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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (No Fee Required)
For the fiscal year ended December 31, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
MUEHLSTEIN HOLDING CORPORATION
(formerly HMC Acquisition Corporation)
(Exact name of Registrant as specified in its charter)
Commission file number: 33-99754
Delaware 06-1436941
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
800 Connecticut Avenue
Norwalk, Connecticut 06856
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including Area Code: (203) 855-6000
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days: Yes [X] No [ ]
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K [ ]
Aggregate market value of the voting stock held by non-affiliates of the
Registrant, computed by reference to the price at which the stock was sold, as
of December 31, 1996: $15,995,890.00.
The number of shares outstanding of Registrant's Common Stock at December 31,
1996 was 1,995,703.
DOCUMENTS INCORPORATED BY REFERENCE
None.
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TABLE OF CONTENTS
1996 FORM 10-K
Item Number
Part I
1. Business
2. Properties
3. Legal Proceedings
4. Submission of Matters to a Vote of Security Holders
Part II
5. Market for the Registrant's Common Stock and Related Stockholder Matters
6. Selected Financial Data
7. Management's Discussion and Analysis of Financial Condition and Results of
Operations
8. Financial Statements
Report of Independent Auditors
Balance Sheets
Statements of Operations
Statements of Cash Flows
Notes to Financial Statements
9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosures
Part III
10. Directors and Executive Officers of the Registrant
11. Executive Compensation
12. Security Ownership of Certain Beneficial Owners and Management
13. Certain Relationships and Related Transactions
Part IV
14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
Signatures
Index to Financial Statements
Index to Exhibits
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PART I
ITEM 1: BUSINESS
General
Muehlstein Holding Corporation, a Delaware corporation incorporated on
September 21, 1995 ("MHC" and "Company"), was organized by certain management
employees of H. Muehlstein & Co., Inc., a New York corporation ("Muehlstein"),
for the purpose of acquiring all of the common stock of Muehlstein from a
wholly-owned subsidiary of Mobil Oil Corporation ("Mobil"). MHC entered into a
Stock Purchase Agreement, dated as of October 30, 1995, pursuant to which the
acquisition of Muehlstein (the "Acquisition") was consummated on February 9,
1996.
MHC engages in no other operations apart from those operations of
Muehlstein and its subsidiaries. The following represents a description of such
operations.
Overview
Muehlstein, headquartered in Norwalk, Connecticut, was established as a
sole proprietorship in Akron, Ohio in 1911. Incorporated in New York in 1922,
Muehlstein remained privately owned until its acquisition by Mobil in 1980.
At inception, Muehlstein acted as a trader and reseller serving the rubber
industry. In the mid-1940s Muehlstein expanded its scope of operations,
pioneering an alternative marketing service for the then-emerging plastics
industry. Over the last 50 years, Muehlstein has become a full-service,
alternative marketing resource for the plastics industry, buying, warehousing,
inventorying, distributing, compounding and selling prime and "off-grade"
plastic resins. Management believes that the company is presently among the
world's largest alternative marketers of plastic resins and rubber.
Muehlstein acts primarily as a merchant, buying and selling various types
of prime and offgrade plastic resins and, to a lesser extent, natural (crude)
and synthetic rubber. The Company matches available materials with appropriate
markets. The global scope of the Company's operations and contacts (26% of its
1996 annual revenues were derived from foreign operations) enables Muehlstein to
assist producers and customers in maintaining a productive relationship between
supply and demand. Muehlstein's client suppliers and customers recognize the
Company's ability, derived from many years of experience, to anticipate and
react promptly to market fluctuations and end user demand. In addition to its
merchant activities, Muehlstein engages in a limited amount of manufacturing
activities, principally plastics compounding.
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The following table sets forth, for the periods indicated, the approximate
contributions by Muehlstein's major lines of business to MHC's (i) total
consolidated revenues, and (ii) income before income taxes and corporate
overhead expenses. In estimating relative contributions to income before income
taxes and corporate overhead expenses, management has made assumptions as to
intercompany transactions on a basis it believes to be reasonable and
consistent.
Year Ended December 31,
1996 1995 1994
Revenues Income Revenues Income Revenues Income
-------- ------ -------- ------ -------- ------
(in thousands)
Merchant
Activities
Plastics $631,451 $16,970 $681,783 $19,100 $546,730 $15,623
Rubber 75,567 1,318 129,188 1,873 83,399 (954)
-------- ------- -------- ------- -------- -------
Total $707,018 $18,288 $810,971 $20,973 $630,129 $14,669
Muehlstein serves approximately 4,000 customers in 70 countries worldwide
from 32 sales offices located throughout North America, Latin America, Europe,
the Asia Pacific region and Northern Africa.
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Merchant Activities
Plastics
Muehlstein has long established relationships with more than 20 of the
major U.S. and international producers of plastic resins, from which it
purchases a wide selection of grades of polyethylene, polypropylene and
polystyrene resins. Muehlstein believes it to be practical, convenient and
cost-effective for the major producers of plastic resins to utilize the
distribution channels of Muehlstein and other merchants rather than perform this
function on their own behalf. Muehlstein purchases prime plastic resins from
such producers and generally sells such materials, without processing, to small
and medium-sized, end user companies.
In 1996, Muehlstein, as part of its growth strategy, created a new
operating division, Channel Polymers ("Channel"). Channel will allow the company
to enhance its focus on smaller end users of prime resins, a segment of the
market in which the producers of prime resins have less of an interest. Channel
should enable the company to expand its resale and distribution of prime resins,
exploit its already established international position, and increase its
technology base. This, in turn, should lead to enhanced productivity and
customer service.
Muehlstein also purchases a substantial amount (approximately 45% of its
total purchases of plastic resins) of virgin, off-grade resins (as opposed to
reclaimed or reprocessed resins), including high and low density polyethylene,
polypropylene and polystyrene, for sale to large volume end users. The use of
off-grade resins, which fail to meet specifications for prime resins (relative
to melt, flow, density and/or color), can result in significant cost savings in
the manufacture of products not requiring prime grade resins. The supply of
off-grade resins results from a number of factors, including supplier overruns
and changes in customer specifications. Muehlstein's historic experience
suggests that the supply of off-grade resins is proportional to the industry's
total production of plastic resins.
As a merchant of prime and off-grade plastic resins, Muehlstein acts in
the capacity of distributor, agent and reseller. When Muehlstein acts as a
distributor, it takes possession of the product (generally, prime resins) from
multiple producers and represents such producers in selling the product to
fabricators. When acting as an agent, Muehlstein functions essentially as an
extension of an individual producer's sales force, representing that producer in
the sale of a given product (which it does not take possession of) on an
exclusive basis. When Muehlstein acts as a reseller, it buys both prime and
off-grade plastic resins in bulk, primarily from major petrochemical companies,
and resells them, either in bulk or in smaller quantities (in either case,
without further processing), to numerous domestic and foreign compounders and
processors of plastic resins and manufacturers of plastic products. As a
reseller, Muehlstein may or may not take possession of the product.
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Rubber
Muehlstein acts, on a worldwide basis, as an agent or distributor of
various types of prime and off-grade synthetic rubber for major synthetic rubber
producers in a manner substantially similar to its plastic resin merchant
activities. Products purchased and sold include styrene butadiene rubber (SBR)
and polybutadiene (PBD), the number one and two selling synthetic rubbers,
respectively.
Muehlstein's activities as a merchant in rubber have accounted for
approximately ten percent of the company's annual revenues for the last five
fiscal years.
Use and Product Applications
Plastics
There are differing markets for the various type and grades of plastic
resins which Muehlstein purchases. The company's primary customers for low
density polyethylene include injection molders, extruders and coaters of food
and non-food packaging products, film wrap, household plastic wrap,
shopping/grocery bags, squeeze bottles, housewares, lids, trash bags and toys.
Muehlstein markets high density polyethylene to injection molders, blow molders,
extruders and roto molders whose products include film, bottles, plastic tanks,
pails, pipes and shipping containers. Muehlstein markets polypropylene to
extruders and injection molders whose products include disposable service ware,
trays, videocassettes, leisure furniture and parts for automobiles, trucks,
appliances and business machines. Polystyrene is marketed to businesses engaged
in molding, extrusion and expandable beads whose products include disposable
service ware, foam packaging, videocassettes, hangers and parts for appliances
and business machines.
Rubber
Muehlstein's primary customers for synthetic and crude rubber include
sporting goods, automotive and household products businesses whose products
include golf balls, tires, tubes, toys, molded goods and footwear.
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Manufacturing Activities
Plastic Compounds
Plastic compounding is a manufacturing procedure, conducted under rigid
laboratory and production controls, by which plastic resins and additives such
as talc, stabilizers, lubricants and color pigments are mixed according to
predetermined ratios and specifications. The mix is then transferred to a
chamber where heat is applied under controlled conditions producing a plastic
mass of generally uniform chemical and physical properties. The mass is then
converted into strands or strips by an extrusion process, cooled in liquid and
cut into pellets by a dicing machine. The pellets are transferred by air ducts
to blending tanks to control uniformity of product and then packaged either in
bags or cartons or transferred in bulk to hopper rail cars or hopper trucks for
direct bulk delivery to the customer.
Muehlstein's research laboratories specially engineer proprietary
compounds (on which the company has placed increasing emphasis in recent years)
to meet a customer's requirements in terms of tensile strength, elongation, melt
index, color and other properties. Muehlstein then manufactures the proprietary
compounds from purchased resins (typically low and high density polyethylene,
linear low density polyethylene, and polypropylene) and additives in accordance
with formulas and specifications developed by its laboratories. The company
produces proprietary compounds in economic production quantities based on
customer commitments for future deliveries, as reflected in purchase orders. To
the extent necessary, Muehlstein stores these compounds for future delivery in
its or public warehouses located near customers' manufacturing facilities.
Muehlstein sells its proprietary compounds principally to manufacturers
and suppliers in the automotive industry for such products as side panels, air
ducts and fan shrouds; in the appliance industry, for plastic parts in
refrigerators, washing machines and laundry tubs; in the construction industry,
for such products as plastic conduits, plastic drain pipes and window seals; in
the toy industry, for various plastic toy parts; and in the housewares industry,
for waste baskets, sink strainers, hampers and other items.
Other Manufacturing Activities
Muehlstein utilizes various outside manufacturing facilities to
reprocess certain scrap material into more marketable products, paying a fee
to the manufacturer based on the volume of material reprocessed. For example,
Muehlstein reprocesses polystyrene at one location in Ohio. The company
reprocesses rubber at three to four facilities located in Georgia, Ohio and
Tennessee. At each location, Muehlstein provides the product to be
reprocessed, combined or blended, in accordance with Muehlstein's
instructions. The foregoing activities constitute a minor portion of
Muehlstein's business.
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Foreign Operations
In its foreign operations, Muehlstein acts as reseller/distributor of
plastic resins and rubber. Muehlstein has 23 offices outside of the United
States in 21 countries. As of December 31, 1996, the company employed 101 people
in its foreign locations.
In Europe, Muehlstein has its headquarters in Brussels, Belgium, with
sales offices in Brussels, Hamburg (Germany), Camberley (U.K.), Barcelona
(Spain), Milan (Italy), Cairo (Egypt) and Paris (France). Since July 1994, these
sales offices have operated under a commissionaire or agency arrangement with
Pegasus Polymers International, Inc. (PPI), a wholly-owned subsidiary of
Muehlstein. PPI owns all accounts receivable, inventories and accounts payable,
but the local commissionaire/agent invoices the customer on PPI's behalf. PPI
reimburses the commissionaire or agent for its activities based on sales volume
or on a cost-plus basis. Muehlstein also has an employee, through Mobil, in
Mobil's Moscow office. This employee coordinates the acquisition of synthetic
rubber from Russia for resale in Europe and the United States.
In the Far East, Muehlstein has offices in India, Singapore, Malaysia and
Hong Kong. Muehlstein opened its office in India in 1996. Its offices in
Singapore and Malaysia were opened in late 1994. The Hong Kong office has been
in operation since 1988. From these offices, the company sources its products
(both locally and throughout the world) for resale to local users and other
traders. Muehlstein closely monitors and controls its sales terms in this region
of the world. In Hong Kong, for example, the company does not currently extend
credit to customers.
Muehlstein coordinates its Latin American operations (including its ten
sales offices in Central and South America) from the company's headquarters in
Norwalk, Connecticut. The company sources the majority of the product sold in
Latin America from the United States. As in the Far East, the company closely
monitors and controls sales terms, often insisting on letters of credit to
secure any payment exposure. Most sales are made in U.S. dollars.
Muehlstein has two offices in Canada located in Toronto and Montreal. The
company's Canadian operations have been in existence for over 50 years.
Muehlstein currently coordinates its sales and purchasing activities in Canada
from its Toronto office, with all administrative, accounting and treasury
functions associated with its Canadian operations being handled at its
headquarters in Norwalk, Connecticut.
Customers
In connection with Muehlstein's merchant activities, no single customer
accounted for more than two percent of the company's annual revenues in fiscal
1996. The company's five largest customers accounted for less than four percent
of such revenues. In connection with Muehlstein's
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manufacturing activities, no single customer accounted for more than one
percent of the company's annual revenues in fiscal 1996; the five largest
customers accounted for about 1.1 percent of such revenues. In management's
opinion, Muehlstein is not dependent upon any single customer, such that
their loss would have a material adverse effect on Muehlstein's
business (other than on a temporary basis).
Suppliers and Raw Materials
In fiscal 1996, Muehlstein purchased 1.8 billion pounds of plastic resin
and rubber worldwide. Muehlstein purchases material from a variety of suppliers
both large and small. The top 10 suppliers accounted for approximately 75% of
the total pounds purchased during 1996.
Upon the closing of the Acquisition, MHC entered into agreements with
Mobil Chemical, pursuant to which Mobil Chemical agreed to sell polyethylene and
polypropylene products to and through Muehlstein. See the discussion under
"Certain Relationships and Related Transactions" herein.
Transport
Muehlstein ships its products in packaged form through common carrier rail
and truck facilities, ships and containers. In its custom plastics compounding
operations, Muehlstein also uses hopper rail cars furnished by its customers.
Muehlstein also operates a fleet of approximately 40 leased hopper rail cars.
Sales and Marketing
Muehlstein conducts its sales and marketing activities from its
international headquarters in Norwalk, Connecticut, from regional headquarters
in Brussels, Belgium and Hong Kong, as well as from 29 sales offices worldwide.
Muehlstein utilizes one sales force consisting of approximately 100 people for
all of its products and activities. The international and regional headquarters
offices include executive and administrative personnel as well as those engaged
in sales and marketing. Each sales office is staffed by sales and clerical
personnel adequate, in management's opinion, to represent Muehlstein in the area
served by that office. Office leases are generally short-term and do not involve
a substantial financial commitment by Muehlstein.
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Competition
The plastic resins and rubber markets in which Muehlstein participates are
highly competitive and are comprised of many participants. The industries in
which Muehlstein competes are particularly sensitive to price fluctuations as
well as other competitive factors including quality and service, with varying
emphasis on these factors depending on product line. Although no single company
is dominant, Muehlstein does face significant competitors in each of its
businesses. Muehlstein's competitors include large vertically integrated
companies as well as numerous smaller companies. Competitors of comparable size
to Muehlstein include A. Schulman, Inc., which is engaged principally in
compounding and, to a lesser extent, in merchant and distribution activities,
and Osterman Co., Inc. engaged principally in buying and reselling. Larger
competitors with greater financial resources include General Polymers, a
division of Ashland Chemical Company, principally a distributor and merchant,
M.A. Hanna Co., principally a distributor, merchant and compounder, and
Polymerland, Inc., principally a distributor.
As a merchant of plastic resins, Muehlstein faces competition based
primarily on service and price. As a function of its excellent supplier and
customer relationships, the Company believes that it competes favorably with
respect to each of these competitive factors.
As a manufacturer and distributor of plastic compounds, Muehlstein
competes on the basis of product innovation, quality, service and price. The
company's competitors include producers of plastic resins (many of which operate
compounding plants) and other independent plastic compounders. The Company
believes it competes favorably with respect to each of these competitive factors
due to its excellent supplier and customer relationships, as well as its proven
ability to provide quality plastic compounds at competitive prices.
Muehlstein competes with producers and resellers in the rubber industry
segment primarily on the basis of the breadth of its product line. Muehlstein
competes in all markets (i.e., tire, retread, shoe, toy, golf ball, sports,
etc.). Although producers sell substantially more synthetic and crude rubber
than Muehlstein, the Company believes that it is the largest and most
significant reseller of rubber worldwide.
Backlog
Demand for Muehlstein's major product lines is relatively constant
throughout the year and seasonal fluctuations in marketing, production,
shipments and inventories are not significant. Muehlstein does not have a
significant backlog of orders, as most orders are placed for delivery within 30
days.
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Intellectual Property
Muehlstein uses various trademarks and trade names in its business. These
trademarks and trade names provide certain proprietary rights with respect to
Muehlstein's products and are significant to the extent that they provide a
certain amount of goodwill and name recognition in the industry. Although these
trademarks and trade names may indirectly contribute to profitability,
Muehlstein does not consider a material part of its business to be dependent on
such trademarks and trade names.
Commencing in July 1994, several of Muehlstein's subsidiaries began
conducting their respective businesses under the name "Pegasus," a name that has
identified these businesses with Mobil. Pursuant to the Stock Purchase
Agreement, Muehlstein and Mobil, concurrent with the closing of the Acquisition,
entered into a license agreement granting Muehlstein a nonexclusive,
royalty-free license to use the "Pegasus" trade name in India and in any other
nation outside the western hemisphere in which Muehlstein currently uses such
name for a period of five years. Accordingly, after such transitional period MHC
will no longer enjoy the benefits associated with the Pegasus name.
Environmental Matters
Management believes that compliance with federal, state and local
provisions regulating the discharge of materials into the environment, or
otherwise relating to the protection of the environment, has not had a material
effect upon the capital expenditures, earnings or competitive position of
Muehlstein.
Management believes that the plastics resins and synthetic rubber products
marketed by Muehlstein generally do not pose environmental concerns. In
addition, pursuant to the Stock Purchase Agreement, Mobil has remediated all
environmental conditions existing on Muehlstein's real property, as determined
in a Phase II environmental audit, that constitute or reasonably may constitute
a violation of or require remediation under applicable environmental laws. In
view of the foregoing, management does not believe that environmental concerns
are of significant importance to MHC.
Employees
As of December 31, 1996, Muehlstein employed 280 persons, including nine
executives engaged in management, 89 persons in administration and finance, 150
persons in sales and marketing and 32 persons in manufacturing. None of
Muehlstein's employees are subject to collective bargaining agreements.
Muehlstein believes its relations with its employees to be excellent.
Approximately 179 employees are located in the United States and 101 employees
are located in foreign countries.
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ITEM 2: PROPERTIES
Muehlstein's international headquarters, containing its principal
executive and administrative offices, is located in leased facilities at 800
Connecticut Avenue, Norwalk, Connecticut, and consists of approximately 37,114
square feet. The lease of such facilities, which expires March 31, 1999,
provides for an annual base rent of $966,471. The current total annual lease
cost, including operating expenses, taxes and utilities, is approximately
$1,100,000.
Muehlstein operates sales offices in various locations around the world
under a variety of leases which are generally short-term. The total rent expense
for these offices was approximately $1,900,000 for each of the last three
fiscal years.
Muehlstein owns and operates a plastic compounding plant in Houston,
Texas. The plant has an annual plastic compounding capacity of approximately 50
million pounds on a weekly five-day, three shift basis on which Muehlstein
customarily operates. The plant has a floor area of approximately 100,000 square
feet, and is situated on an 8.6 acre site. Muehlstein considers this facility to
be in good to excellent condition and suitable for its purpose.
Muehlstein leases space in public warehouses on an as-needed basis and
without any long term lease commitments, in order to store its products
conveniently for shipment to customers. The number of public warehouses in use
varies from time to time, but a yearly average approximates 75, with an average
combined space utilization of approximately 800,000 square feet. Muehlstein does
not lease any private warehouses.
Muehlstein owns two condominiums in Florida which are used exclusively for
business purposes.
ITEM 3: LITIGATION
From time to time, Muehlstein is a party to routine litigation incidental
to and in the normal course of its business. Although any litigation has an
element of uncertainty, neither MHC nor Muehlstein is currently engaged in any
legal proceedings that are expected, individually or in the aggregate, to have a
material adverse effect on its financial condition or operations.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year ended December 31, 1996.
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PART II
ITEM 5: MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The common stock of MHC is not publicly traded. There were approximately
120 record holders of such stock at December 31, 1996, including the H.
Muehlstein & Co., Inc. Deferred Profit Sharing and Employee's Stock Ownership
Plan ("ESOP"). The ESOP owns the MHC common stock on behalf of approximately 160
present and former employees of Muehlstein.
MHC has never declared or paid any cash dividends on its common stock. MHC
anticipates that all of its earnings will be retained for the operation and
expansion of its business and does not anticipate paying any cash dividends in
the foreseeable future. Muehlstein's credit agreements (described more fully in
the "Management's Discussion and Analysis of Financial Condition and Results of
Operations" ) contain certain restrictive covenants which, among other things,
restrict MHC's ability to pay dividends.
ITEM 6: SELECTED FINANCIAL DATA
The following selected consolidated financial data for the year ended
December 31, 1996, is derived from the audited consolidated financial
statements of MHC. The selected financial data as of and for the years ended
December 31, 1995, 1994, 1993 and 1992, are derived from the audited combined
financial statements of Muehlstein. This data should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results
of Operations", the consolidated financial statements of MHC, the combined
financial statements of Muehlstein and the related notes included herein.
The pro forma financial information gives effect to the Offering, the
Acquisition and related transactions. The pro forma financial data is
provided for information purposes only and does not purport to be indicative
of MHC's financial position or results of operations which would actually
have been obtained had such transactions been completed as of the date or for
the periods presented, or which may be obtained in the future. The pro forma
financial data should be read in conjunction with the historical financial
statements of MHC and Muehlstein and the related notes included herein.
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<TABLE>
<CAPTION>
Year ended December 31,
--------------------------------------------------------------------------
(in thousands, except number of shares and per share data)
--------------------------------------------------------------------------
1992 1993 1994 1995 1996
--------------------------------------------------
<S> <C> <C> <C> <C> <C>
Statement of Income Data:
Revenues .............................................. $534,707 $517,255 $630,129 $810,971 $ 707,018
Net income (loss) ..................................... 3,704 (3,670) 6,248 13,560 10,055
Net income applicable to common shareholders .......... 8,988
Net income per share applicable to common shareholders 5.09
Number of common shares outstanding ................... 1,765,446
Balance Sheet Data (at end of period):
Working Capital ....................................... $ 94,012 $ 82,104 $111,933 $105,191 $ 33,655
Total Assets .......................................... 158,376 144,822 216,641 205,581 167,146
Long term debt ........................................ 20,217
Redeemable Preferred Stock ............................ 10,000
Common Stock .......................................... 19,191
Parent company investment ............................. 96,058 87,300 118,185 108,639
Year ended December 31,
--------------------------------------------------------------------------
(in thousands, except number of shares and per share data)
--------------------------------------------------------------------------
Pro Pro Pro
Forma Forma Forma
1994 1995 1996
-----------------------------------
<S> <C> <C> <C>
Statement of Income Data:
Revenues .............................................. $ 630,129 $ 810,971 $ 707,018
Net income ............................................ 1,104 7,757 8,925
Net (loss) income applicable to common shareholders ... (96) 6,557 7,725
Net (loss) income per share applicable to
common shareholders.................................. (.05) 3.28 3.87
Number of common shares outstanding ................... 1,995,703 1,995,703 1,995,703
Balance Sheet Data (at end of period):
Working capital ....................................... $ 25,503
Total assets .......................................... 206,950
Long term debt ........................................ 8,000
Redeemable preferred stock ............................ 10,000
Common stock .......................................... 19,382
</TABLE>
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ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
General
As discussed in detail in the notes to the financial statements,
Muehlstein Holding Corporation ("Successor Company" and the "Company") was
incorporated for the purpose of acquiring all of the outstanding capital stock
of H. Muehlstein & Co., Inc. ("Muehlstein" and the "Predecessor Company") and
certain related assets ("Acquisition") from Mobil Oil Corporation (Mobil). The
Acquisition was finalized on February 9, 1996 for a total purchase price of
approximately $98,925,000. In conjunction with the Acquisition, the Company
issued shares of its common stock ("Offering"), as discussed in Liquidity and
Sources of Capital. Accordingly, the year ended December 31, 1996 is the only
period of Successor Company operations and to facilitate the comparison of
results of operations historical data for the twelve-month periods ended
December 31, 1995 and 1994, respectively, has been adjusted to reflect the
Acquisition and Offering as if such transactions had been completed at the
beginning of each of the periods presented. The financial information of the
Successor Company reflects the application of purchase accounting to the
operations of Muehlstein subsequent to the Acquisition by the Company. The
application of purchase accounting results in the allocation of the purchase
price and related acquisition costs based on the fair value of the underlying
assets and liabilities of the Predecessor Company's operations. The pro forma
results of operations have been prepared for comparative purposes only, they are
not comparable to the historical information and are not purported to be
indicative of the results of operations that would actually have occurred had
the Acquisition and Offering been in effect on the dates indicated or that may
result in the future.
In the second half of 1994, flooding in the Houston area and production
outages resulted in plastic supply shortages. Additionally, the market in China
added demand for plastic resin. These factors caused an imbalance in the
marketplace and in conjunction with improved economic conditions worldwide,
resulted in dramatically higher prices by year-end 1994 and early-1995. In the
second half of 1995 market conditions normalized. During the second quarter of
1996, longer than normal production outages for maintenance resulted in a supply
shortage.
Results of Operations
1996 Compared to 1995
Revenues of $707,018,000 in 1996 were 12.8% lower than those of 1995. The
average sales price for plastic resin and rubber, combined, was 6.2% lower than
for the previous year. Worldwide sales volume decreased 5.6% in the year ended
December 31, 1996
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versus the prior year. The decrease was predominately due to lower rubber
volumes in first half of 1996 versus the first half of 1995. Volumes were higher
in the first half of 1995 mainly due to an anticipated feedstock shortage.
For the year ended December 31, 1996, average margin on product sales
decreased to $0.0510 from $0.0551 for the year ended December 31, 1995
predominately due to the effect of the market imbalance during the first half of
1995. Offsetting the lower margins was a 14.2% decrease in selling, general and
administrative expenses to $75,436,000 for the year ended December 31, 1996
versus $87,966,000 for the same period in 1995. The change was mainly due to
lower bad debt expense in the U.S. and Latin America along with lower freight
costs and employee costs. Partially offsetting the cost reductions is the loss
on the sale of accounts receivables, of approximately $2,029,000, to a Master
Trust (See "Liquidity and Sources of Capital"). The net affect of the above was
a 4.6% decrease in income from operations to $18,072,000 in 1996 from
$18,944,000 in 1995.
Interest expenses decreased 34.9% to $4,894,000 in 1996 from $7,518,000
in 1995. The decrease was predominantly due to the replacement of the
Revolving Credit Agreement with an agreement to sell a defined pool of the
Company's accounts receivable. (See "Liquidity and Sources of Capital").
Other income increased $140,000 to $1,340,000 in 1996 from $1,200,000
in 1995.
For the year ended December 31, 1996, net income increased 15.1% to
$8,925,000 from $7,757,000 in the comparative period of the prior year, after
tax charges of $5,593,000 and $4,869,000, respectively. The effective tax rate
was 39% for both years ended December 31, 1996 and 1995.
1995 Compared to 1994
Total revenues increased 28.7% to $810,971,000 in 1995 from
$630,129,000 in 1994. The average sales price for plastic resin and rubber,
combined, was 31.2% higher in 1995 than for the 12 months of 1994. Worldwide
sales volume decreased 1.9% in the year ended December 31, 1995 versus the
prior year. The increases in revenue along with the lower volumes are
reflective of the increased prices and reduced availability that resulted due
to the supply shortage experienced during the first half of 1995.
For the year ended December 31, 1995, average margin on product sales
increased to $0.0551 from $0.0464 for the year ended December 31, 1994, both
reflective of the shortage experienced during 1995. Partially offsetting the
higher margins was a 11.0% increase in selling, general and administrative
expenses to $87,966,000 for the year ended December 31, 1995 versus $79,269,000
for the same period in 1994. The change was mainly due to higher freight costs
in the U.S. and Europe along with higher employee costs. Overall income from
operations increased 49.9% to $18,944,000 in 1995 from $12,640,000 in 1994.
-17-
<PAGE>
Other expenses decreased $520,000 to $6,318,000 in 1995 from $6,838,000 in
1995.
For the year ended December 31, 1995, net income increased $6,653,000 to
$7,757,000 from $1,104,000 in the comparative period of the prior year after tax
charges of $4,869,000 and $4,698,000, respectively. The effective tax rate was
39% for year ended December 31, 1995. For the year ended December 31, 1994 the
effective tax rate was 81%, reflective of the valuation allowance established
against foreign losses.
Liquidity and Sources of Capital
Historically, Muehlstein had been an indirect, wholly owned subsidiary of
Mobil. As such, cash generated by Muehlstein and its financing requirements had
been subject to Mobil's cash management procedures and policies. Muehlstein did
not have any material outside borrowings to fund its cash requirements.
In conjunction with the Acquisition, the Company issued approximately
2,000,000 shares of common stock at $10.00 per share, for total proceeds of
approximately $20,000,000 between January 23, 1996 and December 31, 1996. The
Company's common stock is held by certain of the Company's employees, the
Company's Employee Share Ownership Plan and Citicorp North America, Inc.
("Citicorp"). Shareholders', excluding Citicorp, have a right to put these
shares to the Company, following termination of their employment, subject to
the limitations imposed under the terms of the Credit, Loan and preferred
stock agreements. Such provision exists to create a market for the employees'
shares. Citicorp has the right to put their shares to the Company at any time
after the earliest to occur of: (a) three years after the Acquisition closing
date or (b) certain mergers, consolidations, sale of assets or change of
control with respect to the Company or its material subsidiaries. The
redemption price for any shares will be equal to the most recent appraised
fair market value of the common stock. If a put is exercised, the Company
will have the option to pay for the repurchased shares either in cash or
pursuant to a promissory note. Under the terms of the Credit, Loan and
preferred stock agreements and given management's view of its present
employee base, significant activity under the put provisions is not
anticipated presently.
On February 9, 1996, Mobil purchased from the Company 1,000,000 shares of
Series "A" Preferred Stock, $.01 par value per share, at a purchase price of
$10.00 per share. The Series "A" Preferred Stock pays an annual dividend of
$1.20 per share (equal to 12 percent per annum of the stated value of $10.00 per
share). On January 29, 1997, the Company redeemed 500,000 shares of the Series
"A" Preferred Stock at a price of $10.00 per share, for total proceeds of
$10,000,000.
-18-
<PAGE>
At the date of Acquisition, Muehlstein entered into a loan agreement with
Finova Capital Corporation ("Finova"). Pursuant to this agreement total proceeds
of $8,000,000 from two term loans, Note A and Note B, both maturing March 1,
2000, were received. The principal amount of the two term loans is $2,560,000
(Note A) and $5,440,000 (Note B), respectively. These notes bear interest at a
fixed annual rate of interest of 8.20% per annum (Note A) and 9.70% per annum
(Note B).
Additionally, on the date of Acquisition, Muehlstein entered into a
$125,000,000 revolving credit facility with Citicorp USA, Inc. and Citibank
Canada ("Citibank") ("Credit Agreement") which was guaranteed by the Company.
The expiration date of this Credit Agreement was February 9, 2000. On February
9, 1996, the Company borrowed approximately $73,191,000 under this facility. On
September 25, 1996, as part of the agreement to sell a defined pool of the
Company's accounts receivables the first amendment was added to the credit
agreement whereby the $125,000,000 revolving credit facility was reduced to
$45,000,000. The revolving credit facility bears interest at either (1) 100
basis points per annum over the U.S. or certain other foreign currency Base
Rates or (2) 250 base points per annum over the U.S. or certain other foreign
currency LIBOR rates. There were no amounts outstanding under this agreement at
December 31, 1996. For year ended December 31, 1996, the weighted average
interest rate for such facility was 8.39%. Commitment fees were 0.5%.
Effective September 25, 1996, Muehlstein and one of its subsidiaries,
Muehlstein International Ltd., (collectively, the "Originators") entered into
agreements with Muehlstein Trade Receivables Master Trust ("Master Trust") to
sell a defined pool of the accounts receivable on a revolving basis, through
February 9, 2000, (See Notes to Financial Statements). The Company had net
cash receipts of $72,000,000 from the sale of eligible receivables. The
Company used $48,775,000 of the proceeds to repay the outstanding balance of
the original revolving credit facility at September 25, 1996. Pursuant to the
agreement, Muehlstein services, on behalf of the Master Trust, the accounts
receivable that were sold. In return Muehlstein is paid a servicing fee by
the Master Trust. The servicing fees for the period September 25, 1996
through December 31, 1996 were not significant.
In conjunction with the securitization of $58,000,000 in purchased
receivables, the Master Trust issued Series 1996-1 certificates to CXC
Incorporated which generally bears interest at a commercial paper rate. In
return for $14,000,000 the Master Trust issued Series 1996-2 certificates to
Polymers International Financial Corporation, a subsidiary of the Company. The
series 1996-2 certificates ("Certificates") from the Master Trust will bear
interest generally at 100 basis points over the LIBOR rate. Subsequently,
Polymers International Financial Corporation pledged the Certificates to
Citibank N.A.. In return
-19-
<PAGE>
Citibank N.A. gave approval to Citibank London to issue a $20,000,000 revolving
credit facility to Pegasus Polymers International Inc., a subsidiary of the
Company, at a rate of LIBOR plus 40 basis points.
Capital Expenditures for Muehlstein and the Company are not a material use
of cash. Capital expenditures for 1996, 1995 and 1994 were $775,000, $693,000
and $2,180,000, respectively. Capital expenditures were higher in 1994 due to
expenditures related to the addition of a second line to Muehlstein's
compounding facility in Houston.
1996 Compared to 1995
Operating activities have historically been a major source or use of cash
for working capital needs and capital expenditures. Net cash used in operations
was $6,243,000 for the year ended December 31, 1996, as compared to a
$25,125,000 source of cash for the year ended December 31, 1995. Working capital
on a comparative basis decreased $71,536,000 from December 31, 1995 to December
31, 1996. Current assets decreased by 30.5% to $137,421,000 at December 31, 1996
from $197,725,000 at December 31, 1995. The decrease in 1996 was mainly due to
the selling of certain trade accounts receivables to the Master Trust (see Notes
to Financial Statements), partially offset by higher inventory values, the
result of higher prices during the fourth quarter of 1996 versus the comparable
period of 1995. In conjunction with the aforementioned Acquisition, the
Successor Company adopted the specific identification method using
lower-of-cost-or-market valuation for all of its inventory. The Predecessor
Company used the last-in, first-out (LIFO) method to value approximately 69.3%
of its inventory at December 31,1995. Inventories would have been approximately
$3,034,000 higher on December 31, 1995, if the quantities valued on the LIFO
basis were valued at their replacement cost. Current liabilities increased
$11,232,000 mainly due an increase of $20,015,000 in accounts payable, partially
offset by a decline of $11,681,000 in due to affiliates, the result of higher
market prices and the addition of Mobil as a non-affiliated supplier. The
Company expects that available cash and existing credit facilities will be
sufficient to meet its normal operating requirements, including capital
expenditures for at least the next twelve months. Thereafter, the Company's
liquidity will depend on the results of future operations, as well as available
sources of financing. There can be no assurance that the Company will be able to
meet its loan covenants or, if needed, obtain additional financing on acceptable
terms, and the failure to do so may have an adverse impact on the Company's
business and operations.
1995 Compared to 1994
Net cash generated from operations was $25,125,000 for the year ended
December 31, 1995 as compared to a $20,417,000 use of cash for the year ended
December 31, 1994. Working capital on a comparative basis decreased $6,742,000
from December 31, 1994 to
-20-
<PAGE>
December 31, 1995. Current assets decreased by 4.9% to $197,725,000 at December
31, 1995 from $207,966,000 at December 31, 1994, mainly due to lower inventory
and accounts receivable values as a result of lower pricing during the second
half of 1995 versus the second half of 1994. Current liabilities decreased 3.6%
or $3,499,000 to $92,534,000 at December 31, 1995 from $96,033,000 at December
31, 1994, mainly due to increased taxes payable resulting from increased
earnings.
Foreign Exchange
The Company's foreign exchange exposure is limited to its operations in
Europe, Canada and certain Latin American countries. All sales and purchases in
the United States along with the majority of Latin America transactions
representing approximately 75 percent of the companies volume, are denominated
in U.S. dollars. Exposure to foreign exchange fluctuations in Europe are managed
through a balancing of the local assets (primarily accounts receivable) and
liabilities (accounts payable). Fluctuations in foreign currency exchange rates
have not had a material financial impact on the results of the Predecessor
Company or Successor Company.
Impact of Inflation and Changing Prices
Market conditions, which are influenced by economic and political
considerations, as well as production capacities and utilization, dictate
pricing and costs. The Company has entered into certain supply agreements with
Mobil for an initial term of three years. Such agreements provide for minimum
and maximum limits on the amounts of product supplied at current market prices.
The Company does not have any other long-term purchase or sales commitments with
its suppliers or customers. The Company views this as a marketing advantage that
enables it to respond quickly to market changes, matching supply with demand.
The Company capitalizes on opportunities and imbalances in the market place.
Cautionary Statements Regarding Forward-Looking Information
The Private Securities Litigation Reform Act of 1995 ("Act") provides a
safe harbor for forward-looking information made on behalf of the Company. All
statements, other than statements of historical facts which address the
Company's expectations of sources of capital are forward-looking statements.
Forward-looking Statements made by the Company are based on knowledge of the
environment in which it operates, but because of the factors previously listed,
as well as other factors beyond the control of the Company, actual results may
differ from those in the forward-looking statements.
-21-
<PAGE>
ITEM 8: FINANCIAL STATEMENTS
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors of
Muehlstein Holding Corporation
We have audited the Muehlstein Holding Corporation ("Successor Company"
or the "Company") consolidated financial statements and H. Muehlstein & Co.,
Inc. ("Predecessor Company") combined financial statements as listed in the
accompanying index to the financial statements (Item 14 (a)). Our audits also
included the financial statement schedule listed in the index at Item 14(a).
These financial statements and schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements as listed in the accompanying
index to the financial statements (Item 14(a)) present fairly, in all
material respects, the consolidated financial position of Muehlstein Holding
Corporation at December 31, 1996 and the consolidated results of its
operations and its cash flows for the year ended December 31, 1996 and the
period from February 9, 1996 through December 31, 1996, respectively, and the
combined financial position of H. Muehlstein & Co., Inc. as of December 31,
1995, and the combined results of its operations and cash flows for each of
the two years in the period ended December 31, 1995, in conformity with
generally accepted accounting principles. Also, in our opinion, the related
financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material
respects the information set forth therein.
/S/ ERNST & YOUNG LLP
Stamford, Connecticut
February 28, 1997
F-1
<PAGE>
MUEHLSTEIN HOLDING CORPORATION
BALANCE SHEETS
(In thousands except per share data and number of shares)
<TABLE>
<CAPTION>
SUCCESSOR PREDECESSOR
COMPANY COMPANY
CONSOLIDATED COMBINED
-------------------------
DECEMBER 31
1996 1995
------------ -----------
<S> <C> <C>
ASSETS
Current assets:
Cash............................................................. $ 2,211 $ 6,326
Accounts receivable, net of allowances for doubtful
accounts of $396 and $2,775, respectively .................... 36,428 139,132
Retained interest in receivables................................. 36,224 --
Other receivables, principally value added taxes................. 18,277 16,341
Inventories, net................................................. 40,208 29,516
Due from affiliates.............................................. -- 139
Prepaid expenses and other assets................................ 2,745 2,120
Deferred income taxes............................................ 1,328 4,151
------------ -----------
Total current assets............................................... 137,421 197,725
Receivable from Master Trust....................................... 14,000 --
Property, plant and equipment, net................................. 8,658 7,307
Deferred financing costs, net of accumulated amortization of $237
in 1996.......................................................... 2,743 --
Goodwill, net of accumulated amortization of $123 in 1996.......... 3,962 --
Deferred income taxes.............................................. 362 549
------------ -----------
Total assets....................................................... $ 167,146 $ 205,581
------------ -----------
------------ -----------
LIABILITIES AND SHAREHOLDERS' EQUITY/PARENT COMPANY INVESTMENT
Current liabilities:
Current portion of long-term debt................................ $ 1,122 $ --
Accounts payable................................................. 77,427 57,412
Accrued liabilities.............................................. 11,881 8,096
Income taxes payable............................................. 2,588 --
Other taxes payable, principally value added taxes............... 10,748 15,345
Due to affiliates................................................ -- 11,681
------------ -----------
Total current liabilities.......................................... 103,766 92,534
------------ -----------
Long-term debt..................................................... 20,217 --
Other long-term liabilities........................................ 4,504 4,408
Common stock, par value $.01 per share -authorized shares
20,000,000; issued 1,999,683 shares in 1996...................... 20 --
Preferred stock, par value $.01 per share -authorized shares
1,000,000; issued and outstanding 1,000,000 shares in 1996....... 10 --
Additional paid-in capital......................................... 29,161 --
Retained earnings.................................................. 9,588 --
Treasury stock, par value $.01 per share -outstanding 3,980 shares
in 1996.......................................................... (40) --
Cumulative foreign currency translation adjustment................. (80) --
Parent company investment.......................................... -- 108,639
------------ -----------
Total liabilities and shareholders' equity/parent company
investment....................................................... $ 167,146 $ 205,581
------------ -----------
------------ -----------
</TABLE>
See accompanying notes.
F-2
<PAGE>
MUEHLSTEIN HOLDING CORPORATION
STATEMENTS OF OPERATIONS
(In thousands except per share data and number of shares)
<TABLE>
<CAPTION>
SUCCESSOR
COMPANY PREDECESSOR COMPANY
CONSOLIDATED COMBINED
-----------------------------------
YEAR ENDED DECEMBER 31
1996 1995 1994
------------ ---------- ---------
<S> <C> <C> <C>
Revenues:
Sales and commissions...................................................... $ 706,606 $ 798,469 $ 621,576
Sales to affiliates........................................................ 412 12,502 8,553
------------ ---------- ----------
Total revenues............................................................. 707,018 810,971 630,129
Cost of sales.............................................................. 613,510 704,061 542,633
------------ ---------- ----------
93,508 106,910 87,496
Selling, general and administrative expenses............................... 75,137 83,139 71,180
Bad debt expense........................................................... 83 2,798 1,647
------------ ---------- ----------
Total selling, general and administrative expense.......................... 75,220 85,937 72,827
------------ ---------- ----------
Income from operations..................................................... 18,288 20,973 14,669
Interest expense........................................................... (4,091) -- --
Other (income) expense..................................................... 1,340 1,200 (418)
------------ ---------- ----------
Income before income taxes................................................. 15,537 22,173 14,251
Provision for income taxes................................................. 6,442 8,613 8,003
------------ ---------- ----------
9,095 13,560 6,248
Losses applicable to pre-acquisition period (prior to February 9, 1996),
net of benefit for income taxes of $109.................................. (960) -- --
------------ ---------- ----------
Net income................................................................. 10,055 13,560 6,248
------------ ---------- ----------
Preferred stock dividend................................................... 1,067 -- --
------------ ---------- ----------
Net income applicable to common shareholders............................... $ 8,988 $ 13,560 $ 6,248
------------ ---------- ----------
------------ ---------- ----------
Net income per share applicable to common shareholders..................... $ 5.09
------------
------------
Weighted average number of shares outstanding ............................. 1,765,446
------------
------------
</TABLE>
See accompanying notes.
F-3
<PAGE>
MUEHLSTEIN HOLDING CORPORATION
STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
SUCCESSOR
COMPANY PREDECESSOR
CONSOLIDATED COMPANY COMBINED
------------------------------------------------
FOR THE PERIOD FROM
FEBRUARY 9, 1996
THROUGH YEAR ENDED DECEMBER 31
DECEMBER 31, 1996 1995 1994
-------------------- --------- ---------
<S> <C> <C> <C>
Cash flows from operating activities
Net income................................... $ 10,055 $ 13,560 $ 6,248
Adjustments to reconcile net income to net
cash provided by (used in)
operating activities:
Depreciation.............................. 1,054 907 837
Loss on sale of accounts receivable....... 2,029 -- --
Amortization of goodwill and deferred
financing costs.......................... 360 -- --
Write-down of deferred financing costs.... 2,857 -- --
(Benefit) provision for deferred income
taxes................................... (986) 675 (50)
Loss on sale of fixed assets.............. -- 33 4
Changes in operating assets and
liabilities:
Accounts receivable...................... (47,581) 5,090 (52,079)
Other receivables........................ 14,996 (7,958) (6,696)
Inventories.............................. (3,499) 17,119 (10,215)
Due from affiliates...................... -- 54 (169)
Prepaid expenses and other assets........ (835) (2,841) 769
Accounts payable......................... 11,856 1,321 21,939
Accrued liabilities...................... 4,849 (5,950) 2,740
Other taxes payable...................... (3,378) 9,420 5,477
Other liabilities........................ 1,980 -- --
Due to affiliates........................ -- (6,305) 10,778
---------- --------- --------
Net cash (used in) provided by operating
activities................................. (6,243) 25,125 (20,417)
Cash flows from investing activities
Payments for acquired business............... (98,925) -- --
Payments for purchase of fixed assets........ (559) (693) (2,180)
Proceeds from sale of fixed assets........... -- 237 96
---------- --------- --------
Net cash (used in) investing activities...... (99,484) (456) (2,084)
Cash flows from financing activities
Borrowing--original revolving credit facility 73,191
Repayments of original revolving credit
facility................................... (73,191)
Net borrowing--Citibank London revolving
credit facility............................ 14,115
Borrowing--term loan......................... 8,000
Repayments of term loan borrowing............ (776)
Proceeds from sale of certain accounts
receivable................................. 58,000
Payments for financing costs................. (5,673)
Payments for purchase of treasury stock...... (40)
Proceeds from issuance of common stock, net
of offering costs.......................... 19,609
Proceeds from issuance of preferred stock.... 10,000
Dividends paid on preferred stock............ (467)
Net change in parent company advances........ -- (23,233) 25,366
---------- --------- --------
Net cash provided by (used in) financing
activities................................. 102,768 (23,233) 25,366
Effect of exchange rate changes on cash...... (117) 127 (729)
---------- --------- --------
Net (decrease) increase in cash.............. (3,076) 1,563 2,136
Cash at beginning of period.................. 5,287 4,763 2,627
---------- --------- --------
Cash at end of period........................ $ 2,211 $ 6,326 $ 4,763
---------- --------- --------
---------- --------- --------
Supplemental disclosure of cash flow
information
Cash paid during the period/years,
respectively, for:
Income taxes............................. $ 5,269 $ 1,551 $ 1,374
---------- --------- --------
---------- --------- --------
Interest................................. $ 3,975 $ -- $ --
---------- --------- --------
---------- --------- --------
</TABLE>
See accompanying notes.
F-4
<PAGE>
MUEHLSTEIN HOLDING CORPORATION
NOTES TO FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
SUCCESSOR COMPANY. On September 21, 1995, the Muehlstein Holding Corporation
("Company") was incorporated for the purpose of acquiring all of the
outstanding capital stock of H. Muehlstein & Co., Inc. ("Muehlstein").
On October 30, 1995, the Company entered into an agreement ("Stock Purchase
Agreement") with a wholly-owned subsidiary of Mobil Oil Corporation ("Mobil")
(the ultimate parent of Muehlstein) to purchase 100% of the outstanding
capital stock of Muehlstein and certain related assets ("Acquisition"). The
purchase price was based on capital employed, as defined, plus $10 million.
The proceeds from the sale of the Company's common and preferred stock
aggregating approximately $30,000,000 and borrowings of $81,191,000 under the
Credit and Loan agreements (see Notes 7, 8 and 9) were used to finalize the
Acquisition and provide working capital.
The Acquisition was finalized on February 9, 1996 for a total purchase price
of approximately $98,925,000 ("Purchase Price"), with fees of approximately
$1,089,000 being included. Upon effectiveness of the Acquisition, Muehlstein
became a wholly-owned subsidiary of the Company. The results for the
year-ended December 31, 1996 reflect revenues and losses of $54,022,000 and
$960,000, respectively, being the results of Muehlstein applicable to the
period from January 1, 1996 through February 8, 1996.
The Company's financial statements reflect the application of purchase
accounting to the acquired operations of Muehlstein. The application of
purchase accounting resulted in the allocation of the purchase price and
related acquisition costs based on the fair value of the assets acquired and
liabilities assumed. As a result, the Predecessor Company combined financial
statements are not comparable to the Successor Company consolidated financial
statements. The classification of certain assets and liabilities have been
adjusted to reflect the additional information that has become available.
Such changes did not have any effect on the actual purchase price.
The condensed balance sheet on a fair value basis of the Company as of
February 9, 1996 was as follows:
(IN THOUSANDS)
--------------
ASSETS
Current assets:
Cash......................................... $ 5,287
Accounts receivable.......................... 118,093
Other receivables............................ 22,224
Inventories.................................. 36,713
Prepaid expenses and other current assets....... 3,085
Total current assets............................ 185,402
Property, plant and equipment, net.............. 9,153
Other assets.................................... 7,103
---------
$ 201,658
---------
---------
F-5
<PAGE>
MUEHLSTEIN HOLDING CORPORATION
(FORMERLY HMC ACQUISITION CORPORATION)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. BASIS OF PRESENTATION (CONTINUED)
(IN THOUSANDS)
--------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable.............................. $ 65,562
Notes payable to bank......................... 74,147
Accrued and other current liabilities......... 23,651
------------
163,360
Long-term debt.................................. 7,044
Other long-term liabilities..................... 2,521
Common and preferred stock...................... 28,733
------------
$ 201,658
------------
------------
The above balance sheet reflects fair value adjustments for inventories
($4,254,000); property, plant and equipment ($1,566,000); other ($95,000) and
goodwill ($4,085,000).
The following unaudited condensed financial information, for the years ended
December 31, 1996 and 1995, gives effect, on a pro forma basis, to the
consummation of the offerings of the Company's debt and equity securities,
the Acquisition and related transactions. The pro forma unaudited effects of
such transactions have been presented assuming that they occurred as of the
beginning of the periods presented in the pro forma unaudited statements of
operations. The pro forma information does not necessarily represent what the
actual results would have been for these periods and is not intended to be
indicative of future results.
YEARS ENDED
DECEMBER 31
----------------------
1996 1995
---------- ----------
(IN THOUSANDS, EXCEPT
PER SHARE DATA)
Revenues....................................... $ 707,018 $ 810,971
---------- ----------
---------- ----------
Net income..................................... $ 8,925 $ 7,757
---------- ----------
---------- ----------
Net income per share applicable to common...... $ 3.87 $ 3.28
---------- ----------
---------- ----------
PREDECESSOR COMPANY. The accompanying Predecessor Company combined financial
statements present the combined assets, liabilities, revenues and expenses
related to the marketing operations of Muehlstein and affiliated entities,
exclusive of certain assets and liabilities retained by Mobil, the ultimate
parent company, in conjunction with the Acquisition. These statements are
presented on a historical cost basis. All transactions between subsidiaries
of Muehlstein and other units of Mobil which are included in Muehlstein's
operations have been eliminated. These combined financial statements include
transactions with Mobil for the purchase and sale of plastic resins and other
transactions (see Note 13). Parent company investment reflects Mobil's
investment in Muehlstein, the accumulated earnings of such entity, as well as
intercompany balances with Mobil and other entities affiliated therewith
which are not settled on a current basis. In addition, the parent company
investment includes intercompany accounts resulting from the exclusion of
various assets and liabilities that were not acquired in the Acquisition.
F-6
<PAGE>
MUEHLSTEIN HOLDING CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATION
The Successor Company consolidated financial statements include the accounts
of the Company and its wholly-owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated in consolidation.
REVENUE RECOGNITION
Revenues are recognized when a product is shipped or a service is performed.
CONCENTRATION OF CREDIT RISK
The Company is a distributor of plastic resins and rubber compounds
throughout the United States and other countries. The Company performs
periodic credit evaluations of its customers financial condition and
generally does not require collateral. Credit losses consistently have been
within management's expectations. Sales activity in the Far East has been
restricted to a cash or letter of credit basis except for certain customers
worthy of credit risk in the Singapore-Malaysia region. Credit insurance is
used for all European sales. Exports to Latin America are invoiced and
payable in U.S. dollars and credit terms are generally longer than those in
the United States because of current business practices in these countries.
CASH EQUIVALENTS
Cash equivalents include all highly liquid instruments purchased with
original maturities of less than three months.
SALE OF RECEIVABLES
The Financial Accounting Standards Board issued Statement No. 125,
"Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities," which requires an entity to recognize the
financial and servicing assets it controls and the liabilities it has
incurred and to derecognize financial assets when control has been
surrendered in accordance with the criteria provided in the Statement. The
Company will apply the new rules prospectively to transactions beginning in
the first quarter of 1997. Based on its agreement to sell an interest in a
defined pool of accounts receivable (see Note 3), the Company believes the
application of the new rules, will not have a material impact on the
financial statements.
INVENTORIES
In conjunction with the aforementioned Acquisition, the Successor Company has
adopted the specific identification method using lower-of-cost-or-market
valuation for all of its inventory, which is comprised of plastic resins and
rubber raw materials. The Predecessor Company used the last-in, first-out
(LIFO) method to value approximately 69.3% of its inventory at December 31,
1995.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are recorded at cost. Depreciation is provided
using the straight-line method based on estimated useful lives of 25 years
for plant and from 3-15 years for all other equipment.
F-7
<PAGE>
MUEHLSTEIN HOLDING CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
GOODWILL
Goodwill represents the excess of the cost of acquired businesses over the
fair market value of the net assets acquired at the dates of acquisition.
Goodwill is being amortized using the straight-line method over a period of
25 years.
DEFERRED FINANCING COSTS
Deferred financing costs represent the fees associated with establishing the
Credit and Loan Agreements (see Note 7) and the agreement to sell a defined
pool of the Company's accounts receivable (see Note 3). These costs will be
amortized over the life of the respective agreements.
INCOME TAXES
Income taxes were provided in the Predecessor Company combined statements of
operations as if Muehlstein was a separate taxable entity and did not give
any recognition to tax attributes available to or from the combined group.
The Predecessor Company was included in the combined U.S. federal income tax
return of Mobil. In addition, the Predecessor Company was included in
combined state tax filings with other affiliates. Charges for current U.S.
federal and state income taxes of the Predecessor Company were payable to
Mobil and the related liabilities were included as a component of parent
company investment.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes.
FAIR VALUE
The carrying amounts reported in the balance sheet for cash, retained
interest in receivables, receivable from Master Trust, accounts receivable
and accounts payable approximate their fair value.
The carrying amount of the Company's notes payable at December 31, 1996
approximates fair value and is estimated based on the quoted market price of
similar debt instruments. The carrying amount of the Company's borrowing
under its revolving credit agreements approximates fair value.
FOREIGN CURRENCY TRANSLATION AND TRANSACTIONS
The financial statements of foreign subsidiaries are translated into U.S.
dollars at current rates, except for revenue, costs and expenses which are
translated at average rates during each reporting period. Gains and losses
resulting from foreign currency transactions are included in income currently.
The foreign currency translation gains and losses applicable to the
Predecessor Company are reflected in the currency translation adjustment
account, a component of parent company investment.
F-8
<PAGE>
MUEHLSTEIN HOLDING CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The Company conducts its operations in Europe, Canada and certain Latin
American countries in foreign currencies. Accordingly, it is subject to the
typical currency risks and exposures that arise as a result of change in the
relative value of currencies. All sales and purchases in the United States,
the Far East and a majority of Latin American countries, representing
approximately 75% of the total sales and purchases are denominated in U.S.
dollars. The Company utilizes natural hedges and offsets in Europe to reduce
exposures through a netting of the local assets (primarily accounts
receivable) and liabilities (primarily accounts payable). There can be no
assurance that these strategies will be effective or that transaction losses
can be minimize or forecasted accurately. Fluctuations in foreign currency
exchange rates have not had a material financial impact on the Company's
results.
EARNINGS PER SHARE
Earnings per share in the Successor Company consolidated statement of
operations is based on the weighted average number of shares of Common Stock
outstanding during the year. Earnings per share has been omitted from the
Predecessor Company combined statements of operations as the Predecessor
Company was comprised of indirect wholly-owned subsidiaries of Mobil during
the periods presented.
USE OF ESTIMATES
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reported period. Actual results could differ from those estimates.
RECLASSIFICATIONS
Certain reclassifications were made to conform prior years' data to the
current presentation.
3. SALE OF RECEIVABLES
Effective September 25, 1996, Muehlstein and one of its subsidiaries,
Muehlstein International Ltd. ("Originators"), entered into agreements to
sell, on a revolving basis, their interests in a defined pool of accounts
receivable through February 9, 2000. At December 31, 1996, the defined pool
of outstanding accounts receivable amounted to $108,224,000. During the
period from September 25, 1996 through December 31, 1996, the Originators had
net cash receipts of $72,000,000 from the sale of eligible receivables, as
defined, to the Muehlstein Trade Receivables Master Trust ("Master Trust").
The loss on the sale amounted to approximately $2,029,000 for the period from
September 25, 1996, to December 31, 1996 and is included in selling, general
and administrative expenses in the accompanying Successor Company
consolidated statement of operations. The remaining $36,224,000 of accounts
receivables represents retainage on the sale of receivables that were not
advanced against by the Master Trust.
f-9
<PAGE>
MUEHLSTEIN HOLDING CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. SALES OF RECEIVABLES (CONTINUED)
In return for $72,000,000, the Master Trust issued $58,000,000 of Series
1996-1 certificates, which bear interest at a commercial paper rate (5.40% at
December 31, 1996) and $14,000,000 Series 1996-2 certificates ("1996-2
Certificates"), which bear interest at 100 basis points over the U.S. or
certain other foreign currency LIBOR rates. The 1996-2 Certificates were
acquired by Polymers International Financial Corporation, a subsidiary of the
Company. Subsequently, Polymers International Financial Corporation pledged the
1996-2 Certificates to Citibank N.A. as collateral for a $20,000,000
revolving credit facility. In return Citibank N.A. gave approval to Citibank
London to issue a $20,000,000 revolving credit facility to Pegasus Polymers
International Inc., a subsidiary of the Company (see Note 7).
Pursuant to the agreement, Muehlstein services, on behalf of the Master
Trust, the accounts receivables that were sold. In return Muehlstein is paid
a servicing fee by the Master Trust which is equal to 1/12 of 1/2% of the
average series 1996-1 certificates invested amounts on each day immediately
preceding a collection period. The servicing fees were not significant for
the period from September 25, 1996 through December 31, 1996.
The 1996-2 Certificates are included on the Successor Company consolidated
balance sheet as "Receivable from Master Trust".
4. INVENTORIES
Inventories were as follows:
DECEMBER 31
------------------------
SUCCESSOR PREDECESSOR
1996 1995
----------- -----------
(IN THOUSANDS)
Plastic resins.............. $ 29,995 $ 21,796
Rubber...................... 10,213 7,720
----------- -----------
$ 40,208 $ 29,516
----------- -----------
----------- -----------
Inventories would have been approximately $3,034,000 higher on December 31,
1995 if the quantities valued on the LIFO basis were valued at their
replacement cost.
The income realized as a result of inventory liquidations was approximately
$12,517,000, and $666,000 for the years ended December 31, 1995 and 1994,
respectively.
F-10
<PAGE>
MUEHLSTEIN HOLDING CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are comprised of the following:
DECEMBER 31
------------------------
SUCCESSOR PREDECESSOR
1996 1995
----------- -----------
(IN THOUSANDS)
Land................................... $ 123 $ 187
Building and improvements.............. 7,534 12,889
Machinery and equipment, office
furniture and leasehold
improvements......................... 2,012 4,518
----------- -----------
9,669 17,594
Less accumulated depreciation.......... 1,011 10,287
----------- -----------
$ 8,658 $ 7,307
----------- -----------
----------- -----------
6. INCOME TAXES
Income (loss) before income taxes consisted of the following:
SUCCESSOR PREDECESSOR
---------------------------------
1996 1995 1994
----------- --------- ---------
(IN THOUSANDS)
Earnings before taxes on income:
United States............................. $ 10,617 $ 18,146 $ 16,396
Foreign................................... 4,920 4,027 (2,145)
----------- --------- ---------
$ 15,537 $ 22,173 $ 14,251
----------- --------- ---------
----------- --------- ---------
The provision (benefit) for income taxes consisted of the following:
SUCCESSOR PREDECESSOR
---------------------------------
1996 1995 1994
----------- --------- ---------
(IN THOUSANDS)
United States
Federal:
Current.......................... $ 4,272 $ 5,613 $ 5,428
Deferred......................... (715) 251 (42)
State:
Current.......................... 1,379 1,614 1,562
Deferred......................... (184) 53 (8)
Foreign
Current.......................... 1,777 711 1,063
Deferred......................... (87) 371 --
----------- --------- ---------
Total provision for income taxes..... $ 6,442 $ 8,613 $ 8,003
----------- --------- ---------
----------- --------- ---------
F-11
<PAGE>
MUEHLSTEIN HOLDING CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
6. INCOME TAXES (CONTINUED)
The Company's net deferred income tax asset consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31
------------------------
SUCCESSOR PREDECESSOR
1996 1995
----------- -----------
<S> <C> <C>
(IN THOUSANDS)
Deferred tax assets:
Allowance for doubtful accounts, retained interest in receivables and
claims.............................................................. $ 1,129 $ 1,441
Inventory capitalization and depreciation............................. 494 404
Net operating loss carryforwards of foreign operations................ 3,518 3,569
Deferred compensation plans........................................... 1,728 3,533
Miscellaneous......................................................... 113 159
----------- -----------
Total deferred tax assets............................................. 6,982 9,106
Deferred tax assets valuation allowance............................... (3,518) (3,569)
----------- -----------
Net deferred income tax asset......................................... 3,464 5,537
----------- -----------
Deferred tax liabilities:
Tax over book depreciation............................................ 640 --
LIFO adjustment (Note 2).............................................. 692 --
Prepaid pension and other............................................. 442 837
----------- -----------
Total deferred tax liabilities........................................ 1,774 837
----------- -----------
$ 1,690 $ 4,700
----------- -----------
----------- -----------
Current deferred tax asset (net)...................................... $ 1,328 $ 4,151
Non-current deferred tax asset (net).................................. 362 549
----------- -----------
$ 1,690 $ 4,700
----------- -----------
----------- -----------
</TABLE>
The loss carryforwards for tax purposes all relate to foreign loss
carryforwards. Of the foreign loss carryforward at December 31, 1996,
$2,975,000 has no expiration date, $249,000 expires in 1998, $279,000 expires
in 1999 and $15,000 expires in 2001.
The net change in the valuation allowance for deferred tax assets in 1996 and
1995, was a decrease of $51,000 and an increase of $440,000, respectively.
This change relates to the amount of foreign net operating losses.
The reconciliation of income tax computed at a statutory rate to income tax
expense (benefit) is as follows:
DECEMBER 31
------------------------------
SUCCESSOR PREDECESSOR
1996 1995
------------- ---------------
U.S. Federal Statutory rate.............. 35% 34%
State income tax......................... 6 5
Other.................................... -- 1
Foreign earnings at other than
U.S. Federal Statutory rate............ -- (1)
-- --
41% 39%
-- --
-- --
F-12
<PAGE>
MUEHLSTEIN HOLDING CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
7. DEBT
Effective February 9, 1996, Muehlstein and certain of its subsidiaries
entered into a credit agreement with Citicorp USA, Inc. and Citicorp Canada
("Credit Agreement"), which was guaranteed by the Company. Pursuant to this
Credit Agreement a $125,000,000 revolving credit facility was provided, the
expiration date of which was February 9, 2000. On the same date, the Company
drew down approximately $73,191,000 of this facility. On September 25, 1996
as part of the agreement to sell a defined pool of the Company's accounts
receivable, an amendment was added to the Credit Agreement, whereby the
$125,000,000 revolving credit facility was reduced to $45,000,000, (as part
of the reduction in the credit facility, $2,856,766 of the financing costs
incurred in obtaining the original credit facility was amortized during
1996). The revolving credit facility bears interest at either (1) 100 basis
points per annum over the U.S. or certain other foreign currency Base Rates
or (2) 250 basis points per annum over the U.S. or certain other foreign
currency LIBOR rates. There were no amounts outstanding under this agreement
at December 31, 1996. For the year ended December 31, 1996 the weighted
average interest rate for such facility was 8.39% and commitment fees are
0.5% per annum. Under the Credit Agreement the Company can issue up to
$15,000,000 in letters of credit. At December 31, 1996, outstanding letters
of credit amounted to approximately $3,400,000 for purchase commitments
issued to foreign suppliers.
Effective February 9, 1996, Muehlstein and certain of its subsidiaries
entered into a loan agreement with Finova Capital Corporation ("Loan
Agreement"), which was guaranteed by the Company. Pursuant to this Loan
Agreement total proceeds of $8,000,000 from two term loans, Note A and Note
B, both maturing March 1, 2000, were received. The principal amounts of the
two terms loans are $2,560,000 (Note A) and $5,440,000 (Note B),
respectively. These notes bear interest at a fixed annual rate of 8.20% (Note
A) and 9.70% (Note B).
The fees associated with establishing the aforementioned Credit and Loan
Agreements, amounting to approximately $4,463,697, were capitalized and, with
the exception of the fees expensed as part of the reduction in the credit
facility, will be amortized over the life of the borrowings.
The indebtedness under the Credit and Loan Agreements is secured by liens on
substantially all the assets of Muehlstein and certain of its subsidiaries.
The Credit and Loan Agreements contain various covenants which include, among
other things: (a) the maintenance of certain financial ratios and compliance
with certain financial tests and limitations; (b) limitations on investments
and capital expenditures; and (c) limitations on leases and the sale of
assets.
Effective August 23, 1996, Pegasus Polymers International Inc., entered into
a revolving credit facility (see Note 3). Such facility expires February 9,
2000 and bears interest at a rate of LIBOR plus 40 basis points. For the year
ended December 31, 1996, the weighted average interest rate for such facility
was 6.84%. At December 31, 1996, the outstanding balance of Pegasus'
revolving credit facility was $14,115,000.
F-13
<PAGE>
MUEHLSTEIN HOLDING CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
7. DEBT (CONTINUED)
Long-term debt consisted of the following:
DECEMBER
31, 1996
(IN THOUSANDS)
--------------
Notes payable................................... 7,224
Revolving credit agreements (see Note 3)........ 14,115
-------
21,339
Less: current portion........................... 1,122
-------
$20,217
-------
-------
The aggregate maturities of debt at December 31, 1996 are as follows:
(IN THOUSANDS)
---------------
1997............................................ $ 1,122
1998............................................ 1,229
1999............................................ 1,348
2000............................................ 17,640
-------
$21,339
-------
-------
Interest payments totaled $3,975,372 in 1996.
8. COMMON STOCK
On November 22, 1995, the Company filed a Registration Statement
("Offering"), which became effective on January 23, 1996, pursuant to which
it offered shares of its common stock to certain persons who were employees
of Muehlstein, Mobil, or their respective subsidiaries who would become
employees of the Company or its subsidiaries following the Acquisition, to a
pension plan in which such persons were or would become participants and to
such other parties that the Company, in its discretion, determined. The
Company received total proceeds of $19,152,130 on February 9, 1996 based upon
the sale of 1,915,213 shares of its Common Stock ("Common Stock"), par value
$.01 per share at $10.00 per share. The proceeds of this Offering, net of
offering expenses of approximately $806,000 (of which $417,000 were paid
prior to the closing) were utilized to pay a portion of the purchase price of
the Acquisition. The Company received additional proceeds of $844,700 upon
the sale of 84,470 additional shares of its common stock through December 31,
1996.
F-14
<PAGE>
MUEHLSTEIN HOLDING CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
8. COMMON STOCK (CONTINUED)
The Common Stock is held by certain of the Company's employees, the Company's
Employee Share Ownership Plan (see Note 12) and Citicorp North America, Inc.
("Citicorp"). Shareholders, excluding Citicorp, have a right to put these
shares to the Company, following termination of their employment, subject to
the limitations imposed under the terms of the Credit, Loan, and preferred
stock agreements. Such provisions exist to create a market for the employees'
shares. Citicorp has the right to put their shares to the Company at any time
after the earliest to occur of: (a) three years after the Acquisition closing
date or (b) certain mergers, consolidations, sale of assets or change of
control with respect to the Company or its material subsidiaries. Except for
certain matters connected with its shares, the shares held by Citicorp will
be nonvoting shares. The redemption price for any shares will be equal to the
most recent appraised fair market value of the common stock. If a put is
exercised, the Company will have the option to pay for the repurchased shares
either in cash or pursuant to a promissory note. Under the terms of the
Credit, Loan, and preferred stock agreements, and given management's view of
its current employee base, significant activity under the put provisions is
not anticipated presently. However, in accordance with the requirements for
accounting for common stock with a put provision, the Common Stock has been
classified between liabilities and preferred stock.
9. PREFERRED STOCK
Pursuant to the Stock Purchase Agreement, Mobil purchased from the Company,
on February 9, 1996, 1,000,000 shares of Series "A" Preferred Stock, $.01 par
value per share, at a purchase price of $10.00 per share. The Series "A"
Preferred Stock pays an annual dividend of $1.20 per share (equal to 12
percent per annum of the stated value of $10.00 per share). Except for
certain matters connected with the Series "A" Preferred Stock and other
matters required by applicable law, holders of such shares will have no
voting rights. Series "A" Preferred Stock will have no preemptive rights and
may be redeemed, in whole or in part, at the option of the Company, at any
time. If the Company redeems the Series "A" Preferred Stock, the redemption
price for the shares will equal the stated value per share ($10.00) plus all
accrued and unpaid dividends. In the event of any voluntary or involuntary
dissolution, liquidation or winding up of the Company, the holders of Series
"A" Preferred Stock will have preferential rights, superior to other
shareholders, to distributions out of the assets of the Company.
On January 29, 1997, the Company redeemed 500,000 shares of the Series "A"
Preferred Stock for $5,000,000.
F-15
<PAGE>
MUEHLSTEIN HOLDING CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
10. PARENT COMPANY INVESTMENT
A summary of changes in parent company investment, including unrealized
foreign currency translation gains, is as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
--------------
<S> <C>
Balance as of January 1, 1994 (including cumulative foreign currency
translation gain of $930)................................................... $ 87,300
Net income.................................................................... 6,248
Net change in cumulative foreign currency translation adjustments............. (729)
Net change in parent company advances......................................... 25,366
--------------
Balance as of December 31, 1994 (including cumulative foreign currency
translation gain of $201)................................................... 118,185
Net income.................................................................... 13,560
Net change in cumulative foreign currency translation adjustments............. 127
Net change in parent company advances......................................... (23,233)
--------------
Balance as of December 31, 1995 (including cumulative foreign currency
translation gain of $328)................................................... $ (108,639)
--------------
--------------
</TABLE>
11. LEASES
The Company is the lessee of vehicles, office equipment and office space
under non-cancelable operating leases. The future minimum lease payments
applicable to the operating leases were as follows:
DECEMBER 31, 1996
(IN THOUSANDS)
-----------------
1997.................................. $2,320
1998.................................. 2,037
1999.................................. 694
2000.................................. 201
2001 and beyond....................... 268
------
Total minimum lease payments.......... $5,520
------
------
Rent expense amounted to approximately $2,585,402, $2,932,000 and $2,917,721
in 1996, 1995 and 1994, respectively.
F-16
<PAGE>
MUEHLSTEIN HOLDING CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
12. DEFINED BENEFIT PLANS
The Company has two defined benefit pension plans for its domestic employees,
which provide retirement benefits to all employees and supplemental benefits
in excess of statutory limitations to certain management employees of the
Company (the supplemental plan). The plans provide for pension benefits based
on a career average formula. The Company's funding policy is to make
quarterly contributions to the employee retirement plan, which, on an annual
basis, equal an amount between the minimum required and maximum deductible
contributions allowed by applicable income tax regulations. Such
contributions are determined actuarially based on compensation paid to
eligible employees during the preceding calendar year. The supplemental plan
is unfunded. The benefits for this Plan are based on years of service and
compensation (including compensation not permitted to be taken into account
under the aforementioned defined benefit pension plan). The Company also has
defined benefit pension plans in Belgium, Canada and Germany.
The following table sets forth the funded status of the plans as of December 31:
<TABLE>
<CAPTION>
SUCCESSOR PREDECESSOR SUCCESSOR PREDECESSOR
---------------------------- ------------------------
PLANS FOR WHICH PLANS FOR WHICH
ASSETS EXCEED ACCUMULATED
ACCUMULATED BENEFITS EXCEED
BENEFITS ASSETS
---------------------------- ------------------------
1996 1995 1996 1995
--------------- ----------- ----------- -----------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C>
Actuarial present value of:
Vested benefit obligation.................................. $ (5,569) $ (6,502) $ (3,926) $ (4,396)
Non-vested benefit obligation.............................. (309) (243) (13) (173)
--------------- ----------- ----------- -----------
Accumulated benefit obligation............................. (5,878) (6,745) (3,939) (4,569)
--------------- ----------- ----------- -----------
Projected benefit obligation............................... (6,752) (7,432) (4,409) (4,867)
Plan assets at fair value, principally mutual funds........ 7,873 7,426 270 526
--------------- ----------- ----------- -----------
Plan assets in excess of (or less) than projected benefit
obligation............................................... 1,121 6 (4,139) (4,341)
Unrecognized transition (asset) obligation................. (257) (171) -- --
Unrecognized prior service cost............................ 225 167 48 122
Unrecognized net losses (gains)............................ 135 1,058 99 233
Adjustment to recognize minimum liability.................. -- -- -- (208)
--------------- ----------- ----------- -----------
Net prepaid (accrued) pension cost......................... $ 1,224 $ 1,048 $ (3,992) $ (4,194)
--------------- ----------- ----------- -----------
--------------- ----------- ----------- -----------
</TABLE>
As required, the Company recorded a minimum pension liability of $208,000 at
December 31, 1995 for the excess of the accumulated benefit obligations over
the fair value of plan assets. The liability was offset by intangible assets
(unrecognized prior service cost and unrecognized transition obligation).
During 1996, the Company terminated its defined benefit pension plan in the
United Kingdom and replaced it with a defined contribution pension plan. The
gain recorded on this termination was not significant.
F-17
<PAGE>
MUEHLSTEIN HOLDING CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
12. DEFINED BENEFIT PLANS (CONTINUED)
During 1996, a pension obligation related to a Belgium defined benefit
pension plan was transferred from Mobil to the Company. Such obligation was
not significant and was accounted for as an adjustment to the purchase price
under the Acquisition.
International plan assets at market value, included in the above table, were
approximately $919,000 and $1,073,000 in 1996 and 1995, respectively. The
accumulated benefit obligation of international plans, included in this table
were approximately $3,295,000 and $3,230,000 in 1996 and 1995, respectively.
The projected benefit obligation of international plans, included in this
table were approximately $3,630,000 and $3,533,000 in 1996 and 1995,
respectively.
Net pension cost included the following components for the plans:
SUCCESSOR PREDECESSOR
--------------------------------
YEAR ENDED DECEMBER 31
1996 1995 1994
---------- --------- ---------
(IN THOUSANDS)
Service cost -- benefit earned
during the period....................... $ 381 $ 433 $ 507
Interest cost on projected benefit
obligation.............................. 741 808 764
Actual return on plan assets............... (626) (572) (698)
Net amortization and deferral.............. 54 55 77
------ ------ ------
Net periodic pension cost.................. $ 550 $ 724 $ 650
------ ------ ------
------ ------ ------
The net pension cost attributable to international plans and included above
was $239,000, $328,000 and $242,000 in 1996, 1995 and 1994, respectively.
AS OF DECEMBER 31
-----------------------
1996 1995 1994
----- ----- -----
Assumptions used in the accounting were:
Discount rates................................. 7.5% 7.0% 8.5%
Rates of increase in compensation levels....... 4.0% 4.0% 4.0%
Expected long-term rate of return on assets.... 8.5% 8.0% 8.5%
The aggregate effect of the above assumption changes was not significant to
the net pension cost. In the aggregate, average international plan
assumptions do not vary significantly from U.S. rates.
F-18
<PAGE>
MUEHLSTEIN HOLDING CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
12. DEFINED BENEFIT PLANS (CONTINUED)
RETENTION ACCRUAL
During the period from 1994 through the effective date of the Acquisition,
the Predecessor Company maintained a "Retention Compensation Plan"
("Retention Plan") for certain key employees. The intent of the deferred
compensation plan was to retain key employees by supplementing their current
compensation with additional incentive awards. Employees were granted awards
each year, subject to certain plan restrictions, but were not entitled to
receive pay-outs until they had satisfied a specified vesting term, ranging
from four to six years. According to the agreement, awards could not exceed
13.5% of the Company's income from operations less other annual bonus awards
that were independent of the plan. In conjunction with the Acquisition
participants became fully vested in their Retention Plan benefits, were
entitled to an immediate lump sum payment and the Retention Plan was
discontinued. The total expense under this plan amounted to $3,280,000 and
$1,454,000 in 1995 and 1994, respectively. There was no expense under the
Retention Plan in 1996.
PROFIT SHARING PLAN
The H. Muehlstein & Co. Deferred Profit Sharing Plan ("Profit Sharing Plan")
was established in order to provide benefits to eligible employees. The plan
was a defined contribution plan that covers substantially all U.S. salaried
employees and which provided for benefits upon retirement, death, or
termination of employment. Contributions to the Profit Sharing Plan were made
by the Predecessor Company based on participants' salaries (14% of total
compensation including bonuses) and approved by the Board of Directors.
Eligible employees became 100% vested after five years of service. The total
expense amounted to approximately $328,000, $1,519,000 and $1,310,000 in 1996
(through date of the Acquisition), 1995 and 1994, respectively.
Effective December 1, 1995, sponsorship of the Plan was assumed by Muehlstein
from Mobil, at which time, the Plan changed its name to "H. Muehlstein & Co.,
Inc. Deferred Profit Sharing and Employee Stock Ownership Plan" ("Plan"). The
Plan is a tax-qualified profit sharing plan that contains an employee stock
ownership ("ESOP") feature. Eligible participants share in employee
discretionary profit sharing contributions, which may be made in the form of
cash or Common Stock, as determined at the discretion of the Company's Board
of Directors. As of the date of the Acquisition, Plan participants were given
the option of converting their account balances into the Company's Common
Stock. As a result, approximately $12 million of Plan assets were converted
into approximately 1.2 million shares of Common Stock. The total expense
recognized for the Plan, subsequent to the date of Acquisition, was $865,000
in 1996.
Although the Company has not expressed any intent to discontinue its
contributions, it may do so at any time and terminate the Plan. Upon
termination, the net assets of the Plan will be distributed among the
participants according to the total amount in their account.
POSTRETIREMENT BENEFIT PLANS
The Company provides medical and dental insurance benefits to its U.S.
retired employees who meet certain eligibility requirements. The Company's
policy is to fund the cost of postretirement benefits as incurred.
F-19
<PAGE>
MUEHLSTEIN HOLDING CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
12. DEFINED BENEFIT PLANS (CONTINUED)
POSTRETIREMENT BENEFIT PLANS (CONTINUED)
The status of the Company's postretirement plan reconciled with amounts
recognized in the Company's balance sheet at December 31 was as follows:
<TABLE>
<CAPTION>
SUCCESSOR PREDECESSOR
1996 1995
----------- -------------
<S> <C> <C>
(IN THOUSANDS)
Accumulated postretirement benefit obligation (APBO):
Retirees.............................................................. $ 635 $ 653
Fully eligible active plan participants............................... 17 16
Other active plan participants........................................ 185 159
----- -----
837 828
Unrecognized net actuarial loss....................................... (7) (11)
Unrecognized prior service cost....................................... 22 24
----- -----
Accrued postretirement benefit cost................................... $ 852 $ 841
----- -----
----- -----
</TABLE>
The components of the net periodic postretirement benefit cost for the year
ended December 31 are as follows:
<TABLE>
<CAPTION>
SUCCESSOR PREDECESSOR
1996 1995 1994
--------- ------ -----
<S> <C> <C> <C>
(IN THOUSANDS)
Service cost attributable to employee service during the year....... $ 15 $ 17 $ 22
Interest cost on APBO............................................... 56 67 59
Net amortization.................................................... (2) -- --
------ ------ ------
Net periodic postretirement benefit cost............................ $ 69 $ 84 $ 81
------ ------ ------
------ ------ ------
</TABLE>
For measurement purposes, a 10.2% annual rate increase in the per capita cost
of covered health care benefits was assumed for 1996; the rate was assumed to
decrease gradually to 5.5% by 2011 and remain at that level thereafter. A 1%
increase in the health care cost trend rate has an immaterial impact on the
APBO and the aggregate service and interest cost components of net periodic
postretirement benefit cost.
The weighted average discount rate used in determining the APBO was 7.5%, 7%
and 8.5% in 1996, 1995 and 1994, respectively.
Effective January 1, 1996, the Company amended its medical plan to a managed
care/point-of-service arrangement. This amendment did not have a significant
effect on the APBO and has been incorporated in the results disclosed above.
F-20
<PAGE>
MUEHLSTEIN HOLDING CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
13. RELATED PARTY TRANSACTIONS
Through the date of the Acquisition, the Predecessor Company had various
business arrangements with Mobil and its affiliates. Such arrangements
contained terms and conditions generally comparable to arms-length terms and
conditions and include the following specific transactions:
PRODUCT PURCHASES FROM AFFILIATES
The Predecessor Company purchased plastic resins from Mobil amounting to
approximately $10,213,293, $150,453,000 and $173,531,000 in 1996 (through
date of the Acquisition), 1995 and 1994, respectively. Purchases were made at
market prices. The Predecessor Company's intercompany trade payable to Mobil
reflected sixty day terms. Mobil extended similar terms after the Acquisition.
PRODUCT SALES TO AFFILIATES
The Predecessor Company sold plastic resins to affiliates of Mobil amounting
to approximately $412,000, $12,502,000 and $8,553,000 in 1996 (through date
of the Acquisition), 1995 and 1994, respectively.
ADMINISTRATIVE AND MANAGEMENT SERVICES
Through the date of the Acquisition, Mobil controlled the Predecessor
Company's cash whereby excess cash was swept from the Predecessor Company's
accounts and cash was provided as needed. Amounts funded which were not
repaid on a current basis were classified as a component of parent company
investment.
Mobil also provided a minimal amount of administrative and management
services to the Predecessor Company, primarily consisting of legal, safety
and employee relations services. The Predecessor Company reimbursed Mobil for
such costs on a monthly basis. Such reimbursements amounted to approximately
$218,000 and $341,000 in 1995 and 1994, respectively. No reimbursements
occurred in 1996.
The Predecessor Company had also provided administrative services, primarily
consisting of accounting and employee relations services, to Mobil in the
United States and Europe. Based upon estimated amounts of actual costs and
time spent on Mobil matters by Predecessor Company employees. Mobil had
reimbursed the Predecessor Company for such costs on a monthly basis. Such
reimbursements amounted to approximately $6,000, $1,574,000 and $958,000 in
1996 (through date of Acquisition), 1995 and 1994, respectively. The Company
has provided or obtained all administrative and management services for its
own account following the Acquisition.
AGENCY FOR MOBIL
Through the date of the Acquisition, the Predecessor Company had acted as an
agent for Mobil and had been paid commissions by Mobil. Such commissions
amounted to approximately $421,000, $3,515,000 and $3,693,000 in 1996
(through date of Acquisition), 1995 and 1994, respectively.
DIVIDENDS
On February 9, 1996, Muehlstein declared a dividend of $81,173,000 payable to
the Company.
F-21
<PAGE>
MUEHLSTEIN HOLDING CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
14. RESTRUCTURING
During 1995, thirty-one employees elected to receive an enhanced separation
package the Predecessor Company offered as part of a restructuring and
strategic redesign program. Additionally, during the period 1994 through
1995, the Predecessor Company implemented certain business strategies
designed to improve operating efficiency. Costs associated with these
restructuring programs included consulting costs and severance costs
associated with terminated employees. These costs were $3,044,000 and
$1,916,000 in 1995 and 1994, respectively.
15. BUSINESS SEGMENT INFORMATION
The Company operates in two principal industry segments: the marketing and
sale of plastic resins and rubber products. Intrasegment transfers of
products are not significant. Operating income consists of total revenues
less operating expenses, and does not include either other income, net, or
income taxes. Identifiable assets are those assets used in the Company's
operations in each segment. Corporate assets include cash, deferred income
taxes, deferred financing costs, goodwill and certain other current assets.
Industry segment financial information is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
SUCCESSOR PREDECESSOR
------------------------------------------
1996 1995 1994
------------------ ---------- ----------
<S> <C> <C> <C>
(IN THOUSANDS)
Revenues:
Plastic resins............................ $ 631,451 $ 681,783 $ 546,730
Rubber.................................... 75,567 129,188 83,399
--------------- ---------- ----------
$ 707,018 $ 810,971 $ 630,129
--------------- ---------- ----------
--------------- ---------- ----------
Operating income/(loss):
Plastic resins............................ $ 16,970 $ 19,100 $ 15,623
Rubber.................................... 1,318 1,873 (954)
--------------- ---------- ----------
$ 18,288 $ 20,973 $ 14,669
--------------- ---------- ----------
--------------- ---------- ----------
Identifiable assets at December 31:
Plastic resins............................ $ 134,030 $ 156,950 $ 181,823
Rubber.................................... 12,809 34,453 24,176
Corporate assets.......................... 20,307 14,178 10,642
--------------- ---------- ----------
$ 167,146 $ 205,581 $ 216,641
--------------- ---------- ----------
--------------- ---------- ----------
Capital expenditures:
Plastic resins............................ $ 663 $ 620 $ 2,170
Rubber.................................... 112 73 10
--------------- ---------- ----------
$ 775 $ 693 $ 2,180
--------------- ---------- ----------
--------------- ---------- ----------
Depreciation and amortization:
Plastic resins............................ $ 1,044 $ 817 $ 755
Rubber.................................... 86 90 82
Corporate................................. 360 -- --
--------------- ---------- ----------
$ 1,490 $ 907 $ 837
--------------- ---------- ----------
--------------- ---------- ----------
</TABLE>
The above Successor Company segmented information reflects Predecessor
Company revenues, for the period from January 1, 1996 through February 8,
1996, of $44,358,000 and $9,664,000 for plastic resins and rubber,
respectively.
F-22
<PAGE>
MUEHLSTEIN HOLDING CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
15. BUSINESS SEGMENT INFORMATION (CONTINUED)
Intra-area transfers of products are at prices in excess of cost, based upon
an arms-length transfer pricing strategy. The resultant income is assigned to
the area where the transaction originated.
Geographic financial information is as follows:
<TABLE>
<CAPTION>
SUCCESSOR PREDECESSOR
--------------------------------------
YEAR ENDED DECEMBER 31
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
(IN THOUSANDS)
Net revenues from unaffiliated customers:
United States.............................. $ 576,194 $ 600,641 $ 461,074
Europe..................................... 123,393 185,513 145,579
Other...................................... 92,955 109,696 69,515
Eliminations............................... (85,524) (84,879) (46,039)
---------- ---------- ----------
$ 707,018 $ 810,971 $ 630,129
---------- ---------- ----------
---------- ---------- ----------
Transfers between geographic area
(eliminated in consolidation):
United States.............................. $ 51,529 $ 32,347 $ 16,207
Europe..................................... 24,579 43,421 24,468
Other...................................... 9,416 9,111 5,364
---------- ---------- ----------
$ 85,524 $ 84,879 $ 46,039
---------- ---------- ----------
---------- ---------- ----------
Operating income/(loss):
United States.............................. $ 14,107 $ 19,748 $ 16,814
Europe..................................... 866 (1,239) (3,265)
Other...................................... 3,315 2,464 1,120
---------- ---------- ----------
$ 18,288 $ 20,973 $ 14,669
---------- ---------- ----------
---------- ---------- ----------
Identifiable Assets at December 31:
United States.............................. $ 120,082 $ 121,483 $ 121,933
Europe..................................... 14,832 55,535 65,836
Other...................................... 11,925 14,385 18,230
Corporate assets........................... 20,307 14,178 10,642
---------- ---------- ----------
$ 167,146 $ 205,581 $ 216,641
---------- ---------- ----------
---------- ---------- ----------
Capital expenditures:
United States.............................. $ 130 $ 514 $ 2,096
Europe..................................... 430 91 65
Other...................................... 215 88 19
---------- ---------- ----------
$ 775 $ 693 $ 2,180
---------- ---------- ----------
---------- ---------- ----------
Depreciation and amortization:
United States.............................. $ 888 $ 722 $ 627
Europe..................................... 160 127 189
Other...................................... 82 58 21
Corporate.................................. 360 -- --
---------- ---------- ----------
$ 1,490 $ 907 $ 837
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
F-23
<PAGE>
MUEHLSTEIN HOLDING CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
15. BUSINESS SEGMENT INFORMATION (CONTINUED)
The above Successor Company segmented information reflects Predecessor
Company revenues, for the period from January 1, 1996 through February 8,
1996, of $40,176,000, $12,176,000, $7,137,000 and $(5,467,000) for the United
States, Europe, Other and Eliminations, respectively.
As discussed in Note 13, net revenues from unaffiliated customers through the
date of the Acquisition included transactions with Mobil for the sale of
plastic resins.
The Company also had foreign export sales amounting to approximately
$138,888,000, $151,197,000 and $114,353,000 in 1996, 1995 and 1994,
respectively.
F-24
<PAGE>
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES
None.
-22-
<PAGE>
PART III
ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Executive Officers
The following table sets forth the names, ages and positions of the
directors and executive officers of MHC and Muehlstein. MHC's three executive
officers were appointed at the time of incorporation (i.e., on September 21,
1995). Each of MHC's executive officers, as well as each of the other persons
identified below, currently serves in a policy-making role with Muehlstein.
Name Age Position
J. Kevin Donohue 55 Director, Chairman of the Board, Chief Executive
Officer and President of MHC; President of
Muehlstein
Ronald J. Restivo 52 Director, Chief Financial Officer, Treasurer and
Secretary of MHC, Chief Financial Officer of
Muehlstein
Jerrold J. Johnston 49 Director, Vice President of MHC; General
Manager, Latin America, of Muehlstein
Paul J. Beaudry 58 General Manager, Channel Polymers
Thomas E. Falcone 51 General Manager, Operations, of Muehlstein
John D. Lavery 44 Business Manager, Prime Resins, of Muehlstein
Mark D. Lux 41 Director of MHC; General Manager, Commercial
Director, North America and Asia Plastics, of
Muehlstein
Peter G. Glennon 45 General Manager, Rubber & Prime Polyethelyene,
of Muehlstein
Robert C. Reger 62 General Manager, Compounding, of Muehlstein
-23-
<PAGE>
The members of the MHC Board of Directors have staggered terms. Messrs.
Restivo, Johnston and Lux will serve as directors until the annual shareholders'
meeting in 1997; Mr. Donohue, until the annual shareholders' meeting in 1998.
The executive officers serve in their respective capacities at the discretion of
the Board and until their successors are duly elected and qualified.
Biographies
J. Kevin Donohue became President of Muehlstein in October 1993. From 1990
to 1993, Mr. Donohue was President of Mobil Petrochemicals International, Ltd.,
in Brussels, Belgium. Prior to that he served as President of Muehlstein-U.S.
from 1986 to 1990. Mr. Donohue has been an employee of Muehlstein or other Mobil
affiliates since 1961.
Ronald J. Restivo became Chief Financial Officer of Muehlstein in July
1993. From 1989 to June 1993, Mr. Restivo acted as Muehlstein's controller while
serving as a Mobil employee. Previously, Mr. Restivo was employed for 19 years
by other Mobil subsidiaries. Prior to joining Mobil, Mr. Restivo was employed by
Bell & Howell Co. and Wyeth Laboratories.
Jerrold J. Johnston became General Manager of Latin America of Muehlstein
in February 1990. From 1982 to 1990, Mr. Johnston was Sales Manager, Polystyrene
in Greenwich and Norwalk, Connecticut. Mr. Johnston has been an employee of
Muehlstein since 1970.
Paul J. Beaudry joined Muehlstein in February 1966 and has been General
Manager, Channel Polymers, since January 1996. Previous positions with
Muehlstein have included Sales Manager, Export Manager and General Manager,
Distribution and Agency. Prior to joining Muehlstein, Mr. Beaudry held sales
positions with Dow Chemical Canada, Plastic Packaging Products and Avison
Corporation.
Thomas E. Falcone joined Mobil in March 1973 and has been Muehlstein's
General Manager, Operations, since August 1992. From September 1987 to July 1992
Mr. Falcone was Muehlstein's Administration Manager. Prior to that he held
administrative positions at Mobil Chemical, including Employee Relations
Manager, Manager of Compensation & Benefits, Labor Relations Manager, Programs &
Relations Manager, Human Resources Manager and Administration Manager.
John D. Lavery joined Muehlstein in June 1975 and has been the Business
Manager, Prime Resins, since January 1997. Previous positions with Muehlstein
include Sales Trainee, Sales Representative, Product Manager, District Sales
Manager, Sales Manager and General Sales Manager of North America.
Mark D. Lux became General Manager, Commercial Director, North America and
Asia Plastics, in July 1996. Previously he served as General Manager of Plastics
Europe, Middle East-
-24-
<PAGE>
Africa (MEAF) and Asia from April 1993 to June 1996. He served for nine years as
Muehlstein's Product Manager for low density polyethylene. Mr. Lux has been
employed by Muehlstein since 1977.
Peter G. Glennon joined Muehlstein in 1975. His previous positions with
Muehlstein include sales representative in Atlanta and Akron, District Sales
manager of Akron and Detroit, and General Sales Manager, Rubber Americas
Robert C. Reger became General Manager, Compounding, North America, in
June 1995. He previously served as Plant Manager, Houston Plant. Mr. Reger has
been employed by Muehlstein since August 1981.
-25-
<PAGE>
ITEM 11: EXECUTIVE COMPENSATION
Executive Compensation
<TABLE>
<CAPTION>
Annual Long-Term
Compensation Compensation
--------------------------------------------- -------------------------------
Name Other Retention All
and Annual Plan Other
Principal Position Year Salary ($) Bonus ($) Compensation($) Payouts($) Compensation($)(5)
------------------ ---- ---------- --------- --------------- ---------- ------------------
<S> <C> <C> <C> <C> <C> <C>
J. Kevin Donohue 1996 240,006 180,000 317,129 68,282
Chairman of the 1995 240,390 195,000 1,388,009(3) 198,224
Board and Chief 1994 230,022 160,000 21,320(1) 168,099 64,724
Executive Officer
Ronald J. Restivo 1996 186,264 26,000 75,559 32,874
Chief Financial 1995 186,264 36,000 90,926(3) 34,613
Officer 1994 179,946 10,000 30,194
Jerrold J. Johnston 1996 139,411 90,000 114,693(4) 34,994
Vice President 1995 131,326 120,000 499,220(3) 37,183
1994 120,980 47,000 48,359 25,830
Mark D. Lux 1996 119,262 60,000 74,927(2) 67,026(4) 266,139
General Manager 1995 119,262 82,000 172,227(2) 280,374 29,813
1994 108,827 42,000 153,680(2) 84,556 21,459
Tom E. Falcone 1996 165,958 28,000 51,591 29,905
General Manager 1995 165,958 38,000 254,224 30,922
1994 160,342 25,000 36,075 27,963
</TABLE>
(1) Reflects monies received pursuant to a cash election under the Profit
Sharing Plan.
(2) Represents cost of living related payments for foreign posting.
-26-
<PAGE>
(3) Includes payouts of benefits awarded in fiscal 1994 under the Muehlstein
Retention Plan which automatically became vested upon consummation of the
Acquisition, as follows: Mr. Donohue, $450,000; Mr. Restivo, $80,000; Mr.
Johnston, $110,000.
(4) Includes payouts of benefits awarded in fiscal 1995 under the Muehlstein
Retention Plan which automatically became vested upon consummation of the
Acquisition, as follows: Mr. Johnston, $90,000; Mr. Lux, $60,000.
(5) The amounts in this column consist of the following:
1996:
Mr. Donohue: $3,574 (imputed value for personal use of company car);
$2,304 (actuarially determined value of life insurance
premiums); $1,825 (tax preparation service); $1,778
(reimbursement of medical insurance premiums); $58,801
(Profit Sharing Plan awards)
Mr. Restivo: $1,297 (imputed value for personal use of company car);
$1,860 (actuarially determined value of life insurance
premiums); $29,717 (Profit Sharing Plan awards)
Mr. Johnston: $1,535 (imputed value for personal use of company car);
$811 (actuarially determined value of life insurance
premiums); $530 (tax preparation service); $32,118
(Profit Sharing Plan awards)
Mr. Lux: $162,896 (tax reimbursement); $77,760 (relocation); $386
(actuarially determined value of life insurance
premiums); $25,097 (Profit Sharing Plan awards)
Mr. Falcone: $1,127 (imputed value for personal use of company car);
$1,624 (actuarially determined value of life insurance
premiums); $27,154 (Profit Sharing Plan awards)
1995:
Mr. Donohue: $128,844 (tax reimbursement); $2,790 (imputed value for
personal use of company car); $2,304 (actuarially
determined value of life insurance premiums); $3,196
(tax preparation service); $135 (reimbursement of
medical insurance premiums); $60,955 (Profit Sharing
Plan awards)
Mr. Restivo: $1,636 (imputed value for personal use of company car);
$1,860 (actuarially determined value of life insurance
premiums); $31,117 (Profit Sharing Plan awards)
Mr. Johnston: $1,256 (imputed value for personal use of company car);
$741 (actuarially determined value of life insurance
premiums); $35,186 (Profit Sharing Plan awards)
-27-
<PAGE>
Mr. Lux: $386 (actuarially determined value of life insurance
premiums); $1,250 (tax preparation service); $28,177
(Profit Sharing Plan awards)
Mr. Falcone: $744 (imputed value for personal use of company car);
$1,624 (actuarially determined value of life insurance
premiums); $28,554 (Profit Sharing Plan awards)
1994:
Mr. Donohue: $2,151 (imputed value for personal use of company car);
$2,304 (actuarially determined value of life insurance
premiums); $2,890 (tax preparation service); $2,776
(reimbursement of medical insurance premiums); $54,603
(Profit Sharing Plan awards)
Mr. Restivo: $1,701 (imputed value for personal use of company car);
$1,901 (actuarially determined value of life insurance
premiums); $26,592 (Profit Sharing Plan awards)
Mr. Johnston: $1,286 (imputed value for personal use of company car);
$1,027 (actuarially determined value of life insurance
premiums); $23,517 (Profit Sharing Plan awards)
Mr. Lux: $343 (actuarially determined value of life insurance
premiums); $21,116 (Profit Sharing Plan awards)
Mr. Falcone: $898 (imputed value for personal use of company car);
$1,117 (actuarially determined value of life insurance
premiums); $25,948 (Profit Sharing Plan awards)
Retention Plan
Muehlstein established the Retention Plan in 1988. The intent of the
Retention Plan is to provide an incentive to certain key employees of Muehlstein
to continue as such by awarding them supplemental deferred compensation. The
incentive awards that are granted under the Retention Plan are subject to a four
to six-year vesting term. Participants are not entitled to pay-outs of their
incentive awards until they have satisfied the vesting requirements. The
Retention Plan is unfunded.
In accordance with the terms of the Retention Plan, the accrued benefits
thereunder automatically became fully vested upon the closing of the
Acquisition. As such, participants were entitled to an immediate lump sum
pay-out. Pursuant to the terms of the Stock Purchase Agreement, Mobil agreed to
make the lump sum payments of the fully vested benefits to each eligible
participant prior to the closing of the Acquisition. MHC intends to establish
and maintain a deferred compensation plan similar to the Retention Plan for key
management employees of Muehlstein. The replacement plan will most likely be in
the form of a "stock appreciation rights"
-28-
<PAGE>
plan, which will serve to motivate the management employees by providing an
incentive award that appreciates at the same rate as the value of MHC's common
stock.
Retirement Plan
Muehlstein maintains the Retirement Plan for the benefit of its eligible
employees. The Retirement Plan is a defined benefit pension plan qualified under
section 401(a) of the Internal Revenue Code, as amended. The following table
illustrates annual retirement benefits payable under the Retirement Plan (and
the SERP, described below) at the indicated compensation rate and credited
service levels, assuming retirement at age 62 in 1994.
Annual retirement benefits payable for continuous services of
Compensation 10 years 20 years 25 years 30 years 40 years
$100,000 $ 8,161 $ 16,961 $ 21,361 $ 25,261 $ 34,561
150,000 12,911 26,711 33,611 40,511 54,311
200,000 17,661 36,461 45,861 55,261 74,061
250,000 22,481 46,211 58,111 70,011 93,811
300,000 27,161 55,961 70,361 84,761 113,561
350,000 31,911 65,711 82,611 99,511 133,311
400,000 36,661 75,461 94,861 114,261 153,061
450,000 41,411 85,211 107,111 129,011 172,811
500,000 46,161 94,961 119,361 143,761 192,561
Benefits are paid to Retirement Plan participants based on their
rate of compensation (as limited according to federal tax laws), years of
credited service with Muehlstein, and the amount of covered compensation (as
determined by Social Security). Benefits under the Retirement Plan are not
subject to any deduction for Social Security or other offset amounts. Under
current federal tax law, in 1996 compensation in excess of $150,000 may not be
taken into account for purposes of accruing benefits under the Retirement Plan.
The compensation covered under the Retirement Plan for each Named Executive
Officer as of December 31, 1996, is as follows: J. Kevin Donohue, $420,006;
Ronald J. Restivo, $212,264; Jerrold J. Johnston, $229,411; Mark D. Lux,
$179,262; Thomas E. Falcone, $193,958. The number of credited years of service
for each Named Executive Officer as of December 31, 1996. is as follows: J.
Kevin Donohue, 35.667 years; Ronald J. Restivo, 27 years; Jerrold J. Johnston,
26.083 years; Mark D. Lux, 19.250 years; Thomas E. Falcone, 23.833 years.
-29-
<PAGE>
Profit Sharing Plan
Muehlstein maintained the H. Muehlstein & Co. Deferred Profit Sharing Plan
("Profit Sharing Plan") for the benefit of its eligible employees. The Profit
Sharing Plan was a defined contribution pension plan qualified under Section
401(a) of the Internal Revenue Code, as amended. Benefits were paid to Profit
Sharing Plan participants based on their allocated share of the annual
discretionary contribution made by Muehlstein. Effective December 31, 1995,
sponsorship of the Profit Sharing Plan was assumed by Muehlstein from Mobil, at
which time the Plan changed its name to " H. Muehlstein & Co., Inc. Deferred
Profit Sharing and Employee Stock Ownership Plan"("Plan"). The Plan is a
tax-qualified profit sharing plan that contains an employee stock ownership
("ESOP") feature.
SERP Plan
Muehlstein maintains the H. Muehlstein & Co., Inc. Supplemental Executive
Retirement and Profit Sharing Plan (the "SERP"), which provides for supplemental
retirement and profit sharing benefits to a select group of management
employees. The SERP provides certain management employees with supplemental
retirement and supplemental profit sharing benefits, which are generally equal
to the difference between the benefits the participants actually receive under
the Retirement Plan and Profit Sharing Plan and the benefits the participants
would have received if they were not capped by statutory limitations. The SERP
benefits are unfunded. The estimated annual retirement benefit under the SERP
for each Named Executive Officer as of December 31, 1996, is as follows: J.
Kevin Donohue $76,823; Ronald J. Restivo $1,630; Jerrold J. Johnston $1,706;
Mark D. Lux $747; Thomas E. Falcone $1,822. The SERP profit sharing balances for
each Named Executive Officer as of December 31, 1995, were as follows: J. Kevin
Donohue, $79,376; Ronald J. Restivo, $16,677; Jerrold J. Johnston, $17,139; Mark
D. Lux, $7,313; Thomas E. Falcone, $13,358.
Directors' and Officers' Liability Insurance
MHC has purchased and paid the premium for insurance with respect to
claims against its directors and officers in respect of losses for which MHC may
be required or permitted by law to indemnify such directors and officers. The
directors insured are the directors named herein and all directors of MHC's
subsidiaries. The officers insured are all officers and assistant officers of
MHC and its subsidiaries. There is no allocation or segregation of the premium
as regards specific subsidiaries or individual directors and officers.
Employment Contracts
-30-
<PAGE>
MHC has not entered into, nor does it intend to enter into, employment
contracts with any of its executive officers.
Compensation Committee Interlocks and Insider Participation
The MHC Board of Directors did not have a compensation committee at any
time during the 1996 fiscal year. During such fiscal year, the following
executive officers of MHC and/or Muehlstein participated in deliberations of the
MHC Board concerning executive officer compensation: J. Kevin Donohue and Tom E.
Falcone.
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of MHC's common stock as of December 31, 1996, by holders having
beneficial ownership of more than five percent of such stock and by all MHC
directors and executive officers.
Name of Beneficial Owner Number of Shares Percent of Class
H. Muehlstein & Co., Inc. Deferred Profit
Sharing and Employee's Stock Ownership Plan 1,204,297 60.3%
J. Kevin Donohue 143,677 7.2%
Ronald J. Restivo 10,999 0.6%
Jerrold J. Johnston 65,897 3.3%
Mark D. Lux 38,568 1.9%
Tom E. Falcone 16,052 0.8%
All Officers and Directors as a group 400,094 20.0%
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Set forth below is a summary of certain agreements and arrangements entered into
by MHC and related parties in connection with the Offering and the Acquisition,
as well as other transactions between MHC and related parties which have taken
place since MHC's formation.
-31-
<PAGE>
Transactions with MHC's Executive Officers and Directors
Certain persons who were Muehlstein employees prior to the Acquisition are
now executive officers and directors of MHC. If such persons remain employees of
Muehlstein and/or its subsidiaries, they will receive compensation, bonuses and
other benefits under the various employee benefit plan arrangements maintained
by Muehlstein and/or such subsidiaries. These directors and executive officers
participate in such benefit plans under the same terms generally made available
to other similarly situated employees of Muehlstein and its subsidiaries.
Muehlstein and the subsidiary employers do not charge MHC for the time such
persons spend on the activities of Muehlstein.
Transactions with Mobil and Its Affiliates
Income Taxes
Prior to the Acquisition, Muehlstein's operations were reflected in the
consolidated federal income tax returns filed by Mobil. In addition,
Muehlstein's operations were included in combined state tax filings with other
Mobil affiliates. Pursuant to the terms of the Stock Purchase Agreement, upon
the closing of the Acquisition any tax sharing or similar arrangements involving
Muehlstein terminated. Mobil is generally responsible for payment of, and is
obligated to indemnify MHC against, all federal, state, local and foreign taxes
payable by Muehlstein and its subsidiaries prior to the closing date of the
Acquisition. MHC is responsible for payment of, and is obligated to indemnify
Mobil for, all federal, state, local and foreign taxes payable by the Muehlstein
and its subsidiaries thereafter.
Product Purchases and Sales
Following the Acquisition, Mobil Chemical became contractually obligated
to supply certain plastic resins to Muehlstein, and to utilize Muehlstein as its
agent with respect to certain other plastic resins.
PART IV
ITEM 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this Report:
1. Financial Statements
-32-
<PAGE>
The following Successor Company consolidated financial statements of MHC
are included in Item 8:
Balance Sheet at December 31, 1996
Statement of Operations for the year ended December 31, 1996
Statement of Cash Flows for the period from February 9, 1996 through
December 31, 1996
Notes to Financial Statements
The following Predecessor Company combined financial statements of H.
Muehlstein & Co., Inc. are included in Item 8:
Balance sheet at December 31, 1995
Statements of Operations for the years ended December 31, 1995 and
1994
Statements of Cash Flows for the years ended December 31, 1995 and
1994
Notes to Financial Statements
2. Financial Statement Schedule:
Schedule II - Valuation and Qualifying Accounts
3. Exhibits:
The following exhibits are filed as part of this Report. Parenthetical
references indicate incorporation by reference to documents previously
filed by MHC with the Securities and Exchange Commission (Commission File
No. 33-99754).
Exhibit
Number Description
------ -----------
3.1 Amended and Restated Certificate of Incorporation of the
Registrant (Exhibit 3.1 to MHC's Registration Statement on
Form S-1, No. 33- 99754)
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<PAGE>
3.2 Form of Certificate of Designations of the Series A
Preferred Stock of the Registrant (Exhibit 3.2 to MHC's
Registration Statement on Form S-1, No. 33-99754)
3.3 Bylaws of the Registrant (Exhibit 3.3 to MHC's Registration
Statement on Form S-1, No. 33-99754)
3.4 Form of Second Amended and Restated Certificate of
Incorporation of the Registrant (Exhibit 3.4 to MHC's
Registration Statement on Form S-1, No. 33-99754)
4.1 Form of specimen certificate for the Common Stock of the
Registrant (Exhibit 4.1 to MHC's Registration Statement on
Form S-1, No. 33-99754)
4.2 Form of Subscription Card (Exhibit 4.2 to MHC's Registration
Statement on Form S-1, No. 33-99754)
4.3 Form of Special Election Card (Exhibit 4.3 to MHC's
Registration Statement on Form S-1, No. 33-99754)
4.4 Form of Shareholders' Agreement (Exhibit 4.4 to MHC's
Registration Statement on Form S-1, No. 33-99754)
4.5 Escrow Agreement between the Registrant and Core States Bank
N.A., dated as of January 4, 1996 (Exhibit 4.5 to MHC's
Registration Statement on Form S-1, No. 33-99754)
4.6 Amendment No. 1 to Amended and Restated Escrow Agreement
between the Registrant and Core States N.A., dated as of
January 18, 1995 (Exhibit 4.6 to MHC's Registration
Statement on Form S- 1, No. 33-99754)
4.7 Summary Description of Shareholders' Agreement (Exhibit 4.7
to MHC's Registration Statement on Form S-1, No. 33-99754)
4.8 Form of Amended and Restated Bylaws (Exhibit 4.8 to MHC's
Registration Statement on Form S-1, No. 33-99754)
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<PAGE>
10.1 Form of H. Muehlstein & Co., Inc. Deferred Profit Sharing
and Stock Ownership Plan (Exhibit 10.1 to MHC's Registration
Statement on Form S-1, No. 33-99754)
10.2 Form of H. Muehlstein & Co., Inc. Profit Sharing and Stock
Ownership Trust (Exhibit 10.2 to MHC's Registration
Statement on Form S-1, No. 33-99754)
10.3 Citicorp Proposal Letter, dated September 28, 1995, as
amended (Exhibit 10.3 to MHC's Registration Statement on
Form S-1, No. 33-99754)
10.4 Finova Proposal Letter, dated October 6, 1995 (Exhibit 10.4
to MHC's Registration Statement on Form S-1, No. 33-99754)
10.5 Equity Proposal Letter between Citicorp North America and
the Registrant, dated January 11, 1996 (Exhibit 10.5 to
MHC's Registration Statement on Form S-1, No. 33-99754)
10.6 Credit Agreement, dated February 9, 1996, by and among
Citicorp USA, Inc. and Citibank Canada, and the Registrant
(Filed herewith)
10.7 First Amendment, Consent and Limited Waiver to the Credit
Agreement, dated August 23, 1996, by and among Citicorp USA,
Inc. and Citibank Canada, and the Registrant (Filed
herewith)
10.8 Loan Agreement, dated February 9, 1996, between Finova
Capital Corporation and the Registrant (Filed herewith)
10.9 First Amendment and Consent to Loan Agreement, dated August
26, 1996, between Finova Capital Corporation and the
Registrant (Filed herewith)
10.10 Pooling and Servicing Agreement, dated August 23, 1996,
between Bankers Trust Company and the Registrant (Filed
herewith)
10.11 Revolving Credit Facility Agreement, dated August 23, 1996,
between Citibank London and Pegasus Polymers International
Inc. (Filed herewith)
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<PAGE>
11 Statement re Computation of Per Share Earnings (Filed
herewith)
21 Subsidiaries of the Registrant (Filed herewith)
27 Financial Data Schedule (Filed herewith)
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the last quarter of the
Registrant's fiscal year ended December 31, 1996
-36-
<PAGE>
Schedule II - Valuation and Qualifying Accounts
Muehlstein Holding Corporation
December 31, 1996
(In thousands)
<TABLE>
<CAPTION>
Additions Deductions
Balance at Charged to Write-offs Balance
Beginning Costs and Net of at End
Description of Period Expenses Recoveries of Year
- ----------------------------- ------------ ---------- ---------- ---------
<S> <C> <C> <C> <C>
Year ended December 31, 1996:
Allowance for doubtful
accounts $2,775 $(2,069) $ 310 $ 396
Inventory reserve (1) 644 390 644 390
------ ------- ------ ------
$3,419 $(1,679) $ 954 $ 786
------ ------- ------ ------
------ ------- ------ ------
Year ended December 31, 1995:
Allowance for doubtful accounts $1,275 $ 2,847 $1,347 $2,775
Inventory reserve (1) - 644 - 644
------ ------- ------ ------
$1,275 $ 3,491 $1,347 $3,419
------ ------- ------ ------
------ ------- ------ ------
Year ended December 31, 1994:
Allowance for doubtful accounts $1,852 $ 3,489 $4,066 $1,275
Inventory reserve (1) - - - -
------ ------- ------ ------
$1,852 $ 3,489 $4,066 $1,275
------ ------- ------ ------
------ ------- ------ ------
</TABLE>
(1) Reserve for lower of cost and market.
37
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
MUEHLSTEIN HOLDING CORPORATION
By: /s/ J. Kevin Donohue
--------------------------------------
J. Kevin Donohue
Chairman of the Board and
Chief Executive Officer
Date: March 27, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in capacities and on the dates indicated.
Name Title Date
- ---- ----- ----
/s/ J. Kevin Donohue Chairman of the Board, Chief March 27, 1997
- ------------------------ Executive Officer, Director,
J. Kevin Donohue (Principal Executive Officer)
/s/ Ronald J. Restivo Treasurer, Chief Financial March 27, 1997
- ------------------------ Officer, and Director
Ronald J. Restivo (Principal Financial and
Accounting Officer)
/s/ Jerrold J. Johnston Director March 27, 1997
- ------------------------
Jerrold J. Johnston
/s/ Mark D. Lux Director March 27, 1997
- ------------------------
Mark D. Lux
-38-
<PAGE>
ITEM 14
EXHIBIT 10.6
<PAGE>
[EXECUTION COPY]
================================================================================
CREDIT AGREEMENT
Dated as of February 9, 1996
among
MUEHLTEIN HOLDING CORPORATION,
as Guarantor
H. MUEHLSTEIN & CO., INC.,
PEGASUS POLYMERS INTERNATIONAL INC.,
MUEHLSTEIN INTERNATIONAL, LTD. and
H. MUEHLSTEIN & CO. (CANADA) LIMITED,
as Borrowers
THE INSTITUTIONS FROM TIME TO TIME
PARTY HERETO AS LENDERS
THE INSTITUTIONS FROM TIME TO TIME
PARTY HERETO AS ISSUING BANKS
CITICORP USA, INC.,
as Agent
and
CITIBANK CANADA,
as Canadian Agent
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
1.01. Certain Defined Terms......................................... 1
1.02. Computation of Time Periods................................... 51
1.03. Accounting Terms.............................................. 51
1.04. Other Definitional Provisions................................. 51
1.05. Other Terms................................................... 52
1.06. Payments by the Borrowers..................................... 52
ARTICLE II
AMOUNTS AND TERMS OF LOANS
2.01. The Revolving Credit Facility................................. 52
2.02. Letters of Credit............................................. 58
2.03. Evidence of Indebtedness...................................... 66
2.04. Authorized Officers and Agents................................ 66
ARTICLE III
PAYMENTS AND PREPAYMENTS
3.01. Prepayments; Reductions in and Reallocations
of Revolving Credit Commitments.......................... 67
3.02. Payments...................................................... 70
3.03. Taxes......................................................... 76
3.04. Increased Capital............................................. 80
3.05. Cash Management and Cash Collateral Accounts.................. 81
3.06. Right to Remove Affected Lender............................... 87
ARTICLE IV
INTEREST AND FEES
4.01. Interest on the Loans and Other Obligations................... 88
4.02. Special Provisions Governing Fixed Rate Loans................. 91
4.03. Fees.......................................................... 95
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<PAGE>
Page
----
ARTICLE V
CONDITIONS TO LOANS AND LETTERS OF CREDIT
5.01. Conditions Precedent to the Initial Loans and
Letters of Credit........................................ 97
5.02. Conditions Precedent to All Subsequent Revolving
Loans, Swing Loans and Letters of Credit.................100
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.01. Representations and Warranties of the Borrower................102
ARTICLE VII
REPORTING COVENANTS
7.01. Financial Statements..........................................115
7.02. Events of Default.............................................117
7.03. Lawsuits......................................................117
7.04. Insurance.....................................................117
7.05. Borrowing Base Certificate....................................118
7.06. ERISA Notices.................................................118
7.07. Environmental Notices.........................................120
7.08. Labor Matters.................................................121
7.09. Public Filings and Reports....................................121
7.10. Notices under Acquisition Agreement...........................121
7.11. Other Information.............................................122
ARTICLE VIII
AFFIRMATIVE COVENANTS
8.01. Corporate Existence, Etc......................................122
8.02. Corporate Powers; Conduct of Business, Etc....................122
8.03. Compliance with Laws, Etc.....................................122
8.04. Payment of Taxes and Claims; Tax Consolidation................122
8.05. Insurance.....................................................123
8.06. Inspection of Property; Books and Records;
Discussions.............................................124
8.07. [Intentionally omitted].......................................124
8.08. ERISA Compliance..............................................125
8.09. Foreign Employee Benefit Plan Compliance......................125
8.10. Maintenance of Property.......................................125
8.11. Further Assurances; Additional Collateral.....................125
8.12. Landlord and Bailee Waivers...................................126
8.13. Environmental Compliance......................................127
8.14. Interest Rate Contracts.......................................127
-ii-
<PAGE>
Page
----
ARTICLE IX
NEGATIVE COVENANTS
9.01. Indebtedness..................................................128
9.02. Sales of Assets...............................................129
9.03. Liens.........................................................130
9.04. Investments...................................................131
9.05. Accommodation Obligations.....................................132
9.06. Restricted Junior Payments....................................133
9.07. Conduct of Business; Subsidiaries; Acquisitions...............134
9.08. Transactions with Shareholders and Affiliates.................135
9.09. Restriction on Fundamental Changes............................135
9.10. Sales and Leasebacks; Operating Leases........................136
9.11. Margin Regulations; Securities Laws...........................136
9.12. ERISA and Certain Employment Matters..........................136
9.13. Issuance or Sale of Capital Stock.............................137
9.14. Constituent Documents.........................................137
9.15. Fiscal Year...................................................138
9.16. Cancellation of Debt; Prepayment..............................138
9.17. Environmental Matters.........................................138
9.18. Cash Management...............................................138
9.19. [Intentionally Omitted].......................................139
9.20. No New Restrictions on Subsidiary Dividends...................139
ARTICLE X
FINANCIAL COVENANTS
10.01. Minimum Consolidated Tangible Net Worth......................139
10.02. Minimum Fixed Charge Coverage Ratio..........................140
10.03. Maximum Capital Expenditures.................................140
ARTICLE XI
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
11.01. Events of Default............................................140
11.02. Rights and Remedies..........................................144
11.03. Cash Collateral..............................................146
11.04. License for Use of Software and Other
Intellectual Property....................................147
ARTICLE XII
THE AGENT AND THE CANADIAN AGENT
12.01. Appointment..................................................147
12.02. Nature of Duties.............................................149
12.03. Rights, Exculpation, Etc.....................................149
12.04. Reliance.....................................................150
12.05. Indemnification..............................................150
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<PAGE>
Page
----
12.06. Citicorp and Citibank Canada Individually....................151
12.07. Successor Agents; Resignation of Agents......................152
12.08. Relations Among Lenders......................................153
12.09. Concerning the Collateral and the Loan
Documents................................................153
ARTICLE XIII
MISCELLANEOUS
13.01. Assignments..................................................157
13.02. Expenses.....................................................161
13.03. Indemnity....................................................162
13.04. Change in Accounting Principles..............................164
13.05. Setoff.......................................................164
13.06. Ratable Sharing..............................................165
13.07. Amendments and Waivers.......................................166
13.08. Notices......................................................167
13.09. Survival of Warranties and Agreements........................168
13.10. Failure or Indulgence Not Waiver; Remedies
Cumulative...............................................169
13.11. Marshalling; Payments Set Aside..............................169
13.12. Severability.................................................169
13.13. Headings.....................................................169
13.14. Governing Law................................................169
13.15. Intercreditor Agreement......................................169
13.16. Successors and Assigns.......................................170
13.17. Certain Consents and Waivers.................................170
13.18. Counterparts; Effectiveness; Inconsistencies.................171
13.19. Limitation on Agreements.....................................171
13.20. Confidentiality..............................................172
13.21. Judgment Currency............................................172
13.22. Entire Agreement.............................................173
-iv-
<PAGE>
EXHIBITS
Exhibit A -- Form of Assignment and Acceptance
Exhibit B -- Form of Borrower Guaranty
Exhibit C -- Form of Borrower Pledge Agreement
Exhibit D -- Form of Borrower Security Agreement
Exhibit E -- Form of Borrowing Base Certificate
Exhibit F-1 -- Form of Collateral Access Agreement
(Landlord)
Exhibit F-2 -- Form of Collateral Access Agreement (Bailee)
Exhibit G -- Form of Collection Account Agreement
Exhibit H -- Form of Company Trademark Security Agreement
Exhibit I -- Form of Holdings Guaranty
Exhibit J -- Form of Holdings Pledge Agreement
Exhibit K -- Form of Holdings Security Agreement
Exhibit L-1 -- Form of Notice of Borrowing (U.S. Facility)
Exhibit L-2 -- Form of Notice of Borrowing (Multicurrency
Facility)
Exhibit L-3 -- Form of Notice of Borrowing (Canadian
Facility)
Exhibit M -- Form of Notice of Continuation/Conversion
Exhibit N-1 -- Form of Notice of Letter of Credit Issuance
(U.S. Facility)
Exhibit N-2 -- Form of Notice of Letter of Credit Issuance
(Canadian Facility)
Exhibit O-1 -- Form of Notice of Withdrawal (Multicurrency
Facility)
Exhibit O-2 -- Form of Notice of Withdrawal (Canadian
Facility)
Exhibit P -- Form of Officer's Certificate
Exhibit Q -- Form of Subsidiary Guaranty
Exhibit R -- Form of Subsidiary Security Agreement
Exhibit S-1 -- Form of U.S. Loan Note
Exhibit S-2 -- Form of Multicurrency Loan Note
Exhibit S-3 -- Form of Canadian Loan Note
Exhibit T -- List of Closing Documents
Exhibit U -- Form of Intercompany Note
Exhibit V -- Form of Collateral Assignment of Agency
Agreement
-v-
<PAGE>
SCHEDULES
Schedule 1.01.1 -- Revolving Credit Commitments
Schedule 1.01.2 -- Payment Accounts
Schedule 1.01.3 -- Permitted Existing Accommodation
Obligations
Schedule 1.01.4 -- Permitted Existing Indebtedness
Schedule 1.01.5 -- Permitted Existing Investments
Schedule 1.01.6 -- Permitted Existing Liens
Schedule 6.01-C -- Authorized, Issued and Outstanding
Capital Stock; Subsidiaries
Schedule 6.01-D -- Conflicts with Contractual Obligations
and Requirements of Law
Schedule 6.01-E -- Governmental Consents
Schedule 6.01-I -- Litigation; Adverse Effects
Schedule 6.01-O -- Environmental Matters
Schedule 6.01-P -- ERISA Matters
Schedule 6.01-R -- Labor Matters
Schedule 6.01-U -- Patent, Trademark & Permits
Schedule 6.01-V -- Assets and Properties
Schedule 6.01-Y -- Transactions with Affiliates
Schedule 6.01-AA -- Collection Account Banks; Bank Accounts
-vi-
<PAGE>
[EXECUTION COPY]
CREDIT AGREEMENT
This Credit Agreement dated as of February 9, 1996 (as amended,
supplemented or modified from time to time, this "Agree ment") is entered into
among Muehlstein Holding Corporation, a Delaware corporation (with its
successors and permitted assigns, "Holdings"), H. Muehlstein & Co., Inc., a New
York corporation and direct wholly-owned Subsidiary (as defined below) of
Holdings (with its successors and permitted assigns, the "Company"), Pegasus
Polymers International Inc., a Connecticut corporation and a direct wholly-owned
Subsidiary of the Company (with its successors and permitted assigns,
"Pegasus"), Muehlstein International, Ltd., a New York corporation and a direct
wholly-owned Subsidiary of the Company (with its successors and permitted
assigns, "Muehlstein International"), H. Muehlstein & Co. (Canada) Limited, an
Ontario corporation and a direct wholly-owned Subsidiary of the Company (with
its successors and permitted assigns, the "Canadian Borrower"; and together with
the Company, Pegasus and Muehlstein International, the "Borrowers"), the
institutions from time to time a party hereto as Lenders, whether by execution
of this Agreement or an Assignment and Acceptance, the institutions from time to
time party hereto as Issuing Banks, whether by execution of this Agreement or an
Assignment and Acceptance, Citicorp USA, Inc., a Delaware corporation
("Citicorp"), in its capacity as agent for the Lenders and the Issuing Banks
hereunder (with its successors in such capacity, the "Agent"), and Citibank
Canada, a Canadian chartered bank ("Citibank Canada"), in its capacity as agent
for the Canadian Lenders and the Canadian Issuing Banks hereunder (with its
successors in such capacity, the "Canadian Agent").
ARTICLE I
DEFINITIONS
1.01. Certain Defined Terms. In addition to the terms defined above,
the following terms used in this Agreement shall have the following meanings,
applicable both to the singular and the plural forms of the terms defined:
"Accommodation Obligation" means any Contractual Obligation,
contingent or otherwise, of one Person with respect to any Indebtedness of
another, if the primary purpose or intent thereof by the Person incurring the
Accommodation Obligation is to provide assurance to the obligee of such
Indebtedness of another that such Indebtedness will be paid or discharged, or
that any agreements relating thereto will be complied with, or
-2-
<PAGE>
that the holders thereof will be protected (in whole or in part) against loss in
respect thereof including, without limitation, direct and indirect guarantees,
endorsements (except for collection or deposit in the ordinary course of
business), notes co-made or discounted, recourse agreements, take-or-pay
agreements, keep-well agreements, agreements to purchase or repurchase such
Indebtedness or any security therefor or to provide funds for the payment or
discharge thereof, agreements to maintain solvency, assets, level of income, or
other financial condition, and agreements to make payment other than for value
received. The amount of any Accommodation Obligation shall be equal to the
lesser of (i) the principal amount payable under such Accommodation Obligation
(if quantifiable), and (ii) the portion of the obligation so guaranteed or
otherwise supported.
"Acquisition Agreement" means the Stock Purchase Agreement dated as
of October 30, 1995, between Holdings, as buyer, and Muehlstein Holding
Corporation, as seller, as amended by the first amendment thereto dated as of
November 20, 1995, and as such agreement may be further amended, supplemented or
otherwise modified from time to time.
"Acquisition Documents" means the Acquisition Agreement and all
other instruments, agreements and written Contractual Obligations entered into
in connection with the Acquisition Agreement and otherwise relating thereto,
including, without limitation, the Supply Agreements (as defined in the
Acquisition Agreement), the License Agreement (as defined in the Acquisition
Agreement), the Shareholders' Agreement, the ESOP, the Retirement Plan, the
Nonvoting Common Stock Purchase Agreement and the instruments, agreements and
written Contractual Obligations entered into in connection with the Nonvoting
Common Stock Purchase Agreement.
"Acquisition Loans" means the Loans made to the Borrowers the
proceeds of which are used for the purposes described in the first sentence of
Section 2.01(g).
"Affiliate" means, as to any specified Person, any other Person (i)
which, directly or indirectly, controls, is controlled by or is under common
control with, such specified Person and includes each officer or director or
general partner of such Person, (ii) which beneficially owns or holds 12.5% or
more of the Voting Stock (after giving effect to any Capital Stock which is
convertible into Voting Stock) of such specified Person or (iii) of which 12.5%
or more of the Voting Stock (after giving effect to any Capital Stock which is
convertible into Voting Stock) is beneficially owned or held by such specified
Person or a Subsidiary of such specified Person. For the purposes of this
definition, (i) "control" when used with respect to any specified Person means
the power to direct the management and policies of such Person directly or
indirectly, whether through the ownership of Voting Stock, by contract or
otherwise
-3-
<PAGE>
and (ii) Mobil Corporation shall not be deemed an Affiliate of the Company
solely as a result of its ownership interest in the Preferred Stock but only so
long as it has no representative on the board of directors of Holdings.
"Agent" is defined in the preamble and shall include Citicorp and
any successor Agent appointed pursuant to Section 12.07; provided, however,
references to the Agent in the provisions of this Agreement as they relate to
the Canadian Facility, the Canadian Borrower or any of the Canadian Borrower's
Property shall be deemed to be references to the Canadian Agent.
"Applicable Fixed Rate Margin" means, as of any date, two and
one-half percent (2.5%) per annum.
"Applicable Floating Rate Margin" means, as of any date, (i) one
percent (1.0%) per annum for Floating Rate Loans denominated in Dollars, (ii)
one percent (1.0%) per annum for Floating Rate Loans denominated in Canadian
Dollars and (iii) two and one-half percent (2.5%) per annum for Floating Rate
Loans denominated in any Optional Currency.
"Applicable Lending Office" means, with respect to a particular
Lender, its Fixed Rate Lending Office in respect of provisions relating to Fixed
Rate Loans and Multicurrency Loans, its Domestic Lending Office in respect of
provisions relating to Floating Rate Loans (other than Canadian Loans) and its
Canadian Lending Office in respect of provisions relating to Canadian Loans.
"Assignment and Acceptance" means an Assignment and Acceptance in
substantially the form of Exhibit A delivered to the Agent in connection with an
assignment of a Lender's interest under this Agreement in accordance with the
provisions of Section 13.01.
"Available Currency" means, with respect to any Loan, the currency
in which such Loan is denominated pursuant to the terms hereof.
"Availability Reserves" means (i) any reserve against the
availability under any Credit Facility agreed to between the Agent and the
applicable Borrower or Borrowers and (ii) as of ten (10) Business Days after the
date of notice of any determination thereof to the Borrowers by the Agent (which
notice shall include a reasonably detailed explanation thereof), in the exercise
of its sole discretion exercised in a commercially reasonable manner and in
accordance with the Agent's customary practices, such amounts as the Agent may
from time to time establish against availability under any Credit Facility in
order either (A) to preserve the value of, or the Agent's Lien on, the
Collateral or (B) to reflect future liabilities (including, without limitation,
liabilities in respect of Currency Agreements, Interest Rate
-4-
<PAGE>
Contracts and cash management agreements and arrangements) of the Borrowers.
"Bankruptcy Code" means Title 11 of the United States Code (11
U.S.C. ss.ss. 101 et seq.), as amended from time to time, and any successor
statute.
"Benefit Plan" means a defined benefit plan as defined in Section
3(35) of ERISA (other than a Multiemployer Plan) in respect of which the Company
or any ERISA Affiliate is, or within the immediately preceding six (6) years
was, an "employer" as defined in Section 3(5) of ERISA.
"Borrower Guaranty" means the Guaranty dated as of the Closing Date
duly executed and delivered to the Agent and the Canadian Agent by each of the
Domestic Borrowers substantially in the form of Exhibit B, as the same may be
amended, supplemented or otherwise modified from time to time.
"Borrower Pledge Agreements" means (i) the Pledge Agreement dated as
of the Closing Date by and between the Company and the Agent and (ii) the Pledge
Agreement dated as of the Closing Date by and between Muehlstein International
and the Agent, in each case in substantially the form of Exhibit C, as each of
the same may be amended, supplemented or otherwise modified from time to time.
"Borrowers" is defined in the preamble.
"Borrower Security Agreements" means (i) the Security Agreement
dated as of the Closing Date by and between the Company and the Agent, (ii) the
Security Agreement dated as of the Closing Date by and between Muehlstein
International and the Agent and (iii) the Security Agreement dated as of the
Closing Date by and between Pegasus and the Agent, in each case in substantially
the form of Exhibit D, as each of the same may be amended, supplemented or
otherwise modified from time to time.
"Borrowing" means a borrowing consisting of Loans under the same
Credit Facility of the same type (i.e., Floating Rate Loans or Fixed Rate Loans)
made on the same day by the same Borrower.
"Borrowing Base Certificate" means a certificate, in substantially
the form of Exhibit E (with such modifications thereto as shall be agreed to by
the Agent in accordance with the terms of this Agreement), setting forth (i) for
the Domestic Borrowers, the Collateral Value of Eligible Supported Foreign
Receivables, Eligible Domestic Receivables, Eligible Investment Grade Foreign
Receivables, Eligible L/C Backed Foreign Receivables, Eligible Other Foreign
Receivables, Eligible Domestic Inventory, Eligible Foreign Inventory, Eligible
Aged Inventory and the amounts on deposit in the Cash Collateral
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<PAGE>
Accounts of the Domestic Borrowers and (ii) for the Canadian Borrower, the
Collateral Value of Eligible Domestic Receivables, Eligible Domestic Inventory,
Eligible Aged Inventory and the amounts on deposit in the Canadian Cash
Collection Account and the Canadian Cash Collateral Account.
"Business Activity Report" means (A) a Minnesota Business Activities
Report from the Minnesota Department of Revenue or (B) a New Jersey Business
Activity Report from the New Jersey Department of Revenue.
"Business Day" means a day, in the applicable local time, which is
not a Saturday or Sunday or a legal holiday and on which banks are not required
or permitted by law or other govern mental action to close (i) in New York, New
York, (ii) in the case of Fixed Rate Loans or Multicurrency Loans, in London,
England, (iii) in the case of the Canadian Loans, in Toronto, Canada, or (iv) in
the case of Letter of Credit transactions for a particular Issuing Bank, in the
place where its office for issuance or administration of the pertinent Letter of
Credit is located.
"Canadian Agent" is defined in the preamble and shall include
Citibank Canada and any successor Canadian Agent appointed pursuant to Section
12.07.
"Canadian Borrower" is defined in the preamble.
"Canadian Borrowing Base" means, as of any date of determination,
with respect to the Canadian Borrower, an amount equal to (i) up to eighty-five
percent (85%) of the Collateral Value of Eligible Domestic Receivables of such
Borrower at such time, plus (ii) the lesser of (A) the sum of (1) up to
fifty-five percent (55%) (seventy percent (70%) in the case of plastics) of the
Collateral Value of Eligible Domestic Inventory of such Borrower at such time,
plus (2) up to thirty percent (30%) of the Collateral Value of Eligible Aged
Inventory of such Borrower at such time and (B) such Borrower's Inventory
Sublimit in effect as of such date, plus (iii) up to one hundred percent (100%)
of the Collateral Value of the aggregate amount of all Cash Collateral deposited
by or on behalf of such Borrower and held from time to time in the Canadian Cash
Collection Account or the Canadian Cash Collateral Account. For purposes of this
definition, Eligible Domestic Receivables, Eligible Domestic Inventory and
Eligible Aged Inventory, as of any date of determination, shall be determined
after deduction of all Eligibility Reserves then effective with respect to such
items. As of ten (10) Business Days after the date of notice of any
determination thereof to the Canadian Borrower by the Agent (which notice shall
include a reasonably detailed explanation thereof), (x) any advance rate
specified above may be reduced by the Agent in its sole discretion so long as
such adjustment is made in accordance with the Agent's customary practices and
(y) any advance rate so
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<PAGE>
reduced may be increased by the Agent in its sole discretion (but not in excess
of the percentages set forth above which shall require the consent of all
Lenders in accordance with Section 13.07(b)(ii)) so long as such adjustment is
made in accordance with the Agent's customary practices.
"Canadian Cash Collateral Account" means account number 2012-176018
maintained with Citibank Canada in Toronto, Ontario (i) into which proceeds of
Collateral (in Dollars) of the Canadian Borrower shall be deposited and (ii)
from which, subject to the provisions of Section 3.05, funds will be transferred
(A) to the Dollar Disbursement Accounts of the Canadian Borrower or (B) to the
Canadian Cash Collection Account (after conversion of such funds from Dollars to
Canadian Dollars).
"Canadian Cash Collection Account" means account number 2012-176026
maintained with Citibank Canada in Toronto, Ontario (i) into which (A) proceeds
of Collateral (in Canadian Dollars) of the Canadian Borrower shall be deposited
and (B) subject to the provisions of Section 3.05, funds will be transferred
from the Canadian Cash Collateral Account (after conversion of such funds from
Dollars to Canadian Dollars) and (ii) from which, subject to the provisions of
Section 3.05, funds will be (A) transferred to the Canadian Dollar Disbursement
Accounts of the Canadian Borrower or (B) applied to the Obligations of the
Canadian Borrower.
"Canadian Commitment" means, as to each Canadian Lender, the
Commitment of such Canadian Lender to make Canadian Loans to, and participate in
Letters of Credit Issued for the account of, the Canadian Borrower in the
aggregate principal amount outstanding not to exceed the amount on the Closing
Date set forth opposite such Canadian Lender's name on Schedule 1.01.1 under the
caption "Canadian Commitment", as such amount may be reduced or modified
pursuant to this Agreement; provided, however, at no time shall the aggregate
Canadian Commitments of all Canadian Lenders exceed the Dollar Equivalent in
Canadian Dollars of $10,000,000 less any permanent reduction made pursuant to
Section 3.01.
"Canadian Dollars" means the lawful money of Canada.
"Canadian Facility" means the facility provided by the Canadian
Lenders to make Canadian Loans to, and to Issue Letters of Credit for the
account of, the Canadian Borrower in accordance with the terms and conditions
contained in this Agreement.
"Canadian Indemnitee" is defined in Section 13.03.
"Canadian Issuing Banks" means Citibank Canada and each other
Canadian Lender (or Affiliate of a Canadian Lender) approved by the Canadian
Agent and the Canadian Borrower who has agreed to become a Canadian Issuing Bank
for the purpose of
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<PAGE>
issuing Letters of Credit under the Canadian Facility pursuant to Section 2.02.
"Canadian Lenders" means the Lenders designated as such on Schedule
1.01.1 under the caption "Canadian Commitment" and each other institution which
is party hereto as a Canadian Lender pursuant to an Assignment and Acceptance.
"Canadian Lending Office" means, with respect to any Canadian
Lender, such Lender's office, located in Canada, specified as the "Canadian
Lending Office" under its name on the signature pages hereof or in the
Assignment and Acceptance by which it became a Lender or such other Canadian
office of such Lender as it may from time to time specify by written notice to
the Canadian Borrower and the Agent.
"Canadian Loan" is defined in Section 2.01(a).
"Canadian Loan Note" means one or more notes made payable to the
Canadian Lenders evidencing the Canadian Borrower's Obligation to repay the
Canadian Loans.
"Canadian Prime Rate" means, for any period, a fluctuating interest
rate per annum in effect from time to time, which rate per annum shall at all
times be equal to the higher of:
(i) the rate of interest announced publicly by Citibank Canada in
Toronto, Ontario, from time to time, as Citibank Canada's prime rate for
determining rates of interest on commercial demand loans in Canadian
Dollars made by it in Canada; and
(ii) three-quarters of one percent (0.75%) per annum above the rate
for 30 day Canadian Dollar bankers' acceptances for Citibank Canada that
appears on the Reuters Screen CDOR Page at 10:00 a.m. (Toronto time) on
any date of determination.
"Canadian Swing Loan Bank" means Citibank Canada, in its individual
capacity or, in the event Citibank Canada is not the Canadian Agent, the
Canadian Agent (or any Affiliate of the Canadian Agent designated by the
Canadian Agent). The Canadian Swing Loan Bank may from time to time make in its
sole discretion Swing Loans under the Canadian Facility.
"Capital Expenditures" means, for any period, the aggregate of all
expenditures (whether payable in cash or other Property or accrued as a
liability (but without duplication)) during such period that, in conformity with
GAAP, are required to be classified as capital expenditures; provided, however,
(i) Capital Expenditures shall include (A) that portion of Capital Leases which
is capitalized on the consolidated balance
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<PAGE>
sheet of the Company and its Subsidiaries and (B) expenditures for Equipment
which is purchased simultaneously with the trade-in of existing Equipment owned
by the Company or any of its Subsidiaries, to the extent the gross purchase
price of the purchased Equipment exceeds the book value of the Equipment being
traded in at such time; and (ii) Capital Expenditures shall exclude expenditures
made in connection with the replacement or restoration of Property, to the
extent reimbursed or financed from insurance or condemnation proceeds.
"Capital Lease", as applied to any Person, means any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.
"Capital Stock", with respect to any Person, means any capital stock
of such Person, regardless of class or designation, and all warrants, options,
purchase rights, conversion or ex change rights, voting rights, calls or claims
of any character with respect thereto.
"Cash Collateral" means immediately available cash or Cash
Equivalents held by or on behalf of the Agent, any of the Issuing Banks or any
of the Lenders in any Cash Collateral Account or otherwise, as security for any
or all of the Obligations.
"Cash Collateral Accounts" means, collectively, the cash collateral
accounts set forth on Schedule 6.01-AA.
"Cash Equivalents" means (i) marketable direct obligations issued or
unconditionally guaranteed by the United States government and backed by the
full faith and credit of the United States government; (ii) domestic and
Eurodollar certificates of deposit and time deposits, bankers' acceptances and
floating rate certificates of deposit issued by any commercial bank organized
under the laws of the United States, any state thereof, the District of
Columbia, any foreign bank, or its branches or agencies (fully protected against
currency fluctuations), which, at the time of acquisition, are rated A-1 (or
better) by Standard & Poor's Corporation (or its successors) or P-1 (or better)
by Moody's Investors Service, Inc. (or its successors); (iii) commercial paper
of United States and foreign banks and bank holding companies and their
subsidiaries and United States and foreign finance, commercial industrial or
utility companies which, at the time of acquisition, are rated A-1 (or better)
by Standard & Poor's Corporation (or its successors) or P-1 (or better) by
Moody's Investors Service, Inc. (or its successors); and (iv) marketable direct
obligations of any state of the United States of America or any political
subdivision of any such state given on the date of such investment the highest
credit rating by Moody's Investors Service, Inc. (or its successors) and
Standard & Poor's
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<PAGE>
Corporation (or its successors); provided, that the maturities of any such Cash
Equivalents referred to in clauses (i) through (iv) shall not exceed one year.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. ss.ss. 9601 et seq., any
amendments thereto, any successor statutes, and any regulations or legally
enforceable guidance promulgated thereunder.
"CERCLIS" is defined in Section 6.01(o).
"Change of Control" means (i) any change occurs in the direct or
indirect equity ownership or control of Holdings' Capital Stock resulting in (x)
Persons who control or own Holdings' Voting Stock on the Closing Date and their
respective Affiliates and (y) (A) officers of the Company and (B) members of the
Company's leadership committee, in each case who hold such positions as of the
Closing Date or who are appointed subsequent to the Closing Date in the ordinary
course of business and not in connection with any Change in Control arising
under any of the other clauses of this definition, collectively controlling or
owning less than 51% of Holdings' Voting Stock; (ii) (x) Persons who control or
own Holdings' Voting Stock on the Closing Date and their respective Affiliates
and (y) (A) officers of the Company and (B) members of the Company's leadership
committee, in each case who hold such positions as of the Closing Date or who
are appointed subsequent to the Closing Date in the ordinary course of business
and not in connection with any Change in Control arising under any of the other
clauses of this definition, shall cease to have the right to elect or designate
a majority of the board of directors of Holdings; (iii) a Person or entity or
group of Persons or entities acting in concert (other than, to the extent still
employed by the Company or its Subsidiaries, Persons that control or own
Holdings' Voting Stock on the Closing Date and that are not acting in concert
with Persons that did not control or own Holdings' Voting Stock on the Closing
Date), shall, as a result of a tender or exchange offer, open market purchases,
privately negotiated purchases or otherwise, have become the beneficial owner
(within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as
amended) of securities of Holdings representing more than 20% of Holdings'
Voting Stock; (iv) four (4) members of the Company's leadership committee shall
have left the employ of the Company during any twelve month period (except for
reasons of death or disability), (v) the Company shall cease to own and control
100% of the outstanding Capital Stock of Pegasus, Muehlstein International or
any other Subsidiary Guarantor; or (vi) Holdings shall cease to own and control
100% of the outstanding Capital Stock of the Company.
"Citibank" means Citibank, N.A., a national banking association.
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<PAGE>
"Citibank Canada" is defined in the preamble.
"Citicorp" is defined in the preamble.
"Claim" means any claim or demand, by any Person, of whatsoever kind
or nature for any alleged Liabilities and Costs, whether based in contract,
tort, implied or express warranty, strict liability, criminal or civil statute,
Permit, ordinance or regulation, common law or otherwise.
"Closing Date" means the initial Funding Date of the Loans.
"Closing List" is defined in Section 5.01(a)(i).
"Collateral" means all Property and interests in Prop erty now owned
or hereafter acquired by Holdings, the Borrowers or any of their respective
Subsidiaries upon which a Lien is granted under any of the Loan Documents,
provided, that the Collateral shall not include any Receivables sold pursuant to
the Permitted Receivables Financing Program (it being understood and agreed that
the proceeds of the initial sale thereunder shall constitute part of the
Collateral).
"Collateral Access Agreement" means (a) a landlord waiver (with a
copy of the relevant Lease attached) with respect to personal property located
at real property leased by the Company or its Subsidiaries, substantially in the
form of Exhibit F-1 (with such modifications as the Agent may approve in its
sole discretion) and (b) a bailee waiver with respect to personal property
maintained in a warehouse or with another bailee, substantially in the form of
Exhibit F-2 (with such modifications as the Agent may approve in its sole
discretion).
"Collateral Value" means (i) with respect to any Eligible
Receivable, the Dollar Equivalent of the unpaid face amount of such Receivable
(net of retainage and any other amounts deferred with respect thereto), (ii)
with respect to any item of Eligible Inventory, the Dollar Equivalent of the
value (determined at the lower of cost on a first-in, first-out basis and market
value) of such Inventory and (iii) with respect to Cash Collateral in any
Available Currency (other than Dollars), the Dollar Equivalent of the amount of
Cash Collateral in such Available Currency.
"Collection Account Agreement" means a collection account agreement
executed by a Collection Account Bank, the applicable Borrower or Borrowers, and
the Agent substantially in the form of Exhibit G (with such changes thereto
requested by the Collection Account Bank as may be acceptable to the Agent and
the applicable Borrower or Borrowers, as the case may be), as the same may be
amended, supplemented or otherwise modified from time
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to time.
"Collection Account Bank" means each bank which has entered into
(or, in accordance with Section 8.11(a), will enter into) a Collection Account
Agreement or Standing Orders and which is identified as a Collection Account
Bank on Schedule 6.01-AA, as such schedule may be modified from time to time
pursuant to Section 7.11, at which proceeds of Collateral are deposited.
"Collection Accounts" means, collectively, the collection accounts
established at the Collection Account Banks which are (or, in accordance with
Section 8.11(a), will be) subject to a Collection Account Agreement or Standing
Orders.
"Commercial Letter of Credit" means any documentary letter of credit
Issued by an Issuing Bank pursuant to Section 2.02 for the account of a
Borrower, which is drawable upon presentation of documents evidencing the sale
or shipment of goods purchased by such Borrower in the ordinary course of its
business.
"Common Equity Notes" means (i) the promissory notes, substantially
in the form of Exhibit A to the Shareholders' Agreement issued to holders of
Common Stock pursuant to the Shareholders Agreement and (ii) the promissory
notes described in Section 11.3(a) of the ESOP issued to holders of Common Stock
pursuant to the ESOP.
"Common Stock" means the Common Stock, par value $0.01 per share, of
Holdings.
"Company Trademark Security Agreement" means the Trademark Security
Agreement dated as of the Closing Date by and between the Company and the Agent
substantially in the form of Exhibit H hereto, as the same may be amended,
supplemented or otherwise modified from time to time.
"Compliance Certificate" is defined in Section 7.01(c).
"Consolidated Cash Interest Expense" means, for any period, all as
determined in conformity with GAAP, (i) total interest expense and, after the
inception of the Permitted Receivables Financing Program, any discount
attributable to the payment of yield and any program, commitment, agency and
similar fees payable under the Permitted Receivables Financing Program, whether
paid or accrued (without duplication) (including the interest component of
Capital Lease obligations), of Holdings and its Subsidiaries on a consolidated
basis, including, without limitation, all recurring bank loan fees and
commissions, discounts and other fees and charges owed with respect to letters
of credit and net costs under Interest Rate Contracts, but excluding, however,
amortization of discount, interest paid in property other than cash or any other
interest expense not
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payable in cash, minus (ii) any net payments received during such period under
Interest Rate Contracts.
"Consolidated Fixed Charges" means, for any period, the sum of the
amounts for such period of (i) Consolidated Cash Interest Expense, (ii)
scheduled payments of principal on the Indebtedness of Holdings and its
Subsidiaries (including the principal component of Capital Lease obligations but
excluding the Obligations), (iii) cash dividends paid in respect of the Capital
Stock of Holdings and (iv) cash payments in respect of redemptions of the
Capital Stock of Holdings.
"Consolidated Net Income" means, for any period, the net earnings
(or loss) after taxes of Holdings and its Subsidiaries on a consolidated basis
for such period taken as a single accounting period determined in conformity
with GAAP.
"Consolidated Tangible Net Worth" means, with respect to any Person,
at any time, (i) total consolidated assets of such Person (including the
capitalized portion of Interest Rate Contracts), plus (ii) any negative
cumulative foreign exchange translation adjustments applicable to such Person,
minus (iii) total consolidated liabilities of such Person (excluding any accrued
and unpaid dividends payable on the Capital Stock of such Person), minus (iv)
any positive cumulative foreign exchange translation adjustments applicable to
such Person. There shall be excluded therefrom all General Intangibles (except
goodwill, tax refunds, tax refund claims, rights and claims against carriers,
shippers, franchises, lessors and lessees, and rights to indemnification),
organizational expenses and all unamortized debt discount and deferred charges
(including deferred taxes) and non-current pension liabilities or assets. Assets
and liabilities shall be determined in accordance with GAAP, except that
investments in and moneys due from Affiliates of the Borrowers (other than such
moneys in respect of trade accounts receivables and payables in the ordinary
course of business) shall be excluded from total consolidated assets.
"Contaminant" means any waste, pollutant, hazardous substance,
radioactive substance or material, toxic substance, hazardous waste, radioactive
waste, special waste, petroleum or petroleum-derived substance or waste,
asbestos in any form or condition, polychlorinated biphenyls ("PCBs"), or any
hazardous or toxic constituent thereof and includes, but is not limited to,
these terms as defined in Environmental, Health or Safety Requirements of Law.
"Constituent Document" means, (i) with respect to any corporation,
(A) the articles/certificate of incorporation (or the equivalent organizational
documents) of such entity, (B) the by-laws (or the equivalent governing
documents) of such entity and (C) any document setting forth the designation,
amount and/or relative rights, limitations and preferences of any class or
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series of such entity's Capital Stock or any unanimous shareholder agreement
pertaining to the Canadian Borrower and (ii) with respect to any partnership
(whether limited or general), (A) the certificate of partnership (or equivalent
filings), (B) the partnership agreement (or equivalent organizational documents)
of such partnership and (C) any document setting forth the designation, amount
and/or rights, limitations and preferences of any of such partnership's
partnership interests.
"Contractual Obligation", as applied to any Person, means any
provision of any Securities issued by that Person or any indenture, mortgage,
deed of trust, security agreement, pledge agreement, guaranty, contract,
undertaking, agreement or instrument to which that Person is a party or by which
it or any of its properties is bound, or to which it or any of its properties is
subject.
"Credit Facilities" means, collectively, the U.S. Facility, the
Multicurrency Facility and the Canadian Facility.
"Cure Loans" is defined in Section 3.02(b)(iv)(C).
"Currency Agreement" means any foreign exchange contract, currency
swap agreement or other similar agreement or arrangement.
"Currency Agreement Exposure" means, with respect to any Borrower at
any time and from time to time, an aggregate amount equal to one hundred and ten
percent (110%) of the then pre-settlement risk of such Borrower (determined by
the Agent in accordance with the Agent's (or its applicable Affiliate's)
customary practices) of each Currency Agreement entered into by such Borrower
and the Agent (or an Affiliate of the Agent) for the remaining term and volume
of such Currency Agreement, disregarding (subject to the immediately succeeding
sentence) any Currency Agreement with respect to which the pre-settlement risk
of such Borrower at such time is positive. If (i) such Borrower is a party to
(x) such Currency Agreement providing for such Borrower's purchase of a
particular currency and (y) a similar Currency Agreement with the same
counterparty providing for the sale of such currency and (ii) such Borrower and
such counterparty have entered into a netting agreement in form and substance
satisfactory to the Agent with respect to such Currency Agreements, then the
pre-settlement risk of such Persons at such time (determined by, the Agent in
accordance with the Agent's (or its applicable Affiliate's) customary practices)
under such Currency Agreements shall be netted against one another in
determining such Borrower's aggregate Currency Agreement Exposure (it being
understood and agreed that if any such netting of Currency Agreements results in
a positive net pre-settlement risk to such Borrower, such net pre-settlement
risk shall be disregarded in the calculation of such Borrower's aggregate
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Currency Agreement Exposure).
"Customary Permitted Liens" means
(i) Liens (other than Environmental Liens and Liens in favor of the
PBGC) with respect to the payment of taxes, assessments or governmental
charges in all cases which are not yet due or which are not required to be
paid pursuant to Section 8.04;
(ii) statutory Liens of landlords and Liens of suppliers, mechanics,
carriers, materialmen, consignors, warehousemen, repairers or workmen and
other Liens imposed by law created in the ordinary course of business for
amounts not yet due or which are being contested in good faith by
appropriate proceedings and with respect to which adequate reserves or
other appropriate provisions are being maintained in accordance with GAAP;
(iii) Liens (other than any Lien in favor of the PBGC) incurred or
deposits made in the ordinary course of business in connection with
worker's compensation, unemployment insurance or other types of social
security benefits or to secure the performance of bids, tenders, sales,
contracts (other than for the repayment of borrowed money), surety, appeal
and performance bonds; provided that all such Liens do not in the
aggregate materially detract from the value of any Borrower's or any of
its Subsidiaries' Property or materially impair the use thereof in the
operation of the business of such Borrower or any of such Subsidiaries;
(iv) Liens arising as a result of progress payments or otherwise
under government contracts; and
(v) Liens arising with respect to zoning restrictions, easements,
licenses, reservations, covenants, rights-of-way, utility easements,
building restrictions and other similar charges or encumbrances on the use
of Real Property.
"Default" means an event which, with the giving of notice or the
lapse of time, or both, would constitute an Event of Default.
"Disbursement Accounts" means, collectively, the disbursement
account of each Borrower as set forth on Schedule 6.01-AA.
"DOL" means the United States Department of Labor and any Person
succeeding to the functions thereof.
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"Dollars" and "$" mean the lawful money of the United States.
"Dollar Equivalent" means, with respect to any amount denominated in
an Available Currency (other than Dollars) on the date of determination thereof,
the equivalent of such amount in Dollars determined at the rate of exchange
equal to the Spot Rate on such date of determination.
"Domestic Borrowers" means, collectively, the Company, Pegasus and
Muehlstein International.
"Domestic Borrowing Base" means, as of any date of determination,
with respect to the Domestic Borrowers, an amount equal to, with respect to each
category of Collateral set forth below, the Collateral Value of such Collateral
as of such date multiplied by a percentage, up to the applicable advance rate
set forth opposite such category of Collateral, provided, that, notwithstanding
the "Initial Advance Rates" set forth below, in September 1996, the Agent will
begin to permanently decrease (in a single decrease or a series of decreases)
certain of such "Initial Advance Rates" such that, on or before the second
anniversary of the Closing Date, the maximum advance rate with respect to each
category of Collateral set forth below is the "Revised Advance Rate" set forth
opposite such category:
================================================================================
Initial Revised
Category of Collateral Advance Advance
Rate Rate
================================================================================
(a) Eligible Supported Foreign 95% 85%
Receivables, up to an amount no
greater than the maximum coverage of
credit insurance relating thereto
- --------------------------------------------------------------------------------
(b) Eligible Supported Foreign 75% 75%
Receivables in excess of such maximum
coverage
- --------------------------------------------------------------------------------
(c) Eligible Domestic Receivables 90% 85%
- --------------------------------------------------------------------------------
(d) Eligible Investment Grade Foreign 75% 60%
Receivables
- --------------------------------------------------------------------------------
(e) Eligible L/C Backed Foreign 85% 85%
Receivables
- --------------------------------------------------------------------------------
(f) Eligible Other Foreign Receivables 45% 40%
- --------------------------------------------------------------------------------
(g) Eligible Domestic Inventory 70% 70%
consisting of plastics
- --------------------------------------------------------------------------------
(h) Eligible Domestic Inventory 55% 55%
consisting of rubber
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================================================================================
Initial Revised
Category of Collateral Advance Advance
Rate Rate
================================================================================
(i) Eligible Foreign Inventory consisting 65% 65%
of plastics located in the United
Kingdom
- --------------------------------------------------------------------------------
(j) Eligible Foreign Inventory consisting 55% 55%
of rubber located in the United
Kingdom
- --------------------------------------------------------------------------------
(k) Eligible Foreign Inventory consisting 50% 50%
of plastics located in any approved
European country (other than the
United Kingdom)
- --------------------------------------------------------------------------------
(l) Eligible Foreign Inventory consisting 55% 55%
of rubber located in any approved
European country (other than the
United Kingdom)
- --------------------------------------------------------------------------------
(m) All other Eligible Foreign Inventory 60% 60%
consisting of plastics
- --------------------------------------------------------------------------------
(n) All other Eligible Foreign Inventory 50% 50%
consisting of rubber
- --------------------------------------------------------------------------------
(o) Eligible Aged Inventory 30% 30%
- --------------------------------------------------------------------------------
(p) Cash Collateral deposited by or on 100% 100%
behalf of any Domestic Borrower and
held from time to time in the
respective Cash Collateral Accounts
of the Domestic Borrowers
================================================================================
provided, however, the amount of Eligible Inventory included in the Domestic
Borrowing Base shall be the lesser of (i) the sum of the calculations for each
of the categories described in (g) through (o) above (i.e., the Collateral Value
of the Collateral in such category multiplied by the applicable advance rate)
and (ii) the Inventory Sublimit then in effect for the Domestic Borrowers. For
purposes of this definition, Eligible Supported Foreign Receivables, Eligible
Domestic Receivables, Eligible Investment Grade Foreign Receivables, Eligible
L/C Backed Foreign Receivables, Eligible Other Foreign Receivables, Eligible
Domestic Inventory, Eligible Foreign Inventory and Eligible Aged Inventory, as
of any date of determination, shall be determined after deduction of all
Eligibility Reserves then effective with respect to such items. As of ten (10)
Business Days after the date of notice of any determination thereof to the
Domestic Borrowers by the Agent (which notice shall include a reasonably
detailed explanation thereof), (x) any advance rate specified above (as reduced,
if applicable, by any permanent reductions of such advance rate) may be reduced
by the Agent in its sole
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discretion so long as such adjustment is made in accordance with the Agent's
customary practices and (y) any advance rate so reduced may be increased by the
Agent in its sole discretion (but not in excess of the percentages set forth
above (as reduced, if applicable, by any permanent reductions of such advance
rate) which shall require the consent of all Lenders in accordance with Section
13.07(b)(ii)) so long as such adjustment is made in accordance with the Agent's
customary practices.
"Domestic Lending Office" means, with respect to any Lender, such
Lender's office, located in the United States, specified as the "Domestic
Lending Office" under its name on the signature pages hereof or on the
Assignment and Acceptance by which it became a Lender or such other United
States office of such Lender as it may from time to time specify by written
notice to the Borrowers and the Agent.
"EBITDA" means, for any period on a consolidated basis for Holdings
and its Subsidiaries, (i) the sum of the amounts for such period of (A)
Consolidated Net Income, (B) depreciation, amortization expense and other
non-cash charges, (C) Consolidated Cash Interest Expense, (D) charges for
federal, state, local and foreign income taxes, (E) extraordinary losses which
have been deducted in the determination of Consolidated Net Income, (F) other
non-operating expenses (including discounts and expenses under the Permitted
Receivables Financing Program) not otherwise included in Consolidated Net
Income, (G) non-recurring, non-operating expenses, (H) discretionary bonuses and
profit sharing (to the extent paid in Capital Stock of Holdings) and non-cash
deferred compensation expenses, net of any cash payments made in respect thereof
and (I) ESOP contribution expense, minus (ii) the sum of (A) extraordinary gains
not already excluded from the determination of Consolidated Net Income, (B)
income tax credits and (C) non-recurring, non-operating income.
"Eligibility Reserves" means, as of ten (10) Business Days after the
date of written notice of any determination thereof to the Borrowers by the
Agent (which notice shall include a reasonably detailed explanation thereof),
such amounts as the Agent, in the exercise of its sole discretion (and subject
to the Agent's customary practices), may from time to time establish against the
gross amounts of Eligible Aged Inventory, Eligible Domestic Inventory, Eligible
Domestic Receivables, Eligible Foreign Inventory, Eligible Investment Grade
Foreign Receivables, Eligible L/C Backed Foreign Receivables, Eligible Other
Foreign Receivables and Eligible Supported Foreign Receivables to reflect risks
or contingencies arising after the Closing Date which may affect such items and
which have not already been taken into account in the determination of Eligible
Aged Inventory, Eligible Domestic Inventory, Eligible Domestic Receivables,
Eligible Foreign Inventory, Eligible Investment Grade Foreign Receivables,
Eligible L/C Backed Foreign Receivables, Eligible Other Foreign Receivables and
Eligible Supported Foreign Receivables.
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"Eligible Aged Inventory" means Eligible Inventory of a Borrower
which has not been sold or, in the case of returned Inventory, resold within one
(1) year after the date of such Borrower's original purchase thereof.
"Eligible Assignee" means (i) a Lender or any Affiliate thereof;
(ii) a commercial bank having total assets in excess of $500,000,000 or any
Affiliate thereof; (iii) a finance company, insurance company, other financial
institution or fund, acceptable to the Agent, which is regularly engaged in
making, purchasing or investing in loans and having total assets in excess of
$500,000,000; (iv) a savings and loan association or savings bank organized
under the laws of the United States or any state thereof which has a net worth,
determined in accordance with GAAP, in excess of $250,000,000; or (v) a finance
company, insurance company, bank, other financial institution or fund reasonably
acceptable to the Agent and the Borrower.
"Eligible Domestic Inventory" means Eligible Inventory of a Borrower
(other than Eligible Aged Inventory) which is then located in the United States
of America (including its territories and possessions) or, in the case of the
Canadian Borrower, Eligible Inventory (other than Eligible Aged Inventory) which
is then located in Canada.
"Eligible Domestic Receivables" means Eligible Receivables of a
Borrower which arise with respect to a sale to an account debtor located in (A)
with respect to any Domestic Borrower, the United States of America (including
its territories and possessions), (B) with respect to Receivables of the
Canadian Borrower, Canada or (C) with respect to any Borrower, in such other
jurisdiction or jurisdictions as the Agent may in its sole discretion determine
to be satisfactory for this purpose.
"Eligible Foreign Inventory" means Eligible Inventory of a Borrower
(other than Eligible Aged Inventory) which is then located in the United Kingdom
or Germany or, solely with respect to prepaid rubber Inventory, in Belgium or
The Netherlands or such other Inventory in such other jurisdiction or
jurisdictions (other than the United States (including its territories and
possessions) or Canada) as the Agent may in its sole discretion determine to be
satisfactory for this purpose.
"Eligible Inventory" means Inventory of a Borrower (other than any
Inventory which has been consigned to such Borrower) (i) with respect to which
the Agent has a valid and perfected first priority Lien (subject only to
Customary Permitted Liens), (ii) with respect to which no warranty contained in
any of the Loan Documents has been breached, (iii) which is not in the sole
discretion of the Agent (exercised in accordance with the Agent's customary
practices), obsolete, unmerchantable or subject to any statutory, contractual or
other
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title retention or similar agreement or arrangement, and (iv) which the Agent
deems to be Eligible Inventory, based on such credit and collateral
considerations as the Agent deems appropriate. Except as otherwise agreed to by
the Agent, no Inventory of any Borrower shall be Eligible Inventory if such
Inventory is located, stored, used or held at a leased premises or the premises
of a third party unless (A) the Agent shall have received a Collateral Access
Agreement from such third party unless, solely with respect to Inventory located
in the United States of America (including its territories and possessions), a
Collateral Access Agreement is not required pursuant to Section 8.12 and (B)
appropriate UCC-1 financing statements shall have been executed or, in the case
of Inventory which is located, stored, used or held outside the United States of
America (including its territories and possessions), other appropriate action
satisfactory to the Agent shall have been taken to make the rights of the Agent
in such Inventory effective against third parties, with respect to such
location. The Agent reserves the right, upon ten (10) Business Days notice
thereof to the Borrowers (which notice shall include a reasonably detailed
explanation thereof), to create, from time to time, additional categories of
ineligible Inventory in accordance with its customary practices.
"Eligible Investment Grade Foreign Receivables" means Eligible
Receivables of a Borrower (other than any Eligible Supported Foreign Receivable,
Eligible L/C Backed Foreign Receivable or any Eligible Domestic Receivable) with
respect to a sale to an account debtor located in a country (other than the
United States of America (including its territories and possessions) or Canada)
the senior unsecured debt securities of which are rated BBB- (or better) by
Standard & Poor's Corporation (or its successors) or Baa3 (or better) by Moody's
Investors Service, Inc. (or its successors).
"Eligible L/C Backed Foreign Receivables" means Eligible Receivables
of a Borrower which arise with respect to a sale to an account debtor located in
any country (other than the United States (including its territories and
possessions) or Canada) and with respect to which the account debtor's
obligations (or that portion of such obligations which is acceptable to the
Agent) with respect to such sale is secured by a letter of credit, guaranty or
eligible bankers' acceptance having terms, and from such issuers and
confirmation banks, as are reasonably acceptable to the Agent (which letter of
credit, guaranty or acceptance is subject to the Lien of the Agent in a manner
reasonably satisfactory to the Agent).
"Eligible Other Foreign Receivables" means Eligible Receivables of a
Borrower which do not at such time constitute Eligible Domestic Receivables,
Eligible L/C Backed Foreign Receivables, Eligible Supported Foreign Receivables
or Eligible Investment Grade Foreign Receivables, provided that to the extent
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that the Collateral Value of Eligible Other Foreign Receivables of the Borrowers
arising with respect to sales to account debtors located in a particular country
would in the absence of this proviso exceed 4% of the aggregate Collateral Value
of all Eligible Receivables of the Domestic Borrowers at such time, such
Receivables having an aggregate Collateral Value equal to such excess shall not
constitute Eligible Other Foreign Receivables.
"Eligible Receivables" means each Receivable of a Borrower which is
not at any time, except as otherwise agreed by the Agent, as the case may be, in
its sole discretion (exercised in accordance with its customary practices), of
any of the following types:
(i) (A) it is a Receivable which arises with respect to a sale to an
account debtor located in the United States of America (including its
territories and possessions), Canada or the United Kingdom the original
terms of which provide for payment more than 105 days (or such longer
period as the Agent may determine in its sole discretion) after the date
of the original invoice issued by such Borrower in connection with such
sale, (B) it is a Receivable (other than a Receivable referred to in
clause (A) above) that arises out of a sale the original terms of which
provide for payment more than 150 days (or such longer period as the Agent
may determine in its sole discretion) after the date of the original
invoice issued by such Borrower in connection with such sale or (C) it is
more than 60 days (or such longer period as the Agent may determine in its
sole discretion) past due, according to the original terms of sale; or
(ii) it arises out of a sale not made in the ordinary course of such
Borrower's business or a sale to a Person which is an Affiliate of such
Borrower; or
(iii) it fails to meet or violates any warranty, representation or
covenant contained in this Agreement or any of the other Loan Documents;
or
(iv) (A) the account debtor or any of its Affiliates is also such
Borrower's supplier or creditor and the Receivable is or may become
subject to any right of setoff by the account debtor, and such account
debtor has not entered into an agreement with the Agent with respect to
the waiver of rights of setoff or (B) the account debtor has disputed
liability with respect to such Receivable, or made any claim with respect
to any other Receivable due from such account debtor to such Borrower or
any of its Subsidiaries, in which case the Receivable shall be ineligible
to the extent of such dispute, claim or setoff; or
(v) the account debtor has filed a petition for or
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assignment in bankruptcy or any other petition or application for relief
under the Bankruptcy Code or any similar statute of Canada, the United
Kingdom or any other relevant jurisdiction, or any political subdivision
thereof, made an assignment for the benefit of creditors, or if any
petition or other application for relief under the Bankruptcy Code or any
similar statute of Canada, the United Kingdom or any other relevant
jurisdiction, or any political subdivision thereof has been filed against
the account debtor, or if the account debtor has failed, suspended its
business operations, become insolvent, suffered a receiver, a
receiver-manager, administrator or a trustee to be appointed for any of
its assets or affairs, or is generally failing to pay its debts as they
become due, and, in the case of any of the foregoing, the Agent does not
determine that such occurrence should not result in ineligibility; or
(vi) the sale is on a bill-and-hold, guaranteed sale,
sale-and-return, sale on approval, consignment, or any other repurchase or
return basis; or
(vii) the Agent believes, in the exercise of its reasonable credit
judgment, that collection of such Receivable is insecure or that such
Receivable may not be paid by reason of the account debtor's financial
ability to pay; or
(viii) the account debtor is the United States of America, Canada,
the United Kingdom or any other foreign jurisdiction or any department,
agency or instrumentality thereof, unless the Company or its applicable
Subsidiary assigns its right to payment of such Receivable to the Agent
(on terms reasonably satisfactory to the Agent) pursuant to, in the case
of the United States, the Assignment of Claims Act of 1940, as amended (31
U.S.C. ss. 3727) or, with respect to any such other jurisdiction,
department, agency or instrumentality, any similar Requirement of Law then
in effect with respect to payments due from such jurisdiction, department,
agency or instrumentality; or
(ix) the goods, the delivery of which has given rise to such
Receivable, have not been delivered to or rejected by the account debtor
or the services, the performance of which has given rise to such
Receivable, have not been performed by such Borrower or rejected by the
account debtor; or
(x) the Receivable(s) of the respective account debtor exceed(s) a
credit limit determined by the Agent, in the exercise of its reasonable
credit judgment, at any time or times hereafter, in which case such
Receivable(s) shall be ineligible to the extent such Receivable(s)
exceed(s) such limit; or
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(xi) the Agent does not have a valid and perfected first priority
security interest in such Receivable (subject only to Customary Permitted
Liens); or
(xii) the account debtor is located in the state of New Jersey or
Minnesota and such Borrower has not filed and maintained effective a
current Business Activity Report with the appropriate Governmental
Authority in such state (except in the case such Borrower is qualified to
transact business in such state as a foreign corporation); or
(xiii) the sale is to an account debtor with respect to which fifty
percent (50%) or more of all Receivables owing by such account debtor are
ineligible for any reason; or
(xiv) it arises out of or in connection with a retainage or similar
arrangement; or
(xv) it arises out of or in connection with, or has been or is to be
sold or otherwise transferred pursuant to, the Permitted Receivables
Financing Program; or
(xvi) in the case of Receivables which a Domestic Borrower has
purchased from any Affiliate thereof which is not a Domestic Borrower,
such purchase arrangements are not on terms reasonably satisfactory to the
Agent; or
(xvii) if sale of Inventory giving rise to such Receivable is
through an agent of such Borrower (including, without limitation, a
Subsidiary acting as agent for such Borrower), the agency agreement
applicable thereto is not substantially in the form of the agency
agreements approved by the Agent on the Closing Date (unless any changes
to, or deviations from, such form are reasonably satisfactory to the
Agent);
(xviii) it is deemed ineligible by the Agent in accordance with the
customary criteria of the Agent (it being understood that the Agent shall
provide such Borrower with ten (10) Business Days' notice of any exclusion
of a Receivable pursuant to this clause and a reasonably detailed
explanation for such exclusion).
"Eligible Supported Foreign Receivables" means Eligible Receivables
of a Borrower which arise with respect to sales to account debtors located
outside the United States of America (including its territories and possessions)
and Canada, and which are fully supported by credit insurance payable to such
Borrower on terms and conditions and from a financial institution satisfactory
to the Agent; provided that such credit insurance (x) shall be in full force and
effect and not in dispute and (y) shall have been collaterally assigned to the
Agent pursuant to
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documentation in form and substance reasonably satisfactory to the Agent.
"Environmental, Health or Safety Requirements of Law" means all
valid and enforceable Requirements of Law derived from or relating to federal,
state, local and foreign laws, regulations, orders, ordinances, rules, permits,
licenses or other binding determination of any Governmental Authority relating
to or addressing the environment, health or safety, including but not limited to
any law, regulation, or order relating to the use, handling, or disposal of any
Contaminant, any law, regulation, or order relating to Remedial Action and any
law, regulation, or order relating to workplace or worker safety and health, and
such Requirements of Law as are promulgated by the specifically authorized agent
or agents responsible for administering such Requirements of Law.
"Environmental Lien" means a Lien in favor of any Governmental
Authority for any (i) liabilities under any Environmental, Health or Safety
Requirement of Law, or (ii) damages arising from, or costs incurred by such
Governmental Authority in response to, a Release or threatened Release of a
Contaminant into the environment.
"Environmental Property Transfer Acts" means any applicable
Requirement of Law that conditions, restricts, prohibits or requires any
notification or disclosure triggered by the closure of any Property or the
transfer, sale or lease of any Property or deed or title for any Property for
environmental reasons, including, but not limited to, any so-called
"Environmental Cleanup Responsibility Act", "Responsible Transfer Act", or
"Industrial Site Recovery Act".
"Equipment" means, with respect to any Person, all of such Person's
present and future equipment (as defined in the Uniform Commercial Code or in
any similar statute of Canada, the United Kingdom or any other relevant
jurisdiction, or any political subdivision thereof).
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and any successor statute.
"ERISA Affiliate" means (i) any corporation which is a member of the
same controlled group of corporations (within the meaning of Section 414(b) of
the Internal Revenue Code) as Holdings or the Company; (ii) a partnership or
other trade or business (whether or not incorporated) which is under common
control (within the meaning of Section 414(c) of the Internal Revenue Code) with
Holdings or the Company; (iii) a member of the same affiliated service group
(within the meaning of Section 414(m) of the Internal Revenue Code) as Holdings
or the Company, any corporation described in clause (i) above or any partnership
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or trade or business described in clause (ii) above; and (iv) any other Person
which is required to be aggregated with Holdings or the Company pursuant to
regulations promulgated under Section 414(o) of the Internal Revenue Code.
"ESOP" means the H. Muehlstein & Co., Inc. Deferred Profit Sharing
and Employee Stock Ownership Plan, effective as of December 1, 1995, as the same
may be amended, supplemented or otherwise modified from time to time, subject in
each case to Section 9.16.
"Event of Default" means any of the occurrences set forth in Section
11.01 after the expiration of any applicable grace period and the giving of any
applicable notice, in each case as expressly provided in Section 11.01.
"Federal Funds Rate" means, for any period, a fluctu ating interest
rate per annum equal for each day during such period to 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 in New York, New York, for the next preceding
Business Day) in New York, New York by the Federal Reserve Bank of New York, or
if such rate is not so published for any day which is a Business Day in New
York, New York, the average of the quotations for such day on such transactions
received by the Agent from three federal funds brokers of recog nized standing
selected by the Agent.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System or any Governmental Authority succeed ing to its functions.
"Financial Officer" means, with respect to Holdings or any Borrower,
the chief financial officer, treasurer, controller or other officer or member of
management of Holdings or such Borrower with significant responsibility for the
financial affairs of Holdings or such Borrower.
"Finova" means FINOVA Capital Corporation.
"Finova Credit Agreement" means the Term Loan Agreement dated as of
the Closing Date among Finova and the Company, as the same may be amended,
supplemented or otherwise modified from time to time.
"Finova Documents" means the Finova Credit Agreement and all other
instruments, agreements and written Contractual Obligations entered into in
connection with the Finova Credit Agreement and otherwise relating thereto.
"Finova Indebtedness" means the four year term credit facility
provided by Finova to the Company on the Closing Date in
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an outstanding principal amount of $8,000,000 pursuant to the Finova Credit
Agreement.
"Finsub" means a corporation organized under the laws of a state of
the United States of America which is a special purpose Wholly Owned Subsidiary
of the Company formed solely for the purpose of engaging in the Permitted
Receivables Financing Program.
"Fiscal Year" means the fiscal year of the Borrower, which shall be
the 12-month period ending on December 31 of each calendar year.
"Fixed Charge Coverage Ratio" means, with respect to any period, the
ratio of (i) EBITDA for such period, minus Capital Expenditures for such period,
minus cash taxes for such period, to (ii) Consolidated Fixed Charges for such
period.
"Fixed Rate" means, with respect to any Interest Period applicable
to a Borrowing of Fixed Rate Loans under the applicable Credit Facility
denominated in the applicable currency, an interest rate per annum equal to (i)
the U.S. LIBO Rate with respect to Fixed Rate Loans denominated in Dollars under
the U.S. Facility and (ii) the Multicurrency LIBO Rate, with respect to Fixed
Rate Loans denominated in an Optional Currency under the Multicurrency Facility,
in each case in effect on the relevant Fixed Rate Determination Date.
"Fixed Rate Affiliate" means, with respect to each Lender, the
Affiliate of such Lender (if any) set forth below such Lender's name under the
heading "Fixed Rate Affiliate" on the signature pages hereof or on the
Assignment and Acceptance by which it became a Lender or such Affiliate of a
Lender as it may from time to time specify by written notice to the Borrowers
and the Agent.
"Fixed Rate Determination Date" means, with respect to a Borrowing
of Fixed Rate Loans, (i) the second Business Day prior to the first day of the
Interest Period for any Borrowing or (ii) in the case of a Borrowing of Fixed
Rate Loans under the Multicurrency Facility denominated in Pounds and maintained
in Pounds, the first day of the Interest Period for such Borrowing.
"Fixed Rate Interest Payment Date" means (i) with respect to any
Fixed Rate Loan, the last day of each Interest Period applicable to such Loan
and (ii) with respect to any Fixed Rate Loan having a Interest Period in excess
of three (3) calendar months, the last day of each three (3) calendar month
interval during such Interest Period.
"Fixed Rate Lending Office" means, with respect to any Lender, the
office or offices of such Lender (if any) set forth below such Lender's name
under the heading "Fixed Rate Lending
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Office" on the signature pages hereof or on the Assignment and Acceptance by
which it became a Lender or such office or offices of such Lender as it may from
time to time specify by written notice to the Borrowers and the Agent.
"Fixed Rate Loans" means all Loans under the U.S. Facility and the
Multicurrency Facility denominated in Dollars or an Optional Currency
outstanding which bear interest at a rate determined by reference to the Fixed
Rate applicable to such currency as provided in Section 4.01(a).
"Floating Rate" means, for any period applicable to any Floating
Rate Loan denominated in any Available Currency, a fluctuating interest rate per
annum as shall be in effect from time to time, which rate per annum shall be (i)
the U.S. Base Rate, in the case of Floating Rate Loans denominated in Dollars,
(ii) the Canadian Prime Rate, in the case of Floating Rate Loans denominated in
Canadian Dollars and (iii) the Multicurrency Base Rate, in the case of Floating
Rate Loans denominated in any Optional Currency.
"Floating Rate Loans" means all Loans denominated in an Available
Currency which bear interest at a rate determined by reference to the Floating
Rate applicable to such currency as provided in Section 4.01(a).
"Foreign Employee Benefit Plan" means any employee benefit plan as
defined in Section 3(3) of ERISA which is main tained or contributed to for the
benefit of the employees of the Borrower, any of its Subsidiaries or any of its
ERISA Affiliates, but which is not covered by ERISA pursuant to Section 4(b)(4)
of ERISA.
"Foreign Pension Plan" means any Foreign Employee Benefit Plan which
under applicable local law is required to be funded through a trust or other
funding vehicle.
"Funding Date" means, with respect to any Loan, the date of the
funding of such Loan.
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board, the American
Institute of Certified Public Accountants and the Financial Accounting Standards
Board or in such other statements by such other entity as may be in general use
by significant segments of the accounting profession as in effect on the date of
the most recent audited financial statements of Holdings and its Subsidiaries
delivered to the Lenders prior to the Closing Date (unless otherwise specified
pursuant to Section 13.04).
"General Intangibles" means, with respect to any Person, all of such
Person's present and future general
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intangibles (as defined in Section 9-106 of the Uniform Commercial Code or in
any similar Statute of Canada, the United Kingdom or any other relevant
jurisdiction, or any political subdivision thereof).
"Governmental Authority" means any nation or govern ment, any
federal, state, province, territory, local or other political subdivision
thereof and any entity exercising executive, legislative, judicial, regulatory
or administrative functions of or pertaining to government.
"Holder" means any Person entitled to enforce any of the
Obligations, whether or not such Person holds any evidence of Indebtedness,
including, without limitation, the Agent, each Lender and each Issuing Bank.
"Holdings" is defined in the preamble.
"Holdings Guaranty" means the Guaranty dated as of the Closing Date
duly executed and delivered to the Agent and the Canadian Agent by Holdings
substantially in the form of Exhibit I hereto, as the same may be amended,
supplemented or otherwise modified from time to time.
"Holdings Pledge Agreement" means the Pledge Agreement dated as of
the Closing Date by and between Holdings and the Agent substantially in the form
of Exhibit J hereto, as the same may be amended, supplemented or otherwise
modified from time to time.
"Holdings Security Agreement" means the Security Agreement dated as
of the Closing Date by and between Holdings and the Agent substantially in the
form of Exhibit K hereto, as the same may be amended, supplemented or otherwise
modified from time to time.
"Indebtedness", as applied to any Person, at any time, shall mean,
without duplication, (a) all indebtedness, obligations or other liabilities of
such Person (i) for borrowed money or evidenced by debt securities, debentures,
acceptances, notes or other similar instruments, and any accrued interest, fees
and charges relating thereto, (ii) in respect of obligations (A) to redeem,
repurchase or exchange for cash any Securities at a fixed or determinable date,
at the option of another Person or upon the occurrence of a condition not solely
within the control of such Person, as of the time such payment date becomes
fixed or determined, such option is exercised or such condition is satisfied, as
the case may be, or (B) to pay cash dividends in respect of any stock, (iii)
with respect to letters of credit issued for such Person's account, (iv) to pay
the deferred purchase price of property or services, except (A) accounts payable
and accrued expenses arising in the ordinary course of business and (B) any
obligation arising solely in respect of the
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conversion in the ordinary course of business of any current liability into a
long-term obligation in a like amount and bearing interest at a rate not in
excess of a market rate of interest, (v) in respect of Capital Leases, (vi)
which are Accommodation Obligations, (vii) upon which interest charges are
customarily paid (including zero coupon instruments but excluding obligations
referred to in clauses (iv)(A) or (iv)(B) above) or (viii) under conditional
sale or other title retention agreements relating to property purchased by such
Person; (b) all indebtedness, obligations or other liabilities of such Person or
others secured by a Lien on any property of such Person, whether or not such
indebtedness, obligations or liabilities are assumed by such Person, all as of
such time (it being understood that if recourse with respect to such
indebtedness, obligations or liabilities is limited to such property, such
indebtedness, obligations or other liabilities shall be limited to the fair
market value of such property); (c) all indebtedness, obligations or other
liabilities of such Person in respect of Interest Rate Contracts and Currency
Agreements, net of liabilities owed to such Person by the counterparties
thereon; and (d) all contingent Contractual Obligations with respect to any of
the foregoing.
"Indemnitee" is defined in Section 13.03.
"Indemnified Matter" is defined in Section 13.03.
"Initial Projections" means the financial projections initially
dated November 2, 1995 and updated on February 8, 1996 with respect to Holdings
and its Subsidiaries delivered by Holdings to the Lenders on or prior to the
Closing Date.
"Interbank Rate" means, for any period, (i) in respect of Loans
denominated in Dollars, the Federal Funds Rate, and (ii) in respect of Loans
denominated in any other Available Currency, the Floating Rate applicable to
such currency.
"Intercreditor Agreement" means the Intercreditor Agreement dated as
of the Closing Date between Finova and the Agent, as the same may be amended,
supplemented or otherwise modified from time to time.
"Interest Period" is defined in Section 4.02(b).
"Interest Rate Contract" means any interest rate exchange, swap,
collar, future, protection, cap, floor or similar agreements providing interest
rate protection.
"Interest Rate Contract Exposure" means, with respect to any
Borrower at any time and from time to time, an aggregate amount equal to one
hundred and ten percent (110%) of the then pre-settlement risk of such Borrower
(determined by the Agent in accordance with the Agent's (or its applicable
Affiliate's) customary practices) of each Interest Rate Contract entered into
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by such Borrower and the Agent (or an Affiliate of the Agent) for the remaining
term and volume of such Interest Rate Contract, disregarding (subject to the
immediately succeeding sentence) any such Interest Rate Contract with respect to
which the pre-settlement risk of such Borrower at such time is positive. If (i)
such Borrower is a party to more than one Interest Rate Contract with the same
counterparty and (ii) such Borrower and such counterparty have entered into a
netting agreement in form and substance satisfactory to the Agent with respect
to such Interest Rate Contracts, then the pre-settlement risk of such Persons at
such time (determined by the Agent in accordance with the Agent's (or its
applicable Affiliate's) customary practices) under such Interest Rate Contracts
shall be netted against one another in determining such Borrower's aggregate
Interest Rate Contract Exposure (it being understood and agreed that if any such
netting of Interest Rate Contracts results in a positive net pre-settlement risk
to such Borrower, such net pre-settlement risk shall be disregarded in the
calculation of such Borrower's aggregate Interest Rate Contract Exposure).
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended to the date hereof and from time to time hereafter, any successor
statute and any regulations or guidance promulgated thereunder.
"Inventory" means, with respect to any Person, all of such Person's
present and future (i) inventory (as defined in Section 9-109(4) of the Uniform
Commercial Code or in any similar statute of Canada, the United Kingdom or any
other relevant jurisdiction, or any political subdivision thereof) (including
unbilled accounts receivable), (ii) goods, merchandise and other personal
Property furnished or to be furnished under any contract of service or intended
for sale or lease, and all goods consigned by such Person and all other items
which have previously constituted Equipment but are then currently being held
for sale or lease in the ordinary course of such Person's business, (iii) raw
materials, work-in-process and finished goods, (iv) materials and supplies of
any kind, nature or description used or consumed in such Person's business or in
connection with the manufacture, production, packing, shipping, advertising,
finishing or sale of any of the Property described in clauses (i) through (iii)
above, (v) goods in which such Person has a joint or other interest to the
extent of such Person's interest therein or right of any kind (including,
without limitation, goods in which such Person has an interest or right as
consignee), and (vi) goods which are returned to or repossessed by such Person;
in each case whether in the possession of such Person, a bailee, a consignee, or
any other Person for sale, storage, transit, processing, repair, use or
otherwise, and any and all documents for or relating to any of the foregoing.
"Inventory Sublimit" means the amount set forth opposite the name of
the Borrower(s) set forth below (it being
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understood and agreed that the Company may from time to time by ten (10)
Business Days' written notice to the Agent (and subject to the Agent's consent
which shall not be unreasonably withheld) reallocate portions of the Inventory
Sublimit to one or more of such Borrowers; provided that the sum of such
portions so allocated shall not at any time exceed $35,000,000 in the
aggregate):
Borrower(s) Inventory Sublimit
----------- ------------------
Domestic Borrowers $32,000,000
Canadian Borrower $ 3,000,000
"Investment" means, with respect to any Person, (i) any purchase or
other acquisition by that Person of Securities, or of a beneficial interest in
Securities issued by or other equity ownership interest in any other Person,
(ii) any purchase by that Person of all or a significant part of the assets of a
business conducted by another Person, (iii) any loan, advance (other than
prepaid expenses, accounts receivable, advances to employees and similar items
made or incurred in the ordinary course of business), or capital contribution by
that Person to any other Person, including all Indebtedness to such Person
arising from a sale of property by such Person other than in the ordinary course
of its business and (iv) any accounts (including, without limitation, any such
deposit, cash collateral and investment accounts) with banks or other financial
institutions.
"IRS" means the Internal Revenue Service and any Person succeeding
to the functions thereof.
"Issue" means, with respect to any Letter of Credit, either to
issue, or extend the expiry of, or renew, or increase the amount of, such Letter
of Credit, and the term "Issued" or "Issuance" shall have a corresponding
meaning.
"Issuing Banks" means the U.S. Issuing Banks and the Canadian
Issuing Banks.
"Knowledge" (and the related term "Know") means, with respect to
Holdings' or any Borrower's knowledge, the knowledge of a Responsible Person of
Holdings or such Borrower.
"Leases" means those leases, tenancies or occupancies entered into
by Holdings, any Borrower or any of the Borrowers' respective Subsidiaries, as
tenant, sublessor or sublessee either directly or as the successor in interest
to the Company or any of its Affiliates.
"Lender" means, as of the Closing Date, Citicorp, the Canadian
Lender and each other institution which is a signatory hereto and, at any other
given time, the Canadian Lenders and each other institution which is a party
hereto as a Lender,
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whether as a signatory hereto or pursuant to an Assignment and Acceptance.
"Letter Agreement" means the fee letter dated as of the
date hereof from Citicorp Securities, Inc. and Citicorp and
accepted by the Company.
"Letter of Credit" means any Commercial Letter of Credit or Standby
Letter of Credit Issued for the account of any Borrower pursuant to Section
2.02.
"Letter of Credit Availability" means, at any particular time (i)
with respect to the Domestic Borrowers, the Letter of Credit Sublimit for the
Domestic Borrowers minus the aggregate Letter of Credit Obligations of the
Domestic Borrowers outstanding at such time and (ii) with respect to the
Canadian Borrower, the Letter of Credit Sublimit for the Canadian Borrower minus
the Letter of Credit Obligations of the Canadian Borrower outstanding at such
time.
"Letter of Credit Fee" is defined in Section 4.03(a).
"Letter of Credit Obligations" means, at any particular time with
respect to any Borrower, the sum of (i) all outstanding Reimbursement
Obligations of such Borrower, plus (ii) the aggregate undrawn face amount of all
outstanding Letters of Credit issued for the account of such Borrower
(including, without limitation, any Letter of Credit with respect to which,
notwithstanding the termination thereof pursuant to its terms, the beneficiary
thereunder has a right to make drawings thereunder in accordance with applicable
law), plus (iii) the aggregate face amount of all Letters of Credit requested by
such Borrower but not yet issued (unless the request for an unissued Letter of
Credit has been denied pursuant to Section 2.02). For purposes of determining
the amount of Letter of Credit Obligations (or any component thereof) in respect
of any Letter of Credit which is denominated in an Available Currency (other
than Dollars), such amount shall equal the Dollar Equivalent of the amount of
such currency at the time of determination thereof.
"Letter of Credit Reimbursement Agreement" means, with respect to a
Letter of Credit, such form of application therefor and form of reimbursement
agreement therefor (whether in a single or several documents, taken together) as
the Issuing Bank from which the Letter of Credit is requested may employ in the
ordinary course of business for its own account, with such modifications thereto
as may be agreed upon by the Issuing Bank and the relevant Borrower and as are
not materially adverse (in the reasonable judgment of the Issuing Bank) to the
interests of the Lenders; provided, however, in the event of any conflict
between the terms hereof and of any Letter of Credit Reimbursement Agreement,
the terms hereof shall control.
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"Letter of Credit Sublimit" means the amount set forth opposite the
name of the Borrower(s) set forth below (it being understood and agreed that the
Company may from time to time by ten (10) Business Days' written notice to the
Agent (and subject to the Agent's consent which shall not be unreasonably
withheld) reallocate portions of the Letter of Credit Sublimit to one or more of
such Borrowers; provided that the Letter of Credit Sublimit for the Canadian
Borrower shall not exceed $4,000,000 at any time; provided, further, that the
sum of the portions so allocated shall not at any time exceed $15,000,000 in the
aggregate):
Borrower(s) Letter of Credit Sublimit
----------- -------------------------
Domestic Borrowers $13,000,000
Canadian Borrower $ 2,000,000
"Liabilities and Costs" means all liabilities, obligations,
responsibilities, losses and damages with respect to or arising out of any of
the following: personal injury, death, punitive damages, economic damages,
consequential damages, treble damages, intentional, willful or wanton injury,
damage or threat to the environment, natural resources or public health or
welfare, costs and expenses (including, without limitation, attorney, expert and
consulting fees and costs of or associated with investigation, feasibility or
Remedial Action studies), fines, penalties and monetary sanctions, voluntary
disclosures made to, or settlements with, the United States Government or any
foreign government or any political subdivision thereof, interest, direct or
indirect, known or unknown, absolute or contingent, past, present or future,
including interest, if any, thereon.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, conditional sale agreement, deposit arrangement, security interest,
encumbrance, lien (statutory or other), preference, priority, title retention or
other security agreement or preferential arrangement (including, without
limitation, any negative pledge arrangement and any agreement to provide equal
and ratable security) of any kind or nature whatsoever in respect of any
property of a Person intended to assure payment of any Indebtedness, obligation
or other liability, whether granted voluntarily or imposed by law, and includes
the interest of a lessor under a Capital Lease or under any financing lease
having substantially the same economic effect as any of the foregoing and the
filing of any financing statement or similar notice (other than a financing
statement filed by a "true" lessor pursuant to ss. 9-408 of the Uniform
Commercial Code or any similar statute of Canada, the United Kingdom or any
other relevant jurisdiction, or any political subdivision thereof), naming the
owner of such property as debtor, under the Uniform Commercial Code or other
comparable law of any jurisdiction, but does not include the interest of a
lessor under an Operating
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Lease.
"Loan Documents" means this Agreement, the Notes, the Holdings
Guaranty, the Borrower Guaranty, the Subsidiary Guaranty, the Borrower Security
Agreements, the Holdings Security Agreement, the Company Trademark Security
Agreement, the Holdings Pledge Agreement, the Borrower Pledge Agreements, the
Subsidiary Security Agreements, the Letter Agreement, the Letter of Credit
Reimbursement Agreements, the Intercreditor Agreement, the Collection Account
Agreements, the other documents executed or delivered pursuant to Section
5.01(a) by Holdings, the Company or any Subsidiary of the Company, any Currency
Agreements to which the Agent or any Affiliate of the Agent is a party, any
Interest Rate Contracts to which the Agent or any Affiliate of the Agent is a
party, and all other instruments, agreements and written Contractual Obligations
between any Borrower or any Subsidiary of any Borrower, on the one hand, and any
of the Agent, the Lenders or the Issuing Banks, on the other hand, in each case
delivered to either the Agent, such Lender or such Issuing Bank before, on or
after the Closing Date pursuant to or in connection with the transactions
(including, without limitation, the cash management arrangements) contemplated
hereby. The Loan Documents shall not include the Permitted Receivables
Transaction Documents.
"Loans" means all the Revolving Loans and the Swing Loans.
"Lockboxes" means, collectively, the lockboxes established at the
Collection Account Banks for collection of payments in respect of Receivables or
other Collateral.
"Margin Stock" means "margin stock" as such term is defined in
Regulation U and Regulation G.
"Material Adverse Effect" means a material adverse effect upon (i)
the business, condition (financial or otherwise), operations, performance,
properties or prospects of the Domestic Borrowers, taken as a whole, or the
Canadian Borrower, individually, (ii) the ability of Holdings or any of the
Borrowers to perform their respective material obligations under the Loan
Documents or (iii) the ability of the Lenders, the Issuing Banks, or the Agent
to enforce the Loan Documents.
"Maximum Revolving Credit Amount" means, at any particular time, an
amount equal to:
(i) with respect to the U.S. Facility, (A) the lesser of (1) the
U.S. Commitments in effect at such time and (2) the excess, if any, of (a)
the Domestic Borrowing Base at such time over (b) the Multicurrency
Commitments in effect at such time, minus (B) the amount of any
Availability Reserves applicable to the U.S. Facility in effect at such
time, minus (C) the aggregate amount of the Currency
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Agreement Exposure of the U.S. Borrowers at such time, minus (D) the
aggregate amount of the Interest Rate Contract Exposure of the U.S.
Borrowers at such time;
(ii) with respect to the Multicurrency Facility, (A) the lesser of (1)
the Multicurrency Commitments in effect at such time and (2) the Domestic
Borrowing Base at such time, minus (B) the amount of any Availability
Reserves applicable to the Multicurrency Facility in effect at such time,
minus (C) the amount of the Currency Agreement Exposure of the
Multicurrency Borrower at such time, minus (D) the amount of the Interest
Rate Contract Exposure of the Multicurrency Borrower at such time; and
(iii) with respect to the Canadian Facility, (A) the lesser of (1) the
Canadian Commitments in effect at such time and (2) the Canadian Borrowing
Base at such time, minus (B) the amount of any Availability Reserves
applicable to the Canadian Facility in effect at such time, minus (C) the
amount of the Currency Agreement Exposure of the Canadian Borrower at such
time, minus (D) the amount of the Interest Rate Contract Exposure of the
Canadian Borrower at such time.
"Muehlstein International" is defined in the preamble.
"Multicurrency Base Rate" means, for any period, a fluctuating
interest rate per annum as shall be in effect from time to time, which rate per
annum shall at all times be equal to the rate of interest designated and
published in London by the principal office of Citibank in London, England as
the "base rate" applicable to an Optional Currency, in the case of Floating Rate
Loans denominated in such Optional Currency.
"Multicurrency Borrower" means Pegasus.
"Multicurrency Commitment" means, as to each Multicurrency Lender,
the commitment of such Multicurrency Lender to make Multicurrency Loans to the
Multicurrency Borrower in the aggregate principal amount outstanding not to
exceed the amount on the Closing Date set forth opposite such Multicurrency
Lender's name on Schedule 1.01.1 under the caption "Multicurrency Commitment,"
as such amount may be reduced or modified pursuant to this Agreement; provided,
however, at no time shall the aggregate Multicurrency Commitments of all
Multicurrency Lenders exceed $35,000,000 less any permanent reduction made
pursuant to Section 3.01.
"Multicurrency Facility" means the facility provided by the
Multicurrency Lenders to make Multicurrency Loans to the Multicurrency Borrower
in accordance with the terms and conditions contained in this Agreement.
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"Multicurrency Lenders" means the Lenders designated as such on
Schedule 1.01.1 under the caption "Multicurrency Commitment" and each other
institution which is party hereto as a Multicurrency Lender pursuant to an
Assignment and Acceptance.
"Multicurrency LIBO Rate" means, with respect to any Interest Period
applicable to a Borrowing of Fixed Rate Loans under the Multicurrency Facility
denominated in an Optional Currency:
(i) the interest rate per annum equal to (A) the offered quotations
for deposits in the Optional Currency of the relevant Borrowing for a
period comparable to the relevant Interest Period which appears on the
Telerate Page 3750 or Telerate Page 3740 (as appropriate) at or about
11:00 a.m. (London time) on the applicable Fixed Rate Determination Date;
or (B) if no such interest rate determined under clause (A) is available,
the arithmetic mean (rounded upward to the nearest one-sixteenth of one
percent (0.0625%)) of the interest rates, as supplied to Citibank at its
request, quoted by the "London Reference Banks" to leading banks in the
London interbank market at or about 11:00 a.m. (London time) on the
applicable Fixed Rate Determination Date for the offering of deposits in
the Optional Currency of the relevant Borrowing for a period comparable to
the relevant Interest Period; plus
(ii) in the case of Fixed Rate Loans denominated in Pounds, the
amount (expressed as a percentage) of "associated reserve costs" being
imposed by the Bank of England on the relevant Fixed Rate Determination
Date. The Multicurrency LIBO Rate shall be adjusted automatically on and
as of the effective date of any change in the amount of associated reserve
costs so imposed. The Agent shall provide to the Multicurrency Borrower,
upon the reasonable request of the Multicurrency Borrower, a reasonably
detailed explanation of any associated reserve costs used in the
determination of the Multicurrency LIBO Rate.
For the purposes of this definition, "Telerate Page 3750" means the display
designated as "Page 3750", and "Telerate Page 3740" means the display designated
as "Page 3740" in each case on the Telerate Service (or such other page as may
replace Page 3750 or Page 3740, as applicable, on the service as may be
nominated by the British Bankers' Association as the information vendor for the
purpose of displaying British Bankers' Association Interest Settlement Rates for
deposits in the Optional Currency concerned).
"Multicurrency Loan" is defined in Section 2.01(a).
"Multicurrency Loan Notes" means one or more notes made payable to
the Multicurrency Lenders evidencing the Multicurrency
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Borrower's Obligation to repay the Multicurrency Loans.
"Multicurrency Swing Loan Bank" means Citibank, in its individual
capacity or, in the event Citicorp is not the Agent, the Agent (or any Affiliate
of the Agent designated by the Agent), in its individual capacity. The
Multicurrency Swing Loan Bank may from time to time make in its sole discretion
Swing Loans under the Multicurrency Facility.
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA which is, or within the immediately preceding six
(6) years was, contributed to by any Borrower or any ERISA Affiliate.
"Net Cash Proceeds" means (i) proceeds received by any Borrower or
any of such Borrower's Subsidiaries in cash or Cash Equivalents from the sale
(including, without limitation, any Sale and Leaseback Transaction), assignment
or other disposition, of any Property, other than sales, assignments and other
dispositions of Property between the Company and Wholly Owned Subsidiaries of
the Company to the extent permitted hereunder and sales, assignments and other
dispositions permitted under clauses (i) and (iv) through (viii) of Section
9.02, net of (A) the reasonable costs and expenses (including reasonable legal,
accounting, investment banking, governmental, filing and other fees and expenses
incurred in connection therewith) of sale, assignment or other disposition, (B)
taxes paid or payable as a result thereof and (C) the amount of any Indebtedness
(other than the Obligations but including the Finova Indebtedness) secured by
such Property (to the extent permitted hereunder) and repaid in connection with
such sale, provided that evidence of each of (A), (B) and (C) are provided to
the Agent; (ii) proceeds of insurance on account of the loss of or damage to any
Collateral or any other Property (net of the amount required to be paid under
the terms of any Indebtedness (including the Finova Indebtedness) secured by
such Property (to the extent permitted hereunder)) and payments of compensation
for any Collateral or any such other Property taken by condemnation or eminent
domain; (iii) proceeds received after the Closing Date by Holdings, the Company,
or any of the Company's Subsidiaries in cash or Cash Equivalents from (A) the
issuance of any Capital Stock by Holdings (other than any such issuance
occurring (x) in the ordinary course of business to any member of the management
of the Company in connection with such member's employment with the Company, (y)
pursuant to the ESOP or the Retirement Plan or (z) Common Stock purchased after
the Closing Date by certain employees of Holdings, the Company or its
Subsidiaries pursuant to the Registration Statement), or any other additions to
the equity of Holdings (other than retained earnings or by reason of any capital
contributions or dividends among Holdings, the Company and its Subsidiaries
permitted by this Agreement), net of the reasonable costs and expenses
(including reasonable legal, accounting, investment banking, governmental,
filing and other fees and expenses incurred in
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connection therewith) of sale, assignment or other disposition, provided that
evidence of such costs is provided to the Agent or (B) the issuance of any
Indebtedness by Holdings, the Company, or any Subsidiary of the Company (except
for such Indebtedness permitted under Section 9.01 and any such Indebtedness
incurred in connection with Currency Agreements or Interest Rate Contracts to
the extent any Borrower is permitted to enter into such contracts pursuant to
the terms hereof), net of the reasonable costs and expenses (including
reasonable legal, accounting, investment banking, governmental, filing and other
fees and expenses incurred in connection therewith) of issuance thereof,
provided that evidence of such costs is provided to the Agent.
"Non Pro Rata Loan" is defined in Section 3.02(b)(iv).
"Nonvoting Common Stock" means the Nonvoting Common Stock, par value
$0.01 per share, of Holdings.
"Nonvoting Common Stock Purchase Agreement" means the Common Stock
Purchase Agreement dated as of the Closing Date between Citicorp North America,
Inc. and Holdings.
"Notes" means, collectively, the U.S. Loan Notes, the Multicurrency
Loan Notes and the Canadian Loan Notes and all amendments thereto, replacements
thereof and substitutions therefor.
"Notice of Borrowing" means a notice substantially in the form of
(i) Exhibit L-1 for Borrowings under the U.S. Facility, (ii) Exhibit L-2 for
Borrowings under the Multicurrency Facility and (iii) Exhibit L-3 for Borrowings
under the Canadian Facility.
"Notice of Continuation/Conversion" means a notice substantially in
the form of Exhibit M.
"Notice of Letter of Credit Issuance" means a notice substantially
in the form of (i) Exhibit N-1 for Letters of Credit Issued under the U.S.
Facility and (ii) Exhibit N-2 for Letters of Credit Issued under the Canadian
Facility.
"Notice of Withdrawal" means a notice substantially in the form of
(i) Exhibit O-1 for withdrawals from the applicable Cash Collateral Accounts by
the Multicurrency Borrower and (ii) Exhibit O-2 for withdrawals from the
Canadian Cash Collection Account or Canadian Cash Collateral Account by the
Canadian Borrower.
"NPL" is defined in Section 6.01(o).
"Obligations" means, to the extent arising hereunder, under the
Notes or under any other Loan Document, all Loans, advances, debts, liabilities,
obligations, covenants and duties
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owing by Holdings, any Borrower or any Subsidiary Guarantor to the Agent, the
Canadian Agent, any Lender, any Issuing Bank, any Affiliate of the Agent, any
Lender or any Issuing Bank, or any Person entitled to indemnification pursuant
to Section 13.03, of any kind or nature, present or future, whether or not
evidenced by any note, guaranty or other instrument, whether or not for the
payment of money, whether arising (i) under or in connection with (A) a Currency
Agreement with the Agent or any Affiliate of the Agent, (B) an Interest Rate
Contract with the Agent or any Affiliate of the Agent or (C) the U.S.
Concentration Account, the Canadian Cash Collection Account, the Cash Collateral
Accounts or any cash management services provided by the Agent or any Affiliate
of the Agent, or (ii) by reason of (A) an extension of credit, (B) opening or
amendment of a Letter of Credit or payment of any draft drawn thereunder, (C)
loan, (D) guaranty or (E) indemnification or (iii) in any other manner, whether
direct or indirect (including those acquired by assignment), absolute or
contingent, due or to become due, now existing or hereafter arising and however
acquired. The term includes, without limita tion, all interest, charges,
expenses, fees, reasonable attor neys' fees and disbursements and any other sum
chargeable to Holdings, any Borrower or any Subsidiary Guarantor hereunder or
under any other Loan Document and the obligations of the Borrowers to cash
collateralize the Letter of Credit Obligations and shall also include the
obligations of Holdings or any of its Subsidiaries to Citibank or its Affiliates
in respect of any liabilities such Person has in respect of any corporate credit
cards (not to exceed, with respect to such credit cards, $450,000 in the
aggregate for all such Persons) or in connection with cash management functions,
performed by Citibank or its Affiliates on behalf of Holdings or any of its
Subsidiaries.
"Officer's Certificate" means, as to a corporation, a certificate
executed on behalf of such corporation by an officer or director of such
corporation and, with respect to Holdings, any Borrower or any Subsidiary
Guarantor, substantially in the form of Exhibit P.
"Operating Lease" means, as applied to any Person, any lease of any
property (whether real, personal or mixed) by that Person as lessee which is not
a Capital Lease.
"Optional Currency" means any of the lawful currencies of France,
Germany, Italy, Spain or the United Kingdom.
"Paid In Full", "Pay In Full" and "Payment In Full" means, with
respect to the Obligations of any Borrower or Subsidiary Guarantor, (i) with
respect to each Letter of Credit issued for the account of such Borrower, the
termination and surrender for cancellation of such Letter of Credit, (ii) with
respect to (A) each Letter of Credit (other than those referred to in clause (i)
above, including, without limitation, any Letter of Credit with respect to
which, notwithstanding the termination
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thereof pursuant to its terms, the beneficiary thereunder has a right to make
drawings thereunder in accordance with applicable law), (B) each Currency
Agreement with the Agent or any Affiliate of the Agent to which such Borrower or
Subsidiary Guarantor is a counterparty, (C) each Interest Rate Contract with the
Agent or any Affiliate of the Agent to which such Borrower or Subsidiary
Guarantor is a counterparty, the delivery of Cash Collateral in such form as
requested by the Agent (and, in the case of Letters of Credit, the applicable
Issuing Bank) for deposit in the appropriate Cash Collateral Account, together
with such endorsements, and execution and delivery of such documents and
instruments as the Agent may request in order to perfect or protect the Agent's
Lien with respect thereto, in an aggregate principal amount equal to the then
outstanding Letter of Credit Obligations, Currency Agreement Exposure and
Interest Rate Contract Exposure, respectively, with respect thereto and (iii)
with respect to all other Obligations (other than, as of any date of payment,
Obligations which are contingent and unliquidated and not then due and owing and
which pursuant to Section 13.09, survive the making and repayment of the Loans,
the issuance and discharge of Letters of Credit hereunder and the termination of
the Commitments hereunder), the payment in full in cash of such Obligations.
"Payment Account" means each account of the Agent or the Canadian
Agent into which fundings of Loans and payments in respect of Obligations shall
be made. The Payment Accounts as of the Closing Date are set forth on Schedule
1.01.2.
"PBGC" means the Pension Benefit Guaranty Corporation and any Person
succeeding to the functions thereof.
"Pegasus" is defined in the preamble.
"Pegasus Asia" means Pegasus Polymers Asia Limited, a Hong Kong
corporation.
"Pegasus Benelux" means Pegasus Polymers Benelux, Inc., a Delaware
corporation.
"Pegasus Coordination" means Pegasus Polymers International
Coordination, Inc., a Delaware corporation.
"Permits" means any permit, approval, authorization, license,
variance, exemption, no-action letter or permission required from a Governmental
Authority under an applicable Requirement of Law.
"Permitted Existing Accommodation Obligations" means those
Accommodation Obligations of the Company and its Subsidi aries identified as
such on Schedule 1.01.3.
"Permitted Existing Indebtedness" means the Indebted-
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ness of the Company and its Subsidiaries identified as such on Schedule 1.01.4.
"Permitted Existing Investments" means those Invest ments identified
as such on Schedule 1.01.5.
"Permitted Existing Liens" means the Liens on assets of the Company
or any of its Subsidiaries identified as such on Schedule 1.01.6.
"Permitted Receivables Financing Program" means a receivables
financing program providing, among other things, for (i) the sales to the
Company by certain of its Subsidiaries of Receivables originated by such
Subsidiaries, (ii) the sale by the Company or any of its Subsidiaries to Finsub
of such Receivables, and (iii) the transfer of such Receivables by Finsub to a
special purpose trust or corporation which is not an Affiliate of the Company or
Finsub; provided that (x) all terms and conditions of such program shall be
substantially consistent with the Proposal Letter dated November 20, 1995
between Citicorp North America, Inc. and the Company relating to such program or
otherwise on terms and conditions satisfactory to the Requisite Lenders, (y) all
documentation relating to such program shall be subject to the prior written
approval of the Requisite Lenders (it being understood and agreed that certain
amendments to Article X and the other provisions of this Agreement may be
required in connection with the Permitted Receivables Financing Program) and (z)
the Capital Stock of Finsub and any promissory notes issued by Finsub to the
Borrowers in connection with such program shall have been pledged to the Agent
pursuant to the Loan Documents as additional security for the Obligations.
"Permitted Receivables Transaction Documents" means the documents
approved in writing by the Requisite Lenders and executed and delivered in
connection with the Permitted Receivables Financing Program, as such documents
may be amended, supplemented or otherwise modified from time to time.
"Permitted Subordinated Indebtedness" means unsecured Indebtedness
that is subordinated to the Obligations, the terms of which (including, without
limitation, terms relating to principal amount, interest, maturity, covenants,
subordination and cross-default) and all documentation relating thereto have
been approved by the Requisite Lenders in writing. The Finova Indebtedness shall
not be deemed to be Permitted Subordinated Indebtedness.
"Person" means any natural person, corporation, limited partnership,
limited liability company, general partnership, joint stock company, joint
venture, association, company, trust, bank, trust company, land trust, business
trust or other organization, whether or not a legal entity, or any Governmental
Authority.
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"Plan" means an employee benefit plan defined in Section 3(3) of
ERISA in respect of which any Borrower or any ERISA Affiliate is, or within the
immediately preceding six (6) years was, an "employer" as defined in Section
3(5) of ERISA.
"Pounds" means the lawful currency of the United Kingdom.
"Preferred Stock" means the Series A Preferred Stock, par value
$0.01 per share, issued by Holdings to Muehlstein Holding Corporation (or a
Mobil Affiliate (as defined in the Acquisition Agreement)) pursuant to the
Acquisition Agreement, with a liquidation preference not exceeding $10,000,000.
"Pro Rata Share" means (i) with respect to any Lender and any Credit
Facility, the percentage obtained by dividing (A) such Lender's Revolving Credit
Commitment in respect of such Credit Facility at such time by (B) the aggregate
amount of all Revolving Credit Commitments in respect of such Credit Facility at
such time and (ii) with respect to any Lender and the Credit Facilities taken as
a whole, the percentage obtained by dividing (A) such Lender's Revolving Credit
Commitment in respect of all Credit Facilities at such time by (B) the aggregate
amount of all Revolving Credit Commitments at such time; provided, however, if
all of the Revolving Credit Commitments are terminated pursuant to the terms
hereof, then "Pro Rata Share" means the percentage obtained by dividing (x) the
aggregate amount of such Lender's Revolving Credit Obligations under all Credit
Facilities by (y) the aggregate amount of all Revolving Credit Obligations.
"Process Agent" is defined in Section 13.17.
"Property" means any Real Property or personal prop erty, plant,
building, facility, structure, underground storage tank or unit, Equipment,
Inventory, General Intangible, Receivable, or other asset owned, leased or
operated by any Borrower or any of its Subsidiaries, as applicable (including
any surface water thereon or adjacent thereto, and soil and groundwater
thereunder).
"Protective Advance" is defined in Section 12.09.
"Real Property" means, with respect to any Person, all of such
Person's present and future right, title and interest (including, without
limitation, any leasehold estate) in real property.
"Reallocation Request" is defined in Section 3.01(c).
"Receivables" means, with respect to any Person, all of such
Person's present and future (i) accounts (as defined in the Section 9-106 of the
Uniform Commercial Code or in any similar
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statute of Canada, the United Kingdom or any other relevant jurisdiction, or any
political subdivision thereof), (ii) accounts receivable, (iii) rights to
payment for goods sold or leased or for services rendered (except those
evidenced by instruments or chattel paper), whether or not earned by perfor
mance, (iv) all rights in any merchandise or goods which any of the same may
represent, and (v) all rights, title, security, insurance, letters of credit and
guaranties with respect to each of the foregoing, including, without limitation,
any right of stoppage in transit.
"Reduction Amount" is defined in Section 3.01(c).
"Register" is defined in Section 13.01(c).
"Registration Statement" means Holdings' Registration Statement on
Form S-1 under the Securities Act of 1933 (Registration No. 33-99754), as
amended, relating to the offering by Holdings to certain Persons of up to
2,000,000 shares of Common Stock.
"Regulation A" means Regulation A of the Federal Reserve Board as in
effect from time to time.
"Regulation D" means Regulation D of the Federal Reserve Board as in
effect from time to time.
"Regulation G" means Regulation G of the Federal Reserve Board as in
effect from time to time.
"Regulation U" means Regulation U of the Federal Reserve Board as in
effect from time to time.
"Regulation X" means Regulation X of the Federal Reserve Board as in
effect from time to time.
"Reimbursement Date" is defined in Section 2.02(d)(i)(A).
"Reimbursement Obligations" means, as to any Borrower, the aggregate
non-contingent reimbursement or repayment obliga tions of such Borrower with
respect to amounts drawn under Letters of Credit Issued for the account of such
Borrower.
"Release" means release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment.
"Remedial Action" means actions required to (i) clean up, remove,
treat or in any other way address Contaminants in the indoor or outdoor
environment; or (ii) investigate and determine if a remedial response is needed
and to design such a response and post-remedial investigation, monitoring,
operation and
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maintenance and care.
"Reportable Event" means any of the events described in Section 4043
of ERISA.
"Requirements of Law" means, as to any Person, the charter and
by-laws or other organizational or governing docu ments of such Person, and any
law, rule or regulation, or deter mination of an arbitrator or a court or other
Governmental Authority, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is subject
including, without limitation, the Securities Act, the Securities Exchange Act,
Regulations G, U and X, ERISA, the Fair Labor Standards Act and any similar
statute of any foreign government or any political subdivision thereof and any
certificate of occupancy, zoning ordinance, building, or land use requirement or
Permit or labor or employment rule or regulation, including Environmental,
Health or Safety Requirements of Law.
"Requisite Lenders" means, at any time, Lenders holding, in the
aggregate, at least fifty-one percent (51%) of the then aggregate amount of the
Revolving Credit Commitments in effect at such time; provided, however, that, in
the event any of the Lenders shall have failed to fund its Pro Rata Share of any
Revolving Loan requested by any Borrower under any Credit Facility which such
Lenders are obligated to fund under the terms hereof and any such failure has
not been cured, then for so long as such failure continues, "Requisite Lenders"
means at least two Lenders (excluding Lenders (and their Affiliates who are
Lenders) whose failure to fund their respective Pro Rata Share of such Loans
have not been so cured) whose Pro Rata Shares of the Credit Facilities represent
at least fifty-one percent (51%) of the aggregate Pro Rata Shares of such
Lenders provided, that the requirement of two Lenders shall cease to be in
effect at any time there are more than three Lenders holding U.S. Commitments;
provided, further, however, that, in the event that the Revolving Credit
Commitments have been terminated pursuant to the terms hereof, "Requisite
Lenders" means Lenders (without regard to such Lenders' performance of their
respective obligations hereunder) whose aggregate ratable shares (stated as a
percentage) of the aggregate outstanding principal balance of all Revolving
Credit Obligations are at least fifty-one percent (51%).
"Responsible Person" means (i) with respect to any Borrower, any
Financial Officer of such Borrower or any other officer of such Borrower which
is also a member of the leadership committee of the Company and (ii) solely in
the case of the Company, any member of the leadership committee of the Company.
"Restricted Junior Payment" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of
Capital Stock of Holdings or any of its Subsidiaries now or hereafter
outstanding, except a dividend
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payable solely in (x) shares of, or options or warrants (which do not contain
put or call rights) with respect to, that class of stock and/or (y) shares of
any class of stock which is junior to that class of stock, provided that such
shares do not constitute Indebtedness, (ii) any redemption, retirement, sinking
fund or similar payment, purchase or other acquisition for value, direct or
indirect, of any shares of any class of Capital Stock of Holdings or any of its
Subsidiaries now or hereafter outstanding, (iii) any payment made to redeem,
purchase, repurchase or retire, or to obtain the surrender of, any outstanding
warrants, options or other rights to acquire shares of any class of Capital
Stock of Holdings or any of its Subsidiaries now or hereafter outstand ing and
(iv) any payment or prepayment of principal of, premium, if any, or interest,
fees or other charges on or with respect to, and any redemption, purchase,
retirement, defeasance, sinking fund or similar payment and any claim for
rescission with respect to any Indebtedness (other than the Finova Indebtedness)
which by its terms is subordinated to the Obligations, including, without
limitation, the Permitted Subordinated Indebtedness.
"Retirement Plan" means the H. Muehlstein & Co., Inc. Employees'
Retirement Plan, amended and restated as of January 1, 1994, as the same may be
amended, supplemented or otherwise modified from time to time, subject in each
case to Section 9.16.
"Revolving Credit Availability" means, with respect to any Credit
Facility at any particular time, the amount by which the Maximum Revolving
Credit Amount for such Credit Facility exceeds the Revolving Credit Obligations
outstanding under such Credit Facility at such time.
"Revolving Credit Commitments" means, collectively, the U.S.
Commitments, the Multicurrency Commitments and the Canadian Commitments (it
being understood and agreed that the maximum aggregate principal amount of the
Revolving Credit Commitments shall not exceed $125,000,000, as reduced from time
to time pursuant to the terms hereof).
"Revolving Credit Obligations" means, at any particular time with
respect to any Credit Facility, the sum of (i) the outstanding principal amount
of the Swing Loans at such time, plus (ii) the outstanding principal amount of
the Revolving Loans at such time, plus (iii) the Letter of Credit Obligations
outstanding at such time, plus (iv) the aggregate principal amount of Protective
Advances outstanding at such time, in each case under such Credit Facility. For
purposes of determining the amount of Revolving Credit Obligations (or any
component thereof) in respect of any Revolving Loan which is denominated in any
Available Currency (other than Dollars), such amount shall equal the Dollar
Equivalent of the amount of such currency at the time of determination thereof.
"Revolving Credit Termination Date" means the earlier
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to occur of (i) the date of termination of the Revolving Credit Commitments
pursuant to the terms hereof and (ii) the fourth anniversary of the Closing
Date.
"Revolving Loan" is defined in Section 2.01(a).
"Sale and Leaseback Transaction" means, with respect to any Person,
any direct or indirect arrangement pursuant to which Property is sold or
transferred by such Person and is thereafter leased back from the purchaser
thereof by such Person.
"Securities" means any stock, shares, voting trust certificates,
bonds, debentures, notes or other evidences of indebtedness, secured or
unsecured, convertible, subordinated or otherwise, or any certificates of
interest, shares, or participation in temporary or interim certificates for the
purchase or acquisition of, or any right to subscribe to, purchase or acquire
any of the foregoing, but shall not include any evidence of the Obligations.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, and any successor statute.
"Securities Exchange Act" means the Securities Exchange Act of 1934,
as amended from time to time, and any successor statute.
"Settlement Date" is defined in Section 2.01(f).
"Shareholders' Agreement" means the Shareholders' Agreement dated as
of January 31, 1996 among Holdings and certain holders of shares of Common
Stock.
"Solvent", when used with respect to any Person, means that at the
time of determination:
(i) the assets of such Person, at a fair valuation, are in excess of
the total amount of its debts (including, without limitation, contingent
liabilities); and
(ii) the present fair saleable value of its assets is greater than
its probable liability on its existing debts as such debts become absolute
and matured; and
(iii) it is then able and expects to be able to pay its debts
(including, without limitation, contingent debts and other commitments) as
they mature; and
(iv) it has capital sufficient to carry on its business as conducted
and as proposed to be conducted.
For purposes of determining whether a Person is Solvent, the amount of any
contingent liability shall be computed as the
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amount that, in light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.
"Spot Rate" means, as of any date of determination with respect to
the conversion of an amount in one currency (the "Original Currency") to another
currency (the "Other Currency"), the rate of exchange quoted by the Agent (or
its Affiliate) in New York, New York (if the Original Currency is Dollars),
London, England (if the Original Currency is an Optional Currency), or Toronto,
Canada (if the Original Currency is Canadian Dollars), at 11:00 a.m. (New York
time, London time or Toronto time, as applicable) on such date of determination
to prime banks in New York, New York, London, England, or Toronto, Canada, as
appropriate, for the spot purchase in the foreign exchange market of such city
of such amount of the Original Currency with such Other Currency.
"Standby Letter of Credit" means any Letter of Credit Issued by an
Issuing Bank pursuant to Section 2.02 for the account of a Domestic Borrower
which is not a Commercial Letter of Credit.
"Standing Orders" means a letter agreement between the Agent and the
applicable depository bank with respect to the transfer of funds into a Cash
Collateral Account, in form and substance satisfactory to the Agent.
"Subsidiary" of a Person means any corporation or other entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned or controlled by such
Person, one or more of the other subsidiaries of such Person or any combination
thereof.
"Subsidiary Guarantor" means each Subsidiary of the Company party to
the Subsidiary Guaranty, Pegasus Asia (with respect to the Obligations (other
than in respect of Acquisition Loans) of the Canadian Borrower, and any other
guaranty of all or part of the Obligations.
"Subsidiary Guaranty" means the Guaranty dated as of the Closing
Date duly executed and delivered to the Agent by the Pegasus Benelux and Pegasus
Coordination substantially in the form of Exhibit Q hereto, as the same may be
amended, supplemented or otherwise modified from time to time.
"Subsidiary Investment Basket" means, for any Fiscal Year, an amount
equal to (i) $2,000,000, plus (ii) the Unused Stock Proceeds Carryover Amount as
of the last day of the immediately preceding Fiscal Year, plus (iii) fifty
percent (50%) of the aggregate amount of Net Cash Proceeds received by Holdings
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in connection with the sale of its Capital Stock (after March 31, 1996) during
the then current Fiscal Year. For purposes of this definition "Unused Stock
Proceeds Carryover Amount" means, as of the last day of any Fiscal Year during
the term of this Agreement, (i) fifty percent (50%) of the aggregate amount of
Net Cash Proceeds received by Holdings in connection with the sale of its
Capital Stock (after March 31, 1996) as of such date, minus (ii) for such Fiscal
Year and each preceding Fiscal Year during the term of this Agreement, an amount
equal to the excess, if any, of (1) all intercompany loans to, Investments in
and capitalizations of Subsidiaries of the Company (other than Borrowers) made
during such Fiscal Year (or such preceding Fiscal Year) over (2) $2,000,000
(except as otherwise permitted by this Agreement). For purposes of this
calculation, the term of this Agreement shall be deemed to include all of Fiscal
Year 1996.
"Subsidiary Security Agreements" means (i) the Security Agreement
dated as of the Closing Date duly executed and delivered to the Agent by Pegasus
Benelux and (ii) the Security Agreement dated as of the Closing Date duly
executed and delivered to the Agent by Pegasus Coordination, in each case in
substantially the form of Exhibit R hereto, as the same may be amended,
supplemented or otherwise modified from time to time.
"Swing Loan" is defined in Section 2.01(b).
"Swing Loan Banks" means, collectively, the U.S. Swing Loan Bank,
the Multicurrency Swing Loan Bank and the Canadian Swing Loan Bank.
"Taxes" is defined in Section 3.03(a).
"Termination Event" means (i) a Reportable Event with respect to any
Benefit Plan; (ii) the withdrawal of any Borrower or any ERISA Affiliate from a
Benefit Plan during a plan year in which such Borrower or such ERISA Affiliate
was a "substantial employer" as defined in Section 4001(a)(2) of ERISA; (iii)
the imposition of an obligation on any Borrower or any ERISA Affiliate under
Section 4041 of ERISA to provide affected parties written notice of intent to
terminate a Benefit Plan in a distress termination described in Section 4041(c)
of ERISA; (iv) the institution by the PBGC or any similar foreign Governmental
Authority of proceedings to terminate a Benefit Plan or a Foreign Pension Plan;
(v) any event or condition which would reasonably constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Benefit Plan; (vi) a foreign Governmental Authority shall
appoint or institute proceedings to appoint a trustee to administer any Foreign
Pension Plan; or (vii) the partial or complete withdrawal of any Borrower or any
ERISA Affiliate from a Multiemployer Plan or a Foreign Pension Plan.
"Transaction Costs" means the fees, costs and expenses
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payable by the Borrowers in connection with the execution, delivery and
performance of the Loan Documents and the Acquisition Documents.
"Transaction Documents" means the Loan Documents, the Acquisition
Documents, the Finova Documents and all other agreements or instruments executed
and delivered or to be executed and delivered pursuant hereto or thereto or in
connection herewith or therewith or any of the transactions contemplated hereby
or thereby.
"Uniform Commercial Code" means the Uniform Commercial Code as
enacted in the State of New York, as it may be amended from time to time.
"Unused Commitment Fee" is defined in Section 4.03(b).
"U.S. Base Rate" means, for any period, a fluctuating interest rate
per annum as shall be in effect from time to time, which rate per annum shall at
all times be equal to the highest of:
(i) the rate of interest announced publicly by Citibank in New York,
New York from time to time, as Citibank's base rate; and
(ii) the sum (adjusted to the nearest one quarter of one percent
(0.25%) or, if there is no nearest one quarter of one percent (0.25%), to
the next higher one quarter of one percent (0.25%)) of (A) one half of one
percent (0.50%) per annum plus (B) the rate per annum obtained by dividing
(1) the latest three-week moving average of secondary market morning
offering rates in the United States for three-month certificates of
deposit of major United States money market banks, such three-week moving
average being determined weekly on each Monday (or, if such day is not a
Business Day, on the next succeeding Business Day) for the three-week
period ending on the previous Friday (or, if such day is not a Business
Day, on the next preceding Business Day) by Citibank on the basis of such
rates reported by certificate of deposit dealers to, and published by, the
Federal Reserve Bank of New York, or, if such publication shall be
suspended or terminated, on the basis of quotations for such rates
received by Citibank from three (3) New York certificate of deposit
dealers of recognized standing selected by Citibank, by (2) a percentage
equal to 100% minus the average of the daily percentages specified during
such three-week period by the Federal Reserve Board for determining the
maximum reserve requirement (including, but not limited to, any emergency,
supplemental or other marginal reserve requirement) for Citibank in
respect of liabilities consisting of or including (among other
liabilities) three-month Dollar nonpersonal time deposits in the United
States,
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plus (C) the average during such three-week period of the annual
assessment rates estimated by Citibank for determin ing the then current
annual assessment payable by Citibank to the Federal Deposit Insurance
Corporation (or any successor) for insuring Dollar deposits of Citibank in
the United States.
"U.S. Cash Collateral Account" means account number 4068-9578
maintained with Citibank in New York, New York (i) into which, subject to the
provisions of Section 3.05, funds from the U.S. Concentration Accounts shall be
transferred and invested and (ii) from which, subject to the provisions of
Section 3.05, funds will be transferred to the U.S. Concentration Accounts.
"U.S. Commitment" means, as to each U.S. Lender, the commitment of
such U.S. Lender to make U.S. Loans to, and participate in Letters of Credit
Issued for the account of, the Domestic Borrowers in the aggregate principal
amount outstanding not to exceed the amount on the Closing Date set forth
opposite such U.S. Lender's name on Schedule 1.01.1 under the caption "U.S.
Commitment", as such amount may be reduced or modified pursuant to this
Agreement; provided, however, at no time shall the aggregate U.S. Commitments of
all U.S. Lenders exceed $125,000,000 less any permanent reduction made pursuant
to Section 3.01.
"U.S. Concentration Account" means (i) with respect to the Company,
account number 4000-3644, (ii) with respect to Muehlstein International, account
number 4069-1264 and (iii) with respect to Pegasus, account number 4069-1299, in
each case maintained with Citibank in New York, New York (x) into which, subject
to the provisions of Section 3.05, funds from such Borrower's U.S. Cash
Collateral Account shall be transferred and (y) from which, subject to the
provisions of Section 3.05, funds will be applied to the Obligations of such
Borrower.
"U.S. Facility" means the facility provided by the U.S. Lenders to
make U.S. Loans to, and to Issue Letters of Credit for the account of, the
Domestic Borrowers, in each case in accordance with the terms and conditions
contained in this Agreement.
"U.S. Issuing Banks" means Citibank and each other Lender (or
Affiliate of a Lender) approved by the Agent and the Company who has agreed to
become an Issuing Bank for the purpose of issuing Letters of Credit under the
U.S. Facility pursuant to Section 2.02.
"U.S. Lenders" means the Lenders designated as such on Schedule
1.01.1 under the caption "U.S. Commitment" and each other institution which is
party hereto as a U.S. Lender pursuant to an Assignment and Acceptance.
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"U.S. LIBO Rate" means, with respect to any Interest Period
applicable to a Borrowing of Fixed Rate Loans under the U.S. Facility
denominated in Dollars, the interest rate per annum obtained by dividing:
(i) an interest rate per annum determined by the Agent to be the
average (rounded upward to the nearest whole multiple of one-sixteenth of
one percent (0.0625%) per annum if such average is not such a multiple) of
the rates per annum at which deposits in Dollars are offered by the
principal office of Citibank in London, England to major banks in the
London interbank market at approximately 11:00 a.m. (London time) on the
Fixed Rate Determination Date for such Interest Period for a period equal
to such Interest Period and in an amount substantially equal to the amount
of Citicorp's Fixed Rate Loan and for a period equal to such Interest
Period, by
(ii) a percentage equal to (A) 100% minus (B) the U.S. LIBOR Reserve
Percentage in effect on the relevant Fixed Rate Determination Date. The
U.S. LIBO Rate shall be adjusted automatically on and as of the effective
date of any change in the U.S. LIBOR Reserve Percentage.
For purposes of this definition, "U.S. LIBOR Reserve Percentage" means, for any
day, that percentage which is in effect on such day, as prescribed by the
Federal Reserve Board for determining the maximum reserve requirement
(including, without limitation, any emergency, supplemental or other marginal
reserve requirement) for a member bank of the Federal Reserve System in New
York, New York with deposits exceeding five billion Dollars in respect of
"Eurocurrency Liabilities" (or in respect of any other category of liabilities
which includes deposits by reference to which the interest rate on Fixed Rate
Loans is determined or any category of extensions of credit or other assets
which includes loans by a non-United States office of any bank to United States
residents). The Agent shall provide to the Company, upon the reasonable request
of the Company, a reasonably detailed explanation of any U.S. LIBOR Reserve
Percentage used in the determination of the U.S. LIBO Rate.
"U.S. Loan" is defined in Section 2.01(a).
"U.S. Loan Notes" means one or more notes made payable to the U.S.
Lenders evidencing the Domestic Borrowers' Obligations to repay the U.S. Loans
made to such Borrowers.
"U.S. Swing Loan Bank" means Citicorp, in its individual capacity
or, in the event Citicorp is not the Agent, the Agent (or any Affiliate of the
Agent designated by the Agent), in its individual capacity. The U.S. Swing Loan
Bank may from time to time make in its sole discretion Swing Loans under the
U.S. Facility.
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"Voting Stock" means, with respect to any Person, securities with
respect to any class or classes of Capital Stock of such Person entitling the
holders thereof (whether at all times or only so long as no senior class of
stock has voting power by reason of any contingency) to vote in the election of
members of the board of directors of such Person.
"Wholly Owned Subsidiary" means any direct, wholly owned Subsidiary
of the Company with respect to which the Agent has (i) a first priority Lien on
the Capital Stock of such Subsidiary and (ii) a first priority Lien (subject
only to Customary Permitted Liens) on the Receivables, Inventory and General
Intangibles of such Subsidiary, in each case as security for the Obligations.
1.02. Computation of Time Periods. In this Agreement, in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
mean "to but excluding". Periods of days referred to in this Agreement shall be
counted in calendar days unless Business Days are expressly prescribed. Any
period determined hereunder by reference to a month or months or year or years
shall end on the day in the relevant calendar month in the relevant year, if
applicable, immediately preceding the date numerically corresponding to the
first day of such period, provided that if such period commences on the last day
of a calendar month (or on a day for which there is no numerically corresponding
day in the calendar month during which such period is to end), such period
shall, unless otherwise expressly required by the other provisions of this
Agreement, end on the last day of the calendar month.
1.03. Accounting Terms. Subject to Section 13.04, for purposes of
this Agreement, all accounting terms not otherwise defined herein shall have the
meanings assigned to them in conformity with GAAP.
1.04. Other Definitional Provisions. References to the "preamble",
"Articles", "Sections", "subsections", "Schedules" and "Exhibits" shall be to
the preamble, Articles, Sections, subsections, Schedules and Exhibits,
respectively, of this Agreement unless otherwise specifically provided. The
words "hereof", "herein", and "hereunder" and words of similar import when used
in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement.
1.05. Other Terms. All other terms contained herein shall, unless
the context indicates otherwise, have the meanings assigned to such terms by the
Uniform Commercial Code to the extent the same are defined therein.
1.06. Payments by the Borrowers. Except as expressly
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set forth herein to the contrary, (a) all payments made by the Borrowers in
respect of principal and interest on the Loans made under any Credit Facility
shall be made (i) with respect to the U.S. Facility, in Dollars, (ii) with
respect to the Multicurrency Facility, in the Optional Currency in which such
Loan was made, and (iii) with respect to the Canadian Facility, in Canadian
Dollars and (b) all payments of Reimbursement Obligations shall be made in the
Available Currency in which the Letter of Credit under which such Reimbursement
Obligations arise is denominated.
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ARTICLE II
AMOUNTS AND TERMS OF LOANS AND LETTERS OF CREDIT
2.01. The Revolving Credit Facility.
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(a) Revolving Loans. Subject to the terms and conditions set forth
herein, (i) pursuant to the U.S. Commitments, each U.S. Lender hereby severally
and not jointly agrees to make revolving loans (each a "U.S. Loan") to the
Domestic Borrowers from time to time on any Business Day during the period from
the Closing Date to the Revolving Credit Termination Date, in an aggregate
amount not to exceed at any time outstanding such U.S. Lender's Pro Rata Share
of the Revolving Credit Availability under the U.S. Facility at such time,
provided, however, at no time shall the aggregate Revolving Credit Obligations
owed by the Domestic Borrowers under the U.S. Facility exceed the Maximum
Revolving Credit Amount for the U.S. Facility at such time, (ii) pursuant to the
Multicurrency Commitments, each Multicurrency Lender hereby severally and not
jointly agrees to make revolving loans (each a "Multicurrency Loan") to the
Multicurrency Borrower from time to time on any Business Day during the period
from the Closing Date to the Revolving Credit Termination Date, in an aggregate
amount (converted to the Dollar Equivalent thereof) not to exceed at any time
outstanding such Multicurrency Lender's Pro Rata Share of the Revolving Credit
Availability under the Multicurrency Facility at such time, provided, however,
at no time shall the aggregate Revolving Credit Obligations owed by the
Multicurrency Borrower under the Multicurrency Facility exceed the Maximum
Revolving Credit Amount for the Multicurrency Facility at such time, and (iii)
pursuant to the Canadian Commitments, each Canadian Lender hereby severally and
not jointly agrees to make revolving loans (each a "Canadian Loan" and, together
with the U.S. Loans and the Multicurrency Loans, the "Revolving Loans") to the
Canadian Borrower from time to time on any Business Day during the period from
the Closing Date to the Revolving Credit Termination Date, in an aggregate
amount (converted to the Dollar Equivalent thereof) not to exceed at any time
outstanding such Canadian Lender's Pro Rata Share of the Revolving Credit
Availability under the Canadian Facility at such time, provided, however, at no
time shall the aggregate Revolving Credit Obligations owed by the Canadian
Borrower exceed the Maximum Revolving Credit Amount for the Canadian Facility at
such time. All Revolving Loans comprising the same Borrowing hereunder shall be
made by the U.S. Lenders, the Multicurrency Lenders or the Canadian Lenders, as
the case may be, simultaneously and proportionately to their then respective Pro
Rata Shares of the applicable Credit Facility. Subject to the provisions hereof,
any Borrower may repay any outstanding Revolving Loan on any day which is a
Business Day and any amounts so repaid may be reborrowed, up to the amount
available under this Section 2.01(a) at the time of such Borrowing, until the
Revolving Credit Termination Date. Each Borrowing of U.S. Loans shall be in
Dollars, each Borrowing of Multicurrency Loans shall be denominated in a single
Optional Currency and each Borrowing of Canadian Loans shall be in Canadian
Dollars. Each Borrowing of Multicurrency Loans shall be in an aggregate minimum
amount of the Dollar Equivalent of $500,000 for Floating Rate Loans (and in
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approximately similar intervals in the applicable Optional Currency in excess
thereof) and $1,000,000 for Fixed Rate Loans (and in approximately similar
intervals in the applicable Optional Currency in excess thereof). The
Multicurrency Borrower shall not request Borrowings of Multicurrency Loans on
more than two (2) Business Days during any calendar week (it being agreed and
understood that the Multicurrency Borrower may request more than one Borrowing
on any such Business Day) and shall not request Borrowings in any Optional
Currency if, after giving effect to such Borrowing, the aggregate Dollar
Equivalent principal amount of all outstanding Multicurrency Loans denominated
in such Optional Currency would be $20,000,000. Borrowings under the U.S.
Facility and the Canadian Facility shall not be subject to a minimum amount;
provided, that Borrowings of Fixed Rate Loans under the U.S. Facility shall be
in the amounts specified in Section 4.02(a).
(b) Swing Loans. With respect to each Credit Facility, the relevant
Swing Loan Bank may, in its sole discretion, make to the Borrower or Borrowers
to whom the Revolving Loans under such Credit Facility are available loans (each
a "Swing Loan") from time to time on any Business Day during the period from the
Closing Date to the Revolving Credit Termination Date, in an aggregate amount
not to exceed at any time the Dollar Equivalent of such Swing Loan Bank's Pro
Rata Share of the Revolving Credit Availability under such Credit Facility at
such time. In addition to the foregoing, the Swing Loan Bank under any Credit
Facility may in its sole discretion permit to be outstanding at any time
additional Swing Loans in excess of the amount of all such Loans permitted to be
made pursuant to the preceding sentence in an aggregate Dollar Equivalent
principal amount not to exceed the lesser of (i) $10,000,000 and (ii) the
Revolving Credit Availability for such Credit Facility at such time. All Swing
Loans made under any Credit Facility shall be made as Floating Rate Loans and
shall be available in the same currencies as Revolving Loans made under such
Credit Facility. Except as otherwise provided herein, all Swing Loans shall be
subject to all the terms and conditions applicable to Revolving Loans. Swing
Loans shall be repaid pursuant to the terms of Section 2.01(f) or as otherwise
provided in this Agreement.
(c) Notice of Borrowing in Respect of Loans under the Revolving
Credit Facility. When a Borrower desires to make a Borrowing under this Section
2.01, it shall deliver to the Agent in a manner specified in Section 13.08 a
signed Notice of Borrowing no later than (i) (A) 12:00 p.m. (New York time) on
the proposed Funding Date for such Borrowing, in the case of a proposed
Borrowing of U.S. Loans consisting of Floating Rate Loans and (B) 12:00 p.m.
(New York time) at least three (3) Business Days in advance of the proposed
Funding Date for such Borrowing, in the case of a proposed Borrowing of U.S.
Loans consisting of Fixed Rate Loans, (ii) 11:00 a.m. (London time) at
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least two (2) Business Days in advance of the proposed Funding Date for such
Borrowing, in the case of a proposed Borrowing of Multicurrency Loans consisting
of Floating Rate Loans or Fixed Rate Loans, or (iii) 11:00 a.m. (Toronto time)
at least one (1) Business Day in advance of the proposed Funding Date for such
Borrowing, in the case of a proposed Borrowing of Canadian Loans.
Any such Notice of Borrowing shall be irrevocable and shall first constitute a
request by such Borrower to borrow Swing Loans under the applicable Credit
Facility (other than a request for a Fixed Rate Loan); provided, however, in the
event the Agent after consultation with the relevant Swing Loan Bank determines
that a Borrowing of Swing Loans is not possible or feasible, such Notice of
Borrowing shall constitute a request, as of the time such Notice of Borrowing
was originally submitted, by such Borrower to borrow Revolving Loans under such
Credit Facility; provided, further, however, all Notices of Borrowing with
respect to Fixed Rate Loans shall constitute a request by such Borrower to
borrow Revolving Loans under the U.S. Facility or the Multicurrency Facility, as
the case may be. All Loans made under this Section 2.01 on the Closing Date
shall be made initially as Floating Rate Loans and may thereafter be continued
as Floating Rate Loans or, except in the case of Canadian Loans, converted into
Fixed Rate Loans in the manner provided in Section 4.01(c). In the case of a
Notice of Borrowing delivered in connection with a proposed Borrowing of
Multicurrency Loans or Canadian Loans, the relevant Borrower shall request,
within one-half hour prior to the issuance of such Notice of Borrowing, the
advice of the Agent as to the Dollar Equivalent of the amount of such Borrowing,
and such Borrower shall specify such amount in such Notice of Borrowing,
provided that such advice shall not be deemed to be a prediction or guaranty of
the Dollar Equivalent of such amount after the Notice of Borrowing is submitted
and shall in no way limit the Borrowers' Obligations under this Agreement due to
fluctuations in the applicable Available Currency.
(d) Making of Swing Loans. Promptly after receipt of a Notice of
Borrowing pursuant to Section 2.01(c), the applicable Swing Loan Bank shall
deposit in immediately available funds the amount it intends to fund, if any, in
respect of the Loans requested in such Notice of Borrowing with the Agent (i) at
its office in New York, New York not later than 3:00 p.m. (New York time) on the
Funding Date, in the case of a proposed Borrowing of U.S. Loans, (ii) at its
office in London, England not later than 3:00 p.m. (London time) on the Funding
Date, in the case of a proposed Borrowing of Multicurrency Loans, or (iii) at
its office in Toronto, Canada not later than 3:00 p.m. (Toronto time) on the
Funding Date, in the case of a proposed Borrowing of Canadian Loans. No Swing
Loan Bank shall make any Swing Loan in the period commencing on the first
Business Day after it receives written notice from any Lender that one or more
of the conditions precedent contained in Section 5.02 shall not on such date be
satisfied, and ending when such conditions are satisfied, and no Swing Loan Bank
shall otherwise be required to determine that, or
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take notice whether, the conditions precedent set forth in Section 5.02 hereof
have been satisfied in connection with the making of any Swing Loan. Subject to
the preceding sentence, the Agent shall make such proceeds of each funding of a
Swing Loan available to the relevant Borrower at the Agent's office in New York,
New York, London, England, or Toronto, Canada, as applicable, on the Funding
Date of the proposed Borrowing and shall disburse such proceeds to the
Disbursement Account referred to in the applicable Notice of Borrowing. If the
applicable Swing Loan Bank receives a Notice of Borrowing within the applicable
time limits set forth in Section 2.01(c) and does not intend to fund such
requested Borrowing as a Swing Loan, the Swing Loan Bank will promptly notify
the Agent (to the extent the Swing Loan Bank and the Agent are not the same
Person) of such intention, and no delay by the Swing Loan Bank shall impair the
applicable Borrower's right to borrow Revolving Loans under this Section 2.01.
(e) Making of Revolving Loans. (i) In the event any portion of the
Loans requested in any Notice of Borrowing delivered to the Agent pursuant
Section 2.01(c) will be made as Revolving Loans, the Agent shall promptly notify
each Lender under the applicable Credit Facility of the amount of such Borrowing
of Revolving Loans. Each such Lender shall deposit an amount equal to its Pro
Rata Share under such Credit Facility of the amount of such Borrowing with the
Agent in the applicable Payment Account in immediately available funds and in
the appropriate currency, not later than 3:00 p.m. (New York time or Toronto
time) or 12:00 noon (London time), as applicable, on any Funding Date applicable
thereto (or, if the Funding Date is the Closing Date, such earlier time as the
Agent shall determine). Subject to the fulfillment of the conditions precedent
set forth in Section 5.01 (solely with respect to the making of Revolving Loans
on the Closing Date) or Section 5.02, the Agent shall make the proceeds of such
amounts received by it available to the applicable Borrower at the Agent's
office in New York, New York, London, England, or Toronto, Canada, as
appropriate, on such Funding Date (or as soon thereafter as is customarily
practicable) and shall disburse such proceeds to the Disbursement Account
referred to in the applicable Notice of Borrowing.
(ii) The failure of any Lender to deposit the amount described
in clause (i) above (or required to be paid pursuant to Section 2.01(f)) with
the Agent on the applicable Funding Date shall not relieve any other Lender of
its obligations hereunder to make its Revolving Loan on such Funding Date. No
Lender shall be responsible for any failure by any other Lender to perform its
obligation to make a Revolving Loan hereunder nor shall the U.S. Commitment,
Multicurrency Commitment or Canadian Commitment of any Lender be increased or
decreased as a result of any such failure.
(iii) Unless the Agent shall have been notified by
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any Lender prior to 2:00 p.m. (New York time or Toronto time) or 11:00 a.m.
(London time), as applicable, on any applicable Funding Date in respect of any
Borrowing of Revolving Loans after the Closing Date that such Lender does not
intend to fund its Loan requested to be made on such Funding Date, the Agent may
assume that such Lender has funded its Revolving Loan and is depositing the
proceeds thereof in the applicable Payment Account on the Funding Date, and the
Agent in its sole discretion may, but shall not be obligated to, disburse a
corresponding amount to the applicable Borrower on the Funding Date. If the
Revolving Loan proceeds corresponding to that amount are advanced to such
Borrower by the Agent but are not in fact deposited with the Agent by such
Lender on or prior to the applicable Funding Date, such Lender agrees to pay,
and in addition such Borrower agrees to repay, to the Agent forthwith on demand
such corresponding amount, together with interest thereon, for each day from the
date such amount is disbursed to or for the benefit of such Borrower until the
date such amount is paid or repaid to the Agent, (A) in the case of such
Borrower, at the interest rate applicable to such Borrowing and (B) in the case
of such Lender, at the Interbank Rate for the first Business Day, and thereafter
at the interest rate applicable to such Borrowing. If such Lender shall pay to
the Agent the corresponding amount, the amount so paid shall constitute such
Lender's Revolving Loan, and if both such Lender and such Borrower shall pay and
repay such corresponding amount, the Agent shall promptly pay to such Borrower
such corresponding amount (together with any interest included in such payment).
This Section 2.01(e)(iii) does not relieve any Lender of its obligation to make
its Revolving Loan on any Funding Date.
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(iv) Anything hereinabove to the contrary notwithstanding, if
any Multicurrency Lender shall, not later than 2:00 p.m. (London time) one
Business Day before the date of any requested Borrowing of Multicurrency Loans,
notify the Agent that such Lender is not satisfied that deposits in the relevant
Optional Currency will be freely available to it in the relevant amount and, if
applicable, for the relevant Interest Period, the right of the Multicurrency
Borrower to request Multicurrency Loans in such Optional Currency from such
Lender as part of such Borrowing or any subsequent Borrowing of Multicurrency
Loans shall be suspended until such Lender shall notify the Agent that the
circumstances causing such suspension no longer exist, and, at the option of the
Multicurrency Borrower, the Multicurrency Loan to be made by such Lender as part
of such Borrowing (and the Multicurrency Loan to be made by such Lender as part
of any subsequent Borrowing of Multicurrency Loans in respect of which such
Optional Currency shall have been requested during such period of suspension)
shall be denominated in any other Available Currency requested on the same
Business Day which is available or, in Pounds if no such currency has been
requested or is available, and having a Interest Period coextensive with the
Interest Period in effect in respect of all other Multicurrency Loans comprising
a part of such Borrowing. The Agent shall, upon becoming aware that the
circumstances causing any such suspension no longer apply, promptly so notify
the Multicurrency Borrower, provided that the failure of the Agent to so notify
the Multicurrency Borrower shall not impair the rights of the Lenders under this
Section 2.01(e)(iv) or expose the Agent to any liability.
(f) Settlement of Swing Loans. (i) The Agent shall from time to time
notify (x) each U.S. Lender by 12:00 noon (New York time), (y) each
Multicurrency Lender by 12:00 noon (London time), and (z) each Canadian Lender
by 12:00 noon (Toronto time), in each case on a date to be selected weekly or
more frequently by the Agent, in its sole discretion, of the aggregate principal
amount of Swing Loans outstanding under the relevant Credit Facility (and the
currency in which such Swing Loans are denominated) as of the close of business
on the Business Day immediately preceding the date of such notice (each such
Business Day being a "Settlement Date" in respect of such Credit Facility). Upon
such notice, each U.S. Lender, Multicurrency Lender or Canadian Lender, as the
case may be, shall deposit in the applicable Payment Account in the appropriate
currency an amount equal to its Pro Rata Share under the applicable Credit
Facility of the amount of such principal amount of Swing Loans outstanding in
such currency in immediately available funds, not later than 3:00 p.m. (New York
time, London time or Toronto time, as appropriate) on the date of such notice.
Upon such payment, each Lender shall be deemed to have made a Revolving Loan
denominated in such currency to the applicable Borrower or Borrowers in such
amount (irrespective of the satisfaction of the conditions in Section 5.02).
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(ii) In the event that no Swing Loans with respect to a
particular Credit Facility are outstanding on any Settlement Date in any
currency, the Agent shall, before 3:00 p.m. (New York time, London time or
Toronto time, as applicable) on such Settlement Date, disburse to each Lender
such Lender's Pro Rata Share under such Credit Facility of the funds in such
currency, if any, on deposit in the applicable Payment Account applicable to the
repayment of the Revolving Loans under such Credit Facility denominated in such
currency.
(iii) If and to the extent any Lender under any Credit Facility
shall not have made available to the Agent on any Settlement Date with respect
to such Credit Facility any amount payable by such Lender on such Settlement
Date pursuant to this Section 2.01(f), such Lender agrees to pay to the Agent
forthwith on demand such amount in the applicable currency together with
interest thereon, for each day from such Settlement Date until the date such
amount is paid to the Agent, for three (3) Business Days at the Interbank Rate
and thereafter at the interest rate applicable to the Loans denominated in such
currency hereunder.
(g) Use of Proceeds. Proceeds of Loans shall be used through
dividends to Holdings (i) in an aggregate amount of up to $100,000,000 on the
Closing Date to finance the transactions contemplated by the Transaction
Documents and to pay Transaction Costs and (ii) to fund purchase price
adjustments, if any, after the Closing Date pursuant to the Acquisition
Agreement. Proceeds of U.S. Loans and of Swing Loans under the U.S. Facility
shall be used to provide for ongoing working capital needs in the ordinary
course of the business of the Company and its Subsidiaries and for other lawful
general corporate purposes not prohibited hereunder. Proceeds of Multicurrency
Loans and of Swing Loans under the Multicurrency Facility shall be used to
provide for ongoing working capital needs in the ordinary course of the business
of the Multicurrency Borrower and its Subsidiaries and for other lawful general
corporate purposes not prohibited hereunder. Proceeds of the Canadian Loans and
of Swing Loans under the Canadian Facility shall be used to provide for ongoing
working capital needs in the ordinary course of the business of the Canadian
Borrower and its Subsidiaries and for other lawful general corporate purposes of
the Canadian Borrower and its Subsidiaries not prohibited hereunder.
(h) Revolving Credit Termination Date. The Revolving Credit
Commitments shall terminate, and all outstanding Revolving Credit Obligations
shall be Paid In Full, on the Revolving Credit Termination Date.
2.02. Letters of Credit. Subject to the terms and conditions set
forth herein, (x) each U.S. Issuing Bank hereby severally agrees to Issue for
the account of any Domestic Borrower one or more Letters of Credit, up to an
aggregate face
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amount at any one time outstanding for all Domestic Borrowers equal to the
Letter of Credit Availability of the Domestic Borrowers and (y) each Canadian
Issuing Bank hereby severally agrees to Issue for the account of the Canadian
Borrower one or more Letters of Credit, up to an aggregate face amount at any
one time outstanding equal to the Letter of Credit Availability of the Canadian
Borrower, subject, in each case, to the following provisions:
(a) Types and Amounts. An Issuing Bank shall not have any obligation
to Issue, and shall not, except as otherwise agreed by the Requisite Lenders and
Issuing Bank (except with respect to any notification received by an Issuing
Bank pursuant to Section 2.02(a)(ii)(A), which shall require the agreement of
all of the Lenders and the Issuing Bank), Issue any Letter of Credit at any
time:
(i) if the aggregate Letter of Credit Obligations with respect to
such Issuing Bank, after giving effect to the Issuance of the Letter of
Credit requested hereunder, shall exceed any limit imposed by law or
regulation upon such Issuing Bank;
(ii) if the Issuing Bank receives notice (A) from the Agent at or
before 11:00 a.m. (New York or Toronto time) on the date of the proposed
Issuance of such Letter of Credit that, immediately after giving effect to
the Issuance of such Letter of Credit, the Revolving Credit Obligations in
respect of the U.S. Facility or the Canadian Facility, as applicable, at
such time would exceed the Maximum Revolving Credit Amount for such Credit
Facility or (B) from any of the Lenders at or before 11:00 a.m. (New York
or Toronto time) on the date of the proposed Issuance of such Letter of
Credit that one or more of the conditions precedent con tained in Sections
5.01 (solely with respect to an Issuance of a Letter of Credit on the
Closing Date) or 5.02 would not on such date be satisfied (or waived
pursuant to Section 13.07), unless such conditions are thereafter
satisfied or waived and notice of such satisfaction or waiver is given to
the Issuing Bank by the Agent (and an Issuing Bank shall not otherwise be
required to determine that, or take notice whether, the conditions
precedent set forth in Sections 5.01 or 5.02, as applicable, have been
satisfied or waived);
(iii) which has an expiration date later than the earlier of (A) the
date one (1) year after the date of Issuance or (B) the Business Day next
preceding the Revolving Credit Termination Date, provided that it is
agreed and understood that notwithstanding the termination of any Letter
of Credit pursuant to its terms, the beneficiary under such Letter of
Credit may, in accordance with applicable law, continue to make drawings
thereunder; or
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(iv) which is in a currency other than (A) an Available Currency with
respect to Letters of Credit requested by the Domestic Borrowers and (B)
Dollars or Canadian Dollars with respect to Letters of Credit requested by
the Canadian Borrower; or
(v) the Issuance and terms of which is governed by the laws of any
jurisdiction other than the United States, Canada, the United Kingdom,
France or any other jurisdiction which is approved by the Agent and the
applicable Issuing Bank.
(b) Conditions. In addition to being subject to the satisfaction of
the conditions precedent contained in Sections 5.01 (solely with respect to an
Issuance of a Letter of Credit on the Closing Date) and 5.02, the obligation of
an Issuing Bank to Issue any Letter of Credit is subject to the satisfaction in
full of the following conditions:
(i) if the Issuing Bank so requests, the applicable Borrower shall
have executed and delivered to such Issuing Bank and the Agent a Letter of
Credit Reimbursement Agreement and such other documents and materials as
may be required pursuant to the terms thereof; and
(ii) the terms of the proposed Letter of Credit shall conform to the
customary terms of letters of credit issued by the Issuing Bank.
(c) Issuance of Letters of Credit. (i) A Borrower shall deliver to
the applicable Issuing Bank and the Agent in a manner specified in Section 13.08
a signed Notice of Letter of Credit Issuance not later than 11:00 a.m. (New York
or Toronto time) on the third Business Day preceding the requested date for
Issuance of a Letter of Credit hereunder, or such shorter notice as may be
acceptable to such Issuing Bank and the Agent. Such notice shall be irrevocable.
(ii) The Issuing Bank shall give the Agent written notice, or
telephonic notice confirmed promptly thereafter in writing, of the Issuance of a
Letter of Credit.
(d) Reimbursement Obligations; Duties of Issuing Banks. (i)
Notwithstanding any provision to the contrary in any Letter of Credit
Reimbursement Agreement:
(A) each Borrower for whose account a Letter of Credit has been
Issued agrees to reimburse the applicable Issuing Bank in the applicable
currency for amounts drawn under such Letter of Credit pursuant to
subsection (e)(ii) below, no later than the date (the
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"Reimbursement Date") which is one (1) Business Day after such Borrower
receives written notice from the Issuing Bank that payment has been made
under such Letter of Credit by the Issuing Bank; and
(B) all Reimbursement Obligations with respect to any Letter of
Credit shall bear interest at the Floating Rate applicable to the currency
in which such Letter of Credit was Issued plus the Applicable Floating
Rate Margin from the date of the relevant drawing under such Letter of
Credit until the Reimbursement Date and thereafter at the rate applicable
in accordance with Section 4.01(d).
(ii) The Issuing Bank shall give the Agent written notice, or
telephonic notice confirmed promptly thereafter in writing, of all drawings
under a Letter of Credit and the payment (or the failure to pay when due) by the
Borrowers on account of a Reimbursement Obligation.
(iii) No action taken or omitted in good faith by an Issuing Bank under
or in connection with any Letter of Credit (except for any such action resulting
from the gross negligence or wilful misconduct of such Issuing Bank) shall put
such Issuing Bank under any resulting liability to any Lender, any Borrower or,
so long as such Letter of Credit is not Issued in violation of Section 2.02(a),
relieve any Lender of its obligations hereunder to such Issuing Bank. In
determining whether to pay under any Letter of Credit, the respective Issuing
Bank shall have no obligation to the Lenders or any Borrower other than to
confirm that any documents required to be delivered under a respective Letter of
Credit appear to have been delivered by the appropriate Person and that they
appear on their face to comply with the requirements of such Letter of Credit.
(e) Participations. (i) Immediately upon Issuance by an Issuing Bank
of any Letter of Credit under the U.S. Facility or the Canadian Facility, as
applicable, for the account of any Borrower under such Credit Facility in
accordance with the procedures set forth in this Section 2.02, each Lender
holding a Revolving Credit Commitment in such Credit Facility shall be deemed to
have irrevocably and unconditionally purchased and received from that Issuing
Bank, without recourse or warranty, an undivided interest and participation in
such Letter of Credit to the extent of such Lender's Pro Rata Share under such
Credit Facility, including, without limitation, all obligations of such Borrower
with respect thereto (other than amounts owing to the Issuing Bank under Section
2.02(g)) and any security therefor and guaranty pertaining thereto.
(ii) If any Issuing Bank makes any payment under any Letter of Credit
for the account of any Borrower and such Borrower does not repay such amount to
the Issuing Bank on the
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Reimbursement Date, the Issuing Bank shall promptly notify the Agent, which
shall notify the U.S. Swing Loan Bank or the Canadian Swing Loan Bank, as
applicable, and if such Swing Loan Bank so elects, a Swing Loan under the
applicable Credit Facility can be made in such amount (or the Dollar Equivalent
of such amount (plus reasonable foreign exchange costs) if such Letter of Credit
is in an Available Currency other than Dollars (in the case of the U.S.
Facility) or is in Dollars (in the case of the Canadian Facility)), the proceeds
of which (less such foreign exchange costs) shall be paid to the Agent for the
account of such Issuing Bank, in immediately available funds, and the Agent
shall promptly pay such proceeds to the Issuing Bank. In the event such Issuing
Bank cannot be so paid from proceeds of a Swing Loan, the Agent shall promptly
notify each Lender under such Credit Facility, and each Lender shall promptly
and unconditionally pay to the Agent for the account of such Issuing Bank, in
immediately available funds, the amount (or the Dollar Equivalent of such amount
(plus reasonable foreign exchange costs) if such Letter of Credit is in an
Available Currency other than Dollars (in the case of the U.S. Facility) or is
in Dollars (in the case of the Canadian Facility)) of such Lender's Pro Rata
Share under the applicable Credit Facility of the payment made by such Issuing
Bank, and the Agent shall promptly pay to the Issuing Bank such amounts (less
such foreign exchange costs) received by it. In the event such payments are made
by such Lenders, such payments shall constitute Revolving Loans made to the
applicable Borrower under the applicable Credit Facility pursuant to Section
2.01 (irrespective of the satisfaction of the conditions in Section 5.02). If a
Lender does not make its Pro Rata Share under the applicable Credit Facility of
the amount of any such payment available to the Agent, such Lender agrees to pay
to the Agent for the account of the Issuing Bank, forthwith on demand, such
amount together with interest thereon, for the first Business Day after the date
such payment was first due at the applicable Interbank Rate, and thereafter at
the interest rate then applicable in accordance with Section 4.01(a). The
failure of any such Lender to make available to the Agent for the account of an
Issuing Bank its Pro Rata Share under the applicable Credit Facility of any such
payment shall neither relieve any other Lender of its obligation hereunder to
make available to the Agent for the account of such Issuing Bank such other
Lender's Pro Rata Share under the applicable Credit Facility of any payment on
the date such payment is to be made nor increase the obligation of any other
Lender to make such payment to the Agent. This Section does not relieve any
Borrower of its obligation to pay or repay any Lender funding its Pro Rata Share
of such payment pursuant to this Section interest on the amount of such payment
from such date such payment is to be made until the date on which payment is
repaid in full.
(iii) Whenever an Issuing Bank receives a payment on account of a
Reimbursement Obligation, including any interest thereon, as to which any Swing
Loan Bank has made a Swing Loan or
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any Lender has made a Revolving Loan pursuant to Section 2.02(e)(ii), such
Issuing Bank shall promptly pay to the Agent such payment in accordance with
Section 3.02.
(iv) Upon the request of any Lender under the applicable Credit
Facility, an Issuing Bank shall furnish such Lender copies of any Letter of
Credit or Letter of Credit Reimbursement Agreement to which such Issuing Bank is
party and such other documentation as reasonably may be requested by such
Lender.
(v) The obligations of any Lender to make payments to the Agent for
the account of any Issuing Bank with respect to a Letter of Credit shall be
irrevocable, shall not be subject to any qualification or exception whatsoever
(except the Issuance of the Letter of Credit in contravention of this Section
2.02) and shall be made in accordance with this Agreement (irrespective of the
satisfaction of the conditions described in Sections 5.01 and 5.02) under all
circumstances, including, without limitation, any of the following
circumstances:
(A) any lack of validity or enforceability hereof or of any of the
other Loan Documents;
(B) the existence of any claim, setoff, defense or other right which
any Borrower may have at any time against a beneficiary named in a Letter
of Credit or any transferee of a beneficiary named in a Letter of Credit
(or any Person for whom any such transferee may be acting), the Agent, any
Issuing Bank, any Lender, or any other Person, whether in connection
herewith, with any Letter of Credit, the transactions contemplated herein
or any unrelated transactions (including any underlying transactions
between the account party and beneficiary named in any Letter of Credit);
(C) any draft, certificate or any other document presented under the
Letter of Credit having been deter mined to be forged, fraudulent, invalid
or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(D) the surrender or impairment of any security for the performance
or observance of any of the terms of any of the Loan Documents;
(E) any failure by such Issuing Bank to make any reports required
pursuant to Section 2.02(h) or the inaccuracy of any such report; or
(F) the occurrence of any Event of Default or Default.
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(f) Payment of Reimbursement Obligations. (i) Each Borrower for
whose account a Letter of Credit has been Issued unconditionally agrees to pay
to each Issuing Bank the amount of all Reimbursement Obligations, interest and
other amounts payable to such Issuing Bank under or in connection with such
Letter of Credit when such amounts are due and payable, irrespective of any
claim, setoff, defense or other right which such Borrower may have at any time
against such Issuing Bank or any other Person.
(ii) In the event any payment by a Borrower received by an Issuing
Bank with respect to a Letter of Credit Issued for the account of such Borrower
and distributed by the Agent to the Lenders under the applicable Credit Facility
on account of their participation is thereafter set aside, avoided or recovered
from such Issuing Bank in connection with any receivership, liquida tion or
bankruptcy proceeding, each such Lender which received such distribution shall,
upon demand by such Issuing Bank, contribute such Lender's Pro Rata Share under
such Credit Facility of the amount set aside, avoided or recovered together with
interest at the rate required to be paid by such Issuing Bank upon the amount
required to be repaid by it.
(g) Issuing Bank Charges. Each Borrower for whose account a Letter
of Credit has been Issued agrees to pay to each Issuing Bank, solely for its own
account, the standard charges assessed by such Issuing Bank in connection with
the issuance, administration, amendment and payment or cancellation of such
Letter of Credit.
(h) Issuing Bank Reporting Requirements. Each Issuing Bank shall, on
the day it Issues such a Letter of Credit, provide to the Agent and the
applicable Borrower separate schedules for Commercial Letters of Credit and
Standby Letters of Credit Issued by it, in form and substance reasonably
satisfactory to the Agent, setting forth the aggregate Letter of Credit
Obligations of each Borrower under the applicable Credit Facility outstanding to
it as of such date and any information requested by the Agent or such Borrowers
relating to the date of issue, account party, amount, expiration date and
reference number of each Letter of Credit Issued by it. On each Settlement Date,
the Agent shall provide to each Lender under the applicable Credit Facility
copies of the most recent schedules provided to it by each Issuing Bank under
such Credit Facility.
(i) Indemnification; Exoneration. (A) In addition to all other
amounts payable to an Issuing Bank, each Borrower for whose account such Issuing
Bank has Issued a Letter of Credit agrees to defend, indemnify, and save the
Agent, such Issuing Bank and each Lender under the applicable Credit Facility
harmless from and against any and all claims, demands, liabilities, penalties,
damages, losses (other than loss of profits), costs, charges and expenses
(including reasonable attorneys' fees but excluding taxes) which the Agent, such
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Issuing Bank or such Lender may incur or be subject to as a consequence, direct
or indirect, of (i) the Issuance of such Letter of Credit other than as a result
of the gross negligence or willful misconduct of such Issuing Bank, as
determined by a court of competent jurisdiction, or (ii) the failure of such
Issuing Bank Issuing a Letter of Credit to honor a drawing under such Letter of
Credit as a result of any act or omission, whether rightful or wrongful, of any
present or future de jure or de facto government or Governmental Authority.
(B) As between the Domestic Borrowers on the one hand and the Agent,
the U.S. Lenders and the U.S. Issuing Banks on the other hand, such Borrowers
assume all risks of the acts and omissions of, or misuse of Letters of Credit
by, the respective beneficiaries of the Letters of Credit Issued pursuant to the
U.S. Facility. As between the Canadian Borrower on the one hand and the Canadian
Agent, the Canadian Lenders and the Canadian Issuing Banks on the other hand,
the Canadian Borrower assumes all risks of the acts and omissions of, or misuse
of Letters of Credit by, the respective beneficiaries of the Letters of Credit
Issued pursuant to the Canadian Facility. In furtherance and not in limitation
of the foregoing, subject to the provisions of the Letter of Credit
Reimbursement Agreements, the Agent, the Issuing Banks and the Lenders shall not
be responsible for: (i) the form, validity, legality, sufficiency, accuracy,
genuineness or legal effect of any document submitted by any party in connection
with the application for and Issuance of the Letters of Credit, even if it
should in fact prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent or forged; (ii) the validity, legality or sufficiency of
any instrument transferring or assigning or purporting to transfer or assign a
Letter of Credit or the rights or benefits thereunder or proceeds thereof, in
whole or in part, which may prove to be invalid or ineffective for any reason;
(iii) failure of the beneficiary of a Letter of Credit to comply duly with
conditions required in order to draw upon such Letter of Credit; (iv) errors,
omissions, interruptions or delays in transmission or delivery of any messages,
by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher;
(v) errors in interpretation of technical terms; (vi) any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under any Letter of Credit or of the proceeds thereof; (vii) the misapplication
by the beneficiary of a Letter of Credit of the proceeds of any drawing under
such Letter of Credit; (viii) any litigation, proceeding or charges with respect
to such Letter of Credit; and (ix) any consequences arising from causes beyond
the control of the Agent, the Issuing Banks or the Lenders; except in the cases
of clauses (iii), (iv), (v), (vi), (viii) and (ix) above, for the gross
negligence or willful misconduct of the Issuing Bank, as determined in a
judgment by a court of competent jurisdiction.
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(j) Obligations Several. The obligations of each Issuing Bank and
each U.S. Lender under this Section 2.02 are several and not joint, and no
Issuing Bank or U.S. Lender shall be responsible for the obligation to Issue
Letters of Credit or participation obligation hereunder, respectively, of any
other Issuing Bank or U.S. Lender.
2.03. Evidence of Indebtedness. Each Borrower hereby agrees to pay
when due the principal amount of each Loan which is made to it (whether or not
evidenced by a Note), and further agrees to pay all unpaid interest accrued
thereon, in accordance with the terms hereof and, to the extent evidenced
thereby, of the Notes. On the Closing Date, (i) each Domestic Borrower shall
execute and deliver to each U.S. Lender U.S. Loan Notes substantially in the
form of Exhibit S-1 in a principal amount equal to the maximum amount of such
Lender's U.S. Commitment evidencing the Loans to such Borrowers made under the
U.S. Facility, (ii) the Multicurrency Borrower shall execute and deliver to each
Multicurrency Lender Multicurrency Loan Notes substantially in the form of
Exhibit S-2 in a principal amount equal to the maximum amount of such Lender's
Multicurrency Commitment evidencing the Loans to such Borrowers made under the
Multicurrency Facility and (iii) the Canadian Borrower shall execute and deliver
to each Canadian Lender a Canadian Loan Note substantially in the form of
Exhibit S-3 in a principal amount equal to the maximum amount of such Lender's
Canadian Commitment evidencing the Loans to the Canadian Borrower made under the
Canadian Facility. Thereafter each Borrower, as applicable, shall execute and
deliver such other promissory notes substantially in the form of the Notes
issued on the Closing Date as are necessary to evidence the Loans owing to the
applicable Lenders after giving effect to any assignment thereof pursuant to
Section 13.01, all in form and substance acceptable to the Agent and the parties
to such assignment, provided that the promissory notes being replaced are
returned to such Borrower or other arrangements satisfactory to such Borrower
and the Agent are made. Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing the Indebtedness of
the Borrowers to such Lender under each Credit Facility in which it is a Lender
resulting from each Loan made under such Credit Facility owing to such Lender
from time to time, including the amount of principal and interest payable and
paid to such Lender from time to time hereunder and under each of the Notes.
2.04. Authorized Officers and Agents. On the Closing Date and from
time to time thereafter, the Borrowers shall deliver to the Agent an Officers'
Certificate setting forth the names of the officers, employees and agents
authorized to request Revolving Loans, Swing Loans and Letters of Credit and
containing a specimen signature of each such officer, employee or agent. The
officers, employees and agents so authorized shall also be authorized to act for
the Borrowers in respect of all other matters relating to the Loan Documents.
The Agent shall be
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entitled to rely conclusively on such officer's or employee's authority to
request such Loan or Letter of Credit until the Agent receives written notice to
the contrary. In addition, the Agent shall be entitled to rely conclusively on
any written notice sent to it by telecopy. The Agent shall have no duty to
verify the authenticity of the signature appearing on, or any telecopy or
facsimile of, any written Notice of Borrowing or any other document, and, with
respect to an oral request for such a Loan or Letter of Credit, the Agent shall
have no duty to verify the identity of any person representing himself or
herself as one of the officers, employees or agents authorized to make such
request or otherwise to act on behalf of the Borrowers. None of the Agent, any
Lender or any Issuing Bank shall incur any liability to the Borrowers or any
other Person in acting upon any telecopy or facsimile or telephonic notice
referred to above which the Agent reasonably believes to have been given by a
duly authorized officer or other person authorized to act on behalf of the
Borrowers.
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ARTICLE III
PAYMENTS AND PREPAYMENTS
3.01. Prepayments; Reductions in and Reallocations of Revolving
Credit Commitments.
(a) Voluntary Reductions of Revolving Credit Commitments. The
Borrowers, upon at least five (5) Business Days' prior written notice to the
Agent, shall have the right, from time to time, to terminate in whole the
Revolving Credit Commitments or permanently reduce in part the Revolving Credit
Commitments, provided that the applicable Borrowers shall have made or caused to
be made any payment required to be made pursuant to Section 3.01(b)(i) after
giving effect to such reduction. Any partial reduction of a Lender's Revolving
Credit Commitment (i) shall be applied to such Lender's U.S. Commitment,
Multicurrency Commitment or Canadian Commitment, as requested by the Borrower
(it being understood that no such partial reduction shall alter the Pro Rata
Shares of the Multicurrency Lenders or the Canadian Lenders under the
Multicurrency Facility or the Canadian Facility, as the case may be, and that
any voluntary reduction of a Credit Facility shall permanently reduce the
maximum amount of the Revolving Credit Commitments that may be allocated to such
Credit Facility), (ii) shall be in an aggregate minimum amount of $5,000,000 and
integral multiples of $1,000,000 in excess of that amount, and (iii) shall
reduce the aggregate Revolving Credit Commitment of such Lender (and, where
applicable, its Affiliates) proportionately in accordance with their aggregate
Pro Rata Share of all Credit Facilities. Any notice of termination or reduction
given to the Agent under this Section 3.01(a)(ii) shall specify the date (which
shall be a Business Day) of such termination or reduction and, with respect to a
partial reduction, the aggregate principal amount thereof. When notice of
termination or reduction of the Revolving Credit Commitments is delivered as
provided herein, the principal amount of the Revolving Loans under each Credit
Facility so reduced shall become due and payable on the date specified in such
notice to the extent the Revolving Credit Obligations under such Credit Facility
would exceed the Maximum Revolving Credit Amount for such Credit Facility after
giving effect to such reduction. The payments in respect of reductions and
terminations described in this Section 3.01(a)(ii) may be made without premium
or penalty (except as provided in Section 4.02(f)).
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(b) Mandatory Prepayments of Revolving Loans.
(i) Immediately, if at any time the Revolving Credit Obligations
under any Credit Facility are greater than the Maximum Revolving Credit Amount
for such Credit Facility, the applicable Borrower or Borrowers agree to make a
mandatory repayment of such Revolving Credit Obligations in an aggregate amount
sufficient to reduce any such excess to zero, such amounts to be applied to the
Obligations of the Borrower or Borrowers making such payments in accordance with
Section 3.02. In addition, if at any time the Maximum Revolving Credit Amount
for any Credit Facility is less than the amount of contingent Letter of Credit
Obligations outstanding under such Credit Facility at such time, the applicable
Borrower or Borrowers agree to deposit and maintain Cash Collateral in the
applicable Cash Collateral Account (or, with respect to Letters of Credit
denominated in Canadian Dollars and Issued pursuant to the Canadian Facility, in
the Canadian Cash Collection Account) in a Dollar Equivalent amount equal to the
amount by which such Letter of Credit Obligations exceed such Maximum Revolving
Credit Amount.
(ii) Subject to Section 3.05, on a daily basis from funds on deposit
in (A) (x) the U.S. Concentration Account of any Domestic Borrower located in
the United States and (y) if necessary to repay in full all Revolving Credit
Obligations of such Borrower under the U.S. Facility, the U.S. Cash Collateral
Account of such Borrower, or (B) (x) the Canadian Cash Collection Account and
(y) if necessary to repay in full all Revolving Credit Obligations of the
Canadian Borrower, the Canadian Cash Collateral Account, in each case prior to
1:00 p.m. (New York or Toronto time, as applicable) on any Business Day, the
Agent or the Canadian Agent, as applicable, shall transfer funds in accordance
with Section 3.05 and thereby cause such Domestic Borrower (in the case of
clause (A) above) or the Canadian Borrower (in the case of clause (B) above) to
make a mandatory repayment of the Revolving Credit Obligations owing by such
Borrower on such Business Day in an amount equal to: first, any and all Non Pro
Rata Loans made to such Borrower on a pro rata basis, second, any and all
outstanding Protective Advances made on behalf of such Borrower, third, any and
all outstanding Swing Loans made to such Borrower, and fourth, the repayment of
the Revolving Credit Obligations and other Obligations owing by such Borrower
then outstanding in accordance with the provisions of Section 3.02.
(iii) Immediately after Holdings', any Borrower's or any of the
Borrowers' Subsidiaries' receipt of any Net Cash Proceeds (other than those
arising in connection with the initial sale of Receivables in connection with
the Permitted Receivables Financing Program or in connection with the issuance
of Capital Stock by Holdings after March 31, 1996), each Borrower receiving such
Net Cash Proceeds agrees to make or cause to be made a
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mandatory prepayment of its Loans in an amount equal to one hundred percent
(100%) of such Net Cash Proceeds; provided, however, to the extent Holdings is
permitted to redeem the Preferred Stock or the Nonvoting Common Stock pursuant
to Section 9.06 or to make regularly scheduled payments of principal and
interest on the Common Equity Notes pursuant to Section 9.06, then any such Net
Cash Proceeds arising from the issuance of any Capital Stock by Holdings may be
applied to redeem such Capital Stock or make such regularly scheduled payments.
Immediately upon the Company's receipt of any Net Cash Proceeds from the initial
sale of Receivables in connection with the Permitted Receivables Financing
Program, each Borrower receiving such proceeds agrees to make or cause to be
made a mandatory prepayment of its Loans in an aggregate amount equal to a
percentage to be mutually agreed by the Company and the Agent. Immediately after
Holdings' receipt of any Net Cash Proceeds arising in connection with the
issuance of Capital Stock by Holdings after March 31, 1996, the Borrowers agree
to make or cause to be made a mandatory prepayment of their Loans in an
aggregate amount equal to fifty percent (50%) of such Net Cash Proceeds. Each
mandatory prepayment required to be paid by any Borrower by this Section
3.01(b)(iii) shall be allocated and applied first, to the repayment of the
Revolving Loans owed by such Borrower; second, to any remaining non-contingent
Revolving Credit Obligations of such Borrower; and then, to the extent any such
Obligations are contingent, with the Agent as Cash Collateral in respect of such
contingent Obligations.
(iv) The Revolving Credit Commitments shall be permanently reduced
by the amount of any payment in respect of the Revolving Loans required to be
made pursuant to Section 3.01(b)(iii) in connection with any Net Cash Proceeds
arising from the initial sale of Receivables under the Permitted Receivables
Financing Program (whether or not such payment could be applied to such Loans).
All Revolving Credit Commitments reduced pursuant to this Section 3.01(b)(iv)
shall be made in accordance with each Lender's Pro Rata Share of the Credit
Facilities (it being understood that only the Pro Rata Shares of the U.S.
Lenders under the U.S. Facility may be altered as a result of such reduction).
(v) Nothing in this Section 3.01(b) shall be construed to constitute
the Lenders' consent to any transaction which is not expressly permitted by
Article IX.
(c) Reallocations of Revolving Credit Commitments. (i) The Company,
upon five (5) Business Days' written notice to the Agent, may request (a
"Reallocation Request"), no more than eight (8) times in any Fiscal Year, that a
Lender under a Credit Facility reduce its Revolving Credit Commitment under such
Credit Facility by an amount equal to not less than $1,000,000 (such amount, the
"Reduction Amount"), and that the Revolving Credit Commitment of such Lender
under another Credit Facility, as
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selected by the Company in the Reallocation Request, be correspondingly
increased by the Reduction Amount; provided that a Reallocation Request may not
be made if, after giving effect to the proposed reallocation, (x) the aggregate
amount of the Multicurrency Commitments would exceed the maximum amount of the
Multicurrency Facility in effect at such time or (y) the aggregate amount of the
Canadian Commitments would exceed the maximum amount of the Canadian Facility in
effect at such time. It is agreed and understood that, in connection with any
such reallocation, (A) the Pro Rata Shares of the Lenders under the
Multicurrency Facility or the Canadian Facility shall not change, (B) the
aggregate Pro Rata Share under all Credit Facilities of a Lender and its
Affiliated Lenders shall not change and (C) the amount of the aggregate
Revolving Credit Commitments of all Lenders before and after such reallocation
shall not change. After receiving a Reallocation Request, the Agent shall notify
each affected Lender of such Reallocation Request, and such Revolving Credit
Commitments shall be adjusted as contemplated thereby on the date set forth in
such Reallocation Request.
(ii) In the event the Pro Rata Shares of the U.S. Lenders are
altered after giving effect to the Reallocation Request or after giving effect
to any partial reduction of the Revolving Credit Commitments made pursuant to
Sections 3.01(a) and 3.01(b)(iv), the U.S. Lenders whose Pro Rata Shares have
increased as a result of such request shall effect such purchases of U.S. Loans
from the other U.S. Lenders on the next Settlement Date such that after giving
effect to such purchases each U.S. Lender is owed U.S. Loans in an amount equal
to its adjusted Pro Rata Share of the Revolving Credit Obligations outstanding
in respect of the U.S. Facility.
3.02. Payments. (a) Manner and Time of Payment. All payments of
principal of and interest on the Loans and Reimburse ment Obligations and other
Obligations (including, without limitation, fees and expenses) which are payable
to the Agent, the Lenders or any Issuing Bank shall be made without condition or
reservation of right, in immediately available funds, delivered to the Agent
(or, in the case of Reimbursement Obligations, to the pertinent Issuing Bank)
not later than 1:00 p.m. (New York time, London time or Toronto time, as
applicable) on the date and at the place due, to the applicable Payment Account
(or, in the case of Reimbursement Obligations, such account of the Issuing Bank,
as it may designate). Thereafter, payments in respect of any Swing Loans
received by the Agent shall be distributed to the applicable Swing Loan Bank and
payments in respect of any Revolving Loan received by the Agent shall be
distributed to each Lender under the applicable Credit Facility in accordance
with its Pro Rata Share of such Credit Facility in accordance with the
provisions of Section 3.02(b) on the date received, if received prior to 1:00
p.m., and (except in the case of repayment of Swing Loans) on the next
succeeding Business Day if received thereafter, by the Agent.
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All payments of principal of and interest on the Multicurrency Loans, whether
made directly or pursuant to Section 3.05(c)(ii), shall be made upon at least
two (2) Business Days' prior notice to the Agent.
(b) Apportionment of Payments. (i) Subject to the provisions of
Section 3.02(b)(ii) and (iv), except as otherwise provided herein (A) all
payments of principal and interest in respect of outstanding Revolving Loans
under any Credit Facility, and all payments in respect of Reimbursement
Obligations under the U.S. Facility or the Canadian Facility, shall be allocated
among such of the Lenders and Issuing Banks as are entitled thereto, in
proportion to their respective Pro Rata Shares of such Credit Facility and (B)
all payments of fees and all other payments in respect of any other Obligation
shall be allocated among such of the Lenders and Issuing Banks as are entitled
thereto, in proportion to their respective Pro Rata Shares of the applicable
Credit Facility (if such Obligation relates to such Credit Facility) or
otherwise to their respective Pro Rata Shares of all the Credit Facilities. All
such payments and any other proceeds of Collateral or other amounts received by
the Agent from or for the benefit of a Borrower shall be applied first, to pay
principal of and interest on any portion of the Loans made to such Borrower
which the Agent may have advanced pursuant to the express provisions of this
Agreement on behalf of any Lender other than the Lender then acting as Agent,
for which the Agent has not then been reimbursed by such Lender or such
Borrower, second, to pay principal of and interest on any Protective Advance
made to such Borrower for which the Agent has not then been paid by such
Borrower or reimbursed by the Lenders, third, to pay all other Obligations of
such Borrower then due and payable and fourth, if such Borrower is a Domestic
Borrower and such payment is denominated in Dollars, to the U.S. Cash Collateral
Account to be held as Cash Collateral in accordance with this Agreement. Except
as set forth in Sections 3.01(a) and (b) and unless otherwise designated by the
Company, (A) all principal payments made by any Borrower in respect of
outstanding Swing Loans or Revolving Loans of such Borrower, as the case may be,
shall be applied first, to the outstanding Swing Loans of such Borrower and
second, to the outstanding Revolving Loans of such Borrower, in each case,
first, to repay outstanding Floating Rate Loans, and then (other than in the
case of the Canadian Borrower) to repay outstanding Fixed Rate Loans with those
Loans which have earlier expiring Interest Periods being repaid prior to those
which have later expiring Interest Periods (provided, that, so long as no
Default or Event of Default shall have occurred and be continuing, such Borrower
(other than the Canadian Borrower) may, in lieu of having amounts applied to
repay, in full or in part, a Fixed Rate Loan on a date which is not the last day
of the applicable Interest Period, request that any amount to be so applied be
deposited into such Borrower's U.S. Cash Collateral Account (or, in the case of
Fixed Rate Loans denominated in an Optional Currency, a Cash Collateral Account
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for such currency) as Cash Collateral for application by the Agent to such Loan
on the last day of such Interest Period). In addition, all principal payments
made by each Borrower in respect of outstanding Swing Loans or Revolving Loans
of such Borrower shall be deemed to repay, first Acquisition Loans made to such
Borrower, and second all other Loans made to such Borrower.
(ii) After the occurrence and during the continuance of an Event of
Default, the Agent may, and shall upon the acceleration of the Obligations
pursuant to Section 11.02(a), apply all payments in respect of any Obligations
(other than payments in respect of Obligations of the Canadian Borrower, which
shall be applied solely to the payment of Obligations under the Canadian
Facility) and all proceeds of Collateral (including, without limitation, all
amounts held as Cash Collateral, but excluding any proceeds of Collateral which
are owned by the Canadian Borrower, which proceeds shall be applied solely to
the payment of Obligations under the Canadian Facility) to the Obligations in
the following order (it being understood that the Agent shall have the right to
convert, at a rate of exchange equal to the Spot Rate as of such conversion date
and at the Borrowers' expense, any of such payments or proceeds of Collateral
into the currency in which such Obligations are denominated):
(A) first, to pay interest on and the principal of any portion of
the Revolving Loans which the Agent may have advanced on behalf of any
Lender for which the Agent has not then been reimbursed by such Lender or
a Borrower;
(B) second, to pay interest on and then principal of first any
outstanding Protective Advance and then any Swing Loan;
(C) third, to pay Obligations in respect of any expense
reimbursements or indemnities then due to the Agent, including, without
limitation, fees and expenses in respect of cash management services,
foreign exchange services (including Currency Agreements) provided to the
Company and its Subsidiaries by the Agent;
(D) fourth, to pay Obligations in respect of any expense
reimbursements or indemnities then due to the Lenders and the Issuing
Banks;
(E) fifth, to pay Obligations in respect of any fees then due to the
Agent, the Lenders and the Issuing Banks;
(F) sixth, to pay interest due in respect of the Loans and
Reimbursement Obligations;
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(G) seventh, to pay or prepay (or, to the extent such Obligations
are contingent, provide Cash Collateral pursuant to Section 11.02(b) in
respect of) principal outstanding on Loans and all outstanding Letter of
Credit Obligations;
(H) eighth, to the ratable payment of Interest Rate Contracts to
which the Agent or any Affiliate of the Agent is a party;
(I) ninth, to the ratable payment of all other Obligations;
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provided, however, if sufficient funds are not available to fund all payments to
be made in respect of any of the Obligations described in any of the foregoing
clauses (A) through (I), the available funds being applied with respect to any
such Obligations referred to in any one of such clauses (unless otherwise
specified in such clause) shall be allocated to the payment of such Obligations
ratably, based on the proportion of the Agent's and each Lender's or Issuing
Bank's interest in the aggregate outstanding Obligations described in such
clauses; provided, further, however, all amounts applied in respect of
outstanding Swing Loans or Revolving Loans of any Borrower shall be deemed to
repay, first Acquisition Loans made to such Borrower, and second all other Loans
made to such Borrower. Notwithstanding the foregoing, (x) the Agent, the
Canadian Agent, the Lenders and the Issuing Banks further agree and acknowledge
that in no event shall proceeds of the Collateral of the Canadian Borrower, more
than sixty-five percent (65%) of the Capital Stock of the Canadian Borrower or
Pegasus Asia or amounts received from the Canadian Borrower as described herein
be applied on any of the Obligations (the "Non-Canadian Obligations") other than
the Obligations of the Canadian Borrower, (y) the Agent and the Canadian Agent
shall attempt to liquidate all Collateral which does not secure the Non-Canadian
Obligations (the "Canadian Collateral") and apply the same to the Obligations of
the Canadian Borrower prior to the application thereto of any proceeds of other
Collateral until such time as the Agent and the Canadian Agent, in their
reasonable judgment, determine that further liquidation of the Canadian
Collateral is improbable, economically undesirable or will subject the Agent,
the Canadian Agent, any Lender, any Issuing Bank or any other Holder to
liability and (z) no application of Collateral (other than Canadian Collateral)
may be made to the Obligations of the Canadian Borrower until such time as the
aggregate outstanding Obligations owing to each Lender (and its Affiliates) are
in proportion to (or as near thereto as is reasonably practicable) the
outstanding Obligations owing to each other Lender (and its Affiliates), in
accordance with their respective Pro Rata Shares of all Credit Facilities. The
order of priority set forth in this Section 3.02(b)(ii) and the related
provisions hereof are set forth solely to determine the rights and priorities of
the Agent, the Lenders, the Issuing Banks and other Holders as among themselves.
The order of priority set forth in clauses (A) through (I) of this Section
3.02(b)(ii) may at any time and from time to time be changed by the agreement of
all Lenders without necessity of notice to or consent of or approval by any
Borrower, any Holder which is not a Lender or Issuing Bank, or any other Person;
provided, however, the order of priority set forth in clauses (A) through (E) of
this Section 3.02(b)(ii) may not be changed without the prior written consent of
the Agent.
(iii) The Agent, in its sole discretion subject only to the terms of
this Section 3.02(b)(iii), may pay from the
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proceeds of Revolving Loans made under the applicable Credit Facility (which
Loans may not have been requested by a Borrower pursuant to a Notice of
Borrowing) made to a Borrower hereunder, whether made following a request by
such Borrower pursuant to Section 2.01 or 2.02 or a deemed request as provided
in this Section 3.02(b)(iii), all amounts then due and payable by any Borrower
hereunder, including, without limitation, amounts payable with respect to
payments of principal, interest, Reimbursement Obligations and fees and all
reimbursements for expenses pursuant to Section 13.02. Each Borrower hereby
irrevocably authorizes each Swing Loan Bank and the Lenders to make Swing Loans
or Revolving Loans in the appropriate currency, which Loans shall be Floating
Rate Loans, in each case, upon notice from the Agent as described in the
following sentence for the purpose of paying principal, interest, Reimbursement
Obligations and fees due from any Borrower, reimbursing expenses pursuant to
Section 13.02 and paying any and all other amounts due and payable by any
Borrower hereunder or under the Notes, and agrees that all such Loans so made
shall be deemed to have been requested by it pursuant to Section 2.01 and 2.02
as of the date of the aforementioned notice, provided, that, with respect to any
expenses incurred by third parties which are reimbursable pursuant to Section
13.02, (A) the Agent shall notify the applicable Borrower at least ten (10) days
prior to giving the aforementioned notice to the applicable Swing Loan Bank or
Lenders, together with a reasonably detailed explanation of any amounts with
respect thereto to be paid directly by the Agent with proceeds of Revolving
Loans or Swing Loans made pursuant to this Section 3.02(b)(iii) and (B) in the
event that such Borrower, at least one (1) Business Day prior to the date on
which the Agent has indicated it will give the aforementioned notice to the
applicable Swing Loan Bank or Lenders, notifies the Agent that it disagrees with
any such amount in the notice received by the Borrower, the Agent shall not give
the aforementioned notice to the applicable Swing Loan Bank or Lenders until the
earlier of (1) thirty (30) days after the Borrower so notifies the Agent of such
disagreement and (2) the date on which any disagreement with respect to such
amount is resolved; provided, however, notwithstanding the payment of such
amount at the expiration of such 30-day period without resolving such
disagreement, the Borrower reserves its right to continue to object to such
amount. The Agent shall request Swing Loans or Revolving Loans on behalf of a
Borrower as described in the preceding sentence by notifying the Lenders under
the applicable Credit Facility by telex, telecopy, telegram or other similar
form of transmission (which notice the Agent shall thereafter promptly transmit
to such Borrower), of the amount and Funding Date of the proposed Borrowing and
that such Borrowing is being requested on such Borrower's behalf pursuant to
this Section 3.02(b)(iii). On the proposed Funding Date, the relevant Swing Loan
Bank or Lenders under the relevant Credit Facility, as the case may be, shall
make the requested Loans in accordance with
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the procedures and subject to the conditions specified in Section 2.01 or 2.02
(irrespective of the satisfaction of the conditions described in Section 5.02 or
the requirement to deliver a Notice of Borrowing in Section 2.01(c), which
conditions and requirements, for the purposes of the payment of Swing Loans and
Revolving Loans at the request of the Agent as described in the preceding
sentence, the Lenders irrevocably waive).
(iv) If any Lender fails to fund its Pro Rata Share of any Revolving
Loan Borrowing requested by a Borrower under any Credit Facility which such
Lender is obligated to fund under the terms hereof (the funded portion of such
Revolving Loan Borrowing being hereinafter referred to as a "Non Pro Rata
Loan"), excluding any such Lender who has delivered to the Agent written notice
that one or more of the conditions precedent contained in Section 5.02 shall not
on the date of such request be satisfied and until such conditions are
satisfied, then until the earlier of such Lender's cure of such failure and the
termination of the Revolving Credit Commitments, the proceeds of all amounts
thereafter repaid to the Agent by any Borrower in respect of such Credit
Facility and otherwise required to be applied to such Lender's share of all
other Obligations pursuant to the terms hereof shall be advanced to the Borrower
requesting such Revolving Loan Borrowing by the Agent on behalf of such Lender
to cure, in full or in part, such failure by such Lender, but shall nevertheless
be deemed to have been paid to such Lender in satisfaction of such other
Obligations. Notwithstanding anything contained herein to the contrary:
(A) the foregoing provisions of this Section 3.02(b)(iv) shall apply
only with respect to the proceeds of payments of Obligations;
(B) a Lender shall be deemed to have cured its failure to fund its
Pro Rata Share of any Revolving Loan at such time as an amount equal to
such Lender's original Pro Rata Share of the requested principal portion
of such Revolving Loan is fully funded to the applicable Borrower, whether
made by such Lender itself or by operation of the terms of this Section
3.02(b)(iv), and whether or not the Non Pro Rata Loan with respect thereto
has been repaid;
(C) amounts advanced to a Borrower to cure, in full or in part, any
such Lender's failure to fund its Pro Rata Share of any Revolving Loan
Borrowing ("Cure Loans") shall bear interest from and after the date made
available to the applicable Borrower at the rate applicable to the other
Revolving Loans comprising such Borrowing and shall be treated as
Revolving Loans comprising such Borrowing for all purposes herein;
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(D) regardless of whether or not an Event of Default has occurred or
is continuing, and notwithstanding the instructions of the Borrower as to
its desired application, all repayments of principal which, in accordance
with the other terms of this Section 3.02, would be applied to the
outstanding Revolving Loans shall be applied first, ratably to all
Revolving Loans constituting Non Pro Rata Loans, second, ratably to
Revolving Loans other than those constituting Non Pro Rata Loans or Cure
Loans and, third, ratably to Revolving Loans constituting Cure Loans; and
(E) no Lender shall be relieved of any obligation such Lender may
have to the Borrower under the terms of this Agreement as a result of the
provisions of this Section 3.02(b)(iv).
(c) Payments on Non-Business Days. Whenever any pay ment to be made
by a Borrower hereunder or under the Notes is stated to be due on a day which is
not a Business Day, the payment shall instead be due on the next succeeding
Business Day (or, as set forth in Section 4.02(b)(iv), the next preceding
Business Day), and any such extension of time shall be included in the
computation of the payment of interest and fees hereunder.
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3.03. Taxes.
(a) Payment of Taxes. Any and all payments by the Borrowers
hereunder or under any Note or other document evidencing any Obligations shall
be made free and clear of and without reduction for any and all taxes, levies,
imposts, deductions, charges, withholdings, and all stamp or documentary taxes,
excise taxes, ad valorem taxes and other taxes imposed on the value of the
Property, charges or levies which arise from the execution, delivery or
registration, or from payment or performance under, or otherwise with respect
to, any of the Loan Documents or the Revolving Credit Commitments and all other
liabilities with respect thereto excluding, in the case of each Lender, each
Issuing Bank and the Agent, taxes imposed on its income, capital, profits or
gains and franchise taxes imposed on it by (i) the United States, except certain
withholding taxes contemplated pursuant to Section 3.03(d)(ii)(C), (ii) the
Governmental Authority of any jurisdiction (or any political subdivision
thereof) in which any Applicable Lending Office of such Lender is located, (iii)
the Governmental Authority in which such Person is organized, managed and
controlled or any political subdivision thereof or (iv) any political
subdivision of the United States, unless such taxes are imposed solely as a
result of such Lender's performance of any of the Loan Documents in such
political subdivision and such Lender would not otherwise be subject to tax by
such political subdivision (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter referred to
as "Taxes"). If a Borrower shall be required by law to withhold or deduct any
Taxes from or in respect of any sum payable hereunder or under any such Note or
document to any Lender, any Issuing Bank or the Agent, (x) the sum payable to
such Lender, such Issuing Bank or the Agent shall be increased as may be
necessary so that after making all required withholding or deductions (including
withholding or deductions applicable to additional sums payable under this
Section 3.03) such Lender, such Issuing Bank or the Agent (as the case may be)
receives an amount equal to the sum it would have received had no such
withholding or deductions been made, (y) such Borrower shall make such
withholding or deductions, and (z) such Borrower shall pay the full amount
withheld or deducted to the relevant taxation authority or other authority in
accordance with applicable law.
(b) Indemnification. The Borrowers (other than the Canadian
Borrower, which so agrees to indemnify the Canadian Agent, the Canadian Lenders
and the Canadian Issuing Banks only with respect to Taxes with respect to the
Canadian Facility) jointly and severally agree to indemnify each Lender, each
Issuing Bank and the Agent against, and reimburse each on demand for, the full
amount of all Taxes (including, without limitation,
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any Taxes imposed by any Governmental Authority on amounts payable under this
Section 3.03 and any additional income or franchise taxes resulting therefrom)
incurred or paid by such Lender, such Issuing Bank or the Agent (as the case may
be) or any of their respective Affiliates and any liability (including
penalties, interest, and out-of-pocket expenses paid to third parties) arising
therefrom or with respect thereto, whether or not such Taxes were lawfully
payable (other than any liability that results from the gross negligence or
willful misconduct of the Lenders and the Agent, whether or not such Taxes were
correctly or legally asserted by the relevant taxing authority or other
governmental authority). A certificate as to any additional amount payable to
any Person under this Section 3.03 submitted by it to the Borrower shall, absent
manifest error, be final, conclusive and binding upon all parties hereto. Each
Lender, the Agent and each Issuing Bank agrees (i) within a reasonable time
after receiving a written request from the Company, to provide the Company and
the Agent with such certificates as are reasonably required, and (ii) take such
other actions as are reasonably necessary to claim such exemptions as such
Lender, the Agent or such Issuing Bank or Affiliate may be entitled to claim in
respect of all or a portion of any Taxes which are otherwise required to be paid
or deducted or withheld pursuant to this Section 3.03 in respect of any payments
under this Agreement or under the Notes. If any Lender or the Agent
receives a refund in respect of any Taxes for which such Lender or the Agent has
received payment from a Borrower hereunder, it shall promptly apply such refund
(including any interest received by such Lender or the Agent from the taxing
authority with respect to the refund with respect to such Taxes) to the
Obligations of such Borrower, net of all out-of-pocket expenses of such Lender
or the Agent; provided that such Borrower, upon the request of such Lender or
the Agent, agrees to reimburse such refund (plus penalties, interest or other
charges) to such Lender or the Agent in the event such Lender or the Agent is
required to repay such refund.
(c) Receipts. Within thirty (30) days after the date of any payment
of Taxes pursuant to this Section 3.03 by any Borrower or any of the Borrowers'
Subsidiaries, the Company will furnish to the Agent at its request, at its
notice address in effect under Section 13.08, a copy of a receipt, if any, or
other documentation reasonably satisfactory to the Agent, evidencing payment
thereof. The Borrowers shall furnish to the Agent, within thirty (30) days after
the request of the Agent from time to time, an Officer's Certificate stating
that all Taxes of which they are aware are due have been paid and that no
additional Taxes of which it is aware are due.
(d) Foreign Bank Certifications. (i) Each Lender (other than the
Canadian Lenders) or Issuing Bank (other than the Canadian Issuing Banks) that
is not created or organized under
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the laws of the United States or a political subdivision thereof has delivered
to the Borrowers and the Agent on the date on which such Lender became a Lender
or such Issuing Bank became an Issuing Bank or shall deliver to the Borrowers on
the date such Lender becomes a Lender or such Issuing Bank becomes an Issuing
Bank, if such date is after the Closing Date, a true and accurate certificate
executed in duplicate by a duly authorized officer of such Lender or Issuing
Bank to the effect that such Lender or Issuing Bank is eligible to receive all
payments hereunder and under the Notes without deduction or withholding of
United States federal income tax (1) under the provisions of an applicable tax
treaty concluded by the United States (in which case the certificate shall be
accompanied by two duly completed copies of IRS Form 1001 (or any successor or
substitute form or forms)) or (2) under Section 1441(c)(1) as modified for
purposes of Section 1442(a) of the Internal Revenue Code (in which case the
certificate shall be accompanied by two duly completed copies of IRS Form 4224
(or any successor or substitute form or forms)). If a Lender (other than the
Canadian Lender) or an Issuing Bank (other than a Canadian Issuing Bank) is
unable to deliver the certificate and forms described in, and on the dates
required by, the preceding sentence, then the applicable Borrower shall withhold
the applicable tax and shall have no indemnification obligation with respect to
such withholding tax.
(ii) Each Lender (other than the Canadian Lenders) and each Issuing
Bank (other than the Canadian Issuing Banks) further agrees to promptly deliver
to the Borrowers and the Agent from time to time, a true and accurate
certificate executed in duplicate by a duly authorized officer of such Lender or
such Issuing Bank before or promptly upon the occurrence of any event requiring
a change in the most recent certificate previously delivered by it to the
Borrowers and the Agent pursuant to this Section 3.03(d) (including, but not
limited to, a change in such Lender's or such Issuing Bank's lending office).
Each certificate required to be delivered pursuant to this Section 3.03(d)(ii)
shall certify as to one of the following:
(A) that such Lender or such Issuing Bank can continue to receive
payments hereunder and under the Notes without deduction or withholding of
United States federal income tax;
(B) that such Lender or such Issuing Bank cannot continue to receive
payments hereunder and under the Notes without deduction or withholding of
United States federal income tax as specified therein but does not require
additional payments pursuant to Section 3.03(a) because it is entitled to
recover the full amount of any such deduction or withholding from a source
other than the Borrowers;
(C) that such Lender or Issuing Bank is no longer
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capable of receiving payments hereunder and under the Notes without
deduction or withholding of United States federal income tax as specified
therein by reason of a change in law (including the Internal Revenue Code
or applicable tax treaty) after the later of the Closing Date or the date
on which such Lender became a Lender or such Issuing Bank became an
Issuing Bank and that it is not capable of recov ering the full amount of
the same from a source other than the Borrowers; or
(D) that such Lender or such Issuing Bank is no longer capable of
receiving payments hereunder without deduction or withholding of United
States federal income tax as specified therein other than by reason of a
change in law (including the Internal Revenue Code or applicable tax
treaty) after the later of the Closing Date or the date on which such
Lender became a Lender or such Issuing Bank became an Issuing Bank.
Each Lender (other than the Canadian Lenders) and each Issuing Bank (other than
the Canadian Issuing Banks) agrees to deliver to the Borrowers and the Agent
further duly completed copies of the above-mentioned IRS forms on or before the
earlier of (x) the date that any such form expires or becomes obsolete or
otherwise is required to be resubmitted as a condition to obtaining an exemption
from withholding from United States federal income tax and (y) fifteen (15) days
after the occurrence of any event requiring a change in the most recent form
previously delivered by such Lender or such Issuing Bank to the Borrowers and
the Agent, unless any change in treaty, law, regulation or official
interpretation thereof which would render such form inapplicable or which would
prevent the Lender from duly completing and delivering such form has occurred
prior to the date on which any such delivery would otherwise be required and the
Lender or the Issuing Bank promptly advises the Borrowers that it is not capable
of receiving payments hereunder or under the Notes without any deduction or
withholding of United States federal income tax.
3.04. Increased Capital. If after the date hereof any Lender or
Issuing Bank determines that (i) the adoption or implementation of or any change
in or in the interpretation or administration of any law or regulation or any
guideline or request from any central bank or other Governmental Authority or
quasi-governmental authority exercising jurisdiction, power or control over any
Lender, Issuing Bank or banks or financial institutions generally (whether or
not having the force of law), compliance with which affects or would affect the
amount of capital required or expected to be maintained by such Lender or
Issuing Bank or any corporation controlling such Lender or Issuing Bank and (ii)
the amount of such capital is increased by or based upon (A) the making or
maintenance by any Lender of its
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Loans, any Lender's participation in or obligation to participate in the Loans,
Letters of Credit or other advances made hereunder or the existence of any
Lender's obligation to make Loans or (B) the issuance or maintenance by any
Issuing Bank of, or the existence of any Issuing Bank's obligation to Issue,
Letters of Credit, then, in any such case, upon written demand by such Lender or
Issuing Bank (with a copy of such demand to the Agent), the Borrowers (other
than the Canadian Borrower which so agrees to pay only with respect to the
Canadian Lenders and the Canadian Issuing Banks) jointly and severally agree
immediately to pay to the Agent for the account of such Lender or Issuing Bank,
from time to time as specified by such Lender or Issuing Bank, additional
amounts sufficient to compensate such Lender or Issuing Bank or such corporation
therefor. Such demand shall be accompanied by a reasonably detailed statement as
to the amount of such compensation and include a summary of the basis for such
demand with detailed calculations. Such statement shall be conclusive and
binding for all purposes, in the absence of manifest error.
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3.05. Cash Management and Cash Collateral Accounts.
(a) Establishment of Accounts. On the Closing Date, the Borrowers
and certain of their respective Subsidiaries shall have established the
Lockboxes, Collection Accounts, Cash Collateral Accounts and Disbursement
Accounts identified on Schedule 6.01-AA as "at closing accounts". As soon as
practicable after the Closing Date, the Borrowers agree to establish, and cause
their respective Subsidiaries who are Subsidiary Guarantors, whose Capital Stock
has been pledged under the Loan Documents, who act as agent for any Borrower in
connection with the purchase and sale of Inventory and/or the invoicing and
collection of Receivables or are otherwise agreed to by the Agent and the
Company to establish, the Lockboxes, Collection Accounts, Cash Collateral
Accounts and Disbursement Accounts identified on Schedule 6.01-AA as "post
closing accounts". After any such bank account is established, the Borrowers or
such Subsidiaries may change the bank accounts or
add to the bank accounts listed on Schedule 6.01-AA as their needs may require
and agree to notify the Agent in writing of any such changes (such schedule
being deemed to be amended by any such notice); provided, however, no Borrower
and no such Subsidiary shall (x) change any Collection Account or zero-balance
Disbursement Account (except as contemplated above) or establish any new
Collection Account or zero-balance Disbursement Account with any bank which is
not acceptable to the Agent and which, in the case of a Collection Account to be
maintained at such bank, has not executed a Collection Account Agreement with
respect to such Collection Account or (y) establish any other Disbursement
Account or new Cash Collateral Account, or modify any arrangement with respect
to any other existing Disbursement Account or Cash Collateral Account, without
the prior consent of the Agent, which consent may be granted or withheld in the
reasonable discretion of the Agent (it being understood and agreed that no
Disbursement Account which is not a zero-balance account and no Cash Collateral
Account may be established at any bank other than the Agent or an Affiliate of
the Agent). All Lockboxes and Collection Accounts maintained by any Subsidiary
of a Borrower who acts as agent for any Borrower in connection with the purchase
and sale of Inventory and/or the invoicing and collection of Receivables shall
be maintained in the name of such Subsidiary for the account of such Borrower.
(b) Collections. Except as may be otherwise required after the
Closing Date pursuant to the Permitted Receivables Transaction Documents, each
Borrower and each Subsidiary described in Section 3.05(a) (i) has directed, and
in the future will direct, all of its account debtors to remit all monies,
checks, notes, drafts or funds received by it, including, without limitation,
all payments in respect of Receivables and other proceeds of Collateral directly
to a Lockbox or Collection
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Account or (ii) to the extent that the account debtors of such Borrower or such
Subsidiary, notwithstanding the instructions described in clause (i) above,
remit such monies, checks, notes, drafts or funds directly to such Borrower or
such Subsidiary, such Borrower and such Subsidiary hereby agrees to deposit all
such collections of Receivables into a Collection Account (or, in the case of
collections of Receivables of the Canadian Borrower, into the Canadian Cash
Collection Account or the Canadian Cash Collateral Account, as applicable, and,
in the case of Receivables of the Multicurrency Borrower denominated in Swiss
Francs, in the Cash Collateral Account for such currency) and promptly upon such
Person's receipt thereof. The contents of each Lockbox shall automatically be
deposited into a Collection Account or be emptied and deposited into a
Collection Account by a representative of the Collection Account Bank at which
the applicable Collection Account has been established. Only the Agent and the
applicable Collection Account Bank, if any, shall have power of withdrawal from
each Lockbox and the related Collection Account. Except as may be otherwise
required after the Closing Date pursuant to the Permitted Receivables
Transaction Documents, the Borrowers and Holdings agree to cause all collections
of Receivables, all proceeds of Collateral and all Net Cash Proceeds now or
hereafter received directly or indirectly by Holdings, any Borrower or any
Subsidiary of any Borrower or in the possession of Holdings, any Borrower or any
such Subsidiary to be held in trust for the Agent for the benefit of the Lenders
and, promptly upon receipt thereof, to be deposited into a Collection Account
(in the case of collections of Receivables (or, in the case of collections of
Receivables of the Canadian Borrower, into the Canadian Cash Collection Account
or the Canadian Cash Collateral Account, as applicable, and, in the case of
Receivables of the Multicurrency Borrower denominated in Swiss Francs, in the
Cash Collateral Account for such currency) or a Cash Collateral Account (in all
other cases); provided, however, all Net Cash Proceeds or other amounts not
constituting proceeds of Collateral which are required to be applied to the
Revolving Credit Obligations by any Borrower pursuant to the terms of this
Agreement shall be paid directly to the applicable Payment Account.
(c) U.S. Concentration Account; Canadian Cash Collection Account;
Cash Collateral Accounts. All immediately available funds in any Collection
Account (w) of any Domestic Borrower shall be automatically transferred into the
U.S. Concentration Account, (x) of the Canadian Borrower shall be automatically
transferred into (A) with respect to funds denominated in Canadian Dollars, the
Canadian Cash Collection Account and (B) with respect to funds denominated in
Dollars, the Canadian Cash Collateral Account, (y) of the Multicurrency
Borrower, shall be automatically transferred into the applicable Cash Collateral
Account designated pursuant to the applicable Collection Account Agreement and
(z) of any Subsidiary of a
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Borrower acting as an agent for such Borrower, shall be automatically
transferred to the Cash Collateral Account for the applicable currency of such
Borrower. The U.S. Concentration Account and each Cash Collateral Account (other
than the Canadian Cash Collateral Account) shall be under the sole dominion and
control of the Agent. The Canadian Cash Collection Account and the Canadian Cash
Collateral Account shall be under the sole dominion and control of the Canadian
Agent. The following procedures shall apply to the U.S. Concentration Account,
the Canadian Cash Collection Account and the Cash Collateral Accounts:
(i) The U.S. Concentration Account, the Canadian Cash
Collection Account and the U.S. Cash Collateral Account. With respect to
the U.S. Concentration Account and the U.S. Cash Collateral Account, the
Agent alone shall have power of withdrawal from such accounts. With
respect to the Canadian Cash Collection Account, the Canadian Agent alone
shall have power of withdrawal from such account, except as provided
below. Subject to Sections 3.01(b)(ii), 3.01(b)(iii), 3.02(b)(ii),
3.02(b)(iii) and 11.03, each Domestic Borrower hereby authorizes the Agent
to apply all immediately available funds on deposit in its U.S.
Concentration Account and, if necessary, U.S. Cash Collateral Account to
such Borrower's Obligations under the U.S. Facility, and the Canadian
Borrower hereby authorizes the Canadian Agent to apply all immediately
available funds on deposit in the Canadian Cash Collection Account and, if
necessary, the Canadian Cash Collateral Account (after any necessary
conversion of funds), to such Borrower's Obligations under the Canadian
Facility. Solely with respect to the U.S. Concentration Account, to the
extent any such funds remain after such application, each Domestic
Borrower hereby authorizes the Agent to transfer such funds to such
Borrower's U.S. Cash Collateral Account and invest the same in accordance
with Section 3.05(c)(iii). Solely with respect to the Canadian Cash
Collection Account, so long as no Default or Event of Default has occurred
and is continuing, the Canadian Agent shall honor any request made by the
Canadian Borrower and received by the Canadian Agent no later than 12:00
noon (Toronto time) to transfer funds from the Canadian Cash Collection
Account (but only if no Canadian Loans are outstanding or other
Obligations under the Canadian Facility are then due and payable) to the
Canadian Dollar Disbursement Account of the Canadian Borrower and such
funds shall be transferred to such Disbursement Account on the same
Business Day, provided that such request shall be made pursuant to a
signed Notice of Withdrawal and the conditions set forth therein have been
met as of the date of such request and that the use of such funds are
consistent with Section 2.01(g) (assuming for such purpose that such funds
are proceeds of Canadian Loans) and
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provided, further, that after giving effect to such withdrawal, the
Revolving Credit Availability under the Canadian Facility is greater than
zero. Following the occurrence and during the continuance of any Default
or Event of Default, the Canadian Agent shall not be required to honor any
Notice of Withdrawal, and the Canadian Agent shall be entitled to apply
all funds on deposit in the Canadian Cash Collection Account to the
Obligations of the Canadian Borrower, as the case may be, in accordance
with Section 3.02(b)(ii).
(ii) Cash Collateral Accounts located in Canada, Europe and
Asia. Each Cash Collateral Account located in Canada, Europe and Asia
shall be denominated in a single currency and all proceeds of Collateral
which are in such currency shall be deposited in a corresponding Cash
Collateral Account. So long as no Default or Event of Default has occurred
and is continuing, (A) the Multicurrency Borrower may instruct the Agent
by no later than 12:00 noon (London time), at least two (2) Business Days
prior to the date of such application, to apply any funds denominated in
Dollars or an Optional Currency on deposit in such Cash Collateral Account
maintained by it to the Obligations of the Multicurrency Borrower under
the Multicurrency Facility denominated in such currency (or, in the case
of any such Cash Collateral Account of the Multicurrency Borrower
denominated in Dollars, to the Obligations of the Multicurrency Borrower
under the U.S. Facility), (B) the Canadian Borrower may instruct the
Canadian Agent by no later than 12:00 noon (Toronto time) to apply any
funds denominated in Dollars on deposit in the Canadian Cash Collateral
Account (after any conversion of such funds into Canadian Dollars) to the
Obligations of the Canadian Borrower under the Canadian Facility, and (C)
the Agent shall honor any request made by the Multicurrency Borrower and
the Canadian Agent shall honor any request made by the Canadian Borrower,
as applicable, and received by the Agent or the Canadian Agent, as
applicable, no later than 12:00 noon (London or Toronto time, as
applicable), at least two (2) Business Days prior to the date of such
transfer (in the case of the Multicurrency Borrower), to transfer funds
from any such Cash Collateral Account (whether or not any Multicurrency
Loan or Canadian Loan, as the case may be, is outstanding) to a
Disbursement Account of such Borrower and such funds shall be transferred
to such Disbursement Account of the Canadian Borrower on the same Business
Day or of the Multicurrency Borrower on the following Business Day,
provided that such request shall be made pursuant to a signed Notice of
Withdrawal and the conditions set forth therein shall have been met as of
the date of such request and that the intended use of such funds shall be
consistent with Section 2.01(g) (assuming for such purpose that such
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funds are proceeds of Revolving Loans), and provided, further, that after
giving effect to such withdrawal, the Revolving Credit Availability under
the applicable Credit Facility is greater than zero. Following the
occurrence and during the continuance of any Default or Event of Default,
the Agent shall not be required to honor any Notice of Withdrawal, and the
Agent shall be entitled to apply all funds on deposit in any such Cash
Collateral Account to the Obligations of the Multicurrency Borrower or the
Canadian Borrower, as the case may be, in accordance with Section
3.02(b)(ii).
(iii) Investments. If requested by the applicable Borrower and
subject to the right of the Agent or the Canadian Agent to withdraw funds
from the Canadian Cash Collection Account and the Cash Collateral Accounts
as provided in this Agreement, the Agent or the Canadian Agent, as
applicable, shall, so long as no Event of Default shall have occurred and
be continuing, from time to time invest funds on deposit in such accounts
and accrued interest thereon, reinvest proceeds of any such investments
which may mature or be sold, and invest interest or other income received
from any such investments, in each case in such Cash Equivalents as the
applicable Borrower may select (it being agreed that if such Borrower does
not make any such selection such funds shall be invested in an overnight
investment selected by the Agent). None of the Agent, any Lender or any
Issuing Bank shall be liable to any Borrower for, or with respect to, any
decline in value of amounts on deposit in the Cash Collateral Accounts
which shall have been invested pursuant to this Section 3.05(c)(iii) at
the direction of the applicable Borrower (or pursuant to such overnight
investments selected by the Agent). Cash Equivalents from time to time
purchased and held pursuant to this Section 3.05(c)(iii) shall constitute
Cash Collateral and shall, for purposes of this Agreement, be deemed to be
part of the funds held in the Cash Collateral Accounts in amounts equal to
their respective outstanding principal amounts. Any funds not requested to
be invested in Cash Equivalents shall bear interest in accordance with the
applicable account agreement.
(iv) Additional Payments. If at any time the Agent determines
that any funds held in the Canadian Cash Collection Account or any Cash
Collateral Account are subject to any interest, right, claim or Lien
(other than Liens arising in the ordinary course of business for amounts
which are not yet due and payable) of any Person other than the Agent or
the applicable Borrower, the Borrowers (other than the Canadian Borrower,
which so agrees only with respect to any funds deposited by the Canadian
Borrower) jointly and severally agree that (i) forthwith upon demand
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by the Agent, to pay to the Agent, as additional funds to be deposited and
held in the Canadian Cash Collection Account or the applicable Cash
Collateral Account, as the case may be, an amount equal to the amount of
funds subject to such interest, right, claim or Lien or (ii) if no such
payment is made, the Agent shall immediately and without requirement of
notice as set forth in the definitions of Canadian Borrowing Base and
Domestic Borrowing Base, impose an Eligibility Reserve in the amount of
such funds (unless such interest, right, claim or Lien has then been
included in any Eligibility Reserve with respect to such funds or has been
factored into a decreased advance rate with respect to Cash Collateral).
(v) Custody of Cash Collateral. The Agent shall exercise
reasonable care in the custody and preservation of any funds held in the
U.S. Concentration Account, the Canadian Cash Collection Account and the
Cash Collateral Accounts and shall be deemed to have exercised such care
if such funds are accorded treatment substantially equivalent to that
which the Agent accords its own like property, it being understood that
the Agent shall not be required to preserve rights of the Borrowers in
such accounts or any amounts on deposit therein or any Investments subject
thereto against third parties but may do so at its option. All expenses
incurred in connection therewith shall be for the sole account of the
Canadian Borrower with respect to any funds deposited by the Canadian
Borrower or the joint and several account of the Domestic Borrowers with
respect to any funds deposited by the Domestic Borrowers, and, in each
case, shall constitute Obligations hereunder.
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Notwithstanding anything to the contrary contained in this Agreement, (i) except
as set forth in this clause (c), none of the Borrowers or any Person or entity
claiming on behalf of or through a Borrower shall have any right to withdraw any
of the funds held in the U.S. Concentration Account, the Canadian Cash
Collection Account or any Cash Collateral Account, (ii) the Agent shall not be
required to honor any Notice of Withdrawal with respect to the Canadian Cash
Collateral Account or any Cash Collateral Account that requires the Agent to
transfer funds deposited in such account which are not in immediately available
funds and (iii) the Multicurrency Borrower shall not maintain on deposit in the
Cash Collateral Accounts located in Europe or Asia (or any operating account
from which funds on deposit in such Cash Collateral Accounts have been
transferred) deposits in excess of $5,000,000 (or such larger amount acceptable
to the Agent) at any time outstanding. Upon the Payment In Full of the
Obligations and termination of the Commitments, any funds remaining in the U.S.
Concentration Account, the Canadian Cash Collection Account or any Cash
Collateral Account shall be returned by the Agent to the relevant Borrower or
paid by the Agent to whomever may be legally entitled thereto.
(d) Fees and Expenses. The Borrowers (other than the Canadian
Borrower, which so agrees only with respect to fees, costs and expenses so
incurred in respect of the Canadian Facility) jointly and severally agree to pay
to the Agent any and all reasonable fees, costs and expenses which the Agent
incurs in connection with opening and maintaining the Collection Accounts and
the Cash Collateral Accounts, lock box or other similar payment collection
mechanisms for the Borrowers and depositing for collection any check or item of
payment received by and/or delivered to the Collection Account Banks or the
Agent on account of the Obligations. The Borrowers (other than the Canadian
Borrower, which so agrees only with respect to the Collection Account Banks for
the Canadian Borrower's Collection Accounts) jointly and severally agree to
reimburse the Agent for any amounts paid to any Collection Account Bank arising
out of any required indemnification by the Agent of such Collection Account Bank
against damages incurred by the Collection Account Bank in the operation of a
Collection Account.
3.06. Right to Remove Affected Lender. In the event that any
Borrower is required to pay any amounts deemed material by the Company and the
Agent with respect to a Lender (or its Affiliates, if applicable) pursuant to
Sections 3.03, 3.04 or 4.01(f) or receives a notice from a Lender pursuant to
Section 4.02(e) and such amounts, or similar amounts, have not been demanded by
the Lenders constituting the Requisite Lenders, or, in the event any Lender
fails to fund its Pro Rata Share of any Revolving Loan requested by any Borrower
which such Lender is obligated to fund under the terms hereof and any such
failure has
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not been cured, such Borrower shall have the right to designate an Eligible
Assignee which is not an Affiliate of such Borrower and which is reasonably
acceptable to the Agent to purchase for cash, pursuant to an Assignment and
Acceptance, the outstanding Loans and Reimbursement Obligations (if any) of such
Lender and to assume all of such Lender's other rights and obligations
(including, without limitation, in the case of a U.S. Lender, such Lender's
obligation to participate in all outstanding Letters of Credit pursuant to
Section 2.02(e)) hereunder without recourse to or warranty by, or expense to,
such Lender, for a purchase price equal to the principal amount of all of such
Lender's outstanding Loans plus any accrued but unpaid interest thereon and the
accrued but unpaid Unused Commitment Fees and Letter of Credit Fees in respect
of that Lender's Commitment hereunder and any other amounts that may be owing to
such Lender hereunder. In the event any Issuing Bank fails to Issue a Letter of
Credit requested by a Borrower which such Issuing Bank is obligated to Issue
under the terms hereof and any such failure has not been cured, such Borrower
shall have the right to designate an Eligible Assignee which is not an Affiliate
of such Borrower and which is reasonably acceptable to the Agent to (i) replace
such Issuing Bank if no Letter of Credit Obligations are outstanding to such
Issuing Bank or (ii) become an additional Issuing Bank hereunder (it being
agreed and understood that, as of the date of such addition, the defaulting
Issuing Bank's obligations to Issue Letters of Credit pursuant to Section 2.02
shall terminate and such Issuing Bank shall be an Issuing Bank hereunder only
with respect to outstanding Letters of Credit Issued prior to such date).
ARTICLE IV
INTEREST AND FEES
4.01. Interest on the Loans and Other Obligations. (a) Rate of
Interest. All Loans and the out standing principal balance of all other
Obligations shall bear interest on the unpaid principal amount thereof from the
date such Loans are made and such other Obligations are due and payable until
paid in full, except as otherwise provided in Section 4.01(d), as follows:
(i) If a Floating Rate Loan or such other Obligation, at a rate per
annum equal to the sum of (A) the Floating Rate applicable to the currency
in which such Obligation is denominated in effect from time to time as
interest accrues, plus (B) the Applicable Floating Rate Margin in effect
from time to time;
(ii) If a Fixed Rate Loan, at a rate per annum equal to the sum of (A)
the Fixed Rate determined for the applicable Interest Period and the
applicable
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currency, plus (B) the Applicable Fixed Rate Margin in effect from time to
time during such Interest Period;
The applicable basis for determining the rate of interest on any Loan shall be
initially determined in accordance with Section 2.01(c). The applicable basis
for determining the rate of interest on such Loan shall be selected thereafter
by the relevant Borrower at the time a Notice of Conversion/Continuation is
delivered by such Borrower to the Agent. Notwithstanding the foregoing, such
Borrower may not select the Fixed Rate as the applicable basis for determining
the rate of interest on such a Loan if (x) such Loan is to be made on the
Closing Date, (y) at the time of such selection an Event of Default or Default
would occur or has occurred and is continuing, or (z) such Loan is a Canadian
Loan. If on any day any Loan is outstanding with respect to which notice has not
been timely delivered to the Agent in accordance with the terms hereof
specifying the basis for determining the rate of interest on that day, then for
that day interest on that Loan shall be determined by reference to the
applicable Floating Rate.
(b) Interest Payments. (i) Interest accrued on each Floating Rate
Loan shall be payable in arrears in the currency in which such Loan is
denominated (A) on the first Business Day of each calendar month for the
preceding calendar month, commencing on the first such day following the making
of such Floating Rate Loan and (B) if not theretofore paid in full, at maturity
(whether by acceleration or otherwise) of such Floating Rate Loan.
(ii) Interest accrued on each Fixed Rate Loan shall be payable in
arrears in the currency in which such Loan is denominated on the last day of
each Fixed Rate Interest Payment Date with respect to such Loan and (B) if not
theretofore paid in full, at maturity (whether by acceleration or otherwise) of
such Fixed Rate Loan.
(iii) Interest accrued on the principal balance of all other
Obligations shall be payable in arrears in the currency in which such Obligation
is denominated (A) on the first Business Day of each month, commencing on the
first such day following the incurrence of such Obligation and (B) if not
theretofore paid in full, at the time such other Obligation becomes due and
payable (whether by acceleration or otherwise).
(c) Conversion or Continuation. (i) Each Borrower shall have the
option (A) to convert at any time all or any part of its outstanding Floating
Rate Loans (other than Swing Loans and Canadian Loans) to Fixed Rate Loans
denominated in the same Available Currency; (B) to convert all or any part of
its outstanding Fixed Rate Loans having Interest Periods which expire on the
same date to Floating Rate Loans denominated in the same
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currency on such expiration date; or (C) to continue all or any part of its
outstanding Fixed Rate Loans having Interest Periods which expire on the same
date as Fixed Rate Loans denominated in the same currency, and the succeeding
Interest Period of such continued Loans shall commence on such expiration date;
provided, however, no such outstanding Loan may be continued as, or be converted
into, a Fixed Rate Loan (i) if the continuation of, or the conversion into,
would violate any of the provisions of Section 4.02 or (ii) if an Event of
Default or Default would occur or has occurred and is continuing. Any conversion
into or continuation of Fixed Rate Loans under this Section 4.01(c) shall be in
a minimum amount of $5,000,000 (or the Dollar Equivalent of $1,000,000 for Fixed
Rate Loans denominated in an Optional Currency) and in integral Dollar
Equivalent multiples of $1,000,000 (or approximately similar intervals in
Optional Currencies) in excess of that amount. Such minimum levels may be
achieved under the U.S. Facility by combining the Loans of more than one
Borrower being continued as or converted into Fixed Rate Loans with the same
Interest Period so long as the minimum amount of any single Borrowing is
$1,000,000.
(ii) To convert or continue a Loan under Section 4.01(c)(i), the
applicable Borrower shall deliver a Notice of Conversion/Continuation to the
Agent no later than 12:00 noon (New York time or London time, as applicable) at
least three (3) Business Days (or two (2) Business Days in the case of
Multicurrency Loans) in advance of the proposed conversion/continuation date.
Promptly after receipt of a Notice of Conversion/Continuation under this Section
4.01(c)(ii), the Agent shall notify each Lender under the applicable Credit
Facility by telex or telecopy, or other similar form of trans mission, of the
proposed conversion/continuation. Any Notice of Conversion/Continuation for
conversion to, or continuation of, a Loan shall be irrevocable, and the
applicable Borrower shall be bound to convert or continue in accordance
therewith.
(d) Default Interest. Notwithstanding the rates of interest
specified in Section 4.01(a) or elsewhere herein, and to the extent permitted by
applicable law, effective immediately upon the occurrence of any Event of
Default and for as long thereafter as such Event of Default shall be continuing,
the principal balance of all Loans and of all other Obligations shall bear
interest at a rate which is two percent (2.0%) per annum in excess of the rate
of interest applicable to such Loans and Obligations from time to time.
(e) Computation of Interest. Interest on all Obliga tions (other
than Obligations of the Canadian Borrower) shall be computed on the basis of the
actual number of days elapsed in the period during which interest accrues and a
year of 360 days. Interest on all Obligations of the Canadian Borrower shall be
computed on the basis of the actual number of days elapsed in the
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period during which interest accrues and a year of 365 or 366 days, as
applicable. In computing interest on any Loan, the date of the making of the
Loan shall be included and the date of payment shall be excluded.
(f) Changes; Legal Restrictions. If after the date hereof any Lender
or Issuing Bank determines that the adoption or implementation of or any change
in or in the interpretation or administration of any law or regulation or any
guideline or request from any central bank or other Governmental Authority or
quasi-governmental authority exercising jurisdiction, power or control over any
Lender, Issuing Bank or over banks or financial institutions generally (whether
or not having the force of law), compliance with which, in each case after the
date hereof:
(i) subjects a Lender or an Issuing Bank (or its Applicable Lending
Office) to charges (other than Taxes) of any kind which is applicable to
the Revolving Credit Commitments of the Lenders and/or the Issuing Banks
to make Fixed Rate Loans or to Issue and/or participate in Letters of
Credit; or
(ii) imposes, modifies or holds applicable, any reserve (other than
reserves taken into account in calculating any Fixed Rate), special
deposit, compulsory loan, FDIC insurance or similar requirement against
assets held by, or deposits or other liabilities (including those
pertaining to Letters of Credit) in or for the account of, advances or
loans by, commitments made or other credit extended by, or any other
acquisition of funds by, a Lender or an Issuing Bank or any Applicable
Lending Office or Fixed Rate Affiliate of that Lender or Issuing Bank;
and the result of any of the foregoing is to increase the cost to that Lender or
Issuing Bank of making, renewing or maintaining the Loans or its Revolving
Credit Commitments or issuing or participating in the Letters of Credit or to
reduce any amount receivable thereunder; then, in any such case, upon written
demand by such Lender or Issuing Bank (with a copy of such demand to the Agent),
the Borrowers (other than the Canadian Borrower, which so agrees to pay only the
Canadian Lenders) jointly and severally agree promptly to pay to the Agent for
the account of such Lender or Issuing Bank, from time to time as specified by
such Lender or Issuing Bank, such amount or amounts as may be necessary to
compensate such Lender or Issuing Bank or its Fixed Rate Affiliate for any such
additional cost incurred or reduced amount received. Such demand shall be
accompanied by a statement as to the amount of such compensation and include a
reasonably detailed summary of the basis for such demand. Such statement shall
be conclusive and binding for all purposes, absent manifest error.
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(g) Confirmation of Fixed Rate. Upon the reasonable request of any
Borrower from time to time, the Agent shall promptly provide to such Borrower
such information with respect to the applicable Fixed Rate as may be so
requested.
4.02. Special Provisions Governing Fixed Rate Loans.
With respect to Fixed Rate Loans:
(a) Amount of Advance. Each Fixed Rate Loan shall be for a minimum
amount of $5,000,000 (or the Dollar Equivalent of $1,000,000 for Fixed Rate
Loans denominated in an Optional Currency) and in integral $1,000,000 (or
approximately similar intervals in Optional Currencies) in excess of that
amount. Such minimum levels may be achieved under the U.S. Facility by combining
the Borrowings of more than one Borrower so long as the minimum amount of any
single Borrowing is $1,000,000.
(b) Determination of Interest Period. By giving notice as set forth
in Section 2.01(c) (with respect to a new Borrowing of U.S. Loans or
Multicurrency Loans) or Section 4.01(c) (with respect to a conversion into or
continuation of a Fixed Rate Loan), the applicable Borrower shall have the
option, subject to the other provisions of this Section 4.02, to select an
interest period (each, an "Interest Period") to apply to the Loans described in
such notice, subject to the following provisions:
(i) Such Borrower may only select, as to a par ticular Borrowing of
Fixed Rate Loans, a Interest Period of either one (1), two (2), three (3)
or, to the extent consented to by the Agent, six (6) months in duration;
(ii) In the case of immediately successive Interest Periods
applicable to a Borrowing of Fixed Rate Loans, each successive Interest
Period shall commence on the day on which the next preceding Interest
Period expires;
(iii) If any Interest Period would otherwise expire on a day which
is not a Business Day, such Interest Period shall be extended to expire on
the next succeeding Business Day if the next succeeding Business Day
occurs in the same calendar month, and if there shall be no succeeding
Business Day in such calendar month, such Interest Period shall expire on
the immediately preceding Business Day;
(iv) Such Borrower may not select a Interest Period as to any Loan
if such Interest Period terminates later than the Revolving Credit
Termination
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Date;
(v) There shall be no more than five (5) Interest Periods for Fixed
Rate Loans denominated in Dollars and no more than ten (10) Interest
Periods in the aggregate for Fixed Rate Loans denominated in Optional
Currencies in effect at any one time; and
(vi) No Fixed Rate Loan may be borrowed on the Closing Date, and no
Notice of Conversion/Continuation may be delivered prior to the Closing
Date.
(c) Determination of Interest Rate. As soon as prac ticable on the
applicable Fixed Rate Determination Date, the Agent shall determine (pursuant to
the procedures set forth in the definition of "Fixed Rate") the interest rate
which shall apply to Fixed Rate Loans for which an interest rate is then being
determined for the applicable Interest Period and currency and shall promptly
give notice thereof (in writing or by telephone confirmed in writing) to the
applicable Borrowers and to each Lender (other than the Canadian Lenders). The
Agent's determination shall be presumed to be correct, absent manifest error,
and shall be binding upon such Borrowers.
(d) Interest Rate Unascertainable, Inadequate or Unfair. In the
event that (x) in the case of U.S. Loans, at least one (1) Business Day before
and (y) in the case of Multicurrency Loans, on the Fixed Rate Determination Date
with respect to any Fixed Rate Loan in the relevant currency:
(i) the Agent determines that adequate and fair means do not exist
for ascertaining the applicable interest rates by reference to which the
applicable Fixed Rate for the applicable Available Currency then being
determined is to be fixed;
(ii) the Agent determines that deposits in such currency and in the
principal amounts of the Fixed Rate Loans comprising such Borrowing are
not generally available in the London interbank market for a period equal
to such Interest Period; or
(iii) the Requisite Lenders in the Applicable Credit Facility advise
the Agent that the applicable Fixed Rate for the applicable Available
Currency, as determined by the Agent, after taking into account the
adjustments for reserves and increased costs provided for in Section
4.01(f), will not adequately and fairly reflect the cost to such Lenders
of funding the relevant Fixed Rate Loans in the currency in which such
Loans are denominated;
then the Agent shall forthwith give notice thereof to the
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Borrowers, whereupon (until the Agent notifies the Borrowers that the
circumstances giving rise to such suspension no longer exist) the right of the
Borrowers to elect to have Loans bear interest based upon the Fixed Rate in such
currency shall be suspended and each outstanding Fixed Rate Loan which is
denominated in the affected currency shall be converted into a Floating Rate
Loan denominated in such currency on the last day of the then current Interest
Period therefor, and any Notice of Borrowing with respect to Loans denominated
in such currency for which Revolving Loans have not then been made shall be
deemed to be a request for Floating Rate Loans in such currency, notwithstanding
any prior election by a Borrower to the contrary.
(e) Illegality. (i) If at any time any Lender deter mines (which
determination shall, absent manifest error, be final and conclusive and binding
upon all parties) that the making or continuation of any Fixed Rate Loan in any
currency has become unlawful or impermissible by compliance by that Lender with
any law, governmental rule, regulation or order of any Governmental Authority
(whether or not having the force of law and whether or not failure to comply
therewith would be unlawful or would result in costs or penalties), then, and in
any such event, such Lender may give notice of that determination, in writing,
to the Borrowers and the Agent, and the Agent shall promptly transmit the notice
to each other Lender.
(ii) When notice is given by a Lender under Section 4.02(e)(i), (A)
the Borrowers' right to request from such Lender and such Lender's obligation,
if any, to make Fixed Rate Loans in such currency shall be immediately
suspended, and such Lender shall make a Floating Rate Loan as part of any
requested Borrowing of Fixed Rate Loans in such currency and (B) if the affected
Fixed Rate Loan or Loans are then outstanding, the applicable Borrower shall
immediately, or if not permitted by applicable law to do so immediately, then by
no later than the date it is permitted to do so in accordance with applicable
law, upon at least one (1) Business Day's prior written notice to the Agent and
the affected Lender, convert each such Loan into a Floating Rate Loan.
(iii) If at any time after a Lender gives notice under Section
4.02(e)(i) in respect of a Fixed Rate Loan in any currency such Lender
determines that it may lawfully make Fixed Rate Loans in such currency, such
Lender shall promptly give notice of that determination, in writing, to the
Borrowers and the Agent, and the Agent shall promptly transmit the notice to
each other Lender. The Borrowers' right to request, and such Lender's
obligation, if any, to make Fixed Rate Loans shall thereupon be restored.
(f) Compensation. In addition to all amounts required to be paid by
the Borrower pursuant to Section 4.01, each
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Borrower agrees to compensate each Lender, upon demand, for all losses, expenses
and liabilities (including, without limitation, any loss or expense incurred by
reason of the liquidation or reemployment of deposits or other funds acquired by
such Lender to fund or maintain such Lender's Fixed Rate Loans made to such
Borrower but excluding any loss of the Applicable Fixed Rate Margin on the
relevant Loans) which that Lender may sustain (i) if for any reason a Borrowing
of, conversion into or continuation of such Fixed Rate Loans does not occur on a
date specified therefor in a Notice of Borrowing or a Notice of
Conversion/Continuation given by such Borrower or a successive Interest Period
does not commence after notice therefor is given pursuant to Section 4.01(c),
including, without limitation, pursuant to Section 4.02(d), (ii) if for any
reason any Fixed Rate Loan made to such Borrower is prepaid (including, without
limitation, mandatorily pursuant to Section 3.01) on a date which is not the
last day of the applicable Interest Period (it being understood and agreed that,
notwithstanding anything contained in this Agreement to the contrary, so long as
no Default or Event of Default shall have occurred and be continuing, such
Borrower (other than the Canadian Borrower) may, in lieu of making a mandatory
prepayment of a Fixed Rate Loan which would otherwise be required to be made
under this Agreement on a date which is not the last day of the applicable
Interest Period, deposit an amount equal to the amount which would otherwise be
required to be so prepaid (plus interest accrued thereon for the appropriate
number of days at the rate applicable to such Loan) into the U.S. Cash
Collateral Account (or, in the case of Fixed Rate Loans denominated in an
Optional Currency, an appropriate Cash Collateral Account) as Cash Collateral
for application by the Agent to such Loan on the last day of such Interest
Period), (iii) as a consequence of a required conversion of such Fixed Rate Loan
to a Floating Rate Loan as a result of any of the events indicated in Section
4.02(d) or (e) or (iv) as a consequence of any failure by such Borrower to repay
Fixed Rate Loans when required by the terms hereof. The Lender making demand for
such compensation shall deliver to the applicable Borrower concurrently with
such demand a written statement in reasonable detail as to such losses, expenses
and liabilities, and this statement shall be conclusive as to the amount of
compensation due to that Lender, absent manifest error.
(g) Booking of Fixed Rate Loans. Any Lender may make, carry or
transfer Fixed Rate Loans at, to or for the account of its Fixed Rate Lending
Office or Fixed Rate Affiliate or its other offices or Affiliates. No Lender
shall be entitled, however, to receive any greater amount under Sections 3.03,
3.04, 4.01(f) or 4.02(f) as a result of the transfer of any such Fixed Rate Loan
to any office (other than such Fixed Rate Lending Office) or any Affiliate
(other than such Fixed Rate Affiliate) than such Lender would have been entitled
to receive immediately prior thereto, unless, such Lender provides reasonably
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satisfactory evidence to the Company that (i) the transfer occurred at a time
when circumstances giving rise to the claim for such greater amount did not
exist and (ii) such claim in the relevant amount would have arisen even if such
transfer had not occurred.
(h) Affiliates Not Obligated. No Fixed Rate Affiliate or other
Affiliate of any Lender shall be deemed a party hereto or shall have any
liability or obligation hereunder.
4.03. Fees. (a) Letter of Credit Fee. In addition to any charges
paid pursuant to Section 2.02(g), each Domestic Borrower agrees to pay to the
Agent for the account of the U.S. Lenders as provided in the following sentence,
and the Canadian Borrower agrees to pay to the Canadian Agent for the account of
the Canadian Lenders as provided in the following sentence, with respect to any
Letter of Credit Issued by any Issuing Bank for the account of such Borrower, a
fee per annum (the "Letter of Credit Fee") equal to two percent (2.0%) as of the
date of each such payment on the undrawn face amount of such Letter of Credit,
payable in arrears on the first Business Day of each calendar month for the
preceding calendar month and on the date on which such Letter of Credit expires
in accordance with its terms; provided, however, effective immediately upon the
occurrence of any Event of Default and for so long thereafter as such Event of
Default shall be continuing, the rate at which the Letter of Credit Fees shall
accrue and be payable shall be equal to four percent (4.0%) per annum. The Agent
shall pay each Letter of Credit Fee to the U.S. Lenders in accordance with their
respective Pro Rata Shares of the U.S. Facility, and the Canadian Agent shall
pay each Letter of Credit Fee to the Canadian Lenders in accordance with their
respective Pro Rata Shares of the Canadian Facility.
(b) Unused Commitment Fee. The Domestic Borrowers agree to pay to
the Agent, for the account of the U.S. Lenders in accordance with their
respective Pro Rata Shares of the U.S. Facility, and the Canadian Borrower
agrees to pay to the Canadian Agent, for the account of the Canadian Lenders in
accordance with their respective Pro Rata Shares of the Canadian Facility, a fee
(the "Unused Commitment Fee"), accruing from the Closing Date at a rate of
one-half of one percent (0.5%) per annum on the average amount by which the
Revolving Credit Commitments under such Credit Facility exceed the Revolving
Credit Obligations under such Credit Facility for the period commencing on the
Closing Date and ending on the Revolving Credit Termination Date, the accrued
portion of such fee being payable (A) monthly, in arrears, on the first Business
Day of the immediately succeeding calendar month, commencing on the first such
day after the Closing Date and (B) on the Revolving Credit Termination Date
(whether or not such date occurs on, before or after the Closing Date).
Notwithstanding the foregoing, in the event that any
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Lender fails to fund its Pro Rata Share of any Revolving Loan requested by a
Borrower which such Lender is obligated to fund under the terms hereof, such
Lender shall not be entitled to any Unused Commitment Fees with respect to its
Revolving Credit Commitment under the applicable Credit Facility until such
failure has been cured in accordance with Section 3.02(b)(iv)(B) and no Borrower
shall be required to pay any Unused Commitment Fees with respect to such Credit
Facility to such Lender for such period.
(c) Other Fees. The Borrowers agree to pay to the Agent solely for
its own account such other fees as are set forth in the Letter Agreement.
(d) Calculation and Payment of Fees. All of the above fees that are
based on a per annum rate shall be calculated on the basis of the actual number
of days elapsed in a 360-day year. All such fees shall be payable in addition
to, and not in lieu of, interest, expense reimbursements, indemnification and
other Obligations. Fees shall be payable to the applicable Payment Account in
accordance with Section 3.02. All fees payable hereunder shall be fully earned
and, subject only to Section 13.01(c), nonrefundable when paid. All fees
specified or referred to herein due to the Agent, any Issuing Bank or any
Lender, including, without limitation, those referred to in this Section 4.03,
shall bear interest, if not paid when due, at the interest rate for Loans in
accordance with Section 4.01(d), shall constitute Obligations and shall be
secured by the Collateral.
ARTICLE V
CONDITIONS TO LOANS AND LETTERS OF CREDIT
5.01. Conditions Precedent to the Initial Loans and Letters of
Credit. The obligation of each Lender on the Closing Date to make its Revolving
Loan requested to be made by it and the agreement of each Issuing Bank on the
Closing Date to Issue Letters of Credit, shall be subject to the satisfaction of
all of the following conditions precedent:
(a) Documents. The Agent (on behalf of itself and the Lenders) shall
have received on or before the Closing Date all of the following:
(i) this Agreement, the Notes and all other agreements, documents
and instruments (other than items designated as "post-closing" items)
described in the List of Closing Documents attached hereto and made a part
hereof as Exhibit T (the "Closing List"), each duly executed where
appropriate and in form and substance satisfactory to the Lenders and in
sufficient copies for each of the Lenders; without limiting the foregoing,
the Borrowers hereby direct
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their counsel, (A) McDermott, Will & Emery and (B) each of its other
counsel listed in such List of Closing Documents to prepare and deliver to
the Agent, the Lenders, the Issuing Banks and Sidley & Austin, the
opinions referred to in the Closing List with respect to such counsel;
(ii) the Company's historical financial statements as of September
30, 1995, and as of each succeeding month-end date for which such
financial statements are available prior to the Closing Date, accompanied
by appropriate pro forma financial statements as of December 31, 1995, as
well as a pro forma estimated balance sheet of Holdings and its
Subsidiaries as of the Closing Date, giving effect to the transactions
contemplated in the Transaction Documents, and the Initial Projections;
and
(iii) such additional documentation as the Agent and the Lenders may
reasonably request.
(b) Collateral Information; Perfection of Liens. The Agent shall
have received complete and accurate information from the Company with respect to
the name and the location of the principal place of business and chief executive
office for the Company and each of its Subsidiaries; all Uniform Commercial Code
and other filing and recording fees and taxes shall have been paid or duly
provided for; and the Agent shall have received evidence to the satisfaction of
the Lenders that all Liens granted to the Agent with respect to all Collateral
are valid and effective and, upon the filing of the duly executed Uniform
Commercial Code financing statements (or similar filings required by the
applicable statutes of Canada, any political subdivision thereof or other
foreign jurisdiction in which the Agent is being granted a Lien by the
Borrowers) which shall have been delivered to the Agent (in the case of such
financing statements for Connecticut and Texas, and, to the extent not
prohibited by any Contractual Obligation of Mobil Corporation or any of its
Subsidiaries, prior to the Closing Date in time to have such statements filed
with the relevant filing office at least two (2) Business Days prior to the
Closing Date), will be perfected and of first priority, except as otherwise
permitted under this Agreement. All certificates representing Capital Stock
included in the Collateral shall have been delivered to the Agent (with duly
executed stock powers, as appropriate) and all instruments included in the
Collateral shall have been delivered to the Agent (duly endorsed to the Agent).
(c) Acquisition Agreement and Related Matters. The Agent and the
Lenders shall be satisfied that: (i) the Acquisition Agreement and all other
Acquisition Documents which are to be entered into as of or prior to the Closing
Date shall have been duly approved and executed and delivered by the parties
thereto, (ii) the Registration Statement shall have been declared
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effective by the Securities and Exchange Commission, (iii) shares of Common
Stock and/or Nonvoting Common Stock shall have been purchased in accordance with
the Registration Statement and/or the Nonvoting Common Stock Purchase Agreement
for an aggregate purchase price of not less than $15,000,000, (iv) Holdings
shall have issued the Preferred Stock to Muehlstein Holding Corporation (or a
Mobil Affiliate (as defined in the Acquisition Agreement)) for an aggregate
purchase price of not less than $10,000,000, (v) the Finova Indebtedness shall
have been funded, and the Company shall have received not less than $8,000,000
of proceeds therefrom, (vi) all conditions precedent to closing under the
Acquisition Agreement and the other Acquisition Documents which are to be
entered into as of or prior to the Closing Date have been met (or waived with
the consent of the Requisite Lenders) and such documents are, or simultaneously
with the execution hereof, shall be, in full force and effect, and (vii) good
and marketable title to the Capital Stock of the Company purported to be
transferred by the terms of the Acquisition Agreement and the Acquisition
Documents, free and clear of all Liens, has been transferred to Holdings on
terms satisfactory to the Agent and the Lenders.
(d) No Legal Impediments. No law, regulation, order, judgment or
decree of any Governmental Authority shall exist, and the Agent shall not have
received any notice that any action, suit, investigation, litigation or
proceeding is pending or threatened in any court or before any arbitrator or
Governmental Authority which (i) purports to enjoin, prohibit, restrain or
otherwise affect (A) the making of the Loans on the Closing Date or (B) the
consummation of the transactions contemplated pursuant to the Transaction
Documents or (ii) would be reasonably expected to impose or result in the
imposition of a Material Adverse Effect.
(e) No Change in Condition. No change deemed material by the
Lenders, in their opinion, in the condition (financial or otherwise), business,
performance, assets, operations or prospects of Holdings, the Company, or any of
the Company's Subsidiaries shall have occurred that would (i) cause the Initial
Projections to be unreasonable in light of then current circumstances, (ii) have
a material adverse effect on the ability of Holdings and the Borrowers to
perform their material obligations under the Loan Documents or (iii) have a
material adverse effect on the ability of the Lenders, the Issuing Banks or the
Agent to enforce the Loan Documents.
(f) No Default. No Event of Default or Default shall have occurred
and be continuing or would result from the making of the Loans requested to be
made or the Issuance of the Letters of Credit requested to be Issued on the
Closing Date.
(g) Representations and Warranties. All of the repre-
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sentations and warranties contained in Section 6.01 and in any of the other Loan
Documents shall be true and correct on and as of the Closing Date, both before
and immediately after giving effect to the making of the Loans.
(h) Fees and Expenses Paid. There shall have been paid to the Agent,
for the account of the Lenders and the Agent, for their respective individual
accounts, all fees (including, without limitation, the reasonable legal fees of
counsel to the Agent and local counsel to the Agent for the benefit of the
Lenders) due and payable on or before the Closing Date (including, without
limitation, all such fees described in the Letter Agreement), and all expenses
(including, without limitation, legal expenses) due and payable on or before the
Closing Date.
(i) Closing Date. The Closing Date shall have occurred on or prior
to February 12, 1996.
(j) Consents, Etc. Except as set forth on Schedule 6.01-E, each of
Holdings, the Company and the Company's Subsidiaries shall have received all
material consents and authorizations required pursuant to any material
Contractual Obligation with any other Person and shall have obtained all
material Permits of, and effected all notices to and filings with, any
Governmental Authority as may be necessary to allow each of Holdings, the
Company, and the Company's other Subsidiaries lawfully (A) to execute, deliver
and perform, in all material respects, their respective obligations hereunder,
under the other Transaction Documents to which each of them is, or shall be, a
party and each other agreement or instrument to be executed and delivered by
each of them pursuant thereto or in connection therewith and (B) to create and
perfect the Liens on the Collateral to be owned by each of them in the manner
and for the purpose contemplated by the Loan Documents. No such consent or
authorization shall impose any conditions upon Holdings, the Company, or any of
the Company's Subsidiaries that are not acceptable to the Lenders.
(k) Transaction Costs. The Borrowers and Holdings shall have paid
and be obligated to pay not more than $6,600,000 in Transaction Costs.
(l) Environmental Review. The Lenders shall have been provided with
a written report or written reports of a Phase II investigation or
investigations conducted by ATEC Associates, Inc., identifying potential
environmental Liabilities and Costs to which Holdings, the Company and the
Company's Subsidiaries may be subject, in form and substance satisfactory to the
Lenders and the Agent.
5.02. Conditions Precedent to All Subsequent Revolving
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Loans, Swing Loans and Letters of Credit. The obligation of each Lender to make
any Revolving Loan and of any Swing Loan Bank to make any Swing Loan, requested
to be made by it on any date after the Closing Date, the agreement of each
Issuing Bank to Issue any Letter of Credit on any date after the Closing Date,
and the agreement of the Agent to honor any Notice of Withdrawal is subject to
the following conditions precedent as of each such date:
(a) Representations and Warranties. As of such date, both before and
after giving effect to the Loans to be made or the Letter of Credit to be Issued
on such date, all of the representations and warranties of Holdings, the Company
and the Company's Subsidiaries contained in Section 6.01 and in any other Loan
Document (other than representations and warranties which expressly speak as of
a different date, which representations shall be only made on such date) shall
be true and correct in all material respects.
(b) No Default. No Event of Default or Default shall have occurred
and be continuing or would result from the making of the requested Loan or the
Issuance of the requested Letter of Credit.
(c) No Legal Impediments. No law, regulation, order, judgment or
decree of any Governmental Authority shall, and the Agent shall not have
received from any Lender, any Swing Loan Bank or Issuing Bank, as the case may
be, notice that, in the judgment of such Person, any action, suit,
investigation, litigation or proceeding is pending or threatened in any court or
before any arbitrator or Governmental Authority which is likely to enjoin,
prohibit or restrain, or impose or result in the imposition of any material
adverse condition upon, (i) such Lender's making of the requested Loan or
participation in the requested Letter of Credit, (ii) any Swing Loan Bank's
making of the requested Swing Loan or (iii) such Issuing Bank's issuance of the
requested Letter of Credit.
(d) No Material Adverse Change. No change (other than as
contemplated in the Registration Statement) deemed material by the Requisite
Lenders, in their opinion, in the condition (financial or otherwise), business,
performance, assets, operations or prospects of the Domestic Borrowers, taken as
a whole, or the Canadian Borrower, individually, shall have occurred since
December 31, 1994, which change has had or is reasonably likely to have a
Material Adverse Effect.
Each submission by a Borrower to the Agent of a Notice of Bor rowing with
respect to a Revolving Loan or Swing Loan, each acceptance by a Borrower of the
proceeds of each such Loan so made, each submission by a Borrower to an Issuing
Bank of a Notice of a Letter of Credit Issuance and the issuance of such
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Letter of Credit, and each submission by a Borrower to the Agent of a Notice of
Withdrawal, shall constitute a representation and warranty by such Borrower as
of the Funding Date in respect of such Revolving Loan, as of the Swing Loan
Funding Date in respect of such Swing Loan, as of the date of issuance of such
Letter of Credit and as of the date of such Notice of Withdrawal, that all the
conditions contained in subsections (a), (b) and (c) of this Section 5.02 have
been satisfied or waived in accordance with Section 13.07 (it being understood
that a Notice of Withdrawal shall be deemed to be a request for a Borrowing of
Revolving Loans for purposes of determining whether such conditions have been
satisfied or waived).
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.01. Representations and Warranties of the Borrowers. In order to
induce the Lenders and the Issuing Banks to enter into this Agreement and to
make the Loans and the other financial accommodations to the Borrowers and to
Issue the Letters of Credit described herein, each of Holdings and the Borrowers
(other than the Canadian Borrower, which so represents and warrants in favor of
the Canadian Lenders, only with respect to itself and its unconsolidated
liabilities, assets, business and opportunities) hereby represents and warrants
to each Lender, each Issuing Bank and the Agent as of the Closing Date and
thereafter on each date as required by Section 5.02(a) that the following
statements are true, correct and complete:
(a) Organization; Corporate Powers. Each of Holdings, the Company
and the Company's Subsidiaries (i) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, (ii) is duly qualified to do business as a foreign corporation and
is in good standing under the laws of each jurisdiction in which failure to be
so qualified and in good standing has or is reasonably likely to have a Material
Adverse Effect and (iii) has all requisite corporate power and authority to own,
operate and encumber its Property and to conduct its business in all material
respects as presently conducted.
(b) Authority. (i) Each of Holdings, the Company and the Company's
Subsidiaries has the requisite corporate power and authority to execute, deliver
and perform each of the Loan Documents to which it is a party.
(ii) The execution, delivery and performance, as the case may be, of
each of the Loan Documents which have been executed and to which any of
Holdings, the Company or any of the Company's Subsidiaries is a party and the
consummation of the transactions contemplated thereby, have been duly approved
by
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each of the boards of directors and (to the extent required by law) the
shareholders of Holdings, the Company and such Subsidiary, respectively, and
such approvals have not been rescinded, revoked or modified in any material
respect. No other corporate action or proceedings on the part of Holdings, the
Company or any of the Company's Subsidiaries is necessary to consummate such
transactions.
(iii) Each of the Loan Documents to which Holdings, the Company or any
of the Company's Subsidiaries is a party has been duly executed, or delivered on
behalf of Holdings, the Company or such Subsidiary, as the case may be, and
constitutes its legal, valid and binding obligation, enforceable against such
Person in accordance with its terms (except as such enforcement may be limited
by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance and
other laws affecting the enforcement of creditors' rights generally and to the
effect of general equitable principles (whether considered in a proceeding in
equity or at law)) and is in full force and effect.
(c) Subsidiaries; Ownership of Capital Stock. Schedule 6.01-C (i)
contains a diagram indicating the corporate structure of Holdings, the Company,
the Company's Subsidiaries and any other Affiliate thereof in which Holdings,
the Company or any of the Company's Subsidiaries holds an equity interest as of
the Closing Date after giving effect to the transactions contemplated in the
Transaction Documents; and (ii) accurately sets forth as of the Closing Date
after giving effect to the transactions contemplated in the Transaction
Documents (A) the correct legal name, the jurisdiction of incorporation, and
Employer Identification Number of each of Holdings, the Company and the
Company's Subsidiaries, and the jurisdictions in which each of Holdings, the
Company and the Company's Subsidiaries is qualified to transact business as a
foreign corporation, (B) the authorized, issued and outstanding shares of each
class of Capital Stock of Holdings, the Company and each of the Company's
Subsidiaries and the owners of such shares, and (C) a summary of the direct and
indirect partnership, joint venture, or other equity interests, if any, of
Holdings, the Company and each Subsidiary of the Company in any Person that is
not a corporation. None of the issued and outstanding Capital Stock of Holdings,
the Company or any of the Company's Subsidiaries is subject to any vesting,
redemption, or repurchase agreement, and there are no warrants or options
outstanding with respect to such Capital Stock except as provided in the ESOP,
the Shareholders' Agreement and the Nonvoting Common Stock Purchase Agreement.
The outstanding Capital Stock of Holdings, the Company and each of the Company's
Subsidiaries is duly authorized, validly issued, fully paid and nonassessable
and is not Margin Stock.
(d) No Conflict. The execution, delivery and perfor mance of each of
the Loan Documents to which Holdings, the
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Company or any of the Company's Subsidiaries is a party do not and shall not (i)
conflict with the Constituent Documents of Holdings, the Company or any such
Subsidiary, (ii) to the best Knowledge of Holdings and its Subsidiaries,
constitute a tortious interference with any Contractual Obligation of any
Person, (iii) except as set forth on Schedule 6.01-D conflict with, result in a
breach of or constitute (with or without notice or lapse of time or both) a
default under any material Requirement of Law or any Transaction Document or
other material Contractual Obligation of Holdings, the Company or any such
Subsidiary, or require the termination of any Transaction Document or other
material Contractual Obligation, (iv) result in or require the creation or
imposition of any Lien whatsoever upon any of the Property or assets of
Holdings, the Company or any such Subsidiary, other than Liens contemplated by
the Loan Documents and the Finova Documents, or (v) require any approval of
Holdings', the Company's or any such Subsidiary's shareholders that has not been
obtained.
(e) Governmental Consents, etc. Except as set forth on Schedule
6.01-E, the execution, delivery and performance of each of the Loan Documents
(or, solely as of the Closing Date, the other Transaction Documents executed and
delivered on such date) to which Holdings, the Company or any of the Company's
Subsidiaries is a party do not and shall not require any registration with,
consent or approval of, or notice to, or other action to, with or by any
Governmental Authority, except (i) filings, consents or notices which have been
made, obtained or given, or, in a timely manner, shall be made, obtained, or
given, (ii) filings necessary to create or perfect security interests in the
Collateral, (iii) routine filings made in the ordinary course of business and
(iv) non-essential filings contemplated by the Transaction Documents but not
necessary to consummate the transactions contemplated thereby. None of Holdings,
the Company or any of the Company's Subsidiaries is subject to regulation under
the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act, or the Investment Company Act of 1940, or any other
federal or state statute or regulation which limits its ability to incur
indebtedness or its ability to consummate the transactions contemplated in the
Loan Documents.
(f) Accommodation Obligations; Contingencies. Except as set forth on
Schedule 1.01.3, none of Holdings, the Company or any of the Company's
Subsidiaries has any Accommodation Obliga tion, contingent liability or
liability for any Taxes, long-term lease or commitment, not reflected in its
financial statements delivered to the Agent on or prior to the Closing Date or
otherwise disclosed to the Agent and the Lenders in the other Schedules hereto,
which shall have or is reasonably likely to have a Material Adverse Effect.
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(g) Restricted Junior Payments. None of Holdings, the Company or any
of the Company's Subsidiaries has directly or indirectly declared, ordered, paid
or made or set apart any sum or Property for any Restricted Junior Payment or
agreed to do so, except as permitted pursuant to Section 9.06 hereof.
(h) Financial Position. The Initial Projections, the pro forma
financial statements referred to in Section 5.01(a)(ii) and each of the
Company's business plans and all other financial projections and related
materials and documents delivered to the Lenders pursuant hereto were prepared
in good faith and are based upon facts and assumptions that are reasonable in
light of the then current and foreseeable business conditions and prospects of
the Company and represent management's opinion of the Company's projected
financial performance based on the information available to Holdings and the
Company at the time so furnished.
(i) Litigation; Adverse Effects. Except as set forth in Schedule
6.01-I, there is no action, suit, audit, proceeding, allegation of defective
pricing, investigation or arbitration (or series of related actions, suits,
proceedings, allegations, investigations or arbitrations) before or by any
Governmental Authority or private arbitrator pending or, to the Knowledge of
Holdings, the Company or any of the Company's Subsidiaries, threatened against
Holdings, the Company or any of the Company's Subsidiaries or any Property of
any of them (i) challenging the validity or the enforceability of any of the
Transaction Docu ments or (ii) which shall have or is reasonably likely to have
a Material Adverse Effect. None of Holdings, the Company or any of the Company's
Subsidiaries is (A) in violation of any applicable Requirements of Law which
violation shall have or is reasonably likely to result in a Material Adverse
Effect, or (B) subject to or in default with respect to any judgment, writ,
injunction, restraining order or order of any nature, decree, rule or regulation
of any court or Governmental Authority, in each case which shall have or is
reasonably likely to have a Material Adverse Effect.
(j) No Material Adverse Change. Except as contemplated in the
Registration Statement, since December 31, 1994 there has occurred no event
which shall have or is reasonably likely to have a Material Adverse Effect.
(k) Payment of Taxes. All tax returns and reports of each of
Holdings, the Company and the Company's Subsidiaries required to be filed have
been timely filed, and all taxes, assessments, fees and other governmental
charges thereupon and upon their respective Property, assets, income and
franchises which are shown in such returns or reports to be due and payable have
been paid other than such taxes, assessments, fees and other governmental
charges (i) which are being contested in good faith by Holdings, the Company or
such Subsidiary, as the case may be,
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by appropriate proceedings diligently instituted and conducted and (ii) with
respect to which a reserve or other appropriate provision, if any, as is
required in conformity with GAAP shall have been made. Neither the Company nor
Holdings has any Knowl edge of any proposed tax assessment against Holdings, the
Company or any of the Company's Subsidiaries that shall have or is reasonably
likely to have a Material Adverse Effect.
(l) Performance. None of Holdings, the Company or any of the
Company's Subsidiaries has received notice or has actual Knowledge that (i) it
is in default in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any Contractual Obligation
applicable to it, or (ii) any condition exists which, with the giving of notice
or the lapse of time or both, would constitute a default with respect to any
such Contractual Obligation, in each case, except where such default or
defaults, if any, shall not have or are not reasonably likely to have a Material
Adverse Effect.
(m) Disclosure. The representations and warranties of each of
Holdings, the Company and the Company's Subsidiaries contained in the Loan
Documents and, solely as of the Closing Date, the other Transaction Documents
and the Registration Statement, and all certificates and documents delivered to
the Agent and the Lenders pursuant to the terms hereof and the other Loan
Documents, do not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements contained herein
or therein, in light of the circumstances under which and the time at which they
were made, not misleading, provided that (a) the statements contained in the
Registration Statement describing documents and agreements are summary only and
as such are qualified in their entirety by reference to such documents and
agreements, (b) to the extent any such information in the Registration Statement
was based upon or constitutes a forecast or projection, each of Holdings, the
Company and the Company's Subsidiaries represents only that it acted in good
faith and utilized reasonable assumptions, due and careful consideration and the
best information Known to it at the time in the preparation of such information
and (c) as to the information and representations and warranties in the
Registration Statement and other certificates and documents attached as exhibits
thereto that is specified as having been supplied by third parties, each of
Holdings, the Company and the Company's Subsidiaries represents only that it is
not aware of any material misstatement therein or omission therefrom. Neither
Holdings nor the Company has intentionally withheld any fact from the Agent, any
Issuing Bank or any Lender in regard to any matter which shall have or is
reasonably likely to have a Material Adverse Effect.
(n) Requirements of Law. Each of Holdings, the Company and the
Company's Subsidiaries is in compliance with all
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Requirements of Law applicable to it and its business, in each case where the
failure to so comply individually or in the aggregate shall have or is
reasonably likely to have a Material Adverse Effect.
(o) Environmental Matters. Except as set forth in Schedule 6.01-O:
(A) the operations of Holdings, the Company and the Company's
Subsidiaries comply with all applicable Environmental, Health or Safety
Requirements of Law where failure to so comply has or is reasonably likely
to have a Material Adverse Effect;
(B) Holdings, the Company and each of the Company's Subsidiaries
have obtained or have taken appropriate steps, as required by
Environmental, Health or Safety Requirements of Law, to obtain all
material environmental, health and safety Permits necessary for their
respective operations, and all such Permits are in good standing and each
of Holdings, the Company and each of the Company's Subsidiaries are
currently in compliance with such Permits where failure to so comply has
or is reasonably likely to have a Material Adverse Effect;
(C) to the Company's Knowledge, none of Holdings, the Company or the
Company's Subsidiaries or any of their respective operations or present or
past Property are subject to any investigation or any judicial or
administrative proceeding, order, judgment, settlement, decree, or other
agreement alleging, respecting or addressing (i) a violation of any
Environmental, Health or Safety Requirement of Law where such violation
has or is reasonably likely to have a Material Adverse Effect; (ii) any
Remedial Action where such Remedial Action has or is reasonably likely to
have a Material Adverse Effect; or (iii) any Claims or Liabilities and
Costs arising from the Release or threatened Release of a Contaminant into
the environment where such Claims or Liabilities and Costs has or is
reasonably likely to have a Material Adverse Effect, nor has Holdings, the
Company or any of the Company's Subsidiaries received any notice of the
foregoing;
(D) to the Company's Knowledge, none of Holdings, the Company or the
Company's Subsidiaries is the owner or operator of any Property which has
any of the following which could result in a liability that is reasonably
likely to have a Material Adverse Effect:
(i) any past or present on-site generation, treatment,
recycling, storage or disposal of any hazardous waste, as that term
is defined under 40
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C.F.R. Part 261 or any state or local equivalent or any
similar statute of Canada, the United Kingdom, another
foreign jurisdiction, or political subdivision thereof;
(ii) any past or present landfill, waste-pile, underground
storage tank or surface impoundment;
(iii) any asbestos-containing material or suspected
asbestos-containing material; or
(iv) any polychlorinated biphenyls (PCBs) used in hydraulic
oils, electrical transformers or other Equipment;
(E) to the Company's Knowledge, except as reported to the Agent
pursuant to Section 7.07, no Environmental Lien has attached to any
Property of Holdings, the Company or any of the Company's Subsidiaries;
(F) to the Company's Knowledge, except as reported to the Agent
pursuant to Section 7.07, there have been no Releases of any Contaminants
into the environment in quantities reportable pursuant to 40 C.F.R. 302 by
Holdings, the Company or any of the Company's Subsidiaries;
(G) to the Company's Knowledge, except as reported to the Agent
pursuant to Section 7.07, neither Holdings, nor the Company, nor any of
the Company's Subsidiaries has any liability in connection with any
Release or threatened Release of any Contaminants into the environment
that is reasonably likely to have a Material Adverse Effect ;
(H) to the Company's Knowledge, except as reported to the Agent
pursuant to Section 7.07, neither Holdings, nor the Company nor any of the
Company's Subsidiaries has sent or directly arranged for the transport of
any waste to any site listed or proposed for listing on the National
Priorities List ("NPL") pursuant to CERCLA, or any similar statute of
Canada, the United Kingdom, another foreign jurisdiction, or a political
subdivision thereof, or on the Comprehensive Environmental Response
Compensation Liability Information System List ("CERCLIS"), or any similar
state list;
(I) to the Company's Knowledge, except as reported to the Agent
pursuant to Section 7.07, none of Holdings', the Company's or the
Company's Subsidiaries' present or past Property is listed or proposed for
listing on the NPL pursuant to CERCLA, or any similar statute of Canada,
the United Kingdom, another foreign jurisdiction, or a political
subdivision thereof, or on the CERCLIS or any similar state list of sites
requiring Remedial Action, and the Company and
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the Company's Subsidiaries are unaware of any conditions on such Property
which would qualify such Property for inclusion on any such list;
(J) none of Holdings, the Company or any of the Company's
Subsidiaries is subject to any Environmental Property Transfer Act as a
result of the transactions contemplated by the Loan Documents;
(K) none of the products Holdings, the Company or any of the
Company's Subsidiaries manufactures, distributes or sells, or has ever
manufactured, distributed or sold, contains asbestos-containing material
or suspected asbestos-containing material; and
(L) none of Holdings, the Company or any of the Company's
Subsidiaries is subject to any Environmental, Health or Safety
Requirements of Law relating to financial responsibility, including,
without limitation, those contained in 40 C.F.R. Parts 264 and 265,
Subparts H, and state and local law equivalents, and those contained in 40
C.F.R. Part 280, Subpart H, and state and local law equivalents.
(p) ERISA Matters. None of Holdings, the Company or the ERISA
Affiliates maintains or contributes to any Plan other than those listed on
Schedule 6.01-P hereto. With respect to each Plan which is intended to be
qualified under Section 401(a) of the Internal Revenue Code as currently in
effect, Holdings, the Company or an ERISA Affiliate has received or is in the
process of seeking, a favorable determination letter that the Plan is so
qualified and that each trust related to any such Plan is exempt from federal
income tax under Section 501(a) of the Internal Revenue Code as currently in
effect, except as disclosed on Schedule 6.01-P. None of Holdings, the Company or
the ERISA Affiliates has Knowledge of any reason why such Plans or trusts are
not qualified. Except as disclosed in Schedule 6.01-P, none of Holdings, the
Company or any of the Company's Subsidiaries maintains or contributes to any
employee welfare benefit plan within the meaning of Section 3(l) of ERISA which
provides benefits to employees after termination of employment other than as
required by Section 601 of ERISA. Holdings, the Company and all of the ERISA
Affiliates are in compliance in all material respects with the responsibilities,
obligations or duties imposed on them by ERISA, the Internal Revenue Code and
regulations promulgated thereunder with respect to all Plans. No Benefit Plan
has incurred any accumulated funding deficiency (as defined in Sections
302(a)(2) of ERISA and 412(a) of the Internal Revenue Code) whether or not
waived. Except as disclosed in Schedule 6.01-P, neither Holdings, nor the
Company, nor any ERISA Affiliate, nor any fiduciary of any Plan which is not a
Multiemployer Plan (i) has engaged in a nonexempt prohibited
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transaction described in Section 406 of ERISA or Section 4975 of the Internal
Revenue Code or (ii) has taken or failed to take any action which would
constitute or result in a Termination Event. None of Holdings, the Company or
the ERISA Affiliates has incurred any potential liability under Section 4063,
4064, 4069, 4204 or 4212(c) of ERISA. None of Holdings, the Company or the ERISA
Affiliates has incurred any liability to the PBGC which remains outstanding.
There are no premium payments which have become due to the PBGC which are
unpaid. Schedule B to the most recent annual report filed with the IRS with
respect to each Benefit Plan and furnished to the Agent is complete and
accurate. Since the date of each such Schedule B, there has been no material
adverse change in the funding status or financial condition of the Benefit Plan
relating to such Schedule B. Neither Holdings, nor the Company, nor any ERISA
Affiliate has (i) failed to make a required contribution or payment to a
Multiemployer Plan or (ii) made a complete or partial withdrawal under Section
4203 or 4205 of ERISA from a Multiemployer Plan. Except as disclosed in Schedule
6.01-P, neither Holdings, nor the Company nor any ERISA Affiliate has failed to
make a required installment or any other required payment under Section 412 of
the Internal Revenue Code on or before the due date for such installment or
other payment. Neither Holdings, nor the Company, nor any ERISA Affiliate is
required to provide security to a Benefit Plan under Section 401(a)(29) of the
Internal Revenue Code due to a Plan amendment that results in an increase in
current liability for the plan year. Except as disclosed on Schedule 6.01-P,
neither Holdings, nor the Company, nor any of the ERISA Affiliates has, by
reason of the transactions contemplated hereby, any obligation to make any
payment to any employee pursuant to any Plan or existing contract or
arrangement. The Company has made available to the Agent copies of all of the
following: each Benefit Plan and related trust agreement (including all
amendments to such Plan and trust) in existence, or for which Holdings, the
Company or any ERISA Affiliate has taken any corporate action to authorize the
adoption thereof, as of the Closing Date and in respect of which Holdings, the
Company or any ERISA Affiliate is currently an "employer" as defined in section
3(5) of ERISA, and the most recent summary plan description, actuarial report,
determination letter issued by the IRS and Form 5500 filed in respect of each
such Benefit Plan in existence; a listing of all of the Multiemployer Plans
currently contributed to by Holdings, the Company or any ERISA Affiliate with
the aggregate amount of the most recent annual contributions required to be made
by Holdings, the Company and all ERISA Affiliates to each such Multiemployer
Plan, any information which has been provided to Holdings, the Company or an
ERISA Affiliate regarding withdrawal liability under any Multiemployer Plan and
the collective bargaining agreement pursuant to which such contribution is
required to be made; and each employee welfare benefit plan within the meaning
of Section 3(l) of ERISA which provides benefits to employees of
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Holdings, the Company or any of the Company's Subsidiaries after termination of
employment other than as required by Section 601 of ERISA, the most recent
summary plan description for such plan and the aggregate amount of the most
recent annual payments made to terminated employees under each such plan.
(q) Foreign Employee Benefit Matters. Each Foreign Employee Benefit
Plan is in compliance in all material respects with all Requirements of Law
applicable thereto and the respective requirements of the governing documents
for such Plan. The aggregate of the liabilities to provide all of the accrued
benefits under any Foreign Pension Plan does not exceed the current fair market
value of the assets held in the trust or other funding vehicle for such Plan.
With respect to any Foreign Employee Benefit Plan maintained by Holdings, the
Company, any of the Company's Subsidiaries or any ERISA Affiliate (other than a
Foreign Pension Plan), reasonable reserves have been established in accordance
with prudent business practice or where required by ordinary accounting
practices in the jurisdiction in which such Plan is maintained. The aggregate
unfunded liabilities, after giving effect to any reserves for such liabilities,
with respect to such Plans are not material. There are no actions, suits or
claims (other than routine claims for benefits) pending or threatened against
Holdings, the Company, any of the Company's Subsidiaries or any ERISA Affiliate
with respect to any Foreign Employee Benefit Plan.
(r) Labor Matters. (i) Except as set forth in Schedule 6.01-R, as of
the Closing Date there is no collective bargaining agreement covering any of the
employees of Company or any Subsidiary of Company. To the Company's Knowledge,
except as set forth on Schedule 6.01-R, as of the Closing Date no attempt to
organize the employees of Company or any such Subsidiary is pending, threatened
or planned.
(ii) Set forth in Schedule 6.01-R or Schedule 6.01-P, as the case may
be, is a list, as of the Closing Date, of all material consulting agreements,
executive employment agreements, executive compensation plans, deferred
compensation agreements, employee pension plans or retirement plans, employee
profit sharing plans, employee stock purchase and stock option plans, and
severance plans of Company and its Subsidiaries providing for benefits for
employees of Company and its Subsidiaries.
(s) Securities Activities. None of Holdings, the Company or any of
the Company's Subsidiaries is engaged in the business of extending credit for
the purpose of purchasing or carrying Margin Stock.
(t) Solvency. After giving effect to the transactions contemplated
in the Transaction Documents and the Loans to be made on the Closing Date or
such other date as Loans requested
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hereunder are made and the disbursement of the proceeds of such Loans pursuant
to the Company's instructions, each of Holdings, each Borrower and each
Subsidiary Guarantor is Solvent.
(u) Patents, Trademarks, Permits, Etc.; Government Approvals. (i)
Holdings, the Company and each of the Company's Subsidiaries own, are licensed
or otherwise have the lawful right to use, or have all permits and other
governmental approvals, patents, trademarks, trade names, industrial designs,
copyrights, technology, know-how and processes used in or necessary for the
conduct of their businesses as currently conducted except where the failure to
do so would not have or be reasonably likely to have a Material Adverse Effect.
Except as set forth on Schedule 6.01-U, as of the Closing Date no claims are
pending or, to the best of Company's Knowledge following inquiry, threatened
that Holdings, the Company or any of its Subsidiaries is infringing in any
material respect upon the rights of any Person with respect to such permits and
other governmental approvals, patents, trademarks, trade names, industrial
designs, copyrights, tech nology, know-how and processes.
(ii) Except for Liens granted to the Agent for the benefit of the
Agent, the Issuing Banks and the Lenders, the transactions contemplated by the
Transaction Documents shall not impair the ownership of or rights under (or the
license or other right to use, as the case may be) any permits and governmental
approvals, patents, trademarks, trade names, industrial designs, copyrights,
technology, know-how or processes by Holdings, the Company or any of the
Company's Subsidiaries in any manner which shall have or is reasonably likely to
have a Material Adverse Effect.
(v) Assets and Properties. Each of Holdings, the Company and the
Company's Subsidiaries has good and marketable title to all of its material
assets and Property (tangible and intangible) owned by it or a valid leasehold
interest in all of its material leased assets (except for Liens permitted under
Section 9.03 and minor defects in title which do not interfere with their
ability to conduct their business as presently conducted insofar as
marketability may be limited by any laws or regulations of any Governmental
Authority affecting such assets), and all such assets and Property are free and
clear of all Liens, except Liens securing the Obligations and Liens permitted
under Section 9.03. As of the Closing Date Schedule 6.01-V contains a true and
complete list of (i) all of the Real Property owned in fee simple by each of
Holdings, the Company and the Company's Subsidiaries as of the Closing Date,
(ii) a true and complete list of all Leases in effect on the Closing Date the
annual rental payments under which exceed $250,000 and (iii) a true and complete
list of all warehouses in which there is, or is reasonably expected to be, (i)
for a period of 30 days or more during any twelve-month period, Inventory with a
fair market
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value of $250,000 or more or (ii) at any time, Inventory with a fair market
value of $1,000,000 or more. Substantially all of the assets and Property owned
by or leased to Holdings, the Company and/or each such Subsidiary are in
adequate operating condition and repair, ordinary wear and tear excepted, and
are free and clear of any known defects except such defects that do not
substantially interfere in any material respect with the continued use thereof
in the conduct of normal operations. Except for Liens granted to the Agent for
the benefit of the Agent, the Issuing Banks and the Lenders, neither this
Agreement nor any other Transaction Document, nor any transaction contem plated
herein or therein, shall affect any right, title or interest of Holdings, the
Company or such Subsidiary in and to any of such assets in a manner that shall
have or is reasonably likely to have a Material Adverse Effect.
(w) Insurance. The Certificate of Insurance delivered to the Lenders
pursuant Section 5.01(a) accurately sets forth as of the Closing Date all
insurance policies currently in effect with respect to the respective assets and
business of the Company and its Subsidiaries, specifying for each such policy
and program, (i) the amount thereof, (ii) the general risks insured against
thereby, (iii) the name of the insurer and each insured party thereunder, (iv)
the policy or other identification number thereof and (v) the expiration date
thereof. Such insurance policies and programs are in amounts sufficient to cover
the replacement value of the respective assets of the Company and its
Subsidiaries.
(x) Pledge of Collateral. The grant and perfection of the security
interests in the Capital Stock of the Company and its Subsidiaries constituting
a portion of the Collateral for the benefit of the Agent, the Issuing Banks and
the Lenders, as contemplated by the terms of the Loan Documents, is not made in
violation of the registration provisions of the Securities Act, any applicable
provisions of other federal securities laws, state securities or "Blue Sky" law,
foreign securities law, or applicable general corporation law or in violation of
any other Requirement of Law.
(y) Transactions with Affiliates. Schedule 6.01-Y lists as of the
Closing Date each and every existing material agreement (other than the
Transaction Documents) as of the Closing Date and arrangement that any of
Holdings, the Company or the Company's Subsidiaries has entered into with any of
their respective Affiliates (other than Holdings, the Company's and the
Company's Subsidiaries).
(z) Transaction Documents. Solely with respect to the Transaction
Documents (other than the Loan Documents), as of the Closing Date the following
are true and correct and complete:
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(i) All conditions precedent to, and all material consents and
Permits necessary to permit, the consummation of the transactions contemplated
by such Transaction Documents which will be entered into as of the or prior to
the Closing Date have been satisfied or delivered, or waived (to the extent
required under Section 9.16) with the prior written consent of the Requisite
Lenders, and no action has been taken, or to the best of Holdings and the
Company's Knowledge, shall be taken by any Governmental Authority which
restrains, prevents or imposes material adverse conditions upon, or seeks to
restrain, prevent or impose material adverse conditions upon, the consummation
of the transactions contemplated in such Transaction Documents.
(ii) Each of Holdings, the Company and the Company's Subsidiaries
has the requisite corporate power and authority to execute, deliver and perform
each of such Transaction Documents to which it is a party.
(iii) The execution, delivery and performance, as the case may be,
of each of such Transaction Documents which have been executed and to which any
of Holdings, the Company or any of the Company's Subsidiaries is a party and the
consummation of the transactions contemplated thereby, have been duly approved
by each of the boards of directors and (to the extent required by law) the
shareholders of Holdings, the Company and such Subsidiary, respectively, and
such approvals have not been rescinded, revoked or modified in any material
respect. No other corporate action or proceedings on the part of Holdings, the
Company or any of the Company's Subsidiaries is necessary to consummate such
transactions.
(iv) Each of such Transaction Documents to which Holdings, the
Company or any of the Company's Subsidiaries is a party has been duly executed,
or delivered on behalf of Holdings, the Company or such Subsidiary, as the case
may be, and constitutes its legal, valid and binding obligation, enforceable
against such Person in accordance with its terms (except as such enforcement may
be limited by applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance and other laws affecting the enforcement of creditors' rights
generally and to the effect of general equitable principles (whether considered
in a proceeding in equity or at law)), is in full force and effect and, except
as permitted pursuant to Section 9.16, no term or condition thereof has been
amended, modified or waived from the terms and conditions contained in such
Transaction Documents delivered to the Agent pursuant to Section 5.01(a) without
the prior written consent of the Requisite Lenders. Each of Holdings, the
Company and the Company's Subsidiaries that is a party to such Transaction
Documents and, to the Knowledge of the Company, all other parties thereto, have
performed and complied in all material respects with all material terms,
provisions, agreements and conditions set forth therein and required to be
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performed or complied with by such parties on or before the Closing Date, and as
of such date, no material default, event of default or breach of any covenant by
any such party exists thereunder.
(aa) Bank Accounts. Schedule 6.01-AA sets forth as of the Closing
Date all of (i) Holdings', the Company's and the Company's Subsidiaries'
Collection Account Banks and other banks where funds are from time to time
deposited, including the Lockboxes, the Collection Accounts and the Disbursement
Accounts their addresses and the relevant account numbers, and (ii) the Cash
Collateral Accounts, and the Company has disclosed all additions, subtractions
and modifications to such Schedule to the Agent and the Lenders as required by
Section 3.05.
ARTICLE VII
REPORTING COVENANTS
Each of Holdings and the Borrowers (other than the Canadian Borrower
which so covenants in favor of the Canadian Lenders only with respect to itself
and its consolidated liabilities, assets, business and opportunities) covenants
and agrees that so long as any Commitment is outstanding and thereafter until
Payment In Full of all of the Obligations, unless the Requisite Lenders shall
otherwise give prior written consent thereto:
7.01. Financial Statements. The Company and Holdings shall maintain,
and shall cause each of the Company's Subsidiaries to maintain, a system of
accounting established and administered in accordance with sound business
practices to permit preparation of consolidated and consolidating financial
statements in conformity with GAAP, and each of the financial statements
described below shall be prepared from such system and records. The Company or
Holdings, as the case may be, shall deliver or cause to be delivered to the
Agent and the Lenders:
(a) Monthly Reports. Within thirty (30) days after the end of each
fiscal month in each Fiscal Year, the consolidated and consolidating balance
sheets of Holdings and its Subsidiaries as at the end of such period and the
related consolidated and consolidating statements of income and cash flow of
Holdings and its Subsidiaries for such fiscal month and for the period from the
beginning of the then current Fiscal Year to the end of such fiscal month, and
for the corresponding period during the previous Fiscal Year, and a comparison
of the statement of the year to date earnings and cash flow to the corresponding
statement for the corresponding period from the previous Fiscal Year, and the
most recently prepared forecasted consolidated balance sheet and consolidated
statement of earnings and cash flow of Holdings and its Subsidiaries for and as
of the
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end of such Fiscal Year, and a comparison of the statement of year to date
earnings and cash flow to the annual operating plan, certified by a Financial
Officer of the Company as fairly presenting the consolidated and consolidating
financial position of Holdings and its Subsidiaries as at the dates indicated
and the results of their operations and cash flow for the periods indicated in
accordance with GAAP, subject to normal year end adjustments.
(b) Annual Reports. Within ninety (90) days after the end of each
Fiscal Year, (i) audited financial statements of Holdings and its Subsidiaries
and (ii) annual consolidating financial statements of Holdings and its
Subsidiaries reported on by independent certified public accountants of
recognized national standing acceptable to the Requisite Lenders, which report
shall be unqualified (or, if qualified, only as to non-material matters) and
shall state that such financial statements fairly present the consolidated and
consolidating financial position of Holdings and its Subsidiaries as at the
dates indi cated and the results of their operations and cash flow for the
periods indicated in conformity with GAAP applied on a basis consistent with
prior years (except for changes with which such independent certified public
accountants shall concur and which shall have been disclosed in the notes to the
financial statements) and that the examination by such accountants in connection
with such consolidating financial statements has been made in accordance with
generally accepted auditing standards.
(c) Officer's Certificate. Together with each delivery of any
financial statement pursuant to paragraph (a) and (b) of this Section 7.01, an
Officer's Certificate of the Company signed by a Financial Officer of the
Company setting forth calculations for the period then ended and which
demonstrate compliance, when applicable, with the provisions of Article X (the
"Compliance Certificate").
(d) Business Plans; Financial Projections. Not later than fifteen
(15) days prior to the end of each Fiscal Year, and containing substantially the
same types of financial information contained in the Initial Projections, (i)
the annual business plan of the Company for the next succeeding Fiscal Year and
(ii) forecasts prepared by management of the Company for each fiscal quarter in
the next Fiscal Year and for each succeeding Fiscal Year, up to and including
the Fiscal Year immediately following the Fiscal Year during which it is
anticipated that the Obligations shall be Paid In Full, containing a
consolidated balance sheet, an income statement and a consolidated statement of
cash flow.
(e) Accountant's Statement and Reliance Letter. Together with each
delivery of the financial statements referred to in Section 7.01(b), a written
statement of the firm of
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independent certified public accountants of recognized national standing
acceptable to the Lenders giving the report stating (i) that their audit
examination has included a review of the terms hereof as it relates to
accounting matters and (ii) whether, in connection with their audit examination,
any condition or event which constitutes an Event of Default or Default has come
to their attention, and if such condition or event has come to their attention,
specifying the nature and period of existence thereof. The statement referred to
above shall be accompanied by (x) a copy of the management letter or any similar
report delivered to the Company or Holdings or to any officer or employee
thereof by such accountants in connection with such financial statements and (y)
a reliance letter in form and substance reasonably satisfactory to the Agents
from such accountants to the Company or Holdings. The Agent and each Lender may
communicate directly with such accountants.
(f) Opening Balance Sheet. Within ninety (90) days after the Closing
Date, the Closing Date Balance Sheet (as defined in the Acquisition Agreement).
7.02. Events of Default. Promptly upon (and, in any event, within
five (5) Business Days of) any Borrower or Holdings, as the case may be,
obtaining Knowledge (i) of any condition or event which constitutes an Event of
Default or Default, or becoming aware that any Lender, any Issuing Bank or the
Agent has given any written notice with respect to a claimed Event of Default or
Default, (ii) that any Person has given any written notice to Holdings, the
Company or any Subsidiary of the Company or taken any other action with respect
to a claimed default or event or condition of the type referred to in Section
11.01(e), (iii) of any condition or event which has or is reasonably likely to
materially and adversely affect the value of, or the Agent's interest in, the
Collateral, or (iv) of any condition or event which has or is reasonably likely
to have a Material Adverse Effect, the Company or Holdings, as the case may be,
shall deliver to the Agent and the Lenders an Officer's Certificate specifying
(A) the nature and period of existence of any such claimed default, Event of
Default, Default, condition or event, (B) the notice given or action taken by
such Person in connection therewith, and (C) the remedial action the Company or
Holdings, as the case may be, has taken, is taking and proposes to take with
respect thereto.
7.03. Lawsuits. Promptly upon (and, in any event, within ten (10)
Business Days of) the Company or Holdings, as the case may be, obtaining
Knowledge of the institution of, or written threat of, any action, suit,
proceeding, governmental investigation, any allegation of defective pricing, or
any arbitration against or affecting Holdings, the Company or any of the
Company's Subsidiaries or any Property of Holdings, the Company or any of the
Company's Subsidiaries not previously
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disclosed pursuant to Section 6.01(i), which action, suit, proceeding,
governmental investigation or arbitration exposes, or in the case of multiple
actions, suits, proceedings, governmental investigations or arbitrations arising
out of the same general allegations or circumstances which expose, in Holdings'
or the Company's reasonable judgment, Holdings, the Company or any of the
Company's Subsidiaries to liability in an amount aggregating $1,000,000 or more,
or which could otherwise reasonably be expected to result in a Material Adverse
Effect, Holdings or the Company, as the case may be, shall give written notice
thereof to the Agent and the Lenders and provide such other information as may
be reasonably available to enable each Lender and the Agent and its counsel to
evaluate such matters.
7.04. Insurance. As soon as practicable and in any event within
ninety (90) days after the Closing Date and ninety (90) days after the end of
each Fiscal Year ending after the Closing Date, the Company shall deliver to the
Agent (i) a report in form and substance satisfactory to the Agent and the
Lenders outlining all material insurance coverage (including any self-insurance
provided by Holdings and/or the Company but excluding health, medical, dental
and life insurance (other than key man life insurance)) maintained as of the
date of such report by Holdings, the Company and the Company's Subsidiaries and
the duration of such coverage and (ii) to the extent such insurance coverage is
not provided by Holdings and/or the Company, an insurance broker's statement
that all premiums then due and payable with respect to such coverage have been
paid (except as otherwise agreed to by the Agent).
7.05. Borrowing Base Certificate. Promptly and in any event (a)
within five (5) days (or up to an additional five (5) days with the consent of
the Agent) after the close of each fiscal week (or more or less frequently as
may be requested by the Agent), the Company shall provide the Agent (which the
Agent will promptly deliver to each Lender) with a Borrowing Base Certificate,
together with such supporting documents as the Agent requests (including weekly
updated information concerning Receivables of the Borrowers) and (b) within
fifteen (15) days of (or up to an additional five (5) days with the consent of
the Agent) after the close of each fiscal month (or more or less frequently as
may be requested by the Agent), monthly Inventory reports of the Borrowers as of
the last day of the preceding month, all certified as being true, accurate and
complete by a Financial Officer of the Company.
7.06. ERISA Notices. The Company shall deliver or cause to be
delivered to the Agent, at the Company's expense, the following information and
notices as soon as reasonably possible, and in any event:
(i) within ten (10) Business Days after the
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Company or any ERISA Affiliate Knows or reasonably should Know that
a Termination Event has occurred, a written statement of a Financial
Officer of the Company describing such Termination Event and the
action, if any, which the Company or any ERISA Affiliate has taken,
is taking or proposes to take with respect thereto, and when Known,
any action taken or threatened by the IRS, DOL or PBGC with respect
thereto;
(ii) within ten (10) Business Days after the Company or any
ERISA Affiliate Knows or reasonably should Know that a prohibited
transaction (defined in Sections 406 of ERISA and 4975 of the
Internal Revenue Code) has occurred that would have a material
adverse effect (financial or otherwise) on the Company or any ERISA
Affiliate for which a statutory or class exemption is not available
or a private exemption has not been previously obtained from the
DOL, a statement of a Financial Officer of the Company describing
such transaction and the action which the Company or any ERISA
Affiliate has taken, is taking or proposes to take with respect
thereto;
(iii) within ten (10) Business Days after receipt by the
Company of written request therefor from the Agent, copies of each
annual report (form 5500 series), including Schedule B thereto,
filed with respect to each Benefit Plan;
(iv) within ten (10) Business Days after receipt by the
Company of written request therefor from the Agent, copies of each
actuarial report for any Benefit Plan or Multiemployer Plan and each
annual report for any Multiemployer Plan;
(v) within ten (10) Business Days after the filing thereof
with the IRS, a copy of each funding waiver request filed with
respect to any Benefit Plan and, if requested by the Agent, all
communications received by the Company or any ERISA Affiliate with
respect to such request;
(vi) within ten (10) Business Days upon the occurrence
thereof, notification of any material increase in the benefits of
any existing Benefit Plan or the establishment of any new Benefit
Plan or the commencement of contributions to any Benefit Plan to
which the Company or any ERISA Affiliate was not previously
contributing;
(vii) within ten (10) Business Days after receipt by the
Company or any ERISA Affiliate of the PBGC's
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intention to terminate a Benefit Plan or to have a trustee appointed
to administer a Benefit Plan, copies of each such notice;
(viii) within ten (10) Business Days after receipt by the
Company or any ERISA Affiliate of any unfavorable determination
letter from the IRS regarding the qualification of a Plan under
Section 401(a) of the Internal Revenue Code, copies of each such
letter; provided, that if Company or any ERISA Affiliate has reason
to believe that the IRS erroneously sent such letter, then a copy of
such letter need not be delivered to the Agent if the IRS shall
confirm in writing within such 10-day period that such letter is
withdrawn, invalid or otherwise should be disregarded;
(ix) within ten (10) Business Days after receipt by the
Company or any ERISA Affiliate of a notice from a Multiemployer Plan
regarding the imposition of withdrawal liability, copies of each
such notice;
(x) within ten (10) Business Days after the Company or any
ERISA Affiliate fails to make a required installment or any other
required payment that would give rise to a Lien under Section 412 of
the Internal Revenue Code on or before the due date for such
installment or payment, a notification of such failure;
(xi) within ten (10) Business Days after the Company or any
ERISA Affiliate Knows or reasonably should Know (a) a Multiemployer
Plan has been terminated, (b) the administrator or plan sponsor of a
Multiemployer Plan intends to terminate a Multiemployer Plan, or (c)
the PBGC has instituted or will institute proceedings under Section
4042 of ERISA to terminate a Multiemployer Plan; and
(xii) within ten (10) Business Days after receipt by the
Company of a written notice from the Agent, copies of any Foreign
Employee Benefit Plan and related documents, reports and
correspondence as requested by the Agent in such notice.
For purposes of this Section 7.06, the Company and any ERISA Affiliate shall be
deemed to Know all facts Known by the administrator of any Plan of which the
Company or any ERISA Affiliate is the plan sponsor.
7.07. Environmental Notices. (a) The Company shall notify the Agent
and the Lenders in writing, promptly and in any event within 10 Business Days
upon the Company's learning thereof, of any:
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(i) notice or claim by a Governmental Authority or any third party
to the effect that Holdings, the Company or any of the Company's
Subsidiaries is or may be liable to any Person, or is subject to an
investigation by a Governmental Authority, relating to a material Release
or threatened Release of any Contaminant into the environment, or any
materially unsafe or unhealthy condition at any Property of Holdings, the
Company or any of the Company's Subsidiaries;
(ii) notice that any Property of Holdings, the Company or any of the
Company's Subsidiaries is subject to an Environmental Lien;
(iii) commencement or threat of any judicial or administrative
proceeding alleging a material violation by Holdings, the Company or any
of the Company's Subsidiaries of any Environmental, Health or Safety
Requirement of Law;
(iv) new and material changes to any existing Environmental, Health
or Safety Requirement of Law that would or could reasonably be expected to
have a Material Adverse Effect; or
(v) any intent to execute an agreement, letter of intent or
commitment to acquire stock, assets or real estate, or to lease property,
or to take any other action by Holdings, the Company or any of the
Company's Subsidiaries that would subject Holdings, the Company or any of
the Company's Subsidiaries to environmental, health or safety Liabilities
and Costs that would or could reasonably be expected to have a Material
Adverse Effect.
(b) The Company shall notify the Agent and the Lenders in writing,
promptly and in any event within ten (10) Business Days upon any filing or
report made by Holdings, the Company or any of the Company's Subsidiaries with
any Governmental Authority with respect to (i) the violation of any
Environmental, Health or Safety Requirement of Law, (ii) any unpermitted Release
or threatened Release of a Contaminant that is reportable under 40 C.F.R. 302 or
(iii) any unsafe or unhealthful condition at any Property of Holdings, the
Company or any of the Company's Subsidiaries that would or could reasonably be
expected to have a Material Adverse Effect.
7.08. Labor Matters. The Company shall notify the Agent and the
Lenders in writing, promptly after the Company has Knowledge thereof, of (i) any
material labor dispute to which Holdings, the Company or any of the Company's
Subsidiaries is or may become a party, including, without limitation, any
strikes, lockouts or other disputes relating to such Persons' plants and other
facilities and (ii) any material liability (arising
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pursuant to the Worker Adjustment and Retraining Notification Act or otherwise)
incurred with respect to the closing of any plant or other facility of such
Persons.
7.09. Public Filings and Reports. Promptly upon the filing thereof
with the Securities and Exchange Commission, the Company shall deliver to the
Agent and the Lenders copies of all filings or reports made in connection with
outstanding Indebtedness and Capital Stock of Holdings or the Company.
7.10. Notices under Acquisition Agreement. Promptly upon receipt
thereof, Holdings shall cause a copy of every written notice or communication
received by Holdings pursuant to the Acquisition Agreement to be promptly
delivered to the Agent.
7.11. Other Information. Promptly upon receipt of a request therefor
from the Agent, the Company shall prepare and deliver to the Agent and the
Lenders such other information with respect to Holdings, the Company, any of the
Company's Subsidiaries or the Collateral including, without limitation,
schedules identifying and describing the Collateral and any dispositions thereof
and copies of each existing written agreement or arrangement set forth on
Schedule 6.01-Y, as from time to time may be reasonably requested by the Agent.
ARTICLE VIII
AFFIRMATIVE COVENANTS
Each of Holdings and the Borrowers (other than the Canadian Borrower
which so covenants in favor of the Canadian Lenders only with respect to itself
and its consolidated liabilities, assets, business and opportunities) covenants
and agrees that so long as any Commitment is outstanding and there after until
Payment In Full of all of the Obligations, unless the Requisite Lenders shall
otherwise give prior written consent:
8.01. Corporate Existence, Etc. Each of Holdings and the Company
shall, and shall cause each of the Company's Subsidiaries to, at all times
maintain its respective corporate existence and preserve and keep, or cause to
be preserved and kept, in full force and effect their respective rights and
franchises material to their respective businesses except where the failure to
so maintain or preserve would not have or be reasonably likely to have a
Material Adverse Effect.
8.02. Corporate Powers; Conduct of Business, Etc. Each of Holdings
and the Company shall, and shall cause each of the Company's Subsidiaries to,
qualify and remain qualified to do business in each jurisdiction in which the
nature of its business requires it to be so qualified, except where the failure
to be so qualified would not have or be reasonably likely to have a
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Material Adverse Effect.
8.03. Compliance with Laws, Etc. Each of Holdings and the Company
shall, and shall cause each of the Company's Subsidiaries to, (a) comply with
all Requirements of Law and all restrictive covenants affecting such Person or
the business, Property or operations of such Person, and (b) obtain as needed
all Permits necessary for such Person's operations and maintain such Permits in
good standing, except, in each case, where the failure to do so would not have
or be reasonably likely to have a Material Adverse Effect.
8.04. Payment of Taxes and Claims; Tax Consolidation. Each of
Holdings and the Company shall, and shall cause each of the Company's
Subsidiaries to, pay (a) all taxes, assessments and other governmental charges
imposed upon it or on any of its Property or in respect of any of its
franchises, business, income or Property before any penalty or interest for late
payment (except as such penalty or interest relates to underpayment of estimated
tax payments) accrues thereon, and (b) all material claims (including, without
limitation, claims for labor, services, materials and supplies) for sums which
have become due and payable and which by law have or may become a Lien (other
than a Lien permitted by Section 9.03) upon any of Holdings', the Company's or
such Subsidiary's Property (other than Property with a fair market value of less
than $100,000), prior to the time when any penalty or fine shall be incurred
with respect thereto. Notwithstanding the preceding sentence, any Borrower shall
have the right to contest in good faith the validity or amount of any such taxes
or claims by proper proceedings timely instituted, and may permit the taxes or
claims to be contested to remain unpaid during the period of such contest if (i)
it diligently prosecutes such contest, (ii) it makes adequate provision in
conformity with GAAP with respect to the contested items, and (iii) during the
period of such contest, the enforcement and ability of any taxing authority to
force payment of any contested item or to impose a Lien with respect thereto is
effectively stayed. The Borrower shall promptly pay or cause to be paid any
valid judgment enforcing any such taxes and cause the same to be satisfied of
record.
8.05. Insurance. The Company shall maintain for itself and its
Subsidiaries, or shall cause each of its Subsidiaries to maintain, in full force
and effect the insurance policies and programs listed in the most recent report
delivered to the Agent pursuant to Section 7.04 or substantially similar
policies and programs or other policies and programs as are reasonably
acceptable to the Agent. Each certificate and policy relating to Collateral
damage and/or business interruption coverage shall contain an endorsement, in
form and substance acceptable to the Agent, showing loss payable to the Agent,
and naming the Agent as an additional insured under such policy and
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providing that no act, whether willful or negligent, or default of the Company,
any of the Company's Subsidiaries or any other Person shall affect the right of
the Agent to recover under such policy or policies of insurance in case of loss
or damage. Each certificate and policy relating to general liability, umbrella
and excess insurance coverages other than the foregoing shall contain an
endorsement naming the Agent as an additional insured under such policy. Such
endorsement or an independent instrument furnished to the Agent shall provide
that the insurance companies shall give the Agent at least thirty (30) days'
written notice before any such policy or policies of insurance shall be
cancelled or altered materially adversely to the interests of the Agent, the
Issuing Banks and the Lenders. In the event that the Company or any of its
Subsidiaries, at any time or times hereafter, shall fail to obtain or maintain
any of the policies or insurance required herein or to pay any premium in whole
or in part relating thereto, then the Agent, without waiving or releasing any
obligations or resulting Event of Default hereunder, may at any time or times
after the occurrence of an Event of Default (but shall be under no obligation to
do so) obtain and maintain such policies of insurance and pay such premiums and
take any other action with respect thereto which the Agent deems advisable. The
Agent agrees to give the Company reasonable notice of any such payments made by
it, but the Agent's failure to do so shall not limit its rights under this
section. All sums so disbursed by the Agent shall constitute Protective Advances
and be part of the Obligations, payable as provided herein.
8.06. Inspection of Property; Books and Records; Discussions. (a)
Holdings and the Company shall permit, and shall cause each of the Company's
Subsidiaries to permit, any authorized representative(s) designated by the Agent
to visit and inspect any of the Properties of such Person or such Subsidiary, to
examine, audit, check and make copies of their respective financial and
accounting records, books, journals, orders, receipts and any correspondence and
other data relating to their respective businesses or the transactions
contemplated hereby and by the Transaction Documents (including, in connection
with environmental compliance, hazard or liability), and to discuss their
affairs, finances and accounts with their officers and independent certified
public accountants, in each case upon reasonable notice and at such times during
normal business hours, as often as may be reasonably requested. All costs and
expenses reasonably incurred by the Agent as a result of such inspection, audit
or examination conducted pursuant to this Section 8.06 shall be paid by the
Company. It is presently anticipated that four (4) such inspections and audits
will take place in each Fiscal Year, provided that this sentence shall in no way
limit the right of the Agent to conduct greater or fewer inspections during such
time period.
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(b) Holdings and the Company shall keep and maintain, and shall
cause its respective Subsidiaries to keep and maintain, in all material respects
proper books of record and account in which entries consistent with past
practices or otherwise in conformity with GAAP shall be made of all dealings and
transactions in relation to their respective businesses and activities,
including, without limitation, transactions and other dealings with respect to
the Collateral. If an Event of Default has occurred and is continuing, the
Company, upon the Agent's request, shall promptly turn over true, correct and
complete copies of all such records to the Agent or any of its representatives.
8.07. [Intentionally omitted]
8.08. ERISA Compliance. Holdings and the Company shall, and shall
cause each of the Company's Subsidiaries and each of the ERISA Affiliates to,
establish, maintain and operate all Plans to comply in all material respects
with the provisions of ERISA, the Internal Revenue Code, all other applicable
laws, and the regulations and interpretations thereunder and the respective
requirements of the governing documents for such Plans. Unless otherwise
consented to by the Requisite Lenders, the Company shall exercise its discretion
under Section 11.3 of the ESOP to require that the payment for company stock
purchased upon the exercise of a put option be made with a Common Equity Note
commencing within the 30-day period immediately following the date of exercise
of the put option.
8.09. Foreign Employee Benefit Plan Compliance. Holdings and the
Company shall, and shall cause each of the Company's Subsidiaries and each of
the ERISA Affiliates to establish, maintain and operate all Foreign Employee
Benefit Plans to comply in all material respects with all laws, regulations and
rules applicable thereto and the respective requirements of the governing
documents for such Plans.
8.10. Maintenance of Property. The Company shall, and shall cause
each of its Subsidiaries to, cause all material Property used or useful in the
conduct of its business to be maintained and kept in good condition, repair and
working order, ordinary wear and tear excepted, and supplied with all necessary
equipment and shall cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof; provided, however, that
nothing in this Section shall prevent the Company from discontinuing the
operation or maintenance of any such Property if (i) such Property is permitted
to be disposed of under Section 9.02 or (ii) such discontinuance is, in the
judgment of the Company, necessary or appropriate in the conduct of its business
or the business of any of its Subsidiaries and not disadvantageous to the Agent,
the Issuing Banks or the
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Lenders.
8.11. Further Assurances; Additional Collateral.
(a) Each of Holdings and the Borrowers shall execute and deliver,
and cause its Subsidiaries to execute and deliver, within the time periods set
forth with respect to such items on the Closing List, all agreements, documents
and instruments designated as "post-closing items" on the Closing List.
(b) In addition to and not in lieu of the rights and obligations of
the parties under clause (a) above, (i) at any time and from time to time,
promptly following the Agent's written request and at the expense of the
applicable Person, each of Holdings and the Borrowers agrees to duly execute and
deliver, and to cause its Subsidiaries to duly execute and deliver, any and all
such further instruments and documents and take such further action as the Agent
may reasonably deem desirable in order to perfect and protect any Lien granted
or purported to be granted pursuant to the Loan Documents or to enable the
Agent, in accordance with the terms of the applicable Loan Documents, to
exercise and enforce its rights and remedies under the Loan Documents with
respect to such Collateral and (ii) in the event that the average aggregate
Revolving Credit Availability under all Credit Facilities during any thirty day
period is less than $10,000,000, each Borrower agrees to grant, and cause any of
its Subsidiaries to grant, to the Agent or the Canadian Agent, as applicable, a
security interest in any additional property which, as of the Closing Date, does
not constitute Collateral. Notwithstanding the foregoing, the granting of such
further assurances or security interest under this Section 8.11(b) shall not be
required if it would (w) be prohibited by other Contractual Obligations to which
such Borrower or such Subsidiary is a party, (x) be prohibited by applicable
law, (y) attach to assets constituting the "Term Loan Lenders Collateral" under
(and as defined in) the Intercreditor Agreement or (z) result in material
adverse tax consequences to the Domestic Borrowers, taken as a whole, or the
Canadian Borrower, individually. The obligation to provide such further
assurances or additional security interests may be avoided with respect to any
Borrower or Subsidiary if the assets with respect to which the related security
arrangements are proposed to be altered are excluded from the Domestic Borrowing
Base or the Canadian Borrowing Base, as applicable. In the event that the
Company notifies the Agent that the granting of such further assurances or
additional security interests requested by the Agent would be reasonably likely
to cause material adverse tax consequences, the Agent shall use its best efforts
to work with the Company to, and will consider such structures prepared by the
Company which would, avoid or minimize such adverse tax consequences.
8.12. Landlord and Bailee Waivers. On or prior to the
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Closing Date, the Company shall obtain and deliver to the Agent Collateral
Access Agreements relating to each warehouse location listed on Schedule 6.01-V
(with such exceptions thereto as agreed to by the Agent). The Company shall use
its best efforts to obtain and deliver to the Agent Collateral Access Agreements
(w) relating to the Lease which is located at the Company's headquarters in
Norwalk, Connecticut, (x) with respect to any Lease entered into after the
Closing Date which relates to a location in which there is, or is reasonably
expected to be, Inventory with a fair market value of $250,000 or more and (y)
with respect to any warehouse location listed on Schedule 6.01-V that was not
obtained on or prior to the Closing Date and any other warehouse location
obtained after the Closing Date in which there is, or is reasonably expected to
be, (i) for a period of 30 days or more during any twelve-month period,
Inventory with a fair market value of $250,000 or more or (ii) at any time,
Inventory with a fair market value of $1,000,000 or more.
8.13. Environmental Compliance. (a) Holdings, the Company and the
Company's Subsidiaries shall comply with all Environmental, Health or Safety
Requirements of Law, noncompliance with which reasonably could be expected to
have a Material Adverse Effect.
(b) Holdings, the Company and each of the Company's Subsidiaries
shall obtain as needed all Permits necessary for their operations, and shall
maintain such Permits in good standing, where the failure to obtain and maintain
such Permits is reasonable likely to have a Material Adverse Effect.
8.14. Interest Rate Contracts. (i) On or before March 15, 1996, the
Company shall obtain, and shall thereafter cause to be maintained for a period
of not less than two years, one or more Interest Rate Contracts with respect to
the Loans, covering an aggregate notional amount of not less than $50,000,000
and otherwise on terms reasonably acceptable to the Agent and, in the event such
Interest Rate Contract constitutes Indebtedness of the Company, shall be
purchased from a financial institution reasonably acceptable as a credit matter
to the Agent. Upon the request of the Agent, the Company shall take all steps
necessary to arrange that payments owing to the Company or any of its
Subsidiaries from any counterparty under any Interest Rate Contract shall be
paid directly to the Agent for application to the Obligations.
(ii) The Company agrees to take all such other action with respect
to each such Interest Rate Contract as the Agent may reasonably request in order
to perfect its Lien therein, including, without limitation, executing a
collateral assignment of such Interest Rate Contract in a form and substance
reasonably satisfactory to the Agent.
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ARTICLE IX
NEGATIVE COVENANTS
Each of Holdings and the Borrowers (other than the Canadian Borrower
which so covenants in favor of the Canadian Lenders only with respect to itself
and its consolidated liabilities, assets, business and opportunities) covenants
and agrees that it shall comply with the following covenants so long as any
Commitment is outstanding and thereafter until Payment In Full of all of the
Obligations, unless (except as otherwise provided below) the Requisite Lenders
shall otherwise give prior written consent thereto:
9.01. Indebtedness. None of Holdings, the Company or any of the
Company's Subsidiaries shall directly or indirectly create, incur, assume or
otherwise become or remain directly or indirectly liable with respect to any
Indebtedness, except:
(i) the Obligations;
(ii) the Finova Indebtedness; provided that the outstanding
principal amount of the Finova Indebtedness shall at no time exceed
$8,000,000;
(iii) Permitted Existing Indebtedness and any extensions, renewals,
refundings or replacements of such Indebtedness, provided that any such
extension, renewal, refunding or replacement is in an aggregate principal
amount not greater than the principal amount of, and, taken as a whole is
on terms no less favorable to such Borrower or such Subsidiary than the
terms of, such Indebtedness so extended, renewed, refunded or replaced;
(iv) Indebtedness in respect of taxes, assess ments, governmental
charges and claims for labor, materials or supplies, to the extent that
payment thereof is not required pursuant to Section 8.04;
(v) Indebtedness constituting Accommodation Obligations permitted by
Section 9.05;
(vi) Indebtedness under appeal bonds in connection with judgments
which do not result in an Event of Default or Default or any other breach
hereunder;
(vii) to the extent permitted by Article X and in any event in an
aggregate amount not to exceed $3,000,000 at any time, Capital Leases and
purchase money Indebtedness incurred by the Borrowers to finance the
acquisition of fixed assets, and Indebtedness incurred by the Borrowers to
refinance such Capital Leases and purchase money
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Indebtedness;
(viii) Indebtedness incurred pursuant to the Permitted Receivables
Transaction Documents;
(ix) Permitted Subordinated Indebtedness;
(x) Indebtedness arising from intercompany loans (A) from any
Borrower to any other Borrower; provided that such loans shall be
evidenced by promissory notes substantially in the form of Exhibit U and
shall be pledged to the Agent or the Canadian Agent, as applicable, as
additional Collateral, (B) from any Subsidiary of the Company (other than
Borrowers) to a Borrower, (C) from Holdings to any Borrower, (D) from any
Borrower to any Subsidiary of the Company (other than Borrowers) in a
principal amount, together with any Investments made after the Closing
Date in such Subsidiaries and Finsub and other Subsidiaries permitted to
be created or capitalized after the Closing Date under Section 9.07(b), in
any Fiscal Year not to exceed the Subsidiary Investment Basket for such
Fiscal Year and (E) in addition to any loans made to such Person under
clause (D) above, from Pegasus to Pegasus Asia in an amount at any time
outstanding not to exceed the sum of (1) $2,000,000, plus (2) the amount
of dividends received by Pegasus from Pegasus Asia after the Closing Date;
provided, that no loans permitted by clauses (D) or (E) shall be made if
an Event of Default or Default has occurred and is continuing;
(xi) Indebtedness arising pursuant to Interest Rate Contracts
entered into pursuant to Section 8.14 and other Interest Rate Contracts
reasonably acceptable to the Agent having aggregate Interest Rate Contract
Exposure for all Borrowers in an amount not to exceed an amount equal to
(x) $5,000,000 minus (y) the aggregate Currency Agreement Exposure for all
Borrowers at such time;
(xii) Indebtedness arising pursuant to Currency Agreements entered
into in the ordinary course of business or otherwise reasonably acceptable
to the Agent having aggregate Currency Agreement Exposure for all
Borrowers in an amount not to exceed an amount equal to (x) $5,000,000
minus (y) the aggregate Interest Rate Contract Exposure for all Borrowers
at such time; and
(xiii) Indebtedness of Holdings in respect of the Common Equity
Notes.
9.02. Sales of Assets. None of Holdings, the Company or any of the
Company's Subsidiaries shall sell, assign, transfer, lease, convey or otherwise
dispose of any Property,
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whether now owned or hereafter acquired, or any income or profits therefrom, or
enter into any agreement to do so, except:
(i) the sale of Property (other than General Intangibles) in the
ordinary course of business (including sales of such Property between the
Borrowers and their Subsidiaries);
(ii) the sale of Receivables pursuant to the Permitted Receivables
Transaction Documents;
(iii) sales of assets outside of the ordinary course of business not
in excess of $1,000,000 in any Fiscal Year; provided, however, (A) sales
of Collateral permitted pursuant to this clause shall be for cash or on
customary payment terms and (B) sales of other assets permitted pursuant
to this clause may be for cash, on customary payment terms or for
promissory notes, provided, that all cash shall be applied to the
Obligations (in accordance with Section 3.01(b)) of the Borrower whose
Collateral is being sold and all promissory notes shall be pledged to the
Agent or the Canadian Agent, as applicable, as additional Collateral;
(iv) sales of Receivables in the ordinary course of business made
(A) between Borrowers or (B) from Subsidiaries of the Company to a
Borrower, provided, that all actions under the Uniform Commercial Code and
other applicable Requirements of Law required to perfect the purchaser's
interest in such Receivables shall have been taken;
(v) assignments and licenses of intellectual property of the Company
in the ordinary course of business;
(vi) subleases of leases or leases of owned Real Property, to the
extent such leases and subleases have anticipated annual rentals of less
than $1,000,000 each;
(vii) sales of Receivables backed by foreign letters of credit of
not more than $3,500,000 in any Fiscal Year (or such larger amount as the
Agent may approve in its sole discretion);
(viii) sales of Capital Stock of Subsidiaries of the Company
permitted by Section 9.13; and
(ix) additional dispositions which may be approved by the Agent in
its sole discretion and which result in Net Cash Proceeds of not more than
$2,500,000 in the aggregate; and
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9.03. Liens. None of Holdings, the Company or any of the Company's
Subsidiaries shall directly or indirectly create, incur, assume or permit to
exist any Lien on or with respect to any of their respective Property or assets
except:
(i) Liens created by the Loan Documents and the Finova Documents;
(ii) Permitted Existing Liens;
(iii) Customary Permitted Liens;
(iv) purchase money Liens granted by a Borrower (including the
interest of a lessor under a Capital Lease) and Liens to which any
Property is subject at the time of the Company's acquisition thereof)
securing Indebtedness permitted under Sections 9.01(vii) and limited in
each case to the property purchased or subject to such lease;
(v) any attachment or judgment Lien the existence of which does not
constitute an Event of Default under Section 11.01(h);
(vi) Liens filed to perfect the transfers of Receivables pursuant to
the Permitted Receivables Transaction Documents or otherwise to evidence
the transactions contemplated thereunder;
(vii) to the extent Indebtedness secured thereby is permitted to be
extended, renewed, replaced or refinanced pursuant to Section 9.01(ii), a
future Lien upon any Property which is subject to a Lien described in
clauses (ii) or (iv) above, if such future Lien attaches only to the same
Property, secures only such permitted extensions, renewals, replacements
or refinancings and is of like quality, character and extent; and
(viii) certain statutory and contractual rights of retention on the
Inventory of the Company or any of its Subsidiaries located outside of the
United States and Canada.
9.04. Investments. None of Holdings, the Company or any of the
Company's Subsidiaries shall directly or indirectly make or own any Investment
except:
(i) Investments in cash and Cash Equivalents (including, without
limitation, Cash Collateral) (A) pledged to the Agent or deposited in the
Lockboxes, the Collection Accounts and the Cash Collateral Accounts in
accordance with the provisions of this Agreement and the other Loan
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Documents and (B) on deposit in the Disbursement Accounts or other
operating or payroll accounts of the Borrower; provided that the aggregate
amount in such disbursement or other accounts on an overnight basis shall
not exceed at any time $1,500,000;
(ii) Permitted Existing Investments in an amount not greater than
the amount thereof on the Closing Date;
(iii) Investments received in connection with the bankruptcy or
reorganization of suppliers and customers and in settlement of delinquent
obligations of, and other disputes with, customers and suppliers arising
in the ordinary course of business;
(iv) Investments by Holdings and the Borrowers on the Closing Date
in the Capital Stock of their Subsidiaries and additional Investments made
after the Closing Date in such Subsidiaries and Finsub and other
Subsidiaries permitted to be created or acquired after the Closing Date
under Section 9.07;
(v) Investments in loans to employees made in the ordinary course of
business (but excluding any such loans the proceeds of which are intended
to be used to purchase Capital Stock); and
(vi) Investments constituting Indebtedness permitted by Section
9.01, Accommodation Obligations permitted by Section 9.05 or Capital
Expenditures permitted by Section 10.03.
9.05. Accommodation Obligations. None of Holdings, the Company or
any of the Company's Subsidiaries shall directly or indirectly create or become
or be liable with respect to any Accommodation Obligation, except:
(i) Permitted Existing Accommodation Obligations;
(ii) Accommodation Obligations arising under the Loan Documents;
(iii) obligations, warranties and indemnities which have been or are
undertaken or made in the ordinary course of business, in connection with
the Transaction Documents or in connection with any sale of assets
permitted under Section 9.02;
(iv) (A) Accommodation Obligations of any Subsidiary of Holdings in
respect of obligations of a Borrower or a Subsidiary Guarantor and (B)
Accommodation Obligations of any Subsidiary of Holdings in respect of
obligations of any other Subsidiary of Holdings (other than the Borrowers
or
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the Subsidiary Guarantors) but only if the aggregate amount of such
Accommodation Obligations does not exceed $17,500,000 at any time
outstanding; and
(v) Accommodation Obligations of the Company and Finsub pursuant to
the Permitted Receivables Transaction Documents; and
(vi) Accommodation Obligations in respect of Indebtedness permitted
under Section 9.01 or constituting a Lien permitted under Section 9.03 or
an Investment permitted under Section 9.04.
9.06. Restricted Junior Payments. None of Holdings, the Company or
any of the Company's Subsidiaries shall declare or make any Restricted Junior
Payment, except:
(i) regularly scheduled cash dividends by Holdings on the Preferred
Stock in an aggregate amount not to exceed $1,200,000 in any Fiscal Year;
provided that in the event such dividends actually paid in any Fiscal Year
are less than the maximum permitted to be paid during such Fiscal Year,
the unpaid amount for such Fiscal Year may be carried over to the next
succeeding Fiscal Year;
(ii) regularly scheduled payments of principal and interest by
Holdings on the Indebtedness evidenced by the Common Equity Notes issued
to the holders of Common Stock either (A) pursuant to the Shareholders'
Agreement or (B) pursuant to the ESOP;
(iii) cash dividends on the Capital Stock of the Company to Holdings
paid and declared on or prior to the Closing Date to fund the transactions
contemplated by the Acquisition Documents;
(iv) cash dividends on the Capital Stock of the Company to Holdings
paid and declared in any Fiscal Year (A) to fund the payment of taxes and
ordinary operating expenses of Holdings, (B) to fund the payment of
Transaction Costs of Holdings not in excess of $6,000,000 in the aggregate
and (C) to fund payments permitted to be made by Holdings pursuant to
clauses (i), (ii) and (vii) of this Section 9.06;
(v) cash dividends paid solely to a Borrower by any of such
Borrower's Subsidiaries;
(vi) regularly scheduled payments of interest and principal on the
Permitted Subordinated Indebtedness but only to the extent permitted to be
paid pursuant to the
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terms of such Permitted Subordinated Indebtedness; and
(vii) after the first anniversary of the Closing Date, payments made
by Holdings in respect of (A) redemptions of the Preferred Stock, (B)
repurchases of the Nonvoting Common Stock (but only to the extent such
Nonvoting Common Stock is subject to a put or call pursuant to the
Nonvoting Common Stock Purchase Agreement), (C) repurchases of other
Capital Stock of Holdings put to (or, in the case of Capital Stock subject
to the Shareholders' Agreement and held by former employees of Holdings,
the Borrowers or any Subsidiary Guarantor, called by) Holdings pursuant to
the terms of the Shareholders' Agreement or the ESOP and principal
prepayments of any Common Equity Notes;
provided, however, that the Restricted Junior Payments described in clauses (i),
(ii)(A), (iv) and (vii) above shall not be permitted if either (A) a Default or
an Event of Default shall have occurred and be continuing at the date of
declaration or payment thereof or would result therefrom or (B) such Restricted
Junior Payment is prohibited under the terms of any Indebtedness or Capital
Stock of Holdings, the Company or any of the Company's Subsidiaries; and
provided, further, that cash redemptions permitted under clause (vii) above
shall be limited to the excess, if any, of the average aggregate Revolving
Credit Availability under all Credit Facilities (plus, after the inception of
the Permitted Receivables Financing Program, the average liquidity available to
the Borrowers under the Permitted Receivables Financing Program) during the
thirty days immediately preceding the date set for such payment over
$15,000,000.
9.07. Conduct of Business; Subsidiaries; Acquisitions.
(a) Neither the Company nor any of its Subsidiaries shall engage in
any business other than the businesses engaged in by the Company on the date
hereof and any business or activities which are substantially similar, related
or incidental thereto. Holdings shall engage in no business or activity other
than acting as the parent of the Company and owning all of the issued and
outstanding shares of the common stock of the Company and activities reasonably
related thereto or as otherwise permitted by the Loan Documents. The
Subsidiaries of the Company (other than Borrowers) conducting business in Europe
shall not engage in any business or activity other than acting as the agent for
Pegasus pursuant to the terms of an agency agreement between Pegasus and such
Subsidiary, in form and substance reasonably satisfactory to the Agent which
agreement shall have been collaterally assigned to the Agent pursuant to an
assignment agreement substantially in the form of Exhibit V.
(b) Neither Holdings nor the Company shall create, capitalize or
acquire any Subsidiary after the date hereof;
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provided, however, the Company may capitalize Finsub in accordance with the
Permitted Receivables Transaction Documents and may capitalize the Subsidiaries
proposed to be created on Schedule 6.01-C for the purposes set forth on such
schedule in an aggregate amount during any Fiscal Year, together with the
initial principal amount of all intercompany loans permitted to be made in such
Fiscal Year pursuant to Section 9.01(x), not to exceed the amounts permitted by
Sections 9.01(x)(D) and 9.01(x)(E) for such Fiscal Year.
(c) No Borrower shall enter into any transaction or series of
transactions (other than the transactions contemplated in the Acquisition
Documents) in which it acquires all or any significant portion of the Capital
Stock or assets of another Person; provided, however, with the consent of the
Agent and so long as no Event of Default has occurred and is continuing, the
Borrowers may acquire the assets or Capital Stock of Persons having a fair
market value (as determined by the Company's board of directors), net of any
liabilities assumed by such Borrower in such acquisition (determined in
accordance with GAAP) in the aggregate for all such acquisitions after the
Closing Date of not greater than $2,000,000.
9.08. Transactions with Shareholders and Affiliates. Except for the
consummation of the transactions contemplated in the Transaction Documents, none
of Holdings, the Company or any of the Company's Subsidiaries shall directly or
indirectly enter into or permit to exist any transaction (including, without
limitation, the purchase, sale, lease or exchange of any property or the
rendering of any service) with any Affiliate of Holdings or the Company which is
not its Subsidiary, on terms that are less favorable to Holdings, the Company or
any such Subsidiary, as applicable, than those that could be obtained in an
arm's length transaction at the time from Persons who are not such a holder or
Affiliate other than transactions with such Affiliates who are officers,
directors or members of the leadership committee of Holdings, the Company or a
Subsidiary of the Company which (a) are approved by the board of directors of
Holdings, the Company or such Subsidiary, as applicable, or (b) are in the
ordinary course of business of Holdings, the Company or such Subsidiary, as
applicable.
9.09. Restriction on Fundamental Changes. None of Holdings, the
Company or any of the Company's Subsidiaries shall (a) enter into any merger or
consolidation, or liquidate, wind-up or dissolve (or suffer any liquidation or
dissolution), except for a merger of a Domestic Borrower into another Domestic
Borrower, provided that the documents governing such merger are satisfactory to
the Requisite Lenders and a merger of a Wholly Owned Subsidiary (other than a
Borrower) into the Company (with the Company as the surviving corporation) or
another Wholly Owned Subsidiary or the dissolution of a Subsidiary of the
Company that
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is not a party to any Loan Document and the Capital Stock of which is not
pledged in full or in part to the Agent, or convey, lease, sell, transfer or
otherwise dispose of, in one transaction or series of transactions, all or
substantially all of Holdings, the Company's or any such Subsidiary's business
or Property, whether now or hereafter acquired, except transactions permitted
under Section 9.02 or (b) enter into any partnership or joint venture (other
than (x) profit sharing arrangements with suppliers that are not conducted
through a corporation or partnership established for such purpose and (y)
partnerships or joint ventures which are at least 51% owned by a Domestic
Borrower.
9.10. Sales and Leasebacks; Operating Leases. (a) None of Holdings,
the Company or any of the Company's Subsidiaries shall enter into any Sale and
Leaseback Transaction except to the extent otherwise permitted by Article X and
in an aggregate amount not to exceed the amount specified in Section 9.01(vii).
(b) None of Holdings, the Company or any of the Company's
Subsidiaries shall become liable in any way, whether directly or by assignment
or by Accommodation Obligation, for the obligations of a lessee under any
Operating Lease unless, immediately after giving effect to the incurrence of
liability with respect to such Operating Lease, the aggregate amount of all
rents paid or accrued under all Operating Leases of Holdings, the Company and
the Company's Subsidiaries (determined in conformity with GAAP) shall not exceed
$4,000,000 in any Fiscal Year.
9.11. Margin Regulations; Securities Laws. None of Holdings, the
Company or any of the Company's Subsidiaries, shall use all or any portion of
the proceeds of any credit extended hereunder to purchase or carry Margin Stock.
9.12. ERISA and Certain Employment Matters. The Company shall not:
(i) engage, or permit any ERISA Affiliate to engage, in any
prohibited transaction described in Sections 406 of ERISA or 4975 of the
Internal Revenue Code for which a statutory or class exemption is not
available or a private exemption has not been previously obtained from the
DOL or with respect to which the aggregate liability of the Company and
its ERISA Affiliates arising from such transaction is greater than
$1,000,000;
(ii) permit to exist any accumulated funding deficiency (as defined
in sections 302 of ERISA and 412 of the Internal Revenue Code), with
respect to any Benefit Plan, whether or not waived;
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(iii) fail, or permit any ERISA Affiliate to fail, to pay timely
required contributions or annual installments due with respect to any
waived funding deficiency to any Benefit Plan;
(iv) terminate, or permit any ERISA Affiliate to terminate, any
Benefit Plan which would result in a material liability of Company or any
ERISA Affiliate under Title IV of ERISA;
(v) fail to make any contribution or payment to any Multiemployer
Plan which Company or any ERISA Affiliate may be required to make under
any agreement relating to such Multiemployer Plan, or any law pertaining
thereto;
(vi) fail, or permit any ERISA Affiliate to fail, to pay any
required installment or any other payment required that would give rise to
a Lien under Section 412 of the Internal Revenue Code on or before the due
date for such installment or other payment;
(vii) amend, or permit any ERISA Affiliate to amend, a Plan
resulting in an increase in current liability for the plan year such that
the Company or any ERISA Affiliate is required to provide security to such
Plan under Section 401(a)(29) of the Internal Revenue Code;
(viii) permit any unfunded liabilities with respect to any Foreign
Pension Plan other than as permitted under local law; or
(ix) fail, or permit any Subsidiary or ERISA Affiliate to fail, to
pay any required contributions or payments to a Foreign Pension Plan on or
before the due date for such required installment or payment.
9.13. Issuance or Sale of Capital Stock. Other than pursuant to the
Registration Statement, the Retirement Plan, the ESOP, the Shareholders'
Agreement and the Nonvoting Common Stock Purchase Agreement, none of the Company
or any of the Company's Subsidiaries shall (i) issue any Capital Stock, except,
in the case of the Company, the Capital Stock of the Company issued to Holdings
on or prior to the Closing Date and, in the case of Company's Subsidiaries, the
Capital Stock of any such Subsidiary to the extent the creation thereof is
permitted pursuant to Sections 9.04 and 9.07, (ii) grant any rights (either
preemptive or other) to subscribe for or to purchase, or any option for the
purchase of, its Capital Stock or (iii) create calls, commitments, or claims of
any character relating to any of its Capital Stock. The Company shall not sell
or otherwise dispose of, or permit the sale or disposition of, any shares of
Capital Stock of any of its Subsidiaries, except (x) as required by
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applicable law for the qualification of directors or to satisfy minimum
shareholder requirements and (y) for the Capital Stock of Subsidiaries of the
Company that are not party to any Loan Document and the Capital Stock of which
is not pledged in full or in part to the Agent or the Canadian Agent.
9.14. Constituent Documents. None of Holdings, the Company or any of
the Company's Subsidiaries shall materially amend, modify or otherwise change
any of the terms or provisions in any of their respective Constituent Documents
as in effect on the Closing Date, except that Holdings, the Company or any such
Subsidiary may change its name, provided that any change of name of Holdings,
the Company or any Subsidiary party to the Subsidiary Security Agreement shall
be made in accordance with the Holdings Security Agreement, the Borrower
Security Agreements and the Subsidiary Security Agreements, respectively.
9.15. Fiscal Year. None of Holdings, the Company or any of the
Company's Subsidiaries shall change its Fiscal Year for accounting or tax
purposes from a period consisting of the 12-month period ending on December 31
of each calendar year.
9.16. Cancellation of Debt; Prepayment; Certain Amendments. Neither
Holdings, nor the Company, nor any of the Company's Subsidiaries shall (i)
cancel any material claim or debt or amend or modify the terms thereof, except
in the ordinary course of its business or pursuant to the exercise of reasonable
business judgment or (ii) except for regularly scheduled payments as expressly
permitted pursuant to the terms of the Loan Documents, prepay, redeem, purchase,
repurchase, defease or retire the Finova Indebtedness or any other long-term
Indebtedness; provided, however, after the inception of the Permitted
Receivables Financing Program, the Borrowers shall be entitled to prepay the
Finova Indebtedness or any such other long-term Indebtedness (other than
Permitted Subordinated Indebtedness) by an amount limited to the excess, if any,
of the average aggregate Revolving Credit Availability under all Credit
Facilities (plus the average liquidity available to the Borrowers under the
Permitted Receivables Financing Program) during the thirty (30) days immediately
preceding the date set for such prepayment over $20,000,000, or (iii) terminate,
amend, supplement or otherwise modify the terms of (A) the Acquisition Documents
(other than the Common Equity Notes) in any respect that is materially adverse
to the Lenders or (B) the Finova Documents, the Common Equity Notes, the
Permitted Receivables Transaction Documents or any documents evidencing the
Permitted Subordinated Indebtedness in any respect that is adverse to the
Lenders .
9.17. Environmental Matters. Neither Holdings, nor the Company, nor
any of Company's Subsidiaries shall become subject to any Liabilities and Costs
which would have a Material
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Adverse Effect arising out of or related to (a) the Release or threatened
Release at any location of any Contaminant into the environment, or any Remedial
Action in response thereto, or (b) any violation of any Environmental, Health
and Safety Requirements of Law.
9.18. Cash Management. Neither the Company nor any of its
Subsidiaries may open any deposit or payroll account except in accordance with
Section 3.05, or as may be required after the Closing Date pursuant to the
Permitted Receivables Transaction Documents. The Company shall not authorize or
direct any Person to take any action with respect to amounts deposited in the
Lockboxes, the Collection Accounts, the Cash Collateral Accounts, the Canadian
Cash Collection Account or the U.S. Concentration Account in contravention of
the provisions hereof.
9.19. [Intentionally Omitted]
9.20. No New Restrictions on Subsidiary Dividends. Except to the
extent that any such agreement may be contained in the Loan Documents or the
Permitted Receivables Transaction Documents, neither Holdings nor the Company
will agree, or permit any of the Company's Subsidiaries to agree, to create or
otherwise permit to exist any consensual encumbrance or restriction of any kind
on the ability of any of the Company's Subsidiaries to pay dividends or make any
other distribution or transfer of funds or assets or make loans or advances to
or other Investments in, or pay any Indebtedness owing to, the Company.
ARTICLE X
FINANCIAL COVENANTS
Each of Holdings and the Borrowers (other than the Canadian Borrower
which so covenants in favor of the Canadian Lenders only with respect to itself
and its consolidated liabilities, assets, business and opportunities) covenants
and agrees that so long as any Commitment is outstanding and thereafter until
Payment In Full of all of the Obligations, unless the Requisite Lenders shall
otherwise give prior written consent thereto:
10.01. Minimum Consolidated Tangible Net Worth. Holdings and its
Subsidiaries shall maintain a Consolidated Tangible Net Worth at all times (i)
with respect to the first fiscal quarter of 1996, from the Closing Date until
the day preceding the last day of such fiscal quarter and (ii) with respect to
each fiscal quarter in each Fiscal Year set forth below thereafter, in each case
from the last day of the fiscal quarter preceding such fiscal quarter to the day
preceding the last day of such fiscal quarter of not be less than the minimum
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amount set forth opposite such fiscal quarter:
Period Minimum Amount
------ --------------
First fiscal quarter of 1996 $18,000,000
Second fiscal quarter of 1996 19,000,000
Third fiscal quarter of 1996 20,500,000
Fourth fiscal quarter of 1996 22,000,000
First fiscal quarter of 1997 23,125,000
Second fiscal quarter of 1997 24,250,000
Third fiscal quarter of 1997 25,375,000
Fourth fiscal quarter of 1997 26,500,000
First fiscal quarter of 1998 27,750,000
Second fiscal quarter of 1998 29,000,000
Third fiscal quarter of 1998 30,250,000
Fourth fiscal quarter of 1998 31,500,000
First fiscal quarter of 1999 33,125,000
Second fiscal quarter of 1999 34,750,000
Third fiscal quarter of 1999 36,375,000
Fourth fiscal quarter of 1999 38,000,000
10.02. Minimum Fixed Charge Coverage Ratio. Holdings and its
Subsidiaries shall maintain a Fixed Charge Coverage Ratio on a consolidated
basis, as determined as of the last day of each fiscal quarter set forth below
for the four fiscal quarter period ending on such date (or if the period from
the Closing Date to such last day is less than four full fiscal quarters, such
shorter period), shall not be less than the minimum ratio set forth opposite
such fiscal quarter:
Fiscal Quarter Minimum Ratio
-------------- -------------
Second fiscal quarter of 1996 1.00 to 1
Third fiscal quarter of 1996 1.00 to 1
Fourth fiscal quarter of 1996 1.00 to 1
First fiscal quarter of 1997 1.05 to 1
Second fiscal quarter of 1997 1.10 to 1
Third fiscal quarter of 1997 1.10 to 1
Fourth fiscal quarter of 1997 1.20 to 1
First fiscal quarter of 1998 1.20 to 1
Second fiscal quarter of 1998 1.25 to 1
Third fiscal quarter of 1998 1.25 to 1
Fourth fiscal quarter of 1998 and
each fiscal quarter thereafter 1.30 to 1
10.03. Maximum Capital Expenditures. Capital Expenditures made or
incurred by the Company and its Subsidiaries on a consolidated basis during any
Fiscal Year shall not exceed $1,750,000; provided, that in the event Capital
Expenditures in any Fiscal Year are less than the maximum specified above for
such Fiscal Year, the unspent amount for such Fiscal Year may be carried over to
the next succeeding Fiscal Year (such carry-over
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amount being available only for use in such succeeding Fiscal Year and being
treated as the last amount spent in such succeeding Fiscal Year, in each case
for purposes of applying this proviso to such Fiscal Year).
ARTICLE XI
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
11.01. Events of Default. Each of the following occurrences shall
constitute an Event of Default hereunder:
(a) Failure to Make Payments When Due. Any Borrower shall fail to
pay (i) when due any principal or interest on the Loans (including the
Reimbursement Obligations) or any other fees payable hereunder or (ii) any other
Obligation, and if such non-payment relates to Obligations other than interest,
principal or fees, such non-payment continues for a period of five (5) Business
Days after the due date thereof.
(b) Breach of Certain Covenants. Holdings or any Borrower shall fail
to perform or observe duly and punctually any agreement, covenant or obligation
binding on such Person under (i) Section 7.02, 7.03, 7.05, 8.01, 8.02 or 8.05
(solely with respect to the failure to pay insurance premiums which has the
effect of terminating any insurance policy required to be maintained pursuant to
such section), or (ii) Article IX or Article X.
(c) Breach of Representation or Warranty. Any repre sentation or
warranty made or deemed made by Holdings, the Company or any of the Company's
Subsidiaries to the Agent, any Lender or any Issuing Bank herein or in any other
Loan Document or in any certificate at any time given by any such Person
pursuant to any Loan Document shall be false or misleading in any material
respect on the date made (or deemed made).
(d) Other Defaults. Holdings or any Borrower shall default in the
performance of or compliance with any term contained herein (other than as
covered by paragraphs (a), (b) or (c) of this Section 11.01), or Holdings, the
Company or any of the Company's Subsidiaries shall default in the performance of
or compliance with any term contained in any other Loan Document, and such
default shall continue for (i) five (5) Business Days after the occurrence
thereof with any respect to any term contained in Section 8.06; (ii) ten (10)
Business Days after the occurrence thereof with respect to any term contained in
Section 7.01 or 8.14(i); and (iii) thirty (30) days after the occurrence thereof
with respect to any other term.
(e) Default as to Other Indebtedness; Operating Leases. Holdings,
the Company or any of the Company's
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Subsidiaries shall fail to make any payment when due (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise) after any
grace period applicable thereto with respect to the Finova Indebtedness, any
Permitted Subordinated Indebtedness or any other Indebtedness (other than an
Obligation) in excess of $1,000,000; or any breach, default or event of default
shall occur, or any other condition shall exist under any instrument, agreement
or indenture pertaining to any such, if the effect thereof is (or, with the
giving of notice or lapse of time or both, would be) to cause an acceleration,
mandatory redemption or other required repurchase of such Indebtedness, or
permit the holders of such Indebtedness to accelerate the maturity of such
Indebtedness or require the redemption or other repurchase of such Indebtedness;
or any such Indebtedness shall be otherwise declared to be due and payable (by
acceleration or otherwise) or required to be prepaid, redeemed or otherwise
repurchased by Holdings, the Company or any of the Company's Subsidiaries (other
than by a regularly scheduled required prepayment, mandatory redemption or
required repurchase) prior to the stated maturity thereof; or any breach,
default or event of default remaining uncured for a period of sixty (60) days on
the part of Holdings, the Company or any of the Company's Subsidiaries shall
occur under any Operating Lease to which the Company or any of its Subsidiaries
is a party pursuant to which rental payments thereunder equal or exceed
$1,000,000 per annum; or any event shall have occurred and be continuing which
constitutes an "Event of Termination" under and as defined in the Permitted
Receivables Transaction Documents, or which could otherwise cause the early
termination of the Permitted Receivables Financing Program.
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(f) Involuntary Bankruptcy; Appointment of Receiver, Etc.
(i) An involuntary case, proceeding or other action shall be
commenced against Holdings, the Company or any of its Subsidiaries (A) under any
existing or future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking to have any
order for relief entered with respect to it, or seeking to adjudicate it as
bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
wind-up, liquidation, dissolution, composition or other relief with respect to
it or its debts, or (B) seeking appointment of a receiver, trustee,
receiver-manager, liquidator, sequestrator, administrator, custodian or similar
official for it or for all or any substantial part of its assets which case,
proceeding or other action results in entry of an order for relief or any such
adjudication or appointment or (B) remains undismissed, undischarged or unbonded
for period of sixty (60) days; or a court having jurisdiction in the premises
shall enter a decree or order for relief in respect of Holdings, the Company or
any of the Company's Subsidiaries in an involuntary case, under any applicable
bankruptcy, insolvency or other similar law now or hereinafter in effect; or any
other similar relief shall be granted under any applicable federal, state, local
or foreign law.
(ii) A decree or order of a court having jurisdiction in the
premises for the appointment of a receiver, receiver-manager, liquidator,
sequestrator, trustee, custodian or other officer having similar powers over
Holdings, the Company or any of the Company's Subsidiaries or over all or a
substantial part of the Property of Holdings, the Company or any of the
Company's Subsidiaries shall be entered; or an interim receiver, trustee or
other custodian of Holdings, the Company or any of the Company's Subsidiaries or
of all or a substantial part of the property of Holdings, the Company or any of
the Company's Subsidiaries shall be appointed or a warrant of attachment,
execution or similar process against any substantial part of the Property of
Holdings, the Company or any of the Company's Subsidiaries shall be issued and
any such event shall not be stayed, dismissed, bonded or discharged within sixty
(60) days after entry, appointment or issuance.
(g) Voluntary Bankruptcy; Appointment of Receiver, Etc. Holdings,
the Company or any of the Company's Subsidiaries shall (i) commence any
voluntary case, proceeding or other action (A) under any existing or future law
of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have any order for relief
entered with respect to it, or seeking to adjudicate
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it as bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
wind-up, liquidation, dissolution, composition or other relief with respect to
it or its debts, or (B) seeking appointment of a receiver, trustee,
receiver-manager, liquidator, sequestrator, administrator, custodian or similar
official for it or for all or any substantial part of its assets or (ii) shall
consent to the entry of an order for relief in an involuntary case, or to the
conversion of an involuntary case to a voluntary case, under any such law, or
(iii) shall consent to the appointment of or taking possession by a receiver,
receiver-manager, liquidator, sequestrator, trustee or other custodian or other
officer for all or a substantial part of its property; (iv) or Holdings, the
Company or any of the Company's Subsidiaries shall generally not pay its debts
as such debts become due, or shall admit in writing its inability to pay its
debts generally, or shall make any general assignment for the benefit of
creditors or (v) the Borrower shall take any other action to authorize any of
the actions set forth in this paragraph (g).
(h) Judgments. Holdings, the Company or any of the Company's
Subsidiaries shall permit any judgments or orders against any of them or any of
their respective assets for the payment of money in excess of $1,000,000 in the
aggregate at any one time in excess of any available insurance proceeds to
remain undischarged during a period of forty-five (45) consecutive days unless
during such period such judgments or orders shall be effectively stayed, vacated
or discharged on appeal or otherwise.
(i) Dissolution. Any order, judgment or decree shall be entered
against Holdings, the Company or any of the Company's Subsidiaries, decreeing
its involuntary dissolution or other similar proceeding, and such order shall
remain undischarged and unstayed for a period in excess of sixty (60) days; or
Holdings, the Company or any of the Company's Subsidiaries shall otherwise
dissolve or cease to exist except as specifically permitted hereby.
(j) Loan Documents; Failure of Security. At any time, for any
reason, (i) any Loan Document ceases to be in full force and effect (except in
accordance with its terms) or Holdings, the Company or any of the Company's
Subsidiaries party thereto seeks to repudiate its obligations thereunder and the
Liens intended to be created thereby are, or Holdings, the Company or any such
Subsidiary seeks to render such Liens, invalid or unperfected, or (ii) Liens in
favor of the Agent, the Issuing Banks and/or the Lenders contemplated by the
Loan Documents shall, at any time, for any reason, be invalidated or otherwise
cease to be in full force and effect, or such Liens shall be subordinated or
shall not have the priority contemplated hereby or by the other Loan Documents.
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(k) Termination Event. Any Termination Event occurs which the Agent
reasonably believes could subject either the Company or any ERISA Affiliate to a
liability in excess of $1,000,000.
(l) Waiver of Minimum Funding Standard. If the plan administrator of
any Plan applies under Section 412(d) of the Internal Revenue Code for a waiver
of the minimum funding standards of Section 412(a) of the Internal Revenue Code
and the Agent believes the substantial business hardship upon which the
application for the waiver is based could subject either Holdings, the Company
or any ERISA Affiliate to a material liability.
(m) Material Adverse Change. An event shall exist or occur which has
a Material Adverse Effect.
(n) Intercreditor Agreement. Any of the parties to the Intercreditor
Agreement (other than the Agent and the Lenders) shall fail to perform any
material covenant or material obligation binding on such party or the
Intercreditor Agreement shall cease to be in full force and effect.
(o) Change of Control. A Change of Control shall have occurred.
An Event of Default shall be deemed "continuing" until cured or waived in
accordance with Section 13.07.
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11.02. Rights and Remedies.
(a) Acceleration and Termination. Upon the occurrence of any Event
of Default described in Sections 11.01(f) or 11.01(g), the Revolving Credit
Commitments shall automatically and immediately terminate and the unpaid
principal amount of, and any and all accrued interest on, the Obligations and
all accrued fees shall automatically become immediately due and payable, without
presentment, demand, or protest or other requirements of any kind (including,
without limitation, valuation and appraisement, diligence, presentment, notice
of intent to demand or accelerate and of acceleration), all of which are hereby
expressly waived by the Borrowers; and upon the occurrence and during the
continuance of any other Event of Default, the Agent shall at the request, or
may with the consent, of the Requisite Lenders, by written notice to the
Company, (i) declare that all or any portion of the Revolving Credit Commitments
are terminated, whereupon the Revolving Credit Commitments and the obligation of
each Lender to make any Loan hereunder and of each Lender or Issuing Bank to
Issue or participate in any Letter of Credit not then Issued shall immediately
terminate, and/or (ii) declare the unpaid principal amount of and any and all
accrued and unpaid interest on the Obligations to be, and the same shall
thereupon be, immediately due and payable, without presentment, demand, or
protest or other requirements of any kind (including, without limitation,
valuation and appraisement, diligence, presentment, notice of intent to demand
or accelerate and of acceleration), all of which are hereby expressly waived by
the Borrowers.
(b) Deposit for Letters of Credit. In addition, after the occurrence
and during the continuance of an Event of Default, the Borrowers (other than the
Canadian Borrower) jointly and severally agree, promptly upon demand by the
Agent (given upon the written instructions of the Requisite Lenders or, in the
absence of such instructions, in its sole discretion), to deliver to the Agent,
Cash Collateral in such form as requested by the Agent for deposit in the
applicable Cash Collateral Account, together with such endorsements, and
execution and delivery of such documents and instruments as the Agent may
reasonably request in order to perfect or protect the Agent's Lien with respect
thereto, in an aggregate principal amount equal to the then outstanding Letter
of Credit Obligations.
(c) Rescission. If at any time after termination of the Revolving
Credit Commitments and/or acceleration of the maturity of the Loans, the
Borrowers shall pay all arrears of interest and all payments on account of
principal of the Loans and Reimbursement Obligations which shall have become due
other wise than by acceleration (with interest on principal and, to the extent
permitted by law, on overdue interest, at the rates speci-
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fied herein) and all Events of Default and Defaults (other than nonpayment of
principal of and accrued interest on the Loans due and payable solely by virtue
of acceleration) shall be remedied or waived pursuant to Section 13.07, then
upon the written consent of the Requisite Lenders and written notice to the
Company, the termination of the Revolving Credit Commitments and/or the
acceleration and the consequences of such termination and/or acceleration may be
rescinded and annulled; but such action shall not affect any subsequent Event of
Default or Default or impair any right or remedy consequent thereon. The
provisions of the preceding sentence are intended merely to bind the Lenders and
the Issuing Banks to a decision which may be made at the election of the
Requisite Lenders; they are not intended to benefit the Borrowers and do not
give any Borrower the right to require the Lenders to rescind or annul any
acceleration here under, even if the conditions set forth herein are met.
(d) Enforcement. The Borrowers acknowledge that in the event
Holdings, the Company or any of the Company's Subsidiaries fails to perform,
observe or discharge any of its respective obligations or liabilities hereunder
or under any other Loan Document, any remedy of law may prove to be inadequate
relief to the Agent, the Issuing Banks and the Lenders; therefore, each Borrower
agrees that the Agent, the Issuing Banks and the Lenders shall be entitled after
the occurrence and during the continuance of an Event of Default to temporary
and permanent injunctive relief in any such case without the necessity of
proving actual damages.
11.03. Cash Collateral. The Agent may, at any time after an Event of
Default has occurred and is continuing, and otherwise consistent with the
Uniform Commercial Code (or any applicable Requirements of Law in any other
relevant jurisdiction), sell or cause to be sold any Cash Equivalents being held
by the Agent as Cash Collateral (in the Canadian Cash Collection Account, any
Cash Collateral Account, or otherwise) at any broker's board or at public or
private sale, in one or more sales or lots, at such price as the Agent may deem
best, without assumption of any credit risk, and the purchaser of any or all
such Cash Equivalents so sold shall thereafter own the same, absolutely free
from any claim, encumbrance or right of any kind whatsoever. The Agent, any of
the Lenders and any of the Issuing Banks may, in its own name or in the name of
a designee or nominee, buy such Cash Equivalents at any public sale and, if
permitted by applicable law, buy such Cash Equivalents at any private sale. The
Agent shall apply the proceeds of any such sale, net of any expenses incurred in
connection therewith, and any other funds deposited in (x) the Cash Collateral
Accounts (other than the Canadian Cash Collateral Account), to the payment of
the Obligations in accordance with this Agreement and (y) the Canadian Cash
Collection Account and the Canadian Cash Collateral Account to the payment of
the Obligations under the Canadian
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Facility in accordance with this Agreement. Each Borrower agrees that (i) each
sale of Cash Equivalents shall be conducted in conformity with reasonable
commercial practices of banks, commercial finance companies, insurance companies
or other financial institutions disposing of property similar to such Cash
Equivalents and shall be deemed to be commercially reasonable and (ii) any
requirement of reasonable notice shall be met if such notice is received by the
Company at its notice address on the signature pages hereto at least ten (10)
Business Days before the time of the sale or disposition. Any other requirement
of notice, demand or advertisement for sale is waived to the extent permitted by
law. The Agent may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned.
11.04. License for Use of Software and Other Intellectual Property.
Unless expressly prohibited by the licensor thereof, if any, the Agent (and with
respect to the Property of the Canadian Borrower, the Canadian Agent) is hereby
granted a license to use, without charge, the computer programs, software,
printouts and other computer materials, technical knowledge or processes, data
bases, materials, trademarks, registered trademarks, trademark applications,
service marks, registered service marks, service mark applications, patents,
patent applications, trade names, industrial designs, rights of use of any name,
labels, fictitious names, inventions, designs, trade secrets, goodwill,
registrations, copyrights, copyright applications, Permits, licenses,
franchises, customer lists, credit files, correspondence, and advertising
materials or any Property of a similar nature of each of Holdings, the Company
or any Subsidiary of the Company, in each case, as it pertains to the Collateral
owned by such Person, or any rights to any of the foregoing, in completing
production of, advertising for sale, and selling any of such Collateral, and
such Person's rights under all licenses and franchise agreements shall inure to
the benefit of the Agent (or in the case of a license or franchise agreement of
the Canadian Borrower, the Canadian Agent). Each of the Agent and the Canadian
Agent agrees not to use any such license prior to the occurrence of an Event of
Default without giving prior notice to Holdings, the Company or the applicable
Subsidiary of the Company.
ARTICLE XII
THE AGENT AND THE CANADIAN AGENT
12.01. Appointment. (a) Each U.S. Lender and each U.S. Issuing Bank,
and each Multicurrency Lender under the Multicurrency Facility, and with respect
to Collateral (other than that of the Canadian Borrower), each Canadian Lender
and each Canadian Issuing Bank, hereby designates and appoints
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Citicorp as the Agent hereunder, and each such Person hereby irrevocably
authorizes the Agent to execute such documents (including, without limitation,
the Loan Documents to which the Agent is a party) and to take such other action
on such Person's behalf under the provisions hereof and of the Loan Documents
and to exercise such powers as are set forth herein or therein together with
such other powers as are reasonably incidental thereto. As to any matters not
expressly provided for hereby (including, without limitation, enforcement or
collection of the Notes or any amount payable under any provision of Article III
when due) or the other Loan Documents, the Agent shall not be required to
exercise any discretion or take any action. Notwithstanding the foregoing, the
Agent shall be required to act or refrain from acting (and shall be fully
protected in so acting or refraining from acting) upon the instructions of the
Requisite Lenders (or, where required by the express terms hereof, a different
proportion of the Lenders) and such instructions shall be binding upon all
Lenders, Issuing Banks and Holders; provided, however, the Agent shall not be
required to take any action which (i) the Agent reasonably believes shall expose
it to personal liability unless the Agent receives an indemnification
satisfactory to it from the Lenders with respect to such action or (ii) is
contrary hereto, to the other Loan Documents or applicable law. The Agent agrees
to act as such on the express conditions contained in this Article XII.
(b) Each Canadian Lender and each Canadian Issuing Bank hereby
designates and appoints Citibank Canada as the Canadian Agent hereunder, and
each such Person hereby irrevocably authorizes the Canadian Agent to execute
such documents (including, without limitation, the Loan Documents to which the
Canadian Agent is a party) and to take such other action on such Person's behalf
under the provisions hereof and of the Loan Docu ments and to exercise such
powers as are set forth herein or therein together with such other powers as are
reasonably incidental thereto. As to any matters not expressly provided for
hereby (including, without limitation, enforcement or collection of the Canadian
Notes or any amount payable under any provision of Article III when due) or the
other Loan Documents, the Canadian Agent shall not be required to exercise any
discretion or take any action. Notwithstanding the foregoing, the Canadian Agent
shall be required to act or refrain from acting (and shall be fully protected in
so acting or refraining from acting) upon the instructions of the Requisite
Lenders (or, where required by the express terms hereof, a different proportion
of the Lenders) and such instructions shall be binding upon all Lenders, Issuing
Banks and Holders; provided, however, the Canadian Agent shall not be required
to take any action which (i) the Canadian Agent reasonably believes shall expose
it to personal liability unless the Canadian Agent receives an indemnification
satisfactory to it from the Lenders with respect to such action or (ii) is
contrary hereto, to the other Loan Documents or applicable law. The
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Canadian Agent agrees to act as such on the express conditions contained in this
Article XII.
(c) The provisions of this Article XII are solely for the benefit of
the Agent, the Canadian Agent, the Lenders and Issuing Banks, and none of
Holdings, the Company or the Company's Subsidiaries shall have any rights to
rely on or enforce any of the provisions hereof (other than as expressly set
forth in Sec tions 12.07 and 12.09). In performing their respective functions
and duties hereunder, the Agent and the Canadian Agent shall act solely as agent
of the applicable Lenders and the Issuing Banks and do not assume and shall not
be deemed to have assumed any obligation or relationship of agency, trustee or
fiduciary with or for Holdings, the Company or any Subsidiary of the Company.
Each of the Agent and the Canadian Agent may perform any of its duties
hereunder, or under the Loan Documents, by or through its respective agents or
employees.
12.02. Nature of Duties. The Agent and the Canadian Agent shall not
have any duties or responsibilities except those expressly set forth herein or
in the Loan Documents. The duties of the Agent and the Canadian Agent shall be
mechanical and administrative in nature. The Agent and the Canadian Agent shall
not have by reason hereof a fiduciary relationship in respect of any Holder.
Nothing herein or in any of the Loan Documents, expressed or implied, is
intended to or shall be construed to impose upon the Agent or the Canadian Agent
any obligations in respect hereof or any of the Loan Documents except as
expressly set forth herein or therein. Each Lender and each Issuing Bank shall
make its own independent investigation of the financial condition and affairs of
Holdings, the Company and the Company's Subsidiaries in connection with the
making and the continuance of the Loans hereunder and with the issuance of the
Letters of Credit and shall make its own appraisal of the creditworthiness of
Holdings, the Company and the Company's Subsidiaries initially and on a
continuing basis, and the Agent and the Canadian Agent shall not have any duty
or responsibility, either initially or on a continuing basis, to provide any
Holder with any credit or other information with respect thereto (except for
reports required to be delivered by the Agent and the Canadian Agent under the
terms hereof). If either the Agent or the Canadian Agent seeks the consent or
approval of any of the Lenders to the taking or refraining from taking of any
action hereunder, the Agent and the Canadian Agent shall send notice thereof to
each Lender. The Agent and the Canadian Agent shall promptly notify each Lender
at any time that the Lenders so required hereunder have instructed the Agent and
the Canadian Agent to act or refrain from acting pursuant hereto.
12.03. Rights, Exculpation, Etc. (a) Liabilities; Responsibilities.
None of the Agent, the Canadian Agent, any Affiliate of the Agent or any
Affiliate of the Canadian Agent,
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nor any of their respective officers, directors, employees or agents shall be
liable to any Holder for any action taken or omitted by them hereunder or under
any of the Loan Documents, or in connection therewith, except that no Person
shall be relieved of any liability imposed by law for gross negligence or
willful misconduct. Neither the Agent nor the Canadian Agent shall be liable for
any apportionment or distribution of payments made by it in good faith pursuant
to Section 3.02(b), and if any such apportionment or distribution is
subsequently determined to have been made in error the sole recourse of any
Holder to whom payment was due, but not made, shall be to recover from other
Holders any payment in excess of the amount to which they are determined to have
been entitled. Neither the Agent nor the Canadian Agent shall be responsible to
any Holder for any recitals, statements, representations or warranties herein or
for the execution, effectiveness, genuineness, validity, legality,
enforceability, collectability, or sufficiency hereof or of any of the other
Loan Documents or the transactions contemplated thereby, or for the financial
condition of Holdings, the Company or any of the Company's Subsidiaries. Neither
the Agent nor the Canadian Agent shall be required to make any inquiry
concerning either the performance or observance of any of the terms, provisions
or conditions hereof or of any of the Loan Documents or the financial condition
of the Company or any of its Subsidiaries, or the existence or possible
existence of any Default or Event of Default.
(b) Right to Request Instructions. The Agent and the Canadian Agent
may at any time request instructions from the applicable Lenders with respect to
any actions or approvals which, by the terms of any of the Loan Documents, the
Agent or the Canadian Agent is permitted or required to take or to grant, and
the Agent and the Canadian Agent shall be absolutely entitled to refrain from
taking any action or to withhold any approval and shall not be under any
liability whatsoever to any Person for refraining from any action or withholding
any approval under any of the Loan Documents until it shall have received such
instructions from those Lenders from whom the Agent and the Canadian Agent are
required to obtain such instructions for the pertinent matter in accordance with
the Loan Documents. Without limiting the generality of the foregoing, no Holder
shall have any right of action whatsoever against the Agent or the Canadian
Agent as a result of the Agent or the Canadian Agent acting or refraining from
acting under the Loan Documents in accordance with the instructions of the
Requisite Lenders or, where required by the express terms hereof, a greater
proportion of the Lenders.
12.04. Reliance. Each of the Agent and the Canadian Agent shall be
entitled to rely upon any written notices, statements, certificates, orders or
other documents or any telephone message believed by it in good faith to be
genuine and correct and to have been signed, sent or made by the proper
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Person, and with respect to all matters pertaining hereto or to any of the Loan
Documents and its duties hereunder or thereunder, upon advice of legal counsel
(including counsel for the Company), independent public accountants and other
experts selected by it.
12.05. Indemnification. (a) To the extent that the Agent is not
reimbursed and indemnified by the Borrowers (other than the Canadian Borrower),
the Lenders (other than the Canadian Lenders) shall reimburse and indemnify the
Agent for and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by, or asserted
against the Agent in any way relating to or arising out of the Loan Documents or
any action taken or omitted by the Agent under the Loan Documents, in proportion
to such Lender's Pro Rata Share of all Credit Facilities (without giving effect
to Canadian Facility); provided, however, such Lenders shall have no obligation
to the Agent with respect to the matters indemnified pursuant to this Section
12.05(a) resulting from the willful misconduct or gross negligence of the Agent,
as determined in a judgment by a court of competent jurisdiction. The
obligations of such Lenders under this Section 12.05(a) shall survive the
Payment In Full of the Loans, the Reimbursement Obligations and all other
Obligations and the termination hereof.
(b) To the extent that the Canadian Agent is not reimbursed and
indemnified by the Canadian Borrower, the Canadian Lenders shall reimburse and
indemnify the Canadian Agent for and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or dis bursements of any kind or nature whatsoever which may be imposed
on, incurred by, or asserted against the Canadian Agent in any way relating to
or arising out of the Loan Documents or any action taken or omitted by the
Canadian Agent under the Loan Documents, in proportion to such Canadian Lender's
Pro Rata Share of the Canadian Facility; provided, however, the Canadian Lenders
shall have no obligation to the Canadian Agent with respect to the matters
indemnified pursuant to this Section 12.05(b) resulting from the willful
misconduct or gross negligence of the Canadian Agent, as determined in a
judgment by a court of competent jurisdiction. The obligations of the Canadian
Lenders under this Section 12.05(b) shall survive the Payment In Full of the
Loans, the Reimbursement Obligations and all other Obligations and the
termination hereof.
12.06. Citicorp and Citibank Canada Individually. With respect to
their respective Pro Rata Shares of the Revolving Credit Commitments hereunder,
if any, and the Loans made by it, if any, each of Citicorp and Citibank Canada
shall have and may exercise the same rights and powers hereunder and are subject
to the same obligations and liabilities as and to the extent set forth herein
for any other Lender under the applicable Credit
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Facility. The terms "Lenders", "U.S. Lenders" or "Requisite Lenders" or any
similar terms shall, unless the context clearly otherwise indicates, include
Citicorp in its individual capacity as a Lender, a U.S. Lender or as one of the
Requisite Lenders. The terms "Lenders", "Canadian Lenders" or "Requisite
Lenders" or any similar terms shall, unless the context clearly otherwise
indicates, include Citibank Canada in its individual capacity as a Lender, a
Canadian Lender or as one of the Requisite Lenders. Each of Citicorp, Citibank
Canada and their respective Affiliates may accept deposits from, lend money to,
and generally engage in any kind of banking, trust or other business with the
Company or any of its Subsidiaries as if Citicorp were not acting as Agent and
Citibank Canada were not acting as Canadian Agent pursuant hereto.
12.07. Successor Agents; Resignation of Agents. (a) Resignation. The
Agent may resign from the performance of its functions and duties hereunder at
any time by giving at least thirty (30) Business Days' prior written notice to
the Company and the Lenders. Any resignation by the Agent shall be deemed to be
a resignation by the Canadian Agent. The resignation of the Agent and the
Canadian Agent shall take effect upon the acceptance by a successor Agent and
Canadian Agent of appointment pursuant to this Section 12.07.
(b) Appointment by Requisite Lenders. Upon any such notice of
resignation by the Agent, the Requisite Lenders shall have the right to appoint
a successor Agent and Canadian Agent selected from among the U.S. Lenders and
Canadian Lenders, respectively, which appointment shall be subject to the prior
written approval of the Company (which may not be unreasonably withheld, and
shall not be required upon the occurrence and during the continuance of an Event
of Default). Any successor Agent (or an Affiliate thereof) must also be the
Canadian Agent.
(c) Appointment by Retiring Agent. If a successor Agent and Canadian
Agent shall not have been appointed within the thirty (30) Business Day period
provided in paragraph (a) of this Section 12.07, the retiring Agent and Canadian
Agent, with the consent of the Company (which may not be unreasonably withheld,
and shall not be required upon the occurrence and during the continuance of an
Event of Default), shall then appoint a successor Agent and Canadian Agent who
shall serve as Agent and Canadian Agent, respectively, until such time, if any,
as the Requisite Lenders appoint a successor Agent and Canadian Agent as
provided above.
(d) Rights of the Successor and Retiring Agents. Upon the acceptance
of any appointment as Agent or Canadian Agent hereunder by a successor Agent or
Canadian Agent, such successor Agent and Canadian Agent shall thereupon succeed
to and become vested with all the rights, powers, privileges and duties of the
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retiring Agent and Canadian Agent, respectively, and each of the retiring Agent
and Canadian Agent shall be discharged from its duties and obligations hereunder
thereafter to be performed. After the resignation of any Agent or Canadian Agent
hereunder, the provisions of this Article XII shall inure to such Persons'
benefit as to any actions taken or omitted to be taken by it while it was the
Agent or the Canadian Agent, as applicable, hereunder.
12.08. Relations Among Lenders. Each Lender and each Issuing Bank
agrees that it shall not take any legal action, nor institute any actions or
proceedings, against Holdings, the Company or any other obligor hereunder or
with respect to any Collateral without the prior written consent of the
Requisite Lenders. Without limiting the generality of the foregoing, no Lender
may accelerate or otherwise enforce its portion of the Obligations, or terminate
its Revolving Credit Commitments except in accordance with Section 11.02(a) or a
setoff permitted under Section 13.05.
12.09. Concerning the Collateral and the Loan Documents. (a)
Protective Advances. The Agent, with respect to the Domestic Borrowers and the
Multicurrency Borrower, and the Canadian Agent, with respect to the Canadian
Borrower, may from time to time, after the occurrence and during the continuance
of an Event of Default, make such disbursements and advances to or for the
account of any such Borrower pursuant to the Loan Documents which the Agent or
the Canadian Agent, as applicable, in its sole discretion, deems necessary or
desirable to preserve or protect the Collateral under the applicable Credit
Facility or any portion thereof or, to the extent such advance is consented to
by such Borrower, to enhance the likelihood or maximize the amount of repayment
of the Loans and other Obligations up to an amount, in each case not in excess
of the lesser of the Revolving Credit Availability under such Credit Facility at
such time and (i) $1,000,000 in the aggregate for all Credit Facilities with
respect to advances made by the Agent or the Canadian Agent without such
Borrower's consent or (ii) $5,000,000 in the aggregate for all Credit Facilities
with respect to advances made by the Agent or the Canadian Agent with the
consent of such Borrower ("Protective Advances"). The Agent or the Canadian
Agent, as applicable, shall notify the Company and each Lender in writing of
each such Protective Advance, which notice shall include a description of the
purpose of such Protective Advance. The Borrowers (other than the Canadian
Borrower) jointly and severally agree to pay the Agent, upon demand, the
principal amount of all outstanding Protective Advances under the U.S. Facility
and/or the Multicurrency Facility, together with interest thereon at the rate
from time to time applicable to Floating Rate Loans under such Credit Facility
from the date of such Protective Advance until the outstanding principal balance
thereof is paid in full. The Canadian Borrower agrees to pay the
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Canadian Agent, upon demand, the principal amount of all outstanding Protective
Advances under the Canadian Facility, together with interest thereon at the rate
from time to time applicable to the Canadian Loans from the date of such
Protective Advance until the outstanding principal balance thereof is paid in
full. If the applicable Borrower(s) fail to make payment in respect of any
Protective Advance within one (1) Business Day after the date the Company
receives written demand therefor from the Agent or the Canadian Agent, as the
case may be, the Agent or the Canadian Agent shall promptly notify each Lender
under the applicable Credit Facility and such Lender agrees that it shall
thereupon make available to the Agent, in Dollars or Canadian Dollars, as
applicable, in immediately available funds, the amount equal to such Lender's
Pro Rata Share under the applicable Credit Facility of such Protective Advance.
If such funds are not made available to the Agent or the Canadian Agent, as
applicable, by such Lender within one (1) Business Day after the Agent's or
Canadian Agent's demand therefor, the Agent or the Canadian Agent shall be
entitled to recover any such amount from such Lender together with interest
thereon at the Interbank Rate for each day during the period commencing on the
date of such demand and ending on the date such amount is received. The failure
of any Lender to make available to the Agent or the Canadian Agent such Pro Rata
Share of any such Protective Advance shall neither relieve any other Lender of
its obligation hereunder to make available to the Agent or the Canadian Agent
such other Lender's Pro Rata Share under the applicable Credit Facility of such
Protective Advance on the date such payment is to be made nor increase the
obligation of any other Lender to make such payment to the Agent or the Canadian
Agent. All outstanding principal of, and interest on, Protective Advances shall
constitute Obligations secured by the Collateral until paid in full by the
applicable Borrower(s).
(b) Authority. Each Lender and each Issuing Bank authorizes and
directs the Agent to enter into the Loan Documents relating to the Collateral
for the benefit of the Lenders and the Issuing Banks. Each Canadian Lender and
each Issuing Bank under the Canadian Facility authorizes and directs the
Canadian Agent to enter into the Loan Documents relating to the Collateral for
the benefit of the Canadian Lenders and the Canadian Issuing Banks. Each Lender
and each Issuing Bank agrees that any action taken by the Agent, the Canadian
Agent or the Requisite Lenders (or, where required by the express terms hereof,
a different proportion of the Lenders) in accordance with the provisions hereof
or of the other Loan Documents, and the exercise by the Agent, the Canadian
Agent or the Requisite Lenders (or, where so required, such different
proportion) of the powers set forth herein or therein, together with such other
powers as are reasonably incidental thereto, shall be authorized and binding
upon all of the Lenders and Issuing Banks. Without limiting the generality of
the foregoing, the Agent and the Canadian Agent, as
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to any applicable Credit Facility, shall have the sole and exclusive right and
authority to (i) act as the disbursing and collecting agent for the Lenders and
the Issuing Banks under such Credit Facility with respect to all payments and
collections arising in connection herewith and with the Loan Documents relating
to the Collateral; (ii) execute and deliver each Loan Document relating to the
Collateral and accept delivery of each such agreement delivered by Holdings, the
Company or any of the Company's Subsidiaries; (iii) act as collateral agent for
the Lenders and the Issuing Banks for purposes of the perfection of all security
interests and Liens created by such agreements and all other purposes stated
therein, provided, however, the Agent hereby appoints, authorizes and directs
each Lender and each Issuing Bank, and the Canadian Agent hereby appoints,
authorizes and directs each Canadian Lender and each Canadian Issuing Bank, to
act as collateral sub-agent for the Agent, the Lenders and the Issuing Banks and
the Canadian Agent, the Canadian Lenders and the Canadian Issuing Banks,
respectively, for purposes of the perfection of all security interests and Liens
with respect to Holdings', the Company's and the Company's Subsidiaries'
respective deposit accounts maintained with, and cash and Cash Equivalents held
by, such Lender or such Issuing Bank; (iv) manage, supervise and otherwise deal
with the Collateral; (v) take such action as is necessary or desirable to
maintain the perfection and priority of the security interests and Liens created
or purported to be created by the Loan Documents; and
(vi) except as may be otherwise specifically restricted by the terms hereof or
of any other Loan Document, exercise all remedies given to the Agent, the
Canadian Agent, the Lenders or the Issuing Banks with respect to the Collateral
under the Loan Documents relating thereto, applicable law or otherwise.
(c) Release of Collateral. (i) Each of the Agent, the Lenders and
the Issuing Banks hereby directs the Agent to release any Lien held by the Agent
for the benefit of the Agent, the Lenders, the Issuing Banks and the other
Holders and each of the Canadian Agent, the Canadian Lenders and the Canadian
Issuing Banks hereby directs the Canadian Agent to release any Lien held by the
Canadian Agent for the benefit of the Canadian Agent, the Canadian Lenders, the
Canadian Issuing Banks and the other Holders under the Canadian Facility:
(A) against all of the Collateral, upon final Payment In Full of the
Obligations and termination of the Revolving Credit Commitments; and
(B) against any part of the Collateral sold or disposed of by the
Company or any of its Subsidiaries, if such sale or disposition is
permitted by Section 3.05, 9.02 or 9.06 (or permitted pursuant to a waiver
or consent of a transaction otherwise prohibited by such Section) or, if
not pursuant to such sale or disposition, against any part of
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the Collateral, if such release is consented to by Lenders whose aggregate
Pro Rata Shares under all Credit Facilities, in the aggregate, are equal
to 100%.
(ii) Each of the Lenders and the Issuing Banks hereby directs the
Agent, and each of the Canadian Lenders and Canadian the Issuing Banks hereby
directs the Canadian Agent, to execute and deliver or file such termination and
partial release statements and do such other things as are necessary to release
Liens to be released pursuant to this Section 12.09(c) promptly upon the
effectiveness of any such release.
(iii) Each of the Lenders and the Issuing Banks hereby direct the
Agent (and hereby agree on their own behalf) to take all actions reasonably
requested by the Company to give effect to the Permitted Receivables Financing
Program (after the satisfaction of any approval requirements hereunder with
respect thereto), including, without limitation, the release of the Lien on the
Receivables sold pursuant thereto (it being understood and agreed that the
proceeds of the initial sale thereunder shall constitute part of the
Collateral).
(d) Confirmation by Lenders. Without in any manner limiting the
Agent's or Canadian Agent's authority to act without any specific or further
authorization or consent by the applicable Lenders (as set forth in subsection
(c) above), each Lender agrees to confirm in writing, upon request by the
Company, the authority to release Collateral conferred upon the Agent under
clauses (A) and (B) of subsection (c)(i) above. Upon receipt by the Agent or the
Canadian Agent of any such written confirmation from the Lenders or the Canadian
Lenders, as applicable, of such Person's authority to release any particular
items or types of Collateral and upon at least five (5) Business Days' prior
written request by the Company or the Canadian Borrower, the Agent or the
Canadian Agent, as applicable, shall (and is hereby irrevocably authorized by
the applicable Lenders to) execute such documents as may be necessary to
evidence the release of the Liens upon such Collateral granted to the Agent for
the benefit of Agent, the Lenders, the Issuing Banks and the other Holders or to
the Canadian Agent for the benefit of the Canadian Agent, the Canadian Lenders
and the Issuing Banks and the other Holders under the Canadian Facility;
provided, however, that (i) neither the Agent nor the Canadian Agent shall be
required to execute any such document on terms which, in such Person's opinion,
would expose such Person to liability or create any obligation other than the
release of such Liens without recourse or warranty, and (ii) such release shall
not in any manner discharge, affect or impair the Obligations or any Liens upon
(or obligations of Holdings, the Company or any of the Company's Subsidiaries in
respect of) assets which continue to constitute Collateral, including, without
limitation, all reversionary rights of Holdings, the Company or any Subsidiary
of
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the Company with respect to the released Collateral and the proceeds of any
sale, all of which shall continue to constitute part of the Collateral.
(e) No Obligation. The Agent and the Canadian Agent shall not have
any obligation whatsoever to any Lender or to any other Person to assure that
the Collateral exists or is owned by Holdings, the Company or any of the
Company's Subsidiaries or is cared for, protected or insured or has been
encumbered or that the Liens granted to the Agent and the Canadian Agent herein
or pursuant to the Loan Documents have been properly or sufficiently or lawfully
created, perfected, protected or enforced or are entitled to any particular
priority, or to exercise at all or in any particular manner or under any duty of
care, disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to the Agent and the Canadian Agent
in this Section 12.09 or in any of the Loan Documents, it being understood and
agreed that in respect of the Collateral, or any act, omission or event related
thereto, the Agent and the Canadian Agent may act in any manner it may deem
appropriate, in its sole discretion, given the Agent's or the Canadian Agent's
own interests in the Collateral as one of the Lenders and that the Agent and the
Canadian Agent shall not have any duty or liability whatsoever to any Lender,
any Issuing Bank or any other Holder.
ARTICLE XIII
MISCELLANEOUS
13.01. Assignments. (a) Assignments. No assignments or
participations of any Lender's rights or obligations hereunder shall be made
except in accordance with this Section 13.01. Each Lender may assign to one or
more Eligible Assignees all or a portion of its rights and obligations hereunder
(including all of its rights and obligations with respect to the Revolving Loans
and the Letters of Credit) in accordance with the provisions of this Section
13.01.
(b) Limitations on Assignments. Each assignment by a Lender shall be
subject to the following conditions: (i) each assignment (other than to a Lender
or an Affiliate of a Lender) shall be approved by the Agent and the Company,
which approval shall not be unreasonably withheld or delayed; (ii) each such
assignment shall be to an Eligible Assignee (and, if applicable in the case of
an assignment of a Lender's Multicurrency Commitment or Canadian Commitment,
such Eligible Assignee's Affiliates) and in the case of an assignment of a
Lender's Canadian Commitment or Multicurrency Commitment, the Agent shall be
satisfied with such assignee's (or its Affiliates') ability to fund in Canadian
Dollars or the Optional Currencies, as the case may be; (iii) each assignment of
a Lender's Revolving Credit
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Commitment shall be an assignment of the assigning Lender's (and, where
applicable, its Affiliates') Revolving Credit Commitments in each Credit
Facility in which such Lender (and, if applicable, its Affiliates) then hold
Revolving Credit Commitments and shall be allocated to such Credit Facilities as
determined by such Lender (and, if applicable, its Affiliates) and consented to
by the Agent; (iv) each assignment shall be in an amount such that, after giving
effect to such assignment, the Eligible Assignee (and, if applicable, its
Affiliates) shall hold aggregate Revolving Credit Commitments in an amount at
least equal to $20,000,000 (provided, that after the inception of the Permitted
Receivables Financing Program such assignment shall at least equal $10,000,000
and provided, further, that more than one Lender (and, if applicable, its
Affiliates) may be the assigning Lender under any such assignment) except if the
Eligible Assignee is a Lender or an Affiliate of Lender or if such assignment
shall constitute all the assigning Lender's interest hereunder; and (iv) the
parties to each such assignment shall execute and deliver to the Agent, for its
acceptance and recording in the Register, an Assignment and Acceptance. Upon
such execution, delivery, acceptance and recording in the Register, from and
after the effective date specified in each Assignment and Accep tance and agreed
to by the Agent and the Company, (x) the assignee thereunder shall, in addition
to any rights and obligations hereunder held by it immediately prior to such
effective date, if any, have the rights and obligations hereunder that have been
assigned to it pursuant to such Assignment and Acceptance and shall, to the
fullest extent permitted by law, have the same rights and benefits hereunder as
if it were an original Lender hereunder and (y) the assigning Lender shall, to
the extent that rights and obligations hereunder have been assigned by it
pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations hereunder (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of such assigning Lender's
rights and obligations hereunder, the assigning Lender shall cease to be a party
hereto).
(c) The Register. The Agent shall maintain at its address in effect
pursuant to Section 13.08 a copy of each Assignment and Acceptance delivered to
and accepted by it and a register (the "Register") for the recordation of the
names and addresses of the Lenders and the Revolving Credit Commitments of the
Lenders under each Credit Facility, the principal amount of the Loans under each
Credit Facility owing to each Lender from time to time and whether such Lender
is an original Lender or the assignee of another Lender pursuant to an
Assignment and Acceptance. The Register shall include an account for each
Lender, in which accounts (taken together) shall be recorded (i) the date and
amount of each Borrowing made hereunder, (ii) the effective date and amount of
each Assignment and Accept ance delivered to and accepted by it and the parties
thereto,
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(iii) the amount of any principal or interest due and payable or to become due
and payable from each Borrower to each Lender hereunder or under the Notes, and
(iv) the amount of any sum received by the Agent from Holdings, the Company or
any Subsidiary Guarantor hereunder and each Lender's share thereof. The Agent
shall deliver a statement of such account to the Company whenever an Assignment
and Acceptance is accepted by it and the parties hereto and at such other times
as may be reasonably requested by the Company; provided, however, the Agent
shall not be obligated to deliver such statement more frequently than once a
month. Each such statement shall be deemed final, binding and conclusive upon
the Borrowers in all respects as to all matters reflected therein (absent
manifest error) unless the Company, within sixty (60) days after the end of any
Fiscal Year, delivers to the Agent written notice of any objections which the
Company may have to any such statement covering any time period during such
Fiscal Year. In that event, only those items expressly objected to in such
notice shall be deemed to be disputed by the Company. The entries in the
Register shall be conclusive and binding for all purposes, absent manifest
error, and the Company and each of its Subsidiaries, the Agent and the Lenders
may treat each Person whose name is recorded in the Register as a Lender
hereunder for all purposes hereof. The Register shall be available for
inspection by the Company or any Lender at any reasonable time and from time to
time upon reasonable prior notice.
(d) Fee. Upon its receipt of an Assignment and Acceptance executed
by the assigning Lender and an Eligible Assignee and (unless waived by the
Agent) a processing and recordation fee of $5,000 (payable by the assigning
Lender or the assignee, as shall be agreed between them), the Agent shall, if
such Assignment and Acceptance has been completed and is in compliance herewith
and in substantially the form of Exhibit A hereto, (i) accept such Assignment
and Acceptance (together with the Company), (ii) record the information
contained therein in the Register and (iii) give prompt notice thereof to the
Company and the other Lenders.
(e) Information Regarding the Company. Any Lender may, in connection
with any assignment or proposed assignment pursuant to this Section 13.01,
disclose to the assignee or proposed assignee any information relating to
Holdings, the Company or any of the Company's Subsidiaries furnished to such
Lender by the Agent or by or on behalf of Holdings or the Company; provided
that, prior to any such disclosure, such assignee or proposed assignee shall
agree (for the Company's benefit) to preserve in accordance with Section 13.20
the confidentiality of any confidential information described therein.
(f) Lenders' Creation of Security Interests.
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Notwithstanding any other provision set forth herein, any Lender may at any time
create a security interest in all or any portion of its rights hereunder
(including, without limitation, Obligations owing to it and Notes held by it) in
favor of any Federal Reserve bank in accordance with Regulation A; provided,
however, such assignment shall not release such assigning Lender from any of its
obligations hereunder.
(g) Assignments by an Issuing Bank. If any Issuing Bank (or its
Affiliate) ceases to be a Lender hereunder by virtue of any assignment made
pursuant to this Section 13.01 and another Issuing Bank is obligated to Issue
Letters of Credit or will become so obligated after such assignment becomes
effective, then, as of the effective date of such cessation, such Issuing Bank's
obligations to Issue Letters of Credit pursuant to Section 2.02 shall terminate
and such Issuing Bank shall be an Issuing Bank hereunder only with respect to
outstanding Letters of Credit Issued prior to such date.
(h) Participations. Each Lender may sell participations to one or
more other financial institutions in or to all or a portion of its rights and
obligations under and in respect of any and all facilities hereunder (including,
without limitation, all or a portion of any or all of its Revolving Credit
Commitments hereunder and the Loans owing to it and its undivided interest in
the Letters of Credit); provided, however, that (i) such Lender's obligations
hereunder (including, without limitation, its Revolving Credit Commitments
hereunder) shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) Holdings, the Borrowers, the Agent and the other Lenders shall continue to
deal solely and directly with such Lender in connection with such Lender's
rights and obligations hereunder and (iv) such participant's rights to agree or
to restrict such Lender's ability to agree to the modification, waiver or
release of any of the terms of the Loan Documents or to the release of any
Collateral covered by the Loan Documents, to consent to any action or failure to
act by any party to any of the Loan Documents or any of their respective
Subsidiaries or Affiliates, or to exercise or refrain from exercising any powers
or rights which any Lender may have under or in respect of the Loan Documents or
any Collateral, shall be limited to the right to consent to (A) reduction of the
principal of, or rate or amount of interest on the Loans(s) subject to such
participation (other than by the payment or prepayment thereof), (B)
postponement of any scheduled date for any payment of principal of, or interest
on, the Loan(s) subject to such participation (except with respect to any
modifications of the applicable provisions relating to the prepayments of Loans
and other Obligations) and (C) release of any guarantor of the Obligations or
all or any substantial portion of the Collateral except for any such release
provided in Section 12.09(c). No
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holder of a participation in all or any part of the Loans shall be a "Lender" or
a "Holder" for any purposes hereunder by reason of such participation; provided,
however, that each holder of a participation shall have the rights and
obligations of a Lender (including any right to receive payment) under Sections
3.03, 3.04, 4.01(f), 4.02(d), 4.02(f), 12.05, 13.02 and 13.05; provided,
however, that all requests for any payments pursuant to such Sections shall be
made by a participant through the Lender granting such participation. The right
of each holder of a participation to receive payment under Sections 3.03, 3.04,
4.01(f), 4.02(d), 4.02(f), 12.05, 13.02 and 13.05 shall be limited to the lesser
of (i) the amounts actually incurred by such holder for which payment is
provided under said Sections and (ii) the amounts that would have been payable
under said Sections by the Borrowers to the Lender granting the participation in
respect of the participated interest to such holder had such participation not
been granted. The Lender shall promptly notify the Agent of the identity of any
holder of a participation.
(i) Payment to Participants. Anything herein to the contrary
notwithstanding, in the case of any participation, all amounts payable by the
Borrowers under the Loan Documents shall be calculated and made in the manner
and to the parties required hereby as if no such participation had been sold.
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13.02. Expenses.
(a) Generally. The Borrowers (other than the Canadian Borrower,
which so agrees to pay or reimburse the Canadian Agent with respect to the
Canadian Facility) jointly and severally agree upon demand to pay, or reimburse
the Agent for, all of the Agent's reasonable internal and external audit, legal,
appraisal, valuation, filing, document duplication and reproduction and
investigation expenses and for all other reasonable out-of-pocket costs and
expenses of every type and nature (including, without limitation, the reasonable
fees, expenses and disbursements of the Agent's counsel, Sidley & Austin, local
legal counsel, auditors, accountants, appraisers, printers, insurance and
environmental advisers, and other consultants and agents), incurred by the Agent
in connection with (A) the Agent's audit and investigation of the Company and
the Company's Subsidiaries in connection with the preparation, negotiation, and
execution of the Loan Documents and the Agent's periodic audits of the Company
or the Company's Subsidiaries; (B) the preparation, negotiation, execution and
interpretation hereof (including, without limitation, the satisfaction or
attempted satisfaction of any of the conditions set forth in Article V), the
other Loan Documents and any proposal letter or commitment letter issued in
connection therewith and the making of the Loans hereunder; (C) the cre ation,
perfection or protection of the Liens under the Loan Documents (including,
without limitation, any reasonable fees and expenses for local counsel in
various jurisdictions); (D) the ongoing administration hereof and of the Loans,
including consultation with attorneys in connection therewith and with respect
to the Agent's rights and responsibilities hereunder and under the other Loan
Documents; (E) the protection, collection or enforcement of any of the
Obligations or the enforcement of any of the Loan Documents; (F) the
commencement, defense or intervention in any court proceeding relating in any
way to the Obligations, the Property, Holdings, the Company, any of the
Company's Subsidiaries, this Agreement or any of the other Loan Documents; (G)
the response to, and preparation for, any subpoena or request for document
production with which the Agent is served or deposition or other proceeding in
which the Agent is called to testify, in each case, relating in any way to the
Obligations, the Property, Holdings, the Company, any of the Company's
Subsidiaries, this Agreement or any of the other Loan Documents; and (H) any
amendments, consents, waivers, assignments, restatements, or supplements to any
of the Loan Documents and the preparation, negotiation, and execution of the
same.
(b) After Default. The Borrowers (other than the Canadian Borrower,
which so agrees to pay or reimburse the Canadian Agent, the Canadian Lenders and
the Canadian Issuing Banks with respect to the Canadian Facility) further
jointly and severally agree to pay or reimburse the Agent, the Issuing Banks
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and the Lenders, within five (5) Business Days after such Person's informing
such Borrower(s) thereof in writing accompanied by a copy of a related invoice
or similar statement in reasonable detail and reasonably detailed supporting
information with respect thereto, for all reasonable out-of-pocket costs and
expenses, including, without limitation, reasonable attorneys' fees, incurred by
the Agent, any Issuing Bank or any Lender (i) in enforcing any Loan Document or
Obligation or any security therefor or exercising or enforcing any other right
or remedy available by reason of any Event of Default; (ii) in connection with
any refinancing or restructuring of the credit arrangements provided hereunder
in the nature of a "work-out" or in any insolvency or bankruptcy proceeding;
(iii) in commencing, defending or intervening in any litigation or in filing a
petition, complaint, answer, motion or other pleadings in any legal proceeding
relating to the Obligations, the Property, Holdings, the Company or any of the
Company's Subsidiaries and related to or arising out of the transactions
contemplated hereby or by any of the other Loan Documents; and (iv) in taking
any other action in or with respect to any suit or proceeding (bankruptcy or
otherwise) described in clauses (i) through (iii) above.
13.03. Indemnity. (a) The Borrowers (other than the Canadian
Borrower) further jointly and severally agree to defend, protect, indemnify, and
hold harmless the Agent and each and all of the Lenders and Issuing Banks and
each of their respective Affiliates, and each of such Agent's, Lender's, Issuing
Bank's or Affiliate's respective officers, directors, employees, attorneys and
agents (including, without limitation, those retained in connection with the
satisfaction or attempted satisfaction of any of the conditions set forth in
Article V) (collectively, the "Indemnitees") and (b) the Canadian Borrower
further agrees to defend, protect, indemnify, and hold harmless the Canadian
Agent and each and all of the Canadian Lenders and Canadian Issuing Banks and
each of their respective Canadian Affiliates, and each of such Canadian Agent's,
Canadian Lender's, Canadian Issuing Bank's or Affiliate's respective officers,
directors, employees, attorneys and agents (including, without limitation, those
retained in connection with the satisfaction or attempted satisfaction of any of
the conditions set forth in Article V) (collectively, the "Canadian
Indemnitees"), in each case from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims,
costs, expenses and disbursements of any kind or nature whatsoever (including,
with out limitation, the reasonable fees and disbursements of counsel for such
Indemnitees or Canadian Indemnitees, as applicable, in connection with any
investigative, administrative or judicial proceeding, whether or not such
Indemnitees or Canadian Indemnitees, as applicable, shall be designated a party
thereto), imposed on, incurred by, or asserted against such Indemnitees or
Canadian Indemnitees, as applicable, in any manner relating to or
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arising out of or in connection with (a) this Agreement, the other Loan
Documents, any of the other Transaction Documents or any act, event or
transaction related or attendant thereto, whether or not any such Indemnitee or
Canadian Indemnitee is a party thereto and whether or not such transactions are
consummated, the making of the Loans, the issuance of and participation in
Letters of Credit hereunder, the management of such Loans or Letters of Credit,
the use or intended use of the proceeds of the Loans or Letters of Credit
hereunder, the execution, delivery and/or performance of Currency Agreements or
Interest Rate Contracts, or any of the other transactions contemplated by the
Transaction Documents, or (b) any Liabilities and Costs under Environmental,
Health or Safety Requirements of Law arising from or in connection with the
past, present or future operations of Holdings, the Company, the Company's
Subsidiaries or any of their respective predecessors in interest, or, the past,
present or future environmental, health or safety condition of any respective
Property of Holdings, the Company or the Company's Subsidiaries, the presence of
asbestos-containing materials or suspected asbestos-containing materials at any
respective Property of Holdings, the Company or such Subsidiaries or the Release
or threatened Release of any Contaminant into the environment (collectively, the
"Indemnified Matters"); provided, however, the Borrowers shall have no
obligation to an Indemnitee or a Canadian Indemnitee, as applicable, hereunder
with respect to Indemnified Matters resulting from the willful misconduct or
gross negligence of such Indemnitee or Canadian Indemnitee, as applicable, as
determined in a judgment by a court of competent jurisdiction. To the extent
that the undertaking to indemnify, pay and hold harmless set forth in the
preceding sentence may be unenforceable because it is violative of any law or
public policy, each applicable Borrower shall contribute the maximum portion
which it is permitted to pay and satisfy under applicable law, to the payment
and satisfaction of all Indemnified Matters incurred by the Indemnitees or the
Canadian Indemnitees, as applicable.
13.04. Change in Accounting Principles. If any change in the
accounting principles used in the preparation of the most recent financial
statements referred to in the definition of "GAAP" contained in Section 1.01 is
hereafter required or permitted by the rules, regulations, pronouncements and
opinions of the Financial Accounting Standards Board or the American Institute
of Certified Public Accountants (or successors thereto or agencies with similar
functions) and are adopted by the Company with the agreement of its independent
certified public accountants and such change results in a change in the method
of calculation of any of the covenants, standards or terms found in Article IX
and Article X, the parties hereto agree to enter into negotiations in order to
amend such provisions so as to equitably reflect such change with the desired
result that the criteria for evaluating compliance with such covenants,
standards and terms by
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the Company shall be the same after such change as if such change had not been
made; provided, however, no change in GAAP that would affect the method of
calculation of any of the covenants, standards or terms shall be given effect in
such calculations until such provisions are amended, in a manner satisfactory to
the Requisite Lenders and the Company, so to reflect such change in accounting
principles.
13.05. Setoff. In addition to any Liens granted under the Loan
Documents and any rights now or hereafter granted under applicable law, upon the
occurrence and during the continuance of any Event of Default, each Lender, each
Issuing Bank and any Affiliate of any Lender or Issuing Bank is hereby
authorized by each Borrower at any time or from time to time, without notice to
any Person (any such notice being hereby expressly waived) to combine accounts
or to set off and to appropriate and to apply any and all deposits (general or
special, including, but not limited to, indebtedness evidenced by certificates
of deposit, whether matured or unmatured (but not including trust accounts)) and
any other Indebtedness at any time held or owing by such Lender, Issuing Bank or
any of their Affiliates to or for the credit or the account of such Borrower
against and on account of the Obligations of any Borrowers to such Lender,
Issuing Bank or any of their Affiliates, including, but not limited to, all
Loans and Letters of Credit and all claims of any nature or description arising
out of or in connection herewith, irrespective of whether or not (i) such Lender
or Issuing Bank shall have made any demand hereunder or (ii) the Agent, at the
request or with the consent of the Requisite Lenders, shall have declared the
principal of and interest on the Loans and other amounts due hereunder to be due
and payable as permitted by Article XI and even though such Obligations may be
contingent or unmatured. Each Lender shall give the Company notice of any action
taken pursuant to this Section 13.05 promptly upon the occurrence thereof
provided that any failure to do so shall not limit any right of a Lender to take
such action.
13.06. Ratable Sharing. The Lenders and the Issuing Banks agree
among themselves that, except as otherwise expressly provided in any Loan
Document, (i) with respect to all amounts received by a U.S. Lender or a U.S.
Issuing Bank, a Multicurrency Lender, a Canadian Lender or a Canadian Issuing
Bank, as the case may be, which are applicable to the payment of the Obligations
(excluding (x) the fees described in Sections 2.02(g), 3.03, 3.04, 4.01(f) and
4.02 and (y) and amounts so received in respect of Currency Agreements and/or
Interest Rate Contracts) equitable adjustment shall be made so that, in effect,
all such amounts shall be shared among them ratably in accordance with their Pro
Rata Shares, whether received by voluntary payment, by the exercise of the right
of setoff or banker's lien, by counterclaim or cross-action or by the
enforcement of any or all of such Obligations (excluding (x) the fees described
in Sections
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2.02(g), 3.03, 3.04, 4.01(f) and 4.02 and (y) and amounts so received in respect
of Currency Agreements and/or Interest Rate Contracts) or the Collateral, (ii)
if any of them shall by voluntary payment or by the exercise of any right of
counterclaim, setoff, banker's lien or otherwise, receive payment of a
proportion of the aggregate amount of such Obligations held by it which is
greater than the amount which such Lender is entitled to receive hereunder, the
Lender receiving such excess payment shall purchase, without recourse or
warranty, an undivided interest and participation (which it shall be deemed to
have done simultaneously upon the receipt of such payment) in such Obligations
owed to the others so that all such recoveries with respect to such Obligations
shall be applied ratably in accordance with their Pro Rata Shares; provided,
however, that if all or part of such excess payment received by the purchasing
party is thereafter recovered from it, those purchases shall be rescinded and
the purchase prices paid for such participation shall be returned to such party
to the extent necessary to adjust for such recovery, but without interest except
to the extent the purchasing party is required to pay interest in connection
with such recovery. Each Borrower agrees that any Lender so purchasing a
participation from another Lender pursuant to this Section 13.06 may, to the
fullest extent permitted by law, exercise all its rights of payment (including,
subject to Section 13.05, the right of setoff) with respect to such
participation as fully as if such Lender were the direct creditor of such
Borrower in the amount of such participation. The Agent, the Canadian Agent, the
Lenders and the Issuing Banks further agree and acknowledge that in no event
shall proceeds of the Collateral of the Canadian Borrower, more than sixty-five
percent (65%) of the Capital Stock of the Canadian Borrower or Pegasus Asia or
amounts received from the Canadian Borrower as described herein be shared with
any Lender or Issuing Bank for application on any of the Obligations other than
the Obligations of the Canadian Borrower.
13.07. Amendments and Waivers. (a) General Provisions. Unless
otherwise provided herein, no amendment or modification of any provision hereof
shall be effective without the written agreement of the Requisite Lenders and
the Company, and no termination or waiver of any provision hereof, or consent to
any departure by the Borrowers therefrom, shall be effective without the written
concurrence of the Requisite Lenders, which the Requisite Lenders shall have the
right to grant or withhold in their sole discretion.
(b) Amendments, Consents and Waivers by all Lenders. Notwithstanding
the foregoing, any amendment, modification, termination, waiver or consent with
respect to any of the following provisions hereof shall be effective only by a
written agreement, signed by the Company and each Lender:
(i) waiver of any of the conditions specified in
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Section 5.01 or 5.02 (except with respect to a condition based upon
another provision hereof, the waiver of which requires only the
concurrence of the Requisite Lenders),
(ii) increase in the amount of any of the Revolving Credit
Commitments of any Lender or any increase in the amount, or other
modification to the terms or components, of the Domestic Borrowing Base or
the Canadian Borrowing Base, (except with respect to (A) modifications
which may be made by the Agent in accordance with the definitions of
Canadian Borrowing Base and Domestic Borrowing Base or (B) the
reallocation of the Revolving Credit Commitments under Section 3.01(c)),
(iii) reduction of the principal of, rate or amount of interest on
the Loans or Reimbursement Obligations or any fees payable to any Lender,
(iv) except as provided in Section 11.02(c), extension of the
Revolving Credit Termination Date or postponement of any date on which any
payment of principal of, or interest on, the Loans or Reimbursement
Obligations or any fees payable to any Lender or Issuing Bank would
otherwise be due,
(v) release of any guarantor of the Obligations (except in
connection with the sale of all or substantially all of the Capital Stock
or Property of such guarantor or a merger of such guarantor into another
guarantor or into the Company, in each case approved by the Requisite
Lenders or otherwise permitted hereunder) or all or any portion of the
Collateral (except as provided in Section 12.09(c)),
(vi) change in the definition of Requisite Lenders, or
(vii) amendment of Sections 12.09(c), 13.02, 13.06 or this Section
13.07.
The Agent may, but shall have no obligation to, with the written
concurrence of any Lender, execute amendments, modifications, waivers or
consents on behalf of that Lender. Any waiver or consent shall be effective only
in the specific instance and for the specific purpose for which it was given. No
notice to or demand on any Borrower in any case shall entitle such Borrower to
any other or further notice or demand in similar or other circumstances.
Notwithstanding anything to the contrary contained in this Section 13.07, no
amendment, modification, waiver or consent shall affect the rights or duties of
the Agent hereunder or under the other Loan Documents, including this Article
XIII, unless made in writing and signed by the Agent so affected in addition to
the Lenders required above to take such action. Notwithstanding anything herein
to the contrary, in the
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event that a Borrower shall have requested, in writing, that any Lender agree to
an amendment, modification, waiver or consent with respect to any particular
provision or provisions hereof, and such Lender shall have failed to state, in
writing, that it either agrees or disagrees (in full or in part) with all such
requests (it being understood that any such statement of agree ment may be
subject to satisfactory documentation and other conditions specified in such
statement) within thirty (30) days of receipt of such request by such Lender,
then such Lender hereby irrevocably authorizes the Agent to agree or disagree,
in full or in part, and in the Agent's sole discretion, to such requests on
behalf of such Lender as such Lender's attorney-in-fact and to execute and
deliver any writing evidencing such agreement which has been delivered to such
Lender in connection with such request and approved by the Agent as such
Lender's duly authorized agent for such purposes. Furthermore, in the event that
any Lender fails to agree to any amendment, modification, waiver or consent
requiring the unanimous approval of the Lenders pursuant to Section 13.07(b), at
the joint request of any Borrower and the Agent, the Lenders who have so agreed
to such amendment, modification, waiver or consent shall have the right (but not
the obligation) to, or to cause an Eligible Assignee to, purchase from such
Lender (at the face amount thereof) all Revolving Loans, Letter of Credit
Obligations and Revolving Credit Commitments held by such Lender.
13.08. Notices. (a) Unless otherwise specifically provided herein,
any notice, consent or other communication herein required or permitted to be
given shall be in writing and may be personally served, telecopied, or sent by
courier service or the United States mails (or with respect to the Canadian
Borrower, the Canadian Agent, the Canadian Lenders and the Canadian Issuing
Banks, the Canadian mails) and shall be deemed to have been given (i) ten (10)
days following deposit in the United States mails (or with respect to the
Canadian Borrower, the Canadian Agent, the Canadian Lenders and the Canadian
Issuing Banks, the Canadian mails), with proper postage prepaid, (ii) upon
delivery thereof to a reputable overnight courier service, with delivery charges
prepaid, (iii) when delivered in person or (iv) upon confirmation of receipt of
a telecopy. Notices to the Agent or the Canadian Agent pursuant to Article II,
III or IV shall not be effective until received by the Agent. For the purposes
hereof, the addresses of the parties hereto (until notice of a change thereof is
delivered as provided in this Section 13.08) shall be as set forth below each
party's name on the signature pages hereof or the signature page of any
applicable Assignment and Acceptance, or, as to each party, at such other
address as may be designated by such party in a written notice to all of the
other parties hereto.
(b) The Borrowers (other than the Canadian Borrower, which so agrees
to indemnify and hold harmless the Canadian
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Indemnitees) jointly and severally agree to indemnify and hold harmless each
Indemnitee from and against any and all claims, damages, liabilities,
obligations, losses, penalties, actions, judgments, suits, costs, disbursements
and expenses of any kind or nature (including, without limitation, reasonable
fees and disbursements of counsel to any such Indemnitee) which may be imposed
on, incurred by or asserted against any such Indemnitee or Canadian Indemnitee,
as applicable, in any manner relating to or arising out of any action taken or
omitted by such Indemnitee or Canadian Indemnitee, as applicable, in good faith
in reliance on any notice or other written communication in the form of a
telecopy or facsimile purporting to be from a Borrower or Holdings; provided
that no Borrower shall have any obligation under this Section 13.08(b) to an
Indemnitee or Canadian Indemnitee, as applicable, with respect to any
indemnified matter caused by or resulting from the gross negligence or willful
misconduct of that Indemnitee or Canadian Indemnitee, as applicable, as
determined by a court of competent jurisdiction.
13.09. Survival of Warranties and Agreements. All representations
and warranties made herein and all obligations of the Borrowers and Holdings in
respect of taxes, indemnification and expense reimbursement shall survive the
execution and delivery hereof and of the other Loan Documents, the making and
repayment of the Loans, the issuance and discharge of Letters of Credit
hereunder and the termination of the Commitments hereunder and shall not be
limited in any way by the passage of time or occurrence of any event and shall
expressly cover time periods when the Agent, any of the Issuing Banks or any of
the Lenders may have come into possession or control of any of Holdings',the
Company's or the Company's Subsidiaries' Property.
13.10. Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of the Agent, any Lender or any Issuing Bank in the
exercise of any power, right or privilege under any of the Loan Documents shall
impair such power, right or privilege or be construed to be a waiver of any
default or acquiescence therein, nor shall any single or partial exercise of any
such power, right or privilege preclude other or further exercise thereof or of
any other right, power or privi lege. All rights and remedies existing under the
Loan Documents are cumulative to and not exclusive of any rights or remedies
otherwise available.
13.11. Marshalling; Payments Set Aside. None of the Agent, any
Lender or any Issuing Bank shall be under any obliga tion to marshall any assets
in favor of the Borrowers or any other party or against or in payment of any or
all of the Obliga tions. To the extent that a Borrower makes a payment or
payments to the Agent, the Lenders or the Issuing Banks or any of such Persons
receives payment from the proceeds of the Collateral or exercise their rights of
setoff, and such payment or payments or
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the proceeds of such enforcement or setoff or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to
be repaid to a trustee, receiver or any other party, then to the extent of such
recovery, the obligation or part thereof originally intended to be satisfied,
and all Liens, right and remedies therefor, shall be revived and continued in
full force and effect as if such payment had not been made or such enforcement
or setoff had not occurred.
13.12. Severability. In case any provision in or obligation
hereunder or under the other Loan Documents shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining provisions or obligations, or of such provision or obligation in
any other jurisdiction, shall not in any way be affected or impaired thereby.
13.13. Headings. Section headings herein are included herein for
convenience of reference only and shall not constitute a part hereof or be given
any substantive effect.
13.14. Governing Law. THIS AGREEMENT SHALL BE INTERPRETED, AND THE
RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED, IN ACCORDANCE WITH THE
LAW OF THE STATE OF NEW YORK.
13.15. Intercreditor Agreement. Each Lender and each Issuing Bank,
by executing this Agreement or the Assignment and Acceptance by which such
Person became a Lender or an Issuing Bank, and each Holder, by accepting the
benefits of the Loan Documents, hereby (a) consents to the terms of the
Intercreditor Agreement, (b) agrees to be bound by the terms thereof and (c)
directs the Agent, acting on behalf of the Agent, the Lenders, the Issuing Banks
and the Holders, to execute and deliver the Intercreditor Agreement.
13.16. Successors and Assigns. This Agreement and the other Loan
Documents shall be binding upon the parties hereto and their respective
successors and permitted assigns and shall inure to the benefit of the parties
hereto and the successors and permitted assigns of the Lenders and the Issuing
Banks. The rights hereunder and the interest herein of the Borrowers may not be
assigned without the written consent of all Lenders. Any attempted assignment
without such written consent shall be void.
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13.17. Certain Consents and Waivers.
(a) Personal Jurisdiction. (i) EACH OF THE AGENT, THE LENDERS, THE
ISSUING BANKS, HOLDINGS AND THE BORROWERS IRREVOCABLY AND UNCONDITIONALLY
SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF ANY
NEW YORK STATE COURT OR FEDERAL COURT SITTING IN NEW YORK, NEW YORK, AND ANY
COURT HAVING JURISDICTION OVER APPEALS OF MATTERS HEARD IN SUCH COURTS, IN ANY
ACTION OR PROCEEDING ARISING OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO
THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS AGREEMENT OR THE
OTHER LOAN DOCUMENTS, WHETHER ARISING IN CONTRACT, TORT, EQUITY OR OTHERWISE, OR
FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO
IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH
ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH STATE COURT OR, TO THE
EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH OF HOLDINGS AND THE
BORROWERS IRREVOCABLY DESIGNATES AND APPOINTS CT CORPORATION SYSTEM AT 1633
BROADWAY, NEW YORK, NEW YORK 10019, AS ITS PROCESS AGENT (THE "PROCESS AGENT")
FOR SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT, SUCH
SERVICE BEING HEREBY ACKNOWLEDGED TO BE EFFECTIVE AND BINDING SERVICE IN EVERY
RESPECT. EACH OF THE AGENT, THE LENDERS, THE ISSUING BANKS, HOLDINGS AND THE
BORROWERS AGREES THAT A FINAL NON-APPEALABLE JUDGMENT IN ANY SUCH ACTION OR
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. EACH OF HOLDINGS
AND THE BORROWERS WAIVES IN ALL DISPUTES ANY OBJECTION THAT IT MAY HAVE TO THE
LOCATION OF THE COURT CONSIDERING THE DISPUTE.
(ii) EACH OF HOLDINGS AND THE BORROWERS AGREES THAT THE AGENT SHALL
HAVE THE RIGHT TO PROCEED AGAINST SUCH PERSON OR ITS PROPERTY IN A COURT IN ANY
LOCATION TO ENABLE THE AGENT, THE ISSUING BANKS AND THE LENDERS TO REALIZE ON
THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A
JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF THE AGENT, ANY ISSUING BANK OR
ANY LENDER. EACH OF HOLDINGS AND THE BORROWERS WAIVES ANY OBJECTION THAT IT MAY
HAVE TO THE LOCATION OF THE COURT IN WHICH THE AGENT, ANY ISSUING BANK OR ANY
LENDER MAY COMMENCE A PROCEEDING DESCRIBED IN THIS SECTION.
(b) Service of Process. EACH OF HOLDINGS AND THE BORROWERS
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED
COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE PROCESS AGENT OR THE
RELEVANT BORROWER'S AND/OR HOLDINGS' NOTICE ADDRESS SPECIFIED PURSUANT TO
SECTION 13.08, SUCH SERVICE TO BECOME EFFECTIVE FIVE (5) DAYS AFTER SUCH
MAILING. EACH OF HOLDINGS AND THE BORROWERS IRREVOCABLY WAIVES ANY OBJECTION
(INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON
THE GROUNDS OF FORUM NON
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CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH
ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
IN ANY JURISDICTION SET FORTH ABOVE. NOTHING HEREIN SHALL AFFECT THE RIGHT TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF
THE AGENT TO BRING PROCEEDINGS AGAINST HOLDINGS AND/OR ANY BORROWER IN THE
COURTS OF ANY OTHER JURISDICTION.
(c) Waiver of Jury Trial. EACH OF THE AGENT, THE CANADIAN AGENT, THE
ISSUING BANKS, THE LENDERS, HOLDINGS AND THE BORROWERS WAIVES ANY RIGHT TO TRIAL
BY JURY IN ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, AMONG
ANY OF THE AGENT, THE CANADIAN AGENT, THE ISSUING BANKS, HOLDINGS OR THE
BORROWERS ARISING OUT OF OR RELATED TO THE TRANSACTIONS CONTEMPLATED BY
AGREEMENT OR ANY OTHER LOAN DOCUMENT. ANY SUCH PERSON MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF
THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
13.18. Counterparts; Effectiveness; Inconsistencies. This Agreement
and any amendments, waivers, consents, or supple ments hereto may be executed in
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument. This Agreement shall become effective against Holdings, the
Borrowers, each Lender, each Issuing Bank and the Agent on the date hereof. This
Agreement and each of the other Loan Documents shall be construed to the extent
reasonable to be consistent one with the other, but to the extent that the terms
and conditions hereof are actually inconsistent with the terms and conditions of
any other Loan Document, this Agreement shall govern.
13.19. Limitation on Agreements. All agreements between the
Borrowers, the Agent, each Lender and each Issuing Bank in the Loan Documents
are hereby expressly limited so that in no event shall any of the Loans or other
amounts payable by the Borrower under any of the Loan Documents be directly or
indirectly secured (within the meaning of Regulation U) by Margin Stock.
13.20. Confidentiality. Subject to Section 13.01(e), the Agent, the
Lenders and the Issuing Banks shall hold all nonpublic information obtained
pursuant to the requirements hereof and identified as such by the Company in
accordance with safe and sound banking practices and in any event may make
disclosure reasonably required by a bona fide offeree or assignee (or
participant) in connection with the contemplated transfer (or participation), or
as required or requested by any Governmental Authority or representative
thereof, or pursuant to legal process, or to its accountants, lawyers and other
advisors who shall be informed of the confidential nature of such information,
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and shall require any such offeree or assignee (or participant) to agree (and
require any of its offerees, assignees or participants to agree) to comply with
this Section 13.20. In no event shall the Agent, any Lender or any Issuing Bank
be obligated or required to return any materials furnished by the Company;
provided, however, each offeree shall be required to agree that if it does not
become an assignee (or participant) it shall return all materials furnished to
it by the Company in connection herewith. In the event the Agent or any Lender
or Issuing Bank is requested or required by law to disclose any of such
information, the Agent or such Lender or Issuing Bank agrees to will provide the
Company with prompt notice thereof; provided, however, the Agent or such Lender
or Issuing Bank may, without restriction hereunder, including the providing of
such notice, provide any and all of such information to any of the agencies or
other governmental entities which regularly regulate its ability to engage in
any of its businesses under state or federal law.
13.21. Judgment Currency. (a) If for the purposes of obtaining
judgment in any court it is necessary to convert a sum due hereunder or under
the Notes in any currency to another currency the parties hereto agree, to the
fullest extent that they may effectively do so, that the rate of exchange used
shall be the Spot Rate on the 2nd Business Day preceding that on which judgment
is given.
(b) The obligation of any Borrower in respect of any sum due in the
original currency from it to any Lender or the Agent hereunder or under any Note
held by such Lender shall, notwithstanding any judgment in any other currency,
be discharged only to the extent that on the Business Day following receipt by
such Lender or the Agent (as the case may be) of any sum adjudged to be so due
in such other currency such Lender or the Agent (as the case may be) may in
accordance with normal banking procedures purchase the original currency with
such other currency; if the amount of the original currency so purchased is less
than the sum originally due to such Lender or the Agent (as the case may be) in
the original currency, such Borrower agrees, as a separate obligation and
notwithstanding any such judgment, to indemnify such Lender or the Agent (as the
case may be) against such loss, and if the amount of the original currency so
purchased exceeds the sum originally due to any Lender or the Agent (as the case
may be) in the original currency, such Lender or the Agent (as the case may be)
agrees to remit to such Borrower such excess.
13.22. Entire Agreement. This Agreement, taken together with all of
the other Loan Documents embodies the entire agreement and understanding among
the parties hereto and supersedes the Letter Agreement (except for provisions
therein specifically referred to herein) and all prior agreements and
understandings, written and oral, relating to the subject matter hereof.
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<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly exe cuted as of the
date first above written.
H. MUEHLSTEIN & CO., INC.
By:________________________________
Name:
Title:
Notice Address:
H. Muehlstein & Co., Inc.
800 Connecticut Avenue
Norwalk, Connecticut 06856
Attention: Ronald J. Restivo
Chief Financial Officer
Telecopier No.: (203) 855-6293
Confirmation No.: (203) 855-6164
PEGASUS POLYMERS INTERNATIONAL INC.
By:________________________________
Name:
Title:
Notice Address:
c/o H. Muehlstein & Co., Inc.
800 Connecticut Avenue
Norwalk, Connecticut 06856
Attention: Ronald J. Restivo
Chief Financial Officer
Telecopier No.: (203) 855-6293
Confirmation No.: (203) 855-6164
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<PAGE>
MUEHLSTEIN INTERNATIONAL, LTD.
By:________________________________
Name:
Title:
Notice Address:
c/o H. Muehlstein & Co., Inc.
800 Connecticut Avenue
Norwalk, Connecticut 06856
Attention: Ronald J. Restivo
Chief Financial Officer
Telecopier No.: (203) 855-6293
Confirmation No.: (203) 855-6164
H. MUEHLSTEIN & CO. (CANADA) LIMITED
By:________________________________
Name:
Title:
Notice Address:
c/o H. Muehlstein & Co., Inc.
800 Connecticut Avenue
Norwalk, Connecticut 06856
Attention: Ronald J. Restivo
Chief Financial Officer
Telecopier No.: (203) 855-6293
Confirmation No.: (203) 855-6164
MUEHLSTEIN HOLDING CORPORATION
By:________________________________
Name:
Title:
Notice Address:
c/o H. Muehlstein & Co., Inc.
800 Connecticut Avenue
Norwalk, Connecticut 06856
Attention: Ronald J. Restivo
Chief Financial Officer
Telecopier No.: (203) 855-6293
Confirmation No.: (203) 855-6164
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<PAGE>
CITICORP USA, INC., as Agent and U.S.
Lender
By:________________________________
Name:
Title:
Notice Address, Domestic
and Fixed Rate Lending Offices:
Citicorp USA, Inc.
399 Park Avenue
6th Floor
New York, New York 10043
Attention: Keith R. Karako
Telecopier No.: (212) 793-1290
Confirmation No.: (212) 559-3149
CITIBANK, N.A., as Multicurrency Lender
and Issuing Bank
By:________________________________
Name:
Title:
Notice Address:
c/o Citicorp USA, Inc.
399 Park Avenue
6th Floor
New York, New York 10043
Attention: Keith R. Karako
Telecopier No.: (212) 793-1290
Confirmation No.: (212) 559-3149
Fixed Rate Lending Office:
Citibank, N.A.
Structured Finance Department
5th Floor
Cottons Centre
Hays Lane
London SE1 2QT England
Attention: Phillip Smith/Mary Lutton
Telecopier No.: 011-441-71-234-2398
Confirmation No.: 011-441-71-234-2391 or
-2392
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<PAGE>
CITIBANK CANADA, as Canadian Agent,
Canadian Lender and Canadian Issuing
Bank
By:________________________________
Name: Margaret E. Lambert
Title: Vice President
Corporate Finance
Notice Address and
Canadian Lending Office:
Citibank Canada
123 Front Street West
Toronto, Ontario, Canada M5J 2M3
Attention: Vice President
Corporate Finance
Telecopier No.: (416) 947-5802
Confirmation No.: (416) 947-5596
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<PAGE>
NATIONSBANK, N.A., as U.S. Lender and
Multicurrency Lender
By:________________________________
Name:
Title:
Notice Address:
NationsBank, N.A.
100 South Charles Street
Baltimore, Maryland 21201
Attention: ________________________
Telecopier No.: (410) ___________
Confirmation No.: (410) ___________
Domestic Lending Office:
___________________________________
___________________________________
___________________________________
Attention: _______________________
Telecopier No.: _________________
Confirmation No.: _________________
Fixed Rate Lending Office:
___________________________________
___________________________________
___________________________________
Attention: _______________________
Telecopier No.: _________________
Confirmation No.: _________________
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<PAGE>
HELLER FINANCIAL, INC., as U.S. Lender
By:________________________________
Name: Anne Kuchinski
Title: Vice President
Notice Address:
Heller Financial, Inc.
101 Park Avenue, 10th Floor
New York, New York 10178
Attention: Jeff Schumacher
Assistant Vice President
Telecopier No.: (212) 880-7002
Confirmation No.: (212) 880-7001
Domestic Lending Office:
Heller Financial, Inc.
Loan Administration
500 West Monroe Street, 18th Floor
Chicago, Illinois 60661
Attention: Audrey Crodgen
Assistant Vice President
Telecopier No.: (312) 441-7652
Confirmation No.: (312) 441-7502
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<PAGE>
ITEM 14
EXHIBIT 10.7
<PAGE>
EXECUTION COPY
FIRST AMENDMENT, CONSENT AND LIMITED WAIVER
TO
CREDIT AGREEMENT
THIS FIRST AMENDMENT AND CONSENT TO CREDIT AGREEMENT dated as of
August 23, 1996 (this "First Amendment") is entered into among Muehlstein
Holding Corporation, a Delaware corporation ("Holdings"), H. Muehlstein & Co.,
Inc., a New York corporation (the "Company"), Pegasus Polymers International
Inc., a Connecticut corporation ("Pegasus"), Muehlstein International, Ltd., a
New York corporation ("Muehlstein International"), H. Muehlstein & Co. (Canada)
Limited, an Ontario corporation (the "Canadian Borrower"; and together with the
Company, Pegasus and Muehlstein International, the "Borrowers"), the financial
institutions listed on the signature pages hereof (collectively referred to
herein, together with their respective successors and assigns, as the "Lenders"
and individually as a "Lender"), Citicorp USA, Inc., a Delaware corporation
("Citicorp"), in its capacity as agent for the Lenders and the "Issuing Banks"
(as defined in the Credit Agreement referred to below) (with its successors in
such capacity, the "Agent"), and Citibank Canada, a Canadian chartered bank
("Citibank Canada"), in its capacity as agent for the "Canadian Lenders" and the
"Canadian Issuing Banks" (in each case as defined in the Credit Agreement
referred to below) (with its successors in such capacity, the "Canadian Agent")
and relates to that certain Credit Agreement dated as of February 9, 1996 (as
supplemented or otherwise modified from time to time prior to the "First
Amendment Effective Date" (as defined in Section 2.1(i) below), the "Credit
Agreement"), among Holdings, the Borrowers, the Lenders, the Issuing Banks, the
Agent and the Canadian Agent.
W I T N E S S E T H:
WHEREAS, the Company plans to form a two new Wholly Owned
Subsidiaries, Muehlstein Financial Corporation, a Delaware corporation
("Finsub"), and Polymers International Financial Corporation, a Delaware
corporation ("Finsub2");
WHEREAS, the Company, Muehlstein International, Finsub and Finsub2
plan to enter into the Permitted Receivables Transaction Documents (as defined
in Section 2.1(v) below);
WHEREAS, proceeds of the sale of Receivables by the Company and
Muehlstein International under the Permitted Receivables Transaction Documents
(i) if such proceeds are in the form of cash, shall constitute Net Cash Proceeds
and shall be
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applied as a mandatory prepayment to the outstanding Revolving Loans (without a
corresponding reduction of the Revolving Credit Commitments other than the
reduction in Revolving Credit Commitments effected by this First Amendment) or
(ii) if such proceeds are in the form of promissory notes, shall be pledged to
the Agent, for the benefit of the "Secured Parties" under (and as defined in)
the respective Borrower Pledge Agreements to which the Company and Muehlstein
International are a party;
WHEREAS, Pegasus and Finsub2 plan to enter into the Multicurrency
Loan Documents (as defined in Section 2.1(o) below);
WHEREAS, during the period that the Multicurrency Loan Documents are
in effect, the loan facility evidenced by the Multicurrency Loan Documents shall
replace the Multicurrency Facility under the Credit Agreement;
WHEREAS, the Borrowers have requested that (i) the Lenders approve
the Permitted Receivables Financing Program and the execution by the Company,
Muehlstein International, Finsub and Finsub2 of the Permitted Receivables
Transaction Documents, (ii) the Agent release its Liens on the Receivables sold
from time to time pursuant to the Permitted Receivables Transaction Documents,
(iii) the Agent and the Canadian Agent enter into the Permitted Receivables
Intercreditor Agreement (as defined in Section 2.1(t) below), (iv) the Lenders
approve the execution by Pegasus and Finsub2 of the Multicurrency Loan Documents
and (v) the Agent enter into the Multicurrency Intercreditor Agreement (as
defined in Section 2.1(n) below;
WHEREAS, the Company and the other Borrowers have requested the
Lenders to amend the Credit Agreement (i) to decrease the Multicurrency
Commitment from $35,000,000 to zero, (ii) to decrease the aggregate Revolving
Credit Commitments from $125,000,000 to $45,000,000 , (iii) to decrease the
aggregate US Commitment from $80,000,000 to $35,000,000 and (iv) to effect other
amendments, all as more fully described herein;
NOW, THEREFORE, in consideration of the above premises, Holdings,
the Borrowers, the Lenders, the Agent and the Canadian Agent agree as follows:
1. Definitions. Capitalized terms used and not otherwise defined
herein have the meanings assigned to them in the Credit Agreement.
2. Amendments to the Credit Agreement. Upon the "First Amendment
Effective Date" (as defined in Section 2.1(i) below), the Credit Agreement is
hereby amended as follows:
2.1 Section 1.01. Section 1.01 of the Credit Agreement is
amended as follows:
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(a) The following definition of "Average Liquidity" is added
in proper alphabetical order:
"Average Liquidity" means, for any period, the sum of
(i) average aggregate Revolving Credit Availability under all Credit
Facilities for such period, plus (ii) the excess, if any, of (A) the
average Net Receivables Balance for such period over (B) the
Required Net Receivables Balance for such period, plus (iii) the
average Revolving Credit Availability for such period under the
Credit Agreement referred to in clause (i) of the definition of
"Multicurrency Loan Documents".
(b) The definition of "Borrower Pledge Agreements" is deleted
in its entirety and the following definition is substituted in lieu
thereof:
"Borrower Pledge Agreements" means (i) the Pledge
Agreement dated as of the Closing Date by and between the Company
and the Agent, (ii) the Pledge Agreement dated as of the Closing
Date by and between Muehlstein International and the Agent, (iii)
the Pledge Agreement dated as of the First Amendment Effective Date
by and between Pegasus and the Agent, in each case in substantially
the form of Exhibit C, and (iv) all other pledge agreements executed
by any Borrower in favor of the Agent in connection with the
transactions contemplated hereby, as each of the same may be
amended, supplemented or otherwise modified from time to time.
(c) The definition of "Collateral" is amended to delete the
words "the initial sale" therein and to substitute in lieu thereof the
words "all sales";
(d) The following definition of "Early Amortization Event" is
added in proper alphabetical order:
"Early Amortization Event" is defined on Schedule
1.01.7.
(e) The definition of "Eligible Inventory" is amended to add
the following phrase at the end of the parenthetical phrase before clause
(i) therein: "or which constitutes Returned Goods during any period prior
to which a Trust Early Amortization Event under Section 9.01(e) of the
Permitted Receivables Pooling and Servicing Agreement, or an Early
Amortization Event under the Series 1996-1 Supplement, shall have occurred
and be continuing".
(f) The definition of "Finsub" is deleted in its
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entirety and the following definition is substituted in lieu
thereof:
"Finsub" means Muehlstein Financial Corporation, a
Delaware corporation and a Wholly Owned Subsidiary of the Company.
(g) The following definition of "Finsub2" is added in proper
alphabetical order:
"Finsub2" means Polymers International Financial
Corporation, a Delaware corporation and Wholly Owned Subsidiary of
Pegasus.
(h) The following definition of "First Amendment" is added in
proper alphabetical order:
"First Amendment" means the First Amendment, Consent and
Limited Waiver to Credit Agreement dated as of August 23, 1996,
among Holdings, the Borrowers, the Lenders, the Agent and the
Canadian Agent.
(i) The following definition of "First Amendment Effective
Date" is added in proper alphabetical order:
"First Amendment Effective Date" has the meaning set
forth in the First Amendment.
(j) The definition of "Intercreditor Agreement" is deleted in
its entirety and the following definition of "Intercreditor Agreements" is
substituted in lieu thereof:
"Intercreditor Agreements" means the Multicurrency
Intercreditor Agreement, the Permitted Receivables Intercreditor
Agreement and the Term Loan Intercreditor Agreement, and
"Intercreditor Agreement" means any of them.
(k) The following definition of "Liquidity Event" is added in
proper alphabetical order:
"Liquidity Event" means any time after which the Average
Liquidity becomes less than $5,000,000 for a period of any five (5)
consecutive Business Days or less than $1,500,000 for a period of
any two (2) consecutive Business Days. Solely for purposes of this
definition, (i) Revolving Credit Availability for the U.S. Facility
shall be calculated without giving effect to the limitation imposed
by clause (i)(A)(1) of the definition of Maximum Revolving Credit
Amount and (ii) Revolving Credit Availability for the Canadian
Facility shall be calculated without giving effect to the limitation
imposed by clause (iii)(A)(1) of the
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definition of Maximum Revolving Credit Amount.
(l) The definition of "Loan Documents" is amended (i) to
delete in its entirety the reference therein to "Intercreditor Agreement"
and substitute in lieu thereof "Intercreditor Agreements" and (ii) to add
the following phrase before the period at the end of the last sentence
thereof: "or the Multicurrency Loan Documents".
(m) The definition of "Multicurrency Commitment" is amended to
add the following proviso before the period at the end of such definition:
"provided, further, however, on and after the First Amendment Effective
Date, the Multicurrency Commitment shall be zero.
(n) The definition of "Multicurrency Facility" is amended to
add the phrase "from the Closing Date to the First Amendment Effective
Date" immediately following the reference therein to "Multicurrency
Borrower".
(o) The following definition of "Multicurrency Intercreditor
Agreement" is added in proper alphabetical order:
"Multicurrency Intercreditor Agreement" means the Letter
Agreement dated as of the First Amendment Effective Date from the
Agent and the Canadian Agent to the Multicurrency Lender, as the
same may be amended, supplemented or otherwise modified from time to
time.
(p) The following definition of "Multicurrency Lender" is
added in proper alphabetical order:
"Multicurrency Lender" means Citibank, N.A., in its
capacity as the lender under the Multicurrency Loan Documents, and
its successors in such capacity.
(q) The following definition of "Multicurrency Loan Documents"
is added in proper alphabetical order:
"Multicurrency Loan Documents" means (i) the Credit
Agreement dated as of the First Amendment Effective Date between
Pegasus and the Multicurrency Lender, (ii) the Guaranty dated as of
the First Amendment Effective Date executed by Finsub2 in favor of
the Multicurrency Lender, (iii) the Pledge Agreement dated as of the
First Amendment Effective Date executed by Finsub2 in favor of the
Multicurrency Lender and (iv) all other instruments, agreements and
written Contractual Obligations entered into in connection with any
of the foregoing, in each case as the same may be amended,
supplemented or otherwise modified from time to time.
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(r) The definition of "Net Cash Proceeds" is amended to add
the parenthetical phrase "(but including proceeds of all sales under the
Permitted Receivables Financing Program)" immediately following the phrase
"other than sales, assignments and other dispositions of Property between
the Company and Wholly Owned Subsidiaries of the Company to the extent
permitted hereunder".
(s) The following definition of "Net Receivables Balance" is
added in proper alphabetical order:
"Net Receivables Balance" is defined on Schedule 1.01.7.
(t) The definition of "Permitted Receivables Financing
Program" is deleted in its entirety and the following definition is
substituted in lieu thereof:
"Permitted Receivables Financing Program" means the
receivables financing program evidenced by the Permitted Receivables
Transaction Documents.
(u) The definition of "Permitted Receivables Financing Program
Trustee" is added in proper alphabetical order:
"Permitted Receivables Financing Program Trustee" means
Bankers Trust Company, not in its individual capacity but solely as
trustee of the Muehlstein Trade Receivables Master Trust, together
with its successors and assigns in such capacity.
(v) The following definition of "Permitted Receivables
Intercreditor Agreement" is added in proper alphabetical order:
"Permitted Receivables Intercreditor Agreement" means
the Intercreditor Agreement dated as of the First Amendment
Effective Date among Citicorp North America, Inc., as Program Agent,
Finsub, the Company, Bankers Trust Company, as Trustee, the Agent,
the Canadian Agent, Finova and Ambac Indemnity Corporation, as the
same may be amended, supplemented or otherwise modified from time to
time.
(w) The following definition of "Permitted Receivables Pooling
and Servicing Agreement" is added in proper alphabetical order:
"Permitted Receivables Pooling and Servicing Agreement"
means the Pooling and Serving Agreement dated as of the First
Amendment Effective Date among
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Finsub, the Company and Bankers Trust Company, as trustee, as the
same may be amended, supplemented or otherwise modified from time to
time.
(x) The definition of "Permitted Receivables Transaction
Documents" is deleted in its entirety and the following definition is
substituted in lieu thereof:
"Permitted Receivables Transaction Documents" means the
Permitted Receivables Pooling and Servicing Agreement and the other
agreements, documents and instruments set forth on Schedule 1.01.7
and all other instruments, agreements and written Contractual
Obligations entered into in connection with any of the foregoing, in
each case as the same may be amended, supplemented or otherwise
modified from time to time.
(y) The following definition of "Required Net Receivables
Balance" is added in proper alphabetical order:
"Required Net Receivables Balance" is defined on
Schedule 1.01.7.
(z) The following definition of "Returned Goods" is added in
proper alphabetical order:
"Returned Goods" means all right, title and interest of
the Company, Muehlstein International or Finsub, as applicable, in
and to returned, repossessed or foreclosed goods and/or merchandise.
(aa) The definition of "Revolving Credit Commitment" is
amended to delete the Dollar amount "$125,000,000" and to substitute in
lieu thereof the Dollar amount "$45,000,000".
(bb) The following definition of "Series 1996-1 Supplement" is
added in proper alphabetical order:
"Series 1996-1 Supplement" means the Series 1996-1
Supplement to the Permitted Receivables Pooling and Servicing Agreement,
as such supplement may be amended, supplemented or otherwise modified from
time to
time.
(cc) The following definition of "Series 1996-2 Certificate"
is added in proper alphabetical order:
"Series 1996-2 Certificate" means the Series 1996-2
Certificate issued pursuant to the Series 1996-2 Supplement to the
Permitted Receivables Pooling and Servicing Agreement.
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(dd) The following definition of "Term Loan Intercreditor
Agreement" is added in proper alphabetical order:
"Term Loan Intercreditor Agreement" means the
Intercreditor Agreement dated as of the Closing Date between Finova
and the Agent, as the same may be amended, supplemented or otherwise
modified from time to time.
(ee) The definition of "Transaction Documents" is amended to
add the phrase ", the Permitted Receivables Transaction Documents, the
Multicurrency Loan Documents," immediately following the reference therein
to "the Finova Documents".
(ff) The following definition of "Trust Early Amortization
Event" is added in proper alphabetical order:
"Trust Early Amortization Event" is defined on Schedule
1.01.7.
(gg) The definition of "U.S. Commitment" is amended to delete
the Dollar amount "$125,000,000" and to substitute in lieu thereof the
Dollar amount "$45,000,000".
2.2 Section 2.01(a)(ii). Section 2.01(a)(ii) of the Credit
Agreement is hereby amended to delete the reference therein to "Revolving Credit
Termination Date" and to substitute in lieu thereof "First Amendment Effective
Date".
2.3 Section 2.01(b). Section 2.01(b) of the Credit Agreement
is hereby amended to add the following parenthetical phrase immediately
following the reference to "Revolving Credit Termination Date" in the first
sentence thereof: "(the First Amendment Effective Date, in the case of the
Multicurrency Facility)".
2.4 Section 2.01(g). Section 2.01(g) of the Credit Agreement
is hereby amended to delete the second sentence thereof in its entirety and to
substitute in lieu thereof the following:
"Proceeds of U.S. Loans and of Swing Loans under the U.S. Facility
shall be used to provide for ongoing working capital needs in the
ordinary course of the business of the Company and its Subsidiaries
and for other lawful general corporate purposes not prohibited
hereunder, including, without limitation, (x) capital contributions
from the Company and Muehlstein International to Finsub permitted by
Section 9.07(b), and (y) capital contributions from Pegasus to
Finsub2 permitted by Section 9.07(b)."
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2.5 Section 3.01(b). Section 3.01(b) of the Credit Agreement
is hereby amended as follows:
(a) Clause (iii) thereof is amended to delete the
second sentence therein in its entirety.
(b) Clause (iv) thereof is amended to delete the first
sentence therein in its entirety and to substitute in lieu thereof the
following:
"The Revolving Credit Commitments shall be permanently
reduced to $45,000,000 as of the First Amendment
Effective Date."
2.6 Section 3.05(c)(iii). Section 3.05(c)(ii) of the Credit
Agreement is hereby amended to delete the portion of the second sentence thereof
beginning with clause (C) and to substitute in lieu thereof the following:
"(C) the Agent shall honor any request made by the Multicurrency
Borrower and the Canadian Agent shall honor any request made by the
Canadian Borrower, as applicable, and received by the Agent or the
Canadian Agent, as applicable, no later than 12:00 noon (London or
Toronto time, as applicable), at least two (2) Business Days prior
to the date of such transfer (in the case of the Multicurrency
Borrower), to transfer funds from any such Cash Collateral Account
(whether or not any Multicurrency Loan or Canadian Loan, as the case
may be, is outstanding) to (x) a Disbursement Account of such
Borrower, and such funds shall be transferred to such Disbursement
Account of the Canadian Borrower on the same Business Day or of the
Multicurrency Borrower on the following Business Day, or (y) in the
case of any Cash Collateral Account into which proceeds of
Receivables of the Multicurrency Borrower have been deposited, the
Multicurrency Lender and its successors, for application to amounts
owing under the Multicurrency Loan Documents, and such funds shall
be so transferred on the following Business Day, provided that such
request shall in the case of clause (x) or (y) be made pursuant to a
signed Notice of Withdrawal and the conditions set forth therein
shall have been met as of the date of such request and that the
intended use of such funds shall be consistent with Section 2.01(g)
(assuming for such purpose that such funds are proceeds of Revolving
Loans), and provided, further, that after giving effect to any such
withdrawal by the Canadian Borrower, the Revolving Credit
Availability under the Canadian Facility is greater than zero, and
provided, further, that the Agent shall not be required to honor any
such request
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made by the Multicurrency Borrower at any time after a Liquidity
Event has occurred.
2.7 Section 4.03(b). Section 4.03(b) of the Credit Agreement
is hereby amended to insert the following proviso immediately before the period
at the end of the first sentence of such subsection:
", provided that, if the earnings results of Holdings and its
Subsidiaries for Fiscal Year 1996, as reflected in the audited
financial statements delivered by Holdings to the Agent and the
Lenders pursuant to Section 7.01(b) with respect such Fiscal Year,
exceed in all respects the applicable forecasts for Fiscal Year set
forth in the Initial Projections, then, from and after the first day
of the calendar month immediately succeeding the calendar month in
which such financial statements shall have been so delivered, the
Unused Commitment Fee shall accrue at a rate of three-eighths of one
percent (0.375%) per annum"
2.8 Section 6.01(c). Section 6.01(c) of the Credit Agreement
is hereby amended to delete each reference to the phrase "as of the Closing
Date" therein and to substitute in lieu thereof the phrase "as of the First
Amendment Effective Date".
2.9 Section 6.01(aa). Section 6.01(aa) of the Credit Agreement
is hereby amended to delete the phrase "as of the Closing Date" therein and to
substitute in lieu thereof the phrase "as of the First Amendment Effective
Date".
2.10 Section 8.11(b)(ii)(y). Section 8.11(b)(ii)(y) of the
Credit Agreement is hereby amended to delete the reference therein to
"Intercreditor Agreement" and to substitute in lieu thereof "Term Loan
Intercreditor Agreement".
2.11 Section 9.01. Section 9.01 of the Credit Agreement is
hereby amended as follows:
(a) Clause (viii) thereof is amended to add the phrase "and
pursuant to the Multicurrency Loan Documents" immediately following the
reference to "Permitted Receivables Transaction Documents" therein;
(b) Clause (x) thereof is amended to delete in their entirety
subclauses (D) and (E) thereof and substitute in lieu thereof the
following:
"(D) from any Borrower to any Subsidiary of the Company (other than
Borrowers) in a principal amount, together with any Investments made
(1) after the First Amendment Effective Date in Finsub and Finsub2
and (2) after the
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Closing Date in any such Subsidiaries of the Company (other than
Finsub and Finsub2) permitted to be created or capitalized after the
Closing Date under Section 9.07(b), in any Fiscal Year not to exceed
the Subsidiary Investment Basket for such Fiscal Year, (E) in
addition to any loans made to such Person under clause (D) above,
from Pegasus to Pegasus Asia in an amount at any time outstanding
not to exceed the sum of (1) $2,000,000, plus (2) the amount of
dividends received by Pegasus from Pegasus Asia after the Closing
Date and (F) in addition to any loans made to such Person under
clauses (D) and (E) above, unless the Agent has delivered the notice
described in Section 9.02(ii), from the Company or Muehlstein
International to Finsub in respect of subordinated loans advanced as
part of the purchase price for Receivables sold to Finsub under the
Permitted Receivables Transaction Documents; provided, that no loans
permitted by clauses (D) or (E) shall be made if an Event of Default
or Default has occurred and is continuing;"
2.12 Section 9.02(ii). Section 9.02(ii) of the Credit
Agreement is hereby amended to add the following proviso before the semi-colon
at the end thereof:
"; provided, however, that, if a Liquidity Event shall occur at any
time when (x) an Event of Default has occurred and is continuing or
(y) the Company and its Subsidiaries are not in compliance with any
covenant contained in Article X (without giving effect to any
amendment, modification or waiver of any such covenant since the
date hereof), the Agent may, upon one (1) Business Day's prior
written notice thereof to the Company and the Permitted Receivables
Financing Program Trustee, terminate the right of the Company,
Muehlstein International and any of their Affiliates to continue to
sell or otherwise transfer Receivables pursuant to the Permitted
Receivables Financing Documents; and provided, further, that if (a)
any event shall have occurred and be continuing which constitutes a
Trust Early Amortization Event or (b) purchases of Receivables under
the Permitted Receivables Financing Program shall have been
discontinued for a period of at least five (5) consecutive Business
Days, the right of the Company, Muehlstein International and any of
their Affiliates to continue to sell or otherwise transfer
Receivables pursuant to the Permitted Receivables Financing
Documents shall be automatically terminated."
2.13 Section 9.03. Section 9.03 of the Credit Agreement is
hereby amended as follows:
(a) Clause (vii) thereof is amended to delete the
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word "and" at the end thereof;
(b) Clause (viii) thereof is amended to delete the period at
the end thereof and to substitute in lieu thereof "; and"; and
(c) The following clause (ix) is added thereto:
"(ix) Liens on the Series 1996-2 Certificate held by Finsub2
and pledged to secure the obligations of Finsub2 under the
Multicurrency Loan Documents."
2.14 Section 9.04. Section 9.04 of the Credit Agreement is
hereby amended as follows:
(a) Clause (iv) thereof is amended to delete the phrase "such
Subsidiaries and Finsub" therein and to substitute in lieu thereof the
phrase "such Subsidiaries, Finsub and Finsub2";
(b) The "and" at the end of clause (v) thereof is deleted;
(c) The period at the end of clause (vi) thereof is replaced
with a semi-colon; and
(d) The following clause (vii) is added thereto:
"(vii) Investments by Finsub2 in the Series 1996-2 Certificate
as contemplated by the Permitted Receivables Transaction Documents."
2.15 Section 9.05(v). Section 9.05(v) of the Credit Agreement
is hereby amended to delete the provisions thereof in their entirety and to
substitute in lieu thereof the following:
"(v) Accommodation Obligations incurred pursuant to the
Permitted Receivables Transaction Documents and pursuant to the
Multicurrency Loan Documents; and"
2.16 Section 9.06. Section 9.06 of the Credit Agreement is
hereby amended to delete the second proviso thereto and to substitute in lieu
thereof "and provided, further, that cash redemptions permitted under clause
(vii) above shall be limited to the excess, if any, of the Average Liquidity
during the thirty days immediately preceding the date set for such payment over
$15,000,000".
2.17 Section 9.07(a). Section 9.07(a) of the Credit Agreement
is hereby amended to insert the following two sentences at the end of such
subsection:
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<PAGE>
"Finsub shall not engage in any business other than as contemplated
by the Permitted Receivables Transaction Documents. Finsub2 shall
not engage in any business other than as contemplated by the
Multicurrency Loan Documents."
2.18 Section 9.07(b). Section 9.07(b) of the Credit Agreement
is hereby amended to delete the phrase "Sections 9.01(x)(D) and 9.01(x)(E) for
such Fiscal Year" therein and to substitute in lieu thereof the following:
"Sections 9.01(x)(D), 9.01(x)(E) and 9.01(x)(F) for such Fiscal
Year; provided, further, however, in addition to such amounts,
unless the Agent has delivered the notice described in Section
9.02(ii), the Company and Muehlstein International may make capital
contributions to Finsub to the extent required to be made under the
Permitted Receivables Transaction Documents (i) as part of the
purchase price for Receivables sold to Finsub thereunder and (ii) to
cause the Net Receivables Balance to equal the Required Net
Receivables Balance; and provided, further, however, that Pegasus
may capitalize Finsub2 by making a capital contribution to Finsub2
on the First Amendment Effective Date in an aggregate amount equal
to 102% of the principal amount of the Series 1996-2 Certificate
purchased by Finsub2 under the Permitted Receivables Transaction
Documents (it being understood and agreed that such principal amount
shall in no event exceed $25,000,000)"
2.19 Section 9.16. Section 9.16 of the Credit Agreement is
hereby amended as follows:
(a) Clause (ii) thereof is amended to delete the phrase
"average aggregate Revolving Credit Availability under all Credit
Facilities (plus the average liquidity available to the Borrowers under
the Permitted Receivables Financing Program)" therein and to substitute in
lieu thereof "Average Liquidity"; and
(b) Clause (iii)(B) thereof is deleted in its entirety and the
following is substituted in lieu thereof:
(B) the Finova Documents, the Common Equity Notes, the Permitted
Receivables Transaction Documents, the Multicurrency Loan Documents
or any documents evidencing the Permitted Subordinated Indebtedness
in any respect that is adverse to the Lenders, provided, that no
Persons other than the Company and Muehlstein International may be
added as sellers of Receivables to Finsub under the Permitted
Receivables Transaction Documents.
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<PAGE>
2.20 Section 9.20. Section 9.20 of the Credit Agreement is
hereby amended to add the phrase ", the Multicurrency Loan Documents"
immediately following the reference to "Loan Documents" therein.
2.21 Section 11.01. Section 11.01 of the Credit Agreement is
hereby amended as follows:
(a) Section 11.01(e) is amended to delete the phrase "'Event
of Termination' under and as defined in the Permitted Receivables
Transaction Documents, or which could otherwise cause the early
termination of the Permitted Receivables Financing Program" and to
substitute in lieu thereof "Trust Early Amortization Event; or purchases
of Receivables under the Permitted Receivables Financing Program shall
have been discontinued for a period of at least five (5) consecutive
Business Days".
(b) Section 11.01(n) of the Credit Agreement is amended to
delete the provisions thereof in their entirety and to substitute in lieu
thereof the following:
"(n) Intercreditor Agreements. Any party to any
Intercreditor Agreements (other than the Agent and the Lenders)
shall fail to perform any material covenant or material obligation
binding on such party thereunder or any Intercreditor Agreement
shall cease to be in full force and effect."
2.22 Section 13.15. Section 13.15 of the Credit Agreement is
hereby amended to delete each reference therein (including the Section heading
thereof) to "Intercreditor Agreement" and to substitute in lieu thereof
"Intercreditor Agreements".
3. Amendments to Schedules and Exhibits to Credit Agreement.
Upon the First Amendment Effective Date, the Schedules and Exhibits to the
Credit Agreement are hereby amended as follows:
3.1 Schedule 1.01.1. Schedule 1.01.1 to the Credit Agreement
is deleted in its entirety and Annex A attached hereto and made a part
hereof shall be substituted therefor.
3.2 Schedule 1.01.2. Schedule 1.01.2 to the Credit Agreement
is deleted in its entirety and Annex B attached hereto and made a part
hereof shall be substituted therefor.
3.3 Schedule 1.01.7. New Schedule 1.01.7 to the Credit
Agreement, entitled "Permitted Receivables
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Transaction Documents and Definitions," is added in the form of Annex C
attached hereto and made a part hereof.
3.4 Schedule 6.01-C. Schedule 6.01-C to the Credit Agreement
is deleted in its entirety and Annex D attached hereto and made a part
hereof shall be substituted therefor.
3.5 Schedule 6.01-AA. Schedule 6.01-AA to the Credit Agreement
is deleted in its entirety and Annex E attached hereto and made a part
hereof shall be substituted therefor.
3.6 Exhibit O-1. Exhibit O-1 to the Credit Agreement is
deleted in its entirety and Annex F attached hereto and made a part hereof
shall be substituted therefor.
4. Lender Consents.
4.1 As of the First Amendment Effective Date, the Lenders
hereby approve (i) the Permitted Receivables Financing Program and the
execution, delivery and performance by the Company, Muehlstein
International, Finsub and Finsub2 of the Permitted Receivables Transaction
Documents, provided that, concurrently therewith, the Company and
Muehlstein International shall have made a mandatory prepayment to the
Agent, for the benefit of the U.S. Lenders, of the Net Cash Proceeds
arising from the initial sale of Receivables pursuant to the Permitted
Receivables Transaction Documents in an amount not less than $50,000,000,
(ii) the transactions evidenced by the Multicurrency Loan Documents and
the execution, delivery and performance by Pegasus and Finsub2 thereof,
provided that, prior to or concurrently therewith, the Multicurrency
Borrower shall have paid to the Agent, for the benefit of the
Multicurrency Lenders, the outstanding principal amount of all
Multicurrency Loans, together with all other Obligations arising in
connection with the Multicurrency Facility (whereupon each Multicurrency
Lender will return to Pegasus its Multicurrency Loan Note marked
"cancelled"), and (iii) a Borrowing on the First Amendment Effective Date,
the proceeds of which shall be used by Pegasus to make a capital
contribution to Finsub2 so that Finsub2 may pay for the Series 1996-2
Certificate (it being understood and agreed that if such Borrowing is
repaid by 5:00 p.m. (New York time) on the First Amendment Effective Date,
then no interest shall be payable with respect thereto).
4.2 The Lenders hereby instruct and direct the Agent, upon the
occurrence of the First Amendment Effective Date, (i) to release its Liens
on the Receivables sold from time to time pursuant to the Permitted
Receivables Transaction Documents (including, without limitation, all
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Liens on Dollar denominated Receivables of the Company and Muehlstein
International which are so sold from time to time), (ii) to enter into the
Permitted Receivables Intercreditor Agreement and to take all actions
required to be taken by the Agent thereby (including, without limitation,
the transfer of certain Collection Accounts of the Company and the
Borrower to the Permitted Receivables Financing Program Trustee) and (iii)
to enter into the Multicurrency Intercreditor Agreement and to take all
actions required to be taken by the Agent thereunder.
4.3 The Canadian Lender hereby instructs and directs the
Canadian Agent, upon the occurrence of the First Amendment Effective Date,
to enter into the Permitted Receivables Intercreditor Agreement and to
take all actions required to be taken by the Canadian Agent thereunder.
5. Limited Waiver. As of the First Amendment Effective Date, the
Lenders hereby (a) waive the provisions of Section 8.11(a) of the Credit
Agreement in respect of (and solely in respect of) the Obligations of Holdings
and the Borrowers to deliver within ninety (90) days after the Closing Date all
"Foreign Personal Property Security Documents" identified on the Closing List as
pertaining to Spain and France and (b) extend the time period for the delivery
of such Loan Documents to September 30, 1996 (or such later date as may be
agreed to by the Agent). If such Loan Documents are not delivered on or before
such date, the limited waiver under this Section 5 shall expire.
6. Representations and Warranties. Each of the Borrowers hereby
represents and warrants to each Lender, the Issuing Bank and the Agent that, as
of the First Amendment Effective Date and after giving effect to this First
Amendment, the Permitted Receivables Financing Program and the effectiveness of
the Multicurrency Loan Documents:
(a) Each of the representations and warranties contained in this
Amendment, the Credit Agreement as amended hereby and the other Loan
Documents are true and correct in all material respects on and as of the
First Amendment Effective Date, as if then made, other than
representations and warranties which expressly speak as of a different
date;
(b) No Default or Event of Default has occurred or is continuing;
and
(c) No change (other than as contemplated by the Registration
Statement) in the condition (financial or otherwise), business,
performance, assets, operations or prospects of the Domestic Borrowers,
taken as a whole, or the Canadian Borrower, individually, has occurred
since December 31, 1994, which change has had or is reasonably likely to
have a Material Adverse Effect.
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7. First Amendment Effective Date. This First Amendment shall become
effective as of the date, on or before September 30, 1996 (the "First Amendment
Effective Date") when each of the following conditions shall have been
satisfied:
(a) the Agent shall have received each of the following documents,
in each case in form and substance satisfactory to the Agent:
(i) counterparts hereof executed by each Borrower, Holdings,
the Agent, the Canadian Agent and each Lender;
(ii) an amendatory agreement in substantially the form of
Annex G attached hereto and made a part hereof;
(iii) UCC amendment statements with respect to each UCC-1
financing statement filed against the Company or Muehlstein
International, giving effect to the amendments, pursuant to the
amendatory agreement referred to in the immediately preceding clause
(ii), to the Borrower Security Agreements executed by the Company
and Muehlstein International;
(iv) (A) stock certificate(s) representing 100% of the Capital
Stock of Finsub, together with stock powers (executed in blank)
therefor, (B) all subordinated promissory notes issued to the
Company and Muehlstein International pursuant to the Permitted
Receivables Transaction Documents, endorsed in blank, (C)
replacements for the applicable exhibits to the Borrower Pledge
Agreements executed by the Company and Muehlstein International
reflecting the pledge of the property described in subclauses (A)
and (B) above, and (D) an acknowledgement of pledge executed by
Finsub;
(v) (A) a Pledge Agreement executed by Pegasus, in
substantially the form of Exhibit C to the Credit Agreement, (B)
stock certificate(s) representing 100% of the Capital Stock of
Finsub2, together with stock powers (executed in blank) therefor,
and (C) an acknowledgement of pledge executed by Finsub2;
(vi) fully executed copies of the Permitted Receivables
Intercreditor Agreement and the Multicurrency Intercreditor
Agreement;
(vii) a copy of each of the Permitted Receivables Transaction
Documents, certified as of the First Amendment Effective Date by the
Secretary or an Assistant Secretary of the Company (A) to be a true,
correct and complete copy of each such document and
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(B) not to have been amended or rescinded;
(viii) a copy of each of the Multicurrency Loan Documents,
certified as of the First Amendment Effective Date by the Secretary
or an Assistant Secretary of Pegasus (A) to be a true, correct and
complete copy of each such document and (B) not to have been amended
or rescinded;
(ix) a certificate of the chief executive officer, chief
financial officer or treasurer of the Company executed and delivered
on behalf of the Borrowers certifying that all conditions precedent
required to be satisfied by Holdings, the Company, the other
Borrowers or any Subsidiary Guarantor for the effectiveness of this
First Amendment have been satisfied;
(x) a certificate of the Secretary or Assistant Secretary of
Holdings, each Borrower, Finsub and Finsub2 dated the First
Amendment Effective Date certifying (A) the names and true
signatures of the incumbent officers of such Persons authorized to
sign this Amendment and the other Transaction Documents executed in
connection with this Amendment to which it is a party, (B) the
By-laws of such Person as in effect on the date of such
certification, (C) the resolutions of such Person's Board of
Directors approving and authorizing the execution, delivery and
performance of this Amendment and the other Transaction Documents
executed in connection with this Amendment to which it is a party
and (D) the Articles or Certificate of Incorporation, certified by
the applicable Government Authority, if not previously delivered to
the Agent, or that there have been no changes in the Certificate or
Articles of Incorporation of such Person since the date of the most
recent certification thereof by the Secretary of State of the
applicable State delivered to the Agent;
(xi) Good Standing Certificates relating to the Borrowers, the
Subsidiary Guarantors, Finsub and Finsub2 in the jurisdictions set
forth on Annex H attached hereto and made a part hereof; and
(xii) A favorable opinion of McDermott, Will & Emery, counsel
to the Borrowers, Subsidiary Guarantors, Finsub and Finsub2, in form
and substance satisfactory to the Requisite Lenders, and a letter
entitling the Agent, the Canadian Agent, the Issuing Banks and the
Lenders to rely on any opinion or opinions delivered by McDermott,
Will & Emery in connection with the Permitted Receivables
Transaction Documents and the
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Multicurrency Loan Documents; and
(xiii) such additional documentation as the Agent may
reasonably request.
(b) The Borrowers shall have paid to the Agent, together with any
payments required under Section 4 above, an amount sufficient to reduce
the Revolving Credit Obligations for each Credit Facility to an amount
which is less than or equal to the Maximum Revolving Credit Amount for
such Credit Facility.
(c) The Agent and the Requisite Lenders shall be satisfied that: (i)
the Permitted Receivables Transaction Documents and the Multicurrency Loan
Documents shall have been duly approved and executed and delivered by the
parties thereto in form and substance satisfactory to the Agent and the
Requisite Lenders, and (ii) all conditions precedent to closing under the
Permitted Receivables Transaction Documents and the Multicurrency
Documents have been satisfied (and no modification or waiver of any such
condition shall have been made without the consent of the Agent) and such
documents are, or simultaneously with the execution hereof, will be in
full force and effect.
(d) No law, regulation, order, judgment or decree of any
Governmental Authority shall, and the Agent shall not have received any
notice that litigation is pending or threatened which is likely to,
enjoin, prohibit or restrain the consummation of the transactions
contemplated by this First Amendment, except for such laws, regulations,
orders or decrees, or pending or threatened litigation that in the
aggregate could not reasonably be expected to result in a Material Adverse
Effect.
(e) Each of the representations and warranties contained in this
Amendment, the Credit Agreement as amended hereby and the other Loan
Documents shall be true and correct in all material respects on and as of
the First Amendment Effective Date, as if then made, other than
representations and warranties which expressly speak as of a different
date;
(f) All corporate and other proceedings, and all documents,
instruments and other legal matters in connection with the transactions
contemplated by this Amendment shall be satisfactory in all respects in
form and substance to the Agent and the Requisite Lenders.
(g) No Event of Default or Default shall have occurred and be
continuing on the First Amendment Effective Date.
8. Reference to and Effect on the Loan Documents.
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(a) Upon the effectiveness of this Amendment, on and after the date
hereof, each reference in the Credit Agreement as amended hereby to "this
Agreement", "hereunder", "hereof" or words of like import, and each reference in
the other Loan Documents to the Credit Agreement, shall mean and be a reference
to the Credit Agreement as amended hereby.
(b) Except as specifically amended above, all of the terms of the
Credit Agreement and all other Loan Documents shall remain unchanged and in full
force and effect.
(c) The execution, delivery and effectiveness of this Amendment
shall not, except as expressly provided herein, operate as a waiver of any
right, power or remedy of any Senior Lender, the Agent or the Collateral Agent
under the Credit Agreement or any of the Loan Documents, nor constitute a waiver
of any provision of the Credit Agreement or any of the Loan Documents.
9. Costs and Expenses. The Borrowers (other than the Canadian
Borrower) jointly and severally agree to pay upon demand in accordance with the
terms of Section 13.02 of the Credit Agreement all reasonable costs and expenses
of the Agent in connection with the preparation, reproduction, negotiation,
execution and delivery of this Amendment and all other Loan Documents entered
into in connection herewith, including, without limitation, the reasonable fees,
expenses and disbursements of Sidley & Austin, counsel for the Agent with
respect to any of the foregoing.
10. Miscellaneous. This First Amendment is a Loan Document. The
headings herein are for convenience of reference only and shall not alter or
otherwise affect the meaning hereof.
11. Counterparts. This First Amendment may be executed in any number
of counterparts and by the different parties hereto in separate counterparts,
each of which when so executed and delivered shall be an original, but all of
which shall together constitute one and the same instrument.
12. GOVERNING LAW. THIS FIRST AMENDMENT SHALL BE INTERPRETED, AND
THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO AND TO THE CREDIT AGREEMENT AS
AMENDED HEREBY DETERMINED, IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
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IN WITNESS WHEREOF, the Agent, the Canadian Agent, the Lenders, the
Borrowers and Holdings have caused this First Amendment to be executed by their
respective officers thereunto duly authorized as of the date first above
written.
H. MUEHLSTEIN & CO., INC.
By:_______________________________________________
Name:
Title:
PEGASUS POLYMERS INTERNATIONAL INC.
By:_______________________________________________
Name:
Title:
MUEHLSTEIN INTERNATIONAL, LTD.
By:_______________________________________________
Name:
Title:
H. MUEHLSTEIN & CO. (CANADA) LIMITED
By:_______________________________________________
Name:
Title:
MUEHLSTEIN HOLDING CORPORATION
By:_______________________________________________
Name:
Title:
CITICORP USA, INC., as Agent and U.S.
Lender
By:_______________________________________________
Name:
Title:
-22-
<PAGE>
CITIBANK, N.A., as Multicurrency Lender
By:_______________________________________________
Name:
Title:
CITIBANK CANADA, as Canadian Agent and
Canadian Lender
By:_______________________________________________
Name:
Title:
NATIONSBANK, N.A., as U.S. Lender and
Multicurrency Lender
By:_______________________________________________
Name:
Title:
HELLER FINANCIAL, INC., as U.S. Lender
By:_______________________________________________
Name:
Title:
-23-
<PAGE>
ANNEX A
TO
FIRST AMENDMENT, CONSENT AND WAIVER
New Schedule 1.01.1 to Credit Agreement
[To be attached]
<PAGE>
ANNEX B
TO
FIRST AMENDMENT, CONSENT AND WAIVER
New Schedule 1.01.2 to Credit Agreement
[To be attached]
<PAGE>
ANNEX C
TO
FIRST AMENDMENT, CONSENT AND WAIVER
New Schedule 1.01.7 to Credit Agreement
Permitted Receivables Transaction Documents
[To be inserted]
Applicable Definitions
"Early Amortization Event" means [to be inserted from the final
Series 1996-1 Supplement].
"Net Receivables Balance" means [to be inserted from final Pooling
and Servicing Agreement].
"Required Net Receivables Balance" means [to be inserted from final
Pooling and Servicing Agreement].
"Trust Early Amortization Event" means [to be inserted from final
Pooling and Servicing Agreement].
[Other definitions used in the above definitions to be inserted from final
Permitted Receivables Transaction Documents]
<PAGE>
ANNEX D
TO
FIRST AMENDMENT, CONSENT AND WAIVER
New Schedule 6.01-C to Credit Agreement
[To be attached]
<PAGE>
ANNEX E
TO
FIRST AMENDMENT, CONSENT AND WAIVER
New Schedule 6.01-AA to Credit Agreement
[To be attached]
<PAGE>
ANNEX F
TO
FIRST AMENDMENT, CONSENT AND WAIVER
New Exhibit O-1 to Credit Agreement
[To be attached]
<PAGE>
ANNEX G
TO
FIRST AMENDMENT, CONSENT AND WAIVER
Form of Amendatory Agreement
[To be attached]
<PAGE>
ANNEX H
TO
FIRST AMENDMENT, CONSENT AND WAIVER
Good Standing Jurisdictions
[To be attached]
<PAGE>
ITEM 14
EXHIBIT 10.8
<PAGE>
LOAN AGREEMENT
Dated as of February 9, 1996
among
MUEHLSTEIN HOLDING CORPORATION
as Guarantor
H. MUEHLSTEIN & CO., INC.,
PEGASUS POLYMERS INTERNATIONAL INC., and
MUEHLSTEIN INTERNATIONAL, LTD.,
as Borrowers
and
FINOVA CAPITAL CORPORATION,
as Lender
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE VIII - DEFINITIONS............................................
1.01. Certain Defined Terms.......................................
1.02. Computation of Time Periods.................................
1.03. Accounting Terms............................................
1.04. Other Definitional Provisions...............................
1.05. Other Terms.................................................
1.06. Payments by the Borrowers...................................
ARTICLE II - AMOUNTS AND TERMS OF LOANS.............................
2.01. The Revolving Credit Facility...............................
2.02. Letters of Credit...........................................
2.03. Evidence of Indebtedness....................................
2.04. Authorized Officers and Lenders.............................
ARTICLE III - PAYMENTS AND PREPAYMENTS...............................
3.01. Prepayments; Reductions in and Reallocations of
Revolving Credit Commitments................................
3.02 Payments....................................................
3.03. Taxes.......................................................
3.04. Increased Capital...........................................
3.05. Cash Management and Cash Collateral Accounts................
3.06. Right to Remove Affected Lender.............................
ARTICLE IV - INTEREST AND FEES......................................
4.01. Interest on the Loans and Other Obligations.................
4.02. Special Provisions Governing Euro-dollar Rate Loans
4.03. Fees ....................................................
ARTICLE V - CONDITIONS TO LOANS AND LETTERS OF
CREDIT ..........................................
5.01. Conditions Precedent to the Initial Loans and
Letters of Credit ..........................................
5.02. Conditions Precedent to All Subsequent Revolving Loans,
Swing Loans and Letters of Credit...........................
-1-
<PAGE>
TABLE OF CONTENTS
(continued)
Page
- -----------
ARTICLE VI - REPRESENTATIONS AND WARRANTIES..........................
6.01. Representations and Warranties of the Borrower .............
ARTICLE VII - REPORTING COVENANTS....................................
7.01. Financial Statements........................................
7.02. Events of Default...........................................
7.03. Lawsuits....................................................
7.04. Insurance...................................................
7.05. Borrowing Base Certificate..................................
7.06. ERISA Notices...............................................
7.07. Environmental Notices.......................................
7.08. Labor Matters...............................................
7.09. Public Filings and Reports..................................
7.10. Other Information...........................................
ARTICLE VIII - AFFIRMATIVE COVENANTS..................................
8.01. Corporate Existence, Etc....................................
8.02. Corporate Powers; Conduct of Business, Etc..................
8.03. Compliance with Laws, Etc...................................
8.04. Payment of Taxes and Claims; Tax Consolidation .............
8.05. Insurance...................................................
8.06. Inspection of Property; Books and Records; Discussions .....
8.07. [Intentionally omitted].....................................
8.08. ERISA Compliance............................................
8.09. Foreign Employee Benefit Plan Compliance....................
8.10. Maintenance of Property.....................................
8.11. Further Assurances; Additional Collateral...................
8.12. Landlord and Bailee Waivers.................................
8.13. Environmental Compliance....................................
8.14. Interest Rate Contracts.....................................
ARTICLE IX - NEGATIVE COVENANTS.....................................
9.01. Indebtedness................................................
9.02. Sales of Assets.............................................
9.03. Liens.......................................................
9.04. Investments.................................................
9.05. Accommodation Obligations...................................
9.06. Restricted Junior Payments..................................
-2-
<PAGE>
TABLE OF CONTENTS
(continued)
Page
- -----------
9.07 Conduct of Business; Subsidiaries; Acquisitions ............
9.08. Transactions with Shareholders and Affiliates ..............
9.09. Restriction on Fundamental Changes..........................
9.10. Sales and Leasebacks; Operating Leases......................
9.11. Margin Regulations; Securities Laws.........................
9.12. ERISA and Certain Employment Matters........................
9.13. Issuance or Sale of Capital Stock...........................
9.14. Constituent Documents.......................................
9.15. Fiscal Year.................................................
9.16. Cancellation of Debt; Prepayment............................
9.17. Environmental Matters.......................................
9.18. Cash Management.............................................
9.19. [Intentionally Omitted].....................................
9.20. No New Restrictions on Subsidiary Dividends.................
ARTICLE X - FINANCIAL COVENANTS....................................
10.01. Minimum Consolidated Tangible Net Worth.....................
10.02. Minimum Fixed Charge Coverage Ratio.........................
10.03. Maximum Capital Expenditures................................
ARTICLE XI - EVENTS OF DEFAULT; RIGHTS AND REMEDIES.................
11.01. Events of Default...........................................
11.02. Rights and Remedies.........................................
11.03. Cash Collateral.............................................
11.04. License for Use of Software and Other Intellectual
Property ...................................................
ARTICLE XII - [INTENTIONALLY OMITTED]................................
ARTICLE XIII - MISCELLANEOUS..........................................
13.01. Assignments.................................................
13.02. Expenses....................................................
13.03. Indemnity...................................................
13.04. Change in Accounting Principles.............................
13.05. Setoff......................................................
13.06. Ratable Sharing.............................................
13.07. Amendments and Waivers......................................
13.08. Notices.....................................................
13.09. Survival of Warranties and Agreements.......................
13.10. Failure or Indulgence Not Waiver; Remedies Cumulative ......
-3-
<PAGE>
TABLE OF CONTENTS
(continued)
Page
- -----------
13.11 Marshalling; Payments Set Aside ............................
13.12. Severability................................................
13.13. Headings....................................................
13.14. Governing Law...............................................
13.15. [Intentionally Omitted].....................................
13.16. Successors and Assigns......................................
13.17. Certain Consents and Waivers................................
13.18. Counterparts; Effectiveness; Inconsistencies
13.19. Limitation on Agreements....................................
13.20. Confidentiality.............................................
13.21. Judgment Currency...........................................
13.22. Entire Agreement............................................
-4-
<PAGE>
EXHIBITS
Exhibit A-1 - Form of Collateral Access Agreement (Landlord)
Exhibit A-2 - Form of Collateral Access Agreement (Bailee)
Exhibit B - Form of Borrower Guaranty
Exhibit C - Form of Borrower Junior Security Agreement
Exhibit D - Form of Borrower Junior Pledge Agreement
(Company)
Exhibit E - Form of Company Senior Security Agreement
Exhibit F - Form of Company Junior Trademark Security
Agreement
Exhibit G - Form of Environmental Certificate
Exhibit H - Form of Holding Guaranty
Exhibit I - Form of Holding Junior Pledge Agreement
Exhibit J - Form of Holding Junior Security Agreement
Exhibit K - Form of Junior Collateral Assignment of
Acquisition
Agreement
Exhibit L - Form of Borrower Junior Pledge Agreement
(Muehlstein International)
Exhibit M - Form of Officer's Certificate
Exhibit N - Form of Subsidiary Guaranty
Exhibit O - Form of Subsidiary Junior Security Agreement
Exhibit P - List of Closing Documents
Exhibit U - Form of Compliance Certificate
Exhibit 2.01 - Request for Advance and Disbursement
Instructions
-1-
<PAGE>
SCHEDULES
Schedule 1.01.1 - Payment Account
Schedule 1.01.2 - Permitted Existing Accommodation Obligations
Schedule 1.01.3 - Permitted Existing Indebtedness
Schedule 1.01.4 - Permitted Existing Investments
Schedule 1.01.5 - Permitted Existing Liens
Schedule 6.01-C - Authorized, Issued and Outstanding Capital
Stock; Subsidiaries
Schedule 6.01-D - Conflicts with Contractual Obligations and
Requirements of Law
Schedule 6.01-E - Governmental Consents
Schedule 6.01-I - Litigation; Adverse Effects
Schedule 6.01-O - Environmental Matters
Schedule 6.01-P - ERISA Matters
Schedule 6.01-R - Labor Matters
Schedule 6.01-U - Patent, Trademark & Permits
Schedule 6.01-V - Assets and Properties
Schedule 6.01-Y - Transactions with Affiliates
<PAGE>
LOAN AGREEMENT
This Loan Agreement dated as of February 9, 1996 (as amended,supplemented
or modified from time to time, this "Agreement") is entered into among
Muehlstein Holding Corporation, a Delaware corporation (with its successors and
permitted assigns, "Holdings"), H. Muehlstein & Co., Inc., a New York
corporation and direct wholly-owned Subsidiary (as defined below) of Holdings
(with its successors and permitted assigns, the "Company"), Pegasus Polymers
International Inc., a Connecticut corporation and a direct wholly-owned
Subsidiary of the Company (with its successors and permitted assigns,
"Pegasus"), Muehlstein International, Ltd., a New York corporation and a direct
wholly-owned Subsidiary of the Company (with its successors and permitted
assigns, "Muehlstein International"; and together with the Company and Pegasus,
the "Borrowers"), and FINOVA Capital Corporation, a Delaware corporation
("Lender").
ARTICLE I
DEFINITIONS
1.01. Certain Defined Terms. In addition to the terms defined above, the
following terms used in this Agreement shall have the following meanings,
applicable both to the singular and the plural forms of the terms defined:
"Accommodation Obligation" means any Contractual Obligation, contingent or
otherwise, of one Person with respect to any Indebtedness of another, if the
primary purpose or intent thereof by the Person incurring the Accommodation
Obligation is to provide assurance to the obligee of such Indebtedness of
another that such Indebtedness will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the holders thereof
will be protected (in whole or in part) against loss in respect thereof
including, without limitation, direct and indirect guarantees, endorsements
(except for collection or deposit in the ordinary course of business), notes co-
made or discounted, recourse agreements, take-or-pay agreements, keep-well
agreements, agreements to purchase or repurchase such Indebtedness or any
security therefor or to provide funds for the payment or discharge thereof,
agreements to maintain solvency, assets, level of income, or other financial
condition, and agreements to make payment other than for value received. The
amount of any Accommodation Obligation shall be equal to the lesser of (i) the
principal amount payable under such Accommodation Obligation (if quantifiable),
and (ii) the portion of the obligation so guaranteed or otherwise supported.
"Acquisition Agreement" means the Stock Purchase Agreement dated as of
October 30, 1995, between Holdings, as buyer, and Muehlstein Holding
Corporation, as seller, as amended by the first amendment thereto dated as of
November 20, 1995, and as such agreement may be further amended, supplemented or
otherwise modified from time to time.
<PAGE>
"Acquisition Documents" means the Acquisition Agreement and all other
instruments, agreements and written Contractual Obligations entered into in
connection with the Acquisition Agreement and otherwise relating thereto,
including, without limitation, the Supply Agreements (as defined in the
Acquisition Agreement), the License Agreement (as defined in the Acquisition
Agreement), the Shareholders' Agreement, the ESOP, the Retirement Plan, the
Nonvoting Common Stock Purchase Agreement and the instruments, agreements and
written Contractual Obligations entered into in connection with the Nonvoting
Common Stock Purchase Agreement.
"Affiliate" means, as to any specified Person, any other Person (i) which,
directly or indirectly, controls, is controlled by or is under common control
with, such specified Person and includes each officer or director or general
partner of such Person, (ii) which beneficially owns or holds 12.5% or more of
the Voting Stock (after giving effect to any Capital Stock which is convertible
into Voting Stock) of such specified Person or (iii) of which 12.5% or more of
the Voting Stock (after giving effect to any Capital Stock which is convertible
into Voting Stock) is beneficially owned or held by such specified Person or a
Subsidiary of such specified Person. For the purposes of this definition, (i)
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person directly or indirectly,
whether through the ownership of Voting Stock, by contract or otherwise and (ii)
Mobil Corporation shall not be deemed an Affiliate of the Company solely as a
result of its ownership interest in the Preferred Stock but only so long as it
has no representative on the board of directors of Holdings.
"Availability Reserves" shall have the meaning ascribed to such term from
time to time in the Senior Revolving Credit Agreement.
"Bankruptcy Code" means Title 11 of the United States Code (11 U.S.C.
ss.ss. 101 et seq.), as amended from time to time, and any successor statute.
"Benefit Plan" means a defined benefit plan as defined in Section 3(35) of
ERISA (other than a Multiemployer Plan) in respect of which the Company or any
ERISA Affiliate is, or within the immediately preceding six (6) years was, an
"employer" as defined in Section 3(5) of ERISA.
"Borrower Guaranty" means the Guaranty dated as of the Closing Date duly
executed and delivered to Lender by each of the Borrowers substantially in the
form of Exhibit B, as the same may be amended, supplemented or otherwise
modified from time to time.
"Borrower Junior Pledge Agreements" means (i) the Junior Pledge Agreement
dated as of the Closing Date by and between the Company and Lender and (ii) the
Junior Pledge Agreement dated as of the Closing Date by and between Muehlstein
International and Lender, in each case in substantially the form of Exhibit L,
as each of the
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<PAGE>
same may be amended, supplemented or otherwise modified from time to time.
"Borrower Junior Security Agreements" means (i) the Junior Security
Agreement dated as of the Closing Date by and between the Company and Lender,
(ii) the Junior Security Agreement dated as of the Closing Date by and between
Muehlstein International and Lender, and (iii) the Junior Security Agreement
dated as of the Closing Date by and between Pegasus and Lender, in each case in
substantially the form of Exhibit C, as each of the same may be amended,
supplemented or otherwise modified from time to time.
"Borrowers" is defined in the preamble.
"Borrowing Base Certificate" shall have the meaning ascribed to such term
from time to time in the Senior Revolving Credit Agreement.
"Business Day" means a day, in the applicable local time, which is not a
Saturday or Sunday or a legal holiday and on which banks are not required or
permitted by law or other governmental action to close in New York, New York.
"Capital Expenditures" means, for any period, the aggregate of all
expenditures (whether payable in cash or other Property or accrued as a
liability (but without duplication)) during such period that, in conformity with
GAAP, are required to be classified as capital expenditures; provided, however,
(i) Capital Expenditures shall include (A) that portion of Capital Leases which
is capitalized on the consolidated balance sheet of the Company and its
Subsidiaries and (B) expenditures for Equipment which is purchased
simultaneously with the trade-in of existing Equipment owned by the Company or
any of its Subsidiaries, to the extent the gross purchase price of the purchased
Equipment exceeds the book value of the Equipment being traded in at such time;
and (ii) Capital Expenditures shall exclude expenditures made in connection with
the replacement or restoration of Property, to the extent reimbursed or financed
from insurance or condemnation proceeds.
"Capital Lease", as applied to any Person, means any lease of any property
(whether real, personal or mixed) by that Person as lessee which, in conformity
with GAAP, is accounted for as a capital lease on the balance sheet of that
Person.
"Capital Stock", with respect to any Person, means any capital stock of
such Person, regardless of class or designation, and all warrants, options,
purchase rights, conversion or exchange rights, voting rights, calls or claims
of any character with respect thereto.
"Cash Equivalents" means (i) marketable direct obligations issued or
unconditionally guaranteed by the United States government and backed by the
full faith and credit of the United States government; (ii) domestic and
Euro-dollar certificates of deposit and time deposits, bankers' acceptances and
floating rate certificates of deposit
-4-
<PAGE>
issued by any commercial bank organized under the laws of the United States, any
state thereof, the District of Columbia, any foreign bank, or its branches or
agencies (fully protected against currency fluctuations), which, at the time of
acquisition, are rated A-1 (or better) by Standard & Poor's Corporation (or its
successors) or P-1 (or better) by Moody's Investors Service, Inc. (or its
successors); (iii) commercial paper of United States and foreign banks and bank
holding companies and their subsidiaries and United States and foreign finance,
commercial industrial or utility companies which, at the time of acquisition,
are rated A-1 (or better) by Standard & Poor's Corporation (or its successors)
or P-1 (or better) by Moody's Investors Service, Inc. (or its successors); and
(iv) marketable direct obligations of any state of the United States of America
or any political subdivision of any such state given on the date of such
investment the highest credit rating by Moody's Investors Service, Inc. (or its
successors) and Standard & Poor's Corporation (or its successors); provided,
that the maturities of any such Cash Equivalents referred to in clauses (i)
through (iv) shall not exceed one year.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C. ss.ss. 9601 et seq., any amendments thereto,
any successor statutes, and any regulations or legally enforceable guidance
promulgated thereunder.
"CERCLIS" is defined in Section 6.01(o).
"Change of Control" means (i) any change occurs in the direct or indirect
equity ownership or control of Holdings' Capital Stock resulting in (x) Persons
who control or own Holdings' Voting Stock on the Closing Date and their
respective Affiliates and (y) (A) officers of the Company and (B) members of the
Company's leadership committee, in each case who hold such positions as of the
Closing Date or who are appointed subsequent to the Closing Date in the ordinary
course of business and not in connection with any Change in Control arising
under any of the other clauses of this definition, collectively controlling or
owning less than 51% of Holdings' Voting Stock; (ii) (x) Persons who control or
own Holdings' Voting Stock on the Closing Date and their respective Affiliates
and (y) (A) officers of the Company and (B) members of the Company's leadership
committee, in each case who hold such positions as of the Closing Date or who
are appointed subsequent to the Closing Date in the ordinary course of business
and not in connection with any Change in Control arising under any of the other
clauses of this definition, shall cease to have the right to elect or designate
a majority of the board of directors of Holdings; (iii) a Person or entity or
group of Persons or entities acting in concert (other than, to the extent still
employed by the Company or its Subsidiaries, Persons that control or own
Holdings' Voting Stock on the Closing Date and that are not acting in concert
with Persons that did not control or own Holdings' Voting Stock on the Closing
Date), shall, as a result of a tender or exchange offer, open market purchases,
privately negotiated purchases or otherwise, have become the beneficial owner
(within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as
amended) of securities of Holdings representing more than 20% of Holdings'
Voting Stock; (iv) four (4) members of
-5-
<PAGE>
the Company's leadership committee shall have left the employ of the Company
during any twelve month period (except for reasons of death or disability), (v)
the Company shall cease to own and control 100% of the outstanding Capital Stock
of Pegasus, Muehlstein International or any other Subsidiary Guarantor; or (vi)
Holdings shall cease to own and control 100% of the outstanding Capital Stock of
the Company.
"Citibank" means Citibank, N.A., a national banking association.
"Claim" means any claim or demand, by any Person, of whatsoever kind or
nature for any alleged Liabilities and Costs, whether based in contract, tort,
implied or express warranty, strict liability, criminal or civil statute,
Permit, ordinance or regulation, common law or otherwise.
"Closing" means the date upon which the Loan is initially funded.
"Closing Date" means the date upon which the Closing occurs.
"Collateral" means all Property and interests in Property now owned or
hereafter acquired by Holdings, the Borrowers or any of their respective
Subsidiaries upon which a Lien is granted under any of the Loan Documents,
provided, that the Collateral shall not include any Receivables sold pursuant to
the Permitted Receivables Financing Program (it being understood and agreed that
the proceeds of the initial sale thereunder shall constitute part of the Junior
Collateral and shall be subject to the Intercreditor Agreement).
"Common Equity Notes" means (i) the promissory notes, substantially in the
form of Exhibit A to the Shareholders' Agreement issued to holders of Common
Stock pursuant to the Shareholders Agreement and (ii) the promissory notes
described in Section 11.3(a) of the ESOP issued to holders of Common Stock
pursuant to the ESOP.
"Common Stock" means the Common Stock, par value $0.01 per share, of
Holdings.
"Company Junior Trademark Security Agreement" means the Trademark Security
Agreement dated as of the Closing Date by and between the Company and Lender
substantially in the form of Exhibit F hereto, as the same may be amended,
supplemented or otherwise modified from time to time.
"Company Senior Security Agreement" means the Senior Security Agreement
dated as of the Closing Date by and between the Company and Lender substantially
in the form of Exhibit E hereto, as the same may be amended, supplemented or
otherwise modified from time to time.
"Compliance Certificate" is defined in Section 7.01(c).
-6-
<PAGE>
"Consolidated Cash Interest Expense" means, for any period, all as
determined in conformity with GAAP, (i) total interest expense and, after the
inception of the Permitted Receivables Financing Program, any discount
attributable to the payment of yield and any program, commitment, agency and
similar fees payable under the Permitted Receivables Financing Program, whether
paid or accrued (without duplication) (including the interest component of
Capital Lease obligations), of Holdings and its Subsidiaries on a consolidated
basis, including, without limitation, all recurring bank loan fees and
commissions, discounts and other fees and charges owed with respect to letters
of credit and net costs under Interest Rate Contracts, but excluding, however,
amortization of discount, interest paid in property other than cash or any other
interest expense not payable in cash, minus (ii) any net payments received
during such period under Interest Rate Contracts.
"Consolidated Fixed Charges" means, for any period, the sum of the amounts
for such period of (i) Consolidated Cash Interest Expense, (ii) scheduled
payments of principal on the Indebtedness of Holdings and its Subsidiaries
(including the principal component of Capital Lease obligations but excluding
the Obligations), (iii) cash dividends paid in respect of the Capital Stock of
Holdings and (iv) cash payments in respect of redemptions of the Capital Stock
of Holdings.
"Consolidated Net Income" means, for any period, the net earnings (or loss)
after taxes of Holdings and its Subsidiaries on a consolidated basis for such
period taken as a single accounting period determined in conformity with GAAP.
"Consolidated Tangible Net Worth" means, with respect to any Person, at any
time, (i) total consolidated assets of such Person (including the capitalized
portion of Interest Rate Contracts), plus (ii) any negative cumulative foreign
exchange translation adjustments applicable to such Person, minus (iii) total
consolidated liabilities of such Person (excluding any accrued and unpaid
dividends payable on the Capital Stock of such Person), minus (iv) any positive
cumulative foreign exchange translation adjustments applicable to such Person.
There shall be excluded therefrom all General Intangibles (except goodwill, tax
refunds, tax refund claims, rights and claims against carriers, shippers,
franchises, lessors and lessees, and rights to indemnification), organizational
expenses and all unamortized debt discount and deferred charges (including
deferred taxes) and non-current pension liabilities or assets. Assets and
liabilities shall be determined in accordance with GAAP, except that investments
in and moneys due from Affiliates of the Borrowers (other than such moneys in
respect of trade accounts receivables and payables in the ordinary course of
business) shall be excluded from total consolidated assets.
"Contaminant" means any waste, pollutant, hazardous substance, radioactive
substance or material, toxic substance, hazardous waste, radioactive waste,
special waste, petroleum or petroleum-derived substance or waste, asbestos in
any form or condition, polychlorinated biphenyls ("PCBs"), or any hazardous or
toxic constituent
-7-
<PAGE>
thereof and includes, but is not limited to, these terms as defined in
Environmental, Health or Safety Requirements of Law.
"Constituent Document" means, (i) with respect to any corporation, (A) the
articles/certificate of incorporation (or the equivalent organizational
documents) of such entity, and (B) the by-laws (or the equivalent governing
documents) of such entity, and (ii) with respect to any partnership (whether
limited or general), (A) the certificate of partnership (or equivalent filings),
(B) the partnership agreement (or equivalent organizational documents) of such
partnership and (C) any document setting forth the designation, amount and/or
rights, limitations and preferences of any of such partnership's partnership
interests.
"Contractual Obligation", as applied to any Person, means any provision of
any Securities issued by that Person or any indenture, mortgage, deed of trust,
security agreement, pledge agreement, guaranty, contract, undertaking, agreement
or instrument to which that Person is a party or by which it or any of its
properties is bound, or to which it or any of its properties is subject.
"Credit Facilities" shall have the meaning ascribed to such term from time
to time in the Senior Revolving Credit Agreement.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement.
"Currency Agreement Exposure" shall have the meaning ascribed to such term
from time to time in the Senior Revolving Credit Agreement.
"Customary Permitted Liens" means
(a) Liens (other than Environmental Liens and Liens in favor of the
PBGC) with respect to the payment of taxes, assessments or governmental
charges in all cases which are not yet due or which are not required to be
paid pursuant to Section 8.04;
(b) statutory Liens of landlords and Liens of suppliers, mechanics,
carriers, materialmen, consignors, warehousemen, repairers or workmen and
other Liens imposed by law created in the ordinary course of business for
amounts not yet due or which are being contested in good faith by
appropriate proceedings and with respect to which adequate reserves or
other appropriate provisions are being maintained in accordance with GAAP;
(c) Liens (other than any Lien in favor of the PBGC) incurred or
deposits made in the ordinary course of business in connection with
worker's compensation, unemployment insurance or other types of social
security benefits or
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<PAGE>
to secure the performance of bids, tenders, sales, contracts (other than
for the repayment of borrowed money), surety, appeal and performance bonds;
provided that all such Liens do not in the aggregate materially detract
from the value of any Borrower's or any of its Subsidiaries' Property or
materially impair the use thereof in the operation of the business of such
Borrower or any of such Subsidiaries;
(d) Liens arising as a result of progress payments or otherwise under
government contracts; and
(e) Liens arising with respect to zoning restrictions, easements,
licenses, reservations, covenants, rights-of-way, utility easements,
building restrictions and other similar charges or encumbrances on the use
of Real Property.
"Deed of Trust" means that certain Deed of Trust, Assignment of Rents and
Proceeds, and Security Agreement pursuant to which Borrower shall grant to
Lender a first priority Lien on and security interest in the Houston Facility.
"Default" means an event which, with the giving of notice or the lapse of
time, or both, would constitute an Event of Default.
"Discounted Value" shall refer to the amount determined by discounting the
Remaining Scheduled Payment Amounts (based on the forty-eight (48) month
amortization schedule applicable to the Loan), or so many of the Remaining
Scheduled Payment Amounts as are being prepaid, in the circumstances of a
partial prepayment of the Loan, from their respective due dates to the date of a
prepayment (whether in whole or in part) of the Loan, in accordance with
accepted financial practice and at a discount factor equal to the Reinvestment
Yield.
"DOL" means the United States Department of Labor and any Person succeeding
to the functions thereof.
"Dollars" and "$" mean the lawful money of the United States.
"EBITDA" means, for any period on a consolidated basis for Holdings and its
Subsidiaries, (i) the sum of the amounts for such period of (A) Consolidated Net
Income, (B) depreciation, amortization expense and other non-cash charges, (C)
Consolidated Cash Interest Expense, (D) charges for federal, state, local and
foreign income taxes, (E) extraordinary losses which have been deducted in the
determination of Consolidated Net Income, (F) other non-operating expenses
(including discounts and expenses under the Permitted Receivables Financing
Program) not otherwise included in Consolidated Net Income, (G) non-recurring,
non-operating expenses, (H) discretionary bonuses and profit sharing (to the
extent paid in Capital Stock of Holdings) and non-cash deferred compensation
expenses, net of any cash payments made in respect thereof and (I) ESOP
contribution expense, minus (ii) the sum of (A) extraordinary gains not already
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excluded from the determination of Consolidated Net Income, (B) income tax
credits and (C) non-recurring, non-operating income.
"Environmental Certificate" shall mean that certain Environmental
Certificate with Representations, Covenants, and Warranties, substantially in
the form of Exhibit G hereto, from the Company in favor of Lender with respect
to Houston Facility.
"Environmental, Health or Safety Requirements of Law" means all valid and
enforceable Requirements of Law derived from or relating to federal, state,
local and foreign laws, regulations, orders, ordinances, rules, permits,
licenses or other binding determination of any Governmental Authority relating
to or addressing the environment, health or safety, including but not limited to
any law, regulation, or order relating to the use, handling, or disposal of any
Contaminant, any law, regulation, or order relating to Remedial Action and any
law, regulation, or order relating to workplace or worker safety and health, and
such Requirements of Law as are promulgated by the specifically authorized
Persons responsible for administering such Requirements of Law.
"Environmental Lien" means a Lien in favor of any Governmental Authority
for any (i) liabilities under any Environmental, Health or Safety Requirement of
Law, or (ii) damages arising from, or costs incurred by such Governmental
Authority in response to, a Release or threatened Release of a Contaminant into
the environment.
"Environmental Property Transfer Acts" means any applicable Requirement of
Law that conditions, restricts, prohibits or requires any notification or
disclosure triggered by the closure of any Property or the transfer, sale or
lease of any Property or deed or title for any Property for environmental
reasons, including, but not limited to, any so-called "Environmental Cleanup
Responsibility Act", "Responsible Transfer Act", or "Industrial Site Recovery
Act".
"Equipment" means, with respect to any Person, all of such Person's present
and future equipment (as defined in the Uniform Commercial Code).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute.
"ERISA Affiliate" means (i) any corporation which is a member of the same
controlled group of corporations (within the meaning of Section 414(b) of the
Internal Revenue Code) as Holdings or the Company; (ii) a partnership or other
trade or business (whether or not incorporated) which is under common control
(within the meaning of Section 414(c) of the Internal Revenue Code) with
Holdings or the Company; (iii) a member of the same affiliated service group
(within the meaning of Section 414(m) of the Internal Revenue Code) as Holdings
or the Company, any corporation described in clause (i) above or any partnership
or trade or business described in clause (ii) above; and (iv) any other Person
which is required to be aggregated with Holdings or the Company
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pursuant to regulations promulgated under Section 414(o) of the Internal Revenue
Code.
"ESOP" means the H. Muehlstein & Co., Inc. Deferred Profit Sharing and
Employee Stock Ownership Plan, effective as of December 1, 1995, as the same may
be amended, supplemented or otherwise modified from time to time, subject in
each case to Section 9.16.
"Event of Default" means any of the occurrences set forth in Section 11.01
after the expiration of any applicable grace period and the giving of any
applicable notice, in each case as expressly provided in Section 11.01.
"Federal Reserve Board" means the Board of Governors of the Federal Reserve
System or any Governmental Authority succeeding to its functions.
"Financial Officer" means, with respect to Holdings or any Borrower, the
chief financial officer, treasurer, controller or other officer or member of
management of Holdings or such Borrower with significant responsibility for the
financial affairs of Holdings or such Borrower.
"Finsub" means a corporation organized under the laws of a state of the
United States of America which is a special purpose Wholly Owned Subsidiary of
the Company formed solely for the purpose of engaging in the Permitted
Receivables Financing Program.
"Fiscal Year" means the fiscal year of the Borrower, which shall be the 12-
month period ending on December 31 of each calendar year.
"Fixed Charge Coverage Ratio" means, with respect to any period, the ratio
of (i) EBITDA for such period, minus Capital Expenditures for such period, minus
cash taxes for such period, to (ii) Consolidated Fixed Charges for such period.
"Foreign Employee Benefit Plan" means any employee benefit plan as defined
in Section 3(3) of ERISA which is maintained or contributed to for the benefit
of the employees of the Borrower, any of its Subsidiaries or any of its ERISA
Affiliates, but which is not covered by ERISA pursuant to Section 4(b)(4) of
ERISA.
"Foreign Pension Plan" means any Foreign Employee Benefit Plan which under
applicable local law is required to be funded through a trust or other funding
vehicle.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board, the American
Institute of Certified Public Accountants and the Financial Accounting Standards
Board or in such other statements by such other entity as may be in general use
by significant segments of the accounting profession as in effect on the date of
the most recent audited financial
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statements of Holdings and its Subsidiaries delivered to the Lender prior to the
Closing Date (unless otherwise specified pursuant to Section 13.04).
"General Intangibles" means, with respect to any Person, all of such
Person's present and future general intangibles (as defined in Section 9-106 of
the Uniform Commercial Code).
"Good Funds" means Dollars deposited to the Payment Account in federal
funds at or before 3:00 p.m., New York, New York time, on any Business Day.
"Governmental Authority" means any nation or government, any federal,
state, province, territory, local or other political subdivision thereof and any
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Holder" means any Person entitled to enforce any of the Obligations,
whether or not such Person holds any evidence of Indebtedness, including,
without limitation, Lender.
"Holdings" is defined in the preamble.
"Holdings Guaranty" means the Guaranty dated as of the Closing Date duly
executed and delivered to Lender by Holdings substantially in the form of
Exhibit H hereto, as the same may be amended, supplemented or otherwise modified
from time to time.
"Holdings Junior Pledge Agreement" means the Pledge Agreement dated as of
the Closing Date by and between Holdings and Lender substantially in the form of
Exhibit I hereto, as the same may be amended, supplemented or otherwise modified
from time to time.
"Holdings Junior Security Agreement" means the Security Agreement dated as
of the Closing Date by and between Holdings and Lender substantially in the form
of Exhibit J hereto, as the same may be amended, supplemented or otherwise
modified from time to time.
"Houston Facility" means that parcel of the Real Property owned by the
Company and located at 13001 Almeda Road, Houston, Harris County, Texas,
together with all improvements, machinery, Equipment, fixtures and goods (other
than Inventory, any reversionary interest in Inventory, and any goods that are
returned that constitute Inventory) located thereon, and any software used in
connection with such machinery, Equipment, fixtures, and goods, any of which is
the Property of any Borrower.
"Indebtedness", as applied to any Person, at any time, shall mean, without
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duplication, (a) all indebtedness, obligations or other liabilities of such
Person (i) for borrowed money or evidenced by debt securities, debentures,
acceptances, notes or other similar instruments, and any accrued interest, fees
and charges relating thereto, (ii) in respect of obligations (A) to redeem,
repurchase or exchange for cash any Securities at a fixed or determinable date,
at the option of another Person or upon the occurrence of a condition not solely
within the control of such Person, as of the time such payment date becomes
fixed or determined, such option is exercised or such condition is satisfied, as
the case may be, or (B) to pay cash dividends in respect of any stock, (iii)
with respect to letters of credit issued for such Person's account, (iv) to pay
the deferred purchase price of property or services, except (A) accounts payable
and accrued expenses arising in the ordinary course of business and (B) any
obligation arising solely in respect of the conversion in the ordinary course of
business of any current liability into a long-term obligation in a like amount
and bearing interest at a rate not in excess of a market rate of interest, (v)
in respect of Capital Leases, (vi) which are Accommodation Obligations, (vii)
upon which interest charges are customarily paid (including zero coupon
instruments but excluding obligations referred to in clauses (iv)(A) or (iv)(B)
above) or (viii) under conditional sale or other title retention agreements
relating to property purchased by such Person; (b) all indebtedness, obligations
or other liabilities of such Person or others secured by a Lien on any property
of such Person, whether or not such indebtedness, obligations or liabilities are
assumed by such Person, all as of such time (it being understood that if
recourse with respect to such indebtedness, obligations or liabilities is
limited to such property, such indebtedness, obligations or other liabilities
shall be limited to the fair market value of such property); (c) all
indebtedness, obligations or other liabilities of such Person in respect of
Interest Rate Contracts and Currency Agreements, net of liabilities owed to such
Person by the counterparties thereon; and (d) all contingent Contractual
Obligations with respect to any of the foregoing.
"Indemnitee" is defined in Section 13.03.
"Indemnified Matter" is defined in Section 13.03.
"Initial Projections" means the financial projections initially dated
November 2, 1995 and updated on February 8, 1996 with respect to Holdings and
its Subsidiaries delivered by Holdings to Lender on or prior to the Closing
Date.
"Intercreditor Agreement" means the Intercreditor Agreement dated as of the
Closing Date between the Revolving Credit Agent (as agent for the Senior
Revolving Lenders) and Lender, as the same may be amended, supplemented or
otherwise modified from time to time.
"Interest Rate Contract" means any interest rate exchange, swap, collar,
future, protection, cap, floor or similar agreements providing interest rate
protection.
"Interest Rate Contract Exposure" shall have the meaning ascribed to such
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term from time to time in the Senior Revolving Credit Agreement.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as amended
to the date hereof and from time to time hereafter, any successor statute and
any regulations or guidance promulgated thereunder.
"Inventory" means, with respect to any Person, all of such Person's present
and future (i) inventory (as defined in Section 9-109(4) of the Uniform
Commercial Code) (including unbilled accounts receivable), (ii) goods,
merchandise and other personal Property furnished or to be furnished under any
contract of service or intended for sale or lease, and all goods consigned by
such Person and all other items which have previously constituted Equipment but
are then currently being held for sale or lease in the ordinary course of such
Person's business, (iii) raw materials, work-in-process and finished goods, (iv)
materials and supplies of any kind, nature or description used or consumed in
such Person's business or in connection with the manufacture, production,
packing, shipping, advertising, finishing or sale of any of the Property
described in clauses (i) through (iii) above, (v) goods in which such Person has
a joint or other interest to the extent of such Person's interest therein or
right of any kind (including, without limitation, goods in which such Person has
an interest or right as consignee), and (vi) goods which are returned to or
repossessed by such Person; in each case whether in the possession of such
Person, a bailee, a consignee, or any other Person for sale, storage, transit,
processing, repair, use or otherwise, and any and all documents for or relating
to any of the foregoing.
"Investment" means, with respect to any Person, (i) any purchase or other
acquisition by that Person of Securities, or of a beneficial interest in
Securities issued by or other equity ownership interest in any other Person,
(ii) any purchase by that Person of all or a significant part of the assets of a
business conducted by another Person, (iii) any loan, advance (other than
prepaid expenses, accounts receivable, advances to employees and similar items
made or incurred in the ordinary course of business), or capital contribution by
that Person to any other Person, including all Indebtedness to such Person
arising from a sale of property by such Person other than in the ordinary course
of its business and (iv) any accounts (including, without limitation, any such
deposit, cash collateral and investment accounts) with banks or other financial
institutions.
"IRS" means the Internal Revenue Service and any Person succeeding to the
functions thereof.
"Issuing Bank" and "Issuing Banks" shall each have the meaning ascribed to
such term from time to time in the Senior Revolving Credit Agreement.
"Junior Collateral" means all Collateral except the Senior Collateral, to
the extent such assets are located within the United States.
"Junior Collateral Access Agreement" means (a) a landlord waiver (with a
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copy of the relevant Lease attached) with respect to personal property located
at real property leased by the Company or its Subsidiaries, substantially in the
form of Exhibit A-1 (with such modifications as Lender may approve in its sole
discretion) and (b) a bailee waiver with respect to personal property maintained
in a warehouse or with another bailee, substantially in the form of Exhibit A-2
(with such modifications as Lender may approve in its sole discretion).
"Junior Collateral Assignment of Acquisition Agreement" means the Junior
Collateral Assignment of Acquisition Agreement dated as of the Closing Date by
and between Holdings and Lender, substantially in the form of Exhibit K hereto,
as the same may be amended, supplemented or otherwise modified from time to
time.
"Junior Security Documents" means those documents pursuant to which any of
the Borrowers shall grant a Lien on any of the Junior Collateral in favor of
Lender, including without limitation the Borrower Junior Security Agreements,
the Holdings Junior Security Agreement, the Company Junior Trademark Security
Agreement, the Holdings Junior Pledge Agreement, the Borrower Junior Pledge
Agreements, the Subsidiary Junior Security Agreements, the Junior Collateral
Assignment of Acquisition Agreement, and the Junior Collateral Access
Agreements.
"Knowledge" (and the related term "Know") means, with respect to Holdings'
or any Borrower's knowledge, the knowledge of a Responsible Person of Holdings
or such Borrower.
"Leases" means those leases, tenancies or occupancies entered into by
Holdings, any Borrower or any of the Borrowers' respective Subsidiaries, as
tenant, sublessor or sublessee either directly or as the successor in interest
to the Company or any of its Affiliates.
"Liabilities and Costs" means all liabilities, obligations,
responsibilities, losses and damages with respect to or arising out of any of
the following: personal injury, death, punitive damages, economic damages,
consequential damages, treble damages, intentional, willful or wanton injury,
damage or threat to the environment, natural resources or public health or
welfare, costs and expenses (including, without limitation, attorney, expert and
consulting fees and costs of or associated with investigation, feasibility or
Remedial Action studies), fines, penalties and monetary sanctions, voluntary
disclosures made to, or settlements with, the United States Government or any
foreign government or any political subdivision thereof, interest, direct or
indirect, known or unknown, absolute or contingent, past, present or future,
including interest, if any, thereon.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, conditional sale agreement, deposit arrangement, security interest,
encumbrance, lien (statutory or other), preference, priority, title retention or
other security agreement or preferential arrangement (including, without
limitation, any negative pledge
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arrangement and any agreement to provide equal and ratable security) of any kind
or nature whatsoever in respect of any property of a Person intended to assure
payment of any Indebtedness, obligation or other liability, whether granted
voluntarily or imposed by law, and includes the interest of a lessor under a
Capital Lease or under any financing lease having substantially the same
economic effect as any of the foregoing and the filing of any financing
statement or similar notice (other than a financing statement filed by a "true"
lessor pursuant to ss. 9-408 of the Uniform Commercial Code), naming the owner
of such property as debtor, under the Uniform Commercial Code or other
comparable law of any jurisdiction, but does not include the interest of a
lessor under an Operating Lease.
"Loan" means the Eight Million Dollar ($8,000,000.00) senior term loan from
Lender to Borrowers made pursuant to this Agreement and evidenced by the Notes.
"Loan Documents" means this Agreement, the Notes, the Deed of Trust, the
Environmental Certificate, the Holdings Guaranty, the Borrower Guaranty, the
Subsidiary Guaranty, the Company Senior Security Agreement, the Borrower Junior
Security Agreements, the Holdings Junior Security Agreement, the Company Junior
Trademark Security Agreement, the Holdings Junior Pledge Agreement, the Borrower
Junior Pledge Agreements, the Subsidiary Junior Security Agreements, the Junior
Collateral Assignment of Acquisition Agreement, the Junior Collateral Access
Agreements, the Intercreditor Agreement, the other documents executed or
delivered pursuant to Section 5.01(a) by Holdings, the Company or any Subsidiary
of the Company, and all other instruments, agreements and written Contractual
Obligations between any Borrower or any Subsidiary of any Borrower, on the one
hand, and Lender, on the other hand, in each case delivered to Lender before, on
or after the Closing Date pursuant to or in connection with the transactions
(including, without limitation, the cash management arrangements) contemplated
hereby. The Loan Documents shall not include the Permitted Receivables
Transaction Documents.
"Loan Year" means each period from the Closing Date, or from any annual
anniversary of the Closing Date, through the day preceding the immediately
succeeding annual anniversary of the Closing Date.
"Make Whole Premium" shall equal the excess, if any, of (a) the Discounted
Value immediately prior to any prepayment of that portion of the Loan which is
being prepaid over (b) the principal balance of the Loan being prepaid as of the
date of any such prepayment. Expressed mathematically, the difference, if
greater than zero arising when the amount determined pursuant to clause (b) of
the preceding sentence is subtracted from the amount determined pursuant to
clause (a) of the preceding sentence.
"Margin Stock" means "margin stock" as such term is defined in Regulation U
and Regulation G.
"Material Adverse Effect" means a material adverse effect upon (i) the
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business, condition (financial or otherwise), operations, performance,
properties or prospects of the Borrowers, taken as a whole, (ii) the ability of
Holdings or any of the Borrowers to perform their respective material
obligations under the Loan Documents or (iii) the ability of Lender to enforce
the Loan Documents.
"Maturity Date" means March 1, 2000.
"Muehlstein International" is defined in the preamble.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA which is, or within the immediately preceding six (6) years
was, contributed to by any Borrower or any ERISA Affiliate.
"Net Cash Proceeds" shall have the meaning ascribed to such term from time
to time in the Senior Revolving Credit Agreement.
"Nonvoting Common Stock" means the Nonvoting Common Stock, par value $0.01
per share, of Holdings.
"Nonvoting Common Stock Purchase Agreement" means the Common Stock Purchase
Agreement dated as of the Closing Date between Citicorp North America, Inc. and
Holdings.
"Note A" means that certain Promissory Note A, in the original principal
amount of $2,560,000, made jointly and severally by Borrowers and payable to the
order of Lender.
"Note A Interest Rate" means a fixed annual rate of interest equal to eight
and two-tenths percent (8.20%) per annum. Interest on Note A shall be calculated
on the basis of a year of 360 days and charged for the actual number of days
elapsed.
"Note B" means that certain Promissory Note B, in the original principal
amount of $5,440,000, made jointly and severally by Borrowers and payable to the
order of Lender.
"Note B Interest Rate" means a fixed annual rate of interest equal to nine
and seven-tenths percent (9.70%) per annum. Interest on Note B shall be
calculated on the basis of a year of 360 days and charged for the actual number
of days elapsed.
"Notes" means, collectively, Note A and Note B, and all amendments thereto,
replacements thereof and substitutions therefor.
"NPL" is defined in Section 6.01(o).
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"Obligations" means, to the extent arising hereunder, under the Notes or
under any other Loan Document, the Loan, all advances, debts, liabilities,
obligations, covenants and duties owing by Holdings, any Borrower, or any
Subsidiary Guarantor to Lender, any Affiliate of Lender, or any Person entitled
to indemnification pursuant to Section 13.03, of any kind or nature, present or
future, whether or not evidenced by any note, guaranty or other instrument,
whether or not for the payment of money, whether arising (i) by reason of (A) an
extension of credit, (B) loan, (C) guaranty or (D) indemnification or (ii) in
any other manner, whether direct or indirect (including those acquired by
assignment), absolute or contingent, due or to become due, now existing or
hereafter arising and however acquired. The term includes, without limitation,
all interest, charges, expenses, fees, reasonable attorneys' fees and
disbursements and any other sum chargeable to Holdings, any Borrower, or any
Subsidiary Guarantor hereunder or under any other Loan Document.
"Officer's Certificate" means, as to a corporation, a certificate executed
on behalf of such corporation by an officer or director of such corporation and,
with respect to Holdings, any Borrower or any Subsidiary Guarantor,
substantially in the form of Exhibit M.
"Operating Lease" means, as applied to any Person, any lease of any
property (whether real, personal or mixed) by that Person as lessee which is not
a Capital Lease.
"Paid In Full", "Pay In Full" and "Payment In Full" means, with respect to
the Obligations of any Borrower or Subsidiary Guarantor (other than, as of any
date of payment, Obligations which are contingent and unliquidated and not then
due and owing and which, pursuant to Section 13.09, survive the making and
repayment of the Loan), the payment in full in cash of such Obligations.
"Payment Account" means that certain account of Lender into which payments
in respect of Obligations shall be made. The Payment Account as of the Closing
Date is set forth on Schedule 1.01.1.
"PBGC" means the Pension Benefit Guaranty Corporation and any Person
succeeding to the functions thereof.
"Pegasus" is defined in the preamble.
"Pegasus Benelux" means Pegasus Polymers Benelux, Inc., a Delaware
corporation.
"Pegasus Coordination" means Pegasus Polymers International Coordination,
Inc., a Delaware corporation.
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"Permits" means any permit, approval, authorization license, variance,
exemption, no-action letter or permission required from a Governmental Authority
under an applicable Requirement of Law.
"Permitted Existing Accommodation Obligations" means those Accommodation
Obligations of the Company and its Subsidiaries identified as such on Schedule
1.01.2.
"Permitted Existing Indebtedness" means the Indebtedness of the Company and
its Subsidiaries identified as such on Schedule 1.01.3.
"Permitted Existing Investments" means those Investments identified as such
on Schedule 1.01.4.
"Permitted Existing Liens" means the Liens on assets of the Company or any
of its Subsidiaries identified as such on Schedule 1.01.5.
"Permitted Receivables Financing Program" means a receivables financing
program providing, among other things, for (i) the sales to the Company by
certain of its Subsidiaries of Receivables originated by such Subsidiaries, (ii)
the sale by the Company or any of its Subsidiaries to Finsub of such
Receivables, and (iii) the transfer of such Receivables by Finsub to a special
purpose trust or corporation which is not an Affiliate of the Company or Finsub;
provided that (y) all terms and conditions of such program shall have obtained
all necessary approvals of the Senior Revolving Lenders and (z) the Capital
Stock of Finsub and any promissory notes issued by Finsub to the Borrowers in
connection with such program shall have been pledged to Lender, subject to the
first priority Lien in favor of the Senior Revolving Lenders, pursuant to the
Loan Documents as additional security for the Obligations. Any such Capital
Stock of Finsub and any Promissory Notes issued by Finsub so pledged to Lender
shall be included within the Junior Collateral.
"Permitted Receivables Transaction Documents" means the documents approved
in writing by Lender and executed and delivered in connection with the Permitted
Receivables Financing Program, as such documents may be amended, supplemented or
otherwise modified from time to time.
"Permitted Subordinated Indebtedness" means unsecured Indebtedness that is
subordinated to the Obligations, the terms of which (including, without
limitation, terms relating to principal amount, interest, maturity, covenants,
subordination and cross-default) and all documentation relating thereto have
been approved by Lender in writing.
"Person" means any natural person, corporation, limited partnership,
limited liability company, general partnership, joint stock company, joint
venture, association, company, trust, bank, trust company, land trust, business
trust or other organization, whether or not a legal entity, or any Governmental
Authority.
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"Plan" means an employee benefit plan defined in Section 3(3) of ERISA in
respect of which any Borrower or any ERISA Affiliate is, or within the
immediately preceding six (6) years was, an "employer" as defined in Section
3(5) of ERISA.
"Preferred Stock" means the Series A Preferred Stock, par value $0.01 per
share, issued by Holdings to Muehlstein Holding Corporation (or a Mobil
Affiliate (as defined in the Acquisition Agreement)) pursuant to the Acquisition
Agreement, with a liquidation preference not exceeding $10,000,000.
"Prepayment Premium" shall have the meaning set forth in Section 2.06.
"Prime Rate" means that rate of interest announced publicly by Citibank as
its base borrowing rate, as it exists from time to time, notwithstanding the
fact that some Persons may borrow money at less than the Prime Rate.
"Property" means any Real Property or personal property, plant, building,
facility, structure, underground storage tank or unit, Equipment, Inventory,
General Intangible, Receivable, or other asset owned, leased or operated by any
Borrower or any of its Subsidiaries, as applicable (including any surface water
thereon or adjacent thereto, and soil and groundwater thereunder).
"Protective Advance" is defined in Section 11.02(e).
"Real Property" means, with respect to any Person, all of such Person's
present and future right, title and interest (including, without limitation, any
leasehold estate) in real property. As of the Closing Date, the only piece of
real property owned in fee simple by any Borrower was the Houston Facility.
"Receivables" means, with respect to any Person, all of such Person's
present and future (i) accounts (as defined in the Section 9-106 of the Uniform
Commercial Code), (ii) accounts receivable, (iii) rights to payment for goods
sold or leased or for services rendered (except those evidenced by instruments
or chattel paper), whether or not earned by performance, (iv) all rights in any
merchandise or goods which any of the same may represent, and (v) all rights,
title, security, insurance, letters of credit and guaranties with respect to
each of the foregoing, including, without limitation, any right of stoppage in
transit.
"Registration Statement" means Holdings' Registration Statement on Form S-1
under the Securities Act of 1933 (Registration No. 33-99754), as amended,
relating to the offering by Holdings to certain Persons of up to 2,000,000
shares of Common Stock.
"Regulation G" means Regulation G of the Federal Reserve Board as in effect
from time to time.
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"Regulation U" means Regulation U of the Federal Reserve Board as in effect
from time to time.
"Regulation X" means Regulation X of the Federal Reserve Board as in effect
from time to time.
"Reinvestment Yield" shall mean the rates shown under the column heading
"Ask Yld." for "Govt. Bonds & Notes" in the "Treasury Bonds, Notes & Bills"
Section of The Wall Street Journal - Western Edition published on the Business
Day prior to the date of any proposed prepayment of the Loan for the government
bond or note with a maturity date having the closest matching maturity to the
Weighted Average Life to Maturity, or, if there are more than one government
bonds or notes with a maturity date having the closest matching maturity to the
Weighted Average Life to Maturity, the highest of the rates shown in the "Ask
Yld." column for any such bond or note, plus four percent (4.0%).
"Release" means release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration into the indoor
or outdoor environment.
"Remaining Scheduled Payment Amount" shall mean the amount of each
scheduled payment of principal of and interest on either Note A or Note B, as
applicable, that would be due on or after the date of a prepayment of the Loan
if no payment of the Loan were made prior to its scheduled due date, or as to
any partial prepayment of the Loan, the amount of each scheduled payment of
principal of and interest on either Note A or Note B, as applicable, that would
be due on or after the date of a partial prepayment of the Loan, if no such
partial payment of the Loan were made prior to its scheduled due date.
"Remedial Action" means actions required to (i) clean up, remove, treat or
in any other way address Contaminants in the indoor or outdoor environment; or
(ii) investigate and determine if a remedial response is needed and to design
such a response and post-remedial investigation, monitoring, operation and
maintenance and care.
"Reportable Event" means any of the events described in Section 4043 of
ERISA.
"Requirements of Law" means, as to any Person, the charter and by-laws or
other organizational or governing documents of such Person, and any law, rule or
regulation, or determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject including,
without limitation, the Securities Act, the Securities Exchange Act, Regulations
G, U and X, ERISA, the Fair Labor Standards Act and any similar statute of any
foreign government or any political subdivision thereof and
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any certificate of occupancy, zoning ordinance, building, or land use
requirement or Permit or labor or employment rule or regulation, including
Environmental, Health or Safety Requirements of Law.
"Responsible Person" means (i) with respect to any Borrower, any Financial
Officer of such Borrower or any other officer of such Borrower which is also a
member of the leadership committee of the Company and (ii) solely in the case of
the Company, any member of the leadership committee of the Company.
"Restricted Junior Payment" means (i) any dividend or other distribution,
direct or indirect, on account of any shares of any class of Capital Stock of
Holdings or any of its Subsidiaries now or hereafter outstanding, except a
dividend payable solely in (x) shares of, or options or warrants (which do not
contain put or call rights) with respect to, that class of stock and/or (y)
shares of any class of stock which is junior to that class of stock, provided
that such shares do not constitute Indebtedness, (ii) any redemption,
retirement, sinking fund or similar payment, purchase or other acquisition for
value, direct or indirect, of any shares of any class of Capital Stock of
Holdings or any of its Subsidiaries now or hereafter outstanding, (iii) any
payment made to redeem, purchase, repurchase or retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to acquire
shares of any class of Capital Stock of Holdings or any of its Subsidiaries now
or hereafter outstanding and (iv) any payment or prepayment of principal of,
premium, if any, or interest, fees or other charges on or with respect to, and
any redemption, purchase, retirement, defeasance, sinking fund or similar
payment and any claim for rescission with respect to any Indebtedness which by
its terms is subordinated to the Obligations, including, without limitation, the
Permitted Subordinated Indebtedness.
"Retirement Plan" means the H. Muehlstein & Co., Inc. Employees' Retirement
Plan, amended and restated as of January 1, 1994, as the same may be amended,
supplemented or otherwise modified from time to time, subject in each case to
Section 9.16.
"Revolving Credit Agent" means, initially Citicorp USA, Inc., a Delaware
corporation, the "Agent" under the Senior Revolving Credit Agreement, and
Citibank Canada, a Canadian chartered bank, as the "Canadian Agent," and
thereafter the then acting "Agent" or "Canadian Agent," as such Person is
determined in accordance with the Senior Revolving Credit Agreement.
"Revolving Credit Availability" shall have the meaning ascribed to such
term from time to time in the Senior Revolving Credit Agreement.
"Revolving Credit Commitments" shall have the meaning ascribed to such term
from time to time in the Senior Revolving Credit Agreement.
"Sale and Leaseback Transaction" means, with respect to any Person, any
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direct or indirect arrangement pursuant to which Property is sold or transferred
by such Person and is thereafter leased back from the purchaser thereof by such
Person.
"Securities" means any stock, shares, voting trust certificates, bonds,
debentures, notes or other evidences of indebtedness, secured or unsecured,
convertible, subordinated or otherwise, or any certificates of interest, shares,
or participation in temporary or interim certificates for the purchase or
acquisition of, or any right to subscribe to, purchase or acquire any of the
foregoing, but shall not include any evidence of the Obligations.
"Securities Act" means the Securities Act of 1933, as amended from time to
time, and any successor statute.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and any successor statute.
"Senior Collateral" means the Houston Facility.
"Senior Revolving Credit Agreement" means that certain Credit Agreement
dated of even date herewith by and among Holdings, Borrowers, H. Muehlstein &
Co. (Canada) Limited, the various institutions from time to time a party thereto
as "Lenders", the various institutions from time to time party thereto as the
Issuing Banks, and the Revolving Credit Agent, as the same may from time to time
be amended, renewed, supplemented or otherwise modified at the option of the
parties thereto, and any other agreements pursuant to which any of the
indebtedness, commitments, obligations, costs, expenses, fees, reimbursements
and other indemnities payable or owing thereunder may be refinanced,
restructured, renewed, extended, refunded or replaced, as any such other
agreements may from time to time at the option of the parties thereto be
amended, supplemented, renewed or otherwise modified.
"Senior Revolving Lenders" means, collectively, the various institutions at
any given time a party to the Senior Revolving Credit Agreement, whether such
institutions are party thereto in the capacity as "Lender" thereunder, Issuing
Bank, or both.
"Senior Revolving Loan Documents" shall have the meaning ascribed to the
term "Senior Loan Documents" as set forth in the Intercreditor Agreement.
"Senior Revolving Obligations" shall mean the obligations of Borrowers, or
any of Borrowers, or of Holdings, to any of the Senior Revolving Lenders,
whether arising pursuant to the Senior Revolving Credit Agreement or any of the
other Senior Revolving Loan Documents, to the extent such obligations are
included within the defined term "Senior Loan Obligations" under the
Intercreditor Agreement.
"Senior Security Documents" mean those documents pursuant to which the
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Company shall grant to Lender a Lien on and security interest in the Senior
Collateral, including without limitation the Deed of Trust and the Company
Senior Security Agreement.
"Shareholders' Agreement" means the Shareholders' Agreement dated as of
January 31, 1996 among Holdings and certain holders of shares of Common Stock.
"Solvent", when used with respect to any Person, means that at the time of
determination:
(a) the assets of such Person, at a fair valuation, are in excess of
the total amount of its debts (including, without limitation, contingent
liabilities); and
(b) the present fair saleable value of its assets is greater than its
probable liability on its existing debts as such debts become absolute and
matured; and
(c) it is then able and expects to be able to pay its debts
(including, without limitation, contingent debts and other commitments) as
they mature; and
(d) it has capital sufficient to carry on its business as conducted
and as proposed to be conducted.
For purposes of determining whether a Person is Solvent, the amount of any
contingent liability shall be computed as the amount that, in light of all the
facts and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.
"Subsidiary" of a Person means any corporation or other entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are at the time directly or indirectly owned or controlled by such Person, one
or more of the other subsidiaries of such Person or any combination thereof.
"Subsidiary Guarantor" means each Subsidiary of the Company which is a
party to the Subsidiary Guaranty.
"Subsidiary Guaranty" means the Guaranty dated as of the Closing Date duly
executed and delivered to Lender by Pegasus Benelux and Pegasus Coordination
substantially in the form of Exhibit N hereto, as the same may be amended,
supplemented or otherwise modified from time to time.
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"Subsidiary Investment Basket" means, for any Fiscal Year, an amount equal
to (i) $2,000,000, plus (ii) the Unused Stock Proceeds Carryover Amount as of
the last day of the immediately preceding Fiscal Year, plus (iii) fifty percent
(50%) of the aggregate amount of Net Cash Proceeds received by Holdings in
connection with the sale of its Capital Stock (after March 31, 1996) during the
then current Fiscal Year. For purposes of this definition "Unused Stock Proceeds
Carryover Amount" means, as of the last day of any Fiscal Year during the term
of this Agreement, (i) fifty percent (50%) of the aggregate amount of Net Cash
Proceeds received by Holdings in connection with the sale of its Capital Stock
(after March 31, 1996) as of such date, minus (ii) for such Fiscal Year and each
preceding Fiscal Year during the term of this Agreement, an amount equal to the
excess, if any, of (1) all intercompany loans to, Investments in and
capitalizations of Subsidiaries of the Company (other than Borrowers) made
during such Fiscal Year (or such preceding Fiscal Year) over (2) $2,000,000
(except as otherwise permitted by this Agreement). For purposes of this
calculation, the term of this Agreement shall be deemed to include all of Fiscal
Year 1996.
"Subsidiary Junior Security Agreements" means (i) the Security Agreement
dated as of the Closing Date duly executed and delivered to Lender by Pegasus
Benelux and (ii) the Security Agreement dated as of the Closing Date duly
executed and delivered to Lender by Pegasus Coordination, in each case in
substantially the form of Exhibit O hereto, as the same may be amended,
supplemented or otherwise modified from time to time.
"Taxes" is defined in Section 2.11.
"Termination Event" means (i) a Reportable Event with respect to any
Benefit Plan; (ii) the withdrawal of any Borrower or any ERISA Affiliate from a
Benefit Plan during a plan year in which such Borrower or such ERISA Affiliate
was a "substantial employer" as defined in Section 4001(a)(2) of ERISA; (iii)
the imposition of an obligation on any Borrower or any ERISA Affiliate under
Section 4041 of ERISA to provide affected parties written notice of intent to
terminate a Benefit Plan in a distress termination described in Section 4041(c)
of ERISA; (iv) the institution by the PBGC or any similar foreign Governmental
Authority of proceedings to terminate a Benefit Plan or a Foreign Pension Plan;
(v) any event or condition which would reasonably constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Benefit Plan; (vi) a foreign Governmental Authority shall
appoint or institute proceedings to appoint a trustee to administer any Foreign
Pension Plan; or (vii) the partial or complete withdrawal of any Borrower or any
ERISA Affiliate from a Multiemployer Plan or a Foreign Pension Plan.
"Transaction Costs" means the fees, costs and expenses payable by the
Borrowers in connection with the execution, delivery and performance of the Loan
Documents and the Acquisition Documents.
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"Transaction Documents" means the Loan Documents, the Acquisition
Documents, the Senior Revolving Loan Documents and all other agreements or
instruments executed and delivered or to be executed and delivered pursuant
hereto or thereto or in connection herewith or therewith or any of the
transactions contemplated hereby or thereby.
"Triggering Event" shall have the meaning given such term in the
Intercreditor Agreement.
"Uniform Commercial Code" means the Uniform Commercial Code as enacted in
the State of New York, as it may be amended from time to time.
"Voting Stock" means, with respect to any Person, securities with respect
to any class or classes of Capital Stock of such Person entitling the holders
thereof (whether at all times or only so long as no senior class of stock has
voting power by reason of any contingency) to vote in the election of members of
the board of directors of such Person.
"Weighted Average Life to Maturity" shall mean the number of years
(calculated to the nearest one-twelfth year) obtained by dividing (i) the sum of
the products obtained by multiplying each remaining scheduled payment of
principal under the Loan by the number of years (calculated to the nearest
one-twelfth year) which will elapse between the date of a prepayment of the Loan
and the scheduled due date of such remaining scheduled principal payments, by
(ii) the outstanding principal balance of the Loan on such prepayment date. With
respect to any partial prepayment of the Loan, the foregoing formula shall be
calculated by reference to the remaining scheduled principal payments being
prepaid and dividing by that portion of the principal balance of the Loan which
is being prepaid.
"Wholly Owned Subsidiary" means any direct, wholly owned Subsidiary of the
Company with respect to which Lender has (i) a second priority Lien (subject
only to a Lien in favor of the Senior Revolving Lenders) on the Capital Stock of
such Subsidiary and (ii) a second priority Lien (subject only to a Lien in favor
of the Senior Revolving Lenders and to Customary Permitted Liens) on the
Receivables, Inventory and General Intangibles of such Subsidiary, in each case
as security for the Obligations.
1.02. Computation of Time Periods. In this Agreement, in the computation of
periods of time from a specified date to a later specified date, the word "from"
means "from and including" and the words "to" and "until" each mean "to but
excluding". Periods of days referred to in this Agreement shall be counted in
calendar days unless Business Days are expressly prescribed. Any period
determined hereunder by reference to a month or months or year or years shall
end on the day in the relevant calendar month in the relevant year, if
applicable, immediately preceding the date numerically corresponding to the
first day of such period, provided that if such period commences on the last day
of a calendar month (or on a day for which there is no
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numerically corresponding day in the calendar month during which such period is
to end), such period shall, unless otherwise expressly required by the other
provisions of this Agreement, end on the last day of the calendar month.
1.03. Accounting Terms. Subject to Section 13.04, for purposes of this
Agreement, all accounting terms not otherwise defined herein shall have the
meanings assigned to them in conformity with GAAP.
1.04. Other Definitional Provisions. References to the "preamble",
"Articles", "Sections", "subsections", "Schedules" and "Exhibits" shall be to
the preamble, Articles, Sections, subsections, Schedules and Exhibits,
respectively, of this Agreement unless otherwise specifically provided. The
words "hereof", "herein", and "hereunder" and words of similar import when used
in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement.
1.05. Other Terms. All other terms contained herein shall, unless the
context indicates otherwise, have the meanings assigned to such terms by the
Uniform Commercial Code to the extent the same are defined therein.
1.06. Payments by the Borrowers. All payments made by the Borrowers in
respect of principal and interest on the Loan, or any other payment in respect
of the Obligations, shall be made in Dollars.
ARTICLE II
LOAN AND TERMS OF PAYMENT
2.01. Loan.
(a) Loan. The Loan shall be two term loans, evidenced by the Notes, to
be made by Lender to Borrowers in the aggregate original principal amount
of $8,000,000.
(b) Reborrowing. Borrowers shall not be entitled to reborrow any
portion of the principal balance of the Loan that is repaid or prepaid.
(c) Disbursement of Loan on Closing Date. On the Closing Date,
provided no Default or Event of Default shall exist and that all of the
terms and conditions set forth in Article V shall have been satisfied,
Lender shall make the Loan to Borrowers, the proceeds of which shall be
disbursed in accordance with the instructions set forth on Exhibit 2.01(c)
(the "Request for Advance and Disbursement Instructions").
(d) Notification re Closing. Borrowers shall provide Lender with at
least forty-eight (48) hours prior written notice of the Closing (or such
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shorter period of time as may be acceptable to Lender), to enable Lender to
arrange for the availability of funds. In the event the Closing does not
take place on the date specified in Borrower's notice to Lender, Borrower
agrees to reimburse Lender for Lender's costs to maintain the necessary
funds available for the Closing, at the rate of interest applicable to each
of the Notes, for the number of days which elapse between the date
specified in Borrower's notice and the date upon which the Closing actually
occurs (which number of days shall not include the date specified in
Borrower's notice, but shall include the Closing Date).
2.02. Interest.
(a) Interest Rate. Except as provided in Section 2.05, the Obligations
shall bear interest at the Note A Interest Rate, with respect to the
outstanding principal balance from time to time of Note A, and at the Note
B Interest Rate, with respect to the outstanding principal balance from
time to time of Note B.
(b) Interest Computation. Interest shall be computed on the basis of a
year consisting of 360 days and charged for the actual number of days
during the period for which interest is being charged.
(c) Interest Payments. Interest accrued on the Loan shall be payable
in arrears (A) on the first Business Day of each calendar month, commencing
March 1, 1996, for the preceding calendar month, commencing on the first
such day following the making of the Loan and (B) if not theretofore paid
in full, at maturity (whether on the Maturity Date, by acceleration, or
otherwise) of the Loan.
(d) Maximum Interest. Notwithstanding any provision to the contrary
herein contained, Lender shall not collect a rate of interest on any
obligation or liability due and owing by Borrowers to Lender in excess of
the maximum contract rate of interest permitted by applicable law. Lender
and Borrowers have agreed that the internal laws of the State of New York
shall govern the relationship between them, but in the event of a final
adjudication to the contrary, Borrowers shall be obligated to pay, nunc pro
tunc, to Lender only such interest as then shall be permitted by the laws
of the state found to govern the contract relationship between Lender and
Borrowers. In the event the choice of Borrowers and Lender to have the Loan
be governed by the laws of the State of New York is not given effect in a
final adjudication on the matter, Borrowers and Lender hereby designate, as
their first alternate choice for the law which shall govern the Loan and
the transactions contemplated by this Agreement, the laws of the State of
Arizona. All interest found in excess of that rate of interest allowed and
collected by Lender shall be applied to the principal balance in such
manner as to prevent the payment and collection of interest in excess of
the rate permitted by
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applicable law.
2.03. Payment of Principal. Principal on each of Note A and Note B shall be
payable on the first Business Day of the month, commencing April 1, 1996, and on
the first Business Day of each month thereafter. The monthly principal
installment with respect to each Note for the first forty-seven (47) monthly
payments shall be equal to the principal installment under a seventy-two (72)
month equal monthly payment (principal and interest) amortization schedule,
based upon the original principal balance of each Note and the interest rate
applicable thereto. The interest element of each monthly installment shall be
determined in accordance with Section 2.02 or Section 2.05, as applicable. Any
and all remaining principal, and any other sums due and owing pursuant to the
Loan Documents, plus accrued and unpaid interest thereon, shall be due and
payable on March 1, 2000, the forty- eighth (48th) monthly installment date (the
"Maturity Date" ).
2.04. Late Charges. If a payment of principal or interest to be made
pursuant to this Loan Agreement becomes past due for a period in excess of five
(5) Business Days, Borrowers shall pay on demand to Lender a late charge of one
percent (1%) of the amount of such overdue payment. The foregoing
notwithstanding, no late charge shall be payable by Borrower hereunder if
interest shall be accruing pursuant to Section 2.05.
2.05. Default Interest. Notwithstanding the rates of interest specified in
Section 2.02 or elsewhere herein, and to the extent permitted by applicable law,
effective immediately upon the occurrence of any Event of Default and for as
long thereafter as such Event of Default shall be continuing, the principal
balance of the Loan and all other Obligations then outstanding shall bear
interest at a rate which is two percent (2.0%) per annum in excess of the rate
of interest otherwise applicable to the Loan and Obligations from time to time.
2.06. Prepayments.
(a) Prepayment of the Loan. Borrowers may voluntarily prepay the
principal balance of the Loan, including all amounts due under both Notes,
in whole (as to both Notes), but not in part, at any time, subject to the
following conditions:
(i) not less than thirty (30) days prior to the date upon which
Borrowers desire to make such prepayment, Borrowers shall deliver to
Lender written notice of their intention to prepay, which notice shall
state the prepayment date and shall become irrevocable five (5) days
prior to the stated prepayment date; and
(ii) Borrowers shall pay to Lender, concurrently with
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such prepayment, (I) a prepayment premium (the "Prepayment Premium")
equal to (A) one percent (1%) of the amount prepaid if such prepayment
is made during the Loan Year beginning on the Closing Date, (B) one
percent (1%) of the amount prepaid if such prepayment is made during
the Loan Year beginning on the first anniversary of the Closing Date,
and (C) zero percent (0%) of the amount prepaid if such prepayment is
made after the second anniversary of the Closing Date; (II) accrued
and unpaid interest through the date of such prepayment on the
principal balance being prepaid; and (III) any and all of the other
Obligations then due which remain unpaid.
(b) Make Whole Premium. In the event that Borrower elects that the
Note A Interest Rate shall be a fixed rate, then any prepayment applicable
to Note A, shall be accompanied by a payment equal to the Make Whole
Premium calculated in respect of such prepayment. Any prepayment applicable
to Note B shall be accompanied by a payment equal to the Make Whole Premium
calculated in respect of such prepayment.
(c) Involuntary Prepayment. Any payment of the principal balance of
the Loan received by Lender resulting from the exercise by Lender of any
remedy available to Lender subsequent to the occurrence of an Event of
Default and the acceleration of the Obligations shall be deemed to be a
prepayment subject to the provision of this Section 2.06, and the
applicable Prepayment Premium (calculated in accordance with subsection
2.06(a)(ii)) and any other payment required under subsection 2.06(a)(ii)
shall be payable on demand with respect to such payment.
2.07. Application of Prepayments. Prepayments received by Lender shall be
applied in the following order of priority: (i) first, to the payment of accrued
and unpaid interest on the portion of the principal balance of the Loan that is
being repaid, pro rata as between Note A and Note B to the extent of available
funds, (ii) next, to the payment of any other Obligations then due other than
the principal balance and accrued and unpaid interest on the principal balance
of the Loan, (iii) next, to the principal amount due with respect to Note B on
the Maturity Date, until such amount has been paid in full, (iv) next, to the
principal amount due with respect to Note A on the Maturity Date, until such
amount has been paid in full, (v) next, to the payment of regularly scheduled
installments of the principal balance of Note B, in the inverse order of the
maturity of such installments, until Note B shall have been paid in full, and
(vi) last, to the payment of regularly scheduled installments of the principal
balance of Note A, in the inverse order of the maturity of such installments,
until Note A has been paid in full.
2.08. Payments on Non-Business Days. Whenever any payment to be made by a
Borrower hereunder or under the Notes is stated to be due on a day which is not
a Business Day, the payment shall instead be due on the next succeeding Business
Day,
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and any such extension of time shall be included in the computation of the
payment of interest and fees hereunder.
2.09. Method of Payment; Good Funds. All payments to be made by Borrowers
pursuant to the Loan Documents shall be made by wire transfer to the account of
Lender at the Payment Account, or to such other account as Lender shall notify
Borrowers. Payment shall not be deemed to have been received by Lender until
Lender is in receipt of Good Funds.
2.10. Authorized Officers and Lenders. On the Closing Date and from time to
time thereafter, the Borrowers shall deliver to Lender an Officers' Certificate
setting forth the names of the officers, employees and agents authorized to act
for the Borrowers in respect of all matters relating to the Loan Documents.
Lender shall be entitled to rely conclusively on such officer's or employee's
authority until Lender receives written notice to the contrary. In addition,
Lender shall be entitled to rely conclusively on any written notice sent to it
by telecopy. Lender shall have no duty to verify the authenticity of the
signature appearing on, or any telecopy or facsimile of, any document, and,
Lender shall have no duty to verify the identity of any person representing
himself or herself as one of the officers, employees or agents authorized to
make such request or otherwise to act on behalf of the Borrowers. Lender shall
incur any liability to the Borrowers or any other Person in acting upon any
telecopy or facsimile or telephonic notice referred to above which Lender
reasonably believes to have been given by a duly authorized officer or other
person authorized to act on behalf of the Borrowers.
2.11. Taxes.
(a) Payment of Taxes. Any and all payments by the Borrowers hereunder
or under any Note or other document evidencing any Obligations shall be
made free and clear of and without reduction for any and all taxes, levies,
imposts, deductions, charges, withholdings, and all stamp or documentary
taxes, excise taxes, ad valorem taxes and other taxes imposed on the value
of the Property, charges or levies which arise from the execution, delivery
or registration, or from payment or performance under, or otherwise with
respect to, any of the Loan Documents or the Obligations and all other
liabilities with respect thereto, excluding taxes imposed on its income,
capital, profits or gains and franchise taxes imposed on it by (i) the
United States, (ii) the Governmental Authority of any jurisdiction (or any
political subdivision thereof) in which Lender's principal place of
business is located, (iii) the Governmental Authority in which Lender is
organized, managed and controlled or any political subdivision thereof or
(iv) any political subdivision of the United States, unless such taxes are
imposed solely as a result of such Lender's performance of any of the Loan
Documents in such political subdivision and such Lender would not otherwise
be subject to tax by such political subdivision (all such non-excluded
taxes, levies, imposts, deductions, charges, withholdings and liabilities
being hereinafter referred to as "Taxes"). If a Borrower
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shall be required by law to withhold or deduct any Taxes from or in respect
of any sum payable hereunder or under any such Note or document to Lender,
(x) the sum payable to Lender shall be increased as may be necessary so
that after making all required withholding or deductions (including
withholding or deductions applicable to additional sums payable under this
Section 2.11) Lender receives an amount equal to the sum it would have
received had no such withholding or deductions been made, (y) such Borrower
shall make such withholding or deductions, and (z) such Borrower shall pay
the full amount withheld or deducted to the relevant taxation authority or
other authority in accordance with applicable law.
(b) Indemnification. The Borrowers, jointly and severally agree to
indemnify Lender against, and reimburse Lender on demand for, the full
amount of all Taxes (including, without limitation, any Taxes imposed by
any Governmental Authority on amounts payable under this Section 2.11 and
any additional income or franchise taxes resulting therefrom) incurred or
paid by Lender or its Affiliates and any liability (including penalties,
interest, and out-of-pocket expenses paid to third parties) arising
therefrom or with respect thereto, whether or not such Taxes were lawfully
payable (other than any liability that results from the gross negligence or
willful misconduct of Lender, whether or not such Taxes were correctly or
legally asserted by the relevant taxing authority or other governmental
authority). A certificate as to any additional amount payable to any Person
under this Section 2.11 submitted by it to the Borrower shall, absent
manifest error, be final, conclusive and binding upon all parties hereto.
Lender agrees (i) within a reasonable time after receiving a written
request from the Company, to provide the Company with such certificates as
are reasonably required, and (ii) take such other actions as are reasonably
necessary to claim such exemptions as Lender or any Affiliate of Lender may
be entitled to claim in respect of all or a portion of any Taxes which are
otherwise required to be paid or deducted or withheld pursuant to this
Section 2.11 in respect of any payments under this Agreement or under the
Notes. If Lender receives a refund in respect of any Taxes for which Lender
has received payment from a Borrower hereunder, it shall promptly apply
such refund (including any interest received by Lender from the taxing
authority with respect to the refund with respect to such Taxes) to the
Obligations of such Borrower, net of all out-of-pocket expenses of Lender;
provided that such Borrower, upon the request of Lender, agrees to
reimburse such refund (plus penalties, interest or other charges) to Lender
in the event Lender is required to repay such refund.
(c) Receipts. Within thirty (30) days after the date of any payment of
Taxes pursuant to this Section 2.11 by any Borrower or any of the
Borrowers' Subsidiaries, the Company will furnish to Lender at its request,
at its address referred to in Section 13.08, a copy of a receipt, if any,
or other documentation reasonably satisfactory to Lender, evidencing
payment thereof. The
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Borrowers shall furnish to Lender, within thirty (30) days after the
request of Lender from time to time, an Officer's Certificate stating that
all Taxes of which they are aware are due have been paid and that no
additional Taxes of which it is aware are due.
ARTICLE III
NOTE, SECURITY AND GUARANTIES
3.01 Notes. The Loan shall be evidenced by Note A and Note B executed by
Borrowers (the "Notes").
3.02 Security. The Obligations shall be secured by the Senior Collateral
and the Junior Collateral.
3.03 Guaranties. In consideration for Lender providing financing to
Borrowers, Holdings, the Company and the Subsidiary Guarantors shall jointly and
severally guarantee all obligations of Borrowers to Lender under the Loan
Documents, pursuant to the Holdings Guaranty, the Company Guaranty, and the
Subsidiary Guaranty.
3.04 Perfection of Lien on Junior Collateral. Upon the occurrence of a
Triggering Event, Lender shall be permitted to perfect its Lien on and security
interest in the Junior Collateral. Prior to the occurrence of a Triggering
Event, Lender shall hold, but shall not be permitted to file or record, those
documents and instruments, including without limitation, UCC-1 Financing
Statements, necessary for Lender to perfect its Lien on the Junior Collateral.
Lender agrees that it shall only file the foregoing documents or instruments in
accordance with the provisions of the Intercreditor Agreement.
ARTICLE IV
FEES
4.01. Closing Fee. On the Closing Date, Borrowers shall pay to Lender a
"Closing Fee" in the aggregate amount of $80,000, representing one percent (1%)
of the original principal balance of the Loan.
4.02. Loan Maintenance Fees. Borrowers shall pay to Lender the following
"Loan Maintenance Fees" throughout the life of the Loan, payable on the first
Business Day of each month: $8,333 per month commencing April 1, 1996, and
ending March 1, 1997; $6,667 per month commencing April 1, 1997, and ending
March 1, 1998; $5,000 per month commencing April 1, 1998 and ending March 1,
1999; and $3,333 commencing April 1, 1999, and ending March 1, 2000. In the
event Borrowers prepay the Loan in its entirety, Borrower shall not be liable
for the payment of any Loan Maintenance Fees beyond the date of actual
prepayment of the Loan, provided that Borrower shall have paid the Prepayment
Premium set forth in Section 2.06(a) and the Make Whole Premium set forth in
Section 2.06(b).
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4.03. Calculation and Payment of Fees. All fees shall be payable in
addition to, and not in lieu of, interest, expense reimbursements,
indemnification and other Obligations. Fees shall be payable to the applicable
Payment Account. All fees payable hereunder shall be fully earned and
nonrefundable when paid. All fees specified or referred to herein due to Lender
including, without limitation, those referred to in this Article IV, shall bear
interest, if not paid when due, at the interest rate for Loan in accordance with
Section 2.05, shall constitute Obligations and shall be secured by the
Collateral.
ARTICLE V
CONDITIONS PRECEDENT TO LOAN
5.01. Conditions Precedent to the Loan. The obligation of Lender on the
Closing Date to make the Loan is subject to the satisfaction of all of the
following conditions precedent:
(a) Documents. Lender shall have received on or before the Closing
Date all of the following:
(i) this Agreement, the Notes and all other agreements, documents
and instruments (other than items designated as "post-closing" items)
described in the List of Closing Documents attached hereto and made a
part hereof as Exhibit P, each duly executed where appropriate and in
form and substance satisfactory to Lender and in sufficient copies for
Lender; without limiting the foregoing, the Borrowers hereby direct
their counsel, (A) McDermott, Will & Emery and (B) each of its other
counsel listed in such List of Closing Documents to prepare and
deliver to Lender and Gammage & Burnham, the opinions referred to in
such List of Closing Documents with respect to such counsel;
(ii) the Company's historical financial statements as of
September 30, 1995, and as of each succeeding month-end date for which
such financial statements are available prior to the Closing Date,
accompanied by appropriate pro forma financial statements as of
December 31, 1995, as well as a pro forma estimated balance sheet of
Holdings and its Subsidiaries as of the Closing Date, giving effect to
the transactions contemplated in the Transaction Documents, and the
Initial Projections; and
(iii) such additional documentation as Lender may reasonably
request.
(b) Collateral Information; Perfection of Liens. Lender shall have
received complete and accurate information from the Company with respect
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to the name and the location of the principal place of business and chief
executive office for the Company and each of its Subsidiaries; all Uniform
Commercial Code and other filing and recording fees and taxes shall have
been paid or duly provided for; and Lender shall have received evidence to
the satisfaction of Lender that all Liens granted to Lender with respect to
all Collateral are valid and effective and, upon the filing of the duly
executed Uniform Commercial Code financing statements which shall have been
delivered to Lender (in the case of such financing statements for Texas,
and, to the extent not prohibited by any Contractual Obligation of Mobil
Corporation or any of its Subsidiaries, prior to the Closing Date in time
to have such statements filed with the relevant filing office at least two
(2) Business Days prior to the Closing Date), will be perfected and of
first priority, except as otherwise permitted under this Agreement. All
certificates representing Capital Stock included in the Collateral shall
have been delivered to the Revolving Credit Agent (with duly executed stock
powers, as appropriate) and all instruments included in the Collateral
shall have been delivered to the Revolving Credit Agent (duly endorsed to
the Revolving Credit Agent), in the manner required by the Senior Revolving
Credit Agreement.
(c) Acquisition Agreement and Related Matters. Lender shall be
satisfied that: (i) the Acquisition Agreement and all other Acquisition
Documents which are to be entered into as of or prior to the Closing Date
shall have been duly approved and executed and delivered by the parties
thereto, (ii) the Registration Statement shall have been declared effective
by the Securities and Exchange Commission, (iii) shares of Common Stock
and/or Nonvoting Common Stock shall have been purchased in accordance with
the Registration Statement and/or the Nonvoting Common Stock Purchase
Agreement for an aggregate purchase price of not less than $15,000,000,
(iv) Holdings shall have issued the Preferred Stock to Muehlstein Holding
Corporation (or a Mobil Affiliate (as defined in the Acquisition
Agreement)) for an aggregate purchase price of not less than $10,000,000,
(v) the Senior Revolving Obligations shall have been funded, (vi) all
conditions precedent to closing under the Acquisition Agreement and the
other Acquisition Documents which are to be entered into as of or prior to
the Closing Date have been met (or waived) and such documents are, or
simultaneously with the execution hereof, shall be, in full force and
effect, and (vii) good and marketable title to the Capital Stock of the
Company purported to be transferred by the terms of the Acquisition
Agreement and the Acquisition Documents, free and clear of all Liens, has
been transferred to Holdings on terms satisfactory to Lender.
(d) No Legal Impediments. No law, regulation, order, judgment or
decree of any Governmental Authority shall exist, and Lender shall not have
received any notice that any action, suit, investigation, litigation or
proceeding is pending or threatened in any court or before any arbitrator
or Governmental Authority which (i) purports to enjoin, prohibit, restrain
or otherwise affect (A) the
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making of the Loan on the Closing Date or (B) the consummation of the
transactions contemplated pursuant to the Transaction Documents or (ii)
would be reasonably expected to impose or result in the imposition of a
Material Adverse Effect.
(e) No Change in Condition. No change deemed material by the Lender,
in its opinion, in the condition (financial or otherwise), business,
performance, assets, operations or prospects of Holdings, the Company, or
any of the Company's Subsidiaries shall have occurred that would (i) cause
the Initial Projections to be unreasonable in light of then current
circumstances, (ii) have a material adverse effect on the ability of
Holdings and the Borrowers to perform their material obligations under the
Loan Documents or (iii) have a material adverse effect on the ability of
Lender to enforce the Loan Documents.
(f) No Default. No Event of Default or Default shall have occurred and
be continuing or would result from the making of the Loan.
(g) Representations and Warranties. All of the representations and
warranties contained in Section 6.01 and in any of the other Loan Documents
shall be true and correct on and as of the Closing Date, both before and
immediately after giving effect to the making of the Loan.
(h) Fees and Expenses Paid. There shall have been paid to Lender all
fees (including, without limitation, the reasonable legal fees of counsel
to Lender and local counsel to Lender) due and payable on or before the
Closing Date, and all expenses (including, without limitation, legal
expenses) due and payable on or before the Closing Date.
(i) Closing Date. The Closing Date shall have occurred on or prior to
February 12, 1996.
(j) Consents, Etc. Except as set forth on Schedule 6.01-E, each of
Holdings, the Company and the Company's Subsidiaries shall have received
all material consents and authorizations required pursuant to any material
Contractual Obligation with any other Person and shall have obtained all
material Permits of, and effected all notices to and filings with, any
Governmental Authority as may be necessary to allow each of Holdings, the
Company, and the Company's other Subsidiaries lawfully (A) to execute,
deliver and perform, in all material respects, their respective obligations
hereunder, under the other Transaction Documents to which each of them is,
or shall be, a party and each other agreement or instrument to be executed
and delivered by each of them pursuant thereto or in connection therewith
and (B) to create and perfect the Liens on the Collateral to be owned by
each of them in the manner and for the purpose contemplated by the Loan
Documents. No such consent or authorization shall impose any conditions
upon
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Holdings, the Company, or any of the Company's Subsidiaries that are not
acceptable to the Lender.
(k) Transaction Costs. The Borrowers and Holdings shall have paid and
be obligated to pay not more than $6,600,000 in Transaction Costs.
(l) Environmental Review. Lender shall have been provided with a
written report or written reports of a Phase II investigation or
investigations conducted by ATEC Associates, Inc., identifying potential
environmental Liabilities and Costs to which Holdings, the Company and the
Company's Subsidiaries may be subject, in form and substance satisfactory
to Lender.
(m) Availability. As of the Closing Date, Borrowers shall have minimum
borrowing availability under the Senior Revolving Credit Agreement, after
giving effect to the funding of all amounts under the Senior Revolving
Obligations to be advanced on the Closing Date, of not less than
$17,000,000.
(n) Pension Obligations. Lender shall have reviewed and found
satisfactory any matters with respect to unfunded or underfunded balances
in Borrower's Plans, including without limitation matters relative to the
priority of any potential Lien in favor of such Plan which may be imposed
by law, and, to the extent that Lender shall have concluded that any such
potential Lien may take precedence or priority over the Lien in favor of
Lender with respect to the Collateral, Lender shall be permitted to require
that an Availability Reserve be established prior to the Closing Date, in
the amount satisfactory to Lender with respect to such unfunded and
underfunded pension liabilities.
(o) Senior Revolving Loan Documents. Lender shall have reviewed and
found satisfactory all terms and conditions of the Senior Revolving Loan
Documents.
(p) Preferred Stock. Lender shall have reviewed and found satisfactory
all terms and conditions of the Preferred Stock.
(q) Searches. Lender shall have reviewed and found satisfactory UCC,
tax lien, litigation, and judgment searches for each Borrower.
(r) Corporate Structure. Lender shall have reviewed and found
satisfactory a corporate equity structure of Holdings, the Company, and its
Subsidiaries.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
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6.01. Representations and Warranties of the Borrowers. In order to induce
Lender to enter into this Agreement and to make the Loan and the other financial
accommodations to the Borrowers described herein, each of Holdings and the
Borrowers, hereby represents and warrants to Lender as of the Closing Date that
the following statements are true, correct and complete:
(a) Organization; Corporate Powers. Each of Holdings, the Company and
the Company's Subsidiaries (i) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, (ii) is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each jurisdiction in
which failure to be so qualified and in good standing has or is reasonably
likely to have a Material Adverse Effect and (iii) has all requisite
corporate power and authority to own, operate and encumber its Property and
to conduct its business in all material respects as presently conducted.
(b) Authority.
(i) Each of Holdings, the Company and the Company's Subsidiaries
has the requisite corporate power and authority to execute, deliver
and perform each of the Loan Documents to which it is a party.
(ii) The execution, delivery and performance, as the case may be,
of each of the Loan Documents which have been executed and to which
any of Holdings, the Company or any of the Company's Subsidiaries is a
party and the consummation of the transactions contemplated thereby,
have been duly approved by each of the boards of directors and (to the
extent required by law) the shareholders of Holdings, the Company and
such Subsidiary, respectively, and such approvals have not been
rescinded, revoked or modified in any material respect. No other
corporate action or proceedings on the part of Holdings, the Company
or any of the Company's Subsidiaries is necessary to consummate such
transactions.
(iii) Each of the Loan Documents to which Holdings, the Company
or any of the Company's Subsidiaries is a party has been duly
executed, or delivered on behalf of Holdings, the Company or such
Subsidiary, as the case may be, and constitutes its legal, valid and
binding obligation, enforceable against such Person in accordance with
its terms (except as such enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance and
other laws affecting the enforcement of creditors' rights generally
and to the effect of general equitable principles (whether considered
in a proceeding in equity or at law)) and is in full force and effect.
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(c) Subsidiaries; Ownership of Capital Stock. Schedule 6.01-C (i)
contains a diagram indicating the corporate structure of Holdings, the
Company, the Company's Subsidiaries and any other Affiliate thereof in
which Holdings, the Company or any of the Company's Subsidiaries holds an
equity interest as of the Closing Date after giving effect to the
transactions contemplated in the Transaction Documents; and (ii) accurately
sets forth as of the Closing Date after giving effect to the transactions
contemplated in the Transaction Documents (A) the correct legal name, the
jurisdiction of incorporation, and Employer Identification Number of each
of Holdings, the Company and the Company's Subsidiaries, and the
jurisdictions in which each of Holdings, the Company and the Company's
Subsidiaries is qualified to transact business as a foreign corporation,
(B) the authorized, issued and outstanding shares of each class of Capital
Stock of Holdings, the Company and each of the Company's Subsidiaries and
the owners of such shares, and (C) a summary of the direct and indirect
partnership, joint venture, or other equity interests, if any, of Holdings,
the Company and each Subsidiary of the Company in any Person that is not a
corporation. None of the issued and outstanding Capital Stock of Holdings,
the Company or any of the Company's Subsidiaries is subject to any vesting,
redemption, or repurchase agreement, and there are no warrants or options
outstanding with respect to such Capital Stock except as provided in the
ESOP, the Shareholders' Agreement and the Nonvoting Common Stock Purchase
Agreement. The outstanding Capital Stock of Holdings, the Company and each
of the Company's Subsidiaries is duly authorized, validly issued, fully
paid and nonassessable and is not Margin Stock.
(d) No Conflict. The execution, delivery and performance of each of
the Loan Documents to which Holdings, the Company or any of the Company's
Subsidiaries is a party do not and shall not (i) conflict with the
Constituent Documents of Holdings, the Company or any such Subsidiary, (ii)
to the best Knowledge of Holdings and its Subsidiaries, constitute a
tortious interference with any Contractual Obligation of any Person, (iii)
except as set forth on Schedule 6.01-D conflict with, result in a breach of
or constitute (with or without notice or lapse of time or both) a default
under any material Requirement of Law or any Transaction Document or other
material Contractual Obligation of Holdings, the Company or any such
Subsidiary, or require the termination of any Transaction Document or other
material Contractual Obligation, (iv) result in or require the creation or
imposition of any Lien whatsoever upon any of the Property or assets of
Holdings, the Company or any such Subsidiary, other than Liens contemplated
by the Loan Documents and the Senior Revolving Loan Documents, or (v)
require any approval of Holdings', the Company's or any such Subsidiary's
shareholders that has not been obtained.
(e) Governmental Consents, etc. Except as set forth on Schedule
6.01-E, the execution, delivery and performance of each of the Loan
Documents (or, solely as of the Closing Date, the other Transaction
Documents
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executed and delivered on such date) to which Holdings, the Company or any
of the Company's Subsidiaries is a party do not and shall not require any
registration with, consent or approval of, or notice to, or other action
to, with or by any Governmental Authority, except (i) filings, consents or
notices which have been made, obtained or given, or, in a timely manner,
shall be made, obtained, or given, (ii) filings necessary to create or
perfect security interests in the Collateral, (iii) routine filings made in
the ordinary course of business and (iv) non-essential filings contemplated
by the Transaction Documents but not necessary to consummate the
transactions contemplated thereby. None of Holdings, the Company or any of
the Company's Subsidiaries is subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, the Interstate
Commerce Act, or the Investment Company Act of 1940, or any other federal
or state statute or regulation which limits its ability to incur
indebtedness or its ability to consummate the transactions contemplated in
the Loan Documents.
(f) Accommodation Obligations; Contingencies. Except as set forth on
Schedule 1.01.2, none of Holdings, the Company or any of the Company's
Subsidiaries has any Accommodation Obligation, contingent liability or
liability for any Taxes, long-term lease or commitment, not reflected in
its financial statements delivered to Lender on or prior to the Closing
Date or otherwise disclosed to Lender in the other Schedules hereto, which
shall have or is reasonably likely to have a Material Adverse Effect.
(g) Restricted Junior Payments. None of Holdings, the Company or any
of the Company's Subsidiaries has directly or indirectly declared, ordered,
paid or made or set apart any sum or Property for any Restricted Junior
Payment or agreed to do so, except as permitted pursuant to Section 9.06
hereof.
(h) Financial Position. The Initial Projections, the pro forma
financial statements referred to in Section 5.01(a)(ii) and each of the
Company's business plans and all other financial projections and related
materials and documents delivered to Lender pursuant hereto were prepared
in good faith and are based upon facts and assumptions that are reasonable
in light of the then current and foreseeable business conditions and
prospects of the Company and represent management's opinion of the
Company's projected financial performance based on the information
available to Holdings and the Company at the time so furnished.
(i) Litigation; Adverse Effects. Except as set forth in Schedule
6.01-I, there is no action, suit, audit, proceeding, allegation of
defective pricing, investigation or arbitration (or series of related
actions, suits, proceedings, allegations, investigations or arbitrations)
before or by any Governmental Authority or private arbitrator pending or,
to the Knowledge of Holdings, the Company or any of the Company's
Subsidiaries, threatened against Holdings, the Company or any of the
Company's Subsidiaries or any Property of any of them (i) challenging
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the validity or the enforceability of any of the Transaction Documents or
(ii) which shall have or is reasonably likely to have a Material Adverse
Effect. None of Holdings, the Company or any of the Company's Subsidiaries
is (A) in violation of any applicable Requirements of Law which violation
shall have or is reasonably likely to result in a Material Adverse Effect,
or (B) subject to or in default with respect to any judgment, writ,
injunction, restraining order or order of any nature, decree, rule or
regulation of any court or Governmental Authority, in each case which shall
have or is reasonably likely to have a Material Adverse Effect.
(j) No Material Adverse Change. Except as contemplated in the
Registration Statement, since December 31, 1994 there has occurred no event
which shall have or is reasonably likely to have a Material Adverse Effect.
(k) Payment of Taxes. All tax returns and reports of each of Holdings,
the Company and the Company's Subsidiaries required to be filed have been
timely filed, and all taxes, assessments, fees and other governmental
charges thereupon and upon their respective Property, assets, income and
franchises which are shown in such returns or reports to be due and payable
have been paid other than such taxes, assessments, fees and other
governmental charges (i) which are being contested in good faith by
Holdings, the Company or such Subsidiary, as the case may be, by
appropriate proceedings diligently instituted and conducted and (ii) with
respect to which a reserve or other appropriate provision, if any, as is
required in conformity with GAAP shall have been made. Neither the Company
nor Holdings has any Knowledge of any proposed tax assessment against
Holdings, the Company or any of the Company's Subsidiaries that shall have
or is reasonably likely to have a Material Adverse Effect.
(l) Performance. None of Holdings, the Company or any of the Company's
Subsidiaries has received notice or has actual Knowledge that (i) it is in
default in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any Contractual
Obligation applicable to it, or (ii) any condition exists which, with the
giving of notice or the lapse of time or both, would constitute a default
with respect to any such Contractual Obligation, in each case, except where
such default or defaults, if any, shall not have or are not reasonably
likely to have a Material Adverse Effect.
(m) Disclosure. The representations and warranties of each of
Holdings, the Company and the Company's Subsidiaries contained in the Loan
Documents and, solely as of the Closing Date, the other Transaction
Documents and the Registration Statement, and all certificates and
documents delivered to Lender pursuant to the terms hereof and the other
Loan Documents, do not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
contained herein or therein, in light of the circumstances under which and
the time at which they were made, not misleading,
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provided that (a) the statements contained in the Registration Statement
describing documents and agreements are summary only and as such are
qualified in their entirety by reference to such documents and agreements,
(b) to the extent any such information in the Registration Statement was
based upon or constitutes a forecast or projection, each of Holdings, the
Company and the Company's Subsidiaries represents only that it acted in
good faith and utilized reasonable assumptions, due and careful
consideration and the best information Known to it at the time in the
preparation of such information and (c) as to the information and
representations and warranties in the Registration Statement and other
certificates and documents attached as exhibits thereto that is specified
as having been supplied by third parties, each of Holdings, the Company and
the Company's Subsidiaries represents only that it is not aware of any
material misstatement therein or omission therefrom. Neither Holdings nor
the Company has intentionally withheld any fact from Lender in regard to
any matter which shall have or is reasonably likely to have a Material
Adverse Effect.
(n) Requirements of Law. Each of Holdings, the Company and the
Company's Subsidiaries is in compliance with all Requirements of Law
applicable to it and its business, in each case where the failure to so
comply individually or in the aggregate shall have or is reasonably likely
to have a Material Adverse Effect.
(o) Environmental Matters. Except as set forth in Schedule 6.01-O:
(i) the operations of Holdings, the Company and the Company's
Subsidiaries comply with all applicable Environmental, Health or
Safety Requirements of Law where failure to so comply has or is
reasonably likely to have a Material Adverse Effect;
(ii) Holdings, the Company and each of the Company's Subsidiaries
have obtained or have taken appropriate steps, as required by
Environmental, Health or Safety Requirements of Law, to obtain all
material environmental, health and safety Permits necessary for their
respective operations, and all such Permits are in good standing and
each of Holdings, the Company and each of the Company's Subsidiaries
are currently in compliance with such Permits where failure to so
comply has or is reasonably likely to have a Material Adverse Effect;
(iii) to the Company's Knowledge, none of Holdings, the Company
or the Company's Subsidiaries or any of their respective operations or
present or past Property are subject to any investigation or any
judicial or administrative proceeding, order, judgment, settlement,
decree, or other agreement alleging, respecting or addressing (i) a
violation of any
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Environmental, Health or Safety Requirement of Law where such
violation has or is reasonably likely to have a Material Adverse
Effect; (ii) any Remedial Action where such Remedial Action has or is
reasonably likely to have a Material Adverse Effect; or (iii) any
Claims or Liabilities and Costs arising from the Release or threatened
Release of a Contaminant into the environment where such Claims or
Liabilities and Costs has or is reasonably likely to have a Material
Adverse Effect, nor has Holdings, the Company or any of the Company's
Subsidiaries received any notice of the foregoing;
(iv) to the Company's Knowledge, none of Holdings, the Company or
the Company's Subsidiaries is the owner or operator of any Property
which has any of the following which could result in a liability that
is reasonably likely to have a Material Adverse Effect:
(A) any past or present on-site generation, treatment,
recycling, storage or disposal of any hazardous waste, as that
term is defined under 40 C.F.R. Part 261 or any state or local
equivalent or any similar statute of Canada, the United Kingdom,
another foreign jurisdiction, or political subdivision thereof;
(B) any past or present landfill, waste-pile, underground
storage tank or surface impoundment;
(C) any asbestos-containing material or suspected
asbestos-containing material; or
(D) any polychlorinated biphenyls (PCBs) used in hydraulic
oils, electrical transformers or other Equipment;
(v) to the Company's Knowledge, except as reported to Lender
pursuant to Section 7.07, no Environmental Lien has attached to any
Property of Holdings, the Company or any of the Company's
Subsidiaries;
(vi) to the Company's Knowledge, except as reported to Lender
pursuant to Section 7.07, there have been no Releases of any
Contaminants into the environment in quantities reportable pursuant to
40 C.F.R. 302 by Holdings, the Company or any of the Company's
Subsidiaries;
(vii) to the Company's Knowledge, except as reported to Lender
pursuant to Section 7.07, neither Holdings, nor the Company, nor any
of the Company's Subsidiaries has any liability in connection with any
Release or threatened Release of any Contaminants into the environment
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that is reasonably likely to have a Material Adverse Effect ;
(viii) to the Company's Knowledge, except as reported to Lender
pursuant to Section 7.07, neither Holdings, nor the Company nor any of
the Company's Subsidiaries has sent or directly arranged for the
transport of any waste to any site listed or proposed for listing on
the National Priorities List ("NPL") pursuant to CERCLA, or on the
Comprehensive Environmental Response Compensation Liability
Information System List ("CERCLIS"), or any similar state list;
(ix) to the Company's Knowledge, except as reported to Lender
pursuant to Section 7.07, none of Holdings', the Company's or the
Company's Subsidiaries' present or past Property is listed or proposed
for listing on the NPL pursuant to CERCLA, or on the CERCLIS or any
similar state list of sites requiring Remedial Action, and the Company
and the Company's Subsidiaries are unaware of any conditions on such
Property which would qualify such Property for inclusion on any such
list;
(x) none of Holdings, the Company or any of the Company's
Subsidiaries is subject to any Environmental Property Transfer Act as
a result of the transactions contemplated by the Loan Documents;
(xi) none of the products Holdings, the Company or any of the
Company's Subsidiaries manufactures, distributes or sells, or has ever
manufactured, distributed or sold, contains asbestos-containing
material or suspected asbestos-containing material; and
(xii) none of Holdings, the Company or any of the Company's
Subsidiaries is subject to any Environmental, Health or Safety
Requirements of Law relating to financial responsibility, including,
without limitation, those contained in 40 C.F.R. Parts 264 and 265,
Subparts H, and state and local law equivalents, and those contained
in 40 C.F.R. Part 280, Subpart H, and state and local law equivalents.
(p) ERISA Matters. None of Holdings, the Company or the ERISA
Affiliates maintains or contributes to any Plan other than those listed on
Schedule 6.01-P hereto. With respect to each Plan which is intended to be
qualified under Section 401(a) of the Internal Revenue Code as currently in
effect, Holdings, the Company or an ERISA Affiliate has received or is in
the process of seeking, a favorable determination letter that the Plan is
so qualified and that each trust related to any such Plan is exempt from
federal income tax under Section 501(a) of the Internal Revenue Code as
currently in effect, except as disclosed on Schedule 6.01-P. None of
Holdings, the Company or the ERISA Affiliates has Knowledge of any reason
why such Plans or trusts are not qualified. Except as
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disclosed in Schedule 6.01-P, none of Holdings, the Company or any of the
Company's Subsidiaries maintains or contributes to any employee welfare
benefit plan within the meaning of Section 3(l) of ERISA which provides
benefits to employees after termination of employment other than as
required by Section 601 of ERISA. Holdings, the Company and all of the
ERISA Affiliates are in compliance in all material respects with the
responsibilities, obligations or duties imposed on them by ERISA, the
Internal Revenue Code and regulations promulgated thereunder with respect
to all Plans. No Benefit Plan has incurred any accumulated funding
deficiency (as defined in Sections 302(a)(2) of ERISA and 412(a) of the
Internal Revenue Code) whether or not waived. Except as disclosed in
Schedule 6.01-P, neither Holdings, nor the Company, nor any ERISA
Affiliate, nor any fiduciary of any Plan which is not a Multiemployer Plan
(i) has engaged in a nonexempt prohibited transaction described in Section
406 of ERISA or Section 4975 of the Internal Revenue Code or (ii) has taken
or failed to take any action which would constitute or result in a
Termination Event. None of Holdings, the Company or the ERISA Affiliates
has incurred any potential liability under Section 4063, 4064, 4069, 4204
or 4212(c) of ERISA. None of Holdings, the Company or the ERISA Affiliates
has incurred any liability to the PBGC which remains outstanding. There are
no premium payments which have become due to the PBGC which are unpaid.
Schedule B to the most recent annual report filed with the IRS with respect
to each Benefit Plan and furnished to Lender is complete and accurate.
Since the date of each such Schedule B, there has been no material adverse
change in the funding status or financial condition of the Benefit Plan
relating to such Schedule B. Neither Holdings, nor the Company, nor any
ERISA Affiliate has (i) failed to make a required contribution or payment
to a Multiemployer Plan or (ii) made a complete or partial withdrawal under
Section 4203 or 4205 of ERISA from a Multiemployer Plan. Except as
disclosed in Schedule 6.01-P, neither Holdings, nor the Company nor any
ERISA Affiliate has failed to make a required installment or any other
required payment under Section 412 of the Internal Revenue Code on or
before the due date for such installment or other payment. Neither
Holdings, nor the Company, nor any ERISA Affiliate is required to provide
security to a Benefit Plan under Section 401(a)(29) of the Internal Revenue
Code due to a Plan amendment that results in an increase in current
liability for the plan year. Except as disclosed on Schedule 6.01-P,
neither Holdings, nor the Company, nor any of the ERISA Affiliates has, by
reason of the transactions contemplated hereby, any obligation to make any
payment to any employee pursuant to any Plan or existing contract or
arrangement. The Company has made available to Lender copies of all of the
following: each Benefit Plan and related trust agreement (including all
amendments to such Plan and trust) in existence, or for which Holdings, the
Company or any ERISA Affiliate has taken any corporate action to authorize
the adoption thereof, as of the Closing Date and in respect of which
Holdings, the Company or any ERISA Affiliate is currently an "employer" as
defined in section 3(5) of ERISA, and the most recent summary plan
description, actuarial report, determination letter issued by the IRS and
Form 5500
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filed in respect of each such Benefit Plan in existence; a listing of all
of the Multiemployer Plans currently contributed to by Holdings, the
Company or any ERISA Affiliate with the aggregate amount of the most recent
annual contributions required to be made by Holdings, the Company and all
ERISA Affiliates to each such Multiemployer Plan, any information which has
been provided to Holdings, the Company or an ERISA Affiliate regarding
withdrawal liability under any Multiemployer Plan and the collective
bargaining agreement pursuant to which such contribution is required to be
made; and each employee welfare benefit plan within the meaning of Section
3(l) of ERISA which provides benefits to employees of Holdings, the Company
or any of the Company's Subsidiaries after termination of employment other
than as required by Section 601 of ERISA, the most recent summary plan
description for such plan and the aggregate amount of the most recent
annual payments made to terminated employees under each such plan.
(q) Foreign Employee Benefit Matters. Each Foreign Employee Benefit
Plan is in compliance in all material respects with all Requirements of Law
applicable thereto and the respective requirements of the governing
documents for such Plan. The aggregate of the liabilities to provide all of
the accrued benefits under any Foreign Pension Plan does not exceed the
current fair market value of the assets held in the trust or other funding
vehicle for such Plan. With respect to any Foreign Employee Benefit Plan
maintained by Holdings, the Company, any of the Company's Subsidiaries or
any ERISA Affiliate (other than a Foreign Pension Plan), reasonable
reserves have been established in accordance with prudent business practice
or where required by ordinary accounting practices in the jurisdiction in
which such Plan is maintained. The aggregate unfunded liabilities, after
giving effect to any reserves for such liabilities, with respect to such
Plans are not material. There are no actions, suits or claims (other than
routine claims for benefits) pending or threatened against Holdings, the
Company, any of the Company's Subsidiaries or any ERISA Affiliate with
respect to any Foreign Employee Benefit Plan.
(r) Labor Matters.
(i) Except as set forth in Schedule 6.01-R, as of the Closing
Date there is no collective bargaining agreement covering any of the
employees of Company or any Subsidiary of Company. To the Company's
Knowledge, except as set forth on Schedule 6.01-R, as of the Closing
Date no attempt to organize the employees of Company or any such
Subsidiary is pending, threatened or planned.
(ii) Set forth in Schedule 6.01-R or Schedule 6.01-P, as the case
may be, is a list, as of the Closing Date, of all material consulting
agreements, executive employment agreements, executive compensation
plans, deferred compensation agreements, employee pension plans or
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retirement plans, employee profit sharing plans, employee stock
purchase and stock option plans, and severance plans of Company and
its Subsidiaries providing for benefits for employees of Company and
its Subsidiaries.
(s) Securities Activities. None of Holdings, the Company or any of the
Company's Subsidiaries is engaged in the business of extending credit for
the purpose of purchasing or carrying Margin Stock.
(t) Solvency. After giving effect to the transactions contemplated in
the Transaction Documents, the disbursement of the proceeds of such Loan
pursuant to the Company's instructions, and the funding of all amounts to
be disbursed on the Closing Date in connection with the Senior Revolving
Obligations, each of Holdings, the Company and each Subsidiary Guarantor is
Solvent.
(u) Patents, Trademarks, Permits, Etc.; Government Approvals.
(i) Holdings, the Company and each of the Company's Subsidiaries
own, are licensed or otherwise have the lawful right to use, or have
all permits and other governmental approvals, patents, trademarks,
trade names, industrial designs, copyrights, technology, know-how and
processes used in or necessary for the conduct of their businesses as
currently conducted except where the failure to do so would not have
or be reasonably likely to have a Material Adverse Effect. Except as
set forth on Schedule 6.01-U, as of the Closing Date no claims are
pending or, to the best of Company's Knowledge following inquiry,
threatened that Holdings, the Company or any of its Subsidiaries is
infringing in any material respect upon the rights of any Person with
respect to such permits and other governmental approvals, patents,
trademarks, trade names, industrial designs, copyrights, technology,
know-how and processes.
(ii) Except for Liens granted to Lender, the Revolving Credit
Agent, or the Senior Revolving Lenders, the transactions contemplated
by the Transaction Documents shall not impair the ownership of or
rights under (or the license or other right to use, as the case may
be) any permits and governmental approvals, patents, trademarks, trade
names, industrial designs, copyrights, technology, know-how or
processes by Holdings, the Company or any of the Company's
Subsidiaries in any manner which shall have or is reasonably likely to
have a Material Adverse Effect.
(v) Assets and Properties. Each of Holdings, the Company and the
Company's Subsidiaries has good and marketable title to all of its material
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assets and Property (tangible and intangible) owned by it or a valid
leasehold interest in all of its material leased assets (except for Liens
permitted under Section 9.03 and minor defects in title which do not
interfere with their ability to conduct their business as presently
conducted insofar as marketability may be limited by any laws or
regulations of any Governmental Authority affecting such assets), and all
such assets and Property are free and clear of all Liens, except Liens
securing the Obligations and Liens permitted under Section 9.03. As of the
Closing Date Schedule 6.01-V contains a true and complete list of (i) all
of the Real Property owned in fee simple by each of Holdings, the Company
and the Company's Subsidiaries as of the Closing Date, (ii) a true and
complete list of all Leases in effect on the Closing Date the annual rental
payments under which exceed $250,000 and (iii) a true and complete list of
all warehouses in which there is, or is reasonably expected to be, (i) for
a period of 30 days or more during any twelve-month period, Inventory with
a fair market value of $250,000 or more or (ii) at any time, Inventory with
a fair market value of $1,000,000 or more. Substantially all of the assets
and Property owned by or leased to Holdings, the Company and/or each such
Subsidiary are in adequate operating condition and repair, ordinary wear
and tear excepted, and are free and clear of any known defects except such
defects that do not substantially interfere in any material respect with
the continued use thereof in the conduct of normal operations. Except for
Liens granted to Lender, or the Senior Revolving Lenders, neither this
Agreement nor any other Transaction Document, nor any transaction
contemplated herein or therein, shall affect any right, title or interest
of Holdings, the Company or such Subsidiary in and to any of such assets in
a manner that shall have or is reasonably likely to have a Material Adverse
Effect.
(w) Insurance. The Certificate of Insurance delivered to the Lender
pursuant Section 5.01(a) accurately sets forth as of the Closing Date all
insurance policies currently in effect with respect to the respective
assets and business of the Company and its Subsidiaries, specifying for
each such policy and program, (i) the amount thereof, (ii) the risks
insured against thereby, (iii) the name of the insurer and each insured
party thereunder, (iv) the policy or other identification number thereof,
and (v) the expiration date thereof. Such insurance policies and programs
are in amounts sufficient to cover the replacement value of the respective
assets of the Company and its Subsidiaries.
(x) Pledge of Collateral. The grant and perfection of the security
interests in the Capital Stock of the Company and its Subsidiaries
constituting a portion of the Collateral for the benefit of Lender, as
contemplated by the terms of the Loan Documents, is not made in violation
of the registration provisions of the Securities Act, any applicable
provisions of other federal securities laws, state securities or "Blue Sky"
law, foreign securities law, or applicable general corporation law or in
violation of any other Requirement of Law.
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(y) Transactions with Affiliates. Schedule 6.01-Y lists as of the
Closing Date each and every existing material agreement (other than the
Transaction Documents) as of the Closing Date and arrangement that any of
Holdings, the Company or the Company's Subsidiaries has entered into with
any of their respective Affiliates (other than Holdings, the Company's and
the Company's Subsidiaries).
(z) Transaction Documents. Solely with respect to the Transaction
Documents (other than the Loan Documents), as of the Closing Date the
following are true and correct and complete:
(i) All conditions precedent to, and all material consents and
Permits necessary to permit, the consummation of the transactions
contemplated by such Transaction Documents which will be entered into
as of the or prior to the Closing Date have been satisfied or
delivered, or waived (to the extent required under Section 9.16) with
the prior written consent of Lender, and no action has been taken, or
to the best of Holdings and the Company's Knowledge, shall be taken by
any Governmental Authority which restrains, prevents or imposes
material adverse conditions upon, or seeks to restrain, prevent or
impose material adverse conditions upon, the consummation of the
transactions contemplated in such Transaction Documents.
(ii) Each of Holdings, the Company and the Company's Subsidiaries
has the requisite corporate power and authority to execute, deliver
and perform each of such Transaction Documents to which it is a party.
(iii) The execution, delivery and performance, as the case may
be, of each of such Transaction Documents which have been executed and
to which any of Holdings, the Company or any of the Company's
Subsidiaries is a party and the consummation of the transactions
contemplated thereby, have been duly approved by each of the boards of
directors and (to the extent required by law) the shareholders of
Holdings, the Company and such Subsidiary, respectively, and such
approvals have not been rescinded, revoked or modified in any material
respect. No other corporate action or proceedings on the part of
Holdings, the Company or any of the Company's Subsidiaries is
necessary to consummate such transactions.
(iv) Each of such Transaction Documents to which Holdings, the
Company or any of the Company's Subsidiaries is a party has been duly
executed, or delivered on behalf of Holdings, the Company or such
Subsidiary, as the case may be, and constitutes its legal, valid and
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binding obligation, enforceable against such Person in accordance with
its terms (except as such enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance and
other laws affecting the enforcement of creditors' rights generally
and to the effect of general equitable principles (whether considered
in a proceeding in equity or at law)), is in full force and effect
and, except as permitted pursuant to Section 9.16, no term or
condition thereof has been amended, modified or waived from the terms
and conditions contained in such Transaction Documents delivered to
Lender pursuant to Section 5.01(a) without the prior written consent
of Lender. Each of Holdings, the Company and the Company's
Subsidiaries that is a party to such Transaction Documents and, to the
Knowledge of the Company, all other parties thereto, have performed
and complied in all material respects with all material terms,
provisions, agreements and conditions set forth therein and required
to be performed or complied with by such parties on or before the
Closing Date, and as of such date, no material default, event of
default or breach of any covenant by any such party exists thereunder.
ARTICLE VII
REPORTING COVENANTS
Each of Holdings and the Borrowers covenants and agrees that so long as any
amount is outstanding and thereafter until Payment In Full of all of the
Obligations, unless Lender shall otherwise give prior written consent thereto:
7.01. Financial Statements. The Company and Holdings shall maintain, and
shall cause each of the Company's Subsidiaries to maintain, a system of
accounting established and administered in accordance with sound business
practices to permit preparation of consolidated and consolidating financial
statements in conformity with GAAP, and each of the financial statements
described below shall be prepared from such system and records. The Company or
Holdings, as the case may be, shall deliver or cause to be delivered to Lender:
(a) Monthly Reports. Within thirty (30) days after the end of each
fiscal month in each Fiscal Year, the consolidated and consolidating
balance sheets of Holdings and its Subsidiaries as at the end of such
period and the related consolidated and consolidating statements of income
and cash flow of Holdings and its Subsidiaries for such fiscal month and
for the period from the beginning of the then current Fiscal Year to the
end of such fiscal month, and for the corresponding period during the
previous Fiscal Year, and a comparison of the statement of the year to date
earnings and cash flow to the corresponding statement for the corresponding
period from the previous Fiscal Year, and the most recently prepared
forecasted consolidated balance sheet and consolidated statement of
earnings and cash flow of Holdings and its Subsidiaries for and as of the
end of
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such Fiscal Year, and a comparison of the statement of year to date
earnings and cash flow to the annual operating plan, certified by a
Financial Officer of the Company as fairly presenting the consolidated and
consolidating financial position of Holdings and its Subsidiaries as at the
dates indicated and the results of their operations and cash flow for the
periods indicated in accordance with GAAP, subject to normal year end
adjustments.
(b) Annual Reports. Within ninety (90) days after the end of each
Fiscal Year, (i) audited financial statements of Holdings and its
Subsidiaries and (ii) annual consolidating financial statements of Holdings
and its Subsidiaries reported on by independent certified public
accountants of recognized national standing acceptable to Lender, which
report shall be unqualified (or, if qualified, only as to non-material
matters) and shall state that such financial statements fairly present the
consolidated and consolidating financial position of Holdings and its
Subsidiaries as at the dates indicated and the results of their operations
and cash flow for the periods indicated in conformity with GAAP applied on
a basis consistent with prior years (except for changes with which such
independent certified public accountants shall concur and which shall have
been disclosed in the notes to the financial statements) and that the
examination by such accountants in connection with such consolidating
financial statements has been made in accordance with generally accepted
auditing standards.
(c) Officer's Certificate. Together with each delivery of any
financial statement pursuant to paragraph (a) and (b) of this Section 7.01,
an Officer's Certificate of the Company, signed by a Financial Officer of
the Company which demonstrate compliance, when applicable, with the
provisions of Article X (the "Compliance Certificate").
(d) Business Plans; Financial Projections. Not later than fifteen (15)
days prior to the end of each Fiscal Year, and containing substantially the
same types of financial information contained in the Initial Projections,
(i) the annual business plan of the Company for the next succeeding Fiscal
Year and (ii) forecasts prepared by management of the Company for each
fiscal quarter in the next Fiscal Year and for each succeeding Fiscal Year,
up to and including the Fiscal Year immediately following the Fiscal Year
during which it is anticipated that the Obligations shall be Paid In Full,
containing a consolidated balance sheet, an income statement and a
consolidated statement of cash flow.
(e) Accountant's Statement and Reliance Letter. Together with each
delivery of the financial statements referred to in Section 7.01(b), a
written statement of the firm of independent certified public accountants
of recognized national standing acceptable to Lender giving the report
stating:
(i) that their audit examination has included a review of
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the terms hereof as it relates to accounting matters and
(ii) whether, in connection with their audit examination, any
condition or event which constitutes an Event of Default or Default
has come to their attention, and if such condition or event has come
to their attention, specifying the nature and period of existence
thereof. The statement referred to above shall be accompanied by (x) a
copy of the management letter or any similar report delivered to the
Company or Holdings or to any officer or employee thereof by such
accountants in connection with such financial statements and (y) a
reliance letter in form and substance reasonably satisfactory to
Lender from such accountants to the Company or Holdings. Lender may
communicate directly with such accountants.
(f) Opening Balance Sheet. Within ninety (90) days after the Closing
Date, the Closing Date Balance Sheet (as defined in the Acquisition
Agreement).
7.02. Events of Default. Promptly upon (and, in any event, within five (5)
Business Days of) any Borrower or Holdings, as the case may be, obtaining
Knowledge (i) of any condition or event which constitutes an Event of Default or
Default, or becoming aware that Lender has given any written notice with respect
to a claimed Event of Default or Default, (ii) that any Person has given any
written notice to Holdings, the Company or any Subsidiary of the Company or
taken any other action with respect to a claimed default or event or condition
of the type referred to in Section 11.01(e), (iii) of any condition or event
which has or is reasonably likely to materially and adversely affect the value
of, or Lender's interest in, the Collateral, or (iv) of any condition or event
which has or is reasonably likely to have a Material Adverse Effect, the Company
or Holdings, as the case may be, shall deliver to Lender an Officer's
Certificate specifying (A) the nature and period of existence of any such
claimed default, Event of Default, Default, condition or event, (B) the notice
given or action taken by such Person in connection therewith, and (C) the
remedial action the Company or Holdings, as the case may be, has taken, is
taking and proposes to take with respect thereto.
7.03. Lawsuits. Promptly upon (and, in any event, within ten (10) Business
Days of) the Company or Holdings, as the case may be, obtaining Knowledge of the
institution of, or written threat of, any action, suit, proceeding, governmental
investigation, any allegation of defective pricing, or any arbitration against
or affecting Holdings, the Company or any of the Company's Subsidiaries or any
Property of Holdings, the Company or any of the Company's Subsidiaries not
previously disclosed pursuant to Section 6.01(i), which action, suit,
proceeding, governmental investigation or arbitration exposes, or in the case of
multiple actions, suits, proceedings, governmental investigations or
arbitrations arising out of the same general allegations or circumstances which
expose, in Holdings' or the Company's reasonable judgment, Holdings, the Company
or any of the
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Company's Subsidiaries to liability in an amount aggregating $1,000,000 or more,
or which could otherwise reasonably be expected to result in a Material Adverse
Effect, Holdings or the Company, as the case may be, shall give written notice
thereof to Lender and provide such other information as may be reasonably
available to enable Lender and its counsel to evaluate such matters.
7.04. Insurance. As soon as practicable and in any event within ninety (90)
days after the Closing Date and ninety (90) days after the end of each Fiscal
Year ending after the Closing Date, the Company shall deliver to Lender (i) a
report in form and substance satisfactory to Lender outlining all material
insurance coverage (including any self-insurance provided by Holdings and/or the
Company but excluding health, medical, dental and life insurance (other than key
man life insurance)) maintained as of the date of such report by Holdings, the
Company and the Company's Subsidiaries and the duration of such coverage and
(ii) to the extent such insurance coverage is not provided by Holdings and/or
the Company, an insurance broker's statement that all premiums then due and
payable with respect to such coverage have been paid (except as otherwise agreed
to by Lender). The foregoing shall not relieve the obligation of Holdings and
each Borrower to provide Lender with evidence of the renewal of any policy of
insurance prior to its expiration as such renewals take place from time to time.
7.05. Borrowing Base Certificate. Concurrently with the delivery to the
Revolving Credit Agent or the Senior Revolving Lenders, (a) the Company shall
provide Lender with a Borrowing Base Certificate, together with such supporting
documents as Lender requests (including weekly updated information concerning
Receivables of the Borrowers) and (b) monthly Inventory reports of the Borrowers
as of the last day of the preceding month, all certified as being true, accurate
and complete by a Financial Officer of the Company.
7.06. ERISA Notices. The Company shall deliver or cause to be delivered to
Lender, at the Company's expense, the following information and notices as soon
as reasonably possible, and in any event:
(i) within ten (10) Business Days after the Company or any ERISA
Affiliate Knows or reasonably should Know that a Termination Event has
occurred, a written statement of a Financial Officer of the Company
describing such Termination Event and the action, if any, which the Company
or any ERISA Affiliate has taken, is taking or proposes to take with
respect thereto, and when Known, any action taken or threatened by the IRS,
DOL or PBGC with respect thereto;
(ii) within ten (10) Business Days after the Company or any ERISA
Affiliate Knows or reasonably should Know that a prohibited transaction
(defined in Sections 406 of ERISA and 4975 of the Internal Revenue Code)
has occurred that would have a material adverse effect (financial or
otherwise) on the
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Company or any ERISA Affiliate for which a statutory or class exemption is
not available or a private exemption has not been previously obtained from
the DOL, a statement of a Financial Officer of the Company describing such
transaction and the action which the Company or any ERISA Affiliate has
taken, is taking or proposes to take with respect thereto;
(iii) within ten (10) Business Days after receipt by the Company of
written request therefor from Lender, copies of each annual report (form
5500 series), including Schedule B thereto, filed with respect to each
Benefit Plan;
(iv) within ten (10) Business Days after receipt by the Company of a
written request therefor from Lender, copies of each actuarial report for
any Benefit Plan or Multiemployer Plan and each annual report for any
Multiemployer Plan;
(v) within ten (10) Business Days after the filing thereof with the
IRS, a copy of each funding waiver request filed with respect to any
Benefit Plan and, if requested by Lender, all communications received by
the Company or any ERISA Affiliate with respect to such request;
(vi) within ten (10) Business Days upon the occurrence thereof,
notification of any material increase in the benefits of any existing
Benefit Plan or the establishment of any new Benefit Plan or the
commencement of contributions to any Benefit Plan to which the Company or
any ERISA Affiliate was not previously contributing;
(vii) within ten (10) Business Days after receipt by the Company or
any ERISA Affiliate of the PBGC's intention to terminate a Benefit Plan or
to have a trustee appointed to administer a Benefit Plan, copies of each
such notice;
(viii) within ten (10) Business Days after receipt by the Company or
any ERISA Affiliate of any unfavorable determination letter from the IRS
regarding the qualification of a Plan under Section 401(a) of the Internal
Revenue Code, copies of each such letter; provided, that the Company or any
ERISA Affiliate has reason to believe that the IRS erroneously sent such
letter, then a copy of such letter need not be delivered to Lender if the
IRS shall confirm in writing within such ten (10) day period that such
letter is withdrawn, invalid or otherwise should be disregarded;
(ix) within ten (10) Business Days after receipt by the Company or any
ERISA Affiliate of a notice from a Multiemployer Plan regarding the
imposition of withdrawal liability, copies of each such notice;
(x) within ten (10) Business Days after the Company or any
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ERISA Affiliate fails to make a required installment or any other required
payment that would give rise to a Lien under Section 412 of the Internal
Revenue Code on or before the due date for such installment or payment, a
notification of such failure;
(xi) within ten (10) Business Days after the Company or any ERISA
Affiliate Knows or reasonably should Know (a) a Multiemployer Plan has been
terminated, (b) the administrator or plan sponsor of a Multiemployer Plan
intends to terminate a Multiemployer Plan, or (c) the PBGC has instituted
or will institute proceedings under Section 4042 of ERISA to terminate a
Multiemployer Plan; and
(xii) within ten (10) Business Days after receipt by the Company of a
written notice from Lender, copies of any Foreign Employee Benefit Plan and
related documents, reports and correspondence as requested by Lender in
such notice.
For purposes of this Section 7.06, the Company and any ERISA Affiliate
shall be deemed to Know all facts Known by the administrator of any Plan of
which the Company or any ERISA Affiliate is the plan sponsor.
7.07. Environmental Notices.
(a) The Company shall notify Lender in writing, promptly and in any
event within 10 Business Days upon the Company's learning thereof, of any:
(i) notice or claim by a Governmental Authority or any third
party to the effect that Holdings, the Company or any of the Company's
Subsidiaries is or may be liable to any Person, or is subject to an
investigation by a Governmental Authority, relating to a material
Release or threatened Release of any Contaminant into the environment,
or any materially unsafe or unhealthy condition at any Property of
Holdings, the Company or any of the Company's Subsidiaries;
(ii) notice that any Property of Holdings, the Company or any of
the Company's Subsidiaries is subject to an Environmental Lien;
(iii) commencement or threat of any judicial or administrative
proceeding alleging a material violation by Holdings, the Company or
any of the Company's Subsidiaries of any Environmental, Health or
Safety Requirement of Law;
(iv) new and material changes to any existing Environmental,
Health or Safety Requirement of Law that would or could
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reasonably be expected to have a Material Adverse Effect; or
(v) any intent to execute an agreement, letter of intent or
commitment to acquire stock, assets or real estate, or to lease
property, or to take any other action by Holdings, the Company or any
of the Company's Subsidiaries that would subject Holdings, the Company
or any of the Company's Subsidiaries to environmental, health or
safety Liabilities and Costs that would or could reasonably be
expected to have a Material Adverse Effect.
(b) The Company shall notify Lender in writing, promptly and in any
event within ten (10) Business Days upon any filing or report made by
Holdings, the Company or any of the Company's Subsidiaries with any
Governmental Authority with respect to (i) the violation of any
Environmental, Health or Safety Requirement of Law, (ii) any unpermitted
Release or threatened Release of a Contaminant that is reportable under 40
C.F.R. 302 or (iii) any unsafe or unhealthful condition at any Property of
Holdings, the Company or any of the Company's Subsidiaries that would or
could reasonably be expected to have a Material Adverse Effect.
7.08. Labor Matters. The Company shall notify Lender in writing, promptly
after the Company has Knowledge thereof, of (i) any material labor dispute to
which Holdings, the Company or any of the Company's Subsidiaries is or may
become a party, including, without limitation, any strikes, lockouts or other
disputes relating to such Persons' plants and other facilities and (ii) any
material liability (arising pursuant to the Worker Adjustment and Retraining
Notification Act or otherwise) incurred with respect to the closing of any plant
or other facility of such Persons.
7.09. Public Filings and Reports. Promptly upon the filing thereof with the
Securities and Exchange Commission, the Company shall deliver to Lender copies
of all filings or reports made in connection with outstanding Indebtedness and
Capital Stock of Holdings or the Company.
7.10. Notices Under Acquisition Agreement. Upon receipt thereof, Holdings
shall cause a copy of every written notice or communication received by Holdings
pursuant to the Acquisition Agreement to be promptly delivered to Lender.
7.11 Other Information. Promptly upon receipt of a request therefor from
Lender, the Company shall prepare and deliver to Lender such other information
with respect to Holdings, the Company, any of the Company's Subsidiaries or the
Collateral including, without limitation, schedules identifying and describing
the Collateral and any dispositions thereof and copies of each existing written
agreement or arrangement set forth on Schedule 6.01-Y, as from time to time may
be reasonably requested by Lender.
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ARTICLE VIII
AFFIRMATIVE COVENANTS
Each of Holdings and the Borrowers covenants and agrees that so long as any
amount is outstanding and thereafter until Payment In Full of all of the
Obligations, unless Lender shall otherwise give prior written consent:
8.01. Corporate Existence, Etc. Each of Holdings and the Company shall, and
shall cause each of the Company's Subsidiaries to, at all times maintain its
respective corporate existence and preserve and keep, or cause to be preserved
and kept, in full force and effect their respective rights and franchises
material to their respective businesses except where the failure to so maintain
or preserve would not have or be reasonably likely to have a Material Adverse
Effect.
8.02. Corporate Powers; Conduct of Business, Etc. Each of Holdings and the
Company shall, and shall cause each of the Company's Subsidiaries to, qualify
and remain qualified to do business in each jurisdiction in which the nature of
its business requires it to be so qualified, except where the failure to be so
qualified would not have or be reasonably likely to have a Material Adverse
Effect.
8.03. Compliance with Laws, Etc. Each of Holdings and the Company shall,
and shall cause each of the Company's Subsidiaries to, (a) comply with all
Requirements of Law and all restrictive covenants affecting such Person or the
business, Property or operations of such Person, and (b) obtain as needed all
Permits necessary for such Person's operations and maintain such Permits in good
standing, except, in each case, where the failure to do so would not have or be
reasonably likely to have a Material Adverse Effect.
8.04. Payment of Taxes and Claims; Tax Consolidation. Each of Holdings and
the Company shall, and shall cause each of the Company's Subsidiaries to, pay
(a) all taxes, assessments and other governmental charges imposed upon it or on
any of its Property or in respect of any of its franchises, business, income or
Property before any penalty or interest for late payment (except as such penalty
or interest relates to underpayment of estimated tax payments) accrues thereon,
and (b) all material claims (including, without limitation, claims for labor,
services, materials and supplies) for sums which have become due and payable and
which by law have or may become a Lien (other than a Lien permitted by Section
9.03) upon any of Holdings', the Company's or such Subsidiary's Property (other
than Property with a fair market value of less than $100,000), prior to the time
when any penalty or fine shall be incurred with respect thereto. Notwithstanding
the preceding sentence, any Borrower shall have the right to contest in good
faith the validity or amount of any such taxes or claims by proper proceedings
timely instituted, and may permit the taxes or claims to be contested to remain
unpaid during the period of such contest if (i) it diligently prosecutes such
contest, (ii) it makes adequate provision in conformity with GAAP with respect
to the contested items, and (iii) during the
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period of such contest, the enforcement and ability of any taxing authority to
force payment of any contested item or to impose a Lien with respect thereto is
effectively stayed. The Borrower shall promptly pay or cause to be paid any
valid judgment enforcing any such taxes and cause the same to be satisfied of
record.
8.05. Insurance. The Company shall maintain for itself and its
Subsidiaries, or shall cause each of its Subsidiaries to maintain, in full force
and effect the insurance policies and programs listed in the most recent report
delivered to Lender pursuant to Section 7.04 or substantially similar policies
and programs or other policies and programs as are reasonably acceptable to
Lender. Each certificate and policy relating to Collateral damage and/or
business interruption coverage shall contain an endorsement, in form and
substance acceptable to Lender, showing loss payable to Lender, and naming
Lender as an additional insured under such policy (provided, however, that with
respect to the Junior Collateral, such designation as loss payee and additional
insured in favor of Lender shall be subject to the rights of the Senior
Revolving Lenders in such Junior Collateral), and providing that no act, whether
willful or negligent, or default of the Company, any of the Company's
Subsidiaries or any other Person shall affect the right of Lender to recover
under such policy or policies of insurance in case of loss or damage. Each
certificate and policy relating to general liability, umbrella and excess
insurance coverages other than the foregoing shall contain an endorsement naming
Lender as an additional insured under such policy (provided, however, that with
respect to the Junior Collateral, such designation as loss payee and additional
insured in favor of Lender shall be subject to the rights of the Senior
Revolving Lenders in such Junior Collateral). Such endorsement or an independent
instrument furnished to Lender shall provide that the insurance companies shall
give Lender at least thirty (30) days' written notice before any such policy or
policies of insurance shall be cancelled or altered materially adversely to the
interests of Lender. In the event that the Company or any of its Subsidiaries,
at any time or times hereafter, shall fail to obtain or maintain any of the
policies or insurance required herein or to pay any premium in whole or in part
relating thereto, then Lender, without waiving or releasing any obligations or
resulting Event of Default hereunder, may at any time or times after the
occurrence of an Event of Default (but shall be under no obligation to do so)
obtain and maintain such policies of insurance and pay such premiums and take
any other action with respect thereto which Lender deems advisable (subject, as
to the Junior Collateral, to the right of the Revolving Credit Agent and the
Senior Revolving Lenders to maintain such policies of insurance, pay such
premiums, and take such other actions as the Revolving Credit Agent or the
Senior Revolving Lenders deem advisable). Lender agrees to give the Company
reasonable notice of any such payments made by it, but Lender's failure to do so
shall not limit its rights under this section. All sums so disbursed by Lender
shall constitute Protective Advances and be part of the Obligations, payable as
provided herein. Lender's rights with respect to the proceeds of any insurance
affecting the Junior Collateral shall be subject to the rights of the Senior
Revolving Lenders, all as set forth in the Intercreditor Agreement.
8.06. Inspection of Property; Books and Records; Discussions.
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(a) Holdings and the Company shall permit, and shall cause each of the
Company's Subsidiaries to permit, any authorized representative(s)
designated by Lender to visit and inspect any of the Properties of such
Person or such Subsidiary, to examine, audit, check and make copies of
their respective financial and accounting records, books, journals, orders,
receipts and any correspondence and other data relating to their respective
businesses or the transactions contemplated hereby and by the Transaction
Documents (including, in connection with environmental compliance, hazard
or liability), and to discuss their affairs, finances and accounts with
their officers and independent certified public accountants, in each case
upon reasonable notice and at such times during normal business hours, as
often as may be reasonably requested. All costs and expenses reasonably
incurred by Lender as a result of such inspection, audit or examination
conducted pursuant to this Section 8.06 shall be paid by the Company. It is
presently anticipated that four (4) such inspections and audits will take
place in each Fiscal Year, provided that this sentence shall in no way
limit the right of Lender to conduct greater or fewer inspections during
such time period.
(b) Holdings and the Company shall keep and maintain, and shall cause
its respective Subsidiaries to keep and maintain, in all material respects
proper books of record and account in which entries consistent with past
practices or otherwise in conformity with GAAP shall be made of all
dealings and transactions in relation to their respective businesses and
activities, including, without limitation, transactions and other dealings
with respect to the Collateral. If an Event of Default has occurred and is
continuing, the Company, upon Lender's request, shall promptly turn over
true, correct and complete copies of all such records to Lender or any of
its representatives.
8.07. [Intentionally omitted]
8.08. ERISA Compliance. Holdings and the Company shall, and shall cause
each of the Company's Subsidiaries and each of the ERISA Affiliates to,
establish, maintain and operate all Plans to comply in all material respects
with the provisions of ERISA, the Internal Revenue Code, all other applicable
laws, and the regulations and interpretations thereunder and the respective
requirements of the governing documents for such Plans. Unless otherwise
consented to by Lender, the Company shall exercise its discretion under Section
11.3 of the ESOP to require that the payment for company stock purchased upon
the exercise of a put option be made with a Common Equity Note commencing within
the 30-day period immediately following the date of exercise of the put option.
8.09. Foreign Employee Benefit Plan Compliance. Holdings and the Company
shall, and shall cause each of the Company's Subsidiaries and each of the ERISA
Affiliates to establish, maintain and operate all Foreign Employee Benefit Plans
to comply
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in all material respects with all laws, regulations and rules applicable thereto
and the respective requirements of the governing documents for such Plans.
8.10. Maintenance of Property. The Company shall, and shall cause each of
its Subsidiaries to, cause all material Property used or useful in the conduct
of its business to be maintained and kept in good condition, repair and working
order, ordinary wear and tear excepted, and supplied with all necessary
equipment and shall cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof; provided, however, that
nothing in this Section shall prevent the Company from discontinuing the
operation or maintenance of any such Property if (i) such Property is permitted
to be disposed of under Section 9.02 or (ii) such discontinuance is, in the
judgment of the Company, necessary or appropriate in the conduct of its business
or the business of any of its Subsidiaries and not disadvantageous to Lender.
8.11. Further Assurances; Additional Collateral. Each of Holdings and the
Borrowers shall execute and deliver, and cause its Subsidiaries to execute and
deliver, within the time periods set forth with respect to such items on the
Closing List, all agreements, documents and instruments designated as
"post-closing items" on the Closing List. At any time and from time to time,
promptly following Lender's written request and at the expense of the applicable
Person, each of Holdings and the Borrowers agrees to duly execute and deliver,
and agrees to cause its Subsidiaries to duly execute and deliver, any and all
such further instruments and documents and take such further action as Lender
may reasonably deem desirable in order to perfect and protect any Lien granted
or purported to be granted pursuant to the Loan Documents or to enable Lender,
in accordance with the terms of the applicable Loan Documents, to exercise and
enforce its rights and remedies under the Loan Documents with respect to such
Collateral. In addition, each Borrower agrees to grant, and cause any of its
Subsidiaries to grant, to Lender, a security interest in any additional property
which, as of the Closing Date, does not constitute Collateral, provided, that
the granting of such security interest would not be prohibited by other
Contractual Obligations to which such Borrower or such Subsidiary is a party, or
would not be prohibited by applicable law, and provided further, that such
Subsidiary has granted to the Senior Revolving Lenders a security interest in
such additional Property, it being understood and agreed that Lender shall not
be entitled to obtain the foregoing security interest in, (a) any Property as to
which the Senior Revolving Lenders are not granted a security interest
(exclusive of the Houston Facility), (b) the stock of any Subsidiary which is
organized outside the laws of the United States or any political subdivision
thereof, or any Property owned by any such Subsidiary, wherever located, (c) any
Property located outside the United States, or (d) any accounts payable to
parties resident outside the United States.
8.12. Landlord and Bailee Waivers. On or prior to the date which is 90 days
following the Closing Date, the Company shall obtain and deliver to Lender
Collateral Access Agreements (a) relating to the Lease which is located at the
Company's headquarters in Norwalk, Connecticut (provided, however, that Lender
shall only be
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entitled to such Collateral Access Agreement if a Collateral Access Agreement is
obtained in favor of the Revolving Credit Agent or the Senior Revolving Lenders
with respect to such facility), and (b) relating to each warehouse location
listed on Schedule 6.01-V (with such exceptions thereto as agreed to by Lender).
The Company shall use its best efforts to obtain and deliver to Lender
Collateral Access Agreements (x) with respect to any Lease entered into after
the Closing Date which relates to a location in which there is, or is reasonably
expected to be, Inventory with a fair market value of $250,000 or more and (y)
with respect to any warehouse location listed on Schedule 6.01-V that was not
obtained on or prior to the Closing Date and any other warehouse location
obtained after the Closing Date in which there is, or is reasonably expected to
be, (i) for a period of 30 days or more during any twelve-month period,
Inventory with a fair market value of $250,000 or more or (ii) at any time,
Inventory with a fair market value of $1,000,000 or more.
8.13. Environmental Compliance.
(a) Holdings, the Company and the Company's Subsidiaries shall comply
with all Environmental, Health or Safety Requirements of Law, noncompliance
with which reasonably could be expected to have a Material Adverse Effect.
(b) Holdings, the Company and each of the Company's Subsidiaries shall
obtain as needed all Permits necessary for their operations, and shall
maintain such Permits in good standing, where the failure to obtain and
maintain such Permits is reasonable likely to have a Material Adverse
Effect.
ARTICLE IX
NEGATIVE COVENANTS
Each of Holdings and the Borrowers covenants and agrees that it shall
comply with the following covenants so long as any amount is outstanding and
thereafter until Payment In Full of all of the Obligations, unless (except as
otherwise provided below) the Lender shall otherwise give prior written consent
thereto:
9.01. Indebtedness. None of Holdings, the Company or any of the Company's
Subsidiaries shall directly or indirectly create, incur, assume or otherwise
become or remain directly or indirectly liable with respect to any Indebtedness,
except:
(a) the Obligations;
(b) the Senior Revolving Obligations;
(c) Permitted Existing Indebtedness and any extensions, renewals,
refundings or replacements of such Indebtedness, provided that any such
extension, renewal, refunding or replacement is in an aggregate principal
amount
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not greater than the principal amount of, and, taken as a whole is on terms
no less favorable to such Borrower or such Subsidiary than the terms of,
such Indebtedness so extended, renewed, refunded or replaced;
(d) Indebtedness in respect of taxes, assessments, governmental
charges and claims for labor, materials or supplies, to the extent that
payment thereof is not required pursuant to Section 8.04;
(e) Indebtedness constituting Accommodation Obligations permitted by
Section 9.05;
(f) Indebtedness under appeal bonds in connection with judgments which
do not result in an Event of Default or Default or any other breach
hereunder;
(g) to the extent permitted by Article X and in any event in an
aggregate amount not to exceed $3,000,000 at any time, Capital Leases and
purchase money Indebtedness incurred by the Borrowers to finance the
acquisition of fixed assets, and Indebtedness incurred by the Borrowers to
refinance such Capital Leases and purchase money Indebtedness;
(h) Indebtedness incurred pursuant to the Permitted Receivables
Transaction Documents;
(i) Permitted Subordinated Indebtedness;
(j) Indebtedness arising from intercompany loans (A) from any Borrower
to any other Borrower; provided that such loans shall be evidenced by
promissory notes substantially in the form of Exhibit V and shall be
pledged to Lender as additional Collateral, (B) from any Subsidiary of the
Company (other than Borrowers) to a Borrower, (C) from Holdings to any
Borrower, (D) from any Borrower to any Subsidiary of the Company (other
than Borrowers) in a principal amount, together with any Investments made
after the Closing Date in such Subsidiaries and Finsub and other
Subsidiaries permitted to be created or capitalized after the Closing Date
under Section 9.07(b), in any Fiscal Year not to exceed the Subsidiary
Investment Basket for such Fiscal Year and (E) in addition to any loans
made to such Person under clause (D) above, from Pegasus to Pegasus
Polymers Asia Ltd. ("PPAL") in an amount at any time outstanding not to
exceed the sum of (1) $2,000,000 plus the amount of dividends received by
Pegasus from PPAL after the Closing Date; provided, that no loans permitted
by clauses (D) or (E) shall be made if an Event of Default or Default has
occurred and is continuing;
(k) Indebtedness arising pursuant to Interest Rate Contracts
reasonably acceptable to Lender having aggregate Interest Rate Contract
Exposure
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for all Borrowers in an amount not to exceed an amount equal to (x)
$5,000,000 minus (y) the aggregate Currency Agreement Exposure for all
Borrowers at such time;
(l) Indebtedness arising pursuant to Currency Agreements entered into
in the ordinary course of business or otherwise reasonably acceptable to
Lender having aggregate Currency Agreement Exposure for all Borrowers in an
amount not to exceed an amount equal to (x) $5,000,000 minus (y) the
aggregate Interest Rate Contract Exposure for all Borrowers at such time;
and
(m) Indebtedness of Holdings in respect of the Common Equity Notes.
9.02. Sales of Assets. None of Holdings, the Company or any of the
Company's Subsidiaries shall sell, assign, transfer, lease, convey or otherwise
dispose of any Property, whether now owned or hereafter acquired, or any income
or profits therefrom, or enter into any agreement to do so, to the extent such
Property constitutes Senior Collateral, without Lender's prior written consent.
With respect to any Property other than Property constituting Senior Collateral,
none of Holdings, the Company or any of the Company's Subsidiaries shall sell,
assign, transfer, lease, convey or otherwise dispose of any such Property,
whether now owned or hereafter acquired, or any income or profits therefrom, or
enter into any agreement to do so, except:
(a) the sale of Property (other than General Intangibles) in the
ordinary course of business (including sales of such Property between the
Borrowers and their Subsidiaries);
(b) the sale of Receivables pursuant to the Permitted Receivables
Transaction Documents;
(c) sales of assets outside of the ordinary course of business not in
excess of $1,000,000 in any Fiscal Year; provided, however, (A) sales of
Collateral permitted pursuant to this clause shall be for cash or on
customary payment terms and (B) sales of other assets permitted pursuant to
this clause may be for cash, on customary payment terms or for promissory
notes, provided, that all cash shall be applied to the obligations of the
Borrower whose Collateral is being sold, and all promissory notes shall be
pledged to the Revolving Credit Agent as additional collateral;
(d) sales of Receivables in the ordinary course of business made (A)
between Borrowers or (B) from Subsidiaries of the Company to a Borrower,
provided, that all actions under the Uniform Commercial Code and other
applicable Requirements of Law required to perfect the purchaser's interest
in such Receivables shall have been taken;
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(e) assignments and licenses of intellectual property of the Company
in the ordinary course of business;
(f) subleases of leases or leases of owned Real Property (other than
the Houston Facility), to the extent such leases and subleases have
anticipated annual rentals of less than $1,000,000 each;
(g) sales of Receivables backed by foreign letters of credit of not
more than $3,500,000 in any Fiscal Year (or such larger amount as Lender
may approve in its sole discretion);
(h) sales of Capital Stock of Subsidiaries of the Company permitted by
Section 9.13; and
(i) additional dispositions which may be approved by the Revolving
Credit Agent in its sole discretion and which result in Net Cash Proceeds
of not more than $2,500,000 in the aggregate and which are applied to pay
the Senior Revolving Obligations.
9.03. Liens. None of Holdings, the Company or any of the Company's
Subsidiaries shall directly or indirectly create, incur, assume or permit to
exist any Lien on or with respect to any of their respective Property or assets
except:
(a) Liens created by the Loan Documents and the Senior Revolving Loan
Documents;
(b) Permitted Existing Liens;
(c) Customary Permitted Liens;
(d) purchase money Liens granted by a Borrower (including the interest
of a lessor under a Capital Lease) and Liens to which any Property is
subject at the time of the Company's acquisition thereof) securing
Indebtedness permitted under Sections 9.01(g) and limited in each case to
the property purchased or subject to such lease;
(e) any attachment or judgment Lien the existence of which does not
constitute an Event of Default under Section 11.01(h);
(f) Liens filed to perfect the transfers of Receivables pursuant to
the Permitted Receivables Transaction Documents or otherwise to evidence
the transactions contemplated thereunder;
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(g) to the extent Indebtedness secured thereby is permitted to be
extended, renewed, replaced or refinanced pursuant to Section 9.01 (b), a
future Lien upon any Property which is subject to a Lien described in
clauses (b) or (d) above, if such future Lien attaches only to the same
Property, secures only such permitted extensions, renewals, replacements or
refinancings and is of like quality, character and extent; and
(h) certain statutory and contractual rights of retention on the
Inventory of the Company or any of its Subsidiaries located outside of the
United States and Canada.
9.04. Investments. None of Holdings, the Company or any of the Company's
Subsidiaries shall directly or indirectly make or own any Investment except:
(a) Investments in cash and Cash Equivalents;
(b) Permitted Existing Investments in an amount not greater than the
amount thereof on the Closing Date;
(c) Investments received in connection with the bankruptcy or
reorganization of suppliers and customers and in settlement of delinquent
obligations of, and other disputes with, customers and suppliers arising in
the ordinary course of business;
(d) Investments by Holdings and the Borrowers on the Closing Date in
the Capital Stock of their Subsidiaries and additional Investments made
after the Closing Date in such Subsidiaries and Finsub and other
Subsidiaries permitted to be created or acquired after the Closing Date
under Section 9.07;
(e) Investments in loans to employees made in the ordinary course of
business (but excluding any such loans the proceeds of which are intended
to be used to purchase Capital Stock); and
(f) Investments constituting Indebtedness permitted by Section 9.01,
Accommodation Obligations permitted by Section 9.05, or Capital
Expenditures permitted by Section 10.03.
9.05. Accommodation Obligations. None of Holdings, the Company or any of
the Company's Subsidiaries shall directly or indirectly create or become or be
liable with respect to any Accommodation Obligation, except:
(a) Permitted Existing Accommodation Obligations;
(b) Accommodation Obligations arising under the Loan
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Documents;
(c) obligations, warranties and indemnities which have been or are
undertaken or made in the ordinary course of business, in connection with
the Transaction Documents or in connection with any sale of assets
permitted under Section 9.02;
(d) (A) Accommodation Obligations of any Subsidiary of Holdings in
respect of obligations of a Borrower or a Subsidiary Guarantor and (B)
Accommodation Obligations of any Subsidiary of Holdings in respect of
obligations of any other Subsidiary of Holdings (other than the Borrowers
or the Subsidiary Guarantors) but only if the aggregate amount of such
Accommodation Obligations does not exceed $17,500,000 at any time
outstanding; and
(e) Accommodation Obligations of the Company and Finsub pursuant to
the Permitted Receivables Transaction Documents; and
(f) Accommodation Obligations in respect of Indebtedness permitted
under Section 9.01 or constituting a Lien permitted under Section 9.03 or
an Investment permitted under Section 9.04.
9.06. Restricted Junior Payments. None of Holdings, the Company or any of
the Company's Subsidiaries shall declare or make any Restricted Junior Payment,
except:
(a) regularly scheduled cash dividends by Holdings on the Preferred
Stock in an aggregate amount not to exceed $1,200,000 in any Fiscal Year;
provided that in the event such dividends actually paid in any Fiscal Year
are less than the maximum permitted to be paid during such Fiscal Year, the
unpaid amount for such Fiscal Year may be carried over to the next
succeeding Fiscal Year;
(b) regularly scheduled payments of principal and interest by Holdings
on the Indebtedness evidenced by the Common Equity Notes issued to the
holders of Common Stock either (i) pursuant to the Shareholders' Agreement
or (ii) pursuant to the ESOP;
(c) cash dividends on the Capital Stock of the Company to Holdings
paid and declared on or prior to the Closing Date to fund the transactions
contemplated by the Acquisition Documents;
(d) cash dividends on the Capital Stock of the Company to Holdings
paid and declared in any Fiscal Year (A) to fund the payment of taxes and
ordinary operating expenses of Holdings, (B) to fund the payment of
Transaction
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Costs of Holdings not in excess of $6,000,000 in the aggregate and (C) to
fund payments permitted to be made by Holdings pursuant to clauses (a), (b)
and (g) of this Section 9.06;
(e) cash dividends paid solely to a Borrower by any of such Borrower's
Subsidiaries;
(f) regularly scheduled payments of interest and principal on the
Permitted Subordinated Indebtedness but only to the extent permitted to be
paid pursuant to the terms of such Permitted Subordinated Indebtedness; and
(g) after the first anniversary of the Closing Date, payments made by
Holdings in respect of (A) redemptions of the Preferred Stock, (B)
repurchases of the Nonvoting Common Stock (but only to the extent such
Nonvoting Common Stock is subject to a put or call pursuant to the
Nonvoting Common Stock Purchase Agreement), (C) repurchases of other
Capital Stock of Holdings put to (or, in the case of Capital Stock subject
to the Shareholders' Agreement and held by former employees of Holdings,
the Borrowers or any Subsidiary Guarantor, called by) Holdings pursuant to
the terms of the Shareholders' Agreement or the ESOP and principal
prepayments of any Common Equity Notes; provided, however, that the
Restricted Junior Payments described in clauses (a), (b)(i), (d) and (g)
above shall not be permitted if either (A) a Default or an Event of Default
shall have occurred and be continuing at the date of declaration or payment
thereof or would result therefrom or (B) such Restricted Junior Payment is
prohibited under the terms of any Indebtedness or Capital Stock of
Holdings, the Company or any of the Company's Subsidiaries; and provided,
further, that cash redemptions permitted under clause (g) above shall be
limited to the excess, if any, of the average aggregate Revolving Credit
Availability under all Credit Facilities (plus, after the inception of the
Permitted Receivables Financing Program, the average liquidity available to
the Borrowers under the Permitted Receivables Financing Program) during the
thirty days immediately preceding the date set for such payment over
$15,000,000.
9.07. Conduct of Business; Subsidiaries; Acquisitions.
(a) Neither the Company nor any of its Subsidiaries shall engage in
any business other than the businesses engaged in by the Company on the
date hereof and any business or activities which are substantially similar,
related or incidental thereto. Holdings shall engage in no business or
activity other than acting as the parent of the Company and owning all of
the issued and outstanding shares of the common stock of the Company and
activities reasonably related thereto or as otherwise permitted by the Loan
Documents. The Subsidiaries of the Company (other than Borrowers)
conducting business in Europe shall not engage in any business or activity
other than acting as the agent for Pegasus pursuant to the
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terms of an agency agreement between Pegasus and such Subsidiary, in form
and substance reasonably satisfactory to the Senior Revolving Lenders.
(b) Neither Holdings nor the Company shall create, capitalize or
acquire any Subsidiary after the date hereof; provided, however, the
Company may capitalize Finsub in accordance with the Permitted Receivables
Transaction Documents and may capitalize the Subsidiaries proposed to be
created on Schedule 6.01-C for the purposes set forth on such schedule in
an aggregate amount during any Fiscal Year, together with the initial
principal amount of all intercompany loans permitted to be made in such
Fiscal Year pursuant to Section 9.01(j), not to exceed the amounts
permitted by Sections 9.01(j)(D) and 9.01(j)(E) for such Fiscal Year.
(c) No Borrower shall enter into any transaction or series of
transactions (other than the transactions contemplated in the Acquisition
Documents) in which it acquires all or any significant portion of the
Capital Stock or assets of another Person; provided, however, with the
consent of Lender and so long as no Event of Default has occurred and is
continuing, the Borrowers may acquire the assets or Capital Stock of
Persons having a fair market value (as determined by the Company's board of
directors), net of any liabilities assumed by such Borrower in such
acquisition (determined in accordance with GAAP) in the aggregate for all
such acquisitions after the Closing Date of not greater than $2,000,000.
9.08. Transactions with Shareholders and Affiliates. Except for the
consummation of the transactions contemplated in the Transaction Documents, none
of Holdings, the Company or any of the Company's Subsidiaries shall directly or
indirectly enter into or permit to exist any transaction (including, without
limitation, the purchase, sale, lease or exchange of any property or the
rendering of any service) with any Affiliate of Holdings or the Company which is
not its Subsidiary, on terms that are less favorable to Holdings, the Company or
any such Subsidiary, as applicable, than those that could be obtained in an
arm's length transaction at the time from Persons who are not such a holder or
Affiliate other than transactions with such Affiliates who are officers,
directors, or members of the leadership committee of Holdings, the Company or a
Subsidiary of the Company which (a) are approved by the board of directors of
Holdings, the Company or such Subsidiary, as applicable, or (b) are in the
ordinary course of business of Holdings, the Company or such Subsidiary, as
applicable.
9.09. Restriction on Fundamental Changes. None of Holdings, the Company or
any of the Company's Subsidiaries shall (a) enter into any merger or
consolidation, or liquidate, wind-up or dissolve (or suffer any liquidation or
dissolution), except for a merger of a Borrower into another Borrower, provided
that the documents governing such merger are satisfactory to Lender and a merger
of a Wholly Owned Subsidiary (other than a Borrower) into the Company (with the
Company as the surviving
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corporation) or another Wholly Owned Subsidiary or the dissolution of a
Subsidiary of the Company that is not a party to any Loan Document and the
Capital Stock of which is not pledged in full or in part to Lender, or convey,
lease, sell, transfer or otherwise dispose of, in one transaction or series of
transactions, all or substantially all of Holdings, the Company's or any such
Subsidiary's business or Property, whether now or hereafter acquired, except
transactions permitted under Section 9.02 or (b) enter into any partnership or
joint venture (other than (x) profit sharing arrangements with suppliers that
are not conducted through a corporation or partnership established for such
purpose and (y) partnerships or joint ventures which are at least 51% owned by a
Borrower and which do not constitute consolidated Subsidiaries of Holdings).
9.10. Sales and Leasebacks; Operating Leases.
(a) None of Holdings, the Company or any of the Company's Subsidiaries
shall enter into any Sale and Leaseback Transaction except to the extent
otherwise permitted by Article X and in an aggregate amount not to exceed
the amount specified in Section 9.01(g).
(b) None of Holdings, the Company or any of the Company's Subsidiaries
shall become liable in any way, whether directly or by assignment or by
Accommodation Obligation, for the obligations of a lessee under any
Operating Lease unless, immediately after giving effect to the incurrence
of liability with respect to such Operating Lease, the aggregate amount of
all rents paid or accrued under all Operating Leases of Holdings, the
Company and the Company's Subsidiaries (determined in conformity with GAAP)
shall not exceed $4,000,000 in any Fiscal Year.
9.11. Margin Regulations; Securities Laws. None of Holdings, the Company or
any of the Company's Subsidiaries, shall use all or any portion of the proceeds
of any credit extended hereunder to purchase or carry Margin Stock.
9.12. ERISA and Certain Employment Matters. The Company shall not:
(a) engage, or permit any ERISA Affiliate to engage, in any prohibited
transaction described in Sections 406 of ERISA or 4975 of the Internal
Revenue Code for which a statutory or class exemption is not available or a
private exemption has not been previously obtained from the DOL or with
respect to which the aggregate liability of the Company and its ERISA
Affiliates arising from such transaction is greater than $1,000,000;
(b) permit to exist any accumulated funding deficiency (as defined in
sections 302 of ERISA and 412 of the Internal Revenue Code), with respect
to any Benefit Plan, whether or not waived;
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(c) fail, or permit any ERISA Affiliate to fail, to pay timely
required contributions or annual installments due with respect to any
waived funding deficiency to any Benefit Plan;
(d) terminate, or permit any ERISA Affiliate to terminate, any Benefit
Plan which would result in a material liability of Company or any ERISA
Affiliate under Title IV of ERISA;
(e) fail to make any contribution or payment to any Multiemployer Plan
which Company or any ERISA Affiliate may be required to make under any
agreement relating to such Multiemployer Plan, or any law pertaining
thereto;
(f) fail, or permit any ERISA Affiliate to fail, to pay any required
installment or any other payment required that would give rise to a Lien
under Section 412 of the Internal Revenue Code on or before the due date
for such installment or other payment;
(g) amend, or permit any ERISA Affiliate to amend, a Plan resulting in
an increase in current liability for the plan year such that the Company or
any ERISA Affiliate is required to provide security to such Plan under
Section 401(a)(29) of the Internal Revenue Code;
(h) permit any unfunded liabilities with respect to any Foreign
Pension Plan other than as permitted under local law; or
(i) fail, or permit any Subsidiary or ERISA Affiliate to fail, to pay
any required contributions or payments to a Foreign Pension Plan on or
before the due date for such required installment or payment.
9.13. Issuance or Sale of Capital Stock. Other than pursuant to the
Registration Statement, the Retirement Plan, the ESOP, the Shareholders'
Agreement and the Nonvoting Common Stock Purchase Agreement, none of the Company
or any of the Company's Subsidiaries shall (i) issue any Capital Stock, except,
in the case of the Company, the Capital Stock of the Company issued to Holdings
on or prior to the Closing Date and, in the case of Company's Subsidiaries, the
Capital Stock of any such Subsidiary to the extent the creation thereof is
permitted pursuant to Sections 9.04 and 9.07, (ii) grant any rights (either
preemptive or other) to subscribe for or to purchase, or any option for the
purchase of, its Capital Stock or (iii) create calls, commitments, or claims of
any character relating to any of its Capital Stock. The Company shall not sell
or otherwise dispose of, or permit the sale or disposition of, any shares of
Capital Stock of any of its Subsidiaries, except (x) as required by applicable
law for the qualification of directors or to satisfy minimum shareholder
requirements and (y) for the Capital Stock of Subsidiaries of the Company that
are not party to any Loan Document and the Capital Stock of which is not
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pledged in full or in part to Lender.
9.14. Constituent Documents. None of Holdings, the Company or any of the
Company's Subsidiaries shall materially amend, modify or otherwise change any of
the terms or provisions in any of their respective Constituent Documents as in
effect on the Closing Date, except that Holdings, the Company or any such
Subsidiary may change its name, provided that any change of name of Holdings,
the Company or any Subsidiary party to the Subsidiary Junior Security Agreements
shall be made in accordance with the Holdings Security Agreement, the Borrower
Junior Security Agreements and the Subsidiary Junior Security Agreements,
respectively.
9.15. Fiscal Year. None of Holdings, the Company or any of the Company's
Subsidiaries shall change its Fiscal Year for accounting or tax purposes from a
period consisting of the 12-month period ending on December 31 of each calendar
year.
9.16. Cancellation of Debt; Prepayment; Certain Amendments. Neither
Holdings, nor the Company, nor any of the Company's Subsidiaries shall (i)
cancel any material claim or debt or amend or modify the terms thereof, except
in the ordinary course of its business or pursuant to the exercise of reasonable
business judgment or (ii) except for regularly scheduled payments as expressly
permitted pursuant to the terms of the Loan Documents, prepay, redeem, purchase,
repurchase, defease or retire any long-term Indebtedness (other than the Senior
Revolving Obligations); or (iii) terminate, amend, supplement or otherwise
modify the terms of (A) the Acquisition Documents (other than the Common Equity
Notes) in any respect that is materially adverse to the Lender or (B) the Senior
Revolving Loan Documents, the Common Equity Notes, the Permitted Receivables
Transaction Documents or any documents evidencing the Permitted Subordinated
Indebtedness in any respect that is adverse to the Lender.
9.17. Environmental Matters. Neither Holdings, nor the Company, nor any of
Company's Subsidiaries shall become subject to any Liabilities and Costs which
would have a Material Adverse Effect arising out of or related to (a) the
Release or threatened Release at any location of any Contaminant into the
environment, or any Remedial Action in response thereto, or (b) any violation of
any Environmental, Health and Safety Requirements of Law. The Company shall not
approve the "Phase II Report" (as defined in the Acquisition Agreement) with
respect to the issue of "Potentially Remediable On-Site Conditions" (as defined
in the Acquisition Agreement), pursuant to the approval right provided to the
Company in the Second Amendment to Stock Purchase Agreement, without Lender's
prior written consent, which consent shall not unreasonably be withheld.
9.18. [Intentionally omitted.]
9.19. [Intentionally omitted.]
9.20. No New Restrictions on Subsidiary Dividends. Except to the extent
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that any such agreement may be contained in the Loan Documents or the Permitted
Receivables Transaction Documents, neither Holdings nor the Company will agree,
or permit any of the Company's Subsidiaries to agree, to create or otherwise
permit to exist any consensual encumbrance or restriction of any kind on the
ability of any of the Company's Subsidiaries to pay dividends or make any other
distribution or transfer of funds or assets or make loans or advances to or
other Investments in, or pay any Indebtedness owing to, the Company.
ARTICLE X
FINANCIAL COVENANTS
Each of Holdings and the Borrowers covenants and agrees that so long as any
amount is outstanding and thereafter until Payment In Full of all of the
Obligations, unless Lender shall otherwise give prior written consent thereto:
10.01. Minimum Consolidated Tangible Net Worth. Holdings and its
Subsidiaries shall maintain a Consolidated Tangible Net Worth at all times (i)
with respect to the first fiscal quarter of 1996, from the Closing Date until
the day preceding the last day of such fiscal quarter and (ii) with respect to
each fiscal quarter in each Fiscal Year set forth below thereafter, in each case
from the last day of the fiscal quarter preceding such fiscal quarter to the day
preceding the last day of such fiscal quarter of not be less than the minimum
amount set forth opposite such fiscal quarter:
Period Minimum Amount
------ --------------
First fiscal quarter of 1996 $18,000,000
Second fiscal quarter of 1996 19,000,000
Third fiscal quarter of 1996 20,500,000
Fourth fiscal quarter of 1996 22,000,000
First fiscal quarter of 1997 23,125,000
Second fiscal quarter of 1997 24,250,000
Third fiscal quarter of 1997 25,375,000
Fourth fiscal quarter of 1997 26,500,000
First fiscal quarter of 1998 27,750,000
Second fiscal quarter of 1998 29,000,000
Third fiscal quarter of 1998 30,250,000
Fourth fiscal quarter of 1998 31,500,000
First fiscal quarter of 1999 33,125,000
Second fiscal quarter of 1999 34,750,000
Third fiscal quarter of 1999 36,375,000
Fourth fiscal quarter of 1999 38,000,000
10.02. Minimum Fixed Charge Coverage Ratio. Holdings and its Subsidiaries
shall maintain a Fixed Charge Coverage Ratio on a consolidated basis, as
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determined as of the last day of each fiscal quarter set forth below for the
four fiscal quarter period ending on such date (or if the period from the
Closing Date to such last day is less than four full fiscal quarters, such
shorter period), shall not be less than the minimum ratio set forth opposite
such fiscal quarter:
Fiscal Quarter Minimum Ratio
-------------- -------------
Second fiscal quarter of 1996 1.00 to 1
Third fiscal quarter of 1996 1.00 to 1
Fourth fiscal quarter of 1996 1.00 to 1
First fiscal quarter of 1997 1.05 to 1
Second fiscal quarter of 1997 1.10 to 1
Third fiscal quarter of 1997 1.10 to 1
Fourth fiscal quarter of 1997 1.20 to 1
First fiscal quarter of 1998 1.20 to 1
Second fiscal quarter of 1998 1.25 to 1
Third fiscal quarter of 1998 1.25 to 1
Fourth fiscal quarter of 1998 and
each fiscal quarter thereafter 1.30 to 1
10.03. Maximum Capital Expenditures. Capital Expenditures made or incurred
by the Company and its Subsidiaries on a consolidated basis during any Fiscal
Year shall not exceed $1,750,000; provided, that in the event Capital
Expenditures in any Fiscal Year are less than the maximum specified above for
such Fiscal Year, the unspent amount for such Fiscal Year may be carried over to
the next succeeding Fiscal Year (such carry-over amount being available only for
use in such succeeding Fiscal Year and being treated as the last amount spent in
such succeeding Fiscal Year, in each case for purposes of applying this proviso
to such Fiscal Year).
ARTICLE XI
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
11.01. Events of Default. Each of the following occurrences shall
constitute an Event of Default hereunder:
(a) Failure to Make Payments When Due. Any Borrower shall fail to pay
(i) when due any principal or interest on the Loan or any other fees
payable hereunder or (ii) any other Obligation, and if such non-payment
relates to Obligations other than interest, principal or fees, such
non-payment continues for a period of five (5) Business Days after the due
date thereof.
(b) Breach of Certain Covenants. Holdings or any Borrower shall fail
to perform or observe duly and punctually any agreement, covenant or
obligation binding on such Person under (i) Section 7.02, 7.03, 8.01, 8.02
or 8.05
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(solely with respect to the failure to pay insurance premiums which has the
effect of terminating any insurance policy required to be maintained
pursuant to such section), or (ii) Article IX or Article X.
(c) Breach of Representation or Warranty. Any representation or
warranty made or deemed made by Holdings, the Company or any of the
Company's Subsidiaries to Lender herein or in any other Loan Document or in
any certificate at any time given by any such Person pursuant to any Loan
Document shall be false or misleading in any material respect on the date
made (or deemed made).
(d) Other Defaults. Holdings or any Borrower shall default in the
performance of or compliance with any term contained herein (other than as
covered by paragraphs (a), (b) or (c) of this Section 11.01), or Holdings,
the Company or any of the Company's Subsidiaries shall default in the
performance of or compliance with any term contained in any other Loan
Document, and such default shall continue for (i) five (5) Business Days
after the occurrence thereof with any respect to any term contained in
Section 8.06; (ii) ten (10) Business Days after the occurrence thereof with
respect to any term contained in Section 7.01; and (iii) thirty (30) days
after the occurrence thereof with respect to any other term.
(e) Acceleration as to Other Indebtedness; Operating Leases. Any
Indebtedness of Holdings, the Company or any of the Company's Subsidiaries
in excess of $1,000,000 shall be declared to be due and payable (by
acceleration or otherwise) or required to be prepaid, redeemed or otherwise
repurchased by Holdings, the Company or any of the Company's Subsidiaries
(other than by a regularly scheduled required prepayment, mandatory
redemption or required repurchase) prior to the stated maturity thereof; or
any breach, default or event of default remaining uncured for a period of
sixty (60) days on the part of Holdings, the Company or any of the
Company's Subsidiaries shall occur under any Operating Lease to which the
Company or any of its Subsidiaries is a party involving Property located at
the Houston Facility pursuant to which rental payments thereunder equal or
exceed $1,000,000 per annum; or any event shall have occurred and be
continuing which constitutes an "Event of Termination" under and as defined
in the Permitted Receivables Transaction Documents, or which could
otherwise cause the early termination of the Permitted Receivables
Financing Program.
(f) Involuntary Bankruptcy; Appointment of Receiver, Etc.
(i) An involuntary case, proceeding or other action shall be
commenced against Holdings, the Company or any of its Subsidiaries (A)
under any existing or future law of any jurisdiction, domestic or
foreign, relating to bankruptcy, insolvency, reorganization or relief
of debtors, seeking to have any order for relief entered with respect
to it, or seeking to
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adjudicate it as bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, wind-up, liquidation, dissolution,
composition or other relief with respect to it or its debts, or (B)
seeking appointment of a receiver, trustee, receiver-manager,
liquidator, sequestrator, administrator, custodian or similar official
for it or for all or any substantial part of its assets which case,
proceeding or other action results in entry of an order for relief or
any such adjudication or appointment or (B) remains undismissed,
undischarged or unbonded for period of sixty (60) days; or a court
having jurisdiction in the premises shall enter a decree or order for
relief in respect of Holdings, the Company or any of the Company's
Subsidiaries in an involuntary case, under any applicable bankruptcy,
insolvency or other similar law now or hereinafter in effect; or any
other similar relief shall be granted under any applicable federal,
state, local or foreign law.
(ii) A decree or order of a court having jurisdiction in the
premises for the appointment of a receiver, receiver-manager,
liquidator, sequestrator, trustee, custodian or other officer having
similar powers over Holdings, the Company or any of the Company's
Subsidiaries or over all or a substantial part of the Property of
Holdings, the Company or any of the Company's Subsidiaries shall be
entered; or an interim receiver, trustee or other custodian of
Holdings, the Company or any of the Company's Subsidiaries or of all
or a substantial part of the property of Holdings, the Company or any
of the Company's Subsidiaries shall be appointed or a warrant of
attachment, execution or similar process against any substantial part
of the Property of Holdings, the Company or any of the Company's
Subsidiaries shall be issued and any such event shall not be stayed,
dismissed, bonded or discharged within sixty (60) days after entry,
appointment or issuance.
(g) Voluntary Bankruptcy; Appointment of Receiver, Etc. Holdings, the
Company or any of the Company's Subsidiaries shall (i) commence any
voluntary case, proceeding or other action (A) under any existing or future
law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have any order
for relief entered with respect to it, or seeking to adjudicate it as
bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
wind-up, liquidation, dissolution, composition or other relief with respect
to it or its debts, or (B) seeking appointment of a receiver, trustee,
receiver-manager, liquidator, sequestrator, administrator, custodian or
similar official for it or for all or any substantial part of its assets or
(ii) shall consent to the entry of an order for relief in an involuntary
case, or to the conversion of an involuntary case to a voluntary case,
under any such law, or (iii) shall consent to the appointment of or taking
possession by a receiver, receiver-manager, liquidator, sequestrator,
trustee or other custodian or other officer for all or a substantial part
of its property; (iv) or Holdings, the Company or any of
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the Company's Subsidiaries shall generally not pay its debts as such debts
become due, or shall admit in writing its inability to pay its debts
generally, or shall make any general assignment for the benefit of
creditors or (v) the Borrower shall take any other action to authorize any
of the actions set forth in this paragraph (g).
(h) Judgments. Holdings, the Company or any of the Company's
Subsidiaries shall permit any judgments or orders against any of them or
any of their respective assets for the payment of money in excess of
$1,000,000 in the aggregate at any one time in excess of any available
insurance proceeds to remain undischarged during a period of forty-five
(45) consecutive days unless during such period such judgments or orders
shall be effectively stayed, vacated or discharged on appeal or otherwise.
(i) Dissolution. Any order, judgment or decree shall be entered
against Holdings, the Company or any of the Company's Subsidiaries,
decreeing its involuntary dissolution or other similar proceeding, and such
order shall remain undischarged and unstayed for a period in excess of
sixty (60) days; or Holdings, the Company or any of the Company's
Subsidiaries shall otherwise dissolve or cease to exist except as
specifically permitted hereby.
(j) Loan Documents; Failure of Security. At any time, for any reason,
(i) any Loan Document ceases to be in full force and effect (except in
accordance with its terms) or Holdings, the Company or any of the Company's
Subsidiaries party thereto seeks to repudiate its obligations thereunder
and the Liens intended to be created thereby are, or Holdings, the Company
or any such Subsidiary seeks to render such Liens, invalid or unperfected,
or (ii) Liens in favor of Lender contemplated by the Loan Documents shall,
at any time, for any reason, be invalidated or otherwise cease to be in
full force and effect (except to the extent that Lender has agreed that its
Lien on the Junior Collateral shall remain unperfected until the occurrence
of a Triggering Event), or such Liens shall be subordinated or shall not
have the priority contemplated hereby or by the other Loan Documents.
(k) Termination Event. Any Termination Event occurs which Lender
reasonably believes could subject either the Company or any ERISA Affiliate
to a liability in excess of $1,000,000.
(l) Waiver of Minimum Funding Standard. If the plan administrator of
any Plan applies under Section 412(d) of the Internal Revenue Code for a
waiver of the minimum funding standards of Section 412(a) of the Internal
Revenue Code and Lender believes the substantial business hardship upon
which the application for the waiver is based could subject either
Holdings, the Company or any ERISA Affiliate to a material liability.
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(m) Material Adverse Change. An event shall exist or occur which has a
Material Adverse Effect.
(n) Intercreditor Agreement. Any of the parties to the Intercreditor
Agreement (other than Lender) shall fail to perform any material covenant
or material obligation binding on such party or the Intercreditor Agreement
shall cease to be in full force and effect.
(o) Change of Control. A Change of Control shall have occurred.
An Event of Default shall be deemed "continuing" until cured or waived in
accordance with Section 13.07.
11.02. Rights and Remedies.
(a) Acceleration and Termination. Upon the occurrence of any Event of
Default described in Sections 11.01(f) or 11.01(g), the unpaid principal
amount of, and any and all accrued interest on, the Obligations and all
accrued fees shall automatically become immediately due and payable,
without presentment, demand, or protest or other requirements of any kind
(including, without limitation, valuation and appraisement, diligence,
presentment, notice of intent to demand or accelerate and of acceleration),
all of which are hereby expressly waived by the Borrowers; and upon the
occurrence and during the continuance of any other Event of Default, and
subject to the provisions of the Intercreditor Agreement, Lender may, by
written notice to the Company, declare the unpaid principal amount of and
any and all accrued and unpaid interest on the Obligations to be, and the
same shall thereupon be, immediately due and payable, without presentment,
demand, or protest or other requirements of any kind (including, without
limitation, valuation and appraisement, diligence, presentment, notice of
intent to demand or accelerate and of acceleration), all of which are
hereby expressly waived by the Borrowers.
(b) Rescission. If at any time after acceleration of the maturity of
the Loan, the Borrowers shall pay all arrears of interest and all payments
on account of principal of the Loan which shall have become due otherwise
than by acceleration (with interest on principal and, to the extent
permitted by law, on overdue interest, at the rates specified herein) and
all Events of Default and Defaults (other than nonpayment of principal of
and accrued interest on the Loan due and payable solely by virtue of
acceleration) shall be remedied or waived pursuant to Section 13.07, then
upon written consent of Lender and written notice to the Company, the
consequences of such acceleration may be rescinded and annulled; but such
action shall not affect any subsequent Event of Default or Default or
impair any right or remedy consequent thereon.
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(d) Enforcement. The Borrowers acknowledge that in the event Holdings,
the Company or any of the Company's Subsidiaries fails to perform, observe
or discharge any of its respective obligations or liabilities hereunder or
under any other Loan Document, any remedy of law may prove to be inadequate
relief to Lender; therefore, each Borrower agrees that Lender shall be
entitled after the occurrence and during the continuance of an Event of
Default to temporary and permanent injunctive relief in any such case
without the necessity of proving actual damages.
(e) Protective Advances. Lender may from time to time, after the
occurrence and during the continuance of an Event of Default, make such
disbursements and advances to or for the account of any Borrower pursuant
to the Loan Documents which Lender, in its sole discretion, deems necessary
or desirable to preserve or protect the Collateral or any portion thereof
(provided, that other than with respect to the payment of insurance
premiums and taxes affecting the Senior Collateral, such payments shall not
exceed $50,000 in the aggregate) or, to the extent such advance is
consented to by such Borrower, to enhance the likelihood or maximize the
amount of repayment of the Loan and other Obligations ("Protective
Advances"). Lender shall notify the Company in writing of each such
Protective Advance, which notice shall include a description of the purpose
of such Protective Advance. The Borrowers jointly and severally agree to
pay Lender, upon demand, the principal amount of all outstanding Protective
Advances, together with interest thereon at the Default Rate from the date
of such Protective Advance until the outstanding principal balance thereof
is paid in full. All outstanding principal of, and interest on, Protective
Advances shall constitute Obligations secured by the Collateral until paid
in full by the applicable Borrower(s).
ARTICLE XII
[RESERVED]
ARTICLE XIII
MISCELLANEOUS
13.01. (a) Assignment. No assignment of Lender's rights or obligations
hereunder shall be made without the prior consent of the Revolving Credit Agent
and the Company, which consent shall not unreasonably be withheld. Any such
assignment shall be on terms reasonably acceptable to Lender, the Revolving
Credit Agent, and the Company.
(b) Participations. Lender may sell participations to one or more
other financial institutions in or to all or a portion of its rights and
obligations under and in respect of the Loan hereunder; provided, however,
that (i) Lender's obligations hereunder shall remain unchanged, (ii) Lender
shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii)
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Holdings and the Borrowers shall continue to deal solely and directly with
Lender in connection with Lender's rights and obligations hereunder and
(iv) such participant's rights to agree or to restrict such Lender's
ability to agree to the modification, waiver or release of any of the terms
of the Loan Documents or to the release of any Collateral covered by the
Loan Documents, to consent to any action or failure to act by any party to
any of the Loan Documents or any of their respective Subsidiaries or
Affiliates, or to exercise or refrain from exercising any powers or rights
which any Lender may have under or in respect of the Loan Documents or any
Collateral, shall be limited to the right to consent to (A) reduction of
the principal of, or rate or amount of interest on the Loan subject to such
participation (other than by the payment or prepayment thereof), (B)
postponement of any scheduled date for any payment of principal of, or
interest on, the Loan subject to such participation (except with respect to
any modifications of the applicable provisions relating to the prepayments
of Loan and other Obligations) and (C) release of any guarantor of the
Obligations or all or any substantial portion of the Collateral. No holder
of a participation in all or any part of the Loan shall be a "Lender" or a
"Holder" for any purposes hereunder by reason of such participation;
provided, however, that each holder of a participation shall have the
rights and obligations of a Lender (including any right to receive payment)
under Sections 13.02 and 13.05; provided, however, that all requests for
any payments pursuant to such Sections shall be made by a participant
through the Lender granting such participation. The right of each holder of
a participation to receive payment under Sections 13.02 and 13.05 shall be
limited to the lesser of (i) the amounts actually incurred by such holder
for which payment is provided under said Sections and (ii) the amounts that
would have been payable under said Sections by the Borrowers to the Lender
granting the participation in respect of the participated interest to such
holder had such participation not been granted.
(i) Payment to Participants. Anything herein to the contrary
notwithstanding, in the case of any participation, all amounts
payable by the Borrowers under the Loan Documents shall be
calculated and made in the manner and to the parties required hereby
as if no such participation had been sold.
13.02. Expenses.
(a) Generally. The Borrowers jointly and severally agree upon demand
to pay, or reimburse Lender for, all of Lender's reasonable internal and
external audit, legal, appraisal, valuation, filing, document duplication
and reproduction and investigation expenses and for all other reasonable
out-of-pocket costs and expenses of every type and nature (including,
without limitation, the reasonable fees, expenses and disbursements of
Lender's counsel, Gammage & Burnham, local legal counsel, auditors,
accountants, appraisers, printers, insurance and environmental advisers,
and other consultants and Lenders), incurred by Lender in connection with
(A) Lender's audit and investigation of the Company and
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the Company's Subsidiaries in connection with the preparation, negotiation,
and execution of the Loan Documents and Lender's periodic audits of the
Company or the Company's Subsidiaries; (B) the preparation, negotiation,
execution and interpretation hereof (including, without limitation, the
satisfaction or attempted satisfaction of any of the conditions set forth
in Article V), the other Loan Documents and any proposal letter or
commitment letter issued in connection therewith and the making of the Loan
hereunder; (C) the creation, perfection or protection of the Liens under
the Loan Documents (including, without limitation, any reasonable fees and
expenses for local counsel in various jurisdictions); (D) the ongoing
administration hereof and of the Loan, including consultation with
attorneys in connection therewith and with respect to Lender's rights and
responsibilities hereunder and under the other Loan Documents; (E) the
protection, collection or enforcement of any of the Obligations or the
enforcement of any of the Loan Documents; (F) the commencement, defense or
intervention in any court proceeding relating in any way to the
Obligations, the Property, Holdings, the Company, any of the Company's
Subsidiaries, this Agreement or any of the other Loan Documents; (G) the
response to, and preparation for, any subpoena or request for document
production with which Lender is served or deposition or other proceeding in
which Lender is called to testify, in each case, relating in any way to the
Obligations, the Property, Holdings, the Company, any of the Company's
Subsidiaries, this Agreement or any of the other Loan Documents; and (H)
any amendments, consents, waivers, assignments, restatements, or
supplements to any of the Loan Documents and the preparation, negotiation,
and execution of the same.
(b) After Default. The Borrowers further jointly and severally agree
to pay or reimburse Lender, within five (5) Business Days after such
Person's informing such Borrower(s) thereof in writing accompanied by a
copy of a related invoice or similar statement in reasonable detail and
reasonably detailed supporting information with respect thereto, for all
reasonable out-of-pocket costs and expenses, including, without limitation,
reasonable attorneys' fees, incurred by Lender (i) in enforcing any Loan
Document or Obligation or any security therefor or exercising or enforcing
any other right or remedy available by reason of any Event of Default; (ii)
in connection with any refinancing or restructuring of the credit
arrangements provided hereunder in the nature of a "work-out" or in any
insolvency or bankruptcy proceeding; (iii) in commencing, defending or
intervening in any litigation or in filing a petition, complaint, answer,
motion or other pleadings in any legal proceeding relating to the
Obligations, the Property, Holdings, the Company or any of the Company's
Subsidiaries and related to or arising out of the transactions contemplated
hereby or by any of the other Loan Documents; and (iv) in taking any other
action in or with respect to any suit or proceeding (bankruptcy or
otherwise) described in clauses (i) through (iii) above.
13.03. Indemnity. The Borrowers further jointly and severally agree to
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defend, protect, indemnify, and hold harmless Lender and its Affiliates, and
Lender's and its Affiliate's respective officers, directors, employees,
attorneys and Lenders (including, without limitation, those retained in
connection with the satisfaction or attempted satisfaction of any of the
conditions set forth in Article V) (collectively, the "Indemnitees") from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses and disbursements of any kind
or nature whatsoever (including, without limitation, the reasonable fees and
disbursements of counsel for such Indemnitees in connection with any
investigative, administrative or judicial proceeding, whether or not such
Indemnitees shall be designated a party thereto), imposed on, incurred by, or
asserted against such Indemnitees in any manner relating to or arising out of or
in connection with (a) this Agreement, the other Loan Documents, any of the
other Transaction Documents or any act, event or transaction related or
attendant thereto, whether or not such Indemnitee is a party thereto and whether
or not such transactions are consummated, the making of the Loan hereunder, the
management of the Loan, the use or intended use of the proceeds of the Loan, or
(b) any Liabilities and Costs under Environmental, Health or Safety Requirements
of Law arising from or in connection with the past, present or future operations
of Holdings, the Company, the Company's Subsidiaries or any of their respective
predecessors in interest, or, the past, present or future environmental, health
or safety condition of any respective Property of Holdings, the Company or the
Company's Subsidiaries, the presence of asbestos-containing materials or
suspected asbestos-containing materials at any respective Property of Holdings,
the Company or such Subsidiaries or the Release or threatened Release of any
Contaminant into the environment (collectively, the "Indemnified Matters");
provided, however, the Company shall have no obligation to an Indemnitee
hereunder with respect to Indemnified Matters resulting from the willful
misconduct or gross negligence of such Indemnitee, as determined in a judgment
by a court of competent jurisdiction. To the extent that the undertaking to
indemnify, pay and hold harmless set forth in the preceding sentence may be
unenforceable because it is violative of any law or public policy, each Borrower
shall contribute the maximum portion which it is permitted to pay and satisfy
under applicable law, to the payment and satisfaction of all Indemnified Matters
incurred by the Indemnitees.
13.04. Change in Accounting Principles. If any change in the accounting
principles used in the preparation of the most recent financial statements
referred to in the definition of "GAAP" contained in Section 1.01 is hereafter
required or permitted by the rules, regulations, pronouncements and opinions of
the Financial Accounting Standards Board or the American Institute of Certified
Public Accountants (or successors thereto or agencies with similar functions)
and are adopted by the Company with the agreement of its independent certified
public accountants and such change results in a change in the method of
calculation of any of the covenants, standards or terms found in Article IX and
Article X, the parties hereto agree to enter into negotiations in order to amend
such provisions so as to equitably reflect such change with the desired result
that the criteria for evaluating compliance with such covenants, standards and
terms by the Company shall be the same after such change as if such change had
not been made; provided, however, no change in
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GAAP that would affect the method of calculation of any of the covenants,
standards or terms shall be given effect in such calculations until such
provisions are amended, in a manner satisfactory to Lender and the Company, so
to reflect such change in accounting principles.
13.05. Setoff. In addition to any Liens granted under the Loan Documents
and any rights now or hereafter granted under applicable law, upon the
occurrence and during the continuance of any Event of Default, Lender is hereby
authorized by each Borrower at any time or from time to time, without notice to
any Person (any such notice being hereby expressly waived) to combine accounts
or to set off and to appropriate and to apply any and all deposits (general or
special, including, but not limited to, indebtedness evidenced by certificates
of deposit, whether matured or unmatured (but not including trust accounts)) and
any other Indebtedness at any time held or owing by Lender, to or for the credit
or the account of such Borrower against and on account of the Obligations of any
Borrowers to Lender, including, but not limited to, all Loans and all claims of
any nature or description arising out of or in connection herewith, irrespective
of whether or not (i) Lender shall have made any demand hereunder or (ii) Lender
shall have declared the principal of and interest on the Loan and other amounts
due hereunder to be due and payable as permitted by Article XI and even though
such Obligations may be contingent or unmatured. Lender shall give the Company
notice of any action taken pursuant to this Section 13.05 promptly upon the
occurrence thereof provided that any failure to do so shall not limit any right
of Lender to take such action.
13.06 [Intentionally omitted.]
13.07 Amendments and Waivers. Unless otherwise provided herein, no
amendment or modification of any provision hereof shall be effective without the
written agreement of Lender and the Company, and no termination or waiver of any
provision hereof, or consent to any departure by the Borrowers therefrom, shall
be effective without the written concurrence of Lender, which Lender shall have
the right to grant or withhold in its sole discretion. Any waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which it was given. No notice to or demand on any Borrower in any case shall
entitle such Borrower to any other or further notice or demand in similar or
other circumstances.
13.08. Notices.
(a) Unless otherwise specifically provided herein, any notice, consent
or other communication herein required or permitted to be given shall be in
writing and may be personally served, telecopied, or sent by courier
service or the United States mails and shall be deemed to have been given
(i) ten (10) days following deposit in the United States mails, with proper
postage prepaid, (ii) upon delivery thereof to a reputable overnight
courier service, with delivery charges prepaid, (iii) when delivered in
person or (iv) upon confirmation of receipt of a
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telecopy. Notices to Lender pursuant to Article II, III or IV shall not be
effective until received by Lender. For the purposes hereof, the addresses
of the parties hereto (until notice of a change thereof is delivered as
provided in this Section 13.08) shall be as set forth below each party's
name on the signature pages hereof or, as to each party, at such other
address as may be designated by such party in a written notice to all of
the other parties hereto.
(b) The Borrowers jointly and severally agree to indemnify and hold
harmless each Indemnitee from and against any and all claims, damages,
liabilities, obligations, losses, penalties, actions, judgments, suits,
costs, disbursements and expenses of any kind or nature (including, without
limitation, reasonable fees and disbursements of counsel to any such
Indemnitee) which may be imposed on, incurred by or asserted against any
such Indemnitee in any manner relating to or arising out of any action
taken or omitted by such Indemnitee in good faith in reliance on any notice
or other written communication in the form of a telecopy or facsimile
purporting to be from a Borrower or Holdings; provided that no Borrower
shall have any obligation under this Section 13.08(b) to an Indemnitee with
respect to any indemnified matter caused by or resulting from the gross
negligence or willful misconduct of that Indemnitee, as determined by a
court of competent jurisdiction.
13.09. Survival of Warranties and Agreements. All representations and
warranties made herein and all obligations of the Borrowers and Holdings in
respect of taxes, indemnification and expense reimbursement shall survive the
execution and delivery hereof and of the other Loan Documents, the making and
repayment of the Loan, and shall not be limited in any way by the passage of
time or occurrence of any event and shall expressly cover time periods when
Lender may have come into possession or control of any of Holdings', the
Company's or the Company's Subsidiaries' Property.
13.10. Failure or Indulgence Not Waiver; Remedies Cumulative. No failure or
delay on the part of Lender in the exercise of any power, right or privilege
under any of the Loan Documents shall impair such power, right or privilege or
be construed to be a waiver of any default or acquiescence therein, nor shall
any single or partial exercise of any such power, right or privilege preclude
other or further exercise thereof or of any other right, power or privilege. All
rights and remedies existing under the Loan Documents are cumulative to and not
exclusive of any rights or remedies otherwise available.
13.11. Marshalling; Payments Set Aside. Lender shall not be under any
obligation to marshall any assets in favor of the Borrowers or any other party
or against or in payment of any or all of the Obligations. To the extent that a
Borrower makes a payment or payments to Lender, or if Lender receives payment
from the proceeds of the Collateral or exercise their rights of setoff, and such
payment or payments or the proceeds of such enforcement or setoff or any part
thereof are subsequently invalidated, declared to
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be fraudulent or preferential, set aside or required to be repaid to a trustee,
receiver or any other party, then to the extent of such recovery, the obligation
or part thereof originally intended to be satisfied, and all Liens, right and
remedies therefor, shall be revived and continued in full force and effect as if
such payment had not been made or such enforcement or setoff had not occurred.
13.12. Severability. In case any provision in or obligation hereunder or
under the other Loan Documents shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
13.13. Headings. Section headings herein are included herein for
convenience of reference only and shall not constitute a part hereof or be given
any substantive effect.
13.14. Governing Law. THIS AGREEMENT SHALL BE INTERPRETED, AND THE RIGHTS
AND LIABILITIES OF THE PARTIES HERETO DETERMINED, IN ACCORDANCE WITH THE LAW OF
THE STATE OF NEW YORK.
13.15. [Intentionally Omitted]
13.16. Successors and Assigns. This Agreement and the other Loan Documents
shall be binding upon the parties hereto and their respective successors and
permitted assigns and shall inure to the benefit of the parties hereto and the
successors and permitted assigns of the Lender. The rights hereunder and the
interest herein of the Borrowers may not be assigned without the written consent
of Lender. Any attempted assignment without such written consent shall be void.
13.17. Certain Consents and Waivers.
(a) Personal Jurisdiction.
(i) EACH OF LENDER, HOLDINGS AND THE BORROWERS IRREVOCABLY AND
UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE
NONEXCLUSIVE JURISDICTION OF ANY NEW YORK STATE COURT OR FEDERAL COURT
SITTING IN NEW YORK, NEW YORK, AND ANY COURT HAVING JURISDICTION OVER
APPEALS OF MATTERS HEARD IN SUCH COURTS, IN ANY ACTION OR PROCEEDING
ARISING OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED AMONG THEM IN
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CONNECTION WITH THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS, WHETHER
ARISING IN CONTRACT, TORT, EQUITY OR OTHERWISE, OR FOR RECOGNITION OR
ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO
IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF
ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH
STATE COURT OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT.
EACH OF HOLDINGS AND THE BORROWERS IRREVOCABLY DESIGNATES AND APPOINTS
CT CORPORATION SYSTEM AT 1633 BROADWAY, NEW YORK, NEW YORK 10019, AS
ITS PROCESS AGENT (THE "PROCESS AGENT") FOR SERVICE OF ALL PROCESS IN
ANY SUCH PROCEEDING IN ANY SUCH COURT, SUCH SERVICE BEING HEREBY
ACKNOWLEDGED TO BE EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT.
EACH OF LENDER, HOLDINGS AND THE BORROWERS AGREES THAT A FINAL
NON-APPEALABLE JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE
JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. EACH OF HOLDINGS AND
THE BORROWERS WAIVES IN ALL DISPUTES ANY OBJECTION THAT IT MAY HAVE TO
THE LOCATION OF THE COURT CONSIDERING THE DISPUTE.
(ii) EACH OF HOLDINGS AND THE BORROWERS AGREES THAT LENDER SHALL
HAVE THE RIGHT TO PROCEED AGAINST SUCH PERSON OR ITS PROPERTY IN A
COURT IN ANY LOCATION TO ENABLE LENDER TO REALIZE ON THE COLLATERAL OR
ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR
OTHER COURT ORDER ENTERED IN FAVOR OF LENDER. EACH OF HOLDINGS AND THE
BORROWERS WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE
COURT IN WHICH LENDER MAY COMMENCE A PROCEEDING DESCRIBED IN THIS
SECTION.
(b) Service of Process. EACH OF HOLDINGS AND THE BORROWERS IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN
ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE
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PREPAID, TO THE PROCESS AGENT OR THE RELEVANT BORROWER'S AND/OR HOLDINGS'
NOTICE ADDRESS SPECIFIED PURSUANT TO SECTION 13.08, SUCH SERVICE TO BECOME
EFFECTIVE FIVE (5) DAYS AFTER SUCH MAILING. EACH OF HOLDINGS AND THE
BORROWERS IRREVOCABLY WAIVES ANY OBJECTION (INCLUDING, WITHOUT LIMITATION,
ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH
ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT IN ANY JURISDICTION SET FORTH ABOVE. NOTHING HEREIN SHALL AFFECT
THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL
LIMIT THE RIGHT OF LENDER TO BRING PROCEEDINGS AGAINST HOLDINGS AND/OR ANY
BORROWER IN THE COURTS OF ANY OTHER JURISDICTION.
(c) Waiver of Jury Trial. EACH OF LENDER, HOLDINGS AND THE BORROWERS
WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT, OR OTHERWISE, AMONG ANY OF LENDER, HOLDINGS OR THE
BORROWERS ARISING OUT OF OR RELATED TO THE TRANSACTIONS CONTEMPLATED BY
AGREEMENT OR ANY OTHER LOAN DOCUMENT. ANY SUCH PERSON MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE
OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL
BY JURY.
13.18. Counterparts; Effectiveness; Inconsistencies. This Agreement and any
amendments, waivers, consents, or supplements hereto may be executed in
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument. This Agreement shall become effective against Holdings, the
Borrowers, and Lender on the date hereof. This Agreement and each of the other
Loan Documents shall be construed to the extent reasonable to be consistent one
with the other, but to the extent that the terms and conditions hereof are
actually inconsistent with the terms and conditions of any other Loan Document,
this Agreement shall govern.
13.19. Limitation on Agreements. All agreements between the Borrowers and
Lender, in the Loan Documents are hereby expressly limited so that in no event
shall any of the Loan or other amounts payable by the Borrower under any of the
Loan Documents be directly or indirectly secured (within the meaning of
Regulation U) by Margin Stock.
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13.20. Confidentiality. Lender shall hold all nonpublic information
obtained pursuant to the requirements hereof and identified as such by the
Company in accordance with safe and sound banking practices and in any event may
make disclosure reasonably required by a bona fide offeree or assignee (or
participant) in connection with the contemplated transfer (or participation), or
as required or requested by any Governmental Authority or representative
thereof, or pursuant to legal process, or to its accountants, lawyers and other
advisors who shall be informed of the confidential nature of such information,
and shall require any such offeree or assignee (or participant) to agree (and
require any of its offerees, assignees or participants to agree) to comply with
this Section 13.20. In no event shall Lender be obligated or required to return
any materials furnished by the Company; provided, however, each offeree shall be
required to agree that if it does not become an assignee (or participant) it
shall return all materials furnished to it by the Company in connection
herewith. In the event Lender is requested or required by law to disclose any of
such information, Lender agrees to will provide the Company with prompt notice
thereof; provided, however, Lender may, without restriction hereunder, including
the providing of such notice, provide any and all of such information to any of
the agencies or other governmental entities which regularly regulate its ability
to engage in any of its businesses under state or federal law.
13.21 [Intentionally omitted.]
13.22. Entire Agreement. This Agreement, taken together with all of the
other Loan Documents embodies the entire agreement and understanding among the
parties hereto and supersedes all prior agreements and understandings, written
and oral, relating to the subject matter hereof.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the date
first above written.
H. MUEHLSTEIN & CO., INC.
By:
Name:
Title:
Notice Address:
________________________________________
________________________________________________________________________________
________________________________________________________________________________
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PEGASUS POLYMERS
INTERNATIONAL INC.
By:
Name: ____________________________
Title: ____________________________
Notice Address:
________________________________________
________________________________________________________________________________
________________________________________________________________________________
MUEHLSTEIN INTERNATIONAL,
LTD.
By:
Name: ____________________________
Title: ____________________________
Notice Address:
________________________________________
________________________________________________________________________________
________________________________________________________________________________
HMC ACQUISITION CORPORATION
(to be renamed MUEHLSTEIN
HOLDING CORPORATION)
By:
Name: ____________________________
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Title: ____________________________
Notice Address:
________________________________________
________________________________________________________________________________
________________________________________________________________________________
FINOVA CAPITAL CORPORATION, as
Lender
By:
Name: ____________________________
Title: ____________________________
Notice Address:
FINOVA Capital Corporation
1850 North Central Avenue
P.O. Box 2209
Phoenix, Arizona 85002-2209
Attention: Vice President - Law
Telecopier No.: 602-207-5036
with a copy to:
FINOVA Capital Corporation
355 S. Grand Avenue, Suite 2400
Los Angeles, CA 90071
Attention: Portfolio Manager
Telecopier No.: 213-625-7875
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ITEM 14
EXHIBIT 10.9
<PAGE>
FIRST AMENDMENT AND CONSENT
TO
LOAN AGREEMENT
THIS FIRST AMENDMENT AND CONSENT TO LOAN AGREEMENT dated as of August 23,
1996 (this "First Amendment") is entered into among Muehlstein Holding
Corporation, a Delaware corporation ("Holdings"), H. Muehlstein & Co., Inc., a
New York corporation (the "Company"), Pegasus Polymers International Inc., a
Connecticut corporation ("Pegasus"), and Muehlstein International, Ltd., a New
York corporation ("Muehlstein International"; and together with the Company and
Pegasus, the "Borrowers"), and FINOVA Capital Corporation, a Delaware
corporation ("Lender"), and relates to that certain Loan Agreement dated as of
February 9, 1996 (as supplemented or otherwise modified from time to time prior
to the "First Amendment Effective Date" (as defined in Section 7 below), the
"Loan Agreement"), among Holdings, the Borrowers, and Lender.
W I T N E S S E T H:
WHEREAS, the Company plans to form a two new Wholly Owned Subsidiaries,
Muehlstein Financial Corporation, a Delaware corporation ("Finsub"), and
Polymers International Financial Corporation, a Delaware corporation
("Finsub2");
WHEREAS, the Company, Muehlstein International, Finsub and Finsub2 plan to
enter into the Permitted Receivables Transaction Documents (as defined in
Section 2.1(q) below);
WHEREAS, proceeds of the sale of Receivables by the Company and Muehlstein
International under the Permitted Receivables Transaction Documents (i) if such
proceeds are in the form of cash, shall constitute Net Cash Proceeds and shall,
to the extent provided in the First Amendment to Senior Revolving Credit
Agreement, as defined in Section 2.1(h) hereof, be applied as a mandatory
prepayment to the outstanding Senior Revolving Obligations or (ii) if such
proceeds are in the form of promissory notes, shall be pledged to Lender for its
benefit, but in all events subject to the prior pledge in favor of the Revolving
Credit Agent, for the benefit of the "Secured Parties" under (and as defined in)
the respective "Borrower Pledge Agreements" to which the Company and Muehlstein
International are a party and which constitute a portion of the Senior Revolving
Loan Documents;
WHEREAS, Pegasus and Finsub2 plan to enter into the Multicurrency Loan
Documents (as defined in Section 2.1(q) of the First Amendment to Senior
Revolving Credit Agreement);
<PAGE>
WHEREAS, during the period that the Multicurrency Loan Documents are in
effect, the loan facility evidenced by the Multicurrency Loan Documents shall
replace the "Multicurrency Facility" as defined under the Senior Revolving
Credit Agreement;
WHEREAS, the Borrowers have requested that Lender (i) approve the Permitted
Receivables Financing Program and the execution by the Company, Muehlstein
International, Finsub and Finsub2 of the Permitted Receivables Transaction
Documents, (ii) release its Liens on the Receivables sold from time to time
pursuant to the Permitted Receivables Transaction Documents, (iii) enter into
the Permitted Receivables Intercreditor Agreement (as defined in Section 2.1(o)
below), and (iv) approve the execution by Pegasus and Finsub2 of the
Multicurrency Loan Documents; and
WHEREAS, the Company and the other Borrowers have requested the Lender to
amend the Loan Agreement to effect certain amendments as described herein.
NOW, THEREFORE, in consideration of the above premises, Holdings, the
Borrowers, and Lender agree as follows:
1. Definitions. Capitalized terms used and not otherwise defined herein
have the meanings assigned to them in the Loan Agreement.
2. Amendments to the Loan Agreement. Upon the "First Amendment Effective
Date" (as defined in Section 7 below), the Loan Agreement is hereby amended as
follows:
2.1 Section 1.01. Section 1.01 of the Loan Agreement is amended as
follows:
(a) The following definition of "Average Liquidity" is added in
proper alphabetical order:
"Average Liquidity" shall have the meaning ascribed to such
term from time to time in the Senior Revolving Credit Agreement.
(b) The definition of "Borrower Junior Pledge Agreements" is
deleted in its entirety and the following definition is substituted in
lieu thereof:
"Borrower Junior Pledge Agreements" means (i) the Junior
Pledge Agreement dated as of the Closing Date by and between the
Company and Lender, (ii) the Junior Pledge Agreement dated as of
the Closing Date by and between Muehlstein International and
Lender, (iii) the Junior Pledge Agreement dated as
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of the First Amendment Effective Date by and between Pegasus and
Lender, in each case in substantially the form of Exhibit C, and
(iv) all other pledge agreements executed by any Borrower in
favor of Lender in connection with the transactions contemplated
hereby, as each of the same may be amended, supplemented or
otherwise modified from time to time.
(c) The definition of "Collateral" is amended to delete the words
"the initial sale" therein and to substitute in lieu thereof the words
"all sales";
(d) The following definition of "Early Amortization Event" is
added in proper alphabetical order:
"Early Amortization Event" is defined on Schedule 1.01.7.
(e) The definition of "Finsub" is deleted in its entirety and the
following definition is substituted in lieu thereof:
"Finsub" means Muehlstein Financial Corporation, a Delaware
corporation and a Wholly Owned Subsidiary of the Company.
(f) The following definition of "Finsub2" is added in proper
alphabetical order:
"Finsub2" means Polymers International Financial
Corporation, a Delaware corporation and Wholly Owned Subsidiary
of Pegasus.
(g) The following definition of "First Amendment" is added in
proper alphabetical order:
"First Amendment" means the First Amendment and Consent to
Loan Agreement dated as of August 23, 1996, among Holdings, the
Borrowers and Lender.
(h) The following definition of "First Amendment to Senior
Revolving Credit Agreement" is added in proper alphabetical order:
"First Amendment to Senior Revolving Credit Agreement" means
the First Amendment, Consent and Limited Waiver to Credit
Agreement dated as of August 23, 1996 by and among the various
parties to the Senior Revolving Credit Agreement.
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<PAGE>
(i) The following definition of "First Amendment Effective Date"
is added in proper alphabetical order:
"First Amendment Effective Date" has the meaning set forth
in the First Amendment.
(j) The definition of "Intercreditor Agreement" is deleted in its
entirety and the following definition of "Intercreditor Agreements" is
substituted in lieu thereof:
"Intercreditor Agreements" means the Permitted Receivables
Intercreditor Agreement and the Term Loan Intercreditor
Agreement, and "Intercreditor Agreement" means either of them.
(k) The definition of "Loan Documents" is amended (i) to delete
in its entirety the reference therein to "Intercreditor Agreement" and
substitute in lieu thereof "Intercreditor Agreements" and (ii) to add
the following phrase before the period at the end of the last sentence
thereof: "or the Multicurrency Loan Documents".
(l) The following definition of "Multicurrency Lender" is added
in proper alphabetical order:
"Multicurrency Lender" means Citibank, N.A., in its capacity
as the lender under the Multicurrency Loan Documents, and its
successors in such capacity.
(m) The following definition of "Multicurrency Loan Documents" is
added in proper alphabetical order:
"Multicurrency Loan Documents" has the meaning set forth in
Section 2.1(q) of the First Amendment to Senior Revolving Credit
Agreement, as in effect from time to time.
(n) The definition of "Permitted Receivables Financing Program"
is deleted in its entirety and the following definition is substituted
in lieu thereof:
"Permitted Receivables Financing Program" means the
receivables financing program evidenced by the Permitted
Receivables Transaction Documents.
(o) The following definition of "Permitted Receivables
Intercreditor Agreement" is added in proper alphabetical order:
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"Permitted Receivables Intercreditor Agreement" means the
Intercreditor Agreement dated as of the First Amendment Effective
Date among Citicorp North America, Inc., as program agent,
Finsub, the Company, Bankers Trust Company, as trustee, the
Revolving Credit Agent, Citibank Canada, Lender, and Ambac
Indemnity Corporation, as the same may be amended, supplemented
or otherwise modified from time to time.
(p) The following definition of "Permitted Receivables Pooling
and Servicing Agreement" is added in proper alphabetical order:
"Permitted Receivables Pooling and Servicing Agreement"
means the Pooling and Serving Agreement dated as of the First
Amendment Effective Date among Finsub, the Company and Bankers
Trust Company, as trustee, as the same may be amended,
supplemented or otherwise modified from time to time.
(q) The definition of "Permitted Receivables Transaction
Documents" is deleted in its entirety and the following definition is
substituted in lieu thereof:
"Permitted Receivables Transaction Documents" means the
Permitted Receivables Pooling and Servicing Agreement and the
other agreements, documents and instruments set forth on Schedule
1.01.7 and all other instruments, agreements and written
Contractual Obligations entered into in connection with any of
the foregoing, in each case as the same may be amended,
supplemented or otherwise modified from time to time.
(r) The following definition of "Series 1996-1 Supplement" is
added in proper alphabetical order:
"Series 1996-1 Supplement" means the Series 1996- 1
Supplement to the Permitted Receivables Pooling and Servicing
Agreement, as such supplement may be amended, supplemented or
otherwise modified from time to time.
(s) The following definition of "Series 1996-2 Certificate" is
added in proper alphabetical order:
"Series 1996-2 Certificate" means the Series 1996-2
Certificate issued pursuant to the Series 1996-2 Supplement to
the Permitted Receivables Pooling and Servicing Agreement.
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<PAGE>
(t) The following definition of "Term Loan Intercreditor
Agreement" is added in proper alphabetical order:
"Term Loan Intercreditor Agreement" means the Intercreditor
Agreement dated as of the Closing Date between Lender and the
Revolving Credit Agent, as the same may be amended, supplemented
or otherwise modified from time to time.
(u) The definition of "Transaction Documents" is amended to add
the phrase ", the Permitted Receivables Transaction Documents, the
Multicurrency Loan Documents," immediately following the reference
therein to "the Senior Revolving Loan Documents".
(v) The following definition of "Trust Early Amortization Event"
is added in proper alphabetical order:
"Trust Early Amortization Event" is defined on Schedule
1.01.7.
2.2 Section 6.01(c). Section 6.01(c) of the Loan Agreement is hereby
amended to delete each reference to the phrase "as of the Closing Date"
therein and to substitute in lieu thereof the phrase "as of the First
Amendment Effective Date".
2.3 Section 9.01. Section 9.01 of the Loan Agreement is hereby
amended as follows:
(a) Clause (h) thereof is amended to add the phrase "and pursuant
to the Multicurrency Loan Documents" immediately following the
reference to "Permitted Receivables Transaction Documents" therein;
(b) Clause (j) thereof is amended to delete in their entirety
subclauses (D) and (E) thereof and substitute in lieu thereof the
following:
"(D) from any Borrower to any Subsidiary of the
Company (other than Borrowers) in a principal
amount, together with any Investments made (1)
after the First Amendment Effective Date in Finsub
and Finsub2 and (2) after the Closing Date in any
such Subsidiaries of the Company (other than
Finsub and Finsub2) permitted to be created or
capitalized after the Closing Date under Section
9.07(b), in any Fiscal Year not to
-7-
<PAGE>
exceed the Subsidiary Investment Basket for such
Fiscal Year, (E) in addition to any loans made to
such Person under clause (D) above, from Pegasus
to Pegasus Polymers Asia Ltd. ("PPAL") in an
amount at any time outstanding not to exceed the
sum of (1) $2,000,000, plus (2) the amount of
dividends received by Pegasus from PPAL after the
Closing Date and (F) in addition to any loans made
to such Person under clauses (D) and (E) above,
unless the Revolving Credit Agent has delivered
the notice described in Section 9.02(ii) of the
Senior Revolving Credit Agreement, from the
Company or Muehlstein International to Finsub in
respect of subordinated loans advanced as part of
the purchase price for Receivables sold to Finsub
under the Permitted Receivables Transaction
Documents; provided, that no loans permitted by
clauses (D) or (E) shall be made if an Event of
Default or Default has occurred and is
continuing;"
2.4 Section 9.03. Section 9.03 of the Loan Agreement is hereby
amended as follows:
(a) Clause (g) thereof is amended to delete the word "and" at the
end thereof;
(b) Clause (h) thereof is amended to delete the period at the end
thereof and to substitute in lieu thereof "; and"; and
(c) The following clause (i) is added thereto:
"(i) Liens on the Series 1996-2 Certificate held
by Finsub2 and pledged to secure the obligations
of Finsub2 under the Multicurrency Loan
Documents."
2.5 Section 9.04. Section 9.04 of the Loan Agreement is hereby
amended as follows:
(a) Clause (d) thereof is amended to delete the phrase "such
Subsidiaries and Finsub" therein and to substitute in lieu thereof the
phrase "such Subsidiaries, Finsub and Finsub2";
-8-
<PAGE>
(b) The "and" at the end of clause (e) thereof is deleted;
(c) The period at the end of clause (f) thereof is replaced with
a semi-colon; and
(d) The following clause (g) is added thereto:
"(g) Investments by Finsub2 in the Series 1996-2
Certificate as contemplated by the Permitted
Receivables Transaction Documents."
2.6 Section 9.05(e). Section 9.05(e) of the Loan Agreement is hereby
amended to delete the provisions thereof in their entirety and to
substitute in lieu thereof the following:
"(v) Accommodation Obligations incurred pursuant to the
Permitted Receivables Transaction Documents and
pursuant to the Multicurrency Loan Documents; and"
2.7 Section 9.06. Section 9.06 of the Loan Agreement is hereby
amended to delete the second proviso thereto and to substitute in lieu
thereof "and provided, further, that cash redemptions permitted under
clause (g) above shall be limited to the excess, if any, of the Average
Liquidity during the thirty days immediately preceding the date set for
such payment over $15,000,000".
2.8 Section 9.07(a). Section 9.07(a) of the Loan Agreement is hereby
amended to insert the following two sentences at the end of such
subsection:
"Finsub shall not engage in any business other than as
contemplated by the Permitted Receivables Transaction
Documents. Finsub2 shall not engage in any business
other than as contemplated by the Multicurrency Loan
Documents."
2.9 Section 9.07(b). Section 9.07(b) of the LoanAgreement is hereby
amended to delete the phrase "Sections 9.01(j)(D) and 9.01(j)(E) for such
Fiscal Year" therein and to substitute in lieu thereof the following:
"Sections 9.01(j)(D), 9.01(j)(E) and 9.01(j)(F)
for such Fiscal Year; provided, further, however,
in addition to such amounts, unless the Revolving
Credit Agent
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<PAGE>
has delivered the notice described in Section
9.02(ii) of the Senior Revolving Credit Agreement,
the Company and Muehlstein International may make
capital contributions to Finsub to the extent
required to be made under the Permitted
Receivables Transaction Documents (i) as part of
the purchase price for Receivables sold to Finsub
thereunder and (ii) to cause the Net Receivables
Balance to equal the Required Net Receivables
Balance (as each such term is defined in the
Senior Revolving Credit Agreement); and provided,
further, however, that Pegasus may capitalize
Finsub2 by making a capital contribution to
Finsub2 on the First Amendment Effective Date in
an aggregate amount equal to 102% of the principal
amount of the Series 1996-2 Certificate purchased
by Finsub2 under the Permitted Receivables
Transaction Documents (it being understood and
agreed that such principal amount shall in no
event exceed $25,000,000)"
2.10 Section 9.16. Section 9.16 of the Loan Agreement is hereby
amended as follows:
(a) Clause (iii)(B) thereof is deleted in its entirety and the
following is substituted in lieu thereof:
(B) the Senior Revolving Loan Documents, the
Common Equity Notes, the Permitted Receivables
Transaction Documents, the Multicurrency Loan
Documents or any documents evidencing the
Permitted Subordinated Indebtedness in any respect
that is adverse to the Lender, provided, that no
Persons other than the Company and Muehlstein
International may be added as sellers of
Receivables to Finsub under the Permitted
Receivables Transaction Documents. For purposes of
applying the preceding clause (iii)(B), a
termination of the Senior Revolving Loan Documents
without replacement of the Indebtedness evidenced
-10-
<PAGE>
thereby shall be deemed an event adverse to Lender
absent Lender's prior written consent thereto
(without in any manner limiting Lender's right to
consent in advance to the termination of the
Senior Revolving Loan Documents in circumstances
where the Indebtedness evidenced thereby is
replaced by other Indebtedness on terms adverse to
Lender).
2.11 Section 9.20. Section 9.20 of the Loan Agreement is hereby
amended to add the phrase ", the Multicurrency Loan Documents" immediately
following the reference to "Loan Documents" therein.
2.12 Section 11.01. Section 11.01 of the Loan Agreement is hereby
amended as follows:
(a) Section 11.01(e) is amended to delete the phrase "'Event of
Termination' under and as defined in the Permitted Receivables
Transaction Documents, or which could otherwise cause the early
termination of the Permitted Receivables Financing Program" and to
substitute in lieu thereof "Trust Early Amortization Event; or
purchases of Receivables under the Permitted Receivables Financing
Program shall have been discontinued for a period of at least five (5)
consecutive Business Days".
(b) Section 11.01(n) of the Loan Agreement is amended to delete
the provisions thereof in their entirety and to substitute in lieu
thereof the following:
"(n) Intercreditor Agreements. Any party to any
Intercreditor Agreements (other than Lender) shall
fail to perform any material covenant or material
obligation binding on such party thereunder or any
Intercreditor Agreement shall cease to be in full
force and effect."
3. Amendments to Schedules and Exhibits to Loan Agreement. Upon the First
Amendment Effective Date, the Schedules and Exhibits to the Loan Agreement are
hereby amended as follows:
3.1 Schedule 1.01.1. Schedule 1.01.1 to the Loan Agreement is deleted
in its entirety and Annex A attached hereto and made a part hereof shall be
substituted therefor.
-11-
<PAGE>
3.2 Schedule 1.01.7. New Schedule 1.01.7 to the Loan Agreement,
entitled "Permitted Receivables Transaction Documents and Definitions," is
added in the form of Annex B attached hereto and made a part hereof.
3.3 Schedule 6.01-C. Schedule 6.01-C to the Loan Agreement is deleted
in its entirety and Annex C attached hereto and made a part hereof shall be
substituted therefor.
4. Lender Consents.
4.1 As of the First Amendment Effective Date, the Lender hereby
approves (i) the Permitted Receivables Financing Program and the execution,
delivery and performance by the Company, Muehlstein International, Finsub
and Finsub2 of the Permitted Receivables Transaction Documents, provided
that, concurrently therewith, the Company and Muehlstein International
shall have made a mandatory prepayment to the Revolving Credit Agent, for
the benefit of the Senior Revolving Lenders, of the Net Cash Proceeds
arising from the initial sale of Receivables pursuant to the Permitted
Receivables Transaction Documents in an amount not less than $50,000,000,
(ii) the transactions evidenced by the Multicurrency Loan Documents
(provided, that for purposes of this Section 4.1, the term Multicurrency
Loan Documents shall only refer to the forms of such documents as they
exist on the First Amendment Effective Date) and the execution, delivery
and performance by Pegasus and Finsub2 thereof, and (iii) to borrow funds
on the First Amendment Effective Date, the proceeds of which shall be used
by Pegasus to make a capital contribution to Finsub2 so that Finsub2 may
pay for the Series 1996-2 Certificate.
4.2 Lender, upon the occurrence of the First Amendment Effective
Date, hereby (i) releases its Liens on the Receivables sold from time to
time pursuant to the Permitted Receivables Transaction Documents
(including, without limitation, all Liens on Dollar denominated Receivables
of the Company and Muehlstein International which are so sold from time to
time), (ii) agrees to enter into the Permitted Receivables Intercreditor
Agreement and to take all actions required to be taken by Lender thereby.
5. [Intentionally omitted.]
6. Representations and Warranties. Each of the Borrowers hereby
represents and warrants to Lender that, as of the First Amendment Effective Date
and after giving effect to this First Amendment, the First Amendment to Senior
Revolving Credit Agreement, the Permitted Receivables Financing Program and the
effectiveness of the Multicurrency Loan Documents:
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<PAGE>
(a) Each of the representations and warranties contained in this
Amendment, the Loan Agreement as amended hereby and the other Loan
Documents are true and correct in all material respects on and as of the
First Amendment Effective Date, as if then made, other than representations
and warranties which expressly speak as of a different date;
(b) No Default or Event of Default has occurred or is continuing; and
(c) No change (other than as contemplated by the Registration
Statement) in the condition (financial or otherwise), business,
performance, assets, operations or prospects of the Borrowers, taken as a
whole, has occurred since December 31, 1994, which change has had or is
reasonably likely to have a Material Adverse Effect.
7. First Amendment Effective Date. This First Amendment shall become
effective as of the date, on or before September 30, 1996 (the "First Amendment
Effective Date") when each of the following conditions shall have been
satisfied:
(a) Lender shall have received each of the following documents, in
each case in form and substance satisfactory to Lender:
(i) counterparts hereof executed by each Borrower, Holdings, and
Lender;
(ii) an Amendatory Agreement in substantially the form of Annex D
attached hereto and made a part hereof;
(iii) UCC amendment statements with respect to each UCC-1
financing statement delivered to Lender as of the Closing Date from
the Company and Muehlstein International (exclusive of any such UCC-1
financing statements filed or recorded in the State of Texas), giving
effect to the amendments, pursuant to the Amendatory Agreement
referred to in the immediately preceding clause (ii), to the Borrower
Junior Security Agreements executed by the Company and Muehlstein
International;
(iv) (A) stock certificate(s) representing 100% of the Capital
Stock of Finsub, together with stock powers (executed in blank)
therefor shall have been delivered to the Revolving Credit Agent, (B)
all subordinated promissory notes issued to the Company and Muehlstein
International pursuant to the Permitted Receivables Transaction
Documents, endorsed in blank, shall have been delivered to the
Revolving Credit Agent, (C) replacements for the applicable exhibits
to the Borrower Junior Pledge Agreements executed by the Company and
Muehlstein International reflecting the pledge of the property
described in subclauses
-13-
<PAGE>
(A) and (B) above, and (D) an acknowledgement of pledge executed by
Finsub;
(v) (A) a Junior Pledge Agreement executed by Pegasus, in
substantially the form of Exhibit D to the Loan Agreement, (B) stock
certificate(s) representing 100% of the Capital Stock of Finsub2,
together with stock powers (executed in blank) therefor shall have
been delivered to the Revolving Credit Agent, and (C) an
acknowledgement of pledge executed by Finsub2;
(vi) a fully executed copy of the Permitted Receivables
Intercreditor Agreement;
(vii) a copy of each of the Permitted Receivables Transaction
Documents, certified as of the First Amendment Effective Date by the
Secretary or an Assistant Secretary of the Company (A) to be a true,
correct and complete copy of each such document and (B) not to have
been amended or rescinded;
(viii) a copy of each of the Multicurrency Loan Documents,
certified as of the First Amendment Effective Date by the Secretary or
an Assistant Secretary of Pegasus (A) to be a true, correct and
complete copy of each such document and (B) not to have been amended
or rescinded;
(ix) a certificate of the chief executive officer, chief
financial officer or treasurer of the Company executed and delivered
on behalf of the Borrowers certifying that all conditions precedent
required to be satisfied by Holdings, the Company, the other Borrowers
or any Subsidiary Guarantor for the effectiveness of this First
Amendment have been satisfied;
(x) a certificate of the Secretary or Assistant Secretary of
Holdings, each Borrower, Finsub and Finsub2 dated the First Amendment
Effective Date certifying (A) the names and true signatures of the
incumbent officers of such Persons authorized to sign this Amendment
and the other Transaction Documents executed in connection with this
Amendment to which it is a party, (B) the By-laws of such Person as in
effect on the date of such certification, (C) the resolutions of such
Person's Board of Directors approving and authorizing the execution,
delivery and performance of this Amendment and the other Transaction
Documents executed in connection with this Amendment to which it is a
party and (D) the Articles or Certificate of Incorporation, certified
by the applicable Government Authority, if not previously delivered to
Lender, or that there have been no changes in the Certificate or
Articles of Incorporation of such
-14-
<PAGE>
Person since the date of the most recent certification thereof by the
Secretary of State of the applicable State delivered to Lender;
(xi) Good Standing Certificates relating to the Borrowers, the
Subsidiary Guarantors, Finsub and Finsub2 in the jurisdictions set
forth on Annex E attached hereto and made a part hereof; and
(xii) A favorable opinion of McDermott, Will & Emery, counsel to
the Borrowers, Subsidiary Guarantors, Finsub and Finsub2, in form and
substance satisfactory to Lender, and a letter entitling Lender to
rely on any opinion or opinions delivered by McDermott, Will & Emery
in connection with the Permitted Receivables Transaction Documents;
and
(xiii) such additional documentation as Lender may reasonably
request.
(b) All conditions to the effectiveness of the First Amendment to
Senior Revolving Credit Agreement, as set forth in Section 7 to the First
Amendment to Senior Revolving Credit Agreement, shall have been satisfied.
(c) Lender shall be satisfied that: (i) the Permitted Receivables
Transaction Documents and the Multicurrency Loan Documents shall have been
duly approved and executed and delivered by the parties thereto in form and
substance satisfactory to Lender, and (ii) all conditions precedent to
closing under the Permitted Receivables Transaction Documents and the
Multicurrency Loan Documents have been satisfied (and no modification or
waiver of any such condition shall have been made without the consent of
Lender) and such documents are, or simultaneously with the execution
hereof, will be in full force and effect.
(d) No law, regulation, order, judgment or decree of any Governmental
Authority shall, and Lender shall not have received any notice that
litigation is pending or threatened which is likely to, enjoin, prohibit or
restrain the consummation of the transactions contemplated by this First
Amendment, except for such laws, regulations, orders or decrees, or pending
or threatened litigation that in the aggregate could not reasonably be
expected to result in a Material Adverse Effect.
(e) Each of the representations and warranties contained in this
Amendment, the Loan Agreement as amended hereby and the other Loan
Documents shall be true and correct in all material respects on and as of
the First Amendment Effective Date, as if then made, other than
representations and warranties which expressly speak as of a different
date.
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<PAGE>
(f) All corporate and other proceedings, and all documents,
instruments and other legal matters in connection with the transactions
contemplated by this Amendment shall be satisfactory in all respects in
form and substance to Lender.
(g) No Event of Default or Default shall have occurred and be
continuing on the First Amendment Effective Date.
8. Reference to and Effect on the Loan Documents.
(a) Upon the effectiveness of this Amendment, on and after the date
hereof, each reference in the Loan Agreement as amended hereby to "this
Agreement", "hereunder", "hereof" or words of like import, and each
reference in the other Loan Documents to the Loan Agreement, shall mean and
be a reference to the Loan Agreement as amended hereby.
(b) Except as specifically amended above, all of the terms of the Loan
Agreement and all other Loan Documents shall remain unchanged and in full
force and effect.
(c) The execution, delivery and effectiveness of this Amendment shall
not, except as expressly provided herein, operate as a waiver of any right,
power or remedy of Lender under the Loan Agreement or any of the Loan
Documents, nor constitute a waiver of any provision of the Loan Agreement
or any of the Loan Documents.
9. Costs and Expenses. The Borrowers jointly and severally agree to pay
upon demand in accordance with the terms of Section 13.02 of the Loan Agreement
all reasonable costs and expenses of Lender in connection with the preparation,
reproduction, negotiation, execution and delivery of this Amendment and all
other Loan Documents entered into in connection herewith, including, without
limitation, the reasonable fees, expenses and disbursements of Gammage &
Burnham, counsel for Lender with respect to any of the foregoing.
10. Miscellaneous. This First Amendment is a Loan Document. The headings
herein are for convenience of reference only and shall not alter or otherwise
affect the meaning hereof.
11. Counterparts. This First Amendment may be executed in any number of
counterparts and by the different parties hereto in separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument.
12. GOVERNING LAW. THIS FIRST AMENDMENT SHALL BE INTERPRETED, AND THE
RIGHTS AND LIABILITIES OF THE PARTIES
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<PAGE>
HERETO AND TO THE LOAN AGREEMENT AS AMENDED HEREBY DETERMINED, IN ACCORDANCE
WITH THE LAW OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, Lender, the Borrowers and Holdings have caused this
First Amendment to be executed by their respective officers thereunto duly
authorized as of the date first above written.
H. MUEHLSTEIN & CO., INC.
By: _____________________
Name:
Title:
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<PAGE>
PEGASUS POLYMERS
INTERNATIONAL INC.
By: _____________________
Name:
Title:
MUEHLSTEIN INTERNATIONAL,
LTD.
By: _____________________
Name:
Title:
MUEHLSTEIN HOLDING
CORPORATION
By: _____________________
Name:
Title:
FINOVA CAPITAL CORPORATION
By: _____________________
Name:
Title:
CONSENT
This Consent is attached to and made a part of that certain First Amendment
and Consent to Loan Agreement (the "First Amendment") dated as of August 23,
1996 between Muehlstein Holding Corporation, H. Muehlstein & Co., Inc., Pegasus
Polymers International Inc., and Muehlstein International, Ltd. (collectively as
"Borrowers") and FINOVA Capital Corporation ("Lender"). Terms used herein with
initial capital letters, and not otherwise defined herein, shall have the
meanings given such terms in the First Amendment.
The undersigned, constituting not less than the "Requisite Lenders" as such
term is defined in the Term Loan Intercreditor Agreement, hereby consent,
pursuant to Section 5.9 of the Term Loan Intercreditor Agreement, to the
execution and delivery of the First
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<PAGE>
Amendment and of each other document or instrument referred to therein,
including without limitation the Amendatory Agreement and the Borrower Junior
Pledge Agreement, which are to be entered into between the parties thereto or
otherwise become effective as of the First Amendment Effective Date.
No other or future consent is given hereby, and the undersigned hereby
expressly reserve their right, to the extent set forth in Section 5.9 of the
Term Loan Intercreditor Agreement, to consent to any future amendments,
modifications, or supplementations to any of the "Term Loan Documents," as such
term is defined in the Term Loan Intercreditor Agreement.
CITICORP USA, INC.
By: __________________________
Name:
Title:
HELLER FINANCIAL, INC.
By: __________________________
Name:
Title:
NATIONSBANK, N.A.
By: __________________________
Name:
Title:
CITIBANK, N.A.
By: __________________________
Name:
Title:
CITIBANK CANADA
By: __________________________
Name:
Title:
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<PAGE>
ANNEX A
TO
FIRST AMENDMENT AND CONSENT
New Schedule 1.01.1 to Loan Agreement
Payment Accounts
[To be attached]
<PAGE>
ANNEX B
TO
FIRST AMENDMENT AND CONSENT
New Schedule 1.01.7 to Loan Agreement
Permitted Receivables Transaction Documents
[To be inserted]
Applicable Definitions
"Early Amortization Event" means [to be inserted from the final Series
1996-1 Supplement].
"Net Receivables Balance" means [to be inserted from final Pooling and
Servicing Agreement].
"Required Net Receivables Balance" means [to be inserted from final Pooling
and Servicing Agreement].
"Trust Early Amortization Event" means [to be inserted from final Pooling
and Servicing Agreement].
[Other definitions used in the above definitions to be inserted from final
Permitted Receivables Transaction Documents]
<PAGE>
ANNEX C
TO
FIRST AMENDMENT AND CONSENT
New Schedule 6.01-C to Loan Agreement
[To be attached]
<PAGE>
ANNEX D
TO
FIRST AMENDMENT AND CONSENT
Form of Amendatory Agreement
[To be attached]
<PAGE>
ANNEX E
TO
FIRST AMENDMENT AND CONSENT
Good Standing Jurisdictions
Company Good Standing Certificates
Connecticut
New York
Muehlstein International Good Standing Certificates
Connecticut
New York
Pegasus Good Standing Certificates
Connecticut
Finsub1 Good Standing Certificates
Connecticut
Delaware
Finsub2 Good Standing Certificates
Connecticut
Delaware
<PAGE>
ITEM 14
EXHIBIT 10.10
<PAGE>
EXECUTION COPY
================================================================================
MUEHLSTEIN TRADE RECEIVABLES MASTER TRUST
POOLING AND SERVICING AGREEMENT
Dated as of August 23, 1996
Among
MUEHLSTEIN FINANCIAL CORPORATION,
as Transferor
H. MUEHLSTEIN & CO., INC.,
as Servicer
and
BANKERS TRUST COMPANY,
as Trustee
================================================================================
Pooling and Servicing Agreement
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions........................................... 1
SECTION 1.02. Other Definitional Provisions......................... 25
ARTICLE II
TRANSFER OF RECEIVABLES
SECTION 2.01. Transfer of Receivables............................... 25
SECTION 2.02. Acceptance by Trustee................................. 27
SECTION 2.03. Representations and Warranties of the Transferor
Relating to the Transferor.......................... 27
SECTION 2.04. Representations and Warranties of the Transferor
Relating to the Trust Assets........................ 32
SECTION 2.05. Affirmative Covenants of the Transferor............... 36
SECTION 2.06. Negative Covenants of the Transferor.................. 40
SECTION 2.07. Addition and Removal of Originators................... 44
ARTICLE III
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 3.01. Acceptance of Appointment and Other Matters
Relating to the Servicer............................ 45
SECTION 3.02. Servicing Compensation; Servicer's Expenses........... 47
SECTION 3.03. Representations and Warranties of the Servicer........ 48
SECTION 3.04. Covenants of the Servicer............................. 50
SECTION 3.05. Reports and Records for the Trustee................... 56
SECTION 3.06. Annual Certificate of Servicer........................ 56
SECTION 3.07. Semi-Annual Servicing Report of Independent Public
Accountants......................................... 56
SECTION 3.08. Tax Treatment......................................... 56
SECTION 3.09. Notices to Muehlstein................................. 57
SECTION 3.10. Adjustments........................................... 57
SECTION 3.11. Securities and Exchange Commission Filings............ 57
Pooling and Servicing Agreement
<PAGE>
(ii)
ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS
SECTION 4.01. Rights of Certificateholders.......................... 57
SECTION 4.02. Establishment of Concentration Account and
Muehlstein Collection Accounts...................... 58
SECTION 4.03. Allocation of Collections............................. 61
ARTICLE V
DISTRIBUTIONS AND REPORTS TO CERTIFICATEHOLDERS
SECTION 5.01. Distributions and Reports to Certificateholders....... 61
ARTICLE VI
THE CERTIFICATES
SECTION 6.01. The Certificates...................................... 61
SECTION 6.02. Authentication of Certificates........................ 62
SECTION 6.03. Registration of Transfer and Exchange of Certificates. 62
SECTION 6.04. Mutilated, Destroyed, Lost or Stolen Certificates..... 64
SECTION 6.05. Persons Deemed Owners................................. 64
SECTION 6.06. Access to List of Certificateholders' Names and
Addresses........................................... 65
SECTION 6.07. Authenticating Agent.................................. 65
SECTION 6.08. New Issuances......................................... 66
ARTICLE VII
OTHER MATTERS RELATING TO THE TRANSFEROR
SECTION 7.01. Obligations Not Assignable............................ 69
SECTION 7.02. Limitations on Liability.............................. 69
SECTION 7.03. Indemnification of the Trustee, the Certificateholders,
the Program Agent and the Enhancement Provider...... 69
Pooling and Servicing Agreement
<PAGE>
(iii)
ARTICLE VIII
OTHER MATTERS RELATING TO THE SERVICER
SECTION 8.01. Liability of the Servicer............................. 72
SECTION 8.02. Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer........................ 72
SECTION 8.03. Limitations on Liability.............................. 73
SECTION 8.04. Servicer Indemnification.............................. 73
SECTION 8.05. The Servicer Not to Resign............................ 75
SECTION 8.06. Examination of Records................................ 76
SECTION 8.07. Confidentiality....................................... 76
ARTICLE IX
TRUST EARLY AMORTIZATION EVENTS
SECTION 9.01. Trust Early Amortization Events....................... 76
SECTION 9.02. Additional Rights upon the Occurrence of Any Trust
Early Amortization Event............................ 79
ARTICLE X
SERVICER DEFAULTS
SECTION 10.01. Servicer Defaults.................................... 80
SECTION 10.02. Trustee to Act; Appointment of Successor Servicer.... 83
SECTION 10.03. Notification to Certificateholders................... 85
ARTICLE XI
THE TRUSTEE
SECTION 11.01. Duties of the Trustee................................ 85
SECTION 11.02. Certain Matters Affecting the Trustee................ 88
SECTION 11.03. Trustee Not Liable for Recitals in Certificates or
Receivables........................................ 89
SECTION 11.04. Trustee May Own Certificates......................... 89
SECTION 11.05. Compensation; Trustee's Expenses..................... 90
SECTION 11.06. Eligibility Requirements for Trustee................. 90
SECTION 11.07. Resignation or Removal of Trustee.................... 91
SECTION 11.08. Successor Trustee.................................... 92
Pooling and Servicing Agreement
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(iv)
SECTION 11.09. Merger or Consolidation of Trustee................... 92
SECTION 11.10. Appointment of Co-Trustee or Separate Trustee........ 92
SECTION 11.11. Tax Returns.......................................... 93
SECTION 11.12. Trustee May Enforce Claims Without Possession of
Certificates....................................... 94
SECTION 11.13. Suits for Enforcement................................ 94
SECTION 11.14. Rights of Certificateholders to Direct Trustee....... 95
SECTION 11.15. Representations and Warranties of Trustee............ 95
SECTION 11.16. Maintenance of Office or Agency...................... 95
ARTICLE XII
TERMINATION
SECTION 12.01. Termination of Trust................................. 96
SECTION 12.02. Final Distribution................................... 96
SECTION 12.03. Transferor's Termination Rights...................... 97
ARTICLE XIII
MISCELLANEOUS PROVISIONS
SECTION 13.01. Amendment............................................ 97
SECTION 13.02. Protection of Right, Title and Interest to Trust..... 99
SECTION 13.03. Limitation on Rights of Certificateholders........... 100
SECTION 13.04. Notices; Payments.................................... 101
SECTION 13.05. Rule 144A Information................................ 102
SECTION 13.06. Severability of Provisions........................... 103
SECTION 13.07. Assignment........................................... 103
SECTION 13.08. Certificates Nonassessable and Fully Paid............ 103
SECTION 13.09. Further Assurances................................... 103
SECTION 13.10. Nonpetition Covenant................................. 103
SECTION 13.11. No Waiver; Cumulative Remedies....................... 104
SECTION 13.12. Counterparts......................................... 104
SECTION 13.13. Third-Party Beneficiaries............................ 104
SECTION 13.14. Actions by Certificateholders........................ 104
SECTION 13.15. Merger and Integration............................... 104
SECTION 13.16. Headings............................................. 105
SECTION 13.17. Construction of Agreement............................ 105
SECTION 13.18. Governing Law; Jurisdiction; Consent to Service of
Process............................................ 105
Pooling and Servicing Agreement
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(v)
EXHIBITS
Exhibit A Form of Transferor Certificate
Exhibit B Form of Annual Servicer's Certificate
Exhibit C-1 Form of CoreStates Collection Account Letter
Exhibit C-2 Form of Hong Kong and Singapore Collection Account Letter
Exhibit D Form of Rule 144A and Non-Rule 144A Letters
Exhibit E Form of Daily Report
Exhibit F Muehlstein Credit Policy Manual
Exhibit G Form of Annual Servicing Report of Independent Public Accountants
Pooling and Servicing Agreement
<PAGE>
1
POOLING AND SERVICING AGREEMENT, dated as of August 23, 1996, among
MUEHLSTEIN FINANCIAL CORPORATION, as Transferor, H. MUEHLSTEIN & CO., INC., as
Servicer, and BANKERS TRUST COMPANY, as Trustee.
In consideration of the mutual agreements herein contained, each
party agrees as follows for the benefit of the other parties, the
Certificateholders and the Enhancement Provider to the extent provided herein:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. Whenever used in this Agreement, the
following words and phrases shall have the following meanings, and the
definitions of such terms are applicable to the singular as well as the plural
forms of such terms and to the masculine as well as to the feminine and neuter
genders of such terms. Capitalized terms not otherwise defined in this Agreement
have the same meanings as specified in the related Supplement.
"Accommodation Obligation" means any contractual obligation,
contingent or otherwise, of one Person with respect to any Indebtedness of
another, if the primary purpose or intent thereof by the Person incurring the
Accommodation Obligation is to provide assurance to the obligee of such
Indebtedness of another that such Indebtedness will be paid or discharged, or
that any agreements relating thereto will be complied with, or that the holders
thereof will be protected (in whole or in part) against loss in respect thereof
including, without limitation, direct and indirect guarantees, endorsements
(except for collection or deposit in the ordinary course of business), notes
co-made or discounted, recourse agreements, take-or-pay agreements, keep-well
agreements, agreements to purchase or repurchase such Indebtedness or any
security thereof or to provide funds for the payment or discharge thereof,
agreements to maintain solvency, assets, level of income, or other financial
condition, and agreements to make payment other than for value received. The
amount of any Accommodation Obligation shall be equal to the lesser of (i) the
principal amount payable under such Accommodation Obligation (if quantifiable),
and (ii) the portion of the obligation so guaranteed or otherwise supported.
"Act" shall mean the Securities Act of 1933, as amended from time to
time.
"Additional Originator" shall have the meaning specified in Section
2.07(a).
"Affiliate" shall mean, with respect to any specified Person, any
other Person controlling, controlled by or under common control with such
specified Person and, without limiting the generality of the foregoing, shall be
presumed to include (A) any Person which
Pooling and Servicing Agreement
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2
beneficially owns or holds 12.5% or more of any class of voting securities
(after giving effect to any capital stock which is convertible into voting
stock) of such designated Person or 12.5% or more of the equity interest in such
designated Person and (B) any Person of which such designated Person
beneficially owns or holds 12.5% or more of any class of voting securities
(after giving effect to any capital stock which is convertible into voting
stock). For the purposes of this definition, (i) "control" when used with
respect to any specified Person shall mean the power to direct the management
and policies of such specified Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing and
(ii) Mobil Corporation shall not be deemed an Affiliate of Muehlstein solely as
a result of its ownership interest in the Series A Preferred Stock, par value
$0.01 per share, issued by Muehlstein Holding Corporation, a Delaware
corporation, but only so long as Mobil Corporation has no representative on the
board of directors of Muehlstein Holding Corporation.
"Aggregate Certificateholders' Interest" shall have the meaning
specified in Section 4.01(a).
"Aggregate Non-Investment Grade/Non-Rated Country Receivables
Balance Concentration Limit" shall mean, on any date, 40% or such different
percentage as shall be selected by the Transferor upon satisfaction of the
Rating Agency Condition.
"Agreement" shall mean this Pooling and Servicing Agreement, as the
same may from time to time be amended, modified or otherwise supplemented,
including, with respect to any Series, the related Supplement.
"Amortization Date" shall mean, with respect to any Series, the
amortization date specified in the related Supplement.
"Amortization Period" shall mean, with respect to any Series, unless
otherwise specified in the related Supplement, the period beginning on the
related Amortization Date and ending upon the payment in full to the Investor
Certificateholders of such Series of the Invested Amount with respect to such
Series, all accrued and unpaid interest thereon and all other amounts owed to
the Investor Certificateholders hereunder.
"Beneficiary" shall mean, as of any date of determination, any of
the Trustee, the then holders of the Investor Certificates and any Enhancement
Provider.
"Benefit Plan" means a defined benefit plan as defined in Section
3(35) of ERISA (other than a Multiemployer Plan) in respect of which the
Transferor or any ERISA Affiliate is, or within the immediately preceding six
(6) years was, an "employer" as defined in Section 3(5) of ERISA.
Pooling and Servicing Agreement
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3
"Business Day" shall mean any day other than (a) a Saturday or
Sunday or any other day on which national banking associations or state banking
institutions in New York, New York or the city in which the Corporate Trust
Office is located are authorized or obligated by law, executive order or
governmental decree to be closed and (b) with respect to non-financial reporting
requirements of the Servicer or the Transferor, any day on which the Servicer or
the Transferor is closed and (c) if during any applicable interest period an
interest rate or certificate rate is calculated by reference to a eurodollar
rate, a day on which dealings in deposits in United States dollars are not
customarily transacted in the London interbank market and (d) any other day
specified in a Supplement as a "Business Day".
"Certificate" shall mean any one of the Investor Certificates or the
Transferor Certificate.
"Certificate Rate" shall mean, with respect to any Series, the
certificate rate specified therefor in the related Supplement.
"Certificate Register" shall have the meaning specified in Section
6.03(a).
"Certificateholder" or "Holder" shall mean an Investor
Certificateholder or the Person in whose name the Transferor Certificate is
registered in the Certificate Register.
"Certificateholders' Interest" shall have the meaning specified in
Section 4.01(a).
"Collection Period" shall mean, with respect to any Distribution
Date, the calendar month (or, in the case of the calendar month in which the
Closing Date occurs, the portion of such calendar month following the Closing
Date) immediately preceding the calendar month in which such Distribution Date
occurs.
"Collections" shall mean (a) all cash payments by or on behalf of
the Obligors deposited to any Muehlstein Collection Account or the Concentration
Account, or received by the Servicer, in respect of Receivables in the form of
cash, checks, wire transfers, electronic transfers or any other form of cash
payment and (b) all interest and other investment earnings (net of losses and
investment expenses) on Collections (including, without limitation, funds on
deposit in the Cure Accounts) as a result of the investment thereof pursuant to
Section 4.02(a).
"Concentration Account" shall have the meaning specified in Section
4.02(a).
"Concentration Account Bank" shall initially be Bankers Trust
Company, and shall have the meaning specified in Section 4.02(a).
Pooling and Servicing Agreement
<PAGE>
4
"Confidential Information" shall mean any written information
delivered or made available by or on behalf of Muehlstein (or its Affiliates or
subsidiaries), the Servicer, the Transferor or Muehlstein International to any
Person in connection with or pursuant to this Agreement or the transactions
contemplated hereby which is proprietary in nature and clearly marked or
identified in writing as being confidential information, other than information
(i) which was publicly known, or otherwise known to such Person, at the time of
disclosure or (ii) which subsequently becomes publicly known through no act or
omission by such Person.
"Consolidated Tangible Net Worth" means, with respect to any Person,
at any time, (i) total consolidated assets of such Person (including the
capitalized portion of any interest rate exchange, swap, collar, future,
protection, cap, floor or similar agreement providing interest rate protection),
plus (ii) any negative cumulative foreign exchange translation adjustments
applicable to such Person, minus (iii) total consolidated liabilities of such
Person (excluding any accrued and unpaid dividends payable on the capital stock
of such Person (regardless of class or designation) and all warrants, options,
purchase rights, conversion or exchange rights, voting rights, calls or claims
of any character with respect thereto), minus (iv) any positive cumulative
foreign exchange translation adjustments applicable to such Person. There shall
be excluded therefrom all general intangibles (as defined in Section 9-106 of
the UCC or in any similar statute of Canada, the United Kingdom or any other
relevant jurisdiction, or any political subdivision thereof) (except goodwill,
tax refunds, tax refund claims, rights and claims against carriers, shippers,
franchises, lessors and lessees, and rights to indemnification), organizational
expenses and all unamortized debt discount and deferred charges (including
deferred taxes) and non-current pension liabilities or assets. Assets and
liabilities shall be determined in accordance with generally accepted accounting
principles, except that investments in and moneys due from Affiliates of the
Transferor (other than such moneys in respect of trade accounts receivables and
payables in the ordinary course of business) shall be excluded from total
consolidated assets.
"Contract" shall mean an agreement between an Originator and an
Obligor, containing terms pursuant to or under which such Obligor shall be
obligated to pay from time to time for merchandise delivered or to be delivered
or services performed or to be performed.
"Controlled Affiliate" shall mean any specified Person controlled by
or under common control with Muehlstein, the Servicer or the Transferor or as to
which Muehlstein, the Servicer or the Transferor beneficially owns or holds 50%
or more of any class of securities of such Person the holders of which are
ordinarily entitled to vote for the election of directors of such Person or 50%
or more of the equity interest in such Person. For the purposes of this
definition, "control" when used with respect to any specified Person shall mean
the power to direct the management and policies of such specified Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
Pooling and Servicing Agreement
<PAGE>
5
"Corporate Trust Office" shall have the meaning specified in Section
11.16.
"Country Concentration Limit" shall mean, on any date with respect
to any country the percentage set forth below opposite the category of Public
Debt Rating applicable to such country (including "Non-Rated" as a Public Debt
Rating") or such different percentage as shall be selected by the Transferor;
provided that the Rating Agency Condition shall have first been satisfied with
respect to such different percentage:
S&P Moody's Percentages
--- ------- -----------
AA or higher Aa2 or higher No Limit
A to AA- A2 to Aa3 7.0%
BBB- to A- Baa3 to A3 5.5%
Non-Investment Grade/Non-Rated Countries
6 Largest Countries (measured by Outstanding
Balance of Receivables) 4.0%
All Other Countries 1.5%
"Country Receivable" means, with respect to any country, Receivables
owed by Obligors who are domiciled in such country.
"Credit Agreement" means the Credit Agreement dated February 9, 1996
among H. Muehlstein & Co., Inc., Muehlstein Holding Corporation, Muehlstein
International, Ltd., Pegasus Polymers International Inc., and H. Muehlstein and
Co. (Canada) Limited, the lenders named therein or from time to time parties
thereto, the issuing banks named therein from time to time parties thereto and
Citicorp USA, Inc., as agent, and Citibank, Canada, as Canadian agent, as
amended, supplemented, modified, restated, replaced or refinanced from time to
time.
"Cure Account" with respect to any Series shall have the meaning
specified in the related Supplement, and "Cure Accounts" shall refer to all the
Cure Accounts established for outstanding Series in accordance with the terms of
the related Supplements.
"Cure Funds" shall mean Collections which, from time to time, are
deposited by the Transferor into a Cure Account.
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<PAGE>
6
"Cure Period" shall mean, if the Transferor has elected to begin
depositing Cure Funds into the Cure Accounts, the period beginning on and
including a Pool Non-compliance Date and ending on but excluding the earlier of
(a) the first date thereafter on which the Net Receivables Balance equals or
exceeds the Required Net Receivables Balance and (b) the fifth consecutive
Business Day following the occurrence of such Pool Non-compliance Date.
"Daily Report" shall mean an Officer's Certificate of the Servicer
substantially in the form of Exhibit E hereto.
"Defaulted Receivable" shall mean a Receivable (i) as to which an
Insolvency Event has occurred with respect to the Obligor thereof, (ii) as to
which any payment, or part thereof, remains unpaid by the Obligor thereof for 91
days or more from the original due date for such payment specified in the
relevant invoice or (iii) which, consistent with the Muehlstein Credit Policy
Manual, would be or has been written off as uncollectible.
"Deposit Date" shall mean each Business Day on which any Collections
are deposited in the Concentration Account.
"Determination Date" shall mean, with respect to any Distribution
Date, the fourth Business Day preceding such Distribution Date.
"Determination Date Certificate" shall mean, with respect to any
Determination Date and any Series, a report prepared by an officer of the
Servicer for such Determination Date as of the end of the most recently
completed calendar month, substantially in the form set forth in the related
Supplement.
"Diluted Receivable" shall mean that portion of any Receivable which
is either (a) reduced or cancelled as a result of (i) any failure by any
Originator to deliver any merchandise or provide any services or otherwise to
perform under the underlying Contract or invoice, (ii) any change in the terms
of, or cancellation of, a Contract or invoice or any other adjustment by the
Servicer which reduces the amount payable by the Obligor on the related
Receivable, (iii) a check or other similar instrument issued by the Originator
to the Obligor as a discount or rebate on the underlying Contract or invoice or
(iv) any set-off by an Obligor in respect of any claim by such Obligor as to
amounts owed by it on the related Receivable or (b) subject to any dispute,
offset, counterclaim or defense whatsoever asserted (except the discharge in
bankruptcy of the Obligor thereof); provided that Diluted Receivables are
calculated assuming that all chargebacks are resolved in the Obligor's favor and
do not include contractual adjustments to the amount payable by an Obligor that
are eliminated from the Receivables balance sold to the Trust through a
reduction in the Purchase Price for the related Receivable.
"Discount Amount" shall mean, with respect to any Series, the amount
set forth
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<PAGE>
7
in the related Supplement.
"Distribution Date" shall mean, with respect to any Collection
Period, the fifteenth day of the calendar month immediately following such
Collection Period, or, if such day is not a Business Day, the next succeeding
Business Day or such other day as set forth in the Supplement for any Series.
"DOL" means the United States Department of Labor and any Person
succeeding to the functions thereof.
"Early Amortization Period" shall mean, with respect to any Series,
unless otherwise specified in the related Supplement, the period beginning at
the close of business on the Business Day immediately preceding the day on which
an Early Amortization Event is deemed to have occurred, and ending upon the
Termination Date with respect to such Series.
"Eligible Institution" shall mean a depository institution organized
under the laws of the United States of America or any state thereof, or the
District of Columbia (or any domestic branch of a foreign bank authorized under
any such laws), (a) whose long-term unsecured debt obligations are rated at
least (i) if S&P is a Rating Agency, A- or better, and (ii) if Moody's is a
Rating Agency, A3 or better, and (b) which is subject to regulation regarding
fiduciary funds on deposit substantially similar to 12 C.F.R. Section 9.10(b)
and (c) which has a combined capital and surplus of at least $500,000,000.
"Eligible Investments" shall mean book-entry securities entered on
the books of the registrar of such securities and held in the name or on behalf
of the Trustee, negotiable instruments or securities represented by instruments
in bearer or registered form (registered in the name of the Trustee or its
nominee) which evidence:
(a) direct obligations of, or obligations fully guaranteed as to
timely payment by, the United States of America or any agency thereof;
(b) demand deposits, time deposits or certificates of deposit
(having original maturities which mature no later than the Business Day
prior to the next Distribution Date) of depository institutions or trust
companies incorporated under the laws of the United States of America or
any state thereof (or domestic branches of foreign banks), subject to
supervision and examination by federal or state banking or depository
institution authorities, and having, at the time of the Trust's investment
or contractual commitment to invest therein, the highest short-term
unsecured debt rating from each Rating Agency;
(c) commercial paper (having original maturities of no more than 270
days) having, at the time of the Trust's investment or contractual
commitment to invest
Pooling and Servicing Agreement
<PAGE>
8
therein, the highest short-term rating from each Rating Agency;
(d) investments in no-load money market funds having a rating from
each Rating Agency rating such fund in its highest investment category
(including such funds for which the Trustee or any of its Affiliates is
investment manager or advisor); or
(e) notes or bankers' acceptances (having original maturities of no
more than 270 days) issued by any depository institution or trust company
described in clause (b) above.
"Eligible Receivable" shall mean, at any time, unless otherwise
specified, each Receivable or portion thereof, satisfying the following
criteria:
(a) as to which, at the time of the Transfer of such Receivable to
the Trust, the Transferor or the Trust will have good and marketable title
thereto free and clear from any and all Liens except as created hereunder,
and which has been the subject of either a valid transfer and assignment
from the Transferor to the Trust of all the Transferor's right, title and
interest therein (and in the proceeds thereof), or the grant of a first
priority perfected "security interest" (within the meaning of the UCC of
the State of New York and of the jurisdiction the law of which governs the
perfection of the interest in such Receivable created hereunder) therein
(and in the proceeds thereof);
(b) which is not a Defaulted Receivable or a Diluted Receivable;
(c) which arose in the ordinary course of business of any Originator
and is an account receivable representing all or part of the sales price
of merchandise or services within the meaning of Section 3(c)(5) of the
Investment Company Act, the Obligor of which is primarily liable with
respect thereto;
(d) which is an "account" (within the meaning of Section 9-106 of
the UCC of the State of New York and of the jurisdiction the law of which
governs the perfection of the interest in such Receivable created
hereunder);
(e) which is denominated and payable only in United States dollars.
(f) which will at all times be the legal and assignable payment
obligation of the Obligor of such Receivable, enforceable against such
Obligor in accordance with its terms except as such enforceability may be
limited by applicable bankruptcy, reorganization, insolvency, moratorium
or other laws affecting creditors' rights generally, and except as such
enforceability may be limited by general principles of equity (whether
considered in a suit at law or in equity);
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9
(g) which was created in compliance with, and which, at the time of
the Transfer of such Receivable to the Trust, does not contravene any
applicable Requirement of Law, and the Obligor of which is not in
violation of any such Requirement of Law with respect to such Receivable;
(h) which satisfies all applicable requirements of the Muehlstein
Credit Policy Manual;
(i) with respect to which all consents, licenses, approvals or
authorizations of, or registrations or declarations with, any Governmental
Authority required to be obtained, effected or given in connection with
the creation of such Receivable have been duly obtained, effected or given
and are in full force and effect;
(j) which is not subject to any specific waiver or modification
except for a Receivable which is subject to a waiver or modification as
permitted in accordance with the Muehlstein Credit Policy Manual and which
waiver or modification is reflected in the Servicer's records and computer
files relating thereto;
(k) which is not subject to any provision prohibiting the transfer
or assignment by any Originator of such payment obligation;
(l) the payment terms of which do not exceed 120 days after the
invoice date and otherwise conform to the provisions of the Muehlstein
Credit Policy Manual;
(m) the Obligor of which is not a Controlled Affiliate of
Muehlstein, the Servicer or the Transferor;
(n) the Obligor of which is not a Governmental Authority;
(o) the Obligor of which is not a supplier to, or creditor of, any
Originator; provided that Receivables of which the Obligor is a supplier
to, or creditor of, any Originator shall be "Eligible Receivables" to the
extent that the aggregate Outstanding Balance of such Receivables exceeds
the maximum amount of such Obligor's right of set-off in respect thereof;
(p) the Obligor of which has been directed to remit payments with
respect thereto to a Muehlstein Post Office Box or a Muehlstein Collection
Account;
(q) the Obligor of which has no more than 10% of all its Receivables
91 days or more past their respective due dates;
(r) the Obligor of which is not domiciled in a country (other than
the United
Pooling and Servicing Agreement
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10
States of America) (i) which has more than 20% of its Country Receivables
91 days or more past their respective due dates, calculated in each case
after giving effect to the Receivables of such Obligor or (ii) a national
Governmental Authority of which has failed to pay when due any
Indebtedness in an aggregate principal amount in excess of $50 million (or
the equivalent in any other currency) payable in a currency other than the
currency of such country to a Person resident or having a head office or
chief place of business outside the territory of such country, or (iii)
whose government or central bank shall have prohibited the sale of the
currency of such country in exchange for United States dollars or shall
have admitted in writing its inability to pay its debts as the same become
due or shall have declared a moratorium on the payment of its debts or the
debts of any national Governmental Authority of such country or shall have
ceased to be a member of the International Monetary Fund or ceased to be
eligible to use the resources of the International Monetary Fund;
(s) the Obligor of which is not domiciled in Cuba, Libya, North
Korea, Iran, Iraq, Angola or any other country with respect to which the
United States shall have imposed Category I economic sanctions (i.e. under
31 C.F.R. ss. 500.201) under 31 C.F.R. 500 dealing with Foreign Assets
Control Regulations; and
(t) the Obligor of which is not domiciled in a country in Latin
America that is a Non-Investment Grade/Non-Rated Country if at such time
either (i) the aggregate Outstanding Balance of all Receivables which are
91 days or more past due of Obligors domiciled in all countries in Latin
America exceeds 12% of the aggregate Outstanding Balance of all
Receivables of all Obligors domiciled in all countries in Latin America
(other than any country in Latin America described in subclause (r)
above), or (ii) with respect the countries of the Federative Republic of
Brazil, the United Mexican States and the Republic of Argentina, all three
shall concurrently experience one of the following events: (A) a national
Governmental Authority of such country shall have failed to pay when due
any Indebtedness in an aggregate principal amount in excess of $50 million
(or the equivalent in any other currency) payable in a currency other than
the currency of such country to a Person resident or having a head office
or chief place of business outside the territory of such country, or (B)
the national government or central bank of such country (1) shall have
prohibited the sale of the currency of such country in exchange for United
States dollars or (2) shall have admitted in writing its inability to pay
its debts as the same become due or (3) shall have declared a moratorium
on the payment of its debts or the debts of any national Governmental
Authority of such country or (4) shall have ceased to be a member of the
International Monetary Fund or ceased to be eligible to use the resources
of the International Monetary Fund.
"Eligible Servicer" shall mean Muehlstein, Citibank, N.A., the
Trustee or another entity which, at the time of its appointment as Servicer, (a)
is servicing a portfolio of
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11
trade receivables and has demonstrated the ability to service professionally and
competently a portfolio of similar trade receivables with reasonable standards
of skill and care, (b) is legally qualified and has the capacity to service the
Receivables and (c) has been approved by the Enhancement Provider.
"Enhancement" shall mean, with respect to any Series, any letter of
credit, surety bond, cash collateral account, spread account, guaranteed rate
agreement, maturity liquidity facility, tax protection agreement, interest rate
swap agreement or other similar arrangement for the benefit of the
Certificateholders of such Series.
"Enhancement Agreement" shall mean any agreement, instrument or
document governing the terms of any Enhancement of any Series or pursuant to
which any Enhancement of any Series is issued or outstanding.
"Enhancement Provider" shall mean, for any Series, the Person
identified as such in the applicable Supplement.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, any successor statute, and the regulations
promulgated and rulings issued thereunder.
"ERISA Affiliate" means (i) any corporation which is a member of the
same controlled group of corporations (within the meaning of Section 414(b) of
the Internal Revenue Code) as the Transferor; (ii) a partnership or other trade
or business (whether or not incorporated) which is under common control (within
the meaning of Section 414(c) of the Internal Revenue Code) with the Transferor;
(iii) a member of the same affiliated service group (within the meaning of
Section 414(m) of the Internal Revenue Code) as the Transferor, any corporation
described in clause (i) above or any partnership or trade or business described
in clause (ii) above; and (iv) any other Person which is required to be
aggregated with the Transferor pursuant to regulations promulgated under Section
414(o) of the Internal Revenue Code.
"Expected Final Payment Date" with respect to any Series, shall have
the meaning specified in the related Supplement.
"Fee Letter" shall mean, for each Series, that certain letter
entered into by the Transferor and the Program Agent dated the date of the
certificate purchase agreement with respect to such Series, as such letter may
be modified from time to time in accordance with the terms thereof.
"Financial Officer" means, with respect to the Transferor, the chief
financial officer, treasurer, controller or other officer or member of
management of the Transferor with
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12
significant responsibility for the financial affairs of the Transferor.
"Floating Allocation Percentage" shall mean, with respect to each
Series, the floating allocation percentage specified in the related Supplement;
provided, however, that the aggregate of the Floating Allocation Percentages
with respect to all outstanding Series shall not exceed 100%.
"GAAP" shall mean United States generally accepted accounting
principles.
"Government Receivable" shall mean a Receivable with respect to
which the Obligor is a Governmental Authority.
"Governmental Authority" shall mean any country or nation, any
political subdivision, state or municipality of such country or nation, and any
entity exercising executive, legislative, judicial, regulatory or administrative
functions of any country or nation or political subdivision thereof.
"Indebtedness" shall mean, as applied to any Person, at any time,
without duplication, (a) all indebtedness, obligations or other liabilities of
such Person (i) for borrowed money or evidenced by debt securities, debentures,
acceptances, notes or other similar instruments, together with, in each case,any
accrued interest, fees and charges relating thereto, (ii) in respect of
obligations (A) to redeem, repurchase or exchange for cash any Securities at a
fixed or determinable date, at the option of another Person or upon the
occurrence of a condition not solely within the control of such Person, as of
the time such payment date becomes fixed or determined, such option is exercised
or such condition is satisfied, as the case may be, or (B) to pay cash dividends
in respect of any stock, (iii) with respect to letters of credit issued for such
Person's account, (iv) to pay the deferred purchase price of property or
services, except (A) accounts payable and accrued expenses arising in the
ordinary course of business and (B) any obligation arising solely in respect of
the conversion in the ordinary course of business of any current liability into
a long-term obligation in a like amount and bearing interest at a rate not in
excess of a market rate of interest, (v) in respect of the lease of any property
(whether real, personal or mixed) by such Person as lessee which, in conformity
with GAAP, is accounted for as a capital lease on the balance sheet of such
Person, (vi) which are Accommodation Obligations, (vii) upon which interest
charges are customarily paid (including zero coupon instruments but excluding
obligations referred to in clauses (iv)(A) or (iv)(B) above) or (viii) under
conditional sale or other title retention agreements relating to property
purchased by such Person; (b) all indebtedness, obligations or other liabilities
of such Person secured by a Lien on any property of such Person, whether or not
such indebtedness, obligations or liabilities are assumed by such Person, all as
of such time (it being understood that if recourse with respect to such
indebtedness, obligations or liabilities is limited to such property, such
indebtedness, obligations or other liabilities shall be limited to the fair
market value of such property); (c) all indebtedness, obligations or other
liabilities of such Person in
Pooling and Servicing Agreement
<PAGE>
13
respect of interest rate exchange, swap, collar, future, protection, cap, floor
or similar agreements providing interest rate protection and any foreign
exchange contract, currency swap agreement or other similar agreement or
arrangement, net of liabilities owed to such Person by the counterparties
thereon; and (d) all contingent contractual obligations with respect to any of
the foregoing.
"Indemnified Amounts" shall have the meaning specified in Section
7.03.
"Indemnified Party" shall have the meaning specified in Section
7.03.
"Independent Public Accountants" means any of (a) Arthur Andersen &
Co., (b) Deloitte & Touche LLP, (c) Coopers & Lybrand, (d) Ernst & Young, (e)
KPMG Peat Marwick and (f) Price Waterhouse or any of their respective successors
so long as such successor is one of the six largest United States accounting
firms; provided that such firm is independent with respect to the Servicer
within the meaning of the Act.
"Initial Invested Amount" shall mean, with respect to any Series and
for any date, an amount equal to the initial invested amount specified in the
related Supplement.
"Initial Issuance Date" shall mean, with respect to any Series, the
"Closing Date" specified in the related Supplement.
"Insolvency Event" shall mean, with respect to a specified Person,
(a) the commencement of a case in respect of such Person or any substantial part
of its property under any applicable bankruptcy, insolvency or other similar law
now or hereafter in effect, or the filing of a decree or order by a court having
jurisdiction in the premises appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official for such Person or for all
or any substantial part of its property, or the ordering of the winding-up or
liquidation of such Person's business, and such case, decree or order shall
remain unstayed and in effect for a period of 60 consecutive days, or the filing
of a decree or order for relief by a court having jurisdiction in the premises
in respect of such Person or any substantial part of its property in an
involuntary case under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect; or (b) the commencement by such Person or by a
Controlled Affiliate of such Person (provided that in the case of Muehlstein or
any of its Affiliates, such Controlled Affiliate is domiciled in the United
States and has assets which constitute 2.5% or more of the assets of Muehlstein,
or is Pegasus Polymers International Inc., Polymers International Financial
Corporation, the Transferor or an Originator) of a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or the consent by such Person to the entry of an order for relief in an
involuntary case under any such law, or the consent by such Person to the
appointment of or taking possession by a receiver, liquidator, assignee for the
benefit of creditors, custodian, trustee, sequestrator or similar official for
such Person or for all or any substantial part of its property, or the making by
such
Pooling and Servicing Agreement
<PAGE>
14
Person of any general assignment for the benefit of creditors; or (c) the
failure by such Person generally to pay its debts as such debts become due or
the admission by such Person in writing (as to which the Trustee shall have
written notice) of its inability to pay its debts generally as they become due.
"Intercreditor Agreement" shall mean the agreement among Citicorp
North America, Inc., the Transferor, Muehlstein, Muehlstein International, Ltd.,
the Trustee, Citicorp USA, Inc., Citibank Canada, AMBAC Indemnity Corporation
and FINOVA Capital Corporation, dated as of the date hereof, as the same may
from time to time be amended, modified or otherwise supplemented.
"Internal Revenue Code" shall mean the Internal Revenue Code of
1986, as amended from time to time.
"Invested Amount" shall mean, with respect to any Series and for any
date, an amount equal to the invested amount specified in the related
Supplement.
"Investment Company Act" shall mean the Investment Company Act of
1940, as amended from time to time.
"Investor Certificate" shall mean any one of the certificates
executed by the Transferor and authenticated by or on behalf of the Trustee, in
substantially the form attached to the related Supplement, other than the
Transferor Certificate.
"Investor Certificateholder" shall mean the Person in whose name an
Investor Certificate is registered in the Certificate Register.
"Investor Collections" shall mean, with respect to each Series,
investor collections for such Series specified in the related Supplement.
"IRS" means the Internal Revenue Service and any Person succeeding
to the functions thereof.
"Knowledge" (and the related term "Know") means, with respect to the
Transferor's knowledge, the knowledge of a Responsible Officer of the
Transferor.
"Latin America" shall mean all of North America, Central America and
South America except for the United States of America and Canada.
"Lien" shall mean any mortgage, deed of trust, pledge,
hypothecation, assignment, encumbrance, lien (statutory or other), preference,
participation interest, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever
Pooling and Servicing Agreement
<PAGE>
15
resulting in an encumbrance against real or personal property of a Person,
including, without limitation, any conditional sale or other title retention
agreement, any financing lease having substantially the same economic effect as
any of the foregoing and the filing of any financing statement under the UCC or
comparable law of any jurisdiction to evidence any of the foregoing.
"Loss and Dilution Reserve" shall mean, with respect to any Series,
the amount set forth in the related Supplement as the loss and dilution reserve
for such Series.
"Majority in Interest" shall mean the Holders of Certificates
evidencing 51% or more of the Aggregate Certificateholders' Interest or, if in
respect of any Series, the Holders of Certificates evidencing 51% or more of the
aggregate Certificateholders' Interest in such Series or in relation to any
Series which has an Enhancement as otherwise specified in the Supplement related
to such Series.
"Mobil Corporation" shall mean Mobil Corporation, a New York
corporation.
"Moody's" shall mean Moody's Investors Service, Inc. or its
successor.
"Muehlstein" shall mean H. Muehlstein & Co., Inc., a New York
corporation.
"Muehlstein Collection Account" shall have the meaning specified in
Section 4.02(b).
"Muehlstein Collection Account Bank" shall have the meaning
specified in Section 4.02(b).
"Muehlstein Collection Account Letter" shall have the meaning
specified in Section 4.02(b).
"Muehlstein Credit Policy Manual" shall mean those credit and
collection policies and practices of the Servicer described in the credit policy
and procedures manual, substantially in the form of Exhibit F hereto, in effect
on the date hereof relating to Receivables, as the same may be amended or
modified from time to time in compliance with Section 3.04(j).
"Muehlstein International" shall mean Muehlstein International,
Ltd., a New York corporation.
"Muehlstein Post Office Box" shall have the meaning specified in
Section 4.02(b).
Pooling and Servicing Agreement
<PAGE>
16
"Multiemployer Plan" means a multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, to which the Transferor or any ERISA Affiliate is
making or accruing an obligation to make contributions, or has within any of the
preceding five plan years made an accrued obligation to make contributions.
"Multiple Employer Plan" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of the
Transferor or any ERISA Affiliate and at least one Person other than the
Transferor and the ERISA Affiliates or (b) was so maintained and in respect of
which the Transferor or any ERISA Affiliate could have liability under Section
4064 or 4069 of ERISA in the event such plan has been or were to be terminated.
"Net Receivables Balance"shall mean at any time the Outstanding
Balance of all Receivables then included in the Trust Assets which are then
Eligible Receivables (whether or not any such Receivable was an Eligible
Receivable when acquired or thereafter) reduced, without duplication, in the
order set forth below, by
(i) the aggregate amount by which the Outstanding Balance of all
such Eligible Receivables of any Obligor and its Affiliates taken together
exceeds the product of (A) the Obligor Concentration Limit for such
Obligor multiplied by (B) the Outstanding Balance of all Receivables
included in the Trust Assets which are Eligible Receivables at such time,
and
(ii) the aggregate amount by which the Outstanding Balance (net of
amounts deducted under clause (i) above) of all such Eligible Receivables
of all Obligors domiciled in any country exceeds the product of (A) the
Country Concentration Limit for such country multiplied by (B) the
Outstanding Balance (net of amounts deducted under clause (i) above) of
all Receivables included in the Trust Assets which are Eligible
Receivables at such time, and
(iii) the aggregate amount by which the Outstanding Balance (net of
amounts deducted under clauses (i) and (ii) above) of all such Eligible
Receivables of all Obligors domiciled in any Non-Investment
Grade/Non-Rated Country exceeds the product of (A) the Aggregate
Non-Investment Grade/Non-Rated Country Concentration Limit multiplied by
(B) the Outstanding Balance (net of amounts deducted under clauses (i) and
(ii) above) of all Receivables included in the Trust Assets which are
Eligible Receivables at such time; and
(iv) the aggregate amount by which the Outstanding Balance (net of
amounts deducted under clauses (i), (ii) and (iii) above) of all such
Eligible Receivables the payment of which is supported by a letter of
credit exceeds 15% of the Outstanding Balance of all Receivables included
in the Trust Assets at such time.
Pooling and Servicing Agreement
<PAGE>
17
"Non-Investment Grade/Non-Rated Country" shall mean any country any
class of whose non-credit enhanced long-term senior unsecured debt is not rated
by Moody's and S&P or is rated below investment grade by either Moody's or S&P.
"Obligor" shall mean each Person who is obligated to pay for
merchandise or services provided by any Originator which gave rise to a
Receivable, including any guarantor of such Person's obligations.
"Obligor Concentration Limit" shall mean, on any date with respect
to any Obligor, the percentage set forth below opposite the Public Debt Rating
of such Obligor or such different percentage as shall be selected by the
Transferor; provided that the Rating Agency Condition shall have first been
satisfied with respect to such different percentage, provided further that in
the case of an Obligor with any Affiliate that is also an Obligor, the
Concentration Limit shall be applicable as if such Obligor and such Affiliate
were one Obligor:
S&P Moody's Percentage
--- ------- ----------
BBB- or A3 or better Baa3 or P3 or better 4.0%
Non-Rated or Other Non-Rated or Other 2.0%
"Officer's Certificate" shall mean, unless otherwise specified in
this Agreement, a certificate signed by the President, Vice-President, Chief
Financial Officer, Secretary- Treasurer, Controller, or Assistant Treasurer of
the Transferor, Servicer or any Successor Servicer, or any Responsible Officer
of the Trustee in the event the Trustee is acting as Successor Servicer, as the
case may be, and delivered to the Trustee, each Rating Agency and any
Enhancement Provider.
"Opinion of Counsel" shall mean a written opinion of counsel, who
may be counsel for, or an employee of, the Person providing the opinion (and,
with respect to the Originators and the Transferor, may be McDermott, Will &
Emery) and who shall be reasonably acceptable to the Trustee.
"Originator" shall mean Muehlstein, Muehlstein International and any
other Person or division of any Person designated from time to time as an
Originator pursuant to the terms of both Section 2.07 and the Receivables
Purchase Agreements.
"Outstanding Balance" of any Receivable or designated class of
Receivables at any time shall mean the then outstanding principal balance
thereof, whether or not written-off as uncollectible, converted to an
"instrument" or transferred to a "suspense" account and whether or not payment
thereon has been deferred.
Pooling and Servicing Agreement
<PAGE>
18
"Parent Undertaking Agreement" shall mean the agreement among
Muehlstein and the Trustee, dated as of the date hereof, governing the terms and
conditions upon which Muehlstein shall cause the performance of certain
obligations of the Servicer, as the same may from time to time be amended,
modified or otherwise supplemented.
"Partial Amortization Period" shall mean, a period beginning on and
including a Pool Non-compliance Date and ending on but excluding the earlier of
(a) the first date thereafter on which the Net Receivables Balance equals or
exceeds the Required Net Receivables Balance and (b) the fifth consecutive
Business Day following the occurrence of such Pool Non-compliance Date.
"PBGC" means the Pension Benefit Guaranty Corporation (or any
successor).
"Person" shall mean any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization, Governmental Authority or any other entity
of a similar nature.
"Plan" means a Single Employer Plan or Multiple Employer Plan.
"Plan Event" means (a) (i) the occurrence of a reportable event,
within the meaning of Section 4043 of ERISA, with respect to any Plan unless the
30-day notice requirement with respect to such event has been waived by the
PBGC, or (ii) the requirements of subsection (1) of Section 4043(b) of ERISA
(without regard to subsection (2) of such Section) are met with respect to a
contributing sponsor, as defined in Section 4001(a)(13) or ERISA, of a Plan, and
an event described in paragraph (9), (10), (11), (12) or (13) of Section 4043(c)
of ERISA is reasonably expected to occur with respect to such Plan within the
following 30 days; (b) the application for a minimum funding waiver with respect
to a Plan; (c) the provision by the administrator of any Plan of a notice of
intent to terminate such Plan, pursuant to Section 4041(a)(2) of ERISA
(including any such notice with respect to a plan amendment referred to in
Section 4041(3) of ERISA); (d) the cessation of operations at a facility of any
Originator or any ERISA Affiliate in the circumstances described in Section
4062(e) of ERISA; (e) the withdrawal by any Originator or any ERISA Affiliate
from a Multiple Employer Plan during a plan year for which it was a substantial
employer, as defined in Section 4001(a)(2) of ERISA; (f) the conditions for
imposition of a lien under Section 302(f) of ERISA shall have been met with
respect to any Plan; (g) the adopting of an amendment to a Plan requiring the
provision of security to such Plan pursuant to Section 307 of ERISA; or (h) the
institution by the PBGC of proceedings to terminate a Plan pursuant to Section
4042 of ERISA, or the occurrence of any event or condition described in Section
4042 of ERISA that constitutes grounds for the termination of, or the
appointment of a trustee to administer, such Plan.
"Pool Non-compliance Date" shall mean any day on which the Net
Receivables
Pooling and Servicing Agreement
<PAGE>
19
Balance falls below the Required Net Receivables Balance.
"Principal Terms" shall mean, with respect to any Series: (a) the
name or designation; (b) the initial principal amount (or method for calculating
such amount); (c) the Certificate Rate (or method for the determination
thereof); (d) the payment date or dates and the date or dates from which
interest shall accrue; (e) the method for allocating Collections to Investor
Certificateholders of such Series; (f) the designation of any Series Accounts
and the terms governing the operation of any such Series Accounts; (g) the
issuer and terms or any form of Enhancement with respect thereto; (h) the terms,
if any, on which the Investor Certificates of such Series may be exchanged for
Investor Certificates of another Series, repurchased or redeemed by the
Transferor or remarketed to other investors; (i) the Series Servicing Fee and
the Series Trustee's Fee; (j) the Amortization Date and the Termination Date for
such Series; and (k) any other terms of such Series.
"Public Debt Rating" shall mean, as of any date and with respect to
any Person or country, the lowest rating that has been most recently announced
by either Moody's or S&P, as the case may be, for any class of non-credit
enhanced long-term or short-term senior unsecured debt issued by such Person or
country, as the case may be.
"Purchase Price" shall mean, with respect to any Receivable, the
purchase price therefor specified in each Receivables Purchase Agreement
applicable to such Receivable.
"Rating Agency" shall mean each such nationally recognized
statistical rating organization which has rated any Series of Certificates at
the request of the Transferor.
"Rating Agency Condition" shall mean, with respect to any specified
action, that each Rating Agency, upon the written request of the Transferor, the
Servicer or the Trustee, shall have notified all of such parties in writing that
such action in and of itself will not result in a reduction or withdrawal of the
rating of any outstanding Series with respect to which it is a Rating Agency
and, in relation to a Series with respect to which an Enhancement is in effect,
the Enhancement Provider has given its prior written consent thereto.
"Receivable" shall mean an account receivable or other indebtedness
shown on the records of any Originator as of the Transfer Date, and as of each
date from time to time thereafter, arising from the sale or delivery of
merchandise or providing of services by any Originator (whether constituting an
account, contract right, chattel paper, instrument, general intangible or
otherwise) and including without limitation all monies due or to become due
(whether as payment of purchase price, interest, finance charges or otherwise)
and all Collections and other amounts received or receivable from time to time
with respect to such indebtedness and all proceeds (including, without
limitation, all cash collections and all "proceeds" as defined in the UCC of the
State of New York and of the jurisdiction the law of which governs the
perfection of all rights, titles, interests, remedies, powers and privileges
Pooling and Servicing Agreement
<PAGE>
20
purported to be transferred by or pursuant to this Agreement) thereof,
including, without limitation, all amounts on deposit in any Muehlstein
Collection Accounts, and "Receivables" shall mean all such Receivables.
"Receivables Purchase Agreement" shall mean each of the agreements
between either Muehlstein or Muehlstein International, as seller, and the
Transferor, as purchaser, dated as of the date hereof which govern terms and
conditions upon which the Transferor shall have acquired and shall acquire the
Receivables transferred to the Trust, as the same may from time to time be
amended, modified or otherwise supplemented.
"Reconveyed Receivable" shall have the meaning specified in Section
2.04.
"Record Date" shall mean, with respect to any Distribution Date, the
last day of the preceding calendar month.
"Related Security" means with respect to any Transferor Receivable
(i) all of the Transferor's interest in each Contract related thereto, including
all rights pursuant to each such Contract to repossess or receive merchandise
relating to the sale which gave rise to such Receivable; (ii) all other Liens
and property subject to such Liens from time to time purporting to secure
payment of such Receivable, whether pursuant to the Contract related to such
Receivable or otherwise, together with all financing statements signed by an
Obligor describing any collateral securing such Receivable and (iii) all
guarantees, letters of credit, insurance and other agreements or arrangements of
whatever character from time to time supporting or securing payment of such
Receivable, whether pursuant to the Contract related to such Receivable or
otherwise; provided, however, that the foregoing shall not include any inventory
of any Originator prior to the sale thereof.
"Removed Originator" shall have the meaning specified in Section
2.07(b).
"Required Net Receivables Balance" shall mean, as of any day of
determination, the sum of (i) the aggregate of the Loss and Dilution Reserves
for all outstanding Series, plus (ii) the aggregate of the Yield/Fee Reserves
for all outstanding Series plus (iii) the aggregate of all Invested Amounts for
all outstanding Series (computed as if reduced by (A) the aggregate amount of
Cure Funds held in the Cure Account for each Series and (B) the cumulative
amount of funds held at such time in the Concentration Account as all or a
portion of the Trust Partial Amortization Amount allocable to each such Series).
"Requirement of Law" shall mean any law, treaty, rule or regulation,
or final determination of an arbitrator or Governmental Authority, and, when
used with respect to any Person, the certificate of incorporation and by-laws or
other organizational or governing documents of such Person.
Pooling and Servicing Agreement
<PAGE>
21
"Responsible Officer" shall mean, (i) when used with respect to the
Trustee, any officer within the Corporate Trust Office of the Trustee including
any Managing Director, Vice-President, Assistant Vice-President, Assistant
Secretary, Treasurer, Assistant Treasurer or any other officer of the Trustee
who customarily performs functions similar to those performed by the Persons who
at the time shall be such officers, respectively, or to whom any matter is
referred because of such officer's knowledge of and familiarity with the
particular subject, and (ii) when used with respect to the Transferor, the
Servicer, Muehlstein or Muehlstein International, any of the President,
Vice-President, Chief Financial Officer, Secretary-Treasurer, Assistant
Secretary or Assistant Treasurer.
"Revolving Period" shall mean, with respect to any Series, the
period specified in the related Supplement.
"S&P" shall mean Standard & Poor's Ratings Services, a division of
The McGraw-Hill Companies.
"Series" shall mean any series of Investor Certificates.
"Series Account" shall mean any deposit, trust, escrow, reserve or
similar account maintained for the benefit of the Investor Certificateholders of
any Series, as specified in any Supplement.
"Series Allocation Percentage" shall mean, with respect to any
Series, the percentage equivalent of a fraction, the numerator of which is the
sum of (a) the Invested Amount for such Series (computed as if reduced by (A)
the amount of Cure Funds held in the Cure Account for such Series and (B) the
cumulative amount of funds held at such time in the Concentration Account
allocated to the portion of the Trust Partial Amortization Amount allocable to
such Series) plus (b) the Yield/Fee Reserve for such Series, plus (c) the Loss
and Dilution Reserve for such Series, and the denominator of which is the
aggregate of the amounts specified in clauses (a), (b) and (c) for all
outstanding Series.
"Series Servicing Fee" shall mean, with respect to any Series, the
amount of the servicing fee specified in the applicable Supplement.
"Series Trustee's Fee" shall mean, with respect to any Series, the
amount of the Trustee's fee specified in the applicable Supplement.
"Service Transfer" shall have the meaning specified in Section 10.01
"Servicer" initially shall mean Muehlstein and, after any Service
Transfer, shall mean the Successor Servicer.
Pooling and Servicing Agreement
<PAGE>
22
"Servicer Default" shall have the meaning specified in Section
10.01.
"Servicing Fee" shall have the meaning specified in Section 3.02(a).
"Single Employer Plan" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of any
Originator and the ERISA Affiliates or (b) was so maintained and in respect of
which any Originator or any other ERISA Affiliate could have liability under
Section 4069 of ERISA in the event such plan has been or were to be terminated.
"Subordinated Note" shall mean any note issued pursuant to a
Receivables Purchase Agreement which evidences a loan for the excess, if any, of
the Purchase Price over the actual payment therefor, which loan is deemed to be
made by the Seller of the Receivables to the Purchaser.
"Successor Servicer" shall have the meaning specified in Section
10.02(a).
"Supplement" shall mean, with respect to any Series, a supplement to
this Agreement, executed and delivered in connection with the original issuance
of the Investor Certificates of such Series pursuant to Article VI, and all
amendments, modifications or supplements to such supplement or this Agreement.
"Supplemental Certificate" shall have the meaning specified in
Section 6.08(c).
"Tax Opinion" shall mean, with respect to any action, an Opinion of
Counsel who is not an employee of the Servicer or any Affiliate of the Servicer
to the effect that, for federal and Connecticut (and any other State where
substantial servicing activities in respect of Receivables are conducted by the
Transferor or the Servicer if there is a substantial change from present
servicing activities) state income and franchise tax purposes, (a) such action
will not adversely affect the characterization of the Investor Certificates of
any outstanding Series as debt of the Transferor for tax purposes, (b) such
action will not cause a taxable event to any Investor Certificateholder, (c)
following such action the Trust should not be treated as an association (or
publicly traded partnership) taxable as a corporation, (d) in the case of the
original issuance of Certificates, either (i) the Investor Certificates will
properly be characterized as debt of the Transferor or (ii) the Investor
Certificates should properly be characterized as debt of the Transferor, or if
not debt, as an interest in a partnership and not in an association taxable as a
corporation and (e) in the case of Section 6.08(b), the Investor Certificates of
the new Series will properly be characterized as debt of the Transferor.
"Termination Date" shall mean, with respect to any Series, the
termination date specified in the related Supplement.
Pooling and Servicing Agreement
<PAGE>
23
"Termination Notice" shall have the meaning specified in Section
10.01.
"Transaction Documents" shall mean the collective reference to this
Agreement, each Supplement, each Certificate, each Receivables Purchase
Agreement, each Enhancement Agreement, the Parent Undertaking Agreement, the
Intercreditor Agreement, each certificate purchase agreement and the Fee Letter
for each Series.
"Transfer" shall have the meaning specified in Section 2.01(a), it
being understood that the date of Transfer of any Receivable or other Trust
Asset shall be (i) for each Receivable and Trust Asset in existence on the
Transfer Date, the Transfer Date and (ii) for each other Receivable and Trust
Asset, the date on which such Receivable or other Trust Asset shall be created
or otherwise arise and, in the case of such Receivable, be acquired by the
Transferor under the applicable Receivables Purchase Agreement.
"Transfer Agent and Registrar" shall have the meaning specified in
Section 6.03(a).
"Transfer Date" shall mean September 25, 1996, the initial date of
Transfer of Receivables into the Trust.
"Transferor" shall mean Muehlstein Financial Corporation, a Delaware
corporation.
"Transferor Certificate" shall mean the certificate executed by the
Transferor and authenticated by or on behalf of the Trustee, in substantially
the form of Exhibit A hereto.
"Transferor Interest" shall have the meaning specified in Section
4.01(a).
"Transferor Percentage" shall mean at any time 100% minus the
aggregate of the Floating Allocation Percentages of all outstanding Series at
such time.
"Transferor Receivable" shall mean a Receivable acquired by the
Transferor pursuant to a Receivables Purchase Agreement.
"Transferor's Account" shall mean the special account designated
under the account name "Muehlstein Financial Corporation", being account number
4070-6702 under the dominion and control of the Transferor, for deposits by the
Servicer pursuant to the applicable Supplement, maintained at Citibank, N.A. in
New York, New York or such other account at such other bank, under the dominion
and control of the Transferor, as the Transferor may designate for such purpose
from time to time.
"Trust" shall mean the Muehlstein Trade Receivables Master Trust
created by
Pooling and Servicing Agreement
<PAGE>
24
this Agreement, the corpus of which shall consist of the Trust Assets.
"Trust Assets" shall have the meaning specified in Section 2.01(a).
"Trust Early Amortization Event" shall have the meaning specified in
Section 9.01.
"Trust Invested Amount" shall mean, at any time, the sum of the
Invested Amounts for all outstanding Series at such time.
"Trust Partial Amortization Amount" shall mean, with respect to any
date of determination during a Partial Amortization Period, the amount by which
the Net Receivables Balance is less than the Required Net Receivables Balance.
"Trustee" shall mean Bankers Trust Company, not in its individual
capacity but solely in its capacity as trustee on behalf of the Trust, or its
successor in interest, or any successor trustee appointed as herein provided.
"Trustee's Account" with respect to each Series, shall have the
meaning specified in the related Supplement.
"Trustee's Fee" shall have the meaning specified in Section
11.05(a).
"UCC" shall mean the Uniform Commercial Code, as amended from time
to time, as in effect in any applicable or specified jurisdiction.
"Undivided Fractional Interest" with respect to each Series, shall
have the meaning specified in the related Supplement.
"Yield/Fee Reserve" shall mean, with respect to each Series, the
amount set forth in the related Supplement as the yield/fee reserve for such
Series.
SECTION 1.02. Other Definitional Provisions. (a) All terms defined
in this Agreement shall have the defined meanings when used in any certificate
or other document made or delivered pursuant hereto unless otherwise defined
therein.
(b) As used herein and in any certificate or other document made or
delivered pursuant hereto or thereto, accounting terms not defined in this
Agreement, and accounting terms partly defined in this Agreement to the extent
not completely defined, shall have the respective meanings given to them under
GAAP or regulatory accounting principles, as applicable and in effect from time
to time. To the extent that the definitions of accounting terms herein are
inconsistent with the meanings of such terms under GAAP or regulatory
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accounting principles, the definitions contained herein shall control.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement; Section, Schedule
and Exhibit references contained in this Agreement are references to Sections,
Schedules and Exhibits in or to this Agreement unless otherwise specified; the
term "including" means "including without limitation".
ARTICLE II
TRANSFER OF RECEIVABLES
SECTION 2.01. Transfer of Receivables. (a) By execution of this
Agreement, the Transferor does hereby transfer, assign, set-over and otherwise
convey without recourse, except as expressly provided herein (the making of such
transfer, assignment, set-over and conveyance being a "Transfer", and so to
transfer, assign, set-over and otherwise convey being to "Transfer") to the
Trust for the benefit of the Certificateholders:
(i) all of the Transferor's right, title and interest in, to and
under all Transferor Receivables existing at the close of business on the
Transfer Date and thereafter created from time to time, and conveyed to
the Transferor under the Receivables Purchase Agreements from time to
time, until the termination of the Revolving Period of the last
outstanding Series, and all monies due or to become due and all
Collections in respect of such Transferor Receivables and other amounts
received or receivable from time to time with respect to such Transferor
Receivables and all proceeds (including, without limitation, "proceeds" as
defined in the UCC of the State of New York and of the jurisdiction the
law of which governs the perfection of the interest in the Transferor
Receivables transferred hereunder) thereof;
(ii) all of the Transferor's rights, remedies, powers and privileges
under the Receivables Purchase Agreements existing at the close of
business on the Transfer Date and thereafter created from time to time;
and
(iii) all of the Transferor's right, title and interest in, to and
under the Related Security.
Such property described in the preceding sentence, together with all monies from
time to time on deposit in, and all Eligible Investments and other securities,
instruments and other investments purchased from funds on deposit in, the
Concentration Account, the Muehlstein Collection Accounts and any Series
Account, and any Enhancement issued with respect to any Series (the drawing on
or payment of such Enhancement not being available to
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Certificateholders of any other Series) and all of the Transferor's rights,
remedies, powers, and privileges under the Receivables Purchase Agreements shall
constitute the assets of the Trust (collectively the "Trust Assets").
The foregoing Transfer does not constitute and is not intended to
result in an assumption by the Trust, the Trustee or any Certificateholder of
any obligation of the Servicer, Muehlstein, the Transferor or any other Person
in connection with the Receivables or under any Receivables Purchase Agreement
or under any agreement or instrument relating thereto, including, without
limitation, any obligation to any Obligor. The foregoing Transfer to the Trust
is and shall be made to the Trustee, on behalf of the Trust, and each reference
in this Agreement to such Transfer shall be construed accordingly.
The Transferor agrees to record and file from time to time, at its
own expense, financing statements and other documents (and amendments thereto,
assignments thereof and continuation statements, when applicable) with respect
to the Receivables and the other Trust Assets now existing and hereafter created
meeting the requirements of applicable law in such manner and in such
jurisdictions as are necessary to perfect, and maintain perfection of, the
Transfers of the Receivables and the other Trust Assets to the Trust, and to
deliver a file- stamped copy of any such financing statement or other document
or other evidence of such filing to the Trustee on or prior to the Transfer
Date. The Trustee shall be under no obligation whatsoever to file any such
financing statements, documents, amendments, assignments or continuation
statements or to make any other filing under the UCC in connection with such
Transfer or to monitor the status of the perfection evidenced by such filings.
The Servicer and the Transferor further agree, at their own expense,
on or prior to the Transfer Date to mark their computer records in a manner
reasonably calculated to indicate that the Trust Assets have been conveyed, in
the case of any Originator, to the Transferor in accordance with the Receivables
Purchase Agreements and, in the case of the Transferor, to the Trust in
accordance with this Agreement for the benefit of the Certificateholders.
(b) The Trustee agrees to use its best efforts, and shall cause its
agents or representatives to use their best efforts, to hold in confidence all
Confidential Information; provided that nothing herein shall prevent the Trustee
from delivering copies of any financial statements and other documents
constituting Confidential Information, or disclosing any other Confidential
Information, (i) to a Successor Servicer or as required by a Requirement of Law
applicable to the Trustee, (ii) as required in the performance of the Trustee's
duties hereunder, (iii) as required in enforcing the rights of the
Certificateholders hereunder, (iv) to each Enhancement Provider, (v) as provided
in any Supplement or (vi) to any affiliate, independent or internal auditor,
agent, employee or attorney of the Trustee having a need to know the same,
provided that the Trustee advises such recipient of the confidential nature of
the information being disclosed and each such recipient agrees to be bound by
the terms of this
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Section. The Trustee will allow the Transferor to inspect the Trustee's security
and confidentiality arrangements upon prior written notice from time to time
during normal business hours and agrees to provide reasonable advance notice to
the Transferor of any permitted disclosure. The Trustee shall provide reasonable
prior written notice to the Transferor whenever any disclosure not otherwise
permitted by this Section 2.01(b) is to be made.
SECTION 2.02. Acceptance by Trustee. (a) There is hereby created the
Muehlstein Trade Receivables Master Trust. The Trustee hereby acknowledges its
acceptance on behalf of the Trust of all right, title and interest in and to the
Trust Assets now existing and hereafter created and transferred to the Trust
pursuant to Section 2.01 and the Trustee declares that it shall maintain such
right, title and interest upon the trust herein set forth for the benefit of all
Certificateholders.
(b) The Trustee shall have no power to create, assume or incur
indebtedness or other liabilities in the name of the Trust or to transfer or
place Liens on Trust Assets other than as contemplated in this Agreement.
(c) The Trustee is hereby authorized and directed to execute and
deliver to the other parties thereto each Transaction Document to which the
Trustee is a party.
SECTION 2.03. Representations and Warranties of the Transferor
Relating to the Transferor. The Transferor hereby represents and warrants to the
Trustee for the benefit of the Trust as of the date hereof and, by accepting on
the Transfer Date the proceeds of such Transfer, as of the Transfer Date and,
with respect to any Series, as of the date of the related Supplement and the
related Initial Issuance Date, unless otherwise stated in such Supplement, that:
(a) Organization and Good Standing. The Transferor is a corporation
duly organized and validly existing under the laws of the State of
Delaware and has full power, authority and legal right to own and convey
its properties and conduct its business as presently owned or conducted,
to execute, deliver and perform its obligations under this Agreement and
the Receivables Purchase Agreements, and to execute and deliver the
Certificates to the Trustee pursuant hereto.
(b) Due Qualification. The Transferor is duly qualified to do
business and has obtained all necessary licenses or approvals in each
jurisdiction in which failure to so qualify or to obtain such licenses or
approvals could have a material adverse effect on the Transferor's ability
to perform its obligations hereunder, under the applicable Supplement or
under the Receivables Purchase Agreements.
(c) Due Authorization. The execution, delivery and performance of
this
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Agreement, the applicable Supplement and the Receivables Purchase
Agreements by the Transferor, the execution and delivery by the Transferor
to the Trustee of the Certificates, and the consummation by the Transferor
of the transactions contemplated by this Agreement, the applicable
Supplement and the Receivables Purchase Agreements, have been duly and
validly authorized by all necessary action on the part of the Transferor,
and this Agreement and the other agreements and instruments executed or to
be executed in connection herewith have been duly executed and delivered
on behalf of the Transferor.
(d) Enforceability. Each of this Agreement, the applicable
Supplement and the Receivables Purchase Agreements constitutes a legal,
valid and binding obligation of the Transferor enforceable against the
Transferor in accordance with its terms, except as such enforceability may
be limited by applicable bankruptcy, reorganization, insolvency,
moratorium or other similar laws affecting creditors' rights generally,
now or hereafter in effect, and except as such enforceability may be
limited by general principles of equity (whether considered in a suit at
law or in equity). Each of the Receivables Purchase Agreements is in full
force and effect, and is not subject, as to any party thereto, to any
specific dispute, offset, counterclaim or defense of such party.
(e) No Conflict. The Transferor's execution and delivery of this
Agreement, any Supplement, the Receivables Purchase Agreements and the
Certificates, performance of the transactions contemplated by this
Agreement, any Supplement and the Receivables Purchase Agreements, and
fulfillment of the terms hereof applicable to the Transferor, do not
contravene (1) the Transferor's articles of incorporation, (2) conflict
with or violate any Requirement of Law applicable to the Transferor,
violate any provision of, or require any filing (except for the filings
under the UCC required hereof, each of which has been or is being duly
made and will be in full force and effect on the applicable Initial
Issuance Date), registration, consent or approval under, any Requirement
of Law presently in effect having applicability to the Transferor, except
for such filings, registrations, consents or approvals as have already
been obtained and are in full force and effect, (3) conflict with, result
in any breach of any of the terms and provisions of, or constitute (with
or without notice or lapse of time or both) a default under, any
indenture, contract, agreement, mortgage, deed of trust or other
instrument to which the Transferor is a party or by which it or its
properties or assets are bound, or (4) result in, or require, the creation
or imposition of any Lien upon or with respect to any of the properties
now owned or hereafter acquired by the Transferor other than as
specifically contemplated by this Agreement.
(f) No Proceedings. There are no proceedings, injunctions, writs,
restraining orders or other orders or investigations pending or, to the
best knowledge of the Transferor, threatened against the Transferor before
any Governmental Authority.
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(g) Consents. No authorization, consent, license, order or approval
of, registration or declaration with, any Person or Governmental Authority
is required to be obtained, effected or given by the Transferor in
connection with the execution and delivery of this Agreement, the
applicable Supplement, the Receivables Purchase Agreements, the transfer
of the Trust Assets and the Certificates to the Trust by the Transferor or
the performance of its obligations under this Agreement, the applicable
Supplement and the Receivables Purchase Agreements or the transactions
contemplated hereby and thereby and the fulfillment by the Transferor of
the terms hereof, except for (i) authorizations, consents, licenses,
orders, approvals and the filing of the financing statements or other
documents required to have been filed on or prior to the Transfer Date
pursuant to Section 2.01, all of which were so obtained or filed and are
in full force and effect, and (ii) the filing from time to time of any
amendments, assignments or continuation statements which may become
applicable pursuant to Section 2.01.
(h) Liens on Properties. Except as created hereby, and except for
Liens that will be terminated prior to the Transfer Date, there are no
Liens of any nature whatsoever on any Receivable. The Transferor is not a
party to any contract, agreement, lease or instrument (other than this
Agreement or as contemplated by this Agreement) the performance of which,
either unconditionally or upon the happening of an event, will result in
or require the creation of any Lien on any Receivable, or otherwise result
in a violation of this Agreement.
(i) Contractual Obligations. (i) The Transferor is not a party to
any indenture, loan or credit agreement or any lease or other agreement or
instrument, or subject to any Requirement of Law, that would have an
adverse effect on the ability of the Transferor to carry out its
obligations under this Agreement or any Transaction Documents to which it
is a party, and (ii) neither the Transferor nor, to the best knowledge of
the Transferor, any other party is in default in any respect under or with
respect to the Receivables Purchase Agreements or any other contract,
agreement, lease or instrument to which the Transferor is a party.
(j) Investment Company Act. The Transferor is not an "investment
company", or an "affiliated person" of, or "promoter" or "principal
underwriter" for, or a company controlled by, an "investment company",
within the meaning of and as such terms are defined in the Investment
Company Act.
(k) Locations. The chief place of business and chief executive
office of the Transferor, and the office where the Transferor keeps the
originals of its books, records and documents regarding the Receivables
and the other Trust Assets of the Transferor are located at the address of
the Transferor specified in Section 13.04. The Transferor maintains no
other business locations.
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(l) Tradenames. The legal name of the Transferor is as set forth on
the signature page of this Agreement and the Transferor has no tradenames,
fictitious names, assumed names or "doing business as" names.
(m) Subsidiaries. The Transferor has no subsidiaries.
(n) Accuracy of Information. Each certificate, information, exhibit,
financial statement, document, book, record or report furnished by the
Transferor to the Trustee, any Enhancement Provider or the Servicer in
connection with this Agreement is accurate in all material respects as of
its date.
(o) Solvency. The Transferor is solvent and will not become
insolvent after giving effect to the transactions contemplated by this
Agreement; the Transferor is currently repaying all of its indebtedness as
such indebtedness becomes due; and, after giving effect to the
transactions contemplated by this Agreement, the Transferor will have
adequate capital to conduct its business as presently conducted and as
contemplated by this Agreement.
(p) Compliance. The Transferor has complied, and will comply on each
Initial Issuance Date, (i) with each Requirement of Law with respect to
all Receivables transferred to the Trust hereunder and the Contracts
related thereto and (ii) in all material respects, with each Requirement
of Law with respect to its business or properties.
(q) Taxes. The Transferor has filed all tax returns (federal, state
and local) which it reasonably believes are required to be filed and has
paid or made adequate provision for the payment of all taxes, assessments
and other governmental charges due from the Transferor or is contesting
any such tax, assessment or other governmental charge in good faith
through appropriate proceedings as to which adequate reserves are being
maintained and no lien with respect thereto has attached to its property
and become enforceable against its other creditors. The Transferor knows
of no reasonable basis for any additional tax assessment for any fiscal
year for which adequate reserves have not been established.
(r) Use of Proceeds. No proceeds of the issuance of any Certificate
will be used by the Transferor to acquire any security in a transaction
that is subject to Sections 13 and 14 of the Securities Exchange Act of
1934, as amended, or to purchase or carry any margin security in violation
of any applicable law or regulation.
(s) Muehlstein Collection Accounts. The Muehlstein Collection
Account Banks are the only institutions holding Muehlstein Collection
Accounts for the receipt of payments from Muehlstein Post-Office Boxes in
respect of Receivables (subject to
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such changes as may be made from time to time in accordance with Section
4.02(b)), and all Obligors, and only such Obligors, have been instructed
or, upon the creation of Receivables, will be instructed to make payments
only to Muehlstein Collection Accounts and such instructions have not been
modified or revoked by the Transferor and such instructions that have been
given are in full force and effect.
(t) Trust Early Amortization Event. As of the Initial Issuance Date
for any Series, no Trust Early Amortization Event and no condition that
with the giving of notice and/or the passage of time would constitute a
Trust Early Amortization Event, has occurred and is continuing.
(u) ERISA. No Plan has any accumulated funding deficiency, as
defined in Section 3.02(q) of ERISA, whether or not waived. The Transferor
and each ERISA Affiliate has timely made all contributions required to be
made by it to any Plan. No Plan Event with respect to any Plan has
occurred or could reasonably be expected to occur that could result,
directly or indirectly, in any Lien being imposed on the property of the
Transferor. Neither the Transferor nor any ERISA Affiliate has incurred,
or could reasonably be expected to incur, withdrawal liability to, or
liability in connection with, the reorganization, termination or
insolvency of any Multiemployer Plan.
(v) Fraudulent Conveyance. The Transferor is not entering into the
transactions contemplated hereby with the intent of hindering, delaying or
defrauding creditors.
(x) Limited Purpose. The Transferor engages in no activities other
than those contemplated by the Transaction Documents.
(x) Certificates. Each Certificate, when executed and authenticated
by the Trustee in accordance with the terms of Section 6.01 and delivered
to and paid for by the Investor Certificateholder pursuant to the related
Supplement, will be validly issued and outstanding and entitled to the
benefits of this Agreement and the related Supplement.
The representations and warranties set forth in this Section 2.03
shall survive the Transfer of the Receivables to the Trust and the issuance of
the Certificates, and shall cease and be of no effect upon the indefeasible
repayment in full of the Invested Amount of the last outstanding Series and all
other obligations of the Transferor hereunder. Upon discovery by the Transferor,
the Servicer or a Responsible Officer of the Trustee of a breach of any of the
foregoing representations and warranties, the party discovering such breach
shall give prompt written notice to the other parties and to any Enhancement
Provider. The Trustee's obligations in respect of any such breach are limited as
provided in Section 11.02(g).
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SECTION 2.04. Representations and Warranties of the Transferor
Relating to the Trust Assets. The Transferor hereby represents and warrants to
the Trustee, for the benefit of the Trust, as of the date hereof and, by
accepting on the Transfer Date the proceeds of such Transfer, as of the Transfer
Date and, except for the representation and warranty contained in subparagraph
(j), by accepting on each date during the Revolving Period for any Series the
proceeds of each Transfer of Receivables, as of such date, that:
(a) Valid Transfer. Each of the Receivables Purchase Agreements
creates a valid sale, transfer and assignment to the Transferor of, and
the Transferor is the legal and beneficial owner of, all right, title and
interest of the Originators in and to the Receivables and Related Security
now existing and hereafter created during the Revolving Period and the
proceeds thereof. This Agreement constitutes a valid transfer and
assignment to the Trust of all right, title and interest of the Transferor
in and to the Receivables now existing and hereafter created and purchased
by the Transferor pursuant to the Receivables Purchase Agreements, and in
and to all other Trust Assets and the proceeds thereof and such funds as
are required to be deposited pursuant to this Agreement from time to time
in the Concentration Account, the Muehlstein Collection Accounts and any
Series Account, or, if this Agreement does not constitute such a transfer
and assignment, constitutes a valid grant to the Trust of a first priority
perfected "security interest" (as defined in the UCC of the State of New
York and of the jurisdiction the law of which governs the perfection of
the interest in the Receivables and other Trust Assets created hereunder)
in all right, title and interest of the Transferor in and to the
Receivables now existing and hereafter created and purchased by the
Transferor pursuant to the Receivables Purchase Agreements, and in and to
all other Trust Assets and the proceeds thereof which, in the case of
existing Receivables and the other existing Trust Assets and the proceeds
thereof, is enforceable (except as such enforceability may be limited by
applicable bankruptcy, reorganization, insolvency, moratorium or other
similar laws affecting creditors' rights generally, now or hereafter in
effect, and except as such enforceability may be limited by general
principles of equity, whether considered in a suit at law or in equity) by
the Trustee upon execution and delivery of this Agreement, and which, in
the case of the Receivables and all other Trust Assets hereafter created
and the proceeds thereof, will be enforceable (except as such
enforceability may be limited by applicable bankruptcy, reorganization,
insolvency, moratorium or other similar laws affecting creditors' rights
generally, now or hereafter in effect, and except as such enforceability
may be limited by general principles of equity, whether considered in a
suit at law or in equity) by the Trustee upon such creation. Upon the
filing of the appropriate financing statements and, in the case of
Receivables hereafter created and the proceeds thereof, upon the creation
thereof and payment therefor, the Trust shall have an ownership or first
priority perfected security interest in those Trust Assets (except for
perfection outside of Connecticut in respect of returned merchandise) and
the proceeds thereof in which a
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security interest may be perfected by filing appropriate financing
statements. The Transferor has caused the Servicer to clearly and
unambiguously mark all its computer records and all its microfiche storage
files, if any, in a manner reasonably calculated to indicate that the
Trust Assets are the property of the Trust and shall cause the Servicer to
maintain such records in a manner such that the Trust's perfected first
priority interest in the Receivables shall not be adversely affected.
(b) No Claim or Interest. Except as otherwise provided in this
Agreement or any applicable Supplement, neither the Transferor nor any
Person claiming through or under the Transferor has any claim to or
interest in the Concentration Account, the Muehlstein Collection Accounts
or any Series Account. Each Receivable and the Collections with respect
thereto has been or will be transferred to the Trust free and clear of any
adverse claim or interest of any other Person (other than disputes with
Obligors in the ordinary course of business or in connection with an
Insolvency Event of the related Obligor) not holding through the Trust.
(c) Outstanding Balance; Net Receivables Balance. As of the Initial
Issuance Date for any Series, the Net Receivables Balance is at least
equal to the Required Net Receivables Balance.
(d) Liens. Each Receivable and all other Trust Assets have been
Transferred to the Trust free and clear of any Lien except as created
hereby or by the Receivables Purchase Agreements.
(e) Eligibility. Each Receivable was purchased in accordance with
the terms of the Receivables Purchase Agreements and each Receivable that
was classified as an "Eligible Receivable" by the Transferor in any
document or report delivered hereunder satisfied, at the time of such
classification, the requirements of eligibility contained in the
definition of Eligible Receivable.
(f) Investment Company Act. Each Transfer of Receivables to the
Trust hereunder constitutes a purchase or other acquisition of notes,
drafts, acceptances, open accounts receivable or other obligations
representing part or all of the sales price of merchandise or services
within the meaning of Section 3(c)(5) of the Investment Company Act.
(g) Collection Accounts and Post Office Boxes. The Muehlstein
Collection Account Banks are the only institutions holding Muehlstein
Collection Accounts for the receipt of payments from Muehlstein Post
Office Boxes in respect of Receivables (subject to such changes as may be
made from time to time in accordance herewith) and all Obligors, and only
such Obligors, have been instructed or, upon the creation of Receivables,
will be instructed to make payments only to Muehlstein Collection
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Accounts and such instructions have not been modified or revoked by the
Transferor and such instructions that have been given are in full force
and effect.
(h) No Rescission. Neither any Receivable transferred hereunder nor
any Contract giving rise to any such Receivable has been satisfied,
subordinated or rescinded or, except as disclosed in writing to the
Trustee or otherwise permitted hereunder, amended in any manner and such
Receivables have not, except as permitted hereunder, been compromised,
adjusted, extended, satisfied, subordinated, rescinded or modified.
(i) No Payment. The Transferor has no knowledge of any fact which
would lead it to reasonably expect that, when billed, any Receivable
transferred hereunder would not be paid in accordance with its terms when
due.
(j) Offering of Certificates. Neither the Transferor nor any agent
acting on its behalf has, directly or indirectly, offered any Certificate
or any similar security of the Transferor for sale to, or solicited any
offer to buy any Certificate or any similar security of the Transferor
from, or otherwise approached or negotiated with respect thereto, with any
Person which, and neither the Transferor nor any agent acting on its
behalf has taken or will take any action which, would subject the issuance
or sale of any Certificate to the provisions of Section 5 of the Act or to
the qualification provisions of any securities or blue sky law of any
applicable jurisdiction.
In the event of a breach with respect to any Receivable of the
representation and warranty set forth in Section 2.04(e) on the date of Transfer
for such Receivable (a) which cannot be cured by the Business Day following the
first day on which a Responsible Officer of the Transferor has knowledge thereof
and (b) which causes the Net Receivables Balance to be less than the Required
Net Receivables Balance, the Transferor shall repurchase such Receivable (a
"Reconveyed Receivable") from the Trust such that the payment for such
Reconveyed Receivable is sufficient to cause the Net Receivables Balance to be
equal to or greater than the Required Net Receivables Balance. The Servicer
shall deduct the unpaid balance of such Reconveyed Receivable from the balance
of Eligible Receivables in the Trust and on and after the date of such removal,
such Reconveyed Receivable shall not be included in the calculation of the Net
Receivables Balance. As payment for such Reconveyed Receivable, the Transferor
shall make or cause to be made a deposit in the Cure Account of each outstanding
Series in immediately available funds in an amount equal to the ratable share
for such Series (determined pursuant to Section 4.03) of the aggregate of the
unpaid principal balance of such Reconveyed Receivable. The Transferor shall
make such deposits, or cause such deposits to be made, by the close of business
on the Business Day following the day a Responsible Officer of the Transferor
obtains knowledge of the existence of such Reconveyed Receivable. Such deposits
shall be considered payment in full for such Reconveyed Receivable during the
Collection Period in which such payment occurs. Upon the written
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instruction of the Servicer, Collections related to Reconveyed Receivables shall
be withdrawn from the Cure Account and deposited by the Trustee to the
Transferor Account. At the option and expense of the Servicer or the Transferor,
the Trustee shall execute such documents and instruments of transfer or
assignment as shall be prepared by the Transferor or the Servicer, and shall
take such other actions as shall reasonably be requested by the Transferor, to
effect the removal of such Reconveyed Receivable from the Trust pursuant to this
paragraph. Upon removal of a Reconveyed Receivable from the Trust, the Trustee
shall automatically and without further action be deemed to transfer, assign,
set-over and otherwise convey to or upon the order of the Transferor, without
recourse, representation or warranty, all the right, title and interest of the
Trust in and to such Reconveyed Receivable and Collections with respect thereto
and all proceeds thereof. The obligation of the Transferor set forth in this
paragraph shall constitute the sole remedy respecting any breach of the
representations and warranties set forth in this Section 2.04(e) made on the
date of Transfer of and with respect to such Receivable available to the
Investor Certificateholders (or the Trustee on behalf of the Investor
Certificateholders) or any other Indemnified Party.
The representations and warranties set forth in this Section 2.04
shall survive the Transfer of the Receivables to the Trust and the issuance of
the Certificates, and shall cease and be of no effect upon the indefeasible
repayment in full of the Invested Amount of the last outstanding Series and all
other obligations of the Transferor hereunder. Upon discovery by the Transferor,
the Servicer or the Trustee of a breach of any of the foregoing representations
and warranties, the party discovering such breach shall give prompt written
notice to the other parties and to any Enhancement Provider. The Trustee's
obligations in respect of any such breach are limited as provided in Section
11.02(g).
SECTION 2.05. Affirmative Covenants of the Transferor. The
Transferor hereby covenants and agrees that, until termination of the Trust:
(a) Compliance with Law. The Transferor shall duly satisfy all
obligations on its part to be fulfilled under or in connection with the
Receivables, will maintain in effect all qualifications required under
Requirement of Law in order to properly purchase and convey the
Receivables and other Trust Assets to the Trust and will comply in all
respects with all Requirements of Law applicable to the Transferor, its
business and properties and the Trust Assets, where failure to so comply
would have an adverse effect on the Trust Assets or the ability of the
Transferor to perform its obligations hereunder or under the Receivables
Purchase Agreements.
(b) Preservation of Legal Existence. The Transferor will preserve
and maintain its legal existence, rights, franchises and privileges in the
jurisdiction of its formation, and qualify and remain qualified in each
jurisdiction where the failure to maintain such qualification could
materially adversely affect (i) the interests of the Trustee or of the
Investor Certificateholders hereunder or in the Trust Assets, (ii) the
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collectibility of any Receivable or (iii) the ability of the Transferor or
the Servicer to perform its obligations hereunder or under the Receivables
Purchase Agreements.
The Transferor shall provide to the Trustee access to the
documentation regarding the Receivables in such cases where the Trustee is
required in connection with the enforcement of the rights of
Certificateholders or by applicable statutes or regulations to review such
documentation, such access being afforded without charge and at the sole
cost of the Transferor but only (i) upon reasonable written request, (ii)
during normal business hours, (iii) subject to the Transferor's normal
security and confidentiality procedures and (iv) at reasonably accessible
offices in the continental United States designated by the Transferor.
(c) Keeping of Records and Books of Account. The Transferor will (i)
keep proper books of record and account, which shall be maintained or
caused to be maintained by the Transferor and shall be separate and apart
from those of any Affiliate of the Transferor, in which full and correct
entries shall be made of all financial transactions and the assets and
business of the Transferor in accordance with generally accepted
accounting principles consistently applied, (ii) maintain and implement
administrative and operating procedures (including, without limitation,
the ability to recreate records evidencing the Receivables in the event of
the destruction of the originals thereof) and (iii) keep and maintain all
documents, books, records and other information necessary or reasonably
advisable for the collection of all Receivables (including, without
limitation, records adequate to permit the daily identification of each
new Receivable and all Collections of and adjustments to each existing
Receivable).
(d) Location of Records. The Transferor will keep its chief place of
business, chief executive office and the office where it keeps the books,
records and documents regarding the Receivables and the other Trust Assets
at the address of the Transferor referred to in Section 13.04; provided,
however, that the Transferor may change any such address if the Transferor
delivers to the Trustee (i) written notice of such change at least 30 days
prior to the effective date thereof, and (ii) prior to the effective date
thereof, an Opinion of Counsel, in form and substance satisfactory to the
Trustee, as to such organization and the Transferor's valid existence and
good standing and the continued perfection of the interests of the Trustee
in and to the Receivables and other Trust Assets conveyed hereby (to the
same extent as such interest was perfected or required hereby to be
perfected on the Transfer Date with respect to the Receivables then owned
by the Transferor) and (ii) such financing statements (Forms UCC-1 and
UCC-3) executed by the Transferor required to reflect such change,
together with such documents and instruments required in connection
therewith to monitor the continued perfection of the interests of the
Trustee.
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(e) Maintenance of Separate Directors. The Transferor will maintain
at least two independent directors who are not officers, directors,
shareholders (holding, with respect to Mobil Corporation only, more than a
1% interest in) or employees of (i) Muehlstein, the Transferor or Mobil
Corporation or (ii) any Affiliate of Muehlstein, the Transferor or Mobil
Corporation, or a parent, child, spouse or sibling of any such Person;
provided, however, that if either such independent director dies or
resigns, the Transferor shall have 30 Business Days to replace that Person
with another independent director. The Transferor will not, without the
consent of the two independent directors, acquiesce, petition or otherwise
invoke the process of any Governmental Authority for the purpose of
commencing or sustaining a case against the Transferor under any federal
or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar
official of the Transferor or any substantial part of its property or
ordering the winding-up or liquidation of the affairs of the Transferor.
(f) Payment of Taxes, Etc. The Transferor will pay promptly when due
all taxes, assessments and governmental charges or levies imposed upon it
or any Trust Asset, or in respect of its income or profits therefrom, and
any and all claims of any kind, except that no such amount need be paid if
(i) such nonpayment could not reasonably be expected to subject any
Indemnified Party to civil or criminal penalty or liability or involve any
risk of the sale, forfeiture or loss of any of the property, rights or
interests covered hereunder or under any Supplement or under any
Receivables Purchase Agreement and (ii) the charge or levy is being
contested in good faith through appropriate proceedings as to which
adequate reserves are being maintained and no Lien with respect thereto
has attached to its property and become enforceable against its creditors.
(g) Reporting Requirements. The Transferor will:
(i) within one Business Day after a Responsible Officer of the
Transferor obtains knowledge of the occurrence of any Trust Early
Amortization Event, the commencement of a Partial Amortization
Period or Cure Period or any event which, with the giving of notice
or lapse of time or both, would constitute a Trust Early
Amortization Event, notify (either orally or in writing) the Trustee
of such occurrence;
(ii) as soon as possible and in any event (A) within three
Business Days after a Responsible Officer of the Transferor obtains
knowledge of the occurrence of any Trust Early Amortization Event,
the commencement of a Partial Amortization Period or Cure Period, or
any event which, with the giving of notice or lapse of time or both,
would constitute a Trust Early Amortization Event, furnish to the
Trustee, each Rating Agency and each Enhancement
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Provider the written statement of a Responsible Officer setting
forth details of such Trust Early Amortization Event, the
commencement of such Partial Amortization Period or Cure Period or
such event and the action which the Transferor has taken and
proposes to take with respect thereto, and (B) within three Business
Days after a Responsible Officer obtains knowledge thereof, give
written notice to the Trustee, each Rating Agency and each
Enhancement Provider of any other event, development or information
which is reasonably likely to materially and adversely affect the
ability of the Transferor to perform its obligations under this
Agreement or the Receivables Purchase Agreements;
(iii) promptly, from time to time, furnish to the Trustee such
other information, documents, records or reports regarding the
Receivables, the other Trust Assets or the condition or operations,
financial or otherwise, of the Transferor as the Trustee may from
time to time reasonably request;
(iv) within thirty (30) days after the end of each fiscal
month in each Fiscal Year, deliver to the Trustee, each Rating
Agency and each Enhancement Provider the consolidated balance sheets
of the Transferor and its Subsidiaries as at the end of such period
and the related consolidated statements of income and cash flow of
the Transferor and its Subsidiaries for such fiscal month and for
the period from the beginning of the then current Fiscal Year to the
end of such fiscal month, and for the corresponding period during
the previous Fiscal Year, and a comparison of the statement of the
year to date earnings and cash flow to the corresponding statement
for the corresponding period from the previous Fiscal Year certified
by a Financial Officer of the Transferor as fairly presenting the
consolidated financial position of the Transferor and its
Subsidiaries as at the dates indicated and the results of their
operations and cash flow for the periods indicated in accordance
with GAAP, subject to normal year end adjustments;
(v) within ninety (90) days after the end of each Fiscal Year
deliver to the Trustee and each Rating Agency audited consolidated
financial statements of the Transferor and its Subsidiaries reported
on by independent certified public accountants of recognized
national standing acceptable to the Majority in Interest, which
report shall be unqualified (or, if qualified, only as to
non-material matters) and shall state that such financial statements
fairly present the consolidated financial position of the Transferor
and its Subsidiaries as at the dates indicated in conformity with
GAAP applied on a basis consistent with prior years (except for
changes with which such independent certified public accountants
shall concur and which shall have been disclosed in the notes to the
financial statements) and that the examination by such accountants
in connection with such consolidated financial statements has been
made in accordance with generally accepted auditing standards; and
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(vi) as soon as possible and in any event within 30 days after
a Responsible Officer of the Transferor obtains knowledge that one
of the following events has occurred or is reasonably expected to
occur: (i) the occurrence of any Plan Event with respect to any Plan
or (ii) the withdrawal by the Transferor or any of its ERISA
Affiliates from, or the termination, reorganization or insolvency
of, any Multiemployer Plan.
(h) Receivables Purchase Agreements. The Transferor will at its
expense timely perform and comply with all provisions, covenants and other
promises required to be observed by it under the Receivables Purchase
Agreements, maintain the Receivables Purchase Agreements in full force and
effect, enforce its rights under the Receivables Purchase Agreements
substantially in accordance with the terms thereof and comply with its
obligations under all contracts and invoices giving rise to Receivables.
The Transferor shall, within one Business Day after a Responsible Officer
obtains knowledge of the occurrence of any Termination Event or any event
which, with the giving of notice or lapse of time or both, would
constitute a Termination Event, notify the Trustee in writing of such
occurrence. The Transferor shall promptly furnish to the Trustee copies of
any notices, reports or certificates given or delivered to the Transferor
under the Receivables Purchase Agreements.
(i) UCC Opinion. The Transferor shall deliver to the Trustee within
90 days after the end of each fiscal year, beginning with December 31,
1997, an Opinion of Counsel to the Transferor (who may be counsel employed
by the Transferor or an Affiliate of the Transferor), dated as of a date
during such 90-day period, substantially to the effect that, in the
opinion of such counsel, either (A) such action has been taken with
respect to the recording, registering, filing, re-recording,
re-registering and re-filing of financing statements, continuation
statements or other instructions or documents as is necessary to continue
the perfection of the interests of the Trustee in and to the Receivables
conveyed hereby and the other Trust Assets conveyed hereunder (to the same
extent as such interest was perfected on the Transfer Date with respect to
the Receivables and other Trust Assets then owned by the Transferor) and
reciting the details of such action or referring to prior Opinions of
Counsel in which such details are given or (B) no such action is necessary
to continue the perfection of such interests.
(j) Further Action. The Transferor shall, from time to time, execute
and deliver to the Trustee any instruments, financing or continuation
statements or other writings necessary to maintain the perfection or
priority of the Trustee's ownership or security interest in the
Receivables and the Collections under the UCC or other applicable law. The
Transferor shall, from time to time, execute and deliver to the Obligors
on the Receivables any bills, statements and letters or other writings
necessary to carry out the terms and provisions of this Agreement and to
facilitate the collection
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of the Receivables in a manner consistent with the Muehlstein Credit
Policy Manual.
(k) Special Purpose Covenants. The Transferor shall conduct its
affairs in a manner at all times consistent with the assumptions set forth
in Parts III through VI, inclusive, of the opinion of Messrs. McDermott,
Will & Emery delivered pursuant to Section 3.01(a)(vii) of each of the
Receivables Purchase Agreements; provided that any references therein to
any agreements shall refer to such agreements as amended, restated,
refinanced, supplemented or otherwise modified from time to time.
SECTION 2.06. Negative Covenants of the Transferor. The Transferor
hereby further covenants that, unless it shall have received the written consent
of a Majority in Interest of each outstanding Series and the Rating Agency
Condition (for which the applicable Enhancement Provider shall not have
unreasonably withheld its consent) shall have been satisfied, until termination
of the Trust:
(a) No Liens. Except for the Transfer hereunder the Transferor will
not sell, pledge, assign or transfer any Receivable or any interest
therein or any other Trust Asset to any other Person, or grant, create,
incur, assume or suffer to exist any Lien on, any Trust Asset or any other
property or asset of the Transferor (other than the Transferor
Certificate, any Supplemental Certificate and funds deposited to the
Transferor's Account pursuant to the applicable Supplement or the
Transferor Certificate), whether now existing or hereafter created, or any
interest therein, and the Transferor shall defend the right, title and
interest of the Trust in and to the Trust Assets, whether now existing or
hereafter created, against all claims of third parties claiming through or
under the Transferor.
(b) Activities of the Transferor. The Transferor will not engage in,
enter into or be a party to any business, activity or transaction of any
kind other than the businesses, activities and transactions contemplated
and authorized by this Agreement or the Receivables Purchase Agreements or
any document related hereto or thereto or incidental to its ability to
carry out its obligations under such agreements.
(c) Indebtedness. Except for the Subordinated Notes, the Transferor
will not create, incur or assume any Indebtedness (other than Indebtedness
related to operating expenses incurred in the performance of or incidental
to its obligations under this Agreement which shall not exceed $100,000
per annum) or sell or transfer any Receivable to a trust or other Person
which issues securities in respect of any such Receivables, other than as
contemplated by the Transaction Documents.
(d) Guarantees. Except as provided herein, the Transferor will not
become or remain liable, directly or indirectly, in connection with any
Indebtedness or other liability of any other Person, whether by guarantee,
endorsement (other than
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41
endorsements of negotiable instruments for deposit or collection in the
ordinary course of business), agreement to purchase or repurchase,
agreement to supply or advance funds, or otherwise.
(e) Investments. The Transferor will not make or suffer to exist any
loans or advances to, or extend any credit to, or make any investments (by
way of transfer of property, contributions to capital, purchase of stock
or securities or evidences of indebtedness, acquisition of the business or
assets, or otherwise) in, any of its Affiliates or any other Person except
for purchases of Receivables pursuant to the terms of the Receivables
Purchase Agreements, investments in Eligible Investments in accordance
with the terms of this Agreement and holding the Transferor Certificate.
(f) Extension or Amendment of Receivables. The Transferor will not
extend, amend or otherwise modify (or consent or fail to object to any
such extension, amendment or modification by the Servicer), except as
permitted in Section 3.01(c), the terms of any Receivable, or amend,
modify or waive (or consent or fail to object to any such amendment,
modification or waiver by the Servicer) any payment term or condition of
any invoice related thereto (other than as provided in the Muehlstein
Credit Policy Manual) if the effect of such amendment, modification or
waiver would impair the collectibility or delay the payment of any then
existing Receivable beyond 120 days from the date of the invoice. The
Transferor will not rescind or cancel, or permit the rescission or
cancellation of, any Receivable except as ordered by a court of competent
jurisdiction or other Governmental Authority. Notwithstanding the
foregoing provisions of this Section 2.06(f), each of the Transferor and
the Servicer may extend, amend, modify, cancel or rescind (and the
Transferor need not object to any such action by the Servicer) any Diluted
Receivable in connection with a valid dispute; provided, however, that
such amendment, modification, cancellation or rescission shall not have a
material adverse effect on the interests of any Beneficiary.
(g) Change in Legal Name. The Transferor will not (i) make any
change to its legal name, identity or business structure in any manner or
chief executive office or use any trade names, fictitious names, assumed
names or "doing business as" names unless, prior to the effective date of
any such name change, change in chief executive office, or use, the
Transferor delivers to the Trustee such financing statements (Forms UCC-1
and UCC-3) executed by the Transferor required to reflect such name
change, change in chief executive office, or use, together with such other
documents and instruments required in connection therewith to maintain the
continued perfection of the interests of the Trustee, or (ii) change its
jurisdiction of organization unless the Trustee shall have received from
the Transferor (A) written notice of such change at least 30 days prior to
the effective date thereof, and (B) prior to the effective date thereof,
an Opinion of Counsel, in form and substance satisfactory to the Trustee,
as to such organization and the Transferor's valid existence and good
standing and the continued
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perfection of the interests of the Trustee in and to the Receivables and
other Trust Assets conveyed hereby (to the same extent as such interest
was perfected on the Transfer Date with respect to the Receivables then
owned by the Transferor).
(h) Receivables Purchase Agreements. The Transferor will not (i)
cancel or terminate the Receivables Purchase Agreements or consent to or
accept any cancellation or termination thereof, (ii) amend or otherwise
modify any term or condition of the Receivables Purchase Agreements or
give any consent, waiver or approval thereunder, (iii) waive any default
under or breach of the Receivables Purchase Agreements or (iv) take any
other action under the Receivables Purchase Agreements not contemplated or
required by the terms thereof.
(i) Organization. The Transferor will not amend its certificate of
incorporation or bylaws.
(j) Maintenance of Separate Existence. The Transferor will not (i)
fail to do all things necessary to maintain its existence as a corporation
separate and apart from the Servicer, Muehlstein International,
Muehlstein, any Affiliate of Muehlstein, and any Affiliate of the
Transferor including, without limitation, conducting business
correspondence in its own name and maintaining appropriate and separate
books, records and financial statements; (ii) suffer any limitation on the
authority of its own directors and officers to conduct its business and
affairs in accordance with their independent business judgment, or
authorize or suffer any Person other than its own directors and officers
to act on its behalf with respect to matters (other than matters
customarily delegated to others under powers of attorney) for which a
corporation's own directors and officers would customarily be responsible;
(iii) fail to (A) maintain or cause to be maintained by an agent of the
Transferor under the Transferor's control physical possession of all its
books and records, (B) maintain capitalization adequate for the conduct of
its business, (C) account for and manage its liabilities separately from
those of any other Person, including, without limitation, payment of all
payroll and other administrative expenses and taxes from its own assets,
(D) segregate and identify separately all of its money and assets from
those of any other Person (including, but not limited to, maintaining
separate bank accounts in its own name), and (E) maintain offices through
which its business is conducted separate from those of the Servicer,
Muehlstein International, Muehlstein, any Affiliate of Muehlstein and any
Affiliate of the Transferor (provided that, to the extent that the
Transferor and any of its Affiliates have offices in the same location,
there shall be a fair and appropriate allocation of overhead costs and
expenses among them, and each such entity shall bear its fair share of
such costs and expenses and each such office shall be conspicuously
identified as the office of such entity); (iv) commingle its money or
other assets with those of the Servicer, Muehlstein International,
Muehlstein, any Affiliate of Muehlstein or any Affiliate of the
Transferor, or use its funds for other than the Transferor's uses; (v)
fail
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to (A) maintain its books, financial statements, accounting records and
other business documents and records separate from those of the Servicer,
Muehlstein International, Muehlstein and each other Person, (B) act solely
in its legal name and through its own authorized officers and agents, (C)
make investments directly or by brokers engaged and paid by the Transferor
or its agents (provided that if any such agent is an Affiliate of the
Transferor it shall be compensated at a fair market rate for its
services), (D) separately manage its liabilities from those of the
Servicer, Muehlstein International, Muehlstein or any Affiliate of
Muehlstein and pay its own liabilities, including all administrative
expenses, from its own separate assets (provided that, to the extent the
employees of the Transferor participate in pension, insurance and other
benefit plans of Muehlstein or any Affiliate thereof, the Transferor will
reimburse Muehlstein or such Affiliate, as the case may be, for an
appropriate share of the costs thereof), (E) pay from its assets all
obligations and indebtedness of any kind incurred by it and (F) abide by
all corporate legal formalities, including the maintenance of current
corporate records; (vi) assume the liabilities of the Servicer, Muehlstein
International, Muehlstein or any Affiliate of Muehlstein; (vii) guarantee
the liabilities of the Servicer, Muehlstein International, Muehlstein or
any Affiliate of Muehlstein; (viii) be involved in the day-to-day
management of the Servicer, Muehlstein International, or Muehlstein; (ix)
act as agent of the Servicer, Muehlstein International,
Muehlstein or any Affiliate of Muehlstein or allow the Servicer,
Muehlstein International, Muehlstein or any Affiliate of Muehlstein to act
as its agent (other than as Servicer hereunder or pursuant to a contract
on terms no less favorable to the Transferor than it would have obtained
in a similar contract with a Person not an Affiliate of the Transferor);
(x) make any advances to the Servicer, Muehlstein International,
Muehlstein or any Affiliate of Muehlstein; (xi) have insufficient officers
and personnel to conduct its business and operations; (xii) enter into
business transactions with any of its Affiliates unless the terms are not
more or less favorable to the Transferor than terms and conditions
available at the time to the Transferor for comparable transactions with
unaffiliated persons and a majority of the board of directors of the
Transferor including each director who is an independent director approve
the transaction; (xiii) if the Transferor is included within the
consolidated financial statements of Muehlstein or any Affiliate thereof,
fail to disclose in a note in the financial reports required to be
delivered quarterly and annually the existence of the Transferor as a
separate legal entity and the participation of the Transferor in the
transactions contemplated by the Transaction Documents; or (xiv) fail to
establish investment guidelines and criteria by a majority of the board of
directors including at least two directors who are independent directors.
(k) Ownership; Merger. The Transferor will not (i) sell any shares
of any class of its capital stock to any Person (other than Muehlstein or
any of its Controlled Affiliates), or enter into any transaction of merger
or consolidation, or convey or otherwise dispose of all or substantially
all of its assets (except as contemplated herein),
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or (ii) terminate, liquidate or dissolve itself (or suffer any
termination, liquidation or dissolution), or (iii) acquire or be acquired
by any Person, except indirectly in connection with a consolidation or
merger of Muehlstein with any of its Controlled Affiliates, in connection
with which the Trustee shall have received an Opinion of Counsel, which
counsel shall not be an employee of the Transferor, Muehlstein or any of
their respective Affiliates, that such consolidation or merger does not
affect the separate existence of the Transferor.
SECTION 2.07. Addition and Removal of Originators. (a) At any time
following the Transfer Date, the Transferor may designate any Affiliate of
Muehlstein or any division of (1) Muehlstein International, or (2) any other
Affiliate of Muehlstein as an Originator (an "Additional Originator"); provided
that the following conditions are satisfied: (A) either (i) the average of the
aggregate Outstanding Balance of all Receivables generated by such Additional
Originator as of the last day of each of the immediately preceding twelve months
does not exceed 5% of the average of the aggregate Outstanding Balance of
Eligible Receivables owned by the Trust as of the last day of each of such
twelve months or (ii) the Rating Agency Condition (for which the applicable
Enhancement Provider shall not have unreasonably withheld its consent) shall
have been satisfied, (B) such Additional Originator shall be subject to the
provisions of the Parent Undertaking Agreement and shall become a party to such
Transaction Documents as the Trustee shall reasonably request and (C) Muehlstein
International or Muehlstein, as the case may be, shall guarantee all obligations
of such Additional Originator pursuant to the Transaction Documents.
(b) The Transferor may cause any Originator to no longer be
designated as an Originator (being a "Removed Originator"), and the Transferor
shall cease purchasing Receivables from such Removed Originator, provided that
(i) the average of the aggregate Outstanding Balance of Receivables generated by
such Removed Originator as of the last day of each of the immediately preceding
twelve months does not exceed 5% of the average of the aggregate Outstanding
Balance of Eligible Receivables owned by the Trust as of the last day of each of
such twelve months, (ii) the Transferor provides timely written notice of such
change in designation to each Rating Agency, (iii) the Rating Agency Condition
(for which the applicable Enhancement Provider shall not have unreasonably
withheld its consent) shall have been satisfied and (iv) the Transferor shall
have delivered to the Trustee and any Enhancement Provider an Officer's
Certificate stating that the Transferor reasonably believes that the removal of
such Removed Originator will not result in the occurrence of a Trust Early
Amortization Event.
(c) Notwithstanding anything in this Section 2.07 to the contrary, a
consent by the Majority in Interest of each outstanding Series to changes in the
foregoing subsections (a) and (b) hereof shall be effective only if (i) the
Rating Agency Condition (for which the applicable Enhancement Provider shall not
have unreasonably withheld its consent) shall be satisfied and (ii) written
notice thereof has been given to the Trustee.
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ARTICLE III
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 3.01. Acceptance of Appointment and Other Matters Relating
to the Servicer. (a) Muehlstein agrees to act as the Servicer for the benefit of
the Certificateholders under this Agreement (subject to Article X) and the
Certificateholders by their acceptance of the Certificates consent to Muehlstein
so acting as Servicer.
(b) The Servicer shall (subject to Article X) enforce its respective
rights and interests in, to and under the Receivables and the other Trust Assets
on behalf of the Trust. The Servicer shall service, administer and collect the
Receivables and, in connection therewith, the Servicer shall take or cause to be
taken all such actions as may be necessary or advisable to collect each
Receivable from time to time, all in accordance with applicable laws, rules and
regulations, with reasonable care and diligence, and in accordance with the
Muehlstein Credit Policy Manual; provided, however, that in the event the
Trustee is acting as Servicer hereunder, it shall service the Receivables in
accordance with customary industry standards in effect from time to time.
(c) Provided that no Trust Early Amortization Event or Servicer
Default shall have occurred and be continuing, and no Partial Amortization
Period shall have commenced and be continuing, the Servicer may, in accordance
with the Muehlstein Credit Policy Manual, extend the maturity, adjust the
Outstanding Balance, or otherwise modify the terms of any Defaulted Receivable
or amend, modify or waive any payment term or condition of any invoice related
thereto, all as it may determine to be appropriate to maximize Collections
thereof; provided that, for all purposes hereunder, any such Receivable shall
remain a "Defaulted Receivable" in the amount of its Outstanding Balance
(without giving effect to any such extension, adjustment, amendment,
modification or waiver) until paid in full or charged off as uncollectible.
(d) The Servicer shall have full power and authority, acting alone
or through any party properly designated by it hereunder, to do any and all
things in connection with such servicing and administration which it may deem
necessary or desirable, subject to the terms and conditions of this Agreement
and the applicable Supplement. Without limiting the generality of the foregoing
and subject to Section 10.01 and any limitations provided in any Supplement, the
Servicer or its designee is hereby authorized and empowered (i) to instruct the
Trustee to make withdrawals and payments from the Concentration Account, subject
to the limitations set forth in Section 4.02(a) and as otherwise set forth in
this Agreement, (ii) to instruct the Trustee to make withdrawals and payments
from the Series Accounts, subject to the limitations set forth in the related
Supplement and as otherwise set forth in this Agreement,
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(iii) to instruct the Trustee to take any action required or permitted under any
Enhancement, (iv) to make any filings, reports, notices, applications and
registrations with, and to seek any consents or authorizations from, the
Securities and Exchange Commission and any state securities authority on behalf
of the Trust as may be necessary or advisable to comply with any federal or
state securities laws or reporting requirements, and (v) only (A) with the prior
consent of a Majority in Interest of each outstanding Series and (B) upon
satisfaction of the Rating Agency Condition (for which the applicable
Enhancement Provider shall not have unreasonably withheld its consent), to
subcontract with any other Person (excluding the Transferor and, so long as
Muehlstein shall be the Servicer, any wholly-owned Subsidiary of Muehlstein) (at
the Servicer's expense) for servicing, administering or collecting the
Receivables; provided that such Person shall not become Servicer hereunder and
the Servicer shall remain liable for the performance of the duties and
obligations of the Servicer pursuant to the terms hereof. The Trustee shall
execute any documents furnished by the Servicer which are necessary or
appropriate to enable the Servicer to carry out its servicing administrative
duties hereunder and acceptable in form and substance to the Trustee. The
Trustee shall, upon the written request of the Servicer, furnish the Servicer
with any documents then in the Trustee's possession which are necessary or
appropriate to enable the Servicer to carry out its servicing and administrative
duties hereunder.
(e) The Servicer shall not, and no Successor Servicer shall be
obligated to, use servicing procedures, offices, employees or accounts for
servicing the Receivables which differ in any material respect from the
procedures, offices, employees and accounts used by the Servicer or such
Successor Servicer, as the case may be, in connection with servicing other trade
receivables or its business in general.
(f) The relationship of the Servicer (and of any Successor Servicer
under this Agreement) to the Trustee under this Agreement is intended by the
parties to be that of an independent contractor to or with the Trust and shall
not be construed to be that of a joint venturer, partner, or agent, such that
the acts of the Servicer (or any Successor Servicer) are in any way vicariously
attributable to the Trustee in its individual capacity prior to such time as the
Trustee may serve as Servicer pursuant to the provisions of Article X.
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SECTION 3.02. Servicing Compensation; Servicer's Expenses. (a)
Compensation. As full compensation for its servicing activities hereunder, the
Servicer shall be entitled to receive a monthly servicing fee (the "Servicing
Fee") for each Collection Period (or portion thereof) from the Initial Issuance
Date for each Series until the termination of the Amortization Period, payable
in arrears on the Distribution Date with respect to such Collection Period (or
portion), in an amount equal to the aggregate of the Series Servicing Fees
specified in the Supplements. The Servicing Fee shall be payable only from
Investor Collections pursuant to, and subject to the priority of payment set
forth in, the Supplements; provided, however, that if the Trustee is appointed
Successor Servicer, and Investor Collections are insufficient to pay the
Servicing Fee in full, the Trustee may seek payment of the Servicing Fee from
Muehlstein under the Parent Undertaking Agreement.
(b) Expenses. The Servicer's expenses include the Trustee's Fee (to
the extent not paid from Collections) and all documented reasonable expenses and
liabilities (other than any liability of the Trust with respect to any amount
payable solely out of Collections or any personal liability of the Trust to
repay the Certificates) of the Trust not expressly stated herein to be for the
account of the Certificateholders, including, without limitation, reasonable
expenses related to enforcement of the Receivables and the other amounts due to
the Trustee pursuant to Section 11.05, the reasonable fees and disbursements of
the Independent Public Accountants in connection with this Agreement, any
Supplement and the Receivables Purchase Agreements, and other reasonable fees
and documented expenses including but not limited to the costs of filing UCC
continuation statements; provided that in no event shall the Servicer be liable
for any federal, state or local income or franchise tax, or any interest or
penalties with respect thereto, assessed on the Trust, the Trustee or the
Certificateholders except as expressly provided in Section 7.03(d)(ix). Such
expenses shall be payable, first, by the Servicer out of the Servicing Fee,
second, to the extent not paid by the Servicer, by the Transferor for its own
account, and third, to the extent the Transferor shall fail to pay any of such
expenses, by the Servicer for its own account, and the Servicer shall not be
entitled to any payment for any such expenses other than the Servicing Fee and
reimbursement from the Transferor. In addition, to the extent not paid from the
Servicing Fee, the Transferor shall pay for its own account, and, if the
Transferor fails to do so, the Servicer will pay, all fees and expenses incurred
by or on behalf of the Servicer in connection with its servicing activities
hereunder (including, without limitation, expenses related to enforcement of the
Receivables and the costs of a Service Transfer) or otherwise in connection
herewith (including, without limitation, the fees and expenses set forth above),
and the Servicer will not be entitled to any fee or other payment from, or claim
on, any of the Trust Assets (other than the Servicing Fee and reimbursement from
the Transferor). The Transferor's and Servicer's covenant to pay the expenses
and disbursements provided in this Section 3.02(b) shall survive the termination
of the Trust.
SECTION 3.03. Representations and Warranties of the Servicer.
Muehlstein, as initial Servicer, hereby represents and warrants, and each
Successor Servicer (except for the
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Trustee in such capacity) by acceptance of its appointment hereunder shall
represent and warrant, in the case of the initial Servicer as of the date hereof
and as of the Transfer Date, and, with respect to any Series, as of the date of
the related Supplement and the related Initial Issuance Date or, in the case of
any Successor Servicer, the date of such appointment and, with respect to any
Series issued after such date, as of the date of the related Supplement and the
related Initial Issuance Date, in each case unless otherwise stated in such
Supplement:
(a) Organization. The Servicer is a corporation duly organized and
validly existing under the applicable laws of New York and has full power,
authority and legal right to own its properties and conduct its business
including its receivables servicing business as such properties are
presently owned and as such business is presently conducted and as is
proposed to be conducted under the Transaction Documents, and to execute,
deliver and perform its obligations under the Transaction Documents.
(b) Due Qualification. The Servicer is duly qualified to do business
(or is exempt from such requirements), and has obtained all necessary
licenses and approvals, in each jurisdiction in which the servicing of the
Receivables in accordance with the terms of the Transaction Documents
requires such qualification, except where failure to so qualify or to
obtain such licenses or approvals would not have a material adverse effect
upon a Beneficiary or on the Servicer's ability to perform its obligations
as Servicer under the Transaction Documents.
(c) Due Authorization. The Servicer's execution, delivery and
performance of the Transaction Documents to which it is a party and the
other agreements and instruments executed or to be executed by the
Servicer as contemplated hereby or thereby, and the consummation of the
transactions contemplated by the Transaction Documents, have been duly and
validly authorized by all necessary action on the part of the Servicer.
(d) Binding Obligation. Each of the Transaction Documents to which
it is a party constitutes a legal, valid and binding obligation of the
Servicer enforceable against it in accordance with its terms except as
such enforceability may be limited by applicable bankruptcy,
reorganization, insolvency, moratorium or other similar laws affecting
creditors' rights generally, now and hereafter in effect, and except as
such enforceability may be limited by general principles of equity
(whether considered in a suit at law or in equity).
(e) No Conflict. The Servicer's execution and delivery of the
Transaction Documents to which it is a party, performance of the
transactions contemplated by the Transaction Documents, and fulfillment of
the terms hereof and thereof applicable to the Servicer, do not conflict
with or violate any Requirement of Law applicable to the Servicer or
solely with respect to the servicing of Receivables, do not conflict with
or
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violate in any material respect any Requirement of Law, or conflict with,
result in any breach of any of the terms or provisions of, or constitute
(with or without notice or lapse of time or both) a default under, any
indenture, contract, agreement, mortgage, deed of trust or other
instrument to which the Servicer is a party or by which it or its
properties are bound.
(f) No Proceedings. There are no proceedings or investigations
pending or, to the best knowledge of the Servicer, threatened against the
Servicer before any Governmental Authority (i) asserting the illegality,
invalidity or unenforceability, or seeking any determination or ruling
that would affect the legality, binding effect, validity or
enforceability, of the Transaction Documents, (ii) seeking to prevent the
issuance of the Certificates or the consummation of any of the
transactions contemplated by the Transaction Documents, or (iii) seeking
any determination or ruling that may materially and adversely affect the
financial condition or operations of the Servicer and its Subsidiaries
taken as a whole or the performance by the Servicer of its obligations
under the Transaction Documents.
(g) No Consents. No authorization, consent, license, order or
approval of or registration or declaration with any Person or Governmental
Authority is required to be obtained, effected or given by the Servicer in
connection with the execution and delivery of the Transaction Documents to
which it is a party by the Servicer or the performance of its obligations
hereunder and thereunder, except for authorizations, consents, licenses,
orders, approvals, registrations and declarations that have been duly
obtained, given or made and are in full force and effect.
(h) Muehlstein Post Office Boxes, Muehlstein Collection Accounts and
the Concentration Account. Specified on Schedule 3.03(h) hereto are (i)
the Muehlstein Post Office Box numbers, (ii) the names, addresses and ABA
numbers of all the Muehlstein Collection Account Banks, together with the
account numbers of the Muehlstein Collection Accounts and the name of a
contact person at each Muehlstein Collection Account Bank and (iii) the
name, address and ABA number of the Concentration Account Bank, together
with the account number and the name of a contact person for the
Concentration Account.
(i) Payment Instructions. The Servicer has notified the Obligor on
each Receivable to make payments on such Receivable to either one of the
Muehlstein Post Office Boxes or one of the Muehlstein Collection Accounts.
(j) Daily Reports and Determination Date Certificates. Each Daily
Report and Determination Date Certificate delivered by the Servicer
pursuant to this Agreement shall be true and correct in all material
respects as of the date such report or certificate is delivered.
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(k) Servicer Default. No Servicer Default has occurred or is
continuing.
(l) Trust Early Amortization Event. No Trust Early Amortization
Event has occurred or is continuing.
The representations and warranties set forth in this Section 3.03
shall survive the Transfer of the Receivables to the Trust and the issuance of
the Certificates, and shall cease and be of no effect upon the indefeasible
repayment in full of the Invested Amount of the last outstanding Series and all
other obligations of the Transferor hereunder. Upon a discovery by the
Transferor, the Servicer or the Trustee of a breach of any of the foregoing
representations and warranties, the party discovering such breach shall give
prompt written notice to the other parties and to each Enhancement Provider, if
any. The Trustee's obligations in respect of any such breach are limited as
provided in Section 11.02(g).
SECTION 3.04. Covenants of the Servicer. The Servicer hereby
covenants and agrees that, until termination of the Trust:
(a) Change in Accounts. The Servicer will not (i) make any changes
to Schedule 3.03(h) hereto or (ii) amend any instruction to any Obligor or
any Muehlstein Collection Account Bank with respect to any Muehlstein Post
Office Box or Muehlstein Collection Account or (iii) terminate or
substitute any Cure Account, in any case (A) except as otherwise required
or permitted pursuant to Section 4.02 or the applicable Supplement and (B)
unless the Trustee shall have received written notice of such change,
amendment, termination or substitution and executed copies of Muehlstein
Collection Account Letters to each new Muehlstein Collection Account Bank.
(b) Collections. (i) In the event that the Servicer receives any
Collections, the Servicer agrees to hold all such Collections in trust and
to deposit such Collections to the appropriate Collection Account as soon
as practicable, but in no event later than two Business Days after receipt
thereof.
(ii) In the event that any Affiliate of the Servicer receives any
Collections, the Servicer agrees to cause such Affiliate to hold all such
Collections in trust and to cause such Affiliate to deposit such
Collections to the appropriate Collection Account as soon as practicable,
but in no event later than five Business Days after receipt thereof.
(c) Compliance with Requirement of Law. The Servicer will (i) duly
satisfy all obligations on its part to be fulfilled under or in connection
with each Receivable in accordance with the Muehlstein Credit Policy
Manual, (ii) maintain in effect all qualifications required under any
Requirement of Law in order to service properly each
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Receivable in accordance with the Muehlstein Credit Policy Manual and the
Transaction Documents, and (iii) comply in all material respects with all
other Requirements of Law in connection with servicing each Receivable.
(d) Extension or Amendment of Receivables. The Servicer will not
extend, amend or otherwise modify (or consent or fail to object to any
such extension, amendment or modification by the Transferor), except as
permitted in Section 3.01(c), the terms of any Receivable, or amend,
modify or waive (or consent or fail to object to any such amendment,
modification or waiver by the Transferor) any payment term or condition of
any invoice related thereto (other than as provided in the Muehlstein
Credit Policy Manual) if the effect of such amendment, modification or
waiver would impair the collectibility or delay the payment of any then
existing Receivable beyond 120 days from the date of the invoice; provided
that the Servicer may extend, amend or otherwise modify the date of
payment of any Receivable beyond 120 days from the date of invoice if such
extension, amendment or modification is reasonably calculated to enhance
the collectibility of such Receivable. The Servicer will not rescind or
cancel, or permit the rescission or cancellation of, any Receivable except
as ordered by a court of competent jurisdiction or other Governmental
Authority. Notwithstanding the foregoing provisions of this Section
3.04(d), each of the Servicer and the Transferor may extend, amend,
modify, cancel or rescind (and the Servicer need not object to any such
action by the Transferor) any Diluted Receivable in connection with a
valid dispute; provided, however, that such amendment, modification,
cancellation or rescission shall not have a material adverse effect on the
interests of any Beneficiary.
(e) Protection of Certificateholders' Rights. The Servicer will take
no action which would impair the rights of any Beneficiary in any
Receivable or Trust Asset, except as provided in this Agreement.
(f) Deposits to Concentration Account, any Muehlstein Collection
Account or any Series Account. The Servicer will not deposit or otherwise
credit, or cause to be so deposited or credited, or consent or fail to
object to any such deposit or credit known to it, cash or cash proceeds
other than Collections to the Concentration Account, any Muehlstein
Collection Account or any Series Account.
(g) Receivables Not to Be Evidenced by Promissory Notes. The
Servicer will take no action to cause any Receivable to be evidenced by
any "instrument" (as defined in the UCC of the jurisdiction the law of
which governs the perfection of the interest in such Receivable created
hereunder), except in connection with its enforcement, in which event the
Transferor shall deliver such instrument to the Trustee as soon as
reasonably practicable but in no event more than three Business Days after
execution thereof.
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(h) Reporting Requirements. The Servicer will:
(i) furnish to the Trustee within one Business Day after a
Responsible Officer of the Servicer obtains knowledge of the
occurrence of a Servicer Default or an Early Amortization Event, or
the commencement of a Partial Amortization Period or Cure Period, or
any event which, with the giving of notice or lapse of time or both,
would constitute a Servicer Default or Early Amortization Event,
notify (either orally or in writing) the Trustee of such occurrence;
(ii) as soon as possible and in any event within three
Business Days after a Responsible Officer of the Servicer obtains
knowledge of the occurrence of a Servicer Default or any Early
Amortization Event, or the commencement of a Partial Amortization
Period or Cure Period, or any event which, with the giving of notice
or lapse of time or both, would constitute a Servicer Default or an
Early Amortization Event, furnish to the Trustee and to each
Enhancement Provider the written statement of a Responsible Officer
setting forth details of such Servicer Default or Early Amortization
Event, the commencement of such Partial Amortization Period or Cure
Period or such event and the action which the Servicer has taken and
proposes to take with respect thereto;
(iii) as soon as possible and in any event within three
Business Days after a Responsible Officer of the Servicer obtains
knowledge of any other event, development or information which may
materially adversely affect the ability of the Servicer to perform
its obligations under this Agreement, provide to the Trustee, each
Rating Agency and each Enhancement Provider a written statement of a
Responsible Officer of the Servicer with regard to such event,
development or information;
(iv) promptly, from time to time, furnish to the Trustee and
each Enhancement Provider such other information, documents, records
or reports regarding the Receivables, the other Trust Assets or the
condition or operations, financial or otherwise, of the Servicer as
the Trustee and each Enhancement Provider may from time to time
reasonably request;
(v) within thirty (30) days after the end of each fiscal month
in each Fiscal Year, deliver to the Trustee, each Rating Agency and
each Enhancement Provider the consolidated balance sheets of the
Servicer and its Subsidiaries as at the end of such period and the
related consolidated statements of income and cash flow of the
Servicer and its Subsidiaries for such fiscal month and for the
period from the beginning of the then current Fiscal Year to the end
of such
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fiscal month, and for the corresponding period during the previous
Fiscal Year, and a comparison of the statement of the year to date
earnings and cash flow to the corresponding statement for the
corresponding period from the previous Fiscal Year, and the most
recently prepared forecasted consolidated balance sheet and
consolidated statement of earnings and cash flow of the Servicer and
its Subsidiaries for and as of the end of such Fiscal Year, and a
comparison of the statement of year to date earnings and cash flow
to the annual operating plan, certified by a Financial Officer of
the Servicer as fairly presenting the consolidated financial
position of the Servicer and its Subsidiaries as at the dates
indicated and the results of their operations and cash flow for the
periods indicated in accordance with GAAP, subject to normal year
end adjustments; and
(vi) within ninety (90) days after the end of each Fiscal Year
deliver to the Trustee, each Rating Agency and each Enhancement
Provider audited consolidated financial statements of the Servicer
and its Subsidiaries reported on by independent certified public
accountants of recognized national standing acceptable to the
Majority in Interest, which report shall be unqualified (or, if
qualified, only as to non-material matters) and shall state that
such financial statements fairly present the consolidated position
of the Servicer and its Subsidiaries as at the dates indicated in
conformity with GAAP applied on a basis consistent with prior years
(except for changes with which such independent certified public
accountants shall concur and which shall have been disclosed in the
notes to the financial statements) and that the examination by such
accountants in connection with such consolidated financial
statements has been made in accordance with generally accepted
auditing standards.
The Servicer shall provide to the Trustee access to the
documentation regarding the Receivables in such cases where the Trustee is
required in connection with the enforcement of the rights of
Certificateholders or by applicable statutes or regulations to review such
documentation, such access being afforded without charge and at the sole
cost and expense of the Servicer but only (i) upon reasonable request,
(ii) during normal business hours, (iii) subject to the Servicer's normal
security and confidentiality procedures and (iv) at reasonably accessible
offices in the continental United States designated by the Servicer.
(i) Filing of Continuation Statements. The Servicer shall prepare
and file such continuation statements and any other documents requested by
the Trustee, the Transferor or any of the Certificateholders or which may
otherwise be required by law to fully preserve and protect the interest of
the Trustee, the Transferor or any of the Certificateholders hereunder in
and to the Receivables.
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(j) Change the Muehlstein Credit Policy Manual. The Servicer shall
comply with and perform its servicing obligations with respect to the
Receivables in accordance with the Muehlstein Credit Policy Manual, except
insofar as any failure to so comply or perform would not materially
adversely affect the Certificateholders. Subject to compliance with all
Requirements of Law, the Transferor or the Servicer, as applicable, may
change the terms and provisions of the Muehlstein Credit Policy Manual;
provided, however, that (i) with respect to a material change of
collection policies, the Rating Agency Condition is satisfied with respect
thereto and (ii) with respect to a change of collection procedures, no
material adverse effect on any Series of Certificate would result.
(k) Notification of Obligors. The Servicer will notify the Obligor
on each Receivable purchased by the Trust on or after the Transfer Date to
make payments on such Receivable to one of the Muehlstein Collection
Accounts.
(l) Modification of Systems. The Servicer agrees, promptly after the
material replacement or any material modification of any material
computer, automation or other operating systems (in respect of hardware or
software) used to provide the Servicer's services as Servicer or to make
any calculations or reports hereunder, to give written notice of any such
material replacement or modification to the Trustee.
(m) Servicer Business Days. No later than December 1 of each year,
the Servicer shall furnish the Trustee with a list of days other than
Saturday and Sunday, on which the Servicer shall be closed during the
immediately succeeding calendar year, except that with respect to the
calendar year 1996, the Servicer shall furnish such list to the Trustee on
or before the Transfer Date.
(n) Keeping of Records and Books of Account. The Servicer shall
maintain and implement administrative and operating procedures (including,
without limitation, the ability to recreate records evidencing the
Receivables in the event of the destruction of the originals thereof), and
keep and maintain all documents, books, microfiche, computer records and
other information necessary or reasonably advisable for the collection of
all the Receivables. Such documents, books, microfiche, and computer
records shall reflect all customary facts giving rise to the Receivables,
all payments and credits with respect thereto, and the computer records
shall be clearly marked to show the interests of the Trust in the
Receivables. The Servicer shall hold on behalf of the Trust (to the extent
of its interest therein) any document evidencing or securing a Receivable
and any Contract related to such Receivable and necessary to the servicing
of such Receivable and the collection thereof in accordance with the terms
of this Agreement. Such holding by the Servicer shall be in trust and
shall be deemed to be the holding thereof by the Trustee for purposes of
perfecting the Trust's rights therein
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as provided in the UCC.
(o) Maintenance of Insurance. The Servicer shall use its best
efforts to maintain with a responsible company, and at its own expense,
its current commercial crime insurance (including, without limitation,
commercial fraud insurance) as is commercially available at a cost that is
not generally regarded as excessive by industry standards, with coverage
on all officers, employees or other Persons acting in any capacity
requiring such Persons to handle funds, money, documents or papers
relating to the Receivables.
Notwithstanding anything herein to the contrary and in accordance with Section
3.01(b), if the Trustee is acting as Successor Servicer hereunder it will not be
bound to follow the Muehlstein Credit Policy Manual but shall service the
Receivables in accordance with customary industry standards in effect from time
to time.
SECTION 3.05. Reports and Records for the Trustee. (a) Daily
Records. On each Business Day, the Servicer shall provide by telecopy to the
Trustee, and upon request to any Enhancement Provider and each Investor
Certificateholder, the Daily Report and, to the extent not covered in the Daily
Report, a record setting forth (i) the Collections in respect of the Receivables
processed by the Servicer on the immediately preceding Business Day, (ii) the
amount of Eligible Receivables as of the close of business on the immediately
preceding Business Day and (iii) the Floating Allocation Percentage for each
Series at the close of business on the immediately preceding Business Day.
(b) Determination Date Certificate. On or before each Determination
Date with respect to each outstanding Series, the Servicer shall deliver by
telecopy to the Trustee each Rating Agency and each Enhancement Provider and the
Trustee shall deliver to each Investor Certificateholder a Determination Date
Certificate for such Determination Date.
SECTION 3.06. Annual Certificate of Servicer. On or before April 30
of each calendar year, beginning with April 30, 1997, the Servicer shall deliver
to the Trustee, each Rating Agency and each Enhancement Provider an Officer's
Certificate, executed by the chief financial officer of the Servicer,
substantially in the form of Exhibit B hereto. A copy of each such certificate
will be sent to each Investor Certificateholder by the Trustee.
SECTION 3.07. Semi-Annual Servicing Report of Independent Public
Accountants. Within 90 days after the Transfer Date and on an semi-annual basis
on or before March 31 and September 30 of each calendar year, beginning with
March 31, 1997, the Servicer shall at the Transferor's expense cause the
Independent Public Accountants to furnish a report (addressed to the Trustee) to
the Trustee, the Servicer, each Rating Agency and each Enhancement Provider
substantially to the effect set forth in Exhibit G; provided, however, that all
such Persons and a Majority of all Certificateholders may approve an alternative
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arrangement.
SECTION 3.08. Tax Treatment. The Transferor has entered into this
Agreement, and the Investor Certificates have been (or will be) issued to and
acquired by the Investor Certificateholders, with the intention that, for
federal, state and local income and franchise tax law purposes, the Investor
Certificates will be indebtedness of the Transferor secured by the Receivables.
The Transferor, by entering into this Agreement, and each Certificateholder, by
the acceptance of its Certificate, agree to treat the Certificates for purposes
of federal, state and local income and franchise taxes as indebtedness of the
Transferor. Unless either (i) the Trustee or the Servicer shall receive an
Opinion of Counsel based on a change in applicable law occurring after the date
hereof that the Internal Revenue Code requires such a filing or (ii) the
Internal Revenue Service shall determine that the Trust is required to file such
a return in accordance with the foregoing, the Transferor agrees that it will
report its income for such federal, state and local income or franchise taxes on
the basis that it is the owner of the Receivables.
SECTION 3.09. Notices to Muehlstein. In the event that Muehlstein is
no longer acting as Servicer, any Successor Servicer shall deliver or make
available to Muehlstein International, Muehlstein and the Transferor each
certificate and report required to be delivered thereafter pursuant to Sections
3.05, 3.06 and 3.07.
SECTION 3.10. Adjustments. If the Servicer makes a mistake with
respect to the amount of any Collection and deposits or pays an amount that is
less than or more than the actual amount of such Collection, the Servicer shall
appropriately adjust the amount subsequently deposited into the Trustee's
Account or Transferor's Account or paid to reflect such mistake and send written
notice thereof to the Trustee. Any Receivable in respect of which a dishonored
check is received shall be deemed not to have been paid.
SECTION 3.11. Securities and Exchange Commission Filings. For so
long as Muehlstein or any of its Affiliates is the Servicer, the Servicer shall
deliver or cause to be delivered to the Trustee, the Investor Certificateholders
and each Rating Agency copies of each report of Muehlstein, the Transferor,
Muehlstein, Muehlstein International and any other Affiliate of Muehlstein which
is a party to any Transaction Document filed with the Securities and Exchange
Commission on Forms 10-K and 10-Q promptly after any such filing has been made.
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ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS
SECTION 4.01. Rights of Certificateholders. (a) The Investor
Certificates shall represent fractional undivided beneficial interests in the
Trust (with respect to each Series, the "Certificateholders' Interest"), which
shall consist of the right to receive, to the extent necessary to make the
required payments with respect to the Investor Certificates of such Series at
the times and in the amounts specified in the related Supplement, the portion of
Collections allocable to Investor Certificateholders of such Series pursuant to
this Agreement and the related Supplement from funds on deposit in the
Concentration Account allocable to Certificateholders of such Series and funds
on deposit in any related Series Account and funds available pursuant to any
related Enhancement (collectively with respect to all Series, the "Aggregate
Certificateholders' Interest"), it being understood that the Investor
Certificates of any Series shall not represent any interest in any Series
Account or Enhancement for the benefit of any other Series. The Transferor
Certificate shall represent the fractional undivided beneficial interest in the
remainder of the Trust Assets not allocated pursuant to this Agreement or any
Supplement to the Aggregate Certificateholders' Interest, including the right to
receive Collections with respect to the Receivables and other amounts at the
times and in the amounts specified in this Agreement or in any Supplement to be
paid to the Holder of the Transferor Certificate (the "Transferor Interest");
provided, however, that the Transferor Certificate shall not represent any
interest in the Concentration Account, any Muehlstein Collection Account, any
Series Account or any Enhancement, except as specifically provided in this
Agreement or any Supplement.
(b) The Floating Allocation Percentage for each Series, which is the
percentage that determines the portion of the Aggregate Certificateholders'
Interest allocable to such Series, and the Transferor Percentage, which is the
percentage that determines the Transferor Interest, shall be initially computed
by the Servicer as of the opening of business of the Servicer on the Initial
Issuance Date for the related Series. Thereafter until the commencement of an
Amortization Period for a Series, an Early Amortization Period for a Series or
the Partial Amortization Period, the Floating Allocation Percentage for each
Series and the Transferor Percentage, and through the recomputations thereof the
Certificateholders' Interest for each Series and the Transferor Interest, shall
be recomputed by the Servicer as of the close of business of the Servicer on
each Business Day. Each of the Certificateholders' Interests, the Floating
Allocation Percentage for each Series, the Transferor Interest and the
Transferor Percentage (i) shall remain constant from the time as of which any
such computation or recomputation is made until the time as of which the next
such recomputation, if any, shall be made and (ii) as computed as of the close
of business of the Servicer on the Business Day immediately preceding the
commencement of an Amortization Period for a
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Series, an Early Amortization Period for a Series or a Partial Amortization
Period, shall remain constant at all times during such Amortization Period,
Early Amortization Period or such Partial Amortization Period.
SECTION 4.02. Establishment of Concentration Account and Muehlstein
Collection Accounts. (a) Concentration Account. On or prior to the Transfer
Date, the Servicer, for the benefit of the Certificateholders, shall establish
and maintain or cause to be established and maintained in the name of the
Trustee, on behalf of the Trust, with an Eligible Institution a segregated trust
account accessible by the Trustee (such account being the "Concentration
Account" and such institution holding such account being the "Concentration
Account Bank"), such account bearing a designation clearly indicating that the
funds deposited therein are held for the benefit of the Certificateholders. The
Trustee shall possess all right, title and interest in and to all funds from
time to time on deposit in the Concentration Account and in all proceeds
thereof. The Concentration Account shall be under the sole dominion and control
of the Trustee for the benefit of the Certificateholders. Except as expressly
provided in this Agreement, the Servicer agrees that it shall have no right of
set-off or banker's lien against, and no right to otherwise deduct from, any
funds held in the Concentration Account for any amount owed to it by the
Trustee, the Trust or any Certificateholder. The Servicer shall cause
Collections to be deposited into the Concentration Account on each Business Day
as promptly as is reasonably practicable after receipt in the Collection
Account. The Transferor will require the Originators to deposit any Collections
received by any of them into a Muehlstein Collection Account within two Business
Days following the Business Day on which such Collections are so received or, if
such day is not a Business Day, the next succeeding Business Day.
Notwithstanding the foregoing, if and to the extent that funds that are not
Collections are deposited into the Concentration Account, the Servicer may
direct in writing the Trustee to withdraw such funds from the Concentration
Account and deposit them in the related Transferor's Account.
If, at any time, the institution holding the Concentration Account
ceases to be an Eligible Institution, the Servicer, upon obtaining actual
knowledge thereof, for the benefit of the Certificateholders, shall within 15
Business Days (i) establish a new Concentration Account meeting the conditions
specified above with an Eligible Institution, (ii) transfer any cash and/or any
investments held therein or with respect thereto to such new Concentration
Account and (iii) in the case of any new Concentration Account, deliver to all
Muehlstein Collection Account Banks new Muehlstein Collection Account Letters
(with copies thereof to the Trustee) referring to such new Concentration
Account, and from the date such new Concentration Account is established, it
shall be the "Concentration Account". Pursuant to the authority granted to the
Servicer in Section 3.01, the Servicer shall have the power to instruct the
Trustee to make withdrawals and payments from the Concentration Account for the
purposes of carrying out the Servicer's or the Trustee's duties specified in
this Agreement.
Funds on deposit in the Concentration Account or, in the case of
funds on
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deposit on any Deposit Date or Distribution Date, funds required pursuant to the
applicable Supplement to be deposited to the Trustee's Account or the
Transferor's Account on such date, shall at the direction of the Servicer be
invested by the Trustee or the Eligible Institution maintaining such accounts in
Eligible Investments as instructed by the Servicer in writing (which may be a
standing instruction) (or if not so instructed, then invested by the Trustee or
the Eligible Institution maintaining such accounts in any Eligible Investments
listed in clause (d) of the definition of Eligible Investments). All such
Eligible Investments shall be held by the Trustee or the Eligible Institution
maintaining such accounts for the benefit of the Certificateholders. Such funds
shall be invested in Eligible Investments that will mature so that funds will be
available in amounts sufficient for the Servicer to make each distribution
required under the applicable Supplement on the Distribution Date with respect
to such Collection Period. Funds deposited in the Concentration Account on a
Determination Date with respect to the next following Distribution Date are not
required to be invested overnight. On each Distribution Date, all interest and
other investment earnings (net of losses and investment expenses) received on
funds on deposit in the Concentration Account, to the extent such investment
income is not needed to pay the Certificateholders on such Distribution Date,
shall be paid to the Transferor, except as otherwise specified in any
Supplement. The Trustee is hereby authorized, unless otherwise directed by the
Servicer, to effect transactions in Eligible Investments through a capital
markets affiliate of the Trustee.
(b) Muehlstein Collection Accounts. On or prior to the Transfer
Date, the Servicer, for the benefit of the Certificateholders, shall establish
and maintain or cause to be established and maintained (i) post-office boxes to
which Obligors will remit payments with respect to any Receivable (each such
post-office box, a "Muehlstein Post Office Box") and (ii) in the name of the
Trustee, on behalf of the Trust, with an Eligible Institution, segregated
accounts accessible by the Trustee (each such account, a "Muehlstein Collection
Account"). Obligors will be directed to remit payments with respect to their
Receivables to a Muehlstein Post-Office Box or a Muehlstein Collection Account.
The Muehlstein Post Office Boxes and Muehlstein Collection Accounts shall be
under the sole dominion and control of the Trustee for the benefit of the
Certificateholders; provided, however, that each Muehlstein Post Office Box
shall be accessible by the Trustee for the purpose of transferring Collections
to a Muehlstein Collection Account and each Muehlstein Collection Account shall
be accessible by the Servicer for the purpose of transferring Collections to the
Concentration Account in the manner set forth in Section 4.02(a). Specified on
Schedule 3.03(h) hereto are (i) the Muehlstein Post Office Box numbers, (ii) the
names, addresses and ABA numbers of all the Muehlstein Collection Account Banks,
together with the account numbers of the Muehlstein Collection Accounts and the
name of a contact person at each Muehlstein Collection Account Bank and (iii)
the name, address and ABA number of the Concentration Account Bank, together
with the account number and the name of a contact person for the Concentration
Account. Each Muehlstein Collection Account shall be maintained with
documentation and instructions in form and substance satisfactory to the
Trustee. Such documentation shall provide, among other things, that available
amounts shall be promptly transferred to the Concentration
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Account. The Servicer will not (i) make any changes to Schedule 3.03(h) hereto
or (ii) amend any instruction to any Obligor or any Muehlstein Collection
Account Bank with respect to any Muehlstein Post Office Box or Muehlstein
Collection Account unless the Trustee (if directed to do so by a Majority in
Interest of any outstanding Series or, if the related Supplement so provides,
the Enhancement Provider for such Series) shall have given its prior consent to
such change or amendment and shall have received executed copies of the
Muehlstein Collection Account Letters to each new Muehlstein Collection Account
Bank.
The Servicer hereby agrees and acknowledges that (i) it has executed
and delivered to the Trustee a letter and executed acknowledgement thereto
substantially in the form of Exhibit C hereto (each, a "Muehlstein Collection
Account Letter"), addressed to each banking institution with which a Muehlstein
Collection Account is maintained (each, a "Muehlstein Collection Account Bank")
and (ii) it shall execute and deliver a substantially similar Muehlstein
Collection Account Letter prior to the establishment by it of any additional or
alternative Muehlstein Collection Account. The Servicer hereby agrees, and the
Trustee hereby acknowledges, that the execution and delivery of a Muehlstein
Collection Account Letter transfers all right, title and interest in all monies,
securities and instruments in the applicable Muehlstein Collection Account to
the Trustee. The Servicer agrees to amend Schedule 3.03(h) hereto to reflect any
change in the Muehlstein Collection Account Banks and to execute such further
documents and take such other actions as may be reasonably requested by the
Trustee in order to effect such transfer.
SECTION 4.03. Allocation of Collections. Collections will be
allocated to each Series as specified in the related Supplement, and amounts so
allocated to any Series will not, except as specified in the related Supplement,
be available to the Investor Certificateholders of any other Series. Allocations
thereof between the Certificateholders' Interest and the Transferor Interest,
among the Series or to any Enhancement Agreement and to any Enhancement Provider
shall be set forth in the related Supplement or Supplements. If, on any day, the
sum of the Floating Allocation Percentages for all outstanding Series exceeds
100%, as set forth on the applicable Daily Report, then the aggregate of the
Investor Collections for all outstanding Series shall be allocated pro rata
among all outstanding Series on the basis of the Series Allocation Percentage
for each such Series; provided, however, that if on any day the amount of
Investor Collections for any Series is not sufficient to pay the full amount of
interest due and payable on such day to the Investor Certificateholders of each
Series on such day, then the aggregate of the Investor Collections for all
outstanding Series shall be allocated pro rata among all outstanding Series on
the basis of a fraction, for each Series, the numerator of which is the Invested
Amount of such Series and the denominator of which is the Trust Invested Amount.
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ARTICLE V
DISTRIBUTIONS AND REPORTS TO CERTIFICATEHOLDERS
SECTION 5.01. Distributions and Reports to Certificateholders.
Distributions shall be made to, and reports shall be provided to,
Certificateholders as set forth in the applicable Supplement.
ARTICLE VI
THE CERTIFICATES
SECTION 6.01. The Certificates. The Investor Certificates of any
Series shall be issued in registered form and shall be in substantially the form
set forth as an exhibit to the applicable Supplement and shall upon issue be
executed and delivered by the Transferor to the Trustee for authentication and
redelivery as provided in Section 6.02. The Investor Certificates shall be
issued in minimum denominations of $1,000,000 and in integral multiples of
$1,000 in excess thereof (except that one Certificate may be issued in a
denomination that includes any residual amount), and shall be issued upon
initial issuance as one or more Investor Certificates in an aggregate original
principal amount equal to the Initial Invested Amount. The Transferor
Certificate shall be a single certificate, substantially in the form of Exhibit
A hereto, and shall represent the entire Transferor Interest. Each Certificate
shall be executed by manual or facsimile signature on behalf of the Transferor
by the President, any Vice President, the Chief Administrative and Credit
Officer, Treasurer or the Secretary of the general partner of the Transferor, or
by any other officer or assistant officer duly authorized to execute such
Certificate on behalf of the Transferor. Certificates bearing the manual or
facsimile signature of the individual who was, at the time when such signature
was affixed, authorized to sign on behalf of the Transferor shall not be
rendered invalid, notwithstanding that such individual ceased to be so
authorized prior to the authentication and delivery of such Certificates or does
not hold such office at the date of such Certificates. No Certificates shall be
entitled to any benefit under this Agreement or the applicable Supplement or be
valid for any purpose, unless there appears on such Certificate a certificate of
authentication in substantially the form provided in Exhibit A hereto executed
by or on behalf of the Trustee by the manual signature of a duly authorized
signatory, and such certificate upon any Certificate shall be conclusive
evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder. All Certificates shall be dated the date
of their authentication.
SECTION 6.02. Authentication of Certificates. The Trustee shall
authenticate
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and deliver the Investor Certificates of each Series to, and upon the written
order of, the Transferor against payment to the Transferor of the purchase price
therefor. The Trustee shall authenticate and deliver the Transferor Certificate
to the Transferor simultaneously with its delivery of the first Series of
Investor Certificates to be issued hereunder. The Certificates of any Series
shall be duly authenticated by or on behalf of the Trustee, in authorized
denominations equal to (in the aggregate), in the case of the Investor
Certificates, the Initial Invested Amount, and, in the case of the Transferor
Certificate, in the denomination equal to the Transferor Interest from time to
time, and together evidencing the entire ownership of the Trust.
SECTION 6.03. Registration of Transfer and Exchange of Certificates.
(a) The Trustee shall cause to be kept at its Corporate Trust Office, such
office or agency to be maintained in accordance with the provisions of Section
11.16, a register (the "Certificate Register") in which, subject to such
reasonable regulations as it may prescribe, a transfer agent and registrar
(which may be the Trustee) (the "Transfer Agent and Registrar") shall provide
for the registration of the Certificates and of transfers and exchanges of the
Certificates as herein provided. The Transfer Agent and Registrar shall
initially be the Trustee, and any co- transfer agent and co-registrar chosen by
the Trustee and acceptable to the Servicer. Any reference in this Agreement to
the Transfer Agent and Registrar shall include any co-transfer agent and
co-registrar unless the context requires otherwise.
The Trustee shall be permitted to resign as Transfer Agent and
Registrar upon 30 days' (60 days' during an Amortization Period) written notice
to the Transferor and the Servicer; provided, however, that such resignation
shall not be effective and the Trustee shall continue to perform its duties as
Transfer Agent and Registrar until the Servicer has appointed a Successor
Trustee pursuant to Section 11.07, which Successor Trustee shall act as the
successor Transfer Agent and Registrar hereunder.
Upon surrender for registration of transfer of any Investor
Certificate at any office or agency of the Transfer Agent and Registrar
maintained for such purpose, the Transferor shall execute, and the Trustee shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Investor Certificates (of the same Series) in
authorized denominations of like aggregate Undivided Fractional Interests in the
Aggregate Certificateholders' Interest.
At the option of an Investor Certificateholder, Investor
Certificates may be exchanged for other Investor Certificates (of the same
Series) in authorized denominations of like aggregate Undivided Fractional
Interests in the Certificateholders' Interest, upon surrender of the Investor
Certificates to be exchanged at any such office or agency. Whenever any Investor
Certificates are so surrendered for exchange, the Transferor shall execute, and
the Trustee shall authenticate and deliver, the Investor Certificates which the
Certificateholder making the exchange is entitled to receive.
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Every Investor Certificate presented or surrendered for registration
of transfer or exchange shall be accompanied by a written instrument of transfer
in a form satisfactory to the Trustee or the Transfer Agent and Registrar duly
executed by the Certificateholder thereof or his attorney-in-fact duly
authorized in writing. Each Holder must satisfy all transfer restrictions set
forth in the Certificates.
Each Investor Certificate shall be registered at all times as herein
provided, and any transfer or exchange of such Investor Certificate will be
valid for purposes hereunder only upon registration of such transfer or exchange
by the Trustee or the Transfer Agent and Registrar as provided herein. Payments
on any Distribution Date shall be made to Holders of record on the immediately
preceding Record Date.
No service charge shall be made for any registration of transfer or
exchange of Investor Certificates, but the Transfer Agent and Registrar or any
co-transfer agent and co-registrar may require payment of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with any
transfer or exchange of Investor Certificates.
All Investor Certificates surrendered for registration of transfer
or exchange, or for payment, shall be cancelled and disposed of in a manner
reasonably satisfactory to the Trustee.
(b) The Transfer Agent and Registrar will maintain at its expense in
New York, New York an office or offices or agency or agencies where Investor
Certificates may be surrendered for registration of transfer or exchange.
(c) Notwithstanding any other provision of this Section 6.03, no
registration of transfer of any Investor Certificate shall be made unless the
Transferor or the transferee shall deliver, at its expense, to the Transferor,
the Servicer and the Trustee a representation letter, substantially in the form
attached as Exhibit D to this Agreement, stating that such transferee is not a
"benefit plan investor" as defined in Section 2510.3101(f)(2) of the Labor
Regulations promulgated under ERISA; provided, however that this provision shall
not apply to any Enhancement Provider.
SECTION 6.04. Mutilated, Destroyed, Lost or Stolen Certificates. If
(a) any mutilated Certificate is surrendered to the Transfer Agent and
Registrar, or the Transfer Agent and Registrar receives evidence to its
satisfaction of the destruction, loss or theft of any Certificate and (b) there
is delivered to the Transfer Agent and Registrar, the Trustee, the Transferor
and the Servicer such indemnity (provided that a letter of indemnity from (i) an
insurance company or (ii) an institutional investor, in either case, of
investment grade credit rating shall satisfy such requirement) as may be
required by them to save each of them harmless, then, in the absence of notice
to the Trustee that such Certificate has been acquired
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by a bona fide purchaser, the Transferor shall execute and the Trustee shall
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of like tenor and (in
the case of any new Investor Certificate) Undivided Fractional Interest. In
connection with the issuance of any new Certificate under this Section 6.04, the
Trustee or the Transfer Agent and Registrar may require the payment by the
Certificateholder of a sum sufficient to pay any tax or other governmental
charge that may be imposed in relation thereto. Any duplicate Certificate issued
pursuant to this Section 6.04 shall constitute complete and indefeasible
evidence of ownership in the Trust, as if originally issued, whether or not the
lost, stolen or destroyed Certificate shall be found at any time.
SECTION 6.05. Persons Deemed Owners. At all times prior to due
presentation of a Certificate for registration of transfer, the Trustee, the
Transfer Agent and Registrar and any agent of any of them shall treat the Person
in whose name any Certificate is registered as the owner of such Certificate for
the purpose of receiving distributions pursuant to the terms of the applicable
Supplement and for all other purposes whatsoever and neither the Trustee, the
Transfer Agent and Registrar nor any agent of any of them shall be affected by
any notice to the contrary. Notwithstanding the foregoing, in determining
whether the Holders of the requisite Undivided Fractional Interests have given
any request, demand, authorization, direction, notice, consent or waiver
hereunder, Certificates owned by the Transferor, the Servicer or any Affiliate
thereof shall be disregarded and deemed not to be outstanding, except that, in
determining whether the Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Certificates which a Responsible Officer of the Trustee actually knows to be so
owned shall be so disregarded. Certificates (other than a Transferor
Certificate) so owned which have been pledged in good faith shall not be
disregarded and may be regarded as outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Certificates and that the pledgee is not the Transferor, the Servicer or an
Affiliate thereof or if a Responsible Officer of the Trustee has received
written notice thereof.
SECTION 6.06. Access to List of Certificateholders' Names and
Addresses. The Trustee will furnish or cause to be furnished by the Transfer
Agent and Registrar to the Servicer, the Transferor or any Investor
Certificateholder, within five Business Days after receipt by the Trustee of a
written request therefor from the Servicer, the Transferor or any Investor
Certificateholder, respectively, a list of the names and addresses of the
Certificateholders.
Every Certificateholder, by receiving and holding a Certificate,
agrees that neither the Trustee, the Transfer Agent and Registrar, the
Transferor, the Servicer, Muehlstein, nor any of their respective agents, shall
be held accountable by reason of the disclosure of any such information as to
the names and addresses of the Certificateholders hereunder, regardless of the
sources from which such information was derived.
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SECTION 6.07. Authenticating Agent. (a) The Trustee may appoint one
or more authenticating agents with respect to the Certificates which shall be
authorized to act on behalf of the Trustee in authenticating the Certificates in
connection with the issuance, delivery, registration of transfer, exchange or
repayment of the Certificates. Whenever reference is made in this Agreement to
the authentication of Certificates by the Trustee or the Trustee's certificate
of authentication, such reference shall be deemed to include authentication on
behalf of the Trustee by an authenticating agent and a certificate of
authentication executed on behalf of the Trustee by an authenticating agent.
Each authenticating agent must be acceptable to the Transferor and the Servicer.
(b) Any institution succeeding to the corporate agency business of
an authenticating agent shall continue to be an authenticating agent without the
execution or filing of any power or any further act on the part of the Trustee
or such authenticating agent.
(c) An authenticating agent may at any time resign by giving written
notice of resignation to the Trustee and to the Transferor. The Trustee may at
any time terminate the agency of an authenticating agent by giving notice of
termination to such authenticating agent and to the Transferor. Upon receiving
such a notice of resignation or upon such a termination, or in case at any time
an authenticating agent shall cease to be acceptable to the Trustee or the
Transferor, the Trustee may promptly appoint a successor authenticating agent.
Any successor authenticating agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an authenticating agent.
No successor authenticating agent shall be appointed unless acceptable to the
Trustee and the Transferor.
(d) The Transferor agrees to pay to each authenticating agent, from
time to time, reasonable compensation for its services under this Section 6.07.
(e) The provisions of Sections 7.03, 8.04, 11.01, 11.02 and 11.03
shall be applicable to any authenticating agent.
(f) Pursuant to an appointment made under this Section 6.07, the
Certificates may have endorsed thereon, in lieu of or in addition to the
Trustee's certificate of authentication, an alternate certificate of
authentication in substantially the following form:
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This is one of the Certificates described in the Pooling and
Servicing Agreement among Muehlstein Financial Corporation, H.
Muehlstein & Co., Inc. and Bankers Trust Company, dated as of August
23, 1996.
_________________________________________
_________________________________________
as Authenticating Agent for the Trustee
By:______________________________________
Authorized Signer
SECTION 6.08. New Issuances. (a) The Transferor may from time to
time direct the Trustee, on behalf of the Trust, to issue one or more new Series
of Investor Certificates pursuant to a Supplement. The Investor Certificates of
all outstanding Series shall be equally and ratably entitled as provided herein
to the benefits of this Agreement without preference, priority or distinction,
all in accordance with the terms and provisions of this Agreement and the
applicable Supplement except, with respect to any Series, as provided in the
related Supplement.
(b) On or before the Initial Issuance Date relating to any new
Series, the parties hereto will execute and deliver a Supplement which will
specify the Principal Terms of such new Series. The terms of such Supplement may
modify or amend the terms of this Agreement solely as applied to such new
Series. The obligation of the Trustee to issue the Investor Certificates of such
new Series and to execute and deliver the related Supplement is subject to the
satisfaction of the following conditions:
(i) on or before the tenth Business Day immediately preceding the
Initial Issuance Date for such Series, the Transferor shall have given the
Trustee, the Servicer, each Rating Agency and any Enhancement Provider
written notice of such issuance and the Initial Issuance Date for such
Series;
(ii) the Transferor shall have delivered to the Trustee the related
Supplement, in form satisfactory to the Trustee, executed by each party
hereto other than the Trustee;
(iii) the Transferor shall have delivered to the Trustee any related
Enhancement Agreement executed by each party hereto other than the
Trustee;
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(iv) each Rating Agency shall have notified the Transferor, the
Servicer, the Trustee, and any Enhancement Provider in writing that the
issuance of such new Series of Investor Certificates will not result in a
reduction or withdrawal of the rating of any outstanding Series with
respect to which it is a Rating Agency;
(v) such issuance will not result in the occurrence of a Trust Early
Amortization Event and the Transferor shall have delivered to the Trustee
and any Enhancement Provider an Officer's Certificate, dated the Initial
Issuance Date for such Series (upon which the Trustee may conclusively
rely), to the effect that the Transferor reasonably believes that such
issuance will not result in the occurrence of a Trust Early Amortization
Event and is not reasonably expected to result in the occurrence of a
Trust Early Amortization Event at any time in the future;
(vi) the Transferor shall have delivered to the Trustee and any
Enhancement Provider an Opinion of Counsel to the effect that the issuance
of the Investor Certificates of such Series (A) has been, or need not be,
registered under the Act and will not result in the requirement that any
other Series of Investor Certificates not registered under the Act be so
registered (unless the Transferor has elected, in its sole discretion, to
register such Certificates), (B) will not result in the Trust becoming
subject to registration as an investment company under the Investment
Company Act and (C) will not require this Agreement or the related
Supplement to be qualified under the Trust Indenture Act of 1939, as
amended;
(vii) the Transferor shall have delivered to the Trustee and any
Enhancement Provider a Tax Opinion, dated the Initial Issuance Date for
such Series, with respect to such issuance;
(viii) such issuance will not result in the aggregate of the
Floating Allocation Percentages for all outstanding Series (after giving
effect to such new issuance) exceeding 100%; and
(ix) the Receivables Purchase Agreements and the Parent Undertaking
Agreement shall be in full force and effect.
Upon satisfaction of the above conditions, the Trustee shall execute the
Supplement and the Transferor shall execute and deliver to the Trustee the
Investor Certificates of such Series for authentication and redelivery to or
upon the written order of the Transferor. Notwithstanding the provisions of this
section 6.08(b), prior to the execution of any Supplement, the Trustee shall be
entitled to receive and rely upon an Opinion of Counsel stating that the
execution of such Supplement is authorized or permitted by this Agreement and
any Supplement related to any outstanding Series. The Trustee may, but shall not
be obligated to, enter into any such Supplement which adversely affects the
rights, duties or immunities under this Agreement of
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the Person, solely in its individual capacity then serving as Trustee (but not
its rights, duties or immunities as Trustee).
(c) The Transferor may surrender the Transferor Certificate to the
Trustee in exchange for a newly issued Transferor Certificate and a second
certificate (a "Supplemental Certificate"), the terms of which shall be subject
to Section 13.01 to the extent that it amends any of the terms of this
Agreement, to be delivered to or upon the order of the Transferor (or the holder
of a Supplemental Certificate, in the case of the transfer or exchange thereof,
as provided below), upon satisfaction of the following conditions:
(i) the Transferor shall have delivered to the Trustee an Officer's
Certificate certifying that the result obtained by multiplying (x) an
amount equal to the excess of the Net Receivables Balance over the Trust
Invested Amount by (y) the percentage equivalent of the portion of the
Transferor Interest represented by the Transferor Certificate, shall not
be less than 2% of the Outstanding Balance of all Receivables owned by the
Trust, in each case as of the date of, and after giving effect to, such
exchange;
(ii) the Rating Agency Condition (for which the applicable
Enhancement Provider shall not have unreasonably withheld its consent)
shall have been satisfied with respect to such exchange (or transfer or
exchange as provided below); and
(iii) the Transferor shall have delivered to the Trustee and any
Enhancement Provider a Tax Opinion, dated the date of such exchange (or
transfer or exchange as provided below), with respect thereto.
The Transferor Certificate will at all times be beneficially owned by the
Transferor. Any Supplemental Certificate may be transferred or exchanged only
upon satisfaction of the conditions set forth in clauses (ii) and (iii) above.
ARTICLE VII
OTHER MATTERS RELATING TO THE TRANSFEROR
SECTION 7.01. Obligations Not Assignable. The obligations of the
Transferor hereunder shall not be assignable nor shall any Person succeed to the
obligations of the Transferor hereunder.
SECTION 7.02. Limitations on Liability. None of the directors,
officers, employees or agents of the Transferor, past, present or future, shall
be under any liability to the Trust, the Trustee, the Certificateholders, the
Enhancement Provider or any other Person
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for any action taken or for refraining from the taking of such action in such
capacities pursuant to this Agreement or for any obligation or covenant under
this Agreement; provided, however, that this provision shall not protect any
such Person against any liability which would otherwise be imposed by reason of
willful misconduct or gross negligence in the performance by such Person of such
Person's duties or the reckless disregard by such Person of any of his, her or
its obligations and duties hereunder. The Transferor and any director, officer,
employee or agent of the Transferor may rely in good faith on any document of
any kind prima facie properly executed and submitted by any Person (other than
the Transferor or any Affiliate thereof) respecting any matters arising
hereunder or under any Supplement or the Receivables Purchase Agreements.
SECTION 7.03. Indemnification of the Trustee, the
Certificateholders, the Program Agent and the Enhancement Provider. Without
limiting any other rights which the Trustee, the Certificateholders (other than
the Transferor and its Affiliates), the Program Agent or any Enhancement
Provider and their respective assignees and their respective officers,
directors, employees, agents and affiliates (each, an "Indemnified Party" and
collectively the "Indemnified Parties") may have hereunder or under applicable
law, the Transferor hereby agrees to indemnify each Indemnified Party from and
against any and all claims, damages, losses and liabilities and related costs
and expenses (including reasonable attorneys' fees and disbursements) (all of
the foregoing being collectively referred to as "Indemnified Amounts") awarded
against or incurred by any of them arising out of or resulting from this
Agreement, the activities of the Trustee in connection herewith, the
Transferor's use of proceeds of Transfers of Receivables or reinvestments of
Collections, the interest conveyed hereunder in Trust Assets, or in respect of
any Receivable or the Receivables Purchase Agreements (excluding however (a)
Indemnified Amounts resulting from gross negligence or willful misconduct on the
part of such Indemnified Party to which such Indemnified Amount would otherwise
be due, (b) losses in respect of Receivables to the extent reimbursement
therefor would constitute credit recourse to the Transferor for nonpayment of
any Receivable by any Obligor, (c) any income or franchise taxes or similar
taxes (or any interest or penalties with respect thereto) incurred by such
Indemnified Party arising out of or as a result of this Agreement or the
interest conveyed hereunder in Trust Assets or in respect of any Receivable or
the Receivables Purchase Agreements and (d) Indemnified Amounts resulting from
the acts or omissions of the Servicer (unless the Servicer is Muehlstein or any
Affiliate of Muehlstein)), to the extent caused by:
(i) reliance on any representation, warranty or covenant made or
statement made or deemed made by the Transferor (or any of its Responsible
Officers) under or in connection with this Agreement or the Receivables
Purchase Agreements which shall have been incorrect in any material
respect when made or deemed made or which the Transferor shall have failed
to perform;
(ii) the failure by the Transferor to comply with this Agreement or
any
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applicable Requirement of Law with respect to any Receivable or the
Related Security or related Contract or the Receivables Purchase
Agreements, or the failure of any Receivable or the Related Security or
related Contract to conform to the applicable Receivables Purchase
Agreements or any Requirement of Law;
(iii) the failure to vest in the Trustee on behalf of the Trust for
the benefit of the Investor Certificateholders either an undivided
fractional beneficial interest, to the extent of their respective
Undivided Fractional Interests, or a perfected first priority security
interest in the Receivables and the other Trust Assets, free and clear of
any Lien;
(iv) the failure to have filed, or any delay in filing, any
financing statements or other similar instruments or documents under the
UCC of any applicable jurisdiction or other applicable laws that are
necessary for perfection or priority of the ownership and security
interest created by this Agreement;
(v) any commingling of Collections by the Transferor with other
funds of the Transferor or any of its Affiliates;
(vi) any investigation, litigation or proceeding related to this
Agreement or the Receivables Purchase Agreements or the use of proceeds or
reinvestments of proceeds by the Transferor, Muehlstein International or
Muehlstein of Transfers of Receivables or the ownership of or security
interest in Trust Assets or in respect of any Receivable or Contract,
except to the extent of Indemnified Amounts attributable to any portion of
an investigation, litigation or proceeding relating to such Indemnified
Party's affairs which pertains to matters or transactions in addition to
those contemplated by the Transaction Documents;
(vii) any claim brought by any Person other than an Indemnified
Party arising from any activity by the Transferor or any Affiliate of the
Transferor in servicing, administering or collecting any Receivable;
(viii) any failure by the Transferor to perform its duties or
obligations in accordance with the provisions of this Agreement or any
Receivables Purchase Agreement; or
(ix) any tax (other than any income or franchise or similar tax, or
any interest or penalties with respect thereto) imposed by reason of
ownership of the Receivables or other Trust Assets by the Trustee on
behalf of the Trust.
Any Indemnified Amounts due hereunder shall be payable within
fifteen Business Days of submission of a claim by the Indemnified Party which
describes in
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reasonable detail the basis for such claim.
Indemnification pursuant to this Section 7.03 shall only be payable
from assets of the Transferor. The agreement contained in this Section 7.03
shall survive the collection of all Receivables, the termination of the Trust
and the payment of all amounts otherwise payable hereunder.
Promptly after receipt by an Indemnified Party of any notice of the
commencement of any action, claim or other legal or arbitral proceeding (a
"Proceeding") which such Indemnified Party reasonably anticipates would subject
it to any Indemnified Amount, such Indemnified Party will, if a claim in respect
thereof is to be made by such Indemnified Party against the Transferor under
this Section 7.03, notify the Transferor in writing of the commencement thereof;
provided that (i) the omission so to notify the Transferor will not relieve it
from any liability which it may have hereunder unless and except to the extent
it did not otherwise learn of such Proceeding and such failure results in the
forfeiture by the Transferor of substantial rights or defenses which may arise
under this provision or otherwise, and (ii) the omission so to notify the
Transferor will not relieve it from liability which it may have to an
Indemnified Party otherwise than on account of this Section 7.03. In case any
such Proceedings are brought against any Indemnified Party and it notifies the
Transferor of the commencement thereof, the Transferor will be entitled to
participate therein, and to the extent that it may elect by written notice
delivered to the Indemnified Party, to assume the defense thereof, with counsel
reasonably satisfactory to such Indemnified Party; provided that if the
defendants in any such Proceedings include both the Indemnified Party and the
Transferor and the Indemnified Party shall have reasonably concluded that there
may be legal defenses available to it which are different from or additional to
those available to the Transferor, the Transferor shall not have the right to
direct the defense of such Proceeding on behalf of such Indemnified Party, and
the Indemnified Party shall have the right to select separate counsel to assert
such legal defenses on behalf of such Indemnified Party. Upon receipt of notice
from the Transferor to such Indemnified Party of the Transferor's election so to
assume the defense of such Proceedings and approval by the Indemnified Party of
counsel, the Transferor will not be liable to such Indemnified Party for
expenses incurred thereafter by the Indemnified Party in connection with the
defense thereof (other than reasonable costs of investigation prior to the
assumption of the defense by the Transferor's legal counsel) unless (i) the
Indemnified Party shall have employed separate counsel in connection with the
assertion of legal defenses in accordance with the proviso to the preceding
sentence, (ii) the Transferor shall not have employed counsel reasonably
satisfactory to the Indemnified Party to represent the Indemnified Party within
a reasonable time after notice by the relevant Indemnified Party to the
Transferor of commencement of the Proceedings or (iii) the Transferor has
authorized in writing the employment of counsel for the Indemnified Party at the
Transferor's expense. The indemnity, reimbursement and contribution obligations
of the Transferor hereunder shall be in addition to any other liability the
Transferor may otherwise have to an Indemnified Party and shall be binding upon
and inure to the benefit of any successors and assigns of the Transferor
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and any Indemnified Party. No party subject to this Section 7.03 shall settle,
compromise or consent to the entry of any judgment in any Proceeding in respect
of which indemnification may be sought under this Section 7.03 (whether or not
any Indemnified Party is an actual or potential party to such Proceeding)
without the written consent of the other such parties, unless such settlement,
compromise or consent includes an unconditional release of each Indemnified
Party from all liability arising out of such Proceeding.
ARTICLE VIII
OTHER MATTERS RELATING TO THE SERVICER
SECTION 8.01. Liability of the Servicer. The Servicer shall be
liable under this Agreement only to the extent of the obligations specifically
undertaken by the Servicer in its capacity as Servicer. No implied duties or
covenants shall be read into this Agreement against the Servicer.
SECTION 8.02. Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer. The Servicer shall not consolidate with or merge
into any other Person or convey or transfer its properties and assets
substantially as an entirety to any Person unless:
(a) (i) the Person formed by such consolidation or into which the
Servicer is merged or the Person which acquires by conveyance or transfer
the properties and assets of the Servicer substantially as an entirety
shall be, if the Servicer is not the surviving entity, a corporation
organized and existing under the laws of the United States of America or
any State or the District of Columbia, and such corporation shall have
expressly assumed, by an agreement supplemental hereto, executed and
delivered to the Trustee in form satisfactory to the Trustee the
performance of every covenant and obligation of the Servicer hereunder;
(ii) the Servicer shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel each in form satisfactory to the
Trustee and stating that such consolidation, merger, conveyance or
transfer complies with this Section 8.02 and that all conditions precedent
provided for in this Section 8.02(a) relating to such transaction have
been complied with; and (iii) the Rating Agency Condition shall have been
satisfied; and
(b) the corporation formed by such consolidation or into which the
Servicer is merged or which acquires by conveyance or transfer the
properties and assets of the Servicer substantially as an entirety shall
have all licenses and approvals of Governmental Authorities required to
service the Receivables.
SECTION 8.03. Limitations on Liability. None of the directors,
officers, employees or agents of the Servicer, past, present or future, shall be
under any liability to the
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Trust, the Trustee, the Certificateholders or any other Person for any action
taken or for refraining from the taking of any action in such capacities
pursuant to this Agreement or for any obligation or covenant under this
Agreement, it being understood that, with respect to the Servicer, this
Agreement and the obligations created hereunder are solely the obligations of
the Servicer; provided, however, that this provision shall not protect the
Servicer or any such Person against any liability which would otherwise be
imposed by reason of willful misconduct or gross negligence by such Person of
any of his, her or its obligations and duties. The Servicer and any partner,
director, officer, employee or agent of the Servicer may rely in good faith on
any document of any kind prima facie properly executed and submitted by any
Person (other than the Servicer or any Affiliate thereof) respecting any matters
arising hereunder. The Servicer shall not be under any obligation to appear in,
prosecute or defend any legal action which is not reasonably related to its
duties as Servicer in accordance with this Agreement and which may involve it in
any expense or liability.
SECTION 8.04. Servicer Indemnification. The Servicer hereby agrees
to indemnify each Indemnified Party from and against Indemnified Amounts awarded
against or incurred by any of them arising out of or resulting from this
Agreement, the activities of the Trust or the Trustee in connection herewith,
the Transferor's use of proceeds of Transfers of Receivables or reinvestments of
Collections, the interest conveyed hereunder in Trust Assets, or in respect of
any Receivable or the Receivables Purchase Agreements (excluding however (a)
Indemnified Amounts resulting from gross negligence or willful misconduct on the
part of such Indemnified Party to which such Indemnified Amount would otherwise
be due, (b) losses in respect of Receivables to the extent reimbursement
therefor would constitute credit recourse to the Transferor for nonpayment of
any Receivable by any Originator and (c) any income or franchise taxes or
similar taxes or any interest or penalties with respect thereto) incurred by
such Indemnified Party arising out of or as a result of this Agreement or the
interest conveyed hereunder in Trust Assets or in respect of any Receivable or
the Receivables Purchase Agreements to the extent caused by:
(i) reliance on any representation, warranty or covenant made by the
Servicer (or any of its Responsible Officers) under or in connection with
this Agreement which shall have been incorrect in any material respect
when made or which the Servicer shall have failed to perform;
(ii) the failure by the Servicer to comply with any applicable
Requirement of Law with respect to any Receivable or the Related Security
or related Contract;
(iii) any commingling by the Servicer of Collections with other
funds of the Servicer or any Affiliate;
(iv) any claim brought by any Person other than an Indemnified Party
arising from any activity by the Servicer or any Affiliate of the Servicer
in servicing,
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administering or collecting any Receivable;
(v) any failure by the Servicer to perform its duties or obligations
in accordance with the provisions of this Agreement; or
(vi) the acceptance by the Seller as payment of any Receivable funds
denominated in a currency other than US Dollars.
Indemnification pursuant to this Section 8.04 shall only be payable
from the assets of the Servicer. The agreement contained in this Section 8.04
shall survive the collection of all Receivables, the termination of the Trust
and the payment of all amounts otherwise due hereunder.
Any Indemnified Amounts due hereunder shall be payable within
fifteen Business Days of submission of a claim by the Indemnified Party which
describes in reasonable detail the basis for such claim.
Promptly after receipt by an Indemnified Party of any notice of the
commencement of any action, claim or other legal or arbitral proceeding (a
"Proceeding") which such Indemnified Party reasonably anticipates would subject
it to any Indemnified Amount, such Indemnified Party will, if a claim in respect
thereof is to be made by such Indemnified Party against the Servicer under this
Section 8.04, notify the Servicer in writing of the commencement thereof;
provided that (i) the omission so to notify the Servicer will not relieve it
from any liability which it may have hereunder unless and except to the extent
it did not otherwise learn of such Proceeding and such failure results in the
forfeiture by the Servicer of substantial rights or defenses which may arise
under this provision or otherwise, and (ii) the omission so to notify the
Servicer will not relieve it from liability which it may have to an Indemnified
Party otherwise than on account of this Section 8.04. In case any such
Proceedings are brought against any Indemnified Party and it notifies the
Servicer of the commencement thereof, the Servicer will be entitled to
participate therein, and to the extent that it may elect by written notice
delivered to the Indemnified Party, to assume the defense thereof, with counsel
reasonably satisfactory to such Indemnified Party; provided that if the
defendants in any such Proceedings include both the Indemnified Party and the
Servicer and the Indemnified Party shall have reasonably concluded that there
may be legal defenses available to it which are different from or additional to
those available to the Servicer, the Servicer shall not have the right to direct
the defense of such Proceeding on behalf of such Indemnified Party, and the
Indemnified Party shall have the right to select separate counsel to assert such
legal defenses on behalf of such Indemnified Party. Upon receipt of notice from
the Servicer to such Indemnified Party of the Servicer's election so to assume
the defense of such Proceedings and approval by the Indemnified Party of
counsel, the Servicer will not be liable to such Indemnified Party for expenses
incurred thereafter by the Indemnified Party in connection with the defense
thereof (other than reasonable costs of investigation prior to the
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assumption of the defense by the Servicer's legal counsel) unless (i) the
Indemnified Party shall have employed separate counsel in connection with the
assertion of legal defenses in accordance with the proviso to the next preceding
sentence, (ii) the Servicer shall not have employed counsel reasonably
satisfactory to the Indemnified Party to represent the Indemnified Party within
a reasonable time after notice by the relevant Indemnified Party to the Servicer
of commencement of the Proceedings or (iii) the Servicer has authorized in
writing the employment of counsel for the Indemnified Party at the Servicer's
expense. The indemnity, reimbursement and contribution obligations of the
Servicer hereunder shall be in addition to any other liability the Servicer may
otherwise have to an Indemnified Party and shall be binding upon and inure to
the benefit of any successors and assigns of the Servicer and any Indemnified
Party. No party subject to this Section 8.04 shall settle, compromise or consent
to the entry of any judgment in any Proceeding in respect of which
indemnification may be sought under this Section 8.04 (whether or not any
Indemnified Party is an actual or potential party to such Proceeding) without
the written consent of the other such parties, unless such settlement,
compromise or consent includes an unconditional release of each Indemnified
Party from all liability arising out of such Proceeding.
SECTION 8.05. The Servicer Not to Resign. The Servicer shall not
resign from the obligations and duties hereby imposed on it except upon
determination that (i) its performance of its duties hereunder is no longer
permissible under applicable law and (ii) there is no reasonable action which
the Servicer could take without incurring material liabilities to make its
performance of its duties hereunder permissible under applicable law. Any
determination permitting the resignation of the Servicer shall be evidenced by
an Opinion of Counsel who is not an employee of the Servicer or any Affiliate of
the Servicer with respect to clause (i) above, delivered to, and in form
reasonably satisfactory to, the Trustee. No resignation shall become effective
until the Trustee or a Successor Servicer shall have assumed the
responsibilities and obligations of the Servicer in accordance with Section
10.02.
SECTION 8.06. Examination of Records. The Servicer shall mark its
computer records to give proper notice that the Receivables and other Trust
Assets have been transferred to the Trustee, on behalf of the Trust, pursuant to
this Agreement for the benefit of the Certificateholders. The Servicer (and the
Transferor) shall, prior to the sale or transfer to a party other than the
Transferor of any receivable held in its custody, examine its records to
determine that such receivable is not a Receivable.
SECTION 8.07. Confidentiality. The Servicer agrees to use its best
efforts, and shall cause its agents or representatives to use their best
efforts, to hold in confidence all Confidential Information; provided that
nothing herein shall prevent the Servicer from delivering copies of any
financial statements and other documents constituting Confidential Information
or disclosing any other Confidential Information (i) to a Successor Servicer or
as required by a Requirement of Law applicable to the Servicer, (ii) as required
in the performance of the Servicer's duties hereunder, (iii) as required in
enforcing the rights of the
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Certificateholders hereunder or (iv) as provided in any Supplement. The Servicer
agrees to take such measures as shall be reasonably requested by the Transferor
to protect and maintain the security and confidentiality of all Confidential
Information and, in connection therewith, will allow the Transferor to inspect
the Servicer's security and confidentiality arrangements from time to time
during normal business hours. The Servicer shall use its best efforts to provide
the Transferor written notice at least five Business Days prior to any
disclosure pursuant to this Section 8.07 and in any event will provide written
notice whenever any such disclosure is made.
ARTICLE IX
TRUST EARLY AMORTIZATION EVENTS
SECTION 9.01. Trust Early Amortization Events. If any one of the
following events shall occur:
(a) any failure by the Transferor or the Servicer to make any
payment, transfer or deposit required to be paid, effected or made by it
hereunder (including pursuant to Section 3.04 (b))within two Business Days
after the same shall become due; or
(b) any representation or warranty (other than a representation and
warranty under Section 2.04 (e) that shall have given rise to a repurchase
obligation under Section 2.04), certification or written statement made or
deemed made by the Transferor or the Servicer under or in connection with
this Agreement, or by Muehlstein under or in connection with the Parent
Undertaking Agreement, or in any statement, record, certificate, financial
statement or other document delivered pursuant to this Agreement or the
Parent Undertaking Agreement, or in connection with this Agreement the
Parent Undertaking Agreement shall prove to have been incorrect in any
respect on or as of the date made or deemed made which has a material
adverse effect on the interests of any Beneficiary of any Series; or
(c) the Transferor or the Servicer shall fail to observe or perform
any covenant or agreement applicable to it contained herein which has a
material adverse effect on any Beneficiary if such failure shall remain
unremedied for ten days; or
(d) any Receivables Purchase Agreement shall for any reason cease to
be in full force and effect or an Early Termination (as defined therein)
shall occur; or
(e) the Net Receivables Balance is less than the Required Net
Receivables Balance on the fifth consecutive Business Day following a Pool
Non-compliance Date;
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or
(f) an Insolvency Event shall occur with respect to any Originator,
the Transferor, the Servicer, Muehlstein or the Trust; or
(g) the Securities and Exchange Commission or other regulatory body
having jurisdiction reaches a final determination that the Trust is an
"investment company" within the meaning of the Investment Company Act; or
(h) (i) any purchase of any Receivables by the Transferor under any
Receivables Purchase Agreement shall cease to create a valid sale,
transfer and assign ment to the Transferor of all right, title and
interest of the Originator in and to such Receivables and the proceeds
thereof, or (ii) any Transfer of any Receivables on any date shall for any
reason cease to create a valid transfer and assignment to the Trust of all
right, title and interest of the Transferor in and to such Receivables and
the proceeds thereof or, if such Transfer does not constitute such a sale,
transfer and assignment, cease to create a valid and perfected first
priority "security interest" (as defined in the UCC of the State of New
York and of the jurisdiction the law of which governs the perfection of
the interest in such Receivables created hereunder) in such Receivables
and the proceeds thereof, or (iii) the Investor Certificates delivered
hereunder shall for any reason (other than due to the acts or omissions of
the Investor Certificateholders) cease to evidence the transfer to the
Investor Certificateholders of, or the Investor Certificateholders shall
otherwise cease to have, a beneficial interest in a trust owning or the
Trustee on behalf of the Trust having a perfected first priority security
interest in the Receivables and the other Trust Assets now existing and
hereafter arising and the proceeds thereof to the extent of their
respective Undivided Fractional Interests; or
(i) the Trust at any time receives a final determination that it
will be treated as an association (or publicly traded partnership) taxable
as a corporation for federal income tax purposes; or
(j) a Servicer Default shall have occurred and be continuing; or
(k) the Servicer shall have resigned in accordance with the terms of
this Agreement; or
(l) Muehlstein shall fail to observe or perform any covenant or
agreement (within any applicable cure period) applicable to it contained
in the Parent Undertaking Agreement, or the Parent Undertaking Agreement
shall cease to be in effect; or
(m) any material adverse change shall occur in the collectibility of
the Receivables taken as a whole or in the financial condition of the
Transferor, Muehlstein
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and its subsidiaries taken as a whole or the Servicer and its subsidiaries
taken as a whole, or in the ability of any of them to perform its
obligations under any Transaction Document; or
(n) any breach, default or event of default shall occur or any other
condition shall exist under any instrument, agreement or indenture
pertaining to any Indebtedness of Muehlstein in excess of $3 million if
the effect thereof is to cause an acceleration, mandatory redemption or
other required repurchase of such Indebtedness; or any such Indebtedness
shall be otherwise declared to be due and payable (by acceleration or
otherwise) or required to be prepaid, redeemed or otherwise repurchased by
Muehlstein (other than by a regularly scheduled required prepayment,
mandatory redemption or required repurchase) prior to the stated maturity
thereof; or
(o) Muehlstein and its subsidiaries shall at any time fail to have
Consolidated Tangible Net Worth of at least $15 million; or
(p) the Intercreditor Agreement shall cease to be in full force and
effect; or
(q) (i) any Plan Event shall have occurred, (ii) the Transferor or
any ERISA Affiliate shall have withdrawn from a Multiemployer Plan, or
(iii) any Multiemployer Plan shall have been terminated or reorganized or
become insolvent, and as a result of one or more such events the
Transferor or any ERISA Affiliate has incurred or is reasonably expected
to incur liability in excess of $1,000,000; or
(r) a Termination Event (other than a Termination Event based upon
an Insolvency Event) under any Receivables Purchase Agreement shall occur.
then, if any of the events set forth in paragraphs (a), (d), (e), (f), (g), (i),
(j), (k), (l), (m), (n), (o), (p) or (q) above shall have occurred, a "Trust
Early Amortization Event" shall occur without any notice, demand, protest or
other requirement of any kind immediately upon the occurrence of such event,
and, if any of the events set forth in paragraphs (b), (c), (h) or (r) above
shall have occurred, the Trustee may (and, if directed to do so by a Majority in
Interest of any outstanding Series or, if the related Supplement so provides,
the Enhancement Provider for such Series, shall), by notice to the Transferor,
the Servicer, and each Enhancement Provider, declare that a "Trust Early
Amortization Event" shall occur as of the date set forth in such notice. Upon
the occurrence of either (i) a Trust Early Amortization Event or (ii) an event
described in clause (a) of the definition "Insolvency Event" (without giving
effect to the 60-day grace period therein) with respect to the Transferor or any
Originator, then additional Receivables will not be transferred to the Trust;
provided, however, that if (x) an event described in the preceding clause (ii)
shall occur and (y) in clause (a) of the definition of "Insolvency Event" within
the 60-day grace period referred to each case, decree or order giving rise to
such event shall have been stayed, dismissed or otherwise rescinded, then, so
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long as no Trust Early Amortization Event shall have occurred, additional
Receivables shall thereafter be transferred to the Trust as if such case, decree
or order had not been filed. The Trustee shall be deemed to have knowledge of a
Trust Early Amortization Event only if a Responsible Officer of the Trustee has
actual knowledge or if a Responsible Officer of the Trustee has received written
notice thereof.
A Majority in Interest of each outstanding Series (or, if so
specified in the related Supplement, each Enhancement Provider for such Series)
may, on behalf of all Certificateholders, waive any default (other than a
default described in paragraph (e) above) by the Transferor or the Servicer in
the performance of their obligations hereunder and its consequences, except the
failure to make any distributions or payments required to be made to
Certificateholders or to make any required deposits of any amounts to be so
distributed or paid. Holders of Certificates evidencing 67% or more of the
aggregate Certificateholders' Interest of each outstanding Series (or, if so
specified in the related Supplement, each Enhancement Provider for such Series)
may, on behalf of all Certificateholders, waive any default described in
paragraph (e) above and its consequences. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereon except to the
extent expressly so waived.
SECTION 9.02. Additional Rights upon the Occurrence of Any Trust
Early Amortization Event. (a) Upon the occurrence and during the continuance of
any Trust Early Amortization Event, in addition to all other rights and remedies
under this Agreement or otherwise and all other rights and remedies provided
under the UCC of the applicable jurisdiction and other applicable laws (which
rights shall be cumulative), each of the Servicer, at the direction of the
Trustee, and the Trustee may exercise any and all rights and remedies of the
Transferor under or in connection with the Receivables Purchase Agreements,
including, without limitation, any and all rights of the Transferor to demand or
otherwise require payment of any amount under, or performance of any provision
of, the Receivables Purchase Agreements. Further, the Trustee may exercise any
and all rights and remedies under the Parent Undertaking Agreement.
(b) If an Insolvency Event with respect to the Transferor occurs,
the Transferor shall immediately cease to transfer Receivables to the Trust and
shall promptly give written notice to the Trustee, who shall, within two
Business Days, forward such notice to the Certificateholders, each Rating
Agency, each Enhancement Provider and the Servicer of such event.
Notwithstanding the above, Receivables transferred to the Trust prior to the
occurrence of such Insolvency Event and collections relating to such Receivables
shall continue to be part of the Trust. Unless, within 10 Business Days of the
date of the notice provided for above, the Trustee receives written instructions
from a Majority in Interest of each outstanding Series (or, if so specified in
the related Supplement, the Enhancement Provider for the Series) instructing the
Trustee not to sell, dispose of or liquidate the Receivables, the Trustee or its
agent shall promptly proceed to sell, dispose of, or otherwise liquidate the
Receivables in a
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commercially reasonable manner and on commercially reasonable terms; provided,
however, that, if the amount available to the Trust for distribution after such
sale, disposition or liquidation would be less than the aggregate principal
amount of the Investor Certificates plus any unpaid Discount Amount thereon
through the Distribution Date next succeeding the date of such sale, the Trustee
or its agent shall not proceed with such sale, disposition or liquidation unless
a Majority in Interest of each outstanding Series (or, if so specified in the
related Supplement, the Enhancement Provider for such Series) shall have
consented in writing thereto. The proceeds from such sale, disposition or
liquidation of the Receivables shall be treated as Collections on the
Receivables and shall be distributed in accordance with the terms of this
Agreement after being deposited in the Concentration Account.
ARTICLE X
SERVICER DEFAULTS
SECTION 10.01. Servicer Defaults. If any one of the following events
(each being a "Servicer Default") shall occur and be continuing:
(a) any failure by the Servicer to make any payment, transfer or
deposit (including pursuant to Section 3.04(b)), or, if applicable, to
give instructions or notice to the Trustee to make such payment, transfer
or deposit, or to give notice to the Trustee as to any action to be taken
under any Enhancement Agreement, or any failure to provide a Determination
Date Certificate to the Trustee within two Business Days after the same
shall become due; or
(b) the Servicer shall fail to observe or perform any other covenant
or agreement applicable to it contained herein which has a material
adverse effect on any Beneficiary if such failure shall remain unremedied
for ten days; or
(c) any representation, warranty or certification made by the
Servicer under or in connection with this Agreement, or in any certificate
or information delivered pursuant to or in connection with this Agreement,
shall prove to have been incorrect in any respect when made and which has
a material adverse effect on the interests of any Beneficiary; or
(d) an Insolvency Event shall occur with respect to the Servicer; or
(e) the Servicer assigns its duties under this Agreement, except as
specifically permitted by Section 8.02;
then, as long as such Servicer Default shall not have been remedied and is
continuing, either
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the Trustee (unless otherwise directed by a Majority in Interest of each
outstanding Series or, if so specified in the related Supplement, the
Enhancement Provider for such Series) or the Majority in Interest of each Series
(or, if so specified in the related Supplement, the Enhancement Provider for
such Series), by notice then given in writing to the Servicer (and to the
Trustee if given by such Investor Certificateholders) (each such being a
"Termination Notice"), may terminate all but not less than all the rights and
obligations of the Servicer as Servicer under this Agreement. The Trustee shall
be deemed to have knowledge of a Servicer Default only if a Responsible Officer
of the Trustee has actual knowledge or if a Responsible Officer of the Trustee
has received written notice thereof.
Notwithstanding the foregoing, a delay in or failure of performance
referred to in Section 10.01(a) or (b) for a period of five Business Days shall
not constitute a Servicer Default if such delay or failure could not have been
prevented by the exercise of reasonable diligence by the Servicer and such delay
or failure was caused by an act of God or the public enemy, acts of declared or
undeclared war, public disorder, rebellion or sabotage, epidemics, landslides,
lightning, fire, hurricanes, earthquakes, floods, union strikes, work stoppages
or similar causes. The preceding sentence shall not relieve the Servicer from
using its best efforts to perform its obligations in a timely manner in
accordance with the terms of this Agreement, and the Servicer shall provide the
Trustee, the Transferor, any Enhancement Provider and the Investor
Certificateholders with an Officer's Certificate giving prompt notice of such
failure or delay by it, together with a description of its efforts so to perform
its obligations.
A Majority in Interest of each outstanding Series (or, if so
specified in the related Supplement, the Enhancement Provider for such Series)
may, on behalf of all Certificateholders, waive any default by the Servicer in
the performance of its obligations hereunder and its consequences, except the
failure to make any distributions or payments required to be made to
Certificateholders or to make any required deposits of any amounts to be so
distributed or paid. No such waiver shall extend to any subsequent or other
default or impair any right consequent thereon except to the extent expressly so
waived.
After receipt by the Servicer of a Termination Notice, and on the
date that a Successor Servicer shall have been appointed by the Trustee pursuant
to Section 10.02, all authority and power of the Servicer under this Agreement
shall pass to and be vested in such Successor Servicer (a "Service Transfer")
and, without limitation, the Trustee is hereby authorized, empowered and
instructed (upon the failure of the Servicer to cooperate) to execute and
deliver, on behalf of the Servicer, as attorney-in-fact or otherwise, all
documents and other instruments upon the failure of the Servicer to execute or
deliver such documents or instruments, and to do and accomplish all other acts
or things necessary or appropriate to effect the purposes of such Service
Transfer. The Servicer agrees to cooperate, at its expense, with the Trustee and
such Successor Servicer in (i) effecting the termination of the responsibilities
and rights of the Servicer to conduct servicing hereunder, including, without
limitation, the transfer to such Successor Servicer of all authority of the
Servicer to service the
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Receivables as provided under this Agreement, including all authority over all
Collections which shall on the date of such Service Transfer be held by the
Servicer for deposit to the Concentration Account, any Muehlstein Collection
Account, the Trustee's Account or the Transferor's Account, or which have been
deposited by the Servicer to the Concentration Account, any Muehlstein
Collection Account, or any other account, or which shall thereafter be received
with respect to the Receivables, (ii) taking such measures as shall be
reasonably requested by the Transferor to protect and maintain the security and
confidentiality of all Confidential Information in accordance with Section 8.07
and (iii) assisting the Successor Servicer until all servicing activities have
been transferred to such Successor Servicer, such assistance to include, without
limitation, (x) assisting any accountants selected by the Successor Servicer to
verify collection records and reports made prior to the Service Transfer and (y)
assisting to make the computer systems of the Servicer and the Successor
Servicer compatible to the extent necessary to effect the Servicer Transfer. The
Servicer shall, at its expense, within five Business Days of such Service
Transfer, (A) assemble such documents, instruments and other records (including
computer tapes and disks), which evidence the Receivables and the other Trust
Assets, and which are necessary or desirable to collect the Receivables, and
shall make the same available to the Successor Servicer or the Trustee or its
designee at a place selected by the Successor Servicer or the Trustee and in
such form as the Successor Servicer or the Trustee may reasonably request, and
(B) segregate all cash, checks and other instruments received by it from time to
time constituting Collections of Receivables in a manner acceptable to the
Successor Servicer and the Trustee, and, promptly upon receipt, remit all such
cash, checks and instruments to the Successor Servicer or the Trustee or its
designee.
At any time following a Termination Notice:
(1) the Servicer shall, at the Trustee's request and at the
Servicer's expense, give notice of the Trust's ownership of the
Receivables to the related Obligors and direct that payments be made
directly to the Trustee or its designee;
(2) if the Servicer fails to provide the notice to the Obligors
required in paragraph (1) above, the Trustee may direct the Obligors of
Receivables, or any of them, that payment of all amounts payable under any
such Receivables be made directly to the Trustee or its designee; and
(3) each of the Transferor and each Certificateholder hereby
authorizes the Trustee to take any and all steps in the Transferor's name
and on behalf of the Transferor and the Certificateholders necessary or
desirable, in the determination of the Trustee, to collect all amounts due
under any and all Receivables, including, without limitation, endorsing
the Transferor's name on checks and other instruments representing
Collections in respect of such Receivables and enforcing such Receivables.
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SECTION 10.02. Trustee to Act; Appointment of Successor Servicer.
(a) On and after the receipt by the Servicer of a Termination Notice pursuant to
Section 10.01 or upon a resignation by the Servicer pursuant to Section 8.05,
the Servicer shall continue to perform all servicing functions under this
Agreement until (i) in the case of any such receipt, the date specified in such
Termination Notice or otherwise specified by the Trustee in writing or, if no
such date is specified in such Termination Notice or otherwise specified by the
Trustee, until the earlier of a date agreed upon by the Servicer and the Trustee
and a date specified by the Trustee in a written notice to the Servicer and (ii)
in the case of any such resignation, until the Trustee or a Successor Servicer
shall have assumed the responsibilities and obligations of the Servicer pursuant
to this Section 10.02. The Trustee shall as promptly as possible after the
giving of a Termination Notice or such a resignation appoint an Eligible
Servicer (which may be Citibank, N.A.) as a successor servicer (the "Successor
Servicer"), subject to the consent of any Enhancement Provider which consent
shall not be unreasonably withheld or delayed and if specified in any
Supplement, the consent of a Majority in Interest of such Series, which consent
shall not be unreasonably withheld or delayed, and such Successor Servicer shall
accept its appointment by a written assumption in a form acceptable to the
Trustee. In the event that a Successor Servicer has not been appointed or has
not accepted its appointment by the earlier of 30 days after the date of such
Termination Notice or at the time when the Servicer ceases to act as Servicer,
the Trustee without further action shall automatically be appointed the
Successor Servicer. The Trustee may delegate any of its servicing obligations to
an affiliate or agent of the Trustee in accordance with the terms of this
Agreement. Notwithstanding the foregoing, the Trustee shall, if it is unable or
unwilling so to act as Successor Servicer, petition a court of competent
jurisdiction to appoint any established institution that is an Eligible Servicer
(other than the Trustee) as the Successor Servicer hereunder.
(b) Upon its appointment, the Successor Servicer shall be the
successor in all respects to the Servicer with respect to servicing functions
under this Agreement and shall be subject to all the responsibilities, duties
and liabilities relating thereto placed on the Servicer by the terms and
provisions hereof, and all references in this Agreement to the Servicer shall be
deemed to refer to such Successor Servicer; provided, however, that neither the
Trustee (solely in its capacity as such) nor any Successor Servicer shall be
deemed in default hereunder as a result of the predecessor Servicer's failure to
deliver necessary Trust Assets, documents, or records to the Trustee (solely in
its capacity as such) or to such Successor Servicer; and provided further that
the Successor Servicer shall not be liable for any acts or omissions of the
Servicer occurring prior to such succession or for any breach by the Servicer of
any of its representations and warranties contained herein or in any related
document or agreement. The Successor Servicer shall be reimbursed by the
Transferor for any reasonable transition fees, costs and out-of-pocket expenses
incurred in connection with a Service Transfer in accordance with Section
3.02(b). Any Successor Servicer, by its acceptance of its appointment, will
automatically agree to be bound by the terms and provisions of any Enhancement
Agreement.
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(c) In connection with any Termination Notice, the Trustee shall be
permitted to appoint any Eligible Servicer as a Successor Servicer for servicing
compensation not in excess of the Servicing Fee, unless the Trustee shall agree
to pay the excess over the Servicing Fee of the compensation of any such
Successor Servicer and such excess shall not be unreasonable under the
applicable circumstances.
(d) All authority and power granted to the Successor Servicer under
this Agreement shall automatically terminate upon termination of the Trust and
shall pass to and be vested in the Transferor, and, without limitation, the
Transferor is hereby authorized and empowered to execute and deliver, on behalf
of the Successor Servicer, as attorney-in-fact or otherwise, all documents and
other instruments, and to do and accomplish all other acts or things, necessary
or appropriate to effect the purposes of such transfer of servicing rights. The
Successor Servicer agrees to cooperate with the Transferor in effecting the
termination of the responsibilities and rights of the Successor Servicer to
conduct servicing of the Receivables. Upon such termination of the Trust, the
Successor Servicer shall transfer its electronic records relating to the
Receivables to the Transferor in such electronic form as the Transferor may
reasonably request and shall transfer all other records, correspondence and
documents to the Transferor in the manner and at such times as the Transferor
shall reasonably request.
SECTION 10.03. Notification to Certificateholders. Promptly and in
any event within two Business Days after a Responsible Officer of the Servicer
obtains knowledge of any Servicer Default, the Servicer shall give written
notice thereof to a Responsible Officer of the Trustee, and the Trustee shall
promptly deliver a copy of such notice to the Certificateholders, each
Enhancement Provider and each Rating Agency. Upon any termination or appointment
of a Successor Servicer pursuant to this Article X, the Trustee shall give
prompt written notice thereof to the Transferor and the Certificateholders.
ARTICLE XI
THE TRUSTEE
SECTION 11.01. Duties of the Trustee. (a) Other than while acting in
its capacity as Successor Servicer, the Trustee, prior to the occurrence of a
Servicer Default of which a Responsible Officer of the Trustee has actual
knowledge and after the curing of all Servicer Defaults which may have occurred,
undertakes to perform such duties and only such duties as are specifically set
forth in this Agreement, and no implied duties or covenants shall be read into
this Agreement against the Trustee. If a Responsible Officer of the Trustee has
actual knowledge that a Servicer Default has occurred (which has not been cured
or waived), the Trustee shall exercise such of the rights and powers vested in
it by this Agreement and use the same degree of care and skill in their
exercise, as a prudent person would exercise or use under the circumstances in
the conduct of his or her own affairs.
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(b) The Trustee, upon receipt of any resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement or any Supplement, shall examine them to determine
whether they substantially conform to the requirements of this Agreement or any
Supplement. The Trustee shall give prompt written notice to the
Certificateholders, any Enhancement Provider and each Rating Agency of any
material lack of conformity of any such instrument to the applicable
requirements of this Agreement or any Supplement discovered by the Trustee which
would entitle any Enhancement Provider or a specified percentage of the Investor
Certificateholders to take any action pursuant to this Agreement or any
Supplement.
(c) Subject to Section 11.01(a), no provision of this Agreement
shall be construed to relieve the Trustee from liability for its own grossly
negligent action, its own grossly negligent failure to act or its own willful
misconduct; provided, however, that:
(i) the Trustee shall not be personally liable for an error of
judgment made in good faith by a Responsible Officer or Responsible
Officers of the Trustee, unless it shall be proved that the Trustee was
grossly negligent in ascertaining the pertinent facts;
(ii) the Trustee shall not be personally liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of a Majority in Interest of each
outstanding Series relating to the time, method and place of conducting
any proceeding for any remedy available to the Trustee in accordance with
the terms of this Agreement, or exercising any trust or power conferred
upon the Trustee, under this Agreement; and
(iii) the Trustee shall not be charged with knowledge of any failure
by the Servicer to comply with the obligations of the Servicer referred to
in Section 10.01 or of any Trust Early Amortization Event unless a
Responsible Officer of the Trustee obtains actual knowledge of such
failure or such event or the Trustee receives written notice of such
failure or such event from the Servicer, each Enhancement Provider or the
Certificateholders of any outstanding Series evidencing not less than 20%
of the Invested Amount for such Series.
(d) The Trustee shall not be required to expend or risk its own
funds or otherwise incur financial liability in the performance of any of its
duties hereunder or under any Supplement or in the exercise of any of its rights
or powers if there is reasonable grounds for believing that the repayment of
such funds or indemnity satisfactory to it against such risk or liability is not
reasonably assured to it, and none of the provisions contained in this Agreement
shall in any event require the Trustee to perform, or be responsible for the
manner
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of performance of, any obligations of the Servicer under this Agreement except
during such time, if any, as the Trustee shall be the successor to, and be
vested with the rights, duties, powers and privileges of, the Servicer in
accordance with the terms of this Agreement.
(e) Except for actions expressly authorized by this Agreement, the
Trustee shall take no action reasonably likely to impair the interests of the
Trust in any Receivable now existing or hereafter created or to impair the value
of any Receivable now existing or hereafter created.
(f) Except as expressly provided in this Agreement, the Trustee
shall have no power to vary the corpus of the Trust including, without
limitation, by (i) accepting any substitute obligation for a Receivable
initially Transferred to the Trust under Section 2.01, (ii) adding any other
investment, obligation or security to the Trust, or (iii) withdrawing from the
Trust any Receivable.
(g) In the event that the Transfer Agent and Registrar shall fail to
perform any obligation, duty or agreement in the manner or on the day required
to be performed by the Transfer Agent and Registrar, as the case may be, under
this Agreement or under any Supplement, the Trustee shall be obligated promptly
upon its actual knowledge thereof to perform such obligation, duty or agreement
in the manner so required.
(h) The Trustee shall have no responsibility or liability for the
selection of, or investment losses on, Eligible Investments.
(i) Notwithstanding any other provision contained herein, the
Trustee is not acting as, and shall not be deemed to be, a fiduciary for any
Enhancement Provider in its capacity as such or as a Beneficiary, and the
Trustee's sole responsibility with respect to any such Enhancement Provider
shall be to perform those duties with respect to any such Enhancement Provider
as are specifically set forth herein, and no implied duties or obligations shall
be read into this Agreement against the Trustee with respect to any such
Enhancement Provider.
(j) The Trustee shall notify each Rating Agency and each Enhancement
Provider (i) of any notice which the Trustee receives pursuant to Section
2.05(g)(i), 2.05(h) or 3.04(h)(i), (ii) of any change in any rating of the
Certificates of any other Rating Agency and (iii) immediately of the occurrence
of any Trust Early Amortization Event under Article IX.
(k) The Trustee shall, with respect to each Daily Report (upon which
the Trustee may conclusively rely), (A) compare the Collections reported that
day by the Servicer to the actual Collections deposited to the Collection
Account, (B) with respect to the reconciliation of each of the trust accounts,
compare the beginning balance as reported by the Servicer to the amount on
deposit in the trust accounts per the accounting records of the
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Trustee and (C) perform each of the account transfers set forth in the Daily
Report, as directed by the Servicer.
(l) The Trustee shall follow the following procedures with respect
to each Determination Date Certificate (upon which the Trustee may conclusively
rely):
(i) with respect to the reconciliation of each of the trust
accounts, compare the beginning and ending balances to the amounts which
were on deposit in the trust accounts per the accounting records of the
Trustee as of the applicable date; and
(ii) examine potential Early Amortization Events for positive
indications by the Servicer of Early Amortization Events pursuant to such
requirement in each applicable supplement.
(m) Notwithstanding any other provision of this Agreement or any
Supplement, upon discovery of any material discrepancy between the amounts
reported by the Servicer and the amounts calculated as provided above, the
Servicer shall have ten days to resolve such discrepancy before the Trustee
shall be obligated to give notice to the Certificateholders, each Enhancement
Provider and each Rating Agency.
SECTION 11.02. Certain Matters Affecting the Trustee. Except as
otherwise provided in Section 11.01:
(a) the Trustee may conclusively rely on and shall be fully
protected in acting on, or in refraining from acting in accord with, any
resolution, Officer's Certificate, certificate of auditors or any other
certificate, statement, instrument, opinion, report, notice, request,
consent, order, appraisal, bond or other paper or document believed by it
in good faith to be genuine and to have been signed or presented to it
pursuant to this Agreement by the proper party or parties;
(b) the Trustee may consult with counsel and, as a condition to
taking, suffering or omitting to take any action, may demand an Opinion of
Counsel, and any advice or opinion of counsel shall be full and complete
authorization and protection in respect of any action taken or suffered or
omitted by it hereunder in good faith and in accordance with such advice
or opinion of counsel;
(c) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement, or to institute, conduct
or defend any litigation hereunder or in relation hereto, at the request,
order or direction of any of the Certificateholders, pursuant to the
provisions of this Agreement, unless such Certificateholders shall have
offered to the Trustee security or indemnity satisfactory to it against
the costs, expenses and liabilities which may be incurred therein or
thereby;
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provided, however, that nothing contained herein shall relieve the Trustee
of the obligations, upon the occurrence of a Servicer Default (which has
not been cured or waived), to exercise such of the rights and powers
vested in it by this Agreement, and to use the same degree of care and
skill in their exercise as a prudent person would exercise or use under
the circumstances in the conduct of his or her own affairs;
(d) subject to Section 11.01(c), the Trustee shall not be personally
liable for any action taken, suffered or omitted by it in good faith and
believed by it to be authorized or within the discretion or rights or
powers conferred upon it by this Agreement;
(e) the Trustee shall not be bound to make any investigation into
the facts of matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal,
approval, bond or other paper or document, unless requested in writing so
to do by Certificateholders of any outstanding Series evidencing not less
than 20% of the Invested Amount for such Series or, if so specified in any
Supplement, the Enhancement Provider therefor;
(f) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or a custodian, and the Trustee shall not be responsible for any
misconduct or negligence on the part of, or for the supervision of any
such agent, attorney or custodian appointed with due care by it hereunder;
(g) except as required by Section 11.01, the Trustee shall not be
required to make any initial or periodic examination of any documents or
records related to the Receivables for the purpose of establishing the
presence or absence of defects, the compliance by the Transferor with its
representations and warranties or for any other purpose; and
(h) nothing in this Agreement shall be construed to require the
Trustee to monitor the performance of the Servicer or act as a guarantor
of the Servicer's performance.
SECTION 11.03. Trustee Not Liable for Recitals in Certificates or
Receivables. The Trustee assumes no responsibility for the correctness of the
recitals contained herein and in the Certificates (other than the certificate of
authentication on the Certificates). Except as set forth in Section 11.15, the
Trustee makes no representations as to the validity or sufficiency of this
Agreement or of the Certificates (other than the certificate of authentication
on the Certificates) or of any Receivable or related document. The Trustee shall
not be accountable for the use or application by the Transferor of any of the
Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the
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Transferor in respect of the Receivables or deposited in or withdrawn from the
Concentration Account, any Muehlstein Collection Account, the Transferor's
Account, the Trustee's Account or any other account hereafter established to
effectuate the transactions contemplated by and in accordance with the terms of
this Agreement and any Supplement. The Trustee shall at no time
have any responsibility or liability for or with respect to the
legality, validity and enforceability of any security interest in any
Receivable, or the perfection and priority of such security interest or the
maintenance of any such perfection and priority or the accuracy, content or
completeness of any offering documents used in connection with the sale of the
Certificates.
SECTION 11.04. Trustee May Own Certificates. The Trustee in its
individual or any other capacity may become the owner or pledgee of Investor
Certificates and may otherwise deal, and transact banking business, with the
Servicer and the Transferor with the same rights as it would have if it were not
the Trustee.
SECTION 11.05. Compensation; Trustee's Expenses. (a) The Trustee
shall be entitled to receive a monthly Trustee's fee (which shall not be limited
by any provision of law in regard to the compensation of a trustee of an express
trust, such fee being the "Trustee's Fee") in respect of each Collection Period
(or portion thereof) from the date hereof until the termination of the
Amortization Period, payable in arrears on each Distribution Date in an amount
agreed upon in writing by the Trustee and the Transferor. The Trustee's Fee
shall be the aggregate of the Series Trustee's Fees specified in the
Supplements. The Trustee's Fee shall be payable, first, from Investor
Collections pursuant to, and subject to the priority of payment set forth in,
Section 5.01 of the applicable Supplement, second, to the extent not paid from
Investor Collections, by the Transferor, third, to the extent not paid from
Investor Collections or by the Transferor, by the Servicer pursuant to Section
3.02(b) and, fourth, from Muehlstein pursuant to the Parent Undertaking
Agreement. When the Trustee incurs expenses or renders services in connection
with an Insolvency Event such expenses (including the reasonable fees and
expenses of its counsel) and the compensation for such services are intended to
constitute expenses of administration under any bankruptcy law or law relating
to creditors rights generally.
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(b) Expenses. The Transferor will pay or reimburse the Trustee upon
its request or at least 5 Business Days' notice providing reasonable detail, and
if the Transferor shall fail to do so, the Servicer will so pay or reimburse the
Trustee (with a right to reimbursement from the Transferor) pursuant to Section
3.02(b), and if both the Transferor and the Servicer shall fail to do so,
Muehlstein will so pay or reimburse the Trustee (with a right to reimbursement
from the Transferor) pursuant to the Parent Undertaking Agreement, for all
reasonable expenses, disbursements and advances incurred or made by the Trustee
in accordance with any of the provisions of this Agreement or any Supplement or
in connection with any amendment hereto (including the reasonable fees and
expenses of its agents, any co-trustee and counsel and fees incurred in
connection with a Servicer Default or a Trust Early Amortization Event) except
any such expense, disbursement or advance as may arise from its gross negligence
or willful misconduct and except as provided in the following sentence. If the
Trustee is appointed Successor Servicer pursuant to Section 10.02, the provision
of this Section 11.05 shall not apply to expenses, disbursements and advances
made or incurred by the Trustee in its capacity as Successor Servicer, which
shall be paid, first, out of the Servicing Fee and, second, to the extent not
paid out of the Servicing Fee, by the Transferor pursuant to Section 3.02(b).
The Transferor's and Servicer's covenant provided in this Section 11.05 shall
survive the termination of the Trust.
SECTION 11.06. Eligibility Requirements for Trustee. The Trustee
hereunder shall at all times be an Eligible Institution. If the Trustee
publishes reports of condition at least annually, pursuant to law or to the
requirements of any supervising or examining authority, then, for the purpose of
this Section 11.06, the combined capital and surplus of such corporation shall
be deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. In case at any time the Trustee shall cease to
be eligible in accordance with the provisions of this Section 11.06, the Trustee
shall resign immediately in the manner and with the effect specified in Section
11.07.
SECTION 11.07. Resignation or Removal of Trustee. (a) The Trustee
may at any time resign and be discharged from the trust hereby created by giving
30 days' written notice thereof to the Transferor and the Servicer. Upon
receiving such notice of resignation, the Servicer shall promptly appoint a
successor trustee acceptable to each Enhancement Provider and a Majority in
Interest of each outstanding Series by written instrument, in duplicate, one
copy of which instrument shall be delivered to the resigning Trustee and one
copy to the successor trustee. If no successor trustee shall have been so
appointed and have accepted appointment within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.
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(b) If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 11.06 and shall fail to resign after
written request therefor by the Servicer, or if at any time the Trustee shall be
legally unable to act, or shall be adjudged as bankrupt or insolvent, or if a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Servicer may remove the Trustee and promptly appoint a successor trustee
acceptable to each Enhancement Provider and to a Majority in Interest of each
outstanding Series by written instrument, in duplicate, one copy of which
instrument shall be delivered to the Trustee so removed and one copy to the
successor trustee.
(c) If at any time the Trustee shall fail to perform its obligations
under this Agreement, a Majority in Interest of each outstanding Series may
remove the Trustee and direct the Servicer to promptly appoint a successor
trustee acceptable to each Enhancement Provider and to a Majority in Interest of
each outstanding Series by written instrument, in duplicate, one copy of which
instrument shall be delivered to the Trustee so removed and one copy to the
successor trustee; provided that if all other procedures fail and a successor
trustee has not accepted an appointment pursuant to this Section 11.07(c) within
30 days after the Trustee shall have received notice from the Majority in
Interest of each outstanding Series of their intention to remove such Trustee,
the Trustee may petition any court of competent jurisdiction for the appointment
of a successor trustee.
(d) Notwithstanding anything herein to the contrary, any resignation
or removal of the Trustee and appointment of successor trustee pursuant to any
of the provisions of this Section 11.07 shall not become effective until
acceptance of appointment by the successor trustee as provided in Section 11.08.
SECTION 11.08. Successor Trustee. (a) Any successor trustee
appointed as provided in Section 11.07 shall execute, acknowledge and deliver to
the Transferor, the Servicer and its predecessor Trustee an instrument accepting
such appointment hereunder, and thereupon the resignation or removal of the
predecessor Trustee shall become effective, and such successor trustee, without
any further act, deed or conveyance, shall become fully vested with all the
rights, powers, duties and obligations of its predecessor hereunder, with like
effect as if originally named as Trustee herein. The predecessor Trustee shall
deliver (with the expense therefor payable out of the Trustee's Fee, and by the
Transferor and the Servicer, pursuant to Sections 3.02(b) and 11.05(b)) to the
successor trustee all documents or copies thereof and statements held by it
hereunder, and the Transferor and the predecessor Trustee shall execute and
deliver such instruments and do such other things as may reasonably be required
for fully and certainly vesting and confirming in the successor trustee all such
rights, powers, duties and obligations.
(b) No successor trustee shall accept appointment as provided in
this Section
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11.08 unless at the time of such acceptance such successor trustee shall be
eligible under the provisions of Section 11.06.
(c) Upon acceptance of appointment by a successor trustee as
provided in this Section 11.08, such successor trustee shall mail notice of such
succession hereunder to all Investor Certificateholders, each Enhancement
Provider and to and each Rating Agency.
SECTION 11.09. Merger or Consolidation of Trustee. Any Person into
which the Trustee may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any Person succeeding to
the corporate trust business of the Trustee, shall be the successor of the
Trustee hereunder, provided that such corporation shall be eligible under the
provisions of Section 11.06, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.
SECTION 11.10. Appointment of Co-Trustee or Separate Trustee. (a)
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust may at the time be located, the Trustee shall have the power and
may execute and deliver all instruments to appoint one or more Persons to act as
a co-trustee or co-trustees, or separate trustee or separate trustees, of all or
any part of the Trust, and to vest in such Person or Persons, in such capacity
and for the benefit of the Certificateholders, such title to the Trust, or any
part thereof, and, subject to the other provisions of this Section 11.10, such
powers, duties, obligations, rights and trusts as the Trustee may consider
necessary or desirable. No co-trustee or separate trustee hereunder shall be
required to meet the terms of eligibility as a successor trustee under Section
11.06 and no notice to Certificateholders of the appointment of any co-trustee
or separate trustee shall he required under Section 11.08.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or imposed
upon the Trustee shall be conferred or imposed upon and exercised or
performed by the Trustee and such separate trustee or co-trustee jointly
(it being understood that such separate trustee or co-trustee is not
authorized to act separately without the Trustee joining in such act),
except to the extent that, under any law of any jurisdiction in which any
particular act or acts are to be performed (whether as Trustee hereunder
or as Successor Servicer hereunder), the Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights,
powers, duties and obligations (including the holding of title to the
Trust or any portion thereof in any such jurisdiction) shall be exercised
and performed singly by such separate trustee or co-trustee, but solely at
the direction of the Trustee;
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(ii) no Trustee hereunder shall be personally liable by reason of
any act or omission of any other Trustee hereunder; and
(iii) the Trustee may at any time accept the resignation of or
remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Trustee shall
be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article XI. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all the provisions
of this Agreement, specifically including every provision of this Agreement
relating to the conduct of, affecting the liability of, or affording protection
to, the Trustee. Every such instrument shall be filed with the Trustee and a
copy thereof given to the Servicer.
(d) Any separate trustee or co-trustee may at any time constitute
the Trustee, its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
SECTION 11.11. Tax Returns. No federal income tax return shall be
filed on behalf of the Trust unless either (i) the Trustee or the Servicer shall
receive an Opinion of Counsel based on a change in applicable law occurring
after the date hereof that the Internal Revenue Code requires such a filing or
(ii) the Internal Revenue Service shall determine that the Trust is required to
file such a return. In the event the Trust shall be required to file tax
returns, the Servicer shall prepare or shall cause to be prepared any tax
returns required to be filed by the Trust and shall remit such returns to the
Trustee for signature at least five days before such returns are due to be
filed. The Trustee shall promptly sign such returns and deliver such returns
after signature to the Servicer, and such returns shall be filed by the
Servicer. The Servicer in accordance with the Supplements shall also prepare or
shall cause to be prepared all tax information required by law to be distributed
to Investor Certificateholders and shall deliver such information to the Trustee
at least five days prior to the date it is required by law to be distributed to
the Certificateholders. The Trustee, upon request, will furnish the Servicer
with all such information known to the Trustee as may be reasonably required in
connection with the preparation of all tax returns of the Trust, and shall, upon
request, execute such returns. In no event shall the Trustee, the Servicer or
the Transferor be liable for any liabilities, costs or expenses of the Trust or
the Investor Certificateholders
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arising out of the application of any tax law, including federal, state, foreign
or local income or franchise taxes or any other tax imposed on or measured by
income (or any interest, penalty or addition to tax with respect thereto or
arising from a failure to comply therewith).
SECTION 11.12. Trustee May Enforce Claims Without Possession of
Certificates. All rights of action and claims under this Agreement or the
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the Trustee
shall be brought in its own name as Trustee. Any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
benefit of the Certificateholders in respect of which such judgment has been
obtained.
SECTION 11.13. Suits for Enforcement. (a) If a Servicer Default
shall occur and be continuing, the Trustee, in its discretion may, subject to
the provisions of Sections 11.01 and 11.14, proceed to protect and enforce its
rights and the rights of the Certificateholders under this Agreement by suit,
action or proceeding in equity or at law or otherwise, whether for the specific
performance of any covenant or agreement contained in this Agreement or in aid
of the execution of any power granted in this Agreement or for the enforcement
of any other legal, equitable or other remedy as the Trustee, being advised by
counsel, shall deem most effectual to protect and enforce any of the rights of
the Trustee or the Certificateholders.
(b) Nothing herein contained shall be deemed to authorize the
Trustee to authorize, consent to, accept or adopt on behalf of any
Certificateholder any plan of reorganization, arrangement, adjustment or
composition affecting the Certificates or the rights of any Holder thereof, or
to authorize the Trustee to vote in respect of the claim of any
Certificateholder in any such proceeding.
SECTION 11.14. Rights of Certificateholders to Direct Trustee. A
Majority in Interest of any outstanding Series (or, if so specified in the
related Supplement, the Enhancement Provider for such Series) shall have the
right to direct the time, method, and place of conducting any proceeding for any
remedy available to the Trustee under any Transaction Document, or exercising
any trust or power conferred on the Trustee under any Transaction Document;
provided, however, that, subject to Section 11.01, the Trustee shall have the
right to decline to follow any such direction if the Trustee after being advised
by counsel determines that the action so directed may not lawfully be taken, or
if the Trustee in good faith shall, by a Responsible Officer or Responsible
Officers of the Trustee, determine that the proceedings so directed would be
illegal or involve it in personal liability or be unduly prejudicial to the
rights of Certificateholders not parties to such direction.
SECTION 11.15. Representations and Warranties of Trustee. The
Trustee
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represents and warrants that:
(a) the Trustee is a banking corporation duly organized, validly
existing and in good standing under the laws of the State of New York, and
has the power to own its assets and to transact the business in which it
is presently engaged;
(b) the Trustee has full power, authority and right to execute,
deliver and perform this Agreement, and has taken all necessary action to
authorize the execution, delivery and performance by it of this Agreement;
and
(c) this Agreement has been duly executed and delivered by the
Trustee and constitutes a legal, valid and binding obligation of the
Trustee enforceable against the Trustee in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
reorganization, insolvency, moratorium or other similar laws affecting
creditors' rights generally, now or hereafter in effect, and except as
such enforceability may be limited by general principles of equity
(whether considered in a suit at law or in equity).
SECTION 11.16. Maintenance of Office or Agency. The Trustee will
maintain at its expense in New York, New York an office or agency (the
"Corporate Trust Office") where notices and demands to or upon the Trustee in
respect of the Certificates and this Agreement may be served. The Trustee
initially designates its office or agency at Four Albany Street, New York, New
York, 10006 Attn: Corporate Trust and Agency Group/ Structured Finance, as such
office. The Trustee will give prompt written notice to the Transferor, the
Servicer and to the Certificateholders of any change in the location of the
Certificate Register or any such office or agency.
ARTICLE XII
TERMINATION
SECTION 12.01. Termination of Trust. The Trust and the respective
obligations and responsibilities of the Transferor, the Servicer and the Trustee
created hereby (other than the obligation of the Trustee to make payments to
Certificateholders as hereinafter set forth) shall terminate, except with
respect to the duties described in Sections 2.01(b), 3.02(b), 7.03, 8.04, 8.07,
11.05 and 12.02(b), upon the earlier to occur of (i) the Termination Date of the
last outstanding Series of Certificates and (ii) December 31, 2016.
SECTION 12.02. Final Distribution. (a) The Servicer shall give the
Trustee and the Trustee shall give each Certificateholder at least 30 days'
prior written notice of the date on which (i) the Trust is expected to terminate
in accordance with Section 12.01 and
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(ii) the Certificateholders may surrender their Certificates for payment of the
final distribution on and cancellation of such Certificates. Such notice shall
be accompanied by an Officer's Certificate setting forth the information
specified in Section 3.06 covering the period during the then-current calendar
year through the date of such notice. Not later than five days after the Trustee
shall receive such notice, the Trustee shall mail notice to the
Certificateholders specifying (i) the date upon which such final distribution
will be made upon presentation and surrender of such Certificates at the office
or offices therein designated, (ii) the amount of any such final distribution
and (iii) that the Distribution Date otherwise applicable to such final
distribution is not applicable, payments being made only upon presentation and
surrender of such Certificates at the office or offices therein specified. Each
such Certificateholder shall surrender its Certificate to the Trustee following
receipt of the final distribution thereon. The Trustee shall give such notice to
the Transfer Agent and Registrar at the time such notice is given to the
Certificateholders.
(b) Notwithstanding the Servicer's delivery to the Trustee, or the
Trustee's delivery to the Certificateholders, of the notices required under
Section 12.02(a), all funds then on deposit in the Concentration Account, any
Muehlstein Collection Account, any Series Account, the Transferor's Account or
the Trustee's Account shall continue to be held in trust for the benefit of the
Certificateholders, and the Trustee shall pay such funds to the
Certificateholders upon surrender of their Certificates pursuant to, and subject
to the priorities set forth in, the applicable Supplement, as if such surrender
date were on a Distribution Date (and any excess shall be paid in accordance
with the terms of any Enhancement Agreement). In the event that all
Certificateholders do not surrender their Certificates for cancellation within
six months after the date specified in the above-mentioned written notice from
the Trustee, the Trustee shall give a second written notice to the remaining
Certificateholders to surrender their Certificates for cancellation and receive
the final distribution with respect thereto. If within one year after the second
notice all the Certificates shall not have been surrendered for cancellation,
the Trustee may take appropriate steps, or may appoint an agent to take
appropriate steps, to contact the remaining Certificateholders concerning
surrender of their Certificates, and the cost thereof shall be paid out of the
funds in the Trustee's Account (if such Certificateholders are Investor
Certificateholders) or the Transferor's Account (if any such Certificateholder
is the Holder of the Transferor Certificate) held for the benefit of such
Certificateholders. The Trustee shall pay to the Transferor any monies held by
it for the payment of principal or interest that remains unclaimed for two years
after the date specified in the initial above-mentioned written notice from the
Trustee. After payment to the Transferor, Investor Certificateholders entitled
to any monies must look to the Transferor for payment as general creditors
unless an applicable abandoned property law designates another Person.
SECTION 12.03. Transferor's Termination Rights. Upon the termination
of the Trust, the indefeasible payment in full of all amounts due to the
Investor Certificateholders, payment of Trustee's fees and expenses and the
surrender of the Transferor Certificate, the Trustee shall assign and convey to
the Holder of the Transferor Certificate or
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its designee, without recourse, representation or warranty (except for the
representation that each Receivable and all other Trust Assets will be free and
clear of all Liens which arose as a result of any claim against or affecting, or
any act or omission of, the Trustee in its individual capacity not related to
the transactions contemplated by the Transaction Documents), all right, title
and interest of the Trust in and to the Receivables, whether then existing or
thereafter created, and all other Trust Assets, and all proceeds thereof except
for amounts held in any account by the Trustee pursuant to Section 12.02(b). The
Trustee at the expense of the Transferor shall execute and deliver such
instruments of transfer and assignment, in each case without recourse,
representation or warranty, as shall be prepared by the Transferor for execution
by the Trustee which are reasonably requested by the Transferor to vest in the
Transferor all right, title and interest which the Trust had in the Receivables
and all other Trust Assets.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
SECTION 13.01. Amendment. (a) This Agreement or any Supplement may
be amended from time to time by the Servicer, the Transferor and the Trustee
without the consent of any of the Investor Certificateholders (i) to cure any
ambiguity or (ii) to correct or supplement any provision herein which may be
inconsistent with any other provision herein; provided that any amendment
pursuant to this clause (a) shall not, as evidenced by an Opinion of Counsel,
adversely affect in any material respect the interests of any Beneficiary.
(b) This Agreement or any Supplement may be amended from time to
time by the Servicer, the Transferor and the Trustee, so long as the Rating
Agency Condition is satisfied, with the consent of a Majority in Interest of
each adversely affected Series (or, if so specified in the related Supplement,
the Enhancement Provider for such Series), for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of modifying in any manner the rights of the
Certificateholders; provided, however, that no such amendment shall (i) reduce
in any manner the amount of, or delay the timing of, distributions to be made to
any Certificateholder or deposits of amounts to be so distributed or the amount
available under any Enhancement without the consent of each such
Certificateholder, (ii) change the definition of or the manner of calculating
the Certificateholders' Interest or the Aggregate Certificateholders' Interest
or any Investor Certificateholder's interest therein without the consent of each
affected Investor Certificateholder or (iii) reduce the aforesaid percentage
required to consent to any such amendment without the consent of each Investor
Certificateholder. The Trustee may request an Officer's Certificate and Opinion
of Counsel with respect to an amendment entered into pursuant to this Section
13.01(b) concerning compliance with the requirements of this Agreement. Any
amendment to be effected pursuant to this paragraph shall be deemed to
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adversely affect all outstanding Series, other than any Series with respect to
which such action shall not, as evidenced by an Opinion of Counsel (which
counsel shall not be an employee of, or counsel for, Muehlstein, the Servicer or
the Transferor), addressed and delivered to the Trustee adversely affect the
interests of any Investor Certificateholder of such Series.
(c) Promptly after the execution of any such amendment or consent
(other than an amendment pursuant to Section 13.01(a)), the Trustee shall
furnish written notification of the substance of such amendment to each Rating
Agency, Investor Certificateholder and Enhancement Provider.
(d) It shall not be necessary for the consent of Investor
Certificateholders under this Section 13.01 to approve the particular form of
any proposed amendment, but it shall be sufficient if such consent shall approve
the substance thereof. The manner of obtaining such consents and of evidencing
the authorization of the execution thereof by Investor Certificateholders shall
be subject to such reasonable requirements as the Trustee may prescribe.
(e) Notwithstanding anything in this Section 13.01 to the contrary,
no amendment may be made to this Agreement or any Supplement which would
adversely affect the interests of any Enhancement Provider without the consent
of such Enhancement Provider.
(f) Any supplement executed in accordance with the provisions of
Section 6.08 shall not be considered an amendment to this Agreement for the
purposes of this Section 13.01.
(g) Prior to the execution of any amendment to this Agreement or any
Supplement, the Trustee and any Enhancement Provider shall be entitled to
receive and rely upon an Opinion of Counsel stating that the execution of such
amendment is authorized or permitted by this Agreement. The Trustee may, but
shall not be obligated to, enter into any such amendment which adversely affects
its own rights, duties, indemnities or immunities in its individual capacity
under this Agreement, any Supplement or otherwise.
SECTION 13.02. Protection of Right, Title and Interest to Trust. (a)
The Servicer shall cause this Agreement, all amendments hereto and all financing
statements and continuation statements and any other necessary documents
covering the Certificateholders' and the Trustee's right, title and interest in
and to the Trust to be promptly recorded, registered and filed, and at all times
to be kept recorded, registered and filed, all in such manner and in such places
as may be required by law to preserve and protect fully the right, title and
interest of the Certificateholders and the Trustee hereunder in and to all
property comprising the Trust. The Servicer shall deliver to the Trustee
file-stamped copies of, or filing receipts for, each document recorded,
registered or filed as provided above, as soon as available following such
recording, registration or filing. The Transferor shall cooperate fully
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with the Servicer in connection with the obligations set forth above and will
execute any and all documents reasonably required to fulfill the intent of this
Section 13.02(a).
(b) Within 45 days after the Transferor makes any change in its
name, identity or legal structure which would make any financing statement or
continuation statement filed in accordance with the terms of this Agreement
seriously misleading within the meaning of Section 9-402(7) (or any comparable
provision) of the UCC as in effect in the State of New York or in the
jurisdiction the law of which governs the perfection of the interest in the
Trust Assets created hereunder, the Transferor shall give the Trustee written
notice of such change and shall file such financing statements or amendments as
may be necessary to continue the perfection of the Trust's interest in the Trust
Assets and the proceeds thereof contemplated by Section 2.01.
(c) The Transferor and the Servicer will give the Trustee prompt
written notice of any relocation of the office from which it services
Receivables or keeps records concerning the Receivables or of its principal
executive office and whether, as a result of such relocation, the applicable
provisions of the UCC would require the filing of any amendment of any
previously filed financing or continuation statement or of any new financing
statement and shall file such financing statements or amendments as may be
necessary to perfect or to continue the perfection of the Trust's interest in
the Receivables and the other Trust Assets and the proceeds thereof contemplated
by Section 2.01. The Transferor and the Servicer will at all times maintain each
office from which it services Receivables and its principal executive offices
within the United States of America.
SECTION 13.03. Limitation on Rights of Certificateholders. (a) The
death or incapacity of any Investor Certificateholder shall not operate to
terminate this Agreement or the Trust, nor shall such death or incapacity
entitle such Investor Certificateholders' legal representatives or heirs to
claim an accounting or to take any action or commence any proceeding in any
court for a partition or winding up of the Trust, nor otherwise affect the
rights, obligations and liabilities of the parties hereto or any of them.
(b) No Certificateholder shall have the right to vote (except as
expressly provided in this Agreement, including, without limitation, under
Section 11.14) or in any manner otherwise control the operation and management
of the Trust, or the obligations of the parties hereto, nor shall anything
herein set forth, or contained in the terms of the Certificates, be construed so
as to constitute the Certificateholders from time to time as partners or members
of an association for any reason, nor shall any Investor Certificateholder be
under any liability to any third person by reason of any action taken by the
parties to this Agreement pursuant to any provision hereof.
(c) No Investor Certificateholder shall have any right by virtue of
any provisions of this Agreement to file or otherwise institute any suit, action
or proceeding in
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equity or at law upon or under or with respect to this Agreement, unless such
Investor Certificateholder previously shall have made, and unless a Majority in
Interest of each outstanding Series shall have made, a written request to the
Trustee to institute such action, suit or proceeding in its own name as Trustee
hereunder and shall have offered to the Trustee such reasonable indemnity as it
may require against the costs, expenses and liabilities to be incurred therein
or thereby, and the Trustee, for 60 days after such request and offer of
indemnity, shall have failed to file or otherwise refused to institute any such
action, suit or proceeding; it being understood, intended, and expressly
covenanted, by each Certificateholder with every other Certificateholder and the
Trustee, that no one or more Certificateholders shall have any right in any
manner whatever by virtue or by availing itself or themselves of any provisions
of this Agreement to affect, disturb or prejudice the rights of the Holders of
any of the Investor Certificates, or to obtain or seek to obtain priority over
or preference to any such Investor Certificateholder, or to enforce any right
under this Agreement, except in the manner herein provided. For the protection
and enforcement of the provisions of this Section 13.03, each and every Investor
Certificateholder and the Trustee shall be entitled to such relief as can be
given either at law or in equity. Notwithstanding any other provision of this
Agreement, the Certificates or any Supplement, each Investor Certificateholder
shall have the right to receive the payments of all amounts due hereunder under
the Certificates held by such Holder and under the Supplement relating to the
Series of Certificates held by such Holder and the right to institute suit for
the enforcement of any such payment without the consent of the Trustee or any
other Holder.
(d) By its acceptance of the Transferor Certificate, the Holder
thereof agrees that it will take no action with respect to such Holder's rights
under this Agreement that is inconsistent with, or adverse to, the interests of
any Beneficiary.
SECTION 13.04. Notices; Payments. (a) All notices and other
communications provided for hereunder shall, unless otherwise stated herein, be
in writing (including telex and facsimile communication) and shall be personally
delivered or sent by certified mail, postage prepaid, or overnight courier or
facsimile, to the intended party at the address or facsimile number of such
party set forth below or at such other address or facsimile number as shall be
designated by such party in a written notice to the other parties hereto. All
such notices and communications shall be effective (a) if personally delivered,
when received, (b) if sent by certified mail, four Business Days after having
been deposited in the mail, postage prepaid, (c) if sent by overnight courier,
two Business Days after having been given to such courier, unless sooner
received by the addressee and (d) if transmitted by facsimile, when sent, upon
receipt confirmed by telephone or electronic means. Notices and communications
sent hereunder on a day that is not a Business Day shall be deemed to have been
sent on the following Business Day.
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If to the Transferor,
Muehlstein Financial Corporation
c/o H. Muehlstein & Co., Inc.
800 Connecticut Avenue
Norwalk, CT 06856
Tel.: (203) 855-6164
Fax: (203) 855-6293
Attn.: Ronald J. Restivo
If to the Servicer,
H. Muehlstein & Co., Inc.
800 Connecticut Avenue
Norwalk, CT 06856
Tel.: (203) 855-6164
Fax: (203) 855-6293
Attn.: Ronald J. Restivo
If to the Trustee,
Bankers Trust Company, as Trustee
Four Albany Street
New York, New York 10006
Tel.: (212) 250-6137
Fax: (212) 250-6439
Attn.: Corporate Trust and Agency Group/Structured Finance
If to the Transfer Agent and Registrar,
Bankers Trust Company
Four Albany Street
New York, New York 10006
Tel.: (212) 250-6137
Fax: (212) 250-6439
Attn.: Corporate Trust and Agency Group/Structured Finance
If to the Enhancement Provider or to the Program Agent, to the
address of such Person specified in the related Supplement.
If the Servicer is not Muehlstein, notices shall be given to the
Servicer at the
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address designated by such Servicer, with a copy to Muehlstein at the address
designated above.
(b) Any notice required or permitted to be mailed to an Investor
Certificateholder shall be given by first-class mail, postage prepaid, at the
address of such Certificateholder as shown in the Certificate Register. Notice
so mailed within the time prescribed in this Agreement shall be conclusively
presumed to have been duly given, whether or not the Certificateholder receives
such notice.
(c) If the Transferor is not the Holder of the Transferor
Certificate, the Holder of the Transferor Certificate shall be entitled to
receive all notices which the Investor Certificateholders receive.
SECTION 13.05. Rule 144A Information. For so long as any of the
Investor Certificates of any Series are "restricted securities" within the
meaning of Rule 144(a)(3) under the Act, the Transferor, the Servicer and any
Enhancement Provider agree to cooperate with each other to provide to each
Investor Certificateholder of such Series and to each prospective purchaser of
Investor Certificates designated by such an Investor Certificateholder, upon the
request of such Investor Certificateholder or prospective purchaser, any
information required to be provided to such holder or prospective purchaser to
satisfy the condition set forth in Rule 144A(d)(4) under the Act (or any
successor provision).
SECTION 13.06. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall for any
reason whatsoever be held invalid, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other covenants, agreements, provisions or terms of this
Agreement or of the Certificates or rights of the Certificateholders.
SECTION 13.07. Assignment. Notwithstanding anything to the contrary
contained herein, (i) this Agreement may not be assigned by the Transferor and
(ii) except as provided in Section 8.02, this Agreement may not be assigned by
the Servicer without the prior consent of a Majority in Interest of each
outstanding Series.
SECTION 13.08. Certificates Nonassessable and Fully Paid. It is the
intention of the parties to this Agreement that the Certificateholders shall not
be personally liable for obligations of the Trust, that the interests in the
Trust represented by the Certificates shall be nonassessable for any losses or
expenses of the Trust or for any reason whatsoever and that Certificates upon
authentication thereof by the Trustee pursuant to Section 6.02 are and shall be
deemed fully paid.
SECTION 13.09. Further Assurances. The Transferor and the Servicer
agree
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to do and perform, from time to time, any and all acts and to execute any and
all further instruments and documents required or reasonably requested by the
Trustee more fully to effect the purposes of this Agreement, including, without
limitation, the execution of any financing statements or continuation statements
relating to the Receivables for filing under the provisions of the UCC of any
applicable jurisdiction.
SECTION 13.10. Nonpetition Covenant. Notwithstanding any prior
termination of the Trust, (a) the Servicer, the Trustee and the
Certificateholders shall not, prior to the date which is one year and one day
after the termination of the Trust, acquiesce, petition or otherwise invoke or
cause the Trust or the Transferor to invoke the process of any Governmental
Authority for the purpose of commencing or sustaining a case against the Trust
or the Transferor under any federal or state bankruptcy, insolvency or similar
law or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Trust or the Transferor or any
substantial part of its property or ordering the winding-up or liquidation of
the affairs of the Trust or the Transferor and (b) the Transferor shall not,
prior to the date which is one year and one day after the termination of the
Trust, acquiesce, petition or otherwise invoke or cause the Trust to invoke the
process of any Governmental Authority for the purpose of commencing or
sustaining a case against the Trust under any federal or state bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Trust or any
substantial part of its property or ordering the winding-up or liquidation of
the affairs of the Trust. Notwithstanding the foregoing, nothing herein will
prohibit the Trustee from filing proofs of claim or otherwise participate in any
such proceedings instituted by any other Person.
SECTION 13.11. No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of any Person, any right,
remedy, power or privilege hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, remedy, power or privilege
under this Agreement preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided are cumulative and not exhaustive of any
rights, remedies, powers and privileges provided by law.
SECTION 13.12. Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement. Delivery of an
executed counterpart of a signature page to this Agreement by telecopier shall
be effective as delivery of a manually executed counterpart of this Agreement.
SECTION 13.13. Third-Party Beneficiaries. This Agreement will inure
to the benefit of and be binding upon the parties hereto, the
Certificateholders, any Enhancement
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Providers and their respective successors and permitted assigns. Except as
otherwise provided in this Agreement, no other Person will have any right or
obligation hereunder.
SECTION 13.14. Actions by Certificateholders. (a) Whenever in this
Agreement a provision is made that an action may be taken or a notice given by
Investor Certificateholders, such action or notice may be taken or given by any
Investor Certificateholder, unless such provision requires a specific percentage
of Investor Certificateholders.
(b) Any notice, consent, waiver or other act by the Holder of a
Certificate shall bind such Holder and every subsequent Holder of such
Certificate and of any Certificate issued upon the registration of transfer
thereof or in exchange therefor or in lieu thereof in respect of anything done
or omitted to be done by the Trustee or the Servicer in reliance thereon,
whether or not notation of such action is made upon such Certificate.
SECTION 13.15. Merger and Integration. Except as specifically stated
otherwise herein, this Agreement and the other Transaction Documents set forth
the entire understanding of the parties relating to the subject matter hereof
and thereof, and all prior understandings, written or oral, are superseded by
the Transaction Documents. This Agreement may not be modified, amended, waived
or supplemented except as provided herein.
SECTION 13.16. Headings. The headings herein are for purposes of
reference only and shall not otherwise affect the meaning or interpretation of
any provision hereof.
SECTION 13.17. Construction of Agreement. The Transferor hereby
grants to the Trustee on behalf of the Trust a security interest in all of the
Transferor's right, title and interest in, to and under the Receivables now
existing and hereafter created, all monies due or to become due and all amounts
received with respect thereto, and all other Trust Assets, and all "proceeds"
thereof, to secure all the Transferor's and Servicer's obligations hereunder,
including, without limitation, the Transferor's obligation to sell or transfer
to the Trust all Receivables existing on the date hereof or hereafter created
and transferred to the Transferor from time to time under the Receivables
Purchase Agreements. This Agreement shall constitute a security agreement under
applicable law.
SECTION 13.18. Governing Law; Jurisdiction; Consent to Service of
Process. (a) Governing Law. THIS AGREEMENT, INCLUDING THE RIGHTS AND DUTIES OF
THE PARTIES HERETO, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE PERFECTION OF THE
INTERESTS OF THE TRUSTEE ON BEHALF OF THE TRUST IN THE TRUST ASSETS IS GOVERNED
BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.
Pooling and Servicing Agreement
<PAGE>
105
(b) Jurisdiction. (i) Each of the parties hereto hereby irrevocably
and unconditionally submits, for itself and its property, to the nonexclusive
general jurisdiction of any New York State court or federal court of the United
States of America sitting in New York City, and any appellate court from any
thereof, in any action or proceeding arising out of or relating to this
Agreement or any of the other Transaction Documents to which it is a party, or
for recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in any such New York State
court or, to the extent permitted by law, in such federal court. Each of the
parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Agreement shall
affect any right that any party may otherwise have to bring any action or
proceeding relating to this Agreement or any of the other Transaction Documents
in the courts of any jurisdiction.
(ii) Each of the parties hereto irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection that it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement or any of the
other Transaction Documents to which it is a party in any New York State or
federal court. Each of the parties hereto hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
(c) Consent to Service of Process. Each party to this Agreement
irrevocably consents to service of process by personal delivery, certified mail,
postage prepaid or overnight courier. Nothing in this Agreement will affect the
right of any party to this Agreement to serve process in any other manner
permitted by law.
Pooling and Servicing Agreement
<PAGE>
106
(d) Waiver of Jury Trial. Each party to this Agreement waives any
right to a trial by jury in any action or proceeding to enforce or defend any
rights under or relating to this Agreement, any other Transaction Document or
any amendment, instrument, document or agreement delivered or which may in the
future be delivered in connection herewith or therewith or arising from any
course of conduct, course of dealing, statements (whether oral or written),
actions of any of the parties hereto and the liquidity providers or any other
relationship existing in connection with this Agreement or any other Transaction
Document, and agrees that any such action or proceeding shall be tried before a
court and not before a jury.
IN WITNESS WHEREOF, the parties hereto have caused this Pooling and
Servicing Agreement to be duly executed by their respective officers thereunto
duly authorized as of the day and year first above written.
MUEHLSTEIN FINANCIAL
CORPORATION,
as Transferor
By: __________________________________
Name:
Title:
H. MUEHLSTEIN & CO., INC.,
as Servicer
By: __________________________________
Name:
Title:
BANKERS TRUST COMPANY,
not in its individual capacity but
solely as Trustee
By: __________________________________
Name:
Title:
Pooling and Servicing Agreement
<PAGE>
SCHEDULE 1.01
DESIGNATED COUNTRIES
Pooling and Servicing Agreement
<PAGE>
SCHEDULE 3.03(h)
MUEHLSTEIN POST OFFICE BOXES, COLLECTION ACCOUNTS
AND CONCENTRATION ACCOUNT
A. MUEHLSTEIN POST OFFICE BOXES
================================================================================
Bank Location Post Office Box Number
- --------------------------------------------------------------------------------
1. CoreStates Bank, N.A. Philadelphia, PA 19178 P.O. Box 8500-55960
- --------------------------------------------------------------------------------
2. CoreStates Bank, N.A. Philadelphia, PA 19178 P.O. Box 8500-53580
- --------------------------------------------------------------------------------
3. CoreStates Bank, N.A. Philadelphia, PA 19178 P.O. Box 8500-51105
================================================================================
B. MUEHLSTEIN COLLECTION ACCOUNTS
================================================================================
Name Address and Contact ABA Number Account Number
- --------------------------------------------------------------------------------
1. CoreStates Bank, N.A. 1345 Chestnut Street 0001716246
P.O. Box 7618
Philadelphia, PA 19101-7618
Brian M. Haley
Tel: (215) 973-2372
Fax: (215) 973-6745
- --------------------------------------------------------------------------------
2. CoreStates Bank, N.A. 1345 Chestnut Street 0001295314
P.O. Box 7618
Philadelphia, PA 19101-7618
Brian M. Haley
Tel: (215) 973-2372
Fax: (215) 973-6745
- --------------------------------------------------------------------------------
3. Citibank N.A. Citibank, N.A. 0868-0434 (US$)
(Hong Kong) 399 Park Avenue
New York, NY 10043
Keith Karako
- --------------------------------------------------------------------------------
4. Citibank N.A. Citibank, N.A. 0860-9381 (HK$)
(Hong Kong) 399 Park Avenue
New York, NY 10043
Keith Karako
- --------------------------------------------------------------------------------
5. Citibank N.A. Citibank, N.A. 0/709353/012
(Singapore) 399 Park Avenue (US$)
New York, NY 10043
Keith Karako
- --------------------------------------------------------------------------------
6. Citibank N.A. Citibank, N.A. 0/709353/004
Pooling and Servicing Agreement
<PAGE>
- --------------------------------------------------------------------------------
(Singapore) 399 Park Avenue (S$)
New York, NY 10043
Keith Karako
- --------------------------------------------------------------------------------
7. Citibank N.A. Citibank, N.A. 011/3058/013
(Malaysia) 399 Park Avenue
New York, NY 10043
Keith Karako
================================================================================
C. MUEHLSTEIN CONCENTRATION ACCOUNT
================================================================================
Name Address and Contact ABA Number Account Number
- --------------------------------------------------------------------------------
Bankers Trust Company Four Albany Street 021-001-003 003300712
New York, NY 10006
Louis Bodi
Tel: (212) 250-6137
Fax: (212) 250-6439
================================================================================
Pooling and Servicing Agreement
<PAGE>
EXHIBIT A
FORM OF TRANSFEROR CERTIFICATE
September 25, 1996
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). NEITHER THIS
CERTIFICATE NOR ANY PORTION HEREOF MAY BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EXEMPTION FROM THE REGISTRATION PROVISIONS OF THE SECURITIES ACT.
THE HOLDER HEREOF AGREES FOR THE BENEFIT OF THE TRUST THAT THIS
CERTIFICATE MAY NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED.
MUEHLSTEIN TRADE RECEIVABLES MASTER TRUST
TRANSFEROR CERTIFICATE
THIS CERTIFICATE REPRESENTS AN UNDIVIDED INTEREST
IN CERTAIN ASSETS OF THE MUEHLSTEIN TRADE RECEIVABLES
MASTER TRUST
the corpus of which consists primarily of certain receivables generated from
time to time by H. Muehlstein & Co., Inc. and H. Muehlstein International, Ltd.
(the "Originators") and any other entities designated in the future as
"Originators" pursuant to the terms of the Pooling and Servicing Agreement
referred to below and purchased by Muehlstein Financial Corporation (the
"Transferor"), which in turn transfers and assigns such receivables to the
Muehlstein Trade Receivables Master Trust. This certificate does not represent
any recourse obligation of, and is not guaranteed by, the Transferor, Muehlstein
or any Affiliate of any of them.
This certifies that MUEHLSTEIN FINANCIAL CORPORATION is the
registered owner of the fractional undivided interest (the "Transferor
Interest") in the assets of the Muehlstein Trade Receivables Master Trust (the
"Trust") not represented by the Investor Certificates pursuant to that certain
Pooling and Servicing Agreement dated as of August 23, 1996 (as supplemented or
modified, the "Agreement") by and among the Transferor, H. Muehlstein & Co., Inc
(the "Servicer"), and Bankers Trust Company (the "Trustee"). To the extent not
defined herein, the capitalized terms used herein have the meanings ascribed to
them in the Agreement.
The corpus of the Trust consists of (i) a portfolio of receivables
(the "Receivables") identified under the Agreement from time to time, (ii) funds
collected or to be collected from Obligors in respect of the Receivables, (iii)
all funds which are from time to time on deposit in the Concentration Account,
the Muehlstein Collection Accounts and any
Pooling and Servicing Agreement
<PAGE>
A-2
other account or accounts held for the benefit of Certificateholders and (iv)
all other assets and interests constituting the Trust Assets.
This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement. Although a summary of certain
provisions of the Agreement is set forth below, this Certificate does not
purport to summarize the Agreement and is qualified in its entirety by the terms
and provisions of the Agreement, and reference is made to the Agreement for
information with respect to the interests, rights, benefits, obligations,
proceeds and duties evidenced hereby and the rights, duties and obligations of
the Trustee, the Servicer and the other parties bound by the Agreement.
This Certificate is the Transferor Certificate, which represents an
interest in the Trust, including the right to receive Collections and other
amounts at the times and in the amounts specified in the Agreement to be paid to
the holder of the Transferor Certificate. In addition to this Certificate,
Investor Certificates are being issued to investors pursuant to the Agreement,
which will represent the interests of Investor Certificateholders in the Trust.
This Certificate shall not represent any interest in the Concentration Account,
any Muehlstein Collection Account or other account or Trust Asset except as
provided in the Agreement.
Subject to certain conditions in the Agreement, the obligations
created by the Agreement and the Trust created thereby shall terminate upon the
earlier of (i) December 31, 2016 and (ii) the Termination Date of the last
outstanding Series of Certificates.
By its acceptance of this Transferor Certificate, the Holder hereof
agrees that it will take no action with respect to such Holder's rights under
the Agreement that would violate the terms of the Agreement.
Upon termination of the Trust pursuant to Article XII of the
Agreement, subject to the provisions of the Agreement, payment in full of the
Investor Certificateholders and the surrender of this Certificate, the Trustee
shall assign and convey to the Holder of the Transferor Certificate (without
recourse, representation or warranty (except for the representation that each
Receivable and all other Trust Assets will be free and clear of all Liens)) all
right, title and interest of the Trust in the Trust Assets, whether then
existing or thereafter created, including the Receivables and all proceeds
thereof, except for amounts held by the Trustee pursuant to Section 12.02(b) of
the Agreement. The Trustee shall execute and deliver such instruments of
transfer and assignment, in each case without recourse, as shall be reasonably
requested by the Transferor to vest in the Transferor all right, title and
interest which the Trust has in the Trust Assets.
Unless the certificate of authentication hereon has been executed by
or on behalf of the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
Pooling and Servicing Agreement
<PAGE>
A-3
IN WITNESS WHEREOF, the Transferor has caused this Certificate to be
duly executed.
Dated:________________________
MUEHLSTEIN FINANCIAL
CORPORATION
By: ___________________________________
Name:
Title:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates described in the within-mentioned
Pooling and Servicing Agreement.
Dated: September 25, 1996
BANKERS TRUST COMPANY,
not in its individual capacity but
solely as Trustee
By: ___________________________OR
Authorized Signer
__________________________________________
Authenticating Agent for the Trustee
By: _____________________________________
Authorized Signer
Pooling and Servicing Agreement
<PAGE>
EXHIBIT B
FORM OF ANNUAL SERVICER'S CERTIFICATE
(As required to be delivered on or before April 30 of each calendar
year beginning with April 30, 1997, pursuant to
Section 3.06 of the Pooling and Servicing Agreement)
MUEHLSTEIN FINANCIAL CORPORATION
--------------------------------
MUEHLSTEIN TRADE FINANCIAL MASTER TRUST
--------------------------------
The undersigned, chief financial officer of H. Muehlstein & Co.,
Inc. ("Muehlstein"), as servicer (the "Servicer"), pursuant to the Pooling and
Servicing Agreement, dated as of August 23, 1996 (as amended and supplemented or
otherwise modified from time to time, the "Pooling and Servicing Agreement"), by
and among Muehlstein Financial Corporation, as transferor, H. Muehlstein & Co.,
Inc., as servicer (the "Servicer"), and Bankers Trust Company, as trustee, do
hereby certify that:
1. Muehlstein is, as of the date hereof, the Servicer under the
Pooling and Servicing Agreement.
2. The undersigned chief financial officer is duly authorized
pursuant to the Pooling and Servicing Agreement to execute and deliver
this Certificate to the Trustee, each Rating Agency and any Enhancement
Provider.
3. A review of the activities of the Servicer during the calendar
year ended December 31, ____, and its performance under the Pooling and
Servicing Agreement was conducted under my supervision.
4. Based on such review, the Servicer has, to the best of my
knowledge, performed all of its obligations under the Pooling and
Servicing Agreement throughout such year, and no default in the
performance of such obligations has occurred or is continuing except as
set forth in paragraph 5 below.
5. The following is a description of each default in the performance
of the Servicer's obligations under the provisions of the Pooling and
Servicing Agreement known to me to have been made by the Servicer during
the calendar year ended December 31, ____, which sets forth in detail the
(a) nature of such default, (b) the action taken by the Servicer, if any,
to remedy each such default and (c) the current status of each such
default: [If applicable, insert "None."]
Capitalized terms used but not defined herein shall have the meaning
specified
Pooling and Servicing Agreement
<PAGE>
B-2
in the Pooling and Servicing Agreement.
IN WITNESS WHEREOF, the undersigned has duly executed this
Certificate this _____ day of __________, ____.
H. MUEHLSTEIN & CO., INC., or
[NAME OF SUCCESSOR SERVICER]
By: _____________________________________
Name:
Title:
Pooling and Servicing Agreement
<PAGE>
EXHIBIT C-1
FORM OF CORESTATES COLLECTION ACCOUNT AGREEMENT
September 25, 1996
CoreStates Bank, N.A.
1345 Chestnut Street
P.O. Box 7618
Philadelphia, Pennsylvania 19101-7618
Attention: Brian M. Haley
Corporate Banking
Gentlemen/Ladies:
Reference is made to collection accounts nos. 0001716246 and
0001295314 into which certain monies, instruments and other properties are
deposited from time to time (the "Collection Accounts") maintained with
CoreStates Bank, N.A. ("you" or the "Bank") by H. Muehlstein & Co., Inc. (the
"Company"). Pursuant to that certain Collection Account Agreement dated February
9, 1996 (the "February 1996 Collection Agreement") among you, the Company and
Citicorp USA, Inc., as agent (the"Agent") under the Credit Agreement described
in the February 1996 Collection Agreement (for your convenience, a copy of the
executed February 1996 Agreement is attached hereto as Exhibit A), the
Collection Accounts and the other Account Collateral (as hereinafter defined)
were assigned to the Agent. The Company and certain of its affiliates have
entered into a transaction (the "Receivables Transaction") to, among other
things, refinance in part advances made under the Credit Agreement (as defined
in the February 1996 Collection Agreement). Pursuant to the Receivables
Transaction, the Collection Accounts and the other Account Collateral are to be
transferred to Bankers Trust Company, as trustee for Muehlstein Trade
Receivables Master Trust, established pursuant to a Pooling and Servicing
Agreement (the "Pooling and Servicing Agreement") dated as of August 23, 1996
among Muehlstein Financial Corporation, the Company, as servicer (in such
capacity, the "Servicer"), and Bankers Trust Company, as trustee (the
"Trustee"). By execution of this Collection Account Agreement, the Agent hereby
transfers and assigns all of its right, title and interest in the February 1996
Collection Agreement to the Trustee. It is a condition precedent to the
Receivables Transaction that you execute and deliver this Collection Account
Agreement.
Pursuant to the Receivables Transaction, the Company and certain of
its affiliates have granted to the Trustee a security interest in certain
property of the Company, including, among other things, the following (the
"Account Collateral"): the Lockboxes referred to below, the Collection Accounts,
all funds held therein and all certificates and instruments, if any, from time
to time representing or evidencing such Collection Accounts, all interest,
dividends, cash, instruments and other property from time to time received,
Pooling and Servicing Agreement
<PAGE>
C-1-2
receivable or otherwise distributed in respect of or in exchange for any or all
of the then existing Account Collateral and all proceeds of any and all of the
foregoing Account Collateral and, to the extent not otherwise included, all (i)
payments under insurance (whether or not the Trustee is the loss payee thereof),
or any indemnity, warranty or guaranty, payable by reason of loss or damage to
or otherwise with respect to any of the foregoing Account Collateral and (ii)
cash.
The Company hereby grants, to the Trustee, for the benefit of the
Trust, and the other Holders referred to in the Pooling and Servicing Agreement,
a security interest in, and a pledge to, all of its right, title and interest in
and to the Lockboxes referred to below, the Collection Accounts and all Account
Collateral now or hereinafter on deposit in the Lockboxes and/or the Collection
Accounts and agrees that all funds in the Collection Accounts shall be
transferred to the Trustee on behalf of the Trust in accordance with the
instructions set forth herein. It is a condition to the continued maintenance of
the Lockboxes and Collection Accounts with you that you agree to this letter
agreement. The Company further agrees that the Trustee shall have, subject to
the terms of the Lockbox Agreement (as defined in paragraph (b) below), full and
irrevocable right, power and authority to demand, collect, withdraw, receive or
sue for all amounts now or hereafter on deposit in the Lockboxes and/or
Collection Accounts and at its discretion to take any other action which it
deems necessary or appropriate to protect its interest in the Lockboxes and
Collection Accounts. Except as provided in paragraphs (e) and (i) herein, the
Lockboxes and Collection Accounts shall not be subject to deductions, setoff,
banker's lien or any other right in favor of any person or entity other than the
Trustee, the Trust or the other Holders referred to in the Pooling and Servicing
Agreement.
We hereby direct you to change the name on the Collection Accounts
from "Citicorp USA, Inc., as Agent, Re: H. Muehlstein & Co., Inc" to "Bankers
Trust Company, as Trustee, Re: H. Muehlstein & Co., Inc.".
By signing this letter agreement you confirm that, as of the date
hereof, you have received no notice of any other pledge or assignment of the
Lockboxes and/or Collection Accounts other than to the Agent pursuant to the
February 1996 Collection Agreement. Further, you hereby agree with the Trustee
as follows:
(a) The Company maintains with the Bank the Collection Account in
the name of "Bankers Trust Company, as Trustee, Re: H. Muehlstein & Co.,
Inc." The Company's account debtors make payment directly to the post
office boxes ("Lockboxes") and the addresses used for such boxes are:
P.O. Box 8500-S5960
Philadelphia, Pennsylvania 19178
P.O. Box 8500-S3580
Philadelphia, Pennsylvania 19178
Pooling and Servicing Agreement
<PAGE>
C-1-3
P.O. Box 8500-S1105
Philadelphia, Pennsylvania 19178
(b) The Bank will have exclusive and unrestricted access to the
Lockboxes and will have complete and exclusive authority to receive, pick
up and open all mail therein addressed to the Company, whether registered,
certified, insured or otherwise. The Company will have no control over the
Lockboxes or any mail received in the Lockboxes. The Bank will open all
mail contained in the Lockboxes and remove and inspect the enclosures and
will deposit in the Collection Accounts all checks, drafts and other
payment orders on which the payee or endorsee is the Company. The Company
agrees that it will not, and the Bank agrees that it will not permit the
Company to, establish new lockbox accounts with the Bank unless such
lockbox accounts are the subject of an agreement with the Trustee on terms
and conditions substantially identical to those contained herein. To the
extent not inconsistent with the terms and provisions of this Letter, the
Lockboxes and the Collection Accounts shall continue to be governed by the
terms of the Wholesale Lockbox Service Product Operating Procedures (as
amended, supplemented or otherwise modified form time to time in
accordance with the immediately succeeding sentence, the "Lockbox
Agreement") in effect between the Company and the Bank, a copy of which is
attached hereto as Exhibit B. The Company agrees not to change or amend
any provision of the Lockbox Agreement without the prior written consent
of the Trustee.
(c) Notwithstanding anything to the contrary in the Lockbox
Agreement or any other agreement relating to the Collection Accounts, the
Collection Accounts will be maintained solely for the benefit of the
Trustee and will be subject to written instructions only from an
authorized officer of the Trustee. The Trustee will provide you with a
listing of such authorized officers, which listing is attached hereto as
Schedule 1 (as such Schedule may be amended from time to time). All of the
Account Collateral shall be in the sole dominion and control of the
Trustee, and the Company shall have no control thereover.
(d) You will follow your usual operating procedures for the handling
of any remittance received in the Lockboxes or the Collection Accounts
that contains restrictive endorsements, irregularities (such as a variance
between the written and numerical amounts), undated or postdated items,
missing signatures, incorrect payees, etc.
(e) You will mail all checks returned unpaid because of uncollected
or insufficient funds under appropriate advice to the Company (with a copy
of the notification of return to the Trustee), and you may charge the
Collection Accounts for the face amount thereof. In the event insufficient
funds remain in the Collection Accounts to cover any returned,
uncollected, reversed or charged back items, the Company shall indemnify
you for the uncollected amounts of any such items upon your demand.
Pooling and Servicing Agreement
<PAGE>
C-1-4
(f) You will maintain a record of all checks and other remittance
items received in the Lockboxes and the Collection Accounts and, in
addition to providing the Company with photostats, vouchers, enclosures,
etc. of such checks and remittance items on a daily basis, furnish to the
Trustee a monthly statement of the Lockboxes and Collection Accounts to:
Bankers Trust Company, as Trustee, Four Albany Street, New York, New York
10006, Attention: Corporate Trust and Agency/Structured Finance Group,
with a copy to the Company.
(g) You will transfer, in same day funds, on each of your business
days, all available funds collected from the Collection Accounts on such
day to the following account (the "Concentration Account"):
ABA Number: 021001033
Bankers Trust Company
Four Albany Street
New York, New York 10006
Account Name: BTCO f/a/o Muehlstein
Cash Collateral Account
Account Number: 00330712
Reference: Muehlstein Concentration Account
Attn: Louis Bodi
or to such other account as the Trustee may from time to time
designate in writing.
(h) Subject to paragraphs (e) and (i) herein, all transfers referred
to in paragraphs (b) and (g) above shall be made by the undersigned
irrespective of, and without deduction for, any counterclaim, defense,
recoupment or set-off and shall be final, and the undersigned will not
seek to recover from the Trustee for any reason any such payment once
made.
(i) All service charges and fees with respect to the Lockboxes or
the Collection Accounts shall, in accordance with the Lockbox Agreement,
be debited to the applicable Collection Account. In the event insufficient
funds remain in such Account to cover such service charges and fees, the
Company shall pay and indemnify you for the amounts of such service
charges and fees.
(j) The Trustee shall be entitled to exercise any and all rights of
the Company in respect of the Lockboxes and the Collection Accounts in
accordance with the terms of the Pooling and Servicing Agreement, and the
undersigned shall, subject to the terms of the Lockbox Agreement, comply
in all respects with such exercise.
(k) Notwithstanding any other provisions of this letter agreement:
Pooling and Servicing Agreement
<PAGE>
C-1-5
(1) Unless you are grossly negligent or engage in willful
misconduct in performance or non-performance in connection with this
letter agreement and the Collection Accounts, the Company agrees to
hold you harmless from any claims, damages, losses or expenses
incurred by any party in connection herewith. In the event you
breach the standard of care set forth herein, the Company and the
Trustee expressly agree that your liability shall be limited to
damages directly caused by such breach and in no event shall you be
liable for any incidental, indirect, punitive or consequential
damages whatsoever.
(2) The Company agrees that you may act on the instructions of
the Trustee without making any special inquiry into the authority of
the Trustee, and you will not be held liable for reasonable reliance
on such instructions.
(3) You shall not be liable for any failure, inability to
perform, or delay in performance hereunder if such failure,
inability or delay is due to acts of God, war, civil commotion,
governmental action, fire, explosion, strikes, other industrial
disturbance, equipment malfunction, action, non-action or delayed
action on the part of either the Company or the Trustee or any other
entity or any other causes that are beyond your reasonable control.
(4) The Company's responsibility under paragraphs (e), (i) and
(k) shall survive the termination of this letter agreement.
The letter agreement shall be binding upon and shall inure to the
benefit of you, the Company, the Agent, the Trustee, the Program Agent, the
Holders and their respective successors, transferees and assigns. You may
terminate this letter agreement only upon thirty days' prior written notice to
the Company and the Trustee. The Trustee may terminate this letter agreement
upon ten days' prior written notice to you and the Company. Upon such
termination you shall close the Lockboxes and the Collection Accounts and
transfer all funds in the Lockboxes and the Collection Accounts to the
Concentration Account. After any such termination, you shall nonetheless remain
obligated promptly to transfer to the Concentration Account or to the Trustee
all funds and other property received in respect of the Lockboxes or any
Collection Account.
Pooling and Servicing Agreement
<PAGE>
C-1-6
This letter agreement may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which when taken together
shall constitute one and the same instrument. Delivery of an executed
counterpart of a signature page to this letter Agreement by telecopier shall be
effective as delivery of a manually executed counterpart of this letter
agreement.
This letter agreement supersedes all prior agreements, oral or
written, with respect to the subject matter hereof and may not be amended,
modified or supplemented except by a writing signed by the Trustee, the Company
and you.
Upon acceptance of this letter agreement it will be the valid and
binding obligation of the Company, the Agent, the Trustee and you, in accordance
with its terms.
THIS LETTER AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAW OF THE STATE OF NEW YORK.
Very truly yours,
H. MUEHLSTEIN & CO., INC.
By: __________________________________
Name:
Title:
CITICORP USA, INC., as Agent
By: __________________________________
Name:
Title:
Pooling and Servicing Agreement
<PAGE>
C-1-7
BANKERS TRUST COMPANY, not in its
individual capacity but solely as Trustee
By: __________________________________
Name:
Title:
Acknowledged and agreed to as of
the date first above written:
CORESTATES BANK, N.A.
By: ___________________________
Name:
Title:
Pooling and Servicing Agreement
<PAGE>
Schedule 1
LIST OF AUTHORIZED OFFICERS
Louis Bodi
Melissa Kaye-Adelson
Marie Merritt
Lara Graff
Kevin Healey
Ruth McKenna
Pooling and Servicing Agreement
<PAGE>
EXHIBIT C-2
FORM OF HONG KONG, SINGAPORE AND MALAYSIA
COLLECTION ACCOUNT AGREEMENT
September 25, 1996
Citibank, N.A.
399 Park Avenue
New York, NY 10043
Attention: Keith Karako
Gentlemen/Ladies:
Reference is made to the U.S. Dollar collection account no.
_________ and the local currency account no. ________, into which certain
monies, instruments and other properties are deposited from time to time (the
"Collection Accounts") maintained with Citibank, N.A. ("you" or the "Bank") by
Pegasus Polymers Asia Limited ("Pegasus Asia"). Pursuant to (a) that certain
Receivables Purchase Agreement dated February 9, 1996 (the "February 1996
Receivables Purchase Agreement") among Pegasus Asia and Muehlstein International
Limited (the "Company"), Pegasus Asia agreed to transfer to the Company, and the
Company agreed to acquire from Pegasus Asia, all of Pegasus Asia's right, title
and interest in and to the monies, instruments and other properties deposited
from time to time in the Collection Accounts for the term thereof and (b) that
certain Debenture in Relation to Revolving Credit of Up to U.S. $125,000,000
dated February 9, 1996 (the "February 1996 Debenture") executed by the Company
in favor of Citicorp USA, Inc., as agent (the"Agent") under the Credit Agreement
described in the February 1996 Debenture (for your convenience, copies of the
executed February 1996 Receivables Purchase Agreement and the executed February
1996 Debenture are attached hereto as Exhibit A and Exhibit B, respectively),
the Collection Accounts and the other Account Collateral (as hereinafter
defined) were assigned to the Agent. The Company and certain of its affiliates
have entered into a transaction (the "Receivables Transaction") to, among other
things, refinance in part advances made under the Credit Agreement described in
the February 1996 Debenture. Pursuant to the Receivables Transaction, the
Collection Accounts and the other Account Collateral are to be transferred to
Bankers Trust Company, as trustee for Muehlstein Trade Receivables Master Trust,
established pursuant to a Pooling and Servicing Agreement (the "Pooling and
Servicing Agreement") dated as of August 23, 1996 among Muehlstein Financial
Corporation, H. Muehlstein & Co., Inc., as servicer (in such capacity, the
"Servicer"), and Bankers Trust Company, as trustee (the "Trustee"). By execution
of this Collection Account Agreement, the Agent hereby transfers and assigns all
of its right, title and interest in the Collection Accounts to the Trustee. It
is a condition precedent to the Receivables Transaction that you execute and
deliver this Collection Account Agreement.
Pooling and Servicing Agreement
<PAGE>
C-2-2
Pursuant to the Receivables Transaction, the Company and certain of
its affiliates have granted to the Trustee a security interest in certain
property of the Company, including, among other things, the following (the
"Account Collateral"): the Collection Accounts, all funds held therein and all
certificates and instruments, if any, from time to time representing or
evidencing such Collection Accounts, all interest, dividends, cash, instruments
and other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the then existing
Account Collateral and all proceeds of any and all of the foregoing Account
Collateral and, to the extent not otherwise included, all (i) payments under
insurance (whether or not the Trustee is the loss payee thereof), or any
indemnity, warranty or guaranty, payable by reason of loss or damage to or
otherwise with respect to any of the foregoing Account Collateral and (ii) cash.
The Company hereby grants, to the Trustee, for the benefit of the
Trust, and the other Holders referred to in the Pooling and Servicing Agreement,
a security interest in, and a pledge to, all of its right, title and interest in
and to the Collection Accounts and all Account Collateral now or hereinafter on
deposit in the Collection Accounts and agrees that all funds in the Collection
Accounts shall be transferred to the Trustee on behalf of the Trust in
accordance with the instructions set forth herein. It is a condition to the
continued maintenance of the Collection Accounts with you that you agree to this
letter agreement. The Company further agrees that the Trustee shall have full
and irrevocable right, power and authority to demand, collect, withdraw, receive
or sue for all amounts now or hereafter on deposit in the Collection Accounts
and at its discretion to take any other action which it deems necessary or
appropriate to protect its interest in the Collection Accounts. Except as
provided in paragraphs (d) and (h) herein, the Collection Accounts shall not be
subject to deductions, setoff, banker's lien or any other right in favor of any
person or entity other than the Trustee, the Trust or the other Holders referred
to in the Pooling and Servicing Agreement.
We hereby direct you to change the name on the Collection Accounts
from "F/A/O Muehlstein Int'l Inc." to "Bankers Trust Company, as Trustee, Re:
Pegasus Polymers Asia Ltd.".
By signing this letter agreement you confirm that, as of the date
hereof, you have received no notice of any other pledge or assignment of the
Collection Accounts other than to the Agent pursuant to the February 1996
Debenture. Further, you hereby agree with the Trustee as follows:
(a) The Company maintains with the Bank the Collection Accounts in
the name of "Bankers Trust Company, as Trustee, Re: Pegasus Polymers Asia
Ltd."
(b) Notwithstanding anything to the contrary in any agreement
relating to the Collection Accounts, the Collection Accounts will be
maintained solely for the benefit of the Trustee and will be subject to
written instructions only from an authorized officer of the Trustee. The
Trustee will provide you with a listing of such authorized officers, which
listing is attached hereto as Schedule 1 (as such schedule may be amended
from time to time). All of the Account Collateral shall be in the sole
Pooling and Servicing Agreement
<PAGE>
C-2-3
dominion and control of the Trustee, and the Company shall have no control
thereover.
(c) You will follow your usual operating procedures for the handling
of any remittance received in the Collection Accounts that contains
restrictive endorsements, irregularities (such as a variance between the
written and numerical amounts), undated or postdated items, missing
signatures, incorrect payees, etc.
(d) You will mail all checks returned unpaid because of uncollected
or insufficient funds under appropriate advice to the Company (with a copy
of the notification of return to the Trustee), and you may charge the
Collection Accounts for the face amount thereof. In the event insufficient
funds remain in the Collection Accounts to cover any returned,
uncollected, reversed or charged back items, the Company shall indemnify
you for the uncollected amounts of any such items upon your demand.
(e) You will maintain a record of all checks and other remittance
items received in the Collection Accounts and, in addition to providing
the Company with photostats, vouchers, enclosures, etc. of such checks and
remittance items on a daily basis, furnish to the Trustee a monthly
statement of the Collection Accounts to: Bankers Trust Company, as Trustee
for Muehlstein Trade Receivables Master Trust, Four Albany Street, 10th
floor, New York, New York 10006, Attention: Corporate Trust and
Agency/Structured Finance Group, with a copy to the Company.
(f) You will transfer, in same day funds, on each of your business
days, all available funds collected from the Collection Accounts on such
day to the following account (the "Concentration Account"):
ABA Number: 021001033
Bankers Trust Company
Four Albany Street
New York, New York 10006
Account Name: BTCO f/a/o Muehlstein
Cash Collateral Account
Account Number: 00330712
Reference: Muehlstein Concentration Account
Attn: Louis Bodi
or to such other account as the Trustee may from time to time
designate in writing.
(g) Subject to paragraphs (d) and (h) herein, all transfers referred
to in paragraph (f) above shall be made by the undersigned irrespective
of, and without deduction for, any counterclaim, defense, recoupment or
set-off and shall be final, and the undersigned will not seek to recover
from the Trustee for any reason any such
Pooling and Servicing Agreement
<PAGE>
C-2-4
payment once made.
(h) All service charges and fees with respect to the Collection
Accounts shall be debited to the applicable Collection Account. In the
event insufficient funds remain in such Account to cover such service
charges and fees, the Company shall pay and indemnify you for the amounts
of such service charges and fees.
(i) The Trustee shall be entitled to exercise any and all rights of
the Company in respect of the Collection Accounts in accordance with the
terms of the Pooling and Servicing Agreement, and the undersigned shall
comply in all respects with such exercise.
(j) Notwithstanding any other provisions of this letter agreement:
(1) Unless you are grossly negligent or engage in willful
misconduct in performance or non-performance in connection with this
letter agreement and the Collection Accounts, the Company agrees to
hold you harmless from any claims, damages, losses or expenses
incurred by any party in connection herewith. In the event you
breach the standard of care set forth herein, the Company and the
Trustee expressly agree that your liability shall be limited to
damages directly caused by such breach and in no event shall you be
liable for any incidental, indirect, punitive or consequential
damages whatsoever.
(2) The Company agrees that you may act on the instructions of
the Trustee without making any special inquiry into the authority of
the Trustee, and you will not be held liable for reasonable reliance
on such instructions.
(3) You shall not be liable for any failure, inability to
perform, or delay in performance hereunder if such failure,
inability or delay is due to acts of God, war, civil commotion,
governmental action, fire, explosion, strikes, other industrial
disturbance, equipment malfunction, action, non-action or delayed
action on the part of either the Company or the Trustee or any other
entity or any other causes that are beyond your reasonable control.
(4) The Company's responsibility under paragraphs (d), (h) and
(j) shall survive the termination of this letter agreement.
This letter agreement shall be binding upon and shall inure to the
benefit of you, the Company, the Agent, the Trustee, the Program Agent, the
Holders and their respective successors, transferees and assigns. You may
terminate this letter agreement only upon thirty days' prior written notice to
the Company and the Trustee. The Trustee may terminate this letter agreement
upon ten days' prior written notice to you and the Company. Upon such
termination you shall close the Collection Accounts and transfer all funds in
the Collection Accounts to the Concentration Account. After any such
termination, you shall nonetheless remain obligated promptly to transfer to the
Concentration Account or to the Trustee all funds
Pooling and Servicing Agreement
<PAGE>
C-2-5
and other property received in respect of any Collection Account.
This letter agreement may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which when taken together
shall constitute one and the same instrument. Delivery of an executed
counterpart of a signature page to this letter Agreement by telecopier shall be
effective as delivery of a manually executed counterpart of this letter
agreement.
This letter agreement supersedes all prior agreements, oral or
written, with respect to the subject matter hereof and may not be amended,
modified or supplemented except by a writing signed by the Trustee, Pegasus
Asia, the Company, the Agent, and you.
Upon acceptance of this letter agreement it will be the valid and
binding obligation of the Trustee, Pegasus Asia, the Company, the Agent, and
you, in accordance with its terms.
Pooling and Servicing Agreement
<PAGE>
C-2-6
THIS LETTER AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAW OF THE STATE OF NEW YORK.
Very truly yours,
PEGASUS POLYMERS ASIA LIMITED
By: __________________________________
Name:
Title:
MUEHLSTEIN INTERNATIONAL, LTD.
By: __________________________________
Name:
Title:
CITICORP USA, INC., as Agent
By: __________________________________
Name:
Title:
Pooling and Servicing Agreement
<PAGE>
C-2-7
BANKERS TRUST COMPANY, not in its
individual capacity but solely as Trustee
By: __________________________________
Name:
Title:
Acknowledged and agreed to as of
the date first above written:
CITIBANK, N.A.
By: _______________________________
Name:
Title:
Pooling and Servicing Agreement
<PAGE>
Schedule 1
LIST OF AUTHORIZED OFFICERS
Louis Bodi
Melissa Kaye-Adelson
Marie Merritt
Lara Graff
Kevin Healey
Ruth McKenna
Pooling and Servicing Agreement
<PAGE>
EXHIBIT D
FORM OF RULE 144A LETTER
[Date]
[Trustee]
Muehlstein Financial Corporation
Re: Muehlstein Trade Receivables Master Trust,
[ ]% Receivables Backed Certificates,
Series [ ]
Ladies and Gentlemen:
In connection with our acquisition of the Certificates referred to
above, we certify that (a) we understand that the Certificates are not being
registered under the Securities Act of 1933, as amended (the "Securities Act"),
or any state securities laws and are being transferred to us in a transaction
that is exempt from the registration requirements of the Act and any such laws,
(b) we have such knowledge and experience in financial and business matters that
we are capable of evaluating the merits and risks of investment in the
Certificates, (c) we have had the opportunity to ask questions of and receive
answers from [___________] concerning the purchase of the Certificates and all
matters relating thereto or any additional information deemed necessary to our
decision to purchase the Certificates, (d) we are not a "benefit plan investor"
as defined in Section 2510.3-101(f)(2) of the Labor Regulations promulgated
under the Employee Retirement Income Security Act of 1974, as amended,] (e) we
have not, nor has anyone acting on our behalf, offered, transferred, pledged,
sold or otherwise disposed of the Certificates, any interest in the Certificates
or any other similar security to, or solicited any offer to buy or accept a
transfer, pledge or other disposition of the Certificates, any interest in the
Certificates or any other similar security from, or otherwise approached or
negotiated with respect to the Certificates, any interest in the Certificates or
any other similar security with, any person in any manner, or made any general
solicitation by means of general advertising or in any other manner, or taken
any other action, that would constitute a distribution of the Certificates under
the Securities Act or that would render the disposition of the Certificates a
violation of Section 5 of the Securities Act or require registration pursuant
thereto, nor will it act, nor has it authorized or will it authorize any person
to act, in such manner with respect to the Certificates, and (f) we are a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act and have
Pooling and Servicing Agreement
<PAGE>
D-2
completed either of the forms of certification to that effect attached hereto as
Annex 1 or Annex 2. We are aware that the sale to us is being made in reliance
on Rule 144A. We are acquiring the Certificates for our own account or for
resale pursuant to Rule 144A, and we understand that the Certificates may be
resold, pledged or transferred only (i) to a person reasonably believed to be a
qualified institutional buyer that purchases for its own account or for the
account of a qualified institutional buyer to whom notice is given that the
resale, pledge or transfer is being made in reliance on Rule 144A or (ii)
pursuant to another exemption from registration under the Securities Act.
Very truly yours,
[NAME OF INSTITUTION]
By: _______________________________
Name:
Title:
Pooling and Servicing Agreement
<PAGE>
FORM OF NON-RULE 144A LETTER
[Date]
[Trustee]
Muehlstein Financial Corporation
Re: Muehlstein Trade Receivables Master Trust,
[ ]% Receivables Backed Certificates
Series [ ]
Ladies and Gentleman:
In connection with our acquisition of the Certificates referred to
above, we certify that (a) we understand that the Certificates are not being
registered under the Securities Act of 1933, as amended (the "Act") , or any
state securities laws, and are being transferred to us in a transaction that is
exempt from the registration requirements of the Act and any such laws, (b) we
are an "accredited investor," as defined in Regulation D under the Act, and have
such knowledge and experience in financial and business matters that we are
capable of evaluating the merits and risks of investment in the Certificates,
(c) we have had the opportunity to ask questions of and receive answers from
[_______________] concerning the purchase of the Certificates and all matters
relating thereto or any additional information deemed necessary to our decision
to purchase the Certificates, (d) we are not a "benefit plan investor" as
defined in Section 2510.3-101(f)(2) of the Labor Regulations promulgated under
the Employee Retirement Income Security Act of 1974, as amended, (e) we are
acquiring the Certificates for investment for our own account and not with a
view to any distribution of such Certificates (but without prejudice to our
right at all times to sell or otherwise dispose of the Certificates in
accordance with clause (g) below), (f) we have not, nor has anyone acting on our
behalf, offered, transferred, pledged, sold or otherwise disposed of the
Certificates, any interest in the Certificates or any other similar security to,
or solicited any offer to buy or accept a transfer, pledge or other disposition
of the Certificates, any interest in the Certificates or any other similar
security from, or otherwise approached or negotiated with respect to the
Certificates, any interest in the Certificates or any other similar security
with, any person in any manner, or made any general solicitation by means of
general advertising or in any other manner, or taken any other action, that
would constitute a distribution of the Certificates under the Securities Act or
that would render the disposition of the Certificates a violation of Section 5
of the Securities Act or require registration pursuant thereto, nor will it act,
nor has it authorized or will it authorize any person to act, in such manner
with respect to the Certificates, and (g) we will not sell, transfer or
otherwise dispose of any Certificates unless
Pooling and Servicing Agreement
<PAGE>
D-2
(1) such sale, transfer or other disposition is made pursuant to an effective
registration statement under the Act or is exempt from such registration
requirements, (2) the purchaser or transferee of such Certificate has executed
and delivered to you a certificate to substantially the same effect as this
certificate, and (3) the purchaser or transferee has otherwise complied with any
conditions for transfer set forth in the Pooling and Servicing Agreement.
Very truly yours,
[NAME]
By: _________________________________
Name:
Title:
Pooling and Servicing Agreement
<PAGE>
EXHIBIT E
FORM OF DAILY REPORT
[TO BE PROVIDED]
Pooling and Servicing Agreement
<PAGE>
EXHIBIT F
Muehlstein Credit Policy Manual
[TO BE PROVIDED]
Pooling and Servicing Agreement
<PAGE>
EXHIBIT G
FORM OF SEMI-ANNUAL SERVICING REPORT OF
INDEPENDENT PUBLIC ACCOUNTANTS
To Muehlstein Financial Corporation, the Trustee, the Rating Agencies and the
Certificateholders:
At your request, we have performed the procedures enumerated below
with respect to the receivables of Muehlstein Financial Corporation (the
"Company") that are serviced by H.Muehlstein & Co., Inc. (the "Servicer") for
the period from __________, 199_ to __________, 199_ as set forth in the
accompanying Determination Date Statements (the "Statements") and in the five
accompanying Daily Reports (which were selected on a random basis from the
above-referenced period) (the "Daily Reports"). These procedures, which were
specified by you, were performed solely to assist you, and this report is solely
for your information and should not be used by those who did not participate in
determining the procedures. The procedures and findings are as follows:
A. We obtained all Statements for the period from __________,
199_ through __________, 199_ (the "Fiscal Period") and
performed the following:
- We recalculated the mathematical accuracy of the
Statements.
- With respect to Receivables, we agreed the amounts
appearing as principal amounts and the related aging
buckets to either schedules prepared by the Servicer or
reports generated by the Servicer's system.
B. For a selection of three Statements (one of which was the
Statement for the last Collection Period of the Fiscal
Period), we performed the following procedures:
With respect to the amount appearing as Collections on such
Statements:
- Obtained a daily listing of collections for the
Collection Period and agreed the total on the Statements
to a cumulative total of the daily listing of
collections for that period.
- Agreed a random sample of at least ten of the daily
collections appearing on the daily listing of
collections to the bank statements of the Muehlstein
Receivables Master Trust (the "Trust").
- Agreed the aggregate amount of Receivables received
during that Collection Period to the Servicer's
system-generated reports.
Pooling and Servicing Agreement
<PAGE>
G-2
- For each Obligor the amount of whose Receivables is
greater than 3% of the aggregate amount of all
Receivables, agreed the aggregate amount of all
Receivables with respect to such Obligor to the
Servicer's system-generated reports.
With respect to the amount appearing as Defaulted Receivables:
- Agreed the total Defaulted Receivables to the Servicer's
system-generated reports.
- From a random sample of at least 10 Defaulted
Receivables during the month, agreed the default amount
to the Obligor's file in the Servicer's system.
With respect to the amount appearing as Diluted Receivables:
- Agreed the total Diluted Receivables to the Servicer's
system generated reports.
- From a random sample of at least 10 Diluted Receivables
during the month, agreed the default amount to the
Obligor's file in the Service system.
With respect to the amount appearing as Eligible Receivables:
- Recalculated the mathematical accuracy of the Company's
schedule of Eligible Receivables.
- Agreed the amounts appearing in this schedule to a
statement generated by the Servicer's system.
C. With respect to each of the Daily Reports, we agreed amounts
to the system-generated reports provided by each Originator
for such day.
Because the above procedures do not constitute an audit conducted in accordance
with generally accepted auditing standards, we do not express an opinion on the
Statements for the period from __________, 199_ to __________, 199_. This report
relates only to the accounts and items specified above and does not extend to
any financial statements of the Servicer or the Company, taken as a whole.
Pooling and Servicing Agreement
<PAGE>
EXECUTION COPY
================================================================================
CREDIT AGREEMENT
Dated as of August 23, 1996
between
PEGASUS POLYMERS INTERNATIONAL INC.,
as Borrower
and
CITIBANK, N.A.,
as Lender
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
1.01. Certain Defined Terms......................................... 1
1.02. Computation of Time Periods................................... 8
1.03. Accounting Terms.............................................. 8
1.04. Other Definitional Provisions................................. 8
1.05. Other Terms................................................... 8
1.06. Payments by the Borrower...................................... 8
ARTICLE II
AMOUNTS AND TERMS OF LOANS
2.01. The Revolving Credit Facility................................. 9
2.02. Evidence of Indebtedness...................................... 10
2.03. Authorized Officers and Agents................................ 11
ARTICLE III
PAYMENTS AND PREPAYMENTS
3.01. Prepayments; Reductions in Commitment......................... 11
3.02. Payments...................................................... 12
3.03. Taxes......................................................... 13
3.04. Increased Capital............................................. 14
ARTICLE IV
INTEREST
4.01. Interest on the Loans and Other Obligations................... 14
4.02. Special Provisions Governing Fixed Rate Loans................. 17
4.03. Fees.......................................................... 20
ARTICLE V
CONDITIONS TO LOANS
5.01. Conditions Precedent to the Initial Loan...................... 21
5.02. Conditions Precedent to Each Loan............................. 22
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.01. Representations and Warranties of the Borrower............... 23
ARTICLE VII
COVENANTS OF THE BORROWER
<PAGE>
-ii- Page
7.01. Affirmative Covenants........................................ 24
7.02. Negative Covenants........................................... 25
ARTICLE VIII
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
8.01. Events of Default............................................. 26
8.02. Rights and Remedies; Acceleration and Termination............. 28
8.03. Rights and Remedies; Conversion of Currencies................. 28
ARTICLE IX
MISCELLANEOUS
9.01. Assignments................................................... 29
9.02. Expenses...................................................... 30
9.03. Indemnity..................................................... 31
9.04. Setoff........................................................ 32
9.05. Amendments and Waivers........................................ 32
9.06. Notices....................................................... 32
9.07. Survival of Warranties and Agreements......................... 33
9.08. Failure or Indulgence Not Waiver; Remedies Cumulative......... 33
9.09. Marshalling; Payments Set Aside............................... 33
9.10. Severability.................................................. 34
9.11. Headings...................................................... 34
9.12. Governing Law................................................. 34
9.13. Successors and Assigns........................................ 34
9.14. Counterparts; Effectiveness; Inconsistencies.................. 34
9.15. Confidentiality............................................... 34
9.16. Judgment Currency............................................. 35
9.17. Entire Agreement.............................................. 35
9.18. Intercreditor Agreement....................................... 35
9.19. Certain Consents and Waivers.................................. 35
<PAGE>
iii
EXHIBITS
Exhibit A -- Form of Notice of Borrowing
Exhibit B -- Form of Notice of Continuation/Conversion
Exhibit C -- Form of Note
Exhibit D -- Form of Guaranty
Exhibit E -- Form of Pledge Agreement
<PAGE>
2
CREDIT AGREEMENT
This Credit Agreement dated as of August 23, 1996 (as amended,
supplemented or modified from time to time, this "Agreement") is entered into
among Pegasus Polymers International Inc., a Connecticut corporation (the
"Borrower") and Citibank, N.A. (the "Lender").
ARTICLE I
DEFINITIONS
1.01. Certain Defined Terms. In addition to the terms defined above,
the following terms used in this Agreement shall have the following meanings,
applicable both to the singular and the plural forms of the terms defined:
"Affiliate" has the meaning ascribed to that term in the Syndicated
Credit Agreement.
"Applicable Fixed Rate Margin" means, as of any date, 40 basis
points per annum.
"Applicable Floating Rate Margin" means, as of any date, 40 basis
points per annum for Floating Rate Loans denominated in any Optional Currency.
"Applicable Lending Office" means the office of the Lender set forth
as such on the signature pages hereof or such other office as the Lender may
from time to time specify by written notice to the Borrower.
"Available Currency" means, with respect to any Loan, the currency
in which such Loan is denominated pursuant to the terms hereof.
"Bankruptcy Code" means Title 11 of the United States Code (11
U.S.C. ss.ss. 101 et seq.), as amended from time to time, and any successor
statute.
"Borrower" is defined in the preamble.
"Business Day" means a day, in the applicable local time, which is
not a Saturday or Sunday or a legal holiday and on which banks are not required
or permitted by law or other governmental action to close (i) in New York, New
York and (ii) in London, England.
"Citibank" means Citibank, N.A., a national banking association.
"Closing Date" means the initial Funding Date of the Loans.
"Collateral" has the meaning ascribed to that term in the Pledge
Agreement.
"Commitment" means the commitment of the Lender to make Loans to the
Borrower in the aggregate principal amount outstanding not to exceed $20,000,000
on the Closing Date as such amount may be reduced or modified pursuant to this
Agreement.
Credit Agreement
<PAGE>
3
"Contaminant" has the meaning ascribed to that term in the
Syndicated Credit Agreement.
"Default" means an event which, with the giving of notice or the
lapse of time, or both, would constitute an Event of Default.
"Disbursement Account" means the disbursement account of the
Borrower notified to the Lender from time to time.
"Dollar Equivalent" means, with respect to any amount denominated in
an Available Currency (other than Dollars) on the date of determination thereof,
the equivalent of such amount in Dollars determined at the rate of exchange
equal to the Spot Rate on such date of determination.
"Dollars" and "$" mean the lawful money of the United States.
"Environmental, Health or Safety Requirements of Law" has the
meaning ascribed to that term in the Syndicated Credit Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and any successor statute.
"Event of Default" means any of the occurrences set forth in Section
8.01 after the expiration of any applicable grace period and the giving of any
applicable notice, in each case as expressly provided in Section 8.01.
"Fixed Rate" means, with respect to any Interest Period applicable
to Fixed Rate Loans denominated in an Optional Currency, an interest rate per
annum equal to the Multicurrency LIBO Rate with respect to such Interest Period
and such Optional Currency.
"Fixed Rate Affiliate" means the Affiliate (if any) of the Lender
set forth below the Lender's name under the heading "Fixed Rate Affiliate" on
the signature pages hereof or such Affiliate of the Lender as it may from time
to time specify by written notice to the Borrower.
"Fixed Rate Determination Date" means, with respect to an Interest
Period for a Fixed Rate Loan, (i) the second Business Day prior to the first day
of such Interest Period for such Loan or (ii) in the case of a Fixed Rate Loan
denominated in Pounds and maintained in Pounds, the first day of such Interest
Period for such Loan.
"Fixed Rate Interest Payment Date" means (i) with respect to a Fixed
Rate Loan, the last day of each Interest Period applicable to such Loan and (ii)
with respect to any Fixed Rate Loan having a Interest Period in excess of three
(3) calendar months, the last day of each three (3) calendar month interval
during such Interest Period.
"Fixed Rate Loans" means all Loans outstanding which bear interest
at a rate determined by reference to the Fixed Rate applicable to such currency
as provided in Section 4.01(a).
Credit Agreement
<PAGE>
4
"Floating Rate" means, for any period applicable to any Floating
Rate Loan, a fluctuating interest rate per annum as shall be in effect from time
to time, which rate per annum shall be the Multicurrency Base Rate, in the case
of Floating Rate Loans denominated in any Optional Currency, or the U.S. Base
Rate (as defined in the Syndicated Credit Agreements) in the case of Floating
Rate Loans denominated in Dollars.
"Floating Rate Loans" means all Loans denominated in an Available
Currency which bear interest at a rate determined by reference to the Floating
Rate applicable to such currency as provided in Section 4.01(a).
"Funding Date" means, with respect to any Loan, the date of the
funding of such Loan.
"Governmental Authority" has the meaning ascribed to that term in
the Syndicated Credit Agreement.
"Guarantor" means Polymers International Financial Corporation, a
Delaware corporation.
"Guaranty" has the meaning specified in Section 5.01(d)(iv).
"Holder" means any Person entitled to enforce any of the
Obligations, whether or not such Person holds any evidence of Indebtedness,
including, without limitation, the Lender and its Fixed Rate Affiliate.
"Indebtedness" has the meaning ascribed to that term in the
Syndicated Credit Agreement.
"Indemnified Matter" is defined in Section 9.03.
"Indemnitee" is defined in Section 9.03.
"Intercreditor Agreement" means the Agreement dated August 23, 1996
between Citicorp USA, Inc. as agent, Citibank Canada as Canadian agent,
Citibank, N.A. as multicurrency lender, H. Muehlstein & Co., Inc., Muehlstein
International, Ltd. and Pegasus Polymers International Inc.
"Interest Period" is defined in Section 4.02(b).
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended to the date hereof and from time to time hereafter, any successor
statute and any regulations or guidance promulgated thereunder.
"Lender" is defined in the preamble.
"Lien" has the meaning ascribed to that term in the Syndicated
Credit Agreement.
Credit Agreement
<PAGE>
5
"Loan Documents" means this Agreement, the Note, the Guaranty, the
Pledge Agreement and the other documents executed or delivered pursuant to
Section 5.01 by any Loan Party.
"Loan Parties" means the Borrower and the Guarantor.
"Loans" has the meaning specified in Section 2.01(a).
"Material Adverse Effect" means a material adverse effect upon (i)
the business, condition (financial or otherwise), operations, performance,
properties or prospects of the Borrower, (ii) the ability of any of the Loan
Parties to perform their respective material obligations under the Loan
Documents or (iii) the ability of the Lender to enforce the Loan Documents.
"Maximum Revolving Credit Amount" means, at any particular time, an
amount equal to the lesser of (1) the Commitment in effect at such time and (2)
the "Invested Amount" (as defined in the Series 1996-2 Certificate) of the
Series 1996-2 Certificate at such time.
"Multicurrency Base Rate" means, for any period, a fluctuating
interest rate per annum as shall be in effect from time to time, which rate per
annum shall at all times be equal to the rate of interest designated and
published in London by the principal office of Citibank in London, England as
the "base rate" applicable to an Optional Currency, in the case of Floating Rate
Loans denominated in such Optional Currency.
"Multicurrency Facility" means the facility provided by the Lender
to make Loans to the Borrower in accordance with the terms and conditions
contained in this Agreement.
"Multicurrency LIBO Rate" means, with respect to any Interest Period
applicable to a Fixed Rate Loan denominated in an Optional Currency:
(i) the interest rate per annum equal to (A) the offered quotations
for deposits in the Optional Currency of the relevant Loan for a period
comparable to the relevant Interest Period which appears on the Telerate
Page 3750 or Telerate Page 3740 (as appropriate) at or about 11:00 a.m.
(London time) on the applicable Fixed Rate Determination Date; or (B) if
no such interest rate determined under clause (A) is available, the
arithmetic mean (rounded upward to the nearest one-sixteenth of one
percent (0.0625%)) of the interest rates, as supplied to Citibank at its
request, quoted by the "London Reference Banks" to leading banks in the
London interbank market at or about 11:00 a.m. (London time) on the
applicable Fixed Rate Determination Date for the offering of deposits in
the Optional Currency of the relevant Loan for a period comparable to the
relevant Interest Period; plus
(ii) in the case of Fixed Rate Loans denominated in Pounds, the
amount (expressed as a percentage) of "associated reserve costs" being
imposed by the Bank of England on the relevant Fixed Rate Determination
Date. The Multicurrency LIBO Rate shall be adjusted automatically on and
as of the effective date of any change in the amount of associated reserve
costs so imposed. The Lender shall provide to the Borrower, upon the
reasonable request of the Borrower, a reasonably detailed
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<PAGE>
6
explanation of any associated reserve costs used in the determination of
the Multicurrency LIBO Rate.
For the purposes of this definition, "Telerate Page 3750" means the display
designated as "Page 3750", and "Telerate Page 3740" means the display designated
as "Page 3740" in each case on the Telerate Service (or such other page as may
replace Page 3750 or Page 3740, as applicable, on the service as may be
nominated by the British Bankers' Association as the information vendor for the
purpose of displaying British Bankers' Association Interest Settlement Rates for
deposits in the Optional Currency concerned).
"Note" means a note made payable to the Lender evidencing the
Borrower's Obligation to repay the Loans, and all amendments thereto,
replacements thereof and substitutions therefor.
"Notice of Borrowing" means a notice substantially in the form of
Exhibit A.
"Notice of Continuation/Conversion" means a notice substantially in
the form of Exhibit B.
"Obligation" means, with respect to the Loan Parties and to the
extent arising under the Loan Documents, any payment, performance or other
obligation of any Loan Party of any kind, including, without limitation, any
liability of such Loan Party on any claim, whether or not the right of any
creditor to payment in respect of such claim is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, disputed, undisputed, legal,
equitable, secured or unsecured, and whether or not such claim is discharged,
stayed or otherwise affected by any proceeding referred to in Section 8.01(f) or
(g). Without limiting the generality of the foregoing, the Obligations of the
Loan Parties under the Loan Documents include (a) the obligation to pay
principal, interest, charges, expenses, attorneys' fees and disbursements,
indemnities and other amounts payable by any Loan Party under any Loan Document
to which such Loan Party is party and (b) the obligation of any Loan Party to
reimburse any amount in respect of any of the foregoing that the Lender, in its
sole discretion, may pursuant to any Loan Document elect to pay or advance on
behalf of such Loan Party.
"Optional Currency" means any of the lawful currencies of France,
Germany, Italy, Spain or the United Kingdom.
"Payment Account" means each account of the Lender into which
fundings of Loans and payments in respect of Obligations shall be made. The
Payment Accounts shall be notified by the Lender to the Borrower from time to
time.
"Pledge Agreement" has the meaning specified in Section 5.01(a)(v).
"Person" has the meaning ascribed to that term in the Syndicated
Credit Agreement.
"Pounds" means the lawful currency of the United Kingdom.
"Property" has the meaning ascribed to that term in the Syndicated
Credit Agreement as applicable to each Loan Party (rather than to the other
Persons referred to in the Syndicated Credit Agreement).
Credit Agreement
<PAGE>
7
"Regulation A" means Regulation A of the Federal Reserve Board as in
effect from time to time.
"Release" has the meaning ascribed to that term in the Syndicated
Credit Agreement.
"Requirements of Law" has the meaning ascribed to that term in the
Syndicated Credit Agreement.
"Responsible Person" means any of the president, any vice president,
the chief financial officer, any secretary-treasurer, assistant secretary or
assistant treasurer of the Borrower.
"Revolving Credit Availability" means, at any particular time, the
amount by which the Maximum Revolving Credit Amount exceeds the Revolving Credit
Obligations outstanding at such time.
"Revolving Credit Obligations" means, at any particular time, the
outstanding principal amount of the Loans at such time. For purposes of
determining at any time the amount of Revolving Credit Obligations in respect of
any Loan which is denominated in any Available Currency (other than Dollars),
such amount shall equal the Dollar Equivalent of the amount of such currency at
such time.
"Series 1996-2 Certificate" means the "Certificate", as defined in
the Pledge Agreement.
"Series 1996-2 Supplement" means the Agreement dated as of August
23, 1996 among Muehlstein Financial Corporation as Transferor, H. Muehlstein &
Co., Inc. as Servicer and Bankers Trust Company as Trustee.
"Spot Rate" means, as of any date of determination with respect to
the conversion of an amount in one currency (the "Original Currency") to another
currency (the "Other Currency"), the rate of exchange quoted by the Lender (or
its Affiliate) in New York, New York (if the Original Currency is Dollars),
London, England (if the Original Currency is an Optional Currency), at 11:00
a.m. (New York time or London time, as applicable) on such date of determination
(or if no such quote is available on such date, then on the immediately
preceeding date on which such quote is available) to prime banks in New York,
New York or London, England, as appropriate, for the spot purchase in the
foreign exchange market of such city of such amount of the Original Currency
with such Other Currency.
"Subsidiary" has the meaning ascribed to that term in the Syndicated
Credit Agreement.
"Syndicated Credit Agreement" means the Credit Agreement dated as of
February 9, 1996 among Muehlstein Holding Corporation, as guarantor, H.
Muehlstein & Co., Inc., Pegasus Polymers International Inc., Muehlstein
International Ltd. and H. Muehlstein & Co. (Canada) Limited, as borrowers, the
lenders and issuing bank parties thereto, Citicorp USA, Inc., as agent, and
Citibank Canada, as Canadian agent, as such agreement may be amended,
supplemented or otherwise modified, refinanced or replaced from
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<PAGE>
8
time to time.
"Taxes" is defined in Section 3.03(a).
"Termination Date" means the earlier to occur of (i) the date of
termination of the Commitment pursuant to the terms hereof and (ii) the fourth
anniversary of the Closing Date.
"Uniform Commercial Code" means the Uniform Commercial Code as
enacted in the State of New York, as it may be amended from time to time.
1.02. Computation of Time Periods. In this Agreement, in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
mean "to but excluding". Periods of days referred to in this Agreement shall be
counted in calendar days unless Business Days are expressly prescribed. Any
period determined hereunder by reference to a month or months or year or years
shall end on the day in the relevant calendar month in the relevant year, if
applicable, immediately preceding the date numerically corresponding to the
first day of such period, provided that if such period commences on the last day
of a calendar month (or on a day for which there is no numerically corresponding
day in the calendar month during which such period is to end), such period
shall, unless otherwise expressly required by the other provisions of this
Agreement, end on the last day of the calendar month.
1.03. Accounting Terms. All accounting terms not otherwise defined
herein shall have the meanings assigned to them in conformity with generally
accepted accounting principles.
1.04. Other Definitional Provisions. References to the "preamble",
"Articles", "Sections", "subsections", and "Exhibits" shall be to the preamble,
Articles, Sections, subsections and Exhibits, respectively, of this Agreement
unless otherwise specifically provided. The words "hereof", "herein", and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. Whenever in any Loan Document a term is defined by reference to the
meaning ascribed to such term in the Syndicated Credit Agreement, then such term
shall have the meaning ascribed in the Syndicated Credit Agreement as in
existence on the date hereof without giving effect to any amendment, supplement
or other modification thereto or any refinancing or replacement thereof and
irrespective of any repayment or termination thereof, unless otherwise agreed in
writing by the parties hereto.
1.05. Other Terms. All other terms contained herein shall, unless
the context indicates otherwise, have the meanings assigned to such terms by the
Uniform Commercial Code to the extent the same are defined therein.
1.06. Payments by the Borrower. Except as expressly set forth herein
to the contrary, all payments made by the Borrower in respect of principal and
interest on any Loans shall be made in the Optional Currency in which such Loan
was made.
Credit Agreement
<PAGE>
9
ARTICLE II
AMOUNTS AND TERMS OF LOANS
2.01. The Revolving Credit Facility. (a) Loans. Subject to the terms
and conditions set forth herein, the Lender hereby agrees to make revolving
loans (each a "Loan") to the Borrower from time to time on any Business Day
during the period from the Closing Date to the Termination Date, in an aggregate
amount (converted to the Dollar Equivalent thereof) not to exceed at any time
outstanding the Revolving Credit Availability at such time, provided, however,
at no time shall the aggregate Revolving Credit Obligations owed by the Borrower
exceed the Maximum Revolving Credit Amount at such time. Subject to the
provisions hereof, the Borrower may repay any outstanding Loan on any day which
is a Business Day and any amounts so repaid may be reborrowed, up to the amount
available under this Section 2.01(a) at the time of such Loan, until the
Termination Date. Each Loan shall be denominated in a single Optional Currency.
Each Loan shall be in a minimum amount of the Dollar Equivalent of $500,000 for
Floating Rate Loans (and in approximately similar intervals in the applicable
Optional Currency in excess thereof) and $1,000,000 for Fixed Rate Loans (and in
approximately similar intervals in the applicable Optional Currency in excess
thereof). The Borrower shall not request Loans on more than two (2) Business
Days during any calendar week (it being agreed and understood that the Borrower
may request more than one Loan on any such Business Day) and shall not request
Loans in any Optional Currency if, after giving effect to such Loan, the
aggregate Dollar Equivalent principal amount of all outstanding Loans
denominated in such Optional Currency would equal or exceed the Maximum
Revolving Credit Amount.
(b) Notice of Borrowing. When the Borrower desires to make a Loan
under this Section 2.01, it shall deliver to the Lender in a manner specified in
Section 9.06 a signed Notice of Borrowing no later than 11:00 a.m. (London time)
at least two (2) Business Days in advance of the proposed Funding Date for such
Loan. All Loans made under this Section 2.01 on the Closing Date shall be made
initially as Floating Rate Loans and may thereafter be continued as Floating
Rate Loans or converted into Fixed Rate Loans in the manner provided in Section
4.01(c). In the case of a Notice of Borrowing delivered in connection with a
proposed Loan, the Borrower shall request, within one-half hour prior to the
issuance of such Notice of Borrowing, the advice of the Lender as to the Dollar
Equivalent of the amount of such Loan, and the Borrower shall specify such
amount in such Notice of Borrowing, provided that such advice shall not be
deemed to be a prediction or guaranty of the Dollar Equivalent of such amount
after the Notice of Borrowing is submitted and shall in no way limit the
Borrower's Obligations under this Agreement due to fluctuations in the
applicable Available Currency.
(c) Making of Loans. (i) The Lender shall deposit an amount equal to
the Loan requested in any Notice of Borrowing delivered to the Lender pursuant
Section 2.01(b) in the applicable Payment Account in immediately available funds
and in the appropriate currency, not later than 12:00 noon (London time) on any
Funding Date applicable thereto (or, if the Funding Date is the Closing Date,
such earlier time as the Lender shall determine). Subject to the fulfillment of
the conditions precedent set forth in Article V, the Lender shall make the
proceeds of such amounts received by it available to the Borrower at the
Lender's office in London, England, on such Funding Date (or as soon thereafter
as is customarily practicable) and shall disburse such proceeds to the
Disbursement Account referred to in the applicable Notice of Borrowing.
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10
(ii) Anything hereinabove to the contrary notwithstanding, if the
Lender shall, not later than 2:00 p.m. (London time) one Business Day before the
date of any requested Loan, notify the Borrower that the Lender is not satisfied
that deposits in the relevant Optional Currency will be freely available to it
in the relevant amount and, if applicable, for the relevant Interest Period, the
right of the Borrower to request Loans in such Optional Currency shall be
suspended until the Lender shall notify the Borrower that the circumstances
causing such suspension no longer exist, and, at the option of the Borrower, the
Loan to be made by the Lender (and any subsequent Loan to be made by the Lender
in respect of which such Optional Currency shall have been requested during such
period of suspension) shall be denominated in any other Available Currency
requested on the same Business Day which is available, or in Pounds if no such
currency has been requested or is available, and having a Interest Period
coextensive with the Interest Period in effect in respect of all other Loans
made on such Funding Date. The Lender shall, upon becoming aware that the
circumstances causing any such suspension no longer apply, promptly so notify
the Borrower, provided that the failure of the Lender to so notify the Borrower
shall not impair the rights of the Lender under this Section 2.01(c)(ii) or
expose the Lender to any liability.
(d) Use of Proceeds. Proceeds of Loans shall be used (i) to repay or
prepay Indebtedness to the Lender or (ii) except with respect to the initial
loan hereunder, to provide for ongoing working capital needs in the ordinary
course of the business of the Borrower and its Subsidiaries or for other lawful
general corporate purposes not prohibited hereunder.
(e) Termination Date. The Commitment shall terminate, and all
outstanding Revolving Credit Obligations shall be due and payable, on the
Termination Date.
2.02. Evidence of Indebtedness. The Borrower hereby agrees to pay
when due the principal amount of each Loan which is made to it (whether or not
evidenced by a Note), and further agrees to pay all unpaid interest accrued
thereon, in accordance with the terms hereof and, to the extent evidenced
thereby, of the Note. On the Closing Date, the Borrower shall execute and
deliver to the Lender a Note substantially in the form of Exhibit C in a
principal amount equal to the Lender's Commitment, evidencing the Loans made to
the Borrower under the Multicurrency Facility. The Lender shall maintain in
accordance with its usual practice an account or accounts evidencing the
Indebtedness of the Borrower resulting from each Loan made hereunder from time
to time, including the amount of principal and interest payable and paid to the
Lender from time to time hereunder and under the Note.
2.03. Authorized Officers and Agents. On the Closing Date and from
time to time thereafter, the Borrower shall deliver to the Lender an Officers'
Certificate setting forth the names of the officers, employees and agents
authorized to request Loans and containing a specimen signature of each such
officer, employee or agent. The officers, employees and agents so authorized
shall also be authorized to act for the Borrower in respect of all other matters
relating to the Loan Documents. The Lender shall be entitled to rely
conclusively on such officer's or employee's authority to request such Loan
until the Lender receives written notice to the contrary. In addition, the
Lender shall be entitled to rely conclusively on any written notice sent to it
by telecopy. The Lender shall have no duty to verify the authenticity of the
signature appearing on, or any telecopy or facsimile of, any written Notice of
Borrowing or any other document, and, with respect to an oral request for such a
Loan, the Lender shall have no duty to verify the identity of any person
representing himself or herself as one of the officers, employees or agents
authorized to make such request or otherwise to act
Credit Agreement
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11
on behalf of the Borrower. The Lender shall not incur any liability to the
Borrower or any other Person in acting upon any telecopy or facsimile or
telephonic notice referred to above which the Lender reasonably believes to have
been given by a duly authorized officer or other person authorized to act on
behalf of the Borrower.
ARTICLE III
PAYMENTS AND PREPAYMENTS
3.01. Prepayments; Reductions in Commitment. (a) Voluntary
Reductions of Commitment. The Borrower, upon at least five (5) Business Days'
prior written notice to the Lender, shall have the right, from time to time, to
terminate in whole or permanently reduce in part the Commitment, provided that
the Borrower shall have made or caused to be made any payment required to be
made pursuant to Section 3.01(b) after giving effect to such reduction. Any
partial reduction of the Lender's Commitment shall be in an aggregate minimum
amount of $2,000,000 and integral multiples of $1,000,000 in excess of that
amount. Any notice of termination or reduction given to the Lender under this
Section 3.01(a) shall specify the date (which shall be a Business Day) of such
termination or reduction and, with respect to a partial reduction, the aggregate
principal amount thereof. When notice of termination or reduction of the
Commitment is delivered as provided herein, the principal amount of the Loans
shall become due and payable on the date specified in such notice to the extent
the Revolving Credit Obligations would exceed the Maximum Revolving Credit
Amount after giving effect to such reduction. The payments in respect of
reductions and terminations described in this Section 3.01(a) may be made
without premium or penalty (except as provided in Section 4.02(f)).
(b) Mandatory Prepayments of Loans. Immediately, if at any time the
Revolving Credit Obligations are greater than the Maximum Revolving Credit
Amount, the Borrower agrees to make a mandatory repayment of such Revolving
Credit Obligations in an aggregate amount sufficient to reduce any such excess
to zero, such amounts to be applied to the Obligations of the Borrower in
accordance with Section 3.02.
3.02. Payments. (a) Manner and Time of Payment. All payments of
principal of and interest on the Loans and other Obligations (including, without
limitation, expenses) which are payable to the Lender shall be made without
condition or reservation of right, in immediately available funds, delivered to
the Lender not later than 1:00 p.m. (London time) on the date and at the place
due, to the applicable Payment Account. Thereafter payments in respect of any
Loan received by the Lender shall be applied in accordance with the provisions
of Section 3.02(b) on the date received, if received prior to 1:00 p.m. (London
time), and on the next succeeding Business Day if received thereafter. All
payments of principal of and interest on the Loans, shall be made upon at least
two (2) Business Days' prior notice to the Lender.
(b) Apportionment of Payments. (i) Except as set forth in Sections
3.01(a) and (b) and unless otherwise designated by the Borrower, (A) all
principal payments made by the Borrower in respect of Loans shall be applied
first, to repay outstanding Floating Rate Loans, and then to repay outstanding
Fixed Rate Loans, with those Loans which have earlier expiring Interest Periods
being repaid prior to those which have later expiring Interest Periods.
(ii) After the occurrence and during the continuance of an Event of
Default, the Lender may, and shall upon the acceleration of the Obligations
pursuant to Section 8.02(a),
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12
apply all payments in respect of any Obligations and all proceeds of Collateral
to the Obligations in the following order (it being understood that the Lender
shall have the right to convert, at a rate of exchange equal to the Spot Rate as
of such conversion date and at the Borrower's expense, any of such payments or
proceeds of Collateral into the currency in which such Obligations are
denominated):
(A) first, to pay Obligations in respect of any expense
reimbursements or indemnities then due to the Lender;
(B) second, to pay interest due in respect of the Loans;
(C) third, to pay or prepay principal outstanding on Loans;
(D) fourth, to the ratable payment of all other Obligations.
(c) Payments on Non-Business Days. Whenever any payment to be made
by the Borrower hereunder or under the Note is stated to be due on a day which
is not a Business Day, the payment shall instead be due on the next succeeding
Business Day (or, as set forth in Section 4.02(b)(iii), the next preceding
Business Day), and any such extension of time shall be included in the
computation of the payment of interest hereunder.
3.03. Taxes. (a) Payment of Taxes. Any and all payments by the
Borrower hereunder or under the Note or other document evidencing any
Obligations shall be made free and clear of and without reduction for any and
all taxes, levies, imposts, deductions, charges, withholdings, and all stamp or
documentary taxes, excise taxes, ad valorem taxes and other taxes imposed on the
value of the Property, charges or levies which arise from the execution,
delivery or registration, or from payment or performance under, or otherwise
with respect to, any of the Loan Documents or the Commitment and all other
liabilities with respect thereto excluding, in the case of the Lender, taxes
imposed on its income, capital, profits or gains and franchise taxes imposed on
it by (i) the United States, (ii) the Governmental Authority of any jurisdiction
(or any political subdivision thereof) in which any Applicable Lending Office of
the Lender is located, (iii) the Governmental Authority in which such Person is
organized, managed and controlled or any political subdivision thereof or (iv)
any political subdivision of the United States, unless such taxes are imposed
solely as a result of the Lender's performance of any of the Loan Documents in
such political subdivision and the Lender would not otherwise be subject to tax
by such political subdivision (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter referred to
as "Taxes"). If the Borrower shall be required by law to withhold or deduct any
Taxes from or in respect of any sum payable hereunder or under any such Note or
document to the Lender, (x) the sum payable to the Lender shall be increased as
may be necessary so that after making all required withholding or deductions
(including withholding or deductions applicable to additional sums payable under
this Section 3.03) the Lender receives an amount equal to the sum it would have
received had no such withholding or deductions been made, (y) the Borrower shall
make such withholding or deductions, and (z) the Borrower shall pay the full
amount withheld or deducted to the relevant taxation authority or other
authority in accordance with applicable law.
(b) Indemnification. The Borrower agrees to indemnify the Lender
against, and reimburse it on demand for, the full amount of all Taxes
(including, without limitation, any Taxes imposed by any Governmental Authority
on amounts payable under this Section
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3.03 and any additional income or franchise taxes resulting therefrom) incurred
or paid by the Lender or any of its Affiliates and any liability (including
penalties, interest, and out-of-pocket expenses paid to third parties) arising
therefrom or with respect thereto, whether or not such Taxes were lawfully
payable (other than any liability that results from the gross negligence or
willful misconduct of the Lender, whether or not such Taxes were correctly or
legally asserted by the relevant taxing authority or other governmental
authority). A certificate as to any additional amount payable to any Person
under this Section 3.03 submitted by it to the Borrower shall, absent manifest
error, be final, conclusive and binding upon all parties hereto. The Lender
agrees (i) within a reasonable time after receiving a written request from the
Borrower, to provide the Borrower and the Lender with such certificates as are
reasonably required, and (ii) take such other actions as are reasonably
necessary to claim such exemptions as the Lender or the Affiliate may be
entitled to claim in respect of all or a portion of any Taxes which are
otherwise required to be paid or deducted or withheld pursuant to this Section
3.03 in respect of any payments under this Agreement or under the Note. If the
Lender receives a refund in respect of any Taxes for which the Lender has
received payment from the Borrower hereunder, it shall promptly apply such
refund (including any interest received by the Lender from the taxing authority
with respect to the refund with respect to such Taxes) to the Obligations of the
Borrower, net of all out-of-pocket expenses of the Lender; provided that the
Borrower, upon the request of the Lender, agrees to reimburse such refund (plus
penalties, interest or other charges) to the Lender in the event the Lender is
required to repay such refund.
(c) Receipts. Within thirty (30) days after the date of any payment
of Taxes pursuant to this Section 3.03 by the Borrower or any of the Borrower's
Subsidiaries, the Borrower will furnish to the Lender at its request, at its
notice address in effect under Section 9.06, a copy of a receipt, if any, or
other documentation reasonably satisfactory to the Lender, evidencing payment
thereof. The Borrower shall furnish to the Lender, within thirty (30) days after
the request of the Lender from time to time, an Officer's Certificate stating
that all Taxes of which they are aware are due have been paid and that no
additional Taxes of which it is aware are due.
3.04. Increased Capital. If after the date hereof the Lender
determines that (i) the adoption or implementation of or any change in or in the
interpretation or administration of any law or regulation or any guideline or
request from any central bank or other Governmental Authority or
quasi-governmental authority exercising jurisdiction, power or control over the
Lender or banks or financial institutions generally (whether or not having the
force of law), compliance with which affects or would affect the amount of
capital required or expected to be maintained by the Lender or any corporation
controlling the Lender and (ii) the amount of such capital is increased by or
based upon the making or maintenance by the Lender of its Loans, or the
existence of the Lender's obligation to make Loans, then, in any such case, upon
written demand by the Lender, the Borrower agrees immediately to pay to the
Lender, from time to time as specified by the Lender, additional amounts
sufficient to compensate the Lender or such corporation therefor. Such demand
shall be accompanied by a reasonably detailed statement as to the amount of such
compensation and include a summary of the basis for such demand. Such statement
shall be conclusive and binding for all purposes, in the absence of manifest
error.
Credit Agreement
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14
ARTICLE IV
INTEREST
4.01. Interest on the Loans and Other Obligations. (a) Rate of
Interest. All Loans and the outstanding principal balance of all other
Obligations shall bear interest on the unpaid principal amount thereof from the
date such Loans are made and such other Obligations are due and payable until
paid in full, except as otherwise provided in Section 4.01(d), as follows:
(i) If a Floating Rate Loan or such other Obligation, at a rate per
annum equal to the sum of (A) the Floating Rate applicable to the currency
in which such Obligation is denominated in effect from time to time as
interest accrues, plus (B) the Applicable Floating Rate Margin in effect
from time to time;
(ii) If a Fixed Rate Loan, at a rate per annum equal to the sum of
(A) the Fixed Rate determined for the applicable Interest Period and the
applicable currency, plus (B) the Applicable Fixed Rate Margin in effect
from time to time during such Interest Period;
The applicable basis for determining the rate of interest on any Loan shall be
initially determined in accordance with Section 2.01(b). The applicable basis
for determining the rate of interest on such Loan shall be selected thereafter
by the Borrower at the time a Notice of Continuation/Conversion is delivered by
the Borrower to the Lender. Notwithstanding the foregoing, the Borrower may not
select the Fixed Rate as the applicable basis for determining the rate of
interest on such a Loan if (x) such Loan is to be made on the Closing Date or
(y) at the time of such selection an Event of Default or Default would occur or
has occurred and is continuing. If on any day any Loan is outstanding with
respect to which notice has not been timely delivered to the Lender in
accordance with the terms hereof specifying the basis for determining the rate
of interest on that day, then for that day interest on that Loan shall be
determined by reference to the applicable Floating Rate.
(b) Interest Payments. (i) Interest accrued on each Floating Rate
Loan shall be payable in arrears in the currency in which such Loan is
denominated (A) on the first Business Day of each calendar month for the
preceding calendar month, commencing on the first such day following the making
of such Floating Rate Loan, and (B) if not theretofore paid in full, at maturity
(whether by acceleration or otherwise) of such Floating Rate Loan.
(ii) Interest accrued on each Fixed Rate Loan shall be payable in
arrears in the currency in which such Loan is denominated (A) on the last day of
each Fixed Rate Interest Payment Date with respect to such Loan and (B) if not
theretofore paid in full, at maturity (whether by acceleration or otherwise) of
such Fixed Rate Loan.
(iii) Interest accrued on the principal balance of all other
Obligations shall be payable in arrears in the currency in which such Obligation
is denominated (A) on the first Business Day of each month, commencing on the
first such day following the incurrence of such Obligation and (B) if not
theretofore paid in full, at the time such other Obligation becomes due and
payable (whether by acceleration or otherwise).
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(c) Conversion or Continuation. (i) The Borrower shall have the
option (A) to convert at any time all or any part of its outstanding Floating
Rate Loans to Fixed Rate Loans denominated in the same Available Currency; (B)
to convert all or any part of its outstanding Fixed Rate Loans having Interest
Periods which expire on the same date to Floating Rate Loans denominated in the
same currency on such expiration date; or (C) to continue all or any part of its
outstanding Fixed Rate Loans having Interest Periods which expire on the same
date as Fixed Rate Loans denominated in the same currency, and the succeeding
Interest Period of such continued Loans shall commence on such expiration date;
provided, however, no such outstanding Loan may be continued as, or be converted
into, a Fixed Rate Loan (i) if the continuation of, or the conversion into,
would violate any of the provisions of Section 4.02 or (ii) if an Event of
Default or Default would occur or has occurred and is continuing. Any conversion
into or continuation of Fixed Rate Loans under this Section 4.01(c) shall be in
a minimum amount of $2,000,000 (or the Dollar Equivalent of $1,000,000 for Fixed
Rate Loans denominated in an Optional Currency) and in integral Dollar
Equivalent multiples of $1,000,000 (or approximately similar intervals in
Optional Currencies) in excess of that amount.
(ii) To convert or continue a Loan under Section 4.01(c)(i), the
Borrower shall deliver a Notice of Continuation/Conversion to the Lender no
later than 12:00 noon (London time) at least two (2) Business Days in advance of
the proposed continuation/conversion date. Any Notice of Continuation/Conversion
for conversion to, or continuation of, a Loan shall be irrevocable, and the
Borrower shall be bound to convert or continue in accordance therewith.
(d) Default Interest. Notwithstanding the rates of interest
specified in Section 4.01(a) or elsewhere herein, and to the extent permitted by
applicable law, effective immediately upon the occurrence of any Event of
Default and for as long thereafter as such Event of Default shall be continuing,
the principal balance of all Loans and of all other Obligations shall bear
interest at a rate which is two percent (2.0%) per annum in excess of the rate
of interest applicable to such Loans and Obligations from time to time.
(e) Computation of Interest. Interest on all Obligations shall be
computed on the basis of the actual number of days elapsed in the period during
which interest accrues and a year of 360 days. In computing interest on any
Loan, the date of the making of the Loan shall be included and the date of
payment shall be excluded.
(f) Changes; Legal Restrictions. If after the date hereof the Lender
determines that the adoption or implementation of or any change in or in the
interpretation or administration of any law or regulation or any guideline or
request from any central bank or other Governmental Authority or
quasi-governmental authority exercising jurisdiction, power or control over the
Lender or over banks or financial institutions generally (whether or not having
the force of law), compliance with which, in each case after the date hereof:
(i) subjects the Lender (or its Applicable Lending Office) to
charges (other than Taxes) of any kind which is applicable to the
Commitment of the Lender to make Fixed Rate Loans; or
(ii) imposes, modifies or holds applicable, any reserve (other than
reserves taken into account in calculating any Fixed Rate), special
deposit,
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compulsory loan, FDIC insurance or similar requirement against assets held
by, or deposits or other liabilities in or for the account of, advances or
loans by, commitments made or other credit extended by, or any other
acquisition of funds by, the Lender or any Applicable Lending Office or
Fixed Rate Affiliate of the Lender;
and the result of any of the foregoing is to increase the cost to the Lender of
making, renewing or maintaining the Loans or its Commitment or to reduce any
amount receivable thereunder; then, in any such case, upon written demand by the
Lender, the Borrower agrees promptly to pay to the Lender, from time to time as
specified by the Lender, such amount or amounts as may be necessary to
compensate the Lender or its Fixed Rate Affiliate for any such additional cost
incurred or reduced amount received. Such demand shall be accompanied by a
statement as to the amount of such compensation and include a reasonably
detailed summary of the basis for such demand. Such statement shall be
conclusive and binding for all purposes, absent manifest error.
(g) Confirmation of Fixed Rate. Upon the reasonable request of the
Borrower from time to time, the Lender shall promptly provide to the Borrower
such information with respect to the applicable Fixed Rate as may be so
requested.
4.02. Special Provisions Governing Fixed Rate Loans. With respect to
Fixed Rate Loans:
(a) Amount of Advance. Each Fixed Rate Loan shall be for a minimum
amount of $2,000,000 (or the Dollar Equivalent of $1,000,000 for Fixed
Rate Loans denominated in an Optional Currency) and in integral $1,000,000
(or approximately similar intervals in Optional Currencies) in excess of
that amount.
(b) Determination of Interest Period. By giving notice as set forth
in Section 2.01(b) (with respect to a new Loan) or Section 4.01(c) (with
respect to a conversion into or continuation of a Fixed Rate Loan), the
Borrower shall have the option, subject to the other provisions of this
Section 4.02, to select an interest period (each, an "Interest Period") to
apply to the Loans described in such notice, subject to the following
provisions:
(i) The Borrower may only select, as to a particular Fixed
Rate Loan, an Interest Period of either one (1), two (2), three (3)
or, to the extent consented to by the Lender, six (6) months in
duration;
(ii) In the case of immediately successive Interest Periods
applicable to a Fixed Rate Loan, each successive Interest Period
shall commence on the day on which the next preceding Interest
Period expires;
(iii) If any Interest Period would otherwise expire on a day
which is not a Business Day, such Interest Period shall be extended
to expire on the next succeeding Business Day if the next succeeding
Business Day occurs in the same calendar month, and if there shall
be no succeeding Business Day in such calendar month, such Interest
Period shall expire on the immediately preceding Business Day;
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(iv) The Borrower may not select an Interest Period as to any
Loan if such Interest Period terminates later than the Termination
Date;
(v) There shall be no more than ten (10) Interest Periods in
the aggregate for Fixed Rate Loans denominated in Optional
Currencies in effect at any one time; and
(vi) No Fixed Rate Loan may be borrowed on the Closing Date,
and no Notice of Continuation/Conversion may be delivered prior to
the Closing Date.
(c) Determination of Interest Rate. As soon as practicable on the
applicable Fixed Rate Determination Date, the Lender shall determine
(pursuant to the procedures set forth in the definition of "Fixed Rate")
the interest rate which shall apply to Fixed Rate Loans for which an
interest rate is then being determined for the applicable Interest Period
and currency and shall promptly give notice thereof (in writing or by
telephone confirmed in writing) to the Borrower. The Lender's
determination shall be presumed to be correct, absent manifest error, and
shall be binding upon the Borrower.
(d) Interest Rate Unascertainable, Inadequate or Unfair. In the
event that on the Fixed Rate Determination Date with respect to any Fixed
Rate Loan in the relevant currency:
(i) the Lender determines that adequate and fair means do not
exist for ascertaining the applicable interest rates by reference to
which the applicable Fixed Rate for the applicable Available
Currency then being determined is to be fixed;
(ii) the Lender determines that deposits in such currency and
in the principal amount of the Fixed Rate Loan are not generally
available in the London interbank market for a period equal to such
Interest Period; or
(iii) the Lender advises the Borrower that the applicable
Fixed Rate for the applicable Available Currency, as determined by
the Lender, after taking into account the adjustments for reserves
and increased costs provided for in Section 4.01(f), will not
adequately and fairly reflect the cost to the Lender of funding the
relevant Fixed Rate Loans in the currency in which such Loans are
denominated;
then (until the Lender notifies the Borrower that the circumstances giving
rise to such suspension no longer exist) the right of the Borrower to
elect to have Loans bear interest based upon the Fixed Rate in such
currency shall be suspended and each outstanding Fixed Rate Loan which is
denominated in the affected currency shall be converted into a Floating
Rate Loan denominated in such currency on the last day of the then current
Interest Period therefor, and any Notice of Borrowing with respect to
Loans denominated in such currency for which Loans have not then been made
shall be deemed to be a request for Floating Rate Loans in such currency,
notwithstanding any prior election by the Borrower to the contrary.
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(e) Illegality. (i) If at any time the Lender determines (which
determination shall, absent manifest error, be final and conclusive and
binding upon all parties) that the making or continuation of any Fixed
Rate Loan in any currency has become unlawful or impermissible by
compliance by the Lender with any law, governmental rule, regulation or
order of any Governmental Authority (whether or not having the force of
law and whether or not failure to comply therewith would be unlawful or
would result in costs or penalties), then, and in any such event, the
Lender may give notice of that determination, in writing, to the Borrower.
(ii) When notice is given by the Lender under Section 4.02(e)(i),
(A) the Borrower's right to request from the Lender and the Lender's
obligation, if any, to make Fixed Rate Loans in such currency shall be
immediately suspended, and the Lender shall make a Floating Rate Loan in
such currency and (B) if the affected Fixed Rate Loan or Loans are then
outstanding, the Borrower shall immediately, or if not permitted by
applicable law to do so immediately, then by no later than the date it is
permitted to do so in accordance with applicable law, upon at least one
(1) Business Day's prior written notice to the Lender, convert each such
Loan into a Floating Rate Loan.
(iii) If at any time after the Lender gives notice under Section
4.02(e)(i) in respect of a Fixed Rate Loan in any currency the Lender
determines that it may lawfully make Fixed Rate Loans in such currency,
the Lender shall promptly give notice of that determination, in writing,
to the Borrower. The Borrower's right to request, and the Lender's
obligation to make Fixed Rate Loans shall thereupon be restored.
(f) Compensation. In addition to all amounts required to be paid by
the Borrower pursuant to Section 4.01, the Borrower agrees to compensate
the Lender, upon demand, for all losses, expenses and liabilities
(including, without limitation, any loss or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by the
Lender to fund or maintain the Lender's Fixed Rate Loans made to the
Borrower but excluding any loss of the Applicable Fixed Rate Margin on the
relevant Loans) which the Lender may sustain (i) if for any reason the
making of, conversion into or continuation of such Fixed Rate Loans does
not occur on a date specified therefor in a Notice of Borrowing or a
Notice of Continuation/Conversion given by the Borrower or a successive
Interest Period does not commence after notice therefor is given pursuant
to Section 4.01(c), including, without limitation, pursuant to Section
4.02(d), (ii) if for any reason any Fixed Rate Loan made to the Borrower
is prepaid (including, without limitation, mandatorily pursuant to Section
3.01) on a date which is not the last day of the applicable Interest
Period, (iii) as a consequence of a required conversion of such Fixed Rate
Loan to a Floating Rate Loan as a result of any of the events indicated in
Section 4.02(d) or (e) or Section 8.03 or (iv) as a consequence of any
failure by the Borrower to repay Fixed Rate Loans when required by the
terms hereof. The Lender shall deliver to the Borrower concurrently with
such demand a written statement in reasonable detail as to such losses,
expenses and liabilities, and this statement shall be conclusive as to the
amount of compensation due to the Lender, absent manifest error.
(g) Booking of Fixed Rate Loans. The Lender may make, carry or
transfer
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Fixed Rate Loans at, to or for the account of its Applicable Lending
Office or Fixed Rate Affiliate or its other offices or Affiliates. The
Lender shall not be entitled, however, to receive any greater amount under
Sections 3.03, 3.04, 4.01(f) or 4.02(f) as a result of the transfer of any
such Fixed Rate Loan to any office (other than such Applicable Lending
Office) or any Affiliate (other than such Fixed Rate Affiliate) than the
Lender would have been entitled to receive immediately prior thereto,
unless, the Lender provides reasonably satisfactory evidence to the
Borrower that (i) the transfer occurred at a time when circumstances
giving rise to the claim for such greater amount did not exist and (ii)
such claim in the relevant amount would have arisen even if such transfer
had not occurred.
(h) Affiliates Not Obligated. No Fixed Rate Affiliate or other
Affiliate of the Lender shall be deemed a party hereto or shall have any
liability or obligation hereunder.
4.03. Fees. No fees are payable in respect of the Loan Documents
except as expressly provided in that certain fee letter dated August 23, 1996
addressed to H. Muehlstein & Co. Inc. from Citicorp North America, Inc.
ARTICLE V
CONDITIONS TO LOANS
5.01. Conditions Precedent to the Initial Loan. The obligation of
the Lender to make a Loan on the Closing Date is subject to the satisfaction of
the following conditions precedent before or concurrently with the making of
such Loan:
(a) There shall exist no action, suit, investigation, litigation or
proceeding affecting either Loan Party or any of their respective
Subsidiaries pending or threatened before any court, governmental agency
or arbitrator that (i) is reasonably likely to have a Material Adverse
Effect or (ii) purports to affect the legality, validity or enforceability
of this Agreement or any other Loan Document or the consummation of the
transactions contemplated hereby.
(b) All governmental and third party consents and approvals
necessary in connection with the transactions contemplated hereby shall
have been obtained (without the imposition of any conditions that are not
acceptable to the Lender) and shall remain in effect, and no law or
regulation shall be applicable in the reasonable judgment of the Lender
that restrains, prevents or imposes materially adverse conditions upon the
transactions contemplated hereby.
(c) The Borrower shall have paid all expenses of the Lender
(including the invoiced reasonable fees and expenses of counsel to the
Lender).
(d) The Lender shall have received on or before the Closing Date the
following, each dated such day, in form and substance satisfactory to the
Lender:
(i) The Note to the order of the Lender.
(ii) Certified copies of the resolutions of the Board of
Directors of
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each Loan Party approving this Agreement, the Note, each other Loan
Document to which it is or is to be a party, and of all documents
evidencing other necessary corporate action and governmental
approvals, if any, with respect to this Agreement, the Note and each
other Loan Document.
(iii) A certificate of the Secretary or an Assistant Secretary
of each Loan Party certifying the names and true signatures of the
officers of such Loan Party authorized to sign this Agreement, the
Note, each other Loan Document to which it is or is to be a party
and the other documents to be delivered hereunder and thereunder.
(iv) A guaranty in substantially the form of Exhibit D (as
amended, supplemented or modified from time to time in accordance
with its terms, the "Guaranty"), duly executed by the Guarantor.
(v) A pledge agreement in substantially the form of Exhibit E
(as amended, supplemented or modified from time to time in
accordance with its terms, the "Pledge Agreement"), duly executed by
the Guarantor, together with:
(A) the Series 1996-2 Certificate referred to therein
registered in the name of such nominee as the Lender shall
specify,
(B) executed financing statements in proper form to be
filed under the Uniform Commercial Code of the State of
Connecticut covering the Collateral described in the Pledge
Agreement, and
(C) evidence that all other action that the Lender may
deem necessary or desirable in order to perfect and protect
the first priority liens and security interests created under
the Pledge Agreement has been taken.
(vi) A favorable opinion of McDermott, Will & Emery, counsel
for the Loan Parties, in form and substance satisfactory to the
Lender.
(vii) A favorable opinion of Shearman & Sterling, counsel for
the Administrative Agent, in form and substance satisfactory to the
Lender.
SECTION 5.02. Conditions Precedent to Each Loan. The obligation of
the Lender to make a Loan (including the initial Loan) shall be subject to the
further conditions precedent on the date of such Loan (a) the following
statements shall be true (and each of the giving of the applicable Notice of
Borrowing and the acceptance by the Borrower of the proceeds of such Loan shall
constitute a representation and warranty by the Borrower that on the date of
such Loan such statements are true):
(i) the representations and warranties contained in Section 6.01 of
this Agreement and in each other Loan Document are correct on and as of
the date of such Borrowing, before and after giving effect to such
Borrowing and to the application of the proceeds therefrom, as though made
on and as of such date, and
(ii) no event has occurred and is continuing, or would result from
such Loan
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21
or from the application of the proceeds therefrom, that constitutes a
Default; and
(b) the Lender shall have received such other approvals, opinions or documents
as it may reasonably request.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
SECTION 6.01. Representations and Warranties of the Borrower. The
Borrower represents and warrants as follows:
(a) Due Organization, Etc. Each Loan Party is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation.
(b) Due Authorization and Execution, Etc. The execution, delivery
and performance by each Loan Party of this Agreement, the Note, and each
other Loan Document to which it is or is to be a party and the
consummation of the transactions contemplated hereby, are within such Loan
Party's corporate powers, have been duly authorized by all necessary
corporate action, and do not contravene (i) such Loan Party's charter or
by-laws or (ii) any law, regulation (including, without limitation,
Regulation U or X of the Board of Governors of the Federal Reserve System)
or any contractual or legal restriction binding on or affecting any Loan
Party.
(c) Government Consents. No authorization or approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body or any other third party is required for the due
execution, delivery and performance by either Loan Party to this
Agreement, the Note or any other Loan Document to which it is or is to be
a party, except for those authorizations, approvals, actions, notices and
filings which have been duly obtained, taken, given or made and are in
full force and effect.
(d) Due Execution and Delivery; Legal, Valid and Binding Nature.
This Agreement has been, and the Note and each other Loan Document when
delivered hereunder will have been, duly executed and delivered by each
Loan Party thereto. This Agreement is, and the Note and each other Loan
Document when delivered hereunder will be, the legal, valid and binding
obligation of each Loan Party party thereto enforceable against each such
Loan Party in accordance with its terms, subject to the effect of any
applicable bankruptcy, insolvency, reorganization, fraudulent conveyance
and other laws affecting the enforcement of creditor's rights generally
and to general principles of equity (whether considered in a proceeding in
equity or law).
(e) Absence of Litigation; Litigation Description. There is no
pending or, to the knowledge of any Loan Party, threatened action, suit,
investigation, litigation or proceeding, including, without limitation,
under any Environmental, Health or Safety Requirements of Law, affecting
any Loan Party before any court, governmental agency or arbitrator that
purports to affect the legality, validity or enforceability of this
Agreement, the Note or any other Loan Document or the consummation of the
transactions contemplated hereby.
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ARTICLE VII
COVENANTS OF THE BORROWER
SECTION 7.01. Affirmative Covenants. So long as any Loan shall
remain unpaid or the Lender shall have any Commitment hereunder, the Borrower
will:
(a) Compliance with Laws, Etc. Comply, and cause each of its
Subsidiaries to comply, with all applicable laws, rules, regulations and
orders, such compliance to include, without limitation, compliance with
ERISA and Environmental, Health or Safety Requirements of Law, except
where the failure to do so would not have or be reasonably likely to have
a Material Adverse Effect.
(b) Payment of Taxes, Etc. Pay and discharge, and cause each of its
Subsidiaries to pay and discharge, before the same shall become
delinquent, (i) all taxes, assessments and governmental charges or levies
imposed upon it or upon its property and (ii) all material lawful claims
that, if unpaid, might by law become a Lien upon its property other than
such Liens on Property the fair market value of which in the aggregate is
less than $100,000; provided, however, that neither the Borrower nor any
of its Subsidiaries shall be required to pay or discharge any such tax,
assessment, charge or claim that is being contested in good faith and by
proper proceedings and as to which appropriate reserves are being
maintained, unless and until any Lien resulting therefrom attaches to its
property and becomes enforceable against its other creditors.
(c) Preservation of Corporate Existence, Etc. Preserve and maintain,
and cause each of its Subsidiaries to preserve and maintain, its corporate
existence, rights (charter and statutory) and franchises; provided,
however, that the Borrower and its Subsidiaries may consummate any merger
or consolidation permitted under Section 7.02(a) and may fail to maintain
any such right or franchise where the failure to do so would not,
individually or in the aggregate, have or be reasonably likely to have a
Material Adverse Effect.
(d) Visitation Rights. At any reasonable time and from time to time,
permit the Lender or any authorized agents or representatives thereof to
examine and make copies of and abstracts from the records and books of
account of, and visit the properties of, the Borrower and any of its
Subsidiaries, and to discuss the affairs, finances and accounts of the
Borrower and any of its Subsidiaries with any of their officers or
directors and with their independent certified public accountants, in each
case upon reasonable notice and at such times during normal business
hours, as often as may be reasonably requested.
(e) Keeping of Books. Keep, and cause each of its Subsidiaries to
keep, proper books of record and account, in which in all material
respects full and correct entries shall be made of all financial
transactions and the assets and business of the Borrower and each such
Subsidiary in accordance with generally accepted accounting principles in
effect from time to time.
(f) Maintenance of Properties, Etc. Maintain and preserve, and cause
each of its Subsidiaries to maintain and preserve, all of its material
properties that are used or useful in the conduct of its business in good
working order and condition, ordinary
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wear and tear excepted; provided, however, that nothing in this Section
shall prevent the Borrower or any such Subsidiary from discontinuing the
operation or maintenance of any such Property if discontinuance is, in the
judgment of the Borrower, necessary or appropriate in the conduct of its
business or the business of any of its Subsidiaries and not
disadvantageous to the Lender.
(g) Reporting Requirements. Furnish to the Lender:
(i) as soon as possible and in any event within five Business
Days after the occurrence of each Default continuing on the date of
such statement, a statement of a Responsible Person setting forth
details of such Default and the action that the Borrower has taken
and proposes to take with respect thereto;
(ii) as soon as possible and in any event within ten Business
Days after the commencement thereof, notice of all actions and
proceedings before any court, governmental agency or arbitrator
materially affecting either Loan Party or any of its Subsidiaries of
the type described in Section 6.01(3); and
(iii) such other information respecting either Loan Party or
any of its Subsidiaries as the Lender may from time to time
reasonably request.
(h) Adjusted Net Assets of Guarantor. Cause the Guarantor to
maintain at all times Adjusted Net Assets (as defined in the Guaranty) of
not less than 102% of the Series 1996-2 Invested Amount (as defined in the
Series 1996-2 Supplement).
(i) Additional Special Purpose Covenants. The Borrower will conduct,
and will cause each of its Subsidiaries to conduct, its affairs in a
manner at all times consistent with the assumptions applicable to it set
forth in Parts III through VI, inclusive, of the opinion letter of Messrs.
McDermitt, Will & Emery delivered pursuant to Section 5.01(d)(vi) of this
Agreement; provided that any references therein to any agreements shall
refer to such agreement as amended, restated, refinanced, supplemented or
otherwise modified from time to time.
SECTION 7.02. Negative Covenants. So long as any Loan shall remain
unpaid or the Lender shall have any Commitment hereunder, the Borrower will not:
(a) Mergers, Etc. Merge or consolidate with or into, or convey,
transfer, lease or otherwise dispose of (whether in one transaction or in
a series of transactions) all or substantially all of its assets (whether
now owned or hereafter acquired) to, any Person, or permit any of its
Subsidiaries to do so, except that any Subsidiary of the Borrower that is
not a Loan Party may merge or consolidate with or into, or dispose of
assets to, any other Subsidiary of the Borrower, and except that any
Subsidiary of the Borrower that is not a Loan Party may merge into or
dispose of assets to the Borrower and the Borrower may merge with any
other Person so long as the Borrower is the surviving corporation,
provided, in each case, that no Default shall have occurred and be
continuing at the time of such proposed transaction or would result
therefrom.
(b) Change in Nature of Business. Make, or permit any of its
Subsidiaries to make, any material change in the nature of the business as
carried on at the Closing Date.
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ARTICLE VIII
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
8.01. Events of Default. Each of the following occurrences shall
constitute an Event of Default hereunder:
(a) Failure to Make Payments When Due. (i) The Borrower shall fail
to pay when due any principal or interest on the Loans payable hereunder
or (ii) any Loan Party shall fail to pay any other Obligation, and if such
non-payment relates to Obligations other than interest or principal, such
non-payment continues for a period of five (5) Business Days after the due
date thereof.
(b) Breach of Certain Covenants. The Borrower shall fail to perform
or observe duly and punctually any agreement, covenant or obligation under
Section 7.01(c), (g)(i) or (g)(ii) or Section 7.02.
(c) Breach of Representation or Warranty. Any representation or
warranty made or deemed made by any Loan Party to the Lender herein or in
any other Loan Document or in any certificate at any time given by any
such Person pursuant to any Loan Document shall be false or misleading in
any material respect on the date made (or deemed made).
(d) Other Defaults. Any Loan Party shall default in the performance
of or compliance with any term contained herein (other than as covered by
paragraph (a), (b) or (c) of this Section 8.01), or any Loan Party shall
default in the performance of or compliance with any term contained in any
other Loan Document, and such default shall continue for thirty (30) days
after the occurrence thereof.
(e) Acceleration under Syndicated Credit Agreement. Any event shall
occur or condition shall exist under the Syndicated Credit Agreement and
shall continue after the applicable grace period, if any, specified
therein, if the effect of such event or condition is to accelerate the
maturity of Indebtedness under the Syndicated Credit Agreement, or such
Indebtedness shall be declared to be due and payable prior to the stated
maturity thereof.
(f) Involuntary Bankruptcy; Appointment of Receiver, Etc. (i) An
involuntary case, proceeding or other action shall be commenced against
any Loan Party (A) under any existing or future law of any jurisdiction,
domestic or foreign, relating to bankruptcy, insolvency, reorganization or
relief of debtors, seeking to have any order for relief entered with
respect to it, or seeking to adjudicate it as bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, wind-up, liquidation,
dissolution, composition or other relief with respect to it or its debts,
or (B) seeking appointment of a receiver, trustee, receiver-manager,
liquidator, sequestrator, administrator, custodian or similar official for
it or of all or any substantial part of its assets which case, proceeding
or other action results in entry of an order for relief or any such
adjudication or appointment or (C) remains undismissed, undischarged or
unbonded for period of sixty (60) days; or a court having jurisdiction in
the premises shall enter a decree or order for relief in respect of any
Loan Party in an involuntary
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25
case, under any applicable bankruptcy, insolvency or other similar law now
or hereinafter in effect; or any other similar relief shall be granted
under any applicable federal, state, local or foreign law.
(ii) A decree or order of a court having jurisdiction in the
premises for the appointment of a receiver, receiver-manager, liquidator,
sequestrator, trustee, custodian or other officer having similar powers
over any Loan Party or over all or a substantial part of the Property of
any Loan Party shall be entered; or an interim receiver, trustee or other
custodian of any Loan Party or of all or a substantial part of the
property of any Loan Party shall be appointed or a warrant of attachment,
execution or similar process against any substantial part of the Property
of any Loan Party shall be issued and any such event shall not be stayed,
dismissed, bonded or discharged within sixty (60) days after entry,
appointment or issuance.
(g) Voluntary Bankruptcy; Appointment of Receiver, Etc. Any Loan
Party shall (i) commence any voluntary case, proceeding or other action
(A) under any existing or future law or any jurisdiction, domestic or
foreign, relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have any order for relief entered with respect to it,
or seeking to adjudicate it as bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, wind-up, liquidation,
dissolution, composition or other relief with respect to it or its debts,
or (B) seeking appointment of a receiver, trustee, receiver-manager,
liquidator, sequestrator, administrator, custodian or similar official for
it or for all or any substantial part of its assets, or (ii) shall consent
to the entry of an order for relief in an involuntary case, or to the
conversion of a voluntary case, under any such law, or (iii) shall consent
to the appointment of or taking possession by a receiver,
receiver-manager, liquidator, sequestrator, trustee or other custodian or
other officer for all or a substantial part of its property; or (iv) any
Loan Party shall generally not pay its debts as such debts become due, or
shall admit in writing its inability to pay its debts generally, or shall
make any general assignment for the benefit of creditors; or (v) any Loan
Party shall take any other action to authorize any of the actions set
forth in this paragraph (g).
(h) Loan Documents; Failure of Security. At any time, for any
reason, (i) any Loan Document ceases to be in full force and effect
(except in accordance with its terms) or any Loan Party party thereto
seeks to repudiate its obligations thereunder and the Liens intended to be
created thereby are, or any Loan Party seeks to render such Liens, invalid
or unperfected, or (ii) Liens in favor of the Lender contemplated by the
Loan Documents shall, at any time, for any reason, be invalidated or
otherwise cease to be in full force and effect, or such Liens shall be
subordinated or shall not have the priority contemplated hereby or by the
other Loan Documents.
(i) Change of Control. Muehlstein Holding Corporation, a Delaware
corporation, shall cease to retain beneficial ownership (within the
meaning of Rule 13d-3 of the Securities and Exchange Commission under the
Securities Exchange Act of 1934), directly or indirectly, of 100% of the
voting stock of each Loan Party.
8.02. Rights and Remedies; Acceleration and Termination. Upon the
occurrence of any Event of Default described in Section 11.01(f) or 11.01(g),
the Commitment shall automatically and immediately terminate and the unpaid
principal amount of, and any and all accrued interest on, the Obligations shall
automatically become immediately due and
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26
payable, without presentment, demand, or protest or other requirements of any
kind (including, without limitation, valuation and appraisement, diligence,
presentment, notice of intent to demand or accelerate and of acceleration), all
of which are hereby expressly waived by the Borrower; and upon the occurrence
and during the continuance of any other Event of Default, the Lender may, by
written notice to the Borrower, (i) declare that all or any portion of the
Commitment is terminated, whereupon the Commitment and the obligation of the
Lender to make any Loan hereunder shall immediately terminate, and/or (ii)
declare the unpaid principal amount of and any and all accrued and unpaid
interest on the Obligations to be, and the same shall thereupon be, immediately
due and payable, without presentment, demand, or protest or other requirements
of any kind (including, without limitation, valuation and appraisement,
diligence, presentment, notice of intent to demand or accelerate and of
acceleration), all of which are hereby expressly waived by the Borrower.
8.03. Rights and Remedies; Conversion of Currencies. If an Event of
Default shall have occurred and be continuing for two Business Days or more, the
Lender may by notice to the Borrower (which notice shall be sent by both
facsimile and courier and, if so sent, shall become effective when sent) convert
the applicable currency of all Obligations of the Loan Parties into Dollars at
the Dollar Equivalent of each respective Available Currency on the date on which
such notice is given, which Obligations shall thereupon without further action
become Obligations denominated in Dollars at such Dollar Equivalent and shall
become Floating Rate Loans; provided, however, that the Lender agrees not to
make such conversion so long as either (i) the Revolving Credit Availability, as
calculated on a daily basis (including a daily mark to market of the Revolving
Credit Obligations based on the most current Spot Rates then applicable) is
equal to or greater than $500,000 or (ii) the Borrower shall have entered into,
and shall maintain in effect, one or more foreign currency hedging arrangements,
each in form and substance satisfactory to the Lender, that protect the Lender
from all foreign currency risks arising from its funding in Dollars each Loan it
has made in another currency.
ARTICLE IX
MISCELLANEOUS
9.01. Assignments. (a) Assignments. No assignments or participations
of the Lender's rights or obligations hereunder shall be made except in
accordance with this Section 9.01.
(b) Limitations on Assignments. The Lender shall not assign any of
its rights or obligations hereunder.
(c) Lender's Creation of Security Interests. Notwithstanding any
other provision set forth herein, the Lender may at any time create a security
interest in all or any portion of its rights hereunder (including, without
limitation, Obligations owing to it and the Note held by it) in favor of any
Federal Reserve bank in accordance with Regulation A; provided, however, such
assignment shall not release the Lender from any of its obligations hereunder.
(d) Participations. The Lender may sell participations to one or
more other financial institutions in or to all or a portion of its rights and
obligations under and in respect of any and all facilities hereunder (including,
without limitation, all or a portion of any or all of its Commitment hereunder
and the Loans owing to it); provided, however, that (i) the
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27
Lender's obligations hereunder (including, without limitation, its Commitment
hereunder) shall remain unchanged, (ii) the Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) the Borrower shall continue to deal solely and directly with the Lender in
connection with the Lender's rights and obligations hereunder and (iv) such
participant's rights to agree or to restrict the Lender's ability to agree to
the modification, waiver or release of any of the terms of the Loan Documents or
to the release of any Collateral covered by the Loan Documents, to consent to
any action or failure to act by any party to any of the Loan Documents or any of
their respective Subsidiaries or Affiliates, or to exercise or refrain from
exercising any powers or rights which the Lender may have under or in respect of
the Loan Documents or any Collateral, shall be limited to the right to consent
to (A) reduction of the principal of, or rate or amount of interest on the
Loans(s) subject to such participation (other than by the payment or prepayment
thereof), (B) postponement of any scheduled date for any payment of principal
of, or interest on, the Loan(s) subject to such participation (except with
respect to any modifications of the applicable provisions relating to the
prepayments of Loans and other Obligations) and (C) release of any guarantor of
the Obligations or all or any substantial portion of the Collateral. No holder
of a participation in all or any part of the Loans shall be a "Lender" or a
"Holder" for any purposes hereunder by reason of such participation; provided,
however, that each holder of a participation shall have the rights and
obligations of the Lender (including any right to receive payment) under
Sections 3.03, 3.04, 4.01(f), 4.02(d), 4.02(f), 9.02 and 9.04; provided,
however, that all requests for any payments pursuant to such Sections shall be
made by a participant through the Lender. The right of each holder of a
participation to receive payment under Sections 3.03, 3.04, 4.01(f), 4.02(d),
4.02(f), 9.02 and 9.04 shall be limited to the lesser of (i) the amounts
actually incurred by such holder for which payment is provided under said
Sections and (ii) the amounts that would have been payable under said Sections
by the Borrower to the Lender in respect of the participated interest to such
holder had such participation not been granted.
(e) Payment to Participants. Anything herein to the contrary
notwithstanding, in the case of any participation, all amounts payable by the
Borrower under the Loan Documents shall be calculated and made in the manner and
to the parties required hereby as if no such participation had been sold.
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28
9.02. Expenses. (a) Generally. The Borrower agrees upon demand to
pay, or reimburse the Lender for all of the Lender's reasonable internal and
external audit, legal, appraisal, valuation, filing, document duplication and
reproduction and investigation expenses and for all other reasonable
out-of-pocket costs and expenses of every type and nature (including, without
limitation, the reasonable fees, expenses and disbursements of the Lender's
counsel, auditors, accountants, appraisers, printers, insurance and
environmental advisers, and other consultants and agents), incurred by the
Lender in connection with (A) the Lender's audit and investigation of the Loan
Parties in connection with the preparation, negotiation, and execution of the
Loan Documents and the Lender's periodic audits of the Loan Parties; (B) the
preparation, negotiation, execution and interpretation hereof (including,
without limitation, the satisfaction or attempted satisfaction of any of the
conditions set forth in Article V), the other Loan Documents and the making of
the Loans hereunder; (C) the creation, perfection or protection of the Liens
under the Loan Documents (including, without limitation, any reasonable fees and
expenses for local counsel in various jurisdictions); (D) the ongoing
administration hereof and of the Loans, including consultation with attorneys in
connection therewith and with respect to the Lender's rights and
responsibilities hereunder and under the other Loan Documents; (E) the
protection, collection or enforcement of any of the Obligations or the
enforcement of any of the Loan Documents; (F) the commencement, defense or
intervention in any court proceeding relating in any way to the Obligations, any
Loan Party, this Agreement or any of the other Loan Documents; (G) the response
to, and preparation for, any subpoena or request for document production with
which the Lender is served or deposition or other proceeding in which the Lender
is called to testify, in each case, relating in any way to the Obligations, any
Loan Party, this Agreement or any of the other Loan Documents; and (H) any
amendments, consents, waivers, assignments, restatements, or supplements to any
of the Loan Documents and the preparation, negotiation, and execution of the
same.
(b) After Default. The Borrower further agrees to pay or reimburse
the Lender, within five (5) Business Days after such Person's informing the
Borrower thereof in writing accompanied by a copy of a related invoice or
similar statement in reasonable detail and reasonably detailed supporting
information with respect thereto, for all reasonable out-of-pocket costs and
expenses, including, without limitation, reasonable attorneys' fees, incurred by
the Lender (i) in enforcing any Loan Document or Obligation or any security
therefor or exercising or enforcing any other right or remedy available by
reason of any Event of Default; (ii) in connection with any refinancing or
restructuring of the credit arrangements provided hereunder in the nature of a
"work-out" or in any insolvency or bankruptcy proceeding; (iii) in commencing,
defending or intervening in any litigation or in filing a petition, complaint,
answer, motion or other pleadings in any legal proceeding relating to the
Obligations or any Loan Party and related to or arising out of the transactions
contemplated hereby or by any of the other Loan Documents; and (iv) in taking
any other action in or with respect to any suit or proceeding (bankruptcy or
otherwise) described in clauses (i) through (iii) above.
9.03. Indemnity. The Borrower further agrees to defend, protect,
indemnify, and hold harmless the Lender and each of its Affiliates, and each of
the Lender's or such Affiliate's respective officers, directors, employees,
attorneys and agents (including, without limitation, those retained in
connection with the satisfaction or attempted satisfaction of any of the
conditions set forth in Article V) (collectively, the "Indemnitees") from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses and disbursements of any kind
or nature whatsoever (including, without
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29
limitation, the reasonable fees and disbursements of counsel for such
Indemnitees in connection with any investigative, administrative or judicial
proceeding, whether or not such Indemnitees shall be designated a party
thereto), imposed on, incurred by, or asserted against such Indemnitees in any
manner relating to or arising out of or in connection with (a) this Agreement,
the other Loan Documents or any act, event or transaction related or attendant
thereto, whether or not any such Indemnitee is a party thereto and whether or
not such transactions are consummated, the making of the Loans, the management
of such Loans, the use or intended use of the proceeds of the Loans hereunder,
or any of the other transactions contemplated hereunder, or (b) any liabilities
and costs under Environmental, Health or Safety Requirements of Law arising from
or in connection with the past, present or future operations of any Loan Party
or any of their respective predecessors in interest, or, the past, present or
future environmental, health or safety condition of any respective property of
any Loan Party, the presence of asbestos-containing materials or suspected
asbestos-containing materials at any respective property of any Loan Party or
the Release or threatened Release of any Contaminant into the environment
(collectively, the "Indemnified Matters"); provided, however, the Borrower shall
have no obligation to an Indemnitee hereunder with respect to Indemnified
Matters resulting from the willful misconduct or gross negligence of such
Indemnitee, as determined in a judgment by a court of competent jurisdiction. To
the extent that the undertaking to indemnify, pay and hold harmless set forth in
the preceding sentence may be unenforceable because it is violative of any law
or public policy, the Borrower shall contribute the maximum portion which it is
permitted to pay and satisfy under applicable law, to the payment and
satisfaction of all Indemnified Matters incurred by the Indemnitees.
9.04. Setoff. In addition to any Liens granted under the Loan
Documents and any rights now or hereafter granted under applicable law, upon the
occurrence and during the continuance of any Event of Default, the Lender and
any Affiliate of the Lender is hereby authorized by the Borrower at any time or
from time to time, without notice to any Person (any such notice being hereby
expressly waived) to combine accounts or to set off and to appropriate and to
apply any and all deposits (general or special, including, but not limited to,
indebtedness evidenced by certificates of deposit, whether matured or unmatured
(but not including trust accounts)) and any other Indebtedness at any time held
or owing by the Lender or any of its Affiliates to or for the credit or the
account of the Borrower against and on account of the Obligations of the
Borrower to the Lender or any of its Affiliates, including, but not limited to,
all Loans and all claims of any nature or description arising out of or in con
nection herewith, irrespective of whether or not (i) the Lender shall have made
any demand hereunder or (ii) the Lender shall have declared the principal of and
interest on the Loans and other amounts due hereunder to be due and payable as
permitted by Article VIII and even though such Obligations may be contingent or
unmatured. The Lender shall give the Borrower notice of any action taken
pursuant to this Section 9.04 promptly upon the occurrence thereof provided that
any failure to do so shall not limit any right of the Lender to take such
action.
9.05. Amendments and Waivers. Unless otherwise provided herein, no
amendment or modification of any provision hereof shall be effective without the
written agreement of the Lender and the Borrower, and no termination or waiver
of any provision hereof, or consent to any departure by the Borrower therefrom,
shall be effective without the written concurrence of the Lender, which the
Lender shall have the right to grant or withhold in its sole discretion.
9.06. Notices. (a) Unless otherwise specifically provided herein,
any notice, consent or other communication herein required or permitted to be
given shall be in writing
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30
and may be personally served, telecopied, or sent by courier service or the
United States mails and shall be deemed to have been given (i) ten (10) days
following deposit in the United States mails, with proper postage prepaid, (ii)
upon delivery thereof to a reputable overnight courier service, with delivery
charges prepaid, (iii) when delivered in person or (iv) upon confirmation of
receipt of a telecopy. Notices to the Lender pursuant to Article II, III or IV
shall not be effective until received by the Lender. For the purposes hereof,
the addresses of the parties hereto (until notice of a change thereof is
delivered as provided in this Section 9.06) shall be as set forth below each
party's name on the signature pages hereof or, as to each party, at such other
address as may be designated by such party in a written notice to all of the
other parties hereto.
(b) The Borrower agrees to indemnify and hold harmless each
Indemnitee from and against any and all claims, damages, liabilities,
obligations, losses, penalties, actions, judgments, suits, costs, disbursements
and expenses of any kind or nature (including, without limitation, reasonable
fees and disbursements of counsel to any such Indemnitee) which may be imposed
on, incurred by or asserted against any such Indemnitee in any manner relating
to or arising out of any action taken or omitted by such Indemnitee in good
faith in reliance on any notice or other written communication in the form of a
telecopy or facsimile purporting to be from the Borrower; provided that the
Borrower shall not have any obligation under this Section 9.06(b) to an
Indemnitee with respect to any indemnified matter caused by or resulting from
the gross negligence or willful misconduct of that Indemnitee, as determined by
a court of competent jurisdiction.
9.07. Survival of Warranties and Agreements. All representations and
warranties made herein and all obligations of the Borrower in respect of taxes,
indemnification and expense reimbursement shall survive the execution and
delivery hereof and of the other Loan Documents, the making and repayment of the
Loans and the termination of the Commitment hereunder and shall not be limited
in any way by the passage of time or occurrence of any event and shall expressly
cover time periods when the Lender may have come into possession or control of
any of any Loan Party's property.
9.08. Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of the Lender in the exercise of any power, right
or privilege under any of the Loan Documents shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence therein,
nor shall any single or partial exercise of any such power, right or privilege
preclude other or further exercise thereof or of any other right, power or
privilege. All rights and remedies existing under the Loan Documents are
cumulative to and not exclusive of any rights or remedies otherwise available.
9.09. Marshalling; Payments Set Aside. The Lender shall not be under
any obligation to marshall any assets in favor of the Borrower or any other
party or against or in payment of any or all of the Obligations. To the extent
that the Borrower makes a payment or payments to the Lender or the Lender
receives payment from the proceeds of the Collateral or exercise its of setoff,
and such payment or payments or the proceeds of such enforcement or setoff or
any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, receiver or any
other party, then to the extent of such recovery, the obligation or part thereof
originally intended to be satisfied, and all Liens, right and remedies therefor,
shall be revived and continued in full force and effect as if such payment had
not been made or such enforcement or setoff had not occurred.
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31
9.10. Severability. In case any provision in or obligation hereunder
or under the other Loan Documents shall be invalid, illegal or unenforceable in
any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
9.11. Headings. Section headings herein are included herein for
convenience of reference only and shall not constitute a part hereof or be given
any substantive effect.
9.12. Governing Law. THIS AGREEMENT SHALL BE INTERPRETED, AND THE
RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED, IN ACCORDANCE WITH THE
LAW OF THE STATE OF NEW YORK.
9.13. Successors and Assigns. This Agreement and the other Loan
Documents shall be binding upon the parties hereto and their respective
successors and permitted assigns and shall inure to the benefit of the parties
hereto and the successors and permitted assigns of the Lender. The rights
hereunder and the interest herein of the Borrower may not be assigned without
the written consent of the Lender. Any attempted assignment without such written
consent shall be void.
9.14. Counterparts; Effectiveness; Inconsistencies. This Agreement
and any amendments, waivers, consents, or supplements hereto may be executed in
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument. This Agreement shall become effective against the Borrower and
the Lender on the date hereof. This Agreement and each of the other Loan
Documents shall be construed to the extent reasonable to be consistent one with
the other, but to the extent that the terms and conditions hereof are actually
inconsistent with the terms and conditions of any other Loan Document, this
Agreement shall govern.
9.15. Confidentiality. The Lender shall hold all nonpublic
information obtained pursuant to the requirements hereof and identified as such
by the Borrower in accordance with safe and sound banking practices and in any
event may make disclosure reasonably required by a bona fide offeree or
participant in connection with the contemplated participation, or as required or
requested by any Governmental Authority or representative thereof, or pursuant
to legal process, or to its accountants, lawyers and other advisors who shall be
informed of the confidential nature of such information, and shall require any
such offeree or participant to agree (and require any of its offerees, assignees
or participants to agree) to comply with this Section 9.15. In no event shall
the Lender be obligated or required to return any materials furnished by the
Borrower; provided, however, each offeree shall be required to agree that if it
does not become a participant it shall return all materials furnished to it by
the Borrower in connection herewith. In the event the Lender is requested or
required by law to disclose any of such information, the Lender agrees to will
provide the Borrower with prompt notice thereof; provided, however, the Lender
may, without restriction hereunder, including the providing of such notice,
provide any and all of such information to any of the agencies or other
governmental entities which regularly regulate its ability to engage in any of
its businesses under state or federal law.
9.16. Judgment Currency. (a) If for the purposes of obtaining
judgment in any court it is necessary to convert a sum due hereunder or under
the Note in any currency to another currency the parties hereto agree, to the
fullest extent that they may effectively do so,
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32
that the rate of exchange used shall be the Spot Rate on the 2nd Business Day
preceding that on which judgment is given.
(b) The obligation of the Borrower in respect of any sum due in the
original currency from it to the Lender hereunder or under the Note shall,
notwithstanding any judgment in any other currency, be discharged only to the
extent that on the Business Day following receipt by the Lender of any sum
adjudged to be so due in such other currency the Lender may in accordance with
normal banking procedures purchase the original currency with such other
currency; if the amount of the original currency so purchased is less than the
sum originally due to the Lender in the original currency, the Borrower agrees,
as a separate obligation and notwithstanding any such judgment, to indemnify the
Lender against such loss, and if the amount of the original currency so
purchased exceeds the sum originally due to the Lender in the original currency,
the Lender agrees to remit to the Borrower such excess.
9.17. Entire Agreement. This Agreement, taken together with all of
the other Loan Documents embodies the entire agreement and understanding among
the parties hereto and supersedes all prior agreements and understandings,
written and oral, relating to the subject matter hereof.
9.18. Intercreditor Agreement. The Lender and each holder of the
Note, by accepting the benefits of the Loan Documents, hereby consents to the
terms of the Intercreditor Agreement and agrees to be bound by the terms
thereof.
9.19. Certain Consents and Waivers. (a) Personal Jurisdiction. (i)
Each of the Lender and the Borrower irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of any New York State
court or federal court sitting in New York, New York, and any court having
jurisdiction over appeals of matters heard in such courts, in any action or
proceeding arising out of, connected with, related to or incidental to the
relationship established among them in connection with this agreement or the
other loan documents, whether arising in contract, tort, equity or otherwise, or
for recognition or enforcement of any judgment, and each of the parties hereto
irrevocably and unconditionally agrees that all claims in respect of any such
action or proceeding may be heard and determined in such state court or, to the
extent permitted by law, in such federal court. Each of the Lender and the
Borrower agrees that a final non-appealable judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. The Borrower waives
in all disputes any objection that it may have to the location of the court
considering the dispute.
(ii) The Borrower agrees that the Lender shall have the right to
proceed against such Person or its property in a court in any location to enable
the Lender to realize on the Collateral or any other security for the
Obligations, or to enforce a judgment or other court order entered in favor of
the Lender. The Borrower waives any objection that it may have to the location
of the court in which the Lender may commence a proceeding described in this
Section.
(b) Service of Process. The Borrower irrevocably consents to the
service of process of any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to the Process Agent or the Borrower's notice address specified
pursuant to Section 9.06, such service to become effective five (5) days after
such mailing. The Borrower irrevocably waives any objection (including,
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33
without limitation, any objection to the laying of venue or based on the grounds
of forum non conveniens) which it may now or hereafter have to the bringing of
any such action or proceeding with respect to this Agreement or any other Loan
Document in any jurisdiction set forth above. Nothing herein shall affect the
right to serve process in any other manner permitted by law or shall limit the
right of the Lender to bring proceedings against the Borrower in the courts of
any other jurisdiction.
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34
(c) Waiver of Jury Trial. Each of the Lender and the Borrower waives
any right to trial by jury in any dispute, whether sounding in contract, tort,
or otherwise, between the Lender or the Borrower arising out of or related to
the transactions contemplated by this Agreement or any other Loan Document. Any
such person may file an original counterpart or a copy of this Agreement with
any court as written evidence of the consent of the parties hereto to the waiver
of their right to trial by jury.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the
date first above written.
PEGASUS POLYMERS INTERNATIONAL INC.
By:________________________________
Name:
Title:
Notice Address:
c/o H. Muehlstein & Co., Inc.
800 Connecticut Avenue
Norwalk, Connecticut 06856
Attention: Ronald J. Restivo
Chief Financial Officer
Telecopier No.: (203) 855-6293
Confirmation No.: (203) 855-6164
Credit Agreement
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35
CITIBANK, N.A.
By:________________________________
Name:
Title:
Notice Address:
c/o Citicorp USA, Inc.
399 Park Avenue
6th Floor
New York, New York 10043
Attention: Keith R. Karako
Telecopier No.: (212) 793-1290
Confirmation No.: (212) 559-3149
Applicable Lending Office:
Citibank, N.A.
Structured Finance Department
5th Floor
Cottons Centre
Hays Lane
London SE1 2QT England
Attention: Phillip Smith/Mary Lutton
Telecopier No.: 011-441-71-234-2398
Confirmation No.: 011-441-71-234-2391 or -2392
Credit Agreement
<PAGE>
Exhibit 11- Statement RE: Computation of Per Share Earnings
Year Ended
December 31
1996
----
Primary
Average shares outstanding ......................................... 1,765
Net effect of dilutive stock options - based
on the treasury stock method using
average market price ............................................ 0
------
Total .............................................................. 1,765
------
Net income ......................................................... $8,988
------
Per share amount ................................................... $ 5.09
------
Fully Diluted
Average shares outstanding ......................................... 1,765
Net effect of dilutive stock options - based
on the treasury stock method using the
year-end market price, if higher than
average market price ............................................ 0
------
Total .............................................................. 1,765
------
Net income ......................................................... $8,988
------
Per share amount ................................................... $ 5.09
------
<PAGE>
Exhibit 21
Subsidiaries of Muehlstein Holding Corporation
The following is a list of the full name and the state or other
jurisdiction of incorporation for all subsidiaries of Muehlstein Holding
Corporation as they exist as of December 31, 1996.
Muehlstein & Co., Inc.
Also does business as: Channel Polymers
New York
Muehlstein International, Ltd.
New York
Muehlstein & Co. (Canada) Ltd.
Ontario, Canada
Pegasus Polymers International, Inc.
Connecticut
Pegasus Polymers Italia SrL
Italy
Pegasus Polymers France S.A.R.L.
France
Pegasus Polymers (U.K.) Limited
United Kingdom
Muehlstein Do Brasil Industria, Comercio e Representacoes Ltda.
Brazil
Pegasus Polymers Asia Limited
Hong Kong
Pegasus Polymers Benelux, Inc.
Delaware
Pegasus Polymers Iberica S.L.
Spain
Pegasus Polymers Marketing GmbH
Germany
<PAGE>
MTR Ltd.
Channel Islands
Muehlstein de Chile S.A.
Chile
Muehlstein de Colombia S.A.
Colombia
Muehlstein de Ecuador S.A.
Ecuador
Muehlstein de Guatemala S.A.
Guatemala
Muehlstein de Mexico S.A.
Mexico
Muehlstein de Peru S.A.
Peru
Muehlstein de Puerto Rico Inc.
Puerto Rico
Muehlstein de Costa Rica, S.A.
Costa Rica
Muehlstein Argentina S.A.
Argentina
Muehlstein Financial Corporation
Delaware
Polymers International Financial Corporation
Delaware
Pegasus Polymers International Coordination, Inc.
Delaware
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
BALANCE SHEET (DECEMBER 31, 1996) CONSOLIDATED STATEMENT OF OPERATIONS (DECEMBER
31, 1996) CONSOLIDATED STATEMENT OF CASH FLOWS (FEBRUARY 9 - DECEMBER 31, 1996)
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 2,211
<SECURITIES> 0
<RECEIVABLES> $91,325
<ALLOWANCES> 396
<INVENTORY> 40,208
<CURRENT-ASSETS> 137,421
<PP&E> 9,669
<DEPRECIATION> 1,011
<TOTAL-ASSETS> 167,146
<CURRENT-LIABILITIES> 103,766
<BONDS> 0
0
10
<COMMON> 20
<OTHER-SE> 38,629
<TOTAL-LIABILITY-AND-EQUITY> 167,146
<SALES> 707,018
<TOTAL-REVENUES> 707,018
<CGS> 613,510
<TOTAL-COSTS> 688,730
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 83
<INTEREST-EXPENSE> 4,091
<INCOME-PRETAX> 15,537
<INCOME-TAX> 6,442
<INCOME-CONTINUING> 9,095
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,095
<EPS-PRIMARY> 5.09
<EPS-DILUTED> 5.09
</TABLE>
