SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K
AMENDMENT TO CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 24, 1997
Checkpoint Systems, Inc.
--------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania
------------------------------------------------------------
(State or other jurisdiction of incorporation or organization)
1-11257 22-1895850
------------------------ --------------------------------
(Commission File Number) (I.R.S. Employer Identification No.)
101 Wolf Drive, PO Box 188 Thorofare, New Jersey 08086
-------------------------------------------------------------------
(Address of principal executive offices)
(609) 848-1800
-----------------------------------------------------------------
(Registrant's telephone number, including area code)
N/A
------------------------------------------------------------------
(Former name or address, if changed since last report)
<PAGE>
Item 2. ACQUISITION OR DISPOSITION OF ASSETS.
On February 3, 1998, the previously announced agreement to
purchase the operating assets and business of Tokai Electronics Co. Ltd., a
Japanese manufacturer of radio frequency (RF) labels licensed from Checkpoint,
was completed. A press release announcing the completion of this agreement
was issued on February 10, 1998, and is filed as Exhibit 99.1 to this current
report and is incorporated herein by reference. A copy of the Asset Purchase
Agreement by and among Tokai Aluminum Foil Co. Ltd., Tokai Electronics Co.
Ltd., Checkpoint Production Japan K.K. and Checkpoint Systems, Inc. is filed
as Exhibit 2 to this current report and is incorporated herein by reference.
Item 5. Other Events
------ ------------
On January 29, 1998, the Company issued a press release in
which it announced preliminary fourth quarter and year end results, new
contracts; and a new $100 million unsecured credit facility. A copy of the
press release and $100 million credit facility are attached hereto as
Exhibit 99.2 and Exhibit 10.1 respectively and are incorporated herein by
reference.
On February 10, 1998, the Company issued a press release in
which it announced its 1997 Fourth Quarter and year end results, a copy of
which is filed as Exhibit 99.1 to this current report and is incorporated
by reference.
Item 7. Financial Statements and Exhibits
------ ---------------------------------
1. Exhibits
(c)
2. Asset Purchase Agreement by and among Tokai Aluminum Foil Co. Ltd.,
Tokai Electronics Co. Ltd., Checkpoint Production Japan K.K. and Checkpoint
Systems, Inc.
99.1 Press release announcing the completion of the Asset Purchase
Agreement by and among Tokai Aluminum Foil Co. Ltd., Tokai Electronics Co.
Ltd., Checkpoint Production Japan K.K. and Checkpoint Systems, Inc. dated
February 10, 1998.
99.1 Press release dated February 10, 1997 announcing the Company's
1997 Fourth Quarter and Year End Results.
99.2 Press release dated January 29, 1998 announcing the Company's
preliminary fourth quarter and year-end results, new
contracts; and a new $100 million unsecured credit facility.
10.1 Credit Agreement, dated as of December 24, 1997, by and among the
Company, as Borrower, the Lender Parties named therein, and First Union
National Bank, as Administrative Agent.
Signature
---------
Pursuant to the requirements of the Securities and Exchange Act
of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
Date: February 17, 1998
Checkpoint Systems, Inc.
/s/Jeffrey A. Reinhold
Vice President - Finance,
Chief Financial Officer and
Treasurer
EXHIBIT INDEX
-------------
EXHIBIT NO. DESCRIPTION OF EXHIBITS
- ------------ -------------------------
2. Asset Purchase Agreement by and among Tokai Aluminum Foil Co. Ltd.,
Tokai Electronics Co. Ltd., Checkpoint Production Japan K.K. and
Checkpoint Systems, Inc.
99.1 Press release announcing the completion of the Asset Purchase
Agreement by and among Tokai Aluminum Foil Co. Ltd., Tokai Electronics Co.
Ltd., Checkpoint Production Japan K.K. and Checkpoint Systems, Inc. dated
February 10, 1998.
99.1 Press release dated February 10, 1997, announcing the Company's
1997 Fourth Quarter and Year-End Results.
99.2 Press release dated January 29, 1998 announcing the Company's
preliminary fourth quarter and year-end results, new contracts; and a
new $100 million unsecured credit facility.
10.1 Credit Agreement, dated as of December 24, 1997, by and among the
Company, as Borrower, the Lender Parties named therein, and First Union
National Bank, as Administrative Agent.
PAGE>
FOR: Checkpoint Systems, Inc.
COMPANY CONTACT: Steven G. Selfridge
Chief Operating Officer
(609) 384-2473
Jeffrey A. Reinhold
Chief Financial Officer
(609) 384-2457
INVESTOR CONTACTS: Donna Stein/Stephanie
Conzelman/Cindy Reid
Morgen-Walke Associates, Inc.
(212) 850-5600
PRESS CONTACTS: Scott Sunshine/ Claudia Moscarella
Morgen-Walke Associates, Inc.
FOR IMMEDIATE RELEASE (212) 850-5600
CHECKPOINT SYSTEMS REPORTS 1997 FOURTH QUARTER AND YEAR END RESULTS
- --Completes Tokai Electronics Co., Ltd. Acquisition--
THOROFARE, NJ, February 10, 1998 -- Checkpoint Systems, Inc., (NYSE:CKP) today
reported record revenues for the fourth quarter and year ended
December 28, 1997.
Revenues for the 1997 year were $335,964,000, a 15.2% increase over 1996
revenues of $291,769,000. Net earnings for 1997 were $20,796,000, or $0.59
per share, before non-recurring and restructuring charges. Net earnings were
$20,447,000, or $0.60 per share in 1996. Including the after tax impact of
the non-recurring and restructuring charges incurred during the fourth
quarter of 1997, net earnings were $8,228,000, or $0.23 per share for 1997.
Fourth quarter net revenues rose 29.6% to a record $98,790,000 from
$76,218,000 for the same period last year. Earnings for the fourth quarter
before non-recurring and restructuring charges increased 25.5% to $7,445,000,
or $0.21 per share, compared with $5,933,000, or $0.17 per share in the prior
year's fourth quarter. Including the after tax non-recurring and
restructuring charges, the Company reported a net loss for the quarter of
$5,123,000, or $0.15 per share.
All references to earnings per share are on a diluted basis. See attached table.
- --more--
<PAGE>
Checkpoint previously announced pre-tax fourth quarter 1997 restructuring and
one time special charges totaling $17,100,000. The charges will position the
Company for future efficiencies and profit improvement and are principally
related to severance, termination of facility leases, expansion of new
manufacturing facilities, termination of master reseller agreements,
consolidation of research and development activities and marketing investments.
Checkpoint also announced that it has completed the purchase of the operating
assets and business of Tokai Electronics Co., Ltd., a Japanese manufacturer
of radio frequency (RF) labels licensed from Checkpoint. Checkpoint has held
a one-third interest in Tokai since 1995.
Checkpoint Systems, Inc., located in Thorofare, New Jersey, is a leading
provider of integrated security to retailers. More than 330,000 Checkpoint
RF EAS systems are installed worldwide. Checkpoint Systems, Inc.'s website is
located at www.checkpointsystems.com.
This release may include information that could constitute forward-looking
statements made pursuant to the safe harbor provision of the Private
Securities Litigation Reform Act of 1995. Any such forward-looking
statements may involve risk and uncertainties that could cause actual results
to differ materially from any future results encompassed within the forward-
looking statements. Factors that could cause or contribute to such
differences include those matters disclosed in the Company's Security and
Exchange Commission filings.
- --Table Follows--
<PAGE>
Checkpoint Systems, Inc.
Consolidated Statements of Income
(Amounts in thousands except per share amounts)
Operating Results (unaudited)
========================================================================
Quarter Ended Twelve Months Ended
(13 weeks) (52 weeks)
Dec. 28, Dec. 29, Dec. 28, Dec. 29,
1997 1996 1997 1996
--------- --------- --------- ---------
Net revenues $ 98,791 $ 76,218 $ 335,964 $ 291,769
Cost of revenues 64,713a 42,308 201,724a 168,024
-------- -------- -------- --------
Gross profit 34,078 33,910 134,240 123,745
Selling, general and
Administrative expenses 31,694b 25,766 114,591b 93,676
Restructuring charge 7,945 --- 7,945 ---
-------- -------- -------- --------
Income (loss) operations (5,561) 8,144 11,704 30,069
Interest income 1,584 2,769 8,676 8,339
Income expense 2,518 2,444 9,573 9,557
Other income 369 90 2,758 1,026
-------- -------- -------- --------
Income (loss) before taxes (6,126) 8,559 13,565 29,877
Income tax expense (benefit) (966) 2,626 5,445 9,430
Minority interest 37 0 108 0
-------- -------- -------- --------
Net earnings (loss) $ (5,123)c $ 5,933 $ 8,228c $ 20,447
========== ========= ========= =========
Earnings (loss) per share:
Basic $ (0.15) $ 0.17 $ 0.24 $ 0.64
========= ========= ========= =========
Diluted $ (0.15) $ 0.17 $ 0.23 $ 0.60
========= ========= ========= =========
(a) Includes non-recurring charges of $6,600 and restructuring charges
of $1,055.
(b) Includes non-recurring charges of $1,500.
(c) Includes net non-recurring and restructuring charges of $12,568.
Financial Position
========================================================================
Dec. 28, Dec. 29,
1997 1996
-------- --------
(unaudited)
Cash and investments $ 64,138 $ 185,836
Working capital 211,570 285,753
Current assets 297,680 348,144
Long-term debt 150,912 153,356
Shareholders' equity 277,550 300,794
Total assets 516,434 521,653
# # #
FOR: Checkpoint Systems, Inc.
COMPANY CONTACT:
Steven G. Selfridge
Chief Operating Officer
(609) 384-2473
Jeffrey A. Reinhold
Chief Financial Officer
(609) 384-2457
INVESTOR CONTACTS:
Donna Stein/Stephanie
Conzelman/Cindy Reid
Morgen-Walke Associates, Inc.
(212) 850-5600
PRESS CONTACTS:
Scott Sunshine/ Claudia Moscarella
Morgen-Walke Associates, Inc.
FOR IMMEDIATE RELEASE (212) 850-5600
CHECKPOINT SYSTEMS, INC. COMMENTS ON PRELIMINARY
FOURTH QUARTER AND YEAR END RESULTS AND NEW CONTRACTS;
ANNOUNCES NEW $100 MILLION UNSECURED CREDIT FACILITY
THOROFARE, NJ, January 29, 1998 - Checkpoint Systems, Inc., (NYSE:CKP)
today commented on its preliminary results for the fourth quarter and year
ended December 28, 1997, reported on significant new contracts and
announced that it has closed a new $100 million unsecured credit facility.
Checkpoint expects to report record revenues for the fourth quarter period,
in the range of $96 million to $98 million, up approximately 29% from the
prior year. For the year ended December 28, 1997, the Company expects to
report revenues in the range of $334 million to $336 million, an
approximate increase of 15%. Net income in the fourth quarter of 1997,
before pre-tax restructuring and one time special charges of approximately
$17.1 million, will be in the range of $6.6 million to $7.1 million, or
$.19 to $.21 per share. For the year ended December 28, 1997, the Company
expects to report net income and earnings per share, before restructuring
and non-recurring charges, in the range of $20.1 million to $20.6 million,
or $.57 to $.59 per share.
With the objective of positioning the Company for future efficiencies and
profit improvement, the Company will incur approximately $9 million in
pre-tax restructuring charges and $8.1 million in pre-tax one time special
charges. The impact of these charges will be approximately $.36 per share
on an after tax basis. These charges are principally related to
severance, lease terminations, expansion of new manufacturing
facilities, termination of master reseller agreements, consolidation of
research and development activities and marketing investments.
Kevin P. Dowd, the Company's President and Chief Executive Officer stated,
"1997 has been an important growth year for Checkpoint as we advanced our
penetration of the worldwide security market. We believe that we are well
positioned for the future growth of our business and expect to secure many
new contracts worldwide in 1998. Checkpoint's wide range of system options
and design flexibility allows us to effectively accommodate the needs of
retailers around the globe".
Dowd further stated, "during the fourth quarter we completed the
installation of 48 Continente hypermarkets in Spain, displacing magnetic
technology. This represents over 3,000 checkout aisles, with a retail
organization that is one of Spain's largest. Also during the fourth
quarter, we were awarded the balance of B&Q home improvement stores in
England, giving us a chainwide installation of 276 B&Q stores. We also enter
1998 with a significant add-on contract with Winn Dixie, the nation's fifth
largest supermarket chain, for installation of systems under the Company's
Comprehensive Tag Program in additional locations in the Orlando, FL; Miami,
FL; Raleigh, NC and Atlanta, GA, New Orleans, LA; and Louisville, KY
metropolitan areas, bringing the total number of sites to 589, representing
approximately 50% of the Winn Dixie chain. Also, in Australia, where we now
dominant the market, we have been selected to provide chain-wide installations
at over 550 sites, valued at more than $12 million with Coles Myer and
their Coles Supermarket, K-Mart , Target, Myers, Officeworks, and Liquorland
divisions. We enter 1998 very optimistic about the potential of our business",
stated Dowd.
In addition, the Company also announced that it has closed a new $100
million unsecured credit facility with a consortium of five banks led by First
Union National Bank. "We are very pleased to receive this new facility, which
clearly exemplifies First Union's confidence in Checkpoint, and our future
growth potential. We look forward to a long relationship with First Union
and the entire bank syndicate", Dowd concluded.
Checkpoint Systems, Inc. is a leading provider of integrated security
solutions for retailers worldwide, and is the leading provider of radio
frequency (RF) source tagging, which allows its paper-thin RF tags to be
embedded into product packaging. More than 330,000 Checkpoint RF EAS systems
are installed worldwide. Checkpoint Systems, Inc. website is located at
www.checkpointsystems.com.
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement"), made and entered
into as of November 10, 1997, by and among TOKAI ALUMINUM FOIL
CO., LTD., a Japanese corporation ("TAF"), TOKAI ELECTRONICS CO.,
LTD., a Japanese corporation (the "Seller"), CHECKPOINT
PRODUCTION JAPAN K.K., a Japanese corporation (the "Purchaser")
and CHECKPOINT SYSTEMS, INC., a Pennsylvania corporation
("Checkpoint").
W I T N E S S E T H :
WHEREAS, the Seller wishes to sell most of its assets (together
with the goodwill associated therewith);
WHEREAS, TAF controls the Seller and wishes to support the
Seller's sale of such assets;
WHEREAS, the Purchaser wishes to purchase such assets from the
Seller; and
WHEREAS, Checkpoint controls the Purchaser and wishes to support
the Purchaser's purchase of such assets;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1. Definitions. For the purposes of this Agreement,
capitalized terms used herein without definition shall have the
respective meanings ascribed to them in Schedule 1.1.
1.2. Interpretation. The terms defined in this Agreement shall
mean and include the plural as well as the singular. Pronouns of
the masculine gender shall mean and include corresponding words
of the feminine and neuter gender. References to Articles,
Sections, Exhibits and Schedules and subdivisions thereof shall,
unless otherwise specifically set forth, be references to the
Articles of, Sections of, Exhibits to and Schedules to this
Agreement and subdivisions thereof respectively. The word "including"
shall be deemed to be followed by the words "without limitation."
A facsimile copy shall, unless otherwise specifically set forth, be deemed
to satisfy the requirement of "in writing", "written" and so on.
1.3. Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect interpretation of any
of the terms or provisions of this Agreement.
ARTICLE II
SALE AND PURCHASE OF THE ASSETS
2.1. Sale and Purchase. At the Closing, on the terms and subject
to the conditions contained in this Agreement, the Seller shall
sell and the Purchaser shall purchase any and all rights and
interests the Seller has in the Transferred Assets at the
Purchase Price.
<PAGE>
2.2. Assumption of Certain Liabilities. At the Closing, on the
terms and subject to the conditions contained in this Agreement,
the Seller shall assign and the Purchaser shall assume the
Assumed Liabilities and the Seller shall pay the Purchaser the
Adjustment Amount in consideration for the Purchaser's assumption
of the Assumed Liabilities.
2.3.Finalization of the Closing Accounts, the Purchase Price and
the Adjustment Amount.
(a)Promptly after the Closing, the Purchaser shall prepare its
draft of the Closing Accounts. Within 30 days after the Closing
Date, the Purchaser shall submit its draft of the Closing
Accounts to the Seller for review and audit. The Seller shall
have the right to conduct its review and audit promptly after
submission by the Purchaser of its draft of the Closing Accounts
in order to confirm the accuracy of such draft.
(b)No later than the later of: (i) the 15th day after the
Seller's receipt of the Purchaser's draft of the Closing Accounts
and (ii) the 45th day after the Closing Date (such later date
being the "Seller's Notice Day"), the Seller shall notify the
Purchaser in writing whether or not it approves the Purchaser's
draft of the Closing Accounts. If the Seller, within such time-
frame, notifies the Purchaser of its approval or fails to notify
the Purchaser of the Seller's disapproval, the Closing Accounts
shall be deemed to have been finalized.
(c)If the Seller notifies the Purchaser of its disapproval of the draft
of the Closing Accounts, the Seller and the Purchaser shall discuss in good
faith a possible solution to the difference in opinion between the Seller
and the Purchaser and use their reasonable efforts to agree on the Closing
Accounts. If the Seller and the Purchaser agree on the Closing Accounts at
any time, the Closing Accounts shall be deemed to have been
finalized.
(d)If the Seller and the Purchaser fail to agree on the Closing
Accounts within 30 days after the Purchaser's receipt of the
Seller's notice of its disapproval, either the Seller or the
Purchaser may initiate an arbitration under Section 14.3 for the final
determination of the Adjustment Amount. Unless they are
previously agreed under Section 2.3(c) above, the Purchase Price
and the Adjustment Amount shall be deemed to have been finalized
upon the service of the arbitration award to both the Seller and
the Purchaser.
2.4. Payment. The Purchase Price and the Adjustment Amount shall
be paid as follows:
(a)Payment of the Preliminary Amount. At the Closing, the
Purchaser shall, as the preliminary payment of the Purchase
Price, pay the amount (the "Preliminary Payment Amount") obtained
by (i) deducting (A) the Preliminary Adjustment Amount and (B)
such amount defined in Z of the Price Formula as agreed upon between
the Seller and the Purchaser from and (ii) adding such estimated amount
as agreed upon between the Seller and the Purchaser of the Approved Capital
Expenditures outstanding as of the Closing to 2,869,135,437 Yen, to the Seller.
<PAGE>
(b)Payment of the Adjustment Amount.
(i) If the amount (the "Net Purchase Price") obtained by
deducting the Adjustment Amount from the Purchase Price is larger
than the Preliminary Payment Amount, no later than the 10th
Business Day after the finalization of the Purchase Price and the
Adjustment Amount under Section 2.3, the Purchaser shall pay to the
Seller the difference between the Net Purchase Price and the Preliminary
Payment Amount, together with the interest calculated on such difference
at the Interest Rate for the period after 60th day of the Closing
Date.
(ii) If the Net Purchase Price is less than the Preliminary
Payment Amount no later than the 10th Business Day after the
finalization of the Purchase Price and the Adjustment Amount
under Section 2,3, the Seller shall pay to the Purchaser the
difference between the Preliminary Payment Amount and the Net
Purchase Price, together with the interest calculated on such
difference at the Interest Rate for the period after 60th day of
the Closing Date.
(c)Payment Method. The payment of the preliminary amount under
Section 2.4(a) shall be made by banker's checks in Japanese yen
to be issued by a prime bank in Japan. All other payments under
this Agreement shall be made by wire-transfer (denshin-sokin) of
the relevant amount in Japanese yen to the receiving party's bank account
in Tokyo or Yokohama; provided that the receiving party shall designate such
bank account and notify the paying party of it in writing no later than
5 Business Days prior to the date of the relevant transfer.
2.5. The Parties Expenses Related to Transaction.
(a)Each party hereto shall bear the stamp duty payable with
respect to the originals of this Agreement to be retained by such
party. The Purchaser shall bear the registration license tax
(toroku-menkyo-zei) payable in connection with the registration
of the transfer of the ownership of the Real Properties from the
Seller to the Purchaser under this Agreement, and the Seller and
the Purchaser shall bear the consumption tax payable in
connection with their respective payments under this Agreement
and pay it by adding the amount of the applicable consumption tax
to the relevant payment. Each party hereto shall bear any other
Tax which such party is obligated to pay to the relevant tax
authorities under applicable laws.
(b)The Seller shall be responsible for the payments of Taxes
imposed on the Transferred Assets and the Taxes and social
security changes to be withheld by employers and other expenses
related to the Transferred Employees for the period up to the
Closing Date, and the Purchaser shall be responsible for the same
on and after the Closing Date. The Seller and the Purchaser agree
to settle such payments between the Seller and the Purchaser promptly
after the relevant amount is finalized.
<PAGE>
2.6. No Assumption of Liability. The Purchaser shall not assume
(and TAF and the Seller shall, jointly and severally, indemnify
and hold harmless each Checkpoint Indemnitee from) (a) any
liabilities of TAF or the Seller, or (b) any liabilities arising
out of or attributable to any event occurring or any condition
existing prior to the Closing in connection with the Transferred
Assets, the Transferred Business, the Transferred Employees,
except for the Assumed Liabilities. Notwithstanding the preceding
sentence, the parties hereto agree that with regard to any losses,
liabilities, damages, deficiencies, claims, costs and expenses
(including reasonable attorney's fees and disbursements) arising out
of the disputes with ID Canada or its Affiliates, TAF and the Seller shall
indemnify and hold harmless, jointly and severally, each
Checkpoint Indemnitee only from such losses, liabilities,
damages, deficiencies, claims, costs and expenses (including
reasonable attorney's fees and disbursements) suffered or
incurred by such Checkpoint Indemnitee arising from any
liabilities or claims succeeded from the Seller (other than
claims against ID Canada or its Affiliates). Nothing in this
Section 2.6 shall require TAF or the Seller to indemnify and hold
harmless each Checkpoint Indemnitee from any liability owed by it
to ID Canada arising out of such Checkpoint Indemnitee's own
activities.
2.7. Default Interest. Any amount payable under this Agreement,
but not paid when due, shall bear interest at the Interest Rate
which shall accrue on a daily basis until such amount are paid.
2.8. No Prejudice to Indemnification. Neither the finalization
of the Closing Accounts nor the payment or receipt of the
Purchase Price or Adjustment Amount shall prejudice the parties'
rights under any other provisions of this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1. Representations and Warranties of TAF and Seller. As of the
date hereof, TAF and the Seller, jointly and severally, represent
and warrant to the Purchaser as set forth in Schedule 3.1.
3.2. Representations and Warranties of the Purchaser. As of the
date hereof, the Purchaser and Checkpoint, jointly and severally,
represent and warrant to TAF and the Seller as set forth in
Schedule 3.2.
3.3. Effect of Due Diligence Review. No due diligence review
conducted by any of the parties hereto shall affect in any manner
whatsoever the validity or effect of the representations and
warranties contained herein or made pursuant hereto or of the
indemnifications or remedies related thereto.
<PAGE>
3.4. Survival of Representations and Warranties.
(a)The Purchaser and the Seller have the right to rely fully upon
the representations and warranties of the other party contained
in or made pursuant to this Agreement in connection with the
transactions contemplated under this Agreement. Except as
otherwise provided in the following sentences of this Section 3.4(a),
all such representations and warranties shall survive the Closing for a
period of 30 months after the Closing Date. The representations
and warranties of the Seller or the Purchaser which are contained in (a),
(b), (c) and (d) of Schedules 3.1 and 3.2 shall survive the Closing
and shall continue at all times thereafter. The representations
and warranties related to Taxes contained in this Agreement shall
survive the Closing Date and continue at all times thereafter so
long as a relevant claim can be made against the Purchaser or any
of the Purchaser's Affiliates by any taxing or related authority
of any relevant jurisdiction.
(b)Any right pursuant to this Agreement with respect to a claimed
breach of a representation or warranty shall expire at the end of
the survival period (as set forth in Section 3.4(a)) of the
relevant representation or warranty claimed to be breached (the
"Termination Date") unless on or prior to the Termination Date,
written notice asserting such breach, which shall reasonably set
forth, in light of the information then known to the party giving
such notice, a description of, and estimate (if then reasonable
to make) of the amount involved in, such breach (the "Claim") has
been given to the party from whom indemnification or other remedy
is sought. If the parties cannot amicably reach a settlement of the
Claim or unless such Claim is satisfied by payment, set-off or otherwise,
the party making the Claim must institute arbitration proceedings with
respect to the Claim in accordance with the terms of Section 14.3
of this Agreement prior to the first anniversary of the later of:
(i) the Termination Date of the representation and warranty to
which such Claim relates or (ii), if the amount of Checkpoint's
Losses or Tokai's Losses (as each defined in Article XI) related
to such Claim are not realized or cannot reasonably be determined
before the Termination Date, the date at which such amount is
reasonably determined (the "Loss Determination Date"). Provided
that a Claim is made on or prior to the Termination Date of the
relevant representation and warranty and the arbitration for the
Claim is commenced in accordance with this Section 3.4(b), the
Checkpoint's Loss or the Tokai's Loss related to such Claim may
continue to be claimed beyond the first anniversary of the
relevant Termination Date or Loss Determination Date.
3.5. Construction. Each representation and warranty is to be
construed independently of the others and is not limited by
reference to any other representation and warranty.
<PAGE>
ARTICLE IV
ACTIONS TO OCCUR PRIOR TO CLOSING
4.1. Operation of the Seller. Except as contemplated in
Schedule 4.1 or elsewhere in this Agreement or as otherwise
approved by the Purchaser or Checkpoint in writing, during the
period from the date hereof to the Closing, the Seller shall, and
TAF shall cause the Seller to, conduct its business and
operations only in the ordinary course of its business and keep
its records and accounting books in accordance with Japanese GAAP
consistently applied to the Seller. The Seller shall not enter
into any new transactions other than those related to the
Transferred Business.
4.2. Specific Undertaking for Operation. Without prejudice to
the generality of Section 4.1 but except as contemplated in
Schedule 4.1 or elsewhere in this Agreement or as otherwise
approved by the Purchaser or Checkpoint in writing, during the
period from the date hereof to the Closing, TAF and the Seller
jointly and severally undertake:
(a)that no contract or commitment shall be entered into, amended,
terminated or modified by the Seller except for those to be
entered into in the ordinary course of its business;
(b)that the Seller shall not borrow any additional funds other than as
required in the ordinary course of its business or provide any guarantee
or incur or assume any contingent liabilities;
(c)that the Seller shall not waive, or agree to waive, any claims
or rights;
(d)that the Seller shall not (i) sell, assign, transfer, pledge
or otherwise dispose of any business or asset other than an
individual asset with a value of less than 100,000 yen or (ii)
purchase, lease or otherwise acquire any business or asset other than an
individual asset with a value of less than 100,000 yen, or enter into an
agreement to that effect;
(e)that the Seller shall not increase, or agree to increase, the
rates of compensation (including bonuses) payable or to become
payable to any director, statutory auditor, officer, employee,
agent, independent contractor or consultant, or accelerate, or
agree to accelerate, the rate at which any such compensation is
paid, or modify any other employment terms and conditions, or
enter into any collective bargaining agreement or any agreement
with any labor union;
(f)that the Seller shall not change accounting methods,
principles or practices;
(g)that the Seller shall not change its internal rules, credit
and policies (or any application of any such rules or policies to
the operation thereof); and
<PAGE>
(h)to give the Purchaser prompt notice of any default by any
party under a Material Contract and any event which might have a
material adverse effect on the business or financial condition of
TAF or the Seller.
4.3. Settlement with ID Canada. Nothing provided for in Sections
4.1 and 4.2 shall prohibit the Seller from (a) entering into (i)
such amicable settlement with ID Systems Canada Inc. ("ID
Canada") as approved by Checkpoint in writing or (ii) such
amicable settlement with ID Canada which consists solely of a
monetary payment (and no continuing obligations of the Seller,
TAF or the Purchaser which impact in any way on the continuing
business of the Seller, TAF or the Purchaser), and (b) implementing such
amicable settlement in accordance with its terms.
4.4. TAF's Support. During the period from the date hereof to
the Closing Date, TAF shall provide the Seller with such
financial and other support as are necessary for the Seller to
perform its obligations under this Agreement.
4.5. Access to Information. During the period from the date
hereof to the Closing Date, (i) the Seller shall allow the
Purchaser to have full access to all directors, statutory
auditors, officers and employees and all books, records, computer
files, offices and other facilities and properties of the Seller
and to make such inspections thereof as the Purchaser may
reasonably request, (ii) TAF shall provide Checkpoint with TAF's
interim financial statements for six month period ended on
September 30, 1997 and (iii) TAF, the Seller and Checkpoint shall
cooperate with the Purchaser and its Affiliates in their work to
prepare the smooth and orderly transfer of the Transferred
Business, the Transferred Assets and the Transferred Employees.
4.6. Bank Waiver Documents. TAF and the Seller shall jointly and
severally obtain the Bank Waiver Documents.
4.7. Consents to Assignment of Material Contracts. TAF and the
Seller shall jointly and severally use their reasonable efforts
to obtain written consents to the assignment of the Material
Contracts from the other parties thereto.
4.8. Termination of Employment. TAF shall terminate its
employment of such seconded employees as set forth in Schedule
4.8-A, subject to the occurrence of the Closing. The Seller
shall terminate its fiduciary relationships and employment of
such directors, statutory auditors and employees as set forth in
Schedule 4.8-B, subject to the occurrence of the Closing. TAF and
the Seller shall jointly and severally indemnify each Checkpoint
Indemnitee from any losses, liabilities, damages, deficiencies, costs
or expenses (including reasonable attorneys' fees and disbursements)
based upon, arising out of or in connection with any of such terminations
of fiduciary relationships and employment by TAF or the Seller.
<PAGE>
4.9. Offer of Employment. Within 45 days after the date hereof,
the Purchaser shall offer to each of the persons as set forth in
Schedule 4.9, subject to the occurrence of the Closing,
employment on terms and conditions no less favorable than those
as of the date hereof under which such employees are employed by the
Seller or TAF with such changes as reflected in Schedule 4.9. With
respect to the Transferred Employees who waives his or her claim to
retirement allowances on termination of his or her employment with the
Seller or TAF, the Purchaser shall count each Transferred Employee's period
of service with the Seller or TAF as service with the Purchaser for the
purpose of calculating (i) his or her retirement allowances payable on
leaving employment of the Purchaser and (ii) the number of paid holidays to
which he or she is newly entitled at the Purchaser.
4.10. Best Efforts to Satisfy Condition Precedents. The
parties hereto shall use their respective best efforts to have
the relevant conditions precedent (with respect to TAF and the
Seller, those set forth in Article V and with respect to
Checkpoint and the Purchaser, those set forth in Article VI)
satisfied in a timely manner.
4.11. Preliminary Registration of the Transfer of Ownership.
The Seller shall promptly make the preliminary registration of
the transfer of the ownership of the Real Properties to the
Purchaser. The Purchaser shall bear all the registration tax for
such preliminary registration and shall cooperate with the Seller
in making such preliminary registration; provided, however, that
the Seller shall reimburse the Purchaser for half of the amount
of such registration tax if and when the Closing does not take
place. The Seller and the Purchaser shall equally bear all costs
and expenses associated with such preliminary registration other
than such registration tax. Upon the Seller's request, the Purchaser shall
deliver in advance to the Seller's legal counsel all the documents only
necessary to cancel the preliminary registration and authorize such counsel
to use the documents upon the termination of this Agreement.
4.12. Transfer of Kyosai. The Seller and the Purchaser shall
take all steps required to transfer the existing Kyosai arrangement for
retired allowances from the Seller to the Purchaser as of the Closing.
ARTICLE V
CONDITIONS PRECEDENT TO THE PURCHASER'S OBLIGATION
The obligation of the Purchaser to consummate the transactions
contemplated hereby is subject to the satisfaction of each of the
following conditions:
5.1. Accurate Representations and Warranties. All representations and
warranties of TAF and the Seller contained in this Agreement (after
replacing the words "as of the date hereof" or "to the date hereof" in
such representations and warranties by the words "as of the Closing" or
"to the Closing Date," as the case may be) shall be true as of the Closing
as if such representations and warranties were made as of the Closing. Upon
the delivery of the joint certificate of TAF and the Seller referred to in
Section 5.16(a) to the Purchaser, TAF and the Seller shall be deemed to have
made such representations and warranties on an updated basis to the Purchaser
as set forth in this Section 5.1.
<PAGE>
5.2. Performance by TAF and the Seller. Each of TAF and the Seller shall
have performed and complied with all agreements, covenants and conditions
required by this Agreement to be performed and complied with by it prior
to or on the Closing.
5.3. No Material and Adverse Change. Since the date of this Agreement,
there shall have been no material and adverse change in the condition,
financial or otherwise, of TAF, the Seller, the Transferred Business or the
Transferred Assets, or TAF's or the Seller's ability to perform its
obligations hereunder or under the Associated Agreements.
5.4. Authorizations under Antimonopoly Law. The waiting period for the
Closing required under Article 16 of the Antimonopoly Law shall have expired
without any objection from the FTC.
5.5. Authorization under LPUL. The waiting period for the Closing required
under Article 23 of LPUL shall have expired without any objection from the
relevant governmental body or such governmental body has waived such waiting
period.
5.6. Employees' Consents. No later than 3 Business Days prior to the
Closing, at least 80% of the full time employees of the Seller as of the
date hereof (other than such persons as set forth in Schedule 5.6) shall
have accepted in writing offers of employment with the Purchaser under the
employment terms offered by the Purchaser. Such persons as set forth in
Schedule 5.6 shall have accepted in writing offers of employment with the
Purchaser.
5.7. Material Contracts. All other parties' written consents to the
assignment of each Material Contract from the Seller to the Purchaser shall
have been obtained.
5.8. Review of Material Contracts. The Seller shall have delivered to the
Purchaser complete and accurate copies of such Tangible/Intangible Asset
Leases, Real Estate Leases and Material Contracts as requested by the
Purchaser or, if there are oral agreements in all or part, provided in
writing the material terms and conditions thereof to the Purchaser, and the
Purchaser shall have been reasonably satisfied with the terms and conditions
of such Tangible/Intangible Asset Leases, Real Estate Leases and Material
Contracts.
5.9. Release of Liens. All Liens on the Transferred Assets have
been released in a manner reasonably satisfactory to the
Purchaser.
5.10. Government Approvals. The Purchaser shall have
reasonably been satisfied that the Purchaser will be able to
obtain as of the Closing all governmental and statutory
registrations and approvals and all other licenses, approvals and
authorizations necessary or desirable for the Purchaser to
operate or develop the Transferred Business on the same basis as
the Seller.
5.11. Execution of the Associated Agreements. The Associated
Agreements shall have been executed and delivered, dated as of
the Closing Date, by the parties thereto (other than Checkpoint
and the Purchaser).
<PAGE>
5.12. Environmental Issues. The Purchaser shall have been reasonably
satisfied with (a) the result of the review of the environmental exposures
associated with the Real Properties and (b) the arrangement regarding any
remedial action necessary for solving any material environmental or other
problem related to the Real Properties.
5.13. Subsequent Incorporation. The Purchaser shall have received from a
court-appointed-inspector his report on the result of investigation of this
Agreement.
[5.14 and 5.15 are reserved for additional conditions.]
5.16. Closing Documents. The Purchaser shall have received
the following documents:
(a)a certificate, dated as of the Closing Date, signed by a
representative director of TAF on behalf of TAF, and a representative
director of the Seller on behalf of the Seller, in the form and substance
reasonably satisfactory to the Purchaser,jointly and severally certifying:
(i) that the conditions set forth in Article V have been satisfied;
(ii) that TAF and the Seller waive any conditions set forth in ArtIcle VI
which may not have been satisfied at or prior to the Closing; and (iii) as
to the incumbency, authorization and signature of each of the persons
authorized to execute and deliver, on behalf of TAF or the Seller, this
Agreement, the Associated Agreements and any other documents executed or to
be executed by TAF or the Seller in connection with the transaction
contemplated hereby or thereby;
(b)written consents from such persons as set forth in Schedule
5.6 regarding their employment with the Purchaser; and
(c)such other documents and evidence (including the documentary
evidences of the corporate actions of TAF and the Seller
authorizing the transactions contemplated under this Agreement
and the Associated Agreements) as Checkpoint or the Purchaser may
reasonably request in order to ascertain the fulfillment of the
conditions set forth in this Article V.
ARTICLE VI
CONDITIONS PRECEDENT TO THE SELLER'S OBLIGATIONS
The obligation of the Seller to consummate the transactions
contemplated hereby is subject to the satisfaction of each of the
following conditions:
6.1. Accurate Representations and Warranties. All
representations and warranties of the Purchaser contained in this
Agreement (after replacing the words "as of the date hereof" or
"to the date hereof" in such representations and warranties by
the words "as of the Closing" or "to the Closing Date," as the
case may be) shall be true as of the Closing as if such
representations and warranties were made as of the Closing. Upon
the delivery of the Purchaser's certificate referred to in
Section 6.10(a) to the Seller, the Purchaser shall be deemed to
have made such representations and warranties on an updated basis
to TAF and the Seller as set forth in this Section 6.1.
<PAGE>
6.2. Performance by the Purchaser. The Purchaser shall have performed and
complied with all agreements, covenants and conditions required by this
Agreement to be performed and complied with by it prior to or on the Closing.
6.3. No Material and Adverse Change. Since the date of this Agreement,
there shall have been no material adverse change in the condition, financial
or otherwise, of the Purchaser or the Purchaser's or Checkpoint's ability to
perform its obligations hereunder or under the Supply Agreement.
6.4. Execution of the Associated Agreements. The Associated Agreement shall
have been executed and delivered, dated as of the Closing Date, by the parties
thereto (other than TAF and the Seller).
6.5. Authorization under LPUL. The waiting period for the Closing required
under Article 23 of LPUL shall have expired without any objection from the
relevant governmental body or such governmental body has waived such waiting
period.
[6.6, 6.7, 6.8 and 6.9 are reserved for additional conditions.]
6.10. Closing Documents. The Seller shall have received the
following documents:
(a)a certificate, dated as of the Closing Date, signed by a duly
authorized officer of Checkpoint on behalf of Checkpoint, and a
representative director of the Purchaser on behalf of the
Purchaser, in the form and substance reasonably satisfactory to
TAF and the Seller, jointly and severally certifying: (i) that
the conditions set forth in Article VI have been satisfied; (ii)
that Checkpoint and the Purchaser waive any conditions set forth
in Article V which may not have been satisfied at or prior to the Closing;
and (iii) as to the incumbency, authorization and signature of each of
persons authorized to execute and deliver on behalf of Checkpoint or the
Purchaser, this Agreement, the Associated Agreements and any
other documents executed or to be executed by Checkpoint or the
Purchaser in connection with the transaction contemplated hereby
or thereby; and
(b)such other documents and evidence (including the documentary
evidences of the corporate actions of Checkpoint and the
Purchaser authorizing the transactions contemplated under this
Agreement and the Associated Agreements) as TAF or the Seller may
reasonably request in order to ascertain the fulfillment of the conditions
set forth in this Article VI.
ARTICLE VII
CLOSING
7.1. Time and Place of the Closing. The closing process of the
transactions contemplated under Section 2.1 (the "Closing") shall
take place at the head office of The Bank of Yokohama, Limited,
commencing at 10:00 a.m., Tokyo time, February 2, 1998 or such
other time, date or place as may be agreed upon between the parties,
but in no event later than March 31, 1998. Subject to the completion of
the actions set forth in Section 7.2, the transfer of the Transferred
Business and the Transferred Assets shall be deemed to have taken
place as at 00:01 a.m. of the Closing Date.
<PAGE>
7.2. Actions at the Closing. At the Closing, the parties will
take the following actions:
(a)TAF and Checkpoint or the Purchaser shall execute and deliver
the Supply Agreement, the Indemnity and Security Agreement and
the Non-Competition Agreement;
(b)the Seller shall deliver the Bank Waiver Documents and the
Title Documents to the Purchaser;
(c)the Purchaser shall pay the Preliminary Payment Amount to the
Seller;
(d)the Seller shall deliver to the Purchaser the Business
Documents and the complete and accurate copies of such corporate
accounting books and records of the Seller as the Purchaser
reasonably requests; and
(e)such other actions as the Seller or the Purchaser may
reasonably request in order to consummate and perfect the
transaction contemplated under Section 2.1.
ARTICLE VIII
COVENANTS
8.1. Post Closing Services. At any time or from time to time
after the Closing, TAF and the Seller shall take such further
actions (and execute such documents) as are reasonably necessary,
appropriate or desirable to consummate, perfect and make
effective the transactions contemplated by this Agreement.
8.2. TAF's Unconditional Guaranty. Without any prejudice to any
of TAF's obligations and liabilities under any other provisions
of this Agreement, TAF hereby unconditionally guarantees (rentai-
hosho) the due, complete and punctual performance by the Seller
of all of its obligations under this Agreement.
8.3. Checkpoint's Unconditional Guaranty. Without any prejudice
to any of Checkpoint's obligations and liabilities under any
other provisions of this Agreement, Checkpoint hereby unconditionally
guarantees (rentai-hosho) the due, complete and punctual performance by
the Purchaser of all of its obligations under this Agreement.
8.4. Cooperation on Tax Matters. TAF, the Seller, the Purchaser
and Checkpoint shall cooperate, and shall cause their respective
Affiliates, directors, statutory auditors, officers, employees,
agents, auditors and representatives to cooperate, in preparing
and filing all returns, including maintaining and making
available to each other all books and records necessary in
connection with Taxes and in resolving all disputes and audits
with respect to all taxable periods relating to Taxes and in all
other Tax matters, and to keep each party advised as to any issue
relating to Taxes which could have a bearing on such other
party's responsibility under this Agreement. The Seller and the
Purchaser shall allow any other parties to access its books and
records at such party's reasonable request to the extent
necessary for the smooth operation of the Transferred Business.
<PAGE>
8.5. Liquidation of the Seller. After the Indemnity and Security
Agreement is terminated in accordance with its terms, the
Purchaser shall cooperate with the Seller in order for the Seller
to make a smooth liquidation of the Seller itself; provided,
however, that the Seller shall pay off all of its obligations to
the third parties outstanding as of the Closing and that TAF's
obligations under this Agreement and each Associated Agreement
shall not be affected by the Seller's liquidation in any manner.
8.6. Post Closing Service by the Purchaser. For the period not
exceeding 2 years after the Closing Date and upon the Seller's
request, the Purchaser shall provide the Seller's former
customers with a repair and maintenance service for those
products sold by the Seller with such reasonable terms and conditions
(including the Seller's payment of reasonable fees to the Purchaser) as
agreed upon in writing between the Seller and the Purchaser.
ARTICLE IX
[Reserved for an additional provision.]
ARTICLE X
SECRECY AND NON-COMPETITION
10.1. Secrecy. Each party hereto shall not disclose any
written or electronically or optically recorded information
related to the Transferred Assets or the Transferred Business to
any third parties and shall not use such information for any purposes,
except, in each case, in the ordinary course of operations of the
Transferred Business on or prior to the Closing Date; provided,
however, that the prohibitions contained in this sentence shall
not apply to (a) such information which (i) is in the public
domain as of the date hereof or (ii) becomes available to the
relevant party hereto on a non-confidential basis from a third
party and (b) Checkpoint and the Purchaser on and after the
Closing. Except for any press announcement as may be agreed
between TAF and Checkpoint in writing hereto (it being understood
that the contents of such press announcement shall have no effect
on the terms and conditions set forth in this Agreement or the
Associated Agreements), none of the parties hereto shall, and
each of the parties hereto shall procure that none of its
Affiliates shall, disclose the terms of this Agreement or the
Associated Agreements or the transaction contemplated hereby or
thereby other than to professional advisers or employees of the
relevant party or any of its Affiliates, who may need to be aware
of the same. Notwithstanding the foregoing, TAF, the Seller, the
purchaser or Checkpoint may, after consultation with the other parties,
disclose any information referred to in and prohibited to be disclosed under
this Section 10.1 if and to the extent required by (a) any stock exchange or
any governmental, quasi governmental or other regulatory body having
jurisdiction over it or its Affiliate or (b) as part of legal proceedings,
filings or similar process (including deposition, interrogatories, requests
for information or documents, subpoena, civil or criminal process).
<PAGE>
10.2. Non-Competition. The Seller shall not, directly or indirectly,
either alone, jointly or in conjunction with any other entity or entities,
engage in any business competitive with the Transferred Business for 5 years
after the Closing.
10.3. No-Solicitation. TAF and the Seller shall not (and shall jointly
and severally procure that each of their respective Affiliates shall not)
directly or indirectly employ, solicit or otherwise encourage any of the
Transferred Employees to leave the Purchaser for 5 years after the Closing.
ARTICLE XI
INDEMNIFICATION
11.1. Indemnity by TAF and the Seller. TAF and the Seller shall, jointly
and severally, indemnify and hold harmless each Checkpoint Indemnitee from
and against all losses, liabilities, damages, deficiencies, claims, costs or
expenses (including reasonable attorneys' fees and disbursements) based upon,
arising out of or in connection with the breach of any representation or
warranty, or the non-performance, partial or total, of any covenant or
agreement of TAF or the Seller contained in, or made pursuant to, this
Agreement or any Associated Agreement.
11.2. Indemnity by Checkpoint and the Purchaser. Checkpoint and the
Purchaser shall indemnify and hold harmless each Tokai Indemnitee from and
against all losses, liabilities, damages, deficiencies, claims, costs or
expenses (including reasonable attorneys' fees and disbursements) based upon,
arising out of or in connection with the breach of any representation or
warranty, or the non-performance, partial or total, of any covenant or
agreement of Checkpoint or the Purchaser contained in, or made pursuant to,
this Agreement or any Associated Agreement.
11.3. Right of Set-Off. Nothing contained in this Agreement shall
prohibit or restrict TAF, the Seller, the Purchaser orCheckpoint from
setting off (a) its claims against any other party and (b) its obligations
owed to such other party in accordance with applicable laws.
ARTICLE XII
TERMINATION
12.1. Automatic Termination. If the Closing does not take place on or
before March 31, 1998, unless otherwise agreed in writing among the parties
hereto through their good faith negotiations, this Agreement shall
automatically terminate as of March 31, 1998.
12.2. Effect of Termination. If this Agreement shall terminate pursuant
to Section 12.1, such termination shall be without cost or liability to any
party hereto other than cost or liability for breach of any representation,
warranty, covenant or agreement contained in this Agreement.
<PAGE>
12.3. Termination for Breach. If either TAF or the Seller breaches its
material obligation under this Agreement and fails to cure such a breach
within 30 days after its receipt of a notice of demand to cure such a breach
from Checkpoint, Checkpoint and the Purchaser may terminate this Agreement by
giving a notice of termination to TAF and the Seller. If either Checkpoint
or the Purchaser breaches its material obligation under this Agreement and
fails to cure such a breach within 30 days after its receipt of a notice of
demand to cure such breach from TAF, TAF and the Seller may terminate this
Agreement by giving a notice of termination to Checkpoint and the Purchaser.
ARTICLE XIII
GENERAL PROVISIONS
13.1. Notices. Any notice or other communication required or permitted
to be given hereunder shall be in the English language and in writing and
shall be delivered personally, transmitted by facsimile (in each case
followed by confirmation delivered by registered and express mail or
registered and express air mail, if applicable) or sent by registered and
express mail (or registered and express air mail, if applicable), postage
prepaid, and shall be deemed given when so delivered personally, or if
transmitted by facsimile, 1 day after the date of such facsimile or telex,
or if mailed, 5 days after the date of mailing, to the parties at the
following addresses (or to such other party and/or such other address as
shall be specified by like notice from the party to which notice or other
communication shall be given originally, provided, however, that such notice
of a change of party and/or address shall be effective only upon receipt
thereof):
(i) if to TAF to:
Tokai Aluminum Foil Co., Ltd.
Tokai Plaza 5F
1, Tomiya-cho, Kanagawa-ku
Yokohama 221, Japan
Attention: Executive Vice President
Facsimile Number: 81-45-434-1112
(ii) if to the Seller to:
Tokai Electronics Co., Ltd.
1071 Yahata, Chigasaki City
Kanagawa 253 Japan
Attention: President
Facsimile Number: 81-467-86-7292
(iii) if to the Purchaser to:
Checkpoint Production Japan K.K.
c/o Checkpoint Systems, Inc.
101 Wolf Drive, P.O.Box 188
Thorofare, New Jersey 08086
Attention: Vice President and General Counsel
Facsimile Number: 1-609-848-2042
(iv) if to Checkpoint to:
Checkpoint Systems, Inc.
101 Wolf Drive, P.O.Box 188
Thorofare, New Jersey 08086
Attention: Vice President and General Counsel
Facsimile Number: 1-609-848-2042
<PAGE>
13.2. Waivers and Amendments. This Agreement may be amended,
modified, superseded, cancelled, renewed or extended, and the
terms and conditions hereof may be waived only by a written
instrument signed by the parties or, in the case of a waiver, the
party waiving compliance. No delay on the part of any party in exercising
any right, power or privilege hereunder shall operate as a waiver thereof,
nor shall any waiver on the part of any party of any right, power or
privilege hereunder, nor any single or partial exercise of any
right, power or privilege hereunder, preclude any other or
further exercise thereof or the exercise of any other right,
power or privilege hereunder. Except as specifically provided
for otherwise, the rights and remedies herein provided are cumulative and are
not exclusive of any rights or remedies which any party may otherwise have.
The parties hereto acknowledge that, under Japanese law, action for
specific performance is broadly permitted and that monetary
damages may not always be an adequate remedy for any loss or damage
incurred as a result of any breach of this Agreement. Whether or not
expressly provided in this Agreement, the parties hereby agree to waive any
defense, in any action for specific performance of any obligation under
this Agreement, that monetary damages would be adequate remedy. The rights
and remedies of any party arising out of or otherwise in respect of
any inaccuracy in or breach of any material representation,
warranty, covenant or agreement contained in this Agreement shall
not be limited by the fact, in and of itself, that the act,
omission, occurrence or other state of facts upon which any claim
of any such inaccuracy or breach is based may also be the subject
matter of any other representation, warranty, covenant or agreement contained
in this Agreement (or in any other agreement between the parties) as to which
there is no inaccuracy or breach.
13.3. Binding Effect. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors
and assigns.
13.4. Disclaimer of Partnership or Agency. Nothing contained
or implied in this Agreement shall constitute or be deemed to constitute a
partnership among the parties nor shall this Agreement constitute any party
as the legal representative, agent or fiduciary of any other, nor shall any
party have the right or authority to assume, create or incur any commitment,
liability or obligation of any kind, express or implied, against or in the
name of or on behalf of any other party.
13.5. Expenses. Except as otherwise specifically set forth
in this Agreement, the parties hereto shall bear their respective
expenses including the Taxes incurred in connection with the
preparation, execution and performance of this Agreement and the
transactions contemplated hereby, including all fees and expenses
of agents, representatives, counsel and accountants, interpreters
and consultants.
13.6. Counterparts. This Agreement may be executed in four or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
13.7. Assignment. This Agreement or any right or obligation hereunder
may not be transferred or assigned by any party hereto without the prior
written consent of the all the other parties hereto.
<PAGE>
13.8. Separability. Any term or provision of this Agreement
which is invalid or unenforceable shall be ineffective to the
extent of such invalidity or unenforceability without rendering
invalid or unenforceable the remaining terms and provisions of
this Agreement.
13.9. Entire Agreement. This Agreement constitutes the
entire agreement and understanding among the parties with respect
to the subject matter expressed herein and all other previous
agreements and understandings or other arrangements of any kind
with respect to the said subject matter (including the documents
dated as of June 25, 1997 and signed by TAF, Checkpoint and the
Seller) shall be cancelled and superseded completely by this
Agreement as of the dated hereof.
ARTICLE XIV
LANGUAGE, GOVERNING LAW AND DISPUTE RESOLUTION
14.1. Language. This Agreement is made in, and shall be
construed in accordance with, the English language (other than
those Schedules and Exhibits with respect to which the English
translations are not attached hereto).
14.2. Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of Japan.
14.3. Arbitration. All disputes, controversies or
differences which may arise between the parties out of or in
relation of or in connection with this Agreement shall be finally
settled by arbitration. If the arbitration is initiated by
Checkpoint and/or the Purchaser, the arbitration shall be
conducted in Tokyo, Japan, in accordance with the commercial
arbitration rules of JCAA and if the arbitration shall be
initiated by TAF and/or the Seller, the arbitration shall be
conducted in New York City, New York, United States of America,
in accordance with the arbitration rules of AAA. In any event,
the arbitration shall be conducted in English. The arbitral
tribunal shall be composed of 3 arbitrators. In accordance with
the relevant rules of JCAA or AAA, as the case may be, each party
shall appoint 1 arbitrator, and JCAA or AAA, as the case may be
shall appoint the third arbitrator who shall not be a national of
either Japan or the United States of America. Awards rendered in
any arbitration hereunder shall be final and conclusive and
judgment thereon may be entered into in any court having
jurisdiction for enforcement thereof. There shall be no appeal
to any court from awards rendered hereunder. Awards rendered
hereunder shall apportion the costs of the arbitration concerned
including the fees of the arbitrators.
14.4. Provisional Relief. Nothing contained in this Article
14 shall be construed to limit or preclude a party from bringing
any action in any court of competent jurisdiction for injunctive
or other provisional relief to compel the other party to comply
with its obligations hereunder at any
time.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the day and year first above written.
TOKAI ALUMINUM FOIL CO., LTD. CHECKPOINT SYSTEMS, INC.
By: Shuhei Kubota By: Kevin P. Dowd
President and Represenative President and
Director Chief Executive Officer
TOKAI ELECTRONICS CO., LTD. CHECKPOINT PRODUCTION JAPAN CO., LTD.
By: Kazuhiro Murata By: Neil D. Austin
Representative Director and Vice President, General Counsel
Executive Vice President and Secretary
CREDIT AGREEMENT
dated as of December 24, 1997,
by and among
CHECKPOINT SYSTEMS, INC.,
as Borrower,
the Lenders referred to herein,
and
FIRST UNION NATIONAL BANK,
as Administrative Agent
<PAGE>
TABLE OF CONTENTS
ARTICLE I DEFINITIONS
SECTION 1.1 Definitions
SECTION 1.2 General
SECTION 1.3 Other Definitions and Provisions
ARTICLE II LOANS
SECTION 2.1 Revolving Credit Loans
SECTION 2.2 Specified A/C Loan
SECTION 2.3 Competitive Bid Loans
SECTION 2.4. Swingline Loans.
SECTION 2.5. Procedure for Advances of Revolving Credit
Loans, Specified A/C Loans and Swingline Loans
SECTION 2.6. Procedure for Advances of Competitive Bid Loans
SECTION 2.7. Repayment of Loans
SECTION 2.8. Notes
SECTION 2.9. Permanent Reduction of the Aggregate Commitment
SECTION 2.10. Termination of Credit Facility
SECTION 2.11. Use of Proceeds
ARTICLE III LETTER OF CREDIT FACILITY
SECTION 3.1. L/C Commitment
SECTION 3.2. Procedure for Issuance of Letters of Credit
SECTION 3.3. Commissions and Other Charges
SECTION 3.4. L/C Participations
SECTION 3.5. Reimbursement Obligation of the Borrower
SECTION 3.6. Obligations Absolute
SECTION 3.7. Letter of Credit Application
ARTICLE IV GENERAL LOAN PROVISIONS
SECTION 4.1. Interest
SECTION 4.2. Notice and Manner of Conversion or
Continuation of Revolving Credit Loans and Specified A/C Loans
SECTION 4.3. Fees
SECTION 4.4. Manner of Payment
SECTION 4.5. Crediting of Payments and Proceeds
SECTION 4.6. Adjustments
SECTION 4.7. Nature of Obligations of Lenders Regarding
Extensions of Credit; Assumption by
Administrative Agent
SECTION 4.8. Mandatory Redenomination of Alternative
Currency Loans
SECTION 4.9. Regulatory Limitation
SECTION 4.10. Changed Circumstances
SECTION 4.11. Indemnity
SECTION 4.12. Capital Requirements
SECTION 4.13. Taxes.
ARTICLE V CLOSING; CONDITIONS OF CLOSING AND BORROWING
SECTION 5.1. Closing
SECTION 5.2. Conditions to Closing and Initial Loans
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF THE BORROWER
SECTION 6.1. Representations and Warranties
SECTION 6.2. Survival of Representations and Warranties, Etc
ARTICLE VII FINANCIAL INFORMATION AND NOTICES
SECTION 7.1. Financial Statements and Projections
SECTION 7.2. Officer's Compliance Certificate
SECTION 7.3. Accountants' Certificate
SECTION 7.4. Other Reports
SECTION 7.5. Notice of Litigation and Other Matters
SECTION 7.6. Accuracy of Information
ARTICLE VIII AFFIRMATIVE COVENANTS
SECTION 8.1. Preservation of Corporate Existence and Related Matters
<PAGE>
SECTION 8.2. Maintenance of Property
SECTION 8.3. Insurance
SECTION 8.4. Accounting Methods and Financial Records
SECTION 8.5. Payment and Performance of Obligations
SECTION 8.6. Compliance With Laws and Approvals
SECTION 8.7. Environmental Laws
SECTION 8.8. Compliance with ERISA
SECTION 8.9. Compliance With Agreements
SECTION 8.10. Conduct of Business
SECTION 8.11. Visits and Inspections
SECTION 8.12. Additional Subsidiary Guarantors
SECTION 8.13. Year 2000 Compatibility
SECTION 8.14. Further Assurances
ARTICLE IX FINANCIAL COVENANTS
SECTION 9.1. Leverage Ratio
SECTION 9.2. Minimum Adjusted Tangible Net Worth
SECTION 9.3. Fixed Charge Coverage Ratio
ARTICLE X NEGATIVE COVENANTS
SECTION 10.1. Limitations on Debt
SECTION 10.2. Limitations on Guaranties
SECTION 10.3. Limitations on Liens
SECTION 10.4. Limitations on Loans, Advances, Investments and Acquisitions
SECTION 10.5. Limitations on Mergers and Liquidation
SECTION 10.6. Limitations on Sale of Assets
SECTION 10.7. Limitations on Dividends and Distributions
SECTION 10.8. Transactions with Affiliates
SECTION 10.9. Certain Accounting Changes
SECTION 10.10. Restrictive Agreements
ARTICLE XI DEFAULT AND REMEDIES
SECTION 11.1. Events of Default
SECTION 11.2. Remedies
SECTION 11.3. Rights and Remedies Cumulative; Non-Waiver; Etc.
SECTION 11.4. Judgment Currency
ARTICLE XII THE ADMINISTRATIVE AGENT
SECTION 12.1. Appointment
SECTION 12.2. Delegation of Duties
SECTION 12.3. Exculpatory Provisions
SECTION 12.4. Reliance by the Administrative Agent
SECTION 12.5. Notice of Default
SECTION 12.6. Non-Reliance on the Administrative Agent and
Other Lenders
SECTION 12.7. Indemnification
SECTION 12.8. The Administrative Agent in Its Individual Capacity
SECTION 12.9. Resignation of the Administrative Agent; Successor
Administrative Agent
ARTICLE XIII MISCELLANEOUS
SECTION 13.1. Notices
SECTION 13.2. Expenses; Indemnity
SECTION 13.3. Set-off
SECTION 13.4. Governing Law
SECTION 13.5. Consent to Jurisdiction
SECTION 13.6. Binding Arbitration; Waiver of Jury Trial
SECTION 13.7. Reversal of Payments
SECTION 13.8. Injunctive Relief; Punitive Damages
SECTION 13.9. Accounting Matters
SECTION 13.10. Successors and Assigns; Participations
SECTION 13.11. Amendments, Waivers and Consents
SECTION 13.12. Performance of Duties
SECTION 13.13. All Powers Coupled with Interest
<PAGE>
SECTION 13.14. Survival of Indemnities
SECTION 13.15. Titles and Captions
SECTION 13.16. Severability of Provisions
SECTION 13.17. Counterparts
SECTION 13.18. Term of Agreement
<PAGE>
CREDIT AGREEMENT
CREDIT AGREEMENT, dated as of the 24th day of December, 1997,
by and among CHECKPOINT SYSTEMS, INC., a corporation organized under
the laws of Pennsylvania, as Borrower (the "Borrower"), the Lenders
who are or may become a party to this Agreement (collectively, the
"Lenders"), and FIRST UNION NATIONAL BANK, a national banking association,
as Administrative Agent for the Lenders (the "Administrative Agent").
STATEMENT OF PURPOSE
The Borrower has requested, and the Lenders have agreed, to extend
certain credit facilities to the Borrower on the terms and conditions of this
Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, such
parties hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. The following terms when used
in this Agreement shall have the meanings assigned to them below:
"Absolute Rate" means, as to any Competitive Bid made
by a Lender pursuant to Section 2.6(b), the fixed percentage
rate per annum (expressed in the form of a decimal to no
more than four (4) decimal places) specified by the Lender
making such Competitive Bid.
"Absolute Rate Loan" means any Competitive Bid Loan
denominated in Dollars and bearing interest at the Absolute
Rate determined in accordance with Section 2.6.
"Adjusted Net Worth" means, with respect to the
Borrower and its Subsidiaries, at any date,
the sum of (a) Consolidated stockholder's equity plus (b)
treasury stock (not to exceed $50,000,000), all calculated
in accordance with GAAP.
"Adjusted Tangible Net Worth" means with respect to the
Borrower and its Subsidiaries, at any date, the sum of (a)
Consolidated stockholder's equity minus (b) Consolidated
intangible assets, including, without limitation, goodwill
plus (c) treasury stock (not to exceed $50,000,000), all
calculated in accordance with GAAP.
"Administrative Agent" means First Union in its capacity as
Administrative Agent hereunder, and any successor thereto appointed pursuant
to Section 12.9.
"Administrative Agent's Correspondent" means First
Union National Bank, London Branch, or any other financial
institution designated by the Administrative Agent to act as
its correspondent hereunder with respect to the distribution
and payment of Alternative Currency Loans.
<PAGE>
"Administrative Agent's Office" means the office of the
Administrative Agent specified in or determined in
accordance with the provisions of Section 13.1.
"Affiliate" means, with respect to any Person, any
other Person (other than a Subsidiary) which directly or
indirectly through one or more intermediaries, controls, or
is controlled by, or is under common control with, such
first Person or any of its Subsidiaries. The term "control"
means (a) the power to vote ten percent (10%) or more of the
securities or other equity interests of a Person having
ordinary voting power, or (b) the possession, directly or
indirectly, of any other power to direct or cause the
direction of the management and policies of a Person,
whether through ownership of voting securities, by contract
or otherwise.
"Aggregate Commitment" means the aggregate amount of
the Lenders' Commitments hereunder, as such amount may be
reduced or modified at any time or from time to time
pursuant to the terms hereof. On the Closing Date, the
Aggregate Commitment shall be One Hundred Million
Dollars ($100,000,000).
"Agreement" means this Credit Agreement, as amended,
restated, supplemented or otherwise modified from time to
time.
"Alternative Currency" means Canadian Dollars, French
Francs, Deutsch Marks, Pounds Sterling or Japanese Yen, and,
with the prior written consent of the Administrative Agent
and the Lenders, any other lawful currency (other than
Dollars) which is freely transferable and convertible into
Dollars in the United States currency market and freely
available to all of the Lenders in the London interbank
deposit market.
"Alternative Currency Amount" means with respect to
each Loan made or continued (or to be made or continued) in
an Alternative Currency, the amount of such Alternative
Currency which is equivalent to the principal amount in
Dollars of such Loan at the most favorable spot exchange
rate determined by the Administrative Agent to be available
to it at approximately 11:00 a.m.(Charlotte time) two (2)
Business Days before such Loan is made or continued (or to
be made or continued). When used with respect to any other
sum expressed in Dollars, "Alternative Currency Amount"
shall mean the amount of such Alternative Currency which is
equivalent to the amount so expressed in Dollars at the most
favorable spot exchange rate determined by the
administrative Agent to be available to it at the relevant
time.
"Alternative Currency Commitment" means Twenty Million
Dollars ($20,000,000), as such amount may be reduced or
modified at any time or from time to time pursuant to the
terms hereof.
<PAGE>
"Alternative Currency Loan" means any Loan denominated
in an Alternative Currency (including, unless otherwise
specified, Specified A/C Loans).
"Applicable Law" means all applicable provisions of
constitutions, statutes, laws, rules, treaties, regulations
and orders of all Governmental Authorities and all orders
and decrees of all courts and arbitrators.
"Applicable Margin" shall have the meaning assigned
thereto in Section 4.1(c).
"Assignment and Acceptance" shall have the meaning
assigned thereto in Section 13.10.
"Base Rate" means, at any time, the higher of (a) the
Prime Rate or (b) the Federal Funds Rate plus 1/2 of 1%;
each change in the Base Rate shall take effect
simultaneously with the corresponding change or changes in
the Prime Rate or the Federal Funds Rate.
"Base Rate Loan" means any Loan bearing interest at a
rate based upon the Base Rate as provided in Section 4.1(a).
"Borrower" means Checkpoint Systems, Inc., a
corporation organized under the laws of Pennsylvania, and
its successors.
"Business Day" means (a) for all purposes other than as
set forth in clause (b) below, any day other than a
Saturday, Sunday or legal holiday on which banks in
Charlotte, North Carolina and New York, New York are open
for the conduct of their domestic and international
commercial banking business, and (b) with respect to all
notices and determinations in connection with, and
payments of principal and interest on, any LIBOR Rate Loan
or LIBOR Competitive Bid Loan, any day (i) that is a
Business Day described in clause (a) and that is also a day
for trading by and between banks in deposits for the
applicable Permitted Currency in the London interbank market
and (ii) on which banks are open for the conduct of their
domestic and international banking business in the place
where the Administrative Agent or the Administrative Agent's
Correspondent shall make available Loans in such Permitted
Currency.
"Capital Lease" means, with respect to the Borrower and
its Subsidiaries, any lease of any property by the Borrower
or any of its Subsidiaries as lessee that should, in
accordance with GAAP, be classified and accounted for as a
capital lease on a Consolidated balance sheet of the
Borrower and its Subsidiaries.
"Change in Control" shall have the meaning assigned
thereto in Section 11.1(i).
"Closing Date" means the date of this Agreement.
<PAGE>
"Code" means the Internal Revenue Code of 1986, and the
rules and regulations thereunder, each as amended or
supplemented from time to time.
"Commitment" means, as to any Lender, the obligation of
such Lender to make Loans (other than Competitive Bid Loans)
to and issue or participate in Letters of Credit issued for
the account of the Borrower hereunder in an aggregate
principal or face amount at any time outstanding
not to exceed the amount set forth opposite such Lender's
name on Schedule 1.1(a) hereto, as the same may be reduced
or modified at any time or from time to time pursuant to the
terms hereof.
"Commitment Percentage" means, as to any Lender at any
time, the ratio of (a) the amount of the Commitment of such
Lender to (b) the Aggregate Commitment.
"Competitive Bid" means an offer by a Lender to make a
Competitive Bid Loan pursuant to Section 2.6.
"Competitive Bid Accept/Reject Letter" means the
acceptance or rejection by the Borrower of Competitive Bids
pursuant to Section 2.6.
"Competitive Bid Facility" means the facility
established pursuant to Section 2.3.
"Competitive Bid Interest Period" shall have the
meaning assigned thereto in Section 4.1(b)(ii).
"Competitive Bid Invitation" shall have the meaning
assigned thereto in Section 2.6(a).
"Competitive Bid Loan" means a Loan from a Lender to
the Borrower pursuant to the bidding procedure described in
Section 2.6. Each Competitive Bid Loan shall be a LIBOR
Competitive Bid Loan or Absolute Rate Loan.
"Competitive Bid Notes" means the separate competitive
Bid Notes made by the Borrower payable to the order of each
of the Lenders, substantially in the form of Exhibit A-2
hereto, and any amendments and supplements thereto, any
substitutes therefor, and any replacements, restatements,
renewals or extensions thereof, in whole or in part;
"Competitive Bid Note" means any of such Competitive Bid
Notes.
"Competitive Bid Rate" means, as to any Competitive Bid
made by a Lender pursuant to Section 2.6, (a) in the case of
a LIBOR Competitive Bid Loan, the LIBOR Rate adjusted by the
Competitive Margin and (b) in the case of an Absolute Rate
Loan, the Absolute Rate offered by the
Lender making such Competitive Bid.
"Competitive Bid Request" shall have the meaning
assigned thereto in Section 2.6(a).
<PAGE>
"Competitive Margin" means, as to any LIBOR Competitive
Bid Loan, the margin (expressed as a percentage rate per
annum in the form of a decimal to no more than four (4)
decimal places) to be added to or subtracted from the LIBOR
Rate in order to determine the interest rate applicable to
such Loan, as specified in the Competitive Bid relating to
such Loan.
"Consolidated" means, when used with reference to
financial statements or financial statement items of the
Borrower and its Subsidiaries, such statements or items on a
consolidated basis in accordance with applicable principles
of consolidation under GAAP.
"Credit Facility" means, collectively, the Revolving
Credit Facility, the Specified A/C Facility, the Swingline
Facility, the Competitive Bid Facility and the L/C Facility.
"Credit Facility Termination Date" means the earliest
of the dates referred to in Section 2.10.
"Debt" means, with respect to any Person and its
Subsidiaries at any date and without duplication, the sum of
the following calculated in accordance with GAAP: (a) all
liabilities, obligations and indebtedness for borrowed money
including but not limited to obligations evidenced by bonds,
debentures, notes or other similar instruments of any such
Person, (b) all obligations to pay the deferred purchase
price of property or services of any such Person (including,
without limitation, all obligations under non-competition
agreements), except trade payables arising in the
ordinary course of business not more than ninety (90) days
past due, (c) all obligations of any such Person as lessee
under Capital Leases, (d) all Debt of any other Person
secured by a Lien on any asset of any such Person, (e) all
Guaranties of any such Person, (f) all obligations,
contingent or otherwise, of any such Person relative to the
face amount of letters of credit, whether or not drawn,
including, without limitation, any Reimbursement Obligation,
and banker's acceptances issued for the account of any such
Person, (g) all obligations to redeem, repurchase, exchange,
defease or otherwise make payments in respect of capital
stock or other securities or partnership interests of
such Person, (h) all termination payments which would be due
and payable by any such Person pursuant to Hedging
Agreements and (i) all obligations under Synthetic Leases.
"Default" means any of the events specified in Section
11.1 which with the passage of time, the giving of notice or
any other condition, would constitute an Event of Default.
"Dollars" or "$" means, unless otherwise qualified,
dollars in lawful currency of the United States.
"Dollar Amount" means (a) with respect to each Loan
made or continued (or to be made or continued) in Dollars,
the principal amount thereof and (b) with respect to each
Loan made or continued (or to be made or continued) in an
Alternative Currency, the amount of Dollars which is
<PAGE>
equivalent to the principal amount of such Loan at the most
favorable spot exchange rate determined by the dministrative
Agent at approximately 11:00 a.m. (Charlotte time) two (2)
Business Days before such Loan is made or continued (or to
be made or continued). When used with respect to any other
sum expressed in an Alternative Currency, "Dollar Amount"
shall mean the amount of Dollars which is equivalent to the
amount so expressed in such Alternative Currency at the most
favorable spot exchange rate determined by the
Administrative Agent to be available to it at the relevant
time.
"EBITDAR" means, with respect to the Borrower and its
Subsidiaries on a Consolidated basis for any period, the sum
of (a) Net Income for such period, plus (b) the sum of the
following to the extent deducted in the determination of Net
Income: (i) income and franchise taxes, (ii) Interest
Expense, (iii) amortization, depreciation and other non-cash
charges (including amortization of goodwill, transaction
expenses, covenants not to compete and other intangible
assets) and (iv) Rental Expense. EBITDAR shall be adjusted
in a manner reasonably satisfactory to the Administrative
Agent to include on a pro forma basis as of the first day of
any calculation period any acquisition consummated during
such period and exclude on a pro forma basis as of the first
day of any calculation period any Subsidiary or assets sold
during such period.
"Eligible Assignee" means, with respect to any
assignment of the rights, interest and obligations of a
Lender hereunder, a Person that is at the time of such
assignment (a) a commercial bank organized under the laws of
the United States or any state thereof, having combined
capital and surplus in excess of $500,000,000, (b) a finance
company, insurance company or other financial institution
which in the ordinary course of business extends credit of
the type extended hereunder and that has total assets in
excess of $1,000,000,000, (c) already a Lender hereunder
(whether as an original party to this Agreement or as the
assignee of another Lender), (d) the successor (whether by
transfer of assets, merger or otherwise) to all or
substantially all of the commercial lending business
of the assigning Lender, or (e) any other Person that has
been approved in writing as an Eligible Assignee by the
Borrower and the Administrative Agent.
"Eligible Investments" shall mean investments made in
accordance with Section 4.0 of the Investment Policy.
"Employee Benefit Plan" means any employee benefit plan
which is governed by and within the meaning of Section 3(3)
of ERISA which (a) is maintained for employees of the
Borrower or any ERISA Affiliate or (b) has at any time
within the preceding six (6) years been maintained for the
employees of the Borrower or any current or former ERISA
Affiliate.
"Environmental Laws" means any and all federal,
foreign, state, provincial and local laws, statutes,
<PAGE>
ordinances, rules, regulations, permits, licenses,
approvals, interpretations and orders of courts or
Governmental Authorities, relating to the protection of
human health or the environment, including, but not limited
to, requirements pertaining to the manufacture, processing,
distribution, use, treatment, storage, disposal,
transportation, handling, reporting, licensing, permitting,
investigation or remediation of Hazardous Materials.
"ERISA" means the Employee Retirement Income Security
Act of 1974, and the rules and regulations thereunder, each
as amended or modified from time to time.
"ERISA Affiliate" means any Person who together with
the Borrower is treated as a single employer within the
meaning of Section 414(b), (c), (m) or (o) of the Code or
Section 4001(b) of ERISA.
"Event of Default" means any of the events specified in
Section 11.1; provided, that any requirement for passage of
time, giving of notice, or any other condition, has been
satisfied.
"Existing Credit Agreement" means the Second Amended
and Restated Loan and Agency Agreement dated as of June 29,
1995, as amended, restated or modified from time to time by
and among the Borrower, Checkpoint Systems of Puerto Rico,
Inc., as Guarantor, First Union National Bank (successor to
First Fidelity Bank, National Association), BankBoston, N.A.
(successor to The First National Bank of Boston) and PNC
Bank, National Association (successor to Midlantic Bank,
N.A.), as lenders and First Union National Bank (successor
to First Fidelity Bank, National Association), as agent for
the lenders.
"Extensions of Credit" means, as to any Lender at any
time, an amount equal to the sum of (a) the aggregate
principal amount of all Loans made by such Lender then
outstanding and (b) such Lender's Commitment Percentage of
the L/C Obligations then outstanding.
"FDIC" means the Federal Deposit Insurance Corporation,
or any successor thereto.
"Federal Funds Rate" means, the rate per annum (rounded
upwards, if necessary, to the next higher 1/100th of 1%)
representing the daily effective federal funds rate as
quoted by the Administrative Agent and confirmed in Federal
Reserve Board Statistical Release H.15 (519) or any
successor or substitute publication selected by the
Administrative Agent. If, for any reason, such rate is not
available, then "Federal Funds Rate" shall mean a daily rate
which is determined, in the opinion of the Administrative
Agent, to be the rate at which federal funds are being
offered for sale in the national federal funds market at
9:00 a.m. (Charlotte time). Rates for weekends or holidays
shall be the same as the rate for the most immediate
preceding Business Day.
<PAGE>
"First Union" means First Union National Bank, a
national banking association, and its
successors.
"Fiscal Year" means the fifty-two/fifty-three week
fiscal year, as applicable, of the Borrower and its
Subsidiaries ending on the last Sunday in December of any
calendar year.
"GAAP" means generally accepted accounting principles,
as recognized by the American Institute of Certified Public
Accountants and the Financial Accounting Standards Board,
consistently applied and maintained on a consistent basis
for the Borrower and its Subsidiaries
throughout the period indicated and consistent with the
prior financial practice of the Borrower and its
Subsidiaries.
"Governmental Approvals" means all authorizations,
consents, approvals, licenses and exemptions of,
registrations and filings with, and reports to, all
Governmental Authorities.
"Governmental Authority" means any nation, province,
state or political subdivision thereof, and any government
or any Person exercising executive, legislative, regulatory
or administrative functions of or pertaining to government,
and any corporation or other entity owned or controlled,
through stock or capital ownership or otherwise, by any of
the foregoing.
"Guaranty" means, with respect to the Borrower and its
Subsidiaries, without duplication, any obligation,
contingent or otherwise, of any such Person pursuant to
which such Person has directly or indirectly guaranteed any
Debt or other obligation of any other Person and, without
limiting the generality of the foregoing, any obligation,
direct or indirect, contingent or otherwise, of any such
Person (a) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Debt or other
obligation (whether arising by virtue of partnership
arrangements, by agreement to keep well, to purchase assets,
goods, securities or services, to take-or-pay, or to
maintain financial statement condition or otherwise) or (b)
entered into for the purpose of assuring in any other manner
the obligee of such Debt or other obligation of the payment
thereof or to protect such obligee against loss in respect
thereof (in whole or in part); provided, that the term
Guaranty shall not include endorsements for collection or
deposit in the ordinary course of business.
"Hazardous Materials" means any substances or materials
(a) which are or become defined as hazardous wastes,
hazardous substances, pollutants, contaminants, chemical
substances or mixtures or toxic substances under any
Environmental Law, (b) which are toxic, explosive,
corrosive, flammable, infectious, radioactive, carcinogenic,
mutagenic or otherwise harmful to human health or the
environment and are or become regulated by any Governmental
<PAGE>
Authority, (c) the presence of which require investigation
or remediation under any Environmental Law or common law,
(d) the discharge or emission or release of which requires a
permit or license under any Environmental Law or other
Governmental Approval, (e) which are deemed to constitute a
nuisance or a trespass or which pose a health or safety
hazard to Persons or neighboring properties, (f) which are
materials consisting of underground or aboveground storage
tanks, whether empty, filled or partially filled with any
substance, or (g) which contain, without limitation,
asbestos, polychlorinated biphenyls, urea formaldehyde foam
insulation, petroleum hydrocarbons, petroleum derived
substances or waste, crude oil, nuclear fuel, natural gas or
synthetic gas.
"Hedging Agreement" means any agreement with respect to
an interest rate swap, collar, cap, floor or a forward rate
agreement or other agreement regarding the hedging of
interest rate risk exposure executed in connection with
hedging the interest rate exposure of the Borrower under
this Agreement, and any confirming letter executed pursuant
to such hedging agreement, all as amended, restated,
supplemented or otherwise modified from time to time.
"Interest Expense" means, with respect to the Borrower
and its Subsidiaries for any period, the gross interest
expense (including, without limitation, interest expense
attributable to Capital Leases and all net obligations
pursuant to Hedging Agreements) of the Borrower and its
Subsidiaries, all determined for such period on a
Consolidated basis in accordance with GAAP.
"Interest Period" means a LIBOR Interest Period or a
Competitive Bid Interest Period or any of such Interest
Periods as the context may require.
"Investment Policy" means the Borrower's corporate
investment policy as it exists on the date hereof, which
investment policy has been delivered to the Administrative
Agent and the Lenders and certified as true and correct by
an authorized officer of the Borrower.
"Issuing Lender" means First Union, in its capacity as
issuer of any Letter of Credit.
"L/C Commitment" means the lesser of (a) Ten Million
Dollars ($10,000,000) and (b) the Aggregate Commitment.
"L/C Facility" means the Letter of Credit Facility
established pursuant to Article III.
"L/C Obligations" means at any time, an amount equal to
the sum of (a) the aggregate undrawn and unexpired amount of
the then outstanding Letters of Credit and (b) the aggregate
amount of drawings under Letters of Credit which have not
then been reimbursed pursuant to Section 3.5.
"L/C Participants" means the collective reference to
all the Lenders other than the Issuing Lender.
<PAGE>
"Lender" means each Person executing this Agreement as
a Lender (including, without limitation, the Issuing Lender
and Swingline Lender unless the context otherwise requires)
set forth on the signature pages hereto and each Person that
hereafter becomes a party to this Agreement as a
Lender pursuant to Section 13.10.
"Lending Office" means, with respect to any Lender, the
office of such Lender maintaining such Lender's Commitment
Percentage of the Extensions of Credit.
"Letter of Credit Application" means an application in
the Issuing Lender's customary form requesting the Issuing
Lender to issue a Letter of Credit.
"Letters of Credit" shall have the meaning assigned
thereto in Section 3.1.
"Leverage Ratio" means the ratio calculated in
accordance with Section 9.1.
"LIBOR" means the rate of interest per annum determined
on the basis of the rate for deposits in Dollars in minimum
amounts of at least $5,000,000 (or the lternative Currency
Amount thereof with respect to a borrowing to be made in an
Alternative Currency) for a period equal to the applicable
LIBOR Interest Period which appears on the Telerate Page
3750 at approximately 11:00 a.m. (London time) two (2)
Business Days prior to the first day of the applicable LIBOR
Interest Period (rounded upward, if necessary, to the next
higher 1/32nd of 1%. If, for any reason, such rate does not
appear on Telerate Page 3750, then "LIBOR" shall be
determined by the Administrative Agent to be the arithmetic
average (rounded upward, if necessary, to the next higher
1/32nd of 1% of the rate per annum at which deposits in the
Permitted Currency in which the applicable Loan is
denominated would be offered by first class banks in the
London interbank market to the Administrative Agent (or the
Administrative Agent's Correspondent) at approximately 11:00
a.m. (London time) two (2) Business Days prior to the first
day of the applicable LIBOR Interest Period for a period
equal to such LIBOR Interest Period and in an amount
substantially equal to the amount of the applicable Loan.
Each calculation by the
Administrative Agent of the LIBOR Rate shall be conclusive
and binding for all purposes, absent manifest error.
"LIBOR Competitive Bid Loan" means any Competitive Bid
Loan denominated in Dollars and bearing interest at a rate
determined by reference to the LIBOR Rate at the sole
discretion of the Lender of such Competitive Bid Loan.
"LIBOR Interest Period" shall have the meaning assigned
thereto in Section 4.1(b)(i).
"LIBOR Rate" means a rate per annum (rounded upwards,
if necessary, to the next higher 1/32nd of 1%) determined by
the Administrative Agent pursuant to the following formula:
<PAGE>
LIBOR Rate = _______LIBOR__________
1.00 - Reserve Percentage
"LIBOR Rate Loan" means any Loan (other than a LIBOR
Competitive Bid Loan) bearing interest at a rate based upon
the LIBOR Rate as provided in Section 4.1(a).
"Lien" means, with respect to any asset, any mortgage,
lien, pledge, charge, security interest, hypothecation or
encumbrance of any kind in respect of such asset. For the
purposes of this Agreement, a Person shall be deemed to own
subject to a Lien any asset which it has acquired or holds
subject to the interest of a vendor or lessor under any
conditional sale agreement, Capital
Lease or other title retention agreement relating to such
asset.
"Loan" means any Revolving Credit Loan, Specified A/C
Loan, Competitive Bid Loan or Swingline Loan, and "Loans"
means all such Loans collectively as the context requires.
"Loan Documents" means, collectively, this Agreement,
the Notes, the Letter of Credit Applications, the
Subsidiary Guaranty Agreement, any Hedging Agreement
executed by any Lender and each other document, instrument
and agreement executed and delivered by the borrower or any
Subsidiary thereof in connection with this Agreement or
otherwise referred to herein or contemplated hereby, all as
may be amended, restated, supplemented or otherwise
modified from time to time.
"Loan Parties" means the collective reference to the
Borrower and each of the Subsidiary Guarantors and "Loan
Party" means any one of such Persons.
"Material Adverse Effect" means, with respect to the
Borrower and its Subsidiaries on a Consolidated basis, a
material adverse effect on the properties, business,
prospects, operations or condition (financial or otherwise)
of the Borrower and its Subsidiaries or the ability of the
Borrower and its Subsidiaries to perform their obligations
under the Loan Documents or Material Contracts, in each case
to which they are a party.
"Material Contract" means (a) any contract or other
agreement, written or oral, of the Borrower or any of its
Subsidiaries involving monetary liability or to any such
Person in an amount in excess of $5,000,000 per annum, or
(b) any other contract or agreement, written or oral, of the
Borrower or any of its Subsidiaries the failure to comply
with which could reasonably be expected to have a Material
Adverse Effect.
"Material Subsidiary" means any direct or indirect
Subsidiary of the Borrower which has total revenues
(excluding intercompany sales) for the immediately preceding
four (4) full fiscal quarters equal to or in excess of
$15,000,000.
<PAGE>
"Multiemployer Plan" means a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA to which the Borrower
or any ERISA Affiliate is making, or is accruing an
obligation to make, contributions or has accrued an
obligation to make contributions within the preceding six
(6) years.
"Net Income" means, with respect to the Borrower and
its Subsidiaries for any period, the Consolidated net income
(or loss) of the Borrower and its Subsidiaries for such
period determined in accordance with GAAP; provided, that
there shall be excluded from net income (or loss): (a) the
income (or loss) of any Person (other than a Subsidiary of
such Person) in which such Person has an ownership interest
unless received by such Person in a cash distribution, (b)
the income (or loss) of any Person accrued prior to the date
it became a Subsidiary of such first Person or is merged
into or consolidated with such first Person, and (c) to the
extent not included in clauses (a) and (b) above, any after-
tax extraordinary gains and non-cash losses.
"Notes" means the Revolving Credit Notes, the Specified
A/C Notes, the Competitive Bid Notes, the Swingline Note, or
any combination thereof; "Note" means any of such Notes.
"Notice of Account Designation" shall have the meaning
assigned thereto in Section 5.2(e)(i).
"Notice of Borrowing" shall have the meaning assigned
thereto in Section 2.5(a).
"Notice of Conversion/Continuation" shall have the
meaning assigned thereto in Section 4.2.
"Notice of Prepayment" shall have the meaning assigned
thereto in Section 2.7(d).
"Obligations" means, in each case, whether now in
existence or hereafter arising: (a) the principal of and
interest on (including interest accruing after the filing of
any bankruptcy or similar petition) the Loans, (b) the L/C
Obligations, (c) all payment and other obligations owing by
the Borrower to any Lender under any Hedging Agreement
permitted pursuant to Section 10.1 and (d) all other fees
and commissions (including attorneys' fees), charges,
indebtedness, loans, liabilities, financial accommodations,
obligations, covenants and duties owing by the Borrower or
any of its Subsidiaries to the Lenders or the Administrative
Agent, under or in respect of this Agreement, any
Note or any of the other Loan Documents, of every kind,
nature and description, direct or indirect, absolute or
contingent, due or to become due, contractual or tortious,
liquidated or unliquidated, and whether or not evidenced by
or related to any note, any Letter of Credit or any of the
other Loan Documents and whether or not for the payment of
money.
"Officer's Compliance Certificate" shall have the
meaning assigned thereto in Section 7.2.
<PAGE>
"Operating Lease" shall mean, as to any Person, as
determined in accordance with GAAP, any lease of property
(whether real, personal or mixed) by such Person as lessee
which is not a Capital Lease.
"Other Taxes" shall have the meaning assigned thereto
in Section 4.13(b).
"PBGC" means the Pension Benefit Guaranty Corporation
or any successor agency.
"Pension Plan" means any Employee Benefit Plan, other
than a Multiemployer Plan, which is subject to the
provisions of Title IV of ERISA or Section 412 of the Code
and which (a) is maintained for the employees of the
Borrower or any ERISA Affiliates or (b) has at any time
within the preceding six (6) years been maintained for the
employees of the Borrower or any of its current or former
ERISA Affiliates.
"Permitted Currency" means Dollars or any Alternative
Currency, or each such currency, as the context requires.
"Person" means an individual, corporation, partnership,
limited liability company, association, trust, business
trust, joint venture, joint stock company, pool, syndicate,
sole proprietorship, unincorporated organization,
Governmental Authority or any other form of entity or group
thereof.
"Prime Rate" means, at any time, the rate of interest
per annum publicly announced from time to time by First
Union as its prime rate. Each change in the Prime Rate
shall be effective as of the opening of business on the day
such change in such prime rate occurs. The parties hereto
acknowledge that the rate announced publicly by First Union
as its prime rate is an index or base rate and shall not
necessarily be its lowest or best rate charged to its
customers or other banks.
"Register" shall have the meaning assigned thereto in
Section 13.10(d).
"Reimbursement Obligation" means the obligation of the
Borrower to reimburse the Issuing Lender pursuant to Section
3.5 for amounts drawn under Letters of Credit.
"Rental Expense" means, all obligations of the Borrower
or any of its Subsidiaries for payments under Operating
Leases.
"Required Lenders" means, at any date, any combination
of Lenders whose Commitment Percentages aggregate over
sixty-six and two-thirds percent (66 2/3%) or, if the
Commitments of the Lenders have been terminated pursuant to
the terms hereof, any combination of the holders of at least
sixty-six and two-thirds percent (66 2/3%) of the aggregate
Extensions of Credit.
<PAGE>
"Reserve Percentage" means the maximum daily arithmetic
reserve requirement imposed by the Board of Governors of the
Federal Reserve System (or any successor) under Regulation D
on Eurocurrency liabilities (as defined in Regulation D) for
the applicable LIBOR Interest Period or
Competitive Bid Interest Period as of the first day of such
LIBOR Interest Period or Competitive Bid Interest Period,
but subject to any changes in such reserve requirement
becoming effective during such LIBOR Interest Period or
Competitive Bid Interest Period. For purposes of
calculating the Reserve Percentage, the reserve requirement
shall be as set forth in Regulation D without benefit
of credit for prorations, exemptions or offsets under
Regulation D, and further without regard to whether or not
any Lender elects to actually fund any Loan or portion
thereof with Eurocurrency liabilities. Each calculation by
the Administrative Agent of the LIBOR Rate shall be conclusive
and binding for all purposes, absent manifest error.
"Revolving Credit Facility" means the facility
established pursuant to Article II.
"Revolving Credit Loans" means any revolving credit
loan denominated in Dollars and includes any Alternative
Currency Loan (other than a Specified A/C Loan) made to the
Borrower pursuant to Section 2.1, and all such Loans
collectively as the context requires.
"Revolving Credit Notes" means the separate Revolving
Credit Notes made by the Borrower payable to the order of
each Lender, substantially in the form of Exhibit A-1 hereto
evidencing the Revolving Credit Loans, and any amendments
and modifications thereto, any substitutes therefor, and any
replacements, restatements, renewals or extensions thereof,
in whole or in part; "Revolving Credit Note" means any of
such Revolving Credit Notes.
"Solvent" means, as to the Borrower and its
Subsidiaries on a particular date, that any such
Person (a) has capital sufficient to carry on its business
and transactions and all business and transactions in which
it is about to engage and is able to pay its debts as they
mature, (b) owns property having a value, both at fair
valuation and at present fair saleable value, greater than
the amount required to pay its probable liabilities
(including contingencies), and (c) does not believe
that it will incur debts or liabilities beyond its ability
to pay such debts or liabilities as they mature.
"Specified A/C Aggregate Commitment" means with respect
to each Specified Alternative Currency, the aggregate amount
of the Specified A/C Commitments set forth on Schedule
1.1(b) hereto of the applicable Specified A/C Lenders for
such Specified Alternative Currency, as such
amount may be reduced or modified at any time or from time
to time pursuant to the terms hereof; provided that, in no
event shall the Dollar Amount of any Specified A/C Aggregate
Commitment for any Specified Alternative Currency exceed the
Alternative Currency Commitment.
<PAGE>
"Specified A/C Commitment" means, with respect to each
Specified Alternative Currency as to any applicable
Specified A/C Lender, the obligation of such Specified A/C
Lender to make such Specified A/C Loans to the Borrower
hereunder in an aggregate Dollar Amount at any time
outstanding not to exceed the amount set forth opposite such
Specified A/C Lender's name for such Specified Alternative
Currency on Schedule 1.1(b) hereto, as the same may be
reduced or modified at any time or from time to time
pursuant to the terms hereof.
"Specified A/C Commitment Percentage" means, with
respect to each Specified A/C Lender at any time, for any
Specified Alternative Currency, the ratio of (a) the amount
of the Specified A/C Commitment for such Specified
Alternative Currency of such Specified A/C Lender to (b) the
Specified A/C Aggregate Commitment for such Specified
Alternative Currency of all of the applicable Specified A/C
Lenders.
"Specified A/C Facility" means the facility established
pursuant to Section 2.2.
"Specified A/C Lenders" means, with respect to any
Specified Alternative Currency, each Lender listed on
Schedule 1.1(b) hereto in its capacity as a Specified A/C
Lender hereunder.
"Specified A/C Loans" means, with respect to any
Specified Alternative Currency, the Loans in such Specified
Alternative Currency made by the applicable Specified A/C
Lenders to the Borrower pursuant to Section 2.2.
"Specified A/C Notes" means with respect to any
Specified Alternative Currency, the separate Specified A/C
Notes relating to such Specified Alternative Currency made
by the Borrower payable to the order of each applicable
Specified A/C Lender, substantially in the form of Exhibit
A-4 hereto, and any amendments and modifications thereto,
any substitutes therefor, and any replacements,
restatements, renewals or extensions thereof, in whole or in
part; "Specified A/C Note" means any of such Specified A/C
Notes.
"Specified Alternative Currency" means any Alternative
Currency specified on Schedule 1.1(b) hereto.
"Subsidiary" means as to any Person, any corporation,
partnership or other entity of which more than fifty percent
(50%) of the outstanding capital stock or other ownership
interests having ordinary voting power to elect a majority
of the board of directors or other managers of such
corporation, partnership or other entity is at the time,
directly or indirectly, owned by or the management of which
is otherwise controlled by such Person (irrespective of
whether, at the time, capital stock of any other class or
classes of such corporation shall have or might have voting
power by reason of the happening of any contingency).
Unless otherwise qualified references to "Subsidiary" or
<PAGE>
"Subsidiaries" herein shall refer to those of the Borrower.
"Subsidiary Guarantor" means each of the Material
Subsidiaries listed on Schedule 1.1(c) hereto and each other
Material Subsidiary which becomes party to the Subsidiary
Guaranty Agreement in accordance with Section 8.12.
"Subsidiary Guaranty Agreement" means the unconditional
guaranty agreement executed by each Subsidiary Guarantor
party thereto in favor of the Administrative Agent for the
ratable benefit of itself and the Lenders, substantially in
the form of Exhibit I hereto, as amended, restated,
supplemented or other wise modified from time to time.
"Swingline Commitment" means the lesser of (a) Ten
Million Dollars ($10,000,000) and (b) the Aggregate
Commitment.
"Swingline Facility" means the swingline facility
established pursuant to Section 2.4.
"Swingline Lender" means First Union in its capacity as
swingline lender hereunder.
"Swingline Loan" means any swingline loan made by the
Swingline Lender to the Borrower pursuant to Section 2.4,
and all such Loans collectively as the context requires.
"Swingline Note" means the separate Note made by the
Borrower payable to the order of the Swingline Lender,
substantially in the form of Exhibit A-3 hereto, and any
amendments and modifications thereto, any substitutes
therefor, and any replacements, restatements, renewals or
extensions thereof, in whole or in part.
"Swingline Termination Date" means the earlier to occur
of (a) the resignation of First Union as the Administrative
Agent in accordance with Section 12.9 and (b) the Credit
Facility Termination Date.
"Synthetic Lease" means any synthetic lease, tax
retention operating lease, off-balance sheet loan or similar
off-balance sheet financing product where such transaction
is considered borrowed money indebtedness for tax purposes
but is classified as an operating lease in accordance with
GAAP.
"Taxes" shall have the meaning assigned thereto in
Section 4.13(a).
"Termination Event" means: (a) a "Reportable Event"
described in Section 4043 of ERISA, or (b) the withdrawal of
the Borrower or any ERISA Affiliate from a Pension Plan
during a plan year in which it was a "substantial employer"
as defined in Section 4001(a)(2) of ERISA, or (c) the
termination of a Pension Plan, the filing of a notice of
intent to terminate a Pension Plan or the treatment of a
Pension Plan amendment as a termination under Section 4041
of ERISA, or (d) the institution of proceedings to
<PAGE>
terminate, or the appointment of a trustee with respect to,
any Pension Plan by the PBGC, or (e) any other event or
condition which would constitute grounds under Section
4042(a) of ERISA for the termination of, or the appointment
of a trustee to administer, any Pension Plan, or (f) the
partial or complete withdrawal of the Borrower or any ERISA
Affiliate from a Multiemployer Plan, or (g) the imposition
of a Lien pursuant to Section 412 of the Code or Section 302
of ERISA, or (h) any event or condition which results in the
reorganization or insolvency of a Multiemployer Plan under
Sections 4241 or 4245 of ERISA, or (i) any event or
condition which results in the termination of a ultiemployer
Plan under Section 4041A of ERISA or the institution by PBGC
of proceedings to terminate a Multiemployer Plan under
Section 4042 of ERISA.
"UCC" means the Uniform Commercial Code as in effect in
the State of Pennsylvania.
"Uniform Customs" means, the Uniform Customs and
Practice for Documentary Credits (1993 Revision),
International Chamber of Commerce Publication No. 500.
"United States" means the United States of America.
"Wholly-Owned" means, with respect to a Subsidiary, a
Subsidiary all of the shares of capital stock or other
ownership interests of which are, directly or indirectly,
owned or controlled by the Borrower and/or one or more of
its Wholly-Owned Subsidiaries (except for directors'
qualifying shares or as may otherwise be required by
Applicable Law).
SECTION 1.2 General. Unless otherwise
specified, a reference in this Agreement to a particular
article, section, subsection, Schedule or Exhibit is a
reference to that article, section, subsection, Schedule or
Exhibit of this Agreement. Wherever from the context it
appears appropriate, each term stated in either the singular
or plural shall include the singular and plural, and
pronouns stated in the masculine, feminine or neuter gender
shall include the masculine, the feminine and the neuter.
Any reference herein to "Charlotte time" shall refer to
the applicable time of day in Charlotte, North Carolina.
SECTION 1.3 Other Definitions and Provisions.
(a) Use of Capitalized Terms. Unless otherwise
defined therein, all capitalized terms defined in this
Agreement shall have the defined meanings when used in this
Agreement, the Notes and the other Loan Documents or any
certificate, report or other document made or delivered
pursuant to this Agreement.
(b) Miscellaneous. 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.
<PAGE>
ARTICLE II
LOANS
SECTION 2.1 Revolving Credit Loans.
Subject to the terms and conditions of this Agreement,
each Lender severally agrees to make Revolving Credit Loans
in a Permitted Currency (other than Specified Alternative
Currencies, Loans with respect to which shall only be made
by the applicable Specified A/C Lenders in accordance with
the terms of Section 2.2) to the Borrower from time to time
from the Closing Date through the Credit Facility
Termination Date as requested by the Borrower in accordance
with the terms of Section 2.5; provided, that (a) the Dollar
Amount of the aggregate principal amount of all outstanding
Revolving Credit Loans (after giving effect to any amount
requested) shall not exceed the Aggregate Commitment less
the sum of the Dollar Amount of the aggregate principal
amount of all outstanding Specified A/C Loans less the sum
of the Dollar Amount of the aggregate principal amount of
all outstanding Competitive Bid Loans, Swingline Loans and
L/C Obligations, (b) the sum of (i) the Dollar Amount of the
aggregate principal amount of all outstanding Revolving
Credit Loans made in Alternative Currencies (other than
Specified Alternative Currencies) and (ii) the Dollar Amount
of the aggregate principal amount of all outstanding
Specified A/C Loans shall not exceed the Alternative
Currency Commitment and (c) the Dollar Amount of the
aggregate principal amount of all outstanding Revolving
Credit Loans from any Lender to the Borrower shall not at
any time exceed such Lender's Commitment less such Lender's
Commitment Percentage of the sum of the Dollar Amount of the
aggregate principal amount of all outstanding Specified A/C
Loans, Swingline Loans and L/C Obligations. Each Revolving
Credit Loan by a Lender shall be in a principal amount equal
to such Lender's Commitment Percentage of the aggregate
principal amount of Revolving Credit Loans requested
on such occasion. Revolving Credit Loans to be made in an
Alternative Currency (other than a Specified Alternative
Currency) shall be funded in an amount equal to the
Alternative Currency Amount of such Revolving Credit Loan.
Subject to the terms and conditions hereof, the Borrower may
borrow, repay and reborrow Revolving Credit Loans hereunder
until the Credit Facility Termination Date.
SECTION 2.2 Specified A/C Loans.
(a) Availability. Subject to the terms and conditions
of this Agreement, the applicable Specified A/C Lenders
severally agree to make Specified A/C Loans in the
applicable Specified Alternative Currency to the Borrower
from time to time from the Closing Date through the Credit
Facility Termination Date as requested by the Borrower in
accordance with the terms of Section 2.5; provided, that (a)
the Dollar Amount of the aggregate principal amount of all
outstanding Specified A/C Loans in such Specified
Alternative Currency (after giving effect to any amount
requested) shall not exceed the lesser of (i) the Aggregate
Commitment less the sum of the Dollar Amount of the
<PAGE>
aggregate principal amount of all outstanding Revolving
Credit Loans less the sum of the Dollar Amount of the
aggregate principal amount of all outstanding Competitive
Bid Loans, Swingline Loans and L/C Obligations and (ii) the
applicable Specified A/C Aggregate Commitment, (b) the
sum of (i) the Dollar Amount of the aggregate principal
amount of all outstanding Specified A/C Loans and (ii) the
Dollar Amount of the aggregate principal amount of all
outstanding Revolving Credit Loans made in an Alternative
Currency (other than a Specified Alternative Currency) shall
not exceed the Alternative Currency Commitment and (c) the
Dollar Amount of the aggregate principal amount of all
outstanding Specified A/C Loans in such Specified
Alternative Currency from any applicable Specified A/C
Lender to the Borrower shall not at any time exceed such
Lender's Specified A/C Commitment for such Specified
Alternative Currency. Each Specified A/C Loan by a
Specified A/C Lender shall be in a principal amount equal to
such Specified A/C Lender's applicable Specified A/C
Commitment Percentage of the aggregate principal amount of
the applicable Specified A/C Loans requested on such
occasion. Specified A/C Loans shall be funded in an amount
equal to the Alternative Currency Amount of such Specified
A/C Loan. Subject to the terms and conditions hereof, the
Borrower may borrow, repay and reborrow Specified A/C Loans
hereunder until the Credit Facility Termination Date.
(b) Refunding of Specified A/C Loans.
(i) Upon the occurrence and during the
continuance of an Event of Default, each Specified A/C Loan
may, at the discretion of the Administrative Agent, be
converted immediately to a Base Rate Loan funded in Dollars
by the Lenders in an amount equal to the Dollar Amount of
such Specified A/C Loan for the remainder of the Interest
Period applicable to such Specified A/C Loan. Such Base
Rate Loan shall thereafter be reflected as a Revolving
Credit Loan of the Lenders on the books and records of the
Administrative Agent. Each Lender shall fund its respective
Commitment Percentage of such Base Rate Loan as required to
repay Specified A/C Loans outstanding to the applicable
Specified A/C Lenders upon demand by the Administrative
Agent in no event later than 2:00 p.m. (Charlotte time) on
the next succeeding Business Day after such demand is made.
No Lender's obligation to fund its respective Commitment
Percentage of any Base Rate Loan required to repay such
Specified A/C Loan shall be affected by any other
Lender's failure to fund its Commitment Percentage of such
Base Rate Loan, nor shall any Lender's Commitment Percentage
be increased as a result of any such failure of any other
Lender to fund its Commitment Percentage of such Base Rate
Loan.
(ii) The Borrower shall pay to the Administrative
Agent, for the account of the applicable Specified A/C
Lenders, on demand the amount of such Specified A/C Loans to
the extent that the Lenders fail to refund in full such
outstanding Specified A/C Loans requested or required to
be refunded. In addition, the Borrower hereby authorizes
<PAGE>
the Administrative Agent or any applicable Specified A/C
Lender to charge any account maintained by the Borrower with
the Administrative Agent or such Specified A/C Lender (up to
the amount available therein) in order to immediately pay
such Specified A/C Lenders the amount of such Specified A/C
Loans to the extent amounts received from the Lenders are
not sufficient to repay in full the outstanding Specified
A/C Loans requested or required to be refunded. If any
portion of any such amount paid to the Specified A/C Lenders
shall be recovered by or on behalf of the Borrower from the
Administrative Agent or the Specified A/C Lenders in
bankruptcy or otherwise, the amount so recovered shall be
ratably shared among all the Lenders in accordance with
their respective Commitment Percentages.
(iii) Each Lender acknowledges and agrees that its
obligation to refund Specified A/C Loans in accordance with
the terms of this Section 2.2 is absolute and unconditional
and shall not be affected by any circumstance whatsoever;
provided, that if prior to the refunding of any outstanding
Specified A/C Loans pursuant to this Section 2.2, one of the
events described in Section 11.1(j) or (k) shall have
occurred, each Lender will, on the date the applicable
Revolving Credit Loan would have been made to refund such
Specified A/C Loans, purchase an undivided participating
interest in such Specified A/C Loans in an amount equal to
its Commitment Percentage of the aggregate Dollar Amount of
such Specified A/C Loan. Each Lender will immediately
transfer to the Administrative Agent, for the account of the
applicable Specified A/C Lenders, in immediately available
funds in Dollars, the amount of its participation and upon
receipt thereof the Administrative Agent will deliver to
such Lender a certificate evidencing such participation
dated the date of receipt of such funds and for such amount.
Whenever, at any time after the Administrative Agent has
received from any Lender such Lender's participating
interest in such refunded Specified A/C Loans, the
Administrative Agent or any applicable Specified A/C Lender
receives any payment on account thereof, the Administrative
Agent or such Specified A/C Lender, as applicable, will
distribute to such Lender its participating interest in such
amount (appropriately adjusted, in the case of interest
payments, to reflect the period of time during which such
Lender's participating interest was outstanding and funded).
SECTION 2.3 Competitive Bid Loans. Subject to
the terms and conditions of this Agreement, the Borrower
may, prior to the Credit Facility Termination Date and
pursuant to the procedures set forth in Section 2.6, request
the Lenders to make offers to make Competitive Bid
Loans; provided, that (i) all Competitive Bid Loans shall be
denominated in Dollars and (ii) the aggregate principal
amount of all outstanding Competitive Bid Loans (after
giving effect to any amount requested and the use of
proceeds thereof) shall not exceed the Aggregate Commitment
less the sum of the Dollar Amount of the aggregate principal
amount of all outstanding Revolving Credit Loans, Specified
A/C Loans, Swingline Loans and L/C Obligations. The Lenders
may, but shall have no obligation to, make such offers and
<PAGE>
the Borrower may, but shall have no obligation to, accept
any such offers in the manner set forth in Section 2.6.
SECTION 2.4. Swingline Loans.
(a) Availability. Subject to the terms and conditions
of this Agreement, the Swingline Lender agrees to make
Swingline Loans to the Borrower from time to time from the
Closing Date through the Swingline Termination Date;
provided, that (i) all Swingline Loans shall be denominated
in Dollars and (ii) the aggregate principal amount of all
outstanding Swingline Loans (after giving effect to any
amount requested) shall not exceed the lesser of (A) the
Aggregate Commitment less the sum of the Dollar Amount of
the aggregate principal amount of all outstanding Revolving
Credit Loans less the sum of the Dollar Amount of the
aggregate principal amount of all outstanding Specified A/C
Loans less the sum of all outstanding Competitive Bid
Loans and L/C Obligations and (B) the Swingline Commitment.
(b) Refunding.
(i) Swingline Loans shall be refunded by the
Lenders on demand by the Swingline Lender. Such refundings
shall be made by the Lenders in accordance with their
respective Commitment Percentages and shall thereafter be
reflected as Revolving Credit Loans of the Lenders on the
books and records of the Administrative Agent. Each Lender
shall fund its respective Commitment Percentage of Revolving
Credit Loans as required to repay Swingline Loans
outstanding to the Swingline Lender upon demand by the
Swingline Lender but in no event later than 2:00 p.m.
(Charlotte time) on the next succeeding Business Day after
such demand is made. No Lender's obligation to fund its
respective Commitment Percentage of a Swingline Loan shall
be affected by any other Lender's failure to fund its
Commitment Percentage of a Swingline Loan, nor shall any
Lender's Commitment Percentage be increased as a result of
any such failure of any other Lender to fund its Commitment
Percentage of a Swingline Loan.
(ii) The Borrower shall pay to the Swingline
Lender on demand the amount of such Swingline Loans to the
extent that the Lenders fail to repay in full the
outstanding Swingline Loans requested or required to be
refunded. In addition, the Borrower hereby authorizes the
Administrative Agent to charge any account maintained by the
Borrower with the Swingline Lender (up to the amount
available therein) in order to immediately pay the Swingline
Lender the amount of such Swingline Loans to the extent
amounts received from the Lenders are not sufficient to
repay in full the outstanding Swingline Loans requested or
required to be refunded. If any portion of any such amount
paid to the Swingline Lender shall be recovered by or on
behalf of the Borrower from the Swingline Lender in
bankruptcy or otherwise, the loss of the amount so recovered
shall be ratably shared among all the Lenders in accordance
with their respective Commitment Percentages.
<PAGE>
(iii) Each Lender acknowledges and agrees that its
obligation to refund Swingline Loans in accordance with the
terms of this Section 2.4 is absolute and unconditional and
shall not be affected by any circumstance whatsoever;
provided, that if prior to the refunding of any outstanding
Swingline Loans pursuant to this Section 2.4, one of the
events described in Section 11.1(j) or (k) shall have
occurred, each Lender will, on the date the applicable
Revolving Credit Loan would have been made to refund such
Swingline Loan, purchase an undivided participating interest
in such Swingline Loan in an amount equal to its Commitment
Percentage of the aggregate amount of such Swingline Loan.
Each Lender will immediately transfer to the Swingline
Lender, in immediately available funds, the amount of its
participation and upon receipt thereof the Swingline Lender
will deliver to such Lender a certificate evidencing such
participation dated the date of receipt of such
funds and for such amount. Whenever, at any time after the
Swingline Lender has received from any Lender such Lender's
participating interest in a Swingline Loan, the Swingline
Lender receives any payment on account thereof, the
Swingline Lender will distribute to such Lender its
participating interest in such amount (appropriately
adjusted, in the case of interest payments, to reflect the
period of time during which such Lender's participating
interest was outstanding and funded).
SECTION 2.5. Procedure for Advances of Revolving
Credit Loans, Specified A/C Loans and Swingline Loans.
(a) Requests for Borrowing. The Borrower shall give
the Administrative Agent irrevocable prior written notice in
the form attached hereto as Exhibit B (a "Notice of
Borrowing") not later than 11:00 a.m. (Charlotte time) (i)
on the same Business Day as each Swingline Loan, (ii)
at least one Business Day before each Base Rate Loan, (iii)
at least three (3) Business Days before each LIBOR Rate Loan
denominated in Dollars and (iv) at least four (4) Business
Days before each LIBOR Rate Loan denominated in an
Alternative Currency, of its intention to borrow, specifying
(A) the date of such borrowing, which shall be a Business
Day, (B) whether such Loan is to be a Revolving Credit Loan,
Specified A/C Loan or a Swingline Loan, (C) if such Loan is
a Revolving Credit Loan, whether such Loan shall be
denominated in Dollars or in an Alternative Currency, (D)
if denominated in Dollars, whether the Loans are to be LIBOR
Rate Loans or Base Rate Loans, (E) the amount of such
borrowing, which shall be (1) with respect to LIBOR Rate
Loans denominated in Dollars in an aggregate principal
amount of $2,500,000 or a whole multiple of $500,000 in
excess thereof, (2) with respect to LIBOR Rate Loans
denominated in an Alternative Currency in an aggregate
principal Alternative Currency Amount equal to $5,000,000 or
a whole multiple of $1,000,000 in excess thereof, (3) with
respect to Base Rate Loans in an aggregate principal amount
of $1,000,000 or a whole multiple of $500,000 in excess
thereof, and (4) with respect to Swingline Loans in an
aggregate principal amount of $1,000,000 or a whole multiple
thereof and (F) in the case of a LIBOR Rate Loan, the
<PAGE>
duration of the LIBOR Interest Period applicable thereto.
Notices received after 11:00 a.m. (Charlotte time) shall be
deemed received on the next Business Day. The
Administrative Agent shall promptly notify (i) the Lenders
of each Notice of Borrowing with respect to a Revolving
Credit Loan and (ii) the applicable Specified A/C Lenders of
each Notice of Borrowing with respect to a Specified A/C
Loan.
(b) Disbursement of Revolving Credit Loans Denominated
in Dollars. Not later than 2:00 p.m. (Charlotte time) on
the proposed borrowing date for any Loan denominated in
Dollars, each Lender will make available to the
Administrative Agent, for the account of the Borrower, at
the office of the Administrative Agent in Dollars in funds
immediately available to the Administrative Agent, such
Lender's Commitment Percentage of the requested Revolving
Credit Loan to be made on such borrowing date. The Borrower
hereby irrevocably authorizes the Administrative Agent to
disburse the proceeds of each borrowing requested pursuant
to this Section 2.5 in immediately available funds by
crediting such proceeds to a deposit account of the Borrower
maintained with the Administrative Agent or by wire transfer
from such deposit account to another account as may be
requested by the Borrower by prior written notice to the
Administrative Agent. Subject to Section 4.7, the
Administrative Agent shall not be obligated to disburse the
portion of the proceeds of any Loan requested pursuant to
this Section 2.5 to the extent that any Lender has not
made available to the Administrative Agent its Commitment
Percentage of such Loan.
(c) Disbursement of Alternative Currency Loans (other
than Specified A/C Loans). Not later than 11:00 a.m. (the
time of the Administrative Agent's Correspondent) on or
before the proposed borrowing date for any Alternative
Currency Loan (other than Specified A/C Loans), each Lender
will make available to the Administrative Agent for the
account of the Borrower at the office of the Administrative
Agent's Correspondent, in the requested Alternative Currency
in funds immediately available to the Administrative Agent,
such Lender's Commitment Percentage of the Alternative
Currency Amount of such requested borrowing. The Borrower
hereby irrevocably authorizes the Administrative Agent to
disburse the proceeds of each borrowing requested pursuant
to this Section 2.5 in immediately available funds by
crediting such proceeds to an account of the Borrower
maintained with the Administrative Agent's Correspondent or
by wire transfer from such deposit account to another
account as may be requested by the Borrower by prior written
notice to the Administrative Agent. Subject to Section 4.7,
the Administrative Agent shall not be obligated to disburse
the portion of the proceeds of any Loan requested pursuant
to this Section 2.5 to the extent that any Lender has not
made available to the Administrative Agent its Commitment
Percentage of such Loan.
(d) Disbursement of Specified A/C Loans. Not later
than 11:00 a.m. (the time of the Administrative Agent's
<PAGE>
Correspondent) on or before the proposed borrowing date for
any Specified A/C Loan, each applicable Specified A/C Lender
will make available to the Borrower at the office of the
Administrative Agent's Correspondent in the applicable
Specified Alternative Currency in funds immediately
available to the Borrower, such Specified A/C Lender's
Commitment Percentage of the requested borrowing to be
denominated in the applicable Specified Alternative
Currency. The Borrower hereby irrevocably authorizes such
Specified A/C Lenders to disburse the proceeds of each
borrowing requested pursuant to this Section 2.5 in
immediately available funds by crediting such proceeds to an
account of the Borrower specified in the most recent Notice
of Account Designation provided by the Borrower. Subject to
Section 4.7, the Administrative Agent shall not be obligated
to disburse the portion of the proceeds of any Loan
requested pursuant to this Section 2.5 to the extent that
any Specified A/C Lender has not made available to the
Administrative Agent its Commitment Percentage of such Loan.
(e) Disbursement of Swingline Loans. Not later than
2:00 p.m. (Charlotte time) on the proposed borrowing date
for any Swingline Loan, the Swingline Lender will make
available to the Administrative Agent, for the account of
the Borrower, at the office of the Administrative Agent in
Dollars in funds immediately available to the Administrative
Agent, the Swingline Loans to be made to the Borrower on
such borrowing date. The Borrower hereby irrevocably
authorizes the Administrative Agent to disburse the proceeds
of each borrowing requested pursuant to this Section 2.5 in
immediately available funds by crediting such proceeds to a
deposit account of the Borrower maintained with the
Administrative Agent or by wire transfer from such deposit
account to another account as may be requested by the
Borrower by prior written notice to the Administrative
Agent. Revolving Credit Loans to be made for the purpose of
refunding Swingline Loans shall be made by the Lenders as
provided in Section 2.4(b).
SECTION 2.6. Procedure for Advances of
Competitive Bid Loans.
(a) Competitive Bid Request. In order to request
Competitive Bids, the Borrower shall deliver to the
Administrative Agent a duly completed Competitive Bid
Request in the form of Exhibit C-1 hereto (a "Competitive
Bid Request") to be received by the Administrative Agent not
later than 11:00 a.m. (Charlotte time) (i) five (5) Business
Days before each proposed LIBOR Competitive Bid Loan and
(ii) two (2) Business Days before each proposed Absolute
Rate Loan; provided that, the Borrower may not submit more
than three (3) Competitive Bid Requests during
any period of ten (10) consecutive Business Days, and
provided further, that the Borrower shall not submit more
than three (3) Competitive Bid Requests in any one (1)
calendar month. A Competitive Bid Request that does not
conform substantially to the form of Exhibit C-1 hereto may
be rejected in the Administrative Agent's sole discretion,
and the Administrative Agent shall promptly notify the
<PAGE>
Borrower of such rejection by telephone promptly confirmed
by telecopy. Such request shall in each case refer to this
Agreement and specify (i) whether the borrowing then being
requested is to be a LIBOR Competitive Bid Loan or an
Absolute Rate Loan, (ii) the date of such borrowing (which
shall be a Business Day), (iii) the aggregate principal
amount of such borrowing which shall be in a minimum
principal amount of $5,000,000 or a whole multiple of
$1,000,000 in excess thereof and (iv) the Competitive Bid
Interest Periods with respect to each LIBOR Competitive Bid
Loan and each Absolute Rate Loan which Competitive Bid
Interest Periods may not expire on a date later than the
first Business Day prior to the Credit Facility Termination
Date; provided, that the Borrower may not request bids for
more than three (3) different durations of Competitive Bid
Interest Periods in the same Competitive Bid Request.
Promptly after its receipt of a Competitive Bid Request that
is not rejected as aforesaid, the Administrative Agent shall
invite by telecopier the Lenders to bid in the form set
forth in Exhibit C-2 hereto (a "Competitive Bid
Invitation"), on the terms and conditions of this agreement,
to make Competitive Bid Loans pursuant to the Competitive
Bid Request.
(b) Competitive Bids.
(i) Each Lender may, in its sole discretion,
make up to three (3)
Competitive Bids to the Borrower in response to a ompetitive
Bid Request. Each Competitive Bid by a Lender must be
received by the Administrative Agent via telecopier, in the
form of Exhibit C-3, hereto, (A) not later than 10:30 a.m.,
Charlotte time, three (3) Business Days before any proposed
LIBOR Competitive Bid Loan and (B) not later than 10:30
a.m., Charlotte time, on the same Business Day as a proposed
Absolute Rate Loan, and any Competitive Bid received by the
Administrative Agent after such time can be rejected by the
Administrative Agent. Competitive Bids that do not conform
substantially to the form of Exhibit C-3 hereto or otherwise
include additional conditions to funding shall be rejected
by the Administrative Agent and the Administrative Agent
shall notify the Lender making such nonconforming
Competitive Bid of such rejection as soon as practicable.
Each Competitive Bid shall refer to this Agreement and
specify (A) the principal amount of the Competitive Bid Loan
or Loans that the applicable Lender is willing to make to
the Borrower which shall be in a minimum principal amount of
$5,000,000 or a whole multiple of $1,000,000 in excess
thereof and may equal the entire principal amount of the
Competitive Bid Loan requested by the Borrower, (B) the
Competitive Bid Rate or Rates at which such Lender is
prepared to make the Competitive Bid Loan or Loans and (C)
the Competitive Bid Interest Period applicable to each such
Loan and the last day thereof. A Competitive Bid submitted
by a Lender pursuant to this paragraph (b) shall be
irrevocable.
<PAGE>
(ii) If the Administrative Agent shall elect
to submit a Competitive Bid in its capacity as a Lender, it
shall submit such Competitive Bid directly to the Borrower
at least one quarter (1/4) of an hour earlier than the
latest time at which the other Lenders are required to
submit their Competitive Bids to the Administrative Agent
pursuant to clause (i) above.
(iii) The Administrative Agent shall
notify the Borrower by telecopier, (A) not later than 11:00
a.m., Charlotte time, three (3) Business Days before a
proposed LIBOR Competitive Bid Loan and (B) not later than
11:00 a.m., Charlotte time, on the same Business Day
of each proposed Absolute Rate Loan, of all the Competitive
Bids made, the Competitive Bid Rate or Rates, the principal
amount of each Competitive Bid Loan in respect of which a
Competitive Bid was made, the Competitive Bid Interest
Period applicable to each such LIBOR Competitive Bid
Loan and the identity of the Lender that made each
Competitive Bid. The Administrative Agent shall send a copy
of all Competitive Bids to the Borrower for its records as
soon as practicable after completion of the bidding process
set forth in this Section 2.6.
(iv) All notices required by this Section 2.6
shall be given in accordance with Section 13.1.
(c) Acceptance/Rejection.
(i) The Borrower may, in its sole and
absolute discretion, subject only to the provisions of this
paragraph (c), accept or reject any Competitive Bid referred
to in paragraph (b) above. The Borrower shall notify the
Administrative Agent by telephone, confirmed by telecopier
in the form of Exhibit C-4 hereto (a "Competitive Bid
Accept/Reject Letter"), whether and to what extent it has
decided to accept or reject any or all of the Competitive
Bids referred to in paragraph (b) above, (A) not later than
11:30 a.m., Charlotte time, three (3) Business Days before a
proposed LIBOR Competitive Bid Loan and (B) not later than
11:30 a.m., Charlotte time, on the same Business Day as a
proposed Absolute Rate Loan; provided, that (V) the failure
by the Borrower to give such notice shall be deemed to be a
rejection of all the Competitive Bids referred to in
paragraph (b) above, (W) the acceptance of Competitive Bids
by the Borrower shall be made on the basis of ascending
order (from lowest to highest) of Competitive Bids for LIBOR
Competitive Bid Loans or Absolute Rate Loans within each
Competitive Bid Interest Period and the Borrower shall not
accept a Competitive Bid made at a particular Competitive
Bid Rate for a particular Competitive Bid Interest Period if
the Borrower has rejected a Competitive Bid made at a
lower Competitive Bid Rate for the same Competitive Bid
Interest Period, (X) if Competitive Bids are made by two (2)
or more Lenders at the same Competitive Bid Rate for the
same Competitive Bid Interest Period, the principal amount
accepted shall be allocated among such Lenders by the
Borrower (after consultation with the Administrative Agent)
on a pro rata basis in integral multiples of not less than
<PAGE>
$1,000,000, (Y) the aggregate amount of the Competitive Bids
accepted by the Borrower shall not exceed the principal
amount specified in the Competitive Bid Request and (Z)
except pursuant to clause (X) above, no Competitive Bid
shall be accepted for a Competitive Bid Loan unless such
Competitive Bid Loan is in a minimum principal amount of
$5,000,000 or a whole multiple of $1,000,000 in excess
thereof. A notice given by the Borrower pursuant to this
paragraph (c) shall be irrevocable.
(ii) The Administrative Agent shall promptly
notify each bidding Lender whether or not its Competitive
Bid has been accepted (and if so, in what amount and at what
Competitive Bid Rate) by telephone followed by telecopy, and
each successful bidder will thereupon become bound, subject
to the other applicable conditions hereof, to make the
Competitive Bid Loan in respect of which its Competitive Bid
has been accepted.
(d) Disbursement of Competitive Bid Loans. Not later
than 2:00 p.m. (Charlotte time) on the proposed borrowing
date, each Lender whose Competitive Bid was accepted will
make available to the Administrative Agent, for the account
of the Borrower, at the office of the Administrative Agent
in funds immediately available to the Administrative Agent,
such Lender's Competitive Bid Loan to be made on such
borrowing date. After receipt thereof from the applicable
Lenders, the Administrative Agent shall disburse not later
than 3:30 p.m. (Charlotte time) the proceeds of each
borrowing accepted pursuant to Section 2.6(c) in immediately
available funds by crediting such proceeds to the deposit
account or accounts specified in the most recent Notice of
Account Designation delivered by the Borrower or as may be
agreed upon by the Borrower and the Administrative Agent
from time to time. The Administrative Agent shall not be
obligated to disburse the proceeds of any Competitive Bid
Loan accepted pursuant to Section 2.6(c) until the
applicable Lender shall have made available to the
Administrative Agent its Competitive Bid Loan.
(e) Competitive Bid Fee. For each Competitive Bid
Request received by the Administrative Agent hereunder, the
Borrower shall pay to the Administrative Agent, for its own
account, a Competitive Bid fee in the amount set forth in
the separate letter agreement between the Borrower and the
Administrative Agent dated as of December 11, 1997.
SECTION 2.7. Repayment of Loans.
(a) Repayment. The Borrower shall repay (i) the
principal amount of all outstanding Revolving Credit Loans
in full in the currency in which each such Revolving Credit
Loan was initially funded, together with all accrued but
unpaid interest thereon, on the Credit Facility Termination
Date, (ii) the principal amount of all outstanding Specified
A/C Loans in full in the Specified Alternative Currency in
which each such Specified A/C Loan was initially funded,
together with all accrued but unpaid interest thereon, on
<PAGE>
the Credit Facility Termination Date (or in accordance with
Section 2.2(b) if earlier), (iii) each Competitive Bid Loan
on the expiration of the Competitive Bid Interest Period
applicable thereto, and (iv) the principal amount of all
outstanding Swingline Loans in accordance with Section
2.4(b), together, in each such case, with all accrued but
unpaid interest thereon.
(b) Mandatory Repayment of Excess Loans.
(i) Aggregate Commitment. If at any time (as
determined by the Administrative Agent under Section
2.7(b)(v), and for any reason, the aggregate principal
Dollar Amount of all outstanding Revolving Credit Loans,
Specified A/C Loans, Competitive Bid Loans and Swingline
Loans exceeds one hundred and five percent (105%) of [the
Aggregate Commitment less the L/C Obligations], the Borrower
shall (A) first, if (and to the extent) necessary to
eliminate such excess, immediately repay outstanding
Swingline Loans (and/or reduce any pending request for a
Swingline Loan on such day by the amount of such excess),
(B) second, if (and to the extent) necessary to eliminate
such excess, immediately repay outstanding Revolving Credit
Loans that are Base Rate Loans by the Dollar Amount of such
excess (and/or reduce any pending request for a Base Rate
Loan on such day by the Dollar Amount of such excess), (C)
third, if (and to the extent) necessary to eliminate such
excess, immediately repay LIBOR Rate Loans (other than
Specified A/C Loans) (and/or reduce any pending requests for
a borrowing or continuation or conversion of such Loans
submitted in respect of such Loans on such day) by the
Dollar Amount of any remaining excess, (D) fourth, if (and
to the extent) necessary to eliminate such excess,
immediately repay outstanding Specified A/C Loans (and/or
reduce any pending request for a Specified A/C Loan on such
day by the amount of such excess), and (E) fifth, if (and to
the extent) necessary to eliminate such excess, immediately
repay Competitive Bid Loans (and/or reduce any pending
Competitive Bid Request for a borrowing of such Competitive
Bid Loans) by the amount of any remaining excess.
(ii) Excess Alternative Currency Loans. If at any
time and for any reason the outstanding principal amount of
all outstanding Alternative Currency Loans (including
Specified A/C Loans) exceeds the lesser of (A) the Aggregate
Commitment less the sum of the outstanding principal amount
of all Revolving Credit Loans denominated in Dollars less
the sum of the outstanding principal Dollar Amount of all
Competitive Bid Loans less the sum of the outstanding
principal Dollar Amount of all Swingline Loans less the sum
of the outstanding principal Dollar Amount of all L/C
Obligations and (B) the Alternative Currency Commitment,
such excess shall be immediately repaid, in the currency in
which such Alternative Currency Loan or Alternative Currency
Loans were initially funded, by the Borrower to the
Administrative Agent for the account
of the Lenders.
<PAGE>
(iii) Excess Specified A/C Loans. With respect to
each Specified Alternative Currency, if at any time and for
any reason the outstanding principal amount of all
outstanding Specified A/C Loans funded in such Specified
Alternative Currency exceeds the lesser of (A) the Aggregate
Commitment less the sum of the outstanding principal Dollar
Amount of all Revolving Credit Loans less the sum of the
outstanding principal Dollar Amount of all Competitive Bid
Loans less the sum of the outstanding principal Dollar
Amount of all Swingline Loans less the sum of the
outstanding principal Dollar Amount of all L/C Obligations
and (B) the applicable Specified A/C Aggregate Commitment,
such excess shall be immediately repaid in such Specified
Alternative Currency by the Borrower to the Administrative
Agent for the account of the applicable Specified A/C
Lenders.
(iv) Excess Swingline Loans and L/C Obligations.
If at any time and for any reason (A) the outstanding
principal amount of all outstanding Swingline Loans exceeds
the lesser of (1) the Aggregate Commitment less the sum of
the Dollar Amount of the aggregate principal amount of all
outstanding Revolving Credit Loans, Specified A/C Loans,
Competitive Bid Loans and L/C Obligations and (2) the
Swingline Commitment, such excess shall be immediately
repaid by the Borrower to the Administrative Agent for the
account of the Swingline Lender and (B) the aggregate
outstanding principal amount of the L/C Obligations exceeds
the lesser of (1) the Aggregate Commitment less the sum of
the Dollar Amount of the aggregate principal amount of all
outstanding Revolving Credit Loans, Specified A/C Loans,
Competitive Bid Loans and Swingline Loans and (2) the L/C
Commitment, then the Borrower shall deposit an amount equal
to such excess with the Administrative Agent to be held as
cash collateral in accordance with Section 11.2(b).
(v) Compliance and Payments. The Borrower's
compliance with this Section 2.7(b) shall be tested from
time to time by the Administrative Agent at its sole
discretion, but in any event on each day an interest payment
is due under Section 4.1(e). All payments pursuant to this
Section 2.7(b) shall be accompanied by any amount required
to be repaid under Section 4.11.
(c) Other Mandatory Prepayments. The Borrower shall
prepay the Loans in accordance with Section 2.9 in
connection with any permanent reduction in the Aggregate
Commitment.
(d) Optional Repayments. The Borrower may at any time
and from time to time repay the Loans, in whole or in part,
upon at least four (4) Business Days' irrevocable notice to
the Administrative Agent with respect to LIBOR Rate Loans
denominated in an Alternative Currency, upon at least three
(3) Business Days' irrevocable notice to the Administrative
Agent with respect to LIBOR Rate Loans denominated in
Dollars and Competitive Bid Loans, one (1) Business Day's
irrevocable notice with respect to Base Rate Loans, and upon
irrevocable notice no later than 12:00 p.m. (Charlotte time)
<PAGE>
on the same Business Day with respect to Swingline Loans, in
the form attached hereto as Exhibit D (a "Notice of
Prepayment"), specifying the date and amount of repayment
and whether the repayment is of LIBOR Rate Loans denominated
in an Alternative Currency, LIBOR Rate Loans denominated in
Dollars, Competitive Bid Loans, Base Rate Loans, Swingline
Loans, or a combination thereof, and, if of a combination
thereof, the amount allocable to each. Upon receipt of such
notice, the Administrative Agent shall promptly notify each
Lender. If any such notice is given, the amount specified
in such notice shall be due and payable on the date set
forth in such notice. Partial repayments shall be in an
aggregate amount of $2,500,000 or a whole multiple of
$500,000 in excess thereof; provided, that with respect to
Alternative Currency Loans, partial repayments shall be in
an Alternative Currency Amount equal to $5,000,000 or a
whole multiple of $1,000,000 in excess thereof; and provided
further that, with respect to Swingline Loans, partial
repayments shall be in an aggregate amount of $500,000 or a
whole multiple thereof. Each such repayment shall be
accompanied by any amount required to be paid pursuant to
Section 4.11.
(e) Limitation on Repayment of Certain Loans. The
Borrower may not repay any LIBOR Rate Loan (including,
without limitation, any LIBOR Rate Loan denominated in an
Alternative Currency) or any Competitive Bid Loan on any day
other than on the last day of the Interest Period applicable
thereto unless such repayment is accompanied by any amount
required to be paid pursuant to Section 4.11.
SECTION 2.8. Notes.
(a) Revolving Credit Notes. Each Lender's Revolving
Credit Loans and the obligation of the Borrower to repay
such Revolving Credit Loans shall be evidenced by a
Revolving Credit Note executed by the Borrower payable to
the order of such Lender representing the Borrower's
obligation to pay such Lender's Commitment or, if less, the
aggregate unpaid principal amount of all Revolving Credit
Loans made and to be made by such Lender to the Borrower
hereunder, plus interest and all other fees, charges and
other amounts due thereon. Each Revolving Credit Note
shall be dated the date hereof and shall bear interest on
the unpaid principal amount thereof at the applicable
interest rate per annum specified in Section 4.1.
(b) Specified A/C Notes. With respect to each
Specified Alternative Currency, each A/C Loans in such
Specified Alternative Currency and the obligation of the
Borrower to repay such Specified A/C Loans shall be
evidenced by a separate Specified A/C Note executed by the
Borrower with regard to each Specified Alternative Currency
to be borrowed by the Borrower payable to the order of each
applicable Specified A/C Lender representing the Borrower's
obligation to pay such Specified A/C Lender's applicable
Specified A/C Commitment or, if less, the aggregate unpaid
principal amount of all Specified A/C Loans made and to be
made by such Specified A/C Lender in such Specified
<PAGE>
Alternative Currency to the Borrower hereunder, plus
interest and all other fees, charges and other amounts due
thereon. Each Specified A/C Note shall be dated the date
hereof and shall bear interest on the unpaid principal
amount thereof at the applicable interest rate per annum
specified in Section 4.1.
(c) Competitive Bid Notes. Each Lender's Competitive
Bid Loans and the obligation of the Borrower to repay such
Competitive Bid Loans shall be evidenced by a Competitive
Bid Note executed by the Borrower payable to the order of
such Lender representing the Borrower's obligation to pay
such Lender's Competitive Bid Loans in a principal amount up
to the Aggregate Commitment or, if less, the aggregate
unpaid principal amount of all Competitive Bid Loans made
by such Lender to the Borrower hereunder, plus interest on
such principal amounts and all other fees, charges and other
amounts due thereon. Each Competitive Bid Note shall be
dated the Closing Date and shall bear interest on the unpaid
principal amount thereof at the applicable interest rate per
annum specified in Section 4.1.
(d) Swingline Notes. The Swingline Loans and the
obligation of the Borrower to repay such Swingline Loans
shall be evidenced by the Swingline Note executed by the
Borrower payable to the order of the Swingline Lender
representing the Borrower's obligation to pay the Swingline
Commitment or, if less, the aggregate unpaid principal
amount of all Swingline Loans made and to be made by the
Swingline Lender to the Borrower hereunder, plus interest
and all other fees, charges and other amounts due thereon.
The Swingline Note shall be dated the date hereof and shall
bear interest on the unpaid principal amount thereof at the
applicable interest rate specified in
Section 4.1.
SECTION 2.9. Permanent Reduction of the
Aggregate Commitment.
(a) Voluntary Reduction. The Borrower shall have the
right at any time and from time to time, upon at least five
(5) Business Days prior written notice to the Administrative
Agent (which shall promptly notify each Lender), to
permanently reduce, in whole at any time or in part from
time to time, without premium or penalty, the Aggregate
Commitment in an aggregate principal amount not less than
$5,000,000 or any whole multiple thereof. To the extent
that the Aggregate Commitment is reduced to an amount below
the Swingline Commitment, the Alternative Currency
Commitment or any Specified A/C Aggregate Commitment, there
shall be a corresponding permanent reduction of the
Swingline Commitment, the Alternative Currency Commitment or
the applicable Specified A/C Commitment, as applicable, to
the amount of the Aggregate Commitment as so reduced.
(b) Additional Payments. Each permanent reduction
permitted pursuant to this Section 2.9 shall be accompanied
by a payment of principal (or, with respect to any L/C
Obligations, payment of cash collateral into a cash
<PAGE>
collateral account opened by the Borrower with the
Administrative Agent) sufficient to reduce the aggregate
principal Dollar Amount of the outstanding Extensions of
Credit after such reduction to the Aggregate Commitment as
so reduced. All prepayments required by this Section 2.9(b)
shall be applied first to the aggregate outstanding
principal amount of Swingline Loans, second to the aggregate
outstanding principal amount of all Specified A/C Loans,
third to the aggregate outstanding principal amount of
Revolving Credit Loans, and fourth to the aggregate
outstanding principal amount of Competitive Bid Loans. Any
permanent reduction of the Aggregate Commitment to zero
shall be accompanied by payment of all outstanding
Obligations (and furnishing of cash collateral
satisfactory to the Administrative Agent for all L/C
Obligations) and termination of the Commitments and the
Credit Facility. If the reduction of the Aggregate
Commitment requires the repayment of any LIBOR Rate Loan or
Competitive Bid Loan, such repayment shall be accompanied by
any amount required to be paid pursuant to Section 4.11.
SECTION 2.10. Termination of Credit Facility. The
Credit Facility shall terminate on the earliest of (a)
December __, 2002, (b) the date of a permanent reduction of
the Aggregate Commitment in whole pursuant to Section
2.9(a), and (c) the date of termination pursuant to Section
11.2(a).
SECTION 2.11. Use of Proceeds. The Borrower shall use
the proceeds of the Loans (a) to finance investments and
acquisitions permitted by the terms hereof and (b) for
working capital and general corporate requirements of the
Borrower, including the payment of certain fees and expenses
incurred in connection with the transactions contemplated
hereby.
ARTICLE III
LETTER OF CREDIT FACILITY
SECTION 3.1. L/C Commitment. Subject to the
terms and conditions hereof, the Issuing Lender, in reliance
on the agreements of the other Lenders set forth in Section
3.4(a), agrees to issue standby letters of credit ("Letters
of Credit") for the account of the Borrower on any Business
Day from the Closing Date through but not including the
Credit Facility Termination Date in such form as may be
approved from time to time by the Issuing Lender; provided,
that the Issuing Lender shall not issue any Letter of Credit
if, after giving effect to such issuance, (i) the L/C
Obligations would exceed the lesser of (A) the L/C
Commitment or (B) the Aggregate Commitment less the sum of
the Dollar Amount of the aggregate principal amount of all
outstanding Revolving Credit Loans, Specified A/C Loans,
Competitive Bid Loans and Swingline Loans, or (ii) the
Commitment of any Lender less such Lender's Commitment
Percentage of the Dollar Amount of Revolving Credit Loans,
Specified A/C Loans, Competitive Bid Loans, Swingline Loans
and L/C Obligations would be less than zero. Each Letter
of Credit shall (1) be denominated in Dollars in a minimum
<PAGE>
amount of $50,000 and shall be a standby letter of credit
issued to support obligations of the Borrower or any of its
Subsidiaries, contingent or otherwise, incurred in the
ordinary course of business, (2) expire on a date
satisfactory to the Issuing Lender, which date shall be no
later than the earlier of: (x) the date that is twelve (12)
months after the date of issuance thereof and (y) the Credit
Facility Termination Date; provided that any Letter of
Credit with an expiration date occurring up to twelve (12)
months after such Letter of Credit's date of issuance may be
automatically renewable for subsequent twelve (12) month
periods (but in no event later than the Credit Facility
Termination Date) so long as on the date of such renewal the
Borrower is in compliance with all of the terms and
conditions of this Agreement and the other Loan Documents
and (3) be subject to the Uniform Customs and, to the extent
not inconsistent therewith, the laws of the State of
Pennsylvania. The Issuing Lender shall not issue any
Letter of Credit hereunder if such issuance would conflict
with, or cause the Issuing Lender or any L/C Participant to
exceed any limits imposed by, any Applicable Law.
References herein to "issue" and derivations thereof with
respect to Letters of Credit shall also include extensions
or modifications of any existing Letters of Credit, unless
the context otherwise requires.
SECTION 3.2. Procedure for Issuance of Letters
of Credit. The Borrower may from time to time request that
the Issuing Lender issue a Letter of Credit by delivering to
the Issuing Lender at the Administrative Agent's Office a
Letter of Credit Application therefor, completed to
the satisfaction of the Issuing Lender, and such other
certificates, documents and other papers and information as
the Issuing Lender may request. Upon receipt of any Letter
of Credit Application, the Issuing Lender will process such
Letter of Credit Application and the certificates, documents
and other papers and information delivered to it in
connection therewith in accordance with its customary
procedures and shall, subject to Section 3.1 and Article V,
promptly issue the Letter of Credit requested thereby (but
in no event shall the Issuing Lender be required to issue
any Letter of Credit earlier than three (3) Business Days
after its receipt of the Letter of Credit Application
therefor and all such other certificates, documents and
other papers and information relating thereto) by issuing
the original of such Letter of Credit to the beneficiary
thereof or as otherwise may be agreed by the Issuing Lender
and the Borrower. The Issuing Lender shall furnish to the
Borrower a copy of such Letter of Credit and furnish to each
Lender a copy of such Letter of Credit and the amount of
each Lender's L/C Participation therein, all promptly
following the issuance of such Letter of Credit.
SECTION 3.3. Commissions and Other Charges.
(a) The Borrower shall pay to the Administrative
Agent, for the account of the Issuing Lender and the L/C
Participants, a letter of credit commission with respect to
each Letter of Credit in an amount equal to the product of
<PAGE>
(i) the Applicable Margin with respect to LIBOR Rate Loans
(on a per annum basis) and (ii) the face amount of such
Letter of Credit. Such commission shall be payable (i) from
the date such Letter of Credit is issued, quarterly in
arrears on the last Business Day of each calendar quarter
thereafter and (ii) on the Credit Facility Termination Date.
(b) The Borrower shall pay to the Administrative
Agent, for the account of the Issuing Lender, a facing fee
with respect to each Letter of Credit in an amount equal to
the product of (i) 0.125% (on a per annum basis) and (ii)
the face amount of such Letter of Credit. Such fee shall be
payable (i) from the date such Letter of Credit is issued,
quarterly in arrears on the last Business Day of each
calendar quarter thereafter and (ii) on the Credit Facility
Termination Date.
(c) In addition to the foregoing commissions, the
Borrower shall pay or reimburse the Issuing Lender for such
normal and customary costs and expenses as are incurred or
charged by the Issuing Lender in issuing, effecting payment
under, amending or otherwise administering any Letter
of Credit.
(d) The Administrative Agent shall, promptly following
its receipt thereof, distribute to the Issuing Lender and
the L/C Participants all commissions received by the
Administrative Agent in accordance with their respective
Commitment Percentages.
SECTION 3.4. L/C Participations.
(a) The Issuing Lender irrevocably agrees to grant and
hereby grants to each L/C Participant, and, to induce the
Issuing Lender to issue Letters of Credit hereunder, each
L/C Participant irrevocably agrees to accept and purchase
and hereby accepts and purchases from the Issuing Lender, on
the terms and conditions hereinafter stated, for such L/C
Participant's own account and risk an undivided interest
equal to such L/C Participant's Commitment Percentage in
the Issuing Lender's obligations and rights under and in
respect of each Letter of Credit issued hereunder and the
amount of each draft paid by the Issuing Lender thereunder.
Each L/C Participant unconditionally and irrevocably agrees
with the Issuing Lender that, if a draft is paid under any
Letter of Credit for which the Issuing Lender is not
reimbursed in full by the Borrower in accordance with the
terms of this Agreement, such L/C Participant shall pay to
the Issuing Lender upon demand at the Issuing Lender's
address for notices specified herein an amount equal to such
L/C Participant's Commitment Percentage of the amount of
such draft, or any part thereof, which is not so reimbursed.
(b) Upon becoming aware of any amount required to be
paid by any L/C Participant to the Issuing Lender pursuant
to Section 3.4(a) in respect of any unreimbursed portion of
any payment made by the Issuing Lender under any Letter of
Credit, the Issuing Lender shall notify each L/C Participant
of the amount and due date of such required payment and such
<PAGE>
L/C Participant shall pay to the Issuing Lender the amount
specified on the applicable due date. If any such amount
is paid to the Issuing Lender after the date such payment is
due, such L/C Participant shall pay to the Issuing Lender on
demand, in addition to such amount, the product of (i) such
amount, times (ii) the daily average Federal Funds Rate as
determined by the Administrative Agent during the period
from and including the date such payment is due to the date
on which such payment is immediately available to the
Issuing Lender, times (iii) a fraction the numerator of
which is the number of days that elapse during such period
and the denominator of which is 360. A certificate of the
Issuing Lender with respect to any amounts owing under this
Section shall be conclusive in the absence of manifest
error. With respect to payment to the Issuing Lender of the
unreimbursed amounts described in this Section 3.4(b), if
the L/C Participants receive notice that any such payment is
due (A) prior to 1:00 p.m. (Charlotte time) on any Business
Day, such payment shall be due that Business Day, and (B)
after 1:00 p.m. (Charlotte time) on any Business Day, such
payment shall be due on the following Business Day.
(c) Whenever, at any time after the Issuing Lender has
made payment under any Letter of Credit and has received
from any L/C Participant its Commitment Percentage of such
payment in accordance with this Section 3.4, the Issuing
Lender receives any payment related to such Letter of
Credit (whether directly from the Borrower or otherwise), or
any payment of interest on account thereof, the Issuing
Lender will distribute to such L/C Participant its pro rata
share thereof; provided, that in the event that any such
payment received by the Issuing Lender shall be required to
be returned by the Issuing Lender, such L/C Participant
shall return to the Issuing Lender the portion thereof
previously distributed by the Issuing Lender to it.
SECTION 3.5. Reimbursement Obligation of the
Borrower. The Borrower agrees to reimburse the Issuing
Lender on each date on which the Issuing Lender notifies the
Borrower of the date and amount of a draft paid under any
Letter of Credit for the amount of (a) such draft so paid
and (b) any taxes, fees, charges or other costs or expenses
incurred by the Issuing Lender in connection with such
payment. Each such payment shall be made to the Issuing
Lender at its address for notices specified herein in
Dollars and in immediately available funds. Interest shall
be payable on any and all amounts remaining unpaid by the
Borrower under this Article III from the date such amounts
become payable (whether at stated maturity, by acceleration
or otherwise) until payment in full at the rate which would
be payable on any outstanding Base Rate Loans which were
then overdue. If the Borrower fails to timely reimburse the
Issuing Lender on the date the Borrower receives the notice
referred to in this Section 3.5, the Borrower shall be
deemed to have timely given a Notice of Borrowing hereunder
to the Administrative Agent requesting the Lenders to make
a Base Rate Loan on such date in an amount equal to the
amount of such drawing and, subject to the satisfaction or
waiver of the conditions precedent specified in Article V,
<PAGE>
the Lenders shall make Base Rate Loans in such amount, the
proceeds of which shall be applied to reimburse the Issuing
Lender for the amount of the related drawing and costs and
expenses.
SECTION 3.6. Obligations Absolute. The
Borrower's obligations under this Article III (including
without limitation the Reimbursement Obligation) shall be
absolute and unconditional under any and all circumstances
and irrespective of any set-off, counterclaim or defense to
payment which the Borrower may have or have had against the
Issuing Lender or any beneficiary of a Letter of Credit or
any other Person. The Borrower also agrees that the Issuing
Lender and the L/C Participants shall not be responsible
for, and the Borrower's Reimbursement Obligation under
Section 3.5 shall not be affected by, among other things,
the validity or genuineness of documents or of any
endorsements thereon, even though such documents shall in
fact prove to be invalid, fraudulent or forged, or any
dispute between or among the Borrower and any beneficiary of
any Letter of Credit or any other party to which such Letter
of Credit may be transferred or any claims whatsoever of the
Borrower against any beneficiary of such Letter of Credit or
any such transferee. The Issuing Lender shall not be liable
for any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice,
however transmitted, in connection with any Letter of
Credit, except for errors or omissions caused by the Issuing
Lender's gross negligence or willful misconduct. The
Borrower agrees that any action taken or omitted by the
Issuing Lender under or in connection with any Letter of
Credit or the related drafts or documents, if done in the
absence of gross negligence or willful misconduct and in
accordance with the standards of care specified in the
Uniform Customs and, to the extent not inconsistent
therewith, the UCC, shall be binding on the Borrower and
shall not result in any liability of the Issuing Lender or
any L/C Participant to the Borrower. The responsibility of
the Issuing Lender to the Borrower in connection with any
draft presented for payment under any Letter of Credit
shall, in addition to any payment obligation expressly
provided for in such Letter of Credit, be limited to
determining that the documents (including each draft)
delivered under such Letter of Credit in connection with
such presentment are in conformity with such Letter of
Credit.
SECTION 3.7. Letter of Credit Application. To
the extent that any provision of any Letter of Credit
Application related to any Letter of Credit is inconsistent
with the provisions of this Article III, the provisions of
this Article III shall apply.
ARTICLE IV
GENERAL LOAN PROVISIONS
SECTION 4.1. Interest.
<PAGE>
(a) Interest Rate Options. Subject to the provisions
of this Section 4.1, at the election of the Borrower,
Revolving Credit Loans denominated in Dollars shall bear
interest at the Base Rate or the LIBOR Rate plus, in each
case, the Applicable Margin as set forth below, and
Revolving Credit Loans denominated in an Alternative
Currency and Specified A/C Loans shall bear interest at the
LIBOR Rate plus the Applicable Margin as set forth below;
provided, that in no event shall the LIBOR Rate (and
consequently Alternative Currency Loans and LIBOR
Competitive Bid Loans) be available until three (3) Business
Days after the Closing Date. Competitive Bid Loans shall
bear interest at the Competitive Bid Rate established
pursuant to Section 2.6 and each Swingline Loan shall bear
interest at the Base Rate. The Borrower shall select the
rate of interest and Interest Period, if any, applicable to
any Revolving Credit Loan or Specified A/C Loan at the time
a Notice of Borrowing is given pursuant to Section 2.5 or at
the time a Notice of Conversion/Continuation is given
pursuant to Section 4.2. The Competitive Bid Interest
Period, if any, shall be determined in accordance with
Section 2.6 and Section 4.1(b)(ii). Each Loan or portion
thereof bearing interest based on the Base Rate shall be a
"Base Rate Loan" and each Loan (other than a Competitive Bid
Loan) or portion thereof bearing interest based on the LIBOR
Rate shall be a "LIBOR Rate Loan". Any Loan or any portion
thereof as to which the Borrower has not duly specified an
interest rate as provided herein shall be deemed a Base Rate
Loan denominated in Dollars.
(b) Interest Periods.
(i) In connection with each LIBOR Rate Loan, the
Borrower, by giving notice at the times described in Section
4.1(a), shall elect an interest period (each, a "LIBOR
Interest Period") to be applicable to such Loan, which LIBOR
Interest Period shall be a period of one (1), two (2), three
(3) or six (6) months with respect to each LIBOR Rate Loan;
provided, that:
(A) a LIBOR Interest Period shall commence
on the date of advance of or conversion to any LIBOR Rate
Loan and, in the case of immediately successive LIBOR
Interest Periods, each successive LIBOR Interest Period
shall commence on the date on which the next preceding LIBOR
Interest Period expires;
(B) if any LIBOR Interest Period would
otherwise expire on a day that is not a Business Day, such
LIBOR Interest Period shall expire on the next succeeding
Business Day; provided, that if any LIBOR Interest Period
would otherwise expire on a day that is not a Business
Day but is a day of the month after which no further
Business Day occurs in such month, such LIBOR Interest
Period shall expire on the next preceding Business Day;
(C) any LIBOR Interest Period that begins on
the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the
<PAGE>
calendar month at the end of such LIBOR Interest Period)
shall end on the last Business Day of the relevant
calendar month at the end of such LIBOR Interest Period;
(D) no LIBOR Interest Period shall extend
beyond the Credit Facility Termination Date; and
(E) there shall be no more than five (5)
LIBOR Interest Periods outstanding at any time.
(ii) In connection with each Competitive Bid Loan,
the Borrower, by giving notice at the times described in
Section 2.6, shall request an interest period (each a
"Competitive Bid Interest Period") to be applicable to such
Loan, which Competitive Bid Interest Period shall be
a period of such duration as mutually agreed upon by the
applicable Lender and the Borrower pursuant to Section
2.6(c); provided that:
(A) a Competitive Bid Interest Period for an
Absolute Rate Loan shall not be less than seven (7) days nor
more than one hundred eighty (180) days;
(B) a Competitive Bid Interest Period for
any LIBOR Competitive Bid Loan shall be a period of one (1),
two (2), three (3), or six (6) months;
(C) a Competitive Bid Interest Period shall
commence on the date of advance of any Competitive Bid Loan;
(D) if any Competitive Bid Interest Period
would otherwise expire on a day that is not a Business Day,
such Interest Period shall expire on the next succeeding
Business Day; provided, that if any Competitive Bid Interest
Period for any LIBOR Competitive Bid Loan would otherwise
expire on a day that is not a Business Day but is a day of
the month after which no further Business Day occurs in such
month, such Competitive Bid Interest Period shall expire on
the next preceding Business Day;
(E) any Competitive Bid Interest Period for
any LIBOR Competitive Bid Loan that begins on the last day
of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the
end of such Competitive Bid Interest Period) shall end on
the last Business Day of the relevant calendar month at the
end of such Competitive Bid Interest Period; and
(F) no Competitive Bid Interest Period shall
expire on a date later than the first Business Day prior to
the Credit Facility Termination Date.
(iii) In connection with all Loans there shall
be no more than seven (7) Interest Periods outstanding at
any one time.
(c) Applicable Margin. The Applicable Margin provided
for in Section 4.1(a) with respect to the Loans (other than
Competitive Bid Loans) (the "Applicable Margin") shall:
<PAGE>
(i) for the period commencing on the Closing Date
and ending on the date immediately preceding the tenth
(10th) Business Day following receipt by the Administrative
Agent of the Consolidated financial statements of the
Borrower and its Subsidiaries for the fiscal quarter ended
September 28, 1997 and the accompanying Officer's Compliance
Certificate, be 0.00% for Base Rate Loans and 0.500% for
LIBOR Rate Loans;
(ii) for the period commencing on the tenth (10th)
Business Day following receipt by the Administrative Agent
of the Consolidated financial statements of the Borrower and
its Subsidiaries for the fiscal quarter ended September 28,
1997 and the accompanying Officer's Compliance Certificate
and continuing through and including the Credit Facility
Termination Date, be determined by reference to the Leverage
Ratio as of the end of the fiscal quarter immediately
preceding the delivery of the applicable Officer's
Compliance Certificate in accordance with the chart below:
Applicable Margin Per Annum
Leverage Ratio Base Rate + LIBOR Rate
+
Greater than or equal 0.00% 0.500%
to 30%
Less than 30% 0.00% 0.375%
Adjustments, if any, in the Applicable Margin shall be made
by the Administrative Agent on the tenth (10th) Business Day
(the "Adjustment Date") after receipt by the dministrative
Agent of quarterly Consolidated financial statements for the
Borrower and its Subsidiaries and the accompanying Officer's
Compliance Certificate setting forth the Leverage Ratio of
the Borrower and its Subsidiaries as of the most recent
fiscal quarter end. Subject to Section 4.1(d), in the event
the Borrower fails to deliver such financial statements and
certificate within the time required by Sections 7.1 and
7.2, the Applicable Margin shall be the highest Applicable
Margin set forth above until ten (10) Business Days after
the delivery of such financial statements and certificate.
(d) Default Rate. Upon the occurrence and during the
continuance of an Event of Default, (i) the Borrower shall
no longer have the option to request LIBOR Rate Loans or
Competitive Bid Loans, (ii) all outstanding LIBOR Rate Loans
and Competitive Bid Loans shall bear interest at a rate per
annum equal to two percent (2%) in excess of the rate then
applicable to LIBOR Rate Loans or Competitive Bid Loans
until the end of the applicable Interest Period and
thereafter at a rate equal to two percent (2%) in excess of
the rate then applicable to Base Rate Loans, (iii) all
outstanding Base Rate Loans (including, without limitation,
Swingline Loans) shall bear interest at a rate per annum
equal to two percent (2%) in excess of the rate then
applicable to Base Rate Loans, and (iv) all outstanding
Competitive Bid Loans shall bear interest at a rate per
annum equal to two percent (2%) in excess of the rate then
<PAGE>
applicable to such Competitive Bid Loans until the end of
the applicable Competitive Bid Interest Period and
thereafter at a rate equal to two percent (2%) in excess of
the rate then applicable to Base Rate Loans. Interest shall
continue to accrue on the Notes after the filing by or
against the Borrower of any petition seeking any relief in
bankruptcy or under any act or law pertaining to insolvency
or debtor relief, whether state, federal or foreign.
(e) Interest Payment and Computation. Interest on
each Base Rate Loan and Swingline Loan shall be payable in
arrears on the last Business Day of each calendar quarter
and on the Credit Facility Termination Date. Interest on
each LIBOR Rate Loan, LIBOR Competitive Bid Loan and
Absolute Rate Loan shall be payable on the last day of each
Interest Period applicable thereto and on the Credit
Facility Termination Date, and if such Interest Period
extends over three (3) months, at the end of each three
month interval during such Interest Period. Interest on
Base Rate Loans shall be computed on the basis of a 365-366
day year and assessed for the actual number of days elapsed.
Interest on LIBOR Rate Loans except for Alternative Currency
Loans denominated in Pounds Sterling which shall be computed
on the basis of a 365-day year) and Competitive Bid Loans
and all fees and commissions provided hereunder shall be
computed on the basis of a 360-day year and assessed for the
actual number of days elapsed.
(f) Maximum Rate. In no contingency or event
whatsoever shall the aggregate of all amounts deemed
interest hereunder or under any of the Notes charged or
collected pursuant to the terms of this Agreement or
pursuant to any of the Notes exceed the highest rate
permissible under any Applicable Law which a court of
competent jurisdiction shall, in a final determination, deem
applicable hereto. In the event that such a court
determines that the Lenders have charged or received
interest hereunder in excess of the highest applicable rate,
the rate in effect hereunder shall automatically be reduced
to the maximum rate permitted by Applicable Law and the
Lenders shall at the Administrative Agent's option promptly
refund to the Borrower any interest received by the
Lenders in excess of the maximum lawful rate or shall apply
such excess to the principal balance of the Obligations. It
is the intent hereof that the Borrower not pay or contract
to pay, and that neither the Administrative Agent nor any
Lender receive or contract to receive, directly or
indirectly in any manner whatsoever, interest in excess of
that which may be paid by the Borrower under Applicable
Law.
SECTION 4.2. Notice and Manner of Conversion or
Continuation of Revolving Credit Loans and Specified A/C
Loans.
Provided that no Default or Event of Default has occurred
and is then continuing, the Borrower shall have the option
to (a) convert at any time all or any portion of any
outstanding Base Rate Loans that are Revolving Credit Loans
<PAGE>
in a principal amount equal to $2,500,000 or any whole
multiple of $500,000 in excess thereof into one or more
LIBOR Rate Loans denominated in Dollars, (b) upon the
expiration of any LIBOR Interest Period, convert all or any
part of any outstanding LIBOR Rate Loans denominated in
Dollars in a principal amount equal to $1,000,000 or a whole
multiple of $500,000 in excess thereof into Base Rate Loans
that are Revolving Credit Loans or (c) upon the expiration
of any LIBOR Interest Period, continue any LIBOR Rate Loan
denominated in any Permitted Currency in a principal amount
of $5,000,000 or any whole multiple of $1,000,000 in excess
thereof (or with respect to LIBOR Rate Loans denominated in
an Alternative Currency, the Alternative Currency Amount in
each case thereof) as a LIBOR Rate Loan in the same
Permitted Currency. Whenever the Borrower desires to
convert or continue Loans as provided above, the Borrower
shall give the Administrative Agent irrevocable prior
written notice in the form attached as Exhibit E (a "Notice
of Conversion/Continuation") not later than 11:00 a.m.
(Charlotte time) four (4) Business Days (with respect to any
Loan denominated in an Alternative Currency) and three (3)
Business Days (with respect to any Loan denominated in
Dollars) before the day on which a proposed conversion or
continuation of such Loan is to be effective specifying (A)
the Loans to be converted or continued, and, in the case of
any LIBOR Rate Loan to be converted or continued,
the Permitted Currency in which such Loan is denominated and
the last day of the LIBOR Interest Period therefor, (B) the
effective date of such conversion or continuation (which
shall be a Business Day), (C) the principal amount of such
Loans to be converted or continued, and (D) the LIBOR
Interest Period to be applicable to such converted or
continued LIBOR Rate Loan. The Administrative Agent shall
promptly notify the Lenders of such Notice of
Conversion/Continuation.
SECTION 4.3. Fees.
(a) Commitment Fee. The Borrower shall pay to the
Administrative Agent, for the account of the Lenders, a non-
refundable commitment fee at a rate per annum equal to the
applicable percentage set forth below in this Section 4.3(a)
on the average daily unused portion of the Aggregate
Commitment; provided, that the amount of outstanding
Swingline Loans, Competitive Bid Loans and Specified A/C
Loans shall not be considered usage of the Aggregate
Commitment for the purpose of calculating such commitment
fee. The commitment fee shall be payable in arrears on the
last Business Day of each calendar quarter during the term
of this Agreement commencing December 31, 1997, and on the
Credit Facility Termination Date. Such commitment fee shall
be distributed by the Administrative Agent to the Lenders
pro rata in accordance with the Lenders' respective
Commitment Percentages. The commitment fee rate shall:
(i) for the period commencing on the Closing Date
and ending on the date immediately preceding the tenth
(10th) Business Day following receipt by the Administrative
Agent of the Consolidated financial statements of the
<PAGE>
Borrower and its Subsidiaries for the fiscal quarter ended
September 28, 1997 and the accompanying Officer's Compliance
Certificate, be 0.150%;
(ii) for the period commencing on the tenth (10th)
Business Day following receipt by the Administrative Agent
of the Consolidated financial statements of the Borrower and
its Subsidiaries for the fiscal quarter ended September 28,
1997 and the accompanying Officer's Compliance Certificate
and continuing through and including the Credit Facility
Termination Date, be determined by reference to the Leverage
Ratio of the Borrower and its Subsidiaries as of the end of
the fiscal quarter immediately preceding the delivery of the
applicable Officer's Compliance Certificate in accordance
with the chart below:
Leverage Ratio Commitment Fee Rate
Greater than or equal 0.150%
to 30%
Less than 30% 0.125%
Adjustments, if any, in the commitment fee rate shall be
made by the Administrative Agent on the tenth (10th)
Business Day (the "Adjustment Date") after receipt by the
Administrative Agent of quarterly Consolidated financial
statements for the Borrower and its Subsidiaries and the
accompanying Officer's Compliance Certificate setting forth
the Leverage Ratio of the Borrower and its Subsidiaries as
of the most recent fiscal quarter end. In the event the
Borrower fails to deliver such financial statements and
certificate within the time required by Sections 7.1 and
7.2, the commitment fee rate shall be the highest commitment
fee rate set forth above until ten (10) Business Days after
the delivery of such financial statements and certificate.
(b) Administrative Agent's and Other Fees. In order
to compensate the Administrative Agent for structuring,
syndicating and arranging the Credit Facility and for its
obligations hereunder, the Borrower agrees to pay to the
Administrative Agent, for its sole account, the fees set
forth in the separate fee letter agreement from the
Administrative Agent to the Borrower dated August 28, 1997.
SECTION 4.4. Manner of Payment.
(a) Loans Denominated in Dollars. Each payment
(including repayments described in Article II) by the
Borrower on account of the principal of or interest on the
Loans denominated in Dollars or of any fee, commission or
other amounts (including the Reimbursement Obligation)
payable to the Lenders under this Agreement or any Note
(except as set forth in Sections 4.4(b) and 4.4(c)) shall be
made in Dollars not later than 1:00 p.m. (Charlotte time) on
the date specified for payment under this Agreement to the
Administrative Agent at the Administrative Agent's Office
for the account of the Lenders pro rata in accordance with
their respective Commitment Percentages in immediately
<PAGE>
available funds and shall be made without any set-off,
counterclaim or deduction whatsoever. Any payment received
after such time but before 2:00 p.m. (Charlotte time) on
such day shall be deemed a payment on such date for the
purposes of Section 11.1, but for all other purposes shall
be deemed to have been made on the next succeeding Business
Day. Any payment received after 2:00 p.m. (Charlotte time)
shall be deemed to have been made on the next succeeding
Business Day for all purposes.
(b) Alternative Currency Loans (other than Specified
A/C Loans). Each payment (including repayments described in
Article II) by the Borrower on account of the principal of
or interest on the Loans denominated in any Alternative
Currency (other than a Specified Alternative Currency) shall
be made in such Alternative Currency not later than 11:00
a.m. (the time of the Administrative Agent's Correspondent)
on the date specified for payment under this Agreement to
the Administrative Agent's account with the Administrative
Agent's Correspondent for the account of the Lenders pro
rata in accordance with their respective Commitment
Percentages in immediately available funds, and shall be
made without any set-off, counterclaim or deduction
whatsoever. Any payment received after such time but before
12:00 noon (the time of the Administrative Agent's
Correspondent) on such day shall be deemed a payment on such
date for the purposes of Section 11.1, but for all other
purposes shall be deemed to have been made on the next
succeeding Business Day. Any payment received after 12:00
noon (the time of the Administrative Agent's Correspondent)
shall be deemed to have been made on the next succeeding
Business Day for all purposes.
(c) Specified A/C Loans. Each payment (including
repayments described in Article II) by the Borrower on
account of the principal of or interest on any Specified A/C
Loans shall be made in such Specified Alternative Currency
not later than 12:00 noon (the time of the Administrative
Agent's Correspondent) on the date specified for payment
under this Agreement to the applicable Specified A/C Lenders
pro rata in accordance with their respective Specified A/C
Commitment Percentages in immediately available funds, and
shall be made without any set-off, counterclaim or deduction
whatsoever. Any payment received after such time but before
1:00 p.m. (the time of the Administrative Agent's
Correspondent) on such day shall be deemed a payment on such
date for the purposes of Section 11.1, but for all other
purposes shall be deemed to have been made on the next
succeeding Business Day. Any payment received after 1:00
p.m. (the time of the Administrative Agent's Correspondent)
shall be deemed to have been made on the next succeeding
Business Day for all purposes.
(d) Pro Rata Treatment. Upon receipt by the
Administrative Agent of each such payment, the
Administrative Agent shall distribute to each Lender or each
Specified A/C Lender, as applicable, its pro rata share of
such payment in accordance with the Commitment Percentage of
such Lender or applicable Specified A/C Commitment
<PAGE>
Percentage of such Specified A/C Lender, as applicable.
Each payment to the Administrative Agent of Administrative
Agent's fees or L/C Participants' commissions shall be made
in like manner, but for the account of the Administrative
Agent or the L/C Participants, as the case may be. All
amounts payable by the Borrower to the Swingline Lender with
respect to the Swingline Note shall be made to the
Administrative Agent for the account of the Swingline
Lender, all amounts payable by the Borrower on account of
any Competitive Bid Loan shall be for the account of the
applicable Lender of such Loan, and all amounts payable to
any Lender under Sections 4.10, 4.11, 4.12, 4.13, and 13.2
shall be payable to the Administrative Agent for the account
of the applicable Lender or Specified A/C Lender.
Subject to Section 4.1(b), if any payment under this
Agreement or any Note shall be specified to be made upon a
day which is not a Business Day, it shall be made on the
next succeeding day which is a Business Day and such
extension of time shall in such case be included in
computing any interest if payable along with such payment.
SECTION 4.5. Crediting of Payments and Proceeds.
In the event that the Borrower shall fail to pay any of the
Obligations when due and the Obligations have been
accelerated pursuant to Section 11.2, all payments received
by the Lenders upon the Notes and the other Obligations and
all net proceeds from the enforcement of the Obligations
shall be applied to all expenses then due and payable by the
Borrower hereunder, then to all indemnity obligations then
due and payable by the Borrower hereunder, then to all
Administrative Agent's and Issuing Lender's fees then due
and payable, then to all commitment and other fees and
commissions then due and payable, then to accrued and unpaid
interest on the Swingline Note to the Swingline Lender, then
to the principal amount outstanding under the Swingline Note
to the Swingline Lender, then to the principal amount
outstanding and accrued and unpaid interest on the Specified
A/C Notes, then to accrued and unpaid interest on the
Revolving Credit Notes, the Reimbursement Obligation and any
termination payments due in respect of a Hedging Agreement
with any Lender permitted pursuant to Section 10.1 (pro rata
in accordance with all such amounts due), then to the
principal amount of the Revolving Credit Notes and
Reimbursement Obligation, then to the cash collateral
account described in Section 11.2(b) to the extent of any
L/C Obligations then outstanding, then to accrued and unpaid
interest on the Competitive Bid Notes and then to the
principal amount outstanding under any Competitive Bid Notes
(in inverse order of maturity) in that order.
SECTION 4.6. Adjustments.
(a) If any Lender (a "Benefited Lender") shall at any
time receive any payment of all or part of its Extensions of
Credit (other than Specified A/C Loans and Competitive Bid
Loans) or interest thereon, or if any Lender shall at any
time receive any collateral in respect to its Extensions of
Credit (other than Specified A/C Loans and Competitive Bid
Loans) (whether voluntarily or involuntarily, by set-off or
<PAGE>
otherwise) in a greater proportion than any such payment to and
collateral received by any other Lender, if any, in respect of such
other Lender's Extensions of Credit (other than Specified A/C
Loans and Competitive Bid Loans), or interest thereon, such
Benefited Lender shall purchase for cash from the other
Lenders such portion of each such other Lender's Extensions
of Credit (other than Specified A/C Loans and Competitive
Bid Loans), or shall provide such other Lenders with the
benefits of any such collateral, or the proceeds thereof, as
shall be necessary to cause such Benefited Lender to share
the excess payment or benefits of such collateral or
proceeds ratably with each of the Lenders; provided, that if
all or any portion of such excess payment or benefits is
thereafter recovered from such Benefited Lender, such
purchase shall be rescinded, and the purchase price and
benefits returned to the extent of such recovery, but
without interest. The Borrower agrees that each Lender so
purchasing a portion of another Lender's Extensions of
Credit (other than Specified A/C Loans and Competitive Bid
Loans) may exercise all rights of payment (including,
without limitation, rights of set-off) with respect to such
portion as fully as if such Lender were the direct holder of
such portion.
(b) If any Specified A/C Lender (a "Benefited
Specified A/C Lender") shall at any time receive any payment
of all or part of its Specified A/C Loans, or interest
thereon, or if any Specified A/C Lender shall at any time
receive any collateral in respect to its Specified A/C Loans
(whether voluntarily or involuntarily, by set-off or
otherwise) in a greater proportion than any such payment
to and collateral received by any other Specified A/C Lender
for the same Specified Alternative Currency, if any, in
respect of such other Specified A/C Lender's applicable
Specified A/C Loans, or interest thereon, such Benefited
Specified A/C Lender shall purchase for cash from the other
applicable Specified A/C Lenders such portion of each such
other applicable Specified A/C Lender's Specified A/C Loans,
or shall provide such other Specified A/C Lenders with the
benefits of any such collateral, or the proceeds thereof, as
shall be necessary to cause such Benefited Specified A/C
Lender to share the excess payment or benefits of such
collateral or proceeds ratably with each of the Specified
A/C Lenders for the same Specified Alternative Currency;
provided, that if all or any portion of such excess payment
or benefits is thereafter recovered from such Benefited
Specified A/C Lender, such purchase shall be rescinded, and
the purchase price and benefits returned to the extent of
such recovery, but without interest. The Borrower agrees
that each Specified A/C Lender so purchasing a portion of
another Specified A/C Lender's Specified A/C Loans may
exercise all rights of payment (including, without
limitation, rights of set-off) with respect to such portion
as fully as if such Lender were the direct holder of such
portion.
SECTION 4.7. Nature of Obligations of Lenders
Regarding Extensions of Credit;
Assumption by Administrative Agent. The obligations of the
<PAGE>
Lenders under this Agreement to make the Loans and issue or
participate in Letters of Credit are several and are not
joint or joint and several. Unless the Administrative Agent
shall have received notice from a Lender prior to a
proposed borrowing date that such Lender will not make
available to the Administrative Agent such Lender's ratable
portion of the amount to be borrowed on such date (which
notice shall not release such Lender of its obligations
hereunder), the Administrative Agent may assume that such
Lender has made such portion available to the Administrative
Agent on the proposed borrowing date in accordance with
Section 2.5(b) or (c), as applicable, and the Administrative
Agent may, in reliance upon such assumption, make available
to the Borrower on such date a corresponding amount. If
such amount is made available to the Administrative Agent on
a date after such borrowing date, such Lender shall pay to
the Administrative Agent on demand an amount, until paid,
equal to (a) with respect to a Loan denominated in Dollars,
the amount of such Lender's Commitment Percentage of such
borrowing and interest thereon at a rate equal to the daily
average Federal Funds Rate during such period as determined
by the Administrative Agent and (b) with respect to an
Alternative Currency Loan, the amount of such Lender's
Commitment Percentage of such borrowing and interest thereon
at a rate per annum equal to the Administrative Agent's
aggregate marginal cost (including the cost of maintaining
any required reserves or deposit insurance and of any fees,
penalties, overdraft charges or other costs or expenses
incurred by the Administrative Agent as a result of the
failure to deliver funds hereunder) of carrying such amount.
A certificate of the Administrative Agent with respect to
any amounts owing under this Section 4.7 shall be
conclusive, absent manifest error. If the Commitment
Percentage of such Lender of such borrowing is not made
available to the Administrative Agent by such Lender within
three (3) Business Days after such borrowing date, the
Administrative Agent shall be entitled to recover such
amount made available by the Administrative Agent with
interest thereon at the rate then applicable to such Loan
hereunder, on demand, from the Borrower. The failure of any
Lender to make its Commitment Percentage of any Loan
available shall not relieve it or any other Lender of its
obligation, if any, hereunder to make its Commitment
Percentage of such Loan available on such borrowing date,
but no Lender shall be responsible for the failure of any
other Lender to make its Commitment Percentage of such Loan
available on such borrowing date.
SECTION 4.8. Mandatory Redenomination of
Alternative Currency Loans.
(a) If any LIBOR Rate Loan is required to be converted
to a Base Rate Loan pursuant to Section 4.1(d), Section 4.10
or any other applicable provision hereof, such Loan shall be
funded in Dollars in an amount equal to the Dollar Amount of
such Loan, all subject to the provisions of Section 2.7(b).
The Borrower shall reimburse the Lenders upon any such
conversion for any amounts required to be paid under Section
4.11.
<PAGE>
(b) If any Alternative Currency becomes unavailable to
any Lender for any reason (including, without limitation,
any conversion, discontinuation or replacement of such
currency arising out of or in connection with any event
associated with economic and monetary union in the
European Community) all outstanding Loans in such
Alternative Currency shall be immediately redenominated and
converted into Dollars in an amount equal to the Dollar
Amount of such Loan, all subject to the provisions of
Section 2.7(b).
SECTION 4.9. Regulatory Limitation. In the
event, as a result of increases in the value of Alternative
Currencies against the Dollar or for any other reason, the
obligation of any of the Lenders to make Loans (taking into
account the Dollar Amount of the Obligations and all other
indebtedness required to be aggregated under 12 U.S.C.A.
Section 84, as amended, the regulations promulgated thereunder and
any other Applicable Law) is determined by such Lender to
exceed its then applicable legal lending limit under 12
U.S.C.A. Section 84, as amended, and the regulations promulgated
thereunder, or any other Applicable Law, the amount of
additional Extensions of Credit such Lender shall be
obligated to make or issue or participate in hereunder shall
immediately be reduced to the maximum amount which such
Lender may legally advance (as determined by such Lender),
the obligation of each of the remaining Lenders hereunder
shall be proportionately reduced, based on their applicable
Commitment Percentages and, to the extent necessary under
such laws and regulations (as determined by each of the
Lenders, with respect to the applicability of such
laws and regulations to itself), and the Borrower shall
reduce, or cause to be reduced, complying to the extent
practicable with the remaining provisions hereof, the
Obligations outstanding hereunder by an amount sufficient to
comply with such maximum amounts.
SECTION 4.10. Changed Circumstances.
(a) Circumstances Affecting LIBOR Rate and Alternative
Currency Availability. If with respect to any Interest
Period the Administrative Agent or any Lender (after
consultation with the Administrative Agent) shall determine
that (i) by reason of circumstances affecting the foreign
exchange and interbank markets generally, deposits in
eurodollars or an Alternative Currency in the applicable
amounts are not being quoted via Telerate Page 3750 or
offered to the Administrative Agent or such Lender for such
Interest Period, (ii) a fundamental change has occurred in
the foreign exchange or interbank markets with respect to
any Alternative Currency (including, without limitation,
changes in national or international financial, political or
economic conditions or currency exchange rates or exchange
controls) or (iii) it has become otherwise materially
impractical for the Administrative Agent or the Lenders to
make such Loan in an Alternative Currency, then the
Administrative Agent shall forthwith give notice thereof to
the Borrower. Thereafter, until the Administrative Agent
notifies the Borrower that such circumstances no longer
<PAGE>
exist, the obligation of the Lenders to make LIBOR Rate
Loans, LIBOR Competitive Bid Loans or Alternative Currency
Loans, as applicable, and the right of the Borrower to
convert any Loan to or continue any Loan as a LIBOR Rate
Loan or an Alternative Currency Loan, as applicable, shall
be suspended, and the Borrower shall repay in full (or cause
to be repaid in full) the then outstanding principal amount
of each such LIBOR Rate Loan or Alternative Currency Loan,
as applicable, together with accrued interest thereon, on
the last day of the then current LIBOR Interest Period
applicable to such LIBOR Rate Loan, LIBOR Competitive Bid
Loan or Alternative Currency Loan, as applicable, or convert
the then outstanding principal amount of each such LIBOR
Rate Loan or Alternative Currency Loan, as applicable, to a
Base Rate Loan as of the last day of such Interest Period.
(b) Laws Affecting LIBOR Rate and Alternative Currency
Availability. If, after the date hereof, the introduction
of, or any change in, any Applicable Law or any change in
the interpretation or administration thereof by any
Governmental Authority, central bank or comparable
agency charged with the interpretation or administration
thereof, or compliance by any Lender (or any of its
respective Lending Offices) with any request or directive
(whether or not having the force of law) of any such
Governmental Authority, central bank or comparable agency,
shall make it unlawful or impossible for any of the Lenders
(or any of their respective Lending Offices) to honor
its obligations hereunder to make or maintain any LIBOR Rate
Loan or any Alternative Currency Loan or any LIBOR
Competitive Bid Loan such Lender shall promptly give notice
thereof to the Administrative Agent and the Administrative
Agent shall promptly give notice to the Borrower and
the other Lenders. Thereafter, until the Administrative
Agent notifies the Borrower that such circumstances no
longer exist, (i) the obligations of the Lenders to make
LIBOR Rate Loans, LIBOR Competitive Bid Loans or Alternative
Currency Loans, as applicable, and the right of the Borrower
to convert any Loan to or continue any Loan as a LIBOR Rate
Loan or Alternative Currency Loan, as applicable, shall be
suspended and thereafter the Borrower may select only Base
Rate Loans denominated in Dollars hereunder, and (ii) if any
of the Lenders may not lawfully continue to maintain a LIBOR
Rate Loan, LIBOR Competitive Bid Loan or an Alternative
Currency Loan, as applicable, to the end of the then current
Interest Period applicable thereto as a LIBOR Rate Loan, as
a LIBOR Competitive Bid Loan or as an Alternative Currency
Loan, as applicable, the applicable LIBOR Rate Loan, LIBOR
Competitive Bid Loan or Alternative Currency Loan shall
immediately be converted to a Base Rate Loan denominated in
Dollars for the remainder of such Interest Period.
(c) Increased Costs. If, after the date hereof, the
introduction of, or any change in, any Applicable Law, or in
the interpretation or administration thereof by any
Governmental Authority, central bank or comparable agency
charged with the interpretation or administration thereof,
or compliance by any of the Lenders (or any of their
respective Lending Offices) with any request or directive
<PAGE>
(whether or not having the force of law) of such
Governmental Authority, central bank or comparable agency:
(i) shall subject any of the Lenders (or any of
their respective Lending Offices) to any tax, duty or other
charge with respect to any LIBOR Rate Loan, Alternative
Currency Loan, Competitive Bid Loan, Note, Letter of Credit
or Letter of Credit Application or shall change the basis of
taxation of payments to any of the Lenders (or any of their
respective Lending Offices) of the principal of or interest
on any LIBOR Rate Loan, any Alternative Currency Loan, any
Competitive Bid Loan, any Note, any Letter of Credit or any
Letter of Credit Application or any other amounts due under
this Agreement in respect thereof (except for changes in the
rate of tax on the overall net income of any of the Lenders
or any of their respective Lending Offices imposed by
the jurisdiction in which such Lender is organized or is or
should be qualified to do business or such Lending Office is
located); or
(ii) shall impose, modify or deem applicable any
reserve (including, without limitation, any imposed by the
Board of Governors of the Federal Reserve System), special
deposit, insurance or capital or similar requirement against
assets of, deposits with or for the account of, or
credit extended by any of the Lenders (or any of their
respective Lending Offices) or shall impose on any of the
Lenders (or any of their respective Lending Offices) or the
foreign exchange and interbank markets any other condition
affecting any LIBOR Rate Loan, any Alternative Currency
Loan, any Competitive Bid Loan, any Note, any Letter of
Credit or any Letter of Credit Application; and the result
of any of the foregoing is to increase the costs to any of
the Lenders of maintaining any LIBOR Rate Loan, any
Competitive Bid Loan or any Alternative Currency Loan,
as applicable, or issuing or participating in Letters of
Credit or to reduce the yield or amount of any sum received
or receivable by any of the Lenders under this Agreement or
under the Notes in respect of a LIBOR Rate Loan, a
Competitive Bid Loan or an Alternative Currency Loan, as
applicable, or Letter of Credit or Letter of Credit
Application, then such Lender shall promptly notify the
Administrative Agent and the Borrower of such fact and
demand compensation therefor and, within fifteen (15) days
after such notice by such Lender, the Borrower shall pay to
such Lender such additional amount or amounts as will
compensate such Lender for such increased cost or reduction.
The amount of such compensation shall be determined, in the
applicable Lender's reasonable discretion, based upon the
assumption that such Lender funded its Commitment
Percentage of the LIBOR Rate Loans, Competitive Bid Loans or
Alternative Currency Loans, as applicable, in the London
interbank market and using any reasonable attribution or
averaging methods which such Lender deems appropriate and
practical. A certificate of such Lender setting forth the
basis for determining such amount or amounts necessary to
compensate such Lender shall be forwarded to the Borrower
through the Administrative Agent and shall be conclusively
presumed to be correct save for manifest error.
<PAGE>
SECTION 4.11. Indemnity. The Borrower hereby
indemnifies each of the Lenders against any loss or expense
(including, without limitation, any foreign exchange costs)
which may arise or be attributable to each Lender's
obtaining, liquidating or employing deposits or other funds
acquired to effect, fund or maintain any Loan (a) as a
consequence of any failure by the Borrower to make any
payment when due of any amount due hereunder in connection
with a LIBOR Rate Loan or a Competitive Bid Loan, (b) due to
any failure of the Borrower to borrow, continue or convert
on a date specified therefor in a Notice of Borrowing or
Notice of Continuation/Conversion or Competitive Bid
Accept/Reject Letter or (c) due to any payment, prepayment
or conversion of any LIBOR Rate Loan or Competitive Bid Loan
on a date other than the last day of the Interest Period
therefor. The amount of such loss or expense shall be
determined, in the applicable Lender's reasonable
discretion, based upon the assumption that such Lender
funded its Commitment Percentage of the LIBOR Rate Loans or
its portion of the Competitive Bid Loans, as applicable, in
the London interbank market and using any reasonable
attribution or averaging methods which such Lender deems
appropriate and practical. A certificate of such Lender
setting forth the basis for determining such amount or
amounts necessary to compensate such Lender shall be
forwarded to the Borrower through the Administrative Agent
and shall be conclusively presumed to be correct save for
manifest error.
SECTION 4.12. Capital Requirements. If either (a) the
introduction of, or any change in, or in the interpretation
of, any Applicable Law or (b) compliance with any guideline
or request from any central bank or comparable agency or
other Governmental Authority (whether or not having the
force of law), has or would have the effect of reducing the
rate of return on the capital of, or has affected or would
affect the amount of capital required to be maintained by,
any Lender or any corporation controlling such Lender as a
consequence of, or with reference to the Commitments and
other commitments of this type, below the rate which such
Lender or such other corporation could have achieved but for
such introduction, change or compliance, then within five
(5) Business Days after written demand by any such Lender,
the Borrower shall pay to such Lender from time to time as
specified by such Lender additional amounts sufficient to
compensate such Lender or other corporation for such
reduction. A certificate as to such amounts submitted to
the Borrower and the Administrative Agent by such Lender,
shall, in the absence of manifest error, be presumed to be
correct and binding for all purposes.
SECTION 4.13. Taxes.
(a) Payments Free and Clear. Any and all payments by
the Borrower hereunder or under the Notes or the Letters of
Credit shall be made free and clear of and without deduction
for any and all present or future taxes, levies, imposts,
deductions, charges or withholding, and all liabilities with
<PAGE>
respect thereto excluding, (i) in the case of each Lender
and the Administrative Agent, income and franchise taxes
imposed by the jurisdiction under the laws of which such
Lender or the Administrative Agent (as the case may be) is
organized or is or should be qualified to do business or any
political subdivision thereof and (ii) in the case of each
Lender, income and franchise taxes imposed by the
jurisdiction of such Lender's Lending Office or any
political subdivision thereof (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 deduct or withhold
any Taxes from or in respect of any sum payable hereunder or
under any Note or in respect of any Letter of Credit to any
Lender or the Administrative Agent, (A) the sum payable
shall be increased as may be necessary so that after making
all required deductions or withholdings (including
deductions or withholdings applicable to additional sums
payable under this Section 4.13) such Lender or the
Administrative Agent (as the case may be) receives an amount
equal to the amount such party would have received had no
such deductions been made, (B) the Borrower shall make such
deductions or withholdings, (C) the Borrower shall pay the
full amount deducted or withheld to the relevant taxing
authority or other authority in accordance with applicable
law, and (D) the Borrower shall deliver to the
Administrative Agent evidence of such payment to the
relevant taxing authority or other authority in the manner
provided in Section 4.13(d).
(b) Stamp and Other Taxes. In addition, the Borrower
shall pay any present or future stamp, registration,
recordation or documentary taxes or any other similar fees
or charges or excise or property taxes, levies of the United
States or any state or political subdivision thereof or any
applicable foreign jurisdiction which arise from any payment
made hereunder or from the execution, delivery or
registration of, or otherwise with respect to, this
Agreement, the Loans, the Letters of Credit or the other
Loan Documents, or the perfection of any rights or security
interest in respect thereof (hereinafter referred to as
"Other Taxes").
(c) Indemnity. The Borrower shall indemnify each
Lender and the Administrative Agent for the full amount of
Taxes and Other Taxes (including, without limitation, any
Taxes and Other Taxes imposed by any jurisdiction on amounts
payable under this Section 4.13) paid by such Lender or the
Administrative Agent (as the case may be) and any liability
(including penalties, interest and expenses) arising
therefrom or with respect thereto, whether or not such Taxes
or Other Taxes were correctly or legally asserted. Such
indemnification shall be made within thirty (30) days
from the date such Lender or the Administrative Agent (as
the case may be) makes written demand therefor.
(d) Evidence of Payment. Within sixty (60) days after
the date of any payment of Taxes or Other Taxes, the
Borrower shall furnish to the Administrative Agent, at its
<PAGE>
address referred to in Section 13.1, the original or a
certified copy of a receipt evidencing payment thereof or
other evidence of payment satisfactory to the Administrative
Agent.
(e) Delivery of Tax Forms. Each Lender organized
under the laws of a jurisdiction other than the United
States or any state thereof shall deliver to the Borrower,
with a copy to the Administrative Agent, on the Closing Date
or concurrently with the delivery of the relevant
Assignment and Acceptance, as applicable, (i) two United
States Internal Revenue Service Forms 4224 or Forms 1001, as
applicable (or successor forms), properly completed and
certifying in each case that such Lender is entitled to a
complete exemption from withholding or deduction for or on
account of any United States federal income taxes, and (ii)
an Internal Revenue Service Form W-8 or W-9 or successor
applicable form, as the case may be, to establish an
exemption from United States backup withholding taxes. Each
such Lender further agrees to deliver to the Borrower, with
a copy to the Administrative Agent, a Form 1001 or 4224 and
Form W-8 or W-9, or successor applicable forms or manner of
certification, as the case may be, on or before the date
that any such form expires or becomes obsolete or after the
occurrence of any event requiring a change in the most
recent form previously delivered by it to the Borrower,
certifying in the case of a Form 1001 or 4224 that such
Lender is entitled to receive payments under this Agreement
without deduction or withholding of any United States
federal income taxes (unless in any such case an event
(including without limitation any change in treaty, law or
regulation) has occurred prior to the date on which
any such delivery would otherwise be required which renders
such forms inapplicable or the exemption to which such forms
relate unavailable and such Lender notifies the Borrower and
the Administrative Agent that it is not entitled to receive
payments without deduction or withholding of United States
federal income taxes) and, in the case of a Form W-8 or W-9,
establishing an exemption from United States backup
withholding tax.
(f) Survival. Without prejudice to the survival of
any other agreement of the Borrower hereunder, the
agreements and obligations of the Borrower contained in this
Section 4.13 shall survive the payment in full of the
Obligations and the termination of the Commitments.
ARTICLE V
CLOSING; CONDITIONS OF CLOSING AND BORROWING
SECTION 5.1. Closing. The closing shall take
place at the offices of Kennedy Covington Lobdell & Hickman,
L.L.P., 100 North Tryon Street, Suite 4200, Charlotte, North
Carolina 28202 at 10:00 a.m. on December 19, 1997, or on
such other date as the parties hereto shall mutually agree.
SECTION 5.2. Conditions to Closing and Initial
Loans. The obligation of the Lenders to close this
<PAGE>
Agreement and to make the initial Loan or issue or
participate in the initial Letter of Credit, if any, is
subject to the satisfaction of each of the following
conditions:
(a) Executed Loan Documents. The following Loan
Documents, in form and substance satisfactory to the
Administrative Agent and each Lender:
(i) this Agreement;
(ii) the Revolving Credit Notes;
(iii) the Specified A/C Notes;
(iv) the Competitive Bid Notes;
(v) the Swingline Note; and
(vi) the Subsidiary Guaranty Agreement;
together with any other applicable Loan Documents, shall
have been duly authorized, executed and delivered by the
parties thereto, shall be in full force and effect and no
default or event of default shall exist thereunder, and the
Borrower shall have delivered original counterparts thereof
to the Administrative Agent.
(b) Closing Certificates; etc.
(i) Officer's Certificate of the Borrower. The
Administrative Agent shall have received a certificate from
the chief executive officer or chief financial officer of
the Borrower, in form and substance satisfactory to the
Administrative Agent, to the effect that all representations
and warranties of the Loan Parties contained in this
Agreement and the other Loan Documents are true, correct and
complete; that the Loan Parties are not in violation of any
of the covenants contained in this Agreement and the other
Loan Documents; that, after giving effect to the
transactions contemplated by this Agreement, no Default or
Event of Default has occurred and is continuing; and that
the Borrower has satisfied each of the closing conditions.
(ii) Certificate of Secretary of each Loan Party.
The Administrative Agent shall have received a certificate
of the secretary or assistant secretary of each Loan Party
certifying that attached thereto is a true and complete copy
of the articles of incorporation or other charter documents
of such Loan Party and all amendments thereto, certified as
of a recent date by the appropriate Governmental Authority,
as applicable, in its jurisdiction of incorporation; that
attached thereto is a true and complete copy of the bylaws
of such Loan Party as in effect on the date of such
certification; that, attached thereto is a true and complete
copy of resolutions duly adopted by the Board of Directors
of such Loan Party authorizing the extensions of credit
contemplated hereunder and the execution, delivery and
performance of this Agreement and the other Loan Documents
<PAGE>
to which it is a party; and, as to the incumbency and
genuineness of the signature of each officer of such Loan
Party executing Loan Documents to which it is a party.
(iii) Certificates of Good Standing. The
Administrative Agent shall have received (A) certificates as
of a recent date of the good standing of each Loan Party
under the laws of their respective jurisdictions of
organization and the jurisdictions of their respective
principal places of business and chief executive offices and
(B) a certificate of the relevant taxing authorities
of such jurisdictions certifying that the Borrower has filed
required tax returns and owes no delinquent taxes; provided,
that, with the prior approval of the Administrative Agent,
certain Loan Parties (excluding the Borrower) may provide
the Administrative Agent with certificates or documents
comparable to those referenced above and customarily given
to lending institutions in similar transactions.
(iv) Opinions of Counsel. The Administrative
Agent shall have received favorable opinions of United
States counsel to the Loan Parties addressed to the
Administrative Agent and the Lenders with respect to the
Loan Parties, the Loan Documents and such other matters
as the Lenders shall request, each in form and substance
satisfactory to the Administrative Agent
and the Lenders.
(v) Tax Forms. The Administrative Agent shall
have received copies of the United States Internal Revenue
Service forms required by Section 4.13(e).
(c) Consents; Defaults.
(i) Governmental and Third Party Approvals. All
necessary approvals, authorizations and consents, if any are
required, of any Person and of all Governmental Authorities
and courts having jurisdiction with respect to the
transactions contemplated by this Agreement and the other
Loan Documents shall have been obtained to the extent that
the absence of such approvals, authorizations, or consents
would cause a Material Adverse Effect.
(ii) Permits and Licenses. All permits and
licenses, including permits and licenses required under
Applicable Laws, necessary to the current conduct of
business by the Borrower and its Subsidiaries shall have
been obtained to the extent that the absence of such permits
and licenses would cause a Material Adverse Effect.
(iii) No Injunction, Etc. No action,
proceeding, investigation, regulation or legislation shall
have been instituted, threatened or proposed before any
Governmental Authority to enjoin, restrain, or prohibit, or
to obtain substantial damages in respect of, or which is
related to or arises out of this Agreement or the other Loan
Documents or the consummation of the transactions
contemplated hereby or thereby, or which, in the
Administrative Agent's discretion, would make it inadvisable
<PAGE>
to consummate the transactions contemplated by this
Agreement and such other Loan Documents.
(iv) No Material Adverse Change. There shall not
have occurred any material adverse change in the condition
(financial or otherwise), operations, properties, business
or prospects of the Borrower and its Subsidiaries taken as a
whole, or any event or condition that has had or could be
reasonably expected to have a Material Adverse Effect.
(v) No Event of Default. No Default or Event of
Default shall have occurred and be continuing.
(d) Financial Matters.
(i) Financial Statements. The Administrative
Agent shall have received the most recent audited
Consolidated financial statements of the Borrower and its
Subsidiaries, all in form and substance satisfactory to the
Administrative Agent and prepared in accordance with
GAAP.
(ii) Financial Condition Certificate. The
Borrower shall have delivered to the Administrative Agent a
certificate, in form and substance satisfactory to the
Administrative Agent, and certified as accurate by the chief
executive officer or chief financial officer of the
Borrower, that (A) the Borrower and each of its
Subsidiaries, taken as a whole, are Solvent, (B) the
payables of the Borrower and each of its Subsidiaries are
current or are not more than 45 days past due (except
where such payables are being contested by the Borrower or
any such Subsidiary in good faith by appropriate proceedings
and adequate reserves in respect thereof have been
established on the books of the Borrower or any such
Subsidiary to the extent required by GAAP), (C) attached
thereto is a pro forma balance sheet of the Borrower and its
Subsidiaries setting forth on a pro forma basis the
financial condition of the Borrower and its Subsidiaries on
a Consolidated basis as of [September 28, 1997], reflecting
on a pro forma basis the effect of the transactions
contemplated herein, including all fees and expenses in
connection therewith; and evidencing compliance on a pro
forma basis with the covenants contained in Articles IX and
X; and (D) attached thereto are the financial projections
previously delivered to the Administrative Agent
representing the good faith calculations of the Borrower and
senior management thereof as to the projected results
contained therein.
(iii) Payment at Closing. There shall have
been paid by the Borrower to the Administrative Agent and
the Lenders the fees set forth or referenced in Section 4.3
and any other accrued and unpaid fees or commissions due
hereunder (including, without limitation, legal fees and
expenses), and to any other Person such amount as may be due
thereto in connection with the transactions contemplated
hereby, including all taxes, fees and other charges in
connection with the execution, delivery, recording, filing
<PAGE>
and registration of any of the Loan Documents.
(e) Miscellaneous.
(i) Notice of Borrowing. The Administrative
Agent shall have received a Notice of Borrowing from the
Borrower in accordance with Section 2.5(a), and a written
notice in the form attached hereto as Exhibit H (a "Notice
of Account Designation") specifying the account or accounts
to which the proceeds of any Loans made after the Closing
Date are to be disbursed.
(ii) Proceedings and Documents. All opinions,
certificates and other instruments and all proceedings in
connection with the transactions contemplated by this
Agreement shall be satisfactory in form and substance to the
Lenders. The Lenders shall have received copies of all
other instruments and other evidence as any Lender may
reasonably request, in form and substance satisfactory to
the Lenders, with respect to the transactions contemplated
by this Agreement and the taking of all actions in
connection therewith.
(iii) Due Diligence and Other Documents. The
Borrower shall have delivered to the Administrative Agent
such other documents, certificates and opinions as the
Administrative Agent reasonably requests.
(f) Termination of Existing Credit Agreement. On the
Closing Date, the loans under the Existing Credit Agreement
shall be repaid in full and the commitments and other
obligations and rights of the lenders thereunder shall be
terminated.
SECTION 5.3. Conditions to All Loans and Letters
of Credit. The obligation of any Lender to make any Loan
(subject to Section 2.4(b) with respect to refunding or
participating in Swingline Loans) or issue any Letter of
Credit hereunder is subject to the satisfaction of the
following conditions precedent on the relevant borrowing or
issue date:
(a) Continuation of Representations and Warranties.
The representations and warranties contained in Article VI
and in the other Loan Documents shall be true and correct on
and as of such borrowing date with the same effect as if
made on and as of such date.
(b) No Existing Default. No Default or Event of
Default shall have occurred and be continuing (i) on the
borrowing date with respect to such Loan or after giving
effect to the Loans to be made on such date or (ii) on the
issue date with respect to such Letter of Credit or after
giving
effect to the issuance of such Letter of Credit on such
date.
(c) Officer's Compliance Certificate; Additional
Documents. The Administrative Agent shall have received the
<PAGE>
current Officer's Compliance Certificate and each additional
document, instrument, legal opinion or other item of
information reasonably requested by it.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE BORROWER
SECTION 6.1. Representations and Warranties. To
induce the Administrative Agent and the Lenders to enter
into this Agreement and the Lenders to make the Loans or
issue or participate in Letters of Credit, the Borrower
hereby represents and warrants to the Administrative
Agent and Lenders that:
(a) Organization; Power; Qualification. Each of the
Borrower and its Subsidiaries is duly organized, validly
existing and in good standing under the laws of the
jurisdiction of its incorporation or formation, has the
power and authority to own its properties and to carry on
its business as now being and hereafter proposed to be
conducted and is duly qualified and authorized to do
business in each jurisdiction in which the character of its
properties or the nature of its business requires such
qualification and authorization, except where the failure to
be so qualified could not reasonably be expected to result
in a Material Adverse Effect. The jurisdictions in which
the Borrower and its Subsidiaries are organized and where
their principal places of business are located are described
on Schedule 6.1(a).
(b) Ownership. The capitalization of the Borrower and
its Subsidiaries as of the Closing Date consists of the
number of shares, authorized, issued and outstanding, of
such classes and series, with or without par value,
described on Schedule 6.1(b). All outstanding shares have
been duly authorized and validly issued and are fully paid
and nonassessable. The shareholders of the Subsidiaries of
the Borrower and the number of shares owned by each as of
the Closing Date are described on Schedule 6.1(b). As of
the Closing Date, there are no outstanding stock purchase
warrants, subscriptions, options, securities, instruments or
other rights of any type or nature whatsoever, which are
convertible into, exchangeable for or otherwise provide for
or permit the issuance of capital stock of the Borrower or
its Subsidiaries, except as described on Schedule 6.1(b).
(c) Authorization of Agreement, Loan Documents and
Borrowing. Each of the Loan Parties has the right, power
and authority and has taken all necessary corporate and
other action to authorize the execution, delivery and
performance of this Agreement and each of the other Loan
Documents to which it is a party and the extensions of
credit hereunder and the transactions contemplated hereby in
accordance with their respective terms. This Agreement and
each of the other Loan Documents have been duly executed and
delivered by the duly authorized officers of each Loan
Party, as applicable, and each such document constitutes the
legal, valid and binding obligation of the Loan Parties
<PAGE>
party thereto, enforceable in accordance with its terms,
except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar state,
provincial or federal debtor relief laws from time to time
in effect which affect the enforcement of creditors' rights
in general and the availability of equitable remedies.
(d) Compliance of Agreement, Loan Documents and
Borrowing with Laws, Etc. The execution, delivery and
performance by the Borrower and its Subsidiaries of the Loan
Documents to which each such Person is a party, in
accordance with their respective terms, the extensions of
credit hereunder and the transactions contemplated hereby do
not and will not, by the passage of time, the giving of
notice or otherwise, (i) require any Governmental Approval
or violate any Applicable Law relating to the Borrower or
any of its Subsidiaries, (ii) conflict with, result in a
breach of or constitute a default under the articles of
incorporation, bylaws or other organizational documents of
the Borrower or any of its Subsidiaries or any indenture,
agreement or other instrument to which such Person is a
party or by which any of its properties may be bound or any
Governmental Approval relating to such Person, (iii) result
in or require the creation or imposition of any Lien upon or
with respect to any property now owned or hereafter acquired
by such Person other than Liens arising under the Loan
Documents or (iv) require any consent or authorization of,
filing with, or other act in respect of, an arbitrator or
Governmental Authority and no consent of any other Person is
required in connection with the execution, delivery,
performance, validity or enforceability of this Agreement.
(e) Compliance with Law; Governmental Approvals. Each
of the Borrower and its
Subsidiaries (i) has all Governmental Approvals required by
any Applicable Law for it to conduct its business, each of
which is in full force and effect, is final and not subject
to review on appeal and is not the subject of any pending
or, to the best of its knowledge, threatened attack by
direct or collateral proceeding, and (ii) is in compliance
with each Governmental Approval applicable to it and in
compliance with all other Applicable Laws relating to it or
any of its respective properties, except where the failure
to so comply could not have, individually or in the
aggregate, a Material Adverse Effect.
(f) Tax Returns and Payments. Each of the Borrower
and its Subsidiaries has duly filed or caused to be filed
all federal, state, provincial, local and other tax returns
required by Applicable Law to be filed, and has paid, or
made adequate provision for the payment of, all federal,
state, provincial, local and other taxes, assessments and
governmental charges or levies upon it and its property,
income, profits and assets which are due and payable. No
Governmental Authority has asserted any Lien or other claim
against the Borrower or any Subsidiary thereof with respect
to unpaid taxes which has not been discharged or resolved.
The charges, accruals and reserves on the books of the
Borrower and its Subsidiaries in respect of federal, state,
<PAGE>
provincial, local and other taxes for all Fiscal Years and
portions thereof since the organization of the Borrower and
its Subsidiaries are in the judgment of the Borrower
adequate, and the Borrower does not anticipate any
additional taxes or assessments for any of such years which
individually or in the aggregate could have a Material
Adverse Effect.
(g) Intellectual Property Matters. Each of the
Borrower and its Subsidiaries owns or possesses rights to
use all franchises, licenses, copyrights, copyright
applications, patents, patent rights or licenses, patent
applications, trademarks, trademark rights, service marks,
service mark rights, trade names, trade name rights,
copyrights and rights with respect to the foregoing which
are required to conduct its business except where the
failure to so own or possess such rights could not
have, individually or in the aggregate, a Material Adverse
Effect. No event has occurred which permits, or after
notice or lapse of time or both would permit, the revocation
or termination of any such rights, and neither the Borrower
nor any Subsidiary thereof is liable to any Person for
infringement under Applicable Law with respect to any such
rights as a result of its business operations, except where
any such liability could not have, individually or in the
aggregate, a Material Adverse Effect.
(h) Environmental Matters. Subject to certain
instances of non-compliance which could not have,
individually or in the aggregate, a Material Adverse Effect
on the Borrower and its Subsidiaries taken as a whole:
(i) To the best knowledge of the Borrower, the
properties of the Borrower and its Subsidiaries do not
contain, and have not previously contained, any Hazardous
Materials in amounts or concentrations which constitute or
constituted a violation of applicable Environmental
Laws;
(ii) To the best knowledge of the Borrower, such
properties and all operations of the Borrower and its
Subsidiaries conducted in connection therewith are in
compliance, and have been in compliance, with all applicable
Environmental Laws, and there is no contamination at,
under or about such properties or such operations which
could interfere with the continued operation of such
properties or impair the fair saleable value thereof;
(iii) Neither the Borrower nor any Subsidiary
thereof (since the date it became a Subsidiary) has received
any notice of violation, alleged violation, noncompliance,
liability or potential liability regarding environmental
matters or compliance with Environmental Laws with regard to
any of their properties or the operations conducted in
connection therewith which has not been satisfied in
compliance with any such applicable Environmental Law, nor
does the Borrower or any Subsidiary thereof have knowledge
or reason to believe that any such notice (A) has previously
been received by any Subsidiary prior to the date it became
<PAGE>
a Subsidiary or (B) will be received or is being threatened;
(iv) Hazardous Materials have not been transported
or disposed of from the properties of the Borrower and its
Subsidiaries in violation of, or in a manner or to a
location which could give rise to liability under,
Environmental Laws, nor have any Hazardous Materials been
generated, treated, stored or disposed of at, on or under
any of such properties in violation of, or in a manner that
could give rise to liability under, any applicable
Environmental Laws;
(v) No judicial proceedings or governmental or
administrative action is pending, or, to the knowledge of
the Borrower, threatened, under any Environmental Law to
which the Borrower or any Subsidiary thereof is or will be
named as a potentially responsible party with respect to
such properties or operations conducted in connection
therewith, nor are there any consent decrees or other
decrees, consent orders, administrative orders or other
orders, or other administrative or judicial requirements
outstanding under any Environmental Law with respect to
such properties or such operations; and
(vi) To the best knowledge of the Borrower, there
has been no release, or threat of release, of Hazardous
Materials at or from such properties, in violation of or in
amounts or in a manner that could give rise to liability
under Environmental Laws.
(i) ERISA.
(i) As of the Closing Date, neither the Borrower
nor any ERISA Affiliate maintains or contributes to, or has
any obligation under, any Employee Benefit Plans other than
those identified on Schedule 6.1(i).
(ii) The Borrower and each ERISA Affiliate in all
material respects are in compliance with all applicable
provisions of ERISA and the regulations and published
interpretations thereunder with respect to all Employee
Benefit Plans except for any required amendments for which
the remedial amendment period as defined in Section 401(b)
of the Code has not yet expired. Each Employee Benefit Plan
that is intended to be qualified under Section 401(a)
of the Code has been determined by the Internal Revenue
Service to be so qualified, and each trust related to such
plan has been determined to be exempt under Section 501(a)
of the Code. No liability has been incurred by the Borrower
or any ERISA Affiliate which remains unsatisfied for
any taxes or penalties with respect to any Employee Benefit
Plan or any Multiemployer Plan, except where such nsatisfied
liability could not have, individually or in the aggregate,
a Material Adverse Effect;
(iii) Other than as set forth on Schedule
6.1(i), no Pension Plan has been terminated, nor has any
accumulated funding deficiency (as defined in Section 412 of
the Code) been incurred (without regard to any waiver
<PAGE>
granted under Section 412 of the Code), nor has any funding
waiver from the Internal Revenue Service been received or
requested with respect to any Pension Plan, nor has the
Borrower or any ERISA Affiliate failed to make any
contributions or to pay any amounts due and owing as
required by Section 412 of the Code, Section 302 of ERISA or
the terms of any Pension Plan prior to the due dates of such
contributions under Section 412 of the Code or Section 302
of ERISA, nor has there been any event requiring any
disclosure under Section 4041(c)(3)(C) or 4063(a) of ERISA
with respect to any Pension Plan;
(iv) Neither the Borrower nor any ERISA Affiliate
has: (A) engaged in a nonexempt prohibited transaction
described in Section 406 of the ERISA or Section 4975 of the
Code, (B) incurred any liability to the PBGC which remains
outstanding other than the payment of premiums and there are
no premium payments which are due and unpaid, (C) failed to
make a required contribution or payment to a Multiemployer
Plan, or (D) failed to make a required installment or other
required payment under Section 412 of the Code;
(v) No Termination Event has occurred or is
reasonably expected to occur; and
(vi) No proceeding, claim, lawsuit and/or
investigation is existing or, to the best knowledge of the
Borrower after due inquiry, threatened concerning or
involving any (A) employee welfare benefit plan (as defined
in Section 3(1) of ERISA) currently maintained or
contributed to by the Borrower or any ERISA Affiliate, (B)
Pension Plan or (C) Multiemployer Plan.
(j) Margin Stock. Neither the Borrower nor any
Subsidiary thereof is engaged principally or as one of its
activities in the business of extending credit for the
purpose of "purchasing" or "carrying" any "margin stock" (as
each such term is defined or used in Regulations
G and U of the Board of Governors of the Federal Reserve
System). No part of the proceeds of any of the Loans or
Letters of Credit will be used for purchasing or carrying
margin stock or for any purpose which violates, or which
would be inconsistent with, the provisions of Regulation G,
T, U or X of such Board of Governors.
(k) Government Regulation. Neither the Borrower nor
any Subsidiary thereof is an "investment company" or a
company "controlled" by an "investment company" (as each
such term is defined or used in the Investment Company Act
of 1940, as amended) and neither the Borrower nor any
Subsidiary thereof is, or after giving effect to any Loan or
Letter of Credit will be, subject to regulation under the
Public Utility Holding Company Act of 1935 or the Interstate
Commerce Act, each as amended, or any other Applicable Law
which limits its ability to incur or consummate the
transactions contemplated hereby.
(l) Material Contracts. Schedule 6.1(l) sets forth a
complete and accurate list of all Material Contracts of the
<PAGE>
Borrower and its Subsidiaries in effect as of the Closing
Date not listed on any other Schedule hereto; other than as
set forth in Schedule 6.1(l), each such Material Contract
is, and after giving effect to the consummation of the
transactions contemplated by the Loan Documents will be, in
full force and effect in accordance with the terms thereof.
(m) Employee Relations. Each of the Borrower and its
Subsidiaries has a stable work force in place and, as of the
Closing Date, is not, except as set forth on Schedule
6.1(m), party to any collective bargaining agreement nor has
any labor union been recognized as the representative of its
employees. The Borrower knows of no pending, threatened or
contemplated strikes, work stoppage or other collective
labor disputes involving its employees or those of its
Subsidiaries, except those which could not have,
individually or in the aggregate, a Material Adverse Effect.
(n) Burdensome Provisions. Neither the Borrower nor
any Subsidiary thereof is a party to any indenture,
agreement, lease or other instrument, or subject to any
corporate or partnership restriction, Governmental Approval
or Applicable Law which is so unusual or burdensome as in
the foreseeable future could be reasonably expected to have
a Material Adverse Effect. The Borrower and its
Subsidiaries do not presently anticipate that future
expenditures needed to meet the provisions of any statutes,
orders, rules or regulations of a Governmental Authority
will be so burdensome as to have a Material Adverse Effect.
(o) Financial Statements. The (i) audited
Consolidated balance sheets of the Borrower and its
Subsidiaries as of December 29, 1996 and the related audited
statements of operations, shareholders' equity and cash
flows for the Fiscal Year then ended and (ii) unaudited
Consolidated balance sheet of the Borrower and its
Subsidiaries as of September 28, 1997 and related unaudited
statements of operations, shareholders' equity and cash
flows, copies of which have been furnished to the
Administrative Agent and each Lender, are complete and
correct and fairly present on a Consolidated basis the
assets, liabilities and financial position of the Borrower
and its Subsidiaries as at such dates, and the results of
the operations and changes of financial position for the
periods then ended (other than customary year-end
adjustments for unaudited financial statements). All
such financial statements, including the related schedules
and notes thereto, have been prepared in accordance with
GAAP. The Borrower and its Subsidiaries have no Debt,
obligation or other unusual forward or long-term commitment
which is not fairly reflected in the foregoing financial
statements or in the notes thereto.
(p) No Material Adverse Change. Since June 29, 1997,
there has been no material adverse change in the properties,
business, operations, prospects, or condition (financial or
otherwise) of the Borrower and its Subsidiaries, taken as a
whole, and no event has occurred or condition arisen that
could reasonably be expected to have a Material Adverse Effect.
<PAGE>
(q) Solvency. As of the Closing Date and after giving
effect to each extension of credit made hereunder, the
Borrower and its Subsidiaries, taken as a whole, will be
Solvent.
(r) Titles to Properties. Each of the Borrower and
its Subsidiaries has such title to the real property owned
or leased by it as is necessary or desirable to the conduct
of its business and valid and legal title to all of its
personal property and assets, including, but not limited to,
those reflected on the balance sheets of the Borrower and
its Subsidiaries referred to in Section 6.1(o), except those
which have been disposed of by the Borrower or its
Subsidiaries subsequent to such date which dispositions have
been in the ordinary course of business or as otherwise
expressly permitted hereunder.
(s) Liens. None of the properties and assets of the Borrower or
any Subsidiary thereof is subject to any Lien, except Liens permitted
pursuant to Section 10.3. No financing statement under the Uniform
Commercial Code of any state orpersonal property security legislation
as to registration of security on movable property of any other
jurisdiction which names the Borrower or any Subsidiary thereof or any
of their respective trade names or divisions as debtor or grantor and
which has not been terminated, has been filed in any state or other
jurisdiction and neither the Borrower nor any Subsidiary thereof has
signed any such financing statement or application for registration or
any security agreement authorizing any secured party thereunder to
file any such financing statement or application for registration,
except to perfect those Liens permitted by Section 10.3.
(t) Debt and Guaranties. Schedule 6.1(t) is a
complete and correct listing of all Debt and Guaranties of
the Borrower and its Subsidiaries as of the Closing Date in
excess of $1,000,000 which is not otherwise disclosed in the
financial statements described in Section 6.1(o). The
Borrower and its Subsidiaries have performed and are in compliance with
all of the terms of such Debt and Guaranties and all instruments and
agreements relating thereto, and no default or event of default, or event or
condition which with notice or lapse of time or both would constitute such a
default or event of default on the part of the Borrower or its Subsidiaries
exists with respect to any such Debt or Guaranty.
(u) Litigation. Except as set forth on Schedule
6.1(u), there are no actions, suits or proceedings pending
or, to the knowledge of the Borrower, threatened against or
in any other way relating adversely to or affecting the
Borrower or any Subsidiary thereof or any of their
respective properties in any court or before any arbitrator
of any kind or before or by any Governmental Authority which
relate to the Loan Documents or which, if adversely
determined, could have, individually or in the aggregate, a
Material Adverse Effect.
(v) Absence of Defaults. No event has occurred or is
continuing which constitutes a Default or an Event of
Default, or which constitutes, or which with the passage of
time or giving of notice or both would constitute, a
material default or event of default by the Borrower or any
<PAGE>
Subsidiary thereof under any Material Contract or judgment,
decree or order to which the Borrower or its Subsidiaries is
a party or by which the Borrower or its Subsidiaries or any
of their respective properties may be bound or which would
require the Borrower or its Subsidiaries to make any payment
thereunder prior to the scheduled maturity date therefor.
(x) Accuracy and Completeness of Information. All
written information, reports and other papers and data
produced by or on behalf of the Borrower or any Subsidiary
thereof and furnished to the Lenders were, at the time the
same were so furnished, complete and correct in all
material respects to the extent necessary to give the
recipient a true and accurate knowledge of the
subject matter. No document furnished or written statement
made to the Administrative Agent or the Lenders by the
Borrower or any Subsidiary thereof in connection with the
negotiation, preparation or execution of this Agreement or
any of the Loan Documents contains or will contain
any untrue statement of a fact material to the financial
condition or operations of the Borrower or its Subsidiaries
or omits or will omit to state a fact necessary in order to
make the statements contained therein not misleading. The
Borrower is not aware of any facts which it has not
disclosed in writing to the Administrative Agent having a
Material Adverse Effect, or insofar as the Borrower can now
foresee, which could reasonably be expected to have a
Material Adverse Effect.
SECTION 6.2. Survival of Representations and
Warranties, Etc. All representations and warranties set forth in this
Article VI and all representations and warranties contained in any
certificate, or any of the Loan Documents (including but not limited to any
such representation or warranty made in or in connection with any amendment
thereto) shall constitute representations and warranties made under this
Agreement. All representations and warranties made under this Agreement
shall be made or deemed to be made at and as of the Closing Date, shall
survive the Closing Date and shall not be waived by the execution and
delivery of this Agreement, any investigation made by or on behalf of the
Lenders or any borrowing hereunder.
ARTICLE VII
FINANCIAL INFORMATION AND NOTICES
Until all the Obligations have been finally and
indefeasibly paid and satisfied in full and the
Commitments terminated, unless consent has been obtained in
the manner set forth in Section 13.11, the Borrower will
furnish or cause to be furnished to the Administrative Agent
at the Administrative Agent's Office at the address set
forth in Section 13.1 hereof and to the Lenders at their
respective addresses as set forth on Schedule 1.1, or such
other office as may be designated by the Administrative
Agent and Lenders from time to time:
<PAGE>
SECTION 7.1. Financial Statements and Projections.
(a) Quarterly Financial Statements. As soon as
practicable and in any event within forty-five (45) days
after the end of the first three (3) fiscal quarters, an
unaudited Consolidated and consolidating balance sheet of
the Borrower and its Subsidiaries as of the close of such
fiscal quarter and unaudited Consolidated and consolidating
statements of operations, shareholders' equity and
cash flows for the fiscal quarter then ended and that
portion of the Fiscal Year then ended, including
the notes thereto, all in reasonable detail setting forth in
comparative form the corresponding figures as of the end of
and for the corresponding period in the preceding Fiscal
Year and prepared by the Borrower in accordance with GAAP
and, if applicable, containing disclosure of the effect on
the financial position or results of operations of any
change in the application of accounting principles
and practices during the period, and certified by the chief
financial officer of the Borrower to present fairly in all
material respects the financial condition of the Borrower
and its Subsidiaries on a Consolidated and separate basis as
of their respective dates and the results of operations of
the Borrower and its Subsidiaries for the respective periods
then ended, subject to normal year end adjustments.
(b) Annual Financial Statements. As soon as
practicable and in any event within one hundred twenty (120)
days after the end of each Fiscal Year, an audited
Consolidated balance sheet of the Borrower and its
Subsidiaries as of the close of such Fiscal Year, an
unaudited consolidating balance sheet of the Borrower and
its Subsidiaries as of the close of such Fiscal Year, and
audited Consolidated statements of operations, shareholders'
equity and cash flows for the Fiscal Year then ended and
unaudited consolidating statements of operations,
shareholders' equity and cash flows for the Fiscal Year then
ended, including the notes thereto, all in reasonable detail
setting forth in comparative form the corresponding figures
as of the end of and for the preceding Fiscal Year and
prepared by Coopers & Lybrand L.L.P. (or another independent
certified public accounting firm acceptable to the
Administrative Agent) in accordance with GAAP and, if
applicable, containing disclosure of the effect on the
financial position or results of operations of any change in
the application of accounting principles and practices
during the year, and accompanied by a report thereon by such
certified public accountants that is not qualified with
respect to scope limitations imposed by the Borrower or any
of its Subsidiaries or with respect to accounting principles
followed by the Borrower or any of its Subsidiaries not in
accordance with GAAP.
(c) Annual Business Plan and Financial Projections.
As soon as practicable and in any event not later than
January 30 of each Fiscal Year, a business plan of the
Borrower and its Subsidiaries for the ensuing four (4)
fiscal quarters, such plan to be prepared in accordance with
GAAP and to include, on a quarterly basis, the following: a
<PAGE>
quarterly operating and capital budget, a projected income
statement, statement of cash flows and balance sheet and a
report containing management's discussion and analysis of
such projections, accompanied by a certificate from the
chief financial officer of the Borrower to the effect that,
to the best of such officer's knowledge, such projections
are good faith estimates (utilizing reasonable assumptions)
of the financial condition and operations of the Borrower
and its Subsidiaries for such four (4) quarter period.
SECTION 7.2. Officer's Compliance Certificate.
At each time financial statements are delivered pursuant to
Sections 7.1(a) or (b) and at such other times as the
Administrative Agent shall reasonably request, a certificate
of the chief financial officer or the treasurer of the
Borrower in the form of Exhibit F attached hereto (an
"Officer's Compliance Certificate"):
(a) stating that such officer has reviewed such
financial statements and such statements fairly present the
financial condition of the Borrower and its Subsidiaries as
of the dates indicated and the results of their operations
and cash flows for the periods indicated;
(b) stating that to such officer's knowledge, based on
a reasonable examination, no Default or Event of Default
exists, or, if such is not the case, specifying such Default
or Event of Default and its nature, when it occurred,
whether it is continuing and the steps being taken by the
Borrower with respect to such Default or Event of Default;
and
(c) setting forth as at the end of such fiscal quarter
or Fiscal Year, as the case may be, the calculations
required to establish whether or not the Borrower and its
Subsidiaries were in compliance with the financial covenants
set forth in Article IX as at the end of each respective
period, the calculation of the Applicable Margin pursuant to
Section 4.1(c) as at the end of each respective period, and
the calculation of the total assets of each Subsidiary of
the Borrower for the purpose of determining which
Subsidiaries are Material Subsidiaries.
SECTION 7.3. Accountants' Certificate. At each
time financial statements are delivered pursuant to Section
7.1(b), a certificate of the independent public accountants
certifying such financial statements addressed to the
Administrative Agent for the benefit of the Lenders:
(a) stating that in making the examination necessary
for the certification of such financial statements, they
obtained no knowledge of any Default or Event of Default or,
if such is not the case, specifying such Default or Event of
Default and its nature and period of existence; and
(b) including the calculations prepared by such accountants
required to establish whether or not the Borrower and its Subsidiaries
are in compliance with the financial covenants set forth in Article IX
as at the end of each respective period.
<PAGE>
SECTION 7.4. Other Reports.
(a) Promptly upon receipt thereof, copies of any
management reports and any response thereto by Borrower or
its Subsidiaries, if any, submitted to the Borrower or any
of its Subsidiaries or their respective Board of Directors
by their respective independent public accountants in
connection with their auditing function;
(b) Promptly but in any event within ten (10) Business
Days after the filing thereof, a copy of (i) each report or
other filing made by the Borrower or any of its Subsidiaries
with the Securities and Exchange Commission and required by
the SEC to be delivered to the shareholders of the Borrower
or any of its Subsidiaries, (ii) each report made by the
Borrower or any of its Subsidiaries to the SEC on Form 8-K
and (iii) each final registration statement of the Borrower
or any of its Subsidiaries filed with the SEC; and
(c) Such other information regarding the operations,
business affairs and financial condition of the Borrower or
any of its Subsidiaries as the Administrative Agent or any
Lender may reasonably request.
SECTION 7.5. Notice of Litigation and Other
Matters. Prompt (but in no event later than ten (10) days
after an officer of the Borrower obtains knowledge thereof)
written notice
of:
(a) the commencement of all proceedings and
investigations by or before any Governmental Authority and
all actions and proceedings in any court or before any
arbitrator against or involving the Borrower or any
Subsidiary thereof or any of their respective properties,
assets or businesses which relate to the Loan Documents or
could reasonably be expected to have a Material Adverse
Effect;
(b) any notice of any violation received by the
Borrower or any Subsidiary thereof from any Governmental
Authority, including, without limitation, any notice of
violation of Environmental Laws, except such violations
which could not have a Material Adverse Effect;
(c) any labor controversy that has resulted in, or
threatens to result in, a strike or other work action
against the Borrower or any Subsidiary thereof, except such
controversies which could not have a Material Adverse
Effect;
(d) any attachment, judgment, lien, levy or order
exceeding $1,000,000 that may be assessed against or
threatened against the Borrower or any Subsidiary thereof;
(e) any Default or Event of Default;
<PAGE>
(f) any event which constitutes or which with the
passage of time or giving of notice or both would constitute
a default or event of default under any Material Contract to
which the Borrower or any of its Subsidiaries is a party or
by which the Borrower or any Subsidiary thereof or any of
their respective properties may be bound;
(g) (i) any unfavorable determination letter from the
Internal Revenue Service regarding the qualification of an
Employee Benefit Plan under Section 401(a) of the Code
(along with a copy thereof), (ii) all notices received by
the Borrower or any ERISA Affiliate of the PBGC's intent to
terminate any Pension Plan or to have a trustee appointed to
administer any Pension Plan, (iii) all notices received by
the Borrower or any ERISA Affiliate from a Multiemployer
Plan sponsor concerning the imposition or amount of
withdrawal liability pursuant to Section 4202 of ERISA and
(iv) the Borrower obtaining knowledge or reason to know that
any ERISA Affiliate has filed or intends to file a notice of
intent to terminate any Pension Plan under a distress
termination within the meaning of Section 4041(c) of ERISA;
and
(h) any event which makes any of the representations
set forth in Section 6.1 inaccurate in any respect.
SECTION 7.6. Accuracy of Information. All
written information, reports, statements and other papers
and data furnished by or on behalf of the Borrower to the
Administrative Agent or any Lender (other than financial
forecasts) whether pursuant to this Article VII or any other
provision of this Agreement, shall be, at the time the same
is so furnished, complete and correct in all material
respects to the extent necessary to give the Administrative
Agent or any Lender complete, true and accurate knowledge of
the subject matter based on the Borrower's knowledge
thereof.
ARTICLE VIII
AFFIRMATIVE COVENANTS
Until all of the Obligations have been finally and indefeasibly paid
and satisfied in full and the Commitments terminated, unless consent has been
obtained in the manner provided for in Section 13.11, the Borrower will and
will cause each of its Subsidiaries to:
SECTION 8.1. Preservation of Corporate Existence and
Related Matters. Except as permitted by Section 10.5, preserve and
maintain its separate corporate existence and all rights, franchises,
licenses and privileges necessary to the conduct of its business, and
qualify and remain qualified as a foreign corporation and authorized
to do business in each jurisdiction in which the failure to so qualify
could reasonably be expected to have a Material Adverse Effect.
SECTION 8.2. Maintenance of Property. Protect
and preserve all properties useful in and material to its
business, including copyrights, patents, trade names,
service marks and trademarks; maintain in good working order
<PAGE>
and condition all buildings, equipment and other tangible
real and personal property; and from time to time make or
cause to be made all renewals, replacements and additions to
such property necessary for the conduct of its business, so
that the business carried on in connection therewith may be
properly and advantageously conducted at all times.
SECTION 8.3. Insurance. Maintain insurance with
financially sound and reputable insurance companies against
such risks and in such amounts as are customarily maintained
by similar businesses and as may be required by Applicable
Law, and from time to time deliver to the Administrative
Agent upon its request a detailed list of the insurance then
in effect, stating the names of the insurance companies, the
amounts and rates of the insurance, the dates of the
expiration thereof and the properties and risks covered
thereby.
SECTION 8.4. Accounting Methods and Financial
Records. Maintain a system of accounting, and keep such
books, records and accounts (which shall be true and
complete in all material respects) as may be required or as
may be necessary to permit the preparation of financial
statements in accordance with GAAP (and generally accepted
accounting principles as in effect in any other applicable
jurisdiction) and in compliance with the regulations of any
Governmental Authority having jurisdiction over it or any of
its properties.
SECTION 8.5. Payment and Performance of
Obligations. Pay and perform all Obligations under this
Agreement and the other Loan Documents, and pay or perform
(a) all taxes, assessments and other governmental charges
that may be levied or assessed upon it or any of its
property, and (b) all other indebtedness, obligations and
liabilities in accordance with customary trade practices;
provided, that the Borrower or such Subsidiary may contest
any item described in clauses (a) and (b) of this Section
8.5 in good faith so long as adequate reserves are
maintained with respect thereto in accordance with GAAP.
SECTION 8.6. Compliance With Laws and Approvals.
Observe and remain in compliance in all material respects
with all Applicable Laws and maintain in full force and
effect all Governmental Approvals, in each case applicable
to the conduct of its business.
SECTION 8.7. Environmental Laws. In addition to
and without limiting the generality of Section 8.6, except
where the failure to do so could not have, individually or
in the aggregate, a Material Adverse Effect, (a) comply
with, and ensure such compliance by all tenants and
subtenants, if any, with, all applicable Environmental Laws
and obtain and comply with and maintain, and ensure that all
tenants and subtenants obtain and comply with and maintain,
any and all licenses, approvals, notifications,
registrations or permits required by applicable
Environmental Laws, (b) conduct and complete all
investigations, studies, sampling and testing, and all
<PAGE>
remedial, removal and other actions required under
Environmental Laws, and promptly comply with all
lawful orders and directives of any Governmental Authority
regarding Environmental Laws, and (c) defend, indemnify and
hold harmless the Administrative Agent and the Lenders, and
their respective parents, Subsidiaries, Affiliates,
employees, agents, officers and directors, from and
against any claims, demands, penalties, fines, liabilities,
settlements, damages, costs and expenses of whatever kind or
nature known or unknown, contingent or otherwise, arising
out of, or in any way relating to, the violation of,
noncompliance with or liability under any Environmental Laws
applicable to the operations of the Borrower or any such
Subsidiary, or any orders, requirements or demands of
Governmental Authorities related thereto, including, without
limitation, reasonable attorneys' and consultants' fees,
investigation and laboratory fees, response costs, court
costs and litigation expenses, except to the extent that any
of the foregoing directly result from the gross negligence
or willful misconduct of the party seeking indemnification
therefor.
SECTION 8.8. Compliance with ERISA. In addition
to and without limiting the generality of Section 8.6,
except where the failure to do so could not have,
individually or in the aggregate, a Material Adverse Effect,
(a) comply with all applicable provisions of ERISA and the
regulations and published interpretations thereunder with
respect to all Employee Benefit Plans, (b) not take any
action or fail to take action the result of which could be a
liability to the PBGC or to a Multiemployer Plan, (c) not
participate in any prohibited transaction that could result
in any civil penalty under ERISA or tax under the Code, (d)
operate each Employee Benefit Plan in such a manner that
will not incur any tax liability under Section 4980B of the
Code or any liability to any qualified beneficiary as
defined in Section 4980B of the Code and (e) furnish to the
Administrative Agent upon the Administrative Agent's request
such additional information about any Employee Benefit Plan
as may be reasonably requested by the Administrative Agent.
SECTION 8.9. Compliance With Agreements. Comply
in all respects with each term, condition and provision of
all leases, agreements and other instruments entered into in
the conduct of its business including, without limitation,
any Material Contract; provided, that the Borrower or any
such Subsidiary may contest any such lease, agreement or
other instrument in good faith through applicable
proceedings so long as adequate reserves are maintained in
accordance with
GAAP.
SECTION 8.10. Conduct of Business. Engage only in businesses
in substantially the same fields as the businesses conducted on the Closing
Date and in lines of business reasonably related thereto.
SECTION 8.11. Visits and Inspections. Permit representatives of the
Administrative Agent or any Lender at their own expense, from time to
time, to visit and inspect its properties; inspect, audit and make
extracts, at their own expense, from its books, records and files,
including, but not limited to, management letters prepared by independent
accountants; and discuss with its principal officers, and its independent
accountants, its business, assets, liabilities, financial condition, results
of operations and business prospects.
SECTION 8.12. Additional Subsidiary Guarantors. Upon
the creation or acquisition of any Material Subsidiary permitted by this
Agreement and upon any Subsidiary of the Borrower becoming a Material
Subsidiary as evidenced by the information set forth in the Officer's
Compliance Certificate delivered pursuant to Section 7.2, cause to
be executed and delivered to the Administrative Agent within ten (10)
Business Days after the occurrence of the events described above:
(a) a supplement to the Subsidiary Guaranty Agreement (in substantially
(b) the form attached as an exhibit thereto) executed by such Material
Subsidiary, (b) the closing documents and certificates reasonably required
by the Administrative Agent to be delivered, including, without
limitation, officers' certificates, financial statements, opinions
of counsel, board resolutions, charter documents,
certificates of existence and authority to do business and
any other closing certificates and documents described in
Section 5.2 with respect to such Material Subsidiary and (c)
such other documents reasonably requested by the
Administrative Agent in order that such Subsidiary shall
become bound by all of the terms, covenants and agreements
contained in the Subsidiary Guaranty Agreement.
SECTION 8.13. Year 2000 Compatibility. Take all
actions necessary to assure that the Borrower's computer-
based systems are able to operate and effectively process
data which includes dates on or after January 1, 2000. At
the request of the Administrative Agent, the Borrower shall
provide the Administrative Agent assurance satisfactory to
the Administrative Agent of the Borrower's Year 2000
compatibility.
SECTION 8.14. Further Assurances. Make, execute and
deliver all such additional and further acts, things, deeds
and instruments as the Administrative Agent or any Lender
may reasonably require to document and consummate the
transactions contemplated hereby and to vest completely in
and insure the Administrative Agent and the Lenders their
respective rights under this Agreement, the Notes, the
Letters of Credit and the other Loan Documents.
ARTICLE IX
FINANCIAL COVENANTS
Until all of the Obligations have been finally and
indefeasibly paid and satisfied in full and the Commitments
terminated, unless consent has been obtained in the manner
set forth in Section 13.11, the Borrower and its
Subsidiaries on a Consolidated basis will not:
SECTION 9.1. Leverage Ratio. As of the last day
of any fiscal quarter, permit the ratio of (a) the
Consolidated Debt of the Borrower and its Subsidiaries as of
such date to (b) the sum of Consolidated Debt of the
<PAGE>
Borrower and its Subsidiaries plus Consolidated Adjusted Net
Worth, as of such date, to exceed forty-eight percent (48%).
SECTION 9.2. Minimum Adjusted Tangible Net
Worth. As of the last day of any fiscal quarter, permit
Adjusted Tangible Net Worth to be less than (a) $190,000,000
plus (b) sixty-five percent (65%) of cumulative annual
Consolidated Net Income (without deduction for any losses)
generated from and after December 29, 1997 plus (c) seventy
percent (70%) of the net proceeds received by the Borrower
or any of its Subsidiaries from any equity issuance (other
than capital stock issued to the Borrower or any of its
Subsidiaries in consideration for intercompany loans) by the
Borrower or any of its Subsidiaries subsequent to the
Closing Date.
SECTION 9.3. Fixed Charge Coverage Ratio. As of
the last day of any fiscal quarter, permit the ratio of (a)
EBITDAR for the preceding four (4) fiscal quarters then most
recently ended, to (b) the sum of (i) Interest Expense
during such period plus (ii) Rental Expense during such
period plus (iii) all principal and other payments required
to be paid with respect to long-term Debt, for the next
succeeding four (4) fiscal quarters, to be less than 1.75 to
1.00.
ARTICLE X
NEGATIVE COVENANTS
Until all of the Obligations have been finally and
indefeasibly paid and satisfied in full and the Commitments
terminated, unless consent has been obtained in the manner
set forth in Section 13.11, the Borrower will not and will
not permit any of its Subsidiaries to:
SECTION 10.1. Limitations on Debt. Create, incur,
assume or suffer to exist any Debt except:
(a) the Obligations;
(b) Debt incurred in connection with a Hedging
Agreement with a counterparty and upon terms and conditions
reasonably satisfactory to the Administrative Agent;
(c) Debt existing on the Closing Date and not
otherwise permitted under this Section 10.1, as set forth on
Schedule 6.1(t) and the renewal and refinancing (but not the
increase) thereof;
(d) Debt of the Borrower and its Subsidiaries incurred
in connection with Capital Leases in an aggregate amount not
to exceed $15,000,000 on any date of determination;
(e) purchase money Debt of the Borrower and its
Subsidiaries in an aggregate amount not to exceed
$15,000,000 on any date of determination;
(f) Debt consisting of Guaranties permitted by Section
10.2;
<PAGE>
(g) Debt of the Borrower or any Subsidiary incurred in
connection with the acquisition of Tokai Electronics Co.,
Ltd. in an aggregate amount not to exceed $22,000,000 on any
date of determination; and
(h) unsecured Debt of the Borrower and its
Subsidiaries other than the Debt described in clauses (a)
through (g) above in an aggregate amount not to exceed
$10,000,000 on any date of
determination;
provided, that none of the Debt permitted to be incurred by
this Section 10.1 shall restrict, limit or otherwise
encumber (by covenant or otherwise) the ability of any
Subsidiary of the Borrower to make any payment to the
Borrower or any of its other Subsidiaries (in the form of
dividends, intercompany advances or otherwise) for the
purpose of enabling the Borrower to pay the Obligations.
SECTION 10.2. Limitations on Guaranties. Create,
incur, assume or suffer to exist any Guaranties except:
(a) Guaranties in favor of the Administrative Agent
for the benefit of the Administrative Agent and the Lenders;
(b) Guaranties with respect to Debt permitted pursuant
to Section 10.1;
(c) Guaranties related to sales of equipment in the
ordinary course of business to leasing companies; provided
that the aggregate net present value of all such Guaranties
incurred in connection with the sale of such equipment to
leasing companies cannot exceed the greater of (i)
$1,000,000 less the net present value of recourse
obligations incurred in connection with the sale of
leases pursuant to Section 10.6 or (ii) 25% of the aggregate
net present value of the future lease payments payable under
all such leases by leasing companies to which such
Zuaranties relate; and
(d) Guaranties existing on the Closing Date and not
otherwise permitted under this Section 10.2, as set forth on
Schedule 10.2.
SECTION 10.3. Limitations on Liens. Create, incur,
assume or suffer to exist, any Lien on or with respect to
any of its assets or properties (including, without
limitation, shares of capital stock or other ownership
interests), real or personal, whether now owned or hereafter
acquired, except:
(a) Liens for taxes, assessments and other
governmental charges or levies (excluding any Lien imposed
pursuant to any of the provisions of ERISA or Environmental
Laws) not yet due or as to which the period of grace (not to
exceed thirty (30) days) , if any, related thereto has not
expired or which are being contested in good faith and by
appropriate proceedings if adequate reserves are maintained
to the extent required by GAAP;
<PAGE>
(b) the claims of materialmen, mechanics, carriers,
warehousemen, processors or landlords for labor, materials,
supplies or rentals incurred in the ordinary course of
business, (i) which are not overdue for a period of more
than sixty (60) days or (ii) which are being contested in
good faith and by appropriate proceedings and with respect
to which adequate reserves have been established in
accordance with GAAP;
(c) Liens consisting of deposits or pledges made in
the ordinary course of business in connection with, or to
secure payment of, obligations under workers' compensation,
unemployment insurance or similar legislation;
(d) Liens constituting encumbrances in the nature of
zoning restrictions, easements and rights or restrictions of
record on the use of real property, which in the aggregate
are not substantial in amount and which do not, in any case,
detract from the value of such property or impair the use
thereof in the ordinary conduct of business;
(e) Liens of the Administrative Agent for the benefit
of the Administrative Agent and the Lenders;
(f) Liens in existence on the Closing Date and not
otherwise permitted by this Section 10.3, as described on
Schedule 10.3; and
(g) Liens securing Debt permitted under Sections
10.1(d), (e) and (g); provided, that (i) such Liens shall be
created substantially simultaneously with the acquisition or
lease of the related asset, (ii) such Liens do not at any
time encumber any property other than the property financed
by such Debt, (iii) the amount of Debt secured thereby is
not increased and (iv) the principal amount of Debt secured
by any such Lien shall at no time exceed (100%) of the
original purchase price or lease payment stream of such
property at the time it was acquired or leased.
SECTION 10.4. Limitations on Loans, Advances,
Investments and Acquisitions.
Purchase, own, invest in or otherwise acquire, directly or
indirectly, any capital stock, interests in any partnership
or joint venture (including, without limitation, the
creation or capitalization of any Subsidiary), evidence of
Debt or other obligation or security, substantially all or a
portion of the business or assets of any other Person or any
other investment or interest whatsoever in any other
Person, or make or permit to exist, directly or indirectly,
any loans, advances or extensions of credit to, or any
investment in cash or by delivery of property in, any
Person, or enter into, directly or indirectly, any
commitment or option in respect of the foregoing except the
following shall be permitted (including any commitment or
option with respect to the following):
(a) investments in Subsidiaries existing on the
Closing Date and the other existing loans, advances and
investments described on Schedule 10.4;
<PAGE>
(b) (i) Eligible Investments and (ii) other loans and
investments not authorized specifically by the Investment
Policy but which are permitted by, and approved in
accordance with, Section 8.0 of the Investment Policy, not
exceeding $1,000,000 in aggregate book value outstanding
at any one time.
(c) investments by the Borrower or any of its
Subsidiaries in the form of acquisitions of all or
substantially all of the business or a line of business
(whether by the acquisition of capital stock, assets or any
combination thereof) of any other Person if such acquisition
meets all of the following requirements: (i) the Person
whose equity interest is to be acquired shall be or, as a
result of such acquisition shall become, a Wholly-Owned
Subsidiary of the Borrower and no Change in Control shall
have been effected thereby, (ii) the Person whose equity
interest is to be acquired shall be engaged in a business or
the assets being acquired are to be used in a business
described in Section 8.10, (iii) evidence of approval of the
acquisition of the board of directors or equivalent
governing body of the acquired Person, including, without
limitation, resolutions duly adopted by the board or
directors or equivalent governing body of the acquired
Person authorizing the acquisition and the execution,
delivery and performance of any transactions contemplated
thereby, shall have been delivered to the Administrative
Agent, (iv) such documents reasonably requested by
the Administrative Agent pursuant to Section 8.12 hereof
shall have been delivered to the Administrative Agent, and
(v) in the event the total consideration for such
acquisition exceeds fifteen percent (15%) of the
Consolidated stockholders' equity of the Borrower and its
Subsidiaries calculated in accordance with GAAP, (A) the
Borrower shall have demonstrated pro forma compliance with
each covenant contained in Articles IX and X prior to
consummating the acquisition and no Default or Event of
Default shall have occurred and be continuing both before
and immediately after giving effect to the acquisition, as
well as for a period of at least the next four (4) fiscal
quarters ending thereafter, and (B) a description of the
acquisition and the governing documentation shall have been
delivered to the Administrative Agent and the Lenders at
least fifteen (15) Business Days prior to the consummation
of the acquisition and a copy of the final governing
documentation shall be delivered within five (5) Business
Days after the acquisition; and
(d) loans and advances to employees in the ordinary
course of business in an aggregate amount not to exceed
$100,000 at any one time.
SECTION 10.5. Limitations on Mergers and Liquidation.
Merge, consolidate or enter into any similar combination
with any other Person or liquidate, wind-up or dissolve
itself (or suffer any liquidation or dissolution) except:
(a) any Wholly-Owned Subsidiary of the Borrower may
merge with any other Wholly-Owned Subsidiary of the
<PAGE>
Borrower; provided, that if any such Subsidiary is a
Subsidiary Guarantor, such Subsidiary Guarantor shall be the
surviving entity.
(b) any Wholly-Owned Subsidiary of the Borrower may
merge into the Person such Wholly-Owned Subsidiary was
formed to acquire in connection with an acquisition
permitted by Section 10.4(c); and
(c) any Wholly-Owned Subsidiary of the Borrower may
wind-up into the Borrower.
SECTION 10.6. Limitations on Sale of Assets. Convey,
sell, lease, assign, transfer or otherwise dispose of any of
its property, business or assets (including, without
limitation, the sale of any receivables and leasehold
interests and any sale-leaseback or similar transaction),
whether now owned or hereafter acquired except:
(a) the sale or lease of inventory in the ordinary
course of business;
(b) the sale of obsolete assets no longer used or
usable in the business of the Borrower or any of its
Subsidiaries;
(c) the transfer of assets to the Borrower pursuant to
Section 10.5(c); and
(d) (i) the sale without recourse of the Borrower's or
any of its Subsidiaries' interest in (A) leases of
equipment entered into in the ordinary course of business,
and (B) accounts receivable having a book value of not more
than $4,000,000 during any fiscal year; or (ii) the sale of
any leases or accounts receivable with recourse, for cash of
leases of equipment in which it is lessor and which were
entered into in the ordinary course of business; provided
that, as of the end of each fiscal quarter, the aggregate
net present value of all recourse obligations incurred in
connection with the sale of such leases cannot exceed the
greater of $2,000,000 or 25% of the aggregate net present
value of the future lease payments payable under all leases
sold by the Borrower to which such recourse obligations
relate.
SECTION 10.7. Limitations on Dividends and
Distributions. Declare or pay any dividends upon any of its
capital stock; or (i) purchase, redeem, retire or otherwise
acquire, directly or indirectly, any shares of its capital
stock, or (ii) make any distribution of cash, property or
assets among the holders of shares of its capital stock, or
(iii) make any change in its capital structure, in
the case of clauses (i), (ii) or (iii) that could reasonably
be expected to have a Material Adverse Effect; provided,
that:
(a) the Borrower or any Subsidiary may pay dividends
in shares of its own capital stock;
<PAGE>
(b) any Subsidiary of the Borrower may pay cash
dividends or make contributions to the Borrower; and
(c) the Borrower may pay cash dividends; provided that
no Default or Event of Default has occurred and is
continuing at the time of such declaration and, provided
further that the payment of such dividend will not cause the
occurrence of a Default or Event of Default, all as
demonstrated to the reasonable satisfaction of the
Administrative Agent.
SECTION 10.8. Transactions with Affiliates. Other
than as set forth on Schedule 10.8, directly or indirectly:
(a) make any loan or advance to, or purchase or assume any
note or other obligation to or from, any of its officers,
directors, shareholders or other Affiliates, or to or
from any member of the immediate family of any of its
officers, directors, shareholders or other Affiliates, or
subcontract any operations to any of its Affiliates, or (b)
enter into, or be a party to, any transaction with any of
its Affiliates, except pursuant to the reasonable
requirements of its business and upon fair and reasonable
terms that are fully disclosed to and approved in writing by
the Required Lenders and are no less favorable to it than it
would obtain in a comparable arm's length transaction with a
Person not its Affiliate; provided, that compensation
arrangements for officers and directors such as are
comparable for officers and directors of companies of
similar size shall not be subject to the foregoing approval
requirement by the Required Lenders.
SECTION 10.9. Certain Accounting Changes. Change its
Fiscal Year end, or make any change in its accounting
treatment and reporting practices except as required by
GAAP.
SECTION 10.10. Restrictive Agreements.
(a) Enter into any Debt which contains any negative
pledge on assets or any covenants more restrictive than the
provisions of Articles VIII, IX and X, or which restricts,
limits or otherwise encumbers its ability to incur Liens on
or with respect to any of its assets or properties other
than the assets or properties securing such Debt; or
(b) Enter into or permit to exist any agreement which
impairs or limits the ability of any Subsidiary of the
Borrower to pay dividends to the Borrower.
ARTICLE XI
DEFAULT AND REMEDIES
SECTION 11.1. Events of Default. Each of the
following shall constitute an Event of Default, whatever the
reason for such event and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant
to any judgment or order of any court or any order, rule or
regulation of any Governmental Authority or otherwise:
<PAGE>
(a) Default in Payment of Principal of Loans and
Reimbursement Obligations. The Borrower shall default in
any payment of principal of any Loan, Note or Reimbursement
Obligation when and as due (whether at maturity, by reason
of acceleration or otherwise).
(b) Other Payment Default. The Borrower shall default
in the payment when and as due (whether at maturity, by
reason of acceleration or otherwise) of interest on any
Loan, Note or Reimbursement Obligation or the payment of any
other Obligation, and such default shall continue
unremedied for three (3) Business Days.
(c) Misrepresentation. Any representation or warranty
made or deemed to be made by the Borrower or any of its
Subsidiaries under this Agreement, any other Loan Document
or any amendment hereto or thereto, shall at any time prove
to have been incorrect or misleading in any material respect
when made or deemed made.
(d) Default in Performance of Certain Covenants. The
Borrower shall default in the performance or observance of
any covenant or agreement contained in Sections 7.2, 7.5(e)
or 8.12 or Articles IX or X.
(e) Default in Performance of Other Covenants and
Conditions. The Borrower or any Subsidiary thereof shall
default in the performance or observance of any term,
covenant, condition or agreement contained in this Agreement
(other than as specifically provided for otherwise in this
Section 11.1) or any other Loan Document and such default
shall continue for a period of forty-five (45) days after
written notice thereof has been given to the Borrower by the
Administrative Agent.
(f) Hedging Agreement. Any termination payment shall
be due by the Borrower under any Hedging Agreement and such
amount is not paid within ten (10) Business Days of the due
date thereof.
(g) Debt Cross-Default. The Borrower or any of its
Subsidiaries shall (i) default in the payment of any Debt
(other than the Notes or any Reimbursement Obligation) the
aggregate outstanding amount of which Debt is in excess of
$2,500,000 beyond the period of grace, if any, provided in
the instrument or agreement under which such Debt was
created, or (ii) default in the observance or performance of
any other agreement or condition relating to any Debt (other
than the Notes or any Reimbursement Obligation) the
aggregate outstanding amount of which Debt is in excess of $2,500,000
or contained in any instrument or agreement evidencing, securing
or relating thereto or any other event shall occur or condition
exist, the effect of which default or other event or condition
is to cause, or to permit the holder or holders of such Debt
(or a trustee or agent on behalf of such holder or holders) to cause,
with the giving of notice if required, any such Debt to become due
prior to its stated maturity (any applicable grace period having expired).
<PAGE>
(h) Other Cross-Defaults. The Borrower or any of its
Subsidiaries shall default in the payment when due, or in
the performance or observance, of any obligation or
condition of any Material Contract unless, but only as long
as, the existence of any such default is being contested by
the Borrower or any such Subsidiary in good faith by
appropriate proceedings and adequate reserves in respect
thereof have been established on the books of the Borrower
or any such Subsidiary to the extent required by GAAP.
(i) Change in Control. Any person or group of persons
(within the meaning of Section 13(d) of the Securities
Exchange Act of 1934, as amended), shall obtain ownership or
control in one or more series of transactions of more than
thirty percent (30%) of the common stock or thirty percent
(30%) of the voting power of the Borrower entitled to vote
in the election of members of the board of directors of the
Borrower or there shall have occurred under any indenture or
other instrument evidencing any Debt in excess of $2,500,000
any "change in control" (as defined in such indenture or
other evidence of Debt) obligating the Borrower to
repurchase, redeem or repay all or any part of the Debt or
capital stock provided for therein (any such event, a
"Change in Control").
(j) Voluntary Bankruptcy Proceeding. The Borrower or
any Subsidiary thereof shall (i) commence a voluntary case
under the federal bankruptcy laws (as now or hereafter in
effect), (ii) file a petition seeking to take advantage of
any other laws, domestic or foreign, relating to bankruptcy,
insolvency, reorganization, winding up or composition for
adjustment of debts, (iii) consent to or fail to contest in
a timely and appropriate manner any petition filed against
it in an involuntary case under such bankruptcy laws or
other laws, (iv) apply for or consent to, or fail to
contest in a timely and appropriate manner, the appointment
of, or the taking of possession by, a receiver, custodian,
trustee, or liquidator of itself or of a substantial part of
its property, domestic or
foreign, (v) admit in writing its inability to pay its debts
as they become due, (vi) make a general assignment for the
benefit of creditors, or (vii) take any corporate action for
the purpose of authorizing any of the foregoing.
(k) Involuntary Bankruptcy Proceeding. A case or
other proceeding shall be commenced against the Borrower or
any Subsidiary thereof in any court of competent
jurisdiction seeking (i) relief under the federal bankruptcy
laws (as now or hereafter in effect) or under any other
laws, domestic or foreign, relating to bankruptcy,
insolvency, reorganization, winding up or adjustment of
debts, or (ii) the appointment of a trustee, receiver, custodian,
liquidator or the like for the Borrower or any Subsidiary thereof
or for all or any substantial part of their respective assets,
domestic or foreign, and such case or proceeding shall continue without
dismissal or stay for a period of sixty (60) consecutive days, or an
order granting the relief requested in such case or proceeding (including,
but not limited to, an order for relief under such federal
bankruptcy laws) shall be entered.
<PAGE>
(l) Failure of Agreements. Any provision of this
Agreement or any provision of any other Loan Document shall
for any reason cease to be valid and binding on the Borrower
or Subsidiary party thereto or any such Person shall so
state in writing, or any Loan Document shall for any reason
cease to create a valid and perfected first priority Lien
on, or security interest in, any of the collateral purported
to be covered thereby, in each case other than in accordance
with the express terms hereof or thereof.
(m) Termination Event. The occurrence of any of the
following events: (i) the Borrower or any ERISA Affiliate
fails to make full payment when due of all amounts which,
under the provisions of any Pension Plan or Section 412 of
the Code, the Borrower or any ERISA Affiliate is
required to pay as contributions thereto, (ii) an
accumulated funding deficiency in excess of $1,000,000
occurs or exists, whether or not waived, with respect to any
Pension Plan, (iii) a Termination Event or (iv) the Borrower
or any ERISA Affiliate as employers under one or more
Multiemployer Plans makes a complete or partial withdrawal
from any such Multiemployer Plan and the plan sponsor of
such Multiemployer Plans notifies such withdrawing employer
that such employer has incurred a withdrawal liability
requiring payments in an amount exceeding $1,000,000.
(n) Judgment. A judgment or order for the payment of
money which causes the aggregate amount of all such
judgments to exceed $1,000,000 in any Fiscal Year shall be
entered against the Borrower or any of its Subsidiaries by
any court and such judgment or order shall continue without
discharge or stay for a period of thirty (30) days.
SECTION 11.2. Remedies. Upon the occurrence of an
Event of Default, with the consent of the Required Lenders,
the Administrative Agent may, or upon the request of the
Required Lenders, the Administrative Agent shall, by notice
to the Borrower:
(a) Acceleration; Termination of Facilities. Declare
the principal of and interest on the Loans, the Notes and
the Reimbursement Obligations at the time outstanding, and
all other amounts owed to the Lenders and to the
Administrative Agent under this Agreement or any of the
other Loan Documents (including, without limitation, all L/C
Obligations, whether or not the beneficiaries of
the then outstanding Letters of Credit shall have presented
or shall be entitled to present the documents required
thereunder) and all other Obligations, to be forthwith due
and payable, whereupon the same shall immediately become due
and payable without presentment, demand, protest or other
notice of any kind, all of which are expressly waived,
anything in this Agreement or the other Loan Documents to
the contrary notwithstanding, and terminate the Credit
Facility and any right of the Borrower to request borrowings
or Letters of Credit thereunder; provided, that upon
the occurrence of an Event of Default specified in Section
11.1(j) or (k), the Credit Facility shall be
automatically terminated and all Obligations shall
<PAGE>
automatically become due and payable without presentment,
demand, protest or other notice of any kind, all of which
are expressly waived, anything in this Agreement or any
other Loan Document to the contrary notwithstanding.
(b) Letters of Credit. With respect to all Letters of
Credit with respect to which presentment for honor shall not
have occurred at the time of an acceleration pursuant to the
preceding paragraph, the Borrower shall at such time deposit
in a cash collateral account opened by the Administrative
Agent an amount equal to the aggregate then undrawn and
unexpired amount of such Letters of Credit. Amounts held in
such cash collateral account shall be applied by the
Administrative Agent to the payment of drafts drawn under
such Letters of Credit, and the unused portion thereof after
all such Letters of Credit shall have expired or been fully
drawn upon, if any, shall be applied to repay the other
Obligations. After all such Letters of Credit shall have
expired or been fully drawn upon, the Reimbursement
Obligation shall have been satisfied and all other
Obligations shall have been paid in full, the balance, if
any, in such cash collateral account shall be
returned to the Borrower.
(c) Rights of Collection. Exercise on behalf of the
Lenders all of its other rights and remedies under this
Agreement, the other Loan Documents and Applicable Law, in
order to satisfy all of the Borrower's Obligations.
SECTION 11.3. Rights and Remedies Cumulative; Non-
Waiver; etc. The enumeration of the rights and remedies of
the Administrative Agent and the Lenders set forth in this
Agreement is not intended to be exhaustive and the exercise
by the Administrative Agent and the Lenders of any right or
remedy shall not preclude the exercise of any other rights
or remedies, all of which shall be cumulative, and shall be
in addition to any other right or remedy given hereunder or
under the other Loan Documents or that may now or hereafter
exist at law or in equity or by suit or otherwise. No delay
or failure to take action on the part of the Administrative
Agent or any Lender in exercising any right, power or
privilege shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right, power or
privilege preclude any other or further exercise thereof
or the exercise of any other right, power or privilege or
shall be construed to be a waiver of any Event of Default.
No course of dealing between the Borrower, the
Administrative Agent and the Lenders or their respective
agents or employees shall be effective to change, modify or
discharge any provision of this Agreement or any of the
other Loan Documents or to constitute a waiver of any Event
of Default.
SECTION 11.4. Judgment Currency. The obligation of
the Borrower to make payments of the principal of and
interest on the Notes and the obligation of any such Person
to make payments of any other amounts payable hereunder or
pursuant to any other Loan Document in the currency
specified for such payment shall not be discharged or
<PAGE>
satisfied by any tender, or any recovery pursuant to any
judgment, which is expressed in or converted into any other
currency, except to the extent that such tender or recovery
shall result in the actual receipt by each of the
Administrative Agent and Lenders of the full amount of the
particular Permitted Currency expressed to be payable
pursuant to the applicable Loan Document. The
Administrative Agent shall, using all amounts obtained or
received from the Borrower pursuant to any such tender or
recovery in payment of principal of and interest on the
Obligations, promptly purchase the applicable Permitted
Currency at the most favorable spot exchange rate determined
by the Administrative Agent to be available to it. The
obligation of the Borrower to make payments in the
applicable Permitted Currency shall be enforceable as an
alternative or additional cause of action solely for the
purpose of recovering in the applicable Permitted Currency
the amount, if any, by which such actual receipt shall fall
short of the full amount of the Permitted Currency expressed
to be payable pursuant to the applicable Loan Document.
ARTICLE XII
THE ADMINISTRATIVE AGENT
SECTION 12.1. Appointment. Each of the Lenders hereby
irrevocably designates and appoints First Union as
Administrative Agent of such Lender under this Agreement and
the other Loan Documents and each such Lender irrevocably
authorizes First Union, as Administrative Agent for such
Lender, to take such action on its behalf under the
provisions of this Agreement and the other Loan Documents
and to exercise such powers and perform such duties as are
expressly delegated to the Administrative Agent by the terms
of this Agreement and such other Loan Documents, together
with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in
this Agreement or such other Loan Documents, the
Administrative Agent shall not have any duties or
responsibilities, except those expressly set forth
herein and therein, or any fiduciary relationship with any
Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall
be read into this Agreement or the other Loan Documents or
otherwise exist against the Administrative Agent. To the
extent any provision of this Agreement permits action by the
Administrative Agent, the Administrative Agent
shall, subject to the provisions of Section 13.11 and of
this Article XII, take such action if directed
in writing to do so by the Required Lenders.
SECTION 12.2. Delegation of Duties. The
Administrative Agent may execute any of its respective duties
under this Agreement and the other Loan Documents by or through
agents or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. The
Administrative Agent shall not be responsible for the negligence or
misconduct of any agents or attorneys-in-fact selected by the
Administrative Agent with reasonable care.
<PAGE>
SECTION 12.3. Exculpatory Provisions. Neither the
Administrative Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact, Subsidiaries or
Affiliates shall be (a) liable for any action lawfully taken
or omitted to be taken by it or such Person under or in
connection with this Agreement or the other Loan Documents
(except for actions occasioned solely by its or such
Person's own gross negligence or willful misconduct), or (b)
responsible in any manner to any of the Lenders for any
recitals, statements, representations or warranties made by
the Borrower or any of its Subsidiaries or any officer
thereof contained in this Agreement or the other
Loan Documents or in any certificate, report, statement or
other document referred to or provided for in, or received
by the Administrative Agent under or in connection with,
this Agreement or the other Loan Documents or for the value,
validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or the other Loan Documents or
for any failure of the Borrower or any of its Subsidiaries
to perform its obligations hereunder or thereunder. The
Administrative Agent shall not be under any obligation to
any Lender to ascertain or to inquire as to the observance
or performance of any of the agreements contained in, or
conditions of, this Agreement, or to inspect the properties,
books or records of the Borrower or any of its Subsidiaries.
SECTION 12.4. Reliance by the Administrative Agent.
The Administrative Agent shall be entitled to rely, and
shall be fully protected in relying, upon any note, writing,
resolution, notice, consent, certificate, affidavit, letter,
cablegram, telegram, telecopy, telex or teletype message,
statement, order or other document or conversation believed
by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons and upon advice
and statements of legal counsel (including, without
limitation, counsel to the Borrower), independent
accountants and other experts selected by the Administrative
Agent. The Administrative Agent may deem and treat the
payee of any Note as the owner thereof for all purposes
unless such Note shall have been transferred in accordance
with Section 13.10. The Administrative Agent shall be fully
justified in failing or refusing to take any action under
this Agreement and the other Loan Documents unless it shall
first receive such advice or concurrence of the Required
Lenders (or, when expressly required hereby or by the
relevant other Loan Document, all the Lenders) as it deems
appropriate or it shall first be indemnified to its
satisfaction by the Lenders against any and all liability
and expense which may be incurred by it
by reason of taking or continuing to take any such action
except for its own gross negligence or willful misconduct.
The Administrative Agent shall in all cases be fully
protected in acting, or in refraining from acting, under
this Agreement and the Notes in accordance with a request of
the Required Lenders (or, when expressly required hereby,
all the Lenders), and such request and any action taken or
failure to act pursuant thereto shall be binding upon all
the Lenders and all future holders of the Notes.
<PAGE>
SECTION 12.5. Notice of Default. The Administrative
Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default unless it has
received notice from a Lender or the Borrower referring to
this Agreement, describing such Default or Event of Default
and stating that such notice is a "notice of default". In
the event that the Administrative Agent receives such a
notice, it shall promptly give notice thereof to the
Lenders. The Administrative Agent shall take such action
with respect to such Default or Event of Default as
shall be reasonably directed by the Required Lenders (or,
when expressly required hereby, all the Lenders); provided,
that unless and until the Administrative Agent shall have
received such directions, the Administrative Agent may (but
shall not be obligated to) take such action, or refrain
from taking such action, with respect to such Default or
Event of Default as it shall deem advisable in the best
interests of the Lenders.
SECTION 12.6. Non-Reliance on the Administrative Agent
and Other Lenders. Each Lender expressly acknowledges that
neither the Administrative Agent nor any of its respective
officers, directors, employees, agents, attorneys-in-fact,
Subsidiaries or Affiliates has made any representations or
warranties to it and that no act by the Administrative Agent
hereafter taken, including any review of the affairs of the
Borrower or any of its Subsidiaries, shall be deemed to
constitute any representation or warranty by the
dministrative Agent to any Lender. Each Lender represents
to the Administrative Agent that it has, independently and
without reliance upon the Administrative Agent or any other
Lender, and based on such documents and information as it
has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property,
financial and other condition and creditworthiness of the
Borrower and its Subsidiaries and made its own decision to
make its Loans and issue or participate in Letters of Credit
hereunder and enter into this Agreement. Each Lender also
represents that it will, independently and without
reliance upon the Administrative Agent or any other Lender,
and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit
analysis, appraisals and decisions in taking or not taking
action under this Agreement and the other Loan
Documents, and to make such investigation as it deems
necessary to inform itself as to the business,
operations, property, financial and other condition and
creditworthiness of the Borrower and its Subsidiaries.
Except for notices, reports and other documents expressly
required to be furnished to the Lenders by the Administrative
Agent hereunder or by the other Loan Documents, the Administrative
Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning
the business, operations, property, financial and other condition or
creditworthiness of the Borrower or any of its Subsidiaries which may
come into the possession of the Administrative Agent or any of its
respective officers, directors, employees, agents, attorneys-in-fact,
Subsidiaries or Affiliates.
<PAGE>
SECTION 12.7. Indemnification. The Lenders agree to
indemnify the Administrative Agent in its capacity as such
and (to the extent not reimbursed by the Borrower and
without limiting the obligation of the Borrower to do so),
ratably according to the respective amounts of their
Commitment Percentages, from and against any and all
liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements
of any kind whatsoever which may at any time (including,
without limitation, at any time following the payment
of the Notes or any Reimbursement Obligation) be imposed on,
incurred by or asserted against the Administrative Agent in
any way relating to or arising out of this Agreement or the
other Loan Documents, or any documents contemplated by or
referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or
omitted by the Administrative Agent under or in connection
with any of the foregoing; provided, that no Lender shall be
liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting solely
from the Administrative Agent's bad faith, gross
negligence or willful misconduct. The agreements in this
Section 12.7 shall survive the payment of the Notes, any
Reimbursement Obligation and all other amounts payable
hereunder and the termination of this Agreement.
SECTION 12.8. The Administrative Agent in Its
Individual Capacity. The Administrative Agent and its
respective Subsidiaries and Affiliates may make loans to,
accept deposits from and generally engage in any kind of
business with the Borrower as though the Administrative
Agent were not the Administrative Agent hereunder. With
respect to any Loans made or renewed by it and any Note
issued to it and with respect to any Letter of Credit issued
by it or participated in by it, the Administrative Agent
shall have the same rights and powers under this Agreement
and the other Loan Documents as any Lender and may exercise
the same as though it were not the Administrative Agent, and
the terms "Lender" and "Lenders" shall include the
Administrative Agent in its individual capacity.
SECTION 12.9. Resignation of the Administrative Agent;
Successor Administrative Agent. Subject to the appointment
and acceptance of a successor as provided below, the
Administrative Agent may resign at any time by giving notice
thereof to the Lenders and the Borrower. Upon any such
resignation, the Required Lenders shall have the right to
appoint a successor Administrative Agent, which successor
shall have minimum capital and surplus of at least
$500,000,000. If no successor Administrative Agent shall
have been so appointed by the Required Lenders and shall
have accepted such appointment within thirty (30) days after
the Administrative Agent's giving of notice of resignation,
then the Administrative Agent may, on behalf of the
Lenders, appoint a successor Administrative Agent, which
successor shall have minimum capital and surplus of at least
$500,000,000. Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor Administrative
<PAGE>
Agent, such successor Administrative Agent shall thereupon
succeed to and become vested with all rights, powers,
privileges and duties of the retiring Administrative Agent,
and the retiring Administrative Agent shall be discharged
from its duties and obligations hereunder. After any
retiring Administrative Agent's resignation hereunder as
Administrative Agent, the provisions of this Section 12.9
shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was
acting as Administrative Agent.
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1. Notices.
(a) Method of Communication. Except as otherwise
provided in this Agreement, all notices and communications
hereunder shall be in writing, or by telephone subsequently
confirmed in writing. Any notice shall be effective if
delivered by hand delivery or sent via telecopy,
recognized overnight courier service or certified mail,
return receipt requested, and shall be presumed to be
received by a party hereto (i) on the date of delivery if
delivered by hand or sent by telecopy, (ii) on the next
Business Day if sent by recognized overnight courier service
and (iii) on the third Business Day following the date sent
by certified mail, return receipt requested. A telephonic
notice to the Administrative Agent as understood by the
Administrative Agent will be deemed to be the controlling
and proper notice in the event of a discrepancy with or
failure to receive a confirming written notice.
(b) Addresses for Notices. Notices to any party shall
be sent to it at the following addresses, or any other
address as to which all the other parties are notified in
writing:
If to the Borrower: Checkpoint Systems, Inc.
101 Wolf Drive, P.O. Box 188
Thorofare, New Jersey 08086
Attention: Neil D. Austin, Esq.
Telephone No.: (609) 384-2412
Telecopy No.: (609) 848-2042
With copies to: Checkpoint Systems, Inc.
101 Wolf Drive, P.O. Box 188
Thorofare, New Jersey 08086
Attention: Jeffrey A. Reinhold
Telephone No.: (609) 384-2457
Telecopy No.: (609) 848-2042
<PAGE>
If to First Union as
Administrative Agent: First Union National Bank
One First Union Center, TW-10
301 South College Street
Charlotte, NC 28288-0608
Attention: Syndication Agency
Services
Telephone No.: (704) 374-2698
Telecopy No.: (704) 383-0288
If to any Lender: To the address set forth on
Schedule 1.1 hereto
(c) Administrative Agent's Office. The Administrative
Agent hereby designates its office located at the address
set forth above, or any subsequent office which shall have
been specified for such purpose by written notice to the
Borrower and the Lenders, as the Administrative Agent's
Office referred to herein, to which payments due are to be
made and at which Loans will be disbursed and Letters of
Credit issued.
SECTION 13.2. Expenses; Indemnity. The Borrower will
(a) pay all out-of-pocket expenses of the Administrative
Agent in connection with: (i) the preparation, execution and
delivery of this Agreement and each other Loan Document,
whenever the same shall be executed and delivered,
including, without limitation, all out-of-pocket syndication
and due diligence expenses and reasonable fees and
disbursements of counsel for the Administrative Agent and
(ii) the preparation, execution and delivery of any waiver,
amendment or consent by the Administrative Agent or the
Lenders relating to this Agreement or any other Loan
Document, including, without limitation, reasonable fees and
disbursements of counsel for the Administrative Agent, (b)
pay all out-of-pocket expenses of the Administrative Agent
and the Lenders in connection with the administration and
enforcement of any rights and remedies of the Administrative
Agent and Lenders under the Credit Facility, including
consulting with appraisers, accountants, engineers,
attorneys and other Persons concerning the nature, scope or
value of any right or remedy of the Administrative Agent or
any Lender hereunder or under any other Loan Document or any
factual matters in connection therewith, which expenses
shall include, without limitation, the reasonable
fees and disbursements of such Persons and (c) defend,
indemnify and hold harmless the Administrative Agent and the
Lenders, and their respective parents, Subsidiaries,
Affiliates, employees, agents, officers and directors, from
and against any losses, penalties, fines, liabilities,
settlements, damages, costs and expenses, suffered by any
such Person in connection with any claim, investigation,
litigation or other proceeding (whether or not the
Administrative Agent or any Lender is a party thereto) and
the prosecution and defense thereof, arising out of or in
any way connected with the Agreement, any other Loan
Document or the Loans, including, without limitation,
reasonable attorney's and consultant's fees, except to the
extent that any of the foregoing directly result from the
<PAGE>
gross negligence or willful misconduct of the party seeking
indemnification therefor.
SECTION 13.3. Set-off. In addition to any rights now
or hereafter granted under Applicable Law and not by way of
limitation of any such rights, upon and after the occurrence
of any Event of Default and during the continuance thereof,
the Lenders and any assignee or participant of a Lender in
accordance with Section 13.10 are hereby authorized by the
Borrower at any time or from time to time, without notice to
the Borrower or to any other Person, any such notice being
hereby expressly waived, to set off and to appropriate and
to apply any and all deposits (general or special, time or
demand, including, but not limited to, indebtedness
evidenced by certificates of deposit, whether matured or
unmatured) and any other indebtedness at any time held
or owing by the Lenders, or any such assignee or
participant, to or for the credit or the account of
the Borrower against and on account of the Obligations
irrespective of whether or not (a) the Lenders shall have
made any demand under this Agreement or any of the other
Loan Documents or (b) the Administrative Agent shall have
declared any or all of the Obligations to be due and payable
as permitted by Section 11.2 and although such Obligations
shall be contingent or unmatured.
SECTION 13.4. Governing Law. This Agreement, the
Notes and the other Loan Documents, unless otherwise
expressly set forth therein, shall be governed by, construed
and enforced in accordance with the laws of the State of
Pennsylvania, without reference to the conflicts or choice
of law principles thereof.
SECTION 13.5. Consent to Jurisdiction. The Borrower
hereby irrevocably consents to the personal jurisdiction of
the state and federal courts located in Philadelphia County,
Pennsylvania, in any action, claim or other proceeding
arising out of any dispute in connection with this
Agreement, the Notes and the other Loan Documents, any
rights or obligations hereunder or thereunder, or the
performance of such rights and obligations. The Borrower
hereby irrevocably consents to the service of a summons and
complaint and other process in any action, claim or
proceeding brought by the Administrative Agent or any Lender
in connection with this Agreement, the Notes or the other
Loan Documents, any rights or obligations hereunder or
thereunder, or the performance of such rights and
obligations, on behalf of itself or its property, in the
manner specified in Section 13.1. Nothing in this Section
13.5 shall affect the right of the Administrative
Agent or any Lender to serve legal process in any other
manner permitted by Applicable Law or affect the right of
the Administrative Agent or any Lender to bring any action
or proceeding against the Borrower or its properties in the
courts of any other jurisdictions.
SECTION 13.6. Binding Arbitration; Waiver of Jury
Trial.
<PAGE>
(a) Binding Arbitration. Upon demand of any party,
whether made before or within one hundred twenty (120) days
after institution of any judicial proceeding, any dispute,
claim or controversy arising out of, connected with or
relating to the Notes or any other Loan Documents
("Disputes"), between or among parties to the Notes or any
other Loan Document shall be resolved by binding arbitration
as provided herein. Institution of a judicial proceeding by
a party does not waive the right of that party to demand
arbitration hereunder. Disputes may include, without
limitation, tort claims, counterclaims, claims brought as
class actions, claims arising from Loan Documents executed
in the future, or claims concerning any aspect of the past,
present or future relationships arising out of or connected
with the Loan Documents. Arbitration shall be conducted
under and governed by the Commercial Financial Disputes
Arbitration Rules (the "Arbitration Rules") of the American
Arbitration Association and Title 9 of the U.S. Code. All
arbitration hearings shall be conducted in Pennsylvania.
The expedited procedures set forth in Rule 51, et seq. of
the Arbitration Rules shall be applicable to claims of less
than $1,000,000. All applicable statutes
of limitations shall apply to any Dispute. A judgment upon
the award may be entered in any court having jurisdiction.
The panel from which all arbitrators are selected shall be
comprised of licensed attorneys. The single arbitrator
selected for expedited procedure shall be a retired judge
from the highest court of general jurisdiction, state or
federal, of the state where the hearing will be conducted.
Notwithstanding the foregoing, this paragraph shall not
apply to any Hedging Agreement that is a Loan Document.
(b) Jury Trial. TO THE EXTENT PERMITTED BY APPLICABLE
LAW, THE
ADMINISTRATIVE AGENT, EACH LENDER AND THE BORROWER HEREBY
IRREVOCABLY WAIVES ITS RESPECTIVE RIGHTS TO A JURY TRIAL
WITH RESPECT TO ANY ACTION, CLAIM OR OTHER PROCEEDING
ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS
AGREEMENT, THE NOTES OR THE OTHER LOAN DOCUMENTS, ANY RIGHTS
OR OBLIGATIONS HEREUNDER OR THEREUNDER, OR THE PERFORMANCE
OF SUCH RIGHTS AND OBLIGATIONS.
(c) Preservation of Certain Remedies. Notwithstanding
the preceding binding arbitration provisions, the parties
hereto and to the other Loan Documents preserve, without
diminution, certain remedies that such Persons may employ or
exercise freely, either alone, in conjunction with or during
a Dispute. Each such Person shall have and hereby reserves
the right to proceed in any court of proper jurisdiction or
by self help to exercise or prosecute the following
remedies: (i) all rights to foreclose against any real or
personal property or other security by exercising a power of
sale granted in the Loan Documents or under applicable law
or by judicial foreclosure and sale, (ii) all rights of self
help including peaceful occupation of property and
collection of rents, set off, and peaceful possession of
property, (iii) obtaining provisional or ancillary remedies
including injunctive relief, sequestration, garnishment,
attachment, appointment of receiver and in filing an
<PAGE>
involuntary bankruptcy proceeding, and (iv) when applicable,
a judgment by confession of judgment. Preservation of these
remedies does not limit the power of an arbitrator to grant
similar remedies that may be requested by a party in a
Dispute.
SECTION 13.7. Reversal of Payments. To the extent the
Borrower makes a payment or payments to the Administrative
Agent for the ratable benefit of the Lenders or the
Administrative Agent receives any payment or proceeds of the
collateral which payments or proceeds or any part thereof
are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to a
trustee, receiver or any other party under any bankruptcy
law, state or federal law, common law or equitable cause,
then, to the extent of such payment or proceeds repaid,
the Obligations or part thereof intended to be satisfied
shall be revived and continued in full force and effect as
if such payment or proceeds had not been received by the
Administrative Agent.
SECTION 13.8. Injunctive Relief; Punitive Damages.
(a) The Borrower recognizes that, in the event the
Borrower fails to perform, observe or discharge any of its
obligations or liabilities under this Agreement, any remedy
of law may prove to be inadequate relief to the Lenders.
Therefore, the Borrower agrees that the Lenders, at the
Lenders' option, shall be entitled to temporary and
permanent injunctive relief in any such case
without the necessity of proving actual damages.
(b) The Administrative Agent, the Lenders and the
Borrower (on behalf of itself and its Subsidiaries) hereby
agree that no such Person shall have a remedy of punitive or
exemplary damages against any other party to a Loan Document
and each such Person hereby waives any right or claim to
punitive or exemplary damages that they may now have or may
arise in the future in connection with any Dispute, whether
such Dispute is resolved through arbitration or judicially.
SECTION 13.9. Accounting Matters. All financial and
accounting calculations, measurements and computations made
for any purpose relating to this Agreement, including,
without limitation, all computations utilized by the
Borrower or any Subsidiary thereof to determine compliance
with any covenant contained herein, shall, except as
otherwise expressly contemplated hereby or unless there is
an express written direction by the Administrative Agent to
the contrary agreed to by the Borrower, be performed in
accordance with GAAP as in effect on the Closing Date. In
the event that changes in GAAP shall be mandated by the
Financial Accounting Standards Board, or any similar
accounting body of comparable standing, or shall be
recommended by the Borrower's certified public accountants,
to the extent that such changes would modify such
accounting terms or the interpretation or computation
thereof, such changes shall be followed in defining such
accounting terms only from and after the date the Borrower
<PAGE>
and the Lenders shall have amended this Agreement to the
extent necessary to reflect any such changes in the
financial covenants and other terms and conditions of this
Agreement.
SECTION 13.10. Successors and Assigns; Participations.
(a) Benefit of Agreement. This Agreement shall be
binding upon and inure to the benefit of the Borrower, the
Administrative Agent and the Lenders, all future holders of
the Notes, and their respective successors and assigns,
except that the Borrower shall not assign or transfer any
of its rights or obligations under this Agreement without
the prior written consent of each Lender.
(b) Assignment by Lenders. Each Lender may, with the
consent of the Administrative Agent and (unless a Default or
Event of Default has occurred and is continuing) the
Borrower, which consents shall not be unreasonably withheld
or delayed, assign to one or more Eligible Assignees all or
a portion of its interests, rights and obligations under
this Agreement and the other Loan Documents (including,
without limitation, all or a portion of the Extensions of
Credit at the time owing to it and the Notes held by it);
provided, that:
(i) no assignment of Competitive Bid Loans
shall be permitted;
(ii) no Specified A/C Lender shall assign any
portion of any Specified A/C Commitment to any Assignee if
such assignment would result in a change in the tax
treatment that is adverse to the Borrower (as determined by
the Administrative Agent in consultation with the Borrower)
of any Specified A/C Loans made or to be made by such
Specified A/C Lender;
(iii) each such assignment shall be of a
constant, and not a varying, percentage of all the assigning
Lender's rights and obligations under this Agreement;
(iv) if less than all of the assigning
Lender's Commitment is to be assigned, the Commitment under
this Agreement so assigned shall not be less than
$10,000,000 in the aggregate;
(v) the parties to each such assignment
shall execute and deliver to the Administrative Agent, for
its acceptance and recording in the Register, an Assignment
and Acceptance in the form of Exhibit G attached hereto (an
"Assignment and Acceptance"), together with any Note or
Notes subject to such assignment;
(vi) such assignment shall not, without the
consent of the Borrower, require the Borrower to file a
registration statement with the Securities and Exchange
Commission or apply to or qualify the Loans or the Notes
under the blue sky laws of any state;
<PAGE>
(vii) the assigning Lender shall pay to
the Administrative Agent an assignment fee of $3,000 upon
the execution by such Lender of the Assignment and
Acceptance; provided, that no such fee shall be payable upon
any assignment by a Lender to an Affiliate thereof; and
Upon such execution, delivery, acceptance and recording,
from and after the effective date specified in each
Assignment and Acceptance, which effective date shall be at
least five (5) Business Days after the execution thereof,
(A) the assignee thereunder shall be a party hereto and, to
the extent provided in such Assignment and Acceptance, have
the rights and obligations of a Lender hereby and (B) the
Lender thereunder shall, to the extent provided in such
assignment, be released from its obligations under this
Agreement.
(c) Rights and Duties Upon Assignment. By executing
and delivering an Assignment and Acceptance, the assigning
Lender thereunder and the assignee thereunder confirm to and
agree with each other and the other parties hereto as set
forth in such Assignment and Acceptance.
(d) Register. The Administrative Agent shall maintain
a copy of each Assignment and Acceptance delivered to it and
a register for the recordation of the names and addresses of
the Lenders and the amount of the Extensions of Credit with
respect to each Lender from time to time (the "Register").
The entries in the Register shall be conclusive, in the
absence of manifest error, and the Borrower, the
Administrative Agent and the Lenders may treat each person
whose name is recorded in the Register as a Lender hereunder
for all purposes of this Agreement. The Register shall be
available for inspection by the Borrower or any Lender at
any reasonable time and from time to time upon reasonable
prior notice.
(e) Issuance of New Notes. Upon its receipt of an
Assignment and Acceptance executed by an assigning Lender
and an Eligible Assignee together with any Note or Notes
subject to such assignment and the written consent to such
assignment, the Administrative Agent shall, if such
Assignment and Acceptance has been completed and is
substantially in the form of Exhibit G:
(i) accept such Assignment and Acceptance;
(ii) record the information contained therein
in the Register;
(iii) give prompt notice thereof to the
Lenders and the Borrower; and
(iv) promptly deliver a copy of such
Assignment and Acceptance to the Borrower.
Within five (5) Business Days after receipt of notice, the
Borrower shall execute and deliver to the Administrative
Agent, in exchange for the surrendered Note or Notes, a new
<PAGE>
Note or Notes to the order of such Eligible Assignee in
amounts equal to the Commitment assumed by it pursuant to
such Assignment and Acceptance and a new Note or Notes to
the order of the assigning Lender in an amount equal to the
Commitment retained by it hereunder. Such new Note or Notes
shall be in an aggregate principal amount equal to the
aggregate principal amount of such surrendered Note or
Notes, shall be dated the effective date of such Assignment
and Acceptance and shall otherwise be in substantially the
form of the assigned Notes delivered to the assigning
Lender. Each surrendered Note or Notes shall be canceled
and returned to the Borrower.
(f) Participations. Each Lender may sell
participations to one or more banks or other entities in all
or a portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion
of its Loans and the Notes held by it); provided, that:
(i) each such participation shall be of a
constant, and not varying percentage of all the Assigning
Lender's Commitment or Loans under this Agreement;
(ii) each such participation of the
Commitment or the Loans under this Agreement shall be in an
amount not less than $5,000,000 in the aggregate;
(iii) such Lender's obligations under
this Agreement (including, without limitation, its
Commitment) shall remain unchanged;
(iv) such Lender shall remain solely
responsible to the other parties hereto for the performance
of such obligations;
(v) such Lender shall remain the holder of
the Notes held by it for all purposes of this Agreement;
(vi) the Borrower, the Administrative Agent
and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's
rights and obligations under this Agreement;
(vii) such Lender shall not permit such
participant the right to approve any waivers, amendments or
other modifications to this Agreement or any other Loan
Document other than waivers, amendments or modifications
which would reduce the principal of or the interest rate on
any Loan or Reimbursement Obligation, extend the term or
increase the amount of the Commitment, reduce the amount of
any fees to which such participant is entitled, extend any
scheduled payment date for principal of any Loan or, except
as expressly contemplated hereby or thereby, release the
Subsidiary Guaranty Agreement; and
(viii) any such disposition shall not,
without the consent of the Borrower, require the Borrower to
file a registration statement with the Securities and
<PAGE>
Exchange Commission to apply to qualify the Loans or the
Notes under the blue sky law of any state.
(g) Disclosure of Information; Confidentiality. The
Administrative Agent and the Lenders shall hold all non-
public information with respect to the Borrower obtained
pursuant to the Loan Documents in accordance with their
customary procedures for handling confidential
information. Any Lender may, in connection with any
assignment, proposed assignment, participation or proposed
participation pursuant to this Section 13.10, disclose to
the assignee, participant, proposed assignee or proposed
participant, any information relating to the Borrower
furnished to such Lender by or on behalf of the Borrower;
provided, that prior to any such disclosure, each such
assignee, proposed assignee, participant or proposed
participant shall agree with the Borrower or such Lender to
preserve the confidentiality of any confidential information
relating to the Borrower received from such Lender.
(h) Certain Pledges or Assignments. Nothing herein
shall prohibit any Lender from pledging or assigning any
Note to any Federal Reserve Bank in accordance with
Applicable Law.
SECTION 13.11. Amendments, Waivers and Consents.
Except as set forth below, any term, covenant, agreement or
condition of this Agreement or any of the other Loan
Documents may be amended or waived by the Lenders, and any
consent given by the Lenders, if, but only if, such
amendment, waiver or consent is in writing signed by the
Required Lenders (or by the Administrative Agent with the
consent of the Required Lenders) and delivered to the
Administrative Agent and, in the case of an amendment,
signed by the Borrower; provided, that no amendment,
waiver or consent shall (a) release the Borrower from its
Obligations hereunder, (b) increase the amount or extend the
time of the obligation of the Lenders to make Loans or issue
or participate in Letters of Credit, (c) extend the
originally scheduled time or times of payment of the
principal of any Loan or Reimbursement Obligation or the
time or times of payment of interest on any Loan or
Reimbursement Obligation or any fees, (d) reduce the
principal of or rate of interest payable on any
Loan or Reimbursement Obligation or any fees hereunder, (e)
amend the definition of Alternative Currency, (f) permit any
subordination of the principal or interest on any Loan or
Reimbursement Obligation, (g) release or discharge any
Subsidiary Guarantor from its obligations under the
Subsidiary Guaranty Agreement, (h) amend the provisions of
Section 13.10(a) or (i) amend the provisions of this Section
13.11 or the definition of Required Lenders, without the
prior written consent of each Lender. In addition, no
amendment, waiver or consent to the provisions of Article
XII shall be made without the written consent of the
Administrative Agent.
SECTION 13.12. Performance of Duties. The Borrower's
obligations under this Agreement and each of the other Loan
<PAGE>
Documents shall be performed by the Borrower at its sole
cost and expense.
SECTION 13.13. All Powers Coupled with Interest. All
powers of attorney and other authorizations granted to the
Lenders, the Administrative Agent and any Persons designated
by the Administrative Agent or any Lender pursuant to any
provisions of this Agreement or any of the other Loan
Documents shall be deemed coupled with an interest and shall
be irrevocable so long as any of the Obligations remain
unpaid or unsatisfied or the Credit Facility has not been
terminated.
SECTION 13.14. Survival of Indemnities.
Notwithstanding any termination of this Agreement or any
other provisions of this Agreement to the contrary, the
indemnities to which the Administrative Agent and the
Lenders are entitled under the provisions of this Article
XIII, Section 4.10, 4.11, 4.12 and 8.7 and any other
provision of this Agreement and the Loan Documents shall
continue in full force and effect and shall protect the
Administrative Agent and the Lenders against events arising
after such termination as well as before.
SECTION 13.15. Titles and Captions. Titles and
captions of Articles, Sections and subsections in and the
table of contents of this Agreement are for convenience
only, and neither limit nor amplify the provisions of this
Agreement.
SECTION 13.16. Severability of Provisions. Any
provision of this Agreement or any other Loan Document which
is prohibited or unenforceable in any jurisdiction shall, as
to such jurisdiction, be ineffective only to the extent of
such prohibition or unenforceability without invalidating
the remainder of such provision or the remaining provisions
hereof or thereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
SECTION 13.17. 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 shall be
binding upon all parties, their successors and assigns, and
all of which taken together shall constitute one and the
same agreement.
SECTION 13.18. Term of Agreement. This Agreement shall
remain in effect from the Closing Date through and including
the date upon which all Obligations shall have been
indefeasibly and irrevocably paid and satisfied in full. No
termination of this Agreement shall affect the rights and
obligations of the parties hereto arising prior to such
termination or in respect of any provision of this Agreement
which survives such termination.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers,
all as of the day and year first written above.
BORROWER:
[CORPORATE SEAL] CHECKPOINT SYSTEMS, INC.
By:
Name: Jeffrey A. Reinhold
Title: Vice President - Finance,
Chief Financial Officer and
Treasurer
ADMINISTRATIVE AGENT:
FIRST UNION NATIONAL BANK,
as Administrative Agent
By:
Name: Douglas D. Dimmig
Title: Vice President
LENDERS:
FIRST UNION NATIONAL BANK,
as Lender
By:
Name: Douglas D. Dimmig
Title: Vice President
THE BANK OF NEW YORK,
as Lender
By:
Name: Linda Mae Coppa
Title: Vice President
PNC BANK, NATIONAL ASSOCIATION,
as Lender
By:
Name: Forrest B. Patterson, Jr.
Title: Vice President
THE MITSUBISHI TRUST AND BANKING
CORPORATION , as Lender
By:
Name: Beatrice E. Kossodo
Title: Senior Vice President
BANKBOSTON, N.A., as Lender
By:
Name: Maura Wadlinger
Title: Vice President
<PAGE>
