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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) APRIL 15, 1999
MORTON INDUSTRIAL GROUP, INC.
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(Exact name of registrant as specified in its charter)
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GEORGIA 0-13198 38-0811650
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State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization Identification
No.)
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1021 WEST BIRCHWOOD, MORTON, ILLINOIS 61550
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(Address of principal executive offices) (Zip Code)
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(Registrant's telephone number, including area code 309-266-7176
(Former name or former address, if changed since last report.)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
WORTHINGTON CUSTOM PLASTICS, INC., ACQUISITION
On February 26, 1999, we entered into an agreement with Worthington Custom
Plastics, Inc. to acquire three manufacturing facilities which produce plastic
components for construction and industrial original equipment manufacturers. On
April 15, 1999 we concluded the acquisition. The business we acquired had sales
of $105.1 million in 1998. The Worthington acquisition expands our plastic
product offerings to include washing machine parts, electronics housings and
other injection molded and thermoformed plastic products. The Worthington
acquisition provides us critical mass in the plastics business and adds new
original equipment manufacturers to our customer base.
Pursuant to the agreement to purchase the Worthington businesses, we (i)
paid Worthington Custom Plastics, Inc. $25.0 million in cash, subject to a
working capital adjustment, net of certain assumed liabilities; (ii) issued
10,000 shares of preferred stock, without par value, of Morton Industrial Group,
Inc. to Worthington Custom Plastics, Inc.; and (iii) provided for a contingent
payment to Worthington Custom Plastics, Inc. The preferred stock is mandatorily
redeemable five years from its issuance date at $1,000 per share, and will pay
or accrue annual dividends at a rate of 8%. We may pay such dividends in cash or
in additional shares of preferred stock. The dividend rate may be reduced upon
certain pending changes in a Worthington Custom Plastics, Inc. customer
contract. The contingent payment will be 15% of the fair market value of the
acquired business as of December 31, 2004. For further detail, the Asset
Purchase Agreement and First Amendment to Asset Purchase Agreement are filed as
Exhibits 10.1 and 10.2, respectively, to this Form 8-K.
The assets acquired from Worthington Custom Plastics, Inc. in this
transaction are held by Morton Custom Plastics, LLC, a recently formed limited
liability company wholly owned by Morton Holdings, LLC, a recently formed
limited liability company. Morton Holdings, LLC is 49% owned by Morton
Industrial Group, Inc. and 51% owned by recently formed Quilvest Custom
Plastics, Inc. Quilvest Custom Plastics, Inc. is an affiliate of shareholders of
Morton Industrial Group, Inc. Morton Industrial Group, Inc. acts as the manager
of Morton Holdings, LLC and is allocated 100% of each item of Morton Holdings,
LLC's income, gains, losses, deductions and credits. Quilvest Custom Plastics,
Inc. has granted Morton Industrial Group, Inc. an irrevocable option to purchase
its interest in Morton Holdings, LLC at any time for the sum of One Thousand
Dollars.
To finance the acquisition of assets from Worthington Custom Plastics, Inc.,
Morton Custom Plastics, LLC and Morton Holdings, LLC entered into a secured
revolving credit and term loan facility with General Electric Capital
Corporation ("GECC") as agent and as a lender, pursuant to a Loan Agreement
dated as of April 15, 1999, among Morton Holdings, LLC, Morton Custom Plastics,
LLC, and GECC (the "Loan Agreement"). The Loan Agreement allows for an up to
$24.0 million 4 1/2 year revolving credit facility and an up to $26.0 million
4 1/2 year term loan facility, both at variable interest rates based on LIBOR or
the prime rate, at Morton Custom Plastics, LLC's option, plus various margins.
Morton Custom Plastics, LLC also incurs a fee based on a certain percentage of
the unused revolving credit facility. The term loan facility amortizes quarterly
throughout its term. Morton Custom Plastics, LLC must also prepay certain
amounts from the sale of assets, the issuance of new equity capital and from
"excess cash flow."
The Loan Agreement is secured by a lien on all of Morton Custom Plastics,
LLC's assets, and the assets of its subsidiaries and by a pledge of Morton
Holdings, LLC's membership interest in Morton Custom Plastics, LLC. For further
detail, a copy of the Loan Agreement is filed as Exhibit 10.3 to this Form 8-K.
The Loan Agreement includes certain financial covenants as to maximum capital
expenditures; minimum fixed charge coverage ratio, minimum net income before
interest, tax and depreciation; and minimum tangible net worth. The Loan
Agreement also restricts certain activities of Morton Holdings, LLC and Morton
Custom Plastics, LLC, including the payment of dividends to Morton Industrial
Group, Inc.
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Under the Loan Agreement, the amount available for borrowing depends on a
borrowings base formula that applies varying percentages to certain values of
"eligible" accounts receivable, inventory, equipment and real estate of Morton
Custom Plastics, LLC. As of April 15, 1999, the total amount available for
borrowing under the Loan Agreement was $42.8 million, and the total amount
outstanding was $32.0 million.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
Audited financial statements of Worthington Non-Automotive Plastics Group of
Worthington Custom Plastics, Inc., a subsidiary of Worthington Industries, Inc.
for the ten months ended March 31, 1999 and for the years ended May 31, 1998 and
1997 will be filed by amendment to this Form 8-K.
Morton Industrial Group, Inc. and Subsidiaries Unaudited Pro Forma Condensed
Consolidated financial statements will be filed by amendment to this Form 8-K.
The following documents are filed as Exhibits to this Form 8-K:
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EXHIBIT NO. DOCUMENT
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10.1 Asset Purchase Agreement among the Company, Morton Custom Plastics, LLC, and Worthington Custom
Plastics, Inc. dated February 26, 1999.
10.2 First Amendment to Asset Purchase Agreement, dated as of April 15, 1999, among the Company, Morton
Custom Plastics, LLC and Worthington Custom Plastics, Inc.
10.3 Credit Agreement dated as of April 15, 1999, among Morton Custom Plastics, LLC, Morton Holdings, LLC and
General Electric Capital Corporation.
99.1 Press release dated February 26, 1999 (1998 results).
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
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MORTON INDUSTRIAL GROUP, INC.
(Registrant)
Date: April 29, 1999 By:
[SIGNATURE]
Name: Daryl R. Lindemann
Title: VICE PRESIDENT OF BUSINESS
DEVELOPMENT AND ACQUISITIONS
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EXHIBIT INDEX
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EXHIBIT NO. DOCUMENT
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10.1 Asset Purchase Agreement among the Company, Morton Custom Plastics, LLC, and Worthington Custom
Plastics, Inc. dated February 26, 1999.
10.2 First Amendment to Asset Purchase Agreement, dated as of April 15, 1999, among the Company, Morton
Custom Plastics, LLC and Worthington Custom Plastics, Inc.
10.3 Credit Agreement dated as of April 15, 1999, among Morton Custom Plastics, LLC, Morton Holdings, LLC and
General Electric Capital Corporation.
99.1 Press release dated February 26, 1999 (1998 results).
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ASSET PURCHASE AGREEMENT
WORTHINGTON CUSTOM PLASTICS, INC.
This Agreement is made this 26th day of February, 1999 by and between
Worthington Custom Plastics, Inc., an Ohio corporation ("Seller"), Morton
Industrial Group, Inc., a Georgia corporation ("Parent") and Morton Custom
Plastics, Inc., a newly formed Delaware corporation ("Buyer") and wholly-owned
subsidiary of Parent.
W I T N E S S E T H:
WHEREAS, Seller is engaged in the business, among others, of designing,
manufacturing and selling molded plastic and metal parts; and
WHEREAS, Seller desires to sell, and Parent, through Buyer, desires to
purchase, substantially all of the assets of Seller's plastics business located
at Seller's Harrisburg and Concord, North Carolina, St. Matthews, South Carolina
and Lebanon, Kentucky facilities (the "Business" as further defined hereafter),
and in connection therewith, Buyer has agreed to assume certain of Seller's
liabilities relating to the Business, all on the terms set forth herein; and
WHEREAS, certain terms used herein have the meanings assigned to them in
Section 12 hereof.
NOW, THEREFORE, in consideration of the foregoing and of the respective
promises, covenants, representations and warranties herein contained, it is
agreed:
SECTION 1. PURCHASE OF ASSETS AND ASSUMPTION OF LIABILITIES.
1.1 PURCHASE OF ASSETS. Subject to the terms and conditions set forth
in this Agreement, on the Closing Date, Seller agrees to sell, transfer, assign,
convey and deliver to Buyer, and Buyer agrees to purchase, acquire and accept
from Seller, all of Seller's right, title and interest in and to all of the
assets, properties and rights of Seller used by Seller solely in the conduct of
the Business, as and to the extent existing on the Closing Date (except for the
Excluded Assets as defined in Section 1.2) collectively, the "Assets", free and
clear of all liens and encumbrances other than Permitted Liens. Without
limitation of the foregoing, the Assets include the following as and to the
extent existing on the Closing Date:
(i) REAL PROPERTY. The Real Property owned or leased by
Seller and listed on Schedule 1.1(i) hereto;
(ii) INVENTORY. All Inventory of the Business;
(iii) ACCOUNTS RECEIVABLE. All accounts receivable of the
Business excluding accounts receivable from Seller or Seller's
Affiliates;
(iv) TANGIBLE PERSONAL PROPERTY. All Tangible Property,
including, but not limited to, the Tangible Property listed on
Schedule 1.1(iv);
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(v) CONTRACTS. All Contracts of the Business to which
Seller is a party and which relate to the conduct of the Business
(the "Contracts of the Business"), including, but not limited to,
those set forth on Schedule 1.1(v) hereto; but excluding those
listed on Schedule 1.2(vi);
(vi) PREPAID EXPENSES. All prepaid expenses of the
Business;
(vii) INTANGIBLE PROPERTY. Subject to Sections 1.2(vi) and
7.10 hereof, all Intangible Property, including, but not limited
to, the Intangible Property listed on Schedule 1.1(vii) ;
(viii) BOOKS AND RECORDS. All general, financial and
personnel records, correspondence and other files and records,
including customer lists and sales records, of the Business;
(ix) GOODWILL. All of the Seller's goodwill in the
Business;
(x) CLAIMS. All claims, causes of action, rights of
recovery and rights of set-off arising out of the conduct of the
Business;
(xi) BALANCE SHEET ASSETS. All other assets of Business set
forth on the Balance Sheet, subject to changes in the ordinary
course of business since the Balance Sheet Date;
(xii) EMPLOYEE PLANS. The assets relating to the Plans
listed on Schedule 1.1(xii).
1.2. EXCLUDED ASSETS. Notwithstanding any provision of this Agreement
to the contrary, Seller shall not sell, transfer, assign or convey to Buyer, and
Buyer shall not purchase, acquire or accept, and there shall be excluded from
the Assets the following (the "Excluded Assets"):
(i) CASH. All cash, marketable securities, commercial
paper, certificates of deposit and other bank deposits, treasury
bills and other cash equivalents;
(ii) BANK ACCOUNTS. All rights with respect to bank
accounts;
(iii) INTERCOMPANY ACCOUNTS. All rights of Seller or the
Business with respect to any obligations of Seller, any Seller
Affiliate or any director or officer of Seller or of any Seller
Affiliate;
(iv) INSURANCE. All insurance policies and all rights of
every nature and description under or arising out of such
policies;
(v) EMPLOYEE BENEFIT PLANS. Except as expressly set forth
on Schedule 1.1(xii), all Plans of Seller and the assets relating
thereto;
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(vi) OTHER MATTERS. All rights of Seller (a) under this
Agreement and the agreements and instruments delivered to Seller
by Buyer pursuant to this Agreement, (b) to Seller's and
Worthington's corporate name, logos, tradenames and trademarks,
and (c) under those Contracts listed in Schedule 1.2(vi); and
(vii) ASSETS NOT USED IN THE BUSINESS. Those assets not used
solely in connection with the Business, including, without
limitation, those listed on Schedule 1.2 (vii).
1.3 ASSUMED LIABILITIES. Subject to the terms and conditions set
forth in this Agreement, Buyer agrees that, on the Closing Date, Buyer shall
assume and thereafter pay, perform and discharge when due all liabilities and
obligations of Seller relating to the Assets or the Business or the operation
thereof (except the Excluded Liabilities as defined in Section 1.4) as and to
the extent existing on the Closing Date, including, without limitation, the
following obligations and liabilities as and to the extent existing on the
Closing Date (the "Assumed Liabilities"):
(i) all liabilities and obligations of Seller relating to
the Assets or the Business to be performed after the Closing Date
arising from the Contracts of the Business;
(ii) all liabilities of Seller reflected or reserved against
in the Closing Balance Sheet, or notes thereto, and those
liabilities of Seller arising in the ordinary course of business
of the Business since the Balance Sheet Date;
(iii) all obligations of Seller for replacement of, or refund
or credit for, damaged, defective or other returned products or
for warranty claims in respect of products sold by the Business;
(iv) all obligations of Seller for rebates, price
adjustments, adjustments to accounts payable, future delivery
obligations, discounts or promotions to the extent accrued or
arising in the ordinary course of business of the Business;
(v) all liabilities and obligations of Seller relating to
the Assets or the Business with respect to accrued and unpaid
Taxes to be assumed by Buyer pursuant to Section 7.4 hereof
(other than income and franchise taxes) existing on the Closing
Date including, without limitation, real estate taxes, sales
taxes, general and special taxes and assessments, ad valorem
taxes, water and sewer charges, federal and state withholding
taxes of employees of the Business;
(vi) all liabilities and obligations of Seller relating to
the Plans set forth on Schedule 1.1(xii);
(vii) subject to Section 10.1, all liabilities of Seller in
connection with each Action or Proceeding set forth on Schedule
1.3(vii) hereto;
(viii) all liabilities and obligations of Seller related to
the IDB as described in Section 1.5; and
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(ix) all other liabilities expressly set forth as being
assumed or payable by Buyer as set forth in Section 7 hereof or
pursuant to the Assignment and Assumption Agreement referred to in
Section 9.5(e).
1.4 LIABILITIES NOT ASSUMED. Anything contained in this Agreement to
the contrary notwithstanding, Buyer shall not assume and there shall be excluded
from the Assumed Liabilities (i) all obligations of Seller or the Business to
any Seller Affiliate or any director or officer of Seller or of any Seller
Affiliate, (ii) those obligations or liabilities listed as Excluded Liabilities
on Schedule 1.4, and (iii) those liabilities expressly set forth as being
payable by Seller pursuant to Section 7 hereof. The liabilities of Seller not
assumed by Buyer as listed in this Section 1.4 are referred to herein as the
"Excluded Liabilities."
1.5 LEBANON IDB. Seller's Lebanon, Kentucky facility was financed
through Industrial Building Revenue Bonds, Series 1994 issued by the City of
Lebanon, Kentucky (the "IDB") which were purchased by a Seller's Affiliate. At
Closing the following will occur with respect to the IDB:
(a) As part of the Assumed Liabilities, Buyer shall assume all of
Seller's liabilities and obligations, for payment and otherwise,
under the IDB; and
(b) As part of the Assets being acquired, Seller's Affiliate shall
transfer the IDB to an entity designated by Buyer.
SECTION 2. PURCHASE PRICE.
2.1 PURCHASE PRICE. The consideration for the Assets (the "Purchase
Price") shall be (i) $25,000,000 (the "Closing Cash Payment"); (ii) non-voting
shares of preferred stock of Parent, without par value (the "Preferred Stock"),
having an aggregate value of $10,000,000 and the terms set forth on Exhibit A
hereto; (iii) voting shares of common stock of Buyer, par value $0.01 per share
(the "Common Stock"), equal to 15% of the equity value of Buyer at the Closing
Date on a fully diluted basis; and (iv) Buyer's assumption of the Assumed
Liabilities. The Closing Cash Payment shall be paid as provided in Section 2.3.
2.2. ADJUSTMENT OF PURCHASE PRICE.
(a) The Purchase Price shall be adjusted as follows:
(i) For purposes hereof, "Operating Capital" shall mean
(A) net accounts receivable plus Inventory, plus investments since
November 30, 1998 in fixed assets, less (B) accounts payable.
"Final Operating Capital" shall mean Operating Capital of the
Business as reflected in the Closing Balance Sheet referred to in
Section 2.2(b); and "Target Operating Capital" shall mean
Operating Capital of the Business as reflected on the November 30,
1998 Balance Sheet.
(ii) If the amount of the Final Operating Capital determined
in accordance with this Section is less than the Target Operating
Capital, the Purchase Price shall be decreased by an amount equal
to the difference between the Final Operating Capital and the
Target Operating Capital.
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(iii) If the amount of the Final Operating Capital is greater
than the Target Operating Capital, the Purchase Price shall be
increased by an amount equal to the difference between the Final
Operating Capital and the Target Operating Capital.
(b) The Final Operating Capital shall be determined as of the close of
business on the day immediately preceding the day of the Closing (the
"Determination Time") on the basis of the balance sheet of the Business
as of the Determination Time (the "Closing Balance Sheet"). The Closing
Balance Sheet (i) shall be prepared by Seller in accordance with
generally accepted accounting principles consistently applied ("GAAP") as
supplemented by the principles set forth in Schedule 2.2 (the "Accounting
Principles"); (ii) shall reflect separately investments since November
30, 1998 in fixed assets; and (iii) shall reflect the transactions
contemplated by Schedule 2.2 hereof.
(c) Seller shall use its best efforts to deliver to Buyer the Closing
Balance Sheet within sixty (60) days after the Closing; (i) setting forth
the amount of Final Operating Capital reflected in the Closing Balance
Sheet, and (ii) setting forth the amount of any required adjustment to
the Purchase Price pursuant to this Section 2.2. Seller and Buyer shall
reasonably agree upon the method for obtaining an accurate report of
closing inventory (i.e. physical inventory, cycle count or other). The
parties shall reasonably agree when any counts shall be conducted and
each party and their representatives shall be permitted to observe the
conduct of any counts. In connection with any physical inventory/cycle
count and the preparation of the Closing Balance Sheet, the Buyer shall
cause the employees of the Business to provide to Seller without charge,
full access to the books, records, facilities and employees of the
Business and the Buyer shall cause the Businesses employees to cooperate
fully with Seller in the conduct of the physical inventory/cycle count
and the preparation of the Closing Balance Sheet. The Buyer and its
representatives shall be entitled to consult with personnel of Seller
during the course of the preparation of the Closing Balance Sheet and to
review the work papers prepared in connection therewith.
(d) The Buyer shall have 30 days after its receipt of the Closing
Balance Sheet (hereafter the "Dispute Period") during which it shall have
the opportunity to examine the Closing Balance Sheet and to determine if
it proposes any adjustments to amounts set forth therein. If adjustments
are proposed, the Buyer shall provide a written notice to Seller (a
"Dispute Notice") within the Dispute Period setting forth the proposed
adjustments. Within 15 days after receipt of the Dispute Notice, Buyer
and Seller shall meet and attempt to resolve such proposed adjustments
and upon reaching agreement shall set forth such agreement in writing and
prepare a final Closing Balance Sheet. In the event that Seller and
Buyer are unable to resolve any such Dispute within the 15 day period (or
such longer period as the parties may mutually agree) then the public
accounting firm of Deloitte & Touche, LLP (Columbus office) shall be
employed as arbitrator hereunder to settle the Dispute as soon as
practicable. The arbitrator shall have access to all documents and
facilities necessary to perform its functions as arbitrator. The
arbitrator's determination with respect to any Dispute shall be the
exclusive method for the resolution of that dispute, shall be final and
binding upon the parties hereto and may be enforced by any court of
competent jurisdiction. The arbitrator may at his discretion
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establish binding rules of procedure for the conduct of the
arbitration. Seller and Buyer shall each pay one-half of the fees and
expenses of the arbitrators for such purposes.
2.3. PAYMENT OF PURCHASE PRICE.
(a) At the Closing, Buyer shall pay to Seller (i) an amount equal to
the Closing Cash Payment by wire transfer of immediately available funds
to an account designated by Seller, and (ii) certificates issued in the
name of Seller representing the Preferred Stock and Common Stock
contemplated by Section 2.1.
(b) Within three (3) business days after the determination of Final
Operating Capital is finalized, then (i) in the event the Final Operating
Capital is less than the Target Operating Capital, Seller shall pay to
Buyer the amount, if any, by which the Target Operating Capital exceeds
the Final Operating Capital, or (ii) in the event the Final Operating
Capital exceeds the Target Operating Capital, Buyer shall pay to Seller
the amount, if any, by which the Final Operating Capital is greater than
the Target Operating Capital. Any such payment pursuant to this Section
(b) shall be made by wire transfer of immediately available funds and
shall be accompanied by payment of an amount determined by computing
simple interest on the amount of that payment at the rate of interest
announced publicly by Bank One in Columbus from time to time as its
"reference rate" (on the basis of a 365-day year) from the Closing Date
to the date of payment.
2.4 ALLOCATION. The Purchase Price shall be allocated among the
Assets on a schedule to be attached hereto as Schedule 2.4 and agreed to by the
parties hereto on or prior to the Closing Date. Such purchase price allocation
shall be made consistent with Section 1060 of the Code. Each of the parties
hereto shall not, and shall not permit any of its Affiliates to, take a position
(except as required pursuant to any Order) on any Tax Return, before any
governmental agency charged with the collection of any Tax, or in any judicial
proceeding, that is in any way inconsistent with the allocation determined in
accordance with this Section 2.4.
SECTION 3. CLOSING; TERMINATION; FILINGS.
3.1. CLOSING. Subject to fulfillment or waiver of the conditions
precedent set forth in Sections 8 and 9 hereof, the Closing shall take place on
the Closing Date at the offices of Vorys, Sater, Seymour and Pease, L.L.P. in
Columbus, Ohio at 10:00 a.m., local time, or at such other time and place on the
Closing Date upon which Seller and the Buyer may mutually agree.
3.2. CLOSING DATE. The Closing Date (the "Closing Date") shall either
be the later of (i) March 31, 1999 or, if applicable, the date which is five (5)
business days after all waiting periods, including any extensions thereof,
applicable to the transactions contemplated hereby under the HSR Act have
expired or terminated, or (ii) such other date upon which Seller and the Buyer
may mutually agree. Seller and Buyer shall use their best efforts to effect
Closing on or before March 31, 1999.
3.3. TERMINATION. This Agreement may be terminated at any time prior
to the Closing:
(a) by mutual written consent of Buyer, Parent and Seller;
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(b) by Buyer or Parent if there has been a material misrepresentation
or breach on the part of Seller, or by Seller if there has been a
material misrepresentation or breach on the part of Buyer or Parent, of
the representations, warranties or covenants set forth in this Agreement,
or if events have occurred which have made it impossible to satisfy a
condition precedent to the terminating Party's obligations to consummate
the transactions contemplated hereby, unless the willful breach of this
Agreement by such terminating Party has caused the condition to be
unsatisfied;
(c) by any of Buyer, Parent, or Seller if the Closing has not occurred
on or prior to April 15, 1999; provided that none of Buyer, Parent or
Seller will be entitled to terminate this Agreement pursuant to this
Section 3.3(c) if a willful breach of this Agreement by such party has
prevented the consummation of the transactions contemplated hereby at or
prior to such time; or
(d) by the Buyer pursuant to the terms of Section 3.6.
In the event of termination of this Agreement by Buyer, Parent or
Seller as provided above, this Agreement will forthwith become void and
there will be no liability on the part of any party hereto to any other
party hereto or its stockholders or directors or officers in respect
thereof, except for the obligations of the parties hereto in Sections
7.7, 11.9 and 11.10 and except that nothing herein will relieve any party
from liability for any breach of this Agreement prior to such
termination.
3.4. FILINGS; COOPERATION.
(a) Prior to the Closing the parties shall proceed with diligence and
in good faith to make such filings and take such other actions as may be
necessary to satisfy the HSR Act, if applicable. Buyer shall be
responsible for the HSR Act filing fee; provided that Seller shall
reimburse Buyer for one-half of such filing fee.
(b) On and after the Closing Date, the Buyer and Seller shall, on
request, cooperate with one another by furnishing any additional
information, executing and delivering any additional documents and/or
instruments, and doing any and all such other things as may be reasonably
required by the parties or their counsel to consummate or otherwise
implement the transactions contemplated by this Agreement.
(c) Unless otherwise consented to in writing by the other party,
neither Seller nor Buyer shall cause or permit the destruction or other
disposing of the documentation (including work papers) used in the
development of the Closing Balance Sheet within five (5) years from the
date of Closing and shall grant reasonable access to or cause reasonable
access to be granted to the other party to such documentation during
normal business hours and shall permit such party to make copies thereof
at such party's expense. The above provision does not apply to any
documentation of which both parties have copies.
3.5. NON-ASSIGNABLE CONTRACTS. To the extent that assignment hereunder
by Seller to Buyer of any Contract is not permitted or is not permitted without
the consent of any third party, this Agreement shall not be deemed to constitute
an undertaking to assign the same if such
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consent is not given or if such an undertaking otherwise would constitute a
breach of or cause a loss of benefits thereunder. Buyer and Seller will use
commercially reasonable efforts to obtain any and all such third party
consents.
3.6 DISCLOSURE LETTER. Seller has delivered to Buyer a disclosure
letter dated the date hereof (the "Disclosure Letter"), which contains the
schedules to this Agreement. Seller shall provide supplements to the Disclosure
Letter and schedules to reflect any new information discovered by Seller or
Buyer prior to Closing; provided, however, that if a supplement to the
Disclosure Letter or schedules, unless expressly consented to by Buyer, shall
disclose any fact or event which would have a Material Adverse Effect, Buyer
shall have the right to terminate this Agreement. No supplement to the
Disclosure Letter or schedules shall modify, affect or diminish Buyer's right to
terminate this Agreement pursuant to the terms of Section 3.3 above.
SECTION 4. REPRESENTATIONS, WARRANTIES AND DISCLAIMERS OF SELLER.
Seller represents and warrants to Buyer and Parent as follows:
4.1. ORGANIZATION, POWER. Seller is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Ohio, and
is qualified to do business in all jurisdictions in which the failure to do so
would have a Material Adverse Effect. Seller has all requisite corporate power
to conduct the Business and to enter into this Agreement and to carry out its
obligations hereunder.
4.2 AUTHORITY. The execution and delivery of the Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action required on the part of Seller. The Agreement
has been duly executed and delivered by Seller, and constitutes the valid and
legally binding obligation of Seller and is enforceable against Seller in
accordance with its terms.
4.3 NO CONFLICTS. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will:
(i) violate or conflict with, or result in a breach of any provisions of, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, any of the terms, conditions or provisions of
the Articles of Incorporation or Code of Regulations of Seller, or any note,
bond, mortgage, indenture, deed of trust, material license agreement, loan
agreement or other material agreement, instrument or obligation to which Seller
is a party, or by which it or any of the Assets may be bound or affected; or
(ii) violate any judgment, order, writ, injunction or decree, or any law, rule
or regulation applicable to Seller or the Assets, to the extent any of the
foregoing would have a Material Adverse Effect. Except as set forth on Schedule
4.3, Seller is not required to give notice or obtain any consent from any person
in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.
4.4. FINANCIAL STATEMENTS.
(a) DELIVERY OF FINANCIAL STATEMENTS. Seller has heretofore delivered
to the Buyer a Balance Sheet of the Business as of November 30, 1998 (the
"Balance Sheet Date") and a statement of earnings for the six months then
ended (collectively, the "Financial
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Statements"). The Balance Sheet of the Business as of November 30,
1998 is attached hereto as Schedule 4.4(a) and is sometimes referred
to herein as the "Balance Sheet".
(b) COMPLIANCE WITH GAAP. The Financial Statements have been prepared
from the Seller's books and records and fairly present the financial
position and results of operations of the Business, as of the dates and
for the periods then ended, in conformity with GAAP consistently applied
as supplemented by the principles set forth in Schedule 2.2, except for
the absence of information that would ordinarily be contained in notes to
audited financial statements, and except for normal year end adjustments
as to the November 30, 1998 financial statements.
(c) ABSENCE OF CERTAIN LIABILITIES. Except to the extent reflected or
reserved for in the Balance Sheet there are no liabilities or obligations
of the Business that would normally be shown on a balance sheet prepared
in accordance with GAAP except (i) liabilities or obligations incurred in
the ordinary course of business since the date of the Balance Sheet,
(ii) liabilities and obligations disclosed on Schedule 4.4(c); and (iii)
liabilities and obligations not required to be so disclosed because of
their failure to meet the materiality thresholds set forth therein.
(d) BOOKS AND RECORDS. The books of account and other records of the
Seller maintained in connection with the operation of the Business have
been made available to Buyer, accurately record transactions relating to
the Business in all material respects, and have been maintained in
accordance with sound business practices.
4.5. TITLE TO PROPERTIES, ABSENCE OF LIENS AND ENCUMBRANCES.
(a) REAL PROPERTY. Schedule 1.1(i) sets forth all real property,
owned or leased, by the Seller that is used solely in the Business.
(b) TANGIBLE PROPERTY. Schedule 1.1(iv) sets forth a correct and
complete list, as of the date of this Agreement, of each material item of
Tangible Property owned by the Seller and used solely in connection with
the Business.
(c) LIENS. The Seller has good and marketable title to or a valid
leasehold interest in the Assets of the Business, free and clear of all
liens, mortgages, security interests, claims, charges and encumbrances,
or other defects in title (collectively "Liens") except for (i) Liens set
forth on Schedule 4.5(c) or the title insurance commitment for the Real
Property, (ii) Liens for current Taxes not yet due or delinquent or being
contested in good faith by appropriate proceedings (iii) statutory Liens
arising in the ordinary course of business; and (iv) such Liens, if any,
as are not, individually or in the aggregate, substantial in character,
amount or extent, and do not, individually or in the aggregate,
materially detract from the value or interfere with the present use of
any property or asset subject thereto or affected thereby or the
operations of the Business as presently conducted (collectively items (i)
through (iv) being referred to as "Permitted Liens").
(d) INTANGIBLE PROPERTY. Schedule 1.1(vii) sets forth a list, as of
the date of this Agreement, of all material Intangible Property (to the
extent reducible to written form) owned or used by the Seller in
connection with the conduct of the Business. Except as
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set forth on Schedule 1.1(vii) neither the Business nor any of the
Intangible Property listed on Schedule 1.1(vii) infringes upon the
rights of any other Person. The Seller owns or possesses licenses or
other rights to use all Intangible Property necessary to conduct the
Business as presently operated, and is not currently being challenged
with respect thereto in any way. There is no claim or action by any
person pending, or to Seller's knowledge, threatened with respect to
the use of the foregoing properties or rights.
4.6. MATERIAL CONTRACTS. Schedule 4.6 sets forth a correct and complete
list, as of the date of this Agreement, of each of the following Contracts to
which the Seller is a party and relate to the conduct of the Business
(collectively, the "Material Contracts"):
(a) Contracts for the future acquisition or sale of any assets or the
furnishing of any services involving $50,000 individually (or $100,000 in
the aggregate, in the case of any related series of Contracts), other
than acquisitions or sales of Inventory in the ordinary course of
business;
(b) Contracts other than as listed or excluded under clause (a)
calling for future aggregate payments to or from Seller in any one year
of more than $50,000 in any one case (or $100,000 in the aggregate, in
the case of any related series of Contracts);
(c) Contracts relating to joint ventures or partnerships;
(d) Contracts containing covenants of the Seller prohibiting or
materially limiting the right to compete in any line of business or
prohibiting or restricting its ability to conduct business with any
Person or in any geographical area;
(e) Contracts relating to the acquisition by the Business of any
operating business or the capital stock of any other Person for a
purchase price of more than $50,000 individually (or $100,000 in the
aggregate, in the case of any related series of Contracts);
(f) Contracts requiring the payment by or to the Business of a
royalty, override or similar commission or fee of more than $50,000 in
any one year;
(g) Employment agreements and commitments, severance agreements and
other Contracts with current or former officers, directors or employees
of the Business;
(h) Collective bargaining agreements with any labor union representing
any employees of the Business;
(i) Mortgages, indentures, notes, bonds, letters of credit and other
agreements relating to the borrowing of money which will not be paid,
forgiven or otherwise terminated prior to Closing;
(j) Contracts relating to the creation of Liens or the guarantee of
the payment of liabilities or performance of obligations of any other
Person by the Business; and
(k) Licensing agreements or other contracts with respect to patents,
trademarks, copyrights, trade secrets, or other intellectual property,
including agreements with current
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or former employees, consultants, or contractors regarding the
appropriation or the non-disclosure of any of the Seller's patents,
trademarks, copyrights, trade secrets or other intellectual property.
True, correct and complete copies of all of the Material Contracts have
either been delivered by Seller to Buyer or made available by Seller to Buyer
for its review. Except as set forth on Schedule 4.6, (a) all of the Material
Contracts are valid and in full force and are enforceable against Seller in
accordance with their respective terms; (b) the Seller is not in default under
any such Material Contract; and (c) no other party to any such Material Contract
has given notice to the Seller that it intends to terminate or materially alter
the provisions of such Material Contract. Except as reflected in the Material
Contract or on Schedule 4.3, no approval or consent of any Person is needed for
the Material Contract to continue to be in full force and effect.
4.7. LICENSES; PERMITS. The Business has all material governmental
licenses, permits, authorizations and approvals necessary to the operation of
the Business.
4.8. EMPLOYEE BENEFIT PLANS.
(a) The Schedule 4.8(a) lists all Plans that cover employees of the
Business. Seller has furnished or made available to Buyer, to the extent
requested by Buyer, copies of the Plans (and, if applicable, related
trust agreements) and all amendments thereto together with, where
applicable , (i) the most recent annual report prepared in connection
with any Plan to be assumed by Buyer (Form 5500 including, if applicable,
Schedule B thereto), and (ii) each Plan's summary plan description and
any summaries of material modifications thereto. Seller does not
contribute to or have any liability or obligation under or with respect
to any Plan which is a "multiemployer plan" as defined for purposes of
and subject to Subtitle E of Title IV of ERISA with respect to any
employees or former employees of the Business.
(b) Neither Seller, nor any entity aggregated with Seller under
Section 414(b) or (c) of the Code or Section 4001 of ERISA, has incurred,
with respect to the Business, (i) any liability under Title IV of ERISA
arising in connection with the termination of, or a complete or partial
withdrawal from, any plan covered or previously covered by Title IV of
ERISA or (ii) any liability under Section 412 of the Code, that in either
case would become a liability of Buyer after the Closing Date.
(c) Each 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 no event has occurred since the date of such determination
that would have a Material Adverse Effect on such qualification.
(d) Schedule 4.8(d) sets forth a calculation of the liability of
Seller for post-retirement benefits with respect to employees of the
Business other than pensions, made in accordance with Financial
Accounting Statement 106 of the Financial Accounting Standards Board,
regardless of whether Seller is required by this Statement to disclose
such information.
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(e) Seller is in substantial compliance with all of its obligations
under the Plans.
(f) Seller is in substantial compliance with (i) its filing
requirements under ERISA and the Code as to each Plan, and (ii) all
notice and disclosure to participants requirements under either ERISA or
the Code.
4.9. RELATED PARTY TRANSACTIONS. Except for the intercompany
transactions between Seller and Seller's Affiliates, no officer or director of
the Seller:
(a) has any material direct or indirect interest in (i) any entity
which does any material business with the Business; or (ii) any material
property, asset or right which is used by the Business; or
(b) has any material contractual relationship with the Business other
than such relationship as attaches to being such officer or director.
4.10. LITIGATION. Except as disclosed on Schedule 1.3(vii) there are no
material Actions or Proceedings pending or threatened against the Business or
the Assets, at law or in equity, or before or by any Governmental or Regulatory
Body. There exists no set of facts or circumstances that are not otherwise
addressed by any other representation, warranty or covenant in this Agreement
and that, if discovered as of the Closing Date, would form the basis, as of the
Closing Date, of any such material Action or Proceeding. The Business is not
subject to any Order directed specifically at the Business.
4.11 COMPLIANCE WITH LAW. Except as set forth on Schedule 4.11, Seller
is in substantial compliance with the Laws and Orders to which the Business or
the Assets or the Assumed Liabilities are subject.
4.12 CONDUCT OF BUSINESS. Except as contemplated by this Agreement or
as set forth on Schedule 4.12, since the Balance Sheet Date, the Seller has
conducted the Business only in the ordinary course and there has been no:
(a) Material Adverse Effect;
(b) sale, assignment, transfer, mortgage, pledge or lease of any
material assets of the Business, except for sales transactions or leases
in the ordinary course of business;
(c) incurrence of any material obligation or liability (absolute,
contingent or otherwise) except for liabilities and obligations not being
assumed by Buyer and except for liabilities and obligations incurred in
the ordinary course of business consistent with prior practice or as a
result of normal intercompany transactions;
(d) material damage, destruction or loss (whether or not covered by
insurance) adversely affecting the Business; or
(e) any actual or threatened employee strikes, work stoppages, slow
downs, or walk outs.
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4.13. TAX RETURNS. The Seller has filed (or will file when due) all Tax
Returns for the Business, for all years and periods, and portions thereof for
which the due date (with extension) falls on or before the Closing Date. All
Taxes shown by those returns to be payable and all assessments of the Seller
have been paid or will be paid when due. The federal income tax returns of the
Seller through the taxable year ended May 31, 1995 have been examined by the
Internal Revenue Service and any deficiencies or assessments including interest
and penalties thereon, claimed or made as a result of those examinations
(insofar as they affect the Business) have been paid or provided for or will be
paid by Seller pursuant to Section 7.4. Except as set forth on Schedule 4.13,
there are no claims or investigations by any taxing authority pending, or to the
best of Seller 's knowledge, threatened against the Seller for any past due
Taxes, which could become a liability of Buyer.
4.14. ENVIRONMENTAL VIOLATIONS. Except as set forth on Schedule 4.14,
(i) within the last five years, no Order has been issued, no Environmental Claim
has been filed, no penalty has been assessed and no investigation or review is
pending or, to Seller's knowledge, threatened by any Governmental or Regulatory
Body with respect to any alleged failure by the Business to have any license
required under applicable Environmental Laws in connection with the conduct of
the Business and (ii) the Business is not in material violation of, and has not
received any claim or notice that it is currently in violation of, any
Environmental Law in connection with the conduct of the Business.
4.15. LABOR MATTERS. Seller is not a party to or bound by any
collective bargaining agreement or relationship with any labor organization with
respect to employees of the Business. There have been no labor strikes, work
stoppages, or slowdowns or other material labor disputes with respect to the
Business within the past five years.
4.16 INSURANCE. Schedule 4.16 lists the insurance coverage which is
maintained by or for the Business. All insurance policies maintained by or for
the Business are in full force and effect, all premiums due thereon have been
paid, and the Business has complied with the provisions of such policies. No
notices of any pending or threatened terminations with respect to any of such
insurance policies have been received. The Business has not failed to give any
notice or present any material claim under any insurance policy in due and
timely fashion.
4.17. BROKERS. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on by Seller, without the
intervention of any other person or firm in such manner as not to give rise to
any valid claim against the Buyer for a brokerage commission, finder's fee or
other like payment to any person or entity, except that Seller has retained
Salomon Smith Barney whose fees and expenses as its investment advisor in
connection herewith shall be paid by Seller.
4.18. KNOWLEDGE. To be a breach of a representation or warranty which
is made to the knowledge of Seller, the knowledge required shall be the
knowledge of officers or plant managers of the Seller involved with the
Business, and knowledge of other employees of the Seller involved with the
Business shall not be imputed to Seller. The term "knowledge" means either
actual knowledge or awareness of a fact or other matter that a prudent
individual could reasonably be expected to discover upon due inquiry.
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4.19. ACCOUNTS RECEIVABLE. All accounts receivable of the Business that
are reflected on the Closing Balance Sheet (collectively, the "Accounts
Receivable") will represent valid obligations arising from sales actually made,
services actually performed or other transactions in the ordinary course of the
Business. The reserves reflected in the Closing Balance Sheet in respect of
Accounts Receivable have been calculated consistent with past practice.
4.20. INVENTORY. The reserves reflected in the Closing Balance Sheet in
respect of Inventory of the Business have been calculated consistent with past
practice.
4.21. PRODUCT WARRANTIES. There are no claims against or liability of
Seller relating to the Business outside the range normally experienced by the
Business on account of product warranties or with respect to the manufacture,
sale, distribution, or rental of defective products and to Seller's knowledge
there is no basis for any such claim outside the range normally experienced by
the Business on account of defective products heretofore manufactured, sold,
distributed, or rented, except as otherwise set forth on Schedule 4.21.
4.22. CUSTOMERS AND SUPPLIERS.
(a) Schedule 4.22(a) sets forth a true, accurate and complete list:
(i) of the ten (10) largest customers of the Business in
terms of revenue earned during the most recently completed fiscal year and
the portion of the current fiscal year prior to the date of this Agreement
(collectively, the "Major Customers"), showing the total revenue earned in
each such period from each such customer; and
(ii) of the ten (10) largest suppliers of the Business in
terms of purchases during the most recently completed fiscal year and the
portion of the current fiscal year prior to the date of this Agreement
(collectively, the "Major Suppliers"), showing the total purchases in each
such period from each such supplier;
(b) Since July 1, 1998, except as set forth on Schedule 4.22(b), there
has not been any material adverse change in the business relationship, and there
has been no material dispute, between Seller and any Major Customer or any Major
Supplier, and to Seller's knowledge, no Major Customer or Major Supplier intends
to reduce its purchases from, or sales to, Seller, other than as a result of
such Major Customer's or Major Supplier's normal business cycles.
4.23. PRODUCT LIABILITY CLAIMS. Schedule 4.23 sets forth the product
liability claims against the Business currently pending or which have been
resolved within the past two (2) full fiscal years and the portion of current
fiscal year prior to the date hereof.
4.24. DISCLOSURE. No representation of warranty of Seller in this
Agreement and no statement in the Disclosure Letter furnished pursuant hereto
omits to state a material fact necessary to make the statements herein or
therein, in light of the circumstances in which they were made, not misleading.
SECTION 5. BUYER'S REPRESENTATIONS AND WARRANTIES.
Buyer and Parent, jointly and severally, represent and warrant to Seller
as follows:
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5.1. ORGANIZATION, POWER. Buyer and Parent are corporations duly
organized, validly existing and in good standing under the laws of their
respective state of incorporation and are qualified to do business as foreign
corporations in all jurisdictions in which the failure to do so would have a
Material Adverse Effect on the results of operations or financial condition of
Buyer or Parent, as applicable. Buyer and Parent have all requisite corporate
power to enter into this Agreement and to carry out their respective obligations
hereunder.
5.2. AUTHORITY. The execution and delivery of the Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action required on the part of the Buyer and Parent.
The Agreement has been duly executed and delivered by Buyer and Parent, and
constitutes the valid and legally binding obligation of Buyer and Parent and is
enforceable against the Buyer and Parent in accordance with its terms.
5.3. NO CONFLICTS. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will:
(i) violate or conflict with, or result in a breach of any provisions of, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, any of the terms, conditions or provisions of
the Certificate of Incorporation or By-laws of the Buyer and the parent, or any
note, bond, mortgage, indenture, deed of trust, material license agreement, loan
agreement or other material agreement, instrument or obligation to which Buyer
or Parent or both are a party, or by which Buyer or Parent or any of their
respective properties or assets may be bound or affected; or (ii) violate any
material judgment, order, writ, injunction or decree, or any law, rule or
regulation applicable to Buyer or Parent or both or any of their respective
properties or assets, to the extent any of the foregoing would have a Material
Adverse Effect on the results of operations or financial condition of Buyer or
Parent, or both. Except as set forth on Schedule 5.3, neither Buyer nor Parent
is required to give notice or obtain any consent from any person in connection
with the execution and delivery of the Agreement or the consummation of the
transactions contemplated hereby.
5.4. CAPITALIZATION. At the Closing, Buyer's authorized capital stock
shall consist of 3,000 shares of Common Stock, of which 1,000 shares are issued
and outstanding. At the Closing, Parent's authorized capital stock shall
consist of 20,000,000 shares of Class A common stock, par value $0.01 per share,
of which 3,866,944 shares are issued and outstanding, 200,000 shares of Class B
common stock, par value $0.01 per share, of which 200,000 shares are issued and
outstanding, and 2,000,000 shares of Preferred Stock, without par value, none of
which are issued and outstanding. At the Closing, no other securities of Buyer
or Parent will be authorized, issued or outstanding and there will be no
outstanding subscriptions, options, warrants, convertible securities,
commitments or demands of any character, preemptive or otherwise, other than
this Agreement, relating to any of Buyer's or Parent's capital stock or other
securities of Buyer or Parent, other than stock options granted under Parent's
1997 Stock Option Plan and approximately $105,000,000 of bonds to provide
acquisition financing and debt refinancing. Upon consummation of the
transactions contemplated hereby, Seller shall own approximately 15% of the
total equity capital of Buyer on a fully diluted basis.
5.5. TITLE TO STOCK. As of the date hereof Parent owns, and as of the
Closing Date Parent will own, beneficially and of record, and has or will have
good and marketable title to, all of the outstanding common stock of Buyer.
Upon issuance, the shares of Common Stock and
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Preferred Stock to be issued to Seller hereunder, shall be validly issued,
fully paid and nonassessable and free and clear of all liens, charges,
claims, pledges, restrictions and encumbrances of any kind or nature
whatsoever.
5.6. BROKERS. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on by the Buyer without the
intervention of any other person or firm in such manner as not to give rise to
any valid claim against Seller or Seller's Affiliates for a brokerage
commission, finder's fee or other like payment to any person or entity.
5.7. AVAILABLE FUNDS. Attached hereto as Annex A are financing letters
received by Buyer from Three Cities Research, Inc. and Harris Bank with respect
to the funds necessary to consummate the transactions contemplated hereunder.
Buyer shall use its best efforts to obtain the financing necessary to consummate
the transactions contemplated hereby on commercially reasonable terms and
conditions
5.8 DISCLOSURE. No representation of warranty of Buyer or Parent in
this Agreement and no statement in the Disclosure Letter furnished pursuant
hereto omits to state a material fact necessary to make the statements herein or
therein, in light of the circumstances in which they were made, not misleading.
SECTION 6. OBLIGATIONS PRIOR TO CLOSING.
6.1. CONDUCT OF BUSINESS. Prior to the Closing, Seller shall, except
as otherwise provided herein:
(a) conduct the Business and its affairs only in the ordinary course
and consistent with prior practice,
(b) maintain the assets and properties of the Business and insurance
thereon, in accordance with present practices in all material respects, and
(c) comply in all material respects with all Laws and Orders
applicable to the Business.
6.2. ACCESS TO INFORMATION AND DOCUMENTS. Upon reasonable notice and
during regular business hours, Seller will give or cause to be given to the
Buyer and the Buyer's attorneys, accountants and other representatives
reasonable access to the personnel of the Business and the properties,
documents, contracts, books and records of the Business with respect to the
assets, properties, liabilities or operations of the Business and will furnish
the Buyer with copies of those documents and with that information with respect
to the affairs of the Business as the Buyer may from time to time reasonably
request.
6.3. TITLE INSURANCE, SURVEYS. Seller shall cooperate with the Buyer in
obtaining such title commitments or opinions and such surveys, with respect to
the Real Property, which Buyer may reasonably desire. Seller and Buyer shall
each be responsible for one-half of all expenses incurred in connection with
title searches, reports, commitments insurance and surveys, if necessary.
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6.4. DISCOVERY BY BUYER. Buyer shall provide prompt, written notice to
Seller in the event it obtains actual knowledge at any time prior to Closing of
any breach of any of the representations and warranties made in Section 4 or
elsewhere in this Agreement, or of an event or circumstance it believes would
give Buyer the right to terminate this Agreement or to make a claim against
Seller after Closing.
6.5. THIRD PARTY CONSENTS. Seller and Buyer agree to use commercially
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary, proper or advisable to consummate and
make effective as promptly as practicable the transactions contemplated by this
Agreement, including, without limitation, the obtaining of all necessary
waivers, consents and approvals and the continuance in full force and effect of
the permits, contracts and other agreements set forth on the schedules to this
Agreement and the fulfillment of each condition to the other party's obligations
set forth in Sections 8 and 9.
6.6. REGULATORY AND OTHER APPROVALS. Seller and Buyer will (i) take
all commercially reasonable steps necessary or desirable, and proceed diligently
and in good faith and use all commercially reasonable efforts, as promptly as
practicable to obtain all consents, approvals or actions of, to make all filings
with and to give all notices to Governmental or Regulatory Bodies required of
such parties or their Affiliates to consummate the transactions contemplated
hereby, (ii) provide such other information and communications to such
Governmental or Regulatory Bodies as such parties or such Governmental or
Regulatory Bodies may reasonably request in connection therewith and
(iii) cooperate with each other as promptly as practicable in connection with
the foregoing. In addition to and not in limitation of the foregoing, Seller
and Buyer will (A) take promptly all actions necessary to make the filings
required of each of them or their Affiliates under the HSR Act, (B) comply at
the earliest practicable date with any request for additional information
received by each of them or their Affiliates from the Federal Trade Commission
or the Antitrust Division for the Department of Justice pursuant to the HSR Act
and (C) cooperate with each other in connection with any filing under the HSR
Act and in connection with resolving any investigation or other inquiry
concerning the transactions contemplated by this Agreement commenced by either
the Federal Trade Commission, the Antitrust Division of the Department of
Justice or state attorneys general.
SECTION 7. ADDITIONAL AGREEMENTS AND ACKNOWLEDGMENTS.
7.1. INSURANCE AND PRODUCT CLAIMS.
(a) Worthington and Seller shall terminate the participation of the
Business and its employees in Worthington's self-insurance program and
coverage under insurance policies procured by Worthington effective as of
the Closing Date. The Buyer shall be responsible for obtaining and
providing insurance coverage with respect to the Business and its
employees from and after the Closing Date.
(b) Notwithstanding the provisions of Section 10 and except for those
liabilities assumed by Buyer pursuant to Section 1.3, Seller shall retain
liability for and defend, indemnify and hold harmless the Business and
the Buyer, and their respective successors and assigns, against and in
respect of, any and all damages, claims, losses, liabilities and expenses
(collectively, "Losses") resulting from loss of life, bodily injury or
property
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damage due to events which occur before the Closing Date and as
to which claims alleging such liability are filed prior to the Closing
Date. The obligation of Seller to retain the liability and
indemnification provided for in this Section 7.1(b) is conditioned upon
the Buyer's performance of the following covenants:
(i) the Buyer shall cause the Business and its personnel to
cooperate fully with Seller in the defense of any such claims and
provide Seller with access to the facilities, books, records and
personnel of the Business; and
(ii) so long as Seller is defending any such claim in good
faith, the Buyer shall not, and shall not cause or permit the
Business to, settle or compromise any such claim, without the
written consent of Seller.
(c) Buyer shall insure against all liability claims resulting from a
loss of life, bodily injury or property damage that are made against the
Business after Closing with respect to events that occurred prior to
Closing. Seller agrees to reimburse Buyer for each such claim in amount
equal to the lesser of (i) the deductible amount under the Buyer's
insurance, and (ii) $100,000.
(d) Buyer shall assume liability for and defend and hold harmless the
Seller and Worthington, and their respective successors and assigns,
against and in respect of any and all Losses resulting from loss of
life, bodily injury or property damage arising from or relating to the
Business due to events which occur after the Closing Date.
(e) Buyer shall assume liability for and defend and hold harmless the
Seller and Worthington and their respective successors and assigns,
against and in respect of any and all Losses arising out of the
replacement of, or refund or credit for, damaged, defective or other
returned products or for warranty claims in respect of products sold by
the Business.
7.2. EMPLOYEE MATTERS.
(a) Except for those individuals listed on Schedule 7.2 hereof, whose
employment with the Business shall terminate as of the Closing Date, the
Buyer shall offer to employ all employees of the Business effective
immediately after the Closing. The terms of such employment shall be
competitive with industry standards, and the Buyer shall implement the
employee benefit plans and fringe benefit plans providing benefits set
forth on Schedule 7.2.
(b) Buyer will not, and will not permit the Business to, take any
action which would cause Seller to have any liability under the Workers
Adjustment and Retraining Notification act of 1988, or any similar or
successor federal, state or local law, regulation or ordinance.
7.3. BENEFIT COVERAGE.
(a) The participation of the Business (and its employees and former
employees) in the Worthington employee benefit plans shall cease as of
the Closing Date. The costs of all
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obligations with respect to employees or former employees of the
Business under any benefit plan applicable to them shall be assumed by
Buyer after the Closing Date except to the extent provided below. The
above provision notwithstanding, the following benefits for the
employees and/or former employees of the Business shall be made
available by Seller.
(i) Subject to subsection (ii) below, Seller shall pay or
otherwise discharge (or shall cause the insurance company to pay
or otherwise discharge) claims for benefits relating to health
care services rendered prior to the Closing Date to current and
former employees of the Business as and to the extent required by
the terms of the health care plans not being assumed by Buyer that
apply to such employees of the Business on the Closing Date
("Worthington Health Plans") regardless of when such claims are
filed. Seller may apply normal plan cut-off dates.
(ii) Buyer shall reimburse Seller or Worthington for all
amounts paid pursuant to Section 7.3(a)(i) under claims filed
after the Closing Date with respect to employees of the business,
except for amounts covered by true insurance (i.e. amounts for
which Seller or Worthington is not ultimately liable).
(b) Seller agrees that it shall be responsible for making available to
former employees of the Business who are covered by the Worthington
Health Plans and who leave the employ of the Business prior to the
Closing Date (and such former employee's eligible dependents) the
election to continue coverage under the Worthington Health Plans to the
extent required by federal or state law, at the former employee's or
dependent's expense.
(c) Seller agrees that it shall make available to former employees of
the Business who were covered by the Worthington Health Care Plan and who
have retired under the Worthington Deferred Profit Sharing Plan prior to
the Closing Date, the option to purchase health benefits under the
Worthington Health Plans to the extent that such benefits are made
available to Worthington retirees in general under such plan.
(d) Nothing in this Section 7.3 or elsewhere in this Agreement shall
expand the benefits or coverage which would have been available to any
employee or former employee of the Business under the Worthington Health
Care Plans or other plans had the transaction contemplated by this
Agreement not occurred.
(e) Following the Closing Date, the Buyer shall be responsible for and
shall provide health care and disability benefits to persons who, on the
Closing Date, are employees (including inactive employees on disability
or layoff who are eligible for such insurance) of the Business and their
dependents consistent with industry practice. Subject to Section 10.1,
the Buyer shall assume liability for, and shall make payments in respect
of, disability and health care benefits for all employees and former
employees of the Business receiving such disability and health care
benefits under any plan in existence on the Closing Date, provided
however, that after a total of 42 months of disability as defined in the
plan, it is understood that such employees who are disabled at the
Closing
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Date will be covered by disability insurance currently provided by
Worthington through an outside insurance carrier.
(f) Following the Closing Date, and subject to Section 10.1, the Buyer
shall be responsible for and shall assume all of Seller's obligations to
provide health care benefits to certain former employees of the
Harrisburg, North Carolina facility as more particularly described on
Schedule 7.3(f).
7.4. TAX MATTERS.
(a) INCOME TAXES. Seller shall include the results of operations of
the Business through the Closing in Worthington's consolidated
U.S. federal income tax returns and shall make all state and local income
tax filings and payments for the Business for the tax period ending on
the Closing Date. All liabilities, including interest or penalties,
under U.S. federal and state income tax laws attributable to the
operations of the Business through the Closing Date shall be borne by
Seller, and any refunds or credits or rights to refunds or credits with
respect thereto (including interest and penalties) shall be the property
of Seller.
(b) ALLOCATION OF NON-INCOME TAX LIABILITY. All tax liabilities
attributable to the Business or its assets, operations, purchases, sales,
income, payroll, capital stock or surplus incurred prior to the Closing
Date (other than federal, state and local income tax liabilities) shall
be borne by the Buyer to the extent that such liabilities are, in the
aggregate, reserved for on the Closing Balance Sheet. The reserve on the
Closing Balance Sheet shall not include a reserve for those U.S. federal
income tax liabilities or any state or local income tax liabilities which
are required to be paid by Seller pursuant to this Agreement. Tax
liabilities incurred by the Business prior to the Closing Date in excess
of the reserve therefor on the Closing Balance Sheet shall be borne by
Seller, provided that the liability is not increased due to actions by
the Buyer after Closing. In the event that the reserve on the Closing
Balance Sheet exceeds those tax liabilities which the Business or the
Buyer actually pays, the Buyer shall promptly refund to Seller the amount
of any such excess.
(c) POST CLOSING TAXES. All Taxes attributable to the Business or its
properties, assets, operations, purchases, sales, income, payroll,
capital stock or surplus incurred subsequent to Closing shall be the
responsibility of the Buyer.
(d) REIMBURSEMENTS. If either party pays any Taxes to be borne by the
other party under this Section 7.4, the other party shall promptly
reimburse such party for the Taxes paid. If, in preparing Tax filings or
payments after Closing, it appears to the Buyer or the Business that the
Seller will be asked to pay additional Taxes, the Buyer shall so notify
Seller, and provide Seller a reasonable opportunity to review any related
returns prior to filing them and paying the Tax. If either party receives
any refunds or credits which are the property of the other party under
this Section 7.4, such party shall promptly pay the amount of such
refunds or credits to the other party. As soon as practicable after the
Closing, Seller shall furnish to the Buyer copies of the Business's
portion of the final income tax information included in Seller's combined
federal income tax return and in
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any consolidated or combined state income tax return required to be filed
by Worthington or Seller after the Closing relating solely to the
operations of the Business through the Closing Date.
(e) TRANSFER TAXES. Seller shall file all necessary documentation and
returns with respect to sales, use, transfer, real property transfer,
recording, gains, stock transfer and other similar Taxes and fees (such
Taxes and fees, including any interest or penalties thereon, are herein
sometimes called "Transfer Taxes"). Buyer and Seller shall each be
responsible for one-half (1/2) of all transfer taxes arising out of or
in connection with the transactions effected pursuant to this Agreement.
(f) COOPERATION. Buyer shall and shall require the Business to make
available to Worthington, Seller and their representatives all records
and materials reasonably required by them to pursue or contest any Tax
matters and shall provide reasonable cooperation to Worthington and
Seller in such case, including having personnel of the Business provide
reasonable assistance to Worthington and Seller, consistent with the
manner in which such matters would have been dealt with prior to Closing.
Worthington and Seller shall make available to Buyer and its
representatives those records and materials reasonably required by them
to prepare, pursue or contest any Tax matters arising after Closing which
have factual reference to the pre-Closing periods.
7.5 DEFERRED PROFIT SHARING AND CASH PROFIT SHARING PLANS.
(a) Buyer shall assume the liability for and shall make any payments
which may be due to employees of the Business in connection with the Cash
Profit Sharing Plan applicable to employees of the Business and any
payments of executive bonuses which may be owing to employees of the
Business; provided that Seller shall pay to Buyer an amount equal to the
portion of the payment allocable to Seller in excess of applicable
reserves reflected in the Closing Balance Sheet (based upon the
assumption that the determination period ended as of the Closing Date).
(b) The participation of the employees of the Business in Worthington's
Deferred Profit Sharing Plan shall cease as of the Closing Date. Seller
shall pay over to the Deferred Profit Sharing Plan the amount of any
required contribution to such Plan which is allocable to Seller in excess
of applicable reserves reflected in the Closing Balance Sheet (based upon
the assumption that the determination period ended as of the Closing
Date). All benefits under such Plan shall be calculated and paid in
accordance with the provisions of the Worthington Deferred Profit Sharing
Plan.
7.6. BOOKS AND RECORDS; TAX CLOSING PACKAGE. Unless otherwise
consented to in writing by Seller, the Buyer shall not destroy or otherwise
dispose of any of the existing books and records of the Business within four
(4) years from the date of Closing, and the Buyer shall grant and cause the
Business to grant Seller and its affiliates and their representatives
reasonable access thereto during normal business hours. Thereafter, the
Buyer shall not destroy or otherwise dispose of such books and records
without first offering to surrender to Seller such books and records or any
portion thereof. The Buyer shall cause the personnel of the Business to
prepare the final audit package, monthly financial package and tax package
for the Business.
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7.7. EXPENSES.
(a) Except as otherwise provided in this Agreement, Seller shall pay
all of its costs and expenses (including attorneys' and accountants'
fees, legal costs and expenses) incurred in connection with this
Agreement and the consummation of the transactions contemplated herein.
(b) The Buyer shall pay all of its costs and expenses (including
attorneys' and accountant's fees, legal costs and expenses) incurred in
connection with this Agreement and the consummation of the transactions
contemplated herein, including, but not limited to, the costs of
preparing an audit of the Business.
7.8. WORKERS' COMPENSATION. The workers' compensation liabilities
for employees of the Business are covered through insurance policies obtained
by Worthington. Worthington shall continue to pay (or shall cause its
insurance company to pay) up to and through the Closing Date for workers'
compensation injuries which occurred prior to Closing. After such time
coverage and payments under the Worthington policies shall terminate.
Effective as of Closing Date, and subject to Section 10.1, Buyer shall obtain
appropriate workers' compensation coverage for the employees of the Business
and shall assume continuing responsibility for workers' compensation injuries
that occurred prior to Closing and were previously covered by Worthington.
7.9 PREPARATION OF PAYROLL FORMS. Buyer shall prepare and file, and
Seller shall take all action reasonably required pursuant to Internal Revenue
Service Rev. Proc. 96-60 1996-2 C.B. 399 so that Buyer may file, Forms W-2
for the employees of the Business for the 1998 calendar year.
7.10. PACKAGING AND OTHER MATERIALS - NAME CHANGE. The Buyer shall
not hold the Business out as an affiliated company or subsidiary of
Worthington following the Closing Date. Neither the Buyer nor the Business
shall have the right to use any packaging or other materials which contain
the names Worthington Industries, Worthington Custom Plastics or any
derivation or modification thereof, or any trademark, logo or design of
Worthington Industries or Worthington Custom Plastics (the "Restricted Names
or Marks"). The Buyer shall not cause or permit the Business to use, after
the Closing Date, any advertising or other materials which contain any
Restricted Names or Marks without first obliterating such Restricted Names or
Marks thereon by overprinting, stamping out or otherwise removing the
Restricted Names or Marks from those materials. Furthermore, the Buyer shall
not order, buy, produce or otherwise procure any packaging, advertising or
other materials containing any of the Restricted Names or Marks.
7.11 CREDIT UNION. The employees of the Business have been eligible
to participate in the Worthington Industries Credit Union. To the extent
permitted by law, the Buyer agrees to cause the Business to continue payroll
deduction for any employees currently paying off existing loans from such
credit union through payroll deductions, and to pay over the amount withheld
to the credit union. Payroll deductions for employees of the Business will
not be available for new loans from the Worthington Industries Credit Union
following the Closing.
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7.12. RELEASE FROM GUARANTEES. To the extent that Seller,
Worthington or any Seller Affiliate are liable in connection with any
obligations of the Business, either directly as guarantor, surety or
otherwise, Buyer shall use its best efforts in conjunction with Seller
(including agreeing to replace Seller, Worthington or the Seller Affiliate as
guarantor, surety, etc. and providing bonds or letters of credit in lieu
thereof), in order to have Seller, Worthington or any Seller Affiliate
removed from such liabilities either directly or as guarantor, surety, etc.
In the event that Seller, Worthington or any Seller Affiliate cannot be so
removed from such obligations, Buyer shall indemnify such company with
respect thereto as set forth in Section 10.2.
7.13. PREPARATION OF FINANCIAL STATEMENTS. Seller shall cooperate
with Buyer in the preparation of: (a) audited balance sheets of the Business
as at the end of each of the last full three (3) fiscal years of the
Business, and the related statements of income, changes in stockholders'
equity, and cash flow for each such fiscal year, together with the report
thereon of Ernst & Young, independent certified public accountants, (b) a
balance sheet of the Business as at the Closing Date, and the related
statements of income, changes in stockholders' equity, and cash flow for the
partial year then ended, including each case the notes thereto.
SECTION 8. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE BUYER.
The obligations of the Buyer under this Agreement to enter into and
complete the Closing shall, at the option of the Buyer, be subject to the
satisfaction, on or prior to the Closing Date, of each of the following
conditions precedent (any or all of which may be waived by Buyer).
8.1. ACCURACY OF REPRESENTATIONS AND WARRANTIES. All warranties and
representations made by Seller in this Agreement (considered collectively),
and each of such representations and warranties (considered individually)
shall be true and correct in all material respects on and as of the Closing
Date with the same effect as if such warranties and representations had been
made on and as of the Closing Date except those expressly stated to be made
as of a specified date, and any supplement to the Disclosure Letter added
after the date of this Agreement shall not disclose any fact or event which
would have a Material Adverse Effect.
8.2 COMPLIANCE WITH COVENANTS. Seller shall have performed or
complied with all covenants, agreements and conditions contained in this
Agreement on its part required to be performed or complied with at or prior
to the Closing.
8.3. NO INJUNCTION, ORDER. At the Closing, there shall not be any
Order outstanding against any party hereto or Law promulgated that restrains,
prohibits, invalidates or otherwise prevents consummation of the transactions
contemplated by, or seeks damages as a result of or otherwise interferes with
the Agreement or any of the conditions to the consummation of the transactions
contemplated by this Agreement or would be likely to have any Material Adverse
Effect on the Business or the Assets.
8.4. CONSENTS, WAIVERS, LICENSES, FILINGS, ETC. All consents,
approvals, authorizations, licenses, registrations, declarations or filings
listed on any Schedule to this Agreement shall have been obtained or made, as
the case may be, except where the failure to obtain or make any of the
foregoing (or in lieu thereof waivers) would not reasonably be
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expected, individually or in the aggregate with other such failures, to have
a Material Adverse Effect.
8.5. NO MATERIAL ADVERSE EFFECT. During the period from the date
hereof to the Closing Date, there has been no Material Adverse Effect.
8.6. ABSENCE OF LITIGATION. No action, suit, investigation or
proceeding shall have been commenced or threatened by a governmental agency
or third party against Buyer, the Seller, the Subsidiary, or any of the
affiliates, officers or directors of any of them, with respect to the
transactions contemplated hereby, challenging the rights of the parties
hereto to consummate such transactions or which reasonably could be expected
to have a Material Adverse Effect.
8.7. CLOSING DELIVERIES. Seller shall deliver, or cause to be
delivered, to the Buyer at or prior to the Closing the following documents:
(a) The opinion letter of Dale T. Brinkman, counsel for the Seller,
dated the Closing Date substantially in the form of Exhibit B.
(b) A certified copy of resolutions adopted by the Board of Directors
of Seller authorizing the execution and delivery of this Agreement and
the transactions contemplated hereby.
(c) Executed copies of (i) an Assignment and Assumption Agreement in
substantially the form of Exhibit C; and (ii) a Bill of Sale, in
substantially the form of Exhibit D.
(d) Executed and acknowledged limited or special warranty deeds
necessary to transfer the Real Property listed in Schedule 1.1(i).
(e) Executed copies of appropriate assignment and assumption documents
with respect to the leased Real Property in a form reasonably
satisfactory to both Buyer and Seller.
(f) An officer's certificate, dated the Closing Date, signed by the
President or Vice President of Seller, stating that (i) all
representations and warranties made by Seller under this Agreement are
true and correct in all material respects at and as of the Closing Date,
and (ii) all of the agreements, covenants and obligations to be performed
on the part of the Seller under this Agreement as of the Closing Date
have been timely and duly performed in all material respects.
(g) Executed copies of (i) a Transition Services Agreement in
substantially the form attached herto as Exhibit E and (ii) a
Shareholder's Agreement in substantially the form attached hereto as
Exhibit F.
(h) All documents, certificates, instruments necessary to transfer the
IDB to an entity designated by Buyer.
(i) Such other documents, assignments and other good and sufficient
instruments of conveyance and transfer, in form reasonably satisfactory
to each of the parties hereto, as
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shall be reasonably requested by Buyer to consummate the transactions
contemplated hereby.
8.8. HSR ACT. The applicable waiting period under the HSR Act in
respect of the transactions contemplated hereby shall have expired or been
terminated.
8.9 CERTAIN GE BUSINESS. Seller and Buyer shall have reached a
mutually acceptable agreement with respect to (i) two GE appliance parts
contracts currently being fulfilled at the Lebanon, Kentucky facility,
(ii) certain GE production at Seller's Mason, Ohio facility that is to be
transferred to the Lebanon, Kentucky facility, and (iii) certain equipment
used in connection with GE production that is currently located at the
St. Matthews, South Carolina facility and is to be transferred to the
Lebanon, Kentucky facility.
8.10. HARRIS CONSENT. Buyer shall have received the consent to the
consummation of the transactions contemplated by this Agreement from its
senior lender, Harris Trust and Savings Bank, Chicago, Illinois.
8.11. SATISFACTORY FINANCING. Buyer shall have either obtained the
proceeds from a private placement of high yield bonds, or obtained a commitment
for financing the transactions contemplated by this Agreement and the operation
of the Business from a reputable lender or lenders.
8.12. CINPRES INTELLECTUAL PROPERTY. Seller and Buyer shall have
reached a mutually acceptable agreement with respect to certain Cinpres
technology and equipment used at Seller's Lebanon, Kentucky facility. This
technology and equipment is currently the subject of a License Agreement and
a Lease Agreement between Seller and Cinpres Limited, each of which also
cover Cinpres technology and equipment located at certain of Seller's other
facilities that are not part of the Business.
SECTION 9. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER.
The obligations of Seller under this Agreement to enter into and
complete the Closing shall, at the option of Seller, be subject to the
satisfaction, on or prior to the Closing Date, of each of the following
conditions precedent (any or all of which may be waived by Seller).
9.1. ACCURACY OF REPRESENTATIONS AND WARRANTIES. All warranties and
representations made by the Buyer in this Agreement shall be true and correct
in all material respects on and as of the Closing Date with the same effect
as if such warranties and representations had been made on and as of the
Closing Date except those expressly stated to be made as of a specific date;
9.2 COMPLIANCE WITH COVENANTS. Buyer shall have performed or
complied with all covenants, agreements and conditions contained in this
Agreement on its part required to be performed or complied with at or prior
to the Closing.
9.3. NO INJUNCTION, ORDER. At the Closing, there shall not be any
Order outstanding against any party hereto or Law promulgated that restrains,
prohibits, invalidates or otherwise prevents consummation of the transactions
contemplated by, or seeks damages as a result of or
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otherwise interferes with the Agreement or any of the conditions to the
consummation of the transactions contemplated by this Agreement or would be
likely to have any Material Adverse Effect on the Business or the Assets.
9.4. CONSENTS, WAIVERS, LICENSES, FILINGS, ETC. All consents,
approvals, authorizations, licenses, registrations, declarations or filings
listed on any Schedule to this Agreement shall have been obtained or made, as
the case may be, except where the failure to obtain or make any of the
foregoing (or in lieu thereof waivers) would not reasonably be expected,
individually or in the aggregate with other such failures, to materially
adversely affect Buyer or to have a Material Adverse Effect.
9.5. CLOSING DELIVERIES. The Buyer shall deliver or cause to be
delivered to Seller at the Closing the following:
(a) A wire transfer of the Closing Cash Payment;
(b) Certificates representing the shares of Common Stock and the
shares of Preferred Stock to be issued to Seller as contemplated by
Section 2.1;
(c) An opinion of Husch & Eppenberger, L.L.C., counsel to the Buyer
and Parent, dated the Closing Date, substantially in the form of
Exhibit G.
(d) Certified copies of resolutions adopted by the Board of Directors
of Buyer authorizing the execution and delivery of the Agreement and the
transactions contemplated thereby.
(e) Executed copies of (i) an Assignment and Assumption Agreement in
substantially the form of Exhibit C; and (ii) a Bill of Sale, in
substantially the form of Exhibit D.
(f) Executed copies of appropriate assignment and assumption documents
with respect to the leased Real Property in a form reasonably
satisfactory to both Buyer and Seller.
(g) Executed copies of (i) a Transition Services Agreement in
substantially the form attached herto as Exhibit E and (ii) a
Shareholder's Agreement in substantially the form attached hereto as
Exhibit F.
(h) An officer's certificate, dated the Closing Date, signed by the
President or Vice President of Buyer, stating that (i) all
representations and warranties made by Buyer under this Agreement are
true and correct in all material respects at and as of the Closing Date,
and (ii) all of the agreements, covenants and obligations to be performed
on the part of the Buyer under this Agreement as of the Closing Date have
been timely and duly performed in all material respects.
(i) All documents, certificates, instruments necessary to assume all
of Seller's liabilities and obliations, for payment and otherwise, under
the IDB.
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(j) Such other documents, assignments and other good and sufficient
instruments of conveyance and transfer, in form reasonably satisfactory
to each of the parties hereto, as shall be reasonably requested by Seller
to consummate the transactions contemplated hereby.
9.6. HSR ACT. The applicable waiting period under the HSR Act in
respect of the transactions contemplated hereby shall have expired or been
terminated.
9.7. CERTAIN GE BUSINESS. Seller and Buyer shall have reached a
mutually acceptable agreement with respect to (i) two GE appliance parts
contracts currently being fulfilled at the Lebanon, Kentucky facility,
(ii) certain GE production at Seller's Mason, Ohio facility that is to be
transferred to the Lebanon, Kentucky facility, and (iii) certain equipment
used in connection with GE production that is currently located at the
St. Matthews, South Carolina facility and is to be transferred to the
Lebanon, Kentucky facility.
9.8. CINPRES INTELLECTUAL PROPERTY. Seller and Buyer shall have
reached a mutually acceptable agreement with respect to certain Cinpres
technology and equipment used at Seller's Lebanon, Kentucky facility. This
technology and equipment is currently the subject of a License Agreement and
a Lease Agreement between Seller and Cinpres Limited, each of which also
cover Cinpres technology and equipment located at certain of Seller's other
facilities that are not part of the Business.
SECTION 10. INDEMNIFICATION.
10.1. INDEMNIFICATION BY SELLER.
(a) Except as hereinafter set forth, Seller shall indemnify and hold
harmless the Buyer, Buyer's Affiliates and their respective successors
and assigns, against, and in respect of, any and all Losses, including,
without limitation, reasonable legal, accounting and other expenses,
which may arise out of any of the following (collectively the "Indemnity
Claims"):
(i) any breach or violation of any agreement in this
Agreement on the part of Seller;
(ii) any breach of any of the representations, warranties or
covenants made in this Agreement by Seller;
(iii) the Excluded Liabilities;
(iv) the Actions and Proceedings set forth on
Schedule 1.3(vii);
(v) all payments of workers' compensation liability, and
out-of-pocket expenses directly related thereto, made by Buyer
pursuant to Buyer's obligation under Section 7.8 to assume
continuing responsibility for workers' compensation injuries of
employees of the Business that occurred prior to the Closing;
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(vi) all payments made by Buyer and not covered by insurance
with respect to Buyer's obligation under Section 7.3(e) to assume
responsibility for all disability benefits and health care
benefits during the period of disability for all employees or
former employees of the Business receiving disability benefits on
the Closing Date; and
(vii) all health care premiums paid by Buyer pursuant to
Buyer's obligation under Section 7.3(f) to assume responsibility
for certain health care benefits to certain former employees of
the Harrisburg, North Carolina facility;
PROVIDED HOWEVER, THAT, EXCEPT for Indemnity Claims (A) arising with
respect to breaches by Seller of representations, warranties or
covenants contained in Sections 7.1, 7.4 and 4.5 hereof (to which the
Basket does not apply), or (B) that concern the Actions and
Proceedings set forth in Schedule 1.3(vii) or any Action or Proceeding
hereinafter instituted that constitutes a breach of Seller's warranty
in Section 4.10 (to which the Litigation Basket applies), the Buyer
shall be entitled to indemnification hereunder only when, and only to
the extent of amounts by which the aggregate of all such Indemnity
Claims (excluding those excepted from this limitation) exceed $500,000
(the "Basket"); and provided further that Buyer shall be entitled for
indemnification hereunder only when and to the extent of the amounts
by which Losses attributable to the Actions and Proceedings set forth
on Schedule 1.3(vii), or for any Action or Proceeding hereinafter
instituted that constitutes a breach of Seller's warranty in
Section 4.10, exceed $125,000 in the aggregate or $50,000 individually
(the "Litigation Basket").
(b) Except for (I) Indemnity Claims and other obligations which Seller
has specifically assumed in Section 7 hereof, and (II) Indemnity Claims
relating to items (iv)-(vii) of Section 10.1, all of which shall survive
until the termination of all liabilities arising from the subject matter
thereof pursuant to applicable statutes of limitation, the warranties,
representations and covenants of Seller contained in this Agreement, or
any certificate, document, instrument or agreement delivered pursuant to
this Agreement, shall survive the execution and delivery of this
Agreement, the Closing and the consummation of the transactions called
for by this Agreement but shall expire on April 30, 2000; provided that
if there shall then be pending any Indemnity Claim previously asserted by
the Buyer, such Indemnity Claim shall continue to be subject to
indemnification in accordance herewith.
(c) Buyer acknowledges and agrees that (i) other than the
representations and warranties of Seller specifically contained in this
Agreement or in any other instrument or document executed pursuant
hereto, there are no representations or warranties of Seller either
expressed or implied with respect to the transactions contemplated
hereby, with respect to Seller, the Business or the Assets, (ii) Buyer
shall have no claim or right to indemnification pursuant to this Section
10.1 with respect to any information documents or materials furnished by
Seller or any of its officers, directors, employees, agents or advisors
to Buyer in expectation of the transactions contemplated hereby other
than this Agreement, the Disclosure Letter and Schedules hereto and any
supplements thereto and any instruments and documents executed pursuant
hereto and (iii) if the Closing occurs, Buyer's sole and exclusive remedy
with respect to any and all Losses relating to this
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Agreement or any instrument or document delivered by Seller pursuant
hereto, the transactions contemplated hereby, Seller, the Business and
the Assets shall be pursuant to the indemnification provisions set
forth in this Section 10.1. In furtherance of the foregoing, Buyer
hereby waives, from and after the Closing, any and all rights, claim
and causes of action Buyer may have against Seller and its Affiliates
arising under or based upon any federal, state, local or foreign
statute, law, ordinance, rule or regulation or otherwise (except
pursuant to the indemnification provisions set forth in this Section
10.1).
10.2. INDEMNIFICATION BY THE BUYER. The Buyer shall indemnify and hold
harmless Seller and Seller's Affiliates and their successors and assigns,
against and in respect of, any and all Losses which may arise out of (i) any
breach or violation of any agreement in this Agreement on the part of the Buyer;
(ii) any breach of any of the representations, warranties or covenants made in
this Agreement by the Buyer; (iii) obligations under the Worker Adjustment and
Retraining Notification Act, 29 U.S.C.A. Section 2101 with respect to employees
of the Business; or (iv) any obligations or occurrences relating to the Business
or Assets of the Business for which Seller or a Seller Affiliate is primarily,
secondarily or jointly and severally liable, whether as guarantor, surety or
otherwise (except for those obligations or occurrences specifically retained by
Seller or a Seller Affiliate hereunder and those obligations or occurrences for
which Buyer has a right of indemnification against Seller under the provisions
of this Agreement).
10.3. NOTICE OF CLAIM. Upon obtaining knowledge thereof, the Buyer or
Seller (the "Indemnitee") shall promptly notify the party against whom indemnity
is being sought, either Seller or the Buyer, as the case may be, (the
"Indemnitor") in writing of any damage, claim, loss, liability or expense which
the Indemnitee has determined has given or could give rise to a claim under
Sections 10.1 or 10.2 hereof (such written notice being hereinafter referred to
as a "Notice of Claim"). A Notice of Claim shall specify, in reasonable detail,
the nature and estimated amount of any such claim giving rise to a right of
indemnification.
10.4. DEFENSE OF THIRD PARTY CLAIMS. With respect to any action or any
claim or demand set forth in the Notice of Claim relating to a third party
claim, the Indemnitor may defend, in good faith with reasonable diligence and at
its expense, any such claim or demand, and the Indemnitee, at its expense, shall
have the right to participate in the defense of any such third party claim. So
long as the Indemnitor is defending in good faith any such third party claim,
the Indemnitee shall not settle or compromise such third party claim. The above
provisions notwithstanding, if the third party claim seeks a remedy other than
payment of monetary damages and such other remedy, if awarded to claimant, could
have a material adverse effect upon the Indemnitee, then the parties shall meet
and reasonably agree upon an appropriate manner in which to defend and manage
the claim, so as to protect the interests of both Indemnitor and Indemnitee.
The Indemnitee shall make available to the Indemnitor or its representatives all
records and other materials reasonably required by them for its use in
contesting any third party claim and shall cooperate fully with the Indemnitor
in the defense of all such claims. If the Indemnitor does not so elect to
defend any such third party claim, the Indemnitee shall have no obligation to do
so.
10.5. DISPUTED INDEMNIFICATION. In the event of a dispute concerning
whether a party has an obligation to indemnify and the matter proceeds to
litigation, the parties agree that the
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trier of fact may require the non-prevailing party to pay all or part of the
prevailing party's costs of the litigation (including attorney's fees) if the
trier of fact believes that the equities require such an award based upon the
non-prevailing party's lack of good faith in asserting or defending such
claim.
10.6. LIMITATION OF CLAIMS. The aggregate amount of all claims subject
to indemnification hereunder by Seller as Indemnitor shall not exceed the
aggregate Purchase Price.
10.7. CALCULATION OF LOSSES. For purposes of this Section 10, in
computing such aggregate amounts of Losses, the amount of each Loss shall be
deemed to be an amount (i) net of any insurance proceeds and any indemnity,
contribution or other similar payment payable by any third party with respect
thereto, and (ii) net of any reserves provided for the situation in question
which are included in Assets.
SECTION 11. MISCELLANEOUS
11.1. ENTIRE AGREEMENT. This Agreement (including the Disclosure Letter
and supplements thereto, the Schedules and Exhibits) contain the entire
agreement between the parties with respect to the transactions contemplated
hereby, and supersedes all negotiations, representations, warranties,
commitments, offers, contracts, and writings prior to the date hereof. No
waiver and no modification or amendment of any provision of this Agreement shall
be effective unless specifically made in writing and duly signed by the party to
be bound thereby.
11.2. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together, shall constitute one and the same instrument.
11.3. SEVERABILITY. If any provision hereof shall be held invalid or
unenforceable by any court of competent jurisdiction or as a result of future
legislative action, such holding or action shall be strictly construed and shall
not affect the validity or effect of any other provision hereof.
11.4. ASSIGNABILITY. This Agreement shall be binding upon and inure to
the benefit of the successors and assigns of the parties hereto; provided, that
neither this Agreement nor any right hereunder shall be assignable by Seller or
the Buyer without the prior written consent of the other party, and any other
purported assignment shall be null and void.
11.5. CAPTIONS. The captions of the various Sections of this Agreement
have been inserted only for convenience of reference and shall not be deemed to
modify, explain, enlarge or restrict any of the provisions of this Agreement.
11.6. WAIVERS AND AMENDMENTS. This Agreement may be amended,
superseded, canceled, renewed or extended, and the terms hereof may be waived,
only by a written instrument signed by the parties or, in the case of a waiver,
by 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.
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11.7. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Ohio without regard to principles of
conflicts of law. Any judicial proceeding brought against any of the parties to
this Agreement on any dispute arising out of this Agreement or any matter
related hereto shall be brought in the courts of the State of Ohio, and, by
execution and delivery of this Agreement, each of the parties hereto accepts the
non-exclusive jurisdiction of the aforesaid courts, and irrevocably agrees to be
bound by any judgment rendered thereby in connection with this Agreement.
11.8. NOTICES. All notices, requests, demands, and other communications
under this Agreement shall be in writing and delivered in person or sent by FAX
or sent by certified mail, postage prepaid, and properly addressed as follows:
TO SELLER:
Worthington Custom Plastics, Inc.
c/o Worthington Industries, Inc.
1205 Dearborn Drive
Columbus, OH 43085
FAX: (614) 840-3706
Attn: Date T. Brinkman, General Counsel
TO BUYER:
Morton Industrial Group, Inc.
1021 West Birchwood
P.O. Box 429
Morton, IL 61550-0429
Attn: Daryl R. Lindemann, Vice President
Any party may from time to time change its address for the purpose of
notices to that party by a similar notice specifying a new address, but no such
change shall be deemed to have been given until it is actually received by the
party sought to be charged with its contents.
All notices and other communications required or permitted under this
Agreement which are addressed as provided in this Section 11.8 if delivered
personally or by FAX, shall be effective upon delivery; and, if delivered by
mail, shall be effective three days following deposit in the United States mail,
postage prepaid.
11.9 PUBLIC ANNOUNCEMENTS. Neither the Buyer, Seller nor affiliates or
representatives of either of them shall make any public announcement with
respect to this Agreement or the transactions contemplated hereby without the
prior written consent of the other party hereto, unless such party is advised by
counsel that such disclosure is required by law.
11.10. CONFIDENTIALITY. Upon execution of this Agreement, through and
beyond the Closing, Seller shall, and shall cause its Affiliates to, continue
to maintain the confidentiality of all information, documents and materials
relating to the Business, including all such materials which remain in the
possession of Seller, except to the extent disclosure of any such information
is required by law or authorized by Buyer or reasonably occurs in connection
with consummation of the transactions contemplated by, or disputes over the
terms of, this Agreement, and Buyer shall maintain the confidentiality of
all information, documents and materials relating to Seller
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<PAGE>
(other than that relating to the Business) which Buyer has obtained in
connection with this Agreement or with the transactions contemplated herein,
except to the extend disclosure of any such information is required by law or
authorized by Seller or reasonably occurs in connection with consummation of
the transactions contemplated by, or disputes over the terms of this
Agreement. In the event that any party reasonably believes after
consultation with counsel that it is required by law to disclose any
confidential information described in this Section 11.10, the disclosing
party will (a) provide the other party with prompt notice before such
disclosure in order that any party may attempt to obtain a protective order
or other assurance that confidential treatment will be accorded such
confidential information and (b) cooperate with the other party in attempting
to obtain such order or assurance. The provisions of this Section 11.10
shall not apply to any information, documents or materials which are, as
shown by appropriate written evidence, in the public domain or, as shown by
appropriate written evidence, shall come into the public domain or, as shown
by appropriate written evidence, shall come into the public domain other than
by reason of breach by the applicable party bound hereunder or its
Affiliates. If this Agreement is terminated, the Buyer shall return to
Seller any and al such documents, reports and other written materials
(including financial statements) concerning the Business and shall destroy
all notes or other documents prepared by Buyer containing such confidential
information.
11.11 FURTHER ASSURANCES. At any time and from time to time, each party
hereto, without further consideration shall cooperate, take such further actions
and execute and deliver such further instruments and documents as may be
reasonably requested by any other party in order to carry out the provisions and
purposes of this Agreement.
SECTION 12. DEFINED TERMS
12.1 CERTAIN DEFINITIONS. As used in this Agreement, the following
terms have the following meanings unless the context otherwise requires:
"ACTION OR PROCEEDING" means any claim, action, suit, proceeding or
arbitration by any Person, or any investigation or audit by any Governmental or
Regulatory Body.
"AFFILIATE" means with respect to any Person, any other Person
controlling, controlled by or under common control with such first Person.
"BUSINESS" shall mean the business of designing, manufacturing, assembly
and selling molded plastic parts as currently engaged in by Worthington Custom
Plastics, Inc. from its Lebanon, Kentucky, St. Matthews, South Carolina and the
PMI operations in Concord and Harrisburg, North Carolina. The term "Business"
specifically excludes the plastics operations in Worthington Custom Plastics,
Inc.'s Novi, Michigan sales office , and its Mason, Salem and Upper Sandusky,
Ohio facilities. The term "Business" also specifically excludes the Seller's
land, building and other assets in Cumming, Georgia.
"BUSINESS DAY" means any day on which commercial banks are not authorized
or required by law to close in Columbus, Ohio.
"CODE" means the Internal Revenue Code of 1986, as amended.
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"CONTRACTS" means all executory contracts, agreements, understandings,
indentures, notes, bonds, loans, instruments, leases (for real and personal
property), mortgages, franchises, licenses or commitments.
"ENVIRONMENTAL CLAIM" means, with respect to any Person, any written
notice or claim by any other Person alleging or asserting such Person's
liability for investigatory costs, clean-up costs, Governmental or Regulatory
Body response costs, damages to natural resources or other property, personal
injuries, fines or penalties arising out of, based on or resulting from (a) the
presence or release into the environment, of any Hazardous Material or (b)
circumstances forming the basis of any violation of any Environmental Law.
"ENVIRONMENTAL LAW" means any Law or Order relating to the regulation or
protection of the environment or to emissions, discharges, releases or
threatened releases of pollutants, contaminants or toxic or hazardous wastes
into the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"GOVERNMENTAL OR REGULATORY BODY" means any court, tribunal, arbitrator
or any government or political subdivision thereof, whether federal, state,
county, local or foreign, or any agency, authority, official or instrumentality
of any such government or political subdivision.
"HAZARDOUS MATERIAL" means any chemicals or other materials or substances
which are defined as or included in the definition of "hazardous substances,"
"hazardous wastes," "hazardous materials," "extremely hazardous wastes,"
"restricted hazardous wastes," "toxic substances," "toxic pollutants" or words
of similar import under any Environmental Law.
"HSR ACT" means the Hart-Scott-Radino Anti-trust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"INTANGIBLE PROPERTY" means all patents and applications therefor,
copyrights and applications therefor (including rights to renew), trademarks and
applications therefor, tradenames and applications therefor and servicemarks and
applications therefor, owned by Seller or Worthington and used solely in
connection with the Business.
"INVENTORY" means all raw materials, work-in-process, finished goods,
office and other supplies, parts, packaging materials and other accessories and
supplies related thereto.
"LAW" means any law, statute, rule, regulation, ordinance and other
pronouncement having the effect of law of the United States of America, any
foreign country or any domestic or foreign state, county, city or other
political subdivision or of any Governmental or Regulatory Body.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the results
of the operations or financial condition of the Business, but excluding any such
effect resulting from the loss of the AYP business.
"ORDER" means any writ, judgment, decree, injunction or similar order of
any Governmental or Regulatory Body, in each case whether preliminary or final.
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"PERSON" means any individual, corporation, partnership, firm, joint
venture, association, joint-stock company, trust, unincorporated organization,
Governmental or Regulatory Body or other entity.
"PLAN" means an "employee benefit plan" for purposes of Section 3(3) of
ERISA, and each other employee benefit plan, contract and other arrangement,
whether or not subject to ERISA, maintained, administered, or contributed to by
Seller, and which covers any employees of the Business or under which the
Business has liability.
"REAL PROPERTY" means the real property used solely in connection with
the Business, together with all easements, licenses, interests and all of the
rights arising out of the ownership thereof, together with the buildings,
fixtures and other improvements and appurtenances, if any, belonging or in any
way appertaining thereto.
"SELLER AFFILIATE" means an Affiliate of Seller.
"TANGIBLE PROPERTY" means all furniture, fixtures, equipment (including
motor vehicles), machinery, tools, dyes, castings, fixed assets, computers,
printers, servers, spare parts and other items of tangible personal property of
every kind and description (other than Inventory) used solely in connection with
the Business and owned or leased by Seller.
"TAX" and "TAXES" means all taxes or other assessments imposed by any
federal, state, local, or foreign taxing authority, including income, excise,
property, sales, use, ad valorem, and franchise taxes other than Transfer Taxes.
"TAX RETURN" means any return, report, information return, or other
document (including any related or supporting information) filed or required to
be filed with any federal, state, local or foreign governmental entity or other
authority in connection with the determination, assessment or collection of any
Tax or the administration of any laws, regulations or administrative
requirements relating to any Tax.
"WORTHINGTON" means Worthington Industries, Inc., a Delaware corporation,
which is the ultimate parent entity of the Seller.
12.2 TERMS DEFINED ELSEWHERE. The following terms are defined in the
Sections listed opposite their name:
<TABLE>
<CAPTION>
DEFINED TERM SECTION
------------ -------
<S> <C>
Accounting Principles 2.2(b)
Accounts Receivable 4.19
Assets 1.1
Assumed Liabilities 1.3
Balance Sheet 4.4(a)
Balance Sheet Date 4.4(a)
Closing Balance Sheet 2.2(b)
Closing Cash Payment 2.1
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<PAGE>
Closing Date 3.2
Common Stock 2.1
Contracts of the Business 1.1(v)
Determination Time 2.2(b)
Disabling Condition 7.3(a)
Disclosure Letter 3.6
Dispute Notice 2.2(d)
Dispute Period 2.2(d)
Excluded Assets 1.2
Excluded Liabilities 1.4
Final Operating Working Capital 2.2(a)(i)
Financial Statements 4.4(a)
GAAP 2.2(b)
IDB 1.5
Indemnitee 10.3
Indemnitor 10.3
Indemnity Claims 10.1(a)
Liens 4.5(c)
Losses 7.1(b)
Major Customers 4.23(a)(i)
Major Suppliers 4.23(a)(ii)
Material Contracts 4.6
Notice of Claim 10.3
Operating Capital 2.2(a)(i)
Permitted Liens 4.5(c)
Preferred Stock 2.1
Purchase Price 2.1
Restricted Names or Marks 7.10
Target Operating Capital 2.2(a)(i)
Transfer Taxes 7.4(e)
Worthington Health Plans 7.3(a)(i)
</TABLE>
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Asset Purchase
Agreement as of the date first above written.
WORTHINGTON CUSTOM PLASTICS, INC. MORTON INDUSTRIAL GROUP, INC.
By: By:
------------------------------ -----------------------------
Its: Its:
----------------------------- ----------------------------
MORTON CUSTOM PLASTICS, INC.
By:
-----------------------------
Its:
----------------------------
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<PAGE>
FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT
The Asset Purchase Agreement (the "APA") made and entered as of the
26th day of February, 1999, by and among Worthington Custom Plastics, Inc.,
an Ohio corporation ("Seller"), Morton Industrial Group, Inc., a Georgia
corporation ("MGRP"), and Morton Custom Plastics, Inc., a Delaware
corporation ("MCP") is hereby amended in the following respects and the
parties hereto agree as follows:
1. ASSIGNMENT OF RIGHTS; ASSUMPTION OF OBLIGATIONS. MGRP and MCP
hereby assign to Morton Custom Plastics, LLC, a Delaware limited liability
company ("Buyer"), all their right, title, and interest in, to and under the
APA, and Buyer does hereby assume from MGRP and MCP, and shall pay, perform
and discharge in accordance with the terms of the APA, and shall indemnify
and hold harmless MGRP and MCP from and against, the obligations of MGRP and
MCP thereunder. Pursuant to Section 11.4 of the APA, Seller does hereby
grant its consent to this assignment; provided that neither MGRP or MCP shall
be released from its obligations under the APA.
2. ASSIGNMENT TO GE CAPITAL. The parties hereto acknowledge that
as part of the requirements for obtaining financing for the acquisition of
the assets pursuant to the APA, Buyer's lenders, including General Electric
Capital Corporation (the "Lenders"), will require an assignment of Buyer's
rights under the APA to the Lenders or their agent for collateral purposes.
Seller hereby consents to such assignment.
3. AMENDMENT TO PURCHASE PRICE. Section 2.1 of the APA is hereby
deleted and a new Section 2.1 is hereby substituted therefore as follows:
2.1 PURCHASE PRICE. The Consideration for the Assets (the
"Purchase Price") shall be (i) $25,000,000 (the "Closing Cash
Payment"); (ii) 10,000 shares of preferred stock of Parent,
without par value (the "Preferred Stock") on the terms set forth
on Exhibit A hereto (which the parties agree has a value of
$4,250,000); (iii) a Contingent Payment as provided in Exhibit
A attached hereto; and (iv) Buyer'' assumption of the Assumed
Liabilities. The Closing Cash Payment shall be paid as provided
in Section 2.3.
The Shareholder Agreement set forth in Exhibit F of the APA is hereby deleted.
4. CLOSING. Section 3.1 of the APA is hereby amended to reflect
that the Closing will take place at the offices of Paul, Hastings, Janofsky &
Walker LLP, 1055 Washington Blvd., Stamford, Connecticut. Section 3.2 is
hereby amended by substituting the date hereof for the March 31, 1999 date
contained therein. Section 3.3 of the APA is amended by substituting April
20, 1999 for April 15, 1999.
5. BUYER'S REPRESENTATIONS AND WARRANTIES. Buyer represents and
warrants to Seller that:
<PAGE>
(a) Buyer is a limited liability company duly formed and validly
existing under the laws of the State of Delaware and is qualified to do
business as a foreign limited liability company in all jurisdictions in which
the failure to do so would have a Material Adverse Effect on the results of
operations or financial condition of Buyer. Buyer has all requisite power
and authority to enter into this First Amendment and assume and perform the
obligations of MGRP and MCP under the APA and to carry out its obligations
hereunder and thereunder.
(b) The execution and delivery of this First Amendment and the
consummation of the transactions contemplated hereby and by the APA have been
duly authorized by all necessary limited liability company actions required
on the part of the Buyer. This First Amendment has been duly executed and
delivered by Buyer, and this First Amendment and the APA constitute the valid
and legally binding obligations of Buyer and are enforceable against the
Buyer in accordance with their respective terms.
(c) Neither the execution and delivery of this First Amendment,
the assumption of MGRP's and MCP's obligations under the APA, nor the
consummation of the transactions contemplated hereby and by the APA will:
(i) violate or conflict with, or result in a breach of
any provisions of, or constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, any
of the terms, conditions or provisions of the Articles of Organization
or Operating Agreement of the Buyer, or any note, bond, mortgage,
indenture, deed of trust, material license agreement, loan agreement or
other material agreement, instrument or obligation to which Buyer is
party, or by which Buyer or any of its properties or assets may be bound
or affected; or
(ii) violate any material judgment, order, writ,
injunction or decree, or any law, rule or regulation applicable to Buyer
or any of its properties or assets, to the extent any of the foregoing
would have a Material Adverse Effect on the results of operations or
financial condition of Buyer. Buyer is not required to give notice or
obtain any consent from any person in connection with the execution and
delivery of this First Amendment for the consummation of the
transactions contemplated hereby or by the APA.
6. GE CAPITAL FINANCING. In lieu of the financing contemplated
by the APA, the parties acknowledge that financing will be provided by Buyer
and its sole member, Morton Holdings, LLC, a Delaware limited liability
company, by borrowing such funds from the Lenders.
7. SERIES 1999A PREFERRED. Exhibit A of the APA is hereby
amended to provide that the designation of the preferences, limitations and
relative rights of the Series 1999A Preferred shall be as set forth on
EXHIBIT B attached hereto and made a part hereof by this reference.
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<PAGE>
8. TRANSITION SERVICES AGREEMENT. EXHIBIT E of the APA is hereby
amended to provide that the form of the Transition Service Agreement shall be
as set forth on EXHIBIT C, attached hereto and made a part hereof by this
reference.
9. CAPITALIZATION. Section 5.4 is hereby amended to provide that
bonds for acquisition and debt financing will not be issued by Parent and to
clarify that the Parent has outstanding employee and director stock options
in addition to those granted under Parent's 1997 Stock Option Plan.
10. OPINION OF BUYER'S COUNSEL. The opinion to be given by
Buyer's counsel as set forth in Exhibit G of the APA shall be appropriately
modified to reflect the changes in the APA made by this First Amendment and
may be delivered by separate counsel for Buyer, namely, Winston & Strawn, as
well as Husch & Eppenberger, LLC.
11. GE BUSINESS; POSSIBLE REDUCTION IN DIVIDEND RATE. As required
pursuant to Sections 8.9 and 9.7 of the APA, Seller and Buyer have reached a
mutually acceptable agreement with respect to certain GE business which is
reflected in a separate agreement of even date. Pursuant to that agreement,
the dividend rate on the Series 1999A Preferred may be reduced; therefore, an
appropriate legend will be affixed to the certificate or certificates
evidencing the Series 1999A Preferred in the hands of Seller, substantially
as follows:
THE DIVIDEND RATE SET FORTH IN THE DESIGNATION OF PREFERENCES,
LIMITATIONS, AND RELATIVE RIGHTS OF THE SERIES 1999A PREFERRED
MAY BE REDUCED UNDER CERTAIN CIRCUMSTANCES AS SET FORTH IN THAT
CERTAIN AGREEMENT DATED APRIL 15, 1999 BY AND BETWEEN WORTHINGTON
CUSTOM PLASTICS, INC., MORTON INDUSTRIAL GROUP, INC., AND MORTON
CUSTOM PLASTICS, LLC, A COPY OF WHICH IS AVAILABLE FROM THE
SECRETARY OF THE CORPORATION.
As a condition to any transfer of the Series 1999A Preferred by Seller,
Seller will require that the transferee agree in writing to the foregoing
limitations.
12. PARTIES. Buyer is hereby added as a party to the APA.
13. LEBANON IDB. The parties agree that section 1.5 of the APA
shall be deemed amended as appropriate to reflect the letter to Firstar Bank,
N.A. from Worthington Steel of Michigan, Inc. and Morton Lebanon Kentucky
IRB, LLC dated as of the date hereof (the "Letter") and further that
notwithstanding any provision herein, in the Assignment and Assumption
Agreement or any other document relating to the APA, Buyer shall not assume
or be liable in respect of the IDB or the bonds issued thereunder (the
"Bonds") and the Bonds shall not be transferred to Buyer or its affiliates
until the Letter has been fully executed and delivered by all parties thereto
(and properly attested to the extent required thereby). The parties shall
use best efforts to cause such transfer and assumption to occur at the
earliest practical date.
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<PAGE>
14. DEFINITION. Capitalized terms contained herein that are not
otherwise defined herein shall be construed as defined in the APA.
15. BINDING EFFECT. This First Amendment shall be binding upon
the parties and their successors and assigns. The terms and conditions of
the APA shall continue in full force and effect except as modified herein.
IN WITNESS WHEREOF, the parties have executed this First Amendment to
Asset Purchase Agreement as of this ________ day of April, 1999.
WORTHINGTON CUSTOM PLASTICS, MORTON INDUSTRIAL GROUP,
INC. INC.
By: By:
------------------------------- ------------------------------
Its Its
---------------------------- ---------------------------
MORTON CUSTOM PLASTICS, INC. MORTON CUSTOM PLASTICS, LLC
By: By:
------------------------------- ------------------------------
Its Its
---------------------------- ---------------------------
4
<PAGE>
EXHIBIT A TO FIRST AMENDMENT
CONTINGENT PAYMENT
1. SELLER'S RIGHT TO DEMAND CONTINGENT PAYMENT. Seller shall have the
right to compel Buyer to pay to Seller an amount equal to 15% of the
"Enterprise Value" (as defined below) of Buyer (the "Contingent Payment") as
of December 31, 2004 by notifying Buyer in writing of the demand within the
30-day period following the later of (i) March 31, 2005 or (ii) the date on
which Seller is provided audited financial statements of the Buyer with
respect to the year ended December 31, 2004 on the terms and conditions set
forth below.
2. BUYER RIGHT TO PROVIDE CONTINGENT PAYMENT. Buyer shall have the
right to compel Seller to receive the Contingent Payment based on the
Enterprise Value of Buyer as of December 31, 2004 by notifying Seller in
writing of the exercise of its right within the 30-day period following March
31, 2005 on the terms and conditions set forth below.
3. CONTINGENT PAYMENT ABSENT EXERCISE. If neither Seller nor Buyer
exercises its right to receive or pay the Contingent Payment based on the
December 31, 2004 Enterprise Value of Buyer, the Contingent Payment shall be
equal to 15% of the Enterprise Value of Buyer as of December 31, 2005.
4. AMOUNT OF THE CONTINGENT PAYMENT. The Enterprise Value of the
Buyer shall be the fair market value of a 100% equity ownership interest in
Buyer as of the appropriate date. Such value shall be determined by the
mutual agreement of the parties, or, if the parties cannot agree on the
Enterprise Value of the Buyer within 30 days of the exercise of the right
under Section 1 or 2 by April 30, 2006 if no exercise is made, then the
Enterprise Value of the Buyer shall be determined by appraisal as follows:
The parties shall each appoint, at its own cost, within 15 days
following the expiration of the time for mutual agreement, a qualified
appraiser ("Qualified Appraiser"), who shall be a professional appraiser,
certified public accountant, or investment banker qualified by experience and
ability to appraise a closely held business of the magnitude conducted by
Buyer. In determining the Enterprise Value of the Buyer for purposes of
determining the Contingent Payment, no discounts shall be taken for lack of
marketability of the enterprise or minority interest or the like. Rather,
the determination of Enterprise Value of the buyer shall be based on a
valuation of the Buyer as a going concern. The Contingent Payment shall then
be determined by multiplying Enterprise Value by 15%. If both Qualified
Appraisers agree on the Enterprise Value of the Buyer, their opinion, which
shall be submitted in writing, shall be conclusive and binding on the
parties. If only one of the parties appoints a Qualified Appraiser, that
appraiser's written opinion on the Enterprise Value of the Buyer shall be
conclusive and binding on the parties. If the two Qualified Appraisers
disagree on the Enterprise Value of the Buyer, they shall appoint a third
Qualified Appraiser mutually acceptable to them, and the opinion of the third
Qualified Appraiser, whose fees and expenses shall be divided equally between
the parties, shall be conclusive and binding as to the Enterprise Value of
the Buyer. Provided, however, that if the Enterprise Value of the Buyer in
question found by the third Qualified Appraiser is greater than the higher of
the first two appraisals, the higher of the first two appraisals shall
constitute the
<PAGE>
Enterprise Value of the Buyer, and if Enterprise Value as found by the third
appraiser is less than the lower of the first two appraisals, the lower of
the first two appraisals shall constitute the Enterprise Value of the Buyer.
In determining such Enterprise Value as of any date, Buyer shall be deemed to
have additional cash assets (or, as applicable, to have its assets decreased)
in an amount equal to (a) the sum of (i) all cash distributed by Buyer to
its members in their capacity as such on or prior to such date (other than
distributions to pay or reimburse its members for tax liabilities actually
paid by such members attributable to the taxable income of Buyer) plus (ii)
the fair market value of all non-cash assets distributed by Buyer to its
members in their capacity as such (in each case determined as of the time of
distribution) on or prior to such date plus (iii) payments to Affiliates of
Buyer for products or services to the extent such payments are in excess of
their reasonable value plus (iv) interest on such distributions or excess
payments at the Wall Street Journal national prime rate of interest in effect
from time to time (the "Prime Rate") from the date of such distributions or
excess payments to the date of determining such Enterprise Value minus (b)
the sum of (i) the amount of all capital contributions made to Buyer (valued
at fair market value as of the date of such contribution) plus (ii) interest
on such capital contributions at the Prime Rate from the date of such capital
contributions to the date of determining such Enterprise Value.
In no event shall the amount of such Contingent Payment exceed $35,000,000
plus interest as provided below.
In determining such Enterprise Value, payments to Affiliates in excess of
their reasonable value shall be added back to cash flow, income or other
similar computations.
The parties hereto agree to negotiate in good faith concerning additional
adjustments to the calculation of the Contingent Payment to address
extraordinary charges or events with the respect to the Buyer which were not
contemplated by the parties hereto as of the date hereof.
For purposes of this Exhibit, the following definitions shall apply:
"AFFILIATE" shall mean, with respect to any Person (a) each Person that,
directly or indirectly, owns or controls, whether beneficiary, or as a
trustee, guardian or other fiduciary, five percent (5%) or more of the equity
or voting interest of such Persons, (b) each Person that controls, is
controlled by or is under common control with such Person, (c) each of such
Person's officers, descendants of individuals of any of the foregoing. For
the purposes of this definition, "CONTROL" of a Person shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of its management or policies, whether through the ownership of
voting securities, by contract or otherwise.
"PERSON" shall mean any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation,
limited liability company, institution, public benefit corporation, other
entity or government (whether federal, state, county, city, municipal, local,
foreign, or otherwise, including any instrumentality, division, agency, body
or department thereof).
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5. PAYMENT OF CONTINGENT PAYMENT. The Contingent Payment shall be
paid in cash, or by wire transfer or certified or cashier's check on or
before the 30th day following the determination of the Contingent Payment
pursuant to Section 4 above and shall be accompanied by interest from the
date as to which the Enterprise Value is determined to the date of payment at
the Prime Rate.
6. DEBTOR-CREDITOR RELATIONSHIP. The parties intend for Seller to be
viewed as an unsecured creditor of Buyer with respect to the Contingent
Payment. Nothing in the APA (including this Amendment) shall be construed as
creating a partnership or joint venture between Seller and Buyer.
7. ACCESS TO RECORDS. Buyer shall provide to Seller access to Buyer's
officers and employees and to Buyer's books and records and all financial
information including projections as is reasonably necessary to calculate
Enterprise Value.
3
<PAGE>
RESOLUTIONS OF THE BOARD OF DIRECTORS
OF
MORTON INDUSTRIAL GROUP, INC.
(Designating the preferences, limitations, and relative rights
of the Series 1999A Preferred)
WHEREAS, the board of directors of the Corporation is authorized by the
Corporation's articles of incorporation to issue shares of preferred stock
not to exceed 2,000,000, no par value, from time to time in one or more
series; and
WHEREAS, the articles of incorporation authorizes the board of directors
to determine the preferences, limitations, and relative rights of any series
of preferred stock; and
WHEREAS, the board of directors now desires to designate a series of
preferred stock pursuant to its authority;
NOW, THEREFORE, BE IT RESOLVED, that the board of directors of Morton
Industrial Group, Inc. hereby designates 15,000 shares of its authorized
non-par value preferred stock as a series designated "Series 1999A
Preferred"; and it is
RESOLVED, that the preferences, limitations and relative rights of the
Series 1999A Preferred are as follows:
Except as otherwise provided herein, dividends on each share of
the Series 1999A Preferred shall accrue at the rate of 8% per annum of the
sum of the (i) Liquidation Value (as hereafter defined) thereof plus (ii)
all accumulated and unpaid dividends thereon as of the immediately
preceding Dividend Reference Date (as hereafter defined). Such dividends
shall accrue whether or not they have been declared and whether or not
there are profits, surplus or other funds of the Corporation legally
available for the payment of dividends.
No dividends can be paid on any share of Common Stock until all
accumulated dividends on the Series 1999A Preferred have been paid.
Dividends on the Series 1999A Preferred shall be paid annually on
the last day of each March beginning March 31, 2000, ("Dividend Reference
Date") either, at the option of the Corporation, in cash or by issuance of
that number of additional shares of Series 1999A Preferred equal to the
dividend payable divided by 1,000; provided, however, that no dividends on
the Series 1999A Preferred shall be declared by the board of directors of
the Corporation or paid or set apart for payment by the Corporation at such
time as, and to the extent that, the terms and provisions of any agreement
of the Corporation, including any agreement relating to its indebtedness,
or any provisions of
<PAGE>
the Corporation's articles of incorporation or a declaration relating to
any series of preferred shares ranking senior to the Series 1999A Preferred
as to dividends, prohibit such declaration, payment or setting apart for
payment or provide that such declaration, payment or setting apart for
payment would constitute a breach thereof or a default thereunder, or if
such declaration or payment will be prohibited by law. Notwithstanding
the foregoing, dividends on the Series 1999A Preferred shall accrue whether
or not the Corporation has earnings, whether or not there are funds legally
available for payment of such dividends and whether or not such dividends
are declared.
The Series 1999A Preferred shall not have any voting powers
either general or specified.
The shares of Series 1999A Preferred shall not be subject to
conversion into any other securities of the Corporation.
The Corporation shall purchase or redeem five years after the
date of initial issuance of any of such shares (herein the "Maturity
Date"), the entire amount of the Series 1999A Preferred then issued and
outstanding, and pay the holders of the shares so purchased or redeemed an
amount equal to $1,000.00 per share plus the unpaid accumulated dividends
accrued thereon (including such dividends which have accrued but not been
declared). In the event any of the shares of Series 1999A Preferred are
not tendered for redemption hereunder, the Corporation may deposit the
aggregate redemption price with any bank or trust company in the City of
Columbus, Ohio named in a notice sent to the holders of the Series 1999A
Preferred, payable in the amounts stated to the respective record holders
of the shares to be redeemed on endorsement and surrender of their stock
certificates, and upon the making of such deposit the holders shall cease
to be shareholders with respect to the Series 1999A Preferred and from and
after the making of such deposit the holders shall have no interest in or
claim against the Corporation with respect to the shares of Series 1999A
Preferred, but shall be entitled only to receive the monies from the bank
or trust company without interest. Any monies unclaimed at the end of one
year from the date of the deposit shall be repaid to the Corporation.
Upon any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, there shall be paid to the holders of the
Series 1999A Preferred $1,000.00 per share ("Liquidation Value") plus
accrued and unpaid dividends before any sum shall be paid to or any assets
distributed among the holders of the Common Stock; and after such payment
to the holders of the Series 1999A Preferred all remaining assets and funds
of the Corporation shall be paid to the holders of the Common Stock
according to their respective shares without further participation by the
holders of the Series 1999A Preferred.
The rights and preferences conferred here on the Series 1999A
Preferred shall not be changed or altered or revoked without the consent of
the holders of the majority of the Series 1999A Preferred outstanding at
the time.
2
<PAGE>
The consolidation or merger of the Corporation at any time, or
from time to time with any other corporation, shall not be regarded or
construed to be a liquidation, dissolution or winding up of the Corporation
within the meaning herein, but no such consolidation or merger shall in any
way impair the rights of the Series 1999A Preferred.
The Corporation may issue one or more additional series of
preferred stock without the consent of the holders of the Series 1999A
Preferred so long as the ranking as to preference on liquidation,
dissolution or winding up of the Corporation is either subordinate to such
rights of the Series 1999A Preferred or on a parity with the Series 1999A
Preferred.
3
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
CREDIT AGREEMENT
Dated as of April 15, 1999
among
MORTON CUSTOM PLASTICS, LLC,
EACH OTHER BORROWER PARTY HERETO,
MORTON HOLDINGS, LLC
AND THE OTHER CREDIT PARTIES SIGNATORY HERETO,
as Credit Parties,
THE LENDERS SIGNATORY HERETO
FROM TIME TO TIME,
as Lenders,
and
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent and Lender
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
INDEX OF APPENDICES
- -------------------
<S> <C> <C>
Exhibit 1.1(a)(i) - Form of Notice of Revolving Credit Advance
Exhibit 1.1(a)(ii) - Form of Revolving Note
Exhibit 1.1(b) - Form of Term Note
Exhibit 1.1(c)(ii) - Form of Swing Line Note
Exhibit 1.5(e) - Form of Notice of Conversion/Continuation
Exhibit 4.1(b)(i) - Form of Revolving Borrowing Base Certificate
Exhibit 9.1(a) - Form of Assignment Agreement
Schedule 1.1 - Responsible Individual
Schedule 1.4 - Sources and Uses; Funds Flow Memorandum
Schedule 3.2 - Executive Offices; FEIN
Schedule 3.4(A) - Financial Statements
Schedule 3.4(B) - Pro Forma
Schedule 3.4(C) - Projections
Schedule 3.5 - Material Events
Schedule 3.6 - Real Estate and Leases
Schedule 3.7 - Labor Matters
Schedule 3.8 - Ventures, Subsidiaries and Affiliates;
Outstanding Stock
Schedule 3.11 - Tax Matters
Schedule 3.12 - ERISA Plans
Schedule 3.13 - Litigation
Schedule 3.15 - Intellectual Property
Schedule 3.17 - Hazardous Materials
Schedule 3.18 - Insurance
Schedule 3.19 - Deposit and Disbursement Accounts
Schedule 3.20 - Government Contracts
Schedule 3.22 - Material Agreements
Schedule 5.1 - Corporate and Trade Names
Schedule 6.3 - Indebtedness
Schedule 6.4(a) - Transactions with Affiliates
Schedule 6.7 - Existing Liens
Annex A (Recitals) - Definitions
Annex B (SECTION 1.2) - Letters of Credit
Annex C (SECTION 1.8) - Cash Management System
Annex D (SECTION 2.1(a)) - Schedule of Additional Closing Documents
Annex E (SECTION 4.1(a)) - Financial Statements and Projections -- Reporting
Annex F (SECTION 4.1(b)) - Collateral Reports
Annex G (SECTION 6.10) - Financial Covenants
Annex H (SECTION 9.9(a)) - Lenders' Wire Transfer Information
Annex I (SECTION 11.10) - Notice Addresses
Annex J (from Annex A - - Commitments as of Closing Date
Commitments definition)
</TABLE>
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
1. AMOUNT AND TERMS OF CREDIT. . . . . . . . . . . . . . . . . . . . . . 2
1.1. Credit Facilities . . . . . . . . . . . . . . . . . . . . . . 2
1.2. Letters of Credit . . . . . . . . . . . . . . . . . . . . . . 7
1.3. Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.4. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . .10
1.5. Interest and Applicable Margins . . . . . . . . . . . . . . .10
1.6. Eligible Accounts . . . . . . . . . . . . . . . . . . . . . .13
1.8. Cash Management Systems . . . . . . . . . . . . . . . . . . .17
1.9. Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
1.10. Receipt of Payments . . . . . . . . . . . . . . . . . . . . .17
1.11. Application and Allocation of Payments. . . . . . . . . . . .18
1.12. Loan Account and Accounting . . . . . . . . . . . . . . . . .18
1.13. Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . .19
1.14. Access. . . . . . . . . . . . . . . . . . . . . . . . . . . .20
1.15. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
1.16. Capital Adequacy; Increased Costs; Illegality; Replacement
of Lender in Respect to Increased Costs . . . . . . . . . . .21
1.17. Single Loan . . . . . . . . . . . . . . . . . . . . . . . . .23
2. CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . . . . . . .23
2.1. Conditions to the Initial Loans . . . . . . . . . . . . . . .23
2.2. Further Conditions to Each Loan . . . . . . . . . . . . . . .25
2.3. Additional Borrowers. . . . . . . . . . . . . . . . . . . . .26
3. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . . .26
3.1. Corporate or Limited Liability Company Existence; Compliance
with Law. . . . . . . . . . . . . . . . . . . . . . . . . . .26
3.2. Executive Offices; FEIN . . . . . . . . . . . . . . . . . . .27
3.3. Corporate or Limited Liability Company Power, Authorization,
Enforceable Obligations . . . . . . . . . . . . . . . . . . .27
3.4. Financial Statements and Projections. . . . . . . . . . . . .27
3.5. Material Adverse Effect . . . . . . . . . . . . . . . . . . .28
3.6. Ownership of Property; Liens. . . . . . . . . . . . . . . . .29
3.7. Labor Matters . . . . . . . . . . . . . . . . . . . . . . . .29
3.8. Ventures, Subsidiaries and Affiliates; Outstanding Stock and
Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . .30
3.9. Government Regulation . . . . . . . . . . . . . . . . . . . .30
3.10. Margin Regulations. . . . . . . . . . . . . . . . . . . . . .30
3.11. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
3.12. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
3.13. No Litigation . . . . . . . . . . . . . . . . . . . . . . . .32
3.14. Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . .32
3.15. Intellectual Property . . . . . . . . . . . . . . . . . . . .32
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<PAGE>
3.16. Full Disclosure . . . . . . . . . . . . . . . . . . . . . . .32
3.17. Environmental Matters . . . . . . . . . . . . . . . . . . . .33
3.18. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . .34
3.19. Deposit and Disbursement Accounts . . . . . . . . . . . . . .34
3.20. Government Contracts. . . . . . . . . . . . . . . . . . . . .34
3.21. Customer and Trade Relations. . . . . . . . . . . . . . . . .34
3.22. Agreements and Other Documents. . . . . . . . . . . . . . . .34
3.23. Solvency. . . . . . . . . . . . . . . . . . . . . . . . . . .34
3.24. Worthington Acquisition Agreement . . . . . . . . . . . . . .35
3.25. Status of Holdings; IRB Subsidiary. . . . . . . . . . . . . .35
4. FINANCIAL STATEMENTS AND INFORMATION. . . . . . . . . . . . . . . . .35
4.1. Reports and Notices . . . . . . . . . . . . . . . . . . . . .35
4.2. Communication with Accountants. . . . . . . . . . . . . . . .36
5. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . .36
5.1. Maintenance of Existence and Conduct of Business. . . . . . .36
5.2. Payment of Obligations. . . . . . . . . . . . . . . . . . . .36
5.3. Books and Records . . . . . . . . . . . . . . . . . . . . . .37
5.4. Insurance; Damage to or Destruction of Collateral . . . . . .37
5.5. Compliance with Laws. . . . . . . . . . . . . . . . . . . . .39
5.6. Supplemental Disclosure . . . . . . . . . . . . . . . . . . .39
5.7. Intellectual Property . . . . . . . . . . . . . . . . . . . .39
5.8. Environmental Matters . . . . . . . . . . . . . . . . . . . .39
5.9. Landlords' Agreements, Mortgagee Agreements and Bailee
Letters . . . . . . . . . . . . . . . . . . . . . . . . . . .40
5.10. Year 2000 Compliance. . . . . . . . . . . . . . . . . . . . .40
5.11. Further Assurances. . . . . . . . . . . . . . . . . . . . . .41
6. NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . .41
6.1. Mergers, Subsidiaries, Etc. . . . . . . . . . . . . . . . . .41
6.2. Investments; Loans and Advances . . . . . . . . . . . . . . .41
6.3. Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . .41
6.4. Employee Loans and Affiliate Transactions . . . . . . . . . .42
6.5. Capital Structure and Business. . . . . . . . . . . . . . . .42
6.6. Guaranteed Indebtedness . . . . . . . . . . . . . . . . . . .43
6.7. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . .43
6.8. Sale of Stock and Assets. . . . . . . . . . . . . . . . . . .43
6.9. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . .44
6.10. Financial Covenants . . . . . . . . . . . . . . . . . . . . .44
6.11. Hazardous Materials . . . . . . . . . . . . . . . . . . . . .44
6.12. Sale-Leasebacks . . . . . . . . . . . . . . . . . . . . . . .44
6.13. Cancellation of Indebtedness. . . . . . . . . . . . . . . . .44
6.14. Restricted Payments . . . . . . . . . . . . . . . . . . . . .44
6.15. Change of Corporate or Limited Liability Company Name or
Location; Change of Fiscal Year . . . . . . . . . . . . . . .45
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6.16. No Impairment of Intercompany Transfers . . . . . . . . . . .45
6.17. No Speculative Transactions . . . . . . . . . . . . . . . . .45
6.18. Leases. . . . . . . . . . . . . . . . . . . . . . . . . . . .45
6.19. Credit Parties Other than Borrowers . . . . . . . . . . . . .46
6.20. Modifications of Certain Documents. . . . . . . . . . . . . .46
7. TERM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46
7.1. Termination . . . . . . . . . . . . . . . . . . . . . . . . .46
7.2. Survival of Obligations Upon Termination of Financing
Arrangements. . . . . . . . . . . . . . . . . . . . . . . . .46
8. EVENTS OF DEFAULT: RIGHTS AND REMEDIES. . . . . . . . . . . . . . . .46
8.1. Events of Default . . . . . . . . . . . . . . . . . . . . . .46
8.2. Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . .49
8.3. Waivers by Credit Parties . . . . . . . . . . . . . . . . . .49
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT . . . . . . . . .50
9.1. Assignment and Participations . . . . . . . . . . . . . . . .50
9.2. Appointment of Agent. . . . . . . . . . . . . . . . . . . . .52
9.3. Agent's Reliance, Etc . . . . . . . . . . . . . . . . . . . .52
9.4. GE Capital and Affiliates . . . . . . . . . . . . . . . . . .53
9.5. Lender Credit Decision. . . . . . . . . . . . . . . . . . . .53
9.6. Indemnification . . . . . . . . . . . . . . . . . . . . . . .53
9.7. Successor Agent . . . . . . . . . . . . . . . . . . . . . . .54
9.8. Setoff and Sharing of Payments. . . . . . . . . . . . . . . .55
9.9. Advances; Payments; Non-Funding Lenders; Information;
Actions in Concert. . . . . . . . . . . . . . . . . . . . . .55
10. SUCCESSORS AND ASSIGNS. . . . . . . . . . . . . . . . . . . . . . . .57
10.1. Successors and Assigns. . . . . . . . . . . . . . . . . . . .57
11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . .58
11.1. Complete Agreement; Modification of Agreement . . . . . . . .58
11.2. Amendments and Waivers. . . . . . . . . . . . . . . . . . . .58
11.3. Fees and Expenses . . . . . . . . . . . . . . . . . . . . . .60
11.4. No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . .61
11.5. Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . .62
11.6. Severability. . . . . . . . . . . . . . . . . . . . . . . . .62
11.7. Conflict of Terms . . . . . . . . . . . . . . . . . . . . . .62
11.8. Confidentiality . . . . . . . . . . . . . . . . . . . . . . .62
11.9. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . .63
11.10. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . .64
11.11. Section Titles. . . . . . . . . . . . . . . . . . . . . . . .64
11.12. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . .64
11.13. WAIVER OF JURY TRIAL. . . . . . . . . . . . . . . . . . . . .64
11.14. Press Releases. . . . . . . . . . . . . . . . . . . . . . . .65
11.15. Reinstatement . . . . . . . . . . . . . . . . . . . . . . . .65
iii
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11.16. Advice of Counsel . . . . . . . . . . . . . . . . . . . . . .65
11.17. No Strict Construction. . . . . . . . . . . . . . . . . . . .65
</TABLE>
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v
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vi
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vii
<PAGE>
CREDIT AGREEMENT, dated as of April 15, 1999, among MORTON
CUSTOM PLASTICS, LLC, a Delaware limited liability company ("MCP"), each
other Borrower, if any, party hereto, MORTON HOLDINGS, LLC, a Delaware
limited liability company ("HOLDINGS"), the other Credit Parties signatory
hereto, GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation (in its
individual capacity, "GE CAPITAL"), for itself, as Lender, and as Agent for
Lenders, and the other Lenders signatory hereto from time to time.
RECITALS
WHEREAS, Borrowers desire that Lenders extend revolving and
term credit facilities to Borrowers of up to $50,000,000 in the aggregate (i)
on the Closing Date (x) to finance a portion of the Worthington Acquisition
including related expenses to the extent permitted hereunder and (y) to
finance the Preferred Stock Contribution, and (ii) at any time on or after
the Closing Date to provide working capital financing for Borrowers and funds
for other general corporate or limited liability company purposes of
Borrowers; and for these purposes, Lenders are willing to make certain loans
and other extensions of credit to Borrowers of up to such amount upon the
terms and conditions set forth herein; and
WHEREAS, Borrowers desire to secure all of their obligations
under the Loan Documents by granting to Agent, for the benefit of Agent and
Lenders, a security interest in and lien upon all of their existing and
after-acquired personal and real property; and
WHEREAS, Holdings is willing to guaranty all of the
obligations of Borrowers to Lenders under the Loan Documents and to pledge to
Agent to secure such guaranty, for the benefit of Agent and Lenders, all of
the equity interests in each Borrower owned by Holdings (which, in the case
of MCP, will consist of 100% of the outstanding membership interests of MCP);
and
WHEREAS, capitalized terms used in this Agreement shall have
the meanings ascribed to them in ANNEX A. All Annexes, Disclosure Schedules,
Exhibits and other attachments (collectively, "APPENDICES") hereto, or
expressly identified to this Agreement, are incorporated herein by reference,
and taken together, shall constitute but a single agreement. These Recitals
shall be construed as part of the Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants hereinafter contained, and for other good and valuable
consideration, the parties hereto agree as follows:
<PAGE>
1. AMOUNT AND TERMS OF CREDIT
1.1. CREDIT FACILITIES
(a) REVOLVING CREDIT FACILITY.
(i) Subject to the terms and conditions hereof,
each Revolving Lender agrees to make available from time to time until the
Commitment Termination Date its Pro Rata Share of revolving credit advances
(each, a "REVOLVING CREDIT ADVANCE"). The Pro Rata Share of the Revolving
Loan of any Revolving Lender shall not at any time exceed its separate
Revolving Loan Commitment. The obligations of each Revolving Lender
hereunder shall be several and not joint. The aggregate amount of Revolving
Credit Advances outstanding shall not exceed at any time the lesser of (A)
the Maximum Amount and (B) the Aggregate Revolving Borrowing Base, in each
case less the sum of the Letter of Credit Obligations and the Swing Line Loan
outstanding at such time ("BORROWING AVAILABILITY"). Moreover, the sum of
the Revolving Loan and Swing Line Loan outstanding to any Borrower shall not
exceed at any time that Borrower's separate Revolving Borrowing Base. Until
the Commitment Termination Date, Borrowers may from time to time borrow,
repay and reborrow under this SECTION 1.1(a). Each Revolving Credit Advance
shall be made on notice by Borrower Representative on behalf of the
applicable Borrower to the representative of Agent identified on SCHEDULE 1.1
at the address specified thereon. Those notices must be given no later than
(1) 11:00 a.m. (New York time) on the Business Day of the proposed Revolving
Credit Advance, in the case of an Index Rate Loan, or (2)11:00 a.m. (New York
time) on the date which is three (3) Business Days prior to the proposed
Revolving Credit Advance, in the case of a LIBOR Loan. Each such notice (a
"NOTICE OF REVOLVING CREDIT ADVANCE") must be given in writing (by telecopy
or overnight courier) substantially in the form of EXHIBIT 1.1(a)(i), and
shall include the information required in such Exhibit and such other
information as may be required by Agent. If any Borrower desires to have the
Revolving Credit Advances bear interest by reference to a LIBOR Rate,
Borrower Representative must comply with SECTION 1.5(e).
(ii) Each Borrower shall execute and deliver to each
Revolving Lender a note to evidence the Revolving Loan Commitment of that
Revolving Lender. Each note shall be in the principal amount of the
Revolving Loan Commitment of the applicable Revolving Lender, dated the
Closing Date and substantially in the form of EXHIBIT 1.1(a)(ii) (each a
"REVOLVING NOTE" and, collectively, the "REVOLVING NOTES"). Each Revolving
Note shall represent the obligation of each Borrower to pay the amount of
each Revolving Lender's Revolving Loan Commitment or, if less, the applicable
Revolving Lender's Pro Rata Share of the aggregate unpaid principal amount of
all Revolving Credit Advances to such Borrower together with interest thereon
as prescribed in SECTION 1.5. The entire unpaid balance of the aggregate
Revolving Loan and all other non-contingent Obligations shall be immediately
due and payable in full in immediately available funds on the Commitment
Termination Date.
2
<PAGE>
(iii) At the request of Borrower Representative, in
its discretion Agent may (but shall have absolutely no obligation to), make
Revolving Credit Advances to Borrowers on behalf of Revolving Lenders in
amounts which cause the outstanding balance of the aggregate Revolving Loan
to exceed the Aggregate Revolving Borrowing Base (less the Swing Line Loan)
or which cause the outstanding balance of the Revolving Loan owing by any
Borrower to exceed that Borrower's separate Revolving Borrowing Base (less
the Swing Line Loan advanced to that Borrower) (any such excess Revolving
Credit Advances are herein referred to collectively as "REVOLVING
OVERADVANCES"), and no such event or occurrence shall cause or constitute a
waiver by Agent or Lenders of any Default or Event of Default that may result
therefrom or of Agent's, Swing Line Lender's or Revolving Lenders' right to
refuse to make any further Revolving Overadvances, Swing Line Advances or
Revolving Credit Advances, or incur any Letter of Credit Obligations, as the
case may be, at any time that a Revolving Overadvance exists or would result
therefrom. In addition, Revolving Overadvances may be made even if the
conditions to lending set forth in SECTION 2 have not been met. All
Revolving Overadvances shall constitute Index Rate Loans, shall bear interest
at the Default Rate and shall be payable on demand. Except as otherwise
provided in SECTION 1.13(b), the authority of Agent to make Revolving
Overadvances is limited to an aggregate amount not to exceed $1,500,000 at
any time, shall not cause the aggregate Revolving Loan to exceed the Maximum
Amount, and may be revoked prospectively by a written notice to Agent signed
by Revolving Lenders holding fifty percent (50%) or more of the Revolving
Loan Commitments.
(b) TERM LOAN.
(i) Subject to the terms and conditions hereof,
each Term Lender agrees to make a term loan on the Closing Date to MCP (the
"TERM LOAN") in the original principal amount of its Term Loan Commitment,
and the Term Loan shall consist of (and shall in no event exceed): (1)
$18,000,000 (such amount being hereinafter called the "IN-FORMULA TERM
SUB-LIMIT"); PLUS (2) $8,000,000 (the "TERM OVERADVANCE").
The obligations of each Term Lender hereunder shall be several
and not joint. The Term Loan shall be evidenced by promissory notes
substantially in the form of EXHIBIT 1.1(b) (each a "TERM NOTE" and
collectively the "TERM NOTES"), and MCP shall execute and deliver its
respective Term Note to the applicable Term Lender. Each Term Note shall
represent the obligation of MCP to pay the amount of the applicable Term
Lender's Term Loan Commitment to MCP, together with interest thereon as
prescribed in SECTION 1.5.
(ii) On each date set forth below, MCP shall pay the
principal amount of the Term Loan in the installment set forth opposite such
date (with all such principal payments being deemed to be applied first to
the Term Overadvance until the Term Overadvance is repaid in full, and then
to the In-Formula Term Sub-Limit):
3
<PAGE>
<TABLE>
<CAPTION>
Payment Installment
Date Amount
------- ------
<S> <C>
September 30, 1999 $200,000
December 31, 1999 $500,000
March 31, 2000 $2,300,000
June 30, 2000 $750,000
September 30, 2000 $750,000
December 31, 2000 $750,000
March 31, 2001 $750,000
June 30, 2001 $1,000,000
September 30, 2001 $1,000,000
December 31, 2001 $1,000,000
March 31, 2002 $1,000,000
June 30, 2002 $1,500,000
September 30, 2002 $1,500,000
December 31, 2002 $1,500,000
March 31, 2003 $1,500,000
June 30, 2003 $5,000,000
October 15, 2003 $5,000,000
</TABLE>
(iii) Notwithstanding the foregoing CLAUSE (ii), the
aggregate outstanding principal balance of the Term Loan shall be due and
payable in full in immediately available funds on the Commitment Termination
Date, if not sooner paid in full.
(iv) Each payment of principal with respect to the
Term Loan shall be paid to Agent for the ratable benefit of each Term Lender
making a Term Loan ratably in proportion to each such Term Lender's
respective Term Loan Commitment.
(c) SWING LINE FACILITY.
(i) Agent shall notify the Swing Line Lender upon
Agent's receipt of any Notice of Revolving Credit Advance. Subject to the
terms and conditions hereof, the Swing Line Lender may, in its discretion,
make available from time to time until the Commitment Termination Date
advances (each, a "SWING LINE ADVANCE") in accordance with any such notice.
The aggregate amount of Swing Line Advances outstanding shall not exceed the
lesser of (A) the Swing Line Commitment and (B) the lesser of the Maximum
Amount and (except for Revolving Overadvances) the Aggregate Revolving
Borrowing Base, in each case, less the outstanding balance of the Revolving
Loan at such time ("SWING LINE AVAILABILITY"). Moreover, except for
Revolving Overadvances, the Swing Line Loan outstanding to any Borrower shall
not exceed at any time that Borrower's separate Revolving Borrowing Base less
the Revolving Loan outstanding to such Borrower. Until the Commitment
Termination
4
<PAGE>
Date, Borrowers may from time to time borrow, repay and reborrow under this
SECTION 1.1(c). Each Swing Line Advance shall be made pursuant to a Notice
of Revolving Credit Advance delivered to Agent by Borrower Representative on
behalf of the applicable Borrower in accordance with SECTION 1.1(a). Those
notices must be given no later than 11:00 a.m. (New York time) on the
Business Day of the proposed Swing Line Advance. Notwithstanding any other
provision of this Agreement or the other Loan Documents, the Swing Line Loan
shall constitute an Index Rate Loan. Borrowers shall repay the aggregate
outstanding principal amount of the Swing Line Loan upon demand therefor by
Agent.
(ii) Each Borrower shall execute and deliver to the
Swing Line Lender a promissory note to evidence the Swing Line Commitment.
Each note shall be in the principal amount of the Swing Line Commitment of
the Swing Line Lender, dated the Closing Date and substantially in the form
of EXHIBIT 1.1(c)(ii) (each a "SWING LINE NOTE" and, collectively, the
"SWING LINE NOTES"). Each Swing Line Note shall represent the obligation of
each Borrower to pay the amount of the Swing Line Commitment or, if less, the
aggregate unpaid principal amount of all Swing Line Advances made to such
Borrower together with interest thereon as prescribed in SECTION 1.5. The
entire unpaid balance of the Swing Line Loan and all other non-contingent
Obligations shall be immediately due and payable in full in immediately
available funds on the Commitment Termination Date if not sooner paid in full.
(iii) REFUNDING OF SWING LINE LOANS. The Swing Line
Lender, at any time and from time to time in its sole and absolute
discretion, but not less frequently than weekly, may on behalf of any
Borrower (and each Borrower hereby irrevocably authorizes the Swing Line
Lender to so act on its behalf) request each Revolving Lender (including the
Swing Line Lender) to make a Revolving Credit Advance to such Borrower (which
shall be an Index Rate Loan) in an amount equal to such Revolving Lender's
Pro Rata Share of the principal amount of such Borrower's Swing Line Loan
(the "REFUNDED SWING LINE LOAN") outstanding on the date such notice is
given. Unless any of the events described in SECTIONS 8.1(h) OR 8.1(i) shall
have occurred (in which event the procedures of SECTION 1.1(c)(iv) shall
apply) and regardless of whether the conditions precedent set forth in this
Agreement to the making of a Revolving Credit Advance are then satisfied,
each Revolving Lender shall disburse directly to Agent, its Pro Rata Share of
a Revolving Credit Advance on behalf of the Swing Line Lender, prior to 3:00
p.m. (New York time), in immediately available funds on the Business Day next
succeeding the date such notice is given. The proceeds of such Revolving
Credit Advances shall be immediately paid to the Swing Line Lender and
applied to repay the Refunded Swing Line Loan of the applicable Borrower.
(iv) PARTICIPATION IN SWING LINE LOANS. If, prior
to refunding a Swing Line Loan with a Revolving Credit Advance pursuant to
SECTION 1.1(c)(iii), one of the events described in SECTIONS 8.1(h) OR 8.1(i)
shall have occurred, then, subject to the provisions of SECTION 1.1(c)(v)
below, each Revolving Lender will, on the date such Revolving Credit Advance
was to have been made for the benefit of the applicable Borrower, purchase
from the Swing Line Lender an undivided participation interest in the Swing
Line Loan to
5
<PAGE>
such Borrower in an amount equal to its Pro Rata Share of such Swing Line
Loan. Upon request, each Revolving Lender will promptly transfer to the
Swing Line Lender, in immediately available funds, the amount of its
participation.
(v) REVOLVING LENDERS' OBLIGATIONS UNCONDITIONAL.
Each Revolving Lender's obligation to make Revolving Credit Advances in
accordance with SECTION 1.1(c)(iii) and to purchase participating interests
in accordance with SECTION 1.1(c)(iv) shall be absolute and unconditional and
shall not be affected by any circumstance, including (A) any setoff,
counterclaim, recoupment, defense or other right which such Revolving Lender
may have against the Swing Line Lender, any Borrower or any other Person for
any reason whatsoever; (B) the occurrence or continuance of any Default or
Event of Default; (C) any inability of any Borrower to satisfy the conditions
precedent to borrowing set forth in this Agreement on the date upon which
such participating interest is to be purchased or (D) any other circumstance,
happening or event whatsoever, whether or not similar to any of the
foregoing. If any Revolving Lender does not make available to Agent or the
Swing Line Lender, as applicable, the amount required pursuant to SECTION
1.1(c)(iii) or 1.1(c)(iv), as the case may be, the Swing Line Lender shall be
entitled to recover such amount on demand from such Revolving Lender,
together with interest thereon for each day from the date of non-payment
until such amount is paid in full at the Federal Funds Rate for the first two
Business Days and at the Index Rate thereafter.
(d) RELIANCE ON NOTICES; APPOINTMENT OF BORROWER
REPRESENTATIVE. Agent shall be entitled to rely upon, and shall be fully
protected in relying upon, any Notice of Revolving Credit Advance, Notice of
Conversion/Continuation or similar notice believed by Agent to be genuine.
Agent may assume that each Person executing and delivering such a notice was
duly authorized, unless the responsible individual acting thereon for Agent
has actual knowledge to the contrary. Each Borrower hereby designates MCP as
its representative and agent on its behalf for the purposes of issuing
Notices of Revolving Credit Advances and Notices of Conversion/Continuation,
giving instructions with respect to the disbursement of the proceeds of the
Loans, selecting interest rate options, requesting Letters of Credit, giving
and receiving all other notices and consents hereunder or under any of the
other Loan Documents and taking all other actions (including in respect of
compliance with covenants) on behalf of any Borrower or Borrowers under the
Loan Documents. Borrower Representative hereby accepts such appointment.
Agent and each Lender may regard any notice or other communication pursuant
to any Loan Document from Borrower Representative as a notice or
communication from all Borrowers, and may give any notice or communication
required or permitted to be given to any Borrower or Borrowers hereunder to
Borrower Representative on behalf of such Borrower or Borrowers. Each
Borrower agrees that each notice, election, representation and warranty,
covenant, agreement and undertaking made on its behalf by Borrower
Representative shall be deemed for all purposes to have been made by such
Borrower and shall be binding upon and enforceable against such Borrower to
the same extent as if the same had been made directly by such Borrower.
6
<PAGE>
1.2. LETTERS OF CREDIT. Subject to and in accordance with
the terms and conditions contained herein and in ANNEX B, Borrower
Representative, on behalf of the applicable Borrower, shall have the right to
request, and Revolving Lenders agree to incur, or purchase participations in,
Letter of Credit Obligations in respect of each Borrower.
1.3. PREPAYMENTS
(a) VOLUNTARY PREPAYMENTS. Borrowers may at any time on at
least five (5) days' prior written notice by Borrower Representative to Agent
voluntarily prepay all (but not less than all) of the Term Loan; PROVIDED
that MCP shall be permitted to make partial prepayments of the Term
Overadvance so long as any such prepayments shall be in a minimum amount of
$500,000 and integral multiples of $100,000 in excess of such amount. In
addition, Borrowers may at any time on at least ten (10) days' prior written
notice by Borrower Representative to Agent terminate the Revolving Loan
Commitment; provided that upon such termination, all Loans and other
Obligations shall be immediately due and payable in full. Any such voluntary
prepayment and any such termination of the Revolving Loan Commitment must be
accompanied by the payment of the fee required by SECTION 1.9(c), if any,
plus the payment of any LIBOR funding breakage costs in accordance with
SECTION 1.13(b). Upon any such prepayment and termination of the Revolving
Loan Commitment, each Borrower's right to request Revolving Credit Advances,
or request that Letter of Credit Obligations be incurred on its behalf, or
request Swing Line Advances, shall simultaneously be terminated. Any partial
prepayments of the Term Overadvance of any Borrower shall be applied to
prepay the scheduled installments of such Borrower's Term Loans in inverse
order of maturity (it being understood that such payments shall be deemed to
be applied first against the Term Overadvance of such Borrower).
(b) MANDATORY PREPAYMENTS.
(i) If at any time the outstanding balance of the
aggregate Revolving Loan exceeds the lesser of (A) the Maximum Amount and (B)
the Aggregate Revolving Borrowing Base, LESS, in each case, the aggregate
outstanding Swing Line Loan at such time, Borrowers shall immediately repay
the aggregate outstanding Revolving Credit Advances to the extent required to
eliminate such excess. If any such excess remains after repayment in full of
the aggregate outstanding Revolving Credit Advances, Borrowers shall provide
cash collateral for the Letter of Credit Obligations in the manner set forth
in ANNEX B to the extent required to eliminate such excess. Furthermore, if
the outstanding balance of the Revolving Loan of any Borrower exceeds that
Borrower's separate Revolving Borrowing Base at any time less the outstanding
balance of the Swing Line Loan of such Borrower at such time, the applicable
Borrower shall immediately repay its Revolving Credit Advances in the amount
of such excess (and, if necessary, shall provide cash collateral for its
Letter of Credit Obligations as described above). Notwithstanding the
foregoing, any Revolving Overadvance made pursuant to Section 1.1(a)(iii)
shall be repaid only on demand.
7
<PAGE>
(ii) Immediately upon receipt by any Credit Party of
proceeds of any asset disposition (including condemnation proceeds, but
excluding proceeds of asset dispositions permitted by SECTION 6.8 (a)) or any
sale of Stock of any Subsidiary of any Credit Party, Borrowers shall prepay
the Loans in an amount equal to all such proceeds, net of (A) commissions and
other reasonable and customary transaction costs, fees and expenses properly
attributable to such transaction and payable by Borrowers in connection
therewith (in each case, paid to non-Affiliates), (B) transfer taxes, (C)
amounts payable to holders of senior Liens (to the extent such Liens
constitute Permitted Encumbrances hereunder), if any, and (D) an appropriate
reserve for income taxes in accordance with GAAP in connection therewith.
Any such prepayment shall be applied in accordance with CLAUSE (c) below.
(iii) Until the date on which (x) the Term
Overadvance is repaid in full and the aggregate principal amount of the Term
Loan outstanding is less than $9,000,000, if Holdings or any Borrower issues
any Stock or incurs any Indebtedness (other than Indebtedness permitted by
SECTION 6.3), no later than the Business Day following the date of receipt of
the proceeds thereof, all Borrowers (in the case of an issuance by Holdings)
or the issuing/incurring Borrower shall prepay the Loans in an aggregate
amount equal to all such proceeds, net of underwriting discounts and
commissions and other reasonable costs paid to non-Affiliates in connection
therewith. Any such prepayment shall be applied in accordance with CLAUSE
(c) below.
(iv) Until the date on which the Term Overadvance is
repaid in full, Borrowers shall prepay the Obligations on the earlier of the
date which is ten (10) days after (A) the date on which Holdings' annual
audited Financial Statements for the immediately preceding Fiscal Year are
delivered pursuant to ANNEX E or (B) the date on which such annual audited
Financial Statements were required to be delivered pursuant to ANNEX E, in an
amount equal to 75% of Excess Cash Flow for the immediately preceding Fiscal
Year. Any prepayments from Excess Cash Flow paid pursuant to this CLAUSE
(iv) shall be allocated to each Borrower's Obligations based upon such
Borrower's relative contribution to Excess Cash Flow and shall be applied in
accordance with CLAUSE (c) below. Each such prepayment shall be accompanied
by a certificate signed by Borrower Representative's chief financial officer
certifying the manner in which Excess Cash Flow, the resulting prepayment,
and the method of allocation to each Borrower's Obligations were calculated,
which certificate shall be in form and substance satisfactory to Agent.
(c) APPLICATION OF CERTAIN MANDATORY PREPAYMENTS.
8
<PAGE>
(i) Any prepayments made by any Borrower pursuant
to CLAUSE (b)(ii) above shall be applied as follows: FIRST, to Fees and
reimbursable expenses of Agent then due and payable pursuant to any of the
Loan Documents; SECOND, to interest then due and payable on MCP's Term Loan;
THIRD, to prepay the scheduled installments of MCP's Term Loan in inverse
order of maturity, until such Loan shall have been prepaid in full (it being
understood that such payments shall be deemed to be applied first against the
Term Overadvance); FOURTH, to interest then due and payable on such
Borrower's Swing Line Loan; FIFTH, to the principal balance of the Swing Line
Loan outstanding to such Borrower until the same shall have been repaid in
full; SIXTH, to interest then due and payable on Revolving Credit Advances
made to such Borrower; SEVENTH, to the principal balance of Revolving Credit
Advances outstanding to such Borrower until the same shall have been paid in
full; EIGHTH, to any Letter of Credit Obligations of such Borrower to provide
cash collateral therefor in the manner set forth in ANNEX B, until all such
Letter of Credit Obligations have been fully cash collateralized in the
manner set forth in ANNEX B; NINTH, to interest then due and payable on the
Swing Line Loan of each other Borrower, PRO RATA; TENTH, to the principal
balance of the Swing Line Loan outstanding to each other Borrower, PRO RATA,
until the same shall have been repaid in full; ELEVENTH, to interest then due
and payable on the Revolving Credit Advances outstanding to each other
Borrower, PRO RATA; TWELFTH, to the principal balance of the Revolving Credit
Advances made to each other Borrower, PRO RATA, until the same shall have
been paid in full, and LAST to any Letter of Credit Obligations of each other
Borrower, PRO RATA, to provide cash collateral therefor in the manner set
forth in ANNEX B, until all such Letter of Credit Obligations have been fully
cash collateralized. Neither the Revolving Loan Commitment nor the Swing
Line Commitment shall be permanently reduced by the amount of any such
prepayments.
(ii) Any prepayments made by any Borrower pursuant
to CLAUSE (b)(iii) above shall be applied as follows: FIRST, to Fees and
reimbursable expenses of Agent then due and payable pursuant to any of the
Loan Documents; SECOND, to interest then due and payable on that portion of
MCP's Term Loan in excess of $9,000,000; and THIRD, to prepay the scheduled
installments of MCP's Term Loan in inverse order of maturity until (x) the
Term Overadvance shall have been repaid in full and (y) the aggregate
principal amount of the Term Loan outstanding is less than $9,000,000 (it
being understood that such payments shall be deemed to be applied first
against the Term Overadvance).
(iii) Any prepayments made by any Borrower pursuant
to CLAUSE (b)(iv) above shall be applied as follows: FIRST, to Fees and
reimbursable expenses of Agent then due and payable pursuant to any of the
Loan Documents; SECOND, to interest then due and payable on the Term
Overadvance; and THIRD, to prepay the scheduled installments of MCP's Term
Loan in inverse order of maturity until the Term Overadvance shall have been
prepaid in full.
(d) APPLICATION OF PREPAYMENTS FROM INSURANCE PROCEEDS.
Prepayments from insurance proceeds in accordance with SECTION 5.4(c) shall
be applied as follows:
9
<PAGE>
insurance proceeds from casualties or losses to cash or Inventory shall be
applied, first, to the Swing Line Loans and, second, to the Revolving Credit
Advances of the Borrower that incurred such casualties or losses; insurance
proceeds from casualties or losses to Equipment, Fixtures and Real Estate
shall be applied to scheduled installments of the Term Loan in inverse order
of maturity. Neither the Revolving Loan Commitment nor the Swing Line Loan
Commitment shall be permanently reduced by the amount of any such
prepayments. If the insurance proceeds received as to a particular Borrower
exceed the outstanding principal balances of the Loans to that Borrower or if
the precise amount of insurance proceeds allocable to Inventory as compared
to Equipment, Fixtures and Real Estate are not otherwise determined, the
allocation and application of those proceeds shall be as reasonably
determined by Agent, subject to the approval of Requisite Lenders.
(e) Nothing in this SECTION 1.3 shall be construed to
constitute Agent's or any Lender's consent to any transaction referred to in
CLAUSES (b)(ii) and (b)(iii) above which is not permitted by other
provisions of this Agreement or the other Loan Documents.
1.4. USE OF PROCEEDS. Borrowers shall utilize the proceeds
of the Term Loan, the Revolving Loan and the Swing Line Advances solely (x)
on the Closing Date, for the Worthington Acquisition and to finance the
Preferred Stock Contribution (and, in each case, to pay any related
transaction expenses), and (y) at any time on or after the Closing Date, for
the financing of Borrowers' ordinary working capital and general corporate
and limited liability company needs (but excluding in any event the making of
any Restricted Payment not specifically permitted by SECTION 6.14).
DISCLOSURE SCHEDULE (1.4) contains a description of Borrowers' sources and
uses of funds as of the Closing Date, including Loans and Letter of Credit
Obligations to be made or incurred on that date, and a funds flow memorandum
detailing how funds from each source are to be transferred to particular
uses.
1.5. INTEREST AND APPLICABLE MARGINS. (a) Borrowers shall
pay interest to Agent, for the ratable benefit of Lenders in accordance with
the various Loans being made by each Lender, in arrears on each applicable
Interest Payment Date, at the following rates: (i) with respect to the
Revolving Credit Advances, the Index Rate plus the Applicable Revolver Index
Margin per annum or, at the election of Borrower Representative, the
applicable LIBOR Rate plus the Applicable Revolver LIBOR Margin per annum,
based on the aggregate Revolving Credit Advances outstanding from time to
time; (ii) with respect to the In-Formula Term Sub-Limit, the Index Rate
plus the Applicable In-Formula Term Loan Index Margin per annum or, at the
election of Borrower Representative, the applicable LIBOR Rate plus the
Applicable In-Formula Term Loan LIBOR Margin per annum; (iii) with respect to
the Term Overadvance, the Index Rate plus the Applicable Overadvance Index
Margin per annum or, at the election of Borrower Representative, the
applicable LIBOR Rate plus the Applicable Overadvance LIBOR Margin per annum;
and (iv) with respect to the Swing Line Loan, the Index Rate plus the
Applicable Revolver Index Margin per annum.
10
<PAGE>
The Applicable Revolver Index Margin, Applicable In-Formula
Term Loan Index Margin, Applicable Overadvance Index Margin, Applicable
Revolver LIBOR Margin, Applicable In-Formula Term Loan LIBOR Margin and
Applicable Overadvance LIBOR Margin will be 0.50%, 0.50%, 2.00%, 2.50% 2.50%
and 4.00% per annum, respectively, as of the Closing Date. The Applicable
Margins will be adjusted (up or down) prospectively on a quarterly basis as
determined by Holdings' consolidated financial performance, commencing with
the first day of the first calendar month that occurs more than five (5) days
after delivery of Holdings' quarterly Financial Statements to Lenders for the
Fiscal Quarter ending June 30, 2000. Adjustments in Applicable Margins will
be determined by reference to the following grids:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
IF EBITDA FOR THE FOUR-QUARTER LEVEL OF
PERIOD THEN ENDED IS: APPLICABLE MARGINS:
-----------------------------------------------------------------------------------------------
<S> <C>
GREATER THAN $15,000,000 Level I
-----------------------------------------------------------------------------------------------
GREATER THAN $12,500,000, but LESS THAN OR EQUAL TO $15,000,000 Level II
-----------------------------------------------------------------------------------------------
GREATER THAN $6,600,000, but LESS THAN OR EQUAL TO $12,500,000 Level III
-----------------------------------------------------------------------------------------------
GREATER THAN $5,600,000, but LESS THAN OR EQUAL TO $6,600,000 Level IV
-----------------------------------------------------------------------------------------------
LESS THAN OR EQUAL TO $5,600,000 Level V
-----------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
APPLICABLE MARGINS
- --------------------------------------------------------------------------------------------------------------------
LEVEL I LEVEL II LEVEL III LEVEL IV LEVEL V
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Applicable Revolver Index Margin 0.0% 0.25% 0.50% 0.75% 1.00%
- --------------------------------------------------------------------------------------------------------------------
Applicable Revolver LIBOR Margin 2.00% 2.25% 2.50% 2.75% 3.00%
- --------------------------------------------------------------------------------------------------------------------
Applicable In-Formula Term Loan Index 0.0% 0.25% 0.50% 0.75% 1.00%
Margin
- --------------------------------------------------------------------------------------------------------------------
Applicable In-Formula Term Loan LIBOR 2.00% 2.25% 2.50% 2.75% 3.00%
Margin
- --------------------------------------------------------------------------------------------------------------------
Applicable Overadvance Index Margin 2.00% 2.00% 2.00% 2.00% 2.00%
Applicable Overadvance LIBOR Margin 4.00% 4.00% 4.00% 4.00% 4.00%
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
All adjustments in the Applicable Margins after June 30, 2000
will be implemented quarterly on a prospective basis, for each calendar month
commencing at least five (5) days after the date of delivery to Lenders of the
quarterly unaudited or annual audited (as applicable) Financial Statements of
Borrowers evidencing the need for an adjustment. Concurrently with the delivery
of those Financial Statements, Borrower Representative shall deliver to Agent
and Lenders a certificate, signed by its chief financial officer, setting forth
in reasonable detail the basis for the continuance of, or any change in, the
Applicable Margins.
11
<PAGE>
If a Default or Event of Default shall have occurred or be continuing at the
time any reduction in the Applicable Margins is to be implemented, that
reduction shall be deferred until the first day of the first calendar month
following the date on which such Default or Event of Default is waived or
cured.
(b) If any payment on any Loan becomes due and payable on a
day other than a Business Day, the maturity thereof will be extended to the
next succeeding Business Day (except as set forth in the definition of LIBOR
Period) and, with respect to payments of principal, interest thereon shall be
payable at the then applicable rate during such extension.
(c) All computations of Fees calculated on a per annum
basis and interest shall be made by Agent on the basis of a three hundred and
sixty (360) day year, in each case for the actual number of days occurring in
the period for which such interest and Fees are payable. The Index Rate
shall be determined each day based upon the Index Rate as in effect each day.
Each determination by Agent of an interest rate and Fees hereunder shall be
conclusive, absent manifest error.
(d) So long as an Event of Default shall have occurred and
be continuing under Section 8.1(a), (h) or (i) or so long as any other
Default or Event of Default shall have occurred and be continuing and at the
election of Agent (or upon the written request of Requisite Lenders)
confirmed by written notice from Agent to Borrower Representative, the
interest rates applicable to the Loans and the Letter of Credit Fees shall be
increased by two percent (2%) per annum above the rates of interest or the
rate of such Fees otherwise applicable hereunder ("DEFAULT RATE"), and all
outstanding Obligations shall bear interest at the Default Rate applicable to
such Obligations. Interest and Letter of Credit Fees at the Default Rate
shall accrue from the initial date of such Default or Event of Default until
that Default or Event of Default is cured or waived and shall be payable upon
demand.
(e) So long as no Default or Event of Default shall have
occurred and be continuing, and subject to the additional conditions
precedent set forth in SECTION 2.2, Borrower Representative shall have the
option to (i) request that any Revolving Credit Advances be made as a LIBOR
Loan, (ii) convert at any time all or any part of outstanding Loans (other
than the Swing Line Loan) from Index Rate Loans to LIBOR Loans, (iii) convert
any LIBOR Loan to an Index Rate Loan, subject to payment of LIBOR breakage
costs in accordance with SECTION 1.13(b) if such conversion is made prior to
the expiration of the LIBOR Period applicable thereto, or (iv) continue all
or any portion of any Loan (other than the Swing Line Loan) as a LIBOR Loan
upon the expiration of the applicable LIBOR Period and the succeeding LIBOR
Period of that continued Loan shall commence on the last day of the LIBOR
Period of the Loan to be continued. Any Loan to be made or continued as, or
converted into, a LIBOR Loan must be in a minimum amount of $2,000,000 and
integral multiples of $500,000 in excess of such amount. Any such election
must be made by 11:00 a.m. (New York time) on the third (3rd) Business Day
prior to (1) the date of any proposed Advance which is to bear interest at
the LIBOR Rate, (2) the end of each LIBOR Period with
12
<PAGE>
respect to any LIBOR Loans to be continued as such, or (3) the date on which
Borrower Representative wishes to convert any Index Rate Loan to a LIBOR Loan
for a LIBOR Period designated by Borrower Representative in such election.
If no election is received with respect to a LIBOR Loan by 11:00 a.m. (New
York time) on the third (3rd) Business Day prior to the end of the LIBOR
Period with respect thereto (or if a Default or an Event of Default shall
have occurred and be continuing or if the additional conditions precedent set
forth in SECTION 2.2 shall not have been satisfied), that LIBOR Loan shall be
converted to an Index Rate Loan at the end of its LIBOR Period. Borrower
Representative must make such election by notice to Agent in writing, by
telecopy or overnight courier. In the case of any conversion or continuation,
such election must be made pursuant to a written notice (a "NOTICE OF
CONVERSION/CONTINUATION") in the form of EXHIBIT 1.5(e).
(f) Notwithstanding anything to the contrary set forth in
this SECTION 1.5, if a court of competent jurisdiction determines in a final
order that the rate of interest payable hereunder exceeds the highest rate of
interest permissible under law (the "MAXIMUM LAWFUL RATE"), then so long as
the Maximum Lawful Rate would be so exceeded, the rate of interest payable
hereunder shall be equal to the Maximum Lawful Rate; PROVIDED, HOWEVER, that
if at any time thereafter the rate of interest payable hereunder is less than
the Maximum Lawful Rate, Borrowers shall continue to pay interest hereunder
at the Maximum Lawful Rate until such time as the total interest received by
Agent, on behalf of Lenders, is equal to the total interest which would have
been received had the interest rate payable hereunder been (but for the
operation of this paragraph) the interest rate payable since the Closing Date
as otherwise provided in this Agreement. Thereafter, interest hereunder
shall be paid at the rate(s) of interest and in the manner provided in
SECTIONS 1.5(a) through (e) above, unless and until the rate of interest
again exceeds the Maximum Lawful Rate, and at that time this paragraph shall
again apply. In no event shall the total interest received by any Lender
pursuant to the terms hereof exceed the amount which such Lender could
lawfully have received had the interest due hereunder been calculated for the
full term hereof at the Maximum Lawful Rate. If the Maximum Lawful Rate is
calculated pursuant to this paragraph, such interest shall be calculated at a
daily rate equal to the Maximum Lawful Rate divided by the number of days in
the year in which such calculation is made. If, notwithstanding the
provisions of this SECTION 1.5(f), a court of competent jurisdiction shall
finally determine that a Lender has received interest hereunder in excess of
the Maximum Lawful Rate, Agent shall, to the extent permitted by applicable
law, promptly apply such excess in the order specified in SECTION 1.11 and
thereafter shall refund any excess to Borrowers or as a court of competent
jurisdiction may otherwise order.
1.6. ELIGIBLE ACCOUNTS. Based on the most recent Revolving
Borrowing Base Certificate delivered by each Borrower to Agent and on other
information available to Agent, Agent shall in its reasonable credit judgment
determine which Accounts of each Borrower shall be "ELIGIBLE ACCOUNTS" for
purposes of this Agreement. In determining whether a particular Account of
any Borrower constitutes an Eligible Account, Agent shall not include any
such Account to which any of the exclusionary criteria set forth below
applies. Agent reserves the right, at any time and from time to time after
the Closing Date, to adjust any such
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criteria, to establish new criteria, in its reasonable credit judgment,
subject to the approval of Supermajority Revolving Lenders in the case of
adjustments or new criteria which have the effect of making more credit
available. Eligible Accounts shall not include any Account of any Borrower:
(a) which does not arise from the sale of goods or the
performance of services by such Borrower in the ordinary course of its
business;
(b) (i) upon which such Borrower's right to receive
payment is not absolute or is contingent upon the fulfillment of any
condition whatsoever or (ii) as to which such Borrower is not able to bring
suit or otherwise enforce its remedies against the Account Debtor through
judicial process or (iii) if the Account represents a progress billing
consisting of an invoice for goods sold or used or services rendered pursuant
to a contract under which the Account Debtor's obligation to pay that invoice
is subject to such Borrower's completion of further performance under such
contract or is subject to the equitable lien of a surety bond issuer;
(c) to the extent that any defense, counterclaim, setoff or
dispute is asserted as to such Account;
(d) that is not a true and correct statement of bona fide
indebtedness incurred in the amount of the Account for merchandise sold to or
services rendered and accepted by the applicable Account Debtor;
(e) with respect to which an invoice, acceptable to Agent
in form and substance, has not been sent to the applicable Account Debtor;
(f) that (i) is not owned by such Borrower or (ii) is
subject to any right, claim, security interest or other interest of any other
Person, other than Liens in favor of Agent, on behalf of itself and Lenders;
(g) that arises from a sale to any director, officer, other
employee or Affiliate of any Credit Party, or to any entity which has a
majority of directors who are also directors of any Credit Party;
(h) that is the obligation of an Account Debtor that is the
United States government or a political subdivision thereof, or any state or
municipality or department, agency or instrumentality thereof unless Agent,
in its sole discretion, has agreed to the contrary in writing and such
Borrower, if necessary or desirable, has complied with the Federal Assignment
of Claims Act of 1940, and any amendments thereto, or any applicable state
statute or municipal ordinance of similar purpose and effect, with respect to
such obligation;
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(i) that is the obligation of an Account Debtor located in
a foreign country other than Canada (excluding the provinces of Quebec,
Newfoundland, Nova Scotia and Prince Edward Island) unless payment thereof is
assured by a letter of credit assigned and delivered to Agent, satisfactory
to Agent as to form, amount and issue; PROVIDED that obligations of the
Permitted Foreign Account Debtors to the extent not in excess of $2,000,000
in the aggregate shall not be excluded from Eligible Accounts by reason of
this CLAUSE (i);
(j) to the extent such Borrower or any Subsidiary thereof
is liable for goods sold or services rendered by the applicable Account
Debtor (including, without limitation, with respect to any resin expenses
owing to General Electric Company or any of its Affiliates) to such Borrower
or any Subsidiary thereof but only to the extent of the potential offset;
(k) that arises with respect to goods which are delivered
on a bill-and-hold, cash-on-delivery basis or placed on consignment,
guaranteed sale or other terms by reason of which the payment by the Account
Debtor is or may be conditional;
(l) that is in default; PROVIDED, THAT, without limiting
the generality of the foregoing, an Account shall be deemed in default upon
the occurrence of any of the following:
(i) it is not paid within the earlier of: sixty
(60) days following its due date or ninety (90) days following its original
invoice date;
(ii) if any Account Debtor obligated upon such
Account suspends business, makes a general assignment for the benefit of
creditors or fails to pay its debts generally as they come due; or
(iii) if any petition is filed by or against any
Account Debtor obligated upon such Account under any bankruptcy law or any
other federal, state or foreign (including any provincial) receivership,
insolvency relief or other law or laws for the relief of debtors;
(m) which is the obligation of an Account Debtor if fifty
percent (50%) or more of the dollar amount of all Accounts owing by that
Account Debtor are ineligible under the criteria set forth in clause (l) of
this SECTION 1.6;
(n) as to which Agent's Lien thereon, on behalf of itself
and Lenders, is not a first priority perfected Lien;
(o) as to which any of the representations or warranties
pertaining to Accounts set forth in this Agreement or the Borrower Security
Agreement is untrue;
(p) to the extent such Account is evidenced by a judgment,
Instrument or Chattel Paper;
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(q) to the extent such Account exceeds any credit limit
established by Agent, in its reasonable discretion, following prior notice of
such limit by Agent to Borrower Representative;
(r) to the extent that such Account, together with all
other Accounts owing by such Account Debtor and its Affiliates as of any date
of determination exceed ten percent (10%) (or, in the case of an Account
Debtor consisting of any (i) Account Debtor (other than the ones referred to
in clause (ii) below) whose senior unsecured long-term debt is rated at least
BBB by Moody's Investors Service, Inc. or the equivalent thereof by Standard
& Poor's Ratings Group or other nationally recognized rating agency
acceptable to Agent, twenty percent (20%) or (ii) of General Electric
Corporation, International Business Machine Corporation, BE Aerospace, Inc.
or Phillips Corporation, twenty-five percent (25%)) of all Eligible Accounts;
(s) which is payable in any currency other than Dollars; or
(t) which is unacceptable to Agent in its reasonable credit
judgment relating to such Account or the applicable Account Debtor.
1.7. ELIGIBLE INVENTORY. Based on the most recent Revolving
Borrowing Base Certificate delivered by each Borrower to Agent and on other
information available to Agent, Agent shall in its reasonable credit judgment
determine which Inventory of each Borrower shall be "ELIGIBLE INVENTORY" for
purposes of this Agreement. In determining whether any particular Inventory
of any Borrower constitutes Eligible Inventory, Agent shall not include any
such Inventory to which any of the exclusionary criteria set forth below
applies. Agent reserves the right, at any time and from time to time after
the Closing Date, to adjust any such criteria and to establish new criteria,
in its reasonable credit judgment, subject to the approval of Supermajority
Revolving Lenders in the case of adjustments or new criteria which have the
effect of making more credit available. Eligible Inventory shall not include
any Inventory of any Borrower that:
(a) is not owned by such Borrower free and clear of all
Liens and rights of any other Person (including the rights of a purchaser
that has made progress payments and the rights of a surety that has issued a
bond to assure such Borrower's performance with respect to that Inventory),
except the Liens in favor of Agent, on behalf of itself and Lenders, and
Permitted Encumbrances in favor of landlords and bailees to the extent
permitted in SECTION 5.9 hereof (subject to Reserves established by Agent in
accordance with Section 5.9 hereof);
(b) (i) is not located on premises owned or leased by such
Borrower or (ii) is stored with a bailee, warehouseman or similar Person,
unless Agent has given its prior consent thereto and unless (x) a
satisfactory bailee letter or landlord waiver has been delivered to Agent, or
(y) Reserves satisfactory to Agent have been established with respect
thereto, or
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(iii) is located at any site if the aggregate book value of Inventory at any
such location is less than $100,000;
(c) is placed on consignment or is in transit;
(d) is covered by a negotiable document of title, unless
such document has been delivered to Agent with all necessary endorsements,
free and clear of all Liens except those in favor of Agent and Lenders;
(e) in Agent's reasonable determination, is excess,
obsolete, unsalable, shopworn, seconds, damaged or unfit for sale;
(f) consists of display items or packing or shipping
materials, manufacturing supplies or replacement parts;
(g) consists of goods which have been returned by the buyer;
(h) is not of a type held for sale in the ordinary course
of such Borrower's business;
(i) as to which Agent's Lien, on behalf of itself and
Lenders, therein is not a first priority perfected Lien;
(j) as to which any of the representations or warranties
pertaining to Inventory set forth in this Agreement or the Borrower Security
Agreement is untrue;
(k) consists of any costs associated with "freight-in"
charges;
(l) consists of Hazardous Materials or goods that can be
transported or sold only with licenses that are not readily available;
(m) is not covered by casualty insurance meeting the
requirements of this Agreement or the other Loan Documents; or
(n) is otherwise unacceptable to Agent in its reasonable
credit judgment relating to such Inventory.
1.8. CASH MANAGEMENT SYSTEMS. On or prior to the Closing
Date, Borrowers will establish and will maintain until the Termination Date,
the cash management systems described on ANNEX C (the "CASH MANAGEMENT
SYSTEMS").
1.9. FEES. (a) Borrowers shall pay to GE Capital,
individually, the Fees specified in that certain fee letter of even date
herewith among Holdings, MCP and GE Capital (the "GE CAPITAL FEE LETTER"), at
the times specified for payment therein.
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(b) As additional compensation for the Revolving Lenders,
Borrowers agree to pay to Agent, for the ratable benefit of such Lenders, in
arrears, on the first Business Day of each month prior to the Commitment
Termination Date and on the Commitment Termination Date, a fee for Borrowers'
non-use of available funds in an amount equal to 0.50% percent per annum
(calculated on the basis of a 360 day year for actual days elapsed) of the
difference between (x) the Maximum Amount (as it may be reduced from time to
time) and (y) the average for the period of the daily closing balances of the
aggregate Revolving Loan and the Swing Line Loan outstanding during the
period for which such fee is due.
1.10. RECEIPT OF PAYMENTS. Borrowers shall make each payment
under this Agreement not later than 2:00 p.m. (New York time) on the day when
due in immediately available funds in Dollars to the Collection Account. For
purposes of computing interest and Fees and determining Borrowing
Availability or Net Borrowing Availability as of any date, all payments shall
be deemed received on the day of receipt of immediately available funds
therefor in the Collection Account prior to 2:00 p.m. New York time.
Payments received after 2:00 p.m. New York time on any Business Day shall be
deemed to have been received on the following Business Day.
1.11. APPLICATION AND ALLOCATION OF PAYMENTS. (a) So long
as no Default or Event of Default shall have occurred and be continuing, (i)
payments consisting of proceeds of Accounts received in the ordinary course
of business shall be applied to the Swing Line Loan and the Revolving Loan;
(ii) payments matching specific scheduled payments then due shall be applied
to those scheduled payments; (iii) voluntary prepayments shall be applied as
determined by Borrower Representative, subject to the provisions of SECTION
1.3(a); and (iv) mandatory prepayments shall be applied as set forth in
SECTIONS 1.3(c) AND 1.3(d). All payments and prepayments applied to a
particular Loan shall be applied ratably to the portion thereof held by each
Lender as determined by its Pro Rata Share. As to each other payment, and as
to all payments made when a Default or Event of Default shall have occurred
and be continuing or following the Commitment Termination Date, each Borrower
hereby irrevocably waives the right to direct the application of any and all
payments received from or on behalf of such Borrower, and each Borrower
hereby irrevocably agrees that Agent shall have the continuing exclusive
right to apply any and all such payments against the Obligations of Borrowers
as Agent may deem advisable notwithstanding any previous entry by Agent in
the Loan Account or any other books and records. In the absence of a specific
determination by Agent with respect thereto, payments shall be applied to
amounts then due and payable in the following order: (1) to Fees and Agent's
expenses reimbursable hereunder; (2) to interest on the Swing Line Loan; (3)
to principal payments on the Swing Line Loan; (4) to interest on the other
Loans, ratably in proportion to the interest accrued as to each Loan; (5) to
principal payments on the other Loans and to provide cash collateral for
Letter of Credit Obligations in the manner described in ANNEX B, ratably to
the aggregate, combined principal balance of the other Loans and outstanding
Letter of Credit Obligations; and (6) to all other Obligations including
expenses of Lenders to the extent reimbursable under SECTION 11.3.
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(b) Agent is authorized to, and at its sole election may,
charge to the Revolving Loan balance on behalf of each Borrower and cause to
be paid all Fees, expenses, Charges, costs (including insurance premiums in
accordance with SECTION 5.4(a)) and interest and principal, other than
principal of the Revolving Loan, owing by Borrowers under this Agreement or
any of the other Loan Documents if and to the extent Borrowers fail to
promptly pay any such amounts as and when due, even if such charges would
cause the balance of the aggregate Revolving Loan and the Swing Line Loan to
exceed Borrowing Availability or would cause the balance of the Revolving
Loan and the Swing Loan of any Borrower to exceed such Borrower's separate
Revolving Borrowing Base. At Agent's option and to the extent permitted by
law, any charges so made shall constitute part of the Revolving Loan
hereunder.
1.12. LOAN ACCOUNT AND ACCOUNTING. Agent shall maintain a
loan account (the "LOAN ACCOUNT") on its books to record: all Advances and
the Term Loan, all payments made by Borrowers, and all other debits and
credits as provided in this Agreement with respect to the Loans or any other
Obligations. All entries in the Loan Account shall be made in accordance with
Agent's customary accounting practices as in effect from time to time. The
balance in the Loan Account, as recorded on Agent's most recent printout or
other written statement, shall, absent manifest error, be presumptive
evidence of the amounts due and owing to Agent and Lenders by each Borrower;
PROVIDED that any failure to so record or any error in so recording shall not
limit or otherwise affect any Borrower's duty to pay the Obligations. Agent
shall render to Borrower Representative a monthly accounting of transactions
with respect to the Loans setting forth the balance of the Loan Account as to
each Borrower. Unless Borrower Representative notifies Agent in writing of
any objection to any such accounting (specifically describing the basis for
such objection), within forty-five (45) days after the date thereof, each and
every such accounting shall (absent manifest error) be deemed final, binding
and conclusive upon Borrowers in all respects as to all matters reflected
therein. Only those items expressly objected to in such notice shall be
deemed to be disputed by Borrowers. Notwithstanding any provision herein
contained to the contrary, any Lender may elect (which election may be
revoked) to dispense with the issuance of Notes to that Lender and may rely
on the Loan Account as evidence of the amount of Obligations from time to
time owing to it.
1.13. INDEMNITY. (a) Each Credit Party that is a signatory
hereto shall jointly and severally indemnify and hold harmless each of Agent,
Lenders and their respective Affiliates, and each such Person's respective
officers, directors, employees, attorneys, agents and representatives (each,
an "INDEMNIFIED PERSON"), from and against any and all suits, actions,
proceedings, claims, damages, losses, liabilities and expenses (including
reasonable attorneys' fees and disbursements and other costs of investigation
or defense, including those incurred upon any appeal) which may be instituted
or asserted against or incurred by any such Indemnified Person as the result
of credit having been extended, suspended or terminated under this Agreement
and the other Loan Documents and the administration of such credit,
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and in connection with or arising out of the transactions contemplated
hereunder and thereunder and any actions or failures to act in connection
therewith, including any and all Environmental Liabilities and legal costs
and expenses arising out of or incurred in connection with disputes between
or among ANY PARTIES to any of the Loan Documents (collectively, "INDEMNIFIED
LIABILITIES"); PROVIDED, that no such Credit Party shall be liable for any
indemnification to an Indemnified Person to the extent that any such suit,
action, proceeding, claim, damage, loss, liability or expense results from
that Indemnified Person's gross negligence or willful misconduct. NO
INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY OTHER PARTY TO ANY
LOAN DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OF SUCH
PERSON OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH PARTY,
FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE
ALLEGED AS A RESULT OF CREDIT HAVING BEEN EXTENDED, SUSPENDED OR TERMINATED
UNDER ANY LOAN DOCUMENT OR AS A RESULT OF ANY OTHER TRANSACTION CONTEMPLATED
HEREUNDER OR THEREUNDER.
(b To induce Lenders to provide the LIBOR Rate option on
the terms provided herein, if (i) any LIBOR Loans are repaid in whole or in
part prior to the last day of any applicable LIBOR Period (whether that
repayment is made pursuant to any provision of this Agreement or any other
Loan Document or is the result of acceleration, by operation of law or
otherwise); (ii) any Borrower shall default in payment when due of the
principal amount of any LIBOR Loan; (iii) any Borrower shall default in
making any borrowing of, conversion into or continuation of LIBOR Loans after
Borrower Representative has given notice requesting the same in accordance
herewith; or (iv) any Borrower shall fail to make any prepayment of a LIBOR
Loan after Borrower Representative has given a notice thereof in accordance
herewith, Borrowers shall jointly and severally indemnify and hold harmless
each Lender from and against all losses, costs and expenses resulting from or
arising from any of the foregoing. Such indemnification shall include any
loss or expense arising from the reemployment of funds obtained by it or from
fees payable to terminate deposits from which such funds were obtained. For
the purpose of calculating amounts payable to a Lender under this subsection,
each Lender shall be deemed to have actually funded its relevant LIBOR Loan
through the purchase of a deposit bearing interest at the LIBOR Rate in an
amount equal to the amount of that LIBOR Loan and having a maturity
comparable to the relevant LIBOR Period; PROVIDED, HOWEVER, that each Lender
may fund each of its LIBOR Loans in any manner it sees fit, and the foregoing
assumption shall be utilized only for the calculation of amounts payable
under this subsection. This covenant shall survive the termination of this
Agreement and the payment of the Notes and all other amounts payable
hereunder. As promptly as practicable under the circumstances, each Lender
shall provide Borrower Representative with its written calculation of all
amounts payable pursuant to this SECTION 1.13(b), and such calculation shall
be binding on the parties hereto unless Borrower Representative shall object
in writing within ten (10) Business Days of receipt thereof, specifying the
basis for such objection in detail.
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1.14. ACCESS. Each Credit Party which is a party hereto
shall, during normal business hours, from time to time upon three (3)
Business Days' prior notice as frequently as Agent determines to be
appropriate: (a) provide Agent and any of its officers, employees and agents
access to its properties, facilities, advisors and employees (including
officers) of each Credit Party and to the Collateral, (b) permit Agent, and
any of its officers, employees and agents, to inspect, audit and make
extracts from any Credit Party's books and records, and (c) permit Agent, and
its officers, employees and agents, to inspect, review, evaluate and make
test verifications and counts of the Accounts, Inventory and other Collateral
of any Credit Party. If a Default or Event of Default shall have occurred
and be continuing or if access is necessary to preserve or protect the
Collateral as determined by Agent, each such Credit Party shall provide such
access to Agent and to each Lender at all times and without advance notice.
Furthermore, so long as any Event of Default shall have occurred and be
continuing, Borrowers shall provide Agent and each Lender with reasonable
access to their suppliers and customers. Each Credit Party shall make
available to Agent and its counsel, as quickly as is possible under the
circumstances, originals or copies of all books and records which Agent may
request. Each Credit Party shall deliver any document or instrument necessary
for Agent, as it may from time to time request, to obtain records from any
service bureau or other Person which maintains records for such Credit Party,
and shall maintain duplicate records or supporting documentation on media,
including computer tapes and discs owned by such Credit Party. Agent will
give Lenders at least ten (10) days' prior written notice of regularly
scheduled audits. Representatives of other Lenders may accompany Agent's
representatives on regularly scheduled audits at no charge to Borrowers.
1.15. TAXES. (a) Any and all payments by each Borrower
hereunder (including any payments made pursuant to SECTION 12) or under the
Notes shall be made, in accordance with this SECTION 1.15, free and clear of
and without deduction for any and all present or future Taxes. If any
Borrower shall be required by law to deduct any Taxes from or in respect of
any sum payable hereunder (including any sum payable pursuant to SECTION 12)
or under the Notes, (i) the sum payable shall be increased as much as shall
be necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 1.15)
Agent or Lenders, as applicable, receive an amount equal to the sum they
would have received had no such deductions been made, (ii) such Borrower
shall make such deductions, and (iii) such Borrower shall pay the full amount
deducted to the relevant taxing or other authority in accordance with
applicable law. Within thirty (30) days after the date of any payment of
Taxes, Borrower Representative shall furnish to Agent the original or a
certified copy of a receipt evidencing payment thereof.
(b Each Credit Party that is a signatory hereto shall
jointly and severally indemnify and, within ten (10) Business Days' of demand
therefor, pay Agent and each Lender for the full amount of Taxes (including
any Taxes imposed by any jurisdiction on amounts payable under this SECTION
1.15) paid by Agent or such Lender, as appropriate, and any liability
(including penalties, interest and expenses) arising therefrom or with
respect thereto, whether or not such Taxes were correctly or legally asserted.
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(c Each Lender organized under the laws of a jurisdiction
outside the United States (a "FOREIGN LENDER") as to which payments to be
made under this Agreement or under the Notes are exempt from United States
withholding tax under an applicable statute or tax treaty shall provide to
Borrower Representative and Agent a properly completed and executed IRS Form
4224 or Form 1001 or other applicable form, certificate or document
prescribed by the IRS or the United States certifying as to such Foreign
Lender's entitlement to such exemption (a "CERTIFICATE OF EXEMPTION"). Any
foreign Person that seeks to become a Lender under this Agreement shall
provide a Certificate of Exemption to Borrower Representative and Agent prior
to becoming a Lender hereunder. No foreign Person may become a Lender
hereunder if such Person is unable to deliver a Certificate of Exemption.
1.16. CAPITAL ADEQUACY; INCREASED COSTS; ILLEGALITY;
REPLACEMENT OF LENDER IN RESPECT TO INCREASED COSTS. (a) If any Lender
shall have determined that any law, treaty, governmental (or
quasi-governmental) rule, regulation, guideline or order regarding capital
adequacy, reserve requirements or similar requirements or compliance by any
Lender with any request or directive regarding capital adequacy, reserve
requirements or similar requirements (whether or not having the force of
law), in each case, adopted after the Closing Date, from any central bank or
other Governmental Authority increases or would have the effect of increasing
the amount of capital, reserves or other funds required to be maintained by
such Lender and thereby reducing the rate of return on such Lender's capital
as a consequence of its obligations hereunder, then Borrowers shall from time
to time upon demand by such Lender (with a copy of such demand to Agent) pay
to Agent, for the account of such Lender, additional amounts sufficient to
compensate such Lender for such reduction. A certificate as to the amount of
that reduction and showing the basis of the computation thereof submitted by
such Lender to Borrower Representative and to Agent shall, absent manifest
error, be final, conclusive and binding for all purposes.
(b If, due to either (i) the introduction of or any change
in any law or regulation (or any change in the interpretation thereof) or
(ii) the compliance with any guideline or request from any central bank or
other Governmental Authority (whether or not having the force of law), in
each case adopted after the Closing Date, there shall be any increase in the
cost to any Lender of agreeing to make or making, funding or maintaining any
Loan, then Borrowers shall from time to time, upon demand by such Lender
(with a copy of such demand to Agent), pay to Agent for the account of such
Lender additional amounts sufficient to compensate such Lender for such
increased cost. A certificate as to the amount of such increased cost,
submitted to Borrower Representative and to Agent by such Lender, shall be
conclusive and binding on Borrowers for all purposes, absent manifest error.
Each Lender agrees that, as promptly as practicable after it becomes aware of
any circumstances referred to above which would result in any such increased
cost, the affected Lender shall, to the extent not inconsistent with such
Lender's internal policies of general application, use reasonable commercial
efforts to minimize costs and expenses incurred by it and payable to it by
Borrowers pursuant to this SECTION 1.16(b).
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(c Notwithstanding anything to the contrary contained
herein, if the introduction of or any change in any law or regulation (or any
change in the interpretation thereof) shall make it unlawful, or any central
bank or other Governmental Authority shall assert that it is unlawful, for
any Lender to agree to make or to make or to continue to fund or maintain any
LIBOR Loan, then, unless that Lender is able to make or to continue to fund
or to maintain such LIBOR Loan at another branch or office of that Lender
without, in that Lender's opinion, adversely affecting it or its Loans or the
income obtained therefrom, on notice thereof and demand therefor by such
Lender to Borrower Representative through Agent, (i) the obligation of such
Lender to agree to make or to make or to continue to fund or maintain LIBOR
Loans shall terminate and (ii) each Borrower shall forthwith prepay in full
all outstanding LIBOR Loans owing by such Borrower to such Lender, together
with interest accrued thereon, UNLESS Borrower Representative on behalf of
such Borrower, within five (5) Business Days after the delivery of such
notice and demand, converts all such Loans into a Loan bearing interest based
on the Index Rate.
(d Within fifteen (15) days after receipt by Borrower
Representative of written notice and demand from any Lender (an "AFFECTED
LENDER") for payment of additional amounts or increased costs as provided in
SECTION 1.15(a), 1.16(a) or 1.16(b), Borrower Representative may, at its
option, notify Agent and such Affected Lender of its intention to replace the
Affected Lender. So long as no Default or Event of Default shall have
occurred and be continuing, Borrower Representative, with the consent of
Agent, may obtain, at Borrowers' expense, a replacement Lender ("REPLACEMENT
LENDER") for the Affected Lender, which Replacement Lender must be
satisfactory to Agent. If Borrowers obtain a Replacement Lender within
ninety (90) days following notice of their intention to do so, the Affected
Lender must sell and assign its Loans and Commitments to such Replacement
Lender for an amount equal to the principal balance of all Loans held by the
Affected Lender and all accrued interest and Fees with respect thereto
through the date of such sale, PROVIDED that Borrowers shall have reimbursed
such Affected Lender for the additional amounts or increased costs that it is
entitled to receive under this Agreement through the date of such sale and
assignment.
Notwithstanding the foregoing, Borrowers shall not have the
right to obtain a Replacement Lender if the Affected Lender rescinds its
demand for increased costs or additional amounts within fifteen (15) days
following its receipt of Borrowers' notice of intention to replace such
Affected Lender. Furthermore, if Borrowers give a notice of intention to
replace and do not so replace such Affected Lender within ninety (90) days
thereafter, Borrowers' rights under this SECTION 1.16(d) shall terminate and
Borrowers shall promptly pay all increased costs or additional amounts
demanded by such Affected Lender pursuant to SECTIONS 1.15(a), 1.16(a) and
1.16(b).
(e If any Lender shall fail to notify Borrower
Representative of any event occurring after the date of this Agreement
entitling such Lender to compensation under this Section within 180 days
after the officer of such Lender responsible for the business relationship of
such Lender with Borrowers obtains actual knowledge thereof, such Lender
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shall, with respect to compensation payable pursuant to this Section in
respect of any costs resulting from such event, only be entitled to payment
under this Section for costs incurred from and after the date 180 days prior
to the date that such Lender does give such notice.
1.17. SINGLE LOAN. All Loans to each Borrower and all of the
other Obligations of each Borrower arising under this Agreement and the other
Loan Documents shall constitute one general obligation of that Borrower
secured, until the Termination Date, by all of its Collateral.
2. CONDITIONS PRECEDENT
2.1. CONDITIONS TO THE INITIAL LOANS. No Lender shall be
obligated to make any Loan or incur any Letter of Credit Obligations on the
Closing Date, or to take, fulfill, or perform any other action hereunder,
until the following conditions have been satisfied or provided for in a
manner satisfactory to Agent, or waived in writing by Agent and Lenders:
(a CREDIT AGREEMENT; LOAN DOCUMENTS. This Agreement or
counterparts hereof shall have been duly executed by, and delivered to,
Borrowers, the other Credit Parties signatory hereto, Agent and Lenders; and
Agent shall have received such documents, instruments, agreements and legal
opinions as Agent shall reasonably request in connection with the
transactions contemplated by this Agreement and the other Loan Documents,
including all those listed in the Closing Checklist attached hereto as ANNEX
D, each in form and substance satisfactory to Agent.
(b APPROVALS. Agent shall have received (i) (x)
satisfactory evidence that the Credit Parties have obtained all required
consents and approvals of all Persons including all requisite Governmental
Authorities (including in respect of the Hart-Scott-Rodino Anti-Trust
Improvements Act of 1976 and, except as otherwise agreed to by Agent, in
connection with the Lebanon IRBs and the transactions contemplated by the IRB
Assignment Documents), to the execution, delivery and performance of this
Agreement and the other Loan Documents and the consummation of the Related
Transactions or (y) an officer's certificate in form and substance
satisfactory to Agent affirming that no such consents or approvals are
required, and (ii) (x) satisfactory evidence that Seller has obtained all
required consents and approvals of all Persons including all requisite
Governmental Authorities, to the execution, delivery and performance of the
Pledge Agreement to which it is to be party or (y) an officer's certificate
in form and substance satisfactory to Agent affirming that no such consents
or approvals are required.
(c OPENING AVAILABILITY. The Eligible Accounts and
Eligible Inventory of each Borrower supporting the initial Revolving Credit
Advance and the initial Letter of Credit Obligations incurred and the amount
of the Reserves to be established on the Closing Date shall be sufficient in
value, as reasonably determined by Agent, to provide Borrowers, collectively,
with Net Borrowing Availability, after giving effect to the initial Revolving
Credit Advance made to each Borrower, the incurrence of any initial Letter of
Credit
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Obligations and the consummation of the Related Transactions (on a pro forma
basis, with trade payables being paid currently, and expenses and liabilities
being paid in the ordinary course of business and without acceleration of
sales) of at least $7,000,000.
(d PAYMENT OF FEES. Borrowers shall have paid the Fees
required to be paid on the Closing Date in the respective amounts specified
in SECTION 1.9 (including the Fees specified in the GE Capital Fee Letter),
and shall have reimbursed Agent for all fees, costs and expenses of closing
presented as of the Closing Date.
(e CAPITAL STRUCTURE: OTHER INDEBTEDNESS. (i) The capital
structure of each Credit Party and the terms and conditions of all
Indebtedness (including, without limitation, in respect of the Lebanon IRBs,
the IRB Lease Agreement and the IRB Indenture) of each Credit Party shall be
acceptable to Agent in its sole discretion.
(ii) After giving effect to the Worthington
Acquisition, the aggregate amount of Indebtedness of MCP (including all Loans
incurred on the day hereof but excluding any amounts relating to the Lebanon
IRBs and the IRB Lease Agreement) shall not exceed $32,000,000.
(f CONSUMMATION OF RELATED TRANSACTIONS. (i) Agent shall
have received fully executed copies of the Worthington Acquisition Agreement
and each of the other Related Transactions Documents, each of which shall be
in form and substance satisfactory to Agent and its counsel. The Worthington
Acquisition and the other Related Transactions shall have been consummated in
accordance with the terms of the Worthington Acquisition Agreement and the
other Related Transactions Documents but for the payment of the cash purchase
price payable on the Closing Date pursuant to the Worthington Acquisition
Agreement.
(ii) The Preferred Stock Contribution shall have
been consummated on terms and conditions satisfactory to Agent.
(iii) The aggregate purchase price for the
Worthington Acquisition shall not exceed $25,000,000 in cash PLUS 10,000
shares of MIG Preferred Stock acquired by MCP pursuant to the Preferred Stock
Contribution, PLUS the Contingent Payment, PLUS MCP's assumption of certain
liabilities (including, without limitation, obligations relating to the
Lebanon IRBs including under the IRB Lease Agreement) as are satisfactory to
Agent, PLUS aggregate fees and closing costs (including those payable to
Agent and Lenders) not in excess of $1,500,000.
2.2. FURTHER CONDITIONS TO EACH LOAN. Except as otherwise
expressly provided herein, no Lender shall be obligated to fund any Loan,
convert or continue any Loan as a LIBOR Loan or incur any Letter of Credit
Obligation, if, as of the date thereof:
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(a Any representation or warranty by any Credit Party
contained herein or in any of the other Loan Documents shall be untrue or
incorrect as of such date, except to the extent that such representation or
warranty expressly relates to an earlier date and except for changes therein
expressly permitted or expressly contemplated by this Agreement; or
(b Any event or circumstance having a Material Adverse
Effect with respect to the Credit Parties shall have occurred since the date
hereof as reasonably determined by the Requisite Revolving Lenders; or
(c (i) Any Event of Default shall have occurred and be
continuing or would result after giving effect to any Loan (or the incurrence
of any Letter of Credit Obligations), or (ii) a Default shall have occurred
and be continuing or would result after giving effect to any Loan, and Agent
or Requisite Revolving Lenders shall have determined not to make any Loan or
incur any Letter of Credit Obligation so long as that Default is continuing;
or
(d After giving effect to any Advance (or the incurrence
of any Letter of Credit Obligations), (i) the outstanding principal amount of
the aggregate Revolving Loan would exceed the lesser of the Aggregate
Revolving Borrowing Base and the Maximum Amount, LESS, in each case, the then
outstanding principal amount of the Swing Line Loan, or (ii) the outstanding
principal amount of the Revolving Loan of the applicable Borrower would
exceed such Borrower's separate Revolving Borrowing Base LESS the outstanding
principal amount of the Swing Line Loan to that Borrower; or
(e After giving effect to any Swing Line Advance, (i) the
outstanding principal amount of the Swing Line Loan would exceed Swing Line
Availability, or (ii) the outstanding principal amount of the Swing Line Loan
of the applicable Borrower would exceed such Borrower's separate Revolving
Borrowing Base LESS the outstanding principal amount of the Revolving Loan to
that Borrower.
The request and acceptance by any Borrower of the proceeds of any Loan, the
incurrence of any Letter of Credit Obligations or the conversion or
continuation of any Loan into, or as, a LIBOR Loan, as the case may be, shall
be deemed to constitute, as of the date of such request or acceptance, (i) a
representation and warranty by Borrowers that the conditions in this SECTION
2.2 have been satisfied and (ii) a reaffirmation by Borrowers of the
cross-guaranty provisions set forth in SECTION 12 and of the granting and
continuance of Agent's Liens, on behalf of itself and Lenders, pursuant to
the Collateral Documents.
2.3. ADDITIONAL BORROWERS. As of the Closing Date,
notwithstanding anything to the contrary contained herein, MCP is the only
Borrower and no other Borrower shall be permitted hereunder without the
consent of each Lender (which consent shall be in each such Lender's sole
discretion). Without limiting the foregoing, the parties acknowledge and
agree that prior to any additional Person joining hereto as a Borrower, the
Loan
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Documents would be modified in a manner mutually acceptable to the Lenders
and the Credit Parties.
3. REPRESENTATIONS AND WARRANTIES
To induce Lenders to make the Loans and to incur Letter of
Credit Obligations, the Credit Parties executing this Agreement, jointly and
severally, make the following representations and warranties to Agent and
each Lender with respect to all Credit Parties, each and all of which shall
survive the execution and delivery of this Agreement.
3.1. CORPORATE OR LIMITED LIABILITY COMPANY EXISTENCE;
COMPLIANCE WITH LAW. Each Credit Party (a) is a corporation or limited
liability company, as the case may be, duly organized, validly existing and
in good standing under the laws of its jurisdiction of organization; (b) is
duly qualified to conduct business and is in good standing in each other
jurisdiction where its ownership or lease of property or the conduct of its
business requires such qualification, except where the failure to be so
qualified would not result in exposure to losses, damages or liabilities in
excess of $100,000; (c) has the requisite organizational power and authority
and the legal right to own, pledge, mortgage or otherwise encumber and
operate its properties, to lease the property it operates under lease and to
conduct its business as now, heretofore and proposed to be conducted; (d)
subject to specific representations regarding Environmental Laws, has all
licenses, permits, consents or approvals from or by, and has made all filings
with, and has given all notices to, all Governmental Authorities having
jurisdiction, to the extent required for such ownership, operation and
conduct, except when the failure to have or do so, individually or in the
aggregate could not reasonably be expected to have a Material Adverse Effect;
(e) is in compliance with its charter and by-laws or equivalent
organizational or charter or constituent documents; and (f) subject to
specific representations set forth herein regarding ERISA, Environmental
Laws, tax and other laws, is in compliance with all applicable provisions of
law, except where the failure to comply, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect.
3.2. EXECUTIVE OFFICES; FEIN. As of the Closing Date, the
current location of each Credit Party's chief executive office and principal
place of business is set forth in Disclosure Schedule (3.2), and none of such
locations have changed within the twelve (12) months preceding the Closing
Date. In addition, DISCLOSURE SCHEDULE (3.2) lists the federal employer
identification number of each Credit Party.
3.3. CORPORATE OR LIMITED LIABILITY COMPANY POWER,
AUTHORIZATION, ENFORCEABLE OBLIGATIONS. The execution, delivery and
performance by each Credit Party of the Loan Documents to which it is a party
and the creation of all Liens provided for therein: (a) are within such
Person's organizational power; (b) have been duly authorized by all necessary
or proper organizational and shareholder or membership action; (c) do not
contravene any provision of such Person's charter or bylaws or equivalent
organizational or charter or other constituent documents; (d) do not violate
any law or regulation, or any order or decree of any
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court or Governmental Authority; (e) do not conflict with or result in the
breach or termination of, constitute a default under or accelerate or permit
the acceleration of any performance required by, any indenture (including,
without limitation, the IRB Indenture), mortgage, deed of trust, lease
(including, without limitation, the IRB Lease Agreement), agreement or other
instrument to which such Person is a party or by which such Person or any of
its property is bound; (f) do not result in the creation or imposition of any
Lien upon any of the property of such Person other than those in favor of
Agent, on behalf of itself and Lenders, pursuant to the Loan Documents; and
(g) do not require the consent or approval of any Governmental Authority or
any other Person, except those referred to in SECTION 2.1(b), all of which
will have been duly obtained, made or complied with prior to the Closing
Date. On or prior to the Closing Date, each of the Loan Documents shall have
been duly executed and delivered by each Credit Party thereto and each such
Loan Document shall then constitute a legal, valid and binding obligation of
such Credit Party enforceable against it in accordance with its terms.
3.4. FINANCIAL STATEMENTS AND PROJECTIONS. Except for the
Projections, all Financial Statements concerning Holdings and its
Subsidiaries which are referenced below have been prepared in accordance with
GAAP consistently applied throughout the periods covered (except as disclosed
therein and except, with respect to unaudited Financial Statements, for the
absence of footnotes and normal year-end audit adjustments) and present
fairly in all material respects the financial position of the Persons covered
thereby as at the dates thereof and the results of their operations and cash
flows for the periods then ended.
(a The following Financial Statements attached hereto as
DISCLOSURE SCHEDULE (3.4(A)) have been delivered on the date hereof:
The audited consolidated balance sheet at May 31, 1998
and the related statements of income and cash flows of Worthington for the
twelve month period then ended, certified by Ernst & Young LLP, and the
unaudited consolidated balance sheet at December 31, 1998 and the related
statements of income and cash flows of Worthington for the seven month period
then ended, prepared by Ernst & Young LLP, and such December 31, 1998
Financial Statements support the Projections for the Fiscal Year 1999
previously delivered to Agent.
(b PRO FORMA. The Pro Forma delivered on the date hereof
and attached hereto as DISCLOSURE SCHEDULE (3.4(B)) was prepared by Holdings
giving PRO FORMA effect to the Related Transactions, was based on the
unaudited consolidated balance sheet of Worthington dated December 31, 1998,
and was prepared on a basis consistent with such unaudited balance sheet,
with only such adjustments thereto as would be required in accordance with
GAAP; PROVIDED, that the income statement relating to the Pro Forma only
reflects sales and EBITDA results of Holdings and its Subsidiaries after
giving PRO FORMA effect to the Related Transactions;
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(c PROJECTIONS. The Projections delivered on the date
hereof and attached hereto as DISCLOSURE SCHEDULE (3.4(C)) have been prepared
by Holdings and MCP in light of the past operations of Worthington's
business, and reflect projections for the five year period beginning on
January 1, 1999 on a month by month basis for the first year and on a year by
year basis thereafter. The Projections are based upon estimates and
assumptions stated therein, all of which Holdings and MCP believe as of the
Closing Date to be reasonable and fair in light of current conditions and
current facts known to Holdings and MCP and, as of the Closing Date, reflect
Holdings' and MCP's good faith and reasonable estimates of the future
financial performance of Holdings and its Subsidiaries and of the other
information projected therein for the period set forth therein. The foregoing
representations (and other references to the existing Projections herein) are
qualified by the fact that the Projections reflect an earlier proposed
financing structure for the Worthington Acquisition and not the financing
structure contemplated hereby but this qualification does not affect the
sales and EBITDA information contained in the Projections.
3.5. MATERIAL ADVERSE EFFECT. Between December 31, 1998 and
the Closing Date, (a) neither Worthington nor any Credit Party has incurred
any obligations, contingent or non-contingent liabilities, liabilities for
Charges, long-term leases or unusual forward or long-term commitments which
are not reflected in the Pro Forma and which, alone or in the aggregate,
could reasonably be expected to have a Material Adverse Effect, (b) no
contract, lease or other agreement or instrument has been entered into by
Worthington or any Credit Party or has become binding upon Worthington's or
any Credit Party's assets and no law or regulation applicable to Worthington
or any Credit Party has been adopted which has had or could reasonably be
expected to have a Material Adverse Effect, and (c) neither Worthington nor
any Credit Party is in default and to the best of Borrowers' knowledge no
third party is in default under any material contract, lease or other
agreement or instrument, which alone or in the aggregate could reasonably be
expected to have a Material Adverse Effect. Except as set forth on
DISCLOSURE SCHEDULE (3.5), between December 31, 1998 and the Closing Date no
event has occurred, which alone or together with other events, could
reasonably be expected to have a Material Adverse Effect.
3.6. OWNERSHIP OF PROPERTY; LIENS. As of the Closing Date
and after giving effect to the Worthington Acquisition, the real estate
("REAL ESTATE") listed on DISCLOSURE SCHEDULE (3.6) constitutes all of the
real property owned, leased, subleased, or used by any Credit Party. Each
Credit Party owns good and marketable fee simple title to all of its owned
real estate, and valid and marketable leasehold interests in all of its
leased Real Estate, all as described on DISCLOSURE SCHEDULE (3.6), and copies
of all such leases or a summary of terms thereof satisfactory to Agent have
been delivered to Agent. DISCLOSURE SCHEDULE (3.6) further describes any Real
Estate with respect to which any Credit Party is a lessor, sublessor or
assignor as of the Closing Date and after giving effect to the Worthington
Acquisition. Each Credit Party also has good and marketable title to, or
valid leasehold interests in, all of its personal properties and assets. As
of the Closing Date and after giving effect to the Worthington Acquisition,
none of the properties and assets of any Credit Party are subject to any
Liens other than Permitted Encumbrances, and there are no facts,
circumstances or
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conditions known to any Credit Party that may result in any Liens (including
Liens arising under Environmental Laws) other than Permitted Encumbrances.
Each Credit Party has received all deeds, assignments, waivers, consents,
non-disturbance and recognition or similar agreements, bills of sale and
other documents, and has duly effected all recordings, filings and other
actions necessary to establish, protect and perfect such Credit Party's
right, title and interest in and to all such Real Estate and other properties
and assets. DISCLOSURE SCHEDULE (3.6) also describes any purchase options,
rights of first refusal or other similar contractual rights pertaining to any
Real Estate. As of the Closing Date and after giving effect to the
Worthington Acquisition, no portion of any Credit Party's Real Estate has
suffered any material damage by fire or other casualty loss which has not
heretofore been repaired and restored in all material respects to its
original condition or otherwise remedied. As of the Closing Date and after
giving effect to the Worthington Acquisition, all material permits required
to have been issued or appropriate to enable the Real Estate to be lawfully
occupied and used for all of the purposes for which they are currently
occupied and used have been lawfully issued and are in full force and effect.
3.7. LABOR MATTERS. As of the Closing Date and after giving
effect to the Worthington Acquisition (a) no strikes or other material labor
disputes against any Credit Party are pending or, to any Credit Party's
knowledge, threatened; (b) hours worked by and payment made to employees of
each Credit Party comply with the Fair Labor Standards Act and each other
federal, state, local or foreign law applicable to such matter; (c) all
payments due from any Credit Party for employee health and welfare insurance
have been paid or accrued as a liability on the books of such Credit Party;
(d) except as set forth in DISCLOSURE SCHEDULE (3.7), no Credit Party is a
party to or bound by any collective bargaining agreement, management
agreement, consulting agreement or any employment agreement (and true and
complete copies of any agreements described on DISCLOSURE SCHEDULE (3.7) have
been delivered to Agent); (e) there is no organizing activity involving any
Credit Party pending or, to any Credit Party's knowledge, threatened by any
labor union or group of employees; (f) there are no representation
proceedings pending or, to any Credit Party's knowledge, threatened with the
National Labor Relations Board, and no labor organization or group of
employees of any Credit Party has made a pending demand for recognition; and
(g) except as set forth in DISCLOSURE SCHEDULE (3.7), there are no complaints
or charges against any Credit Party pending or, to the knowledge of any
Credit Party, threatened to be filed with any Governmental Authority or
arbitrator based on, arising out of, in connection with, or otherwise
relating to the employment or termination of employment by any Credit Party
of any individual.
3.8. VENTURES, SUBSIDIARIES AND AFFILIATES; OUTSTANDING
STOCK AND INDEBTEDNESS. Except as set forth in DISCLOSURE SCHEDULE (3.8), no
Credit Party has any Subsidiaries or is engaged in any joint venture or
partnership with any other Person. Except as set forth in DISCLOSURE
SCHEDULE (3.8), as of the Closing Date no Credit Party is an Affiliate of any
other Person. All of the issued and outstanding Stock of each Credit Party
is owned by each of the stockholders and/or members and in the amounts set
forth on DISCLOSURE SCHEDULE (3.8). There are no outstanding rights to
purchase, options, warrants or similar rights or
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agreements pursuant to which any Credit Party may be required to issue, sell,
repurchase or redeem any of its Stock or other equity securities or any Stock
or other equity securities of its Subsidiaries. All outstanding Indebtedness
of each Credit Party as of the Closing Date is described in SECTION 6.3
(including DISCLOSURE SCHEDULE (6.3)). None of the Credit Parties other than
Borrowers has any assets (except nominal cash, Stock of their Subsidiaries,
in the case of the IRB Subsidiary, the Lebanon IRBs and the rights related
thereto and, in the case of Holdings, (i) $5,000,000 of cash received from
MPC and evidenced by the Holdings Note which cash shall immediately be
conveyed to MIG as consideration for the MIG Preferred Stock and to pay to
MIG certain fees and expenses related to the Related Transactions, (ii)
capital contributions made to Holdings so long as immediately thereafter an
equal amount is contributed to the capital of Borrowers and (iii) payments
that Holdings receives to the extent permitted by SECTION 6.4 or SECTION
6.14) or any Indebtedness or Guaranteed Indebtedness (except the Obligations
and the Holdings Note).
3.9. GOVERNMENT REGULATION. No Credit Party is an
"investment company" or an "affiliated person" of, or "promoter" or
"principal underwriter" for, an "investment company," as such terms are
defined in the Investment Company Act of 1940 as amended. No Credit Party is
subject to regulation under the Public Utility Holding Company Act of 1935,
the Federal Power Act, or any other federal or state statute that restricts
or limits its ability to incur Indebtedness or to perform its obligations
hereunder. The making of the Loans by Lenders to Borrowers, the incurrence of
the Letter of Credit Obligations on behalf of Borrowers, the application of
the proceeds thereof and repayment thereof and the consummation of the
Related Transactions will not violate any provision of any such statute or
any rule, regulation or order issued by the Securities and Exchange
Commission.
3.10. MARGIN REGULATIONS. No Credit Party is engaged, nor
will it engage, principally or as one of its important activities, in the
business of extending credit for the purpose of "purchasing" or "carrying"
any "margin security" as such terms are defined in Regulation U of the
Federal Reserve Board as now and from time to time hereafter in effect (such
securities being referred to herein as "MARGIN STOCK"). No Credit Party owns
any Margin Stock, and none of the proceeds of the Loans or other extensions
of credit under this Agreement will be used, directly or indirectly, for the
purpose of purchasing or carrying any Margin Stock, for the purpose of
reducing or retiring any Indebtedness which was originally incurred to
purchase or carry any Margin Stock or for any other purpose which might cause
any of the Loans or other extensions of credit under this Agreement to be
considered a "purpose credit" within the meaning of Regulation T, U or X of
the Federal Reserve Board. No Credit Party will take or permit to be taken
any action which might cause any Loan Document to violate any regulation of
the Federal Reserve Board.
3.11. TAXES. All tax returns, reports and statements,
including information returns, required by any Governmental Authority to be
filed by any Credit Party have been filed with the appropriate Governmental
Authority and all Charges have been paid prior to the date on which any fine,
penalty, interest or late charge may be added thereto for nonpayment
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thereof (or any such fine, penalty, interest, late charge or loss has been
paid), excluding Charges or other amounts being contested in accordance with
SECTION 5.2(b). Proper and accurate amounts have been withheld by each Credit
Party from its respective employees for all periods in full and complete
compliance with all applicable federal, state, local and foreign law and such
withholdings have been timely paid to the respective Governmental
Authorities. DISCLOSURE SCHEDULE (3.11) sets forth as of the Closing Date
those taxable years for which any Credit Party's tax returns are currently
being audited by the IRS or any other applicable Governmental Authority and
any assessments or threatened assessments in connection with such audit, or
otherwise currently outstanding. Except as described on DISCLOSURE SCHEDULE
(3.11), no Credit Party has executed or filed with the IRS or any other
Governmental Authority any agreement or other document extending, or having
the effect of extending, the period for assessment or collection of any
Charges. None of the Credit Parties are liable for any Charges: (a) under
any agreement (including any tax sharing agreements other than the Tax
Sharing Agreement) or (b) to each Credit Party's knowledge, as a transferee.
As of the Closing Date, no Credit Party has agreed or been requested to make
any adjustment under IRC Section 481(a), by reason of a change in accounting
method or otherwise, which would have a Material Adverse Effect.
3.12. ERISA. (a) DISCLOSURE SCHEDULE (3.12) lists and
separately identifies all Title IV Plans, Multiemployer Plans, ESOPs and
Retiree Welfare Plans. Copies of all such listed Plans, together with a copy
of the latest form 5500 for each such Plan, have been delivered to Agent.
Except with respect to Multiemployer Plans, each Qualified Plan has been
determined by the IRS to qualify under Section 401 of the IRC, and the trusts
created thereunder have been determined to be exempt from tax under the
provisions of Section 501 of the IRC, and nothing has occurred which would
cause the loss of such qualification or tax-exempt status. Each Plan is in
compliance with the applicable provisions of ERISA and the IRC, including the
filing of reports required under the IRC or ERISA. No Credit Party or ERISA
Affiliate has failed to make any contribution or pay any amount due as
required by either Section 412 of the IRC or Section 302 of ERISA or the
terms of any such Plan. No Credit Party or ERISA Affiliate has engaged in a
prohibited transaction, as defined in Section 4975 of the IRC, in connection
with any Plan, which would subject any Credit Party to a material tax on
prohibited transactions imposed by Section 4975 of the IRC.
(b Except as set forth in DISCLOSURE SCHEDULE (3.12): (i)
no Title IV Plan has any Unfunded Pension Liability; (ii) no ERISA Event or
event described in Section 4062(e) of ERISA with respect to any Title IV Plan
has occurred or is reasonably expected to occur; (iii) there are no pending,
or to the knowledge of any Credit Party, threatened claims (other than claims
for benefits in the normal course), sanctions, actions or lawsuits, asserted
or instituted against any Plan or any Person as fiduciary or sponsor of any
Plan; (iv) no Credit Party or ERISA Affiliate has incurred or reasonably
expects to incur any liability as a result of a complete or partial
withdrawal from a Multiemployer Plan; (v) within the last five years no Title
IV Plan with Unfunded Pension Liabilities has been transferred outside of the
"controlled group" (within the meaning of Section 4001(a)(14) of ERISA) of
any Credit Party or ERISA
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Affiliate; and (vi) no liability under any Title IV Plan has been satisfied
with the purchase of a contract from an insurance company that is not rated
AAA by the Standard & Poor's Corporation or the equivalent by another
nationally recognized rating agency.
3.13. NO LITIGATION. No action, claim, lawsuit, demand,
investigation or proceeding is now pending or, to the knowledge of any Credit
Party, threatened against any Credit Party or Worthington, before any
Governmental Authority or before any arbitrator or panel of arbitrators
(collectively, "Litigation") which challenges Worthington's or any Credit
Party's right or power to enter into or perform any of its obligations under
the Loan Documents to which it is a party, or the validity or enforceability
of any Loan Document or any action taken thereunder, or (b) which has a
reasonable risk of being determined adversely to any Credit Party and which,
if so determined, could have a Material Adverse Effect. Except as set forth
on DISCLOSURE SCHEDULE (3.13), as of the Closing Date there is no Litigation
pending or, to the knowledge of any Credit Party, threatened which seeks
damages in excess of $100,000 or injunctive relief or alleges criminal
misconduct of Worthington or any Credit Party.
3.14. BROKERS. No broker or finder acting on behalf of any
Credit Party brought about the obtaining, making or closing of the Loans or
the Related Transactions, and no Credit Party has any obligation to any
Person in respect of any finder's or brokerage fees in connection therewith.
3.15. INTELLECTUAL PROPERTY. As of the Closing Date, each
Credit Party owns or has rights to use all Intellectual Property necessary to
continue to conduct its business as now conducted by it or proposed to be
conducted by it, and each Patent, Trademark, Copyright and License is listed,
together with application or registration numbers, as applicable, in
DISCLOSURE SCHEDULE (3.15) hereto. Each Credit Party conducts its business
and affairs without any known infringement of or interference with any
Intellectual Property of any other Person.
3.16. FULL DISCLOSURE. No information contained in this
Agreement, any of the other Loan Documents, any Projections, Financial
Statements or Collateral Reports or other reports from time to time delivered
hereunder or any written statement furnished by or on behalf of any Credit
Party to Agent or any Lender pursuant to the terms of this Agreement contains
or will contain any untrue statement of a material fact or omits or will omit
to state a material fact necessary to make the statements contained herein or
therein not misleading in light of the circumstances under which they were
made. The Liens granted to Agent, on behalf of itself and Lenders, pursuant
to the Collateral Documents will at all times be fully perfected first
priority Liens in and to the Collateral described therein, subject, as to
priority, only to Permitted Encumbrances with respect to the Collateral other
than Accounts.
3.17. ENVIRONMENTAL MATTERS. (a) Except as described in the
environmental reports listed on DISCLOSURE SCHEDULE (3.17) or as otherwise
described on such Disclosure
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Schedule, as of the Closing Date and after giving effect to the Worthington
Acquisition: (i) the Real Estate is free of contamination from any Hazardous
Material except for such contamination that would not materially adversely
impact the value or marketability of such Real Estate and which would not
result in Environmental Liabilities which could reasonably be expected to
exceed $100,000; (ii) no Credit Party has caused or suffered to occur any
Release of Hazardous Materials on, at, in, under, above, to, from or about
any of its Real Estate; (iii) the Credit Parties are and have been in
compliance with all Environmental Laws, except for such noncompliance which
would not result in Environmental Liabilities which could reasonably be
expected to exceed $100,000; (iv) the Credit Parties have obtained, and are
in compliance with, all Environmental Permits required by Environmental Laws
for the operations of their respective businesses as presently conducted or
as proposed to be conducted, except where the failure to so obtain or comply
with such Environmental Permits would not result in Environmental Liabilities
which could reasonably be expected to exceed $100,000, and all such
Environmental Permits are valid, uncontested and in good standing; (v) no
Credit Party is involved in operations or knows of any facts, circumstances
or conditions, including any Releases of Hazardous Materials, that are likely
to result in any Environmental Liabilities of such Credit Party which could
reasonably be expected to exceed $100,000, and no Credit Party has permitted
any current or former tenant or occupant of the Real Estate to engage in any
such operations; (vi) there is no Litigation arising under or related to any
Environmental Laws, Environmental Permits or Hazardous Material which seeks
damages, penalties, fines, costs or expenses in excess of $100,000 or
injunctive relief, or which alleges criminal misconduct by any Credit Party;
(vii) no notice has been received by any Credit Prty identifying it as a
"potentially responsible party" or requesting information under CERCLA or
analogous state statutes, and to the knowledge of the Credit Parties, there
are no facts, circumstances or conditions that may result in any Credit Party
being identified as a "potentially responsible party" under CERCLA or
analogous state statutes; and (viii) the Credit Parties have provided to
Agent copies of all existing environmental reports, reviews and audits and
all written information pertaining to actual or potential Environmental
Liabilities, in each case relating to any Credit Party.
(b Each Credit Party hereby acknowledges and agrees that
Agent (i) is not now, and has not ever been, in control of any of the Real
Estate or any Credit Party's affairs, and (ii) does not have the capacity
through the provisions of the Loan Documents or otherwise to influence any
Credit Party's conduct with respect to the ownership, operation or management
of any of its Real Estate or compliance with Environmental Laws or
Environmental Permits.
3.18. INSURANCE. DISCLOSURE SCHEDULE (3.18) lists all
insurance policies of any nature maintained, as of the Closing Date, for
current occurrences by each Credit Party, as well as a summary of the terms
of each such policy.
3.19. DEPOSIT AND DISBURSEMENT ACCOUNTS. DISCLOSURE SCHEDULE
(3.19) lists all banks and other financial institutions at which any Credit
Party maintains deposits and/or
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other accounts as of the Closing Date, including any Disbursement Accounts,
and such Schedule correctly identifies the name, address and telephone number
of each depository, the name in which the account is held, a description of
the purpose of the account, and the complete account number.
3.20. GOVERNMENT CONTRACTS. Except as set forth in
DISCLOSURE SCHEDULE (3.20), as of the Closing Date, no Credit Party is a
party to any contract or agreement with any Governmental Authority and no
Credit Party's Accounts are subject to the Federal Assignment of Claims Act,
as amended (31 U.S.C. Section 3727) or any similar state or local law.
3.21. CUSTOMER AND TRADE RELATIONS. As of the Closing Date,
there exists no actual or, to the knowledge of any Credit Party, threatened
termination or cancellation of, or any material adverse modification or
change in: the business relationship of any Credit Party with any customer
or group of customers whose purchases during the preceding twelve (12) months
caused them to be ranked among the ten largest customers of such Credit
Party; or the business relationship of any Credit Party with any supplier or
group of suppliers whose supplies during the preceding twelve (12) months
caused them to be ranked among the ten largest suppliers of such Credit Party.
3.22. AGREEMENTS AND OTHER DOCUMENTS. As of the Closing
Date, each Credit Party has provided to Agent or its counsel, on behalf of
Lenders, accurate and complete copies (or summaries) of all of the following
agreements or documents to which any it is subject and each of which are
listed on DISCLOSURE SCHEDULE (3.22): supply agreements and purchase
agreements not terminable by such Credit Party within sixty (60) days
following written notice issued by such Credit Party and involving
transactions in excess of $1,000,000 per annum; any lease of Equipment
having a remaining term of one year or longer and requiring aggregate rental
and other payments in excess of $500,000 per annum; licenses and permits
held by the Credit Parties, the absence of which could be reasonably likely
to have a Material Adverse Effect; instruments or documents evidencing
Indebtedness of such Credit Party and any security interest granted by such
Credit Party with respect thereto; and instruments and agreements evidencing
the issuance of any equity securities, warrants, rights or options to
purchase equity securities of such Credit Party.
3.23. SOLVENCY. Both before and after giving effect to (a)
the Loans and Letter of Credit Obligations to be made or extended on the
Closing Date or such other date as Loans and Letter of Credit Obligations
requested hereunder are made or extended, (b) the disbursement of the
proceeds of such Loans pursuant to the instructions of Borrower
Representative, (c) the Worthington Acquisition, the Preferred Stock
Contribution (and the loan by MCP to Holdings of $5,000,000 in connection
therewith evidenced by the Holdings Note), and the consummation of the other
Related Transactions and (d) the payment and accrual of all transaction costs
in connection with the foregoing, each Credit Party is Solvent.
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3.24. WORTHINGTON ACQUISITION AGREEMENT. As of the Closing
Date, Holdings and MCP have delivered to Agent a complete and correct copy of
the Worthington Acquisition Agreement (including all schedules, exhibits,
amendments, supplements, modifications, assignments and all other documents
delivered pursuant thereto or in connection therewith). No Credit Party and,
to MCP's knowledge, no other Person party thereto is in default in the
performance or compliance with any provisions thereof. The Worthington
Acquisition Agreement and each other document delivered pursuant thereto or
in connection therewith complies with, and the Worthington Acquisition has
been consummated in accordance with, all applicable laws. Each of the
Worthington Acquisition Agreement and each other document delivered pursuant
thereto or in connection therewith is in full force and effect as of the
Closing Date, has not been terminated, rescinded or withdrawn. All requisite
approvals by Governmental Authorities having jurisdiction over Worthington,
any Credit Party and other Persons referenced therein, with respect to the
transactions contemplated by the Worthington Acquisition Agreement, have been
obtained, and no such approvals impose any conditions to the consummation of
the transactions contemplated by the Worthington Acquisition Agreement or to
the conduct by any Credit Party of its business thereafter. To the best of
each Credit Party's knowledge, none of Seller's representations or warranties
in the Worthington Acquisition Agreement and each other document delivered
pursuant thereto or in connection therewith contain any untrue statement of a
material fact or omit any fact necessary to make the statements therein not
misleading.
3.25. STATUS OF HOLDINGS; IRB SUBSIDIARY. Prior to the
Closing Date, Holdings and the IRB Subsidiary will not have engaged in any
business or incurred any Indebtedness or any other liabilities (except in
connection with its corporate or limited liability company formation, the
Related Transactions Documents and this Agreement).
4. FINANCIAL STATEMENTS AND INFORMATION
4.1. REPORTS AND NOTICES. (a) Each Credit Party executing
this Agreement hereby agrees that from and after the Closing Date and until
the Termination Date, it shall deliver to Agent and/or Lenders, as required,
the Financial Statements, notices, Projections and other information at the
times, to the Persons and in the manner set forth in ANNEX E.
(b) Each Credit Party executing this Agreement hereby
agrees that from and after the Closing Date and until the Termination Date,
it shall deliver to Agent and/or Lenders, as required, the various Collateral
Reports (including Revolving Borrowing Base Certificates in the form of
EXHIBIT 4.1(b)(i)) at the times, to the Persons and in the manner set forth
in ANNEX F.
4.2. COMMUNICATION WITH ACCOUNTANTS. Each Credit Party
executing this Agreement authorizes Agent and, so long as a Default or Event
of Default shall have occurred and be continuing, each Lender, to communicate
directly with its independent certified public accountants including KPMG
LLP, and authorizes and shall instruct those accountants and
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advisors to disclose and make available to Agent and each Lender any and all
Financial Statements and other supporting financial documents, schedules and
information relating to any Credit Party (including copies of any issued
management letters) with respect to the business, financial condition and
other affairs of any Credit Party.
5. AFFIRMATIVE COVENANTS
Each Credit Party executing this Credit Agreement jointly and
severally agrees as to all Credit Parties that from and after the date hereof
and until the Termination Date:
5.1. MAINTENANCE OF EXISTENCE AND CONDUCT OF BUSINESS. Each
Credit Party shall: do or cause to be done all things necessary to preserve
and keep in full force and effect its corporate or limited liability
existence and its material rights and franchises; continue to conduct its
business substantially as now conducted or as otherwise permitted hereunder;
at all times maintain, preserve and protect all of its material assets and
properties used or useful in the conduct of its business, and keep the same
in good repair, working order and condition in all material respects (taking
into consideration ordinary wear and tear) and from time to time make, or
cause to be made, all necessary or appropriate repairs, replacements and
improvements thereto consistent with industry practices; and transact
business only in such limited liability company and trade names as are set
forth in DISCLOSURE SCHEDULE (5.1).
5.2. PAYMENT OF OBLIGATIONS. (a) Subject to SECTION
5.2(b), each Credit Party shall pay and discharge or cause to be paid and
discharged promptly all Charges payable by it, including (A) Charges imposed
upon it, its income and profits, or any of its property (real, personal or
mixed) and all Charges with respect to tax, social security and unemployment
withholding with respect to its employees, and (B) lawful claims for labor,
materials, supplies and services or otherwise, before any thereof shall
become past due.
(b) Each Credit Party may in good faith contest, by
appropriate proceedings, the validity or amount of any Charges described in
SECTION 5.2(a); PROVIDED, that (i) adequate reserves with respect to such
contest are maintained on the books of such Credit Party, in accordance with
GAAP, (ii) no Lien shall be imposed to secure payment of such Charges that is
superior to any of the Liens securing the Obligations and such contest is
maintained and prosecuted continuously and with diligence and operates to
suspend collection or enforcement of such Charges, (iii) none of the
Collateral becomes subject to forfeiture or loss as a result of such contest,
(iv) such Credit Party shall promptly pay or discharge such contested Charges
or claims and all additional charges, interest, penalties and expenses, if
any, and shall deliver to Agent evidence acceptable to Agent of such
compliance, payment or discharge, if such contest is terminated or
discontinued adversely to such Credit Party or the conditions set forth in
this SECTION 5.2(b) are no longer met, and (v) Agent has not advised
Borrowers in writing that Agent reasonably believes that nonpayment or
nondischarge thereof could have or result in a Material Adverse Effect.
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5.3. BOOKS AND RECORDS. Each Credit Party shall keep
adequate books and records with respect to its business activities in which
proper entries, reflecting all financial transactions, are made in accordance
with GAAP and on a basis consistent with the Financial Statements attached as
DISCLOSURE SCHEDULE (3.4(A)).
5.4. INSURANCE; DAMAGE TO OR DESTRUCTION OF COLLATERAL. (a)
The Credit Parties shall, at their sole cost and expense, maintain the
policies of insurance described on DISCLOSURE SCHEDULE (3.18) as in effect on
the date hereof or otherwise in form and amounts and with insurers acceptable
to Agent. If any Credit Party at any time or times hereafter shall fail to
obtain or maintain any of the policies of insurance required above or to pay
all premiums relating thereto, Agent may at any time or times thereafter
obtain and maintain such policies of insurance and pay such premiums and take
any other action with respect thereto which Agent deems advisable. Agent
shall have no obligation to obtain insurance for any Credit Party or pay any
premiums therefor. By doing so, Agent shall not be deemed to have waived any
Default or Event of Default arising from any Credit Party's failure to
maintain such insurance or pay any premiums therefor. All sums so disbursed,
including attorneys' fees, court costs and other charges related thereto,
shall be payable on demand by Borrowers to Agent and shall be additional
Obligations hereunder secured by the Collateral.
(b) Agent reserves the right at any time upon any change in
any Credit Party's risk profile (including any change in the product mix
maintained by any Credit Party or any laws affecting the potential liability
of such Credit Party) to require additional forms and limits of insurance to,
in Agent's opinion, adequately protect both Agent's and Lender's interests in
all or any portion of the Collateral and to ensure that each Credit Party is
protected by insurance in amounts and with coverage customary for its
industry. If Agent requires any such additional forms or limits of insurance,
the applicable Credit Party shall have thirty (30) days to provide to Agent
satisfactory evidence that it has obtained such additional forms and/or
limits. If requested by Agent, each Credit Party shall deliver to Agent from
time to time a report of a reputable insurance broker, reasonably
satisfactory to Agent, with respect to its insurance policies.
(c) Each Borrower shall deliver to Agent, in form and
substance satisfactory to Agent, endorsements to (i) all "All Risk" and
business interruption insurance naming Agent, on behalf of itself and
Lenders, as loss payee, and (ii) all general liability and other liability
policies naming Agent, on behalf of itself and Lenders, as additional
insured. Each Borrower irrevocably makes, constitutes and appoints Agent
(and all officers, employees or agents designated by Agent), so long as any
Default or Event of Default shall have occurred and be continuing or the
anticipated insurance proceeds exceed $500,000, as such Borrower's true and
lawful agent and attorney-in-fact for the purpose of making, settling and
adjusting claims under such "All Risk" policies of insurance, endorsing the
name of such Borrower on any check or other item of payment for the proceeds
of such "All Risk" policies of insurance and for making all determinations
and decisions with respect to such "All Risk" policies of insurance. Agent
shall have no duty to exercise any rights or powers granted to it pursuant to
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the foregoing power-of-attorney. Borrower Representative shall promptly
notify Agent of any loss, damage, or destruction to the Collateral in the
amount of $250,000 or more, whether or not covered by insurance. After
deducting from such proceeds the expenses, if any, incurred by Agent in the
collection or handling thereof, Agent may, at its option, apply such proceeds
to the reduction of the Obligations in accordance with SECTION 1.3(d);
provided that in the case of insurance proceeds pertaining to any Credit
Party that is not a Borrower, such insurance proceeds shall be applied
ratably to all of the Loans owing by each Borrower, or permit or require the
applicable Borrower to use such money, or any part thereof, to replace,
repair, restore or rebuild the Collateral in a diligent and expeditious
manner with materials and workmanship of substantially the same quality as
existed before the loss, damage or destruction. Notwithstanding the
foregoing, if the casualty giving rise to such insurance proceeds would not
reasonably be expected to have a Material Adverse Effect and such insurance
proceeds do not exceed $500,000 in the aggregate, Agent shall permit the
applicable Borrower to replace, restore, repair or rebuild the property;
PROVIDED that if such Borrower shall not have completed or entered into
binding agreements to complete such replacement, restoration, repair or
rebuilding within 270 days of such casualty, Agent may apply such insurance
proceeds to the Obligations in accordance with SECTION 1.3(d); provided
further that in the case of insurance proceeds pertaining to any Credit Party
that is not a Borrower, such insurance proceeds shall be applied ratably to
all of the Loans owing by each Borrower. All insurance proceeds which are to
be made available to any Borrower to replace, repair, restore or rebuild the
Collateral shall be applied by Agent to reduce the outstanding principal
balance of the Revolving Loan of such Borrower (which application shall not
result in a permanent reduction of the Revolving Loan Commitment) and upon
such application, Agent shall establish a Reserve against the separate
Revolving Borrowing Base of the affected Borrower in an amount equal to the
amount of such proceeds so applied. All insurance proceeds made available to
any Credit Party that is not a Borrower to replace, repair, restore or
rebuild Collateral shall be deposited in a cash collateral account.
Thereafter, such funds shall be made available to that Borrower to provide
funds to replace, repair, restore or rebuild the Collateral as follows: (i)
Borrower Representative shall request a Revolving Credit Advance or a release
from the cash collateral account be made to such Borrower in the amount
requested to be released; (ii) so long as the conditions set forth in SECTION
2.2 have been met, Revolving Lenders shall make such Revolving Credit Advance
or Agent shall release funds from the cash collateral account; and (iii) in
the case of insurance proceeds applied against the Revolving Loan, the
Reserve established with respect to such insurance proceeds shall be reduced
by the amount of such Revolving Credit Advance. To the extent not used to
replace, repair, restore or rebuild the Collateral, such insurance proceeds
shall be applied in accordance with SECTION 1.3(d); provided that in the case
of insurance proceeds pertaining to any Credit Party that is not a Borrower,
such insurance proceeds shall be applied ratably to all of the Loans owing by
each Borrower.
5.5. COMPLIANCE WITH LAWS. Each Credit Party shall comply
with all federal, state, local and foreign laws (including, without
limitation, the Hart-Scott-Rodino Anti-Trust Improvements Act of 1976) and
regulations applicable to it, including those relating to ERISA
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and labor matters, and Environmental Laws and Environmental Permits, except
to the extent that the failure to comply, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect.
5.6. SUPPLEMENTAL DISCLOSURE. From time to time as may be
requested by Agent (which request will not be made more frequently than once
each year absent the occurrence and continuance of a Default or an Event of
Default), the Credit Parties shall supplement each Disclosure Schedule
hereto, or any representation herein or in any other Loan Document, with
respect to any matter hereafter arising which, if existing or occurring at
the date of this Agreement, would have been required to be set forth or
described in such Disclosure Schedule or as an exception to such
representation or which is necessary to correct any information in such
Disclosure Schedule or representation which has been rendered inaccurate
thereby (and, in the case of any supplements to any Disclosure Schedule, such
Disclosure Schedule shall be appropriately marked to show the changes made
therein); provided that (a) no such supplement to any such Disclosure
Schedule or representation shall be or be deemed a waiver of any Default or
Event of Default resulting from the matters disclosed therein, except as
consented to by Agent and Requisite Lenders in writing; and (b) no supplement
shall be required as to representations and warranties that relate solely to
the Closing Date.
5.7. INTELLECTUAL PROPERTY. Each Credit Party will conduct
its business and affairs without any known infringement of or interference
with any Intellectual Property of any other Person in any material respect.
5.8. ENVIRONMENTAL MATTERS. Each Credit Party shall and
shall cause each Person within its control to: (a) conduct its operations and
keep and maintain its Real Estate in compliance with all Environmental Laws
and Environmental Permits other than noncompliance which could not reasonably
be expected to have a Material Adverse Effect; (b) implement any and all
investigation, remediation, removal and response actions which are
appropriate or necessary to maintain the value and marketability of the Real
Estate or to otherwise comply with Environmental Laws and Environmental
Permits pertaining to the presence, generation, treatment, storage, use,
disposal, transportation or Release of any Hazardous Material on, at, in,
under, above, to, from or about any of its Real Estate; (c) notify Agent
promptly after such Credit Party becomes aware of any violation of
Environmental Laws or Environmental Permits or any Release on, at, in, under,
above, to, from or about any Real Estate which is reasonably likely to result
in Environmental Liabilities in excess of $100,000; and (d) promptly forward
to Agent a copy of any order, notice, request for information or any
communication or report received by such Credit Party in connection with any
such violation or Release or any other matter relating to any Environmental
Laws or Environmental Permits that could reasonably be expected to result in
Environmental Liabilities in excess of $100,000, in each case whether or not
the Environmental Protection Agency or any Governmental Authority has taken
or threatened any action in connection with any such violation, Release or
other matter. If Agent at any time has a reasonable basis to believe that
there may be a violation of any
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Environmental Laws or Environmental Permits by any Credit Party or any
Environmental Liability arising thereunder, or a Release of Hazardous
Materials on, at, in, under, above, to, from or about any of its Real Estate,
which, in each case, could reasonably be expected to have a Material Adverse
Effect, then each Credit Party shall, upon Agnt's written request (i) cause
the performance of such environmental audits including subsurface sampling of
soil and groundwater, and preparation of such environmental reports, at
Borrowers' expense, as Agent may from time to time reasonably request, which
shall be conducted by reputable environmental consulting firms reasonably
acceptable to Agent and shall be in form and substance acceptable to Agent,
and (ii) permit Agent or its representatives to have access to all Real
Estate for the purpose of conducting such environmental audits and testing as
Agent deems appropriate, including subsurface sampling of soil and
groundwater. Borrowers shall reimburse Agent for the costs of such audits
and tests and the same will constitute a part of the Obligations secured
hereunder.
5.9. LANDLORDS' AGREEMENTS, MORTGAGEE AGREEMENTS AND BAILEE
LETTERS. Each Credit Party shall obtain a landlord's agreement, mortgagee
agreement or bailee letter, as applicable, from the lessor of each leased
property or mortgagee of owned property or with respect to any warehouse,
processor or converter facility or other location where Collateral is
located, which agreement or letter shall contain a waiver or subordination of
all Liens or claims that the landlord, mortgagee or bailee may assert against
the Inventory or Collateral at that location, and shall otherwise be
satisfactory in form and substance to Agent. With respect to such locations
or warehouse space leased or owned as of the Closing Date and thereafter, if
Agent has not received a landlord or mortgagee agreement or bailee letter as
of the Closing Date (or, if later, as of the date such location is acquired
or leased), any Borrower's Eligible Inventory at that location shall, in
Agent's discretion, be excluded from the Revolving Borrowing Base or be
subject to such Reserves as may be established by Agent in its reasonable
credit judgment. After the Closing Date, no real property or warehouse space
shall be leased or acquired by any Credit Party and no Inventory shall be
shipped to a processor or converter under arrangements established after the
Closing Date without the prior written consent of Agent (which consent, in
Agent's discretion, may be conditioned upon the exclusion from the Revolving
Borrowing Base of Eligible Inventory at that location or the establishment of
Reserves acceptable to Agent) or, unless and until a satisfactory landlord or
mortgagee agreement or bailee letter, as appropriate, shall first have been
obtained with respect to such location. Each Credit Party shall timely and
fully pay and perform its obligations under all leases and other agreements
with respect to each leased location or public warehouse where any Collateral
is or may be located.
5.10. YEAR 2000 COMPLIANCE. On or prior to the Closing Date,
each Credit Party shall complete and deliver to Agent a Year 2000 Assessment,
and on prior to May 30, 1999, each Credit Party shall complete and deliver to
Agent a Year 2000 Corrective Plan. On or prior to June 30, 1999, each Credit
Party shall implement Year 2000 Corrective Actions. On or before July 31,
1999, each Credit Party shall complete Year 2000 Corrective Actions and Year
2000 Implementation Testing. On or before November 30, 1999, each Credit
Party
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shall eliminate all Year 2000 Problems, except where the failure to correct
the same could not reasonably be expected to have a Material Adverse Effect,
individually or in the aggregate.
5.11. FURTHER ASSURANCES. Each Credit Party executing this
Agreement agrees that it shall and shall cause each other Credit Party to, at
such Credit Party's expense and upon request of Agent, duly execute and
deliver, or cause to be duly executed and delivered, to Agent such further
instruments and do and cause to be done such further acts as may be necessary
or proper in the reasonable opinion of Agent to carry out more effectively
the provisions and purposes of this Agreement or any other Loan Document.
6. NEGATIVE COVENANTS
Each Credit Party executing this Agreement jointly and
severally agrees as to all Credit Parties that, without the prior written
consent of Agent and the Requisite Lenders, from and after the date hereof
until the Termination Date:
6.1. MERGERS, SUBSIDIARIES, ETC. No Credit Party shall
directly or indirectly, by operation of law or otherwise, (a) form or acquire
any Subsidiary, or (b) merge with, consolidate with, acquire all or
substantially all of the assets or capital stock of, or otherwise combine
with or acquire, any Person.
6.2. INVESTMENTS; LOANS AND ADVANCES. Except as otherwise
expressly permitted by this SECTION 6, no Credit Party shall make or permit
to exist any investment in, or make, accrue or permit to exist loans or
advances of money to, any Person, through the direct or indirect lending of
money, holding of securities or otherwise, except that (a) Borrowers may hold
investments comprised of notes payable, or stock or other securities issued
by Account Debtors to any Borrower pursuant to negotiated agreements with
respect to settlement of such Account Debtor's Accounts in the ordinary
course of business, so long as the aggregate amount of such Accounts so
settled by Borrowers does not exceed $100,000; (b) each Credit Party may
maintain its existing investments in its Subsidiaries as of the Closing Date;
(c) MCP may hold the Holdings Note and make the $5,000,000 loan to Holdings
evidenced thereby; and (d) other investments not exceeding $100,000 in the
aggregate at any time outstanding.
6.3. INDEBTEDNESS. (a) No Credit Party shall create,
incur, assume or permit to exist any Indebtedness, except (without
duplication) (i) Indebtedness secured by purchase money security interests
and Capitalized Leases permitted in clause (c) of Section 6.7, (ii) the Loans
and the other Obligations, (iii) unfunded pension fund and other employee
benefit plan obligations and liabilities to the extent they are permitted to
remain unfunded under applicable law, (iv) in the case of Holdings,
Indebtedness evidenced by the Holdings Note, and (v) existing Indebtedness
described in DISCLOSURE SCHEDULE (6.3) and refinancings thereof or amendments
or modifications thereto which do not have the effect of increasing the
principal
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amount thereof or changing the amortization thereof (other than to extend the
same) and which are otherwise on terms and conditions no less favorable to
any Credit Party, Agent or any Lender, as reasonably determined by Agent,
than the terms of the Indebtedness being refinanced, amended or modified.
(b) No Credit Party shall, directly or indirectly,
voluntarily purchase, redeem, defease or prepay any principal of, premium, if
any, interest or other amount payable in respect of any Indebtedness, other
than (i) the Obligations, (ii) Indebtedness evidenced by the Holdings Note,
and (iii) Indebtedness secured by a Permitted Encumbrance if the asset
securing such Indebtedness has been sold or otherwise disposed of in
accordance with SECTIONS 6.8(b), (c) or (d).
6.4. EMPLOYEE LOANS AND AFFILIATE TRANSACTIONS. (a) Except
as otherwise expressly permitted in this Section 6 with respect to
Affiliates, no Credit Party shall enter into or be a party to any transaction
with any other Credit Party or any Affiliate thereof except in the ordinary
course of and pursuant to the reasonable requirements of such Credit Party's
business and upon fair and reasonable terms that are no less favorable to
such Credit Party than would be obtained in a comparable arm's length
transaction with a Person not an Affiliate of such Credit Party; PROVIDED,
that (i) so long as no Event of Default has occurred or would occur as a
result thereof MCP and Holdings shall be permitted to reimburse MIG for
out-of-pocket expenses and costs incurred by MIG on behalf of the Credit
Parties to the extent required and contemplated by the Credit Parties'
constituent documents as in effect on the date hereof but in no event in an
amount exceeding $100,000 per annum, (ii) Holdings shall be permitted to
enter into the Tax Sharing Agreement and, subject to SECTION 6.14, perform
its obligations thereunder, (iii) the Credit Parties shall be permitted to
enter into the transactions relating to the Lebanon IRBs, the IRB Assignment
Documents, the IRB Indenture and the IRB Lease Agreement and (iv) MCP and
Holdings shall be permitted to enter into Amendment No. 1 to the Worthington
Acquisition Agreement and perform their obligations thereunder. In addition,
if any such transaction or series of related transactions involves payments
in excess of $500,000 in the aggregate, the terms of these transactions must
be disclosed in advance to Agent and Lenders. All such transactions existing
as of the date hereof are described on DISCLOSURE SCHEDULE (6.4(a)).
(b) No Credit Party shall enter into any lending or
borrowing transaction with any employees of any Credit Party, except loans to
their respective employees on an arm's-length basis in the ordinary course of
business consistent with past practices for travel expenses, relocation costs
and similar purposes up to a maximum of $100,000 to any employee and up to a
maximum of $300,000 in the aggregate at any one time outstanding.
6.5. CAPITAL STRUCTURE AND BUSINESS. No Credit Party shall
(a) make any changes in any of its business objectives, purposes or
operations which could reasonably be expected to adversely affect the
repayment of the Loans or any of the other Obligations or could reasonably be
expected to have or result in a Material Adverse Effect, (b) make any change
in its capital structure as described on DISCLOSURE SCHEDULE (3.8), including
the
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issuance of any shares of Stock, warrants or other securities convertible
into Stock or any revision of the terms of its outstanding Stock, or (c)
amend its charter or bylaws, membership agreements, operating agreements or
other constituent documents in a manner which would adversely affect Agent or
Lenders or such Credit Party's duty or ability to repay the Obligations. No
Credit Party shall engage in any business other than the businesses currently
engaged in by it or businesses reasonably related thereto.
6.6. GUARANTEED INDEBTEDNESS. No Credit Party shall create,
incur, assume or permit to exist any Guaranteed Indebtedness except (a) by
endorsement of instruments or items of payment for deposit to the general
account of any Credit Party, and (b) for Guaranteed Indebtedness incurred for
the benefit of any other Credit Party if the primary obligation is expressly
permitted by this Agreement.
6.7. LIENS. No Credit Party shall create, incur, assume or
permit to exist any Lien on or with respect to its Accounts or any of its
other properties or assets (whether now owned or hereafter acquired) except
for (a) Permitted Encumbrances; (b) Liens in existence on the date hereof
and summarized on DISCLOSURE SCHEDULE (6.7); (c) Liens created after the date
hereof by conditional sale or other title retention agreements (including
Capital Leases) or in connection with purchase money Indebtedness with
respect to Equipment and Fixtures acquired by any Credit Party in the
ordinary course of business, involving the incurrence of an aggregate amount
of purchase money Indebtedness and Capital Lease Obligations of not more than
$5,000,000 outstanding at any one time for all such Liens (provided that such
Liens attach only to the assets subject to such purchase money debt and such
Indebtedness is incurred within twenty (20) days following such purchase and
does not exceed 100% of the purchase price of the subject assets); and (d)
other Liens securing Indebtedness not exceeding $250,000 in the aggregate at
any time outstanding, so long as such Liens do not attach to any Accounts or
Inventory or any property included in the real property or Equipment
appraisals previously delivered to Agent. In addition, no Credit Party shall
become a party to any agreement, note, indenture or instrument, or take any
other action, which would prohibit the creation of a Lien on any of its
properties or other assets in favor of Agent, on behalf of itself and
Lenders, as additional collateral for the Obligations, except operating
leases, Capital Leases (including the IRB Lease Agreement), the IRB
Indenture, or Licenses which prohibit Liens upon the assets that are subject
thereto.
6.8. SALE OF STOCK AND ASSETS. No Credit Party shall sell,
transfer, convey, assign or otherwise dispose of any of its properties or
other assets, including the capital Stock of any of its Subsidiaries (whether
in a public or a private offering or otherwise) or any of their Accounts,
other than (a) the sale of Inventory in the ordinary course of business, (b)
the sale, transfer, conveyance or other disposition by a Credit Party of
assets that are obsolete or no longer used or useful in such Credit Party's
business and having a value not exceeding $50,000 in any single transaction
or $100,000 in the aggregate in any Fiscal Year, (c) other Equipment and
Fixtures having a value not exceeding $50,000 in any single transaction or
$100,000 in the aggregate in any Fiscal Year, and (d) so long as no Default
or Event of
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Default has occurred or would occur as a result thereof, Equipment having a
value in the aggregate in any Fiscal Year not exceeding 10% of the value of
such Credit Party's Equipment at the beginning of such Fiscal Year as
reasonably determined by Agent. With respect to any disposition of assets or
other properties permitted pursuant to CLAUSE (b), CLAUSE (c) and CLAUSE (d)
above, Agent agrees on reasonable prior written notice to release its Lien on
such assets or other properties in order to permit the applicable Credit
Party to effect such disposition and shall execute and deliver to Borrowers,
at Borrowers' expense, appropriate UCC-3 termination statements and other
releases as reasonably requested by Borrowers.
6.9. ERISA. No Credit Party shall, or shall cause or permit
any ERISA Affiliate to, cause or permit to occur an event which could result
in the imposition of a Lien under Section 412 of the IRC or Section 302 or
4068 of ERISA or cause or permit to occur an ERISA Event to the extent such
ERISA Event could reasonably be expected to have a Material Adverse Effect.
6.10. FINANCIAL COVENANTS. Borrowers shall not breach or
fail to comply with any of the Financial Covenants (the "FINANCIAL
COVENANTS") set forth in ANNEX G.
6.11. HAZARDOUS MATERIALS. No Credit Party shall cause or
permit a Release of any Hazardous Material on, at, in, under, above, to, from
or about any of the Real Estate where such Release would (a) violate in any
respect, or form the basis for any Environmental Liabilities under, any
Environmental Laws or Environmental Permits or (b) otherwise adversely impact
the value or marketability of any of the Real Estate or any of the
Collateral, other than such violations or Environmental Liabilities which
could not reasonably be expected to have a Material Adverse Effect.
6.12. SALE-LEASEBACKS. No Credit Party shall engage in any
sale-leaseback, synthetic lease or similar transaction involving any of its
assets.
6.13. CANCELLATION OF INDEBTEDNESS. No Credit Party shall
cancel any claim or debt owing to it, except for reasonable consideration
negotiated on an arm's-length basis and in the ordinary course of its
business consistent with past practices.
6.14. RESTRICTED PAYMENTS. No Credit Party shall make any
Restricted Payment, except (a) dividends and distributions by Subsidiaries of
any Borrower paid to such Borrower, (b) employee loans permitted under
SECTION 6.4(b) above, (c) the payments permitted by clauses (i) and (iv) of
the proviso contained in SECTION 6.4(a), (d) distributions by MCP to its
members so long as (i) the amount thereof does not exceed the amount payable
by Holdings to MIG within two Business Days' after the date of such
distribution pursuant to the terms of the Tax Sharing Agreement determined as
if Holdings had no assets other than its equity interests in Borrowers and no
other source of income other than in connection with such equity interests
and (ii) no Default or Event of Default shall exist or would result as a
result therefrom, PROVIDED that if Holdings receives any payment from MIG
pursuant to the terms of
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Paragraph 2(b) or Section 3 of the Tax Sharing Agreement Holdings shall
immediately thereafter contribute to the capital of MCP an amount equal to
any such payment, (e) payments by Holdings to MIG pursuant to the Tax Sharing
Agreement out of amounts distributed to Holdings in accordance with SECTION
6.14(d), (f) Restricted Payments to the extent that both before and after
giving effect thereto (i) the Term Overadvance has been paid in full, (ii) no
less than $5,000,000 in Net Borrowing Availability exists, (iii) no Default
or Event of Default shall exist or would result as a result thereof and (iv)
the timing of the payments referred to in CLAUSE (f) shall be set at dates
which permit the delivery of Financial Statements necessary to determine
current compliance with the financial covenants set forth in ANNEX G prior to
each payment, and (g) payments in connection with the Preferred Stock
Contribution.
6.15. CHANGE OF CORPORATE OR LIMITED LIABILITY COMPANY NAME
OR LOCATION; CHANGE OF FISCAL YEAR. No Credit Party shall (a) change its
corporate or limited liability company name, or (b) change its chief
executive office, principal place of business, corporate or limited liability
company offices or warehouses or locations at which Collateral is held or
stored, or the location of its records concerning the Collateral, in any case
without at least thirty (30) days prior written notice to Agent and after
Agent's written acknowledgment that any reasonable action requested by Agent
in connection therewith, including to continue the perfection of any Liens in
favor of Agent, on behalf of Lenders, in any Collateral, has been completed
or taken, and PROVIDED that any such new location shall be in the continental
United States. Without limiting the foregoing, no Credit Party shall change
its name, identity or corporate or limited liability company structure in any
manner which might make any financing or continuation statement filed in
connection herewith seriously misleading within the meaning of Section
9-402(7) of the Code or any other then applicable provision of the Code
except upon prior written notice to Agent and Lenders and after Agent's
written acknowledgment that any reasonable action requested by Agent in
connection therewith, including to continue the perfection of any Liens in
favor of Agent, on behalf of Lenders, in any Collateral, has been completed
or taken. No Credit Party shall change its Fiscal Year.
6.16. NO IMPAIRMENT OF INTERCOMPANY TRANSFERS. No Credit
Party shall directly or indirectly enter into or become bound by any
agreement, instrument, indenture or other obligation (other than this
Agreement and the other Loan Documents) which could directly or indirectly
restrict, prohibit or require the consent of any Person with respect to the
payment of dividends or distributions or the making or repayment of
intercompany loans by a Subsidiary of any Borrower to any Borrower or between
Borrowers.
6.17. NO SPECULATIVE TRANSACTIONS. No Credit Party shall
engage in any transaction involving commodity options, futures contracts or
similar transactions, except solely to hedge against fluctuations in the
prices of commodities owned or purchased by it and the values of foreign
currencies receivable or payable by it and interest swaps, caps or collars.
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6.18. LEASES. No Credit Party shall enter into any operating
lease for Equipment or Real Estate, if the aggregate of all such operating
lease payments payable in any year for Holdings and its Subsidiaries on a
consolidated basis would exceed $5,000,000.
6.19. CREDIT PARTIES OTHER THAN BORROWERS. None of the
Credit Parties other than Borrowers shall engage in any trade or business, or
own any assets (other than Stock of their Subsidiaries) or incur any
Indebtedness or Guaranteed Indebtedness (other than the Obligations and the
Holdings Note); PROVIDED that the IRB Subsidiary shall be the holder of the
Lebanon IRBs.
6.20. MODIFICATIONS OF CERTAIN DOCUMENTS. No Credit Party
shall amend or change (or permit or consent to any amendment or change of)
the terms of the Worthington Acquisition Agreement as amended by Amendment
No. 1 thereto, the Tax Sharing Agreement or any documentation relating to the
Lebanon IRBs, including, without limitation, the IRB Indenture or the IRB
Lease Agreement.
7. TERM
7.1. TERMINATION. The financing arrangements contemplated
hereby shall be in effect until the Commitment Termination Date, and the
Loans and all other Obligations shall be automatically due and payable in
full on such date.
7.2. SURVIVAL OF OBLIGATIONS UPON TERMINATION OF FINANCING
ARRANGEMENTS. Except as otherwise expressly provided for in the Loan
Documents, no termination or cancellation (regardless of cause or procedure)
of any financing arrangement under this Agreement shall in any way affect or
impair the obligations, duties and liabilities of the Credit Parties or the
rights of Agent and Lenders relating to any unpaid portion of the Loans or
any other Obligations, due or not due, liquidated, contingent or unliquidated
or any transaction or event occurring prior to such termination, or any
transaction or event, the performance of which is required after the
Commitment Termination Date. Except as otherwise expressly provided herein
or in any other Loan Document, all undertakings, agreements, covenants,
warranties and representations of or binding upon the Credit Parties, and all
rights of Agent and each Lender, all as contained in the Loan Documents,
shall not terminate or expire, but rather shall survive any such termination
or cancellation and shall continue in full force and effect until the
Termination Date; provided however, that in all events the provisions of
SECTION 11, the payment obligations under SECTIONS 1.15 and 1.16, and the
indemnities contained in the Loan Documents shall survive the Termination
Date.
8. EVENTS OF DEFAULT: RIGHTS AND REMEDIES
8.1. EVENTS OF DEFAULT. The occurrence of any one or more
of the following events (regardless of the reason therefor) shall constitute
an "EVENT OF DEFAULT" hereunder:
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(a) Any Borrower (i) fails to make any payment of principal
of, or interest on, or Fees owing in respect of, the Loans or any of the
other Obligations when due and payable, or (ii) fails to pay or reimburse
Agent or Lenders for any expense reimbursable hereunder or under any other
Loan Document within ten (10) days following Agent's demand for such
reimbursement or payment of expenses.
(b) Any Credit Party shall fail or neglect to perform, keep
or observe any of the provisions of SECTIONS 1.4, 1.8, 5.4 or 6, or any of
the provisions set forth in ANNEXES C or G, respectively.
(c) Any Borrower shall fail or neglect to perform, keep or
observe any of the provisions of SECTION 4 or any provisions set forth in
ANNEXES E or F, respectively, and the same shall remain unremedied for five
(5) days or more after such Credit Party is aware or should have been aware
of such failure or negligence.
(d) Any Credit Party shall fail or neglect to perform, keep
or observe any other provision of this Agreement or of any of the other Loan
Documents (other than any provision embodied in or covered by any other
clause of this SECTION 8.1) and the same shall remain unremedied for thirty
(30) days or more after such Credit Party is aware or should have been aware
of such failure or negligence.
(e) A default or breach shall occur under any other
agreement, document or instrument to which any Credit Party is a party which
is not cured within any applicable grace period, and such default or breach
(i) involves the failure to make any payment when due in respect of any
Indebtedness (other than the Obligations) of any Credit Party in excess of
$250,000 in the aggregate, or (ii) causes, or permits any holder of such
Indebtedness or a trustee to cause, Indebtedness or a portion thereof in
excess of $250,000 in the aggregate to become due prior to its stated
maturity or prior to its regularly scheduled dates of payment, regardless of
whether such default is waived, or such right is exercised, by such holder or
trustee.
(f) Any information contained in any Revolving Borrowing
Base Certificate is untrue or incorrect in any respect, or any representation
or warranty herein or in any Loan Document or in any written statement,
report, financial statement or certificate (other than a Revolving Borrowing
Base Certificate) made or delivered to Agent or any Lender by any Credit
Party is untrue or incorrect in any material respect as of the date when made
or deemed made.
(g) Assets of any Credit Party with a fair market value of
$250,000 or more shall be attached, seized, levied upon or subjected to a
writ or distress warrant, or come within the possession of any receiver,
trustee, custodian or assignee for the benefit of creditors of any Credit
Party and such condition continues for forty-five (45) days or more.
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(h) A case or proceeding shall have been commenced against
any Credit Party seeking a decree or order in respect of any Credit Party (i)
under Title 11 of the United States Code, as now constituted or hereafter
amended or any other applicable federal, state or foreign bankruptcy or other
similar law, (ii) appointing a custodian, receiver, liquidator, assignee,
trustee or sequestrator (or similar official) for any Credit Party or of any
substantial part of any such Person's assets, or (iii) ordering the
winding-up or liquidation of the affairs of any Credit Party, and such case
or proceeding shall remain undismissed or unstayed for sixty (60) days or
more or such court shall enter a decree or order granting the relief sought
in such case or proceeding.
(i) Any Credit Party (i) shall file a petition seeking
relief under Title 11 of the United States Code, as now constituted or
hereafter amended, or any other applicable federal, state or foreign
bankruptcy or other similar law, (ii) shall fail to contest in a timely and
appropriate manner or shall consent to the institution of proceedings
thereunder or to the filing of any such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator, assignee, trustee or
sequestrator (or similar official) of any Credit Party or of any substantial
part of any such Person's assets, (iii) shall make an assignment for the
benefit of creditors, (iv) shall take any corporate or limited liability
company action in furtherance of any of the foregoing; or (v) shall admit in
writing its inability to, or shall be generally unable to, pay its debts as
such debts become due.
(j) A final judgment or judgments for the payment of money
in excess of $250,000 in the aggregate at any time outstanding shall be
rendered against any Credit Party and the same shall not, within thirty (30)
days after the entry thereof, have been discharged or execution thereof
stayed or bonded pending appeal, or shall not have been discharged prior to
the expiration of any such stay.
(k) Any material provision of any Loan Document shall for
any reason cease to be valid, binding and enforceable in accordance with its
terms (or any Credit Party or Worthington shall challenge the enforceability
of any Loan Document or shall assert in writing, or engage in any action or
inaction based on any such assertion, that any provision of any of the Loan
Documents has ceased to be or otherwise is not valid, binding and enforceable
in accordance with its terms), or any security interest created under any
Loan Document shall cease to be a valid and perfected first priority security
interest or Lien (except as otherwise permitted herein or therein) in any of
the Collateral purported to be covered thereby.
(l) Any Change of Control shall occur.
(m) Any event shall occur as a result of which
revenue-producing activities cease or are substantially curtailed at any
facility of Borrowers generating more than 25% (or 40% if such facility is
covered by insurance, including business interruption insurance acceptable to
Agent) of Borrowers' consolidated revenues for the Fiscal Year preceding such
event and such cessation or curtailment continues for more than twenty (20)
days.
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(n) Without limiting the provisions of clause (e) above, a
default or breach shall occur under any of the documentation relating to the
Lebanon IRBs, including, without limitation, the IRB Indenture or the IRB
Lease Agreement, which is not cured within any applicable grace period, and
such default or breach (i) involves the failure to make any payment when due
in respect of any obligations under such documentation, or (ii) causes, or
permits any holder of such obligation or a trustee to cause such obligation
to become due prior to its stated maturity or prior to its regularly
scheduled dates of payment, regardless of whether such default is waived, or
such right is exercised, by such holder or trustee.
(o) Any Person other than the IRB Subsidiary (or its
trustee pursuant to the terms of the IRB Indenture) or Agent, on behalf of
Lenders, shall hold the Lebanon IRBs or have any rights related thereto.
(p) Failure of MCP to deliver to Agent satisfactory
evidence that Seller has complied with Section 7.1(c) of the IRB Lease
Agreement.
8.2. REMEDIES. (a) If any Event of Default shall have
occurred and be continuing or if a Default shall have occurred and be
continuing and Agent or Requisite Revolving Lenders shall have determined not
to make any Advances or incur any Letter of Credit Obligations so long as
that specific Default is continuing, Agent may (and at the written request of
the Requisite Revolving Lenders shall), without notice, suspend the Revolving
Loan facility with respect to further Advances and/or the incurrence of
further Letter of Credit Obligations whereupon any further Advances and
Letter of Credit Obligations shall be made or extended in Agent's sole
discretion (or in the sole discretion of the Requisite Revolving Lenders, if
such suspension occurred at their direction) so long as such Default or Event
of Default is continuing. If any Default or Event of Default shall have
occurred and be continuing, Agent may (and at the written request of
Requisite Lenders shall), without notice except as otherwise expressly
provided herein, increase the rate of interest applicable to the Loans and
the Letter of Credit Fees to the Default Rate.
(b) If any Event of Default shall have occurred and be
continuing, Agent may (and at the written request of the Requisite Lenders
shall), without notice, (i) terminate the Revolving Loan facility with
respect to further Advances or the incurrence of further Letter of Credit
Obligations; (ii) declare all or any portion of the Obligations, including
all or any portion of any Loan to be forthwith due and payable, and require
that the Letter of Credit Obligations be cash collateralized as provided in
ANNEX B, all without presentment, demand, protest or further notice of any
kind, all of which are expressly waived by Borrowers and each other Credit
Party; and (iii) exercise any rights and remedies provided to Agent under the
Loan Documents and/or at law or equity, including all remedies provided under
the Code; PROVIDED, HOWEVER, that upon the occurrence of an Event of Default
specified in SECTIONS 8.1(g), (h) or (i), the Revolving Loan facility shall
be immediately terminated and all of the
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Obligations, including the aggregate Revolving Loan, shall become immediately
due and payable without declaration, notice or demand by any Person.
8.3. WAIVERS BY CREDIT PARTIES. Except as otherwise
provided for in this Agreement or by applicable law, each Credit Party waives
(including for purposes of SECTION 12): (a) presentment, demand and protest
and notice of presentment, dishonor, notice of intent to accelerate, notice
of acceleration, protest, default, nonpayment, maturity, release, compromise,
settlement, extension or renewal of any or all commercial paper, accounts,
contract rights, documents, instruments, chattel paper and guaranties at any
time held by Agent on which any Credit Party may in any way be liable, and
hereby ratifies and confirms whatever Agent may do in this regard, (b) all
rights to notice and a hearing prior to Agent's taking possession or control
of, or to Agent's replevy, attachment or levy upon, the Collateral or any
bond or security which might be required by any court prior to allowing Agent
to exercise any of its remedies, and (c) the benefit of all valuation,
appraisal, marshaling and exemption laws.
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT
9.1. ASSIGNMENT AND PARTICIPATIONS. (a) The Credit Parties
signatory hereto consent to any Lender's assignment of, and/or sale of
participations in, at any time or times, the Loan Documents, Loans, Letter of
Credit Obligations and any Commitment or of any portion thereof or interest
therein, including any Lender's rights, title, interests, remedies, powers or
duties thereunder, whether evidenced by a writing or not. Any assignment by
a Lender shall (i) require the consent of Agent and (so long as no Default or
Event of Default has occurred and is continuing) the Borrower Representative
(which shall not be unreasonably withheld or delayed) and the execution of an
assignment agreement (an "ASSIGNMENT AGREEMENT") substantially in the from
attached hereto as EXHIBIT 9.1(a) and otherwise in form and substance
satisfactory to, and acknowledged by, Agent; (ii) be conditioned on such
assignee Lender representing to the assigning Lender and Agent that it is
purchasing the applicable Loans to be assigned to it for its own account, for
investment purposes and not with a view to the distribution thereof; (iii) if
a partial assignment, be in an amount at least equal to $5,000,000 and, after
giving effect to any such partial assignment, the assigning Lender shall have
retained Commitments in an amount at least equal to $5,000,000; and (iv)
include a payment to Agent of an assignment fee of $3,500. In the case of an
assignment by a Lender under this SECTION 9.1, the assignee shall have, to
the extent of such assignment, the same rights, benefits and obligations as
it would if it were a Lender hereunder. The assigning Lender shall be
relieved of its obligations hereunder with respect to its Commitments or
assigned portion thereof from and after the date of such assignment. Each
Borrower hereby acknowledges and agrees that any assignment will give rise to
a direct obligation of Borrowers to the assignee and that the assignee shall
be considered to be a "Lender". In all instances, each Lender's liability to
make Loans hereunder shall be several and not joint and shall be limited to
such Lender's Pro Rata Share of the applicable Commitment. In the event
Agent or any Lender assigns or otherwise transfers all or any part of the
Obligations, Agent or any such
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Lender shall so notify Borrowers and Borrowers shall, upon the request of
Agent or such Lender, execute new Notes in exchange for the Notes, if any,
being assigned. Notwithstanding the foregoing provisions of this SECTION
9.1(a), any Lender may at any time pledge the Obligations held by it and such
Lender's rights under this Agreement and the other Loan Documents to a
Federal Reserve Bank, and any Lender that is an investment fund may assign
the Obligations held by it and such Lender's rights under this Agreement and
the other Loan Documents to another investment fund managed by the same
investment advisor; PROVIDED, HOWEVER, that no such pledge to a Federal
Reserve Bank shall release such Lender from such Lender's obligations
hereunder or under any other Loan Document.
(b) Any participation by a Lender of all or any part of its
Commitments shall be made with the understanding that all amounts payable by
Borrowers hereunder shall be determined as if that Lender had not sold such
participation, and that the holder of any such participation shall not be
entitled to require such Lender to take or omit to take any action hereunder
except actions directly affecting (i) any reduction in the principal amount
of, or interest rate or Fees payable with respect to, any Loan in which such
holder participates, (ii) any extension of the scheduled amortization of the
principal amount of any Loan in which such holder participates or the final
maturity date thereof, and (iii) any release of all or substantially all of
the Collateral (other than in accordance with the terms of this Agreement,
the Collateral Documents or the other Loan Documents). Solely for purposes
of SECTIONS 1.13, 1.15, 1.16 and 9.8, each Borrower acknowledges and agrees
that a participation shall give rise to a direct obligation of Borrowers to
the participant and the participant shall be considered to be a "Lender".
Except as set forth in the preceding sentence no Borrower or Credit Party
shall have any obligation or duty to any participant. Neither Agent nor any
Lender (other than the Lender selling a participation) shall have any duty to
any participant and may continue to deal solely with the Lender selling a
participation as if no such sale had occurred.
(c) Except as expressly provided in this SECTION 9.1, no
Lender shall, as between Borrowers and that Lender, or Agent and that Lender,
be relieved of any of its obligations hereunder as a result of any sale,
assignment, transfer or negotiation of, or granting of participation in, all
or any part of the Loans, the Notes or other Obligations owed to such Lender.
(d) Each Credit Party executing this Agreement shall assist
any Lender permitted to sell assignments or participations under this SECTION
9.1 as reasonably required to enable the assigning or selling Lender to
effect any such assignment or participation, including the execution and
delivery of any and all agreements, notes and other documents and instruments
as shall be requested and, if requested by Agent in connection with the
primary syndication of the Commitments and/or the Loans, the preparation of
informational materials for, and the participation of management in meetings
with, potential assignees or participants. Each Credit Party executing this
Agreement shall certify the correctness, completeness and accuracy of all
descriptions of the Credit Parties and their affairs contained in any selling
materials provided by them and all other information provided by them and
included in such materials, except that any Projections delivered by
Borrowers shall only be certified by
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Borrowers as having been prepared by Borrowers in compliance with the
representations contained in SECTION 3.4(c).
(e) A Lender may furnish any information concerning Credit
Parties in the possession of such Lender from time to time to assignees and
participants (including prospective assignees and participants). Each Lender
shall obtain from assignees or participants confidentiality covenants
substantially equivalent to those contained in SECTION 11.8.
(f) So long as no Event of Default shall have occurred and
be continuing, no Lender shall assign or sell participations in any portion
of its Loans or Commitments to a potential Lender or participant, if, as of
the date of the proposed assignment or sale, the assignee Lender or
participant would be subject to capital adequacy or similar requirements
under SECTION 1.16(a), increased costs under SECTION 1.16(b), an inability to
fund LIBOR Loans under SECTION1.16(c), or withholding taxes in accordance
with SECTION 1.15(a).
9.2. APPOINTMENT OF AGENT. GE Capital is hereby appointed
to act on behalf of all Lenders as Agent under this Agreement and the other
Loan Documents. The provisions of this SECTION 9.2 are solely for the
benefit of Agent and Lenders and no Credit Party nor any other Person shall
have any rights as a third party beneficiary of any of the provisions hereof.
In performing its functions and duties under this Agreement and the other
Loan Documents, Agent shall act solely as an agent of Lenders and does not
assume and shall not be deemed to have assumed any obligation toward or
relationship of agency or trust with or for any Credit Party or any other
Person. Agent shall have no duties or responsibilities except for those
expressly set forth in this Agreement and the other Loan Documents. The
duties of Agent shall be mechanical and administrative in nature and Agent
shall not have, or be deemed to have, by reason of this Agreement, any other
Loan Document or otherwise a fiduciary relationship in respect of any Lender.
Neither Agent nor any of its Affiliates nor any of their respective
officers, directors, employees, agents or representatives shall be liable to
any Lender for any action taken or omitted to be taken by it hereunder or
under any other Loan Document, or in connection herewith or therewith, except
for damages caused by its or their own gross negligence or willful misconduct.
If Agent shall request instructions from Requisite Lenders,
Requisite Revolving Lenders, Supermajority Revolving Lenders or all affected
Lenders with respect to any act or action (including failure to act) in
connection with this Agreement or any other Loan Document, then Agent shall
be entitled to refrain from such act or taking such action unless and until
Agent shall have received instructions from Requisite Lenders, Requisite
Revolving Lenders, Supermajority Revolving Lenders or all affected Lenders,
as the case may be, and Agent shall not incur liability to any Person by
reason of so refraining. Agent shall be fully justified in failing or
refusing to take any action hereunder or under any other Loan Document (a) if
such action would, in the opinion of Agent, be contrary to law or the terms
of this Agreement or any other Loan Document, (b) if such action would, in
the opinion of Agent,
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expose Agent to Environmental Liabilities or (c) if Agent shall not first be
indemnified to its satisfaction against any and all liability and expense
which may be incurred by it by reason of taking or continuing to take any
such action. Without limiting the foregoing, no Lender shall have any right
of action whatsoever against Agent as a result of Agent acting or refraining
from acting hereunder or under any other Loan Document in accordance with the
instructions of Requisite Lenders, Requisite Revolving Lenders, Supermajority
Revolving Lenders or all affected Lenders, as applicable.
9.3. AGENT'S RELIANCE, ETC. Neither Agent nor any of its
Affiliates nor any of their respective directors, officers, agents or
employees shall be liable for any action taken or omitted to be taken by it
or them under or in connection with this Agreement or the other Loan
Documents, except for damages caused by its or their own gross negligence or
willful misconduct. Without limitation of the generality of the foregoing,
Agent: (a) may treat the payee of any Note as the holder thereof until
Agent receives written notice of the assignment or transfer thereof signed by
such payee and in form satisfactory to Agent; (b) may consult with legal
counsel, independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good faith
by it in accordance with the advice of such counsel, accountants or experts;
(c) makes no warranty or representation to any Lender and shall not be
responsible to any Lender for any statements, warranties or representations
made in or in connection with this Agreement or the other Loan Documents; (d)
shall not have any duty to ascertain or to inquire as to the performance or
observance of any of the terms, covenants or conditions of this Agreement or
the other Loan Documents on the part of any Credit Party or to inspect the
Collateral (including the books and records) of any Credit Party; (e) shall
not be responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or the
other Loan Documents or any other instrument or document furnished pursuant
hereto or thereto; and (f) shall incur no liability under or in respect of
this Agreement or the other Loan Documents by acting upon any notice,
consent, certificate or other instrument or writing (which may be by
telecopy, telegram, cable or telex) believed by it to be genuine and signed
or sent by the proper party or parties.
9.4. GE CAPITAL AND AFFILIATES. With respect to its
Commitments hereunder, GE Capital shall have the same rights and powers under
this Agreement and the other Loan Documents as any other Lender and may
exercise the same as though it were not Agent; and the term "Lender" or
"Lenders" shall, unless otherwise expressly indicated, include GE Capital in
its individual capacity. GE Capital and its Affiliates may lend money to,
invest in, and generally engage in any kind of business with, any Credit
Party, any of their Affiliates and any Person who may do business with or own
securities of any Credit Party or any such Affiliate, all as if GE Capital
were not Agent and without any duty to account therefor to Lenders. GE
Capital and its Affiliates may accept fees and other consideration from any
Credit Party for services in connection with this Agreement or otherwise
without having to account for the same to Lenders. Each Lender acknowledges
the potential conflict of interest
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between GE Capital as a Lender holding disproportionate interests in the
Loans and GE Capital as Agent.
9.5. LENDER CREDIT DECISION. Each Lender acknowledges that
it has, independently and without reliance upon Agent or any other Lender and
based on the Financial Statements referred to in SECTION 3.4(a) and such
other documents and information as it has deemed appropriate, made its own
credit and financial analysis of the Credit Parties and its own decision to
enter into this Agreement. Each Lender also acknowledges that it will,
independently and without reliance upon 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 decisions in taking or not taking action
under this Agreement. Each Lender acknowledges the potential conflict of
interest of each other Lender as a result of Lenders holding disproportionate
interests in the Loans, and expressly consents to, and waives any claim based
upon, such conflict of interest.
9.6. INDEMNIFICATION. Lenders agree to indemnify Agent (to
the extent not reimbursed by Credit Parties and without limiting the
obligations of Credit Parties hereunder), ratably according to their
respective Pro Rata Shares, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by, or asserted against Agent in any way relating to or
arising out of this Agreement or any other Loan Document or any action taken
or omitted by Agent in connection therewith; PROVIDED, HOWEVER, that no
Lender shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from Agent's gross negligence or willful misconduct.
Without limiting the foregoing, each Lender agrees to reimburse Agent
promptly upon demand for its ratable share of any out-of-pocket expenses
(including counsel fees) incurred by Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise)
of, or legal advice in respect of rights or responsibilities under, this
Agreement and each other Loan Document, to the extent that Agent is not
reimbursed for such expenses by Credit Parties.
9.7. SUCCESSOR AGENT. Agent may resign at any time by
giving not less than thirty (30) days' prior written notice thereof to
Lenders and Borrower Representative. Upon any such resignation, the
Requisite Lenders shall have the right to appoint a successor Agent. If no
successor Agent shall have been so appointed by the Requisite Lenders and
shall have accepted such appointment within 30 days after the resigning
Agent's giving notice of resignation, then the resigning Agent may, on behalf
of Lenders, appoint a successor Agent, which shall be a Lender, if a Lender
is willing to accept such appointment, or otherwise shall be a commercial
bank or financial institution or a subsidiary of a commercial bank or
financial institution if such commercial bank or financial institution is
organized under the laws of the United States of America or of any State
thereof and has a combined capital and surplus of at least $300,000,000. If
no successor Agent has been appointed pursuant to the foregoing, by
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the 30th day after the date such notice of resignation was given by the
resigning Agent, such resignation shall become effective and the Requisite
Lenders shall thereafter perform all the duties of Agent hereunder until such
time, if any, as the Requisite Lenders appoint a successor Agent as provided
above. Any successor Agent appointed by Requisite Lenders hereunder shall be
subject to the approval of Borrower Representative, such approval not to be
unreasonably withheld or delayed; PROVIDED that such approval shall not be
required if a Default or an Event of Default shall have occurred and be
continuing. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall succeed to and become vested with
all the rights, powers, privileges and duties of the resigning Agent. Upon
the earlier of the acceptance of any appointment as Agent hereunder by a
successor Agent or the effective date of the resigning Agent's resignation,
the resigning Agent shall be discharged from its duties and obligations under
this Agreement and the other Loan Documents, except that any indemnity rights
or other rights in favor of such resigning Agent shall continue. After any
resigning Agent's resignation hereunder, the provisions of this SECTION 9
shall inure to its benefit as to any actions taken or omitted to be taken by
it while it was Agent under this Agreement and the other Loan Documents.
9.8. SETOFF AND SHARING OF PAYMENTS. In addition to any
rights now or hereafter granted under applicable law and not by way of
limitation of any such rights, upon the occurrence and during the continuance
of any Event of Default, each Lender and each holder of any Note is hereby
authorized at any time or from time to time, without notice to any Credit
Party or to any other Person, any such notice being hereby expressly waived,
to set off and to appropriate and to apply any and all balances held by it at
any of its offices for the account of any Borrower or Guarantor (regardless
of whether such balances are then due to such Borrower or Guarantor) and any
other properties or assets any time held or owing by that Lender or that
holder to or for the credit or for the account of any Borrower or Guarantor
against and on account of any of the Obligations which are not paid when due.
Any Lender or holder of any Note exercising a right to set off or otherwise
receiving any payment on account of the Obligations in excess of its Pro Rata
Share thereof shall purchase for cash (and the other Lenders or holders shall
sell) such participations in each such other Lender's or holder's Pro Rata
Share of the Obligations as would be necessary to cause such Lender to share
the amount so set off or otherwise received with each other Lender or holder
in accordance with their respective Pro Rata Shares. Each Lender's
obligation under this SECTION 9.8 shall be in addition to and not limitation
of its obligations to purchase a participation in an amount equal to its Pro
Rata Share of the Swing Line Loans under SECTION 1.1. Each Credit Party that
is a Borrower or Guarantor agrees, to the fullest extent permitted by law,
that (a) any Lender or holder may exercise its right to set off with respect
to amounts in excess of its Pro Rata Share of the Obligations and may sell
participations in such amount so set off to other Lenders and holders and (b)
any Lender or holders so purchasing a participation in the Loans made or
other Obligations held by other Lenders or holders may exercise all rights of
set-off, bankers' lien, counterclaim or similar rights with respect to such
participation as fully as if such Lender or holder were a direct holder of
the Loans and the other Obligations in the amount of such participation.
Notwithstanding the foregoing, if all or any portion of the set-off amount or
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payment otherwise received is thereafter recovered from the Lender that has
exercised the right of set-off, the purchase of participations by that Lender
shall be rescinded and the purchase price restored without interest.
9.9. ADVANCES; PAYMENTS; NON-FUNDING LENDERS; INFORMATION;
ACTIONS IN CONCERT.
(a) ADVANCES; PAYMENTS. (i) Revolving Lenders shall
refund or participate in the Swing Line Loan in accordance with CLAUSES (iii)
and (iv) of SECTION 1.1(c). If the Swing Line Lender declines to make a
Swing Line Loan or if Swing Line Availability is zero, Agent shall notify
Revolving Lenders, promptly after receipt of a Notice of Revolving Credit
Advance and in any event prior to 1:00 p.m. (New York time) on the date such
Notice of Revolving Advance is received, by telecopy, telephone or other
similar form of transmission. Each Revolving Lender shall make the amount of
such Lender's Pro Rata Share of such Revolving Credit Advance available to
Agent in same day funds by wire transfer to Agent's account as set forth in
ANNEX H not later than 3:00 p.m. (New York time) on the requested funding
date, in the case of an Index Rate Loan and not later than 11:00 a.m. (New
York time) on the requested funding date in the case of a LIBOR Loan. After
receipt of such wire transfers (or, in the Agent's sole discretion, before
receipt of such wire transfers), subject to the terms hereof, Agent shall
make the requested Revolving Credit Advance to the Borrower designated by
Borrower Representative in the Notice of Revolving Credit Advance. All
payments by each Revolving Lender shall be made without setoff, counterclaim
or deduction of any kind.
(ii) On the second (2nd) Business Day of each
calendar week or more frequently as aggregate cumulative payments in excess
of $2,000,000 are received with respect to the Loans (other than the Swing
Line Loan) (each, a "SETTLEMENT DATE"), Agent will advise each Lender by
telephone, or telecopy of the amount of such Lender's Pro Rata Share of
principal, interest and Fees paid for the benefit of Lenders with respect to
each applicable Loan. Provided that such Lender has funded all payments or
Advances required to be made by it and has purchased all participations
required to be purchased by it under this Agreement and the other Loan
Documents as of such Settlement Date, Agent will pay to each Lender such
Lender's Pro Rata Share of principal, interest and Fees paid by Borrowers
since the previous Settlement Date for the benefit of that Lender on the
Loans held by it. To the extent that any Lender (a "NON-FUNDING LENDER") has
failed to fund all such payments and Advances or failed to fund the purchase
of all such participations, Agent shall be entitled to set off the funding
short-fall against that Non-Funding Lender's Pro Rata Share of all payments
received from Borrowers. Such payments shall be made by wire transfer to
such Lender's account (as specified by such Lender in ANNEX H or the
applicable Assignment Agreement) not later than 2:00 p.m. (New York time) on
the next Business Day following each Settlement Date.
(b) AVAILABILITY OF LENDER'S PRO RATA SHARE. Agent may
assume that each Revolving Lender will make its Pro Rata Share of each
Revolving Credit Advance available to
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Agent on each funding date. If such Pro Rata Share is not, in fact, paid to
Agent by such Revolving Lender when due, Agent will be entitled to recover
such amount on demand from such Revolving Lender without set-off,
counterclaim or deduction of any kind. If any Revolving Lender fails to pay
the amount of its Pro Rata Share forthwith upon Agent's demand, Agent shall
promptly notify Borrower Representative and Borrowers shall immediately repay
such amount to Agent. Nothing in this SECTION 9.9(b) or elsewhere in this
Agreement or the other Loan Documents shall be deemed to require Agent to
advance funds on behalf of any Revolving Lender or to relieve any Revolving
Lender from its obligation to fulfill its Commitments hereunder or to
prejudice any rights that Borrowers may have against any Revolving Lender as
a result of any default by such Revolving Lender hereunder. To the extent
that Agent advances funds to any Borrower on behalf of any Revolving Lender
and is not reimbursed therefor on the same Business Day as such Advance is
made, Agent shall be entitled to retain for its account all interest accrued
on such Advance until reimbursed by the applicable Revolving Lender.
(c) RETURN OF PAYMENTS. (i) If Agent pays an amount to a
Lender under this Agreement in the belief or expectation that a related
payment has been or will be received by Agent from Borrowers and such related
payment is not received by Agent, then Agent will be entitled to recover such
amount from such Lender on demand without set-off, counterclaim or deduction
of any kind.
(ii) If Agent determines at any time that any amount
received by Agent under this Agreement must be returned to any Borrower or
paid to any other Person pursuant to any insolvency law or otherwise, then,
notwithstanding any other term or condition of this Agreement or any other
Loan Document, Agent will not be required to distribute any portion thereof
to any Lender. In addition, each Lender will repay to Agent on demand any
portion of such amount that Agent has distributed to such Lender, together
with interest at such rate, if any, as Agent is required to pay to any
Borrower or such other Person, without set-off, counterclaim or deduction of
any kind.
(d) NON-FUNDING LENDERS. The failure of any Non-Funding
Lender to make any Revolving Credit Advance or any payment required by it
hereunder or to purchase any participation in any Swing Line Loan to be made
or purchased by it on the date specified therefor shall not relieve any other
Revolving Lender (each such other Revolving Lender, an "OTHER LENDER") of its
obligations to make such Advance or purchase such participation on such date,
but neither any Other Lender nor Agent shall be responsible for the failure
of any Non-Funding Lender to make an Advance or to purchase a participation
required hereunder. Notwithstanding anything set forth herein to the
contrary, a Non-Funding Lender shall not have any voting or consent rights
under or with respect to any Loan Document or constitute a "Lender" or a
"Revolving Lender" (or be included in the calculation of "Requisite Lenders",
"Requisite Revolving Lenders" or "Supermajority Revolving Lenders" hereunder)
for any voting or consent rights under or with respect to any Loan Document.
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(e) DISSEMINATION OF INFORMATION. Agent will use
reasonable efforts to provide Lenders with any notice of Default or Event of
Default received by Agent from, or delivered by Agent to, any Credit Party,
with notice of any Event of Default of which Agent has actually become aware
and with notice of any action taken by Agent following any Event of Default;
provided, however, that Agent shall not be liable to any Lender for any
failure to do so, except to the extent that such failure is attributable to
Agent's gross negligence or willful misconduct.
(f) ACTIONS IN CONCERT. Anything in this Agreement to the
contrary notwithstanding, each Lender hereby agrees with each other Lender
that no Lender shall take any action to protect or enforce its rights arising
out of this Agreement or the Notes (including exercising any rights of
set-off) without first obtaining the prior written consent of Agent and
Requisite Lenders, it being the intent of Lenders that any such action to
protect or enforce rights under this Agreement and the Notes shall be taken
in concert and at the direction or with the consent of Agent.
10. SUCCESSORS AND ASSIGNS
10.1. SUCCESSORS AND ASSIGNS. This Agreement and the other
Loan Documents shall be binding on and shall inure to the benefit of each
Credit Party, Agent, Lenders and their respective successors and assigns
(including, in the case of any Credit Party, a debtor-in-possession on behalf
of such Credit Party), except as otherwise provided herein or therein. No
Credit Party may assign, transfer, hypothecate or otherwise convey its
rights, benefits, obligations or duties hereunder or under any of the other
Loan Documents without the prior express written consent of Agent and
Lenders. Any such purported assignment, transfer, hypothecation or other
conveyance by any Credit Party without the prior express written consent of
Agent and Lenders shall be void. The terms and provisions of this Agreement
are for the purpose of defining the relative rights and obligations of each
Credit Party, Agent and Lenders with respect to the transactions contemplated
hereby and no Person shall be a third party beneficiary of any of the terms
and provisions of this Agreement or any of the other Loan Documents.
11. MISCELLANEOUS
11.1. COMPLETE AGREEMENT; MODIFICATION OF AGREEMENT. The
Loan Documents constitute the complete agreement between the parties with
respect to the subject matter thereof and may not be modified, altered or
amended except as set forth in SECTION 11.2 below. Any letter of interest,
and/or fee letter (other than the GE Capital Fee Letter) between any Credit
Party and Agent or any Lender or any of their respective affiliates,
predating this Agreement and relating to a financing of substantially similar
form, purpose or effect shall be superseded by this Agreement.
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11.2. AMENDMENTS AND WAIVERS. (a) Except for actions
expressly permitted to be taken by Agent, no amendment, modification,
termination or waiver of any provision of this Agreement or any of the Notes,
or any consent to any departure by any Credit Party therefrom, shall in any
event be effective unless the same shall be in writing and signed by Agent
and Borrowers, and by Requisite Lenders, Requisite Revolving Lenders,
Supermajority Revolving Lenders or all affected Lenders, as applicable.
Except as set forth in CLAUSES (b) and (c) below, all such amendments,
modifications, terminations or waivers requiring the consent of any Lenders
shall require the written consent of Requisite Lenders.
(b) No amendment, modification, termination or waiver of or
consent with respect to any provision of this Agreement which increases the
percentage advance rates set forth in the definition of the MCP Revolving
Borrowing Base or the Second Borrower Revolving Borrowing Base (to the extent
applicable), or which makes less restrictive the nondiscretionary criteria
for exclusion from Eligible Accounts and Eligible Inventory set forth in
SECTIONS 1.6 and 1.7 shall be effective unless the same shall be in writing
and signed by Agent, Supermajority Revolving Lenders and Borrowers. No
amendment, modification, termination or waiver of or consent with respect to
any provision of this Agreement which waives compliance with the conditions
precedent set forth in SECTION 2.2 to the making of any Loan or the
incurrence of any Letter of Credit Obligations shall be effective unless the
same shall be in writing and signed by Agent, Requisite Revolving Lenders and
Borrowers. Notwithstanding anything contained in this Agreement to the
contrary, no waiver or consent with respect to any Default (if in connection
therewith Agent or Requisite Revolving Lenders, as the case may be, have
exercised its or their right to suspend the making or incurrence of further
Advances or Letter of Credit Obligations pursuant to SECTION 8.2(a)) or any
Event of Default shall be effective for purposes of the conditions precedent
to the making of Loans or the incurrence of Letter of Credit Obligations set
forth in SECTION 2.2 unless the same shall be in writing and signed by Agent,
Requisite Revolving Lenders and Borrowers.
(c) No amendment, modification, termination or waiver
shall, unless in writing and signed by Agent and each Lender directly
affected thereby, do any of the following: (i) increase the principal amount
of any Lender's Commitment (which action shall be deemed to directly affect
all Lenders); (ii) reduce the principal of, rate of interest on or Fees
payable with respect to any Loan or Letter of Credit Obligations of any
affected Lender; (iii) extend any scheduled payment date or final maturity
date of the principal amount of any Loan of any affected Lender; (iv) waive,
forgive, defer, extend or postpone any payment of interest or Fees as to any
affected Lender; (v) except as otherwise permitted herein or in the other
Loan Documents, release, or permit any Credit Party to sell or otherwise
dispose of, any Collateral with a value exceeding $5,000,000 in the aggregate
(which action shall be deemed to directly affect all Lenders); (vi) change
the percentage of the Commitments or of the aggregate unpaid principal amount
of the Loans which shall be required for Lenders or any of them to take any
action hereunder; and (vii) amend or waive this SECTION 11.2 or the
definitions of the terms "Requisite Lenders", "Requisite Revolving Lenders"
or "Supermajority Revolving Lenders" insofar as such definitions affect the
substance of this
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SECTION 11.2. Furthermore, no amendment, modification, termination or
waiver affecting the rights or duties of Agent under this Agreement or any
other Loan Document shall be effective unless in writing and signed by Agent,
in addition to Lenders required hereinabove to take such action. Each
amendment, modification, termination or waiver shall be effective only in the
specific instance and for the specific purpose for which it was given. No
amendment, modification, termination or waiver shall be required for Agent to
take additional Collateral pursuant to any Loan Document. No amendment,
modification, termination or waiver of any provision of any Note shall be
effective without the written concurrence of the holder of that Note. No
notice to or demand on any Credit Party in any case shall entitle such Credit
Party or any other Credit Party to any other or further notice or demand in
similar or other circumstances. Any amendment, modification, termination,
waiver or consent effected in accordance with this SECTION 11.2 shall be
binding upon each holder of the Notes at the time outstanding and each future
holder of the Notes.
(d) If, in connection with any proposed amendment,
modification, waiver or termination (a "PROPOSED CHANGE"):
(i) requiring the consent of all affected Lenders,
the consent of Requisite Lenders is obtained, but the consent of other
Lenders whose consent is required is not obtained (any such Lender whose
consent is not obtained as described this CLAUSE (i) and in CLAUSES (ii),
(iii) and (iv) below being referred to as a "NON-CONSENTING LENDER"), or
(ii) requiring the consent of Supermajority
Revolving Lenders, the consent of Requisite Revolving Lenders is obtained,
but the consent of Supermajority Revolving Lenders is not obtained, or
(iii) requiring the consent of Requisite Revolving
Lenders, the consent of Revolving Lenders holding 51% or more of the
aggregate Revolving Loan Commitments is obtained, but the consent of
Requisite Revolving Lenders is not obtained, or
(iv) requiring the consent of Requisite Lenders, the
consent of Lenders holding 51% or more of the aggregate Commitments is
obtained, but the consent of Requisite Lenders is not obtained, then, so long
as Agent is not a Non-Consenting Lender, at Borrower Representative's
request, Agent or a Person acceptable to Agent shall have the right with
Agent's consent and in Agent's sole discretion (but shall have no obligation)
to purchase from such Non-Consenting Lenders, and such Non-Consenting Lenders
agree that they shall, upon Agent's request, sell and assign to Agent or such
Person, all of the Commitments of such Non-Consenting Lender for an amount
equal to the principal balance of all Loans held by the Non-Consenting Lender
and all accrued interest and Fees with respect thereto through the date of
sale, such purchase and sale to be consummated pursuant to an executed
Assignment Agreement.
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(e) Upon indefeasible payment in full in cash and
performance of all of the Obligations (other than indemnification Obligations
under Section 1.13, termination of the Commitments and a release of all
claims against Agent and Lenders, and so long as no suits, actions,
proceedings, or claims are pending or threatened against any Indemnified
Person asserting any damages, losses or liabilities that are Indemnified
Liabilities, Agent shall deliver to Borrowers termination statements,
mortgage releases and other documents necessary or appropriate to evidence
the termination of the Liens securing payment of the Obligations.
11.3. FEES AND EXPENSES. Borrowers shall reimburse Agent for
all out-of-pocket expenses incurred in connection with the preparation of the
Loan Documents (including the reasonable fees and expenses of all of its
special loan counsel, advisors, consultants and auditors retained in
connection with the Loan Documents and the Related Transactions and advice in
connection therewith). Borrowers shall reimburse Agent (and, with respect to
CLAUSES (c), (d) and (e) below, all Lenders) for all fees, costs and
expenses, including the reasonable fees, costs and expenses of counsel or
other advisors (including environmental and management consultants and
appraisers) for advice, assistance, or other representation in connection
with:
(a) the forwarding to Borrowers or any other Person on
behalf of Borrowers by Agent of the proceeds of the Loans;
(b) any amendment, modification or waiver of, or consent
with respect to, any of the Loan Documents or Related Transactions Documents
or advice in connection with the administration of the Loans made pursuant
hereto or its rights hereunder or thereunder;
(c) any litigation, contest, dispute, suit, proceeding or
action (whether instituted by Agent, any Lender, any Borrower or any other
Person) in any way relating to the Collateral, any of the Loan Documents or
any other agreement to be executed or delivered in connection therewith or
herewith, whether as party, witness, or otherwise, including any litigation,
contest, dispute, suit, case, proceeding or action, and any appeal or review
thereof, in connection with a case commenced by or against any or all of the
Borrowers or any other Person that may be obligated to Agent by virtue of the
Loan Documents; including any such litigation, contest, dispute, suit,
proceeding or action arising in connection with any work-out or restructuring
of the Loans during the pendency of one or more Events of Default; PROVIDED
that in the case of reimbursement of counsel for Lenders other than Agent,
such reimbursement shall be limited to one counsel for all such Lenders;
(d) any attempt to enforce any remedies of Agent against
any or all of the Credit Parties or any other Person that may be obligated to
Agent or any Lender by virtue of any of the Loan Documents; including any
such attempt to enforce any such remedies in the course of any work-out or
restructuring of the Loans during the pendency of one or more Events of
Default; PROVIDED that in the case of reimbursement of counsel for Lenders
other than Agent, such reimbursement shall be limited to one counsel for all
such Lenders;
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(e) any work-out or restructuring of the Loans during the
pendency of one or more Events of Default; or
(f) efforts to (i) monitor the Loans or any of the other
Obligations, (ii) evaluate, observe or assess any of the Credit Parties or
their respective affairs, and (iii) verify, protect, evaluate, assess,
appraise, collect, sell, liquidate or otherwise dispose of any of the
Collateral;
including, as to each of clauses (a) through (f) above, all attorneys' and
other professional and service providers' fees arising from such services,
including those in connection with any appellate proceedings; and all
expenses, costs, charges and other fees incurred by such counsel and others
in any way or respect arising in connection with or relating to any of the
events or actions described in this SECTION 11.3 shall be payable, on demand,
by Borrowers to Agent. Without limiting the generality of the foregoing, such
expenses, costs, charges and fees may include: fees, costs and expenses of
accountants, environmental advisors, appraisers, investment bankers,
management and other consultants and paralegals; court costs and expenses;
photocopying and duplication expenses; court reporter fees, costs and
expenses; long distance telephone charges; air express charges; telegram or
telecopy charges; secretarial overtime charges; and expenses for travel,
lodging and food paid or incurred in connection with the performance of such
legal or other advisory services.
11.4. NO WAIVER. Agent's or any Lender's failure, at any
time or times, to require strict performance by the Credit Parties of any
provision of this Agreement and any of the other Loan Documents shall not
waive, affect or diminish any right of Agent or such Lender thereafter to
demand strict compliance and performance therewith. Any suspension or waiver
of an Event of Default shall not suspend, waive or affect any other Event of
Default whether the same is prior or subsequent thereto and whether the same
or of a different type. Subject to the provisions of SECTION 11.2, none of
the undertakings, agreements, warranties, covenants and representations of
any Credit Party contained in this Agreement or any of the other Loan
Documents and no Default or Event of Default by any Credit Party shall be
deemed to have been suspended or waived by Agent or any Lender, unless such
waiver or suspension is by an instrument in writing signed by an officer of
or other authorized employee of Agent and the applicable required Lenders,
and directed to Borrowers specifying such suspension or waiver.
11.5. REMEDIES. Agent's and Lenders' rights and remedies
under this Agreement shall be cumulative and nonexclusive of any other rights
and remedies which Agent or any Lender may have under any other agreement,
including the other Loan Documents, by operation of law or otherwise.
Recourse to the Collateral shall not be required.
11.6. SEVERABILITY. Wherever possible, each provision of
this Agreement and the other Loan Documents shall be interpreted in such a
manner as to be effective and valid
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under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement.
11.7. CONFLICT OF TERMS. Except as otherwise provided in
this Agreement or any of the other Loan Documents by specific reference to
the applicable provisions of this Agreement, if any provision contained in
this Agreement is in conflict with, or inconsistent with, any provision in
any of the other Loan Documents, the provision contained in this Agreement
shall govern and control.
11.8. CONFIDENTIALITY. Agent and each Lender agree to use
commercially reasonable efforts and at least equivalent to the efforts Agent
or such Lender applies to maintaining the confidentiality of its own
confidential information to maintain as confidential all confidential
information provided to them by the Credit Parties and designated as
confidential for a period of two (2) years following receipt thereof, except
that Agent and any Lender may disclose such information (a) to Persons
employed or engaged by Agent or such Lender in evaluating, approving,
structuring or administering the Loans and the Commitments; (b) to any bona
fide assignee or participant or potential assignee or participant that has
agreed to comply with the covenant contained in this SECTION 11.8 (and any
such bona fide assignee or participant or potential assignee or participant
may disclose such information to Persons employed or engaged by them as
described in CLAUSE (a) above); (c) as required or requested by any
Governmental Authority or reasonably believed by Agent or such Lender to be
compelled by any court decree, subpoena or legal or administrative order or
process; (d) as, on the advice of Agent's or such Lender's counsel, required
by law; (e) in connection with the exercise of any right or remedy under the
Loan Documents or in connection with any Litigation to which Agent or such
Lender is a party; or (f) which ceases to be confidential through no fault of
Agent or such Lender.
11.9. GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED
IN ANY OF THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, THE LOAN DOCUMENTS AND THE
OBLIGATIONS SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND
PERFORMED IN THAT STATE AND ANY APPLICABLE LAWS OF THE UNITED STATES OF
AMERICA. EACH CREDIT PARTY HEREBY CONSENTS AND AGREES THAT THE STATE OR
FEDERAL COURTS LOCATED IN NEW YORK COUNTY, CITY OF NEW YORK, NEW YORK SHALL
HAVE NON-EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES
BETWEEN THE CREDIT PARTIES, AGENT AND LENDERS PERTAINING TO THIS AGREEMENT OR
ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR RELATING
TO THIS
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AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, PROVIDED, THAT AGENT, LENDERS
AND THE CREDIT PARTIES ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY
HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF NEW YORK COUNTY, CITY OF NEW
YORK, NEW YORK AND, PROVIDED, FURTHER NOTHING IN THIS AGREEMENT SHALL BE
DEEMED OR OPERATE TO PRECLUDE AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL
ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER
SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER
IN FAVOR OF AGENT. EACH CREDIT PARTY EXPRESSLY SUBMITS AND CONSENTS IN
ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH
COURT, AND EACH CREDIT PARTY HEREBY WAIVES ANY OBJECTION WHICH SUCH CREDIT
PARTY MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR
FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. EACH CREDIT PARTY
HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS
ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS,
COMPLAINTS AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL
ADDRESSED TO SUCH CREDIT PARTY AT THE ADDRESS SET FORTH IN ANNEX I OF THIS
AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER
OF SUCH CREDIT PARTY'S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT
IN THE U.S. MAILS, PROPER POSTAGE PREPAID.
11.10. NOTICES. Except as otherwise provided herein, whenever
it is provided herein that any notice, demand, request, consent, approval,
declaration or other communication shall or may be given to or served upon
any of the parties by any other parties, or whenever any of the parties
desires to give or serve upon any other parties any communication with
respect to this Agreement, each such notice, demand, request, consent,
approval, declaration or other communication shall be in writing and shall be
deemed to have been validly served, given or delivered (a) upon the earlier
of actual receipt and three (3) Business Days after deposit in the United
States Mail, registered or certified mail, return receipt requested, with
proper postage prepaid, (b) upon transmission, when sent by telecopy or other
similar facsimile transmission (with such telecopy or facsimile promptly
confirmed by delivery of a copy by personal delivery or United States Mail as
otherwise provided in this SECTION 11.10), (c) one (1) Business Day after
deposit with a reputable overnight courier with all charges prepaid or (d)
when delivered, if hand-delivered by messenger, all of which shall be
addressed to the party to be notified and sent to the address or facsimile
number indicated on ANNEX I or to such other address (or facsimile number) as
may be substituted by notice given as herein provided. The giving of any
notice required hereunder may be waived in writing by the party entitled to
receive such notice. Failure or delay in delivering copies of any notice,
demand, request, consent, approval, declaration or other communication to any
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Person (other than Borrower Representative or Agent) designated on ANNEX I to
receive copies shall in no way adversely affect the effectiveness of such
notice, demand, request, consent, approval, declaration or other
communication.
11.11. SECTION TITLES. The Section titles and Table of
Contents contained in this Agreement are and shall be without substantive
meaning or content of any kind whatsoever and are not a part of the agreement
between the parties hereto.
11.12. COUNTERPARTS. This Agreement may be executed in any
number of separate counterparts, each of which shall collectively and
separately constitute one agreement.
11.13. WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN
CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND
ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES
WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION
RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE
APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF
THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO
WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT
TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE,
AMONG AGENT, LENDERS AND ANY CREDIT PARTY ARISING OUT OF, CONNECTED WITH,
RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN
CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR THE
TRANSACTIONS RELATED THERETO.
11.14. PRESS RELEASES. Each Credit Party executing this
Agreement agrees that neither it nor its Affiliates will in the future issue
any press releases or other public disclosure using the name of GE Capital or
its affiliates or referring to this Agreement, the other Loan Documents or
the Related Transactions Documents without at least two (2) Business Days'
prior notice to GE Capital and without the prior written consent of GE
Capital unless (and only to the extent that) such Credit Party or Affiliate
is required to do so under law and then, in any event, such Credit Party or
Affiliate will consult with GE Capital before issuing such press release or
other public disclosure. Each Credit Party consents to the publication by
Agent or any Lender of a tombstone or similar advertising material relating
to the financing transactions contemplated by this Agreement. Agent reserves
the right to provide to industry trade organizations information necessary
and customary for inclusion in league table measurements with Borrowers'
consent which shall not be unreasonably withheld or delayed.
11.15. REINSTATEMENT. This Agreement shall remain in full
force and effect and continue to be effective should any petition be filed by
or against any Borrower for liquidation or reorganization, should any
Borrower become insolvent or make an assignment for the benefit of any
creditor or creditors or should a receiver or trustee be appointed for all or
any
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significant part of any Borrower's assets, and shall continue to be effective
or to be reinstated, as the case may be, if at any time payment and
performance of the Obligations, or any part thereof, is, pursuant to
applicable law, rescinded or reduced in amount, or must otherwise be restored
or returned by any obligee of the Obligations, whether as a "voidable
preference," "fraudulent conveyance," or otherwise, all as though such
payment or performance had not been made. In the event that any payment, or
any part thereof, is rescinded, reduced, restored or returned, the
Obligations shall be reinstated and deemed reduced only by such amount paid
and not so rescinded, reduced, restored or returned.
11.16. ADVICE OF COUNSEL. Each of the parties represents to
each other party hereto that it has discussed this Agreement and,
specifically, the provisions of SECTIONS 11.9 and 11.13, with its counsel.
11.17. NO STRICT CONSTRUCTION. The parties hereto have
participated jointly in the negotiation and drafting of this Agreement. In
the event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties hereto and
no presumption or burden of proof shall arise favoring or disfavoring any
party by virtue of the authorship of any provisions of this Agreement.
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IN WITNESS WHEREOF, this Agreement has been duly executed as
of the date first written above.
MORTON CUSTOM PLASTICS, LLC
By: Morton Holdings, LLC,
its Manager
By: Morton Industrial Group, Inc.
its Manager
By:
-----------------------------------
Name:
Title:
GENERAL ELECTRIC CAPITAL CORPORATION, as
Agent and Lender
By:
-----------------------------------
Name:
Title:
The following Persons are signatories to this Agreement in their
capacity as Credit Parties and not as Borrowers.
MORTON HOLDINGS, LLC
By: Morton Industrial Group, Inc.
its Manager
By:
-----------------------------------
Name:
Title:
MORTON LEBANON KENTUCKY IBRB, LLC
By: Morton Custom Plastics, LLC,
its Manager
By: Morton Holdings, LLC,
its Manager
By: Morton Industrial Group, Inc.,
its Manager
By:
------------------------------
Name:
Title:
SCHEDULE 1.1
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RESPONSIBLE INDIVIDUAL
----------------------
General Electric Capital Corporation
335 Madison Avenue, 12th Floor
New York, New York 10017
Attention: Morton Custom Plastics Account Manager
Telecopier No.: (212) 983-8767
Telephone No.: (212) 370-8000
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ANNEX A (RECITALS)
TO
CREDIT AGREEMENT
DEFINITIONS
Capitalized terms used in the Loan Documents shall have
(unless otherwise provided elsewhere in the Loan Documents) the following
respective meanings and all section references in the following definitions
shall refer to Sections of the Agreement:
"ACCOUNT DEBTOR" shall mean any Person who may become
obligated to any Credit Party under, with respect to, or on account of, an
Account.
"ACCOUNTS" shall mean all "accounts," as such term is defined
in the Code, now owned or hereafter acquired by any Credit Party and, in any
event, including (a) all accounts receivable, other receivables, book debts
and other forms of obligations (other than forms of obligations evidenced by
Chattel Paper, Documents or Instruments) now owned or hereafter received or
acquired by or belonging or owing to any Credit Party, whether arising out of
goods sold or services rendered by it or from any other transaction
(including any such obligations which may be characterized as an account or
contract right under the Code), (b) all of each Credit Party's rights in, to
and under all purchase orders or receipts now owned or hereafter acquired by
it for goods or services, (c) all of each Credit Party's rights to any goods
represented by any of the foregoing (including unpaid sellers' rights of
rescission, replevin, reclamation and stoppage in transit and rights to
returned, reclaimed or repossessed goods), (d) all monies due or to become
due to any Credit Party, under all purchase orders and contracts for the sale
of goods or the performance of services or both by such Credit Party or in
connection with any other transaction (whether or not yet earned by
performance on the part of such Credit Party) now or hereafter in existence,
including the right to receive the proceeds of said purchase orders and
contracts, and (e) all collateral security and guarantees of any kind, now or
hereafter in existence, given by any Person with respect to any of the
foregoing.
"ADVANCE" shall mean any Revolving Credit Advance or Swing
Line Advance, as the context may require.
"AFFILIATE" shall mean, with respect to any Person, (a) each
Person that, directly or indirectly, owns or controls, whether beneficially,
or as a trustee, guardian or other fiduciary, five percent (5%) or more of
the Stock having ordinary voting power in the election of directors of such
Persons, (b) each Person that controls, is controlled by or is under common
control with such Person, (c) each of such Person's officers, directors,
joint venturers and partners and (d) in the case of Borrowers, the immediate
family members, spouses and lineal descendants of individuals who are
Affiliates of any Borrower. For the purposes of this definition, "CONTROL"
of a Person shall mean the possession, directly or indirectly, of the power
to direct or cause the direction of its management or policies, whether
through the ownership of voting securities, by contract or otherwise;
PROVIDED, HOWEVER, that the term "AFFILIATE" shall specifically exclude Agent
and each Lender.
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"AGENT" shall mean GE Capital or its successor appointed
pursuant to SECTION 9.7.
"AGGREGATE REVOLVING BORROWING BASE" shall mean, as of any
date of determination, an amount equal to the sum of the MCP Revolving
Borrowing Base and the Second Borrower Revolving Borrowing Base (if any).
"AGREEMENT" shall mean the Credit Agreement by and among
Borrowers, the other Credit Parties named therein, GE Capital, as Agent and
Lender and the other Lenders signatory from time to time to the Agreement.
"APPENDICES" shall have the meaning assigned to it in the
recitals to the Agreement.
"APPLICABLE IN-FORMULA TERM LOAN INDEX MARGIN" shall mean the
per annum interest rate from time to time in effect and payable in addition
to the Index Rate applicable to the In-Formula Term Sub-Limit, as determined
by reference to SECTION 1.5(a) of the Agreement.
"APPLICABLE IN-FORMULA TERM LOAN LIBOR MARGIN" shall mean the
per annum interest rate from time to time in effect and payable in addition
to the LIBOR Rate applicable to the In-Formula Term Sub-Limit, as determined
by reference to SECTION 1.5(a) of the Agreement.
"APPLICABLE MARGINS" means collectively the Applicable
Revolver Index Margin, the Applicable In-Formula Term Loan Index Margin, the
Applicable Overadvance Index Margin, the Applicable Revolver LIBOR Margin,
the Applicable In-Formula Term Loan LIBOR Margin and the Applicable
Overadvance LIBOR Margin.
"APPLICABLE OVERADVANCE INDEX MARGIN" shall mean the per annum
interest rate from time to time in effect and payable in addition to the
Index Rate applicable to the Term Overadvance, as determined by reference to
SECTION 1.5(a) of the Agreement.
"APPLICABLE OVERADVANCE LIBOR MARGIN" shall mean the per annum
interest rate from time to time in effect and payable in addition to the
LIBOR Rate applicable to the Term Overadvance, as determined by reference to
SECTION 1.5(a) of the Agreement.
"APPLICABLE REVOLVER INDEX MARGIN" shall mean the per annum
interest rate margin from time to time in effect and payable in addition to
the Index Rate applicable to the Revolving Loan, as determined by reference
to SECTION 1.5(a) of the Agreement.
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"APPLICABLE REVOLVER LIBOR MARGIN" shall mean the per annum
interest rate from time to time in effect and payable in addition to the
LIBOR Rate applicable to the Revolving Loan, as determined by reference to
SECTION 1.5(a) of the Agreement.
"ASSIGNMENT AGREEMENT" shall have the meaning assigned to it
in SECTION 9.1(a).
"BORROWERS" shall mean each of MCP and any other Person that
becomes a Borrower hereunder pursuant to Section 2.3.
"BORROWER ACCOUNTS" shall have the meaning assigned to it in
ANNEX C.
"BORROWER INTELLECTUAL PROPERTY AGREEMENT" shall mean the
Intellectual Property Agreement of even date herewith entered into among
Agent, on behalf of itself and Lenders, and each Borrower.
"BORROWER PLEDGE AGREEMENT" shall mean the Pledge Agreement of
even date herewith entered into among Agent, on behalf of itself and Lenders,
and each Borrower.
"BORROWER REPRESENTATIVE" shall mean MCP in its capacity as
Borrower Representative pursuant to the provisions of SECTION 1.1(d).
"BORROWER SECURITY AGREEMENT" shall mean the Security
Agreement of even date herewith entered into among Agent, on behalf of itself
and Lenders, and each Borrower.
"BORROWING AVAILABILITY" shall have the meaning assigned to it
in SECTION 1.1(a)(i).
"BUSINESS DAY" shall mean any day that is not a Saturday, a
Sunday or a day on which banks are required or permitted to be closed in the
State of New York and in reference to LIBOR Loans shall mean any such day
that is also a LIBOR Business Day.
"CAPITAL EXPENDITURES" shall mean, with respect to any Person,
all expenditures (by the expenditure of cash or the incurrence of
Indebtedness, including without limitation in connection with Capital Leases)
by such Person during any measuring period for any fixed assets or
improvements or for replacements, substitutions or additions thereto, that
have a useful life of more than one year and that are required to be
capitalized under GAAP.
"CAPITAL LEASE" shall mean, with respect to any Person, any
lease of any property (whether real, personal or mixed) by such Person as
lessee that, in accordance with GAAP, would be required to be classified and
accounted for as a capital lease on a balance sheet of such Person.
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"CAPITAL LEASE OBLIGATION" shall mean, with respect to any
Capital Lease of any Person, the amount of the obligation of the lessee
thereunder that, in accordance with GAAP, would appear on a balance sheet of
such lessee in respect of such Capital Lease.
"CASH MANAGEMENT SYSTEMS" shall have the meaning assigned to
it in SECTION 1.10.
"CHANGE OF CONTROL" shall mean any event, transaction or
occurrence as a result of which (a) MIG shall cease to own and control at
least 80% of the economic and 35% of the voting rights associated with the
outstanding capital Stock of all classes of Holdings on a fully diluted
basis, (b) Holdings shall cease to own and control all of the economic and
voting rights associated with at least 100% of the outstanding capital Stock
of MCP, (c) MIG shall cease to be the Manager of Holdings and Holdings shall
cease to be the Manager of MCP and MCP shall cease to be the Manager of the
IRB Subsidiary or (d) MCP shall cease to own and control all of the economic
and voting rights associated with all of the outstanding capital Stock of any
of its Subsidiaries.
"CHARGES" shall mean all federal, state, county, city,
municipal, local, foreign or other governmental taxes (including taxes owed
to the PBGC at the time due and payable), levies, assessments, charges,
liens, claims or encumbrances upon or relating to (a) the Collateral, (b) the
Obligations, (c) the employees, payroll, income or gross receipts of any
Credit Party, (d) any Credit Party's ownership or use of any properties or
other assets, or (e) any other aspect of any Credit Party's business.
"CHATTEL PAPER" shall mean any "chattel paper," as such term
is defined in the Code, now owned or hereafter acquired by any Credit Party,
wherever located.
"CLOSING DATE" shall mean April 15, 1999.
"CLOSING CHECKLIST" shall mean the schedule, including all
appendices, exhibits or schedules thereto, listing certain documents and
information to be delivered in connection with the Agreement, the other Loan
Documents and the transactions contemplated thereunder, substantially in the
form attached hereto as ANNEX D.
"CODE" shall mean the Uniform Commercial Code as the same may,
from time to time, be enacted and in effect in the State of New York;
PROVIDED, HOWEVER, in the event that, by reason of mandatory provisions of
law, any or all of the attachment, perfection or priority of Agent's or any
Lender's security interest in any Collateral is governed by the Uniform
Commercial Code as enacted and in effect in a jurisdiction other than the
State of New York, the term "CODE" shall mean the Uniform Commercial Code as
enacted and in effect in such other jurisdiction solely for purposes of the
provisions hereof relating to such attachment, perfection or priority and for
purposes of definitions related to such provisions.
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"COLLATERAL" shall mean the property covered by the Security
Agreements, the Mortgages, the Pledge Agreements and the other Collateral
Documents and any other property, real or personal, tangible or intangible,
now existing or hereafter acquired, that may at any time be or become subject
to a security interest or Lien in favor of Agent, on behalf of itself and
Lenders, to secure the Obligations.
"COLLATERAL DOCUMENTS" shall mean the Security Agreements, the
Pledge Agreements, the Guaranties, the Mortgages, the Intellectual Property
Security Agreements and all similar agreements entered into guaranteeing
payment of, or granting a Lien upon property as security for payment of, the
Obligations.
"COLLATERAL REPORTS" shall mean the reports with respect to
the Collateral referred to in ANNEX F.
"COLLECTION ACCOUNT" shall mean that certain account of Agent,
account number 502-328-54 in the name of Agent at Bankers Trust Company in
New York, New York or such other account as Agent shall specify.
"COMMITMENT TERMINATION DATE" shall mean the earliest of (a)
October 15, 2003, (b) the date of termination of Lenders' obligations to make
Advances and/or incur Letter of Credit Obligations or permit existing Loans
to remain outstanding pursuant to SECTION 8.2(b), and (c) the date of
indefeasible prepayment in full by Borrowers of the Loans and the
cancellation and return (or stand-by guarantee) of all Letters of Credit or
the cash collateralization of all Letter of Credit Obligations pursuant to
ANNEX B, and the permanent reduction of the Revolving Loan Commitment and the
Swing Line Commitment to zero dollars ($0).
"COMMITMENTS" shall mean (a) as to any Lender, the aggregate
of such Lender's Revolving Loan Commitment (including without duplication
the Swing Line Lender's Swing Line Commitment as a subset of its Revolving
Loan Commitment) and Term Loan Commitment as set forth on ANNEX J to the
Agreement or in the most recent Assignment Agreement executed by such Lender
and (b) as to all Lenders, the aggregate of all Lenders' Revolving Loan
Commitments (including without duplication the Swing Line Lender's Swing Line
Commitment as a subset of its Revolving Loan Commitment) and Term Loan
Commitments, which aggregate commitment shall be $50,000,000 on the Closing
Date, as to each of clauses (a) and (b), as such Commitments may be reduced,
amortized or adjusted from time to time in accordance with the Agreement.
"COMPLIANCE CERTIFICATE" shall have the meaning assigned to it
in ANNEX E.
"CONTINGENT PAYMENT" shall have the meaning assigned to such
term in the Worthington Acquisition Agreement, as amended by Amendment No. 1
thereto.
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"CONTRACTS" shall mean all "contracts," as such term is
defined in the Code, now owned or hereafter acquired by any Credit Party, in
any event, including all contracts, undertakings, or agreements (other than
rights evidenced by Chattel Paper, Documents or Instruments) in or under
which any Credit Party may now or hereafter have any right, title or
interest, including any agreement relating to the terms of payment or the
terms of performance of any Account.
"COPYRIGHT LICENSE" shall mean any and all rights now owned or
hereafter acquired by any Credit Party under any written agreement granting
any right to use any Copyright or Copyright registration.
"COPYRIGHTS" shall mean all of the following now owned or
hereafter acquired by any Credit Party: (a) all copyrights and general
intangibles of like nature (whether registered or unregistered), now owned or
existing or hereafter adopted or acquired, all registrations and recordings
thereof, and all applications in connection therewith, including all
registrations, recordings and applications in the United States Copyright
Office or in any similar office or agency of the United States, any state or
territory thereof, or any other country or any political subdivision thereof,
and (b) all reissues, extensions or renewals thereof.
"CREDIT PARTIES" shall mean Holdings, each Borrower, and each
of their respective Subsidiaries.
"CURRENT ASSETS" shall mean, with respect to any Person, all
current assets of such Person as of any date of determination calculated in
accordance with GAAP, but excluding cash, cash equivalents and debts due from
Affiliates.
"CURRENT LIABILITIES" shall mean, with respect to any Person,
all liabilities which should, in accordance with GAAP, be classified as
current liabilities, and in any event shall include all Indebtedness payable
on demand or within one year from any date of determination without any
option on the part of the obligor to extend or renew beyond such year, all
accruals for federal or other taxes based on or measured by income and
payable within such year, and the current portion of long-term debt required
to be paid within one year, but excluding, in the case of Borrowers, the
aggregate outstanding principal balances of the Revolving Loan and the Swing
Line Loan.
"DEFAULT" shall mean any event which, with the passage of time
or notice or both, would, unless cured or waived, become an Event of Default.
"DEFAULT RATE" shall have the meaning assigned to it in
SECTION 1.5(d).
"DISBURSEMENT ACCOUNTS" shall have the meaning assigned to it
on ANNEX C.
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"DISCLOSURE SCHEDULES" shall mean the Schedules prepared by
Borrowers and denominated as Disclosure SCHEDULES 1.4 through 6.7 in the
Index to the Agreement.
"DOCUMENTS" shall mean any "documents," as such term is
defined in the Code, now owned or hereafter acquired by any Credit Party,
wherever located.
"DOLLARS" or "$" shall mean lawful currency of the United
States of America.
"EBITDA" shall mean, with respect to any Person for any fiscal
period, an amount equal to (a) consolidated net income of such Person for
such period, MINUS (b) the sum of (i) income tax credits, (ii) interest
income, (iii) gain from extraordinary items for such period, (iv) any
aggregate net gain (but not any aggregate net loss) during such period
arising from the sale, exchange or other disposition of capital assets by
such Person (including any fixed assets, whether tangible or intangible, all
inventory sold in conjunction with the disposition of fixed assets and all
securities), and (v) any other non-cash gains which have been added in
determining consolidated net income, in each case to the extent included in
the calculation of consolidated net income of such Person for such period in
accordance with GAAP, but without duplication, PLUS (c) the sum of (i) any
provision for income taxes, (ii) Interest Expense, (iii) loss from
extraordinary items for such period, (iv) the amount of non-cash charges
(including depreciation and amortization) for such period, (v) amortized debt
discount for such period, and (vi) the amount of any deduction to
consolidated net income as the result of any grant to any members of the
management of such Person of any Stock, in each case to the extent included
in the calculation of consolidated net income of such Person for such period
in accordance with GAAP, but without duplication. For purposes of this
definition, the following items shall be excluded in determining consolidated
net income of a Person: (1) the income (or deficit) of any other Person
accrued prior to the date it became a Subsidiary of, or was merged or
consolidated into, such Person or any of such Person's Subsidiaries; (2) the
income (or deficit) of any other Person (other than a Subsidiary) in which
such Person has an ownership interest, except to the extent any such income
has actually been received by such Person in the form of cash dividends or
distributions; (3) the undistributed earnings of any Subsidiary of such
Person to the extent that the declaration or payment of dividends or similar
distributions by such Subsidiary is not at the time permitted by the terms of
any contractual obligation or requirement of law applicable to such
Subsidiary; (4) any restoration to income of any contingency reserve, except
to the extent that provision for such reserve was made out of income accrued
during such period; (5) any write-up of any asset; (6) any net gain from the
collection of the proceeds of life insurance policies; (7) any net gain
arising from the acquisition of any securities, or the extinguishment, under
GAAP, of any Indebtedness, of such Person, (8) in the case of a successor to
such Person by consolidation or merger or as a transferee of its assets, any
earnings of such successor prior to such consolidation, merger or transfer of
assets, and (9) any deferred credit representing the excess of equity in any
Subsidiary of such Person at the date of acquisition of such Subsidiary over
the cost to such Person of the investment in such Subsidiary.
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"ELIGIBLE ACCOUNTS" shall have the meaning assigned to it in
SECTION 1.6 of the Agreement.
"ELIGIBLE INVENTORY" shall have the meaning assigned to it in
SECTION 1.7 of the Agreement.
"ENVIRONMENTAL LAWS" shall mean all applicable federal, state,
local and foreign laws, statutes, ordinances, codes, rules, standards and
regulations, now or hereafter in effect, and in each case as amended or
supplemented from time to time, and any applicable judicial or administrative
interpretation thereof, including any applicable judicial or administrative
order, consent decree, order or judgment, imposing liability or standards of
conduct for or relating to the regulation and protection of human health,
safety, the environment and natural resources (including ambient air, surface
water, groundwater, wetlands, land surface or subsurface strata, wildlife,
aquatic species and vegetation). Environmental Laws include the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980
(42 U.S.C. Sections 9601 ET SEQ.) ("CERCLA"); the Hazardous Materials
Transportation Authorization Act of 1994 (49 U.S.C. Sections 5101 ET SEQ.);
the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. Sections
136 ET SEQ.); the Solid Waste Disposal Act (42 U.S.C. Sections 6901 ET SEQ.);
the Toxic Substance Control Act (15 U.S.C. Sections 2601 ET SEQ.); the Clean
Air Act (42 U.S.C. Sections 7401 ET SEQ.); the Federal Water Pollution
Control Act (33 U.S.C. Sections 1251 ET SEQ.); the Occupational Safety and
Health Act (29 U.S.C. Sections 651 ET SEQ.); and the Safe Drinking Water Act
(42 U.S.C. Sections 300(f) ET SEQ.), each as from time to time amended, and
any and all regulations promulgated thereunder, and all analogous state,
local and foreign counterparts or equivalents and any transfer of ownership
notification or approval statutes.
"ENVIRONMENTAL LIABILITIES" shall mean, with respect to any
Person, all liabilities, obligations, responsibilities, response, remedial
and removal costs, investigation and feasibility study costs, capital costs,
operation and maintenance costs, losses, damages, punitive damages, property
damages, natural resource damages, consequential damages, treble damages,
costs and expenses (including all fees, disbursements and expenses of
counsel, experts and consultants), fines, penalties, sanctions and interest
incurred as a result of or related to any claim, suit, action, investigation,
proceeding or demand by any Person, whether based in contract, tort, implied
or express warranty, strict liability, criminal or civil statute or common
law, including any arising under or related to any Environmental Laws,
Environmental Permits, or in connection with any Release or threatened
Release or presence of a Hazardous Material whether on, at, in, under, from
or about or in the vicinity of any real or personal property.
"ENVIRONMENTAL PERMITS" shall mean all permits, licenses,
authorizations, certificates, approvals or registrations required by any
Governmental Authority under any Environmental Laws.
"EQUIPMENT" shall mean all "equipment," as such term is
defined in the Code, now owned or hereafter acquired by any Credit Party,
wherever located and, in any event,
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including all such Credit Party's machinery and equipment, including
processing equipment, conveyors, machine tools, data processing and computer
equipment with software and peripheral equipment (other than software
constituting part of the Accounts), and all engineering, processing and
manufacturing equipment, office machinery, furniture, materials handling
equipment, tools, attachments, accessories, automotive equipment, trailers,
trucks, forklifts, molds, dies, stamps, motor vehicles, rolling stock and
other equipment of every kind and nature, trade fixtures and fixtures not
forming a part of real property, all whether now owned or hereafter acquired,
and wherever situated, together with all additions and accessions thereto,
replacements therefor, all parts therefor, all substitutes for any of the
foregoing, fuel therefor, and all manuals, drawings, instructions, warranties
and rights with respect thereto, and all products and proceeds thereof and
condemnation awards and insurance proceeds with respect thereto.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974 (or any successor legislation thereto), as amended from time to time,
and any regulations promulgated thereunder.
"ERISA AFFILIATE" shall mean, with respect to any Credit
Party, any trade or business (whether or not incorporated) which, together
with such Credit Party, are treated as a single employer within the meaning
of Sections 414(b), (c), (m) or (o) of the IRC.
"ERISA EVENT" shall mean, with respect to any Credit Party or
any ERISA Affiliate, (a) any event described in Section 4043(c) of ERISA with
respect to a Title IV Plan; (b) the withdrawal of any Credit Party or ERISA
Affiliate from a Title IV Plan subject to Section 4063 of ERISA during a plan
year in which it was a substantial employer, as defined in Section 4001(a)(2)
of ERISA; (c) the complete or partial withdrawal of any Credit Party or any
ERISA Affiliate from any Multiemployer Plan; (d) the filing of a notice of
intent to terminate a Title IV Plan or the treatment of a plan amendment as a
termination under Section 4041 of ERISA; (e) the institution of proceedings
to terminate a Title IV Plan or Multiemployer Plan by the PBGC; (f) the
failure by any Credit Party or ERISA Affiliate to make when due required
contributions to a Multiemployer Plan or Title IV Plan unless such failure is
cured within 30 days; (g) any other event or condition which might reasonably
be expected to constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Title IV
Plan or Multiemployer Plan or for the imposition of liability under Section
4069 or 4212(c) of ERISA; (h) the termination of a Multiemployer Plan under
Section 4041A of ERISA or the reorganization or insolvency of a Multiemployer
Plan under Section 4241 of ERISA; or (i) the loss of a Qualified Plan's
qualification or tax exempt status; or (j) the termination of a Plan
described in Section 4064 of ERISA.
"ESOP" shall mean a Plan which is intended to satisfy the
requirements of Section 4975(e)(7) of the IRC.
"EVENT OF DEFAULT" shall have the meaning assigned to it in
SECTION 8.1.
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"EXCESS CASH FLOW" shall mean, without duplication, with
respect to any Fiscal Year of Borrowers and their Subsidiaries, consolidated
net income PLUS (a) depreciation, amortization and Interest Expense to the
extent deducted in determining consolidated net income, PLUS decreases or
MINUS increases (as the case may be) (b) in Working Capital, MINUS (c)
Capital Expenditures during such Fiscal Year (excluding the financed portion
thereof and excluding any Capital Expenditures in such Fiscal Year to the
extent in excess of the amount permitted to be made in such Fiscal Year
pursuant to CLAUSE (a) of Annex G), MINUS (d) Interest Expense paid or
accrued (excluding any original issue discount, interest paid in kind or
amortized debt discount, to the extent included in determining Interest
Expense) and scheduled principal payments paid or payable in respect of
Funded Debt, PLUS or MINUS (as the case may be), (e) extraordinary gains or
losses which are cash items not included in the calculation of net income,
MINUS (f) mandatory prepayments paid in cash pursuant to SECTION 1.3 other
than mandatory prepayments made pursuant to SECTIONS 1.3(b)(i), 1.3(b)(iv) or
1.3(d), PLUS (g) taxes deducted in determining consolidated net income to the
extent not paid for in cash. For purposes of this definition, "WORKING
CAPITAL" means Current Assets LESS Current Liabilities.
"FEDERAL FUNDS RATE" shall mean, for any day, a floating rate
equal to the weighted average of the rates on overnight Federal funds
transactions among members of the Federal Reserve System, as determined by
Agent.
"FEDERAL RESERVE BOARD" means the Board of Governors of the
Federal Reserve System, or any successor thereto.
"FEES" shall mean any and all fees payable to Agent or any
Lender pursuant to the Agreement or any of the other Loan Documents.
"FINANCIAL STATEMENTS" shall mean the consolidated income
statements, statements of cash flows and balance sheets of Borrowers
delivered in accordance with SECTION 3.4 of the Agreement and ANNEX E to the
Agreement.
"FISCAL MONTH" shall mean any of the monthly accounting
periods of Borrowers.
"FISCAL QUARTER" shall mean any of the quarterly accounting
periods of Borrowers, ending on March 31, June 30, September 30 and December
31 of each year.
"FISCAL YEAR" shall mean any of the annual accounting periods
of Borrowers ending on December 31 of each year.
"FIXED CHARGE COVERAGE RATIO" shall mean, with respect to any
Person for any fiscal period, the ratio of EBITDA to Fixed Charges.
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"FIXED CHARGES" shall mean, with respect to any Person for any
fiscal period, (a) the aggregate of all Interest Expense paid or accrued
during such period, plus (b) scheduled payments of principal with respect to
Indebtedness during such period, plus (c) Capital Expenditures during such
period (excluding the financed portion thereof).
"FIXTURES" shall mean any "fixtures" as such term is defined
in the Code, now owned or hereafter acquired by any Credit Party.
"FUNDED DEBT" shall mean, with respect to any Person, all
Indebtedness for borrowed money evidenced by notes, bonds, debentures, or
similar evidences of Indebtedness and which by its terms matures more than
one year from, or is directly or indirectly renewable or extendible at such
Person's option under a revolving credit or similar agreement obligating the
lender or lenders to extend credit over a period of more than one year from
the date of creation thereof, and specifically including Capital Lease
Obligations, current maturities of long-term debt, revolving credit and
short-term debt extendible beyond one year at the option of the debtor, and
also including, in the case of Borrowers, the Obligations and, without
duplication, Guaranteed Indebtedness consisting of guaranties of Funded Debt
of other Persons.
"GAAP" shall mean generally accepted accounting principles in
the United States of America consistently applied, as such term is further
defined in ANNEX G to the Agreement.
"GE CAPITAL FEE LETTER" shall have the meaning assigned to it
in SECTION 1.9.
"GENERAL INTANGIBLES" shall mean any "general intangibles," as
such term is defined in the Code, now owned or hereafter acquired by any
Credit Party, and, in any event, including all right, title and interest
which such Credit Party may now or hereafter have in or under any Contract,
all customer lists, Licenses, Copyrights, Trademarks, Patents, and all
applications therefor and reissues, extensions or renewals thereof, rights in
Intellectual Property, interests in partnerships, joint ventures and other
business associations, licenses, permits, copyrights, trade secrets,
proprietary or confidential information, inventions (whether or not patented
or patentable), technical information, procedures, designs, knowledge,
know-how, software, data bases, data, skill, expertise, experience,
processes, models, drawings, materials and records, goodwill (including the
goodwill associated with any Trademark or Trademark License), all rights and
claims in or under insurance policies (including insurance for fire, damage,
loss and casualty, whether covering personal property, real property,
tangible rights or intangible rights, all liability, life, key man and
business interruption insurance, and all unearned premiums), uncertificated
securities, choses in action, deposit, checking and other bank accounts,
rights to receive tax refunds and other payments, rights of indemnification,
all books and records, correspondence, credit files, invoices and other
papers, including without limitation all tapes, cards, computer runs and
other papers and documents in the possession or under the control of such
Credit Party or any computer bureau or service company from time to time
acting for such Credit Party.
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"GOVERNMENTAL AUTHORITY" shall mean any nation or government,
any state or other political subdivision thereof, and any agency, department
or other entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"GUARANTEED INDEBTEDNESS" shall mean, as to any Person, any
obligation of such Person guaranteeing any indebtedness, lease, dividend, or
other obligation ("PRIMARY OBLIGATIONS") of any other Person (the "PRIMARY
OBLIGOR") in any manner, including any obligation or arrangement of such
Person (a) to purchase or repurchase any such primary obligation, (b) to
advance or supply funds (i) for the purchase or payment of any such primary
obligation or (ii) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency or any
balance sheet condition of the primary obligor, (c) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment
of such primary obligation, or (d) to indemnify the owner of such primary
obligation against loss in respect thereof. The amount of any Guaranteed
Indebtedness at any time shall be deemed to be an amount equal to the lesser
at such time of (x) the stated or determinable amount of the primary
obligation in respect of which such Guaranteed Indebtedness is made and (y)
the maximum amount for which such Person may be liable pursuant to the terms
of the instrument embodying such Guaranteed Indebtedness; or, if not stated
or determinable, the maximum reasonably anticipated liability (assuming full
performance) in respect thereof.
"GUARANTIES" shall mean, collectively, the Holdings Guaranty,
each Subsidiary Guaranty and any other guaranty executed by any Guarantor in
favor of Agent and Lenders in respect of the Obligations.
"GUARANTORS" shall mean Holdings, each Subsidiary of each
Borrower, and each other Person, if any, which executes a guarantee or other
similar agreement in favor of Agent in connection with the transactions
contemplated by the Agreement and the other Loan Documents.
"HAZARDOUS MATERIAL" shall mean any substance, material or
waste which is regulated by or forms the basis of liability now or hereafter
under, any Environmental Laws, including any material or substance which is
(a) defined as a "solid waste," "hazardous waste," "hazardous material,"
"hazardous substance," "extremely hazardous waste," "restricted hazardous
waste," "pollutant," "contaminant," "hazardous constituent," "special waste,"
"toxic substance" or other similar term or phrase under any Environmental
Laws, (b) petroleum or any fraction or by-product thereof, asbestos,
polychlorinated biphenyls (PCB's), or any radioactive substance.
"HOLDINGS" shall have the meaning ascribed thereto in the
recitals to the Agreement.
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"HOLDINGS GUARANTY" shall mean the guaranty of even date
herewith executed by Holdings in favor of Agent and Lenders.
"HOLDINGS INTELLECTUAL PROPERTY SECURITY AGREEMENT" shall mean
the Intellectual Property Security Agreement of even date herewith entered
into between Agent, on behalf of itself and Lenders, and Holdings.
"HOLDINGS NOTE" shall mean the $5,000,000 promissory note from
Holdings to MCP dated the Closing Date.
"HOLDINGS PLEDGE AGREEMENT" shall mean the Pledge Agreement of
even date herewith entered into between Agent, on behalf of itself and
Lenders, and Holdings.
"HOLDINGS SECURITY AGREEMENT" shall mean the Security Agreement
of even date herewith entered into between Agent, on behalf of itself and
Lenders, and Holdings.
"INDEBTEDNESS" of any Person shall mean without duplication
(a) all indebtedness of such Person for borrowed money or for the deferred
purchase price of property payment for which is deferred six (6) months or
more, but excluding obligations to trade creditors incurred in the ordinary
course of business that are not overdue by more than six (6) months unless
being contested in good faith, (b) all reimbursement and other obligations
with respect to letters of credit, bankers' acceptances and surety bonds,
whether or not matured, (c) all obligations evidenced by notes, bonds,
debentures or similar instruments, (d) all indebtedness created or arising
under any conditional sale or other title retention agreement with respect to
property acquired by such Person (even though the rights and remedies of the
seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), (e) all Capital Lease Obligations and
the present value (discounted at the Index Rate as in effect on the Closing
Date) of future rental payments under all synthetic leases, (f) all
obligations of such Person under commodity purchase or option agreements or
other commodity price hedging arrangements, in each case whether contingent
or matured, (g) all obligations of such Person under any foreign exchange
contract, currency swap agreement, interest rate swap, cap or collar
agreement or other similar agreement or arrangement designed to alter the
risks of that Person arising from fluctuations in currency values or interest
rates, in each case whether contingent or matured, (h) all Indebtedness
referred to above secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien
upon or in property or other assets (including accounts and contract rights)
owned by such Person, even though such Person has not assumed or become
liable for the payment of such Indebtedness, and (i) the Obligations;
PROVIDED, that the obligation of MCP to make the Contingent Payment shall not
constitute Indebtedness.
"INDEMNIFIED LIABILITIES" shall have the meaning assigned to
it in SECTION 1.13.
"INDEX RATE" shall mean, for any day, a floating rate equal to
the higher of (i) the rate publicly quoted from time to time by THE WALL
STREET JOURNAL as the "base rate on
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corporate loans at large U.S. money center commercial banks" (or, if THE WALL
STREET JOURNAL ceases quoting a base rate of the type described, the highest
per annum rate of interest published by the Federal Reserve Board in Federal
Reserve statistical release H.15 (519) entitled "Selected Interest Rates" as
the Bank prime loan rate or its equivalent), and (ii) the Federal Funds Rate
plus fifty (50) basis points per annum. Each change in any interest rate
provided for in the Agreement based upon the Index Rate shall take effect at
the time of such change in the Index Rate.
"INDEX RATE LOAN" shall mean a Loan or portion thereof bearing
interest by reference to the Index Rate.
"IN-FORMULA TERM SUB-LIMIT" shall have the meaning provided in
SECTION 1.1(b)(i)(1).
"INSTRUMENTS" shall mean any "instrument," as such term is
defined in the Code, now owned or hereafter acquired by any Credit Party,
wherever located, and, in any event, including all certificated securities,
all certificates of deposit, and all notes and other, without limitation,
evidences of indebtedness, other than instruments that constitute, or are a
part of a group of writings that constitute, Chattel Paper.
"INTELLECTUAL PROPERTY" shall mean any and all Licenses,
Patents, Copyrights, Trademarks, trade secrets and customer lists.
"INTELLECTUAL PROPERTY SECURITY AGREEMENTS" shall mean,
collectively, the Holdings Intellectual Property Security Agreement, Borrower
Intellectual Property Security Agreement and Subsidiary Intellectual Property
Security Agreement in each case made in favor of Agent, on behalf of itself
and Lenders, by each applicable Credit Party.
"INTEREST EXPENSE" shall mean, with respect to any Person for
any fiscal period, interest expense (whether cash or non-cash) of such Person
determined in accordance with GAAP for the relevant period ended on such
date, including, in any event, interest expense with respect to any Funded
Debt of such Person and interest expense for the relevant period that has
been capitalized on the balance sheet of such Person.
"INTEREST PAYMENT DATE" means (a) as to any Index Rate Loan,
the first Business Day of each month to occur while such Loan is outstanding,
(b) as to any LIBOR Loan, the last day of the applicable LIBOR Period;
PROVIDED that in the case of any LIBOR Period greater than three months in
duration, interest shall be payable at three month intervals and on the last
day of such LIBOR Period; and PROVIDED further that in addition to the
foregoing, each of (x) the date upon which all of the Commitments have been
terminated and the Loans have been paid in full and (y) the Commitment
Termination Date shall be deemed to be an "Interest Payment Date" with
respect to any interest which is then accrued under the Agreement.
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"INVENTORY" shall mean any "inventory," as such term is
defined in the Code, now or hereafter owned or acquired by any Credit Party,
wherever located, and in any event including inventory, merchandise, goods
and other personal property which are held by or on behalf of any Credit
Party for sale or lease or are furnished or are to be furnished under a
contract of service, or which constitute raw materials, work in process or
materials used or consumed or to be used or consumed in such Credit Party's
business or in the processing, production, packaging, promotion, delivery or
shipping of the same, including other supplies.
"INVESTMENT PROPERTY" shall have the meaning ascribed thereto
in Section 9-115 of the Code in those jurisdictions in which such definition
has been adopted and shall include (i) all securities, whether certificated
or uncertificated, including stocks, bonds, interests in limited liability
companies, partnership interests, treasuries, certificates of deposit, and
mutual fund shares; (ii) all securities entitlements of any Credit Party,
including the rights of any Credit Party to any securities account and the
financial assets held by a securities intermediary in such securities account
and any free credit balance or other money owing by any securities
intermediary with respect to that account; (iii) all securities accounts held
by any Credit Party; (iv) all commodity contracts held by any Credit Party;
and (v) all commodity accounts held by any Credit Party.
"IRC" shall mean the Internal Revenue Code of 1986, as
amended, and any successor thereto.
"IRB ASSIGNMENT DOCUMENTS" shall mean the documentation
pursuant to which (i) Seller assigns its rights and obligations under the IRB
Lease Agreement to MCP and MCP assumes such rights and obligations and (ii)
the Lebanon IRBs are transferred by an Affiliate of Seller to IRB Subsidiary.
"IRB INDENTURE" shall mean the Trust Indenture dated as of
December 1, 1994 by and among the City of Lebanon, Kentucky, a city and
political subdivision of the Commonwealth of Kentucky, and Star Bank, N.A.,
Kentucky, Lebanon, Kentucky (acting through the Corporate Trust Department of
Star Bank, National Association, in Cincinnati, Ohio), as Trustee, and as
Paying Agent and Bond Register.
"IRB LEASE AGREEMENT" shall mean the Lease Agreement dated as
of December 1, 1994, between the City of Lebanon, Kentucky, a city and
political subdivision of the Commonwealth of Kentucky, and MCP, as assignee
of Seller thereunder pursuant to the terms of the IRB Assignment Documents.
"IRB SUBSIDIARY" shall mean Morton Lebanon Kentucky IBRB, LLC,
a Delaware limited liability company, and a wholly-owned domestic Subsidiary
of MCP which shall be the holder of the Lebanon IRBs.
"IRS" shall mean the Internal Revenue Service, or any
successor thereto.
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"L/C ISSUER" shall have the meaning assigned to such term in
ANNEX B.
"LEBANON IRBs" shall mean the industrial revenue bonds issued
in respect of MCP's Lebanon, Kentucky location and pursuant to the terms of
the IRB Indenture.
"LENDERS" shall mean GE Capital, the other Lenders named on
the signature page of the Agreement, and, if any such Lender shall decide to
assign all or any portion of the Obligations, such term shall include such
assignee.
"LETTER OF CREDIT FEE" has the meaning ascribed thereto in
ANNEX B.
"LETTER OF CREDIT OBLIGATIONS" shall mean all outstanding
obligations incurred by Agent and Lenders at the request of Borrower
Representative, whether direct or indirect, contingent or otherwise, due or
not due, in connection with the issuance of a reimbursement agreement or
guaranty by Agent or purchase of a participation as set forth in ANNEX B with
respect to any Letter of Credit. The amount of such Letter of Credit
Obligations shall equal the maximum amount which may be payable by Agent or
Lenders thereupon or pursuant thereto.
"LETTERS OF CREDIT" shall mean commercial letters of credit
issued for the account of any Borrower by any L/C Issuer for which Agent and
Lenders have incurred Letter of Credit Obligations.
"LIBOR BUSINESS DAY" shall mean a Business Day on which banks
in the city of London are generally open for interbank or foreign exchange
transactions.
"LIBOR LOAN" shall mean a Loan or any portion thereof bearing
interest by reference to the LIBOR Rate.
"LIBOR PERIOD" shall mean, with respect to any LIBOR Loan,
each period commencing on a LIBOR Business Day selected by Borrower
Representative pursuant to the Agreement and ending one, two, three or six
months thereafter, as selected by Borrower Representative's irrevocable
notice to Agent as set forth in SECTION 1.5(e); PROVIDED that the foregoing
provision relating to LIBOR Periods is subject to the following:
(a) if any LIBOR Period would otherwise end on a day that is
not a LIBOR Business Day, such LIBOR Period shall be extended to the
next succeeding LIBOR Business Day unless the result of such extension
would be to carry such LIBOR Period into another calendar month in which
event such LIBOR Period shall end on the immediately preceding LIBOR
Business Day;
(b) any LIBOR Period that would otherwise extend beyond the
Commitment Termination Date shall end two (2) LIBOR Business Days prior
to such date;
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(c) any LIBOR Period pertaining to a LIBOR Loan that begins
on the last LIBOR Business 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 LIBOR Period) shall end on the last LIBOR Business Day
of a calendar month;
(d) Borrower Representative shall select LIBOR Periods so as
not to require a payment or prepayment of any LIBOR Loan during a LIBOR
Period for such Loan; and
(e) Borrower Representative shall select LIBOR Periods so
that there shall be no more than eight (8) separate LIBOR Loans in
existence at any one time.
"LIBOR RATE" shall mean for each LIBOR Period, a rate of
interest determined by Agent equal to:
(a) the offered rate for deposits in United States Dollars
for the applicable LIBOR Period which appears on Telerate Page 3750 as
of 11:00 a.m., London time, on the second full LIBOR Business Day next
preceding the first day of each LIBOR Period (unless such date is not a
Business Day, in which event the next succeeding Business Day will be
used); divided by
(b) a number equal to 1.0 MINUS the aggregate (but without
duplication) of the rates (expressed as a decimal fraction) of reserve
requirements in effect on the day which is two (2) LIBOR Business Days
prior to the beginning of such LIBOR Period (including basic,
supplemental, marginal and emergency reserves under any regulations of
the Board of Governors of the Federal Reserve system or other
governmental authority having jurisdiction with respect thereto, as now
and from time to time in effect) for Eurocurrency funding (currently
referred to as "Eurocurrency liabilities" in Regulation D of such Board
which are required to be maintained by a member bank of the Federal
Reserve System.
If such interest rates shall cease to be available from
Telerate News Service, the LIBOR Rate shall be determined from such financial
reporting service or other information as shall be mutually acceptable to
Agent and Borrower Representative.
"LICENSE" shall mean any Copyright License, Patent License,
Trademark License or other license of rights or interests now held or
hereafter acquired by any Credit Party.
"LIEN" shall mean any mortgage or deed of trust, pledge,
hypothecation, assignment, deposit arrangement, lien, charge, claim, security
interest, easement or encumbrance, or preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including any lease or title retention agreement, any financing
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lease having substantially the same economic effect as any of the foregoing,
and the filing of, or agreement to give, any financing statement perfecting a
security interest under the Code or comparable law of any jurisdiction).
"LITIGATION" shall have the meaning assigned to it in SECTION
3.13.
"LOAN ACCOUNT" shall have the meaning assigned to it in
SECTION 1.12.
"LOAN DOCUMENTS" shall mean the Agreement, the Notes, the
Collateral Documents and all other agreements (including, without limitation,
the GE Capital Fee Letter), instruments, documents and certificates
identified in the Closing Checklist executed and delivered to, or in favor
of, Agent and/or Lenders and including all other pledges, powers of attorney,
consents, assignments, contracts, notices, and all other written matter
whether heretofore, now or hereafter executed by or on behalf of any Credit
Party, or any employee of any Credit Party, and delivered to Agent or any
Lender in connection with the Agreement or the transactions contemplated
hereby. Any reference in the Agreement or any other Loan Document to a Loan
Document shall include all appendices, exhibits or schedules thereto, and all
amendments, restatements, supplements or other modifications thereto, and
shall refer to such Agreement as the same may be in effect at any and all
times such reference becomes operative.
"LOANS" shall mean the Revolving Loan, the Swing Line Loan and
the Term Loan.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect
on (a) the business, assets, operations, prospects or financial or other
condition of the Credit Parties considered as a whole or, on or prior to the
Closing Date, Worthington, as the case may be, (b) any Borrower's ability to
pay any of the Loans or any of the other Obligations in accordance with the
terms of the Agreement, (c) the Collateral or Agent's Liens, on behalf of
itself and Lenders, on the Collateral or the priority of such Liens, or (d)
Agent's or any Lender's rights and remedies under the Agreement and the other
Loan Documents. Without limiting the foregoing, any event or occurrence
adverse to one or more Credit Parties which results or could reasonably be
expected to result in costs and/or liabilities and/or loss of revenues,
individually or in the aggregate, to any Credit Party in any 30-day period in
excess of the lesser of $3,000,000 and 10% of Borrowing Availability as of
any date of determination shall be deemed to have had Material Adverse
Effect.
"MAXIMUM AMOUNT" shall mean, at any particular time, an amount
equal to the Revolving Loan Commitment of all Lenders.
"MCP" shall have the meaning assigned thereto in the recitals
to this Agreement.
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"MCP PLEDGE AGREEMENT" shall mean the Pledge Agreement of even
date herewith executed by MCP in favor of Agent, on behalf of itself and
Lenders, pledging all Stock of its Subsidiaries and all instruments of
Indebtedness, if any, owing to or held by it.
"MCP REVOLVING BORROWING BASE" shall mean, as of any date of
determination by Agent, from time to time, an amount equal to the sum at such
time of:
(a) up to eighty-five percent (85%) of the book value of
MCP's Eligible Accounts, less any Reserves established by Agent at such
time;
(b) up to sixty percent (60%) of the book value of MCP's
Eligible Inventory (other than work-in-process Inventory) valued on a
first-in, first-out basis (at the lower of cost or market), less any
Reserves established by Agent at such time; and
(c) up to twenty percent (20%) of the book value of MCP's
Eligible Inventory consisting of work-in-process Inventory valued on a
first-in, first-out basis (at the lower of cost or market), less any
Reserves established by Agent at such time.
"MIG" shall mean Morton Industrial Group, Inc., a Georgia
corporation.
"MIG PREFERRED STOCK" shall mean non-voting shares of the
Series 1999A Preferred Stock of MIG, no par value, having terms and
conditions satisfactory to Agent.
"MORTGAGED PROPERTIES" shall have the meaning assigned to it
in ANNEX D.
"MORTGAGES" shall mean each of the mortgages, deeds of trust,
leasehold mortgages, leasehold deeds of trust, collateral assignments of
leases or other real estate security documents delivered by any Credit Party
to Agent with respect to the Mortgaged Properties, all in form and substance
satisfactory to Agent.
"MULTIEMPLOYER PLAN" shall mean a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA, and to which any Credit Party or
ERISA Affiliate is making, is obligated to make, has made or been obligated
to make, contributions on behalf of participants who are or were employed by
any of them.
"NET BORROWING AVAILABILITY" shall mean as of any date of
determination (a) as to all Borrowers, the lesser of (i) the Maximum Amount
and (ii) the Aggregate Revolving Borrowing Base, in each case LESS the sum of
the aggregate Revolving Loan and Swing Line Loan then outstanding, or (b) as
to an individual Borrower, the lesser of (i) the Maximum Amount LESS the sum
of the Revolving Loan and Swing Line Loan outstanding to all other Borrowers
and (ii) that Borrower's separate Revolving Borrowing Base, LESS the sum of
the Revolving Loan and Swing Line Loan outstanding to that Borrower.
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"NET WORTH" shall mean, with respect to any Person as of any
date of determination, the book value of the assets of such Person, MINUS (a)
reserves applicable thereto, and MINUS (b) all of such Person's liabilities
on a consolidated basis (including accrued and deferred income taxes), all as
determined in accordance with GAAP.
"NON-FUNDING LENDER" shall have the meaning assigned to it in
Section 9.9(a)(ii).
"NOTES" shall mean the Revolving Notes, the Swing Line Notes
and the Term Notes, collectively.
"NOTICE OF CONVERSION/CONTINUATION" shall have the meaning
assigned to it in SECTION 1.5(e).
"NOTICE OF REVOLVING CREDIT ADVANCE" shall have the meaning
assigned to it in SECTION 1.1(a).
"OBLIGATIONS" shall mean all loans, advances, debts,
liabilities and obligations, for the performance of covenants, tasks or
duties or for payment of monetary amounts (whether or not such performance is
then required or contingent, or such amounts are liquidated or determinable)
owing by any Credit Party to Agent or any Lender, and all covenants and
duties regarding such amounts, of any kind or nature, present or future,
whether or not evidenced by any note, agreement or other instrument, arising
under the Agreement or any of the other Loan Documents. This term includes
all principal, interest (including all interest which accrues after the
commencement of any case or proceeding in bankruptcy after the insolvency of,
or for the reorganization of any Credit Party, whether or not allowed in such
proceeding), Fees, Charges, expenses, attorneys' fees and any other sum
chargeable to any Credit Party under the Agreement or any of the other Loan
Documents.
"PATENT LICENSE" shall mean rights under any written agreement
now owned or hereafter acquired by any Credit Party granting any right with
respect to any invention on which a Patent is in existence.
"PATENTS" shall mean all of the following in which any Credit
Party now holds or hereafter acquires any interest: (a) all letters patent of
the United States or any other country, all registrations and recordings
thereof, and all applications for letters patent of the United States or any
other country, including registrations, recordings and applications in the
United States Patent and Trademark Office or in any similar office or agency
of the United States, any State or Territory thereof, or any other country,
and (b) all reissues, continuations, continuations-in-part or extensions
thereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any successor thereto.
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"PERMITTED ENCUMBRANCES" shall mean the following
encumbrances: (a) Liens for taxes or assessments or other governmental
Charges not yet due and payable; (b) pledges or deposits of money securing
statutory obligations under workmen's compensation, unemployment insurance,
social security or public liability laws or similar legislation (excluding
Liens under ERISA); (c) pledges or deposits of money securing bids, tenders,
contracts (other than contracts for the payment of money) or leases to which
any Credit Party is a party as lessee made in the ordinary course of
business; (d) inchoate and unperfected workers', mechanics' or similar liens
arising in the ordinary course of business, so long as such Liens attach only
to Equipment, Fixtures and/or Real Estate; (e) carriers', warehousemen's,
suppliers' or other similar possessory liens arising in the ordinary course
of business and securing liabilities in an outstanding aggregate amount not
in excess of $100,000 at any time, so long as such Liens attach only to
Inventory; (f) deposits securing, or in lieu of, surety, appeal or customs
bonds in proceedings to which any Credit Party is a party; (g) any attachment
or judgment lien not constituting an Event of Default under SECTION 8.1(j);
(h) zoning restrictions, easements, licenses, or other restrictions on the
use of any Real Estate or other minor irregularities in title (including
leasehold title) thereto, so long as the same do not materially impair the
use, value, or marketability of such Real Estate; (i) presently existing or
hereinafter created Liens in favor of Agent, on behalf of Lenders; and (j)
Liens expressly permitted under CLAUSES (b) and (c) of SECTION 6.7 of the
Agreement.
"PERMITTED FOREIGN ACCOUNT DEBTORS" shall mean Compaq Computer
Corporation, International Business Machine Corporation, BE Aerospace, Inc.,
CTS Corporation and any of their respective foreign Affiliates reasonably
acceptable to Agent.
"PERSON" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, limited liability company, institution, public benefit
corporation, other entity or government (whether federal, state, county,
city, municipal, local, foreign, or otherwise, including any instrumentality,
division, agency, body or department thereof).
"PLAN" shall mean, at any time, an employee benefit plan, as
defined in Section 3(3) of ERISA, which any Credit Party maintains,
contributes to or has an obligation to contribute to on behalf of
participants who are or were employed by any Credit Party.
"PLEDGE AGREEMENTS" shall mean, collectively, the Holdings
Pledge Agreement, the Borrower Pledge Agreement, the Subsidiary Pledge
Agreement, and any pledge agreements entered into after the Closing Date by
any Credit Party (as required by the Agreement or any other Loan Document).
"PREFERRED STOCK CONTRIBUTION" shall mean, collectively, (i)
the loan of $5,000,000 by MCP to Holdings evidenced by the Holdings Note,
(ii) the purchase with a portion of such loan proceeds by Holdings from MIG,
and the related issuance by MIG, of
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10,000 shares of MIG Preferred Stock, having an aggregate liquidation value
of $10,000,000, (iii) the payment by Holdings to MIG of the remaining portion
of such loan proceeds as a management fee, (iv) the contribution by Holdings
to the common equity of MCP of all of such MIG Preferred Stock, and (v) the
transfer by MCP to Seller of such MIG Preferred Stock as partial
consideration for the Worthington Acquisition in accordance with the terms of
the Worthington Acquisition Agreement.
"PROCEEDS" shall mean "proceeds," as such term is defined in
the Code and, in any event, shall include (a) any and all proceeds of any
insurance, indemnity, warranty or guaranty payable to any Credit Party from
time to time with respect to any of the Collateral, (b) any and all payments
(in any form whatsoever) made or due and payable to any Credit Party from
time to time in connection with any requisition, confiscation, condemnation,
seizure or forfeiture of all or any part of the Collateral by any
Governmental Authority (or any Person acting under color of governmental
authority), (c) any claim of any Credit Party against third parties (i) for
past, present or future infringement of any Patent or Patent License, or
(ii) for past, present or future infringement or dilution of any Copyright,
Copyright License, Trademark or Trademark License, or for injury to the
goodwill associated with any Trademark or Trademark License, (d) any
recoveries by any Credit Party against third parties with respect to any
litigation or dispute concerning any of the Collateral, and (e) any and all
other amounts from time to time paid or payable under or in connection with
any of the Collateral, upon disposition or otherwise.
"PRO FORMA" means the unaudited consolidated balance sheet of
Holdings and its Subsidiaries as of December 31, 1998 after giving PRO FORMA
effect to the Related Transactions.
"PROJECTIONS" means Borrowers' forecasted consolidated: (a)
balance sheets; (b) profit and loss statements; (c) cash flow statements; and
(d) capitalization statements, all prepared on a Subsidiary by Subsidiary or
division by division basis, if applicable, and otherwise consistent with the
historical Financial Statements of Worthington, together with appropriate
supporting details and a statement of underlying assumptions.
"PRO RATA SHARE" shall mean with respect to all matters
relating to any Lender (a) with respect to the Revolving Loan (including the
Swing Line Loan as a subset of the Swing Line Lender's Revolving Loan), the
percentage obtained by dividing (i) the Revolving Loan Commitment (including
the Swing Line Commitment as a subset of the Swing Line Lender's Revolving
Loan Commitment) by (ii) the aggregate Revolving Loan Commitments, (b) with
respect to the Term Loan(s), the percentage obtained by dividing (i) the Term
Loan Commitment of that Lender by (ii) the aggregate Term Loan Commitments of
all Lenders, as any such percentages may be adjusted by assignments permitted
pursuant to SECTION 9.1, (c) with respect to all Loans, the percentage
obtained by dividing (i) the aggregate Commitments of that Lender by (ii) the
aggregate Commitments of all Lenders, and (d) with respect to all Loans on
and after the Commitment Termination Date, the percentage obtained by
dividing (i) the
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aggregate outstanding principal balance of the Loans held by that Lender, by
(ii) the outstanding principal balance of the Loans held by all Lenders.
"QUALIFIED PLAN" shall mean a Plan which is intended to be
tax-qualified under Section 401(a) of the IRC.
"REAL ESTATE" shall have the meaning assigned to it in SECTION
3.6.
"REFUNDED SWING LINE LOAN" shall have the meaning assigned to
it in SECTION 1.1(c)(iii).
"RELATED TRANSACTIONS" means each borrowing under the
Revolving Loan and the Term Loan on the Closing Date, the Worthington
Acquisition, the Preferred Stock Contribution, the assignments and other
transactions relating to the IRB Assignment Documents, the payment of all
fees, costs and expenses associated with all of the foregoing and the
execution and delivery of all of the Related Transactions Documents.
"RELATED TRANSACTIONS DOCUMENTS" shall mean the Loan
Documents, the Worthington Acquisition Agreement and the IRB Assignment
Documents and, in each case, all other documents executed in connection
therewith.
"RELEASE" shall mean any release, threatened release, spill,
emission, leaking, pumping, pouring, emitting, emptying, escape, injection,
deposit, disposal, discharge, dispersal, dumping, leaching or migration of
Hazardous Material in the indoor or outdoor environment, including the
movement of Hazardous Material through or in the air, soil, surface water,
ground water or property.
"REQUISITE LENDERS" shall mean (a) Lenders having more than
sixty-six and two-thirds percent (66 2/3%) of the Commitments of all Lenders,
or (b) if the Commitments have been terminated, more than sixty-six and
two-thirds percent (66 2/3%) of the aggregate outstanding amount of all
Loans.
"REQUISITE REVOLVING LENDERS" shall mean (a) Lenders having
more than sixty-six and two-thirds percent (66 2/3%) of the Revolving Loan
Commitments of all Lenders, or (b) if the Revolving Loan Commitments have
been terminated, more than sixty-six and two-thirds percent (66 2/3%) of the
aggregate outstanding amount of the Revolving Loan.
"RESERVES" shall mean, with respect to the Revolving Borrowing
Base of any Borrower (a) reserves established by Agent from time to time
against Eligible Inventory pursuant to SECTION 5.9, (b) reserves established
pursuant to SECTION 5.4(c), and (c) such other reserves against Eligible
Accounts, Eligible Inventory or Borrowing Availability of any Borrower which
Agent may, in its reasonable credit judgment, establish from time to time.
Without limiting the generality of the foregoing, Reserves established (i) to
ensure the payment
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of accrued Interest Expenses or Indebtedness or (ii) because Agent is not
satisfied with its Collateral position, as determined in its sole discretion,
with respect to MCP's assets, including, without limitation, MCP's interest
in Equipment and Real Estate, located at MCP's Lebanon Kentucky facility
shall in each case be deemed to be a reasonable exercise of Agent's credit
judgment.
"RESTRICTED PAYMENT" shall mean (a) the declaration or payment
of any dividend or the incurrence of any liability to make any other payment
or distribution of cash or other property or assets in respect of a Person's
Stock, (b) any payment on account of the purchase, redemption, defeasance,
sinking fund or other retirement of a Person's Stock or any other payment or
distribution made in respect thereof, either directly or indirectly, (c) any
payment made to redeem, purchase, repurchase or retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to acquire
Stock of such Person now or hereafter outstanding; (d) any payment of a claim
for the rescission of the purchase or sale of, or for material damages
arising from the purchase or sale of, any shares of such Person's Stock or of
a claim for reimbursement, indemnification or contribution arising out of or
related to any such claim for damages or rescission; (e) any payment, loan,
contribution, or other transfer of funds or other property to any Stockholder
of such Person other than payment of compensation in the ordinary course to
stockholders who are employees of such Person; and (f) any payment of
management fees (or other fees of a similar nature) by such Person to any
Stockholder of such Person or their Affiliates.
"RETIREE WELFARE PLAN" shall mean, at any time, a Plan that is
a "welfare plan" as defined in Section 3(2) of ERISA, that provides for
continuing coverage or benefits for any participant or any beneficiary of a
participant after such participant's termination of employment, other than
continuation coverage provided pursuant to Section 4980B of the IRC and at
the sole expense of the participant or the beneficiary of the participant.
"REVOLVING BORROWING BASE" shall mean, as the context may
require, the MCP Revolving Borrowing Base and the Second Borrower Revolving
Borrowing Base or any such Borrowing Base.
"REVOLVING BORROWING BASE CERTIFICATE" shall mean a
certificate to be executed and delivered from time to time by each Borrower
in the form attached to the Agreement as EXHIBIT 4.1(b).
"REVOLVING CREDIT ADVANCE" shall have the meaning assigned to
it in SECTION 1.1(a)(i).
"REVOLVING LENDERS" shall mean, as of any date of
determination, Lenders having a Revolving Loan Commitment.
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"REVOLVING LOAN" shall mean, at any time, the sum of (i) the
aggregate amount of Revolving Credit Advances outstanding to any Borrower or
to all Borrowers PLUS (ii) the aggregate Letter of Credit Obligations
incurred on behalf of any Borrower or all Borrowers. Unless the context
otherwise requires, references to the outstanding principal balance of the
Revolving Loan shall include the outstanding balance of Letter of Credit
Obligations.
"REVOLVING LOAN COMMITMENT" shall mean (a) as to any Lender,
the aggregate commitment of such Lender to make Revolving Credit Advances
(including without duplication Swing Line Advances as a subset of the Swing
Line Lender's Revolving Loan Commitment) and/or incur Letter of Credit
Obligations as set forth on ANNEX J to the Agreement or in the most recent
Assignment Agreement executed by such Lender and (b) as to all Lenders, the
aggregate commitment of all Lenders to make Revolving Credit Advances
(including without duplication Swing Line Advances as a subset of the Swing
Line Lender's Revolving Loan Commitment) and/or incur Letter of Credit
Obligations, which aggregate commitment shall be $24,000,000 on the Closing
Date, as such amount may be adjusted, if at all, from time to time in
accordance with the Agreement.
"REVOLVING NOTE" shall have the meaning assigned to it in
SECTION 1.1(a)(ii).
"REVOLVING OVERADVANCE" shall have the meaning assigned to it
in SECTION 1.1(a)(iii).
"SECOND BORROWER REVOLVING BORROWING BASE" shall mean, until
otherwise agreed to by each of the Lenders, zero.
"SECURITY AGREEMENTS" shall mean, collectively, the Holdings
Security Agreement, Borrower Security Agreement and Subsidiary Security
Agreement, in each case of even date herewith entered into among Agent, on
behalf of itself and Lenders, and each Credit Party that is a signatory
thereto.
"SELLER" shall mean Worthington Custom Plastics, Inc., an Ohio
corporation.
"SOLVENT" shall mean, with respect to any Person on a
particular date, that on such date (a) the fair value of the property of such
Person is greater than the total amount of liabilities, including contingent
liabilities, of such Person; (b) the present fair salable value of the assets
of such Person is not less than the amount that will be required to pay the
probably liability of such Person on its debts as they become absolute and
matured; (c) such Person does not intend to, and does not believe that it
will, incur debts or liabilities beyond such Person's ability to pay as such
debts and liabilities mature; and (d) such Person is not engaged in a
business or transaction, and is not about to engage in a business or
transaction, for which such Person's property would constitute an
unreasonably small capital. The amount of contingent liabilities (such as
litigation, guarantees and pension plan liabilities) at any time shall be
computed as the amount which, in light of all the facts and circumstances
existing at the time,
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represents the amount which can be reasonably be expected to become an actual
or matured liability.
"STOCK" shall mean all shares, options, warrants, membership
interests, general or limited partnership interests or other equivalents
(regardless of how designated) of or in a corporation, partnership or
equivalent entity whether voting or nonvoting, including common stock,
preferred stock or any other "equity security" (as such term is defined in
Rule 3a11-1 of the General Rules and Regulations promulgated by the
Securities and Exchange Commission under the Securities Exchange Act of 1934,
as amended).
"SUBSIDIARY" shall mean, with respect to any Person, (a) any
corporation of which an aggregate of more than fifty percent (50%) of the
outstanding Stock having ordinary voting power to elect a majority of the
board of directors of such corporation (irrespective of whether, at the time,
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) is at the
time, directly or indirectly, owned legally or beneficially by such Person
and/or one or more Subsidiaries of such Person, or with respect to which any
such Person has the right to vote or designate the vote of fifty percent
(50%) or more of such Stock whether by proxy, agreement, operation of law or
otherwise, and (b) any partnership or limited liability company in which such
Person and/or one or more Subsidiaries of such Person shall have an interest
(whether in the form of voting or participation in profits or capital
contribution) of more than fifty percent (50%) or of which any such Person is
a general partner or may exercise the powers of a general partner.
"SUBSIDIARY GUARANTY" shall mean the Subsidiary Guaranty of
even date herewith executed by each Subsidiary of each Borrower in favor of
Agent, on behalf of itself and Lenders.
"SUBSIDIARY INTELLECTUAL PROPERTY SECURITY AGREEMENT" shall
mean the Intellectual Property Security Agreement of even date herewith
entered into among Agent, on behalf of itself and Lenders, the IRB Subsidiary
and each other Credit Party party thereto.
"SUBSIDIARY PLEDGE AGREEMENT" shall mean the Subsidiary Pledge
Agreement of even date herewith entered into by Agent, on behalf of itself
and Lenders, and the IRB Subsidiary.
"SUBSIDIARY SECURITY AGREEMENT" shall mean the Security
Agreement of even date herewith entered into among Agent, on behalf of itself
and Lenders, the IRB Subsidiary and each other Credit Party party thereto.
"SUPERMAJORITY REVOLVING LENDERS" shall mean (a) Lenders
having eighty percent (80%) or more of the Revolving Loan Commitments of all
Lenders, or (b) if the Revolving Loan Commitments have been terminated,
eighty percent (80%) or more of the
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aggregate outstanding amount of the Revolving Loan (with the Swing Line Loan
being attributed to the Lender making such Loan) and Letter of Credit
Obligations.
"SWING LINE ADVANCE" has the meaning assigned to it in SECTION
1.1(c)(i).
"SWING LINE AVAILABILITY" has the meaning assigned to it in
SECTION 1.1(c)(i).
"SWING LINE COMMITMENT" shall mean, as to the Swing Line
Lender, the commitment of the Swing Line Lender to make Swing Line Loans as
set forth on ANNEX J to the Agreement, which commitment constitutes a
subfacility of the Revolving Loan Commitment of the Swing Line Lender.
"SWING LINE LENDER" shall mean GE Capital.
"SWING LINE LOAN" shall mean, as the context may require, at
any time, the aggregate amount of Swing Line Advances outstanding to any
Borrower or to all Borrowers.
"SWING LINE NOTE" has the meaning assigned to it in SECTION
1.1(c)(ii).
"TANGIBLE NET WORTH" shall mean, with respect to any Person at
any date, the Net Worth of such Person at such date, EXCLUDING, HOWEVER, from
the determination of the total assets at such date, (a) all goodwill,
capitalized organizational expenses, capitalized research and development
expenses, trademarks, trade names, copyrights, patents, patent applications,
licenses and rights in any thereof, and other intangible items, (b) all
unamortized debt discount and expense, (c) treasury Stock, and (d) any
write-up in the book value of any asset resulting from a revaluation thereof.
"TAX SHARING AGREEMENT" shall mean the Tax Sharing Agreement
dated as of the date hereof by and between MIG and Holdings.
"TAXES" shall mean taxes, levies, imposts, deductions, Charges
or withholdings, and all liabilities with respect thereto, excluding taxes
imposed on or measured by the net income of Agent or a Lender by the
jurisdictions under the laws of which Agent and Lenders are organized or any
political subdivision thereof or by the jurisdiction of any lending office of
any Lender used to make Loans hereunder unless the connection with such
lending office jurisdiction arises solely from any Lender having executed,
delivered or performed its obligations or receive a payment under, or
enforced the Agreement or the Notes.
"TERM LENDERS" shall mean those Lenders having Term Loan
Commitments.
"TERM LOAN" shall have the meaning assigned to it in SECTION
1.1(b)(i).
"TERM LOAN COMMITMENT" shall mean (a) as to any Lender with a
Term Loan Commitment, the commitment of such Lender to make its Pro Rata
Share of the Term Loan as
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set forth on ANNEX J to the Agreement or in the most recent Assignment
Agreement executed by such Lender, and (b) as to all Lenders with a Term Loan
Commitment, the aggregate commitment of all Lenders to make the Term Loan,
which aggregate commitment shall be $26,000, 000 on the Closing Date, as to
each of clauses (a) and (b), as such Term Loan Commitments may be reduced,
amortized or adjusted from time to time in accordance with the Agreement.
"TERM OVERADVANCE" shall have the meaning assigned to it in
SECTION 1.1(b)(i)(2).
"TERM NOTE" shall have the meaning assigned to it in SECTION
1.1(b)(i).
"TERMINATION DATE" shall mean the date on which the Loans have
been indefeasibly repaid in full and all other Obligations under the
Agreement and the other Loan Documents have been completely discharged and
Letter of Credit Obligations have been cash collateralized, canceled or
backed by stand-by letters of credit in accordance with ANNEX B, and none of
Borrowers shall have any further right to borrow any monies under the
Agreement.
"THIRD PARTY INTERACTIVES" shall mean all Persons with whom
any Credit Party exchanges data electronically in the ordinary course of
business, including, without limitation, customers, suppliers, third-party
vendors, subcontractors, processors-converters, shippers and warehousemen.
"TITLE IV PLAN" shall mean an employee pension benefit plan,
as defined in Section 3 (2) of ERISA (other than a Multiemployer Plan), which
is covered by Title IV of ERISA, and which any Credit Party or ERISA
Affiliate maintains, contributes to or has an obligation to contribute to on
behalf of participants who are or were employed by any of them.
"TRADEMARK LICENSE" shall mean rights under any written
agreement now owned or hereafter acquired by any Credit Party granting any
right to use any Trademark.
"TRADEMARKS" shall mean all of the following now owned or
hereafter acquired by any Credit Party: (a) all trademarks, trade names,
corporate or limited liability company names, business names, trade styles,
service marks, logos, other source or business identifiers, prints and labels
on which any of the foregoing have appeared or appear, designs and general
intangibles of like nature (whether registered or unregistered), now owned or
existing or hereafter adopted or acquired, all registrations and recordings
thereof, and all applications in connection therewith, including
registrations, recordings and applications in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
state or territory thereof, or any other country or any political subdivision
thereof; (b) all reissues, extensions or renewals thereof; and (c) all
goodwill associated with or symbolized by any of the foregoing.
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"UNFUNDED PENSION LIABILITY" shall mean, at any time, the
aggregate amount, if any, of the sum of (a) the amount by which the present
value of all accrued benefits under each Title IV Plan exceeds the fair
market value of all assets of such Title IV Plan allocable to such benefits
in accordance with Title IV of ERISA, all determined as of the most recent
valuation date for each such Title IV Plan using the actuarial assumptions
for funding purposes in effect under such Title IV Plan, and (b) for a period
of five (5) years following a transaction which might reasonably be expected
to be covered by Section 4069 of ERISA, the liabilities (whether or not
accrued) that could be avoided by any Credit Party or any ERISA Affiliate as
a result of such transaction.
"WORTHINGTON" shall mean the portion of the Seller's business
consisting of substantially all of the assets of Seller's non-automotive
plastics operations located at Seller's Harrisburg and Concord, North
Carolina, St. Matthews, South Carolina and Lebanon, Kentucky facilities
"WORTHINGTON ACQUISITION" shall mean the acquisition of all or
substantially all of the assets of Worthington pursuant to the Worthington
Acquisition Agreement.
"WORTHINGTON ACQUISITION AGREEMENT" shall mean the Asset
Purchase Agreement, dated February 26, 1999, originally by and among Seller,
MIG and MCP (as in effect on the Closing Date and after giving effect to
Amendment No. 1 to such agreement dated as of the date hereof.
"YEAR 2000 ASSESSMENT" shall mean a comprehensive written
assessment of the nature and extent of each Credit Party's Year 2000 Problems
and Year 2000 Date-Sensitive Systems/Components, including, without
limitation, Year 2000 Problems regarding data exchanges with Third Party
Interactives.
"YEAR 2000 CORRECTIVE ACTIONS" shall mean, as to each Credit
Party, all actions necessary to eliminate such Person's Year 2000 Problems,
including, without limitation, computer code enhancements and revisions,
upgrades and replacements of Year 2000 Date-Sensitive Systems/Components, and
coordination of such enhancements, revisions, upgrades and replacements with
Third Party Interactives.
"YEAR 2000 CORRECTIVE PLAN" shall mean, with respect to each
Credit Party, a comprehensive plan to eliminate all of its Year 2000 Problems
on or before November 30, 1999, including without limitation (i) computer
code enhancements or revisions, (ii) upgrades or replacements of Year 2000
Date-Sensitive Systems/Components, (iii) test and validation procedures, (iv)
an implementation time line and budget and (v) designation of specific
employees who will be responsible for planning, coordinating and implementing
each phase or subpart of the Year 2000 Corrective Plan.
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"YEAR 2000 DATE-SENSITIVE SYSTEM/COMPONENT" shall mean, as to
any Person, any system software, network software, applications software,
data base, computer file, embedded microchip, firmware or hardware that
accepts, creates, manipulates, sorts, sequences, calculates, compares or
outputs calendar-related data accurately; such systems and components shall
include, without limitation, mainframe computers, file server/client systems,
computer workstations, routers, hubs, other network-related hardware, and
other computer-related software, firmware or hardware and information
processing and delivery systems of any kind and telecommunications systems
and other communications processors, security systems, alarms, elevators and
HVAC systems.
"YEAR 2000 IMPLEMENTATION TESTING" shall mean, as to each
Credit Party, (i) the performance of test and validation procedures regarding
Year 2000 Corrective Actions on a unit basis and on a systemwide basis; (ii)
the performance of test and validation procedures regarding data exchanges
among the Credit Parties' Year 2000 Date-Sensitive Systems/Components and
data exchanges with Third Party Interactives, and (iii) the design and
implementation of additional Corrective Actions, the need for which has been
demonstrated by test and validation procedures.
"YEAR 2000 PROBLEMS" shall mean, with respect to each Credit
Party, limitations on the capacity or readiness of any such Credit Party's
Year 2000 Date-Sensitive Systems/Components to accurately accept, create,
manipulate, sort, sequence, calculate, compare or output calendar date
information with respect to calendar year 1999 or any subsequent calendar
year beginning on or after January 1, 2000 (including leap year
computations), including, without limitation, exchanges of information among
Year 2000 Date-Sensitive Systems/Components of the Credit Parties and
exchanges of information among the Credit Parties and Year 2000
Date-Sensitive Systems/Components of Third Party Interactives and
functionality of peripheral interfaces, firmware and embedded microchips.
All other undefined terms contained in any of the Loan
Documents shall, unless the context indicates otherwise, have the meanings
provided for by the Code as in effect in the State of New York to the extent
the same are used or defined therein. Unless otherwise specified, references
in the Agreement or any of the Appendices to a Section, subsection or clause
refer to such Section, subsection or clause as contained in the Agreement.
The words "herein," "hereof" and "hereunder" and other words of similar
import refer to the Agreement as a whole, including all Annexes, Exhibits and
Schedules, as the same may from time to time be amended, restated, modified
or supplemented, and not to any particular section, subsection or clause
contained in the Agreement or any such Annex, Exhibit or Schedule.
Wherever from the context it appears appropriate, each term
stated in either the singular or plural shall include the singular and the
plural, and pronouns stated in the masculine, feminine or neuter gender shall
include the masculine, feminine and neuter genders. The words "including",
"includes" and "include" shall be deemed to be followed by the words "without
limitation"; references to Persons include their respective successors and
assigns (to
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the extent and only to the extent permitted by the Loan Documents) or, in the
case of governmental Persons, Persons succeeding to the relevant functions of
such Persons; and all references to statutes and related regulations shall
include any amendments of the same and any successor statutes and
regulations. Whenever any provision in any Loan Document refers to the
knowledge (or an analogous phrase) of any Credit Party, such words are
intended to signify that such Credit Party has actual knowledge or awareness
of a particular fact or circumstance or that such Credit Party, if it had
exercised reasonable diligence, would have known or been aware of such fact
or circumstance.
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<PAGE>
ANNEX B (SECTION 1.2)
TO
CREDIT AGREEMENT
LETTERS OF CREDIT
(a) ISSUANCE. Subject to the terms and conditions of the
Agreement, Agent and Revolving Lenders agree to incur, from time to time
prior to the Commitment Termination Date, upon the request of Borrower
Representative on behalf of the applicable Borrower and for such Borrower's
account, Letter of Credit Obligations by causing Letters of Credit to be
issued (by a bank or other legally authorized Person selected by or
acceptable to Agent in its sole discretion (each, an "L/C ISSUER")) for such
Borrower's account and guaranteed by Agent; PROVIDED, HOWEVER, that if the
L/C Issuer is a Revolving Lender, then such Letters of Credit shall not be
guaranteed by Agent but rather each Revolving Lender shall, subject to the
terms and conditions hereinafter set forth, purchase (or be deemed to have
purchased) risk participations in all such Letters of Credit issued with the
written consent of Agent, as more fully described in paragraph (b)(ii) below.
The aggregate amount of all such Letter of Credit Obligations shall not at
any time exceed the least of (i) $1,500,000 (the "L/C SUBLIMIT"), and (ii)
the Maximum Amount LESS the aggregate outstanding principal balance of the
Revolving Credit Advances and the Swing Line Loan, and (iii) the Aggregate
Revolving Borrowing Base LESS the aggregate outstanding principal balance of
the Revolving Credit Advances and the Swing Line Loan. Furthermore, the
aggregate amount of any Letter of Credit Obligations incurred on behalf of
any Borrower shall not at any time exceed such Borrower's separate Revolving
Borrowing Base LESS the aggregate principal balance of the Revolving Credit
Advances and the Swing Line Loan to such Borrower. No such Letter of Credit
shall have an expiry date which is more than one year following the date of
issuance thereof, and neither Agent nor Revolving Lenders shall be under any
obligation to incur Letter of Credit Obligations in respect of, or purchase
risk participations in, any Letter of Credit having an expiry date which is
later than the Commitment Termination Date.
(b) (i) ADVANCES AUTOMATIC; PARTICIPATIONS. In the event
that Agent or any Revolving Lender shall make any payment on or pursuant to
any Letter of Credit Obligation, such payment shall then be deemed
automatically to constitute a Revolving Credit Advance (which would
extinguish the corresponding Letter of Credit Obligations) to the applicable
Borrower under SECTION 1.1(a) of the Agreement regardless of whether a
Default or Event of Default shall have occurred and be continuing and
notwithstanding any Borrower's failure to satisfy the conditions precedent
set forth in SECTION 2, and each Revolving Lender shall be obligated to pay
its Pro Rata Share thereof in accordance with the Agreement. The failure of
any Revolving Lender to make available to Agent for Agent's own account its
Pro Rata Share of any such Revolving Credit Advance or payment by Agent under
or in respect of a Letter of Credit shall not relieve any other Revolving
Lender of its obligation hereunder to make available to Agent its Pro Rata
Share thereof, but no Revolving Lender shall be responsible for
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<PAGE>
the failure of any other Revolving Lender to make available such other
Revolving Lender's Pro Rata Share of any such payment.
(ii) If it shall be illegal or unlawful for any Borrower
to incur Revolving Credit Advances as contemplated by paragraph (b)(i) above
because of an Event of Default described in SECTION 8.1(h) or (i) or
otherwise or if it shall be illegal or unlawful for any Revolving Lender to
be deemed to have assumed a ratable share of the reimbursement obligations
owed to an L/C Issuer, or if the L/C Issuer is a Revolving Lender, then (i)
immediately and without further action whatsoever, each Revolving Lender
shall be deemed to have irrevocably and unconditionally purchased from Agent
(or such L/C Issuer, as the case may be) an undivided interest and
participation equal to such Revolving Lender's Pro Rata Share (based on the
Revolving Loan Commitments) of the Letter of Credit Obligations in respect of
all Letters of Credit then outstanding and (ii) thereafter, immediately upon
issuance of any Letter of Credit, each Revolving Lender shall be deemed to
have irrevocably and unconditionally purchased from Agent (or such L/C
Issuer, as the case may be) an undivided interest and participation in such
Revolving Lender's Pro Rata Share (based on the Revolving Loan Commitments)
of the Letter of Credit Obligations with respect to such Letter of Credit on
the date of such issuance. Each Revolving Lender shall fund its
participation in all payments or disbursements made under the Letters of
Credit in the same manner as provided in the Agreement with respect to
Revolving Credit Advances.
(c) CASH COLLATERAL. If Borrowers are required to provide
cash collateral for any Letter of Credit Obligations pursuant to the
Agreement prior to the Commitment Termination Date, each Borrower will pay to
Agent for the benefit of Revolving Lenders cash or cash equivalents
acceptable to Agent ("CASH EQUIVALENTS") in an amount equal to 105% of the
maximum amount then available to be drawn under each applicable Letter of
Credit outstanding for the benefit of such Borrower. Such funds or Cash
Equivalents shall be held by Agent in a cash collateral account (the "CASH
COLLATERAL ACCOUNT") maintained at a bank or financial institution acceptable
to Agent. The Cash Collateral Account shall be in the name of the applicable
Borrower and shall be pledged to, and subject to the control of, Agent, for
the benefit of Agent and Lenders, in a manner satisfactory to Agent. Each
Borrower hereby pledges and grants to Agent, on behalf of Lenders, a security
interest in all such funds and Cash Equivalents held in the Cash Collateral
Account from time to time and all proceeds thereof, as security for the
payment of all amounts due in respect of the Letter of Credit Obligations and
other Obligations, whether or not then due. The Agreement, including this
ANNEX B, shall constitute a security agreement under applicable law.
If any Letter of Credit Obligations, whether or not then due
and payable, shall for any reason be outstanding on the Commitment
Termination Date, Borrowers shall either (i) provide cash collateral therefor
in the manner described above, or (ii) cause all such Letters of Credit and
guaranties thereof to be canceled and returned, or (iii) deliver a stand-by
letter (or letters) of credit in guaranty of such Letter of Credit
Obligations, which stand-by letter (or letters) of credit shall be of like
tenor and duration (plus thirty (30) additional days) as, and in an amount
equal to 105% of, the aggregate maximum amount then available to be drawn
under, the Letters of Credit to which such outstanding Letter of Credit
Obligations relate and shall be
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<PAGE>
issued by a Person, and shall be subject to such terms and conditions, as are
be satisfactory to Agent in its sole discretion.
From time to time after funds are deposited in the Cash
Collateral Account by any Borrower, whether before or after the Commitment
Termination Date, Agent may apply such funds or Cash Equivalents then held in
the Cash Collateral Account to the payment of any amounts, in such order as
Agent may elect, as shall be or shall become due and payable by such Borrower
to Lenders with respect to such Letter of Credit Obligations of such Borrower
and, upon the satisfaction in full of all Letter of Credit Obligations of
such Borrower, to any other Obligations of any Borrower then due and payable.
No Borrower nor any Person claiming on behalf of or through
any Borrower shall have any right to withdraw any of the funds or Cash
Equivalents held in the Cash Collateral Account, except that upon the
termination of all Letter of Credit Obligations and the payment of all
amounts payable by Borrowers to Lenders in respect thereof, any funds
remaining in the Cash Collateral Account shall be applied to other
Obligations when due and owing and upon payment in full of such Obligations,
any remaining amount shall be paid to Borrowers or as otherwise required by
law.
(d) FEES AND EXPENSES. Borrowers agree to pay to Agent for
the benefit of Revolving Lenders, as compensation to such Lenders for Letter
of Credit Obligations incurred hereunder, (x) all costs and expenses incurred
by Agent or any Lender on account of such Letter of Credit Obligations, and
(y) for each month during which any Letter of Credit Obligation shall remain
outstanding, a fee (the "LETTER OF CREDIT FEE") in an amount equal to 1.5%
per annum multiplied by the maximum amount available from time to time to be
drawn under the applicable Letter of Credit. Such fee shall be paid to
Agent for the benefit of the Revolving Lenders in arrears, on the first day
of each month. In addition, Borrowers shall pay to any L/C Issuer, on demand,
such fees (including all per annum fees), charges and expenses of such L/C
Issuer in respect of the issuance, negotiation, acceptance, amendment,
transfer and payment of such Letter of Credit or otherwise payable pursuant
to the application and related documentation under which such Letter of
Credit is issued.
(e) REQUEST FOR INCURRENCE OF LETTER OF CREDIT OBLIGATIONS.
Borrower Representative shall give Agent at least two (2) Business Days prior
written notice requesting the incurrence of any Letter of Credit Obligation,
specifying the date such Letter of Credit Obligation is to be incurred,
identifying the beneficiary and the Borrower to which such Letter of Credit
Obligation relates and describing the nature of the transactions proposed to
be supported thereby. The notice shall be accompanied by the form of the
Letter of Credit (which shall be acceptable to the L/C Issuer) to be
guarantied and, to the extent not previously delivered to Agent, copies of
all agreements between any Borrower and the L/C Issuer pertaining to the
issuance of Letters of Credit. Notwithstanding anything contained herein to
the contrary, Letter of Credit applications by Borrower Representative and
approvals by Agent and the L/C Issuer may be made and transmitted pursuant to
electronic codes and security measures mutually agreed upon and established
by and among Borrower Representative, Agent and the L/C Issuer.
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<PAGE>
(f) OBLIGATION ABSOLUTE. The obligation of Borrowers to
reimburse Agent and Revolving Lenders for payments made with respect to any
Letter of Credit Obligation shall be absolute, unconditional and irrevocable,
without necessity of presentment, demand, protest or other formalities, and
the obligations of each Revolving Lender to make payments to Agent with
respect to Letters of Credit shall be unconditional and irrevocable. Such
obligations of Borrowers and Revolving Lenders shall be paid strictly in
accordance with the terms hereof under all circumstances including the
following circumstances:
(i) any lack of validity or enforceability of any Letter of
Credit or the Agreement or the other Loan Documents or any other
agreement;
(ii) the existence of any claim, set-off, defense or other
right which any Borrower or any of their respective Affiliates or any
Lender may at any time have against a beneficiary or any transferee of
any Letter of Credit (or any Persons or entities for whom any such
transferee may be acting), Agent, any Lender, or any other Person,
whether in connection with the Agreement, the Letter of Credit, the
transactions contemplated herein or therein or any unrelated transaction
(including any underlying transaction between any Borrower or any of
their respective Affiliates and the beneficiary for which the Letter of
Credit was procured);
(iii) any draft, demand, certificate or any other document
presented under any Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect;
(iv) payment by Agent (except as otherwise expressly provided
in paragraph (g)(ii)(C) below) or any L/C Issuer under any Letter of
Credit or guaranty thereof against presentation of a demand, draft or
certificate or other document which does not comply with the terms of
such Letter of Credit or such guaranty;
(v) any other circumstance or happening whatsoever, which is
similar to any of the foregoing; or
(vi) the fact that a Default or an Event of Default shall have
occurred and be continuing.
(g) INDEMNIFICATION; NATURE OF LENDERS' DUTIES. (i) In
addition to amounts payable as elsewhere provided in the Agreement, Borrowers
hereby agree to pay and to protect, indemnify, and save harmless Agent and
each Lender from and against any and all claims, demands, liabilities,
damages, losses, costs, charges and expenses (including attorneys' fees and
allocated costs of internal counsel) which Agent or any Lender may incur or
be subject to as a consequence, direct or indirect, of (A) the issuance of
any Letter of Credit or guaranty thereof, or (B) the failure of Agent or any
Lender seeking indemnification or of any L/C Issuer to honor a demand for
payment under any Letter of Credit or guaranty thereof as a result of any act
or omission, whether rightful or wrongful, of any present or future de jure
or de facto
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<PAGE>
government or Governmental Authority, in each case other than to the extent
solely as a result of the gross negligence or willful misconduct of Agent or
such Lender (as finally determined by a court of competent jurisdiction).
(ii) As between Agent and any Lender and Borrowers,
Borrowers assume all risks of the acts and omissions of, or misuse of any
Letter of Credit by beneficiaries of any Letter of Credit. In furtherance
and not in limitation of the foregoing, to the fullest extent permitted by
law neither Agent nor any Lender shall be responsible: (A) for the form,
validity, sufficiency, accuracy, genuineness or legal effect of any document
issued by any party in connection with the application for and issuance of
any Letter of Credit, even if it should in fact prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or forged; (B) for the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, which may prove
to be invalid or ineffective for any reason; (C) for failure of the
beneficiary of any Letter of Credit to comply fully with conditions required
in order to demand payment under such Letter of Credit; PROVIDED that, in the
case of any payment by Agent under any Letter of Credit or guaranty thereof,
Agent shall be liable to the extent such payment was made solely as a result
of its gross negligence or willful misconduct (as finally determined by a
court of competent jurisdiction) in determining that the demand for payment
under such Letter of Credit or guaranty thereof complies on its face with any
applicable requirements for a demand for payment under such Letter of Credit
or guaranty thereof; (D) for errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable, telegraph, telex or
otherwise, whether or not they be in cipher; (E) for errors in interpretation
of technical terms; (F) for any loss or delay in the transmission or
otherwise of any document required in order to make a payment under any
Letter of Credit or guaranty thereof or of the proceeds thereof; (G) for the
credit of the proceeds of any drawing under any Letter of Credit or guaranty
thereof; and (H) for any consequences arising from causes beyond the control
of Agent or any Lender. None of the above shall affect, impair, or prevent
the vesting of any of Agent's or any Lender's rights or powers hereunder or
under the Agreement.
(iii) Nothing contained herein shall be deemed to
limit or to expand any waivers, covenants or indemnities made by Borrowers in
favor of any L/C Issuer in any letter of credit application, reimbursement
agreement or similar document, instrument or agreement between or among
Borrowers and such L/C Issuer.
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<PAGE>
ANNEX C (SECTION 1.8)
TO
CREDIT AGREEMENT
CASH MANAGEMENT SYSTEMS
Each Borrower shall, and shall cause its Subsidiaries to,
establish and maintain the Cash Management Systems described below:
(a) On or before the Closing Date (or such later date as
Agent shall consent to in writing) and until the Termination Date, each
Borrower shall (i) establish lock boxes ("LOCK BOXES") at one or more of the
banks set forth on DISCLOSURE SCHEDULE (3.19), and shall request in writing
and otherwise take such reasonable steps to ensure that all Account Debtors
forward payment directly to such Lock Boxes, and (ii) deposit and cause its
Subsidiaries to deposit or cause to be deposited promptly, and in any event
no later than the first Business Day after the date of receipt thereof, all
cash, checks, drafts or other similar items of payment relating to or
constituting payments made in respect of any and all Collateral, including,
without limitation, payments, if any, in respect of the Lebanon IRBs (whether
or not otherwise delivered to a Lock Box) into bank accounts in such
Borrower's name or any such Subsidiary's name (collectively, the "BORROWER
ACCOUNTS") at banks set forth on DISCLOSURE SCHEDULE (3.19) (each, a
"RELATIONSHIP BANK").
(b) On or before the Closing Date (or such later date as
Agent shall consent to in writing), each Relationship Banks, shall have
entered into tri-party blocked account agreements with Agent, for the benefit
of itself and Lenders, and the applicable Borrower and Subsidiaries thereof,
as applicable, in form and substance acceptable to Agent, which shall become
operative on or prior to the Closing Date. Each such blocked account
agreement shall provide, among other things, that (i) all items of payment
deposited in such account and proceeds thereof deposited in the Collection
Account are held by such bank as agent or bailee-in-possession for Agent, on
behalf of Lenders, (ii) the bank executing such agreement has no rights of
setoff or recoupment or any other claim against such account, as the case may
be, other than for payment of its service fees and other charges directly
related to the administration of such account and for returned checks or
other items of payment, and (iii) from and after the Closing Date with
respect to banks at which a Borrower Account is located, such bank agrees to
forward immediately all amounts in each Borrower Account to the Collection
Account and to commence the process of daily sweeps from such Borrower
Account into the Collection Account. Each Borrower shall not, and shall not
cause or permit any Subsidiary thereof to, accumulate or maintain cash in
disbursement or payroll accounts as of any date of determination in excess of
checks outstanding against such accounts as of that date and amounts
necessary to meet minimum balance requirements.
(c) So long as no Default or Event of Default has occurred
and is continuing, Borrowers may amend DISCLOSURE SCHEDULE (3.19) to add or
replace a Relationship Bank, Lock Box or Borrower Account or to replace any
Disbursement Account; PROVIDED, HOWEVER, THAT (i) Agent shall have consented
in writing in advance to the opening of such account or Lock Box
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with the relevant bank and (ii) prior to the time of the opening of such
account or Lock Box, the applicable Borrower and/or the Subsidiaries thereof,
as applicable, and such bank shall have executed and delivered to Agent a
tri-party blocked account agreement, in form and substance satisfactory to
Agent. Borrowers shall close any of their accounts (and establish replacement
accounts in accordance with the foregoing sentence) promptly and in any event
within thirty (30) days of notice from Agent that the creditworthiness of any
bank holding an account is no longer acceptable in Agent's reasonable
judgment, or as promptly as practicable and in any event within sixty (60)
days of notice from Agent that the operating performance, funds transfer
and/or availability procedures or performance with respect to accounts or
lockboxes of the bank holding such accounts or Agent's liability under any
tri-party blocked account agreement with such bank is no longer acceptable in
Agent's reasonable judgment.
(d) The Lock Boxes, Borrower Accounts and Disbursement
Accounts (other than any payroll account) shall be cash collateral accounts,
with all cash, checks and other similar items of payment in such accounts
securing payment of the Loans and all other Obligations, and in which each
Borrower and each Subsidiary thereof shall have granted a Lien to Agent, on
behalf of itself and Lenders, pursuant to the Security Agreements.
(e) All amounts deposited in the Collection Account shall
be deemed received by Agent in accordance with Section 1.10 of the Agreement
and shall be applied (and allocated) by Agent in accordance with SECTION 1.11
of the Agreement. In no event shall any amount be so applied unless and
until such amount shall have been credited in immediately available funds to
the Collection Account.
(f) Each Borrower may maintain, in its name, an account
(each a "DISBURSEMENT ACCOUNT" and collectively, the "DISBURSEMENT ACCOUNTS")
at a bank acceptable to Agent into which Agent shall, from time to time,
deposit proceeds of Revolving Credit Advances and Swing Line Advances made to
such Borrower pursuant to SECTION 1.1 for use by such Borrower solely in
accordance with the provisions of SECTION 1.4.
(g) Each Borrower shall and shall cause its Affiliates,
officers, employees, agents, directors or other Persons acting for or in
concert with such Borrower (each a "RELATED PERSON") to (i) hold in trust for
Agent, for the benefit of itself and Lenders, all checks, cash and other
items of payment in respect of amounts owing to such Borrower or any of its
Subsidiaries received by such Borrower or any such Related Person, and (ii)
within one (1) Business Day after receipt by such Borrower or any such
Related Person of any such checks, cash or other items or payment, deposit
the same into a Borrower Account of such Borrower or Subsidiary, as
applicable. Each Borrower and each other Credit Party acknowledges and
agrees that all cash, checks or items of payment constituting proceeds of
Collateral are the property of Agent and Lenders. All proceeds of the sale
or other disposition of any Collateral, shall be deposited directly into the
applicable Borrower Accounts
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ANNEX D (SECTION 2.1(a))
TO
CREDIT AGREEMENT
SCHEDULE OF ADDITIONAL CLOSING DOCUMENTS
In addition to, and not in limitation of, the conditions described in SECTION
2.1 of the Agreement, pursuant to SECTION 2.1(a), the following items must be
received by Agent in form and substance satisfactory to Agent on or prior to
the Closing Date (each capitalized term used but not otherwise defined herein
shall have the meaning ascribed thereto in ANNEX A to the Agreement):
1. APPENDICES. All Appendices to the Agreement, in form
and substance satisfactory to Agent.
2. REVOLVING NOTES, SWING LINE NOTES AND TERM NOTES. Duly
executed originals of the Revolving Notes, Swing Line Notes and Term Notes
for each applicable Lender, dated the Closing Date.
3. SECURITY AGREEMENTS. Duly executed originals of each
of the Security Agreements, dated the Closing Date, and all instruments,
documents and agreements executed pursuant thereto.
4. INSURANCE. Satisfactory evidence that the insurance
policies required by SECTION 5.4 are in full force and effect, together with
appropriate evidence showing loss payable and/or additional insured clauses
or endorsements, as requested by Agent, in favor of Agent, on behalf of
Lenders.
5. SECURITY INTERESTS AND CODE FILINGS.
(a) Evidence satisfactory to Agent that Agent (for
the benefit of itself and Lenders) has (or upon the filing of documents
delivered to Agent on or prior to the Closing Date will have) a valid and
perfected first priority security interest in the Collateral, including (i)
such documents duly executed by each Credit Party (including financing
statements under the Code and other applicable documents under the laws of
any jurisdiction with respect to the perfection of Liens) as Agent may
request in order to perfect its security interests in the Collateral and (ii)
copies of Code search reports in such jurisdictions as Agent reasonably
determines listing all effective financing statements that name any Credit
Party as debtor, together with copies of such financing statements, none of
which shall cover the Collateral.
(b) Evidence satisfactory to Agent, including
copies, of all UCC-1 and other financing statements filed in favor of any
Credit Party with respect to each location, if any, at which Inventory may be
consigned.
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6. INTELLECTUAL PROPERTY SECURITY AGREEMENTS. Duly
executed originals of the Intellectual Property Security Agreements, each
dated the Closing Date and signed by each Credit Party which owns Trademarks,
Copyrights and/or Patents, as applicable, all in form and substance
satisfactory to Agent, together with all instruments, documents and
agreements executed pursuant thereto.
7. HOLDINGS GUARANTY. Duly executed originals of the
Holdings Guaranty, dated the Closing Date, executed by Holdings in favor of
Agent, for the benefit of Lenders, and all documents, instruments and
agreements executed pursuant thereto.
8. SUBSIDIARY GUARANTIES. Duly executed originals of the
Subsidiaries Guaranty, dated the Closing Date, executed by and each direct
and indirect Subsidiary of Holdings that is not a Borrower in favor of Agent,
for the benefit of Lenders, and all documents, instruments and agreements
executed pursuant thereto.
9. INITIAL REVOLVING BORROWING BASE CERTIFICATE. Duly
executed originals of an initial Borrowing Base Certificate from each
Borrower, dated the Closing Date, reflecting information concerning Eligible
Accounts and Eligible Inventory of such Borrower as of a date not more than
seven (7) days prior to the Closing Date.
10. INITIAL NOTICE OF REVOLVING CREDIT ADVANCE. Duly
executed originals of a Notice of Revolving Credit Advance, dated the Closing
Date, with respect to the initial Revolving Credit Advance to be requested by
Borrower Representative on the Closing Date.
11. LETTER OF DIRECTION. Duly executed originals of a
letter of direction from Borrower Representative addressed to Agent, on
behalf of itself and Lenders, with respect to the disbursement on the Closing
Date of the proceeds of the Term Loan and the initial Revolving Credit
Advance.
12. CASH MANAGEMENT SYSTEM; BLOCKED ACCOUNT AGREEMENTS.
Evidence satisfactory to Agent that, as of the Closing Date, Cash Management
Systems complying with ANNEX C to the Agreement have been established and are
currently being maintained in the manner set forth in such ANNEX C, together
with copies of duly executed tri-party blocked account and lock box
agreements, satisfactory to Agent, with the banks as required by ANNEX C.
13. CHARTER (OR EQUIVALENT DOCUMENTATION) AND GOOD
STANDING. For each of Seller and each Credit Party, such Person's (a) charter
(or equivalent organizational documents) and all amendments thereto, (b) good
standing certificates (including verification of tax status) in its state of
incorporation and (c) good standing certificates (including verification of
tax status) and certificates of qualification to conduct business in each
jurisdiction where its ownership or lease of property or the conduct of its
business requires such qualification, each dated a recent date prior to the
Closing Date and certified by the applicable Secretary of State or other
authorized Governmental Authority.
D-2
<PAGE>
14. BYLAWS (OR EQUIVALENT DOCUMENTATION) AND RESOLUTIONS.
For each of Seller, and each Credit Party, (a) such Person's bylaws (or other
equivalent constituent documentation), together with all amendments thereto
and (b) resolutions of such Person's Board of Directors (or equivalent
governing body) and equityholders, approving and authorizing the execution,
delivery and performance of the Loan Documents to which such Person is a
party and the transactions to be consummated in connection therewith, each
certified as of the Closing Date by such Person's secretary or an assistant
secretary as being in full force and effect without any modification or
amendment.
15. INCUMBENCY CERTIFICATES. For each of Seller and each
Credit Party, signature and incumbency certificates of the officers of each
such Person executing any of the Loan Documents, certified as of the Closing
Date by such Person's secretary or an assistant secretary as being true,
accurate, correct and complete.
16. OPINIONS OF COUNSEL. Duly executed originals of
opinions of Winston & Strawn, counsel for the Credit Parties, together with
any local counsel opinions requested by Agent, each in form and substance
satisfactory to Agent and its counsel, dated the Closing Date, and each
accompanied by a letter addressed to such counsel from the Credit Parties,
authorizing and directing such counsel to address its opinion to Agent, on
behalf of Lenders, and to include in such opinion an express statement to the
effect that Agent and Lenders are authorized to rely on such opinion.
17. RELIANCE LETTERS. Duly executed originals of reliance
letters, dated the Closing Date and addressed to Agent and Lenders with
respect to any opinions delivered (i) in connection with the Worthington
Acquisition and (ii) by bond counsel in connection with the transactions
contemplated by the IRB Assignment Documents, and Agent shall be satisfied
with each such opinion.
18. PLEDGE AGREEMENTS. Duly executed originals of each of
the Pledge Agreements accompanied by (as applicable) (a) certificates
representing all of the outstanding Stock being pledged pursuant to such
Pledge Agreement and stock powers (or similar transfer instruments) for such
certificates executed in blank and (b) any instruments evidencing
Indebtedness, including, without limitation in respect of the Holdings Note
and the Lebanon IRBs, being pledged pursuant to such Pledge Agreement, duly
endorsed in blank.
19. ACCOUNTANTS' LETTERS. A letter from the Credit Parties
to their independent auditors authorizing the independent certified public
accountants of the Credit Parties to communicate with Agent and Lenders in
accordance with SECTION 4.2.
20. APPOINTMENT OF AGENT FOR SERVICE. An appointment of CT
Corporation as each Credit Party's agent for service of process.
21. FEE LETTER. Duly executed originals of the GE Capital
Fee Letter.
D-3
<PAGE>
22. OFFICER'S CERTIFICATE. Agent shall have received duly
executed originals of a certificate of the Chief Executive Officer and Chief
Financial Officer of each Borrower or any other appropriate Person as
determined by Agent, dated the Closing Date, stating that, since December 31,
1998 (a) no event or condition has occurred or is existing which could
reasonably be expected to have a Material Adverse Effect; (b) no Litigation
has been commenced which, if successful, would have a Material Adverse Effect
or could challenge any of the transactions contemplated by the Agreement and
the other Loan Documents; (d) there have been no Restricted Payments made by
any Credit Party; and (e) there has been no material increase in liabilities,
liquidated or contingent, and no material decrease in assets of Worthington
or any Borrower or any of its Subsidiaries.
23. WAIVERS. Agent, on behalf of Lenders, shall have
received landlord waivers and consents, bailee letters and mortgagee
agreements in form and substance satisfactory to Agent, in each case as
required pursuant to SECTION 5.9.
24. MORTGAGES. Mortgages covering all of the Real Estate
(the "MORTGAGED PROPERTIES") together with: (a) title insurance policies,
current as-built surveys, zoning letters and certificates of occupancy, in
each case satisfactory in form and substance to Agent, in its sole
discretion; (b) evidence that counterparts of the Mortgages have been
recorded in all places to the extent necessary or desirable, in the judgment
of Agent, to create a valid and enforceable first priority lien (subject to
Permitted Encumbrances) on each Mortgaged Property in favor of Agent for the
benefit of itself and Lenders (or in favor of such other trustee as may be
required or desired under local law); and (c) an opinion of counsel in each
state in which any Mortgaged Property is located in form and substance and
from counsel satisfactory to Agent.
25. ENVIRONMENTAL REPORTS. Agent shall have received Phase
I Environmental Site Assessment Reports, consistent with American Society for
Testing and Materials (ASTM) Standard E 1527-94 and applicable state
requirements, on all of the Real Estate, dated no more than 6 months prior to
the Closing Date, prepared by environmental engineers satisfactory to Agent,
all in form and substance satisfactory to Agent, in its sole discretion.
D-4
<PAGE>
26. AUDITED FINANCIALS; FINANCIAL CONDITION. Agent shall
have received Worthington's (x) audited Financial Statements for the twelve
month period ended May 31, 1998 which have been certified by Ernst & Young
LLP, and (y) Financial Statements for the seven month period ended December
31, 1998 prepared by Ernst & Young LLP. Each Borrower shall have provided
Agent with its current operating statements, a consolidated balance sheet and
statement of cash flows, the Pro Forma, Projections and a Revolving Borrowing
Base Certificate with respect to such Borrower certified by its Chief
Financial Officer, in each case in form and substance satisfactory to Agent,
and Agent shall be satisfied, in its sole discretion, with all of the
foregoing. Agent shall have further received a certificate of the Chief
Executive Officer and/or the Chief Financial Officer of each Borrower or any
other appropriate Person as determined by Agent, based on such Pro Forma and
Projections, to the effect that (a) such Borrower will be Solvent upon the
consummation of the transactions contemplated herein; (b) the Pro Forma
fairly presents the financial condition of such Borrower as of the date
thereof after giving effect to the transactions contemplated by the Loan
Documents; (c) the Projections are based upon estimates and assumptions
stated therein, all of which such Borrower believes to be reasonable and fair
in light of current conditions and current facts known to such Borrower and,
as of the Closing Date, reflect such Borrower's good faith and reasonable
estimates of its future financial performance and of the other information
projected therein for the period set forth therein; and (d) containing such
other statements with respect to the solvency of such Borrower and matters
related thereto as Agent shall request.
27. ASSIGNMENT OF REPRESENTATIONS, WARRANTIES, COVENANTS,
INDEMNITIES AND RIGHTS. Agent shall have received a duly executed copy of an
Assignment of Representations, Warranties, Covenants, Indemnities and Rights
in respect of MCP's and Holdings rights under the Worthington Acquisition
Agreement, which assignment shall be expressly permitted under the
Worthington Acquisition Agreement or shall have been consented to by Seller
in writing.
28. IRB DOCUMENTS; TAX SHARING AGREEMENT. True and correct
copies, certified by an officer of MCP, of (x) all documents executed in
connection with the Lebanon IRB (including, without limitation, the IRB
Indenture, the IRB Lease Agreement and the IRB Assignment Documents and
related consents to the extent required by Agent with respect thereto) and
(y) the Tax Sharing Agreement.
29. OTHER DOCUMENTS. Such other certificates, documents
and agreements respecting any Credit Party as Agent may, in its sole
discretion, request.
D-5
<PAGE>
ANNEX E (SECTION 4.1(a))
TO
CREDIT AGREEMENT
FINANCIAL STATEMENTS AND PROJECTIONS -- REPORTING
Borrowers shall deliver or cause to be delivered to Agent or
to Agent and Lenders, as indicated, the following:
(a) MONTHLY FINANCIALS. To Agent, within thirty (30) days
after the end of each Fiscal Month, financial information regarding Borrowers
and their Subsidiaries, certified by the Chief Financial Officer of Borrower
Representative, consisting of consolidated (i) unaudited balance sheets as of
the close of such Fiscal Month and the related statements of income and cash
flow for that portion of the Fiscal Year ending as of the close of such
Fiscal Month; and (ii) unaudited statements of income and cash flows for such
Fiscal Month, setting forth in comparative form the figures for the
corresponding period in the prior year and the figures contained in the
Projections for such Fiscal Year, all prepared in accordance with GAAP
(subject to normal year-end adjustments). Such financial information shall
be accompanied by the certification of the Chief Financial Officer of
Borrower Representative that (i) such financial information presents fairly
in accordance with GAAP (subject to normal year-end adjustments) the
financial position and results of operations of Borrowers and their
Subsidiaries, on a consolidated basis, in each case as at the end of such
month and for the period then ended and (ii) any other information presented
is true, correct and complete in all material respects and that there was no
Default or Event of Default in existence as of such time or, if a Default or
Event of Default shall have occurred and be continuing, describing the nature
thereof and all efforts undertaken to cure such Default or Event of Default;
(b) QUARTERLY FINANCIALS. To Agent, within forty-five (45)
days after the end of each Fiscal Quarter, consolidated financial information
regarding Borrowers and their Subsidiaries, certified by the Chief Financial
Officer of Borrower Representative, including (i) unaudited balance sheets as
of the close of such Fiscal Quarter and the related statements of income and
cash flow for that portion of the Fiscal Year ending as of the close of such
Fiscal Quarter and (ii) unaudited statements of income and cash flows for
such Fiscal Quarter, in each case setting forth in comparative form the
figures for the corresponding period in the prior year and the figures
contained in the Projections for such Fiscal Year, all prepared in accordance
with GAAP (subject to normal year-end adjustments). Such financial
information shall be accompanied by (A) a statement in reasonable detail
(each, a "COMPLIANCE CERTIFICATE" showing the calculations used in
determining compliance with each of the financial covenants set forth on
ANNEX G which is tested on a quarterly basis and (B) the certification of the
Chief Financial Officer of Borrower Representative that (i) such financial
information presents fairly in accordance with GAAP (subject to normal
year-end adjustments) the financial position, results of operations and
statements of cash flows of Borrowers and their Subsidiaries, on both a
consolidated basis, as at the end of such Fiscal Quarter and for the period
then ended, (ii) any other information presented is true, correct and
complete in all material respects and that there was no Default or Event of
Default in existence as of such time or, if a Default or Event of Default
E-1
<PAGE>
shall have occurred and be continuing, describing the nature thereof and all
efforts undertaken to cure such Default or Event of Default. In addition,
Borrowers shall deliver to Agent and Lenders, within forty-five (45) days
after the end of each Fiscal Quarter, a management discussion and analysis
which includes a comparison to budget for that Fiscal Quarter and a
comparison of performance for that Fiscal Quarter to the corresponding period
in the prior year;
(c) OPERATING PLAN. To Agent, as soon as available, but not
later than thirty (30) days after the end of each Fiscal Year, an annual
operating plan for each Borrower, approved by the Board of Directors of such
Borrower, for the subsequent five-year period, which will include a statement
of all of the material assumptions on which such plan is based, will include
monthly balance sheets and a monthly budget for the first year of such
five-year period and will integrate sales, gross profits, operating expenses,
operating profit, cash flow projections and Borrowing Availability
projections all prepared on the same basis and in similar detail as that on
which operating results are reported (and in the case of cash flow
projections, representing management's good faith estimates of future
financial performance based on historical performance), and including plans
for personnel, Capital Expenditures and facilities;
(d) ANNUAL AUDITED FINANCIALS. To Agent, within ninety (90)
days after the end of each Fiscal Year, audited Financial Statements for
Borrowers and their Subsidiaries on a consolidated basis, consisting of
balance sheets and statements of income and retained earnings and cash flows,
setting forth in comparative form in each case the figures for the previous
Fiscal Year, which Financial Statements shall be prepared in accordance with
GAAP, certified without qualification, by an independent certified public
accounting firm of national standing or otherwise acceptable to Agent. Such
Financial Statements shall be accompanied by (i) a statement prepared in
reasonable detail showing the calculations used in determining compliance
with each of the financial covenants set forth on ANNEX G, (ii) a report from
such accounting firm to the effect that, in connection with their audit
examination, nothing has come to their attention to cause them to believe
that a Default or Event of Default has occurred (or specifying those Defaults
and Events of Default that they became aware of), it being understood that
such audit examination extended only to accounting matters and that no
special investigation was made with respect to the existence of Defaults or
Events of Default, (iii) a letter addressed to Agent, on behalf of itself and
Lenders, in form and substance reasonably satisfactory to Agent and subject
to standard qualifications taken by nationally recognized accounting firms,
signed by such accounting firm acknowledging that Agent and Lenders are
entitled to rely upon such accounting firm's certification of such audited
Financial Statements, (iv) the annual letters to such accountants in
connection with their audit examination detailing contingent liabilities and
material litigation matters, and (v) the certification of the Chief Executive
Officer or Chief Financial Officer of Borrowers that all such Financial
Statements present fairly in accordance with GAAP the financial position,
results of operations and statements of cash flows of Borrowers and their
Subsidiaries on a consolidated basis, as at the end of such year and for the
period then ended, and that there was no Default or Event of Default in
existence as of such time or, if a Default or Event of Default shall have
occurred and be continuing, describing the nature thereof and all efforts
undertaken to cure such Default or Event of Default;
E-2
<PAGE>
(e) MANAGEMENT LETTERS. To Agent, within five (5) Business
Days after receipt thereof by any Credit Party, copies of all management
letters, exception reports or similar letters or reports received by such
Credit Party from its independent certified public accountants;
(f) DEFAULT NOTICES. To Agent, as soon as practicable, and
in any event within five (5) Business Days after an executive officer of any
Borrower has actual knowledge of the existence of any Default, Event of
Default or other event which has had a Material Adverse Effect, telephonic or
telecopied notice specifying the nature of such Default or Event of Default
or other event, including the anticipated effect thereof, which notice, if
given telephonically, shall be promptly confirmed in writing on the next
Business Day;
(g) SEC FILINGS AND PRESS RELEASES. To Agent, promptly
upon their becoming available, copies of: (i) all Financial Statements,
reports, notices and proxy statements made publicly available by any Credit
Party to its security holders; (ii) all regular and periodic reports and all
registration statements and prospectuses, if any, filed by any Credit Party
with any securities exchange or with the Securities and Exchange Commission
or any governmental or private regulatory authority; and (iii) all press
releases and other statements made available by any Credit Party to the
public concerning material changes or developments in the business of any
such Person;
(h) EQUITY NOTICES. To Agent, as soon as practicable,
copies of all material written notices given or received by any Credit Party
with respect to any Stock of such Person.
(i) SUPPLEMENTAL SCHEDULES. To Agent, supplemental
disclosures, if any, required by SECTION 5.6 of the Agreement;
(j) LITIGATION. To Agent in writing, promptly upon
learning thereof, notice of any Litigation commenced or threatened against
any Credit Party that (i) seeks damages in excess of $100,000, (ii) seeks
injunctive relief, (iii) is asserted or instituted against any Plan, its
fiduciaries or its assets or against any Credit Party or ERISA Affiliate in
connection with any Plan, (iv) alleges criminal misconduct by any Credit
Party, (v) alleges the violation of any law regarding, or seeks remedies in
connection with, any Environmental Liabilities or (vi) involves any product
recall;
(k) INSURANCE NOTICES. To Agent, disclosure of losses or
casualties required by SECTION 5.4 of the Agreement;
(l) DEFAULT NOTICES. To Agent, copies of (i) (x) any and
all default notices received under or with respect to any leased location or
public warehouse where Collateral is located, and (y) such other notices or
documents as Agent may request in its reasonable discretion and (ii) any and
all default notices received under or with respect to the Lebanon IRBs,
including, without limitation, under or with respect to the IRB Indenture or
the IRB Lease Agreement;
E-3
<PAGE>
(m) LEASE AMENDMENTS. To Agent, copies of all material
amendments to real estate leases with respect to all Real Estate; and
(n) OTHER DOCUMENTS. To Agent and Lenders, such other
financial and other information respecting any Credit Party's business or
financial condition as Agent or any Lender shall, from time to time,
reasonably request.
E-4
<PAGE>
ANNEX F (SECTION 4.1(b))
TO
CREDIT AGREEMENT
COLLATERAL REPORTS
Borrowers shall deliver or cause to be delivered the following:
(a) To Agent, upon its request, and in no event less
frequently than five (5) Business Days after the end of each Fiscal Month
(together with a copy of all or any part of such delivery requested by any
Lender in writing after the Closing Date), each of the following:
(i) a Revolving Borrowing Base Certificate with
respect to each Borrower accompanied by such supporting detail and
documentation as shall be requested by Agent in its reasonable
discretion;
(ii) with respect to each Borrower, a summary of
Inventory by location and type with a supporting perpetual Inventory
report, in each case accompanied by such supporting detail and
documentation as shall be requested by Agent in its reasonable
discretion, provided that until the first Fiscal Month that ends 60 or
more days after the Closing Date, MCP shall not be required to provide a
perpetual Inventory report with respect to Inventory located at its St.
Mathews, South Carolina facility; and
(iii) with respect to each Borrower, a monthly trial
balance showing Accounts outstanding aged from invoice due date as
follows: 1 to 30 days, 31 to 60 days, 61 to 90 days and 91 days or
more, accompanied by such supporting detail and documentation as shall
be requested by Agent in its reasonable discretion;
(b) To Agent, on a weekly basis or at such more frequent
intervals as Agent may request from time to time (together with a copy of all
or any part of such delivery requested by any Lender in writing after the
Closing Date), collateral reports with respect to each Borrower, including
all additions and reductions (cash and non-cash) with respect to Accounts of
such Borrower, in each case accompanied by such supporting detail and
documentation as shall be requested by Agent in its reasonable discretion;
(c) To Agent, at the time of delivery of each of the
monthly Financial Statements delivered pursuant to ANNEX E, a reconciliation
of the Accounts trial balance and month-end Inventory reports of each
Borrower to such Borrower's general ledger and monthly Financial Statements
delivered pursuant to such ANNEX E, in each case accompanied by such
supporting detail and documentation as shall be requested by Agent in its
reasonable discretion;
(d) To Agent, at the time of delivery of each of the annual
Financial Statements delivered pursuant to ANNEX E, (i) a listing of
government contracts of each Borrower subject to the Federal Assignment of
Claims Act of 1940; and (ii) a list of any applications for the registration
of any Patent, Trademark or Copyright with the United States Patent and
Trademark
F-1
<PAGE>
Office, the United States Copyright Office or any similar office or agency
which any Credit Party thereof has filed in the prior Fiscal Quarter;
(e) Each Borrower, at its own expense, shall deliver to
Agent the results of each physical verification, if any, which such Borrower
or any of its Subsidiaries may in their discretion have made, or caused any
other Person to have made on their behalf, of all or any portion of their
Inventory (and, if a Default or an Event of Default shall have occurred and
be continuing, each Borrower shall, upon the request of Agent, conduct, and
deliver the results of, such physical verifications as Agent may require);
(f) Each Borrower, at its own expense, shall deliver to
Agent such appraisals of Equipment and Real Estate as Agent may request from
time to time (provided that so long as no Default or Event of Default has
occurred and is continuing, such appraisals shall be required no more
frequently than once every two (2) years) and such appraisals shall be
prepared by an appraiser satisfactory to Agent, and which shall otherwise be
in form and substance satisfactory to Agent (it being understood that any
such appraisal in respect of Real Estate shall be an MAI appraisal); and
(g) Such other reports, statements and reconciliations with
respect to the Revolving Borrowing Base or the Collateral of any or all
Credit Parties as Agent shall from time to time request in its reasonable
discretion.
F-2
<PAGE>
ANNEX G (SECTION 6.10)
TO
CREDIT AGREEMENT
FINANCIAL COVENANTS
Borrowers shall not breach or fail to comply with any of the
following financial covenants, each of which shall be calculated in
accordance with GAAP consistently applied:
(a) MAXIMUM CAPITAL EXPENDITURES. Holdings and its
Subsidiaries on a consolidated basis shall not make Capital Expenditures
during the following periods that exceed in the aggregate the amounts set
forth opposite each of such periods:
<TABLE>
<CAPTION>
PERIOD MAXIMUM CAPITAL EXPENDITURES PER PERIOD
- ------ ---------------------------------------
<S> <C>
Fiscal Year 1999 $3,700,000
Fiscal Year 2000 $3,800,000
Fiscal Year 2001 $3,400,000
Fiscal Year 2002 $3,500,000
Fiscal Year 2003 $1,800,000
</TABLE>
(b) MINIMUM FIXED CHARGE COVERAGE RATIO. Holdings and its
and their Subsidiaries shall have on a consolidated basis at the end of each
Fiscal Quarter set forth below, a Fixed Charge Coverage Ratio for the
four-quarter period then ended (or with respect to the Fiscal Quarters ending
on or before March 31, 2000, the period commencing on the Closing Date and
ending on the last day of such Fiscal Quarter) of not less than the following:
<TABLE>
<CAPTION>
PERIOD ENDED RATIO
------------ -----
<S> <C>
9/30/99 0.80 to 1.00
12/31/99 0.80 to 1.00
3/31/00 0.50 to 1.00
6/30/00 0.50 to 1.00
9/30/00 0.50 to 1.00
12/31/00 0.50 to 1.00
3/31/01 0.70 to 1.00
6/30/01 0.70 to 1.00
9/30/01 0.70 to 1.00
12/31/01 0.70 to 1.00
3/31/02 0.70 to 1.00
6/30/02 0.70 to 1.00
9/30/02 0.70 to 1.00
12/31/02 0.60 to 1.00
3/31/03 0.60 to 1.00
6/30/03 0.40 to 1.00
9/30/03 0.30 to 1.00
</TABLE>
G-1
<PAGE>
(c) MINIMUM EBITDA. Holdings and its Subsidiaries on a
consolidated basis shall have, at the end of each Fiscal Quarter set forth
below, EBITDA for the 12-month period then ended (or with respect to the
Fiscal Quarters ending on or before March 31, 2000, the period commencing on
the Closing Date and ending on the last day of such Fiscal Quarter) of not
less than the following:
<TABLE>
<CAPTION>
PERIOD ENDED EBITDA
------------ ------
<S> <C>
9/30/99 $ 1,200,000
12/31/99 $ 2,800,000
3/31/00 $ 4,600,000
6/30/00 $ 6,700,000
9/30/00 $ 7,500,000
12/31/00 $ 7,800,000
3/31/01 $ 8,200,000
6/30/01 $ 8,300,000
9/30/01 $ 8,600,000
12/31/01 $ 8,800,000
3/31/02 $ 9,100,000
6/30/02 $ 9,300,000
9/30/02 $ 9,600,000
12/31/02 $ 9,800,000
3/31/03 $10,100,000
6/30/03 $10,400,000
9/30/03 $10,700,000
</TABLE>
(d) MINIMUM TANGIBLE NET WORTH. Holdings and its
Subsidiaries on a consolidated basis shall maintain at all times Tangible Net
Worth equal to or greater than $4,250,000.
Unless otherwise specifically provided herein, any accounting
term used in the Agreement shall have the meaning customarily given such term
in accordance with GAAP, and all financial computations hereunder shall be
computed in accordance with GAAP consistently applied. That certain items or
computations are explicitly modified by the phrase "in accordance with GAAP"
shall in no way be construed to limit the foregoing. If any "Accounting
Changes" (as defined below) occur and such changes result in a change in the
calculation of the financial covenants, standards or terms used in the
Agreement or any other Loan Document, then Borrowers, Agent and Lenders agree
to enter into negotiations in order to amend such provisions of the Agreement
so as to equitably reflect such Accounting Changes with the desired result
that the criteria for evaluating Borrowers' and their Subsidiaries' financial
condition shall be the same after such Accounting Changes as if such
Accounting Changes had not been made; provided, however, that the agreement
of Requisite Lenders to
G-2
<PAGE>
any required amendments of such provisions shall be sufficient to bind all
Lenders. "ACCOUNTING CHANGES" means (a) changes in accounting principles
required by the promulgation of any rule, regulation, pronouncement or
opinion by the Financial Accounting Standards Board of the American Institute
of Certified Public Accountants (or successor thereto or any agency with
similar functions), (b) changes in accounting principles concurred in by any
Borrower's certified public accountants; (c) purchase accounting adjustments
under A.P.B. 16 and/or 17 and EITF 88-16, and the application of the
accounting principles set forth in FASB 109, including the establishment of
reserves pursuant thereto and any subsequent reversal (in whole or in part)
of such reserves; and (d) the reversal of any reserves established as a
result of purchase accounting adjustments. All such adjustments resulting
from expenditures made subsequent to the Closing Date (including
capitalization of costs and expenses or payment of pre-Closing Date
liabilities) shall be treated as expenses in the period the expenditures are
made and deducted as part of the calculation of EBITDA in such period. If
Agent, Borrowers and Requisite Lenders agree upon the required amendments,
then after appropriate amendments have been executed and the underlying
Accounting Change with respect thereto has been implemented, any reference to
GAAP contained in the Agreement or in any other Loan Document shall, only to
the extent of such Accounting Change, refer to GAAP, consistently applied
after giving effect to the implementation of such Accounting Change. If
Agent, Borrowers and Requisite Lenders cannot agree upon the required
amendments within thirty (30) days following the date of implementation of
any Accounting Change, then all Financial Statements delivered and all
calculations of financial covenants and other standards and terms in
accordance with the Agreement and the other Loan Documents shall be prepared,
delivered and made without regard to the underlying Accounting Change.
G-3
<PAGE>
ANNEX H (SECTION 9.9(a))
TO
CREDIT AGREEMENT
WIRE TRANSFER INFORMATION
AGENT'S AND GE CAPITAL'S ACCOUNT:
Bank Name: Bankers Trust Company
Location: New York, New York
ABA Routing No.: 021001033
Credit Account No.: 50-232-854
Account Name: Morton
H-1
<PAGE>
ANNEX I (SECTION 11.10)
to
CREDIT AGREEMENT
NOTICE ADDRESSES
(A) If to Agent or GE Capital, at
General Electric Capital Corporation
335 Madison Avenue, 12th Floor
New York, New York 10017
Attention: Morton Customs Account Manager
Telecopier No.: (212) 983-8767
Telephone No.: (212) 370-8000
with copies to:
Paul, Hastings, Janofsky & Walker LLP
1055 Washington Boulevard
Stamford, Connecticut 06901
Attention: Christopher H. Craig, Esq.
Telecopier No.: (203) 359-3031
Telephone No.: (203) 961-7400
AND
General Electric Capital Corporation
201 High Ridge Road
Stamford, Connecticut 06927-5100
Attention: Corporate Counsel - Commercial Finance
Telecopier No.: (203) 316-7889
Telephone No.: (203) 316-7552
(B) If to any Borrower, to Borrower Representative, at
Morton Custom Plastics, LLC
1021 West Birchwood
Morton, Illinois 61550
Attention: William D. Morton
Telecopier No.: (309) 263-1841
Telephone No.: (309) 263-1748
I-1
<PAGE>
with copies to:
Winston & Strawn
35 W. Wacker Drive
Chicago, Illinois 60601-9703
Attention: Gregory S. Murray, Esq.
Telecopier No.: (312) 558-5700
Telephone No.: (312) 558-5600
I-2
<PAGE>
ANNEX J (from ANNEX A - COMMITMENTS DEFINITION)
to
CREDIT AGREEMENT
LENDER(S)
---------
Revolving Loan Commitment General Electric Capital Corporation
(including a Swing Line Commitment
of $5,000,000)
$24,000,000
Term Loan Commitment: General Electric Capital Corporation
$26,000,000
J-1
<PAGE>
[LETTERHEAD]
CONTACT:
Thomas D. Lauerman Van Negris / Philip J. Denning
Morton Industrial Group, Inc. Kehoe, White, Van Negris & Company, Inc.
(309) 263-3300 (212) 396-0606
FOR IMMEDIATE RELEASE
MORTON INDUSTRIAL GROUP ANNOUNCES 1998 FOURTH QUARTER AND YEAR-END RESULTS;
ANNOUNCES TWO ADDITIONAL ACQUISITIONS
MORTON, IL - MARCH 2, 1999 - Morton Industrial Group, Inc. (Nasdaq: MGRP), a
leading contract manufacturing supplier to large industrial original
equipment manufacturers (OEMs), today announced its financial results for
1998 which is the Company's first year of operations as a public company.
Morton Industrial Group, Inc. was formed by the merger of MLX Corp. with
Morton Metalcraft Holding Co. on January 20, 1998.
Revenues for the Company's 1998 fourth quarter increased by 50 percent to
$39.8 million from $26.4 million in the 1997 fourth quarter. Operating income
for the fourth quarter of 1998 was $149 thousand compared to an operating
loss of $8.3 million in the year ago quarter. The net loss for the 1998
fourth quarter was $1.3 million compared to a net loss of $5.6 million in the
comparable period. The basic and diluted net losses per share for the 1998
fourth quarter were $0.33 and $0.33 respectively, based on 4,066,944 and
4,417,743 weighted average shares outstanding. In the 1997 fourth quarter,
the basic and diluted net losses per share were $2.87 and $2.87 respectively,
based on 1,944,444 and 3,325,973 weighted average shares.
For the twelve months ended December 31, 1998, sales increased by 60 percent
to $151.2 million from $94.4 million a year ago. 1998 operating income and
net income were $6.3 million and $1.7 million, respectively, compared to an
operating loss of $4.8 million and a net loss of $4.9 million in 1997. Basic
and diluted net earnings per share in 1998 were $0.41 and $0.36 respectively,
based on 4,023,373 and 4,582,614 weighted average shares outstanding. In
1997, the basic and diluted net losses per share were $2.52 and $2.52
respectively, on 1,944,444 and 3,340,651 weighted average shares.
The results for the 1998 fourth quarter and full year reflect the impact of
an industry-wide softening of demand for agricultural products and normal
seasonal trends. Prior year results reflect expenses relating to the MLX
Corp. merger.
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MORTON INDUSTRIAL GROUP, INC.
March 2, 1999
Page Two
William D. Morton, Chairman, President and Chief Executive Officer of Morton
Industrial Group, Inc., stated: "We are pleased with our achievements in 1998 -
our first full year of operations as a public company. Throughout the past year,
we continued to enhance our relationships with our principal customers, and
supplied them with an increasing number of additional metal and plastic
components and subassemblies. Sales for both the 1998 fourth quarter and full
year increased substantially, despite the impact of an industry-wide softening
of demand for agricultural products and normal seasonal trends.
"Our focus is on meeting the rigorous demands of our customers. In an effort to
do so, we have undertaken a targeted acquisition strategy to expand our
manufacturing capabilities and consequent ability to offer our customers an
expanded array of products and services. In 1998, we acquired B&W Metal
Fabricators and SMP Steel to strengthen our Contract Fabrication Division, which
expands our presence in the increasingly important southeastern part of the
country. We established our Contract Plastics Division in 1998 through the
acquisitions of Carroll George and Mid-Central Plastics, which gave us
thermoforming and injection molding plastics manufacturing capabilities.
"Our strategy to acquire companies that further diversify our product offerings
and customer base is continuing. Today, we announced two additional
acquisitions, in addition to the four acquisitions we completed in 1998.
"We completed a definitive agreement to acquire three facilities of Worthington
Custom Plastics, a division of Worthington Industries (Nasdaq: WTHG). This
acquisition will be known as Morton Custom Plastics and become part of our
Contract Plastics Division. Morton's new Morton Custom Plastics subsidiary,
which had sales of over $100 million in 1998 and has 1,200 employees, provides
plastic components for the business equipment, appliances, aircraft, medical and
recreational vehicle industries including thermoplastic injection molding,
vacuum and pressure thermoforming, painting and assembly. We believe that the
acquisition materially strengthens Morton's Contract Plastics Division and
significantly diversifies our existing customer base through the new
subsidiary's major customer relationships in specific industries.
"We also established our new Contract Machining Division by acquiring the
Illinois Machine & Tool Works and MC Products divisions of Midland Partners,
Inc. Morton's new Contract Machining Division, which had revenues of
approximately $17 million in 1998 and 150 employees, manufactures finished
machine parts for the heavy equipment, pump, valve and controls and electronic
industries and is QS 9000 and ISO 9002 certified.
"Looking ahead, we believe that 1999 will continue to be a year of change and
growth as Morton capitalizes on its niche in the marketplace. Our reputation
for high quality products and customer service, together with our expanded range
of metal and plastic fabrication and machining capabilities, is enhancing our
relationships with our principal customers. We are beginning to see our
strategy bear fruit, as we have already been selected to manufacture a
significant number of additional components for new industrial products for
Deere and Caterpillar."
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MORTON INDUSTRIAL GROUP, INC.
March 2, 1999
Page Three
Morton Industrial Group, Inc. is a supplier of high-quality metal fabrications,
plastic, and machined component parts and subassemblies for large industrial
original equipment manufacturers (OEMs). Its annualized revenues are
approaching $300 million and over 3,000 employees in its facilities in the
Midwest and Southeast. The Company provides large original equipment
manufacturers with a wide range of services including design, prototype
development, precision tool making and production of metal fabrications,
plastic, and machined component parts. Additional services provided by Morton
include painting, subassembly, packaging, warehousing and just-in-time delivery
to customers' production lines.
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995: This press release contains forward looking statements (within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934), including, but not limited to, statements
related to Morton's beliefs, expectations, or intentions. These statements
involve risk and uncertainties that may cause Morton's actual results to differ
significantly from those expected, suggested, or projected. Factors that could
contribute to such differences include, but are not limited to, competition with
other fabricators; the risks associated with Morton's acquisition strategy,
including unanticipated problems, difficulties in integrating acquired
businesses, diversion of management's attention from daily operations, possible
increased interest costs, and possible adverse effects on earnings resulting
from increased goodwill amortization; introduction of new technologies that
require significant capital expenditures; and general economic and business
conditions.
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- STATISTICAL TABLE FOLLOWS -
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MORTON INDUSTRIAL GROUP, INC.
March 2, 1999
Page Four
MORTON INDUSTRIAL GROUP, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED TWELVE MONTHS ENDED
12/31/98 12/31/97 12/31/98 12/31/97
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales $39,783 $26,376 $151,196 $94,402
Cost of sales 35,693 25,084 129,740 83,267
-------- -------- -------- --------
Gross profit 4,090 1,292 21,456 11,135
Operating expenses
Selling expenses 1,177 634 4,311 2,231
Administrative expenses 2,764 9,000 10,864 13,746
-------- -------- -------- --------
Total Operating Expenses 3,941 9,634 15,175 15,977
-------- -------- -------- --------
Operating Income 149 (8,342) 6,281 (4,842)
-------- -------- -------- --------
Other Income (expense)
Interest expenses (1,635) (890) (4,720) (3,375)
Miscellaneous 69 15 261 84
-------- -------- -------- --------
Total other income (expenses) (1,566) (875) (4,459) (3,291)
-------- -------- -------- --------
Earnings before income taxes (1,417) (9,217) 1,822 (8,133)
Income Taxes (84) (3,629) 158 (3,224)
-------- -------- -------- --------
Net Income (loss) (1,333) (5,588) 1,664 (4,909)
-------- -------- -------- --------
-------- -------- -------- --------
Earnings per Share
Basic $ (0.33) $ (2.87) $ 0.41 $ (2.52)
-------- -------- -------- --------
-------- -------- -------- --------
Diluted $ (0.33) $ (2.87) $ 0.36 $ (2.52)
-------- -------- -------- --------
-------- -------- -------- --------
Weighted average number of shares
Basic 4,066,944 1,944,444 4,023,373 1,944,444
Dilluted 4,417,743 3,325,973 4,582,614 3,340,651
</TABLE>
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