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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
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): October 23, 1996
DEP CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 0-12862 95-2040819
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification Number)
2101 East Via Arado, Rancho Dominguez, California 90220
(Address of principal executive offices)
Registrant's telephone number, including area code:
(310) 604-0777
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ITEM 3. BANKRUPTCY OR RECEIVERSHIP
On October 23, 1996, the United States Bankruptcy Court confirmed the
Second Amended Plan of Reorganization (the "Plan of Reorganization") of DEP
Corporation (the "Company"), and on November 4, 1996 (the "Effective Date"), the
Plan of Reorganization became effective. The Company originally filed its
voluntary petition for relief under Chapter 11 of the United States Bankruptcy
Code (the "Bankruptcy Code") on April 1, 1996 (the "Filing Date"). The filing
was made in the United States Bankruptcy Court, District of Delaware.
The Plan of Reorganization provides for the treatment of allowed
claims against and equity interests in the Company, pursuant to a series of
classifications summarized herein.
Class 1 under the Plan of Reorganization comprises all claims of the
Company's secured lenders (the "Lender Group"), which amount to approximately
$62,000,000. Pursuant to the Plan of Reorganization, these claims will be
repaid, with interest at the prime rate plus 2%, pursuant to a restructured long
term note, the maturity of which is July 31, 2002. With respect to Class 1, the
Plan of Reorganization further provides that on the Effective Date, the Lender
Group would receive $150,000 in cash to satisfy certain post-petition interest
claims, 542,488 shares of the Company's Common Stock, and warrants to purchase
an additional 330,050 shares of Common Stock at a price equal to the average of
the last reported sales price for the Company's Common Stock on each of the 20
consecutive trading days following the Effective Date. Under the Plan of
Reorganization, the Company's existing Class A and Class B Common Stock,
including the shares to be issued to the Lender Group, have been reclassified as
one class of Common Stock having the same voting rights, preferences and
privileges. Finally, the Plan of Reorganization provides for the Company to
pledge to the Lender Group any net cash proceeds derived by the Company in
connection with the pending litigation between the Company and S.C. Johnson &
Son, Inc. ("S.C. Johnson") and affiliates.
Class 2 under the Plan of Reorganization comprises all claims of
Nationwide Life Insurance Company ("Nationwide") and West Coast Life Insurance
Company ("West Coast"), which claims are secured by the Company's real property
in Rancho Dominguez, California. These claims arise under certain promissory
notes and deeds of trust entered into between the Company and Nationwide and
West Coast, respectively, the principal amount of which is approximately
$3,700,000 in the aggregate. Pursuant to the Plan of Reorganization, any
default under those instruments has been cured, the Company has compensated
Nationwide and West Coast for any actual damages incurred in reliance upon those
instruments, the maturity dates thereof have been reinstated, and the rights of
Nationwide and West Coast thereunder otherwise have not been altered.
Class 3 under the Plan of Reorganization comprises all unsecured
claims that are specified as having priority under Bankruptcy Code sections
507(a)(3), 507(a)(4), 507(a)(5), or 507(a)(6), respectively. Pursuant to the
Plan of Reorganization, any and all such claims are to be paid on the later of
the Effective Date and the date such claims would be due in the ordinary course
of business.
Class 4 under the Plan of Reorganization comprises unsecured claims of
$1,000 or less, or which the holder voluntarily has reduced its claim to $1,000.
Pursuant to the Plan of Reorganization, the holders of these claims are entitled
to cash equal to the amount of their allowed claims on or about the Effective
Date.
Class 5 under the Plan of Reorganization comprises any and all
unsecured claims of the Company's subsidiaries. Pursuant to the Plan of
Reorganization, such claims shall continue to receive treatment in accordance
with the Company's ordinary business practices.
Class 6 under the Plan of Reorganization comprises unsecured claims
that are not classified in any other class of claims. These include claims
arising from the purchase of goods and services. Pursuant to the Plan of
Reorganization, allowed claims in Class 6 will be satisfied by the Company
subject to the following terms and conditions: (i) all unpaid principal and
accrued but unpaid interest, if any, shall be due and payable on March 15, 1998
("Unsecured Maturity Date"); (ii) from the Filing Date through the Unsecured
Maturity Date, interest at the rate of five percent (5%) per annum, simple,
shall accrue on each allowed Class 6 claim, and (iii) to the Unsecured Maturity
Date, interest and principal shall be paid in eighteen monthly installments,
beginning with the first payment on the Effective Date.
Class 7 and Class 8 comprise, respectively, the equity interests
represented by the Company's Class A and Class B Common Stock. Pursuant to the
Plan of Reorganization, the holders of the Company's Common Stock will retain
the equity interests represented by such stock, subject to dilution by virtue of
the issuance of Common Stock and warrants to the Lender Group in connection with
their Class 1 claims. Further, as noted above, the Company's existing Class A
and Class B Common Stock has been reclassified as one class of Common Stock
having the same voting rights, preferences and privileges. Such Common Stock
trades on the Nasdaq SmallCap market under the symbol "DEPC." Stockholders will
not be required to exchange their shares in connection with the
reclassification. Immediately prior to the Effective Date, the Company had
6,251,140 shares of Common Stock outstanding. After giving effect to the
542,488 shares of Common Stock
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issuable in connection with the Plan of Reorganization, the Company will have
outstanding 6,793,628 shares of Common Stock. The Company has reserved 330,050
shares of Common Stock for issuance in connection with warrants issuable under
the Plan of Reorganization.
Additionally, the Plan provides for the treatment of certain
"unclassified" claims. First, allowed administrative claims, which generally
comprise liabilities incurred by the Company during the pendency of its Chapter
11 case, are to be paid as soon as such claims would have become due in the
ordinary course of business, or under the terms of such claims, in the absence
of the reorganization case. Second, allowed claims for taxes entitled to
priority under Bankruptcy Code section 507(a)(8) are to be paid in deferred cash
payments over a period not exceeding six years from the date of assessment of
such tax claim, in an aggregate amount equal to the amount of such allowed
claim, plus simple interest on the unpaid portion of such allowed claim at the
statutory rate provided for such taxes under non-bankruptcy law, without penalty
of any kind. Further, the Company may pay the remaining balance on any priority
tax claim at any time, in full, without premium or penalty of any kind.
The Plan of Reorganization, together with certain other documents
contemplated by the Plan of Reorganization, including the Certificate of
Amendment of the Company's Certificate of Incorporation, the Term Loan
Agreement, the Warrant Agreement and the Release Agreement, are filed as
exhibits to this Current Report on Form 8-K. Information as to the assets and
liabilities of the Company as of September 30, 1996 is contained in the
Company's consolidated balance sheet (substantially in the form filed with the
Office of the United States Trustee) included as an exhibit to this Current
Report on Form 8-K.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED. Not applicable.
(b) PRO FORMA FINANCIAL INFORMATION. Not applicable.
(c) EXHIBITS.
2.1 Second Amended Plan of Reorganization, dated as of August 23,
1996, as amended.
3.1 Certificate of Amendment of Certificate of Incorporation of DEP
Corporation, dated November 4, 1996.
10.1 Form of Term Loan Agreement dated as of November 4, 1996 by and
among DEP Corporation, as borrower, City National Bank, as co-
agent, and Foothill Capital Corporation, as agent, and others.
10.2 Form of Warrant Agreement dated as of November 4, 1996 by and
among DEP Corporation and the Warrant Holders named therein.
10.3 Form of Release Agreement dated as of November 4, 1996 by and
among DEP Corporation and its Lenders (as defined therein).
99.1 Consolidated balance sheet of DEP Corporation and subsidiaries as
of September 30, 1996 (substantially in the form filed with the
Office of the United States Trustee).
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: November 7, 1996 DEP CORPORATION
/s/ Grant W. Johnson
----------------------------------------
Grant W. Johnson
Senior Vice President, Finance and Chief
Financial Officer
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EXHIBIT INDEX
Exhibit
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2.1 Second Amended Plan of Reorganization, dated as of August 23,
1996, as amended.
3.1 Certificate of Amendment of Certificate of Incorporation of DEP
Corporation, dated November 4, 1996.
10.1 Form of Term Loan Agreement dated as of November 4, 1996 by and
among DEP Corporation, as borrower, City National Bank, as co-
agent, and Foothill Capital Corporation, as agent, and others.
10.2 Form of Warrant Agreement dated as of November 4, 1996 by and
among DEP Corporation and the Warrant Holders named therein.
10.3 Form of Release Agreement dated as of November 4, 1996 by and
among DEP Corporation and its Lenders (as defined therein).
99.1 Consolidated balance sheet of DEP Corporation and subsidiaries as
of September 30, 1996 (substantially in the form filed with the
Office of the United States Trustee).
<PAGE>
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
) Chapter 11
In re )
)
DEP CORPORATION, a Delaware corporation, )
)
) Case No. 96-480 (HSB)
Debtor. )
)
)
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DEBTOR'S SECOND AMENDED PLAN OF REORGANIZATION
DATED AS OF AUGUST 23, 1996 (AS AMENDED BY
STIPULATION AND CONSENT ORDER, UNDER 11 U.S.C. Section 1127(a)
AND FED. R. BANKR. P. 3019, IMPLEMENTING TECHNICAL
MODIFICATIONS TO REORGANIZATION PLAN AND RESOLVING OBJECTIONS
OF S.C. JOHNSON & SON, INC., AND AFFILIATES, TO CONFIRMATION)
(THIS VERSION INCORPORATES INTO THE AMENDED PLAN OF REORGANIZATION
THE MODIFICATIONS TO SUCH PLAN MADE PURSUANT TO THE STIPULATION AND
CONSENT ORDER, UNDER 11 U.S.C. Section 1127(a) AND FED. R. BANKR. P. 3019,
IMPLEMENTING TECHNICAL MODIFICATIONS TO REORGANIZATION
PLAN AND RESOLVING OBJECTIONS OF S.C. JOHNSON & SON, INC.,
AND AFFILIATES, TO CONFIRMATION)
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TABLE OF CONTENTS
PAGE
----
I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
II. DEFINITIONS, INTERPRETATION AND RULES OF CONSTRUCTION . . . . . . . . 6
A. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
B. Interpretation And Computation Of Time . . . . . . . . . . . . . . 12
1. Defined Terms.. . . . . . . . . . . . . . . . . . . . . . . . 12
2. Rules Of Interpretation.. . . . . . . . . . . . . . . . . . . 12
3. Time Periods. . . . . . . . . . . . . . . . . . . . . . . . . 13
III. DESIGNATION OF CLASSES OF CLAIMS AND INTERESTS . . . . . . . . . . . 13
A. Secured Claims.. . . . . . . . . . . . . . . . . . . . . . . . . . 13
B. Unsecured Claims.. . . . . . . . . . . . . . . . . . . . . . . . . 14
C. Interests. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
D. Special Provisions Governing Class 4 Claims. . . . . . . . . . . . 14
IV. TREATMENT OF CLAIMS AND INTERESTS . . . . . . . . . . . . . . . . . . 15
A. Distribution Date. . . . . . . . . . . . . . . . . . . . . . . . . 15
B. Unclassified Claims. . . . . . . . . . . . . . . . . . . . . . . . 15
1. Administrative Claims.. . . . . . . . . . . . . . . . . . . . 15
a. General. . . . . . . . . . . . . . . . . . . . . . . . . 15
b. Payment Of Statutory Fees. . . . . . . . . . . . . . . . 15
c. Bar Date For Administrative Claims.. . . . . . . . . . . 16
i. General Provisions. . . . . . . . . . . . . . . . . 16
ii. Professionals. . . . . . . . . . . . . . . . . . . 16
iii. Ordinary Course Liabilities.. . . . . . . . . . . 16
iv. Tax Claims.. . . . . . . . . . . . . . . . . . . . 16
2. Treatment Of Priority Tax Claims. . . . . . . . . . . . . . . 17
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C. Treatment of Secured Claims. . . . . . . . . . . . . . . . . . . . 17
1. Class 1 (Claims Of Lenders Under Bank Credit Agreement) . . . 17
a. Addition to Loan Balance . . . . . . . . . . . . . . . . 17
b. Payment Obligations On Effective Date. . . . . . . . . . 17
c. Additional Payment Obligations . . . . . . . . . . . . . 18
d. Waiver of Certain Charges and Expenses . . . . . . . . . 19
e. Distribution of Stock And Warrants . . . . . . . . . . . 19
f. Class 1 Release Agreement. . . . . . . . . . . . . . . . 20
2. Class 2(a) and (b) Secured Claims of Nationwide
(Class 2(a)) and West Coast (Class 2(b)). . . . . . . . . . 20
D. Treatment of Classes of Unsecured Claims . . . . . . . . . . . . . 21
1. Class 3 (Unsecured Claims Entitled To Priority) . . . . . . . 21
2. Class 4 (Unsecured Claims of $1,000 or Less or Which the Holder
Reduces to $1,000). . . . . . . . . . . . . . . . . . . . . 21
3. Class 5 (Intercompany Unsecured Claims) . . . . . . . . . . . 21
4. Class 6 (All Other Unsecured Claims). . . . . . . . . . . . . 21
E. Treatment of Classes of Interests. . . . . . . . . . . . . . . . . 22
1. Class 7 (Existing Class A Stock). . . . . . . . . . . . . . . 22
2. Class 8 (Existing Class B Stock). . . . . . . . . . . . . . . 22
V. TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES. . . . . . . . . 22
A. Assumption . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
B. Cure Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
C. Rejection. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
VI. MEANS FOR EXECUTION AND IMPLEMENTATION OF THIS PLAN . . . . . . . . . 24
A. Revesting Of Assets. . . . . . . . . . . . . . . . . . . . . . . . 24
B. Preservation Of Rights Of Action . . . . . . . . . . . . . . . . . 25
C. Certificate Of Incorporation And Bylaw Amendments. . . . . . . . . 25
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D. Management Of Reorganized DEP. . . . . . . . . . . . . . . . . . . 25
1. Officers And Directors. . . . . . . . . . . . . . . . . . . . 25
E. Objections To Claims And Interests.. . . . . . . . . . . . . . . . 26
F. Distribution Of Property Under This Plan.. . . . . . . . . . . . . 26
1. Disbursing Agent. . . . . . . . . . . . . . . . . . . . . . . 26
2. Disputed Claims . . . . . . . . . . . . . . . . . . . . . . . 26
3. Manner Of Payment Under This Plan.. . . . . . . . . . . . . . 27
4. Delivery Of Distributions And Undeliverable
Or Unclaimed Distributions. . . . . . . . . . . . . . . . . 27
a. Delivery Of Distributions In General.. . . . . . . . . . 27
b. Undeliverable Distributions. . . . . . . . . . . . . . . 28
i. Holding And Investment Of Undeliverable
Property. . . . . . . . . . . . . . . . . . . . . 28
ii. Distribution Of Undeliverable Property
After It Becomes Deliverable And Failure
To Claim Undeliverable Property . . . . . . . . . 28
5. Compliance With Tax Requirements. . . . . . . . . . . . . . . 28
6. Setoffs And Recoupments . . . . . . . . . . . . . . . . . . . 28
7. De Minimis Distributions. . . . . . . . . . . . . . . . . . . 29
G. Discharge Of Debtors And Injunction. . . . . . . . . . . . . . . . 29
H. No Liability For Solicitation Or Participation . . . . . . . . . . 30
I. Limitation Of Liability. . . . . . . . . . . . . . . . . . . . . . 30
J. Retiree Benefits . . . . . . . . . . . . . . . . . . . . . . . . . 30
K. Other Secured Claims . . . . . . . . . . . . . . . . . . . . . . . 30
L. Exemption from Certain Taxes.. . . . . . . . . . . . . . . . . . . 31
M. Applicability Of Bankruptcy Code Section 1145 To Stock And Warrants
Issued Under The Plan. . . . . . . . . . . . . . . . . . . . . 31
VII. CONFIRMABILITY OF PLAN AND CRAMDOWN. . . . . . . . . . . . . . . . . 32
A. Confirmability And Severability Of Plan. . . . . . . . . . . . . . 32
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B. Cramdown . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
VIII. RETENTION OF JURISDICTION . . . . . . . . . . . . . . . . . . . . . 32
IX. MISCELLANEOUS PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . 34
A. Dissolution Of Committee . . . . . . . . . . . . . . . . . . . . . 34
B. Modification Of This Plan. . . . . . . . . . . . . . . . . . . . . 34
C. Revocation Of This Plan. . . . . . . . . . . . . . . . . . . . . . 34
D. Successors And Assigns . . . . . . . . . . . . . . . . . . . . . . 34
E. Saturday, Sunday Or Legal Holiday. . . . . . . . . . . . . . . . . 35
F. Post-Effective Date Effect Of Evidences Of Claims Or Interests . . 35
G. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
H. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . 35
I. Severability Of Plan Provisions. . . . . . . . . . . . . . . . . . 35
J. No Admissions. . . . . . . . . . . . . . . . . . . . . . . . . . . 36
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I.
INTRODUCTION
DEP Corporation, a Delaware corporation (the "Debtor"), hereby proposes the
following plan of reorganization (the "Plan") for the resolution of the Debtor's
outstanding creditor claims and equity interests. Reference is made to the
Debtor's Disclosure Statement for a discussion of the Debtor's history,
business, properties and results of operations, and for a summary of this Plan
and certain related matters.
All holders of Claims are encouraged to read this Plan and the Disclosure
Statement in their entirety before voting to accept or reject this Plan. No
materials, other than the Disclosure Statement and any exhibits and schedules
attached thereto or referenced therein, have been approved by the Debtor for use
in soliciting acceptances or rejections of this Plan.
II.
DEFINITIONS, INTERPRETATION AND RULES OF CONSTRUCTION
A. Definitions.
In addition to such other terms as are defined in other sections of
this Plan, the following terms (which appear in this Plan as capitalized terms)
have the following meanings as used in this Plan:
1. "ADMINISTRATIVE CLAIM" means a Claim for costs and expenses
of administration allowed under Bankruptcy Code section 503(b) and referred to
in section 507(a)(1) including: (a) the actual and necessary costs and expenses
incurred after the Petition Date of preserving the Estate and operating the
businesses of the Debtor (such as wages, salaries and commissions for services
and payments for inventory and expenses of sale); (b) compensation for legal,
financial advisory, accounting and other services and reimbursement of expenses
awarded or allowed under Bankruptcy Code sections 330(a) or 331; and (c) all
fees and charges assessed against the Estate under 28 U.S.C. Section 1930.
2. "AGENT" means Foothill Capital Corporation, its successors and
assigns, in its capacity as Agent under the Bank Credit Agreement and the New
Bank Documents.
3. "ALLOWED CLAIM" OR "ALLOWED INTEREST" means a Claim against or
Interest in the Debtor to the extent that
a. a proof of the Claim or Interest
(1) was timely filed; or
(2) is deemed filed under applicable law or by reason of an
order of the Bankruptcy Court; and
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b. (1) the Debtor or Reorganized DEP does not file an
objection within a time fixed by the Bankruptcy Court and the Claim or
Interest is not otherwise a Disputed Claim or Disputed Interest (but only
to the extent that such Claim or Interest is not a Disputed Claim or
Disputed Interest);
(2) the Claim or Interest is allowed (and only to the
extent allowed) by a Final Order, or
(3) the Claim or Interest is allowed under this Plan.
Unless otherwise specified in this Plan, "Allowed Claim" shall not include
interest on such Claim accruing after the Petition Date.
4. "ALLOWED CLASS ... CLAIM" means an Allowed Claim in the
particular class described in this Plan.
5. "ALLOWED CLASS ... INTEREST" means an Allowed Interest in the
particular class described in this Plan.
6. "ALLOWED CLASS 1 506(b) POSTPETITION INTEREST CLAIMS" means:
(i) the sum of (a) for the period from April 1, 1996 through June 30, 1996, the
non-default interest rate (the "base rate" plus 3%) payable on the Lenders'
Petition Date loan balance under the Bank Credit Agreement ("Loan Balance")
compounded monthly, plus (b) for the period from July 1, 1996 through
September 30, 1996, the non-default interest rate (the "base rate" plus 4%)
payable on the Loan Balance compounded monthly, plus (c) for the period from
October 1, 1996 until the Effective Date, interest on the Loan Balance equal to
the "base rate" plus 3% compounded monthly; MINUS (ii) the aggregate amount of
postpetition cash interest payments made by the Debtor in the amount of $200,000
per month pursuant to the Cash Collateral Orders.
7. "BANK CREDIT AGREEMENT" means that certain Revolving Credit and
Term Loan Agreement, dated as of August 6, 1993, among the Debtor, Citicorp USA,
Inc. (individually and as agent for the Lenders), The First National Bank of
Boston (individually and as co-agent for the Lenders), and City National Bank
(individually and as co-agent for the Lenders), and their respective successors
and assigns, and any other agreements entered into, or notes, security
agreements, guaranties or other documents executed in connection therewith or as
an adjunct or supplement thereto or required thereby, as all of the foregoing
may have been amended from time to time before or after the Petition Date.
8. "BANKRUPTCY CODE" means title 11 of the United States Code, as
now in effect or hereafter amended.
9. "BANKRUPTCY COURT" means the United States Bankruptcy Court for
the District in which the Reorganization Case is filed or, if such court ceases
to exercise jurisdiction over the Reorganization Case, such court or adjunct
thereof that exercises jurisdiction over the Reorganization Case in lieu of the
United States Bankruptcy Court for such District.
10. "BANKRUPTCY RULES" means, collectively (a) the Federal Rules of
Bankruptcy Procedure and (b) the local rules of the Bankruptcy Court, as
applicable from time to time in the Reorganization Case.
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11. "BUSINESS DAY" means any day, other than a Saturday, Sunday or
"legal holiday" (as defined in Bankruptcy Rule 9006(a)).
12. "CASH COLLATERAL ORDERS" means the orders of the Bankruptcy Court
entered during the Reorganization Case governing the Debtor's use of cash
collateral and the provision of adequate protection to the Lenders in connection
therewith.
13. "CLAIM" means a Claim against the Debtor, whether or not asserted
or allowed, as defined in Bankruptcy Code section 101(5).
14. "CLASS 1 506 (b) PROFESSIONAL FEE AND EXPENSE CLAIMS" means any
reasonable outside professional fees and expenses incurred by professionals
employed by the Agent to represent and render services to all of the Lenders as
a group (and not any individual lender or Lenders, or subgroup of Lenders) from
and after the Petition Date to the Effective Date, for which the Lenders seek
reimbursement from the Debtor.
15. "CLASS 1 WARRANTS" means warrants to purchase one share of DEP
Common Stock having the following terms and conditions:
a. the exercise price of the Class 1 Warrants shall be equal to
the average closing price at which the DEP Common Stock trades during the
Pricing Period;
b. the Class 1 Warrants shall be exercisable for a period
commencing on the first Business Day following the expiration of the
Pricing Period and ending on the six-year anniversary of the Effective
Date;
c. the Class 1 Warrants shall be transferable; and
d. the Class 1 warrants shall have such other terms and
conditions not inconsistent with the foregoing as set forth in the Class 1
Warrant Agreement.
16. "CLASS 1 WARRANT AGREEMENT" means the document governing the
terms and conditions of the Class 1 Warrants which shall be filed with the
Bankruptcy Court prior to the Effective Date.
17. "CLASS 1 RELEASE AGREEMENT" means the general mutual release to
be exchanged and filed on or before the Effective Date under which the Debtor
and the Estate, on behalf of each of them and their respective officers,
directors, agents, predecessors and successors on the one hand ("Debtor
Releasing Parties"), and the members of Class 1 on behalf of each of them and
their respective officers, directors, agents, predecessors and successors on the
other hand ("Class 1 Releasing Parties"), will broadly release and discharge all
claims and causes of action of each respective party from the beginning of time
to the Effective Date, other than any obligations under this Plan. The Class 1
Release Agreement shall (i) include a waiver of California Civil Code section
1542 and any similar statutes and principles; and (ii) clarify, out of an
abundance of caution, that nothing therein is intended to or constitutes a
release or waiver in favor of S.C. Johnson & Son, Inc. and affiliates.
18. "CONFIRMATION" means the entry of the Confirmation Order.
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19. "CONFIRMATION DATE" means the date on which the Bankruptcy Court
enters the Confirmation Order on its docket.
20. "CONFIRMATION ORDER" means the Order of the Bankruptcy Court
confirming this Plan under Bankruptcy Code section 1129.
21. "CREDITORS' COMMITTEE" means any official committee of creditors
appointed in the Reorganization Case by the Office of the United States Trustee.
22. "DEBTOR IN POSSESSION" means the Debtor when acting in the
capacity of representative of the Estate in the Reorganization Case.
23. "DEBTOR" means DEP.
24. "DEP" means DEP Corporation, a Delaware corporation.
25. "DEP COMMON STOCK" means, collectively, the Existing Class A
Stock, the Existing Class B Stock, options to purchase the same, if and when
exercised, and the new shares of common stock in DEP to be issued to Class 1
under the Plan.
26. "DISBURSING AGENT" means DEP, Reorganized DEP or any other
entities designated by DEP or Reorganized DEP pursuant to Section VI.F below to
distribute property under this Plan.
27. "DISCLOSURE STATEMENT" means the Disclosure Statement to
Accompany Debtor's Second Amended Plan of Reorganization dated August 23, 1996
(and all exhibits and schedules annexed thereto or referred to therein) that
relates to this Plan, as it may have been amended or supplemented from time to
time.
28. "DISPUTED CLAIM" OR "DISPUTED INTEREST" means a Claim or Interest
as to which a proof of Claim or Interest has been filed or deemed filed under
applicable law, as to which an objection has been or may be timely filed and
which objection, if timely filed, has not been withdrawn on or before any date
fixed for filing such objections by this Plan or Order of the Bankruptcy Court
and has not been overruled or denied by a Final Order. Prior to the time that
an objection has been or may be timely filed, for the purposes of this Plan a
Claim or Interest shall be considered a Disputed Claim or a Disputed Interest in
its entirety if: (i) the amount of the Claim or Interest specified in the proof
of Claim or Interest exceeds the amount of any corresponding Claim or Interest
Scheduled by the Debtor in its Schedules of Assets and Liabilities; (ii) any
corresponding Claim or Interest Scheduled by the Debtor in its Schedules of
Assets and Liabilities has been Scheduled as disputed, contingent, or
unliquidated, irrespective of the amount Scheduled; or (iii) no corresponding
Claim or Interest has been Scheduled by the Debtor in its Schedules of Assets
and Liabilities.
29. "EFFECTIVE DATE" means the first Business Day (a) that is at
least ten (10) days (as calculated in accordance with Bankruptcy Rule 9006(a))
after the Confirmation Date; and (b) on which no stay of the Confirmation Order
is in effect.
9
<PAGE>
30. "EXISTING CLASS A STOCK" means the issued and outstanding shares
of Class A Common Stock in DEP prior to the Effective Date.
31. "EXISTING CLASS B STOCK" means the issued and outstanding shares
of Class B Common Stock in DEP prior to the Effective Date.
32. "ESTATE" means the estate created in the Reorganization Case by
Bankruptcy Code section 541.
33. "FINAL ORDER" means an order or judgment of the Bankruptcy Court
as to which the time to appeal, petition for certiorari, move for reargument of
rehearing has expired and as to which no appeal, petition for certiorari or
other proceedings for reargument of rehearing shall then be pending or as to
which any right to appeal, petition for certiorari, reargue or rehear shall have
been waived in writing in form and substance approved by the Debtor or, in the
event that an appeal, writ of certiorari, reargument or rehearing thereof has
been sought, such order of judgment of the Bankruptcy Court shall have been
affirmed by the highest court to which such order or judgment of the Bankruptcy
Court was appealed, or from which reargument or rehearing was sought, or
certiorari has been denied, and the time to take any further appeal, petition
for certiorari or move for reargument or rehearing shall have expired.
34. "INTEREST" means the interest of any equity security holder of
the Debtor, whether or not asserted, as defined in Bankruptcy Code section
101(17).
35. "INTERCOMPANY CLAIM" means a Claim held by an insider (as defined
in Bankruptcy Code section 101(31)) of DEP, other than Claims arising out of or
relating to the employment of any Person by DEP.
36. "JOHNSON" means S.C. Johnson & Son, Inc., and its affiliates.
37. "LENDERS" means all parties that are "Lenders" as such term is
defined in Section 1.01 of the Revolving Credit and Term Loan Agreement, which
is identified above under the term "Bank Credit Agreement," and the successors
and assigns of all such parties. Lenders includes Foothill Capital Corporation
("Foothill"), PNC Bank, N.A. ("PNC"), City National Bank ("City National"),
Pearl Street Fund, L.P. ("Pearl Street"), TCW Special Credits Fund V -- The
Principal Fund ("Oaktree") and Cerberus Partners ("Cerberus").
38. "NATIONWIDE" means Nationwide Life Insurance Company, an Ohio
corporation, its successors and assigns.
39. "NEW BANK DOCUMENTS" means the security agreement, note and
related documents respecting the satisfaction of the Allowed Claims of the
Lenders under this Plan. The New Bank Documents previously were filed with the
Bankruptcy Court and shall be amended and refiled with the Bankruptcy Court,
consistent with this Plan, prior to Confirmation.
40. "ORDER" means an order or judgment of the Bankruptcy Court as
entered on the docket.
10
<PAGE>
41. "PERSON" means any individual, corporation, general partnership,
limited partnership, association, joint stock company, joint venture, estate,
trust, government or any political subdivision, governmental unit (as defined in
the Bankruptcy Code), official committee appointed by the United States Trustee,
unofficial committee of creditors or equity holders or other entity.
42. "PETITION DATE" means April 1, 1996, the date on which the
Reorganization Case was commenced.
43. "PLAN" means this plan of reorganization in the Reorganization
Case and all exhibits and schedules annexed hereto or referred to herein, as
such may be amended, modified or supplemented.
44. "PRICING PERIOD" means the period commencing on the first Trading
Day after the Effective Date and ending on the twentieth Trading Day after the
Effective Date.
45. "PRIME RATE" means the "prime rate" as published from time to
time in the Wall Street Journal, national edition, representing the base rate
for corporate loans, as reflected therein.
46. "PRIORITY TAX CLAIM" means an Allowed Claim for an amount
entitled to priority under Bankruptcy Code section 507(a)(8).
47. "PRO RATA" means proportionately so that the ratio of (a) the
amount of consideration distributed on account of a particular Allowed Claim to
(b) the amount of the Allowed Claim is the same as the ratio of (x) the amount
of consideration distributed on account of all Allowed Claims of the class in
which the particular Allowed Claim is included to (y) the amount of all Allowed
Claims of that class.
48. "RANCHO DOMINGUEZ FACILITY" means DEP's administrative,
manufacturing, and packaging facility located in Rancho Dominguez, California,
consisting of approximately 180,000 square feet.
49. "REORGANIZATION CASE" means the Debtor's case under chapter 11 of
the Bankruptcy Code.
50. "REORGANIZED DEP" means DEP on and after the Effective Date, and
any successor thereto.
51. "SCHEDULED" means set forth on the Schedules of Asset and
Liabilities.
52. "SCHEDULES OF ASSETS AND LIABILITIES" means the Schedules of
Assets and Liabilities which will be filed by the Debtor with the Bankruptcy
Court, as the same may be amended from time to time prior to the Effective Date.
53. "SECURED CLAIM" means any Claim that is secured by a lien on
property in which the Estate has an interest or that is subject to setoff under
Bankruptcy Code section 553, to the extent of the value of the claimholder's
interest in the Estate's interest in such
11
<PAGE>
property or to the extent of the amount subject to setoff, as applicable, as
determined pursuant to Bankruptcy Code section 506(a).
54. "TRADING DAY" means a Business Day in which, for the entire
Business Day, the DEP Common Stock is listed and open for trading on the NASDAQ
SmallCap Market or other nationally recognized market.
55. "UNSECURED CLAIM" means any Claim that is not an Administrative
Claim, Priority Tax Claim, Secured Claim or Intercompany Claim.
56. "WEST COAST" means West Coast Life Insurance Company, a
California corporation, its successors and assigns.
57. The term "net recoveries" against Johnson, as used in Section
IV.C.1.c.(5). of the Plan and elsewhere herein, hereby is clarified to refer to
recoveries received by DEP, Reorganized DEP or any designated representative
from Johnson on account of claims asserted by DEP, Reorganized DEP or any
designated representative against Johnson NET of DEP or Reorganized DEP's
satisfaction of Johnson's setoff and recoupment rights (if any) and/or the
security interest (if any) of Johnson in and to any such recoveries. Nothing in
this clarification constitutes an acknowledgment by DEP, Reorganized DEP or any
designated representative of any right of Johnson to setoff or recoupment and/or
to assert any security interest in and to any recoveries.
B. INTERPRETATION AND COMPUTATION OF TIME.
1. DEFINED TERMS.
Any term used in this Plan that is not defined in this Plan, either in
Section II.A (Definitions) or elsewhere, but that is used in the Bankruptcy Code
or the Bankruptcy Rules, has the meaning assigned to that term in the Bankruptcy
Code or the Bankruptcy Rules.
2. RULES OF INTERPRETATION.
For purposes of this Plan: (a) whenever from the context it is
appropriate, each term, whether stated in the singular or the plural, shall
include both the singular and the plural; (b) any reference in this Plan to a
contract, instrument, release or other agreement or document being in a
particular form or on particular terms and conditions means that such
document shall be substantially in such form or substantially on such terms
and conditions; provided, however, that any change to such form, terms or
conditions which is material to a party to such document shall not be
modified without such party's consent; (c) any reference in this Plan to an
existing document, schedule or Exhibit filed or to be filed means such
document or Exhibit, as it may have been or may be amended, modified or
supplemented; (d) unless otherwise specified in a particular reference, all
references in this Plan to Sections, Articles and Exhibits are references to
Sections, Articles and Exhibits of or to this Plan; (e) the words "herein,"
"hereof," "hereto," "hereunder" and others of similar import refer to this
Plan in its entirety rather than to only a particular portion of this Plan;
(f) captions and headings to Articles and Sections are inserted for
convenience of reference only and are not intended to be a part of or to
affect the interpretations of this Plan; (g) the rules of construction set
forth in Bankruptcy Code section
12
<PAGE>
102 shall apply; (h) reference to a pleading, request or document being "filed"
means duly and properly filed with the Bankruptcy Court as reflected on the
official docket of the Bankruptcy Court; and (i) any Claim satisfied or released
during the Reorganization Case shall not constitute an Allowed Claim entitled to
treatment under this Plan.
3. TIME PERIODS.
In computing any period of time prescribed or allowed by this Plan,
the provisions of Bankruptcy Rule 9006 (a) shall apply.
III.
DESIGNATION OF CLASSES OF CLAIMS AND INTERESTS
The following is the designation of the classes of Claims and
Interests under this Plan. In accordance with Bankruptcy Code section
1123(a)(1), Administrative Claims and Priority Tax Claims described in Article
IV of this Plan have not been classified and are excluded from the following
classes. A Claim or Interest is classified in a particular class only to the
extent that the Claim or Interest qualifies within the description of that
class, and is classified in another class or classes to the extent that any
remainder of the Claim or Interest qualifies within the description of such
other class or classes. A Claim or Interest is classified in a particular class
only to the extent that the Claim or Interest is an Allowed Claim or Allowed
Interest in that class and has not been paid, released or otherwise satisfied
before the Effective Date; a Claim or Interest which is not an Allowed Claim or
Interest is not in any class. Notwithstanding anything to the contrary
contained in this Plan, no distribution shall be made on account of any Claim or
Interest which is not an Allowed Claim or Allowed Interest.
A. SECURED CLAIMS.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CLASS STATUS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CLASS 1:
--------
All Secured Claims (and Unsecured Impaired Holders entitled
Claims, if any) of Lenders. to vote
- --------------------------------------------------------------------------------
CLASS 2(a) AND (b):
-------------------
Secured Claims of Nationwide Unimpaired Holders not entitled
(Class 2(a)) and West Coast to vote
(Class 2(b)).
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
13
<PAGE>
B. UNSECURED CLAIMS.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CLASS 3:
--------
Unsecured Claims that are specified Unimpaired Holders not
as having priority in Bankruptcy entitled
Code section 507(a)(3), 507(a)(4), to vote
507(a)(5), or 507(a)(6)
of the Bankruptcy Code,
respectively.
- --------------------------------------------------------------------------------
CLASS 4:
--------
Unsecured Claims of $1,000 or less Impaired Holders entitled
(and those of holders which timely to vote
elect to reduce to $1,000), as
specified in Section III.D below.
- --------------------------------------------------------------------------------
CLASS 5:
--------
Intercompany Claims Unimpaired Holders not
entitled to vote
- --------------------------------------------------------------------------------
CLASS 6:
--------
Unsecured Claims that are not Impaired Holders entitled
classified in any other class of to vote
Claims, including Claims arising
from the purchase of goods
and services.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
C. INTERESTS.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CLASS STATUS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CLASS 7:
--------
Interests of holders of Existing Impaired Holders entitled
Class A Stock. to vote
- --------------------------------------------------------------------------------
CLASS 8:
--------
Interests of holders of Existing Impaired Holders entitled
Class B Stock. to vote
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
D. SPECIAL PROVISIONS GOVERNING CLASS 4 CLAIMS.
Class 4 consists of all Unsecured Claims which are allowed in the
amount of $1,000 or less, or which would have been allowed in an amount in
excess of $1,000 and would have been classified in Class 6 under this Plan but
for the holder of such Allowed Claim electing to accept a less favorable
treatment and reduce such Allowed Claim to $1,000 by previously timely filing
the ballot to be provided by the Debtor and making such an election thereon to
reduce the holder's Allowed Claim to $1,000. A holder of an Allowed Claim was
entitled only elect to reduce the holder's Allowed Claim to $1,000 with respect
to the aggregate of all Claims
14
<PAGE>
of such holder. If the holder of an Allowed Claim receives treatment in Class
4, then no Claim of such holder which would have been otherwise classified in
Class 6 shall be classified in Class 6.
IV.
TREATMENT OF CLAIMS AND INTERESTS
A. DISTRIBUTION DATE.
Except as otherwise provided in this Plan, property to be distributed
hereunder to an impaired class (a) shall be distributed on or as soon as
practicable after the Effective Date to each holder of an Allowed Claim or an
Allowed Interest of that class that is an Allowed Claim or an Allowed Interest
as of the Effective Date, and (b) shall be distributed to each holder of an
Allowed Claim or Allowed Interest of that class that is allowed after the
Effective Date, to the extent allowed, as soon as practicable after the Order of
the Bankruptcy Court allowing the Claim or Interest becomes a Final Order.
Property to be distributed under this Plan to a class that is not impaired or on
account of a Claim of a kind described in Bankruptcy Code section 507(a)(1)
shall be distributed on the latest of (i) the later of the two dates specified
in the preceding sentence and (ii) the date on which the distribution to the
holder of the Claim would have been due and payable in the ordinary course of
business or under the terms of the Claim absent the Reorganization Case.
B. UNCLASSIFIED CLAIMS.
1. ADMINISTRATIVE CLAIMS.
a. GENERAL.
Subject to the bar date provisions herein, Reorganized DEP shall pay
to each holder of an Administrative Claim, on account of the Administrative
Claim and in full satisfaction thereof, cash equal to the amount of such
Administrative Claim, unless the holder agrees or shall have agreed to other
treatment of such Claim. Payment on an Administrative Claim will not be made
until such payment would have become due in the ordinary course of the subject
Debtor's business or under the terms of the Claim in the absence of the
Reorganization Case.
b. PAYMENT OF STATUTORY FEES.
On or before the Effective Date, all fees payable pursuant to 28
U.S.C. Section 1930, as determined by the Bankruptcy Court at the hearing on
Confirmation, shall be paid in cash equal to the amount of such Administrative
Claim.
15
<PAGE>
c. BAR DATE FOR ADMINISTRATIVE CLAIMS.
i. GENERAL PROVISIONS.
Except for (i) non-tax liabilities incurred in the ordinary course of
business by a Debtor in Possession; and (ii) tax claims, requests for payment of
Administrative Claims must be filed no later than sixty (60) days after the
Effective Date. Holders of Administrative Claims (including, without
limitation, professionals requesting compensation or reimbursement of expenses
and the holders of any Claims for federal, state or local taxes) that are
required to file a request for payment of such Claims and that do not file such
requests by the applicable bar date shall be forever barred from asserting such
Claims against the Debtor, Reorganized DEP or its property.
ii. PROFESSIONALS.
All professionals or other entities requesting compensation or
reimbursement of expenses pursuant to Bankruptcy Code sections 327, 328, 330,
331, 503(b) and 1103 for services rendered before the Effective Date (including,
without limitation, any compensation requested by any professional or any other
entity for making a substantial contribution in any Reorganization Case) shall
file and serve on Reorganized DEP an application for final allowance of
compensation and reimbursement of expenses no later than sixty (60) days after
the Effective Date. Objections to applications of professionals for
compensation or reimbursement of expenses must be filed and served on
Reorganized DEP and the professionals to whose application the objections are
addressed no later than ninety (90) days after the Effective Date.
iii. ORDINARY COURSE LIABILITIES.
Holders of Administrative Claims based on liabilities incurred in the
ordinary course of the Debtor's business (other than Claims of governmental
units for taxes or Claims and/or penalties related to such taxes) shall not be
required to file any request for payment of such Claims. Such Administrative
Claims shall be assumed and paid by Reorganized DEP pursuant to the terms and
conditions of the particular transaction giving rise to such Administrative
Claim, without any further action by the holders of such Claims.
iv. TAX CLAIMS.
All requests for payment of Administrative Claims and other Claims by
a governmental unit for taxes (and for interest and/or penalties related to such
taxes) for any tax year or period, all or any portion of which occurs or falls
within the period from and including the Petition Date through and including the
Effective Date ("Postpetition Tax Claims") and for which no bar date has
otherwise been previously established, must be filed on or before the later of
(i) 60 days following the Effective Date; and (ii) 120 days following the filing
of the tax return for such taxes for such tax year or period with the applicable
governmental unit. Any holder of any Postpetition Tax Claim that is required to
file a request for payment of such taxes and does not file such a Claim by the
applicable bar date shall be forever barred from asserting any such Postpetition
Tax Claim against the Debtor, Reorganized DEP or its property, whether any such
Postpetition Tax Claim is deemed to arise prior to, on or subsequent to the
Effective Date.
16
<PAGE>
2. TREATMENT OF PRIORITY TAX CLAIMS.
Except as otherwise agreed to by Reorganized DEP and the applicable
taxing agency, Reorganized DEP shall pay to each holder of an Allowed Priority
Tax Claim deferred cash payments, over a period not exceeding six years from the
date of assessment of such Claim, in an aggregate amount equal to the amount of
such Allowed Claim, plus interest from the Effective Date on the unpaid portion
of such Allowed Claim (without penalty of any kind) at the rate prescribed
below. The payment of the amount of each such Allowed Claim shall be made in
equal semiannual installments with the first installment due on the latest of:
(i) the Effective Date, (ii) 30 calendar days after the date on which an Order
allowing such Claim becomes a Final Order and (iii) such other time or times as
may be agreed to by the holder of such Claim and Reorganized DEP. Each
installment shall include simple interest on the unpaid portion of such Allowed
Claim, without penalty of any kind, at the statutory rate of interest provided
for such taxes under applicable nonbankruptcy law; PROVIDED, HOWEVER, that
Reorganized DEP shall have the right to pay any Priority Tax Claim, or any
remaining balance of such Claim, in full, at any time on or after the Effective
Date, without premium or penalty of any kind.
C. TREATMENT OF SECURED CLAIMS.
1. CLASS 1 (CLAIMS OF LENDERS UNDER BANK CREDIT AGREEMENT).
Class 1 is impaired under this Plan. Class 1 Allowed Claims
(including Class 1 Allowed Secured Claims) shall receive the following
treatment:
a. ADDITION TO LOAN BALANCE.
The following shall be added to the Loan Balance: (i) except for
$150,000, all Allowed Class 1 506(b) Post Petition Interest Claims; and (ii) up
to $1.150 million (minus the monthly payments in the amount of $25,000 under the
Cash Collateral Orders during the Reorganization Case) in respect of Class 1
506(b) Professional Fee and Expense Claims (the "Maximum Fee Amount"). The
Debtor shall not challenge the reasonableness of the Maximum Fee Amount (such
that, by way of clarification, if such fees and expenses equal the Maximum Fee
Amount the Debtor will not challenge, object to or contest such amount and such
amount shall be added to the Loan Balance). If, however, the Class 1 506(b)
Professional Fee and Expense Claims actually paid by the Lenders is less than
$1.150 million (minus the above-referenced monthly payments), such lesser amount
shall be added to the Loan Balance. The Lenders shall provide the Debtor with
copies of any invoices, engagement letters or other documentation necessary to
assist the Debtor in determining the actual amount paid by the Lenders in
respect of Class 1 506(b) Professional Fee and Expense Claims. Any dispute over
this matter will be resolved by the Bankruptcy Court as a core matter.
b. PAYMENT OBLIGATIONS ON EFFECTIVE DATE.
On the Effective Date, the $150,000 in remaining Allowed Class 1
506(b) Postpetition Interest Claims not added to the Loan Balance shall be paid
by Reorganized DEP, in cash.
17
<PAGE>
c. ADDITIONAL PAYMENT OBLIGATIONS.
Reorganized DEP shall repay an amount equal to the Loan Balance plus
(x) that portion of the Allowed Class 1 506(b) Postpetition Interest Claims not
satisfied as provided in subparagraph (b) above, and (y) the Maximum Fee Amount
(or such lesser amount as provided in subparagraph (a) above) (collectively
referred to as the "Effective Date Loan Balance"), subject to the following
terms and conditions, all as more particularly specified in the New Bank
Documents:
(1) DUE DATE -- All unpaid principal and accrued but unpaid
interest, if any, shall be due and payable on July 31, 2002 ("Maturity
Date").
(2) INTEREST -- From the Effective Date to the Maturity
Date, interest on any remaining Effective Date Loan Balance will be at the
rate per annum equal to the Prime Rate plus two percent (2%).
(3) PRINCIPAL -- To the Maturity Date, Reorganized DEP will
make principal payments as specified in the New Bank Documents. By way of
clarification, along with each of the first twelve interest payments,
Reorganized DEP will make a special monthly principal payment, calculated
by dividing the Maximum Fee Amount (or such lesser amount as provided in
subparagraph (a) above) by twelve.
(4) PAYMENT DATES -- Interest (payable in arrears for the
previous month) on the remaining Effective Date Loan Balance shall be paid
on the first Business Day of each calendar month commencing with the first
full calendar month following the Effective Date. Except as provided in
subparagraph (c)(3) above with respect to special monthly principal
payments, principal shall be paid on the last Business Day of each calendar
quarter commencing with the first full calendar quarter following the
Effective Date.
(5) SECURITY -- Payment and performance of all of
Reorganized DEP's obligations under the New Bank Documents shall be secured
by substantially the same assets as specified in the Bank Credit Agreement,
and, accordingly, shall be secured by substantially all of Reorganized
DEP's assets, including accounts, inventory, equipment, general intangibles
and proceeds of the foregoing. In addition, payment and performance of
such obligations shall be secured by any net recoveries against S.C.
Johnson & Son, Inc. and affiliates (collectively, "SCJ") to which DEP is
entitled in connection with the Principal Case (as defined in the
Disclosure Statement) or pursuant to any other claim relating to the SCJ
Acquisition (as defined in the Disclosure Statement) now or hereafter
asserted against SCJ under Bankruptcy Code section 544(b) or otherwise.
18
<PAGE>
(6) PREPAYMENT - Principal shall be prepaid from the net
cash proceeds received from the sale of assets (subject to exceptions
specified in the New Bank Documents), the issuance of debt or equity
securities, or specified litigation recoveries (as provided in the New Bank
Documents); provided that, in each such case, the amount prepaid shall be
reduced to the extent Reorganized DEP uses all or a portion of such net
proceeds for any capital expenditure, I.E., the purchase or replacement of
an asset having an expected useful life in excess of one year.
(7) GENERALLY -- Additional terms and conditions governing
the treatment of the Class 1 Allowed Claims, including covenants,
representations and other similar terms, are specified in the New Bank
Documents. By way of clarification, (i) the "Agency Fee" (as defined
therein) shall be $15,000 per quarter starting with the payment on
October31, 1996; (ii) Oaktree and Cereberus shall be recognized by the
Debtor as Lenders under the New Bank Documents; (iii) no new security
interest will be granted to the Lenders under this Plan in and to the
Rancho Dominguez Facility; (iv) the 180-day periods in section 2.4(a) and
(c) shall be reduced to ten (10) Business Days, (v) prepayments under
section 2.4(a) and (c) shall be applied only in inverse order to the unpaid
installments of the Advances, as defined therein; (vi) the "right of first
refusal" in section 8.7(i) shall be deleted; and (vii) one-time
reorganization expenses shall not be included in the calculations for the
financial covenants contained in section 5.4. All consideration payable to
or provided by the Debtor in satisfaction of Class 1 Allowed Claims shall
be tendered to the Agent for distribution to the Lenders.
d. WAIVER OF CERTAIN CHARGES AND EXPENSES.
Conditioned upon the occurrence of the Effective Date, except for Allowed
Class 1 506(b) Postpetition Interest Claims and the Maximum Fee Amount, which
shall be satisfied as specified above, Class 1 shall irrevocably waive any right
to assert any Claim for fees, charges, interest, default interest, late charges,
professional fees, expenses or penalties under the Bank Credit Agreement or any
other agreement, statute or theory, whether at law or equity, from the beginning
of time to the Effective Date, and all such Claims shall be deemed disallowed as
of the Effective Date.
e. DISTRIBUTION OF STOCK AND WARRANTS.
Previously, each Lender was provided the option to receive EITHER
(i) such Lender's Pro Rata share of 625,000 new shares of DEP Common Stock, OR
(ii) such Lender's Pro Rata share of (x) 500,000 new shares of DEP Common Stock,
plus (y) Class 1 Warrants to purchase 500,000 new shares of DEP Common Stock.
In accordance with each Lender's election, the following shares of new DEP
Common Stock and Class 1 Warrants shall be distributed on the Effective Date:
19
<PAGE>
----------------------------------------------------------------------------
----------------------------------------------------------------------------
LENDER PERCENTAGE STOCK WARRANTS
----------------------------------------------------------------------------
Foothill (30.86%) 154,300 154,300
----------------------------------------------------------------------------
Pearl Street (18.99%) 118,688 --
----------------------------------------------------------------------------
Oaktree (15.86%) 79,300 79,300
----------------------------------------------------------------------------
PNC (15.00%) 93,750 --
----------------------------------------------------------------------------
Cerberus (9.82%) 49,100 49,100
----------------------------------------------------------------------------
City National (9.47%) 47,350 47,350
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Total (100.00%) 542,488 330,050
----------------------------------------------------------------------------
----------------------------------------------------------------------------
f. CLASS 1 RELEASE AGREEMENT.
On or before the Effective Date, the Debtor Releasing Parties and the
Class 1 Releasing Parties shall execute and deliver the Class 1 Release
Agreement.
2. CLASS 2(a) AND (b) SECURED CLAIMS OF NATIONWIDE (CLASS 2(a)) AND
WEST COAST (CLASS 2(b)).
Class 2 is not impaired under this Plan. The Class 2(a) and (b)
Allowed Secured Claims shall receive the following treatment:
a. Any default other than a default of a kind specified in
Bankruptcy Code section 365(b)(2) shall be cured;
b. The maturity of such Allowed Claims shall be reinstated as
the maturity existed before any default;
c. The holders of such Allowed Claims shall be compensated for
actual damages incurred as a result of any reasonable reliance by such
holders on any such contractual provision or such applicable law;
d. The other legal, equitable or contractual rights to which
such Allowed Claims entitle the holders of such Allowed Claims shall not
otherwise be altered.
20
<PAGE>
D. TREATMENT OF CLASSES OF UNSECURED CLAIMS.
1. CLASS 3 (UNSECURED CLAIMS ENTITLED TO PRIORITY).
Class 3 is not impaired under this Plan. Reorganized DEP shall pay
each Allowed Claim in Class 3 which has not been paid prior to the Effective
Date in cash and in full. Payment on a Class 3 Claim will not be made until
such payment would have become due in the ordinary course of the Debtor's
business or under the terms of the Claim in the absence of the Reorganization
Case.
2. CLASS 4 (UNSECURED CLAIMS OF $1,000 OR LESS OR WHICH THE HOLDER
REDUCES TO $1,000).
Class 4 is impaired under this Plan. Each holder of an Allowed Claim
in this class which has not already been paid during the Reorganization Case
shall receive on account of such Allowed Claim cash equal to the allowed amount
of such Claim up to a maximum of $1,000, unless such holder agrees to less
favorable treatment.
3. CLASS 5 (INTERCOMPANY UNSECURED CLAIMS).
Class 5 is not impaired under this Plan. All Allowed Claims in Class
5 shall continue to receive treatment in accordance with DEP's ordinary business
practices with respect to Intercompany Claims.
4. CLASS 6 (ALL OTHER UNSECURED CLAIMS).
Class 6 is impaired under this Plan. All Allowed Claims in Class 6
shall be satisfied by Reorganized DEP subject to the following terms and
conditions:
a. DUE DATE -- All unpaid principal and accrued but unpaid
interest, if any, shall be due and payable on March 15, 1998 ("Unsecured
Maturity Date").
b. INTEREST UNTIL UNSECURED MATURITY DATE -- From the Petition
Date until the Unsecured Maturity Date, interest at the rate of five
percent (5%) per annum, simple, shall accrue on each Class 6 Allowed Claim,
and be paid at the same time as principal payments are due.
c. PRINCIPAL -- To the Unsecured Maturity Date, principal shall
be paid in equal monthly installments.
d. PAYMENT DATES -- Interest and principal payments shall be
made on the fifteenth calendar day of each month ("Payment Dates")
commencing October 15, 1996 and continuing on the fifteenth calendar day of
each of the next seventeen calendar months; provided, however, that if the
Effective Date does not occur until after October 15, 1996, the first
payment shall be made on the first Business Day
21
<PAGE>
following the Effective Date, and the next payment shall be made on
November 15, 1996 as if the Effective Date had occurred on or before
October 15, 1996(1).
e. NO PROHIBITION AGAINST PREPAYMENT -- The remaining principal
balances due may at any time be prepaid Pro Rata without penalty or
premium.
E. TREATMENT OF CLASSES OF INTERESTS.
1. CLASS 7 (EXISTING CLASS A STOCK).
Class 7 is impaired under this Plan. All Allowed Interests in this
Class shall retain their Allowed Interests in Reorganized DEP, subject to
dilution by virtue of the issuance of DEP Common Stock and Class 1 Warrants to
be issued to Class 1 under this Plan. In addition, each share of Existing Class
A Stock shall be reclassified as DEP Common Stock such that upon such
reclassification, all DEP Common Stock shall have the same voting rights,
preferences and privileges.
2. CLASS 8 (EXISTING CLASS B STOCK).
Class 8 is impaired under this Plan. All Allowed Interests in this
Class shall retain their Allowed Interests in Reorganized DEP, subject to
dilution by virtue of issuance of DEP Common Stock and the Class 1 Warrants to
Class 1. In addition, each share of Existing Class B Stock shall be
reclassified as DEP Common Stock such that upon such reclassification, all DEP
Common Stock shall have the same voting rights, preferences and privileges.
V.
TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES
A. ASSUMPTION.
Unless previously assumed or rejected by order of the Bankruptcy Court
or pursuant to Bankruptcy Code section 365, as of the Effective Date, DEP shall
assume, pursuant to Bankruptcy Code section 365, each of the executory contracts
and unexpired leases of DEP that are not rejected under Section V.C hereof,
including the executory contracts and unexpired leases which are identified in
the Schedule of Assumed Contracts previously filed with the Bankruptcy Court.
The Schedule of Assumed Contracts specifies the amounts DEP presently
believes are necessary, if any, to cure each of the executory contracts set
forth thereon in accordance with Bankruptcy Code section 365(b)(1)(A) & (B).
DEP shall satisfy such amounts ("Cure Amounts") pursuant to this Plan. At the
hearing on Confirmation, DEP will ask the Bank-
___________________________
(1) If the Effective Date does not occur until after November 15, 1996, the
first two payments shall be made on the first Business Day following the
Effective Date, and the next payment shall be made on December 15, 1996, as
if the Effective Date had occurred on or before November 15, 1996.
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ruptcy Court to find conclusively that the Cure Amounts are the only amounts
necessary to cure those contracts. Pursuant to the Schedule of Assumed
Contracts, if any party to an executory contract or unexpired lease listed on
the Schedule of Assumed Contracts contends that the Cure Payment is wrong as to
such party's contract or lease, such party was required to file with the
Bankruptcy Court and serve upon DEP's counsel a written statement and an
accompanying affidavit in support thereof, specifying the amounts allegedly
owing under Bankruptcy Code section 365(b)(1)(A) & (B), no later than August 28,
1996; failure to timely serve such a statement shall result in the entry of a
Confirmation Order declaring that DEP's tender of the Cure Amount pursuant to
the provisions of this Plan, as specified in the Schedule of Assumed Contracts,
shall provide cure and compensation for any and all defaults in unpaid
obligations under such assumed executory contract or unexpired lease. If DEP
disagrees with any written statement filed by a party regarding a specified Cure
Amount, DEP nevertheless may ask the Court to enter such an order at the hearing
on Plan confirmation. DEP reserves the right to amend the Cure Amounts at any
time prior to Plan confirmation and, if DEP makes such an amendment, will serve
notice of such amendment on the party affected thereby.
DEP reserves the right at any time prior to the Confirmation Date to
amend such Schedule either to: (a) delete any executory contract or unexpired
lease listed therein and provide for its rejection pursuant to Section V.C below
or (b) add any executory contract or unexpired lease to such Schedule, thus
providing for its assumption (or assumption and assignment) pursuant to this
Section V.A. DEP shall provide notice of any amendment to such schedule to the
parties to the executory contract or unexpired lease affected thereby. The
Confirmation Order shall constitute an order of the Bankruptcy Court approving
all such assumptions described in this Section V.A, pursuant to Bankruptcy Code
section 365, as of the Effective Date.
B. CURE PAYMENTS.
In addition to the provisions specified above regarding Cure Amounts,
Cure Amounts shall be satisfied, pursuant to Bankruptcy Code section 365(b)(1),
in one of the following three ways: (1) by payment of the default amount in
cash on the Effective Date, (2) by payment of the default amount in equal
quarterly installments commencing on the Effective Date and continuing for one
year; (3) by payment of the default amount consistent with the treatment
provided under this Plan to Class 6 Allowed Claims; or (4) on such other terms
as agreed to by Reorganized DEP and the non-Debtor parties to such executory
contract or unexpired lease. As to each assumed executory contract or
unexpired lease, Reorganized DEP shall elect one of these three alternatives as
the cure method. In the event of a dispute regarding (i) any Cure Amounts,
(ii)the ability of Reorganized DEP to provide adequate assurance of future
performance under the contract or lease to be assumed, or (iii) any other
matter pertaining to assumption (or assumption and assignment), the Cure
Amounts required by Bankruptcy Code section 365(b)(1) shall be made following
the entry of a Final Order resolving the dispute and approving assumption.
C. REJECTION.
Unless previously assumed or rejected by order of the Bankruptcy Court
or pursuant to Bankruptcy Code section 365, on the Effective Date, any executory
contracts and unexpired leases listed on the Schedule of Rejected Contracts
previously filed with the
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Bankruptcy Court, shall be rejected, to the extent, if any, that any of the
foregoing constitute executory contracts or unexpired leases, and without
conceding that they constitute executory contracts or unexpired leases or that
the Debtor has any liability thereunder. Listing a contract or lease on such
Schedule did not and shall not constitute an admission by the Debtor or
Reorganized DEP that such contract or lease is an executory contract or
unexpired lease or that the Debtor or Reorganized DEP has any liability
thereunder. The Debtor reserves the right at any time prior to Confirmation to
amend such Schedule either to: (a) delete any executory contract or unexpired
lease listed therein and provide for its assumption (or assumption and
assignment) pursuant to Section V.A above; or (b) add any executory contract or
unexpired lease to such schedule, thus providing for its rejection pursuant to
this Section V.C. The Debtor shall provide notice of any amendment of such
Schedule to the parties to the executory contract or unexpired lease affected
thereby.
The Confirmation Order shall constitute an order of the Bankruptcy
Court approving all such rejections, pursuant to Bankruptcy Code section 365, as
of the Effective Date. Any Claim for damages arising from the rejection under
this Plan of an executory contract or unexpired lease must be filed within
thirty (30) days after the mailing of notice of Confirmation or be forever
barred and unenforceable against the Debtor, the Estate, Reorganized DEP and its
property and barred from receiving any distribution under this Plan.
VI.
MEANS FOR EXECUTION AND IMPLEMENTATION OF THIS PLAN
A. REVESTING OF ASSETS.
Except as otherwise provided in any provision of this Plan, on the
Effective Date, unless the Creditors' Committee or other entity is designated
representative of the Estate before or after Confirmation, all property of the
Estate of DEP shall revest in Reorganized DEP, free and clear of all Claims,
liens, encumbrances and other Interests; provided, however, that with respect to
the designation of a representative of the Estate other than Reorganized DEP in
its capacity as DEP's successor, nothing in the Plan or the Confirmation Order
shall constitute a finding that DEP or Reorganized DEP has satisfied the
standards for designating such other representative under Bankruptcy Code
section 1123(b)(3), and any request for designation of such other representative
shall be made pursuant to motion on notice to Johnson; provided, further, that
Reorganized DEP's or any designated representative's right to assert recoveries
from Johnson shall be subject to (i) any defenses preserved by Johnson against
DEP, including without limitation those preserved in Johnson's Answer and
Counterclaim, dated August 1, 1996, in Adversary Proceeding Number 96-93 and
(ii) Johnson's rights (if any) under the Plan, Bankruptcy Code section 502(h)
and (to the extent permitted by the Bankruptcy Code) the doctrines of setoff and
recoupment. From and after the Effective Date, Reorganized DEP may operate its
business and use, acquire, and dispose of property and settle and compromise
Claims or Interests without supervision by the Bankruptcy Court and free of any
restrictions of the Bankruptcy Code or Bankruptcy Rules, other than those
restrictions expressly imposed by this Plan and the Confirmation Order.
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B. PRESERVATION OF RIGHTS OF ACTION.
Except as otherwise provided in this Plan, or in any contract,
instrument, release or other agreement entered into in connection with this
Plan, in accordance with Bankruptcy Code section 1123(b), unless the Creditors'
Committee or other entity is designated as representative of the Estate before
or after Confirmation in accordance with the terms and conditions set forth in
Section VI.A. hereof, Reorganized DEP shall retain and may enforce any claims,
rights and causes of action that the Debtor or Estate may hold against any
entity, including, without limitation, any claims, rights or causes of action
under Bankruptcy Code sections 544 through 550 or any similar provisions of
state law, or any other statute or legal theory, and any rights of equitable
subordination or otherwise, only to the extent that the Debtor or the Estate
properly held such claims, rights or causes of action. Except as otherwise
provided in the Plan and subject to the terms and conditions set forth in
Section VI.A. hereof, any such recoveries shall be retained by Reorganized DEP
free and clear of all Claims and Interests. Unless the Creditors' Committee or
other entity is designated as representative of the Estate before or after
Confirmation in accordance with the terms and conditions set forth in Section
VI.A hereof, Reorganized DEP may pursue those rights of action, as appropriate,
in accordance with what is in the best interests of Reorganized DEP holding such
rights of action. Johnson's liability (if any) to DEP, Reorganized DEP or any
designated representative on account of any right or claim, including without
limitation any cause of action under Bankruptcy Code sections 544 through 550,
shall not be affected or abridged by DEP's or Reorganized DEP's satisfaction in
part or in full of any obligation of DEP or Reorganized DEP that is secured by
proceeds of such claim. Nothing in this Plan constitutes a waiver by DEP or
Reorganized DEP of any and all such rights.
C. CERTIFICATE OF INCORPORATION AND BYLAW AMENDMENTS.
Reorganized DEP shall amend its Certificate of Incorporation and
Bylaws in conformity with section 303 of the Delaware general corporation law
and pursuant to Bankruptcy Code section 1123(a)(5)(I). The amended Certificate
of Incorporation and Bylaws (and other relevant governing instruments of Debtor)
shall be amended to provide, among other things, the following: (i) to
authorize the issuance of new DEP Common Stock to Class 1 under this Plan and
the Class 1 Warrants; (ii) to prohibit the issuance of non-voting securities to
the extent required by Bankruptcy Code section 1123(a)(6); (iii) to authorize
the reclassification and/or exchange of the Existing Class A Stock and the
Existing Class B Stock into DEP Common Stock having the same voting rights,
preferences and privileges; (iv) to modify any stock option plan or agreement
relating to the same to provide that the beneficiary thereof shall be entitled
to purchase DEP Common Stock in lieu of Existing Class A Stock or Existing
Class B Stock; and (v) to include such other provisions as are appropriate. The
amended Certificate of Incorporation and Bylaws shall become effective upon the
Effective Date.
D. MANAGEMENT OF REORGANIZED DEP.
1. OFFICERS AND DIRECTORS.
As of the Effective Date, the Persons identified on the schedule
previously filed with the Bankruptcy Court will serve as the initial members of
the Board of Directors of Reorganized DEP. Such Persons shall be deemed elected
to the Board of Directors, and such
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elections shall be deemed effective as of the Effective Date, without any
requirement of further action by stockholders of DEP or Reorganized DEP. The
Persons identified on such Schedule will serve as the initial executive officers
of Reorganized DEP as of the Effective Date. Subject to any requirement of
Bankruptcy Court approval under Bankruptcy Code section 1129(a)(5), those
persons designated as directors and executive officers of Reorganized DEP in
such Schedule shall assume their offices as of the Effective Date and shall
continue to serve in such capacities thereafter, pending further action of the
Board of Directors or stockholders of Reorganized DEP in accordance with
Reorganized DEP's Certificate of Incorporation and Bylaws.
E. OBJECTIONS TO CLAIMS AND INTERESTS.
Except as otherwise provided for applications of professionals for
compensation and reimbursement of expenses under Section IV.B.1. hereof, and as
otherwise Ordered by the Bankruptcy Court after notice and a hearing, objections
to Claims or Interests, including Administrative Claims, shall be filed and
served upon the holder of such Claim, Interest or Administrative Claim as
applicable, not later than the later of (a) one hundred twenty (120) days after
the Effective Date, and (b) one hundred twenty (120) days after a proof of Claim
or Interest or request for payment of such Claim, Interest or Administrative
Claim is filed, unless this period is extended by the Bankruptcy Court. After
the Effective Date, unless the Creditors' Committee or other entity is
designated as representative of the Estate before or after Confirmation in
accordance with the terms and conditions set forth in Section VI.A. hereof,
Reorganized DEP shall have the exclusive right to object to Claims and
Interests.
F. DISTRIBUTION OF PROPERTY UNDER THIS PLAN.
1. DISBURSING AGENT.
Reorganized DEP or such other entity or entities as Reorganized DEP
may employ in its sole discretion ("Third Party Disbursing Agent") shall act as
Disbursing Agent under this Plan and make all distributions required under this
Plan. Any Disbursing Agent may employ or contract with other entities to assist
in or perform the distribution of property to be distributed. Unless otherwise
determined by Reorganized DEP, each Disbursing Agent shall serve without bond.
Each Third Party Disbursing Agent shall receive, without further Bankruptcy
Court approval, reasonable compensation for distribution services rendered
pursuant to this Plan and reimbursement of reasonable out-of-pocket expenses
incurred in connection with such services from Reorganized DEP on terms agreed
to with Reorganized DEP.
Reorganized DEP and the Agent shall coordinate making any and all the
distributions of DEP Common Stock and the Class 1 Warrants to Class 1.
2. DISPUTED CLAIMS.
Notwithstanding any other provisions of this Plan, no payments or
distributions shall be made on account of any Disputed Claim or Disputed
Interest until such Claim or Interest becomes an Allowed Claim or Allowed
Interest, and then only to the extent that it becomes an Allowed Claim or
Allowed Interest. To the extent a Disputed Claim or Disputed Interest becomes
an Allowed Claim or an Allowed Interest after the date a payment or distribution
is due
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and payable to the other Allowed Claims or Allowed Interests in the class to
which such Allowed Claim or Allowed Interest belongs, any payment or
distribution shall be tendered in respect of such Allowed Claim or Allowed
Interest beginning within ten (10) calendar days after the date such Claim
becomes an Allowed Claim or Allowed Interest.
As to any Disputed Claim (including Claims based upon rejection of
executory contracts or unexpired leases) or Disputed Interest, the Bankruptcy
Court, upon motion by Reorganized DEP, shall estimate for purposes of
allowance and distribution, the amount of the Claim or Interest in order to
enable Reorganized DEP promptly to distribute amounts required to be
distributed under this Plan. The Bankruptcy Court's estimation of any
Disputed Claim or Disputed Interest will limit the distribution to be made
thereon and be final for all purposes, regardless of the amount, if any, that
could be allowed on account of such Claim or Interest absent such estimation
proceeding. With respect to the Claims asserted by Johnson against DEP or
Reorganized DEP and the claims and counterclaims asserted by DEP, Reorganized
DEP or any designated representative against Johnson, nothing in the Plan or
the Confirmation Order shall (i)abridge or modify the standards governing
estimation contained in Bankruptcy Code section 502(c) or (ii) allow DEP to
estimate such claims absent compliance with such standards.
3. MANNER OF PAYMENT UNDER THIS PLAN.
Cash payments made pursuant to this Plan shall be in U.S. dollars by
checks drawn on a domestic bank selected by Reorganized DEP, or by wire transfer
from a domestic bank, at Reorganized DEP's option, except that payments made to
foreign trade creditors holding Allowed Claims may be paid, at the option of
Reorganized DEP in such funds and by such means as are necessary or customary in
a particular foreign jurisdiction.
4. DELIVERY OF DISTRIBUTIONS AND UNDELIVERABLE OR UNCLAIMED
DISTRIBUTIONS.
a. DELIVERY OF DISTRIBUTIONS IN GENERAL.
Except as provided below in Section VI.F.4.b for holders of
undeliverable distributions, distributions to holders of Allowed Claims shall
be distributed by mail as follows: (1) at the addresses set forth on the
respective proofs of Claim filed by such holders; (2) at the addresses set
forth in any written notices of address changes delivered to the Disbursing
Agent after the date of any related proof of Claim; or (3) at the address
reflected on the Schedule of Assets and Liabilities filed by the Debtor if no
proof of Claim is filed and the Disbursing Agent has not received a written
notice of a change of address.
Distributions to holders of Allowed Interests shall be made in
accordance with the Debtor's customary nonbankruptcy corporate practice for
providing notices and/or distributions to holders of Allowed Interests, whether
or not the address utilized for such notices and/or distributions corresponds
with the address listed in any Proof of Interest or other document filed with
the Bankruptcy Court. If Reorganized DEP agrees, any holder of an Allowed
Interest shall be entitled to exchange such holder's stock certificate
representing Existing Class A Stock or Existing Class B Stock for a stock
certificate representing DEP Common Stock.
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b. UNDELIVERABLE DISTRIBUTIONS.
i. HOLDING AND INVESTMENT OF UNDELIVERABLE PROPERTY.
If the distribution to the holder of any Claim is returned to the
Disbursing Agent as undeliverable, no further distribution shall be made to such
holder unless and until Reorganized DEP or the Disbursing Agent is notified in
writing of such holder's then current address. Subject to Section VI.F.4.b(2),
undeliverable distributions shall remain in the possession of the Disbursing
Agent pursuant to this Section VI.F.4.b(1) until such times as a distribution
becomes deliverable.
Unclaimed cash (including interest) shall be held in trust in a
segregated bank account in the name of the Disbursing Agent, for the benefit of
the potential claimants of such funds, and shall be accounted for separately.
Such funds shall be held in interest-bearing accounts (as selected by
Reorganized DEP in its sole discretion), to the extent practicable; and the
parties entitled to such funds shall be entitled to any interest earned on such
funds.
ii. DISTRIBUTION OF UNDELIVERABLE PROPERTY AFTER IT BECOMES
DELIVERABLE AND FAILURE TO CLAIM UNDELIVERABLE
PROPERTY.
Any holder of an Allowed Claim who does not assert a Claim for an
undeliverable distribution held by the Disbursing Agent within two (2) years
after the Effective Date shall no longer have any Claim to or interest on such
undeliverable distribution, and shall be forever barred from receiving any
distributions under this Plan. In such cases any property held for distribution
on account of such Claims shall be retained by Reorganized DEP, as follows: Any
cash shall be the property of Reorganized DEP, free from any restrictions
thereon. Nothing contained in this Plan shall require the Debtor, Reorganized
DEP or the Disbursing Agent to attempt to locate any holder of an Allowed Claim.
Undeliverable distributions to holders of Allowed Interests shall be
governed and determined by applicable nonbankruptcy law.
5. COMPLIANCE WITH TAX REQUIREMENTS.
In connection with this Plan, to the extent applicable, the Disbursing
Agent shall comply with all withholding and reporting requirements imposed on it
by any governmental unit, and all distributions pursuant to this Plan shall be
subject to such withholding and reporting requirements.
6. SETOFFS AND RECOUPMENTS.
Notwithstanding anything to the contrary contained in this Plan,
Reorganized DEP may, but shall not be required to, set off, recoup and withhold
against any Allowed Claim and the distributions to be made pursuant to this Plan
on account of such Claim, claims of any nature that the Debtor or Reorganized
DEP may have against the holder of such Allowed Claim; PROVIDED, HOWEVER, that
neither the failure to effect such a setoff or recoupment, nor the allowance of
any Claim against the Debtor or Reorganized DEP, nor any partial or full payment
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during the Reorganization Case or after the Effective Date in respect of any
Allowed Claim shall constitute a waiver or release by the Debtor or Reorganized
DEP of any claim that the Debtor or Reorganized DEP may possess against such
holder.
7. DE MINIMIS DISTRIBUTIONS.
No cash payment of less than twenty-five dollars ($25.00) shall be
made by the Disbursing Agent to any holders of a Claim unless a request therefor
is made in writing to the Disbursing Agent.
G. DISCHARGE OF DEBTORS AND INJUNCTION.
The rights afforded in this Plan and the treatment of all Claims and
Interests therein shall be in exchange for and in complete satisfaction,
discharge and release of all Claims and Interests of any nature whatsoever,
including any interest accrued on such Claims from and after the Petition
Date, against the Debtor and the Debtor in Possession or any of its property.
Except as otherwise provided in this Plan or the Confirmation Order: (i) on
the Effective Date, the Debtor, Reorganized DEP and its property shall be
deemed discharged and released to the fullest extent permitted by Bankruptcy
Code section 1141 from all Claims and Interests, including, but not limited
to, demands, liabilities, Claims and Interests that arose before the
Confirmation Date and all debts of the kind specified in Bankruptcy Code
sections 502(g), 502(h) or 502(i), whether or not: (a) a proof of Claim or
proof of Interest based on such debt or Interest is filed or deemed filed
pursuant to Bankruptcy Code section 501, (b) a Claim or Interest based on
such debt or Interest is allowed pursuant to Bankruptcy Code section 502 or
(c) the holder of a Claim or Interest based on such debt or Interest has
accepted this Plan; and (ii) all Persons shall be precluded from asserting
against the Debtor, Reorganized DEP and its property any other or further
Claims or Interests based upon any act or omission, transaction, or other
activity of any kind or nature that occurred prior to the Confirmation Date.
Except as otherwise provided in this Plan or the Confirmation Order, the
Confirmation Order shall act as a discharge of any and all Claims against and
all debts and liabilities of the Debtor, as provided in Bankruptcy Code
sections 524 and 1141, and such discharge shall void any judgment against the
Debtor at any time obtained to the extent that it relates to a Claim
discharged; provided, however, that any judgment obtained by Johnson from a
court having proper jurisdiction to determine the liability of DEP or
Reorganized DEP on such Claim shall not be void; provided, further, that
Johnson's right to enforce any such judgment shall be in accordance with the
provisions of the Plan regarding the treatment of Allowed Claims under the
Plan. Nothing in the Plan or the Confirmation Order constitutes a waiver by
DEP or Reorganized DEP of the jurisdiction of the Bankruptcy Court with
respect to the allowance of Claims or any objection or counterclaim relating
thereto.
Except as otherwise provided in this Plan or the Confirmation Order,
on and after the Effective Date, all Persons who have held, currently hold or
may hold a debt, Claim or Interest discharged pursuant to the terms of this
Plan are permanently enjoined from taking any of the following actions on
account of any such discharged debt, Claim or Interest: (1) commencing or
continuing in any manner any action or other proceeding against the Debtor,
Reorganized DEP and its property; (2) enforcing, attaching, collecting or
recovering in any manner any judgment, award, decree or order against the
Debtor, Reorganized DEP and its property; (3) creating, perfecting or
enforcing any lien or encumbrance against the Debtor, Reorganized
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DEP or its property; (4)asserting any setoff, right of subrogation or
recoupment of any kind against any obligation due to any of the Debtor,
Reorganized DEP or its property; and (5) commencing or continuing any action,
in any manner, in any place that does not comply with or is inconsistent with
the provisions of this Plan or the Confirmation Order; provided, however,
that nothing in the Plan or the Confirmation Order shall affect or abridge
the rights (if any) of Johnson (i) to establish in a court of proper
jurisdiction (to the extent permitted by the Bankruptcy Code) the right to
setoff or recoup any Claim it may have against DEP from any obligation it may
owe to DEP, and (ii) to enforce, collect or recover any judgment, award,
decree, or order it obtains from a court having proper jurisdiction to
determine the liability of DEP to Johnson on account of such Claim, which
Allowed Claim shall be satisfied in accordance with the provisions of the
Plan. Nothing in the Plan or the Confirmation Order constitutes a waiver by
DEP or Reorganized DEP of the jurisdiction of the Bankruptcy Court with
respect to the assertion of any claim or right of setoff or recoupment or any
objection or counterclaim relating thereto. Any Person injured by any
willful violation of such injunction shall recover actual damages, including
costs and attorneys' fees, and, in appropriate circumstances, may recover
punitive damages, from the willful violator.
H. NO LIABILITY FOR SOLICITATION OR PARTICIPATION.
As specified in Bankruptcy Code section 1125(e), Persons that solicit
acceptances or rejections of this Plan and/or that participate in the offer,
issuance, sale, or purchase of securities offered or sold under this Plan, in
good faith and in compliance with the applicable provisions of the Bankruptcy
Code, are not liable, on account of such solicitation or participation, for
violation of any applicable law, rule, or regulation governing the solicitation
of acceptances or rejections of this Plan or the offer, issuance, sale or
purchase of securities.
I. LIMITATION OF LIABILITY.
Neither the Debtor, Reorganized DEP, nor any of its employees,
officers, directors, agents or representatives, nor any professional persons
employed by any of them, or any of their members, agents, representatives or
professional advisors, shall have or incur any liability to any Person or entity
for any act taken or omission made in good faith in connection with or related
to formulating, implementing, confirming or consummating this Plan, the
Disclosure Statement, or any contract, instrument, release or other agreement or
document created in connection with this Plan.
J. RETIREE BENEFITS.
The Debtor does not have any retiree benefit plans, within the meaning
of Bankruptcy Code section 1114.
K. OTHER SECURED CLAIMS.
In the event there exists any Allowed Secured Claim in addition to
those otherwise classified in this Plan ("Other Secured Claim"), such Other
Secured Claim shall receive treatment as follows:
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a. Any default other than a default of a kind specified in
Bankruptcy Code section 365(b)(2) shall be cured;
b. The maturity of the Claim shall be reinstated as the
maturity existed before any default;
c. The holder of the Claim shall be compensated for actual
damages incurred as a result of any reasonable reliance by the holder on any
provision that entitled the holder to accelerate the maturity of the Claim; and
d. The other legal, equitable, or contractual rights to which
the Claim entitles the holder shall not otherwise be altered.
L. EXEMPTION FROM CERTAIN TAXES.
Pursuant to Bankruptcy Code section 1146(c), the issuance, transfer, or
exchange of a security, or the making or delivery of an instrument of transfer,
shall not be subject to any stamp tax, real estate transfer tax, or similar tax.
Transfers under the Plan that are exempt from taxation pursuant to Bankruptcy
Code section 1146(c) include the issuance, transfer, assignment, or exchange of
the DEP Common Stock, the Class 1 Warrants, the creation of any mortgage, deed
of trust, lien or other security interests, the making, revestment, or
assignment of any lease or sublease, the transfer of property or the making,
revesting, or delivery of any deed or other instrument or transfer under, in
furtherance of, or in connection with, the Plan, including any deeds, bills of
sale, pledges, mortgages, deeds of trust, or assignments executed in connection
with the Plan, agreements entered into in connection with the Plan, or the
Confirmation Order.
M. APPLICABILITY OF BANKRUPTCY CODE SECTION 1145
TO STOCK AND WARRANTS ISSUED UNDER THE PLAN.
The protections afforded by Bankruptcy Code section 1145 with regard
to the offer, issuance, sale, or purchase of the DEP Common Stock, the Class 1
Warrants, or other securities issued to holders of Allowed Claims and Allowed
Interests under the Plan, and distributed pursuant to the Plan to any entity and
any Class, shall apply to the full extent provided by law. In addition, the
exemption provided in Bankruptcy Code section 1145 from the requirements of
section 5 of the Securities Act of 1933, 15 U.S.C. Section 77e, and any state or
local law requiring registration for the offer or sale of a security shall apply
to the distribution of the above-referenced and any other securities issued
under the Plan to the holders of Allowed Claims and Allowed Interests under the
Plan.
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VII.
CONFIRMABILITY OF PLAN AND CRAMDOWN
A. CONFIRMABILITY AND SEVERABILITY OF PLAN.
The Debtor reserves the right to modify, revoke or withdraw this Plan, as
provided herein. A modification or withdrawal, or a determination by the
Bankruptcy Court that this Plan is not confirmable pursuant to Bankruptcy Code
section 1129, shall not limit or affect (i) the confirmability of this Plan as
it applies to any other Debtor or (ii) the Debtor's ability to modify this Plan,
to satisfy the confirmation provisions of Bankruptcy Code section 1129.
B. CRAMDOWN.
The Debtor requests Confirmation under Bankruptcy Code section 1129(b) if
any impaired class does not accept this Plan pursuant to Bankruptcy Code section
1126. In that event, the Debtor reserves the right to modify this Plan to the
extent, if any, that Confirmation of this Plan under Bankruptcy Code section
1129(b) requires modification.
VIII.
RETENTION OF JURISDICTION
Notwithstanding the entry of the Confirmation Order or the occurrence of
the Effective Date, the Bankruptcy Court shall retain such jurisdiction over the
Reorganization Case after the Effective Date as is legally permissible,
including, without limitation, jurisdiction to:
1. Allow, disallow, determine, liquidate, classify or establish the
priority or secured or unsecured status of or estimate any Claim or Interest,
including, without limitation, the resolution of any request for payment of any
Administrative Claim and the resolution of any and all objections to the
allowance or priority of Claims or Interests or counterclaims relating to the
foregoing;
2. Grant or deny any and all applications for allowance of compensation
or reimbursement of expenses authorized pursuant to the Bankruptcy Code or this
Plan, for periods ending on or before the Effective Date;
3. Resolve any motions pending on the Effective Date to assume, assume
and assign or reject any executory contract or unexpired lease to which the
Debtor is a party or with respect to which the Debtor may be liable and to hear,
determine and, if necessary, liquidate, any and all Claims arising therefrom;
4. Ensure that distributions to holders of Allowed Claims are
accomplished pursuant to the provisions of this Plan;
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5. Decide or resolve any and all applications, motions, adversary
proceedings contested or litigated matters and any other matters or grant or
deny any applications involving the Debtors that may be pending on the Effective
Date;
6. Enter such Orders as may be necessary or appropriate to implement
or consummate the provisions of this Plan and all contracts, instruments,
releases and other agreements or documents created in connection with this Plan
or the Disclosure Statement;
7. Resolve any and all controversies, suits or issues that may arise
in connection with the consummation, interpretation or enforcement of this Plan
or any entity's obligations incurred in connection with this Plan;
8. Modify this Plan before or after the Effective Date pursuant to
Bankruptcy Code section 1127, or modify the Disclosure Statement before
substantial consummation of the Plan or any contract, instrument, release or
other agreement or document created in connection with this Plan or Disclosure
Statement; or remedy any defect or omission or reconcile any inconsistency in
any Bankruptcy Court Order, this Plan, the Disclosure Statement or any contract,
instrument, release or other agreement or document created in connection with
this Plan or Disclosure Statement, in such manner as may be necessary or
appropriate to consummate this Plan, to the extent authorized by the Bankruptcy
Code;
9. Issue injunctions, enter and implement other orders or take such
other actions as may be necessary or appropriate to restrain interference by any
entity with consummation or enforcement of this Plan;
10. Designate one or more representatives to prosecute or continue
any prosecution of any cause of action or objection to Claim;
11. Preside over and enter Orders and/or judgments respecting any
adversary proceedings or contested matters initiated before or after
Confirmation pertaining to matters or proceedings arising under title 11, or
arising in or related to cases under title 11;
12. Enter and implement such orders as are necessary or appropriate
if the Confirmation Order is for any reason modified, stayed, reversed, revoked
or vacated;
13. Determine any other matters that may arise in connection with or
relate to this Plan, the Disclosure Statement, the Confirmation Order or any
contract, instrument, release or other agreement or document created in
connection with this Plan or the Disclosure Statement; and
14. Enter an order concluding the Reorganization Case.
If the Bankruptcy Court abstains from exercising jurisdiction or is
otherwise without jurisdiction over any matter arising out of the Reorganization
Case, including without limitation the matters set forth in this Section, this
Section shall have no effect upon and shall not control, prohibit, or limit the
exercise of jurisdiction by any other court having competent jurisdiction with
respect to such matter. Nothing herein or in the Confirmation Order shall
(i) expand the jurisdiction of the Bankruptcy Court beyond legally permissible
limits and (ii) grant the
33
<PAGE>
Bankruptcy Court greater power than it could invoke prior to Confirmation with
respect to deciding and resolving any non-core adversary proceedings.
IX.
MISCELLANEOUS PROVISIONS
A. DISSOLUTION OF COMMITTEE.
On the Effective Date, the Creditors' Committee shall dissolve and the
members of such committee shall be released and discharged from all further
rights and duties arising from or related to the Reorganization Case, provided,
however, that so long as Reorganized DEP consents, the Creditors' Committee
shall continue in existence for the purpose of monitoring and/or moving to
intervene in, and/or serving as representative of, the Estate in accordance with
the terms and conditions of Section VI.A. hereof with respect to any cause of
action, adversary proceeding or contested matter. The professionals retained by
any the Creditors' Committee and the members thereof shall not be entitled to
compensation or reimbursement of expenses for any services rendered after the
Effective Date, except for (1) services rendered and expenses incurred in
connection with any applications for allowance of compensation and reimbursement
of expenses pending on the Effective Date or filed after the Effective Date as
provided in this Plan, and (2) services rendered and expenses incurred in
connection with causes of action, adversary proceedings or contested matters as
set forth above.
B. MODIFICATION OF THIS PLAN.
Subject to the restrictions on plan of reorganization modifications
set forth in Bankruptcy Code section 1127, the Debtor reserves the right to
alter, amend or modify this Plan before its substantial consummation.
C. REVOCATION OF THIS PLAN.
The Debtor reserves the right to revoke or withdraw this Plan prior to
the Confirmation Date. If the Debtor revokes or withdraws this Plan, or if
Confirmation does not occur, then this Plan shall be null and void, and nothing
contained in this Plan shall: (1) constitute a waiver or release of any Claims
by or against, or any Interests in, the Debtor; or (2) prejudice in any manner
the rights of the Debtor in any further proceedings.
D. SUCCESSORS AND ASSIGNS.
The rights, benefits and obligations of any entity named or referred
to in this Plan shall be binding on, and shall inure to the benefit of, any
heir, executor, administrator, successor or assign of such entity.
34
<PAGE>
E. SATURDAY, SUNDAY OR LEGAL HOLIDAY.
If any payment or act under this Plan is required to be made or
performed on a date that is not a Business Day, then the making of such payment
or the performance of such act may be completed on the next succeeding Business
Day, but shall be deemed to have been completed as of the required date.
F. POST-EFFECTIVE DATE EFFECT OF EVIDENCES OF CLAIMS OR INTERESTS.
Notes, bonds, stock certificates and other evidences of Claims against
or Interests in the Debtor shall, effective upon the Effective Date, represent
only the right to participate in the distributions contemplated by this Plan.
G. HEADINGS.
The headings used in this Plan are inserted for convenience only and
neither constitute a portion of this Plan nor in any manner affect the
provisions of this Plan.
H. GOVERNING LAW.
Unless a rule of law or procedure is supplied by (i) federal law
(including the Bankruptcy Code and Bankruptcy Rules), or (ii) an express choice
of law provision in any agreement, contract, instrument, or document provided
for, or executed in connection with, this Plan, the rights and obligations
arising under this Plan and any agreements, contracts, documents, and
instruments executed in connection with this Plan shall be governed by, and
construed and enforced in accordance with, the laws of the State of California
without giving effect to the principles of conflict of laws thereof.
I. SEVERABILITY OF PLAN PROVISIONS.
If prior to Confirmation any term or provision of this Plan which does
not govern the treatment of Claims or Interests or the conditions to the
Effective Date is held by the Bankruptcy Court to be invalid, void or
unenforceable, the Bankruptcy Court shall have the power to alter and interpret
such term or provision to make it valid or enforceable to the maximum extent
practicable, consistent with the original purpose of the term or provision held
to be invalid, void or unenforceable, and such term or provision shall then be
applicable as altered or interpreted. Notwithstanding any such holding,
alteration or interpretation, the remainder of the terms and provisions of this
Plan will remain in full force and effect and will in no way be affected,
impaired or invalidated by such holding, alteration or interpretation. The
Confirmation Order shall constitute a judicial determination and shall provide
that each term and provision of this Plan, as it may have been altered or
interpreted in accordance with the foregoing, is valid and enforceable pursuant
to its terms.
35
<PAGE>
J. NO ADMISSIONS.
Notwithstanding anything herein to the contrary, nothing contained in this
Plan shall be deemed as an admission by the Debtor with respect to any matter
set forth herein including, without limitation, liability on any Claim or
Interest or the propriety of any Claim or Interest classification.
Dated: August 23, 1996 DEP CORPORATION,
a Delaware corporation
By: /s/
--------------------------------
GRANT W. JOHNSON
Senior Vice President and
Chief Financial Officer
36
<PAGE>
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
DEP CORPORATION
DEP CORPORATION, a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), DOES HEREBY CERTIFY THAT:
FIRST: At a meeting of the Board of Directors of the Corporation held
on August 13, 1996, resolutions were duly adopted setting forth proposed
amendments to the Certificate of Incorporation of the Corporation, declaring
said amendments to be advisable and directing that those amendments be adopted
pursuant to Section 303 of the General Corporation Law of the State of Delaware.
The resolutions setting forth the proposed amendments are as follows:
WHEREAS, in connection with the Corporation's Second Amended Plan
of Reorganization dated as of August 23, 1996, which Plan of
Reorganization was duly confirmed by the United States Bankruptcy
Court for the District of Delaware under Section 1129 of the
Bankruptcy Code, the Board of Directors of the Corporation deems it to
be desirable and in the best interests of the Corporation to amend the
Corporation's Certificate of Incorporation to (i) convert each
outstanding share of the Corporation's Class A Common Stock into one
outstanding share of a single class of the Corporation's common equity
securities, to be designated "Common Stock," (ii) convert each
outstanding share of the Corporation's Class B Common Stock into one
outstanding share of such Common Stock, (iii) eliminate the designated
series of Class A Common Stock and Class B Common Stock and (iv)
reduce the number of authorized shares of Common Stock to Fifteen
Million Shares.
NOW, THEREFORE, BE IT RESOLVED, that Article IV of the
Certificate of Incorporation of the Corporation be, and it hereby is,
amended in its entirety to read as follows:
"ARTICLE IV
(A) AUTHORIZED SHARES. The total number of shares of all
classes of capital stock which the Corporation shall have authority to
issue is Eighteen Million (18,000,000) shares, consisting of Fifteen
Million (15,000,000) shares of Common Stock, par value $.01 per share
(such class of stock, the "Common Stock"), and Three Million
(3,000,000)
<PAGE>
shares of Preferred Stock, par value $.01 per share (such class of stock,
the "Preferred Stock").
At 5:00 p.m. (New York City time) on the date that this
Certificate of Amendment is filed with the Secretary of State of the
State of Delaware (such time, the "Effective Time"), and without
further action on the part of the Corporation or its stockholders, (i)
each share of Class A Common Stock, par value $.01 per share, of the
Corporation ("Old Class A Common Stock") issued and outstanding
immediately prior to the Effective Time shall automatically be
reclassified as and changed into one validly issued, fully paid and
nonassessable share of Common Stock; and (ii) each share of Class B
Common Stock, par value $.01 per share, of the Corporation ("Old Class
B Common Stock") issued and outstanding immediately prior to the
Effective Time shall automatically be reclassified as and changed into
one validly issued, fully paid and nonassessable share of Common
Stock.
Each stock certificate that theretofore represented shares of Old
Class A Common Stock shall thereafter be deemed to represent that
number of shares of Common Stock into which the shares of Old Class A
Common Stock represented by such certificate shall have been
reclassified; PROVIDED, HOWEVER, that each person holding of record a
stock certificate or certificates that represented shares of Old Class
A Common Stock shall receive, upon surrender of such certificate or
certificates, a new certificate or certificates evidencing and
representing the number of shares of Common Stock to which such person
is entitled. Each stock certificate that theretofore represented
shares of Old Class B Common Stock shall thereafter be deemed to
represent that number of shares of Common Stock into which the shares
of Old Class B Common Stock represented by such certificate shall have
been reclassified; PROVIDED, HOWEVER, that each person holding of
record a stock certificate or certificates that represented shares of
Old Class B Common Stock shall receive, upon surrender of such
certificate or certificates, a new certificate or certificates
evidencing and representing the number of shares of Common Stock to
which such person is entitled.
Subject to the provisions hereof, at each annual or special
meeting of stockholders, each holder of Common Stock shall be entitled
to one (1) vote in person or by proxy for each share of Common Stock
standing in such person's name on the stock transfer records of the
Corporation in connection with the election of directors and all other
actions submitted to a vote of stockholders.
(b) PREFERRED STOCK. The designations, voting powers,
preferences and relative, participating, optional or other special
rights and qualifications, limitations or restrictions of each series
of the Preferred Stock shall be established by resolution of the Board
of Directors pursuant to Section 151 of the Delaware Law (or any
successor provision then in effect).
(c) NO PREEMPTIVE RIGHTS. No holder of any shares of the
capital stock of the Corporation shall, by reason of such holding,
have any preemptive right to subscribe to any additional issue of
capital stock of any class or series of the Corporation or to any
security of the Corporation convertible into such stock."
SECOND: Said amendments were duly adopted in accordance with the
provisions of Section 303 of the General Corporation Law of the State of
Delaware, having been duly adopted pursuant
2
<PAGE>
to a plan of reorganization under the United States Bankruptcy Code (Title 11,
United States Code) with respect to the Corporation that was duly confirmed by
the order of a United States federal court of competent jurisdiction in
accordance with such Section.
IN WITNESS WHEREOF, DEP CORPORATION has caused this certificate to be
signed by Robert Berglass, its President, and Judith R. Berglass, its Secretary,
as of the 4th day of November, 1996.
DEP CORPORATION
By: /s/ Robert Berglass
------------------------------
Robert Berglass
President
Attest: /s/ Judith R. Berglass
----------------------------------
Judith R. Berglass
Secretary
3
<PAGE>
TERM LOAN AGREEMENT
Dated as of November 4, 1996
among
DEP CORPORATION, AS BORROWER
CITY NATIONAL BANK, AS CO-AGENT for Lenders
and
FOOTHILL CAPITAL CORPORATION, AS AGENT for Lenders
and Others
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I - DEFINITIONS AND ACCOUNTING TERMS. . . . . . . . . . . . . . 2
SECTION 1.1. Certain Defined Terms . . . . . . . . . . . . . . . 2
SECTION 1.2. Computation of Time Periods . . . . . . . . . . . . 14
SECTION 1.3. Accounting Terms. . . . . . . . . . . . . . . . . . 14
ARTICLE II - AMOUNTS AND TERMS OF THE ADVANCES. . . . . . . . . . . . . 14
SECTION 2.1. The Advances. . . . . . . . . . . . . . . . . . . . 14
SECTION 2.2. Repayment . . . . . . . . . . . . . . . . . . . . . 14
(a) Monthly Principal Payments . . . . . . . . . . . . . . . . 15
(b) Quarterly Principal Payments . . . . . . . . . . . . . . . 15
(c) Final Principal Payment. . . . . . . . . . . . . . . . . . 16
SECTION 2.3. Optional Prepayments. . . . . . . . . . . . . . . . 16
SECTION 2.4. Mandatory Prepayments . . . . . . . . . . . . . . . 16
(a) Net Cash Proceeds. . . . . . . . . . . . . . . . . . . . . 16
(b) Change of Control. . . . . . . . . . . . . . . . . . . . . 17
(c) Seller Litigation. . . . . . . . . . . . . . . . . . . . . 17
(d) Payment of Interest. . . . . . . . . . . . . . . . . . . . 17
SECTION 2.5. Interest. . . . . . . . . . . . . . . . . . . . . . 17
(a) Ordinary Interest. . . . . . . . . . . . . . . . . . . . . 17
(b) Default Interest . . . . . . . . . . . . . . . . . . . . . 17
SECTION 2.6. Agent's Fees. . . . . . . . . . . . . . . . . . . . 18
SECTION 2.7. Payments and Computations . . . . . . . . . . . . . 18
(a) Payments . . . . . . . . . . . . . . . . . . . . . . . . . 18
(b) Computations of Interest . . . . . . . . . . . . . . . . . 18
(c) Business Day . . . . . . . . . . . . . . . . . . . . . . . 18
(d) Assumption of Payment by Borrower. . . . . . . . . . . . . 19
SECTION 2.8. Taxes . . . . . . . . . . . . . . . . . . . . . . . 19
(a) Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(b) Other Taxes. . . . . . . . . . . . . . . . . . . . . . . . 19
(c) Payment of Taxes . . . . . . . . . . . . . . . . . . . . . 19
(d) Receipts . . . . . . . . . . . . . . . . . . . . . . . . . 20
(e) Lender Forms . . . . . . . . . . . . . . . . . . . . . . . 20
(f) Failure to Provide Forms . . . . . . . . . . . . . . . . . 20
(g) Survival . . . . . . . . . . . . . . . . . . . . . . . . . 21
(h) Minimize Taxes . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 2.9. Sharing of Payments, Etc. . . . . . . . . . . . . . 21
SECTION 2.10. Defaulting Lenders . . . . . . . . . . . . . . . . 22
(a) Payments of Defaulted Amounts. . . . . . . . . . . . . . . 22
(b) Payments to Defaulting Lenders . . . . . . . . . . . . . . 22
(c) Rights and Remedies. . . . . . . . . . . . . . . . . . . . 23
i
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PAGE
(d) Satisfaction . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE III - CONDITIONS OF LENDING . . . . . . . . . . . . . . . . . . 24
SECTION 3.1. Delivery of Documents . . . . . . . . . . . . . . . 24
ARTICLE IV - REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . 25
SECTION 4.1. Representations and Warranties of Borrower. . . . . 25
(a) Organization and Authority . . . . . . . . . . . . . . . . 25
(b) Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . 25
(c) Corporate Power. . . . . . . . . . . . . . . . . . . . . . 25
(d) Government Consents. . . . . . . . . . . . . . . . . . . . 26
(e) Enforceability . . . . . . . . . . . . . . . . . . . . . . 26
(f) Litigation . . . . . . . . . . . . . . . . . . . . . . . . 26
(g) Margin Stock . . . . . . . . . . . . . . . . . . . . . . . 26
(h) ERISA Event. . . . . . . . . . . . . . . . . . . . . . . . 27
(i) Withdrawal Liability . . . . . . . . . . . . . . . . . . . 27
(j) Multiemployer Plans. . . . . . . . . . . . . . . . . . . . 27
(k) Other Events . . . . . . . . . . . . . . . . . . . . . . . 27
(l) Compliance With Environmental Laws . . . . . . . . . . . . 27
(m) National Priorities List . . . . . . . . . . . . . . . . . 27
(n) Hazardous Materials. . . . . . . . . . . . . . . . . . . . 27
(o) Other Agreements . . . . . . . . . . . . . . . . . . . . . 28
(p) Tax Returns. . . . . . . . . . . . . . . . . . . . . . . . 28
(q) Open Years . . . . . . . . . . . . . . . . . . . . . . . . 28
(r) Federal Adjustments. . . . . . . . . . . . . . . . . . . . 28
(s) State and Local Adjustments. . . . . . . . . . . . . . . . 28
(t) Investment Company . . . . . . . . . . . . . . . . . . . . 28
(u) Solvent. . . . . . . . . . . . . . . . . . . . . . . . . . 29
(v) Owned Real Property. . . . . . . . . . . . . . . . . . . . 29
(w) Leased Real Property . . . . . . . . . . . . . . . . . . . 29
(x) Investments. . . . . . . . . . . . . . . . . . . . . . . . 29
(y) Intellectual Property. . . . . . . . . . . . . . . . . . . 29
(z) Employment Arrangements. . . . . . . . . . . . . . . . . . 29
ARTICLE V - COVENANTS OF BORROWER . . . . . . . . . . . . . . . . . . . 30
SECTION 5.1. Affirmative Covenants . . . . . . . . . . . . . . . 30
(a) Compliance With Laws, Etc. . . . . . . . . . . . . . . . . 30
(b) Payment of Taxes, Etc. . . . . . . . . . . . . . . . . . . 30
(c) Compliance With Environmental Laws . . . . . . . . . . . . 30
(d) Maintenance of Insurance . . . . . . . . . . . . . . . . . 30
(e) Preservation of Corporate Existence, Etc.. . . . . . . . . 31
(f) Visitation Rights. . . . . . . . . . . . . . . . . . . . . 31
(g) Plan Contributions . . . . . . . . . . . . . . . . . . . . 31
ii
<PAGE>
PAGE
(h) Keeping of Books . . . . . . . . . . . . . . . . . . . . . 31
(i) Maintenance of Properties, Etc.. . . . . . . . . . . . . . 31
(j) Compliance With Terms of Leaseholds. . . . . . . . . . . . 31
(k) Transactions With Affiliates . . . . . . . . . . . . . . . 31
(l) Cash Concentration Accounts. . . . . . . . . . . . . . . . 31
(m) Additional Subsidiary Guaranties, Etc. . . . . . . . . . . 32
SECTION 5.2. Negative Covenants. . . . . . . . . . . . . . . . . 32
(a) Liens, Etc.. . . . . . . . . . . . . . . . . . . . . . . . 32
(b) Debt.. . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(c) Lease Obligations. . . . . . . . . . . . . . . . . . . . . 33
(d) Mergers, Etc.. . . . . . . . . . . . . . . . . . . . . . . 33
(e) Investments in Other Persons.. . . . . . . . . . . . . . . 34
(f) Dividends, Etc.. . . . . . . . . . . . . . . . . . . . . . 34
(g) Accounting Changes . . . . . . . . . . . . . . . . . . . . 35
(h) Prepayments, Etc. of Debt. . . . . . . . . . . . . . . . . 35
(i) Partnerships . . . . . . . . . . . . . . . . . . . . . . . 35
(j) Payments Pursuant to Plan of Reorganization. . . . . . . . 35
SECTION 5.3. Reporting Requirements. . . . . . . . . . . . . . . 35
(a) Default Notice . . . . . . . . . . . . . . . . . . . . . . 35
(b) Monthly Financials . . . . . . . . . . . . . . . . . . . . 35
(c) Quarterly Financials . . . . . . . . . . . . . . . . . . . 36
(d) Annual Financials. . . . . . . . . . . . . . . . . . . . . 36
(e) Annual Forecasts . . . . . . . . . . . . . . . . . . . . . 37
(f) ERISA Events . . . . . . . . . . . . . . . . . . . . . . . 37
(g) Plan Terminations. . . . . . . . . . . . . . . . . . . . . 37
(h) Plan Annual Reports. . . . . . . . . . . . . . . . . . . . 37
(i) Multiemployer Plan Notices . . . . . . . . . . . . . . . . 37
(j) Litigation . . . . . . . . . . . . . . . . . . . . . . . . 38
(k) Securities Reports . . . . . . . . . . . . . . . . . . . . 38
(l) Creditor Reports . . . . . . . . . . . . . . . . . . . . . 38
(m) Agreement Notices. . . . . . . . . . . . . . . . . . . . . 38
(n) Environmental Conditions . . . . . . . . . . . . . . . . . 38
(o) Change of Control Notice . . . . . . . . . . . . . . . . . 38
(p) Other Information. . . . . . . . . . . . . . . . . . . . . 39
SECTION 5.4. Financial Covenants . . . . . . . . . . . . . . . . 39
(a) Working Capital. . . . . . . . . . . . . . . . . . . . . . 39
(b) Fixed Charge Coverage Ratio. . . . . . . . . . . . . . . . 39
(c) Capital Expenditures . . . . . . . . . . . . . . . . . . . 39
(d) Leverage Ratio . . . . . . . . . . . . . . . . . . . . . . 40
(e) Calculation. . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE VI - EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . 40
SECTION 6.1. Events of Default . . . . . . . . . . . . . . . . . 40
iii
<PAGE>
PAGE
(a) Payment. . . . . . . . . . . . . . . . . . . . . . . . . . 40
(b) Representations and Warranties . . . . . . . . . . . . . . 40
(c) Certain Covenants. . . . . . . . . . . . . . . . . . . . . 40
(d) Covenants. . . . . . . . . . . . . . . . . . . . . . . . . 41
(e) Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
(f) Insolvency . . . . . . . . . . . . . . . . . . . . . . . . 41
(g) Monetary Judgments . . . . . . . . . . . . . . . . . . . . 42
(h) Non-monetary Judgments . . . . . . . . . . . . . . . . . . 42
(i) Loan Documents . . . . . . . . . . . . . . . . . . . . . . 42
(j) Collateral Documents . . . . . . . . . . . . . . . . . . . 42
(k) ERISA Events . . . . . . . . . . . . . . . . . . . . . . . 42
(l) Withdrawal Liability . . . . . . . . . . . . . . . . . . . 42
(m) Multiemployer Plans. . . . . . . . . . . . . . . . . . . . 42
ARTICLE VII - AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 7.1. Authorization and Action. . . . . . . . . . . . . . 43
SECTION 7.2. Agent's Reliance, Etc.. . . . . . . . . . . . . . . 43
SECTION 7.3. Foothill and Affiliates . . . . . . . . . . . . . . 44
SECTION 7.4. Lender Credit Decision. . . . . . . . . . . . . . . 44
SECTION 7.5. Indemnification . . . . . . . . . . . . . . . . . . 44
SECTION 7.6. Successor Agents. . . . . . . . . . . . . . . . . . 45
SECTION 7.7. Co-Agent. . . . . . . . . . . . . . . . . . . . . . 45
SECTION 7.8. Reports Prepared by Agent . . . . . . . . . . . . . 45
ARTICLE VIII - MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . 46
SECTION 8.1. Amendments, Etc.. . . . . . . . . . . . . . . . . . 46
SECTION 8.2. Notices, Etc. . . . . . . . . . . . . . . . . . . . 46
SECTION 8.3. No Waiver; Remedies.. . . . . . . . . . . . . . . . 46
SECTION 8.4. Costs and Expenses. . . . . . . . . . . . . . . . . 47
SECTION 8.5. Right of Set-off. . . . . . . . . . . . . . . . . . 47
SECTION 8.6. Binding Effect. . . . . . . . . . . . . . . . . . . 47
SECTION 8.7. Assignments and Participations. . . . . . . . . . . 47
(a) Assignments. . . . . . . . . . . . . . . . . . . . . . . . 47
(b) Effect of Assignment . . . . . . . . . . . . . . . . . . . 48
(c) Register . . . . . . . . . . . . . . . . . . . . . . . . . 48
(d) Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . 49
(e) Participation. . . . . . . . . . . . . . . . . . . . . . . 49
(f) Disclosure . . . . . . . . . . . . . . . . . . . . . . . . 49
(g) Assignment to Federal Reserve Board. . . . . . . . . . . . 50
(h) Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 8.8. Headings. . . . . . . . . . . . . . . . . . . . . . 50
SECTION 8.9. Consent to Jurisdiction . . . . . . . . . . . . . . 50
(a) Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . 50
iv
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Page
(b) Legal Process. . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 8.10. Confidentiality. . . . . . . . . . . . . . . . . . 50
SECTION 8.11. Severability . . . . . . . . . . . . . . . . . . . 51
SECTION 8.12. GOVERNING LAW. . . . . . . . . . . . . . . . . . . 51
SECTION 8.13. Execution in Counterparts. . . . . . . . . . . . . 51
LIST OF EXHIBITS
Exhibit A -- Form of Note
Exhibit B -- Form of Security Agreement
Exhibit C -- Form of Confirmation and Grant of Security Interest in
Trademarks
Exhibit D -- Form of Guaranty
Exhibit E -- Form of Compliance Certificate
Exhibit F -- Form of Assignment and Acceptance
Exhibit G -- Form of Release Agreement
Exhibit H -- Form of Warrant Agreement
LIST OF SCHEDULES
Schedule 1.1 -- List of Lenders
Schedule 3.1(c) -- Evidence of Insurance
Schedule 4.1(b) -- List of Subsidiaries
Schedule 4.1(d) -- List of Authorizations, Approvals and
Notices
Schedule 4.1(f) -- List of Litigation
Schedule 4.1(q) -- List of Open Tax Years
Schedule 4.1(r) -- List of Unpaid Proposed Federal
Adjustments to Open Years
Schedule 4.1(s) -- List of Unpaid Proposed State, Local and
Foreign Adjustments to Open Years
Schedule 4.1(v) -- List of Owned Real Property
Schedule 4.1(w) -- List of Leased Real Property
Schedule 4.1(x) -- List of Existing Investments
Schedule 4.1(y) -- List of Patents, Trademarks, Trade
Names, Service Marks and Copyrights
Schedule 4.1(z) -- List of Employment Agreements, Executive
Compensation Arrangements and Agreements
Relating to Voting or Disposition of
Stock
Schedule 5.2(b) -- List of Existing Debt
Schedule 5.2(c) -- List of Existing Liens
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TERM LOAN AGREEMENT, dated as of November 4, 1996 (this "AGREEMENT"),
among DEP CORPORATION, a Delaware corporation ("BORROWER"), the lenders
("LENDERS") listed on the signature pages hereof, CITY NATIONAL BANK, as
co-agent (the "CO-AGENT") for Lenders (as hereinafter defined) hereunder, and
FOOTHILL CAPITAL CORPORATION ("FOOTHILL"), as Agent ("AGENT") for Lenders. As
used herein, the term "Lenders" includes Lenders listed on the signature pages
hereof and/or their predecessors in interest, as the context may require.
PRELIMINARY STATEMENTS:
(1) Pursuant to the Asset Purchase Agreement, dated as of July 9,
1993, between Borrower and S.C. Johnson & Son, Inc. (the "SELLER"), Borrower
acquired the Agree and Halsa product lines and certain assets relating thereto
from the Seller (the "ACQUISITION").
(2) In connection with the Acquisition, Lenders made a term loan of
$45,000,000 to Borrower in order to pay to the Seller the cash consideration for
the Acquisition.
(3) In connection with the Acquisition, Lenders also made available
to Borrower up to $35,000,000 of credit on a fully revolving basis to pay the
transaction fees and expenses related to the Acquisition, to refinance the
Obligations of Borrower existing on the Closing Date under or pursuant to the
Revolving Credit Agreement dated as of November 30, 1990, as amended among
Borrower, Citibank and City National Bank as lenders, and Citibank, N.A. as
agent for such lenders, and to provide working capital for Borrower and its
Subsidiaries.
(4) On April 1, 1996 (the "PETITION DATE"), Borrower filed for
protection under Chapter 11 of the Bankruptcy Code;
(5) This Agreement is made pursuant to a Plan of Reorganization (the
"PLAN OF REORGANIZATION") which has been approved pursuant to Chapter 11 of the
Bankruptcy Code. The Plan of Reorganization (including the terms defined
therein) is incorporated herein by this reference as if fully set forth herein.
(6) Pursuant to the Plan of Reorganization, the Allowed Claims of
Lenders are classified in Class 1.
(7) Pursuant to the Plan of Reorganization, the following shall be
added to the principal balance of loans under the Bank Credit Agreement (as
defined in the Plan of Reorganization): (i) the Professional Fee Amount; and
(ii) all but $150,000 of the Allowed Class 1 506(b) Postpetition Interest Claims
(as defined in the Plan Reorganization) which is referred to herein as the
"LENDER EFFECTIVE DATE ALLOWED CLAIM."
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(8) Conditioned upon the occurrence of the Effective Date (as defined
in the Plan of Reorganization), the terms of the Plan of Reorganization and this
Agreement are binding on Borrower and Lenders.
(9) This Agreement is subject to the terms of the Plan of
Reorganization, and in the event of any inconsistency between this Agreement and
the Plan of Reorganization, the Plan of Reorganization shall control.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, it is hereby provided as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1. CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"ACQUISITION" has the meaning specified in Preliminary Statement (1).
"ACQUISITION DOCUMENTS" means the final documentation relating to the
Acquisition.
"ADVANCE" has the meaning specified in Section 2.1.
"AFFILIATE" means, as to any Person, any other Person that, directly
or indirectly, controls, is controlled by or is under common control with such
Person or is a director or officer of such Person. For purposes of this
definition, the term "control" (including the terms "controlling," "controlled
by" and "under common control with") of a Person means the possession, direct or
indirect, of the power to vote 5% or more of the Voting Stock of such Person or
to direct or cause the direction of the management and policies of such Person,
whether through the ownership of Voting Stock, by contract or otherwise.
"AGENT" has the meaning specified in the Plan of Reorganization.
"AGENT'S ACCOUNT" means the account maintained by the Agent with Chase
Manhattan, 4 New York Plaza, New York, New York 10004, ABA 021000021, Credit
Foothill Capital Corporation, Acct. No. 323-266193 (re: DEP Corporation) or
such other deposit account as Agent may from time to time specify in writing to
Borrower and Lenders.
"AGREEMENT" has the meaning provided in the first paragraph of this
Agreement.
"ALLOWED CLAIM" has the meaning specified in the Plan of
Reorganization.
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"ALLOWED CLASS 1 506(b) POSTPETITION INTEREST CLAIMS" has the meaning
specified in the Plan of Reorganization.
"ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance entered
into by a Lender and an Eligible Assignee, and accepted by Agent, in accordance
with Section 8.7 and in substantially the form of Exhibit F hereto.
"BANKRUPTCY CODE" means Title 11 of the United States Code, as now or
hereafter in effect, or any successor statute.
"BORROWER" has the meaning specified in the recital of parties to this
Agreement.
"BUSINESS DAY" means a day of the year on which banks are not required
or authorized to close in New York City.
"CAPITAL EXPENDITURES" means, for any period, all expenditures during
such period for equipment, fixed assets, real property or improvements, or for
replacements or substitutions therefor or additions thereto, that have a useful
life of more than one year.
"CAPITALIZED LEASES" of any Person means all obligations of such
Person as lessee under Leases that have been or should be, in accordance with
GAAP, recorded as Capital Leases.
"CASH EQUIVALENTS" means any of the following, to the extent owned by
Borrower free and clear of all Liens (other than Permitted Liens) and having a
maturity of not greater than 90 days from the date of issuance thereof: (a)
readily marketable direct obligations of the Government of the United States or
any agency or instrumentality thereof or obligations unconditionally guaranteed
by the full faith and credit of the Government of the United States, (b) insured
certificates of deposit of or time deposits with any commercial bank that is a
Lender or a member of the Federal Reserve System, issues (or the parent of which
issues) commercial paper rated as described in clause (c), is organized under
the laws of the United States or any State thereof and has combined capital and
surplus of at least $1 billion, (c) commercial paper in an aggregate amount of
no more than $500,000 per issuer outstanding at any time, issued by any
corporation organized under the laws of any State of the United States and rated
at least "Prime-1" (or the then equivalent grade) by Moody's Investors Services,
Inc. or "A-1" (or the then equivalent grade) by Standard & Poor's Corporation,
or (d) interests in mutual funds or money market funds which invest exclusively
in the obligations described in clauses (a) through (c) above (without regard to
the per issuer limitation).
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980.
"CHANGE OF CONTROL" means the occurrence of (i) any Person or two or
more Persons acting in concert shall have acquired (by an acquisition approved
by the board of
3
<PAGE>
directors of Borrower) beneficial ownership (within the meaning of Rule 13d-3 of
the Securities and Exchange Commission under the Securities and Exchange Act of
1934), directly or indirectly, of common stock of Borrower (or other securities
convertible into such common stock) representing 26% or more of the combined
voting power of all common stock of Borrower, (ii) at any time, Robert Berglass
and his Affiliates shall collectively own beneficially (including having the
right to vote) less than 26% of the combined voting power of all common stock of
Borrower or (iii) at any time, the majority of the board of directors of
Borrower is not comprised of `Continuing Directors', which term shall mean those
individuals who on the Effective Date were directors of Borrower and those
individuals subsequently elected or appointed whose election or appointment was
recommended or approved by a majority of the Continuing Directors.
"CHASE MANHATTAN" means The Chase Manhattan Bank and its successors.
"CLASS 1 WARRANTS" has the meaning specified in the Plan of
Reorganization.
"CLOSING DATE" means August 6, 1993.
"COLLATERAL" means all "Collateral" referred to in the Collateral
Documents and all other property that is subject to any Lien granted from time
to time in favor of Agent for the benefit of Lenders to secure payment of any of
the Obligations under the Loan Documents.
"COLLATERAL DOCUMENTS" means the Security Agreement, the Confirmation
and Grant of Security Interest in Trademarks, and all other agreements or
instruments delivered to Agent for the benefit of Lenders from time to time to
secure payment of any of the Obligations under the Loan Documents, in each case
as amended, supplemented or otherwise modified from time to time.
"CONFIDENTIAL INFORMATION" means information that Borrower furnishes
to Agent or any Lender on a confidential basis, but does not include any such
information that is or becomes generally available to the public (other than
information that is or becomes available to the public as a result of disclosure
by Agent or any Lender in violation of Section 8.10) or that is or becomes
available to Agent or such Lender from a source other than Borrower or any agent
of Borrower.
"CONFIRMATION AND GRANT OF SECURITY INTEREST IN TRADEMARKS" means a
confirmation and grant of security interest in trademarks from a Grantor in
favor of Agent for the benefit of Lenders in substantially the form of Exhibit
C.
"CONSOLIDATED" refers to the consolidation of accounts in accordance
with GAAP.
"CONSOLIDATED NET WORTH" means, as of any date of determination, all
amounts which would in conformity with GAAP be included under stockholders'
equity in a Consolidated balance sheet of Borrower and its Subsidiaries as of
such date, minus (to the
<PAGE>
extent not otherwise deducted in accordance with GAAP) the carrying value of (a)
treasury stock and capital stock, intercompany obligations or other securities
of, or capital contributions to or investments in, any Subsidiary and (b) any
write-up in the book value of an asset resulting from any revaluation thereof
after July 31, 1996.
"CONSOLIDATED TOTAL LIABILITIES" means all obligations (including
without limitation all Debt) of Borrower and its Subsidiaries which in
accordance with GAAP would be included in determining total liabilities on a
Consolidated balance sheet of Borrower and its Subsidiaries.
"CURRENT ASSETS" of any Person means all assets of such Person that
would, in accordance with GAAP, be classified as current assets of a company
conducting a business the same as or similar to that of such Person, after
deducting adequate reserves in each case in which a reserve is proper in
accordance with GAAP.
"CURRENT LIABILITIES" of any person means all items (including taxes
accrued as estimated) that in accordance with GAAP would be classified as
current liabilities of such Person, EXCLUDING, HOWEVER, all amounts of Funded
Debt of such Person required to be paid or prepaid within one year after the
date of determination.
"DEBT" of any Person means, without duplication, (a) all indebtedness
of such Person for borrowed money; (b) all Obligations of such Person for the
deferred purchase price of property or services (other than trade payables that
are incurred in the ordinary course of such Person's business); (c) all
Obligations of such Person evidenced by notes, bonds, debentures or other
similar instruments; (d) all Obligations of such Person 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 Capitalized Leases of such Person; (f) all
Obligations, contingent or otherwise, of such Person under acceptance, letter of
credit or similar facilities; (g) all Obligations of such Person to purchase,
redeem, retire, defease or otherwise make any payment in respect of any capital
stock of or other ownership or profit interest in such Person or any other
Person or any warrants, rights or options to acquire such capital stock, valued,
in the case of Redeemable Preferred Stock, at the greater of its voluntary or
involuntary liquidation preference plus accrued and unpaid dividends; (h) all
Debt of others referred to in clauses (a) through (g) above guaranteed directly
or indirectly in any manner by such Person, or in effect guaranteed directly or
indirectly by such Person through an agreement (i) to pay or purchase such Debt
or to advance or supply funds for the payment or purchase of such Debt, (ii) to
purchase, sell or lease (as lessee or lessor) property, or to purchase or sell
services, primarily for the purpose of enabling the debtor to make payment of
such Debt or to assure the holder of such Debt against loss, (iii) to supply
funds to or in any other manner invest in the debtor (including any agreement to
pay for property or services irrespective of whether such property is received
or such services are rendered), or (iv) otherwise to assure a creditor against
loss; and (i) all Debt referred to in clauses (a) through (g) above secured by
(or for which the holder of such Debt has an existing right, contingent or
otherwise, to be secured by) any Lien on property
5
<PAGE>
(including, without limitation, accounts and contract rights) owned by such
Person, even though such Person has not assumed or become liable for the payment
of such Debt; PROVIDED, HOWEVER, that in the case of Borrower and its
Subsidiaries, Debt shall not include any indebtedness owed by any Subsidiary of
Borrower to Borrower or by Borrower to any Subsidiary of Borrower, PROVIDED that
if any such indebtedness is evidenced by a document or instrument, the same is
pledged pursuant to the appropriate Security Agreement and, if not so evidenced,
is at its creation effectively pledged (by book entry, notation or otherwise) to
Agent.
"DEP COMMON STOCK" means the Common Stock, par value $0.01, of
Borrower, after giving effect to the Plan of Reorganization.
"DEFAULT" means any Event of Default or any event that would
constitute an Event of Default but for the requirement that notice be given or
time elapse or both.
"DEFAULTED AMOUNT" means, with respect to any Lender at any time, any
amount required to be paid by such Lender to Agent or any other Lender hereunder
or under any other Loan Document at or prior to such time which has not been so
paid as of such time, including, without limitation, any amount required to be
paid by such Lender to (a) any other Lender pursuant to Section 2.9 to purchase
any participation in Advances owing to such other Lender and (b) Agent pursuant
to Section 7.5 to reimburse Agent for such Lender's ratable share of any amount
required to be paid by Lenders to Agent as provided therein.
"DEFAULTING LENDER" means, at any time, any Lender that, at such time,
(a) owes a Defaulted Amount or (b) shall take or be the subject of any action or
proceeding of a type described in Section 6.1(f).
"DISCLOSED LITIGATION" has the meaning specified in Section 4.1(f).
"DOMESTIC LENDING OFFICE" means, with respect to any Lender, the
office of such Lender situated in the United States of America which it
specifies as its "Domestic Lending Office" opposite its name on Schedule 1.1
hereto or in the Assignment and Acceptance pursuant to which it became a Lender,
or such other office of such Lender situated in the United States of America as
such Lender may from time to time specify to Borrower and Agent.
"EBITDA" means, for any period, net income (or net loss) PLUS the sum
of (a) interest expense, (b) income tax expense (or credit), (c) depreciation
expense, and (d) amortization expense, in each case determined in accordance
with GAAP for such period.
"EFFECTIVE DATE" means the date the Plan of Reorganization became or
becomes effective in accordance with the Plan of Reorganization.
"ELIGIBLE ASSIGNEE" means (a) any Lender, (b) any Affiliate of any
Lender, and (c) any other bank or other financial institution approved in
writing by Borrower and Agent as
6
<PAGE>
an Eligible Assignee for purposes of this Agreement, PROVIDED that Borrower's
approval shall not be unreasonably withheld.
"ENVIRONMENTAL ACTION" means any administrative, regulatory or
judicial action, suit, demand, demand letter, claim, notice of non-compliance or
violation, investigation, proceeding, consent order or consent agreement
relating in any way to any Environmental Law or any Environmental Permit
including, without limitation, (a) any claim by any governmental or regulatory
authority for enforcement, cleanup, removal, response, remedial or other actions
or damages pursuant to any Environmental Law and (b) any claim by any third
party seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from Hazardous Materials or arising
from alleged injury or threat of injury to health, safety or the environment.
"ENVIRONMENTAL LAW" means any federal, state or local law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award
relating to the environment, health, safety or Hazardous Materials, including,
without limitation, CERCLA, the Resource Conservation and Recovery Act, the
Hazardous Materials Transportation Act, the Clean Water Act, the Toxic
Substances Control Act, the Clean Air Act, the Safe Drinking Water Act, the
Atomic Energy Act, the Federal Insecticide, Fungicide and Rodenticide Act and
the Occupational Safety and Health Act.
"ENVIRONMENTAL PERMIT" means any permit, approval, identification
number, license or other authorization required under any Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"ERISA AFFILIATE" of any Person means any other Person that for
purposes of Title IV of ERISA is a member of such Person's controlled group, or
under common control with such Person, within the meaning of Section 414 of the
Internal Revenue Code.
"ERISA EVENT" with respect to any Person means (a) the occurrence of a
reportable event, within the meaning of Section 4043 of ERISA, with respect to
any Plan of such Person or any of its ERISA Affiliates unless the 30-day notice
requirement with respect to such event has been waived by the PBGC; (b) the
provision by the administrator of any Plan of such Person or any of its ERISA
Affiliates of a notice of intent to terminate such Plan, pursuant to Section
4041(a)(2) of ERISA (including any such notice with respect to a plan amendment
referred to in Section 4041(e) of ERISA); (c) the cessation of operations at a
facility of such Person or any of its ERISA Affiliates in the circumstances
described in Section 4062(e) of ERISA; (d) the withdrawal by such Person or any
of its ERISA Affiliates from a Multiple Employer Plan during a plan year for
which it was a substantial employer, as defined in Section 4001(a)(2) of ERISA;
(e) the failure by such Person or any of its ERISA Affiliates to make a payment
to a Plan required under Section 302(f)(1) of ERISA; (f) the adoption of an
amendment to a Plan of such Person or any of its ERISA Affiliates requiring the
provision of security to such Plan, pursuant to Section 307 of ERISA; or (g) the
institution by the PBGC of
7
<PAGE>
proceedings to terminate Plan of such Person or any of its ERISA Affiliates,
pursuant to Section 4042 of ERISA, or the occurrence of any event or condition
described in Section 4042 of ERISA that could constitute grounds for the
termination of, or the appointment of a trustee to administer, such Plan.
"EVENTS OF DEFAULT" has the meaning specified in Section 6.1.
"EXISTING DEBT" means Debt of Borrower and its Subsidiaries
outstanding immediately before the Effective Date and listed on Schedule 5.2(b)
or provided for by the Plan of Reorganization.
"EXISTING LIENS" means Liens on the assets of Borrower and its
Subsidiaries existing immediately prior to the Effective Date and listed on
Schedule 5.2(c) or provided for by the Plan of Reorganization.
"FEDERAL FUNDS RATE" means, for any period, a fluctuating interest
rate per annum equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day that is a Business Day, the average of the quotations for such day for such
transactions received by Agent from three Federal funds brokers of recognized
standing selected by it.
"FOOTHILL" has the meaning specified in the recital of parties to this
Agreement.
"FUNDED DEBT" of any Person means Debt of such Person that by its
terms matures more than one year after the date of creation or determination or
matures within one year from such date but is renewable or extendible, at the
option of such Person, to a date more than one year after such date or arises
under a revolving credit or similar agreement that obligates the lender or
lenders to extend credit during a period of more than one year after such date,
including, without limitation, all amounts of Funded Debt of such Person
required to be paid or prepaid within one year after the date of determination
and including, in the case of Borrower, Debt under the Notes.
"GAAP" has the meaning specified in Section 1.3.
"GRANTOR" means any Person who from time to time executes a Collateral
Document, or any Person who from time to time grants a Lien in favor of Agent
for the benefit of Lenders to secure payment of any of the Obligations under the
Loan Documents.
"GUARANTY" means the guaranty of payment in favor of Agent for the
benefit of Lenders in substantially the form of Exhibit D.
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"HAZARDOUS MATERIALS" means (a) petroleum or petroleum products,
natural or synthetic gas, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation and radon gas, (b) any substances defined as
or included in the definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "extremely hazardous wastes," "restricted hazardous
wastes," "toxic substances," "toxic pollutants," "contaminants" or "pollutants,"
or words of similar import, under any Environmental Law and (c) any other
substance exposure to which is regulated under any Environmental Law.
"INSUFFICIENCY" means, with respect to any Plan, the amount, if any,
of its unfunded benefit liabilities, as defined in Section 4001(a)(18) of ERISA.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"INVESTMENT" in any Person means any loan or advance to such Person,
any purchase or other acquisition of any capital stock, warrants, rights,
options, obligations or other securities of such Person, any capital
contribution to such Person or any other investment in such Person, including,
without limitation, any arrangement pursuant to which the investor incurs Debt
of the types referred to in clauses (h) and (i) of the definition of "Debt" in
respect of such Person, but excluding (i) loans or advances on account of trade
credit given in the ordinary course of Borrower's business and (ii) lease
payments or other expenditures incurred in the ordinary course of Borrower's
business or expenditures which would be considered ordinary course expenditures
by the standards or trade customs of the industry in which Borrower operates.
"LENDER EFFECTIVE DATE ALLOWED CLAIM" has the meaning specified in the
recital of the parties.
"LENDERS" has the meaning specified in the first paragraph of this
Agreement.
"LIEN" means any lien, security interest or other charge or
encumbrance of any kind, or any other type of preferential arrangement,
including, without limitation, the lien or retained security title of a
conditional vendor and any easement, right of way or other encumbrance on title
to real property.
"LOAN DOCUMENTS" means this Agreement, the Notes, the Guaranty, and
the Collateral Documents.
"LOCKBOX ACCOUNT" has the meaning specified in the Security Agreement.
"MARGIN STOCK" has the meaning specified in Regulation G and
Regulation U.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
business, condition (financial or otherwise), operations, performance,
properties or prospects of Borrower and its Subsidiaries, taken as a whole, (b)
the rights and remedies of Agent or any
9
<PAGE>
Lender under any Loan Document or (c) the ability of Borrower to perform its
Obligations under any Loan Document to which it is or is to be a party.
"MULTIEMPLOYER PLAN" of any Person means a multiemployer plan, as
defined in Section 4001(a)(3) of ERISA, to which such Person or any of its ERISA
Affiliates is making or accruing an obligation to make contributions, or has
within any of the preceding five plan years made or accrued an obligation to
make contributions.
"MULTIPLE EMPLOYER PLAN" of any Person means a single employer plan,
as defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees
of such Person or any of its ERISA Affiliates and at least one Person other than
such Person and its ERISA Affiliates or (b) was so maintained and in respect of
which such Person or any of its ERISA Affiliates could have liability under
Section 4064 or 4069 of ERISA in the event such plan has been or were to be
terminated.
"NET CASH PROCEEDS" means, with respect to any sale, lease, transfer
or other disposition of any asset or the sale or issuance of any Debt or capital
stock, any securities convertible into or exchangeable for capital stock or any
warrants, rights or options to acquire capital stock by any Person, the
aggregate amount of cash received from time to time by or on behalf of such
Person in connection with such transaction after deducting therefrom only (a)
reasonable and customary brokerage commissions, underwriting fees and discounts,
legal fees, finder's fees and other similar fees and commissions; (b) the amount
of taxes payable in connection with or as a result of such transaction; (c) all
other reasonable out-of-pocket expenses incurred in connection with or as a
result of such transaction; and (d) the amount of any Debt (excluding
intercompany Debt) that is secured by a Lien on such asset which, by the terms
of such transaction, is required to be repaid upon such disposition or that
would, if secured by a Lien, create with such a Lien a "purchase money security
interest" within the meaning of Section 9107 of the California Uniform
Commercial Code, in each case to the extent, but only to the extent, that the
amounts so deducted are, at the time of receipt of such cash, actually paid to a
Person that is not an Affiliate and are properly attributable to such
transaction or to the asset that is the subject thereof.
"NOTE" means a promissory note of Borrower payable to the order of any
Lender, in substantially the form of Exhibit A hereto, evidencing the
indebtedness of Borrower to such Lender resulting from the Advance of such
Lender.
"OBLIGATION" means, with respect to any Person, any obligation of such
Person of any kind, including, without limitation, any liability of such Person
on any claim, whether or not the right of any creditor to payment in respect of
such claim is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, disputed, undisputed, legal, equitable, secured or unsecured, and
whether or not such claim is discharged, stayed or otherwise affected by any
proceeding referred to in Section 6.1(f). Without limiting the generality of
the foregoing, the Obligations of Borrower under the Loan Documents include (a)
the obligation to pay principal, interest, charges, expenses, fees, attorneys'
fees and disbursements, indemnities and other amounts payable by Borrower under
any Loan Document and (b) the
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obligation to reimburse any amount in respect of any of the foregoing that any
Lender, in its sole discretion, may elect to pay or advance on behalf of
Borrower.
"OPEN YEAR" has the meaning specified in Section 4.1(q).
"OTHER TAXES" has the meaning specified in Section 2.8(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any
successor.
"PERMITTED LIENS" means the following:
(i) Liens for taxes, assessments and governmental charges or
levies which are not yet due and payable or which may be paid after the due
date without penalty or which are being contested in good faith through
appropriate proceedings, provided however, that Borrower shall have set
aside adequate reserves in accordance with GAAP with respect to any
contested tax, assessment or charge;
(ii) Liens imposed by law, such as materialmen's, mechanics',
carriers', workmen's and repairmen's Liens and other similar Liens arising
in the ordinary course of business securing obligations which are not
overdue for a period of more than 60 days or which are being contested in
good faith through appropriate actions, provided, however, that Borrower
shall have set aside adequate reserves in accordance with GAAP with respect
to such contested obligations;
(iii) Liens arising from judgment or awards which do not
create an Event of Default pursuant to Section 6.1(g) or 6.1(h) or with
respect to which Borrower has obtained a stay of execution pending appeal,
provided, however, that Borrower shall have posted a bond which satisfies
the legal requirements applicable to such appeal, and provided, further,
that Borrower shall have set aside adequate reserves in accordance with
GAAP with respect to such contested judgment or award;
(iv) pledges or deposits to secure obligations under workers'
compensation laws or similar legislation or to secure public or statutory
obligations;
(v) Existing Liens;
(vi) Liens created by the Loan Documents or in favor of Agent in
connection therewith;
(vii) purchase money Liens upon or in property acquired or
held by Borrower or any of its Subsidiaries in the ordinary course of
business to secure the purchase price of such property or to secure Debt
incurred solely for the purpose of financing the acquisition, construction
or improvement of any such property to be subject to such Liens, or Liens
existing on any such property at the time of acquisition, or extensions,
renewals or replacements of any of the foregoing for the same or a lesser
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amount; provided, however, that no such Lien shall extend to or cover any
property other than the property being acquired, constructed or improved,
and no such extension, renewal or replacement shall extend to or cover any
property not theretofore subject to the Lien being extended, renewed or
replaced; and provided, further, that the aggregate principal amount of
Debt of Borrower and its Subsidiaries on a Consolidated basis secured by
Liens permitted by this clause (vii) shall not exceed $2,200,000 at any
time outstanding and that any such Debt shall not otherwise be prohibited
by the terms of the Loan Documents;
(viii) Liens arising in connection with Capitalized Leases in
an aggregate principal amount for Borrower and its Subsidiaries on a
Consolidated basis not to exceed $2,000,000 at any time outstanding; and
(ix) the replacement, extension or renewal of any Lien permitted
by clauses (v) through (viii) above upon or in the same property
theretofore subject thereto or the replacement, extension or renewal
(without increase in the amount or change in any direct or contingent
obligor) of the Debt secured thereby.
"PERSON" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture or other entity, or a government or any political subdivision or agency
thereof.
"PLAN" means a Single Employer Plan or a Multiple Employer Plan.
"PLAN OF REORGANIZATION" has the meaning specified in Preliminary
Statement (5).
"PREFERRED STOCK" means, with respect to any corporation, capital
stock issued by such corporation that is entitled to a preference or priority
over any other capital stock issued by such corporation upon any distribution of
such corporation's assets, whether by dividend or upon liquidation.
"PRIME RATE" means the "prime rate" as published from time to time in
THE WALL STREET JOURNAL, national edition, representing the base rate for
corporate loans, as reflected therein.
"PRINCIPAL SUBSIDIARY" means any Subsidiary of Borrower whose total
assets constitute over 5% of the Consolidated total assets of Borrower and its
Subsidiaries at such time; and "Principal Subsidiaries" means all of such
corporations and Subsidiaries.
"PROFESSIONAL FEE AMOUNT" means $975,000.
"REDEEMABLE" means, with respect to any capital stock, Debt or other
right or Obligation, any such right or Obligation that (a) the issuer has
undertaken to redeem at a fixed or determinable date or dates, whether by
operation of a sinking fund or otherwise, or upon
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the occurrence of a condition not solely within the control of the issuer or
(b) is redeemable at the option of the holder.
"REGISTER" has the meaning specified in Section 8.7(c).
"REGULATION G" and "REGULATION U" mean Regulation G and Regulation U,
respectively, of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"REORGANIZATION EXPENSES" means expenses incurred by Borrower in
connection with its proceeding under the Bankruptcy Code and the Plan of
Reorganization.
"REQUIRED LENDERS" means at any time Lenders owed or holding more than
50% of the aggregate principal amount of the Advances outstanding at such time;
provided, however, if any Lender shall be a Defaulting Lender at such time,
there shall be excluded from the determination of Required Lenders at such time
the aggregate principal amount of the Advances made by such Lender and
outstanding at such time.
"SECURITY AGREEMENT" means a security agreement granting Liens on
Collateral consisting of personal property and fixtures executed by a Grantor in
favor of Agent for the benefit of Lenders in substantially the form, in the case
of Borrower, of Exhibit B.
"SELLER" has the meaning specified in Preliminary Statement (1).
"SELLER LITIGATION" means any civil action or other proceeding brought
by Borrower or any of its Subsidiaries against the Seller, whether arising under
the Bankruptcy Code or otherwise, relating to the Acquisition or the assets and
liabilities acquired or assumed by Borrower in connection therewith.
"SINGLE EMPLOYER PLAN" of any Person means a single employer plan, as
defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees of
such Person or any of its ERISA Affiliates and no Person other than such Person
and its ERISA Affiliates or (b) was so maintained and in respect of which such
Person or any of its ERISA Affiliates could have liability under Section 4069 of
ERISA in the event such plan has been or were to be terminated.
"SOLVENT" and "SOLVENCY" mean, with respect to any Person on a
particular date, that on such date (a) the value of the property of such Person
at fair valuation is greater than the debts of such Person at fair valuation,
(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 probable 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 business or a transaction, and is not about to engage
in business or a transaction, for which such Person's property would constitute
an unreasonably small capital.
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"SUBORDINATED DEBT" means any Debt of Borrower that is subordinated to
the Obligations of Borrower under the Loan Documents on, and that otherwise
contains, terms and conditions satisfactory to the Required Lenders.
"SUBSIDIARY" of any Person means any corporation, partnership, joint
venture, trust or estate of which (or in which) more than 50% of (a) the issued
and outstanding capital stock having ordinary voting power to elect a majority
of the Board of Directors of such corporation (irrespective of whether at the
time capital stock of any other class or classes of such corporation shall or
might have voting power upon the occurrence of any contingency), (b) the
aggregate general partners' or joint venturers' interest in the capital or
profits of such partnership or joint venture or (c) the controlling interest, by
contract or otherwise, in such trust or estate, is at the time directly or
indirectly owned or controlled by such Person, by such Person and one or more of
its other Subsidiaries or by one or more of such Person's other Subsidiaries.
"TAXES" has the meaning specified in Section 2.8(a).
"TERMINATION DATE" means the date of the repayment in full of all
amounts due hereunder.
"VOTING STOCK" means capital stock issued by a corporation, or
equivalent interests in any other Person, the holders of which are ordinarily,
in the absence of contingencies, entitled to vote for the election of directors
(or persons performing similar functions) of such Person, even though the right
so to vote has been suspended by the happening of such a contingency.
"WITHDRAWAL LIABILITY" has the meaning specified in Part I of Subtitle
E of Title IV of ERISA.
SECTION 1.2. COMPUTATION OF TIME PERIODS. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
mean "to but excluding".
SECTION 1.3. ACCOUNTING TERMS. All accounting terms not specifically
defined herein shall be construed in accordance with generally accepted
accounting principles ("GAAP").
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.1. THE ADVANCES. On the Effective Date, an amount equal to
the Lender Effective Date Allowed Claim shall be deemed to constitute an advance
(an "ADVANCE") hereunder.
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SECTION 2.2. REPAYMENT. Borrower shall repay to Agent for the
ratable account of Lenders the aggregate outstanding principal amount of the
Advances (as of the Effective Date) as follows:
(a) MONTHLY PRINCIPAL PAYMENTS. Borrower shall make twelve
monthly principal payments in an amount equal to one-twelfth of the
Professional Fee Amount. These monthly payments shall be made on the first
day of the first calendar month following the Effective Date and on the
first day of each of the subsequent eleven calendar months thereafter.
(b) QUARTERLY PRINCIPAL PAYMENTS. In addition to the principal
payments required pursuant to Section 2.2(a), Borrower shall make quarterly
principal payments in accordance with the following table:
PAYMENT DATE PRINCIPAL AMOUNT
----------------------------------------------- ----------------
Later of Effective Date or September 30, 1996 $ 100,000
December 31, 1996 $ 100,000
March 31, 1997 $ 100,000
June 30, 1997 $ 100,000
September 30, 1997 $ 350,000
December 31, 1997 $ 350,000
March 31, 1998 $ 350,000
June 30, 1998 $ 350,000
September 30, 1998 $ 750,000
December 31, 1998 $ 750,000
March 31, 1999 $1,000,000
June 30, 1999 $1,000,000
September 30, 1999 $1,250,000
December 31, 1999 $1,250,000
March 31, 2000 $1,250,000
June 30, 2000 $1,500,000
September 30, 2000 $1,500,000
December 31, 2000 $1,750,000
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PAYMENT DATE PRINCIPAL AMOUNT
----------------------------------------------- ----------------
March 31, 2001 $1,750,000
June 30, 2001 $1,750,000
September 30, 2001 $1,750,000
December 31, 2001 $1,750,000
March 31, 2002 $2,000,000
June 30, 2002 $2,000,000
(c) FINAL PRINCIPAL PAYMENT. On July 31, 2002, Borrower shall
pay the remaining unpaid principal amount of all Advances.
SECTION 2.3. OPTIONAL PREPAYMENTS. Borrower may, upon at least three
Business Days' notice to Agent stating the proposed date and aggregate principal
amount of the prepayment, and if such notice is given Borrower shall, prepay the
outstanding aggregate principal amount of the Advances in whole or ratably in
part, together with accrued interest to the date of such prepayment on the
aggregate principal amount prepaid; PROVIDED, HOWEVER, that each partial
prepayment shall be in an aggregate amount of $300,000 or an integral multiple
of $100,000 in excess thereof. Each such prepayment of any Advances shall be
applied to the installments thereof in direct order of maturity.
SECTION 2.4. MANDATORY PREPAYMENTS.
(a) NET CASH PROCEEDS. Borrower shall, on the 10th Business Day
following the date of receipt of the Net Cash Proceeds from (i) the sale,
lease, transfer or other disposition of any assets of Borrower or any of
its Subsidiaries (other than (A) sales of inventory in the ordinary course
of business, (B) sales of damaged, worn or obsolete equipment to the extent
the proceeds thereof are intended to be used to purchase replacements for
such equipment within 10 Business Days or sales of damaged, worn or
obsolete equipment made after the purchase of replacements for such
equipment, and (C) sales of assets, or a series of sales of related assets,
which are sold for an amount, or an aggregate amount, less than $100,000,
EXCEPT to the extent that the aggregate of all such sales in any fiscal
year exceeds $500,000); (ii) the incurrence or issuance by Borrower or any
of its Subsidiaries of any Debt (other than Debt described in Section
5.2(b)(i), (ii), and (iv) through (vii)); and (iii) the sale or issuance by
Borrower or any of its Subsidiaries of any capital stock, any securities
convertible into or exchangeable for capital stock or any warrants, rights
or options to acquire capital stock (other than the sale or issuance of
such stock upon the exercise by employees, directors, or consultants of
Borrower and its Subsidiaries of stock options issued pursuant to
Borrower's stock option plans), prepay an aggregate principal amount of the
Advances equal to the amount of such Net Cash Proceeds; provided that,
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in each such case the amount prepaid hereunder shall be reduced to the
extent that during such 10 Business Day period Borrower or its Subsidiaries
have utilized or entered into a binding commitment to utilize such Net Cash
Proceeds to effect a Capital Expenditure by Borrower or a Subsidiary of
Borrower, or, in the case of a sale of securities, to redeem outstanding
securities of Borrower or of any Subsidiary of Borrower. Each such
prepayment under this Section 2.4(a) shall be applied in inverse order to
the unpaid installments of the Advances.
(b) CHANGE OF CONTROL. Upon the occurrence of a Change of
Control, at the request of the Required Lenders through Agent, Borrower
shall prepay the outstanding aggregate principal amount of the Advances in
whole.
(c) SELLER LITIGATION. Borrower shall, on the 10th Business Day
following the date of receipt by Borrower or any of its Subsidiaries of any
cash proceeds in respect of any Seller Litigation (whether pursuant to
judgment, settlement or otherwise), prepay an aggregate principal amount of
the Advances equal to the amount of such cash proceeds (less only the
amount of any costs, fees, expenses and taxes incurred by Borrower in
respect of such Seller Litigation, including, without limitation, fees and
expenses of counsel to Borrower and other consultants of Borrower actually
paid or payable by Borrower in respect of such Seller Litigation), provided
that the amount prepaid hereunder shall be reduced to the extent that
during such 10 Business Day period Borrower or its Subsidiaries have
utilized or entered into a binding commitment to utilize such cash proceeds
to effect a Capital Expenditure by Borrower or a Subsidiary of Borrower.
Each such prepayment pursuant to this subsection 2.4(c) shall be applied in
inverse order to the unpaid installments of the Advances. Borrower
acknowledges and agrees that in the event Borrower or any of its
Subsidiaries shall receive any property other than cash in respect of any
Seller Litigation, such property shall immediately be pledged to Agent for
the benefit of Lenders pursuant to such Collateral Documents (including any
additional Collateral Documents) as Agent may request in order to create
and perfect a first priority security interest in such property to secure
the payment of the Obligations under the Loan Documents.
(d) PAYMENT OF INTEREST. All prepayments under this Section 2.4
shall be made together with accrued interest to the date of such prepayment
on the principal amounts prepaid.
SECTION 2.5. INTEREST.
(a) ORDINARY INTEREST. Borrower shall pay interest on the
unpaid principal amount of each Advance owing to each Lender from the
Effective Date until such principal amount shall be paid in full (subject,
however, to the provisions of subsection (b) below) at a rate per annum
equal at all times to the sum of (i) the Prime Rate in effect from time to
time plus (ii) 2% payable in arrears monthly on the first Business Day of
each calendar month
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(commencing with the first calendar month following the Effective Date)
during such periods and on the date such Advance shall be paid in full.
(b) DEFAULT INTEREST. Upon the occurrence and during the
continuance of an Event of Default, Borrower shall pay interest on (i) the
unpaid principal amount of each Advance owing to each Lender, payable in
arrears on the dates referred to in clause (a) above, at a rate per annum
equal at all times to 2% per annum above the rate per annum required to be
paid on such Advance pursuant to clause (a) above and (ii) the amount of
any interest, fee or other amount payable hereunder which is not paid when
due, from the date such amount shall be due until such amount shall be paid
in full, payable in arrears on the date such amount shall be paid in full
and on demand, at a rate per annum equal at all times to 2% per annum above
the rate per annum required to be paid on Advances pursuant to clause (a)
above.
SECTION 2.6. AGENT'S FEES. On the last day of each fiscal quarter
commencing October 31, 1996 and ending on the payment of the outstanding
principal amount of the Advances hereunder, Borrower shall pay to Agent for its
own account an agent fee of $15,000.
SECTION 2.7. PAYMENTS AND COMPUTATIONS.
(a) PAYMENTS. Borrower shall make each payment hereunder and
under the Notes not later than 1:00 p.m. (New York City time) on the day
when due in U.S. dollars to Agent at Agent's Account in same day funds.
Agent will promptly thereafter cause like funds to be distributed (i) if
such payment by Borrower is in respect of principal, interest or any other
Obligation then payable hereunder and under the Notes to more than one
Lender, to such Lenders for the account of their respective Domestic
Lending Offices ratably in accordance with the amounts of such respective
Obligations then payable to such Lenders and (ii) if such payment by
Borrower is in respect of any Obligation then payable hereunder to one
Lender, to such Lender for the account of its Domestic Lending Office, in
each case to be applied in accordance with the terms of this Agreement.
Upon its acceptance of an Assignment and Acceptance and recording of the
information contained therein in the Register pursuant to Section 8.7(d),
from and after the effective date of such Assignment and Acceptance, Agent
shall make all payments hereunder and under the Notes in respect of the
interest assigned thereby to the Lender assignee thereunder, and the
parties to such Assignment and Acceptance shall make all appropriate
adjustments in such payments for periods prior to such effective date
directly between themselves.
(b) COMPUTATIONS OF INTEREST. All computations of interest
based on the Prime Rate shall be made by Agent on the basis of a year of
365 or 366 days, as the case may be, and all computations based on the
Federal Funds Rate shall be made by Agent on the basis of a year of 360
days, in each case for the actual number of days (including the first day
but excluding the last day) occurring in the period for which such interest
or fees are payable. Each determination by Agent of an interest rate or
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fee hereunder shall be conclusive and binding for all purposes, absent
manifest error (including clerical and administrative error).
(c) BUSINESS DAY. Whenever any payment hereunder or under the
Notes shall be stated to be due on a day other than a Business Day, such
payment shall be made on the next succeeding Business Day, and such
extension of time shall in such case be included in the computation of
interest.
(d) ASSUMPTION OF PAYMENT BY BORROWER. Unless Agent shall have
received notice from Borrower prior to the date on which any payment is due
to any Lender hereunder that Borrower will not make such payment in full,
Agent may assume that Borrower has made such payment in full to Agent on
such date and Agent may, in reliance upon such assumption, cause to be
distributed to each such Lender on such due date an amount equal to the
amount then due such Lender. If and to the extent Borrower shall not have
so made such payment in full to Agent, each such Lender shall repay to
Agent forthwith on demand such amount distributed to such Lender together
with interest thereon, for each day from the date such amount is
distributed to such Lender until the date such Lender repays such amount to
Agent, at the Federal Funds Rate.
SECTION 2.8. TAXES.
(a) TAXES. Any and all payments by Borrower hereunder or under
the Notes shall be made, in accordance with Section 2.7, free and clear of
and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, EXCLUDING, in the case of each Lender and Agent, taxes on
or measured by overall net income and franchise taxes on overall net income
or on net capital imposed by any jurisdiction or any political subdivision
thereof under the laws of which such Lender or Agent is organized, is
fiscally resident, or maintains a Domestic Lending Office, (all such non-
excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "TAXES"). If Borrower shall
be required by law to deduct any Taxes from or in respect of any sum
payable hereunder or under any Note to any Lender or Agent, (i) the sum
payable shall be increased as may be necessary so that after making all
required deductions (including deductions applicable to additional sums
payable under this Section 2.8) such Lender or Agent (as the case may be)
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) Borrower shall make such deductions and (iii)
Borrower shall pay the full amount deducted to the relevant taxing
authority or other authority in accordance with applicable law.
(b) OTHER TAXES. In addition, Borrower shall pay any present or
future stamp, documentary, excise, property or similar taxes, charges or
levies that arise from any payment made hereunder or under the Notes or
from the execution,
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delivery or registration of, or otherwise with respect to, this Agreement
or the Notes (hereinafter referred to as "OTHER TAXES").
(c) PAYMENT OF TAXES. Borrower shall indemnify each Lender and
Agent for the full amount of Taxes and Other Taxes, and for the full amount
of taxes imposed by any jurisdiction within the United States on amounts
payable under this Section 2.8, paid by such Lender or Agent (as the case
may be) and any liability (including penalties, additions to tax, interest
and expenses) arising therefrom or with respect thereto. This
indemnification shall be made within 30 days from the date such Lender or
Agent (as the case may be) makes written demand therefor.
(d) RECEIPTS. Within 30 days after the date of any payment of
Taxes, Borrower shall furnish to Agent, at its address referred to in
Section 8.2, the original receipt of payment thereof or a certified copy of
such receipt.
(e) LENDER FORMS. Each Lender organized under the laws of a
jurisdiction outside the United States shall, on or prior to the Effective
Date for each Lender party hereto on the Effective Date, and on the date of
the Assignment and Acceptance pursuant to which it became a Lender in the
case of each other Lender, and from time to time thereafter if requested in
writing by Borrower or Agent (but only so long thereafter as such Lender
remains lawfully able to do so), provide Agent and Borrower with two duly
completed copies of Internal Revenue Service form 1001 or 4224, as
appropriate, or any successor form prescribed by the Internal Revenue
Service, certifying that such Lender is entitled to benefits under an
income tax treaty to which the United States is a party that reduces the
rate of withholding tax on payments under this Agreement or the Notes or
certifying that the income receivable pursuant to this Agreement or the
Notes is effectively connected with the conduct of a trade or business in
the United States. If the form provided by a Lender at the time such
Lender first becomes a party to this Agreement indicates a United States
interest withholding tax rate in excess of zero, withholding tax at such
rate shall be considered excluded from Taxes unless and until such Lender
provides the appropriate form certifying that a lesser rate applies,
whereupon withholding tax at such lesser rate only shall be considered
excluded from Taxes for periods governed by such form; PROVIDED, HOWEVER,
that, if at the date of the Assignment and Acceptance pursuant to which a
Lender assignee becomes a party to this Agreement, the Lender assignor was
entitled to payments under subsection (a) in respect of United States
withholding tax with respect to interest paid at such date, then, to such
extent, the term Taxes shall include (in addition to withholding taxes that
may be imposed in the future or other amounts otherwise includable in
Taxes) United States withholding tax, if any, applicable with respect to
the Lender assignee on such date. If any form or document referred to in
this subsection (e) requires the disclosure of information, other than
information necessary to compute the tax payable and information required
on the date hereof by Internal Revenue Service form 1001 or 4224, that the
Lender reasonably considers to be confidential, the Lender shall give
notice thereof to Borrower and shall not be obligated to include in such
form or document such confidential information.
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(f) FAILURE TO PROVIDE FORMS. For any period with respect to
which a Lender has failed to provide Borrower with the appropriate form
described in subsection (e) (OTHER THAN if such failure is due to a change
in law occurring after the date on which a form originally was required to
be provided or if such form otherwise is not required under subsection
(e)), such Lender shall not be entitled to indemnification under subsection
(a) or (c) with respect to Taxes imposed by the United States; PROVIDED,
HOWEVER, that should a Lender become subject to Taxes because of its
failure to deliver a form required hereunder, Borrower shall take such
steps as such Lender shall reasonably request to assist such Lender to
recover such Taxes.
(g) SURVIVAL. Without prejudice to the survival of any other
agreement of Borrower hereunder, the agreements and obligations of Borrower
contained in this Section 2.8 shall survive the payment in full of
principal and interest hereunder and under the Notes.
(h) MINIMIZE TAXES. Each Lender shall use reasonable efforts
(consistent with its internal policy and legal and regulatory restrictions)
to minimize the amount of Taxes and Other Taxes (including reasonable
efforts to designate a different Domestic Lending Office if the making of
such a designation would allow such Lender to perform its obligations to
make Advances or to continue to maintain Advances and would not, in the
judgment of such Lender, be otherwise disadvantageous to such Lender).
Each Lender further shall give notice to Borrower (with a copy to Agent)
promptly after such Lender becomes aware of any Tax or Other Tax which
Borrower is obligated to pay pursuant to this Section 2.8.
SECTION 2.9. SHARING OF PAYMENTS, ETC. If any Lender shall obtain at
any time any payment (whether voluntary, involuntary, through the exercise of
any right of set-off, or otherwise) (a) on account of Obligations due and
payable to such Lender hereunder and under the Notes at such time in excess of
its ratable share (according to the proportion of (i) the amount of such
Obligations due and payable to such Lender at such time to (ii) the aggregate
amount of the Obligations due and payable to all Lenders hereunder and under the
Notes at such time) of payments on account of the Obligations due and payable to
all Lenders hereunder and under the Notes at such time obtained by all Lenders
at such time or (b) on account of Obligations owing (but not due and payable) to
such Lender hereunder and under the Notes at such time in excess of its ratable
share (according to the proportion of (i) the amount of such Obligations owing
to such Lender at such time to (ii) the aggregate amount of the Obligations
owing (but not due and payable) to all Lenders hereunder and under the Notes at
such time) of payments on account of the Obligations owing (but not due and
payable) to all Lenders hereunder and under the Notes at such time obtained by
all Lenders at such time, such Lender shall forthwith purchase from the other
Lenders such participations in the Obligations due and payable or owing to them,
as the case may be, as shall be necessary to cause such purchasing Lender to
share the excess payment ratably with each of them; PROVIDED, HOWEVER, that if
all or any portion of such excess payment is thereafter recovered from such
purchasing Lender, such purchase from each other Lender shall be rescinded and
such other Lender shall repay to the purchasing Lender the purchase price to the
extent of such other Lender's ratable
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share (according to the proportion of (i) the purchase price paid to such Lender
to (ii) the aggregate purchase price paid to all Lenders) of such recovery
together with an amount equal to such Lender's ratable share (according to the
proportion of (i) the amount of such other Lender's required repayment to (ii)
the total amount so recovered from the purchasing Lender) of any interest or
other amount paid or payable by the purchasing Lender in respect of the total
amount so recovered. Any Lender so purchasing a participation from another
Lender pursuant to this Section 2.9 may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of set-off) with respect
to such participation as fully as if such Lender were the direct creditor of
Borrower in the amount of such participation.
SECTION 2.10. DEFAULTING LENDERS.
(a) PAYMENTS OF DEFAULTED AMOUNTS. In the event that, at any
one time, (i) any Lender shall be a Defaulting Lender, (ii) such Defaulting
Lender shall owe a Defaulted Amount to Agent or any of the other Lenders
and (iii) Borrower shall make any payment hereunder or under any other Loan
Document to Agent for the account of such Defaulting Lender, then Agent
may, on its behalf or on behalf of such other Lenders and to the fullest
extent permitted by applicable law, apply at such time the amount so paid
by Borrower to or for the account of such Defaulting Lender to the payment
of each such Defaulted Amount to the extent required to pay such Defaulted
Amount. In the event that Agent shall so apply any such amount to the
payment of any such Defaulted Amount on any date, the amount so applied by
Agent shall constitute for all purposes of this Agreement and the other
Loan Documents payment, to such extent, of such Defaulted Amount on such
date. Any such amount so applied by Agent shall be retained by Agent or
distributed by Agent to such other Lenders, ratably in accordance with the
respective portions of such Defaulted Amounts payable at such time to Agent
and such other Lenders and, if the amount of such payment made by Borrower
shall at such time be insufficient to pay all Defaulted Amounts owing at
such time to Agent and the other Lenders, in the following order of
priority:
(i) FIRST, to Agent for any Defaulted Amount then owing to
Agent; and
(ii) SECOND, to any other Lenders for any Defaulted Amounts
then owing to such other Lenders, ratably in accordance with such
respective Defaulted Amounts then owing to such other Lenders.
Any portion of such amount paid by Borrower for the account of such
Defaulting Lender remaining, after giving effect to the amount applied by
Agent pursuant to this subsection (a), shall be applied by Agent as
specified in subsection (b) of this Section 2.10.
(b) PAYMENTS TO DEFAULTING LENDERS. In the event that, at any
one time, (i) any Lender shall be a Defaulting Lender, (ii) such Defaulting
Lender shall not owe a Defaulted Amount and (iii) Borrower, the Agent or
any other Lender shall be
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required to pay or distribute any amount hereunder or under any other Loan
Document to or for the account of such Defaulting Lender, then Borrower or
such other Lender shall pay such amount to Agent to be held by Agent, to
the fullest extent permitted by applicable law, in escrow or Agent shall,
to the fullest extent permitted by applicable law, hold in escrow such
amount otherwise held by it. Any funds held by Agent in escrow under this
subsection (b) shall be deposited by Agent in an account with Chase
Manhattan, in the name and under the control of Agent, but subject to the
provisions of this subsection (b). The terms applicable to such account,
including the rate of interest payable with respect to the credit balance
of such account from time to time, shall be Chase Manhattan's standard
terms applicable to escrow accounts maintained with it. Any interest
credited to such account from time to time shall be held by Agent in escrow
under, and applied by Agent from time to time in accordance with the
provisions of, this subsection (b). Agent shall, to the fullest extent
permitted by applicable law, apply all funds so held in escrow from time to
time to the extent necessary to pay any amount payable by such Defaulting
Lender hereunder and under the other Loan Documents to Agent or any other
Lender, as and when such amounts are required to be made or paid and, if
the amount so held in escrow shall at any time be insufficient to make and
pay all such amounts required to be paid at such time, in the following
order of priority:
(i) FIRST, to Agent for any amount then due and payable by
such Defaulting Lender to Agent hereunder; and
(ii) SECOND, to any other Lenders for any amount then due
and payable by such Defaulting Lender to such other Lenders hereunder,
ratably in accordance with such respective amounts then due and
payable to such other Lenders.
In the event that such Defaulting Lender shall, at any time, cease to be a
Defaulting Lender, any funds held by Agent in escrow at such time with
respect to such Defaulting Lender shall be distributed by Agent to such
Defaulting Lender and applied by such Defaulting Lender to the Obligations
owing to such Lender at such time under this Agreement and the other Loan
Documents ratably in accordance with the respective amounts of such
Obligations outstanding at such time.
(c) RIGHTS AND REMEDIES. The rights and remedies against a
Defaulting Lender under this Section 2.10 are in addition to other rights
and remedies which Borrower, Agent or any Lender may have against such
Defaulting Lender with respect to any Defaulted Amount.
(d) SATISFACTION. Any payment made by Borrower for the account
of any Defaulting Lender shall be a payment in satisfaction of Borrower's
obligation in favor of the Defaulting Lender for which the payment was
made, notwithstanding the fact that the payment may be applied in the
manner set forth in this Section 2.10.
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ARTICLE III
CONDITIONS OF LENDING
SECTION 3.1. DELIVERY OF DOCUMENTS. Concurrently with the Effective
Date, Agent shall have received, to the extent not then in its possession, each
dated the Effective Date (unless otherwise specified), in sufficient copies for
each Lender (except for the Notes, the certificates and instruments representing
the Pledged Shares (as defined in the Security Agreements) and Pledged Debt (as
defined in the Security Agreements) and the stock and bond powers delivered
therewith)):
(i) The Notes to the order of Lenders.
(ii) The Security Agreement, duly executed by Borrower, together
with:
(A) certificates representing all the stock of the
Subsidiaries of Borrower listed on Schedule I of the Security
Agreement (such stock to be defined as the Pledged Shares referred to
therein) accompanied by undated stock powers executed in blank and
instruments evidencing the Pledged Debt referred to therein endorsed
in blank;
(B) Uniform Commercial Code financing statements for filing
in the following jurisdictions, duly executed by Borrower, dated as of
the Effective Date: California, Hawaii, New Jersey and Tennessee;
(C) evidence of the insurance required by the terms of the
Security Agreement, naming Agent as insured and loss payee with such
responsible and reputable insurance companies or associations, and in
such amounts and covering such risks, as is reasonably satisfactory to
Agent; and
(D) the Lockbox Letters referred to in the Security
Agreement, duly executed by Borrower and the Lockbox Banks referred to
in the Security Agreement, and undated executed copies of Lockbox
Notices (referred to in the Security Agreement) to the Lockbox Banks,
dated as of the Effective Date.
(iii) The Confirmation and Grant of Security Interest in
Trademarks, duly executed by Borrower, dated as of the Effective Date.
(iv) Pursuant to the provisions of the Plan of Reorganization,
Borrower, Agent and each of the Lenders shall have executed and delivered a
Release Agreement, in substantially the form of the attached Exhibit G (the
"RELEASE AGREEMENT").
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(v) The Agent, on behalf of the Lenders, shall have received
542,488 newly issued shares of DEP Common Stock to be distributed to the
Lenders in accordance with the Plan of Reorganization.
(vi) Borrower and each of the Lenders which has elected to
receive Class 1 Warrants pursuant to the Plan of Reorganization shall have
executed and delivered a Warrant Agreement, in substantially the form of
the attached Exhibit H (the "WARRANT AGREEMENT"), and Borrower shall have
executed and delivered to the Agent for the benefit of such Lenders
warrants to purchase an aggregate of 330,050 shares of DEP Common Stock.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1. REPRESENTATIONS AND WARRANTIES OF BORROWER. Borrower
represents and warrants, as of the Effective Date, as follows:
(a) ORGANIZATION AND AUTHORITY. Borrower (i) is a corporation
duly organized, validly existing and good standing under the laws of the
jurisdiction of its incorporation, (ii) is duly qualified and in good
standing as a foreign corporation in each other jurisdiction in which it
owns or leases property or in which the conduct of its business requires it
to so qualify or be licensed except where the failure to so qualify or be
licensed would not have a Material Adverse Effect, and (iii) has all
requisite corporate power and authority to own or lease and operate its
properties and to carry on its business as now conducted and as proposed to
be conducted, to execute and deliver, and to perform its obligations under,
this Agreement and the other Loan Documents to which it is a party.
(b) SUBSIDIARIES. Set forth on Schedule 4.1(b) hereto is a
complete and accurate list of all Subsidiaries of Borrower, showing as of
the date hereof (as to each such Subsidiary) the jurisdiction of its
incorporation, the number of shares of each class of capital stock
authorized, and the number outstanding, on the date hereof and the
percentage of the outstanding shares of each such class owned (directly or
indirectly) by Borrower and the number of shares covered by all outstanding
options, warrants, rights of conversion or purchase and similar rights at
the date hereof. All of the outstanding capital stock of all of such
Subsidiaries has been validly issued, is fully paid and non-assessable and
is owned by Borrower or one or more of its Subsidiaries free and clear of
all Liens, except for Permitted Liens.
(c) CORPORATE POWER. The execution, delivery and performance by
Borrower of this Agreement, the Notes, and the other Loan Documents, and
the consummation of the transactions contemplated hereby and thereby, are
within Borrower's corporate powers, have been duly authorized by all
necessary corporate action, and do not (i) contravene Borrower's charter or
by-laws, (ii) violate any law,
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rule, regulation (including, without limitation, Regulation X of the Board
of Governors of the Federal Reserve System), order, writ, judgment,
injunction, decree, determination or award, (iii) conflict with or result
in the breach of, or constitute a default under, any contract, loan
agreement, indenture, mortgage, deed of trust, lease or other instrument
binding on or affecting Borrower or any of its properties or (iv) except
for the Liens created by the Collateral Documents, result in or require the
creation or imposition of any Lien upon or with respect to any of the
properties of Borrower. Borrower is not in violation of any such law,
rule, regulation, order, writ, judgment, injunction, decree, determination
or award or in breach of any such contract, loan agreement, indenture,
mortgage, deed of trust, lease or other instrument, the violation or breach
of which would have a Material Adverse Effect.
(d) GOVERNMENT CONSENTS. No authorization or approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body or any other third party is required for (i) the due
execution, delivery, recordation, filing or performance by Borrower of this
Agreement, the Notes, or any other Loan Document, or for the consummation
of the other transactions contemplated hereby and thereby, (ii) the grant
by Borrower of the Liens granted by it pursuant to the Collateral
Documents, (iii) the perfection or maintenance of the Liens created by the
Collateral Documents which can be perfected by filing under the Uniform
Commercial Code, for a period of five years, or can be perfected by filing
for recordation under the U.S. Federal statute for trademarks, 15 U.S.C.
Section 1060, or (iv) the exercise by Agent or any Lender of its rights
under the Loan Documents or the remedies in respect of the Collateral
pursuant to the Collateral Documents, except for the authorizations,
approvals, actions, notices and filings listed on Schedule 4.1(d), all of
which have been duly obtained, taken, given or made and are in full force
and effect.
(e) ENFORCEABILITY. This Agreement has been, and each of the
Notes, and each other Loan Document when delivered hereunder will have
been, duly executed and delivered by Borrower. This Agreement is, and each
of the Notes, and each other Loan Document when delivered hereunder will
be, the legal, valid and binding obligation of Borrower, enforceable
against Borrower in accordance with its terms.
(f) LITIGATION. Except for the proceedings under Chapter 11 of
the Bankruptcy Code to which the Plan of Reorganization relates and as set
forth in Schedule 4.1(f) (collectively the "DISCLOSED LITIGATION"), there
is no action, suit, investigation, litigation or proceeding affecting
Borrower including any Environmental Action, pending or threatened before
any court, governmental agency or arbitrator that (i) would have a Material
Adverse Effect or (ii) purports to affect the legality, validity or
enforceability of this Agreement, any Note, or any other Loan Document or
other transactions contemplated hereby.
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(g) MARGIN STOCK. Borrower is not engaged in the business of
extending credit for the purpose of purchasing or carrying Margin Stock,
and no proceeds of any Advance will be used to purchase or carry any Margin
Stock or to extend credit to others for the purpose of purchasing or
carrying any Margin Stock. None of the Pledged Shares (as defined in the
Security Agreements) constitutes Margin Stock.
(h) ERISA EVENT. No ERISA Event has occurred or is reasonably
expected to occur with respect to any Plan of Borrower or any of its ERISA
Affiliates.
(i) WITHDRAWAL LIABILITY. Neither Borrower nor any of its ERISA
Affiliates has incurred or is reasonably expected to incur any Withdrawal
Liability to any Multiemployer Plan.
(j) MULTIEMPLOYER PLANS. Neither Borrower nor any of its ERISA
Affiliates has been notified by the sponsor of a Multiemployer Plan of
Borrower or any of its ERISA Affiliates that such Multiemployer Plan is in
reorganization or has been terminated, within the meaning of Title IV of
ERISA, and no such Multiemployer Plan is reasonably expected to be in
reorganization or to be terminated, within the meaning of Title IV of
ERISA.
(k) OTHER EVENTS. Neither the business nor the properties of
Borrower is affected by any fire, explosion, accident, strike, lockout or
other labor dispute, drought, storm, hail, earthquake, embargo, act of God
or of the public enemy or other casualty (whether or not covered by
insurance) that would have a Material Adverse Effect.
(l) COMPLIANCE WITH ENVIRONMENTAL LAWS. The operations and
properties of Borrower comply in all material respects with all
Environmental Laws, all material Environmental Permits have been obtained
and are in effect for the operations and properties of Borrower, Borrower
is in compliance in all material respects with all such material
Environmental Permits, and no circumstances exist that could (i) form the
basis of an Environmental Action against Borrower or any of their
properties that would have a Material Adverse Effect or (ii) cause any such
property to be subject to any material restrictions on ownership,
occupancy, use or transferability under any Environmental Law.
(m) NATIONAL PRIORITIES LIST. None of the properties of
Borrower is listed or proposed for listing on the National Priorities List
under CERCLA or on the Comprehensive Environmental Response, Compensation
and Liability Information System maintained by the Environmental Protection
Agency or any analogous state list of sites requiring investigation or
cleanup or is adjacent to any such property, and no underground storage
tanks, as such term is defined in 42 U.S.C. Section 6991, are located on
any property of Borrower or, to the best of its knowledge, on any adjoining
property.
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(n) HAZARDOUS MATERIALS. Neither Borrower nor any of its
Subsidiaries has transported or arranged for the transportation of any
Hazardous Materials to any location that is listed or proposed for listing
on the National Priorities List under CERCLA or on the Comprehensive
Environmental Response, Compensation and Liability Information System
maintained by the Environmental Protection Agency or any analogous state
list, Hazardous Materials have not been generated, used, treated, handled,
stored or disposed of on, or released or transported to or from, any
property of Borrower or, to the best of its knowledge, any adjoining
property, except in compliance with all Environmental Laws and
Environmental Permits, and all other wastes generated at any such
properties have been disposed of in compliance with all Environmental Laws
and Environmental Permits.
(o) OTHER AGREEMENTS. Borrower is not a party to any indenture,
loan or credit agreement or any lease or other agreement or instrument or
subject to any charter or corporate restriction that would have a Material
Adverse Effect.
(p) TAX RETURNS. Borrower has filed, has caused to be filed or
has been included in all Federal tax returns required to be filed and all
state, local and foreign tax returns Borrower believes it is required to
file, or has timely applied for an extension for the filing thereof, and
has paid all taxes shown thereon to be due, together with applicable
interest and penalties, or will pay such taxes, interest and penalties in
accordance with the Plan of Reorganization, or is contesting in good faith
amounts due through appropriate proceedings and has established adequate
reserves therefore in accordance with GAAP.
(q) OPEN YEARS. Set forth on Schedule 4.1(q) hereto is a
complete and accurate list, as of the date hereof, of each taxable year of
Borrower for which Federal income tax returns have been filed and for which
the expiration of the applicable statute of limitations for assessment or
collection has not occurred by reason of extension or otherwise (an "OPEN
YEAR").
(r) FEDERAL ADJUSTMENTS. Except as disclosed on Schedule 4.1(r)
hereto, there is no unpaid amount, as of the date hereof, of adjustments to
the Federal income tax liability of Borrower proposed by the Internal
Revenue Service with respect to Open Years, and no issues have been raised
by the Internal Revenue Service in respect of Open Years that, in the
aggregate, would have a Material Adverse Effect.
(s) STATE AND LOCAL ADJUSTMENTS. Except as disclosed on
Schedule 4.1(s) hereto, there is no unpaid amount, as of the date hereof,
of adjustments to the state, local and foreign tax liability of Borrower
and its Subsidiaries proposed by all state, local and foreign taxing
authorities (other than amounts arising from adjustments to Federal income
tax returns), and no issues have been raised by such taxing authorities
that, in the aggregate, would have a Material Adverse Effect.
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(t) INVESTMENT COMPANY. Borrower is not 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. Neither the making of any
Advances, the application of the proceeds or repayment thereof by Borrower,
nor the consummation of the other transactions contemplated hereby, will
violate any provision of such Act or any rule, regulation or order of the
Securities and Exchange Commission thereunder.
(u) SOLVENT. Borrower is Solvent.
(v) OWNED REAL PROPERTY. Set forth on Schedule 4.1(v) hereto is
a complete and accurate list of all real property owned by Borrower showing
as of the date hereof the street address, county or other relevant
jurisdiction, state, record owner and book and fair value thereof.
Borrower has good, marketable and insurable fee simple title to such real
property (including any such real property constituting Collateral), free
and clear of all Liens, other than Permitted Liens.
(w) LEASED REAL PROPERTY. Set forth on Schedule 4.1(w) hereto
is a complete and accurate list of all leases of real property under which
Borrower is the lessee showing as of the date hereof the street address,
county or other relevant jurisdiction, state, lessor, lessee, expiration
date and annual rental cost thereof. Each such lease is the legal, valid
and binding obligation of the lessor thereof, enforceable in accordance
with its terms.
(x) INVESTMENTS. Set forth on Schedule 4.1(x) hereto is a
complete and accurate list of all Investments held by Borrower showing as
of the Effective Date the amount, obligor or issuer and maturity, if any,
thereof.
(y) INTELLECTUAL PROPERTY. Set forth on Schedule 4.1(y) hereto
is a complete and accurate list of all patents, trademarks, trade names,
service marks and copyrights, and all applications therefor and licenses
thereof, of Borrower showing as of the date hereof the jurisdiction in
which registered, the registration number, the date of registration and the
expiration date.
(z) EMPLOYMENT ARRANGEMENTS. Set forth on Schedule 4.1(z) is a
complete and accurate list of (i) all employment agreements and executive
compensation arrangements to which Borrower is a party which provide for
aggregate compensation (excluding, for the purposes of this Section 4.1(z),
compensation in the form of employee stock options granted to such Person)
to any Person (assuming compliance with or satisfaction of all
contingencies or conditions thereof) of more than $300,000 per year and
(ii) all agreements relating to the voting or disposition of any
outstanding shares of capital stock of Borrower to which Borrower is a
party or of which Borrower is otherwise aware. Borrower has delivered to
Agent a true and complete copy of each of the agreements required to be
listed in Schedule 4.1(z).
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ARTICLE V
COVENANTS OF BORROWER
SECTION 5.1. AFFIRMATIVE COVENANTS. So long as any Advance shall
remain unpaid, Borrower will, unless the Required Lenders shall otherwise
consent in writing:
(a) COMPLIANCE WITH LAWS, ETC. Comply, and cause each of its
Subsidiaries to comply, in all material respects, with all applicable laws,
rules, regulations and orders, such compliance to include, without
limitation, compliance with ERISA and the Racketeer Influenced and Corrupt
Organizations Chapter of the Organized Crime Control Act of 1970.
(b) PAYMENT OF TAXES, ETC. Pay and discharge, and cause each of
its Subsidiaries to pay and discharge, before the same shall become
delinquent, (i) all taxes, assessments and governmental charges or levies
imposed upon it or upon its property and (ii) all lawful claims that, if
unpaid, might by law become a Lien (other than a Permitted Lien) upon its
property; provided, however, that neither Borrower nor any of its
Subsidiaries shall be required to pay or discharge any such tax,
assessment, charge or claim that is being contested in good faith and by
proper proceedings and as to which appropriate reserves are being
maintained, unless and until any Lien resulting therefrom attaches to its
property and becomes enforceable against its other creditors.
Notwithstanding the foregoing or any other provision of this Agreement to
the contrary, Borrower shall be entitled to defer payment of "Priority Tax
Claims" (as defined in the Plan of Reorganization) in accordance with the
Plan of Reorganization.
(c) COMPLIANCE WITH ENVIRONMENTAL LAWS. Comply, and cause each
of its Subsidiaries and all lessees and other Persons occupying its
properties to comply, in all material respects, with all Environmental Laws
and Environmental Permits applicable to its operations and properties;
obtain and renew all Environmental Permits necessary for its operations and
properties; and conduct, and cause each of its Subsidiaries to conduct, any
investigation, study, sampling and testing, and undertake any cleanup,
removal, remedial or other action necessary to remove and clean up all
Hazardous Materials from any of its properties, in accordance with the
requirements of all Environmental Laws; provided, however, that neither
Borrower nor any of its Subsidiaries shall be required to undertake any
such cleanup, removal, remedial or other action to the extent that its
obligation to do so is being contested in good faith and by proper
proceedings and appropriate reserves are being maintained with respect to
such circumstances.
(d) MAINTENANCE OF INSURANCE. Maintain, and cause each of its
Subsidiaries to maintain, insurance with responsible and reputable
insurance companies or associations in such amounts and covering such risks
as is usually carried by companies engaged in similar businesses and owning
similar properties in the same general areas in which Borrower or such
Subsidiary operates.
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(e) PRESERVATION OF CORPORATE EXISTENCE, ETC. Except as a
direct result of a transaction permitted under Section 5.2(d), preserve and
maintain, and cause each of its Subsidiaries to preserve and maintain, its
corporate existence, rights (charter and statutory) and franchises.
(f) VISITATION RIGHTS. At any reasonable time and from time to
time (which request shall be made on reasonable grounds), permit Agent or
any of Lenders or any agents or representatives thereof, to examine and
make copies of and abstracts from the records and books of account of, and
visit the properties of, Borrower and any of its Subsidiaries, and to
discuss the affairs, finances and accounts of Borrower and any of its
Subsidiaries with any of their officers or directors and with their
independent certified public accountants.
(g) PLAN CONTRIBUTIONS. Make, and cause each of its
Subsidiaries to make, when due, all contributions required by law to be
made to all Plans.
(h) KEEPING OF BOOKS. Keep, and cause each of its Subsidiaries
to keep, proper books of record and account, in which full and correct
entries shall be made of all financial transactions and the assets and
business of Borrower and each such Subsidiary in accordance with generally
accepted accounting principles in effect from time to time.
(i) MAINTENANCE OF PROPERTIES, ETC. Maintain and preserve, and
cause each of its Subsidiaries to maintain and preserve, all of its
properties that are used or useful in the conduct of its business in good
working order and condition, ordinary wear and tear excepted.
(j) COMPLIANCE WITH TERMS OF LEASEHOLDS. Make all payments and
otherwise perform all material obligations in respect of all leases of real
property, keep such leases in full force and effect and not allow such
leases to lapse or be terminated or any rights to renew such leases to be
forfeited or cancelled, notify Agent of any default by any party with
respect to such leases and cooperate with Agent in all respects to cure any
such default, and cause each of its Subsidiaries to do so.
(k) TRANSACTIONS WITH AFFILIATES. Conduct, and cause each of
its Subsidiaries to conduct, all transactions otherwise permitted under the
Loan Documents with any of their Affiliates on terms that are fair and
reasonable and no less favorable to Borrower or such Subsidiary than it
would obtain in a comparable arm's-length transaction with a Person not an
Affiliate.
(l) CASH CONCENTRATION ACCOUNTS. Maintain main cash
concentration accounts with City National Bank and Lockbox Accounts into
which all proceeds of Collateral are paid with City National Bank and
Pittsburgh National Bank or one or more banks acceptable to Agent that have
accepted the assignment of such accounts to Agent pursuant to the Security
Agreement. To the extent not otherwise provided in the
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preceding sentence, maintain all deposit accounts or investment accounts
(other than investment accounts permitted under Section 5.2(e)(iii) hereof)
with City National Bank, with such accounts and the monies therein to be
part of the Collateral for the Obligations of Borrower under the Loan
Documents, provided that Borrower's access to such accounts shall not be
restricted by Lenders except in the event that any payment to Lenders has
not been made when due; and provided further, that such requirement shall
not be applicable to accounts in the United Kingdom and Canada in the
respective aggregate maximum amounts of $100,000 and $500,000 (or their
equivalent in the respective currency), the lockbox account of Borrower
maintained at Pittsburgh National Bank and the payroll account of Borrower
maintained at Bank of America. N.T. & S.A. in Carson, California.
(m) ADDITIONAL SUBSIDIARY GUARANTIES, ETC. Upon the formation
of any Principal Subsidiary or any Subsidiary of Borrower becoming a
Principal Subsidiary, and at the expense of Borrower, (i) within 5 days
after such formation or becoming, furnish to Agent a description of the
real and personal properties of such Principal Subsidiary in detail
reasonably satisfactory to Agent; (ii) within 10 days after such formation
or becoming, cause such Principal Subsidiary to duly execute and deliver to
Agent the Guaranty and such Collateral Documents (together with all the
stock of such Principal Subsidiary accompanied by undated stock powers
executed in blank, if not previously delivered to Agent) and other
documents as Agent may reasonably request; (iii) within 15 days after such
formation or becoming, take whatever action (including, without limitation,
the filing of Uniform Commercial Code financing statements and the giving
of notices) may be necessary or advisable in the opinion of Agent to vest
in Agent valid and perfected security interests on the properties purported
to be subject to the Collateral Documents delivered pursuant to this
Section 5.1(m); and (iv) at any time and from time to time, promptly cause
such Principal Subsidiary to execute and deliver any and all further
instruments and documents and take all such other actions as Agent may
reasonably deem necessary in obtaining the full benefits of, or in
perfecting and preserving the security interests created by, such Guaranty
and Collateral Documents.
SECTION 5.2. NEGATIVE COVENANTS. So long as any Advance shall remain
unpaid, Borrower will not, at any time, without the written consent of the
Required Lenders:
(a) LIENS, ETC. Create, incur, assume or suffer to exist, or
permit any of its Subsidiaries to create, incur, assume or suffer to exist,
any Lien on or with respect to any of its properties of any character
(including, without limitation, accounts) whether now owned or hereafter
acquired, or assign, or permit any of its Subsidiaries to assign, any
accounts or other right to receive income, excluding, however, from the
operation of the foregoing restrictions the Permitted Liens.
(b) DEBT. Create, incur, assume or suffer to exist, or permit
any of its Subsidiaries to create, incur, assume or suffer to exist, any
Debt other than:
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(i) Debt under the Loan Documents;
(ii) unsecured Debt incurred in the ordinary course of
business for borrowed money, maturing within one year from the date
incurred, and aggregating, for Borrower and its Subsidiaries on a
Consolidated basis, not more than $1,000,000 at any one time
outstanding;
(iii) Subordinated Debt;
(iv) Existing Debt and any Debt extending the maturity of,
or refunding or refinancing, in whole or in part, any Existing Debt,
provided that the terms of any such extending, refunding or
refinancing Debt, and of any agreement entered into and of any
instrument issued in connection therewith, are otherwise permitted by
the Loan Documents and further provided that the principal amount of
such Existing Debt shall not be increased above the principal amount
thereof outstanding immediately prior to such extension, refunding or
refinancing, and the direct and contingent obligors therefor shall not
be changed, as a result of or in connection with such extension,
refunding or refinancing;
(v) Debt secured by Liens described in clauses (vii) and
(viii) of the definition of Permitted Liens set forth in Section 1.1
not to exceed in the aggregate the amount set forth in such Section;
(vi) unsecured Debt incurred in the ordinary course of
business for the deferred purchase price of property or services,
maturing within one year from the date created, and aggregating, for
Borrower and its Subsidiaries on a Consolidated basis, not more than
$1,000,000 at one time outstanding; and
(vii) indorsement of negotiable instruments for deposit
or collection or similar transactions in the ordinary course of
business;
PROVIDED, HOWEVER, that Dep International, Ltd., a U.S. Virgin Islands
corporation and a Subsidiary of Borrower, will not be permitted to create,
incur, assume or suffer to exist any Debt whatsoever.
(c) LEASE OBLIGATIONS. Create, incur, assume or suffer to exist, or
permit any of its Subsidiaries to create, incur, assume or suffer to exist, any
obligations as lessee for the rental or hire of real or personal property of any
kind under leases or agreements to lease including Capitalized Leases having an
original term of one year or more that would cause the direct and contingent
liabilities of Borrower and its Subsidiaries, on a Consolidated basis, in
respect of all such obligations to exceed $1,500,000 payable in any period of 12
consecutive months.
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(d) MERGERS, ETC. Merge into or consolidate with any Person or
permit any Person to merge into it, or permit any of its Subsidiaries to do so,
except that (i) any Subsidiary of Borrower may merge into or consolidate with
any other Subsidiary of Borrower provided that, in the case of any such
consolidation, the Person formed by such consolidation shall be a Subsidiary of
Borrower and (ii) any Subsidiary of Borrower may merge into Borrower; provided,
however, that in each case, immediately after giving effect thereto, no event
shall occur and be continuing that constitutes a Default and, in the case of any
such merger to which Borrower is a party, Borrower is the surviving corporation;
and except that Borrower and/or one or more of its Subsidiaries may engage in
any such transactions in order to effect a sale of all of the assets of Borrower
or such Subsidiaries.
(e) INVESTMENTS IN OTHER PERSONS. Make or hold, or permit any of its
Subsidiaries to make or hold, any Investment in any Person other than:
(i) (A) Investments by Borrower and its Subsidiaries in
any Subsidiary that has executed a Guaranty and a Security Agreement
hereunder, (B) Investments by Borrower and its Subsidiaries in other
Subsidiaries of Borrower existing on the Effective Date, and (C)
Investments by Borrower and its Subsidiaries in other Subsidiaries of
Borrower all the stock of which has been pledged to Agent for the
benefit of Lenders under the applicable Security Agreement in an
aggregate amount invested from the Effective Date not to exceed
$2,000,000;
(ii) loans and advances to employees of Borrower and its
Subsidiaries in the ordinary course of the business as presently
conducted in an aggregate principal amount not to exceed $200,000 at
any time outstanding;
(iii) Investments by Borrower and its Subsidiaries in
Cash Equivalents;
(iv) advances or additional capital contributions to Dep
Asia Limited, a Hong Kong corporation, in an outstanding aggregate
amount not to exceed $2,500,000;
(v) Investment existing on the Effective Date and listed on
Schedule 4.1(x); and
(vi) other Investments in an aggregate amount invested not
to exceed $2,000,000.
(f) DIVIDENDS, ETC. Declare or pay any dividends, purchase, redeem,
retire, defease or otherwise acquire for value any of its capital stock or any
warrants, rights or options to acquire such capital stock, now or hereafter
outstanding, return any capital to its stockholders as such, make any
distribution of assets, capital
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stock, warrants, rights, options, obligations or securities to its
stockholders as such or issue or sell any capital stock or any warrants,
rights or options to acquire such capital stock, or permit any of its
Subsidiaries to purchase, redeem, retire, defease or otherwise acquire for
value any capital stock of Borrower or any warrants, rights or options to
acquire such capital stock or to issue or sell any capital stock or any
warrants, rights or options to acquire such capital stock, except that
Borrower may (i) declare and deliver dividends and distributions payable
only in common stock of Borrower; and (ii) purchase, redeem, retire,
defease or otherwise acquire shares of its capital stock with the proceeds
received from the issue of new shares of its capital stock with equal or
inferior voting powers, designations, preferences and rights.
(g) ACCOUNTING CHANGES. Make or permit, or permit any of its
Subsidiaries to make or permit, any change as to its fiscal year or in
accounting policies or reporting practices, except as required by GAAP.
(h) PREPAYMENTS, ETC. OF DEBT. Prepay, redeem, purchase,
defease or otherwise satisfy prior to the scheduled maturity thereof in any
manner, or make any payment in violation of any subordination terms of, any
Debt, other than (i) the prepayment of the Advances in accordance with the
terms of this Agreement; (ii) regularly scheduled or required repayments or
redemptions of Debt permitted under Section 5.2(b); and (iii) in accordance
with the Plan of Reorganization, or amend, modify or change in any manner
any term or condition of any Debt permitted under Section 5.2(b) if the
effect of such amendment, modification or change is to increase the
required amount of any payment or prepayment or to create an Event of
Default, or permit any of its Subsidiaries to do any of the foregoing.
(i) PARTNERSHIPS. Become a general partner in any general or
limited partnership, or permit any of its Subsidiaries to do so, other than
any Subsidiary the sole assets of which consist of its interest in such
partnership and other than through a special interest vehicle.
(j) PAYMENTS PURSUANT TO PLAN OF REORGANIZATION.
Notwithstanding any other provision of this Agreement to the contrary,
Borrower shall be authorized to make any and all payments and to take any
and all such other actions as are required under the Plan of
Reorganization.
SECTION 5.3. REPORTING REQUIREMENTS. So long as any Advance shall
remain unpaid Borrower will, unless the Required Lenders shall otherwise consent
in writing, furnish to Lenders:
(a) DEFAULT NOTICE. As soon as possible and in any event within
five days after any officer of Borrower becomes aware of the occurrence of
each Default continuing on the date of such statement, a statement of the
chief financial officer of Borrower setting forth details of such Default
and the action that Borrower has taken and proposes to take with respect
thereto.
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(b) MONTHLY FINANCIALS. As soon as available and in any event
within 30 days after the end of each month other than a month which is the
last month of a fiscal quarter or fiscal year, (i) a Consolidated balance
sheet of Borrower and its Subsidiaries as of the end of such month; (ii)
Consolidated statements of income of Borrower and its Subsidiaries
(including a breakdown of sales by product line) for such month and the
period commencing on the first day of the fiscal year in which such month
occurs and ending on the last day of such month; and (iii) Consolidated
statements of cash flows of Borrower and its Subsidiaries for the period
commencing on the first day of the fiscal year in which such month occurs
and ending on the last day of such month, setting forth in each case in
comparative form the corresponding figures for the corresponding month or
period of the preceding year, all in reasonable detail and duly certified
by the chief financial officer of Borrower that, to the best of the
knowledge of such chief financial officer, subject to year-end audit
adjustments, the financial information contained therein fairly present the
financial condition of Borrower and its Subsidiaries.
(c) QUARTERLY FINANCIALS. As soon as available and in any event
within 45 days after the end of each fiscal quarter of Borrower other than
the last fiscal quarter of a fiscal year, (i) a Consolidated balance sheet
of Borrower and its Subsidiaries as of the end of such quarter; (ii)
Consolidated statements of income of Borrower and its Subsidiaries
(including a breakdown of sales by product line) for such quarter and the
period commencing on the first day of the fiscal year in which such quarter
occurs and ending on the last day of such quarter; and (iii) Consolidated
statements of cash flows of Borrower and its Subsidiaries for the period
commencing on the first day of the fiscal year in which such quarter occurs
and ending on the last day of such quarter, setting forth in the case of
subclause (ii) above in comparative form, the corresponding figures for the
corresponding quarter or period of the preceding fiscal year and the
corresponding figures from the most recent business plan delivered to
Lenders pursuant to Section 5.3(e) hereof and in the case of subclause (i)
and (iii) above in comparative form the corresponding figures from the most
recent plan delivered to Lenders pursuant to Section 5.3(e) hereof, all in
reasonable detail and duly certified (subject to year-end audit
adjustments) by the chief financial officer of Borrower as having been
prepared in accordance with GAAP, together with (i) a certificate of said
officer stating that no Default has occurred and is continuing or, if a
Default has occurred and is continuing, a statement as to the nature
thereof and the action that Borrower has taken and proposes to take with
respect thereto and (ii) a completed compliance certificate, in
substantially the form of Exhibit E attached hereto, duly executed by the
chief financial officer or chief executive officer of Borrower.
(d) ANNUAL FINANCIALS. As soon as available and in any event
within 90 days after the end of each fiscal year of Borrower, a copy of the
annual audit report for such year for Borrower and its Subsidiaries,
including therein a Consolidated balance sheet of Borrower and its
Subsidiaries as of the end of such fiscal year and Consolidated statements
of income and cash flows of Borrower and its Subsidiaries for
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such fiscal year, in each case accompanied by an opinion reasonably
acceptable to the Required Lenders of a nationally recognized public
accounting firm, together with (i) a certificate of such accounting firm to
Lenders stating that in the course of the regular audit of the business of
Borrower and its Subsidiaries, which audit was conducted by such accounting
firm in accordance with generally accepted auditing standards, such
accounting firm has obtained no knowledge that a Default has occurred and
is continuing, or if, in the opinion of such accounting firm, a Default has
occurred and is continuing, a statement as to the nature thereof and (ii) a
completed compliance certificate, in substantially the form of Exhibit E,
duly executed by the chief financial officer or the chief executive officer
of Borrower. In addition, Borrower shall furnish to Lenders, as soon as
available and in any event no later than 45 days after the end of each
fiscal year of Borrower, (A) a Consolidated balance sheet of Borrower and
its Subsidiaries as of the end of such fiscal year, and (B) Consolidated
statements of income (including a breakdown of sales by product line) and
cash flows of Borrower and its Subsidiaries for such fiscal year, all in
reasonable detail and duly certified (subject to year-end audit
adjustments) by the chief financial officer of Borrower as having been
prepared in accordance with GAAP.
(e) ANNUAL FORECASTS. (i) As soon as available and in any event
no later than 30 days after the end of each fiscal year of Borrower,
Borrower's annual business plan and forecasts prepared by management of
Borrower, in form reasonably satisfactory to Agent, of balance sheets,
income statements (including a breakdown of sales by product line) and cash
flow statements (it being understood that each such business plan and all
such forecasts furnished to Lenders shall set forth information on a
quarterly basis for the first fiscal year covered thereby and shall set
forth information on an annual basis for each fiscal year thereafter until
the Termination Date).
(f) ERISA EVENTS. Promptly and in any event within 10 days
after Borrower or any of its ERISA Affiliates knows or has reason to know
that any ERISA Event with respect to Borrower or any of its ERISA
Affiliates has occurred, a statement of the chief financial officer of
Borrower describing such ERISA Event and the action, if any, that Borrower
or such ERISA Affiliate has taken and proposes to take with respect
thereto.
(g) PLAN TERMINATIONS. Promptly and in any event within five
Business Days after receipt thereof by Borrower or any of its ERISA
Affiliates, copies of each notice from the PBGC stating its intention to
terminate any Plan of Borrower or any of its ERISA Affiliates or to have a
trustee appointed to administer any such Plan.
(h) PLAN ANNUAL REPORTS. Promptly and in any event within 30
days after the filing thereof with the Internal Revenue Service, copies of
each Schedule B (Actuarial Information) to the annual report (Form 5500
Series) with respect to each Plan of Borrower or any of its ERISA
Affiliates.
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(i) MULTIEMPLOYER PLAN NOTICES. Promptly and in any event
within five Business Days after receipt thereof by Borrower or any of its
ERISA Affiliates from the sponsor of a Multiemployer Plan of Borrower or
any of its ERISA Affiliates, copies of each notice concerning (i) the
imposition of Withdrawal Liability by any such Multiemployer Plan, (ii) the
reorganization or termination, within the meaning of Title IV of ERISA, of
any such Multiemployer Plan or (iii) the amount of liability incurred, or
that may be incurred, by Borrower or any of its ERISA Affiliates in
connection with any event described in clause (i) or (ii).
(j) LITIGATION. Promptly after the commencement thereof, notice
of all actions, suits, investigations, litigation and proceedings before
any court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, affecting Borrower or any of its
Subsidiaries of the type described in Section 4.1(f), and promptly after
the occurrence thereof, notice of any adverse change in the status or the
financial effect on Borrower of the Disclosed Litigation from that
described on Schedule 4.1(f).
(k) SECURITIES REPORTS. Promptly after the sending or filing
thereof, copies of all proxy statements, financial statements and reports
that Borrower or any of its Subsidiaries sends to its stockholders, and
copies of all regular, periodic and special reports, and all registration
statements, that Borrower or any of its Subsidiaries files with the
Securities and Exchange Commission or any governmental authority that may
be substituted therefor, or with any national securities exchange.
(l) CREDITOR REPORTS. Promptly after the furnishing thereof,
copies of any statement or report furnished to any other holder of the
securities of Borrower or of any of its Subsidiaries pursuant to the terms
of any indenture, loan or credit or similar agreement and not otherwise
required to be furnished to Lenders pursuant to any other clause of this
Section 5.3.
(m) AGREEMENT NOTICES. Promptly upon receipt thereof, copies of
all notices, requests and other documents (other than routine
correspondence) received by Borrower or any of its Subsidiaries under or
pursuant to any Acquisition Documents and, from time to time upon request
by Agent, such information and reports regarding the Acquisition Documents
as Agent may reasonably request.
(n) ENVIRONMENTAL CONDITIONS. Promptly after the occurrence
thereof, notice of any condition or occurrence on any property of Borrower
that results in a material noncompliance by Borrower or any of its
Subsidiaries with any Environmental Law or Environmental Permit or could
(i) form the basis of an Environmental Action against Borrower or any of
its Subsidiaries or such property that would have a Material Adverse Effect
or (ii) cause any such property to be subject to any restrictions on
ownership, occupancy, use or transferability under any Environmental Law.
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(o) CHANGE OF CONTROL NOTICE. As soon as possible and in any
event within five days after the occurrence of any event referred to in
clause (i) or (ii) of the definition of "Change of Control" contained in
Section 1.1 hereof, notice of the occurrence of such event.
(p) OTHER INFORMATION. Such other information respecting the
business, condition (financial or otherwise), operations, performance,
properties or prospects of Borrower as any Lender may from time to time
reasonably request.
SECTION 5.4. FINANCIAL COVENANTS. So long as any Advance shall
remain unpaid, Borrower will, unless the Required Lenders otherwise consent in
writing:
(a) WORKING CAPITAL. Maintain a ratio of Consolidated Current
Assets to Consolidated Current Liabilities of not less than 1.5 to 1.0.
(b) FIXED CHARGE COVERAGE RATIO. Maintain, for each period of
four consecutive quarters set forth below, a ratio of (i) Consolidated
EBITDA of Borrower and its Subsidiaries for such period MINUS the sum of
(A) cash Capital Expenditures of Borrower and its Subsidiaries during such
period, and (B) Consolidated cash income taxes paid (net of any cash income
tax refunds received) by Borrower and its Subsidiaries during such period,
to (ii) the sum of (A) interest payable on, and amortization of debt
discount in respect of, all Debt of Borrower and its Subsidiaries during
such period and (B) principal amounts of all Funded Debt payable by
Borrower and its Subsidiaries during such period of not less than the ratio
set forth below for the respective period:
FOUR-QUARTER PERIOD ENDING RATIO
---------------------------------------------------
On October 31, 1996 0.30 to 1.0
On January 31, 1997 0.35 to 1.0
On April 30, 1997 0.50 to 1.0
On July 31, 1997 0.85 to 1.0
During 1997/1998 fiscal year 0.95 to 1.0
During 1998/1999 fiscal year 0.95 to 1.0
During 1999/2000 fiscal year 0.90 to 1.0
During 2000/2001 fiscal year 0.80 to 1.0
During 2001/2002 fiscal year 0.85 to 1.0
(c) CAPITAL EXPENDITURES. Not make, or permit any of its
Subsidiaries to make, any Capital Expenditures that would cause the
aggregate of all
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such Capital Expenditures made by Borrower and its Subsidiaries in any
period of 12 consecutive months to exceed an aggregate amount of $1,500,000
plus an amount equal to the sum of (i) Net Cash Proceeds which, in
accordance with the provisions of Section 2.4(a), are utilized by Borrower
or any Subsidiary of Borrower to effect a Capital Expenditure during such
12-consecutive-month period; PLUS (ii) cash proceeds which, in accordance
with the provision of Section 2.4(c), are utilized by Borrower or any
Subsidiary of Borrower to effect a Capital Expenditure during such
12-consecutive-month period.
(d) LEVERAGE RATIO. Maintain, for each quarter ended in the
periods set forth below, a ratio of Consolidated Total Liabilities to
Consolidated Net Worth of not greater than the ratio set forth below for
such quarter:
FISCAL QUARTER ENDING RATIO
-----------------------------------------------
During 1996/1997 fiscal year 40 to 1.0
During 1997/1998 fiscal year 30 to 1.0
During 1998/1999 fiscal year 18 to 1.0
During 1999/2000 fiscal year 13 to 1.0
During 2000/2001 fiscal year 8 to 1.0
During 2001/2002 fiscal year 5 to 1.0
(e) CALCULATION. In making calculations under this Section 5.4,
Reorganization Expenses shall be excluded.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.1. EVENTS OF DEFAULT. If any of the following events
("EVENTS OF DEFAULT") shall occur and be continuing:
(a) PAYMENT. Borrower shall fail to pay any principal of any
Advance when due and payable, or shall fail to pay any interest on any
Advance within three days after such interest shall become due and payable,
or Borrower shall fail to make any other payment under any Loan Document
within three days after the same becomes due and payable; or
(b) REPRESENTATIONS AND WARRANTIES. Any representation or
warranty made or deemed made by Borrower (or any of its officers) under or
in connection with any Loan Document shall prove to have been incorrect in
any material respect when made or deemed made; or
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(c) CERTAIN COVENANTS. Borrower shall fail to perform or
observe any term, covenant or agreement contained in Sections 5.2, 5.3(a)
or 5.4; or
(d) COVENANTS. Borrower shall fail to perform any other term,
covenant or agreement contained in any Loan Document on its part to be
performed or observed if such failure shall remain unremedied for 15
Business Days after written notice thereof shall have been given to
Borrower by Agent or any Lender; or
(e) DEBT. Borrower or any of its Subsidiaries shall fail to pay
any principal of, premium or interest on or any other amount payable in
respect of, any Debt that is outstanding in a principal amount of at least
$1,000,000 in the aggregate (but excluding Debt outstanding hereunder and
any Debt for the deferred purchase price of property or services to the
extent such Debt is being contested in good faith by Borrower and Borrower
has set aside adequate reserves on its books in accordance with GAAP in
respect of such contested Debt) of Borrower or such Subsidiary (as the case
may be), when the same becomes due and payable (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise), and such
failure shall continue after the applicable grace period, if any, specified
in the agreement or instrument relating to such Debt; or any other event
shall occur or condition shall exist under any agreement or instrument
relating to any such Debt and shall continue after the applicable grace
period, if any, specified in such agreement or instrument, if the effect of
such event or condition is to accelerate, or to permit the acceleration of,
the maturity of such Debt or otherwise to cause, or to permit the holder
thereof to cause, such Debt to mature; or any such Debt shall be declared
to be due and payable or required to be prepaid or redeemed (other than by
a regularly scheduled required prepayment or redemption or a prepayment or
redemption that is required other than as a result of a default by or other
condition in respect of Borrower), purchased or defeased, or an offer to
prepay, redeem, purchase or defease such Debt shall be required to be made,
in each case prior to the stated maturity thereof; or
(f) INSOLVENCY. Borrower or any of its Subsidiaries shall
generally not pay its debts as such debts become due, or shall admit in
writing its inability to pay its debts generally, or shall make a general
assignment for the benefit of creditors; or any proceeding shall be
instituted by or against Borrower or any of its Subsidiaries seeking to
adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, or composition
of it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee, or other similar official
for it or for any substantial part of its property and, in the case of any
such proceeding instituted against it (but not instituted by it) that is
being diligently contested by it in good faith, either such proceeding
shall remain undismissed or unstayed for a period of 60 days or any of the
actions sought in such proceeding (including, without limitation, the entry
of an order for relief against, or the appointment of a receiver, trustee,
custodian or other similar official for, it or any substantial part of its
property) shall occur; or Borrower or any of its Subsidiaries shall
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take any corporate action to authorize any of the actions set forth above
in this subsection (f); or
(g) MONETARY JUDGMENTS. Any judgment or order for the payment
of money in excess of $5,000,000 shall be rendered against Borrower or any
of its Subsidiaries and either (i) enforcement proceedings shall have been
commenced by any creditor upon such judgment or order or (ii) there shall
be any period of 10 consecutive days during which a stay of enforcement of
such judgment or order, by reason of a pending appeal or otherwise, shall
not be in effect; or
(h) NON-MONETARY JUDGMENTS. Any non-monetary judgment or order
shall be rendered against Borrower or any of its Subsidiaries that would
have a Material Adverse Effect, and there shall be any period of 10
consecutive days during which a stay of enforcement of such judgment or
order, by reason of a pending appeal or otherwise, shall not be in effect;
or
(i) LOAN DOCUMENTS. Any material provision of any Loan Document
after delivery thereof pursuant hereto shall for any reason cease to be
valid and binding on or enforceable against Borrower to it, or Borrower
shall so state in writing (other than ceasing to be valid, binding or
enforceable as a result of an amendment, release, waiver, termination, or
consent given by Lenders or Agent); or
(j) COLLATERAL DOCUMENTS. Any Collateral Document after
delivery thereof pursuant hereto shall for any reason (other than pursuant
to the terms thereof) cease to create a valid and perfected first priority
(other than as a result of the priority of Permitted Liens) Lien on the
Collateral purported to be covered thereby, or any Grantor shall so state
in writing (other than ceasing to create a valid and perfected first
priority Lien as a result of an amendment, release, waiver, termination, or
consent given by Lenders or Agent); or
(k) ERISA EVENTS. Any ERISA Event shall have occurred with
respect to, a Plan of Borrower or any of its ERISA Affiliates and the sum
(determined as of the date of occurrence of such ERISA Event) of the
Insufficiency of such Plan and the Insufficiency of any and all other Plans
of Borrower and their ERISA Affiliates with respect to which an ERISA Event
shall have occurred and then exist (or the liability of Borrower and their
ERISA Affiliates related to such ERISA Event) exceeds $1,000,000; or
(l) WITHDRAWAL LIABILITY. Borrower or any of its ERISA
Affiliates shall have been notified by the sponsor of a Multiemployer Plan
of Borrower or any of its ERISA Affiliates that it has incurred Withdrawal
Liability to such Multiemployer Plan in an amount that, when aggregated
with all other amounts required to be paid to Multiemployer Plans by the
borrower and its ERISA Affiliates as Withdrawal Liability (determined as of
the date of such notification), exceeds $1,000,000 or requires payments
exceeding $1,000,000 per annum; or
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(m) MULTIEMPLOYER PLANS. Borrower or any of its ERISA
Affiliates shall have been notified by the sponsor of a Multiemployer Plan
of Borrower or any of its ERISA Affiliates that such Multiemployer Plan is
in reorganization or is being terminated, within the meaning of Title IV of
ERISA, and as a result of such reorganization or termination the aggregate
annual contributions of Borrower and its ERISA Affiliates to all
Multiemployer Plans that are then in reorganization or being terminated
have been or will be increased over the amounts contributed to such
Multiemployer Plans for the plan years of such Multiemployer Plans
immediately preceding the plan year in which such reorganization or
termination occurs by an amount exceeding $1,000,000;
then, and in any such event, Agent shall at the request, or may with the consent
of the Required Lenders, by notice to Borrower, declare the Notes, all interest
thereon and all other amounts payable under this Agreement and the other Loan
Documents to be forthwith due and payable, whereupon the Notes, all such
interest and all such amounts shall become and be forthwith due and payable,
without presentment, demand, protest or further notice of any kind, all of which
are hereby expressly waived by Borrower.
ARTICLE VII
AGENT
SECTION 7.1. AUTHORIZATION AND ACTION. Agent is authorized on behalf
of each Lender to take such action as agent on its behalf and to exercise such
powers and discretion under this Agreement and the other Loan Documents as are
delegated to Agent by the terms hereof and thereof, together with such powers
and discretion as are reasonably incidental thereto. As to any matters not
expressly provided for by the Loan Documents (including, without limitation,
enforcement or collection of the Notes), Agent shall not be required to exercise
any discretion or take any action, but shall be required to act or to refrain
from acting (and shall be fully protected in so acting or refraining from
acting) upon the instructions of the Required Lenders, and such instructions
shall be binding upon all Lenders and all holders of Notes; PROVIDED, HOWEVER,
that Agent shall not be required to take any action that exposes Agent to
personal liability or that is contrary to this Agreement or applicable law.
Agent shall give to each Lender prompt notice of each notice given to it by
Borrower pursuant to the terms of this Agreement.
SECTION 7.2. AGENT'S RELIANCE, ETC. Neither Agent nor any of its
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 the Loan
Documents, except for its or their own gross negligence or willful misconduct.
Without limitation of the generality of the foregoing, Agent: (i) may treat the
payee of any Note as the holder thereof until Agent receives and accepts an
Assignment and Acceptance entered into by the Lender that is the payee of such
Note, as assignor, and an Eligible Assignee, as assignee, as provided in Section
8.7; (ii) may consult with legal counsel (including counsel for Borrower),
independent public accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be
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taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (iii) 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 the Loan Documents; (iv) 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 any Loan Document on the part of
Borrower or to inspect the property (including the books and records) of
Borrower; (v) shall not be responsible to any Lender for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of any
Loan Document or any other instrument or document furnished pursuant hereto;
(vi) shall incur no liability under or in respect of any Loan Document by acting
upon any notice, consent, certificate or other instrument or writing (which may
be by telegram, telecopy, cable or telex) believed by it to be genuine and
signed or sent by the proper party or parties; and (vii) shall incur no
liability as a result of any determination whether the transactions contemplated
by the Loan Documents constitute a "highly leveraged transaction" within the
meaning of the interpretations issued by the Comptroller of the Currency, the
Federal Deposit Insurance Corporation and the Board of Governors of the Federal
Reserve System.
SECTION 7.3. FOOTHILL AND AFFILIATES. With respect to its Advances
and the Notes issued to it, Foothill shall have the same rights and powers under
the 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 Foothill in its individual capacity. Foothill and
its affiliates may accept deposits from, lend money to, act as trustee under
indentures of, accept investment banking engagements from and generally engage
in any kind of business with, Borrower, any of its Subsidiaries and any Person
who may do business with or own securities of Borrower or any such Subsidiary,
all as if Foothill were not Agent and without any duty to account therefor to
Lenders.
SECTION 7.4. LENDER CREDIT DECISION. Each Lender shall 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, make its own decisions
in taking or not taking action under this Agreement.
SECTION 7.5. INDEMNIFICATION. Each Lender severally shall indemnify
Agent (to the extent not promptly reimbursed by Borrower) from and against such
Lender's ratable share of any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever that may be imposed on, incurred by, or asserted
against Agent in any way relating to or arising out of the Loan Documents or any
action taken or omitted by Agent under the Loan Documents; 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 limitation of the foregoing, each Lender shall reimburse Agent promptly
upon demand for its ratable share of any costs and expenses payable by Borrower
under Section 8.4, to the extent that Agent is not promptly reimbursed for such
costs and expenses by Borrower. For purposes of this Section 7.5, Lenders'
respective ratable shares of any amount shall be determined, at any time,
according
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<PAGE>
to the aggregate principal amount of the Advances outstanding at such time and
owing to the respective Lenders. The failure of any Lender to reimburse Agent
promptly upon demand for its ratable share of any amount required to be paid by
Lenders to Agent as provided herein shall not relieve any other Lender of its
obligation hereunder to reimburse Agent for its ratable share of such amount,
but no Lender shall be responsible for the failure of any other Lender to
reimburse Agent for such other Lender's ratable share of such amount.
SECTION 7.6. SUCCESSOR AGENTS. Agent may resign at any time by
giving written notice thereof to Lenders and Borrower and may be removed at any
time with or without cause by the Required Lenders. Upon any such resignation
or removal, the Required Lenders shall have the right to appoint a successor
Agent. If no successor Agent shall have been so appointed by the Required
Lenders, and shall have accepted such appointment, within 30 days after the
retiring Agent's giving of notice of resignation or the Required Lenders'
removal of the retiring Agent, then the retiring Agent may, on behalf of
Lenders, appoint a successor Agent, which shall be a commercial bank organized
under the laws of the United States or of any State thereof and having a
combined capital and surplus of at least $250,000,000. Upon the acceptance of
any appointment as Agent hereunder by a successor Agent and upon the execution
and filing or recording of such financing statements, or amendments thereto, and
such amendments or supplements to the Collateral Documents, and such other
instruments or notices, as may be necessary or desirable, or as the Required
Lenders may request, in order to continue the perfection of the Liens granted or
purported to be granted by the Collateral Documents, such successor Agent shall
succeed to and become vested with all the rights, powers, discretion, privileges
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations under the Loan Documents. After any retiring
Agent's resignation or removal hereunder as Agent, the provisions of this
Article VII shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement.
SECTION 7.7. CO-AGENT. The Co-Agent as such will have no duties or
responsibilities under this Agreement or any other Loan Document.
SECTION 7.8. REPORTS PREPARED BY AGENT. In the event that Agent
shall obtain or prepare any analyses, information or reports relating to
Borrower and its Subsidiaries and not otherwise required by the terms hereof to
be delivered to Lenders, Agent may, at the request of any Lender, provide to
such Lender such analyses, reports and information as Agent shall in its sole
discretion determine is appropriate; PROVIDED, HOWEVER, that any Lender
requesting or receiving any such analyses, report or information thereby
expressly acknowledges and agrees that (i) any such analysis, report or
information is being provided by Agent as an accommodation to such Lender, (ii)
that none of the delivery, receipt or content of any such analyses, report or
information shall affect such Lender's obligations to at all times,
independently and without reliance upon Agent or any other Lender and based on
such documents and information as such Lender shall deem appropriate at the
time, make its own credit decisions in taking or not taking action under this
Agreement, and (iii) Agent shall incur no liability whatsoever as a result of
the delivery, receipt or content of any such
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<PAGE>
analyses, report or information and shall be fully indemnified with respect
thereto pursuant to Section 7.5 hereof.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1. AMENDMENTS, ETC. No amendment or waiver of any
provision of this Agreement or the Notes, nor consent to any departure by
Borrower therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Required Lenders, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given; PROVIDED, HOWEVER, that no amendment, waiver or consent shall,
unless in writing and signed by all Lenders (other than any Lender which is, at
such time, a Defaulting Lender), do any of the following at any time: (i) waive
any of the conditions specified in Section 3.1, (ii) change the aggregate unpaid
principal amount of the Advances, or the number of Lenders, that shall be
required for Lenders or any of them to take any action hereunder, (iii) amend
this Section 8.1, (iv) subject Lenders to any additional obligations, (v) reduce
the principal of, or interest (other than interest payable pursuant to Section
2.5(b)) on, the Notes or any fees or other amounts payable hereunder or (vi)
postpone any date fixed for any payment of principal of, or interest on, the
Notes or any fees or other amounts payable hereunder; PROVIDED FURTHER that no
amendment, waiver or consent shall, unless in writing and signed by Agent in
addition to Lenders required above to take such action, affect the rights or
duties of Agent under this Agreement or any Note.
SECTION 8.2. NOTICES, ETC. All notices and other communications
provided for hereunder shall be in writing (including telegraphic, telecopy,
telex or cable communication) and mailed, telegraphed, telecopied, telexed,
cabled or delivered, if to Borrower, at its address at 2101 East Via Arado,
Rancho Dominguez, California 90220, Attention: Robert Berglass, President and
Chairman, Telecopy Number (310) 537-2524, with a copy thereof to Latham &
Watkins, 633 West Fifth Street, Suite 4000, Los Angeles, California 90071-2007,
Attention: Robert A. Koenig, Telecopy Number (213) 891-8763; if to any Bank, at
its Domestic Lending Office specified opposite its name on Schedule 1.1 hereto;
if to any other Lender, at its Domestic Lending Office specified in the
Assignment and Acceptance pursuant to which it became a Lender; and if to Agent,
at its address at 11111 Santa Monica Boulevard, Suite 1500, Commercial Banking,
Los Angeles, CA 90025, Attention: Karen Sandler, Telecopy Number (310) 479-
0461; or, as to each party, at such other address as shall be designated by such
party in a written notice to the other parties. All such notices and
communications shall, when mailed, telegraphed, telecopied, telexed or cabled,
be effective when deposited in the mails, delivered to the telegraph company,
transmitted by telecopier, confirmed by telex answerback or delivered to the
cable company, respectively, except that notices and communications to Agent
pursuant to Article II, III or VII shall not be effective until received by
Agent.
SECTION 8.3. NO WAIVER; REMEDIES. No failure on the part of any
Lender or Agent to exercise, and no delay in exercising, any right hereunder or
under any Note shall
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<PAGE>
operate as a waiver thereof; nor shall any single or partial exercise of any
such right preclude any other or further exercise thereof or the exercise of any
other right. The remedies herein provided are cumulative and not exclusive of
any remedies provided by law.
SECTION 8.4. COSTS AND EXPENSES. Borrower agrees to pay on demand
all reasonable costs and expenses of Agent and Lenders in connection with the
enforcement of the Loan Documents, whether in any action, suit or litigation,
any bankruptcy insolvency or other similar proceeding affecting creditors'
rights generally or otherwise.
SECTION 8.5. RIGHT OF SET-OFF. Upon (a) the occurrence and during
the continuance of any Event of Default and (b) the making of the request or the
granting of the consent specified by Section 6.1 to authorize Agent to declare
the Notes due and payable pursuant to the provisions of Section 6.1, each Lender
and each of its Affiliates is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and otherwise apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other indebtedness at any time owing by such Lender or such
Affiliate to or for the credit or the account of Borrower against any and all of
the Obligations of Borrower now or hereafter existing under this Agreement and
the Note or Notes held by such Lender, irrespective of whether such Lender shall
have made any demand under this Agreement or such Note or Notes and although
such obligations may be unmatured. Each Lender shall promptly notify Borrower
after any such set-off and application; PROVIDED, HOWEVER, that the failure to
give such notice shall not affect the validity of such set-off and application.
The rights of each Lender and its Affiliates under this Section are in addition
to other rights and remedies (including, without limitation, other rights of
set-off) that such Lender and its Affiliates may have.
SECTION 8.6. BINDING EFFECT. This Agreement shall become effective
on the Effective Date and thereafter shall be binding upon and inure to the
benefit of Borrower, Agent and each Lender and their respective successors and
assigns, except that Borrower shall not have the right to assign its rights
hereunder or any interest herein without the prior written consent of Lenders.
SECTION 8.7. ASSIGNMENTS AND PARTICIPATIONS.
(a) ASSIGNMENTS. Subject to the provisions of Section 8.7(i),
each Lender may assign to one or more banks or other entities all or a
portion of its rights and obligations under this Agreement (including,
without limitation, all or a portion of the Advances owing to it and the
Notes held by it); PROVIDED, HOWEVER, that (i) except in the case of an
assignment to a Person that, immediately prior to such assignment, was a
Lender or an assignment of all of a Lender's rights and obligations under
this Agreement, the amount of the Advance of the assigning Lender being
assigned pursuant to each such assignment (determined as of the date of the
Assignment and Acceptance with respect to such assignment) shall in no
event be less than $5,000,000 and each such assignment shall be to an
Eligible Assignee, and (ii) the parties to each such assignment shall
execute and deliver to Agent, for its acceptance and recording in
41
<PAGE>
the Register, an Assignment and Acceptance, together with the Notes subject
to such assignment and a processing and recordation fee of $2,500. A copy
of such Assignment and Acceptance shall also be delivered to Borrower;
PROVIDED, HOWEVER, that such delivery to Borrower shall not be a condition
of effectiveness of such Assignment and Acceptance. Upon such execution,
delivery, acceptance and recording, from and after the effective date
specified in such Assignment and Acceptance, (x) the assignee thereunder
shall be a party hereto and, to the extent that rights and obligations
hereunder have been assigned to it pursuant to such Assignment and
Acceptance, have the rights and obligations of a Lender hereunder and (y)
the Lender assignor thereunder shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such Assignment
and Acceptance, relinquish its rights and be released from its obligations
under this Agreement (and, in the case of an Assignment and Acceptance
covering all or the remaining portion of an assigning Lender's rights and
obligations under this Agreement, such Lender shall cease to be a party
hereto).
(b) EFFECT OF ASSIGNMENT. By executing and delivering an
Assignment and Acceptance, the Lender assignor thereunder and the assignee
thereunder confirm to and agree with each other and the other parties
hereto as follows: (i) other than as provided in such Assignment and
Acceptance, such assigning Lender makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with any Loan Document or the
execution, legality, validity, enforceability, genuineness, sufficiency or
value of any Loan Document or any other instrument or document furnished
pursuant hereto; (ii) such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to the financial
condition of Borrower or the performance or observance by Borrower of any
of its obligations under any Loan Document or any other instrument or
document furnished pursuant hereto; (iii) such assignee confirms that it
has received a copy of the Loan Documents, together with copies of the
financial statements referred to in Section 4.1 and such other documents
and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance;
(iv) such assignee will, independently and without reliance upon Agent,
such assigning Lender 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 any Loan
Document; (v) such assignee confirms that it is an Eligible Assignee; (vi)
such assignee appoints and authorizes Agent to take such action as agent on
its behalf and to exercise such powers and discretion under this Agreement
and the other Loan Documents as are delegated to Agent by the terms hereof
and thereof, together with such powers and discretion as are reasonably
incidental thereto; and (vii) such assignee agrees that it will perform in
accordance with their terms all of the obligations that by the terms of
this Agreement are required to be performed by it as a Lender.
(c) REGISTER. Agent shall maintain at its address referred to
in Section 8.2 a copy of each Assignment and Acceptance delivered to and
accepted by it
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and a register for the recordation of the names and addresses of Lenders
and the principal amount of the Advances owing to, each Lender from time to
time (the "REGISTER"). The entries in the Register shall be conclusive and
binding for all purposes, absent manifest error, and Borrower, Agent and
Lenders may treat each Person whose name is recorded in the Register as a
Lender hereunder for all purposes of this Agreement. The Register shall be
available for inspection by Borrower or any Lender at any reasonable time
and from time to time upon reasonable prior notice.
(d) NOTES. Upon its receipt of an Assignment and Acceptance
executed by an assigning Lender and an assignee, together with any Notes
subject to such assignment, Agent shall, if such Assignment and Acceptance
has been completed and is in substantially the form of Exhibit F hereto,
(i) accept such Assignment and Acceptance, (ii) record the information
contained therein in the Register and (iii) give prompt notice thereof to
Borrower. Within five Business Days after its receipt of such notice,
Borrower, at its own expense, shall execute and deliver to Agent, in
exchange for the surrendered Note, a new Note to the order of such Eligible
Assignee in an aggregate amount equal to the Advance assumed by it pursuant
to such Assignment and Acceptance and, if the assigning Lender has retained
an Advance hereunder, a new Note to the order of the assigning Lender in an
aggregate amount equal to the Advance retained by it hereunder. Such new
Notes shall be in an aggregate principal amount equal to the aggregate
principal amount of the Advances outstanding on the effective date of the
Assignment and Acceptance, shall be dated the effective date of such
Assignment and Acceptance and shall otherwise be in substantially the form
of Exhibit A hereto.
(e) PARTICIPATION. Subject to the provisions of Section 8.7(i),
each Lender may sell participations in or to all or a portion of its rights
and obligations under this Agreement (including, without limitation, all or
a portion of the Advances owing to it and the Note held by it); PROVIDED,
HOWEVER, that (i) such Lender's obligations under this Agreement shall
remain unchanged, (ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations, (iii) such
Lender shall remain the holder of such Note for all purposes of this
Agreement, (iv) Borrower, Agent and the other Lenders shall continue to
deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement and (v) no participant under
any such participation shall have any right to approve any amendment or
waiver of any provision of any Loan Document, or any consent to any
departure by Borrower therefrom, except to the extent that such amendment,
waiver or consent would reduce the principal of, or interest (other than
interest payable pursuant to Section 2.5(b)) on, the Notes or any fees or
other amounts payable hereunder, in each case to the extent subject to such
participation, postpone any date fixed for any payment of principal of, or
interest (other than interest payable pursuant to Section 2.5(b)) on, the
Notes or any fees or other amounts payable hereunder, in each case to the
extent subject to such participation, or release all or substantially all
of the Collateral.
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(f) DISCLOSURE. Any Lender may, in connection with any
assignment or participation or proposed assignment or participation
pursuant to this Section 8.7, disclose to the assignee or participant or
proposed assignee or participant, any information relating to Borrower
furnished to such Lender by or on behalf of Borrower; PROVIDED, HOWEVER,
that, prior to any such disclosure, the assignee or participant or proposed
assignee or participant shall agree to preserve the confidentiality of any
Confidential Information received by it from such Lender.
(g) ASSIGNMENT TO FEDERAL RESERVE BOARD. Notwithstanding any
other provision set forth in this Agreement, any Lender (including any
Eligible Assignee of any Lender) may at any time create a security interest
in, or assign, all or any portion of its rights under this Agreement and
the other Loan Documents (including, without limitation, the Advances owing
to it and the Notes held by it) in favor of or to any Federal Reserve Bank
without notice to, or consent of, Borrower or Agent.
(h) TAXES. Notwithstanding the provisions of Section 2.8,
Borrower shall not be liable for (i) any Taxes or Other Taxes, that are
incurred by any Affiliate of any Lender when such Affiliate becomes a
Lender under Section 8.7(a) to the extent such Taxes or Other Taxes exceed
the Taxes or Other Taxes that would have been incurred by such Lender, or
(ii) any Taxes or Other Taxes, that are incurred by any participant
referred to in Section 8.7(e).
SECTION 8.8. HEADINGS. Article and Section headings in this
Agreement are included for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
SECTION 8.9. CONSENT TO JURISDICTION.
(a) JURISDICTION. Borrower hereby irrevocably submits to the
jurisdiction of any California or federal court sitting in the County of
Los Angeles, in any action or proceeding arising out of or relating to this
Agreement or any other Loan Document, and Borrower hereby irrevocably
agrees that all claims in respect of such action or proceeding may be heard
and determined in such courts. Borrower hereby irrevocably waives, to the
fullest extent it may effectively do so, the defense of an inconvenient
forum to the maintenance of such action or proceeding.
(b) LEGAL PROCESS. Nothing in this Section 8.9 shall affect the
right of any Lender or Agent to serve legal process in any other manner
permitted by law or affect the right of any Lender or Agent to bring any
action or proceeding against Borrower or its property in the courts of
other jurisdictions.
SECTION 8.10. CONFIDENTIALITY. Neither Agent nor any Lender shall
disclose any Confidential Information to any Person without the consent of
Borrower, other than (a) to Agent's or such Lender's Affiliates and their
officers, directors, employees, agents and
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advisors and to actual or prospective Eligible Assignees and participants, and
then only on a confidential basis; (b) as required by any law, rule or
regulation or judicial process; and (c) as requested or required by any state,
federal or foreign authority or examiner regulating banks or banking. If any
Lender or Agent is required by any law, rule or regulation or judicial process
to disclose any Confidential Information, such Lender or Agent, as the case may
be, will promptly give notice to Borrower so that Borrower may seek a protective
order or other appropriate remedy. If Borrower shall not obtain such protective
order or other remedy, such Lender or Agent, as the case may be, will endeavor
to furnish only that portion of the Confidential Information which such Lender
or Agent believes to be legally required.
SECTION 8.11. SEVERABILITY. The provisions of this Agreement are
severable, and if any clause or provision hereof shall be held invalid or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect only such clause or provision, or part thereof, in
such jurisdiction, and shall not in any manner affect such clause or provision
in any other jurisdiction, or any other clause or provision of this Agreement in
any jurisdiction.
SECTION 8.12. GOVERNING LAW. THIS AGREEMENT AND THE NOTES SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA.
SECTION 8.13. EXECUTION IN COUNTERPARTS. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.
[Remainder of page intentionally blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
DEP CORPORATION
By:
----------------------------------------
Name:
-------------------------------
Title:
-------------------------------
FOOTHILL CAPITAL CORPORATION, as a
Lender and as Agent
By:
----------------------------------------
Name:
-------------------------------
Title:
-------------------------------
CITY NATIONAL BANK, as a Lender and as
Co-Agent
By:
----------------------------------------
Name:
-------------------------------
Title:
-------------------------------
PNC BANK, N.A., as a Lender
By:
----------------------------------------
Name:
-------------------------------
Title:
-------------------------------
S-1
<PAGE>
GOLDMAN, SACHS CREDIT PARTNERS, L.P., as a
Lender
By:
----------------------------------------
Name:
-------------------------------
Title:
-------------------------------
CERBERUS PARTNERS, L.P., as a Lender
By:
----------------------------------------
Name:
-------------------------------
Title:
-------------------------------
TCW SPECIAL CREDITS FUND V - THE PRINCIPAL
FUND, as a Lender
By:
----------------------------------------
Name:
-------------------------------
Title:
-------------------------------
By: TCW ASSET MANAGEMENT COMPANY, its
general partner
By:
---------------------------------
Name:
----------------------------
Title:
----------------------------
By:
---------------------------------
Name:
----------------------------
Title:
----------------------------
S-2
<PAGE>
WARRANT AGREEMENT
BETWEEN
DEP CORPORATION
and
Each Initial Warrant Holder
Executing A Copy Of This Warrant Agreement
______________________________
Dated as of November 4, 1996
______________________________
<PAGE>
TABLE OF CONTENTS
-----------------
PAGE
----
WARRANT AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2. WARRANT CERTIFICATES . . . . . . . . . . . . . . . . . . . . . 2
SECTION 3. REGISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 4. REGISTRATION OF TRANSFERS AND EXCHANGES. . . . . . . . . . . . 3
SECTION 5. WARRANTS; EXERCISE OF WARRANTS . . . . . . . . . . . . . . . . 3
SECTION 6. PAYMENT OF TAXES . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 7. MUTILATED OR MISSING WARRANT CERTIFICATES. . . . . . . . . . . 5
SECTION 8. RESERVATION OF WARRANT SHARES. . . . . . . . . . . . . . . . . 5
SECTION 9. OBTAINING STOCK EXCHANGE LISTINGS. . . . . . . . . . . . . . . 5
SECTION 10. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES
ISSUABLE. . . . . . . . . . . . . . . . . . . . . . . . . . 6
(a) ADJUSTMENT FOR CHANGE IN CAPITAL STOCK . . . . . . . . . . . . . 6
(b) ADJUSTMENT FOR OTHER DISTRIBUTIONS . . . . . . . . . . . . . . . 6
(c) WHEN DE MINIMIS ADJUSTMENT MAY BE DEFERRED . . . . . . . . . . . 7
(d) WHEN NO ADJUSTMENT REQUIRED. . . . . . . . . . . . . . . . . . . 7
(e) NOTICE OF ADJUSTMENT . . . . . . . . . . . . . . . . . . . . . . 7
(f) VOLUNTARY REDUCTION. . . . . . . . . . . . . . . . . . . . . . . 7
(g) NOTICE OF CERTAIN TRANSACTIONS . . . . . . . . . . . . . . . . . 8
(h) REORGANIZATION OF COMPANY. . . . . . . . . . . . . . . . . . . . 8
(i) BOARD OF DIRECTORS DETERMINATION FINAL . . . . . . . . . . . . . 9
(j) WHEN ISSUANCE OR PAYMENT MAY BE DEFERRED . . . . . . . . . . . . 9
(k) ADJUSTMENT IN NUMBER OF SHARES . . . . . . . . . . . . . . . . . 9
(l) FORM OF WARRANTS . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 11. FRACTIONAL INTERESTS. . . . . . . . . . . . . . . . . . . . . 9
SECTION 12. NOTICES TO WARRANT HOLDERS. . . . . . . . . . . . . . . . . . 10
SECTION 13. NOTICES TO COMPANY AND WARRANT HOLDER . . . . . . . . . . . . 10
SECTION 14. SUPPLEMENTS AND AMENDMENTS. . . . . . . . . . . . . . . . . . 11
SECTION 15. SUCCESSORS. . . . . . . . . . . . . . . . . . . . . . . . . . 11
<PAGE>
SECTION 16. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 17. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 18. BENEFITS OF THIS AGREEMENT. . . . . . . . . . . . . . . . . . 11
SECTION 19. COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . . . 11
<PAGE>
WARRANT AGREEMENT
This WARRANT AGREEMENT, dated as of November 4, 1996 (this
"Agreement"), is by and between DEP CORPORATION, a Delaware corporation (the
"Company"), and each initial holder of Warrants issued pursuant to this
Agreement, as reflected in the signature pages hereto.
WHEREAS, the Company commenced on April 1, 1996 a case under Chapter
11 of the United States Bankruptcy Code (Title 11, United States Code) (the
"Bankruptcy Code") seeking protection from its creditors and reorganization
thereunder;
WHEREAS, the Company has prepared its Second Amended Plan of
Reorganization dated as of August 23, 1996 (the "Consensual Plan"), which
Consensual Plan was duly confirmed by the United States Bankruptcy Court for the
District of Delaware (the "Bankruptcy Court") under Section 1129 of the
Bankruptcy Code;
WHEREAS, one element of the Consensual Plan calls for the Company to
issue to the holders of Class 1 Secured Claims under the Consensual Plan, at
such holders' election, either or both of shares of the Company's Common Stock
(as defined below) and warrants to purchase shares of such Common Stock; and
WHEREAS, the Common Stock Purchase Warrants issuable pursuant to this
Agreement (the "Warrants"), representing the right to purchase, in total, up to
an aggregate of 330,050 shares of the Company's Common Stock, are intended to be
the "Class 1 Warrants" contemplated by the Consensual Plan, and this Agreement
is intended as the "Class 1 Warrant Agreement" also so contemplated.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
SECTION 1. DEFINITIONS.
"BUSINESS DAY" shall mean any day, other than a Saturday, Sunday or "LEGAL
HOLIDAY" (as defined in Rule 9006(a) of the Federal Rules of Bankruptcy
Procedure, or any successor provision then in force).
"COMMON STOCK" initially shall mean the Company's Common Stock, $.01 par
value per share, and in the event of any reclassification, reorganization or
other change in the Company's capital stock, shall mean shares of any class of
common stock of the Company and any other stock of the Company, however
designated, that has the right (subject to any prior rights of any class or
series of preferred stock) to participate in any distribution of the assets or
earnings of the Company without limit as to per share amount.
"CURRENT MARKET PRICE" shall mean, with respect to any date of
determination, the average of the Quoted Prices of the Common Stock for 20
consecutive trading days commencing 21 trading days before the date in question.
<PAGE>
"EFFECTIVE DATE" shall mean the date the Consensual Plan becomes effective
in accordance with the terms of such Consensual Plan.
"EXERCISE PRICE" shall mean the average of the Quoted Prices of the Common
Stock during the Trading Period.
"EXPIRATION DATE" shall mean the sixth anniversary of the Effective Date.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"NASDAQ SMALLCAP MARKET" shall mean the National Association of Securities
Dealers, Inc. SmallCap Market.
"QUOTED PRICE" shall mean, with respect to any date of determination, the
last reported sales price (or, as applicable, closing price) of the Common Stock
on such date as reported by NASDAQ SmallCap Market, or if the Common Stock is
not listed on such market, "QUOTED PRICE" shall mean the last reported sales
price (or, as applicable, closing price) of the Common Stock on such date on any
other nationally recognized market or exchange, or if the Common Stock is not
listed on such market or exchange, "QUOTED PRICE" shall mean the last bid price
for the Common Stock quoted on such date in any recognized over-the-counter
reporting service. In the absence of one or more such quotations, the Board of
Directors of the Company shall reasonably determine the Quoted Price of the
Common Stock in good faith, which determination shall (absent manifest error) be
conclusive and binding.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"TRADING PERIOD" shall mean the period beginning with the first NASDAQ
SmallCap Market trading day following the Effective Date and ending 20 trading
days thereafter (including such 20th trading day in such period); PROVIDED that
if the Common Stock is not listed on the NASDAQ SmallCap Market during such
period, the pricing period shall commence on the first trading day thereafter in
which the Common Stock is listed on the NASDAQ SmallCap Market or other
nationally recognized market or exchange and shall terminate 20 trading days
thereafter; and PROVIDED FURTHER, that if a transaction of the sort described in
Section 10(h) hereof is consummated within such 20 day period, the "Trading
Period" shall mean the period beginning with the first trading day following the
Effective Date and ending on one day immediately prior to the consummation of
such transaction.
"TRANSFER AGENT" shall mean the Company's transfer agent for the Common
Stock.
"WARRANT CERTIFICATES" shall mean the certificates evidencing the Warrants.
"WARRANT SHARES" shall mean the Common Stock issuable on exercise of the
Warrants.
SECTION 2. WARRANT CERTIFICATES. The Warrant Certificates to be
delivered pursuant to this Agreement shall be in registered form only and shall
be substantially in the form set forth in Exhibit A attached hereto. Each
Warrant Certificate shall represent the right to purchase no fewer than 10,000
Warrant Shares (as appropriately and equitably adjusted for any
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<PAGE>
stock split or similar transaction as provided in Section 10), and no transfer
or exercise of any Warrants or Warrant Certificate shall be valid, recognized or
consummated if such transfer or exercise would otherwise result in the issuance
of a Warrant Certificate to purchase fewer than 10,000 Warrant Shares. The
Warrant Certificates shall be signed on behalf of the Company by its Chairman of
the Board or its President or a Vice President and by its Secretary or an
Assistant Secretary under its corporate seal. Each such signature upon the
Warrant Certificates may be in the form of a facsimile signature of the present
or any future Chairman of the Board, President, Vice President, Secretary or
Assistant Secretary and may be imprinted or otherwise reproduced on the Warrant
Certificates and for that purpose the Company may adopt and use the facsimile
signature of any person who shall have been Chairman of the Board, President,
Vice President, Secretary or Assistant Secretary, notwithstanding the fact that
at the time the Warrant Certificates shall be delivered or disposed of he shall
have ceased to hold such office. The seal of the Company may be in the form of
a facsimile thereof and may be impressed, affixed, imprinted or otherwise
reproduced on the Warrant Certificates.
In case any officer of the Company who shall have signed any of the
Warrant Certificates shall cease to be such officer before the Warrant
Certificates so signed shall have been disposed of by the Company, such Warrant
Certificates nevertheless may be delivered or disposed of as though such person
had not ceased to be such officer of the Company; and any Warrant Certificate
may be signed on behalf of the Company by any person who, at the actual date of
the execution of such Warrant Certificate, shall be a proper officer of the
Company to sign such Warrant Certificate, although at the date of the execution
of this Warrant Agreement any such person was not such officer.
SECTION 3. REGISTRATION. The Company shall number and register the
Warrant Certificates in a register as they are issued. The Company may deem and
treat the registered holder(s) of the Warrant Certificates as the absolute
owner(s) thereof (notwithstanding any notation of ownership or other writing
thereon made by anyone), for all purposes, and shall not be affected by any
notice to the contrary.
SECTION 4. REGISTRATION OF TRANSFERS AND EXCHANGES. Subject to the
limitations set forth in Sections 2 and 5 hereof, the Company shall from time to
time register the transfer of any outstanding Warrant Certificates in a Warrant
register to be maintained by the Company upon surrender thereof with the form of
assignment on the reverse thereof duly completed and signed. Upon any such
registration of transfer, a new Warrant Certificate shall be issued to the
transferee(s) and the surrendered Warrant Certificate shall be cancelled and
disposed of by the Company.
Subject to the limitations set forth in Sections 2 and 5 of this
Warrant Agreement, Warrant Certificates may be exchanged at the option of the
holder(s) thereof, when surrendered to the Company at its office for another
Warrant Certificate or other Warrant Certificates of like tenor and representing
in the aggregate a like number of Warrants. Warrant Certificates surrendered
for exchange shall be cancelled and disposed of by the Company.
SECTION 5. WARRANTS; EXERCISE OF WARRANTS. Subject to the terms of
this Agreement, each Warrant holder shall have the right, which may be exercised
commencing at 9:00 a.m., Los Angeles time, on the first Business Day following
the expiration of the Trading Period and ending at 5:00 p.m., Los Angeles time,
on the Expiration Date, to receive from the
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<PAGE>
Company the number of fully paid and nonassessable Warrant Shares which the
holder may at the time be entitled to receive upon the exercise of such Warrants
and payment of the Exercise Price then in effect for such Warrant Shares. Each
Warrant not exercised prior to 5:00 p.m., Los Angeles time, on the Expiration
Date shall become void and all rights thereunder and all rights in respect
thereof under this Agreement shall cease as of such time. No adjustments as to
dividends will be made upon exercise of the Warrants.
Anything to the contrary contained herein or in any Warrant
Certificate notwithstanding, no Warrant holder may purchase fewer than 10,000
Warrant Shares (such number, as appropriately and equitably adjusted for any
stock split or similar transaction) pursuant to any exercise of Warrants or any
Warrant Certificate issued or delivered pursuant to this Warrant Agreement.
A Warrant may be exercised upon surrender to the Company at its office
designated for such purpose (the address of which is set forth in Section 13
hereof) of the Certificate or Certificates evidencing the Warrants to be
exercised with the form of election to purchase on the reverse thereof duly
filled in and signed, which signature shall be guaranteed by a bank or trust
company having an office or correspondent in the United States or a broker or
dealer which is a member of a registered securities exchange or the NASD, and
upon payment to the Company of the Exercise Price for the number of Warrant
Shares in respect of which such Warrants are then exercised. Payment of the
aggregate Exercise Price shall be made in cash or by certified or official bank
check to the order of the Company.
Subject to the provisions of this Section 5 and of Sections 2 and 6
hereof, upon such surrender of Warrants and payment of the Exercise Price the
Company shall issue and cause to be delivered with all reasonable dispatch to or
upon the written order of the holder and in such name or names as the Warrant
holder may designate, a certificate or certificates for the number of full
Warrant Shares issuable upon the exercise of such Warrants together with cash as
provided in Section 11; PROVIDED, HOWEVER, that if any consolidation, merger or
lease or sale of assets is proposed to be effected by the Company as described
in subsection (h) of Section 10 hereof, or a tender offer or an exchange offer
for shares of Common Stock shall be made, upon such surrender of Warrant
Certificates and payment of the Exercise Price as aforesaid, the Company shall,
as soon as possible, but in any event not later than seven Business Days
thereafter, issue and cause to be delivered the full number of Warrant Shares
issuable upon the exercise of such Warrants in the manner described in this
sentence together with cash as provided in Section 11. Such certificate or
certificates shall be deemed to have been issued and any person so designated to
be named therein shall be deemed to have become a holder of record of such
Warrant Shares as of the date of the surrender of such Warrant Certificates and
payment of the Exercise Price.
The Warrants shall be exercisable, at the election of the holders
thereof and subject to the limitations set forth in this Section 5 and in
Section 2 hereof, either in full or from time to time in part and, in the event
that a Certificate evidencing Warrants is exercised in respect of fewer than all
of the Warrant Shares issuable on such exercise at any time prior to the date of
expiration of the Warrants, a new Certificate evidencing the remaining Warrant
or Warrants will be issued and delivered pursuant to the provisions of this
Section and of Section 2 hereof.
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<PAGE>
All Warrant Certificates surrendered upon exercise of Warrants shall
be cancelled and disposed of by the Company. The Company shall keep copies of
this Agreement and any notices given or received hereunder available for
inspection by the holders during normal business hours at its principal place of
business.
SECTION 6. PAYMENT OF TAXES. The Company will pay all documentary
stamp taxes attributable to the initial issuance of Warrant Shares upon the
exercise of Warrants.
SECTION 7. MUTILATED OR MISSING WARRANT CERTIFICATES. In case any of
the Warrant Certificates shall be mutilated, lost, stolen or destroyed, the
Company shall issue, in exchange and substitution for and upon cancellation of
the mutilated Warrant Certificate, or in lieu of and substitution for the
Warrant Certificate lost, stolen or destroyed, a new Warrant Certificate of like
tenor and representing an equivalent number of Warrants, but only upon receipt
of evidence reasonably satisfactory to the Company of such loss, theft or
destruction of such Warrant Certificate and indemnity or bond, if requested,
also reasonably satisfactory to it, PROVIDED HOWEVER, that no such bond may be
requested from any initial holder of Warrants issued pursuant to this Agreement
or any institutional "accredited investor" (as defined in Regulation D under the
Securities Act) who subsequently acquires Warrants. Applicants for such
substitute Warrant Certificates shall also comply with such other reasonable
regulations and pay such other reasonable charges as the Company may prescribe.
SECTION 8. RESERVATION OF WARRANT SHARES. The Company will at all
times reserve and keep available, free from preemptive rights, out of the
aggregate of its authorized but unissued Common Stock or its authorized and
issued Common Stock held in its treasury, for the purpose of enabling it to
satisfy any obligation to issue Warrant Shares upon exercise of Warrants, the
maximum number of shares of Common Stock which may then be deliverable upon the
exercise of all outstanding Warrants.
The Company or, if appointed, the Transfer Agent and every subsequent
transfer agent for shares of the Company's Common Stock will be irrevocably
authorized and directed at all times to reserve such number of authorized shares
as shall be required for such purpose. The Company will keep a copy of this
Agreement on file with the Transfer Agent and with every subsequent transfer
agent for any shares of the Company's capital stock issuable upon the exercise
of the rights of purchase represented by the Warrants. The Company will furnish
such Transfer Agent a copy of all notices of adjustments and certificates
related thereto, transmitted to each holder pursuant to Section 12 hereof.
Before taking any action which would cause an adjustment pursuant to
Section 10 hereof to reduce the Exercise Price below the then par value (if any)
of the Warrant Shares, the Company will take any corporate action which may, in
the opinion of its counsel (which may be counsel employed by the Company), be
necessary in order that the Company may validly and legally issue fully paid and
nonassessable Warrant Shares at the Exercise Price as so adjusted.
Before taking any action which would cause an adjustment pursuant to
Section 10 hereof to increase the number of the Warrant Shares issuable upon
exercise of the Warrants, the Company will take any corporate action which may,
in the opinion of its counsel (which may be counsel employed by the Company), be
necessary in order that the Company may validly and legally issue the full
number of Warrant Shares as so adjusted.
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<PAGE>
The Company covenants that all Warrant Shares which may be issued upon
exercise of Warrants will, upon issue, be fully paid, nonassessable, free of
preemptive rights and free from all taxes, liens, charges and security interests
with respect to the issue thereof.
SECTION 9. OBTAINING STOCK EXCHANGE LISTINGS. The Company will from
time to time take all action which may be necessary so that the Warrant Shares,
immediately upon their issuance upon the exercise of Warrants, will be listed on
the principal securities exchanges and markets within the United States of
America, if any, on which other shares of the Company's Common Stock are then
listed. The Company is under no obligation, hereunder or otherwise, to register
the Warrants or the Warrant Shares under the Securities Act or under any state
"blue sky" laws.
SECTION 10. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES
ISSUABLE. The Exercise Price and the number of Warrant Shares issuable upon the
exercise of each Warrant are subject to adjustment from time to time upon the
occurrence of the events enumerated in this Section 10.
(a) ADJUSTMENT FOR CHANGE IN CAPITAL STOCK. If the Company:
1. pays a dividend or makes a distribution on its Common Stock in
shares of its Common Stock;
2. subdivides its outstanding shares of Common Stock into a greater
number of shares;
3. combines its outstanding shares of Common Stock into a smaller
number of shares;
4. makes a distribution on its Common Stock in shares of its capital
stock other than Common Stock; or
5. issues by reclassification of its Common Stock any shares of its
capital stock;
then the Exercise Price in effect immediately prior to such action shall be
proportionately adjusted so that the holder of any Warrant thereafter exercised
may receive the aggregate number and kind of shares of capital stock of the
Company which he would have owned immediately following such action if such
Warrant had been exercised immediately prior to such action.
The adjustment shall become effective immediately after the record
date in the case of a dividend or distribution and immediately after the
effective date in the case of a subdivision, combination or reclassification.
If after an adjustment a holder of a Warrant upon exercise of it may receive
shares of two or more classes of capital stock of the Company, the Board of
Directors of the Company shall reasonably determine in good faith the allocation
of the adjusted Exercise Price between the classes of capital stock. After such
allocation, the exercise privilege and the Exercise Price of each class of
capital stock shall thereafter be subject to
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<PAGE>
adjustment on terms comparable to those applicable to Common Stock in this
Section. Such adjustment shall be made successively whenever any event listed
above shall occur.
(b) ADJUSTMENT FOR OTHER DISTRIBUTIONS. If the Company distributes to all
holders of its Common Stock any of its assets (including but not limited to
cash), debt securities, preferred stock, or any rights or warrants to purchase
debt securities, preferred stock, assets or other securities of the Company, the
Exercise Price shall be adjusted in accordance with the formula:
E' = E x M - F
-----
M
where:
E' = the adjusted Exercise Price.
E = the current Exercise Price.
M = the Current Market Price on the record date.
F = the fair market value on the record date of the assets, securities,
rights or warrants applicable to one share of Common Stock, as
reasonably determined in good faith by the Board of Directors of the
Company.
The adjustment shall be made successively whenever any such
distribution is made and shall become effective immediately after the record
date for the determination of stockholders entitled to receive the distribution.
(c) WHEN DE MINIMIS ADJUSTMENT MAY BE DEFERRED. No adjustment in the
Exercise Price need be made unless the adjustment would require an increase or
decrease of at least 1% in the Exercise Price. Any adjustments that are not
made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section shall be made to the nearest
cent or to the nearest 1/100th of a share, as the case may be.
(d) WHEN NO ADJUSTMENT REQUIRED. No adjustment need be made for rights to
purchase Common Stock pursuant to a Company plan for reinvestment of dividends
or interest. No adjustment need be made for a change in the par value or no par
value of the Common Stock. To the extent the Warrants become convertible into
cash, no adjustment need be made thereafter as to the cash. Interest will not
accrue on the cash.
(e) NOTICE OF ADJUSTMENT. Whenever the Exercise Price is adjusted, the
Company shall provide the notices required by Section 12 hereof.
(f) VOLUNTARY REDUCTION. The Company from time to time may reduce the
Exercise Price by any amount for any period of time if the period is at least 15
Business Days and if the reduction is irrevocable during the period; PROVIDED,
HOWEVER, that in no event may the Exercise Price be reduced pursuant to this
subsection (f) to less than the par value of a share of Common Stock.
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<PAGE>
Whenever the Exercise Price is reduced, the Company shall mail to
Warrant holders a notice of the reduction. The Company shall mail the notice at
least 10 Business Days before the date the Exercise Price reduced pursuant to
this subsection (f) takes effect. The notice shall state the reduced Exercise
Price and the period it will be in effect. Failure to mail the notice or any
defect in it shall not affect the validity of the reduction in the Exercise
Price reduced pursuant to this subsection (f).
A reduction of the Exercise Price pursuant to this subsection (f) does
not change or adjust the Exercise Price otherwise in effect for purposes of
subsections (a) and (b) of this Section 10.
(g) NOTICE OF CERTAIN TRANSACTIONS. If:
1. the Company takes any action that would require an adjustment in
the Exercise Price pursuant to subsections (a) or (b) of this Section 10
and if the Company does not arrange for Warrant holders to participate
pursuant to subsection (d) of this Section 10;
2. the Company takes any action that would require a supplemental
Warrant Agreement pursuant to subsection (h) of this Section 10; or
3. there is a liquidation or dissolution of the Company;
the Company shall mail to Warrant holders a notice stating the proposed record
date for the dividend or distribution or the proposed effective date of the
subdivision, combination, reclassification, consolidation, merger, transfer,
lease, liquidation or dissolution. The Company shall mail the notice at least
15 Business Days before such date. Failure to mail the notice or any defect in
it shall not affect the validity of the transaction.
(h) REORGANIZATION OF COMPANY. If the Company consolidates or merges with
or into, or transfers or leases all or substantially all its assets to, any
person, upon consummation of such transaction the Warrants shall automatically
become exercisable for the kind and amount of securities, cash or other assets
which the holder of a Warrant would have owned immediately after the
consolidation, merger, transfer or lease if the holder had exercised the Warrant
immediately before the effective date of the transaction. This subsection (h)
shall apply to any successive transaction of the sort described in the preceding
sentence with the same force and effect as in the first such transaction.
Concurrently with the consummation of such transaction, the corporation formed
by or surviving any such consolidation or merger if other than the Company, or
the person to which such sale or conveyance shall have been made, shall enter
into a supplemental Warrant Agreement so providing and further providing for
adjustments which shall be as nearly equivalent as may be practical to the
adjustments provided for in this Section 10. The successor company shall mail
to Warrant holders a notice describing the supplemental Warrant Agreement.
If the issuer of securities deliverable upon exercise of Warrants
under the supplemental Warrant Agreement is an affiliate of the formed,
surviving, transferee or lessee corporation, that issuer shall join in the
supplemental Warrant Agreement.
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<PAGE>
If this subsection (h) applies to any event described in this
subsection (h), subsections (a) or (b) of this Section 10 do not apply to such
event.
(i) BOARD OF DIRECTORS DETERMINATION FINAL. Any determination reasonably
made by the Board of Directors of the Company acting in good faith pursuant to
subsection (a) or (b) of this Section 10 shall be (absent manifest error)
conclusive.
(j) WHEN ISSUANCE OR PAYMENT MAY BE DEFERRED. In any case in which this
Section 10 shall require that an adjustment in the Exercise Price be made
effective as of a record date for a specified event, the Company may elect to
defer until the occurrence of such event (i) issuing to the holder of any
Warrant exercised after such record date the additional Warrant Shares and other
capital stock of the Company, if any, issuable upon such exercise over and above
the Warrant Shares and other capital stock of the Company, if any, that would
have been issuable upon such exercise prior to such adjustment, and (ii) paying
to such holder any amount in cash in lieu of a fractional share pursuant to
Section 11; PROVIDED, HOWEVER, that the Company shall deliver to such holder a
due bill or other appropriate instrument evidencing such holder's right to
receive such additional Warrant Shares, other capital stock and cash upon the
occurrence of the event requiring such adjustment.
(k) ADJUSTMENT IN NUMBER OF SHARES. Upon each adjustment of the Exercise
Price pursuant to this Section 10, each Warrant outstanding prior to the making
of the adjustment in the Exercise Price shall thereafter evidence the right to
receive upon payment of the adjusted Exercise Price that number of shares of
Common Stock (calculated to the nearest hundredth) obtained from the following
formula:
N'= N x E
-----
E'
where:
N' = the adjusted number of Warrant Shares issuable upon exercise of a
Warrant by payment of the adjusted Exercise Price.
N = the number or Warrant Shares previously issuable upon exercise of a
Warrant by payment of the Exercise Price prior to adjustment.
E' = the adjusted Exercise Price.
E = the Exercise Price prior to adjustment.
(l) FORM OF WARRANTS. Irrespective of any adjustments in the Exercise
Price or the number or kind of shares purchasable upon the exercise of the
Warrants, Warrants theretofore or thereafter issued may continue to express the
same price and number and kind of shares as are stated in the Warrants initially
issuable pursuant to this Agreement.
SECTION 11. FRACTIONAL INTERESTS. The Company shall not be required
to issue fractional Warrant Shares on the exercise of Warrants. If more than
one Warrant shall be presented for exercise in full at the same time by the same
holder, the number of full Warrant
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Shares which shall be issuable upon the exercise thereof shall be computed on
the basis of the aggregate number of Warrant Shares purchasable on exercise of
the Warrants so presented. If any fraction of a Warrant Share would, except for
the provisions of this Section 11, be issuable on the exercise of any Warrants
(or specified portion thereof), the Company shall pay an amount in cash equal to
the Quoted Price on the Business Day immediately preceding the date the Warrant
is presented for exercise, multiplied by such fraction.
SECTION 12. NOTICES TO WARRANT HOLDERS. Upon any adjustment of the
Exercise Price pursuant to Section 10, the Company shall promptly thereafter (i)
cause to be filed with the Company a certificate of a firm of independent public
accountants of recognized standing selected by the Board of Directors of the
Company (who may be the regular auditors of the Company) setting forth the
Exercise Price after such adjustment and setting forth in reasonable detail the
method of calculation and the facts upon which such calculations are based and
setting forth the number of Warrant Shares (or portion thereof) issuable after
such adjustment in the Exercise Price, upon exercise of a Warrant and payment of
the adjusted Exercise Price, which certificate, absent manifest error, shall be
conclusive evidence of the correctness of the matters set forth therein, and
(ii) cause to be given to each of the registered holders of the Warrant
Certificates at his address appearing on the Warrant register written notice of
such adjustments and a certificate from the chief financial officer of the
Company setting forth the method of calculation of such adjustments by first
class mail, postage prepaid. Where appropriate, such notice may be given in
advance and included as a part of the notice required to be mailed under the
other provisions of this Section 12. If the Company proposes to take any action
which would require an adjustment of the Exercise Price pursuant to Section 10,
then the Company shall cause to be given to each of the registered holders of
the Warrant Certificates at his address appearing on the Warrant register, by
first class mail, postage prepaid, a written notice stating (i) the transaction
or proposed transaction which would require such adjustment, (ii) the date on
which such transaction was or such proposed transaction will be effected, and
(iii) the adjusted Exercise Price and number of Warrant Shares resulting from
such transaction or proposed transaction. The failure to give the notice
required by this Section 12 or any defect therein shall not affect the legality
or validity of any distribution, right, option, warrant, consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding up, or the vote upon
any action.
Nothing contained in this Agreement or in any of the Warrant
Certificates shall be construed as conferring upon the holders thereof the right
to vote or to consent or to receive notice as shareholders in respect of the
meetings of shareholders or the election of Directors of the Company or any
other matter, or any rights whatsoever as shareholders of the Company.
SECTION 13. NOTICES TO COMPANY AND WARRANT HOLDER. Any notice or
demand authorized by this Agreement to be given or made by the registered holder
of any Warrant Certificate to or on the Company shall be sufficiently given or
made three business days after deposit in the mail, first class or registered,
postage prepaid, addressed to the office of the Company expressly designated by
the Company at its office for purposes of this Agreement (until the Warrant
holders are otherwise notified in accordance with this Section by the Company),
as follows:
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DEP Corporation
2101 East Via Arado
Rancho Dominguez, California 90220
Attention: President
Any notice pursuant to this Agreement to be given by the Company to
the registered holder(s) of any Warrant Certificate shall be sufficiently given
when and if deposited in the mail, first class or registered, postage prepaid,
addressed (until the Company is otherwise notified in accordance with this
Section by such holder) to such holder at the address appearing on the Warrant
register of the Company.
SECTION 14. SUPPLEMENTS AND AMENDMENTS. The Company may from time to
time supplement or amend this Agreement without the approval of any holders of
Warrant Certificates in order to cure any ambiguity or to correct or supplement
any provision contained herein which may be defective or inconsistent with any
other provision herein, or to make any other provisions in regard to matters or
questions arising hereunder which the Company may deem necessary or desirable,
in either case if it shall not in any way adversely affect the interests of the
holders of Warrant Certificates.
SECTION 15. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company shall bind and inure to the
benefit of its respective successors and assigns hereunder.
SECTION 16. TERMINATION. This Agreement shall terminate at 5:00
p.m., Los Angeles time, on the Expiration Date. Notwithstanding the foregoing,
this Agreement will terminate on any earlier date if all Warrants have been
exercised.
SECTION 17. GOVERNING LAW. This Agreement and each Warrant
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be construed in
accordance with the internal laws of said State.
SECTION 18. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement
shall be construed to give to any person or corporation other than the Company
and the registered holders of the Warrant Certificates any legal or equitable
right, remedy or claim under this Agreement; but this Agreement shall be for the
sole and exclusive benefit of the Company and the registered holders of the
Warrant Certificates.
SECTION 19. COUNTERPARTS. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
[Signature Pages Follow]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
DEP CORPORATION
By____________________________
Robert Berglass
President
[NAME OF EACH INITIAL WARRANT HOLDER]
By_____________________________
Name:___________________
Title:__________________
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EXHIBIT A
[Form of Warrant Certificate]
[Face]
____ Warrants, Each to Purchase One Share No. ________
Warrant Certificate
DEP CORPORATION
This Warrant Certificate certifies that ______________, or registered
assigns, is the registered holder of Warrants ("WARRANTS") expiring on the
Expiration Date (as defined in the Warrant Agreement dated as of November 4,
1996 (the "WARRANT AGREEMENT")) to purchase an aggregate of ____ shares of the
Common Stock, $.01 par value per share (the "COMMON STOCK"), of DEP CORPORATION,
a Delaware corporation (the "COMPANY"). Each Warrant entitles the holder upon
exercise to receive from the Company on or before 5:00 p.m., Los Angeles time,
on the Expiration Date, one fully paid and nonassessable share of Common Stock
(a "WARRANT SHARE") at the Exercise Price (as defined in the Warrant Agreement),
payable in lawful money of the United States of America upon surrender of this
Warrant Certificate and payment of the Exercise Price at the office of the
Company designated for such purpose, but subject to the conditions set forth
herein and in the Warrant Agreement referred to on the reverse hereof. The
Exercise Price and number of Warrant Shares issuable upon exercise of the
Warrants are subject to adjustment upon the occurrence of certain events set
forth in the Warrant Agreement.
No Warrant holder may purchase fewer than 10,000 Warrant Shares
pursuant to any exercise of the Warrants represented by this Warrant
Certificate, and any purported exercise with respect to fewer than 10,000
Warrant Shares shall be null and void. No Warrant Certificate shall be issued
that represents the right to purchase fewer than 10,000 Warrant Shares, and no
transfer or exercise of any Warrants or Warrant Certificate shall be valid,
recognized or consummated if such transfer or exercise would otherwise result in
the issuance of a Warrant Certificate representing the right to purchase fewer
than 10,000 Warrant Shares.
No Warrant may be exercised after 5:00 p.m., Los Angeles time, on the
Expiration Date, and to the extent not exercised by such time such Warrants
shall become void.
Reference is hereby made to the further provisions of this Warrant
Certificate set forth on the reverse hereof and such further provisions shall
for all purposes have the same effect as though fully set forth at this place.
This Warrant Certificate shall not be valid unless countersigned by
the Company, as such term is used in the Warrant Agreement.
A-1
<PAGE>
IN WITNESS WHEREOF, DEP CORPORATION has caused this Warrant
Certificate to be signed by its President and by its Secretary.
Dated:
DEP CORPORATION
By ________________________________________
President
By ________________________________________
Secretary
A-2
<PAGE>
[Form of Warrant Certificate]
[Reverse]
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants expiring on the Expiration Date, entitling the
holder on exercise to receive shares of Common Stock and are issued or to be
issued pursuant to a Warrant Agreement, duly executed and delivered by the
Company, which Warrant Agreement is hereby incorporated by reference in and made
a part of this instrument and is hereby referred to for a description of the
rights, limitation of rights, obligations, duties and immunities thereunder of
the Company and the holders (the words "HOLDERS" or "HOLDER" meaning the
registered holders or registered holder) of the Warrants. A copy of the Warrant
Agreement may be obtained by the holder hereof upon written request to the
Company.
Subject to the limitations set forth in the Warrant Agreement,
Warrants may be exercised at any time on or before the Expiration Date. The
holder of Warrants evidenced by this Warrant Certificate may exercise them by
surrendering this Warrant Certificate, with the form of election to purchase set
forth hereon properly completed and executed, together with payment of the
Exercise Price in cash at the office of the Company designated for such purpose.
In the event that upon any exercise of Warrants evidenced hereby the number of
Warrants exercised shall be less than the total number of Warrants evidenced
hereby, there shall, subject to the limitations set forth in the Warrant
Agreement, be issued to the holder hereof or his assignee a new Warrant
Certificate evidencing the number of Warrants not exercised.
The Warrant Agreement provides that upon the occurrence of certain
events the Exercise Price set forth on the face hereof may, subject to certain
conditions, be adjusted. If the Exercise Price is adjusted, the Warrant
Agreement provides that the number of shares of Common Stock issuable upon the
exercise of each Warrant shall be adjusted. No fractions of a share of Common
Stock will be issued upon the exercise of any Warrant, but the Company will pay
the cash value thereof determined as provided in the Warrant Agreement.
Warrant Certificates, when surrendered at the office of the Company by
the registered holder thereof in person or by legal representative or attorney
duly authorized in writing, may be exchanged, in the manner and subject to the
limitations provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant Certificates of like
tenor evidencing in the aggregate a like number of Warrants.
Upon due presentation for registration of transfer of this Warrant
Certificate at the office of the Company, with the form of assignment set forth
hereon properly completed and executed, a new Warrant Certificate or Warrant
Certificates of like tenor and evidencing in the aggregate a like number of
Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided in the Warrant Agreement,
without charge except for any tax or other governmental charge imposed in
connection therewith.
A-3
<PAGE>
The Company may deem and treat the registered holder(s) thereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, of any distribution to the holder(s) hereof, and for all other
purposes, and the Company shall not be affected by any notice to the contrary.
Neither the Warrants nor this Warrant Certificate entitles any holder hereof to
any rights of a stockholder of the Company.
A-4
<PAGE>
[Form of Election to Purchase]
(To Be Executed Upon Exercise Of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to receive __________ shares of Common
Stock and herewith tenders payment for such shares to the order of DEP
CORPORATION in the amount of $______ in accordance with the terms hereof. The
undersigned requests that a certificate for such shares be registered in the
name of ________________, whose address is _______________________________ and
that such shares be delivered to ________________ whose address is ___________
______________________. If said number of shares is less than all of the shares
of Common Stock purchasable hereunder, the undersigned requests that a new
Warrant Certificate representing the remaining balance of such shares be
registered in the name of ______________, whose address is____________________
_________________________, and that such Warrant Certificate be delivered to
_________________, whose address is __________________.
Signature: _____________________________________
Date: _____________________
A-5
<PAGE>
[Form of Assignment]
(To be Executed Upon Transfer of Warrant)
To assign this Warrant Certificate, fill in the form below:
The undersigned assigns and transfers this Warrant Certificate to
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
(Print or type assignee's name, address and zip code)
______________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
and irrevocably appoints __________________________________________ agent to
transfer this Warrant Certificate on the books of the Company. The agent may
substitute another to act for him.
Date: _______________________
Your Signature: __________________________________________________
(Your name as it appears on the front of this Warrant Certificate)
By: ________________________________
Title: _____________________________
Signature Guarantee: _______________________________________________
A-6
<PAGE>
RELEASE AGREEMENT
This RELEASE AGREEMENT, dated as of November 4, 1996 (this
"Agreement"), is by and among DEP CORPORATION, a Delaware corporation in its
individual capacity and as debtor in possession in its Chapter 11 proceeding
(the "Company"), and the Lenders (as defined below).
WHEREAS, the Company commenced on April 1, 1996 a case under Chapter
11 of the United States Bankruptcy Code (Title 11, United States Code) (the
"Bankruptcy Code") seeking protection from its creditors and reorganization
thereunder;
WHEREAS, the Company has prepared and negotiated the Consensual Plan
(as defined below), which Consensual Plan has been duly confirmed by the United
States Bankruptcy Code for the District of Delaware (the "Bankruptcy Court");
WHEREAS, one element of the Consensual Plan calls for the Company
Releasing Parties and the Lender Releasing Parties (each as defined below)
broadly to release and discharge all claims and causes of action of each
respective party against the others, other than obligations under the Consensual
Plan, with such release and discharge expressly to provide, out of an abundance
of caution, that nothing therein is intended to or constitutes a release or
waiver in favor of any of the SC Johnson Parties (as defined below); and
WHEREAS, this Agreement is intended as the "Class 1 Release Agreement"
contemplated by the Consensual Plan.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
SECTION 1. DEFINITIONS.
"CLAIMS" shall mean any and all actions, liabilities, claims, demands, and
causes of action (in law or in equity, whether by tort, contract or other theory
of liability) for any and all acts, contracts, omissions, debts, accounts,
damages, costs, losses, and expenses of every type, character, kind, nature or
description, whether known or unknown, choate or inchoate, fixed or contingent,
accrued or hereinafter accruing, whether or not known, suspected or claimed of
any matter, cause or thing from the beginning of time up to and including the
Effective Date.
"COMPANY RELEASING PARTIES" shall mean the Company and each of its past,
present and future affiliates, associates, employees, officers, directors,
partners, fiduciaries, owners, subsidiaries, shareholders, agents, attorneys,
insurers, predecessors and successors, or any of them.
"CONSENSUAL PLAN" shall mean the Company's Second Amended Plan of
Reorganization dated as of August 23, 1996, duly confirmed by the Bankruptcy
Court under Section 1129 of the Bankruptcy Code.
"EFFECTIVE DATE" shall mean the date the Consensual Plan became effective
in accordance with the Consensual Plan.
"LENDER RELEASING PARTIES" shall mean the Lenders and each of them and each
of their respective past, present and future affiliates, associates, employees,
officers, directors, partners,
<PAGE>
owners, subsidiaries, shareholders, agents, attorneys, insurers, predecessors
and successors, or any of them.
"LENDERS" shall mean all parties, other than the Company, that are, or at
any time were, parties to or have, or at any time had, a participation interest
in the Revolving Credit and Term Loan Agreement dated as of August 6, 1993, as
amended, among the Company, Citicorp USA, Inc. (individually and as agent for
the Lenders), The First National Bank of Boston (individually and as co-agent
for the Lenders), and City National Bank (individually and as co-agent for the
Lenders), and their respective successors and assigns.
"SC JOHNSON PARTIES" shall mean S.C. Johnson & Son, Inc., a Wisconsin
corporation, and its past, present and future affiliates, associates, employees,
officers, directors, partners, owners, subsidiaries, shareholders, agents,
attorneys, insurers, predecessors and successors, or any of them. The foregoing
notwithstanding, under no circumstance shall any Company Releasing Party be
deemed a successor to any SC Johnson Party for the purposes of this Agreement,
or otherwise an "SC Johnson Party" hereunder, and no SC Johnson Party shall for
any purpose be deemed a "Lender" or a "Lender Releasing Party" hereunder.
SECTION 2. RELEASE.
(a) The Lenders, on behalf of themselves and each other Lender Releasing
Party, hereby expressly release, remit, acquit and forever discharge the Company
Releasing Parties of and from any and all Claims which such Lender Releasing
Parties, or any of them, now have or may hereafter have or assert against the
Company Releasing Parties, or any of them, other than the obligations of the
Company Releasing Parties, or any of them, to the Lenders arising under the
Consensual Plan.
(b) The Company, on behalf of itself and each other Company Releasing
Party, hereby expressly releases, remits, acquits and forever discharges the
Lender Releasing Parties of and from any and all Claims which such Company
Releasing Parties, or any of them, now have or may hereafter have or assert
against the Lender Releasing Parties, or any of them, other than the obligations
of the Lender Releasing Parties, or any of them, to the Company Releasing
Parties arising under the Consensual Plan.
(c) Notwithstanding the foregoing, nothing herein is intended to or shall
constitute a release or waiver of any Claim that any Company Releasing Party or
any Lender Releasing Party may now have or may hereafter assert against the SC
Johnson Parties or any of them, all such Claims being expressly preserved and
maintained.
SECTION 3. WAIVER OF RIGHTS UNDER CIVIL CODE SECTION 1542
EACH PARTY ACKNOWLEDGES THAT IT HAS BEEN ADVISED BY LEGAL COUNSEL AND
IS FAMILIAR WITH THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542, WHICH
PROVIDES AS FOLLOWS:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT
THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM
MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR."
2
<PAGE>
EACH PARTY, BEING AWARE OF SUCH CODE SECTION, HEREBY EXPRESSLY WAIVES ANY RIGHTS
HE MAY HAVE THEREUNDER, AS WELL AS UNDER ANY OTHER STATUTES OR COMMON LAW
PRINCIPLES OF SIMILAR EFFECT.
SECTION 4. AMENDMENTS IN WRITING. Any amendment to this Agreement must
be in writing and signed by duly authorized representative of each party hereto.
SECTION 5. AUTHORIZATION. By execution of this document, each party
hereto represents and warrants that it is duly authorized to enter into this
Agreement, including, without limitation, providing the releases set forth
herein.
SECTION 6. CHOICE OF LAW. This Agreement shall be construed in
accordance with, and all disputes hereunder shall be governed by, the internal
laws of the State of California.
SECTION 7. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which taken together shall be deemed one original.
SECTION 8. BINDING EFFECT. The provisions of this Agreement shall
inure to the benefit of and be binding upon each of the parties, and each of
their affiliates, associates, employees, officers, directors, partners, owners,
subsidiaries, shareholders, agents, attorneys, insurers, predecessors and
successors and any and all persons acting by, through, under or in concert with
them or any of them.
SECTION 9. NO ASSIGNMENTS. Each party hereto represents and warrants
that there have been no assignments or other transfers of any interest in any
Claim being released hereunder, and agrees to hold the other parties harmless
from any liability, claims, demands, damages, costs, expenses and attorneys'
fees incurred by the other parties as a result of any person asserting any such
assignment or transfer, or any rights or claims under any such assignment or
transfer. The parties intend that this indemnity does not require payment as a
condition precedent to recovery hereunder.
SECTION 10. ATTORNEYS' FEES. Each party hereto further agrees that if
it hereafter commences, joins in, or in any manner seeks relief through any suit
arising out of, based upon or relating to any of the Claims released hereunder,
then that party shall pay to the other party in addition to any other damages
caused to such other parties thereby, all attorneys' fees reasonably incurred by
said parties in defending or otherwise responding to said suit or Claim.
3
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement as of the date first written above.
"COMPANY"
DEP CORPORATION
By________________________
Name:
Title:
"LENDERS"
FOOTHILL CAPITAL CORPORATION
By________________________
Name:
Title:
CITY NATIONAL BANK
By________________________
Name:
Title:
PNC BANK, N.A.
By________________________
Name:
Title:
4
<PAGE>
GOLDMAN SACHS CREDIT PARTNERS, L.P.
By________________________
Name:
Title:
CERBERUS PARTNERS, L.P.
By________________________
Name:
Title:
TCW SPECIAL CREDITS FUND V -- THE PRINCIPAL FUND
By: TCW ASSET MANAGEMENT
COMPANY, its general partner
By________________________
Name:
Title:
By________________________
Name:
Title:
5
<PAGE>
DEP CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET
<TABLE>
<CAPTION>
September 30,
1996
ASSETS -------------
<S> <C>
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 12,029,000
Accounts receivable, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,515,000
Inventories at lower of cost (first-in, first-out) or market:
Raw materials. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,800,000
Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,693,000
--------------
13,493,000
Income taxes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -
Other current assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,698,000
--------------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42,735,000
Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,898,000
Intangibles, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,414,000
Other assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 813,000
--------------
$ 89,860,000
--------------
--------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Liabilities not subject to compromise
Current portion long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . $ 302,000
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,400,000
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,470,000
--------------
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,172,000
Liabilities subject to compromise. . . . . . . . . . . . . . . . . . . . . . . . . . 66,086,000
Long-term debt, net of current portion . . . . . . . . . . . . . . . . . . . . . . . 5,900,000
Other non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,259,000
--------------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87,417,000
Stockholders' equity:
Preferred stock, par value $.01; authorized 3,000,000; none outstanding. . . . . . -
Class A common stock, par value $.01; authorized 14,000,000 shares; 32,000
Class B common stock, par value $.01; authorized 7,000,000 shares; 32,000
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,141,000
Retained earnings (deficit). . . . . . . . . . . . . . . . . . . . . . . . . . . . (8,582,000)
Foreign currency translation adjustment. . . . . . . . . . . . . . . . . . . . . . (175,000)
--------------
3,448,000
Less: treasury stock, at cost, 115,500 shares each of
Class A and Class B common stock. . . . . . . . . . . . . . . . . . . . . . . . . (1,005,000)
--------------
2,443,000
--------------
$ 89,860,000
--------------
--------------
</TABLE>
