SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
(Mark One)
{X} QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 2, 1995
OR
{ } TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition period from _________ to _________
Commission file number 1-4148
REEVES INDUSTRIES, INC.
_____________________________________________________
(Exact name of registrant as specified in its charter)
Delaware 57-0735790
_______________________________ _____________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
Highway 29 South
Post Office Box 1898
Spartanburg, S. C. 29304
________________________________________ _________
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (803)576-1210
_________________________________________________________________
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes x No
35,021,666 shares of $.01 par value common stock of the Registrant
were outstanding at the close of business on August 15, 1995.
REEVES INDUSTRIES, INC. AND SUBSIDIARY
INDEX
PART I. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheet as of
December 31, 1994 and July 2, 1995 3
Condensed Consolidated Statement of Income
for the quarters and six months ended
July 3, 1994 and July 2, 1995 5
Condensed Consolidated Statement of Changes
in Stockholder's Equity for the six months
ended July 2, 1995 6
Condensed Consolidated Statement of Cash
Flows for the six months ended July 3, 1994
and July 2, 1995 7
Notes to Condensed Consolidated Financial
Statements 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 12
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 18
SIGNATURES 18
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEET
REEVES INDUSTRIES, INC. AND SUBSIDIARY
(in thousands, except share data)
December 31, July 2,
1994 1995
_________ _________
ASSETS
Current assets
Cash and cash equivalents, including
cash equivalents of $1,550 and $110 $ 17,429 $ 4,425
Accounts receivable, less allowance for
doubtful accounts of $1,232 and $1,847 52,890 55,976
Inventories (Note A) 35,909 44,856
Deferred income taxes 4,259 3,760
Other current assets 4,114 3,580
_________ _________
Total current assets 114,601 112,597
Property, plant and equipment, at cost
less accumulated depreciation (Note B) 70,629 71,972
Unamortized financing costs, less
accumulated amortization of $1,830
and $2,156 3,293 2,967
Goodwill, less accumulated amortization
of $10,771 and $11,442 42,017 41,346
Deferred income taxes 1,246 1,761
Other assets (Note C) 5,412 7,172
_________ _________
Total assets $ 237,198 $ 237,815
========= =========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities
Accounts payable $ 32,109 $ 24,631
Accrued expenses and other
liabilities 18,738 19,475
_________ _________
Total current liabilities 50,847 44,106
Long-term debt (Note D) 146,278 151,728
Deferred income taxes 5,637 5,637
Other liabilities 5,621 5,858
_________ _________
Total liabilities 208,383 207,329
_________ _________
Stockholder's equity
Common stock, $.01 par value, 50,000,000
shares authorized; 35,021,666 shares
issued and outstanding 350 350
Capital in excess of par value 5,099 5,099
Retained earnings 26,908 28,657
Equity adjustments from translation (3,542) (3,620)
_________ _________
28,815 30,486
_________ _________
Commitments and contingencies
_________ _________
Total liabilities and
stockholder's equity $ 237,198 $ 237,815
========= =========
See notes to condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
REEVES INDUSTRIES, INC. AND SUBSIDIARY
(in thousands)
Quarter Ended Six Months Ended
__________________ __________________
July 3, July 2, July 3, July 2,
1994 1995 1994 1995
________ ________ ________ ________
Net sales $ 80,754 $ 76,032 $154,208 $156,080
Cost of sales 63,647 62,352 121,965 126,812
________ ________ ________ ________
Gross profit on sales 17,107 13,680 32,243 29,268
Selling, general and
administrative expenses 8,529 8,921 15,844 17,506
________ ________ ________ ________
Operating income 8,578 4,759 16,399 11,762
Other income (expense)
Other income, net 336 (158) (40) 43
Interest expense and
amortization of
financing costs and
debt discounts (4,106) (4,447) (8,190) (8,794)
________ ________ ________ ________
(3,770) (4,605) (8,230) (8,751)
________ ________ ________ ________
Income before income
taxes 4,808 154 8,169 3,011
Income taxes 1,999 126 3,123 1,262
________ ________ ________ ________
Net income $ 2,809 $ 28 $ 5,046 $ 1,749
======== ======== ======== ========
See notes to condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES
IN STOCKHOLDER'S EQUITY
REEVES INDUSTRIES, INC. AND SUBSIDIARY
(in thousands)
Capital Equity
Common Stock in Excess Adjustments
$0.01 Par Value of Retained From
Shares Amount Par Value Earnings Translation Total
______ ______ _________ ________ ___________ ________
Balance at
December 31,
1994 35,022 $ 350 $ 5,099 $ 26,908 $ (3,542) $ 28,815
Net income 1,749 1,749
Translation
adjustments (78) (78)
______ ______ ________ ________ _________ ________
Balance at
July 2,
1995 35,022 $ 350 $ 5,099 $ 28,657 $ (3,620) $ 30,486
====== ====== ======== ======== ========= ========
See notes to condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
REEVES INDUSTRIES, INC. AND SUBSIDIARY
(in thousands)
Six Months Ended
______________________
July 3, July 2,
1994 1995
________ ________
OPERATING ACTIVITIES
Net income $ 5,046 $ 1,749
Adjustments to reconcile net income
to net cash provided by operating
activities
Depreciation and amortization 5,231 5,526
Changes in operating assets and
liabilities (7,085) (19,774)
Translation adjustments 530 107
________ ________
NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES 3,722 (12,392)
________ ________
INVESTING ACTIVITIES
Purchases of property, plant
and equipment (12,448) (5,971)
________ ________
NET CASH USED BY INVESTING ACTIVITIES (12,448) (5,971)
________ ________
FINANCING ACTIVITIES
Net borrowings on revolving loan 4,940 5,400
________ ________
NET CASH PROVIDED BY FINANCING ACTIVITIES 4,940 5,400
________ ________
EFFECT OF EXCHANGE RATE CHANGES ON CASH (36) (41)
________ ________
DECREASE IN CASH AND CASH EQUIVALENTS (3,822) (13,004)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 12,015 17,429
________ ________
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 8,193 $ 4,425
======== ========
See notes to condensed consolidated financial statements.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
REEVES INDUSTRIES, INC. AND SUBSIDIARY
JULY 2, 1995
GENERAL
Reeves Industries, Inc., incorporated in Delaware in 1982
("Reeves"), a wholly-owned subsidiary of Hart Holding Company
Incorporated ("Hart Holding"), is a holding company whose principal
asset is the common stock of its wholly-owned subsidiary, Reeves
Brothers, Inc. ("Reeves Brothers"). Reeves Brothers is a
diversified industrial company with operations in two principal
business segments, industrial coated fabrics, conducted through its
Industrial Coated Fabrics Group ("ICF"), and apparel textiles,
conducted through its Apparel Textile Group ("ATG").
The accompanying unaudited condensed consolidated financial
statements of Reeves have been prepared in accordance with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X.
Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for
complete financial statements. For such information, refer to the
consolidated financial statements and footnotes thereto included in
Reeves' annual report on Form 10-K for the year ended December 31,
1994, as filed with the Securities and Exchange Commission on March
27, 1995. The condensed consolidated financial statements so
presented are, in the opinion of management, inclusive of all
adjustments (consisting only of normal recurring adjustments)
considered necessary for a fair presentation of financial position
as of July 2, 1995, and the results of operations and cash flows
for the quarters and six months ended July 3, 1994 and July 2,
1995.
Certain prior-year amounts have been reclassified to conform
to the current-year presentation.
NOTE A - INVENTORIES
Inventories at December 31, 1994 and July 2, 1995, were
comprised of the following (in thousands):
December 31, July 2,
1994 1995
___________ ________
Raw materials $ 7,591 $ 9,436
Work in process 8,536 10,529
Manufactured and finished goods 19,782 24,891
________ ________
$ 35,909 $ 44,856
======== ========
Approximately 31% and 28% of Reeves' inventories at December
31, 1994 and July 2, 1995, respectively, are valued using the last-
in, first-out ("LIFO") method. Interim LIFO determinations,
including those as of July 2, 1995, are based on management's
estimates of expected year end inventory levels and costs.
NOTE B - PROPERTY, PLANT AND EQUIPMENT
During 1994 Reeves entered into Inducement Agreements (the
"Inducement Agreements") with Spartanburg County, South Carolina,
and Lee County, South Carolina, respectively (the "Counties"). The
Inducement Agreements provide Reeves an incentive to make capital
investments in the Counties in the form of qualified investments in
land, buildings, and/or machinery and equipment by allowing Reeves
to pay a fee in lieu of ad valorem property taxes. Qualified
investments, which include owned assets and assets leased under
operating leases, totaled $22.5 million and $25.9 million at
December 31, 1994 and July 2, 1995, respectively. The net book
value at December 31, 1994 and July 2, 1995 of owned assets to
which nominal title was transferred to the Counties was $12.2
million and $12.2 million, respectively.
NOTE C - LONG-TERM OTHER ASSETS
The increase in long-term other assets from December 31, 1994
is due primarily to pre-operating costs related to the new weaving
facility in Spartanburg, South Carolina which will weave automotive
airbag fabric for the airbag material market. The gross amount of
capitalized pre-operating costs at December 31, 1994 and July 2,
1995 was approximately $3.7 million and $5.5 million, respectively.
NOTE D - LONG-TERM DEBT
Long-term debt at December 31, 1994 and July 2, 1995,
consisted of the following (in thousands):
December 31, July 2,
1994 1995
___________ _________
11% Senior Notes due July 15, 2002,
net of unamortized discount of
$659 and $615 $ 121,841 $ 121,885
13 3/4% Subordinated Debentures due
May 1, 2000, net of unamortized
discount of $63 and $57 10,937 10,943
Revolving loan payable to banks 13,500 18,900
_________ _________
$ 146,278 $ 151,728
========= =========
On August 6, 1992, Reeves and Reeves Brothers entered into a
credit agreement, as amended, (the "Credit Agreement") with a group
of banks which provided Reeves and Reeves Brothers with an
aggregate $35 million revolving line of credit (the "Revolving
Loan") and letter of credit facility. On March 27, 1995, the
Credit Agreement was amended to increase the Revolving Loan to $42
million. As of July 2, 1995, Reeves and Reeves Brothers had
available borrowings, net of $1.2 million of outstanding letters of
credit, of $21.9 million under the Revolving Loan.
On July 14, 1995, the Credit Agreement was amended and
restated (the "Amended Credit Agreement") to increase the Revolving
Loan to $60 million and extend its term until July 13, 2000. The
Revolving Loan under the Amended Credit Agreement bears interest at
rates determined in a manner similar to that under the Credit
Agreement. The Revolving Loan is secured by Reeves Brothers'
domestic accounts receivable and inventories. The Amended Credit
Agreement contains certain restrictive covenants with respect to
Reeves and Reeves Brothers including, among other things, (i)
limitations on liens, guarantee obligations, sale of assets,
dividends and investments, loans and advances, (ii) maintenance of
net worth and (iii) compliance with certain financial tests and
limitations.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following table and discussion present Reeves' sales and
operating income by segment for the quarters and six months ended
July 3, 1994 and July 2, 1995 (in thousands):
Quarter Ended Six Months Ended
__________________ __________________
July 3, July 2, July 3, July 2,
1994 1995 1994 1995
________ ________ ________ ________
Net Sales:
Industrial Coated
Fabrics Group $ 40,524 $ 46,112 $ 78,243 $ 90,622
Apparel Textile Group 39,536 29,150 74,600 63,998
Other 694 770 1,365 1,460
________ ________ ________ ________
Total Net Sales $ 80,754 $ 76,032 $154,208 $156,080
======== ======== ======== ========
Operating Income:
Industrial Coated
Fabrics Group $ 7,849 $ 8,766 $ 14,688 $ 17,177
Apparel Textile Group 3,836 (1,498) 6,776 (29)
Other 101 34 185 75
Corporate Expenses (3,208) (2,543) (5,250) (5,461)
________ ________ ________ ________
Total Operating
Income $ 8,578 $ 4,759 $ 16,399 $ 11,762
======== ======== ======== ========
Operating Income as a
Percent of Net Sales 10.6% 6.3% 10.6% 7.5%
======== ======== ======== ========
THREE MONTHS ENDED JULY 3, 1994 COMPARED WITH
THREE MONTHS ENDED JULY 2, 1995
NET SALES
Reeves' total net sales decreased 5.8% for the second quarter
of 1995 compared to the second quarter of 1994. ICF's net sales
represented 60.6% of Reeves' total net sales for the second quarter
of 1995 compared to 50.2% for the comparable period in 1994. ATG's
net sales represented 38.3% of Reeves' total net sales for the
second quarter of 1995 compared to 49.0% for the comparable period
in 1994. Other net sales represented 1.1% of Reeves' total net
sales for the second quarter of 1995 compared to 0.8% for the
comparable period in 1994.
ICF's net sales increased 13.8% during the second quarter of
1995 compared to the second quarter of 1994. ICF's net sales
increased primarily due to (i) higher unit volume, partially offset
by lower prices, in the specialty coated fabrics product line and
(ii) higher volumes and prices in the industrial coverings and
offset blankets product lines.
ATG's net sales decreased 26.3% during the second quarter of
1995 compared to the second quarter of 1994 primarily due to lower
unit volume and lower prices in the finished goods and greige goods
divisions. This decrease is due to a weak U.S. retail apparel
market.
OPERATING INCOME
Operating income for the second quarter of 1995 was $4.8
million compared to $8.6 million for the second quarter of 1994.
As a percentage of net sales, operating income decreased to 6.3% of
net sales for the second quarter of 1995 compared to 10.6% for the
same period of 1994.
ICF's operating income for the second quarter of 1995
increased by 11.7% as compared to the second quarter of 1994.
ICF's operating income increased primarily as a result of (i)
higher unit volume, partially offset by lower prices, in the
specialty coated fabrics product line, (ii) higher unit volumes and
prices in the industrial coverings and offset blankets product
lines, (iii) cost reductions from investments in more
technologically advanced equipment, and (iv) foreign currency
exchange gains. These increases were partially offset by (i)
lower overhead absorption in ICF's domestic operations as a result
of lower production volume in the offset blankets and coated
automotive airbag material product lines and (ii) higher raw
material and labor costs in ICF's foreign operations.
ATG's operating income for the second quarter of 1995
decreased by 139.1% as compared to the second quarter of 1994,
primarily due to the weak U.S. retail apparel market. The decrease
is primarily due to (i) lower unit volume and lower sales prices,
(ii) higher manufacturing costs due to higher raw material costs,
(iii) lower overhead absorption as a result of lower production
volumes and (iv) an increase in ATG's allowance for doubtful
accounts due to the weaker market. Reeves has undertaken certain
restructuring actions, including the reduction of weaving
operations at one facility, to reduce the impact of the weak U.S.
retail apparel market on ATG's results.
Corporate expenses decreased 20.7% during the second quarter
of 1995 compared to the second quarter of 1994. The decrease is
primarily attributable to lower management incentive and outside
consultant expenses. These decreases were partially offset by
higher other corporate expenses.
SIX MONTHS ENDED JULY 3, 1994 COMPARED WITH
SIX MONTHS ENDED JULY 2, 1995
NET SALES
Reeves' total net sales increased 1.2% for the first six
months of 1995 compared to the first six months of 1994. ICF's net
sales represented 58.1% of Reeves' total net sales for the first
six months of 1995 compared to 50.7% for the comparable period in
1994. ATG's net sales represented 41.0% of Reeves' total net sales
for the first six months of 1995 compared to 48.4% for the
comparable period in 1994. Other net sales represented 0.9% of
Reeves' total net sales for the first six months of 1995 compared
to 0.9% for the comparable period in 1994.
ICF's net sales increased 15.8% during the first six months of
1995 compared to the first six months of 1994. ICF's net sales
increased primarily due to higher unit volume in all product lines
and higher prices in the offset blankets product line. These
increases were partially offset by lower prices in the coated
fabrics product line.
ATG's net sales decreased 14.2% during the first six months of
1995 compared to the first six months of 1994 primarily due to(i)
lower unit volume in the finished goods division and (ii) lower
prices in the finished goods and greige goods divisions. The decrease is
primarily due to the weak U.S. retail apparel market.
OPERATING INCOME
Operating income for the first six months of 1995 was $11.8
million compared to $16.4 million for the first six months of 1994.
As a percentage of net sales, operating income decreased to 7.5% of
net sales for the first six months of 1995 compared to 10.6% for
the same period of 1994.
ICF's operating income for the first six months of 1995
increased by 16.9% as compared to the first six months of 1994.
ICF's operating income increased primarily as a result of (i)
higher unit volume in the specialty coated fabrics and coated
automotive airbag material product lines, (ii) higher volumes and
prices in the industrial coverings and offset blankets product
lines, (iii) cost reductions from investments in more
technologically advanced equipment and (iv) foreign currency
exchange gains. These increases were partially offset by (i) lower
prices in the specialty coated fabrics and coated automotive airbag
material product lines, (ii) lower overhead absorption in ICF's
domestic operations as a result of lower production volume in the
coated automotive airbag material product lines and (iii) higher
raw material and labor costs in ICF's foreign operations.
ATG's operating income for the first six months of 1995
decreased by 100.4% as compared to the first six months of 1994,
primarily due to the weak U.S. retail apparel market. The decrease
is primarily due to (i) lower unit sales volume and lower sales
prices, (ii) higher manufacturing costs due to higher raw material
costs, (iii) lower overhead absorption as a result of lower
production volumes and (iv) an increase in ATG's allowance for
doubtful accounts due to the weaker market. Reeves has undertaken
certain restructuring actions, including the reduction of weaving
operations at one facility to reduce the impact of the weak U.S.
retail apparel market on ATG's results.
Corporate expenses increased 4.0% during the first six months
of 1995 compared to the first six months of 1994. The increase is
primarily due to increased staffing expense necessary to support
business development activities and other corporate expenses. In
addition, 1994 corporate expenses were lower as a result of a gain
related to the settlement of a pension obligation of a previously
discontinued operation.
LIQUIDITY AND CAPITAL RESOURCES
Cash used by operations during the six months ended July 2,
1995 was approximately $12.4 million. Cash was used by operations
as a result of increases in accounts receivable, inventory and
other assets and a decrease in accounts payable. Accounts
receivable increased primarily due to an overall slowing of
customer payments. Inventories increased primarily due to
increases (i) in ICF's inventories to meet customer requirements
for airbag products, (ii) to support higher sales at ICF's foreign
operations and (iii) in ATG's inventories due to purchase
commitments related to greige goods. The decrease in accounts
payable is primarily due to payments for capital expenditures and
the timing of payments for greige cotton material at ATG.
In June 1992, Reeves completed a public offering of
$122.5 million of 11% Senior Notes due 2002 (the "Senior Notes").
Proceeds of the offering were used to redeem all of Reeves' then
outstanding 12 1/2% Senior Notes and 13% Senior Subordinated
Debentures and to pay and terminate the revolving loan outstanding
under a prior loan agreement.
Reeves is required to make sinking fund payments with respect
to the remaining 13 3/4% Subordinated Debentures of $6.0 million on
May 1, 1999 and $5.0 million on May 1, 2000.
On August 6, 1992, Reeves and Reeves Brothers entered into a
credit agreement, as amended, (the "Credit Agreement") with a group
of banks which provided Reeves and Reeves Brothers with an
aggregate $35 million revolving line of credit (the "Revolving
Loan") and letter of credit facility. On March 27, 1995, the
Credit Agreement was amended to increase the Revolving Loan to $42
million. As of July 2, 1995, Reeves and Reeves Brothers had
available borrowings, net of $1.2 million of outstanding letters of
credit, of $21.9 million under the Revolving Loan.
The 11% Senior Notes and 13 3/4% Subordinated Debentures
contain certain restrictive covenants with respect to Reeves and
Reeves Brothers including, among other things, limitations on the
payment of dividends, the incurrence of additional indebtedness and
certain liens, mergers or acquisitions, investments and
transactions with affiliates.
On July 14, 1995, the Credit Agreement was amended and
restated (the "Amended Credit Agreement") to increase the Revolving
Loan to $60 million and extend its term until July 13, 2000. The
Revolving Loan under the Amended Credit Agreement bears interest at
rates determined in a manner similar to that under the Credit
Agreement. The Revolving Loan is secured by Reeves Brothers'
domestic accounts receivable and inventories. The Amended Credit
Agreement contains certain restrictive covenants with respect to
Reeves and Reeves Brothers including, among other things, (i)
limitations on liens, guarantee obligations, sale of assets,
dividends and investments, loans and advances, (ii) maintenance of
net worth and (iii) compliance with certain financial tests and
limitations.
In May 1994, Reeves received a $12.0 million commitment
from an equipment lessor for long-term operating leases of
equipment. This commitment was increased to $18.8 million in August
1994. As of July 2, 1995, the availability under this commitment has
been utilized. On August 9, 1995, Reeves received a commitment of
$8.0 million from an equipment lessor for long-term operating leases
of equipment. Reeves believes that a substantial portion of this
commitment will be utilized in 1995.
Reeves believes that its cash flow from operations, available
leasing capacity and funds available under the Amended Credit
Agreement will be sufficient to meet anticipated requirements for
working capital, capital expenditures and other needs.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits Description
10.01 Amended and Restated Credit Agreement
dated as of July 14, 1995
27 Financial Data Schedule
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the
three month period ended July 2, 1995.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
REEVES INDUSTRIES, INC.
DATE: August 15, 1995 By: \s\ Steven W. Hart
___________________
Steven W. Hart
Executive Vice President
Chief Financial Officer
CREDIT AGREEMENT
among
REEVES BROTHERS, INC.,
REEVES INDUSTRIES, INC.,
and
The Several Banks and Financial Institutions Parties Hereto
and
CHEMICAL BANK,
as Agent,
Dated as of August 5, 1992
(as amended and restated as of July 14, 1995)
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS.............................................. 1
1.1 Defined Terms.............................................. 1
1.2 Other Definitional Provisions.............................. 22
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS.......................... 23
2.1 Revolving Credit Commitments............................... 23
2.2 Revolving Credit Notes..................................... 24
2.3 Procedure for Revolving Credit Borrowing................... 24
2.4 Swing Line Commitments..................................... 25
2.5 Swing Line Notes........................................... 25
2.6 Procedure for Swing Line Borrowing......................... 26
2.7 Refunded Swing Line Loans; Termination of
Commitments.............................................. 26
2.8 Fees....................................................... 27
2.9 Termination or Reduction of Commitments.................... 27
2.10 Optional Prepayments and Mandatory Prepayments............ 28
2.11 Conversion and Continuation Options....................... 28
2.12 Minimum Amounts of Eurodollar Tranches.................... 29
2.13 Interest Rates and Payment Dates.......................... 29
2.14 Computation of Interest and Fees.......................... 30
2.15 Inability to Determine Interest Rate...................... 30
2.16 Pro Rata Treatment and Payments........................... 31
2.17 Illegality................................................ 32
2.18 Requirements of Law........................................ 32
2.19 Taxes..................................................... 34
2.20 Indemnity................................................. 35
SECTION 3. LETTERS OF CREDIT........................................ 36
3.1 L/C Commitment............................................. 36
3.2 Procedure for Issuance of Letters of Credit................ 36
3.3 Fees, Commissions and Other Charges........................ 37
3.4 L/C Participations......................................... 37
3.5 Reimbursement Obligation of the Borrowers.................. 39
3.6 Obligations Absolute....................................... 39
3.7 Letter of Credit Payments.................................. 39
3.8 Application................................................ 40
SECTION 4. REPRESENTATIONS AND WARRANTIES........................... 40
4.1 Financial Condition........................................ 40
4.2 No Change.................................................. 41
4.3 Corporate Existence; Compliance with Law................... 41
4.4 Corporate Power; Authorization; Enforceable
Obligations................................................ 41
4.5 No Legal Bar............................................... 42
4.6 No Material Litigation..................................... 42
4.7 No Default................................................. 42
4.8 Ownership of Property; Liens............................... 42
4.9 Intellectual Property...................................... 42
4.10 No Burdensome Restrictions................................ 43
4.11 Taxes..................................................... 43
4.12 Federal Regulations....................................... 43
4.13 ERISA..................................................... 43
4.14 Investment Company Act; Other Regulations................. 44
4.15 Subsidiaries.............................................. 44
4.16 Purpose of Loans.......................................... 44
4.17 Environmental Matters..................................... 44
SECTION 5. CONDITIONS PRECEDENT..................................... 45
5.1 Conditions to Extensions of Credit......................... 45
5.2 Conditions to Each Extension of Credit..................... 48
SECTION 6. AFFIRMATIVE COVENANTS.................................... 49
6.1 Financial Statements....................................... 49
6.2 Certificates; Other Information............................ 50
6.3 Payment of Obligations..................................... 51
6.4 Conduct of Business and Maintenance of Existence........... 52
6.5 Maintenance of Property; Insurance......................... 52
6.6 Inspection of Property; Books and Records;
Discussions................................................ 52
6.7 Notices.................................................... 52
6.8 Environmental Laws......................................... 53
6.9 Changes to Advance Rates, Standards of Eligibility
and Reserves............................................... 54
6.10 Periodic Audit of Inventory and Accounts
Receivable................................................. 54
SECTION 7. NEGATIVE COVENANTS....................................... 55
7.1 Financial Condition Covenants.............................. 55
7.2 Limitation on Negative Pledge Clauses...................... 56
7.3 Limitation on Liens........................................ 56
7.4 Limitation on Guarantee Obligations........................ 58
7.5 Limitations on Fundamental Changes......................... 58
7.6 Limitation on Sale of Assets............................... 58
7.7 Limitation on Dividends.................................... 59
7.8 Limitation on Investments, Loans and Advances.............. 59
7.9 Limitation on Optional Payments and Modifications
of Debt Instruments........................................ 60
7.10 Transactions with Affiliates.............................. 60
7.11 Corporate Documents....................................... 60
7.12 Fiscal Year............................................... 60
SECTION 8. EVENTS OF DEFAULT........................................ 61
SECTION 9. THE AGENT................................................ 64
9.1 Appointment................................................ 64
9.2 Delegation of Duties....................................... 65
9.3 Exculpatory Provisions..................................... 65
9.4 Reliance by Agent.......................................... 65
9.5 Notice of Default.......................................... 66
9.6 Non-Reliance on Agent and Other Banks...................... 66
9.7 Indemnifications........................................... 67
9.8 Agent in Its Individual Capacity........................... 67
9.9 Successor Agent............................................ 68
9.10 Swing Line Bank........................................... 68
SECTION 10. MISCELLANEOUS............................................ 68
10.1 Amendments and Waivers.................................... 68
10.2 Notices................................................... 69
10.3 No Waiver; Cumulative Remedies............................ 70
10.4 Survival of Representations and Warranties................ 70
10.5 Payment of Expenses and Taxes............................. 70
10.6 Successors and Assigns; Participations;
Purchasing Banks.......................................... 71
10.7 Adjustments; Set-off...................................... 74
10.8 Counterparts.............................................. 75
10.9 Severability.............................................. 75
10.10 Integration.............................................. 75
10.11 GOVERNING LAW............................................ 76
10.12 Submission To Jurisdiction; Waivers...................... 76
10.13 Acknowledgements......................................... 76
10.14 WAIVERS OF JURY TRIAL.................................... 77
10.15 Confidentiality.......................................... 77
10.16 Borrower Merger.......................................... 77
SCHEDULES
SCHEDULE I Commitment Amounts and Percentages;
Lending Offices; Addresses for Notice
SCHEDULE II UCC Filing Locations
SCHEDULE III Indebtedness
SCHEDULE IV Liens
SCHEDULE V ERISA
SCHEDULE VI Restricted and Unrestricted Subsidiaries
of the Borrowers
SCHEDULE VII Litigation
SCHEDULE VIII Existing Letters of Credit
SCHEDULE IX Convertible Debenture Investment
EXHIBITS
EXHIBIT A-1 Form of Revolving Credit Note
EXHIBIT A-2 Form of Swing Line Note
EXHIBIT B Form of Swing Line Loan Participation
Certificate
EXHIBIT C-1 Form of Company Guarantee
EXHIBIT C-2 Form of Parent Guarantee
EXHIBIT D Form of Confidentiality Agreement
EXHIBIT E Form of Commitment Transfer Supplement
EXHIBIT F Form of Borrowing Base Certificate
EXHIBIT G Form of Closing Certificate
EXHIBIT H Form of Compliance Certificate
EXHIBIT I Form of Applicable Margin Certificate
EXHIBIT J Form of Opinion of Cadwalader,
Wickersham & Taft
EXHIBIT K Form of Opinion of Augustus I. duPont,
Esq.
EXHIBIT L Form of Security Agreement
CREDIT AGREEMENT, dated as of August 5, 1992, among
REEVES BROTHERS, INC., a Delaware corporation (the "Company"),
REEVES INDUSTRIES, INC., a Delaware corporation (the "Parent";
and collectively with the Company, the "Borrowers"), the several
banks and other financial institutions from time to time parties
to this Agreement (the "Banks") and CHEMICAL BANK, a New York
banking corporation, as agent for the Banks hereunder (in such
capacity, the "Agent").
WHEREAS, the Borrowers, certain of the Banks and the
Agent are parties to that certain Credit Agreement, dated as of
August 6, 1992 (as amended prior to the Closing Date, the
"Existing Agreement");
WHEREAS, the Borrowers have requested that the Existing
Agreement be amended and restated (a) to provide for additional
financial institutions as lenders (the "New Banks") and to
eliminate Bank of Boston Connecticut, a bank party to the
Existing Agreement, (b) to increase the commitments to
$60,000,000, (c) to provide a new senior secured swing line loan
facility, (d) to extend the Termination Date (as defined below)
and (e) otherwise to amend the Existing Agreement and restate it
in its entirety as more fully set forth herein;
WHEREAS, the banks party to the Existing Agreement and
the Agent are willing to so amend and restate the Existing
Agreement, and the New Banks are willing to become parties
hereto, but only on the terms and subject to the conditions set
forth herein; and
WHEREAS, the Borrowers, the Banks and the Agent
mutually desire to further amend, modify, restate, renew and
extend (but not extinguish) the indebtedness under the Existing
Agreement;
NOW, THEREFORE, in consideration of the mutual
covenants and agreements herein contained, the parties hereto
hereby agree that the Existing Credit Agreement shall be and
hereby is amended and restated in its entirety to read as
provided in the heading and recitals hereto and as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the
following terms shall have the following meanings:
"Accounts": accounts, accounts receivable and other
receivables of the Company for goods sold or services
rendered whether now owned or hereafter existing.
"Affiliate": as to any Person, (a) any other Person
(other than a Subsidiary) which, directly or indirectly, is
in control of, is controlled by, or is under common control
with, such Person or (b) any Person who is a director,
officer, shareholder or partner (i) of such Person, (ii) of
any Subsidiary of such Person or (iii) of any Person
described in the preceding clause (a). For purposes of this
definition, "control" of a Person means the power, directly
or indirectly, either to (i) vote 10% or more of the
securities having ordinary voting power for the election of
directors of such Person or (ii) direct or cause the
direction of the management and policies of such Person
whether by contract or otherwise.
"Aggregate Outstanding Extensions of Credit": as to
any Bank at any time, an amount equal to the sum of (a) the
aggregate principal amount of all Revolving Credit Loans
made by such Bank then outstanding, (b) such Bank's
Commitment Percentage of the Swing Line Loans then
outstanding, provided that for purposes of calculating
Available Commitments pursuant to subsection 2.8(a), such
amount shall be zero and (c) such Bank's Commitment
Percentage of the L/C Obligations then outstanding.
"Agreement": this Credit Agreement, as hereby amended
and restated as of July 14, 1995 and as further amended,
supplemented or otherwise modified from time to time.
"Alternate Base Rate": for any day, a rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%)
equal to the greatest of (a) the Prime Rate in effect on
such day, (b) the Base CD Rate in effect on such day plus 1%
and (c) the Federal Funds Effective Rate in effect on such
day plus 1/2 of 1%. For purposes hereof: "Prime Rate"
shall mean the rate of interest per annum publicly announced
from time to time by the Agent as its prime rate in effect
at its principal office in New York City (each change in the
Prime Rate to be effective on the date such change is
publicly announced) (the Prime Rate not being intended to be
the lowest rate of interest charged by Chemical in
connection with extensions of credit to debtors); "Base CD
Rate" shall mean the sum of (a) the product of (i) the
Three-Month Secondary CD Rate and (ii) a fraction, the
numerator of which is one and the denominator of which is
one minus the C/D Reserve Percentage and (b) the C/D
Assessment Rate; "Three-Month Secondary CD Rate" shall mean,
for any day, the secondary market rate for three-month
certificates of deposit reported as being in effect on such
day (or, if such day shall not be a Business Day, the next
preceding Business Day) by the Board of Governors of the
Federal Reserve System (the "Board") through the public
information telephone line of the Federal Reserve Bank of
New York (which rate will, under the current practices of
the Board, be published in Federal Reserve Statistical
Release H.15(519) during the week following such day), or,
if such rate shall not be so reported on such day or such
next preceding Business Day, the average of the secondary
market quotations for three-month certificates of deposit of
major money center banks in New York City received at
approximately 10:00 A.M., New York City time, on such day
(or, if such day shall not be a Business Day, on the next
preceding Business Day) by the Agent from three New York
City negotiable certificate of deposit dealers of recognized
standing selected by it; and "Federal Funds Effective Rate"
shall mean, for any day, 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 on the next succeeding Business Day by the Federal
Reserve Bank of New York, or, if such rate is not so
published for any day which is a Business Day, the average
of the quotations for the day of such transactions received
by the Agent from three federal funds brokers of recognized
standing selected by it. If for any reason the Agent shall
have determined (which determination shall be conclusive
absent manifest error) that it is unable to ascertain the
Base CD Rate or the Federal Funds Effective Rate, or both,
for any reason, including the inability or failure of the
Agent to obtain sufficient quotations in accordance with the
terms thereof, the Alternate Base Rate shall be determined
without regard to clause (b) or (c), or both, of the first
sentence of this definition, as appropriate, until the
circumstances giving rise to such inability no longer exist.
Any change in the Alternate Base Rate due to a change in the
Prime Rate, the Three-Month Secondary CD Rate or the Federal
Funds Effective Rate shall be effective on the effective day
of such change in the Prime Rate, the Three-Month Secondary
CD Rate or the Federal Funds Effective Rate, respectively.
"Alternate Base Rate Loans": Loans the rate of
interest applicable to which is based upon the Alternate
Base Rate.
"Apparel Textile Group": the Apparel Textile Group, an
unincorporated division of the Company.
"Applicable L/C Rate": 2%, provided that:
(a) if the Applicable Margin Certificate
delivered on the Closing Date or required pursuant to
subsection 6.2(c) for the most recently completed four
consecutive fiscal quarter period demonstrates that the
ratio of Consolidated EBITDA for such period to
Consolidated Net Interest Expense for such period is
greater than 2.0 to 1.0, the Applicable L/C Rate, upon
receipt and confirmation of such Applicable Margin
Certificate by the Agent, shall be 1-3/4%;
(b) if such Applicable Margin Certificate
demonstrates that the ratio of Consolidated EBITDA for
such period to Consolidated Net Interest Expense for
such period is greater than 2.5 to 1.0, the Applicable
L/C Rate, upon receipt and confirmation of such
Applicable Margin Certificate by the Agent, shall be 1-
1/2%;
(c) if such Applicable Margin Certificate
demonstrates that the ratio of Consolidated EBITDA for
such period to Consolidated Net Interest Expense for
such period is greater than 3.0 to 1.0, the Applicable
L/C Rate, upon receipt and confirmation of such
Applicable Margin Certificate by the Agent, shall be 1-
1/4%; and
(d) if such Applicable Margin Certificate
demonstrates that the ratio of Consolidated EBITDA for
such period to Consolidated Net Interest Expense for
such period is greater than 3.5 to 1.0, the Applicable
L/C Rate, upon receipt and confirmation of such
Applicable Margin Certificate by the Agent, shall be
1%;
and provided, further, that in no event for the period from
the Closing Date through December 31, 1995 shall the
Applicable L/C Rate be less than 1-3/4%.
"Applicable Margin": (i) 1% with respect to Alternate
Base Rate Loans and (ii) 2% with respect to Eurodollar
Loans, provided that:
(a) if the Applicable Margin Certificate
delivered on the Closing Date or required pursuant to
subsection 6.2(c) for the most recently completed four
consecutive fiscal quarter period demonstrates that the
ratio of Consolidated EBITDA for such period to
Consolidated Net Interest Expense for such period is
greater than 2.0 to 1.0, the Applicable Margin for
outstanding Loans to the Borrowers, upon receipt and
confirmation of such Applicable Margin Certificate by
the Agent, shall be: (i) with respect to Alternate
Base Rate Loans, 3/4% and (ii) with respect to
Eurodollar Loans, 1-3/4%;
(b) if such Applicable Margin Certificate
demonstrates that the ratio of Consolidated EBITDA for
such period to Consolidated Net Interest Expense for
such period is greater than 2.5 to 1.0, the Applicable
Margin for outstanding Loans to the Borrowers, upon
receipt and confirmation of such Applicable Margin
Certificate by the Agent, shall be: (i) with respect
to Alternate Base Rate Loans, 1/2% and (ii) with
respect to Eurodollar Loans, 1-1/2%;
(c) if such Applicable Margin Certificate
demonstrates that the ratio of Consolidated EBITDA for
such period to Consolidated Net Interest Expense for
such period is greater than 3.0 to 1.0, the Applicable
Margin for outstanding Loans to the Borrowers, upon
receipt and confirmation of such Applicable Margin
Certificate by the Agent, shall be: (i) with respect
to Alternate Base Rate Loans, 1/4% and (ii) with
respect to Eurodollar Loans, 1-1/4%; and
(d) if such Applicable Margin Certificate
demonstrates that the ratio of Consolidated EBITDA for
such period to Consolidated Net Interest Expense for
such period is greater than 3.5 to 1.0, the Applicable
Margin for outstanding Loans to the Borrowers, upon
receipt and confirmation of such Applicable Margin
Certificate by the Agent, shall be: (i) with respect
to Alternate Base Rate Loans, 0% and (ii) with respect
to Eurodollar Loans, 1%;
and provided, further, that in no event for the period from
the Closing Date through December 31, 1995 shall the
Applicable Margin be less than (i) with respect to Alternate
Base Rate Loans, 3/4% and (ii) with respect to Eurodollar
Loans, 1-3/4%.
"Applicable Margin Certificate": as defined in
subsection 6.2(c).
"Application": an application, in such form as the
Issuing Bank may specify from time to time, requesting the
Issuing Bank to open a Letter of Credit.
"Automotive Airbag Group": the Reeves International
Automotive Airbag Group, an unincorporated division of the
Company.
"Available Commitment": as to any Bank at any time, an
amount equal to the excess, if any, of (a) such Bank's
Commitment over (b) such Bank's Aggregate Outstanding
Extensions of Credit; collectively, as to all the Banks, the
"Available Commitments".
"Available Credit": as of the date of determination,
thereof, an amount equal to the difference between (a) the
lesser of (i) the Commitments and (ii) the Borrowing Base
and (b) the Banks' Aggregate Outstanding Extensions of
Credit.
"Board of Directors" means, with respect to any Person,
the board of directors of such Person or any committee of
such board duly authorized to act on such Board's behalf.
"Borrower Merger": the merger or consolidation of one
Borrower with or into the other Borrower.
"Borrowers": the collective reference to the Parent
and the Company.
"Borrowing Base": on any date of determination
thereof, an amount equal to the sum of (a) 85% (or such
other percentage as the Agent shall determine in accordance
with subsection 6.9) of the then Eligible Accounts of the
Company, plus (b) 65% (or such other percentage as the Agent
shall determine in accordance with subsection 6.9) of the
then Eligible Inventory of the Company; provided, that in no
event shall the amount determined under this clause (b)
exceed 50% of the book value of the inventory (determined on
a first-in first-out basis) of the Parent and its Restricted
Subsidiaries (as defined in the Indenture).
"Borrowing Base Certificates": the collective
reference to the certificates, substantially in the form of
Exhibit F, to be provided by the Company pursuant to
subsection 6.2(d).
"Borrowing Date": any Business Day specified in a
notice pursuant to subsection 2.3 or 2.6 as a date on which
the Borrowers request the Banks to make Loans hereunder.
"Business Day": a day other than a Saturday, Sunday or
other day on which commercial banks in New York City are
authorized or required by law to close.
"Capital Stock": any and all shares, interests,
participations or other equivalents (however designated) of
capital stock of a corporation, any and all equivalent
ownership interests in a Person (other than a corporation)
and any and all warrants or options to purchase any of the
foregoing.
"Cash Equivalents": (a) securities issued or directly
and fully guaranteed or insured by the United States of
America or any agency or instrumentality thereof (provided
that the full faith and credit of the United States of
America is pledged in support thereof) and maturing within
one year from the date of acquisition, (b) dollar and
eurodollar time deposits and certificates of deposit or
bankers' acceptances of any domestic commercial bank or
domestic branch office or agency of a foreign commercial
bank of recognized standing having capital and surplus in
excess of $100,000,000 (a "Qualified Bank"), (c) repurchase
obligations with a term of not more than seven days for
underlying securities of the types described in clause (a)
above entered into with any Qualified Bank, (d) commercial
paper issued by any Qualified Bank and commercial paper of
any other non-affiliated issuer rated at least A-2 or the
equivalent thereof by Standard & Poor's Corporation or at
least P-2 or the equivalent thereof by Moody's Investors
Service, Inc. and in each case maturing within one year from
the date of acquisition, (e) securities, bonds, notes,
debentures or investments or other forms of indebtedness of
any non-affiliated person rated at least A or the equivalent
thereof by Standard & Poor's Corporation and at least A or
the equivalent thereof by Moody's Investors Service, Inc.,
(f) investments in money market or mutual funds registered
under the Investment Company Act of 1940, as amended, whose
sole investments are comprised of securities and other
instruments described in clauses (a) through (e) above, and
(g) with respect to foreign operations of the Parent and its
Subsidiaries, overnight deposits with foreign commercial
banks in the ordinary course of business and certificates of
deposit or bankers' acceptances of foreign commercial banks
of recognized standing having capital and surplus in excess
of $100,000,000.
"C/D Assessment Rate": for any day as applied to any
Alternate Base Rate Loan, the annual assessment rate in
effect on such day which is payable by a member of the Bank
Insurance Fund classified as well-capitalized and within
supervisory subgroup "B" (or a comparable successor
assessment risk classification) within the meaning of 12
C.F.R. subsection 327.3(d) (or any successor provision) to
the Federal Deposit Insurance Corporation (or any successor)
for such Corporation's (or such successor's) insuring time
deposits at offices of such institution in the United
States.
"C/D Reserve Percentage": for any day as applied to
any Alternate Base Rate Loan, that percentage (expressed as
a decimal) which is in effect on such day, as prescribed by
the Board of Governors of the Federal Reserve System, for
determining the maximum reserve requirement for a Depositary
Institution (as defined in Regulation D of the Board) in
respect of new non-personal time deposits in Dollars of
$100,000 or more having a maturity of 30 days or more.
"Change in Control": means the occurrence of an event
whereby (a) a Person or group of Persons acting in concert
as a partnership or other group (a "Group") (other than the
Control Group) shall, as a result of a tender or exchange
offer, open market purchases, privately negotiated purchases
or otherwise, have become the direct or indirect beneficial
owner (within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934, as amended) of securities of the
Parent (i) representing 50% or more of the combined voting
power of the then outstanding securities of the Parent
ordinarily (and apart from rights accruing under special
circumstances) having the right to vote in the election of
directors ("Voting Securities") or (ii) if the Control Group
shall beneficially own less than 50% of the outstanding
Voting Securities, representing a percentage greater than
the percentage of Voting Securities so owned by the Control
Group or (b) the Company ceases to be a wholly-owned
Subsidiary of the Parent, except in connection with a merger
with or into the Parent or a wholly-owned Subsidiary of the
Parent.
"Chemical": Chemical Bank.
"Closing Date": July 14, 1995.
"Code": the Internal Revenue Code of 1986, as amended
from time to time.
"Collateral": as defined in the Security Agreement.
"Commitment": as to any Bank, the obligation of such
Bank to make Revolving Credit Loans to, and/or to make or
participate in Swing Line Loans made to, and/or to issue or
participate in Letters of Credit issued on behalf of, the
Borrowers hereunder in an aggregate principal and/or face
amount at any one time outstanding not to exceed the amount
set forth opposite such Bank's name on Schedule I (as such
Schedule I shall be deemed revised by Schedule II of any
Commitment Transfer Supplement executed in accordance with
the terms hereof), as such amount may be reduced from time
to time as provided herein; collectively, as to all the
Banks, the "Commitments".
"Commitment Percentage": as to any Bank at any time,
the percentage of the aggregate Commitments then constituted
by such Bank's Commitment (or, at any time after the
Commitments shall have expired or terminated, the percentage
which such Bank's Aggregate Outstanding Extensions of Credit
constitutes of the Aggregate Outstanding Extensions of
Credit of all Banks).
"Commitment Period": the period from and including the
Closing Date to but not including the Termination Date or
such earlier date on which the Commitments shall terminate
as provided herein.
"Commonly Controlled Entity": an entity, whether or
not incorporated, which is under common control with any
Borrower within the meaning of Section 4001 of ERISA or is
part of a group which includes any Borrower and which is
treated as a single employer under Section 414 of the Code.
"Company Guarantee": the amended and restated Company
Guarantee, substantially in the form of Exhibit C-1, to be
made by the Company in favor of the Agent for the ratable
benefit of the Banks, as the same may be amended, modified
or supplemented from time to time.
"Confidentiality Agreement": the Confidentiality
Agreement, substantially in the form of Exhibit D, to be
entered into by each prospective Transferee pursuant to
subsection 10.6(f), as the same may be amended, modified or
supplemented from time to time.
"Consolidated EBITDA": for any fiscal period, (a) the
Consolidated Net Income for such period, (b) plus (to the
extent deducted from earnings in determining Consolidated
Net Income) or minus (to the extent added to earnings in
determining Consolidated Net Income) the sum, in each case
for such period, of income taxes, Consolidated Net Interest
Expense, depreciation and amortization, all as determined on
a consolidated basis in accordance with GAAP.
"Consolidated Net Income": for any fiscal period, the
consolidated net income (or loss) of the Parent and its
Subsidiaries for such period, determined on a consolidated
basis in accordance with GAAP; provided that gains or losses
from extraordinary items and from sales of assets (other
than sales of inventory in the ordinary course of business)
shall not be considered in determining Consolidated Net
Income.
"Consolidated Net Interest Expense": for any period,
the sum of (a) the amount which would, in conformity with
GAAP, be set forth opposite the caption "interest expense"
or any like caption (expressed as a negative number), and
(b) the amount which would be set forth opposite the caption
"interest income" or any like caption (expressed as a
positive number), in each case on a consolidated income
statement of the Parent and its Subsidiaries.
"Consolidated Net Worth": at a particular date, all
amounts which, in accordance with GAAP, would be included
under stockholders' equity on a consolidated balance sheet
of the Parent and its Subsidiaries at such date.
"Contractual Obligation": as to any Person, any
provision of any security issued by such Person or of any
agreement, instrument or other undertaking to which such
Person is a party or by which it or any of its property is
bound.
"Control Group": means Douglas B. Hart, James W. Hart,
James W. Hart, Jr., Steven W. Hart, Jennifer H. Fray and
their respective heirs and Affiliates.
"Default": any of the events specified in Section 8,
whether or not any requirement for the giving of notice, the
lapse of time, or both, or any other condition, has been
satisfied.
"Dollars" and "$": dollars in lawful currency of the
United States of America.
"Eligible Accounts": as to the Company, at a
particular date, the total outstanding balance of Accounts
of the Company, net of amounts collected by a Borrower in
respect of Accounts and not yet posted to such Accounts,
minus (without duplication) the sum of: (a) Accounts which
are not bona fide, valid and legally enforceable obligations
of the obligor in respect thereof or which do not arise from
the actual sale and delivery of goods or rendition and
acceptance of services in the ordinary course of business to
such obligor; (b) Accounts which are subject to any asserted
defense, setoff or charge-back; (c) Accounts which
contravene, or arise from sales which contravene, any
Requirement of Law applicable thereto; (d) Past Due
Receivables; (e) the amount of net credit balances of any
obligor, the dates of which are more than 60 days past due
or, for Accounts with sale terms over 60 days, the dates of
which are more than 90 days from the invoice date; (f) bill-
and-hold receivables; (g) the lesser of (1) Accounts of any
obligor which is both a customer of and a vendor to the
Company, and (2) the amount then owing by the Company to
such obligor; (h) if more than 50% of the Accounts of any
obligor constitute Past Due Receivables, the Accounts of
such obligor; (i) Accounts of any obligor which is an
Affiliate or Subsidiary of the Company; (j) Accounts of any
obligor which is organized under the laws of a jurisdiction
outside the United States of America or Canada, unless each
such Account is supported by a letter of credit approved by
the Agent in favor of the Company and such letter of credit
is subject to a perfected first priority security interest
in favor of the Agent for the ratable benefit of the Banks;
(k) Accounts which are not denominated and payable in
Dollars in the United States of America; (l) Accounts of any
Governmental Authority (other than the United States of
America, provided the Company duly assigns its rights to
payment of such Accounts to the Agent for the ratable
benefit of the Banks pursuant to the Assignment of Claims
Act of 1940, as amended from time to time (31 U.S.C. # 3727
et seq.)); (m) Accounts of any obligor who is insolvent or
involved, whether voluntarily or involuntarily, in any case
or proceeding under any bankruptcy, reorganization,
insolvency, adjustment of debt, dissolution, liquidation or
similar law of any jurisdiction; (n) Accounts which are not
free and clear of all Liens or other rights or claims of any
other Person (except in favor of the Agent for the ratable
benefit of the Banks) and do not arise from sales in respect
of which all sales, excise or similar taxes have been paid
in full; (o) Accounts which are not subject to a perfected
first priority security interest in favor of the Agent for
the ratable benefit of the Banks pursuant to the Security
Agreement, Canadian collateral security documents in form
and substance satisfactory to the Agent, or security
arrangements contemplated by the previous clause (j); (p)
Accounts which do not conform in all material respects to
the representations and warranties contained in the Security
Agreement; and (q) such other Accounts as the Agent,
exercising its commercially reasonable judgment, believes
will not be paid in full on a timely basis, provided that
the Agent notifies the Company in writing that such a
determination has been made.
"Eligible Inventory": as to the Company, at a
particular date, the aggregate amount of Inventory as
recorded at standard cost in the accounting records of the
Company, plus 90% of the outstanding value of bill-and-hold
Accounts, minus (without duplication) the sum of: (a)
Inventory which is not owned solely by the Company free and
clear of all Liens or other rights or claims of any other
Person (except in favor of the Agent for the ratable benefit
of the Banks); (b) Inventory which is not subject to a
perfected first priority security interest in favor of the
Agent for the ratable benefit of the Banks pursuant to the
Security Agreement; (c) Inventory which is damaged; (d)
work-in-process, except (i) with respect to the Apparel
Textile Group, (x) the materials costs of work-in-process
that is contained in the finished goods department awaiting
inspection, (y) raw materials not put into production and
(z) the materials costs of greige cloth undergoing the
conversion process, (ii) with respect to the Automotive
Airbag Group, (x) the materials costs of work-in-process
that is contained in the finished goods department awaiting
inspection and (y) raw materials not put into production and
(iii) with respect to the Industrial Coated Fabrics Group,
(x) the costs of work-in-process that is contained in the
finished goods department awaiting inspection and (y) raw
materials not put into production; (e) Inventory which is
allocable to a contract with a Governmental Authority (other
than the United States of America provided the Company duly
assigns its rights to payment for such Inventory to the
Agent for the ratable benefit of the Banks pursuant to the
Assignment of Claims Act of 1940, as amended from time to
time (31 U.S.C. subsection 3727 et seq.)); (f) chemicals and dyes;
(g) miscellaneous inventory such as tint, starch and packing
material; (h) remnant stores inventory; (i) with respect to
the Apparel Textile Group, Inventory that is more than 6
months old; (j) reserves provided by the Company for
obsolete, second quality or slow-moving goods; (k)
intercompany profit included in inventory; (l) any
reconciling differences between the Company's perpetual
records and general ledger accounts if the perpetual records
report inventory balances less than the general ledger
accounts; (m) Inventory not located on the Company's owned
or leased premises with the exception of Inventory located
at public warehouses, provided that the appropriate landlord
waiver(s) and consent(s) are obtained, satisfactory in form
and substance to the Agent; (n) an adjustment, positive or
negative, attributable to material price variances that
result when standard costs and actual costs differ;
(o) Inventory which does not conform in all material
respects to the representations and warranties contained in
the Security Agreement; and (p) such other Inventory as the
Agent, exercising its commercially reasonable discretion,
has otherwise determined to be unacceptable because the
Agent believes that such Inventory is not readily saleable
on the customary terms on which it is usually sold; provided
that the Agent notifies the Company in writing that such a
determination has been made.
"Environmental Laws": any and all foreign, Federal,
state, local or municipal laws, rules, orders, regulations,
statutes, ordinances, codes, decrees, requirements of any
Governmental Authority or Requirements of Law (including
common law) regulating, relating to or imposing liability or
standards of conduct concerning protection of human health
or the environment, as now or may at any time hereafter be
in effect.
"ERISA": the Employee Retirement Income Security Act
of 1974, as amended from time to time.
"Eurocurrency Reserve Requirements": for any day as
applied to a Eurodollar Loan, the aggregate (without
duplication) of the rates (expressed as a decimal fraction)
of reserve requirements in effect on such day (including,
without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board of
Governors of the Federal Reserve System or other
Governmental Authority having jurisdiction with respect
thereto) dealing with reserve requirements prescribed for
eurocurrency funding (currently referred to as "Eurocurrency
Liabilities" in Regulation D of such Board) maintained by a
member bank of such System.
"Eurodollar Base Rate": with respect to each day
during each Interest Period pertaining to a Eurodollar Loan,
the rate per annum equal to the rate at which Chemical is
offered Dollar deposits at or about 10:00 A.M., New York
City time, two Working Days prior to the beginning of such
Interest Period in the interbank eurodollar market where the
eurodollar and foreign currency and exchange operations in
respect of its Eurodollar Loans are then being conducted for
delivery on the first day of such Interest Period for the
number of days comprised therein and in an amount comparable
to the amount of the Eurodollar Loans to be outstanding
during such Interest Period.
"Eurodollar Loans": Loans the rate of interest
applicable to which is based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during
each Interest Period pertaining to a Eurodollar Loan, a rate
per annum determined for such day in accordance with the
following formula (rounded upward to the nearest 1/100th of
1%):
Eurodollar Base Rate
________________________________________
1.00 - Eurocurrency Reserve Requirements
"Eurodollar Tranche": the collective reference to
Eurodollar Loans the Interest Periods with respect to all of
which begin on the same date and end on the same later date
(whether or not such Loans shall originally have been made
on the same day).
"Event of Default": any of the events specified in
Section 8, provided that any requirement for the giving of
notice, the lapse of time, or both, or any other condition,
has been satisfied.
"Existing Agreement": as defined in the recitals
hereto.
"Existing Letters of Credit": the letters of credit
issued by the Issuing Bank for the account of the Borrowers
under the Existing Agreement prior to the Closing Date and
listed on Schedule VIII.
"Existing Revolving Credit Loans": as defined in
subsection 2.1.
"Financing Lease": any lease of property, real or
personal, the obligations of the lessee in respect of which
are required in accordance with GAAP to be capitalized on a
balance sheet of the lessee.
"Foreign Subsidiary": Reeves S.p.A. or any other
Restricted Subsidiary of the Company organized under the
laws of a jurisdiction other than any state of the United
States.
"GAAP": generally accepted accounting principles in
the United States of America in effect on the Closing Date.
"Governmental Authority": any nation or government,
any state or other political subdivision thereof and any
entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to
government.
"Guarantees": the collection reference to the Company
Guarantee and the Parent Guarantee.
"Guarantee Obligation": as to any Person (the
"guaranteeing person"), any obligation of (a) the
guaranteeing person or (b) another Person (including,
without limitation, any bank under any letter of credit) to
induce the creation of which obligation the guaranteeing
person has issued a reimbursement, counterindemnity or
similar obligation, in either case guaranteeing or in effect
guaranteeing any Indebtedness, leases, dividends or other
obligations (the "primary obligations") of any other third
Person (the "primary obligor") in any manner, whether
directly or indirectly, including, without limitation, any
obligation of the guaranteeing person, whether or not
contingent, (i) to purchase any such primary obligation or
any property constituting direct or indirect security
therefor, (ii) to advance or supply funds (1) for the
purchase or payment of any such primary obligation or (2) to
maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency
of the primary obligor, (iii) to purchase property,
securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of
the primary obligor to make payment of such primary
obligation or (iv) otherwise to assure or hold harmless the
owner of any such primary obligation against loss in respect
thereof; provided, however, that the term Guarantee
Obligation shall not include endorsements of instruments for
deposit or collection in the ordinary course of business.
The amount of any Guarantee Obligation of any guaranteeing
person shall be deemed to be the lower of (a) an amount
equal to the stated or determinable amount of the primary
obligation in respect of which such Guarantee Obligation is
made and (b) the maximum amount for which such guaranteeing
person may be liable pursuant to the terms of the instrument
embodying such Guarantee Obligation, unless such primary
obligation and the maximum amount for which such
guaranteeing person may be liable are not stated or
determinable, in which case the amount of such Guarantee
Obligation shall be such guaranteeing person's maximum
reasonably anticipated liability in respect thereof as
determined by the Borrowers in good faith.
"Hedging Agreements": (a) any interest rate protection
agreement, interest rate future, interest rate option,
interest rate swap, interest rate cap or other interest rate
hedge or arrangement under which either of the Borrowers or
any of their Restricted Subsidiaries is a party or a
beneficiary and (b) any agreement or arrangement designed to
limit or eliminate the risk and/or exposure of either of the
Borrowers or any of their Restricted Subsidiaries to
fluctuations in currency exchange rates.
"Hedging Bank": any Bank which from time to time
enters into Hedging Agreements with either of the Borrowers
or any of their Restricted Subsidiaries.
"Indebtedness": of any Person at any date, (a) all
indebtedness of such Person for borrowed money or for the
deferred purchase price of property or services (other than
current trade liabilities incurred in the ordinary course of
business and payable in accordance with customary practices)
or which is evidenced by a note, bond (other than a
performance bond issued in the ordinary course of business),
debenture or similar instrument, (b) all obligations of such
Person under Financing Leases, (c) all obligations of such
Person in respect of letters of credit and acceptances
(other than letters of credit and acceptances in respect of
current trade liabilities incurred in the ordinary course of
business and payable in accordance with customary practices)
issued or created for the account of such Person and (d) all
liabilities secured by any Lien on any property owned by
such Person even though such Person has not assumed or
otherwise become liable for the payment thereof.
"Indenture": means the Indenture, dated as of June 1,
1992, between the Parent and Chemical Bank, as Trustee, as
amended, modified or supplemented from time to time.
"Industrial Coated Fabrics Group": the Industrial
Coated Fabrics Group, also known as Reeves International, an
unincorporated division of the Company.
"Insolvency": with respect to any Multiemployer Plan,
the condition that such Plan is insolvent within the meaning
of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Interest Payment Date": (a) as to any Alternate Base
Rate Loan (including any Swing Line Loan), the last day of
each March, June, September and December to occur while such
Loan is outstanding, (b) as to any Eurodollar Loan having an
Interest Period of three months or less, the last day of
such Interest Period, (c) as to any Eurodollar Loan having
an Interest Period longer than three months, each day which
is three months, or a whole multiple thereof, after the
first day of such Interest Period and the last day of such
Interest Period, and (d) as to any Loan, (i) the Termination
Date and (ii) any date upon which the Commitments have been
terminated and the Loans have been paid in full.
"Interest Period": with respect to any Eurodollar
Loan:
(i) initially, the period commencing on the
borrowing or conversion date, as the case may be, with
respect to such Eurodollar Loan and ending one, two,
three or six months thereafter, as selected by a
Borrower in its notice of borrowing or notice of
conversion, as the case may be, given with respect
thereto; and
(ii) thereafter, each period commencing on the
last day of the next preceding Interest Period
applicable to such Eurodollar Loan and ending one, two,
three or six months thereafter, as selected by such
Borrower by irrevocable notice to the Agent not less
than three Working Days prior to the last day of the
then current Interest Period with respect thereto;
provided that, all of the foregoing provisions relating to
Interest Periods are subject to the following:
(1) if any Interest Period pertaining to a
Eurodollar Loan would otherwise end on a day that is
not a Working Day, such Interest Period shall be
extended to the next succeeding Working Day unless the
result of such extension would be to carry such
Interest Period into another calendar month in which
event such Interest Period shall end on the immediately
preceding Working Day;
(2) any Interest Period that would otherwise
extend beyond the Termination Date shall end on the
Termination Date; and
(3) any Interest Period pertaining to a Eurodollar
Loan that begins on the last Working Day of a calendar
month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of
such Interest Period) shall end on the last Working Day
of a calendar month.
"Inventory": all of the Company's "inventory" as
defined in the Uniform Commercial Code of the State of New York.
"Investments": as defined in subsection 7.8.
"Issuing Bank": Chemical, in its capacity as issuer of
any Letter of Credit.
"L/C Commitment": $10,000,000.
"L/C Fee Payment Date": the last day of each March,
June, September and December.
"L/C Obligations": at any time, an amount equal to the
sum of (a) the aggregate then undrawn and unexpired amount
of the then outstanding Letters of Credit and (b) the
aggregate amount of drawings under Letters of Credit which
have not then been reimbursed pursuant to subsection 3.5.
"L/C Participants": the collective reference to all
the Banks other than the Issuing Bank.
"Letters of Credit": as defined in Section 3.1(a).
"Lien": any mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien
(statutory or other), or preference, priority or other
security agreement or preferential arrangement of any kind
or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement, any
Financing Lease having substantially the same economic
effect as any of the foregoing, and the filing of any
financing statement (other than financing statements with
respect to operating leases) under the Uniform Commercial
Code or comparable law of any jurisdiction in respect of any
of the foregoing).
"Loan": a Revolving Credit Loan or a Swing Line Loan,
as the context shall require; collectively, the "Loans".
"Loan Documents": this Agreement, the Notes, the
Applications, the Guarantees, and the Security Agreement.
"Material Adverse Effect": a material adverse effect
on (a) the business, operations, property or condition
(financial or otherwise) of the Parent and its Subsidiaries
taken as a whole, (b) the ability of any Borrower to perform
its obligations under this Agreement or any of the other
Loan Documents, or (c) the validity or enforceability of
this Agreement or any of the other Loan Documents or the
rights or remedies of the Agent or the Banks hereunder or
thereunder.
"Materials of Environmental Concern": any petroleum
(including crude oil or any fraction thereof) or petroleum
products (including, without limitation, gasoline) or any
hazardous or toxic substances, materials or wastes, defined
as such in or regulated under any Environmental Law,
including, without limitation, asbestos, polychlorinated
biphenyls, and urea-formaldehyde insulation.
"Multiemployer Plan": a Plan which is a multiemployer
plan as defined in Section 4001(a)(3) of ERISA.
"Net Cash Proceeds": when used in respect of any sale
or other disposition of property, business or assets of any
Person, the gross cash proceeds received by such Person from
such sale or disposition less (i) all legal, title,
recording and transfer tax expenses, commissions and other
documented fees and expenses, and all other federal, state
and local taxes (including the amount, if any, reasonably
estimated by such Person at the time of such sale or other
disposition for taxes payable by such Person on or measured
by net income or gain resulting from such transaction)
incurred in connection therewith, (ii) the principal amount
of, premium, if any, and interest on any Indebtedness (other
than the Loans) which is secured by the asset sold or
otherwise disposed of and which is required to be repaid in
connection with such sale or other disposition of assets and
(iii) amounts to be provided by such Person as a reserve, in
accordance with GAAP, against any liabilities associated
with any such sale or other disposition of assets and
retained by such Person after such sale or other disposition
of assets, including, without limitation, pension and other
post-employment benefit liabilities and liabilities related
to environmental matters or against any indemnification
obligations associated with such sale or other disposition
of assets.
"Note": a Revolving Credit Note or a Swing Line Note,
as the context shall require; collectively, the "Notes".
"Obligations" means the unpaid principal amount
of, and interest (including, without limitation,
interest accruing after the maturity of the Loans and
interest accruing after the filing of any petition in
bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to either
of the Borrowers, whether or not a claim for post-
filing or post-petition interest is allowed in such
proceeding) on the Notes and all other obligations and
liabilities of the Borrowers to the Agent or to the
Banks, including, without limitation, the obligations
under the Letters of Credit, whether direct or
indirect, absolute or contingent, due or to become due,
or now existing or hereafter incurred, which may arise
under, out of, or in connection with, this Agreement,
the Security Agreement, the Guarantees, the other Loan
Documents and any other document made, delivered or
given in connection therewith or herewith, whether on
account of principal, interest, reimbursement
obligations, fees, indemnities, costs, expenses
(including, without limitation, all fees and
disbursements of counsel to the Agent or to the Banks
that are required to be paid by the Borrowers pursuant
to the terms of this Agreement) or otherwise.
"Parent Guarantee": the Parent Guarantee,
substantially in the form of Exhibit C-2, to be made by the
Parent in favor of the Agent for the ratable benefit of the
Banks, as the same may be amended, modified or supplemented
from time to time.
"PBGC": the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA.
"Participant": as defined in subsection 10.6(b).
"Past Due Receivables": with respect to the Company at
a particular time, Accounts (excluding Accounts with net
credit balances) which (x) for Accounts with sale terms due
up to and including 60 days, are represented as over 60 days
past due by Apparel Textile Group, Automotive Airbag Group
or Industrial Fabric Group aging reports and (y) for other
Accounts, have been invoiced by the Company and have been
outstanding for more than 90 days from the invoice date.
"Permitted Transactions": means, as to any Person, (i)
reasonable and customary fees, compensation and benefits
paid to officers, directors, employees or consultants of
such Person or any of its Restricted Subsidiaries or their
respective Affiliates for services rendered to such Person
or Restricted Subsidiary in the ordinary course of business
consistent with past practice, (ii) transfers of goods and
services by or among such Person and its Restricted
Subsidiaries and their respective Affiliates in the ordinary
course of business consistent with past practice, provided
that if any such transaction or series of related
transactions involves in excess of $1,500,000, the Board of
Directors of such Person shall determine in good faith by
resolution that such transaction is on terms fair and
reasonable to such Person and (iii) payments made pursuant
to the Tax Allocation Agreement.
"Person": an individual, partnership, corporation,
business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other
entity of whatever nature.
"Plan": at a particular time, any employee benefit
plan which is covered by ERISA and in respect of which any
Borrower or a Commonly Controlled Entity is (or, if such
plan were terminated at such time, would under Section 4069
of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"Properties": as defined in subsection 4.17(a).
"Purchasing Banks": as defined in subsection 10.6(c).
"Refunded Swing Line Loans": as defined in subsection
2.7.
"Regulation U": Regulation U of the Board of Governors
of the Federal Reserve System.
"Reimbursement Obligation": the obligation of the
Borrowers to reimburse the Issuing Bank pursuant to
subsection 3.5 for amounts drawn under Letters of Credit.
"Reorganization": with respect to any Multiemployer
Plan, the condition that such plan is in reorganization
within the meaning of Section 4241 of ERISA.
"Reportable Event": any of the events set forth in
Section 4043(b) of ERISA, other than those events as to
which the thirty day notice period is waived under
subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg.
Section 2615 or any successor regulation thereto.
"Required Banks": at any time, Banks the Commitment
Percentages of which aggregate at least 60%.
"Requirement of Law": as to any Person, the
Certificate of Incorporation and By-Laws or other
organizational or governing documents of such Person, and
any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or any
of its property or to which such Person or any of its
property is subject.
"Responsible Officer": any one of the chief executive
officer or an executive vice president of any Borrower or,
with respect to financial matters, the chief financial
officer, the Vice President-Finance or the Treasurer of any
Borrower.
"Restricted Subsidiary": means, with respect to any
Person, (i) any Subsidiary of such Person which exists on
the date of this Agreement and (ii) any other Subsidiary
which has not been classified as an Unrestricted Subsidiary.
Either Borrower by resolution of its Board of Directors, may
classify a Subsidiary as an Unrestricted Subsidiary until
such time as it may, by further resolution of its Board of
Directors, classify such Subsidiary as a Restricted
Subsidiary. When an Unrestricted Subsidiary is classified
as a Restricted Subsidiary, notice thereof must be provided
to the Agent.
"Revolving Credit Loans": as defined in subsection
2.1.
"Revolving Credit Notes": as defined in subsection
2.2.
"Security Agreement": the amended and restated
Security Agreement, substantially in the form of Exhibit L,
to be executed by the Company in favor of the Agent, for the
ratable benefit of the Banks, as amended, supplemented or
otherwise modified from time to time.
"Senior Notes": the 11% Senior Notes due 2002 of the
Parent.
"Single Employer Plan": any Plan which is covered by
Title IV of ERISA, but which is not a Multiemployer Plan.
"Subordinated Debt": the 13-3/4% Subordinated
Debentures due May 1, 2001 of the Parent.
"Subsidiary": as to any Person, a corporation,
partnership or other entity of which shares of stock or
other ownership interests having ordinary voting power
(other than stock or such other ownership interests having
such power only by reason of the happening of a contingency)
to elect a majority of the board of directors or other
managers of such corporation, partnership or other entity
are at the time owned, or the management of which is
otherwise controlled, directly or indirectly through one or
more intermediaries, or both, by such Person. Unless
otherwise qualified, all references to a "Subsidiary" or to
"Subsidiaries" in this Agreement shall refer to a Subsidiary
or Subsidiaries of the respective Borrowers.
"Swing Line Commitment": the Swing Line Bank's
obligation to make Swing Line Loans pursuant to subsection
2.4.
"Swing Line Bank": Chemical, in its capacity as
provider of the Swing Line Loans, or any other Bank
appointed by Chemical and approved by the Borrowers, which
approval shall not be unreasonably withheld.
"Swing Line Loan Participation Certificate": a
certificate in substantially the form of Exhibit B.
"Swing Line Loans": as defined in subsection 2.4.
"Swing Line Note": as defined in subsection 2.5.
"Tax Allocation Agreement": the Tax Allocation
Agreement, effective as of January 1, 1992, among Hart
Holding Company Incorporated, the Parent, the Company,
Fenchurch, Inc., Turner Freight Systems, Inc. (formerly
Turner Trucking Company), Reeves Penna, Inc., A.R.A.
Manufacturing Company, Hart Investment Properties
Corporation, Hart Capital Corporation and Reeves Holdings,
Inc., as amended, modified or supplemented from time to
time.
"Termination Date": the fifth anniversary of the
Closing Date.
"Transferee": as defined in subsection 10.6(f).
"Type": as to any Loan, its nature as an Alternate
Base Rate Loan or a Eurodollar Loan.
"Uniform Customs": the Uniform Customs and Practice
for Documentary Credits (1993 Revision), International
Chamber of Commerce Publication No. 500, as the same may be
amended from time to time.
"Unrestricted Subsidiary": of any Person means any
Subsidiary which has been classified as an Unrestricted
Subsidiary and any Subsidiary of an Unrestricted Subsidiary
until such time as (i) such Subsidiary is reclassified as a
Restricted Subsidiary or (ii) such Person or any of its
Restricted Subsidiaries becomes directly or indirectly
liable in respect of any Contractual Obligation or
Indebtedness of such Unrestricted Subsidiary. A Subsidiary
of either Borrower may only be classified as an Unrestricted
Subsidiary if immediately after such classification, there
would not be a Default or Event of Default and such Borrower
and its Restricted Subsidiaries would have only Investments
in such Subsidiary which would be permitted by subsection
7.8 hereof and Section 4.10 of the Indenture. An
Unrestricted Subsidiary of either Borrower may only be
reclassified as a Restricted Subsidiary if, immediately
after giving effect to such reclassification, there would be
no Default or Event of Default hereunder and such Borrower
could create, assume, guarantee or suffer to exist at least
$1.00 of additional Indebtedness. No Restricted Subsidiary
may be reclassified as an Unrestricted Subsidiary. Any
valid classification shall be effective as of the date
specified in the applicable resolution of the Board of
Directors of such Borrower, which shall not be prior to the
date such resolution is made. When an Unrestricted
Subsidiary is classified as a Restricted Subsidiary, notice
thereof must be provided to the Agent.
"Working Day": any Business Day on which dealings in
foreign currencies and exchange between banks may be carried
on in London, England.
1.2 Other Definitional Provisions. (a) Unless
otherwise specified therein, all terms defined in this Agreement
shall have the defined meanings when used in the Notes or any
certificate or other document made or delivered pursuant hereto.
(b) As used herein and in the Notes, and any
certificate or other document made or delivered pursuant hereto,
accounting terms relating to the Borrowers and their Subsidiaries
not defined in subsection 1.1 and accounting terms partly defined
in subsection 1.1, to the extent not defined, shall have the
respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision
of this Agreement, and Section, subsection, Schedule and Exhibit
references are to this Agreement unless otherwise specified.
(d) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such
terms.
(e) Notwithstanding anything to the contrary herein,
for purposes of making all calculations in connection with the
covenants contained in Section 7, all accounting terms used
herein shall be interpreted and all accounting determinations
hereunder shall be made in accordance with GAAP consistently
applied as in effect on the Closing Date. In the event of any
material difference at any time between GAAP as in effect on the
Closing Date and generally accepted accounting principles as from
time to time in effect, the certificate of a Responsible Officer
required pursuant to subsection 6.2(b)(ii) shall include a
reconciliation of the calculations required thereby with the
financial statement being delivered with such certificate.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 Revolving Credit Commitments. (a) The Borrowers
acknowledge and confirm that certain of the Banks have made
revolving credit loans (the "Existing Revolving Credit Loans") to
them under the Existing Credit Agreement. The Company hereby
reaffirms its obligation to pay such Existing Revolving Credit
Loans in accordance with the terms and provisions of this
Agreement and the other Loan Documents. Subject to the terms and
conditions hereof, each Bank severally agrees to maintain such
Existing Revolving Credit Loans and to make additional revolving
credit loans (individually as to the Existing Revolving Credit
Loans and additional revolving credit loans, a "Revolving Credit
Loan" and, collectively, "Revolving Credit Loans") to the
Borrowers from time to time during the Commitment Period in an
aggregate principal amount at any one time outstanding which,
when added to such Bank's Commitment Percentage of the then
outstanding L/C Obligations and the then outstanding Swing Line
Loans, does not exceed the amount of such Bank's Commitment;
provided that (i) the sum of such Bank's Revolving Credit Loans
and such Bank's Commitment Percentage of the then outstanding L/C
Obligations and the then outstanding Swing Line Loans shall not
exceed such Bank's Commitment Percentage of the Borrowing Base
then in effect, and (ii) prior to the Borrower Merger, no Bank
shall make a Revolving Credit Loan to the Parent unless on such
Borrowing Date at least $20,000,000 aggregate principal amount of
Revolving Credit Loans, Swing Line Loans and L/C Obligations of
the Company will be outstanding. Prior to the Borrower Merger,
each borrowing by the Parent shall be deemed a certification that
pursuant to the terms of the Indenture, the Company is prohibited
at such time from incurring additional Indebtedness pursuant
thereto. During the Commitment Period the Borrowers may use the
Commitments by borrowing, prepaying the Revolving Credit Loans in
whole or in part, and reborrowing, all in accordance with the
terms and conditions hereof.
(b) The Revolving Credit Loans may from time to time
be (i) Eurodollar Loans, (ii) Alternate Base Rate Loans or (iii)
a combination thereof, as determined by a Borrower and notified
to the Agent in accordance with subsections 2.3 and 2.11,
provided that no Revolving Credit Loan shall be made as a
Eurodollar Loan after the day that is one month prior to the
Termination Date.
2.2 Revolving Credit Notes. The Revolving Credit
Loans made by each Bank shall be evidenced by a promissory note
of the respective Borrower, substantially in the form of Exhibit
A-1 with appropriate insertions as to payee, date and principal
amount (as the same may be amended, supplemented, or otherwise
modified from time to time, a "Revolving Credit Note"), payable
to the order of such Bank and in a principal amount equal to the
lesser of (a) the amount of the initial Commitment of such Bank
and (b) the aggregate unpaid principal amount of all Revolving
Credit Loans made by such Bank. Each Bank is hereby authorized
to record the date, Type and amount of each Revolving Credit Loan
made by such Bank, each continuation thereof, each conversion of
all or a portion thereof to another Type, the date and amount of
each payment or prepayment of principal thereof and, in the case
of Eurodollar Loans, the length of each Interest Period with
respect thereto, on the schedule annexed to and constituting a
part of its Revolving Credit Note, and any such recordation shall
constitute prima facie evidence of the accuracy of the
information so recorded. Each Revolving Credit Note shall (x) be
dated the Closing Date, (y) be stated to mature on the
Termination Date and (z) provide for the payment of interest in
accordance with subsection 2.13.
2.3 Procedure for Revolving Credit Borrowing. A
Borrower may borrow Revolving Credit Loans under the Commitments
during the Commitment Period on any Working Day, if all or any
part of the requested Revolving Credit Loans are to be initially
Eurodollar Loans, or on any Business Day, otherwise, provided
that, subject to the last sentence of subsection 3.5, such
Borrower shall give the Agent irrevocable notice (which notice
must be received by the Agent prior to 11:00 A.M., New York City
time, (a) three Working Days prior to the requested Borrowing
Date, if all or any part of the requested Revolving Credit Loans
are to be initially Eurodollar Loans, or (b) one Business Day
prior to the requested Borrowing Date, otherwise), specifying (i)
the amount to be borrowed, (ii) the requested Borrowing Date,
(iii) whether the borrowing is to be of Eurodollar Loans,
Alternate Base Rate Loans or a combination thereof and (iv) if
the borrowing is to be entirely or partly of Eurodollar Loans,
the amount of such Eurodollar Loan and the length of the initial
Interest Period therefor. Each borrowing under the Commitments
shall be in an amount equal to (x) in the case of Alternate Base
Rate Loans, $100,000 or a whole multiple thereof (or, if the then
Available Commitments are less than $100,000, such lesser amount)
and (y) in the case of Eurodollar Loans, $1,500,000 or a whole
multiple of $100,000 in excess thereof. Upon receipt of any such
notice from a Borrower, the Agent shall promptly notify each Bank
thereof. Each Bank will make the amount of its pro rata share of
each borrowing available to the Agent for the account of the
applicable Borrower at the office of the Agent specified in
subsection 10.2 prior to 11:00 A.M., New York City time, on the
Borrowing Date requested by such Borrower in funds immediately
available to the Agent. Such borrowing will then be made
available to such Borrower by the Agent crediting the account of
such Borrower on the books of such office with the aggregate of
the amounts made available to the Agent by the Banks and in like
funds as received by the Agent.
2.4 Swing Line Commitments. (a) Subject to the terms
and conditions hereof, the Swing Line Bank agrees to make swing
line loans (individually, a "Swing Line Loan"; collectively, the
"Swing Line Loans") to the Borrowers from time to time during the
Commitment Period in an aggregate principal amount at any one
time outstanding not to exceed $3,000,000, provided that (i) at
no time may the sum of the then outstanding Swing Line Loans,
Revolving Credit Loans and L/C Obligations exceed the lesser of
(x) the Commitments and (y) the Borrowing Base and (ii) prior to
the Borrower Merger, the Swing Line Bank shall not make a Swing
Line Loan to the Parent unless on such Borrowing Date at least
$20,000,000 aggregate principal amount of Revolving Credit Loans,
Swing Line Loans and L/C Obligations of the Company will be
outstanding. Prior to the Borrower Merger, each borrowing
hereunder shall be deemed a certification that pursuant to the
terms of the Indenture, the Company is prohibited at such time
from incurring additional Indebtedness pursuant thereto. During
the Commitment Period the Borrowers may use the Commitments by
borrowing, prepaying the Swing Line Loans in whole or in part,
and reborrowing, all in accordance with the terms and conditions
hereof.
(b) All Swing Line Loans shall be made as Alternate
Base Rate Loans and shall not be entitled to be converted into
Eurodollar Loans.
2.5 Swing Line Notes. The Swing Line Loans shall be
evidenced by a promissory note of the respective Borrower
substantially in the form of Exhibit A-2, with appropriate
insertions as to payee, date and principal amount (as the same
may be amended, supplemented, or otherwise modified from time to
time, a "Swing Line Note"), payable to the order of the Swing
Line Bank and in a principal amount equal to the lesser of (a)
the amount of the Swing Line Commitment and (b) the aggregate
unpaid principal amount of the Swing Line Loans. The Swing Line
Bank is hereby authorized to record the date and amount of each
Swing Line Loan and the date and amount of each payment or
prepayment of principal thereof, on the schedule annexed to and
constituting a part of each Swing Line Note and any such
recordation on such schedule shall constitute prima facie
evidence of the accuracy of the information so recorded. The
Swing Line Notes shall (a) be dated the Closing Date, (b) be
stated to mature on the Termination Date and (c) provide for the
payment of interest in accordance with subsection 2.13.
2.6 Procedure for Swing Line Borrowing. A Borrower
may borrow Swing Line Loans under the Commitments during the
Commitment Period on any Business Day, provided that such
Borrower shall give the Swing Line Bank irrevocable notice (which
notice must be received by the Swing Line Bank prior to 12:00
noon, New York City time) on the requested Borrowing Date
specifying the amount of the requested Swing Line Loan (which
shall be in a minimum amount of $100,000 or a whole multiple in
excess thereof) and the requested Borrowing Date. The proceeds
of a Swing Line Loan will then be made available by the Swing
Line Bank to such Borrower at the office of the Swing Line Bank
by crediting the account of such Borrower at such office with
such proceeds in Dollars and in immediately available funds.
2.7 Refunded Swing Line Loans; Termination of
Commitments. (a) The Swing Line Bank, at any time in its sole
and absolute discretion may, and, at any time as there shall be a
Swing Line Loan outstanding on either the 15th or the 30th
calendar day of any month (or if such day is not a Business Day,
then on the next succeeding Business Day), the Swing Line Bank
shall, on behalf of the Borrowers (which hereby irrevocably
direct and authorize the Swing Line Bank to act on their behalf),
request each Bank, including the Swing Line Bank, to make a
Revolving Credit Loan in an amount equal to such Bank's
Commitment Percentage of the principal amount of the Swing Line
Loans (the "Refunded Swing Line Loans") outstanding on the date
such notice is given; provided that the provisions of this
subsection shall not affect the Borrowers' obligations to prepay
Swing Line Loans in accordance with the provisions of subsection
2.10(b). Unless the Commitments shall have expired or terminated
(in which event the procedures of paragraph (b) of this
subsection 2.7 shall apply), each Bank will make the proceeds of
its Revolving Credit Loan available to the Agent for the account
of the Swing Line Bank at the office of the Agent prior to 12:00
noon, New York City time, in funds immediately available to the
Agent on the Business Day next succeeding the date such notice is
given. The proceeds of such Revolving Credit Loans shall be
immediately applied to repay the Refunded Swing Line Loans.
(b) If the Commitments shall expire or terminate at
any time while Swing Line Loans are outstanding, each Bank shall,
at the option of the Swing Line Bank exercised reasonably, either
(i) notwithstanding the expiration or termination of the
Commitments, to the extent permitted by law, make a Revolving
Credit Loan or (ii) purchase an undivided participating interest
in such Swing Line Loans, in either case in an amount equal to
such Bank's Commitment Percentage determined on the date of, and
immediately prior to, expiration or termination of the
Commitments of the aggregate principal amount of such Swing Line
Loans. Each Bank will make the proceeds of any Revolving Credit
Loan made pursuant to the immediately preceding sentence
available to the Agent for the account of the Swing Line Bank at
the office of the Agent prior to 12:00 noon, New York City time,
in funds immediately available on the Business Day next
succeeding the date on which the Revolving Credit Commitments
expire or terminate. The proceeds of such Revolving Credit Loans
shall be immediately applied to repay the Swing Line Loans
outstanding on the date of termination or expiration of the
Commitments. In the event that the Banks purchase undivided
participating interests pursuant to clause (ii) of the first
sentence of this paragraph (d), each Bank shall immediately
transfer to the Swing Line Bank, in immediately available funds,
the amount of its participation and upon receipt thereof the
Swing Line Bank will deliver to such Bank a Swing Line Loan
Participation Certificate dated the date of receipt of such funds
and in such amount.
(c) Whenever, at any time after the Swing Line Bank
has received from any Bank such Bank's participating interest in
a Swing Line Loan, the Swing Line Bank receives any payment on
account thereof, the Swing Line Bank will distribute to such Bank
its participating interest in such amount (appropriately
adjusted, in the case of interest payments, to reflect the period
of time during which such Bank's participating interest was
outstanding and funded) provided, however, that in the event that
such payment received by the Swing Line Bank is required to be
returned, such Bank will return to the Swing Line Bank any
portion thereof previously distributed by the Swing Line Bank to
it.
2.8 Fees. (a) The Borrowers agree to pay to the
Agent for the account of each Bank a commitment fee for the
period from and including the Closing Date to the Termination
Date, computed at the rate of .375% per annum on the average
daily amount of the Available Commitment of such Bank during the
period for which payment is made, payable quarterly in arrears on
the last day of each March, June, September and December and on
the Termination Date or such earlier date as the Commitments
shall terminate as provided herein.
(b) The Borrowers agree to pay to the Agent for the
account of each Bank a fee for the period from the date that the
Commitments are accepted by the Borrowers to the Closing Date,
computed at the rate of .375% per annum on an amount equal to the
Commitment of such Bank minus its commitment under the Existing
Agreement during such period, payable on the Closing Date.
(c) The Borrowers agree to pay all fees required
pursuant to the Fee Letter, dated June 1, 1995, among Chemical,
the Borrowers, and Chemical Securities Inc.
2.9 Termination or Reduction of Commitments. The
Borrowers shall have the right, upon not less than five Business
Days' notice to the Agent, to terminate the Commitments or, from
time to time, to reduce the amount of the Commitments, provided
that no such termination or reduction shall be permitted if,
after giving effect thereto and to any prepayments of the
Revolving Credit Loans and Swing Line Loans made on the effective
date thereof, the aggregate principal amount of the Revolving
Credit Loans then outstanding, when added to the then outstanding
L/C Obligations and the then outstanding Swing Line Loans, would
exceed the Commitments then in effect. Any such reduction shall
be in an amount equal to $100,000 or a whole multiple thereof and
shall reduce permanently the Commitments then in effect.
2.10 Optional Prepayments and Mandatory Prepayments.
(a) The Borrowers may at any time and from time to time prepay
the Loans, in whole or in part, without premium or penalty, upon
at least three Working Days' irrevocable notice to the Agent, if
all or any part of the Loans to be prepaid are Eurodollar Loans,
and one Business Days' irrevocable notice to the Agent otherwise
(provided that the Borrowers may prepay Swing Line Loans on any
Business Day without prior notice thereof), specifying the date
and amount of prepayment and whether the prepayment is (i) of
Revolving Credit Loans or Swing Line Loans, or a combination
thereof, and (ii) of Eurodollar Loans, Alternate Base Rate Loans
or a combination thereof, and, in each case if a combination
thereof, the amount allocable to each. Prepayments of Eurodollar
Loans shall be subject to the provisions of subsection 2.20.
Upon receipt of any such notice the Agent shall promptly notify
each affected Bank thereof. If any such notice is given, the
amount specified in such notice shall be due and payable on the
date specified therein. Optional prepayments of Loans other than
Swing Line Loans shall be in minimum aggregate principal amounts
of $500,000 or an integral multiple of $100,000 in excess
thereof.
(b) If the Borrowing Base Certificate shows that the
sum of the Aggregate Outstanding Extensions of Credit on the date
of such Borrowing Base Certificate exceeds the Borrowing Base,
the Borrowers agree to pay to the Agent, on behalf of the Banks,
on the date such Borrowing Base Certificate is furnished, an
amount equal to such excess, which amount shall be applied first,
to payment of any Swing Line Loans then outstanding, second, to
payment of any Revolving Credit Loans then outstanding, third, to
payment of any Reimbursement Obligations then outstanding and
fourth, to cash collateralize any outstanding L/C Obligations on
terms reasonably satisfactory to the Agent.
2.11 Conversion and Continuation Options. (a) The
Borrowers may elect from time to time to convert outstanding
Revolving Credit Loans from Eurodollar Loans to Alternate Base
Rate Loans by giving the Agent at least one Business Day's prior
irrevocable notice of such election, provided that any such
conversion of Eurodollar Loans may only be made on the last day
of an Interest Period with respect thereto. The Borrowers may
elect from time to time to convert outstanding Revolving Credit
Loans (but not, in any event, Swing Line Loans) from Alternate
Base Rate Loans to Eurodollar Loans by giving the Agent at least
three Working Days' prior irrevocable notice of such election.
Any such notice of conversion to Eurodollar Loans shall specify
the length of the initial Interest Period or Interest Periods
therefor. Upon receipt of any such notice the Agent shall
promptly notify each Bank thereof. All or any part of
outstanding Eurodollar Loans and Alternate Base Rate Loans may be
converted as provided herein, provided that (i) no Loan may be
converted into a Eurodollar Loan when any Event of Default has
occurred and is continuing and the Agent or the Required Banks
have determined that such a conversion is not appropriate, (ii)
any such conversion may only be made if, after giving effect
thereto, subsection 2.12 shall not have been contravened and
(iii) no Loan may be converted into a Eurodollar Loan after the
date that is one month prior to the Termination Date.
(b) Any Eurodollar Loans may be continued as such upon
the expiration of the then current Interest Period with respect
thereto by the applicable Borrower giving notice to the Agent, in
accordance with the applicable provisions of the term "Interest
Period" set forth in subsection 1.1, of the length of the next
Interest Period to be applicable to such Loans, provided that no
Eurodollar Loan may be continued as such (i) when any Event of
Default has occurred and is continuing and the Agent or the
Required Banks have determined that such a continuation is not
appropriate, (ii) if, after giving effect thereto, subsection
2.12 would be contravened or (iii) after the date that is one
month prior to the Termination Date and provided, further, that
if the applicable Borrower shall fail to give any required notice
as described above in this paragraph or if such continuation is
not permitted pursuant to the preceding proviso, such Loans shall
be automatically converted to Alternate Base Rate Loans on the
last day of such then expiring Interest Period.
2.12 Minimum Amounts of Eurodollar Tranches. All
borrowings, conversions and continuations of Loans hereunder and
all selections of Interest Periods hereunder shall be in such
amounts and be made pursuant to such elections so that, after
giving effect thereto, the aggregate principal amount of the
Loans comprising each Eurodollar Tranche shall be equal to
$1,500,000 or a whole multiple of $100,000 in excess thereof.
2.13 Interest Rates and Payment Dates. (a) Each
Eurodollar Loan shall bear interest for each day during each
Interest Period with respect thereto at a rate per annum equal to
the Eurodollar Rate determined for such day plus the Applicable
Margin.
(b) Each Alternate Base Rate Loan shall bear interest
at a rate per annum equal to the Alternate Base Rate plus the
Applicable Margin.
(c) If all or a portion of (i) the principal amount of
any Loan or (ii) any interest payable thereon shall not be paid
when due (whether at the stated maturity, by acceleration or
otherwise), such overdue amount shall bear interest at a rate per
annum which is (x) in the case of overdue principal, the rate
that would otherwise be applicable thereto pursuant to the
foregoing provisions of this subsection plus 2% or (y) in the
case of overdue interest, the rate described in paragraph (b) of
this subsection plus 2%, in each case from the date of such
non-payment until such amount is paid in full (as well after as
before judgment).
(d) Interest shall be payable in arrears on each
Interest Payment Date, provided that interest accruing pursuant
to paragraph (c) of this subsection shall be payable on demand.
2.14 Computation of Interest and Fees. (a) Interest
on Alternate Base Rate Loans, letter of credit commissions and
commitment fees shall be calculated on the basis of a 365- (or
366-, as the case may be) day year for the actual days elapsed.
Interest on Eurodollar Loans shall be calculated on the basis of
a 360-day year for the actual days elapsed. The Agent shall as
soon as practicable notify the Borrowers and the Banks of each
determination of a Eurodollar Rate. Any change in the interest
rate on a Loan resulting from a change in the Alternate Base Rate
or the Eurocurrency Reserve Requirements shall become effective
as of the opening of business on the day on which such change in
the Alternate Base Rate is announced or such change in the
Eurocurrency Reserve Requirements becomes effective. The Agent
shall as soon as practicable notify the Borrowers and the Banks
of the effective date and the amount of each such change in
interest rate.
(b) Each determination of an interest rate by the
Agent pursuant to any provision of this Agreement shall be
conclusive and binding on the Borrower and the Banks in the
absence of manifest error. The Agent shall, at the request of
the Borrower, deliver to the Borrower a statement showing the
quotations used by the Agent in determining any interest rate
pursuant to subsection 2.13(a).
2.15 Inability to Determine Interest Rate. In the
event that prior to the first day of any Interest Period:
(a) the Agent shall have determined (which
determination shall be conclusive and binding upon the
Borrowers) that, by reason of circumstances affecting the
relevant market, adequate and reasonable means do not exist
for ascertaining the Eurodollar Rate for such Interest
Period, or
(b) the Agent shall have received notice from the
Required Banks that the Eurodollar Rate determined or to be
determined for such Interest Period will not adequately and
fairly reflect the cost to such Banks (as conclusively
certified by such Banks) of making or maintaining their
affected Loans during such Interest Period,
the Agent shall give telecopy or telephonic notice thereof to the
Borrowers and the Banks as soon as practicable thereafter. If
such notice is given (x) any Eurodollar Loans requested to be
made on the first day of such Interest Period shall be made as
Alternate Base Rate Loans, (y) any Loans that were to have been
converted on the first day of such Interest Period to Eurodollar
Loans shall be continued as Alternate Base Rate Loans and (z) any
outstanding Eurodollar Loans that were to have been continued on
the first day of such Interest Period as Eurodollar Loans shall
be converted, on the first day of such Interest Period, to
Alternate Base Rate Loans. Until such notice has been withdrawn
by the Agent, no further Eurodollar Loans shall be made or
continued as such, nor shall the Borrowers have the right to
convert Loans to Eurodollar Loans.
2.16 Pro Rata Treatment and Payments. (a) Each
borrowing of Revolving Credit Loans by the Borrowers from the
Banks hereunder, each payment by the Borrowers on account of any
commitment fee hereunder and any reduction of the Commitments of
the Banks shall be made pro rata according to the respective
Commitment Percentages of the Banks. Each payment (including
each prepayment) by the Borrowers on account of principal of and
interest on any Revolving Credit Loans shall be made pro rata
according to the respective outstanding principal amounts of such
Revolving Credit Loans then held by the Banks. All payments
(including prepayments) to be made by the Borrowers hereunder and
under any Notes, whether on account of principal, interest, fees
or otherwise, shall be made without set off or counterclaim and
shall be made prior to 12:00 Noon, New York City time, on the due
date thereof to the Agent, for the account of the Banks, at the
Agent's office specified in subsection 10.2, in Dollars and in
immediately available funds. The Agent shall distribute such
payments to the Banks promptly upon receipt in like funds as
received. If any payment hereunder (other than payments on the
Eurodollar Loans) becomes due and payable on a day other than a
Business Day, such payment shall be extended to the next
succeeding Business Day, and, with respect to payments of
principal, interest thereon shall be payable at the then
applicable rate during such extension. If any payment on a
Eurodollar Loan becomes due and payable on a day other than a
Working Day, the maturity thereof shall be extended to the next
succeeding Working Day (and, with respect to payments of
principal, interest thereon shall be payable at the then
applicable rate during such extension) unless the result of such
extension would be to extend such payment into another calendar
month, in which event such payment shall be made on the
immediately preceding Working Day.
(b) Unless the Agent shall have been notified in
writing by any Bank prior to a Borrowing Date that such Bank will
not make the amount that would constitute its Commitment
Percentage of the borrowing on such date available to the Agent,
the Agent may assume that such Bank has made such amount
available to the Agent on such Borrowing Date, and the Agent may,
in reliance upon such assumption, make available to the
applicable Borrower a corresponding amount. If such amount is
made available to the Agent on a date after such Borrowing Date,
such Bank shall pay to the Agent on demand an amount equal to the
product of (i) the daily average Federal funds rate during such
period as quoted by the Agent, times (ii) the amount of such
Bank's Commitment Percentage of such borrowing, times (iii) a
fraction the numerator of which is the number of days that elapse
from and including such Borrowing Date to the date on which such
Bank's Commitment Percentage of such borrowing shall have become
immediately available to the Agent and the denominator of which
is 360. A certificate of the Agent submitted to any Bank with
respect to any amounts owing under this subsection shall be
conclusive in the absence of manifest error. If such Bank's
Commitment Percentage of such borrowing is not in fact made
available to the Agent by such Bank within three Business Days of
such Borrowing Date, the Agent shall be entitled to recover such
amount with interest thereon at the rate per annum applicable to
Alternate Base Rate Loans hereunder, on demand, from the
Borrowers and such Bank shall be liable to the Borrowers for any
damages suffered by the Borrowers by reason of the failure of
such Bank to advance such borrowing.
2.17 Illegality. Notwithstanding any other provision
herein, if any change in any Requirement of Law or in the
interpretation or application thereof shall make it unlawful for
any Bank to make or maintain Eurodollar Loans as contemplated by
this Agreement, (a) the commitment of such Bank hereunder to make
Eurodollar Loans, continue Eurodollar Loans as such and convert
Alternate Base Rate Loans to Eurodollar Loans shall forthwith be
cancelled and (b) such Bank's Loans then outstanding as
Eurodollar Loans, if any, shall be converted automatically to
Alternate Base Rate Loans on the respective last days of the then
current Interest Periods with respect to such Loans or within
such earlier period as required by law. If any such conversion
of a Eurodollar Loan occurs on a day which is not the last day of
the then current Interest Period with respect thereto, the
Borrowers shall pay to such Bank such amounts, if any, as may be
required pursuant to subsection 2.20. Following the payment of
all amounts owed by the Borrowers to any Bank pursuant to the
preceding sentence, the Borrowers shall then have the right to
replace such Bank for which it shall be unlawful to make or
maintain Eurodollar Loans as contemplated by this Agreement, any
such Bank agreeing to promptly transfer its Loans and Commitments
hereunder to a replacement Bank acceptable to the Borrowers.
2.18 Requirements of Law. (a) In the event that any
change in any Requirement of Law or in the interpretation or
application thereof or compliance by any Bank with any request or
directive (whether or not having the force of law) from any
central bank or other Governmental Authority made subsequent to
the Closing Date:
(i) shall subject any Bank to any tax of any kind
whatsoever with respect to this Agreement, any Note, any
Letter of Credit, any Application or any Eurodollar Loan
made by it, or change the basis of taxation of payments to
such Bank in respect thereof (except for taxes covered by
subsection 2.19 and changes in the rate of tax on the
overall net income of such Bank);
(ii) shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar
requirement against assets held by, deposits or other
liabilities in or for the account of, advances, loans or
other extensions of credit by, or any other acquisition of
funds by, any office of such Bank which is not otherwise
included in the determination of the Eurodollar Rate
hereunder; or
(iii) shall impose on such Bank any other condition;
and the result of any of the foregoing is to increase the cost to
such Bank, by an amount which such Bank deems to be material, of
making, converting into, continuing or maintaining Eurodollar
Loans or issuing or participating in Letters of Credit or to
reduce any amount receivable hereunder in respect thereof then,
in any such case, the Borrowers shall promptly pay such Bank,
upon its demand, any additional amounts necessary to compensate
such Bank for such increased cost or reduced amount receivable.
If any Bank becomes entitled to claim any additional amounts
pursuant to this subsection, it shall promptly notify the
Borrowers, through the Agent, of the event by reason of which it
has become so entitled. A certificate as to any additional
amounts payable pursuant to this subsection submitted by such
Bank, through the Agent, to the Borrowers (including calculations
of any such additional amounts in reasonable detail) shall be
conclusive in the absence of manifest error. This covenant shall
survive the termination of this Agreement and the payment of the
Notes and all other amounts payable hereunder.
(b) In the event that any Bank shall have determined
that the adoption of or any change in any Requirement of Law
regarding capital adequacy or in the interpretation or
application thereof or compliance by such Bank or any corporation
controlling such Bank with any request or directive regarding
capital adequacy (whether or not having the force of law) from
any Governmental Authority made subsequent to the Closing Date
does or shall have the effect of reducing the rate of return on
such Bank's or such corporation's capital as a consequence of its
obligations hereunder or under any Letter of Credit to a level
below that which such Bank or such corporation could have
achieved but for such change or compliance (taking into
consideration such Bank's or such corporation's policies with
respect to capital adequacy) by an amount deemed by such Bank to
be material, then from time to time, after submission by such
Bank to the Borrowers (with a copy to the Agent) of a written
request therefor (including calculations of any such additional
amounts in reasonable detail), the Borrowers shall pay to such
Bank such additional amount or amounts as will compensate such
Bank for such reduction.
(c) Following the payment of all amounts owed by the
Borrowers to any Bank pursuant to this subsection 2.18, the
Borrowers shall then have the right to replace such Bank, any
such Bank agreeing to promptly transfer its Loans and Commitments
hereunder to a replacement Bank acceptable to the Borrowers.
2.19 Taxes. (a) All payments made by the Borrowers
under this Agreement and the Notes shall be made free and clear
of, and without deduction or withholding for or on account of,
any present or future income, stamp or other taxes, levies,
imposts, duties, charges, fees, deductions or withholdings, now
or hereafter imposed, levied, collected, withheld or assessed by
any Governmental Authority, excluding, in the case of the Agent
and each Bank, net income taxes and franchise taxes (imposed in
lieu of net income taxes) imposed on the Agent or such Bank, as
the case may be, as a result of a present or former connection
between the jurisdiction of the government or taxing authority
imposing such tax and the Agent or such Bank (excluding a
connection arising solely from the Agent or such Bank having
executed, delivered or performed its obligations or received a
payment under, or enforced, this Agreement or the Notes) or any
political subdivision or taxing authority thereof or therein (all
such non-excluded taxes, levies, imposts, duties, charges, fees,
deductions and withholdings being hereinafter called "Taxes").
If any Taxes are required to be withheld from any amounts payable
to the Agent or any Bank hereunder or under the Notes, the
amounts so payable to the Agent or such Bank shall be increased
to the extent necessary to yield to the Agent or such Bank (after
payment of all Taxes) interest or any such other amounts payable
hereunder at the rates or in the amounts specified in this
Agreement and the Notes. Whenever any Taxes are payable by the
Borrowers, as promptly as possible thereafter the Borrowers shall
send to the Agent for its own account or for the account of such
Bank, as the case may be, a certified copy of an original
official receipt received by the Borrowers showing payment
thereof. If the Borrowers fail to pay any Taxes when due to the
appropriate taxing authority or fails to remit to the Agent the
required receipts or other required documentary evidence, the
Borrowers shall indemnify the Agent and the Banks for any
incremental taxes, interest or penalties that may become payable
by the Agent or any Bank as a result of any such failure. The
agreements in this subsection shall survive the termination of
this Agreement and the payment of the Notes and all other amounts
payable hereunder.
(b) Each Bank that is not incorporated under the laws
of the United States of America or a state thereof agrees that it
will deliver to the Borrowers and the Agent (i) two duly
completed copies of United States Internal Revenue Service Form
1001 or 4224 or successor applicable form, as the case may be,
and (ii) an Internal Revenue Service Form W-8 or W-9 or successor
applicable form. Each such Bank also agrees to deliver to the
Borrowers and the Agent two further copies of the said Form 1001
or 4224 and Form W-8 or W-9, or successor applicable forms or
other manner of certification, as the case may be, on or before
the date that any such form expires or becomes obsolete or after
the occurrence of any event requiring a change in the most recent
form previously delivered by it to the Borrowers, and to obtain
such extensions or renewals thereof as may reasonably be
requested by the Borrowers or the Agent, unless in any such case
an event (including, without limitation, any change in treaty,
law or regulation) has occurred prior to the date on which any
such delivery would otherwise be required which renders all such
forms inapplicable or which would prevent such Bank from duly
completing and delivering any such form with respect to it and
such Bank so advises the Borrowers and the Agent. Such Bank
shall certify (i) in the case of a Form 1001 or 4224, that it is
entitled to receive payments under this Agreement without
deduction or withholding of any United States federal income
taxes and (ii) in the case of a Form W-8 or W-9, that it is
entitled to an exemption from United States backup withholding
tax.
(c) The Borrower shall not be required to indemnify
any Bank, or to pay any increased amounts to any Bank in respect
of any Taxes which would not have been imposed but for the
failure of any Bank to comply in all material respects with the
provisions of subsection 2.19(b) hereof.
(d) If a Bank or the Agent receives a refund in
respect of any Taxes as to which it has been indemnified by a
Borrower, or with respect to which a Borrower has paid increased
amounts, pursuant to this subsection 2.19, it shall within 30
days from the date of such receipt pay over such refund to such
Borrower, net of all out-of-pocket third-party expenses of such
Bank or the Agent.
(e) Following the payment of all amounts owed by the
Borrowers to any Bank pursuant to this subsection 2.19, the
Borrowers shall then have the right to replace such Bank, any
such Bank agreeing to promptly transfer its Loans and Commitments
hereunder to a replacement Bank acceptable to the Borrowers.
2.20 Indemnity. The Borrowers agree to indemnify each
Bank and to hold each Bank harmless from any loss or expense
which such Bank may sustain or incur as a consequence of (a)
default by the Borrowers in payment when due of the principal
amount of or interest on any Eurodollar Loan, (b) default by the
Borrowers in making a borrowing of, conversion into or
continuation of Eurodollar Loans after the Borrowers have given a
notice requesting the same in accordance with the provisions of
this Agreement, (c) default by the Borrowers in making any
prepayment after the Borrowers have given a notice thereof in
accordance with the provisions of this Agreement or (d) the
making of a prepayment of Eurodollar Loans on a day which is not
the last day of an Interest Period with respect thereto,
including, without limitation, in each case, any such loss or
expense arising from the reemployment of funds obtained by it or
from fees payable to terminate the deposits from which such funds
were obtained. This covenant shall survive the termination of
this Agreement and the payment of the Notes and all other amounts
payable hereunder.
SECTION 3. LETTERS OF CREDIT
3.1 L/C Commitment. (a) Subject to the terms and
conditions hereof, the Issuing Bank, in reliance on the
agreements of the other Banks set forth in subsection 3.4(a),
agrees to (i) issue stand-by letters of credit (collectively,
with the Existing Letters of Credit, the "Letters of Credit") for
the account of the Borrowers on any Business Day during the
Commitment Period in such form as may be approved from time to
time by the Issuing Bank and (ii) continue the Existing Letters
of Credit; provided that the Issuing Bank shall have no
obligation to issue any Letter of Credit if, after giving effect
to such issuance, (a) the L/C Obligations would exceed the L/C
Commitment or (b) the sum of the Aggregate Outstanding Extensions
of Credit would exceed the Commitments. Each Letter of Credit
issued hereunder shall (i) be denominated in Dollars, (ii) expire
no later than one year following the Termination Date provided
that at least 30 days prior to the Termination Date, the
Borrowers enter into a reimbursement agreement with the Issuing
Bank and fully cash collateralize those Letters of Credit that
will mature after the Termination Date and (iii) expire no later
than a date 365 days after its issuance.
(b) The Existing Letters of Credit shall automatically
be deemed to have been issued under this Agreement as of the
Closing Date, and except as otherwise indicated herein, the terms
and provisions of the Existing Agreement shall thereafter have no
force or effect with respect thereto.
(c) Each Letter of Credit shall be subject to the
Uniform Customs and, to the extent not inconsistent therewith,
the laws of the State of New York.
(d) The Issuing Bank shall not at any time be
obligated to issue any Letter of Credit hereunder if such
issuance would conflict with, or cause the Issuing Bank or any
L/C Participant to exceed any limits imposed by, any applicable
Requirement of Law.
3.2 Procedure for Issuance of Letters of Credit. The
Borrowers may from time to time request that the Issuing Bank
issue a Letter of Credit by delivering to the Issuing Bank at its
address for notices specified herein an Application therefor,
completed to the satisfaction of the Issuing Bank, and such other
certificates, documents and other papers and information as the
Issuing Bank may request. Upon receipt of any Application, the
Issuing Bank will process such Application and the certificates,
documents and other papers and information delivered to it in
connection therewith in accordance with its customary procedures
and shall promptly issue the Letter of Credit requested thereby
(but in no event shall the Issuing Bank be required to issue any
Letter of Credit earlier than three Business Days after its
receipt of the Application therefor and all such other
certificates, documents and other papers and information relating
thereto) by issuing the original of such Letter of Credit to the
beneficiary thereof or as otherwise may be agreed by the Issuing
Bank and the Borrowers. The Issuing Bank shall furnish a copy of
such Letter of Credit to the Borrowers promptly following the
issuance thereof.
3.3 Fees, Commissions and Other Charges. (a) The
Borrowers shall pay to the Agent, for the account of the Issuing
Bank and the L/C Participants, a letter of credit commission with
respect to each Letter of Credit, computed for the period from
the date of issuance of each Letter of Credit to the next
succeeding L/C Fee Payment Date to occur after the date of
issuance of each such Letter of Credit, and thereafter from the
date of such payment to the date upon which the next such payment
is due hereunder at the Applicable L/C Rate of the aggregate
amount available to be drawn under such Letter of Credit on the
date on which such fee is calculated; 1/4% of such fee shall be
payable to the Issuing Bank, and the Applicable L/C Rate minus
1/4% shall be payable to the Banks (including the Issuing Bank)
to be shared ratably among them in accordance with their
respective Commitment Percentages. Such commissions shall be
payable in arrears on each L/C Fee Payment Date to occur after
the date of issuance of each Letter of Credit and shall be
nonrefundable.
(b) In addition to the foregoing fees and commissions,
the Borrowers shall pay or reimburse the Issuing Bank for such
normal and customary costs and expenses as are incurred or
charged by the Issuing Bank in issuing, effecting payment under,
amending or otherwise administering any Letter of Credit.
(c) The Agent shall, promptly following its receipt
thereof, distribute to the Issuing Bank and the L/C Participants
all fees and commissions received by the Agent for their
respective accounts pursuant to this subsection.
3.4 L/C Participations. (a) Effective in the case of
(i) each Existing Letter of Credit as of the Closing Date and
(ii) each other Letter of Credit as of the date of the opening
thereof, the Issuing Bank irrevocably agrees to grant and hereby
grants to each L/C Participant, and, to induce the Issuing Bank
to issue Letters of Credit hereunder, each L/C Participant
irrevocably agrees to accept and purchase and hereby accepts and
purchases from the Issuing Bank, on the terms and conditions
hereinafter stated, for such L/C Participant's own account and
risk an undivided interest, equal to such L/C Participant's
Commitment Percentage, in the Issuing Bank's obligations and
rights under each Letter of Credit issued hereunder and the
amount of each draft paid by the Issuing Bank thereunder. Each
L/C Participant unconditionally and irrevocably agrees with the
Issuing Bank that, if a draft is paid under any Letter of Credit
for which the Issuing Bank is not reimbursed in full by the
Borrowers in accordance with the terms of this Agreement, such
L/C Participant shall pay to the Issuing Bank upon demand at the
Issuing Bank's address for notices specified in subsection 10.2
an amount equal to such L/C Participant's Commitment Percentage
of the amount of such draft, or any part thereof, which is not so
reimbursed.
(b) If any amount required to be paid by any L/C
Participant to the Issuing Bank pursuant to subsection 3.4(a) in
respect of any unreimbursed portion of any payment made by the
Issuing Bank under any Letter of Credit is paid to the Issuing
Bank within three Business Days after the date such payment is
due, such L/C Participant shall pay to the Issuing Bank on demand
an amount equal to the product of (i) such amount, times (ii) the
daily average Federal funds rate, as quoted by the Issuing Bank,
during the period from and including the date such payment is
required to the date on which such payment is immediately
available to the Issuing Bank, times (iii) a fraction the
numerator of which is the number of days that elapse during such
period and the denominator of which is 360. If any such amount
required to be paid by any L/C Participant pursuant to subsection
3.4(a) is not in fact made available to the Issuing Bank by such
L/C Participant within three Business Days after the date such
payment is due, the Issuing Bank shall be entitled to recover
from such L/C Participant, on demand, such amount with interest
thereon calculated from such due date at the rate per annum
applicable to Alternate Base Rate Loans hereunder. A certificate
of the Issuing Bank submitted to any L/C Participant with respect
to any amounts owing under this subsection shall be conclusive in
the absence of manifest error.
(c) Whenever, at any time after the Issuing Bank has
made payment under any Letter of Credit and has received from any
L/C Participant its pro rata share of such payment in accordance
with subsection 3.4(a), the Issuing Bank receives any payment
related to such Letter of Credit (whether directly from the
Borrowers or otherwise, including proceeds of Collateral applied
thereto by the Issuing Bank), or any payment of interest on
account thereof, the Issuing Bank will distribute to such L/C
Participant its pro rata share thereof; provided, however, that
in the event that any such payment received by the Issuing Bank
shall be required to be returned by the Issuing Bank, such L/C
Participant shall return to the Issuing Bank the portion thereof
previously distributed by the Issuing Bank to it.
3.5 Reimbursement Obligation of the Borrowers. Each
Borrower agrees to reimburse the Issuing Bank on each date on
which the Issuing Bank notifies the Borrowers of the date and
amount of a draft presented under any Letter of Credit and paid
by the Issuing Bank for the amount of (a) such draft so paid and
(b) any taxes, fees, charges or other costs or expenses incurred
by the Issuing Bank in connection with such payment. Each such
payment shall be made to the Issuing Bank at its address for
notices specified in subsection 10.2 in lawful money of the
United States of America and in immediately available funds.
Interest shall be payable on any and all amounts remaining unpaid
by the Borrowers under this subsection from the date such amounts
become payable (whether at stated maturity, by acceleration or
otherwise) until payment in full at the rate which would be
payable on any outstanding Alternate Base Rate Loans which were
then overdue. Each drawing under any Letter of Credit shall
constitute a request by the Borrowers to the Agent for a
borrowing pursuant to subsection 2.1 of Alternate Base Rate Loans
in the amount of such drawing. The Borrowing Date with respect
to such borrowing shall be the date of such drawing.
3.6 Obligations Absolute. The Borrowers' obligations
under this Section 3 shall be absolute and unconditional under
any and all circumstances and irrespective of any set-off,
counterclaim or defense to payment which the Borrowers may have
or have had against the Issuing Bank or any beneficiary of a
Letter of Credit. The Borrowers also agree with the Issuing Bank
that the Issuing Bank shall not be responsible for, and the
Borrowers' Reimbursement Obligations under subsection 3.5 shall
not be affected by, among other things, the validity or
genuineness of documents or of any endorsements thereon, even
though such documents shall in fact prove to be invalid,
fraudulent or forged, or any dispute between or among the
Borrowers and any beneficiary of any Letter of Credit or any
other party to which such Letter of Credit may be transferred or
any claims whatsoever of the Borrowers against any beneficiary of
such Letter of Credit or any such transferee. The Issuing Bank
shall not be liable for any error, omission, interruption or
delay in transmission, dispatch or delivery of any message or
advice, however transmitted, in connection with any Letter of
Credit, except for errors or omissions caused by the Issuing
Bank's gross negligence or willful misconduct. The Borrowers
agree that any action taken or omitted by the Issuing Bank under
or in connection with any Letter of Credit or the related drafts
or documents, if done in the absence of gross negligence or
willful misconduct and in accordance with the standards of care
specified in the Uniform Commercial Code of the State of New
York, shall be binding on the Borrowers and shall not result in
any liability of the Issuing Bank to the Borrowers.
3.7 Letter of Credit Payments. If any draft shall be
presented for payment under any Letter of Credit, the Issuing
Bank shall promptly notify the Borrowers of the date and amount
thereof. The responsibility of the Issuing Bank to the Borrowers
in connection with any draft presented for payment under any
Letter of Credit shall, in addition to any payment obligation
expressly provided for in such Letter of Credit, be limited to
determining that the documents (including each draft) delivered
under such Letter of Credit in connection with such presentment
are in conformity with such Letter of Credit.
3.8 Application. To the extent that any provision of
any Application related to any Letter of Credit is inconsistent
with the provisions of this Section 3, the provisions of this
Section 3 shall apply.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Banks to enter into this Agreement and to
make the Loans and issue or participate in the Letters of Credit
the Borrowers hereby represent and warrant to the Agent and each
Bank that:
4.1 Financial Condition. The consolidated balance
sheet of the Parent and its consolidated Subsidiaries as at
December 31, 1994 and the related consolidated statement of
income and consolidated statement of cash flows for the fiscal
year ended on such date, reported on by Price Waterhouse, and the
consolidating balance sheet of the Parent and its consolidated
Subsidiaries as at December 31, 1994 and the related
consolidating statement of income, copies of which have
heretofore been furnished to each Bank, are complete and correct
and present fairly the consolidated financial condition of the
Parent and its consolidated Subsidiaries as at such date, and the
consolidated results of their operations and their consolidated
cash flows for the fiscal year then ended. The unaudited
consolidated and consolidating balance sheet of the Parent and
its consolidated Subsidiaries as at March 31, 1995 and the
related unaudited consolidated and consolidating statement of
income and consolidated statement of cash flows for the three-
month period ended on such date certified by a Responsible
Officer, copies of which have heretofore been furnished to each
Bank, are complete and correct and present fairly the
consolidated financial condition of the Parent and its
consolidated Subsidiaries as at such date, and the consolidated
results of their operations and their consolidated cash flows for
the three-month period then ended (subject to normal year-end
audit adjustments). All such financial statements, including the
related schedules and notes thereto, have been prepared in
accordance with GAAP applied consistently throughout the periods
involved (except as approved by such accountants or Responsible
Officer, as the case may be, and as disclosed therein). Neither
the Parent nor any of its consolidated Subsidiaries had, at the
date of the most recent balance sheet referred to above, any
material Guarantee Obligation, material contingent liability or
material liability for taxes, or any long-term lease or unusual
forward or long-term commitment, including, without limitation,
any interest rate or foreign currency swap or exchange
transaction, which is not reflected in the foregoing statements
or in the notes thereto. During the period from December 31,
1994 to and including the date of this Agreement there has been
no sale, transfer or other disposition by either Borrower or any
of their consolidated Subsidiaries of any material part of its
business or property and no purchase or other acquisition of any
business or property (including any capital stock of any other
Person) material in relation to the consolidated financial
condition of either Borrower and its consolidated Subsidiaries at
March 31, 1995.
4.2 No Change. Since March 31, 1995 (a) there has
been no development or event nor any prospective development or
event, which has had or could reasonably be expected to have a
Material Adverse Effect and (b) no dividends or other
distributions have been declared, paid or made upon the Capital
Stock of the Parent nor has any of the Capital Stock of the
Parent been redeemed, retired, purchased or otherwise acquired
for value by the Parent or any of its Subsidiaries.
4.3 Corporate Existence; Compliance with Law. Each of
the Parent and its Subsidiaries (a) is duly organized, validly
existing and in good standing under the laws of the jurisdiction
of its organization, (b) has the corporate power and authority,
and the legal right, to own and operate its property, to lease
the property it operates as lessee and to conduct the business in
which it is currently engaged, (c) is duly qualified as a foreign
corporation and in good standing under the laws of each
jurisdiction where its ownership, lease or operation of property
or the conduct of its business requires such qualification and
(d) is in compliance with all Requirements of Law, except with
respect to clauses (c) and (d), to the extent that the failure to
be so qualified and in good standing or to comply with such
Requirements of Law could not, in the aggregate, reasonably be
expected to have a Material Adverse Effect.
4.4 Corporate Power; Authorization; Enforceable
Obligations. Each Borrower has the corporate power and
authority, and the legal right, to make, deliver and perform this
Agreement, the Applications, the Notes and the other Loan
Documents to which each Borrower is a party and to borrow
hereunder and has taken all necessary corporate action to
authorize the borrowings on the terms and conditions of this
Agreement and the other Loan Documents to which each Borrower is
a party and to authorize the execution, delivery and performance
of this Agreement and the other Loan Documents to which each
Borrower is a party. No consent or authorization of, filing with
or other act by or in respect of, any Governmental Authority or
any other Person is required in connection with the borrowings
hereunder or with the execution, delivery, performance, validity
or enforceability of this Agreement or the other Loan Documents
to which each Borrower is a party. This Agreement has been, and
the other Loan Documents to which each Borrower is a party will
be, duly executed and delivered on behalf of each Borrower. This
Agreement constitutes, and the other Loan Documents to which each
Borrower is a party when executed and delivered by each Borrower
and the other parties thereto will constitute, a legal, valid and
binding obligation of each Borrower enforceable against such
Borrower in accordance with its terms, except as enforceability
may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general
equitable principles (whether enforcement is sought by
proceedings in equity or at law).
4.5 No Legal Bar. The execution, delivery and
performance of this Agreement and the other Loan Documents to
which each Borrower is a party, the borrowings hereunder and the
use of the proceeds thereof will not violate any Requirement of
Law or Contractual Obligation of any Borrower or of any of its
Subsidiaries and will not result in, or require, the creation or
imposition of any Lien on any of its or their respective
properties or revenues pursuant to any such Requirement of Law or
Contractual Obligation.
4.6 No Material Litigation. Except as set forth on
Schedule VII, no litigation, investigation or proceeding of or
before any arbitrator or Governmental Authority is pending or, to
the knowledge of any Borrower, threatened by or against any
Borrower or any of its Subsidiaries or against any of its or
their respective properties or revenues (a) with respect to this
Agreement or the other Loan Documents to which each Borrower is a
party or any of the transactions contemplated hereby or thereby,
or (b) which could reasonably be expected to have a Material
Adverse Effect.
4.7 No Default. Neither Borrower nor any of its
Subsidiaries is in default under or with respect to any of its
Contractual Obligations in any respect which could reasonably be
expected to have a Material Adverse Effect. No Default or Event
of Default has occurred and is continuing.
4.8 Ownership of Property; Liens. Except as could not
reasonably be expected to have a Material Adverse Effect, each
Borrower and its Subsidiaries has good and marketable title in
fee simple to (exclusive of appurtenant easements), or a valid
leasehold interest in, all its real property, and good title to
or valid leasehold interests in all its other property, and none
of such property is subject to any Lien except as permitted by
subsection 7.3.
4.9 Intellectual Property. To the best of its
knowledge, each Borrower and its Subsidiaries owns, or is
licensed to use, all trademarks, tradenames, copyrights,
technology, know-how and processes believed to be necessary for
the conduct of its business as currently conducted except for
those the failure to own or license which could not reasonably be
expected to have a Material Adverse Effect (the "Intellectual
Property"). No claim has been asserted and is pending by any
Person challenging or questioning the use of any such
Intellectual Property or the validity or effectiveness of any
such Intellectual Property, nor does any Borrower know of any
valid basis for any such claim. To the best of its knowledge,
the use of such Intellectual Property by such Borrower and its
Subsidiaries does not infringe on the valid intellectual property
rights of any Person, except for such claims and infringements
that, in the aggregate, could not reasonably be expected to have
a Material Adverse Effect.
4.10 No Burdensome Restrictions. No Requirement of
Law or Contractual Obligation of any Borrower or any of its
Subsidiaries could reasonably be expected to have a Material
Adverse Effect.
4.11 Taxes. Each Borrower and its Subsidiaries has
filed or caused to be filed all tax returns which, to the
knowledge of such Borrower, are required to be filed and has paid
all taxes shown to be due and payable on said returns or on any
assessments made against it or any of its property and all other
taxes, fees or other charges imposed on it or any of its property
by any Governmental Authority and no tax Lien has been filed,
and, to the knowledge of such Borrower, no claim is being
asserted, with respect to any such tax, fee or other charge, in
each case other than any the amount or validity of which are
currently being contested in good faith by appropriate
proceedings and with respect to which reserves in conformity with
GAAP have been provided on the books of such Borrower or its
Subsidiaries, as the case may be.
4.12 Federal Regulations. No part of the proceeds of
any Loans will be used for "purchasing" or "carrying" any "margin
stock" within the respective meanings of each of the quoted terms
under Regulation U of the Board of Governors of the Federal
Reserve System as now and from time to time hereafter in effect
or for any purpose which violates the provisions of the
Regulations of such Board of Governors. If requested by any Bank
or the Agent, each Borrower will furnish to the Agent and each
Bank a statement to the foregoing effect in conformity with the
requirements of FR Form U-1 referred to in said Regulation U.
4.13 ERISA. Except as set forth in Schedule V, no
Reportable Event has occurred during the five-year period prior
to the date on which this representation is made or deemed made
with respect to any Plan, and each Plan has complied in all
material respects with the applicable provisions of ERISA and the
Code. The present value of all accrued benefits under each
Single Employer Plan maintained by any Borrower or any Commonly
Controlled Entity (based on the current liability interest rate
and other assumptions used in preparation of the Plan's Form 5500
Annual Report) did not, as of the last annual valuation date
prior to the date on which this representation is made or deemed
made, exceed the value of the assets of such Plan allocable to
such accrued benefits. Neither Borrower nor any Commonly
Controlled Entity has had a complete or partial withdrawal from
any Multiemployer Plan, and neither Borrower nor any Commonly
Controlled Entity would become subject to any liability under
ERISA if a Borrower or any such Commonly Controlled Entity were
to withdraw completely from all Multiemployer Plans as of the
valuation date most closely preceding the date on which this
representation is made or deemed made. No such Multiemployer
Plan is in Reorganization or Insolvent. There are no material
liabilities of either Borrower or any Commonly Controlled Entity
for post retirement benefits to be provided to their current and
former employees under Plans which are welfare benefit plans (as
defined in Section 3(1) of ERISA).
4.14 Investment Company Act; Other Regulations.
Neither Borrower is an "investment company", or a company
"controlled" by an "investment company", within the meaning of
the Investment Company Act of 1940, as amended. Neither Borrower
is subject to regulation under any Federal or State statute or
regulation which limits its ability to incur Indebtedness.
4.15 Subsidiaries. Schedule VI sets forth all the
Restricted and Unrestricted Subsidiaries of the Parent and the
Company at the Closing Date.
4.16 Purpose of Loans. The proceeds of the Loans
shall be used by the Borrowers for general corporate purposes in
the ordinary course of business and, subject to the terms hereof,
for acquisitions or for the repurchase of the Subordinated Debt
and the Senior Notes. In no event shall the proceeds of the
Loans be used by Parent to prepay the outstanding Loans of the
Company. Each Letter of Credit shall be used by the Borrowers
(i) to provide credit support for workman's compensation claims
and insurance, (ii) to provide credit support for certain lease
obligations and (iii) for any other purpose reasonably acceptable
to the Agent.
4.17 Environmental Matters. Except insofar as there
is no reasonable likelihood of a Material Adverse Effect arising
from any combination of facts or circumstances inconsistent with
any of the following:
(a) Any properties owned or leased by either of the
Borrowers or any of their Subsidiaries (the "Properties")
and, to the knowledge of either of the Borrowers or any of
their Subsidiaries, any properties formerly owned or leased
by them, their predecessors, or their former subsidiaries or
predecessors thereof, do not contain, and have not
previously contained, any Materials of Environmental Concern
in amounts or concentrations which constitute or constituted
a violation of, or reasonably could be expected to give rise
to liability under, Environmental Laws.
(b) Each of the Borrowers and their Subsidiaries are
in compliance, and have in the last five years been in
compliance, with all applicable Environmental Laws, and
there is no violation of any Environmental Law which
reasonably could be expected to interfere with the continued
operations of either of the Borrowers or any of their
Subsidiaries.
(c) Neither of the Borrowers nor any of their
Subsidiaries has received any notice of violation, alleged
violation, non-compliance, liability or potential liability
under any Environmental Law, nor does any Borrower have
knowledge that any such notice will be received or is being
threatened.
(d) Materials of Environmental Concern have not been
(i) transported or disposed of in violation of, or in a
manner or to a location which reasonably could be expected
to give rise to liability under, any applicable
Environmental Law, nor (ii) generated, treated, stored or
disposed of at, on or under any of the Properties in
violation of, or in a manner that reasonably could be
expected to give rise to liability under, any applicable
Environmental Law.
(e) No judicial proceedings or governmental or
administrative action is pending, or, to the knowledge of
either of the Borrowers or any of their Subsidiaries,
threatened, under any Environmental Law to which either of
the Borrowers or any of their Subsidiaries is or will be
named as a party, nor are there any consent decrees or other
decrees, consent orders, administrative orders or other
orders, or other administrative or judicial requirements
arising out of judicial proceedings or governmental or
administrative actions, outstanding under any Environmental
Law to which either of the Borrowers or any of their
Subsidiaries is a party.
(f) There has been no release or threat of release of
Materials of Environmental Concern in violation of or in
amounts or in a manner that reasonably could be expected to
give rise to liability under any Environmental Law for which
either of the Borrowers or any of their Subsidiaries may
become liable.
SECTION 5. CONDITIONS PRECEDENT
5.1 Conditions to Extensions of Credit. The agreement
of each Bank to make the initial extension of credit requested to
be made by it is subject to the satisfaction, immediately prior
to or concurrently with the making of such extension of credit on
the Closing Date, of the following conditions precedent:
(a) Loan Documents. The Agent shall have received (i)
this Agreement, executed and delivered by a duly authorized
officer of each Borrower, with a counterpart for each Bank,
(ii) for the account of each Bank, a Revolving Credit Note
conforming to the requirements hereof and executed by a duly
authorized officer of the Company and a Revolving Credit
Note conforming to the requirements hereof and executed by a
duly authorized officer of the Parent, each such Revolving
Credit Note being issued in substitution and replacement of
the revolving credit notes under the Existing Agreement,
(iii) for the account of the Swing Line Bank, a Swing Line
Note conforming to the requirements hereof and executed by a
duly authorized officer of the Company and a Swing Line Note
conforming to the requirements hereof and executed by a duly
authorized officer of the Parent, (iv) the Security
Agreement, executed and delivered by a duly authorized
officer of the Company, with a counterpart for each Bank and
(v) the Company Guarantee authorized, executed and delivered
by an authorized officer of the Company, with a counterpart
for each Bank and the Parent Guarantee authorized, executed
and delivered by an authorized officer of the Parent, with a
counterpart for each Bank.
(b) Filings, Registrations and Recordings. Any
documents (including, without limitation, financing
statements and financing statement amendments) required to
be filed, and any other actions required to be taken, under
or in connection with the Security Agreement in order to
create, in favor of the Agent, for the ratable benefit of
the Banks, a perfected first priority security interest
(subject to any applicable bankruptcy, insolvency,
reorganization, moratorium or other similar law) in so much
of the Collateral as is subject to the Uniform Commercial
Code described therein shall have been delivered to the
Agent for filing in each office listed on Schedule II. All
Collateral shall be free and clear of any Liens, except as
permitted by subsection 7.3.
(c) Corporate Proceedings. The Agent shall have
received, with a counterpart for each Bank, a copy of the
resolutions, in form and substance satisfactory to the
Agent, of the Board of Directors of each Borrower
authorizing (i) the execution, delivery and performance of
this Agreement, the Notes and the other Loan Documents to
which it is a party, and (ii) the borrowings contemplated
hereunder, certified by the Secretary or an Assistant
Secretary of each Borrower as of the Closing Date, which
certificate shall state that the resolutions thereby
certified have not been amended, modified, revoked or
rescinded and shall be in form and substance satisfactory to
the Agent.
(d) Corporate Documents. The Agent shall have
received, with a counterpart for each Bank, true and
complete copies of the certificate of incorporation and
by-laws of each Borrower, certified as of the Closing Date
as complete and correct copies thereof by the Secretary or
an Assistant Secretary of each Borrower.
(e) No Violation. The consummation of the
transactions contemplated hereby shall not contravene,
violate or conflict with, nor involve the Agent or any Bank
in any violation of, any Requirement of Law.
(f) Consents, Licenses and Approvals. The Agent shall
have received, with a counterpart for each Bank, a
certificate of a Responsible Officer of each Borrower (i)
attaching copies of all consents, authorizations and filings
referred to in subsection 4.4, if any, and (ii) stating that
any such consents, licenses and filings are in full force
and effect, and each such consent, authorization and filing
shall be in form and substance satisfactory to the Agent.
(g) Borrowing Base Certificate; Applicable Margin
Certificate. The Agent shall have received, with a copy for
each Bank, (i) a Borrowing Base Certificate substantially in
the form of Exhibit F, dated the Closing Date, with respect
to the Borrowing Base as of May 27, 1995, and executed by a
Responsible Officer of each Borrower and (ii) an Applicable
Margin Certificate, for the four consecutive fiscal quarters
ended April 2, 1995, substantially in the form of Exhibit I,
dated the Closing Date and executed by a Responsible Officer
of each Borrower.
(h) Incumbency Certificates. The Agent shall have
received, with a counterpart for each Bank, a certificate of
the Secretary or an Assistant Secretary of each Borrower and
each of its Subsidiaries which is a party to any Loan
Document, dated the Closing Date, as to the incumbency and
signature of the officers of each Borrower and its
Subsidiaries executing each Loan Document to which it is a
party and any certificate or other document to be delivered
by it pursuant hereto and thereto, together with evidence of
the incumbency of such Secretary or Assistant Secretary.
(i) Closing Certificate. The Agent shall have
received, with a counterpart for each Bank, a Closing
Certificate, substantially in the form of Exhibit G and
dated the Closing Date, executed by a Responsible Officer of
each Borrower.
(j) Fees and Other Amounts. The Agent shall have
received the fees to be received on the Closing Date
referred to in subsection 2.8, together with all other fees
and interest accrued and unpaid under the Existing
Agreement.
(k) No Material Litigation. Except as set forth on
Schedule VII, no litigation, inquiry, injunction or
restraining order shall be pending, entered or threatened
which in the reasonable judgment of any Bank could
reasonably be expected to have a Material Adverse Effect.
(l) Legal Opinions. The Agent shall have received,
with a counterpart for each Bank, the following executed
legal opinions:
(i) the executed legal opinion of Messrs.
Cadwalader, Wickersham & Taft counsel to the Borrowers,
substantially in the form of Exhibit J; and
(ii) the executed legal opinion of Augustus I.
duPont, Esq., general counsel of the Parent and the
Company, substantially in the form of Exhibit K.
Each such legal opinion shall cover such other matters
incident to the transactions contemplated by this Agreement
as the Agent may reasonably require.
(m) Good Standing Certificates. The Agent shall have
received, with a copy for each Bank, copies of certificates
dated as of a recent date from the Secretary of State or
other appropriate authority of such jurisdiction, evidencing
the good standing of each Borrower and each Subsidiary in
their respective states of incorporation and in the states
in which their principal business operations, if any, are
located.
(n) Audit of Inventory and Accounts Receivable. The
Agent shall have completed its due diligence inspection,
testing and review of the inventory and accounts receivable
of Borrowers and its Subsidiaries (other than Reeves
S.p.A.).
5.2 Conditions to Each Extension of Credit. The
agreement of each Bank to make any extension of credit requested
to be made by it on any date (including, without limitation, its
initial extension of credit) is subject to the satisfaction of
the following conditions precedent:
(a) Representations and Warranties. Each of the
representations and warranties made by the Borrowers and
their Subsidiaries in or pursuant to the Loan Documents
shall be true and correct in all material respects on and as
of such date as if made on and as of such date.
(b) No Default. No Default or Event of Default shall
have occurred and be continuing on such date or after giving
effect to the extensions of credit requested to be made on
such date.
(c) Additional Documents. The Agent shall have
received each additional document (including, without
limitation, with respect to Letters of Credit and the
Applications), instrument, legal opinion or item of
information reasonably requested by it, including, without
limitation, a copy of any debt instrument, security
agreement or other material contract to which the Borrowers
may be a party.
(d) No Change. There shall not have occurred any
change, or development or event involving a prospective
change, which in any such case, in the reasonable judgment
of the Agent, has had or could reasonably be expected to
have a Material Adverse Effect.
(e) Additional Matters. All corporate and other
proceedings, and all documents, instruments and other legal
matters in connection with the transactions contemplated by
this Agreement and the other Loan Documents shall be
reasonably satisfactory in form and substance to the Agent,
and the Agent shall have received such other documents and
legal opinions in respect of any aspect or consequence of
the transactions contemplated hereby or thereby as it shall
reasonably request.
Each borrowing by and Letter of Credit issued on behalf of any
Borrower hereunder shall constitute a representation and warranty
by each Borrower as of the date of such extension of credit that
the conditions contained in this subsection 5.2 have been
satisfied.
SECTION 6. AFFIRMATIVE COVENANTS
Each Borrower hereby agrees that, so long as the
Commitments remain in effect, any Note or any Letter of Credit
remains outstanding and unpaid or any other amount is owing to
any Bank or the Agent hereunder, the Borrowers shall and (except
in the case of delivery of financial information, reports and
notices) shall cause each of their Restricted Subsidiaries to:
6.1 Financial Statements. Furnish to each Bank:
(a) as soon as available, but in any event within 120
days after the end of each fiscal year of the Parent, a copy
of the consolidated and consolidating balance sheets of the
Parent and its consolidated Subsidiaries as at the end of
such year and the related consolidated and consolidating
statements of income and consolidated statement of cash
flows for such year, setting forth in each case in
comparative form the consolidated figures for the previous
year, reported on without a "going concern" or like
qualification or exception, or, except with respect to the
consolidating balance sheet and related consolidating
statement of income, qualification arising out of the scope
of the audit, by Price Waterhouse or other independent
certified public accountants of nationally recognized
standing; and
(b) as soon as available, but in any event not later
than 50 days after the end of each of the first three
quarterly periods of each fiscal year of the Parent, the
unaudited consolidated and consolidating balance sheets of
the Parent and its consolidated Subsidiaries as at the end
of such quarter and the related unaudited consolidated and
consolidating statements of income and consolidated
statement of cash flows of the Parent and its consolidated
Subsidiaries for such quarter and the portion of the fiscal
year through the end of such quarter, setting forth in each
case in comparative form the consolidated figures for the
previous year, certified by a Responsible Officer as being
fairly stated in all material respects when considered in
relation to the consolidated financial statements of the
Parent and its consolidated Subsidiaries (subject to normal
year-end audit adjustments);
all such financial statements to be complete and correct in all
material respects and to be prepared in reasonable detail and in
accordance with GAAP applied consistently throughout the periods
reflected therein and with prior periods (except as approved by
such accountants or Responsible Officer, as the case may be, and
disclosed therein).
6.2 Certificates; Other Information. Furnish to each
Bank:
(a) concurrently with the delivery of the financial
statements referred to in subsection 6.1(a), a certificate
of the independent certified public accountants reporting on
such financial statements stating that in making the
examination necessary therefor no knowledge was obtained of
any Default or Event of Default, except as specified in such
certificate;
(b) concurrently with the delivery of the financial
statements referred to in subsections 6.1(a) and 6.1(b), a
certificate of a Responsible Officer substantially in the
form of Exhibit H (i) stating that, to the best of such
Responsible Officer's knowledge, such Borrower during such
period has observed or performed all of its covenants and
other agreements, and satisfied every condition, contained
in this Agreement and the other Loan Documents to which it
is a party to be observed, performed or satisfied by it, and
that such Responsible Officer has obtained no knowledge of
any Default or Event of Default except as specified in such
certificate and (ii) showing in detail the breakdown and
calculation of such Borrower's compliance with the
requirements of subsections 7.1, 7.3(g), 7.6(d), 7.8(c),
7.8(d), 7.8(f) and 7.9(a) hereof;
(c) concurrently with the delivery of the financial
statements referred to in subsections 6.1(a) and 6.1(b), a
certificate (the "Applicable Margin Certificate")
substantially in the form of Exhibit I of a Responsible
Officer of each Borrower showing in detail the calculation
of the ratio of Consolidated EBITDA to Consolidated Net
Interest Expense for the four consecutive fiscal quarters
ending on the last day of the quarter for which such
financial statements are being delivered;
(d) within fifteen Business Days following the end of
each fiscal month, a Borrowing Base Certificate showing the
Borrowing Base as of the last day of such fiscal month,
certified as complete and correct by a Responsible Officer
of the Company to the best of such Responsible Officer's
knowledge;
(e) not later than sixty days following the end of
each fiscal year, a copy of the projections by the Parent of
the consolidated and consolidating balance sheet and income
statement and the consolidated cash flow budget of the
Parent and its Subsidiaries for the succeeding fiscal year,
such projections to be accompanied by a certificate of a
Responsible Officer to the effect that such projections have
been prepared on the basis of sound financial planning
practice and that such Responsible Officer has no reason to
believe they are incorrect or misleading in any material
respect;
(f) within five days after the same are sent, copies
of all financial statements and reports which the Parent
sends to its stockholders, and within five days after the
same are filed, copies of all financial statements and
reports which the Parent may make to, or file with, the
Securities and Exchange Commission or any successor or
analogous Governmental Authority; and
(g) promptly, such additional financial and other
information as any Bank may from time to time reasonably
request.
6.3 Payment of Obligations. Pay, discharge or
otherwise satisfy at or before maturity or before they become
delinquent, as the case may be, all its obligations of whatever
nature, except where the amount or validity thereof is currently
being contested in good faith by appropriate proceedings and
reserves in conformity with GAAP with respect thereto have been
provided on the books of the Borrowers or their Subsidiaries, as
the case may be.
6.4 Conduct of Business and Maintenance of Existence.
Continue to engage in business of the same general type as now
conducted by it and preserve, renew and keep in full force and
effect its corporate existence and take all reasonable action to
maintain all rights, privileges and franchises necessary or
desirable in the normal conduct of its business except as
otherwise permitted pursuant to subsection 7.5; comply with all
Contractual Obligations and Requirements of Law except to the
extent that failure to comply therewith could not, in the
aggregate, reasonably be expected to have a Material Adverse
Effect.
6.5 Maintenance of Property; Insurance. Keep all
property useful and necessary in its business in good working
order and condition; maintain with insurance companies which the
Borrowers believe in good faith to be financially sound and
reputable, insurance on all its property in at least such amounts
and against at least such risks (but including in any event
public liability, product liability and business interruption) as
the Borrowers reasonably determine in good faith are usually
insured against in the same general area by companies engaged in
the same or a similar business; and furnish to each Bank, upon
written request, full information as to the insurance carried.
6.6 Inspection of Property; Books and Records;
Discussions. Keep proper books of records and account in which
full, true and correct entries in conformity with GAAP and all
Requirements of Law shall be made of all dealings and
transactions in relation to its business and activities; and upon
reasonable notice and without undue disruption of its operations,
permit representatives of any Bank to visit and inspect any of
its properties and examine and make abstracts from any of its
books and records at any reasonable time and as often as may
reasonably be desired and to discuss the business, operations,
properties and financial and other condition of the Borrowers and
their Subsidiaries with officers and employees of the Borrowers
and their Subsidiaries and with their independent certified
public accountants, provided that prior to any such visit, each
Bank shall notify the Agent of such Bank's intention to visit and
inspect such properties, and each Bank shall use all reasonable
efforts to coordinate any such visit to coincide with the visit
of another Bank or Banks intending to visit and inspect such
properties.
6.7 Notices. Promptly give notice to the Agent and
each Bank of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any
Contractual Obligation of the Borrowers or any of their
Subsidiaries or (ii) litigation, investigation or proceeding
which may exist at any time between the Borrowers or any of
their Subsidiaries and any Governmental Authority, which in
either case, if not cured or if adversely determined, as the
case may be, could reasonably be expected to have a Material
Adverse Effect;
(c) any litigation or proceeding affecting the
Borrowers or any of their Subsidiaries (i) in which the
amount involved is $2,000,000 or more and not covered by
insurance or (ii) in which injunctive or similar relief is
sought, and where in either case such litigation or
proceeding could, in the judgment of the Borrowers, be
reasonably expected to have a Material Adverse Effect;
(d) any amendment of its Certificate of Incorporation
(except to increase the number of authorized shares of
Common Stock);
(e) the classification of any Unrestricted Subsidiary
as a Restricted Subsidiary;
(f) the following events, as soon as possible and in
any event within 30 days after the Borrowers know or have
reason to know thereof: (i) the occurrence or reasonably
expected occurrence of any Reportable Event with respect to
any Plan or any withdrawal from, or the termination,
Reorganization or Insolvency of any Multiemployer Plan or
(ii) the institution of proceedings or the taking of any
other action by the PBGC or the Borrowers or any Commonly
Controlled Entity or any Multiemployer Plan with respect to
the withdrawal from, or the terminating, Reorganization or
Insolvency of, any Plan, to the extent that any of the
events set forth in this subsection 6.7(f), either
individually or in the aggregate, could reasonably result in
a liability to the Borrowers of $2,000,000 or more; and
(g) a material adverse change in the business,
operations, property or condition (financial or otherwise)
of the Parent and its Subsidiaries taken as a whole.
Each notice pursuant to this subsection shall be accompanied by a
statement of a Responsible Officer setting forth details of the
occurrence referred to therein.
6.8 Environmental Laws.
(a) Comply, and undertake all reasonable efforts to
ensure compliance by all tenants and subtenants, if any, in all
material respects with all applicable Environmental Laws and
obtain and comply with and maintain, and undertake all reasonable
efforts to ensure that all tenants and subtenants obtain and
comply with and maintain, in all material respects any and all
licenses, approvals, notifications, registrations or permits
required by applicable Environmental Laws;
(b) Conduct and complete in all material respects all
investigations, studies, sampling and testing, and all remedial,
removal and other actions required under Environmental Laws, and
promptly comply in all material respects with all lawful orders
and directives of all Governmental Authorities regarding
Environmental Laws in each case except to the extent that the
same are being contested in good faith by appropriate proceedings
and the pendency of such proceedings could not be reasonably
expected to have a Material Adverse Effect; and
(c) Defend, indemnify and hold harmless the Agent and
the Banks, and their respective parents, subsidiaries,
affiliates, employees, agents, officers and directors, from and
against any claims, demands, penalties, fines, liabilities,
settlements (provided that such settlements are approved by the
Borrowers in advance which approval shall not be unreasonably
withheld), damages, losses, costs and expenses of whatever kind
or nature, known or unknown, contingent or otherwise, arising out
of, or in any way relating to any asserted or established
violation of, noncompliance with or liability under any
Environmental Laws by either of the Borrowers or any of their
Subsidiaries or the Properties, or any orders, requirements or
demands of Governmental Authorities related thereto, including,
without limitation, attorneys' and consultants' fees,
investigation and laboratory fees, response costs, court costs
and litigation expenses, except to the extent that any of the
foregoing arise out of the gross negligence or willful misconduct
of the party seeking indemnification therefor. This indemnity
shall continue in full force and effect regardless of the
termination of this Agreement.
6.9 Changes to Advance Rates, Standards of Eligibility
and Reserves. The Agent shall be entitled to (a) reduce the
advance rates, increase the standards of eligibility and
establish or increase any reserves under this Agreement on ten
days' prior written notice to the Borrowers in the event that the
most recent audit of inventory and accounts receivable of the
Company conducted pursuant to subsection 6.10 was, in the
commercially reasonable judgment of the Agent, materially
different from historical performance, and (b) with the prior
written consent of the Banks, increase the advance rates, reduce
the standards of eligibility and reduce any reserves under this
Agreement, in each case in its commercially reasonable judgment.
6.10 Periodic Audit of Inventory and Accounts
Receivable. The Agent shall be entitled to perform periodic due
diligence inspections, tests and reviews of the inventory and
accounts receivable of the Borrowers and their Subsidiaries on
mutually convenient Business Days, and shall in each case be
satisfied in all material respects with the results thereof. The
Borrowers shall pay the fees and expenses of the Agent, or any
entity the Agent retains with the consent of the Borrower (which
consent shall not be unreasonably withheld), to perform an audit
of the Collateral, provided, that the Borrowers shall pay such
fees and expenses for no more than one audit of the Collateral in
any twelve-month period.
SECTION 7. NEGATIVE COVENANTS
Each Borrower hereby agrees that, so long as the
Commitments remain in effect, any Note or any Letter of Credit
remains outstanding and unpaid or any other amount is owing to
any Bank or the Agent hereunder, each Borrower shall not, and
shall not permit any of its Restricted Subsidiaries to, directly
or indirectly:
7.1 Financial Condition Covenants.
(a) Maintenance of Consolidated Net Worth. Permit
Consolidated Net Worth (excluding changes resulting from foreign
exchange translation adjustments after April 2, 1995) (i) at any
time from the Closing Date through December 31, 1995 to be less
than $26,000,000 and (ii) at any time after December 31, 1995 to
be less than $26,000,000 plus 50% of Consolidated Net Income (to
the extent a positive number) for each fiscal year concluded (as
at the time of determination) after December 31, 1994.
(b) Consolidated EBITDA to Consolidated Net Interest
Expense Ratio. Permit the ratio of (i) Consolidated EBITDA for
any period of four consecutive fiscal quarters ending on the date
specified below to (ii) Consolidated Net Interest Expense for
such period to be less than the ratio set forth opposite such
period below:
Period Ratio
Four quarters ending 7/2/95: 1.8 to 1.0
Four quarters ending 10/1/95: 1.8 to 1.0
Four quarters ending 12/31/95: 1.8 to 1.0
Four quarters ending 3/31/96: 2.0 to 1.0
Four quarters ending 6/30/96: 2.0 to 1.0
Four quarters ending 9/29/96: 2.0 to 1.0
Four quarters ending 12/31/96: 2.0 to 1.0
Four quarters ending 3/30/97
and any quarter thereafter: 2.5 to 1.0
(c) Consolidated Indebtedness to Consolidated EBITDA
Ratio. Permit at any time the ratio of (i) consolidated
Indebtedness of the Parent and its Subsidiaries as at any time of
determination thereof (the "Determination Date") to (ii)
Consolidated EBITDA for the four fiscal quarters ending on the
last day of the fiscal quarter immediately preceding the
Determination Date to be greater than the ratio set forth
opposite such period below:
Determination Date Period Ratio
Closing Date through 12/31/95: 4.85 to 1.0
1/1/96 through 12/31/96: 4.50 to 1.0
1/1/97 through any time thereafter: 4.00 to 1.0
7.2 Limitation on Negative Pledge Clauses. Enter into
any agreement other than this Agreement or the Indenture which
prohibits or limits the ability of any Borrower or any of its
Restricted Subsidiaries to create, incur, assume or suffer to
exist any Lien upon any of its property, assets or revenues,
whether now owned or hereafter acquired.
7.3 Limitation on Liens. Create, incur, assume or
suffer to exist any Lien upon any of its property, assets or
revenues, whether now owned or hereafter acquired, except for:
(a) Liens for taxes not yet due or which are being
contested in good faith by appropriate proceedings, provided
that adequate reserves with respect thereto are maintained
on the books of the Borrowers or their Restricted
Subsidiaries, as the case may be, in conformity with GAAP;
(b) carriers', warehousemen's, mechanics',
materialmen's, repairmen's or other like Liens arising in
the ordinary course of business which are not overdue for a
period of more than 60 days or which are being contested in
good faith by appropriate proceedings;
(c) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social
security legislation and deposits securing liability to
insurance carriers under insurance or self-insurance
arrangements;
(d) deposits to secure the performance of bids, trade
contracts (other than for borrowed money), leases, statutory
obligations, surety and appeal bonds, performance bonds and
other obligations of a like nature incurred in the ordinary
course of business;
(e) easements, rights-of-way, restrictions and other
similar encumbrances incurred in the ordinary course of
business which, in the aggregate, are not substantial in
amount and which do not in any case materially detract from
the value of the property subject thereto or materially
interfere with the ordinary conduct of the business of
either of the Borrowers or such Restricted Subsidiary;
(f) Liens in existence on the Closing Date listed on
Schedule IV, securing Indebtedness outstanding on the
Closing Date and listed on Schedule III, provided that no
such Lien is spread to cover any additional property after
the Closing Date and that the amount of Indebtedness secured
thereby is not increased;
(g) Liens securing Indebtedness in an aggregate
principal amount not exceeding $10,000,000 at any one time
outstanding of the Borrowers and their Restricted
Subsidiaries incurred to finance the acquisition of fixed or
capital assets, provided that (i) such Indebtedness (x)
incurred in respect of guarantees of the obligations of any
Person other than a Borrower or a Restricted Subsidiary
secured by property of a Borrower or a Restricted Subsidiary
shall not exceed $2,000,000 at any time outstanding and (y)
shall not be incurred in respect of any Unrestricted
Subsidiary, (ii) such Liens shall be created substantially
simultaneously with the acquisition of such fixed or capital
assets, (iii) such Liens do not at any time encumber any
property other than the property financed by such
Indebtedness, (iv) the amount of Indebtedness secured
thereby is not increased and (v) the principal amount of
Indebtedness secured by any such Lien shall at no time
exceed 100% of the fair value (as determined in good faith
by the board of directors of such Borrower or such
Restricted Subsidiary, as the case may be) of such property
at the time it was acquired;
(h) Liens on assets of any Foreign Subsidiary securing
Indebtedness for borrowed money of any Foreign Subsidiary
not guaranteed by either Borrower;
(i) Liens in respect of judgments or decrees entered
against either of the Borrowers or any of their Restricted
Subsidiaries which have been vacated, discharged, stayed or
bonded pending appeal within 60 days from the entry thereof;
(j) Liens on the property or assets of a corporation
which is acquired and becomes a Restricted Subsidiary after
the Closing Date securing Indebtedness existing at the time
such corporation was acquired and not created in
anticipation of such acquisition, provided that (i) such
Liens existed at the time such corporation became a
Restricted Subsidiary and were not created in anticipation
thereof, (ii) any such Lien is not spread to cover any
property or assets of such corporation after the time such
corporation becomes a Restricted Subsidiary, (iii) the
amount of Indebtedness secured thereby is not increased and
(iv) immediately after giving effect to the acquisition of
such corporation by either Borrower, no Default or Event of
Default shall have occurred and be continuing;
(k) Liens securing obligations under letters of credit
in respect of current trade liabilities incurred in the
ordinary course of business;
(l) Liens in favor of the Agent for the ratable
benefit of the Banks and the Hedging Banks created under the
Security Agreement; and
(m) subject to clauses (a) through (l) of this
subsection 7.3, renewals of Liens permitted by this
subsection 7.3.
7.4 Limitation on Guarantee Obligations. Create,
incur, assume or suffer to exist any Guarantee Obligation other
than (a) the Guarantees, (b) guarantees by the Parent of the
Company's obligations under operating leases and (c) guarantees
constituting Indebtedness described in subsection 7.3(g).
7.5 Limitations on Fundamental Changes. Enter into
any merger, consolidation or amalgamation, or liquidate, wind up
or dissolve itself (or suffer any liquidation or dissolution), or
convey, sell, lease, assign, transfer or otherwise dispose of,
all or substantially all of its property, business or assets, or
make any material change in its present method of conducting
business, except:
(a) any Restricted Subsidiary of any Borrower may be
merged or consolidated with or into such Borrower (provided
that such Borrower shall be the continuing or surviving
corporation) or with or into any one or more wholly owned
Restricted Subsidiaries of any Borrower (provided that the
wholly owned Restricted Subsidiary or Subsidiaries shall be
the continuing or surviving corporation); and
(b) any wholly owned Restricted Subsidiary may sell,
lease, transfer or otherwise dispose of any or all of its
assets (upon voluntary liquidation or otherwise) to any
Borrower or any other wholly owned Restricted Subsidiary of
any Borrower; and
(c) The Borrower Merger may occur.
7.6 Limitation on Sale of Assets. Convey, sell,
lease, assign, transfer or otherwise dispose of any of its
property, business or assets (including, without limitation,
receivables, leasehold interests and all or substantially all of
the assets of the Apparel Textile Group or the Industrial Coated
Fabrics Group or the Automotive Airbag Group), whether now owned
or hereafter acquired, except:
(a) obsolete or worn out property disposed of in the
ordinary course of business;
(b) the sale of inventory in the ordinary course of
business;
(c) as permitted by subsection 7.5(b);
(d) property, business or assets in an aggregate
principal amount not to exceed $10,000,000 (at book value),
from and after the Closing Date, as to the Borrowers and
their Restricted Subsidiaries, provided that the proceeds of
such sale or disposition shall be applied to the prepayment
of the Loans in accordance with subsection 2.10(a).
7.7 Limitation on Dividends. Declare or pay any
dividend (other than dividends payable solely in common stock of
either of the Borrowers or any Restricted Subsidiary) on, or make
any payment on account of, or set apart assets for a sinking or
other analogous fund for, the purchase, redemption, defeasance,
retirement or other acquisition of, any shares of any class of
Capital Stock of any Borrower or any warrants or options to
purchase any such Stock, whether now or hereafter outstanding, or
make any other distribution in respect thereof, either directly
or indirectly, whether in cash or property or in obligations of
any Borrower or any Restricted Subsidiary (any of the foregoing,
"Dividend Payments"), except Dividend Payments by any Restricted
Subsidiary to any wholly owned Restricted Subsidiary or to the
Company or by the Company to the Parent.
7.8 Limitation on Investments, Loans and Advances.
Make any advance, loan, extension of credit or capital
contribution to, or purchase any stock, bonds, notes, debentures
or other securities of or any assets constituting a business unit
of, or make any other investment in, (all of the foregoing herein
referred to as "Investments") any Person, except:
(a) extensions of trade credit in the ordinary course
of business;
(b) Investments in Cash Equivalents;
(c) acquisitions of the stock, business, or assets
constituting a business unit of companies engaged in a
business similar to one of the lines of business conducted
by the Borrowers, which companies, through such
acquisitions, become wholly-owned Subsidiaries of either
Borrower or are combined with or, in the case of assets
constituting a business unit, are acquired by, either
Borrower or an existing wholly owned Subsidiary of either
Borrower, provided that immediately after giving effect to
such acquisition, the Available Credit equals or exceeds
$10,000,000;
(d) Investments in (i) entities engaged in businesses
similar to the Borrowers, which entities will not be direct
or indirect wholly owned Subsidiaries of the Borrowers, in
an aggregate amount up to $5,000,000, from and after the
Closing Date, or (ii) entities (other than those described
in clause (i)) which will not be direct or indirect wholly
owned Subsidiaries of either Borrower in an aggregate amount
up to $2,500,000, from and after the Closing Date, provided,
in each case that immediately after giving effect to such
Investment, the Available Credit equals or exceeds
$10,000,000;
(e) Investments by the Company in the Parent and
Investments by the Parent in the Company;
(f) Investments by either Borrower in any Restricted
Subsidiary or by any Restricted Subsidiary in any other
Restricted Subsidiary not exceeding $5,000,000 in the
aggregate at any one time outstanding, less any Investments
permitted pursuant to subsection 7.8(d)(ii);
(g) Permitted Transactions to the extent permitted by
subsection 7.10; and
(h) Investments described on Schedule IX hereto.
7.9 Limitation on Optional Payments and Modifications
of Debt Instruments. (a) Make any optional payment or
prepayment on or redemption ("Restricted Payments") of any
Indebtedness other than (i) Indebtedness pursuant to this
Agreement and (ii) the repurchase of Senior Notes and
Subordinated Debt in an aggregate outstanding principal amount
not to exceed $15,000,000, from and after the Closing Date,
provided, that no Senior Notes shall be repurchased unless the
Borrowers have repurchased all of the outstanding Subordinated
Debt, and, provided further, that no Senior Notes or Subordinated
Debt shall be repurchased unless the Available Credit, after
giving effect to any such repurchase equals or exceeds
$10,000,000 or (b) amend, modify or change, or consent or agree
to any amendment, modification or change to any of the terms
relating to (i) the payment or prepayment of principal of or
interest on, any Indebtedness (other than any such amendment,
modification or change which would extend the maturity or reduce
the amount of any payment of principal thereof or which would
reduce the rate or extend the date for payment of interest
thereon) or (ii) the Tax Allocation Agreement.
7.10 Transactions with Affiliates. Enter into any
transaction, including, without limitation, any purchase, sale,
lease or exchange of property or the rendering of any service,
with any Affiliate other than a Permitted Transaction unless such
transaction is otherwise permitted under this Agreement or is in
the ordinary course of the Borrowers' business and is upon fair
and reasonable terms no less favorable to such Borrower or such
Restricted Subsidiary, as the case may be, than it would obtain
in a comparable arm's length transaction with a Person not an
Affiliate.
7.11 Corporate Documents. Amend its Certificate of
Incorporation (except to increase the number of authorized shares
of Common Stock) in a manner that could reasonably be expected to
have a Material Adverse Effect.
7.12 Fiscal Year. Permit the fiscal year to end on a
day other than December 31.
SECTION 8. EVENTS OF DEFAULT
If any of the following events shall occur and be
continuing:
(a) Any of the Borrowers shall fail to pay any
principal of any Note or any Reimbursement Obligation when
due in accordance with the terms thereof or hereof; or the
Borrowers shall fail to pay any interest on any Note, or any
other amount payable hereunder, within three days after any
such interest or other amount becomes due in accordance with
the terms thereof or hereof; or
(b) Any representation or warranty made or deemed made
by any of the Borrowers herein or in any other Loan Document
or which is contained in any certificate, document or
financial or other statement furnished at any time under or
in connection with this Agreement shall prove to have been
incorrect in any material respect on or as of the date made
or deemed made; or
(c) Any of the Borrowers shall default in the
observance or performance of any agreement contained in
Section 7; or
(d) Any of the Borrowers shall default in the
observance or performance of any other agreement contained
in this Agreement (other than as provided in paragraphs (a)
through (c) of this Section) or under any of the Loan
Documents, and such default shall continue unremedied for a
period of 30 days; or
(e) Any of the Borrowers or any of their Restricted
Subsidiaries shall (i) default in any payment of principal
of or interest on any Indebtedness (other than the Notes) or
in the payment of any Guarantee Obligation or in the payment
of any amount under any Hedging Agreement involving in the
aggregate $1,000,000 or more, beyond the period of grace
(not to exceed 30 days), if any, provided in the instrument
or agreement under which such Indebtedness or Guarantee
Obligation was created; or (ii) default in the observance or
performance of any other agreement or condition relating to
any such Indebtedness or Guarantee Obligation or contained
in any instrument or agreement evidencing, securing or
relating thereto, or any other event shall occur or
condition exist, the effect of which default or other event
or condition is to cause, or to permit the holder or holders
of such Indebtedness or beneficiary or beneficiaries of such
Guarantee Obligation (or a trustee or agent on behalf of
such holder or holders or beneficiary or beneficiaries) to
cause, with the giving of notice if required, such
Indebtedness to become due prior to its stated maturity or
such Guarantee Obligation to become payable; or
(f) (i) Any of the Borrowers or any of their
Restricted Subsidiaries shall commence any case, proceeding
or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to
have an order for relief entered with respect to it, or
seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with
respect to it or its debts, or (B) seeking appointment of a
receiver, trustee, custodian or other similar official for
it or for all or any substantial part of its assets, or any
of the Borrowers or any of their Restricted Subsidiaries
shall make a general assignment for the benefit of its
creditors; or (ii) there shall be commenced against any of
the Borrowers or any of their Restricted Subsidiaries any
case, proceeding or other action of a nature referred to in
clause (i) above which (A) results in the entry of an order
for relief or any such adjudication or appointment or (B)
remains undismissed, undischarged or unbonded for a period
of 60 days; or (iii) there shall be commenced against any of
the Borrowers or any of their Restricted Subsidiaries any
case, proceeding or other action seeking issuance of a
warrant of attachment, execution, distraint or similar
process against all or any substantial part of its assets
which results in the entry of an order for any such relief
which shall not have been vacated, discharged, or stayed or
bonded pending appeal within 60 days from the entry thereof;
or (iv) any of the Borrowers or any of their Restricted
Subsidiaries shall take any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in,
any of the acts set forth in clause (i), (ii), or (iii)
above; or (v) any of the Borrowers or any of their
Restricted Subsidiaries shall generally not, or shall be
unable to, or shall admit in writing its inability to, pay
its debts as they become due; or
(g) (i) Any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section
4975 of the Code) involving any Plan, (ii) any "accumulated
funding deficiency" (as defined in Section 302 of ERISA),
whether or not waived, shall exist with respect to any Plan,
which is not remedied by a contribution within the time
period permitted by Treas. Reg. subsection 11.412(c)-12, (iii) a
Reportable Event shall occur with respect to, or proceedings
shall commence to have a trustee appointed, or a trustee
shall be appointed, to administer or to terminate, any
Single Employer Plan, which Reportable Event or commencement
of proceedings or appointment of a trustee is, in the
reasonable opinion of the Required Banks, likely to result
in the termination of such Plan for purposes of Title IV of
ERISA, (iv) any Single Employer Plan shall terminate for
purposes of Title IV of ERISA, (v) any Borrower or any
Commonly Controlled Entity shall, or in the reasonable
opinion of the Required Banks is likely to, incur any
liability in connection with a withdrawal from, or the
Insolvency or Reorganization of, a Multiemployer Plan or
(vi) any other event or condition shall occur or exist, with
respect to a Plan; and in each case in clauses (i) through
(vi) above, such event or condition, together with all other
such events or conditions, if any, could subject such
Borrower or any of its Subsidiaries to any tax, penalty or
other liabilities which in the aggregate could reasonably be
expected to have a Material Adverse Effect; or
(h) One or more judgments or decrees shall be entered
against any of the Borrowers or any of their Restricted
Subsidiaries involving in the aggregate a liability (not
paid or fully covered by insurance) of $2,000,000 or more
and all such judgments or decrees shall not have been
vacated, discharged, stayed or bonded pending appeal within
60 days from the entry thereof; or
(i) On or after the Closing Date, (i) for any reason
any Loan Document ceases to be or is not in full force and
effect or any of the Liens intended to be created by the
Security Agreement ceases to be or is not a valid and
perfected Lien having the priority contemplated thereby or
(ii) any Borrower shall assert that any Loan Document to
which it is a party has ceased to be or is not in full force
and effect; or
(j) The occurrence or happening of a Change in
Control;
then, and in any such event, (A) if such event is an Event of
Default specified in clause (i) or (ii) of paragraph (f) above
with respect to any of the Borrowers, automatically the
Commitments shall immediately terminate and the Loans hereunder
(with accrued interest thereon) and all other amounts owing under
this Agreement (including, without limitation, all amounts of L/C
Obligations, whether or not the beneficiaries of the then
outstanding Letters of Credit shall have presented the documents
required thereunder) and the Notes shall immediately become due
and payable, and (B) if such event is any other Event of Default,
either or both of the following actions may be taken: (i) with
the consent of the Required Banks, the Agent may, or upon the
request of the Required Banks, the Agent shall, by notice to the
Borrowers declare the Commitments to be terminated forthwith,
whereupon the Commitments shall immediately terminate; and (ii)
with the consent of the Required Banks, the Agent may, or upon
the request of the Required Banks, the Agent shall, by notice of
default to the Borrowers, declare the Loans hereunder (with
accrued interest thereon) and all other amounts owing under this
Agreement (including, without limitation, all amounts of L/C
Obligations, whether or not the beneficiaries of the then
outstanding Letters of Credit shall have presented the documents
required thereunder) and the Notes to be due and payable
forthwith, whereupon the same shall immediately become due and
payable.
Except as expressly provided above in this Section,
presentment, demand, protest and all other notices of any kind
are hereby expressly waived. With respect to all Letters of
Credit with respect to which presentment for honor shall not have
occurred at the time of an acceleration pursuant to the preceding
paragraph, the Borrowers shall at such time deposit in a cash
collateral account opened by the Agent an amount equal to the
aggregate then undrawn and unexpired amount of such Letters of
Credit. The Borrowers hereby grant to the Agent, for the benefit
of the Issuing Bank and the L/C Participants, a security interest
in such cash collateral to secure all obligations of the
Borrowers in respect of such Letters of Credit under this
Agreement and the other Loan Documents. The Borrowers shall
execute and deliver to the Agent, for the account of the Issuing
Bank and the L/C Participants, such further documents and
instruments as the Agent may request to evidence the creation and
perfection of such security interest in such cash collateral
account. Amounts held in such cash collateral account shall be
applied by the Agent to the payment of drafts drawn under such
Letters of Credit, and the unused portion thereof after all such
Letters of Credit shall have expired or been fully drawn upon, if
any, shall be applied to repay other obligations of the Borrowers
hereunder and under the Notes. After all such Letters of Credit
shall have expired or been fully drawn upon, all Reimbursement
Obligations shall have been satisfied and all other obligations
of the Borrowers hereunder and under the Notes shall have been
paid in full, the balance, if any, in such cash collateral
account shall be returned to the Borrowers.
SECTION 9. THE AGENT
9.1 Appointment. (a) Each Bank hereby irrevocably
designates and appoints Chemical as the Agent of such Bank under
this Agreement and the other Loan Documents, and each such Bank
irrevocably authorizes Chemical, as the Agent for such Bank, to
take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such
powers and perform such duties as are expressly delegated to the
Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably
incidental thereto. Notwithstanding any provision to the
contrary elsewhere in this Agreement, the Agent shall not have
any duties or responsibilities, except those expressly set forth
herein, or any fiduciary relationship with any Bank, and no
implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or
any other Loan Document or otherwise exist against the Agent.
(b) All Collateral shall be held or administered by
the Agent for the ratable benefit of the Banks and the Hedging
Banks. Any proceeds received by the Agent from the foreclosure,
sale, lease, or other disposition of any of the Collateral and
any other proceeds received pursuant to the terms of the Security
Agreement shall be applied first to the payment in full of the
Obligations and then, after all the Obligations have been paid in
full and the Commitments have been terminated, second to the
payment of all obligations of the Borrowers or any of their
Restricted Subsidiaries to any Hedging Bank under any Hedging
Agreement provided by such Hedging Bank. Each Hedging Bank
agrees that (i) if at any time it shall receive the proceeds of
any Collateral or any proceeds pursuant to the terms of the
Security Agreement (other than through application by the Agent
in accordance with this subsection 9.1(b)), it shall promptly
turn the same over to the Agent for application in accordance
with the provisions hereof and (ii) it will not take or cause to
be taken any action, including, without limitation, the
commencement of any legal or equitable proceedings, the purpose
of which is or could be to give such Hedging Bank any preference
or priority against the other Banks with respect to the
Collateral.
9.2 Delegation of Duties. The Agent may execute any
of its duties under this Agreement and the other Loan Documents
by or through agents, affiliates or attorneys-in-fact and shall
be entitled to advice of counsel concerning all matters
pertaining to such duties. The Agent shall not be responsible
for the negligence or misconduct of any agents or attorneys
in-fact selected by it with reasonable care.
9.3 Exculpatory Provisions. Neither the Agent nor any
of its officers, directors, employees, agents, attorneys-in-fact
or Affiliates shall be (i) liable for any action lawfully taken
or omitted to be taken by it or such Person under or in
connection with this Agreement or any other Loan Document (except
for its or such Person's own gross negligence or willful
misconduct) or (ii) responsible in any manner to any of the Banks
for any recitals, statements, representations or warranties made
by the Borrowers or any officer thereof contained in this
Agreement or any other Loan Document or in any certificate,
report, statement or other document referred to or provided for
in, or received by the Agent under or in connection with, this
Agreement or any other Loan Document or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this
Agreement, the Notes or any other Loan Document or for any
failure of the Borrowers to perform its obligations hereunder or
thereunder. The Agent shall not be under any obligation to any
Bank to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions
of, this Agreement or any other Loan Document, or to inspect the
properties, books or records of the Borrowers.
9.4 Reliance by Agent. The Agent shall be entitled to
rely, and shall be fully protected in relying, upon any Note,
writing, resolution, notice, consent, certificate, affidavit,
letter, cablegram, telegram, telecopy, telex or teletype message,
statement, order or other document or conversation believed by it
to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons and upon advice and statements of
legal counsel (including, without limitation, counsel to the
Borrowers), independent accountants and other experts selected by
the Agent. The Agent may deem and treat the payee of any Note as
the owner thereof for all purposes unless a written notice of
assignment, negotiation or transfer thereof shall have been filed
with the Agent. The Agent shall be fully justified in failing or
refusing to take any action under this Agreement or any other
Loan Document unless it shall first receive such advice or
concurrence of the Required Banks as it deems appropriate or it
shall first be indemnified to its satisfaction by the Banks
against any and all liability and expense which may be incurred
by it by reason of taking or continuing to take any such action.
The Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement and the Notes and
the other Loan Documents in accordance with a request of the
Required Banks, and such request and any action taken or failure
to act pursuant thereto shall be binding upon all the Banks and
all future holders of the Notes.
9.5 Notice of Default. The Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or
Event of Default hereunder unless the Agent has received notice
from a Bank or either Borrower referring to this Agreement,
describing such Default or Event of Default and stating that such
notice is a "notice of default". In the event that the Agent
receives such a notice, the Agent shall give notice thereof to
the Banks. The Agent shall take such action with respect to such
Default or Event of Default as shall be reasonably directed by
the Required Banks; provided that unless and until the Agent
shall have received such directions, the Agent may (but shall not
be obligated to) take such action, or refrain from taking such
action, with respect to such Default or Event of Default as it
shall deem advisable in the best interests of the Banks.
9.6 Non-Reliance on Agent and Other Banks. Each Bank
expressly acknowledges that neither the Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or
Affiliates has made any representations or warranties to it and
that no act by the Agent hereinafter taken, including any review
of the affairs of the Borrowers, shall be deemed to constitute
any representation or warranty by the Agent to any Bank. Each
Bank represents to the Agent that it has, independently and
without reliance upon the Agent or any other Bank, and based on
such documents and information as it has deemed appropriate, made
its own appraisal of and investigation into the business,
operations, property, financial and other condition and
creditworthiness of the Borrowers and made its own decision to
make its Loans hereunder and enter into this Agreement. Each
Bank also represents that it will, independently and without
reliance upon the Agent or any other Bank, and based on such
documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and
decisions in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigation as it
deems necessary to inform itself as to the business, operations,
property, financial and other condition and creditworthiness of
the Borrowers. Except for notices, reports and other documents
expressly required to be furnished to the Banks by the Agent
hereunder, the Agent shall not have any duty or responsibility to
provide any Bank with any credit or other information concerning
the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of the Borrowers which
may come into the possession of the Agent or any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates.
9.7 Indemnification. The Banks agree to indemnify the
Agent in its capacity as such (to the extent not reimbursed by
the Borrowers and without limiting the obligation of the
Borrowers to do so), ratably according to their respective
Commitment Percentages in effect on the date on which
indemnification is sought (or, if indemnification is sought after
the date upon which the Commitments shall have terminated and the
Loans and L/C Obligations shall have been paid in full, ratably
in accordance with their Commitment Percentages immediately prior
to such date), from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind whatsoever
which may at any time (including, without limitation, at any time
following the payment of the Notes) be imposed on, incurred by or
asserted against the Agent in any way relating to or arising out
of this Agreement, any of the other Loan Documents or any
documents contemplated by or referred to herein or therein or the
transactions contemplated hereby or thereby or any action taken
or omitted by the Agent under or in connection with any of the
foregoing; provided that no Bank shall be liable for the payment
of any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or
disbursements resulting solely from the Agent's gross negligence
or willful misconduct. The agreements in this subsection shall
survive the payment of the Notes and all other amounts payable
hereunder.
9.8 Agent in Its Individual Capacity. The Agent and
its Affiliates may make loans to, accept deposits from and
generally engage in any kind of business with the Borrowers as
though the Agent were not the Agent hereunder and under the other
Loan Documents. With respect to its Loans made or renewed by it
and any Note issued to it and with respect to any Letter of
Credit issued or participated in by it and with respect to any
Letter of Credit issued or participated in by it, the Agent shall
have the same rights and powers under this Agreement and the
other Loan Documents as any Bank and may exercise the same as
though it were not the Agent, and the terms "Bank" and "Banks"
shall include the Agent in its individual capacity.
9.9 Successor Agent. The Agent may resign as Agent
upon 10 days' notice to the Banks. If the Agent shall resign as
Agent under this Agreement and the other Loan Documents, then the
Required Banks shall appoint from among the Banks a successor
agent for the Banks, which successor agent shall be approved by
the Borrowers, whereupon such successor agent shall succeed to
the rights, powers and duties of the Agent, and the term "Agent"
shall mean such successor agent effective upon its appointment,
and the former Agent's rights, powers and duties as Agent shall
be terminated, without any other or further act or deed on the
part of such former Agent or any of the parties to this Agreement
or any holders of the Notes. After any retiring Agent's
resignation as Agent, the provisions of this subsection shall
inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement and the other
Loan Documents.
9.10 Swing Line Bank. The provisions of this Section
9 shall apply to the Swing Line Bank in its capacity as such to
the same extent that such provisions apply to the Agent.
SECTION 10. MISCELLANEOUS
10.1 Amendments and Waivers. Neither this Agreement,
any Note, any other Loan Document, nor any terms hereof or
thereof may be amended, supplemented or modified except in
accordance with the provisions of this subsection. With the
written consent of the Required Banks, the Agent and the
Borrowers may, from time to time, enter into written amendments,
supplements or modifications hereto and to the Notes and the
other Loan Documents for the purpose of adding any provisions to
this Agreement, the Notes or the other Loan Documents or changing
in any manner the rights or obligations of the Banks or of the
Borrowers hereunder or thereunder or waiving, on such terms and
conditions as the Agent may specify in such instrument, any of
the requirements of this Agreement, the Notes or the other Loan
Documents or any Default or Event of Default and its
consequences; provided, however, that no such waiver and no such
amendment, supplement or modification shall (a) reduce the amount
or extend the maturity of any Note or any Reimbursement
Obligation or any installment of any Note or any Reimbursement
Obligation, or reduce the rate or extend the time of payment of
interest thereon, or reduce any fee payable to any Bank
hereunder, or change the amount of any Bank's Commitment, in each
case without the consent of the Bank affected thereby, or (b)
amend, modify or waive any provision of this subsection or of
subsection 6.9, or increase the aggregate Commitments above
$60,000,000, or reduce the percentage specified in the definition
of Required Banks, or consent to the assignment or transfer by
the Borrowers of any of their rights and obligations under this
Agreement and the other Loan Documents or release all or
substantially all of the Collateral, in each case without the
written consent of all the Banks, or (c) amend, modify or waive
any provision of Section 9 without the written consent of the
then Agent. The Swing Line Notes, the Letters of Credit and the
Applications relating thereto and the L/C Obligations may not be
amended, supplemented or modified without the written consent of
the Swing Line Bank or the Issuing Bank, as applicable (and, in
the case of the Swing Line Notes, each Bank, if any, which holds
a participation therein pursuant to subsection 2.7 and, in the
case of Letters of Credit and L/C Obligations, each affected L/C
Participant). Any such waiver and any such amendment, supplement
or modification shall apply equally to each of the Banks and
shall be binding upon the Borrowers, the Banks, the Agent and all
future holders of the Notes. In the case of any waiver, the
Borrowers, the Banks and the Agent shall be restored to their
former position and rights hereunder and under the outstanding
Notes and any other Loan Documents, and any Default or Event of
Default waived shall be deemed to be cured and not continuing;
but no such waiver shall extend to any subsequent or other
Default or Event of Default, or impair any right consequent
thereon.
10.2 Notices. All notices, requests and demands to or
upon the respective parties hereto to be effective shall be in
writing (including by telecopy), or by telephone promptly
confirmed in writing and, unless otherwise expressly provided
herein, shall be deemed to have been duly given or made when
delivered by hand, or three days after being deposited in the
mail, postage prepaid, or, in the case of telecopy notice or
written confirmation of telephone notice, when received,
addressed as follows in the case of the Borrowers and the Agent,
and as set forth in Schedule I in the case of the other parties
hereto, or to such other address as may be hereafter notified by
the respective parties hereto and any future holders of the
Notes:
The Company: Reeves Brothers, Inc.
401 Merritt 7
Norwalk, CT 06856-5063
(For Fed. Ex., etc., use 06851)
Attention: Treasurer, with a copy to the
General Counsel
Telecopy: 203-845-7950
Confirmation: 203-846-9988
The Parent: Reeves Industries, Inc.
401 Merritt 7
Norwalk, CT 06856-5063
(For Fed. Ex., etc., use 06851)
Attention: Treasurer, with copy to the
General Counsel
Telecopy: 203-845-7950
Confirmation: 203-846-9988
The Agent: Chemical Bank
270 Park Avenue
10th Floor
New York, New York 10017
Attention: David J. Corcoran
Telecopy: 212-270-3860
Confirmation: 212-270-5032
with a
copy to: Chemical Bank Agent Services Corporation
140 East 45th Street
29th Floor
New York, New York 10017
Attention: Sandra Miklave
Telecopy: 212-270-0854
Confirmation: 212-270-0005
provided that any notice, request or demand to or upon the Agent
or the Banks pursuant to subsection 2.3, 2.6, 2.9, 2.10, 2.11 or
2.16 shall not be effective until received.
10.3 No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of the Agent or
any Bank, any right, remedy, power or privilege hereunder shall
operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of
any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative
and not exclusive of any rights, remedies, powers and privileges
provided by law.
10.4 Survival of Representations and Warranties. All
representations and warranties made hereunder and in any
document, certificate or statement delivered pursuant hereto or
in connection herewith shall survive the execution and delivery
of this Agreement and the Notes.
10.5 Payment of Expenses and Taxes. The Borrowers
agree (a) to pay or reimburse the Agent for all its reasonable
out-of-pocket costs and expenses incurred in connection with the
development, preparation and execution of, and any amendment,
supplement or modification to, this Agreement, the Notes and the
other Loan Documents and any other documents prepared in
connection herewith or therewith, and the consummation and
administration of the transactions contemplated hereby and
thereby, including, without limitation, (i) the reasonable fees
and disbursements of counsel to the Agent and (ii) the reasonable
costs and expenses of the Agent incurred in connection with any
due diligence inspection, test or review of the inventory and
accounts receivable of the Borrowers and their Subsidiaries
pursuant to subsection 6.10, (b) to pay or reimburse each Bank
and the Agent for all its costs and expenses incurred in
connection with the enforcement or preservation of any rights
under this Agreement, the Notes, the other Loan Documents and any
such other documents, including, without limitation, reasonable
fees and disbursements of counsel to the Agent and to the several
Banks, and (c) to pay, indemnify, and hold each Bank and the
Agent harmless from, any and all recording and filing fees and
any and all liabilities with respect to, or resulting from any
delay in paying, stamp, excise and other taxes, if any, which may
be payable or determined to be payable in connection with the
execution and delivery of, or consummation or administration of
any of the transactions contemplated by, or any amendment,
supplement or modification of, or any waiver or consent under or
in respect of, this Agreement, the Notes, the other Loan
Documents and any such other documents, and (d) to pay,
indemnify, and hold each Bank and the Agent harmless from and
against any and all other liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever with respect to
the execution, delivery, enforcement, performance and
administration of this Agreement, the Notes, the other Loan
Documents and any such other documents (all the foregoing,
collectively, the "indemnified liabilities"), provided, that the
Borrowers shall have no obligation hereunder to the Agent or any
Bank with respect to indemnified liabilities arising from (i) the
gross negligence or willful misconduct of the Agent or any such
Bank, (ii) legal proceedings commenced against the Agent or any
such Bank by any security holder or creditor thereof arising out
of and based upon rights afforded any such security holder or
creditor solely in its capacity as such, or (iii) legal
proceedings commenced against the Agent or any such Bank by any
other Bank or by any Transferee. The agreements in this
subsection shall survive repayment of the Notes and all other
amounts payable hereunder.
10.6 Successors and Assigns; Participations;
Purchasing Banks.
(a) This Agreement shall be binding upon and inure to
the benefit of the Borrowers, the Banks, the Agent, all future
holders of the Notes and their respective successors and assigns,
except that the Borrowers may not assign or transfer any of their
rights or obligations under this Agreement without the prior
written consent of each Bank.
(b) Any Bank may, in the ordinary course of its
commercial banking business and in accordance with applicable
law, at any time sell to one or more banks or other entities
("Participants") participating interests in any Loan owing to
such Bank, any Note held by such Bank, any Commitment of such
Bank or any other interest of such Bank hereunder and under the
other Loan Documents, provided, that no such participating
interest shall be in an amount less than $5,000,000. In the
event of any such sale by a Bank of participating interests to a
Participant, such Bank's obligations under this Agreement to the
other parties to this Agreement shall remain unchanged, such Bank
shall remain solely responsible for the performance thereof, such
Bank shall remain the holder of any such Note for all purposes
under this Agreement and the other Loan Documents, and the
Borrowers and the Agent shall continue to deal solely and
directly with such Bank in connection with such Bank's rights and
obligations under this Agreement and the other Loan Documents.
The Borrowers agree that if amounts outstanding under this
Agreement and the Notes are due or unpaid, or shall have been
declared or shall have become due and payable upon the occurrence
of an Event of Default, each Participant shall be deemed to have
the right of setoff in respect of its participating interest in
amounts owing under this Agreement and any Note to the same
extent as if the amount of its participating interest were owing
directly to it as a Bank under this Agreement or any Note,
provided that such Participant shall only be entitled to such
right of setoff if it shall have agreed in the agreement pursuant
to which it shall have acquired its participating interest to
share with the Banks the proceeds thereof as provided in
subsection 10.7. The Borrowers also agree that each Participant
shall be entitled to the benefits of subsections 2.19, 2.18, 2.20
and 10.5 with respect to its participation in the Commitments and
the Loans outstanding from time to time; provided, that no
Participant shall be entitled to receive any greater amount
pursuant to such subsections than the transferor Bank would have
been entitled to receive in respect of the amount of the
participation transferred by such transferor Bank to such
Participant had no such transfer occurred.
(c) Any Bank may, in the ordinary course of its
commercial banking business and in accordance with applicable
law, at any time sell to any Bank or any affiliate thereof and,
with the consent of the Borrowers and the Agent (which in each
case shall not be unreasonably withheld), to one or more
additional banks or financial institutions ("Purchasing Banks")
all or any part of its rights and obligations under this
Agreement and the Notes and with respect to the Letters of
Credit, pursuant to a Commitment Transfer Supplement,
substantially in the form of Exhibit E, executed by such
Purchasing Bank, such transferor Bank (and, in the case of a
Purchasing Bank that is not then a Bank or an affiliate thereof,
by the Borrowers and the Agent) and delivered to the Agent for
its acceptance and recording in the Register, provided that no
such sale shall be effected with respect to Commitments in an
amount less than $5,000,000. Upon such execution, delivery,
acceptance and recording, from and after the Transfer Effective
Date determined pursuant to such Commitment Transfer Supplement,
(x) the Purchasing Bank thereunder shall be a party hereto and,
to the extent provided in such Commitment Transfer Supplement,
have the rights and obligations of a Bank hereunder with a
Commitment as set forth therein, and (y) the transferor Bank
thereunder shall, to the extent provided in such Commitment
Transfer Supplement, be released from its obligations under this
Agreement (and, in the case of a Commitment Transfer Supplement
covering all or the remaining portion of a transferor Bank's
rights and obligations under this Agreement, such transferor Bank
shall cease to be a party hereto). Such Commitment Transfer
Supplement shall be deemed to amend this Agreement to the extent,
and only to the extent, necessary to reflect the addition of such
Purchasing Bank and the resulting adjustment of Commitment
Percentages arising from the purchase by such Purchasing Bank of
all or a portion of the rights and obligations of such transferor
Bank under this Agreement and the Notes. On or prior to the
Transfer Effective Date determined pursuant to such Commitment
Transfer Supplement, the Borrowers, at their own expense, shall
execute and deliver to the Agent in exchange for the surrendered
Note a new Note to the order of such Purchasing Bank in an amount
equal to the Commitment assumed by it pursuant to such Commitment
Transfer Supplement and, if the transferor Bank has retained a
Commitment hereunder, new Notes to the order of the transferor
Bank in an amount equal to the Commitment retained by it
hereunder. Such new Notes shall be dated the Closing Date and
shall otherwise be in the form of the Notes replaced thereby.
The Notes surrendered by the transferor Bank shall be returned by
the Agent to the Borrowers marked "cancelled".
(d) The Agent shall maintain at its address referred
to in subsection 10.2 a copy of each Commitment Transfer
Supplement delivered to it and a register (the "Register") for
the recordation of the names and addresses of the Banks and the
Commitment of, and principal amount of the Loans owing to, each
Bank from time to time. The entries in the Register shall be
conclusive, in the absence of manifest error, and the Borrowers,
the Agent and the Banks may treat each Person whose name is
recorded in the Register as the owner of the Loan recorded
therein for all purposes of this Agreement. The Register shall
be available for inspection by the Borrowers or any Bank at any
reasonable time and from time to time upon reasonable prior
notice.
(e) Upon its receipt of a Commitment Transfer
Supplement executed by a transferor Bank and Purchasing Bank
(and, in the case of a Purchasing Bank that is not then a Bank or
an affiliate thereof, by the Borrowers and the Agent) together
with payment to the Agent of a registration and processing fee of
$4,000, the Agent shall (i) promptly accept such Commitment
Transfer Supplement and (ii) on the Transfer Effective Date
determined pursuant thereto record the information contained
therein in the Register and give notice of such acceptance and
recordation to the Banks and the Borrowers.
(f) The Borrowers authorize each Bank to disclose to
any Participant or Purchasing Bank (each, a "Transferee") and any
prospective Transferee any and all financial information in such
Bank's possession concerning the Borrowers and their affiliates
which has been delivered to such Bank by or on behalf of the
Borrowers pursuant to this Agreement or which has been delivered
to such Bank by or on behalf of the Borrowers in connection with
such Bank's credit evaluation of the Borrowers and their
affiliates prior to becoming a party to this Agreement, provided
that prior to disclosing any such information to a Transferee or
prospective Transferee, such Bank shall have delivered to the
Borrowers a Confidentiality Agreement executed and delivered by a
duly authorized representative of such Transferee or prospective
Transferee (together with a certificate of the Secretary or an
Assistant Secretary of such Transferee or prospective Transferee
establishing the incumbency and signature of such representative
and the authority of such representative to execute and deliver
such Transferee's or prospective Transferee's Confidentiality
Agreement on behalf of such Transferee or prospective Transferee,
together with evidence of the incumbency of such Secretary or
Assistant Secretary).
(g) If, pursuant to this subsection, any interest in
this Agreement or any Note is transferred to any Transferee which
is organized under the laws of any jurisdiction other than the
United States or any state thereof, the transferor Bank shall
cause such Transferee, concurrently with the effectiveness of
such transfer, (i) to represent to the transferor Bank (for the
benefit of the transferor Bank, the Agent and the Borrowers) that
under applicable law and treaties no taxes will be required to be
withheld by the Agent, the Borrowers or the transferor Bank with
respect to any payments to be made to such Transferee in respect
of the Loans, (ii) to furnish to the transferor Bank (and, in the
case of any Purchasing Bank registered in the Register, the Agent
and the Borrowers) either U.S. Internal Revenue Service Form 4224
or U.S. Internal Revenue Service Form 1001 (wherein such
Transferee claims entitlement to complete exemption from U.S.
federal withholding tax on all interest payments hereunder) and
(iii) to agree (for the benefit of the transferor Bank, the Agent
and the Borrowers) to provide the transferor Bank (and, in the
case of any Purchasing Bank registered in the Register, the Agent
and the Borrowers) a new Form 4224 or Form 1001 upon the
expiration or obsolescence of any previously delivered form and
comparable statements in accordance with applicable U.S. laws and
regulations and amendments duly executed and completed by such
Transferee, and to comply from time to time with all applicable
U.S. laws and regulations with regard to such withholding tax
exemption.
(h) Nothing herein shall prohibit any Bank from
pledging or assigning any Note to any Federal Reserve Bank in
accordance with applicable law.
10.7 Adjustments; Set-off.
(a) If any Bank (a "benefitted Bank") shall at any
time receive any payment of all or part of its Loans or the
Reimbursement Obligations owing to it, or interest thereon, or
receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, pursuant to events or proceedings of
the nature referred to in Section 8(f), or otherwise), in a
greater proportion than any such payment to or collateral
received by any other Bank, if any, in respect of such other
Bank's Loans or the Reimbursement Obligations owing to it, or
interest thereon, such benefitted Bank shall purchase for cash
from the other Banks such portion of each such other Bank's Loan
or the Reimbursement Obligations owing to it, or shall provide
such other Banks with the benefits of any such collateral, or the
proceeds thereof, as shall be necessary to cause such benefitted
Bank to share the excess payment or benefits of such collateral
or proceeds ratably with each of the Banks; provided, however,
that if all or any portion of such excess payment or benefits is
thereafter recovered from such benefitted Bank, such purchase
shall be rescinded, and the purchase price and benefits returned,
to the extent of such recovery, but without interest. The
Borrowers agree that each Bank so purchasing a portion of another
Bank's Loan or the Reimbursement Obligations owing to it may
exercise all rights of payment (including, without limitation,
rights of set-off) with respect to such portion as fully as if
such Bank were the direct holder of such portion.
(b) In addition to any rights and remedies of the
Banks provided by law, each Bank shall have the right, without
prior notice to the Borrowers, any such notice being expressly
waived by the Borrowers to the extent permitted by applicable
law, upon any amount becoming due and payable by the Borrowers
hereunder or under the Notes (whether at the stated maturity, by
acceleration or otherwise) to set-off and appropriate and apply
against such amount any and all deposits (general or special,
time or demand, provisional or final), in any currency, and any
other credits, indebtedness or claims, in any currency, in each
case whether direct or indirect, absolute or contingent, matured
or unmatured, at any time held or owing by such Bank or any
branch or agency thereof to or for the credit or the account of
the Borrowers. Each Bank agrees promptly to notify the Borrowers
and the Agent after any such set-off and application made by such
Bank, provided that the failure to give such notice shall not
affect the validity of such set-off and application.
10.8 Counterparts. This Agreement may be executed by
one or more of the parties to this Agreement on any number of
separate counterparts, and all of said counterparts taken
together shall be deemed to constitute one and the same
instrument. A set of the copies of this Agreement signed by all
the parties shall be lodged with the Borrowers and the Agent.
10.9 Severability. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
10.10 Integration. This Agreement represents the
agreement of the Borrowers, the Agent and the Banks with respect
to the subject matter hereof, and there are no promises,
undertakings, representations or warranties by the Agent or any
Bank relative to subject matter hereof not expressly set forth or
referred to herein or in the other Loan Documents.
10.11 GOVERNING LAW. THIS AGREEMENT AND THE NOTES AND
THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT
AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
10.12 Submission To Jurisdiction; Waivers. Each of
the Borrowers hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal
action or proceeding relating to this Agreement and the
other Loan Documents to which it is a party, or for
recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the
Courts of the State of New York, the courts of the United
States of America for the Southern District of New York, and
appellate courts from any thereof;
(b) consents that any such action or proceeding may be
brought in such courts and waives any objection that it may
now or hereafter have to the venue of any such action or
proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees
not to plead or claim the same;
(c) agrees that service of process in any such action
or proceeding may be effected by mailing a copy thereof by
registered or certified mail (or any substantially similar
form of mail), postage prepaid, to such Borrower at its
address set forth in subsection 10.2 or at such other
address of which the Agent shall have been notified pursuant
thereto;
(d) agrees that nothing herein shall affect the right
to effect service of process in any other manner permitted
by law or shall limit the right to sue in any other
jurisdiction; and
(e) waives, to the maximum extent not prohibited by
law, any right it may have to claim or recover, in any legal
action or proceeding either referred to in this subsection
or relating to this Agreement or the other Loan Documents to
which it is a party, any special, exemplary, punitive or
consequential damages.
10.13 Acknowledgements. Each of the Borrowers hereby
acknowledge that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement, the Notes and the
other Loan Documents;
(b) neither the Agent nor any Bank has any fiduciary
relationship to such Borrower, and the relationship between
Agent and Banks, on one hand, and such Borrower, on the
other hand, is solely that of debtor and creditor; and
(c) no joint venture exists among the Banks or among
such Borrower and the Banks.
10.14 WAIVERS OF JURY TRIAL. EACH BORROWER, THE AGENT
AND THE BANKS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL
BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT, THE NOTES OR ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN.
10.15 Confidentiality. Subject to subsection 10.6(f),
the Banks shall hold all non-public information obtained pursuant
to the requirements of this Agreement which has been identified
as such by the Borrowers in accordance with its customary
procedures for handling confidential information of this nature
and in accordance with safe and sound banking practices and may
make disclosure reasonably required by a bona fide Transferee in
connection with the contemplated transfer of any Note or
participation therein or as required or requested by any
Governmental Authority or representative thereof or pursuant to
legal process.
10.16 Borrower Merger. From and after the
effectiveness of the Borrower Merger, all references to the
Company, the Parent and the Borrowers shall be deemed to be
references to the surviving entity of such merger.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered in New York, New York
by their proper and duly authorized officers as of the day and
year first above written.
REEVES BROTHERS, INC.
By: \s\ Willam Ewing III
__________________________
Title: Vice President and
Treasurer
REEVES INDUSTRIES, INC.
By: \s\ William Ewing III
__________________________
Title: Vice President and
Treasurer
CHEMICAL BANK,
as Agent and as a Bank
By: \s\ David J. Corcoran
_________________________
Title: Vice President
FLEET BANK, N.A.
as a Bank
By: \s\ Richard M. Bochicchio
_____________________________
Title: Senior Vice President
NATIONSBANK, N.A. (Carolinas)
as a Bank
By: \s\ J. Timothy Martin
_____________________________
Title: Senior Vice President
THE BANK OF NEW YORK,
as a Bank
By: \s\ David Duffy
_____________________________
Title: Vice President
The undersigned has executed this Agreement solely for the
purpose of confirming that, from and after the Closing Date, it
is no longer a Bank and has no rights or obligations hereunder.
BANK OF BOSTON CONNECTICUT,
as a bank party to the Existing
Agreement
By: \s\ W. Lincoln Schoff Jr
_____________________________
Title: Vice President
EXHIBIT A-1
FORM OF
REVOLVING CREDIT NOTE
$__________ New York, New York
July ___, 1995
FOR VALUE RECEIVED, the undersigned, [NAME OF
BORROWER], a Delaware corporation (the "Company"), hereby
unconditionally promises to pay on the Termination Date to the
order of [NAME OF BANK] (the "Bank") at the office of Chemical
Bank, located at 270 Park Avenue, New York, New York 10017, in
lawful money of the United States of America and in immediately
available funds, the principal amount of the lesser of
(a)_________________ DOLLARS ($____________) and (b) the
aggregate unpaid principal amount of all Revolving Credit Loans
made by the Bank to the undersigned pursuant to subsection 2.1 of
the Credit Agreement referred to below.
The undersigned further agrees to pay interest in like
money at such office on the unpaid principal amount hereof from
time to time from the date hereof at the rates per annum set
forth in subsections 2.13(a) and (b) of the Credit Agreement
referred to below until any such amount shall become due and
payable (whether at the stated maturity, by acceleration or
otherwise), and thereafter on any such overdue amount at the rate
per annum set forth in subsection 2.13(c) of the Credit Agreement
until paid in full (both before and after judgment). Interest
shall be payable in arrears on each Interest Payment Date,
commencing on the first such date to occur after the date hereof
and terminating upon payment (including prepayment) in full of
the unpaid principal amount hereof; provided that interest
accruing on any overdue amount shall be payable on demand.
The holder of this Revolving Credit Note is authorized
to, and so long as it holds this Note shall, record the date,
Type and amount of each Revolving Credit Loan made by the Bank
pursuant to subsection 2.1 of the Credit Agreement, each
continuation thereof, each conversion of all or a portion thereof
to another Type pursuant to subsection 2.11 of the Credit
Agreement, the date and amount of each payment or prepayment of
principal thereof and, in the case of Eurodollar Loans, the
length of each Interest Period and the Eurodollar Rate with
respect thereto, on the schedules annexed hereto and constituting
a part hereof, or on a continuation thereof which shall be
annexed hereto and constitute a part hereof, and any such
recordation shall constitute prima facie evidence of the accuracy
of the information so recorded, provided that failure of the Bank
to make any such recordation (or any error in such recordation)
shall not affect the obligations of the Company under this
Revolving Credit Note or under the Credit Agreement.
This Revolving Credit Note is one of the Revolving
Credit Notes referred to in the Credit Agreement, dated as of
August 5, 1992, among the Company, [NAME OF BORROWER NOT PARTY TO
THIS REVOLVING CREDIT NOTE], the several banks and financial
institutions from time to time parties thereto (the "Banks") and
Chemical Bank, a New York banking corporation, as agent for the
Banks thereunder (as heretofore amended and restated and as
hereafter amended, supplemented or otherwise modified from time
to time, the "Credit Agreement"), is entitled to the benefits
thereof, is secured as provided therein and is subject to
optional and mandatory prepayment in whole or in part as provided
therein. Terms used herein which are defined in the Credit
Agreement shall have such defined meanings unless otherwise
defined herein or unless the context otherwise requires.
Upon the occurrence of any one or more of the Events of
Default specified in the Credit Agreement, all amounts then
remaining unpaid on this Revolving Credit Note shall become, or
may be declared to be, immediately due and payable, all as
provided therein.
Except as expressly provided in Section 10 of the
Credit Agreement, the Company expressly waives diligence,
presentment, protest, demand and other notices of any kind.
This Revolving Credit Note shall be governed by, and
construed and interpreted in accordance with, the laws of the
State of New York.
[NAME OF BORROWER]
By:________________________
Title:
SCHEDULE A to
Revolving Credit Note
LOANS, CONVERSIONS AND PAYMENTS
OF ALTERNATE BASE RATE LOANS
Amount of Amount of
Eurodollar Alternate Unpaid
Loans Con- Base Rate Principal
Amount of verted into Loans Con- Balance of
Alternate Alternate verted into Amount of Alternate
Rate Base Rate Base Rate Eurodollar Principal Base Rate Notation
Date Loan Rate Loans Loans Repaid Loans Made by
____ _________ __________ __________ _________ _________ _______
____ _________ __________ __________ _________ _________ _______
SCHEDULE B to
Revolving Credit Note
LOANS, CONVERSIONS AND PAYMENTS
OF EURODOLLAR LOANS
Amount
of Amount of
Euro- Amount of Eurodollar
dollar Alternate Interest Loans
Loan Base Rate Period and Converted Unpaid
(and Loans Eurodollar into Amount Principal
Contin- Converted Rate with Alternate of Prin- Balance of
uations into Euro- Respect Base Rate cipal Eurodollar Notation
Date Thereof) dollar Loans Thereto Loans Repaid Loans Made by
____ _______ ____________ _________ _________ ________ __________ _______
____ _______ ____________ _________ _________ ________ __________ _______
EXHIBIT A-2
FORM OF
SWING LINE NOTE
$__________ New York, New York
July ___, 1995
FOR VALUE RECEIVED, the undersigned, [NAME OF
BORROWER], a Delaware corporation (the "Company"), hereby
unconditionally promises to pay on the Termination Date to the
order of Chemical Bank (the "Swing Line Bank") at its offices
located at 270 Park Avenue, New York, New York 10017, in lawful
money of the United States of America and in immediately
available funds, the principal amount of the lesser of
(a)_________________ DOLLARS ($____________) and (b) the
aggregate unpaid principal amount of all Swing Line Loans made by
the Swing Line Bank to the undersigned pursuant to subsection 2.4
of the Credit Agreement referred to below.
The undersigned further agrees to pay interest in like
money at such office on the unpaid principal amount hereof from
time to time from the date hereof at the rates per annum set
forth in subsections 2.13(b) of the Credit Agreement referred to
below until any such amount shall become due and payable (whether
at the stated maturity, by acceleration or otherwise), and
thereafter on any such overdue amount at the rate per annum set
forth in subsection 2.13(c) of the Credit Agreement until paid in
full (both before and after judgment). Interest shall be payable
in arrears on each Interest Payment Date, commencing on the first
such date to occur after the date hereof and terminating upon
payment (including prepayment) in full of the unpaid principal
amount hereof; provided that interest accruing on any overdue
amount shall be payable on demand.
The holder of this Swing Line Note is authorized to,
and so long as it holds this Swing Line Note shall, record the
date and amount of each Swing Line Loan made by the Swing Line
Bank pursuant to subsection 2.4 of the Credit Agreement and the
date and amount of each payment or prepayment of principal
thereof on the schedule annexed hereto and constituting a part
hereof, or on a continuation thereof which shall be annexed
hereto and constitute a part hereof, and any such recordation
shall constitute prima facie evidence of the accuracy of the
information so recorded, provided that failure of the Swing Line
Bank to make any such recordation (or any error in such
recordation) shall not affect the obligations of the Company
under this Swing Line Note or under the Credit Agreement.
This Swing Line Note is one of the Swing Line Notes
referred to in the Credit Agreement, dated as of August 5, 1992,
among the Company, [NAME OF BORROWER NOT PARTY TO THIS SWING LINE
NOTE], the several banks and financial institutions from time to
time parties thereto (the "Banks") and Chemical Bank, a New York
banking corporation, as agent for the Banks thereunder (as
heretofore amended and restated and as hereafter amended,
supplemented or otherwise modified from time to time, the "Credit
Agreement"), is entitled to the benefits thereof, is secured as
provided therein and is subject to optional and mandatory
prepayment in whole or in part as provided therein. Terms used
herein which are defined in the Credit Agreement shall have such
defined meanings unless otherwise defined herein or unless the
context otherwise requires.
Upon the occurrence of any one or more of the Events of
Default specified in the Credit Agreement, all amounts then
remaining unpaid on this Swing Line Note shall become, or may be
declared to be, immediately due and payable, all as provided
therein.
Except as expressly provided in Section 10 of the
Credit Agreement, the Company expressly waives diligence,
presentment, protest, demand and other notices of any kind.
This Swing Line Note shall be governed by, and
construed and interpreted in accordance with, the laws of the
State of New York.
[NAME OF BORROWER]
By:________________________
Title:
Schedule A to
Swing Line Note
SWING LINE LOANS AND PAYMENTS OF PRINCIPAL
Amount of Amount of Unpaid
Swing Line Principal Principal Notation
Date Loans Repaid Balance Made by
____ __________ _________ _________ ________
____ __________ _________ _________ ________
EXHIBIT B TO
CREDIT AGREEMENT
[FORM OF SWING LINE LOAN PARTICIPATION CERTIFICATE]
_______ __, ____
[Name of Bank]
__________________
__________________
Dear Sirs:
Pursuant to subsection 2.7(b) of the Credit Agreement dated as of
August 5, 1992 (as heretofore amended and restated and as hereafter amended,
supplemented or otherwise modified from time to time, the "Credit Agreement";
unless otherwise defined herein, terms defined in the Credit Agreement are
used herein as therein defined), among Reeves Brothers, Inc., a Delaware
corporation, Reeves Industries, Inc., a Delaware corporation, the several
banks and other financial institutions from time to time parties thereto
(the "Banks") and Chemical Bank, as agent for the Banks thereunder (in such
capacity, the "Agent"), the undersigned, as Swing Line Bank under the Credit
Agreement, hereby acknowledges receipt from you on the date hereof of _____
________DOLLARS ($ ) as payment for a participating interest in
the following Swing Line Loan:
Date of Swing Line Loan: _______________
Principal Amount of Swing
Line Loan Participating Interest: _______________
Very truly yours,
CHEMICAL BANK
By:________________
Title:
EXHIBIT C-1
FORM OF
COMPANY GUARANTEE
GUARANTEE, dated as of August 5, 1992, made by REEVES
BROTHERS, INC., a Delaware corporation (the "Guarantor"), in
favor of CHEMICAL BANK, as agent (in such capacity, the "Agent")
for the banks (the "Banks") parties to the Credit Agreement,
dated as of August 5, 1992 (as heretofore amended and restated
and as hereafter amended, supplemented or otherwise modified from
time to time, the "Credit Agreement"), among the Guarantor,
Reeves Industries, Inc. (the "Parent"; and collectively with the
Guarantor, the "Borrowers"), the Banks and the Agent.
W I T N E S S E T H :
WHEREAS, the Guarantor executed and delivered that
certain guarantee, dated as of August 6, 1992 (as amended prior
to the date hereof, the "Existing Guarantee") to the Agent for
the ratable benefit of certain of the Banks;
WHEREAS, the Company has agreed to amend the Existing
Guarantee and restate it in its entirety as more fully set forth
herein;
WHEREAS, pursuant to the Credit Agreement, the Banks
have severally agreed to make loans to and issue letters of
credit for or for the account of the Borrowers upon the terms and
subject to the conditions set forth therein; it is a condition
precedent to the obligation of the Banks to make their respective
loans to and issue letters of credit for or for the account of
the Borrowers under the Credit Agreement that the Guarantor shall
have executed and delivered this amended and restated Guarantee
to the Agent for the ratable benefit of the Banks;
NOW, THEREFORE, in consideration of the premises and to
induce the Agent and the Banks to enter into the Credit Agreement
and to induce the Banks to make their respective loans to and
issue letters of credit for or for the account of the Borrowers
under the Credit Agreement, the Guarantor hereby agrees with the
Agent, for the ratable benefit of the Banks, that the Existing
Guarantee shall be and hereby is amended and restated in its
entirety to read herein and as follows:
1. Defined Terms. Unless otherwise defined herein,
terms which are defined in the Credit Agreement and used herein
are so used as so defined. As used herein, "Obligations" means
the unpaid principal amount of, and interest on (including,
without limitation, interest accruing after the maturity of the
Loans and interest accruing after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization
or like proceeding, relating to the Parent, whether or not a
claim for post-filing or post-petition interest is allowed in
such proceeding) on the Notes of the Parent and all other
obligations and liabilities of the Parent to the Agent or to the
Banks, including, without limitation, the obligations under the
Letters of Credit, whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter
incurred, which may arise under, out of, or in connection with,
the Credit Agreement, the other Loan Documents and any other
document made, delivered or given in connection therewith or
herewith, whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses
(including, without limitation, all reasonable fees and
disbursements of counsel to the Agent or to the Banks that are
required to be paid by the Parent pursuant to the terms of the
Credit Agreement) or otherwise.
2. Guarantee. The Guarantor hereby unconditionally
and irrevocably guarantees to the Agent, for the ratable benefit
of the Banks, the prompt and complete payment and performance by
the Parent when due (whether at the stated maturity, by
acceleration or otherwise) of the Obligations. The amounts
payable by the Guarantor under the foregoing sentence shall be
such amounts before giving effect to any payments to the Agent
and/or any Bank by any other guarantor of the Obligations, but
after giving effect to all payments whatsoever theretofore
received by the Agent and/or any Banks from the Parent with
respect to the Obligations. The Guarantor further agrees to pay
any and all expenses (including, without limitation, all
reasonable fees and disbursements of counsel) which may be paid
or incurred by the Agent or by the Banks in enforcing, or
obtaining advice of counsel in respect of, any of their rights
under this Guarantee. This Guarantee shall remain in full force
and effect until the Obligations are paid in full and the
Commitments are terminated, notwithstanding that from time to
time prior thereto the Parent may be free from any Obligations.
Notwithstanding the aggregate amount of the Obligations
at any time or from time to time payable or to be payable by the
Parent to the Agent or to any Bank, the liability of the
Guarantor to the Agent and the Banks hereunder shall not exceed
the principal sum of Forty Million U.S. Dollars (U.S.$40,000,000)
in the aggregate at any time, plus such portion of the interest,
fees, indemnities, costs and expenses included in the Obligations
as said principal sum shall bear to the principal amount of all
the Obligations at the time payment thereof is due or demanded by
the Agent. The Guarantor agrees that the Obligations may at any
time and from time to time exceed the amount of the liability of
the Guarantor hereunder without impairing this Guarantee or
affecting the rights and remedies of the Agent or any Bank
hereunder. The Guarantor agrees that whenever, at any time, or
from time to time, it shall make any payment to the Agent or any
Bank on account of its liability hereunder, it will notify the
Agent and such Bank in writing that such payment is made under
this Guarantee for such purpose. No payment or payments made by
the Parent or any other Person or received or collected by the
Agent or any Bank from the Parent or any other Person by virtue
of any action or proceeding or any set-off or appropriation or
application, at any time or from time to time, in reduction of or
in payment of the Obligations shall be deemed to modify, reduce,
release or otherwise affect the liability of the Guarantor
hereunder which shall, notwithstanding any such payment or
payments remain liable hereunder until the Obligations are paid
in full and the Commitments are terminated.
Anything herein or in any other Loan Document to the
contrary notwithstanding, the maximum liability of the Guarantor
hereunder and under the other Loan Documents shall in no event
exceed the amount which can be guaranteed by the Guarantor under
applicable federal and state laws relating to the insolvency of
debtors.
3. Right of Set-off. Upon the occurrence of any
Event of Default specified in the Credit Agreement, the Agent and
each Bank are hereby irrevocably authorized at any time and from
time to time without notice to the Guarantor, any such notice
being hereby waived by the Guarantor, to set off and appropriate
and apply any and all deposits (general or special, time or
demand, provisional or final), in any currency, and any other
credits, indebtedness or claims, in any currency, in each case
whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by the Agent or such Bank to
or for the credit or the account of the Guarantor, or any part
thereof in such amounts as the Agent or such Bank may elect, on
account of the liabilities of the Guarantor hereunder and claims
of every nature and description of the Agent or such Bank against
the Guarantor, in any currency, whether arising hereunder, under
the Credit Agreement, the Security Agreement, any Note or any
other Loan Document or otherwise, as the Agent or such Bank may
elect, whether or not the Agent or such Bank has made any demand
for payment and although such liabilities and claims may be
contingent or unmatured. The Agent and each Bank shall notify
the Guarantor promptly of any such set-off made by it and the
application made by it of the proceeds thereof, provided that the
failure to give such notice shall not affect the validity of such
set-off and application. The rights of the Agent and each Bank
under this paragraph are in addition to other rights and remedies
(including, without limitation, other rights of set-off) which
the Agent or such Bank may have.
4. No Subrogation. Notwithstanding any payment or
payments made by the Guarantor hereunder, or any set-off or
application of funds of the Guarantor by the Agent or any Bank,
the Guarantor shall not be entitled to be subrogated to any of
the rights of the Agent or any Bank against the Parent or against
any collateral security or guarantee or right of offset held by
the Agent or any Bank for the payment of the Obligations, nor
shall the Guarantor seek any reimbursement from the Parent in
respect of payments made by the Guarantor hereunder, until all
amounts owing to the Agent and the Banks by the Parent on account
of the Obligations are paid in full and the Commitments are
terminated. If any amount shall be paid to the Guarantor on
account of such subrogation rights at any time when all of the
Obligations shall not have been paid in full, such amount shall
be held by the Guarantor in trust for the Agent and the Banks,
segregated from other funds of the Guarantor, and shall,
forthwith upon receipt by the Guarantor, be turned over to the
Agent in the exact form received by the Guarantor (duly indorsed
by the Guarantor to the Agent, if required), to be applied
against the Obligations, whether matured or unmatured, in such
order as the Agent may determine.
5. Amendments, etc. with respect to the Obligations.
The Guarantor shall remain obligated hereunder notwithstanding
that, without any reservation of rights against the Guarantor,
and without notice to or further assent by the Guarantor, any
demand for payment of any of the Obligations made by the Agent or
any Bank may be rescinded by the Agent or such Bank, and any of
the Obligations continued, and the Obligations, or the liability
of any other party upon or for any part thereof, or any
collateral security or guarantee therefor or right of offset with
respect thereto, may, from time to time, in whole or in part, be
renewed, extended, amended, modified, accelerated, compromised,
waived, surrendered or released by the Agent or any Bank, and the
Credit Agreement, the Security Agreement, the Notes and the other
Loan Documents and any other documents executed and delivered in
connection therewith may be amended, modified, supplemented or
terminated, in whole or in part, as the Banks (or the Required
Banks, as the case may be) may deem advisable from time to time,
and any collateral security, guarantee or right of offset at any
time held by the Agent or any Bank for the payment of the
Obligations may be sold, exchanged, waived, surrendered or
released. Neither the Agent nor any Bank shall have any
obligation to protect, secure, perfect or insure any Lien at any
time held by it as security for the Obligations or for this
Guarantee or any property subject thereto.
6. Guarantee Absolute and Unconditional. The
Guarantor waives any and all notice of the creation, renewal,
extension or accrual of any of the Obligations and notice of or
proof of reliance by the Agent or any Bank upon this Guarantee or
acceptance of this Guarantee; the Obligations, and any of them,
shall conclusively be deemed to have been created, contracted or
incurred in reliance upon this Guarantee; and all dealings
between the Parent or the Guarantor, on the one hand, and the
Agent and the Banks, on the other, shall likewise be conclusively
presumed to have been had or consummated in reliance upon this
Guarantee. The Guarantor waives diligence, presentment, protest,
demand for payment and notice of default or nonpayment to or upon
the Parent or the Guarantor with respect to the Obligations.
This Guarantee shall be construed as a continuing, absolute and
unconditional guarantee of payment without regard to (a) the
validity or enforceability of the Credit Agreement, the Security
Agreement, the Notes and the other Loan Documents and any of the
Obligations or any collateral security therefor or guarantee or
right of offset with respect thereto at any time or from time to
time held by the Agent or any Bank, (b) any defense, set-off or
counterclaim (other than a defense of payment or performance)
which may at any time be available to or be asserted by the
Parent against the Agent or any Bank, or (c) any other
circumstance whatsoever (with or without notice to or knowledge
of the Parent or the Guarantor) which constitutes, or might be
construed to constitute, an equitable or legal discharge of the
Parent for the Obligations, or of the Guarantor under this
Guarantee, in bankruptcy or in any other instance. When the
Agent is pursuing its rights and remedies hereunder against the
Guarantor, the Agent or any Bank may, but shall be under no
obligation to, pursue such rights and remedies as it may have
against the Parent or any other Person or against any collateral
security or guarantee for the Obligations or any right of offset
with respect thereto, and any failure by the Agent or any Bank to
pursue such other rights or remedies or to collect any payments
from the Parent or any such other Person or to realize upon any
such collateral security or guarantee or to exercise any such
right of offset, or any release of the Parent or any such other
Person or of any such collateral security, guarantee or right of
offset, shall not relieve the Guarantor of any liability
hereunder, and shall not impair or affect the rights and
remedies, whether express, implied or available as a matter of
law, of the Agent and the Banks against the Guarantor.
7. Reinstatement. This Guarantee shall continue to
be effective, or be reinstated, as the case may be, if at any
time payment, or any part thereof, of any of the Obligations is
rescinded or must otherwise be restored or returned by the Agent
or any Bank upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of the Parent or upon or as a
result of the appointment of a receiver, intervenor or
conservator of, or trustee or similar officer for, the Parent or
any substantial part of its property, or otherwise, all as though
such payments had not been made.
8. Payments. The Guarantor hereby agrees that the
Obligations will be paid to the Agent without set-off or
counterclaim in U.S. Dollars at the office of the Agent located
at 270 Park Avenue, New York, New York 10017.
9. Further Assurances. The Guarantor hereby
covenants and agrees with the Agent and the Banks that, from and
after the date of this Guarantee until the Obligations are paid
in full and the Commitments are terminated, at any time and from
time to time, upon written request of the Agent, and at the sole
expense of the Guarantor, the Guarantor will promptly and duly
execute and deliver such further instruments and documents and
take such further actions as the Agent may reasonably request for
the purpose of obtaining or preserving the full benefits of this
Guarantee and of the rights and powers herein granted.
10. Severability. Any provision of this Guarantee
which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
11. Paragraph Headings. The paragraph headings used
in this Guarantee are for convenience of reference only and are
not to affect the construction hereof or be taken into
consideration in the interpretation hereof.
12. No Waiver; Cumulative Remedies. Neither the Agent
nor any Bank shall by any act (except by a written instrument
pursuant to paragraph 13 hereof), delay, indulgence, omission or
otherwise be deemed to have waived any right or remedy hereunder
or to have acquiesced in any Default or Event of Default or in
any breach of any of the terms and conditions hereof. No failure
to exercise, nor any delay in exercising, on the part of the
Agent or any Bank, any right, power or privilege hereunder shall
operate as a waiver thereof. No single or partial exercise of
any right, power or privilege hereunder shall preclude any other
or further exercise thereof or the exercise of any other right,
power or privilege. A waiver by the Agent or any Bank of any
right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which the Agent or such
Bank would otherwise have on any future occasion. The rights and
remedies herein provided are cumulative, may be exercised singly
or concurrently and are not exclusive of any rights or remedies
provided by law.
13. Waivers and Amendments; Successors and Assigns;
Governing Law. None of the terms or provisions of this Guarantee
may be waived, amended, supplemented or otherwise modified except
by a written instrument executed by the Guarantor and the Agent,
provided that any provision of this Guarantee may be waived by
the Agent in a letter or agreement executed by the Agent or by
telex or facsimile transmission from the Agent. This Guarantee
shall be binding upon the successors and assigns of the Guarantor
and shall inure to the benefit of the Agent and the Banks and
their successors and assigns. This Guarantee shall be governed
by, and construed and interpreted in accordance with, the laws of
the State of New York.
14. Notices. Notices by the Agent to the Guarantor
may be given by mail or by facsimile transmission, addressed to
the Guarantor at its address or transmission number set forth
under its signature below and shall be effective (a) in the case
of mail, 2 days after deposit in the postal system, first class
postage pre-paid and (b) in the case of facsimile transmissions,
when sent. The Guarantor may change its address and transmission
numbers by written notice to the Agent.
15. Authority of Agent. The Guarantor acknowledges
that the rights and responsibilities of the Agent under this
Guarantee with respect to any action taken by the Agent or the
exercise or non-exercise by the Agent of any option, right,
request, judgment or other right or remedy provided for herein or
resulting or arising out of this Guarantee shall, as between the
Agent and the Banks, be governed by the Credit Agreement and by
such other agreements with respect thereto as may exist from time
to time among them, but, as between the Agent and the Guarantor,
the Agent shall be conclusively presumed to be acting as agent
for the Banks with full and valid authority so to act or refrain
from acting, and the Guarantor shall not be under any obligation,
or entitlement, to make any inquiry respecting such authority.
16. Termination on Borrower Merger. Notwithstanding
anything to the contrary contained herein, this Guarantee shall
terminate and be of no further force or effect upon the
consummation of the Borrower Merger.
IN WITNESS WHEREOF, the undersigned has caused this
Guarantee to be duly executed and delivered as of the date first
above written.
REEVES BROTHERS, INC.
By __________________
Name:
Title:
Address for Notices:
Reeves Brothers, Inc.
401 Merritt 7
Norwalk, Connecticut 06856-5063
(For Fed Ex., etc., use 06851)
Attention: Treasurer, with a
copy to the
General Counsel
Telecopy: 203-845-7950
Confirmation: 203-846-9988
EXHIBIT C-2
FORM OF
PARENT GUARANTEE
GUARANTEE, dated as of July __, 1995, made by REEVES
INDUSTRIES, INC., a Delaware corporation (the "Guarantor"), in
favor of CHEMICAL BANK, as agent (in such capacity, the "Agent")
for the banks (the "Banks") parties to the Credit Agreement,
dated as of August 5, 1992 (as heretofore amended and restated
and as hereafter amended, supplemented or otherwise modified from
time to time, the "Credit Agreement"), among the Guarantor,
Reeves Brothers, Inc. (the "Company"; and collectively with the
Guarantor, the "Borrowers"), the Banks and the Agent.
W I T N E S S E T H :
WHEREAS, pursuant to the Credit Agreement, the Banks
have severally agreed to make loans to and issue letters of
credit for or for the account of the Borrowers upon the terms and
subject to the conditions set forth therein; it is a condition
precedent to the obligation of the Banks to make their respective
loans to and issue letters of credit for or for the account of
the Borrowers under the Credit Agreement that the Guarantor shall
have executed and delivered this Guarantee to the Agent for the
ratable benefit of the Banks.
NOW, THEREFORE, in consideration of the premises and to
induce the Agent and the Banks to enter into the Credit Agreement
and to induce the Banks to make their respective loans to and
issue letters of credit for or for the account of the Borrowers
under the Credit Agreement, the Guarantor hereby agrees with the
Agent, for the ratable benefit of the Banks, as follows:
1. Defined Terms. Unless otherwise defined herein,
terms which are defined in the Credit Agreement and used herein
are so used as so defined. As used herein, "Obligations" means
the unpaid principal amount of, and interest on (including,
without limitation, interest accruing after the maturity of the
Loans and interest accruing after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization
or like proceeding, relating to the Company, whether or not a
claim for post-filing or post-petition interest is allowed in
such proceeding) on the Notes of the Company and all other
obligations and liabilities of the Company to the Agent or to the
Banks, including, without limitation, the obligations under the
Letters of Credit, whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter
incurred, which may arise under, out of, or in connection with,
the Credit Agreement, the other Loan Documents and any other
document made, delivered or given in connection therewith or
herewith, whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses
(including, without limitation, all reasonable fees and
disbursements of counsel to the Agent or to the Banks that are
required to be paid by the Company pursuant to the terms of the
Credit Agreement) or otherwise.
2. Guarantee. The Guarantor hereby unconditionally
and irrevocably guarantees to the Agent, for the ratable benefit
of the Banks, the prompt and complete payment and performance by
the Company when due (whether at the stated maturity, by
acceleration or otherwise) of the Obligations. The amounts
payable by the Guarantor under the foregoing sentence shall be
such amounts before giving effect to any payments to the Agent
and/or any Bank by any other guarantor of the Obligations, but
after giving effect to all payments whatsoever theretofore
received by the Agent and/or any Banks from the Company with
respect to the Obligations. The Guarantor further agrees to pay
any and all expenses (including, without limitation, all
reasonable fees and disbursements of counsel) which may be paid
or incurred by the Agent or by the Banks in enforcing, or
obtaining advice of counsel in respect of, any of their rights
under this Guarantee. This Guarantee shall remain in full force
and effect until the Obligations are paid in full and the
Commitments are terminated, notwithstanding that from time to
time prior thereto the Company may be free from any Obligations.
The Guarantor agrees that whenever, at any time, or
from time to time, it shall make any payment to the Agent or any
Bank on account of its liability hereunder, it will notify the
Agent and such Bank in writing that such payment is made under
this Guarantee for such purpose. No payment or payments made by
the Company or any other Person or received or collected by the
Agent or any Bank from the Company or any other Person by virtue
of any action or proceeding or any set-off or appropriation or
application, at any time or from time to time, in reduction of or
in payment of the Obligations shall be deemed to modify, reduce,
release or otherwise affect the liability of the Guarantor
hereunder which shall, notwithstanding any such payment or
payments remain liable hereunder until the Obligations are paid
in full and the Commitments are terminated.
3. Right of Set-off. Upon the occurrence of any
Event of Default specified in the Credit Agreement, the Agent and
each Bank are hereby irrevocably authorized at any time and from
time to time without notice to the Guarantor, any such notice
being hereby waived by the Guarantor, to set off and appropriate
and apply any and all deposits (general or special, time or
demand, provisional or final), in any currency, and any other
credits, indebtedness or claims, in any currency, in each case
whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by the Agent or such Bank to
or for the credit or the account of the Guarantor, or any part
thereof in such amounts as the Agent or such Bank may elect, on
account of the liabilities of the Guarantor hereunder and claims
of every nature and description of the Agent or such Bank against
the Guarantor, in any currency, whether arising hereunder, under
the Credit Agreement, the Security Agreement, any Note or any
other Loan Document or otherwise, as the Agent or such Bank may
elect, whether or not the Agent or such Bank has made any demand
for payment and although such liabilities and claims may be
contingent or unmatured. The Agent and each Bank shall notify
the Guarantor promptly of any such set-off made by it and the
application made by it of the proceeds thereof, provided that the
failure to give such notice shall not affect the validity of such
set-off and application. The rights of the Agent and each Bank
under this paragraph are in addition to other rights and remedies
(including, without limitation, other rights of set-off) which
the Agent or such Bank may have.
4. No Subrogation. Notwithstanding any payment or
payments made by the Guarantor hereunder, or any set-off or
application of funds of the Guarantor by the Agent or any Bank,
the Guarantor shall not be entitled to be subrogated to any of
the rights of the Agent or any Bank against the Company or
against any collateral security or guarantee or right of offset
held by the Agent or any Bank for the payment of the Obligations,
nor shall the Guarantor seek any reimbursement from the Company
in respect of payments made by the Guarantor hereunder, until all
amounts owing to the Agent and the Banks by the Company on
account of the Obligations are paid in full and the Commitments
are terminated. If any amount shall be paid to the Guarantor on
account of such subrogation rights at any time when all of the
Obligations shall not have been paid in full, such amount shall
be held by the Guarantor in trust for the Agent and the Banks,
segregated from other funds of the Guarantor, and shall,
forthwith upon receipt by the Guarantor, be turned over to the
Agent in the exact form received by the Guarantor (duly indorsed
by the Guarantor to the Agent, if required), to be applied
against the Obligations, whether matured or unmatured, in such
order as the Agent may determine.
5. Amendments, etc. with respect to the Obligations.
The Guarantor shall remain obligated hereunder notwithstanding
that, without any reservation of rights against the Guarantor,
and without notice to or further assent by the Guarantor, any
demand for payment of any of the Obligations made by the Agent or
any Bank may be rescinded by the Agent or such Bank, and any of
the Obligations continued, and the Obligations, or the liability
of any other party upon or for any part thereof, or any
collateral security or guarantee therefor or right of offset with
respect thereto, may, from time to time, in whole or in part, be
renewed, extended, amended, modified, accelerated, compromised,
waived, surrendered or released by the Agent or any Bank, and the
Credit Agreement, the Security Agreement, the Notes and the other
Loan Documents and any other documents executed and delivered in
connection therewith may be amended, modified, supplemented or
terminated, in whole or in part, as the Banks (or the Required
Banks, as the case may be) may deem advisable from time to time,
and any collateral security, guarantee or right of offset at any
time held by the Agent or any Bank for the payment of the
Obligations may be sold, exchanged, waived, surrendered or
released. Neither the Agent nor any Bank shall have any
obligation to protect, secure, perfect or insure any Lien at any
time held by it as security for the Obligations or for this
Guarantee or any property subject thereto.
6. Guarantee Absolute and Unconditional. The
Guarantor waives any and all notice of the creation, renewal,
extension or accrual of any of the Obligations and notice of or
proof of reliance by the Agent or any Bank upon this Guarantee or
acceptance of this Guarantee; the Obligations, and any of them,
shall conclusively be deemed to have been created, contracted or
incurred in reliance upon this Guarantee; and all dealings
between the Company or the Guarantor, on the one hand, and the
Agent and the Banks, on the other, shall likewise be conclusively
presumed to have been had or consummated in reliance upon this
Guarantee. The Guarantor waives diligence, presentment, protest,
demand for payment and notice of default or nonpayment to or upon
the Company or the Guarantor with respect to the Obligations.
This Guarantee shall be construed as a continuing, absolute and
unconditional guarantee of payment without regard to (a) the
validity or enforceability of the Credit Agreement, the Security
Agreement, the Notes and the other Loan Documents and any of the
Obligations or any collateral security therefor or guarantee or
right of offset with respect thereto at any time or from time to
time held by the Agent or any Bank, (b) any defense, set-off or
counterclaim (other than a defense of payment or performance)
which may at any time be available to or be asserted by the
Company against the Agent or any Bank, or (c) any other
circumstance whatsoever (with or without notice to or knowledge
of the Company or the Guarantor) which constitutes, or might be
construed to constitute, an equitable or legal discharge of the
Company for the Obligations, or of the Guarantor under this
Guarantee, in bankruptcy or in any other instance. When the
Agent is pursuing its rights and remedies hereunder against the
Guarantor, the Agent or any Bank may, but shall be under no
obligation to, pursue such rights and remedies as it may have
against the Company or any other Person or against any collateral
security or guarantee for the Obligations or any right of offset
with respect thereto, and any failure by the Agent or any Bank to
pursue such other rights or remedies or to collect any payments
from the Company or any such other Person or to realize upon any
such collateral security or guarantee or to exercise any such
right of offset, or any release of the Company or any such other
Person or of any such collateral security, guarantee or right of
offset, shall not relieve the Guarantor of any liability
hereunder, and shall not impair or affect the rights and
remedies, whether express, implied or available as a matter of
law, of the Agent and the Banks against the Guarantor.
7. Reinstatement. This Guarantee shall continue to
be effective, or be reinstated, as the case may be, if at any
time payment, or any part thereof, of any of the Obligations is
rescinded or must otherwise be restored or returned by the Agent
or any Bank upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of the Company or upon or as a
result of the appointment of a receiver, intervenor or
conservator of, or trustee or similar officer for, the Company or
any substantial part of its property, or otherwise, all as though
such payments had not been made.
8. Payments. The Guarantor hereby agrees that the
Obligations will be paid to the Agent without set-off or
counterclaim in U.S. Dollars at the office of the Agent located
at 270 Park Avenue, New York, New York 10017.
9. Further Assurances. The Guarantor hereby
covenants and agrees with the Agent and the Banks that, from and
after the date of this Guarantee until the Obligations are paid
in full and the Commitments are terminated, at any time and from
time to time, upon written request of the Agent, and at the sole
expense of the Guarantor, the Guarantor will promptly and duly
execute and deliver such further instruments and documents and
take such further actions as the Agent may reasonably request for
the purpose of obtaining or preserving the full benefits of this
Guarantee and of the rights and powers herein granted.
10. Severability. Any provision of this Guarantee
which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
11. Paragraph Headings. The paragraph headings used
in this Guarantee are for convenience of reference only and are
not to affect the construction hereof or be taken into
consideration in the interpretation hereof.
12. No Waiver; Cumulative Remedies. Neither the Agent
nor any Bank shall by any act (except by a written instrument
pursuant to paragraph 13 hereof), delay, indulgence, omission or
otherwise be deemed to have waived any right or remedy hereunder
or to have acquiesced in any Default or Event of Default or in
any breach of any of the terms and conditions hereof. No failure
to exercise, nor any delay in exercising, on the part of the
Agent or any Bank, any right, power or privilege hereunder shall
operate as a waiver thereof. No single or partial exercise of
any right, power or privilege hereunder shall preclude any other
or further exercise thereof or the exercise of any other right,
power or privilege. A waiver by the Agent or any Bank of any
right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which the Agent or such
Bank would otherwise have on any future occasion. The rights and
remedies herein provided are cumulative, may be exercised singly
or concurrently and are not exclusive of any rights or remedies
provided by law.
13. Waivers and Amendments; Successors and Assigns;
Governing Law. None of the terms or provisions of this Guarantee
may be waived, amended, supplemented or otherwise modified except
by a written instrument executed by the Guarantor and the Agent,
provided that any provision of this Guarantee may be waived by
the Agent in a letter or agreement executed by the Agent or by
telex or facsimile transmission from the Agent. This Guarantee
shall be binding upon the successors and assigns of the Guarantor
and shall inure to the benefit of the Agent and the Banks and
their successors and assigns. This Guarantee shall be governed
by, and construed and interpreted in accordance with, the laws of
the State of New York.
14. Notices. Notices by the Agent to the Guarantor
may be given by mail or by facsimile transmission, addressed to
the Guarantor at its address or transmission number set forth
under its signature below and shall be effective (a) in the case
of mail, 2 days after deposit in the postal system, first class
postage pre-paid and (b) in the case of facsimile transmissions,
when sent. The Guarantor may change its address and transmission
numbers by written notice to the Agent.
15. Authority of Agent. The Guarantor acknowledges
that the rights and responsibilities of the Agent under this
Guarantee with respect to any action taken by the Agent or the
exercise or non-exercise by the Agent of any option, right,
request, judgment or other right or remedy provided for herein or
resulting or arising out of this Guarantee shall, as between the
Agent and the Banks, be governed by the Credit Agreement and by
such other agreements with respect thereto as may exist from time
to time among them, but, as between the Agent and the Guarantor,
the Agent shall be conclusively presumed to be acting as agent
for the Banks with full and valid authority so to act or refrain
from acting, and the Guarantor shall not be under any obligation,
or entitlement, to make any inquiry respecting such authority.
16. Termination on Borrower Merger. Notwithstanding
anything to the contrary contained herein, this Guarantee shall
terminate and be of no further force or effect upon the
consummation of the Borrower Merger.
IN WITNESS WHEREOF, the undersigned has caused this
Guarantee to be duly executed and delivered as of the date first
above written.
REEVES INDUSTRIES, INC.
By _________________
Name:
Title:
Address for Notices:
Reeves Industries, Inc.
401 Merritt 7
Norwalk, Connecticut 06856-5063
(For Fed Ex, etc., use 06851)
Attention: Treasurer, with a
copy to the
General Counsel
Telecopy: 203-845-7950
Confirmation: 203-846-9988
EXHIBIT D
FORM OF CONFIDENTIALITY AGREEMENT
[Letterhead of Selling Bank]
__________, 199_
[NAME AND ADDRESS OF BANK]
(the "Financial Institution")
Ladies/Gentlemen:
Reference is made to the Credit Agreement, dated as of
August 5, 1992 (as heretofore amended and restated and as
hereafter amended, supplemented or otherwise modified from time
to time, the "Credit Agreement"), among Reeves Industries, Inc.
and Reeves Brothers, Inc. (collectively the "Borrowers"), the
several banks and financial institutions party thereto (including
the undersigned, the "Banks") and Chemical Bank as agent for the
Banks (in such capacity, the "Agent"). Capitalized terms used
but not defined herein have the meanings assigned to such terms
in the Credit Agreement.
This letter (the "Agreement") sets forth the agreement
between the Financial Institution and the undersigned, for the
benefit of the Borrowers and the Banks, with respect to
maintaining the confidentiality of certain non-public
documentation, information and other materials obtained pursuant
to the requirements of the Credit Agreement which has been
identified as non-public by the Borrowers (collectively, the
"Non-Public Information") to be disclosed or made available to
the Financial Institution by the undersigned or the Borrowers in
connection with the Financial Institution's contemplated purchase
of an interest in the undersigned's Commitment and Loans under
the Credit Agreement or otherwise in connection with the Credit
Agreement.
In consideration of the disclosure to the Financial
Institution by the undersigned of Non-Public Information, the
Financial Institution hereby agrees with the undersigned, for the
benefit of the Borrowers and the Banks, that from the date hereof
until the Financial Institution executes and delivers a
Commitment Transfer Supplement to the Agent and such Commitment
Transfer Supplement is accepted and recorded:
1. The Financial Institution will hold all Non-Public
Information confidential in accordance with customary
banking procedures for handling information of this
nature and in accordance with safe and sound banking
practices and will refrain from using Non-Public
Information for any use or commercial purpose other
than in connection with the Financial Institution's
contemplated purchase of an interest in the
undersigned's Commitment and Loans under the Credit
Agreement or otherwise in connection with the Credit
Agreement, except as expressly permitted by the Credit
Agreement, this Agreement or as reasonably required or
requested by any Governmental Authority or
representative thereof or pursuant to legal process.
2. Unless required to do so by law, the Financial
Institution will not disclose Non-Public Information to
any person other than those of its directors, officers,
employees, representatives and advisors as may be
reasonably necessary and will advise all such persons
of the confidential nature of the Non-Public
Information and of the Financial Institution's
obligations hereunder.
3. If the Financial Institution does not purchase an
interest in the undersigned's Commitment and Loans
under the Credit Agreement, the Financial Institution
will return all Non-Public Information and copies
thereof in their possession to the undersigned as
promptly as practicable.
4. This Agreement shall in no way be deemed to require the
disclosure or making available to the Financial
Institution of any documentation, information or other
material, which shall be solely in the discretion of
the undersigned but subject to the requirements of the
Credit Agreement in that regard.
5. The provisions of this Agreement shall not apply to any
information or material (including Non-Public
Information) which (a) is or becomes known to the
public generally through no wrongful act of the
Financial Institution, its directors, officers,
employees, representatives and advisors, (b) is, to the
best of the Financial Institution's knowledge when such
information is received, rightfully received from a
third party without breach of any binding obligation of
confidentiality to the Borrowers, (c) is approved for
release by written authorization of the Borrowers, or
(d) was in the Financial Institution's rightful
possession or that of the Financial Institution's
directors, officers, employees, representatives and
advisors at the time of disclosure hereunder.
6. This Agreement shall be binding upon the parties
hereto, shall inure to the benefit of the parties
hereto, the Borrowers and the Banks and their
respective successors, and shall not be assigned by the
Financial Institution without the written consent of
the Borrowers and the undersigned.
7. The undersigned makes no warranty, expressed or
implied, regarding the accuracy, completeness or
usefulness of Non-Public Information, and the Financial
Institution shall consider and use such Non-Public
Information solely at its own risk and discretion.
8. All provisions of this Agreement shall be binding and
take effect from the date the Financial Institution
signs this Agreement.
9. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF NEW YORK.
10. This Agreement may be modified only by a written
amendment executed by both parties.
If the foregoing is accepted and agreed to by the
Financial Institution, then please acknowledge that this
Agreement is binding on the Financial Institution by signing and
returning to the undersigned the attached copy of this Agreement.
Very truly yours,
[NAME OF SELLING BANK]
By______________________________
Name:
Title:
Accepted and Agreed to this
____ day of _________, 199_
[NAME OF FINANCIAL INSTITUTION]
By_________________________
Name:
Title:
EXHIBIT E
[FORM OF COMMITMENT TRANSFER SUPPLEMENT]
COMMITMENT TRANSFER SUPPLEMENT
COMMITMENT TRANSFER SUPPLEMENT, dated as of the date
set forth in Item 1 of Schedule I hereto, among the Transferor
Bank set forth in Item 2 of Schedule I hereto (the "Transferor
Bank"), each Purchasing Bank set forth in Item 3 of Schedule I
hereto (each, a "Purchasing Bank"), and CHEMICAL BANK, as agent
for the Banks under the Credit Agreement described below (in such
capacity, the "Agent").
W I T N E S S E T H :
WHEREAS, this Commitment Transfer Supplement is being
executed and delivered in accordance with subsection 10.6(c) of
the Credit Agreement, dated as of August 5, 1992, among REEVES
BROTHERS, INC., a Delaware corporation (the "Company"), REEVES
INDUSTRIES, INC., a Delaware corporation (the "Parent"; and
collectively with the Company, the "Borrowers"), the Transferor
Bank and the other Banks and financial institutions parties
thereto and the Agent (as heretofore amended and restated and as
hereafter amended, supplemented or otherwise modified in
accordance with the terms thereof, the "Credit Agreement"; terms
defined therein being used herein as therein defined);
WHEREAS, each Purchasing Bank (if it is not already a
Bank party to the Credit Agreement) wishes to become a Bank party
to the Credit Agreement; and
WHEREAS, the Transferor Bank is selling and assigning
to each Purchasing Bank, rights, obligations and commitments
under the Credit Agreement;
NOW, THEREFORE, the parties hereto hereby agree as
follows:
1. Upon receipt by the Agent of five counterparts of
this Commitment Transfer Supplement, to each of which is attached
a fully completed Schedule I and Schedule II, and each of which
has been executed by the Transferor Bank, each Purchasing Bank
(and any other person required by the Credit Agreement to execute
this Commitment Transfer Supplement), the Agent will transmit to
the Borrowers, the Transferor Bank and each Purchasing Bank a
Transfer Effective Notice, substantially in the form of Schedule
III to this Commitment Transfer Supplement (a "Transfer
Effective Notice"). Such Transfer Effective Notice shall set
forth, inter alia, the date on which the transfer effected by
this Commitment Transfer Supplement shall become effective (the
"Transfer Effective Date"), which date shall be the fifth
Business Day following the date of such Transfer Effective
Notice. From and after the Transfer Effective Date, each
Purchasing Bank shall be a Bank party to the Credit Agreement for
all purposes thereof.
2. At or before 12:00 Noon, local time of the
Transferor Bank, on the Transfer Effective Date, each Purchasing
Bank shall pay to the Transferor Bank, in immediately available
funds, an amount equal to the purchase price, as agreed between
the Transferor Bank and such Purchasing Bank (the "Purchase
Price"), of the portion being purchased by such Purchasing Bank
(such Purchasing Bank's "Purchased Percentage") of the
outstanding Loans and other amounts owing to the Transferor Bank
under the Credit Agreement and the Transferor Bank's Notes and in
connection with the Letters of Credit. Effective upon receipt by
the Transferor Bank of the Purchase Price from a Purchasing Bank,
the Transferor Bank hereby irrevocably sells, assigns and
transfers to such Purchasing Bank, without recourse,
representation or warranty, and each Purchasing Bank hereby
irrevocably purchases, takes and assumes from the Transferor
Bank, such Purchasing Bank's Purchased Percentage of the
Commitments and the presently outstanding Loans and other amounts
owing to the Transferor Bank under the Credit Agreement and the
Transferor Bank's Notes and in connection with the Letters of
Credit, together with all instruments, documents and collateral
security pertaining thereto.
3. The Transferor Bank has made arrangements with each
Purchasing Bank with respect to (i) the portion, if any, to be
paid, and the date or dates for payment, by the Transferor Bank
to such Purchasing Bank of any fees heretofore received by the
Transferor Bank pursuant to the Credit Agreement prior to the
Transfer Effective Date and (ii) the portion, if any, to be paid,
and the date or dates for payment, by such Purchasing Bank to the
Transferor Bank of fees or interest received by such Purchasing
Bank pursuant to the Credit Agreement from and after the Transfer
Effective Date.
4. (a) All principal payments that would otherwise
be payable from and after the Transfer Effective Date to or for
the account of the Transferor Bank pursuant to the Credit
Agreement and the Transferor Bank's Notes or in connection with
the Letters of Credit shall, instead, be payable to or for the
account of the Transferor Bank and the Purchasing Banks, as the
case may be, in accordance with their respective interests as
reflected in this Commitment Transfer Supplement.
(b) All interest, fees and other amounts that would
otherwise accrue for the account of the Transferor Bank from and
after the Transfer Effective Date pursuant to the Credit
Agreement and the Transferor Bank's Notes or in connection with
the Letters of Credit shall, instead, accrue for the account of,
and be payable to, the Transferor Bank and the Purchasing Banks,
as the case may be, in accordance with their respective interests
as reflected in this Commitment Transfer Supplement. In the
event that any amount of interest, fees or other amounts accruing
prior to the Transfer Effective Date was included in the Purchase
Price paid by any Purchasing Bank, the Transferor Bank and each
Purchasing Bank will make appropriate arrangements for payment by
the Transferor Bank to such Purchasing Bank of such amount upon
receipt thereof from the Borrowers.
5. On or prior to the Transfer Effective Date, the
Transferor Bank will deliver to the Agent its Notes. On or prior
to the Transfer Effective Date, each Borrower will deliver to the
Agent Notes for each Purchasing Bank and the Transferor Bank, in
each case in principal amounts reflecting, in accordance with the
Credit Agreement, their Commitments (as adjusted pursuant to this
Commitment Transfer Supplement). Each such new Note shall be
dated the Closing Date. Promptly after the Transfer Effective
Date, the Agent will send to each of the Transferor Bank and the
Purchasing Banks its new Notes and will send to each Borrower the
superseded Transferor Bank's Note of such Borrower marked
"Cancelled" or if such Note cannot be located by such Transferee
Bank, a lost note indemnification agreement in form and substance
reasonably acceptable to the Borrowers.
6. Concurrently with the execution and delivery
hereof, the Transferor Bank will provide to each Purchasing Bank
(if it is not already a Bank party to the Credit Agreement)
conformed copies of all documents delivered to such Transferor
Bank on the Closing Date in satisfaction of the conditions
precedent set forth in the Credit Agreement and all written
amendments and waivers thereto through the date of execution and
delivery hereof.
7. Each of the parties to this Commitment Transfer
Supplement agrees that at any time and from time to time upon the
written request of any other party, it will execute and deliver
such further documents and do such further acts and things as
such other party may reasonably request in order to effect the
purposes of this Commitment Transfer Supplement.
8. By executing and delivering this Commitment
Transfer Supplement, the Transferor Bank and each Purchasing Bank
confirm to and agree with each other and the Agent and the Banks,
and in the case of the following clause (vi), the Purchasing Bank
agrees for the benefit of the Borrowers, as follows: (i) other
than the representation and warranty that it is the legal and
beneficial owner of the interest being assigned hereby free and
clear of any adverse claim, the Transferor Bank makes no
representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in
or in connection with the Credit Agreement or the execution,
legality, validity, enforceability, genuineness, sufficiency or
value of the Credit Agreement or any other Loan Document or any
other instrument or document furnished pursuant thereto; (ii) the
Transferor Bank makes no representation or warranty and assumes
no responsibility with respect to the financial condition of the
Borrowers or the performance or observance by the Borrowers of
any of their obligations under the Agreement or any other Loan
Document or any other instrument or document furnished pursuant
hereto; (iii) each Purchasing Bank confirms that it has received
a copy of the Credit Agreement, together with copies of the
financial statements referred to in subsection 4.1, the financial
statements delivered pursuant to subsection 6.1, if any, and such
other documents and information as it has deemed appropriate to
make its own credit analysis and decision to enter into this
Commitment Transfer Supplement; (iv) each Purchasing Bank will,
independently and without reliance upon the Agent, the Transferor
Bank or any other Bank 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 the Credit Agreement; (v) each Purchasing Bank appoints and
authorizes the Agent to take such action as agent on its behalf
and to exercise such powers under the Agreement as are delegated
to the Agent by the terms thereof, together with such powers as
are reasonably incidental thereto, all in accordance with
Section 9 of the Credit Agreement; and (vi) each Purchasing Bank
agrees that it will perform in accordance with their terms all of
the obligations which by the terms of the Credit Agreement are
required to be performed by it as a Bank.
9. Each party hereto represents and warrants to and
agrees with the Agent that it is aware of and will comply with
the provision of subsection 10.6(g) of the Credit Agreement.
10. Schedule II hereto sets forth the revised
Commitments and Commitment Percentages of the Transferor Bank and
each Purchasing Bank as well as administrative information with
respect to each Purchasing Bank.
11. This Commitment Transfer Supplement shall be
governed by, and construed in accordance with, the laws of the
State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this
Commitment Transfer Supplement to be executed by their respective
duly authorized officers on Schedule I hereto as of the date set
forth in Item 1 of Schedule I hereto.
SCHEDULE I
TO
COMMITMENT
TRANSFER
SUPPLEMENT
COMPLETION OF INFORMATION AND
SIGNATURES FOR COMMITMENT
TRANSFER SUPPLEMENT
Re: Amended and restated Credit Agreement, dated as of
August 5, 1992,with Reeves Brothers, Inc. and
Reeves Industries, Inc.
Item 1 (Date of Commitment [Insert date of Commitment
Transfer Supplement): Transfer Supplement]
Item 2 (Transferor Bank): [Insert name of Transferor
Bank]
Item 3 (Purchasing Bank[s]): [Insert name[s] of
Purchasing Bank[s]]
Item 4 (Signatures of Parties
to Commitment Transfer
Supplement):
_________________ , as
Transferor Bank
By________________
Title:
__________________, as a
Purchasing Bank
By________________
Title:
__________________, as a
Purchasing Bank
By________________
Title:
CONSENTED TO AND ACKNOWLEDGED:
REEVES BROTHERS, INC.
By_________________
Title:
REEVES INDUSTRIES, INC.
By_________________
Title:
CHEMICAL BANK, as Agent
By_________________
Title:
[Consents Required only when
Purchasing Bank is not already
a Bank or affiliate thereof]
ACCEPTED FOR RECORDATION
IN REGISTER:
CHEMICAL BANK, as Agent
By_________________
Title:
SCHEDULE II
TO COMMITMENT
TRANSFER
SUPPLEMENT
LIST OF LENDING OFFICES, ADDRESSES
FOR NOTICES AND COMMITMENT AMOUNTS
[Name of Transferor
Bank] Revised Commitment Amounts:
$_______
Revised Commitment Percentage:
________
[Name of Purchasing
Bank] New Commitment Amounts:
$________
Address for Notices:
New Commitment Percentage:
_________
[Address]
Attention:_____________
Telex:_________________
Answerback:____________
Telephone:_____________
Telecopier:____________
Eurodollar Lending Office:
____________________
____________________
____________________
Domestic Lending Office:
____________________
____________________
____________________
SCHEDULE III
TO COMMITMENT
TRANSFER
SUPPLEMENT
[Form of Transfer Effective Notice]
To: REEVES BROTHERS, INC.
REEVES INDUSTRIES, INC.
[TRANSFEROR BANK]
[PURCHASING BANK]
The undersigned, as Agent under the amended and
restated Credit Agreement, dated as of August 5, 1992, among
Reeves Brothers, Inc., Reeves Industries, Inc., the several
Banks financial institutions and parties thereto and Chemical
Bank, as Agent, acknowledges receipt of five executed
counterparts of a completed Commitment Transfer Supplement, as
described in Schedule I hereto. [Note: attach copy of
Schedule I from Commitment Transfer Supplement.] Terms defined
in such Commitment Transfer Supplement are used herein as
therein defined.
1. Pursuant to such Commitment Transfer Supplement, you are
advised that the Transfer Effective Date will be __________________
[Insert fifth business day following date of Transfer Effective
Notice]
2. Pursuant to such Commitment Transfer Supplement,
the Transferor Bank is required to deliver to the Agent on or
before the Transfer Effective Date its Note[s] or a lost note
indemnification agreement reasonably acceptable to the
Borrowers.
3. Pursuant to such Commitment Transfer Supplement,
the Borrowers are required to deliver to the Agent on or before
the Transfer Effective Date the following Notes, each dated
_________________ [Insert Closing Date]
[Describe each new Note for Transferor Bank and
Purchasing Bank as to principal amount and payee.]
4. Pursuant to such Commitment Transfer Supplement
each Purchasing Bank is required to pay its Purchase Price to
the Transferor Bank at or before 12:00 Noon on the Transfer
Effective Date in immediately available funds.
Very truly yours,
CHEMICAL BANK, as Agent
By _________________
Title:
EXHIBIT F
REEVES INDUSTRIES, INC.
BORROWING BASE CERTIFICATE
DATE
(000's)
ATG ICF-D RIAAG TOTAL
Accounts Receivable Borrowing Base
Eligible Accounts Receivable
Rate of advance 85% 85% 85% 85%
____ ____ ____ ____
Total
==== ==== ==== ====
Inventory Borrowing Base*
Eligible Inventory
Rate of advance 65% 65% 65% 65%
____ ____ ____ ____
Total
==== ==== ==== ====
Total Borrowing Base ==== ==== ==== ====
* Total effective rate of advance cannot exceed 50% of the book value of
inventory.
Book value of inventory (FIFO)
50% 50%
____
Maximum inventory borrowing base
====
Inventory borrowing base as determined
====
As a Responsible Officer of the Company, this Borrowing Base Certificate is
complete and correct to the best of my knowledge as of the date specified:
________________________________________ _________
William Ewing III - Treasurer Date
ATG ICF-D RIAAG TOTAL
Eligible Accounts
Accounts, net of unapplied cash
Less:
a. Accounts not bona fide, valid or legally
enforceable
b. Accounts subject to any asserted defense,
setoff or charge-back
c. Accounts which contravene any Requirement
of Law
d. Past Due Receivables
e. Net credit balances
f. Bill-and-hold receivables
g. Less or (1) Accounts or (2) amount owing
to an obligor which is a vendor and customer
h. Accounts where more than 50% of the accounts
constitute Past Due Receivables
i. Affiliate / subsidiary Accounts
j. Accounts of obligors outside US or Canada not
supported by a Letter of Credit
k. Accounts not denominated and payable in US
Dollars
l. Accounts of any Governmental Agency other
than the US
m. Accounts of an obligor that is insolvent
n. Accounts subject to a lien or other claim
o. Accounts not subject to a perfected first priority
security lien
p. Accounts which do not conform to
representations and warranties
q. Other Accounts as determined by the
Agent ____ ____ ____ ____
Sub-total ____ ____ ____ ____
Total Eligible Accounts
==== ==== ==== ====
Eligible Inventory
Inventory
Plus 90% of Bill-and-hold Accounts
Less:
a. Inventory subject to a lien or other claim
b. Inventory not subject to a perfected first priority
security lien
c. Damaged Inventory
d. Work-in-process, as defined
e. Inventory which is allocable to a Governmental
Authority other than the US
f. Chemical & dyes
g. Miscellaneous inventory
h. Remnant stores inventory
i. ATG inventory more than 6 months old
j. Reserves
k. Intercompany profit included in inventory
l. Reconciling differences between the perpetual
records and the general ledger accounts
m. Inventory not located on the Company's
owned or leased premises
n. Material price variance adjustment
o. Inventory which does not conform to
representations and warranties
p. Other Inventory as determined by the
Agent ____ ____ ____ ____
Sub-total ____ ____ ____ ____
Total Eligible Inventory
==== ==== ==== ====
EXHIBIT G
[FORM OF CLOSING CERTIFICATE]
Pursuant to subsection 5.1(i) of the amended and
restated Credit Agreement, dated as of August 5, 1992, among the
Reeves Brothers, Inc. (the "Company"), Reeves Industries, Inc.
(the "Parent"; and collectively with the Company, the
"Borrowers"), the several banks and financial institutions
parties thereto (the "Banks") and Chemical Bank, a New York
banking corporation, as agent for the Banks (in such capacity,
the "Agent") (the "Credit Agreement"; capitalized terms used
herein without definition are used as defined in the Credit
Agreement), each of the undersigned hereby certifies to the Agent
and each Bank as follows:
(a) None of the resolutions of the Boards of Directors of either
of the Borrowers certified and delivered under subsection 5.1(c)
of the Credit Agreement has been amended, modified, revoked or
rescinded since their respective dates of execution and such
resolutions are in full force and effect on the date hereof in
the form adopted;
(b) The incumbencies and signatures of the officers of
each of the Borrowers indicated on the Incumbency
Certificates delivered pursuant to subsection 5.1(h) of the
Credit Agreement remain true and correct since their
respective dates of execution and such incumbencies and
signatures are in full force and effect on the date hereof;
(c) The certificates of incorporation and by-laws of
each of the Borrowers certified and delivered under
subsection 5.1(d) of the Credit Agreement have not been
amended, modified, revoked, rescinded or otherwise altered
since their respective dates of adoption and such documents
are in full force and effect on the date hereof in the same
form in which they were delivered pursuant to such
subsection 5.1(d);
(d) Each of the representations and warranties made by
either of the Borrowers in or pursuant to the Loan Documents
to which they are a party are true and correct in all
material respects on and as of the date hereof as if made on
and as of the date hereof;
(e) Immediately after giving effect to the amendment
and restatement of the Existing Agreement on the date
hereof, no Default or Event of Default shall have occurred
and will be continuing under any Loan Document; and
(f) The conditions precedent set forth in subsections
5.1 of the Credit Agreement have been satisfied.
IN WITNESS WHEREOF, the undersigned has hereunto
executed this Closing Certificate as of this _____ day of _______
1995.
REEVES BROTHERS, INC.
By:________________________________
Name:
Title:
REEVES INDUSTRIES, INC.
By:________________________________
Name:
Title:
EXHIBIT H
FORM OF COMPLIANCE CERTIFICATE
DATE OF CERTIFICATE: _____________
COMPLIANCE WITH SUBSECTIONS 7.1, 7.3(g), 7.6(d), 7.8(c),
7.8(d), 7.8(f), and 7.9(a)
Subsection 7.1(a): Maintenance of Consolidated Net Worth.
Consolidated Net Worth $________________________
Required Consolidated Net Worth $________________________
Subsection 7.1(b): Consolidated EBITDA to Consolidated Net
Interest Expense Ratio
For the past four quarters
Consolidated Net Income
Consolidated Net Interest Expense
Income Tax Expense
Depreciation
Amortization
_______________________________________________________________________
Consolidated EBITDA
Interest Expense
Interest Income
_______________________________________________________________________
Net Interest Expense
Ratio of Consolidated EBITDA to
Consolidated Net Interest Expense ___________________
Required Ratio of Consolidated EBITDA to
Consolidated Net Interest Expense ___________________
Subsection 7.1(c): Consolidated Indebtedness to Consolidated
EBITDA Ratio
Consolidated Indebtedness $ ____________________
Consolidated EBITDA $ ____________________
Consolidated Indebtedness
to Consolidated EBITDA
Ratio ____________________
Required Consolidated Indebtedness
to Consolidated EBITDA Ratio ____________________
Subsection 7.3(g): Limitation on Liens securing Indebtedness
incurred to finance acquisition of fixed or
capital assets.
Amount of secured
Indebtedness incurred to
finance acquisition of
fixed or capital assets:
Total $ _______________________
Permitted $ 10,000,000
=======================
Amount of such Indebtedness
constituting guarantees
of the obligations of
any Person other then
a Borrower or a
Restricted Subsidiary:
Total $________________________
Permitted $ 2,000,000
========================
Subsection 7.6(d): Limitation on Sale of Assets
Amount since Closing Date $________________________
Permitted $ 10,000,000
========================
Subsection 7.8(c): Limitation on acquisitions of the stock,
business or assets of companies which become
or are combined with wholly owned
subsidiaries of either Borrower.
Date of acquisition:
Description of acquisition:
Available Credit immediately
after acquisition:
Actual $________________________
Required $ 10,000,000
========================
Subsection 7.8(d): Additional Investments
(i) Investments in entities in similar business
which will not be direct or indirect wholly
owned subsidiaries of either Borrower
Amount since Closing Date $________________________
Permitted $ 5,000,000
========================
Available Credit immediately after
Investment:
Actual $________________________
Required $ 10,000,000
========================
(ii) Investments in entities (other than those described in
clause (i)) which will not be direct or indirect wholly
owned subsidiaries of either Borrower
Amount since Closing Date $________________________
Permitted $ 2,500,000
========================
Available Credit Immediately
after Investment:
Actual $________________________
Required $ 10,000,000
========================
Subsection 7.8(f): Limitation on Investments by either Borrower
in any Restricted Subsidiary of any
Restricted Subsidiary in any other Restricted
Subsidiary.
Amount $________________________
Permitted $ 5,000,000
========================
Subsection 7.9(a): Optional Payments
Since Closing Date, the
amount of repurchased:
Senior Notes $________________________
Subordinated Debt $________________________
Total $________________________
Permitted $ 15,000,000
========================
Available Credit after
repurchase of Senior
Notes or Subordinated
Debt
Actual $________________________
Required $ 10,000,000
========================
EXHIBIT I
Reeves Industries, Inc.
Applicable Margin Certificate
as of April 2, 1995
(000's)
Consolidated EBITDA to Consolidated Net Interest Expense
1994 1995
_____________________________________
2nd Qtr. 3rd Qtr. 4th Qtr. 1st Qtr. Total
EBITDA:
Net Income
Net Interest Expense
Income Tax Expense
Depreciation
Amortization
Financing Costs &
Debt Discounts
Goodwill
Pre-Operating Costs _____ _____ _____ _____ _____
EBITDA
===== ===== ===== ===== =====
Net Interest Expense:
Interest Expense
Interest Income _____ _____ _____ _____ _____
Net Interest Expense
===== ===== ===== ===== =====
Ratio
Required
As a Responsible Officer of the Company, this Applicable Margin Certificate
is complete and correct to the best of my knowledge as of the date specified:
_________________________________ _________
William Ewing III - Treasurer Date
[Letterhead of Cadwalader, Wickersham & Taft]
EXHIBIT J
July 14, 1995
The Banks Party to
the Credit Agreement
Referred to Below
Ladies and Gentlemen:
We have acted as counsel to Reeves Industries, Inc., a Delaware
corporation (the "Parent"), and Reeves Brothers, Inc., a Delaware
corporation (the "Company") (the Parent and the Company, collectively, the
"Borrowers"), in connection with the negotiation, execution and delivery of
(i) the Credit Agreement, dated as of August 5, 1992, as amended and restated
as of July 14, 1995 (the "Credit Agreement"), among the Parent, the Company,
the several banks party thereto (the "Banks") and Chemical Bank, as agent for
the Banks (the "Agent"), (ii) the Guarantee, dated as of August 5, 1992, as
amended and restated as of July 14, 1995 (the "Company Guarantee"), made by
the Company in favor of the Agent for the ratable benefit of the Banks, (iii)
the Guarantee, dated as of July 14, 1995 (the "Parent Guarantee") made by the
Parent in favor of the Agent for the ratable benefit of the Banks, (iv) the
Security Agreement, dated as of August 5, 1992, as amended and restated as of
July 14, 1995 (the "Security Agreement"), made by the Company in favor of the
Agent for the ratable benefit of the Banks, and (v) the Notes, each dated
July 14, 1995 (the "Notes"), made by the Parent and the Company,
respectively, in favor of the Banks (the Credit Agreement, the Company
Guarantee, the Parent Guarantee, the Security Agreement and the Notes,
collectively, the "Loan Documents").
This opinion is being delivered to you pursuant to Section 5.1(l) of the
Credit Agreement. Unless otherwise defined herein, capitalized terms used
herein shall have the meanings assigned to such terms in, or by reference in,
the Credit Agreement.
In connection with this opinion, we have (i) investigated such questions
of law, (ii) examined originals or certified, conformed or reproduction
copies of each of the Loan Documents and such charter documents, instruments,
documents and records of Borrowers, and such certificates of public officials
and such other documents, and (iii) received such information from officers
and representatives of the Borrowers, in each case as we have deemed
necessary or appropriate for the purposes of this opinion.
In all such examinations, we have assumed, but have not verified, the
legal capacity of all natural persons executing documents, the genuineness of
all signatures, the genuineness of all signatures on original or certified,
conformed or reproduction copies of documents of all parties, the
authenticity of original and certified copies of all copies submitted to us
as conformed for reproduction copies. As to the various questions of fact
relevant to the opinions expressed herein, we have relied upon, and assume
the accuracy of, representations and warranties contained in, and by
reference in, the Credit Agreement and the Security Agreement and
certificates and oral or written statements and other information of or from
public officials, and written statements and other information of
representatives of the Borrowers and others and assume compliance on the part
of all parties to the Loan Documents with their covenants and agreements
contained therein.
In rendering our opinion we have relied, with your permission, on the
opinion of Augustus I. duPont, Esq., General Counsel of the Parent and the
Company, of even date herewith, a copy of which is attached hereto.
To the extent that it is relevant to the opinions expressed herein, we
have assumed that the parties to the Loan Documents other than the Company
and the Parent have, or had at the time of execution and delivery thereof,
the power to enter into and perform such documents and that such documents
have been duly authorized, executed and delivered by, and constitute legal,
valid and binding obligations of, such other parties.
Based upon the foregoing and subject to the limitations, qualifications
and assumptions set forth herein, we are of the opinion that:
1. Each of the Loan Documents constitutes the legal, valid and binding
obligation of each Borrower party thereto enforceable against such Borrower
in accordance with its terms.
2. No consent, approval, waiver, license or authorization of, filing
with or other act by or in respect of, any Governmental Authority of or
within the State of New York is required on the part of either the Borrowers
in connection with the execution, delivery, performance, validity or
enforceability of any of the Loan Documents to which it is a party, the
consummation of the transactions contemplated thereby, the compliance with
each of the provisions thereof, the borrowing on the terms and conditions of
the Credit Agreement, or the grant of the security interests purported to be
created by the Security Agreement in the case of the Company.
3. The execution, delivery and performance of each of the Loan
Documents, the consummation of the transactions contemplated thereby, the
compliance with each of the provisions thereof, the borrowing on the terms
and conditions of the Credit Agreement and the granting of security interests
purported to be created by the Security Agreement in the case of the Company,
do not and will not conflict with, constitute a default under or violate any
law, rule or regulation of any governmental authority of or within the State
of New York and will not result in, or require, the creation or imposition of
any Lien on any of its or their respective properties or revenues pursuant to
any such law, rule or regulation.
4. Neither of the Borrowers is an "investment company", or a company
"controlled" by an "investment company", within the meaning of the Investment
Company Act of 1940, as amended.
5. Neither of the Borrowers is subject to regulation under any Federal
or New York state statute or regulation which limits its ability to incur
Indebtedness under the Credit Agreement.
6. The provisions of the Security Agreement are effective to create in
favor of the Agent for the ratable benefit of the Banks a valid and
enforceable security interest in all right, title and interest in the Company
in the Collateral. Upon the filing of financing statements in the offices
listed in Schedule II to the Credit Agreement naming the Company as debtor
and the Agent as secured party and describing the Collateral as the
collateral covered thereby, the security interest created pursuant to the
Security Agreement in the Collateral will constitute a fully-perfected
security interest under the Uniform Commercial Code as in effect on the date
hereof in each of the states listed in said Schedule II (as it is in effect
in each state, the "Code"), in the case of Inventory (as defined in the
Security Agreement) to the extent that such Inventory is located within said
states.
The opinions set forth above are subject to the following
qualifications, limitations and assumptions.
(a) We express no opinion as to:
(i) the rights or interests of the Company in, or title of the
Company to, any of the Collateral;
(ii) The validity, binding effect or enforceability (A) of any
provision of the Loan Documents relating to indemnification,
contribution or exculpation in connection with violations of
any securities laws or statutory duties or public policy, or
in connection with willful, reckless or criminal acts or gross
negligence of the indemnified or exculpated party or the
party receiving contribution; or (B) of any provision of the
Loan Documents relating to exculpation of any party in
connection with its own negligence that a court would
determine in the circumstances under applicable law to be
unfair, insufficiently explicit, unreasonable or contrary to
public policy; and
(iii) the effect of any law of any jurisdiction other than the
State of New York wherein any Bank may be located or wherein
enforcement of any Loan Document may be sought that limits
the rates of interest legally chargeable or collectable.
(b) Our opinions in paragraph 1 above as to enforceability are subject
to applicable bankruptcy, insolvency, reorganization, fraudulent transfer,
preference, moratorium or similar laws from time to time in effect affecting
creditors' rights generally, general principles of equity (regardless of
whether the same are considered in a proceeding at law or in equity), and
certain remedial provisions of the Loan Documents may be unenforceable, in
whole or in part, but the inclusion of such provisions does not affect the
validity of the Loan Documents, and the Loan Documents taken as a whole
contain adequate provisions for enforcing the obligations of the Borrowers
party thereto.
(c) We do not express an opinion as to the application of, and our
opinions above are subject to the effect, if any, of, any applicable
fraudulent conveyance, fraudulent transfer, fraudulent obligation or
preferential transfer law, principles of equitable subordination and any law
governing the liquidation or dissolution of, or the distribution of assets
of, any person or entity.
(d) In connection with our opinion in paragraph 3, such opinion is
limited to laws of the State of New York and the United States of America,
which, in our experience, are normally applicable to transactions of the type
provided for in the Loan Documents.
(e) We express no opinion with respect to the effect of Section 552 of
the United States Bankruptcy Code (relating to property acquired by the
Company after the commencement of a case under the United States Bankruptcy
Code) with respect to the Company and Section 547 of the United States
Bankruptcy Code (relating to a security interest in such after-acquired
property which serves to secure antecedent debt);
(f) The continuation of a security interest in proceeds is limited to
the degree set forth in Section 9-306(2) and 9-306(4) of the Code and the
perfection of a security interest in proceeds continues only upon compliance
with the provisions of Section 9-306(3) of the Code.
(g) We note that the perfection or nonperfection of the security
interests created by the Security Agreement may be subject to the following
qualifications:
(i) Article 9 of the Code requires the filing of appropriate
continuation statements within the period of six months prior
to the expiration of five years from the date of the original
filings (and each fifth year thereafter), in order to maintain
the effectiveness of the filings referred to in paragraph 6;
and
(ii) the perfection of the security interests in respect of the
Company will be terminated as to any Collateral acquired more
than four months after the Company changes its name, identity
or corporate structure so as to make the financing statements
filed with respect thereto seriously misleading, unless new
appropriate financing statements indicating the new name,
identity or corporate structure of the Company are properly
filed before the expiration of such four months.
(h) We have rendered the opinions expressed herein based on facts,
circumstances, laws, rules, regulations, court decisions, and regulatory
authority determinations in effect on the date hereof. We assume no
obligation to update or supplement this opinion or reflect any facts,
circumstances, law, rule, regulation, or any charges thereto, or any court
decisions or regulatory authority determinations which may hereafter occur
or come to our attention.
The opinions expressed herein are limited to (a) the federal laws of
the United States of America, (b) the laws of the State of New York, and (c)
in the case of paragraph 6 hereof and based solely upon a review of the Code
as published in the Uniform Commercial Code Filing Guide, the states listed
in Schedule II to the Credit Agreement.
This opinion is rendered to you solely for your benefit and may not be
furnished, used, circulated, quoted or relied upon by any other person, firm
or corporation (other than a successor to or an assignee of the Agent or any
Bank) for any purposes without our prior written consent.
Very truly yours,
\s\ Cadwalader, Wickersham & Taft
[Letterhead of Augustus I. duPont]
EXHIBIT K
July 14, 1995
The Banks Party to
The Credit Agreement
Referred to Below:
Ladies and Gentlemen:
I am General Counsel of Reeves Industries, Inc., a Delaware
corporation (the "Parent"), and Reeves Brothers, Inc., a Delaware
corporation (the "Company") (the Parent and the Company, collectively, the
"Borrowers"), and have acted as such in connection with the negotiation,
execution and delivery of (i) the Credit Agreement, dated as of August 5,
1992 (as amended and restated as of July 14, 1995, the "Credit Agreement"),
among the Parent, the Company, the several banks and financial institutions
party thereto (the "Banks") and Chemical Bank, as agent for the Banks (the
"Agent"), (ii) the Company Guarantee, dated as of August 5, 1992 (as amended
and restated as of July 14, 1995, the "Company Guarantee"), made by the
Company in favor of the Agent for the ratable benefit of the Banks, (iii) the
Parent Guarantee, dated as of July 14, 1995 (the "Parent Guarantee"), made by
the Parent in favor of the Agent for the ratable benefit of the Banks, (iv)
the Security Agreement, dated as of August 5, 1992 (as amended and restated
as of July 14, 1995, the "Security Agreement"), made by the Company in favor
of the Agent for the ratable benefit of the Banks, and (v) the Notes, each
dated July 14, 1995 (the "Notes"), made by the Borrowers in favor of the
Banks (the Credit Agreement, the Company Guarantee, the Parent Guarantee, the
Security Agreement and the Notes, collectively, the "Loan Documents").
This opinion is being furnished to you pursuant to Section 5.1(l) of
the Credit Agreement. Unless otherwise defined herein, capitalized terms
used herein shall have the meanings assigned to such terms in, or by
reference in, the Credit Agreement.
In connection with this opinion, I have (i) investigated such
questions of law, (ii) examined an executed copy of each of the Loan
Documents and originals or certified, conformed or reproduction copies of
such charter documents, instruments, documents and records of the Borrowers,
and such certificates of public officials and such other documents and (iii)
received such information from officers and representatives of the Borrowers,
in each case as I have deemed necessary or appropriate for the purposes of
this opinion.
In all such examinations, I have assumed, but have not verified, the
legal capacity of all natural persons executing documents, the genuineness of
all signatures on original or certified, conformed or reproduction copies of
documents of all parties other than the Borrowers and the authenticity of
original and certified copies of all copies submitted to me as conformed or
reproduction copies. As to various questions of fact relevant to the
opinions expressed herein, I have relied upon, and assume the accuracy of,
representations and warranties contained in, and by reference in, the Credit
Agreement and certificates and oral or written statements and other
information of representatives of the Borrowers and others and assume
compliance on the part of all parties to the Loan Documents with their
covenants and agreements contained therein.
Based upon the foregoing and subject to the limitations,
qualifications and assumptions set forth herein, I am of the opinion that:
1. Each of the Borrowers (i) is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization,
(ii) has the corporate power and authority, and the legal right, to own and
operate its property, to lease the property it operates as lessee and to
conduct the business in which it is currently engaged and (iii) is duly
qualified as a foreign corporation and in good standing under the laws of
each jurisdiction where its ownership, lease or operation of property or the
conduct of its business requires such qualification, to the extent that the
failure to be so qualified and in good standing could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect.
2. Each of the Borrowers (i) has the corporate power and
authority, and the legal right, to make, deliver and perform each of the
Loan Documents to which it is a party, to consummate each of the
transactions contemplated thereby, to comply with each of the provisions
thereof, to borrow under the Credit Agreement and to grant the security
interests purported to be created by the Security Agreement in the case of
the Company and (ii) has taken all necessary corporate action to authorize
the execution, delivery and performance of each of the Loan Documents to
which it is a party, to consummate each of the transactions contemplated
thereby, to comply with each of the provisions thereof, to borrow on the
terms and conditions of the Credit Agreement and to grant the security
interests purported to be created by the Security Agreement in the case of
the Company.
3. Each of the Loan Documents has been duly and validly executed
and delivered by each of the Borrowers parties thereto.
4. No consent, approval, waiver, license or authorization of,
filing with or other act by or in respect of, any Governmental Authority of
or within the State of New York or in respect of the General Corporation Law
of the State of Delaware ("Delaware Corporate Law") or of any other Person is
required on the part of either of the Borrowers in connection with the
execution, delivery, performance, validity or enforceability of any of the
Loan Documents to which it is a party, the consummation of the transactions
contemplated thereby, the compliance with each of the provisions thereof, the
borrowing on the terms and conditions of the Credit Agreement, or the grant
of the security interests purported to be created by the Security Agreement
in the case of the Company.
5. The execution, delivery and performance of each of the Loan
Documents, the consummation of the transactions contemplated thereby, the
compliance with each of the provisions thereof, the borrowing on the terms
and conditions of the Credit Agreement and the granting of the security
interests purported to be created by the Security Agreement in the case of
the Company, do not and will not conflict with, constitute a default under or
violate any Requirement of Law of any Governmental Authority of or within the
State of New York or in respect of Delaware Corporate Law or, to the best of
my knowledge, any Contractual Obligation of either of the Borrowers, and will
not result in, or require, the creation or imposition of any Lien on any of
their respective properties or revenues pursuant to any such Requirement of
Law or Contractual Obligation.
6. No litigation, investigation or proceeding of or before any
arbitrator or Governmental Authority is pending, or to the best of my
knowledge, threatened by or against either of the Borrowers or against any of
their respective properties or revenues (i) with respect to any Loan Document
to which it is a party or any of the transactions contemplated thereby, or
(ii) which could reasonably be expected to have a Material Adverse Effect.
I have rendered the opinions expressed herein based on facts,
circumstances, laws, rules, regulations, court decisions and regulatory
authority determinations in effect on the date hereof. I assume no
obligation to update or supplement this opinion or reflect any facts,
circumstances, laws, rules, regulations, or any changes thereto, or any court
decisions or regulatory authority determinations which may hereafter occur or
come to my attention.
The opinions expressed herein are limited to the laws of the State
of New York and to the General Corporation Law of the State of Delaware, in
each case as currently in effect.
This opinion is rendered to you solely for your benefit and may not
be furnished, used, circulated, quoted and relied upon by any other person,
firm or corporation (other than a successor to or assignee of the Agent or
any Bank) for any purposes without my prior written consent, except that a
copy of this opinion may be attached to the opinion of even date of
Cadwalader, Wickersham & Taft addressed to you and may be relied upon by
Cadwalader, Wickersham & Taft in rendering said opinion.
Very truly yours,
\S\ Augustus I. duPont
Exhibit L
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of August 5, 1992, made by
REEVES BROTHERS, INC., a Delaware corporation (the "Company"), in
favor of CHEMICAL BANK, as Agent (in such capacity, the "Agent")
for the banks (the "Banks") parties to the Credit Agreement,
dated as of August 5, 1992 (as heretofore amended and restated
and as hereafter amended, supplemented or otherwise modified from
time to time, the "Credit Agreement") among the Company, Reeves
Industries, Inc. (the "Parent"; and collectively with the
Company, the "Borrowers"), the Banks and the Agent.
W I T N E S S E T H :
WHEREAS, the Company executed and delivered that
certain security agreement, dated as of August 6, 1992 (as
amended prior to the date hereof, the "Existing Security
Agreement") to the Agent for the ratable benefit of certain of
the Banks;
WHEREAS, the Company has agreed to amend the Existing
Security Agreement and restate it in its entirety as more fully
set forth herein;
WHEREAS, pursuant to the Credit Agreement, the Banks
have severally agreed to make loans to and issue letters of
credit for or for the account of the Borrowers upon the terms and
subject to the conditions set forth therein; it is a condition
precedent to the obligation of the Banks to make their respective
loans to and issue letters of credit for or for the account of
the Borrowers under the Credit Agreement that the Company shall
have executed and delivered this amended and restated Security
Agreement to the Agent for the ratable benefit of the Banks.
NOW, THEREFORE, in consideration of the premises and to
induce the Agent and the Banks to enter into the Credit Agreement
and to induce the Banks to make their respective loans to and
issue the letters of credit for or for the account of the
Borrowers under the Credit Agreement, the Company hereby agrees
with the Agent, for the ratable benefit of the Banks, that the
Existing Security Agreement shall be and hereby is amended and
restated in its entirety to read as provided in the headings and
recitals hereto and as follows:
1. Defined Terms. Unless otherwise defined herein,
terms which are defined in the Credit Agreement and used herein
are so used as so defined; the following terms which are defined
in the Uniform Commercial Code in effect in the State of New York
on the date hereof are used herein as so defined: Accounts,
Chattel Paper, Documents, Farm Products, General Intangibles,
Instruments, Inventory and Proceeds; and the following terms
shall have the following meanings:
"Code" means the Uniform Commercial Code as from
time to time in effect in the State of New York.
"Collateral" shall have the meaning assigned to it
in Section 2 of this Security Agreement.
"Obligations" means the unpaid principal amount of, and
interest on (including, without limitation, interest
accruing after the maturity of the Loans and interest
accruing after the filing of any petition in bankruptcy, or
the commencement of any insolvency, reorganization or like
proceeding, relating to the Company, whether or not a claim
for post-filing or post-petition interest is allowed in such
proceeding) the Notes and all other obligations and
liabilities of the Company to the Agent or to the Banks,
including, without limitation, the obligations under the
Letters of Credit and the Company Guarantee, whether direct
or indirect, absolute or contingent, due or to become due,
or now existing or hereafter incurred, which may arise
under, out of, or in connection with, the Credit Agreement,
the Company Guarantee, the other Loan Documents and any
other document made, delivered or given in connection
therewith or herewith, whether on account of principal,
interest, reimbursement obligations, fees, indemnities,
costs, expenses (including, without limitation, all
reasonable fees and disbursements of counsel to the Agent or
to the Banks that are required to be paid by the Company
pursuant to the terms of the Credit Agreement or the Company
Guarantee) or otherwise.
"Security Agreement" means this Security
Agreement, as amended, supplemented or otherwise
modified from time to time.
2. Grant of Security Interest. As collateral security
for the prompt and complete payment and performance when due
(whether at the stated maturity, by acceleration or otherwise) of
the Obligations, the Company hereby grants to the Agent for the
ratable benefit of the Banks, and to the extent and in the order
provided in subsection 9.1(b) of the Credit Agreement, for the
ratable benefit of the Hedging Banks, a security interest in all
of the following property now owned or at any time hereafter
acquired by the Company or in which the Company now has or at any
time in the future may acquire any right, title or interest
(collectively, the "Collateral"):
(i) all Accounts;
(ii) all Inventory; and
(iii) to the extent not otherwise included, all
Proceeds and products of any and all of the foregoing.
3. Rights of Agent and Banks; Limitations on Agent's
and Banks' Obligations.
(a) Company Remains Liable under Accounts. Anything
herein to the contrary notwithstanding, the Company shall remain
liable under each of the Accounts to observe and perform all the
conditions and obligations to be observed and performed by it
thereunder, all in accordance with the terms of any agreement
giving rise to each such Account. Neither the Agent nor any Bank
shall have any obligation or liability under any Account (or any
agreement giving rise thereto) by reason of or arising out of
this Security Agreement or the receipt by the Agent or any such
Bank of any payment relating to such Account pursuant hereto, nor
shall the Agent or any Bank be obligated in any manner to perform
any of the obligations of the Company under or pursuant to any
Account (or any agreement giving rise thereto), to make any
payment, to make any inquiry as to the nature or the sufficiency
of any payment received by it or as to the sufficiency of any
performance by any party under any Account (or any agreement
giving rise thereto), to present or file any claim, to take any
action to enforce any performance or to collect the payment of
any amounts which may have been assigned to it or to which it may
be entitled at any time or times.
(b) Notice to Account Debtors and Contracting Parties.
Upon the request of the Agent at any time after the occurrence
and during the continuance of an Event of Default, the Company
shall notify account debtors on the Accounts that the Accounts
have been assigned to the Agent for the ratable benefit of the
Banks and that payments in respect thereof shall be made directly
to the Agent. Subject to section 3(c) below, Agent may in its
own name or in the name of others communicate with account
debtors on the Accounts to verify with them to its satisfaction
the existence, amount and terms of any Accounts.
(c) Analysis of Accounts. The Agent shall have the
right to make test verifications of the Accounts in any manner
and through any medium that it reasonably considers advisable,
and the Company shall furnish all such assistance and information
as the Agent may require in connection therewith, provided that
if an Event of Default shall not have occurred and be continuing,
the Agent shall make such test verifications only in consultation
with the Company following notice of its intention to do so to
the Company and shall in any event contact account debtors of the
Company only in conjunction with the Company. Upon the Agent's
request and at the expense of the Company, the Company shall, to
the extent set forth in subsection 6.10 of the Credit Agreement,
cause independent public accountants or others satisfactory to
the Agent to furnish to the Agent reports showing
reconciliations, aging and test verifications of, and trial
balances for, the Accounts.
(d) Collections on Accounts. The Agent hereby
authorizes the Company to collect the Accounts, subject to the
Agent's direction and control, and the Agent may curtail or
terminate said authority at any time after the occurrence and
during the continuance of an Event of Default. If required by
the Agent at any time after the occurrence and during the
continuance of an Event of Default, any payments of Accounts,
when collected by the Company, shall be forthwith (and, in any
event, within two Business Days) deposited by the Company in the
exact form received, duly indorsed by the Company to the Agent if
required, in a special collateral account maintained by the
Agent, subject to withdrawal by the Agent for the account of the
Banks only, as hereinafter provided, and, until so turned over,
shall be held by the Company in trust for the Agent and the
Banks, segregated from other funds of the Company. Each deposit
of any such Proceeds shall be accompanied by a report identifying
in reasonable detail the nature and source of the payments
included in the deposit. All Proceeds constituting collections
of Accounts while held by the Agent (or by the Company in trust
for the Agent and the Banks) shall continue to be collateral
security for all of the Obligations and shall not constitute
payment thereof until applied as hereinafter provided. At such
intervals as may be agreed upon by the Company and the Agent, or,
if an Event of Default shall have occurred and be continuing, at
any time at the Agent's election, the Agent shall apply all or
any part of the funds on deposit in said special collateral
account on account of the Obligations in such order as the Agent
may elect, and any part of such funds which the Agent elects not
so to apply and deems not required as collateral security for the
Obligations shall be paid over from time to time by the Agent to
the Company or to whomsoever may be lawfully entitled to receive
the same. If an Event of Default shall have occurred and be
continuing, at the Agent's request, the Company shall deliver to
the Agent all original and other documents evidencing, and
relating to, the agreements and transactions which gave rise to
the Accounts, including, without limitation, all original orders,
invoices and shipping receipts.
4. Representations and Warranties. The Company hereby
represents and warrants that:
(a) Title; No Other Liens. Except for the Lien
granted to the Agent for the ratable benefit of the
Banks pursuant to this Security Agreement, the Company
owns each item of the Collateral free and clear of any
and all Liens or claims of others other than the Liens
permitted by subsection 7.3 of the Credit Agreement.
No security agreement, financing statement or other
public notice with respect to all or any part of the
Collateral is on file or of record in any public
office, except such as may have been filed in favor of
the Agent, for the ratable benefit of the Banks,
pursuant to this Security Agreement.
(b) Perfected First Priority Liens. The Liens
granted pursuant to this Security Agreement constitute
perfected Liens on the Collateral in favor of the
Agent, for the ratable benefit of the Banks, which are
prior to all other Liens on the Collateral created by
the Company and in existence on the date hereof and
which are enforceable as such against all creditors of
and purchasers from the Company.
(c) Accounts. The amount represented by the
Company to the Banks from time to time as owing by each
account debtor or by all account debtors in respect of
the Accounts will at such time be the correct amount
actually owing by such account debtor or debtors
thereunder, subject to immaterial inaccuracies. No
amount payable to the Company under or in connection
with any Account is evidenced by any Instrument or
Chattel Paper which has not been delivered to the Agent
other than (i) promissory notes in an aggregate unpaid
amount not exceeding $250,000 provided that such
amounts have not been included in the calculation of
the Borrowing Base and (ii) promissory notes payable to
ARA Automotive Group, a former unincorporated division
of the Company, which are currently the subject of
litigation or otherwise of doubtful collectability in
the reasonable judgment of the Company ("ARA Notes").
The place where the Company keeps its records
concerning the Accounts is Highway 29 South,
Spartanburg, South Carolina 29301.
(d) Inventory. The Inventory is kept at the
locations listed on Schedule I hereto.
(e) Chief Executive Office. The Company's chief
executive office and chief place of business is located
at Highway 29 South, Spartanburg, South Carolina 29301.
(f) Farm Products. None of the Collateral
constitutes, or is the Proceeds of, Farm Products.
(g) Governmental Obligors. Other than the United
States of America (for which the right to payment of
any Account included in the calculation of the
Borrowing Base shall be duly assigned to the Agent for
the ratable benefit of the Banks pursuant to the
Assignment of Claims Act of 1940, as amended from time
to time), none of the obligors on any Accounts is a
Governmental Authority.
(h) Power and Authority; Authorization. The
Company has the corporate power and authority and the
legal right to execute and deliver, to perform its
obligations under, and to grant the Lien on the
Collateral pursuant to, this Security Agreement and has
taken all necessary corporate action to authorize its
execution, delivery and performance of, and grant of
the Lien on the Collateral pursuant to, this Security
Agreement.
5. Covenants. The Company covenants and agrees with
the Agent and the Banks that, from and after the date of this
Security Agreement until the Obligations are paid in full and the
Commitments are terminated:
(a) Further Documentation; Pledge of Instruments
and Chattel Paper. At any time and from time to time,
upon the written request of the Agent, and at the sole
expense of the Company, the Company will promptly and
duly execute and deliver such further instruments and
documents and take such further action as the Agent may
reasonably request for the purpose of obtaining or
preserving the full benefits of this Security Agreement
and of the rights and powers herein granted, including,
without limitation, the filing of any financing or
continuation statements under the Uniform Commercial
Code in effect in any jurisdiction with respect to the
Liens created hereby. The Company also hereby
authorizes the Agent to file any such financing or
continuation statement without the signature of the
Company to the extent permitted by applicable law. A
carbon, photographic or other reproduction of this
Security Agreement shall be sufficient as a financing
statement for filing in any jurisdiction. If any
amount payable under or in connection with any of the
Collateral shall be or become evidenced by any
Instrument (other than the ARA Notes) or Chattel Paper,
such Instrument or Chattel Paper shall be immediately
delivered to the Agent, duly endorsed in a manner
satisfactory to the Agent, to be held as Collateral
pursuant to this Security Agreement unless the
aggregate unpaid principal amount of such Instruments
(other than ARA Notes) shall not exceed $100,000 at any
one time.
(b) Indemnification. The Company agrees to pay,
and to save the Agent and the Banks harmless from, any
and all liabilities, costs and expenses (including,
without limitation, reasonable legal fees and expenses)
(i) with respect to, or resulting from, any delay in
paying, any and all excise, sales or other taxes which
may be payable or determined to be payable with respect
to any of the Collateral, (ii) with respect to, or
resulting from, any delay in complying with any
Requirement of Law applicable to any of the Collateral
or (iii) in connection with any of the transactions
contemplated by this Security Agreement. In any suit,
proceeding or action brought by the Agent or any Bank
under any Account for any sum owing thereunder, or to
enforce any provisions of any Account, the Company will
save, indemnify and keep the Agent and such Bank
harmless from and against all expense, loss or damage
suffered by reason of any defense, setoff,
counterclaim, recoupment or reduction or liability
whatsoever of the account debtor or obligor thereunder,
arising out of a breach by the Company of any
obligation thereunder or arising out of any other
agreement, indebtedness or liability at any time owing
to or in favor of such account debtor or obligor or its
successors from the Company.
(c) Maintenance of Records. The Company will
keep and maintain at its own cost and expense
satisfactory and complete records of the Collateral,
including, without limitation, a record of all payments
received and all credits granted with respect to the
Accounts. The Company will mark its books and records
pertaining to the Collateral to evidence this Security
Agreement and the security interests granted hereby.
For the Agent's and the Banks' further security, the
Agent, for the ratable benefit of the Banks, shall have
a security interest in all of the Company's books and
records pertaining to the Collateral, and, if an Event
of Default shall have occurred and be continuing, the
Company shall turn over any such books and records to
the Agent or to its representatives during normal
business hours at the request of the Agent.
(d) Right of Inspection. Subject to subsection
6.6 of the Credit Agreement, the Agent and the Banks
shall at all times have full and free access during
normal business hours to all the books, correspondence
and records of the Company, and the Agent and the Banks
and their respective representatives may examine the
same, take extracts therefrom and make photocopies
thereof, and the Company agrees to render to the Agent
and the Banks, at the Company's cost and expense, such
clerical and other assistance as may be reasonably
requested with regard thereto. Subject to subsection
6.6 of the Credit Agreement, the Agent and the Banks
and their respective representatives shall at all times
also have the right to enter into and upon any premises
where any of the Inventory is located for the purpose
of inspecting the same, observing its use or otherwise
protecting its interests therein.
(e) Compliance with Laws, etc. The Company will
comply in all material respects with all Requirements
of Law applicable to the Collateral or any part thereof
or to the operation of the Company's business;
provided, however, that the Company may contest any
Requirement of Law in any reasonable manner which shall
not, in the sole opinion of the Agent, adversely affect
the Agent's or the Banks' rights or the priority of
their Liens on the Collateral.
(f) Compliance with Terms of Contractual
Obligations. The Company will perform and comply in
all material respects with all its obligations under
its Contractual Obligations relating to the Collateral
in each case where the failure to so perform or comply
could reasonably be expected to have a Material Adverse
Effect or to materially adversely affect the value of
the Collateral taken as a whole.
(g) Payment of Obligations. The Company will pay
promptly when due all taxes, assessments and
governmental charges or levies imposed upon the
Collateral or in respect of its income or profits
therefrom, as well as all claims of any kind
(including, without limitation, claims for labor,
materials and supplies) against or with respect to the
Collateral, except that no such charge need be paid if
(i) the validity thereof is being contested in good
faith by appropriate proceedings, (ii) such proceedings
do not involve any material danger of the sale,
forfeiture or loss of any material amount of the
Collateral or any interest therein and (iii) such
charge is adequately reserved against on the Company's
books in accordance with GAAP.
(h) Limitation on Liens on Collateral. The
Company will not create, incur or permit to exist, will
defend the Collateral against, and will take such other
action as is necessary to remove, any Lien or claim on
or to the Collateral, other than the Liens created
hereby or permitted by subsection 7.3 of the Credit
Agreement and will defend the right, title and interest
of the Agent and the Banks in and to any of the
Collateral against the claims and demands of all
Persons whomsoever.
(i) Limitations on Dispositions of Collateral.
The Company will not sell, transfer, lease or otherwise
dispose of any of the Collateral, or attempt, offer or
contract to do so except for sales of Inventory in the
ordinary course of its business and except as permitted
by subsection 7.6 of the Credit Agreement.
(j) Limitations on Modifications, Waivers,
Extensions and Agreements Giving Rise to Accounts. The
Company will not (i) amend, modify, terminate or waive
any provision of any agreement giving rise to an
Account in any manner which could reasonably be
expected to materially adversely affect the value of
such Account as Collateral, (ii) fail to exercise
promptly and diligently each and every material right
which it may have under each agreement giving rise to
an Account (other than any right of termination) or
(iii) fail to deliver to the Agent a copy of each
material demand, notice or document received by it
relating in any way to any agreement giving rise to an
Account in each case where the taking or failure to
take such action could reasonably be expected to have a
Material Adverse Effect or to materially adversely
affect the value of the Collateral taken as a whole.
(k) Limitations on Discounts, Compromises,
Extensions of Accounts. Other than in the ordinary
course of business as generally conducted by the
Company over a period of time, the Company will not
grant any extension of the time of payment of any of
the Accounts, compromise, compound or settle the same
for less than the full amount thereof, release, wholly
or partially, any Person liable for the payment
thereof, or allow any credit or discount whatsoever
thereon in each case where the taking or failure to
take such action could reasonably be expected to have a
Material Adverse Effect or to materially adversely
affect the value of the Collateral taken as a whole.
(l) Maintenance of Insurance. The Company will
maintain, with insurance companies which the Borrowers
believe in good faith to be financially sound and
reputable, insurance policies (i) insuring the
Inventory against loss by fire, explosion, theft and
such other casualties as may be reasonably satisfactory
to the Agent and (ii) insuring the Company, the Agent
and the Banks against liability for personal injury and
property damage relating to such Inventory, such
policies to be in such form and amounts and having such
coverage as may be reasonably satisfactory to the Agent
and the Banks, with losses payable to the Company, the
Agent and the Banks as their respective interests may
appear. All such insurance shall (i) provide that no
cancellation, material reduction in amount or material
change in coverage thereof shall be effective until at
least 30 days after receipt by the Agent of written
notice thereof and (ii) be reasonably satisfactory in
all other respects to the Agent. The Company shall
deliver to the Agent and the Banks a summary of all
insurance coverage during the month of July in each
calendar year and such updates with respect thereto as
the Agent may from time to time reasonably request.
(m) Further Identification of Collateral. The
Company will furnish to the Agent and the Banks from
time to time statements and schedules further
identifying and describing the Collateral and such
other reports in connection with the Collateral as the
Agent may reasonably request, all in reasonable detail.
(n) Notices. The Company will advise the Agent
and the Banks promptly, in reasonable detail, at their
respective addresses set forth in the Credit Agreement,
(i) of any Lien (other than Liens created hereby or
permitted under the Credit Agreement) on, or claim
asserted against, any of the Collateral and (ii) of the
occurrence of any other event which could reasonably be
expected to have a material adverse effect on the
aggregate value of the Collateral or on the Liens
created hereunder.
(o) Changes in Locations, Name, etc. The Company
will not (i) change the location of its chief executive
office/chief place of business from that specified in
Section 4(e) or remove its books and records from the
location specified in Section 4(c), (ii) permit any of
the Inventory to be kept at a location other than those
listed on Schedule I hereto or (iii) change its name,
identity or corporate structure to such an extent that
any financing statement filed by the Agent in
connection with this Security Agreement would become
seriously misleading, unless it shall have given the
Agent and the Banks at least 20 days prior written
notice thereof.
6. Agent's Appointment as Attorney-in-Fact.
(a) Powers. The Company hereby irrevocably
constitutes and appoints the Agent and any officer or agent
thereof, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the
place and stead of the Company and in the name of the Company or
in its own name, from time to time in the Agent's discretion, for
the purpose of carrying out the terms of this Security Agreement,
to take any and all appropriate action and to execute any and all
documents and instruments which may be necessary or desirable to
accomplish the purposes of this Security Agreement, and, without
limiting the generality of the foregoing, the Company hereby
gives the Agent the power and right, on behalf of the Company,
without notice to or assent by the Company, to do the following:
(i) in the case of any Account, at any time
when the authority of the Company to collect the
Accounts has been curtailed or terminated pursuant to
the first sentence of Section 3(d) hereof, or in the
case of any other Collateral, at any time when any
Event of Default shall have occurred and is continuing,
in the name of the Company or its own name, or
otherwise, to take possession of and indorse and
collect any checks, drafts, notes, acceptances or other
instruments for the payment of moneys due under any
Account or with respect to any other Collateral and to
file any claim or to take any other action or
proceeding in any court of law or equity or otherwise
deemed appropriate by the Agent for the purpose of
collecting any and all such moneys due under any
Account or with respect to any other Collateral
whenever payable;
(ii) to pay or discharge taxes and Liens levied
or placed on or threatened against the Collateral, to
effect any repairs or any insurance called for by the
terms of this Security Agreement or any other Loan
Document and to pay all or any part of the premiums
therefor and the costs thereof; and
(iii) upon the occurrence and during the
continuance of any Event of Default, (A) to direct any
party liable for any payment under any of the
Collateral to make payment of any and all moneys due or
to become due thereunder directly to the Agent or as
the Agent shall direct; (B) to ask or demand for,
collect, receive payment of and receipt for, any and
all moneys, claims and other amounts due or to become
due at any time in respect of or arising out of any
Collateral; (C) to sign and indorse any invoices,
freight or express bills, bills of lading, storage or
warehouse receipts, drafts against debtors,
assignments, verifications, notices and other documents
in connection with any of the Collateral; (D) to
commence and prosecute any suits, actions or
proceedings at law or in equity in any court of
competent jurisdiction to collect the Collateral or any
thereof and to enforce any other right in respect of
any Collateral; (E) to defend any suit, action or
proceeding brought against the Company with respect to
any Collateral; (F) to settle, compromise or adjust any
suit, action or proceeding described in clause (E)
above and, in connection therewith, to give such
discharges or releases as the Agent may reasonably deem
appropriate; and (G) generally, to sell, transfer,
pledge and make any agreement with respect to or
otherwise deal with any of the Collateral as fully and
completely as though the Agent were the absolute owner
thereof for all purposes, and to do, at the Agent's
option and the Company's expense, at any time, or from
time to time, all acts and things which the Agent
reasonably deems necessary to protect, preserve or
realize upon the Collateral and the Agent's and the
Banks' Liens thereon and to effect the intent of this
Security Agreement, all as fully and effectively as the
Company might do.
The Company hereby ratifies all that said attorneys shall
lawfully do or cause to be done by virtue hereof. This power of
attorney is a power coupled with an interest and shall be
irrevocable.
(b) Other Powers. The Company also authorizes the
Agent and the Banks, at any time and from time to time, to
execute, in connection with the sale provided for in Section 9
hereof, any indorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral.
(c) No Duty on Agent or Banks' Part. The powers
conferred on the Agent and the Banks hereunder are solely to
protect the Agent's and the Banks' interests in the Collateral
and shall not impose any duty upon the Agent or any Bank to
exercise any such powers. The Agent and the Banks shall be
accountable only for amounts that they actually receive as a
result of the exercise of such powers, and neither they nor any
of their officers, directors, employees or agents shall be
responsible to the Company for any act or failure to act
hereunder, except for their own gross negligence or willful
misconduct.
7. Performance by Agent of Company's Obligations. If
the Company fails to perform or comply with any of its agreements
contained herein and the Agent, as provided for by the terms of
this Security Agreement, shall itself perform or comply, or
otherwise cause performance or compliance, with such agreement,
the expenses of the Agent incurred in connection with such
performance or compliance, together with interest thereon at a
rate per annum 2% above the Alternate Base Rate, shall be payable
by the Company to the Agent on demand and shall constitute
Obligations secured hereby.
8. Proceeds. In addition to the rights of the Agent
and the Banks specified in Section 3(d) with respect to payments
of Accounts, it is agreed that if an Event of Default shall occur
and be continuing (a) all Proceeds received by the Company
consisting of cash, checks and other near-cash items shall be
held by the Company in trust for the Agent and the Banks,
segregated from other funds of the Company, and shall, forthwith
upon receipt by the Company, if so requested by the Agent be
turned over to the Agent in the exact form received by the
Company (duly indorsed by the Company to the Agent, if required),
and (b) any and all such Proceeds received by the Agent (whether
from the Company or otherwise) may, in the sole discretion of the
Agent, be held by the Agent for the ratable benefit of the Banks
as collateral security for, and/or then or at any time thereafter
may be applied by the Agent against, the Obligations (whether
matured or unmatured), such application to be in such order as
the Agent shall elect. Any balance of such Proceeds remaining
after the Obligations shall have been paid in full and the
Commitment shall have been terminated shall be paid over to the
Company or to whomsoever may be lawfully entitled to receive the
same.
9. Remedies. If an Event of Default shall occur and
be continuing, the Agent, on behalf of the Banks may exercise, in
addition to all other rights and remedies granted to them in this
Security Agreement and in any other instrument or agreement
securing, evidencing or relating to the Obligations, all rights
and remedies of a secured party under the Code. Without limiting
the generality of the foregoing, the Agent, without demand of
performance or other demand, presentment, protest, advertisement
or notice of any kind (except any notice required by law referred
to below) to or upon the Company or any other Person (all and
each of which demands, defenses, advertisements and notices are
hereby waived), may in such circumstances forthwith collect,
receive, appropriate and realize upon the Collateral, or any part
thereof, and/or may forthwith sell, lease, assign, give option or
options to purchase, or otherwise dispose of and deliver the
Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels at public or private sale or
sales, at any exchange, broker's board or office of the Agent or
any Bank or elsewhere upon such terms and conditions as it may
deem advisable and at such prices as it may deem best, for cash
or on credit or for future delivery without assumption of any
credit risk. The Agent or any Bank shall have the right upon any
such public sale or sales, and, to the extent permitted by law,
upon any such private sale or sales, to purchase the whole or any
part of the Collateral so sold, free of any right or equity of
redemption in the Company, which right or equity is hereby waived
or released. The Company further agrees, at the Agent's request,
to assemble the Collateral and make it available to the Agent at
places which the Agent shall reasonably select, whether at the
Company's premises or elsewhere. The Agent shall apply the net
proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all
reasonable costs and expenses of every kind incurred therein or
incidental to the care or safekeeping of any of the Collateral or
in any way relating to the Collateral or the rights of the Agent
and the Banks hereunder, including, without limitation,
reasonable attorneys' fees and disbursements, to the payment in
whole or in part of the Obligations, in such order as the Agent
may elect, and only after such application and after the payment
by the Agent of any other amount required by any provision of
law, including, without limitation, Section 9-504(1)(c) of the
Code, need the Agent account for the surplus, if any, to the
Company. To the extent permitted by applicable law, the Company
waives all claims, damages and demands it may acquire against the
Agent or any Bank arising out of the exercise by them of any
rights hereunder. If any notice of a proposed sale or other
disposition of Collateral shall be required by law, such notice
shall be deemed reasonable and proper if given at least 10 days
before such sale or other disposition. The Company shall remain
liable for any deficiency if the proceeds of any sale or other
disposition of the Collateral are insufficient to pay the
Obligations and the reasonable fees and disbursements of any
attorneys employed by the Agent or any Bank to collect such
deficiency.
10. Limitation on Duties Regarding Preservation of
Collateral. The Agent's sole duty with respect to the custody,
safekeeping and physical preservation of the Collateral in its
possession, under Section 9-207 of the Code or otherwise, shall
be to deal with it in the same manner as the Agent deals with
similar property for its own account. Neither the Agent, any
Bank, nor any of their respective directors, officers, employees
or agents shall be liable for failure to demand, collect or
realize upon all or any part of the Collateral or for any delay
in doing so or shall be under any obligation to sell or otherwise
dispose of any Collateral upon the request of the Company or
otherwise.
11. Powers Coupled with an Interest. All
authorizations and agencies herein contained with respect to the
Collateral are irrevocable and powers coupled with an interest.
12. Severability. Any provision of this Security
Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
13. Paragraph Headings. The paragraph headings used
in this Security Agreement are for convenience of reference only
and are not to affect the construction hereof or be taken into
consideration in the interpretation hereof.
14. No Waiver; Cumulative Remedies. Neither the Agent
nor any Bank shall by any act (except by a written instrument
pursuant to Section 15 hereof), delay, indulgence, omission or
otherwise be deemed to have waived any right or remedy hereunder
or to have acquiesced in any Default or Event of Default or in
any breach of any of the terms and conditions hereof. No failure
to exercise, nor any delay in exercising, on the part of the
Agent or any Bank, any right, power or privilege hereunder shall
operate as a waiver thereof. No single or partial exercise of
any right, power or privilege hereunder shall preclude any other
or further exercise thereof or the exercise of any other right,
power or privilege. A waiver by the Agent or any Bank of any
right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which the Agent or such
Bank would otherwise have on any future occasion. The rights and
remedies herein provided are cumulative, may be exercised singly
or concurrently and are not exclusive of any rights or remedies
provided by law.
15. Waivers and Amendments; Successors and Assigns;
Governing Law. None of the terms or provisions of this Security
Agreement may be waived, amended, supplemented or otherwise
modified except by a written instrument executed by the Company
and the Agent, provided that any provision of this Security
Agreement may be waived by the Agent in a written letter or
agreement executed by the Agent or by facsimile transmission from
the Agent. This Security Agreement shall be binding upon the
successors and assigns of the Company and shall inure to the
benefit of the Agent and the Banks and their respective
successors and assigns. This Security Agreement shall be
governed by, and construed and interpreted in accordance with,
the laws of the State of New York.
16. Notices. Notices hereunder may be given by mail
or by facsimile transmission, addressed or transmitted to the
Person to which it is being given at such Person's address or
transmission number set forth in the Credit Agreement and shall
be effective (a) in the case of mail, 2 days after deposit in the
postal system, first class postage pre-paid and (b) in the case
of facsimile notices, when sent. The Company may change its
address and facsimile transmission number by written notice to
the Agent, and the Agent or any Bank may change its address and
facsimile transmission number by written notice to the Company
and, in the case of a Bank, to the Agent.
17. Authority of Agent. The Company acknowledges that
the rights and responsibilities of the Agent under this Security
Agreement with respect to any action taken by the Agent or the
exercise or non-exercise by the Agent of any option, right,
request, judgment or other right or remedy provided for herein or
resulting or arising out of this Security Agreement shall, as
between the Agent and the Banks, be governed by the Credit
Agreement and by such other agreements with respect thereto as
may exist from time to time among them, but, as between the Agent
and the Company, the Agent shall be conclusively presumed to be
acting as agent for the Banks with full and valid authority so to
act or refrain from acting, and the Company shall not be under
any obligation, or entitlement, to make any inquiry respecting
such authority.
18. Borrower Merger. From and after the effectiveness
of the Borrower Merger, all references to the Company, the Parent
and the Borrowers shall be deemed to be references to the
surviving entity of such merger.
IN WITNESS WHEREOF, the Company has caused this
Security Agreement to be duly executed and delivered as of the
date first above written.
REEVES BROTHERS, INC.
By________________
Name:
Title:
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0
0
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