<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 March 31, 1994
-------------------------------
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 1-10756
-------
CARLISLE PLASTICS, INC.
----------------------------------------------------
(Exact name of registrant as specified in its Charter)
Delaware 04-2891825
- - ------------------------------------- -------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
**********************************
Commission file number 33-35966
--------
POLY-TECH, INC.
--------------------------------------
Minnesota 41-1503086
- - ------------------------------------- -------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
***********************************
ONE UNION STREET, BOSTON, MA 02108
- - ----------------------------------------- -----------
(Address of principal executive offices) (Zip Code)
(617) 523-0920
----------------------------------------------------
(Registrant's telephone number, including area code)
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
----- -----
AT MARCH 31, 1994, 8,075,591 AND 9,618,694 SHARES OF CARLISLE PLASTICS, INC.
CLASS A COMMON STOCK AND CLASS B COMMON STOCK, RESPECTIVELY, WERE
OUTSTANDING.
-1-
<PAGE> 2
CARLISLE PLASTICS, INC.
FORM 10-Q
QUARTER ENDED March 31, 1994
<TABLE>
INDEX
PART I - FINANCIAL INFORMATION:
<CAPTION>
PAGE
----
<S> <C>
Item 1. Financial Statements....................... 3
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................. 17
PART II - OTHER INFORMATION:
Item 1. Legal Proceedings.......................... 19
Item 2. Changes in Securities...................... 19
Item 3. Defaults Upon Senior Securities............ 19
Item 4. Submission of Matters to a Vote of
Security Holders........................... 19
Item 5. Other Information.......................... 19
Item 6. Exhibits and Reports on Form 8-K........... 19
SIGNATURES............................................... 20
INDEX TO EXHIBITS........................................ 21
</TABLE>
-2-
<PAGE> 3
<TABLE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
(In thousands, except share (Unaudited)
and per share amounts) MARCH 31, DECEMBER 31,
1994 1993
----------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 34,108 $ 19,745
Receivables--principally trade--net
of allowances of $2,687 as of March 31,
1994 and $3,025 as of December 31, 1993 51,368 46,770
Inventories 40,586 43,032
Other current assets 7,213 5,750
--------- ---------
Total current assets 133,275 115,297
--------- ---------
Property, plant and equipment--net of
accumulated depreciation of $71,845 as of
March 31, 1994 and $68,606 as of
December 31, 1993 138,292 135,755
Goodwill--net 67,201 67,729
Other assets--net 6,121 7,067
--------- ---------
TOTAL ASSETS $ 344,889 $ 325,848
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 31,280 $ 11,209
Accounts payable 32,552 34,109
Other accrued liabilities 17,475 15,722
--------- ---------
Total current liabilities 81,307 61,040
--------- ---------
Long-term debt--net of current portion 184,859 183,101
Deferred income taxes 10,483 10,816
Other non-current liabilities 1,500 1,625
Stockholders' equity:
Preferred stock--$.01 par value; 10,000,000
shares authorized, no shares issued
or outstanding
Class A common stock--$.01 par value; 50,000,000
shares authorized; 8,075,591 and 8,000,401
issued and outstanding as of March 31,
1994 and December 31, 1993, respectively 81 80
Class B common stock--$.01 par value; 20,000,000
shares authorized; 9,618,694 issued and
outstanding as of March 31, 1994 and
December 31, 1993 96 96
Additional paid-in capital 68,309 67,904
Retained earnings (deficit) (1,746) 1,186
--------- ---------
Total stockholders' equity 66,740 69,266
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 344,889 $ 325,848
========= =========
</TABLE>
See notes to unaudited condensed consolidated financial statements
and independent accountants' report.
-3-
<PAGE> 4
<TABLE>
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share amounts)
<CAPTION>
THREE MONTHS ENDED MARCH 31,
----------------------------
1994 1993
-------- --------
<S> <C> <C>
Net sales $ 86,092 $ 90,831
Cost of goods sold 64,639 66,495
-------- --------
Gross profit 21,453 24,336
Operating expenses 15,236 16,550
Goodwill and other amortization 744 742
-------- --------
Operating income 5,473 7,044
Interest expense 5,547 5,930
Interest and other income (101) (128)
-------- --------
Income before provision for
income taxes, extraordinary item
and cumulative effect of change
in accounting principle 27 1,242
Provision for income taxes 11 559
-------- --------
Income before extraordinary
item and cumulative effect of
change in accounting principle 16 683
Extraordinary item (net of taxes of
$1,574 in 1994 and $138 in 1993) (2,462) (234)
Cumulative effect of change in
accounting principle relating
to income taxes - 1,586
-------- --------
Net income (loss) $ (2,446) $ 2,035
======== ========
Earnings per common share:
Before extraordinary item and
change in accounting principle $ - $ .04
Extraordinary item (.14) (.01)
Cumulative effect of change in
accounting principle relating
to income taxes - .09
-------- --------
Net income (loss) $ (.14) $ .12
======== ========
Weighted average of common
and common equivalent shares 17,654 17,648
======== ========
</TABLE>
See notes to unaudited condensed consolidated financial statements
and independent accountants' report.
-4-
<PAGE> 5
<TABLE>
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<CAPTION>
THREE MONTHS ENDED MARCH 31,
----------------------------
1994 1993
----------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (2,446) $ 2,035
Adjustments to reconcile net income (loss) to
net cash flows from operating activities:
Depreciation and amortization 5,212 4,695
Deferred income taxes (426) 11
Write-off of deferred financing costs 1,331 122
Change in accounting principle - (1,586)
Other 14 41
Changes in assets and liabilities:
Receivables (4,598) (2,316)
Inventories 2,446 (162)
Other current assets (1,370) (74)
Accounts payable (1,557) (1,248)
Other accrued liabilities 4,474 4,657
Other assets (428) (231)
---------- ----------
Total adjustments 5,098 3,909
---------- ----------
Net cash provided by operating activities 2,652 5,944
---------- ----------
CASH FLOWS USED FOR INVESTING ACTIVITIES:
Acquisition of property, plant and
equipment--net (6,794) (3,619)
Purchase minority interest of subsidiary (3,221) -
Sale of assets of trucking subsidiary - 1,500
---------- ----------
Net cash used for investing activities (10,015) (2,119)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt (10,239) (5,288)
Issuance of long-term debt 32,068 467
Deferred financing costs (509) (5)
Exercise of stock options 406 38
Other - 37
---------- ----------
Net cash provided by (used for)
financing activities 21,726 (4,751)
---------- ----------
CASH AND CASH EQUIVALENTS:
Net increase (decrease) 14,363 (926)
Beginning of period 19,745 17,750
---------- ----------
End of period $ 34,108 $ 16,824
========== ==========
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest paid $ 809 $ 1,144
Income taxes paid $ 456 $ 37
</TABLE>
See notes to unaudited condensed consolidated financial statements
and independent accountants' report.
-5-
<PAGE> 6
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in thousands, except per share amounts)
(Unaudited--See Independent Accountants' Report)
A. BASIS OF PRESENTATION
The condensed consolidated financial statements have been prepared by
Carlisle Plastics, Inc. (the "Company") pursuant to the rules and
regulations of the Securities and Exchange Commission. In the opinion
of management, the statements reflect all adjustments, which are of a
normal recurring nature, to present fairly the Company's financial
position as of March 31, 1994 and December 31, 1993 and the results of
operations and cash flows for the three months ended March 31, 1994 and
1993. While the interim financial statements and accompanying
footnotes are unaudited, they have been reviewed by Deloitte & Touche,
the Company's independent certified public accountants.
Results of operations are not necessarily indicative of the results
expected for the full year. Certain amounts in prior periods'
financial statements have been reclassified to conform to the current
period's presentation.
These condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes
included in the Company's Form 10-K for the year ended December 31,
1993.
<TABLE>
B. INVENTORIES
Inventories consisted of the following at March 31, 1994 and
December 31, 1993:
<CAPTION>
(Unaudited)
March 31, December 31,
1994 1993
----------- -----------
<S> <C> <C>
Raw materials $ 15,506 $ 13,909
Finished Goods 25,080 29,123
----------- -----------
Total $ 40,586 $ 43,032
=========== ===========
</TABLE>
C. RELATED PARTY TRANSACTIONS
Management fees incurred with respect to services rendered by
affiliates of a certain stockholder were $375 for the three months
ended March 31, 1994 and 1993.
D. ACCOUNTING FOR INCOME TAXES
As of March 31, 1994, the Company had net operating loss carryforwards
from a subsidiary which was not consolidated for the purpose of filing
income tax returns for years prior to 1994. These carryforwards,
-6-
<PAGE> 7
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
totalling $9,385, expire in the years 2006 to 2008. The Company also
had alternative minimum tax credits totalling $2,553, which have no
expiration date.
E. INTEREST RATE AGREEMENTS
In September 1993, the Company received $2,000 from the termination of
an interest rate swap agreement, which it had entered into in June
1993. This gain has been deferred and is being amortized over the
original term of the swap agreement.
On September 15, 1993, the Company entered into a new interest rate
swap agreement with a notional principal amount of $90,000, terminating
on June 15, 1997 (matching the principal and due date of the Company's
10.25% Senior Fixed Rate Notes). Under the agreement, the Company
receives interest at a fixed rate (4.9%) and pays interest at a
floating rate (LIBOR), which is established in arrears at six month
intervals. The agreement is collateralized by a letter of credit. The
net interest differential and amortization of the deferred gain of $234
was recorded as a reduction of interest expense in the three month
period ended March 31, 1994. The Company is subject to interest rate
risk during the term of the swap agreement. A sufficient increase in
market interest rates during the term of the agreement could result in
the Company having a net payment obligation under the agreement. Based
upon market quotations as of March 31, 1994, the estimated cost of
terminating the interest rate swap agreement approximated $4,200. This
estimate was made based on relevant market information about the
financial instrument and is subjective in nature and involves
uncertainty and significant judgement and, therefore, cannot be
determined with precision.
On May 5, 1994, the Company bought an interest rate corridor for $1,545
with a notional principal amount of $90,000, which, beginning June 15,
1995, effectively hedges the Company's interest rate risk on the
interest rate swap agreement from 5.86% to 7.36%. The term of this
corridor is June 15, 1995 through June 15, 1997; the principal and due
date matches that of the Company's 10.25% Senior Fixed Rate Notes. The
cost of entering into the interest rate corridor will be deferred and
amortized over the term of the agreement. The Company is subject to
interest rate risk during the period of this corridor to the extent
that the LIBOR rate, established in arrears at six month intervals,
exceeds 7.36%.
F. BUSINESS ACQUISITION
Under a put and call arrangement signed in conjunction with the
acquisition of Rhino-X Industries, Inc. ("Rhino-X") in July 1991, the
Company purchased the minority interest shares at the minimum option
price of $12 per share on January 1, 1994, as established by the put
and call arrangement. The Company had recorded an obligation of $4,000
at December 31, 1993, less $500 for the minority shareholders' interest
-7-
<PAGE> 8
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
in retained earnings. At December 31, 1993 this obligation was also
reduced by $779 for sales tax payments made by the Company and
recoverable from the minority shareholders.
G. DEBT FINANCING
During March and April of 1994, the Company entered into a series of
transactions to repay and refinance certain debt.
On March 1, 1994, the Company retired $10,000 of its Senior Variable
Rate Notes due 1994 upon maturity.
On March 9, 1994 (and as amended April 14, 1994), the Company entered
into a three-year $55,000 revolving credit facility secured by the
Company's accounts receivable and inventory. Under the facility, the
Company may borrow the lesser of $55,000 or 80% of eligible accounts
receivable and 50% of eligible inventory (as defined in the agreement)
for working capital purposes. The borrowings under this facility are
payable at the expiration of the three-year agreement. The facility
includes a $7,000 sub-facility for letters of credit. The interest
rates on advances under the facility are: LIBOR plus 2.25% for advances
less than $5,000, LIBOR plus 3.25% for advances from $5,000 to $10,000
and LIBOR plus 3.75% for advances in excess of $10,000. The fee for
letter of credit obligations is 1.5% per annum. The fee for non-use of
available funds is 0.25% per annum. The LIBOR rate applicable to the
revolving credit facility was 3.625% at March 31, 1994. At March 31,
1994, the Company had $32,068 outstanding revolver advances and $5,410
letter of credit obligations. On April 14, 1994, the facility was
reduced to $20,000 after the implementation of an accounts receivable
securitization program.
On April 1, 1994, the Company retired an industrial revenue bond for
$300 prior to maturity.
On April 4, 1994, the Company entered into a five-year sale and
leaseback financing. Under the financing, the Company sold and leased
back equipment for $45,025, resulting in a gain which will be amortized
over the term of the related equipment. The lease is secured by the
related equipment. The rental payments for the lease are based on a
variable interest rate of LIBOR plus 2.65%. The LIBOR rate applicable
to the sale and leaseback agreement was 3.8125% at April 4, 1994.
On April 4, 1994, the Company retired the $68,525 outstanding balance
of its 13.75% Senior Fixed Rate Notes, three years prior to maturity,
at 103.93% of the principal amount. The notes were retired using
proceeds of the sale and leaseback financing and cash on hand. The
premium and the related write-off of deferred financing costs were
recorded as an extraordinary charge of $2,462 (net of taxes) in the
first quarter of 1994.
-8-
<PAGE> 9
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
On April 14, 1994, the Company entered into a five-year $35,000
accounts receivable securitization program for working capital
purposes. Under this program, the Company sold and will continue to
sell substantially all of its accounts receivable to a newly-formed,
wholly-owned subsidiary, Carlisle Plastics Funding Corporation
("CPFC"). CPFC purchases the accounts receivable of the Company with
proceeds from its borrowings under a commercial paper facility
(limited to 80% of eligible accounts receivable as defined in the
agreement). The interest rate of the facility is commercial paper rate
plus 1.25%. The purchased accounts receivable are solely the assets of
CPFC. In the event of liquidation of CPFC, creditors of CPFC would be
entitled to satisfy their claims from CPFC's assets prior to any
distribution to the Company. The proceeds of $35,000 were used to pay
down the outstanding balance of revolving credit advances. The
borrowings under this agreement are payable at the expiration of the
five-year agreement.
The agreements for the revolving credit facility, sale and leaseback
financing, and accounts receivable securitization program contain
covenants that include requirements to maintain compliance with certain
financial tests and ratios, including maximum capital expenditures,
minimum net worth, minimum interest and taxes coverage ratio, minimum
fixed charges coverage ratio and maximum funded debt to equity ratio.
Debt balances as of March 31, 1994 have been classified in accordance
with the repayment schedule of these refinancing agreements.
<TABLE>
The following table sets forth pro forma selected balance sheet
categories as if the debt refinancing had been completed by March 31,
1994:
<CAPTION>
(UNAUDITED)
<S> <C>
ASSETS
Cash $ 2,847
Other current assets 99,167
--------
Total current assets 102,014
Long-term assets 211,614
--------
Total assets $313,628
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of long-term debt $ 7,480
Other current liabilities 42,566
--------
Total current liabilities 50,046
Long-term debt 184,859
Other long-term liabilities 11,983
--------
Total liabilities 246,888
Equity 66,740
--------
Total liabilities and
stockholders' equity $313,628
========
</TABLE>
-9-
<PAGE> 10
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
H. UNAUDITED CONDENSED FINANCIAL INFORMATION OF CARLISLE PLASTICS,
INC. AND SUBSIDIARIES
Unaudited condensed consolidating financial information of Carlisle
Plastics, Inc. and subsidiaries follows.
-10-
<PAGE> 11
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
H. Unaudited Condensed Financial Information of Carlisle Plastics,
Inc. and Subsidiaries (continued)
<TABLE>
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEETS
<CAPTION>
MARCH 31, 1994
----------------------------------------------------------------------------------
Carlisle Non-Guarantor
Plastics, Poly-Tech, Subsidiaries Eliminations Total
Inc. Inc.(1) (2)
--------- ----------- ------------- ------------ ----------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 33,675 $ 1 $ 432 $ - $ 34,108
Receivables--principally trade--net (6) 49,676 - 1,692 - 51,368
Inventories (6) 40,456 - 130 - 40,586
Notes receivable from subsidiary (4) 21,317 - - (21,317) -
Receivable from subsidiaries or parent - 28,608 36,472 (65,080) -
Other current assets 4,519 5,444 1,972 (4,722) 7,213
--------- --------- --------- --------- ---------
Total current assets 149,643 34,053 40,698 (91,119) 133,275
Notes receivable from subsidiaries (3)(4) 118,806 - - (118,806) -
Investment in subsidiaries 17,399 70,540 - (87,939) -
Property, plant and equipment--net (7) 51,566 29,669 57,057 - 138,292
Goodwill--net 4,239 12,042 50,920 - 67,201
Other assets--net 4,662 2 1,457 - 6,121
--------- --------- --------- --------- ---------
TOTAL ASSETS $ 346,315 $ 146,306 $ 150,132 $(297,864) $ 344,889
========= ========= ========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt (7) $ 30,901 $ - $ 379 $ - $ 31,280
Accounts payable 30,897 418 1,237 - 32,552
Note payable to parent (4) - - 21,317 (21,317) -
Payable to subsidiaries or parent 22,082 36,289 6,709 (65,080) -
Other accrued liabilities 9,829 744 11,624 (4,722) 17,475
--------- --------- --------- --------- ---------
Total current liabilities 93,709 37,451 41,266 (91,119) 81,307
Long-term debt--net of current portion (7) 184,367 - 492 - 184,859
Note payable to parent (3) (4) - 90,000 28,806 (118,806) -
Deferred income taxes 2,474 3,835 4,174 - 10,483
Other non-current liabilities 1,500 - - - 1,500
Stockholders' equity:
Intercompany preferred stock (5) - 15,000 - (15,000) -
Common stock 177 1,300 71,569 (72,869) 177
Additional paid-in capital 68,309 - 70 (70) 68,309
Retained earnings (deficit) (4,221) (1,280) 3,755 - (1,746)
--------- --------- --------- --------- ---------
Total stockholders' equity 64,265 15,020 75,394 (87,939) 66,740
--------- --------- --------- --------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 346,315 $ 146,306 $ 150,132 $(297,864) $ 344,889
========= ========= ========= ========= =========
- - ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
-11-
<PAGE> 12
<TABLE>
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
H. UNAUDITED CONDENSED FINANCIAL INFORMATION OF CARLISLE PLASTICS,
INC. AND SUBSIDIARIES (Continued)
<CAPTION>
DECEMBER 31, 1993
-------------------------------------------------------------------------------
Carlisle Non-Guarantor
Plastics, Poly-Tech, Subsidiaries Eliminations Total
Inc. Inc.(1) (2)
--------- ---------- ------------- ------------ ------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 19,419 $ 1 $ 325 $ - $ 19,745
Receivables--net (6) 17,983 16,080 12,707 - 46,770
Inventories (6) 15,554 7,307 20,171 - 43,032
Notes receivable from subsidiary (4) 21,317 - - (21,317) -
Receivable from subsidiaries or parent 32,706 - 11,520 (44,226) -
Other current assets 1,060 7,186 2,062 (4,558) 5,750
-------- --------- --------- --------- ---------
Total current assets 108,039 30,574 46,785 (70,101) 115,297
Notes receivable from subsidiaries (3)(4) 118,806 - - (118,806) -
Investment in subsidiaries 17,329 70,540 - (87,869) -
Property, plant and equipment--net (7) 50,433 29,823 55,499 - 135,755
Goodwill--net 4,330 12,128 51,271 - 67,729
Other assets--net 4,963 525 1,579 - 7,067
-------- --------- --------- --------- ---------
TOTAL ASSETS $ 303,900 $ 143,590 $ 155,134 $(276,776) $ 325,848
========= ========= ========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt (7) $ 10,980 $ - $ 229 $ - $ 11,209
Accounts payable 31,818 470 1,821 - 34,109
Notes payable to parent (4) - - 21,317 (21,317) -
Payable to subsidiaries or parent - 30,659 13,567 (44,226) -
Other accrued liabilities 6,813 2,688 10,779 (4,558) 15,722
-------- --------- --------- --------- ---------
Total current liabilities 49,611 33,817 47,713 (70,101) 61,040
Long-term debt--net of current portion (7) 182,457 - 644 - 183,101
Notes payable to parent (3) (4) - 90,000 28,806 (118,806) -
Deferred income taxes 2,481 3,835 4,500 - 10,816
Other non-current liabilities 1,625 - - - 1,625
Stockholders' equity:
Intercompany preferred stock (5) - 15,000 - (15,000) -
Common stock 176 1,300 72,069 (73,369) 176
Additional paid-in capital 67,904 - - - 67,904
Retained earnings (deficit) (354) (362) 1,402 500 1,186
-------- --------- --------- --------- ---------
Total stockholders' equity 67,726 15,938 73,471 (87,869) 69,266
-------- --------- --------- --------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 303,900 $ 143,590 $ 155,134 $(276,776) $ 325,848
========= ========= ========= ========= =========
- - -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-12-
<PAGE> 13
<TABLE>
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
H. UNAUDITED CONDENSED FINANCIAL INFORMATION OF CARLISLE PLASTICS,
INC. AND SUBSIDIARIES (CONTINUED)
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1994
----------------------------------------------------------------------------
Carlisle Non-Guarantor
Plastics, Poly-Tech, Subsidiaries Eliminations Total
Inc. Inc.(1) (2)
--------- ---------- ------------- ------------ ------
<S> <C> <C> <C> <C> <C>
Net sales $ 88,008 $ 4,632 $ 17,666 $(24,214) $ 86,092
Cost of goods sold 75,410 2,194 11,249 (24,214) 64,639
-------- -------- -------- -------- --------
Gross profit 12,598 2,438 6,417 - 21,453
Operating expenses 14,087 421 1,472 - 15,980
Intercompany interest expense (income) (4,418) 3,600 818 - -
Interest expense 5,445 - 102 - 5,547
Interest and other income (101) - - - (101)
-------- -------- -------- -------- --------
Income (loss) before provision for income
taxes and extraordinary item (2,415) (1,583) 4,025 - 27
Provision for income taxes (benefit) (1,008) (665) 1,684 - 11
-------- -------- -------- -------- --------
Income (loss) before extraordinary item (1,407) (918) 2,341 - 16
Extraordinary item -- early
retirement of debt, net of taxes (2,460) - (2) - (2,462)
-------- -------- -------- -------- --------
Net income (loss) $ (3,867) $ (918) $ 2,339 $ - $ (2,446)
======== ======== ======== ======= ========
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1993
----------------------------------------------------------------------------
Carlisle Non-Guarantor
Plastics, Poly-Tech, Subsidiaries Eliminations Total
Inc. Inc.(1) (2)
--------- ---------- ------------- ------------ -----
<S> <C> <C> <C> <C> <C>
Net sales $ 29,769 $ 30,458 $ 40,608 $(10,004) $ 90,831
Cost of goods sold 22,831 21,844 31,824 (10,004) 66,495
-------- -------- -------- -------- --------
Gross profit 6,938 8,614 8,784 - 24,336
Operating expenses 4,235 6,215 6,842 - 17,292
Intercompany interest expense (income) (4,687) 3,600 1,087 - -
Interest expense 5,812 - 118 - 5,930
Interest and other income (115) - (13) - (128)
-------- -------- -------- -------- --------
Income (loss) before provision for income
taxes, extraordinary item and
cumulative effect of change
in accounting principle 1,693 (1,201) 750 - 1,242
Provision for income taxes (benefit) 410 (54) 203 - 559
-------- -------- -------- -------- --------
Income (loss) before extraordinary item
and cumulative effect of change in
accounting principle 1,283 (1,147) 547 - 683
Extraordinary item -- early
retirement of debt, net of taxes (234) - - - (234)
Cumulative effect of change in accounting
principle relating to income taxes 2,489 (69) (834) - 1,586
-------- -------- -------- -------- --------
Net income (loss) $ 3,538 $ (1,216) $ (287) $ - $ 2,035
======== ======== ======== ======== ========
- - -----------------------------------------------------------------------------------------------------------------------
</TABLE>
-13-
<PAGE> 14
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
H. UNAUDITED CONDENSED FINANCIAL INFORMATION OF CARLISLE PLASTICS,
INC. AND SUBSIDIARIES (continued)
(1) Poly-Tech, Inc. ("Poly-Tech") has guaranteed the Company's Notes.
The aggregate principal amount of this indebtedness was $177,625
as of March 31, 1994. American Western Corporation ("American
Western"), a wholly-owned subsidiary of Poly-Tech, is not
obligated under any of such guarantees by Poly-Tech.
(2) Non-guarantor subsidiaries include American Western, Rhino-X,
A&E Products (Far East) Ltd., Plasticos Bajacal, S.A. de C.V. and
A&E -- Korea, Ltd.
(3) Poly-Tech's Intercompany Notes include a $55,000 Intercompany Note
issued March 23, 1990 and a $35,000 Intercompany Note issued
April 7, 1989 (together the "Intercompany Notes") payable to the
Company ten years from their respective dates of issuance, without
amortization, and bear interest at 16% per annum. The
Intercompany Notes may be prepaid at any time, in whole or in
part, at 100% of their principal amount plus accrued interest to
the date of prepayment. The Intercompany Notes are unsecured and
rank pari passu in right of payment with all other existing and
future senior subordinated indebtedness of Poly-Tech.
Additionally, the Intercompany Notes, pursuant to their terms, are
subordinated in right of payment to all other unsubordinated
indebtedness of Poly-Tech, including the guarantees by Poly-Tech
of the Notes.
(4) The Non-Guarantor Subsidiaries' Intercompany Notes include a
$4,000 note issued July 16, 1991 that is payable May 15, 1994,
without amortization, bearing interest at 8% per annum; a $17,317
note issued January 1, 1994 payable upon demand, without
amortization, bearing interest at the commercial paper rate plus
1.25% per annum (4.02% at March 31, 1994); and a $28,806 note
issued June 19, 1992 payable March 1, 1996, without amortization,
bearing interest at LIBOR plus 2.375% per annum. These
Intercompany Notes may be prepaid at any time, in whole or in
part, at 100% of their principal amount plus accrued interest to
the date of prepayment. The Intercompany Notes are unsecured and
rank pari passu in right of payment with all other existing and
future indebtedness of Rhino-X and American Western.
(5) The intercompany preferred stock has $1,688 cumulative preferred
dividends in arrears.
(6) On March 9, 1994, Poly-Tech, American Western and Rhino-X entered
into asset purchase agreements with Carlisle Plastics, Inc. Under
these asset purchase agreements, all accounts receivable and
-14-
<PAGE> 15
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
H. UNAUDITED CONDENSED FINANCIAL INFORMATION OF CARLISLE PLASTICS,
INC. AND SUBSIDIARIES (continued)
inventory were sold from the subsidiaries to Carlisle Plastics,
Inc. On March 9, 1994, these three subsidiaries also entered into
contract manufacturing agreements with Carlisle Plastics, Inc.,
under which the subsidiaries provide manufacturing services to
Carlisle Plastics, Inc. With the implementation of these
agreements, Carlisle Plastics, Inc. became responsible for all
selling and administrative duties for the Company. The asset
purchase and contract manufacturing agreements were effective
January 1, 1994.
(7) On April 4, 1994, Poly-Tech, American Western and Rhino-X sold
certain assets as part of the Company's sale and leaseback
financing. The subsidiaries entered into sublease agreements with
Carlisle Plastics, Inc. The sublease agreements were equal to
each subsidiary's pro rata share (based on assets sold by each
subsidiary) of the Company's sale and leaseback financing and have
similar terms.
-15-
<PAGE> 16
INDEPENDENT ACCOUNTANTS' REPORT
Carlisle Plastics, Inc.
Boston, Massachusetts
We have reviewed the accompanying condensed consolidated balance sheet
of Carlisle Plastics, Inc. and subsidiaries as of March 31, 1994, and
the related condensed consolidated statements of operations and cash
flows for the three-month periods ended March 31, 1994 and 1993. These
financial statements are the responsibility of the Company's
management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of
interim financial information consists principally of applying
analytical procedures to financial data and of making inquiries of
persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance with
generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to such condensed consolidated financial statements
for them to be in conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet of Carlisle
Plastics, Inc. and subsidiaries as of December 31, 1993, and the
related consolidated statements of operations, stockholders' equity,
and cash flows for the year then ended (not presented herein); and in
our report dated February 9, 1994, we expressed an unqualified opinion
on those consolidated financial statements. In our opinion, the
information set forth in the accompanying condensed consolidated
balance sheet as of December 31, 1993 is fairly stated, in all material
respects, in relation to the consolidated balance sheet from which it
has been derived.
DELOITTE & TOUCHE
Boston, Massachusetts
May 5, 1994
-16-
<PAGE> 17
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
NET SALES
The Company's net sales for the three months ended March 31, 1994
decreased 5.2% to $86.1 million from $90.8 million for the three months
ended March 31, 1993. Sales in 1994 were adversely impacted by the
earthquake in California and harsh winter weather experienced on the
East Coast. Unit volume increased six percent in the 1994 period
compared to the 1993 period. Net selling prices per unit decreased
in the 1994 period as compared to 1993.
GROSS PROFIT
Gross profit for the Company for the three months ended March 31, 1994
decreased to $21.5 million from $24.3 million for the three months
ended March 31, 1993. Gross margin as a percent of sales decreased to
24.9% for the 1994 period from 26.8% for the comparable 1993 period as
a result of the lower net selling prices per unit.
OPERATING EXPENSES
Operating expenses, exclusive of goodwill and other amortization, for
the three months ended March 31, 1994 decreased to $15.2 million from
$16.6 million for the three months ended March 31, 1993. The decrease
was due to reduced selling and advertising expenses.
INCOME FROM OPERATIONS
Income from operations decreased to $5.5 million for the three months
ended March 31, 1994 from $7.0 million for the same period in 1993.
INTEREST EXPENSE
Interest expense, including amortization of deferred financing
costs, decreased 6.5% to $5.5 million for the three months
ended March 31, 1994 from $5.9 million for the three months ended
March 31, 1993. The decrease was due to a reduction in the average
debt outstanding and amortization of a deferred gain resulting from the
termination of an interest rate swap contract.
INCOME TAXES
The provision for income taxes is based upon the estimated effective
tax rate for each respective year.
NET INCOME (LOSS)
Net loss for the three months ended March 31, 1994 was $2.4 million.
The loss was primarily the result of a $2.5 million extraordinary
charge due to the early extinguishment of debt. Net income of $2.0
million for the three months ended March 31, 1993 included a benefit of
$1.6 million from the cumulative effect of an accounting principle
-17-
<PAGE> 18
change relating to the adoption of SFAS No. 109 and $.2 million
extraordinary charge due to the early extinguishment of debt.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital as of March 31, 1994 was $52.0 million, a
decrease of $2.3 million from the working capital balance at December
31, 1993.
For the three months ended March 31, 1994, cash flow from operations
was $2.7 million, compared to $5.9 million for the comparable period in
1993. Principal uses of cash in 1994 included net capital expenditures
of $6.8 million. Capital expenditures for 1994 are expected to
approximate depreciation expense.
On January 1, 1994, the Company purchased the minority interest shares
of Rhino-X for $4.0 million, net of $.8 million for sales tax payments
made by the Company and recoverable from the minority shareholders.
On March 1, 1994, the Company retired $10.0 million of its Senior
Variable Rate Notes due 1994 upon maturity.
On March 9, 1994, the Company entered into a three-year $55.0 million
revolving credit facility. At March 31, 1994, $32.1 million was
outstanding under this revolving credit facility.
On April 1, 1994 the Company retired the $.3 million balance of one of
its industrial revenue bonds.
On April 4, 1994, the Company entered into a five-year sale and
leaseback financing. The Company utilized existing cash balances and
proceeds from the sale and leaseback financing to retire the $68.5
million outstanding balance of its 13.75% Senior Fixed Rate Notes,
three years prior to maturity at 103.93% of their principal amount.
The premium and the related write-off of deferred financing costs were
recorded as an extraordinary charge of $2.5 million (net of taxes) in
the first quarter of 1994.
On April 14, 1994, the Company completed a five-year accounts
receivable securitization agreement for $35.0 million and used the
proceeds to pay down outstanding revolving credit advances. The
Company reduced the revolving credit agreement to $20.0 million.
In the third quarter of 1993, the Company entered into an interest rate
swap agreement with a notional principal amount of $90,000, terminating
on June 15, 1997 (matching the principal and due date of the Company's
10.25% Senior Fixed Rate Notes). Under the agreement, the Company
receives interest at a fixed rate (4.9%) and pays interest at a
floating rate (LIBOR), which is established in arrears at six month
intervals. The agreement is collateralized by a letter of credit. The
net interest differential of $.1 million was recorded as a reduction of
interest expense in the three month period ended March 31, 1994. The
Company is subject to interest rate risk during the term of the swap
agreement. A sufficient increase in market interest rates during the
term of the agreement could result in the Company having a net payment
obligation under the agreement.
-18-
<PAGE> 19
On May 5, 1994, the Company bought an interest rate corridor for $1,545
with a notional principal amount of $90,000, which effectively hedges
the Company's interest rate risk on the interest rate swap agreement
from 5.86% to 7.36% beginning in June 1995. The term of this corridor
is June 15, 1995 through June 15, 1997; the principal and due date
matches that of the Company's 10.25% Senior Fixed Rate Notes. The cost
of entering into the interest rate corridor will be deferred and
amortized over the term of the agreement. The Company is subject to
interest rate risk during the period of this corridor to the extent
that the LIBOR rate, established in arrears at six month intervals,
exceeds 7.36%.
The Company expects its cash on hand, funds from operations and
borrowings available under existing credit facilities to be sufficient
to cover future operating and investing cash requirements. Based upon
the Company's ability to generate funds from operations, management
believes that the Company will have the funds necessary to meet all of
its financing requirements and obligations.
ACCOUNTING PRONOUNCEMENTS
During 1994, the Company adopted Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities," which had no material effects on its consolidated
financial statements.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings:
None.
Item 2. Changes in Securities:
None.
Item 3. Defaults Upon Senior Securities:
None.
Item 4. Submission of Matters to a Vote of Security Holders:
None.
Item 5. Other Information:
None.
Item 6. Exhibits and Reports on Form 8-K:
None.
-19-
<PAGE> 20
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.
CARLISLE PLASTICS, INC.
Date MAY 13, 1994 /s/ RAJIV P. BHATT
------------ -------------------------------
Rajiv P. Bhatt
Chief Financial Officer
(Principal Financial
and Accounting Officer) and
Director
POLY-TECH, INC.
Date MAY 13, 1994 /s/ RAJIV P. BHATT
------------ -------------------------------
Rajiv P. Bhatt
Chief Financial Officer
(Principal Financial
and Accounting Officer)
-20-
<PAGE> 21
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
QUARTERLY PERIOD ENDED MARCH 31, 1994
INDEX TO EXHIBITS
10.14 Credit Agreement dated as of March 9, 1994 by and among
Carlisle Plastics, Inc. (the "Company"), as Borrower, Poly-
Tech, Inc. ("Poly-Tech"), A&E Products (Far East) Ltd. ("Far
East"), Plasticos Bajacal S.A. de C.V. ("Plasticos"), Rhino-X
Industries, Inc. ("Rhino-X"), A&E Korea, Ltd. ("Korea"),
American Western Corporation ("American Western") and AWC
Transportation Corporation ("AWCT"), as Co-obligors, and
General Electric Capital Corporation ("GECC"), as Agent and
Lender, as amended by the First Amendment to Credit Agreement
and Security Agreement dated as of April 14, 1994 by and
among the same parties.
10.15 Revolving Credit Note dated March 9, 1994 in the amount
of $55,000,000 issued by the borrowers under the Credit
Agreement referenced in Exhibit 10.14 to GECC.
10.16 Security Agreement dated as of March 9, 1994 by and
amount the borrowers under the Credit Agreement
referenced in Exhibit 10.14 and GECC, as administrative
agent, as amended by the First Amendment to Credit
Agreement and Security Agreement dated as of April 14,
1994 by and among the same parties (included in Exhibit
10.14).
10.17 Asset Purchase Agreements dated March 9, 1994 by and
between the Company and American Western, Poly-Tech and
Rhino-X.
10.18 Contract Manufacturing Agreements March 9, 1994
by and between the Company and American Western, Poly-
Tech and Rhino-X.
10.19 Subordination Agreement dated as of March 9, 1994 by
and among GECC, the Company, Poly-Tech, Far East,
Plasticos, Rhino-X, Korea, American Western and AWCT.
10.20 Equipment Lease Agreement dated as of April 4, 1994 by
and between the Company and GECC.
10.21 Equipment Sublease Agreements dated as of April 4, 1994
by and between the Company and American Western, Poly-
Tech and Rhino-X.
10.22 Bills of Sale dated April 4, 1994 by the Company, Poly-
Tech, American Western and Rhino-X.
10.23 Subordination Agreement dated as of April 4, 1994 by
and among GECC, the Company, Poly-Tech, Far East,
Plasticos, Rhino-X, Korea, American Western and AWCT.
-21-
<PAGE> 22
10.24 Subsidiary Guarantees dated as of April 4, 1994 by
Poly-Tech, American Western and Rhino-X in favor of
GECC.
10.25 Receivables Funding and Servicing Agreement dated as of
April 14, 1994 by and amount Carlisle Plastics Funding
Corporation ("CPFC"), as Borrower, Redwood Receivables
Corporation ("Redwood"), as Lender, the Company, as
Servicer, and GECC, as Operating Agent and Collateral
Agent.
10.26 Note dated April 14, 1994 in the amount of $35,000,000
issued by CPFC to Redwood pursuant to the Receivables
Funding and Servicing Agreement referenced in Exhibit
10.25.
10.27 Receivables Sale Agreement dated as of April 14, 1994
by and between the Company and CPFC.
10.28 Note dated April 14, 1994 in the amount of $35,000,000
issued by the Company to CPFC pursuant to the
Receivables Sale Agreement referenced in Exhibit 10.27.
-22-
<PAGE> 1
Exhibit 10.14
CREDIT AGREEMENT
Dated as of March 9, 1994
by and between
CARLISLE PLASTICS, INC.,
as Borrower,
POLY-TECH, INC., A&E PRODUCTS (FAR EAST) LTD.,
PLASTICOS BAJACAL S.A. DE C.V., RHINO-X INDUSTRIES, INC.,
A&E KOREA, LTD., AMERICAN WESTERN CORPORATION AND
AWC TRANSPORTATION CORPORATION,
as Co-Obligors,
and
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent and Lender
<PAGE> 2
<TABLE>
TABLE OF CONTENTS
-----------------
<S> <C> <C>
1. AMOUNT AND TERMS OF CREDIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Revolving Credit Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.3 Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.4 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.6 Eligible Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.7 Eligible Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.8 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.9 Cash Management Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.10 Receipt of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.11 Application and Allocation of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.12 Loan Account and Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.13 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.14 Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.15 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.16 Capital Adequacy and Other Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.1 Conditions to the Initial Revolving Credit Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.2 Further Conditions to Each Revolving Credit Advance and Each of the Letter of Credit Obligations . . . . . 17
3. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.1 Corporate Existence; Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.2 Executive Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.3 Corporate Power; Authorization; Enforceable Obligations . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.4 Financial Statements and Projections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.5 Collateral Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.6 Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.7 Ownership of Property; Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.8 Restrictions; No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.9 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.10 Ventures, Subsidiaries and Affiliates; Outstanding Stock and Indebtedness . . . . . . . . . . . . . . . . 22
3.11 Government Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.12 Margin Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.13 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.14 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.15 No Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.16 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.17 Employment Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.18 Patents, Trademarks, Copyrights and Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.19 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.20 Hazardous Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.21 Insurance Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
3.22 Deposit and Disbursement Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
3.23 Government Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
3.24 Customer and Trade Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
3.25 Agreements and Other Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
3.26 Mandatory Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4. FINANCIAL STATEMENTS AND INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.1 Reports and Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.2 Communication with Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.1 Maintenance of Existence and Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.2 Payment of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.3 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.4 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.5 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.6 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.7 Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.8 Supplemental Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.9 Employee Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.10 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.11 Landlords' Agreements and Bailee Letters and Mortgagee Agreements . . . . . . . . . . . . . . . . . . . . 32
5.12 Leased Locations of Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.13 Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.14 Maintenance of Equipment and Fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.15 Offering Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.16 Notice of Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.17 Blocked Account Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.1 Mergers, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.2 Investments; Loans and Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.3 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.4 Employee Loans and Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
6.5 Capital Structure and Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
6.6 Guaranteed Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
6.7 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
6.8 Sale of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.9 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.10 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.11 Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.12 Hazardous Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.13 Sale-Leasebacks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.14 Cancellation of Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.15 Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.16 Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
6.17 Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
6.18 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
6.19 Sale of Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
6.20 Cash Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
6.21 No Impairment of Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
6.22 Amendment to Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
6.23 Corporate Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
</TABLE>
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<PAGE> 4
<TABLE>
<S> <C>
7. TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.2 Survival of Obligations Upon Termination of Financing Arrangements . . . . . . . . . . . . . . . . . . . . 41
8. EVENTS OF DEFAULT: RIGHTS AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
8.3 Waivers by Borrower and Co-Obligors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
9.1 Assignment and Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
9.2 Appointment of Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
9.3 Set-Off and Sharing of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
9.4 Disbursement of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
9.5 Disbursements of Advances, Payments and Information . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
10. SUCCESSORS AND ASSIGNS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
10.1 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
11.1 Complete Agreement; Modification of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
11.2 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
11.3 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
11.4 No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
11.5 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
11.6 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
11.7 Conflict of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
11.8 Authorized Signature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
11.9 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
11.10 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
11.11 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
11.12 Exceptions to Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
11.13 Subordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
11.14 Section Titles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
11.15 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
11.16 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
</TABLE>
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<PAGE> 5
INDEX OF EXHIBITS AND SCHEDULES
-------------------------------
<TABLE>
<S> <C> <C>
Exhibit A - Form of Notice of Revolving Credit Advance
Exhibit A-1 - Form of Conversion/Continuation Notice
Exhibit B - Form of Borrowing Base Certificate
Exhibit C - Form of Revolving Credit Note
Exhibit D - Form of Security Agreement
Schedule 1.1(d) - Responsible Individual
Schedule 1.6 - Eligible Accounts
Schedule 1.7 - Eligible Inventory
Schedule 1.9 - List of Bank Accounts
Schedule 3.2 - Executive Offices
Schedule 3.4 - Financial Statements and Projections
Schedule 3.5 - Collateral Reports
Schedule 3.7 - Real Estate and Leases
Schedule 3.9 - Labor Matters
Schedule 3.10 - Ventures, Subsidiaries and Affiliates;
Outstanding Stock and Indebtedness
Schedule 3.13 - Tax Matters
Schedule 3.14 - ERISA Plans
Schedule 3.15 - Litigation
Schedule 3.17 - Employment Matters
Schedule 3.18 - Intellectual Property
Schedule 3.20 - Hazardous Materials
Schedule 3.21,
Part I - Insurance Policies
Schedule 3.21,
Part II
Schedule 3.22 - Deposit and Disbursement Accounts
Schedule 4.1(A) - Financial Statements and
Projections -- Reporting
Schedule 4.1(B) - Collateral Reports -- Reporting
Schedule 5.1 - Trade Names
Schedule 6.3 - Indebtedness
Schedule 6.3A - Subordinated Notes
Schedule 6.7 - Permitted Liens
Schedule 6.11 - Financial Covenants
Schedule 6.11A - Attachment to SCHEDULE 6.11
Schedule 11.8 - Authorized Signatures
Schedule 11.10 - Notice Addresses
Schedule A - Definitions
Schedule B - Letters of Credit
Schedule C - Cash Management System
Schedule C-1 - Borrower Accounts
Schedule D - Schedule of Documents
Schedule E - Revolving Loan Commitments
</TABLE>
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<PAGE> 6
CREDIT AGREEMENT, dated as of March 9, 1994, by and between
Carlisle Plastics, Inc., a Delaware corporation ("Borrower"), Poly-Tech, Inc.,
a Minnesota corporation, A&E Products (Far East) Ltd., a Hong Kong corporation,
Plasticos Bajacal S.A. de C.V., a Mexican corporation, Rhino-X Industries,
Inc., a Delaware corporation, A&E Korea, Ltd., a Delaware corporation, American
Western Corporation, a Delaware corporation, and AWC Transportation
Corporation, a South Dakota corporation (each a "Co- Obligor" and collectively
"Co-Obligors"), and GENERAL ELECTRIC CAPITAL CORPORATION, a New York
corporation (in its individual capacity, "GE Capital"), for itself, as Lender,
and as Agent for Lenders.
RECITALS
--------
A. Borrower desires to borrow up to Fifty-Five Million
Dollars ($55,000,000) from Lenders and Lenders are willing to make certain
loans to Borrower of up to such amount upon and subject to the terms and
conditions set forth herein.
B. Each of the Co-Obligors is a direct or indirect
wholly-owned Subsidiary of Borrower, receives working capital from Borrower and
will benefit both directly and indirectly from the extensions of credit to be
made to Borrower upon and subject to the terms and conditions set forth herein.
C. Capitalized terms used in this Agreement shall have
the meanings ascribed to them in SCHEDULE A. All Schedules, Exhibits and other
attachments hereto, or expressly identified to this Agreement, are incorporated
herein by reference, and taken together, shall constitute but a single
agreement. These Recitals shall be construed as part of this Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants hereinafter contained, the parties hereto agree as follows:
1. AMOUNT AND TERMS OF CREDIT
1.1 REVOLVING CREDIT ADVANCES. (a) Upon and subject to
the terms and conditions hereof, each Lender agrees to make available, from
time to time, until the Commitment Termination Date, for Borrower's use and
upon the request of Borrower therefor, advances (each, a "Revolving Credit
Advance") against Eligible Accounts and Eligible Inventory in an aggregate
amount outstanding which shall not at any given time exceed the lesser at such
time of (i) the Maximum Revolving Credit Loan ($55,000,000 as of the Closing
Date, as such amount may be reduced from time to time in accordance with the
terms of this Agreement) MINUS the amount of Letter of Credit Obligations, and
(ii) the "Formula Amount" in an amount equal to the Borrowing Base MINUS the
amount of Letter of Credit Obligations (collectively, "Borrowing
Availability"), in any case less such other reserves as Agent may deem
appropriate from time to time. In the event that Borrower enters into the
<PAGE> 7
Receivables Securitization Facility, then the amount of the Maximum Revolving
Credit Loan shall be reduced on a dollar for dollar basis by the maximum
permitted amount of funding available to Borrower under the Receivables
Securitization Facility and Borrower shall at that time make any prepayment
required pursuant to Section 1.2(A). Until all amounts outstanding in respect
of the Revolving Credit Loan shall become due and payable on the Commitment
Termination Date, Borrower may from time to time borrow, repay and reborrow
under this SECTION 1.1(a). Subject to the terms and conditions of this
Agreement, the Revolving Credit Advances may be LIBOR Rate Advances or Index
Rate Advances, or a combination thereof, selected by Borrower in accordance
with SECTIONS 1.1(B) and 1.1(C). Each LIBOR Rate Advance shall be in the
minimum amount of $100,000 and in integral multiples of $100,000 if in excess
thereof.
(b) Subject to the terms of SECTION 1.1(A), Borrower
shall select the Rate Option and, in the case of each LIBOR Rate Advance, the
LIBOR Interest Period applicable to each Revolving Credit Advance from time to
time by giving an irrevocable notice (a "Notice of Revolving Credit Advance")
not later than 12:00 noon (New York time) (x) on the Borrowing Date of each
Index Rate Advance and (y) three (3) Business Days before the Borrowing Date
for each LIBOR Rate Advance. Each Notice of Revolving Credit Advance shall be
substantially in the form of EXHIBIT A hereto, specifying:
(i) the Borrowing Date, which shall be a Business Day, of such
Revolving Credit Advance;
(ii) the aggregate amount of each Revolving Credit Advance;
(iii) the Rate Option selected; and
(iv) in the case of each LIBOR Rate Advance, the LIBOR
Interest Period applicable thereto; PROVIDED, THAT there shall
be no more than three (3) LIBOR Interest Periods outstanding
at any one time.
Borrower shall use its best efforts to select LIBOR Interest Periods so that it
is not necessary to prepay any LIBOR Rate Advance in order to make a payment
required by the terms of this Agreement, including any prepayments required or
permitted pursuant to the terms of this Agreement.
(c) Index Rate Advances shall continue as Index Rate
Advances unless and until such Index Rate Advances are converted by Borrower in
accordance with this SECTION 1.1(C) into LIBOR Rate Advances. Each LIBOR Rate
Advance shall continue as a LIBOR Rate Advance until the end of the then
applicable LIBOR Interest Period, at which time such LIBOR Rate Advance shall
be automatically converted into an Index Rate Advance unless Borrower shall
have
-2-
<PAGE> 8
given Agent an irrevocable notice (a "Conversion/Continuation Notice")
requesting that, at the end of such LIBOR Interest Period, such LIBOR Rate
Advance continue as a LIBOR Rate Advance for the same or another LIBOR Interest
Period. Subject to the terms of SECTION 1.1(A), Borrower may elect from time
to time to convert all or any part of a Revolving Credit Advance of any Rate
Option into any other Rate Option; PROVIDED that any conversion of a LIBOR Rate
Advance shall be made on, and only on, the last day of the LIBOR Interest
Period applicable thereto. Borrower shall give Agent a Conversion/
Continuation Notice of each conversion or continuation of a Revolving Credit
Advance not later than 12:00 noon (New York time) (i) on the Request Date, in
the case of a conversion into an Index Rate Advance, and (ii) at least three
(3) Business Days before the Request Date of the requested conversion or
continuation, in the case of a conversion into or continuation of a LIBOR Rate
Advance. Each Conversion/Continuation Notice shall be in the form of EXHIBIT
A-1 hereto, specifying:
(i) the Request Date, which shall be a Business Day, of
such conversion or continuation;
(ii) the aggregate amount and Rate Option of the Revolving
Credit Advance which is to be converted or continued; and
(iii) the amount and Rate Option(s) of the Revolving Credit
Advance(s) into which such Revolving Credit Advance is to be converted
or continued and, in the case of a conversion into or continuation of
a LIBOR Rate Advance, the duration of the LIBOR Interest Period
applicable thereto.
(d) Each Notice of Revolving Credit Advance and
Conversion/Continuation Notice shall be given to the individual at Agent
responsible for Borrower as identified on SCHEDULE 1.1 (D) at the address
specified thereon. In the event that Borrower shall give Agent (i) Notices of
Revolving Credit Advance which request a LIBOR Rate Advance and an Index Rate
Advance on the same Borrowing Date, or (ii) Conversion/Continuation Notices
which request a LIBOR Rate Advance and an Index Rate Advance on the same
Request Date, unless otherwise instructed in writing by Borrower, for purposes
of calculating the Applicable Margin, Agent shall be deemed to have funded such
LIBOR Rate Advances prior to any such Index Rate Advances. Each Notice of
Revolving Credit Advance and Conversion/Continuation Notice shall be given in
writing (by, telecopy, telex or cable) or by telephone confirmed immediately in
writing. If the written confirmation differs in any material respect from the
action taken by Agent and the Lenders, the records of Agent shall govern in the
absence of manifest error. Agent shall be entitled to rely upon, and shall be
fully protected under this Agreement in relying upon, any Notice of Revolving
Credit Advance or Conversion/Continuation Notice believed by Agent to be
genuine and to assume that each Person identified on SCHEDULE 11.8
-3-
<PAGE> 9
executing and delivering the same was duly authorized unless the responsible
individual acting thereon for Agent shall have, at the time of reliance
thereon, actual knowledge to the contrary.
(e) Borrower shall execute and deliver to each Lender a
note to evidence the Revolving Credit Loan, such note to be in the principal
amount of the Revolving Loan Commitment of such Lender, dated the Closing Date
and substantially in the form of EXHIBIT C hereto (each a "Revolving Credit
Note" and, collectively, the "Revolving Credit Notes"). The Revolving Credit
Notes shall represent the obligation of Borrower to pay the amount of the
Maximum Revolving Credit Loan or, if less, the aggregate unpaid principal
amount of all Revolving Credit Advances made by Lenders to Borrower, and all
other Obligations, with interest thereon as prescribed in SECTION 1.5.
(f) The date and amount of each Revolving Credit Advance
and each payment of principal with respect thereto shall be recorded on the
books and records of Agent, which books and records shall constitute PRIMA
FACIE evidence of the accuracy of the information therein recorded. The entire
unpaid balance of the Revolving Credit Loan shall be immediately due and
payable on the Commitment Termination Date.
1.2 PREPAYMENT. (a) In the event that the outstanding
balance of the Revolving Credit Loan shall, at any time, exceed the lesser at
such time of (i) the Maximum Revolving Credit Loan MINUS the Letter of Credit
Obligations or (ii) the Borrowing Base MINUS the Letter of Credit Obligations,
Borrower and Co-Obligors, jointly and severally, shall immediately repay the
Revolving Credit Loan in the amount of such excess.
(b) Subject to the provisions of SECTION 1.18, Borrower
shall have the right, subject to the terms and conditions of the Loan
Documents, at any time on at least 30 days' prior written notice to Agent to
voluntarily prepay the entire Revolving Credit Loan and terminate the Revolving
Loan Commitment; PROVIDED, THAT in the event that Borrower elects to so
voluntarily prepay the entire Revolving Credit Loan and terminate the Revolving
Credit Loan Commitment on or prior to the first anniversary of the Closing
Date, Borrower and Co-Obligors, jointly and severally, shall pay to Agent for
the ratable benefit of Lenders a prepayment fee in an amount equal to the then
aggregate Commitments multiplied by one percent (1%); PROVIDED, THAT no such
fee shall be payable if Borrower repays the entire Revolving Credit Loan in
full with the proceeds of a public offering of its Stock and terminates the
Revolving Loan Commitment or if the entire Revolving Credit Loan is repaid in
full and the Revolving Loan Commitment is terminated upon a Change in Control
of Borrower. Upon any such prepayment and termination, Borrower's right to
request and receive Revolving Credit Advances, and to request the incurrence of
Letter of Credit Obligations, shall simultaneously terminate. Any such
prepayment
-4-
<PAGE> 10
and termination shall be accompanied by the payment of all accrued and unpaid
interest and all Fees and all other remaining Obligations, including all
Letter of Credit Obligations.
1.3 LETTERS OF CREDIT. Subject to the terms and
conditions of this Agreement, including Schedule B, Borrower shall have the
right to request, and each Lender agrees to incur its Pro Rata Share of, the
Letter of Credit Obligations in accordance with SCHEDULE B.
1.4 USE OF PROCEEDS. Borrower shall utilize the
proceeds of Revolving Credit Advances solely for the financing of ordinary
working capital needs consistent with the terms of the Indentures, including
payment of interest with respect to, and the principal portion when due (in
accordance with the amortization schedule for such Indebtedness on the Closing
Date, without amendment or acceleration), of long term Indebtedness, including
that evidenced by the Indentures. Without limiting the generality of the
foregoing, Revolving Credit Advances shall not be used to redeem, make open
market purchases of or prepay any long-term Indebtedness, including any
evidenced by or arising under any of the Indentures.
1.5 INTEREST ON REVOLVING CREDIT LOAN. (a) Borrower and
Co-Obligors, jointly and severally, shall pay accrued interest to Agent, for
the ratable benefit of Lenders, in arrears (i) with respect to each Index Rate
Advance, on the first day of each month and on the Commitment Termination Date,
and (ii) with respect to each LIBOR Rate Advance, on the last day of its
applicable LIBOR Interest Period and, in the case of a LIBOR Interest Period
longer than one month, interest shall also be payable on the last day of each
month during such LIBOR Interest Period, and on the Commitment Termination
Date, and (iii) if any interest accrues or remains payable with respect to the
Revolving Credit Loan after the Commitment Termination Date, upon demand by
Agent. In addition, interest accrued on that portion of the outstanding
principal amount of any Index Rate Advance converted into a LIBOR Rate Advance
on a day other than the first day of a month shall be payable on the date of
conversion.
(b) If any interest or other payment on the Revolving
Credit Loan becomes due and payable on a day other than a Business Day, the
maturity thereof 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.
(c) Each Index Rate Advance shall bear interest at the
Index Rate from the date of such Index Rate Advance or the date on which such
Index Rate Advance was converted from a LIBOR Rate Advance to the date on which
such Index Rate Advance is repaid or converted to a LIBOR Rate Advance.
Changes in the rate of interest
-5-
<PAGE> 11
on that portion of any Revolving Credit Advance maintained as an Index Rate
Advance will take effect simultaneously with each change in the Index Base
Rate. Each LIBOR Advance shall bear interest from the first day of the LIBOR
Interest Period applicable thereto to the last day of such LIBOR Interest
Period at the interest rate determined for such LIBOR Rate Advance.
(d) All computations of interest shall be made by Agent
on the basis of a three hundred and sixty (360) day year, in each case for the
actual number of days occurring in the period for which such interest is
payable. Each determination by Agent of an interest rate hereunder shall be
conclusive and binding for all purposes, absent manifest error or bad faith.
(e) So long as any Event of Default shall have occurred
and be continuing, the interest rate applicable to any Revolving Credit Advance
and any other Obligations shall be increased by two percent (2%) per annum
above the rate of interest otherwise applicable ("Default Rate") and the
Default Rate shall be deemed to have been imposed as of and shall be payable
for all periods (including, without limitation, any remaining portion of a
LIBOR Interest Period) subsequent to the date of the occurrence of any Default
resulting in such Event of Default.
(f) Notwithstanding anything to the contrary set forth in
this SECTION 1.5, if, at any time until payment in full of all of the
Obligations, the rate of interest payable hereunder exceeds the highest rate of
interest permissible under any law which a court of competent jurisdiction
shall, in a final determination, deem applicable hereto (the "Maximum Lawful
Rate"), then in such event and so long as the Maximum Lawful Rate would be so
exceeded, the rate of interest payable hereunder shall be equal to the Maximum
Lawful Rate; PROVIDED, THAT if at any time thereafter the rate of interest
payable hereunder is less than the Maximum Lawful Rate, Borrower and
Co-Obligors, jointly and severally, shall continue to pay interest hereunder at
the Maximum Lawful Rate until such time as the total interest received by
Agent, on behalf of Lenders, from the making of such advances hereunder is
equal to the total interest which would have been received had the interest
rate payable hereunder been (but for the operation of this SECTION 1.5(F)) the
interest rate payable since the Closing Date as otherwise provided in this
Agreement. Thereafter, the interest rate payable hereunder shall be the rate
of interest provided in sECTIONS 1.5(C) through (E), unless and until the rate
of interest again exceeds the Maximum Lawful Rate, in which event this sECTION
1.5(F) shall again apply. In no event shall the total interest received by any
Lender pursuant to the terms hereof exceed the amount which such Lender could
lawfully have received had the interest due hereunder been calculated for the
full term hereof at the Maximum Lawful Rate. In the event the Maximum Lawful
Rate is calculated pursuant to this SECTION 1.5(F), such interest shall be
calculated at a daily rate equal to the Maximum Lawful Rate divided
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by the number of days in the year in which such calculation is made. In the
event that a court of competent jurisdiction, notwithstanding the provisions of
this SECTION 1.5 (f), shall make a final determination that a Lender has
received interest hereunder or under any of the other Loan Documents in excess
of the Maximum Lawful Rate, Agent shall, to the extent permitted by applicable
law, promptly apply such excess first to any interest due and not yet paid
hereunder, then to the outstanding principal of the Obligations, then to Fees
and any other unpaid Obligations and thereafter shall refund any excess to
Borrower or as a court of competent jurisdiction may otherwise order.
1.6 ELIGIBLE ACCOUNTS. Based on the most recent Schedule
of Accounts delivered by Borrower to Agent and on other information available
to Agent, Agent shall at its sole discretion determine which Accounts shall be
deemed to be "Eligible Accounts" for purposes of determining the amounts, if
any, to be advanced to Borrower. In determining whether a particular Account
constitutes an Eligible Account, Agent shall not include any such Account which
does not meet the criteria set forth on SCHEDULE 1.6.
1.7 ELIGIBLE INVENTORY. Based on the most recent
Schedule of Inventory delivered by Borrower to Agent and on other information
available to Agent, Agent shall in its sole discretion determine which
Inventory shall be deemed to be "Eligible Inventory" for purposes of
determining the amounts, if any, to be advanced to Borrower. In determining
whether any particular Inventory constitutes Eligible Inventory, Agent shall
not include Inventory which does not meet the criteria set forth on Schedule
1.7.
1.8 FEES. (a) Borrower shall pay to GE Capital,
individually, the fees specified in the GE Capital Fee Letter at the times
specified for payment therein.
(b) As additional compensation for Lenders' costs and
risks in making the Revolving Credit Loan available to Borrower, Borrower and
Co-Obligors, jointly and severally, agree to pay to Agent, for the ratable
benefit of Lenders, in arrears, on the first Business Day of each month prior
to the Commitment Termination Date and on the Commitment Termination Date, a
fee for Borrower's non-use of available funds (the "Non-Use Fee") in an amount
equal to 0.25% per annum (calculated on the basis of a 360-day year and actual
days elapsed) of the difference between the respective daily averages of (i)
the Maximum Revolving Credit Loan (as it may be reduced from time to time
hereunder) and (ii) the amount of the Revolving Credit Loan PLUS Letter of
Credit Obligations outstanding during the period for which the Non-Use Fee is
due.
(c) Borrower shall pay to GE Capital, individually in its
capacity as Agent, a collateral monitoring fee of $10,000 per annum, such fee
to be paid in advance on the Closing Date and on
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each anniversary thereof. If the average outstanding balance of the Revolving
Credit Loan for any month after the earlier of (i) the closing date of the
Receivables Securitization Facility or (ii) June 1, 1994 exceeds $10,000,000,
the collateral monitoring fee payable to GE Capital, individually in its
capacity as Agent, on the next succeeding anniversary of the Closing Date shall
be increased to $30,000.
1.9 CASH MANAGEMENT SYSTEMS. On or prior to the Closing
Date, Borrower will establish and will maintain until the Termination Date, the
cash management systems described on Schedule C.
1.10 RECEIPT OF PAYMENTS. Borrower and Co-Obligors,
jointly and severally, shall make each payment under this Agreement not later
than 12:00 noon (New York time) on the day when due in lawful money of the
United States of America in immediately available funds to the Collection
Account. For purposes of computing interest and fees and determining the
amount of funds available for borrowing by Borrower pursuant to SECTION 1.1(A),
(a) all payments (including cash sweeps) consisting of cash, wire or electronic
transfers in immediately available funds shall be deemed received on the date
of deposit thereof in the Collection Account and oral or written notice by
Borrower to Agent of such deposit, and (b) all payments consisting of checks,
drafts, or similar non-cash items shall be deemed received on receipt of good
funds following deposit of any such payment in the Collection Account and oral
or written notice to Agent by Borrower of such deposit.
1.11 APPLICATION AND ALLOCATION OF PAYMENTS. Borrower and
each of the Co-Obligors hereby irrevocably waives the right to direct the
application of any and all payments at any time or times hereafter received
from or on behalf of Borrower or any Co-Obligor and Borrower and each of the
Co-Obligors hereby irrevocably agrees that Agent shall have the continuing
exclusive right to apply any and all such payments against the then due and
payable Obligations and in repayment of the Revolving Credit Loan and Letter of
Credit Obligations, as Agent may deem advisable, notwithstanding any previous
entry by Agent upon the Loan Account or any other books and records. In the
absence of a specific determination by Agent with respect thereto, the same
shall be applied in the following order: (i) to then due and payable Fees and
expenses; (ii) to then due and payable interest payments; (iii) to Obligations
other than Fees, expenses and interest and principal payments; and (iv) to then
due and payable principal payments on the Revolving Credit Loan. Agent is
authorized to, and at its option may, make or cause to be made Revolving Credit
Advances on behalf of Borrower for payment of all Fees, expenses, Charges,
costs, principal, interest or other Obligations owing by Borrower under this
Agreement or any of the other Loan Documents if and to the extent Borrower
fails to promptly pay any such amounts as and when due, even if such Revolving
Credit Advance would cause total Revolving Credit
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Advances to exceed Borrowing Availability or the Maximum Revolving Credit Loan
amount. At Agent's option and to the extent permitted by law, any advances so
made shall be deemed Revolving Credit Advances constituting part of the
Revolving Credit Loan hereunder.
1.12 LOAN ACCOUNT AND ACCOUNTING. Agent shall maintain a
loan account (the "Loan Account") on its books to record: (a) all Revolving
Credit Advances and payments made under Letter of Credit Obligations, (b) all
payments made by Borrower or any Co-Obligor and (c) all other appropriate
debits and credits as provided in this Agreement with respect to the
Obligations. All entries in the Loan Account shall be made in accordance with
Agent's customary accounting practices as in effect from time to time.
Borrower and Co-Obligors, jointly and severally, shall pay all Obligations as
such amounts become due or are declared due pursuant to the terms of this
Agreement.
The balance in the Loan Account, as recorded on Agent's most
recent printout or other written statement, shall be presumptive evidence of
the amounts due and owing to Agent and Lenders by Borrower and Co-Obligors;
PROVIDED, THAT any failure to so record or any error in so recording shall not
limit or otherwise affect Borrower's or any Co-Obligor's obligation to pay the
Obligations. Within five (5) Business Days after the end of each calendar
month, Agent shall render to Borrower a monthly accounting of transactions
under the Revolving Credit Loan and setting forth the balance of the Loan
Account. Each and every such accounting shall (absent manifest error) be deemed
final, binding and conclusive upon Borrower and Co-Obligors in all respects as
to all matters reflected therein, unless Borrower within ten (10) Business Days
after the date any such accounting is rendered, shall notify Agent in writing
of any objection which Borrower may have to any such accounting, describing the
basis for such objection with specificity. In that event, only those items
expressly objected to in such notice shall be deemed to be disputed by
Borrower. Agent's determination, based upon the facts available, of any item
objected to by Borrower in such notice shall (absent manifest error) be final,
binding and conclusive on Borrower and Co-Obligors, unless Borrower shall
commence a judicial proceeding to resolve such objection within fifteen (15)
Business Days following Agent's notifying Borrower of such determination.
1.13 INDEMNITY. (a) Borrower and each of the Co-Obligors,
jointly and severally, shall indemnify and hold each of Agent, Lenders and
their respective Affiliates, officers, directors, employees, attorneys, agents
and representatives (each, an "Indemnified Person"), harmless from and against
any and all suits, actions, proceedings, claims, damages, losses, liabilities
and expenses (including attorneys' fees and disbursements and other costs of
investigation or defense, including those incurred upon any appeal) which may
be instituted or asserted against or incurred by any such Indemnified Person as
the result of credit having been
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extended under this Agreement and the other Loan Documents or in connection
with or arising out of the transactions contemplated hereunder and thereunder,
including any and all Environmental Liabilities and Costs; PROVIDED, THAT
Borrower and Co-Obligors shall not be liable for any indemnification to such
Indemnified Person to the extent that any such suit, action, proceeding, claim,
damage, loss, liability or expense results solely from such Indemnified
Person's gross negligence or willful misconduct, as finally determined by a
court of competent jurisdiction after all possible appeals have been exhausted.
NEITHER AGENT, ANY LENDER NOR ANY OTHER INDEMNIFIED PERSON SHALL BE RESPONSIBLE
OR LIABLE TO ANY OTHER PARTY HERETO, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY
BENEFICIARY OF SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY
THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES
WHICH MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN EXTENDED UNDER THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS.
(b) Borrower and Co-Obligors hereby acknowledge and agree
that Agent (i) is not now, and has not ever been, in control of Borrower's or
any of its Subsidiaries' affairs, and (ii) does not have the capacity through
the provisions of the Loan Documents to influence Borrower's or any of its
Subsidiaries' conduct with respect to the ownership, operation or management of
any assets or other property.
1.14 ACCESS. Borrower shall (i) provide full access
during normal business hours, from time to time upon five (5) Business Day's
prior notice, to Agent and any of its officers, employees, agents and
representatives, as frequently as Agent determines, in its sole discretion, to
be appropriate (unless a Default or Event of Default shall have occurred and be
continuing, in which event Agent and its officers, employees, designees, agents
and representatives shall have access at any and all times and without any
notice), to the properties, facilities, books, records and officers of Borrower
and its Subsidiaries and to the Collateral, and, either through Borrower or
with Borrower present (unless a Default or Event of Default shall have occurred
and be continuing, in which event Agent and its officers, employees, agents and
representatives shall have access directly without going through Borrower or
having Borrower present) to the accountants of Borrower and its Subsidiaries;
(ii) from time to time, without prior notice, permit Agent to conduct test
verifications of the Accounts in any manner and through any medium that Agent
deems advisable in its reasonable credit judgment; PROVIDED, that Agent shall
notify Borrower of any test verifications it makes (unless a Default or Event
of Default shall have occurred and be continuing, in which
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<PAGE> 16
event Agent shall have no obligation to notify Borrower) and Borrower shall
furnish all such assistance and information as Agent may request in connection
therewith; (iii) permit Agent, not more frequently than once each Fiscal
Quarter (unless a Default or Event of Default shall have occurred and be
continuing, in which event Agent shall have the right as frequently as it
determines), to make physical verifications and appraisals, at Borrower's and
Co-Obligors' expense, of the Inventory, in any manner and through any medium
that it deems advisable; PROVIDED, THAT Agent shall provide five (5) Business
Day's prior notice to Borrower (unless a Default or Event of Default shall have
occurred and be continuing, in which event no notice need be provided), and
Borrower and each of the Co-Obligors shall furnish all such information and
assistance as Agent may request in connection therewith; PROVIDED FURTHER, that,
unless a Default or Event of Default shall have occurred and be continuing, no
physical verification or appraisal of the Inventory shall be at Borrower's and
Co-Obligors' expense unless at the time of such verification or appraisal a
Revolving Credit Advance against Eligible Inventory shall be outstanding; and
(iv) following the occurrence and during the continuance of any Default or Event
of Default, provide full access at any and all times without notice to the
suppliers, customers and advisors of Borrower and its Subsidiaries. Without
limiting the generality of the foregoing, Borrower shall (i) permit Agent, and
any of its officers, employees, agents and representatives, to inspect, audit
and make extracts from all of Borrower's and its Subsidiaries' records, files
and books of account and (ii) permit Agent, and any of its officers, employees,
agents and representatives, to inspect, review and evaluate the Accounts and
Inventory at Borrower's and its Subsidiaries' locations and at premises not
owned by or leased to Borrower or any Subsidiary of Borrower. Borrower shall
make available to Agent and its counsel, as quickly as is possible under the
circumstances, originals or copies of all books, records, board minutes,
contracts, insurance policies, environmental audits and reports, business plans,
files, financial statements (actual and pro forma), filings with federal, state
and local regulatory agencies, and other instruments and documents which Agent
may request. Borrower shall deliver any document or instrument necessary for
Agent, as it may from time to time request, to obtain records from any service
bureau or other Person which maintains records for Borrower or any of its
Subsidiaries, and shall maintain duplicate records or supporting documentation
on media, including computer tapes and discs owned by Borrower. Borrower shall
notify its certified public accountants and its banking and other financial
institutions of its consent to such Person talking with Agent regarding Borrower
and its Subsidiaries, their respective affairs and the Collateral and making
available to Agent all such information (including such accountants' work
papers) and records as Agent may reasonably request.
1.15 TAXES. (a) Any and all payments by Borrower or any
Co-Obligor hereunder or in respect of the Revolving Credit Notes shall be made,
in accordance with this SECTION 1.15, free and clear of and without deduction
for any and all present or future Taxes. If Borrower or any Co-Obligor shall
be required by law to deduct any Taxes from or in respect of any sum payable
hereunder or in respect of the Revolving Credit Notes, (i) the sum payable
shall be
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increased as much as shall be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this SECTION 1.15) Agent or Lenders, as applicable, receive an amount equal to
the sum they would have received had no such deductions been made, (ii)
Borrower or such Co-Obligor shall make such deductions, and (iii) Borrower and
the Co-Obligors, jointly and severally, shall pay the full amount deducted to
the relevant taxing or other authority in accordance with applicable law.
(b) Borrower and the Co-Obligors, jointly and severally,
shall indemnify and pay, within ten (10) days of demand therefor, Agent and
each Lender for the full amount of Taxes (including any Taxes imposed by any
jurisdiction on amounts payable under this SECTION 1.15) paid by Agent or such
Lender, as appropriate (excluding Taxes imposed on or measured by the net
income of Agent or a Lender pursuant to the income tax laws of the United
States of America or by the jurisdictions in which Agent's or such Lender's
lending offices are located), and any liability (including penalties, interest
and expenses) arising therefrom or with respect thereto, whether or not such
Taxes were correctly or legally asserted.
(c) Within thirty (30) days after the date of any payment
of any such Taxes referred to in SECTION 1.15(a), Borrower shall furnish to
Agent, at its address referred to in SECTION 11.10, the original or a certified
copy of a receipt evidencing payment thereof.
1.16 Capital Adequacy and Other Adjustments.
--------------------------------------
In the event that any Lender shall have determined that the
adoption after the date hereof of any law, treaty, governmental (or
quasi-governmental) rule, regulation, guideline or order regarding capital
adequacy, reserve requirements or similar requirements or compliance by any
Lender with any request or directive regarding capital adequacy, reserve
requirements or similar requirements (whether or not having the force of law
and whether or not failure to comply therewith would be unlawful) from any
central bank or governmental agency or body having jurisdiction:
(a) subjects any Lender to any tax, duty, charge or
withholding on or from payments due from Borrower (excluding taxation of the
overall net income of any Lender), or changes the basis of taxation of payments
to any Lender in respect of its Revolving Credit Loan, any Letter of Credit
Obligations or other Obligations or amounts due it hereunder;
(b) imposes or increases or deems applicable any reserve,
assessment, insurance charge, special deposit or similar requirement against
assets of, deposits with or for the account of,
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or credit or Letter of Credit extended by, or Letter of Credit Obligation
incurred by, any Lender (other than reserves and assessments taken into account
in determining the interest rate applicable to LIBOR Rate Advances);
(c) imposes any other condition the result of which is to
increase the cost to any Lender in connection with the Revolving Credit Loan,
or of making, committing to make, funding, issuing or maintaining the Revolving
Credit Loan or Letter of Credit Obligations or reduces any amount receivable by
any Lender, or requires any Lender to make any payment calculated by reference
to the amount of the Revolving Credit Loan held or interest received by it, by
an amount deemed material by such Lender; or
(d) affects the amount of capital required or expected to be
maintained by any Lender or any corporation controlling any Lender and such
Lender determines the amount of capital required is increased by or based upon
the existence of this Agreement or its obligation to make the Revolving Credit
Loan or incur Letter of Credit Obligations or of commitments of this type;
then Borrower and Co-Obligors, jointly and severally, shall from time to time
within fifteen (15) days after notice and demand from such Lender (together
with the certificate referred to in the next sentence and with a copy to Agent)
pay to Agent, for the account of such Lender, additional amounts sufficient to
compensate such Lender for such increased expense incurred (including, in the
case of SECTION 1.16(D), any deduction on the rate of return on capital to an
amount below that which it could have achieved but for such change in
regulation) as reduction in the amount received by such Lender; PROVIDED, THAT
notwithstanding the foregoing, neither Borrower nor any Co-Obligor shall have
any obligation to make any such payment in the event, if any, that such notice
and demand was sent by such Lender more than ninety (90) days after it became
aware of such law, treaty, governmental (or quasi-governmental) rule,
regulation, guideline or order. A certificate as to the amount of such cost
and showing the basis of the computation of such cost submitted by such Lender
to Borrower and Agent shall, absent manifest error, be final, conclusive and
binding for all purposes.
1.17 AVAILABILITY OF LIBOR RATE. If the Requisite Lenders
determine, in their sole discretion, that (a) maintenance of the Revolving
Credit Loan at the LIBOR Rate or the Index Rate would violate any applicable
law, rule, regulation, or directive, whether or not having the force of law, or
(b) deposits of a type and maturity appropriate to match fund Revolving Credit
Advances are not available, or (c) adequate and fair means do not exist for
ascertaining the applicable interest rate by reference to the LIBOR Rate or the
Index Rate as to which an interest rate determination is then being made, then
Agent shall suspend the availability of the LIBOR Rate and the Index Rate and
the interest rate on the
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Revolving Credit Loan upon the occurrence of such suspension shall be the
Alternate Rate.
1.18 FUNDING INDEMNIFICATION. If any payment of a LIBOR
Rate Advance occurs on a date which is not the last day of the applicable LIBOR
Interest Period, whether because of acceleration, prepayment or otherwise, or a
LIBOR Rate Advance is not made on the date specified in a Notice of Revolving
Credit Advance or a Conversion/Continuation Notice for any reason other than
default by the Lenders, Borrower and each of the Co-Obligors, jointly and
severally, will indemnify Agent and each Lender from and against any loss or
cost incurred by it resulting therefrom, including any loss or cost in
liquidating or employing deposits acquired to fund or maintain the LIBOR Rate
Advance.
1.19 LENDER CERTIFICATES: SURVIVAL OF INDEMNITY. A
certificate of a Lender as to the amount due under SECTION 1.16 or 1.18 shall
be final, conclusive and binding on Borrower and the Co-Obligors in the absence
of manifest error. Such certificate shall set forth in reasonable detail the
manner in which the amount due has been calculated and the assumptions upon
which such calculation was based. Determination of amounts payable under
SECTIONS 1.16 and 1.18 shall be calculated as though each Lender funded its
Revolving Credit Loan through the purchase of a deposit of the type and
maturity corresponding to the deposit used as a reference in determining the
LIBOR Rate applicable to such Revolving Credit Loan, whether in fact that is
the case or not. Unless otherwise provided herein, the amount specified in the
certificate shall be payable on demand by Borrower and Co-Obligors, jointly and
severally, after receipt by Borrower of the certificate. The obligations of
the Borrower and Co-Obligors under SECTIONS 1.16 AND 1.18 shall survive payment
of the Obligations and termination of the Revolving Loan Commitment.
2. CONDITIONS PRECEDENT
2.1 Conditions to the Initial Revolving Credit Advance.
--------------------------------------------------
Notwithstanding any other provision of this Agreement and
without affecting in any manner the rights of Agent and Lenders hereunder,
Borrower shall have no rights under this Agreement (but Borrower and
Co-Obligors shall have all applicable obligations hereunder), and no Lender
shall be obligated to make any Revolving Credit Advance, incur any Letter of
Credit Obligation, or take, fulfill, or perform any other action hereunder,
until the following conditions have been satisfied, in Agent's sole discretion,
or waived in writing by Agent:
(a) This Agreement or counterparts hereof shall have been
duly executed by, and delivered to, Borrower, Co-Obligors, Agent and Lenders.
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(b) Agent shall have received all such documents,
instruments, agreements and legal opinions as Agent shall request in connection
with the transactions contemplated by this Agreement and the other Loan
Documents, including all documents, instruments, agreements and legal opinions
listed in the Schedule of Documents, each in form and substance satisfactory to
Agent.
(c) Evidence satisfactory to Agent that Borrower and
Co-Obligors have obtained consents and acknowledgments of all Persons whose
consents and acknowledgments may be required, including, but not limited to,
all requisite Governmental Authorities, to the terms, and to the execution and
delivery, of this Agreement, the other Loan Documents and the consummation of
the transactions contemplated hereby and thereby.
(d) The Eligible Accounts and Eligible Inventory
supporting the initial Revolving Credit Advance and the amount of the reserves
to be established on the Closing Date shall be sufficient in value, as
determined by Agent, to provide Borrower with excess Borrowing Availability,
after giving effect to the initial Revolving Credit Advance, under the
Revolving Credit Loan of at least $10 million.
(e) Payment by Borrower to GE Capital, individually, of
the closing fee in the amount specified in the GE Capital Fee Letter.
(f) Agent shall have received evidence satisfactory to
Agent and its counsel that: (i) since December 31, 1993, no Material Adverse
Effect on the business, operations, financial condition or prospects of
Borrower, the industries in which it operates, or any of its Subsidiaries have
occurred; (ii) no litigation has commenced which, if successful, could have any
such Material Adverse Effect or could challenge any of the transactions
contemplated by this Agreement and the other Loan Documents; (iii) since
December 31, 1993, no dividends or other distributions to Borrower's
stockholders has occurred; and (iv) since December 31, 1993, no material
increase in liabilities, liquidated or contingent, and no material decrease in
assets of Borrower or any of its Subsidiaries has occurred.
(g) The terms and conditions of all Indebtedness of
Borrower and its Subsidiaries, including all Indebtedness evidenced by or
arising under the Indentures, shall be satisfactory to Agent, in its sole
discretion.
(h) Agent shall have received audited financial
statements for the year ended December 31, 1993 with an unqualified opinion
from Deloitte & Touche with respect thereto which financial statements shall
reflect operating and net income for the fiscal year ended December 31, 1993 of
at least $31,470,000 and $7,180,000, respectively. There shall be no material
difference
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between such audited financial statements and the draft financial statements
for such period previously provided by Borrower to Agent.
(i) Borrower shall have entered into the Toll
Manufacturing Agreements and the Asset Purchase Agreements with all of its
domestic operating Subsidiaries and each of such Agreements shall be in form
and substance satisfactory to Agent, in its sole discretion, and the conditions
provided for therein with respect to protection of Borrower's interest in
Inventory shall have been performed to Agent's satisfaction.
(j) Borrower and its Subsidiaries shall have the
insurance coverage provided for in SECTION 3.21 and SECTION 5.5, in full force
and effect, with lender loss payable endorsements in favor of Agent, on behalf
of itself and Lenders, with respect to property and casualty coverage for
Inventory, and naming Agent, on behalf of itself and Lenders, as an additional
insured with respect to all liability coverage, in each case issued by
responsible carriers on terms and with coverage (in amounts and scope)
acceptable to Agent and requiring at least thirty (30) days notice of
cancellation, non-renewal or material change.
(k) Agent shall have received evidence satisfactory to
Agent and its counsel that Borrower and each of its Subsidiaries are in
compliance, except as disclosed in writing to Agent and Lenders and to the
extent acceptable to Agent in its sole discretion, with all applicable foreign,
federal, state and local laws and regulations, including those relating to
labor and environmental matters and ERISA.
(l) Agent, on behalf of Lenders, shall have received
landlord or bailee waivers and consents, as applicable, in form and substance
satisfactory to Agent, with respect to each leased location where any
Collateral is or may be located. In the event Borrower is unable to obtain an
applicable landlord or bailee waiver and consent acceptable to Agent as to any
such location prior to the Closing Date, Eligible Inventory at that location
shall automatically be deemed to be ineligible for purposes of calculating
Borrowing Availability until receipt of such waiver and consent.
(m) Agent, on behalf of Lenders, shall have received
mortgagee waivers and consents in form and substance satisfactory to Agent,
with respect to each owned location where any Collateral is or may be located.
In the event Borrower is unable to obtain a mortgagee waiver and consent as to
any location prior to the Closing Date, Eligible Inventory at that location
shall automatically be deemed to be ineligible for purposes of calculating
Borrowing Availability until receipt of such waiver and consent.
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(n) Agent shall have received and reviewed all existing
environmental reviews and audits, as well as information pertaining to all
actual or potential environmental claims, and shall be satisfied, in its sole
discretion, with the contents of such reviews, audits and other information and
with the results of all other environmental due diligence which may be
conducted by Agent. Agent shall also have received such environmental review
and audit reports as Agent shall have requested and Agent shall be satisfied,
in its sole discretion, with the contents of all such environmental reports.
(o) The terms, structure, tax effect and documentation of
the transactions contemplated hereby, including (i) organizational or governing
documents and material agreements of Borrower and its Subsidiaries, (ii) any
intercreditor or subordination agreements and (iii) the legal structure of
Borrower and its Subsidiaries and Affiliates shall be satisfactory in form and
substance to Agent, its counsel and Lenders in all respects.
(p) Agent shall have completed its business and legal due
diligence with respect to Borrower and its Subsidiaries and the legal and
corporate structure thereof and the results of such due diligence shall be
satisfactory to Agent, in its sole discretion.
(q) Borrower shall have provided Agent with its current
operating statements, a consolidated and consolidating balance sheet and
statement of cash flows, projections, and a borrowing availability certificate
executed by Borrower's Chief Financial Officer, in each case in form and
substance satisfactory to Agent, and Agent shall be satisfied, in its sole
discretion, with all of the foregoing.
2.2 FURTHER CONDITIONS TO EACH REVOLVING CREDIT ADVANCE
AND EACH OF THE LETTER OF CREDIT OBLIGATIONS. It shall be a further condition
to the initial and each subsequent Revolving Credit Advance and the incurrence
of the initial and each subsequent Letter of Credit Obligation that the
following statements shall be true on the date of each such Advance or
incurrence, as the case may be:
(a) Agent has received an appropriate Notice of Revolving
Credit Advance or Conversion/Continuation Notice or request for incurrence of
Letter of Credit Obligations, as applicable, at least the required period
before the applicable Borrowing Date, conversion date or issuance date.
(b) All of Borrower's representations and warranties
contained herein or in any of the other Loan Documents shall be true and
correct on and as of the Closing Date and the date on which each such Revolving
Credit Advance is made, converted or continued or Letter of Credit Obligation
incurred, as though made on and as of such date, except to the extent that any
such
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representation or warranty expressly relates to an earlier date and except for
changes therein expressly permitted by this Agreement.
(c) Borrower and each of its Subsidiaries shall be in
full compliance with all of the covenants and other agreements contained herein
or in any of the other Loan Documents.
(d) No event shall have occurred and be continuing, or
would result from the making, converting or continuing of any Revolving Credit
Advance or the incurrence of any Letter of Credit Obligation, which constitutes
or would constitute a Default or an Event of Default.
(e) After giving effect to such Revolving Credit Advance
or the incurrence of such Letter of Credit Obligation, the aggregate principal
amount of the Revolving Credit Loan shall not exceed the maximum amount
permitted by SECTION 1.1(A) without requiring that a payment be made to Agent
or any Lender.
(f) Each of the conditions set forth in SECTION 2.1 shall
continue to be satisfied as of such date.
The request and acceptance by Borrower of the proceeds of any Revolving Credit
Advance and the request by Borrower for the incurrence by Lenders of any Letter
of Credit Obligation shall be deemed to constitute, as of the date of such
request or acceptance, (i) a representation and warranty by Borrower that the
conditions in this SECTION 2.2 have been satisfied and (ii) a reaffirmation by
Borrower and each of the Co-Obligors of the granting and continuance of Agent's
Liens, on behalf of itself and Lenders, pursuant to the Collateral Documents.
3. REPRESENTATIONS AND WARRANTIES
To induce Lenders to make the Revolving Credit Loan and incur
Letter of Credit Obligations, in each case as herein provided for, Borrower
makes the following representations and warranties to Agent and each Lender,
each and all of which shall be true and correct as of the date of execution and
delivery of this Agreement, and shall survive the execution and delivery of
this Agreement:
3.1 CORPORATE EXISTENCE; COMPLIANCE WITH LAW. Borrower
and each of its Subsidiaries (i) is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and has been duly qualified to conduct business and is in good
standing in each other jurisdiction where its ownership or lease of property or
the conduct of its business requires such qualification, other than failures to
so qualify which either individually or in the aggregate would not have a
Material Adverse Effect; (ii) has the requisite corporate power and authority
and the legal right to own, pledge, mortgage or otherwise encumber and operate
its properties, to lease the
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<PAGE> 24
property it operates under lease and to conduct its business as now, heretofore
and proposed to be conducted; (iii) has all licenses, permits, consents or
approvals from or by, and has made all filings with, and has given all notices
to, all Governmental Authorities having jurisdiction, to the extent required
for such ownership, operation and conduct; (iv) is in compliance with its
certificate or articles of incorporation and by-laws; and (v) is in compliance
with all applicable provisions of law.
3.2 EXECUTIVE OFFICES. The current location of
Borrower's and each of its Subsidiaries' executive office and principal place
of business is set forth on SCHEDULE 3.2 and, except as set forth on SCHEDULE
3.2, none of such locations has changed within the past six (6) months.
3.3 CORPORATE POWER; AUTHORIZATION; ENFORCEABLE
OBLIGATIONS. The execution, delivery and performance by Borrower of the Loan
Documents and all instruments and documents to be delivered by Borrower or any
Co-Obligor hereunder and thereunder and the creation of all Liens provided for
herein and therein: (i) are within Borrower's or such Co-Obligor's, as the case
may be, corporate power; (ii) have been duly authorized by all necessary or
proper corporate and shareholder action; (iii) are not in contravention of any
provision of Borrower's or any Co-Obligor's certificate or articles or
incorporation or bylaws; (iv) will not violate any law or regulation, or any
order or decree of any court or governmental instrumentality; (v) will not
conflict with or result in the breach or termination of, constitute a default
under or accelerate any performance required by, any indenture (including any
of the Indentures), mortgage, deed of trust, lease, agreement or other
instrument to which Borrower or any of its Subsidiaries is a party or by which
Borrower or any of its Subsidiaries or any of their respective properties is
bound; (vi) will not result in the creation or imposition of any Lien upon any
of the property of Borrower or any of its Subsidiaries other than those in
favor of Agent, on behalf of itself and Lender, all pursuant to the Loan
Documents; and (vii) do not require the consent or approval of any Governmental
Authority or any other Person, except those referred to in SECTION 2.1(C), all
of which will have been duly obtained, made or complied with prior to the
Closing Date. At or prior to the Closing Date, each of the Loan Documents
shall have been duly executed and delivered for the benefit of or on behalf of
Borrower and each of the Co-Obligors (to the extent that the Co-Obligors are
parties thereto) and each shall then constitute a legal, valid and binding
obligation of Borrower and each of the Co-Obligors (to the extent that the Co-
Obligors are parties thereto), enforceable against it in accordance with its
terms. Each of the Toll Manufacturing Agreements and the Asset Purchase
Agreements has been duly executed by Borrower and each of its domestic
operating Subsidiaries and each constitutes a legal, valid and binding
obligation of each of the parties thereto, enforceable against each of them in
accordance with their respective terms.
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<PAGE> 25
3.4 FINANCIAL STATEMENTS AND PROJECTIONS. Borrower has
delivered the financial statements and projections identified on SCHEDULE 3.4,
and each such financial statement complies with the description thereof
contained on SCHEDULE 3.4. Equity on the Closing Date shall be equal to or
greater than $66,000,000. The aggregate amount of Subordinated Debt
outstanding on the Closing Date is $140,123,000.
3.5 COLLATERAL REPORTS. Borrower has delivered the
Collateral Reports identified on SCHEDULE 3.5 and each such Collateral Report
complies with the description thereof contained on SCHEDULE 3.5.
3.6 MATERIAL ADVERSE EFFECT. Neither the Borrower nor
any of its Subsidiaries, as of December 31, 1993 had any obligations,
contingent liabilities, or liabilities for Charges, long-term leases or unusual
forward or long-term commitments which are not reflected in the pro forma
balance sheet of Borrower and its Subsidiaries and which could, alone or in the
aggregate, have or result in a Material Adverse Effect. There has been no
material adverse change in the business, assets, operations, prospects or
financial or other condition of the Borrower or any of its Subsidiaries since
December 31, 1993. Since December 31, 1993, no dividends, advances or other
distributions have been declared, paid or made upon any Stock of the Borrower
or any of its Subsidiaries, other than dividends and other distributions in the
ordinary course of business consistent with past practices by such Subsidiaries
to Borrower, no shares of Stock of Borrower have been, or are now required to
be, redeemed, retired, purchased or otherwise acquired for value.
3.7 OWNERSHIP OF PROPERTY; LIENS. (a) Except as
described on SCHEDULE 3.7, the real estate listed on SCHEDULE 3.7 constitutes
all of the real property owned, leased, or used in its business by Borrower or
any of its Subsidiaries. Borrower and each of its Subsidiaries owns good and
marketable fee simple title to: (i) all of its real estate, and valid and
marketable leasehold interests in all of its Leases (both as lessor and lessee,
sublessee or assignee), all as described on SCHEDULE 3.7, and (ii) good and
marketable title to, or valid leasehold interests in, all of its other
properties and assets, and none of the properties and assets of Borrower or any
of its Subsidiaries thereof are subject to any Liens, except Liens permitted
under SECTION 6.7; and Borrower or such Subsidiary has received all deeds,
assignments, waivers, consents, non-disturbance and recognition or similar
agreements, bills of sale and other documents, and duly effected all
recordings, filings and other actions necessary to establish, protect and
perfect Borrower's or such Subsidiaries, right, title and interest in and to
all such real estate and other assets or property. Except as described on
SCHEDULE 3.7, (i) neither the Borrower, any of its Subsidiaries nor any other
party to any such Lease described on SCHEDULE 3.7 is in default of its
obligations
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<PAGE> 26
thereunder or has delivered or received any notice of default under any such
Lease, and no event has occurred which, with the giving of notice, the passage
of time or both, would constitute a default under any such Lease; (ii) neither
the Borrower nor any of its Subsidiaries owns or holds or is obligated under or
a party to, any option, right of first refusal or any other contractual right
to purchase, acquire, sell, assign or dispose of any real property owned or
leased by Borrower or any such Subsidiary except as set forth therein; and
(iii) no portion of any real property owned or leased by Borrower or any of its
Subsidiaries has suffered any material damage by fire or other casualty loss or
a Release which has not heretofore been completely repaired and restored to its
original condition or is being remedied. All permits required to have been
issued or appropriate to enable the real property owned or leased by Borrower
or such Subsidiary to be lawfully occupied and used for all of the purposes for
which they are currently occupied and used, have been lawfully issued and are,
as of the date hereof, in full force and effect.
3.8 RESTRICTIONS; NO DEFAULT. No contract, lease,
agreement or other instrument to which Borrower or any of its Subsidiaries is a
party or by which it or any of its properties or assets is bound or affected
and no provision of applicable law or governmental regulation has or results in
a Material Adverse Effect, or would have or result in a Material Adverse
Effect. Neither the Borrower nor any of its Subsidiaries is in default, and to
such Borrower's or Subsidiary's knowledge no third party is in default, under
or with respect to any contract, agreement, lease or other instrument to which
it is a party. No Default or Event of Default has occurred and is continuing.
3.9 LABOR MATTERS. There are no strikes or other labor
disputes against Borrower or any of its Subsidiaries that are pending or
threatened. Hours worked by and payment made to employees of Borrower and each
of its Subsidiaries have not been in violation of the Fair Labor Standards Act
or any other applicable federal, state, local or foreign law dealing with such
matters. All payments due from Borrower or any Subsidiary thereof on account
of employee health and welfare insurance have been paid or accrued as a
liability on the books of Borrower. Except as set forth on SCHEDULE 3.9,
neither Borrower nor any of its Subsidiaries has any obligation under any
employment agreement. There is no organizing activity involving Borrower or
any of its Subsidiaries pending or threatened by any labor union or group of
employees. Except as set forth on SCHEDULE 3.9, there are no representation
proceedings pending or threatened with the National Labor Relations Board, and
no labor organization or group of employees of Borrower or any of its
Subsidiaries has made a pending demand for recognition. There are no
complaints or charges against Borrower or any of its Subsidiaries pending or
threatened to be filed with any federal, state, local or foreign court,
governmental agency or arbitrator based on, arising out of, in connection with,
or otherwise relating
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<PAGE> 27
to the employment or termination of employment by Borrower or any of it
Subsidiaries of any individual. Neither Borrower nor any of its Subsidiaries
thereof is a contractor or subcontractor and has a legal obligation to engage
in affirmative action.
3.10 VENTURES, SUBSIDIARIES AND AFFILIATES; OUTSTANDING
STOCK AND INDEBTEDNESS. Except as set forth on SCHEDULE 3.10, Borrower has no
subsidiaries, is not engaged in any joint venture or partnership with any other
Person, and is not an Affiliate of any other Person. All of the issued and
outstanding Stock of each Subsidiary is owned by each of the stockholders named
on SCHEDULE 3.10. All outstanding Indebtedness of Borrower and its
Subsidiaries is described on SCHEDULE 6.3. Except as set forth on SCHEDULE
3.10, there are no outstanding rights to purchase, options, warrants or similar
rights or agreements pursuant to which Borrower or any of its Subsidiaries may
be required to issue or sell any Stock or other equity security of itself, or
any of its Subsidiaries or any other Person. As of the Closing Date, all
outstanding Indebtedness and all Liens of Borrower and each of its Subsidiaries
are described in SECTION 6.3, including SCHEDULE 6.3, and SECTION 6.7,
respectively.
3.11 GOVERNMENT REGULATION. Neither the Borrower nor any
of its Subsidiaries is an "investment company" or an "affiliated person" of, or
"promoter" or "principal underwriter" for, an "investment company," as such
terms are defined in the Investment Company Act of 1940, as amended. Neither
the Borrower nor any of its Subsidiaries is subject to regulation under the
Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act or any other federal or state statute that restricts or
limits its ability to incur Indebtedness or to perform its obligations
hereunder, and the making of the Revolving Credit Advances and the incurrence
of Letter of Credit Obligations, the application of the proceeds and repayment
thereof by Borrower and Co-Obligors and the consummation of the transactions
contemplated by this Agreement and the other Loan Documents will not violate
any provision of any such statute, the Trust Indenture Act of 1939, as amended,
or any rule, regulation or order issued by the Securities and Exchange
Commission.
3.12 MARGIN REGULATIONS. Neither the Borrower nor any of
its Subsidiaries is engaged, nor will it engage, principally or as one of its
important activities, in the business of extending credit for the purpose of
"purchasing" or "carrying" any "margin security" within the respective meanings
of each of the quoted terms under Regulation U or G of the Board of Governors
of the Federal Reserve System (the "Federal Reserve Board") as now and from
time to time hereafter in effect. Neither the Borrower nor any of its
Subsidiaries owns any "margin security", as that term is defined in Regulations
G and U of the Board of Governors of the Federal Reserve System (the "Federal
Reserve Board"), and none of the proceeds of the Revolving Credit Advances or
any Letter of
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<PAGE> 28
Credit will be used, directly or indirectly, for the purpose of purchasing or
carrying any margin security, for the purpose of reducing or retiring any
Indebtedness which was originally incurred to purchase or carry any margin
security or for any other purpose which might cause any of the loans or other
extensions of credit under this Agreement to be considered a "purpose credit"
within the meaning of Regulation G, T, U or X of the Federal Reserve Board.
Neither the Borrower nor any of its Subsidiaries will take or permit any agent
acting on its behalf to take any action which might cause this Agreement or any
other Loan Document or any document or instrument delivered pursuant hereto to
violate any regulation of the Federal Reserve Board.
3.13 TAXES. All federal, state, local and foreign tax
returns, reports and statements, including, but not limited to, information
returns (Form 1120-S) required to be filed by Borrower or any of its
Subsidiaries, have been filed with the appropriate Governmental Authority and
all Charges and other impositions shown thereon to be due and payable have been
paid prior to the date on which any fine, penalty, interest or late charge may
be added thereto for nonpayment thereof, or any such fine, penalty, interest,
late charge or loss has been paid. Except as set forth on SCHEDULE 3.13,
Borrower and each of its Subsidiaries has paid when due and payable all Charges
required to be paid by it. Proper and accurate amounts have been withheld by
Borrower or each of its Subsidiaries from its respective employees for all
periods in full and complete compliance with the tax, social security and
unemployment withholding provisions of applicable federal, state, local and
foreign law and such withholdings have been timely paid to the respective
Governmental Authorities. SCHEDULE 3.13 sets forth those taxable years for
which Borrower's tax returns are currently being audited by the IRS or any
other applicable Governmental Authority and any assessments or threatened
assessments in connection with such audit, or otherwise currently outstanding.
Except as described on SCHEDULE 3.13, neither the Borrower nor any of its
Subsidiaries has executed or filed with the IRS or any other Governmental
Authority any agreement or other document extending, or having the effect of
extending, the period for assessment or collection of any Charges. Neither the
Borrower nor any of its Subsidiaries has filed a consent pursuant to IRC
Section 341(f) or agreed to have IRC Section 341(f) (2) apply to any
dispositions of subsection (f) assets (as such term is defined in IRC Section
341(f)(4)). None of the property owned by Borrower or any of its Subsidiaries
is property which such Borrower or such Subsidiary is required to treat as
being owned by any other Person pursuant to the provisions of IRC Section
168(f)(8) of the Internal Revenue Code of 1954, as amended, and in effect
immediately prior to the enactment of the Tax Reform Act of 1986 or is
"tax-exempt use property" within the meaning of the IRC Section 168 (h).
Neither the
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Borrower nor any of its Subsidiaries has agreed or been requested to make any
adjustment under IRC Section 481(a) by reason of a change in accounting method
or otherwise. Neither the Borrower nor any of its Subsidiaries has any
obligation under any written tax sharing agreement.
3.14 ERISA. (a) SCHEDULE 3.14 lists all Plans maintained
or contributed to by Borrower or any of its Subsidiaries and all Qualified
Plans maintained or contributed to by any ERISA Affiliate, and separately
identifies the Title IV Plans, Multiemployer Plans, any multiple employer plans
subject to Section 4064 of ERISA, unfunded Pension Plans, Welfare Plans and
Retiree Welfare Plans. Each Qualified Plan has been determined by the IRS to
qualify under Section 401 of the IRC, and the trusts created thereunder have
been determined to be exempt from tax under the provisions of Section 501 of
the IRC, and to the best knowledge of Borrower nothing has occurred which would
cause the loss of such qualification or tax-exempt status. Each Plan is in
compliance with the applicable provisions of ERISA and the IRC, including the
filing of reports required under the IRC or ERISA which are true and correct as
of the date filed, and with respect to each Plan, other than a Qualified Plan,
all required contributions and benefits have been paid in accordance with the
provisions of each such Plan. Neither the Borrower, any Subsidiary thereof nor
any ERISA Affiliate, with respect to any Qualified Plan, has failed to make any
contribution or pay any amount due as required by Section 412 of the IRC or
Section 302 of ERISA or the terms of any such Plan. With respect to all
Retiree Welfare Plans, the present value of future anticipated expenses
pursuant to the latest actuarial projections of liabilities does not exceed
$100,000, and copies of such latest projections have been provided to Agent;
with respect to Pension Plans, other than Qualified Plans, the present value of
the liabilities for current participants thereunder using PBGC interest
assumptions does not exceed $250,000. Neither the Borrower nor any Subsidiary
thereof has engaged in a prohibited transaction, as defined in Section 4975 of
the IRC or Section 406 of ERISA, in connection with any Plan, which would
subject Borrower or such Subsidiary (after giving effect to any exemption) to a
material tax on prohibited transactions imposed by Section 4975 of the IRC or
any other material liability.
(b) Except as set forth on SCHEDULE 3.14: (i) no Title IV
Plan has any Unfunded Pension Liability; (ii) No ERISA Event or event described
in Section 4062(e) of ERISA with respect to any Title IV Plan has occurred or
is reasonably expected to occur; (iii) there are no pending, or to the
knowledge of Borrower or any of its Subsidiaries, threatened claims, actions or
lawsuits (other than claims for benefits in the normal course), asserted or
instituted against (x) any Plan or its assets, (y) any fiduciary with respect
to any Plan or (z) Borrower, any of its Subsidiaries or any ERISA Affiliate
with respect to any Plan; (iv) neither the Borrower, any of its Subsidiaries
nor any ERISA Affiliate has incurred or reasonably expects to incur any
Withdrawal Liability (and no event has occurred which, with the giving of
notice under Section 4219 of ERISA, would result in such liability) under
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<PAGE> 30
Section 4201 of ERISA as a result of a complete or partial withdrawal from a
Multiemployer Plan; (v) within the last five years neither the Borrower, any of
its Subsidiaries, nor any ERISA Affiliate has engaged in a transaction which
resulted in a Title IV Plan with Unfunded Liabilities being transferred outside
of the "controlled group" (within the meaning of Section 4001(a)(14) of ERISA)
of any such entity; (vi) no Plan which is a Retiree Welfare Plan provides for
continuing benefits or coverage for any participant or any beneficiary of a
participant after such participant's termination of employment (except as may
be required by Section 4980B of the IRC and at the sole expense of the
participant or the beneficiary of the participant); Borrower, each of its
Subsidiaries and each ERISA Affiliate have complied with the notice and
continuation coverage requirements of Section 4980B of the IRC and the
regulations thereunder except where the failure to comply could not have or
result in any Material Adverse Effect; and (vii) no liability under any Plan
has been funded, nor has such obligation been satisfied, with the purchase of a
contract from an insurance company that is not rated AAA by the Standard &
Poor's Corporation and the equivalent by each other nationally recognized
rating agency.
3.15 NO LITIGATION. Except as set forth on SCHEDULE 3.15,
no action, claim or proceeding is now pending or, to the knowledge of Borrower
or any of its Subsidiaries, threatened against Borrower or any Subsidiary, at
law, in equity or otherwise, before any court, board, commission, agency or
instrumentality of any federal, state, local or foreign government or of any
agency or subdivision thereof, or before any arbitrator or panel of
arbitrators, (i) which challenges Borrower's or any Subsidiary's right, power
or competence to enter into or perform any of its obligations under the Loan
Documents, or the validity or enforceability of any Loan Document or any action
taken thereunder, or (ii) which if determined adversely, could have or result
in a Material Adverse Effect, nor to the best knowledge of Borrower or such
Subsidiary does a state of facts exist which is reasonably likely to give rise
to such proceedings.
3.16 BROKERS. No broker or finder acting on behalf of
Borrower or any of its Subsidiaries brought about the obtaining, making or
closing of the loans made pursuant to this Agreement or the transactions
contemplated by the Loan Documents and neither Borrower nor any of its
Subsidiaries has any obligation to any Person in respect of any finder's or
brokerage fees in connection therewith.
3.17 EMPLOYMENT MATTERS. Except as set forth on SCHEDULE
3.17, there are no (i) employment, consulting or management agreements covering
management of Borrower or any of its Subsidiaries, or (ii) collective
bargaining agreements or other labor agreements covering any employees of
Borrower or any of its
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<PAGE> 31
Subsidiaries. A true and complete copy of each such agreement has been
furnished to Agent.
3.18 PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES. Except
as otherwise set forth on SCHEDULE 3.18, Borrower and each of its Subsidiaries
owns all material licenses, patents, patent applications, copyrights, service
marks, trademarks, trademark applications, and trade names necessary to
continue to conduct its business as heretofore conducted by it, now conducted
by it and proposed to be conducted by it, each of which is listed, together
with Copyright Office or Patent and Trademark Office application or
registration numbers, where applicable, on SCHEDULE 3.18. SCHEDULE 3.18 lists
all tradenames or other names under which Borrower or any of its Subsidiaries
conducts business. Borrower and each Subsidiary conducts its business without
infringement or claim of infringement of any license, patent, copyright,
service mark, trademark, trade name, trade secret or other intellectual
property right of others. There is no infringement or claim of infringement by
others of any license, patent, copyright, service mark, trademark, trade name,
trade secret or other intellectual property right of Borrower or any Subsidiary
thereof.
3.19 FULL DISCLOSURE. No information contained in this
Agreement, any of the other Loan Documents, the Projections, the Financial
Statements, the Collateral Reports or any written statement furnished by or on
behalf of Borrower or any of its Subsidiaries pursuant to the terms of this
Agreement or any of the other Loan Documents, which has previously been
delivered to Agent, contains any untrue statement of a material fact or omits
to state a material fact necessary to make the statements contained herein or
therein not misleading in light of the circumstances under which they were
made. The Liens granted to Agent, on behalf of itself and Lenders, pursuant to
the Collateral Documents will at the Closing Date be fully perfected first
priority Liens in and to the Collateral described therein.
3.20 HAZARDOUS MATERIALS. Except as set forth on SCHEDULE
3.20, all real property owned or leased by Borrower or any of its Subsidiaries
is free of contamination from any Hazardous Material. In addition, SCHEDULE
3.20 discloses potential material environmental liabilities of Borrower or any
of its Subsidiaries of which any of them have knowledge (i) related to
noncompliance with the Environmental Laws, or (ii) associated with any such
real property. Neither the Borrower nor any of its Subsidiaries has caused or
suffered to occur any Release with respect to any Hazardous Material at, under,
above or within any real property which it owns or leases. Neither the
Borrower nor any of its Subsidiaries is involved in operations which could lead
to the imposition of any liability or Lien on it, or any owner of any premises
which it occupies, under any Environmental Law, and neither the Borrower nor
any of its Subsidiaries has permitted any tenant or occupant of such premises
to engage in any such activity.
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<PAGE> 32
Borrower has provided to Agent copies of all existing environmental reports,
reviews and audits and all written information pertaining to actual or
potential Environmental Liabilities and Costs, in each case relating to
Borrower or any of its Subsidiaries.
3.21 INSURANCE POLICIES. SCHEDULE 3.21 PART II lists all
insurance of any nature maintained for current occurrences by Borrower or any
of its Subsidiaries, as well as a summary of the terms of such insurance.
Borrower covenants that such Insurance complies with and shall at all times
comply with the standards set forth on Schedule 3.21 Part I.
3.22 DEPOSIT AND DISBURSEMENT ACCOUNTS. SCHEDULE 3.22
lists all banks and other financial institutionsat which Borrower or any of its
Subsidiaries maintains deposits and/or other accounts, including any
disbursement accounts, and such SCHEDULE 3.22 correctly identifies the name,
address and telephone number of each depository, the name in which the account
is held, a description of the purpose of the account, and the complete account
number.
3.23 GOVERNMENT ACCOUNTS. None of the Accounts are
subject to the Federal Assignment of Claims Act (31 U.S.C. Section 3727)
relative to the assignment of such Accounts except for Accounts which do not in
the aggregate exceed (a) $300,000 on the Closing Date or (b) the amount set
forth in any Borrowing Base Certificate delivered by Borrower to Agent from
time to time hereunder.
3.24 CUSTOMER AND TRADE RELATIONS. There exists no actual
or threatened termination or cancellation of, or any material adverse
modification or change in: (a) the business relationship of Borrower or any of
its Subsidiaries with any customer or group of customers whose purchases
individually or in the aggregate are material to the operations of Borrower or
such Subsidiary or Borrower and its Subsidiaries, taken as a whole; or (b) the
business relationship of Borrower or any of its Subsidiaries with any supplier
material to the operations of Borrower, such Subsidiary or Borrower and its
Subsidiaries, taken as a whole.
3.25 AGREEMENTS AND OTHER DOCUMENTS. As of the Closing
Date, Borrower has provided to Agent or its counsel, on behalf of Lenders,
accurate and complete copies (or summaries) of all of the following agreements
or documents to which Borrower or any of its Subsidiaries is subject: (a)
Plans; (b) supply agreements not terminable by Borrower or such Subsidiary, as
appropriate, within sixty (60) days following written notice issued by Borrower
or such Subsidiary; (c) purchase agreements not terminable by Borrower or such
Subsidiary, as appropriate, within sixty (60) days following written notice
issued by Borrower or such Subsidiary; (d) leases of real property; (e) any
lease of Equipment having a remaining term of one year or longer and requiring
aggregate rental and other
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<PAGE> 33
payments in excess of $25,000 per annum; (f) licenses and permits necessary for
the conduct of Borrower's or such Subsidiary's businesses; (g) employment,
consulting, severance, "golden parachute" and other similar agreements with any
officer of Borrower or such Subsidiary; (h) instruments or documents evidencing
Indebtedness of Borrower or such Subsidiary and any Lien granted by Borrower or
such Subsidiary with respect thereto; and (i) instruments and agreements
evidencing the issuance of any equity securities, warrants, rights or options
to purchase equity securities of Borrower or such Subsidiary.
3.26 MANDATORY REDEMPTION. No mandatory redemption of
securities issued under that certain Indenture between Borrower and Bank of
Montreal Trust Company, as trustee, dated as of March 23, 1990, shall be
required to be made on either March 1, 1995 or March 1, 1996 due to credits
received by Borrower against such mandatory redemptions.
4. FINANCIAL STATEMENTS AND INFORMATION
4.1 REPORTS AND NOTICES. (a) Borrower covenants and
agrees that from and after the Closing Date and until the Commitment
Termination Date, it shall deliver to Agent and/or Lenders, as required, the
Financial Statements, notices and Projections at the times, to the Persons and
in the manner set forth on SCHEDULE 4.1(A).
(b) Borrower covenants and agrees that from and after the
Closing Date, it shall deliver to Agent and/or Lenders, as required, the
various Collateral Reports at the times, to the Persons and in the manner set
forth on SCHEDULE 4.1(B).
4.2 COMMUNICATION WITH ACCOUNTANTS. Borrower authorizes
Agent to communicate directly with its independent certified public
accountants, including Deloitte & Touche, and authorizes those accountants to
disclose to Agent any and all financial statements and other supporting
financial documents and schedules including copies of any management letter
with respect to the business, financial condition and other affairs of the
Borrower or any of its Subsidiaries. At or before the Closing Date, Borrower
shall deliver a letter addressed to such accountants instructing them to comply
with the provisions of this SECTION 4.2 and stating that Agent and the Lenders
are relying on the certified financial statements prepared by such accountants.
5. AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, unless Agent shall
otherwise consent in writing, from and after the date hereof and until the
Termination Date:
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5.1 MAINTENANCE OF EXISTENCE AND CONDUCT OF BUSINESS.
Borrower shall, and shall cause each of its Subsidiaries, to: (a) do or cause
to be done all things necessary to preserve and keep in full force and effect
its corporate existence and its rights and franchises; (b) continue to conduct
its business substantially as now conducted or as otherwise permitted
hereunder; (c) at all times maintain, preserve and protect all of its
copyrights, patents, trademarks, trade names and all other intellectual
property and rights as licensee or licensor thereof and preserve all the
remainder of its property, in use or useful in the conduct of its business and
keep the same in good repair, working order and condition (taking into
consideration ordinary wear and tear) and from time to time make, or cause to
be made, all necessary or appropriate repairs, replacements and improvements
thereto consistent with industry practices, so that the business carried on in
connection therewith may be properly and advantageously conducted at all times;
and (d) except as permitted by Section 4(e) of the Security Agreement, transact
business only in such names as are set forth on SCHEDULE 5.1.
5.2 PAYMENT OF OBLIGATIONS. (a) Borrower shall: (i) pay
and discharge or cause to be paid and discharged all Obligations; and (ii)
prior to an Event of Default, pay and discharge, or cause to be paid and
discharged, its Indebtedness other than the Obligations at the time such
amounts are due and payable, and, subject to SECTION 5.2(B), pay and discharge
or cause to be paid and discharged promptly all (A) Charges imposed upon it,
its income and profits, or any of its property (real, personal or mixed), and
(B) lawful claims for labor, materials, supplies and services or otherwise,
before any thereof shall become in default.
(b) Borrower may in good faith contest, by proper legal
action or proceedings, the validity or amount of any Charges or claims arising
under SECTION 5.2 (A) (II) and while so contesting such Charges or claims, not
pay them; PROVIDED, THAT at the time of commencement of any such action or
proceeding, and during the pendency thereof (i) adequate reserves with respect
thereto are maintained on the books of Borrower, in accordance with GAAP, (ii)
such contest operates to suspend collection of the contested Charges or claims
and such contest is maintained and prosecuted continuously and with diligence,
(iii) none of the Collateral would be subject to forfeiture or loss or any Lien
by reason of the institution or prosecution of such contest, (iv) no Lien shall
exist, be imposed or be attempted to be imposed for such Charges or claims
during such action or proceeding, (v) Borrower shall promptly pay or discharge
such contested Charges and all additional charges, interest, penalties and
expenses, if any, and shall deliver to Agent evidence acceptable to Agent of
such compliance, payment or discharge, if such contest is terminated or
discontinued adversely to Borrower, and (vi) Agent has not advised Borrower in
writing that Agent reasonably believes that nonpayment or
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nondischarge thereof could have or result in a Material Adverse Effect.
5.3 BOOKS AND RECORDS. Borrower shall keep adequate
records and books of account with respect to Borrower's and its Subsidiaries'
business activities, in which proper entries, reflecting all financial
transactions, are made in accordance with GAAP and on a basis consistent with
the Financial Statements referred to in SCHEDULE 3.4.
5.4 LITIGATION. Borrower shall notify Agent in writing,
promptly upon learning thereof, of any litigation commenced or threatened
against Borrower or any of its Subsidiaries, and of the institution against it
of any suit or administrative proceeding that (a) may involve an amount in
excess of $500,000 or (b) seeks injunctive relief or could have or result in a
Material Adverse Effect if adversely determined.
5.5 INSURANCE. (a) Borrower shall, at its sole cost and
expense, maintain the policies of insurance described on SCHEDULE 3.21, PART I
in form and with insurers acceptable to Agent. Such policies shall be in such
amounts as are set forth on SCHEDULE 3.21 and except as provided therein, in
amounts not less than the amounts maintained on the Closing Date. Borrower
shall notify Agent promptly of any occurrence causing a material loss or
decline in value of any real or personal property and the estimated (or actual,
if available) amount of such loss or decline. Except as otherwise specified on
SCHEDULE 3.21, Borrower hereby directs all present and future insurers under
its "All Risk" policies of insurance to pay all proceeds payable thereunder on
account of loss or damage to any Collateral directly to Agent, on behalf of
itself and Lenders. Borrower irrevocably makes, constitutes and appoints Agent
(and all officers, employees or agents designated by Agent) as Borrower's true
and lawful agent and attorney-in-fact for the purpose of making, settling and
adjusting claims with respect to the Collateral under the "All Risk" policies
of insurance, endorsing the name of Borrower on any check, draft, instrument or
other item of payment for the proceeds of such "All Risk" policies of
insurance, and for making all determinations and decisions with respect to
claims under such "All Risk" policies of insurance; PROVIDED that so long as a
Default or Event of Default shall not have occurred and be continuing, Borrower
may make, settle and adjust all claims of less than $250,000. In the event
Borrower at any time or times hereafter shall fail to obtain or maintain any of
the policies of insurance required in SCHEDULE 3.21, PART II or to pay any
premium in whole or in part relating thereto, Agent, without waiving or
releasing any Obligations or Default or Event of Default hereunder, may at any
time or times thereafter (but shall not be obligated to) obtain and maintain
such policies of insurance and pay such premium and take any other action with
respect thereto which Agent deems advisable. All sums so disbursed, including
attorneys fees, court costs and other charges related thereto,
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shall be payable, on demand, by Borrower to Agent and shall be additional
Obligations hereunder secured by the Collateral, PROVIDED, THAT if and to the
extent Borrower fails to promptly pay any of such sums upon demand therefor,
Agent is authorized to, and at its option may, make or cause to be made
Revolving Credit Advances on behalf of Borrower for payment thereof.
(b) Agent reserves the right at any time, upon review of
Borrower's or any of its Subsidiaries' risk profile, to require additional
forms and limits of insurance to, in Agent's sole opinion, adequately protect
both Agent and Lenders' interests, including their interests in the Collateral,
and to ensure that Borrower and each of its Subsidiaries is protected by
insurance in amounts and with coverage customary for businesses engaged in
their businesses. Borrower shall, if so requested by Agent, deliver to Agent,
from time to time upon request of Agent, a report of a reputable insurance
broker, satisfactory to Agent, with respect to its insurance policies.
(c) Borrower shall deliver to Agent endorsements (i) to
all "All Risk" insurance covering any Collateral naming Agent, on behalf of
itself and Lenders, as lender loss payee, and (ii) to all general liability and
other liability policies naming Agent, on behalf of itself and Lenders, as
additional insured.
5.6 COMPLIANCE WITH LAWS. Borrower shall comply in all
material respects with all federal, state and local laws and regulations
applicable to it, including those relating to licensing, environmental,
consumer credit, truth-in-lending, ERISA and labor matters.
5.7 AGREEMENTS. Borrower and each of its Subsidiaries
shall perform, within all required time periods (after giving effect to any
applicable grace periods), all of its obligations and enforce all of its rights
under each agreement to which it is a party, including any lease or customer
contracts to which it is a party. Neither the Borrower nor any of its
Subsidiaries shall terminate or modify any provision of any agreement to which
it is a party which termination or modification could have or result in a
Material Adverse Effect.
5.8 SUPPLEMENTAL DISCLOSURE. On the request of Agent (in
the event that such information is not otherwise delivered by Borrower to Agent
pursuant to this Agreement), so long as there are Obligations outstanding
hereunder, but not more frequently than every month, Borrower will supplement
each schedule or representation herein with respect to any matter hereafter
arising which, if existing or occurring at the date of this Agreement, would
have been required to be set forth or described in such schedule or as an
exception to such representation or which is necessary to correct any
information in such schedule or representation which has been rendered
inaccurate thereby;
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PROVIDED, THAT such supplement to such schedule or representation shall not be
deemed an amendment thereof unless expressly consented to in writing by Agent
and Requisite Lenders, and no such amendments, except as the same may be
consented to in a writing which expressly includes a waiver, shall be or be
deemed a waiver of any Default or Event of Default disclosed therein.
5.9 EMPLOYEE PLANS. Borrower shall notify Agent of (i)
any and all claims, actions, or lawsuits asserted or instituted, and of any
threatened litigation or claims against Borrower, any of its Subsidiaries or
against any ERISA Affiliate in connection with any Plan maintained, at any
time, by such Borrower, such Subsidiary or such ERISA Affiliate, or to which
such Borrower, such Subsidiary or such ERISA Affiliate has or had at any time
any obligation to contribute, or against any such Plan itself, or against any
fiduciary of or service provided to any such Plan, in each case in excess of
$250,000 and (ii) the occurrence of any "Reportable Event" with respect to any
Pension Plan of Borrower, such Subsidiary or such ERISA Affiliate.
5.10 ENVIRONMENTAL MATTERS. Borrower shall, and shall
cause each of its Subsidiaries to, (i) comply in all respects with all
Environmental Laws applicable to it, (ii) notify Agent promptly after Borrower
or such Subsidiary becomes aware of any Release upon any premises owned or
occupied by it, and (iii) promptly forward to Agent a copy of any order,
notice, permit, application, or any communication or report received by
Borrower or such Subsidiary in connection with any such Release or any other
matter relating to the Environmental Laws that may affect such premises or
Borrower or such Subsidiary. The provisions of this SECTION 5.10 shall apply
whether or not the Environmental Protection Agency, any other federal agency or
any state, local or foreign environmental agency has taken or threatened any
action in connection with any Release or the presence of any Hazardous
Materials.
5.11 LANDLORDS' AGREEMENTS AND BAILEE LETTERS AND
MORTGAGEE AGREEMENTS. Borrower shall use its best efforts to obtain a
landlord's agreement in form and substance acceptable to Agent from the lessor
of each leased premise currently being used by Borrower or any of its
Subsidiaries and the lessor of any new leased premises, in each case where
Collateral is currently or may be located. Borrower shall use its best efforts
to obtain a bailee letter in form and substance acceptable to Agent from the
owner of each warehouse currently being used by Borrower or any of its
Subsidiaries and the owner of any new warehouse, in each case where Collateral
is currently or may be located. Borrower shall use its best efforts to obtain
a mortgagee's agreement in form and substance satisfactory to Agent from the
mortgagee of each owned premise currently being used by Borrower or any
Subsidiary thereof, and the mortgagee of any new owned property subject to a
mortgage, in each case where Collateral is currently or may be located. With
respect to locations leased or owned on the Closing Date, in the
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event Borrower is unable to obtain a landlord agreement, bailee letter or
mortgagee agreement as to any location prior to the Closing Date, Eligible
Inventory at that location shall automatically be deemed to be ineligible for
purposes of calculating Borrowing Availability. No real property or portion
thereof where any Inventory may be stored, kept or processed shall be leased or
acquired by, and no agreement with respect to any warehouse where any Inventory
may be stored, kept or processed shall be entered into by, Borrower or any
Subsidiary thereof after the Closing Date, unless and until a landlord
agreement, bailee letter or mortgagee agreement, as appropriate, in each case
satisfactory to Agent, in its sole discretion, shall first have been obtained
with respect to such location; PROVIDED that Borrower or such Subsidiary may
enter into such lease, acquisition or warehouse agreement without a landlord
agreement, bailee letter or mortgagee agreement, as appropriate, if all of the
following conditions are met: (i) the book value of Inventory at any such
location does not exceed $100,000, (ii) after giving effect to any exception
under this SECTION 5.11, the aggregate book value of Inventory at all such
exempted locations does not exceed $400,000, and (iii) Borrower or such
Subsidiary shall have used its best efforts to obtain a landlord agreement,
bailee letter or mortgagee letter, as appropriate, prior to entering into any
such transaction.
5.12 LEASED LOCATIONS OF COLLATERAL. Borrower shall, and
shall cause its Subsidiaries to, timely and fully pay and perform its
obligations under all leases and other agreements with respect to each leased
location or public warehouse where any Collateral is or may be located. Upon
Agent's request from time to time, Borrower shall deliver to Agent copies of
(i) all invoices received by Borrower for the payment of rent or other
obligations with respect to any such leased location or warehouse, (ii) all
cancelled checks evidencing payment of such rent and other obligations, (iii)
any and all default notices received under or with respect to any such leased
location or warehouse, and (iv) any and all other notices received under or
with respect to any such lease or other agreement.
5.13 SUBSIDIARY. Prior to forming any Subsidiary or
permitting any of its Subsidiaries to form any Subsidiary, Borrower shall (a)
provide not less than twenty-five (25) days prior written notice to Agent, (b)
receive the prior written consent of Agent if, after giving effect to the
formation thereof, a new domestic Subsidiary shall have assets of One Hundred
Thousand Dollars ($100,000) or more, or a new foreign Subsidiary shall have
assets of Five Hundred Thousand Dollars ($500,000) or more, and (c) cause each
new Subsidiary to execute (i) applicable Toll Manufacturing Agreements and
Asset Purchase Agreements for domestic operating Subsidiaries, (ii) Collateral
Documents with respect to Accounts and Inventory, and (iii) this Agreement as
a Co-Obligor.
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5.14 MAINTENANCE OF EQUIPMENT AND FIXTURES. Borrower
shall, and shall cause its Subsidiaries to, keep and maintain its Equipment and
Fixtures in good operating condition sufficient for the continuation of its
business conducted on a basis consistent with past practices, and Borrower or
such Subsidiary shall provide or arrange for all maintenance and service and
all repairs necessary for such purpose.
5.15 OFFERING PROCEEDS. Unless Agent shall otherwise
agree, Borrower shall apply the entire net cash proceeds from any sale of Stock
permitted under this Agreement, first, to reduce the Revolving Credit Loan to
zero, second, to reduce all of the other Obligations then due and payable to
zero and, third, for any other legally permissible purpose.
5.16 NOTICE OF LABOR MATTERS. Borrower shall provide
prompt notice to Agent of (i) any strike or other material labor dispute
against Borrower or any of its Subsidiaries, (ii) any organizing efforts
involving Borrower or any of its Subsidiaries by any labor union or group of
employees, and (iii) any complaints or charges against Borrower or any of its
Subsidiaries filed with any federal, state, local or foreign court,
governmental agency or arbitrator involving an amount in excess of $250,000 and
based on, arising out of, in connection with, or otherwise relating to the
employment or termination of employment by Borrower or any of its Subsidiaries
of any individual. Borrower shall provide prompt notice to Agent of any
collective bargaining agreement or employment agreement with any officer
entered into by Borrower or any Subsidiary of Borrower with any other Person
and, together with such notice, shall provide Agent with a copy of any such
collective bargaining agreement or employment agreement.
5.17 BLOCKED ACCOUNT AGREEMENTS. No later than May 2,
1994, Borrower and Co-Obligors shall enter into blocked account agreements with
Agent in form and substance satisfactory to Agent, in its sole discretion,
consistent with the requirements of SCHEDULE C and as otherwise deemed
advisable by Agent in its sole discretion as a result of the consummation of
the Receivables Securitization Facility.
6. NEGATIVE COVENANTS
Borrower covenants and agrees that, without Agent's prior
written consent, from and after the date hereof until the Commitment
Termination Date:
6.1 MERGERS, ETC. Borrower shall not, nor shall Borrower
permit any of its Subsidiaries to, directly or indirectly, by operation of law
or otherwise, merge or consolidate with, acquire all or substantially all of
the assets or capital stock of, or otherwise combine with, any Person, except
that any wholly-owned Subsidiary may merge or consolidate with or into Borrower
(provided
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Borrower is the surviving corporation) or with or into another wholly-owned
Subsidiary.
6.2 INVESTMENTS; LOANS AND ADVANCES. Except as otherwise
permitted by SECTION 6.3 or 6.4, Borrower shall not, nor shall it permit any of
its Subsidiaries to, make any investment in, or make or accrue loans or
advances of money to any Person (including, without limitation, Subordinated
Debt), through the direct or indirect lending of money, holding of securities
or otherwise other than Permitted Investments.
6.3 INDEBTEDNESS. Borrower shall not, nor shall Borrower
permit any of its Subsidiaries to, create, incur, assume or permit to exist any
Indebtedness, except (i) Indebtedness existing on the Closing Date and
described on SCHEDULE 6.3 and SCHEDULE 6.3A, (ii) the Obligations, (iii)
deferred taxes not yet deemed payable, (iv) unfunded pension fund and other
employee benefit plan obligations and liabilities not to exceed $250,000 in the
aggregate and then only to the extent they are permitted to remain unfunded
under applicable law, (v) Subordinated Debt issued after the Closing Date by
Borrower in favor of a Subsidiary, (vi) Subordinated Debt issued by any
Subsidiary in favor of Borrower in the ordinary course of Borrower's business
in accordance with past practices for the working capital needs of such
Subsidiary in an aggregate amount for all such loans not to exceed $2,000,000
outstanding at any one time, (vii) subject to the aggregate limitations set
forth in SCHEDULE 6.11, Subordinated Debt issued by any Subsidiary in favor of
Borrower in the ordinary course of Borrower's business in accordance with past
practices for the Capital Expenditure needs of such Subsidiary; (viii)
Indebtedness incurred under the Receivables Securitization Facility, (ix)
Indebtedness incurred under the Sale Leaseback Facility, (x) Indebtedness
related to sale leaseback transactions (other than the Sale Leaseback Facility)
or purchase money transactions; PROVIDED, that the aggregate amount of
Indebtedness for all such transactions shall not exceed $2,500,000 in any
Fiscal Year on a non-cumulative basis, (xi) commencing with Fiscal Year 1995,
unsecured Indebtedness in an aggregate amount not to exceed the Debt
Availability, if any, for the Fiscal Year immediately preceding such Fiscal
Year, and (xii) any extension, renewal, substitution, refinancing or
replacement of any Subordinated Debt set forth on SCHEDULE 6.3A owing by any
Subsidiary in favor of Borrower with Subordinated Debt between such Subsidiary
and Borrower in the same or lesser amounts and on terms which are no less
favorable to Borrower and Lenders (other than the amendment of the interest
rate in any promissory note evidencing any such Subordinated Debt to a market
rate determined by Borrower in good faith as of the time of any such
amendment). Borrower shall not, nor shall it permit any of its Subsidiaries
to, prepay, redeem, purchase, exchange, convert, defease, retire or otherwise
acquire (collectively, a "Redemption") any Indebtedness prior to its regularly
scheduled maturity date except for Redemptions of (A) the Revolving Credit
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Loan, (B) Subordinated Debt owing to Borrower by application of offsets of
consideration due and payable by Borrower to such Subsidiary; PROVIDED, THAT
any such payments or prepayments of such Subordinated Debt shall not be
reborrowed by such Subsidiary except as permitted by clauses (vi) and (vii) of
this SECTION 6.3, and (C) Indebtedness arising under the Indentures or the
Fairmont IRB; PROVIDED, THAT no Redemption under any of the Indentures or the
Fairmont IRB shall be permitted unless (i) Borrower shall have unused Borrowing
Availability of at least $7,500,000 after giving effect to any such Redemption,
(ii) no Default or Event of Default shall have occurred and be continuing or
shall result from such Redemption, and (iii) Borrower shall have provided to
Agent no later than five (5) Business Days prior to the proposed date of such
Redemption a certificate executed by Borrower's Chief Financial Officer
certifying that such Redemption is being made in conformity with the Indentures
and, in the case of a Redemption of all or any portion of the Fairmont IRB, the
agreements underlying the Fairmont IRB and setting forth in each case the
source of funds to be used to consummate such Redemption.
6.4 EMPLOYEE LOANS AND TRANSACTIONS. Borrower shall not,
and shall not cause or permit any of its Subsidiaries to:
(i) make loans or advances to any employee or Affiliate
other than:
(A) Subordinated Debt permitted by SECTION 6.3 or
(B) advances for travel and related expenses to
Borrower's officers and employees, in each case solely in the ordinary course
of business consistent with past practice, and not to exceed $100,000 in the
aggregate for all such amounts outstanding at any time; or
(C) bona-fide loans made by Borrower to its
officers and employees in an amount not to exceed $400,000 in the aggregate for
all such loans outstanding at any one time; PROVIDED, THAT (x) each such loan
is evidenced by a promissory note due within three (3) years, and (y) each such
loan shall have been made for the purpose of providing interim financing to
such employee or officer for the purpose of acquiring improved real estate as
the principal residence of such employee or officer in connection with a
relocation of such Person to a new office; or
(D) other bona-fide loans made by Borrower to its
officers and employees in the ordinary course of business in an amount not to
exceed $50,000 in the aggregate for all such loans outstanding at any one time;
or
(ii) except for the Management Services Agreement,
enter into any transaction with any Affiliate except on an arm's length basis
on fair and reasonable terms no less favorable to Borrower or
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the applicable Subsidiary than would be obtained in a transaction with a Person
that is not an Affiliate.
6.5 CAPITAL STRUCTURE AND BUSINESS. Borrower shall not,
nor shall it permit any of its Subsidiaries to: (i) make any changes in any of
its business objectives, purposes or operations which could in any way
adversely affect the repayment of the Loans or any of the other Obligations or
could have or result in a Material Adverse Effect, (ii) make any change in the
capital structure of any Subsidiary of Borrower as described on SCHEDULE 3.10
(including the issuance of any shares of Stock, warrants or other securities
convertible into Stock or any revision of the terms of the outstanding Stock of
any Subsidiary of Borrower), or (iii) amend its certificate or articles of
incorporation or bylaws. Neither the Borrower nor any of its Subsidiaries
shall engage in any business other than the businesses currently engaged in by
Borrower or such Subsidiary.
6.6 GUARANTEED INDEBTEDNESS. The Borrower shall not, nor
shall it permit any of its Subsidiaries to, incur any Guaranteed Indebtedness
except (i) by endorsement of instruments or items of payment for deposit to the
general account of Borrower, (ii) for Guaranteed Indebtedness incurred pursuant
to the terms and conditions of the CIT Guaranty Agreement and (iii) Guaranteed
Indebtedness incurred for the benefit of Borrower or such Subsidiary if the
primary obligation constitutes Indebtedness permitted by SECTION 6.3.
6.7 LIENS. The Borrower shall not, nor shall it permit
any of its Subsidiaries to, create, incur, assume or permit to exist any Lien
on or with respect to any properties or assets (including any documents or
instruments with respect to Accounts) of such Borrower or any of its
Subsidiaries, whether now owned or hereafter acquired, or any income or profits
therefrom, except (i) Permitted Encumbrances, (ii) Liens existing on the
Closing Date and described on SCHEDULE 6.7, (iii) Liens in favor of Agent, on
behalf of itself and Lenders, pursuant to the Loan Documents, (iv) Liens
arising pursuant to the Receivables Securitization Facility, (v) Liens arising
pursuant to the Sale Leaseback Facility, and (vi) Purchase Money Liens securing
Indebtedness permitted under clause (x) of SECTION 6.3. In addition, neither
the Borrower nor any of its Subsidiaries shall become a party to any new
agreement, note, indenture or instrument (other than the Sale Leaseback
Facility and the Receivables Securitization Facility), or take any other
action, which would prohibit the creation of a Lien on any of its properties or
other assets in favor of Agent, on behalf of itself and Lenders, as additional
collateral for the Obligations or require, in connection with the granting of
any such Lien in favor of Agent, on behalf of itself and Lenders, equal or
ratable Liens in favor of any other Person or otherwise impose a burden upon
the rights and benefits afforded to Agent and Lenders hereunder.
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6.8 SALE OF ASSETS. The Borrower shall not, nor shall it
permit any of its Subsidiaries to, sell, transfer, convey, assign or otherwise
dispose of any of its properties, assets or business, including the capital
stock of any Subsidiary or any of its Accounts (with or without recourse) to
any other Person other than, in the case of a Subsidiary, to Borrower or
another Subsidiary and except for (i) sales of inventory in the ordinary course
of business, (ii) sales of Accounts by Borrower to a Subsidiary pursuant to the
Receivables Securitization Facility, (iii) sales of Equipment pursuant to the
Sale Leaseback Facility, (iv) the sale or other disposition of property which
is no longer used or useful in the business of Borrower or its Subsidiaries;
PROVIDED, THAT any such sale or disposition is made for the fair market value
of such property, and (v) sales or dispositions by Borrower of property outside
the ordinary course of business; PROVIDED, THAT (a) no Default or Event of
Default shall have occurred and be continuing or shall result from such sale or
disposition, (b) any such sale or disposition is made for the fair market value
of such property, (c) the aggregate fair market value of all property so sold
or disposed of in any Fiscal Year shall not exceed $500,000 on a non-cumulative
basis, and (d) within sixty (60) days of such sale or disposition, Borrower
shall have replaced such property with like property of at least equal value
and quality; PROVIDED FURTHER, that in each such case such sale or other
disposition does not conflict with or result in the breach of or constitute a
default under any Toll Manufacturing Agreement or Asset Purchase Agreement or
the Sale Leaseback Facility.
6.9 EVENTS OF DEFAULT. The Borrower shall not, nor shall
it permit any of its Subsidiaries to, take any action or omit to take any
action, which act or omission would constitute (a) a Default or an Event of
Default under, pursuant to, or noncompliance with any of, the terms of this
Agreement or any of the other Loan Documents or (b) a default or an event of
default pursuant to, or noncompliance with, any other contract, lease,
mortgage, deed of trust, instrument or other agreement to which it is a party
or by which it or any of its property is bound, or any document creating a
Lien.
6.10 ERISA. Neither the Borrower, any Subsidiary of
Borrower nor any ERISA Affiliate shall without Agent's prior written consent
acquire any new ERISA Affiliate that maintains or has an obligation to
contribute to a Pension Plan that has either an "accumulated funding
deficiency", as defined in Section 302 of ERISA, or any "unfunded vested
benefits", as defined in Section 4006(a)(3)(e)(iii) of ERISA, in the case of
any plan other than a Multiemployer Plan, and in Section 4211 of ERISA in the
case of a Multiemployer Plan. Additionally, neither the Borrower, any
Subsidiary of Borrower nor any ERISA Affiliate shall, without Agent's prior
written consent, permit or suffer any condition set forth on SCHEDULE 3.13 to
cease to be met and satisfied at any time; terminate any Pension Plan that is
subject to Title IV of
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ERISA where such termination could reasonably be anticipated to result in
liability to such Person; permit any accumulated funding deficiency, as defined
in Section 302(a)(2) of ERISA, to be incurred with respect to any Pension Plan;
fail to make any contributions or fail to pay any amounts due and owing as
required by the terms of any Plan before such contributions or amounts become
delinquent; make a complete or partial withdrawal (within the meaning of
Section 4201 of ERISA) from any Multiemployer Plan; or at any time fail to
provide Agent with copies of any Plan documents or governmental reports or
filings, if requested by Agent.
6.11 FINANCIAL COVENANTS. Borrower shall not breach or
fail to comply with any of the financial covenants (the "Financial Covenants")
set forth on SCHEDULE 6.11.
6.12 HAZARDOUS MATERIALS. Except as set forth on SCHEDULE
3.20, the Borrower shall not, nor shall it permit any of its Subsidiaries or
any other Person within its control, to cause or permit a Release or the
presence, use, generation, manufacture, installation, Release, discharge,
storage or disposal of any Hazardous Materials on, under, in, above or about
any of its owned or leased real estate or the transportation of any Hazardous
Materials to or from any such real estate where such Release or such presence,
use, generation, manufacture, installation, Release, discharge, storage or
disposal would violate or form the basis for liability under any Environmental
Laws. Borrower, at its own expense, shall cause the performance of such
environmental audits and preparation of such environmental reports as Agent may
from time to time request as to any location at which Collateral is then
located, by reputable environmental consulting firms acceptable to Agent, and
in form and substance acceptable to Agent.
6.13 SALE-LEASEBACKS. Neither the Borrower nor any of its
Subsidiaries thereof shall engage in any sale-leaseback or similar transaction
involving any of its assets, other than the transactions (i) permitted by
clause (x) of SECTION 6.3, and (ii) expressly contemplated pursuant to the
terms and conditions of the Sale Leaseback Facility.
6.14 CANCELLATION OF INDEBTEDNESS. The Borrower shall
not, nor shall it permit any of its Subsidiaries to, cancel any claim or debt
owing to it, except for reasonable consideration negotiated on an arm's-length
basis and in the ordinary course of its business consistent with past practice.
6.15 RESTRICTED PAYMENTS. The Borrower shall not, nor
shall it cause or permit any of its Subsidiaries to, make any Restricted
Payment; PROVIDED, THAT Borrower's Subsidiaries may continue to make dividends,
distributions and payments to Borrower.
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<PAGE> 45
<TABLE>
6.16 LEASES. The Borrower shall not, nor shall it cause
or permit any of its Subsidiaries to, become or remain liable in any way,
whether directly or by assignment or as a guarantor or other surety, for the
obligations of a lessee under any lease of real property or any operating lease
or similar agreement or arrangement, if the aggregate amount of all rents paid
or committed to be paid by Borrower and its Subsidiaries under all such leases
would exceed the following amounts for each of the following Fiscal Years on a
non-cumulative basis:
<CAPTION>
Fiscal Year Amount
----------- ------
<S> <C>
1994 $23,134,000
1995 25,448,000
1996 27,992,000
1997 30,791,000
</TABLE>
6.17 STOCKHOLDERS. The Borrower shall not, nor shall it
cause or permit any of its Subsidiaries to, cause or suffer the occurrence of
any change in the composition of the Stockholders of any of its Subsidiaries as
of the Closing Date.
6.18 FISCAL YEAR. The Borrower shall not, nor shall it
cause or permit any of its Subsidiaries to, change its Fiscal Year.
6.19 SALE OF STOCK. The Borrower shall not sell (whether
in a public or private offering or otherwise) any of its Stock unless the
proceeds of such sale are applied as required by Section 5.15. The Borrower
shall not, nor shall it permit any of its Subsidiaries to, sell (whether in a
public or private offering or otherwise) any of the Stock of any Subsidiary of
Borrower.
6.20 CASH MANAGEMENT. The Borrower shall not permit any
of its Subsidiaries to accumulate or maintain cash or cash equivalents in
disbursement, payroll or other deposit accounts as of any date of determination
in excess of checks outstanding against such accounts as of that date and
amounts necessary to meet minimum balance requirements; PROVIDED, THAT so long
as no Event of Default shall have occurred and be continuing (a) foreign
Subsidiaries may maintain cash in such accounts in excess of the amount of
checks outstanding in an amount not to exceed $750,000 in the aggregate for all
such Subsidiaries, and (b) domestic Subsidiaries may retain cash in such
accounts in excess of the amount of checks outstanding in an amount not to
exceed $250,000 in the aggregate for all such Subsidiaries; PROVIDED FURTHER,
THAT such amounts are maintained in the ordinary course of such Subsidiaries'
business.
6.21 NO IMPAIRMENT OF DISTRIBUTIONS. The Borrower shall
not, nor shall it permit any of its Subsidiaries to, directly or indirectly,
enter into or become bound by any agreement,
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instrument, indenture or other obligation which could directly or indirectly
restrict, prohibit or require the consent of any Person with respect to the
payment of dividends or other distributions or the making of intercompany loans
by any Subsidiary to Borrower, or which would require as a condition thereto
that any amount be paid, or Liens be granted, or assets transferred, to any
Person.
6.22 AMENDMENT TO AGREEMENTS. The Borrower shall not, nor
shall it permit any Subsidiary to, amend, modify, restate, terminate or waive,
nor suffer the amendment, modification, restatement, termination or waiver of,
any of the provisions of any of the Indentures, the CIT Documents, the Sale
Leaseback Facility, the Receivables Securitization Facility or the Toll
Manufacturing Agreements or the Asset Purchase Agreements.
6.23 CORPORATE ACCOUNTS. Neither Borrower nor any of its
Subsidiaries shall maintain corporate deposit accounts or other accounts with
any bank or other financial institution except those set forth on SCHEDULE
3.22. Neither Borrower nor any of its Subsidiaries shall maintain any
corporate deposit account or other financial account with any Affiliate of
Borrower or commingle any funds with funds of any Affiliate of Borrower.
7. TERM
7.1 TERMINATION. The financing arrangement contemplated
hereby shall be in effect until the Commitment Termination Date; PROVIDED, THAT
in the event of a prepayment of any part of the Obligations prior to the
Commitment Termination Date with funds borrowed from any Person (other than
Lenders pursuant to this Agreement, GE Capital or any other participant
pursuant to the Sale Leaseback Facility, or Redwood Receivables Corporation
pursuant to the Receivables Securitization Facility), Borrower shall
simultaneously therewith pay to Agent, in full, in immediately available funds
all then current and liquidated Obligations arising under this Agreement or any
of the other Loan Documents and provide for payment of all other Obligations,
including the provision of cash collateral for all Letter of Credit
Obligations, in a manner satisfactory to Agent.
7.2 SURVIVAL OF OBLIGATIONS UPON TERMINATION OF FINANCING
ARRANGEMENTS. Except as otherwise expressly provided for in the Loan
Documents, no termination or cancellation (regardless of cause or procedure) of
any financing arrangement under this Agreement shall in any way affect or
impair the obligations, duties and liabilities of the Borrower and the
Co-Obligors or the rights of Agent and Lenders relating to any unpaid
Obligation, due or not due, whether for payment or performance, liquidated,
contingent or unliquidated or any transaction or event occurring prior to such
termination, or any transaction or event, the performance of which is not
required until after the Commitment Termination Date. Except as otherwise
expressly provided herein or in any other Loan
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<PAGE> 47
Document, all undertakings, agreements, covenants, warranties and
representations of or binding upon Borrower or any Subsidiary of Borrower, and
all rights of Agent and Lenders, all as contained in the Loan Documents shall
not terminate or expire, but rather shall survive such termination or
cancellation and shall continue in full force and effect until such time as all
of the Obligations have been indefeasibly paid in full in accordance with the
terms of the agreements creating such Obligations.
8. EVENTS OF DEFAULT: RIGHTS AND REMEDIES
8.1 EVENTS OF DEFAULT. The occurrence of any one or more
of the following events (regardless of the reason therefor) shall constitute an
"Event of Default" hereunder:
(a) Borrower shall fail to make any payment in respect of
any Obligation hereunder or under any of the other Loan Documents when due and
payable or declared due and payable, including, without limitation, any payment
of principal of, or interest on or Fees with respect to, the Revolving Credit
Loan or any payment of Fees with respect to the Letter of Credit Obligations.
(b) Borrower or any Subsidiary of Borrower shall fail or
neglect to perform, keep or observe any of the provisions of SECTION 1.9 or
SECTION 6, including any of the provisions set forth on SCHEDULE C and SCHEDULE
6.11, respectively.
(c) Borrower or any Subsidiary of Borrower shall fail or
neglect to perform, keep or observe any term or provision of this Agreement
(other than any such term or provision referred to in lettered paragraphs (a),
(b) or (d) of this SECTION 8.1 or of any of the other Loan Documents), and the
same shall remain unremedied for a period ending on the first to occur of
fifteen (15) days after Borrower shall receive written notice of any such
failure from Agent or fifteen (15) days after Borrower shall become aware
thereof.
(d) Borrower shall, or shall cause or permit any of its
Subsidiaries to, fail to timely and fully pay and perform its obligations under
all leases and other agreements with respect to each leased location or public
warehouse at which Collateral is located or shall fail or neglect to perform,
keep or observe any of the provisions of SECTION 5.12.
(e) A default shall occur under any other agreement,
document or instrument to which Borrower or any of its Subsidiaries is a party
or by which Borrower or any of its Subsidiaries or any of Borrower's or any of
its Subsidiaries' property is bound and such default (i) involves any default
or event of default under any Indenture, (ii) involves any default or event of
default under any CIT Document, (iii) involves any default or event of default
under
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<PAGE> 48
the Sale Leaseback Facility, (iv) involves any default or event of default
under the Receivables Securitization Facility, (v) involves a default or event
of default under any Toll Manufacturing Agreement or any Asset Sale Agreement,
(vi) involves any default or event of default in respect of any Indebtedness of
Borrower or any of its Subsidiaries (other than Indebtedness referred to in
(i), (ii), (iii), (iv) or (v) above) in an aggregate amount exceeding $500,000
in the aggregate or (vii) causes (or permits any holder of such Indebtedness or
a trustee to cause) any Indebtedness, or portion thereof, in an amount
exceeding $500,000 for all such Indebtedness in the aggregate, to become due
prior to its stated maturity or prior to its regularly scheduled dates of
payment.
(f) Any representation or warranty herein or in any other
Loan Document or in any written statement pursuant thereto or hereto, or any
report, financial statement or certificate made or delivered to Agent or any
Lenders by Borrower or any Subsidiary of Borrower shall be untrue or incorrect
in any material respect, as of the date when made or deemed made (including
those made or deemed made pursuant to SECTION 2.2).
(g) Any of the assets of Borrower or any of its
Subsidiaries shall be attached, seized, levied upon or subjected to a writ or
distress warrant, or come within the possession of any receiver, trustee,
custodian or assignee for the benefit of creditors of such Borrower or such
Subsidiary, as the case may be, and shall remain unstayed or undismissed for
sixty (60) consecutive days; or any Person other than Borrower shall apply for
the appointment of a receiver, trustee or custodian for any of Borrower's or
any of its Subsidiaries' assets and shall remain unstayed or undismissed for
sixty (60) consecutive days; or Borrower or any of its Subsidiaries shall have
concealed, removed or permitted to be concealed or removed, any part of its
property, with intent to hinder, delay or defraud its creditors or any of them
or made or suffered a transfer of any of its property or the incurring of an
obligation which may by fraudulent under any bankruptcy, fraudulent conveyance
or other similar law.
(h) A case or proceeding shall have been commenced
against Borrower or any of its Subsidiaries in a court having competent
jurisdiction seeking a decree or order (i) under Title 11 of the United States
Code, as now constituted or hereafter amended, or any other applicable federal,
state or foreign bankruptcy or other similar law, (ii) appointing a custodian,
receiver, liquidator, assignee, trustee or sequestrator (or similar official)
of Borrower or any of its Subsidiaries or of any substantial part of any of
their properties, or (iii) ordering the winding up or liquidation of the
affairs of Borrower or any of its Subsidiaries and such case or proceeding
shall remain undismissed or unstayed for sixty (60) consecutive days or such
court shall enter a decree or order granting the relief sought in such case or
proceeding.
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<PAGE> 49
(i) Borrower or any of its Subsidiaries shall (i) file a
petition seeking relief under Title 11 of the United States Code, as now
constituted or hereafter amended, or any other applicable federal, state or
foreign bankruptcy or other similar law, (ii) consent to the institution of
proceedings thereunder or to the filing of any such petition or to the
appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee or sequestrator (or similar official) of Borrower or any of
its Subsidiaries or of any substantial part of any of their properties, (iii)
fail generally to pay its debts as such debts become due, or (iv) take any
corporate action in furtherance of any such action.
(j) Final judgment or judgments (after the expiration of
all times to appeal therefrom) for the payment of money in excess of $500,000
in the aggregate shall be rendered against Borrower or any of its Subsidiaries
unless the same shall be (i) fully covered by insurance in accordance with
SECTION 5.5 or (ii) vacated, stayed, bonded, paid or discharged within a period
of fifteen (15) days from the date of such judgment.
(k) Any other event shall have occurred which has had or
resulted in, or would have or result in, a Material Adverse Effect.
(l) Any provision of any Collateral Document, including
the Security Agreement, after delivery thereof pursuant to SECTION 2.1, shall
for any reason cease to be valid, binding and enforceable in accordance with
its terms, or any Lien created under any Collateral Document, including the
Security Agreement, shall cease to be a valid and perfected security interest
or Lien having the first Priority in all of the Collateral purported to be
covered thereby, or Borrower or any Co-Obligor shall disavow any of its
obligations under this Agreement or any of the other Loan Documents or shall
deny that it has any further obligations hereunder or thereunder, or shall
contest the validity or enforceability of any thereof or shall give notice to
such effect.
(m) Borrower shall cease to own all of the issued and
outstanding capital stock of all of its Subsidiaries.
(n) There shall occur any Change in Control of Borrower.
(o) Any provision of any Toll Manufacturing Agreement or
any Asset Sale Agreement shall for any reason cease to be valid, binding and
enforceable in accordance with its terms.
8.2 REMEDIES. If any Default or Event of Default shall
have occurred and be continuing, in addition to all other rights and remedies,
Agent may, without notice, elect in its sole discretion to make no further
Revolving Credit Advances or incur no additional Letter of Credit Obligations.
If any Event of Default shall have occurred and be continuing, Agent may,
without notice, take any one or more of the following actions: (a) increase the
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<PAGE> 50
rate of interest applicable to the Revolving Credit Loan to the Default Rate,
as provided in SECTION 1.5(E); (b) terminate the Revolving Credit Commitment
whereupon no further Revolving Credit Advances or Letter of Credit Obligations
shall be made or incurred; (c) declare all or any portion of the Obligations to
be forthwith due and payable, including contingent liabilities with respect to
Letter of Credit Obligations, and thereupon such Obligations shall become and
be due and payable, without presentment, demand, protest or further notice of
any kind, all of which are expressly waived by Borrower and each of the
Co-Obligors; and/or (d) exercise any rights and remedies provided to Agent
under this Agreement and the other Loan Documents and/or at law or equity,
including all remedies provided under the Code; PROVIDED, THAT upon the
occurrence of any Event of Default specified in SECTIONS 8.1(G), (h) or (i),
the Revolving Credit Commitment shall automatically terminate, all of the
Obligations, including contingent liabilities with respect to Letter of Credit
Obligations, shall automatically become and be immediately due and payable, and
the rate of interest applicable to the Revolving Credit Loan shall
automatically increase to the Default Rate, as provided in SECTION 1.5(E), in
each case without declaration, notice or demand by Agent. Upon the occurrence
of any Default or Event of Default, at Agent's request, Borrower shall deposit
with Agent cash collateral in the amount of all then existing Letter of Credit
Obligations.
8.3 WAIVERS BY BORROWER AND CO-OBLIGORS. Except as
otherwise provided for in this Agreement or by applicable law, Borrower and the
Co-Obligors each waives: (i) presentment, demand and protest and notice of
presentment, dishonor, notice of intent to accelerate, notice of acceleration,
protest, default, nonpayment, maturity, release, compromise, settlement,
extension or renewal of any or all commercial paper, accounts, contract rights,
documents, instruments, chattel paper and guaranties at any time held by Agent
or any Lender on which Borrower or any Co-Obligor may in any way be liable, and
each hereby ratifies and confirms whatever Agent or any Lender may do in this
regard, (ii) all rights to notice and a hearing prior to Agent's taking
possession or control of, or to Agent's replevy, attachment or levy upon, the
Collateral or any bond or security which might be required by any court prior
to allowing Agent to exercise any of its remedies, and (iii) the benefit of all
valuation, appraisal and exemption laws. Borrower and the Co-Obligors each
acknowledges that it has been advised by counsel of its choice with respect to
this Agreement, the other Loan Documents and the transactions evidenced by this
Agreement and the other Loan Documents.
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT
9.1 ASSIGNMENT AND PARTICIPATIONS. GE Capital may assign
its rights and delegate its obligations as a Lender under this Agreement and,
further, may assign, or sell participations in, all or any part of its
Revolving Credit Advances, its Letter of
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Credit Obligations, its Commitments, or any other interest herein or in its
Revolving Credit Note to an Affiliate or to any other Person; PROVIDED, THAT
(i) in the event of any assignment by GE Capital of less than all of its rights
and obligations as a Lender to a Person other than another Lender or an
Affiliate of GE Capital, Borrower shall first have consented to such assignee,
which consent shall not be unreasonably withheld; and (ii) in the case of an
assignment by GE Capital of all of its rights and obligations as a Lender to a
Person other than another Lender or an Affiliate of GE Capital, no consent of
Borrower shall be necessary, PROVIDED FURTHER, THAT, in the case of (ii) above,
GE Capital shall give Borrower sixty (60) days' prior written notice of such
assignment and no prepayment fee under SECTION 1.2(B) shall be payable if
Borrower elects to prepay the Obligations in full during such sixty (60) day
period.
Unless Agent shall have otherwise agreed in writing, no other
Lender shall assign any of its rights or delegate any of its obligations under
this Agreement or any of the other Loan Documents or assign, or sell any
participation in, all or any part of its Revolving Credit Advances, its Letter
of Credit Obligations, its Commitments, or any other interest herein or in its
Revolving Credit Note to any Affiliate or other Person.
In the case of an assignment by GE Capital under this SECTION
9.1 (or in the event, if any, that Agent shall so agree in writing, an
assignment by another Lender), the assignee shall have, to the extent of such
assignment, the same rights, benefits and obligations as it would if it were a
Lender hereunder. The assigning Lender shall be relieved of its obligations
hereunder with respect to its Commitment or assigned portion thereof. Borrower
and Co-Obligors hereby acknowledge and agree that any assignment will give rise
to a direct obligation of Borrower and Co-Obligors to the assignee and that the
assignee shall be considered to be a "Lender". In all instances, each Lender's
liability to make Revolving Credit Advances or incur Letter of Credit
Obligations hereunder shall be several and not joint and shall be limited to
such Lender's Pro Rata Share.
GE Capital may (or, in the event, if any, that Agent shall so
agree in writing, another Lender may) sell participations in all or any part of
any Revolving Credit Advances made, or any Letter of Credit Obligations
incurred, by it as a Lender to an Affiliate or any other Person; PROVIDED, THAT
all amounts payable by Borrower and Co-Obligors hereunder shall be determined
as if that Lender had not sold such participation and the holder of any such
participation shall not be entitled to require such Lender to take or omit to
take any action hereunder except action directly affecting (a) any reduction in
the principal amount, interest rate or fees payable with respect to any
Revolving
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Credit Advances in which such holder participates, (b) any extension of the
final scheduled maturity date of the principal amount of the Revolving Credit
Advances in which such holder participates, and (c) any release of any
Collateral with a value in excess of $3,500,000 in the aggregate (other than in
accordance with the terms of this Agreement, the Collateral Documents or the
other Loan Documents). Borrower and Co-Obligors hereby acknowledge and agree
that any participation will give rise to a direct obligation of Borrower and
Co-Obligors to the participant and the participant shall for purposes of
SECTIONS 1.15, 1.16 and 9.3 be considered to be a "Lender".
Unless Agent shall have otherwise agreed in writing, no
Lender, other than GE Capital, shall sell any participation in all or any part
of any Revolving Credit Advances made, or any Letter of Credit Obligations
incurred, by it to any Affiliate or other Person.
Except as otherwise provided in this SECTION 9.1, no Lender
shall, as between Borrower and that Lender, be relieved of any of its
obligations hereunder as a result of any sale, assignment, transfer or
negotiation of, or granting of participation in, all or any part of the
Revolving Credit Advances, the Revolving Credit Notes, Letter of Credit
Obligations, or other Obligations owed to such Lender. Any Lender permitted to
sell assignments and participations under this SECTION 9.1 may furnish any
information concerning the Borrower and/or any of its Subsidiaries in the
possession of that Lender from time to time to assignees and participants
(including prospective assignees and participants).
Borrower shall assist any Lender permitted to sell assignments
or participations under this SECTION 9.1 in whatever manner necessary in order
to enable or effect any such assignment or participation, including the
execution and delivery of any and all agreements, notes and other documents and
instruments as shall be requested and the preparation of informational
materials for, and the participation of relevant management in meetings with,
potential assignees or participants. Borrower shall certify the correctness,
completeness and accuracy of all descriptions of Borrower, its Subsidiaries and
their respective affairs contained in any selling materials and all information
provided by them and included in such materials.
9.2 APPOINTMENT OF AGENT. GE Capital is hereby appointed
Agent hereunder to act on behalf of all Lenders as Agent under this Agreement
and the other Loan Documents. The provisions of this SECTION 9.2 are solely
for the benefit of Agent and Lenders and neither the Borrower nor any of its
Subsidiaries nor any other Person shall have any rights as a third party
beneficiary of any of the provisions hereof. In performing its functions and
duties under this Agreement and the other Loan Documents, Agent shall act
solely as an agent of Lenders and does not assume and shall not be deemed to
have assumed any obligation toward or relationship of
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agency or trust with or for the Borrower, any Subsidiary of Borrower or any
other Person. Agent shall have no duties or responsibilities except for those
expressly set forth in this Agreement and the other Loan Documents. The duties
of Agent shall be mechanical and administrative in nature and Agent shall not
have, or be deemed to have, by reason of this Agreement, any other Loan
Document or otherwise a fiduciary relationship in respect of any Lender.
Neither Agent nor any of its officers, directors, employees, agents or
representatives shall be liable to any Lender for any action taken or omitted
to be taken by it hereunder or under any other Loan Document, or in connection
herewith or therewith, unless caused by its or their own gross negligence or
willful misconduct as finally determined by a court of competent jurisdiction
after all possible appeals have been exhausted.
The agency hereby created shall in no way impose any of the
rights and powers of, or impose any duties or obligations upon, Agent in its
individual capacity as a Lender hereunder. Agent shall have the same rights
and powers hereunder as any other Lender and may exercise the same as though it
were not performing the duties and functions delegated to it hereunder. Agent
may resign at any time by giving thirty (30) days prior written notice thereof
to Lenders and Borrower. Upon any such resignation, Requisite Lenders shall
have the right, upon five (5) days notice to Borrower, to appoint a successor
Agent. Upon acceptance of appointment, the successor Agent shall succeed to
and become vested with all rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from all of its
duties and obligations under this Agreement and the other Loan Documents.
If Agent shall request instructions from Requisite Lenders
with respect to any act or action (including failure to act) in connection with
this Agreement or any other Loan Document, then Agent shall be entitled to
refrain from such act or taking such action unless and until Agent shall have
received instructions from Requisite Lenders, and Agent shall not incur
liability to any Person by reason of so refraining. Agent shall be fully
justified in failing or refusing to take any action hereunder or under any
other Loan Document (a) if such action would, in the opinion of Agent, be
contrary to law or the terms of this Agreement or any other Loan Document or
(b) if Agent shall not first be indemnified to its satisfaction against any and
all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. Without limiting the foregoing, no Lender
shall have any right of action whatsoever against Agent as a result of Agent
acting or refraining from acting hereunder or under any other Loan Document in
accordance with the instructions of Requisite Lenders.
9.3 SET-OFF AND SHARING OF PAYMENTS. In addition to any
rights now or hereafter granted under applicable law and not by way of
limitation of any such rights, upon the occurrence and during
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the continuance of any Event of Default, each Lender and each holder of any
Revolving Credit Note is hereby authorized at any time or from time to time,
without prior notice to Borrower, any Co-Obligor or to any other Person, any
such notice being hereby expressly waived, to set off and to appropriate and to
apply any and all balances held by it at any of its offices for the account of
Borrower or any Co-Obligor (including all account balances whether provisional
or final and whether or not collected or available) and any other properties or
assets any time held or owing by that Lender or that holder to or for the
credit or for the account of Borrower or any Co-Obligor against and on account
of any of the Obligations which are not paid when due. Agent agrees to notify
Borrower of the occurrence of such setoff; provided, that failure of Agent to
give notice as provided herein shall not in any way affect the validity or
effectiveness of such setoff. Any Lender or holder of any Revolving Credit
Note having a right to set off shall, to the extent the amount of any such set
off exceeds its Pro Rata Share of the Obligations, purchase for cash (and the
other Lenders or holders shall sell) such participations in each such other
Lender's or holder's Pro Rata Share of the Obligations as would be necessary to
cause such Lender to share such excess with each other Lender or holder in
accordance with their respective Pro Rata Shares. Borrower and the Co-Obligors
each agrees, to the fullest extent permitted by law, that (a) any Lender or
holder of any Revolving Credit Note may exercise its right to set off with
respect to amounts in excess of its Pro Rata Share of the Obligations and may
sell participations in such excess to other Lenders and holders and (b) any
Lender or holder so purchasing a participation in the Revolving Credit Advances
or other Obligations held by other Lenders or holders may exercise all rights
of set-off, bankers' lien, counterclaim or similar rights with respect to such
participation as fully as if such Lender or holder were a direct holder of
Revolving Credit Advances and other Obligations in the amount of such
participation.
9.4 DISBURSEMENT OF FUNDS. Agent may, on behalf of
Lenders, disburse funds to Borrower for Revolving Credit Advances requested.
Each Lender shall reimburse Agent on demand for all funds disbursed on its
behalf by Agent, or if Agent so requests, each Lender will remit to Agent its
Pro Rata Share of any Revolving Credit Advance before Agent disburses same to
Borrower. If any Lender fails to pay the amount of its Pro Rata Share
forthwith upon Agent's demand, Agent shall promptly notify Borrower and
Borrower shall immediately repay such amount to Agent. Nothing in this SECTION
9.4 or elsewhere in this Agreement or the other Loan Documents shall be deemed
to require Agent to advance funds on behalf of any Lender or to relieve any
Lender from its obligation to fulfill its Commitments hereunder or to prejudice
any rights that Borrower may have against any Lender as a result of any default
by such Lender hereunder.
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9.5 Disbursements of Advances, Payments and Information.
---------------------------------------------------
(a) Revolving Credit Advances and Payments; Fee
-------------------------------------------
Payments.
---------
(i) The Revolving Credit Loan balance may
fluctuate from day to day through Agent's disbursement of funds to, and receipt
of funds from, Borrower. In order to minimize the frequency of transfers of
funds between Agent and each Lender, Revolving Credit Advances and payments in
respect thereof will be settled according to the procedures described in
SECTIONS 9.5(A)(II) and 9.5(A)(III) below. Notwithstanding these procedures,
each Lender's obligation to fund its portion of any advances made by Agent to
Borrower will commence on the date such advances are made by Agent. Such
payments will be made by each Lender without setoff, counterclaim or reduction
of any kind.
(ii) On (x) the second Business Day of each week,
or more frequently (including daily) if Agent so elects with respect to Index
Rate Advances, or (y) the second Business Day after the Borrowing Date with
respect to LIBOR Rate Advances (in each case, each such day being a "Settlement
Date"), Agent will advise each Lender by telephone, telex or telecopy of the
amount of such Lender's Pro Rata Share of the Revolving Credit Loan balance as
of the close of business on the second Business Day immediately preceding the
Settlement Date. In the event that payments are necessary to adjust the amount
of such Lender's portion of the Revolving Credit Loan to such Lender's Pro Rata
Share of the Revolving Credit Loan as of any Settlement Date, the party from
which such payment is due will pay the other, in same day funds, by wire
transfer to the other's account not later than 1:00 p.m. New York time on the
first Business Day following the Settlement Date. Notwithstanding the
foregoing, if Agent so elects, Agent may require that each Lender make its Pro
Rata Share of any requested Revolving Credit Advance available to Agent for
disbursement prior to the funding of such Revolving Credit Advance. If Agent
elects to require that such funds be so made available, Agent shall advise each
Lender by telephone, telex or telecopy of the amount of such Lender's Pro Rata
Share of the requested Revolving Credit Advance no later than 12:00 noon New
York time on the date of funding thereof, and each such Lender shall pay Agent
such Lender's Pro Rata Share of such requested Revolving Credit Advance, in
same day funds, by wire transfer to the Agent's account not later than 1:00
p.m. New York time on the date of funding such Revolving Credit Advance.
(iii) For purposes of this Section 9.5(A)(III), the following
terms and conditions will have the following meanings:
(A) "Daily Loan Balance" means an amount calculated as of
the end of each calendar day by subtracting (i) the
cumulative principal amount paid by Agent to a
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Lender with respect to the Revolving Credit Loan from
the Closing Date through and including such calendar
day, from (ii) the cumulative principal amount of the
Revolving Credit Loan advanced by such Lender to
Agent from the Closing Date through and including
such calendar day.
(B) "Daily Interest Rate" means an amount calculated by
dividing the interest rate payable to a Lender on the
Revolving Credit Loan (as set forth in SECTION 1.5)
as of each calendar day by three hundred sixty (360)
days.
(C) "Daily Interest Amount" means an amount calculated by
multiplying the Daily Loan Balance of the Revolving
Credit Loan by the associated Daily Interest Rate on
the Revolving Credit Loan.
(D) "Interest Ratio" means a number calculated by
dividing the total amount of interest on the
Revolving Credit Loan received by Agent during the
immediately preceding month by the total amount of
interest on the Revolving Credit Loan due from
Borrower during the immediately preceding month.
On the first Business Day of each calendar month (an "Interest Settlement
Date"), Agent will advise each Lender by telephone, telex or telecopy of the
amount of such Lender's Pro Rata Share of interest paid and Fees paid for the
benefit of Lenders on the Revolving Credit Loan as of the end of the last day
of the immediately preceding month. Provided that such Lender has made all
payments required to be made by it under this Agreement and the other Loan
Documents, Agent will pay to such Lender, by wire transfer to such Lender's
account (as specified by such Lender on SCHEDULE 9.5(A)(III) or the applicable
Lender Addition Agreement, as amended by such Lender from time to time after
the date hereof pursuant to the notice provisions contained herein or in the
applicable Lender Addition Agreement) not later than 12:00 noon (New York time)
on the next Business Day following the Interest Settlement Date, such Lender's
Pro Rata Share of interest paid and Fees paid for the benefit of Lenders on the
Revolving Credit Loan. Such Lender's Pro Rata Share of interest on the
Revolving Credit Loan will be calculated by adding together the Daily Interest
Amounts for each calendar day of the prior month for the Revolving Credit Loan
and multiplying the total thereof by the Interest Ratio for the Revolving
Credit Loan.
(b) Availability of Lender's Pro Rata Share.
---------------------------------------
(i) Agent may assume that each Lender will make its Pro
Rata Share of each Revolving Credit Advance available to Agent on the first
Business Day following the next Settlement Date. If such
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Pro Rata Share is not, in fact, paid to Agent by such Lender when due, Agent
will be entitled to recover such amount on demand from such Lender without
set-off, counterclaim or deduction of any kind.
(ii) Nothing contained in this SECTION 9.5(B) will be
deemed to relieve any Lender of its obligation to fulfill its Commitments or to
prejudice any rights Agent or Borrower may have against any Lender as a result
of any default by such Lender under this Agreement.
(c) Return of Payments.
------------------
(i) If Agent pays an amount to a Lender under this
Agreement in the belief or expectation that a related payment has been or will
be received by Agent from Borrower and such related payment is not received by
Agent, then Agent will be entitled to recover such amount from such Lender on
demand without set-off, counterclaim or deduction of any kind.
(ii) If Agent determines at any time that any amount
received by Agent under this Agreement must be returned to Borrower or paid to
any other Person pursuant to any insolvency law or otherwise, then,
notwithstanding any other term or condition of this Agreement or any other Loan
Document, Agent will not be required to distribute any portion thereof to any
Lender. In addition, each Lender will repay to Agent on demand any portion of
such amount that Agent has distributed to such Lender, together with interest
at such rate, if any, as Agent is required to pay to Borrower or such other
Person, without set-off, counterclaim or deduction of any kind.
(d) Dissemination of Information.
----------------------------
Agent will use reasonable efforts to provide Lenders with any
information received by Agent from Borrower which is required to be provided to
Lenders hereunder, with any notice of Default or Event of Default received by
Agent from Borrower, with any notice of Default or Event of Default delivered
by Agent to Borrower, and with notice of any action taken by Agent following
any Default or Event of Default; PROVIDED, THAT Agent shall not be liable to
any Lender for any failure to do so, except to the extent that such failure is
attributable to Agent's gross negligence or willful misconduct as finally
determined by a court of competent jurisdiction after all possible appeals have
been exhausted.
10. SUCCESSORS AND ASSIGNS
10.1 SUCCESSORS AND ASSIGNS. This Agreement and the other
Loan Documents shall be binding on and shall inure to the benefit of Borrower,
each of the Co-Obligors, Agent, Lenders and their respective successors and
assigns, except as otherwise provided herein or therein. Neither Borrower nor
any of the Co-
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Obligors may assign, transfer, hypothecate or otherwise convey its rights,
benefits, obligations or duties hereunder or under any of the other Loan
Documents without the prior express written consent of Agent and Requisite
Lenders. Any such purported assignment, transfer, hypothecation or other
conveyance by Borrower or any of the Co-Obligors without the prior express
written consent of Agent shall be void. The terms and provisions of this
Agreement are for the purpose of defining the relative rights and obligations
of Borrower, the Co-Obligors, Agent and Lenders with respect to the
transactions contemplated hereby and there shall be no third party
beneficiaries of any of the terms and provisions of this Agreement or any of
the other Loan Documents.
11. MISCELLANEOUS
11.1 COMPLETE AGREEMENT; MODIFICATION OF AGREEMENT. The
Loan Documents constitute the complete agreement between the parties with
respect to the subject matter thereof and may not be modified, altered or
amended except as set forth in SECTION 11.2. Any proposal letter or commitment
letter between Borrower and Agent or any of its affiliates predating this
Agreement and relating to a financing of substantially similar form, purpose or
effect shall be merged with and into and superseded by this Agreement.
11.2 AMENDMENTS AND WAIVERS. (a) No amendment,
modification or termination of any provision of this Agreement or any of the
Revolving Credit Notes shall in any event be effective unless the same shall be
in writing and signed by Requisite Lenders and Borrower.
(b) Notwithstanding the foregoing, except to the extent
permitted by any applicable Lender Addition Agreement, no amendment,
modification, termination or waiver shall, unless in writing and signed by each
affected Lender, do any of the following: (a) increase the principal amount of
the Commitment of any affected Lender; (b) reduce the principal of, rate of
interest on or Fees payable with respect to any Revolving Credit Advance or
Fees payable with respect to any Letter of Credit Obligations; (c) extend the
final scheduled maturity date of the principal amount of the Revolving Credit
Loan; (d) waive, forgive, defer, extend or postpone any payment required
hereunder; (e) except as otherwise contemplated herein or in one of the other
Loan Documents, permit Borrower to sell or otherwise dispose of any Collateral
with a value exceeding $3,500,000 in the aggregate; (f) change the percentage
of the Commitments or of the aggregate unpaid principal amount of the Revolving
Credit Loan which shall be required for Lenders or any of them to take any
action hereunder; (g) release Collateral with a value exceeding $3,500,000 in
the aggregate (except if the sale or other disposition of such Collateral is
permitted under this Agreement or one of the other Loan Documents); and (h)
amend or waive this SECTION 11.2 or the definitions of the terms used in this
SECTION 11.2 insofar as the definitions affect
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the substance of this SECTION 11.2; and PROVIDED, FURTHER, THAT no amendment,
modification, termination or waiver affecting the rights or duties of Agent
under this Agreement or any other Loan Document shall in any event be
effective, unless in writing and signed by Agent, in addition to Lenders
required hereinabove to take such action. Each amendment, modification,
termination or waiver shall be effective only in the specific instance and for
the specific purpose for which it was given. No amendment, modification,
termination or waiver shall be required for Agent to take additional Collateral
pursuant to any Loan Document. No amendment, modification, termination or
waiver of any provision of any Revolving Credit Note shall be effective without
the written concurrence of the holder of that Revolving Credit Note. No notice
to or demand on Borrower or any Co-Obligor in any case shall entitle Borrower
or any Co-Obligor to any other or further notice or demand in similar or other
circumstances. Any amendment, modification, termination, waiver or consent
effected in accordance with this SECTION 11.2 shall be binding upon each holder
of the Revolving Credit Notes at the time outstanding and each future holder of
the Revolving Credit Notes.
11.3 FEES AND EXPENSES. Borrower and Co-Obligors, jointly
and severally, shall reimburse Agent for all out-of-pocket expenses incurred in
connection with (a) the preparation of the Loan Documents (including the fees
and expenses of all of its special loan counsel, advisors, consultants and
auditors retained in connection with the Loan Documents and the transactions
contemplated thereby and advice in connection therewith), (b) wire transfers to
the account of Borrower and (c) Letter of Credit Obligations. Borrower and
Co-Obligors, jointly and severally, shall reimburse Agent for all fees, costs
and expenses, including the fees, costs and expenses of counsel or other
advisors (including environmental and management consultants) for advice,
assistance, or other representation in connection with:
(a) the forwarding to Borrower or any other Person on
behalf of Borrowers by Lender of the proceeds of the Revolving Credit Advances;
(b) any amendment, modification or waiver of, or consent with
respect to, any of the Loan Documents or advice in connection with the
administration of the loans made pursuant hereto or its rights hereunder or
thereunder;
(c) any litigation, contest, dispute, suit, proceeding or
action (whether instituted by Agent, any Lender, Borrower, any Co-Obligor or
any other Person) in any way relating to the Collateral, any of the Loan
Documents or any other agreement to be executed or delivered in connection
therewith or herewith, whether as party, witness, or otherwise, including any
litigation, contest, dispute, suit, case, proceeding or action, and any appeal
or review thereof, in connection with a case commenced by or against
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Borrower, any Co-Obligor or any other Person that may be obligated to Agent by
virtue of the Loan Documents;
(d) any attempt to enforce any rights of Agent or any
Lender against Borrower, any Co-Obligor or any other Person that may be
obligated to Agent or any Lender by virtue of any of the Loan Documents;
(e) any attempt to (i) monitor the Revolving Credit
Advances, Letter of Credit Obligations or any of the other Obligations, (ii)
evaluate, observe, assess Borrower, any of its Subsidiaries or any of their
respective affairs, and (iii) verify, protect, evaluate, assess, appraise,
collect, sell, liquidate or otherwise dispose of any of the Collateral;
including, without limitation, all field audit and examination fees set forth
in the GE Capital Fee Letter and all attorneys' and other professional and
service providers' fees arising from such services, including those in
connection with any appellate proceedings; and all expenses, costs, charges and
other fees incurred by such counsel and others in any way or respect arising in
connection with or relating to any of the events or actions described in this
SECTION 11.3 shall be payable, on demand, by Borrower and Co-Obligors, jointly
and severally, to Agent. Without limiting the generality of the foregoing,
such expenses, costs, charges and fees may include: fees, costs and expenses of
accountants, environmental advisors, appraisers, investment bankers, management
and other consultants and paralegals; court costs and expenses; photocopying
and duplication expenses; court reporter fees, costs and expenses; long
distance telephone charges; air express charges; telegram charges; secretarial
overtime charges; and expenses for travel, lodging and food paid or incurred in
connection with the performance of such legal or other advisory services.
11.4 NO WAIVER. Agent's or any Lender's failure, at any
time or times, to require strict performance of any provision of this Agreement
and any of the other Loan Documents shall not waive, affect or diminish any
right of Agent or such Lender thereafter to demand strict compliance and
performance therewith. Any suspension or waiver of a Default or an Event of
Default under this Agreement or any of the other Loan Documents shall not
suspend, waive or affect any other Default or Event of Default under this
Agreement and any of the other Loan Documents whether the same is prior or
subsequent thereto and whether of the same or of a different type. None of the
undertakings, agreements, warranties, covenants and representations of Borrower
and its Subsidiaries contained in this Agreement or any of the other Loan
Documents and no Default or Event of Default under this Agreement and no
defaults under any of the other Loan Documents shall be deemed to have been
suspended or waived by Agent or any Lender, unless such waiver or suspension is
by an instrument in writing signed by an officer of or other
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authorized employee of Agent and Requisite Lenders and directed to Borrower
specifying such suspension or waiver.
11.5 REMEDIES. Agent's and Lenders' rights and remedies
under this Agreement shall be cumulative and nonexclusive of any other rights
and remedies which Agent or any Lender may have under any other agreement,
including the other Loan Documents, by operation of law or otherwise. Neither
Agent nor any Lender shall be under any obligation to marshall any assets in
favor of Borrower or any Co-Obligor or any other Person or against or in
payment of any or all of the Obligations.
11.6 SEVERABILITY. WHEREVER possible, each provision of
this Agreement and the other Loan Documents shall be interpreted in such a
manner as to be effective and valid under applicable law, but if any provision
of this Agreement shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining
provisions of this Agreement.
11.7 CONFLICT OF TERMS. Except as otherwise provided in
this Agreement or any of the other Loan Documents by specific reference to the
applicable provisions of this Agreement, if any provision contained in this
Agreement is in conflict with, or inconsistent with, any provision in any of
the other Loan Documents, the provision contained in this Agreement shall
govern and control.
11.8 AUTHORIZED SIGNATURE. Until Agent shall be notified
by Borrower to the contrary, the signature upon any document or instrument
delivered pursuant hereto of any officer or other employee of Borrower listed
on SCHEDULE 11.8 shall bind Borrower and be deemed to be the act of Borrower
affixed pursuant to and in accordance with resolutions duly adopted by
Borrower's Board of Directors.
11.9 GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY
PROVIDED IN ANY OF THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS
OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT, THE OTHER LOAN
DOCUMENTS AND THE OBLIGATIONS ARISING HEREUNDER AND THEREUNDER SHALL BE
GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE, AND
ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. BORROWER, EACH
CO-OBLIGOR, AGENT AND LENDERS HEREBY CONSENT AND AGREE THAT THE STATE OR
FEDERAL COURTS LOCATED IN THE BOROUGH OF MANHATTAN, CITY OF NEW YORK, NEW YORK,
SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES
AMONG BORROWER, CO- OBLIGORS, AGENT AND LENDERS PERTAINING TO THIS AGREEMENT OR
ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, PROVIDED, THAT AGENT,
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LENDERS, BORROWER AND CO-OBLIGORS EACH ACKNOWLEDGE THAT ANY APPEALS FROM THOSE
COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF THE BOROUGH OF
MANHATTAN, CITY OF NEW YORK, NEW YORK AND, PROVIDED, FURTHER, THAT NOTHING IN
THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE AGENT FROM BRINGING SUIT
OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE
COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT
OR OTHER COURT ORDER IN FAVOR OF AGENT OR LENDERS. BORROWER, EACH CO-OBLIGOR,
AGENT AND LENDERS EXPRESSLY SUBMIT AND CONSENT IN ADVANCE TO SUCH JURISDICTION
IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND BORROWER, EACH
CO-OBLIGOR, AGENT AND LENDERS HEREBY WAIVE ANY OBJECTION WHICH THEY MAY HAVE
BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON
CONVENIENS AND HEREBY CONSENT TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF
AS IS DEEMED APPROPRIATE BY SUCH COURT. BORROWER, EACH CO-OBLIGOR, AGENT AND
LENDERS HEREBY WAIVE PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER
PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREE THAT SERVICE OF SUCH
SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL ADDRESSED TO BORROWER, EACH CO-OBLIGOR, AGENT AND LENDERS AT THEIR
RESPECTIVE ADDRESSES SET FORTH ON SCHEDULE 11.10 OF THIS AGREEMENT AND THAT
SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF ACTUAL RECEIPT
THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE
PREPAID.
11.10 NOTICES. Except as otherwise provided herein, whenever
it is provided herein that any notice, demand, request, consent, approval,
declaration or other communication shall or may be given to or served upon
either of the parties by the other party, or whenever either of the parties
desires to give or serve upon the other party any communication with respect to
this Agreement, each such notice, demand, request, consent, approval,
declaration or other communication shall be in writing and shall be deemed to
have been validly served, given or delivered (i) upon the earlier of actual
receipt and three (3) days after deposit in the United States Mail, registered
or certified mail, return receipt requested, with proper postage prepaid, (ii)
upon transmission, when sent by telecopy or other similar facsimile
transmission (with such telecopy or facsimile promptly confirmed by delivery of
a copy by personal delivery or United States Mail as otherwise provided in this
SECTION 11.10), (iii) one (1) Business Day after deposit with a reputable
overnight courier with all charges prepaid or (iv) when delivered, if
hand-delivered by messenger, all of which shall be addressed to the party to be
notified and sent to the address or facsimile number indicated on SCHEDULE
11.10 or to such other address (or facsimile number) as may be substituted by
notice given as herein provided. The giving of any notice required hereunder
may be waived in writing by the party entitled to receive such notice. Failure
or delay in delivering copies of any notice, demand, request, consent,
approval, declaration or other communication to any Person (other than Borrower
or Agent) designated on Schedule 11.10 to receive copies shall in no way
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adversely affect the effectiveness of such notice, demand, request, consent,
approval, declaration or other communication.
11.11 CONFIDENTIALITY. Each of the Lenders and Agent agrees
to exercise reasonable efforts to keep any non-public information delivered or
made available to it pursuant to this Agreement or any other Loan Document,
which Borrower has identified in writing as confidential information,
confidential from any Person other than officers, employees, agents, designees
or representatives of such Lender or Agent who are or are expected to become
engaged in evaluating, approving, structuring or administering this Agreement
or any of the other Loan Documents, or Revolving Credit Advances, Letter of
Credit Obligations or any other transaction contemplated hereby or thereby;
PROVIDED, THAT nothing herein shall prevent Agent or any Lender from disclosing
such information (i) to any bona fide prospective or actual assignee,
transferee or participant that has agreed in writing to comply with this
SECTION 11.11 in connection with the contemplated assignment or transfer of any
Revolving Credit Advances or Letter of Credit Obligations or participations
therein; (ii) to any of its Affiliates to the extent any such Affiliate
requires such information in the ordinary course of Agent's or such Lender's
credit committee or asset management procedures; (iii) to any of its legal
counsel, accountants, and other professional advisors; (iv) as required or
requested by any Governmental Authority or representative thereof or pursuant
to legal process; or (v) as required in connection with the exercise of any
remedy under this Agreement or any of the other Loan Documents; PROVIDED,
FURTHER, that a determination by Agent or a Lender as to the application of the
circumstances described in the foregoing clauses (i) through (v) will be
conclusive if made in good faith.
11.12 EXCEPTIONS TO COVENANTS. Neither Borrower nor any
Subsidiary shall be deemed to be permitted to take any action or omit to take
any action which is permitted as an exception to any of the terms, provisions
or covenants contained in any of the Loan Documents if such action or omission
would result in a Default or Event of Default or the breach of any other term,
provision or covenant contained in any Loan Document.
11.13 SUBORDINATION. Borrower and each Co-Obligor agree
that, notwithstanding any language to the contrary contained in the
Subordinated Debt, all Subordinated Debt, whether heretofore, now or hereafter
incurred, created, evidenced or owing, however such Subordinated Debt may be
evidenced, extended or renewed, shall be and is subordinated in right of
payment to the prior payment in full when and as due (whether by acceleration
or otherwise) in cash of the Obligations now or hereafter owing to Agent or any
Lender; provided that Borrower may pay the Subordinated Debt in accordance with
the terms of Section 6.3. In furtherance thereof, Borrower and each Co-Obligor
agree not to ask, demand, accelerate, sue for, take or secure all or any part
of the Subordinated Debt except as
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permitted in this Agreement unless and until any and all Obligations shall have
been paid in full in cash and this Agreement shall have been terminated as
provided herein. Upon any distribution of all or substantially all of the
assets or property of Borrower or any Subsidiary or in the event of any
receivership, insolvency, bankruptcy, assignment for benefit of creditors,
reorganization, readjustment or arrangement with creditors, whether pursuant to
bankruptcy laws, dissolution, winding up, liquidation or other marshalling of
the assets and liabilities of Borrower, whether voluntary or involuntary, or
upon acceleration of the Obligations, all Obligations shall first be paid in
full in cash before any payment or distribution of any character (whether in
cash, securities or other property) shall be made for or on account of or
applied on any Subordinated Debt.
11.14 SECTION TITLES. The Section titles and Table of
Contents contained in this Agreement are and shall be without substantive
meaning or content of any kind whatsoever and are not a part of the agreement
between the parties hereto.
11.15 COUNTERPARTS. This Agreement may be executed in any
number of separate counterparts, each of which shall collectively and
separately constitute one agreement.
11.16 WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN
CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND
ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH
APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE
PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH
APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF
THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY
DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG AGENT, LENDERS
AND BORROWERS ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY
OF THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.
* * * * * * * * *
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IN WITNESS WHEREOF, this Agreement has been duly executed as
of the date first written above.
GENERAL ELECTRIC CAPITAL
CORPORATION, as Agent and Lender
By: /s/ Dan Pengue
------------------------------
Title: Authorized Signatory
------------------------------
CARLISLE PLASTICS, INC.
By: /s/ Rajiv P. Bhatt
------------------------------
Title: Chief Financial Officer
------------------------------
POLY-TECH, INC.
By: /s/ Rajiv P. Bhatt
------------------------------
Title: Vice President
------------------------------
A&E PRODUCTS (FAR EAST) LTD.
By: /s/ Rajiv P. Bhatt
------------------------------
Title: Director
------------------------------
PLASTICOS BAJACAL S.A. DE C.V.
By: /s/ Clifford A. Deupree
------------------------------
Title: Sole Administrator
------------------------------
<PAGE> 66
RHINO-X INDUSTRIES, INC.
By: /s/ Rajiv P. Bhatt
------------------------------
Title: Chief Financial Officer
------------------------------
A&E KOREA, LTD.
By: /s/ Rajiv P. Bhatt
------------------------------
Title: Vice President
------------------------------
AMERICAN WESTERN CORPORATION
By: /s/ Rajiv P. Bhatt
------------------------------
Title: Vice President
------------------------------
AWC TRANSPORTATION CORPORATION
By: /s/ Rajiv P. Bhatt
------------------------------
Title: Vice President
------------------------------
<PAGE> 67
SCHEDULE A
to
CREDIT AGREEMENT
Dated as of March 9, 1994
DEFINITIONS
-----------
Capitalized terms used in the Agreement shall have (unless
otherwise provided elsewhere in the Agreement) the following respective
meanings:
"ACCOUNT DEBTOR" shall mean any Person who may become
obligated to Borrower, or any of its Subsidiaries, under, with respect to, or
on account of, an Account.
"ACCOUNTS" shall mean all "accounts," as such term is defined
in the Code, now owned or hereafter acquired by Borrower, or any of its
Subsidiaries, including (a) all accounts receivable, other receivables, book
debts and other forms of obligations now owned or hereafter received or
acquired by or belonging or owing to Borrower, or any of its Subsidiaries,
whether arising out of goods sold or leased or services rendered by it or from
any other transaction (including any such obligations which may be
characterized as an account under the Code), (b) all of Borrower's and each of
its Subsidiaries' rights in, to and under all purchase orders or receipts now
owned or hereafter acquired by it for goods or services, (c) all of Borrower's
and each of its Subsidiaries' rights to any goods represented by any of the
foregoing (including unpaid sellers' rights of rescission, replevin,
reclamation and stoppage in transit and rights to returned, reclaimed or
repossessed goods), (d) all monies due or to become due to Borrower, or any of
its Subsidiaries, under all purchase orders and contracts for the sale or lease
of goods or the performance of services or both by Borrower, or any of its
Subsidiaries (whether or not yet earned by performance on the part of Borrower
or such Subsidiary, as appropriate) now or hereafter in existence, including
the right to receive the proceeds of said purchase orders and contracts, and
(e) all collateral security and guarantees of any kind, now or hereafter in
existence, given by any Person with respect to any of the foregoing.
"AFFILIATE" shall mean, with respect to any Person, (i) each
Person that, directly or indirectly, owns or controls, whether beneficially, or
as a trustee, guardian or other fiduciary, 5% or more of the Stock having
ordinary voting power in the election of directors of such Person, (ii) each
Person that controls, is controlled by or is under common control with such
Person or any Affiliate of such Person or (iii) each of such Person's officers,
directors, joint venturers and partners. For the purposes of this definition,
"control" of a Person shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of its management or policies, whether
through the ownership of voting securities, by contract or otherwise.
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"AGENT" shall mean GE Capital in its capacity as agent for the
Lenders pursuant to Section 9, and not in its individual capacity as a Lender,
and any successor appointed pursuant to Section 9.2.
"AGREEMENT" shall mean the Credit Agreement by and among
Borrower, the Co-Obligors, and General Electric Capital Corporation, as Agent
and Lender, including all restatements and modifications thereof and amendments
and supplements thereto and any appendices, exhibits or schedules to any of the
foregoing, and shall refer to the Agreement as the same may be in effect at any
and all times such reference becomes operative.
"ALTERNATE RATE" shall mean a rate per annum equal to (a) the
Commercial Paper Rate, plus (b) the Applicable Margin, in each case changing
when and as the Commercial Paper Rate changes.
"APPLICABLE MARGIN" shall mean incremental rates as follows:
(a) for that portion of the aggregate outstanding balance of the Revolving
Credit Loan which is less than $5 million, 2.25% per annum, (b) for that
portion of the aggregate outstanding balance of the Revolving Credit Loan which
is $5 million or greater but less than $10 million, 3.25% per annum, and (c)
for that portion of the aggregate outstanding balance of the Revolving Credit
Loan which is $10 million or more, 3.75% per annum.
"ASSET PURCHASE AGREEMENTS" shall mean those certain Asset
Purchase Agreements by and between Borrower and each of its domestic operating
Subsidiaries, each dated the Closing Date, whereby Borrower agrees to purchase
all of such Subsidiaries' raw materials, work in process, finished goods,
accounts and inventory upon the terms and conditions set forth therein, in each
case in form and substance satisfactory to Agent and its counsel.
"BORROWER" shall mean Carlisle Plastics, Inc., a Delaware
corporation, and its permitted successors and assigns.
"BORROWING AVAILABILITY" shall have the meaning assigned to it
in Section 1.1(a).
"BORROWING BASE" shall mean at any time an amount determined
by Agent, in its sole discretion from time to time, equal to the sum at such
time of:
(a) Up to eighty percent (80%) of the book value of
Eligible Accounts, less reserves; and
(b) Up to fifty percent (50%) of Eligible Inventory
valued on a first-in, first-out basis (at the lower of cost or
market), less reserves; PROVIDED, HOWEVER, that total Revolving Credit
Loans secured by Eligible Inventory shall not exceed $20,000,000 at
any time.
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"BORROWING BASE CERTIFICATE" shall mean a certificate in the
form attached to the Agreement as EXHIBIT B.
"BORROWING DATE" shall mean a date in which a Revolving Credit
Advance is made or a Letter of Credit Obligation is incurred hereunder.
"BUSINESS DAY" shall mean (a) for all purposes other than
as specified in clause (b), any day other than a Saturday, Sunday or other day
on which banks are required or permitted to be closed in the State of New York
and (b) with respect to all notices, determinations, borrowings, rate
selections and payments in connection with the LIBOR Rate and determination of
the Index Rate, any day that is a Business Day described in clause (a) and that
is also a day on which dealings in U.S. Dollars are carried on in the London
interbank market.
"CAPITAL EXPENDITURES" shall mean all payments for any fixed
assets or improvements, or for replacements, substitutions or additions
thereto, that have a useful life of more than one year and that are required to
be capitalized under GAAP, and, in any event, shall include Capital Lease
Obligations and all asset purchases secured by purchase money security
interests.
"CAPITAL LEASE" shall mean, with respect to any Person, any
lease of any property (whether real, personal or mixed) by such Person as
lessee that, in accordance with GAAP, either would be required to be classified
and accounted for as a capital lease on a balance sheet of such Person or
otherwise be disclosed as such in a note to such balance sheet, other than, any
such lease under which such Person is the lessor.
"CAPITAL LEASE OBLIGATION" shall mean, with respect to any
Capital Lease, the amount of the obligation of the lessee thereunder that, in
accordance with GAAP, would appear on a balance sheet of such lessee in respect
of such Capital Lease or otherwise be disclosed in a note to such balance
sheet.
A "CHANGE IN CONTROL" shall have occurred if, at any time, (i)
any Person or "group" has acquired "beneficial ownership" (as such terms are
defined under Section 13d-3 of and Regulation 13D under the Securities Exchange
Act of 1934, as amended), either directly or indirectly, of outstanding shares
of Stock of Borrower having more than twenty percent (20%) of the voting power
for the election of directors of Borrower under ordinary circumstances or (ii)
more than twenty percent (20%) of the members of Borrower's Board of Directors
shall have been replaced by new Directors not nominated for membership on the
Board by a majority of Directors who were Directors on the Closing Date.
"CHARGES" shall mean all federal, state, county, city,
municipal, local, foreign or other governmental taxes (including,
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without limitation, taxes owed to the PBGC at the time due and payable),
levies, assessments, charges, liens, claims or encumbrances upon or relating to
(i) the Collateral, (ii) the Obligations, (iii) the employees, payroll, income
or gross receipts of Borrower, or any of its Subsidiaries, (iv) Borrower's, or
any of its Subsidiaries', ownership or use of any of its properties or other
assets, or (v) any other aspect of Borrower's, or any of its Subsidiaries',
businesses.
"CHATTEL PAPER" shall mean any "chattel paper," as such term
is defined in the Code, now owned or hereafter acquired by Borrower, or any of
its Subsidiaries, wherever located.
"CIT DOCUMENTS" shall mean, collectively the CIT Guaranty
Agreement, the CIT Loan Agreement and the CIT Notes.
"CIT GUARANTY AGREEMENT" shall mean that certain Guaranty
Agreement, dated May 13, 1992, executed by Poly-Tech, Inc. in favor of CIT
Group/Equipment Financing, Inc., as in effect on the Closing Date.
"CIT LOAN AGREEMENT" shall mean that certain Loan and Security
Agreement by and between Borrower and The CIT Group/ Equipment Financing, Inc.,
dated May 13, 1992, as in effect on the Closing Date.
"CIT NOTES" shall mean those certain promissory notes
described on Schedule 6.3 executed by Borrower in favor of CIT Group/Equipment
Financing, Inc. pursuant to the CIT Loan Agreement, as in effect on the Closing
Date.
"CLOSING DATE" shall mean March 9, 1994.
"CODE" shall mean the Uniform Commercial Code as the same may,
from time to time, be in effect in the State of New York; PROVIDED, HOWEVER, in
the event that, by reason of mandatory provisions of law, any or all of the
attachment, perfection or priority of Agent's or any Lender's security interest
in any Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of New York, the term "Code" shall mean the
Uniform Commercial Code as in effect in such other jurisdiction solely for
purposes of the provisions hereof relating to such attachment, perfection or
priority and for purposes of definitions related to such provisions.
"COLLATERAL" shall mean the property covered by the Security
Agreement and the other Collateral Documents and any other property, real or
personal, tangible or intangible, now existing or hereafter acquired, that may
at any time be or become subject to a security interest or Lien in favor of
Agent, on behalf of itself and Lenders, to secure the Obligations.
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"COLLATERAL DOCUMENTS" shall mean, collectively, the Security
Agreement and all other documents, agreements, mortgages, assignments, security
agreements, pledges and instruments executed by Borrower or any Co-Obligor or
any other Subsidiary pursuant to which a Lien is granted on any assets or
property to secure the Obligations, in each case as the same may be amended,
modified or supplemented from time to time.
"COLLATERAL REPORTS" shall mean the reports with respect to
the Collateral referred to in Schedule 3.5.
"COLLECTION ACCOUNT" shall mean that certain account of Agent,
account number 50232854 in the name of GECC/CAF Depository at Bankers Trust
Company, 17 Wall Street, New York, New York, ABA number 021 001 033.
"COMMERCIAL PAPER RATE" shall mean a floating rate equal to
the latest month-end rate for thirty (30) day commercial paper rate of interest
for "high-grade unsecured notes sold through dealers by major corporations"
published in the "Money Rates" section of the WALL STREET JOURNAL (whether or
not actually charged, but subject to any and all corrections or retractions
which may be published). The Commercial Paper Rate shall be specified by Agent
on the Closing Date for the month of March 1994 and thereafter on the last
Business Day of each calendar month and, once specified, shall be in effect
throughout the next calendar month.
"COMMITMENT" or "COMMITMENTS" shall mean the commitment or
commitments of a Lender or Lenders to make Revolving Credit Advances as set
forth in Section 1.1(a).
"Commitment Termination Date" shall mean the earliest of (i)
March 9, 1997, (ii) the date of termination of Lenders' obligations to advance
funds or permit existing advances to remain outstanding pursuant to SECTION
8.2, and (iii) the date of prepayment in full in cash by Borrower of the
Revolving Credit Loan in accordance with the provisions of SECTION 1.2(B).
"CONTRACTS" shall mean all "contracts," as such term is
defined in the Code, now owned or hereafter acquired by Borrower, or any of its
Subsidiaries, including all contracts, undertakings, or agreements (other than
rights evidenced by Chattel Paper, Documents or Instruments) in or under which
Borrower, or any of its Subsidiaries, may now or hereafter have any right,
title or interest, including any agreement relating to the terms of payment or
the terms of performance of any Account.
"CONVERSION/CONTINUATION NOTICE" shall have the meaning
assigned to it in SECTION 1.1(C).
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"CO-OBLIGOR" AND "CO-OBLIGORS" shall have the meanings
respectively assigned to them in the opening paragraph of the Agreement.
"COPYRIGHT LICENSE" shall mean any and all rights now owned or
hereafter acquired by Borrower or any of its Subsidiaries under any written
agreement granting any right to use any Copyright or Copyright registration.
"COPYRIGHTS" shall mean all of the following now owned or
hereafter acquired by Borrower or any of its Subsidiaries: (i) all copyrights
and general intangibles of like nature (whether registered or unregistered),
now owned or existing or hereafter adopted or acquired, all registrations and
recordings thereof, and all applications in connection therewith, including all
registrations, recordings and applications in the United States Copyright
Office or in any similar office or agency of the United States, any state or
territory thereof, or any other country or any political subdivision thereof,
and (ii) all reissues, extensions or renewals thereof.
<TABLE>
"DEBT AVAILABILITY" shall mean, for each Fiscal Year, an
amount equal to (a) the aggregate amount of Indebtedness that Borrower and its
Subsidiaries could have had outstanding as of the end of such Fiscal Year
without exceeding the ratio of Funded Debt to Equity, measured as of the end of
such Fiscal Year, set forth below opposite such Fiscal Year, minus (b) the
aggregate amount of Indebtedness of Borrower and its Subsidiaries actually
outstanding as of the end of such Fiscal Year:
<CAPTION>
Funded Debt to
Fiscal Year Equity Ratio
----------- ------------
<S> <C>
1994 2.20 to 1.0
1995 1.65 to 1.0
1996 1.24 to 1.0
1997 .90 to 1.0
1998 .65 to 1.0
</TABLE>
"DEBT SERVICE CHARGES" shall mean, with respect to Borrower
and its Subsidiaries on a consolidated basis, for any fiscal period of
Borrower, the sum of (i) Interest Expense in respect of Funded Debt plus (ii)
regularly scheduled payments of principal on Funded Debt, in each case of
Borrower and its Subsidiaries for such period.
"DEFAULT" shall mean any event which, with the passage of time
or notice or both, would, unless cured or waived, become an Event of Default.
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"DEFAULT RATE" shall have the meaning assigned to it in
Section 1.5(e).
"DISBURSEMENT ACCOUNT" shall have the meaning assigned to it
on Schedule C.
"DOL" shall mean the United States Department of Labor or any
successor thereto.
"DOCUMENTS" shall mean any "documents," as such term is
defined in the Code, now owned or hereafter acquired by Borrower, or any of its
Subsidiaries, wherever located.
"EBITDA" shall mean, with respect to Borrower and its
Subsidiaries on a consolidated basis, for any fiscal period of Borrower (i) Net
Income plus (ii) to the extent deducted in determining Net Income, Interest
Expense and taxes (as stated in Borrower's consolidated statement of income)
plus (iii) to the extent deducted in determining Net Income, depreciation,
amortization and other similar non-cash charges minus (iv) to the extent added
in determining Net Income, extraordinary gains plus (v) to the extent deducted
in determining Net Income, extraordinary losses.
"ELIGIBLE ACCOUNTS" shall have the meaning assigned to it on
Schedule 1.6.
"ELIGIBLE INVENTORY" shall have the meaning assigned to it on
Schedule 1.7.
"ENVIRONMENTAL LAWS" shall mean all federal, state, local and
foreign laws, statutes, ordinances and regulations, now or hereafter in effect,
and in each case as amended or supplemented from time to time, and any
applicable judicial or administrative interpretation thereof, including any
applicable judicial or administrative order, consent decree or judgment,
relative to the applicable real estate, relating to the regulation and
protection of human health, safety, the environment and natural resources
(including ambient air, surface water, groundwater, wetlands, land surface or
subsurface strata, wildlife, aquatic species and vegetation). Environmental
Laws include, but are not limited to, the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended (42 U.S.C. Section Section
9601 ET SEQ.) ("CERCLA"); the Hazardous Material Transportation Act, as amended
(49 U.S.C. Section Section 1801 ET SEQ.); the Federal Insecticide, Fungicide,
and Rodenticide Act, as amended (7 U.S.C. Section Section 136 ET SEQ.); the
Resource Conservation and Recovery Act, as amended (42 U.S.C. Section Section
6901 ET SEQ.) ("RCRA"); the Toxic Substance Control Act, as amended (15 U.S.C.
Section Section 2601 ET SEQ.); the Clean Air Act, as amended (42 U.S.C.
Section Section 740 ET SEQ.); the Federal Water Pollution Control Act, as
amended (33 U.S.C. Section Section 1251 et seq.); the Occupational Safety and
Health Act, as amended (29 U.S.C. Section Section 651 ET SEQ.)
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<PAGE> 74
("OSHA"); and the Safe Drinking Water Act, as amended (42 U.S.C. Section
Section 300(f) ET SEQ.), and any and all regulations promulgated thereunder,
and all analogous state, local and foreign counterparts or equivalents and any
transfer of ownership notification or approval statutes.
"ENVIRONMENTAL LIABILITIES AND COSTS" shall mean all
liabilities, obligations, responsibilities, remedial actions, removal actions,
losses, damages, punitive damages, consequential damages, treble damages, costs
and expenses (including all fees, disbursements and expenses of counsel,
experts and consultants and costs of investigation and feasibility studies),
fines, penalties, sanctions and interest incurred as a result of any claim,
suit, action or demand by any person or entity, whether based in contract,
tort, implied or express warranty, strict liability, criminal or civil statute
or common law (including any thereof arising under any Environmental Law,
permit, order or agreement with any Governmental Authority) and which relate to
any health or safety condition regulated under any Environmental Law or in
connection with any other environmental matter or Release, threatened Release
or the presence of a Hazardous Material or threatened Release of a Hazardous
Material.
"EQUIPMENT" shall mean all "equipment," as such term is
defined in the Code, now owned or hereafter acquired by Borrower, or any of its
Subsidiaries, wherever located, including all Borrower's and each of its
Subsidiaries' machinery and equipment, including processing equipment,
conveyors, machine tools, data processing and computer equipment with software
and peripheral equipment (other than software constituting part of the
Accounts), and all engineering, processing and manufacturing equipment, office
machinery, furniture, materials handling equipment, tools, attachments,
accessories, automotive equipment, trailers, trucks, forklifts, molds, dies,
stamps, motor vehicles, rolling stock and other equipment of every kind and
nature, trade fixtures and fixtures not forming a part of real property, all
whether now owned or hereafter acquired, and wherever situated, together with
all additions and accessions thereto, replacements therefor, all parts
therefor, all substitutes for any of the foregoing, fuel therefor, and all
manuals, drawings, instructions, warranties and rights with respect thereto,
and all products and proceeds thereof and condemnation awards and insurance
proceeds with respect thereto.
"EQUITY" shall mean the assets of Borrower and its
Subsidiaries on a consolidated basis less (i) reserves applicable thereto and
(ii) the liabilities of Borrower and its Subsidiaries on a consolidated basis,
all as determined in accordance with GAAP.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974 (or any successor legislation thereto), as amended from time to time,
and any regulations promulgated thereunder.
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"ERISA AFFILIATE" shall mean, with respect to Borrower or any
of its Subsidiaries, any trade or business (whether or not incorporated) under
common control with Borrower or such Subsidiary, as appropriate, and which,
together with Borrower or such Subsidiary, as appropriate, are treated as a
single employer within the meaning of Sections 414(b), (c), (m) or (o) of the
IRC.
"ERISA EVENT" shall mean, with respect to Borrower, any of its
Subsidiaries or any ERISA Affiliate, (i) a Reportable Event with respect to a
Title IV Plan or a Multiemployer Plan; (ii) the withdrawal of Borrower, or any
of its Subsidiaries or any ERISA Affiliate from a Title IV Plan subject to
Section 4063 of ERISA during a plan year in which it was a substantial
employer, as defined in Section 4001(a)(2) of ERISA; (iii) the complete or
partial withdrawal of Borrower, or any of its Subsidiaries or any ERISA
Affiliate from any Multiemployer Plan; (iv) the filing of a notice of intent to
terminate a Title IV Plan or the treatment of a plan amendment as a termination
under Section 4041 of ERISA; (v) the institution of proceedings to terminate a
Title IV Plan or Multiemployer Plan by the PBGC; (vi) the failure to make
required contributions to a Qualified Plan; or (vii) any other event or
condition which might reasonably be expected to constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee
to administer, any Title IV Plan or Multiemployer Plan or the imposition of any
liability under Title IV of ERISA, other than PBGC premiums due but not
delinquent under Section 4007 of ERISA.
"EVENT OF DEFAULT" shall have the meaning assigned to it in
SECTION 8.1.
"FAIRMONT IRB" shall mean the industrial revenue bonds issued
in connection with that certain loan agreement dated December 31, 1985 between
the City of Fairmont, Minnesota and AMDEVCO PACKAGING/FILMS, INC.
"FEDERAL RESERVE BOARD" shall have the meaning assigned to it
in Section 3.12.
"FEES" shall mean any and all fees due to Agent or any Lender
pursuant to the Agreement or any of the other Loan Documents.
"FINANCIAL COVENANTS" shall have the meaning assigned to it in
SECTION 6.11.
"FINANCIAL STATEMENTS" shall mean the financial statements
referred to in SCHEDULE 3.4.
"FISCAL MONTH" shall mean any of the monthly accounting
periods of Borrower.
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"FISCAL QUARTER" shall mean any of the quarterly accounting
periods of Borrower.
"FISCAL YEAR" shall mean the twelve month period of Borrower
ending December 31 of each year.
"FIXED CHARGES" shall mean, with respect to Borrower and its
Subsidiaries on a consolidated basis, for any fiscal period of Borrower, the
sum of (i) Debt Service Charges plus (ii) taxes (as stated in Borrower's
consolidated statement of income), in each case of Borrower for such period.
"FORMULA AMOUNT" shall have the meaning assigned to it in
Section 1.1(a).
"FUNDED DEBT" shall mean, with respect to Borrower and its
Subsidiaries, on a consolidated basis, all of its Indebtedness which by the
terms of the agreement governing or instrument evidencing such Indebtedness
matures more than one year from or is directly or indirectly renewable or
extendible at its option under a revolving credit or similar agreement
obligating the lender or lenders to extend credit over a period of more than
one year from the date of creation thereof, including in each instance current
maturities of long-term debt (and the current portion of long-term debt in the
last year of its term), revolving credit and short-term debt extendible beyond
one year at the option of the debtor, and shall also include, without
limitation, Indebtedness arising under or in connection with any interest rate
swap agreement or arrangements, the Revolving Credit Loan, the Letter of Credit
Obligations and the other Obligations.
"GAAP" shall mean generally accepted accounting principles in
the United States of America as in effect from time to time, consistently
applied.
"GE CAPITAL" shall mean General Electric Capital Corporation,
a New York corporation.
"GE CAPITAL FEE LETTER" shall mean that certain letter, dated
February 18, 1994, between GE Capital and Borrower with respect to certain fees
to be paid by Borrower to GE Capital.
"GENERAL INTANGIBLES" shall mean any "general intangibles," as
such term is defined in the Code, now owned or hereafter acquired by Borrower,
or any of its Subsidiaries, including, without limitation, all right, title and
interest which Borrower, or any of its Subsidiaries, may now or hereafter have
in or under any Contract, all customer lists, Copyrights, Trademarks, Patents,
service marks, trade names, business names, corporate names, trade styles,
logos and other source or business identifiers, and all applications therefor
and reissues, extensions or renewals thereof, rights in intellectual property,
interests in
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partnerships, joint ventures and other business associations, licenses,
permits, copyrights, trade secrets, proprietary or confidential information,
inventions (whether or not patented or patentable), technical information,
procedures, designs, knowledge, know-how, software, data bases, data, skill,
expertise, experience, processes, models, drawings, materials and records,
goodwill (including the goodwill associated with any Trademark, Trademark
registration or Trademark licensed under any Trademark license), all rights and
claims in or under insurance policies (including insurance for fire, damage,
loss and casualty, whether covering personal property, real property, tangible
rights or intangible rights, all liability, and business interruption insurance
and all unearned premiums), uncertificated securities, choses in action,
deposit, checking and other bank accounts, rights to receive tax refunds and
other payments and rights of indemnification.
"GOVERNMENTAL AUTHORITY" shall mean any nation or government,
any state or other political subdivision thereof, and any agency, department or
other entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"GUARANTEED INDEBTEDNESS" shall mean, as to any Person, any
obligation of such Person guaranteeing any indebtedness, lease, dividend, or
other obligation ("primary obligations") of any other Person (the "primary
obligor") in any manner, including any obligation or arrangement of such Person
(i) to purchase or repurchase any such primary obligation, (ii) to advance or
supply funds (a) for the purchase or payment of any such primary obligation or
(b) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency or any balance sheet condition
of the primary obligor, (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) to indemnify the owner of such primary obligation against
loss in respect thereof.
"GUARANTOR" shall mean each Person, if any, which executes a
guarantee or a support or other similar agreement in favor of Agent or any
Lender in connection with the transactions contemplated by the Agreement and
the other Loan Documents.
"GUARANTIES" shall mean any agreement to pay or perform, on
behalf of Borrower, the Revolving Credit Loan, the Letter of Credit Obligations
or any of the other Obligations, made in favor of Agent or any Lender, in form
and substance satisfactory to Agent, together with all amendments,
modifications and supplements thereto contested to in writing by Agent, and
shall refer to any such Guaranty as the same may be in effect at the time such
reference becomes operative.
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"HAZARDOUS MATERIAL" shall mean any substance, material or
waste, the generation, handling, storage, treatment or disposal of which is
regulated by or forms the basis of liability now or hereafter under, any
Government Authority in any jurisdiction in which Borrower or any of its
Subsidiaries has owned, leased, or operated real property or disposed of
hazardous materials, or by any Federal government authority, including, without
limitation, any material or substance which is (i) defined as a "solid waste,"
"hazardous waste," "hazardous material," "hazardous substance," "extremely
hazardous waste" or "restricted hazardous waste" or other similar term or
phrase under any Environmental Laws, (ii) petroleum or any fraction or
by-product thereof, asbestos, polychlorinated biphenyls (PCB's), any
radioactive substance, methane, volatile hydrocarbons or any industrial
solvent, (iii) designated as a "hazardous substance" pursuant to Section 311 of
the Clean Water Act, 33 U.S.C. Section Section 1251 ET SEQ. (33 U.S.C.
Section Section 1321) or listed pursuant to Section 307 of the Clean Water Act
(33 U.S.C. Section 1317), (iv) defined as a "hazardous waste" pursuant to
Section 1004 of the Resource Conservation and Recovery Act, 42 U.S.C. Section
6901, ET SEQ. (42 U.S.C. Section 6903), or (v) defined as a "hazardous
substance" pursuant to Section 1012 of the Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. Section 9601 ET SEQ. (42
U.S.C. Section 9601).
"INDEBTEDNESS" of any Person shall mean (i) all indebtedness
of such Person for borrowed money or for the deferred purchase price of
property or services (including reimbursement and all other obligations with
respect to surety bonds, letters of credit and bankers' acceptances, whether or
not matured, but excluding obligations to trade creditors incurred in the
ordinary course of business), (ii) all obligations evidenced by notes, bonds,
debentures or similar instruments, (iii) all indebtedness created or arising
under any conditional sale or other title retention agreement with respect to
property acquired by such Person (even though the rights and remedies of the
seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), (iv) all Capital Lease Obligations, (v)
all obligations arising under or in connection with any interest rate swap
agreement or arrangements, (vi) all Indebtedness referred to in clause (i),
(ii), (iii), (iv) or (v) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien upon or in property or other assets (including accounts and contract
rights) owned by such Person, even though such Person has not assumed or become
liable for the payment of such Indebtedness, (vii) the Obligations, and (viii)
all liabilities under Title IV of ERISA.
"Indentures" shall mean, collectively (i) that certain Amended
and Restated Indenture dated as of April 1, 1989 by and between Borrower and
United States Trust Company of New York, as trustee, relating to the issuance
of Borrower's 13-3/4% Senior
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Notes due 1997, (ii) that certain Indenture dated as of March 23, 1990, by and
between Borrower and Bank of Montreal Trust Company, as trustee, relating to
the issuance of Borrower's Senior Variable Rate Notes due 1997, and (iii) that
certain Indenture dated as of June 1, 1992 by and among Borrower, Poly-Tech,
Inc. and United States Trust Company of New York, as trustee, relating to the
issuance of Borrower's 10-1/4% Senior Notes due 1997, in each case as the same
may have been amended, modified or supplemented through the Closing Date.
"INDEX BASE RATE" shall mean a floating rate equal to the rate
determined by the Agent on the last Business Day of each month at which
deposits in U.S. Dollars with a maturity of one (1) month are offered based
upon information presented on the Telerate Screen as of 11:00 a.m. (London
time) on such Business Day; provided that if at least two such offered rates
appear on the Telerate Screen, the arithmetic mean of all such rates (as
determined by the Agent) shall be the rate used; provided further that if
Telerate ceases to provide LIBOR quotations, such rate shall be the average
rate determined by the Agent on the last Business Day of each month at which
deposits in U.S. Dollars in the amount of $100,000 with a maturity of one (1)
month are offered by Bankers Trust Company to first-class banks in the London
interbank market as of 11:00 a.m. (London time) on such Business Day. The
Index Base Rate shall be specified by Agent on the Closing Date for the month
of March 1994 and thereafter on the last Business Day of each calendar month
and, once specified, shall be in effect throughout the next calendar month.
"INDEX RATE" shall mean, for each Index Rate Advance, the sum
of (a) the quotient of (i) the applicable Index Base Rate, divided by (ii) one
minus the Reserve Requirement (expressed as a decimal) applicable thereto, plus
(b) the Applicable Margin. The Index Rate shall be rounded, if necessary, to
the next higher 1/16th of 1%.
"INDEX RATE ADVANCE" shall mean a Revolving Credit Advance
which bears interest at the Index Rate.
"INSTRUMENTS" shall mean any "instrument," as such term is
defined in the Code, now owned or hereafter acquired by Borrower, or any of its
Subsidiaries, wherever located, including all certificated securities, all
certificates of deposit, and all notes and other, without limitation, evidences
of indebtedness, other than instruments that constitute, or are a part of a
group of writings that constitute, Chattel Paper.
"INTEREST EXPENSE" shall mean, for any fiscal period of
Borrower, interest expense of Borrower for such period in respect of Funded
Debt, excluding the amortization of capitalized debt transaction costs.
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"INVENTORY" shall mean any "inventory," as such term is
defined in the Code, now or hereafter owned or acquired by, Borrower, or any of
its Subsidiaries, wherever located, including inventory, merchandise, goods and
other personal property which are held by or on behalf of Borrower, or any of
its Subsidiaries, for sale or lease or are furnished or are to be furnished
under a contract of service or which constitute raw materials, work in process
or materials used or consumed or to be used or consumed in Borrower's, or any
of its Subsidiaries', businesses or in the processing, production, packaging,
promotion, delivery or shipping of the same, including other supplies.
"IRC" shall mean the Internal Revenue Code of 1986, as
amended, and any successor thereto.
"IRS" shall mean the Internal Revenue Service, or any
successor thereto.
"LEASES" shall mean all leasehold estates in real property now
owned or hereafter acquired by Borrower or any of its Subsidiaries, as lessee.
"LENDER ADDITION AGREEMENT" shall mean an agreement among
Agent, a Lender and such Lender's assignee regarding their respective rights
and obligations with respect to assignments of the Revolving Credit Loan, the
Commitments and other interests under the Agreement and the other Loan
Documents.
"LENDERS" shall mean GE Capital and, if at any time GE Capital
shall decide to assign or syndicate all or any portion of the Obligations, such
term shall include such assignee or such other members of the syndicate.
"LETTER OF CREDIT OBLIGATIONS" shall mean all outstanding
obligations incurred by Lenders at the request of Borrower, whether direct or
indirect, contingent or otherwise, due or not due, in connection with the
issuance by the Lenders of, or the guarantee by Lenders of the issuance by
another of, letters of credit. The amount of Letter of Credit Obligations
outstanding at any time shall equal the maximum amount which may be payable by
Lenders thereupon or pursuant thereto at such time.
"LETTERS OF CREDIT" shall mean commercial or standby letters
of credit issued at the request and for the account of Borrower for which
Lenders have incurred Letter of Credit Obligations.
"LIBOR BASE RATE" shall mean, for each LIBOR Interest Period,
the rate determined by the Agent at which deposits in U.S. Dollars are offered
based upon information presented on the Telerate Screen as of 11:00 a.m.
(London time) on the LIBOR Rate
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Determination Date in the approximate amount of the LIBOR Rate Advance and
having a maturity approximately equal to such LIBOR Interest Period; PROVIDED
that if at least two such offered rates appear on the Telerate Screen in
respect of such LIBOR Interest Period, the arithmetic mean of all such rates
(as determined by the Agent) shall be the rate used; PROVIDED FURTHER that if
Telerate ceases to provide LIBOR quotations, such rate shall be the average
rate determined by the Agent at which deposits in U.S. Dollars are offered for
the relevant LIBOR Interest Period by Bankers Trust Company to first-class
banks in the London interbank market as of 11:00 a.m. (London time) on the
applicable LIBOR Rate Determination Date in the approximate amount of the LIBOR
Rate Advance and having a maturity approximately equal to such LIBOR Interest
Period.
"LIBOR INTEREST PERIOD" shall mean, with respect to a LIBOR
Rate Advance, a period of one, two or three months, as available, commencing on
a Business Day, selected by Borrower pursuant to SECTION 1.1(A) of this
Agreement. Such Interest Period shall end on the day in the relevant
succeeding calendar month which corresponds numerically to the beginning day of
such Interest Period; PROVIDED that if there is no such numerically
corresponding day in such next, second or third succeeding month, such Interest
Period shall end on the last Business Day of such next, second or third
succeeding month. If an Interest Period would otherwise end on a day which is
not a Business Day, such Interest Period shall end on the next succeeding
Business Day; PROVIDED that if such next succeeding Business Day falls in a new
month, such Interest Period shall end on the immediately preceding Business
Day. In the case of immediately succeeding Interest Periods, each successive
Interest Period shall commence on the day on which the immediately preceding
Interest Period expires. Notwithstanding any of the foregoing, no Interest
Period shall extend beyond the Commitment Termination Date.
"LIBOR RATE" shall mean, for each LIBOR Interest Period, the
sum of (a) the quotient of (i) the LIBOR Base Rate applicable to such LIBOR
Interest Period, divided by (ii) one minus the Reserve Requirement (expressed
as a decimal) applicable to such LIBOR Interest Period, plus (b) the Applicable
Margin. The LIBOR Rate shall be rounded, if necessary, to the next higher
1/16th of 1%.
"LIBOR RATE ADVANCE" shall mean a Revolving Credit Advance
which bears interest at the LIBOR Rate.
"LIBOR RATE DETERMINATION DATE" shall mean the date for
calculating the LIBOR Rate. The LIBOR Rate Determination Date shall be the
second Business Day prior to the first day of the related LIBOR Interest
Period.
"LICENSE" shall mean any Copyright License, Patent License,
Trademark License or other license of rights or interests
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now held or hereafter acquired by Borrower or any of its Subsidiaries.
"LIEN" shall mean any mortgage or deed of trust, pledge,
hypothecation, assignment, deposit arrangement, lien, charge, claim, security
interest, easement or encumbrance, or preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including any lease or title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing
of, or agreement to give, any financing statement perfecting a security
interest under the Code or comparable law of any jurisdiction).
"LOAN ACCOUNT" shall have the meaning assigned to it in
Section 1.12.
"LOAN DOCUMENTS" shall mean the Agreement, the Revolving
Credit Note, the GE Capital Fee Letter, the Security Agreement, the other
Collateral Documents and all other agreements, instruments, documents and
certificates identified in the Schedule of Documents in favor of Agent and/or
Lenders and including all other pledges, financing statements, powers of
attorney, consents, assignments, contracts, notices, and all other written
matter whether heretofore, now or hereafter executed by or on behalf of
Borrower or any of its Affiliates, or any employee of Borrower, or any of its
Affiliates, and delivered to Agent or any Lender in connection with the
Agreement or the transactions contemplated hereby.
"LOCK BOX ACCOUNT" shall have the meaning assigned to it on
Schedule C.
"MANAGEMENT SERVICES AGREEMENT" shall mean that certain
Management Services Letter Agreement, dated May 22, 1991, by and between
Borrower and Carlisle Plastics Management Corporation, as heretofore amended
and as the same may after the Closing Date be extended or renewed on terms
which are no less favorable to Borrower and which have been otherwise disclosed
to Agent.
"MATERIAL ADVERSE EFFECT" shall mean (a) a material adverse
effect on (i) the business, assets, operations, prospects or financial or other
condition of Borrower or Borrower and its Subsidiaries considered as a whole,
(ii) Borrower's ability to pay the Revolving Credit Loan, the Letter of Credit
Obligations or any of the other Obligations in accordance with the terms
thereof, (iii) the Collateral or Agent's Liens, on behalf of itself and
Lenders, on the Collateral or the priority of any such Lien, or (iv) Agent's or
any Lender's rights and remedies under the Agreement or any other Loan Document
or (v) the validity or enforceability of any of the Loan Documents, or (b) the
incurrence by Borrower or any of its Subsidiaries of material liability,
contingent or liquidated, outside of the ordinary course of business.
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"MAXIMUM LAWFUL RATE" shall have the meaning assigned to it in
Section 1.5(f).
"MAXIMUM REVOLVING CREDIT LOAN" shall mean, at any particular
time, an amount equal to $55,000,000 as such amount may be reduced, if at all,
from time to time in accordance with the Agreement.
"MULTIEMPLOYER PLAN" shall mean a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA, and to which Borrower, or any of its
Subsidiaries or any ERISA Affiliate is making, is obligated to make, has made
or been obligated to make, contributions on behalf of participants who are or
were employed by any of them.
"NET INCOME" shall mean, with respect to Borrower and its
Subsidiaries on a consolidated basis, for any fiscal period, Borrower's
consolidated net income (or loss) after income and franchise taxes and shall
have the meaning given such term by GAAP; provided, that, there shall be
specifically excluded therefrom net income of any Person that is not a, direct
or indirect, wholly-owned Subsidiary of Borrower, unless received by Borrower
in cash.
"NET WORTH" shall mean the sum of (i) the higher of
$66,000,000 or Equity as of April 30, 1994 plus (ii) Net Income since April 30,
1994 through and including the applicable measurement date.
"NON-USE FEE" shall have the meaning assigned to it in Section
1.8(b).
"NOTICE OF REVOLVING CREDIT ADVANCE" shall have the meaning
assigned to it in Section 1.1(b).
"OBLIGATIONS" shall mean all loans, advances, debts,
liabilities and obligations, for the performance of covenants, tasks or duties
or for payment of monetary amounts (whether or not such performance is then
required or contingent, or amounts are liquidated or determinable) owing by
Borrower to Agent or any Lender, and all covenants and duties regarding such
amounts, of any kind or nature, present or future, whether or not evidenced by
any note, agreement or other instrument, arising under the Agreement or any of
the other Loan Documents. This term includes all principal, interest, Fees,
Charges, expenses, reimbursements, indemnities, attorneys' fees and any other
sum chargeable to Borrower under the Agreement or any of the other Loan
Documents.
"PATENT LICENSE" shall mean rights under any written agreement
now owned or hereafter acquired by Borrower or any of its Subsidiaries granting
any right with respect to any invention on which a Patent is in existence.
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"PATENTS" shall mean all of the following in which Borrower or
any of its Subsidiaries now holds or hereafter acquires any interest: (i) all
letters patent of the United States or any other country, all registrations and
recordings thereof, and all applications for letters patent of the United
States or any other country, including registrations, recordings and
applications in the United States Patent and Trademark Office or in any similar
office or agency of the United States, any State or Territory thereof, or any
other country, and (ii) all reissues, continuations, continuations-in-part or
extensions thereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any successor thereto.
"PENSION PLAN" shall mean an employee pension benefit plan, as
defined in Section 3(2) of ERISA (other than a Multiemployer Plan), which is
not an individual account plan, as defined in Section 3(34) of ERISA, and which
Borrower or any of its Subsidiaries or, if a Title IV Plan, any ERISA Affiliate
maintains, contributes to or has an obligation to contribute to on behalf of
participants who are or were employed by any of them.
"PERMITTED ENCUMBRANCES" shall mean the following
encumbrances: (i) Liens for taxes or assessments or other governmental Charges
or levies, either not yet due and payable or to the extent that nonpayment
thereof is permitted by the terms of Section 5.2(b); (ii) pledges or deposits
securing obligations under workmen's compensation, unemployment insurance,
social security or public liability laws or similar legislation; (iii) pledges
or deposits securing bids, tenders, contracts (other than contracts for the
payment of money) or leases to which either Borrower is a party as lessee made
in the ordinary course of business; (iv) deposits securing public or statutory
obligations of either Borrower; (v) inchoate and unperfected workers',
mechanics', suppliers' or similar liens arising in the ordinary course of
business; (vi) carriers', warehousemen's or other similar possessory liens
arising in the ordinary course of business and securing indebtedness not yet
due and payable in an outstanding aggregate amount not in excess of $25,000 at
any time; (vii) deposits securing, or in lieu of, surety, appeal or customs
bonds in proceedings to which Borrower is a party; and (viii) zoning
restrictions, easements, licenses, or other restrictions on the use of real
property or other minor irregularities in title (including leasehold title)
thereto, so long as the same do not materially impair the use, value, or
marketability of such real property, lease or leasehold estate.
"PERMITTED INVESTMENTS" shall mean (i) investments in direct
obligations of the United States of America maturing within 90 days of the date
of acquisition thereof, (ii) investments in certificates of deposit maturing
within 90 days of the date of acquisition thereof issued by a bank or trust
company which is
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organized under the laws of the United States or any state thereof having
capital, surplus and undivided profits aggregating in excess of $500,000,000,
(iii) investments in commercial paper given the highest rating by two
nationally recognized statistical rating organizations (as defined in Rule 436
under the Securities Act of 1933, as amended) and maturing not more than 90
days from the date of acquisition thereof, (iv) demand deposit accounts and
other corporate accounts set forth on SCHEDULE 3.22, (v) loans or advances
permitted by SECTION 6.3 or 6.4, (vi) existing Investments in Subsidiaries
described in SCHEDULE 3.10, and (vii) Investments in new Subsidiaries after the
Closing Date in accordance with the terms of SECTION 5.13.
"PERSON" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, institution, public benefit corporation, other entity or
government (whether federal, state, county, city, municipal, local, foreign, or
otherwise, including any instrumentality, division, agency, body or department
thereof).
"PLAN" shall mean, with respect to either of the Borrower, any
of its Subsidiaries or any ERISA Affiliate, at any time, an employee benefit
plan, as defined in Section 3(3) of ERISA, which Borrower or any of its
Subsidiaries maintains, contributes to or has an obligation to contribute to on
behalf of participants who are or were employed by any of them.
"PROCEEDS" shall mean "proceeds," as such term is defined in
the Code, including (i) any and all proceeds of any insurance, indemnity,
warranty or guaranty payable to Borrower or any of its Subsidiaries from time
to time with respect to any of the Collateral, (ii) any and all payments (in
any form whatsoever) made or due and payable to Borrower or any of its
Subsidiaries from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any part of the
Collateral by any governmental body, authority, bureau or agency (or any person
acting under color of governmental authority), (iii) any recoveries by Borrower
or any of its Subsidiaries against third parties with respect to any litigation
or dispute concerning any of the Collateral, and (iv) any and all other amounts
from time to time paid or payable under or in connection with any of the
Collateral, upon disposition or otherwise.
"PROJECTIONS" shall mean any and all projections delivered
pursuant to or in connection with the Agreement.
"PRO RATA SHARE" shall mean with respect to matters relating
to a Lender's Commitment with respect to Revolving Credit Advances and Letter
of Credit Obligations (including the making or repayment of Revolving Credit
Advances and incurrence of Letter of Credit Obligations pursuant to those
Commitments), and with respect to all other matters, the percentage obtained by
dividing (i) the
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Revolving Loan Commitment of that Lender by (ii) the aggregate Revolving Loan
Commitments of all Lenders, as such percentage may be adjusted by assignments
permitted pursuant to Section 9.1.
"PURCHASE MONEY LIENS" shall mean purchase money liens
(including capitalized leases and other forms of installment purchase financing
but excluding the Sale Leaseback Facility) granted to the Person financing a
purchase of Equipment acquired in the ordinary course of business in accordance
with past practice (subject to the limitations on Capital Expenditures set
forth in the Agreement, including SCHEDULE 6.11); PROVIDED, that such liens
attach only to the Equipment so acquired, the Indebtedness secured by such lien
does not exceed the purchase price of the Equipment on which the lien is
granted, and the transaction does not violate any other provision of the
Agreement.
"QUALIFIED PLAN" shall mean an employee pension benefit plan,
as defined in Section 3(2) of ERISA, which is intended to be tax-qualified
under Section 401(a) of the IRC, and which Borrower, any of its Subsidiaries or
any ERISA Affiliate maintains, contributes to or has an obligation to
contribute to on behalf of participants who are or were employed by any of
them.
"RATE OPTION" shall mean the LIBOR Rate or the Index Rate.
"RATE SWAP AGREEMENT" shall mean that certain interest rate
and currency exchange agreement, dated September 15, 1993, by and between
Borrower and The First National Bank of Boston, as in effect on the Closing
Date.
"RECEIVABLES SECURITIZATION FACILITY" shall mean that certain
facility between Borrower and Redwood Receivables Corporation or another
funding source satisfactory to Agent to finance Borrower's accounts receivable
in an amount not to exceed Thirty-Five Million Dollars ($35,000,000), such
facility to include the terms and conditions set forth in that certain
commitment letter, dated February 16, 1994, between Borrower and Redwood
Receivables Corporation, and such other terms and conditions as are
satisfactory to Agent in its sole discretion.
"REDIRECTION NOTICE" shall have the meaning assigned to it in
Schedule C to the Agreement.
"REDWOOD RECEIVABLES CORPORATION" shall mean Redwood
Receivables Corporation, a special purpose Delaware corporation, and its
successors and assigns.
"RELEASE" shall mean, as to any Person, any release, spill,
emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal,
dumping, leaching or migration of Hazardous Materials in the indoor or outdoor
environment by such Person,
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including the movement of Hazardous Materials through or in the air, soil,
surface water, ground water or property.
"REPORTABLE EVENT" shall mean any of the events described in
Section 4043(b) (1), (2), (3), (5), (6), (8) or (9) of ERISA.
"REQUEST DATE" shall have the meaning assigned to it in
SECTION 1.1(C).
"REQUISITE LENDERS" shall mean (a) Lenders having more than
sixty-six and two-thirds percent (66 2/3%) of the total Commitments of all
Lenders, or (b) if all Commitments have been terminated, Lenders having more
than sixty-six and two-thirds percent (66 2/3%) of the aggregate outstanding
amount of the Revolving Credit Loan.
"RESERVE REQUIREMENT" shall mean, with respect to a LIBOR
Interest Period, the maximum aggregate reserve requirements in effect on the
LIBOR Rate Determination Date or the Index Rate Determination Date, as
applicable (including, without limitation, all basic, supplemental, marginal
and emergency reserves), which are imposed upon a Lender under any regulations
of the Board of Governors of the Federal Reserve System or other governmental
authority having jurisdiction with respect thereto, as now and from time to
time in effect, for eurocurrency liabilities with a maturity equal to such
Interest Period.
"RESTRICTED PAYMENT" shall mean (i) the declaration or payment
of any dividend or the incurrence of any liability to make any other payment or
distribution of cash or other property or assets in respect of a Person's
Stock, (ii) any payment on account of the purchase, redemption, defeasance or
other retirement of a Person's Stock or any other payment or distribution made
in respect thereof, either directly or indirectly, or (iii) any payment, loan,
contribution, or other transfer of funds or other property to any Stockholder
of such Person.
"RETIREE WELFARE PLAN" shall refer to any Welfare Plan
providing for continuing coverage or benefits for any participant or any
beneficiary of a participant after such participant's termination of
employment, other than continuation coverage provided pursuant to Section 4980B
of the IRC and at the sole expense of the participant or the beneficiary of the
participant.
"REVOLVING CREDIT ADVANCE" shall have the meaning assigned to
it in Section 1.1(a).
"REVOLVING CREDIT LOAN" shall mean the aggregate amount of
Revolving Credit Advances outstanding at any time.
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"REVOLVING CREDIT NOTE" shall have the meaning assigned to it
in Section 1.1(c) and shall be substantially in the form of Exhibit C.
"REVOLVING LOAN COMMITMENT" shall mean (a) as to any Lender,
the aggregate commitment of such Lender to make Revolving Credit Advances as
set forth on Schedule E to the Agreement or in the most recent Lender Addition
Agreement executed by such Lender and (b) as to all Lenders, the aggregate
commitment of all Lenders to make Revolving Credit Advances.
"SALE LEASEBACK FACILITY" shall mean a sale-leaseback facility
between Borrower and GE Capital or other Person in an amount not to exceed
Forty-Five Million Dollars ($45,000,000), such facility, whether with GE
Capital or another Person, to include (a) the terms and conditions set forth in
that certain commitment letter, dated February 18, 1994, between Borrower and
GE Capital, as amended, and (b) such other terms and conditions which are
satisfactory to Agent in its sole discretion.
"SCHEDULE OF ACCOUNTS" shall mean the schedules of Accounts to
be delivered by Borrower to Agent pursuant to Section 1.6.
"SCHEDULE OF DOCUMENTS" shall mean the schedule, including all
appendices, exhibits or schedules thereto, listing certain documents and
information to be delivered in connection with the Agreement, the other Loan
Documents and the transactions contemplated thereunder, substantially in the
form attached hereto as Schedule D.
"SCHEDULE OF INVENTORY" shall mean the schedules of Inventory
to be delivered by Borrower to Agent pursuant to SECTION 1.7, including
Borrower's internal reports classifying and valuing Inventory.
"SECURITY AGREEMENT" shall mean the Security Agreement of even
date herewith entered into among Agent, on behalf of itself and Lenders,
Borrower and its Subsidiaries, including all amendments, modifications and
supplements thereto, and shall refer to the Security Agreement as the same may
be in effect at the time such reference becomes operative.
"STOCK" shall mean all shares, options, warrants, general or
limited partnership interests or other equivalents (regardless of how
designated) of or in a corporation, partnership or equivalent entity whether
voting or nonvoting, including common stock, preferred stock or any other
"equity security" (as such term is defined in Rule 3a11-1 of the General Rules
and Regulations promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended).
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"STOCKHOLDER" shall mean each holder of Stock of Borrower or
any of its Subsidiaries, as the context may require.
"SUBORDINATED DEBT" shall mean any Indebtedness issued or
otherwise owing by Borrower in favor of any Subsidiary or by any Subsidiary in
favor of Borrower (a) the payment of which is subordinated to the payment of
the Obligations in form and substance satisfactory to Agent in its sole
discretion and (b) which is incurred pursuant to documentation or entry in the
financial records of Borrower or a Subsidiary, as applicable, in form and
substance satisfactory to Agent in its sole discretion. Subordinated Debt
shall include, without limitation, Indebtedness of the Subsidiaries in favor of
Borrower set forth on SCHEDULE 6.3A and any extensions, renewals,
substitutions, refinancings or replacements permitted by SECTION 6.3 and
Indebtedness of the Subsidiaries in favor of Borrower expressly permitted by
SECTION 6.3.
"SUBSIDIARY" shall mean, with respect to any Person, (i) any
corporation of which an aggregate of more than fifty percent (50%) of the
outstanding Stock having ordinary voting power to elect a majority of the board
of directors of such corporation (irrespective of whether, at the time, Stock
of any other class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency) is at the time,
directly or indirectly, owned legally or beneficially by such Person and/or one
or more Subsidiaries of such Person, or with respect to which any such Person
has the right to vote or designate the vote of fifty percent (50%) or more of
such Stock whether by proxy, agreement, operation of law or otherwise and (ii)
any partnership in which such Person and/or one or more Subsidiaries of such
Person shall have an interest (whether in the form of voting or participation
in profits or capital contribution) of more than fifty percent (50%) or of
which any such Person is a general partner or may exercise the powers of a
general partner. Unless otherwise expressly provided, all references herein to
a "Subsidiary" shall mean a Subsidiary of Borrower.
"TAXES" shall mean taxes, levies, imposts, duties, deductions,
Charges or withholdings of whatsoever nature, and all liabilities with respect
thereto, imposed by any domestic or foreign government or any subdivision or
taxing authority thereof.
"TELERATE SCREEN" shall mean the display designated as Screen
3750 on the Telerate System or such other screen on the Telerate System as
shall display the London interbank offered rates for deposits in U.S. Dollars
quoted by selected banks.
"TERMINATION DATE" shall mean the date on which the Revolving
Credit Loan has been repaid in full in cash and all other Obligations under the
Agreement and the other Loan Documents have
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been completely discharged and Borrower shall have no further right to borrow
any monies thereunder.
"TITLE IV PLAN" shall mean a Pension Plan, other than a
Multiemployer Plan, which is covered by Title IV of ERISA.
"TOLL MANUFACTURING AGREEMENTS" shall mean those certain
Contract Manufacturing Agreements by and between Borrower and each of its
domestic operating Subsidiaries, each dated the Closing Date, whereby Borrower
appoints such Subsidiaries as Borrower's agent to purchase, process and ship
Inventory for the benefit of Borrower upon the terms and conditions set forth
therein, in each case in form and substance satisfactory to Agent and its
counsel.
"TRADEMARK LICENSE" shall mean rights under any written
agreement now owned or hereafter acquired by Borrower or any of its
Subsidiaries granting any right to use any Trademark or Trademark registration.
"TRADEMARKS" shall mean all of the following now owned or
hereafter acquired by Borrower or any of its Subsidiaries: (i) all trademarks,
trade names, corporate names, business names, trade styles, service marks,
logos, other source or business identifiers, prints and labels on which any of
the foregoing have appeared or appear, designs and general intangibles of like
nature (whether registered or unregistered), now owned or existing or hereafter
adopted or acquired, all registrations and recordings thereof, and all
applications in connection therewith, including registrations, recordings and
applications in the United States Patent and Trademark Office or in any similar
office or agency of the United States, any state or territory thereof, or any
other country or any political subdivision thereof; and (ii) all reissues,
extensions or renewals thereof.
"UNFUNDED PENSION LIABILITY" shall mean, at any time, the
aggregate amount, if any, of the sum of (i) the amount by which the present
value of all accrued benefits under each Title IV Plan exceeds the fair market
value of all assets of such Title IV Plan allocable to such benefits in
accordance with Title IV of ERISA, all determined as of the most recent
valuation date for each such Title IV Plan using the actuarial assumptions in
effect under such Title IV Plan, and (ii) for a period of five (5) years
following a transaction reasonably likely to be covered by Section 4069 of
ERISA, the liabilities (whether or not accrued) that could be avoided by
Borrower, any of its Subsidiaries or any ERISA Affiliate as a result of such
transaction.
"WELFARE PLANS" shall mean any welfare plan, as defined in
Section 3(1) of ERISA, which is maintained or contributed to by either of the
Borrowers, any Subsidiary thereof or any ERISA Affiliate.
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"WITHDRAWAL LIABILITY" shall mean, at any time, the aggregate
amount of the liabilities, if any, pursuant to Section 4201 of ERISA, and any
increase in contributions pursuant to Section 4243 of ERISA with respect to all
Multiemployer Plans.
Any accounting term used in the Agreement shall have, unless
otherwise specifically provided herein, the meaning customarily given such term
in accordance with GAAP, and all financial computations hereunder shall be
computed, unless otherwise specifically provided herein, in accordance with
GAAP consistently applied. That certain items or computations are explicitly
modified by the phrase "in accordance with GAAP" shall in no way be construed
to limit the foregoing. In the event that any "Accounting Changes" (as defined
below) occur and such changes result in a change in the calculation of the
financial covenants, standards or terms used in the Agreement or any other Loan
Document, then Borrower, Agent and Lenders agree to enter into negotiations in
order to amend such provisions of this Agreement so as to equitably reflect
such Accounting Changes with the desired result that the criteria for
evaluating the Borrower's and its Subsidiaries' financial condition shall be
the same after such Accounting Changes as if such Accounting Changes had not
been made; provided, further, that the agreement of Requisite Lenders to any
required amendments of such provisions shall be sufficient to bind all Lenders.
"Accounting Changes" means (a) changes in accounting principles required by the
promulgation of any rule, regulation, pronouncement or opinion by the Financial
Accounting Standards Board of the American Institute of Certified Public
Accountants (or successor thereto or any agency with similar functions), and
(b) changes in accounting principles concurred in by Borrower's certified
public accountants. In the event, if any, that Agent, Borrower and Requisite
Lenders shall have agreed upon the required amendments, then after such
agreement has been evidenced in writing and the underlying Accounting Change
with respect thereto has been implemented, any reference to GAAP contained in
this Agreement or in any other Loan Document shall, only to the extent of such
Accounting Change, refer to GAAP, consistently applied after giving effect to
the implementation of such Accounting Change. If Agent, Borrower and Requisite
Lenders cannot agree upon the required amendments within thirty (30) days
following the date of implementation of any Accounting Change, then all
financial statements delivered and all calculations of financial covenants and
other standards and terms in accordance with the Agreement and the other Loan
Documents shall be prepared, delivered and made without regard to the
underlying Accounting Change.
All other undefined terms contained in the Agreement or any of
the other Loan Documents shall, unless the context indicates otherwise, have
the meanings provided for by the Code as in effect in the State of New York to
the extent the same are used or defined therein. Unless otherwise expressly
provided or unless the context requires otherwise, all references in the
Agreement to Sections, Schedules and Exhibits shall mean and refer to Sections,
-25-
<PAGE> 92
Schedules and Exhibits of the Agreement. References to Persons include their
respective permitted successors and assigns or, in the case of a Governmental
Authority, Persons succeeding to the relevant functions of such Persons. All
references to statutes and related regulations shall include all amendments of
same and any successor or replacement statutes and regulations. The words
"herein," "hereof" and "hereunder" and other words of similar import refer to
the Agreement as a whole, including the Exhibits and Schedules hereto, as the
same may from time to time be amended, modified or supplemented, and not to any
particular section, subsection or clause contained in the Agreement.
Wherever from the context it appears appropriate, each term
stated in either the singular or plural shall include the singular and the
plural, and pronouns stated in the masculine, feminine or neuter gender shall
include the masculine, feminine and neuter genders. The words "including",
"includes" and "include" shall be deemed to be followed by the words "without
limitation"; references to Persons include their respective successors and
assigns (to the extent and only to the extent permitted by the Loan Documents)
or, in the case of governmental Persons, Persons succeeding to the relevant
functions of such Persons; and all references to statutes and related
regulations shall include any amendments of the same and any successor statutes
and regulations.
-26-
<PAGE> 93
FIRST AMENDMENT TO CREDIT AGREEMENT AND SECURITY AGREEMENT
----------------------------------------------------------
This FIRST AMENDMENT TO CREDIT AGREEMENT AND SECURITY
AGREEMENT (this "Amendment"), dated as of April 14, 1994, is by and among
CARLISLE PLASTICS INC., a Delaware corporation, as Borrower, POLY-TECH, INC., a
Minnesota corporation, A&E PRODUCTS (FAR EAST) LTD., a Hong Kong corporation,
PLASTICOS BAJACAL S.A. DE C.V., a Mexican corporation, RHINO-X INDUSTRIES,
INC., a Delaware corporation, A&E KOREA, LTD., a Delaware corporation, AMERICAN
WESTERN CORPORATION, a Delaware corporation, and AWC TRANSPORTATION
CORPORATION, a South Dakota corporation, collectively as the Co-Obligors, and
GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation, as Agent and as
Lender.
RECITALS
--------
A. The parties hereto are parties to that certain Credit
Agreement dated as of March 9, 1994 (as amended, restated, supplemented or
otherwise modified from time to time, the "Credit Agreement"), pursuant to
which Lender has made and may hereafter make loans and advances and other
extensions of credit to Borrower;
B. The parties hereto are parties to that certain
Security Agreement dated as of March 9, 1994 (as amended, restated,
supplemented or otherwise modified from time to time, the "Security
Agreement"), pursuant to which Borrower and Co- Obligors granted to Agent, for
the benefit of Agent and Lenders, a security interest in all of their right,
title and interest in, to and under the Collateral;
C. Borrower and Co-Obligors desire, and Agent is
willing, to amend certain provisions of the Credit Agreement and the Security
Agreement, all on the terms and conditions set forth in this Amendment; and
D. Each capitalized term used in this Amendment and not
otherwise defined in this Amendment shall have the meaning ascribed thereto in
Schedule A to the Credit Agreement; this Amendment shall constitute a Loan
Document; these Recitals shall be construed as part of this Amendment.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants hereinafter contained, the parties hereto agree as follows:
1. Amendment of the Credit Agreement.
---------------------------------
1.1 SECTION 5.13(C) of the Credit Agreement is hereby
amended by inserting immediately after the word "Subsidiary" in the second line
thereof the phrase "(except Carlisle Plastics Funding Corporation)".
1.2 SECTION 6.4(I)(A) of the Credit Agreement is hereby
amended by inserting immediately after the words "Subordinated
<PAGE> 94
Debt" the phrase "and RFC Loans (as defined in the Receivables Sale
Agreement)".
1.3 The Credit Agreement is hereby amended by adding
immediately after SECTION 6.23 the following new SECTION 6.24:
6.24 Borrower shall not receive any amounts from Carlisle
Plastics Funding Corporation, including any dividends or other
distributions, servicing fees, loans or proceeds from the sale
of receivables, other than by direct deposit into the account
listed on SCHEDULE 6.24; PROVIDED, THAT such Account shall be
subject to a blocked account agreement in form and substance
satisfactory to Agent.
1.4 The Credit Agreement is hereby amended by deleting in
their entirety SCHEDULE 1.9 and SCHEDULE 3.22 and by substituting therefor
SCHEDULE 1.9 and SCHEDULE 3.22, respectively, in the form attached hereto as
SCHEDULE 1.9 and SCHEDULE 3.22, respectively.
1.5 The Credit Agreement is hereby amended by amending
SCHEDULE A as follows:
(a) SCHEDULE A is hereby amended by inserting therein in
proper alphabetical order the following new definitions:
"RECEIVABLES FUNDING AND SERVICING AGREEMENT" shall mean that
certain Receivables Funding and Servicing Agreement, dated as
of April 14, 1994, by and among Carlisle Plastics Funding
Corporation, as Borrower, Redwood Receivables Corporation, as
Lender, Carlisle Plastics, Inc., as Servicer, and GE Capital,
as Operating Agent and Collateral Agent.
"RECEIVABLES SALE AGREEMENT" shall mean that certain
Receivables Sale Agreement, dated as of April 14, 1994, by and
between Borrower and Carlisle Plastics Funding Corporation.
(b) SCHEDULE A is hereby amended by deleting the word
"and" on the fifteenth line of the definition of "Permitted
Investments" and by inserting the following new language at the end of
such definition:
; and (viii) capital contributions pursuant to Sections
2.01(b) and 4.04 of the Receivables Sale Agreement.
-2-
<PAGE> 95
(c) SCHEDULE A is hereby amended by deleting in its
entirety the definition of "Receivables Securitization
Facility" and by substituting therefor the following new definition:
"RECEIVABLES SECURITIZATION FACILITY" shall mean that certain
facility between Borrower and Redwood Receivables Corporation
to finance Borrower's accounts receivable pursuant to the
Receivables Sale Agreement and the Receivables Funding and
Servicing Agreement.
(d) SCHEDULE A is hereby amended by deleting in its
entirety the definition of "Sale Leaseback Facility" and by
substituting therefor the following new definition:
"SALE LEASEBACK FACILITY" shall mean a sale-leaseback facility
between Borrower and GE Capital pursuant to that certain
Equipment Lease Agreement, dated as of April 4, 1994, by and
between GE Capital, as Agent, and Borrower, and those certain
Equipment Sublease Agreements between Borrower and Poly-Tech,
Inc., American Western Corporation and Rhino-X Industries,
Inc., respectively, each dated as of April 4, 1994.
1.6 The Credit Agreement is hereby amended by deleting in
its entirety SCHEDULE C and by substituting therefor SCHEDULE C in the form
attached hereto as SCHEDULE C.
1.7 The Credit Agreement is hereby amended by deleting in
its entirety SCHEDULE C-1 and by substituting therefor SCHEDULE C-1 in the form
attached hereto as SCHEDULE C-1.
2. Amendment of the Security Agreement.
-----------------------------------
2.1 SECTION 2(A)(I) of the Security Agreement is hereby
amended by inserting at the end thereof the following language:
; PROVIDED, HOWEVER, that Agent, on behalf of Agent and
Lenders, shall release, as of the date of the Receivables Sale
Agreement, all right, title and interest granted hereunder to
Agent, for the benefit of Agent and Lenders, in all
Receivables (as defined in the Receivables Sale Agreement) of
Borrower which are sold or otherwise transferred from time to
time to Carlisle Plastics Funding Corporation pursuant to and
in accordance with the terms of the Receivables Securitization
Facility.
-3-
<PAGE> 96
2.2 The Security Agreement is hereby amended by deleting
in its entirety SCHEDULE I thereto and by substituting therefor SCHEDULE I in
the form attached hereto as SCHEDULE I.
3. CONDITIONS TO EFFECTIVENESS. This Amendment shall not become
effective, and Agent and Lenders shall have no obligation hereunder, until the
following conditions shall have been satisfied in full, in Agent's sole
discretion:
(a) Agent shall have received original counterparts of
this Amendment, duly executed by each party hereto;
(b) Agent shall have received a duly executed original of
that certain Subordination Agreement, dated as of March 9, 1994, among
Agent, for the benefit of Agent and Lenders, Borrower and the
Co-Obligors;
(c) Agent shall have received incumbency certificates,
dated as of the date hereof, of the Secretary or Assistant Secretary
of the Borrower and each of the Co-Obligors, respectively, which shall
identify by name and title, and bear the signature of, their
respective officers authorized to sign the Loan Documents to which
they are a party, upon which certificates the Agent shall be entitled
to rely until informed of any change in writing by such entity;
(d) Agent shall have received such other agreements,
schedules, exhibits, certificates, documents or other instruments as
Agent may request; and
(e) on and as of the date hereof, the representations and
warranties of Borrower made pursuant to Section 4 hereof shall be
true, accurate and complete in all respects.
4. REPRESENTATIONS AND WARRANTIES OF BORROWER. In order to
induce Agent and Lender to enter into this Amendment, Borrower hereby makes the
following representations and warranties, each of which shall survive the
execution and delivery of this Amendment:
(a) as of the date hereof, no Default or Event of Default
is continuing and, after giving effect to this Amendment and the
transactions contemplated hereby, no Default or Event of Default shall
have occurred and be continuing;
(b) as of the date hereof and after giving effect to this
Amendment and the transactions contemplated hereby, the
representations and warranties of Borrower and each of the Co-Obligors
contained in the Loan Documents are true, accurate and complete in all
respects on and as of the date hereof to the same extent as though
made on and as of the date hereof, except to the extent that any such
representation or warranty expressly relates to an earlier date; and
-4-
<PAGE> 97
(c) the execution, delivery and performance by Borrower and
each of the Co-Obligors of this Amendment and each of the agreements,
schedules, exhibits, certificates, documents and other instruments
attached hereto, described herein or contemplated hereby to which such
Person is a party are within its corporate power and have been duly
authorized by all necessary corporate action on the part of such
Person (including, without limitation, resolutions of any executive
committee, the board of directors and, as applicable, the
stockholders, of such Person), and this Amendment and such agreements,
schedules, exhibits, certificates, documents and instruments are the
legal, valid and binding obligation of each such Person enforceable
against each such Person in accordance with their respective terms,
except as enforceability may be limited by bankruptcy, insolvency or
other similar laws affecting the rights of creditors generally or by
application of general principles of equity.
5. Reference to and Effect on the Credit Agreement and Security
------------------------------------------------------------
Agreement.
---------
5.1 Except as specifically amended above, each of the Credit
Agreement and Security Agreement shall remain in full force and effect and each
of the Credit Agreement and Security Agreement, as amended by this Amendment,
is hereby ratified and confirmed in all respects.
5.2 The execution, delivery and effectiveness of this
Amendment shall not operate as a waiver of any right, power or remedy of Agent
under the Credit Agreement or Security Agreement, or any of the other Loan
Documents, or constitute a waiver of any provision of the Credit Agreement or
Security Agreement, or any of the other Loan Documents.
5.3 Upon the effectiveness of this Amendment each
reference in (a) the Credit Agreement to "this Agreement," "hereunder,"
"hereof," or words of similar import and (b) any other Loan Document to "the
Credit Agreement," shall, in each case, mean and be a reference to the Credit
Agreement, as amended hereby.
5.4 Upon the effectiveness of this Amendment each
reference in (a) the Security Agreement to "this Agreement," "hereunder,"
"hereof," or words of similar import and (b) any other Loan Document to "the
Security Agreement," shall, in each case, mean and be a reference to the
Security Agreement, as amended hereby.
6. Miscellaneous.
-------------
6.1 FEES AND EXPENSES. Borrower agrees to pay on demand all
fees, costs and expenses incurred by or otherwise due to Agent in connection
with the preparation, execution and delivery of this
-5-
<PAGE> 98
Amendment, together with all fees, costs and expenses incurred by or otherwise
due to Agent prior to the date hereof which are payable by Borrower pursuant to
the Credit Agreement.
6.2 HEADINGS. Section headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose.
6.3 COUNTERPARTS. This Amendment may be executed in any
number of separate counterparts, each of which shall collectively and
separately constitute one agreement.
6.4 GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY
PROVIDED HEREIN, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, THIS AMENDMENT AND THE OBLIGATIONS ARISING HEREUNDER
SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS
AND DECISIONS OF THE STATE OF NEW YORK (WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES) APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE, AND ANY
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
* * * *
-6-
<PAGE> 99
IN WITNESS WHEREOF, each party hereto has caused this First
Amendment to be duly executed and delivered by its proper and duly authorized
officer as of the date first written above.
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent and Lender
By: /s/ Dan Pengue
--------------------------------
Title: Authorized Signatory
--------------------------------
CARLISLE PLASTICS, INC.
By: /s/ Rajiv P. Bhatt
--------------------------------
Title: Chief Financial Officer
--------------------------------
POLY-TECH, INC.
By: /s/ Rajiv P. Bhatt
--------------------------------
Title: Vice President
--------------------------------
A&E PRODUCTS (FAR EAST) LTD.
By: /s/ Rajiv P. Bhatt
--------------------------------
Title: Director
PLASTICOS BAJACAL S.A. DE C.V.
By: /s/ Clifford A. Deupree
--------------------------------
Title: Sole Administrator
--------------------------------
RHINO-X INDUSTRIES, INC.
By: /s/ Rajiv P. Bhatt
--------------------------------
Title: Chief Financial Officer
A&E - KOREA, LTD.
By: /s/ Rajiv P. Bhatt
--------------------------------
Title: Vice President
--------------------------------
<PAGE> 100
AMERICAN WESTERN CORPORATION
By: /s/ Rajiv P. Bhatt
--------------------------------
Title: Vice President
--------------------------------
AWC TRANSPORTATION CORPORATION
By: /s/ Rajiv P. Bhatt
--------------------------------
Title: Vice President
--------------------------------
<PAGE> 1
Exhibit 10.15
REVOLVING CREDIT NOTE
---------------------
New York, New York
$55,000,000.00 March 9, 1994
FOR VALUE RECEIVED, each of the undersigned, CARLISLE
PLASTICS, INC., a Delaware corporation ("Borrower"), POLY-TECH,
INC., a Minnesota corporation, A&E PRODUCTS (FAR EAST) LTD., a Hong
Kong corporation, PLASTICOS BAJACAL S.A. DE C.V., a Mexican
corporation, RHINO-X INDUSTRIES, INC., a Delaware corporation, A&E
- - -- KOREA, LTD., a Delaware corporation, AMERICAN WESTERN
CORPORATION, a Delaware corporation, and AWC TRANSPORTATION
CORPORATION, a South Dakota corporation (each a "Co-Obligor" and
collectively "Co-Obligors"), jointly and severally, HEREBY PROMISES
TO PAY to the order of GENERAL ELECTRIC CAPITAL CORPORATION, a New
York corporation ("Lender"), at the address of General Electric
Capital Corporation, 501 Merritt Seven, Third Floor, Norwalk,
Connecticut 06581, or at such other place as Lender may designate
from time to time in writing, in lawful money of the United States
of America and in immediately available funds, the amount of FIFTY
FIVE MILLION DOLLARS AND NO CENTS ($55,000,000.00) or, if less, the
aggregate unpaid amount of Lender's Pro Rata Share of all
obligations of Borrower under the "Credit Agreement" (as
hereinafter defined). Lender's initial Revolving Loan Commitment
under the Credit Agreement is $55,000,000.00 as such amount may be
adjusted from time to time, if at all, pursuant to the Credit
Agreement; PROVIDED, THAT, in no event shall the aggregate amount
of Revolving Loan Commitments exceed $55,000,000.00. Capitalized
terms, unless otherwise defined herein, shall have the respective
meanings assigned to such terms in the Credit Agreement and
SCHEDULE A thereof.
This Revolving Credit Note is issued pursuant to that
certain Credit Agreement, dated of even date herewith, by and
between Borrower, Co-Obligors, and GE Capital, as Agent and Lender
(as amended, restated, supplemented or otherwise modified from time
to time, the "Credit Agreement"), and is entitled to the benefit
and security of the Credit Agreement, the Security Agreement and
all of the other Loan Documents. Reference is hereby made to the
Credit Agreement for a statement of all of the terms and conditions
under which the loans evidenced hereby were made and are to be
repaid.
The principal amount of the indebtedness evidenced hereby
shall be payable in the amounts and on the dates specified in the
Credit Agreement, the terms of which are hereby incorporated herein
by reference. Interest thereon shall be paid until such principal
<PAGE> 2
amount is paid in full at such interest rates and at such times as
are specified in the Credit Agreement.
If any payment on this Revolving Credit Note becomes due
and payable on a day other than a Business Day, the maturity
thereof 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.
Upon and after the occurrence of any Event of Default,
this Revolving Credit Note may, as provided in the Credit
Agreement, and without demand, notice or legal process of any kind,
be declared, and immediately shall become, due and payable.
Demand, presentment, protest and notice of nonpayment and
protest are hereby waived by Borrower.
THIS REVOLVING CREDIT NOTE HAS BEEN EXECUTED, DELIVERED
AND ACCEPTED AT NEW YORK, NEW YORK AND SHALL BE INTERPRETED,
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS (AS
OPPOSED TO CONFLICTS OF LAW PROVISIONS) OF THE STATE OF NEW YORK.
CARLISLE PLASTICS, INC.
By: /s/ Rajiv P. Bhatt
------------------
Title: Chief Financial Officer
-----------------------
POLY-TECH, INC
By: /s/ Rajiv P. Bhatt
------------------
Title: Vice President
--------------
A&E PRODUCTS (FAR EAST) LTD.
By: /s/ Rajiv P. Bhatt
------------------
Title: Director
--------
<PAGE> 3
PLASTICOS BAJACAL S.A. DE C.V.
By: /s/ Clifford A. Deupree
-----------------------
Title: Sole Administrator
------------------
RHINO-X INDUSTRIES, INC.
By: /s/ Rajiv P. Bhatt
------------------
Title: Chief Financial Officer
-----------------------
A&E -- KOREA, LTD.
By: /s/ Rajiv P. Bhatt
------------------
Title: Vice President
--------------
AMERICAN WESTERN CORPORATION
By: /s/ Rajiv P. Bhatt
------------------
Title: Vice President
--------------
AWC TRANSPORTATION CORPORATION
By: /s/ Rajiv P. Bhatt
------------------
Title: Vice President
--------------
<PAGE> 1
Exhibit 10.16
SECURITY AGREEMENT
------------------
SECURITY AGREEMENT, dated as of March 9, 1994, made by
CARLISLE PLASTICS, INC., a Delaware corporation, having its chief
executive office at One Union Street, Boston, Massachusetts 02108
("Carlisle"), and each of its Subsidiaries listed on SCHEDULE IV
hereto (Carlisle and each Subsidiary, individually, a "Debtor" and
collectively, "Debtors"), in favor of GENERAL ELECTRIC CAPITAL
CORPORATION, a New York corporation, as Agent, on behalf of itself
and Lenders.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, pursuant to that certain Credit Agreement of
even date herewith by and among the Debtors, Agent and Lenders (as
the same from time to time may be amended, restated, supplemented
or otherwise modified, the "Credit Agreement"), Lenders have
agreed, among other things, to make the "Revolving Credit Loan" (as
defined in SCHEDULE A to the Credit Agreement) to Borrower and to
incur "Letter of Credit Obligations" (as defined in SCHEDULE A to
the Credit Agreement) for the benefit of Borrower;
WHEREAS, Agent and Lenders are willing to make the
Revolving Credit Loan, and to incur Letter of Credit Obligations,
provided for in the Credit Agreement, but only upon the condition,
among others, that Carlisle and its Subsidiaries, each of which is
a Co-Obligor under the Credit Agreement, shall have executed and
delivered this Security Agreement in favor of Agent, for the
benefit of Agent and Lenders;
NOW, THEREFORE, in consideration of the premises and
mutual covenants herein contained and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the Debtors hereby agree as follows:
1. DEFINED TERMS. Unless otherwise defined herein,
capitalized terms defined in the Credit Agreement or in SCHEDULE A
thereto are used herein as therein defined.
2. GRANT OF SECURITY INTEREST.
--------------------------
a. To secure the prompt and complete payment,
performance and observance of all of the Obligations, and to induce
Agent and Lenders to enter into the Credit Agreement and to make
the Revolving Credit Loan, and to incur Letter of Credit
Obligations, provided for therein in accordance with the terms and
conditions thereof, each and every Debtor hereby grants to Agent,
for the benefit of Agent and Lenders, a security interest in all of
each and every Debtor's right, title and interest in, to and under
the following, whether now owned by or owing to, or hereafter
acquired by or arising in favor of any Debtor (including under any
trade names, styles or derivations thereof), and whether owned or
consigned by or to, or leased from or to, any Debtor, and
<PAGE> 2
regardless of where located (all of which being hereinafter
collectively referred to as the "Collateral"):
(i) all Accounts;
(ii) all Chattel Paper to the extent they arise
out of Accounts or Inventory ("Pledged Chattel Paper");
(iii) all Contracts to the extent they arise out
of Accounts or Inventory ("Pledged Contracts");
(iv) all Documents to the extent they arise out
of Accounts or Inventory ("Pledged Documents").
(v) all Instruments to the extent they arise
out of Accounts or Inventory ("Pledged Instruments");
(vi) all Inventory;
(vii) all General Intangibles to the extent they
arise out of Accounts or Inventory; and
(viii) to the extent not otherwise included, all
Proceeds of the foregoing and all accessions to, substitutions
and replacements for, and rents, profits and products of, each
of the foregoing.
3. AGENT'S AND LENDERS' RIGHTS; LIMITATIONS ON AGENT'S
---------------------------------------------------
AND LENDERS' OBLIGATIONS.
- - ------------------------
a. It is expressly agreed by each and every Debtor
that, anything herein to the contrary notwithstanding, each Debtor
shall remain liable under each of its Contracts and each of its
Licenses to observe and perform all the conditions and obligations
to be observed and performed by it thereunder, and neither Agent
nor any Lender shall have any obligation or liability under any
Contract or License by reason of or arising out of this Security
Agreement or the granting herein of a security interest therein or
the receipt by Agent or any Lender of any payment relating to any
Contract or License pursuant hereto, nor shall Agent nor any Lender
be required or obligated in any manner to perform or fulfill any of
the obligations of any Debtor under or pursuant to any Contract or
License, or to make any payment, or to make any inquiry as to the
nature or the sufficiency of any payment received by it or the
sufficiency of any performance by any party under any Contract or
License, or to present or file any claims, or to take any action to
collect or enforce any performance or 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. After the occurrence of any Event of Default, Agent
may at any time without prior notice to any Debtor, notify Account
-2-
<PAGE> 3
Debtors, parties to Pledged Contracts and Pledged Documents and
obligors in respect of Pledged Instruments, that the Accounts and
the right, title and interest of any Debtor in and under such
Pledged Contracts, Pledged Documents and Pledged Instruments have
been assigned to Agent, for the benefit of Agent and Lenders, and
that payments shall be made directly to Agent, for the benefit of
Agent and Lenders. After the occurrence of any Event of Default,
upon the request of Agent, each and every Debtor shall so notify
Account Debtors, parties to Pledged Contracts and Pledged Documents
and obligors in respect of Pledged Instruments that the Accounts
and the right, title and interest of any Debtor in and under such
Pledged Contracts, Pledged Documents and Pledged Instruments have
been assigned to Agent, for the benefit of Agent and Lenders, and
that payments shall be made directly to Agent, for the benefit of
Agent and Lenders. After the occurrence of any Event of Default,
Agent may at any time notify obligors in respect of Chattel Paper
that the right, title and interest of any Debtor in and under such
Pledged Chattel Paper have been assigned to Agent, for the benefit
of Agent and Lenders, and that payments shall be made directly to
Agent, for the benefit of Agent and Lenders.
c. Agent shall have the right to make test
verifications of the Accounts, in any manner and through any medium
that it considers advisable in its reasonable credit judgment;
PROVIDED, THAT Agent shall notify Carlisle of any test
verifications it makes (unless a Default or Event of Default shall
have occurred and be continuing, in which event Agent shall have no
obligation to notify Carlisle), and each and every Debtor agrees to
furnish all such assistance and information as Agent may require in
connection therewith. Agent shall have the right, not more
frequently than once each Fiscal Quarter (unless a Default or Event
of Default shall have occurred and be continuing, in which event
Agent shall have the right as frequently as it determines), to make
physical verifications and appraisals, at Debtors' expense, of the
Inventory and other Collateral, in any manner and through any
medium that it deems advisable, provided that Agent shall provide
five (5) Business Days' prior notice to Debtors (unless a Default
or Event of Default shall have occurred and be continuing, in which
event no notice need be provided), and each and every Debtor agrees
to furnish all such information and assistance as Agent may require
in connection with any and all such physical verifications and
appraisals; PROVIDED FURTHER, THAT, unless a Default or Event of
Default shall have occurred and be continuing, no physical
verification or appraisal of the Inventory shall be at Debtors'
expense unless at the time of such verification or appraisal a
Revolving Credit Advance against Eligible Inventory shall be
outstanding. Agent may at any time in Agent's own name (on behalf
of itself and Lenders), or in the name of any Debtor communicate
with Account Debtors, parties to Pledged Contracts, obligors in
respect of Pledged Instruments and obligors in respect of Pledged
Chattel Paper to verify with such Persons, to Agent's satisfaction,
the existence, amount and terms of any such Accounts, Pledged
-3-
<PAGE> 4
Contracts, Pledged Instruments or Pledged Chattel Paper. If a
Default or Event of Default shall have occurred and be continuing,
each and every Debtor, at its own expense, shall cause the
certified independent public accountant then engaged by such
Debtor, to prepare and deliver to Agent at any time and from time
to time promptly upon Agent's request (on behalf of itself and
Lenders), the following reports: (i) a reconciliation of all
Accounts; (ii) an aging of all Accounts; (iii) trial balances; and
(iv) a test verification of such Accounts as Agent may request.
Each Debtor, at its own expense, shall deliver to Agent the results
of each physical verification, if any, which such Debtor may in its
discretion have made, or caused any other Person to have made on
its behalf, of all or any portion of its Inventory.
4. REPRESENTATIONS AND WARRANTIES. The Debtors,
jointly and severally, represent and warrant that:
a. Except for the security interest granted to Agent,
for the benefit of Agent and Lenders, under this Security
Agreement, each Debtor is the sole owner of each item of the
Collateral in which it purports to grant a security interest
hereunder, and has good and marketable title thereto free and clear
of any and all Liens, security interests or other encumbrances,
other than encumbrances set forth in clauses (v) or (vi) of the
definition of Permitted Encumbrances.
b. No effective security agreement, financing
statement, equivalent security or Lien instrument or continuation
statement covering all or any part of the Collateral is on file or
of record in any public office, except such as may have been filed
by a Debtor in favor of Agent, for the benefit of Agent and
Lenders, pursuant to this Security Agreement and except such as may
have been filed in connection with encumbrances set forth in clause
(vi) of the definition of Permitted Encumbrances.
c. As a result of the filing of appropriate financing
statements in the jurisdictions listed on SCHEDULE I hereto, this
Security Agreement is effective to create a valid and continuing
Lien on and perfected security interest in favor of Agent, for the
benefit of Agent and Lenders, in the Collateral with respect to
which a security interest may be perfected by filing pursuant to
the Code, which Lien and security interest is prior to all other
Liens and is enforceable as such as against any and all creditors
of and purchasers from each Debtor (other than purchasers of
Inventory in the ordinary course of business). All action
necessary or desirable to protect and perfect such security
interest in each item of the Collateral has been duly taken.
d. SCHEDULE II hereto lists all Pledged Instruments of
each Debtor. All action necessary or desirable to protect and
perfect the security interest of Agent, for the benefit of Agent
and Lenders, in each item set forth on SCHEDULE II, including the
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delivery of all originals thereof to Agent has been duly taken.
The security interest of Agent, for the benefit of Agent and
Lenders, in the Collateral listed on SCHEDULE II hereto is prior to
all other Liens, and is enforceable as such against any and all
creditors of and purchasers from each Debtor.
e. Each Debtor's chief executive office, principal
place of business, corporate offices, all warehouses and premises
within which Collateral is stored or located, and the locations of
all of its books and records concerning the Collateral are set
forth on SCHEDULE III hereto, and no Debtor shall change such chief
executive office, principal place of business, corporate offices,
or warehouses or Collateral locations, or remove any such books and
records or change its name or its mailing address, or establish
additional places of business or additional locations at which
Collateral is stored, kept or processed unless such Debtor shall
have given Agent at least thirty (30) days' prior written notice
thereof, and Agent shall have determined that after giving effect
to any such change that such Debtor has taken such action, at
Debtor's expense, as is necessary or desired by Agent to assure
that Agent, for the benefit of Agent and Lenders, shall continue to
have first perfected Liens in the Collateral.
f. As to the Accounts reflected in each Collateral
Report and each Account's trial balance delivered to Agent pursuant
to the Credit Agreement or any other Loan Document, except as
otherwise specifically disclosed therein: (i) the Accounts
represent bona fide sales of Inventory or rendering of services to
Account Debtors in the ordinary course of each Debtor's business
completed in accordance with the terms and provisions contained in
the documents available to Agent with respect thereto and are not
evidenced by a judgment, Instrument or Chattel Paper; (ii) the
amounts shown on such deliveries to Agent and on such records and
all invoices and statements which may be delivered to the Agent
with respect thereto are actually and absolutely owing to each
Debtor as indicated thereon and are not in any way contingent;
(iii) no payments have been or shall be made thereon except
payments immediately delivered to the Agent pursuant to the terms
of SCHEDULE C to the Credit Agreement; (iv) there are no setoffs,
claims or disputes existing or asserted with respect thereto and no
Debtor has made any agreement with any Account Debtor for any
deduction therefrom except a discount or allowance allowed by such
Debtor in the ordinary course of its business for prompt payment
and disclosed to Agent; (v) to the best of each Debtor's knowledge,
there are no facts, events or occurrences which in any way impair
the validity or enforcement thereof or tend to reduce the amount
payable thereunder as shown on such deliveries to Agent or on any
Debtor's books and records and all invoices and statements
delivered to Agent, on behalf of Agent and Lenders, with respect
thereto; (vi) to the best of each Debtor's knowledge, all Account
Debtors have the capacity to contract; (vii) no Debtor has received
any notice of proceedings or actions which are threatened or
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pending against any Account Debtor which might result in any
adverse change in such Account Debtor's financial condition; and
(viii) no Debtor has any knowledge that any Account Debtor is
unable generally to pay its debts as they become due.
g. With respect to any Inventory, scheduled or listed
on any statement or other report delivered to Agent pursuant to the
terms of this Security Agreement or the Credit Agreement, except as
otherwise specifically disclosed therein, (i) such property is
located at one of the locations set forth on SCHEDULE III hereto,
(ii) each indicated Debtor has good, indefeasible and merchantable
title to such property and such property is not subject to any Lien
or security interest or document whatsoever except for the
perfected, first priority security interest granted to Agent, for
the benefit of Agent and Lenders, hereunder, (iii) such Inventory
is of good and merchantable quality, free from any defects, (iv)
such property is not subject to any licensing, patent, royalty,
trademark, trade name or copyright agreements with any third
parties which would require any consent of any third party upon
sale or disposition of that Inventory or the payment of any monies
to any third party as a precondition of such sale or other
disposition, and (v) the completion of manufacture, sale or other
disposition of such property by Agent following an Event of Default
shall not require the consent of any Person and shall not
constitute a breach or default under any contract or agreement to
which any Debtor is a party or to which such property is subject.
5. COVENANTS. The Debtors, jointly and severally,
covenant and agree with Agent, for the benefit of Agent and
Lenders, that from and after the date of this Security Agreement
and until all of the Obligations are paid or otherwise satisfied in
full:
a. FURTHER ASSURANCES; PLEDGE OF INSTRUMENTS. At any
time and from time to time, upon the written request of Agent and
at the sole expense of such Debtor, each Debtor shall promptly and
duly execute and deliver any and all such further instruments and
documents and take such further actions as Agent may deem desirable
to obtain the full benefits of this Security Agreement and of the
rights and powers herein granted, including (i) using its best
efforts to secure all consents and approvals necessary or
appropriate for the assignment to or for the benefit of Agent, on
behalf of itself and Lenders, of any Pledged Contract held by any
Debtor or in which any Debtor has any rights not heretofore
assigned, (ii) filing any financing or continuation statements
under the Code with respect to the Liens and security interests
granted hereunder or under any other Loan Document, (iii)
transferring Collateral to Agent's possession (for the benefit of
Agent and Lenders) (if such Collateral consists of Pledged Chattel
Paper or if a security interest in such Collateral can be perfected
only by possession, or if requested by Agent), and (iv) using its
best efforts to obtain waivers of Liens, if any exist, from
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landlords and mortgagees. Each Debtor also hereby authorizes
Agent, on behalf of Agent and Lenders, to file any such financing
or continuation statements without the signature of any Debtor to
the extent permitted by applicable law. If any amount payable
under or in connection with any of the Collateral is or shall
become evidenced by any Instrument, such Instrument, other than
checks and notes received in the ordinary course of business, shall
be duly endorsed in a manner satisfactory to Agent immediately upon
any Debtor's receipt thereof and shall become a Pledged Instrument.
b. MAINTENANCE OF RECORDS. Each Debtor shall keep and
maintain, at its own cost and expense, satisfactory and complete
records of the Collateral, including a record of any and all
payments received and any and all credits granted with respect to
the Collateral and all other dealings with the Collateral. All
Pledged Chattel Paper shall be marked with the following legend:
"This writing and the obligations evidenced or secured hereby are
subject to the security interest of General Electric Capital
Corporation, as Agent, for the benefit of itself as a Lender and
certain other Lenders." For Agent's further security (for the
benefit of Agent and Lenders), each Debtor agrees that Agent, on
behalf of itself and Lenders, shall have a special property right
and security interest in all of such Debtor's books and records
pertaining to the Collateral and, upon the occurrence and during
the continuance of any Event of Default, each Debtor shall deliver
and turn over any such books and records to Agent or to its
representatives at any time on demand of Agent. Prior to the
occurrence of a Default or Event of Default, each Debtor shall
permit any representative of Agent to inspect such books and
records and shall provide photocopies thereof to Agent, for the
benefit of Agent and Lenders, as more specifically set forth in
SECTION 5(c) below.
C. RIGHT OF INSPECTION. Agent shall at all times have
full and free access during normal business hours upon five (5)
Business Day's prior notice to any affected Debtor (and at any time
without any notice to any Debtor upon the occurrence and during the
continuance of any Default or Event of Default) to all the books
and records and correspondence of each and every Debtor, and Agent
or its employees, officers, agents or representatives may examine
the same, take extracts therefrom and make photocopies thereof, and
each Debtor agrees to render to Agent at such Debtor's cost and
expense, such clerical and other assistance as may be requested
with regard thereto. Agent and its employees, officers, agents and
representatives shall also have the right upon five (5) Business
Day's prior notice to any affected Debtor (and without any notice
to any Debtor upon the occurrence and during the continuance of any
Default or Event of Default) to enter into and upon any premises
where any of the Inventory or other Collateral is located for the
purpose of inspecting the same, observing its use or otherwise
protecting Agent's interests (for the benefit of Agent and Lenders)
in the Collateral.
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<PAGE> 8
D. CONTINUOUS PERFECTION. In furtherance of and
without limiting the scope of the negative covenants contained in
the Credit Agreement, no Debtor shall change its name, identity or
corporate structure in any manner which might make any financing or
continuation statement filed in connection herewith seriously
misleading within the meaning of SECTION 9.402(7) of the Code or
any other then applicable provision of the Code unless such Debtor
shall have given Agent at least twenty-five (25) Business Days'
prior written notice thereof and shall have taken all action (or
made arrangements to take such action substantially simultaneously
with such change if it is impossible to take such action in
advance) necessary or requested by Agent to amend such financing
statement or continuation statement so that it is not misleading.
e. Covenants Regarding Patents, Trademarks and Copyrights.
------------------------------------------------------
(i) Each Debtor shall notify Agent immediately if it
knows or has reason to know that any application or
registration relating to any Patent, Trademark or Copyright
may become abandoned or dedicated, or of any adverse
determination or development (including the institution of, or
any such determination or development in, any proceeding in
the United States Patent and Trademark Office, the United
States Copyright Office or any court) regarding any Debtor's
ownership of any Patent, Trademark or Copyright, its right to
register the same, or to keep and maintain the same.
(ii) In no event shall any Debtor, either itself or
through any agent, employee, licensee or designee, file an
application for the registration of any Patent, Trademark or
Copyright with the United States Patent and Trademark Office,
the United States Copyright Office or any similar office or
agency without giving Agent prior written notice thereof, and,
upon request of Agent, each Debtor shall execute and deliver
any and all agreements, instruments, documents and papers as
Agent may request to grant to Agent (for the benefit of Agent
and Lenders) a fully paid, irrevocable and unconditional
license to use such Patent, Trademark or Copyright, and the
General Intangibles of any Debtor relating thereto or
represented thereby for the purposes set forth in SECTION 9
hereof.
(iii) Each Debtor shall take all actions necessary or
requested by Agent to maintain and pursue each application, to
obtain the relevant registration and to maintain the
registration of each of the Patents, Trademarks and
Copyrights, including the filing of applications for renewal,
affidavits of use, affidavits of noncontestability and
opposition and interference and cancellation proceedings.
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<PAGE> 9
(iv) In the event that any Patent, Trademark or Copyright
is infringed upon, or misappropriated or diluted by a third
party, each Debtor shall notify Agent promptly after such
Debtor learns thereof and shall, unless such Debtor shall
reasonably determine that such Patent, Trademark or Copyright
is in no way material to the conduct of such Debtor's business
or operations, promptly sue for infringement, misappropriation
or dilution and to recover any and all damages for such
infringement, misappropriation or dilution, and shall take
such other actions as Agent shall deem appropriate under the
circumstances to protect such Patent, Trademark or Copyright.
6. AGENT'S APPOINTMENT AS ATTORNEY-IN-FACT.
---------------------------------------
a. Each Debtor hereby irrevocably constitutes and
appoints Agent, on behalf of itself and Lenders, 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 such Debtor and in the name of such
Debtor or in its own name, from time to time in Agent's sole
discretion for the purpose of carrying out the terms of this
Security Agreement, to take any and all appropriate action and to
execute and deliver 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, hereby grants to Agent, for the benefit of itself and
Lenders, the power and right, on behalf of such Debtor, without
notice to or assent by such Debtor, and at any time, to do the
following:
(i) in the name of such Debtor, in its own name or
otherwise, take possession of, endorse and receive payment of
any checks, drafts, notes, acceptances, or other Pledged
Instruments for the payment of monies due under any
Collateral;
(ii) continue any insurance existing pursuant to the
terms of this Security Agreement, the Credit Agreement or any
other Loan Document, and pay all or any part of the premiums
therefor and the costs thereof; and
(iii) receive payment of any and all monies, claims, and
other amounts due or to become due at any time arising out of
or in respect of any Collateral.
b. Each Debtor hereby irrevocably constitutes and
appoints Agent, on behalf of itself and Lenders, 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 such Debtor and in the name of such
Debtor or in its own name, from time to time in Agent's sole
discretion for the purpose of carrying out the terms of this
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<PAGE> 10
Security Agreement, to take any and all appropriate action and to
execute and deliver 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, hereby grants to Agent, for the benefit of itself and
Lenders, the power and right, on behalf of such Debtor, without
notice to or assent by such Debtor, to do the following:
(i) upon the occurrence and during the continuance of
any Default or Event of Default, ask, demand, collect, receive
and give acquittances and receipts for any and all money due
or to become due under any Collateral;
(ii) at any time on or after the Closing Date, pay or
discharge taxes, Liens, security interests or other
encumbrances levied or placed on or threatened against the
Collateral to the extent that any such action may be necessary
or desirable to protect or preserve the Collateral or the
first priority, perfected security interest of Agent, on
behalf of Agent and Lenders, in the Collateral;
(iii) at any time on or after the Closing Date, effect any
repairs or obtain any insurance called for by the terms
hereof, of the Credit Agreement or of any other Loan Document,
and pay all or any part of the premiums therefor and costs
thereof;
(iv) upon the occurrence and during the continuance of
any Default or Event of Default, direct any party liable for
any payment under or in respect of any of the Collateral to
make payment of any and all monies due or to become due
thereunder, directly to Agent, for the benefit of Agent and
Lenders, or as Agent, on behalf of Agent and Lenders, shall
direct;
(v) upon the occurrence and during the continuance of
any Default or Event of Default, sign and endorse any
invoices, freight or express bills, bills of lading, storage
or warehouse receipts, drafts against debtors, assignments,
verifications and notices in connection with Accounts and
other documents constituting or related to the Collateral;
(vi) upon the occurrence and during the continuance of
any Event of Default, settle, compromise or adjust any suit,
action, or proceeding described herein and, in connection
therewith, give such discharges or releases as Agent may deem
appropriate;
(vii) upon the occurrence and during the continuance of
any Event of Default, file any claim or take or commence any
other action or proceeding in any court of law or equity or
otherwise deemed appropriate by Agent for the purpose of
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collecting any and all such monies due under any Collateral
whenever payable;
(viii) upon the occurrence and during the continuance of
any Event of Default, 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 part
thereof and to enforce any other right in respect of any
Collateral;
(ix) at any time on or after the Closing Date, defend any
suit, action or proceeding brought against such Debtor with
respect to any Collateral if such Debtor does not defend such
suit, action or proceeding or if Agent believes that such
Debtor is not pursuing such defense in a manner that will
maximize the recovery with respect to such Collateral;
(x) upon the occurrence and during the continuance of
any Event of Default, use any Patent, Trademark, Copyright,
Contract or General Intangible for the purposes set forth in
SECTION 9 hereof;
(xi) upon the occurrence and during the continuance of
any Event of Default, sell, transfer, pledge, make any
agreement with respect to or otherwise deal with any of the
Collateral as fully and completely as though Agent were the
absolute owner thereof for all purposes; and
(xii) at any time on or after the Closing Date, at Agent's
option and at such Debtor's expense, at any time, or from time
to time, do all acts and things which Agent deems necessary or
desirable to perfect or preserve the Collateral and Agent's
Lien (for the benefit of Agent and Lenders) thereon in order
to effect the intent of this Security Agreement, all as fully
and effectively as such Debtor might do.
c. Each Debtor hereby ratifies, to the extent permitted
by law, all that said attorneys shall lawfully do or cause to be
done by virtue hereof. The power of attorney granted pursuant to
this SECTION 6 is a power coupled with an interest and shall be
irrevocable until all of the Obligations are indefeasibly paid or
otherwise satisfied in full.
d. The powers conferred on Agent, for the benefit of
Agent and Lenders, hereunder are solely to protect Agent's
interests (for the benefit of Agent and Lenders) in the Collateral
and shall not impose any duty upon Agent or any Lender to exercise
any such powers. Neither Agent nor any Lender shall be accountable
for any amount other than amounts that it actually receives as a
result of the exercise of such powers and none of Agent's nor any
Lender's officers, directors, employees, agents or representatives
shall be responsible to any Debtor for any act or failure to act,
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except individually (and not jointly and severally) for their own
gross negligence or willful misconduct as finally determined by a
court of competent jurisdiction after all possible appeals have
been exhausted.
e. Each Debtor also authorizes Agent, on behalf of
itself and Lenders, at any time and from time to time so long as a
Default or Event of Default shall have occurred and be continuing,
to (i) communicate in its own name with any party to any Pledged
Contract with regard to the assignment of the right, title and
interest of any Debtor in and under the Pledged Contracts and other
matters relating thereto, and (ii) execute, in connection with any
sale provided for in SECTION 8 hereof, any endorsements,
assignments or other instruments of conveyance or transfer with
respect to the Collateral.
7. PERFORMANCE BY AGENT OF DEBTOR'S OBLIGATIONS. If
any Debtor fails to perform or comply with any of its agreements
contained herein or in any of the other Loan Documents, and Agent
or any Lender, as provided for by the terms of this Security
Agreement or any of the other Loan Documents, shall itself perform
or comply, or otherwise cause performance of or compliance with
such agreement, the expenses, including attorneys' fees, of Agent
or such Lender incurred in connection with such performance or
compliance, together with interest thereon at the rate then in
effect in respect of the Revolving Credit Loan, shall be payable by
each Debtor to Agent, for the benefit of Agent and/or Lenders, as
appropriate, on demand and shall constitute Obligations secured
hereby.
8. REMEDIES; RIGHTS UPON DEFAULT.
-----------------------------
a. If any Event of Default shall occur and be
continuing, Agent may exercise in addition to all other rights and
remedies granted to it under this Security Agreement, the Credit
Agreement, the other Loan Documents and under any other instrument
or agreement securing, evidencing or relating to any of the
Obligations, all rights and remedies of a secured party under the
Code. Without limiting the generality of the foregoing, each
Debtor expressly agrees that in any such event Agent without demand
of performance or other demand, advertisement or notice of any kind
(except the notice specified below of time and place of public or
private sale) to or upon any Debtor or any other Person (all and
each of which demands, advertisements and notices are hereby
expressly waived to the maximum extent permitted by the Code and
other applicable law), may forthwith enter upon the premises of any
Debtor where any Collateral is located through self-help, without
judicial process, without first obtaining a final judgment or
giving any Debtor notice and opportunity for a hearing on Agent's
claim or action (on behalf of Agent and Lenders), and without
paying rent to any Debtor, and collect, receive, assemble, process,
appropriate and realize upon the Collateral, or any part thereof,
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and may forthwith sell, lease, assign, give an option or options to
purchase, or sell or otherwise dispose of and deliver said
Collateral (or contract to do so), or any part thereof, in one or
more parcels at a public or private sale or sales, at any exchange
at such prices as it may deem acceptable, for cash or on credit or
for future delivery without assumption of any credit risk. Agent
or any Lender 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 for the benefit of Agent or any Lender,
as the case may be, the whole or any part of said Collateral so
sold, free of any right or equity of redemption, which equity of
redemption each Debtor hereby releases. Such sales may be
adjourned and continued from time to time with or without notice.
Agent shall have the right to conduct such sales on such Debtor's
premises or elsewhere and shall have the right to use such Debtor's
premises without charge for such time or times as Agent deems
necessary or advisable.
Each Debtor further agrees, at Agent's request, to
assemble the Collateral and make it available to Agent, for the
benefit of Agent and Lenders, at places which Agent shall select,
whether at any Debtor's premises or elsewhere. Until Agent is able
to effect a sale, lease, or other disposition of Collateral, Agent
shall have the right to use Collateral, or any part thereof, to the
extent that it deems appropriate for the purpose of preserving
Collateral or its value or for any other purpose deemed appropriate
by Agent. Agent shall have no obligation to any Debtor to maintain
or preserve the rights of any Debtor as against third parties with
respect to Collateral while Collateral is in the possession of
Agent. Agent may, if it so elects, seek the appointment of a
receiver or keeper to take possession of Collateral and to enforce
any of Agent's remedies (for the benefit of Agent and Lenders),
with respect to such appointment without prior notice or hearing.
Agent shall apply the net proceeds of any such collection,
recovery, receipt, appropriation, realization or sale as provided
in SECTION 8(D) hereof, each Debtor remaining jointly and severally
liable for any deficiency remaining unpaid after such application,
and only after so paying over such net proceeds and after the
payment by Agent, of any other amount required by any provision of
law, including SECTION 9-504(1)(C) of the Code (but only after
Agent has received what it considers reasonable proof of a
subordinate party's security interest), need Agent account for the
surplus, if any, to such Debtor. To the maximum extent permitted
by applicable law, each Debtor waives all claims, damages, and
demands against Agent or any Lender arising out of the
repossession, retention or sale of the Collateral except such as
arise out of the gross negligence or willful misconduct of Agent or
such Lender as finally determined by a court of competent
jurisdiction after all possible appeals have been exhausted. Each
Debtor agrees that ten (10) Business Days' prior notice by Agent of
the time and place of any public sale or of the time after which a
private sale may take place is reasonable notification of such
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matters. Each Debtor shall remain jointly and severally liable for
any deficiency if the proceeds of any sale or disposition of the
Collateral are insufficient to pay all amounts to which Agent, on
behalf of Agent and Lenders, is entitled, each Debtor also being
jointly and severally liable for any attorneys' fees incurred by
Agent or any Lender to collect such deficiency.
b. Each Debtor agrees to pay any and all costs of Agent
or any Lender, including attorneys' fees and expenses, incurred in
connection with the enforcement of any of its rights and remedies
hereunder.
c. Except as otherwise specifically provided herein,
each Debtor hereby waives presentment, demand, protest or any
notice (to the maximum extent permitted by applicable law) of any
kind in connection with this Security Agreement or any Collateral.
d. The Proceeds of any sale, disposition or other
realization upon all or any part of the Collateral shall be
distributed by Agent, for the benefit of Agent and Lenders, upon
receipt, in the following order of priorities:
FIRST, to Agent in an amount sufficient to pay in
full the expenses of Agent in connection with such sale,
disposition or other realization, including all expenses,
liabilities and advances incurred or made by Agent in
connection therewith, including attorneys' fees and
expenses;
SECOND, to Agent, for the benefit of Agent and
Lenders, in an amount equal to the then due and unpaid
accrued interest, Fees and prepayment premiums, if any,
on the Revolving Credit Loan;
THIRD, to Agent, for the ratable benefit of Agent
and Lenders, in an amount equal to the then outstanding
principal amount of the Revolving Credit Loan;
FOURTH, to Agent, for the benefit of Agent and
Lenders, in an amount equal to any other obligations,
including any contingent obligations, or amounts owed, if
any, in connection with the Obligations; and
FINALLY, upon payment in full of all of the
Obligations, to the applicable Debtor or its
representatives or to whomsoever may be lawfully entitled
to receive the same, or as a court of competent
jurisdiction may direct.
9. GRANT OF LICENSE TO USE CONTRACTS AND GENERAL
INTANGIBLES. For the purpose of enabling Agent to exercise rights
and remedies under SECTION 8 hereof (including, without limiting
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<PAGE> 15
the terms of SECTION 8 hereof, in order to take possession of,
hold, preserve, process, assemble, prepare for sale, market for
sale, sell or otherwise dispose of Collateral) at such time as
Agent, on behalf of Agent and Lenders, shall be lawfully entitled
to exercise such rights and remedies, each Debtor hereby grants to
Agent, for the benefit of Agent and Lenders, an irrevocable,
non-exclusive license (exercisable without payment of royalty or
other compensation to any Debtor) to use, license or sublicense any
and all Contracts and General Intangibles whether part of the
Collateral or not including, without limitation, any Patent,
Trademark, trade secret or Copyright now owned or hereafter
acquired by any Debtor, and wherever the same may be located, and
including in such license to use, license or sublicense access to
all media in which any of the licensed items may be recorded or
stored and to all computer and automatic machinery software and
programs used for the compilation or printout thereof.
10. LIMITATION ON AGENT'S AND LENDERS' DUTY IN RESPECT
OF COLLATERAL. Agent and each Lender shall use reasonable care
with respect to the Collateral in its possession or under its
control. Neither Agent nor any Lender shall have any other duty as
to any Collateral in its possession or control or in the possession
or control of any agent or nominee of Agent or such Lender, or any
income thereon or as to the preservation of rights against prior
parties or any other rights pertaining thereto. Upon request of
any Debtor, Agent shall account for any monies received by it (for
the benefit of Agent and Lenders) in respect of any foreclosure on
or disposition of the Collateral specifically relating to such
Debtor.
11. REINSTATEMENT. This Agreement shall remain in full
force and effect and continue to be effective should any petition
be filed by or against any Debtor for liquidation or
reorganization, should any Debtor become insolvent or make an
assignment for the benefit of any creditor or creditors or should
a receiver or trustee be appointed for all or any significant part
of any Debtor's assets, and shall continue to be effective or be
reinstated, as the case may be, if at any time payment and
performance of the Obligations, or any part thereof, is, pursuant
to applicable law, rescinded or reduced in amount, or must
otherwise be restored or returned by any obligee of the
Obligations, whether as a "voidable preference," "fraudulent
conveyance," or otherwise, all as though such payment or
performance had not been made. In the event that any payment, or
any part thereof, is rescinded, reduced, restored or returned, the
obligations shall be reinstated and deemed reduced only by such
amount paid and not so rescinded, reduced, restored or returned.
12. NOTICES. Except as otherwise provided herein,
whenever it is provided herein that any notice, demand, request,
consent, approval, declaration or other communication shall or may
be given to or served upon any of the parties by any other party,
-15-
<PAGE> 16
or whenever any of the parties desires to give and serve upon any
other party any communication with respect to this Security
Agreement, each such notice, demand, request, consent, approval,
declaration or other communication shall be in writing and shall be
given in the manner, and deemed received, as provided for in
SECTION 11.10 of the Credit Agreement with any such notice, demand,
request, consent, approval, declaration or other communication to
any Debtor sent to such Debtor at the address for Carlisle provided
for in such SECTION 11.10.
13. 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. This
Security Agreement is to be read, construed and applied together
with the Credit Agreement and the other Loan Documents which, taken
together, set forth the complete understanding and agreement of
Agent, Lenders and Debtors with respect to the matters referred to
herein and therein.
14. NO WAIVER; CUMULATIVE REMEDIES. Neither Agent nor
any Lender shall by any act, delay, omission or otherwise be deemed
to have waived any of its rights or remedies hereunder, and no
waiver shall be valid unless in writing, signed by Agent and then
only to the extent therein set forth. A waiver by Agent, on behalf
of Agent and Lenders, of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy
which Agent would otherwise have had on any future occasion. No
failure to exercise nor any delay in exercising on the part of
Agent or any Lender, any right, power or privilege hereunder, shall
operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege hereunder preclude any
other or future exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies hereunder
provided are cumulative and may be exercised singly or
concurrently, and are not exclusive of any rights and remedies
provided by law. None of the terms or provisions of this Security
Agreement may be waived, altered, modified or amended except by an
instrument in writing, duly executed by Agent and each Debtor.
15. LIMITATION BY LAW. All rights, remedies and powers
provided in this Security Agreement may be exercised only to the
extent that the exercise thereof does not violate any applicable
provision of law, and all the provisions of this Security Agreement
are intended to be subject to all applicable mandatory provisions
of law that may be controlling and to be limited to the extent
necessary so that they shall not render this Security Agreement
invalid, unenforceable, in whole or in part, or not entitled to be
-16-
<PAGE> 17
recorded, registered or filed under the provisions of any
applicable law.
16. TERMINATION OF THIS SECURITY AGREEMENT. Subject to
SECTION 11 hereof, this Security Agreement shall terminate upon the
later of the Commitment Termination Date and the date on which the
Revolving Credit Loan and all of the other Obligations then due and
payable have been paid in full in cash and all Letter of Credit
Obligations, if any, have either been discharged or cash
collateralized.
17. SUCCESSORS AND ASSIGNS. This Security Agreement and
all obligations of each Debtor hereunder shall be binding upon the
successors and assigns of each Debtor and shall, together with the
rights and remedies of Agent, for the benefit of Agent and Lenders,
hereunder, inure to the benefit of Agent and Lenders, all future
holders of any instrument evidencing any of the Obligations and
their respective successors and assigns. No sales of
participations, other sales, assignments, transfers or other
dispositions of any agreement governing or instrument evidencing
the Obligations or any portion thereof or interest therein shall in
any manner affect the security interest granted to Agent, for the
benefit of Agent and Lenders, hereunder. No Debtor may assign,
sell or otherwise transfer any interest in or obligation under this
Security Agreement.
18. COUNTERPARTS. This Security Agreement may be
executed in any number of separate counterparts, each of which
shall collectively and separately constitute one and the same
agreement.
19. GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE.
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE LOAN
DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, THIS SECURITY AGREEMENT AND THE
OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE, AND ANY
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. EACH DEBTOR AND
AGENT, ON BEHALF OF AGENT AND LENDERS, HEREBY CONSENT AND AGREE
THAT THE STATE OR FEDERAL COURTS LOCATED IN THE BOROUGH OF
MANHATTAN, CITY OF NEW YORK, NEW YORK, SHALL HAVE EXCLUSIVE
JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN
OR AMONG ANY DEBTOR, AGENT OR ANY LENDER PERTAINING TO THIS
SECURITY AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATING TO
THIS SECURITY AGREEMENT, PROVIDED, THAT AGENT, ON BEHALF OF AGENT
AND LENDERS, AND EACH DEBTOR ACKNOWLEDGE THAT ANY APPEALS FROM
THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF NEW
YORK, NEW YORK, AND, PROVIDED, FURTHER, THAT NOTHING IN THIS
SECURITY AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE AGENT, ON
BEHALF OF AGENT AND LENDERS, FROM BRINGING SUIT OR TAKING OTHER
LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL
-17-
<PAGE> 18
OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT
OR OTHER COURT ORDER IN FAVOR OF AGENT, FOR THE BENEFIT OF AGENT
AND LENDERS. EACH DEBTOR AND AGENT, ON BEHALF OF AGENT AND
LENDERS, EXPRESSLY SUBMIT AND CONSENT IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND
EACH DEBTOR AND AGENT, ON BEHALF OF AGENT AND LENDERS, HEREBY WAIVE
ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY
CONSENT TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS
DEEMED APPROPRIATE BY SUCH COURT. EACH DEBTOR AND AGENT, ON BEHALF
OF AGENT AND LENDERS, HEREBY WAIVE PERSONAL SERVICE OF THE SUMMONS,
COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREE THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS
MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH
DEBTOR OR AGENT AT THE RESPECTIVE ADDRESSES SET FORTH ON SCHEDULE
11.10 TO THE CREDIT AGREEMENT FOR BORROWER OR AGENT AND THAT
SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF
ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S.
MAILS, PROPER POSTAGE PREPAID.
20. WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN
CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND
ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE
PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER
THAN ARBITRATION RULES), EACH DEBTOR AND AGENT, ON BEHALF OF AGENT
AND LENDERS, DESIRE THAT DISPUTES ARISING HEREUNDER OR RELATING
HERETO BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS.
THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE
JUDICIAL SYSTEM AND OF ARBITRATION, EACH DEBTOR AND AGENT, ON
BEHALF OF AGENT AND LENDERS, WAIVE ALL RIGHTS TO TRIAL BY JURY IN
ANY ACTION, SUIT OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE,
WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, ARISING OUT OF,
CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED BETWEEN THEM IN CONNECTION WITH, THIS SECURITY
AGREEMENT OR THE TRANSACTIONS RELATED HERETO.
-18-
<PAGE> 19
IN WITNESS WHEREOF, each Debtor has caused this Security
Agreement to be executed and delivered by its duly authorized
officer as of the date first set forth above.
CARLISLE PLASTICS, INC.
By: /s/ Rajiv P. Bhatt
------------------------------
Title: Chief Financial Officer
---------------------------
POLY-TECH, INC.
By: /s/ Rajiv P. Bhatt
------------------------------
Title: Vice President
---------------------------
A&E PRODUCTS (FAR EAST) LTD.
By: /s/ Rajiv P. Bhatt
------------------------------
Title: Director
---------------------------
PLASTICOS BAJACAL S.A. DE C.V.
By: /s/ Clifford A. Deupree
------------------------------
Title: Sole Administrator
---------------------------
RHINO-X INDUSTRIES, INC.
By: /s/ Rajiv P. Bhatt
------------------------------
Title: Chief Financial Officer
---------------------------
A&E - KOREA, LTD.
By: /s/ Rajiv P. Bhatt
------------------------------
Title: Vice President
---------------------------
AMERICAN WESTERN CORPORATION
By: /s/ Rajiv P. Bhatt
------------------------------
Title: Vice President
---------------------------
<PAGE> 20
AWC TRANSPORTATION CORPORATION
By: /s/ Rajiv P. Bhatt
-----------------------------
Title: Vice President
--------------------------
ACCEPTED AS OF THE DATE
FIRST SET FORTH ABOVE:
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent for Lenders
By: /s/ Dan Pengue
--------------------------------
Title: Authorized Signatory
-----------------------------
<PAGE> 1
Exhibit 10.17
Asset Purchase Agreements
-------------------------
Attached is the Asset Purchase Agreement dated March 9, 1994 between
the Company and American Western. Substantially identical agreements were
entered into with Poly-Tech and Rhino-X on the same date.
<PAGE> 2
ASSET PURCHASE AGREEMENT
------------------------
AGREEMENT effective as of January 1, 1994, by and among Carlisle
Plastics, Inc., a Delaware corporation (the "Buyer"), and American Western
Corporation, a Delaware corporation (the "Seller").
WHEREAS, the Seller desires to sell and transfer to the Buyer, and the
Buyer desires to purchase and acquire from the Seller, all of the raw
materials, inventory, work in process, finished products and accounts of the
Seller used by the Seller or relating to the fabrication, manufacture,
marketing, distribution and sale of plastics film products, molded plastic
products and related products (the "Purchased Assets") upon the terms,
conditions and provisions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained in this Agreement, the parties hereto
agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
---------------------------
1.1 ASSET PURCHASE. On and subject to the terms and conditions set
forth in this Agreement, the Buyer hereby purchases from Seller, and the Seller
hereby sells, transfers, assigns, conveys and delivers to the Buyer, free and
clear of all liens, charges, claims, pledges, encumbrances, security interests,
purchase rights and mortgages or any other limitations or restrictions
whatsoever but subject to customer claims of offset and adjustment, all right,
title and interest in the following assets of the Seller (the "Purchased
Assets"):
(a) Accounts as such term is defined in the Uniform Commercial
Code, of Seller including (a) all accounts receivable, other
receivables, book debts and other forms of obligations, but excluding
accounts receivables and other obligations existing from related or
affiliated companies, (b) all of Seller's rights in, to and under the
purchase orders or receipts for goods or services, (c) all of Seller's
rights to any goods represented by any of the foregoing (including
unpaid sellers' rights of rescission, replevin, reclamation and
stoppage in transit and rights to returned, reclaimed or repossessed
goods), (d) all monies due or to become due to Seller under all
purchase orders and contracts for the sale of goods or the performance
of services or both by Seller or in connection with any other
transaction (whether or not yet earned by performance on the part of
Seller) including the right to receive the proceeds of said purchase
orders and contracts, and (e) all collateral security and guarantees
<PAGE> 3
of any kind given by any party with respect to any of the foregoing.
(b) Inventory as such term is defined in the Uniform Commercial
Code, of the Seller wherever located including inventory, merchandise,
goods and other personal property which are held by or on behalf of
Seller, for sale or lease or are furnished or are to be furnished under
a contract of service or which constitute finished goods raw materials,
work in process or materials used or consumed or to be used or consumed
in Seller's business or in the processing, production, packaging,
promotion, delivery or shipping of the same, including other supplies.
Coincident with such sale, transfer, assignment and conveyance, and upon
payment of the purchase price as contemplated by Section 1.2 of this Agreement,
the Seller shall deliver to the Buyer possession of the properties and assets
so conveyed and Seller will warrant and defend the sale of the Purchased Assets
hereby made to Buyer, its successors and assigns, against all parties claiming
the whole or any part thereof.
1.2 CONSIDERATION FOR ASSETS. In full consideration of, and in
exchange for, the sale of the Purchased Assets Buyer hereby pays to the Seller
an amount equal to the sum of the book value of the Assets according to
Generally Accepted Accounting Principles (the "Purchase Price") which amount
will be credited to the account currently existing between Buyer and Seller or
other amounts owing by Seller to Buyer.
1.3 LIABILITIES NOT ASSUMED. Except for contractual obligations
accruing after the date hereof under any purchase order, contract or agreement
constituting part of the Purchased Assets, Buyer does not assume and Seller
shall indemnify and hold Buyer harmless against, any liability, obligation or
claim whatsoever not included as part of the Purchased Assets.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE SELLER
--------------------------------------------------------
As an inducement to the Buyer to enter into this Agreement, the Seller
hereby represents and warrants to, and agrees with, the Buyer that the Seller
is the sole owner of the Purchased Assets and owns good and marketable title,
free and clear of all liens, charges, purchase rights, claims, pledges,
mortgages, security interests, encumbrances, or other limitations or
restrictions whatsoever, to all of the Purchased Assets.
2
<PAGE> 4
ARTICLE III
ADDITIONAL AGREEMENTS
---------------------
The Seller will execute and deliver such further instruments of
conveyance and transfer and take such additional action as the Buyer may
reasonably request to effect, consummate, confirm or evidence the transfer to
the Buyer (or its designees) of the Purchased Assets. The Seller will execute
such documents as may be necessary to assist the Buyer in preserving or
perfecting its rights in the Purchased Assets.
ARTICLE IV
MISCELLANEOUS
-------------
4.1 ASSIGNMENT. This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, and no other person shall acquire
or have any right under or by virtue of this Agreement. Neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned by
any party hereto without the prior written consent of the other party.
4.2 SEVERABILITY. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the
remainder of such provisions or the remaining provisions of this Agreement.
4.3 NO STRICT CONSTRUCTION. The language used in this Agreement will
be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction will be applied against any
person.
4.4 CAPTIONS. The captions used in this Agreement are for convenience
of reference only and do not constitute a part of this Agreement and will not
be deemed to limit, characterize or in any way affect any provision of this
Agreement, and all provisions of this Agreement will be enforced and construed
as if no caption had been used in this Agreement.
4.5 COMPLETE AGREEMENT. This document and the documents referred to
herein contain the complete agreement between the parties and supersede any
prior understandings, agreements or representations by or between the parties,
written or oral, which may have related to the subject matter hereof in any
way. There
3
<PAGE> 5
are no restrictions, promises, warranties, covenants, or undertakings, other
than those expressly provided for herein.
4.6 COUNTERPARTS. This Agreement may be executed in one or more
counterparts all of which taken together will constitute one and the same
instrument.
4.7 GOVERNING LAW. The law of the State of Minnesota will govern all
questions concerning the construction, validity and interpretation of this
Agreement and the performance of the obligations imposed by this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
Dated: March 9, 1994 Dated: March 9, 1994
-------------------- --------------------
AMERICAN WESTERN CORPORATION CARLISLE PLASTICS, INC.
By /s/ Rajiv P. Bhatt By /s/ Rajiv P. Bhatt
-------------------------- --------------------------
Its Vice President Its Chief Financial Officer
----------------------- -------------------------
4
<PAGE> 1
Exhibit 10.18
CONTRACT MANUFACTURING AGREEMENTS
---------------------------------
Attached is the Contract Manufacturing Agreement dated March 9, 1994
between the Company and American Western. Substantially identical agreements
were entered into with Poly-Tech and Rhino-X on the same date.
<PAGE> 2
CONTRACT MANUFACTURING AGREEMENT
--------------------------------
This Agreement effective as of January 1, 1994, between Carlisle Plastics,
Inc., a Delaware corporation, with offices at One Union Street, Boston,
Massachusetts 02108 (hereinafter referred to as "Customer"), and American
Western Corporation, a Delaware Corporation, with offices at 1401 West 94th
Street, Minneapolis, MN 55431 (hereinafter referred to as "Manufacturer").
WHEREAS, Customer wishes to market a product using Raw Materials; and
WHEREAS, Customer wishes to purchase the Raw Materials and to have
Manufacturer process them for use in products Customer intends to market; and
WHEREAS, Manufacturer possesses the technology to process the Raw
Materials in accordance with Customer's requirements; and
WHEREAS, Customer wishes to have Manufacturer serve as its agent to
procure and process the Raw Materials.
NOW, THEREFORE, in consideration of the mutual agreements, promises and
covenants herein contained, the parties hereby agree as follows:
SECTION 1 Agency
- - ----------------
Customer hereby appoints Manufacturer as Customer's Agent to purchase,
process and ship Inventory in accordance with Customer's requirements and
the terms hereof. Title to all Raw Materials purchased by Manufacturer
and work-in- -process and Products manufactured from the Raw Materials and
all accounts receivable and proceeds thereof shall be vested solely in
Customer.
SECTION 2 Definitions
- - ---------------------
a. "Inventory" - all Raw Materials and all work-in-process and Products
manufactured from Raw Materials.
b. "Laws" - all applicable federal, state and local laws, statutes,
ordinances, rules, regulations, guidelines, codes and orders.
c. "Nonconformity" - Product which does not comply with the requirements
of Customer.
d. "Plant" - the manufacturing and processing facilities where
Manufacturer's services will be provided, owned or leased by
Manufacturer.
<PAGE> 3
e. "Product" - finished goods consisting of plastic film products
manufactured from the Raw Materials and marketed and sold by
Customer.
f. "Raw Materials" - all plastic resins, compounds and other raw
materials purchased by Manufacturer, as agent for and at the
direction of, Customer for manufacture of the Products.
g. "Technical Information" - all formulae, manufacturing processes and
know- how, quality control data, test data and all other scientific
and/or technical data and information ("data") relating to the
Product or which may hereafter be developed by Customer in connection
with the Product and conveyed to Manufacturer other than such data
known to Manufacturer prior to the date of this Agreement or
hereafter developed by Manufacturer in its own business.
SECTION 3 Term
- - --------------
The term of this Agreement shall commence effective January 1, 1994 and
shall expire on February 28, 1997 ("initial term") and thereafter, the
term shall be automatically renewed from year to year, provided that
either party may terminate this Agreement any time after the initial term
upon thirty (30) days prior written notice to the other party.
SECTION 4 Performance
- - ---------------------
a. PRODUCT. Manufacturer agrees to purchase as Customer's agent,
receive, schedule and store Raw Materials, in quantities and at
prices agreed to by Customer and to process the Raw Materials for
Customer and ship Product to locations specified by Customer from
time to time in accordance with the terms hereof.
b. REQUIREMENTS. All Product processed by Manufacturer shall be in
accordance with and subject to Customer specifications, forecasts,
production schedules and demand schedules, mutually agreed upon by
Customer and Manufacturer and all Laws. Customer shall not incur any
cost in respect of any Product which is rejected for failure to meet
mutually agreed upon specifications.
In the event Manufacturer is unable to comply with Customer's
requirements and such inability is not caused by the unavailability
of Raw Materials required by Customer or by a force majeure under
Section 22, Manufacturer shall take such additional steps as
required, including without limitation, system modifications and
additions, to produce Product in accordance with Customer's
requirements.
2
<PAGE> 4
c. MANUFACTURER'S EQUIPMENT. Manufacturer, at its cost, shall provide
such equipment as required to produce, package and ship Product in
accordance with the terms hereof and shall maintain said equipment in
good, safe operating condition and repair.
SECTION 5 Customer's Interests
- - ------------------------------
a. Manufacturer agrees to execute and deliver to Customer UCC financing
statements evidencing that title to the Inventory is held by Customer
and that the Inventory is held on consignment by Manufacturer. If
Manufacturer has in its possession inventory owned by Manufacturer or
by persons other than Customer, Manufacturer shall segregate the
Inventory owned by Customer and post appropriate notices indicting
Customer's ownership of the Inventory. Manufacturer shall not cause
or permit any lien or security interests (other than liens or
security interests granted by Customer) to attach to any of the
Inventory. In furtherance of the foregoing, Manufacturer will not
execute or deliver any financing statement designating the Inventory
as collateral, except for an informational consignment filing in
favor of the Customer. All purchase orders for Raw Materials issued
by Manufacturer shall specify that the same are purchased by
Manufacturer as agent for Customer, and, unless otherwise mutually
agreed, the suppliers of such Raw Materials shall be paid directly by
Customer.
b. Manufacturer shall ship Products only to Customer or purchasers
designated by Customer ("Ultimate Purchasers"). Manufacturer shall
have no interest in or claim against any account receivable of
Customer arising from the sale of any Product. All invoices for
payments arising from sales of Product shall be issued by Customer
only and shall direct that all payments are to be made only to
lockboxes in the name of Customer or its designee. If any Ultimate
Purchaser delivers any payment to Manufacturer with respect to any
Product, Manufacturer shall, within one business day after receipt
thereof, transfer such payment to Customer; Manufacturer waives any
right of offset it may have with respect to any amounts from time to
time owing by Customer to Manufacturer hereunder. Manufacturer
agrees that Manufacturer shall look solely to Customer for any
amounts from time to time owing hereunder and shall be a general
unsecured creditor of Customer.
3
<PAGE> 5
c. Manufacturer shall maintain its books and records and prepare and
file all tax returns required to be filed by it in a manner
consistent with the terms of this Agreement and reflecting that all
of the Inventory and accounts receivable arising from the sale
thereof are the property of Customer.
SECTION 6 Product Quality
- - -------------------------
a. PRODUCT. Without limiting its representations and warranties herein,
Manufacturer shall sample and test the Product in accordance with
Customer's request. Manufacturer shall also sample, test and
segregate for testing by Customer such quantities of Product and
materials as Customer may from time to time request and Manufacturer
shall, at Customer's expense, ship such packages and materials to
such destinations as specified by Customer. Manufacturer shall not
release any Product for shipment which does not comply with the
specifications or other requirements of this Agreement.
b. PROTECTION. Manufacturer shall exercise reasonable care in handling,
storing and protecting any materials and property intended for use in
or in the manufacture of the Product.
SECTION 7 Storage
- - ------------------
Manufacturer shall provide suitable Customer approved storage and
warehousing space for Raw Materials and packaged Product. Manufacturer shall
ship the Product in accordance with Customer's written instructions from time
to time. Manufacturer shall load the Product onto trucks, trailers or other
modes of transportation as directed by Customer and ship them as directed by
Customer.
SECTION 8 Rejection
- - -------------------
a. Without limiting any other provisions of this Agreement, Customer may
reject or refuse to accept any nonconforming Product. Manufacturer
shall not ship any Product to Customer which has not been produced,
sampled and tested in accordance with the terms of this Agreement or
which does not otherwise comply with the terms hereof.
b. Except as otherwise expressly provided in this Agreement, Customer
shall not incur any cost(s) in respect of any Product which is
rejected by Customer for nonconformity unless such nonconformity
results from actions demanded by Customer.
4
<PAGE> 6
SECTION 9 Inspection
- - --------------------
a. RECORDS. Manufacturer shall maintain, true, accurate and complete
records in respect of Product production, storage and shipment
hereunder ("records") for a period of five (5) years from the date of
production. Upon written notice to Manufacturer from Customer,
Customer may inspect the records at mutually convenient times and
locations.
b. INVENTORIES. Manufacturer shall promptly provide Customer monthly
written reports of Customer's inventory of Product and materials.
c. PLANT. During the period(s) Manufacturer is performing its services
hereunder, Customer may maintain, at Customer's cost, such
representative(s) as desired by Customer in areas of the Plant where
materials or Product are handled, processed or stored hereunder for
the purposes of inspecting the Plant and its facilities, including
the Customer equipment, and the procedures followed by Manufacturer;
provided, however, that such inspection(s) shall not relieve
Manufacturer of any of its obligations hereunder. Manufacturer
shall, in good faith, explore the possibility and feasibility of
changing its procedure(s) whenever such changes are determined by
Customer as necessary or desirable in order to correct and/or improve
the Product, the conditions of processing and packaging and the
procedures followed hereunder.
d. NOTICE. Manufacturer shall promptly deliver to Customer copies of
all notices received by Manufacturer concerning any federal, state or
local inspections of the portion of the Plant utilized in the
production of Product under this Agreement and shall otherwise notify
Customer promptly upon learning of any visits or inquiries by any
federal, state or local government representatives regarding the
Product.
SECTION 10 Supply Quantities
- - ----------------------------
a. MANUFACTURING ORDER REQUIREMENT. Manufacturer shall process and ship
Product only after receipt of, and in accordance with manufacturing
instructions received from Customer.
SECTION 11 Compensation.
- - ------------------------
Customer shall pay Manufacturer or credit Manufacturer's account or other
amount owing to Customer by Manufacturer for Product processed, packaged and
shipped during the initial term in amounts equal to Manufacturer's costs in
accordance with Generally Accepted Accounting Principles ("GAAP"). Upon sale
of the Product, Customer agrees to credit against Manufacturer's account or
other amount owing by
5
<PAGE> 7
Manufacturer to Customer, on a monthly basis after appropriate GAAP valuation
of assets is made, a manufacturing fee as determined from time to time by the
parties.
SECTION 12 Warranties
- - ---------------------
a. Subject only to the representations and warranties of Customer in
section 12.c hereof, Manufacturer represents and warrants that
Manufacturer's performance hereunder shall be in accordance with all
the terms of this Agreement.
b. Customer will promptly notify Manufacturer upon learning of any known
or believed nonconformity, and the parties agree to cooperate with
each other in promptly correcting such nonconformity.
c. Warrantor in each case agrees to indemnify, defend and hold the other
party harmless from any and all losses, claims, damages, expenses and
reasonable counsel fees arising out of or resulting from a breach of
its respective warranty.
d. If any action, suit or proceeding shall be commenced, or any claim,
demand or assessment be asserted against a party resulting from or
arising out of a breach of warranty by the other party, the party
from whom indemnification is sought shall be notified in writing
promptly and shall have the right to assume control of the defense,
compromise or settlement thereof, at its sole expense, and in
connection therewith, the other party shall cooperate fully in such
defense and make available to the indemnifying party all relevant
information, subject to such confidentiality provisions as may be
appropriate.
SECTION 13 Indemnification and Insurance
- - ----------------------------------------
a. Manufacturer shall indemnify and hold Customer harmless from all
loss, liability, damages, claims, suits, recoveries, judgments
including costs, expenses and reasonable attorneys' fees, that may be
claimed, asserted or recovered against Customer by any person or
entity for any actual or alleged injury to person or property or
death occurring to any of Manufacturer's employees, agents or any
individual on Manufacturer's premises.
b. Manufacturer shall maintain insurance through companies satisfactory
to Customer.
6
<PAGE> 8
SECTION 14 Arbitration
- - ----------------------
a. All claims, counterclaims, disputes and other matters in question
between the parties hereto arising out of or relating to this
Agreement or the breach thereof shall be decided by arbitration in
Minneapolis in accordance with the Commercial Arbitration Rules of
the American Arbitration Association then obtaining, subject to the
limitations and provisions set forth in paragraphs b and c below.
The right of each party to arbitrate and any other agreement or
consent to arbitrate shall be specifically enforceable in any court
having jurisdiction.
b. Notice of demand for arbitration must be filed in writing with the
other parties to this Agreement and with the American Arbitration
Association. The demand must be made within a reasonable time after
the claim. No demand for arbitration may be made after the date when
institution of legal or equitable proceedings based on such claim,
dispute or other matter in question would be barred by the applicable
statute of limitation.
c. The award rendered by the arbitrators will be final and judgment may
be entered upon it in any court having jurisdiction thereof, and will
not be subject to modification or appeal except to the extent
permitted by Sections 10 and 11 of the Federal Arbitration Act (9
U.S.C. Sections 10, 11).
SECTION 15 Confidential Information
- - -----------------------------------
a. Technical Information which Customer provides or makes available to
Manufacturer shall be treated by Manufacturer as confidential
information and shall not be disclosed to any third party without
Customer's express written consent.
SECTION 16 Trademarks
- - ---------------------
a. Nothing in this Agreement shall be construed to grant to Manufacturer
any rights to or interest in any trademark, trade name, trade dress,
copyright, patent or any interests therein asserted to be owned by
Customer ("intellectual property"). Manufacturer's use of the
intellectual property shall be limited to Manufacturer's performance
of this Agreement. Any other use of the intellectual property shall
constitute an infringement thereof and/or a violation of Customer's
rights resulting in irreparable injury to Customer entitling Customer
to immediate injunctive relief under the rules of Commercial
Arbitration of the American Arbitration Association.
7
<PAGE> 9
SECTION 17 Breach
- - -----------------
The following actions shall each constitute a breach under the terms of
this Agreement. In the event Manufacturer or Customer:
a. commences a voluntary case under any chapter of the Bankruptcy Code
(Title 11, United States Code), or takes any equivalent or similar
action by filing a petition under any other federal or state law in
effect at such time relating to bankruptcy or insolvency, or if a
petition is filed against Manufacturer under any chapter of the
Bankruptcy Code and is not dismissed within 90 days thereafter, or if
a petition is filed seeking any such equivalent or similar relief
against Manufacturer under any other federal or state law in effect
at the time relating to bankruptcy and is not dismissed within 90
days thereafter;
b. makes a general assignment for the benefit of creditors;
c. admits in writing an inability to pay its debts generally as they
become due;
d. has appointed (voluntarily or involuntarily) a trustee, receiver,
custodian or agent under applicable law or under contract, whose
appointment or authority to take charge of property of Manufacturer
for the purpose of general administration of such property for the
benefit of Manufacturer's creditors; or
e. is guilty of a breach of any of the terms or provisions of this
Agreement and such breach is not cured within thirty (30) days after
receipt of written notice from the opposite party advising of such
breach.
SECTION 18 Termination
- - ----------------------
a. In the event this Agreement is terminated as provided in Section 3
hereof, Customer at its expense may enter the Plant in a manner and
at times which will not disrupt Manufacturer's operations and remove
all Customer Raw Materials, work in process, and finished Products.
b. In the event of the occurrence of any breach(es) listed in Section 17,
Customer may terminate this Agreement upon written notice to
Manufacturer and, thereafter, Manufacturer shall immediately stop the
production of any Products then in process. Thereafter, Customer may
enter the Plant, without such entry being deemed a trespass, and take
possession of all Raw Materials, work in process and finished Product.
8
<PAGE> 10
c. Upon termination of this Agreement for any reason Manufacturer shall
promptly deliver to Customer all Product manufactured hereunder along
with all Specifications, Technical Information, artwork, premiums,
packaging materials purchased by Customer and all other such materials
and supplies provided by Customer.
SECTION 19 Assignment
- - ---------------------
Neither party shall assign or otherwise transfer, in any manner (either by
contract, operation of law or change in control), this Agreement or any of its
rights or obligations hereunder provided, however, Customer may assign its
rights hereunder to General Electric Capital Corporation and either party may
so assign this Agreement to any of its Affiliates. For purposes of this
Agreement, an "Affiliate" shall mean an entity controlling, controlled by, or
under common control with a party to this Agreement.
SECTION 20 Captions
- - -------------------
The captions contained in this Agreement are for convenience and reference
only and do not define, limit, extend or describe the scope of this Agreement
or the intent of any provision thereof.
SECTION 21 Entire Agreement
- - ---------------------------
This Agreement, including its exhibits and attachments, constitutes the
entire understanding of the parties and may not be changed, modified or amended
("modified") except in writing signed by the parties.
SECTION 22 Force Majeure
- - ------------------------
a. In the event that a party hereto shall be delayed, hindered in or
prevented from the performance of any act required hereunder by
reason of fire, tornadoes, floods, acts of God, strikes, lock-outs,
labor troubles, inability to procure materials, failure of power,
restrictive laws, riots, insurrection, war or other reasons of a like
nature not the fault of, or under the reasonable control of, the
party delayed in performing work or doing acts required hereunder,
then performance of such act(s) shall be excused for the period of
the delay and the period for the performance of any such act shall be
extended for a period equal to the period of such delay, provided
such delayed party promptly gives written notice to the other party
of the occurrence giving rise to the delay and upon cessation of the
event causing the delay, promptly resumes performance of its
obligations hereunder.
9
<PAGE> 11
b. If Manufacturer is unable to perform at any time during the term
hereof due to a force majeure occurrence, Customer may, in its sole
discretion, secure substitute performance for the period of the force
majeure occurrence without incurring any obligation(s) to
Manufacturer therefor; provided, however, that Customer shall
promptly cease securing such substitute performance upon
Manufacturer's resumption of performance hereunder.
SECTION 23 Governing Law
- - ------------------------
This Agreement shall be governed and construed in accordance with the laws
of the State of Minnesota.
SECTION 24 Severability
- - -----------------------
Each provision of this Agreement is severable and if any provision shall
be finally determined to be invalid, illegal or unenforceable ("invalid") in
any jurisdiction, the remaining provisions shall not be affected thereby, nor
shall said provision be invalid in any other jurisdiction.
SECTION 25 Successors and Assigns
- - ---------------------------------
Except as limited by the Assignment provisions hereof, this Agreement, its
terms and provisions shall be binding upon and inure to the benefit of the
parties hereto and their respective partners, legal representatives, successors
and assigns.
SECTION 26 Waiver
- - -----------------
Either party's failure to enforce any provision of this Agreement or to
require performance by the other party shall not be construed as a waiver of
such provision nor affect the validity of the Agreement or any part thereof, or
either party's right to enforce any provision thereafter.
SECTION 27 Third Party Beneficiary; Waivers, Amendments and Modifications
- - -------------------------------------------------------------------------
The parties hereto acknowledge and agree that General Electric Capital
Corporation and Redwood Receivables Corporation are third party beneficiaries
of this Agreement, and no provision of this Agreement may be amended, modified
or waived without the prior written consent of General Electric Capital
Corporation and Redwood Receivables Corporation.
10
<PAGE> 12
IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the day and year first above written.
AMERICAN WESTERN CORPORATION CARLISLE PLASTICS, INC.
By: /s/ Rajiv P. Bhatt By: /s/ Rajiv P. Bhatt
----------------------- --------------------------------
Title: Vice President Title: Chief Financial Officer
--------------------- -----------------------------
Date: March 9, 1994 Date: March 9, 1994
--------------------- -----------------------------
<PAGE> 1
Exhibit 10.19
SUBORDINATION AGREEMENT
-----------------------
This SUBORDINATION AGREEMENT ("Agreement") is dated as of March 9, 1994
among General Electric Capital Corporation, for itself, as Lender, and as Agent
for Lenders under the hereinafter defined Credit Agreement (the "Agent"),
Carlisle Plastics, Inc., a Delaware corporation ("Borrower"), Poly-Tech, Inc.,
a Minnesota corporation ("Poly-Tech"), A&E Products (Far East) Ltd., a Hong
Kong corporation ("A&E"), Plasticos Bajacal S.A. de C.V., a Mexico corporation
("PB"), Rhino-X Industries, Inc., a Delaware corporation ("Rhino-X"), A&E Korea
Ltd., a Delaware corporation ("A&E Korea"), American Western Corporation, a
Delaware corporation ("AWC"), and AWC Transportation Corporation, a South
Dakota corporation ("Transportation" and together with Poly-Tech, A&E, PB,
Rhino-X, A&K Korea and AWC, the "Co-Obligors").
WITNESSETH:
WHEREAS, the Agent has entered into that certain Credit Agreement dated
as of the date hereof with the Borrower and each of the Co-Obligors (as the
same may be amended, supplemented or modified from time, the "Credit
Agreement"), evidencing the Senior Debt (as hereinafter defined);
WHEREAS, the Co-Obligors are, or from time to time will be, indebted to
the Borrower, and the Borrower is, or from time to time will be, indebted to
the Co-Obligors, such indebtedness comprising the Subordinated Indebtedness (as
hereinafter defined);
WHEREAS, the Co-Obligors and/or the Borrower, in their respective
capacities as creditors of the Borrower and/or the Co- Obligors, are referred
to herein as the "Subordinating Creditors"; and
WHEREAS, the Senior Creditors (as hereinafter defined) and the
Subordinating Creditors have entered into this Agreement to set forth the
relative rights of payment and enforcement of the obligations of the Borrower
and the Co-Obligors to the Subordinating Creditors with respect to the
Subordinated Indebtedness and the obligations of the Borrower and the Co-
Obligors to the Senior Creditors with respect to the Senior Debt.
NOW, THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereby agree as follows:
Section 1. CERTAIN DEFINITIONS. In addition to the terms defined in
the recitals hereto, the following terms shall have the following meanings for
the purpose of this Agreement:
<PAGE> 2
Section 1.1. BANKRUPTCY CODE. The term "Bankruptcy Code" shall mean
11 U.S.C. [Section]101 ET SEQ., as from time to time hereinafter amended, and
any successor or similar statute.
Section 1.2. COLLATERAL. The term "Collateral" shall mean all assets,
property and interests in property of the Borrower or any Co-Obligor, whether
now owned or hereafter acquired (whether by purchase or lease) in which a Lien
is granted pursuant to the Credit Agreement or any other Loan Document, as each
of such agreements may hereafter be amended, modified or supplemented.
Section 1.3. COLLECTION ACTION. The term "Collection Action" shall
mean (a) to ask, demand, sue for, take or receive from or on behalf of the
Borrower or any Co-Obligor, by set-off or in any other manner, the whole or any
part of any monies which may now or hereafter be owing by the Borrower or any
Co-Obligor to any Subordinating Creditor on any of the Subordinated
Indebtedness, provided, that a request for and receipt of a payment of
Subordinated Indebtedness when payment thereof is permitted under Section 3
hereof shall not be considered a Collection Action hereunder, (b) to initiate
or participate with others in any suit, action or proceeding against the
Borrower or any Co-Obligor to enforce payment of or to collect the whole or any
part of the Subordinated Indebtedness, (c) to ask, demand, take or receive any
security for any of the Subordinated Indebtedness, or (d) to accelerate any of
the Subordinated Indebtedness.
Section 1.4. EVENT OF BANKRUPTCY. The term "Event of Bankruptcy"
shall mean any of the following: (a) the filing by the Borrower or any
Co-Obligor of a voluntary petition in bankruptcy under any provision of any
bankruptcy law (including, without limitation, the Bankruptcy Code) or a
petition to take advantage of any receivership or insolvency laws, including,
without limitation, any petition seeking the dissolution, winding up, total or
partial liquidation, reorganization, composition, arrangement, adjustment or
readjustment or other relief of the Borrower or any Co-Obligor, the Borrower's
or any Co-Obligor's debts or the Borrower's or any Co-Obligor's assets or the
appointment of a trustee, receiver, liquidator, custodian or similar official
for the Borrower or any Co-Obligor or a material part of the Borrower's or any
Co-Obligor's property; (b) the admission in writing by the Borrower or any Co-
Obligor of its inability to pay its debts generally as they become due; (c) the
appointment of a receiver, liquidator, trustee, custodian or other similar
official for the Borrower or any Co- Obligor or all or a material part of the
Borrower's or any Co- Obligor's assets; (d) the filing of any petition against
the Borrower or any Co-Obligor under any bankruptcy law (including, without
limitation, the Bankruptcy Code) or other receivership or insolvency law, which
petition is not dismissed within sixty (60) days or, if such petition is being
contested by the Borrower or any of the Co-Obligors, ninety (90) days,
including, without limitation, any petition seeking the dissolution, winding
up, total or partial liquidation, reorganization, composition, arrangement,
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<PAGE> 3
adjustment or readjustment or other relief of the Borrower or any Co-Obligor,
the Borrower's or any Co-Obligor's debts or the Borrower's or any Co-Obligor's
assets or the appointment of a trustee, receiver, liquidator, custodian or
similar official for the Borrower or any Co-Obligor or a material part of the
Borrower's or any Co-Obligor's property; (e) the general assignment by the
Borrower or any Co-Obligor for the benefit of creditors or any other
marshalling of the assets and liabilities of the Borrower or any Co-Obligor; or
(f) any corporate action taken by the Borrower or any Co-Obligor to authorize
any of the foregoing.
Section 1.5. EVENT OF DEFAULT. The term "Event of Default" shall mean
the occurrence and continuance of any "Default" or "Event of Default" as such
terms are defined in the Credit Agreement.
Section 1.6. SENIOR CREDITORS. The term "Senior Creditors" shall
mean the Agent and each Lender entitled to any payments of Senior Debt.
Section 1.7. SENIOR CREDITORS' DOCUMENTS. The term "Senior Creditors'
Documents" shall mean and include, respectively, the Credit Agreement, each
other Loan Document and all other documents, instruments and agreements now or
hereafter evidencing, guaranteeing or securing the whole or any part of the
Senior Debt, including any documents evidencing, guaranteeing or securing any
refunding, refinancing or replacement of the Senior Debt now outstanding.
Section 1.8. SENIOR CREDITORS' SECURITY INTERESTS. The term "Senior
Creditors' Security Interests" shall mean the Liens with respect to any of the
Collateral granted by the Borrower or any Co-Obligor to the Agent, for the
benefit of the Lenders.
Section 1.9. SENIOR DEBT. The term "Senior Debt" shall mean all
indebtedness, obligations and liabilities (including, without limitation, all
principal, fees, costs, expenses, indemnifications and interest (including all
post-petition interest or court-approved adequate protection payments accruing
or allowed to be paid during the pendency of any bankruptcy, insolvency,
receivership or similar proceedings under chapter 7 or 11 of the Bankruptcy
Code and any other interest that would have accrued but for the commencement of
such proceedings ("Post-Petition Interest")) of any kind and nature now or
hereafter owed by the Borrower, any Co-Obligor or any other Person to the Agent
or any Lender under or secured by any of the Senior Creditors' Documents, as
such agreements may be amended or modified from time to time, and any
replacements, substitutions, renewals or refinancings thereof.
Section 1.10. SUBORDINATED INDEBTEDNESS. The term "Subordinated
Indebtedness" shall mean the Borrower's or any Co- Obligor's obligation to pay
or repay to any Subordinating Creditor
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<PAGE> 4
any loans or intercompany advances made at any time to the Borrower or a
Co-Obligor by any Subordinating Creditor, including all Post- Petition Interest
with respect thereto, as any agreements or instruments evidencing the same may
be amended or modified from time to time, and any replacements,
substitutions, renewals or refinancings thereof.
Section 1.11. SUBORDINATING CREDITORS. The term "Subordinating
Creditors" shall have the meaning set forth in the third recital to this
Agreement.
Section 1.12. SUBORDINATING CREDITORS' DOCUMENTS. The term
"Subordinating Creditors' Documents" shall mean and include all documents,
instruments and agreements evidencing the whole or any part of the Subordinated
Indebtedness.
Section 1.13. SUBORDINATION NOTICE. The term "Subordination Notice"
shall mean the giving by the Agent to the applicable Subordinating Creditor of
written notice that an Event of Default has occurred and is continuing under
the applicable Senior Creditor Document or would result after giving effect to
the next payment with respect to any of the Subordinated Indebtedness.
All other capitalized terms used but not otherwise defined herein shall
have the meanings ascribed thereto in the Credit Agreement.
Section 2. Subordination; Standby; No Intercompany Transfers.
--------------------------------------------------
(a) Each Subordinating Creditor agrees that payment of the
Subordinated Indebtedness is expressly subordinated to the prior payment in
full in cash of all Senior Debt, upon the terms and subject to the conditions
contained in this Agreement.
(b) The Borrower and each Co-Obligor shall not, directly or
indirectly, make or agree to make, and no Subordinating Creditor shall accept
or receive, any payment or distribution (in cash, property or securities, by
set-off or otherwise), direct or indirect, of or on account of any Subordinated
Indebtedness, if, at the time of such payment or distribution, or immediately
after giving effect thereto, an Event of Default shall have occurred and be
continuing.
(c) Following an acceleration of the maturity of any of the Senior
Debt (whether as a result of any payment default, any covenant default or
otherwise) and as long as such acceleration shall continue unrescinded and
unannulled, all of the Senior Debt shall first be paid in full in cash, or
provision for such payment shall be made in a manner satisfactory to the Agent,
before any payment is made on account of or applied on the Subordinated
Indebtedness.
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<PAGE> 5
(d) Each payment on the Subordinated Indebtedness by the
Borrower or any Co-Obligor shall be deemed to constitute a representation of
the Borrower or such Co-Obligor to the applicable Subordinating Creditor and
the Senior Creditors that such payment is permitted to be paid by the Borrower
or such Co-Obligor under this Agreement. The applicable Subordinating Creditor
shall be entitled to retain such payment unless the Agent shall have notified
(in writing) such Subordinating Creditor that the terms of this Agreement,
including, without limitation, those set forth in SECTION 2(b), prohibited the
Borrower or such Co-Obligor from making such payment on the date such payment
was made, in which case such Subordinating Creditor shall deliver such payment
or an amount of immediately available funds equal to the amount thereof to the
applicable Senior Creditor for application to the payment of any Senior Debt
then due within five (5) Business Days of receipt of such notice. Any notice
given under this SECTION 2(d) shall constitute a Subordination Notice for all
purposes of this SECTION 2.
(e) The subordination provisions contained herein shall apply
with respect to all of the Senior Debt, regardless of how or in what manner the
Senior Debt is incurred, or whether the Senior Debt has already been
incurred or may be incurred in the future by future advances or other financial
accommodations made or extended by any Senior Creditor, or whether such future
advances or other financial accommodations are made at the discretion of any
Senior Creditor under the Senior Creditors' Documents or pursuant to any
commitment or otherwise.
(f) If any Subordinating Creditor shall attempt to take any
Collection Action, the Agent may interpose as a defense or plea the making of
this Agreement and the Agent may intervene and interpose such defense in its
name or in the name of the Borrower or applicable Co-Obligor, and the Agent may
by virtue of this Agreement restrain the enforcement thereof in the name
of the Borrower or applicable Co-Obligor or the Agent. No Subordinating
Creditor shall accept or receive any Lien on any of the Collateral of the
Borrower or applicable Co-Obligor to secure payment of any of the Subordinated
Indebtedness. In the event that the Subordinating Creditors are granted a Lien
with respect to any of the Subordinated Indebtedness, all such Liens
(including, without limitation, any purchase money security interest) in any
property of Borrower or any Co-Obligor ("Subordinated Security Interests") are
hereby expressly subordinated to Agent's Liens therein.
(g) Neither the Borrower nor any Co-Obligor shall make or
agree to make or commit to be made any loans, advances, investments,
contributions to capital or other transfers of assets or property to or in
respect of or for the benefit of any Co- Obligor except (i) as permitted under
Section 3 of this Agreement, or (ii) as permitted or required under the Credit
Agreement.
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<PAGE> 6
Section 3. PERMITTED PAYMENTS. Subject to the terms of SECTION 2 and
only with respect to the Subordinated Indebtedness owed by it, the Borrower or
any Co-Obligor may pay to the applicable Subordinating Creditor, and such
Subordinating Creditor may accept or receive from the Borrower or such
Co-Obligor, the payments of the Subordinated Indebtedness provided for under
the Subordinating Creditors' Documents (when and as due without giving effect
to any acceleration thereof or any amendment or modification thereof which
would have the effect of increasing the amount or frequency of any such
payments) only as follows:
(a) Borrower or any Co-Obligor may make only principal or interest
payments on Subordinated Indebtedness owed by it to the applicable
Subordinating Creditor on an unaccelerated basis, provided that: (i) there
does not then exist, nor after the making of any such payment would there
exist, any Event of Default; and (ii) such payments are permitted by the Credit
Agreement and any other instrument or agreement pursuant to which there is
issued or secured or evidenced any Subordinated Indebtedness of the Borrower or
the applicable Co-Obligor.
(b) Upon the giving of a Subordination Notice by the Agent to any
Subordinating Creditor, the subordination and standby provisions of SECTIONS 2
and 5 shall govern and control until the earlier of (i) the date on
which the Agent provides such Subordinating Creditor with written notice that
there are no currently existing Events of Default under the Senior Creditors'
Documents or (ii) the payment in full in cash of the Senior Debt. The Agent
shall provide a written notice to the Borrower within thirty (30) calendar days
after all Events of Default under the Senior Creditors' Documents are cured or
waived to the Agent's satisfaction or the Senior Debt has been paid in full in
cash.
Section 4. SUBORDINATED INDEBTEDNESS OWED ONLY TO SUBORDINATING
CREDITORS; FUTURE SUBORDINATED INDEBTEDNESS. Each Subordinating Creditor
warrants and represents to the Senior Creditors that such Subordinating
Creditor has not previously assigned any interest in any of the Subordinated
Indebtedness to any party, that no party owns an interest in any of the
Subordinated Indebtedness other than such Subordinating Creditor (whether as
joint holder of any Subordinated Indebtedness, participants or otherwise), and
that the entire Subordinated Indebtedness is owing to the Subordinating
Creditors. The Subordinating Creditors shall not sell, assign or otherwise
transfer to any Person any interest in the Subordinated Indebtedness unless the
transferee agrees to be bound by all the provisions of this Agreement by an
instrument in writing acceptable to the Agent. The parties hereto agree that
the Subordinating Creditors, the Borrower and the Co-Obligors shall not create
or permit to exist in favor of any Subordinating Creditor any indebtedness that
could be considered Subordinated Indebtedness hereunder without the consent of
Agent and without first executing an amendment to this Agreement adding the
obligee of such
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<PAGE> 7
indebtedness to this Agreement as a Subordinating Creditor if required by the
Agent.
Section 5. STANDBY PROVISIONS. Until such time as all Senior Debt has
been paid in full in cash, no Subordinating Creditor shall take any Collection
Action with respect to any of Subordinated Indebtedness.
Section 6. INSOLVENCY PROCEEDINGS. Upon the occurrence of an Event of
Bankruptcy, then and in any such event:
(a) Each Senior Creditor shall be entitled to receive payment in full in
cash (or to have such payment duly provided for in a manner satisfactory to the
Agent) of all amounts due or to become due on or in respect of all Senior
Debt, before any payment or distribution, whether in cash, property or
securities, is made on account of or applied to the Subordinated Indebtedness;
(b) The Subordinated Indebtedness shall forthwith become due and payable,
and any payment or distribution of assets of the Borrower or any Co-Obligor of
any kind or character, whether in cash, property or securities, to which any
Subordinating Creditor would be entitled except for the provisions of this
Agreement, shall be paid or delivered by any debtor, custodian,
liquidating trustee, agent or other Person making such payment or distribution,
directly to the Agent, or its representative or representatives, for
application to the payment of all such Senior Debt remaining unpaid, to the
extent necessary to pay all such Senior Debt in full in cash after giving
effect to any concurrent payment or distribution, or provision therefor, to the
Agent and to facilitate the foregoing, such Subordinating Creditor will direct
each such Person to make all such payments and distributions directly to the
Agent;
(c) Each Subordinating Creditor hereby irrevocably authorizes and
empowers the Agent to demand, sue for, collect and receive such Subordinating
Creditor's ratable share of all such payments and distributions and to
receive and receipt therefor and give acquittance therefor; to file and prove
such claims in any statutory or non-statutory proceeding; and in the event that
such Subordinating Creditor has not responded prior to five (5) days before any
deadline for the taking of any such action, to vote the full amount of
Subordinated Indebtedness which is owing in its sole discretion in connection
with any resolution, arrangement, plan of reorganization, compromise,
settlement or extension and to take all such other action (including, without
limitation, the right to participate in any composition of creditors and the
right to vote at creditors' meetings for the election of trustees, acceptance
of plans and otherwise) in the name of such Subordinating Creditor or
otherwise, as the Agent may deem necessary or advisable for the enforcement of
the subordination provisions hereof. Each Subordinating Creditor hereby
agrees, under the circumstances set forth in this Section 6, duly and promptly
to take such action as
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<PAGE> 8
may be requested at any time and from time to time by the Agent to collect
hereunder and to file appropriate proofs of claim in respect thereof and to
execute and deliver such powers of attorney, assignments or other instruments
as may be requested by the Agent in order to enable the Agent to enforce
any and all claims upon or in respect of the Subordinated Indebtedness and to
collect and receive any and all payments or distributions which may be payable
or deliverable at any time upon or in respect of the Subordinated Indebtedness;
and
(d) Each Subordinating Creditor shall execute and deliver to the Agent
all such further instruments and other documentation confirming the above
authorization, and all such proofs of claim, assignments of claim and other
instruments and other documentation, and shall take all such other action,
as may be requested by the Agent to enforce such claims and carry out the
purposes of this SECTION 6.
The Borrower and each Co-Obligor shall give prompt notice to the Senior
Creditors and the Subordinating Creditors of any Event of Bankruptcy.
Upon any payment or distribution of assets of the Borrower or any
Co-Obligor referred to in this SECTION 6, the applicable Subordinating Creditor
shall be entitled to rely upon any order or decree made by any court of
competent jurisdiction in which any proceeding (which proceeding relates to the
Event of Bankruptcy) is pending, or a certificate of the debtor, custodian,
liquidating trustee, agent or other Person making any payment or distribution
to such holders, for the purpose of ascertaining the Persons entitled to
participate therein, the then outstanding principal amount of the Senior Debt
and any and all amounts payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this SECTION 6.
SECTION 7. PAYMENTS OR DISTRIBUTIONS RECEIVED BY A SUBORDINATING
CREDITOR. Except as to payments or distributions which a Subordinating
Creditor is permitted to accept or receive pursuant to this Agreement, should
any payment or distribution be received by any Subordinating Creditor upon or
with respect to any of the Subordinated Indebtedness prior to the payment in
full in cash of all Senior Debt, such Subordinating Creditor shall receive and
hold the same in trust, as trustee, for the benefit of the Senior Creditors and
shall forthwith deliver the same to the Agent, in precisely the same form
received (except for the endorsement or assignment of such Subordinating
Creditor where necessary) for application on the Senior Debt, due or not due,
and until so delivered, the same shall be held in trust by such Subordinating
Creditor as the property of the Senior Creditors.
Section 8. SUBROGATION. After all Senior Debt has been paid in full
in cash and until the Subordinated Indebtedness has been paid in full, the
Subordinating Creditors shall be subrogated
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<PAGE> 9
to the rights of the Senior Creditors to receive distributions with respect to
the Senior Debt, to the extent that distributions otherwise payable to the
Subordinating Creditors have been applied to the payment of Senior Debt in
accordance with the provisions of this Agreement. As between the Borrower or
any Co-Obligor, its creditors other than the Senior Creditors and the
Subordinating Creditors, a distribution applied to the payment of the Senior
Debt in accordance with the provisions of this Agreement which otherwise would
have been made to a Subordinating Creditor shall not be deemed a payment by the
Borrower or any Co-Obligor on the Subordinated Indebtedness, it being
understood that nothing contained in this Agreement is intended to or shall
impair, as between the Borrower or the applicable Co-Obligor, its creditors
other than the Senior Creditors and the Subordinating Creditors, the obligation
of the Borrower or the applicable Co-Obligor, which is absolute and
unconditional, to pay to the applicable Subordinating Creditor the principal of
and premium, if any, and the interest, if any, on the Subordinated Indebtedness
as and when the same shall become due and payable in accordance with its terms,
or to affect the relative rights of the Subordinating Creditors and creditors
of the Borrower or any Co-Obligor other than the Senior Creditors.
Section 9. TERM. This Agreement shall constitute a continuing
agreement among the parties, including, without limitation, their successors
and assigns, regardless of whether such successors and assigns are signatories
hereto, and any Senior Creditor or its respective successors and assigns may
continue, without notice to the Subordinating Creditors, to extend credit and
make other accommodations to or for the account of the Borrower or any
Co-Obligor in reliance upon the provisions of this Agreement. This Agreement
shall be irrevocable by the Subordinating Creditors until all Senior Debt shall
have been paid and fully satisfied and all financing arrangements between the
Agent and the Borrower and the Co-Obligors pursuant to the Senior Creditors'
Documents have been terminated in writing.
Section 10. ADDITIONAL AGREEMENTS BETWEEN THE AGENT AND BORROWER OR
CO-OBLIGORS. The Agent and the Lenders, at any time and from time to time, may
enter into such agreement or agreements with the Borrower or any Co-Obligor as
the Agent and the Lenders may deem proper, extending the time of payment of or
renewing or otherwise altering the terms of all or any of the Senior Debt or
affecting the security underlying any or all of the Senior Debt.
Section 11. WAIVERS OF SUBORDINATING CREDITORS. All Senior Debt shall
be deemed to have been made or incurred in reliance upon this Agreement, and
each Subordinating Creditor expressly waives all notice of the acceptance by
any Senior Creditor of the subordination and other provisions of this
Agreement, notice of the incurring of Senior Debt from time to time under the
Senior Creditors' Documents and all other notices not specifically required
pursuant to the terms of this Agreement or by
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<PAGE> 10
law, and each Subordinating Creditor expressly waives reliance by any Senior
Creditor upon the subordination and other agreements as herein provided.
Section 12. WAIVERS OF THE AGENT. No waiver shall be deemed to be
made by the Agent of any of its rights hereunder, unless the same shall be in
writing signed on behalf of the Agent, and each waiver, if any, shall be a
waiver only with respect to the specific instance involved and shall in no way
impair the rights of the Agent in any other respect at any other time.
Section 13. NOTICE OF DEFAULT. Each party hereto agrees to give to
the others copies of any written notices of default, termination, demand for
payment, acceleration, foreclosure, exercise of remedies and any other written
notice of a like nature, including, without limitation, any such notice which
may be given under or pursuant to the terms of any of the applicable Senior
Creditors' Documents, or the Subordinating Creditors' Documents, which such
party may give to the Borrower or any Co-Obligor hereafter, in each case
concurrently with, or as soon as practicable after, the giving of such notice
to the Borrower or such Co-Obligor; provided, however, that no failure of any
party to give a copy of any such notice as provided herein shall in any event
affect the validity or effectiveness of the notice or render the party liable
to any other party in any respect or relieve each Subordinating Creditor of its
obligations and agreements contained herein.
Section 14. NOTICES. Any notice or other communication required or
permitted to be given shall be in writing addressed to the respective party as
set forth below and may be personally served, telecopied or sent by reputable
overnight courier service and shall be deemed to have been given: (a) if
delivered in person, when delivered; (b) if delivered by telecopy, on the date
of transmission if transmitted on a Business Day before 4:00 p.m. (Stamford,
Connecticut time) (but only if such telecopied document is also delivered by
another method permitted by this Agreement by the next Business Day) or, if
not, on the next succeeding Business Day; or (c) if delivered by reputable
overnight courier, the day such delivery is made by such courier.
Notices shall be addressed as follows:
If to the Agent:
GENERAL ELECTRIC CAPITAL CORPORATION
Commercial Finance, Inc.
501 Merritt Seven, Third Floor
Norwalk, Connecticut 06851
Attn: Carlisle Plastics Account Manager
Telecopy No: (203) 840-4580
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<PAGE> 11
If to the Borrower or the Co-Obligors:
CARLISLE PLASTICS, INC.
One Union Street
Boston, Massachusetts 02108
Attn: Chief Financial Officer
Telecopy No: (617) 523-5428
or at such other address or to any such successor or assign as any party may
designate by notice to the other party in accordance with the provisions
hereof.
Section 15. GOVERNING LAW. THIS AGREEMENT SHALL BE INTERPRETED, AND
THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED, IN ACCORDANCE WITH
THE INTERNAL LAWS, WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS, AND
DECISIONS OF THE STATE OF NEW YORK.
Section 16. PARTIES. This Agreement shall be binding upon, and inure
to the benefit of, the Subordinating Creditors and the Senior Creditors and
their respective successors and assigns. The terms "Borrower" and "Co-Obligor"
as used herein shall also refer to the successors and assigns of the Borrower
or such Co- Obligor, including, without limitation, a receiver, trustee,
custodian or debtor-in-possession.
Section 17. CONSENT TO JURISDICTION. THE PARTIES AGREE THAT ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT MAY BE
COMMENCED IN ANY STATE OR FEDERAL COURT IN THE STATE OF NEW YORK, AND AGREE
THAT A SUMMONS AND COMPLAINT COMMENCING AN ACTION OR PROCEEDING IN ANY SUCH
COURT SHALL BE PROPERLY SERVED AND SHALL CONFER PERSONAL JURISDICTION IF SERVED
PERSONALLY OR BY CERTIFIED MAIL TO IT AT ITS ADDRESS HEREINABOVE SET FORTH, OR
AS IT MAY PROVIDE IN WRITING FROM TIME TO TIME, OR AS OTHERWISE PROVIDED UNDER
THE LAWS OF THE STATE OF NEW YORK.
Section 18. WAIVER OF JURY TRIAL. THE PARTIES HERETO HEREBY WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF THIS AGREEMENT, OR ANY DEALINGS BETWEEN THEM RELATING TO
THE SUBJECT MATTER OF THIS AGREEMENT. THE PARTIES HERETO ALSO WAIVE ANY BOND
OR SURETY OR SECURITY UPON SUCH BOND THAT MIGHT, BUT FOR THIS WAIVER, BE
REQUIRED OF THE SENIOR CREDITORS. THE SCOPE OF THIS WAIVER IS INTENDED TO BE
ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND
THAT RELATE TO THE SUBJECT MATTER OF THIS AGREEMENT, INCLUDING, WITHOUT
LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW AND STATUTORY CLAIMS. THE PARTIES HERETO EACH ACKNOWLEDGE THAT THIS
WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT
EACH HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT
EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. THE
PARTIES HERETO
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<PAGE> 12
FURTHER WARRANT AND REPRESENT THAT EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL
COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT. IN THE EVENT OF LITIGATION, THIS AGREEMENT
MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
Section 19. SECTION TITLES. The section titles contained in this
Agreement are and shall be without substantive meaning or content of any kind
whatsoever and are not a part of the Agreement between the parties hereto.
Section 20. NO AMENDMENTS. There shall be no amendment, modification
or supplementation to any Subordinating Creditors' Document or the waiver or
termination by the Borrower or any Co- Obligor of any of its material rights
thereunder, unless such action is consented to by the Agent or required by any
court or governmental agency.
Section 21. COUNTERPARTS. This Agreement and any amendments, waivers,
consents or supplements may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all of which
counterparts together shall constitute but one and the same instrument. This
Agreement shall become effective upon the execution of a counterpart hereof by
each of the parties hereto.
Section 22. SEVERABILITY. The invalidity, illegality or
unenforceability of any provision in or obligation under this Agreement shall
not affect or impair the validity, legality or enforceability of the remaining
provisions or obligations under this Agreement.
[SIGNATURE PAGES FOLLOW]
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<PAGE> 13
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their duly authorized representatives as of the
day and year first above written.
Senior Creditor:
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent for itself and the Lenders
By: /s/ Dan Pengue
--------------------------------
Title: Authorized Signatory
------------------------------
<PAGE> 14
Subordinating Creditors:
Borrower:
CARLISLE PLASTICS, INC.
By: /s/ Rajiv P. Bhatt
-------------------------------
Title: Chief Financial Officer
-----------------------------
Co-Obligors:
POLY-TECH, INC.
By: /s/ Rajiv P. Bhatt
-------------------------------
Title: Vice President
-----------------------------
RHINO-X INDUSTRIES, INC.
By: /s/ Rajiv P. Bhatt
-------------------------------
Title: Chief Financial Officer
-----------------------------
AMERICAN WESTERN CORPORATION
By: /s/ Rajiv P. Bhatt
-------------------------------
Title: Vice President
-----------------------------
A&E PRODUCTS (FAR EAST) LTD.
By: /s/ Rajiv P. Bhatt
-------------------------------
Title: Director
-----------------------------
PLASTICOS BAJACAL S.A. DE C.V.
By: /s/ Clifford A. Deupree
-------------------------------
Title: Sole Administrator
-----------------------------
A&E KOREA LTD.
By: /s/ Rajiv P. Bhatt
-------------------------------
Title: Vice President
-----------------------------
<PAGE> 15
AWC TRANSPORTATION CORPORATION
By: /s/ Rajiv P. Bhatt
-------------------------------
Title: Vice President
-----------------------------
<PAGE> 1
Exhibit 10.20
EXECUTION COPY
EQUIPMENT LEASE AGREEMENT
THIS EQUIPMENT LEASE AGREEMENT is made as of the 4th day of April,
1994, by and between GENERAL ELECTRIC CAPITAL CORPORATION, AS AGENT FOR ITSELF
AND CERTAIN PARTICIPANTS ("Lessor"), and CARLISLE PLASTICS, INC. ("Lessee").
Unless otherwise defined herein, capitalized terms used as defined terms herein
shall have the meanings assigned to such terms in Exhibit B hereto.
The parties agree that Lessor agrees to lease to Lessee, and Lessee
agrees to lease from Lessor, the Equipment described in the Equipment Schedules
to be executed pursuant hereto, subject to the terms set forth herein and in
the Equipment Schedules.
1. TERM. The term of this Lease with respect to any item of the
Equipment shall consist of the term set forth in the Equipment Schedule
relating thereto; provided, however, that this Lease shall be effective from
and after the date of execution hereof.
2. RENT. Lessee shall pay Lessor rent, without any deduction or
setoff and without prior notice or demand, in the aggregate amounts specified
in the Equipment Schedules. Except as provided in Section 12 and Section 20
hereof, this is a non-cancel- able net lease and Lessee shall not be entitled
to any abatement or reduction of payments due hereunder for any reason. Lessee
agrees to make the payments due hereunder regardless of any existing or future
offset or claim which may be asserted by Lessee. Rent and all other amounts due
and owing from Lessee to Lessor under or in connection with this Lease are
payable as and when specified in the Equipment Schedules by preauthorized debit
pursuant to the preauthorized Debit Agreement; and shall be effective upon
receipt. Time is of the essence. If any payment is not paid on the due date,
then, unless such nonpayment is due solely to any act or failure to act by
Lessor, Lessor may collect, and Lessee agrees to pay, a charge calculated as
the product of the Late Charge Rate specified in the applicable Equipment
Schedule and the amount in arrears for the period such amount remains unpaid.
In addition, if any payment of rent is not paid on the Payment Date on which it
is due, then, unless such nonpayment is due solely to any act or failure to act
by Lessor, Lessor may collect, and Lessee agrees to pay, a charge in an amount
equal to the Late Payment Fee with respect thereto.
3. REPRESENTATIONS AND WARRANTIES OF LESSEE. Lessee represents and
warrants that, as of the date hereof: (a) Lessee and each of its direct and
indirect subsidiaries is a corporation duly organized and validly existing in
good standing under the laws
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<PAGE> 2
of the state of its incorporation and is in good standing and qualified as a
foreign corporation in (i) each jurisdiction in which the Equipment is or will
be located and (ii) in such jurisdictions where its ownership or lease of
property or the conduct of its business requires it to be so qualified, except
for purposes of this clause (ii), in such jurisdictions where the failure
to be so qualified would not have a Material Adverse Effect. Exhibit F hereto
correctly identifies (i) the name of each subsidiary of Lessee, (ii) the
jurisdiction of its incorporation, (iii) the authorized, issued and outstanding
capital stock of each such subsidiary and the holders thereof, and (iv) the
address of such subsidiary's chief executive office and principal place of
business.
(b) The execution, delivery and performance of this Lease, each
Sublease executed on the date hereof and all related instruments and documents
(i) have been duly authorized by all necessary corporate action on the part of
Lessee and each subsidiary, as applicable; (ii) do not require the approval of
any stockholder, trustee or holder of any obligations of Lessee or any of its
subsidiaries except such as have been duly obtained; and (iii) do not and will
not contravene any law, governmental rule, regulation or order now binding on
Lessee or any of its subsidiaries or the charter or by-laws of Lessee or any of
its subsidiaries, or contravene the provisions of, or constitute a default
under, or result in the creation of any lien or encumbrance upon the property
of Lessee or any of its subsidiaries under, any indenture, mortgage, contract
or other agreement to which Lessee or any of its subsidiaries is a party or by
which any of them or any of their property is bound.
(c) This Lease, each Sublease executed on the date hereof and all
related instruments and documents, when entered into, will constitute legal,
valid and binding obligations of Lessee and its subsidiaries, as applicable,
enforceable against Lessee and its subsidiaries, as applicable, in accordance
with the terms thereof, except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally, and by applicable laws (including any applicable
common law and equity) and judicial decisions which may affect the remedies
provided herein.
(d) There are no (i) pending actions or proceedings to which Lessee or
any of its subsidiaries is a party, or (ii) other pending or threatened actions
or proceedings of which Lessee or any of its subsidiaries has knowledge, before
any court, arbitrator or administrative agency, which, in any such case, either
individually or in the aggregate, would materially adversely affect the
financial condition, operations, business or prospects of Lessee or the ability
of Lessee or any of its subsidiaries to perform its obligations hereunder,
under such Sublease or under any related instruments and documents. Further,
Lessee and its subsidiaries are not in default under any obligation for the
payment of borrowed
2
<PAGE> 3
money, for the deferred purchase price of property or for the payment of any
rent under any lease agreement which, in each case either individually or in
the aggregate, would adversely affect the financial condition of Lessee or any
of its subsidiaries or the ability of Lessee or any of its subsidiaries to
perform its obligations hereunder, under such Sublease or under any related
instruments and documents.
(e) The consolidated financial statements of Lessee, including the
audited financial statements for the fiscal year ended December 31, 1993
(copies of which have been furnished to Lessor), have been prepared in
accordance with generally accepted accounting principles consistently applied
("GAAP") and fairly present Lessee's consolidated financial condition and
results of operations as of the dates of and for the periods covered by such
statements, and since the date of such December 31, 1993 financial statements
there has been (i) no material adverse change in the business, operations,
financial condition or prospects of Lessee or any of its subsidiaries, (ii) no
litigation commenced which, if successful, will have any such material adverse
effect or which will challenge any of the transactions contemplated by this
Agreement or the Credit Agreement, and (iii) no dividends or other
distributions by Lessee to its stockholders (other than payments for services
rendered in the ordinary course of business consistent with past practice and
not in excess of fair market value), no material increase in liabilities,
liquidated or contingent, and no material decrease in the assets of Lessee or
any of its subsidiaries from those shown on such statements. Neither the
aforesaid financial statements nor, to the knowledge of Lessee, any document
furnished by Lessee to Lessor in connection with the transactions contemplated
hereby contains or will contain any untrue statement of a material fact or
omits or will omit a material fact necessary to make the statements contained
therein not misleading, under the circumstances under which any such statement
shall have been made. There is no fact known to Lessee or any of its
subsidiaries relating to the Equipment or the transactions contemplated hereby
that materially adversely affects or, so far as Lessee can now reasonably
foresee, might materially adversely affect the ability of Lessee or any of its
subsidiaries to perform its obligations under this Lease, the applicable
Sublease and all related instruments and documents.
(f) The address stated below the signature of Lessee is the chief place
of business and chief executive office (as such term is used in Section
9-103(3) of the Massachusetts Uniform Commercial Code) of Lessee; and except
for the names specified on Exhibit H hereto, neither Lessee nor any of Lessee's
subsidiaries or Affiliates conducts business in a corporate or divisional name
at any location where the Equipment will be located under any other name. Each
Equipment Schedule correctly identifies the location of each item of Equipment
specified thereon and whether any of such locations are leased by Lessee or
subject to any real property mortgage. Lessee and its subsidiaries have no
other places of
3
<PAGE> 4
business where the Equipment will be located other than those specified in
the Equipment Schedules.
(g) Immediately prior to the execution and delivery of the applicable
Bill of Sale, Lessee and each applicable subsidiary of Lessee shall own the
Equipment subject to such Bill of Sale free of all liens, claims and
encumbrances other than Permitted Liens, and except for the financing
statements listed on Exhibit P hereto, releases for which will be delivered to
Lessor at or prior to the closing of the transactions contemplated to occur on
the date of such Bill of Sale, no effective financing statement or other form
of lien notice covering all or any part of the Equipment is on file in any
recording office except those in favor of Lessor. None of the Equipment is in
the possession of any consignee, bailee, warehouseman, agent, sublessee or
other processor, except for Equipment leased by a Sublessee pursuant to a
Sublease.
(h) No consent, approval, giving of notice to, registration with, or
taking of any other action in respect of any Governmental Authority, including
but not limited to state or Federal environmental protection agencies, not
already obtained is required for the valid and lawful execution and delivery of
this Lease and the related instruments and documents.
(i) Except for the filing of any required financing statements which
have already been made, no action is required to perfect Lessor's right, title
and interest in and to the Equipment.
(j) Each Bill of Sale transfers to Lessor good title to the Equipment
described on the schedule attached thereto free and clear of any and all
encumbrances, liens, charges or defects other than Permitted Liens, and Lessee
or the applicable subsidiary has paid for all of such Equipment in full. No
notice must be given, and no other action must be taken with respect to any
state or local jurisdiction, or any Person, in order to preserve for Lessor all
the rights transferred by the Bills of Sale.
(k) Under the laws of the state(s) in which the Equipment is to be
located, the Equipment consists solely of personal property and not fixtures.
(l) On the Lease Commencement Date, Lessor will have good and
marketable title to the items of Equipment being subjected to this Lease and
the Equipment Schedules.
4. COVENANTS OF LESSEE. Lessee covenants and agrees as follows:
(a) Lessee will furnish Lessor and each Participant:
(1) no later than 30 days after the end of each month (except
for the last month of any fiscal quarter of Lessee, in which case 45
days after the end of such
4
<PAGE> 5
month), a consolidated balance sheet of Lessee and its Consolidated
subsidiaries as of the end of such month, and the related statements of
income and cash flows for such month, internally prepared in accordance
with GAAP, and together with comparable statements for the
corresponding period in the prior Fiscal Year and a comparison to
Lessee's budget for such period, all in reasonable detail and
accompanied by a certificate of the Chief Financial Officer of Lessee
on behalf of Lessee demonstrating in reasonable detail compliance with
the covenants set forth in Exhibit G-1 hereto and stating that to the
knowledge of such officer, after due inquiry, no Default or event which
with the giving of notice or the lapse of time or both would constitute
a Default (a "Potential Default") has occurred and is continuing;
(2) no later than forty-five (45) days after the end of each
fiscal quarter of Lessee, Consolidated and consolidating financial and
other information regarding Lessee and its subsidiaries, including (i)
unaudited balance sheets as of the close of such fiscal quarter and the
related statements of income and cash flows for that portion of the
Fiscal Year ending as of the close of such fiscal quarter and (ii)
unaudited statements of income and cash flows for such fiscal quarter,
in each case setting forth in comparative form the figures for the
corresponding period in the prior Fiscal Year and the figures contained
in the budget, all prepared in accordance with GAAP (subject to normal
year-end adjustments) and accompanied by (A) a certificate of the Chief
Financial Officer of Lessee in reasonable detail showing the
calculations used in determining compliance with the financial
covenants of the type set forth in Section 4(a)(l), (B) an officer's
certificate executed by the Chief Executive Officer or Chief Financial
Officer of Lessee to the effect that all of such financial and other
information is true, complete and correct and presents fairly in
accordance with GAAP (subject to normal year-end adjustments) the
financial position, results of operations and statements of cash flows
of Lessee and its subsidiaries, on both a Consolidated and
consolidating basis, as at the end of such fiscal quarter and for the
period then ended, and (C) a management discussion and analysis which
includes a comparison to budget for that fiscal quarter and a
comparison of a performance for that fiscal quarter to the
corresponding period in the prior Fiscal Year;
(3)(A) no later than 90 days after the end of each fiscal year
of Lessee, the consolidated balance sheet of Lessee and its
Consolidated Subsidiaries as of the end of such year and the related
statements of income and cash flows, all in reasonable detail and
accompanied by an
5
<PAGE> 6
unqualified report thereon of independent certified public accountants
of recognized national standing, which report shall state that such
financial statements present fairly the financial position of Lessee
as of the dates indicated and the results of its operations and changes
in financial position for the periods indicated in conformity with GAAP
applied on a consistent basis and that the audit by such accountants in
connection with such financial statements was made in accordance with
generally accepted auditing standards, accompanied by a certificate of
the Chief Financial Officer of Lessee of the type specified in Section
4(a)(1) above, together with a set of corresponding financial
statements prepared on a consolidating basis, which financial
statements shall be accompanied by an operating plan for the next
fiscal year approved by Lessee's Board of Directors that includes a
monthly budget for such year and integrates operating profit and cash
flow projections (including forecasted availability under the Credit
Agreement) and Consolidated Capital Expenditures and (B) as soon as
they are available, copies of all management letters received by Lessee
which were issued by such accountants;
(4) promptly upon any Responsible Officer of Lessee obtaining
knowledge of any condition or event which constitutes a Default or a
Potential Default hereunder, Lessee shall provide prompt written notice
to Lessor specifying such condition and what action Lessee is taking or
proposes to take with respect thereto; and
(5) within thirty (30) days after the date on which they are
filed, all regular periodic reports, forms and other filings required
to be made by Lessee to the Securities and Exchange Commission.
(b) Lessee will promptly execute and deliver to Lessor such further
documents, instruments and assurances and take such further action as Lessor
from time to time may reasonably request in order to carry out the intent and
purpose of this Lease and to establish and protect the rights and remedies
created or intended to be created in favor of Lessor hereunder.
(c) Lessee will and, will cause its subsidiaries to, comply with all
affirmative and negative covenants set forth in Exhibits M and N hereto, to the
same extent as if set forth herein, which Exhibits shall be incorporated herein
by reference.
(d) Lessee shall, and shall cause each of its subsidiaries to, comply
with the financial covenants set forth in Exhibits G-1 and G-2 hereto to the
same extent as set forth herein, which Exhibits shall be incorporated herein by
reference.
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<PAGE> 7
(e) Lessee covenants and agrees that, without Lessor's prior written
consent, from and after the date hereof until the expiration of the Lease term:
(1) Lessee shall not, nor shall Lessee permit any of its
subsidiaries to, directly or indirectly, by operation of law or
otherwise, merge with, consolidate with, acquire all or substantially
all of the assets or capital stock of, or otherwise combine with, any
Person, except (A) as provided in Sections 15(a)(8), (9) and (10)
hereof and (B) that a subsidiary of Lessee may merge with or into a
Wholly-Owned subsidiary of Lessee or Lessee, provided that, in the case
of a merger involving Lessee, Lessee is the surviving corporation;
(2) Lessee shall not, nor shall it permit any subsidiary to,
purchase or agree to purchase inventory or other products from any
Affiliates of Lessee except in arm's-length transactions upon terms and
conditions that are fair and reasonable to the purchaser and pursuant
to the Asset Purchase Agreements and the Toll Manufacturing Agreements;
(3) Lessee shall not, nor shall Lessee permit any of its
subsidiaries to take any action which would be reasonably likely to (A)
adversely affect its ability to perform its obligations hereunder or
under the relevant Sublease or any related documents or instruments or
(B) have a Material Adverse Effect; and
(4) Lessee shall not, nor shall Lessee permit any of its
subsidiaries to, create, incur, assume or permit to exist any lien on
or with respect to any properties or assets of Lessee or any of its
subsidiaries constituting fixed assets or real property or interests
therein, whether now owned or hereafter acquired, or any income or
profits therefrom, except (i) Permitted Liens; (ii) the liens created
by this Lease or the Subleases or created in connection with the Credit
Agreement or the Receivables Funding Facility; (iii) the Liens in
effect on the date hereof and described on Exhibit S hereto; and (iv)
Purchase Money Liens securing Indebtedness permitted by Section 2.3(x)
of Exhibit N to this Lease.
(f) Lessee will not attach or incorporate any item of Equipment to or
in any other item of equipment or personal property or to or in any real
property in a manner that gives rise to the assertion of any lien, claim or
encumbrance on such item of Equipment by reason of such attachment or the
assertion of a claim that such item of Equipment has become a fixture. Lessee
hereby agrees in accordance with Section 20(c) hereof that it will purchase any
such item of Equipment which Lessor notifies Lessee in
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<PAGE> 8
writing is subject to the assertion of any such lien, claim or encumbrance
within ten (10) days of such notice.
(g) If any items of Equipment are to be used or located on the Premises
of any Consolidated Subsidiary of Lessee, Lessee shall prior to any such
location or use cause such Consolidated Subsidiary to enter into a sublease for
such items of Equipment and Lessor, Lessee and such Consolidated Subsidiary
shall execute and deliver a Consent to Sublease substantially in the form of
Exhibit J hereto together with such other documents and instruments, and each
of Lessee and Lessor will take such other actions, as Lessor, Lessee or such
Consolidated Subsidiary may reasonably request in connection therewith and
consistent with the terms hereof.
(h) Lessee and its subsidiaries will use the net proceeds of the sale
of the Equipment to redeem Senior Notes issued under the Indenture dated as of
April 1, 1989 as provided in Section 2.3(i) of Exhibit N to this Lease.
5. AUTHORIZATION AND CONDITIONS. Lessor's obligations to purchase
Equipment from Lessee and the applicable subsidiaries of Lessee and to lease
the same to Lessee under any Equipment Schedule shall be conditioned upon and
subject to the receipt by Lessor prior to the Lease Commencement Date of the
following, in form and substance satisfactory to Lessor:
(i) evidence as to due compliance with the insurance provisions
hereof;
(ii) Uniform Commercial Code financing statements and lien search
reports as are reasonably required by Lessor;
(iii) a certificate of Lessee's and such applicable subsidiary's
Secretary certifying: (1) resolutions of Lessee's or such subsidiary's
Board of Directors duly authorizing the sale of the Equipment to
Lessor, the leasing of the Equipment hereunder and under the applicable
Sublease and the execution, delivery and performance of this
Lease, the applicable Sublease and the Equipment Schedules and all
related instruments and documents, and (2) the incumbency and signature
of the officers of Lessee or such subsidiary authorized to execute such
documents;
(iv) a certificate of a Responsible Officer of Lessee certifying on
behalf of Lessee that no Default or Potential Default has occurred
and is continuing;
(v) an opinion of counsel from Messrs. Lindquist & Vennum, counsel for
Lessee and each subsidiary, and such other opinions of counsel as
Lessor may request, in each case in form and substance satisfactory
to Lessor;
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(vi) execution and delivery of such Bills of Sale and other documents
as Lessor may reasonably request consistent with the terms hereof;
(vii) Lessor shall have received an Appraisal with respect to such
Equipment in form and substance satisfactory to Lessor;
(viii) complete descriptions on an itemized basis of all Equipment
under each Equipment Schedule including make, model, manufacturer,
serial numbers, age, date placed in service and Total Funding
Amount, together with all equipment specifications;
(ix) copies of invoices and purchase orders and satisfactory evidence
that Lessee or the applicable subsidiary has fully paid for such
Equipment;
(x) executed copies of the Subordination Agreement and the Subsidiary
Guarantees;
(xi) Subleases executed by each of Poly-Tech, American Western and
Rhino-X, together with an executed Consent to Sublease with respect to
each Sublease and all agreements, documents and instruments required
thereby, and satisfaction of all conditions precedent required
to be satisfied prior to the Lease Commencement Date (as defined in the
applicable Sublease) thereunder, together in each case with such other
documents, instruments and opinions as Lessor may reasonably request in
connection with the execution and delivery thereof;
(xii) all such other documents, instruments, opinions and evidence of
the taking of such other actions as Lessor may reasonably request in
connection with the consummation of the transactions contemplated
herein and consistent with the terms hereof, all of which shall be
complete and satisfactory to Lessor;
(xiii) an executed copy of the Credit Agreement and the other documents
and instruments executed in connection therewith, which agreements,
documents and instruments shall be in full force and effect, and the
initial funding under the Credit Agreement shall have occurred;
(xiv) executed copies of notices of redemption of the Senior Notes
required by the Indentures to be redeemed in connection with the
consummation of the transactions contemplated hereby, which
notices shall be duly authorized and in full force and effect;
(xv) Estoppel/Waiver Agreements substantially in the form of Exhibit
D-1 and D-2 hereto, as applicable, delivered
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by the mortgagee or lessor of each of the mortgaged or leased Premises
identified on Exhibit I hereto; and
(xvi) executed letter agreements with respect to the payment of
local property taxes.
6. DELIVERY; INSPECTION AND ACCEPTANCE BY LESSEE. With respect to the
Equipment being purchased by Lessor on the Lease Commencement Date, subject to
the terms and conditions of this Lease, including without limitation Sections 4
and 5 hereof, Lessor and Lessee shall execute and deliver an Equipment
Schedule containing a complete description of each item of Equipment to be
leased hereunder as of such date. Simultaneously therewith, Lessor shall
purchase such Equipment from Lessee or the applicable subsidiary of Lessee
subject to satisfaction of such terms and conditions by paying to Lessee or the
applicable subsidiary of Lessee by wire transfer of immediately available funds
an amount equal to the Total Funding Amount specified on the Equipment Schedule
for such Equipment, such purchase to be evidenced by a Bill of Sale from Lessee
or the applicable subsidiary of Lessee to Lessor in the form attached hereto as
Exhibit C covering such Equipment; whereupon, as between Lessor and Lessee,
such Equipment shall be deemed to have been accepted by Lessee for all purposes
of this Lease and subject to this Lease. All expenses incurred in connection
with Lessor's purchase, leasing and subleasing of the Equipment (including the
fees and expenses of counsel for Lessor, the fees and expenses incurred in
connection with the delivery of the Appraisal, UCC search and filing fees, due
diligence fees and expenses and other reasonable expenses) shall be the
responsibility of Lessee and shall be paid upon demand.
7. USE AND MAINTENANCE. Lessee shall use the Equipment solely in the
conduct of its business, in a manner so as to maintain the Equipment in good
working order and condition, ordinary wear and tear from proper use alone
excepted, consistent with the requirements of all applicable insurance
policies, and in compliance with all Applicable Laws and shall not
dismantle or remove material parts of the items of Equipment, except as may be
appropriate in connection with repairs to the Equipment. Lessee shall not use
or locate the Equipment outside of the United States. Lessee shall not, nor
shall it permit any subsidiary to: (a) (i) move or relocate the Equipment to
any location other than a location listed on Exhibit I hereto or (ii) move or
relocate the Equipment to another location listed on Exhibit I hereto unless,
in the case of either (i) or (ii) Lessee shall provide Lessor with prior
written notice of such relocation (A) not less than thirty (30) days prior
thereto if the items of Equipment to be relocated, either individually or in
the aggregate with respect to a particular relocation, are valued on the
Equipment Schedule at less than $400,000, and (B) not less than sixty (60) days
prior thereto if the items of Equipment to be relocated, either individually or
in the aggregate with respect to a particular relocation, are valued on the
Equipment Schedule at or above $400,000; and, if
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Lessor requests, Lessee shall fully comply with the requirements of Section
14(b)(iv) hereof, including any remedial or corrective action required
thereunder prior to such relocation, or (b) except for the Subleases being
entered into on the date hereof or as otherwise provided in Section 16(a)
hereof, sell, convey, transfer, encumber, part with possession of, assign or
sublease any item of Equipment or any of its rights hereunder, and any such
purported transaction shall be null and void and of no force or effect. Lessee
shall not, nor shall it permit any subsidiary to, attach or incorporate the
Equipment to or in any other item of equipment not subject to this Lease in
such a manner that the Equipment may be deemed to have become an accession to
or a part of such other item of equipment or a fixture on real property. If
requested by Lessor, Lessee will cause each principal item of the Equipment to
be continuously marked, in a plain and distinct manner, with an inventory
control tag furnished by Lessor. At its own expense, Lessee will cause the
Equipment to be kept and maintained as recommended by the manufacturer and in
as good operating condition as when delivered to Lessee hereunder, ordinary
wear and tear resulting from proper use alone excepted, and will provide all
maintenance and service and make all repairs or replacements reasonably
necessary for such purpose and in accordance with a maintenance program
consistent with and customary to standard industry practice and satisfactory to
Lessor. Lessee shall promptly notify Lessor when Equipment with a value of 10%
or more of the Total Funding Amount shall have been put in storage for a period
of thirty (30) days or more. While any Equipment is in storage, it shall be
maintained by Lessee in accordance with the terms hereof. If any parts of the
Equipment become worn out, lost, destroyed, damaged beyond repair or otherwise
permanently rendered unfit for use, Lessee, at its own expense, will within a
reasonable time replace such parts with replacement parts which are free and
clear of all liens, encumbrances or rights of others (other than Permitted
Liens) and have a value, utility and useful life at least equal to the parts
replaced. All parts which are added to the Equipment which are essential to the
operation of the Equipment, required by Applicable Law or the requirements of
insurance or which cannot be detached from the Equipment without materially
interfering with the operation of the Equipment or adversely affecting the
value, utility or useful life which the Equipment would have had without the
addition thereof, shall immediately become the property of Lessor, and shall be
deemed incorporated in the Equipment and subject to the terms of this Lease as
if originally leased hereunder. Lessee shall not make or permit any of its
subsidiaries to make any material alterations to the Equipment without the
prior written consent of Lessor, which consent shall not be unreasonably
withheld. Upon reasonable advance notice, Lessor and its agents shall have the
right to inspect the Equipment and all maintenance records with respect thereto
at any reasonable time during normal business hours. Lessee shall cause an
Appraisal with respect to the Equipment in form and substance satisfactory to
Lessor to be provided to Lessor at Lessee's sole expense following Lessor's
request (i) in the
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absence of a Default or a Potential Default, no more than once in every two
year period following the Lease Commencement Date and (ii) at such other times
as Lessor may request if a Default or Potential Default has occurred and is
continuing; PROVIDED, THAT Lessee shall cause such an appraisal to be provided
at Lessor's expense at any other time following Lessor's request therefor.
8. DISCLAIMER OF WARRANTIES. LESSOR, NOT BEING A SELLER (AS SUCH TERM IS
DEFINED IN THE UNIFORM COMMERCIAL CODE IN EFFECT IN ANY APPLICABLE
JURISDICTION), NOR A SELLER'S AGENT, EXPRESSLY DISCLAIMS AND DOES NOT MAKE TO
LESSEE OR ANY SUBSIDIARY OF LESSEE ANY WARRANTY OR REPRESENTATION, EXPRESS OR
IMPLIED, OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OR OTHERWISE,
INCLUDING, BUT NOT LIMITED TO: THE FITNESS FOR USE, DESIGN OR CONDITION OF THE
EQUIPMENT; THE QUALITY OR CAPACITY OF THE EQUIPMENT; THE WORKMANSHIP IN THE
EQUIPMENT; THAT THE EQUIPMENT WILL SATISFY THE REQUIREMENTS OF ANY LAW, RULE,
SPECIFICATION OR CONTRACT PERTAINING THERETO; AND ANY GUARANTY OR WARRANTY
AGAINST PATENT INFRINGEMENT OR LATENT DEFECTS, it being agreed that all such
risks, as between Lessor and Lessee or any subsidiary of Lessee, are to be
borne by Lessee. Lessor is not responsible for any direct, indirect,
incidental or consequential damage to or losses resulting from the
installation, operation or use of the Equipment or any products manufactured
thereby. All assignable warranties made by the supplier to Lessee or any
subsidiary of Lessee and assigned by Lessee or any subsidiary of Lessee to
Lessor pursuant to the Bills of Sale are hereby assigned to Lessee for and
during the term of this Lease and, following the purchase of the Equipment
pursuant to Section 21 upon the expiration of the Lease term, and Lessee agrees
to resolve all such claims directly with the supplier. Lessor shall cooperate
fully with Lessee with respect to the resolution of such claims, in good faith
and by appropriate proceedings at Lessee's expense. Any such claim shall not
affect in any manner the unconditional obligation of Lessee to make rent
payments hereunder.
9. FEES AND TAXES. (a) To the extent permitted by law, Lessee shall
file any necessary report and return for, shall pay promptly when due, shall
otherwise be liable to reimburse Lessor (on an after-tax basis) for, and agrees
to indemnify and hold Lessor harmless from: (i) all recordation, documentary
stamp and other fees (exclusive of initial titling); and (ii) taxes
(other than taxes calculated on the basis of net income of Lessor or taxes in
the nature thereof), assessments and all other charges or withholdings of any
nature (together with any penalties, fines or interest thereon) relating to the
Equipment or this Lease or the delivery, acquisition, ownership, use,
operation, leasing, sale or subleasing of the Equipment, or upon the rentals
payable hereunder, whether the same be assessed to Lessor or Lessee. Lessor
shall provide prompt notice to Lessee of any claim for indemnification
hereunder; provided, however, that the failure to give such prompt notice shall
not affect Lessee's obligations hereunder unless such failure materially and
adversely prejudices the rights of Lessee.
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(b) If any report, return or property listing, or any fee, tax or
assessment described in sub-part (a) hereof ("Imposition") is, by law, required
to be filed by, assessed or billed to, or paid by, Lessor, Lessee at its own
expense will do all things reasonably required to be done by Lessor (to the
extent permitted by law) in connection therewith and is hereby authorized by
Lessor to act on behalf of Lessor in all respects, including (but not limited
to), the contest or protest, in good faith and by appropriate proceedings, of
the validity of any Imposition, or the amount thereof. Lessor agrees fully to
cooperate with Lessee in any such contest, and Lessee agrees to indemnify
Lessor promptly for all reasonable expenses incurred by Lessor in the course of
such cooperation. An Imposition shall be paid, subject to refund proceedings,
by Lessee if failure to pay would adversely affect Lessor's interest in the
Equipment. Lessee shall (i) reimburse Lessor upon receipt of written request
for reimbursement for any Imposition charged to or asserted against Lessor and
(ii) on request of Lessor, submit to Lessor written evidence of Lessee's
payment of Impositions and copies of all reports, returns or similar documents
relating to the Equipment. Provided that Lessee is not then in Default, if
Lessor obtains a refund of any Imposition which has been paid (by Lessee, or by
Lessor and for which Lessor has been reimbursed by Lessee), Lessor shall
promptly pay such refund to Lessee, and any amount previously refunded and
returned to Lessor shall be paid to Lessee upon the cure of all outstanding
Defaults. If Lessee fails to pay any such charges when due, except any
Imposition being contested in good faith and by appropriate proceedings as
above provided, Lessor at its option may do so, in which event the amount so
paid (including any penalty or interest incurred as a result of Lessee's
failure), plus interest thereon at the Late Charge Rate, shall be paid by
Lessee to Lessor not later than the date on which the next periodic payment of
rent is due.
(c) As used herein, the term "Lessor" shall mean and include General
Electric Capital Corporation (in its individual capacity) and each Participant,
their successors and assigns, and the consolidated Federal taxpayer group of
which each is a member.
(d) Lessee agrees that it will list and report on behalf of Lessor all
Equipment subject to this Lease to all appropriate taxing jurisdictions for
personal property tax (or personal property tax equivalent)
reporting/compliance purposes. Lessee agrees to directly pay all such personal
property tax (or personal property tax equivalent) on behalf of Lessor to the
appropriate taxing jurisdiction on a timely basis until Lessor shall otherwise
direct in writing. Lessee agrees to pay any and all penalties or interest
relating to the reporting of the aforementioned Equipment if Lessee fails to
timely and/or accurately file any applicable personal property tax return or
report or pay any applicable personal property tax (or personal property tax
equivalent) unless such failure is due to the willful misconduct or gross
negligence of Lessor. If Lessor should receive any tax assessment resulting
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from incorrect, late, or absent personal property tax reporting or payment by
Lessee, Lessee agrees to immediately reimburse Lessor upon receipt of a written
request for reimbursement for any personal property tax (or personal property
tax equivalent) charged to or assessed against Lessor. Upon written request of
Lessor, Lessee agrees to submit to Lessor copies of personal property tax
returns and reports (with, if requested, any and all applicable workpapers) and
cancelled checks or other appropriate proof of payments evidencing payment of
the relevant tax to the taxing jurisdiction.
10. LIENS. The parties intend and agree that the Equipment shall remain
personal property, and Lessee will not take any actions or positions
inconsistent therewith, notwithstanding the manner in which it may be affixed
to any real property. Lessee further agrees to maintain the Equipment free
from all claims, liens, encumbrances and legal processes whatsoever (including,
without limitation, any such claim or lien arising by reason of any legal
processes against the Equipment arising as result of an attempt to
recharacterize the Equipment from personal property to fixtures) other than
liens (a) for fees, taxes, levies, duties or other governmental charges of any
kind, liens of mechanics, materialmen, laborers, employees or suppliers and
similar liens arising by operation of law in each case incurred by Lessee in
the ordinary course of business for sums that are not yet delinquent or are
being contested in good faith by negotiations or by appropriate proceedings
which suspend the collection thereof (provided, however, that such proceedings
do not involve any substantial danger (as determined in Lessor's sole
discretion) of the sale, forfeiture or loss of the Equipment or any interest
therein) (such liens collectively referred to herein as "Permitted Liens"); and
(b) liens arising out of any judgments or awards against Lessee which have been
adequately bonded to protect Lessor's interests or with respect to which a stay
of execution has been obtained pending an appeal or a proceeding for review.
Lessee will defend, at its own expense, Lessor's title to the Equipment from
such claims, liens or legal processes. Lessee shall also notify Lessor
immediately upon receipt of notice of any lien, attachment or judicial
proceeding affecting the Equipment in whole or in part.
11. INSURANCE. (a) Lessee agrees at its own expense to keep all
Equipment insured against damage to or loss of such Equipment, with a combined
single limit per occurrence of not less than the aggregate sum of all such
amounts specified in each Equipment Schedule and having an aggregate
deductible per occurrence not in excess of $25,000; PROVIDED, THAT Lessee will
maintain flood and earthquake insurance with limits and deductibles which are
in accordance with reasonable industry practice for similarly situated
businesses in similar industries and giving effect to the location of the
Equipment. General Electric Capital Corporation (in its individual capacity
and as agent) and any successor or assignee of General Electric Capital
Corporation and each Participant shall be named as loss payee with respect to
such insurance.
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(b) Lessee agrees at its own expense to carry liability coverage for
personal injuries, death or property damage in an amount not less than $2
million. General Electric Capital Corporation (in its individual capacity and
as agent) and each Participant shall be named as an additional insured with
respect to all such liability insurance.
(c) Lessee agrees at its own expense to carry business interruption
insurance covering Lessee and its subsidiaries in amount not less than $30
Million.
(d) All insurance required by this Section 11 shall be in form and
amount and with companies reasonably acceptable to Lessor, and Lessee shall pay
the premiums therefor and deliver to Lessor evidence satisfactory to Lessor of
such insurance coverage following any material change thereto and otherwise
annually or upon Lessor's request; PROVIDED, THAT Lessee shall also cause to be
provided to Lessor, not less than fifteen (15) days prior to the scheduled
expiration or lapse of such insurance coverage, evidence satisfactory to Lessor
of renewal or replacement coverage. Each insurer shall agree, by endorsement
upon the policy or policies issued by it or by independent instrument furnished
to Lessor, (a) that it will give Lessor thirty (30) days' prior written notice
of the effective date of any material alteration or cancellation of such
policy; (b) that insurance as to the interest of any named additional insured
or loss payee other than Lessee shall not be invalidated by any actions,
inactions, breach of warranty or conditions or negligence of Lessee or any
Person with respect to such policy or policies; (c) that neither Lessor nor any
other additional insured shall have any obligation or liability for premiums in
connection with such policy; (d) that it shall waive any right to any set off
or counterclaim or any other deduction and waive any right of subrogation
against Lessor or any additional insured, except for claims as arise from
willful misconduct or gross negligence of such additional insured; and (e) to
such other matters as Lessor reasonably may request. Any co-insurance coverage
shall be in form and substance satisfactory to Lessor. Without limiting
Lessor's rights as loss payee under a standard loss payee endorsement as
required above, Lessee hereby appoints Lessor as Lessee's attorney-in-fact,
with respect to casualties causing loss or damage in excess of $250,000 or
otherwise occurring while a Default or Potential Default has occurred and is
continuing, to make proof of loss and claim for insurance, to make adjustments
with insurers and to receive payment of and execute or endorse all documents,
checks or drafts in connection with payments made as a result of such insurance
policies to the extent the same relates to the Equipment. Any reasonable
expense of Lessor in adjusting or collecting insurance shall be borne by
Lessee. Lessee agrees to immediately and fully report to Lessor if any item of
Equipment is involved in (i) an accident causing personal injury (other than an
injury or claim of injury covered by a worker's compensation policy in the
ordinary course of business) or (ii) property damage in excess of $25,000.
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12. LOSS AND DAMAGE. (a) Lessee assumes the risk of direct and
consequential loss and damage to the Equipment from all causes. Except as
provided in this Section for discharge upon payment of Stipulated Loss Value
and all other amounts due, no loss or damage to the Equipment or any part
thereof shall release or impair any obligations of Lessee under this Lease.
Lessee agrees that Lessor shall not incur any liability to Lessee or any
subsidiary of Lessee for any loss of business, loss of profits, expenses, or
any other damages resulting to Lessee or any subsidiary of Lessee by reason of
any failure of or delay in delivery or any delay caused by any nonperformance,
defective performance, or breakdown of the Equipment, nor shall Lessor at any
time be responsible for personal injury or the loss or destruction of any other
property resulting from the Equipment. In the event of loss or damage to the
Equipment which does not constitute a Total Loss (as hereinafter defined),
Lessee shall, at its sole cost and expense, promptly repair and restore such
item of the Equipment to the condition required by this Lease. Provided that
Lessee is not then in Default, (a) upon receipt of evidence reasonably
satisfactory to Lessor of completion of such repairs, Lessor will apply any
insurance proceeds received by Lessor on account of such loss to the cost of
repairs and (b) any excess proceeds remaining upon the completion of such
repairs shall be returned to Lessee.
(b) Upon the occurrence of the actual or constructive total loss of
any item of the Equipment, or the loss, theft or destruction of any item of the
Equipment or damage to any item of the Equipment to such extent as shall make
repair thereof uneconomical (in Lessee's reasonable discretion) or shall render
any item of the Equipment permanently unfit for normal use or the condemnation,
confiscation, requisition, seizure, forfeiture or other taking of title to or
use of any item of the Equipment (as established to the reasonable satisfaction
of Lessor; any such occurrence being herein referred to as a "Total Loss"),
during the term of this Lease, Lessee shall give prompt notice thereof to
Lessor. If the date of occurrence of the Total Loss is fifteen (15) or fewer
days before such next date for the payment of rent, (i) on the next date for
the payment of rent Lessee shall pay to Lessor the rent then due on such date,
and (ii) on the second date for the payment of rent following the date of
occurrence of the Total Loss, Lessee shall pay to Lessor the rent then due on
such date plus the Stipulated Loss Value of the item or items of Equipment with
respect to which the Total Loss has occurred and any other sums then due
hereunder with respect to the Equipment (less any insurance proceeds or
condemnation award actually paid to Lessor). If the date of occurrence of the
Total Loss is more than fifteen (15) days before such next date for the payment
of rent, Lessee shall pay to Lessor the rent then due on such next payment date
plus the Stipulated Loss Value of the item or items of the Equipment with
respect to which the Total Loss has occurred and any other sums then due
hereunder with respect to that Equipment (less any insurance proceeds or
condemnation award actually paid to Lessor). Upon making such payments of
rent, Stipulated Loss Value
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and other amounts then due, this Lease and the obligation to make future rental
payments shall terminate solely with respect to the Equipment or items thereof
so paid for and (to the extent applicable) Lessee shall become entitled to
such Equipment and the right to receive any future insurance proceeds or
condemnation award in respect thereof as is where is without warranty, express
or implied, with respect to any matter whatsoever, except as provided in the
following sentence. Lessor shall deliver to Lessee a bill of sale transferring
and assigning to Lessee without recourse or warranty (except that Lessor shall
represent and warrant that it has whatever title Lessee or the applicable
subsidiary of Lessee conveyed to it subject to any Permitted Liens and any
liens, claims or encumbrances required to be removed by Lessee pursuant to the
terms hereof), all of Lessor's right, title and interest in and to such
Equipment. Lessor shall not be required to make and may specifically disclaim
any representation or warranty as to the condition of the Equipment or any
other matters. As used in this Lease, "Stipulated Loss Value" and "Termination
Value" shall mean the product of the Total Funding Amount (designated on the
appropriate Equipment Schedule) of the Equipment for which such calculation is
being made and the applicable percentage factor set forth on the Schedule of
Stipulated Loss Values or the Schedule of Termination Values (as applicable)
attached to the Equipment Schedule. Stipulated Loss Value and Termination
Value shall be determined as of the next date on which a payment of rent is or
would be due after a Total Loss or other termination of this Lease, after
payment of any rent due on such date, and the applicable percentage factor
shall be that which is set forth with respect to such Payment Date. After
payment of the final payment of rent due under the term of this Lease with
respect to any item of Equipment, Stipulated Loss Value and Termination Value
shall be determined as of the date of termination of this Lease with respect to
such item of Equipment after payment of any such rent due, and the applicable
percentage factor shall be the last percentage factor set forth on the Schedule
of Stipulated Loss Values or the Schedule of Termination Values (as
applicable).
13. REDELIVERY. Subject to the provisions of Sections 12 and 21 hereof,
if Lessor requires the return of any Equipment following the occurrence of a
Default under Section 15 hereof, Lessee shall at its own risk and expense,
return the Equipment to Lessor in the same condition as when delivered to
Lessee hereunder, ordinary wear and tear resulting from proper use thereof
excepted, and in such operating condition as is capable of performing its
originally intended use, free and clear of all liens, encumbrances or rights of
others whatsoever except liens, encumbrances or rights resulting from claims
against Lessor not attributable to the transactions contemplated herein and
otherwise in accordance with the terms of this Lease, by the assembling,
crating, insuring and delivering of such Equipment by knowledgeable
professionals in accordance with manufacturer's standards and specifications,
if available and if not so available, in accordance with industry standards for
new equipment, with all sumps and tanks clean and dry and no Hazardous
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Materials located in or on the Equipment and together with all maintenance and
service records and all software and software documentation necessary for the
operation of the Equipment to such locations as Lessor shall specify within the
continental United States. Return shall be completed within forty-five (45)
days after termination of this Lease with respect to such item of Equipment.
In addition to Lessor's other rights and remedies hereunder, if any item of the
Equipment is not returned in a timely fashion, or if repairs are necessary to
place the Equipment in the condition required in this Section, Lessee shall
continue to pay to Lessor rent in respect of such item of Equipment at the
last prevailing lease rate hereunder for the period of delay in redelivery, or
for the period of time reasonably necessary to accomplish such repairs together
with the cost of such repairs, as applicable. Lessor's acceptance of such rent
on account of such delay or repair does not constitute a renewal of the term of
this Lease or a waiver of Lessor's right to prompt return of the Equipment in
proper condition.
14. INDEMNITY/ENVIRONMENTAL MATTERS. (a) GENERAL INDEMNITY. Lessee assumes
and agrees to indemnify, defend and keep harmless General Electric Capital
Corporation (in its individual capacity and as agent) and each Participant,
their successors and assigns, and their agents and employees (each an
"Indemnitee" and collectively "Indemnitees"), from and against any and all
losses, claims and expenses, including legal expenses (other than such losses,
claims or expenses as may result from the gross negligence or wilful misconduct
of such party, its agents or employees), arising on account of the ordering,
acquisition, delivery, install- ation or rejection of the Equipment, the
ownership of the Equipment during the term of this Lease, the possession,
maintenance, use, condition (including without limitation, latent and other
defects and whether or not discoverable by Lessor or Lessee or any subsidiary
of Lessee, any claim in tort for strict liability, and any claim for patent,
trademark or copyright infringement) or operation of any item of the Equipment,
and by whomsoever used or operated during the term of this Lease with respect
to that item of the Equipment, the loss, damage, destruction, removal, return,
surrender, sale or other disposition of the Equipment, or any item thereof, as
well as all expenses paid or incurred in connection with the amendment,
modification and administration of, and any restructuring, refinancing or
workout involving, the Lease, the Subleases and the other documents and
agreements executed in connection herewith and therewith and the collection and
enforcement of the Lease, the Subleases and such other documents and
agreements. Lessor shall give Lessee prompt notice of any claim or liability
hereby indemnified against; provided, however, that the failure to give such
prompt notice shall not affect Lessee's obligations hereunder unless such
failure materially and adversely prejudices the rights of Lessee. Lessee shall
be entitled to control the defense of any claim or liability hereby indemnified
against, so long as Lessee is diligently pursuing such defense and no Default
or Potential Default shall have occurred and
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be continuing; provided, however, that Lessee shall not be entitled to control,
or to assume the defense of, any such action, suit or proceeding, if and to the
extent that in the reasonable opinion of the Indemnitee the claims shall
involve the potential imposition of criminal liability on such Indemnitee or if
a Default or Potential Default shall have occurred and be continuing or Lessee
shall not be diligently defending such claim; provided further, however, that
Lessor shall have the right to approve defense counsel selected by Lessee
(which approval shall not unreasonably be withheld). In the event Lessee
assumes the defense of any such action, any Indemnitee shall have the right to
employ separate counsel in such action and participate therein, but the fees
and expenses of such counsel shall be at the expense of such Indemnitee, unless
(i) the employment of such counsel has been specifically authorized by Lessee,
or (ii) the counsel employed by Lessee has advised such Indemnitee that (x)
representation of such Indemnitee by the same counsel would be inappropriate
under the applicable standards of professional conduct due to actual or
potential conflicts of interest or (y) such counsel's representation of such
Indemnitee would be likely to involve such counsel in representing differing
interests which could adversely affect either the judgment or loyalty of such
counsel to such Indemnitee, whether it be a conflicting, inconsistent, diverse
or other interest (in which case Lessee shall not have the right to assume the
defense of such action on behalf of such Indemnitee; it being understood,
however, that Lessee shall not, in connection with any one such action, or
separate but substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys, and
of any local counsel retained by said firm, at any one time for each such
Indemnitee, which firm shall be designated in writing by such Indemnitee).
Lessee shall not agree to the settlement of any claim, dispute or other
proceeding giving rise to any claim for indemnification hereunder or make any
admission of any liability (including any civil or criminal liability or any
liability arising under any Environmental Laws and Regulations) on behalf of
any Indemnitee, without the prior written consent of such Indemnitee.
(b) ENVIRONMENTAL MATTERS. (i) Lessee hereby represents, warrants and
covenants that all approvals required to be taken, given or obtained at any time
during the term hereof from any governmental authority, to the extent relating
to environmental protection (including, without limitation, with respect to
solid and liquid waste disposal, waste water disposal, air pollution and noise
pollution), health and safety or the operation or maintenance of the Equipment,
have been or will be as and when required duly taken, given or obtained, as the
case may be and, except as set forth on Exhibit O hereto, no Hazardous Materials
have been or will be disposed of or released (as such term is used in CERCLA)
into, under or on the Premises. Lessee hereby further represents and warrants
that neither Lessee nor any of its subsidiaries is a treatment, storage or
disposal facility requiring a permit under
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the Resource Conservation and Recovery Act, 42 U.S.C. [Section] 6901 ET SEQ.,
the regulations thereunder or any state analog. Lessee hereby covenants and
agrees that during the term of this Lease the Equipment will not be used in
connection with any treatment, storage or disposal facility requiring a permit
under the Resource Conservation and Recovery Act, 42 U.S.C. [Section] 6901 et
seq., the regulations thereunder or any state analog and if at any time the
Equipment is located on any Premises during the term of this Lease that becomes,
constitutes or qualifies as such a treatment, storage or disposal facility
Lessee shall relocate such Equipment within 30 days thereof in accordance with
Section 7 hereof.
(ii) Except as set forth on Exhibit O hereto, Lessee hereby
represents, warrants and covenants that the location, operation, use and
maintenance of the Equipment and Lessee's and each of its subsidiaries'
business operations on the Premises comply and shall continue to comply in all
material respects with all applicable laws and any restrictive covenant or deed
restriction (of record or otherwise) affecting the Equipment or the Premises,
including all applicable zoning ordinances and building codes, flood disaster
laws and health and environmental laws and regulations and other Applicable
Laws, including, but not limited to, The Comprehensive Environmental Response
Compensation and Liability Act of 1980, 42 U.S.C. [Section] 9601 ET SEQ., as
amended ("CERCLA"), the Resource Conservation and Recovery Act of 1976, as
amended by the Solid Waste Disposal Act, as amended by the Hazardous and Solid
Waste Amendments of 1984, 42 U.S.C. [Section] 6901 ET SEQ., the Federal Water
Pollution Control Act, as amended by the Clean Water Act of 1977, 33 U.S.C.
[Section] 1251 ET SEQ., the Toxic Substances Control Act of 1976, 15 U.S.C.
[Section] 2601 ET SEQ., the Emergency Planning and Community Right-to-Know Act
of 1986, 42 U.S.C. [Section] 11001 ET SEQ., the Clean Air Act of 1966, as
amended, 42 U.S.C. [Section] 7401 ET SEQ., the National Environmental Policy Act
of 1975, 42 U.S.C. [Section] 4321, the Rivers and Harbors Act of 1899, 33 U.S.C.
[Section] 401 ET SEQ., the Occupational Safety and Health Act of 1970, as
amended, 29 U.S.C. [Section] 651 ET SEQ., the Safe Drinking Water Act of 1974,
as amended, 42 U.S.C. [Section] 300(f) ET SEQ., the Endangered Species Act of
1973, as amended, 16 U.S.C. [Section] 1531, ET SEQ., and the Oil Pollution Act
of 1990, 33 U.S.C. [Section] 2701 ET SEQ., and all other rules, regulations and
guidance documents promulgated or published thereunder, and any state, regional,
county or local statute, law, rule, regulation or ordinance relating to public
health, safety or the environment, including, without limitation, releases,
discharges, emissions or disposals to air, water, land or groundwater, or
relating to the withdrawal or use of groundwater, to the use, handling or
disposal of polychlorinated biphenyls, asbestos or urea formaldehyde, to the
treatment, storage, disposal or management of hazardous substances (including,
without limitation, petroleum, its derivatives, by-products or other
hydrocarbons), or relating to exposure to toxic, hazardous, or other controlled,
prohibited or regulated substances, to the transportation, storage, disposal,
management or release of gaseous or liquid substances, and any regulation,
order, injunction,
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judgment, declaration, notice or demand issued thereunder. All of the foregoing
shall be collectively referred to in this Lease as "Environmental Laws and
Regulations" with respect to the matters described on Exhibit O, Lessee agrees
that it will, at its sole cost and expense, undertake all appropriate action
that may be required to remediate such matters and thereafter monitor such
site conditions, utilizing the highest industry standards applicable to
environmental professionals performing similar services including, without
limitation, all clean-up, remedial, restorative and removal work required by any
Governmental Authority, until such remediation is completed.
(iii) Lessee shall indemnify and hold each Indemnitee
harmless from and against any and all claims, losses, liabilities, penalties,
fines, judgments, proceedings, actions and expenses (including without
limitation attorneys' fees, consultants' fees, response, removal,
containment, remediation and clean up costs and other costs incurred in the
defense of any claim, proceeding or action) (herein collectively referred to as
"Environmental Expenses" and individually as an "Environmental Expense"), other
than such losses, claims or expenses as may result solely from the gross
negligence or wilful misconduct of such party, its agents or employees, which
may be asserted against Lessee or any of its subsidiaries or any Indemnitee in
connection with (A) any actual or alleged violation by Lessee or any of its
subsidiaries of, failure of Lessee or any of its subsidiaries to comply with, or
liability of Lessee or any of its subsidiaries arising under any Environmental
Laws and Regulations; (B) any use, presence, suspected presence, disposal,
storage, treatment, transportation, handling, generation or actual or alleged
release or threatened release into the environment of any Hazardous Materials
including, without limitation, the matters identified on Exhibit O; (C) any
actual or alleged soil, surface water or groundwater contamination resulting
from any condition which existed on or before the date hereof or activities
which occur after the date hereof or otherwise relate to the acquisition, use,
lease, maintenance, sale, delivery or redelivery of the Equipment or from
Lessee's or its subsidiaries' business operations on the Premises including,
without limitation, the matters identified on Exhibit O; (D) any asbestos or
asbestos-containing material at the Premises, including without limitation all
costs and expenses relating to any removal thereof or any repairs, maintenance,
encapsulation, or remedial activity related thereto, whether or not required
under any Environmental Laws and Regulations; (E) any polychlorinated biphenyls
("PCBS") or PCB equipment deposited or present at the Premises including without
limitation all costs and expenses related to any removal thereof or any repairs,
maintenance or remedial action related thereto, whether or not required under
any Environmental Laws and Regulations; and (F) any illness, disability, injury,
or death of any person, or damage to property arising out of or alleged to have
arisen out of exposure to activities, substances or conditions occurring after
the date hereof or otherwise relating to the acquisition, use, lease,
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maintenance, sale, delivery or redelivery of the Equipment or from Lessee's or
any of its subsidiaries' business operations on the Premises, regardless of when
any such illness, disability, injury, death or damage is alleged to have
occurred or becomes known. For purposes hereof, "HAZARDOUS MATERIALS" shall
mean any pollutants, contaminants, or hazardous substances, hazardous wastes,
toxic substances, regulated substances and wastes, radioactive materials,
polychlorinated biphenyls, asbestos and petroleum, including crude oil or any
fraction thereof, as now or hereafter defined or regulated as such by the
Environmental Laws and Regulations.
(iv) Lessor reserves the right to require environmental
audits (including, in connection with the relocation of any Equipment pursuant
to Section 7(a) hereof, an additional environmental audit for any such
location relating to each such relocation) on any of the Premises where the
Equipment is or will be located, such audits to be performed at Lessor's request
and, if Lessor shall have reasonable cause to believe that a violation of
Environmental Laws has occurred or could reasonably be expected to occur, at
Lessee's expense by an independent environmental consultant reasonably
acceptable to Lessor. In the event that any such audit discloses any violation
of applicable Environmental Laws and Regulations, Lessee shall, at its sole
expense, promptly commence remedial, corrective and other actions necessary to
resolve such violation or problem in full compliance with all Environmental Laws
and Regulations.
(c) TAX GROSS-UP. Lessee further agrees that with respect to any
payment or indemnity under this Section 14, such indemnity shall include any
amount necessary to hold the Indemnitee harmless on an after tax basis from all
federal, state, local and foreign governmental taxes required to be paid by such
recipient with respect to such payment or indemnity.
15. DEFAULT; REMEDIES. (a) Lessee shall be deemed to be in default
hereunder ("Default") if:
(1) Lessee shall fail to make (A) any payment of rent, Stipulated Loss
Value, Termination Value or amount due under Section 20 or 21 hereof when due or
(B) any other amount payable hereunder within five (5) days after the same shall
have become due; or
(2) Lessee shall fail to obtain and maintain in full force and effect
the insurance required herein; or
(3) Lessee shall fail to perform or observe any other covenant,
condition or agreement to be performed or observed by it hereunder or under any
document or instrument executed and delivered by Lessee in connection herewith
and such failure shall continue unremedied for a period of thirty (30) days
after written notice thereof to Lessee by Lessor; or
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(4) Lessee or any subsidiary of Lessee shall (A) be generally not paying
its debts as they become due; or (B) take action for the purpose of invoking the
protection of any bankruptcy or insolvency law, or any such law is invoked
against or with respect to Lessee, any subsidiary of Lessee or its property, and
any such petition filed against Lessee or any subsidiary of Lessee is not
dismissed within sixty (60) days or, if such petition is being contested by
Lessee or any subsidiary of Lessee, ninety (90) days; or
(5) Lessee shall make or permit any unauthorized assignment, transfer or
sublease of this Lease, the Equipment or any interest therein; or
(6) any certificate, statement, representation or warranty contained
herein or in any Bill of Sale, Estoppel/Waiver Agreement, Consent to Sublease,
Sublease, Subsidiary Guaranty, Subordination Agreement or other document,
instrument or certificate delivered in connection herewith or provided pursuant
to Section 4 or 5 hereof shall prove to have been false in any material respect
at the time as of which the facts therein set forth were stated or certified; or
(7) (A) Lessee or any of its subsidiaries shall be in default under any
Sublease or Consent to Sublease; (B) Lessee or any of its subsidiaries shall be
in default under any obligation for the payment of borrowed money, for the
deferred purchase price of property or for the payment of any rent under any
lease agreement (which shall include any equipment lease entered into between
Lessee and Lessor after the date hereof), and any applicable grace period with
respect thereto shall have expired; (C) Lessee or any of its subsidiaries shall
have violated any term or condition of the Credit Agreement or any agreement
entered into in connection therewith or any agreement entered into in connection
with the Receivables Funding Facility or another event or condition shall have
occurred which has caused or would cause, after the giving of notice or the
expiration of time or otherwise, any default thereunder and any applicable grace
period with respect thereto shall have expired; (D) Lessee or any of its
subsidiaries shall have violated any term or condition of any of the Indentures,
any of the Senior Debt or any Subordinated Debt or another event or condition
shall have occurred which has caused or would cause, after the giving of notice
or the lapse of time or otherwise, any default thereunder, and any applicable
grace period with respect thereto shall have expired; or (E) Lessee shall fail
to repay or refinance the Senior Notes issued under the Indenture dated as of
June 1, 1992 on or prior to the scheduled maturity date of such Notes to a
maturity date after the expiration of the Lease term; or
(8) Lessee or any subsidiary of Lessee which has executed a Sublease or
a Subsidiary Guaranty shall have terminated its corporate existence,
consolidated with, merged into, or conveyed or leased substantially all of its
assets as an entirety to any Person
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(such actions being referred to as an "Event"), except (A) with respect to
Lessee and its subsidiaries, as permitted under Section 4(e) hereof (subject to
compliance by Lessee or the applicable subsidiary with the conditions set forth
in this clause (8); (B) with respect to Lessee, if not less than sixty (60) days
prior to such Event: (x) such Person is organized and existing under the laws of
the United States or any state, and executes and delivers to Lessor an agreement
containing an effective assumption by such Person of the due and punctual
performance of this Lease and all related documents and instruments; and (y)
Lessor has consented to such assumption by such Person; and (C) with respect to
any subsidiary of Lessee, if not less than sixty (60) days prior to such Event:
(x) such Person is organized and existing under the laws of the United States or
any state and executes and delivers to Lessor an agreement containing an
effective assumption by such Person of the due and punctual performance of any
applicable Sublease, Consent to Sublease and Subsidiary Guaranty, as well as all
related documents and instruments; and (y) such Person is Lessee or a subsidiary
of Lessee; or
(9) if Lessee is a privately held corporation and effective control of
Lessee's voting capital stock issued and outstanding from time to time is not
retained by the present stockholders (unless Lessee shall have provided sixty
(60) days' prior written notice to Lessor of the proposed disposition of stock
and Lessor shall have consented thereto in writing); or
(10) if Lessee is a publicly held corporation there shall occur a
material change in the ownership of Lessee's capital stock unless (A) the entity
surviving such transaction (if other than Lessee) shall expressly assume the
obligations of Lessee under this Lease and the related instruments and documents
by an assumption agreement in form and substance satisfactory to Lessor and (B)
after giving effect to such change in control, there shall be no deterioration
in the financial condition or credit quality of such Person from that of Lessee
which existed immediately prior to such change in control as determined by
Lessor in its sole and absolute discretion; or
(11) there occurs any default, termination or rescission under any
Sublease, any Consent to Sublease, any Subsidiary Guaranty, any Subordination
Agreement or any other document or instrument executed in connection with this
Lease or any Sublease or any such agreement, document or instrument is deemed
void or unenforceable.
(b) Solely for the purpose of this Section 15, each Equipment Schedule
executed pursuant to this Lease shall constitute a separate instrument of lease;
provided, however, that the occurrence of a Default with respect to any
Equipment Schedule shall, at the sole discretion of Lessor (as set forth in a
written declaration to Lessee) constitute a Default with respect to each
Equipment Schedule. Notwithstanding anything set forth herein,
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Lessor may exercise all rights and remedies hereunder independently with
respect to each Equipment Schedule.
(c) Upon a Default, Lessor may, at its option, declare this Lease to be
in default by written notice to Lessee (without election of remedies), and at
any time thereafter, may do any one or more of the following, all of which are
authorized by Lessee:
(1) declare the Stipulated Loss Value (such amount representing
a liquidated damage formula which the parties reasonably believe represents the
anticipated harm to Lessor of a Default and not a penalty) of the Equipment
(determined as of the next date on which a payment is or would have been due
after the declaration of a Default, or as of the final Payment Date if such
determination is made after the final Payment Date for such item of Equipment),
together with all other sums then due hereunder with respect to such Equipment,
immediately due and payable with respect to any or all of the Equipment (the
parties also deem that such amount best reflects the damages Lessor would
sustain in the event of the bankruptcy or insolvency of Lessee or the applicable
subsidiary executing a Sublease and this Lease or the applicable Sublease were
not assumed); and/or
(2) accelerate and sue for and recover all rent and other
payments due hereunder, then accrued or thereafter accruing, with respect to any
or all of the Equipment (discounted to present value at a rate equal to the
discount rate of the Federal Reserve Bank of New York in effect on the date of
such Default); and/or
(3) require Lessee to assemble any or all of the Equipment at
the location to which the Equipment was delivered or the location to which such
Equipment may have been moved by Lessee or any subsidiary executing a Sublease
or such other location in reasonable proximity to either of the foregoing as
Lessor shall designate; or to return promptly, at Lessee's expense, any or all
of the Equipment to Lessor at the location and in the condition required under
Section 13 hereof and otherwise in accordance with all of the terms of Section
13 hereof; and/or
(4) enter into any premises where any item of Equipment is
believed to be located and take possession of and render unusable by Lessee or
any subsidiary executing a Sublease any or all of the Equipment, wherever it may
be located, without any court order or other process of law and without
liability for any damages occasioned by such taking of possession (other than as
is caused by the gross negligence or willful misconduct of Lessor) (any such
taking of possession shall constitute an automatic cancellation of this Lease as
it applies to those items taken without further notice, and such taking of
possession shall not prohibit Lessor from exercising its other remedies
hereunder); and/or
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(5) (A) sell or otherwise dispose of any or all of the
Equipment, whether or not in Lessor's possession, in a commercially reasonable
manner at public or private sale with notice to Lessee (the parties agreeing
that ten (10) days' prior written notice shall constitute adequate notice
of such sale), with the right of Lessee to purchase at such sale and the right
of Lessor to purchase and apply the net proceeds of such disposition, after
deducting all costs of such disposition (including but not limited to costs of
transportation, possession, storage, refurbishing, advertising and attorneys'
and brokers' fees), to the Obligations of Lessee hereunder, including amounts
payable pursuant to clause (c) (1) or (2) above, with Lessee remaining liable
for any deficiency and Lessor having the obligation to reimburse Lessee on
account of any excess of the net proceeds of disposition after such deductions
over such Obligations, and the right to use Lessee's or the applicable
subsidiary's premises for any or all of the foregoing without liability for
rents, costs, damages or otherwise; or (B) retain any repossessed Equipment and
credit the reasonable market value thereof to the Obligations of Lessee
hereunder, including amounts payable pursuant to clause (c)(1) or (2) above,
with Lessee remaining liable for any deficiency and with Lessor having the
obligation to reimburse Lessee on account of any excess of such reasonable value
over such Obligations, such reasonable market value to be established by an
appraisal firm to be selected by Lessee from a list of three such firms
presented to Lessee by General Electric Capital Corporation; PROVIDED, THAT (i)
Lessee must indicate its selection by notice to General Electric Capital
Corporation within five (5) Business Days of receipt of such list, (ii) Lessee
may not reject all of such firms, and (iii) upon either the failure to select a
firm within such period or the rejection of all such firms, General Electric
Capital Corporation may select the firm to conduct such appraisal; and/or
(6) cancel this Lease as to any or all of the Equipment; and/or
(7) proceed by appropriate court action, either at law or in
equity, to enforce performance by Lessee or to recover damages for the breach
hereof; or exercise any other right or remedy available to Lessor at law or in
equity or otherwise, including without limitation any rights available to Lessor
under the Subleases, the Consents to Sublease, the Subsidiary Guaranty and all
other documents, instruments and agreements executed in connection herewith and
therewith.
Notwithstanding anything to the contrary contained in this Section 15,
in the exercise of any right, remedy or power contained or referred to in this
Section 15 or in the other Lease Documents, Lessor shall not be entitled to
retain sums in excess of the amount of the Obligations. Lessor shall render to
Lessee an accounting of the proceeds of any disposition of the Equipment or the
retention and crediting of the reasonable value thereof and
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application thereof to the Obligations reasonably promptly after such
disposition or retention and application.
(d) Unless otherwise provided above, a cancellation under this Section
15 shall occur only upon written notice by Lessor to Lessee and only with
respect to such items of the Equipment as Lessor specifically elects to cancel
in such notice. Upon such a cancellation, Lessee's obligation to continue to pay
rent hereunder shall cease with respect to such items of the Equipment as Lessor
specifically elects to cancel. Except as to such items of the Equipment with
respect to which there is a termination, this Lease shall remain in full force
and effect and Lessee shall be and remain liable for the full performance of all
its obligations hereunder. In addition, Lessee shall be liable for all legal
fees and other expenses incurred by reason of any Default or the exercise of
Lessor's remedies, including all expenses incurred in connection with the return
of any Equipment in accordance with the terms of Section 13 hereof or in placing
such Equipment in the condition required by said Section. No right or remedy
referred to in this Section is intended to be exclusive, but each shall be
cumulative and shall be in addition to any other remedy referred to above or
otherwise available at law or in equity, and may be exercised concurrently or
separately from time to time. The failure of Lessor to exercise the rights
granted hereunder upon any Default by Lessee shall not constitute a waiver of
any such right upon the continuation or reoccurrence of any such Default. In no
event shall the execution of an Equipment Schedule constitute a waiver by Lessor
of any pre-existing Default in the performance of the terms and conditions
hereof.
16. ASSIGNMENT BY LESSOR AND LESSEE. (a) WITHOUT THE PRIOR WRITTEN
CONSENT OF LESSOR, LESSEE WILL NOT ASSIGN ANY OF ITS RIGHTS HEREUNDER, SUBLET
THE EQUIPMENT OR OTHERWISE PERMIT THE EQUIPMENT TO BE OPERATED OR USED BY, OR TO
COME INTO OR REMAIN IN THE POSSESSION OF, ANYONE BUT LESSEE or a subsidiary of
Lessee pursuant to a Sublease which meets the requirements of Section 4(g)
hereof or pursuant to the Subleases being executed on the date hereof pursuant
to Section 5 hereof. No assignment or sublease, whether authorized in this
Section or in violation of the terms hereof, shall relieve Lessee of its
obligations hereunder and Lessee shall remain primarily liable hereunder.
Subject always to the foregoing, this Lease inures to the benefit of, and is
binding upon, the successors and assigns of the parties hereto.
(b) General Electric Capital Corporation may at any time assign all or
any part (and any permitted successor or assignee of General Electric Capital
Corporation may at any time assign all, but not less than all) of its rights,
obligations, title and interest hereunder, to any other Person. If Lessee is
given notice of any such assignment, Lessee shall acknowledge receipt thereof in
writing. Upon any such conveyance by General Electric Capital Corporation, the
transferee shall be deemed the "Lessor" for all purposes of the items of
Equipment to which such transfer relates
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and each reference herein to Lessor shall thereafter be deemed a reference to
the transferee to the extent of such transfer; provided, however, that in
connection with any such assignment, General Electric Capital Corporation or
an Affiliate thereof shall act as fiscal agent on behalf of all such assignees
and shall bill for, collect and receive the rentals and other sums payable under
this Lease in respect thereof.
(c) Lessee acknowledges that it has been advised that General Electric
Capital Corporation is acting hereunder as agent for itself and one or more
third parties (each being herein referred to as a "Participant" and,
collectively, as the "Participants"); that the interest of Lessor in this Lease,
the Equipment Schedules, related instruments and documents and/or the Equipment
may be assigned to or be participated in by, in whole or in part, and may be
used as security for financing obtained from, one or more Participants (the
"Syndication"). Lessee agrees that each Participant shall be directly entitled
to the benefits of Sections 9 and 14 hereof with respect to its participation in
this Lease and may exercise any and all rights of setoff. Lessee agrees to
fully cooperate with Lessor in connection with the Syndication, including
(without limitation) the execution and delivery of such other documents,
instruments, notices, opinions, certificates and acknowledgements as reasonably
may be required by Lessor or such Participant.
17. MISCELLANEOUS. (a) This Lease and the Equipment Schedule
constitute the entire agreement between the parties with respect to the subject
matter hereof and shall not be amended or altered in any manner except by a
document in writing executed by both parties.
(b) Any provision of this Lease 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.
(c) The representations, warranties and covenants of Lessee herein shall
be deemed to be continuing and to survive the closing hereunder. Each execution
by Lessee of an Equipment Schedule shall be deemed reaffirmation and warranty
that there shall have been no material adverse change in the business,
operations or financial condition or prospects of Lessee from the date of
execution hereof. The obligations of Lessee under Sections 9, 13, 14, 21 and 24
which accrue during the term of this Lease and obligations which by their
express terms survive the termination of this Lease shall survive the
termination of this Lease.
(d) Lessor represents and covenants to Lessee that, conditioned upon
Lessee performing all of the covenants and
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conditions hereof, as to claims of Lessor or Persons claiming under Lessor, so
long as no Default shall have occurred and be continuing Lessee shall
peaceably and quietly hold, possess and use the Equipment during the term of
this Lease subject to the terms and provisions hereof.
(e) If Lessee fails to perform any of its obligations hereunder, Lessor
shall have the right, but shall not be obligated, to effect such performance and
the amount of any out of pocket and other reasonable expenses of Lessor incurred
in connection with such performance, together with interest thereon at the Late
Charge Rate (in addition to any Late Payment Fee charged in connection with a
late payment of rent), shall be payable by Lessee upon demand.
(f) All notices (excluding billings and communications in the ordinary
course of business) hereunder shall be in writing, personally delivered,
delivered by overnight courier service, sent by facsimile transmission (with
confirmation of receipt), or sent by certified mail, return receipt requested,
addressed to the other party at its respective address stated below the
signature of such party or at such other address as such party shall from time
to time designate in writing to the other party; and shall be effective from the
date of mailing.
(g) This Lease shall not be effective unless and until accepted by
execution by an officer of Lessor.
18. CHATTEL PAPER. To the extent that this Lease and/or any Equipment
Schedule would constitute chattel paper, as such term is defined in the Uniform
Commercial Code as in effect in any applicable jurisdiction, no security
interest herein or therein may be created through the transfer or possession of
this Lease in and of itself without the transfer or possession of the original
of an Equipment Schedule executed pursuant to this Lease and incorporating the
Lease by reference; and no security interest in this Lease and an Equipment
Schedule may be created by the transfer or possession of any counterpart of the
Equipment Schedule other than the original thereof, which shall be identified as
the document marked "Original" and all other counterparts shall be marked
"Duplicate" or "Copy".
19. OWNERSHIP FOR TAX PURPOSES; GRANT OF SECURITY INTEREST.
(a) For income tax, personal property tax and sales tax purposes, the
parties hereto agree that it is their mutual intention that Lessee shall be
considered the owner of the Equipment and that no transfer of title to the
Equipment shall occur. Accordingly, Lessor agrees (i) to treat Lessee as the
owner of the Equipment on its federal, state and local income tax returns and on
any personal property or sales tax returns, unless such treatment violates any
applicable law or regulation, (ii) not to take actions or positions inconsistent
with such treatment on or
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with respect to its income tax, personal property tax or sales tax returns
unless the failure to take an inconsistent action or position violates any
applicable law or regulation, and (iii) not to claim any tax benefits available
to an owner of the Equipment on or with respect to its income tax returns. The
foregoing undertakings by Lessor shall not be violated by Lessor' taking a tax
position inconsistent with the foregoing sentence to the extent such position
is required by law or is taken through inadvertence so long as such inadvertent
tax position is reversed by Lessor promptly upon its discovery. Lessor shall
in no event be liable to Lessee if Lessee fails to secure any of the tax
benefits available to the owner of the Equipment.
(b) The parties hereto agree that the transactions contemplated herein
are intended as a lease; provided, however, to provide for the contingency of a
determination for other reasons that the lease so intended nonetheless creates a
security interest, Lessee grants to Lessor:
(i) to secure the prompt payment and performance as and when
due of all Obligations and indebtedness of Lessee (or any Affiliate of Lessee),
now existing or hereafter created, to Lessor pursuant to this Lease, the
documents executed and delivered by the Lessee in connection herewith or
otherwise, a first priority security interest in all right, title and interest
Lessee may now have or may hereafter acquire in, to and under the Equipment and
all accessions, substitutions and replacements thereto and therefor, and
proceeds (cash and non-cash), including insurance proceeds thereof and in
furtherance of the foregoing, Lessee shall (A) execute and deliver to Lessor, to
be recorded at Lessee's expense, Uniform Commercial Code financing statements,
statements of amendment and statements of continuation as reasonably may be
required by Lessor to perfect and maintain perfected the first priority security
interest granted by Lessee herein and (B) execute and deliver, to be recorded at
Lessee's expense, any such forms and documents as reasonably may be required by
Lessor to evidence Lessor's title to and security interest in any item of
Equipment which is covered by a certificate of title issued under a statute of
any applicable jurisdiction; and
(ii) to the extent the Equipment covered by the Lease may
constitute or be deemed to be Lessee's inventory, as such term is defined in the
Uniform Commercial Code of any applicable jurisdiction (the "Inventory"), a
security interest in such Inventory, which shall mean all Equipment
offered or furnished under any contract of service or intended for sale or
lease, any and all additions, attachments, accessories and accessions thereto,
any and all substitutions, replacements or exchanges therefor, any and all
leases, subleases, rentals, accounts and contracts with respect to the Equipment
which may now exist or hereafter arise, together with all rights thereunder and
all rental and other payments and purchase options due and to become due
thereunder, any and all sales proceeds payable for such property, all insurance,
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<PAGE> 31
bonds and/or other proceeds of the property and all returned or repossessed
Equipment now or at any time or times hereafter in the possession or under the
control of Lessee or Lessor; PROVIDED, HOWEVER, THAT LESSEE IS NOT AUTHORIZED
TO SELL OR SUBLEASE (except as provided in Sections 4(g), 5 and 16(a) hereof)
THE EQUIPMENT OR THE INVENTORY; and
(iii) a security interest in all accounts, as such term is defined in
the Uniform Commercial Code of any applicable jurisdiction, now owned by Lessee
or hereafter acquired or owned by Lessee that might arise or result from any
lease or other disposition of any of the Equipment or the Inventory, including,
but not limited to, any right of Lessee to payment for Equipment sold or leased
or under any contract for services whether or not evidenced by an instrument or
chattel paper and whether or not such right has been earned by performance.
20. EARLY TERMINATION AND PURCHASE OPTION. (a) Notwithstanding any
provision in this Lease to the contrary, if no Default shall have occurred and
be continuing, Lessee shall have the option exercisable by written notice
delivered not less than 90 days prior to the proposed purchase date, on any two
Payment Dates in a calendar year, to purchase any item of Equipment that has
become technologically obsolete for Lessee's purposes at a purchase price equal
to the sum of (i) the Termination Value of such Equipment, plus (ii) if the
Option to Convert has been exercised, the Make Whole Premium, if any, plus (iii)
in the case of any termination prior to one year after the Lease Commencement
Date, an additional amount equal to 1% of the Termination Value of such
Equipment (such amount, the "Termination Premium") in payment of Lessor's
administrative expenses, provided that (A) no Termination Premium shall be
payable in the event that the purchase is caused by a change in control of
Lessee's voting stock; and (B) the Termination Premium shall be equal to 0.5% of
the Termination Value of such Equipment if the purchase price is paid from the
proceeds of any offering of Lessee's equity securities that is registered under
the Securities Act of 1933, as amended, plus (iv) all rent and other sums then
due on such date, plus (v) all taxes and charges upon sale and all expenses
incurred by Lessor in connection with such sale; PROVIDED, THAT after giving
effect to any such purchase the Total Funding Amount of all Equipment purchased
under this Section 20(a) shall not exceed 10% of the cumulative original Total
Funding Amount of all items of Equipment subject to this Lease.
(b) In addition, on any Payment Date, Lessee may purchase on any such
date all, but not less than all, of the Equipment which is then in existence.
Unless and until Lessee exercises its rights under this Section 20 or Lessee
purchases the Equipment under Section 21 below, nothing contained herein shall
give or convey to Lessee any right, title or interest in and to any Equipment
except as a lessee. The purchase price for the Equipment so purchased under
this Section 20(b) shall be equal to the sum of (i) the Termination Value of the
Equipment, plus (ii) if the Option
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<PAGE> 32
to Convert has been exercised, the Make Whole Premium, if any, plus (iii) in the
case of a termination prior to one year after the Lease Commencement Date, the
Termination Premium, subject to the same provisos as are set forth in
clauses (A) and (B) of Section 20(a)(iii) above, plus (iv) all rent and other
sums due on such date, plus (v) all taxes and charges upon sale and all expenses
incurred by Lessor in connection with such sale.
(c) If Lessee is required to purchase any items of Equipment pursuant
to Section 4(f) hereof, or to pay the Stipulated Loss Value of any Equipment (x)
upon an event of Total Loss with respect to such Equipment pursuant to Section
12 hereof or (y) following the occurrence of a Default pursuant to Section
15(c)(i) hereof, Lessee shall pay to Lessor an amount equal to the sum of (i)
the Termination Value or Stipulated Loss Value, as so required of such
Equipment, plus (ii) if the Option to Convert has been exercised, the Make Whole
Premium, if any, plus (iii) in the case of a termination prior to one year after
the Lease Commencement Date, an additional amount equal to the Termination
Premium, subject to the same provisos as are set forth in clauses (A) and (B) of
Section 20(a)(iii) above, plus (iv) all other rent and other sums then due on
such date plus (v) all taxes and charges upon sale and all other reasonable
expenses incurred by Lessor in connection with such sale.
(d) For purposes hereof, "Make Whole Premium" shall mean a premium
equal to the excess, if any of (i) the aggregate present value as of the date of
purchase of the sum of (A) the remaining scheduled rent payments for all such
items of Equipment being purchased on such date plus (B) the full amount of the
Fixed Purchase Price that but for exercise of the options or required
repurchases or payments contained in this Section 20 would be payable on the
final Payment Date for such items of Equipment, discounted to the date of
payment at the Reinvestment Rate, over (ii) the aggregate present value as of
the date of purchase of the sums of (A) the remaining scheduled rent payments
for all such items of Equipment being purchased on such date plus (B) the full
amount of the Fixed Purchase Price that but for exercise of the option contained
in this Section 20 would be payable on the final Payment Date for such items of
Equipment, discounted to the date of payment at the fixed Contract Rate;
provided, however, that if the Reinvestment Rate is equal to or higher than the
fixed Contract Rate, the Make Whole Premium shall be zero.
(e) "Reinvestment Rate" shall mean the yield to maturity of United
States Treasury Notes with a maturity equal to the remaining term of the Lease
as published in THE WALL STREET JOURNAL three (3) Business Days prior to such
purchase. If no maturity exactly corresponds to such remaining term, the
Reinvestment Rate shall be interpolated on a straight line basis, utilizing the
yields for the two maturities which most closely correspond to the requisite
maturity. On the effective date of termination Lessee shall pay to Lessor all
amounts specified in this Section 20,
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<PAGE> 33
whereupon, Lessor will transfer to Lessee, without recourse or warranty (except
that Lessor shall represent and warrant that it has whatever title Lessee
conveyed to it subject to any Permitted Liens and any liens, claims or
encumbrances required to be removed by Lessee pursuant to the terms hereof), all
of Lessor's right, title and interest in and to such Equipment and this Lease
shall terminate with respect to such Equipment being purchased (but only as to
such Equipment).
21. END OF LEASE PURCHASE REQUIREMENT.
Unless Lessee has exercised its option to terminate this Lease pursuant
to Section 20(b) hereof, upon the expiration of the term of this Lease, Lessee
shall purchase all of the Equipment described on Equipment Schedules which
remains subject to the terms of this Lease upon the following terms and
conditions: At the expiration of the term of this Lease, Lessee shall pay to
Lessor in cash the Fixed Purchase Price for the Equipment so purchased,
determined as hereinafter provided. The Fixed Purchase Price of the Equipment
shall be an amount equal to (i) $800,448, less (ii) an amount determined by
multiplying $800,448 by a fraction, the numerator of which shall be equal to the
sum of (A) the Total Funding Amount of all items of Equipment theretofore
purchased by Lessee under Sections 20(a), (b) or (c) hereof, the purchase price
of which has been paid to Lessor and (B) the Total Funding Amount of all items
of Equipment as to which a Total Loss has occurred and Lessee has paid Lessor
the Stipulated Loss Value thereof, and the denominator of which shall be the
original Total Funding Amount of all Equipment subject to this Lease on the
Lease Commencement Date, together with all rent and other sums then due on such
date, plus all taxes and charges upon sale and all other expenses incurred by
Lessor in connection with such sale. Upon satisfaction of the conditions
specified in this Section 21, Lessor will transfer, without recourse or warranty
(except that Lessor shall represent and warrant that it has whatever title
Lessee conveyed to it subject to any Permitted Liens and any liens, claims or
encumbrances required to be removed by Lessee pursuant to the terms hereof) all
of Lessor's right, title and interest in and to the purchased Equipment. Except
as specified in the preceding sentence with respect to title, Lessor shall not
be required to make and may specifically disclaim any representation or warranty
as to the condition of such Equipment and other matters.
22. RENT CALCULATIONS.
All rent, Stipulated Loss Value and Termination Value calculations shall
be as set forth in the Equipment Schedule.
23. CONFIDENTIALITY.
Lessor agrees to exercise reasonable efforts to keep any non-public
information delivered or made available to it pursuant to the Lease or any other
Lease Document, which Lessee has
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<PAGE> 34
identified in writing as confidential information, confidential from any Person
other than officers, employees, agents, designees or representatives of Lessor
who are or are expected to become engaged in evaluating, approving,
structuring or administering the Lease, any Sublease, any other Lease Document
or any other transaction contemplated hereby or thereby; PROVIDED, THAT nothing
herein shall prevent Lessor from disclosing such information (a) to any bona
fide prospective or actual assignee, transferee or Participant that has agreed
in writing to comply with this Section 23 in connection with the contemplated
assignment, transfer or participation of any interest herein or therein; (b) to
any of its Affiliates to the extent any such Affiliate requires such information
in the ordinary course of Lessor's credit committee or asset management
procedures; (c) to any of its legal counsel, accountants, and other professional
advisors; (d) as required or requested by any Governmental Authority or
representative thereof or pursuant to legal process; or (e) as required in
connection with the exercise of any remedy under the Lease, any Sublease or any
of the other Lease Documents; PROVIDED, FURTHER, that a determination by Lessor
as to the application of the circumstances described in the foregoing clauses
(a) through (e) will be conclusive if made in good faith.
24. TRANSACTION EXPENSES.
On the Lease Commencement Date Lessee shall pay promptly all Transaction
Costs to the parties entitled thereto. For purposes hereof "Transaction Costs"
shall mean the fees, expenses and costs of documenting and closing the
transactions contemplated herein and in the Subleases being executed on the date
hereof and all related documents, instruments and agreements, including, without
limitation, the fees and expenses of counsel to Lessor, the appraisal fees, the
filing fees, due diligence costs and expenses, and all other fees and expenses
of Lessor; provided, however, in no event shall Transaction Costs include any of
Lessee's or Lessee's counsels', accountants', engineers' or other advisors' or
representatives' expenses or any other cost or expense which Lessee is required
to pay by the express terms of this Lease or any document or instrument executed
or delivered in connection herewith including, without limitation any costs,
fees or expenses incurred under or in connection with any environmental audit
required pursuant to Section 14(b)(iv) hereof or local counsel opinions required
pursuant to Section 16(c) hereof, all of which shall remain payable by Lessee in
accordance with the terms hereof.
25. USURY SAVINGS.
It is the intention of the parties hereto to comply with any applicable
usury laws to the extent that any of this Lease or any Exhibit or Schedule is
determined to be subject to such laws; accordingly, it is agreed that,
notwithstanding any provision to the contrary in any Exhibit, any Schedule or
the Lease, in no event shall this Lease or any Exhibit or any Schedule require
the payment
34
<PAGE> 35
or permit the collection of interest in excess of the maximum amount permitted
by applicable law. If any such excess interest in contracted for, charged or
received under this Lease or any Exhibit or any Schedule, or in the event that
all of the principal balance shall be prepaid, so that under any of such
circumstances the amount of interest contracted for, charged or received under
any of this Lease or any Exhibit or any Schedule shall exceed the maximum
amount of interest permitted by applicable law, then in such event (a) the
provisions of this Section 25 shall govern and control, (b) neither Lessee nor
any other person or entity now or hereafter liable for the payment hereof shall
be obligated to pay the amount of such interest to the extent that it is in
excess of the maximum amount of interest permitted by applicable law, (c) any
such excess which may have been collected shall be either applied as a credit
against the then unpaid principal balance or refunded to Lessee, at the option
of Lessor, and (d) the effective rate of interest shall be automatically
reduced to the maximum lawful contract rate allowed under applicable law as now
or hereafter construed by the courts having jurisdiction thereof. It is
further agreed that without limitation of the foregoing, all calculations of
the rate of interest contracted for, charged or received under this Lease or
any Exhibit or any Schedule which are made for the purpose of determining
whether such rate exceeds the maximum lawful contract rate, shall be made, to
the extent permitted by applicable law, by amortizing, prorating, allocating
and spreading in equal parts during the period of the full stated term of the
indebtedness evidenced hereby, all interest at any time contracted for, charged
or received from Lessee or otherwise by Lessor in connection with such
indebtedness; provided, however, that if any applicable state law is amended or
the law of the United States of America preempts any applicable state law, so
that it becomes lawful for Lessor to receive a greater interest per annum rate
than is presently allowed, Lessee agrees that, on the effective date of such
amendment or preemption, as the case may be, the lawful maximum hereunder shall
be increased to the maximum interest per annum rate allowed by the amended
state law or the law of the United States of America.
26. PAYMENTS DURING DEFAULT.
Notwithstanding anything to the contrary contained in this Lease, if
Lessee is in Default hereunder, any amount that would otherwise be paid to
Lessee under this Lease shall be held by Lessor as security for the obligations
of Lessee hereunder and, at such time as no Default shall be continuing, such
amount shall be paid promptly to Lessee unless Lessor shall have declared this
Lease to be in default under Section 15 hereof, in which event such amount shall
be applied by Lessor in accordance with the terms of said Section 15.
27. WAIVER OF JURY TRIAL.
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<PAGE> 36
LESSEE AND LESSOR HEREBY WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING
TO WHICH LESSEE AND LESSOR MAY BE PARTIES ARISING OUT OF OR IN ANY WAY
PERTAINING TO THIS LEASE. IT IS HEREBY AGREED AND UNDERSTOOD THAT THIS WAIVER
CONSTITUTES A WAIVER OF TRIAL BY JURY OF ALL CLAIMS AGAINST PARTIES TO SUCH
ACTIONS OR PROCEEDINGS, INCLUDING CLAIMS AGAINST PARTIES WHO ARE NOT PARTIES TO
THIS LEASE. THIS WAIVER IS KNOWINGLY, INTENTIONALLY AND VOLUNTARILY MADE BY
LESSEE AND LESSOR AND LESSEE AND LESSOR HEREBY ACKNOWLEDGE THAT NO
REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE BY ANY INDIVIDUAL TO INDUCE
THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY TO MODIFY OR NULLIFY ITS EFFECT.
LESSEE AND LESSOR FURTHER ACKNOWLEDGE THAT THEY HAVE BEEN REPRESENTED IN THE
SIGNING OF THIS LEASE AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL
COUNSEL, SELECTED OF THEIR OWN FREE WILL, AND THAT THEY HAVE HAD THE OPPORTUNITY
TO DISCUSS THIS WAIVER WITH COUNSEL.
28. CHOICE OF LAW; JURISDICTION.
THIS LEASE AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL
IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL
LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES
OF SUCH STATE), INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE,
REGARDLESS OF THE LOCATION OF THE EQUIPMENT UNLESS AND TO THE EXTENT THE GRANT
OF A SECURITY INTEREST MAY BE GOVERNED BY OTHER APPLICABLE STATE LAW. The
parties agree that any action or proceeding arising out of or relating to this
Lease may be commenced in any state or Federal court in the State of New York,
and agree that a summons and complaint commencing an action or proceeding in any
such court shall be properly served and shall confer personal jurisdiction if
served personally or by certified mail to it at its address hereinbelow set
forth, or as it may provide in writing from time to time, or as otherwise
provided under the laws of the State of New York.
[signature page to follow]
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<PAGE> 37
IN WITNESS WHEREOF, the parties hereto have caused this Equipment Lease
Agreement to be duly executed as of the day and year first above set forth.
GENERAL ELECTRIC CAPITAL CORPORATION CARLISLE PLASTICS, INC.
AS AGENT FOR ITSELF AND CERTAIN Lessee
PARTICIPANTS
Lessor
By: /s/ Christopher Ziluca By: /s/ Rajiv P. Bhatt
--------------------------- ----------------------------
Title: Senior Credit Analyst Title: Chief Financial Officer
------------------------- ------------------------
44 Old Ridgebury Road One Union Street
Danbury, CT 06810-5105 Boston, Massachusetts 02108
Attn.: Manager of Operations Attn.: Chief Financial
Officer
Receipt of this original
counterpart of the Equipment
Lease Agreement hereby
acknowledged on the 4th day
of April, 1994:
GENERAL ELECTRIC CAPITAL CORPORATION,
AS AGENT FOR ITSELF AND CERTAIN PARTICIPANTS
By:________________________________
Title:_____________________________
37
<PAGE> 38
EXHIBIT B TO EQUIPMENT LEASE AGREEMENT
--------------------------------------
DEFINITIONS RELATING TO
EQUIPMENT LEASE AGREEMENT
-------------------------
For purposes of this Exhibit, all accounting terms not otherwise defined
herein shall have the meanings assigned to them in accordance with generally
accepted accounting principles. Any of the terms defined herein may, unless the
context otherwise requires, be used in the singular or the plural depending on
the reference. A reference in this Exhibit to any document includes an
amendment or supplement to, or replacement or novation of, that document unless
otherwise expressly provided herein or in the Lease. A reference in this
Exhibit to a party to a document includes that party's successors and permitted
assigns. A reference in this Exhibit to any statute, regulation, proclamation,
ordinance or law includes all statutes, regulations, proclamations, ordinances
or laws varying, consolidating or replacing them, and a reference to a statute
includes all regulations, proclamations and ordinances issued or otherwise
applicable under that statute. "Include", "includes" and "including" shall be
deemed to be followed by "without limitation" whether or not they are in fact
followed by such words or words of like import. "Writing", "written" and
comparable terms refer to printing, typing, lithography and other means of
reproducing words in a visible form.
"ADJUSTMENT PERIOD" shall have the meaning assigned to such term in the
Equipment Schedule.
"AFFILIATE" of any Person shall mean any other Person directly or
indirectly controlling, directly or indirectly controlled by or under direct or
indirect common control with such Person.
"AMERICAN WESTERN" shall mean American Western Corporation, a Delaware
corporation.
"APPLICABLE LAWS" shall mean all applicable laws, statutes,
treaties,rules, codes, ordinances, regulations, permits, certificates, orders,
interpretations, licenses and permits of any Governmental Authority and
judgments, decrees, injunctions, writs, orders or like action of any court,
arbitrator or other administrative, judicial or quasi-judicial tribunal or
agency of competent jurisdiction (including those pertaining to health, safety
or the environment and including any tax laws).
"APPRAISAL" shall mean the written appraisal report of MB Valuations,
Inc. dated January 28, 1994, describing Equipment being made subject to the
Lease.
"ASSET PURCHASE AGREEMENTS" shall mean those certain Asset Purchase
Agreements by and between Lessee and each of its domestic operating
subsidiaries, each dated the Closing Date under the Credit Agreement, whereby
Lessee purchased all of such subsidiaries' raw materials, work in process,
finished goods, accounts and inventory upon the terms and conditions set forth
therein.
<PAGE> 39
"BASE INDEX" shall have the meaning assigned to such term in the
Equipment Schedule.
"BILL OF SALE" shall mean a Bill of Sale in the form of Exhibit C to the
Lease executed by Lessee and each Sublessee executing a Sublease in favor of
Lessor.
"BUSINESS DAY" shall mean any day excluding Saturday, Sunday and any day
on which banking institutions located in the State of New York or Massachusetts
are authorized by law or other governmental action to close.
"CAPITAL EXPENDITURES" shall mean all payments for any fixed assets or
improvements, or for replacements, substitutions or additions thereto, that have
a useful life of more than one year and that are required to be capitalized
under GAAP, and, in any event, shall include Capital Lease Obligations and all
asset purchases secured by purchase money security interests.
"CAPITAL LEASE" shall mean, with respect to any Person, any lease of any
property (whether real, personal or mixed) by such Person as lessee that, in
accordance with GAAP, either would be required to be classified and accounted
for as a capital lease on a balance sheet of such Person or otherwise be
disclosed as such in a note to such balance sheet, other than, any such lease
under which such Person is the lessor.
"CAPITAL LEASE OBLIGATION" shall mean, with respect to any Capital
Lease, the amount of the obligation of the lessee thereunder that, in accordance
with GAAP, would appear on a balance sheet of such lessee in respect of such
Capital Lease or otherwise be disclosed in a note to such balance sheet.
"CERCLA" shall have the meaning assigned to such term in
Section 14(b)(ii) of the Lease.
"CHARGES" shall mean all federal, state, county, city, municipal, local,
foreign or other governmental taxes (including, without limitation, taxes owed
to the PBGC at the time due and payable), levies, assessments, charges, liens,
claims or encumbrances upon or relating to (i) the Equipment, (ii) the
Obligations, (iii) the employees, payroll, income or gross receipts of Lessee or
any of its subsidiaries, (iv) Lessee's, or any of its subsidiaries', ownership
or use of any of its properties or other assets, or (v) any other aspect of
Lessee's, or any of its subsidiaries', businesses.
"CIT DOCUMENTS" shall mean, collectively the CIT Guaranty Agreement, the
CIT Loan Agreement and the CIT Notes.
"CIT GUARANTY AGREEMENT" shall mean that certain Guaranty Agreement,
dated May 13, 1992, executed by Poly-Tech in favor of The CIT Group/Equipment
Financing, Inc., as in effect on the Lease Commencement Date.
"CIT LOAN AGREEMENT" shall mean that certain Loan and Security Agreement
by and between Lessee and The CIT Group/Equipment
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<PAGE> 40
Financing, Inc., dated May 13, 1992, as in effect on the Lease Commencement
Date.
"CIT NOTES" shall mean those certain promissory notes described on
Exhibit L-1 to the Lease, executed by Lessee in favor of The CIT Group/Equipment
Financing, Inc. pursuant to the CIT Loan Agreement, as in effect on the Lease
Commencement Date.
"CONSENT TO SUBLEASE" shall mean a Consent to Sublease in the form of
Exhibit J to the Lease executed by Lessee, Lessor and the sublessee identified
therein.
"CONSOLIDATED" shall mean the relevant figures as determined for Lessee
and its Consolidated Subsidiaries on a consolidated basis in accordance with
GAAP after eliminating all intercompany items and minority interests.
"CONSOLIDATED SUBSIDIARY" shall mean each subsidiary of Lessee other
than an unconsolidated subsidiary.
"CONTRACT RATE" shall have the meaning assigned to such term in the
Equipment Schedule.
"CONVERSION DATE" shall have the meaning assigned to such term in the
Equipment Schedule.
"CREDIT AGREEMENT" shall mean that certain Credit Agreement dated as of
March 9, 1994, among Carlisle Plastics, Inc. and General Electric Capital
Corporation, as agent and lender, and the other lenders party thereto, as in
effect on the Lease Commencement Date.
"CURRENT INDEX" shall have the meaning assigned to such term in the
Equipment Schedule.
"DEBIT AGREEMENT" shall mean the GE Capital Commercial Equipment
Financing Authorization Agreement for Pre-Arranged Payments (Debits) in the form
of Exhibit K to the Lease executed by Lessee and delivered to General Electric
Capital Corporation.
"DEBT AVAILABILITY" shall mean, for each Fiscal Year, an amount equal to
(a) the aggregate amount of Indebtedness that Lessee and its subsidiaries could
have had outstanding as of the end of such Fiscal Year without exceeding the
ratio of Funded Debt to Equity, measured as of the end of such Fiscal Year, set
forth below opposite such Fiscal Year, minus (b) the aggregate amount of
Indebtedness of Lessee and its subsidiaries actually outstanding as of the end
of such Fiscal Year:
<TABLE>
<CAPTION>
Funded Debt to
Fiscal Year Equity Ratio
----------- ------------
<S> <C>
1994 2.20 to 1.0
1995 1.65 to 1.0
1996 1.24 to 1.0
</TABLE>
3
<PAGE> 41
<TABLE>
<S> <C>
1997 .90 to 1.0
1998 .65 to 1.0
1999 .65 to 1.0
</TABLE>
"DEBT SERVICE CHARGES" shall mean, with respect to Lessee and its
subsidiaries on a Consolidated basis, for any fiscal period of Lessee, the sum
of (i) Interest Expense in respect of Funded Debt plus (ii) regularly scheduled
payments of principal on Funded Debt, in each case of Lessee and its
subsidiaries for such period.
"DEFAULT" shall have the meaning assigned to such term in Section 15(a)
of the Lease.
"DIVIDENDS" shall mean any dividends or other distributions upon or with
respect to a Person's capital stock or any redemptions, repurchases or other
acquisitions or retirements of such capital stock, in any case paid, declared or
effected by such Person and any principal payments of Subordinated Debt by such
Person.
"EBITDA" shall mean, with respect to Lessee and its subsidiaries on a
Consolidated basis, for any fiscal period of Lessee (i) Net Income plus (ii) to
the extent deducted in determining Net Income, Interest Expense and taxes (as
stated in Lessee's Consolidated statement of income) plus (iii) to the extent
deducted in determining Net Income, depreciation, amortization and other similar
non-cash charges minus (iv) to the extent added in determining Net Income,
extraordinary gains plus (v) to the extent deducted in determining Net Income,
extraordinary losses.
"ENVIRONMENTAL EXPENSE" shall have the meaning assigned to such term in
Section 14(b)(iii) of the Lease.
"ENVIRONMENTAL LAWS AND REGULATIONS" shall have the meaning assigned to
such term in Section 14(b)(ii) of the Lease.
"EQUIPMENT SCHEDULE" shall mean, collectively, the Equipment Schedules
in the form of Exhibit A to the Lease executed by Lessee and Lessor setting
forth certain terms and conditions upon which the items of Equipment described
therein will be subjected to the Lease.
"EQUIPMENT" shall mean the items of equipment described in each
Equipment Schedule executed by Lessee and Lessor pursuant to the Lease, together
with all additions, attachments, appliances, parts, instruments, appurtenances,
accessories, furnishings and other parts of whatever nature which may from time
to time be incorporated or installed in or attached to the Equipment and any and
all replacements, substitutions or exchanges therefor.
"ESTOPPEL/WAIVER AGREEMENT" shall mean an Estoppel/Waiver Agreement
substantially in the form of Exhibit D-1 or Exhibit D-2 to the Lease delivered
in accordance with Section 5 of the Lease.
"EVENT" shall have the meaning assigned to such term in Section 15(a) of
the Lease.
4
<PAGE> 42
"EQUITY" shall mean the assets of Lessee and its subsidiaries on a
Consolidated basis LESS (i) reserves applicable thereto and (ii) the liabilities
of Lessee and its subsidiaries on a consolidated basis, all as determined in
accordance with GAAP.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974
(or any successor legislation thereto), as amended from time to time, and any
regulations promulgated thereunder.
"ERISA AFFILIATE" shall mean, with respect to Lessee or any of its
subsidiaries, any trade or business (whether or not incorporated) under common
control with Lessee or such subsidiary, as appropriate, and which, together with
Lessee or such subsidiary, as appropriate, are treated as a single employer
within the meaning of Sections 414(b), (c), (m) or (o) of the IRC.
"FAIRMONT IRB" shall mean the industrial revenue bonds issued in
connection with that certain loan agreement dated December 31, 1985 between the
City of Fairmont, Minnesota and AMDEVCO PACKAGING/FILMS, INC.
"FISCAL YEAR" shall mean the twelve month period of Lessee and its
subsidiaries ending December 31 of each year.
"FIXED CHARGES" shall mean, with respect to Lessee and its subsidiaries
on a Consolidated basis, for any fiscal period of Lessee, the sum of (i) Debt
Service Charges plus (ii) taxes (as stated in Lessee's Consolidated statement of
income), in each case of Lessee for such period.
"FIXED PURCHASE PRICE" shall have the meaning assigned to such term in
Section 21 of the Lease.
"FUNDED DEBT" shall mean, with respect to Lessee and its subsidiaries,
on a Consolidated basis, all of its Indebtedness which by the terms of the
agreement governing or instrument evidencing such Indebtedness matures more than
one year from or is directly or indirectly renewable or extendible at its option
under a revolving credit or similar agreement obligating the lender or lenders
to extend credit over a period of more than one year from the date of creation
thereof, including in each instance current maturities of long-term debt (and
the current portion of long-term debt in the last year of its term), revolving
credit and short-term debt extendible beyond one year at the option of the
debtor, and shall also include, without limitation, Indebtedness arising under
or in connection with any interest rate swap agreement or arrangements and the
Obligations.
"GAAP" shall have the meaning assigned to such term in Section
3 of the Lease.
"GOVERNMENTAL AUTHORITY" shall mean any federal, state, county,
municipal or other United States federal, state or local governmental or
regulatory authority, agency, board, body, commission, instrumentality, court or
quasi-governmental authority.
"GUARANTEED INDEBTEDNESS" shall mean, as to any Person, any obligation
of such Person guaranteeing any indebtedness, lease,
5
<PAGE> 43
dividend, or other obligation ("primary obligations") of any other Person (the
"primary obligor") in any manner, including any obligation or arrangement of
such Person (i) to purchase or repurchase any such primary obligation, (ii) to
advance or supply funds (a) for the purchase or payment of any such
primary obligation or (b) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency or any
balance sheet condition of the primary obligor, (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) to indemnify the owner of such primary
obligation against loss in respect thereof.
"HAZARDOUS MATERIALS" shall have the meaning assigned to such term in
Section 14(b)(iii) of the Lease.
"IMPOSITION" shall have the meaning assigned to such term in Section 9
of the Lease.
"INDEBTEDNESS" of any Person shall mean (i) all indebtedness of such
Person for borrowed money or for the deferred purchase price of property or
services (including reimbursement and all other obligations with respect to
surety bonds, letters of credit and bankers' acceptances, whether or not
matured, but excluding obligations to trade creditors incurred in the ordinary
course of business), (ii) all obligations evidenced by notes, bonds, debentures
or similar instruments, (iii) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such property), (iv) all Capital Lease Obligations, (v) all
obligations arising under or in connection with any interest rate swap agreement
or arrangements, (vi) all Indebtedness referred to in clause (i), (ii), (iii),
(iv) or (v) above secured by (or for which the holder of such Indebtedness has
an existing right, contingent or otherwise, to be secured by) any lien upon or
in property or other assets (including accounts and contract rights) owned by
such Person, even though such Person has not assumed or become liable for the
payment of such Indebtedness, (vii) the Obligations, and (viii) all liabilities
under Title IV of ERISA.
"INDEMNITEE" shall have the meaning assigned to such term in Section
14(a) of the Lease.
"INDENTURES" shall mean the following indentures to which Lessee is a
party: (i) the Amended and Restated Indenture dated as of April 1, 1989, as
supplemented and amended through March 20, 1990; (ii) the Indenture dated as of
March 23, 1990, as supplemented through October 9, 1990; and (iii) the Indenture
dated as of June 1, 1992, each as in effect on the Lease Commencement Date
without giving effect to any amendment or modification thereto made without the
consent of Lessor.
"INTEREST EXPENSE" shall mean, for any fiscal period of Lessee, interest
expense of Lessee for such period in respect of
6
<PAGE> 44
Funded Debt, excluding the amortization of capitalized debt transaction
costs.
"INVENTORY" shall have the meaning assigned to such term in Section
19(b)(ii) of the Lease.
"IRC" means the Internal Revenue Code of 1986, as amended.
"LATE CHARGE RATE" with respect to any payments relating to an item of
Equipment or other payments, shall have the meaning assigned to such term in the
Equipment Schedule covering such item of Equipment.
"LATE PAYMENT FEE" shall mean, with respect to a payment of rent, a fee
equal to five percent (5%) of the rental payment that is not paid when due.
"LEASE COMMENCEMENT DATE" with respect to any item of Equipment shall
mean the date of execution by Lessee and Lessor of the Equipment Schedule and
delivery by Lessee or the applicable subsidiary of Lessee of the Bill of Sale
for such Equipment.
"LEASE" shall mean the Equipment Lease Agreement dated as of April 4,
1994 by and between Lessor and Lessee, as supplemented and amended from time to
time by Equipment Schedules entered into pursuant to the applicable provisions
of the Lease.
"LEASE DOCUMENTS" shall mean this Lease (and all Schedules and Exhibits
hereto), the Subleases, the Consents to Sublease, the Subsidiary Guarantees, and
all other agreements, instruments, documents and certificates in favor of Lessor
or Lessee, as sublessor under the Subleases, and including all other pledges,
financing statements, powers of attorney, consents, assignments, contracts,
notices, and all other written matter whether heretofore, now or hereafter
executed by or on behalf of Lessee or any of its Affiliates, or any employee of
Lessee, or any of its Affiliates, in connection with this Lease or any Sublease
or the transactions contemplated hereby or thereby.
"LESSEE" shall mean Carlisle Plastics, Inc.
"LESSOR" shall mean General Electric Capital Corporation, as agent for
itself and certain Participants.
"MAKE WHOLE PREMIUM" shall have the meaning assigned to such term in
Section 20(d) of the Lease.
"MANAGEMENT SERVICES AGREEMENT" shall mean that certain Management
Services Letter Agreement, dated May 22, 1991, by and between Lessee and
Carlisle Plastics Management Corporation, as heretofore amended and as the same
may after the Lease Commencement Date be extended or renewed on terms which are
no less favorable to Lessee and which have been otherwise disclosed to Lessor.
"MATERIAL ADVERSE EFFECT" shall mean (a) a material adverse effect on
(i) the business, assets, operations, prospects or financial or other condition
of Lessee or any subsidiaries of Lessee executing a Sublease, (ii) Lessee's or
any of its
7
<PAGE> 45
subsidiaries' ability to pay any of the Obligations under the Lease or under
any Sublease or any other Obligations in accordance with the terms thereof,
(iii) Lessor's liens on the Equipment or proceeds thereof or the priority of
any such lien, or (iv) Lessor's or any Participant's rights and remedies under
the Lease, any Sublease or any other Lease Document or (v) the validity or
enforceability of any of the Lease Documents, or (b) the incurrence by Lessee
or any of its subsidiaries of material liability, contingent or liquidated,
outside of the ordinary course of business.
"MULTIEMPLOYER PLAN" shall mean a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA, and to which Lessee, or any of its subsidiaries or
any ERISA Affiliate is making, is obligated to make, has made or been obligated
to make, contributions on behalf of participants who are or were employed by any
of them.
"NET INCOME" shall mean, with respect to Lessee and its subsidiaries on
a Consolidated basis, for any fiscal period, Lessee's Consolidated net income
(or loss) after income and franchise taxes and shall have the meaning given such
term by GAAP; PROVIDED, THAT, there shall be specifically excluded therefrom net
income of any Person that is not a direct or indirect wholly-owned subsidiary of
Lessee, unless received by Lessee in cash.
"NET WORTH" shall mean the sum of (i) the higher of $66,000,000 or
Equity as of April 30, 1994 PLUS (ii) Net Income since April 30, 1994 through
and including the applicable measurement date.
"NOTICE DATE shall have the meaning assigned to such term in the
Equipment Schedule.
"OBLIGATIONS" shall mean all obligations for the payment of rent,
Stipulated Loss Value, Termination Value, Fixed Purchase Price, fees, expenses,
taxes, indemnification and all other debts, liabilities and obligations, for the
performance of covenants, tasks or duties or for payment of monetary amounts
(whether or not such performance is then required or contingent, or amounts are
liquidated or determinable) owing by Lessee to Lessor or any Participant, and
all covenants and duties regarding such amounts, of any kind or nature, present
or future, whether or not evidenced by any lease, note, agreement or other
instrument, arising under this Lease, any Sublease or any of the other Lease
Documents. This term includes all principal, interest, fees, charges, expenses,
reimbursements, indemnities, attorneys' fees and any other sum chargeable to
Lessee or any Subleasee under this Lease or any of the other Lease Documents.
"OPTION TO CONVERT" shall have the meaning assigned to such term in the
Equipment Schedule.
"PARTICIPANT" shall have the meaning assigned to such term in Section
16(c) of the Lease.
"PAYMENT DATE" shall have the meaning assigned to such term in the
Equipment Schedule.
8
<PAGE> 46
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
successor thereto.
"PENSION Plan" shall mean an employee pension benefit plan, as defined
in Section 3(2) of ERISA (other than a Multiemployer Plan), which is not an
individual account plan, as defined in Section 3(34) of ERISA, and which Lessee
or any of its subsidiaries or, if a Title IV Plan, any ERISA Affiliate
maintains, contributes to or has an obligation to contribute to on behalf of
participants who are or were employed by any of them.
"PERIODIC INSTALLMENT" shall have the meaning assigned to such term in
the Equipment Schedule.
"PERMITTED INVESTMENTS" shall mean (i) investments in direct obligations
of the United States of America maturing within 90 days of the date of
acquisition thereof, (ii) investments in certificates of deposit maturing within
90 days of the date of acquisition thereof issued by a bank or trust company
which is organized under the laws of the United States or any state thereof
having capital, surplus and undivided profits aggregating in excess of
$500,000,000, (iii) investments in commercial paper given the highest rating by
two nationally recognized statistical rating organizations (as defined in Rule
436 under the Securities Act of 1933, as amended) and maturing not more than 90
days from the date of acquisition thereof, (iv) demand deposit accounts and
other corporate accounts set forth on Schedule 3.22 to the Credit Agreement, (v)
loans or advances permitted by Section 2.3 or 2.4 of Exhibit N to the Lease,
(vi) existing investments in subsidiaries described in Exhibit F to the Lease,
and (vii) Investments in new subsidiaries after the Closing Date in accordance
with the terms of Section 1.13 of Exhibit M to the Lease.
"PERMITTED LIEN" shall have the meaning assigned to such term in Section
10 of the Lease.
"PERSON" shall mean any individual, corporation, partnership, joint
venture, association, joint stock company, trust, nonincorporated organization
or government or agency or political subdivision thereof.
"POLY-TECH" shall mean Poly-Tech, Inc., a Minnesota corporation.
"POTENTIAL DEFAULT" shall have the meaning assigned to such term in
Section 4 of the Lease.
"PREMISES" shall mean the premises owned or leased by Lessee or any
Affiliate of Lessee where the Equipment is located during the term of the Lease.
"PRINCIPAL" shall have the meaning assigned to such term in the
Equipment Schedule.
"PURCHASE MONEY LIENS" shall mean purchase money liens (including
capitalized leases and other forms of installment purchase financing but
excluding the Lease and the Subleasees) granted to the Person financing a
purchase of equipment acquired in
9
<PAGE> 47
the ordinary course of business in accordance with past practice (subject to the
limitations on Capital Expenditures set forth in the Lease, including those set
forth in Exhibit G-1 thereto); PROVIDED, THAT such liens attach only to the
equipment so acquired, the Indebtedness secured by such lien does not exceed the
purchase price of the equipment on which the lien is granted, and the
transaction does not violate any other provision of the Lease.
"RECEIVABLES FUNDING FACILITY" shall mean the accounts receivable
funding facility to be established by Lessee and Carlisle Plastics Funding
Corporation with Redwood Receivables Corporation and General Electric Capital
Corporation or another funding source satisfactory to Lessor to finance Lessee's
accounts receivable in an amount not to exceed Thirty-Five Million Dollars
($35,000,000) such facility to include the terms and conditions set forth in
that certain commitment letter dated February 15, 1994, between Lessee and
Redwood Receivables Corporation, and such other terms and conditions as are
satisfactory to Lessor in its sole discretion.
"REINVESTMENT RATE" shall have the meaning assigned to such term in
Section 20(e) of the Lease.
"RESPONSIBLE OFFICER" shall mean, with respect to any Person, the
Chairman, the President, any Senior Vice President and any other executive
corporate officer (or holder of an equivalent position for a nonincorporated
Person) who in the normal performance of his operational responsibilities would
have knowledge of such matter and the requirements with respect thereto.
"RESTRICTED PAYMENT" shall mean (i) the declaration or payment of any
dividend or the incurrence of any liability to make any other payment or
distribution of cash or other property or assets in respect of a Person's stock,
(ii) any payment on account of the purchase, redemption, defeasance or other
retirement of a Person's stock or any other payment or distribution made in
respect thereof, either directly or indirectly, or (iii) any payment, loan,
contribution, or other transfer of funds or other property to any stockholder of
such Person.
"RHINO-X" shall mean Rhino-X Industries, Inc., a Delaware
corporation.
"SENIOR NOTES" shall mean the Senior Notes issued and outstanding
pursuant to the Indentures.
"STIPULATED LOSS VALUE" shall have the meaning assigned to such term in
Section 12 of the Lease.
"SUBLEASE" shall mean an Equipment Sublease Agreement in the form
attached as Exhibit B to the Consent to Sublease.
"SUBLESSEE" shall mean each of Poly-Tech, Rhino-X and American Western.
"SUBORDINATED DEBT" shall mean any Indebtedness issued or otherwise
owing by Lessee in favor of any subsidiary or by any subsidiary in favor of
Lessee (a) the payment of which is
10
<PAGE> 48
subordinated to the payment of the Obligations in form and substance
satisfactory to Lessor in its sole discretion and (b) which is incurred pursuant
to documentation or entry in the financial records of Lessee or a
subsidiary, as applicable, in form and substance satisfactory to Lessor in its
sole discretion. Subordinated Debt shall include, without limitation,
Indebtedness of the subsidiaries in favor of Lessee set forth on Exhibit L-2 to
the Lease and any extensions, renewals, substitutions, refinancings or
replacements permitted by Section 2.3 of Exhibit N to the Lease and Indebtedness
of the subsidiaries in favor of Lessee expressly permitted by Section 2.3 of
Exhibit N to the Lease.
"SUBORDINATION AGREEMENT" shall mean the Subordination Agreement in the
form of Exhibit Q hereto of even date herewith among Lessor, Lessee and the
subsidiaries of Lessee.
"SUBSIDIARY" of a Person shall mean (a) any corporation more than 50% of
the outstanding securities having ordinary voting power of which shall at the
time be owned or controlled, directly or indirectly, by such Person or by one or
more of its subsidiaries or by such Person and one or more of its subsidiaries,
or (b) any partnership, association, joint venture or similar business
organization more than 50% of the ownership interests having ordinary voting
power of which shall at the time be so owned or controlled. Unless otherwise
expressly provided, all references herein to a "subsidiary" shall mean a
subsidiary of Lessee.
"SUBSIDIARY GUARANTEES" shall mean the Subsidiary Guarantees in the form
of Exhibit R hereto executed by Poly-Tech, Rhino-X and American Western on the
date hereof in favor of Lessor guaranteeing the payment and performance of
Lessee's obligations under the Lease.
"SUPPLIER" shall mean the manufacturer and/or Lessee's supplier or
vendor of any item of Equipment.
"SYNDICATION" shall have the meaning assigned to such term in Section
16(c) of the Lease.
"TERMINATION PREMIUM" shall have the meaning assigned to such term in
Section 20(a) of the Lease.
"TERMINATION VALUE" shall have the meaning assigned to such term in
Section 12 of the Lease.
"TOLL MANUFACTURING AGREEMENTS" shall mean those certain Contract
Manufacturing Agreements by and between Lessee and each of its domestic
operating subsidiaries, each dated the Closing Date under the Credit Agreement,
whereby Lessee appoints such subsidiaries as Lessee's agent to purchase, process
and ship inventory for the benefit of Lessee upon the terms and conditions set
forth therein.
"TOTAL FUNDING AMOUNT" shall mean, with respect to all the Equipment
covered on an individual Equipment Schedule, the total funding amount for such
items of Equipment as set forth on such Equipment Schedule and with respect to
any item of Equipment the total fair market value set forth on the Equipment
Schedule for
11
<PAGE> 49
such item of Equipment, and in each case the total funding amount shall not
exceed the fair market value on an "in place" basis as set forth in the
appraisal of the Equipment dated January 28, 1994 delivered to General
Electric Capital Corporation, as adjusted upon any early termination or casualty
event.
"TOTAL INDEBTEDNESS" shall mean the total liabilities of Lessee and its
Consolidated Subsidiaries which, in accordance with GAAP, would be included in
the liability side of a balance sheet.
"TOTAL LOSS" shall have the meaning assigned to such term in Section 12
of the Lease.
"TRANSACTION COSTS" shall have the meaning assigned to such term in
Section 24 of the Lease.
"UNFUNDED PENSION LIABILITY" shall mean, at any time, the aggregate
amount, if any, of the sum of (i) the amount by which the present value of all
accrued benefits under each Title IV Plan exceeds the fair market value of all
assets of such Title IV Plan allocable to such benefits in accordance with Title
IV of ERISA, all determined as of the most recent valuation date for each such
Title IV Plan using the actuarial assumptions in effect under such Title IV
Plan, and (ii) for a period of five (5) years following a transaction reasonably
likely to be covered by Section 4069 of ERISA, the liabilities (whether or not
accrued) that could be avoided by Lessee, any of its subsidiaries or any ERISA
Affiliate as a result of such transaction.
"WHOLLY-OWNED SUBSIDIARY" of a Person shall mean (a) any subsidiary all
of the outstanding voting securities of which shall at the time be owned or
controlled, directly or indirectly, by such Person or one or more Wholly-Owned
subsidiaries of such Person, or by such Person and one or more Wholly-Owned
subsidiaries of such Person, or (b) any partnership, association, joint venture
or similar business organization 100% of the ownership interests having any
voting power of which shall at the time be so owned or controlled.
12
<PAGE> 50
EXHIBIT G-1 TO EQUIPMENT LEASE AGREEMENT
----------------------------------------
FINANCIAL COVENANTS
-------------------
Lessee shall not, and shall cause its subsidiaries not to, breach or
fail to comply with any of the following financial covenants, each of which
shall be calculated in accordance with GAAP, consistently applied:
(a) Maximum Capital Expenditures. Lessee and its subsidiaries
on a Consolidated basis shall not make Capital Expenditures during the
following periods that exceed in the aggregate the amounts set forth
opposite each of such periods:
<TABLE>
<CAPTION>
Aggregate Maximum
Period Covered Capital Expenditures
-------------- --------------------
<S> <C>
January 1, 1994 through $16,000,000
December 31, 1994
January 1, 1995 through $12,000,000
December 31, 1995
January 1, 1996 through $12,000,000
December 31, 1996
January 1, 1997 through $12,000,000
December, 31, 1997
January 1, 1998 through $12,000,000
December 31, 1998
January 1, 1999 through $12,000,000
December 31, 1999
</TABLE>
(b) MINIMUM NET WORTH. Lessee and its subsidiaries on a
Consolidated basis shall have, as at each of the dates set forth below
(and shall maintain at all times during the period from and including
such date through but excluding the next date immediately succeeding
such date), Net Worth equal to or greater than the amount set forth
opposite such date:
<TABLE>
<CAPTION>
Date Minimum Net Worth
---- -----------------
<S> <C>
June 30, 1994 The higher of $66,000,000
or Equity as of April 30,
1994
September 30, 1994 The higher of $66,000,000
or Equity as of April 30,
1994
December 31, 1994 $ 68,000,000
March 31, 1995 $ 69,400,000
June 30, 1995 $ 71,300,000
</TABLE>
<PAGE> 51
<TABLE>
<S> <C>
December 31, 1995 $ 75,800,000
June 30, 1996 $ 78,000,000
December 31, 1996 $ 83,100,000
June 30, 1997 $ 85,800,000
December 31, 1997 $ 92,200,000
June 30, 1998 $ 95,600,000
December 31, 1998 $103,300,000
</TABLE>
(c) MINIMUM INTEREST AND TAXES COVERAGE RATIO. Lessee and its
subsidiaries on a Consolidated basis shall have a ratio of (i) EBITDA to
(ii) Interest Expense and taxes (as stated in Lessee's consolidated
statement of income), in each case measured as at each of the dates set
forth below, for each of the periods set forth opposite such dates, of
not less than the amount set forth opposite each such period and date:
<TABLE>
<CAPTION>
Minimum Interest
and Taxes
Date Period Covered Coverage Ratio
---- -------------- --------------
<S> <C> <C>
June 30, 1994 July 1, 1993 through 2.2 to 1.0
June 30, 1994
September 30, 1994 October 1, 1993 through 2.2 to 1.0
September 30, 1994
December 31, 1994 January 1, 1994 through 2.2 to 1.0
December 31, 1994
March 31, 1995 April 1, 1994 through 2.1 to 1.0
March 31, 1995
June 30, 1995 July 1, 1994 through 2.1 to 1.0
June 30, 1995
September 30, 1995 October 1, 1994 through 2.1 to 1.0
September 30, 1995
December 31, 1995 January 1, 1995 through 2.1 to 1.0
December 31, 1995
March 31, 1996 April 1, 1995 through 2.1 to 1.0
March 31, 1996
June 30, 1996 July 1, 1995 through 2.1 to 1.0
June 30, 1996
September 30, 1996 October 1, 1995 through 2.1 to 1.0
September 30, 1996
December 31, 1996 January 1, 1996 through 2.1 to 1.0
</TABLE>
<PAGE> 52
<TABLE>
<S> <C> <C>
December 31, 1996
March 31, 1997 April 1, 1996 through 2.1 to 1.0
March 31, 1997
June 30, 1997 July 1, 1996 through 2.1 to 1.0
June 30, 1997
September 30, 1997 October 1, 1996 through 2.1 to 1.0
September 30, 1997
December 31, 1997 January 1, 1997 through 2.1 to 1.0
December 31, 1997
March 31, 1998 April 1, 1997 through 2.1 to 1.0
March 31, 1998
June 30, 1998 July 1, 1997 through 2.1 to 1.0
June 30, 1998
September 30, 1998 October 1, 1997 through 2.1 to 1.0
September 30, 1998
December 31, 1998 January 1, 1998 through 2.1 to 1.0
December 31, 1998
March 31, 1999 April 1, 1998 through 2.1 to 1.0
March 31, 1999
June 30, 1999 July 1, 1998 through 2.1 to 1.0
June 30, 1999
</TABLE>
(d) MINIMUM FIXED CHARGES COVERAGE RATIO. Lessee and its
subsidiaries on a Consolidated basis shall have a ratio of (i) EBITDA to
(ii) Fixed Charges, in each case measured as at each of the dates set
forth below, for each of the periods set forth opposite such dates, of
not less than the amount set forth opposite each such period and date:
<TABLE>
<CAPTION>
Minimum Fixed
Charges
Date Period Covered Coverage Ratio
---- -------------- --------------
<S> <C> <C>
June 30, 1994 July 1, 1993 through 1.5 to 1.0
June 30, 1994
September 30, 1994 October 1, 1993 through 1.5 to 1.0
September 30, 1994
December 31, 1994 January 1, 1994 through 1.5 to 1.0
December 31, 1994
March 31, 1995 April 1, 1994 through 1.4 to 1.0
March 31, 1995
June 30, 1995 July 1, 1994 through 1.4 to 1.0
June 1, 1995
</TABLE>
3
<PAGE> 53
<TABLE>
<S> <C> <C>
September 30, 1995 October 1, 1994 through 1.4 to 1.0
September 30, 1995
December 31, 1995 January 1, 1995 through 1.4 to 1.0
December 31, 1995
March 31, 1996 April 1, 1995 through 1.4 to 1.0
March 31, 1996
June 30, 1996 July 1, 1995 through 1.4 to 1.0
June 30, 1996
September 30, 1996 October 1, 1995 through 1.4 to 1.0
September 30, 1996
December 31, 1996 January 1, 1996 through 1.4 to 1.0
December 31, 1996
March 31, 1997 April 1, 1996 through 1.4 to 1.0
March 31, 1997
June 30, 1997 July 1, 1996 through 1.4 to 1.0
June 30, 1997
September 30, 1997 October 1, 1996 through 1.4 to 1.0
September 30, 1997
December 31, 1997 January 1, 1997 through 1.4 to 1.0
December 31, 1997
March 31, 1998 April 1, 1997 through 1.4 to 1.0
March 31, 1998
June 30, 1998 July 1, 1997 through 1.4 to 1.0
June 30, 1998
September 30, 1998 October 1, 1997 through 1.4 to 1.0
September 30, 1998
December 31, 1998 January 1, 1998 through 1.4 to 1.0
December 31, 1998
March 31, 1999 April 1, 1998 through 1.4 to 1.0
March 31, 1999
June 30, 1999 July 1, 1998 through 1.4 to 1.0
June 30, 1999
</TABLE>
(e) MAXIMUM FUNDED DEBT TO EQUITY RATIO. Lessee and its
subsidiaries on a Consolidated basis shall have and shall maintain at
all times from the Lease Commencement Date through and including June
30, 1999 a ratio of (i) Funded Debt to (ii) Equity of not more than 3.0
to 1.0
For all purposes of the financial covenants set forth in this EXHIBIT
G-1, financial information for periods prior to the Lease Commencement Date
shall be restated on a pro forma basis as
4
<PAGE> 54
though the transactions contemplated by the Credit Agreement and the Lease had
occurred at the time of such previous measurement dates. EXHIBIT G-2 sets forth
certain financial information to be used for financial covenant calculations
which has been so restated on a pro forma basis for periods prior to the Lease
Commencement Date.
5
<PAGE> 55
EXHIBIT G-2 TO EQUIPMENT LEASE AGREEMENT
----------------------------------------
(a) For all purposes of the financial covenants set forth in
Exhibit G-1, EBITDA shall be restated on a pro forma basis to be the
following amounts during the following periods:
<TABLE>
<CAPTION>
Period EBITDA
------ ------
<S> <C>
July 1, 1993 through $16,520,000
September 30, 1993
October 1, 1993 through $13,778,000
December 31, 1993
January 1, 1994 through actual EBITDA for the
March 31, 1994 period
</TABLE>
(b) For all purposes of the financial covenants set forth in
Exhibit G-1, Interest Expense shall be restated on a pro forma basis to
be the following amounts during the following periods:
<TABLE>
<CAPTION>
Period Interest Expense
------ ----------------
<S> <C>
July 1, 1993 through $3,894,000
September 30, 1993
October 1, 1993 through $3,529,000
December 31, 1993
January 1, 1994 through $3,875,000
March 31, 1994
</TABLE>
(c) For all purposes of the financial covenants set forth in
Exhibit G-1, taxes (as stated in Lessee's consolidated statement of
income) shall be restated on a pro forma basis to be the following
amounts during the following periods:
<TABLE>
<CAPTION>
Period taxes
------ -----
<S> <C>
July 1, 1993 through $2,196,000
September 30, 1993
October 1, 1993 through $1,379,000
December 31, 1993
January 1, 1994 through actual taxes for
March 31, 1994 the period
</TABLE>
1
<PAGE> 56
(d) For all purposes of the financial covenants set forth in Exhibit
G-1, debt amortization(1) shall be restated on a pro forma basis to
be the following amounts during the following periods:
<TABLE>
<CAPTION>
Period debt amortization
------ -----------------
<S> <C>
July 1, 1993 through $1,988,000
September 30, 1993
October 1, 1993 through $1,988,000
December 31, 1993
January 1, 1994 through $2,075,000
March 31, 1994
</TABLE>
________________________
(1) Defined in the definition of Debt Service Charges to
mean "regularly scheduled payments of principal on Funded Debt".
<PAGE> 57
Exhibit M to Equipment Lease Agreement
--------------------------------------
Lessee covenants and agrees that, unless Lessor shall
otherwise consent in writing, from and after the date hereof and
until the expiration of the Lease term:
1.1 MAINTENANCE OF EXISTENCE AND CONDUCT OF BUSINESS.
Lessee shall, and shall cause each of its subsidiaries, to: (a) do
or cause to be done all things necessary to preserve and keep in
full force and effect its corporate existence and its rights and
franchises; (b) continue to conduct its business substantially as
now conducted or as otherwise permitted hereunder; and (c) at all
times maintain, preserve and protect all of its copyrights,
patents, trademarks, trade names and all other intellectual
property and rights as licensee or licensor thereof and preserve
all the remainder of its property, in use or useful in the conduct
of its business and keep the same in good repair, working order and
condition (taking into consideration ordinary wear and tear) and
from time to time make, or cause to be made, all necessary or
appropriate repairs, replacements and improvements thereto
consistent with industry practices, so that the business carried on
in connection therewith may be properly and advantageously
conducted at all times.
1.2 PAYMENT OF OBLIGATIONS. (a) Lessee shall: (i) pay
and discharge or cause to be paid and discharged all Obligations;
and (ii) prior to an Event of Default, pay and discharge, or cause
to be paid and discharged, its Indebtedness other than the
Obligations at the time such amounts are due and payable, and,
subject to SECTION 1.2(b), pay and discharge or cause to be paid
and discharged promptly all (A) Charges imposed upon it, its income
and profits, or any of its property (real, personal or mixed), and
(B) lawful claims for labor, materials, supplies and services or
otherwise, before any thereof shall become in default.
(b) Except as otherwise specifically provided in the
Lease with respect to charges or claims relating to or affecting
the Equipment, Lessee may in good faith contest, by proper legal
action or proceedings, the validity or amount of any Charges or
claims arising under SECTION 1.2 (a) (ii) and while so contesting
such Charges or claims, not pay them; PROVIDED, THAT at the time of
commencement of any such action or proceeding, and during the
pendency thereof (i) adequate reserves with respect thereto are
maintained on the books of Lessee, in accordance with GAAP, (ii)
such contest operates to suspend collection of the contested
Charges or claims and such contest is maintained and prosecuted
continuously and with diligence, (iii) none of the Collateral would
be subject to forfeiture or loss or any lien by reason of the
institution or prosecution of such contest, (iv) no lien shall
exist, be imposed or be attempted to be imposed for such Charges or
claims during such action or proceeding, (v) Lessee shall promptly
pay or discharge such contested Charges and all additional charges,
interest, penalties and expenses, if any, and shall deliver to
<PAGE> 58
Lessor evidence acceptable to Lessor of such compliance, payment or
discharge, if such contest is terminated or discontinued adversely
to Lessee, and (vi) Lessor has not advised Lessee in writing that
Lessor reasonably believes that nonpayment or nondischarge thereof
could have or result in a Material Adverse Effect.
1.3 BOOKS AND RECORDS. Lessee shall keep adequate
records and books of account with respect to Lessee's and its
subsidiaries' business activities, in which proper entries,
reflecting all financial transactions, are made in accordance with
GAAP and on a basis consistent with the Financial Statements
referred to in SECTION 3(A) OF THE LEASE.
1.4 LITIGATION. Lessee shall notify Lessor in writing,
promptly upon learning thereof, of any litigation commenced or
threatened against Lessee or any of its subsidiaries, and of the
institution against it of any suit or administrative proceeding
that (a) may involve an amount in excess of $500,000 or (b) seeks
injunctive relief or could have or result in a Material Adverse
Effect if adversely determined.
1.5 RESERVED
1.6 COMPLIANCE WITH LAWS. Lessee shall comply in all
material respects with all federal, state and local laws and
regulations applicable to it, including those relating to
licensing, environmental, consumer credit, truth-in-lending, ERISA
and labor matters.
1.7 AGREEMENTS. Lessee and each of its subsidiaries
shall perform, within all required time periods (after giving
effect to any applicable grace periods), all of its obligations and
enforce all of its rights under each agreement to which it is a
party, including any lease or customer contracts to which it is a
party. Neither Lessee nor any of its subsidiaries shall terminate
or modify any provision of any agreement to which it is a party
which termination or modification could have or result in a
Material Adverse Effect.
1.8 SUPPLEMENTAL DISCLOSURE. On the request of Lessor
(in the event that such information is not otherwise delivered by
Lessee to Lessor pursuant to the Lease), so long as there are
Obligations outstanding hereunder, but not more frequently than
every month, Lessee will supplement each schedule or representation
contained in the Lease or any Exhibit thereto with respect to any
matter hereafter arising which, if existing or occurring at the
Lease Commencement Date, would have been required to be set forth
or described therein or as an exception to such representation or
which is necessary to correct any information in the Lease or such
Exhibit or representation which has been rendered inaccurate
thereby; PROVIDED, THAT such supplement to such Exhibit or
representation shall not be deemed an amendment thereof unless
expressly consented to in writing by Lessor, and no such
2
<PAGE> 59
amendments, except as the same may be consented to in a writing
which expressly includes a waiver, shall be or be deemed a waiver
of any Default or Potential Default disclosed therein.
1.9 EMPLOYEE PLANS. Lessee shall notify Lessor of (i)
any and all claims, actions, or lawsuits asserted or instituted,
and of any threatened litigation or claims against Lessee, any of
its subsidiaries or against any ERISA Affiliate in connection with
any Plan maintained, at any time, by Lessee, such subsidiary or
such ERISA Affiliate, or to which Lessee, such subsidiary or such
ERISA Affiliate has or had at any time any obligation to
contribute, or against any such Plan itself, or against any
fiduciary of or service provided to any such Plan, in each case in
excess of $250,000 and (ii) the occurrence of any "Reportable
Event" with respect to any Pension Plan of Lessee, such subsidiary
or such ERISA Affiliate.
1.10 RESERVED
1.11 RESERVED
1.12 RESERVED
1.13 SUBSIDIARY. Prior to forming any subsidiary or
permitting any of its subsidiaries to form any subsidiary (other
than Carlisle Plastics Funding Corporation), Lessee shall (a)
provide not less than twenty-five (25) days prior written notice to
Lessor, (b) receive the prior written consent of Lessor if, after
giving effect to the formation thereof, a new domestic subsidiary
shall have assets of One Hundred Thousand Dollars ($100,000) or
more, or a new foreign subsidiary shall have assets of Five Hundred
Thousand Dollars ($500,000) or more, and (c) cause each new
subsidiary to execute applicable Toll Manufacturing Agreements and
Asset Purchase Agreements for domestic operating subsidiaries.
1.14 MAINTENANCE OF EQUIPMENT AND FIXTURES. Lessee
shall, and shall cause its subsidiaries to, keep and maintain its
equipment and fixtures in good operating condition sufficient for
the continuation of its business conducted on a basis consistent
with past practices, and Lessee or such subsidiary shall provide or
arrange for all maintenance and service and all repairs necessary
for such purpose.
1.15 OFFERING PROCEEDS. Unless Lessor shall otherwise
agree, Lessee shall apply the entire net cash proceeds from any
sale of stock permitted under the Lease, first, to reduce the
revolving credit loan under the Credit Agreement to zero, second,
to reduce the Obligations under the Lease and the Lease Documents
to zero, and, third, for any other legally permissible purpose.
1.16 NOTICE OF LABOR MATTERS. Lessee shall provide
prompt notice to Lessor of (i) any strike or other material labor
dispute against Lessee or any of its subsidiaries, (ii) any
3
<PAGE> 60
organizing efforts involving Lessee or any of its subsidiaries by
any labor union or group of employees, and (iii) any complaints or
charges against Lessee or any of its subsidiaries filed with any
federal, state, local or foreign court, governmental agency or
arbitrator involving an amount in excess of $250,000 and based on,
arising out of, in connection with, or otherwise relating to the
employment or termination of employment by Lessee or any of its
subsidiaries of any individual. Lessee shall provide prompt notice
to Lessor of any collective bargaining agreement or employment
agreement with any officer entered into by Lessee or any subsidiary
of Lessee with any other Person and, together with such notice,
shall provide Lessor with a copy of any such collective bargaining
agreement or employment agreement.
4
<PAGE> 61
EXHIBIT N to Equipment Lease Agreement
--------------------------------------
Lessee covenants and agrees that, without Lessor's prior
written consent, from and after the date hereof until the
expiration of the Lease term:
2.1 RESERVED
2.2 INVESTMENTS; LOANS AND ADVANCES. Except as
otherwise permitted by SECTION 2.3 or 2.4 of Exhibit N or as
required pursuant to the Receivables Funding Facility, Lessee shall
not, nor shall it permit any of its subsidiaries to, make any
investment in, or make or accrue loans or advances of money to any
Person (including, without limitation, Subordinated Debt), through
the direct or indirect lending of money, holding of securities or
otherwise other than Permitted Investments.
2.3 INDEBTEDNESS. Lessee shall not, nor shall Lessee
permit any of its subsidiaries to, create, incur, assume or permit
to exist any Indebtedness, except (i) Indebtedness existing on the
Closing Date and described on Exhibits L-1 and Exhibit L-2 to the
Lease, provided that (A) failure to repay the Senior Notes issued
under the Indenture dated as of June 1, 1992 on or prior to the
scheduled maturity date of such Notes or to refinance such Notes to
a maturity date after the expiration of the Lease term shall
constitute an Event of Default under the Lease, and such
Indebtedness shall no longer constitute permitted Indebtedness
after such scheduled maturity date; and (B) Indebtedness under the
Indenture dated as of April 1, 1989 shall be repaid as follows:
(1) Lessee shall make open market purchases of or otherwise call
for redemption in the manner set forth in such Indenture Senior
Notes issued under such Indenture in an aggregate principal amount
of $23,525,000 on or prior to the Lease Commencement Date, at an
aggregate redemption price not in excess of that provided for in
such Senior Notes; and (2) on or prior to the Lease Commencement
Date Lessee shall call for redemption in the manner set forth in
such Indenture Senior Notes in an aggregate principal amount equal
to the net proceeds to Lessee and its subsidiaries of the sale of
the Equipment to Lessor as provided in Section 4.04(ii) of the
Indentures, such redemption to be effected within the time period
required under such section; and in the case of each of (B)(1) and
(2) of this Section 2.3(i), such Senior Notes shall be redeemed on
the redemption dated applicable thereto set forth in the notices of
redemption and shall not constitute permitted Indebtedness
thereafter, (ii) the Obligations, (iii) deferred taxes not yet
deemed payable, (iv) unfunded pension fund and other employee
benefit plan obligations and liabilities not to exceed $250,000 in
the aggregate and then only to the extent they are permitted to
remain unfunded under applicable law, (v) Subordinated Debt issued
after the Closing Date by Lessee in favor of a subsidiary, (vi)
<PAGE> 62
Subordinated Debt issued by any subsidiary in favor of Lessee in
the ordinary course of Lessee's business in accordance with past
practices for the working capital needs of such subsidiary in an
aggregate amount for all such loans not to exceed $2,000,000
outstanding at any one time, (vii) subject to the aggregate
limitations set forth in Exhibit G-1 to the Lease, Subordinated
Debt issued by any subsidiary in favor of Lessee in the ordinary
course of Lessee's business in accordance with past practices for
the Capital Expenditure needs of such subsidiary; (viii)
Indebtedness incurred under the Receivables Funding Facility, (ix)
Indebtedness incurred under the Credit Agreement, (x) Indebtedness
related to sale leaseback transactions (other than this Lease and
the Subleases) or purchase money transactions; PROVIDED, THAT the
aggregate amount of Indebtedness for all such transactions shall
not exceed $2,500,000 in any Fiscal Year on a non-cumulative basis,
(xi) commencing with Fiscal Year 1995, unsecured Indebtedness in an
aggregate amount not to exceed the Debt Availability, if any, for
the Fiscal Year immediately preceding such Fiscal Year, and (xii)
any extension, renewal, substitution, refinancing or replacement of
any Subordinated Debt set forth on Exhibit L-1 owing by any
subsidiary in favor of Lessee with Subordinated Debt between such
subsidiary and Lessee in the same or lesser amounts and on terms
which are no less favorable to Lessee and Lessor (other than the
amendment of the interest rate in any promissory note evidencing
any such Subordinated Debt to a market rate determined by Lessee in
good faith as of the time of any such amendment). Lessee shall
not, nor shall it permit any of its subsidiaries to, prepay,
redeem, purchase, exchange, convert, defease, retire or otherwise
acquire (collectively, a "Redemption") any Indebtedness prior to
its regularly scheduled maturity date except for Redemptions of (A)
the revolving credit loan under the Credit Agreement and of the
Obligations, (B) Subordinated Debt owing to Lessee by application
of offsets of consideration due and payable by Lessee to such
subsidiary; PROVIDED, THAT any such payments or prepayments of such
Subordinated Debt shall not be reborrowed by such subsidiary except
as permitted by clauses (vi) and (vii) of this Section 2.3, and (C)
Indebtedness arising under the Indentures or the Fairmont IRB;
PROVIDED, THAT no Redemption under any of the Indentures (other
than, for purposes of clause (i) below only, a Redemption of Senior
Notes required to be made by the Lease with the net proceeds of the
sale and leaseback transaction contemplated by the Lease and the
Subleases) or the Fairmont IRB shall be permitted unless (i) Lessee
shall have unused Borrowing Availability under the Credit Agreement
of at least $7,500,000 after giving effect to any such Redemption,
(ii) no Default or Potential Default shall have occurred and be
continuing or shall result from such Redemption, and (iii) Lessee
shall have provided to Lessor no later than five (5) Business Days
prior to the proposed date of such Redemption a certificate
executed by Lessee's Chief Financial Officer certifying that such
Redemption is being made in conformity with the Indentures and, in
the case of a Redemption of all or any portion of the Fairmont IRB,
the agreements underlying the Fairmont IRB and setting forth in
each case the source of funds to be used to consummate such Redemption.
2
<PAGE> 63
2.4 EMPLOYEE LOANS AND TRANSACTIONS. Lessee shall not,
and shall not cause or permit any of its subsidiaries to:
(i) make loans or advances to any employee or Affiliate
other than:
(A) Subordinated Debt permitted by SECTION 2.3 of
this Exhibit N; or
(B) advances for travel and related expenses to
Lessee's officers and employees, in each case solely in the
ordinary course of business consistent with past practice, and not
to exceed $100,000 in the aggregate for all such amounts
outstanding at any time; or
(C) bona-fide loans made by Lessee to its officers
and employees in an amount not to exceed $400,000 in the aggregate
for all such loans outstanding at any one time; PROVIDED, THAT (x)
each such loan is evidenced by a promissory note due within three
(3) years, and (y) each such loan shall have been made for the
purpose of providing interim financing to such employee or officer
for the purpose of acquiring improved real estate as the principal
residence of such employee or officer in connection with a
relocation of such Person to a new office; or
(D) other bona-fide loans made by Lessee to its
officers and employees in the ordinary course of business in an
amount not to exceed $50,000 in the aggregate for all such loans
outstanding at any one time; or
(ii) except for the Management Services Agreement, enter
into any transaction with any Affiliate except on an arm's length
basis on fair and reasonable terms no less favorable to Lessee or
the applicable subsidiary than would be obtained in a transaction
with a Person that is not an Affiliate.
2.5 CAPITAL STRUCTURE AND BUSINESS. Lessee shall not,
nor shall it permit any of its subsidiaries to: (i) make any
changes in any of its business objectives, purposes or operations
which could in any way adversely affect the repayment of the
Obligations or could have or result in a Material Adverse Effect,
(ii) make any change in the capital structure of any subsidiary of
Lessee as described on Exhibit F to the Lease (including the
issuance of any shares of stock, warrants or other securities
convertible into stock or any revision of the terms of the
outstanding stock of any subsidiary of Lessee), or (iii) amend its
certificate or articles of incorporation or bylaws. Neither Lessee
nor any of its subsidiaries shall engage in any business other than
the businesses currently engaged in by Lessee or such subsidiary.
2.6 GUARANTEED INDEBTEDNESS. Lessee shall not, nor
shall it permit any of its subsidiaries to, incur any Guaranteed
Indebtedness except (i) by endorsement of instruments or items of
3
<PAGE> 64
payment for deposit to the general account of Lessee, (ii) for
Guaranteed Indebtedness incurred pursuant to the terms and
conditions of the CIT Guaranty Agreement and (iii) Guaranteed
Indebtedness of the Senior Notes which guarantees are in existence
on the Lease Commencement Date and Guaranteed Indebtedness incurred
for the benefit of Lessee or such subsidiary if the primary
obligation constitutes Indebtedness permitted by clause x of
Section 2.3 of this Exhibit N.
2.7 LIENS. Neither the Lessee nor any of its
subsidiaries shall become a party to any new agreement, note,
indenture or instrument (other than the Receivables Financing
Facility), or take any other action, which would prohibit the
creation of a lien on any of its properties or other assets in
favor of Lessor, as additional collateral for the Obligations or
require, in connection with the granting of any such lien in favor
of Lessor, equal or ratable liens in favor of any other Person or
otherwise impose a burden upon the rights and benefits afforded to
Lessor under the Lease.
2.8 SALE OF ASSETS. Lessee shall not, nor shall it
permit any of its subsidiaries to, sell, transfer, convey, assign
or otherwise dispose of any of its properties, assets or business,
including the capital stock of any subsidiary or any of its
accounts (with or without recourse) to any other Person other than,
in the case of a subsidiary, to Lessee or another subsidiary and
except for (i) sales of inventory in the ordinary course of
business, (ii) sales of accounts by Lessee to a subsidiary pursuant
to the Receivables Funding Facility, and (iii) the sale or other
disposition of property (other than the Equipment, disposition of
which is subject to the provisions of the Lease and the Subleases)
which is no longer used or useful in the business of Lessee or its
subsidiaries; PROVIDED, THAT any such sale or disposition is made
for the fair market value of such property.
2.9 DEFAULT. Lessee shall not, nor shall it permit any
of its subsidiaries to, take any action or omit to take any action,
which act or omission would constitute (a) a Default or a Potential
Default under, pursuant to, or noncompliance with any of, the terms
of this Lease or any of the other Lease Documents or (b) a default
or an event of default pursuant to, or noncompliance with, any
other contract, lease, mortgage, deed of trust, instrument or other
agreement to which it is a party or by which it or any of its
property is bound, or any document creating a lien.
2.10 ERISA. Neither the Lessee, any subsidiary of Lessee
nor any ERISA Affiliate shall without Lessor's prior written
consent acquire any new ERISA Affiliate that maintains or has an
obligation to contribute to a Pension Plan that has either an
"accumulated funding deficiency", as defined in Section 302 of
ERISA, or any "unfunded vested benefits", as defined in Section
4006(a)(3)(e)(iii) of ERISA, in the case of any plan other than a
Multiemployer Plan, and in Section 4211 of ERISA in the case of a
4
<PAGE> 65
Multiemployer Plan. Additionally, neither the Lessee, any
subsidiary of Lessee nor any ERISA Affiliate shall, without
Lessor's prior written consent, permit or suffer any condition set
forth on Schedule 3.13 to the Credit Agreement to cease to be met
and satisfied at any time; terminate any Pension Plan that is
subject to Title IV of ERISA where such termination could
reasonably be anticipated to result in liability to such Person;
permit any accumulated funding deficiency, as defined in Section
302(a)(2) of ERISA, to be incurred with respect to any Pension
Plan; fail to make any contributions or fail to pay any amounts due
and owing as required by the terms of any Plan before such
contributions or amounts become delinquent; make a complete or
partial withdrawal (within the meaning of Section 4201 of ERISA)
from any Multiemployer Plan; or at any time fail to provide Lessor
with copies of any Plan documents or governmental reports or
filings, if requested by Lessor.
2.11 RESERVED.
2.12 RESERVED.
2.13 SALE-LEASEBACKS. Neither Lessee nor any of its
subsidiaries thereof shall engage in any sale-leaseback or similar
transaction involving any of its assets, other than the
transactions expressly contemplated pursuant to the terms and
conditions of this Lease and the Subleases or as permitted under
Section 2.3(x) of this Exhibit N.
2.14 RESTRICTED PAYMENTS. Lessee shall not, nor shall it
cause or permit any of its subsidiaries to, make any Restricted
Payment; PROVIDED, THAT Lessee's subsidiaries may continue to make
dividends, distributions and payments to Lessee.
2.15 LEASES. Lessee shall not, nor shall it cause or
permit any of its subsidiaries to, become or remain liable in any
way, whether directly or by assignment or as a guarantor or other
surety, for the obligations of a lessee under any lease of real
property or any operating lease or similar agreement or
arrangement, if the aggregate amount of all rents paid or committed
to be paid by Lessee and its subsidiaries under all such leases
would exceed the following amounts for each of the following Fiscal
Years on a non-cumulative basis:
<TABLE>
<CAPTION>
Fiscal Year Amount
----------- ------
<S> <C>
1994 $23,134,000
1995 25,448,000
1996 27,992,000
1997 30,791,000
1998 33,870,000
1999 37,257,000
</TABLE>
5
<PAGE> 66
2.17 STOCKHOLDERS. Lessee shall not, nor shall it cause
or permit any of its subsidiaries to, cause or suffer the
occurrence of any change in the composition of the stockholders of
any of its subsidiaries as of the Lease Commencement Date.
2.18 FISCAL YEAR. Lessee shall not, nor shall it cause
or permit any of its subsidiaries to, change its Fiscal Year.
2.19 SALE OF STOCK. Lessee shall not sell (whether in a
public or private offering or otherwise) any of its stock unless
the proceeds of such sale are applied as required by Section 1.15
of Exhibit M to the Lease. Lessee shall not, nor shall it permit
any of its subsidiaries to, sell (whether in a public or private
offering or otherwise) any of the stock of any subsidiary of
Lessee.
2.20 RESERVED.
2.21 NO IMPAIRMENT OF DISTRIBUTIONS. Lessee shall not,
nor shall it permit any of its subsidiaries to, directly or
indirectly, enter into or become bound by any agreement,
instrument, indenture or other obligation which could directly or
indirectly restrict, prohibit or require the consent of any Person
with respect to the payment of dividends or other distributions or
the making of intercompany loans by any subsidiary to Lessee, or
which would require as a condition thereto that any amount be paid,
or liens be granted, or assets transferred, to any Person.
2.22 AMENDMENT TO AGREEMENTS. Lessee shall not, nor shall
it permit any subsidiary to, amend, modify, restate, terminate or
waive, nor suffer the amendment, modification, restatement,
termination or waiver of, any of the provisions of any of the
Indentures, the CIT Documents, the Credit Agreement and the Loan
Documents (as defined herein), the Receivables Funding Facility or
the Toll Manufacturing Agreements or the Asset Purchase Agreements.
6
<PAGE> 67
EQUIPMENT SCHEDULE NO. 1
forming a part of the Equipment Lease Agreement dated as of April
4, 1994
1. EQUIPMENT. The Equipment leased hereunder shall be as
set forth in the schedule attached hereto as Annex A.
TOTAL FUNDING AMOUNT: $45,025,270
2. TERM. Upon and after the date of execution hereof, the
Equipment shall be subject to the terms and conditions provided
herein and in the Equipment Lease Agreement referred to above (the
"Lease") (which is incorporated herein by reference).
A full term of lease with respect to said Equipment shall
commence on the date hereof and shall extend for sixty (60) months
and no days, to and including April 4, 1999.
3. RENT. From and after the date hereof, the rent for said
Equipment during the term of this Lease shall be payable as
hereinafter set forth. Each payment of rent shall be comprised of
a portion of the Total Funding Amount (the Total Funding Amount
being referred to herein as "Principal") and interest. Interest
shall be payable on the Principal balance of the Lease from the
Lease Commencement Date through and including the dates of payment
at the floating per annum simple interest rate ("Contract Rate")
calculated as hereinafter set forth. Until the Option to Convert
(as defined below) is exercised, the Contract Rate shall be
adjusted once each calendar month, and such adjustment shall be
effective during the adjustment period ("Adjustment Period") as
hereinafter defined. Each Adjustment Period shall commence on the
fourth day of a calendar month and shall continue through the same
day of the next succeeding calendar month. The first Adjustment
Period shall commence on April 4, 1994. The Contract Rate for each
Adjustment Period shall be equal to the sum of (i) 2.65 percent
(2.65%) per annum plus (ii) a variable per annum interest rate
which shall be equal to the one month LIBOR rate as indicated in
the "Money Rates" column of THE WALL STREET JOURNAL, Eastern
Edition, published on the first day of such Adjustment Period or,
if such day is not a Business Day, on the first Business Day
following the first day of such Adjustment Period.
The Principal balance of the Lease is payable in lawful
money of the United States in 60 consecutive monthly installments
(each, a "Periodic Installment") calculated as set forth below and
a final installment which shall be in the amount of the Fixed
Purchase Price. The first Periodic Installment shall be due and
payable on May 4, 1994 and the following Periodic Installments
shall be due and payable on the same day of each succeeding month
(each, a "Payment Date"). Payments of Principal shall be in equal
<PAGE> 68
monthly installments within each successive yearly period
commencing on April 4, 1994, and shall be in the following
aggregate amounts during each such year: $7,003,931 in year one;
$8,704,886 in year two; $8,704,886 in year three; $10,005,616 in
year four; and $9,805,503 in year five. In addition, the final
installment in the amount of the Fixed Purchase Price shall be due
and payable on the Payment Date on which the final Periodic
Installment is due and payable. Annex D to the Equipment Schedule
contains a monthly Principal amortization schedule for the term of
the Lease and is incorporated herein by reference. In the event
that a Payment Date is not a Business Day, the payment due on such
date shall be due on the next succeeding Business Day.
Lessee shall also make mandatory prepayments of
Principal, without premium or penalty, semi-annually within five
Business Days following delivery of Lessee's audited year-end and
unaudited six month financial statements (but in no event later
than 95 days after the conclusion of each Fiscal Year and 65 days
after the conclusion of each six month operating period,
respectively). The first such payment shall be in an amount equal
to forty percent (40%) of Consolidated Net Income for the Fiscal
Year ending December 31, 1994, and each successive payment shall be
in an amount equal to forty percent (40%) of Lessee's Consolidated
Net Income for the six month period then ended; PROVIDED, that
prepayments shall not exceed $2,000,000 with respect to any Fiscal Year.
Such prepayments will be applied to the Principal payments due in inverse
order of their maturity.
In addition to the payments of Principal provided above,
interest at the Contract Rate shall be payable on each Payment
Date. All payments shall be applied first to interest and then to
Principal. Each payment may, at the option of Lessor, be
calculated and applied on an assumption that such payment would be
made on its due date. The acceptance by Lessor of any payment
which is less than payment in full of all amounts due and owing at
such time shall not constitute a waiver of Lessor's right to
receive payment in full at such time or at any prior or subsequent
time. Interest shall be calculated on the basis of a 360 day year.
So long as (i) no Default exists under the Lease or any
Sublease, (ii) all the terms and conditions of the Lease, the
Subleases and all related agreements, documents and instruments are
fulfilled, and (iii) the yields for the following United States
Treasury Notes, as reported in THE WALL STREET JOURNAL column
"Treasury Bonds, Notes & Bills" on the date that is five Business
Days prior to the Notice Date (as hereinafter defined), are as
follows: (A) the yield of one year Treasury Notes is at least 20
basis points greater than the yield of six month Treasury Notes,
(B) the yield of three year Treasury Notes is at least 50 basis
points greater than the yield of one year Treasury Notes, and (C)
the yield of five year Treasury Notes is at least 50 basis points
higher than the yield of three year Treasury Notes, Lessee may
elect to convert (the "Option to Convert") the Contract Rate to a
- 2 -
<PAGE> 69
fixed per annum simple interest rate as of any day on which a
Periodic Installment is due (the "Conversion Date") upon at least
30 but no more than 60 days prior written notice (the "Notice
Date") to Lessor accompanied by a conversion fee of $500.00 (which
notice shall be irrevocable and shall be sent to the attention of
Lessor's Business Center Manager, 44 Old Ridgebury Road, Danbury,
CT 06810). Such notice shall state the due date of a Periodic
Installment in which Lessee elects the fixed Contract Rate to
apply.
If Lessee elects to exercise the Option to Convert, the
fixed Contract Rate shall be equal to the sum of the Base Rate (as
hereinafter defined) plus the Current Rate, as determined below.
The "Base Rate" shall be equal to 2.95 percent (2.95%) per annum.
The "Current Rate" shall be equal to the per annum rates determined
by reference below to the remaining time until the final Periodic
Installment is due:
(i) If there are less than twelve (12) months remaining
from the Conversion Date before the final Periodic Installment
is due, the "Current Rate" shall be the per annum interest
rate for "1-Year" Treasury Bills, Constant Maturity, under the
column indicating an average rate as stated in the Federal
Reserve Statistical Release H.15(519) for the second week of
the month preceding the calendar month in which the fixed
Contract Rate will be effective. If, for any reason
whatsoever, the Federal Reserve Statistical Release H.15(519)
is no longer published, the Current Rate shall be equal to the
latest annualized interest rate for "one year" U.S. Treasury
Bills as reported by the Federal Reserve Board on a weekly-
average basis, adjusted for constant maturity, as indicated in
the "Money Rates" column of THE WALL STREET JOURNAL, Eastern
Edition, published on the first Business Day of the calendar
month preceding the calendar month in which the fixed Contract
Rate will be effective.
(ii) If there are at least twelve (12) but less than
twenty-four (24) months remaining from the Conversion Date
before the final Periodic Installment is due, the "Current
Rate" shall be determined in the same manner as noted in
subparagraph (i) above, except the Current Rate shall be based
upon the rate listed for "2-Year" Treasury Bills.
(iii) If there are at least twenty-four (24) but less
than thirty-six (36) months remaining from the Conversion Date
before the final Periodic Installment is due, the "Current
Rate" shall be determined in the same manner as noted in
subparagraph (i) above, except it shall be based upon the rate
listed for "3-Year" Treasury Bills.
(iv) If there are at least thirty-six (36) but less than
forty-eight (48) months remaining from the Conversion Date
before the final Periodic Installment is due, the "Current
- 3 -
<PAGE> 70
Rate" shall be interpolated on a straight-line basis,
utilizing the Current Yields which would be calculated as of
the date of determination of the Current Yield under clause
(iii) for 3-Year Treasury Bills and clause (v) for 5-Year
Treasury Bills, determined in the same manner as noted in
subparagraph (i) above, except it shall be based upon the rate
listed for "4-Year" Treasury Bills.
(v) If there are at least forty-eight (48) but less than
sixty (60) months remaining from the Conversion Date before
the final Periodic Installment is due, the "Current Rate"
shall be determined in the same manner as noted in
subparagraph paragraph (i) above, except it shall be based
upon the rate listed for "5-Year" Treasury Bills.
4. LESSEE'S CONFIRMATION. Lessee hereby confirms and
warrants to Lessor that the Equipment: (a) was duly delivered to
Lessee or the applicable subsidiary of Lessee executing a Sublease
on the date hereof at the locations specified in Section 5 hereof;
(b) has been received, inspected and determined to be in compliance
with all applicable specifications and that the Equipment is hereby
accepted for all purposes of the Lease; and (c) is a part of the
"Equipment" referred to in the Lease and is taken subject to all
terms and conditions therein and herein provided.
5. LOCATION OF EQUIPMENT. The locations of the Equipment
are specified on the Schedule of Equipment attached hereto.
6. LATE CHARGE RATE. The Late Charge Rate shall be one and
one-half (1[Section] ) percent per month of the amount in arrears for the
period such amount remains unpaid (provided, however, that if such
rate exceeds the highest rate permitted by Applicable Law, then the
Late Charge Rate shall be the highest rate permitted by Applicable
Law).
7. SCHEDULE OF STIPULATED LOSS AND TERMINATION VALUES. The
Schedule of Stipulated Loss Values attached hereto as Annex B and
the Schedule of Termination Values attached hereto as Annex C are
incorporated herein by reference, and shall be applicable solely to
the Equipment described in this Equipment Schedule.
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<PAGE> 71
8. PROPERTY, CASUALTY AND PUBLIC LIABILITY INSURANCE. The
amount of public liability insurance referenced in Section 11 of
the Lease is $2 million. The amount of combined single limit
casualty insurance shall be the Stipulated Loss Value for the
Equipment subject to this Equipment Schedule from time to time.
DATE OF EXECUTION: April 4, 1994
GENERAL ELECTRIC CAPITAL CORPORATION, CARLISLE PLASTICS, INC.
AS AGENT FOR ITSELF AND CERTAIN Lessee
PARTICIPANTS
Lessor
By: /s/ Christopher Ziluca By: /s/ Rajiv P. Bhatt
---------------------------------- ----------------------
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<PAGE> 1
Exhibit 10.21
Equipment Sublease Agreements
-----------------------------
Attached is the Equipment Sublease Agreement dated as of April 4, 1994
between the Company and American Western. Substantially identical agreements
were entered into with Poly-Tech and Rhino-X on the same date.
<PAGE> 2
EXECUTION COPY
EQUIPMENT SUBLEASE AGREEMENT
THIS EQUIPMENT SUBLEASE AGREEMENT is made as of the 4th day of April,
1994, by and between CARLISLE PLASTICS, INC. ("Sublessor") and AMERICAN WESTERN
CORPORATION ("Sublessee"). Unless otherwise defined herein, capitalized terms
used as defined terms herein shall have the meanings assigned to such terms in
Exhibit B hereto.
The parties agree that Sublessor agrees to lease to Sublessee, and
Sublessee agrees to lease from Sublessor, the Equipment described in the
Equipment Schedules to be executed pursuant hereto, subject to the terms set
forth herein and in the Equipment Schedules.
1. TERM. The term of this Sublease with respect to any item of the
Equipment shall consist of the term set forth in the Equipment Schedule
relating thereto; provided, however, that this Sublease shall be effective from
and after the date of execution hereof.
2. RENT. Sublessee shall pay Sublessor rent, without any deduction
or setoff and without prior notice or demand, in the aggregate amounts
specified in the Equipment Schedules. Except as provided in Section 12 and
Section 20 hereof, this is a non-cancel- able net lease and Sublessee shall not
be entitled to any abatement or reduction of payments due hereunder for any
reason. Sublessee agrees to make the payments due hereunder regardless of any
exist- ing or future offset or claim which may be asserted by Sublessee. Rent
and all other amounts due and owing from Sublessee to Sublessor under or in
connection with this Sublease are payable as and when specified in the
Equipment Schedules by preauthorized debit pursuant to the preauthorized Debit
Agreement; and shall be effective upon receipt. Time is of the essence. If
any payment is not paid on the due date, then, unless such nonpayment is due
solely to any act or failure to act by General Electric Capital Corporation,
Sublessor may collect, and Sublessee agrees to pay, a charge calculated as the
product of the Late Charge Rate specified in the applicable Equipment Schedule
and the amount in arrears for the period such amount remains unpaid. In
addition, if any payment of rent is not paid on the Payment Date on which it is
due, then, unless such nonpayment is due solely to any act or failure to act by
General Electric Capital Corporation, Sublessor may collect, and Sublessee
agrees to pay, a charge in an amount equal to the Late Payment Fee with respect
thereto.
3. REPRESENTATIONS AND WARRANTIES OF SUBLESSEE. Sublessee represents
and warrants that, as of the date hereof: (a) Sublessee
<PAGE> 3
and each of its direct and indirect subsidiaries is a corporation duly
organized and validly existing in good standing under the laws of the state of
its incorporation and is in good standing and qualified as a foreign
corporation in (i) each jurisdiction in which the Equipment is or will be
located and (ii) in such jurisdictions where its ownership or lease of property
or the conduct of its business requires it to be so qualified, except for
purposes of this clause (ii), in such jurisdictions where the failure to be so
qualified would not have a Material Adverse Effect. Exhibit F hereto correctly
identifies (i) the name of each subsidiary of Sublessee, (ii) the jurisdiction
of its incorporation, (iii) the authorized, issued and outstanding capital
stock of each such subsidiary and the holders thereof, and (iv) the address of
such subsidiary's chief executive office and principal place of business.
(b) The execution, delivery and performance of this Sublease and all
related instruments and documents (i) have been duly authorized by all
necessary corporate action on the part of Sublessee and each subsidiary, as
applicable; (ii) do not require the approval of any stockholder, trustee or
holder of any obligations of Sublessee or any of its subsidiaries except such
as have been duly obtained; and (iii) do not and will not contravene any law,
governmental rule, regulation or order now binding on Sublessee or any of its
subsidiaries or the charter or by-laws of Sublessee or any of its subsidiaries,
or contravene the provisions of, or constitute a default under, or result in
the creation of any lien or encumbrance upon the property of Sublessee or any
of its subsidiaries under, any indenture, mortgage, contract or other agreement
to which Sublessee or any of its subsidiaries is a party or by which any of
them or any of their property is bound.
(c) This Sublease and all related instruments and documents, when
entered into, will constitute legal, valid and binding obligations of Sublessee
and its subsidiaries, as applicable, enforceable against Sublessee and its
subsidiaries, as applicable, in accordance with the terms thereof, except as
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally, and by
applicable laws (including any applicable common law and equity) and judicial
decisions which may affect the remedies provided herein.
(d) There are no (i) pending actions or proceedings to which Sublessee
or any of its subsidiaries is a party, or (ii) other pending or threatened
actions or proceedings of which Sublessee or any of its subsidiaries has
knowledge, before any court, arbitrator or administrative agency, which, in any
such case, either individually or in the aggregate, would materially adversely
affect the financial condition, operations, business or prospects of Sublessee
or the ability of Sublessee or any of its subsidiaries to perform its
obligations hereunder or under any related instruments and documents. Further,
Sublessee and its
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<PAGE> 4
subsidiaries are not in default under any obligation for the payment of
borrowed money, for the deferred purchase price of property or for the
payment of any rent under any lease agreement which, in each case either
individually or in the aggregate, would adversely affect the financial
condition of Sublessee or any of its subsidiaries or the ability of Sublessee
or any of its subsidiaries to perform its obligations hereunder or under any
related instruments and documents.
(e) To the knowledge of Sublessee, no document furnished by Sublessee
to Sublessor in connection with the transactions contemplated hereby contains
or will contain any untrue statement of a material fact or omits or will omit a
material fact necessary to make the statements contained therein not
misleading, under the circumstances under which any such statement shall have
been made. There is no fact known to Sublessee or any of its subsidiaries
relating to the Equipment or the transactions contemplated hereby that
materially adversely affects or, so far as Sublessee can now reasonably
foresee, might materially adversely affect the ability of Sublessee or any of
its subsidiaries to perform its obligations under this Sublease and all related
instruments and documents.
(f) The address stated below the signature of Sublessee is the chief
place of business and chief executive office (as such term is used in Section
9-103(3) of the Uniform Commercial Code) of Sublessee; and except for the names
specified on Exhibit H hereto, neither Sublessee nor any of Sublessee's
subsidiaries or Affiliates conducts business in a corporate or divisional name
at any location where the Equipment will be located under any other name. Each
Equipment Schedule correctly identifies the location of each item of Equipment
specified thereon and whether any of such locations are leased by Sublessee or
subject to any real property mortgage. Sublessee and its subsidiaries have no
other places of business where the Equipment will be located other than those
specified in the Equipment Schedules.
(g) Immediately prior to the execution and delivery of the Bill of
Sale, Sublessee shall own the Equipment subject to such Bill of Sale free of
all liens, claims and encumbrances other than Permitted Liens, and except for
the financing statements listed on Exhibit P hereto, releases for which will be
delivered to Sublessor at or prior to the closing of the transactions
contemplated to occur on the date of such Bill of Sale, no effective financing
statement or other form of lien notice covering all or any part of the
Equipment is on file in any recording office except those in favor of
Sublessor. None of the Equipment is in the possession of any consignee,
bailee, warehouseman, agent, sublessee or other processor.
(h) No consent, approval, giving of notice to, registration with, or
taking of any other action in respect of any Governmental Authority, including
but not limited to state or Federal environmental protection agencies, not
already obtained is
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<PAGE> 5
required for the valid and lawful execution and delivery of this Sublease and
the related instruments and documents.
(i) Except for the filing of any required financing statements which
have already been made, no action is required to perfect Lessor's right, title
and interest in and to the Equipment.
(j) The Bill of Sale executed by Sublessee transfers to Lessor good
title to the Equipment described on the schedule attached thereto free and
clear of any and all encumbrances, liens, charges or defects other than
Permitted Liens, and Sublessee has paid for all of such Equipment in full. No
notice must be given, and no other action must be taken with respect to any
state or local jurisdiction, or any Person, in order to preserve for Lessor all
the rights transferred by the Bill of Sale.
(k) Under the laws of the state(s) in which the Equipment is to be
located, the Equipment consists solely of personal property and not fixtures.
(l) On the Lease Commencement Date, Lessor will have good and
marketable title to the items of Equipment being subjected to this Sublease and
the Equipment Schedules.
4. COVENANTS OF SUBLESSEE. Sublessee covenants and agrees as follows:
(a) Promptly upon any Responsible Officer of Sublessee obtaining
knowledge of any condition or event which constitutes a Default or a Potential
Default hereunder, Sublessee shall provide prompt written notice to Sublessor
specifying such condition and what action Sublessee is taking or proposes to
take with respect thereto.
(b) Sublessee will promptly execute and deliver to Sublessor such
further documents, instruments and assurances and take such further action as
Sublessor from time to time may reasonably request in order to carry out the
intent and purpose of this Sublease and to establish and protect the rights and
remedies created or intended to be created in favor of Sublessor or Lessor
hereunder.
(c) Sublessee will and, will cause its subsidiaries to, comply with all
affirmative and negative covenants set forth in Exhibits M and N hereto, to the
same extent as if set forth herein, which Exhibits shall be incorporated herein
by reference.
(d) Sublessee shall, and shall cause each of its subsidiaries to,
comply with the financial covenants set forth in Exhibits G-1 and G-2 hereto to
the same extent as set forth herein, which Exhibits shall be incorporated
herein by reference.
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<PAGE> 6
(e) Sublessee covenants and agrees that, without Lessor's prior written
consent, from and after the date hereof until the expiration of the Sublease
term:
(1) Sublessee shall not, nor shall Sublessee permit any of its
subsidiaries to, directly or indirectly, by operation of law or
otherwise, merge with, consolidate with, acquire all or substantially
all of the assets or capital stock of, or otherwise combine with, any
Person, except (A) as provided in Section 15(a)(8) hereof and (B) that
Sublessee or a subsidiary of Sublessee may merge with or into a
Wholly-Owned subsidiary of Lessee or Lessee, provided that, in the case
of a merger involving Lessee, Lessee is the surviving corporation;
(2) Sublessee shall not, nor shall it permit any subsidiary to,
purchase or agree to purchase inventory or other products from any
Affiliates of Sublessee except in arm's-length transactions upon terms
and conditions that are fair and reasonable to the purchaser and
pursuant to the Asset Purchase Agreements and the Toll Manufacturing
Agreements;
(3) Sublessee shall not, nor shall Sublessee permit any of its
subsidiaries to take any action which would be reasonably likely to (A)
adversely affect its ability to perform its obligations hereunder or
(B) have a Material Adverse Effect; and
(4) Sublessee shall not, nor shall Sublessee permit any of its
subsidiaries to, create, incur, assume or permit to exist any lien on
or with respect to any properties or assets of Sublessee or any of its
subsidiaries constituting fixed assets or real property or interests
therein, whether now owned or hereafter acquired, or any income or
profits therefrom, except (i) Permitted Liens; (ii) the liens created
by this Subleases or created in connection with the Credit Agreement or
the Receivables Funding Facility; (iii) the Liens in effect on the date
hereof and described on Exhibit S hereto; and (iv) Purchase Money Liens
securing Indebtedness permitted by Section 2.3(x) of Exhibit N to this
Sublease.
(f) Sublessee will not attach or incorporate any item of Equipment to
or in any other item of equipment or personal property or to or in any real
property in a manner that gives rise to the assertion of any lien, claim or
encumbrance on such item of Equipment by reason of such attachment or the
assertion of a claim that such item of Equipment has become a fixture.
Sublessee hereby agrees in accordance with Section 20(c) hereof that it will
purchase any such item of Equipment which Lessor or Sublessor notifies
Sublessee in writing is subject to the assertion of any
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<PAGE> 7
such lien, claim or encumbrance within ten (10) days of such notice.
(g) Sublessee will use the net proceeds of the sale of the Equipment to
redeem Senior Notes issued under the Indenture dated as of April 1, 1989 as
provided in Section 2.3(i) of Exhibit N to this Sublease.
5. AUTHORIZATION AND CONDITIONS. Sublessor's obligations to lease the
Equipment to Sublessee under any Equipment Schedule shall be conditioned upon
and subject to the receipt by Sublessor prior to the Lease Commencement Date
of the following, in form and substance satisfactory to Sublessor:
(i) evidence as to due compliance with the insurance provisions
hereof;
(ii) Uniform Commercial Code financing statements and lien search
reports as are reasonably required by Lessor;
(iii) a certificate of Sublessee's Secretary certifying: (1)
resolutions of Sublessee's Board of Directors duly authorizing the sale
of the Equipment to Lessor, the subleasing of the Equipment hereunder
and the execution, delivery and performance of this Sublease and
the Equipment Schedules and all related instruments and documents, and
(2) the incumbency and signature of the officers of authorized to
execute such documents;
(iv) a certificate of a Responsible Officer of Sublessee certifying on
behalf of Sublessee that no Default or Potential Default has occurred
and is continuing;
(v) an opinion of counsel from Messrs. Lindquist & Vennum, counsel for
Sublessee and each subsidiary, and such other opinions of counsel as
Lessor may request, in each case in form and substance satisfactory to
Lessor;
(vi) execution and delivery of the Bill of Sale and other such
documents as Sublessor may reasonably request consistent with the
terms hereof;
(vii) Lessor shall have received an Appraisal with respect to such
Equipment in form and substance satisfactory to Lessor;
(viii) complete descriptions on an itemized basis of all Equipment
under each Equipment Schedule including make, model, manufacturer,
serial numbers, age, date placed in service and Total Funding
Amount, together with all equipment specifications;
6
<PAGE> 8
(ix) copies of invoices and purchase orders and satisfactory evidence
that Sublessee has fully paid for such Equipment;
(x) executed copies of the Subordination Agreement and the Subsidiary
Guaranties;
(xi) executed copies of the other Subleases executed by subsidiaries of
Lessee together with an executed Consent to Sublease with respect to
each Sublease and all agreements, documents and instruments required
thereby, and satisfaction of all conditions precedent required to be
satisfied prior to the Lease Commencement Date (as defined in the
applicable Sublease) thereunder, together in each case with such
other documents, instruments and opinions as Lessor may reasonably
request in connection with the execution and delivery thereof; and
(xii) all such other documents, instruments, opinions and evidence of
the taking of such other actions as Sublessor may reasonably request in
connection with the consummation of the transactions contemplated
herein and consistent with the terms hereof, all of which shall be
complete and satisfactory to Sublessor.
6. DELIVERY; INSPECTION AND ACCEPTANCE BY SUBLESSEE. With respect to
the Equipment being purchased by Lessor on the Lease Commencement Date, subject
to the terms and conditions of this Sublease, including without limitation
Sections 4 and 5 hereof, Sublessor and Sublessee shall execute and
deliver an Equipment Schedule containing a complete description of each item of
Equipment to be leased hereunder as of such date. Simultaneously therewith,
Lessor shall purchase such Equipment from Sublessee subject to satisfaction of
such terms and conditions by paying to Sublessee by wire transfer of
immediately available funds an amount equal to the Total Funding Amount
specified on the Equipment Schedule for such Equipment, such purchase to be
evidenced by a Bill of Sale from Sublessee to Lessor in the form attached to
the Lease as Exhibit C covering such Equipment; whereupon, as between Sublessor
and Sublessee, such Equipment shall be deemed to have been accepted by
Sublessee for all purposes of this Sublease and subject to this Sublease. All
expenses incurred in connection with Lessor's purchase, leasing and subleasing
of the Equipment (including the fees and expenses of counsel for Lessor, the
fees and expenses incurred in connection with the delivery of the Appraisal,
UCC search and filing fees, due diligence fees and expenses and other
reasonable expenses) shall be the responsibility of Sublessee and shall be paid
upon demand.
7. USE AND MAINTENANCE. Sublessee shall use the Equipment solely in the
conduct of its business, in a manner so as to maintain the Equipment in good
working order and condition, ordinary wear and tear from proper use alone
excepted, consistent
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<PAGE> 9
with the requirements of all applicable insurance policies, and in compliance
with all Applicable Laws and shall not dismantle or remove material parts of
the items of Equipment, except as may be appropriate in connection with repairs
to the Equipment. Sublessee shall not use or locate the Equipment outside of
the United States. Sublessee shall not (a) (i) move or relocate the Equipment
to any location other than a location listed on Exhibit I hereto or (ii) move
or relocate the Equipment to another location listed on Exhibit I hereto
unless, in the case of either (i) or (ii) Sublessee shall provide Lessor with
prior written notice of such relocation (A) not less than thirty (30) days
prior thereto if the items of Equipment to be relocated, either individually or
in the aggregate with respect to a particular relocation, are valued on the
Equipment Schedule at less than $400,000, and (B) not less than sixty (60) days
prior thereto if the items of Equipment to be relocated, either individually or
in the aggregate with respect to a particular relocation, are valued on the
Equipment Schedule at or above $400,000; and, if Lessor requests, Sublessee
shall fully comply with the requirements of Section 14(b)(iv) hereof, including
any remedial or corrective action required thereunder prior to such relocation,
or (b) except as otherwise provided in Section 16(a) hereof, sell, convey,
transfer, encumber, part with possession of, assign or sublease any item of
Equipment or any of its rights hereunder, and any such purported transaction
shall be null and void and of no force or effect. Sublessee shall not attach
or incorporate the Equipment to or in any other item of equipment not subject
to this Sublease in such a manner that the Equipment may be deemed to have
become an accession to or a part of such other item of equipment or a fixture
on real property. If requested by Lessor, Sublessee will cause each principal
item of the Equipment to be continuously marked, in a plain and distinct
manner, with an inventory control tag furnished by Lessor. At its own expense,
Sublessee will cause the Equipment to be kept and maintained as recommended by
the manufacturer and in as good operating condition as when delivered to
Sublessee hereunder, ordinary wear and tear resulting from proper use alone
excepted, and will provide all maintenance and service and make all repairs or
replacements reasonably necessary for such purpose and in accordance with a
maintenance program consistent with and customary to standard industry practice
and satisfactory to Sublessor. Sublessee shall promptly notify Lessor when
Equipment with a value of 10% or more of the Total Funding Amount shall have
been put in storage for a period of thirty (30) days or more. While any
Equipment is in storage, it shall be maintained by Sublessee in accordance with
the terms hereof. If any parts of the Equipment become worn out, lost,
destroyed, damaged beyond repair or otherwise permanently rendered unfit for
use, Sublessee, at its own expense, will within a reasonable time replace such
parts with replacement parts which are free and clear of all liens,
encumbrances or rights of others (other than Permitted Liens) and have a value,
utility and useful life at least equal to the parts replaced. All parts which
are added to the Equipment which are essential to the operation of the
Equipment, required by Applicable Law or the requirements of
8
<PAGE> 10
insurance or which cannot be detached from the Equipment without materially
interfering with the operation of the Equipment or adversely affecting the
value, utility or useful life which the Equipment would have had without the
addition thereof, shall immediately become the property of Lessor, and shall be
deemed incorporated in the Equipment and subject to the terms of this
Sublease as if originally leased hereunder. Sublessee shall not make any
material alterations to the Equipment without the prior written consent of
Sublessor, which consent shall not be unreasonably withheld. Upon reasonable
advance notice, Sublessor and its agents shall have the right to inspect the
Equipment and all maintenance records with respect thereto at any reasonable
time during normal business hours.
8. DISCLAIMER OF WARRANTIES. SUBLESSOR, NOT BEING A SELLER (AS SUCH
TERM IS DEFINED IN THE UNIFORM COMMERCIAL CODE IN EFFECT IN ANY APPLICABLE
JURISDICTION), NOR A SELLER'S AGENT, EXPRESSLY DISCLAIMS AND DOES NOT MAKE TO
SUBLESSEE ANY WARRANTY OR REPRESENT- ATION, EXPRESS OR IMPLIED, OF
MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OR OTHERWISE, INCLUDING,
BUT NOT LIMITED TO: THE FITNESS FOR USE, DESIGN OR CONDITION OF THE EQUIPMENT;
THE QUALITY OR CAPACITY OF THE EQUIPMENT; THE WORKMANSHIP IN THE EQUIPMENT;
THAT THE EQUIPMENT WILL SATISFY THE REQUIREMENTS OF ANY LAW, RULE,
SPECIFICATION OR CONTRACT PERTAINING THERETO; AND ANY GUARANTY OR WARRANTY
AGAINST PATENT INFRINGEMENT OR LATENT DEFECTS, it being agreed that all such
risks, as between Sublessor and Sublessee, are to be borne by Sublessee.
Sublessor is not responsible for any direct, indirect, incidental or
consequential damage to or losses resulting from the installation, operation or
use of the Equipment or any products manufactured thereby. All assignable
warranties made by the supplier to Sublessee or any subsidiary of Sublessee and
assigned by Sublessee or any subsidiary of Sublessee to Lessor pursuant to the
Bill of Sale are hereby assigned to Sublessee for and during the term of this
Sublease and, following the purchase of the Equipment pursuant to Section 21
upon the expiration of the Sublease term, and Sublessee agrees to resolve all
such claims directly with the supplier. Sublessor shall cooperate fully with
Sublessee with respect to the resolution of such claims, in good faith and by
appropriate proceedings at Sublessee's expense. Any such claim shall not
affect in any manner the unconditional obligation of Sublessee to make rent
payments hereunder.
9. FEES AND TAXES. (a) To the extent permitted by law, Sublessee shall
file any necessary report and return for, shall pay promptly when due, shall
otherwise be liable to reimburse Sublessor (on an after-tax basis) for, and
agrees to indemnify and hold Sublessor harmless from: (i) all recordation,
documentary stamp and other fees (exclusive of initial titling); and (ii)
taxes (other than taxes calculated on the basis of net income of Sublessor or
taxes in the nature thereof), assessments and all other charges or withholdings
of any nature (together with any penalties, fines or interest thereon) relating
to the Equipment or this Sublease or the delivery, acquisition, ownership, use,
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<PAGE> 11
operation, leasing, sale or subleasing of the Equipment, or upon the rentals
payable hereunder, whether the same be assessed to Sublessor or Sublessee.
Sublessor shall provide prompt notice to Sublessee of any claim for
indemnification hereunder; provided, however, that the failure to give such
prompt notice shall not affect Sublessee's obligations hereunder unless such
failure materially and adversely prejudices the rights of Sublessee.
(b) If any report, return or property listing, or any fee, tax or
assessment described in sub-part (a) hereof ("Imposition") is, by law, required
to be filed by, assessed or billed to, or paid by, Sublessor, Sublessee at its
own expense will do all things reasonably required to be done by Sublessor (to
the extent permitted by law) in connection therewith and is hereby authorized
by Sublessor to act on behalf of Sublessor in all respects, including (but not
limited to), the contest or protest, in good faith and by appropriate
proceedings, of the validity of any Imposition, or the amount thereof.
Sublessor agrees fully to cooperate with Sublessee in any such contest, and
Sublessee agrees to indemnify Sublessor promptly for all reasonable expenses
incurred by Sublessor in the course of such cooperation. An Imposition shall be
paid, subject to refund proceedings, by Sublessee if failure to pay would
adversely affect Sublessor's interest in the Equipment. Sublessee shall (i)
reimburse Sublessor upon receipt of written request for reimbursement for any
Imposition charged to or asserted against Sublessor and (ii) on request of
Sublessor, submit to Sublessor written evidence of Sublessee's payment of
Impositions and copies of all reports, returns or similar documents relating to
the Equipment. Provided that Sublessee is not then in Default, if Sublessor
obtains a refund of any Imposition which has been paid (by Sublessee, or by
Sublessor and for which Sublessor has been reimbursed by Sublessee), Sublessor
shall promptly pay such refund to Sublessee, and any amount previously refunded
and returned to Sublessor shall be paid to Sublessee upon the cure of all
outstanding Defaults. If Sublessee fails to pay any such charges when due,
except any Imposition being contested in good faith and by appropriate
proceedings as above provided, Sublessor at its option may do so, in which
event the amount so paid (including any penalty or interest incurred as a
result of Sublessee's failure), plus interest thereon at the Late Charge Rate,
shall be paid by Sublessee to Sublessor not later than the date on which the
next periodic payment of rent is due.
(c) As used in this Section 9, the term "Sublessor" shall mean and
include Carlisle Plastics, Inc., General Electric Capital Corporation (in its
individual capacity) and each Participant, their successors and assigns, and
the consolidated Federal taxpayer group of which each is a member.
(d) Sublessee agrees that it will list and report on behalf of
Sublessor all Equipment subject to this Sublease to all appropriate taxing
jurisdictions for personal property tax (or
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personal property tax equivalent) reporting/compliance purposes. Sublessee
agrees to directly pay all such personal property tax (or personal property tax
equivalent) on behalf of Sublessor to the appropriate taxing jurisdiction on a
timely basis until Sublessor shall otherwise direct in writing. Sublessee
agrees to pay any and all penalties or interest relating to the reporting of
the aforementioned Equipment if Sublessee fails to timely and/or accurately
file any applicable personal property tax return or report or pay any
applicable personal property tax (or personal property tax equivalent) unless
such failure is due to the willful misconduct or gross negligence of Sublessor.
If Sublessor should receive any tax assessment resulting from incorrect, late,
or absent personal property tax reporting or payment by Sublessee, Sublessee
agrees to immediately reimburse Sublessor upon receipt of a written request for
reimbursement for any personal property tax (or personal property tax
equivalent) charged to or assessed against Sublessor. Upon written request of
Sublessor, Sublessee agrees to submit to Sublessor copies of personal property
tax returns and reports (with, if requested, any and all applicable workpapers)
and cancelled checks or other appropriate proof of payments evidencing payment
of the relevant tax to the taxing jurisdiction.
10. LIENS. The parties intend and agree that the Equipment shall remain
personal property, and Sublessee will not take any actions or positions
inconsistent therewith, notwithstanding the manner in which it may be
affixed to any real property. Sublessee further agrees to maintain the
Equipment free from all claims, liens, encumbrances and legal processes
whatsoever (including, without limitation, any such claim or lien arising by
reason of any legal processes against the Equipment arising as result of an
attempt to recharacterize the Equipment from personal property to fixtures)
other than liens (a) for fees, taxes, levies, duties or other governmental
charges of any kind, liens of mechanics, materialmen, laborers, employees or
suppliers and similar liens arising by operation of law in each case incurred
by Sublessee in the ordinary course of business for sums that are not yet
delinquent or are being contested in good faith by negotiations or by
appropriate proceedings which suspend the collection thereof (provided,
however, that such proceedings do not involve any substantial danger (as
determined in Lessor's sole discretion) of the sale, forfeiture or loss of the
Equipment or any interest therein) (such liens collectively referred to herein
as "Permitted Liens"); and (b) liens arising out of any judgments or awards
against Sublessee which have been adequately bonded to protect Sublessor's
interests or with respect to which a stay of execution has been obtained
pending an appeal or a proceeding for review. Sublessee will defend, at its own
expense, Lessor's title to the Equipment from such claims, liens or legal
processes. Sublessee shall also notify Sublessor immediately upon receipt of
notice of any lien, attachment or judicial proceeding affecting the Equipment
in whole or in part.
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11. INSURANCE. (a) Sublessee agrees at its own expense to keep all
Equipment insured against damage to or loss of such Equipment, with a combined
single limit per occurrence of not less than the aggregate sum of all such
amounts specified in each Equipment Schedule and having an aggregate
deductible per occurrence not in excess of $25,000; provided, that Sublessee
will maintain flood and earthquake insurance with limits and deductibles which
are in accordance with reasonable industry practice for similarly situated
businesses in similar industries and giving effect to the location of the
Equipment. General Electric Capital Corporation (in its individual capacity
and as agent) and any successor or assignee of General Electric Capital
Corporation and each Participant shall be named as loss payee with respect to
such insurance.
(b) Sublessee agrees at its own expense to carry liability coverage for
personal injuries, death or property damage in an amount not less than $2
million. General Electric Capital Corporation (in its individual capacity and
as agent) and each Participant shall be named as an additional insured with
respect to all such liability insurance.
(c) Sublessee agrees at its own expense to carry business interruption
insurance covering Sublessee and its subsidiaries in amount not less than $30
Million.
(d) All insurance required by this Section 11 shall be in form and
amount and with companies reasonably acceptable to Lessor, and Sublessee shall
pay the premiums therefor and deliver to Lessor evidence satisfactory to Lessor
of such insurance coverage following any material change thereto and otherwise
annually or upon Sublessor's request; provided, that Sublessee shall also cause
to be provided to Lessor, not less than fifteen (15) days prior to the
scheduled expiration or lapse of such insurance coverage, evidence satisfactory
to Lessor of renewal or replacement coverage. Each insurer shall agree, by
endorsement upon the policy or policies issued by it or by independent
instrument furnished to Lessor, (a) that it will give Lessor thirty (30) days'
prior written notice of the effective date of any material alteration or
cancellation of such policy; (b) that insurance as to the interest of any named
additional insured or loss payee other than Sublessee shall not be invalidated
by any actions, inactions, breach of warranty or conditions or negligence of
Sublessee or any Person with respect to such policy or policies; (c) that
neither Lessor nor any other additional insured shall have any obligation or
liability for premiums in connection with such policy; (d) that it shall waive
any right to any set off or counterclaim or any other deduction and waive any
right of subrogation against Lessor or any additional insured, except for
claims as arise from willful misconduct or gross negligence of such additional
insured; and (e) to such other matters as Lessor reasonably may request. Any
co- insurance coverage shall be in form and substance satisfactory to Lessor.
Without limiting Lessor's rights as loss payee under a
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standard loss payee endorsement as required above, Sublessee hereby
appoints Lessor as Sublessee's attorney-in-fact, with respect to casualties
causing loss or damage in excess of $250,000 or otherwise occurring while a
Default or Potential Default has occurred and is continuing, to make proof of
loss and claim for insurance, to make adjustments with insurers and to receive
payment of and execute or endorse all documents, checks or drafts in connection
with payments made as a result of such insurance policies to the extent the
same relates to the Equipment. Any reasonable expense of Lessor in adjusting
or collecting insurance shall be borne by Sublessee. Sublessee agrees to
immediately and fully report to Lessor if any item of Equipment is involved in
(i) an accident causing personal injury (other than an injury or claim of
injury covered by a worker's compensation policy in the ordinary course of
business) or (ii) property damage in excess of $25,000.
12. LOSS AND DAMAGE. (a) Sublessee assumes the risk of direct and
consequential loss and damage to the Equipment from all causes. Except as
provided in this Section for discharge upon payment of Stipulated Loss Value
and all other amounts due, no loss or damage to the Equipment or any part
thereof shall release or impair any obligations of Sublessee under this
Sublease. Sublessee agrees that Sublessor shall not incur any liability to
Sublessee or any subsidiary of Sublessee for any loss of business, loss of
profits, expenses, or any other damages resulting to Sublessee or any
subsidiary of Sublessee by reason of any failure of or delay in delivery or any
delay caused by any nonperformance, defective performance, or breakdown of the
Equipment, nor shall Sublessor at any time be responsible for personal injury
or the loss or destruction of any other property resulting from the Equipment.
In the event of loss or damage to the Equipment which does not constitute a
Total Loss (as hereinafter defined), Sublessee shall, at its sole cost and
expense, promptly repair and restore such item of the Equipment to the
condition required by this Sublease. Provided that Sublessee is not then in
Default, (a) upon receipt of evidence reasonably satisfactory to Sublessor of
completion of such repairs, Sublessor will apply any insurance proceeds
received by Sublessor on account of such loss to the cost of repairs and (b)
any excess proceeds remaining upon the completion of such repairs shall be
returned to Sublessee.
(b) Upon the occurrence of the actual or constructive total loss of
any item of the Equipment, or the loss, theft or destruction of any item of the
Equipment or damage to any item of the Equipment to such extent as shall make
repair thereof uneconomical (in Sublessee's reasonable discretion) or shall
render any item of the Equipment permanently unfit for normal use or the
condemnation, confiscation, requisition, seizure, forfeiture or other taking of
title to or use of any item of the Equipment (as established to the reasonable
satisfaction of Lessor; any such occurrence being herein referred to as a
"Total Loss"), during the term of this Sublease, Sublessee shall give prompt
notice thereof to Sublessor and Lessor. If the date of occurrence of the Total
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<PAGE> 15
Loss is fifteen (15) or fewer days before such next date for the payment of
rent, (i) on the next date for the payment of rent Sublessee shall pay to
Sublessor the rent then due on such date, and (ii) on the second date for the
payment of rent following the date of occurrence of the Total Loss, Sublessee
shall pay to Sublessor the rent then due on such date plus the Stipulated Loss
Value of the item or items of Equipment with respect to which the Total Loss
has occurred and any other sums then due hereunder with respect to the
Equipment (less any insurance proceeds or condemnation award actually paid to
Sublessor). If the date of occurrence of the Total Loss is more than fifteen
(15) days before such next date for the payment of rent, Sublessee shall pay to
Sublessor the rent then due on such next payment date plus the Stipulated Loss
Value of the item or items of the Equipment with respect to which the Total
Loss has occurred and any other sums then due hereunder with respect to that
Equipment (less any insurance proceeds or condemnation award actually paid to
Sublessor). Upon making such payments of rent, Stipulated Loss Value and other
amounts then due, this Sublease and the obligation to make future rental
payments shall terminate solely with respect to the Equipment or items thereof
so paid for and (to the extent applicable) Sublessee shall become entitled to
such Equipment and the right to receive any future insurance proceeds or
condemnation award in respect thereof as is where is without warranty, express
or implied, with respect to any matter whatsoever, except as provided in the
following sentence. Sublessor shall deliver to Sublessee a bill of sale
transferring and assigning to Sublessee without recourse or warranty (except
that Sublessor shall represent and warrant that it has whatever title Lessor
conveyed to it subject to any Permitted Liens and any liens, claims or
encumbrances required to be removed by Sublessee pursuant to the terms hereof),
all of Sublessor's right, title and interest in and to such Equipment.
Sublessor shall not be required to make and may specifically disclaim any
representation or warranty as to the condition of the Equipment or any other
matters. As used in this Sublease, "Stipulated Loss Value" and "Termination
Value" shall mean the product of the Total Funding Amount (designated on the
appropriate Equipment Schedule) of the Equipment for which such calculation is
being made and the applicable percentage factor set forth on the Schedule of
Stipulated Loss Values or the Schedule of Termination Values (as applicable)
attached to the Equipment Schedule. Stipulated Loss Value and Termination
Value shall be determined as of the next date on which a payment of rent is or
would be due after a Total Loss or other termination of this Sublease, after
payment of any rent due on such date, and the applicable percentage factor
shall be that which is set forth with respect to such Payment Date. After
payment of the final payment of rent due under the term of this Sublease with
respect to any item of Equipment, Stipulated Loss Value and Termination Value
shall be determined as of the date of termination of this Sublease with respect
to such item of Equipment after payment of any such rent due, and the
applicable percentage factor shall be the last
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percentage factor set forth on the Schedule of Stipulated Loss Values or the
Schedule of Termination Values (as applicable).
13. REDELIVERY. Subject to the provisions of Sections 12 and 21 hereof,
if Sublessor requires the return of any Equipment following the occurrence of a
Default under Section 15 hereof, Sublessee shall at its own risk and
expense, return the Equipment to Sublessor in the same condition as when
delivered to Sublessee hereunder, ordinary wear and tear resulting from proper
use thereof excepted, and in such operating condition as is capable of
performing its originally intended use, free and clear of all liens,
encumbrances or rights of others whatsoever except liens, encumbrances or
rights resulting from claims against Sublessor not attributable to the
transactions contemplated herein and otherwise in accordance with the terms of
this Sublease, by the assembling, crating, insuring and delivering of such
Equipment by knowledgeable professionals in accordance with manufacturer's
standards and specifications, if available and if not so available, in
accordance with industry standards for new equipment, with all sumps and tanks
clean and dry and no Hazardous Materials located in or on the Equipment and
together with all maintenance and service records and all software and software
documentation necessary for the operation of the Equipment to such locations as
Sublessor shall specify within the continental United States. Return shall be
completed within forty-five (45) days after termination of this Sublease with
respect to such item of Equipment. In addition to Sublessor's other rights and
remedies hereunder, if any item of the Equipment is not returned in a timely
fashion, or if repairs are necessary to place the Equipment in the condition
required in this Section, Sublessee shall continue to pay to Sublessor rent in
respect of such item of Equipment at the last prevailing lease rate hereunder
for the period of delay in redelivery, or for the period of time reasonably
necessary to accomplish such repairs together with the cost of such repairs, as
applicable. Sublessor's acceptance of such rent on account of such delay or
repair does not constitute a renewal of the term of this Sublease or a waiver
of Sublessor's right to prompt return of the Equipment in proper condition.
14. INDEMNITY/ENVIRONMENTAL MATTERS. (a) GENERAL INDEMNITY. Sublessee
assumes and agrees to indemnify, defend and keep harmless Sublessor, General
Electric Capital Corporation (in its individual capacity and as agent) and each
Participant, their successors and assigns, and their agents and employees
(each an "Indemnitee" and collectively "Indemnitees"), from and against any and
all losses, claims and expenses, including legal expenses (other than such
losses, claims or expenses as may result from the gross negligence or wilful
misconduct of such party, its agents or employees), arising on account of the
ordering, acquisition, delivery, install- ation or rejection of the Equipment,
the ownership of the Equipment during the term of this Sublease, the
possession, maintenance, use, condition (including without limitation, latent
and other defects and whether or not discoverable by any Indemnitee or
Sublessee, any claim in tort for strict liability, and any claim for patent,
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<PAGE> 17
trademark or copyright infringement) or operation of any item of the Equipment,
and by whomsoever used or operated during the term of this Sublease with
respect to that item of the Equipment, the loss, damage, destruction, removal,
return, surrender, sale or other disposition of the Equipment, or any item
thereof, as well as all expenses paid or incurred in connection with the
amendment, modification and administration of, and any restructuring,
refinancing or workout involving, the Lease, the Sublease and the other
documents and agreements executed in connection herewith and therewith and the
collection and enforcement of the Lease, the Sublease and such other documents
and agreements. Sublessor shall give Sublessee prompt notice of any claim or
liability hereby indemnified against; provided, however, that the failure to
give such prompt notice shall not affect Sublessee's obligations hereunder
unless such failure materially and adversely prejudices the rights of
Sublessee. Sublessee shall be entitled to control the defense of any claim or
liability hereby indemnified against, so long as Sublessee is diligently
pursuing such defense and no Default or Potential Default shall have occurred
and be continuing; provided, however, that Sublessee shall not be entitled to
control, or to assume the defense of, any such action, suit or proceeding, if
and to the extent that in the reasonable opinion of the Indemnitee the claims
shall involve the potential imposition of criminal liability on such Indemnitee
or if a Default or Potential Default shall have occurred and be continuing or
Sublessee shall not be diligently defending such claim; provided further,
however, that Sublessor shall have the right to approve defense counsel
selected by Sublessee (which approval shall not unreasonably be withheld). In
the event Sublessee assumes the defense of any such action, any Indemnitee
shall have the right to employ separate counsel in such action and participate
therein, but the fees and expenses of such counsel shall be at the expense of
such Indemnitee, unless (i) the employment of such counsel has been
specifically authorized by Sublessee, or (ii) the counsel employed by Sublessee
has advised such Indemnitee that (x) representation of such Indemnitee by the
same counsel would be inappropriate under the applicable standards of
professional conduct due to actual or potential conflicts of interest or (y)
such counsel's representation of such Indemnitee would be likely to involve
such counsel in representing differing interests which could adversely affect
either the judgment or loyalty of such counsel to such Indemnitee, whether it
be a conflicting, inconsistent, diverse or other interest (in which case
Sublessee shall not have the right to assume the defense of such action on
behalf of such Indemnitee; it being understood, however, that Sublessee shall
not, in connection with any one such action, or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys, and of any local counsel
retained by said firm, at any one time for each such Indemnitee, which firm
shall be designated in writing by such Indemnitee). Sublessee shall not agree
to the settlement of any claim, dispute or other proceeding giving rise to any
claim for
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indemnification hereunder or make any admission of any liability (including any
civil or criminal liability or any liability arising under any Environmental
Laws and Regulations) on behalf of any Indemnitee, without the prior written
consent of such Indemnitee.
(b) ENVIRONMENTAL MATTERS. (i) Sublessee hereby represents, warrants
and covenants that all approvals required to be taken, given or obtained at any
time during the term hereof from any governmental authority, to the extent
relating to environmental protection (including, without limitation, with
respect to solid and liquid waste disposal, waste water disposal, air pollution
and noise pollution), health and safety or the operation or maintenance of the
Equipment, have been or will be as and when required duly taken, given or
obtained, as the case may be and, except as set forth on Exhibit O hereto, no
Hazardous Materials have been or will be disposed of or released (as such term
is used in CERCLA) into, under or on the Premises. Sublessee hereby further
represents and warrants that neither Sublessee nor any of its subsidiaries is a
treatment, storage or disposal facility requiring a permit under the Resource
Conservation and Recovery Act, 42 U.S.C. [Section] 6901 ET SEQ., the
regulations thereunder or any state analog. Sublessee hereby covenants and
agrees that during the term of this Sublease the Equipment will not be used in
connection with any treatment, storage or disposal facility requiring a permit
under the Resource Conservation and Recovery Act, 42 U.S.C. [Section] 6901 ET
SEQ., the regulations thereunder or any state analog and if at any time the
Equipment is located on any Premises during the term of this Sublease that
becomes, constitutes or qualifies as such a treatment, storage or disposal
facility Sublessee shall relocate such Equipment within 30 days thereof in
accordance with Section 7 hereof.
(ii) Except as set forth on Exhibit O hereto, Sublessee hereby
represents, warrants and covenants that the location, operation, use and
maintenance of the Equipment and Sublessee's and each of its subsidiaries'
business operations on the Premises comply and shall continue to comply in all
material respects with all applicable laws and any restrictive covenant or deed
restriction (of record or otherwise) affecting the Equipment or the Premises,
including all applicable zoning ordinances and building codes, flood disaster
laws and health and environmental laws and regulations and other Applicable
Laws, including, but not limited to, The Comprehensive Environmental Response
Compensation and Liability Act of 1980, 42 U.S.C. [Section] 9601 ET SEQ., as
amended ("CERCLA"), the Resource Conservation and Recovery Act of 1976, as
amended by the Solid Waste Disposal Act, as amended by the Hazardous and Solid
Waste Amendments of 1984, 42 U.S.C. [Section] 6901 et seq., the Federal Water
Pollution Control Act, as amended by the Clean Water Act of 1977, 33 U.S.C.
[Section] 1251 ET SEQ., the Toxic Substances Control Act of 1976, 15 U.S.C.
[Section] 2601 ET SEQ., the Emergency Planning and Community Right-to-Know Act
of 1986, 42 U.S.C. [Section] 11001 ET SEQ., the Clean Air Act of 1966, as
amended, 42
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U.S.C. [Section] 7401 ET SEQ., the National Environmental Policy Act of 1975,
42 U.S.C. [Section] 4321, the Rivers and Harbors Act of 1899, 33 U.S.C.
[Section] 401 ET SEQ., the Occupational Safety and Health Act of 1970, as
amended, 29 U.S.C. [Section] 651 ET SEQ., the Safe Drinking Water Act of 1974,
as amended, 42 U.S.C. [Section] 300(f) ET SEQ., the Endangered Species Act of
1973, as amended, 16 U.S.C. [Section] 1531, ET SEQ., and the Oil Pollution
Act of 1990, 33 U.S.C. [Section] 2701 ET SEQ., and all other rules, regulations
and guidance documents promulgated or published thereunder, and any state,
regional, county or local statute, law, rule, regulation or ordinance relating
to public health, safety or the environment, including, without limitation,
releases, discharges, emissions or disposals to air, water, land or
groundwater, or relating to the withdrawal or use of groundwater, to the use,
handling or disposal of polychlorinated biphenyls, asbestos or urea
formaldehyde, to the treatment, storage, disposal or management of hazardous
substances (including, without limitation, petroleum, its derivatives,
by-products or other hydrocarbons), or relating to exposure to toxic,
hazardous, or other controlled, prohibited or regulated substances, to the
transportation, storage, disposal, management or release of gaseous or liquid
substances, and any regulation, order, injunction, judgment, declaration,
notice or demand issued thereunder. All of the foregoing shall be collectively
referred to in this Sublease as "Environmental Laws and Regulations" with
respect to the matters described on Exhibit O, Sublessee agrees that it will,
at its sole cost and expense, undertake all appropriate action that may be
required to remediate such matters and thereafter monitor such site conditions,
utilizing the highest industry standards applicable to environmental
professionals performing similar services including, without limitation, all
clean-up, remedial, restorative and removal work required by any Governmental
Authority, until such remediation is completed.
(iii) Sublessee shall indemnify and hold each Indemnitee
harmless from and against any and all claims, losses, liabilities, penalties,
fines, judgments, proceedings, actions and expenses (including without
limitation attorneys' fees, consultants' fees, response, removal,
containment, remediation and clean up costs and other costs incurred in the
defense of any claim, proceeding or action) (herein collectively referred to as
"Environmental Expenses" and individually as an "Environmental Expense"), other
than such losses, claims or expenses as may result solely from the gross
negligence or wilful misconduct of such party, its agents or employees, which
may be asserted against Sublessee or any of its subsidiaries or any Indemnitee
in connection with (A) any actual or alleged violation by Sublessee or any of
its subsidiaries of, failure of Sublessee or any of its subsidiaries to comply
with, or liability of Sublessee or any of its subsidiaries arising under any
Environmental Laws and Regulations; (B) any use, presence, suspected presence,
disposal, storage, treatment, transportation, handling, generation or actual or
alleged release or threatened release into the environment of any Hazardous
Materials including, without limitation, the matters
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identified on Exhibit O; (C) any actual or alleged soil, surface water or
groundwater contamination resulting from any condition which existed on or
before the date hereof or activities which occur after the date hereof or
otherwise relate to the acquisition, use, lease, maintenance, sale, delivery or
redelivery of the Equipment or from Sublessee's or its subsidiaries' business
operations on the Premises; (D) any asbestos or asbestos-containing material at
the Premises, including without limitation all costs and expenses relating to
any removal thereof or any repairs, maintenance, encapsulation, or remedial
activity related thereto, whether or not required under any Environmental Laws
and Regulations; (E) any polychlorinated biphenyls ("PCBS") or PCB equipment
deposited or present at the Premises including without limitation all costs and
expenses related to any removal thereof or any repairs, maintenance or remedial
action related thereto, whether or not required under any Environmental Laws
and Regulations; and (F) any illness, disability, injury, or death of any
person, or damage to property arising out of or alleged to have arisen out of
exposure to activities, substances or conditions occurring after the date
hereof or otherwise relating to the acquisition, use, lease, maintenance, sale,
delivery or redelivery of the Equipment or from Sublessee's or any of its
subsidiaries' business operations on the Premises, regardless of when any such
illness, disability, injury, death or damage is alleged to have occurred or
becomes known. For purposes hereof, "HAZARDOUS MATERIALS" shall mean any
pollutants, contaminants, or hazardous substances, hazardous wastes, toxic
substances, regulated substances and wastes, radioactive materials,
polychlorinated biphenyls, asbestos and petroleum, including crude oil or any
fraction thereof, as now or hereafter defined or regulated as such by the
Environmental Laws and Regulations.
(iv) Sublessor reserves the right to require environmental
audits (including, in connection with the relocation of any Equipment pursuant
to Section 7(a) hereof, an additional environmental audit for any such location
relating to each such relocation) on any of the Premises where the Equipment is
or will be located, such audits to be performed at Sublessor's request and, if
Sublessor shall have reasonable cause to believe that a violation of
Environmental Laws has occurred or could reasonably be expected to occur, at
Sublessee's expense by an independent environmental consultant reasonably
acceptable to Sublessor. In the event that any such audit discloses any
violation of applicable Environmental Laws and Regulations, Sublessee shall, at
its sole expense, promptly commence remedial, corrective and other actions
necessary to resolve such violation or problem in full compliance with all
Environmental Laws and Regulations.
(c) TAX GROSS-UP. Sublessee further agrees that with respect to any
payment or indemnity under this Section 14, such indemnity shall include any
amount necessary to hold the Indemnitee harmless on an after tax basis from all
federal, state, local and
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foreign governmental taxes required to be paid by such recipient with respect
to such payment or indemnity.
15. DEFAULT; REMEDIES. (a) Sublessee shall be deemed to be in default
hereunder ("Default") if:
(1) Sublessee shall fail to make (A) any payment of rent, Stipulated
Loss Value, Termination Value or amount due under Section 20 or 21 hereof when
due or (B) any other amount payable hereunder within five (5) days after the
same shall have become due; or
(2) Sublessee shall fail to obtain and maintain in full force and
effect the insurance required herein; or
(3) Sublessee shall fail to perform or observe any other covenant,
condition or agreement to be performed or observed by it hereunder or under any
document or instrument executed and delivered by Sublessee in connection
herewith and such failure shall continue unremedied for a period of thirty (30)
days after written notice thereof to Sublessee by Sublessor; or
(4) Sublessee or any subsidiary of Sublessee shall (A) be generally not
paying its debts as they become due; or (B) take action for the purpose of
invoking the protection of any bankruptcy or insolvency law, or any such law is
invoked against or with respect to Sublessee, any subsidiary of Sublessee or
its property, and any such petition filed against Sublessee or any subsidiary
of Sublessee is not dismissed within sixty (60) days or, if such petition is
being contested by Sublessee or any subsidiary of Sublessee, ninety (90) days;
or
(5) Sublessee shall make or permit any unauthorized assignment,
transfer or sublease of this Sublease, the Equipment or any interest therein;
or
(6) any certificate, statement, representation or warranty contained
herein or in any Bill of Sale, Estoppel/Waiver Agreement, Consent to Sublease,
Sublease, Subsidiary Guaranty, Subordination Agreement or other document,
instrument or certificate delivered in connection herewith or with the Lease or
any other Sublease or provided pursuant to Section 4 or 5 hereof, of the Lease
or any other Sublease shall prove to have been false in any material respect at
the time as of which the facts therein set forth were stated or certified; or
(7) (A) Lessee or any of its subsidiaries shall be in default under the
Lease, any Sublease or Consent to Sublease; (B) the Lease, Sublessee or any of
its subsidiaries shall be in default under any obligation for the payment of
borrowed money, for the deferred purchase price of property or for the payment
of any rent under any lease agreement and any applicable grace period with
respect thereto shall have expired; (C) Lessee or any of its
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subsidiaries shall have violated any term or condition of the Credit Agreement
or any agreement entered into in connection therewith or any agreement entered
into in connection with the Receivables Funding Facility or another event
or condition shall have occurred which has caused or would cause, after the
giving of notice or the expiration of time or otherwise, any default thereunder
and any applicable grace period with respect thereto shall have expired; (D)
Lessee or any of its subsidiaries shall have violated any term or condition of
any of the Indentures, any of the Senior Debt or any Subordinated Debt or
another event or condition shall have occurred which has caused or would cause,
after the giving of notice or the lapse of time or otherwise, any default
thereunder, and any applicable grace period with respect thereto shall have
expired; or (E) Lessee shall fail to repay or refinance the Senior Notes issued
under the Indenture dated as of June 1, 1992 on or prior to the scheduled
maturity date of such Notes to a maturity date after the expiration of the
Lease term; or
(8) Sublessee shall have terminated its corporate existence,
consolidated with, merged into, or conveyed or leased substantially all of its
assets as an entirety to any Person (such actions being referred to as an
"Event"), except (A) as permitted under Section 4(e) hereof (subject to
compliance by Sublessee with the conditions set forth in this clause (8); and
(B) if not less than sixty (60) days prior to such Event: (x) such Person is
organized and existing under the laws of the United States or any state and
executes and delivers to Sublessor an agreement containing an effective
assumption by such Person of the due and punctual performance of this Sublease,
Consent to Sublease and Subsidiary Guaranty, if applicable, as well as all
related documents and instruments; and (y) such Person is Lessee or a
subsidiary of Lessee; or
(9) if Lessee shall cease to own all of the issued and outstanding
stock of Sublessee; or
(10) there occurs any default, termination or rescission under any
Sublease, any Consent to Sublease, any Subsidiary Guaranty, any Subordination
Agreement or any other document or instrument executed in connection with the
Lease, this Sublease or any other Sublease or any such agreement, document or
instrument is deemed void or unenforceable.
(b) Solely for the purpose of this Section 15, each Equipment Schedule
executed pursuant to this Sublease shall constitute a separate instrument of
lease; provided, however, that the occurrence of a Default with respect to any
Equipment Schedule shall, at the sole discretion of Sublessor (as set forth in
a written declaration to Sublessee) constitute a Default with respect to each
Equipment Schedule. Notwithstanding anything set forth herein, Sublessor may
exercise all rights and remedies hereunder independently with respect to each
Equipment Schedule.
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(c) Upon a Default, Sublessor may, at its option, declare this Sublease
to be in default by written notice to Sublessee (without election of remedies),
and at any time thereafter, may do any one or more of the following, all of
which are authorized by Sublessee:
(1) declare the Stipulated Loss Value (such amount representing
a liquidated damage formula which the parties reasonably believe represents the
anticipated harm to Sublessor of a Default and not a penalty) of the Equipment
(determined as of the next date on which a payment is or would have been due
after the declaration of a Default, or as of the final Payment Date if such
determination is made after the final Payment Date for such item of Equipment),
together with all other sums then due hereunder with respect to such Equipment,
immediately due and payable with respect to any or all of the Equipment (the
parties also deem that such amount best reflects the damages Sublessor would
sustain in the event of the bankruptcy or insolvency of Sublessee and this
Sublease were not assumed); and/or
(2) accelerate and sue for and recover all rent and other
payments due hereunder, then accrued or thereafter accruing, with respect to
any or all of the Equipment (discounted to present value at a rate equal
to the discount rate of the Federal Reserve Bank of New York in effect on the
date of such Default); and/or
(3) require Sublessee to assemble any or all of the Equipment
at the location to which the Equipment was delivered or the location to which
such Equipment may have been moved by Sublessee or such other location in
reasonable proximity to either of the foregoing as Sublessor shall designate;
or to return promptly, at Sublessee's expense, any or all of the Equipment to
Sublessor at the location and in the condition required under Section 13 hereof
and otherwise in accordance with all of the terms of Section 13 hereof; and/or
(4) enter into any premises where any item of Equipment is
believed to be located and take possession of and render unusable by Sublessee
any or all of the Equipment, wherever it may be located, without any court
order or other process of law and without liability for any damages
occasioned by such taking of possession (other than as is caused by the gross
negligence or willful misconduct of Sublessor) (any such taking of possession
shall constitute an automatic cancellation of this Sublease as it applies to
those items taken without further notice, and such taking of possession shall
not prohibit Sublessor from exercising its other remedies hereunder); and/or
(5) (A) sell or otherwise dispose of any or all of the
Equipment, whether or not in Sublessor's possession, in a commercially
reasonable manner at public or private sale with notice to Sublessee
(the parties agreeing that ten (10) days' prior written notice shall constitute
adequate notice of such sale), with
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the right of Sublessee to purchase at such sale and the right of Sublessor to
purchase and apply the net proceeds of such disposition, after deducting all
costs of such disposition (including but not limited to costs of
transportation, possession, storage, refurbishing, advertising and
attorneys' and brokers' fees), to the Obligations of Sublessee hereunder,
including amounts payable pursuant to clause (c) (1) or (2) above, with
Sublessee remaining liable for any deficiency and Sublessor having the
obligation to reimburse Sublessee on account of any excess of the net proceeds
of disposition after such deductions over such Obligations, and the right to
use Sublessee's premises for any or all of the foregoing without liability for
rents, costs, damages or otherwise; or (B) retain any repossessed Equipment and
credit the reasonable market value thereof to the Obligations of Sublessee
hereunder, including amounts payable pursuant to clause (c)(1) or (2) above,
with Sublessee remaining liable for any deficiency and with Sublessor having
the obligation to reimburse Sublessee on account of any excess of such
reasonable value over such Obligations, such reasonable market value to be
established by an appraisal firm to be selected by Lessee from a list of three
such firms presented to Lessee by General Electric Capital Corporation;
provided, that (i) Lessee must indicate its selection by notice to General
Electric Capital Corporation within five (5) Business Days of receipt of such
list, (ii) Lessee may not reject all of such firms, and (iii) upon either the
failure to select a firm within such period or the rejection of all such firms,
General Electric Capital Corporation may select the firm to conduct such
appraisal; and/or
(6) cancel this Sublease as to any or all of the Equipment;
and/or
(7) proceed by appropriate court action, either at law or in
equity, to enforce performance by Sublessee or to recover damages for the
breach hereof; or exercise any other right or remedy available to Sublessor
at law or in equity or otherwise, including without limitation any rights
available to Sublessor under the Subleases, the Consents to Sublease, the
Subsidiary Guaranty and all other documents, instruments and agreements
executed in connection herewith and therewith.
Notwithstanding anything to the contrary contained in this Section 15,
in the exercise of any right, remedy or power contained or referred to in this
Section 15 or in the other Sublease Documents, Sublessor shall not be entitled
to retain sums in excess of the amount of the Obligations. Sublessor shall
render to Sublessee an accounting of the proceeds of any disposition of the
Equipment or the retention and crediting of the reasonable value thereof and
application thereof to the Obligations reasonably promptly after such
disposition or retention and application.
(c) Unless otherwise provided above, a cancellation under this Section
15 shall occur only upon written notice by
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Sublessor to Sublessee and only with respect to such items of the Equipment as
Sublessor specifically elects to cancel in such notice. Upon such a
cancellation, Sublessee's obligation to continue to pay rent hereunder shall
cease with respect to such items of the Equipment as Sublessor specifically
elects to cancel. Except as to such items of the Equipment with respect to
which there is a termination, this Sublease shall remain in full force and
effect and Sublessee shall be and remain liable for the full performance of all
its obligations hereunder. In addition, Sublessee shall be liable for all
legal fees and other expenses incurred by reason of any Default or the exercise
of Sublessor's remedies, including all expenses incurred in connection with the
return of any Equipment in accordance with the terms of Section 13 hereof or in
placing such Equipment in the condition required by said Section. No right or
remedy referred to in this Section is intended to be exclusive, but each shall
be cumulative and shall be in addition to any other remedy referred to above or
otherwise available at law or in equity, and may be exercised concurrently or
separately from time to time. The failure of Sublessor to exercise the rights
granted hereunder upon any Default by Sublessee shall not constitute a waiver
of any such right upon the continuation or reoccurrence of any such Default.
In no event shall the execution of an Equipment Schedule constitute a waiver by
Sublessor of any pre-existing Default in the performance of the terms and
conditions hereof.
16. ASSIGNMENT BY SUBLESSOR AND SUBLESSEE. (a) WITHOUT THE PRIOR
WRITTEN CONSENT OF LESSOR, SUBLESSEE WILL NOT ASSIGN ANY OF ITS RIGHTS
HEREUNDER, SUBLET THE EQUIPMENT OR OTHERWISE PERMIT THE EQUIPMENT TO BE
OPERATED OR USED BY, OR TO COME INTO OR REMAIN IN THE POSSESSION OF,
ANYONE BUT SUBLESSEE. No assignment or sublease, whether authorized in this
Section or in violation of the terms hereof, shall relieve Sublessee of its
obligations hereunder and Sublessee shall remain primarily liable hereunder.
Subject always to the foregoing, this Sublease inures to the benefit of, and is
binding upon, the successors and assigns of the parties hereto.
(b) Carlisle Plastics, Inc. may not assign all or any of its rights,
obligations, title and interest hereunder to any Person, provided, that (i) it
may assign all, but not less than all, of its rights, obligations, title and
interest hereunder to General Electric Capital Corporation, and (ii) General
Electric Capital Corporation may at any time assign all or any part (and any
permitted successor or assignee of General Electric Capital Corporation may at
any time assign all, but not less than all) of its rights, obligations, title
and interest hereunder, to any other Person. If Sublessee is given notice of
any such assignment, Sublessee shall acknowledge receipt thereof in writing.
Upon any such conveyance by General Electric Capital Corporation, the
transferee shall be deemed the "Sublessor" for all purposes of the items of
Equipment to which such transfer relates and each reference herein to Sublessor
shall thereafter be deemed a
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reference to the transferee to the extent of such transfer; provided, however,
that in connection with any such assignment, General Electric Capital
Corporation or an Affiliate thereof shall act as fiscal agent on behalf
of all such assignees and shall bill for, collect and receive the rentals and
other sums payable under this Sublease in respect thereof.
(c) Sublessee acknowledges that it has been advised that General
Electric Capital Corporation is acting under the Lease as agent for itself and
one or more third parties (each being herein referred to as a "Participant"
and, collectively, as the "Participants"); that the interest of Sublessor in
the Lease, this Sublease, the Equipment Schedules, related instruments and
documents and/or the Equipment may be assigned to or be participated in by, in
whole or in part, and may be used as security for financing obtained from, one
or more Participants (the "Syndication"). Sublessee agrees that each
Participant shall be directly entitled to the benefits of Sections 9 and 14
hereof with respect to its participation in this Sublease and may exercise any
and all rights of setoff. Sublessee agrees to fully cooperate with Sublessor
in connection with the Syndication, including (without limitation) the
execution and delivery of such other documents, instruments, notices, opinions,
certificates and acknowledgements as reasonably may be required by Sublessor or
such Participant.
17. MISCELLANEOUS. (a) This Sublease and the Equipment Schedule
constitute the entire agreement between the parties with respect to the subject
matter hereof and shall not be amended or altered in any manner except by
a document in writing executed by both parties.
(b) Any provision of this Sublease 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.
(c) The representations, warranties and covenants of Sublessee herein
shall be deemed to be continuing and to survive the closing hereunder. Each
execution by Sublessee of an Equipment Schedule shall be deemed reaffirmation
and warranty that there shall have been no material adverse change in the
business, operations or financial condition or prospects of Sublessee from the
date of execution hereof. The obligations of Sublessee under Sections 9, 13,
14, 21 and 24 which accrue during the term of this Sublease and obligations
which by their express terms survive the termination of this Sublease shall
survive the termination of this Sublease.
(d) Sublessor represents and covenants to Sublessee that, conditioned
upon Sublessee performing all of the covenants and
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conditions hereof, as to claims of Sublessor or Persons claiming under
Sublessor, so long as no Default shall have occurred and be continuing
Sublessee shall peaceably and quietly hold, possess and use the Equipment
during the term of this Sublease subject to the terms and provisions hereof.
(e) If Sublessee fails to perform any of its obligations hereunder,
Sublessor shall have the right, but shall not be obligated, to effect such
performance and the amount of any out of pocket and other reasonable expenses
of Sublessor incurred in connection with such performance, together with
interest thereon at the Late Charge Rate (in addition to any Late Payment Fee
charged in connection with a late payment of rent), shall be payable by
Sublessee upon demand.
(f) All notices (excluding billings and communications in the ordinary
course of business) hereunder shall be in writing, personally delivered,
delivered by overnight courier service, sent by facsimile transmission (with
confirmation of receipt), or sent by certified mail, return receipt requested,
addressed to the other party at its respective address stated below the
signature of such party or at such other address as such party shall from time
to time designate in writing to the other party; and shall be effective from
the date of mailing.
(g) This Sublease shall not be effective unless and until accepted by
execution by an officer of Sublessor.
18. CHATTEL PAPER. To the extent that this Sublease and/or any Equipment
Schedule would constitute chattel paper, as such term is defined in the Uniform
Commercial Code as in effect in any applicable jurisdiction, no security
interest herein or therein may be created through the transfer or possession
of this Sublease in and of itself without the transfer or possession of the
original of an Equipment Schedule executed pursuant to this Sublease and
incorporating the Sublease by reference; and no security interest in this
Sublease and an Equipment Schedule may be created by the transfer or possession
of any counterpart of the Equipment Schedule other than the original thereof,
which shall be identified as the document marked "Original" and all other
counterparts shall be marked "Duplicate" or "Copy".
19. OWNERSHIP FOR TAX PURPOSES; GRANT OF SECURITY INTEREST.
(a) For income tax, personal property tax and sales tax purposes, the
parties hereto agree that it is their mutual intention that Sublessee shall be
considered the owner of the Equipment and that no transfer of title to the
Equipment shall occur. Accordingly, Sublessor agrees (i) to treat Sublessee as
the owner of the Equipment on its federal, state and local income tax returns
and on any personal property or sales tax returns, unless such treatment
violates any applicable law or regulation, (ii) not to take actions or
positions inconsistent with such treatment on or
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with respect to its income tax, personal property tax or sales tax returns
unless the failure to take an inconsistent action or position violates any
applicable law or regulation, and (iii) not to claim any tax benefits available
to an owner of the Equipment on or with respect to its income tax returns. The
foregoing undertakings by Sublessor shall not be violated by Sublessor's taking
a tax position inconsistent with the foregoing sentence to the extent such
position is required by law or is taken through inadvertence so long as such
inadvertent tax position is reversed by Sublessor promptly upon its discovery.
Sublessor shall in no event be liable to Sublessee if Sublessee fails to secure
any of the tax benefits available to the owner of the Equipment.
(b) The parties hereto agree that the transactions contemplated herein
are intended as a lease; provided, however, to provide for the contingency of a
determination for other reasons that the lease so intended nonetheless creates
a security interest, Sublessee grants to Sublessor:
(i) to secure the prompt payment and performance as and when
due of all Obligations and indebtedness of Sublessee (or any Affiliate of
Sublessee), now existing or hereafter created, to Sublessor pursuant to this
Sublease, the documents executed and delivered by Sublessee in connection
herewith or otherwise, a first priority security interest in all right, title
and interest Sublessee may now have or may hereafter acquire in, to and under
the Equipment and all accessions, substitutions and replacements thereto and
therefor, and proceeds (cash and non-cash), including insurance proceeds
thereof and in furtherance of the foregoing, Sublessee shall (A) execute and
deliver to Sublessor, to be recorded at Sublessee's expense, Uniform Commercial
Code financing statements, statements of amendment and statements of
continuation as reasonably may be required by Sublessor to perfect and maintain
perfected the first priority security interest granted by Sublessee herein and
(B) execute and deliver, to be recorded at Sublessee's expense, any such forms
and documents as reasonably may be required by Sublessor to evidence
Sublessor's title to and security interest in any item of Equipment which is
covered by a certificate of title issued under a statute of any applicable
jurisdiction; and
(ii) to the extent the Equipment covered by the Sublease may
constitute or be deemed to be Sublessee's inventory, as such term is defined in
the Uniform Commercial Code of any applicable jurisdiction (the
"Inventory"), a security interest in such Inventory, which shall mean all
Equipment offered or furnished under any contract of service or intended for
sale or lease, any and all additions, attachments, accessories and accessions
thereto, any and all substitutions, replacements or exchanges therefor, any and
all leases, subleases, rentals, accounts and contracts with respect to the
Equipment which may now exist or hereafter arise, together with all rights
thereunder and all rental and other payments and purchase options due and to
become due thereunder, any and all sales proceeds payable for such property,
all insurance,
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bonds and/or other proceeds of the property and all returned or repossessed
Equipment now or at any time or times hereafter in the possession or under the
control of Sublessee or Sublessor; PROVIDED, HOWEVER, THAT Sublessee IS NOT
AUTHORIZED TO SELL OR SUBLEASE (except as provided in Section 16(a) hereof)
THE EQUIPMENT OR THE INVENTORY; and
(iii) a security interest in all accounts, as such term is
defined in the Uniform Commercial Code of any applicable jurisdiction, now
owned by Sublessee or hereafter acquired or owned by Sublessee that might arise
or result from any lease or other disposition of any of the Equipment or
the Inventory, including, but not limited to, any right of Sublessee to payment
for Equipment sold or leased or under any contract for services whether or not
evidenced by an instrument or chattel paper and whether or not such right has
been earned by performance.
20. EARLY TERMINATION AND PURCHASE OPTION. (a) Notwithstanding any
provision in this Sublease to the contrary, if no Default shall have occurred
and be continuing, Sublessee shall have the option exercisable by written
notice delivered not less than 90 days prior to the proposed purchase date, on
any two Payment Dates in a calendar year, to purchase any item of Equipment
that has become technologically obsolete for Sublessee's purposes at a purchase
price equal to the sum of (i) the Termination Value of such Equipment, plus
(ii) if the Option to Convert has been exercised, the Make Whole Premium, if
any, plus (iii) in the case of any termination prior to one year after the
Sublease Commencement Date, an additional amount equal to 1% of the Termination
Value of such Equipment (such amount, the "Termination Premium") in payment of
Sublessor's administrative expenses, provided that (A) no Termination Premium
shall be payable in the event that the purchase is caused by a change in
control of Lessee's voting stock; and (B) the Termination Premium shall be
equal to 0.5% of the Termination Value of such Equipment if the purchase price
is paid from the proceeds of any offering of Lessee's equity securities that is
registered under the Securities Act of 1933, as amended, plus (iv) all rent and
other sums then due on such date, plus (v) all taxes and charges upon sale and
all expenses incurred by Sublessor in connection with such sale; provided, that
after giving effect to any such purchase the Total Funding Amount of all
Equipment purchased under this Section 20(a) shall not exceed 10% of the
cumulative original Total Funding Amount of all items of Equipment subject to
this Sublease.
(b) In addition, on any Payment Date, Sublessee may purchase on any
such date all, but not less than all, of the Equipment which is then in
existence. Unless and until Sublessee exercises its rights under this Section
20 or Sublessee purchases the Equipment under Section 21 below, nothing
contained herein shall give or convey to Sublessee any right, title or interest
in and to any Equipment except as a lessee. The purchase price for the
Equipment so purchased under this Section 20(b) shall be equal
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to the sum of (i) the Termination Value of the Equipment, plus (ii) if the
Option to Convert has been exercised, the Make Whole Premium, if any, plus
(iii) in the case of a termination prior to one year after the Sublease
Commencement Date, the Termination Premium, subject to the same provisos as are
set forth in clauses (A) and (B) of Section 20(a)(iii) above, plus (iv) all
rent and other sums due on such date, plus (v) all taxes and charges upon sale
and all expenses incurred by Sublessor in connection with such sale.
(c) If Sublessee is required to purchase any items of Equipment
pursuant to Section 4(f) hereof, or to pay the Stipulated Loss Value of any
Equipment (x) upon an event of Total Loss with respect to such Equipment
pursuant to Section 12 hereof or (y) following the occurrence of a Default
pursuant to Section 15(c)(i) hereof, Sublessee shall pay to Sublessor an amount
equal to the sum of (i) the Termination Value or Stipulated Loss Value, as so
required of such Equipment, plus (ii) if the Option to Convert has been
exercised, the Make Whole Premium, if any, plus (iii) in the case of a
termination prior to one year after the Sublease Commencement Date, an
additional amount equal to the Termination Premium, subject to the same
provisos as are set forth in clauses (A) and (B) of Section 20(a)(iii) above,
plus (iv) all other rent and other sums then due on such date plus (v) all
taxes and charges upon sale and all other reasonable expenses incurred by
Sublessor in connection with such sale.
(d) For purposes hereof, "Make Whole Premium" shall mean a premium
equal to the excess, if any of (i) the aggregate present value as of the date
of purchase of the sum of (A) the remaining scheduled rent payments for all
such items of Equipment being purchased on such date plus (B) the full amount
of the Fixed Purchase Price that but for exercise of the options or required
repurchases or payments contained in this Section 20 would be payable on the
final Payment Date for such items of Equipment, discounted to the date of
payment at the Reinvestment Rate, over (ii) the aggregate present value as of
the date of purchase of the sums of (A) the remaining scheduled rent payments
for all such items of Equipment being purchased on such date plus (B) the full
amount of the Fixed Purchase Price that but for exercise of the option
contained in this Section 20 would be payable on the final Payment Date for
such items of Equipment, discounted to the date of payment at the fixed
Contract Rate; provided, however, that if the Reinvestment Rate is equal to or
higher than the fixed Contract Rate, the Make Whole Premium shall be zero.
(e) "Reinvestment Rate" shall mean the yield to maturity of United
States Treasury Notes with a maturity equal to the remaining term of the
Sublease as published in THE WALL STREET JOURNAL three (3) Business Days prior
to such purchase. If no maturity exactly corresponds to such remaining term,
the Reinvestment Rate shall be interpolated on a straight line basis, utilizing
the yields for the two maturities which most closely
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correspond to the requisite maturity. On the effective date of termination
Sublessee shall pay to Sublessor all amounts specified in this Section 20,
whereupon, Sublessor will transfer to Sublessee, without recourse or warranty
(except that Sublessor shall represent and warrant that it has whatever title
Lessor conveyed to it subject to any Permitted Liens and any liens, claims or
encumbrances required to be removed by Sublessee pursuant to the terms hereof),
all of Sublessor's right, title and interest in and to such Equipment and this
Sublease shall terminate with respect to such Equipment being purchased (but
only as to such Equipment).
21. END OF SUBLEASE PURCHASE REQUIREMENT.
Unless Sublessee has exercised its option to terminate this Sublease
pursuant to Section 20(b) hereof, upon the expiration of the term of this
Sublease, Sublessee shall purchase all of the Equipment described on Equipment
Schedules which remains subject to the terms of this Sublease upon the
following terms and conditions: At the expiration of the term of this Sublease,
Sublessee shall pay to Sublessor in cash the Fixed Purchase Price for the
Equipment so purchased, determined as hereinafter provided. The Fixed Purchase
Price of the Equipment shall be an amount equal to (i) an amount determined by
multiplying $800,448 by a fraction, the numerator of which shall be the Total
Funding Amount under this Sublease, and the denominator of which shall be the
Total Funding Amount (as defined in the Lease), less (ii) an amount determined
by multiplying the amount obtained in clause (i) of this sentence by a
fraction, the numerator of which shall be equal to the sum of (A) the Total
Funding Amount of all items of Equipment theretofore purchased by Sublessee
under Sections 20(a), (b) or (c) hereof, the purchase price of which has been
paid to Sublessor and (B) the Total Funding Amount of all items of Equipment as
to which a Total Loss has occurred and Sublessee has paid Sublessor the
Stipulated Loss Value thereof, and the denominator of which shall be the
original Total Funding Amount of all Equipment subject to this Sublease on the
Sublease Commencement Date, together with all rent and other sums then due on
such date, plus all taxes and charges upon sale and all other expenses incurred
by Sublessor in connection with such sale. Upon satisfaction of the conditions
specified in this Section 21, Sublessor will transfer, without recourse or
warranty (except that Sublessor shall represent and warrant that it has
whatever title Lessor conveyed to it subject to any Permitted Liens and any
liens, claims or encumbrances required to be removed by Sublessee pursuant to
the terms hereof) all of Sublessor's right, title and interest in and to the
purchased Equipment. Except as specified in the preceding sentence with respect
to title, Sublessor shall not be required to make and may specifically disclaim
any representation or warranty as to the condition of such Equipment and other
matters.
22. RENT CALCULATIONS.
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All rent, Stipulated Loss Value and Termination Value calculations shall
be as set forth in the Equipment Schedule.
23. RESERVED.
24. TRANSACTION EXPENSES.
On the Lease Commencement Date Sublessee shall pay promptly all
Transaction Costs to the parties entitled thereto. For purposes hereof
"Transaction Costs" shall mean the fees, expenses and costs of documenting and
closing the transactions contemplated herein, in the Lease and in the other
Subleases being executed on the date hereof and all related documents,
instruments and agreements, including, without limitation, the fees and expenses
of counsel to Lessor, the appraisal fees, the filing fees, due diligence costs
and expenses, and all other fees and expenses of Lessor; provided, however, in
no event shall Transaction Costs include any of Sublessor's, Sublessee's or
their counsels', accountants', engineers' or other advisors' or representatives'
expenses or any other cost or expense which Sublessee is required to pay by the
express terms of this Sublease or any document or instrument executed or
delivered in connection herewith including, without limitation any costs, fees
or expenses incurred under or in connection with any environmental audit
required pursuant to Section 14(b)(iv) hereof or local counsel opinions required
pursuant to Section 16(c) hereof, all of which shall remain payable by Sublessee
in accordance with the terms hereof.
25. USURY SAVINGS.
It is the intention of the parties hereto to comply with any applicable
usury laws to the extent that any of this Sublease or any Exhibit or Schedule is
determined to be subject to such laws; accordingly, it is agreed that,
notwithstanding any provision to the contrary in any Exhibit, any Schedule or
the Sublease, in no event shall this Sublease or any Exhibit or any Schedule
require the payment or permit the collection of interest in excess of the
maximum amount permitted by applicable law. If any such excess interest in
contracted for, charged or received under this Sublease or any Exhibit or any
Schedule, or in the event that all of the principal balance shall be prepaid, so
that under any of such circumstances the amount of interest contracted for,
charged or received under any of this Sublease or any Exhibit or any Schedule
shall exceed the maximum amount of interest permitted by applicable law, then in
such event (a) the provisions of this Section 25 shall govern and control, (b)
neither Sublessee nor any other person or entity now or hereafter liable for the
payment hereof shall be obligated to pay the amount of such interest to the
extent that it is in excess of the maximum amount of interest permitted by
applicable law, (c) any such excess which may have been collected shall be
either applied as a credit against the then unpaid principal balance or refunded
to Sublessee, at the option of
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Sublessor, and (d) the effective rate of interest shall be automatically reduced
to the maximum lawful contract rate allowed under applicable law as now or
hereafter construed by the courts having jurisdiction thereof. It is
further agreed that without limitation of the foregoing, all calculations of the
rate of interest contracted for, charged or received under this Sublease or any
Exhibit or any Schedule which are made for the purpose of determining whether
such rate exceeds the maximum lawful contract rate, shall be made, to the extent
permitted by applicable law, by amortizing, prorating, allocating and spreading
in equal parts during the period of the full stated term of the indebtedness
evidenced hereby, all interest at any time contracted for, charged or received
from Sublessee or otherwise by Sublessor in connection with such indebtedness;
provided, however, that if any applicable state law is amended or the law of the
United States of America preempts any applicable state law, so that it becomes
lawful for Sublessor to receive a greater interest per annum rate than is
presently allowed, Sublessee agrees that, on the effective date of such
amendment or preemption, as the case may be, the lawful maximum hereunder shall
be increased to the maximum interest per annum rate allowed by the amended state
law or the law of the United States of America.
26. PAYMENTS DURING DEFAULT.
Notwithstanding anything to the contrary contained in this Sublease, if
Sublessee is in Default hereunder, any amount that would otherwise be paid to
Sublessee under this Sublease shall be held by Sublessor as security for the
obligations of Sublessee hereunder and, at such time as no Default shall be
continuing, such amount shall be paid promptly to Sublessee unless Sublessor
shall have declared this Sublease to be in default under Section 15 hereof, in
which event such amount shall be applied by Sublessor in accordance with the
terms of said Section 15.
27. WAIVER OF JURY TRIAL.
SUBLESSEE AND SUBLESSOR HEREBY WAIVE TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO WHICH SUBLESSEE AND SUBLESSOR MAY BE PARTIES ARISING OUT OF OR IN
ANY WAY PERTAINING TO THIS SUBLEASE. IT IS HEREBY AGREED AND UNDERSTOOD THAT
THIS WAIVER CONSTITUTES A WAIVER OF TRIAL BY JURY OF ALL CLAIMS AGAINST PARTIES
TO SUCH ACTIONS OR PROCEEDINGS, INCLUDING CLAIMS AGAINST PARTIES WHO ARE NOT
PARTIES TO THIS SUBLEASE. THIS WAIVER IS KNOWINGLY, INTENTIONALLY AND
VOLUNTARILY MADE BY SUBLESSEE AND SUBLESSOR AND SUBLESSEE AND SUBLESSOR HEREBY
ACKNOWLEDGE THAT NO REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE BY ANY
INDIVIDUAL TO INDUCE THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY TO MODIFY OR
NULLIFY ITS EFFECT. SUBLESSEE AND SUBLESSOR FURTHER ACKNOWLEDGE THAT THEY HAVE
BEEN REPRESENTED IN THE SIGNING OF THIS SUBLEASE AND IN THE MAKING OF THIS
WAIVER BY INDEPENDENT LEGAL COUNSEL, SELECTED OF THEIR OWN FREE WILL, AND THAT
THEY HAVE HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL.
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<PAGE> 34
28. CHOICE OF LAW; JURISDICTION.
THIS SUBLEASE AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW
YORK (WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES OF SUCH
STATE), INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, REGARDLESS OF THE LOCATION OF THE EQUIPMENT UNLESS AND
TO THE EXTENT THE GRANT OF A SECURITY INTEREST MAY BE GOVERNED BY
OTHER APPLICABLE STATE LAW. The parties agree that any action or
proceeding arising out of or relating to this Sublease may be
commenced in any state or Federal court in the State of New York,
and agree that a summons and complaint commencing an action or
proceeding in any such court shall be properly served and shall
confer personal jurisdiction if served personally or by certified
mail to it at its address hereinbelow set forth, or as it may
provide in writing from time to time, or as otherwise provided
under the laws of the State of New York.
[signature page to follow]
33
<PAGE> 35
IN WITNESS WHEREOF, the parties hereto have caused this
Equipment Sublease Agreement to be duly executed as of the day and
year first above set forth.
CARLISLE PLASTICS, INC. AMERICAN WESTERN CORPORATION
Sublessor Sublessee
By: /s/ Rajiv P. Bhatt By: /s/ Rajiv P. Bhatt
--------------------------- ---------------------------
Title: Chief Financial Officer Title: Chief Financial Officer
------------------------ ------------------------
One Union Street 1401 West 94th Street
Boston, Massachusetts 02108 Minneapolis, Minnesota 55431
Attn.: Chief Financial Attn.: Chief Financial
Officer Officer
Receipt of this original
counterpart of the Equipment
Lease Agreement hereby
acknowledged on the 4th day
of April, 1994:
CARLISLE PLASTICS, INC.
By:________________________________
Title:_____________________________
34
<PAGE> 36
EXHIBIT B TO EQUIPMENT SUBLEASE AGREEMENT
-----------------------------------------
DEFINITIONS RELATING TO
EQUIPMENT SUBLEASE AGREEMENT
----------------------------
For purposes of this Exhibit, all accounting terms not
otherwise defined herein shall have the meanings assigned to them
in accordance with generally accepted accounting principles. Any
of the terms defined herein may, unless the context otherwise
requires, be used in the singular or the plural depending on the
reference. A reference in this Exhibit to any document includes an
amendment or supplement to, or replacement or novation of, that
document unless otherwise expressly provided herein or in the
Sublease. A reference in this Exhibit to a party to a document
includes that party's successors and permitted assigns. A
reference in this Exhibit to any statute, regulation, proclamation,
ordinance or law includes all statutes, regulations, proclamations,
ordinances or laws varying, consolidating or replacing them, and a
reference to a statute includes all regulations, proclamations and
ordinances issued or otherwise applicable under that statute.
"Include", "includes" and "including" shall be deemed to be
followed by "without limitation" whether or not they are in fact
followed by such words or words of like import. "Writing",
"written" and comparable terms refer to printing, typing,
lithography and other means of reproducing words in a visible form.
"ADJUSTMENT PERIOD" shall have the meaning assigned to such
term in the Equipment Schedule.
"AFFILIATE" of any Person shall mean any other Person directly
or indirectly controlling, directly or indirectly controlled by or
under direct or indirect common control with such Person.
"AMERICAN WESTERN" shall mean American Western Corporation, a
Delaware corporation.
"APPLICABLE LAWS" shall mean all applicable laws, statutes,
treaties,rules, codes, ordinances, regulations, permits,
certificates, orders, interpretations, licenses and permits of any
Governmental Authority and judgments, decrees, injunctions, writs,
orders or like action of any court, arbitrator or other
administrative, judicial or quasi-judicial tribunal or agency of
competent jurisdiction (including those pertaining to health,
safety or the environment and including any tax laws).
"APPRAISAL" shall mean the written appraisal report of MB
Valuations, Inc. dated January 28, 1994, describing Equipment being
made subject to the Lease.
"ASSET PURCHASE AGREEMENTS" shall mean those certain Asset
Purchase Agreements by and between Lessee and each of its domestic
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<PAGE> 37
operating subsidiaries, each dated the Closing Date under the
Credit Agreement, whereby Lessee purchased all of such
subsidiaries' raw materials, work in process, finished goods,
accounts and inventory upon the terms and conditions set forth
therein.
"BASE INDEX" shall have the meaning assigned to such term in
the Equipment Schedule.
"BILL OF SALE" shall mean a Bill of Sale in the form of
Exhibit C to the Lease executed by Sublessee in favor of Lessor.
"BUSINESS DAY" shall mean any day excluding Saturday, Sunday
and any day on which banking institutions located in the State of
New York or Massachusetts are authorized by law or other
governmental action to close.
"CAPITAL EXPENDITURES" shall mean all payments for any fixed
assets or improvements, or for replacements, substitutions or
additions thereto, that have a useful life of more than one year
and that are required to be capitalized under GAAP, and, in any
event, shall include Capital Lease Obligations and all asset
purchases secured by purchase money security interests.
"CAPITAL LEASE" shall mean, with respect to any Person, any
lease of any property (whether real, personal or mixed) by such
Person as lessee that, in accordance with GAAP, either would be
required to be classified and accounted for as a capital lease on
a balance sheet of such Person or otherwise be disclosed as such in
a note to such balance sheet, other than, any such lease under
which such Person is the lessor.
"CAPITAL LEASE OBLIGATION" shall mean, with respect to any
Capital Lease, the amount of the obligation of the lessee
thereunder that, in accordance with GAAP, would appear on a balance
sheet of such lessee in respect of such Capital Lease or otherwise
be disclosed in a note to such balance sheet.
"CERCLA" shall have the meaning assigned to such term in
Section 14(b)(ii) of the Sublease.
"CHARGES" shall mean all federal, state, county, city,
municipal, local, foreign or other governmental taxes (including,
without limitation, taxes owed to the PBGC at the time due and
payable), levies, assessments, charges, liens, claims or
encumbrances upon or relating to (i) the Equipment, (ii) the
Obligations, (iii) the employees, payroll, income or gross receipts
of Sublessee or any of its subsidiaries, (iv) Sublessee's, or any
of its subsidiaries', ownership or use of any of its properties or
other assets, or (v) any other aspect of Sublessee's, or any of its
subsidiaries', businesses.
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<PAGE> 38
"CIT DOCUMENTS" shall mean, collectively the CIT Guaranty
Agreement, the CIT Loan Agreement and the CIT Notes.
"CIT GUARANTY AGREEMENT" shall mean that certain Guaranty
Agreement, dated May 13, 1992, executed by Poly-Tech in favor of
The CIT Group/Equipment Financing, Inc., as in effect on the Lease
Commencement Date.
"CIT LOAN AGREEMENT" shall mean that certain Loan and Security
Agreement by and between Lessee and The CIT Group/Equipment
Financing, Inc., dated May 13, 1992, as in effect on the Lease
Commencement Date.
"CIT NOTES" shall mean those certain promissory notes
described on Exhibit L-1 to the Sublease, executed by Lessee in
favor of The CIT Group/Equipment Financing, Inc. pursuant to the
CIT Loan Agreement, as in effect on the Lease Commencement Date.
"CONSENT TO SUBLEASE" shall mean a Consent to Sublease in the
form of Exhibit J to the Lease.
"CONSOLIDATED" shall mean the relevant figures as determined
for Lessee and its Consolidated Subsidiaries on a consolidated
basis in accordance with GAAP after eliminating all intercompany
items and minority interests.
"CONSOLIDATED SUBSIDIARY" shall mean each subsidiary of Lessee
other than an unconsolidated subsidiary.
"CONTRACT RATE" shall have the meaning assigned to such term
in the Equipment Schedule.
"CONVERSION DATE" shall have the meaning assigned to such
term in the Equipment Schedule.
"CREDIT AGREEMENT" shall mean that certain Credit Agreement
dated as of March 9, 1994, among Carlisle Plastics, Inc. and
General Electric Capital Corporation, as agent and lender, and the
other lenders party thereto, as in effect on the Lease Commencement
Date.
"CURRENT INDEX" shall have the meaning assigned to such term
in the Equipment Schedule.
"DEBIT AGREEMENT" shall mean the GE Capital Commercial
Equipment Financing Authorization Agreement for Pre-Arranged
Payments (Debits) in the form of Exhibit K to the Lease.
"DEBT AVAILABILITY" shall mean, for each Fiscal Year, an
amount equal to (a) the aggregate amount of Indebtedness that
Lessee and its subsidiaries could have had outstanding as of the
end of such Fiscal Year without exceeding the ratio of Funded Debt
to Equity, measured as of the end of such Fiscal Year, set forth
3
<PAGE> 39
below opposite such Fiscal Year, minus (b) the aggregate amount of
Indebtedness of Lessee and its subsidiaries actually outstanding as
of the end of such Fiscal Year:
<TABLE>
<CAPTION>
Funded Debt to
Fiscal Year Equity Ratio
----------- ------------
<S> <C>
1994 2.20 to 1.0
1995 1.65 to 1.0
1996 1.24 to 1.0
1997 .90 to 1.0
1998 .65 to 1.0
1999 .65 to 1.0
</TABLE>
"DEBT SERVICE CHARGES" shall mean, with respect to Lessee and
its subsidiaries on a Consolidated basis, for any fiscal period of
Lessee, the sum of (i) Interest Expense in respect of Funded Debt
plus (ii) regularly scheduled payments of principal on Funded Debt,
in each case of Lessee and its subsidiaries for such period.
"DEFAULT" shall have the meaning assigned to such term in
Section 15(a) of the Sublease.
"DIVIDENDS" shall mean any dividends or other distributions
upon or with respect to a Person's capital stock or any
redemptions, repurchases or other acquisitions or retirements of
such capital stock, in any case paid, declared or effected by such
Person and any principal payments of Subordinated Debt by such
Person.
"EBITDA" shall mean, with respect to Lessee and its
subsidiaries on a Consolidated basis, for any fiscal period of
Lessee (i) Net Income plus (ii) to the extent deducted in
determining Net Income, Interest Expense and taxes (as stated in
Lessee's Consolidated statement of income) PLUS (iii) to the extent
deducted in determining Net Income, depreciation, amortization and
other similar non-cash charges MINUS (iv) to the extent added in
determining Net Income, extraordinary gains plus (v) to the extent
deducted in determining Net Income, extraordinary losses.
"ENVIRONMENTAL EXPENSE" shall have the meaning assigned to
such term in Section 14(b)(iii) of the Sublease.
"ENVIRONMENTAL LAWS AND REGULATIONS" shall have the meaning
assigned to such term in Section 14(b)(ii) of the Sublease.
"EQUIPMENT SCHEDULE" shall mean, collectively, the Equipment
Schedules in the form of Exhibit A to the Sublease executed by
4
<PAGE> 40
Sublessee and Sublessor setting forth certain terms and conditions
upon which the items of Equipment described therein will be
subjected to the Sublease.
"EQUIPMENT" shall mean the items of equipment described in
each Equipment Schedule executed by Sublessee and Sublessor
pursuant to the Sublease, together with all additions, attachments,
appliances, parts, instruments, appurtenances, accessories,
furnishings and other parts of whatever nature which may from time
to time be incorporated or installed in or attached to the
Equipment and any and all replacements, substitutions or exchanges
therefor.
"ESTOPPEL/WAIVER AGREEMENT" shall mean an Estoppel/Waiver
Agreement substantially in the form of Exhibit D-1 or Exhibit D-2
to the Lease.
"EVENT" shall have the meaning assigned to such term in
Section 15(a) of the Sublease.
"EQUITY" shall mean the assets of Lessee and its subsidiaries
on a Consolidated basis less (i) reserves applicable thereto and
(ii) the liabilities of Lessee and its subsidiaries on a
consolidated basis, all as determined in accordance with GAAP.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974 (or any successor legislation thereto), as amended from
time to time, and any regulations promulgated thereunder.
"ERISA AFFILIATE" shall mean, with respect to Lessee or any of
its subsidiaries, any trade or business (whether or not
incorporated) under common control with Lessee or such subsidiary,
as appropriate, and which, together with Lessee or such subsidiary,
as appropriate, are treated as a single employer within the meaning
of Sections 414(b), (c), (m) or (o) of the IRC.
"FAIRMONT IRB" shall mean the industrial revenue bonds issued
in connection with that certain loan agreement dated December 31,
1985 between the City of Fairmont, Minnesota and AMDEVCO
PACKAGING/FILMS, INC.
"FISCAL YEAR" shall mean the twelve month period of Lessee and
its subsidiaries ending December 31 of each year.
"FIXED CHARGES" shall mean, with respect to Lessee and its
subsidiaries on a Consolidated basis, for any fiscal period of
Lessee, the sum of (i) Debt Service Charges plus (ii) taxes (as
stated in Lessee's Consolidated statement of income), in each case
of Lessee for such period.
"FIXED PURCHASE PRICE" shall have the meaning assigned to such
term in Section 21 of the Sublease.
5
<PAGE> 41
"FUNDED DEBT" shall mean, with respect to Lessee and its
subsidiaries, on a Consolidated basis, all of its Indebtedness
which by the terms of the agreement governing or instrument
evidencing such Indebtedness matures more than one year from or is
directly or indirectly renewable or extendible at its option under
a revolving credit or similar agreement obligating the lender or
lenders to extend credit over a period of more than one year from
the date of creation thereof, including in each instance current
maturities of long-term debt (and the current portion of long-term
debt in the last year of its term), revolving credit and short-term
debt extendible beyond one year at the option of the debtor, and
shall also include, without limitation, Indebtedness arising under
or in connection with any interest rate swap agreement or
arrangements and the Obligations.
"GAAP" shall have the meaning assigned to such term in Section
3 of the Lease.
"GOVERNMENTAL AUTHORITY" shall mean any federal, state,
county, municipal or other United States federal, state or local
governmental or regulatory authority, agency, board, body,
commission, instrumentality, court or quasi-governmental authority.
"GUARANTEED INDEBTEDNESS" shall mean, as to any Person, any
obligation of such Person guaranteeing any indebtedness, lease,
dividend, or other obligation ("primary obligations") of any other
Person (the "primary obligor") in any manner, including any
obligation or arrangement of such Person (i) to purchase or
repurchase any such primary obligation, (ii) to advance or supply
funds (a) for the purchase or payment of any such primary
obligation or (b) to maintain working capital or equity capital of
the primary obligor or otherwise to maintain the net worth or
solvency or any balance sheet condition of the primary obligor,
(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) to indemnify the owner of such primary
obligation against loss in respect thereof.
"HAZARDOUS MATERIALS" shall have the meaning assigned to such
term in Section 14(b)(iii) of the Sublease.
"IMPOSITION" shall have the meaning assigned to such term in
Section 9 of the Sublease.
"INDEBTEDNESS" of any Person shall mean (i) all indebtedness
of such Person for borrowed money or for the deferred purchase
price of property or services (including reimbursement and all
other obligations with respect to surety bonds, letters of credit
and bankers' acceptances, whether or not matured, but excluding
obligations to trade creditors incurred in the ordinary course of
business), (ii) all obligations evidenced by notes, bonds,
debentures or similar instruments, (iii) all indebtedness created
6
<PAGE> 42
or arising under any conditional sale or other title retention
agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or
sale of such property), (iv) all Capital Lease Obligations, (v) all
obligations arising under or in connection with any interest rate
swap agreement or arrangements, (vi) all Indebtedness referred to
in clause (i), (ii), (iii), (iv) or (v) above secured by (or for
which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any lien upon or in
property or other assets (including accounts and contract rights)
owned by such Person, even though such Person has not assumed or
become liable for the payment of such Indebtedness, (vii) the
Obligations, and (viii) all liabilities under Title IV of ERISA.
"INDEMNITEE" shall have the meaning assigned to such term in
Section 14(a) of the Sublease.
"INDENTURES" shall mean the following indentures to which
Lessee is a party: (i) the Amended and Restated Indenture dated as
of April 1, 1989, as supplemented and amended through March 20,
1990; (ii) the Indenture dated as of March 23, 1990, as
supplemented through October 9, 1990; and (iii) the Indenture dated
as of June 1, 1992, each as in effect on the Lease Commencement
Date without giving effect to any amendment or modification thereto
made without the consent of Lessor.
"INTEREST EXPENSE" shall mean, for any fiscal period of
Lessee, interest expense of Lessee for such period in respect of
Funded Debt, excluding the amortization of capitalized debt
transaction costs.
"INVENTORY" shall have the meaning assigned to such term in
Section 19(b)(ii) of the Sublease.
"IRC" means the Internal Revenue Code of 1986, as amended.
"LATE CHARGE RATE" with respect to any payments relating to an
item of Equipment or other payments, shall have the meaning
assigned to such term in the Equipment Schedule covering such item
of Equipment.
"LATE PAYMENT FEE" shall mean, with respect to a payment of
rent, a fee equal to five percent (5%) of the rental payment that
is not paid when due.
"LEASE COMMENCEMENT DATE" with respect to any item of
Equipment shall mean the date of execution by Sublessee and
Sublessor of the Equipment Schedule and delivery by Sublessee of
the Bill of Sale for such Equipment.
"LEASE" shall mean the Equipment Lease Agreement dated as of
April 4, 1994 by and between Lessor and Lessee, as supplemented and
7
<PAGE> 43
amended from time to time by Equipment Schedules entered into
pursuant to the applicable provisions of the Lease.
"LEASE DOCUMENTS" shall mean the Lease (and all Schedules and
Exhibits hereto), the Subleases, the Consents to Sublease, the
Subsidiary Guarantees, and all other agreements, instruments,
documents and certificates in favor of Lessor or Lessee, as
sublessor under the Subleases, and including all other pledges,
financing statements, powers of attorney, consents, assignments,
contracts, notices, and all other written matter whether
heretofore, now or hereafter executed by or on behalf of Lessee or
any of its Affiliates, or any employee of Lessee, or any of its
Affiliates, in connection with this Lease or any Sublease or the
transactions contemplated hereby or thereby.
"LESSEE" shall mean Carlisle Plastics, Inc.
"LESSOR" shall mean General Electric Capital Corporation, as
agent for itself and certain Participants.
"MAKE WHOLE PREMIUM" shall have the meaning assigned to such
term in Section 20(d) of the Sublease.
"MANAGEMENT SERVICES AGREEMENT" shall mean that certain
Management Services Letter Agreement, dated May 22, 1991, by and
between Lessee and Carlisle Plastics Management Corporation, as
heretofore amended and as the same may after the Lease Commencement
Date be extended or renewed on terms which are no less favorable to
Lessee and which have been otherwise disclosed to Lessor.
"MATERIAL ADVERSE EFFECT" shall mean (a) a material adverse
effect on (i) the business, assets, operations, prospects or
financial or other condition of Lessee or any subsidiaries of
Lessee executing a Sublease, (ii) Lessee's or any of its
subsidiaries' ability to pay any of the Obligations under the Lease
or under any Sublease or any other Obligations in accordance with
the terms thereof, (iii) Lessor's liens on the Equipment or
proceeds thereof or the priority of any such lien, or (iv) Lessor's
or any Participant's or Sublessor's, as a Sublessor, rights and
remedies under the Lease, any Sublease or any other Lease Document
or (v) the validity or enforceability of any of the Lease
Documents, or (b) the incurrence by Lessee or any of its
subsidiaries of material liability, contingent or liquidated,
outside of the ordinary course of business.
"MULTIEMPLOYER PLAN" shall mean a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA, and to which Sublessee, or
any of its subsidiaries or any ERISA Affiliate is making, is
obligated to make, has made or been obligated to make,
contributions on behalf of participants who are or were employed by
any of them.
8
<PAGE> 44
"NET INCOME" shall mean, with respect to Lessee and its
subsidiaries on a Consolidated basis, for any fiscal period,
Lessee's Consolidated net income (or loss) after income and
franchise taxes and shall have the meaning given such term by GAAP;
PROVIDED, THAT, there shall be specifically excluded therefrom net
income of any Person that is not a direct or indirect wholly-owned
subsidiary of Lessee, unless received by Lessee in cash.
"NET WORTH" shall mean the sum of (i) the higher of
$66,000,000 or Equity as of April 30, 1994 PLUS (ii) Net Income
since April 30, 1994 through and including the applicable
measurement date.
"NOTICE DATE shall have the meaning assigned to such term in
the Equipment Schedule.
"OBLIGATIONS" shall mean all obligations for the payment of
rent, Stipulated Loss Value, Termination Value, Fixed Purchase
Price, fees, expenses, taxes, indemnification and all other debts,
liabilities and obligations, for the performance of covenants,
tasks or duties or for payment of monetary amounts (whether or not
such performance is then required or contingent, or amounts are
liquidated or determinable) owing by Lessee to Lessor or any
Participant, or by any Sublessee to Sublessor as the Sublessor, and
all covenants and duties regarding such amounts, of any kind or
nature, present or future, whether or not evidenced by any lease,
note, agreement or other instrument, arising under the Lease, any
Sublease or any of the other Lease Documents. This term includes
all principal, interest, fees, charges, expenses, reimbursements,
indemnities, attorneys' fees and any other sum chargeable to Lessee
or any Subleasee under this Lease or any of the other Lease
Documents.
"OPTION TO CONVERT" shall have the meaning assigned to such
term in the Equipment Schedule.
"PARTICIPANT" shall have the meaning assigned to such term in
Section 16(c) of the Lease.
"PAYMENT DATE" shall have the meaning assigned to such term in
the Equipment Schedule.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any successor thereto.
"PENSION PLAN" shall mean an employee pension benefit plan, as
defined in Section 3(2) of ERISA (other than a Multiemployer Plan),
which is not an individual account plan, as defined in Section
3(34) of ERISA, and which Lessee or any of its subsidiaries or, if
a Title IV Plan, any ERISA Affiliate maintains, contributes to or
has an obligation to contribute to on behalf of participants who
are or were employed by any of them.
9
<PAGE> 45
"PERIODIC INSTALLMENT" shall have the meaning assigned to
such term in the Equipment Schedule.
"PERMITTED INVESTMENTS" shall mean (i) investments in direct
obligations of the United States of America maturing within 90 days
of the date of acquisition thereof, (ii) investments in
certificates of deposit maturing within 90 days of the date of
acquisition thereof issued by a bank or trust company which is
organized under the laws of the United States or any state thereof
having capital, surplus and undivided profits aggregating in excess
of $500,000,000, (iii) investments in commercial paper given the
highest rating by two nationally recognized statistical rating
organizations (as defined in Rule 436 under the Securities Act of
1933, as amended) and maturing not more than 90 days from the date
of acquisition thereof, (iv) demand deposit accounts and other
corporate accounts set forth on Schedule 3.22 to the Credit
Agreement, (v) loans or advances permitted by Section 2.3 or 2.4 of
Exhibit N to the Sublease, (vi) existing investments in
subsidiaries described in Exhibit F to the Sublease, and (vii)
Investments in new subsidiaries after the Closing Date in
accordance with the terms of Section 1.13 of Exhibit M to the
Sublease.
"PERMITTED LIEN" shall have the meaning assigned to such term
in Section 10 of the Sublease.
"PERSON" shall mean any individual, corporation, partnership,
joint venture, association, joint stock company, trust,
nonincorporated organization or government or agency or political
subdivision thereof.
"POLY-TECH" shall mean Poly-Tech, Inc., a Minnesota
corporation.
"POTENTIAL DEFAULT" shall have the meaning assigned to such
term in Section 4 of the Sublease.
"PREMISES" shall mean the premises owned or leased by
Sublessee or any Affiliate of Sublessee where the Equipment is
located during the term of the Sublease.
"PRINCIPAL" shall have the meaning assigned to such term in
the Equipment Schedule.
"PURCHASE MONEY LIENS" shall mean purchase money liens
(including capitalized leases and other forms of installment
purchase financing but excluding the Lease and the Subleasees)
granted to the Person financing a purchase of equipment acquired in
the ordinary course of business in accordance with past practice
(subject to the limitations on Capital Expenditures set forth in
the Sublease, including those set forth in Exhibit G-1 thereto);
PROVIDED, that such liens attach only to the equipment so acquired,
the Indebtedness secured by such lien does not exceed the purchase
10
<PAGE> 46
price of the equipment on which the lien is granted, and the
transaction does not violate any other provision of the Sublease.
"RECEIVABLES FUNDING FACILITY" shall mean the accounts
receivable funding facility to be established by Lessee and
Carlisle Plastics Funding Corporation with Redwood Receivables
Corporation and General Electric Capital Corporation or another
funding source satisfactory to Lessor to finance Lessee's accounts
receivable in an amount not to exceed Thirty-Five Million Dollars
($35,000,000) such facility to include the terms and conditions set
forth in that certain commitment letter dated February 15, 1994,
between Lessee and Redwood Receivables Corporation, and such other
terms and conditions as are satisfactory to Lessor in its sole
discretion.
"REINVESTMENT RATE" shall have the meaning assigned to such
term in Section 20(e) of the Sublease.
"RESPONSIBLE OFFICER" shall mean, with respect to any Person,
the Chairman, the President, any Senior Vice President and any
other executive corporate officer (or holder of an equivalent
position for a nonincorporated Person) who in the normal
performance of his operational responsibilities would have
knowledge of such matter and the requirements with respect thereto.
"RESTRICTED PAYMENT" shall mean (i) the declaration or payment
of any dividend or the incurrence of any liability to make any
other payment or distribution of cash or other property or assets
in respect of a Person's stock, (ii) any payment on account of the
purchase, redemption, defeasance or other retirement of a Person's
stock or any other payment or distribution made in respect thereof,
either directly or indirectly, or (iii) any payment, loan,
contribution, or other transfer of funds or other property to any
stockholder of such Person.
"RHINO-X" shall mean Rhino-X Industries, Inc., a Delaware
corporation.
"SENIOR NOTES" shall mean the Senior Notes issued and
outstanding pursuant to the Indentures.
"STIPULATED LOSS VALUE" shall have the meaning assigned to
such term in Section 12 of the Sublease.
"SUBLEASE" shall mean an Equipment Sublease Agreement in the
form attached as Exhibit B to the Consent to Sublease, and shall
include the Sublease to which this Exhibit B is attached.
"SUBLESSEE" shall mean any of Poly-Tech, Rhino-X and American
Western executing the Sublease to which this Exhibit B is attached.
"SUBORDINATED DEBT" shall mean any Indebtedness issued or
otherwise owing by Lessee in favor of any subsidiary or by any
11
<PAGE> 47
subsidiary in favor of Lessee (a) the payment of which is
subordinated to the payment of the Obligations in form and
substance satisfactory to Lessor in its sole discretion and (b)
which is incurred pursuant to documentation or entry in the
financial records of Lessee or a subsidiary, as applicable, in form
and substance satisfactory to Lessor in its sole discretion.
Subordinated Debt shall include, without limitation, Indebtedness
of the subsidiaries in favor of Lessee set forth on Exhibit L-2 to
the Sublease and any extensions, renewals, substitutions,
refinancings or replacements permitted by Section 2.3 of Exhibit N
to the Sublease and Indebtedness of the subsidiaries in favor of
Sublessee expressly permitted by Section 2.3 of Exhibit N to the
Sublease.
"SUBORDINATION AGREEMENT" shall mean the Subordination
Agreement in the form of Exhibit Q to the Lease.
"SUBSIDIARY" of a Person shall mean (a) any corporation more
than 50% of the outstanding securities having ordinary voting power
of which shall at the time be owned or controlled, directly or
indirectly, by such Person or by one or more of its subsidiaries or
by such Person and one or more of its subsidiaries, or (b) any
partnership, association, joint venture or similar business
organization more than 50% of the ownership interests having
ordinary voting power of which shall at the time be so owned or
controlled. Unless otherwise expressly provided, all references
herein to a "subsidiary" shall mean a subsidiary of Sublessee or
Sublessee, as appropriate.
"SUBSIDIARY GUARANTEES" shall mean the Subsidiary Guarantees
in the form of Exhibit R to the Lease.
"SUPPLIER" shall mean the manufacturer and/or Lessee's
supplier or vendor of any item of Equipment.
"SYNDICATION" shall have the meaning assigned to such term in
Section 16(c) of the Sublease.
"TERMINATION PREMIUM" shall have the meaning assigned to such
term in Section 20(a) of the Sublease.
"TERMINATION VALUE" shall have the meaning assigned to such
term in Section 12 of the Sublease.
"TOLL MANUFACTURING AGREEMENTS" shall mean those certain
Contract Manufacturing Agreements by and between Lessee and each of
its domestic operating subsidiaries, each dated the Closing Date
under the Credit Agreement, whereby Lessee appoints such
subsidiaries as Lessee's agent to purchase, process and ship
inventory for the benefit of Lessee upon the terms and conditions
set forth therein.
12
<PAGE> 48
"TOTAL FUNDING AMOUNT" shall mean, with respect to all the
Equipment covered on an individual Equipment Schedule, the total
funding amount for such items of Equipment as set forth on such
Equipment Schedule and with respect to any item of Equipment the
total fair market value set forth on the Equipment Schedule for
such item of Equipment, and in each case the total funding amount
shall not exceed the fair market value on an "in place" basis as
set forth in the appraisal of the Equipment dated January 28, 1994
delivered to General Electric Capital Corporation, as adjusted upon
any early termination or casualty event.
"TOTAL INDEBTEDNESS" shall mean the total liabilities of
Lessee and its Consolidated Subsidiaries which, in accordance with
GAAP, would be included in the liability side of a balance sheet.
"TOTAL LOSS" shall have the meaning assigned to such term in
Section 12 of the Sublease.
"TRANSACTION COSTS" shall have the meaning assigned to such
term in Section 24 of the Sublease.
"UNFUNDED PENSION LIABILITY" shall mean, at any time, the
aggregate amount, if any, of the sum of (i) the amount by which the
present value of all accrued benefits under each Title IV Plan
exceeds the fair market value of all assets of such Title IV Plan
allocable to such benefits in accordance with Title IV of ERISA,
all determined as of the most recent valuation date for each such
Title IV Plan using the actuarial assumptions in effect under such
Title IV Plan, and (ii) for a period of five (5) years following a
transaction reasonably likely to be covered by Section 4069 of
ERISA, the liabilities (whether or not accrued) that could be
avoided by Sublessee, any of its subsidiaries or any ERISA
Affiliate as a result of such transaction.
"WHOLLY-OWNED SUBSIDIARY" of a Person shall mean (a) any
subsidiary all of the outstanding voting securities of which shall
at the time be owned or controlled, directly or indirectly, by such
Person or one or more Wholly-Owned subsidiaries of such Person, or
by such Person and one or more Wholly-Owned subsidiaries of such
Person, or (b) any partnership, association, joint venture or
similar business organization 100% of the ownership interests
having any voting power of which shall at the time be so owned or
controlled.
13
<PAGE> 49
EXHIBIT G-1
to
EQUIPMENT SUBLEASE AGREEMENT
__________________
FINANCIAL COVENANTS
-------------------
Sublessee, as a subsidiary of Lessee, shall comply with
the covenants set forth herein applicable to subsidiaries of
Lessee. Lessee shall not, and shall cause its subsidiaries not to,
breach or fail to comply with any of the following financial
covenants, each of which shall be calculated in accordance with
GAAP, consistently applied:
(a) MAXIMUM CAPITAL EXPENDITURES. Lessee and its
subsidiaries on a Consolidated basis shall not make Capital
Expenditures during the following periods that exceed in the
aggregate the amounts set forth opposite each of such periods:
<TABLE>
<CAPTION>
Aggregate Maximum
Period Covered Capital Expenditures
-------------- --------------------
<S> <C>
January 1, 1994 through $16,000,000
December 31, 1994
January 1, 1995 through $12,000,000
December 31, 1995
January 1, 1996 through $12,000,000
December 31, 1996
January 1, 1997 through $12,000,000
December, 31, 1997
January 1, 1998 through $12,000,000
December 31, 1998
January 1, 1999 through $12,000,000
December 31, 1999
</TABLE>
(b) MINIMUM NET WORTH. Lessee and its subsidiaries on
a Consolidated basis shall have, as at each of the dates set
forth below (and shall maintain at all times during the period
from and including such date through but excluding the next
date immediately succeeding such date), Net Worth equal to or
greater than the amount set forth opposite such date:
<TABLE>
<CAPTION>
Date Minimum Net Worth
---- -----------------
<S> <C>
June 30, 1994 The higher of $66,000,000
or Equity as of April 30,
1994
</TABLE>
<PAGE> 50
<TABLE>
<S> <C>
September 30, 1994 The higher of $66,000,000
or Equity as of April 30,
1994
December 31, 1994 $ 68,000,000
March 31, 1995 $ 69,400,000
June 30, 1995 $ 71,300,000
December 31, 1995 $ 75,800,000
June 30, 1996 $ 78,000,000
December 31, 1996 $ 83,100,000
June 30, 1997 $ 85,800,000
December 31, 1997 $ 92,200,000
June 30, 1998 $ 95,600,000
December 31, 1998 $103,300,000
</TABLE>
(c) MINIMUM INTEREST AND TAXES COVERAGE RATIO. Lessee
and its subsidiaries on a Consolidated basis shall have a
ratio of (i) EBITDA to (ii) Interest Expense and taxes (as
stated in Lessee's consolidated statement of income), in each
case measured as at each of the dates set forth below, for
each of the periods set forth opposite such dates, of not less
than the amount set forth opposite each such period and date:
<TABLE>
<CAPTION>
Minimum Interest
and Taxes
Date Period Covered Coverage Ratio
---- -------------- --------------
<S> <C> <C>
June 30, 1994 July 1, 1993 through 2.2 to 1.0
June 30, 1994
September 30, 1994 October 1, 1993 through 2.2 to 1.0
September 30, 1994
December 31, 1994 January 1, 1994 through 2.2 to 1.0
December 31, 1994
March 31, 1995 April 1, 1994 through 2.1 to 1.0
March 31, 1995
June 30, 1995 July 1, 1994 through 2.1 to 1.0
June 30, 1995
</TABLE>
2
<PAGE> 51
<TABLE>
<S> <C> <C>
September 30, 1995 October 1, 1994 through 2.1 to 1.0
September 30, 1995
December 31, 1995 January 1, 1995 through 2.1 to 1.0
December 31, 1995
March 31, 1996 April 1, 1995 through 2.1 to 1.0
March 31, 1996
June 30, 1996 July 1, 1995 through 2.1 to 1.0
June 30, 1996
September 30, 1996 October 1, 1995 through 2.1 to 1.0
September 30, 1996
December 31, 1996 January 1, 1996 through 2.1 to 1.0
December 31, 1996
March 31, 1997 April 1, 1996 through 2.1 to 1.0
March 31, 1997
June 30, 1997 July 1, 1996 through 2.1 to 1.0
June 30, 1997
September 30, 1997 October 1, 1996 through 2.1 to 1.0
September 30, 1997
December 31, 1997 January 1, 1997 through 2.1 to 1.0
December 31, 1997
March 31, 1998 April 1, 1997 through 2.1 to 1.0
March 31, 1998
June 30, 1998 July 1, 1997 through 2.1 to 1.0
June 30, 1998
September 30, 1998 October 1, 1997 through 2.1 to 1.0
September 30, 1998
December 31, 1998 January 1, 1998 through 2.1 to 1.0
December 31, 1998
March 31, 1999 April 1, 1998 through 2.1 to 1.0
March 31, 1999
June 30, 1999 July 1, 1998 through 2.1 to 1.0
June 30, 1999
</TABLE>
(d) MINIMUM FIXED CHARGES COVERAGE RATIO. Lessee and
its subsidiaries on a Consolidated basis shall have a ratio of
(i) EBITDA to (ii) Fixed Charges, in each case measured as at
each of the dates set forth below, for each of the periods set
3
<PAGE> 52
forth opposite such dates, of not less than the amount set
forth opposite each such period and date:
<TABLE>
<CAPTION>
Minimum Fixed
Charges
Date Period Covered Coverage Ratio
---- -------------- --------------
<S> <C> <C>
June 30, 1994 July 1, 1993 through 1.5 to 1.0
June 30, 1994
September 30, 1994 October 1, 1993 through 1.5 to 1.0
September 30, 1994
December 31, 1994 January 1, 1994 through 1.5 to 1.0
December 31, 1994
March 31, 1995 April 1, 1994 through 1.4 to 1.0
March 31, 1995
June 30, 1995 July 1, 1994 through 1.4 to 1.0
June 1, 1995
September 30, 1995 October 1, 1994 through 1.4 to 1.0
September 30, 1995
December 31, 1995 January 1, 1995 through 1.4 to 1.0
December 31, 1995
March 31, 1996 April 1, 1995 through 1.4 to 1.0
March 31, 1996
June 30, 1996 July 1, 1995 through 1.4 to 1.0
June 30, 1996
September 30, 1996 October 1, 1995 through 1.4 to 1.0
September 30, 1996
December 31, 1996 January 1, 1996 through 1.4 to 1.0
December 31, 1996
March 31, 1997 April 1, 1996 through 1.4 to 1.0
March 31, 1997
June 30, 1997 July 1, 1996 through 1.4 to 1.0
June 30, 1997
September 30, 1997 October 1, 1996 through 1.4 to 1.0
September 30, 1997
December 31, 1997 January 1, 1997 through 1.4 to 1.0
December 31, 1997
</TABLE>
4
<PAGE> 53
<TABLE>
<S> <C> <C>
March 31, 1998 April 1, 1997 through 1.4 to 1.0
March 31, 1998
June 30, 1998 July 1, 1997 through 1.4 to 1.0
June 30, 1998
September 30, 1998 October 1, 1997 through 1.4 to 1.0
September 30, 1998
December 31, 1998 January 1, 1998 through 1.4 to 1.0
December 31, 1998
March 31, 1999 April 1, 1998 through 1.4 to 1.0
March 31, 1999
June 30, 1999 July 1, 1998 through 1.4 to 1.0
June 30, 1999
</TABLE>
(e) MAXIMUM FUNDED DEBT TO EQUITY RATIO. Lessee and its
subsidiaries on a Consolidated basis shall have and shall
maintain at all times from the Lease Commencement Date through
and including June 30, 1999 a ratio of (i) Funded Debt to (ii)
Equity of not more than 3.0 to 1.0
For all purposes of the financial covenants set forth in
this EXHIBIT G-1, financial information for periods prior to the
Lease Commencement Date shall be restated on a pro forma basis as
though the transactions contemplated by the Credit Agreement and
the Lease had occurred at the time of such previous measurement
dates. EXHIBIT G-2 sets forth certain financial information to be
used for financial covenant calculations which has been so restated
on a pro forma basis for periods prior to the Lease Commencement
Date.
5
<PAGE> 54
EXHIBIT G-2
-----------
(a) For all purposes of the financial covenants set
forth in Exhibit G-1, EBITDA shall be restated on a pro forma
basis to be the following amounts during the following
periods:
<TABLE>
<CAPTION>
Period EBITDA
------ ------
<S> <C>
July 1, 1993 through $16,520,000
September 30, 1993
October 1, 1993 through $13,778,000
December 31, 1993
January 1, 1994 through actual EBITDA for the
March 31, 1994 period
</TABLE>
(b) For all purposes of the financial covenants set
forth in Exhibit G-1, Interest Expense shall be restated on
a pro forma basis to be the following amounts during the
following periods:
<TABLE>
<CAPTION>
Period Interest Expense
------ ----------------
<S> <C>
July 1, 1993 through $3,894,000
September 30, 1993
October 1, 1993 through $3,529,000
December 31, 1993
January 1, 1994 through $3,875,000
March 31, 1994
</TABLE>
(c) For all purposes of the financial covenants set
forth in Exhibit G-1, taxes (as stated in Lessee's
consolidated statement of income) shall be restated on a pro
forma basis to be the following amounts during the following
periods:
<TABLE>
<CAPTION>
Period taxes
------ -----
<S> <C>
July 1, 1993 through $2,196,000
September 30, 1993
October 1, 1993 through $1,379,000
December 31, 1993
January 1, 1994 through actual taxes for
March 31, 1994 the period
</TABLE>
<PAGE> 55
(d) For all purposes of the financial covenants set forth in
Exhibit G-1, debt amortization(1) shall be restated on a pro
forma basis to be the following amounts during the following
periods:
<TABLE>
<CAPTION>
Period debt amortization
------ -----------------
<S> <C>
July 1, 1993 through $1,988,000
September 30, 1993
October 1, 1993 through $1,988,000
December 31, 1993
January 1, 1994 through $2,075,000
March 31, 1994
</TABLE>
_________________________
(1) Defined in the definition of Debt Service Charges to mean
"regularly scheduled payments of principal on Funded Debt".
2
<PAGE> 56
EXHIBIT M TO EQUIPMENT SUBLEASE AGREEMENT
-----------------------------------------
Sublessee covenants and agrees that, unless Sublessor
shall otherwise consent in writing, from and after the date hereof
and until the expiration of the Sublease term:
1.1 MAINTENANCE OF EXISTENCE AND CONDUCT OF BUSINESS.
Sublessee shall, and shall cause each of its subsidiaries, to: (a)
do or cause to be done all things necessary to preserve and keep in
full force and effect its corporate existence and its rights and
franchises; (b) continue to conduct its business substantially as
now conducted or as otherwise permitted hereunder; and (c) at all
times maintain, preserve and protect all of its copyrights,
patents, trademarks, trade names and all other intellectual
property and rights as licensee or licensor thereof and preserve
all the remainder of its property, in use or useful in the conduct
of its business and keep the same in good repair, working order and
condition (taking into consideration ordinary wear and tear) and
from time to time make, or cause to be made, all necessary or
appropriate repairs, replacements and improvements thereto
consistent with industry practices, so that the business carried on
in connection therewith may be properly and advantageously
conducted at all times.
1.2 PAYMENT OF OBLIGATIONS. (a) Sublessee shall: (i)
pay and discharge or cause to be paid and discharged all
Obligations; and (ii) prior to an Event of Default, pay and
discharge, or cause to be paid and discharged, its Indebtedness
other than the Obligations at the time such amounts are due and
payable, and, subject to SECTION 1.2(b), pay and discharge or cause
to be paid and discharged promptly all (A) Charges imposed upon it,
its income and profits, or any of its property (real, personal or
mixed), and (B) lawful claims for labor, materials, supplies and
services or otherwise, before any thereof shall become in default.
(b) Except as otherwise specifically provided in the
Sublease with respect to charges or claims relating to or affecting
the Equipment, Sublessee may in good faith contest, by proper legal
action or proceedings, the validity or amount of any Charges or
claims arising under SECTION 1.2 (a) (ii) and while so contesting
such Charges or claims, not pay them; PROVIDED, THAT at the time of
commencement of any such action or proceeding, and during the
pendency thereof (i) adequate reserves with respect thereto are
maintained on the books of Sublessee, in accordance with GAAP, (ii)
such contest operates to suspend collection of the contested
Charges or claims and such contest is maintained and prosecuted
continuously and with diligence, (iii) none of the Collateral would
be subject to forfeiture or loss or any lien by reason of the
institution or prosecution of such contest, (iv) no lien shall
exist, be imposed or be attempted to be imposed for such Charges or
claims during such action or proceeding, (v) Sublessee shall
promptly pay or discharge such contested Charges and all additional
charges, interest, penalties and expenses, if any, and shall
<PAGE> 57
deliver to Sublessor evidence acceptable to Sublessor of such
compliance, payment or discharge, if such contest is terminated or
discontinued adversely to Sublessee, and (vi) Sublessor has not
advised Sublessee in writing that Sublessor reasonably believes
that nonpayment or nondischarge thereof could have or result in a
Material Adverse Effect.
1.3 BOOKS AND RECORDS. Sublessee shall keep adequate
records and books of account with respect to Sublessee's and its
subsidiaries' business activities, in which proper entries,
reflecting all financial transactions, are made in accordance with
GAAP and on a basis consistent with the Financial Statements
referred to in SECTION 3(A) OF THE SUBLEASE.
1.4 LITIGATION. Sublessee shall notify Sublessor in
writing, promptly upon learning thereof, of any litigation
commenced or threatened against Sublessee or any of its
subsidiaries, and of the institution against it of any suit or
administrative proceeding that (a) may involve an amount in excess
of $500,000 or (b) seeks injunctive relief or could have or result
in a Material Adverse Effect if adversely determined.
1.5 RESERVED
1.6 COMPLIANCE WITH LAWS. Sublessee shall comply in all
material respects with all federal, state and local laws and
regulations applicable to it, including those relating to
licensing, environmental, consumer credit, truth-in-lending, ERISA
and labor matters.
1.7 AGREEMENTS. Sublessee and each of its subsidiaries
shall perform, within all required time periods (after giving
effect to any applicable grace periods), all of its obligations and
enforce all of its rights under each agreement to which it is a
party, including any lease or customer contracts to which it is a
party. Neither Sublessee nor any of its subsidiaries shall
terminate or modify any provision of any agreement to which it is
a party which termination or modification could have or result in
a Material Adverse Effect.
1.8 SUPPLEMENTAL DISCLOSURE. On the request of
Sublessor (in the event that such information is not otherwise
delivered by Sublessee to Sublessor pursuant to the Sublease), so
long as there are Obligations outstanding hereunder, but not more
frequently than every month, Sublessee will supplement each
schedule or representation contained in the Sublease or any Exhibit
thereto with respect to any matter hereafter arising which, if
existing or occurring at the Sublease Commencement Date, would have
been required to be set forth or described therein or as an
exception to such representation or which is necessary to correct
any information in the Sublease or such Exhibit or representation
which has been rendered inaccurate thereby; provided, that such
supplement to such Exhibit or representation shall not be deemed an
2
<PAGE> 58
amendment thereof unless expressly consented to in writing by
Sublessor, and no such amendments, except as the same may be
consented to in a writing which expressly includes a waiver, shall
be or be deemed a waiver of any Default or Potential Default
disclosed therein.
1.9 EMPLOYEE PLANS. Sublessee shall notify Sublessor of
(i) any and all claims, actions, or lawsuits asserted or
instituted, and of any threatened litigation or claims against
Sublessee, any of its subsidiaries or against any ERISA Affiliate
in connection with any Plan maintained, at any time, by Sublessee,
such subsidiary or such ERISA Affiliate, or to which Sublessee,
such subsidiary or such ERISA Affiliate has or had at any time any
obligation to contribute, or against any such Plan itself, or
against any fiduciary of or service provided to any such Plan, in
each case in excess of $250,000 and (ii) the occurrence of any
"Reportable Event" with respect to any Pension Plan of Sublessee,
such subsidiary or such ERISA Affiliate.
1.10 RESERVED
1.11 RESERVED
1.12 RESERVED
1.13 SUBSIDIARY. Prior to forming any subsidiary or
permitting any of its subsidiaries to form any subsidiary (other
than Carlisle Plastics Funding Corporation), Sublessee shall (a)
provide not less than twenty-five (25) days prior written notice to
Lessor, (b) receive the prior written consent of Sublessor if,
after giving effect to the formation thereof, a new domestic
subsidiary shall have assets of One Hundred Thousand Dollars
($100,000) or more, or a new foreign subsidiary shall have assets
of Five Hundred Thousand Dollars ($500,000) or more, and (c) cause
each new subsidiary to execute applicable Toll Manufacturing
Agreements and Asset Purchase Agreements for domestic operating
subsidiaries.
1.14 MAINTENANCE OF EQUIPMENT AND FIXTURES. Sublessee
shall, and shall cause its subsidiaries to, keep and maintain its
equipment and fixtures in good operating condition sufficient for
the continuation of its business conducted on a basis consistent
with past practices, and Sublessee or such subsidiary shall provide
or arrange for all maintenance and service and all repairs
necessary for such purpose.
1.15 OFFERING PROCEEDS. Unless Lessor shall otherwise
agree, Sublessee shall apply the entire net cash proceeds from any
sale of stock permitted under the Lease, first, to reduce the
revolving credit loan under the Credit Agreement to zero, second,
to reduce the Obligations under the Lease and the Lease Documents
to zero, third, to reduce the Obligations under the Sublease to
zero and, fourth, for any other legally permissible purpose.
3
<PAGE> 59
1.16 NOTICE OF LABOR MATTERS. Sublessee shall provide
prompt notice to Sublessor of (i) any strike or other material
labor dispute against Sublessee or any of its subsidiaries, (ii)
any organizing efforts involving Sublessee or any of its
subsidiaries by any labor union or group of employees, and (iii)
any complaints or charges against Sublessee or any of its
subsidiaries filed with any federal, state, local or foreign court,
governmental agency or arbitrator involving an amount in excess of
$250,000 and based on, arising out of, in connection with, or
otherwise relating to the employment or termination of employment
by Sublessee or any of its subsidiaries of any individual.
Sublessee shall provide prompt notice to Sublessor of any
collective bargaining agreement or employment agreement with any
officer entered into by Sublessee or any subsidiary of Sublessee
with any other Person and, together with such notice, shall provide
Sublessor with a copy of any such collective bargaining agreement
or employment agreement.
4
<PAGE> 60
EXHIBIT N TO EQUIPMENT SUBLEASE AGREEMENT
-----------------------------------------
Sublessee covenants and agrees that, without Lessor's
prior written consent, from and after the date hereof until the
expiration of the Lease term it shall comply with the following
covenants set forth on this Exhibit applicable to it directly or as
a subsidiary of Lessee:
2.1 RESERVED
2.2 INVESTMENTS; LOANS AND ADVANCES. Except as
otherwise permitted by SECTION 2.3 or 2.4 of Exhibit N or as
required pursuant to the Receivables Funding Facility, Lessee shall
not, nor shall it permit any of its subsidiaries to, make any
investment in, or make or accrue loans or advances of money to any
Person (including, without limitation, Subordinated Debt), through
the direct or indirect lending of money, holding of securities or
otherwise other than Permitted Investments.
2.3 INDEBTEDNESS. Lessee shall not, nor shall Lessee
permit any of its subsidiaries to, create, incur, assume or permit
to exist any Indebtedness, except (i) Indebtedness existing on the
Closing Date and described on Exhibits L-1 and Exhibit L-2 to the
Sublease, provided that (A) failure to repay the Senior Notes
issued under the Indenture dated as of June 1, 1992 on or prior to
the scheduled maturity date of such Notes or to refinance such
Notes to a maturity date after the expiration of the Lease term
shall constitute an Event of Default under the Sublease, and such
Indebtedness shall no longer constitute permitted Indebtedness
after such scheduled maturity date; and (B) Indebtedness under the
Indenture dated as of April 1, 1989 shall be repaid as follows:
(1) Lessee shall make open market purchases of or otherwise call
for redemption in the manner set forth in such Indenture Senior
Notes issued under such Indenture in an aggregate principal amount
of $23,525,000 on or prior to the Lease Commencement Date, at an
aggregate redemption price not in excess of that provided for in
such Senior Notes; and (2) on or prior to the Lease Commencement
Date Lessee shall call for redemption in the manner set forth in
such Indenture Senior Notes in an aggregate principal amount equal
to the net proceeds to Lessee and its subsidiaries of the sale of
the Equipment to Lessor as provided in Section 4.04(ii) of the
Indentures, such redemption to be effected within the time period
required under such section; and in the case of each of (B)(1) and
(2) of this Section 2.3(i), such Senior Notes shall be redeemed on
the redemption dated applicable thereto set forth in the notices of
redemption and shall not constitute permitted Indebtedness
thereafter, (ii) the Obligations, (iii) deferred taxes not yet
deemed payable, (iv) unfunded pension fund and other employee
benefit plan obligations and liabilities not to exceed $250,000 in
the aggregate and then only to the extent they are permitted to
<PAGE> 61
remain unfunded under applicable law, (v) Subordinated Debt issued
after the Closing Date under the Credit Agreement by Lessee in
favor of a subsidiary, (vi) Subordinated Debt issued by any
subsidiary in favor of Lessee in the ordinary course of Lessee's
business in accordance with past practices for the working capital
needs of such subsidiary in an aggregate amount for all such loans
not to exceed $2,000,000 outstanding at any one time, (vii) subject
to the aggregate limitations set forth in Exhibit G-1 to the
Sublease, Subordinated Debt issued by any subsidiary in favor of
Lessee in the ordinary course of Lessee's business in accordance
with past practices for the Capital Expenditure needs of such
subsidiary; (viii) Indebtedness incurred under the Receivables
Funding Facility, (ix) Indebtedness incurred under the Credit
Agreement, (x) Indebtedness related to sale leaseback transactions
(other than the Lease and the Subleases) or purchase money
transactions; provided, that the aggregate amount of Indebtedness
for all such transactions shall not exceed $2,500,000 in any Fiscal
Year on a non-cumulative basis, (xi) commencing with Fiscal Year
1995, unsecured Indebtedness in an aggregate amount not to exceed
the Debt Availability, if any, for the Fiscal Year immediately
preceding such Fiscal Year, and (xii) any extension, renewal,
substitution, refinancing or replacement of any Subordinated Debt
set forth on Exhibit L-1 owing by any subsidiary in favor of Lessee
with Subordinated Debt between such subsidiary and Lessee in the
same or lesser amounts and on terms which are no less favorable to
Lessee and Lessor (other than the amendment of the interest rate in
any promissory note evidencing any such Subordinated Debt to a
market rate determined by Lessee in good faith as of the time of
any such amendment). Lessee shall not, nor shall it permit any of
its subsidiaries to, prepay, redeem, purchase, exchange, convert,
defease, retire or otherwise acquire (collectively, a "Redemption")
any Indebtedness prior to its regularly scheduled maturity date
except for Redemptions of (A) the revolving credit loan under the
Credit Agreement and of the Obligations, (B) Subordinated Debt
owing to Lessee by application of offsets of consideration due and
payable by Lessee to such subsidiary; provided, that any such
payments or prepayments of such Subordinated Debt shall not be
reborrowed by such subsidiary except as permitted by clauses (vi)
and (vii) of this Section 2.3, and (C) Indebtedness arising under
the Indentures or the Fairmont IRB; provided, that no Redemption
under any of the Indentures (other than, for purposes of clause (i)
below only, a Redemption of Senior Notes required to be made by the
Lease with the net proceeds of the sale and leaseback transaction
contemplated by the Lease and the Subleases) or the Fairmont IRB
shall be permitted unless (i) Lessee shall have unused Borrowing
Availability under the Credit Agreement of at least $7,500,000
after giving effect to any such Redemption, (ii) no Default or
Potential Default shall have occurred and be continuing or shall
result from such Redemption, and (iii) Lessee shall have provided
to Lessor no later than five (5) Business Days prior to the
proposed date of such Redemption a certificate executed by Lessee's
Chief Financial Officer certifying that such Redemption is being
made in conformity with the Indentures and, in the case of a
2
<PAGE> 62
Redemption of all or any portion of the Fairmont IRB, the
agreements underlying the Fairmont IRB and setting forth in each
case the source of funds to be used to consummate such Redemption.
2.4 EMPLOYEE LOANS AND TRANSACTIONS. Lessee shall not,
and shall not cause or permit any of its subsidiaries to:
(i) make loans or advances to any employee or Affiliate
other than:
(A) Subordinated Debt permitted by SECTION 2.3 of
this Exhibit N; or
(B) advances for travel and related expenses to
Lessee's officers and employees, in each case solely in the
ordinary course of business consistent with past practice, and not
to exceed $100,000 in the aggregate for all such amounts
outstanding at any time; or
(C) bona-fide loans made by Lessee to its officers
and employees in an amount not to exceed $400,000 in the aggregate
for all such loans outstanding at any one time; PROVIDED, THAT (x)
each such loan is evidenced by a promissory note due within three
(3) years, and (y) each such loan shall have been made for the
purpose of providing interim financing to such employee or officer
for the purpose of acquiring improved real estate as the principal
residence of such employee or officer in connection with a
relocation of such Person to a new office; or
(D) other bona-fide loans made by Lessee to its
officers and employees in the ordinary course of business in an
amount not to exceed $50,000 in the aggregate for all such loans
outstanding at any one time; or
(ii) except for the Management Services Agreement, enter
into any transaction with any Affiliate except on an arm's length
basis on fair and reasonable terms no less favorable to Lessee or
the applicable subsidiary than would be obtained in a transaction
with a Person that is not an Affiliate.
2.5 CAPITAL STRUCTURE AND BUSINESS. Lessee shall not,
nor shall it permit any of its subsidiaries to: (i) make any
changes in any of its business objectives, purposes or operations
which could in any way adversely affect the repayment of the
Obligations or could have or result in a Material Adverse Effect,
(ii) make any change in the capital structure of any subsidiary of
Lessee as described on Exhibit F to the Lease (including the
issuance of any shares of stock, warrants or other securities
convertible into stock or any revision of the terms of the
outstanding stock of any subsidiary of Lessee), or (iii) amend its
certificate or articles of incorporation or bylaws. Neither Lessee
nor any of its subsidiaries shall engage in any business other than
the businesses currently engaged in by Lessee or such subsidiary.
3
<PAGE> 63
2.6 GUARANTEED INDEBTEDNESS. Lessee shall not, nor
shall it permit any of its subsidiaries to, incur any Guaranteed
Indebtedness except (i) by endorsement of instruments or items of
payment for deposit to the general account of Lessee, (ii) for
Guaranteed Indebtedness incurred pursuant to the terms and
conditions of the CIT Guaranty Agreement and (iii) Guaranteed
Indebtedness of the Senior Notes which guarantees are in existence
on the Lease Commencement Date and Guaranteed Indebtedness incurred
for the benefit of Lessee or such subsidiary if the primary
obligation constitutes Indebtedness permitted by clause (x) of
Section 2.3 of this Exhibit N.
2.7 LIENS. Neither the Lessee nor any of its
subsidiaries shall become a party to any new agreement, note,
indenture or instrument (other than the Receivables Financing
Facility), or take any other action, which would prohibit the
creation of a lien on any of its properties or other assets in
favor of Lessor, as additional collateral for the Obligations or
require, in connection with the granting of any such lien in favor
of Lessor, equal or ratable liens in favor of any other Person or
otherwise impose a burden upon the rights and benefits afforded to
Lessor under the Lease.
2.8 SALE OF ASSETS. Lessee shall not, nor shall it
permit any of its subsidiaries to, sell, transfer, convey, assign
or otherwise dispose of any of its properties, assets or business,
including the capital stock of any subsidiary or any of its
accounts (with or without recourse) to any other Person other than,
in the case of a subsidiary, to Lessee or another subsidiary and
except for (i) sales of inventory in the ordinary course of
business, (ii) sales of accounts by Lessee to a subsidiary pursuant
to the Receivables Funding Facility, and (iii) the sale or other
disposition of property (other than the Equipment, disposition of
which is subject to the provisions of the Lease and the Subleases)
which is no longer used or useful in the business of Lessee or its
subsidiaries; PROVIDED, THAT any such sale or disposition is made
for the fair market value of such property.
2.9 DEFAULT. Lessee shall not, nor shall it permit any
of its subsidiaries to, take any action or omit to take any action,
which act or omission would constitute (a) a Default or a Potential
Default under, pursuant to, or noncompliance with any of, the terms
of this Lease or any of the other Lease Documents or (b) a default
or an event of default pursuant to, or noncompliance with, any
other contract, lease, mortgage, deed of trust, instrument or other
agreement to which it is a party or by which it or any of its
property is bound, or any document creating a lien.
2.10 ERISA. Neither the Lessee, any subsidiary of Lessee
nor any ERISA Affiliate shall without Lessor's prior written
consent acquire any new ERISA Affiliate that maintains or has an
obligation to contribute to a Pension Plan that has either an
"accumulated funding deficiency", as defined in Section 302 of
4
<PAGE> 64
ERISA, or any "unfunded vested benefits", as defined in Section
4006(a)(3)(e)(iii) of ERISA, in the case of any plan other than a
Multiemployer Plan, and in Section 4211 of ERISA in the case of a
Multiemployer Plan. Additionally, neither the Lessee, any
subsidiary of Lessee nor any ERISA Affiliate shall, without
Lessor's prior written consent, permit or suffer any condition set
forth on Schedule 3.13 to the Credit Agreement to cease to be met
and satisfied at any time; terminate any Pension Plan that is
subject to Title IV of ERISA where such termination could
reasonably be anticipated to result in liability to such Person;
permit any accumulated funding deficiency, as defined in Section
302(a)(2) of ERISA, to be incurred with respect to any Pension
Plan; fail to make any contributions or fail to pay any amounts due
and owing as required by the terms of any Plan before such
contributions or amounts become delinquent; make a complete or
partial withdrawal (within the meaning of Section 4201 of ERISA)
from any Multiemployer Plan; or at any time fail to provide Lessor
with copies of any Plan documents or governmental reports or
filings, if requested by Lessor.
2.11 RESERVED.
2.12 RESERVED.
2.13 SALE-LEASEBACKS. Neither Lessee nor any of its
subsidiaries thereof shall engage in any sale-leaseback or similar
transaction involving any of its assets, other than the
transactions expressly contemplated pursuant to the terms and
conditions of this Lease and the Subleases or as permitted under
Section 2.3(x) of this Exhibit N.
2.14 RESTRICTED PAYMENTS. Lessee shall not, nor shall it
cause or permit any of its subsidiaries to, make any Restricted
Payment; provided, that Lessee's subsidiaries may continue to make
dividends, distributions and payments to Lessee.
2.15 LEASES. Lessee shall not, nor shall it cause or
permit any of its subsidiaries to, become or remain liable in any
way, whether directly or by assignment or as a guarantor or other
surety, for the obligations of a lessee under any lease of real
property or any operating lease or similar agreement or
arrangement, if the aggregate amount of all rents paid or committed
to be paid by Lessee and its subsidiaries under all such leases
would exceed the following amounts for each of the following Fiscal
Years on a non-cumulative basis:
<TABLE>
<CAPTION>
Fiscal Year Amount
----------- ------
<S> <C>
1994 $23,134,000
1995 25,448,000
1996 27,992,000
1997 30,791,000
1998 33,870,000
</TABLE>
5
<PAGE> 65
<TABLE>
<S> <C>
1999 37,257,000
</TABLE>
2.17 STOCKHOLDERS. Lessee shall not, nor shall it cause
or permit any of its subsidiaries to, cause or suffer the
occurrence of any change in the composition of the stockholders of
any of its subsidiaries as of the Lease Commencement Date.
2.18 FISCAL YEAR. Lessee shall not, nor shall it cause
or permit any of its subsidiaries to, change its Fiscal Year.
2.19 SALE OF STOCK. Lessee shall not sell (whether in a
public or private offering or otherwise) any of its stock unless
the proceeds of such sale are applied as required by SECTION 1.15
of Exhibit M to the Lease. Lessee shall not, nor shall it permit
any of its subsidiaries to, sell (whether in a public or private
offering or otherwise) any of the stock of any subsidiary of
Lessee.
2.20 RESERVED.
2.21 NO IMPAIRMENT OF DISTRIBUTIONS. Lessee shall not,
nor shall it permit any of its subsidiaries to, directly or
indirectly, enter into or become bound by any agreement,
instrument, indenture or other obligation which could directly or
indirectly restrict, prohibit or require the consent of any Person
with respect to the payment of dividends or other distributions or
the making of intercompany loans by any subsidiary to Lessee, or
which would require as a condition thereto that any amount be paid,
or liens be granted, or assets transferred, to any Person.
2.22 AMENDMENT TO AGREEMENTS. Lessee shall not, nor shall
it permit any subsidiary to, amend, modify, restate, terminate or
waive, nor suffer the amendment, modification, restatement,
termination or waiver of, any of the provisions of any of the
Indentures, the CIT Documents, the Credit Agreement and the Loan
Documents (as defined therein), the Receivables Funding Facility or
the Toll Manufacturing Agreements or the Asset Purchase Agreements.
6
<PAGE> 66
EQUIPMENT SCHEDULE NO. 1
forming a part of the Equipment Sublease Agreement dated as of
April 4, 1994
1. EQUIPMENT. The Equipment leased hereunder shall be as
set forth in the schedule attached hereto as Annex A.
TOTAL FUNDING AMOUNT: $5,322,135
2. TERM. Upon and after the date of execution hereof, the
Equipment shall be subject to the terms and conditions provided
herein and in the Equipment Sublease Agreement referred to above
(the "Sublease") (which is incorporated herein by reference).
A full term of lease with respect to said Equipment shall
commence on the date hereof and shall extend for sixty (60) months
and no days, to and including April 4, 1999.
3. RENT. From and after the date hereof, the rent for said
Equipment during the term of this Sublease shall be payable as
hereinafter set forth. Each payment of rent shall be comprised of
a portion of the Total Funding Amount (the Total Funding Amount
being referred to herein as "Principal") and interest. Interest
shall be payable on the Principal balance of the Sublease from the
Lease Commencement Date through and including the dates of payment
at the floating per annum simple interest rate ("Contract Rate")
calculated as hereinafter set forth. Until the Option to Convert
(as defined below) is exercised, the Contract Rate shall be
adjusted once each calendar month, and such adjustment shall be
effective during the adjustment period ("Adjustment Period") as
hereinafter defined. Each Adjustment Period shall commence on the
fourth day of a calendar month and shall continue through the same
day of the next succeeding calendar month. The first Adjustment
Period shall commence on April 4, 1994. The Contract Rate for each
Adjustment Period shall be equal to the sum of (i) 2.65 percent
(2.65%) per annum plus (ii) a variable per annum interest rate
which shall be equal to the one month LIBOR rate as indicated in
the "Money Rates" column of THE WALL STREET JOURNAL, Eastern
Edition, published on the first day of such Adjustment Period or,
if such day is not a Business Day, on the first Business Day
following the first day of such Adjustment Period.
The Principal balance of the Sublease is payable in
lawful money of the United States in 60 consecutive monthly
installments (each, a "Periodic Installment") calculated as set
forth below and a final installment which shall be in the amount of
the Fixed Purchase Price. The first Periodic Installment shall be
due and payable on May 4, 1994 and the following Periodic
Installments shall be due and payable on the same day of each
succeeding month (each, a "Payment Date"). Payments of Principal
<PAGE> 67
shall be in equal monthly installments within each successive
yearly period commencing on April 4, 1994, and shall be in the
portion of the following aggregate amounts during each such year
obtained by multiplying each such amount by a fraction, the
numerator of which shall be the Total Funding Amount under the
Sublease, and the denominator of which shall be the Total Funding
Amount, (as defined in the Lease): $7,003,931 in year one;
$8,704,886 in year two; $8,704,886 in year three; $10,005,616 in
year four; and $9,805,503 in year five. In addition, the final
installment in the amount of the Fixed Purchase Price shall be due
and payable on the Payment Date on which the final Periodic
Installment is due and payable. Annex D to the Equipment Schedule
contains a monthly Principal amortization schedule for the term of
the Sublease and is incorporated herein by reference. In the event
that a Payment Date is not a Business Day, the payment due on such
date shall be due on the next succeeding Business Day.
Sublessee shall also make mandatory prepayments of
Principal, without premium or penalty, semi-annually within five
Business Days following delivery of Lessee's audited year-end and
unaudited six month financial statements (but in no event later
than 95 days after the conclusion of each Fiscal Year and 65 days
after the conclusion of each six month operating period,
respectively), in the amounts provided in the Equipment Schedule
attached to the Lease. Such prepayments will be applied to the
Principal payments due in inverse order of their maturity.
In addition to the payments of Principal provided above,
interest at the Contract Rate shall be payable on each Payment
Date. All payments shall be applied first to interest and then to
Principal. Each payment may, at the option of Sublessor, be
calculated and applied on an assumption that such payment would be
made on its due date. The acceptance by Sublessor of any payment
which is less than payment in full of all amounts due and owing at
such time shall not constitute a waiver of Sublessor's right to
receive payment in full at such time or at any prior or subsequent
time. Interest shall be calculated on the basis of a 360 day year.
So long as (i) no Default exists under the Sublease or
any Sublease, (ii) all the terms and conditions of the Sublease,
the Subleases and all related agreements, documents and instruments
are fulfilled, and (iii) the yields for the following United States
Treasury Notes, as reported in THE WALL STREET JOURNAL column
"Treasury Bonds, Notes & Bills" on the date that is five Business
Days prior to the Notice Date (as hereinafter defined), are as
follows: (A) the yield of one year Treasury Notes is at least 20
basis points greater than the yield of six month Treasury Notes,
(B) the yield of three year Treasury Notes is at least 50 basis
points greater than the yield of one year Treasury Notes, and (C)
the yield of five year Treasury Notes is at least 50 basis points
higher than the yield of three year Treasury Notes, Sublessee may
elect to convert (the "Option to Convert") the Contract Rate to a
fixed per annum simple interest rate as of any day on which a
-2-
<PAGE> 68
Periodic Installment is due (the "Conversion Date") upon at least
30 but no more than 60 days prior written notice (the "Notice
Date") to Sublessor accompanied by a conversion fee of $500.00
(which notice shall be irrevocable and shall be sent to the
attention of Sublessor's Business Center Manager, 44 Old Ridgebury
Road, Danbury, CT 06810); provided, that the Option to Convert may
only be exercised concurrently with the exercise of the Option to
Convert (as defined in the Lease) under the Lease, and the
Conversion Rate shall be identical to the Conversion Rate (as
defined in the Lease). Such notice shall state the due date of a
Periodic Installment in which Sublessee elects the fixed Contract
Rate to apply.
If Sublessee elects to exercise the Option to Convert,
the fixed Contract Rate shall be equal to the sum of the Base Rate
(as hereinafter defined) plus the Current Rate, as determined
below. The "Base Rate" shall be equal to 2.95 percent (2.95%) per
annum. The "Current Rate" shall be equal to the per annum rates
determined by reference below to the remaining time until the final
Periodic Installment is due:
(i) If there are less than twelve (12) months remaining
from the Conversion Date before the final Periodic Installment
is due, the "Current Rate" shall be the per annum interest
rate for "1-Year" Treasury Bills, Constant Maturity, under the
column indicating an average rate as stated in the Federal
Reserve Statistical Release H.15(519) for the second week of
the month preceding the calendar month in which the fixed
Contract Rate will be effective. If, for any reason
whatsoever, the Federal Reserve Statistical Release H.15(519)
is no longer published, the Current Rate shall be equal to the
latest annualized interest rate for "one year" U.S. Treasury
Bills as reported by the Federal Reserve Board on a weekly-
average basis, adjusted for constant maturity, as indicated in
the "Money Rates" column of THE WALL STREET JOURNAL, Eastern
Edition, published on the first Business Day of the calendar
month preceding the calendar month in which the fixed Contract
Rate will be effective.
(ii) If there are at least twelve (12) but less than
twenty-four (24) months remaining from the Conversion Date
before the final Periodic Installment is due, the "Current
Rate" shall be determined in the same manner as noted in
subparagraph (i) above, except the Current Rate shall be based
upon the rate listed for "2-Year" Treasury Bills.
(iii) If there are at least twenty-four (24) but less
than thirty-six (36) months remaining from the Conversion Date
before the final Periodic Installment is due, the "Current
Rate" shall be determined in the same manner as noted in
subparagraph (i) above, except it shall be based upon the rate
listed for "3-Year" Treasury Bills.
-3-
<PAGE> 69
(iv) If there are at least thirty-six (36) but less than
forty-eight (48) months remaining from the Conversion Date
before the final Periodic Installment is due, the "Current
Rate" shall be interpolated on a straight-line basis,
utilizing the Current Yields which would be calculated as of
the date of determination of the Current Yield under clause
(iii) for 3-Year Treasury Bills and clause (v) for 5-Year
Treasury Bills, determined in the same manner as noted in
subparagraph (i) above, except it shall be based upon the rate
listed for "4-Year" Treasury Bills.
(v) If there are at least forty-eight (48) but less than
sixty (60) months remaining from the Conversion Date before
the final Periodic Installment is due, the "Current Rate"
shall be determined in the same manner as noted in
subparagraph paragraph (i) above, except it shall be based
upon the rate listed for "5-Year" Treasury Bills.
4. SUBLESSEE'S CONFIRMATION. Sublessee hereby confirms and
warrants to Sublessor that the Equipment: (a) was duly delivered
to Sublessee on the date hereof at the locations specified in
Section 5 hereof; (b) has been received, inspected and determined
to be in compliance with all applicable specifications and that the
Equipment is hereby accepted for all purposes of the Sublease; and
(c) is a part of the "Equipment" referred to in the Sublease and is
taken subject to all terms and conditions therein and herein
provided.
5. LOCATION OF EQUIPMENT. The locations of the Equipment
are specified on the Schedule of Equipment attached hereto.
6. LATE CHARGE RATE. The Late Charge Rate shall be one and
one-half (1[Section] ) percent per month of the amount in arrears for the
period such amount remains unpaid (provided, however, that if such
rate exceeds the highest rate permitted by Applicable Law, then the
Late Charge Rate shall be the highest rate permitted by Applicable
Law).
7. SCHEDULE OF STIPULATED LOSS AND TERMINATION VALUES. The
Schedule of Stipulated Loss Values attached hereto as Annex B and
the Schedule of Termination Values attached hereto as Annex C are
incorporated herein by reference, and shall be applicable solely to
the Equipment described in this Equipment Schedule.
-4-
<PAGE> 70
8. PROPERTY, CASUALTY AND PUBLIC LIABILITY INSURANCE. The
amount of public liability insurance referenced in Section 11 of
the Sublease is $2 million. The amount of combined single limit
casualty insurance shall be the Stipulated Loss Value for the
Equipment subject to this Equipment Schedule from time to time.
DATE OF EXECUTION: April 4, 1994
CARLISLE PLASTICS, INC. AMERICAN WESTERN CORPORATION
Sublessor Sublessee
By:/s/ Rajiv P. Bhatt By:/s/ Rajiv P. Bhatt
--------------------------- -------------------------
-5-
<PAGE> 1
Exhibit 10.22
Bills of Sale
-------------
Attached is the Bill of Sale dated as of April 4, 1994 by the Company.
Substantially identical Bills of Sale were executed by American Western,
Poly-tech and Rhino-X on the same date.
<PAGE> 2
Bill of Sale
------------
KNOW ALL MEN BY THESE PRESENTS THAT Carlisle Plastics, Inc. ("Seller"),
for and in consideration of the sum of $14,285,375 (the "Net Proceeds"), such
Net Proceeds being at least equal to the fair value of the hereinafter defined
Equipment, as determined by the Board of Directors of Seller and other good and
valuable consideration, in hand paid by GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent for itself and certain Participants ("Purchaser"), the receipt of
which is hereby acknowledged, grants, bargains, sells, conveys, transfers and
delivers all right, title and interest unto Purchaser, its successors and
assigns forever to (i) the property described on Schedule A attached hereto and
made a part hereof, and (ii) all Equipment (as defined in any bill of sale
executed by any of Carlisle Plastics, Inc. or any subsidiary of Carlisle
Plastics, Inc. in favor of Purchaser in connection with the Equipment Lease
Agreement dated as of April 4, 1994, between Carlisle Plastics, Inc. and
General Electric Capital Corporation, as Agent for itself and certain
Participants), listed on Schedule A to such bill of sale as to which it may be
determined after the date hereof was in fact owned by Seller on the date hereof
(collectively, the "Equipment"), free and clear of any and all liens, claims,
charges and encumbrances, together with all of Seller's right, title and
interest in, under and to all product support, warranty and indemnification
rights and software and software licenses held by Seller in connection with
such Equipment.
Seller does hereby agree to and with Purchaser, its successors and
assigns, to warrant and defend title to the aforesaid Equipment hereby sold
unto Purchaser, its successors and assigns against all and every person and
persons whomsoever.
Seller hereby represents and warrants to Purchaser that: (i) Seller is
the record and beneficial owner of such Equipment, (ii) that Seller has full
right, power and authority to sell the Equipment and to make this Bill of Sale,
and (iii) the Equipment has been fully paid for.
Seller, for itself and its successors and assigns further covenants and
agrees to do, execute and deliver, or to cause to be done, executed or
delivered, all such further acts, transfers and assurances, for the better
assuring, conveying and confirming unto Purchaser and its successors and
assigns the rights and interests in the Equipment hereby bargained, sold,
assigned, transferred, set over and conveyed, as Purchaser and its successors
and assigns shall reasonably request.
<PAGE> 3
This Bill of Sale and the representations, warranties and covenants
herein contained shall inure to the benefit of Purchaser and its successors and
assigns, shall be binding upon Seller and its successors, assigns and
transferees, and shall survive the execution and delivery hereof.
IN WITNESS WHEREOF, Seller has hereunto set its hand by an officer as
of this 4th day of April, 1994.
CARLISLE PLASTICS, INC.
By:/s/ Rajiv P. Bhatt
----------------------------------
Title: Chief Financial Officer
------------------------------
<PAGE> 1
Exhibit 10.23
EXECUTION COPY
SUBORDINATION AGREEMENT
-----------------------
This SUBORDINATION AGREEMENT ("Agreement") is dated as of April 4, 1994
among General Electric Capital Corporation, as agent for itself and certain
participants under the hereinafter defined Lease (the "Lessor"), Carlisle
Plastics, Inc., a Delaware corporation ("Lessee"), Poly-Tech, Inc., a Minnesota
corporation ("Poly-Tech"), A&E Products (Far East) Ltd., a Hong Kong
corporation ("A&E"), Plasticos Bajacal S.A. de C.V., a Mexico corporation
("PB"), Rhino-X Industries, Inc., a Delaware corporation ("Rhino-X"), A&E Korea
Ltd., a Delaware corporation ("A&E Korea"), American Western Corporation, a
Delaware corporation ("AWC"), and AWC Transportation Corporation, a South
Dakota corporation ("Transportation" and together with Poly-Tech, A&E, PB,
Rhino-X, A&K Korea and AWC, the "Subsidiaries").
WITNESSETH:
WHEREAS, the Lessor has entered into that certain Equipment Lease
Agreement dated as of the date hereof with the Lessee (as the same may be
amended, supplemented or modified from time, the "Lease"), evidencing a portion
of the Senior Debt (as hereinafter defined);
WHEREAS, the Lessee has entered into Equipment Sublease Agreements
dated as of the date hereof with each of Poly-Tech, Rhino-X and AWC (as the
same may be amended, supplemented or modified from time to time with the
consent of the Lessor, the "Subleases") with respect to the sublease by such
Subsidiaries (the "Sublessees") of certain of the Equipment (as defined in the
Lease) leased to Lessee under the Lease, which Subleases evidence a portion of
the Senior Debt;
WHEREAS, the Sublessees and the other Subsidiaries are, or from time to
time will be, indebted to the Subsidiaries and the Lessee, and the Lessee is,
or from time to time will be, indebted to the Sublessees or the other
Subsidiaries, such indebtedness comprising a portion of the Subordinated
Indebtedness (as hereinafter defined);
WHEREAS, the Subsidiaries and/or the Lessee, in their capacities as
creditors of the Lessee and/or the Subsidiaries, are referred to herein as the
"Subordinating Creditors"; and
WHEREAS, the Senior Creditors (as hereinafter defined) and the
Subordinating Creditors have entered into this Agreement to set forth the
relative rights of payment and enforcement of the obligations of the Lessee and
the Subsidiaries to the Subordinating
<PAGE> 2
Creditors with respect to the Subordinated Indebtedness and the obilgations of
the Lessee and the Sublessees to the Senior Creditors with respect to the
Senior Debt.
NOW, THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereby agree as follows:
Section 1. CERTAIN DEFINITIONS. In addition to the terms defined in
the recitals hereto, the following terms shall have the following meanings for
the purpose of this Agreement:
Section 1.1. BANKRUPTCY CODE. The term "Bankruptcy Code" shall
mean 11 U.S.C. [Section] 101 ET SEQ., as from time to time hereinafter amended,
and any successor or similar statute.
Section 1.2. COLLATERAL. The term "Collateral" shall mean all
assets, property and interests in property of the Lessee or any Subsidiary,
whether now owned or hereafter acquired (whether by purchase or lease) in which
a security interest or lien is granted pursuant to the Lease or any
Sublease, as each of such agreements may hereafter be amended, modified or
supplemented.
Section 1.3. COLLECTION ACTION. The term "Collection Action" shall
mean (a) to ask, demand, sue for, take or receive from or on behalf of the
Lessee or any Subsidiary, by set-off or in any other manner, the whole
or any part of any monies which may now or hereafter be owing by the Lessee or
any Subsidiary to any Subordinating Creditor on any of the Subordinated
Indebtedness, provided, that a request for and receipt of a payment of
Subordinated Indebtedness when payment thereof is permitted under Section 3
hereof shall not be considered a Collection Action hereunder, (b) to initiate
or participate with others in any suit, action or proceeding against the Lessee
or any Subsidiary to enforce payment of or to collect the whole or any part of
the Subordinated Indebtedness, (c) to ask, demand, take or receive any security
for any of the Subordinated Indebtedness, or (d) to accelerate any of the
Subordinated Indebtedness.
Section 1.4. EVENT OF BANKRUPTCY. The term "Event of Bankruptcy"
shall mean any of the following: (a) the filing by the Lessee or any
Subsidiary of a voluntary petition in bankruptcy under any provision of
any bankruptcy law (including, without limitation, the Bankruptcy Code) or a
petition to take advantage of any receivership or insolvency laws, including,
without limitation, any petition seeking the dissolution, winding up, total or
partial liquidation, reorganization, composition, arrangement, adjustment or
readjustment or other relief of the Lessee or any Subsidiary, the Lessee's or
any Subsidiary's debts or the Lessee's or any Subsidiary's assets or the
appointment of a trustee, receiver, liquidator, custodian or similar official
for the Lessee or any Subsidiary or a material part of the Lessee's or any
Subsidiary's property; (b) the admission in writing by the Lessee or any
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<PAGE> 3
Subsidiary of its inability to pay its debts generally as they become due; (c)
the appointment of a receiver, liquidator, trustee, custodian or other similar
official for the Lessee or any Subsidiary or all or a material part of the
Lessee's or any Subsidiary's assets; (d) the filing of any petition against the
Lessee or any Subsidiary under any bankruptcy law (including, without
limitation, the Bankruptcy Code) or other receivership or insolvency law, which
petition is not dismissed within sixty (60) days or, if such petition is being
contested by the Lessee or any of the Subsidiaries, ninety (90) days,
including, without limitation, any petition seeking the dissolution, winding
up, total or partial liquidation, reorganization, composition, arrangement,
adjustment or readjustment or other relief of the Lessee or any Subsidiary, the
Lessee's or any Subsidiary's debts or the Lessee's or any Subsidiary's assets
or the appointment of a trustee, receiver, liquidator, custodian or similar
official for the Lessee or any Subsidiary or a material part of the Lessee's or
any Subsidiary's property; (e) the general assignment by the Lessee or any
Subsidiary for the benefit of creditors or any other marshalling of the assets
and liabilities of the Lessee or any Subsidiary; or (f) any corporate action
taken by the Lessee or any Subsidiary to authorize any of the foregoing.
Section 1.5. EVENT OF DEFAULT. The term "Event of Default" shall mean
the occurrence and continuance of any "Default" or "Potential Default" as such
terms are defined in the Lease.
Section 1.6. RESERVED.
Section 1.7. SENIOR CREDITORS. The term "Senior Creditors" shall
mean the Lessor, each Participant (as defined in the Lease) entitled to any
payments of Senior Debt and, with respect to the Senior Debt referred to in
clause (ii) of the definition of Senior Debt, the Lessee; provided, that all of
the interests of the Lessee with respect thereto and each Sublease and all
related documents, instruments, agreements and Collateral have been assigned to
the Lessor under each Consent to Sublease executed in connection with such
Sublease.
Section 1.8. SENIOR CREDITORS' DOCUMENTS. The term "Senior Creditors'
Documents" shall mean and include, respectively, the Lease, each Sublease, each
Consent to Sublease and all other documents, instruments and agreements now or
hereafter evidencing, guaranteeing or securing the whole or any part of the
Senior Debt, including any documents evidencing, guaranteeing or securing any
refunding, refinancing or replacement of the Senior Debt now outstanding.
Section 1.9. SENIOR CREDITORS' SECURITY INTERESTS. The term "Senior
Creditors' Security Interests" shall mean the liens or security interests with
respect to any of the Collateral granted by the Lessee or any Subsidiary to the
Lessor or to the Lessee.
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<PAGE> 4
Section 1.10. SENIOR DEBT. The term "Senior Debt" shall mean (i) all
obligations of payment and performance under the Lease (including all payments
of rent, Stipulated Loss Value and Termination Value, all indemnification
payments, and all other payments due pursuant to, or with respect to, the Lease
(including all post-petition interest or court-approved adequate protection
payments accruing or allowed to be paid during the pendency of any bankruptcy,
insolvency, receivership or similar proceedings under Chapter 7 or 11 of the
Bankruptcy Code and any other interest that would have accrued but for the
commencement of such proceedings ("Post-Petition Interest"))) now or hereafter
owed by the Lessee or any other Person to the Lessor or any Participant under
or secured by any of the Senior Creditors' Documents, as such agreements may be
amended or modified from time to time, and any replacements, substitutions,
renewals or refinancings thereof, (ii) all obligations of payment and
performance under the Subleases (including all payments of rent, Stipulated
Loss Value and Termination Value (each as defined therein), all indemnification
payments and all other payments due pursuant to, or with respect to, the
Subleases (including all Post-Petition Interest with respect thereto)) now or
hereafter owed by any Sublessee or any other Person to Lessee under or secured
by any of the Senior Creditors' Documents, as such agreements may be amended or
modified from time to time, and (iii) any replacements, substitutions, renewals
or refinancings of any thereof.
Section 1.11. SUBORDINATED INDEBTEDNESS. The term "Subordinated
Indebtedness" shall mean the Lessee's or any Subsidiary's obligation to pay or
repay to any Subordinating Creditor (i) any loans or intercompany advances made
at any time to the Lessee or a Subsidiary by any Subordinating Creditor (except
pursuant to any Sublease or related documents or instruments), including all
Post-Petition Interest with respect thereto, as any agreements or instruments
evidencing the same may be amended or modified from time to time, and (ii) any
replacements, substitutions, renewals or refinancings thereof.
Section 1.12. SUBORDINATING CREDITORS. The term "Subordinating
Creditors" shall have the meaning set forth in the fourth recital to this
Agreement.
Section 1.13. SUBORDINATING CREDITORS' DOCUMENTS. The term
"Subordinating Creditors' Documents" shall mean and include all documents,
instruments and agreements evidencing the whole or any part of the Subordinated
Indebtedness.
Section 1.14. SUBORDINATION NOTICE. The term "Subordination Notice"
shall mean the giving by the Lessor to the applicable Subordinating Creditor of
written notice that an Event of Default has occurred and is continuing under
the applicable Senior Creditor Document or would result after giving effect to
the next payment with respect to any of the Subordinated Indebtedness.
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<PAGE> 5
All other capitalized terms used but not otherwise defined herein shall
have the meanings ascribed thereto in the Lease.
Section 2. SUBORDINATION; STANDBY; NO INTERCOMPANY TRANSFERS.
(a) Each Subordinating Creditor agrees that payment of the Subordinated
Indebtedness is expressly subordinated to the prior payment in full in cash of
all Senior Debt, upon the terms and subject to the conditions contained in
this Agreement.
(b) The Lessee and each Subsidiary shall not, directly or indirectly,
make or agree to make, and no Subordinating Creditor shall accept or receive,
any payment or distribution (in cash, property or securities, by set-off or
otherwise), direct or indirect, of or on account of any Subordinated
Indebtedness, if, at the time of such payment or distribution, or immediately
after giving effect thereto, an Event of Default shall have occurred and be
continuing.
(c) Following an acceleration of the maturity of any of the Senior Debt
(whether as a result of any payment default, any covenant default or otherwise)
and as long as such acceleration shall continue unrescinded and
unannulled, all of the Senior Debt shall first be paid in full in cash, or
provision for such payment shall be made in a manner satisfactory to the
Lessor, before any payment is made on account of or applied on the Subordinated
Indebtedness.
(d) Each payment on the Subordinated Indebtedness by the Lessee or any
Subsidiary shall be deemed to constitute a representation of the Lessee or such
Subsidiary to the applicable Subordinating Creditor and the Senior Creditors
that such payment is permitted to be paid by the Lessee or such
Subsidiary under this Agreement. The applicable Subordinating Creditor shall
be entitled to retain such payment unless the Lessor shall have notified (in
writing) such Subordinating Creditor that the terms of this Agreement,
including, without limitation, those set forth in SECTION 2(b), prohibited the
Lessee or such Subsidiary from making such payment on the date such payment was
made, in which case such Subordinating Creditor shall deliver such payment or
an amount of immediately available funds equal to the amount thereof to the
applicable Senior Creditor for application to the payment of any Senior Debt
then due within five (5) Business Days of receipt of such notice. Any notice
given under this SECTION 2(d) shall constitute a Subordination Notice for all
purposes of this SECTION 2.
(e) The subordination provisions contained herein shall apply with
respect to all of the Senior Debt, regardless of how or in what manner the
Senior Debt is incurred, or whether the Senior Debt has already been
incurred or may be incurred in the future by
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<PAGE> 6
future advances or other financial accommodations made or extended by the
Senior Creditor, or whether such future advances or other financial
accommodations are made at the discretion of any Senior Creditor under the
Senior Creditors' Documents or pursuant to any commitment or otherwise.
(f) If any Subordinating Creditor shall attempt to take any Collection
Action, the Lessee or applicable Subsidiary or the Lessor may interpose as a
defense or plea the making of this Agreement and the Lessor may intervene
and interpose such defense in its name or in the name of the Lessee or
applicable Subsidiary, and the Lessee or applicable Subsidiary or the Lessor
may by virtue of this Agreement restrain the enforcement thereof in the name of
the Lessee or applicable Subsidiary or the Lessor. No Subordinating Creditor
shall accept or receive any lien or security interest on any of the Collateral
of the Lessee or applicable Subsidiary to secure payment of any of the
Subordinated Indebtedness. In the event that the Subordinating Creditors are
granted a security interest in any of the Subordinated Indebtedness, all such
security interests (including any purchase money security interest) in any
property of Lessee or any Subsidiary ("Subordinated Security Interests") are
hereby expressly subordinated to Lessor's security interests therein.
(g) Neither the Lessee nor any Subsidiary shall make or agree to make or
commit to be made any loans, advances, investments, contributions to capital or
other transfers of assets or property to or in respect of or for the benefit
of any Subsidiary except (i) as permitted under Section 3 of this Agreement, or
(ii) as permitted or required under the Lease, any Sublease or any related
document or instrument.
Section 3. PERMITTED PAYMENTS. Subject to the terms of SECTION 2 and
only with respect to the Subordinated Indebtedness owed by it, the Lessee or
any Subsidiary may pay to the applicable Subordinating Creditor, and such
Subordinating Creditor may accept or receive from the Lessee or such
Subsidiary, the payments of the Subordinated Indebtedness provided for under
the Subordinating Creditors' Documents (when and as due without giving effect
to any acceleration thereof or any amendment or modification thereof which
would have the effect of increasing the amount or frequency of any such
payments) only as follows:
(a) Lessee or any Subsidiary may make only principal or interest payments
on Subordinated Indebtedness owed by it to the applicable Subordinating
Creditor on an unaccelerated basis, provided that: (i) there does not then
exist, nor after the making of any such payment would there exist, any
Default; and (ii) such payments are permitted by the Lease and any other
instrument or agreement pursuant to which there is issued or secured or
evidenced any Debt of the Lessee or the applicable Subsidiary.
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<PAGE> 7
(b) Upon the giving of a Subordination Notice by the Lessor to any
Subordinating Creditor, the subordination and standby provisions of SECTIONS 2
and 5 shall govern and control until the earlier of (i) the date on which the
Lessor provides such Subordinating Creditor with written notice that there
are no currently existing Events of Default under the Senior Creditors'
Documents or (ii) the payment in full in cash of the Senior Debt. The Lessor
shall provide a written notice to the Lessee within thirty (30) calendar days
after all Events of Default under the Senior Creditors' Documents are cured or
waived to the Lessor's satisfaction or the Senior Debt has been paid in full in
cash.
Section 4. SUBORDINATED INDEBTEDNESS OWED ONLY TO SUBORDINATING
CREDITORS; FUTURE SUBORDINATED INDEBTEDNESS. Each Subordinating Creditor
warrants and represents to the Senior Creditors that such Subordinating
Creditor has not previously assigned any interest in any of the Subordinated
Indebtedness to any party, that no party owns an interest in any of the
Subordinated Indebtedness other than such Subordinating Creditor (whether as
joint holder of any Subordinated Indebtedness, participants or otherwise), and
that the entire Subordinated Indebtedness is owing to the Subordinating
Creditors. The Subordinating Creditors shall not sell, assign or otherwise
transfer to any Person any interest in the Subordinated Indebtedness unless the
transferee agrees to be bound by all the provisions of this Agreement by an
instrument in writing acceptable to the Lessor. The parties hereto agree that
the Subordinating Creditors, the Lessee and the Subsidiaries shall not create
or permit to exist in favor of any Subordinating Creditor any indebtedness that
could be considered Subordinated Indebtedness hereunder without the consent of
Lessor and without first executing an amendment to this Agreement adding the
obligee of such indebtedness to this Agreement as a Subordinating Creditor if
required by the Lessor.
Section 5. STANDBY PROVISIONS. Until such time as all Senior Debt has
been paid in full in cash, no Subordinating Creditor shall take any Collection
Action with respect to any of Subordinated Indebtedness. In addition, the
Lessee shall not take any Collection Action with respect to any Senior Debt
owed to it or any Senior Creditors' Document to which it is a party or
applicable to it without the written consent of the Lessor; and all rights and
remedies under this Agreement or thereunder or with respect thereto, and all
rights in and to any property or assets leased thereunder or payable or
deliverable with respect hereto or thereto or pursuant to which any lien or
security interest is granted hereunder or thereunder, are hereby assigned by
the Lessee to Lessor.
Section 6. INSOLVENCY PROCEEDINGS. Upon the occurrence of an Event of
Bankruptcy, then and in any such event:
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<PAGE> 8
(a) Each Senior Creditor shall be entitled to receive payment in full in
cash (or to have such payment duly provided for in a manner satisfactory to the
Lessor) of all amounts due or to become due on or in respect of all Senior
Debt, before any payment or distribution, whether in cash, property or
securities, is made on account of or applied to the Subordinated Indebtedness;
(b) The Subordinated Indebtedness shall forthwith become due and payable,
and any payment or distribution of assets of the Lessee or any Subsidiary of
any kind or character, whether in cash, property or securities, to which any
Subordinating Creditor would be entitled except for the provisions of this
Agreement, shall be paid or delivered by any debtor, custodian, liquidating
trustee, agent or other Person making such payment or distribution, directly to
the Lessor, or its representative or representatives, for application to the
payment of all such Senior Debt remaining unpaid, to the extent necessary to
pay all such Senior Debt in full in cash after giving effect to any concurrent
payment or distribution, or provision therefor, to the Lessor and to facilitate
the foregoing, such Subordinating Creditor will direct each such Person to make
all such payments and distributions directly to the Lessor;
(c) Each Subordinating Creditor hereby irrevocably authorizes and
empowers the Lessor to demand, sue for, collect and receive such Subordinating
Creditor's ratable share of all such payments and distributions and to
receive and receipt therefor and give acquittance therefor; to file and prove
such claims in any statutory or non-statutory proceeding; and in the event that
such Subordinating Creditor has not responded prior to five (5) days before any
deadline for the taking of any such action, to vote the full amount of
Subordinated Indebtedness which is owing in its sole discretion in connection
with any resolution, arrangement, plan of reorganization, compromise,
settlement or extension and to take all such other action (including, without
limitation, the right to participate in any composition of creditors and the
right to vote at creditors' meetings for the election of trustees, acceptance
of plans and otherwise) in the name of such Subordinating Creditor or
otherwise, as the Lessor may deem necessary or advisable for the enforcement of
the subordination provisions hereof. Each Subordinating Creditor hereby
agrees, under the circumstances set forth in this SECTION 6, duly and promptly
to take such action as may be requested at any time and from time to time by
the Lessor to collect hereunder and to file appropriate proofs of claim in
respect thereof and to execute and deliver such powers of attorney, assignments
or other instruments as may be requested by the Lessor in order to enable the
Lessor to enforce any and all claims upon or in respect of the Subordinated
Indebtedness and to collect and receive any and all payments or distributions
which may be payable or deliverable at any time upon or in respect of the
Subordinated Indebtedness; and
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<PAGE> 9
(d) Each Subordinating Creditor and the Lessee shall execute and deliver
to the Lessor and, if required by the Lessor, the Lessee, or its representative
all such further instruments and other documentation confirming the
above authorization, and all such proofs of claim, assignments of claim and
other instruments and other documentation, and shall take all such other
action, as may be requested by the Lessor to enforce such claims and carry out
the purposes of this SECTION 6.
The Lessee and each Subsidiary shall give prompt notice to the Senior
Creditors and the Subordinating Creditors of any Event of Bankruptcy.
Upon any payment or distribution of assets of the Lessee or any
Subsidiary referred to in this SECTION 6, the applicable Subordinating Creditor
shall be entitled to rely upon any order or decree made by any court of
competent jurisdiction in which any proceeding (which proceeding relates to the
Event of Bankruptcy) is pending, or a certificate of the debtor, custodian,
liquidating trustee, agent or other Person making any payment or distribution
to such holders, for the purpose of ascertaining the Persons entitled to
participate therein, the then outstanding principal amount of the Senior Debt
and any and all amounts payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Section 6.
SECTION 7. PAYMENTS OR DISTRIBUTIONS RECEIVED BY A SUBORDINATING
CREDITOR. Except as to payments or distributions which a Subordinating
Creditor is permitted to accept or receive pursuant to this Agreement, should
any payment or distribution be received by any Subordinating Creditor upon or
with respect to any of the Subordinated Indebtedness prior to the payment in
full in cash of all Senior Debt, such Subordinating Creditor shall receive and
hold the same in trust, as trustee, for the benefit of the Senior Creditors and
shall forthwith deliver the same to the Lessor, in precisely the same form
received (except for the endorsement or assignment of such Subordinating
Creditor where necessary) for application on the Senior Debt, due or not due,
and until so delivered, the same shall be held in trust by such Subordinating
Creditor as the property of the Senior Creditors.
Section 8. SUBROGATION. After all Senior Debt has been paid in full
in cash and until the Subordinated Indebtedness has been paid in full, the
Subordinating Creditors shall be subrogated to the rights of the Senior
Creditors to receive distributions with respect to the Senior Debt, to the
extent that distributions otherwise payable to the Subordinating Creditors have
been applied to the payment of Senior Debt in accordance with the provisions of
this Agreement. As between the Lessee or any Subsidiary, its creditors other
than the Senior Creditors and the Subordinating Creditors, a distribution
applied to the payment of the Senior Debt in accordance with the provisions of
this Agreement which otherwise would have been made to a Subordinating Creditor
shall not be
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deemed a payment by the Lessee or any Subsidiary on the Subordinated
Indebtedness, it being understood that nothing contained in this Agreement is
intended to or shall impair, as between the Lessee or the applicable
Subsidiary, its creditors other than the Senior Creditors and the Subordinating
Creditors, the obligation of the Lessee or the applicable Subsidiary, which is
absolute and unconditional, to pay to the applicable Subordinating Creditor the
principal of and premium, if any, and the interest, if any, on the Subordinated
Indebtedness as and when the same shall become due and payable in accordance
with its terms, or to affect the relative rights of the Subordinating Creditors
and creditors of the Lessee or any Subsidiary other than the Senior Creditors.
Section 9. TERM. This Agreement shall constitute a continuing
agreement among the parties, including, without limitation, their successors
and assigns, regardless of whether such successors and assigns are signatories
hereto, and any Senior Creditor or its respective successors and assigns may
continue, without notice to the Subordinating Creditors, to enter into lease
facilities, extend credit and make other accommodations to or for the account
of the Lessee or any Sublessee in reliance upon the provisions of this
Agreement. This Agreement shall be irrevocable by the Subordinating Creditors
until all Senior Debt shall have been paid and fully satisfied and all
financing arrangements between the Lessor and the Lessee or the Lessee and any
Sublessee pursuant to the Senior Creditors' Documents have been terminated in
writing.
Section 10. ADDITIONAL AGREEMENTS BETWEEN THE LESSOR AND LESSEE OR
SUBLESSEES. The Lessor, at any time and from time to time, and the Lessee,
with the written consent of the Lessor, may enter into such agreement or
agreements with the Lessee or any Sublessee as the Lessor may deem proper,
extending the time of payment of or renewing or otherwise altering the terms of
all or any of the Senior Debt or affecting the security underlying any or all
of the Senior Debt.
Section 11. WAIVERS OF SUBORDINATING CREDITORS. All Senior Debt shall
be deemed to have been made or incurred in reliance upon this Agreement, and
each Subordinating Creditor expressly waives all notice of the acceptance by
any Senior Creditor of the subordination and other provisions of this
Agreement, notice of the incurring of Senior Debt from time to time under the
Senior Creditors' Documents and all other notices not specifically required
pursuant to the terms of this Agreement or by law, and each Subordinating
Creditor expressly waives reliance by any Senior Creditor upon the
subordination and other agreements as herein provided.
Section 12. WAIVERS OF THE LESSOR. No waiver shall be deemed to be
made by the Lessor of any of its rights hereunder, unless the same shall be in
writing signed on behalf of the Lessor, and each waiver, if any, shall be a
waiver only with respect to the
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<PAGE> 11
specific instance involved and shall in no way impair the rights of the
Lessor in any other respect at any other time.
Section 13. NOTICE OF DEFAULT. Each party hereto agrees to give to
the others copies of any written notices of default, termination, demand for
payment, acceleration, foreclosure, exercise of remedies and any other written
notice of a like nature, including, without limitation, any such notice which
may be given under or pursuant to the terms of any of the applicable Senior
Creditors' Documents, or the Subordinating Creditors' Documents, which such
party may give to the Lessee or any Sublessee hereafter, in each case
concurrently with, or as soon as practicable after, the giving of such notice
to the Lessee or such Sublessee; PROVIDED, HOWEVER, that no failure of any
party to give a copy of any such notice as provided herein shall in any event
affect the validity or effectiveness of the notice or render the party liable
to any other party in any respect or relieve each Subordinating Creditor of its
obligations and agreements contained herein.
Section 14. NOTICES. Any notice or other communication required or
permitted to be given shall be in writing addressed to the respective party as
set forth below and may be personally served, telecopied or sent by reputable
overnight courier service and shall be deemed to have been given: (a) if
delivered in person, when delivered; (b) if delivered by telecopy, on the date
of transmission if transmitted on a Business Day before 4:00 p.m. (Stamford,
Connecticut time) (but only if such telecopied document is also delivered by
another method permitted by this Agreement by the next Business Day) or, if
not, on the next succeeding Business Day; or (c) if delivered by reputable
overnight courier, the day such delivery is made by such courier.
Notices shall be addressed as follows:
If to the Lessor:
GENERAL ELECTRIC CAPITAL CORPORATION
44 Old Ridgebury Road
Danbury, Connecticut 06810-5105
Attn: Manager of Operations
Telecopy No: (203) 796-1315
If to the Lessee, the Sublessees or the Subsidiaries:
CARLISLE PLASTICS, INC.
One Union Street
Boston, Massachusetts 02108
Attn: Chief Financial Officer
Telecopy No: (617) 523-5428
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or at such other address or to any such successor or assign as any party may
designate by notice to the other party in accordance with the provisions
hereof.
Section 15. GOVERNING LAW. THIS AGREEMENT SHALL BE INTERPRETED, AND
THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED, IN ACCORDANCE WITH
THE INTERNAL LAWS, WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS, AND
DECISIONS OF THE STATE OF NEW YORK.
Section 16. PARTIES. This Agreement shall be binding upon, and inure
to the benefit of, the Subordinating Creditors and the Senior Creditors and
their respective successors and assigns. The terms "Lessee", "Sublessee" and
"Subsidiary" as used herein shall also refer to the successors and assigns of
the Lessee or such Sublessee or Subsidiary, including, without limitation, a
receiver, trustee, custodian or debtor-in-possession
Section 17. CONSENT TO JURISDICTION. THE PARTIES AGREE THAT ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT MAY BE COMMENCED IN
ANY STATE OR FEDERAL COURT IN THE STATE OF NEW YORK, AND AGREE THAT A SUMMONS
AND COMPLAINT COMMENCING AN ACTION OR PROCEEDING IN ANY SUCH COURT SHALL BE
PROPERLY SERVED AND SHALL CONFER PERSONAL JURISDICTION IF SERVED PERSONALLY OR
BY CERTIFIED MAIL TO IT AT ITS ADDRESS HEREINBELOW SET FORTH, OR AS IT MAY
PROVIDE IN WRITING FROM TIME TO TIME, OR AS OTHERWISE PROVIDED UNDER THE LAWS OF
THE STATE OF NEW YORK.
Section 18. WAIVER OF JURY TRIAL. THE PARTIES HERETO HEREBY WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF THIS AGREEMENT, OR ANY DEALINGS BETWEEN THEM RELATING TO
THE SUBJECT MATTER OF THIS AGREEMENT. THE PARTIES HERETO ALSO WAIVE ANY BOND OR
SURETY OR SECURITY UPON SUCH BOND THAT MIGHT, BUT FOR THIS WAIVER, BE REQUIRED
OF THE SENIOR CREDITORS. THE SCOPE OF THIS WAIVER IS INTENDED TO BE
ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT
RELATE TO THE SUBJECT MATTER OF THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION,
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW
AND STATUTORY CLAIMS. THE PARTIES HERETO EACH ACKNOWLEDGE THAT THIS WAIVER IS A
MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY
RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH WILL CONTINUE
TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. THE PARTIES HERETO
FURTHER WARRANT AND REPRESENT THAT EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL
COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING
THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO
THIS AGREEMENT. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A
WRITTEN CONSENT TO A TRIAL BY THE COURT.
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Section 19. SECTION TITLES. The section titles contained in this
Agreement are and shall be without substantive meaning or content of any kind
whatsoever and are not a part of the Agreement between the parties hereto.
Section 20. NO AMENDMENTS. There shall be no amendment, modification
or supplementation to any Subordinating Creditors' Document or the waiver or
termination by the Lessee or any Subsidiary of any of its material rights
thereunder, unless such action is consented to by the Lessor or required by any
court or governmental agency.
Section 21. COUNTERPARTS. This Agreement and any amendments, waivers,
consents or supplements may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all of which
counterparts together shall constitute but one and the same instrument. This
Agreement shall become effective upon the execution of a counterpart hereof by
each of the parties hereto.
Section 22. SEVERABILITY. The invalidity, illegality or
unenforceability of any provision in or obligation under this Agreement shall
not affect or impair the validity, legality or enforceability of the remaining
provisions or obligations under this Agreement.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their duly authorized representatives as of the
day and year first above written.
Senior Creditor:
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent for itself and certain
Participants
By: /s/ Christopher Ziluca
-------------------------------
Title: Senior Credit Analyst
------------------------------
Subordinating Creditors:
Lessee:
CARLISLE PLASTICS, INC.
By: /s/ Rajiv P. Bhatt
-------------------------------
Title: Chief Financial Officer
------------------------------
Sublessees:
POLY-TECH, INC.
By: /s/ Rajiv P. Bhatt
-------------------------------
Title: Chief Financial Officer
------------------------------
RHINO-X INDUSTRIES, INC.
By: /s/ Rajiv P. Bhatt
-------------------------------
Title: Chief Financial Officer
------------------------------
AMERICAN WESTERN CORPORATION
By: /s/ Rajiv P. Bhatt
-------------------------------
Title: Chief Financial Officer
------------------------------
<PAGE> 15
Subsidiaries:
A&E PRODUCTS (FAR EAST) LTD.
By: /s/ Rajiv P. Bhatt
-------------------------------
Title: Chief Financial Officer
------------------------------
PLASTICOS BAJACAL S.A. DE C.V.
By: /s/ Rajiv P. Bhatt
-------------------------------
Title: Chief Financial Officer
------------------------------
A&E KOREA LTD.
By: /s/ Rajiv P. Bhatt
-------------------------------
Title: Chief Financial Officer
------------------------------
AWC TRANSPORTATION CORPORATION
By: /s/ Rajiv P. Bhatt
-------------------------------
Title: Chief Financial Officer
------------------------------
<PAGE> 1
Exhibit 10.24
Subsidiary Guarantees
---------------------
Attached is the Subsidiary Guaranty dated as of April 4, 1994 by
American Western. Substantially identical guarantees were executed by
Poly-Tech and Rhino-X on the same date.
<PAGE> 2
EXECUTION COPY
SUBSIDIARY GUARANTY
-------------------
This Subsidiary Guaranty (this "Guaranty") is executed and delivered by
AMERICAN WESTERN CORPORATION ("Guarantor") in favor of GENERAL ELECTRIC CAPITAL
CORPORATION, AS AGENT FOR ITSELF AND CERTAIN PARTICIPANTS ("Lessor"), in
connection with that certain Equipment Lease Agreement dated as of April 4,
1994 (together with all Equipment Schedules executed or to be executed pursuant
thereto and as amended, supplemented or modified from time to time, the
"Lease"), by and between Lessor and CARLISLE PLASTICS, INC. ("Lessee"). Unless
otherwise defined herein, capitalized terms shall have their meanings as
defined in the Lease.
In order to induce Lessor to enter into the Lease (execution and
delivery hereof being a condition precedent to Lessor's obligations under the
Lease), and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the undersigned as primary
obligor and not as surety hereby IRREVOCABLY AND UNCONDITIONALLY GUARANTEES (a)
to pay Lessor in lawful money of the United States all rents and other sums due
and owing under and in connection with the Lease and the documents executed and
delivered by Lessee in connection therewith, or any substitutions therefor, at
the times and in the manner set forth in the Lease and such documents; and (b)
to perform, at the time and in the manner set forth in the Lease and the
documents executed and delivered by Lessee in connection therewith, all of the
terms, covenants and conditions therein required to be kept, observed or
performed by Lessee, in each case whether now existing or arising hereafter,
whether otherwise guaranteed or secured and whether on open account, evidenced
by instruments or otherwise (collectively, the "Obligations"); provided, that
the Obligations of Guarantor hereunder shall not exceed the amounts payable by
Guarantor to Lessee (including any amounts payable by reason of acceleration)
under the Equipment Sublease Agreement of even date herewith (as amended,
supplemented or modified after the date hereof, the "Sublease") between Lessee
and Guarantor (the "Guaranteed Amount"). Lessor agrees that the Guaranteed
Amount shall be reduced by one dollar for every one dollar received by Lessor
from Lessee which Lessee identifies as having been received from Guarantor
under the Sublease.
1. This Guaranty is a continuing one and shall terminate only upon
full payment to Lessor of the Guaranteed Amount of all rents and all other sums
due under the Lease and the documents executed and delivered by Lessee in
connection therewith and the performance of all of the terms, covenants and
conditions therein required to be kept, observed or performed by Lessee,
including such payment and performance under all schedules made a
<PAGE> 3
part of said Lease, whether to be performed before or after the last rent
payment has been made under the Lease.
2. Guarantor authorizes Lessor, with Lessee's consent where required,
without notice or demand, and without affecting its liability hereunder, from
time to time to: (a) change the amount, time or manner of payment of rent or
other sums reserved in the Lease; (b) change any of the terms, covenants,
conditions or provisions of the Lease including any increase or decrease in any
installment of rent; (c) amend, modify, change or supplement the Lease; (d)
consent to Lessee's assignment of the Lease or to the sublease of all, or any
portion, of the Equipment covered by the Lease; (e) receive and hold security
for the payment of this Guaranty or the performance of the Lease, and exchange,
enforce, waive and release any such security; and (f) apply such security and
direct the order or manner of sale thereof as Lessor in its discretion may
determine.
3. Guarantor waives any right to require Lessor to: (a) proceed or
enforce any remedies against Lessee or any other Person liable on the
Obligations; (b) proceed against or exhaust any security held from Lessee, any
other Person or any other guaranty or surety agreement; (c) pursue any other
remedy in Lessor's power whatsoever; or (d) notify Guarantor of the creation,
existence or any default by Lessee in the payment of any rent or other sums
reserved in the Lease or in the performance of any term, covenant or condition
therein required to be kept, observed or performed by Lessee. Guarantor waives
any defense arising by reason of any disability or other defense of Lessee, any
lack of authority of Lessee with respect to the Lease, the invalidity,
illegality or lack of enforceability of the Lease from any cause whatsoever,
the failure of Lessor to acquire title to the Equipment subject to the Lease or
to perfect or maintain perfection of any interest therein, the impairment of
any other collateral, or the cessation from any cause whatsoever of the
liability of Lessee. Upon demand, Guarantor agrees to pay and perform the
Obligations regardless of any existing or future offset or claim which may be
asserted by Guarantor. This Guaranty and Guarantor's payment obligations
hereunder shall continue to be effective or be reinstated, as the case may be,
if at any time payment of any of the Obligations is rescinded or must otherwise
be restored or returned by Lessor, whether pursuant to any bankruptcy,
insolvency or similar proceeding or otherwise, by court order, administrative
order or settlement, all as though such payment had not been made. Lessor's
good faith determination as to whether a payment must be restored or returned
shall be binding on Guarantor. Payment of all amounts now or hereafter owed to
Guarantor by Lessee or any other obligor for any of the Obligations is hereby
subordinated in right of payment to the indefeasible payment in full to Lessor
of all Obligations and is hereby assigned to Lessor as security therefor.
Guarantor hereby irrevocably and unconditionally waives and relinquishes all
statutory, contractual, common law, equitable and
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<PAGE> 4
all other claims against Lessee or any other obligor for any of the
Obligations, any collateral therefor, or any other assets of Lessee or any
other obligor for subrogation, reimbursement, exoneration, contribution,
indemnification, setoff or other recourse in respect of sums paid or payable
to Lessor by Guarantor hereunder, and Guarantor hereby further irrevocably and
unconditionally waives and relinquishes any and all other benefits which it
might otherwise directly or indirectly receive or be entitled to by reason of
any amounts paid by, or collected or due from, Guarantor, Lessee or any other
obligor for any of the Obligations, or realized from any of their respective
assets. Guarantor waives all presentations, demands for performance, protests,
notices of dishonor, and notices of acceptance of this Guaranty. Without in
any way limiting the foregoing, Guarantor hereby waives any other act or
omission of Lessor (except acts or omissions of gross negligence or in bad
faith) which changes the scope of the Guarantor's risk.
4. Guarantor represents and warrants to Lessor that:
(a) (1) Guarantor is a corporation duly organized and validly
existing in good standing under the laws of the state of its incorporation.
(2) The execution, delivery and performance hereof: (x) have been duly
authorized by all necessary corporate action on the part of Guarantor; (y) do
not require the approval of any stockholder, trustee or holder of any
obligations of Guarantor except such as have been duly obtained; and (z) do not
and will not contravene any law, governmental rule, regulation or order now
binding on Guarantor, or the charter or by-laws of Guarantor, or contravene the
provisions of, or constitute a default under, or result in the creation of any
lien or encumbrance upon the property of Guarantor under, any indenture,
mortgage, contract or other agreement to which Guarantor is a party or by which
it or its property is bound. (3) Since December 31, 1993, there has been no
material adverse change in the financial condition or results of operations of
Guarantor.
(b) This Guaranty constitutes the legal, valid and binding
obligation of Guarantor, enforceable against Guarantor in accordance with the
terms hereof, except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by applicable laws (including any applicable
common law and equity) and judicial decisions which may affect the remedies
provided herein.
(c) There are no pending actions or proceedings to which
Guarantor is a party, and there are no other pending or threatened actions or
proceedings of which Guarantor has knowledge, before any court, arbitrator or
administrative agency, which, either individually or in the aggregate, would
materially adversely affect the financial condition of Guarantor or the ability
of Guarantor to perform its obligations under any material obligation
-3-
<PAGE> 5
which, either individually or in the aggregate, would have the same such
effect.
(d) Guarantor warrants to Lessor that Guarantor is not relying
on Lessor to provide information concerning the financial condition of Lessee
either now or in the future.
5. (a) Guarantor will promptly execute and deliver to Lessor such
further documents, instruments and assurances and take such further action as
Lessor from time to time may reasonably request in order to carry out the
intent and purpose of this Guaranty and to establish and protect the rights and
remedies created or intended to be created in favor of Lessor thereunder.
(b) Guarantor shall be liable for all reasonable attorneys' fees
and other costs and expenses incurred by reason of any Potential Default, any
Default, the enforcement of any of Lessor's remedies under the Lease or
the enforcement of Lessor's rights hereunder and/or under the Lease. No right
or remedy referred to in this Section is intended to be exclusive, but each
shall be cumulative and shall be in addition to any other remedy referred to
above or otherwise available at law or in equity, and may be exercised
concurrently or separately from time to time.
(c) The obligations of the undersigned hereunder are independent
of the obligations of Lessee. A separate action or actions may be brought and
prosecuted against Guarantor whether an action is brought against Lessee or
whether Lessee be joined in any such action or actions.
6. It is understood that while the amount of the Obligations
guaranteed hereby is limited to the Guaranteed Amount, if, in any action or
proceeding involving any state or federal bankruptcy, insolvency or other law
affecting the rights of creditors generally, this Guaranty would be held or
determined to be void, invalid or unenforceable on account of the amount of the
aggregate liability under this Guaranty, then, notwithstanding any other
provision of this Guaranty to the contrary, the aggregate amount of such
liability shall, without any further action of the undersigned, Lessor or any
other Person, be automatically limited and reduced to the highest amount which
is valid and enforceable as determined in such action or proceeding.
7. GUARANTOR AGREES THAT THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS
OF LESSOR AND GUARANTOR HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK
(WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES OF SUCH STATE). Guarantor
agrees that any action or proceeding arising out of or relating to this
Guaranty may be commenced in any state or Federal court in the State of New
York and agrees that a summons and complaint commencing an action or proceeding
in any such court shall be
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<PAGE> 6
properly served and shall confer personal jurisdiction if served personally or
by certified mail to it at its address hereinbelow set forth, or as it may
provide in writing from time to time, or as otherwise provided under the laws
of the State of New York. This writing is intended as the final expression by
the parties and is intended as a complete and exclusive statement of the terms
hereof. No course of dealing, trade or usage and no parol evidence shall be
used to supplement or modify any terms hereof. There are no conditions to the
full effectiveness of this Guaranty.
GUARANTOR HEREBY WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
WHICH GUARANTOR MAY BE PARTY ARISING OUT OF OR IN ANY WAY PERTAINING TO THIS
GUARANTY, THE SUBLEASE OR THE LEASE OR ANY DOCUMENT OR INSTRUMENT EXECUTED AND
DELIVERED IN CONNECTION THEREWITH. IT IS HEREBY AGREED AND UNDERSTOOD THAT
THIS WAIVER CONSTITUTES A WAIVER OF TRIAL BY JURY OF ALL CLAIMS AGAINST ALL
PARTIES TO SUCH ACTIONS OR PROCEEDINGS, INCLUDING CLAIMS AGAINST PARTIES WHO
ARE NOT PARTIES TO THIS GUARANTY. THIS WAIVER IS KNOWINGLY, WILLINGLY AND
VOLUNTARILY MADE BY GUARANTOR AND GUARANTOR HEREBY ACKNOWLEDGES THAT NO
REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE BY ANY INDIVIDUAL TO INDUCE
THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY TO MODIFY OR NULLIFY ITS EFFECT.
GUARANTOR FURTHER ACKNOWLEDGES THAT IT HAS BEEN REPRESENTED IN THE SIGNING OF
THIS GUARANTY AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL,
SELECTED OF ITS OWN FREE WILL, AND THAT IT HAS HAD THE OPPORTUNITY TO DISCUSS
THIS WAIVER WITH COUNSEL.
This Guaranty shall inure to the benefit of Lessor and its successors
and assigns and shall be binding upon the successors and assigns of Guarantor.
[signature page to follow]
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<PAGE> 7
IN WITNESS WHEREOF, Guarantor has caused this instrument to be duly
executed as of this 4th day of April, 1994.
AMERICAN WESTERN CORPORATION
By: /s/ Rajiv P. Bhatt
----------------------------------
Title: Chief Financial Officer
--------------------------------
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<PAGE> 1
Exhibit 10.25
EXECUTION COPY
RECEIVABLES FUNDING AND SERVICING AGREEMENT
Dated as of April 14, 1994
by and among
CARLISLE PLASTICS FUNDING CORPORATION,
as Borrower,
REDWOOD RECEIVABLES CORPORATION,
as Lender,
CARLISLE PLASTICS, INC.,
as Servicer
and
GENERAL ELECTRIC CAPITAL CORPORATION,
as Operating Agent and Collateral Agent
<PAGE> 2
<TABLE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
<S> <C> <C>
SECTION 1.01. Certain Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.02. Other Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 1.03. Interpretation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 1.04. Rounding. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE II
COMMITMENT; ADVANCES
SECTION 2.01. Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 2.02. Optional Changes in
Commitment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 2.03. Notices Relating to Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 2.04. Disbursement of Loan Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 2.05. Note. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.06. Principal Repayments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.07. Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.08. Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 2.09. Time and Method of Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 2.10. Additional Costs; Capital Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 2.11. Breakage Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE III
CONDITIONS TO LENDING
SECTION 3.01. Conditions Precedent to Effectiveness of
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 3.02. Conditions Precedent to All Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the
Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 4.02. Representations and Warranties of the
Borrower With Respect to the Parent and
the Transferred Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 4.03. Representations and Warranties of the
Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
</TABLE>
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ARTICLE V
GENERAL COVENANTS OF THE BORROWER
<TABLE>
<S> <C> <C>
SECTION 5.01. Affirmative Covenants of the Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 5.02. Reporting Requirements of the Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 5.03. Negative Covenants of the Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
ARTICLE VI
COLLECTIONS AND DISBURSEMENTS
SECTION 6.01. Establishment of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 6.02. Funding of Collection Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 6.03. Daily Disbursements From the Collection
Account - Revolving Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 6.04. Disbursements From the Retention Account
- Settlement Date Procedures - Revolving
Period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 6.05. Liquidation Settlement Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 6.07. Investment of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 6.08. Termination Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE VII
APPOINTMENT OF THE SERVICER
SECTION 7.01. Appointment of the Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 7.02. Duties and Responsibilities of the
Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 7.03. Authorization of the Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 7.04. Servicing Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 7.05. Negative Covenants of the Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 7.06. Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 7.07. Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 7.08. Annual Statement as to Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 7.09. Annual Independent Public
Accountants' Servicing and
Compliance Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 7.10. Termination of Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
ARTICLE VIII
GRANT OF SECURITY INTERESTS
SECTION 8.01. Borrower's Grant of Security Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 8.02. Lender's Assignment and Grant of Security
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 8.03. Consent to Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
</TABLE>
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<PAGE> 4
<TABLE>
<S> <C> <C>
SECTION 8.04. Delivery of Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 8.05. Borrower Remains Liable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 8.06. Covenants of the Borrower and Servicer
Regarding the Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
ARTICLE IX
TERMINATION EVENTS
SECTION 9.01. Termination Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 9.02. Events of Servicer Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
ARTICLE X
REMEDIES
SECTION 10.01. Actions Upon Termination Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 10.02. Receipt of Payments in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
SECTION 10.03. Application of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
SECTION 10.04. Exercise of Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
SECTION 10.05. Severability of Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
SECTION 10.06. Waiver of Appraisement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
SECTION 10.07. Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
SECTION 10.08. Continuing Security Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
ARTICLE XI
SUCCESSOR SERVICER
SECTION 11.01. Servicer Not to Resign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
SECTION 11.02. Appointment of the Successor Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
SECTION 11.03. Duties of the Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
SECTION 11.04. Effect of Termination or Resignation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
ARTICLE XII
INDEMNIFICATION
SECTION 12.01. Indemnities by the Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
SECTION 12.02. Indemnities by the Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
ARTICLE XIII
OPERATING AGENT
SECTION 13.01. Authorization and Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
SECTION 13.02. Reliance, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
SECTION 13.03. GE Capital and Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
</TABLE>
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ARTICLE XIV
MISCELLANEOUS
<TABLE>
<S> <C>
SECTION 14.01. Notices, Etc. . . . . . . . . . . . . . . . . . . . . . . 89
SECTION 14.02. Binding Effect; Assignability . . . . . . . . . . . . . . 89
SECTION 14.03. Costs, Expenses and Taxes . . . . . . . . . . . . . . . . 90
SECTION 14.04. Confidentiality . . . . . . . . . . . . . . . . . . . . . 91
SECTION 14.05. No Proceedings . . . . . . . . . . . . . . . . . . . . . 91
SECTION 14.06. Amendments; Waivers; Consents . . . . . . . . . . . . . . 92
SECTION 14.07. GOVERNING LAW; CONSENT TO
JURISDICTION; WAIVER OF JURY
TRIAL. . . . . . . . . . . . . . . . . . . . . . . . . . 92
SECTION 14.08. Execution in Counterparts; Severability . . . . . . . . . 93
SECTION 14.09. Descriptive Headings . . . . . . . . . . . . . . . . . . 93
EXHIBITS
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A. Borrower Notice
B. Borrowing Base Certificate
C. Receivables Sale Agreement
D. Form of Note
E. Officer's Certificate of Parent
as to Borrower's Solvency
F. Officer's Certificate of Borrower
G. Officer's Certificate of Servicer
H. Opinion of Counsel
I. Monthly Report
SCHEDULES
- - ---------
1. Concentration Limits
2. Additional Criteria and Requirements for Eligible
Receivables
3. List of Excluded Customers (including Annex A - Form of amending letter)
4. Calculation of Income Discount Amount
5. Calculation of Daily Interest
6. Addresses for Notices and other Offices of the Borrower
7. Former names, assumed names, "dba" names, etc.
Borrower
8. List of Lockboxes and Lockbox Accounts
9. Servicer Financial Covenants
</TABLE>
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<PAGE> 6
RECEIVABLES FUNDING AND SERVICING AGREEMENT, dated as of April
14, 1994 (the "Agreement") by and among CARLISLE PLASTICS FUNDING CORPORATION,
a Delaware corporation (the "Borrower"), REDWOOD RECEIVABLES CORPORATION, a
Delaware corporation, as Lender (as such, together with its successors and
assigns, the "Lender"), GENERAL ELECTRIC CAPITAL CORPORATION, in its capacity
as operating agent hereunder (as such, together with its successors and
assigns, the "Operating Agent") and in its capacity as Collateral Agent for the
Liquidity Agent, the Liquidity Lenders, the Letter of Credit Agent, the Letter
of Credit Providers and the CP Holders (as such, together with its successors
and assigns, the "Collateral Agent") and CARLISLE PLASTICS, INC., a Delaware
corporation (as such, together with its successors and assigns, the "Parent"),
as servicer hereunder (as such, together with its successors and permitted
assigns, the "Servicer").
W I T N E S S E T H:
WHEREAS, the Borrower is a wholly-owned, bankruptcy-remote
subsidiary of the Parent;
WHEREAS, the Borrower has been formed for the sole purpose of
purchasing and financing certain trade and other receivables owned by the
Parent and purchased by or contributed to the Borrower pursuant to the
Receivables Sale Agreement, dated as of April 14, 1994 (the "Receivables Sale
Agreement"), by and between the Parent and the Borrower;
WHEREAS, the Borrower and the Lender intend that the Lender
will make advances to the Borrower from time to time, such advances to be
secured by all receivables and other collateral owned by the Borrower;
WHEREAS, the Operating Agent has been requested and is willing
to act as operating agent on behalf of the Lender in connection with the making
and financing of such advances;
WHEREAS, in order to effectuate the purposes of this
Agreement, the Lender and the Operating Agent desire that a servicer be
appointed to perform certain servicing, administrative and collection functions
in respect of the receivables financed by the Lender under this Agreement;
WHEREAS, the Parent has been requested and is willing to act
as the Servicer; and
WHEREAS, in order to secure the advances made to the Borrower
by the Lender, the Borrower intends to grant to the Lender a security interest
in such receivables and other collateral owned by the Borrower, and the Lender
intends to assign such security interest to the Collateral Agent and to grant
to the Collateral Agent a security interest in certain other collateral.
NOW, THEREFORE, the parties agree as follows:
<PAGE> 7
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used herein, the following
terms shall have the following meanings:
"Accrued Monthly Interest and Unused Facility Fees" means for
any day within a Settlement Period, the sum of the Daily Interest and Daily
Unused Facility Fees calculated for each day from and including the first day
of the Settlement Period through and including the day for which the
calculation is being made.
"Additional Amounts" means any amounts payable to any Affected
Party under Sections 2.10 and 2.11.
"Additional Costs" has the meaning specified in Section
2.10(b).
"Administration Fee" means a fee payable by the Borrower to
the Lender in the amount of $25,000 on the Effective Date and thereafter upon
each anniversary of the Effective Date.
"Advance" has the meaning set forth in Section 2.01.
"Advance Rate" means, for any date within a Settlement Period,
a percentage equal to 100% minus the Lender Discount Rate then in effect.
"Advances Available" means, on any day, an amount equal to the
excess of Availability over Advances Outstanding (prior to giving effect to any
Advances to be issued on such day).
"Advances Outstanding" means, for any day, the aggregate
principal amount of Advances outstanding on such day, after giving effect to
all repayments and issuances of Advances on such day.
"Adverse Claim" means any claim of ownership or any lien,
security interest, title retention, trust or other charge or encumbrance, or
other type of preferential arrangement having the effect or purpose of creating
a lien or security interest, other than the security interest created under
this Agreement or the Collateral Agent Agreement.
"Affected Party" means the Lender, any of the Liquidity
Lenders, the Operating Agent, any of the Letter of Credit Providers, the
Collateral Agent, or any affiliate of the foregoing persons.
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<PAGE> 8
"Affiliate" means, as to any Person, any other Person that,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such Person within the meaning of control under Section 15 of the
Securities Act of 1933, as amended.
"Agreement" means this Receivables Funding and Servicing
Agreement, among the Borrower, the Lender, the Servicer, the Operating Agent
and the Collateral Agent.
"Authorized Officer" means, with respect to any corporation,
the Chairman of the Board, the President, any Vice President, the Secretary,
the Treasurer, any Assistant Secretary, any Assistant Treasurer and each other
officer of such corporation specifically authorized in resolutions of the Board
of Directors of such corporation to sign agreements, instruments or other
documents in connection with this Agreement.
"Availability" means, as of any date, the least of (a) (i) the
Borrowing Base as of such date, times (ii) the Advance Rate, minus (iii) the
Income Discount Amount, (b) the Maximum Facility Commitment then in effect, or
(c) 80% of the Outstanding Balance of Eligible Receivables determined as of the
end of the previous month.
"Average Outstanding Balance of all Transferred Receivables"
means, for any period, the sum of the Outstanding Balance of Transferred
Receivables (other than Defaulted Receivables) on each day during such period,
divided by the number of days in such period.
"Billed Amount" means, with respect to any Receivable, the net
amount billed on the Billing Date to the related Obligor with respect thereto.
"Billing Date" means the date on which the invoice with
respect to a Receivable was generated by the related Obligor.
"Borrower" means Carlisle Plastics Funding Corporation, a
Delaware corporation.
"Borrower Account Collateral" has the meaning specified in
Section 8.01(c).
"Borrower Assigned Agreements" has the meaning specified in
Section 8.01(b).
"Borrower Collateral" has the meaning specified in Section
8.01.
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<PAGE> 9
"Borrower LOC Draws" means any payments made to the Lender in
connection with the Letter of Credit and allocated to the Borrower.
"Borrower Notice" means a notice in the form of Exhibit A,
setting forth the information required by Section 2.03(b).
"Borrower Secured Obligations" means all obligations of every
nature of the Borrower (other than to the Parent or Servicer), now or hereafter
existing, under this Agreement, the Note, and any promissory note or other
document or instrument delivered pursuant to such documents, and all
amendments, extensions or renewals hereof or thereof, whether for principal,
interest, fees, expenses or otherwise, whether now existing or hereafter
arising, voluntary or involuntary, whether or not jointly owed with others,
direct or indirect, absolute or contingent, liquidated or unliquidated, and
whether or not from time to time decreased or extinguished and later increased,
created or incurred and all or any portion of such obligations that are paid,
to the extent all or any part of such payment is avoided or recovered directly
or indirectly from the Lender, the Operating Agent or the Collateral Agent as a
preference, fraudulent transfer or otherwise.
"Borrower's Net Worth" means, with respect to the Borrower,
the total assets less the total liabilities of the Borrower.
"Borrower's Share" means the ratio of the Maximum Facility
Commitment to the aggregate maximum commitments under this Agreement and all
Other Funding Agreements.
"Borrowing Base" means, as of the date of its computation, an
amount equal to (a) the aggregate Outstanding Balance of Transferred
Receivables that are Eligible Receivables, plus (b) an amount equal to the
Outstanding Balance of Eligible Receivables to be purchased by or contributed
to the Borrower on that date, minus (c) the sum of the Concentration Discount
Amounts for all Obligors in respect of such Eligible Receivables, minus (d) the
total amount of Promotional Allowance Reserve and Deductions in respect of such
Eligible Receivables, minus (e) Collections received in respect of Transferred
Receivables since the end of the period covered by the most recent Borrowing
Base Certificate, plus (f) the Estimated Outstanding Balance of New
Receivables.
"Borrowing Base Certificate" means an Officer's Certificate in
the form of Exhibit B, computing for any Business Day the Borrowing Base, the
Availability and any net increase or decrease in the Availability since the
date of the previous Borrowing Base Certificate and New Advances Available.
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<PAGE> 10
"Borrowing Excess" means, for any date, as disclosed in the
most recently submitted Borrowing Base Certificate, the extent to which the
then Advances Outstanding exceeds the Availability as of such date.
"Breakage Costs" has the meaning specified in Section 2.11.
"Business Day" means any day of the year other than a
Saturday, Sunday or any day on which banks generally are required, or
authorized, to close in New York, New York.
"Cash Interest Expense" means, with respect to any Person for
any period, the amount of cash interest payable on all Debt of such Person and
its consolidated Subsidiaries.
"Change in Control" means the time when (i) any Person or
"group" has acquired "beneficial ownership" (as such terms are defined under
Section 13d-3 of and Regulation 13D under the Securities Exchange Act of 1934,
as amended), either directly or indirectly, of outstanding shares of Stock of
the Parent having more than fifty percent (50%) of the voting power for the
election of directors of the Parent under ordinary circumstances or (ii) more
than fifty percent (50%) of the members of the Parent's board of directors
shall have been replaced by new directors not nominated for membership on the
board by a majority of directors who were directors on the Effective Date.
"Collateral" means, collectively, the Borrower Collateral
pledged by the Borrower in Section 8.01 and the Lender Collateral pledged and
assigned by the Lender in Section 8.02.
"Collateral Account" means the account maintained with the
Depositary described in Section 6.01(d).
"Collateral Agent" means GE Capital or such other party
designated as agent for the secured parties under the Collateral Agent
Agreement.
"Collateral Agent Agreement" means the Collateral Agent
Agreement, dated as of March 15, 1994, entered into by the Lender with the
Collateral Agent, the Letter of Credit Agent, the Liquidity Agent and the
Depositary.
"Collateral Agent Fees" means the fees paid to the Collateral
Agent under the Collateral Agent Agreement.
"Collection Account" means the Eligible Bank Account
maintained with the Depositary described in Section 6.01(b).
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<PAGE> 11
"Collections" means, with respect to any Receivable, all cash
collections and other cash proceeds of such Receivable.
"Commercial Paper" means commercial paper issued by the Lender.
"Commercial Paper Notes" mean promissory notes of the Lender
issued with respect to Commercial Paper.
"Commitment Termination Date" means the earlier of (a) the
date so designated pursuant to Section 9.01 as a result of a Termination Event,
and (b) the Final Maturity Date; provided, however, that if the Borrower has
not on or before the 90th day prior to the Final Maturity Date (i) entered into
an agreement with the Lender and the Operating Agent renewing or extending the
Final Maturity Date, or (ii) entered into a firm commitment with a
counterparty, acceptable to the Operating Agent, to purchase from the Lender at
par plus accrued Interest all Advances Outstanding as of the Final Maturity
Date, then the Commitment Termination Date shall be the date that is 90 days
prior to the Final Maturity Date.
"Concentration Discount Amount" means, with respect to any
Obligor, on any date after giving effect to all Eligible Receivables to be
purchased on such date, the amount by which the Outstanding Balance of Eligible
Receivables payable by such Obligor exceeds either (a) the Dollar amount set
forth on Schedule 1, or (b) the product of (i) such Obligor's Concentration
Limit Percentage set forth on Schedule 1 and (ii) the Outstanding Balance of
all Transferred Receivables that are Eligible Receivables on such date. The
Concentration Discount Amount may be changed at any time at the sole discretion
of the Operating Agent.
"Concentration Limit Percentage" means, with respect to any
Obligor, the maximum percentage that such Obligor's Outstanding Balance of
Eligible Receivables may be of the Outstanding Balance of all Eligible
Receivables that are Transferred Receivables at such time, as determined by the
Operating Agent (subject to written confirmation from the Rating Agency that
such Concentration Limit Percentages shall not result in a withdrawal or
reduction of the then current rating by such Rating Agency of the Commercial
Paper) and notified to the Borrower in writing (such initial notification is
attached as Schedule 1 hereto.)
"Contract" means an agreement (or agreements, including an
invoice or invoices) pursuant to, or under which, an Obligor shall be obligated
to pay for services rendered or merchandise or goods sold to such Obligor by
the Parent from time to time.
"CP Holder" means any Person holding record or beneficial
ownership of Commercial Paper.
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<PAGE> 12
"Credit and Collection Policies" means the credit, collection,
customer relations and service policies of the Parent in effect on the
Effective Date, as set forth in writing and delivered to the Lender, the
Operating Agent and the Collateral Agent on or before the Effective Date
pursuant to Section 3.01(q), and, as such policies may hereafter be amended,
modified or supplemented from time to time with the written consent of the
Operating Agent.
"Daily Average Advances Outstanding" means, for any Settlement
Period, the sum of the Advances Outstanding for each day in such Settlement
Period, divided by the number of days in such Settlement Period.
"Daily Borrowing Rate" has the meaning specified in Schedule 5
to this Agreement.
"Daily Interest" has the meaning specified in Schedule 5 to
this Agreement.
"Daily Unused Facility Fee" means a fee payable by the
Borrower to the Lender for each day in an amount equal to the product of (a)(i)
the Unused Facility Fee Rate, divided by (ii) 360; times (b) the excess, if
any, of (i) the Maximum Facility Commitment, minus (ii) Advances Outstanding.
"Dealer" means any dealer under a Dealer Agreement.
"Dealer Agreement" means any dealer agreement entered into by
the Lender for the distribution of Commercial Paper.
"Debt" of any Person means (a) indebtedness of such Person for
borrowed money, (b) obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments, (c) obligations of such Person to pay the
deferred purchase price of property or services, (d) obligations of such Person
as lessee under leases which have been or should be, in accordance with GAAP,
recorded as capital leases, (e) obligations secured by any lien or other charge
upon property or assets owned by such Person, even though such Person has not
assumed or become liable for the payment of such obligations, (f) obligations
of such Person under direct or indirect guaranties in respect of, and
obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clauses (a) through (e)
above, and (g) liabilities in respect of unfunded vested benefits under plans
covered by ERISA. For the purposes hereof, the term "guarantee" shall include
any agreement, whether such agreement is on a contingency or otherwise, to
purchase, repurchase or otherwise acquire Debt of any other Person, or to
purchase, sell or lease, as
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<PAGE> 13
lessee or lessor, property or services, in any such case primarily for the
purpose of enabling another person to make payment of Debt, or to make any
payment (whether as an advance, capital contribution, purchase of an equity
interest or otherwise) to assure a minimum equity, asset base, working capital
or other balance sheet or financial condition, in connection with the Debt of
another Person, or to supply funds to or in any manner invest in another Person
in connection with Debt of such Person.
"Deductions" means unpaid amounts on Transferred Receivables
identified but not yet recognized and resulting from credits, discounts,
rescissions, merchandise returns, contractual allowances, compromises,
adjustments, extensions or other non-cash deductions (other than Promotional
Allowances).
"Default Factor" means, for any date within a Settlement
Period, an amount equal to (a) the Default Factor Multiple, multiplied by (b) a
fraction expressed as a decimal, (i) the numerator of which is the aggregate
Outstanding Balance of all Receivables originated by the Parent and the Seller
Subsidiaries that became Defaulted Receivables (as of the date they became
Defaulted Receivables) during the previous 12 fiscal month period ending prior
to the first day of such Settlement Period (provided, however, that with
respect to fiscal months occurring prior to January 1, 1994, the Outstanding
Balance of all Receivables originated by the Parent and the Seller Subsidiaries
that became Defaulted Receivables during such fiscal month or months shall be
deemed to be an amount equal to 75% of all Receivables originated by the Parent
and the Seller Subsidiaries that became Delinquent Receivables) and (ii) the
denominator of which is the Parent's Sales during such 12 fiscal month period,
as determined by the Operating Agent on the Business Day prior to such
Settlement Period.
"Default Factor Multiple" means, as of the Effective Date,
3.0. The Default Factor Multiple may subsequently be adjusted on a monthly
basis by the Operating Agent in its sole discretion. In any event, the Default
Factor Multiple will not be less than 3.0.
-8-
<PAGE> 14
"Default Ratio" means, as of any Settlement Date, the ratio
(expressed as a percentage) computed by dividing
(a) the aggregate Outstanding Balance of all
Transferred Receivables that are Defaulted Receivables (determined as
of the date they became Defaulted Receivables) as of the end of the
prior Settlement Period
by
(b) the Outstanding Balance of all Transferred
Receivables on the last day of the second preceding Settlement Period.
"Defaulted Receivable" means a Receivable (a) as to which any
payment, or part thereof, remains unpaid for more than 90 days from the
Maturity Date of such Receivable, or (b) as to which the Obligor thereof has
taken any action, or suffered any event to occur, of the type described in
Section 9.01(c) in respect of the Obligor, or (c) which otherwise would be
determined to be uncollectible and written off in keeping with the Credit and
Collection Policies.
"Delinquency Ratio" means, as of any Settlement Date, the
ratio (expressed as a percentage) computed by dividing
(a) the aggregate Outstanding Balance of all
Transferred Receivables that were Delinquent Receivables as of the
last day of the prior Settlement Period
by
(b) the Outstanding Balance of all Transferred
Receivables on the last day of such prior Settlement Period.
"Delinquent Receivable" means any Receivable, other than a
Defaulted Receivable, as to which any payment, or part thereof, remains unpaid
for more than 60 days past its Maturity Date.
"Depositary" means Bankers Trust Company, or any other Person
designated as the successor Depositary from time to time in its capacity as
issuing and paying agent or trustee in connection with the issuance of
Commercial Paper by the Lender.
"Depositary Fee" means the fee paid to the Depositary in
connection with the issuance of Commercial Paper by the Lender.
-9-
<PAGE> 15
"Dilution Factor" means, for any date within a Settlement
Period, an amount equal to the product of (a) the Dilution Multiple and (b) a
fraction expressed as a decimal, (i) the numerator of which is the amount of
dilutions representing all non-cash reductions of Receivables (other than
Defaulted Receivables and deductions for Promotional Allowances) from the
Parent's Sales over the 12 fiscal month period ending prior to such Settlement
Period, and (ii) the denominator of which is such Parent's Sales for such 12
fiscal month period, as determined by the Operating Agent on the Business Day
prior to such Settlement Period.
"Dilution Multiple" means, as of the Effective Date, 2.0. The
Dilution Multiple may subsequently be adjusted on a monthly basis by the
Operating Agent in its sole discretion. In any event, the Dilution Multiple
will not be less than 2.0.
"Dilutions-to-Collections Ratio" means, as of any Settlement
Date, the ratio (expressed as a percentage) computed by dividing
(a) the aggregate unpaid amounts on all
Transferred Receivables resulting from credits, discounts,
rescissions, merchandise returns, contractual allowances, compromises,
adjustments, extensions or other non-cash deductions (other than
Promotional Allowances) during the preceding three Settlement Periods;
by
(b) the aggregate amount of all
Collections on Transferred Receivables during such Settlement Periods.
"Dollar" and "$" means lawful currency of the United States of
America.
"Early Termination Premium" has the meaning set forth in
Section 2.02(c).
"Effective Date" means April 15, 1994.
"Eligible Bank Account" means (a) a segregated deposit account
maintained with a depositary institution or trust company whose short-term debt
obligations are rated at least A-1+ by S&P and P-1 by Moody's or (b) a
segregated account (maintained in the corporate trust department of such
depository institution or trust) which may be an account maintained with the
Depositary, which is maintained with a depository institution or trust company
whose long term unsecured debt obligations are rated at least BBB- by S&P and
Baa3 by Moody's, or (c) a segregated trust
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<PAGE> 16
account or similar account maintained with a federally or state chartered
depository institution subject to regulations regarding fiduciary funds on
deposit substantially similar to 12 C.F.R. Section 9.10(b) as in effect on the
Effective Date.
"Eligible Customer" means any Obligor which has not been
designated by the Operating Agent as an Excluded Customer.
"Eligible Receivable" means, at any time, a Receivable:
(a) (i) which is a liability of an Eligible
Customer organized under the laws of any jurisdiction in the United
States and having its principal office in the United States, or (ii)
if located outside the United States, such Receivable is covered by an
acceptable letter of credit (to the extent the aggregate Outstanding
Balance of such Receivables is 3% or less of the aggregate Outstanding
Balance of all Eligible Receivables);
(b) which is denominated and payable in Dollars
in the United States;
(c) which is not and will not be subject to any
right of rescission, set-off (other than Promotional Allowances and
Deductions), recoupment, counterclaim or defense, whether arising out
of transactions concerning the related Contract or otherwise;
(d) which is not a Delinquent Receivable or a
Defaulted Receivable;
(e) which does not represent "billed but not yet
shipped" goods or merchandise, unperformed services, consigned goods
or "sale or return" goods;
(f) as to which the representations and
warranties of Section 4.02(c) are true and correct in all respects as
of the date of its inclusion in any Borrowing Base Certificate;
(g) which has a Maturity Date no later than (i)
60 days from its Billing Date or (ii) such longer period of time, not
in excess of 90 days, to the extent the aggregate Outstanding Balance
of such Receivables is 6% or less of the aggregate Outstanding Balance
of all Transferred Receivables; and
(h) which complies with such other criteria and
requirements as the Operating Agent may from time to time specify to
the Borrower following 30 days' prior notice
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<PAGE> 17
(such other criteria and requirements initially being described on
Schedule 2 to this Agreement).
"ERISA" means the Employee Retirement Income Security Act of
1974, as it may be amended from time to time, and the regulations promulgated
thereunder.
"Estimated Outstanding Balance of New Receivables" means, on
any day, the aggregate Outstanding Balance of Eligible Receivables that the
Operating Agent reasonably estimates have been originated since the date of the
most recent Borrowing Base Certificate, based on (a) historical experience with
respect to the origination of Receivables and (b) significant changes that will
affect the then-current size and scope of the business of the Parent and its
Subsidiaries, not to exceed Collections for such period.
"Event of Servicer Termination" has the meaning specified in
Section 9.02.
"Excluded Customer" means an Obligor which is (a) an Affiliate
of the Parent or the Borrower, (b) a Governmental Authority, (c) bankrupt,
insolvent, unable to make payment of its obligations when due, the debtor in a
voluntary or involuntary bankruptcy proceeding, or the subject of a comparable
receivership or insolvency proceeding, (d) placed by the Parent on restricted
credit terms, (e) in litigation with the Borrower, the Parent or any Seller
Subsidiary, (f) an Obligor owing Receivables 50% or more of which are
Delinquent Receivables or (g) an Obligor listed on Schedule 3 hereof as revised
from time to time pursuant to a letter in the form of Annex A thereto.
"Facility Structuring Fee" means a non-refundable fee equal to
$190,000.
"Final Maturity Date" means April 14, 1999.
"Funding Date" means each day on which an Advance is made.
"GAAP" means generally accepted accounting principles as in
effect in the United States, consistently applied, as of the date of such
application.
"GE Capital" means General Electric Capital Corporation.
"Governmental Authority" means the United States of America,
any state, local or other political subdivision thereof and any entity
exercising executive, legislative, judicial,
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<PAGE> 18
regulatory or administrative functions thereof or pertaining thereto.
"Governmental Consents" has the meaning specified in Section
4.02(a)(xv).
"Incipient Event" means an event which, upon the giving of
notice or the passage of time, or both, would become a Termination Event.
"Income Discount Amount" means the amount calculated by the
Operating Agent, from time to time at its discretion, as set forth on Schedule
4.
"Indemnified Amounts" has the meaning specified in Section
12.01(a).
"Indemnified Party" has the meaning specified in Section
12.01(a).
"Interest", for any period, means the sum of the Daily
Interest for each day in such period, as more fully specified in Schedule 5.
"Interest and Fees Shortfall" means, for any day within a
Settlement Period, the amount, if any, by which the Accrued Monthly Interest
and Unused Facility Fees calculated as of that day exceed the Retained Monthly
Interest and Unused Facility Fees as of that same day.
"Internal Revenue Code" means the Internal Revenue Code of
1986, as amended from time to time.
"Investments" means, with respect to any Borrower Account
Collateral or Lender Account Collateral, the certificates, instruments or other
Permitted Investments in which amounts in such account are invested from time
to time.
"Lender" means Redwood Receivables Corporation, a Delaware
corporation.
"Lender Account Collateral" has the meaning specified in
Section 8.02(c).
"Lender Assigned Agreements" has the meaning specified in
Section 8.02(b).
"Lender Collateral" has the meaning specified in Section 8.02.
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<PAGE> 19
"Lender Discount Rate" means a decimal equal to the sum of (a)
the Dilution Factor and (b) the Default Factor.
"Lender Secured Obligations" means all obligations of every
nature of the Lender to the Collateral Agent, the CP Holders, the Depositary,
the Liquidity Agent, the Liquidity Lenders, the Letter of Credit Agent and the
Letter of Credit Providers now or hereafter existing under this Agreement, the
Commercial Paper, the Depositary Agreement, the Collateral Agent Agreement, the
Liquidity Loan Agreement, the Letter of Credit Agreement and any promissory
note or other document or instrument delivered pursuant to such documents,
whether for principal, interest, fees, expenses or otherwise, whether now
existing or hereafter arising, voluntary or involuntary, whether or not jointly
owed with others, direct or indirect, absolute or contingent, liquidated or
unliquidated, and whether or not from time to time decreased or extinguished
and later increased, created or incurred and all or any portion of such
obligations that are paid, to the extent all or any part of such payment is
avoided or recovered directly or indirectly from any Lender Secured Party as a
preference, fraudulent transfer or otherwise.
"Lender Secured Parties" has the meaning specified in Section
8.02.
"Letter of Credit" means the letter of credit, dated April 12,
1994, provided by the Letter of Credit Providers pursuant to the Letter of
Credit Agreement.
"Letter of Credit Agent" means GE Capital, in its capacity as
agent for the Letter of Credit Providers under the Letter of Credit Agreement,
and its successors and permitted assigns in such capacity.
"Letter of Credit Agreement" means the Letter of Credit
Reimbursement Agreement, dated as of March 15, 1994, entered into by the
Lender, the Letter of Credit Agent and the Letter of Credit Providers.
"Letter of Credit Providers" means, initially, GE Capital, as
provider of the Letter of Credit under the Letter of Credit Agreement, and
thereafter its successors and any permitted assigns in such capacity.
"Liquidity Agent" means GE Capital and its successors and
assigns as agent for the Liquidity Lenders pursuant to the Liquidity Loan
Agreement.
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<PAGE> 20
"Liquidity Lenders" means, collectively, GE Capital and any
other provider of Liquidity Loans under the Liquidity Loan Agreement.
"Liquidity Loan Agreement" means the Liquidity Loan Agreement,
dated as of March 15, 1994, entered into by the Lender, the Liquidity Lenders
and the Liquidity Agent in connection with the provision of liquidity support
for the Lender.
"Liquidity Loans" means borrowings by the Lender under the
Liquidity Loan Agreement.
"Loans" means any indebtedness issued by an Affected Party,
including Advances, Borrower LOC Draws and Liquidity Loans.
"Lockbox" has the meaning specified in Section 6.01(a)(ii).
"Lockbox Account" means each of the segregated deposit
accounts described in Section 6.01(a) in the name of the Borrower, the Lender
and the Parent, into which all Collections in respect of Transferred
Receivables shall be deposited.
"Lockbox Agreement" means each of the agreements among the
Parent, the Borrower, the Operating Agent, the Lender and the Lockbox Bank with
respect to the related Lockbox Account, (a) providing that all Collections
therein shall be remitted directly to the Collection Account within one
Business Day of receipt, (b) providing that such depositary institution waives
its rights of set-off with respect to the Lockbox Account, and (c) otherwise
satisfactory to the Operating Agent.
"Lockbox Bank" means each of Bank of Boston, Branch Banking &
Trust, Midlantic National Bank, Wells Fargo, First Bank Minneapolis and Bank of
Montreal.
"Maturity Date", for any Receivable, means the due date for
payment specified in the related Contract, or, if no date is specified, 60 days
from the Billing Date.
"Maximum Facility Commitment" means $35,000,000, as such
amount may be subject to reduction in accordance with Section 2.02(a).
"Maximum Lawful Rate" has the meaning specified in Section
2.07(c).
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"Monthly Report" has the meaning set forth in Section
5.02(a)(ii).
"Moody's" means Moody's Investors Service, Inc.
"Net Proceeds Amount" means the aggregate face amount of
Commercial Paper minus the discount therefrom reflected in the price to the
initial investor and dealer fees for such Commercial Paper.
"New Advances Available" means, as of the date of any
calculation, (a) the Availability as of such date, minus (b) Advances
Outstanding.
"Note" has the meaning set forth in Section 2.05(a).
"Obligations" means all amounts owed by the Borrower under
this Agreement, including Advances, Interest, Fees, Additional Amounts and
indemnities.
"Obligor" means, with respect to any Receivable, the Person
primarily obligated to make payments in respect thereto.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by the Chairman of the Board, Vice Chairman of the Board,
the President, a Vice President, the Treasurer, the Secretary or any other duly
authorized officer of such Person acceptable to the Operating Agent.
"Operating Agent" means GE Capital, as Operating Agent
hereunder, together with its successors and assigns.
"Operating Agent Agreement" means the Operating Agent
Agreement, dated as of March 15, 1994, between the Lender and the Operating
Agent.
"Operating Agent Base Fees" means the amount designated as
such and so agreed by the Lender and the Operating Agent.
"Optional Prepayment of Advances" means the option of the
Borrower to repay an Advance pursuant to a Borrower Notice and in accordance
with Article VI.
"Optional Repayment Amount" means the principal amount of any
Optional Prepayment of Advances, plus the interest accrued on such principal
amount through the prepayment date, as set forth in any Borrower Notice.
"Other Costs" has the meaning specified in Section 14.03(a).
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"Other Funding Agreements" means other agreements for the
purchase or funding of Receivables entered into from time to time by the Lender
in which it is contemplated that such purchases or fundings will be financed in
the same manner as contemplated hereunder.
"Outstanding Balance" of any Receivable at any time means an
amount (not less than zero) equal to (a) its Billed Amount, minus (b) all
payments received from the Obligor with respect thereto, minus (c) all amounts
for discounts or any other modifications to the Billed Amount; provided, that
if the Operating Agent or the Servicer makes a determination that all payments
by the Obligor with respect to such Receivable have been made, its Outstanding
Balance shall be zero.
"Past Due Receivable" means any Receivable, other than a
Delinquent or Defaulted Receivable, as to which any payment, or part thereof,
remains unpaid for more than 30 days past its Maturity Date.
"Past Due Receivables Ratio" means, as of any Settlement Date,
the ratio (expressed as a percentage) computed by dividing
(a) the aggregate Outstanding Balance of all
Transferred Receivables that were Past Due Receivables as of the last
day of the prior Settlement Period
by
(b) the Outstanding Balance of all Transferred
Receivables on the last day of such prior Settlement Period.
"Parent" means Carlisle Plastics, Inc., a Delaware corporation.
"Parent Requested Amount" means the amount which the Parent
wishes to receive in cash from the sale of Receivables on any Sale Date.
"Parent's Sales" means, for any period, the Billed Amounts of
all Receivables originated by the Parent or any of the Seller Subsidiaries
during such period , plus the aggregate amount of any down payments or deposits
made in respect of such Receivables.
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"Permitted Investments" means one or more of the following:
(a) obligations of, or guaranteed as to the full
and timely payment of principal and interest by, the United States or
obligations of any agency or instrumentality thereof, when such
obligations are backed by the full faith and credit of the United
States;
(b) repurchase agreements on obligations
specified in clause (a); provided, that the short-term debt
obligations of the party agreeing to repurchase are rated at least A-1+
by S&P and P-1 by Moody's;
(c) federal funds, certificates of deposit, time
deposits and bankers' acceptances (which shall each have an original
maturity of not more than 90 days or, in the case of bankers'
acceptances, shall in no event have an original maturity of more than
365 days) of any United States depository institution or trust company
incorporated under the laws of the United States or any state;
provided, that the short-term obligations of such depository
institution or trust company are rated at least A-1+ by S&P and P-1 by
Moody's;
(d) commercial paper (having original maturities
of not more than 30 days) of any corporation incorporated under the
laws of the United States or any state thereof which on the date of
acquisition are rated at least A-1+ by S&P and P-1 by Moody's;
(e) securities of money market funds rated at
least AAm by S&P and P-1 by Moody's; and
(f) such other investments with respect to which
each Rating Agency shall have confirmed in writing to the Lender and
Collateral Agent that such investments shall not result in a
withdrawal or reduction of the then current rating by such Rating
Agency of the Commercial Paper.
"Person" means an individual, partnership, corporation
(including a business trust), joint stock company, trust, association, joint
venture, Governmental Authority or any other entity of whatever nature.
"Proceeds" means, with respect to any Collateral, whatever is
receivable or received when such Collateral is sold, collected, exchanged or
otherwise disposed of, whether such disposition is voluntary or involuntary,
and includes all rights
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to payment, including returned premiums, with respect to any insurance relating
to such Collateral.
"Program Documents" means the Letter of Credit Agreement, the
Liquidity Loan Agreement, the Collateral Agent Agreement, the Depositary
Agreement, Commercial Paper Notes, the Operating Agent Agreement and the Dealer
Agreements.
"Promotional Allowances" has the meaning specified in Section
4.02(c)(iii).
"Promotional Allowance Reserve" means, at any time, an amount
equal to Promotional Allowance expenses identified and accrued in accordance
with GAAP but not yet paid to Obligors.
"Rating Agency" means each of Moody's and S&P.
"Rating Agency Fee" means fees paid to each Rating Agency in
connection with the rating of the Commercial Paper.
"Receivable" means (a) indebtedness of an Obligor (whether
constituting an account, or chattel paper, instruments or general intangibles
arising out of such account) arising from the provision of merchandise, goods
or services by the Parent or a Seller Subsidiary to such Obligor, including the
right to payment of any interest or finance charges and other obligations of
such Obligor with respect thereto;
(b) all security interests or liens and property
subject thereto from time to time purporting to secure payment by the
Obligor;
(c) all guarantees, indemnities and warranties
and proceeds thereof, proceeds of insurance policies, financing
statements and other agreements or arrangements of whatever character
from time to time supporting or securing payment of such Receivable;
(d) all Collections with respect to any of the
foregoing;
(e) all Records with respect to any of the
foregoing; and
(f) all Proceeds of any of the foregoing.
"Receivable Collection Turnover Ratio" means, as of any
Settlement Date, an amount equal to the product of (a)(i) the aggregate
Outstanding Balance of Transferred Receivables at the beginning of the
preceding Settlement Period, divided by (ii)
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aggregate Collections on Transferred Receivables for such Settlement Period,
times (b) the number of days of such Settlement Period.
"Receivables Sale Agreement" means the Receivables Sale
Agreement, dated April 14, 1994, between the Parent and the Borrower, in the
form of Exhibit C hereto.
"Records" means all Contracts and other documents, books,
records and other information (including, without limitation, computer
programs, tapes, disks, punch cards, data processing software and related
property and rights) prepared and maintained by the Parent, the Servicer or the
Borrower with respect to Receivables and the related Obligors.
"Regulatory Change" shall mean any change after the Effective
Date in federal, state or foreign law or regulations (including, without
limitation, Regulation D of the Federal Reserve Board) or the adoption or
making after such date of any interpretation, directive or request applying to
any Affected Party of or under any federal, state or foreign law or regulations
(whether or not having the force of law) by any Governmental Authority charged
with the interpretation or administration thereof.
"Rejected Amount" means, with respect to the Borrower, the
amount of the capital contribution which the Parent is required to make to the
Borrower (as determined by the Operating Agent) as a result of breaches of
representations and warranties with respect to Receivables sold or contributed
to the Borrower by the Parent pursuant to the Receivables Sale Agreement.
"Related Documents" means the Note, the Lockbox Agreements,
the Receivables Sale Agreement, the Sale Assignments and all agreements,
instruments, certificates, financing statements or other documents required to
be delivered hereunder or thereunder.
"Request Notice" means a notice in the form of a computer
print-out, tape or other form acceptable to the Operating Agent which (a) by
reference to an invoice register and file or microfilm of actual invoices, (i)
enables the Operating Agent to identify all Receivables sold or contributed on
a Sale Date by the Parent to the Borrower and the Required Information with
respect thereto and (ii) sets forth the amount of payments received on each
Transferred Receivable since the prior Sale Date, and (b) sets forth the Parent
Requested Amount for the succeeding Sale Date.
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"Required Information" means, with respect to a Receivable,
(a) the Obligor, (b) the Obligor's address, (c) the Billed Amount, (d) any
discounts, (e) the Maturity Date and (f) the Billing Date.
"Retained Monthly Interest and Unused Facility Fees" means,
for any day within a Settlement Period, the sum of all amounts transferred to
or retained in the Retention Account with respect to Daily Interest and Daily
Unused Facility Fees calculated as of the same day in accordance with Section
6.03(a)(iii) and Accrued Monthly Interest and Unused Facility Fees calculated
as of the same day in accordance with Section 6.04(a)(iii).
"Retention Account" means the Eligible Bank Account maintained
with the Depositary described in Section 6.01(c).
"Retention Account Deficiency" means, for any Settlement Date,
any deficiency in the amounts on deposit in the Retention Account necessary to
make the payments required under Sections 6.04(a)(i) and (ii).
"Revolving Period" means the period commencing on the
Effective Date of this Agreement and ending on the day prior to the Commitment
Termination Date.
"RFC Loans" means the loans made by the Borrower to the Parent
pursuant to the Receivables Sale Agreement.
"S&P" means Standard & Poor's Corporation.
"Sale Assignment" means the assignment entered into between
the Parent and the Borrower on any Sale Date substantially in the form of
Exhibit A to the Receivables Sale Agreement.
"Sale Date" means each date on which a Transferred Receivable
is sold or contributed to the Borrower by the Parent under the Receivables Sale
Agreement.
"Secured Parties" means, collectively, the Lender and the
Lender Secured Parties.
"Seller Subsidiaries" means each of Poly-Tech, Inc., Rhino-X
Industries, Inc. and American Western Corporation, which are either direct or
indirect wholly-owned Subsidiaries of the Parent.
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"Servicer" means the Parent, or any Person designated as
Successor Servicer, and its successors and assigns from time to time hereunder.
"Servicer Termination Notice" means notice by the Operating
Agent to the Servicer that an Event of Servicer Termination has occurred and
that the Servicer's appointment hereunder has been terminated.
"Servicing Fee" means a fee payable by the Borrower to the
Servicer on each Settlement Date equal to the product of (a) the Servicing Fee
Rate, (b) the Average Outstanding Balance of all Transferred Receivables for
the preceding Settlement Period, and (c) the actual number of days in such
period divided by 360.
"Servicing Fee Rate" means 1%.
"Servicing Officer" means any officer of the Servicer involved
in, or responsible for, the administration and servicing of the Transferred
Receivables whose name appears on an Officer's Certificate listing servicing
officers furnished to the Operating Agent by the Servicer, as amended from time
to time.
"Servicing Records" means all documents, books, records and
other information (including, without limitation, computer programs, tapes,
disks, punch cards, data processing software and related property and rights)
prepared and maintained by the Servicer with respect to the Transferred
Receivables and the related Obligors.
"Settlement Date" means the tenth Business Day following the
end of each Settlement Period.
"Settlement Period" means, in the case of the initial
Settlement Period, the period beginning with the Effective Date to and
including May 1, 1994; with respect to the final Settlement Period, the period
ending on the Final Maturity Date and beginning with the first day of the
fiscal month in which the Final Maturity Date occurs; and with respect to all
other Settlement Periods, each fiscal month consisting of a four week period
commencing May 2, 1994, a five week period commencing May 30, 1994, and
thereafter successive four, four and five week periods.
"Stock" shall mean all shares, options, warrants, general or
limited partnership interests or other equivalents (regardless of how
designated) of or in a corporation, partnership or equivalent entity whether
voting or nonvoting, including common stock, preferred stock or any other
"equity security" (as such term is defined in Rule 3a11-1 of the General
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Rules and Regulations promulgated by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended).
"Sub-Servicer" means any Person with whom the Servicer enters
into a Sub-Servicing Agreement.
"Sub-Servicing Agreement" means any written contract between
the Servicer and any Sub-Servicer, relating to servicing, administration or
collection of Transferred Receivables as provided in Section 7.01, in such form
as has been approved by the Servicer and the Operating Agent.
"Subsidiary" means, as to any Person, any corporation or other
entity of which securities or other ownership interests having ordinary voting
power to elect a majority of the Board of Directors or other Persons performing
similar functions are at the time directly or indirectly owned by such Person.
"Successor Servicer" has the meaning specified in Section
11.02.
"Successor Servicing Fees" means the fees payable by the
Borrower to the Successor Servicer, as agreed to by the Borrower, the Lender,
the Operating Agent, the Liquidity Agent and the Letter of Credit Agent, which
shall not exceed the Servicing Fee Rate.
"Successor Servicing Expenses" means expenses payable by the
Borrower to the Successor Servicer, as agreed to by the Borrower, the Lender,
the Operating Agent, the Liquidity Agent and the Letter of Credit Agent.
"Termination Event" has the meaning specified in Section 9.01.
"Transferred Receivable" means any Receivable which has been
purchased by the Borrower, or contributed as capital by the Parent to the
Borrower, under the Receivables Sale Agreement.
"UCC" means, for any jurisdiction, the Uniform Commercial Code
as from time to time in effect in such jurisdiction.
"Unused Facility Fee", for any period, means the sum of Daily
Unused Facility Fees for each day in such period.
"Unused Facility Fee Rate" means 0.25%.
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"Wire Payments" has the meaning specified in Section
6.01(a)(ii).
SECTION 1.02. Other Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP. All terms used in
Article 9 of the UCC of the State of New York, and not specifically defined
herein, are used herein as defined in such Article 9. All hourly references
herein shall refer to New York City time.
SECTION 1.03. Interpretation. Except as otherwise indicated, all
agreements defined in this Agreement refer to the same as from time to time
amended or supplemented or as the terms of such agreements are waived or
modified in accordance with their terms.
SECTION 1.04. Rounding. For purposes of any calculations referred
to in this Agreement (unless otherwise specified), (a) all percentages
resulting from such calculations will be rounded up, if necessary, to the
nearest one ten-thousandth of a percentage point (e.g. 9.87654% (or .0987654)
being rounded up to 9.8766% (or .098766)) and (b) all Dollar amounts used in or
resulting from such calculations will be rounded up to the nearest dollar (e.g.
$1,057.37 being rounded up to $1,058).
ARTICLE II
COMMITMENT; ADVANCES
SECTION 2.01. Advances. The Lender hereby agrees, on the terms and
subject to the conditions of this Agreement, to make advances (each, an
"Advance") to the Borrower during the Revolving Period in an aggregate
principal amount at any one time outstanding up to, but not exceeding, the
Availability. Subject to the terms of this Agreement, during the Revolving
Period the Borrower may borrow, repay and reborrow up to the amount of the
Availability (after giving effect to the mandatory and voluntary reductions
required and permitted herein).
SECTION 2.02. Optional Changes in Commitment.(a) The Borrower shall
be entitled at its option, not more than twice during each calendar year, to
reduce permanently the Maximum Facility Commitment; provided that the Borrower
shall give notice of such reduction to the Lender as provided in Section 2.03
hereof and that any partial reduction of the Maximum Facility Commitment shall
be in an amount equal to Five Million Dollars ($5,000,000) or an integral
multiple thereof; and provided, further, that any reduction of the Maximum
Facility Commitment below Advances Outstanding shall be subject to the
Borrower's repayment obligations under Sections 2.03(a) and 2.06(a).
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(b) Subject to Section 2.02(c), the Borrower shall be
entitled at its option to terminate the Maximum Facility Commitment, provided
that the Lender shall be given 30 days prior notice by the Borrower of such
termination. Any such termination shall be permanent and irrevocable.
(c) Early termination or reduction of the Maximum
Facility Commitment shall obligate the Borrower to pay to the Lender an amount
(the "Early Termination Premium") equal to the product of (i) the amount by
which the Maximum Facility Commitment is reduced and (ii) one of the following
percentages: if such termination or reduction occurs during the 12 month
period ended (A) April 30, 1995, 1.00%; (B) April 30, 1996, 0.25%; and (C)
thereafter, 0%; provided, however, that no Early Termination Premium shall be
due if the Maximum Facility Commitment is terminated (x) within 30 days after a
Change in Control, or (y) upon a public offering by the Parent of its common
stock, the proceeds of which are used to pay any Advances Outstanding.
SECTION 2.03. Notices Relating to Advances. (a) On the first
Business Day of each week, and on each Funding Date, the Borrower shall file a
Borrowing Base Certificate and copies of all applicable Request Notices under
the Receivables Sale Agreement with the Operating Agent. Availability will be
calculated based on the most recent Borrowing Base Certificate delivered to the
Lender and the Operating Agent. The Borrower may request additional Advances
(in a minimum amount of $100,000) up to the New Advances Available, if any. If
there is a Borrowing Excess, the Borrower must repay, in accordance with the
procedures set forth in Sections 6.02(a)(iii), 6.03(a)(iv) and 6.04(a)(i)(E),
Advances Outstanding to the level of the new Availability.
(b) The Borrower shall give the Lender and the Operating
Agent written notice of each termination or reduction of the Maximum Facility
Commitment and of each borrowing and repayment of each Advance (in each case, a
"Borrower Notice"). Each such written notice shall be irrevocable and shall be
effective only if received by the Lender and the Operating Agent not later than
11 a.m., New York City time on the Business Day prior to the date of the
related termination, reduction, borrowing or repayment. Any repayment by the
Borrower of Advances hereunder shall be in a minimum amount of $1,000,000.
Each such notice of termination or reduction shall specify the amount thereof.
Each such notice of borrowing or repayment shall specify the amount (subject to
Section 2.01 hereof) of Advances to be borrowed or repaid and the Funding Date
or repayment date (which shall be a Business Day).
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(c) Each Borrower Notice requesting an Advance shall
include a representation by the Borrower that the Advance requested shall not
on the Funding Date exceed the New Advances Available, based upon the most
recent Borrowing Base Certificate.
SECTION 2.04. Disbursement of Loan Proceeds. The Borrower shall
give the Lender and the Operating Agent notice of each Advance hereunder as
provided in Section 2.03(b) hereof. Not later than 4:00 p.m., New York City
time, on the date specified for each Advance hereunder, the Lender shall
transfer, by wire transfer or otherwise, but in any event in immediately
available funds, the amount of the Advance to be made on such date, and shall
cause the Collateral Agent to deposit such amount in the Collection Account in
accordance with the provisions of Section 6.02(a)(ii) hereof.
SECTION 2.05. Note. (a) The Advances made by the Lender hereunder
shall be evidenced by a single promissory note of the Borrower in substantially
the form of Exhibit D hereto (the "Note"). The Note shall be dated the date of
the initial Advance under this Agreement, shall be payable to the order of the
Lender in a principal amount equal to the Maximum Facility Commitment as
originally in effect, and shall otherwise be duly completed. The Advances
evidenced by the Note shall be payable as provided in Article VI hereof.
(b) The Lender shall enter on a schedule attached to the
Note a notation (which may be computer generated) with respect to each Advance
made hereunder of: (i) the date and principal amount thereof and (ii) each
payment and repayment of principal thereof. The failure of the Lender to make
a notation on the schedule to the Note as aforesaid shall not limit or
otherwise affect the obligation of the Borrower to repay the Advances in
accordance with their respective terms as set forth herein.
SECTION 2.06. Principal Repayments. The Advances (a) shall be repaid
as and when necessary, as set forth in Sections 2.03(a), 6.03, 6.04 and 6.05,
to cause the aggregate principal amount of the Advances Outstanding not to
exceed the Availability, and (b) may be repaid at any time and from time to
time, in whole or in part, upon prior written notice to the Lender and
Operating Agent as provided in Section 2.03(b) hereof and any amount so repaid
may, subject to the terms and conditions hereof, be reborrowed hereunder during
the Revolving Period; provided, however, that all repayments of Advances or any
portion thereof shall be made together with payment of (i) all Interest accrued
on the amount repaid to (but excluding) the date of such repayment, and (ii)
any and all Breakage Costs payable under Section 2.11.
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SECTION 2.07. Interest.
(a) The Borrower shall pay to the Lender, as set forth in
Sections 6.03, 6.04 and 6.05, Interest on the unpaid principal amount of each
Advance for the period commencing on and including the date of such Advance
until but excluding the date such Advance shall be paid in full.
(b) Notwithstanding the foregoing, the Borrower shall pay
interest on unpaid Interest, on any Advance or any installment thereof, and on
any other amount payable by the Borrower hereunder (to the extent permitted by
law) that shall not be paid in full when due (whether at stated maturity, by
acceleration or otherwise) for the period commencing on the due date thereof to
(but excluding) the date the same is paid in full at the applicable Daily
Borrowing Rate.
(c) Anything in this Agreement or the Related Documents
to the contrary notwithstanding, if at any time the rate of interest payable by
any Person under this Agreement and the Related Documents exceeds the highest
rate of interest permissible under applicable law (the "Maximum Lawful Rate"),
then, so long as the Maximum Lawful Rate would be exceeded, the rate of
interest under this Agreement and the Related Documents shall be equal to the
Maximum Lawful Rate. If at any time thereafter the rate of interest payable
under this Agreement and the Related Documents is less than the Maximum Lawful
Rate, such Person shall continue to pay interest under this Agreement and the
Related Documents at the Maximum Lawful Rate until such time as the total
interest received from such Person is equal to the total interest that would
have been received had applicable law not limited the interest rate payable
under this Agreement and the Related Documents. In no event shall the total
interest received by the Lender and the Collateral Agent under this Agreement
and the Related Documents exceed the amount which the Lender and the Collateral
Agent could lawfully have received, had the interest due under this Agreement
and the Related Documents been calculated since the Effective Date at the
Maximum Lawful Rate.
SECTION 2.08. Fees.
(a) On the Effective Date, the Borrower shall have paid
to the Lender the Facility Structuring Fee and the Administration Fee.
(b) On each Settlement Date, the Borrower shall have paid
to the Lender the Unused Facility Fee.
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(c) On each Settlement Date, the Borrower shall pay to
the Servicer, the Servicing Fee, or to the Successor Servicer, the Successor
Servicing Fees and Expenses.
SECTION 2.09. Time and Method of Payments. Subject to the
provisions of Sections 6.03, 6.04 and 6.05, all payments of principal,
interest, fees and other amounts (including indemnities) payable by the
Borrower hereunder shall be made in Dollars, in immediately available funds, to
the Lender not later than 2:00 p.m., New York City time, on the date on which
such payment shall become due. Any such payment made on such date but after
such time shall, if the amount paid bears interest, be deemed to have been made
on, and interest shall continue to accrue and be payable thereon until, the
next succeeding Business Day. If any payment of principal or interest becomes
due on a day other than a Business Day, such payment may be made on the next
succeeding Business Day and such extension shall be included in computing
interest in connection with such payment. All payments hereunder and under the
Note shall be made without set-off or counterclaim and in such amounts as may
be necessary in order that all such payments shall not be less than the amounts
otherwise specified to be paid under this Agreement and the Note (after
withholding for or on account of any present or future taxes, levies, imposts,
duties or other similar charges of whatever nature imposed upon an Affected
Party by any government or any political subdivision or taxing authority
thereof, other than any tax on or measured by the net income of the Affected
Party to which any such payment is due pursuant to applicable federal, state
and local income tax laws). Upon payment in full of the Note, following the
Commitment Termination Date, the Lender shall mark the Note "Paid" and return
it to the Borrower.
SECTION 2.10. Additional Costs; Capital Requirements.
(a) In the event that any existing or future law, regulation or guideline, or
interpretation thereof, by any court or administrative or governmental
authority charged with the administration thereof, or compliance by any
Affected Party with any request or directive (whether or not having the force
of law) of any such authority shall impose, modify or deem applicable or result
in the application of, any capital maintenance, capital ratio or similar
requirement against Loan commitments made by any Affected Party under this
Agreement or a Program Document, and the result of any event referred to above
is to impose upon any Affected Party or increase any capital requirement
applicable as a result of the making or maintenance of, such Affected Party's
loan commitment (which imposition of capital requirements may be determined by
each Affected Party's reasonable allocation of the aggregate of such capital
increases or impositions), then, upon demand made by the Operating Agent on
behalf of such Affected Party as promptly as practicable after it obtains
knowledge that
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such law, regulation, guideline, interpretation, request or directive exists
and determines to make such demand, the Borrower shall immediately pay to the
Collateral Agent on behalf of such Affected Party from time to time as
specified by the Operating Agent additional amounts which shall be sufficient
to compensate such Affected Party for the Borrower's Share of such imposition
of or increase in capital requirements together with interest on each such
amount from the date demanded until payment in full thereof at the Daily
Borrowing Rate. A certificate setting forth in reasonable detail the amount
necessary to compensate such Affected Party as a result of an imposition of or
increase in capital requirements submitted by the Operating Agent to the
Borrower shall be conclusive, absent manifest error, as to the amount thereof.
(b) In the event that any Regulatory Change shall: (i)
change the basis of taxation of any amounts payable to any Affected Party in
respect of any Loans (other than taxes imposed on the overall net income of
such Affected Party for any such Loans by the United States of America or any
state or other jurisdiction in which such Affected Party's lending offices are
located); (ii) impose or modify any reserve, Federal Deposit Insurance
Corporation premium or assessment, special deposit or similar requirements
relating to any extensions of credit or other assets of, or any deposits with
or other liabilities of, such Affected Party; or (iii) impose any other
conditions affecting this Agreement in respect of Loans (or any of such
extensions of credit, assets, deposits or liabilities); and the result of any
event referred to in clause (i), (ii) or (iii) above shall be to increase such
Affected Party's costs of making or maintaining any Loans or its commitment
under a Program Document, or to reduce any amount receivable by such Affected
Party hereunder in respect of any of its Loans or its commitment (such
increases in costs and reductions in amounts receivable are hereinafter
referred to as "Additional Costs") then, upon demand made by the Operating
Agent on behalf of such Affected Party, as promptly as practicable after it
obtains knowledge that such a Regulatory Change exists and determines to make
such demand, the Borrower shall pay to the Collateral Agent on behalf of such
Affected Party, from time to time as specified by the Operating Agent,
additional commitment fees or other amounts which shall be sufficient to
compensate such Affected Party for the Borrower's Share of such increased cost
or reduction in amounts receivable by such Affected Party from the date of such
change, together with interest on each such amount from the date demanded until
payment in full thereof at the Daily Borrowing Rate.
(c) Determinations by any Affected Party for purposes of
this Section 2.10 of the effect of any Regulatory Change on its costs of making
or maintaining Loans or on amounts receivable
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by it in respect of Loans, and of the additional amounts required to compensate
such Affected Party in respect of any Additional Costs, shall be set forth in a
written notice to the Borrower in reasonable detail and shall be conclusive,
absent manifest error.
SECTION 2.11. Breakage Costs. The Borrower shall pay to the
Collateral Agent for the account of the Lender, upon the request of the Lender,
such amount or amounts as shall compensate the Lender for any loss, cost or
expense incurred by the Lender (as reasonably determined by the Lender) as a
result of any repayment of an Advance (and Interest thereon) other than on the
maturity date of the Commercial Paper funding such Advance, such compensation
to include, without limitation, an amount equal to any loss or expense suffered
by the Lender during the period from the date of receipt of such repayment to
(but excluding) the maturity date of such Commercial Paper, if the rate of
interest obtainable by the Lender upon the redeployment of an amount of funds
equal to the amount of such repayment is less than the rate of interest
applicable to such Commercial Paper (such expense to be referred to as
"Breakage Costs"). The determination by the Lender of the amount of any such
loss or expense shall be set forth in a written notice to the Borrower in
reasonable detail and shall be conclusive, absent manifest error.
SECTION 2.12. Collections on Receivables. In the event that the
Servicer is unable to determine the specific Receivables on which Collections
have been received from an Obligor, the parties agree that such Collections
shall be deemed to have been received on the Receivables in the order in which
they were originated with respect to such Obligor. In the event that the
Servicer is unable to determine the specific Receivables on which discounts,
offsets or other non-cash reductions have been granted or made with respect to
an Obligor, the parties agree that such reductions shall be deemed to have been
granted or made in the reverse order in which they were originated with respect
to such Obligor.
ARTICLE III
CONDITIONS TO LENDING
SECTION 3.01. Conditions Precedent to Effectiveness of Agreement.
The effectiveness of this Agreement is subject to the condition precedent that
the Lender, the Operating Agent and the Collateral Agent shall each have
received on or before the Effective Date the following, in form and substance
satisfactory to the Operating Agent and the Collateral Agent:
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(a) An executed copy of the Receivables Sale Agreement in
the form approved by the Operating Agent and the Collateral Agent and evidence
to the effect that all conditions precedent to the effectiveness thereof shall
have been satisfied;
(b) A certificate from an officer of the Parent in the
form of Exhibit E to the effect that the performance of the Receivables Sale
Agreement will not render the Borrower insolvent and the Borrower will be able
to remain economically viable without further investments by the Parent for the
foreseeable future;
(c) [Reserved];
(d) With respect to the Borrower:
(i) the certificate or articles of incorporation
of the Borrower certified, as of a date no more than five days
prior to the Effective Date, by the Secretary of State of its
state of incorporation;
(ii) a good standing certificate, dated no more
than five days prior to the Effective Date, from the
respective Secretary of State of its state of incorporation
and each state in which the Borrower is required to qualify to
do business;
(iii) a Certificate of the Secretary or Assistant
Secretary of the Borrower certifying as of the Effective Date:
(A) the names and true signatures of the officers authorized
on its behalf to sign this Agreement, (B) a copy of the
Borrower's by-laws, and (C) a copy of the resolutions of the
board of directors of the Borrower approving this Agreement,
and the transactions contemplated thereby;
(iv) an Officer's Certificate in the form of
Exhibit F hereto; and
(v) the Note shall have been duly executed and
delivered by the Borrower to the Operating Agent and shall be
in full force and effect.
(e) With respect to the Servicer:
(i) the certificate or articles of incorporation
of the Servicer certified, as of a date no more than five days
prior to the Effective Date, by the Secretary of State of its
state of incorporation;
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(ii) a good standing certificate, dated no more
than five days prior to the Effective Date, from the
respective Secretary of State of its state of incorporation
and each state in which the Servicer is required to qualify to
do business;
(iii) a certificate of the Secretary or Assistant
Secretary of the Servicer certifying as of the Effective Date:
(A) the names and true signatures of the officers authorized
on its behalf to sign this Agreement, (B) a copy of
the Servicer's by-laws, and (C) a copy of the resolutions of
the board of directors of the Servicer approving this
Agreement and the transactions contemplated hereby; and
(iv) an Officer's Certificate in the form of
Exhibit G hereto;
(f) Certified copies of Requests for Information or
Copies on form UCC-11 (or a similar search report certified by a party
acceptable to the Operating Agent), dated a date no more than five days prior
to the Effective Date listing all effective financing statements which name the
Parent (under its present name and any previous name) as debtor, together with
copies of such financing statements;
(g) Acknowledgement copies of proper financing statements
(form UCC-3), if any, necessary to release all security interests and other
rights of any Person in Transferred Receivables previously granted by the
Parent including, without limitation, all such releases specified by the Parent
prior to the date hereof;
(h) Consents to the closing of the transactions
contemplated hereby, in form and substance satisfactory to the Operating Agent;
(i) Acknowledgement copies of proper financing statements
(form UCC-1), duly filed, in respect of Transferred Receivables, (i) pursuant
to the Receivables Sale Agreement, naming the Parent as the assignor and the
Borrower as the assignee, and (ii) pursuant to Article VIII, naming the
Borrower as the debtor, the Lender as secured party and the Collateral Agent as
the assignee, or other, similar instruments or documents, as may be necessary
or, in the opinion of the Operating Agent, desirable under the Uniform
Commercial Code of all appropriate jurisdictions or any other applicable law
(including the Assignment of Claims Act) to perfect the Lender's and the
Collateral Agent's interests in all Transferred Receivables in which an
interest may be assigned hereunder;
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(j) Fully executed copies of the Lockbox Agreements;
(k) The opinion of counsel to the Borrower and the Parent
in form and substance satisfactory to the Lender, the Operating Agent and the
Collateral Agent, as to the matters set forth in Exhibit H;
(l) The favorable opinion of Winston & Strawn, counsel to
the Lender and the Operating Agent, as to the true sale of the Transferred
Receivables from the Parent to the Borrower, the nonconsolidation of the
Borrower's assets into the bankruptcy estate of the Parent and such other
matters as the Operating Agent may require;
(m) Payment of the Facility Structuring Fee;
(n) Payment of the Lender's legal fees (not in excess of
$125,000), document preparation costs and out-of-pocket costs associated with
rating agency fees;
(o) Such sublicenses or subleases as the Operating Agent
shall require with regard to all computer programs licensed or leased by the
Servicer and used in the servicing of the Receivables;
(p) (i) Consolidated and consolidating balance sheets
and statements of income and changes in financial position of
the Servicer and its Subsidiaries for each of the years in the
three year period ended December 31, 1993, audited by a
nationally recognized accounting firm;
(ii) No later than May 15, 1994, unaudited
consolidated and consolidating balance sheets and statements
of income and changes in financial position of the Servicer
and its Subsidiaries for the three month period ended March
31, 1994; and
(iii) The Borrower's balance sheet, dated as of the
Effective Date and attached to a certificate of the chief
financial officer of the Parent;
(q) A copy of the Parent's Credit and Collection
Policies; and
(r) Such other approvals, consents, opinions, documents
and instruments, as the Operating Agent may reasonably request.
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SECTION 3.02. Conditions Precedent to All Advances. Each Advance
(including the initial Advance) shall be subject to the further conditions
precedent that:
(a) On the related Funding Date, the Borrower shall have
certified in the related Borrowing Base Certificate that, except as
specifically disclosed in the related Borrower Notice (or specifically
disclosed in a prior instance to the Lender in writing), and specifically
consented to by the Lender in its sole discretion:
(i) The representations and warranties of the
Borrower, the Parent and the Servicer set forth in Sections 4.01, 4.02
and 4.03 are true and correct on and as of such date, before and after
giving effect to such borrowing and to the application of the proceeds
therefrom, as though made on and as of such date;
(ii) No event has occurred, or would result from
such Advance or from the application of the proceeds therefrom, which
constitutes a Termination Event or would constitute a Termination
Event but for the requirement that notice be given or time elapse or
both;
(iii) The Borrower is in compliance with each of its
covenants set forth herein; and
(iv) No event has occurred which constitutes an
Event of Servicer Termination or would constitute an Event of Servicer
Termination but for the requirement that notice be given or time
elapse or both;
(b) The Commitment Termination Date shall not have
occurred;
(c) Each Transferred Receivable submitted by the Borrower
for computation of the Borrowing Base is an Eligible Receivable; and
(d) The Parent and Borrower shall have taken such other
action, including delivery of approvals, consents, opinions, documents and
instruments to the Lender and the Operating Agent, as the Operating Agent may
reasonably request.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Borrower. The
Borrower represents and warrants to the Lender, the Operating Agent and the
Collateral Agent as of the date hereof, as of the Effective Date and on each
subsequent Funding Date as follows:
(a) The Borrower is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and is duly qualified to do business, and is in good standing, in
each jurisdiction in which the nature of its business requires it to be so
qualified (except where such failure to be so qualified would not have a
material adverse effect).
(b) The Borrower has the power and authority to own and
convey all of its properties and to execute and deliver this Agreement and the
Related Documents and to perform the transactions contemplated hereby and
thereby.
(c) The Borrower is a wholly-owned subsidiary of the
Parent.
(d) Regarding the operation of the Borrower:
(i) the Borrower is a limited purpose corporation
whose activities are restricted in its certificate of incorporation;
(ii) neither the Parent nor any Affiliate of the
Parent is involved in the day-to-day management of the Borrower;
(iii) other than the purchase and contribution of
Receivables and the making of RFC Loans pursuant to the Receivables
Sale Agreement, the payment of dividends and the return of capital,
and the payment of Servicing Fees to the Servicer under this
Agreement, the Borrower engages in no intercorporate transactions with
the Parent or any Affiliate of the Parent;
(iv) the Borrower maintains separate corporate
records and books of account from the Parent, holds regular corporate
meetings and otherwise observes corporate formalities and has a
separate business office from the Parent;
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(v) the financial statements and books and
records of the Borrower and the Parent reflect the separate corporate
existence of the Borrower;
(vi) the Borrower maintains its assets separately
from the assets of the Parent and any other Affiliate of the Parent
(including through the maintenance of separate bank accounts), the
Borrower's funds and assets, and records relating thereto, have not
been and are not commingled with those of the Parent or any other
Affiliate of the Parent and the separate creditors of the Borrower
will be entitled to be satisfied out of the Borrower's assets prior to
any value in the Borrower becoming available to the Borrower's
equityholders;
(vii) neither the Parent nor any Affiliate of the
Parent (A) pays the Borrower's expenses; (B) guarantees the Borrower's
obligations, or (C) advances funds to the Borrower for the payment of
expenses or otherwise;
(viii) the Borrower does not (A) pay the expenses of
the Parent or any Affiliate of the Parent, (B) guarantee the
obligations of another Person or (C) advance funds to the Parent or
any Affiliate of the Parent (except pursuant to the Receivables Sale
Agreement) for the payment of expenses or otherwise;
(ix) all business correspondence of the Borrower
and other communications are conducted in the Borrower's own name, on
its own stationery and through a separately-listed telephone number;
(x) the Borrower does not act as agent for the
Parent, but instead presents itself to the public as a corporation
separate from the Parent, independently engaged in the business of
purchasing and financing Receivables; and
(xi) the Borrower maintains two independent
directors at all times who shall at no time be a shareholder,
director, officer, employee or associate of the Parent or any
Affiliate of the Parent (other than the Borrower) as provided in its
certificate of incorporation.
(e) The Borrower has not engaged, and does not presently
engage, in any activity other than the activities undertaken pursuant to this
Agreement and the Related Documents, nor has the Borrower entered into any
agreement other than this Agreement and the Related Documents.
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(f) The execution, delivery and performance by the
Borrower of this Agreement, the Related Documents and the transactions
contemplated hereby and thereby (i) have been duly authorized by all necessary
corporate or other action on the part of the Borrower, (ii) do not contravene
or cause the Borrower to be in default under (A) the Borrower's certificate of
incorporation or by-laws, (B) any contractual restriction contained in any
indenture, loan or credit agreement, lease, mortgage, security agreement, bond,
note, or other agreement or instrument binding on or affecting the Borrower or
its property or the Parent or its property, or (C) any law, rule, regulation,
order, license requirement, writ, judgment, award, injunction, or decree
applicable to, binding on or affecting the Borrower or its property or the
Parent or its property, and (iii) do not result in or require the creation of
any Adverse Claim upon or with respect to any of the property of the Borrower
or the Parent (other than in favor of the Lender and the Collateral Agent as
contemplated hereunder).
(g) This Agreement and the Related Documents have each
been duly executed and delivered by the Borrower.
(h) No consent of, notice to, filing with or permits,
qualifications or other action by any Governmental Authority or any other party
is required (i) for the due execution, delivery and performance by the Borrower
of this Agreement or any of the Related Documents, (ii) for the perfection of
or the exercise by each of the Lender, the Operating Agent or the Collateral
Agent of any of its rights or remedies hereunder or thereunder, (iii) for the
grant by the Borrower of the security interests granted under Section 8.01 of
this Agreement, (iv) for the perfection of or the exercise by each of the
Lender or the Collateral Agent of its rights and remedies provided for in this
Agreement, or (v) to ensure the legality, validity, enforceability or
admissibility into evidence of this Agreement in any jurisdiction in which any
of the Collateral is located, in each case other than consents, notices,
filings and other actions which have been obtained or made and complete copies
of which have been provided to the Lender, the Operating Agent or the
Collateral Agent.
(i) No transaction contemplated by this Agreement
requires compliance with any bulk sales act or similar law.
(j) This Agreement and each Related Document is the
legal, valid and binding obligation of the Borrower enforceable against the
Borrower in accordance with its respective terms. Each of the Borrower
Assigned Agreements to which the Parent or the Borrower is a party constitutes
the legal, valid and binding obligation of such Person, enforceable against
such Person in accordance with its terms.
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(k) There is no pending or threatened, nor any reasonable
basis for any, action, suit or proceeding against or affecting the Borrower,
its officers or directors, or the property of the Borrower, in any court or
tribunal, before any arbitrator of any kind or before or by any Governmental
Authority.
(l) No injunction, writ, restraining order or other order
of any nature adverse to the Borrower or the conduct of its business or which
is inconsistent with the due consummation of the transactions contemplated by
this Agreement or the Related Documents has been issued by a Governmental
Authority nor been sought by any Person.
(m) The principal place of business and chief executive
office of the Borrower, and the office where the Borrower keeps its Records and
the original copies of the Borrower Assigned Agreements are located at the
address of the Borrower for notices under Section 14.01 as set forth on the
attached Schedule 6, and there are currently no, and during the past four
months (or such shorter time as the Borrower has been in existence) there have
not been, any other locations where the Borrower is located (as that term is
used in the UCC of the jurisdiction where such principal place of business is
located) or keeps Records except as set forth on the attached Schedule 6.
(n) The Borrower does not have and has never conducted
business using tradenames, fictitious names, assumed names or "doing business
as" names.
(o) The Borrower does not have any Subsidiaries.
(p) The Borrower is solvent and will not become insolvent
after giving effect to the transactions contemplated by this Agreement and the
Receivables Sale Agreement. The Borrower has no Debts to any Person other than
pursuant to this Agreement and the Related Documents. The Borrower, after
giving effect to the transactions contemplated by this Agreement and the
Related Documents, will have an adequate amount of capital to conduct its
business in the foreseeable future.
(q) For federal income tax, reporting and accounting
purposes, the Borrower will treat the purchase or absolute assignment of each
Transferred Receivable pursuant to the Receivables Sale Agreement as a purchase
or absolute assignment of the Parent's full right, title and ownership interest
in such Transferred Receivable to the Borrower (and those Receivables
contributed to the Borrower by the Parent pursuant to the Receivables Sale
Agreement shall be accounted for as an increase in the stated capital of the
Borrower) and the Borrower has not
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in any other manner accounted for or treated the transactions in Transferred
Receivables.
(r) The Borrower has complied in all respects with all
applicable laws, rules, regulations, and orders with respect to it, its
business and properties and all Collateral.
(s) The Borrower has filed on a timely basis all tax
returns (federal, state and local) required to be filed, is not liable for
taxes payable by any other Person and has paid or made adequate provisions for
the payment of all taxes, assessments and other governmental charges due from
the Borrower.
(t) Each Borrowing Base Certificate and Request Notice is
accurate in all material respects.
(u) Each Transferred Receivable is owned by the Borrower
free and clear of any Adverse Claim and the Borrower has the right to pledge
the same and interests therein pursuant to Section 8.01, and upon making each
Advance, the Lender will have acquired a perfected, first priority and valid
security interest in such Transferred Receivable, free and clear of any Adverse
Claim. No effective financing statement or other instrument similar in effect
covering all or any part of the Borrower Collateral is on file in any recording
office, except such as may have been filed in favor of the Lender as "Secured
Party" and the Collateral Agent as "Assignee" pursuant to Article VIII of this
Agreement or, with respect to the Transferred Receivables, in favor of the
Borrower pursuant to the Receivables Sale Agreement.
(v) Each Transferred Receivable was purchased or
contributed on the relevant Sale Date pursuant to the Receivables Sale
Agreement;
(w) Each purchase of Receivables under the Receivables
Sale Agreement will constitute (i) a "current transaction" within the meaning
of Section 3(a)(3) of the Securities Act of 1933, as amended, and (ii) a
purchase or other acquisition of notes, drafts, acceptances, open accounts
receivable or other obligations representing part or all of the sales price of
merchandise, insurance or services within the meaning of Section 3(c)(5) of the
Investment Company Act of 1940, as amended;
(x) All information heretofore or hereafter furnished by
or on behalf of the Borrower to the Collateral Agent, the Operating Agent or
the Lender in connection with this Agreement or any transaction contemplated
hereby is and will be true and complete in all material respects and does not
and will not omit to state a material fact necessary to make the statements
contained therein not misleading.
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SECTION 4.02. Representations and Warranties of the Borrower With
Respect to the Parent and the Transferred Receivables. The Borrower represents
and warrants to the Lender, the Operating Agent and the Collateral Agent that
on the Effective Date it has entered into the Receivables Sale Agreement with
the Parent and that, as of each Funding Date, the Parent has made the following
representations and warranties pursuant to such Receivables Sale Agreement:
(a) As of each Sale Date:
(i) the Parent is a corporation duly organized,
validly existing and in good standing under the laws of its
jurisdiction of incorporation and is duly qualified to do business and
is in good standing in every jurisdiction in which the nature of its
business requires it to be so qualified (except where such failure to
be so qualified would not have a material adverse effect);
(ii) the Parent has the power and authority to own
and convey all of its properties and assets, to execute and deliver
this Agreement and the Related Documents and to perform the
transactions contemplated hereby and thereby;
(iii) the Parent is operated in a manner such that:
(A) neither the Parent nor any Affiliate
of the Parent is involved in the day-to-day management of the
Borrower;
(B) other than the purchase and
contribution of Receivables and the making of RFC Loans pursuant to
the Receivables Sale Agreement, the payment of dividends and the
return of capital, and the payment of Servicing Fees to the Servicer
under this Agreement, neither the Parent nor any Affiliate of the
Parent engages in intercorporate transactions with the Borrower;
(C) the Parent maintains separate
corporate records and books of account from the Borrower, holds
regular corporate meetings and otherwise observes corporate
formalities and has a separate business office from the Borrower;
(D) the financial statements and books
and records of the Parent and the Borrower reflect the separate
corporate existence of the Borrower;
(E) the Parent maintains its assets
separately from the assets of the Borrower and any other
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Affiliate of the Parent (including through the maintenance of separate
bank accounts), the Parent's funds and assets, and records relating
thereto, have not been and are not commingled with those of the
Borrower or any other Affiliate of the Parent and the separate
creditors of the Borrower will be entitled to be satisfied out of the
Borrower's assets prior to any value in the Borrower becoming
available to the Parent or its creditors;
(F) neither the Parent nor any Affiliate
of the Parent (1) pays the Borrower's expenses; (2) advances funds to
the Borrower for the payment of expenses or otherwise, or (3)
guarantees the Borrower's obligations;
(G) the Borrower does not (1) pay the
expenses of the Parent or any Affiliate of the Parent, or (2) advance
funds to the Parent or any Affiliate of the Parent (except pursuant to
this Agreement) for the payment of expenses or otherwise; and
(H) except as provided in this Agreement
in respect of its duties as Servicer, the Parent does not act as agent
for the Borrower, but instead presents itself to the public as a
corporation separate from the Borrower;
(iv) the execution, delivery and performance by
the Parent of this Agreement and the Related Documents and the
transactions contemplated thereby (A) have been duly authorized by all
necessary corporate or other action on the part of the Parent, (B) do
not contravene or cause the Parent to be in default under (1) the
Parent's certificate of incorporation or by-laws, (2) any contractual
restriction with respect to any Debt of the Parent or contained in any
indenture, loan or credit agreement, lease, mortgage, security
agreement, bond, note, or other agreement or instrument binding on or
affecting the Parent or its property, or (3) any law, rule,
regulation, order, writ, judgment, award, injunction or decree
applicable to, binding on or affecting the Parent or its property, and
(C) do not result in or require the creation of any Adverse Claim upon
or with respect to any of its properties (other than in favor of the
Borrower with respect to the Receivables Sale Agreement and the Lender
and the Collateral Agent under Article VIII of this Agreement);
(v) this Agreement and the Related Documents have
each been duly executed and delivered by the Parent;
(vi) no consent of, notice to, filing with or
permits, qualifications or other action by any Governmental
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Authority or any other party, is required for the due execution,
delivery and performance by the Parent of this Agreement or any of the
Related Documents or for the perfection of or the exercise by the
Borrower, the Lender, the Operating Agent or the Collateral Agent of
any of their rights or remedies hereunder or thereunder, other than
consents, notices, filings and other actions which have been obtained
or made and complete copies of which have been provided to the Lender,
the Operating Agent and the Collateral Agent;
(vii) this Agreement and each Related Document
delivered by the Parent is (or upon execution and delivery will be if
not executed and delivered as of the date hereof) the legal, valid and
binding obligation of the Parent enforceable against the Parent in
accordance with its respective terms;
(viii) there is no pending or threatened, nor any
reasonable basis for any, action, suit or proceeding, against or
affecting the Parent, its officers or directors, or the property of
the Parent, in any court or tribunal, before any arbitrator of any
kind or before or by any Governmental Authority (A) asserting the
invalidity of this Agreement or any of the Related Documents, (B)
seeking to prevent the transfer, sale or pledge of any Receivable or
the consummation of any of the transactions contemplated hereby or
thereby, or (C) seeking any determination or ruling that might
materially and adversely affect (1) the performance by the Borrower or
the Parent of its obligations under this Agreement or any of the
Related Documents, (2) the validity or enforceability of this
Agreement or any of the Related Documents, (3) the Receivables or the
Contracts, or (4) the federal income tax attributes of the
contribution, sale or pledge of the Transferred Receivables;
(ix) no injunction, writ, restraining order or
other order of any nature adverse to the Parent or the conduct of its
business or which is inconsistent with the due consummation of the
transactions contemplated by this Agreement or the Related Documents
has been issued by a Governmental Authority nor been sought by any
Person;
(x) the principal places of business and chief
executive office of the Parent are located at the addresses set forth
on attached Schedule 6 and there are now no, and during the past four
months there have not been any, other locations where the Parent is
located (as that term is used in the UCC of the jurisdiction where
such principal places
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of business are located) or keeps Records, except as set forth on the
attached Schedule 6;
(xi) the legal name of the Parent is as set forth
at the beginning of this Agreement and the Parent does not use any
tradenames, fictitious names, assumed names or "doing business as"
names, except as set forth on the attached Schedule 7;
(xii) Schedule 8 lists all Lockboxes and Lockbox
Accounts and the Lockbox Accounts listed thereon are the only lockbox
accounts maintained by the Parent in respect of the Transferred
Receivables;
(xiii) the Parent is solvent and will not become
insolvent after giving effect to the transactions contemplated by this
Agreement and the Related Documents; the Parent is paying its Debts as
they mature; the Parent has not incurred Debts beyond its ability to
pay as they mature; and the Parent, after giving effect to the
transactions contemplated by this Agreement and the Related Documents,
will have an adequate amount of capital to conduct its business in the
foreseeable future;
(xiv) for federal income tax, reporting and
accounting purposes, the Parent will treat the sale of each Receivable
sold or assigned pursuant to the Receivables Sale Agreement as a sale
of, or absolute assignment of, its full right, title and ownership
interest in such Receivable to the Borrower (and those Receivables
contributed to the Borrower by the Parent pursuant to the Receivables
Sale Agreement shall be accounted for as an increase in the stated
capital of the Borrower), and the Parent has not in any other respect
accounted for or treated the transactions contemplated by the
Receivables Sale Agreement;
(xv) the Parent has complied in all material
respects with all applicable laws, rules, regulations and orders with
respect to it, its business and properties and all Receivables and
related Contracts (including without limitation, all applicable
environmental, health and safety requirements) and all restrictions
contained in any indenture, loan or credit agreement, mortgage,
security agreement, bond, note or other agreement or instrument
binding on or affecting the Parent or its property, and has and
maintains all permits, licenses, authorizations, registrations,
approvals and consents of Governmental Authorities for (A) the
activities and business of the Parent and each of its Subsidiaries as
currently conducted and as proposed to be conducted, (B) the
ownership, use,
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operation and maintenance by each of them of its properties,
facilities and assets, and (C) the performance by the Parent and the
Borrower of this Agreement and the Related Documents (hereinafter
referred to collectively as "Governmental Consents");
(xvi) without limiting the generality of the prior
representation, no condition exists or event has occurred which, in
itself or with the giving of notice or lapse of time or both, would
result in the suspension, revocation, impairment, forfeiture or
non-renewal of any Governmental Consent applicable to the Parent or
any Subsidiary;
(xvii) the Parent has filed on a timely basis all
tax returns (federal, state and local) required to be filed and has
paid or made adequate provisions for the payment of all taxes,
assessments and other governmental charges due from the Parent;
(xviii) with respect to the Parent or any of its
Subsidiaries, there has occurred no event which has or is reasonably
likely to have a material adverse effect on the Parent's operations,
including its ability to perform its obligations under this Agreement
or the Related Documents as Parent, Servicer or otherwise;
(xix) the Parent is licensed or otherwise has the
lawful right to use all patents, trademarks, servicemarks, tradenames,
copyrights, technology, know-how and processes used in or necessary
for the conduct of its business as currently conducted which are
material to its financial condition, business, operations, assets and
prospects, individually or taken as a whole;
(xx) (A) the consolidated balance sheets of
the Parent and its consolidated Subsidiaries for each of the last
three years delivered prior to such Sale Date in accordance with the
provisions of this Agreement, and the related statements of income and
shareholders' equity of the Parent and its consolidated Subsidiaries
for such fiscal years, certified without qualification by the Parent's
independent certified public accountants, copies of which have been
furnished to Redwood and the Operating Agent, fairly present the
consolidated financial condition, business and operations of the
Parent and its consolidated Subsidiaries as at such date and the
consolidated results of the operations of the Parent and its
consolidated Subsidiaries for the periods ended on such dates, all in
accordance with GAAP, (B) the unaudited consolidated balance sheets
and the related statements of income and
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shareholders' equity of the Parent and its consolidated Subsidiaries
for each fiscal quarter in the period since the most recent
consolidated balance sheet and related statement of income and
shareholders' equity referred to in clause (A) above and ended at
least 45 days prior to such Sale Date, copies of which have been
furnished to Redwood and the Operating Agent, fairly present the
consolidated financial condition, business and operations of the
Parent and its consolidated Subsidiaries as of the last day of such
fiscal quarters and the consolidated results of the operations of the
Parent and its consolidated Subsidiaries for the periods ended on such
dates, all in accordance with GAAP (subject to year-end adjustments
consisting of normal, recurring accruals), and (C) since the last date
for which a balance sheet of the Parent and its consolidated
Subsidiaries has been delivered to Redwood and the Operating Agent,
there has been no material adverse change in any such condition,
business or operations;
(xxi) each Request Notice contains or otherwise
refers to a complete and accurate list of all Transferred Receivables
to be sold or contributed by the Parent to the Borrower as of the
related Sale Date;
(xxii) each Obligor of a Transferred Receivable has
been directed, and is required to, remit all payments with respect to
such Receivable for deposit in a Lockbox Account or a Lockbox;
(xxiii) with respect to each Receivable, sold or
contributed pursuant to the Receivables Sale Agreement the Required
Information contained or referred to in the Request Notice and the
Sale Assignment is true and correct;
(xxiv) each pension plan or profit sharing plan to
which the Parent is a party has been administered and fully funded in
accordance with the obligations of the Parent under law and as set
forth in such plan, and the Parent has complied with the applicable
provisions of ERISA in effect as of such Sale Date;
(xxv) the Parent has valid business reasons for
selling or contributing its interests in the Transferred Receivables
rather than obtaining a loan with the Transferred Receivables as
collateral;
(xxvi) the Parent has not agreed to pay any fee or
commission to any agent, broker, finder or other person for or on
account of services rendered as a broker or finder in connection with
this Agreement or the Related Documents or
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the transactions contemplated hereby or thereby which would give rise
to any valid claim against the Borrower for any brokerage commission,
finder's fee or like payment;
(xxvii) all information heretofore or hereafter furnished
with respect to the Parent to the Borrower, Lender, Operating Agent or
Collateral Agent in connection with any transaction contemplated by
this Agreement or the Related Documents is and will be true and
complete in all material respects and does not and will not omit to
state a material fact necessary to make the statements contained
herein or therein not misleading; and
(xxviii) no part of the proceeds received by the Parent or any
Affiliate from the Advances will be used directly or indirectly for
the purpose of purchasing or carrying, or for payment in full or in
part of, Debt that was incurred for the purposes of purchasing or
carrying, any "margin stock", as such term is defined in Section 221.3
of Regulation U of the Board of Governors of the Federal Reserve
System.
(b) [Reserved].
(c) As of the date of each Borrowing Base Certificate
delivered hereunder, with respect to each Receivable designated as an Eligible
Receivable:
(i) such Receivable is a receivable created through the
provision of merchandise, goods or services by the Parent in the
ordinary course of its business in a current transaction;
(ii) such Receivable was created in accordance with the
requirements of (A) a Contract and (B) the Credit and Collection
Policies;
(iii) the Parent has indicated in writing to the Operating
Agent the maximum amount of promotional allowances, discounts or
similar deductions or rebates that may be charged against such
Receivable ("Promotional Allowances");
(iv) neither such Receivable nor the related Contract has
been satisfied, subordinated, rescinded or amended in any manner;
(v) neither such Receivable nor the related Contract is
or will be subject to any right of rescission, set-off (other than
Promotional Allowances and Deductions),
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recoupment, counterclaim or defense, whether arising out of
transactions concerning the Contract or otherwise;
(vi) prior to its sale or contribution to the
Borrower such Receivable was owned by the Parent free and clear
of any Adverse Claim, and the Parent had the right to contribute,
sell, assign and transfer the same and interests therein as
contemplated under the Receivables Sale Agreement and, upon such sale
or contribution, the Borrower acquired a valid ownership interest in
such Receivable, free and clear of any Adverse Claim;
(vii) such Receivable was purchased or contributed
under the Receivables Sale Agreement, and the Receivables Sale
Agreement and the related Sale Assignment constitutes a valid
transfer, assignment, set-over and conveyance to the Borrower of all
right, title and interest of the Parent in and to such Receivable sold
or contributed thereunder;
(viii) the Billed Amount of such Receivable is net
of contractual allowances, any set-off or other modifications (other
than Promotional Allowances and Deductions) and such Receivable is
entitled to be paid pursuant to the terms of the related Contract, has
not been paid in full or been compromised, adjusted, extended,
satisfied, subordinated, rescinded or modified, and is not subject to
compromise, adjustment, extension, satisfaction, subordination,
rescission or modification by the Parent;
(ix) the Parent has submitted all necessary
documentation (including an invoice) for payment of such Receivable to
the Obligor and has fulfilled all its other obligations in respect
thereof;
(x) any stated term of such Receivable is not
greater than (i) 60 days or (ii) such longer period of time, not in
excess of 90 days, to the extent the aggregate Outstanding Balance of
such Receivable and all other Receivables of like term is 6% or less
of the aggregate Outstanding Balance of all Transferred Receivables;
(xi) such Receivable is an "account" within the
meaning of the UCC of each jurisdiction where the Parent's principal
places of business or chief executive office is located;
(xii) neither such Receivable nor the related
Contract contravenes in any material respect any laws, rules or
regulations applicable thereto (including, without limitation, laws,
rules and regulations relating to usury,
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consumer protection, truth in lending, fair credit billing, fair
credit reporting, equal credit opportunity, fair debt collection
practices and privacy) and no party to such related Contract is in
violation of any such law, rule or regulation in any material respect;
(xiii) such Receivable does not represent "billed
but not yet shipped" goods or merchandise, unperformed services,
consigned goods or "sale or return" goods nor does such Receivable
arise from a transaction for which any additional performance by
Borrower or acceptance or other act of the Obligor remains to be
performed as a condition to payments on such Receivable;
(xiv) there are no procedures or investigations
pending or threatened before any Governmental Authority (A) asserting
the invalidity of such Receivable or such Contract, (B) asserting the
bankruptcy or insolvency of the related Obligor, (C) seeking the
payment of such Receivable or payment and performance of such
Contract, or (D) seeking any determination or ruling that might
materially and adversely affect the validity or enforceability of such
Receivable or such Contract;
(xv) as of such transfer thereunder, no Obligor on
such Receivable is bankrupt, is insolvent, is unable to make payment
of its obligations when due, is the debtor in a voluntary or
involuntary bankruptcy proceeding, or is the subject of a comparable
receivership or insolvency proceeding, other than Obligors under the
protection of a bankruptcy court or receivership which has approved
payment by any such Obligor of such Receivable; and
(xvi) the Parent has no knowledge of any fact
(including any defaults by the Obligor on any other accounts) which
should have led it to expect at the time of such Receivable's
designation as an Eligible Receivable that the Billed Amount of such
Receivable would not be paid in full when due, except for Promotional
Allowances.
The Borrower hereby certifies that (A) the benefits of such representations and
warranties of the Parent have been assigned to the Lender and the Collateral
Agent; (B) the rights of the Borrower under the Receivables Sale Agreement to
require a capital contribution of a Rejected Amount from its Parent may be
enforced by the Lender and the Collateral Agent; and (C) the Receivables Sale
Agreement provides that the representations and warranties described in Section
4.02(b) and this Section 4.02(c) shall survive the sale of the Transferred
Receivables and the
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termination of the Receivables Sale Agreement and this Agreement.
SECTION 4.03. Representations and Warranties of the Servicer. The
Servicer represents and warrants to the Lender, the Operating Agent and the
Collateral Agent as follows as of the date hereof:
(a) The Servicer is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and is duly qualified to do business, and is in good standing, in
every jurisdiction in which the nature of its business requires it to be so
qualified (except where such failure to be so qualified would not have a
material adverse effect).
(b) The Servicer has the power and authority to execute
and deliver this Agreement and the transactions contemplated hereby.
(c) The execution, delivery and performance by the
Servicer of this Agreement and all other agreements, instruments and documents
which may be delivered by it pursuant hereto and the transactions contemplated
thereby (i) have been duly authorized by all necessary corporate or other
action on the part of the Servicer, (ii) do not contravene or cause the
Servicer to be in default under (A) its charter or by-laws, (B) any contractual
restriction with respect to any Debt of the Servicer or contained in any
indenture, loan or credit agreement, lease, mortgage, security agreement, bond,
note or other agreement or instrument binding on or affecting it or its
property, or (C) any law, rule, regulation, order, writ, judgment, award,
injunction or decree binding on or affecting it or its property, and (iii) do
not result in or require the creation of any Adverse Claim upon or with respect
to any of its properties.
(d) This Agreement has been duly executed and delivered
by the Servicer.
(e) No consent of, notice to, filing with or permits,
qualifications or other action by any Governmental Authority or any other party
is required for the due execution, delivery and performance by the Servicer of
this Agreement or any other agreement, document or instrument to be delivered
hereunder other than any consents, notices, permits, qualifications, filings or
other actions which have been obtained or made and complete copies of which
have been provided to the Lender, the Operating Agent and the Collateral Agent.
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(f) This Agreement is the legal, valid and binding
obligation of the Servicer enforceable against the Servicer in accordance with
its terms.
(g) There is no pending or threatened, nor any reasonable
basis for any, action, suit or proceeding of a material nature against or
affecting the Servicer, its officers or directors, or the property of the
Servicer, in any court or tribunal, before any arbitrator of any kind or before
or by any Governmental Authority (i) asserting the invalidity of this Agreement
or any document to be delivered by the Servicer hereunder, or (ii) seeking any
determination or ruling that might materially and adversely affect (A) the
performance by the Servicer of its obligations under this Agreement, or (B) the
validity or enforceability of this Agreement or any document to be delivered by
the Servicer hereunder.
(h) No injunction, writ, restraining order or other order
of any material nature adverse to the Servicer or the conduct of its business
or which is inconsistent with the due consummation of the transactions
contemplated by this Agreement has been issued by a Governmental Authority or,
to the knowledge of the Servicer, has been sought by any other Person.
ARTICLE V
GENERAL COVENANTS OF THE BORROWER
SECTION 5.01. Affirmative Covenants of the Borrower. The Borrower
shall, unless the Operating Agent shall otherwise consent in writing:
(a) comply in all material respects with all applicable
laws, rules, regulations and orders with respect to it, its business and
properties and all Transferred Receivables, related Contracts and Collections
with respect thereto;
(b) preserve and maintain its corporate existence,
rights, franchises and privileges in the jurisdiction of its incorporation;
(c) engage exclusively in the activities contemplated by
this Agreement and the Related Documents;
(d) continue to operate its business in the manner set
forth in Sections 4.01(d) and (e);
(e) cause to be delivered to the Lender, the Operating
Agent and the Collateral Agent on or before March 31 of each year, (i) an
Officer's Certificate of the Borrower, dated the
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date of such delivery, bringing down to such date the matters set forth in the
Officer's Certificate delivered pursuant to Section 3.01(d)(iv), (ii) an
Officer's Certificate of the Servicer, dated the date of such delivery,
bringing down to such date the matters set forth in the Officer's Certificate
delivered pursuant to Section 3.01(e)(iv), and (iii) an opinion of counsel, in
form and substance satisfactory to the Lender, the Operating Agent, and the
Collateral Agent reaffirming as of the date of its delivery the opinion of
counsel with respect to the Borrower and the Parent delivered to the Lender,
the Operating Agent and the Collateral Agent on the Effective Date pursuant to
Section 3.01(l);
(f) deposit all Collections it may receive in respect of
Transferred Receivables into the Lockbox Account within one Business Day of
receipt;
(g) use the proceeds of the Advances made hereunder
solely for (i) the purchase of Receivables from the Parent, (ii) payment of
dividends to its shareholder, (iii) the making of RFC Loans and (iv) payment of
administrative or servicing fees or expenses to the Parent or routine
administrative expenses;
(h) have or maintain:
(i) Borrower's Net Worth not less than (A)
additional paid in capital of the Borrower as of any day,
minus (B) $250,000;
(ii) a Dilutions-to-Collection Period of not more
than 7.5%; and
(iii) a Receivable Collection Turnover Ratio of not
more than 70 days.
(i) cooperate fully with all requests of the Lender, the
Operating Agent and the Collateral Agent regarding the information and
documents necessary or desirable to allow each of the Lender, the Operating
Agent and the Collateral Agent to carry out its responsibilities hereunder;
(j) permit the Lender, the Operating Agent and the Collateral
Agent to make or cause to be made (and, after the occurrence of and during the
continuance of an Event of Default, at the Borrower's expense) inspections and
audits of any books, records and papers of the Borrower and the Servicer and to
make extracts therefrom and copies thereof, or to make inspections and
examinations of any properties and facilities of the Borrower and the Servicer,
on reasonable notice, at all such reasonable times and as often as required in
order to assure that the Borrower is
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and will be in compliance with its obligations under this Agreement and the
Related Documents or to evaluate the Lender's investment in the then
outstanding Note;
(k) pay, perform and discharge all of its obligations and
liabilities, including, without limitation, all taxes, assessments and
governmental charges upon its income and properties when due, unless and to the
extent only that such obligations, liabilities, taxes, assessments and
governmental charges shall be contested in good faith and by appropriate
proceedings and that, to the extent required by GAAP, proper and adequate book
reserves relating thereto are established by the Borrower and then only to the
extent that a bond is filed in cases where the filing of a bond is necessary to
avoid the creation of an Adverse Claim against any of its properties; and
(l) promptly notify the Lender and the Operating Agent in
writing of any litigation, legal proceeding or dispute, whether or not in the
ordinary course of business, affecting the Borrower, whether or not fully
covered by insurance, and regardless of the subject matter thereof.
SECTION 5.02. Reporting Requirements of the Borrower. The Borrower
shall furnish, or cause to be furnished, to the Lender, the Operating Agent and
the Collateral Agent:
(a) (i) no less frequently than on the first Business Day of
each week, commencing with the Effective Date, a Borrowing Base Certificate;
and (ii) monthly, as soon as available, and in any event, within ten Business
Days after the end of each Settlement Period, a Monthly Report in the form of
Exhibit I, including all data necessary to recalculate the Advance Rate and a
list of Obligors on Transferred Receivables not included in the previous
Monthly Report;
(b) as soon as available and in any event within 90 days
after the end of each fiscal year, a copy of the annual report for such year
for the Parent and its consolidated Subsidiaries, containing audited financial
statements for such fiscal year certified, in a manner acceptable to the
Operating Agent and the Collateral Agent, by independent public accountants
acceptable to the Operating Agent and the Collateral Agent;
(c) as soon as available and in any event within 45 days
after the end of each of the first three quarters of each fiscal year of the
Parent, a consolidated and consolidating balance sheet of the Parent and its
consolidated Subsidiaries as of the end of such quarter, and consolidated and
consolidating statements of income and retained earnings, and of cash flow, of
the Parent and its consolidated Subsidiaries for such quarter and
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for the period commencing at the end of the previous fiscal year and ending
with the end of such quarter, together with a certificate of the chief
financial officer or chief accounting officer of the Parent identifying such
documents as being the documents described in this paragraph (c) and stating
that the information set forth therein fairly presents the financial condition
of the Parent and its consolidated Subsidiaries as of and for the periods then
ended, subject to year-end adjustments consisting only of normal, recurring
accruals;
(d) as soon as possible and in any event within five days
after the occurrence of a Termination Event (including without limitation a
material adverse change in the financial condition of the Borrower as
determined by the Operating Agent or the Collateral Agent and notified in
writing to the Borrower) or an Incipient Event, the statement of the chief
executive officer of the Borrower setting forth complete details of such
Termination Event or Incipient Event and the action which the Borrower has
taken, is taking and proposes to take with respect thereto;
(e) as soon as available and in any event within 90 days
after the end of each fiscal year, the Seller shall cause a firm of nationally
recognized independent public accountants to furnish a statement (on which the
Lender, the Operating Agent and the Collateral Agent may rely) to the
Collateral Agent and the Operating Agent to the effect that such firm has
applied the agreed upon procedures agreed to by the Borrower and the Operating
Agent with respect to (a) the Borrower's compliance with the Borrower's
financial covenants in this Agreement and (b) the substantial compliance with
this Agreement in the preparation of the Monthly Reports (including the
Borrowing Base Certificates attached thereto) delivered during the previous
fiscal year, and that, on the basis of such procedures, such firm has reported
that there are no exceptions, except as set forth in such statement;
(f) promptly, a copy of the letter of the independent
public accountants to Parent's management with respect to their annual audit of
the Parent, and management's response thereto; and
(g) promptly, from time to time, such other information,
documents, records or reports respecting the Transferred Receivables or the
Contracts or the condition or operations, financial or otherwise, of the
Borrower, or the Parent or any of its Subsidiaries, as the Lender, the
Operating Agent or the Collateral Agent may, from time to time, reasonably
request.
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SECTION 5.03. Negative Covenants of the Borrower. The Borrower shall
not, without the written consent of the Lender, the Operating Agent and the
Collateral Agent:
(a) sell, assign (by operation of law or otherwise) or
otherwise dispose of, or create or suffer to exist any Adverse Claim upon or
with respect to, or assign any right to receive income in respect of, (i) any
Transferred Receivable or related Contract with respect thereto, or upon or
with respect to the Lockbox Account, the Lockboxes, the Collection Account, the
Retention Account or other account in which any Collections of any Transferred
Receivable are deposited, or (ii) any of the Borrower's property;
(b) extend, amend, forgive, discharge, compromise, cancel
or otherwise modify the terms of the Receivables Sale Agreement, any Related
Document or of any Transferred Receivable, or amend, modify or waive any term
or condition of any Contract related thereto;
(c) make any change in its instructions to Obligors
regarding payments to be made to the Borrower or payments to be deposited to
any Lockbox Account or any Lockboxes;
(d) amend its certificate of incorporation, its by-laws
or any Related Document;
(e) merge with or into, consolidate with or into,
convey, transfer, lease or otherwise dispose of all or substantially all of its
assets (whether now owned or hereafter acquired) to, or acquire all or
substantially all of the assets or capital stock or other ownership interest
of, any Person (whether in one transaction or in a series of transactions), or
own any Subsidiary;
(f) prepare any financial statements which shall account
for the transactions contemplated by the Receivables Sale Agreement in any
manner other than as a purchase or absolute assignment of the Transferred
Receivables to the Borrower from the Parent, or in any other respect account
for or treat the transactions contemplated hereby (including but not limited
to, for accounting, tax and reporting purposes) in any manner other than as a
purchase or absolute assignment of the Transferred Receivables to the Borrower
from the Parent;
(g) at any time (i) advance credit to any Person (other
than an RFC Loan under the Receivables Sale Agreement), or (ii) declare any
dividends (other than stock dividends), return any capital, or make an RFC Loan
under the Receivables Sale
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Agreement, if after giving effect to such distribution or RFC Loan, there would
be a Borrowing Excess;
(h) create, incur, permit to exist or have outstanding any
Debt, except:
(i) Debt of the Borrower to the Lender, any Affected
Party or any Indemnified Party under this Agreement and the
Note;
(ii) taxes, assessments and governmental charges,
non-interest bearing accounts payable and accrued liabilities,
in any case not more than 90 days past due from the original
due date thereof, and non-interest bearing deferred
liabilities other than for borrowed money (e.g., deferred
taxes), in each case incurred and continuing in the ordinary
course of business; and
(iii) the endorsement of negotiable instruments for
deposit or collection in the ordinary course of business.
(i) issue any additional shares or any right or option to
acquire any shares, or any security convertible into any shares, of the capital
stock of the Borrower; or
(j) make or suffer to exist any purchases of assets or
investments in any Person, including, without limitation, any shareholder,
director, officer or employee of the Borrower or any of the Parent's other
Subsidiaries, except Transferred Receivables, RFC Loans and Permitted
Investments.
ARTICLE VI
COLLECTIONS AND DISBURSEMENTS
SECTION 6.01. Establishment of Accounts
(a) The Lockbox Accounts. (i) The Borrower has established
with each Lockbox Bank the related Lockbox Account, into which the Servicer
(and the Borrower if received by it) shall deposit from time to time all
monies, instruments and other property received by it as Proceeds of the
Transferred Receivables. The Borrower agrees that prior to a Termination Event
the Operating Agent, and upon the occurrence and during the continuation of a
Termination Event the Collateral Agent, shall have exclusive dominion and
control of the Lockbox Accounts and all monies, instruments and other property
from time to time in the Lockbox Accounts. The Borrower will not make or cause
to be
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made, or have any ability to make or cause, any withdrawals from the Lockbox
Accounts, except as provided in Section 6.01(b)(ii).
(ii) The Borrower and the Servicer have instructed
all existing Obligors, and will instruct all future Obligors, to make payments
in respect of Transferred Receivables only (A) by check or money order mailed
to one or more lockboxes or post office boxes under the control of the
Operating Agent (each such box being a "Lockbox"), or (B) by wire transfer
directly to any Lockbox Account ("Wire Payments"). The Lockboxes to which mail
payments are made as of the date hereof and the related Lockbox Accounts are
listed on the attached Schedule 8. The Borrower and the Servicer shall
endorse, to the extent necessary, all checks or other instruments received in
any Lockbox so that the same can be deposited in the related Lockbox Account,
in the form so received (with all necessary endorsements), on the next Business
Day after the Business Day on which such check or other instruments are
received. In addition, the Borrower and Servicer shall deposit or cause to be
deposited in any Lockbox Account all cash, checks, money orders or other
Proceeds of Collateral received other than in a Lockbox or by Wire Payments, in
the form so received (with all necessary endorsements), not later than the
close of business on the Business Day following the date of such receipt, and
until so deposited all such items or other Proceeds shall be held in trust for
the Collateral Agent.
(iii) In the event that a Lockbox Agreement
terminates for any reason or a Lockbox Bank fails to comply with its
obligations under the Lockbox Agreement for any reason, then the Borrower shall
promptly notify all relevant Obligors to send payments to a new Lockbox or to
make all future Wire Payments to a new Lockbox Account with another Lockbox
Bank. The Borrower shall not close any Lockbox and related Lockbox Account
unless it shall have (1) received the prior written consent of the Operating
Agent and the Collateral Agent, (2) established a new lockbox and related
account with the same Lockbox Bank or with a new depositary institution
satisfactory to the Operating Agent and the Collateral Agent, (3) entered into
an agreement covering such new account with the Lockbox Bank or with such new
depositary institution substantially in the form of the Lockbox Agreement which
is satisfactory in all respects to the Operating Agent and the Collateral Agent
(whereupon, for all purposes of this Agreement and the Related Documents, such
new lockbox shall become a Lockbox, such new account shall become a Lockbox
Account, such new agreement shall become a Lockbox Agreement and any new
depositary institution shall become the Lockbox Bank), and (4) taken all such
action as the Collateral Agent shall require to grant and perfect a first
priority security interest
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in such new Lockbox Account to the Collateral Agent under Section 8.01 of this
Agreement.
(b) Collection Account. (i) The Lender has established and
shall maintain an Eligible Bank Account with the Depositary titled "Redwood
Receivables Corporation - Collection Account (Carlisle Plastics Funding
Corporation)". The Borrower agrees that the Operating Agent shall have
exclusive dominion and control of the Collection Account and all monies,
instruments and other property from time to time in the Collection Account.
(ii) Pursuant to Section 6.02, the Borrower shall
instruct each Lockbox Bank to transfer, and the Borrower hereby grants each of
the Operating Agent and the Collateral Agent the authority to instruct each
Lockbox Bank to transfer, on each Business Day in same day funds, all available
funds deposited in the Lockbox Account before such Business Day to the
Collection Account. The Lender, the Operating Agent and the Collateral Agent
may deposit into the Collection Account from time to time all monies,
instruments and other property received by any of them as Proceeds of the
Transferred Receivables. On each Business Day before the Commitment Termination
Date, so long as no Termination Event shall have occurred and be continuing,
the Operating Agent shall instruct and cause the Depositary (which instruction
may be in writing or by telephone confirmed promptly thereafter in writing) to
release funds on deposit in the Collection Account in the order of priority set
forth in Section 6.03. On each Business Day on and after the Commitment
Termination Date and on each Business Day during any period while a Termination
Event has occurred and is continuing, the Collateral Agent may and the
Operating Agent shall apply all amounts when received in the Collection Account
in the order of priority set forth in Section 6.05.
(iii) In the event that the Depositary wishes to
resign as depositary of the Collection Account for any reason, fails to carry
out the instructions of the Operating Agent or the Collateral Agent for any
reason, or if the Collection Account ceases to be an Eligible Account, then the
Lender or the Operating Agent shall promptly notify all Secured Parties. The
Lender shall not close the Collection Account unless it shall have (A) received
the prior written consent of the Operating Agent and the Collateral Agent, (B)
established a new account with the Depositary or with a new depositary
institution satisfactory to the Operating Agent and the Collateral Agent, (C)
entered into an agreement covering such new account with such new depositary
institution satisfactory in all respects to the Operating Agent and the
Collateral Agent (whereupon such new account shall become the Collection
Account for all purposes of this Agreement and the Related Documents), and (D)
taken all such
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action as the Collateral Agent shall require to grant and perfect a first
priority security interest in such new Collection Account and all funds held in
such new Collection Account, and all certificates and instruments, if any, from
time to time representing or evidencing such new Collection Account or such
funds to the Collateral Agent under this Agreement.
(c) Retention Account. The Lender has established and shall
maintain an Eligible Bank Account with the Depositary and controlled by the
Operating Agent titled "Redwood Receivables Corporation - Retention Account
(Carlisle Plastics Funding Corporation)".
(d) Collateral Account. The Lender has established and
shall maintain an Eligible Bank Account with the Depositary and controlled by
the Operating Agent titled "Redwood Receivables Corporation - Collateral
Account".
SECTION 6.02. Funding of Collection Account.
(a) No later then 10:00 a.m. New York City time on each
Business Day:
(i) the Operating Agent shall transfer all
Collections deposited in the Lockbox Accounts prior to such Business
Day to the Collection Account;
(ii) the Lender shall cause the Collateral Agent to
deposit any Advances made on such Business Day to the Collection
Account;
(iii) if, on the prior Business Day, the Operating
Agent has notified the Borrower of any Borrowing Excess pursuant to
Section 6.03(b), the Borrower shall deposit cash in the amount of such
Borrowing Excess in the Collection Account;
(iv) if, pursuant to a Borrower Notice, the Borrower
has requested to make an Optional Repayment of Advances on such
Business Day, the Borrower shall deposit cash into the Collection
Account in an amount equal to such Optional Repayment Amount;
(v) if on such Business Day the Borrower is
required to make other payments under this Agreement not previously
retained out of Collections (including Indemnified Amounts not
previously paid), the Borrower shall deposit an amount equal to such
payments in the Collection Account;
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(vi) if, on the prior Business Day, the Parent made a
capital contribution of a Rejected Amount pursuant to the Receivables
Sale Agreement, the Borrower shall deposit cash in the amount received
from the Parent for such repurchase in the Collection Account; and
(vii) the Servicer shall deposit into the Collection
Account the Outstanding Balance of any Transferred Receivable it
elects to pay pursuant to Section 7.03.
(b) If, two Business Days prior to any Settlement Date,
the Operating Agent notifies the Borrower of any Retention Account Deficiency
pursuant to Section 6.04(b), the Borrower shall deposit cash in the amount of
such deficiency into the Collection Account no later than 10:00 a.m. on such
Settlement Date.
(c) To the extent the Borrower fails to make the deposits
required under Section 6.02(a)(iii), 6.02(a)(v) or 6.02(b), then the Lender may
(but shall not be required to) fund such deficiencies (even if such funding
would exceed New Advances Available) by depositing cash in the amount of such
deficiency in the Collection Account and such funding shall be treated as new
Advances to the Borrower.
(d) On the Commitment Termination Date, the Operating
Agent shall transfer all amounts held in the Retention Account as of that date
to the Collection Account.
SECTION 6.03. Daily Disbursements From the Collection Account -
Revolving Period.
(a) No later than 12:00 noon New York City time on each
Business Day during the Revolving Period, following the transfers made in
accordance with Section 6.02, the Operating Agent shall disburse all amounts in
the Collection Account in the following priority:
(i) to the Retention Account for the account of
the Lender, the amount of any Retention Account Deficiency
deposited pursuant to Section 6.02(b) or 6.02(c);
(ii) to the Retention Account for the account of
the Lender, an amount equal to the sum of
(A) Daily Interest on Advances Outstanding
as of the previous day;
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(B) Daily Unused Facility Fees for such day;
and
(C) the Interest and Fees Shortfall for the
prior Business Day;
(iii) to the Collateral Account for the account of the
Lender (or in the case of Indemnified Amounts, for the account
of the Indemnified Party), amounts deposited into the
Collection Account pursuant to Section 6.02(a)(v) or 6.02(c);
(iv) to the Collateral Account for the account of
the Lender, as repayment of principal on Advances if, as
disclosed in the most recently submitted Borrowing Base
Certificate, there is a Borrowing Excess, by transfer of such
Borrowing Excess;
(v) if, pursuant to a Borrower Notice, the Borrower
has requested to repay an Advance on such date, the amount of
such requested repayment to the Collateral Account for the
account of the Lender, as repayment of principal on such
Advance; and
(vi) to an account previously designated by the
Borrower and authorized by the Operating Agent, the balance,
if any.
(b) After completion of the disbursements specified in
Section 6.03(a), the Operating Agent shall notify the Borrower of any remaining
Borrowing Excess, and the Borrower shall deposit the amount of such remaining
Borrowing Excess in the Collection Account by 10:00 a.m. on the following
Business Day.
SECTION 6.04. Disbursements From the Retention Account - Settlement
Date Procedures - Revolving Period.
(a) No later than 1:00 p.m. on each Settlement Date
during the Revolving Period, the amounts held in the Retention Account shall be
disbursed or retained by the Operating Agent in the following priority:
(i) to the Collateral Account for the account of
the Lender (or, if applicable, any Indemnified Party), in an
amount equal to:
(A) accrued and unpaid Interest to the end of
the preceding Settlement Period;
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(B) all Unused Facility Fees accrued and unpaid
to the end of the preceding Settlement Period;
(C) all Additional Amounts incurred and payable
to any Affected Party through the end of the
preceding Settlement Period;
(D) all other amounts accrued and payable under
this Agreement other than principal payments on
Advances (including Indemnified Amounts incurred and
payable to any Indemnified Party) through the end of
the preceding Settlement Period; and
(E) if there is a Borrowing Excess, to the extent
not covered in Section 6.03, an amount equal to such
excess, in reduction of Advances Outstanding;
(ii) to an account previously designated by the
Servicer and authorized by the Operating Agent on behalf of
the Borrower, in an amount equal to the Servicer's accrued and
unpaid Servicing Fee to the end of the preceding Settlement
Period;
(iii) retained in the Retention Account, the
Accrued Monthly Interest and Unused Facility Fees as of that
date;
(iv) to the extent that the balance in the
Retention Account exceeds the amount to be retained under
Sections 6.04(a)(iii), that excess, if so designated by the
Borrower, to the Collateral Account to repay Advances
Outstanding; and
(v) to the extent that the balance in the Retention
Account exceeds the amount to be retained or disbursed under
Section 6.04(a)(iii) or (iv), that excess to an account
previously designated by the Borrower and authorized by the
Operating Agent.
(b) Two Business Days prior to each Settlement Date, the
Operating Agent shall determine and notify the Borrower of any Retention
Account Deficiency for the preceding Settlement Period, and the Borrower shall
deposit cash in the amount of such Retention Account Deficiency to the
Collection Account pursuant to Section 6.02(b).
SECTION 6.05. Liquidation Settlement Procedures.
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On each Business Day on and after the Commitment Termination
Date, the Collateral Agent shall transfer all amounts from the Collection
Account in the following priority:
(a) if an Event of Servicer Termination has occurred
and a Successor Servicer has been appointed, to the Successor Servicer
in an amount equal to its accrued and unpaid Successor Servicing Fees;
(b) to the Collateral Account for the account of the
Lender, in an amount equal to:
(i) accrued and unpaid Interest through and
including such date;
(ii) all accrued and unpaid Unused Facility Fees;
(iii) all Additional Amounts incurred and payable
to any Affected Party;
(iv) all Indemnified Amounts incurred and payable
to any Indemnified Party; and
(v) the principal of all Current Advances
Outstanding; and
(c) if an Event of Servicer Termination has occurred and a
Successor Servicer has been appointed, to the Successor Servicer in an
amount equal to its accrued and unpaid Successor Servicing Expenses.
(d) if an Event of Servicer Termination has not
occurred, to the Servicer in an amount equal to its accrued and unpaid
Servicing Fee.
SECTION 6.06 Notification by Operating Agent. The Operating Agent
shall notify the Borrower, the Lender, the Collateral Agent and the Servicer of
the determinations and disbursements made pursuant to Sections 6.03, 6.04, 6.05
and Section 6.08.
SECTION 6.07. Investment of Accounts. During the Revolving Period,
to the extent there are uninvested amounts deposited in the Collection Account
or the Retention Account, the Operating Agent shall invest all such amounts in
Permitted Investments selected by the Operating Agent that mature no later than
the immediately succeeding Business Day, in the case of the Collection Account,
and the immediately succeeding Settlement Date, in the case of the Retention
Account. On or after the
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Commitment Termination Date, any investment of such amounts shall be solely at
the discretion of the Operating Agent subject to the restrictions described
above.
SECTION 6.08. Termination Procedures. (a) On the earlier of (i) the
first Business Day after the Commitment Termination Date on which current
Advances Outstanding have been reduced to zero or (ii) the Final Maturity Date,
if the payments required to be made pursuant to Sections 6.05(a), (b) and (c)
have not been made in full, the Borrower shall immediately deposit into the
Collection Account an amount sufficient to make such payments in full.
(b) On the first Business Day after the Commitment
Termination Date on which the payments required pursuant to Subsections
6.05(a),(b) and (c) have been made in full, all amounts held in the Collection
Account and the Retention Account, if any, shall be disbursed to the Borrower
and all security interests of the Lender and the Collateral Agent in all
Transferred Receivables owned by the Borrower shall be released by the Lender
and the Collateral Agent. Such disbursement shall constitute the final payment
to which the Borrower is entitled pursuant to the terms of this Agreement.
ARTICLE VII
APPOINTMENT OF THE SERVICER
SECTION 7.01. Appointment of the Servicer. The Borrower hereby
appoints the Servicer as its agent to service the Transferred Receivables and
enforce its respective rights and interests in and under each Transferred
Receivable and each related Contract and to serve in such capacity until the
termination of its responsibilities pursuant to Sections 7.10, 9.02 or 11.01.
The Servicer hereby agrees to perform the duties and obligations with respect
thereto set forth herein. The Servicer may, with the prior consent of the
Borrower, the Lender, the Operating Agent, and the Collateral Agent subcontract
with a Sub-Servicer for collection, servicing or administration of the
Transferred Receivables, provided, that (a) the Servicer shall remain liable
for the performance of the duties and obligations of the Sub-Servicer pursuant
to the terms hereof, and (b) any Sub-Servicing Agreement that may be entered
into and any other transactions or services relating to the Transferred
Receivables involving a Sub-Servicer shall be deemed to be between the
Sub-Servicer and the Servicer alone and the Borrower, the Lender, Operating
Agent and the Collateral Agent shall not be deemed parties thereto and shall
have no obligations, duties or liabilities with respect to the Sub-Servicer.
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SECTION 7.02. Duties and Responsibilities of the Servicer.
(a) The Servicer shall conduct the servicing,
administration and collection of the Transferred Receivables and shall take, or
cause to be taken, all such actions as may be necessary or advisable to
service, administer and collect each Transferred Receivable from time to time.
(b) The duties of the Servicer shall include, without
limitation:
(i) preparation and submission of claims to, and
post-billing liaison with, Obligors on Transferred Receivables;
(ii) arranging for the direct remittance of all
Collections with respect to each Transferred Receivable to the
Lockboxes or the Lockbox Accounts;
(iii) maintaining all necessary Servicing Records
with respect to the Transferred Receivables and providing such reports
to the Lender, the Operating Agent and the Collateral Agent in respect
of the servicing of the Transferred Receivables (including information
relating to its performance under this Agreement) as may be required
hereunder or as the Lender, the Operating Agent or the Collateral
Agent may reasonably request;
(iv) maintaining and implementing administrative
and operating procedures (including, without limitation, an ability to
recreate Servicing Records evidencing the Transferred Receivables in
the event of the destruction of the originals thereof) and keeping and
maintaining all documents, books, records and other information
reasonably necessary or advisable for the collection of the
Transferred Receivables (including, without limitation, records
adequate to permit the identification of each new Transferred
Receivable and all Collections of and adjustments to each existing
Transferred Receivable);
(v) promptly delivering to the Operating Agent
or the Collateral Agent, from time to time, such information and
Servicing Records (including information relating to its performance
under this Agreement) as the Operating Agent or the Collateral Agent
may from time to time reasonably request;
(vi) identifying each Transferred Receivable
clearly and unambiguously in its Servicing Records to
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reflect that such Transferred Receivable is owned by the Borrower and
pledged to the Collateral Agent;
(vii) complying in all respects with the Credit and
Collection Policies in regard to each Transferred Receivable and the
related Contracts;
(viii) complying in all material respects with all
applicable laws, rules, regulations and orders with respect to it, its
business and properties and all Transferred Receivables, related
Contracts and Collections with respect thereto;
(ix) preserving and maintaining its corporate
existence, rights, franchises and privileges in the jurisdiction of
its incorporation, and qualifying and remaining qualified in good
standing as a foreign corporation and qualifying to and remaining
authorized to perform obligations as Servicer (including enforcement
of collection of Transferred Receivables on behalf of the Lender and
the Collateral Agent) in each jurisdiction where the failure to
preserve and maintain such existence, rights, franchises, privileges
and qualification would materially adversely affect (A) the rights or
interests of the Lender and the Collateral Agent in the Transferred
Receivables, (B) the collectibility of any Transferred Receivable, (C)
the ability of the Servicer to perform its obligations hereunder, or
(D) the ability of the Parent to perform its obligations under this
Agreement or under the Contracts;
(x) immediately notifying the Lender, the Operating
Agent and the Collateral Agent of the occurrence of a Termination
Event (including, without limitation, a material adverse change in the
financial condition of the Parent) or an Incipient Event; and
(xi) notifying the Lender, the Operating Agent and the
Collateral Agent of any action, suit, proceeding, dispute, offset
deduction, defense or counterclaim that is or may be asserted by an
Obligor with respect to any Transferred Receivable.
(c) The Lender, the Operating Agent and the Collateral
Agent shall not have any obligation or liability with respect to any
Transferred Receivables or related Contracts, nor shall any of them be
obligated to perform any of the obligations of the Servicer hereunder.
SECTION 7.03. Authorization of the Servicer. Each of the Borrower
and the Lender hereby authorizes the Servicer (including
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any successor thereto) to take any and all reasonable steps in its name and on
its behalf necessary or desirable and not inconsistent with the pledge of the
Transferred Receivables to the Lender and the Collateral Agent, in the
determination of the Servicer, to collect all amounts due under any and all
Transferred Receivables, including, without limitation, endorsing any of their
names on checks and other instruments representing Collections, executing and
delivering any and all instruments of satisfaction or cancellation, or of
partial or full release or discharge, and all other comparable instruments,
with respect to the Transferred Receivables and, after the delinquency of any
Transferred Receivable and to the extent permitted under and in compliance with
applicable law and regulations, to commence proceedings with respect to
enforcing payment of such Transferred Receivables and the related Contracts,
and adjusting, settling or compromising the account or payment thereof, to the
same extent as the Parent could have done if it had continued to own such
Receivable. The Parent, the Borrower and the Lender shall furnish the Servicer
(and any successors thereto) with any powers of attorney and other documents
necessary or appropriate to enable the Servicer to carry out its servicing and
administrative duties hereunder, and shall cooperate with the Servicer to the
fullest extent in order to ensure the collectibility of the Transferred
Receivables. Notwithstanding anything to the contrary contained herein, the
Lender, the Collateral Agent and the Operating Agent shall have the absolute
and unlimited right to direct the Servicer (whether the Servicer is the Parent
or otherwise) to commence or settle any legal action to enforce collection of
any Transferred Receivable or to foreclose upon, repossess or take any other
action which the Collateral Agent or the Operating Agent deems necessary or
advisable with respect thereto; provided, that the Servicer may, rather than
commencing such action or taking other enforcement action, at its option elect
to pay the Borrower the Outstanding Balance of such Transferred Receivable. In
no event shall the Servicer be entitled to make the Lender, the Collateral
Agent or the Operating Agent a party to any litigation without such party's
express prior written consent, or to make the Borrower a party to any
litigation without the Operating Agent's consent.
SECTION 7.04. Servicing Fees. As compensation for its servicing
activities hereunder and as reimbursement for its expenses in connection
therewith, the Servicer shall be entitled to receive the Servicing Fees in the
manner set forth in Sections 6.04 and 6.05, payable monthly in arrears on each
Settlement Date with respect to the preceding Settlement Period. The Servicer
shall be required to pay for all expenses incurred by the Servicer in
connection with its activities hereunder (including any payments to
accountants, counsel or any other Person) and
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shall not be entitled to any payment therefor other than the Servicing Fees.
SECTION 7.05. Negative Covenants of the Servicer. The Servicer shall
not, without the written consent of the Operating Agent and the Collateral
Agent:
(a) sell, assign (by operation of law or otherwise) or
otherwise dispose of, or create or suffer to exist any Adverse Claim upon or
with respect to (and any such purported disposition shall be null and void),
any Transferred Receivable or related Contract with respect thereto, or upon or
with respect to the Lockbox Account, the Lockboxes, the Collection Account, the
Retention Account or any other account to which any Collections of any
Receivable are deposited, or assign any right to receive income in respect
thereof;
(b) extend, amend or otherwise modify the terms of any
Transferred Receivable (other than adjusting, settling or compromising the
account or payment of a Transferred Receivable pursuant to Section 7.03), or
amend, modify or waive any term or condition of any Contract related thereto;
(c) make any material change in the character of its
business;
(d) make any change in its instructions to Obligors to
make payments to the Lockbox Accounts or Lockboxes;
(e) nor permit any of its Subsidiaries to, directly or
indirectly, by operation of law or otherwise, merge or consolidate with,
acquire all or substantially all of the assets or capital stock of, or
otherwise combine with, any Person, except that any wholly-owned Subsidiary,
other than the Borrower, may merge or consolidate with or into the Parent
(provided the Parent is the surviving corporation) or with or into another
wholly-owned Subsidiary; or
(f) make any change to its corporate name or use any
tradenames, fictitious names, assumed names or "doing business as" names (other
than as set forth in Schedule 7), unless the Lender, the Operating Agent and
the Collateral Agent are notified in advance of any such name change or use.
SECTION 7.06. Financial Covenants. The Servicer shall comply with
the financial covenants set forth in Schedule 9.
SECTION 7.07. Reporting. During the term of this Agreement, the
Servicer shall furnish to the Collateral Agent, the Operating Agent and the
Lender:
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(a) as soon as available and in any event within 90 days
after the end of each fiscal year of the Servicer a copy of the consolidated
financial statement of the Servicer and its consolidated Subsidiaries as of the
end of such year and the related consolidated statements of income and retained
earnings, and of cash flow, of the Servicer and its consolidated Subsidiaries
for such year, in each case reported on by a firm of nationally recognized
independent public accountants;
(b) on or before the 45th day after each fiscal quarter,
an Officers' Certificate stating, as to each signer thereof, that (i) a review
of the activities of the Servicer during the preceding calendar quarter and of
its performance under this Agreement has been made under such officer's
supervision, (ii) to the best of such officer's knowledge, based on such
review, the Servicer has fulfilled all its obligations under this Agreement
throughout such quarter, or, if there has been a default in the fulfillment of
any such obligation, specifying each such default known to such officer and the
nature and status thereof; (iii) the Servicer has complied with the covenants
set forth in Sections 7.05 and 7.06 and (iv) the representations and warranties
of the Servicer in Section 4.03 are true and correct as if made on the date of
such Officers' Certificate;
(c) promptly after the sending or filing thereof, copies
of all reports which the Servicer sends to any of its security holders, public
filings with any Governmental Authority and the annual report of the Servicer;
and
(d) such other periodic, special or other reports or
information as the Lender, the Operating Agent or the Collateral Agent may
reasonably require.
SECTION 7.08. Annual Statement as to Compliance. The Servicer shall
deliver to the Collateral Agent, the Operating Agent and the Lender on or
before March 31 of each year an Officers' Certificate stating, as to each
signer thereof, that (a) a review of the activities of the Servicer during the
preceding calendar year and of its performance under this Agreement has been
made under such officer's supervision, (b) to the best of such officer's
knowledge, based on such review, the Servicer has fulfilled all its obligations
under this Agreement throughout such year or, if there has been a default in
the fulfillment of any such obligation, specifying each such default known to
such officer and the nature and status thereof, (c) the Servicer has complied
with the covenants set forth in Sections 7.05 and 7.06, and (d) the
representations and warranties of the Servicer in Section 4.03 are true and
correct as if made on the date of such Officers' Certificate.
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SECTION 7.09. Annual Independent Public Accountants' Servicing and
Compliance Report. On or before March 31 of each year, the Servicer at its
expense shall cause a firm of nationally recognized independent public
accountants to furnish a statement (on which the Lender, the Operating Agent
and the Collateral Agent may rely) to the Collateral Agent and the Operating
Agent to the effect that such firm has applied the agreed upon procedures
referred to in Section 5.02(e) with respect to (a) the Servicer's compliance
with the Servicer's financial covenants in this Agreement and (b) the
Servicer's substantial compliance with this Agreement (including the Credit and
Collection Policies), and that, on the basis of such procedures, such firm has
reported that there are no exceptions, except as set forth in such statement.
SECTION 7.10. Termination of Servicer. With the prior written
consent of the Lender, the Operating Agent and the Collateral Agent, the
Borrower may terminate the Servicer.
ARTICLE VIII
GRANT OF SECURITY INTERESTS
SECTION 8.01. Borrower's Grant of Security Interest. As security for
the prompt payment or performance in full when due, whether at stated maturity,
by acceleration or otherwise, of all Borrower Secured Obligations, the Borrower
hereby assigns and pledges to the Lender, and grants to the Lender a security
interest in and lien upon, all of the Borrower's right, title and interest in
and to the following, in each case whether now or hereafter existing or in
which Borrower now has or hereafter acquires an interest and wherever the same
may be located (collectively, the "Borrower Collateral"):
(a) all Transferred Receivables, Contracts and
Collections;
(b) the Receivables Sale Agreement, the Lockbox
Agreement and all other Related Documents now or hereafter in effect
relating to the purchase, servicing or processing of Transferred
Receivables (the "Borrower Assigned Agreements"), including (i) all
rights of the Borrower to receive moneys due and to become due under
or pursuant to the Borrower Assigned Agreements, (ii) all rights of
the Borrower to receive proceeds of any insurance, indemnity, warranty
or guaranty with respect to the Borrower Assigned Agreements, (iii)
claims of the Borrower for damages arising out of or for breach of or
default under the Borrower Assigned Agreements, and (iv) the right of
the Borrower to
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amend, waive or terminate the Borrower Assigned Agreements, to perform
under the Borrower Assigned Agreements and to compel performance and
otherwise exercise all remedies under the Borrower Assigned
Agreements;
(c) all of the following (the "Borrower Account
Collateral"):
(i) the Lockbox Account, the Lockboxes and
all funds held in the Lockbox Account and the Lockboxes and
all certificates and instruments, if any, from time to time
representing or evidencing the Lockbox Account, the Lockboxes
or such funds,
(ii) the Collection Account and the Retention
Account, all funds held in the Collection Account and the
Retention Account, and all certificates and instruments, if
any, from time to time representing or evidencing the
Collection Account, the Retention Account or such funds,
(iii) all Investments from time to time of
amounts in the Collection Account, the Lockbox Account and the
Retention Account, and all certificates and instruments, if
any, from time to time representing or evidencing such
Investments,
(iv) all notes, certificates of deposit and
other instruments from time to time delivered to or otherwise
possessed by the Lender or any assignee or agent on behalf of
the Lender in substitution for or in addition to any of the
then existing Borrower Account Collateral, and
(v) all interest, dividends, cash,
instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in
exchange for any and all of the then existing Borrower Account
Collateral;
(d) all additional property that may from time to
time hereafter be granted and pledged by the Borrower or by anyone on
its behalf, including the deposit with the Lender, the Operating Agent
or the Collateral Agent of additional moneys by the Borrower;
(e) all Proceeds, accessions, substitutions,
rents and profits of any and all of the foregoing Borrower Collateral
(including Proceeds that constitute property of the types described in
Sections 8.01(a) through (d) above)
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and, to the extent not otherwise included, all payments under
insurance (whether or not the Lender or any assignee or agent on
behalf of the Lender is the loss payee thereof) or any indemnity,
warranty or guaranty payable by reason of loss or damage to or
otherwise with respect to any of the foregoing Borrower Collateral;
and
(f) the note or notes evidencing any RFC Loans
and all of the Borrower's rights to repayment thereunder.
SECTION 8.02. Lender's Assignment and Grant of Security Interest. As
security for the prompt payment or performance in full when due, whether at
stated maturity, by acceleration or otherwise, of all Lender Secured
Obligations, the Lender hereby assigns and pledges to the Collateral Agent for
its benefit and for the benefit of the CP Holders, the Depositary, the
Liquidity Lenders, the Liquidity Agent, the Letter of Credit Agent and the
Letter of Credit Providers (collectively, the "Lender Secured Parties"), and
grants to the Collateral Agent for its benefit and for the benefit of the
Lender Secured Parties, a security interest and lien in all of its right, title
and interest in and to the following, whether now owned or hereafter acquired
(collectively, the "Lender Collateral"):
(a) the Borrower Collateral;
(b) this Agreement and the Note (the "Lender
Assigned Agreements"), including (i) all rights of the Lender to
receive moneys due and to become due under or pursuant to the Lender
Assigned Agreements, (ii) all rights of the Lender to receive proceeds
of any insurance, indemnity, warranty or guaranty with respect to the
Lender Assigned Agreements, (iii) all claims of the Lender for damages
arising out of or for breach of or default under the Lender Assigned
Agreements, and (iv) all rights of the Lender to amend, waive or
terminate the Lender Assigned Agreements, to perform under and to
compel performance of the Lender Assigned Agreements and otherwise to
exercise all remedies under the Lender Assigned Agreements;
(c) all of the following (the "Lender Account
Collateral"):
(i) the Retention Account, all funds held in
the Retention Account and all certificates and instruments, if
any, from time to time representing or evidencing the
Retention Account or such funds,
(ii) all Investments from time to time of
amounts in the Retention Account, and all certificates
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and instruments, if any, from time to time representing or
evidencing such Investments,
(iii) all notes, certificates of deposit and
other instruments from time to time delivered to or otherwise
possessed by the Collateral Agent or any assignee or agent on
behalf of the Collateral Agent in substitution for or in
addition to any of the then existing Lender Account
Collateral, and
(iv) all interest, dividends, cash,
instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in
exchange for any and all of the then existing Lender Account
Collateral;
(d) all additional property that may from time to
time hereafter be granted and pledged by the Lender or by anyone on
its behalf, including the deposit with the Collateral Agent of
additional moneys by the Lender; and
(e) all Proceeds of any and all of the foregoing
Lender Collateral (including Proceeds that constitute property of the
types described in Sections 8.02(a) through (d) above) and, to the
extent not otherwise included, all payments under insurance (whether
or not the Collateral Agent is the loss payee thereof) or any
indemnity, warranty or guaranty payable by reason of loss or damage to
or otherwise with respect to any of the foregoing Lender Collateral.
SECTION 8.03. Consent to Assignment. Each of the Borrower, the
Parent and the Servicer acknowledges and consents to the security interest over
the Borrower Collateral created pursuant to Section 8.02 and acknowledges the
rights of the Collateral Agent and the covenants given by the Lender in favor
of the Collateral Agent set forth in this Agreement, and further acknowledges
and consents that the Collateral Agent shall be entitled to enforce the
provisions of the Borrower Assigned Agreements or the Lender Assigned
Agreements to which the Borrower, the Parent or the Servicer is a party and
shall be entitled to all the rights and remedies of the Lender thereunder. In
addition, each of the Borrower, the Parent and the Servicer hereby authorizes
the Collateral Agent to rely on the representations and warranties of the
Borrower, the Parent or the Servicer, respectively, contained in the Borrower
Assigned Agreements and the Lender Assigned Agreements to which the Borrower,
the Parent or the Servicer is a party and in any other certificates and
documents furnished by the Borrower, the Parent or the Servicer to any party in
connection therewith.
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SECTION 8.04. Delivery of Collateral. All certificates or
instruments representing or evidencing Collateral shall be delivered to and
held by or on behalf of the Collateral Agent pursuant to this Agreement, and
shall be in suitable form for transfer by delivery or shall be accompanied by
duly executed instruments of transfer or assignment in blank, all in form and
substance satisfactory to the Collateral Agent, and to the extent not
constituting an assignment shall be irrevocable powers of attorney coupled with
an interest. The Collateral Agent shall have the right, at any time in its
discretion and without notice to the Borrower or the Lender, to transfer to or
to register in the name of the Collateral Agent or any of its nominees any or
all of the Collateral. In addition, the Collateral Agent shall have the right
at any time to exchange certificates or instruments representing or evidencing
Collateral for certificates or instruments of smaller or larger denominations.
SECTION 8.05. Borrower Remains Liable. Notwithstanding anything in
this Agreement, (a) each of the Borrower and the Parent shall remain liable
under the Transferred Receivables, Contracts, Borrower Assigned Agreements and
other agreements included in the Collateral to perform all of its duties and
obligations thereunder to the same extent as if this Agreement had not been
executed, (b) the exercise by the Lender or the Collateral Agent of any of its
rights under this Agreement shall not release the Borrower or the Servicer from
any of their respective duties or obligations under the Transferred
Receivables, Contracts, Borrower Assigned Agreements or other agreements
included in the Collateral, (c) the Lender, the Collateral Agent and the Lender
Secured Parties shall not have any obligation or liability under the
Transferred Receivables, Contracts, Borrower Assigned Agreements or other
agreements included in the Collateral by reason of this Agreement, and (d)
neither the Collateral Agent nor any of the other Secured Parties shall be
obligated to perform any of the obligations or duties of the Borrower or the
Servicer under the Transferred Receivables, Contracts, Borrower Assigned
Agreements or other agreements included in the Collateral or to take any action
to collect or enforce any claim for payment assigned under this Agreement.
SECTION 8.06. Covenants of the Borrower and Servicer Regarding the
Collateral.
(a) Offices and Records. The Borrower shall keep its
principal place of business and chief executive offices and the office where it
keeps its Records at the respective locations specified in Section 4.01(m) or,
upon 30 days prior written notice to the Collateral Agent, at such other
location in a jurisdiction where all action required by Section 8.06(f) shall
have been taken with respect to the Collateral. The Borrower and
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the Servicer shall, for not less than three years or for such longer period as
may be required by law, from the date on which any Transferred Receivable
arose, maintain the Records with respect to each Transferred Receivable,
including records of all payments received, credits granted and merchandise
returned. The Borrower and the Servicer will, upon five Business Days notice,
permit representatives of the Operating Agent and the Collateral Agent at any
time and from time to time during normal business hours, and at such times
outside of normal business hours as the Operating Agent and the Collateral
Agent shall reasonably request, (i) to inspect and make copies of and abstracts
from such records, and (ii) to visit the properties of the Borrower or the
Servicer utilized in connection with the collection, processing or servicing of
the Transferred Receivables for the purpose of examining such Records, and to
discuss matters relating to the Receivables or the Borrower's or Servicer's
performance under this Agreement with any officer or employee of the Borrower
or Servicer having knowledge of such matters. In connection therewith, the
Operating Agent or the Collateral Agent may institute procedures to permit it
to confirm the Obligor balances in respect of any Transferred Receivables.
Each of the Borrower and the Servicer agrees to render to the Operating Agent
and the Collateral Agent such clerical and other assistance as may be
reasonably requested with regard to the foregoing. If a Termination Event
shall have occurred and be continuing, promptly upon request therefor, the
Borrower or the Servicer shall deliver to the Collateral Agent records
reflecting activity through the close of business on the immediately preceding
Business Day.
(b) Collection of Transferred Receivables. Except as
otherwise provided in this Section 8.06(b), the Borrower shall continue to
collect or cause to be collected, at its own expense, all amounts due or to
become due to the Borrower under the Transferred Receivables, the Borrower
Assigned Agreements and any other Borrower Collateral. In connection with such
collections, the Borrower may take (and at the Collateral Agent's direction
after a Termination Event has occurred and is continuing, shall take) such
action as the Borrower or the Collateral Agent may deem necessary or advisable
to enforce collection of the Transferred Receivables and the Borrower Assigned
Agreements; provided, however, that the Collateral Agent may, at any time that
a Termination Event has occurred and is continuing, notify any Obligor with
respect to any Transferred Receivables or obligors under the Borrower Assigned
Agreements of the assignment of such Transferred Receivables or Borrower
Assigned Agreements, as the case may be, to the Collateral Agent and direct
that payments of all amounts due or to become due to the Borrower thereunder be
made directly to the Collateral Agent or any servicer, collection agent or
lockbox or other account designated by the Collateral Agent and, upon such
notification and at the
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expense of the Borrower, the Collateral Agent may enforce collection of any
such Transferred Receivables or the Borrower Assigned Agreements and adjust,
settle or compromise the amount or payment thereof.
(c) Maintain Records of Transferred Receivables. The
Borrower and the Servicer shall, at their own cost and expense, maintain (or
cause to be maintained) satisfactory and complete records of the Collateral,
including a record of all payments received and all credits granted with
respect to the Collateral and all other dealings with the Collateral. Each of
the Borrower and the Servicer will mark (or cause to be marked) conspicuously
with a legend, in form and substance satisfactory to the Collateral Agent, its
records, computer tapes, computer disks and credit files pertaining to the
Collateral and the Related Contracts, and its file cabinets or other storage
facilities where it maintains information pertaining to the Collateral, to
evidence this Agreement and the assignment and security interest granted by
this Article VIII. Upon the occurrence and during the continuation of a
Termination Event, the Borrower and Servicer shall (i) deliver and turn over
(or cause to be delivered and turned over) to the Collateral Agent or to its
representatives, or at the option of the Collateral Agent shall provide the
Collateral Agent or its representatives with access to, at any time on demand
of the Collateral Agent, all of the Borrower's and Servicer's facilities,
personnel, books and records pertaining to the Collateral, including all
Records, and (ii) allow the Collateral Agent to occupy the premises of the
Borrower and the Servicer where such books, records and Records are maintained,
and utilize such premises, the equipment thereon and any personnel of the
Borrower or the Servicer that the Collateral Agent may wish to employ for such
reasonable period of time as is necessary to administer, service and collect
the Transferred Receivables.
(d) Performance of Borrower Assigned Agreements. The
Borrower shall (i) perform and observe all the terms and provisions of the
Borrower Assigned Agreements to be performed or observed by it, maintain the
Borrower Assigned Agreements in full force and effect, enforce the Borrower
Assigned Agreements in accordance with their terms and take all such action to
such end as may be from time to time requested by the Collateral Agent, and
(ii) upon request of the Operating Agent or the Collateral Agent, make to any
other party to the Borrower Assigned Agreements such demands and requests for
information and reports or for action as the Borrower is entitled to make under
the Borrower Assigned Agreements.
(e) Notice of Adverse Claim. Each of the Borrower and the
Servicer shall advise the Lender, the Operating Agent and the
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Collateral Agent promptly, in reasonable detail, (i) of any Adverse Claim known
to it made or asserted against any of the Borrower Collateral, and (ii) of the
occurrence of any event which would have a material adverse effect on the
aggregate value of the Borrower Collateral or on the assignments and security
interests granted by the Borrower in this Agreement.
(f) Further Assurances; Financing Statements. (i) Each of
the Borrower and the Servicer severally agrees that at any time and from time
to time, at its expense, it shall promptly execute and deliver all further
instruments and documents, and take all further action, that may be necessary
or desirable or that the Lender, the Operating Agent or the Collateral Agent
may request to perfect and protect the assignments and security interests
granted or purported to be granted by this Article VIII or to enable the
Lender, the Operating Agent or the Collateral Agent to exercise and enforce its
rights and remedies under this Agreement with respect to any Collateral.
Without limiting the generality of the foregoing, the Borrower shall execute
and file such financing or continuation statements, or amendments thereto, and
such other instruments or notices as may be necessary or desirable or that the
Lender, the Operating Agent or the Collateral Agent may request to protect and
preserve the assignments and security interests granted by this Agreement.
(ii) The Borrower and the Lender hereby severally authorize
the Collateral Agent to file one or more financing or continuation statements,
and amendments thereto, relating to all or any part of the Collateral without
the signature of the Borrower or the Lender where permitted by law. A carbon,
photographic or other reproduction of this Agreement or any financing statement
covering the Collateral or any part thereof shall be sufficient as a financing
statement where permitted by law. The Collateral Agent will promptly send to
the Borrower any financing or continuation statements thereto which it files
without the signature of the Borrower and will promptly send to the Lender any
financing or continuation statements thereto which it files without the
signature of the Lender except, in the case of filings of copies of this
Agreement as financing statements, the Collateral Agent will promptly send the
Borrower or the Lender, as the case may be, the filing or recordation
information with respect thereto.
(iii) Each of the Borrower and the Servicer shall furnish to
the Collateral Agent from time to time such statements and schedules further
identifying and describing the Collateral and such other reports in connection
with the Collateral as the Collateral Agent may reasonably request, all in
reasonable detail.
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ARTICLE IX
TERMINATION EVENTS
SECTION 9.01. Termination Events. If any of the following events
(each, a "Termination Event") shall occur and be continuing:
(a) (i) the Borrower shall default in the payment of any
amount owed by it hereunder and such failure shall remain unremedied for one
Business Day, or (ii) the Borrower shall fail to perform or observe any other
term, covenant or agreement contained in this Agreement and such failure shall
remain unremedied for five Business Days, in each case after written notice
thereof shall have been given by the Operating Agent or the Collateral Agent to
the Borrower; or
(b) a default shall have occurred (and any applicable
grace period shall have elapsed) and be continuing under any instrument or
agreement evidencing, securing or providing for the issuance of Debt of the
Parent or the Borrower and such default shall not have been waived by the
non-defaulting party; or
(c) the Parent or the Borrower shall generally not pay
any of its respective Debts as such Debts become due, or shall admit in writing
its inability to pay its Debts generally, or shall make a general assignment
for the benefit of creditors, or any proceeding shall be instituted by or
against the Parent or the Borrower seeking to adjudicate it a bankrupt or
insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief or composition of it or any of its Debts under
any law relating to bankruptcy, insolvency, reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment of a
receiver, trustee, custodian or other similar official for it or for any
substantial part of its property, or any of the actions sought in such
proceeding (including, without limitation, the entry of an order for relief
against, or the appointment of a receiver, trustee, custodian or other similar
official for, it or for any substantial part of its property) shall occur, or
the Parent or the Borrower shall take any corporate action to authorize any of
the actions set forth in this subsection; or
(d) judgments or orders for the payment of money (other
than such judgments or orders in respect of which adequate insurance is
maintained for the payment thereof) in excess of $500,000 in the aggregate
against the Parent or any of its Affiliates shall remain unpaid, unstayed on
appeal, undischarged, unbonded or undismissed for a period of 30 days or more;
or
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(e) a judgment or order for the payment of money is
rendered against the Borrower in excess of $50,000 shall remain unpaid,
unstayed on appeal, undischarged, unbonded or undismissed for a period of 30
days or more; or
(f) there is, in the judgment of the Operating Agent, a
material breach of any of the representations and warranties of the Borrower
set forth in Section 4.01 or 4.02; or
(g) any Governmental Authority (including the Internal
Revenue Service or the Pension Benefit Guaranty Corporation) shall file notice
of a lien with regard to any assets of the Parent (other than a lien (i)
limited by its terms to assets other than Receivables and (ii) not materially
adversely affecting the financial condition of the Parent or the Parent's
ability to perform as Servicer hereunder); or
(h) any Governmental Authority (including the Internal
Revenue Service or the Pension Benefit Guaranty Corporation) shall file notice
of a lien with regard to any of the assets of the Borrower (other than a lien
(i) limited by its terms to assets other than Receivables and (ii) not
materially adversely affecting the financial condition of the Borrower); or
(i) as of any Settlement Date, the Default Ratio is
greater than 14% (or 11% at the discretion of the Operating Agent); or
(j) as of any Settlement Date, the Delinquency Ratio is
greater than 6%; or
(k) there shall occur a failure of the Parent to
contribute capital in the Rejected Amount as required under the Receivables
Sale Agreement, or if the Receivables Sale Agreement shall for any reason cease
to evidence the transfer to the Borrower (or its assignees or transferees) of
the legal and equitable title to, and ownership of, the Transferred
Receivables; or
(l) the Lockbox Agreement or the Receivables Sale
Agreement shall have been amended or terminated without the written consent of
the Lender, the Operating Agent and the Collateral Agent; or
(m) an Event of Servicer Termination shall have occurred;
or
(n) the Operating Agent shall have determined that the
funding of Receivables hereunder is impracticable due to a drop in or
withdrawal of any of the ratings assigned to the Lender's
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Commercial Paper, the imposition of Additional Amounts, restrictions on the
amount of Transferred Receivables it may finance, the permanent inability of
the Lender to issue Commercial Paper or for any other reason whatsoever; or
(o) the Lender and the Collateral Agent cease to hold a
first priority, perfected security interest in the Transferred Receivables; or
(p) a Borrower LOC Draw has occurred; or
(q) the obligations of the Liquidity Lenders to make
Liquidity Loans, the proceeds of which may be used by the Lender to make
Advances to the Borrower, have terminated; or
(r) as of any Settlement Date, the Past Due Receivables Ratio
is greater than 14%;
then and in any such event, the Commitment Termination Date shall automatically
occur, without demand, protest or any notice of any kind, all of which are
hereby expressly waived by the Borrower.
SECTION 9.02. Events of Servicer Termination. If any of the
following events (each, an "Event of Servicer Termination") shall occur and be
continuing:
(a) the Servicer shall fail to perform or observe any
term, covenant or agreement contained in this Agreement and such failure shall
remain unremedied for five Business Days after written notice thereof shall
have been given by the Lender, the Collateral Agent or the Operating Agent to
the Servicer; or
(b) a default shall have occurred (and any applicable
grace period shall have elapsed) and be continuing under any instrument or
agreement evidencing, securing or providing for the issuance of Debt of the
Servicer and such default shall not have been waived by the non-defaulting
party; or
(c) the Servicer shall generally not pay any of its Debts
as such Debts become due, or shall admit in writing its inability to pay its
Debts generally, or shall make a general assignment for the benefit of
creditors, or any proceeding shall be instituted by or against the Servicer
seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief or
composition of it or any of its Debts under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, trustee, custodian or other
similar official for it or for any substantial part of its property, or any of
the actions
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sought in such proceeding (including, without limitation, the entry of an order
for relief against, or the appointment of a receiver, trustee, custodian or
other similar official for, it or for any substantial part of its property)
shall occur, or the Servicer shall take any corporate action to authorize any
of the actions set forth in this subsection; or
(d) judgments or orders for the payment of money (other
than such judgments or orders in respect of which adequate insurance is
maintained for the payment thereof) in excess of $500,000 in the aggregate
against the Servicer or any of its Affiliates shall remain unpaid, unstayed on
appeal, undischarged, unbonded or undismissed for a period of 30 days or more;
or
(e) there is a material breach of any of the
representations and warranties of the Servicer set forth in Section 4.03; or
(f) a Termination Event shall have occurred or this
Agreement shall have been terminated; or
(g) the Servicer shall assign or purport to assign any of
its obligations hereunder or under the Receivables Sale Agreement without the
prior written consent of the Operating Agent and the Collateral Agent;
then, and in any such event, the Operating Agent shall (on behalf of the
Borrower), at the request, or may with the consent, of the Lender or the
Collateral Agent, by delivery of a Servicer Termination Notice to the Borrower
and the Servicer, terminate the servicing responsibilities of the Servicer
hereunder, without demand, protest or further notice of any kind, all of which
are hereby waived by the Servicer. Upon any such declaration, all authority
and power of the Servicer under this Agreement and the Receivables Sale
Agreement shall pass to and be vested in the Successor Servicer appointed
pursuant to Section 11.02; provided, that notwithstanding anything to the
contrary herein, the Borrower agrees that it will continue to follow the
procedures set forth in Section 7.02(b)(ii) with respect to Collections on
Transferred Receivables.
ARTICLE X
REMEDIES
SECTION 10.01. Actions Upon Termination Event. If any Termination
Event shall have occurred and be continuing and the Operating Agent shall have
declared the Commitment Termination Date to have occurred or the Commitment
Termination Date shall
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have been deemed to have occurred pursuant to Section 9.01, then the Collateral
Agent may exercise in respect of the Borrower Collateral, in addition to any
and all other rights and remedies otherwise available to it, all of the rights
and remedies of a secured party upon default under the UCC (such rights and
remedies to be cumulative and nonexclusive), and, in addition, may take the
following remedial actions:
(a) The Collateral Agent may, without notice to the
Borrower except as required by law and at any time or from time to time,
charge, set-off and otherwise apply all or any part of the Borrower Secured
Obligations against amounts payable to the Borrower from the Collection
Account, the Lockbox Account, the Retention Account or any part of such
accounts in accordance with the priorities required by Section 10.03.
(b) The Collateral Agent may solicit and accept bids for
and sell the Borrower Collateral or any part of the Borrower Collateral in one
or more parcels at public or private sale, at any exchange, broker's board or
at any of the Lender's, Operating Agent's or Collateral Agent's offices or
elsewhere, for cash, on credit or for future delivery, and upon such other
terms as the Collateral Agent may deem commercially reasonable. The Collateral
Agent agrees to give at least ten Business Days' notice to the Borrower of the
time and place of any public sale or the time after which any private sale is
to be made shall constitute reasonable notification. The Collateral Agent
shall not be obligated to make any sale of Borrower Collateral regardless of
notice of sale having been given. The Collateral Agent may adjourn any public
or private sale from time to time by announcement at the time and place fixed
for such sale, and such sale may, without further notice, be made at the time
and place to which it was so adjourned. Every such sale shall operate to
divest all right, title, interest, claim and demand whatsoever of the Borrower
in and to the Borrower Collateral so sold, and shall be a perpetual bar, both
at law and in equity, against the Borrower, the Parent, any Person claiming the
Borrower Collateral sold through the Borrower, the Parent and their respective
successors or assigns.
(c) Upon the completion of any sale under Section 10.01(b),
the Borrower or the Servicer will deliver or cause to be delivered all of the
Borrower Collateral sold to the purchaser or purchasers at such sale on the
date of sale, or within a reasonable time thereafter if it shall be impractical
to make immediate delivery, but in any event full title and right of possession
to such property shall pass to such purchaser or purchasers forthwith upon the
completion of such sale. Nevertheless, if so requested by the Collateral Agent
or by any purchaser, the Borrower shall confirm any such sale or transfer
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by executing and delivering to such purchaser all proper instruments of
conveyance and transfer and releases as may be designated in any such request.
(d) At any public sale under Section 10.01(b), the Lender,
any holder of the Note (the identity of which, if other than the Collateral
Agent, shall be disclosed by the Borrower to each Rating Agency), the
Collateral Agent or any Lender Secured Party may bid for and purchase the
property offered for sale and, upon compliance with the terms of sale, may
hold, retain and dispose of such property without further accountability
therefor. Any purchaser at any sale under Section 10.01(b) shall be entitled,
for the purpose of making payment for the property purchased, to use the Note
in order that there may be credited thereon the sums payable out of the net
proceeds of such sale to any such holder, and thereupon such purchaser shall be
credited on account of such purchase price with the portion of such net
proceeds that shall be applicable to the payment of, and shall have been
credited upon, the Note so used.
(e) The Collateral Agent may exercise at the Borrower's
expense any and all rights and remedies of the Borrower under or in connection
with the Borrower Assigned Agreements or the other Borrower Collateral,
including any and all rights of the Borrower to demand or otherwise require
payment of any amount under, or performance of any provisions of, the Borrower
Assigned Agreements.
SECTION 10.02. Receipt of Payments in Trust. All payments received
by the Borrower, the Parent, the Servicer, the Lender or the Operating Agent
under or in connection with the Borrower Collateral shall be received in trust
for the benefit of the Collateral Agent, shall be segregated from other funds
of such party and shall be forthwith paid over to the Collateral Agent in the
same form as so received (with any necessary endorsement).
SECTION 10.03. Application of Proceeds. Any cash held by or on
behalf of the Collateral Agent as Borrower Collateral, whether from Transferred
Receivables or otherwise, and all cash proceeds received by the Collateral
Agent in respect of any sale of, collection from or other realization upon all
or any part of the Borrower Collateral, shall be applied as set forth in
Section 6.05. Any surplus of such cash or cash proceeds held by or on behalf
of the Collateral Agent shall be disposed of in accordance with Section 6.08.
SECTION 10.04. Exercise of Remedies. No failure or delay on the part
of the Collateral Agent to exercise any right, power or privilege under this
Agreement and no course of dealing between the Borrower, the Servicer, the
Lender or the Operating
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Agent, on the one hand, and the Collateral Agent, on the other hand, shall
operate as a waiver of such right, power or privilege, nor shall any single or
partial exercise of any right, power or privilege under this Agreement preclude
any other or further exercise of such right, power or privilege or the exercise
of any other right, power or privilege. The rights and remedies expressly
provided in this Agreement are cumulative and not exclusive of any rights or
remedies which the Collateral Agent or the Secured Parties would otherwise have
pursuant to law or equity. No notice to or demand on any party in any case
shall entitle such party to any other or further notice or demand in similar or
other circumstances, or constitute a waiver of the right of the other party to
any other or further action in any circumstances without notice or demand.
SECTION 10.05. Severability of Remedies. The invalidity of any
remedy in any jurisdiction shall not invalidate such remedy in any other
jurisdiction. The invalidity or unenforceability of the remedies herein
provided in any jurisdiction shall not in any way affect the right of the
enforcement in such jurisdiction or elsewhere of any of the other remedies
herein provided.
SECTION 10.06. Waiver of Appraisement. Each of the Borrower and the
Servicer agrees, to the full extent that it may lawfully so agree, that neither
it nor anyone claiming through or under it will set up, claim or seek to take
advantage of any appraisement, valuation, stay, extension or redemption law now
or hereafter in force in any locality where any Borrower Collateral may be
situated in order to prevent, hinder or delay the enforcement or foreclosure of
this Agreement, or the absolute sale of any of the Borrower Collateral or any
part thereof, or the final and absolute putting into possession thereof,
immediately after such sale, of the purchasers thereof, and each of the
Borrower and the Servicer, for itself and all who may at any time claim through
or under it, hereby waives, to the full extent that it may be lawful so to do,
the benefit of all such laws to the extent they may prevent, hinder or delay
the enforcement or foreclosure of the Agreement, and any and all right to have
any of the properties or assets comprising the Borrower Collateral marshalled
upon any such sale, and agrees that the Collateral Agent or any court having
jurisdiction to foreclose the security interests granted in this Agreement may
sell the Borrower Collateral as an entirety or in such parcels as the
Collateral Agent or such court may determine.
SECTION 10.07. Power of Attorney. Each of the Borrower and the
Servicer hereby irrevocably appoints the Collateral Agent its true and lawful
attorney (with full power of substitution) in its name, place and stead and at
its expense, in connection with the enforcement of the rights and remedies
provided for in this
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Article X, including with the following powers: (a) to give any necessary
receipts or acquittance for amounts collected or received hereunder, (b) to
make all necessary transfers of the Borrower Collateral in connection with any
sale or other disposition made pursuant hereto, (c) to execute and deliver for
value all necessary or appropriate bills of sale, assignments and other
instruments in connection with any such sale or other disposition, the Borrower
and the Servicer hereby ratifying and confirming all that such attorney (or any
substitute) shall lawfully do hereunder and pursuant hereto, and (d) to sign
any agreements, orders or other documents in connection with or pursuant to
this Agreement and any Related Document. Nevertheless, if so requested by the
Collateral Agent or a purchaser of Borrower Collateral, the Borrower shall
ratify and confirm any such sale or other disposition by executing and
delivering to the Collateral Agent or such purchaser all proper bills of sale,
assignments, releases and other instruments as may be designated in any such
request.
SECTION 10.08. Continuing Security Interest. This Agreement shall
create a continuing security interest in the Collateral until the satisfaction
of Section 6.08 of this Agreement.
ARTICLE XI
SUCCESSOR SERVICER
SECTION 11.01. Servicer Not to Resign. The Servicer shall not
resign from the obligations and duties hereby imposed on it except upon
determination that (a) the performance of its duties hereunder has become
impermissible under applicable law, and (b) there is no reasonable action which
the Servicer could take to make the performance of its duties hereunder
permissible under applicable law. Any such determination permitting the
resignation of the Servicer shall be evidenced as to clause (a) above by an
opinion of counsel to such effect delivered to the Lender, the Collateral Agent
and the Operating Agent. No such resignation shall become effective until a
successor servicer shall have assumed the responsibilities and obligations of
the Servicer in accordance with Section 11.02.
SECTION 11.02. Appointment of the Successor Servicer. In connection
with the termination of the Servicer's responsibilities under this Agreement
pursuant to Section 9.02 or 11.01, the Operating Agent shall (a) succeed to and
assume all of the Servicer's responsibilities, rights, duties and obligations
as Servicer (but not in any other capacity, including specifically not its
obligations under Section 12.02) under this
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Agreement (and except that the Operating Agent makes no representations and
warranties pursuant to Section 4.03), or (b) appoint a successor servicer to
the Servicer which shall be acceptable to the Collateral Agent and shall
succeed to all rights and assume all of the responsibilities, duties and
liabilities of the Servicer under this Agreement (the Operating Agent, in such
capacity, or such successor servicer being referred to as the "Successor
Servicer"); provided, that the Successor Servicer shall have no responsibility
for any actions of the Servicer prior to the date of its appointment as
Successor Servicer. In selecting a Successor Servicer, the Operating Agent may
obtain bids from any potential Successor Servicer and may agree to any bid it
deems appropriate. The Successor Servicer shall accept its appointment by
executing, acknowledging and delivering to the Operating Agent and the
Collateral Agent an instrument in form and substance acceptable to the
Operating Agent and the Collateral Agent.
SECTION 11.03. Duties of the Servicer. At any time following the
appointment of a Successor Servicer:
(a) The Servicer agrees that it will terminate its
activities as Servicer hereunder in a manner acceptable to the Collateral Agent
so as to facilitate the transfer of servicing to the Successor Servicer
including, without limitation, timely delivery (i) to the Collateral Agent of
any funds that were required to be remitted to the Collateral Agent for deposit
in the Lockbox Account, and (ii) to the Successor Servicer, at a place selected
by the Successor Servicer, of all Servicing Records and other information with
respect to the Transferred Receivables. The Servicer shall account for all
funds and shall execute and deliver such instruments and do such other things
as may reasonably be required to more fully and definitely vest and confirm in
the Successor Servicer all rights, powers, duties, responsibilities,
obligations and liabilities of the Servicer.
(b) The Servicer shall terminate each Sub-Servicing
Agreement that may have been entered into and the Successor Servicer shall not
be deemed to have assumed any of the Servicer's interest therein or to have
replaced the Servicer as a party to any such Sub-Servicing Agreement.
SECTION 11.04. Effect of Termination or Resignation. Any termination
or resignation of the Servicer under this Agreement shall not affect any claims
that the Borrower, the Collateral Agent, the Lender or the Operating Agent may
have against the Servicer for events or actions taken or not taken by the
Servicer arising prior to any such termination or resignation.
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ARTICLE XII
INDEMNIFICATION
SECTION 12.01. Indemnities by the Borrower. (a) Without limiting
any other rights that the Collateral Agent, the Lender, the Operating Agent,
the Liquidity Agent, any Liquidity Lender, the Letter of Credit Agent or any
Letter of Credit Provider or any director, officer, employee or agent of such
party (each an "Indemnified Party") may have hereunder or under applicable law,
the Borrower hereby agrees to indemnify each Indemnified Party from and against
any and all claims, losses, liabilities, obligations, damages, penalties,
actions, judgments, suits, and related costs and expenses of any nature
whatsoever, including reasonable attorneys' fees and disbursements (all of the
foregoing being collectively referred to as "Indemnified Amounts"), which may
be imposed on, incurred by or asserted against an Indemnified Party in any way
arising out of or relating to (i) any breach of the Borrower's obligations
under this Agreement, (ii) the financing or the pledge of the Transferred
Receivables, or (iii) any Receivable or any Contract, excluding, however,
Indemnified Amounts to the extent resulting from gross negligence or willful
misconduct on the part of such Indemnified Party. Without limiting or being
limited by the foregoing, the Borrower shall pay on demand to each Indemnified
Party any and all amounts necessary to indemnify such Indemnified Party from
and against any and all Indemnified Amounts relating to or resulting from:
(A) reliance on any representation or warranty made
or deemed made by the Borrower (or any of its officers) under
or in connection with this Agreement, any Related Document or
any report or other information delivered by the Borrower
pursuant hereto which shall have been incorrect in any
material respect when made or deemed made or delivered;
(B) the failure by the Borrower to comply with any
term, provision or covenant contained in this Agreement, any
Related Document or any agreement executed by it in connection
with this Agreement or with any applicable law, rule or
regulation with respect to any Transferred Receivable or its
related Contract, or the nonconformity of any Transferred
Receivable or its related Contract with any such applicable
law, rule or regulation; or
(C) the failure to vest and maintain vested in the
Borrower legal and equitable title to and ownership of the
Receivables which are, or are purported to be,
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Transferred Receivables, together with all Collections
in respect thereof, free and clear of any Adverse Claim
(except as permitted hereunder) whether existing at the
time of the purchase of such Receivable or at any time
thereafter, and to maintain or transfer to the Collateral
Agent a first priority, perfected security interest therein.
(b) Any Indemnified Amounts subject to the
indemnification provisions of this Section 12.01 not paid in accordance with
Article VI, to the extent that funds are available therefor in accordance with
the provisions of Article VI, shall be paid to the Indemnified Party within
five Business Days following demand therefor.
SECTION 12.02. Indemnities by the Servicer. (a) Without limiting
any other rights that an Indemnified Party may have hereunder or under
applicable law, the Servicer hereby agrees to indemnify each Indemnified Party
from and against any and all Indemnified Amounts which may be imposed on,
incurred by or asserted against an Indemnified Party in any way arising out of
or relating to any breach of the Servicer's obligations under this Agreement,
excluding, however, Indemnified Amounts to the extent resulting from gross
negligence or willful misconduct on the part of such Indemnified Party.
Without limiting or being limited by the foregoing, the Servicer shall pay on
demand to each Indemnified Party any and all amounts necessary to indemnify
such Indemnified Party from and against any and all Indemnified Amounts
relating to or resulting from:
(i) reliance on any representation or warranty
made or deemed made by the Servicer (or any of its officers)
under or in connection with this Agreement, any Related
Document or any report or other information delivered by the
Servicer pursuant hereto which shall have been incorrect in
any material respect when made or deemed made or delivered; or
(ii) the failure by the Servicer to comply with
any term, provision or covenant contained in this Agreement,
any Related Document or any agreement executed by it in
connection with this Agreement or with any applicable law,
rule or regulation with respect to any Transferred Receivable
or its related Contract, or the imposition of any Adverse
Claim (except as permitted hereunder) with respect to a
Transferred Receivable as a result of the Servicer's actions
hereunder.
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(b) Any Indemnified Amounts subject to the
indemnification provisions of this Section shall be paid to the Indemnified
Party within five Business Days following demand therefor.
ARTICLE XIII
OPERATING AGENT
SECTION 13.01. Authorization and Action. The Operating Agent may
take such action and carry out such functions under this Agreement as are
delegated to it by the terms hereof, pursuant to the Operating Agent Agreement
or otherwise contemplated hereby or thereby or are reasonably incidental
thereto; provided, that the duties of the Operating Agent shall be determined
solely by the express provisions of this Agreement and other than the duties
set forth in Section 13.02 any permissive right of the Operating Agent
hereunder shall not be construed as a duty.
SECTION 13.02. Reliance, etc. None of the Operating Agent, any
Affiliate thereof nor any of their respective directors, officers, agents or
employees will be liable for any action taken or omitted to be taken by any of
them under or in connection with this Agreement, the Program Documents or the
Related Documents, except when caused by their own gross negligence or willful
misconduct. Without limiting the generality of the foregoing, and
notwithstanding any term or provision hereof to the contrary, the Borrower, the
Servicer and the Lender hereby acknowledge and agree that the Operating Agent
(a) acts as agent hereunder for the Lender and has no duties or obligations to,
will incur no liabilities or obligations to, and does not act as an agent in
any capacity for, the Borrower or the Parent, (b) may consult with legal
counsel, independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good faith
by it in accordance with the advice of such counsel, accountants or experts,
(c) makes no warranty or representation hereunder and shall not be responsible
for any statements, warranties or representations made in or in connection with
this Agreement, the Program Documents or the Related Documents, (d) shall not
have any duty to ascertain or to inquire as to the performance or observance of
any of the terms, covenants or conditions of this Agreement, the Program
Documents or Related Documents on the part of the Borrower, the Servicer or the
Lender or to inspect the property (including the books and records) of the
Borrower, the Servicer or the Lender, (e) shall not be responsible to the
Borrower, the Servicer or the Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any
other instrument or document furnished pursuant
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hereto (including the Related Documents), (f) shall incur no liability under or
in respect of this Agreement, the Program Documents or the Related Documents by
acting upon any notice or communication (including a communication by
telephone), consent, certificate or other instrument or writing believed by it
to be genuine and signed, sent or communicated by the proper party or parties
and (g) shall not be bound to make any investigation into the facts or matters
stated in any notice or other communication hereunder and may rely on the
accuracy of such facts or matters.
SECTION 13.03. GE Capital and Affiliates. GE Capital and its
Affiliates may generally engage in any kind of business with the Borrower, the
Parent, the Servicer, the Lender or any Obligor, any of their respective
Affiliates and any Person who may do business with or own securities of such
parties or any of their respective Affiliates, all as if GE Capital were not
the Operating Agent, and without the duty to account therefor to the Borrower,
the Parent, the Servicer, the Lender or any other Person.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.01. Notices, Etc. All notices and other communications
provided for hereunder, unless otherwise stated herein, shall be in writing and
mailed or telecommunicated, or delivered as to each party hereto, at its
address set forth on Schedule 6 or at such other address as shall be designated
by such party in a written notice to the other parties hereto. All such
notices and communications shall not be effective until received by the party
to whom such notice or communication is addressed.
SECTION 14.02. Binding Effect; Assignability. This Agreement shall
be binding upon and inure to the benefit of the Borrower, the Servicer, the
Lender, the Operating Agent and their respective permitted successors and
assigns. Neither the Borrower nor the Servicer may assign any of their rights
and obligations hereunder or any interest herein without the prior written
consent of the Lender, the Collateral Agent and the Operating Agent and unless
each Rating Agency shall have confirmed in writing to the Lender and the
Operating Agent that such assignment would not result in a withdrawal or
reduction of the then current rating by such Rating Agency of the Commercial
Paper. The Lender, the Collateral Agent and the Operating Agent may, with the
consent of the Borrower, the Parent and the Servicer (which consent shall not
be reasonably withheld), assign any of their respective rights and obligations
hereunder or
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interest herein to any Person. Any such assignee may further assign at any
time its rights and obligations hereunder or interests herein without the
consent of the Borrower, the Parent or the Servicer. This Agreement shall
create and constitute the continuing obligations of the parties hereto in
accordance with its terms, and shall remain in full force and effect until its
termination; provided, that the rights and remedies with respect to any breach
of any representation and warranty made by the Borrower or the Servicer
pursuant to Article IV and the indemnification and payment provisions of
Article XII shall be continuing and shall survive any termination of this
Agreement.
SECTION 14.03. Costs, Expenses and Taxes. (a) In addition to the
rights of indemnification under Article XII hereof, the Borrower agrees to pay
upon demand all reasonable costs and expenses and taxes (excluding income and
similar taxes) incurred by the Lender, the Operating Agent or the Collateral
Agent ("Other Costs") in connection with the administration (including periodic
auditing, Rating Agency requirements, modification and amendment) of this
Agreement, the Related Documents and the other documents to be delivered
hereunder, including, without limitation, the reasonable fees and out-of-pocket
expenses of counsel for the Lender, the Operating Agent and the Collateral
Agent with respect thereto and with respect to advising the Lender, the
Operating Agent or the Collateral Agent as to its rights and remedies under
this Agreement, the Related Documents and the other agreements executed
pursuant hereto. The Borrower further agrees to pay within five Business Days
after demand all reasonable costs, counsel fees and expenses in connection with
the enforcement (whether through negotiation, legal proceedings or otherwise)
of this Agreement, the Related Documents and the other agreements and documents
to be delivered hereunder, including, without limitation, reasonable counsel
fees and expenses in connection with the enforcement of rights under this
Section 14.03 in accordance with the provisions of Article VI to the extent
that funds are available therefor in accordance therewith.
(b) In addition, the Borrower shall pay on demand any and
all stamp, sales, excise and other taxes and fees payable or determined to be
payable in connection with the execution, delivery, filing or recording of this
Agreement, the Related Documents or the other agreements and documents to be
delivered hereunder, and agrees to indemnify and save each Indemnified Party
from and against any and all liabilities with respect to or resulting from any
delay in paying or omission to pay such taxes and fees.
(c) In the event that the Operating Agent determines that
any of the costs referred to in paragraphs (a) or (b) above
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were in any part incurred on behalf of, or are attributable to the actions of,
borrowers or sellers under Other Funding Agreements, the Borrower shall have no
liability hereunder in excess of the Borrower's Share of such costs.
(d) If the Borrower or the Servicer fails to perform any
agreement or obligation contained herein, the Lender, the Collateral Agent or
the Operating Agent may (but shall not be required to) itself perform, or cause
performance of, such agreement or obligation, and the expenses of such party
incurred in connection therewith shall be payable by the party which has failed
to so perform upon the such party's demand therefor.
SECTION 14.04. Confidentiality. Except to the extent otherwise
required by applicable law or unless the Operating Agent shall otherwise
consent in writing, the Borrower and the Servicer agree to maintain the
confidentiality of this Agreement (and all drafts hereof and documents
ancillary thereto) in its communications with third parties and otherwise and
not to disclose, deliver or otherwise make available to any third party (other
than its directors, officers, employees, accountants or counsel) the original
or any copy of all or any part of this Agreement (or any draft hereof and
documents ancillary thereto).
Each of the Lender and the Operating Agent agrees to exercise
reasonable efforts to keep any non-public information delivered or made
available to it pursuant to this Agreement or any other Related Document, which
the Parent has identified in writing as confidential information, confidential
from any Person other than officers, employees, agents, designees or
representatives of such Lender or the Operating Agent who are or are expected
to become engaged in evaluating, approving, structuring or administering this
Agreement or any of the other Related Documents or any other transaction
contemplated hereby or thereby; provided, that nothing herein shall prevent the
Operating Agent or the Lender from disclosing such information (i) to any bona
fide prospective or actual Liquidity Lender or Letter of Credit Provider that
has agreed in writing to comply with this Section 14.04; (ii) to any of its
Affiliates to the extent any such Affiliate requires such information in the
ordinary course of the Operating Agent's or the Lender's credit committee or
asset management procedures; (iii) to any rating agency, or any of the
Operating Agent's or the Lender's legal counsel, accountants, and other
professional advisors; (iv) as required or requested by any Governmental
Authority or representative thereof or pursuant to legal process; or (v) as
required in connection with the exercise of any remedy under this Agreement or
any of the other Related Documents; provided, further, that a determination by
the Operating Agent or the Lender as to the application of the circumstances
described in
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the foregoing clauses (i) through (v) will be conclusive if made in good faith.
SECTION 14.05. No Proceedings. The Borrower and the Servicer each
hereby agree that it will not, directly or indirectly, institute, or cause to
be instituted, against the Lender any proceeding seeking to adjudicate it a
bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief or composition of it or any of its
Debts under any law relating to bankruptcy, insolvency, reorganization or
relief of debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee, custodian or other similar official for it
or for any substantial part of its property, or any of the actions sought in
such proceeding (including, without limitation, the entry of an order for
relief against, or the appointment of a receiver, trustee, custodian or other
similar official for, it or for any substantial part of its property) so long
as there shall not have elapsed one year plus one day since the latest maturing
Commercial Paper have been paid in full in cash.
SECTION 14.06. Amendments; Waivers; Consents. No modification,
amendment or waiver of or with respect to any provision of this Agreement, the
Related Documents or any other agreements, instruments and documents delivered
pursuant hereto, nor consent to any departure by the Borrower or the Servicer
from any of the terms or conditions thereof, shall be effective unless (i) it
shall be in writing and signed by each of the parties hereto and (ii) each
Rating Agency shall have confirmed in writing to the Lender and the Operating
Agent that such modification, termination or waiver would not result in a
withdrawal or reduction of the then current rating by such Rating Agency of the
Commercial Paper. Any waiver or consent shall be effective only in the
specific instance and for the purpose for which given. No consent to or demand
on the Borrower, the Parent or the Servicer in any case shall, in itself,
entitle it to any other consent or further notice or demand in similar or other
circumstances. This Agreement, the Related Documents and the documents
referred to therein embody the entire agreement among the Borrower, the Lender,
the Operating Agent, the Collateral Agent and the Servicer and supersede all
prior agreements and understandings relating to the subject hereof.
SECTION 14.07. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY
TRIAL. (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS PROVISIONS) OF THE
STATE OF NEW YORK.
(b) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY SUBMITS
TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE
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STATE OF NEW YORK AND THE UNITED STATES DISTRICT COURT LOCATED IN THE BOROUGH
OF MANHATTAN IN NEW YORK CITY, AND EACH WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY
REGISTERED MAIL DIRECTED TO THE ADDRESSES SET FORTH ON THE ATTACHED SCHEDULE 6,
AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE DAYS AFTER THE SAME
SHALL HAVE BEEN DEPOSITED IN THE U.S. MAILS, POSTAGE PREPAID. EACH OF THE
PARTIES TO THIS AGREEMENT HEREBY WAIVES ANY OBJECTION BASED ON FORUM NON
CONVENIENS AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER, AND
CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY THE COURT. NOTHING IN THIS SECTION 14.07(b) SHALL AFFECT THE
RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR AFFECT EITHER'S RIGHT TO BRING ANY ACTION OR PROCEEDING IN
THE COURTS OF ANY OTHER JURISDICTION.
(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY WAIVES ANY
RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO OR IN
CONNECTION WITH THIS AGREEMENT. INSTEAD, ANY DISPUTE RESOLVED IN COURT WILL BE
RESOLVED IN A BENCH TRIAL WITHOUT A JURY.
SECTION 14.08. Execution in Counterparts; Severability. This
Agreement may be executed by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
when taken together shall constitute one and the same agreement. In case any
provision in or obligation under this Agreement shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining provisions or obligations, or of such provision or obligation
shall not in any way be affected or impaired thereby in such jurisdiction and
the validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation shall not be impaired thereby
in any other jurisdiction.
SECTION 14.09. Descriptive Headings. The descriptive headings of the
various sections of this Agreement are inserted for convenience of reference
only and shall not be deemed to affect the meaning or construction of any of
the provisions hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed on the date first above written.
CARLISLE PLASTICS FUNDING
CORPORATION
By /s/ Marie B. Humbert
---------------------------------
Title: Vice President and
Assistant Secretary
REDWOOD RECEIVABLES CORPORATION
By /s/ James E. O'Connell, III
---------------------------------
Title: Vice President
CARLISLE PLASTICS, INC., as
Servicer
By /s/ Rajiv P. Bhatt
---------------------------------
Title: Chief Financial Officer
GENERAL ELECTRIC CAPITAL
CORPORATION, as Operating Agent
and Collateral Agent
By /s/ N. A. Gaudino
--------------------------------
Title:
<PAGE> 100
Schedule 4
INCOME DISCOUNT AMOUNT
<TABLE>
<S> <C> <C>
Income Discount Amount = Borrowing Rate Discount Amount
+ Interest Volatility Discount Amount
+ Unused Facility Fee Discount Amount
+ Servicing Fee Discount Amount
#1 Borrowing Rate = Advances Outstanding
Discount Amount x Borrowing Rate
x Liquidation Term Factor
#2 Interest Volatility = Advances Outstanding
Discount Amount x Interest Volatility Percentage
x Liquidation Term Factor
#3 Unused Facility Fee = Unused Facility Amount
Discount Amount x Unused Facility Fee Rate
x Liquidation Term Factor
#4 Servicing Fee = Outstanding Balances of Transferred
Discount Amount Receivables
x Servicing Fee Rate
x Liquidation Term Factor
#5 Borrowing Rate = Daily Borrowing Rate (see
Schedule 5)
x 360
#6 Liquidation Term = Expected Liquidation Period/360
Factor
#7 Unused Facility = Maximum Facility Commitment
Amount - Advances Outstanding
</TABLE>
"Expected Liquidation Period" means the weighted average days
required to liquidate the Receivables, as determined by the Operating Agent
from time to time (as of the Effective Date the Expected Liquidation Period
will be 49 days).
"Interest Volatility Percentage" means the maximum increase in
interest rates anticipated over the expected liquidation term, as determined
from time to time by the Collateral Agent (as of the Effective Date the
Interest Volatility Percentage will be 0.1%.)
<PAGE> 101
EXAMPLE
Income Discount Amount =
Borrowing Rate Discount Amount = $320,539
+ Interest Volatility Discount Amount = 4,083
+ Unused Facility Fee Discount Amount = 1,701
+ Servicing Fee Discount Amount = 68,055
-------
$394,378
Input Table: =======
A. Outstanding Balance of Transferred Receivables: $50,000,000
B. Maximum Facility Commitment: $35,000,000
C. Advances Outstanding: $30,000,000
D. Daily Borrowing Rate (Post-Termination): 0.0218%
E. Unused Facility Fee Rate: 0.25%
F. Servicing Fee Rate: 1.0%
G. Average expected term to liquidate Receivables: 49 days
H. Interest Volatility Percentage: 0.1%
Calculations:
- - ------------
#7. Unused Facility = B - C
Amount = $35,000,000 - $30,000,000
= $5,000,000
----------
#6. Liquidation Term = G / 360
Factor = 49 / 360
= 0.13611
-------
#5. Borrowing Rate = D x 360
= 0.0218% x 360
= 7.85%
-----
#1. Borrowing Rate = C x #5 x #6
Discount Amount = $30,000,000 x 7.85% x 0.13611
= $320,539
--------
#2. Interest Volatility = C x H x #6
Discount Amount = $30,000,000 x 0.1% x 0.13611
= $4,083
------
#3. Unused Facility Fee = #7 x E x #6
Discount Amount = $5,000,000 x 0.25% x 0.13611
= $1,701
------
#4. Servicing Fee = A x F x #6
Discount Amount = $50,000,000 x 1.0% x 0.13611
= $70,932
-------
<PAGE> 102
Schedule 5
DETERMINATION OF "INTEREST"
MONTHLY INTEREST EXPENSE = SUM OF DAILY INTEREST FOR THE
SETTLEMENT PERIOD
#1) Daily Interest = Daily Borrowing Rate x Advances
Outstanding on the preceding day
#2) Daily Borrowing Rate:
(a) Pre-Termination = Daily Interest Rate + Daily Margin
(b) Post-Termination = Daily Interest Rate + Daily Margin
+ Daily Default Margin
#3) Daily Interest Rate = [Daily Weighted Average CP Rate +
Daily Weighted Average Liquidity
Rate] x [Redwood Funding Factor +
Borrower LOC Funding Factor]
#4) Daily Weighted Average
CP Rate = [Commercial Paper Outstanding/
Senior Debt] x [Dollar Weighted
Average CP Rate/360 Days]
#5) Daily Weighted Average
Liquidity Rate = [Liquidity Loans Outstanding/Senior
Debt] x [Liquidity Rate/360 Days]
#6) Liquidity Interest
Rate = Greater of NYCHA Prime or 30 Day CP
#7) Daily Margin and
Daily Default Margin = 1.25% per annum and 3.00% per
annum/360 Days, respectively
#8) Senior Debt = CP Outstanding + Liquidity Loans
Outstanding
#9) Redwood Funding Factor = Redwood Debt/Total Fundings
Outstanding
#10) Borrower LOC Funding
Factor = Borrower LOC Deposits/Advances
Outstanding
<PAGE> 103
Definitions
"Borrower LOC Deposits" means an amount equal to the product
of (a) LOC Deposits and (b)(i) the portion of LOC Draws Outstanding allocated
to the RFC, divided by (ii) LOC Draws Outstanding.
"LOC Deposits" means, for any day, the amount, if any, of
proceeds from LOC Draws Outstanding not used to pay maturing Commercial Paper
or Liquidity Loans and remaining in the Collateral Account at the end of such
day.
"LOC Draws" means any payments made to the Lender in respect
of the Letter of Credit.
"LOC Draws Outstanding" means, at any time, (a) any LOC Draws
to date minus (b) any payments made prior to such time to reimburse such LOC
Draws.
"Redwood Debt" means, at any time, the aggregate of the
Lender's Senior Debt, plus LOC Draws Outstanding, minus LOC Deposits for all
RFCs at such time.
"RFC" means a receivables financing company that either sells
receivables to the Lender or makes borrowings from the Lender secured by
receivables.
"Total Fundings Outstanding" means, at any time, the aggregate
of the Advances Outstanding at such time, plus the amounts corresponding to
Advances Outstanding for all other RFCs that have pledged receivables as
collateral for such advances from the Lender at such time, plus the purchases
outstanding for all other RFCs as sellers of receivables to the Lender at such
time.
<PAGE> 104
Schedule 9
SERVICER FINANCIAL COVENANTS
1. The Servicer shall not breach or fail to comply with any of
the following financial covenants, each of which shall be calculated in
accordance with GAAP, consistently applied:
(a) Maximum Capital Expenditures. The Servicer and its
Subsidiaries on a consolidated basis shall not make Capital Expenditures during
the following periods that exceed in the aggregate the amounts set forth
opposite each of such periods:
Aggregate Maximum
Period Covered Capital Expenditures
-------------- --------------------
January 1, 1994 through $16,000,000
December 31, 1994
January 1, 1995 through $12,000,000
December 31, 1995
January 1, 1996 through $12,000,000
December 31, 1996
January 1, 1997 through $12,000,000
December, 31, 1997
(b) Minimum Net Worth. The Servicer and its Subsidiaries on
a consolidated basis shall have, as at each of the dates set forth below (and
shall maintain at all times during the period from and including such date
through but excluding the next date immediately succeeding such date), Net
Worth equal to or greater than the amount set forth opposite such date:
Date Minimum Net Worth
---- -----------------
June 30, 1994 The higher of $66,000,000
or Equity as of April 30,
1994
September 30, 1994 The higher of $66,000,000
or Equity as of April 30,
1994
December 31, 1994 $68,000,000
March 31, 1995 $69,400,000
June 30, 1995 $71,300,000
December 31, 1995 $75,800,000
<PAGE> 105
June 30, 1996 $78,000,000
December 31, 1996 $83,100,000
(c) Minimum Interest and Taxes Coverage Ratio. The Servicer
and its Subsidiaries on a consolidated basis shall have a ratio of (i) EBITDA
to (ii) Interest Expense and taxes (as stated in the Servicer's consolidated
statement of income), in each case measured as at each of the dates set forth
below, for each of the periods set forth opposite such dates, of not less than
the amount set forth opposite each such period and date:
Minimum Interest
and Taxes
Date Period Covered Coverage Ratio
---- -------------- --------------
June 30, 1994 July 1, 1993 through 2.2 to 1.0
June 30, 1994
September 30, 1994 October 1, 1993 through 2.2 to 1.0
September 30, 1994
December 31, 1994 January 1, 1994 through 2.2 to 1.0
December 31, 1994
March 31, 1995 April 1, 1994 through 2.1 to 1.0
March 31, 1995
June 30, 1995 July 1, 1994 through 2.1 to 1.0
June 30, 1995
September 30, 1995 October 1, 1994 through 2.1 to 1.0
September 30, 1995
December 31, 1995 January 1, 1995 through 2.1 to 1.0
December 31, 1995
March 31, 1996 April 1, 1995 through 2.1 to 1.0
March 31, 1996
June 30, 1996 July 1, 1995 through 2.1 to 1.0
June 30, 1996
September 30, 1996 October 1, 1995 through 2.1 to 1.0
September 30, 1996
December 31, 1996 January 1, 1996 through 2.1 to 1.0
December 31, 1996
2
<PAGE> 106
(d) Minimum Fixed Charges Coverage Ratio. The Servicer and
its Subsidiaries on a consolidated basis shall have a ratio of (i) EBITDA to
(ii) Fixed Charges, in each case measured as at each of the dates set forth
below, for each of the periods set forth opposite such dates, of not less than
the amount set forth opposite each such period and date:
Minimum Fixed
Charges
Date Period Covered Coverage Ratio
---- -------------- ---------------
June 30, 1994 July 1, 1993 through 1.5 to 1.0
June 30, 1994
September 30, 1994 October 1, 1993 through 1.5 to 1.0
September 30, 1994
December 31, 1994 January 1, 1994 through 1.5 to 1.0
December 31, 1994
March 31, 1995 April 1, 1994 through 1.4 to 1.0
March 31, 1995
June 30, 1995 July 1, 1994 through 1.4 to 1.0
June 1, 1995
September 30, 1995 October 1, 1994 through 1.4 to 1.0
September 30, 1995
December 31, 1995 January 1, 1995 through 1.4 to 1.0
December 31, 1995
March 31, 1996 April 1, 1995 through 1.4 to 1.0
March 31, 1996
June 30, 1996 July 1, 1995 through 1.4 to 1.0
June 30, 1996
September 30, 1996 October 1, 1995 through 1.4 to 1.0
September 30, 1996
December 31, 1996 January 1, 1996 through 1.4 to 1.0
December 31, 1996
(e) Maximum Funded Debt to Equity Ratio. The Servicer
and its Subsidiaries on a consolidated basis shall have and shall maintain at
all times from March 9, 1994 through and including March 9, 1997 a ratio of (i)
Funded Debt to (ii) Equity of not more than 3.0 to 1.0
3
<PAGE> 107
(f) For all purposes of the financial covenants set forth in
this Schedule 9, financial information for periods prior to March 9, 1994 shall
be restated on a pro forma basis as though the transactions contemplated by the
Credit Agreement had occurred at the time of such previous measurement dates.
Section 2 of this Schedule 9 sets forth certain financial information to be
used for financial covenant calculations which has been so restated on a pro
forma basis for periods prior to March 9, 1994.
2. (a) For all purposes of the financial covenants set forth in
this Schedule 9, EBITDA shall be restated on a pro forma basis to be the
following amounts during the following periods:
Period EBITDA
------ ------
July 1, 1993 through $16,520,000
September 30, 1993
October 1, 1993 through $13,778,000
December 31, 1993
January 1, 1994 through actual EBITDA for
March 31, 1994 the period
(b) For all purposes of the financial covenants set forth
in this Schedule 9, Interest Expense shall be restated on a pro forma
basis to be the following amounts during the following periods:
Period Interest Expense
------ ----------------
July 1, 1993 through $3,894,000
September 30, 1993
October 1, 1993 through $3,529,000
December 31, 1993
January 1, 1994 through $3,875,000
March 31, 1994
(c) For all purposes of the financial covenants set forth
in this Schedule 9, taxes (as stated in the Servicer's consolidated statement
of income) shall be restated on a pro forma basis to be the following amounts
during the following periods:
Period taxes
------ -----
July 1, 1993 through $2,196,000
September 30, 1993
4
<PAGE> 108
October 1, 1993 through $1,379,000
December 31, 1993
January 1, 1994 through actual taxes for
March 31, 1994 the period
(d) For all purposes of the financial covenants set forth in this
Schedule 9, debt amortization1/ shall be restated on a pro forma basis to be
the following amounts during the following periods:
Period debt amortization
------ -----------------
July 1, 1993 through $1,988,000
September 30, 1993
October 1, 1993 through $1,988,000
December 31, 1993
January 1, 1994 through $2,075,000
March 31, 1994
3. (a) Capitalized terms used in this Schedule 9 and not defined
in the Funding Agreement shall have the following respective meanings:
"Capital Expenditures" shall mean all payments for any fixed
assets or improvements, or for replacements, substitutions or additions
thereto, that have a useful life of more than one year and that are required to
be capitalized under GAAP, and, in any event, shall include Capital Lease
Obligations and all asset purchases secured by purchase money security
interests.
"Capital Lease" shall mean, with respect to any Person, any
lease of any property (whether real, personal or mixed) by such Person as
lessee that, in accordance with GAAP, either would be required to be classified
and accounted for as a capital lease on a balance sheet of such Person or
otherwise be disclosed as such in a note to such balance sheet, other than, any
such lease under which such Person is the lessor.
"Capital Lease Obligation" shall mean, with respect to any
Capital Lease, the amount of the obligation of the lessee thereunder that, in
accordance with GAAP, would appear on a balance sheet of such lessee in respect
of such Capital Lease or otherwise be disclosed in a note to such balance
sheet.
____________________
1/ Defined in the definition of Debt Service Charges to mean
"regularly scheduled payments of principal on Funded Debt".
5
<PAGE> 109
"Credit Agreement" shall mean, the Credit Agreement between
and among the Servicer, as Borrower, Poly-Tech, Inc., A&E Products (Far East)
Ltd., Plasticos Bajacal S.A. de C.V., Rhino-X Industries, Inc., A&E Korea,
Ltd., American Western Corporation and AWC Transportation Corporation, as
Co-Obligors, and General Electric Capital Corporation, as Agent and Lender.
"Debt Service Charges" shall mean, with respect to the
Servicer and its Subsidiaries on a consolidated basis, for any fiscal period of
the Servicer, the sum of (i) Interest Expense in respect of Funded Debt plus
(ii) regularly scheduled payments of principal on Funded Debt, in each case of
the Servicer and its Subsidiaries for such period.
"EBITDA" shall mean, with respect to the Servicer and its
Subsidiaries on a consolidated basis, for any fiscal period of the Servicer (i)
Net Income plus (ii) to the extent deducted in determining Net Income, Interest
Expense and taxes (as stated in the Servicer's consolidated statement of
income) plus (iii) to the extent deducted in determining Net Income,
depreciation, amortization and other similar non-cash charges minus (iv) to the
extent added in determining Net Income, extraordinary gains plus (v) to the
extent deducted in determining Net Income, extraordinary losses.
"Equity" shall mean the assets of the Servicer and its
Subsidiaries on a consolidated basis less (i) reserves applicable thereto and
(ii) the liabilities of the Servicer and its Subsidiaries on a consolidated
basis, all as determined in accordance with GAAP.
"Fixed Charges" shall mean, with respect to the Servicer and
its Subsidiaries on a consolidated basis, for any fiscal period of the
Servicer, the sum of (i) Debt Service Charges plus (ii) taxes (as stated in the
Servicer's consolidated statement of income), in each case of the Servicer for
such period.
"Funded Debt" shall mean, with respect to the Servicer and its
Subsidiaries, on a consolidated basis, all of its Indebtedness which by the
terms of the agreement governing or instrument evidencing such Indebtedness
matures more than one year from or is directly or indirectly renewable or
extendible at its option under a revolving credit or similar agreement
obligating the lender or lenders to extend credit over a period of more than
one year from the date of creation thereof, including in each instance current
maturities of long-term debt (and the current portion of long-term debt in the
last year of its term), revolving credit and short-term debt extendible beyond
one year at the option of the debtor, and shall also include,
6
<PAGE> 110
without limitation, Indebtedness arising under or in connection with any
interest rate swap agreement or arrangements, the Revolving Credit Loan, the
Letter of Credit Obligations and the other Obligations.
"GAAP" shall mean generally accepted accounting principles in
the United States of America as in effect from time to time, consistently
applied.
"Indebtedness" of any Person shall mean (i) all indebtedness
of such Person for borrowed money or for the deferred purchase price of
property or services (including reimbursement and all other obligations with
respect to surety bonds, letters of credit and bankers' acceptances, whether or
not matured, but excluding obligations to trade creditors incurred in the
ordinary course of business), (ii) all obligations evidenced by notes, bonds,
debentures or similar instruments, (iii) all indebtedness created or arising
under any conditional sale or other title retention agreement with respect to
property acquired by such Person (even though the rights and remedies of the
seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), (iv) all Capital Lease Obligations, (v)
all obligations arising under or in connection with any interest rate swap
agreement or arrangements, (vi) all Indebtedness referred to in clause (i),
(ii), (iii), (iv) or (v) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien upon or in property or other assets (including accounts and contract
rights) owned by such Person, even though such Person has not assumed or become
liable for the payment of such Indebtedness, (vii) the Obligations, and (viii)
all liabilities under Title IV of ERISA.
"Interest Expense" shall mean, for any fiscal period of the
Servicer, interest expense of the Servicer for such period in respect of Funded
Debt, excluding the amortization of capitalized debt transaction costs.
"Net Income" shall mean, with respect to the Servicer and its
Subsidiaries on a consolidated basis, for any fiscal period, the Servicer's
consolidated net income (or loss) after income and franchise taxes and shall
have the meaning given such term by GAAP; provided, that, there shall be
specifically excluded therefrom net income of any Person that is not a, direct
or indirect, wholly-owned Subsidiary of the Servicer, unless received by the
Servicer in cash.
"Net Worth" shall mean the sum of (i) the higher of
$66,000,000 or Equity as of April 30, 1994 plus (ii) Net Income
7
<PAGE> 111
since April 30, 1994 through and including the applicable measurement date.
"Revolving Credit Advance" shall have the meaning assigned to
it in Section 1.1(a) of the Credit Agreement.
"Subordinated Debt" shall mean any Indebtedness issued or
otherwise owing by the Servicer in favor of any Subsidiary or by any Subsidiary
in favor of the Servicer (a) the payment of which is subordinated to the
payment of the Obligations in form and substance satisfactory to Agent in its
sole discretion and (b) which is incurred pursuant to documentation or entry in
the financial records of the Servicer or a Subsidiary, as applicable, in form
and substance satisfactory to Agent in its sole discretion. Subordinated Debt
shall include, without limitation, Indebtedness of the Subsidiaries in favor of
the Servicer set forth on Schedule 6.3A of the Credit Agreement and any
extensions, renewals, substitutions, refinancings or replacements permitted by
Section 6.3 of the Credit Agreement and Indebtedness of the Subsidiaries in
favor of the Servicer expressly permitted by Section 6.3 of the Credit
Agreement.
"Subsidiary" shall mean, with respect to any Person, (i) any
corporation of which an aggregate of more than fifty percent (50%) of the
outstanding Stock having ordinary voting power to elect a majority of the board
of directors of such corporation (irrespective of whether, at the time, Stock
of any other class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency) is at the time,
directly or indirectly, owned legally or beneficially by such Person and/or one
or more Subsidiaries of such Person, or with respect to which any such Person
has the right to vote or designate the vote of fifty percent (50%) or more of
such Stock whether by proxy, agreement, operation of law or otherwise and (ii)
any partnership in which such Person and/or one or more Subsidiaries of such
Person shall have an interest (whether in the form of voting or participation
in profits or capital contribution) of more than fifty percent (50%) or of
which any such Person is a general partner or may exercise the powers of a
general partner. Unless otherwise expressly provided, all references in this
Schedule 9 to a "Subsidiary" shall mean a Subsidiary of the Servicer.
"Taxes" shall mean taxes, levies, imposts, duties, deductions,
Charges or withholdings of whatsoever nature, and all liabilities with respect
thereto, imposed by any domestic or foreign government or any subdivision or
taxing authority thereof.
8
<PAGE> 112
(b) Any accounting term used in this Schedule 9 shall have,
unless otherwise specifically provided in this Schedule 9, the meaning
customarily given such term in accordance with GAAP, and all financial
computations shall be computed, unless otherwise specifically provided in this
Schedule 9, in accordance with GAAP consistently applied. That certain items
or computations are explicitly modified by the phrase "in accordance with GAAP"
shall in no way be construed to limit the foregoing. In the event that any
"Accounting Changes" (as defined below) occur and such changes result in a
change in the calculation of the financial covenants, standards or terms used
in this Schedule 9 then the Servicer, parties to the Funding Agreement agree to
enter into negotiations in order to amend such provisions of this Agreement so
as to equitably reflect such Accounting Changes with the desired result that
the criteria for evaluating the Servicer's and its Subsidiaries' financial
condition shall be the same after such Accounting Changes as if such Accounting
Changes had not been made. "Accounting Changes" means (i) changes in
accounting principles required by the promulgation of any rule, regulation,
pronouncement or opinion by the Financial Accounting Standards Board of the
American Institute of Certified Public Accountants (or successor thereto or any
agency with similar functions), and (ii) changes in accounting principles
concurred in by the Servicer's certified public accountants. In the event, if
any, that the parties to the Funding Agreement shall have agreed upon the
required amendments, then after such agreement has been evidenced in writing
and the underlying Accounting Change with respect thereto has been implemented,
any reference to GAAP contained in this Schedule 9 shall, only to the extent of
such Accounting Change, refer to GAAP, consistently applied after giving effect
to the implementation of such Accounting Change. If the parties to the Funding
Agreement cannot agree upon the required amendments within thirty (30) days
following the date of implementation of any Accounting Change, then all
financial statements delivered and all calculations of financial covenants and
other standards and terms in accordance with this Schedule 9 shall be prepared,
delivered and made without regard to the underlying Accounting Change.
(c) All other undefined terms contained in this Schedule
shall, unless the context indicates otherwise, have the meanings provided for
by the Code as in effect in the State of New York to the extent the same are
used or defined therein. References to Persons include their respective
permitted successors and assigns or, in the case of a Governmental Authority,
Persons succeeding to the relevant functions of such Persons. All references
to statutes and related regulations shall include all amendments of same and
any successor or replacement statutes and regulations.
9
<PAGE> 1
Exhibit 10.26
CARLISLE PLASTICS FUNDING CORPORATION
$35,000,000 April 14, 1994
FOR VALUE RECEIVED, CARLISLE PLASTICS FUNDING CORPORATION, a
Delaware corporation (the "Borrower"), promises to pay to Redwood Receivables
Corporation (the "Lender"), or registered assigns, the principal sum of
Thirty-Five Million and no/100 DOLLARS ($35,000,000) or, if less, the unpaid
principal amount of the aggregate loans ("Advances") made by the Lender to the
Borrower pursuant to the Funding Agreement (as defined below), as set forth on
the attached Schedule, on the dates specified in Section 2.06 of the Funding
Agreement, and to pay interest on the unpaid principal amount of this Note on
each day that such unpaid principal amount is outstanding at the Daily
Borrowing Rate as provided in Schedule 5 to the Funding Agreement on the dates
specified in Section 2.07 of the Funding Agreement.
This Note is issued pursuant to the Receivables Funding and
Servicing Agreement, dated as of April , 1994 (the "Funding Agreement"),
between the Borrower, [Name of Parent], the Lender and General Electric Capital
Corporation as agent for the Lender (in such capacity, the "Operating Agent")
and as collateral agent (in such capacity, the "Collateral Agent") for the
Lender Secured Parties (as defined in the Funding Agreement). Capitalized
terms used but not defined in this Note are used with the meanings ascribed to
them in the Funding Agreement.
Notwithstanding any other provisions contained in this Note,
if at any time the rate of interest payable by the Borrower under this Note,
when combined with any and all other charges provided for in this Note, in the
Funding Agreement or in any other document (to the extent such other charges
would constitute interest for the purpose of any applicable law limiting
interest that may be charged on this Note), exceeds the highest rate of
interest permissible under applicable law (the "Maximum Lawful Rate"), then so
long as the Maximum Lawful Rate would be exceeded the rate of interest under
this Note shall be equal to the Maximum Lawful Rate. If at any time thereafter
the rate of interest payable under this Note is less than the Maximum Lawful
Rate, the Borrower shall continue to pay interest under this Note at the
Maximum Lawful Rate until such time as the total interest paid by the Borrower
is equal to the total interest that would have been paid had applicable law not
limited the interest rate payable under Note. In no event shall the total
interest received by the Lender under this Note exceed the amount which the
Lender could lawfully have received had the interest due under this Note been
calculated since the date of this Note at the Maximum Lawful Rate.
<PAGE> 2
Payments of the principal of, premium, if any, and interest on
this Note shall be made by the Borrower to the holder hereof by wire transfer
of immediately available funds by 2:00 p.m. New York City time, in the manner
and at the address specified for such purpose as provided in Section 2.09 of
the Funding Agreement, or in such manner or at such other address as the holder
of this Note shall have specified in writing to the Borrower for such purpose,
without the presentation or surrender of this Note or the making of any
notation on this Note.
If any payment under this Note falls due on a day which is not
a Business Day, then such due date shall be extended to the next succeeding
Business Day and Interest (calculated at the Daily Borrowing Rate for each day
during the period then ending) shall be payable on any principal so extended.
The Borrower expressly waives presentment, demand, diligence,
protest and all notices of any kind whatsoever with respect to this Note.
The holder hereof may, as provided in Section 14.02 of the
Funding Agreement, sell, assign, transfer, negotiate, grant participations in
or otherwise dispose of all or any portion of this Note and the indebtedness
evidenced by this Note.
This Note is secured by the security interests granted to the
Lender pursuant to Section 8.01 of the Funding Agreement. The holder of this
Note is entitled to the benefits of the Funding Agreement and may enforce the
agreements of the Borrower contained in the Funding Agreement and exercise the
remedies provided for by, or otherwise available in respect of, the Funding
Agreement, all in accordance with the terms of the Funding Agreement. If a
Termination Event shall occur and be continuing, the unpaid balance of the
principal of this Note, together with accrued interest, may be declared and
become due and payable in the manner and with the effect provided in the
Funding Agreement.
This Note is made and delivered in New York, New York and
shall be governed by, and construed in accordance with, the internal laws
(without application of its conflict of laws provisions) of the State of New
York.
-2-
<PAGE> 3
IN WITNESS WHEREOF, the Borrower has caused this Note to be
signed and delivered by its duly authorized officer as of the date set forth
above.
CARLISLE PLASTICS FUNDING
CORPORATION
By:/s/ Rajiv P. Bhatt
---------------------
Name: Rajiv P. Bhatt
Title: President
-3-
<PAGE> 1
Exhibit 10.27
EXECUTION COPY
RECEIVABLES SALE AGREEMENT
Dated as of April 14, 1994
by and between
CARLISLE PLASTICS, INC.
and
CARLISLE PLASTICS FUNDING CORPORATION
<PAGE> 2
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions and Conventions . . . . . . . . . . 1
SECTION 1.02. Other Terms and Interpretation . . . . . . . . 10
SECTION 1.03. Rounding . . . . . . . . . . . . . . . . . . . 11
ARTICLE II
TRANSFERS OF RECEIVABLES
SECTION 2.01. Agreement to Transfer . . . . . . . . . . . . . 11
SECTION 2.02. Grant of Security Interest . . . . . . . . . . 12
ARTICLE III
RFC LOANS TO PARENT
SECTION 3.01. RFC Loans . . . . . . . . . . . . . . . . . . . 12
SECTION 3.02. Notices Relating to Loans . . . . . . . . . . . 13
SECTION 3.03. Disbursement of Loan Proceeds . . . . . . . . . 13
SECTION 3.04. Parent Note . . . . . . . . . . . . . . . . . . 13
SECTION 3.05. Principal Repayments. . . . . . . . . . . . . . 13
SECTION 3.06. Interest. . . . . . . . . . . . . . . . . . . . 13
SECTION 3.07. Time and Method of Payments . . . . . . . . . . 14
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 4.01. Representations and Warranties of the
Parent . . . . . . . . . . . . . . . . . . . . 14
SECTION 4.02. Covenants of the Parent . . . . . . . . . . . . 23
SECTION 4.03. Negative Covenants of the Parent . . . . . . . 26
SECTION 4.04. Breach of Representations, Warranties or
Covenants . . . . . . . . . . . . . . . . . . . 26
ARTICLE V
INDEMNIFICATION
SECTION 5.01. Indemnification . . . . . . . . . . . . . . . . 27
SECTION 5.02. Assignment of Indemnities . . . . . . . . . . . 28
-i-
<PAGE> 3
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. Notices, Etc. . . . . . . . . . . . . . . . . . 28
SECTION 6.02. No Waiver; Remedies . . . . . . . . . . . . . . 28
SECTION 6.03. Binding Effect; Assignability . . . . . . . . . 28
SECTION 6.04. No Proceedings . . . . . . . . . . . . . . . . 29
SECTION 6.05. Amendments; Consents and Waivers . . . . . . . 29
SECTION 6.06. GOVERNING LAW; CONSENT TO JURISDICTION;
WAIVER OF JURY TRIAL . . . . . . . . . . . . . 29
SECTION 6.07. Execution in Counterparts; Severability . . . . 30
SECTION 6.08. Descriptive Headings . . . . . . . . . . . . . 30
SECTION 6.09. No Setoff . . . . . . . . . . . . . . . . . . . 30
SECTION 6.10. Further Assurances . . . . . . . . . . . . . . 30
SECTION 6.11. Confidentiality . . . . . . . . . . . . . . . . 30
SCHEDULE
--------
SCHEDULE 1 - List of offices and locations of Records
SCHEDULE 2 - List of Tradenames, Fictitious Names, Assumed Names
and "D/B/A Names"
SCHEDULE 3 - List of Lockboxes and Lockbox Accounts
EXHIBITS
--------
EXHIBIT A - FORM OF ASSIGNMENT
EXHIBIT B - FORM OF PARENT NOTE
-ii-
<PAGE> 4
RECEIVABLES SALE AGREEMENT, dated as of April 14, 1994 (this
"Agreement"), between CARLISLE PLASTICS, INC. (the "Parent"), a Delaware
corporation, and CARLISLE PLASTICS FUNDING CORPORATION, a Delaware corporation
(the "RFC").
W I T N E S S E T H:
WHEREAS, the RFC is an Affiliate of the Parent;
WHEREAS, the RFC has been formed for the sole purpose of
purchasing, and financing such purchases by granting to Redwood Receivables
Corporation ("Redwood") a security interest in, all trade receivables owned by
the Parent; and
WHEREAS, the Parent intends to sell, or otherwise contribute,
and the RFC intends to purchase, or otherwise have contributed to it, such
trade receivables, from time to time, as described herein;
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions and Conventions. As used herein,
the following terms shall have the following meanings:
"Advance" means each of the advances made by Redwood to the
RFC under the Funding Agreement.
"Advances Outstanding" means, for any day, the aggregate
principal amount of Advances outstanding on such day, after giving effect to
all repayments and issuances of Advances on such day.
"Adverse Claim" means any claim of ownership or any lien,
security interest, title retention, trust or other charge or encumbrance, or
other type of preferential arrangement having the effect or purpose of
creating a lien or security interest, other than the security interest created
under the Funding Agreement or the Collateral Agent Agreement.
"Affected Party" means Redwood, the Collateral Agent, the
Liquidity Agent, any of the Liquidity Lenders, the Operating Agent, any of the
Letter of Credit Providers or any affiliate of the foregoing persons.
"Affiliate" means, as to any Person, any other Person that,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such Person within the meaning of control under Section 15 of the
Securities Act of 1933, as amended.
<PAGE> 5
"Agreement" means this Receivables Sale Agreement between the
Parent and the RFC.
"Assignment" has the meaning specified in Section 2.01(b).
"Billed Amount" means, with respect to any Receivable, the net
amount billed on the Billing Date to the related Obligor with respect thereto.
"Billing Date" means the date on which the invoice with
respect to a Receivable was generated by the related Obligor.
"Borrowing Base Certificate" means the certificate designated
as such pursuant to the Funding Agreement.
"Business Day" means any day of the year other than a Saturday,
Sunday or any day on which banks generally are required, or authorized, to
close in New York, New York.
"Collateral Agent" means GE Capital or such other party
designated as agent for the secured parties under the Collateral Agent
Agreement.
"Collateral Agent Agreement" means the Collateral Agent
Agreement, dated as of March 15, 1994, entered into by Redwood with the
Collateral Agent, the Letter of Credit Agent, the Liquidity Agent and the
Depositary.
"Collection Account" means the Eligible Bank Account
maintained with the Depositary described in Section 6.01(b) of the Funding
Agreement.
"Collections" means, with respect to any Receivable, all cash
collections and other cash proceeds of such Receivable.
"Commercial Paper" means commercial paper issued by Redwood.
"Commitment Termination Date" means the date specified as such
pursuant to the Funding Agreement.
"Contract" means an agreement (or agreements) pursuant to, or
under which, an Obligor shall be obligated to pay for services rendered or
merchandise or goods sold to such Obligor by the Parent from time to time.
"Contributed Receivable" has the meaning specified in Section
2.01(b).
"Credit and Collection Policies" means the credit, collection,
customer relations and service policies of the Parent in effect on the
Effective Date, as set forth in writing and
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delivered to Redwood, the Operating Agent and the Collateral Agent on or before
the Effective Date pursuant to Section 3.01(q) of the Funding Agreement, and,
as such policies may hereafter be amended, modified or supplemented from time
to time with the written consent of the Operating Agent.
"Debt" of any Person means (a) indebtedness of such Person for
borrowed money, (b) obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments, (c) obligations of such Person to pay the
deferred purchase price of property or services, (d) obligations of such
Person as lessee under leases which have been or should be, in accordance with
GAAP, recorded as capital leases, (e) obligations secured by any lien or other
charge upon property or assets owned by such Person, even though such Person
has not assumed or become liable for the payment of such obligations, (f)
obligations of such Person under direct or indirect guaranties in respect of,
and obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clauses (a) through (e)
above, and (g) liabilities in respect of unfunded vested benefits under plans
covered by ERISA. For the purposes hereof, the term "guarantee" shall include
any agreement, whether such agreement is on a contingency or otherwise, to
purchase, repurchase or otherwise acquire Debt of any other Person, or to
purchase, sell or lease, as lessee or lessor, property or services, in any such
case primarily for the purpose of enabling another person to make payment of
Debt, or to make any payment (whether as an advance, capital contribution,
purchase of an equity interest or otherwise) to assure a minimum equity, asset
base, working capital or other balance sheet or financial condition, in
connection with the Debt of another Person, or to supply funds to or in any
manner invest in another Person in connection with Debt of such Person.
"Deductions" means unpaid amounts on Transferred Receivables
identified but not yet recognized and resulting from credits, discounts,
rescissions, merchandise returns, contractual allowances, compromises,
adjustments, extensions or other non-cash deductions (other than Promotional
Allowances).
"Defaulted Receivable" means a Receivable (a) as to which any
payment, or part thereof, remains unpaid for more than 90 days from the
Maturity Date of such Receivable, or (b) as to which the Obligor thereof has
taken any action, or suffered any event to occur, of the type described in
Section 9.01(c) of the Funding Agreement in respect of the Obligor, or (c)
which otherwise would be determined to be uncollectible and written off in
keeping with the Credit and Collection Policies.
"Delinquent Receivable" means any Receivable, other than a
Defaulted Receivable, as to which any payment, or part
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thereof, remains unpaid for more than 60 days past its Maturity Date.
"Depositary" means Bankers Trust Company, or any other Person
designated as the successor Depositary from time to time in its capacity as
issuing and paying agent or trustee in connection with the issuance of
Commercial Paper by Redwood.
"Dollar" and "$" means lawful currency of the United States of
America.
"Effective Date" means April 14, 1994.
"Eligible Bank Account" has the meaning specified in Section
1.01 of the Funding Agreement.
"Eligible Customer" means any Obligor which has not been
designated by the Operating Agent as an Excluded Customer.
"Eligible Receivable" means, at any time, a Receivable:
(a) (i) which is a liability of an Eligible Customer
organized under the laws of any jurisdiction in the United States and having
its principal office in the United States, or (ii) if located outside the
United States, such Receivable is covered by an acceptable letter of credit
(to the extent the aggregate Outstanding Balance of such Receivables is 3% or
less of the aggregate Outstanding Balance of all Eligible Receivables);
(b) which is denominated and payable in Dollars in the United
States;
(c) which is not disputed and is not and will not be subject
to any right of rescission, set-off (other than Promotional Allowances and
Deductions), recoupment, counterclaim or defense, whether arising out of
promotional allowances, discounts or other transactions concerning the related
Contract or otherwise;
(d) which is not a Delinquent Receivable or a Defaulted
Receivable;
(e) which does not represent "billed but not yet shipped"
goods or merchandise, unperformed services, consigned goods or "sale or return"
goods;
(f) as to which the representations and warranties of Section
4.01(c) are true and correct in all respects as of the related Sale Date;
(g) which has a Maturity Date no later than (i) 60 days from
its Billing Date or (ii) such longer period of time, not in excess of 90 days,
to the extent the aggregate Outstanding
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Balance of such Receivables is 6% or less of the aggregate Outstanding Balance
of all Transferred Receivables; and
(h) which complies with such other criteria and requirements
as the Operating Agent may from time to time specify to the RFC following 30
days' prior notice (such other criteria and requirements initially being
described on Schedule 2 to the Funding Agreement).
"ERISA" means the Employee Retirement Income Security Act of
1974, as it may be amended from time to time, and the regulations promulgated
thereunder.
"Event of Servicer Termination" has the meaning specified in
Section 9.02 of the Funding Agreement.
"Excluded Customer" means an Obligor which is (a) an Affiliate
of the Parent or the Borrower, (b) a Governmental Authority, (c) bankrupt,
insolvent, unable to make payment of its obligations when due, the debtor in a
voluntary or involuntary bankruptcy proceeding, or the subject of a comparable
receivership or insolvency proceeding, (d) placed by the Parent on restricted
credit terms, (e) in litigation with the Borrower, the Parent or any Seller
Subsidiary, (f) an Obligor owing Receivables 50% or more of which are
Delinquent Receivables or (g) an Obligor listed on Schedule 3 of the Funding
Agreement as revised from time to time pursuant to a letter in the form of
Annex A thereto.
"Funding Agreement" means the Receivables Funding and
Servicing Agreement, dated as of April 14, 1994 among the RFC, Redwood (as
Lender), the Operating Agent, the Collateral Agent and the Parent, as Servicer.
"Funding Excess" means a Borrowing Excess as defined in the
Funding Agreement.
"GAAP" means generally accepted accounting principles as in
effect in the United States, consistently applied, as of the date of such
application.
"GE Capital" means General Electric Capital Corporation.
"Governmental Authority" means the United States of America,
any state, local or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions thereof or pertaining thereto.
"Governmental Consents" has the meaning specified in Section
4.01(a) (xv).
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"Indemnified Amounts" has the meaning specified in Section 5.01.
"Indemnified Party" has the meaning specified in Section 5.01.
"Letter of Credit" means the letter of credit, dated April 12,
1994, provided by the Letter of Credit Provider pursuant to the Letter of
Credit Agreement.
"Letter of Credit Agent" means GE Capital, in its capacity as
agent for the Letter of Credit Providers under the Letter of Credit Agreement,
and its successors and permitted assigns in such capacity.
"Letter of Credit Agreement" means the Letter of Credit
Reimbursement Agreement, dated as of March 15, 1994, entered into by Redwood,
the Letter of Credit Agent and the Letter of Credit Provider.
"Letter of Credit Provider" means, initially, GE Capital, as
provider of the Letter of Credit under the Letter of Credit Agreement, and
thereafter its successors and any permitted assigns in such capacity.
"Liquidity Agent" means GE Capital and its successors and
assigns as agent for the Liquidity Lenders pursuant to the Liquidity Loan
Agreement.
"Liquidity Loan Agreement" means the Liquidity Loan Agreement,
dated as of March 15, 1994, entered into by Redwood, the Liquidity Agent and
the Liquidity Lenders in connection with the provision of liquidity support for
Redwood.
"Liquidity Lenders" means, collectively, GE Capital and any
other provider of under the Liquidity Loan Agreement.
"Liquidity Loans" means borrowings by Redwood under the
Liquidity Loan Agreement.
"Loan" means any loan made to the Parent by the RFC pursuant
to Section 2.03.
"Lockbox" has the meaning specified in Section 4.02(b).
"Lockbox Account" means each of the segregated deposit accounts
described in Section 6.01(a) of the Funding Agreement in the name of the RFC,
Redwood and the Parent into which all Collections in respect of Transferred
Receivables shall be deposited.
"Lockbox Agreement" means each of the agreements among the
Parent, the RFC, the Operating Agent, Redwood and the Lockbox
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<PAGE> 10
Bank with respect to the related Lockbox Account, (a) providing that all
Collections therein shall be remitted directly to the Collection Account within
one Business Day of receipt, (b) providing that such depositary institution
waives its rights of set-off with respect to the Lockbox Account, and (c)
otherwise satisfactory to the Operating Agent.
"Lockbox Bank" means each of Bank of Boston, Branch Banking &
Trust, Midlantic National Bank, Wells Fargo, First Bank Minneapolis and Bank of
Montreal.
"Maturity Date", for any Receivable, means the due date for
payment specified in the related Contract, or, if no date is specified, 60
days from the Billing Date.
"Maximum Sale Price" means, with respect to the Eligible
Receivables to be sold by the Parent to the RFC on any day the price
calculated by the RFC and approved from time to time by the Operating Agent,
not to exceed (a) the Outstanding Balance of Eligible Receivables to be sold
by the Parent to the RFC on such date, minus (b) the expected costs to be
incurred by the RFC of financing such purchase of such Sold Receivables until
the outstanding balance of such Sold Receivable is paid in full, minus (c) the
portion of such Sold Receivables that are expected to become Defaulted
Receivables, minus (d) portion of such Sold Receivables that are expected to
be reduced by means other than by the receipt of Collections on such Sold
Receivables in each of (b), (c) and (d) determined, based on historical
experience, by the Parent.
"Obligor" means, with respect to any Receivable, the Person
primarily obligated to make payments in respect thereto.
"Officer's Certificate" means, with respect to any Person, a
certificate signed by the Chairman of the Board, Vice Chairman of the Board,
the President, a Vice President, the Treasurer, the Secretary or any other
duly authorized officer of such Person acceptable to the Operating Agent.
"Operating Agent" means GE Capital as Operating Agent pursuant
to the Funding Agreement, together with its successors and assigns.
"Outstanding Balance" of any Receivable at any time means an
amount (not less than zero) equal to (a) its Billed Amount, minus (b) all
payments received from the Obligor with respect thereto, minus (c) all amounts
for discounts or any other modifications to the Billed Amount; provided, that
if the Operating Agent or the Servicer makes a determination that all payments
by the Obligor with respect to such Receivable have been made, its Outstanding
Balance shall be zero.
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<PAGE> 11
"Parent" means Carlisle Plastics, Inc., as the transferor of
Receivables under this Agreement.
"Parent Interest Rate" has the meaning specified in Section
3.06(a).
"Parent Note" has the meaning specified in Section 3.04.
"Parent's Sales" means, for any period, the Billed Amounts of
all Receivables originated by the Parent during such period, plus the aggregate
amount of any down payments or deposits made in respect of such Receivables.
"Person" means an individual, partnership, corporation
(including a business trust), joint stock company, trust, association, joint
venture, Governmental Authority or any other entity of whatever nature.
"Proceeds" means, with respect to any Receivable, whatever is
receivable or received when such Receivable is sold, collected, exchanged or
otherwise disposed of, whether such disposition is voluntary or involuntary,
and includes all rights to payment, including returned premiums, with respect
to any insurance relating to such Receivable.
"Promotional Allowances" has the meaning specified in Section
4.01(c) (iii).
"Receivable" means (a) indebtedness of an Obligor (whether
constituting an account, or chattel paper, instruments or general intangibles
arising out of such account) arising from the provision of merchandise, goods
or services by the Parent or a Seller Subsidiary to such Obligor, including
the right to payment of any interest or finance charges and other obligations
of such Obligor with respect thereto;
(b) all security interests or liens and property subject
thereto from time to time purporting to secure payment by the Obligor;
(c) all guarantees, indemnities and warranties and
proceeds thereof, proceeds of insurance policies, financing statements and
other agreements or arrangements of whatever character from time to time
supporting or securing payment of such Receivable;
(d) all Collections with respect to any of the foregoing;
(e) all Records with respect to any of the foregoing; and
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<PAGE> 12
(f) all Proceeds of any of the foregoing.
"Records" means all Contracts and other documents, books,
records and other information (including, without limitation, computer
programs, tapes, disks, punch cards, data processing software and related
property and rights) prepared and maintained by the Parent, the Servicer or
the RFC with respect to Receivables and the related Obligors.
"Redwood" means Redwood Receivables Corporation, a Delaware
corporation.
"Related Documents" means the Assignments, the Lockbox
Agreements, the Funding Agreement and all agreements, instruments,
certificates, financing statements or other documents required to be delivered
hereunder or thereunder.
"Requested Amount" means the amount which the Parent wishes to
receive from the sale of Receivables on any Sale Date.
"Request Notice" means a notice in the form of a computer
print-out, tape or other form acceptable to the Operating Agent, which (a) by
reference to an invoice register and file or microfiche of actual invoices,
(i) enables the RFC and the Operating Agent to identify all Receivables to be
sold or contributed on the succeeding Sale Date by the Parent to the RFC and the
Required Information with respect thereto and (ii) sets forth the amount of
payments received on each Transferred Receivable since the prior Sale Date and
(b) sets forth the Requested Amount for the succeeding Sale Date.
"Request Notice Date" has the meaning set forth in Section
2.01(b).
"Required Information" means, with respect to a Receivable,
(a) the Obligor, (b) the Obligor's address, (c) the Billed Amount, (d) any
discounts, (e) the Maturity Date and (f) the Billing Date.
"RFC" means Carlisle Plastics Funding Corporation, as the
purchaser and transferee of Receivables under this Agreement.
"RFC Loan" has the meaning specified in Section 3.01.
"RFC Secured Obligations" means all obligations of every
nature of the RFC (other than to the Parent or Servicer), now or hereafter
existing, under the Funding Agreement and any promissory note or other
document or instrument delivered pursuant to such documents, and all
amendments, extensions or renewals thereof, whether for principal, interest,
fees, expenses or otherwise, whether now existing or hereafter arising,
voluntary or involuntary, whether or not jointly owed with others, direct or
indirect, absolute or contingent, liquidated or
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<PAGE> 13
unliquidated, and whether or not from time to time decreased or extinguished
and later increased, created or incurred and all or any portion of such
obligations that are paid, to the extent all or any part of such payment is
avoided or recovered directly or indirectly from Redwood, the Operating Agent
or the Collateral Agent as a preference, fraudulent transfer or otherwise.
"Sale Date" has the meaning specified in Section 2.01(b).
"Sale Price" has the meaning specified in Section 2.01(b).
"Seller Subsidiaries" means each of Poly-Tech, Inc., Rhino-X
Industries, Inc. and American Western Corporation, which are either direct or
indirect wholly-owned Subsidiaries of the Parent.
"Servicer" means the Parent as Servicer or any person
designated as Successor Servicer, and its successors and assigns from time to
time pursuant to the Funding Agreement.
"Sold Receivable" has the meaning specified in Section 2.01(b).
"Subsidiary" means, as to any Person, any corporation or other
entity of which securities or other ownership interests having ordinary voting
power to elect a majority of the Board of Directors or other Persons performing
similar functions are at the time directly or indirectly owned by such Person.
"Sub-Servicer" means any Person with whom the Servicer enters
into a Sub-Servicing Agreement.
"Sub-Servicing Agreement" means any written contract between
the Servicer and any Sub-Servicer, relating to servicing, administration or
collection of Transferred Receivables as provided in Section 7.01 of the
Funding Agreement in such form as had been approved by the Servicer and the
Operating Agent.
"Successor Servicer" has the meaning specified in Section
11.02 of the Funding Agreement.
"Termination Event" means any event designated as such in the
Funding Agreement.
"Transferred Receivable" means any Receivable that is a
Contributed Receivable or a Sold Receivable.
"UCC" means, for any jurisdiction, the Uniform Commercial Code
as from time to time in effect in such jurisdiction.
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<PAGE> 14
"Wire Payments" has the meaning specified in Section 4.02(b).
SECTION 1.02. Other Terms and Interpretation. All
accounting terms not specifically defined herein shall be construed in
accordance with GAAP. All terms used in Article 9 of the UCC of the State of
New York, and not specifically defined herein, are used herein as defined in
such Article 9. All hourly references herein shall refer to New York City
time. Except as otherwise indicated, all agreements defined in this
Agreement refer to the same as from time to time amended or supplemented or as
the terms of such agreements are waived or modified in accordance with their
terms.
SECTION 1.03. Rounding. For purposes of any calculations
referred to in this Agreement (unless otherwise specified), (i) all percentages
resulting from such calculations will be rounded up, if necessary, to the
nearest one ten-thousandth of a percentage point (e.g. 9.87654% (or .0987654)
being rounded up to 9.8766% (or .098766)) and (ii) all Dollar amounts used in
or resulting from such calculations will be rounded up to the nearest dollar
(e.g., $1,057.37 being rounded to $1,058).
ARTICLE II
TRANSFERS OF RECEIVABLES
SECTION 2.01. Agreement to Transfer. (a) On and after the
date of this Agreement until the Commitment Termination Date, the Parent agrees
to sell or contribute to the RFC all Receivables originated by the Parent.
(b) On the Effective Date and no less frequently than weekly
thereafter (each a "Request Notice Date") the Parent shall deliver to the RFC
a Request Notice setting forth all outstanding Receivables originated and
owned by the Parent through such Request Notice Date. No later than the
following Business Day (the "Sale Date") the RFC and the Parent shall identify
and mutually agree which Receivables designated in such Request Notice they
wish to purchase and sell (the "Sold Receivables"). The price (the "Sale
Price") paid for such Sold Receivables shall be an amount agreed between the
Parent and the RFC but in no event more than the Maximum Sale Price for such
Sold Receivables. On each Sale Date, the Receivables designated in the
Request Notice which are not identified as Sold Receivables shall be
contributed by the Parent as a capital contribution to the RFC ("Contributed
Receivables"). To the extent that the Sale Price for the Sold Receivables is
less than the fair market value thereof, the difference shall be deemed a
capital contribution by the Parent to the RFC. The Parent and the RFC shall
enter into a certificate of assignment (the "Assignment"), dated as of each
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<PAGE> 15
Sale Date, substantially in the form of Exhibit A hereto, identifying Sold
Receivables and Contributed Receivables, and the RFC shall pay the Sale Price
for such Sold Receivables. The Sale Price shall be payable in full by wire
transfer on the Sale Date to an account designated by the Parent (and approved
by the Operating Agent) on or before the Sale Date.
(c) Concurrent with the payment of the Sale Price for Sold
Receivables and contribution of the Contributed Receivables, the ownership of
each Transferred Receivable specified in such Assignment (each, a "Transferred
Receivable") shall be vested in the RFC and the Parent shall not take any
action inconsistent with such ownership and shall not claim any ownership
interest in any such Transferred Receivable.
(d) Until the occurrence of an Event of Servicer Termination
or a resignation pursuant to the Funding Agreement, the Parent, as Servicer,
shall conduct the servicing, administration and collection of such Transferred
Receivable and shall take, or cause to be taken, all such actions as may be
necessary or advisable to service, administer and collect such Transferred
Receivable, from time to time, all in accordance with (i) the terms of the
Funding Agreement, (ii) customary and prudent servicing procedures for trade
receivables of a similar type and (iii) all applicable laws, rules and
regulations. Documents relating to Transferred Receivables shall be held in
trust by the Parent, as Servicer, for the benefit of the RFC and its assignees
as the owners thereof, and possession of any incident relating to the
Transferred Receivables and Contracts so retained is for the sole purpose of
facilitating the servicing of the Transferred Receivables. Such retention and
possession thereof is at the will of the RFC and its assignees and in a
custodial capacity for their benefit only.
SECTION 2.02. Grant of Security Interest. It is the
intention of the parties hereto that each transfer of Transferred Receivables
to be made hereunder shall constitute a purchase and sale or capital
contribution and not a loan. In the event, however, that a court of competent
jurisdiction were to hold that any transaction evidenced hereby constitutes a
loan and not a purchase and sale or capital contribution, it is the intention
of the parties hereto that this Agreement shall constitute a security
agreement under applicable law and that the Parent shall be deemed to have
granted to the RFC a first priority security interest in all of the Parent's
right, title and interest in, to and under the Transferred Receivables, all
payments of principal, interest, fees, charges and indemnities on or under
such Transferred Receivables and all proceeds of any such Transferred
Receivables.
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ARTICLE III
RFC LOANS TO PARENT
SECTION 3.01. RFC Loans. The RFC hereby agrees, on the
terms and subject to the conditions of this Agreement, to make advances (each,
an "RFC Loan") to the Parent to the extent of its available funds during the
term of this Agreement in an aggregate principal amount at any one time
outstanding up to, but not exceeding, $35,000,000. Subject to the terms of
this Agreement, the Parent may borrow, repay and reborrow; provided that no
such RFC Loans may be made if, after giving effect thereto, there would be a
Funding Excess.
SECTION 3.02. Notices Relating to Loans. The Parent shall
give the RFC and the Operating Agent prior written notice of each borrowing and
repayment of each RFC Loan. Each such notice of borrowing or repayment shall
specify the amount of RFC Loans to be borrowed or repaid and the date of such
action (which shall be a Business Day).
SECTION 3.03. Disbursement of Loan Proceeds. Not later
than 3:00 p.m., New York City time, on the date specified for each RFC Loan
hereunder, the RFC shall transfer, by wire transfer or otherwise, but in any
event in immediately available funds, the amount of the RFC Loan to be made on
such date, to the account designated by the Parent maintained with The First
National Bank of Boston in the manner and approved by the Operating Agent, in
accordance with instructions previously supplied to the RFC. The proceeds of
such RFC Loan shall be used by the Parent solely for working capital purposes.
SECTION 3.04. Parent Note. (a) The RFC Loans made by the
RFC hereunder shall be evidenced by a single promissory note of the Parent in
substantially the form of Exhibit B hereto (the "Parent Note"). The Parent
Note shall be dated the date of this Agreement, shall be payable to the order
of the RFC in a principal amount equal to $35,000,000 and shall otherwise be
duly completed.
(b) The RFC shall enter on a schedule attached to the Parent
Note a notation (which may be computer generated) with respect to each RFC Loan
made hereunder of: (i) the date and principal amount thereof and (ii) each
payment and repayment of principal thereof. The failure of the RFC to make a
notation on the schedule to the Parent Note as aforesaid shall not limit or
otherwise affect the obligation of the Parent to repay the RFC Loans in
accordance with their respective terms as set forth herein.
SECTION 3.05. Principal Repayments. The RFC Loans may be
repaid by the Parent at any time and from time to time, in whole or in part,
upon prior written notice to the RFC and Operating
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<PAGE> 17
Agent as provided in Section 3.02. In addition, the RFC Loans shall be payable
immediately on demand of the RFC. Any amount so repaid may, subject to the
terms and conditions hereof, be reborrowed hereunder; provided, however, that
all repayments of RFC Loans or any portion thereof shall be made together with
payment of all interest accrued on the amount repaid to (but excluding) the
date of such repayment.
SECTION 3.06. Interest. (a) At the end of each month
after the date hereof, the Parent shall pay to the RFC interest at a rate
agreed, from time to time, to by the Parent and the RFC (the "Parent Interest
Rate") on the unpaid principal amount of each RFC Loan for the period
commencing on and including the date of such RFC Loan until but excluding the
date such RFC Loan shall be paid in full.
(b) Notwithstanding the foregoing, the Parent shall pay
interest on unpaid interest, on any RFC Loan or any installment thereof, and
on any other amount payable by the Parent hereunder (to the extent permitted
by law) that shall not be paid in full when due (whether at stated maturity, by
acceleration or otherwise) for the period commencing on the due date thereof to
(but excluding) the date the same is paid in full at the applicable Parent
Interest Rate.
SECTION 3.07. Time and Method of Payments. All payments of
principal, interest and other amounts (including indemnities) payable by the
Parent hereunder shall be made in Dollars, in immediately available funds, to
the RFC not later than 12:00 noon New York City time, on the date on which
such payment shall become due. Any such payment made on such date but after
such time shall, if the amount paid bears interest, be deemed to have been
made on, and interest shall continue to accrue and be payable thereon until,
the next succeeding Business Day. If any payment of principal or interest
becomes due on a day other than a Business Day, such payment may be made on
the next succeeding Business Day and such extension shall be included in
computing interest in connection with such payment. All payments hereunder
and under the Parent Note shall be made without set-off or counterclaim and in
such amounts as may be necessary in order that all such payments shall not be
less than the amounts otherwise specified to be paid under this Agreement and
the Parent Note. Upon payment in full of the Parent Note, following the end
of the term of this Agreement, the RFC shall mark the Parent Note "Paid" and
return it to the Parent.
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ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 4.01. Representations and Warranties of the Parent.
The Parent represents and warrants to the RFC, that:
(a) As of each Sale Date:
(i) the Parent is a corporation duly organized,
validly existing and in good standing under the laws of its
jurisdiction of incorporation and is duly qualified to do business
and is in good standing in every jurisdiction in which the nature
of its business requires it to be so qualified except where such
failure to be so qualified would not have a material adverse
effect;
(ii) the Parent has the power and authority to own
and convey all of its properties and assets, to execute and
deliver this Agreement and the Related Documents and to perform the
transactions contemplated hereby and thereby;
(iii) the Parent is operated in a manner such that:
(A) neither the Parent nor any Affiliate of the
Parent is involved in the day-to-day management of the
Borrower;
(B) other than the purchase and contribution of
Receivables and the making of RFC Loans pursuant to
this Agreement, the payment of dividends and the return of
capital, and the payment of Servicing Fees to the Servicer
under the Funding Agreement, neither the Parent nor any
Affiliate of the Parent engages in intercorporate
transactions with the Borrower;
(C) the Parent maintains separate corporate
records and books of account from the Borrower, holds
regular corporate meetings and otherwise observes corporate
formalities and has a separate business office from the
Borrower;
(D) the financial statements and books and
records of the Parent and the Borrower reflect the
separate corporate existence of the Borrower;
(E) the Parent maintains its assets separately
from the assets of the Borrower and any other
Affiliate of the Parent (including through the maintenance
of separate bank accounts), the Parent's funds and assets,
and records relating thereto, have
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not been and are not commingled with those of the Borrower or any
other Affiliate of the Parent and the separate creditors of the
Borrower will be entitled to be satisfied out of the Parent's assets
prior to any value in the Borrower becoming available to the Parent
or its creditors;
(F) neither the Parent nor any Affiliate of the Parent
(A) pays the Borrower's expenses; (B) guarantees the Borrower's
obligations, or (C) advances funds to the Borrower for the payment
of expenses or otherwise;
(G) the Borrower does not (a) pay the expenses of the
Parent or any Affiliate of the Parent, (b) guarantee the
obligations of another Person or (c) advance funds to the Parent or
any Affiliate of the Parent (except pursuant to this Agreement) for
the payment of expenses or otherwise; and
(H) except as provided in the Funding Agreement in
respect of its duties as Servicer, the Parent does not act as agent
for the Borrower, but instead presents itself to the public as a
corporation separate from the Borrower;
(iv) the execution, delivery and performance by the Parent of
this Agreement and the Related Documents and the transactions contemplated
thereby (A) have been duly authorized by all necessary corporate or other
action on the part of the Parent, (B) do not contravene or cause the
Parent to be in default under (1) the Parent's certificate of
incorporation or by-laws, (2) any contractual restriction with respect to
any Debt of the Parent or contained in any indenture, loan or credit
agreement, lease, mortgage, security agreement, bond, note, or other
agreement or instrument binding on or affecting the Parent or its property
or (3) any law, rule, regulation, order, writ, judgment, award, injunction
or decree applicable to, binding on or affecting the Parent or its
property and (C) do not result in or require the creation of any Adverse
Claim upon or with respect to any of its properties (other than in favor
of the RFC with respect to this Agreement and Redwood and the Collateral
Agent under the Funding Agreement);
(v) this Agreement and the Related Documents have each been
duly executed and delivered by the Parent;
(vi) no consent of, notice to, filing with or permits,
qualifications or other action by any Governmental Authority or any other
party, is required for the due execution, delivery and performance by the
Parent of this Agreement or any of the Related Documents or for the
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<PAGE> 20
perfection of or the exercise by the RFC, Redwood, the Operating Agent
or the Collateral Agent of any of their rights or remedies thereunder
or hereunder, other than consents, notices, filings and other actions
which have been obtained or made and complete copies of which have
been provided to Redwood, the Operating Agent and the Collateral
Agent;
(vii) each of this Agreement and each other Related Document
delivered by the Parent is (or upon execution and delivery will be if not
executed and delivered as of the date hereof) the legal, valid and binding
obligation of the Parent enforceable against the Parent in accordance with
its respective terms;
(viii) there is no pending or threatened, nor any reasonable
basis for any, action, suit or proceeding against or affecting the Parent,
its officers or directors, or the property of the Parent, in any court or
tribunal, or before any arbitrator of any kind or before or by any
Governmental Authority (A) asserting the invalidity of this Agreement or
any of the Related Documents, (B) seeking to prevent the transfer, sale or
pledge of any Receivable or the consummation of any of the transactions
contemplated hereby or thereby or (C) seeking any determination or ruling
that might materially and adversely affect (1) the performance by the RFC
or the Parent of its obligations under this Agreement or any of the Related
Documents, (2) the validity or enforceability of this Agreement or any
of the Related Documents, (3) the Receivables or the Contracts or (4)
the federal income tax attributes of the contribution, sale or pledge
of the Transferred Receivables;
(ix) no injunction, writ, restraining order or other order of
any nature adverse to the Parent or the conduct of its business or which
is inconsistent with the due consummation of the transactions contemplated
by this Agreement or the Related Documents have been issued by a
Governmental Authority nor been sought by any Person;
(x) the principal places of business and chief executive
office of the Parent are located at the addresses of the Parent set forth
on the attached Schedule 1 in this Agreement and there are now no, and
during the past four months there have not been any, other locations where
the Parent is located (as that term is used in the UCC of the jurisdiction
where such principal places of business are located) or keeps Records,
except as set forth on the attached Schedule 1;
(xi) the legal name of the Parent is as set forth at the
beginning of this Agreement and the Parent does not use any tradenames,
fictitious names, assumed names or
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<PAGE> 21
"doing business as" names, except as set forth on the attached Schedule 2;
(xii) Schedule 3 lists all Lockboxes and Lockbox Accounts and
the Lockbox Accounts listed thereon are the only lockbox accounts
maintained by the Parent in respect of the Transferred Receivables;
(xiii) the Parent is solvent and will not become insolvent
after giving effect to the transactions contemplated by this Agreement and
the Related Documents; the Parent is paying its Debts as they mature; the
Parent has not incurred Debts beyond its ability to pay as they mature;
and the Parent, after giving effect to the transactions contemplated by
this Agreement and the Related Documents, will have an adequate amount of
capital to conduct its business in the foreseeable future;
(xiv) for federal income tax, reporting and accounting
purposes, the Parent will treat the sale of each Receivable sold or
assigned pursuant to this Agreement as a sale of, or absolute assignment
of, its full right, title and ownership interest in such Receivable to the
RFC (and those Receivables contributed to the RFC by the Parent pursuant to
this Agreement shall be accounted for as an increase in the stated capital
of the RFC), and the Parent has not in any other respect accounted for or
treated the transactions contemplated by this Agreement;
(xv) the Parent has complied in all material respects with
all applicable laws, rules, regulations, and orders with respect to it, its
business and properties and all Receivables and related Contracts
(including without limitation, all applicable environmental, health and
safety requirements) and all restrictions contained in any indenture, loan
or credit agreement, mortgage, security agreement, bond, note or other
agreement or instrument binding on or affecting the Parent or its property,
and has and maintains all permits, licenses, authorizations, registrations,
approvals and consents of Governmental Authorities for (A) the activities
and business of the Parent and each of its Subsidiaries as currently
conducted and as proposed to be conducted, (B) the ownership, use,
operation and maintenance by each of them of its properties, facilities
and assets, and (C) the performance by the Parent and the RFC of this
Agreement and the Related Documents (hereinafter referred to collectively
as "Governmental Consents");
(xvi) without limiting the generality of the prior
representation, no condition exists or event has occurred which, in
itself or with the giving of notice or lapse of time or both, would
result in the suspension, revocation,
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<PAGE> 22
impairment, forfeiture or non-renewal of any Governmental Consent
applicable to the Parent or any Subsidiary;
(xvii) the Parent has filed on a timely basis all tax returns
(federal, state and local) required to be filed and has paid or made
adequate provisions for the payment of all taxes, assessments and other
governmental charges due from the Parent;
(xviii) with respect to the Parent or any of its Subsidiaries,
there has occurred no event which has or is reasonably likely to have a
material adverse effect on the Parent's operations, including its ability
to perform its obligations under this Agreement or the Related Documents,
as Parent, Servicer or otherwise;
(xix) the Parent is licensed or otherwise has the lawful right
to use all patents, trademarks, servicemarks, tradenames, copyrights,
technology, know-how and processes used in or necessary for the conduct of
its business as currently conducted which are material to its financial
condition, business, operations, assets and prospects, individually or
taken as a whole;
(xx) (a) the consolidated balance sheets of the Parent and
its consolidated Subsidiaries for each of the last three years delivered
prior to such Sale Date, and the related statements of income and
shareholders' equity of the Parent and its consolidated Subsidiaries for
such years, certified without qualification by the Parent's independent
certified public accountants, copies of which have been furnished to
Redwood and the Operating Agent, fairly present the consolidated financial
condition, business and operations of the Parent and its consolidated
Subsidiaries as at such date and the consolidated results of the
operations of the Parent and its consolidated Subsidiaries for the periods
ended on such dates, all in accordance with GAAP, (b) the unaudited
consolidated balance sheets and the related statements of income and
shareholders' equity of the Parent and its consolidated Subsidiaries for
each fiscal quarter in the period since the most recent consolidated
balance sheet and related statement of income and shareholders' equity
referred to in clause (a) above and ended at least 45 days prior to such
Sale Date, copies of which have been furnished to Redwood and the
Operating Agent, fairly present the consolidated financial condition,
business and operations of the Parent and its consolidated Subsidiaries as
of the last day of such fiscal quarters and the consolidated results of
the operations of the Parent and its consolidated Subsidiaries for the
periods ended on such dates, all in accordance with GAAP (subject to year-
end adjustments consisting of normal, recurring accruals), and (c) since
the last date for which a balance sheet of the
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<PAGE> 23
Parent and its consolidated Subsidiaries has been delivered to Redwood
and the Operating Agent, there has been no material adverse change in
any such condition, business or operations;
(xxi) each Request Notice contains or otherwise refers to a
complete and accurate list of all Transferred Receivables to be
contributed or sold by the Parent to the RFC as of the related Sale Date ;
(xxii) each Obligor of a Transferred Receivable has been
directed, and is required to, remit all payments with respect to such
Receivable for deposit in a Lockbox Account or Lockbox;
(xxiii) with respect to each Transferred Receivable, on such
Sale Date the Required Information contained or referred to in the
Request Notice and the Assignment is true and correct;
(xxiv) each pension plan or profit sharing plan to which the
Parent is a party has been administered and fully funded in accordance
with the obligations of the Parent under law and as set forth in such plan,
and the Parent has complied with the applicable provisions of ERISA in
effect as of such Sale Date;
(xxv) the Parent has valid business reasons for selling or
contributing its interests in the Transferred Receivables rather than
obtaining a loan with the Transferred Receivables as collateral;
(xxvi) the Parent has not agreed to pay any fee or commission
to any agent, broker, finder or other person for or on account of services
rendered as a broker or finder in connection with this Agreement or the
Related Documents or the transactions contemplated hereby or thereby which
would give rise to any valid claim against the RFC for any brokerage
commission or finder's fee or like payment;
(xxvii) all information heretofore or hereafter furnished with
respect to the Parent to the RFC, Redwood, the Operating Agent or
Collateral Agent in connection with any transaction contemplated by this
Agreement or the Related Documents is and will be true and complete in all
material respects and does not and will not omit to state a material fact
necessary to make the statements contained herein or therein not
misleading; and
(xxviii) no part of the proceeds received by the Parent or any
Affiliate from the Sale Price will be used directly or indirectly for
the purpose of purchasing or carrying, or for payment in full or in
part of, Debt that was incurred
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<PAGE> 24
for the purposes of purchasing or carrying any "margin stock", as such
term is defined in Section 221.3 of Regulation U of the Board of
Governors of the Federal Reserve System.
(b) [Reserved.]
(c) As of the date of each Borrowing Base Certificate delivered
under the Funding Agreement, with respect to each Receivable designated as
an Eligible Receivable:
(i) such Receivable is a receivable created through the
provision of merchandise, goods or services by the Parent in the ordinary
course of its business in a current transaction;
(ii) such Receivable was created in accordance with the
requirements of (A) a Contract and (B) the Credit and Collection Policies;
(iii) the Parent has indicated in writing to the Operating
Agent the maximum amount of promotional allowances, discounts, rebates or
deductions that may be charged against such Receivable ("Promotional
Allowances");
(iv) neither such Receivable nor its related Contract has
been satisfied, subordinated, rescinded or amended in any manner;
(v) neither such Receivable nor its related Contract is or
will be subject to any right of rescission, set-off (other than
Promotional Allowances and Deductions), recoupment, counterclaim or
defense, whether arising out of transactions concerning the Contract or
otherwise;
(vi) prior to its sale or contribution to the RFC such
Receivable was owned by the Parent free and clear of any Adverse Claim,
and the Parent had the right to contribute, sell, assign and transfer the
same and interests therein as contemplated under this Agreement and, upon
such sale or contribution, the RFC acquired a valid and the sole record
and beneficial ownership interest in such Receivable, free and clear of
any Adverse Claim;
(vii) this Agreement and the Assignment related to such
Receivable constitutes a valid transfer, assignment, set-over and
conveyance to the RFC of all right, title and interest of the Parent
in and to such Receivable;
(viii) the Billed Amount of such Receivable is net of
contractual allowances, any set-off or other modifications (other than
Promotional Allowances and Deductions) and such Receivable is entitled to
be paid pursuant to the terms of the related Contract, has not been
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<PAGE> 25
paid in full or been compromised, adjusted, extended, satisfied,
subordinated, rescinded or modified, and is not subject to compromise,
adjustment, extension, satisfaction, subordination, rescission, or
modification by the Parent;
(ix) the Parent has submitted all necessary documentation
(including an invoice) for payment of such Receivable to the Obligor and
has fulfilled all its other obligations in respect thereof;
(x) any stated term of such Receivable is not greater than
(i) 60 days or (ii) such longer period of time, not in excess of 90 days,
to the extent the aggregate Outstanding Balance of such Receivable and all
other Receivables of like term is 6% or less of the aggregate Outstanding
Balance of all Transferred Receivables;
(xi) such Receivable is an "account" within the meaning of
the UCC of each jurisdiction where the Parent's principal places of
business or chief executive office is located;
(xii) neither such Receivable nor the related Contract
contravenes in any material respect any laws, rules or regulations
applicable thereto (including, without limitation, laws, rules and
regulations relating to usury, consumer protection, truth in lending, fair
credit billing, fair credit reporting, equal credit opportunity, fair debt
collection practices and privacy) and no party to such related Contract is
in violation of any such law, rule or regulation in any material respect;
(xiii) such Receivable does not represent "billed but not yet
shipped" goods or merchandise, unperformed services, consigned goods or
"sale or return" goods; nor does such Receivable arise from a transaction
for which any additional performance by the RFC or acceptance or other act
of the Obligor remains to be performed as a condition to payments on such
Receivable;
(xiv) there are no procedures or investigations pending or
threatened before any Governmental Authority (A) asserting the invalidity
of such Receivable or such Contract, (B) asserting the bankruptcy or
insolvency of the related Obligor, (C) seeking the payment of such
Receivable or payment and performance of such Contract or (D) seeking any
determination or ruling that might materially and adversely affect the
validity or enforceability of such Receivable or such Contract;
(xv) as of such date of transfer hereunder, no Obligor on
such Receivable is bankrupt or insolvent, is unable to make payment of its
obligations when due, is the
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<PAGE> 26
debtor in a voluntary or involuntary bankruptcy proceeding, or is the
subject of a comparable receivership or insolvency proceeding, other
than Obligors under the protection of a bankruptcy court or receivership
which has approved payment by any such Obligor of such Receivable; and
(xvi) the Parent has no knowledge of any fact (including any
defaults by the Obligor on any other accounts) which leads it or should
have led it to expect at the time of such Receivable's designation as an
Eligible Receivable, that the Billed Amount of such Receivable would not
be paid in full when due, except for Promotional Allowances.
It is understood and agreed that the representations and warranties described
in this Section 4.01 shall survive the sale or assignment of the Transferred
Receivables to the RFC, any subsequent assignment of the Transferred
Receivables by the RFC (including its grant of a first priority perfected
security interest in, to and under the Transferred Receivables, pursuant to the
Funding Agreement, in order to secure the due payment and performance by the
RFC of the RFC Secured Obligations), the furnishing of any Borrowing Base
Certificate, and the termination of this Agreement and the Funding Agreement
and shall continue so long as any Transferred Receivable shall remain
outstanding.
SECTION 4.02. Covenants of the Parent. (a) Offices and
Records. The Parent shall keep its chief place of business and chief
executive offices and the office where it keeps its Records at the respective
locations specified on Schedule 1 hereto in accordance with Section 4.01(a)(x)
or, upon 30 days prior written notice to the RFC and the Collateral Agent, at
such other location in a jurisdiction where all action required by Section
4.02(f) shall have been taken with respect to the Transferred Receivables.
The Parent shall, for not less than three years or for such longer period as
may be required by law, from the date on which any Transferred Receivable
arose, maintain the Records with respect to each Transferred Receivable,
including records of all payments received, credits granted and merchandise
returned. The Parent will, upon five Business Days notice, permit
representatives of the RFC, the Servicer, the Operating Agent or the
Collateral Agent at any time and from time to time during normal business
hours, and at such times outside of normal business hours as the RFC, the
Servicer, the Operating Agent or the Collateral Agent shall reasonably
request, (i) to inspect and make copies of and abstracts from such records,
and (ii) to visit the properties of the Parent utilized in connection with the
collection, processing or servicing of the Transferred Receivables for the
purpose of examining such Records, and to discuss matters relating to the
Transferred Receivables or the Parent's performance under this Agreement with
any officer or employee of the Parent having knowledge of such matters. In
connection therewith, the Parent, the Operating Agent or the
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<PAGE> 27
Collateral Agent may institute procedures to permit it to confirm the Obligor
outstanding balances in respect of any Transferred Receivables. The Parent
agrees to render to the RFC, the Operating Agent and the Collateral Agent such
clerical and other assistance as may be reasonably requested with regard to the
foregoing. If a Termination Event under the Funding Agreement shall have
occurred and be continuing, promptly upon request therefor, the Parent shall
assist the RFC in delivering to the Operating Agent records reflecting activity
through the close of business on the immediately preceding Business Day.
(b) Collection of Transferred Receivables. The RFC has
established with each Lockbox Bank the related Lockbox Account, into which the
Parent and the RFC shall deposit from time to time all monies, instruments and
other property received by any of them as Proceeds of the Transferred
Receivables. The Parent has instructed all existing Obligors, and will
instruct all future Obligors, to make payments in respect of Transferred
Receivables only (i) by check or money order mailed to one or more lockboxes
or post office boxes under the control of the Operating Agent (each such box
being a "Lockbox"), or (ii) by wire transfer directly to the related Lockbox
Account ("Wire Payments"). The Lockboxes to which mail payments are made as
of the date hereof and the related Lockbox Accounts listed are listed on the
attached Schedule 2. The Parent shall endorse, to the extent necessary, all
checks or other instruments received in any Lockbox so that the same can be
deposited, in the form so received (with all necessary endorsements), on the
next Business Day after the Business Day on which such check or other
instruments are received. In addition, the Parent shall deposit or cause to
be deposited in any Lockbox Account all cash, checks, money orders or other
Proceeds of Collateral received other than in a Lockbox or by Wire Payments,
in the form so received (with all necessary endorsements), not later than the
close of business on the Business Day following the date of such receipt, and
until so deposited all such items or other Proceeds shall be held in trust for
the Collateral Agent. In connection with such collections, the Parent may take
(and at the Collateral Agent's direction after a Termination Event has occurred
and is continuing, shall take) such action as the RFC or the Collateral Agent
may deem necessary or advisable to enforce collection of the Transferred
Receivables; provided, however, that the Collateral Agent may, at any time that
a Termination Event has occurred and is continuing, notify any Obligor with
respect to any Transferred Receivables of the assignment of such Transferred
Receivables to the Collateral Agent and direct that payments of all amounts due
or to become due thereunder be made directly to the Collateral Agent or any
servicer, collection agent or lockbox or other account designated by the
Collateral Agent and, upon such notification the Collateral Agent may enforce
collection of any such Receivable and adjust, settle or compromise the amount
or payment thereof.
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(c) Maintain Records of Transferred Receivables. The
Parent shall, at its own cost and expense, maintain (or cause to be maintained)
satisfactory and complete records of the Transferred Receivables, including a
record of all payments received and all credits granted with respect to the
Transferred Receivables and all other dealings with the Transferred
Receivables. The Parent will mark (or shall cause to be marked) conspicuously
with a legend, in form and substance satisfactory to the Operating Agent, the
records, computer tapes, computer disks and credit files pertaining to the
Transferred Receivables, and its file cabinets or other storage facilities
where it maintains information pertaining to the Transferred Receivables, to
evidence this Agreement, the transfers hereunder and that ownership of each
Transferred Receivable is held by the RFC or its assignee. Upon the
occurrence and during the continuation of a Termination Event, the Parent
shall (i) deliver and turn over (or shall cause to be delivered or turned over)
to the Operating Agent or its representatives, or at the option of the
Operating Agent shall provide to the Operating Agent or its representatives
with access to, at any time on demand of the Operating Agent, all of the
Parent's facilities, personnel, books and records pertaining to the Collateral,
including all Records, and (ii) allow the Operating Agent to occupy the
premises of the Parent (or a Seller Subsidiary) where such books and Records
are maintained, and utilize such premises, the equipment thereon and any
personnel of the Parent that the Collateral Agent may wish to employ for such
reasonable period of time as is necessary to administer, service and collect
the Transferred Receivables.
(d) Notice of Adverse Claim. The Parent shall advise the
RFC, the Operating Agent and the Collateral Agent promptly, in reasonable
detail, (i) of any Adverse Claim known to it made or asserted against any of
the Transferred Receivables, and (ii) of the occurrence of any event which
would have a material adverse effect on the aggregate value of the Transferred
Receivables or on the validity of the transfers in this Agreement.
(e) Further Assurances. The Parent agrees that at any time
and from time to time, at its expense, it shall promptly execute and deliver
all further instruments and documents, and take all further action, that may be
necessary or desirable or that the RFC, the Operating Agent or the Collateral
Agent may request to perfect and protect the transfers made and security
interests granted or purported to be granted by this Agreement or to enable
the RFC, the Operating Agent or the Collateral Agent to exercise and enforce
its rights and remedies under this Agreement with respect to any Transferred
Receivables. Without limiting the generality of the foregoing, the RFC shall
execute and file such financing or continuation statements, or amendments
thereto, and such other instruments or notices as may be necessary or
desirable or that the RFC, the Operating Agent or the Collateral
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Agent may request to protect and preserve the transfers and security interests
granted by this Agreement.
(f) Financing Statements. The Parent hereby authorizes
the RFC and the Collateral Agent to file one or more financing or
continuation statements, and amendments thereto, relating to all or any part
of the Transferred Receivables without the signature of the Parent where
permitted by law. A carbon, photographic or other reproduction of this
Agreement or any notice or financing statement covering the Transferred
Receivables or any part thereof shall be sufficient as a notice or financing
statement where permitted by law.
(g) Assignment of Rights. The Parent acknowledges and
agrees that, pursuant to the Funding Agreement, the RFC may assign all of its
right, title and interest in, to and under the Transferred Receivables and the
RFC Loans and its rights, title and interest under this Agreement, including
its right to exercise the remedies created by Section 4.04 hereof to Redwood
and the Collateral Agent. The Parent agrees that, upon such assignment, the
assignee may enforce directly, without joinder of the RFC, the repurchase
obligations of the Parent set forth in Section 5.01 hereof with respect to
breaches of the representations and warranties set forth in Section 4.04 of
this Agreement.
SECTION 4.03. Negative Covenants of the Parent. The
Parent shall not, without the written consent of the RFC, the Operating Agent
and the Collateral Agent:
(a) sell, assign (by operation of law or otherwise)
or otherwise dispose of, or create or suffer to exist any Adverse
Claim upon or with respect to, or assign any right to receive income in
respect of any Transferred Receivable or related Contract with respect
thereto, or upon or with respect to the Lockbox Accounts or Lockboxes or other
account in which any Collections of any Transferred Receivables are deposited;
(b) extend, amend, forgive, discharge, comprise,
cancel or otherwise modify the terms of any Transferred Receivable, or
amend, modify or waive any term or condition of any Contract related thereto;
(c) make any change in its instructions to Obligors
regarding payments to be made to the RFC or payments to be deposited to any
Lockbox Account or any Lockbox;
(d) nor permit any of its Subsidiaries to, directly or
indirectly, by operation of law or otherwise, merge or consolidate with,
acquire all or substantially all of the assets or capital stock of, or
otherwise combine with, any Person, except that any wholly-owned Subsidiary,
other than the RFC, may merge or consolidate with or into the Parent (provided
the Parent
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is the surviving corporation) or with or into another wholly-owned Subsidiary;
or
(e) make statements or disclosures or prepare any
financial statements which shall account for the transactions contemplated by
this Agreement in any manner other than as a sale or absolute assignment of the
Transferred Receivables to the RFC, or in any other respect account for or
treat the transactions contemplated hereby (including but not limited to, for
accounting, tax and reporting purposes) in any manner other than as a sale or
absolute assignment of the Transferred Receivables.
SECTION 4.04. Breach of Representations, Warranties or
Covenants. Upon discovery by the Parent, the RFC or any assignee of the RFC's
rights hereunder of a breach of any of the representations, warranties or
covenants described in Sections 4.01, 4.02 or 4.03 hereof which materially and
adversely affects the value of a Transferred Receivable or the interests of the
RFC, Redwood or the Collateral Agent therein, the party discovering such breach
shall give prompt written notice to the other parties. Thereafter, if
requested by notice from the RFC or any such assignee, the Parent shall on the
next succeeding Business Day make a capital contribution in cash of such amount
to the RFC by remitting the amount of such capital contribution to the
Collection Account in accordance with the terms of the Funding Agreement.
ARTICLE V
INDEMNIFICATION
SECTION 5.01. Indemnification. Without limiting any other
rights that the RFC, any of its shareholders, officers or agents, or any
assignee of the RFC's rights hereunder (each, an "Indemnified Party") may have
hereunder or under applicable law, the Parent hereby agrees to indemnify each
Indemnified Party from and against any and all claims, losses, liabilities,
obligations, damages, penalties, actions, judgments, suits, and related costs
and expenses of any nature whatsoever, including reasonable attorneys' fees and
disbursements (all of the foregoing being collectively referred to as
"Indemnified Amounts") which may be imposed on, incurred by or asserted against
an Indemnified Party in any way arising out of or resulting from this Agreement
or the use by the Parent of proceeds of any purchase or assignment hereunder or
in respect of any Transferred Receivable or any Contract, excluding, however,
(a) Indemnified Amounts to the extent resulting from gross negligence or
willful misconduct on the part of such Indemnified Party or (b) recourse for
uncollectible Transferred Receivables. Without limiting or being limited by
the foregoing, the Parent shall pay on demand to each Indemnified Party any and
all Indemnified Amounts necessary to indemnify such Indemnified Party from and
against any and all Indemnified Amounts relating to or resulting from:
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(i) reliance on any representation or warranty
made or deemed made by the Parent (or any of its
officers) under or in connection with this Agreement, any
report or any other information delivered by the Parent
pursuant hereto, which shall have been incorrect in any
material respect when made or deemed made or delivered;
(ii) the failure by the Parent to comply with any
term, provision or covenant contained in this Agreement, or
any agreement executed in connection with this Agreement or
with any applicable law, rule or regulation with respect to
any Transferred Receivable or the related Contract, or the
nonconformity of any Transferred Receivable or the related
Contract with any such applicable law, rule or regulation; or
(iii) the failure to vest and maintain vested in
the RFC, or to transfer to the RFC, legal and equitable title
to and ownership of the Receivables which are, or are
purported to be, Transferred Receivables, together with all
Collections in respect thereof, free and clear of any Adverse
Claim (except as permitted hereunder) whether existing at the
time of the proposed sale of such Receivable or at any time
thereafter.
SECTION 5.02. Assignment of Indemnities. The Parent
acknowledges that, pursuant to the Funding Agreement, the RFC may assign its
rights of indemnity granted hereunder to Redwood and the Collateral Agent and
upon such assignment, Redwood or the Collateral Agent, as applicable, shall
have all rights of the RFC hereunder and may in turn assign such rights. The
Parent agrees that, upon such assignment, Redwood, the Collateral Agent or the
assignee of either Redwood or the Collateral Agent, as applicable, may enforce
directly, without joinder of the RFC, the indemnities set forth in this
Section.
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. Notices, Etc. All notices and other
communications provided for hereunder shall, unless otherwise stated herein, be
in writing (including telecommunication and express mail) and mailed or
telecommunicated, or delivered as to each party hereto, at its address set
forth under its name on the signature page hereof or at such other address as
shall be designated by such party in a written notice to the other parties
hereto. All such notices and communications shall not be effective until
received by the party to whom such notice or communication is addressed.
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<PAGE> 32
SECTION 6.02. No Waiver; Remedies. No failure on the part
of the Parent or the RFC to exercise, and no delay in exercising, any right
hereunder or under any Assignment shall operate as a waiver thereof; nor shall
any single or partial exercise of any right hereunder preclude any other or
further exercise thereof or the exercise of any other right. The remedies
herein provided are cumulative and not exclusive of any other remedies provided
by law.
SECTION 6.03. Binding Effect; Assignability. This
Agreement shall be binding upon and inure to the benefit of the Parent and the
RFC, and their respective successors and permitted assigns. Except as
contemplated herein, neither party may assign any of its rights and obligations
hereunder or any interest herein without the prior written consent of the other
party. This Agreement shall create and constitute the continuing obligations
of the parties hereto in accordance with its terms, and shall remain in full
force and effect until its termination; provided, that the rights and remedies
pursuant to Section 4.04 with respect to any breach of any representation,
warranty or covenants made by the Parent pursuant to Sections 4.01, 4.02 and
4.03 and the indemnification and payment provisions of Article IV shall be
continuing and shall survive any termination of this Agreement.
SECTION 6.04. No Proceedings. The Parent hereby agrees
that it will not, directly or indirectly, institute, or cause to be instituted,
against the RFC any proceeding of the type referred to in Section 9.01(c) of
the Funding Agreement so long as there shall not have elapsed one year plus one
day since the latest maturing commercial paper issued by Redwood and allocated
to the RFC has been paid in full in cash.
SECTION 6.05. Amendments; Consents and Waivers. No
modification, amendment or waiver of, or with respect to, any provision of this
Agreement, and all other agreements, instruments and documents delivered
thereto, nor consent to any departure by the Parent or the RFC from any of the
terms or conditions thereof shall be effective unless it shall be in writing
and signed by each of the parties hereto, Redwood and the Collateral Agent.
Any waiver or consent shall be effective only in the specific instance and for
the purpose for which given. No consent or demand in any case shall, in
itself, entitle any party to any other consent or further notice or demand in
similar or other circumstances. This Agreement and the documents referred to
herein embody the entire agreement of the Parent and the RFC with respect to
the Transferred Receivables and supersede all prior agreements and
understandings relating to the subject hereof.
SECTION 6.06. GOVERNING LAW; CONSENT TO JURISDICTION;
WAIVER OF JURY TRIAL. (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS
PROVISIONS) OF THE STATE OF NEW YORK.
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<PAGE> 33
(b) THE PARENT AND THE RFC HEREBY SUBMIT TO THE
NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND
THE UNITED STATES DISTRICT COURT LOCATED IN THE BOROUGH OF MANHATTAN IN NEW
YORK CITY, AND EACH WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND
CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY REGISTERED MAIL DIRECTED
TO THE ADDRESS SET FORTH ON THE SIGNATURE PAGE HEREOF AND SERVICE SO MADE SHALL
BE DEEMED TO BE COMPLETED FIVE DAYS AFTER THE SAME SHALL HAVE BEEN DEPOSITED IN
THE U.S. MAILS, POSTAGE PREPAID. THE PARENT AND THE RFC EACH HEREBY WAIVE ANY
OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY
ACTION INSTITUTED HEREUNDER AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT. NOTHING IN THIS
SECTION SHALL AFFECT THE RIGHT OF THE PARENT OR THE RFC TO SERVE LEGAL PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT EITHER'S RIGHT TO BRING ANY
ACTION OR PROCEEDING IN THE COURTS OF ANY OTHER JURISDICTION.
(c) THE PARENT AND THE RFC EACH HEREBY WAIVES ANY RIGHT
TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT, OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO, OR IN
CONNECTION WITH THIS AGREEMENT. INSTEAD, ANY DISPUTE RESOLVED IN COURT WILL BE
RESOLVED IN A BENCH TRIAL WITHOUT A JURY.
SECTION 6.07. Execution in Counterparts; Severability.
This Agreement may be executed by the parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and both of
which when taken together shall constitute one and the same agreement. In case
any provision in or obligation under this Agreement shall be invalid, illegal
or unenforceable in any jurisdiction, the validity, legality and enforceability
of the remaining provisions or obligations, or of such provision or obligation,
shall not in any way be affected or impaired thereby in any other jurisdiction.
SECTION 6.08. Descriptive Headings. The descriptive
headings of the various sections of this Agreement are inserted for convenience
of reference only and shall not be deemed to affect the meaning or construction
of any of the provisions hereof.
SECTION 6.09. No Setoff. The Parent's obligations under
this Agreement shall not be affected by any right of setoff, counterclaim,
recoupment, defense or other right the Parent might have against the RFC,
Redwood, the Operating Agent, the Collateral Agent or any assignee, all of
which rights are hereby waived by the Parent.
SECTION 6.10. Further Assurances. The Parent agrees to do
such further acts and things and to execute and deliver to the RFC, Redwood,
the Operating Agent or any assignee such additional assignments, agreements,
powers and instruments as the RFC, Redwood, the Operating Agent or any assignee
may require or deem advisable to carry into effect the purposes of this
Agreement or to
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<PAGE> 34
better assure and confirm unto any such party its respective rights, powers and
remedies hereunder.
SECTION 6.11. Confidentiality. Except to the extent
otherwise required by applicable law or unless the affected party shall
otherwise consent in writing, the Parent and the RFC agree to maintain the
confidentiality of this Agreement (and all drafts of this agreement and
documents ancillary to this Agreement) in its communications with third parties
other than any Affected Party or any Indemnified Party and otherwise and not to
disclose, deliver or otherwise make available to any third party (other than
its directors, officers, employees, accountants or counsel) the original or any
copy of all or any part of this Agreement (or any draft of this Agreement and
documents ancillary to this Agreement) except to an Affected Party or an
Indemnified Party.
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<PAGE> 35
IN WITNESS WHEREOF, the parties have caused this Receivables
Sale Agreement to be executed by their respective officers thereunto duly
authorized, as of the date first above written.
CARLISLE PLASTICS, INC.
By /s/ Rajiv P. Bhatt
--------------------------------
Name: Rajiv P. Bhatt
Title: Chief Financial Officer
Address: One Union Street
Boston, Massachusetts 02108
Attention: Chief Financial Officer
Phone number: (617) 557-2600
Telecopier number: (617) 523-5428
CARLISLE PLASTICS FUNDING CORPORATION
By /s/ Marie B. Humbert
--------------------------------
Name: Marie B. Humbert
Title: Vice President and
Assistant Secretary
Address: 1401 West 94th Street
Minneapolis, Minnesota
55431
Attention: Vice President
Phone number: (612) 885-9359
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<PAGE> 1
Exhibit 10.28
NOTE
$35,000,000 April 14, 1994
FOR VALUE RECEIVED, CARLISLE PLASTICS, INC., a Delaware
corporation (the "Company"), hereby promises to pay to CARLISLE FUNDING
PLASTICS CORPORATION (the "Lender"), for its account, the principal sum of
$35,000,000 Dollars (or such lesser amount as shall equal the aggregate unpaid
principal amount of the Loans made by the Lender to the Company under the Sale
Agreement referred to below), in lawful money of the United States of America
and in immediately available funds immediately on the demand of the Lender.
The date, amount and interest rate, of each Loan made by the
Lender to the Company, and each payment made on account of the principal
thereof, shall be recorded by the Lender on its books and, prior to any
transfer of this Note, endorsed by the Lender on the schedule attached hereto
or any continuation thereof.
This Note is the Note referred to in the Receivables Sale
Agreement (as modified and supplemented and in effect from time to time, the
"Sale Agreement") dated as of April 14, 1994 by and between the Company and the
Lender and evidences Loans made by the Lender thereunder. Capitalized terms
used in this Note have the respective meanings assigned to them in the Sale
Agreement.
The Sale Agreement provides for prepayments of Loans upon the
terms and conditions specified therein.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
CARLISLE PLASTICS, INC.
By /s/ Rajiv P. Bhatt
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