SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 7, 1995
SMITH CORONA CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 1-10281 51-0286862
- -------- ------- ----------
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
65 Locust Avenue, New Canaan, Connecticut 06840
(Address of principal executive offices) (zip code)
(203) 972-1471
(Registrant's telephone number, including area code)
<PAGE>
Item 5. Other Events
On April 7, 1995, Smith Corona Corporation (the "Company")
entered into an Amended and Restated Revolving Credit Agreement
with Chemical Bank, as Agent, and the Lenders parties thereto (the
"Credit Agreement"). The Credit Agreement provides for extensions
of revolving credit loans and letters of credit in an initial
aggregate principal amount not to exceed $30,000,000 (up through
March 30, 1996); the aggregate principal amount of such lending
commitment reduces to an amount not in excess of $25,000,000 from
March 31, 1996 through the July 1, 1996 termination date. The
Credit Agreement is secured by the grant to the Agent for the
ratable benefit of the Lenders of a security interest in the
principal domestic assets of the Company. On April 10, 1995, the
Company issued a press release (the "News Release") announcing the
Credit Agreement and an estimated third quarter loss.
A copy of the News Release and the Credit Agreement are
attached hereto as Exhibits 99.1 and 99.2, respectively, and are
incorporated herein by reference.
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description
- ----------- -----------
99.1 News Release
99.2 Credit Agreement
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
Date: April 26, 1995 SMITH CORONA CORPORATION
By: /S/ John A. Piontkowski
John A. Piontkowski
Vice President - Finance
& Controller
EXHIBIT 99.1
------------
NEWS RELEASE
Contact: Patricia J. Cornell
Smith Corona Corporation
(203) 972-1471
FOR IMMEDIATE RELEASE
SMITH CORONA ANNOUNCES AMENDMENT TO CREDIT AGREEMENT;
ESTIMATES THIRD QUARTER LOSS
NEW CANAAN, CT., April 10, 1995 -- Smith Corona Corporation NYSE:
SCO) announced today that it has reached an agreement on a
restructuring of its revolving credit agreement with the
company's lending banks. The amended agreement, which initially
provides for loans of up to $30 million, will remain in place
until July 1, 1996. The secured credit facility includes terms
and conditions regarding profitability, minimum net worth and
provides for restrictions on dividends under certain
circumstances.
For its third fiscal quarter ending March 31, 1995, Smith
Corona expects sales to be significantly below the prior year,
primarily as a result of lower unit volume. It estimates a net
loss of approximately $10 - $12 million, or $.33 - $.40 per share
for the third quarter. In the third quarter of fiscal 1994,
Smith Corona reported net income of $1.4 million, or $.05 per
share, on net sales of $60.5 million. (Fiscal 1994 results have
been reclassified to reflect discontinued operations; net income
of discontinued operations was $1.3 million, or $.04 per share).
According to Robert Van Buren, recently elected chairman and
chief executive officer, "We are extremely disappointed with
these estimated results, but we continue to face a difficult
competitive environment and weak industry demand. As a result,
we are evaluating a number of alternatives, including
cost-reduction measures, that will enable us to build on our strengths
in manufacturing and distribution and enhance shareholder value."
Mr. Van Buren also noted that in light of lower estimated
earnings, management will recommend to the board of directors
that it omit its quarterly dividend at the board meeting
scheduled for May 17th.
Smith Corona, based in New Canaan, Connecticut, is a leading
marketer worldwide of a full range of small office and home
office products, including personal word processors, portable
electronic typewriters, facsimile machines and other office
products.
EXHIBIT 99.2
AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
among
SMITH CORONA CORPORATION
The Several Lenders
from Time to Time Parties Hereto
and
CHEMICAL BANK,
as Agent
Dated as of April 7, 1995
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS. . . . . . . . . . . . . . . . . . . . 1
1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . 1
1.2 Other Definitional Provisions . . . . . . . . . . . . 17
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS. . . . . . . . . . 17
2.1 Revolving Credit Commitments. . . . . . . . . . . . . 17
2.2 Revolving Credit Notes. . . . . . . . . . . . . . . . 18
2.3 Procedure for Revolving Credit Borrowing. . . . . . . 18
2.4 . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.5 Termination or Reduction of Commitments . . . . . . . 19
2.6 Optional Prepayments; Mandatory Prepayments . . . . . 19
2.7 Interest Rates and Payment Dates. . . . . . . . . . . 19
2.8 Computation of Interest and Fees. . . . . . . . . . . 20
2.9 Pro Rata Treatment and Payments . . . . . . . . . . . 20
2.10 Requirements of Law. . . . . . . . . . . . . . . . . 21
2.11 Taxes. . . . . . . . . . . . . . . . . . . . . . . . 21
2.12 L/C Commitment.. . . . . . . . . . . . . . . . . . . 23
2.13 Procedure for Issuance of Letters of Credit. . . . . 23
2.14 Fees, Commissions and Other Charges. . . . . . . . . 24
2.15 L/C Participations.. . . . . . . . . . . . . . . . . 24
2.16 Reimbursement Obligation of the Borrower.. . . . . . 25
2.17 Obligations Absolute.. . . . . . . . . . . . . . . . 26
2.18 Letter of Credit Payments. . . . . . . . . . . . . . 27
2.19 Application. . . . . . . . . . . . . . . . . . . . . 27
2.20 Increased Costs. . . . . . . . . . . . . . . . . . . 27
2.21 Further Assurances . . . . . . . . . . . . . . . . . 27
2.22 Nature of Obligations; Indemnities . . . . . . . . . 28
SECTION 3. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . 30
3.1 Financial Condition . . . . . . . . . . . . . . . . . 30
3.2 No Change . . . . . . . . . . . . . . . . . . . . . . 31
3.3 Corporate Existence; Compliance with Law. . . . . . . 31
3.4 Corporate Power; Authorization; Enforceable
Obligations . . . . . . . . . . . . . . . . . . . . . 31
3.5 No Legal Bar. . . . . . . . . . . . . . . . . . . . . 31
3.6 No Material Litigation. . . . . . . . . . . . . . . . 32
3.7 No Default. . . . . . . . . . . . . . . . . . . . . . 32
3.8 Ownership of Property; Liens. . . . . . . . . . . . . 32
3.9 Intellectual Property . . . . . . . . . . . . . . . . 32
3.10 No Burdensome Restrictions . . . . . . . . . . . . . 32
3.11 Taxes. . . . . . . . . . . . . . . . . . . . . . . . 32
3.12 Federal Regulations. . . . . . . . . . . . . . . . . 33
3.13 ERISA. . . . . . . . . . . . . . . . . . . . . . . . 33
3.14 Investment Company Act; Other Regulations. . . . . . 33
3.15 Subsidiaries . . . . . . . . . . . . . . . . . . . . 33
3.16 Purpose of Loans . . . . . . . . . . . . . . . . . . 33
3.17 Accuracy and Completeness of Information . . . . . . 33
3.18 Security Agreement . . . . . . . . . . . . . . . . . 34
3.19 Environmental Matters. . . . . . . . . . . . . . . . 34
SECTION 4. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . 35
4.1 Conditions to Initial Extension of Credit . . . . . . 36
4.2 Conditions to Each Extension of Credit. . . . . . . . 38
SECTION 5. AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . 39
5.1 Financial Statements. . . . . . . . . . . . . . . . . 39
5.2 Certificates; Other Information . . . . . . . . . . . 40
5.3 Results of Lien Searches. . . . . . . . . . . . . . . 41
5.4 Payment of Obligations. . . . . . . . . . . . . . . . 41
5.5 Conduct of Business and Maintenance of Existence. . . 41
5.6 Maintenance of Quality Control Procedures . . . . . . 41
5.7 Maintenance of Property; Insurance. . . . . . . . . . 41
5.8 Inspection of Property; Books and Records;
Discussions . . . . . . . . . . . . . . . . . . . . . 41
5.9 Notices . . . . . . . . . . . . . . . . . . . . . . . 42
5.10 Environmental Laws . . . . . . . . . . . . . . . . . 43
5.11 Maintenance of Liens of the Security Agreement.
. . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.12 Security Interest in Real Property and Leaseholds. . 43
SECTION 6. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . 45
6.1 Financial Condition Covenants . . . . . . . . . . . . 45
6.2 Limitation on Indebtedness. . . . . . . . . . . . . . 46
6.3 Limitation on Liens . . . . . . . . . . . . . . . . . 46
6.4 Limitation on Guarantee Obligations . . . . . . . . . 47
6.5 Limitation on Fundamental Changes . . . . . . . . . . 47
6.6 Limitation on Sale of Assets. . . . . . . . . . . . . 48
6.7 Limitation on Dividends . . . . . . . . . . . . . . . 48
6.8 Limitation on Capital Expenditures. . . . . . . . . . 49
6.9 Limitation on Investments, Loans and Advances . . . . 49
6.10 Limitation on Transactions with Affiliates . . . . . 49
6.11 Limitation on Sales and Leasebacks . . . . . . . . . 50
6.12 Limitation on Changes in Fiscal Year . . . . . . . . 50
6.13 Limitation on Lines of Business. . . . . . . . . . . 50
6.14 Limitation on Negative Pledge Clauses. . . . . . . . 50
SECTION 7. EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . 50
SECTION 8. THE AGENT. . . . . . . . . . . . . . . . . . . . . 54
8.1 Appointment . . . . . . . . . . . . . . . . . . . . . 54
8.2 Delegation of Duties. . . . . . . . . . . . . . . . . 54
8.3 Exculpatory Provisions. . . . . . . . . . . . . . . . 54
8.4 Reliance by Agent . . . . . . . . . . . . . . . . . . 55
8.5 Notice of Default . . . . . . . . . . . . . . . . . . 55
8.6 Non-Reliance on Agent and Other Lenders . . . . . . . 55
8.7 Indemnification . . . . . . . . . . . . . . . . . . . 56
8.8 Agent in Its Individual Capacity. . . . . . . . . . . 56
8.9 Successor Agent . . . . . . . . . . . . . . . . . . . 57
SECTION 9. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . 57
9.1 Amendments and Waivers. . . . . . . . . . . . . . . . 57
9.2 Notices . . . . . . . . . . . . . . . . . . . . . . . 58
9.3 No Waiver; Cumulative Remedies. . . . . . . . . . . . 58
9.4 Survival of Representations and Warranties. . . . . . 59
9.5 Payment of Expenses and Taxes . . . . . . . . . . . . 59
9.6 Successors and Assigns; Participations and Assignments 60
9.7 Adjustments; Set-off 62
9.8 Counterparts. . . . . . . . . . . . . . . . . . . . . 63
9.9 Severability. . . . . . . . . . . . . . . . . . . . . 63
9.10 Integration. . . . . . . . . . . . . . . . . . . . . 63
9.11 GOVERNING LAW. . . . . . . . . . . . . . . . . . . . 63
9.12 Submission To Jurisdiction; Waivers. . . . . . . . . 63
9.13 Acknowledgements . . . . . . . . . . . . . . . . . . 64
9.14 WAIVERS OF JURY TRIAL. . . . . . . . . . . . . . . . 64
SCHEDULES
Schedule 2.12 Existing Letters of Credit
Schedule 3.15 Subsidiaries
Schedule 6.2 Existing Indebtedness
Schedule 6.3 Existing Liens
Schedule 6.4 Existing Guarantee Obligations
Schedule I - Commitments
EXHIBITS
Exhibit A - Form of Revolving Credit Note
Exhibit B - Form of Legal Opinion
Exhibit C - Form of Assignment and Acceptance
Exhibit D - Form of Borrowing Certificate
Exhibit E - Form of Borrowing Base Certificate
Exhibit F - Form of Security Agreement
Exhibit G - Form of Collateral Monitoring Reporting
Requirements
<PAGE>
AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT,
dated as of April 7, 1995, among SMITH CORONA CORPORATION, a
Delaware corporation (the "Borrower"), the several banks and
other financial institutions from time to time parties to this
Agreement (the "Lenders") and CHEMICAL BANK, a New York banking
corporation, as agent for the Lenders hereunder (in such
capacity, the "Agent").
INTRODUCTORY STATEMENT
WHEREAS, pursuant to the Revolving Credit Agreement
dated as of June 25, 1993, among the Borrower, the Lenders
parties thereto and the Agent (the "Prior Agreement"), the
Lenders made loans to the Borrower on the terms and conditions
and for the purposes set forth therein; and
WHEREAS, the Borrower has requested that the Prior
Agreement be amended and restated, and the Agent and the Lenders
have agreed to such request on the terms and conditions set forth
herein; and
NOW, THEREFORE, the parties hereto agree that,
effective as of the Effective Date, the Prior Agreement shall be
amended and restated as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the
following terms shall have the following meanings:
"ABR": for any day, a rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to the
greatest of (a) the Prime Rate in effect on such day, (b)
the Base CD Rate in effect on such day plus 1% or (c) the
Federal Funds Effective Rate in effect on such day plus 1/2
of 1%. For purposes hereof: "Prime Rate" shall mean the
rate of interest per annum publicly announced from time to
time by the Agent as its prime rate in effect at its
principal office in New York City (the Prime Rate not being
intended to be the lowest rate of interest charged by
Chemical Bank in connection with extensions of credit to
debtors); "Base CD Rate" shall mean the sum of (a) the
product of (i) the Three-Month Secondary CD Rate and (ii) a
fraction, the numerator of which is one and the denominator
of which is one minus the C/D Reserve Percentage and (b) the
C/D Assessment Rate; "Three-Month Secondary CD Rate" shall
mean, for any day, the secondary market rate for three-month
certificates of deposit reported as being in effect on such
day (or, if such day shall not be a Business Day, the next
preceding Business Day) by the Board of Governors of the
Federal Reserve System (the "Board") through the public
information telephone line of the Federal Reserve Bank of
New York (which rate will, under the current practices of
the Board, be published in Federal Reserve Statistical
Release H.15(519) during the week following such day), or,
if such rate shall not be so reported on such day or such
next preceding Business Day, the average of the secondary
market quotations for three-month certificates of deposit of
major money center banks in New York City received at
approximately 10:00 A.M., New York City time, on such day
(or, if such day shall not be a Business Day, on the next
preceding Business Day) by the Agent from three New York
City negotiable certificate of deposit dealers of recognized
standing selected by it; and "Federal Funds Effective Rate"
shall mean, for any day, the weighted average of the rates
on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as
published on the next succeeding Business Day by the Federal
Reserve Bank of New York, or, if such rate is not so
published for any day which is a Business Day, the average
of the quotations for the day of such transactions received
by the Agent from three federal funds brokers of recognized
standing selected by it. If for any reason the Agent shall
have determined (which determination shall be conclusive
absent manifest error) that it is unable to ascertain the
Base CD Rate or the Federal Funds Effective Rate, or both,
for any reason, including the inability or failure of the
Agent to obtain sufficient quotations in accordance with the
terms thereof, the ABR shall be determined without regard to
clause (b) or (c), or both, of the first sentence of this
definition, as appropriate, until the circumstances giving
rise to such inability no longer exist. Any change in the
ABR due to a change in the Prime Rate, the Three-Month
Secondary CD Rate or the Federal Funds Effective Rate shall
be effective as of the opening of business on the effective
day of such change in the Prime Rate, the Three-Month
Secondary CD Rate or the Federal Funds Effective Rate,
respectively.
"Acceptance Obligations": at any particular time,
the aggregate outstanding and unreimbursed amount of all
bankers' acceptances created for the account of the Borrower
by BAI.
"Account Debtor": each debtor, customer or obligor
in any way obligated on or in connection with any Account.
"Accounts": all "accounts" (as defined in the UCC).
"Adjusted Current Liabilities": at a particular
date, all current liabilities of the Borrower and its
Subsidiaries, determined on a consolidated basis in
accordance with GAAP, excluding the Loans outstanding under
this Agreement.
"Affiliate": as to any Person, any other Person
(other than a Subsidiary) which, directly or indirectly, is
in control of, is controlled by, or is under common control
with, such Person. For purposes of this definition,
"control" of a Person means the power, directly or
indirectly, either to (a) vote 10% or more of the securities
having ordinary voting power for the election of directors
of such Person or (b) direct or cause the direction of the
management and policies of such Person, whether by contract
or otherwise.
"Aggregate Outstanding Extensions of Credit": as to
any Lender at any time, an amount equal to the sum of (a)
the aggregate principal amount of all Loans made by such
Lender then outstanding and (b) such Lender's Commitment
Percentage of the L/C Obligations then outstanding.
"Agreement": this Amended and Restated Credit
Agreement, as amended, supplemented or otherwise modified
from time to time.
"Application": an application, in such form as the
Issuing Lender may specify from time to time, requesting the
Issuing Lender to open a Letter of Credit.
"Assignee": as defined in subsection 9.6(c).
"Available Commitment": as to any Lender at any
time, an amount equal to the excess, if any, of (a) the
amount of such Lender's Commitment over (b) such Lender's
Aggregate Outstanding Extensions of Credit.
"BAI": Bank of America Illinois, a bank organized
under the laws of the State of Illinois.
"Borrowing Base": at any date of determination
thereof, an amount equal to (a) the sum of (i) 70% of
Eligible Accounts at such date, (ii) 40% of Eligible
Inventory at such date, (iii) 20% of Eligible Service Depot
Inventory at such date, provided, that 20% of Eligible
Service Depot Inventory may not exceed $500,000, and (iv)
40% of finished goods inventory in transit to the United
States, which is subject to the Agent's security interest
under the Security Agreement, from (I) the Borrower's
facility in Singapore, (II) Samsung Corporation, Korea, and
(III) such other third parties as may be designated by the
Borrower from time to time which are reasonably acceptable
to the Agent at such date, less the amount of (b) (1) F/X
Exposure at such date, (2) a reserve for ocean freight,
customs duty and other fees for inventory in transit from
the Borrower's facility in Singapore to the United States,
calculated as 5% of the dollar amount in transit from
Singapore, net of intercompany profit at such date and (3)
the amount of Acceptance Obligations at such date.
"Borrowing Base Certificate": the Certificate of the
Borrower, substantially in the form of Exhibit E required to
be delivered pursuant to subsection 5.2(d).
"Borrowing Date": any Business Day specified in a
notice pursuant to subsection 2.3 as a date on which the
Borrower requests the Lenders to make Loans hereunder.
"Business": as defined in subsection 3.19.
"Business Day": a day other than a Saturday, Sunday
or other day on which commercial banks in New York City are
authorized or required by law to close.
"Capital Stock": any and all shares, interests,
participations or other equivalents (however designated) of
capital stock of a corporation, any and all equivalent
ownership interests in a Person (other than a corporation)
and any and all warrants or options to purchase any of the
foregoing.
"C/D Assessment Rate": for any day as applied to any
ABR Loan, the net annual assessment rate (rounded upward to
the nearest 1/100th of 1%) determined by Chemical to be
payable on such day to the Federal Deposit Insurance
Corporation or any successor ("FDIC") for FDIC's insuring
time deposits made in Dollars at offices of Chemical in the
United States.
"C/D Reserve Percentage": for any day as applied to
any ABR Loan, that percentage (expressed as a decimal) which
is in effect on such day, as prescribed by the Board of
Governors of the Federal Reserve System (or any successor)
(the "Board"), for determining the maximum reserve
requirement for a Depositary Institution (as defined in
Regulation D of the Board) in respect of new non-personal
time deposits in Dollars having a maturity of 30 days or
more.
"Change in Control": shall be deemed to have occurred
if (a) any person or group (within the meaning of Rule 13d-5
of the Securities and Exchange Act of 1934 as in effect on
the date hereof) other than HMI or any direct or indirect
wholly owned subsidiary of HMI, shall own directly or
indirectly, beneficially or of record, shares representing
more than 35% of the aggregate ordinary voting power
represented by the issued and outstanding capital stock of
the Borrower; provided, however, that, at any time that HMI
or any direct or indirect wholly owned subsidiary of HMI
shall fail to own, directly and of record, shares
representing at least 35% of the aggregate ordinary voting
power represented by the issued and outstanding capital
stock of the Borrower, a Change in Control shall be deemed
to have occurred if any person or group other than HMI or
any direct or indirect subsidiary of HMI shall own, directly
or indirectly, beneficially or of record, shares
representing more than 25% of the aggregate ordinary voting
power represented by the issued and outstanding capital
stock of the Borrower; (b) a majority of the seats (other
than vacant seats) on the board of directors of the Borrower
shall at any time have been occupied by persons who were
neither (i) nominated by the management of the Borrower, nor
(ii) appointed by directors so nominated; or (c) any person
or group (other than HMI or any wholly owned subsidiary of
HMI) shall otherwise directly or indirectly control the
Borrower; provided, however, that the sale by HMI of its
shares shall not constitute a Change in Control except
pursuant to (a) above.
"Chemical": Chemical Bank.
"Code": the Internal Revenue Code of 1986, as
amended from time to time.
"Collateral Access Agreements": the agreements among
the Borrower and the landlord of each premises at which the
Borrower maintains Collateral, each of such agreements
providing for (i) access by the Lenders to the premises
where the Collateral is located and (ii) waivers by the
landlords of landlord's liens on the Collateral arising by
operation of law existing or which may come to exist.
"Commitment": as to any Lender, the obligation of
such Lender to make Loans to, or issue or participate in
Letters of Credit for the account of, the Borrower hereunder
in an aggregate principal amount at any one time outstanding
not to exceed the amount set forth opposite such Lender's
name on Schedule I, as such amount may be reduced from time
to time in accordance with the provisions of this Agreement.
"Commitment Percentage": as to any Lender at any
time, the percentage which such Lender's Commitment then
constitutes of the aggregate Commitments (or, at any time
after the Commitments shall have expired or terminated, the
percentage which the aggregate principal amount of such
Lender's Aggregate Outstanding Extensions of Credit
constitutes of the aggregate principal amount of the total
Aggregate Outstanding Extensions of Credit).
"Commitment Period": the period from and including
the Effective Date to but not including the Termination Date
or such earlier date on which the Commitments shall
terminate as provided herein.
"Commonly Controlled Entity": an entity, whether or
not incorporated, which is under common control with the
Borrower within the meaning of Section 4001 of ERISA or is
part of a group which includes the Borrower and which is
treated as a single employer under Section 414 of the Code.
"Consolidated Intangibles": at a particular date,
all assets of the Borrower and its Subsidiaries, determined
on a consolidated basis at such date, that would be
classified as intangible assets on a consolidated balance
sheet of the Borrower and its Subsidiaries prepared in
accordance with GAAP, including, without limitation,
unamortized debt discount and expense, unamortized
organization and reorganization expense, costs in excess of
the net asset value of acquired companies, patents, trade or
service marks, franchises, trade names, goodwill and the
amount of any write-up in the book value of any assets
resulting from any revaluation.
"Consolidated Interest Expense": for any period, the
amount of the gross interest expense, both expensed and
capitalized, of the Borrower and its Subsidiaries,
determined on a consolidated basis in accordance with GAAP,
for such period on the aggregate principal amount of their
Indebtedness.
"Consolidated Joint Ventures": any Joint Venture in
which the Borrower or any of its Subsidiaries has greater
than a 50% ownership interest.
"Consolidated Net Income": for any fiscal period of
the Borrower and its Subsidiaries, the amount which, in
accordance with GAAP, would be set forth opposite the
caption "net income or loss" or any like caption on a
consolidated income statement of the Borrower and its
Subsidiaries for such period.
"Consolidated Net Worth": at a particular date, all
amounts which would be included under shareholders' equity
on a consolidated balance sheet of the Borrower and its
Subsidiaries determined on a consolidated basis in
accordance with GAAP.
"Consolidated Operating Profit": for any fiscal
period of the Borrower and its Subsidiaries, EBIT for such
period (but excluding the amount of extraordinary and/or
unusual gains or losses otherwise included in calculating
such EBIT).
"Consolidated Tangible Net Worth": at a particular
date, Consolidated Net Worth, less Consolidated Intangibles.
"Contractual Obligation": as to any Person, any
provision of any security issued by such Person or of any
agreement, instrument or other undertaking to which such
Person is a party or by which it or any of its property is
bound.
"Cortland Property": as defined in subsection 5.12.
"Default": any of the events specified in Section 7,
whether or not any requirement for the giving of notice, the
lapse of time, or both, or any other condition, has been
satisfied.
"Defective Stock": laminators (LX2000, LX900, LX400,
and LX800), address writers (also referred to as envelope
printers), and handifaxes, and other products determined to
be defective in the reasonable judgment of the Agent.
"Dollars" and "$": dollars in lawful currency of the
United States of America.
"EBIT": for any period, Consolidated Net Income for
such period, plus, to the extent deducted from earnings in
determining such Consolidated Net Income for such period,
the sum of (i) taxes, (ii) Consolidated Interest Expense and
(iii) cash dividends received from Joint Ventures which are
not Consolidated Joint Ventures, minus, to the extent added
to earnings in determining such Consolidated Net Income for
such period, earnings from Joint Ventures which are not
Consolidated Joint Ventures, all as determined in accordance
with GAAP.
"Effective Date": the date on which the conditions
precedent set forth in subsection 4.1 shall be satisfied.
"Eligible Accounts": at the time of any
determination thereof, all Accounts of the Borrower which
meet the following criteria at the time of creation and
continue to meet such criteria at all times relevant to such
determination, and which are and which continue to be
acceptable to the Agent in all respects. Standards of
eligibility may be fixed and revised from time to time
solely by the Agent in its exclusive reasonable judgment.
The following requirements shall apply in determining
whether a particular Account constitutes an Eligible
Account:
(a) such Account is evidenced by an invoice and
has arisen from the sale of goods which have been
shipped or delivered to an Account Debtor on an
absolute sale basis, have not been shipped or
delivered on a consignment, approval, or sale-or--
return basis, and are not subject to any repurchase
or return agreement or arrangement, other than those
repurchase or return agreements that (i) arise in the
ordinary course of the Borrower's business, and (ii)
are consistent with standard industry practices;
(b) such Account has been adjusted to reflect the
return or rejection of, or any loss of or damage to,
any of the Inventory giving rise to such Account, and
is not subject to any material delivery, freight or
financing charges, or late or other fees, or set-offs,
counterclaims, defenses, or disputes existing
or asserted with respect to such Account;
(c) the Account Debtor in respect of such Account
is not insolvent or the subject of any bankruptcy
case or insolvency proceeding of any kind, unless
such Account is due from such Account Debtor as an
administrative claim under the Bankruptcy Code and
the Agent, in the exercise of its reasonable business
judgment, deems such Account Debtor to be
creditworthy;
(d) the Account Debtor in respect of such Account
is located within the United States of America;
(e) the Account Debtor in respect of such Account
is not the United States of America or any state,
territory, subdivision, department or agency thereof,
unless all applicable requirements of the Assignment
of Claims Act of 1940 have been met;
(f) such Account is at all times subject to the
Agent's duly perfected, first priority Lien except
for Liens permitted by subsection 6.3;
(g) such Account does not arise out of
transactions with an employee, officer, agent,
director, stockholder, Subsidiary, or Affiliate of
the Borrower;
(h) such Account is not later than sixty (60)
days after the due date stated on the invoice
therefor, provided, that the aggregate Accounts of
any Account Debtor with original due dates more
recent than 60 days prior to the date of
determination shall be reduced by the amount of net
credit balances of such Account Debtor the dates of
which are earlier than 60 days prior to such date of
determination;
(i) for each of the ten Accounts with the highest
aggregate balances on the Borrower's accounts
receivable aging summary, the balance under clause
(h) above ("not later than 60 days" clause) is less
than 25% of the total face value of such Account, and
for each other Account, the aggregate balance under
clause (h) above is less than 50% of the total face
value of such Account;
(j) such Account has not been and is not required
to be charged off or written off as uncollectible in
accordance with the customary business practice of
the Borrower;
(k) such Account does not arise out of any claim
in tort, is not evidenced by chattel paper, a
promissory note, a negotiable instrument, or any
other instrument of any kind or, if such Account is
evidenced by chattel paper, a promissory note, a
negotiable instrument, or any other instrument, the
Borrower has delivered and properly endorsed such
chattel paper, promissory note, negotiable instrument
or other instrument to the Agent, on behalf of the
Lenders;
(l) the amount of the face value of such Account
listed on any schedule of Accounts and shown on all
invoices and statements delivered to the Agent with
respect to such Account is not subject to any
retainages or holdbacks of any type, is actually and
absolutely owing to such Borrower, and is not
contingent for any reason and has not been sold or
discounted without recourse;
(m) such Account does not arise out of a cash on
delivery (COD) sale except to the extent that, in the
ordinary course of such Borrower's business, such
Borrower has received payment on such Account, but
has not yet applied such payment to such Account; or
(n) such Account does not arise out of the
delivery of samples or trial merchandise to customers
of Account Debtors.
Such Accounts shall be reduced by the greater of (1) the
value of an allowance earned but not taken, or (2) the value
of an accrual for the estimated current liability, in both
cases with respect to advertising/preparation allowances, or
"Key City" allowances, volume and other rebate programs, and
downward price adjustments or price protection and
transition programs (collectively referred to as the
"Programs"), where (1) and (2) are calculated as follows:
(1) the allowance earned but not taken with respect to the
Programs, equal to the general ledger provision for the
Programs (giving effect to adjustments for additions and/or
reversals) minus (I) credits issued (also referred to as
payments) to date and (II) total chargebacks requested by
customers as recorded on the Borrower's transaction code
summary aging of accounts report; and (2) the estimate of
the current liability for the Programs, equal to the
one-month rolling average of the last twelve months of credits
issued (also referred to as payments) plus chargebacks
requested by customers as recorded in the current to 60 days
past due aging categories on the Borrower's transaction code
summary aging of accounts report.
"Eligible Inventory": at any time of determination,
"inventory" (as defined in the UCC) shown on the most recent
schedule of Inventory delivered by the Borrower and meeting
the following requirements (which the Agent may, in its sole
discretion, revise from time to time):
(a) such Inventory consists of finished goods
Inventory owned by the Borrower and is not raw
materials, work-in-process or packing materials or
supplies not related to the Inventory;
(b) such Inventory is merchantable and is
currently salable in the normal course of such
Borrower's business;
(c) such Inventory is either (i) located in the
United States and is on the premises listed on the
schedule of Inventory locations attached to the
Security Agreement or (ii) in transit to a location
in the United States, provided, that the Borrower has
taken all steps necessary for the Agent to perfect
its security interest in such in-transit Inventory,
provided further, that with respect to any such
Inventory located on leased property the Borrower
shall have delivered a Collateral Access Agreement
executed by the lessor of such property;
(d) such Inventory has not been consigned and
does not represent any goods sold pursuant to a "bill
and hold" or "sale or return" arrangement, or is
otherwise in-transit to third parties;
(e) such Inventory is at all times subject to the
Agent's duly perfected, first priority Lien except
for Liens permitted by subsection 6.3;
(f) such Inventory does not constitute
reconditioned product, service depot, rework, or
discontinued (as each such term is used in the
inventory records of the Borrower delivered to the
Agent), or Defective Stock;
(g) such Inventory is net of intercompany
profits; and
(h) such Inventory is net of products using
electrical current of other than 110 volts.
"Eligible Service Depot Inventory": an amount equal
to 70% of Service Depot Inventory, where 70% is an
estimation of such Inventory to be returned to Eligible
Inventory. Standards of eligibility may be revised from
time to time solely by the Agent in its exclusive reasonable
judgment.
"Environmental Laws": any and all foreign, Federal,
state, local or municipal laws, rules, orders, regulations,
statutes, ordinances, codes, decrees, requirements of any
Governmental Authority or other Requirements of Law
(including common law) regulating, relating to or imposing
liability or standards of conduct concerning protection of
human health or the environment, as now or may at any time
hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act
of 1974, as amended from time to time.
"Event of Default": any of the events specified in
Section 7, provided that any requirement for the giving of
notice, the lapse of time, or both, or any other condition,
has been satisfied.
"Existing Guarantees": the Guarantee Obligations
outstanding on the Effective Date to the extent set forth on
Schedule 6.4 and, but only if, immediately after giving
effect thereto, no Default or Event of Default would exist.
"Existing Letters of Credit": as defined in
subsection 2.12(a).
"Financing Lease": any lease of property, real or
personal, the obligations of the lessee in respect of which
are required in accordance with GAAP to be capitalized on a
balance sheet of the lessee.
"F/X Exposure": on any date, the amount most
recently determined by Chemical, on a mark-to-market basis,
of the Borrower's exposure to Chemical under the Borrower's
foreign exchange line with Chemical. Chemical may determine
such exposure at any time and will advise the Borrower of
the results of each such determination.
"GAAP": generally accepted accounting principles in
the United States of America in effect from time to time.
"Governmental Authority": any nation or government,
any state or other political subdivision thereof and any
entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to
government.
"Guarantee Obligation": as to any Person (the
"guaranteeing person"), any obligation of (a) the
guaranteeing person or (b) another Person (including,
without limitation, any bank under any letter of credit) to
induce the creation of which the guaranteeing person has
issued a reimbursement, counterindemnity or similar
obligation, in either case guaranteeing or in effect
guaranteeing any Indebtedness, leases, dividends or other
obligations (the "primary obligations") of any other third
Person (the "primary obligor") in any manner, whether
directly or indirectly, including, without limitation, any
obligation of the guaranteeing person, whether or not
contingent, (i) to purchase any such primary obligation or
any property constituting direct or indirect security
therefor, (ii) to advance or supply funds (1) for the
purchase or payment of any such primary obligation or (2) to
maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency
of the primary obligor, (iii) to purchase property,
securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of
the primary obligor to make payment of such primary
obligation or (iv) otherwise to assure or hold harmless the
owner of any such primary obligation against loss in respect
thereof; provided, however, that the term Guarantee
Obligation shall not include endorsements of instruments for
deposit or collection in the ordinary course of business.
The amount of any Guarantee Obligation of any guaranteeing
person shall be deemed to be the lower of (a) an amount
equal to the stated or determinable amount of the primary
obligation in respect of which such Guarantee Obligation is
made and (b) the maximum amount for which such guaranteeing
person may be liable pursuant to the terms of the instrument
embodying such Guarantee Obligation, unless such primary
obligation and the maximum amount for which such
guaranteeing person may be liable are not stated or
determinable, in which case the amount of such Guarantee
Obligation shall be such guaranteeing person's maximum
reasonably anticipated liability in respect thereof as
determined by the Borrower in good faith.
"Hazardous Materials": any hazardous materials,
hazardous wastes, hazardous constituents, hazardous or toxic
substances, petroleum products (including crude oil or any
fraction thereof), defined or regulated as such in or under
any Environmental Law.
"HMI": HM Investments, Ltd., a Delaware corporation.
"Indebtedness": of any Person at any date, (a) all
indebtedness of such Person for borrowed money or for the
deferred purchase price of property or services (other than
current trade liabilities incurred in the ordinary course of
business and payable in accordance with customary
practices), (b) any other indebtedness of such Person which
is evidenced by a note, bond, debenture or similar
instrument, (c) all obligations of such Person under
Financing Leases, (d) all obligations of such Person in
respect of letters of credit or acceptances issued or
created for the account of such Person and (e) all
liabilities secured by any Lien on any property owned by
such Person even though such Person has not assumed or
otherwise become liable for the payment thereof.
"Insolvency": with respect to any Multiemployer
Plan, the condition that such Plan is insolvent within the
meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of
Insolvency.
"Intellectual Property": as defined in subsection
3.9.
"Interest Payment Date": the last day of each March,
June, September and December to occur while such Loan is
outstanding.
"Issuing Lender": (a) with respect to Letters of
Credit issued after the Effective Date, either Chemical or
BAI and (b) with respect to each of the Existing Letters of
Credit and any extension, amendment and renewal thereof, the
bank listed as the issuing bank of such Existing Letters of
Credit on Schedule 2.12.
"Inventory": all "inventory" (as defined in the
UCC).
"J.M. Murray Contract": as defined in subsection
5.12.
"Joint Ventures": any arrangement (including,
without limitation, a partnership, corporation or
association but excluding any such entity which had or has
securities that are publicly traded) whereby the Borrower
and/or one or more of its Subsidiaries on the one hand, and
a Person or Persons other than the Borrower, an Affiliate of
the Borrower or any of its Subsidiaries, on the other,
directly or indirectly hold interests in an asset or group
of assets that are being operated or are proposed to be
operated by one or more of such holders for the accounts of
all such holders in accordance with the terms of an
operating agreement, ownership agreement, corporate charter,
articles of association, partnership agreement or other
customary similar type arrangement among such holders.
"Letters of Credit": as defined in subsection 2.12.
"L/C Commitment": as defined in subsection 2.12.
"L/C Obligations": at a particular time the sum of
(a) the undrawn and unexpired amount of the Letters of
Credit and (b) the aggregate amount of drawings under the
Letters of Credit which have not been reimbursed pursuant to
subsection 2.16.
"L/C Participants": the collective reference to all
the Lenders other than the Issuing Lender.
"Lien": any mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien
(statutory or other), charge or other security interest or
any preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever
(including, without limitation, any conditional sale or
other title retention agreement and any Financing Lease
having substantially the same economic effect as any of the
foregoing).
"Loan": any loan made by any Lender pursuant to this
Agreement.
"Loan Documents": this Agreement, the Security
Agreement, the Notes and any Application and, when executed
and delivered pursuant to subsection 5.12, the Mortgage.
"Material Adverse Effect": a material adverse effect
on (a) the business, operations, property or condition
(financial or otherwise) of the Borrower and its
Subsidiaries taken as a whole or (b) the validity or
enforceability of this Agreement, any of the Notes or any of
the other Loan Documents or the rights or remedies of the
Agent or the Lenders hereunder or thereunder.
"Materials of Environmental Concern": any gasoline
or petroleum (including crude oil or any fraction thereof)
or petroleum products or any hazardous or toxic substances,
materials or wastes, defined or regulated as such in or
under any Environmental Law, including, without limitation,
asbestos, polychlorinated biphenyls and urea-formaldehyde
insulation.
"Mortgage": as defined in subsection 5.12.
"Multiemployer Plan": a Plan which is a
multiemployer plan as defined in Section 4001(a)(3) of
ERISA.
"Non-Excluded Taxes": as defined in subsection 2.11.
"Notes": the collective reference to the Revolving
Credit Notes.
"Participant": as defined in subsection 9.6(b).
"PBGC": the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA.
"Permitted Investments": (a) direct obligations of,
or obligations the principal of and interest on which are
unconditionally guaranteed by, the United States of America
(or by any agency thereof to the extent such obligations are
backed by the full faith and credit of the United States of
America), in each case maturing within 270 days from the
date of acquisition thereof; (b) investments in commercial
paper maturing within 270 days from the date of acquisition
thereof and having, at such date of acquisition, the highest
credit rating obtainable from Standard & Poor's Ratings
Group or from Moody's Investors Service, Inc.; (c)
investments in certificates of deposit, banker's acceptances
and time deposits maturing within 270 days from the date of
acquisition thereof issued or guaranteed by or placed with,
and money market deposit accounts issued or offered by, any
Lender, or any domestic office of any commercial bank
organized under the laws of the United States of America or
any State thereof which has a combined capital and surplus
and undivided profits of not less than $500,000,000 and
whose short-term debt is rated A-1 or better by Standard &
Poor's Ratings Group or P-1 by Moody's Investor's Service,
Inc., or similarly rated by any successor to either of such
rating services; and (d) other investment instruments
approved in writing by the Required Lenders and offered by
financial institutions which have a combined capital and
surplus and undivided profits of not less than $500,000,000.
"Person": an individual, partnership, corporation,
business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other
entity of whatever nature.
"Plan": at a particular time, any employee benefit
plan which is covered by ERISA and in respect of which the
Borrower or a Commonly Controlled Entity is (or, if such
plan were terminated at such time, would under Section 4069
of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"Prior Agreement": as defined in the recitals
hereof.
"Properties": as defined in subsection 3.19(a).
"Quick Assets": at a particular date, all current
assets (other than Inventory) of the Borrower and its
Subsidiaries, determined on a consolidated basis in
accordance with GAAP.
"Quick Ratio": at a particular date, the ratio of
Quick Assets to Adjusted Current Liabilities.
"Register": as defined in subsection 9.6(d).
"Regulation U": Regulation U of the Board of
Governors of the Federal Reserve System as in effect from
time to time.
"Reimbursement Obligation": the obligation of the
Borrower to reimburse the Issuing Lender pursuant to
subsection 2.16.
"Rent": for any period, the amount of rent expense of
the Borrower and its Subsidiaries, determined on a
consolidated basis in accordance with GAAP, in connection
with all leases of the Borrower and its Subsidiaries, other
than Financing Leases.
"Reorganization": with respect to any Multiemployer
Plan, the condition that such plan is in reorganization
within the meaning of Section 4241 of ERISA.
"Reports": the Borrower's Annual Report on Form 10-K
for the fiscal year ended June 30, 1994 and any other
document that has been both (a) filed subsequent to June 30,
1994 under the Securities Exchange Act of 1934, as amended,
in the form (including exhibits) filed with the Securities
and Exchange Commission and (b) delivered to the Agent.
"Reportable Event": any of the events set forth in
Section 4043(b) of ERISA, other than those events as to
which the thirty day notice period is waived under
subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg.
section 2615.
"Required Lenders": at any time, Lenders the
Commitment Percentages of which aggregate 100%.
"Requirement of Law": as to any Person, the
Certificate of Incorporation and By-Laws or other
organizational or governing documents of such Person, and
any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or any
of its property or to which such Person or any of its
property is subject.
"Responsible Officer": the chief executive officer
or the president of the Borrower or, with respect to
financial matters, the chief financial officer, treasurer,
vice president - finance or controller of the Borrower.
"Revolving Credit Loans": as defined in subsection
2.1.
"Revolving Credit Note": as defined in subsection
2.2.
"Security Agreement": the Security Agreement, dated
as of the date hereof, between the Borrower and the Agent,
as the same may from time to time be amended, modified or
supplemented.
"Service Depot Inventory": the Inventory currently
described by the Borrower in its books and records as
"department 390 inventory".
"Single Employer Plan": any Plan which is covered by
Title IV of ERISA, but which is not a Multiemployer Plan.
"Subsidiary": as to any Person, a corporation,
partnership or other entity of which shares of stock or
other ownership interests having ordinary voting power
(other than stock or such other ownership interests having
such power only by reason of the happening of a contingency)
to elect a majority of the board of directors or other
managers of such corporation, partnership or other entity
are at the time owned, or the management of which is
otherwise controlled, directly or indirectly through one or
more intermediaries, or both, by such Person. Unless
otherwise qualified, all references to a "Subsidiary" or to
"Subsidiaries" in this Agreement shall refer to a Subsidiary
or Subsidiaries of the Borrower.
"Termination Date": July 1, 1996.
"Transferee": as defined in subsection 9.6(f).
"UCC": shall mean the Uniform Commercial Code as
from time to time in effect in the State of New York.
"Uniform Customs": the Uniform Customs and Practice
for Documentary Credits (1983 Revision), International
Chamber of Commerce Publication No. 400, as the same may be
amended from time to time.
1.2 Other Definitional Provisions. (a) Unless
otherwise specified therein, all terms defined in this Agreement
shall have the defined meanings when used in the Notes or any
certificate or other document made or delivered pursuant hereto.
(b) As used herein and in the Notes, and any
certificate or other document made or delivered pursuant hereto,
accounting terms relating to the Borrower and its Subsidiaries
not defined in subsection 1.1 and accounting terms partly defined
in subsection 1.1, to the extent not defined, shall have the
respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision
of this Agreement, and Section, subsection, Schedule and Exhibit
references are to this Agreement unless otherwise specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 Revolving Credit Commitments. Subject to the
terms and conditions hereof, each Lender severally agrees to make
revolving credit loans ("Revolving Credit Loans") to the Borrower
from time to time during the Commitment Period in an aggregate
principal amount at any one time outstanding which, when added to
such Lender's Commitment Percentage of the then outstanding L/C
Obligations, does not exceed the lesser of (i) the amount of such
Lender's Commitment and (ii) such Lender's Commitment Percentage
multiplied by the Borrowing Base in effect at such time. During
the Commitment Period the Borrower may use the Commitments by
borrowing, prepaying the Revolving Credit Loans in whole or in
part, and reborrowing, all in accordance with the terms and
conditions hereof.
2.2 Revolving Credit Notes. The Revolving Credit
Loans made by each Lender shall be evidenced by a promissory note
of the Borrower, substantially in the form of Exhibit A, with
appropriate insertions as to payee, date and principal amount (a
"Revolving Credit Note"), payable to the order of such Lender and
in a principal amount equal to the lesser of (a) the amount of
the initial Commitment of such Lender and (b) the aggregate
unpaid principal amount of all Revolving Credit Loans made by
such Lender. Each Lender is hereby authorized to record the date
and amount of each Revolving Credit Loan made by such Lender,
the date and amount of each payment or prepayment of principal
thereof on the schedule annexed to and constituting a part of its
Revolving Credit Note, and any such recordation shall constitute
prima facie evidence of the accuracy of the information so
recorded. Each Revolving Credit Note shall (x) be dated the
Effective Date, (y) be stated to mature on the Termination Date
and (z) provide for the payment of interest in accordance with
subsection 2.7.
2.3 Procedure for Revolving Credit Borrowing. The
Borrower may borrow under the Commitments during the Commitment
Period on any Business Day, provided that the Borrower shall give
the Agent irrevocable notice (which notice (x) must be received
by the Agent prior to 10:00 A.M., New York City time, on the
requested Borrowing Date and (y) may be given to the Agent
telephonically and confirmed via facsimile by the Borrower),
specifying (i) the amount to be borrowed and (ii) the requested
Borrowing Date. Each borrowing under the Commitments shall be in
an amount equal to $100,000 or a whole multiple thereof (or, if
the then Available Commitments are less than $100,000, such
lesser amount). Upon receipt of any such notice from the
Borrower, the Agent shall promptly notify each Lender thereof.
Each Lender will make the amount of its pro rata share of each
borrowing available to the Agent for the account of the Borrower
at the office of the Agent specified in subsection 9.2 prior to
11:00 A.M., New York City time, on the Borrowing Date requested
by the Borrower in funds immediately available to the Agent.
Such borrowing will then be made available to the Borrower by the
Agent crediting the account of the Borrower on the books of such
office with the aggregate of the amounts made available to the
Agent by the Lenders and in like funds as received by the Agent.
2.4 Facility Fee. The Borrower agrees to pay to the
Agent for the account of each Lender a facility fee for the
period from and including the first day of the Commitment Period
to the Termination Date, computed at the rate of 1/2 of 1% per
annum on the Commitment of such Lender during the period for
which payment is made, payable quarterly in arrears on the last
day of each March, June, September and December and on the
Termination Date or such earlier date on which the Commitments
shall terminate as provided herein, commencing on the first of
such dates to occur after the date hereof.
2.5 Termination or Reduction of Commitments. (a)
The Borrower shall have the right, upon not less than five
Business Days' notice to the Agent, to terminate the Commitments
or, from time to time, to reduce the amount of the Commitments,
provided that no such termination or reduction shall be permitted
if, after giving effect thereto and to any prepayments of the
Loans made on the effective date thereof, the then outstanding
principal amount of the Loans, when added to the then outstanding
L/C Obligations, would exceed the amount of the Commitments then
in effect. Any such reduction shall be in an amount equal to
$100,000 or a whole multiple thereof and shall reduce permanently
the Commitments then in effect.
(b) The Commitments shall automatically reduce to
$25,000,000 on March 31, 1996. The reduction shall be
accompanied by prepayment of Loans to the extent that, after
giving affect to such reduction, the then outstanding principal
amount of Loans, when added to the then outstanding L/C
Obligations, would not exceed the amount of the Commitments as so
reduced.
2.6 Optional Prepayments; Mandatory Prepayments.
(a) The Borrower may, at any time and from time to time, prepay
the Loans, in whole or in part, without premium or penalty, upon
at least three Business Days' irrevocable notice to the Agent,
specifying the date and amount of prepayment. Upon receipt of
any such notice the Agent shall promptly notify each Lender
thereof. If any such notice is given, the amount specified in
such notice shall be due and payable on the date specified
therein, together with any amounts payable pursuant to subsection
2.16.
(b) In the event that any Borrowing Base Certificate
delivered pursuant to subsection 5.2(d) shall indicate that, as
of the date thereof, the amount of the Aggregate Outstanding
Extensions of Credit of all Lenders then outstanding exceeds the
amount of the Borrowing Base then, without notice or demand, the
Borrower shall, on the date of such certificate, make a mandatory
prepayment of the Loans in an amount equal to such excess.
2.7 Interest Rates and Payment Dates. (a) Each Loan
shall bear interest at a rate per annum equal to the ABR.
(b) If all or a portion of (i) the principal amount
of any Loan, (ii) any interest payable thereon or (iii) any
commitment fee or other amount payable hereunder shall not be
paid when due (whether at the stated maturity, by acceleration or
otherwise), such overdue amount shall bear interest at a rate per
annum equal to the ABR plus 2%, in each case from the date of
such non-payment until such amount is paid in full (as well after
as before judgment).
(c) Interest shall be payable in arrears on each
Interest Payment Date, provided that interest accruing pursuant
to paragraph (b) of this subsection shall be payable from time to
time on demand.
2.8 Computation of Interest and Fees. Facility fees
and, whenever it is calculated on the basis of the Prime Rate,
interest shall be calculated on the basis of a 365- (or 366-, as
the case may be) day year for the actual days elapsed; and,
otherwise, interest shall be calculated on the basis of a 360-day
year for the actual days elapsed. Any change in the interest
rate on a Loan resulting from a change in the ABR shall become
effective as of the opening of business on the day on which such
change becomes effective. The Agent shall as soon as practicable
notify the Borrower and the Lenders of the effective date and the
amount of each such change in interest rate.
2.9 Pro Rata Treatment and Payments. (a) Each
borrowing by the Borrower from the Lenders hereunder, each
payment by the Borrower on account of any facility fee hereunder
and any reduction of the Commitments of the Lenders shall be made
pro rata according to the respective Commitment Percentages of
the Lenders. Each payment (including each prepayment) by the
Borrower on account of principal of and interest on the Loans
shall be made pro rata according to the respective outstanding
principal amounts of the Loans then held by the Lenders. All
payments (including prepayments) to be made by the Borrower
hereunder and under the Notes, whether on account of principal,
interest, fees or otherwise, shall be made without set off or
counterclaim and shall be made prior to 12:00 Noon, New York City
time, on the due date thereof to the Agent, for the account of
the Lenders, at the Agent's office specified in subsection 9.2,
in Dollars and in immediately available funds. The Agent shall
distribute such payments to the Lenders promptly upon receipt in
like funds as received. If any payment hereunder becomes due and
payable on a day other than a Business Day, such payment shall be
extended to the next succeeding Business Day, and, with respect
to payments of principal, interest thereon shall be payable at
the then applicable rate during such extension.
(b) Unless the Agent shall have been notified in
writing by any Lender prior to a borrowing that such Lender will
not make the amount that would constitute its Commitment
Percentage of such borrowing available to the Agent, the Agent
may assume that such Lender is making such amount available to
the Agent, and the Agent may, in reliance upon such assumption,
make available to the Borrower a corresponding amount. If such
amount is not made available to the Agent by the required time on
the Borrowing Date therefor, such Lender shall pay to the Agent,
on demand, such amount with interest thereon at a rate equal to
the daily average Federal Funds Effective Rate for the period
until such Lender makes such amount immediately available to the
Agent. A certificate of the Agent submitted to any Lender with
respect to any amounts owing under this subsection shall be
conclusive in the absence of manifest error. If such Lender's
Commitment Percentage of such borrowing is not made available to
the Agent by such Lender within three Business Days of such
Borrowing Date, the Agent shall also be entitled to recover such
amount with interest thereon at the rate per annum applicable to
ABR Loans hereunder, on demand, from the Borrower.
2.10 Requirements of Law. If any Lender shall have
determined that the adoption of or any change in any Requirement
of Law regarding capital adequacy or in the interpretation or
application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive
regarding capital adequacy (whether or not having the force of
law) from any Governmental Authority made subsequent to the date
hereof does or shall have the effect of reducing the rate of
return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder to a level below that
which such Lender or such corporation could have achieved but for
such change or compliance (taking into consideration such
Lender's or such corporation's policies with respect to capital
adequacy) by an amount deemed by such Lender to be material, then
from time to time, after submission by such Lender to the
Borrower (with a copy to the Agent) of a written request
therefore, the Borrower shall pay to such Lender such additional
amount or amounts as will compensate such Lender for such
reduction.
2.11 Taxes. (a) All payments made by the Borrower
under this Agreement and the Notes shall be made free and clear
of, and without deduction or withholding for or on account of,
any present or future income, stamp or other taxes, levies,
imposts, duties, charges, fees, deductions or withholdings, now
or hereafter imposed, levied, collected, withheld or assessed by
any Governmental Authority, excluding net income taxes and
franchise taxes (imposed in lieu of net income taxes) imposed on
the Agent or any Lender as a result of a present or former
connection between the Agent or such Lender and the jurisdiction
of the Governmental Authority imposing such tax or any political
subdivision or taxing authority thereof or therein (other than
any such connection arising solely from the Agent or such Lender
having executed, delivered or performed its obligations or
received a payment under, or enforced, this Agreement or the
Notes). If any such non-excluded taxes, levies, imposts, duties,
charges, fees, deductions or withholdings ("Non-Excluded Taxes")
are required to be withheld from any amounts payable to the Agent
or any Lender hereunder or under the Notes, the amounts so
payable to the Agent or such Lender shall be increased to the
extent necessary to yield to the Agent or such Lender (after
payment of all Non-Excluded Taxes) interest or any such other
amounts payable hereunder at the rates or in the amounts
specified in this Agreement and the Notes, provided, however,
that the Borrower shall not be required to increase any such
amounts payable to any Lender that is not organized under the
laws of the United States of America or a state thereof if such
Lender fails to comply with the requirements of paragraph (b) of
this subsection. Whenever any Non-Excluded Taxes are payable by
the Borrower, as promptly as possible thereafter the Borrower
shall send to the Agent for its own account or for the account of
such Lender, as the case may be, a certified copy of an original
official receipt received by the Borrower showing payment
thereof. If the Borrower fails to pay any Non-Excluded Taxes
when due to the appropriate taxing authority or fails to remit to
the Agent the required receipts or other required documentary
evidence, the Borrower shall indemnify the Agent and the Lenders
for any incremental taxes, interest or penalties that may become
payable by the Agent or any Lender as a result of any such
failure. The agreements in this subsection shall survive the
termination of this Agreement and the payment of the Notes and
all other amounts payable hereunder.
(b) Each Lender that is not incorporated under the
laws of the United States of America or a state thereof shall:
(i) deliver to the Borrower and the Agent (A) two duly
completed copies of United States Internal Revenue Service
Form 1001 or 4224, or successor applicable form, as the case
may be, and (B) an Internal Revenue Service Form W-8 or W-9,
or successor applicable form, as the case may be;
(ii) deliver to the Borrower and the Agent two further
copies of any such form or certification on or before the
date that any such form or certification expires or becomes
obsolete and after the occurrence of any event requiring a
change in the most recent form previously delivered by it to
the Borrower; and
(iii) obtain such extensions of time for filing and
complete such forms or certifications as may reasonably be
requested by the Borrower or the Agent;
unless in any such case an event (including, without limitation,
any change in treaty, law or regulation) has occurred prior to
the date on which any such delivery would otherwise be required
which renders all such forms inapplicable or which would prevent
such Lender from duly completing and delivering any such form
with respect to it and such Lender so advises the Borrower and
the Agent. Such Lender shall certify (i) in the case of a Form
1001 or 4224, that it is entitled to receive payments under this
Agreement without deduction or withholding of any United States
federal income taxes and (ii) in the case of a Form W-8 or W-9,
that it is entitled to an exemption from United States backup
withholding tax. Each Person that shall become a Lender or a
Participant pursuant to subsection 9.6 shall, upon the
effectiveness of the related transfer, be required to provide all
of the forms and statements required pursuant to this subsection,
provided that in the case of a Participant such Participant shall
furnish all such required forms and statements to the Lender from
which the related participation shall have been purchased.
2.12 L/C Commitment.
(a) Prior to the Effective Date, the Issuing Lender
has issued, for the account of the Borrower, the letters of
credit listed on Schedule 2.12 (the "Existing Letters of
Credit"). Subject to the terms and conditions hereof, the
Issuing Lender, in reliance on the agreements of the other
Lenders set forth in subsection 2.15 agrees to issue irrevocable
letters of credit (together with the Existing Letters of Credit,
"Letters of Credit") for the account of the Borrower on any
Business Day during the Commitment Period in such form as may be
approved from time to time by the Issuing Lender; provided, that
the Issuing Lender shall not issue any Letter of Credit if, after
giving effect to such issuance, (1) the Aggregate Outstanding
Extensions of Credit would exceed the lesser of (i) the
Commitments or (ii) the Borrowing Base as of such time or (2) the
aggregate of the L/C Obligations and the Acceptance Obligations
would exceed $7,500,000. The commitment to issue Letters of
Credit as set forth in this subsection 2.12(a) is referred to as
the "L/C Commitment".
(b) Each Letter of Credit shall:
(i) be denominated in Dollars and shall be an
irrevocable commercial letter of credit issued in respect of
the purchase of goods or services by the Borrower and its
Subsidiaries in the ordinary course of business and
(ii) expire no later than the Termination Date.
(c) Each Letter of Credit shall be subject to the
Unifo rm Customs and, to the extent not inconsistent therewith,
the l aws of the State of New York.
(d) The Issuing Lender shall not at any time be
obligated to issue any Letter of Credit hereunder if such
issuance would conflict with, or cause the Issuing Lender or any
L/C Participant to exceed any limits imposed by, any applicable
Requirement of Law.
2.13 Procedure for Issuance of Letters of Credit.
The Borrower may from time to time request that the
Issuing Lender issue a Letter of Credit by delivering to the
Issuing Lender at its address for notices specified herein an
Application therefor, completed to the satisfaction of the
Issuing Lender, and such other certificates, documents and other
paper s and information as the Issuing Lender may request. Upon
receipt of any Application, the Issuing Lender will process such
Application and the certificates, documents and other papers and
information delivered to it in connection therewith in accordance
with its customary procedures and shall promptly issue the Letter
of Credit requested thereby (but in no event shall the Issuing
Lender be required to issue any Letter of Credit earlier than
three Business Days after its receipt of the Application therefor
and all such other certificates, documents and other papers and
information relating thereto) by issuing the original of such
Letter of Credit to the beneficiary thereof or as otherwise may
be agreed by the Issuing Lender and the Borrower. The Issuing
Lender shall furnish a copy of such Letter of Credit to the
Borrower promptly following the issuance thereof.
2.14 Fees, Commissions and Other Charges.
(a) The Borrower shall pay to the Agent a fronting
fee with respect to each Letter of Credit (i) for the account of
the Issuing Lender in an amount equal to 1% of the face amount of
such Letter of Credit and (ii) for the account of the Lenders, an
amount equal to 2 1/2% per annum on the face amount of such Letter
of Credit, to be shared ratably among them in accordance with
their respective Commitment Percentages. Such fronting fee
provided in clause (i) above shall be payable in advance on the
date of issuance of each Letter of Credit and shall be
nonrefundable and the fronting fee provided in clause (ii) above
shall be payable quarterly in arrears on the last day of each
March, June, September and December and on the Termination Date
or such earlier date on which the Commitments shall terminate as
provided herein, commencing on the first of such dates to occur
after the date hereof.
(b) In addition to the foregoing fees and
commissions, the Borrower shall pay or reimburse the Issuing
Lender for such normal and customary costs and expenses as are
incurred or charged by the Issuing Lender in issuing, effecting
payment under, amending or otherwise administering any Letter of
Credit.
(c) The Agent shall, promptly following its receipt
thereof, distribute to the Issuing Lender and the L/C
Participants all fees and commissions received by the Agent for
their respective accounts pursuant to this subsection.
2.15 L/C Participations.
(a) Effective on the Effective Date in the case of
an Existing Letter of Credit, and effective on the date of
issuance in the case of a Letter of Credit issued after the
Effective Date, the Issuing Lender irrevocably agrees to grant
and hereby grants to each L/C Participant, and, to induce the
Issuing Lender to issue Letters of Credit hereunder, each L/C
Participant irrevocably agrees to accept and purchase and hereby
accepts and purchases from the Issuing Lender, on the terms and
conditions hereinafter stated, for such L/C Participant's own
account and risk an undivided interest equal to such L/C
Participant's Commitment Percentage in the Issuing Lender's
obligations and rights under each Letter of Credit issued
hereunder and the amount of each draft paid by the Issuing Lender
thereunder. Each L/C Participant unconditionally and irrevocably
agrees with the Issuing Lender that, if a draft is paid under any
Letter of Credit for which the Issuing Lender is not reimbursed
in full by the Borrower in accordance with the terms of this
Agreement, such L/C Participant shall pay to the Issuing Lender
upon demand at the Issuing Lender's address for notices specified
herein an amount equal to such L/C Participant's Commitment
Percentage of the amount of such draft, or any part thereof,
which is not so reimbursed.
(b) If any amount required to be paid by any L/C
Participant to the Issuing Lender pursuant to paragraph 2.15(a)
in respect of any unreimbursed portion of any payment made by the
Issuing Lender under any Letter of Credit is paid to the Issuing
Lender within three Business Days after the date such payment is
due, such L/C Participant shall pay to the Issuing Lender on
demand an amount equal to the product of (1) such amount, times
(2) the daily average Federal funds rate, as quoted by the
Issuing Lender, during the period from and including the date
such payment is required to the date on which such payment is
immediately available to the Issuing Lender, times (3) a fraction
the numerator of which is the number of days that elapse during
such period and the denominator of which is 360. If any such
amount required to be paid by any L/C Participant pursuant to
paragraph 2.15(a) is not in fact made available to the Issuing
Lender by such L/C Participant within three Business Days after
the date such payment is due, the Issuing Lender shall be
entitled to recover from such L/C Participant, on demand, such
amount with interest thereon calculated from such due date at the
rate per annum applicable to Loans hereunder. A certificate of
the Issuing Lender submitted to any L/C Participant with respect
to any amounts owing under this subsection shall be conclusive in
the absence of manifest error.
(c) Whenever, at any time after the Issuing Lender
has made payment under any Letter of Credit and has received from
any L/C Participant its pro rata share of such payment in
accordance with subsection 2.15(a), the Issuing Lender receives
any payment related to such Letter of Credit (whether directly
from the Borrower or otherwise, including proceeds of collateral
applied thereto by the Issuing Lender), or any payment of
interest on account thereof, the Issuing Lender will distribute
to such L/C Participant its pro rata share thereof; provided,
however, that in the event that any such payment received by the
Issuing Lender shall be required to be returned by the Issuing
Lender, such L/C Participant shall return to the Issuing Lender
the portion thereof previously distributed by the Issuing Lender
to it.
2.16 Reimbursement Obligation of the Borrower.
(a) The Borrower agrees to reimburse the Issuing
Lender on each date on which the Issuing Lender notifies the
Borrower of the date and amount of a draft presented under any
Letter of Credit and paid by the Issuing Lender, for the amount
of (1) such draft so paid and (2) any taxes, fees, charges or
other costs or expenses incurred by the Issuing Lender in
connection with such payment. Each such payment shall be made to
the Issuing Lender at its address for notices specified herein in
lawful money of the United States of America and in immediately
available funds.
(b) Interest shall be payable on any and all amounts
remaining unpaid by the Borrower under this subsection from the
date such amounts become payable (whether at stated maturity, by
acceleration or otherwise) until payment in full at the rate
which would be payable on any outstanding Loans which were then
overdue.
(c) Each drawing under any Letter of Credit shall
constitute a request by the Borrower to the Agent for a borrowing
pursuant to subsection 2.3 of Loans in the amount of such
drawing. The Borrowing Date with respect to such borrowing shall
be the date of such drawing.
2.17 Obligations Absolute.
(a) The Borrower also agrees with the Issuing Lender
that the Issuing Lender shall not be responsible for, and the
Borrower's Reimbursement Obligations under subsection 2.16(a)
shall not be affected by, among other things, (1) the validity or
genuineness of documents or of any endorsements thereon, even
though such documents shall in fact prove to be invalid,
fraudulent or forged (except where the failure to detect such
invalidity, fraud or forgery is the result of acts or omissions
of the Issuing Lender constituting gross negligence or willful
misconduct), or (2) any dispute between or among the Borrower and
any beneficiary of any Letter of Credit or any other party to
which such Letter of Credit may be transferred or (3) any claims
whatsoever of the Borrower against any beneficiary of such Letter
of Credit or any such transferee.
(b) The Issuing Lender shall not be liable for any
error, omission, interruption or delay in transmission, dispatch
or delivery of any message or advice, however transmitted, in
connection with any Letter of Credit, except for errors or
omissions caused by the Issuing Lender's gross negligence or
willful misconduct.
(c) The Borrower agrees that any action taken or
omitted by the Issuing Lender under or in connection with any
Letter of Credit or the related drafts or documents, if done in
the absence of gross negligence of willful misconduct and in
accordance with the standards of care specified in the Uniform
Commercial Code of the State of New York, shall be binding on the
Borrower and shall not result in any liability of the Issuing
Lender to the Borrower.
2.18 Letter of Credit Payments.
If any draft shall be presented for payment under any
Letter of Credit, the Issuing Lender shall promptly notify the
Borrower of the date and amount thereof. The responsibility of
the Issuing Lender to the Borrower in connection with any draft
presented for payment under any Letter of Credit shall, in the
absence of gross negligence or willful misconduct by the Issuing
Lender and in addition to any payment obligation expressly
provided for in such Letter of Credit, be limited to determining
that the documents (including each draft) delivered under such
Letter of Credit in connection with such presentment are in
conformity with such Letter of Credit.
2.19 Application.
To the extent that any provision of any Application
related to any Letter of Credit is inconsistent with the
provisions of this Section 2, the provisions of this Section 2
shall apply.
2.20 Increased Costs. If, following the Effective
Date, any law or regulation or any change in the interpretation
or application thereof by any court or administrative or
Governmental Authority charged with the administration thereof
shall either (i) impose, modify, assess or deem applicable any
reserve, special deposit, assessment or similar requirement
against any L/C Commitment or Letters of Credit issued by the
Issuing Lender or any Lender or (ii) impose on the Issuing Lender
or any Lender any other condition regarding any Letter of Credit,
and the result of any event referred to in clauses (i) or (ii)
above shall be to increase the cost to the Issuing Lender or such
Lender of issuing or maintaining such Letter of Credit, any L/C
Commitment or its participation therein, as the case may be
(which increase in cost shall be the result of the Issuing
Lender's or such Lender's reasonable allocation of the aggregate
of such cost increases resulting from such events), then, upon
demand by the Issuing Lender, the Agent or such Lender, the
Borrower shall immediately pay to the Issuing Lender or such
Lender from time to time as specified by the Issuing Lender or
such Lender additional amounts which shall be sufficient to
compensate the Issuing Lender or such Lender for such increased
cost, together with interest on each such amount from the date
deman ded until payment in full thereof at the rate provided in
subsection 2.16(b). A certificate as to the fact and amount of
such increased cost incurred by the Issuing Lender or any Lender
as a result of any event mentioned in clauses (a) or (b) above,
submitted by the Issuing Lender or any such Lender to the
Borrower, shall be conclusive, absent manifest error.
2.21 Further Assurances. The Borrower hereby agrees
from time to time, to do and perform any and all acts and to
execute any and all further instruments required or reasonably
requested by the Issuing Lender or the Required Lenders more
fully to effect the purposes of this Agreement and the issuance
of the Letters of Credit hereunder.
2.22 Nature of Obligations; Indemnities. (a) The
obligations of the Borrower hereunder shall be absolute and
unconditional under any and all circumstances and irrespective of
any set off, counterclaim or defense to payment which the
Borrower may have or have had against the Issuing Lender, the
Agent, any Lender or any beneficiary of a Letter of Credit,
provided, however, that this provision shall be deemed a waiver
by the Borrower of the assertion of a compulsory counterclaim
only to the extent permitted by applicable law. The Borrower
assumes all risks of the acts or omissions of the users of the
Letters of Credit and all risks of the misuse of the Letters of
Credit. Neither the Issuing Lender, any of its correspondents or
any Lender shall be responsible: (i) for the form, validity,
sufficiency, accuracy, genuineness or legal effect of any
document specified in any of the Applications for any of the
Letters of Credit, even if it should in fact prove to be in any
or all respects invalid, insufficient, inaccurate, fraudulent, or
forged; (ii) for the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign any
of the Letters of Credit or any of the rights or benefits
there under or proceeds thereof in whole or in part; (iii) for
failure of any draft to bear any reference or adequate reference
to any of the Letters of Credit, or failure of anyone to note the
amount of any draft on the reverse of any of the Letters of
Credit or to surrender or to take up any of the Letters of Credit
or to send forward any such document apart from drafts as
required by the terms of any of the Letters of Credit, each of
which provisions, if contained in a Letter of Credit itself, it
is agreed, may be waived by the Issuing Lender; (iv) for errors,
omissions, interruptions or delays in transmission or delivery of
any messages, by mail, cable, telegraph, telex or otherwise,
whether or not they be in cipher; (v) for any error, neglect,
default, suspension or insolvency of any correspondents of the
Issuing Lender; (vi) for errors in translation or for errors in
interpretation of technical terms; (vii) for any loss or delay,
in the transmission or otherwise, of any such document or draft
or of proceeds thereof; or (viii) for any other circumstances
whatsoever in making or failing to make payment under a Letter of
Credit. None of the above shall affect, impair or prevent the
vesting of any of the rights or powers of the Issuing Lender, the
Agent or any of the Lenders. The Issuing Lender or the Agent
shall have the right to transmit the terms of the Letter of
Credit involved without translating them.
(b) In furtherance and extension and not in
limitation of the specific provisions hereinabove in these
subsections 2.12 through 2.22 set forth, (i) any action taken or
omitted by the Issuing Lender, the Agent, any Lender or by any of
their respective correspondents under or in connection with any
of the Letters of Credit, if taken or omitted in good faith and
without willful misconduct or gross negligence, shall be binding
upon the Borrower and shall not put the Issuing Lender, the
Agent , any Lender or their respective correspondents under any
resulting liability to the Borrower and (ii) the Issuing Lender
may a ccept documents that appear on their face to be in order,
without responsibility for further investigation, regardless of
any notice or information to the contrary; provided, that if the
Issuing Lender shall receive written notification from both the
beneficiary of a Letter of Credit and the Borrower that
suffi ciently identifies (in the opinion of the Issuing Lender)
documents to be presented to the Issuing Lender which are not to
be honored, the Issuing Lender agrees that it will not honor such
documents.
(c) The Borrower hereby agrees at all times to
protect, indemnify and save harmless each of the Issuing Lender,
the Agent, its correspondents and any Lender, from and against
any and all claims, actions, suits and other legal proceedings,
and from and against any and all losses, claims, demands,
liabilities, damages, costs, charges, counsel fees and other
expenses which they or any of them may, at any time, sustain or
incur by reason of or in consequence of or arising out of the
issuance of any of the Letters of Credit; it being the intention
of the parties that this Agreement shall be construed and applied
to protect and indemnify each of the Issuing Lender, the Agent,
its correspondents and any Lender against any and all risks
involved in the issuance of all of the Letters of Credit, all of
which risks, whether or not foreseeable, being hereby assumed by
the Borrower (except as otherwise provided for herein),
including, without limitation, any and all risks of all acts by
any Governmental Authority, domestic or foreign. The Issuing
Lender, the Agent or any Lender shall not, in any way, be liable
for any failure by it or anyone else to pay a draft drawn under
any of the Letters of Credit as a result of any acts, whether
rightful or wrongful, of any Governmental Authority, or any other
cause not readily within their control or the control of their
respective correspondents, agents, or subagents. Without
limiting the generality of the foregoing, the Borrower shall
reimburse each of the Issuing Lender, the Agent, its
correspondents and any Lender, and shall pay and indemnify each
of the Issuing Lender, the Agent, its correspondents and any
Lender against payment of, out-of-pocket costs and expenses,
withholding taxes, liabilities and damages including, without
limitition, reasonable counsel fees, incurred or sustained by any
of th em in connection with any of the Letters of Credit or by
reason of any such failure to pay. Also, without limiting the
generality of the foregoing, the Borrower shall reimburse the
Issuing Lender or the Agent forthwith upon its receipt of any
demand therefor, for any and all commissions, fees and other
charges paid or payable by the Issuing Lender or the Agent to any
foreign bank which shall be an advising bank or a beneficiary of
a Letter of Credit which shall, in reliance thereon, have issued
its own letter of credit in respect of obligations of the
Borrower. Notwithstanding the foregoing provisions of this
subsection 2.22(c), the Borrower shall have no obligation to
indemnify any Issuing Lender, the Agent, any correspondent or any
Lender from and against any liabilities or other costs of any
nature whatsoever resulting from any acts or omissions of any
such party constituting gross negligence or willful misconduct.
SECTION 3. REPRESENTATIONS AND WARRANTIES
To induce the Agent and the Lenders to enter into
this Agreement and to make the Loans and issue or participate in
the Letters of Credit, the Borrower hereby represents and
warrants to the Agent and each Lender that:
3.1 Financial Condition. The consolidated balance
sheet of the Borrower and its consolidated Subsidiaries as at
June 30, 1994 and the related consolidated statements of income
and of cash flows for the fiscal year ended on such date,
reported on by Deloitte & Touche, copies of which have heretofore
been furnished to each Lender, are complete and correct and
present fairly the consolidated financial condition of the
Borrower and its consolidated Subsidiaries as at such date, and
the consolidated results of their operations and their
consolidated cash flows for the fiscal year then ended. The
unaudited consolidated balance sheet of the Borrower and its
consolidated Subsidiaries as at December 31, 1994 and the related
unaudited consolidated statements of income and of cash flows for
the six-month period ended on such date, certified by a
Responsible Officer, copies of which have heretofore been
furnished to each Lender, are complete and correct and present
fairly the consolidated financial condition of the Borrower and
its consolidated Subsidiaries as at such date, and the
consolidated results of their operations and their consolidated
cash flows for the six-month period then ended (subject to normal
year-end audit adjustments). All such financial statements,
including the related schedules and notes thereto, have been
prepared in accordance with GAAP applied consistently throughout
the periods involved (except as approved by such accountants or
Responsible Officer, as the case may be, and as disclosed
therein). Neither the Borrower nor any of its consolidated
Subsidiaries had, at the date of the most recent balance sheet
referred to above, any material Guarantee Obligation, contingent
liability or liability for taxes, or any long-term lease or
unusual forward or long-term commitment, including, without
limitation, any interest rate or foreign currency swap or
exchange transaction, which is not reflected in the foregoing
statements or in the notes thereto. During the period from
December 31, 1994 to and including the date hereof there has been
no sale, transfer or other disposition by the Borrower or any of
its consolidated Subsidiaries of any material part of its
business or property and no purchase or other acquisition of any
business or property (including any capital stock of any other
Person) material in relation to the consolidated financial
condition of the Borrower and its consolidated Subsidiaries at
December 31, 1994.
3.2 No Change. Since June 30, 1994, there has been
no development or event which has had or could have a Material
Adverse Effect except as disclosed in the Reports filed and
delivered to the Agent prior to the date hereof.
3.3 Corporate Existence; Compliance with Law. Each
of the Borrower and its Subsidiaries (a) is duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its organization, (b) has the corporate power and
authority, and the legal right, to own and operate its property,
to lease the property it operates as lessee and to conduct the
business in which it is currently engaged, (c) is duly qualified
as a foreign corporation and in good standing under the laws of
each jurisdiction where its ownership, lease or operation of
property or the conduct of its business requires such
qualification and (d) is in compliance with all Requirements of
Law except to the extent that the failure to comply therewith
could not, in the aggregate, have a Material Adverse Effect.
3.4 Corporate Power; Authorization; Enforceable
Obligations. The Borrower has the corporate power and authority,
and the legal right, to make, deliver and perform the Loan
Documents to which it is a party and to borrow hereunder and has
taken all necessary corporate action to authorize the borrowings
on the terms and conditions of this Agreement, the Notes and the
Applications and to authorize the execution, delivery and
performance of the Loan Documents to which it is a party. No
consent or authorization of, filing with, notice to or other act
by or in respect of, any Governmental Authority or any other
Person is required in connection with the borrowings hereunder or
with the execution, delivery, performance, validity or
enforceability of the Loan Documents to which the Borrower is a
party. This Agreement has been, and each other Loan Document to
which it is a party will be, duly executed and delivered on
behalf of the Borrower. This Agreement constitutes, and each
other Loan Document to which it is a party when executed and
delivered will constitute, a legal, valid and binding obligation
of the Borrower enforceable against the Borrower in accordance
with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
3.5 No Legal Bar. The execution, delivery and
performance of the Loan Documents to which the Borrower is a
party, the borrowings hereunder and the use of the proceeds
thereof will not violate any Requirement of Law or Contractual
Obligation of the Borrower or of any of its Subsidiaries and will
not result in, or require, the creation or imposition of any Lien
on any of its or their respective properties or revenues pursuant
to any such Requirement of Law or Contractual Obligation.
3.6 No Material Litigation. Except as disclosed in
the Reports filed and delivered to the Agent prior to the date
hereof, no litigation, investigation or proceeding of or before
any arbitrator or Governmental Authority is pending or, to the
knowledge of the Borrower, threatened by or against the Borrower
or any of its Subsidiaries or against any of its or their
respective properties or revenues (a) with respect to any of the
Loan Documents or any of the transactions contemplated hereby or
thereby, or (b) which could have a Material Adverse Effect.
3.7 No Default. Neither the Borrower nor any of its
Subsidiaries is in default under or with respect to any of its
Contractual Obligations in any respect which could have a
Material Adverse Effect, provided, that the Borrower shall
furnish the Agent with copies of any and all waivers granted for
the benefit of the Borrower or any of its Subsidiaries in respect
of Contractual Obligations. No Default or Event of Default has
occurred and is continuing other than Defaults or Events of
Default the subject of a waiver, dated as of March 31, 1995,
granted by the Agent pursuant to the Prior Agreement.
3.8 Ownership of Property; Liens. Each of the
Borrower and its Subsidiaries has good record and marketable
title in fee simple to, or a valid leasehold interest in, all its
real property, and good title to, or a valid leasehold interest
in, all its other property, and none of such property is subject
to any Lien except as permitted by subsection 6.3.
3.9 Intellectual Property. The Borrower and each of
its Subsidiaries owns, or is licensed to use, all trademarks,
tradenames, copyrights, technology, know-how and processes
necessary for the conduct of its business as currently conducted
except for those the failure to own or license which could not
have a Material Adverse Effect (the "Intellectual Property"). No
claim has been asserted and is pending by any Person challenging
or questioning the use of any such Intellectual Property or the
validity or effectiveness of any such Intellectual Property, nor
does the Borrower know of any valid basis for any such claim. To
the Borrower's knowledge, the use of such Intellectual Property
by the Borrower and its Subsidiaries does not infringe on the
rights of any Person, except for such claims and infringements
that, in the aggregate, do not have a Material Adverse Effect.
3.10 No Burdensome Restrictions. No Requirement of
Law or Contractual Obligation of the Borrower or any of its
Subsidiaries has a Material Adverse Effect.
3.11 Taxes. Each of the Borrower and its
Subsidiaries has filed or caused to be filed all tax returns
which, to the knowledge of the Borrower, are required to be filed
and has paid all taxes shown to be due and payable on said
returns or on any assessments made against it or any of its
property and all other taxes, fees or other charges imposed on it
or any of its property by any Governmental Authority (other than
any the amount or validity of which are currently being contested
in good faith by appropriate proceedings and with respect to
which reserves in conformity with GAAP have been provided on the
books of the Borrower or its Subsidiaries, as the case may be);
no tax Lien has been filed, and, to the knowledge of the
Borrower, no claim is being asserted, with respect to any such
tax, fee or other charge.
3.12 Federal Regulations. No part of the proceeds
of any Loans will be used for "purchasing" or "carrying" any
"margin stock" within the respective meanings of each of the
quoted terms under Regulation U of the Board of Governors of the
Federal Reserve System as now and from time to time hereafter in
effect or for any purpose which violates the provisions of the
Regulations of such Board of Governors. If requested by any
Lender or the Agent, the Borrower will furnish to the Agent and
each Lender a statement to the foregoing effect in conformity
with the requirements of FR Form U-1 referred to in said
Regulation U.
3.13 ERISA. Neither a Reportable Event nor an
"accumulated funding deficiency" (within the meaning of
Section 412 of the Code or Section 302 of ERISA) has occurred
during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Plan,
and each Plan has complied in all material respects with the
applicable provisions of ERISA and the Code. No termination of a
Single Employer Plan has occurred, and no Lien in favor of the
PBGC or a Plan has arisen, during such five-year period. The
present value of all accrued benefits under each Single Employer
Plan (based on those assumptions used to fund such Plans) did
not, as of the last annual valuation date prior to the date on
which this representation is made or deemed made, exceed the
value of the assets of such Plan allocable to such accrued
benefits. Neither the Borrower nor any Commonly Controlled
Entity has made, has been required to make or is currently
required to make any contributions to a Multiemployer Plan.
3.14 Investment Company Act; Other Regulations. The
Borrower is not an "investment company", or a company
"controlled" by an "investment company", within the meaning of
the Investment Company Act of 1940, as amended. The Borrower is
not subject to regulation under any Federal or State statute or
regulation which limits its ability to incur Indebtedness.
3.15 Subsidiaries. Schedule 3.15 is a complete and
accurate list of all of the Subsidiaries of the Borrower at the
date hereof.
3.16 Purpose of Loans. The proceeds of the Loans
shall be used by the Borrower for general corporate purposes.
3.17 Accuracy and Completeness of Information. All
information, reports and other papers and data with respect to
the Borrower and its Subsidiaries (other than projections)
furnished to the Lenders by the Borrower were, at the time the
same were so furnished, complete and correct in all material
respects, or have been subsequently supplemented by other
information, reports or other papers or data, to the extent
necessary to give the Lenders a true and accurate knowledge of
the subject matter of such information, reports, or other papers
and data in all material respects. All projections with respect
to the Borrower and its Subsidiaries, furnished to the Lenders by
or on behalf of the Borrower, as supplemented, were prepared and
presented in good faith by the Borrower, it being recognized by
the Lenders that such projections as to future events are not to
be viewed as facts and that actual results during the period or
periods covered by any such projections may differ from the
projected results. No fact is known or should be known to the
Borrower which has or may have a Material Adverse Effect, which
has not been set forth in the financial statements referred to in
subsection 3.1 or in such information, reports, papers and data
or otherwise disclosed in writing to the Lenders prior to the
Effective Date. No document furnished or statement made in
writing to the Lenders by the Borrower in connection with the
negotiation, preparation or execution of this Agreement contains
any untrue statement of a material fact, or omits to state a
material fact necessary in order to make the statements contained
therein, in the light of the circumstances in which they were
made, not misleading, in either case which has not been
corrected, supplemented or remedied by subsequent documents
furnished or statements made in writing to the Lenders.
3.18 Security Agreement. The provisions of the
Security Agreement are effective to create in favor of the Agent,
for the ratable benefit of the Lenders, a legal and valid
security interest in all right, title and interest of the
Borrower in the collateral described therein. UCC financing
statements are being filed by the Agent in the filing offices
listed in Schedule 3 to the Security Agreement, and upon their
proper filing shall create for the benefit of the Agent a fully
perfected, first priority security interest in all right, title
and interest of the Borrower in such collateral, subject to any
Liens permitted by subsection 6.3.
3.19 Environmental Matters. Except as disclosed in
the Reports filed and delivered to the Agent prior to the date
hereof,
(a) The facilities and properties owned, leased or
operated by the Borrower or any of its Subsidiaries (the
"Properties") do not contain, and have not previously
contained, any Materials of Environmental Concern in amounts
or concentrations which (i) constitute or constituted a
violation of, or (ii) could give rise to liability under,
any Environmental Law, except in either case insofar as such
violation or liability, or any aggregation thereof, is not
reasonably likely to result in the payment of an amount
which could have a Material Adverse Effect.
(b) The Properties and all operations at the
Properties are in compliance, and have in the last five
years been in compliance in all material respects, with all
applicable Environmental Laws, and there is no contamination
at, under or about the Properties or violation of any
Environmental Law with respect to the Properties or the
business operated by the Borrower or any of its Subsidiaries
(the "Business") which could materially interfere with the
continued operation of the Properties or materially impair
the fair saleable value thereof.
(c) Neither the Borrower nor any of its Subsidiaries
has received any notice of violation, alleged violation,
non-compliance, liability or potential liability regarding
environmental matters or compliance with Environmental Laws
with regard to any of the Properties or the Business, nor
does the Borrower have knowledge or reason to believe that
any such notice will be received or is being threatened.
(d) Materials of Environmental Concern have not been
transported or disposed of from the Properties in violation
of, or in a manner or to a location which could give rise to
any material liability under, any Environmental Law, nor
have any Materials of Environmental Concern been generated,
treated, stored or disposed of at, on or under any of the
Properties in violation of, or in a manner that could give
rise to any material liability under, any applicable
Environmental Law.
(e) No judicial proceeding or governmental or
administrative action is pending or, to the knowledge of the
Borrower, threatened, under any Environmental Law to which
the Borrower or any Subsidiary is or will be named as a
party with respect to the Properties or the Business, nor
are there any consent decrees or other decrees, consent
orders, administrative orders or other orders, or other
administrative or judicial requirements outstanding under
any Environmental Law with respect to the Properties or the
Business.
(f) There has been no release or, to the best
knowledge of the Borrower, threat of release of Materials of
Environmental Concern at or from the Properties, or arising
from or related to the operations of the Borrower or any
Subsidiary in connection with the Properties or otherwise in
connection with the Business, in violation of or in amounts
or in a manner that could give rise to any material
liability under Environmental Laws.
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions to Initial Extension of Credit. The
agreement of each Lender to make the initial extension of credit
requested to be made by it is subject to the satisfaction,
immediately prior to or concurrently with the making of such
extension of credit on the Effective Date, of the following
conditions precedent:
(a) Loan Documents. The Agent shall have received
(i) this Agreement and the Security Agreement, each executed
and delivered by a duly authorized officer of the Borrower,
with a respective counterpart for each Lender and (ii) for
the account of each Lender, a Revolving Credit Note
conforming to the requirements hereof and executed by a duly
authorized officer of the Borrower.
(b) Perfection of First Priority Liens. Any
documents (including, without limitation, financing
statements) required to be filed, registered or recorded in
order to create, for the benefit of the Agent and the
Lenders, a perfected, first priority Lien on the collateral
described in the Security Agreement, subject to Liens
permitted by subsection 6.3, shall have been properly
executed and delivered to the Agent for filing in each
office in each jurisdiction in which such filings,
registrations and recordations are required to perfect such
first priority security interests created by the Security
Agreement, and any other action required on the part of the
Borrower in the judgment of the Agent to perfect such
security interests as such first priority Liens shall have
been effected.
(c) Borrowing Certificate. The Agent shall have
received with a counterpart for each Lender, a certificate
of the Borrower, dated as of the Effective Date,
substantially in the form of Exhibit D, with appropriate
insertions and attachments, satisfactory in form and
substance to the Agent, executed by the Chairman and Chief
Executive Officer, President, any Vice President or the
Secretary or any Assistant Secretary of the Borrower.
(d) Corporate Proceedings of the Borrower. The
Agent shall have received, with a counterpart for each
Lender, a copy of the resolutions, in form and substance
satisfactory to the Agent, of the Board of Directors of the
Borrower authorizing (i) the execution, delivery and
performance of this Agreement and the Notes and (ii) the
borrowings contemplated hereunder, certified by the
Secretary or an Assistant Secretary of the Borrower as of
the Effective Date, which certificate shall be in form and
substance satisfactory to the Agent and shall state that the
resolutions thereby certified have not been amended,
modified, revoked or rescinded.
(e) Borrower Incumbency Certificate. The Agent
shall have received, with a counterpart for each Lender, a
Certificate of the Borrower, dated as of the Effective Date,
as to the incumbency and signature of the officers of the
Borrower executing any Loan Document satisfactory in form
and substance to the Agent, executed by the Chairman and
Chief Executive Officer, President, any Vice President, the
Secretary or any Assistant Secretary of the Borrower.
(f) Corporate Documents. The Agent shall
have received, with a counterpart for each Lender, true and
complete copies of the certificate of incorporation and
by-laws of the Borrower, certified as of the Effective Date
as complete and correct copies thereof by the Secretary or
an Assistant Secretary of the Borrower.
(g) Good Standing Certificates. The Agent shall
have received, for itself and for each Lender, copies of
certificates dated as of a recent date from the Secretary of
State or other appropriate authority, evidencing the good
standing of the Borrower in each State where the ownership,
lease or operation of property or the conduct of business
requires it to qualify as a foreign corporation, except
where the failure to so qualify would not have a Material
Adverse Effect.
(h) Litigation. No suit, action, investigation,
inquiry or other proceeding (including, without limitation,
the enactment or promulgation of a statute or rule of which
the Borrower is aware after reasonable inquiry) by or before
any arbitrator or any Governmental Authority shall be
pending and no preliminary or permanent injunction or order
by a state or federal court shall have been entered (i) in
connection with this Agreement or the other Loan Documents
or any of the transactions contemplated hereby or thereby or
(ii) which, in any such case, in the reasonable judgment of
the Agent, is reasonably likely to have a Material Adverse
Effect.
(i) No Violation. The consummation of the
transactions contemplated hereby shall not contravene,
violate or conflict with, nor involve the Agent or any
Lender in a violation of, any Requirement of Law.
(j) Consents, Licenses, Approvals, Etc. The Agent
shall have received, with a counterpart for each Lender, a
certificate of a Responsible Officer or the treasurer of the
Borrower either (i) attaching copies of all consents,
licenses and approvals required in connection with the
execution, delivery and performance by the Borrower and the
validity and enforceability against the Borrower of the Loan
Documents and such consents, licenses and approvals shall be
in full force and effect, or (ii) stating that no such
consents, licenses or approvals are so required.
(k) Legal Opinion. The Agent shall have received,
with a counterpart for each Lender, the executed legal
opinion of Winthrop, Stimson, Putnam & Roberts, counsel to
the Borrower, substantially in the form of Exhibit B.
(l) Borrowing Base Certificate. The Agent shall
have received, with a counterpart for each Lender, a
certificate of the Borrower, substantially in the form of
Exhibit E with appropriate insertions and attachments, duly
executed by a Responsible Officer.
(m) UCC Filing Searches - Pre-Effective Date. The
Agent shall have received the results of searches of Uniform
Commercial Code filings made with respect to the Borrower in
the States of California, Connecticut, Hawaii and New York,
pursuant to subsection 4.1(b), together with copies of
financing statements disclosed by such searches within a
reasonable period prior to the Effective Date, and such
searches shall disclose no Liens on any assets encumbered by
any security document, except for Liens permitted by
subsection 6.3 or, if unpermitted Liens are disclosed, the
Agent shall have received satisfactory evidence of release
of such Liens.
(n) Fees and Interest. All accrued and unpaid fees
and interest payable to the Lenders party to the Prior
Agreement shall be paid in full and distributed to such
Lenders in accordance with the Prior Agreement.
4.2 Conditions to Each Extension of Credit. The
agreement of each Lender to make any extension of credit
requested to be made by it on any date (including, without
limitation, its initial Loan) is subject to the satisfaction of
the following conditions precedent:
(a) Representations and Warranties. Each of the
representations and warranties made by the Borrower in or
pursuant to the Loan Documents shall be true and correct in
all material respects on and as of such date as if made on
and as of such date.
(b) No Default. No Default or Event of Default
shall have occurred and be continuing on such date or after
giving effect to the extension of credit requested to be
made on such date.
(c) Additional Matters. All corporate and other
proceedings, and all documents, instruments and other legal
matters in connection with the transactions contemplated by
this Agreement and the other Loan Documents shall be
satisfactory in form and substance to the Agent, and the
Agent shall have received such other documents and legal
opinions in respect of any aspect or consequence of the
transactions contemplated hereby or thereby as it shall
reasonably request.
Each borrowing by, and each issuance of a Letter of Credit for
the account of, the Borrower hereunder shall constitute a
representation and warranty by the Borrower as of the date of
such Loan that the conditions contained in this subsection 4.2
have been satisfied.
SECTION 5. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as the
Commitments remain in effect, any Note or any Letter of Credit
remains outstanding and unpaid or any other amount is owing to
any Lender or the Agent hereunder, the Borrower shall and (except
in the case of delivery of financial information, reports and
notices) shall cause each of its Subsidiaries to:
5.1 Financial Statements. Furnish to each Lender:
(a) as soon as available, but in any event within
95 days after the end of each fiscal year of the Borrower, a
copy of the consolidated balance sheet of the Borrower and
its consolidated Subsidiaries as at the end of such year and
the related consolidated statements of income and retained
earnings and of cash flows for such year, setting forth in
each case in comparative form the figures for the previous
year, reported on without a "going concern" or like
qualification or exception, or qualification arising out of
the scope of the audit, by Deloitte & Touche or other
independent certified public accountants of nationally
recognized standing;
(b) as soon as available, but in any event not later
than 50 days after the end of each of the first three
quarterly periods of each fiscal year of the Borrower, the
unaudited consolidated balance sheet of the Borrower and its
consolidated Subsidiaries as at the end of such quarter and
the related unaudited consolidated statements of income and
retained earnings and of cash flows of the Borrower and its
consolidated Subsidiaries for such quarter and the portion
of the fiscal year through the end of such quarter, setting
forth in each case in comparative form the figures for the
previous year, certified by a Responsible Officer as being
fairly stated in all material respects (subject to normal
year-end audit adjustments); and
(c) not later than 20 days after the end of each
calendar month, the unaudited consolidated balance sheet of
the Borrower and its consolidated Subsidiaries as at the end
of such month and the related unaudited consolidated
statements of income and retained earnings and of cash flows
of the Borrower and its consolidated Subsidiaries for such
month, certified by a Responsible Officer as being fairly
stated in all material respects (subject to normal audit
adjustments).
All such financial statements shall be complete and correct in
all material respects and shall be prepared in reasonable detail
and in accordance with GAAP applied consistently throughout the
periods reflected therein and with prior periods (except as
approved by such accountants or officer, as the case may be, and
disclosed therein).
5.2 Certificates; Other Information. Furnish to
each Lender:
(a) concurrently with the delivery of the financial
statements referred to in subsections 5.1(a), 5.1(b) and
5.1(c), a certificate of a Responsible Officer stating that,
to the best of such Officer's knowledge, the Borrower during
such period has observed or performed all of its covenants
and other agreements, and satisfied every condition,
contained in this Agreement, any Applications and in the
Notes to be observed, performed or satisfied by it, and that
such Officer has obtained no knowledge of any Default or
Event of Default except as specified in such certificate;
(b) within five days after the same are sent, copies
of all financial statements and reports which the Borrower
sends to its stockholders, and within five days after the
same are filed, copies of all financial statements and
reports which the Borrower may make to, or file with, the
Securities and Exchange Commission or any successor or
analogous Governmental Authority;
(c) promptly, such additional financial and other
information as any Lender may from time to time reasonably
request;
(d) within 20 days after the end of each fiscal
month (or more frequently as may be agreed by the Borrower
and the Agent), a Borrowing Base Certificate, substantially
in the form of Exhibit E or in such other form as the Agent
shall reasonably request, as of the close of business on the
last day of such fiscal month, accompanied by the reports
described on Exhibit G or in such other form as the Agent
shall reasonably request, and certified as complete and
correct as of the date thereof by a Responsible Officer of
the Borrower; and
(e) promptly give notice to the Agent and each
Lender if the Borrower should reasonably know that an
account debtor of the Borrower or a Subsidiary becomes a
debtor in any bankruptcy, insolvency or reorganization
proceeding and such account debtor owes the Borrower or a
Subsidiary an amount equal to or greater than 2% of all
Accounts of the Borrower.
5.3 Results of Lien Searches. Within 30 days after
the Effective Date the Agent shall have received the results of a
search of the UCC filings and tax and judgement liens which may
have been filed with respect to Collateral (as defined in the
Security Agreement) of the Borrower in the filing offices of each
of the jurisdictions referred to in subsection 3.18, such
searches reflecting the Agent's perfected first priority security
interest in the Collateral, subject to Liens permitted by
subsection 6.3. Promptly after receipt of the Agent's invoice,
the Borrower shall reimburse the Agent for all fees, taxes and
expenses it incurred in connection with such filings,
registrations and recordings, including, without limitation, the
reasonable fees and disbursements of counsel of the Agent.
5.4 Payment of Obligations. Pay, discharge or
otherwise satisfy at or before maturity or before they become
delinquent, as the case may be, all its obligations of whatever
nature, except where the amount or validity thereof is currently
being contested in good faith by appropriate proceedings and
reserves in conformity with GAAP with respect thereto have been
provided on the books of the Borrower or its Subsidiaries, as the
case may be.
5.5 Conduct of Business and Maintenance of
Existence. Continue to engage in the business in which it is
presently engaged or similar or related businesses and preserve,
renew and keep in full force and effect its corporate existence
and take all reasonable action to maintain all rights, privileges
and franchises necessary or desirable in the normal conduct of
its business except as otherwise permitted pursuant to subsection
6.5; comply with all Contractual Obligations and Requirements of
Law except to the extent that failure to comply therewith could
not, in the aggregate, have a Material Adverse Effect.
5.6 Maintenance of Quality Control Procedures.
Maintain in accordance with historical practice the quality of
products and services offered.
5.7 Maintenance of Property; Insurance. Keep all
property useful and necessary in its business in good working
order and condition; maintain with financially sound and
reputable insurance companies insurance on all its property in at
least such amounts and against at least such risks as are usually
insured against in the same general area by companies engaged in
the same or a similar business; and furnish to each Lender, upon
written request, full information as to the insurance carried.
5.8 Inspection of Property; Books and Records;
Discussions. Keep proper books of records and account in which
full, true and correct entries in conformity in all material
respects with GAAP and all Requirements of Law shall be made of
all dealings and transactions in relation to its business and
activities; and permit representatives of any Lender to visit and
inspect any of its properties and examine and make abstracts from
any of its books and records upon reasonable prior notice and
during normal business hours and as often as may reasonably be
desired and to discuss the business, operations, properties and
financial and other condition of the Borrower and its
Subsidiaries with officers and employees of the Borrower and its
Subsidiaries and with its independent certified public
accountants.
5.9 Notices. As soon as possible after a
Responsible Officer of the Borrower has knowledge of any of the
following, give notice to the Agent and each Lender of:
(a) the occurrence of any Default or Event of
Default;
(b) any (i) default or event of default under any
Contractual Obligation of the Borrower or any of its
Subsidiaries or (ii) litigation, investigation or proceeding
which may exist at any time between the Borrower or any of
its Subsidiaries and any Governmental Authority, which in
either case, if not cured or if adversely determined, as the
case may be, could have a Material Adverse Effect;
(c) any litigation or proceeding affecting the
Borrower or any of its Subsidiaries in which the amount
involved is $1,000,000 or more and not covered by insurance
or in which injunctive or similar relief is sought;
(d) the following events, as soon as possible and in
any event within 30 days after the Borrower knows or has
reason to know thereof: (i) the occurrence or expected
occurrence of any Reportable Event with respect to any Plan,
a failure to make any required contribution to a Plan, the
creation of any Lien in favor of the PBGC or a Plan or any
withdrawal from, or the termination, Reorganization or
Insolvency of, any Multiemployer Plan or (ii) the
institution of proceedings or the taking of any other action
by the PBGC or the Borrower or any Commonly Controlled
Entity or any Multiemployer Plan with respect to the
withdrawal from, or the terminating, Reorganization or
Insolvency of, any Plan;
(e) any amendment of the certificate of incorporation
or by-laws of the Borrower; and
(f) any development or event which has had a
Material Adverse Effect.
Each notice pursuant to this subsection shall be accompanied by a
statement of a Responsible Officer setting forth details of the
occurrence referred to therein and stating what action the
Borrower proposes to take with respect thereto.
5.10 Environmental Laws.
(a) Comply with, and ensure compliance by all tenants and
subtenants, if any, with, all applicable Environmental Laws and
obtain and comply with and maintain, and ensure that all tenants
and subtenants obtain and comply with and maintain, any and all
licenses, approvals, notifications, registrations or permits
required by applicable Environmental Laws.
(b) Conduct and complete all investigations, studies, sampling
and testing, and all remedial, removal and other actions required
under Environmental Laws and promptly comply with all lawful
orders and directives of all Governmental Authorities regarding
Environmental Laws.
5.11 Maintenance of Liens of the Security Agreement. Promptly,
upon the reasonable request of the Agent (as defined in the
Security Agreement) or any Lender, at the Borrower's expense,
execute, acknowledge and deliver, or cause the execution,
acknowledgement and delivery of, and thereafter register, file or
record, or cause to be registered, filed or recorded, in an
appropriate governmental office, any document or instrument
supplemental to or confirmatory of the Security Agreement or
otherwise deemed by the Agent necessary or desirable for the
continued validity, perfection and priority of the Liens on the
collateral covered thereby (subject to any applicable bankruptcy,
insolvency, reorganization, moratorium or other similar law).
5.12 Security Interest in Real Property and
Leaseholds. As soon as possible after the Effective Date and in
no event later than 30 days after such time, furnish to the Agent
in respect of the Borrower's real property located in Cortland,
New York (the "Cortland Property"), the following:
(a) an executed mortgage encumbering the Cortland
Property (the "Mortgage"), reasonably acceptable to the
Agent and the Agent's counsel; provided, however, the face
amount of the Mortgage shall not exceed 125% of the
appraised value of the Cortland Property;
(b) an appraisal of the Cortland Property in
compliance with all FIRREA regulations;
(c) a Phase I environmental audit, with a copy for
each Lender, from an environmental consulting or auditing
firm reasonably satisfactory to the Agent and in form and
substance satisfactory to the Agent, which audit, in any
event, shall address and provide conclusions in respect of
any environmental hazards, conditions or liabilities
(contingent or otherwise) with respect to the Cortland
Property;
(d) a survey, consisting of maps or plats of an
as-built survey of the site of the Cortland Property certified
to the Agent and the title insurance company issuing the
policy referred to in subsection 5.12(e) (the "Title
Insurance Company") in a manner satisfactory to them, dated
a date reasonably satisfactory to them by an independent
professional licensed land surveyor reasonably satisfactory
to the Agent and the Title Insurance Company, which maps or
plats and the surveys on which they are based shall be made
in accordance with the Minimum Standard Detail Requirements
for Land Title Surveys jointly established and adopted by
the American Land Title Association and the American
Congress on Surveying and Mapping in 1992, and, without
limiting the generality of the foregoing, there shall be
surveyed and shown on such maps, plats or surveys the
following: (i) the locations on such sites of all the
buildings, structures and other improvements and the
established building setback lines; (ii) the lines of
streets abutting the sites and width thereof; (iii) all
access and other easements appurtenant to the sites or
necessary or desirable to use the sites; (iv) all roadways,
paths, driveways, easements, encroachments and overhanging
projections and similar encumbrances affecting the site,
whether recorded, apparent from a physical inspection of the
sites or otherwise known to the surveyor, (v) any
encroachments on any adjoining property by the building
structures and improvements on the sites; and (vi) if the
site is described as being on a filed map, a legend relating
the survey to said map;
(e) a mortgagee's title policy (or policies) or
marked-up unconditional commitments for such insurance dated
within 30 days of the Effective Date. Each such policy
shall (i) be in an amount reasonably satisfactory to the
Agent; (ii) be issued at ordinary rates; (iii) insure that
the Cortland Property insured thereby creates a valid first
Lien on the property covered by the Mortgage free and clear
of all defects and encumbrances, except such as may be
reasonably approved by the Agent and its counsel; (iv) name
the Agent for the benefit of the Lenders as the insured
thereunder; (v) be in the form of an acceptable New York
State mortgage form; (vi) contain such endorsements and
affirmative coverage as the Agent may reasonably request and
(vii) be issued by a title insurance company satisfactory to
the Agent (including any such title insurance companies
acting as co-insurers or reinsurers, at the option of the
Agent). The Agent shall have received evidence reasonably
satisfactory to it that all premiums in respect of each such
policy, and all charges for recording of the Mortgage and
for mortgage recording tax, if any, have been paid;
(f) with respect to any parcel of improved real
property encumbered by the Mortgage which is within an area
designated as a special flood hazard area by the Federal
Emergency Management Agency or other applicable agency, the
Agent shall have received (i) a policy of flood insurance
which (A) covers any parcel of such improved real property,
(B) is written in an amount not less than the outstanding
principal amount of the Indebtedness secured by the Mortgage
which is reasonably allocable to such real property or the
maximum limit of coverage made available with respect to the
particular type of property, whichever is less, and (C) has
a term ending not later than the maturity of the
indebtedness secured by the Mortgage and (ii) original
copies of each of the notice(s), if any, required pursuant
to Section 208(e)(3) of Regulation H of the Board of
Governors of the Federal Reserve System, duly executed by
the Borrower;
(g) the Mortgage shall provide that the mortgagee
shall grant a partial release of the Mortgage to facilitate
the closing of the sale contemplated by that certain
purchase and sale agreement by and between the J.M. Murray
Center, Inc. and the Borrower for net cash proceeds of
approximately $1,300,000 (the "J.M. Murray Contract"); and
(h) the executed legal opinion of Winthrop, Stimson,
Putnam & Roberts, counsel to the Borrower, covering the
enforceability of the Mortgage, as well as such other legal
opinions of local counsel to the Borrower relating to such
other matters as the Agent shall reasonably request.
SECTION 6. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as the
Commitments remain in effect, any Note or any Letter of Credit
remains outstanding and unpaid or any other amount is owing to
any Lender or the Agent hereunder, the Borrower shall not, and
(except with respect to subsection 6.1) shall not permit any of
its Subsidiaries to, directly or indirectly:
6.1 Financial Condition Covenants.
(a) Maintenance of Net Worth. Permit Consolidated
Tangible Net Worth at the end of any fiscal quarter to be less
than (a) the amount of Consolidated Tangible Net Worth as at
March 31, 1995 minus $3,000,000, plus (b) 80% of positive
Consolidated Net Income for all full fiscal quarters ended from
and including the fiscal quarter ending June 30, 1995 through and
including the fiscal quarter for which compliance is being
calculated.
(b) Quick Ratio. Permit the Quick Ratio to be
at any time less than .90 to 1.0.
(c) Operating Losses. Permit Consolidated Operating
Profit to be less than negative $2,500,000 for any period of one calendar
month; permit Consolidated Operating Profit be less than negative
$3,000,000 for the fiscal quarter ending June 30, 1995; or permit
Consolidated Operating Profit to be less than $0 for any fiscal
quarter ending after June 30, 1995.
6.2 Limitation on Indebtedness. Create, incur,
assume or suffer to exist any Indebtedness, except:
(a) Indebtedness of the Borrower under this
Agreement;
(b) Indebtedness of the Borrower to any Subsidiary
and of any Subsidiary to the Borrower or any other
Subsidiary;
(c) Indebtedness outstanding on the date hereof and
listed on Schedule 6.2; and
(d) additional Indebtedness not exceeding $3,000,000
(as to the Borrower and all of its Subsidiaries) at any time
outstanding.
6.3 Limitation on Liens. Create, incur, assume or
suffer to exist any Lien upon any of its property, assets or
revenues, whether now owned or hereafter acquired, except for:
(a) Liens created pursuant to the Security Agreement;
(b) Liens for taxes not yet due or which are being
contested in good faith by appropriate proceedings, provided
that adequate reserves with respect thereto are maintained
on the books of the Borrower or its Subsidiaries, as the
case may be, in conformity with GAAP;
(c) carriers', warehousemen's, mechanics',
materialmen's, repairmen's or other like Liens arising in
the ordinary course of business which are not overdue for a
period of more than 60 days or which are being contested in
good faith by appropriate proceedings;
(d) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social
security legislation;
(e) deposits to secure the performance of bids,
trade contracts (other than for borrowed money), leases,
statutory obligations, surety and appeal bonds, performance
bonds and other obligations of a like nature incurred in the
ordinary course of business;
(f) easements, rights-of-way, restrictions and other
similar encumbrances incurred in the ordinary course of
business which, in the aggregate, are not substantial in
amount and which do not in any case materially detract from
the value of the property subject thereto or materially
interfere with the ordinary conduct of the business of the
Borrower or such Subsidiary;
(g) Liens in existence on the date hereof listed on
Schedule 6.3, securing Indebtedness permitted by subsection
6.2(c), provided that no such Lien is spread to cover any
additional property after the Effective Date and that the
amount of Indebtedness secured thereby is not increased;
(h) Liens securing Indebtedness of the Borrower and
its Subsidiaries permitted by subsection 6.2 incurred to
finance the acquisition of fixed or capital assets, provided
that (i) such Liens shall be created substantially
simultaneously with the acquisition of such fixed or capital
assets, (ii) such Liens do not at any time encumber any
property other than the property financed by such
Indebtedness, (iii) the amount of Indebtedness secured
thereby is not increased and (iv) the principal amount of
Indebtedness secured by any such Lien shall at no time
exceed 80% of the lesser of the original purchase price of
such property or the fair value (as determined in good faith
by the board of directors of the Borrower) of such property
at the time it was acquired; and
(i) Liens arising solely as a result of
precautionary filings of UCC financing statements in respect
of personal property leased pursuant to operating leases.
6.4 Limitation on Guarantee Obligations. Create,
incur, assume or suffer to exist any Guarantee Obligation except:
(a) Guarantee Obligations in existence on the date
hereof and listed on Schedule 6.4;
(b) Guarantee Obligations in respect of Indebtedness
incurred pursuant to subsection 6.2(d); and
(c) guarantees made in the ordinary course of its
business by the Borrower of obligations of any of its
Subsidiaries, which obligations are otherwise permitted
under this Agreement.
6.5 Limitation on Fundamental Changes. Merge into
or consolidate with any other Person in a transaction in which
the Borrower is not the surviving entity, or liquidate, wind up
or dissolve itself (or suffer any liquidation or dissolution),
or, except as expressly permitted under subsection 6.6(b),
convey, sell, lease, assign, transfer or otherwise dispose of,
all or substantially all of its property, business or assets, or,
except as expressly permitted under subsection 6.8, purchase,
lease or otherwise acquire all or substantially all of the assets
of any other Person, or make any material change in its present
method of conducting business, except:
(a) any Subsidiary of the Borrower may be merged or
consolidated with any one or more wholly owned Subsidiaries
of the Borrower (provided that the wholly owned Subsidiary
or Subsidiaries shall be the continuing or surviving
corporation);
(b) any wholly owned Subsidiary may sell, lease,
transfer or otherwise dispose of any or all of its assets
(upon voluntary liquidation or otherwise) to the Borrower or
any other wholly owned Subsidiary of the Borrower; and
(c) the Borrower and any Subsidiary of the Borrower
may purchase inventory in the ordinary course of business.
6.6 Limitation on Sale of Assets. Convey, sell,
lease, assign, transfer or otherwise dispose of any of its
property, business or assets (including, without limitation,
receivables and leasehold interests), whether now owned or
hereafter acquired, or, in the case of any Subsidiary, issue or
sell any shares of such Subsidiary's Capital Stock to any Person
other than the Borrower or any wholly owned Subsidiary, except:
(a) the sale or other disposition of obsolete or
worn out property in the ordinary course of business;
(b) the sale of Inventory in the ordinary course of
business;
(c) the sale or discount without recourse of
accounts receivable arising in the ordinary course of
business in connection with the compromise or collection
thereof;
(d) the sale or other disposition of property (other
than Inventory), provided, that (i) such property shall be
disposed of for not less than fair market value and (ii) the
net proceeds of all such dispositions from and after the
Effective Date shall not exceed the greater of (A)
$5,000,000 or (B) the aggregate net proceeds of the
contemplated transactions in respect of the Borrower's
Cortland Property; and
(e) as permitted by subsection 6.5(b).
6.7 Limitation on Dividends. Declare or pay any
dividend (other than dividends payable solely in common stock of
the Borrower) on, or make any payment on account of, or set apart
assets for a sinking or other analogous fund for, the purchase,
redemption, defeasance, retirement or other acquisition of, any
shares of any class of Capital Stock of the Borrower or any
warrants or options to purchase any such Stock, whether now or
hereafter outstanding, or make any other distribution in respect
thereof, either directly or indirectly, whether in cash or
property or in obligations of the Borrower or any Subsidiary (all
of the foregoing, "Restricted Payments"); provided, that, so long
as no Default or Event of Default exists or would occur as a
result thereof, the Borrower may make Restricted Payments during
any fiscal quarter in an amount which, together with the amount
of all Restricted Payments made during the immediately preceding
three fiscal quarters, would not exceed 50% of the amount by
which (a) Consolidated Net Income for the four fiscal quarters
immediately preceding the fiscal quarter in which such Restricted
Payment is to be made exceeds (b) $25,000,000.
6.8 Limitation on Capital Expenditures. Make or
commit to make (by way of the acquisition of assets or securities
of a Person or otherwise) any expenditure in respect of the
purchase or other acquisition of fixed or capital assets
(excluding any such asset acquired in connection with normal
replacement and maintenance programs properly charged to current
operations) except for expenditures for assets (including,
without limitation, expenditures made through Joint Ventures) and
acquisitions of securities not exceeding, in the aggregate for
the Borrower and its Subsidiaries during any of the fiscal years
of the Borrower set forth below, the amount set forth opposite
such fiscal year below:
Fiscal Year Ending Amount
June 30, 1995 $8,000,000
June 30, 1996 $8,000,000
provided, the acquisition by the Borrower of the building covered
by the J.M. Murray Contract for the approximate amount of
$550,000 (approximately $250,000 of which will be in cash, and
the balance of which will result from the assumption by the
Borrower of the existing first mortgage encumbering such
building) shall not be regarded as a capital expenditure for
purposes of the above $8,000,000 restriction.
6.9 Limitation on Investments, Loans and Advances.
Make any advance, loan, extension of credit or capital
contribution to, or purchase any stock, bonds, notes, debentures
or other securities of or any assets constituting a business unit
of, or make any other investment in, any Person, except :
(a) extensions of trade credit in the ordinary
course of business;
(b) Permitted Investments; and
(c) subject to subsection 6.8, investments by the
Borrower in its Subsidiaries now or hereafter existing or
Joint Ventures and investments by such Subsidiaries in the
Borrower and in other Subsidiaries or Joint Ventures.
6.10 Limitation on Transactions with Affiliates.
Enter into any transaction, including, without limitation, any
purchase, sale, lease or exchange of property or the rendering of
any service, with any Affiliate unless such transaction is
(a) otherwise permitted under this Agreement, (b) in the ordinary
course of the Borrower's or such Subsidiary's business and
(c) upon fair and reasonable terms no less favorable to the
Borrower or such Subsidiary, as the case may be, than it would
obtain in a comparable arm's length transaction with a Person
which is not an Affiliate.
6.11 Limitation on Sales and Leasebacks. Enter into
any arrangement with any Person providing for the leasing by the
Borrower or any Subsidiary of real or personal property which has
been or is to be sold or transferred by the Borrower or such
Subsidiary to such Person or to any other Person to whom funds
have been or are to be advanced by such Person on the security of
such property or rental obligations of the Borrower or such
Subsidiary. It is, however, mutually understood and agreed that
the Lenders and the Agent will not unreasonably withhold their
consent to a "sale/leaseback" of the Cortland Property provided
that (i) such property is sold for an amount reasonably
determined by the Lenders to be not less than the fair market
value of such property, and (ii) the Borrower takes such steps as
are necessary to perfect the Agent's security interest in the
leasehold interest of the Borrower resulting therefrom.
6.12 Limitation on Changes in Fiscal Year. Permit
the fiscal year of the Borrower to end on a day other than June
30.
6.13 Limitation on Lines of Business. Enter into
any business, either directly or through any Subsidiary, except
for the business in which the Borrower is presently engaged or
similar or related businesses.
6.14 Limitation on Negative Pledge Clauses. Enter
into any agreement with any Person other than the Lenders
pursuant to this Agreement or any other Loan Document which
prohibits or limits the ability of the Borrower or any of its
Subsidiaries to create, incur, assume or suffer to exist any Lien
upon any of its property, assets or revenues, whether now owned
or hereafter acquired; provided, that, the Borrower may enter
into such an agreement in connection with any Lien permitted by
this Agreement, when such prohibition or limitation is by its
terms effective only against the assets subject to such Lien.
SECTION 7. EVENTS OF DEFAULT
If any of the following events shall occur and be
continuing:
(a) The Borrower shall fail to pay any principal of
any Note or any Reimbursement Obligation when due in
accordance with the terms thereof or hereof; or the Borrower
shall fail to pay any interest on any Note, or any other
amount payable hereunder, within three Business Days after
any such interest or other amount becomes due in accordance
with the terms thereof or hereof; or
(b) Any representation or warranty made or deemed
made by the Borrower herein or which is contained in any
certificate, document or financial or other statement
furnished by it at any time under or in connection with this
Agreement or any other Loan Document shall prove to have
been incorrect in any material respect on or as of the date
made or deemed made; or
(c) The Borrower shall default in the observance or
performance of any agreement contained in Section 6; or
(d) The Borrower shall default in the observance or
performance of any other agreement contained in this
Agreement or any other Loan Document (other than as provided
in paragraphs (a) through (c) of this Section), and such
default shall continue unremedied for a period of 10 days;
or
(e) The Borrower or any of its Subsidiaries shall
(i) default in any payment of principal of or interest on
any Indebtedness (other than the Notes) or in the payment of
any Guarantee Obligation, beyond the period of grace (not to
exceed 30 days), if any, provided in the instrument or
agreement under which such Indebtedness or Guarantee
Obligation was created provided, that, the aggregate
principal amount of such Indebtedness or Guarantee
Obligation shall be greater than $1,000,000; or (ii) default
in the observance or performance of any other agreement or
condition relating to any such Indebtedness or Guarantee
Obligation or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event
shall occur or condition exist, the effect of which default
or other event or condition is to cause, or to permit the
holder or holders of such Indebtedness or beneficiary or
beneficiaries of such Guarantee Obligation (or a trustee or
agent on behalf of such holder or holders or beneficiary or
beneficiaries) to cause, with the giving of notice if
required, such Indebtedness to become due prior to its
stated maturity or such Guarantee Obligation to become
payable; or
(f) (i) The Borrower or any of its Subsidiaries
shall commence any case, proceeding or other action (A)
under any existing or future law of any jurisdiction,
domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an
order for relief entered with respect to it, or seeking to
adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with
respect to it or its debts, or (B) seeking appointment of a
receiver, trustee, custodian, conservator or other similar
official for it or for all or any substantial part of its
assets, or the Borrower or any of its Subsidiaries shall
make a general assignment for the benefit of its creditors;
or (ii) there shall be commenced against the Borrower or any
of its Subsidiaries any case, proceeding or other action of
a nature referred to in clause (i) above which (A) results
in the entry of an order for relief or any such adjudication
or appointment or (B) remains undismissed, undischarged or
unbonded for a period of 60 days; or (iii) there shall be
commenced against the Borrower or any of its Subsidiaries
any case, proceeding or other action seeking issuance of a
warrant of attachment, execution, distraint or similar
process against all or any substantial part of its assets
which results in the entry of an order for any such relief
which shall not have been vacated, discharged, or stayed or
bonded pending appeal within 60 days from the entry thereof;
or (iv) the Borrower or any of its Subsidiaries shall take
any action in furtherance of, or indicating its consent to,
approval of, or acquiescence in, any of the acts set forth
in clause (i), (ii), or (iii) above; or (v) the Borrower or
any of its Subsidiaries shall generally not, or shall be
unable to, or shall admit in writing its inability to, pay
its debts as they become due; or
(g) (i) Any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or
Section 4975 of the Code) involving any Plan, (ii) any
"accumulated funding deficiency" (as defined in Section 302
of ERISA), whether or not waived, shall exist with respect
to any Plan or any Lien in favor of the PBGC or a Plan shall
arise on the assets of the Borrower or any Commonly
Controlled Entity, (iii) a Reportable Event shall occur with
respect to, or proceedings shall commence to have a trustee
appointed, or a trustee shall be appointed, to administer or
to terminate, any Single Employer Plan, which Reportable
Event or commencement of proceedings or appointment of a
trustee is, in the reasonable opinion of the Required
Lenders, likely to result in the termination of such Plan
for purposes of Title IV of ERISA, (iv) any Single Employer
Plan shall terminate for purposes of Title IV of ERISA,
(v) the Borrower or any Commonly Controlled Entity shall, or
in the reasonable opinion of the Required Lenders is likely
to, incur any liability in connection with a withdrawal
from, or the Insolvency or Reorganization of, a
Multiemployer Plan or (vi) any other event or condition
shall occur or exist with respect to a Plan; and in each
case in clauses (i) through (vi) above, such event or
condition, together with all other such events or
conditions, if any, could have a Material Adverse Effect; or
(h) One or more judgments or decrees shall be
entered against the Borrower or any of its Subsidiaries
involving in the aggregate a liability (not paid or fully
covered by insurance) of $1,000,000 or more, and all such
judgments or decrees shall not have been vacated,
discharged, stayed or bonded pending appeal within 60 days
from the entry thereof; or
(i) there shall have occurred a Change in Control;
then, and in any such event, (A) if such event is an Event of
Default specified in clause (i) or (ii) of paragraph (f) above
with respect to the Borrower, automatically the Commitments shall
immediately terminate and the Loans hereunder (with accrued
interest thereon) and all other amounts owing under this
Agreement (including, without limitation, all amounts of L/C
Obligations, whether or not the beneficiaries of the then
outstanding Letters of Credit shall have presented the documents
required thereunder) and the Notes shall immediately become due
and payable, and (B) if such event is any other Event of Default,
either or both of the following actions may be taken: (i) with
the consent of the Required Lenders, the Agent may, or upon the
request of the Required Lenders, the Agent shall, by notice to
the Borrower declare the Commitments to be terminated forthwith,
whereupon the Commitments shall immediately terminate; and (ii)
with the consent of the Required Lenders, the Agent may, or upon
the request of the Required Lenders, the Agent shall, by notice
to the Borrower, declare the Loans hereunder (with accrued
interest thereon) and all other amounts owing under this
Agreement including, without limitation, all amounts of L/C
Obligations, whether or not the beneficiaries of the then
outstanding Letters of Credit shall have presented the documents
required thereunder) and the Notes to be due and payable
forthwith, whereupon the same shall immediately become due and
payable. Except as expressly provided above in this Section,
presentment, demand, protest and all other notices of any kind
are hereby expressly waived.
With respect to all Letters of Credit with respect to
which presentment for honor shall not have occurred at the time
of an acceleration pursuant to the preceding paragraph, the
Borrower shall at such time deposit in a cash collateral account
opened by the Agent an amount equal to the aggregate then undrawn
and unexpired amount of such Letters of Credit. The Borrower
hereby grants to the Agent, for the benefit of the Issuing Lender
and the L/C Participants, a security interest in such cash
collateral to secure all obligations of the Borrower under this
Agreement and the other Loan Documents. Amounts held in such
cash collateral account shall be applied by the Agent to the
payment of drafts drawn under such Letters of Credit, and the
unused portion thereof after all such Letters of Credit shall
have expired or been fully drawn upon, if any, shall be applied
to repay other obligations of the Borrower hereunder and under
the Notes. After all such Letters of Credit shall have expired
or been fully drawn upon, all Reimbursement Obligations shall
have been satisfied and all other obligations of the Borrower
hereunder and under the Notes shall have been paid in full, the
balance, if any, in such cash collateral account shall be
returned to the Borrower. The Borrower shall execute and deliver
to the Agent, for the account of the Issuing Lender and the L/C
Participants, such further documents and instruments as the Agent
may request to evidence the creation and perfection of the within
security interest in such cash collateral account.
SECTION 8. THE AGENT
8.1 Appointment. Each Lender hereby irrevocably
designates and appoints Chemical Bank as the Agent of such Lender
under this Agreement and the other Loan Documents, and each
Lender irrevocably authorizes Chemical Bank, as the Agent for
such Lender, to take such action on its behalf under the
provisions of this Agreement and the other Loan Documents and to
exercise such powers and perform such duties as are expressly
delegated to the Agent by the terms of this Agreement and the
other Loan Documents, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to
the contrary elsewhere in this Agreement, the Agent shall not
have any duties or responsibilities, except those expressly set
forth herein, or any fiduciary relationship with any Lender, and
no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or
any other Loan Document or otherwise exist against the Agent.
8.2 Delegation of Duties. The Agent may execute any
of its duties under this Agreement and the other Loan Documents
by or through agents or attorneys-in-fact and shall be entitled
to advice of counsel concerning all matters pertaining to such
duties. The Agent shall not be responsible for the negligence or
misconduct of any agents or attorneys in-fact selected by it with
reasonable care.
8.3 Exculpatory Provisions. Neither the Agent nor
any of its officers, directors, employees, agents,
attorneys-in-fact or Affiliates shall be (i) liable for any
action lawfully taken or omitted to be taken by it or such Person
under or in connection with this Agreement or any other Loan
Document (except for its or such Person's own gross negligence or
willful misconduct) or (ii) responsible in any manner to any of
the Lenders for any recitals, statements, representations or
warranties made by the Borrower or any officer thereof contained
in this Agreement or any other Loan Document or in any
certificate, report, statement or other document referred to or
provided for in, or received by the Agent under or in connection
with, this Agreement or any other Loan Document or for the value,
validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or the Notes or any other Loan
Document or for any failure of the Borrower to perform its
obligations hereunder or thereunder. The Agent shall not be
under any obligation to any Lender to ascertain or to inquire as
to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of the
Borrower.
8.4 Reliance by Agent. The Agent shall be entitled
to rely, and shall be fully protected in relying, upon any Note,
writing, resolution, notice, consent, certificate, affidavit,
letter, telecopy, telex or teletype message, statement, order or
other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Borrower),
independent accountants and other experts selected by the Agent.
The Agent may deem and treat the payee of any Note as the owner
thereof for all purposes unless a written notice of assignment,
negotiation or transfer thereof shall have been filed with the
Agent. The Agent shall be fully justified in failing or refusing
to take any action under this Agreement or any other Loan
Document unless it shall first receive such advice or concurrence
of the Required Lenders as it deems appropriate or it shall first
be indemnified to its satisfaction by the Lenders against any and
all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Agent shall
in all cases be fully protected in acting, or in refraining from
acting, under this Agreement and the Notes and the other Loan
Documents in accordance with a request of the Required Lenders,
and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Lenders and all future
holders of the Notes.
8.5 Notice of Default. The Agent shall not be
deemed to have knowledge or notice of the occurrence of any
Default or Event of Default hereunder unless the Agent has
received notice from a Lender or the Borrower referring to this
Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default". In the event
that the Agent receives such a notice, the Agent shall give
notice thereof to the Lenders. The Agent shall take such action
with respect to such Default or Event of Default as shall be
reasonably directed by the Required Lenders; provided that unless
and until the Agent shall have received such directions, the
Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable in the best interests
of the Lenders.
8.6 Non-Reliance on Agent and Other Lenders. Each
Lender expressly acknowledges that neither the Agent nor any of
its officers, directors, employees, agents, attorneys-in-fact or
Affiliates has made any representations or warranties to it and
that no act by the Agent hereinafter taken, including any review
of the affairs of the Borrower, shall be deemed to constitute any
representation or warranty by the Agent to any Lender. Each
Lender represents to the Agent that it has, independently and
without reliance upon the Agent or any other Lender, and based on
such documents and information as it has deemed appropriate, made
its own appraisal of and investigation into the business,
operations, property, financial and other condition and
creditworthiness of the Borrower and made its own decision to
make its Loans hereunder and enter into this Agreement. Each
Lender also represents that it will, independently and without
reliance upon the Agent or any other Lender, and based on such
documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and
decisions in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigation as it
deems necessary to inform itself as to the business, operations,
property, financial and other condition and creditworthiness of
the Borrower. Except for notices, reports and other documents
expressly required to be furnished to the Lenders by the Agent
hereunder, the Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information
concerning the business, operations, property, condition
(financial or otherwise), prospects or creditworthiness of the
Borrower which may come into the possession of the Agent or any
of its officers, directors, employees, agents, attorneys-in-fact
or Affiliates.
8.7 Indemnification. The Lenders agree to indemnify
the Agent in its capacity as such (to the extent not reimbursed
by the Borrower and without limiting the obligation of the
Borrower to do so), ratably according to their respective
Commitment Percentages in effect on the date on which
indemnification is sought under this subsection (or, if
indemnification is sought after the date upon which the
Commitments shall have terminated and the Loans shall have been
paid in full, ratably in accordance with their Commitment
Percentages immediately prior to such date), from and against any
and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of
any kind whatsoever which may at any time (including, without
limitation, at any time following the payment of the Notes) be
imposed on, incurred by or asserted against the Agent in any way
relating to or arising out of this Agreement, any of the other
Loan Documents or any documents contemplated by or referred to
herein or therein or the transactions contemplated hereby or
thereby or any action taken or omitted by the Agent under or in
connection with any of the foregoing; provided that no Lender
shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting
solely from the Agent's gross negligence or willful misconduct.
The agreements in this subsection shall survive the payment of
the Notes and all other amounts payable hereunder.
8.8 Agent in Its Individual Capacity. The Agent and
its Affiliates may make loans to, accept deposits from and
generally engage in any kind of business with the Borrower as
though the Agent were not the Agent hereunder and under the other
Loan Documents. With respect to its Loans made or renewed by it
and any Note issued to it and with respect to any Letter of
Credit issued or participated in by it, the Agent shall have the
same rights and powers under this Agreement and the other Loan
Documents as any Lender and may exercise the same as though it
were not the Agent, and the terms "Lender" and "Lenders" shall
include the Agent in its individual capacity.
8.9 Successor Agent. The Agent may resign as Agent
upon 10 days' notice to the Lenders and the Borrower. If the
Agent shall resign as Agent under this Agreement and the other
Loan Documents, then the Required Lenders shall appoint from
among the Lenders a successor agent for the Lenders, which
successor agent shall be approved by the Borrower, whereupon such
successor agent shall succeed to the rights, powers and duties of
the Agent, and the term "Agent" shall mean such successor agent
effective upon such appointment and approval, and the former
Agent's rights, powers and duties as Agent shall be terminated,
without any other or further act or deed on the part of such
former Agent or any of the parties to this Agreement or any
holders of the Notes. After any retiring Agent's resignation as
Agent, the provisions of this subsection shall inure to its
benefit as to any actions taken or omitted to be taken by it
while it was Agent under this Agreement and the other Loan
Documents.
SECTION 9. MISCELLANEOUS
9.1 Amendments and Waivers. Neither this Agreement,
any Note or any other Loan Document, nor any terms hereof or
thereof may be amended, supplemented or modified except in
accordance with the provisions of this subsection. The Required
Lenders may, or, with the written consent of the Required
Lenders, the Agent may, from time to time, (a) enter into with
the Borrower written amendments, supplements or modifications
hereto and to the Notes and the other Loan Documents for the
purpose of adding any provisions to this Agreement, the Notes or
the other Loan Documents or changing in any manner the rights of
the Lenders or of the Borrower hereunder or thereunder or (b)
waive, on such terms and conditions as the Required Lenders or
the Agent, as the case may be, may specify in such instrument,
any of the requirements of this Agreement, the Notes or the other
Loan Documents or any Default or Event of Default and its
consequences; provided, however, that no such waiver and no such
amendment, supplement or modification shall (i) reduce the amount
or extend the scheduled date of maturity of any Note or of any
installment thereof, or reduce the stated rate of any interest or
fee payable hereunder or extend the scheduled date of any payment
thereof or increase the amount or extend the expiration date of
any Lender's Commitment, in each case without the consent of each
Lender affected thereby, or (ii) amend, modify or waive any
provision of this subsection or reduce the percentage specified
in the definition of Required Lenders, or consent to the
assignment or transfer by the Borrower of any of its rights and
obligations under this Agreement and the other Loan Documents or
release any material portion of the Collateral (as defined in the
Security Agreement), in each case without the written consent of
all the Lenders, or (iii) amend, modify or waive any provision of
Section 8 without the written consent of the then Agent. Any
such waiver and any such amendment, supplement or modification
shall apply equally to each of the Lenders and shall be binding
upon the Borrower, the Lenders, the Agent and all future holders
of the Notes. In the case of any waiver, the Borrower, the
Lenders and the Agent shall be restored to their former position
and rights hereunder and under the outstanding Notes and any
other Loan Documents, and any Default or Event of Default waived
shall be deemed to be cured and not continuing; but no such
waiver shall extend to any subsequent or other Default or Event
of Default, or impair any right consequent thereon.
9.2 Notices. All notices, requests and demands to
or upon the respective parties hereto to be effective shall be in
writing (including by telecopy), and, unless otherwise expressly
provided herein, shall be deemed to have been duly given or made
when delivered by hand, or 3 days after being deposited in the
mail, postage prepaid, or, in the case of telecopy notice, when
received, addressed as follows in the case of the Borrower and
the Agent, and as set forth in Schedule I in the case of the
other parties hereto, or to such other address as may be
hereafter notified by the respective parties hereto and any
future holders of the Notes:
The Borrower: Smith Corona Corporation
65 Locust Avenue
New Canaan, Connecticut
Attention: Manfred J. Eckhardt
Vice President and Treasurer
Telecopy: (203) 972-4226
Telephone: (203) 972-4202
The Agent: Chemical Bank
270 Park Avenue
New York, New York 10017
Attention: John J. Huber III
Telecopy: (212) 270-2625
Telephone: (212) 270-1402
provided that any notice, request or demand to or upon the Agent
or the Lenders pursuant to subsection 2.3, 2.5, 2.6, 2.7 or 2.12
shall not be effective until received.
9.3 No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of the Agent or
any Lender, any right, remedy, power or privilege hereunder or
under the other Loan Documents shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy,
power or privilege. The rights, remedies, powers and privileges
herein provided are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by law.
9.4 Survival of Representations and Warranties. All
representations and warranties made hereunder, in the other Loan
Documents and in any document, certificate or statement delivered
pursuant hereto or in connection herewith shall survive the
execution and delivery of this Agreement and the Notes and the
making of the Loans hereunder until all obligations of the
Borrower hereunder have been discharged.
9.5 Payment of Expenses and Taxes. The Borrower
agrees (a) to pay or reimburse the Agent for all its
out-of-pocket costs and expenses incurred in connection with the
development, preparation and execution of, and any amendment,
supplement or modification to, this Agreement, the Notes and the
other Loan Documents and any other documents prepared in
connection herewith or therewith, and the consummation and
administration of the transactions contemplated hereby and
thereby, including, without limitation, the reasonable fees and
disbursements of counsel to the Agent, (b) to pay or reimburse
each Lender and the Agent for all its costs and expenses incurred
in connection with the enforcement or preservation of any rights
under this Agreement, the Notes, the other Loan Documents and any
such other documents, including, without limitation, the fees and
disbursements of counsel to the Agent and to the several Lenders
(including, without duplication, the allocated cost of in-house
counsel) and (c) to pay, indemnify, and hold each Lender and the
Agent harmless from, any and all recording and filing fees and
any and all liabilities with respect to, or resulting from any
delay in paying, stamp, excise and other taxes, if any, which may
be payable or determined to be payable in connection with the
execution and delivery of, or consummation or administration of
any of the transactions contemplated by, or any amendment,
supplement or modification of, or any waiver or consent under or
in respect of, this Agreement, the Notes, the other Loan
Documents and any such other documents, and (d) to pay,
indemnify, and hold each Lender and the Agent harmless from and
against any and all other liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever with respect to
the execution, delivery, enforcement, performance and
administration of this Agreement, the Notes, the other Loan
Documents and any such other documents, including, without
limitation, any of the foregoing relating to the violation of,
noncompliance with or liability under, any Environmental Law
applicable to the operations of the Borrower, any of its
Subsidiaries or any of the Properties (all the foregoing in this
clause (d), collectively, the "indemnified liabilities"),
provided, that the Borrower shall have no obligation hereunder to
the Agent or any Lender with respect to indemnified liabilities
arising from the gross negligence or willful misconduct of the
Agent or any such Lender. The agreements in this subsection
shall survive repayment of the Notes and all other amounts
payable hereunder.
9.6 Successors and Assigns; Participations and
Assignments. (a) This Agreement shall be binding upon and inure
to the benefit of the Borrower, the Lenders, the Agent, all
future holders of the Notes and their respective successors and
assigns, except that the Borrower may not assign or transfer any
of its rights or obligations under this Agreement without the
prior written consent of each Lender.
(b) Any Lender may, in the ordinary course of its
commercial banking business and in accordance with applicable
law, at any time sell to one or more banks or other entities
(each a "Participant") participating interests in any Loan owing
to such Lender, any Note held by such Lender, any Commitment of
such Lender or any other interest of such Lender hereunder and
under the other Loan Documents. In the event of any such sale by
a Lender of a participating interest to a Participant, such
Lender's obligations under this Agreement to the other parties to
this Agreement shall remain unchanged, such Lender shall remain
solely responsible for the performance thereof, such Lender shall
remain the holder of any such Note for all purposes under this
Agreement and the other Loan Documents, and the Borrower and the
Agent shall continue to deal solely and directly with such Lender
in connection with such Lender's rights and obligations under
this Agreement and the other Loan Documents. The Borrower agrees
that if amounts outstanding under this Agreement and the Notes
are due or unpaid, or shall have been declared or shall have
become due and payable upon the occurrence of an Event of
Default, each Participant shall be deemed to have the right of
set-off in respect of its participating interest in amounts owing
under this Agreement and any Note to the same extent as if the
amount of its participating interest were owing directly to it as
a Lender under this Agreement or any Note, provided that, in
purchasing such participating interest, such Participant shall be
deemed to have agreed to share with the Lenders the proceeds
thereof as provided in subsection 9.7(a) as fully as if it were a
Lender hereunder. The Borrower also agrees that each Participant
shall be entitled to the benefits of subsections 2.10 and 2.11
with respect to its participation in the Commitments and the
Loans outstanding from time to time as if it was a Lender;
provided that, in the case of subsection 2.15, such Participant
shall have complied with the requirements of said subsection and
provided, further, that no Participant shall be entitled to
receive any greater amount pursuant to any such subsection than
the transferor Lender would have been entitled to receive in
respect of the amount of the participation transferred by such
transferor Lender to such Participant had no such transfer
occurred.
(c) Any Lender may, in the ordinary course of its
commercial banking business and in accordance with applicable
law, at any time and from time to time assign to any Lender or
any affiliate thereof or, with the consent of the Borrower and
the Agent (which in each case shall not be unreasonably
withheld), to an additional bank or financial institutions (an
"Assignee") all or any part of its rights and obligations under
this Agreement and the Notes in an aggregate principal amount not
less than $10,000,000 pursuant to an Assignment and Acceptance,
substantially in the form of Exhibit C, executed by such
Assignee, such assigning Lender (and, in the case of an Assignee
that is not then a Lender or an affiliate thereof, by the
Borrower and the Agent) and delivered to the Agent for its
acceptance and recording in the Register. Upon such execution,
delivery, acceptance and recording, from and after the effective
date determined pursuant to such Assignment and Acceptance, (x)
the Assignee thereunder shall be a party hereto and, to the
extent provided in such Assignment and Acceptance, have the
rights and obligations of a Lender hereunder with a Commitment as
set forth therein, and (y) the assigning Lender thereunder shall,
to the extent provided in such Assignment and Acceptance, be
released from its obligations under this Agreement (and, in the
case of an Assignment and Acceptance covering all or the
remaining portion of an assigning Lender's rights and obligations
under this Agreement, such assigning Lender shall cease to be a
party hereto).
(d) The Agent shall maintain at its address referred
to in subsection 9.2 a copy of each Assignment and Acceptance
delivered to it and a register (the "Register") for the
recordation of the names and addresses of the Lenders and the
Commitment of, and principal amount of the Loans owing to, each
Lender from time to time. The entries in the Register shall be
conclusive, in the absence of manifest error, and the Borrower,
the Agent and the Lenders may treat each Person whose name is
recorded in the Register as the owner of the Loan recorded
therein for all purposes of this Agreement. The Register shall
be available for inspection by the Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior
notice.
(e) Upon its receipt of an Assignment and Acceptance
executed by an assigning Lender and an Assignee (and, in the case
of an Assignee that is not then a Lender or an affiliate thereof,
by the Agent) together with payment to the Agent of a
registration and processing fee of $2,000, the Agent shall (i)
promptly accept such Assignment and Acceptance and (ii) on the
effective date determined pursuant thereto record the information
contained therein in the Register and give notice of such
acceptance and recordation to the Lenders and the Borrower. On
or prior to such effective date, the Borrower, at its own
expense, shall execute and deliver to the Agent (in exchange for
the Revolving Credit Note of the assigning Lender) a new
Revolving Credit Note to the order of such Assignee in an amount
equal to the Commitment assumed by it pursuant to such Assignment
and Acceptance and, if the assigning Lender has retained a
Commitment hereunder, a new Revolving Credit Note, to the order
of the assigning Lender in an amount equal to the Commitment
retained by it hereunder. Such new Notes shall be dated the
Effective Date or the Termination Date, as the case may be, and
shall otherwise be in the form of the Note replaced thereby.
(f) The Borrower authorizes each Lender to disclose to
any Participant or Assignee (each, a "Transferee") and any
prospective Transferee any and all financial information in such
Lender's possession concerning the Borrower and its Affiliates
which has been delivered to such Lender by or on behalf of the
Borrower pursuant to this Agreement or which has been delivered
to such Lender by or on behalf of the Borrower in connection with
such Lender's credit evaluation of the Borrower and its
Affiliates prior to becoming a party to this Agreement.
(g) Nothing herein shall prohibit any Lender from
pledging or assigning any Note to any Federal Reserve Bank in
accordance with applicable law.
9.7 Adjustments; Set-off. (a) If any Lender (a
"benefitted Lender") shall at any time receive any payment of all
or part of its Loans, or interest thereon, or receive any
collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, pursuant to events or proceedings of
the nature referred to in Section 7(f), or otherwise), in a
greater proportion than any such payment to or collateral
received by any other Lender, if any, in respect of such other
Lender's Loans or the Reimbursement Obligation owing to it, or
interest thereon, such benefitted Lender shall purchase for cash
from the other Lenders a participating interest in such portion
of each such other Lender's Loan or the Reimbursement Obligation
owing to it, or shall provide such other Lenders with the
benefits of any such collateral, or the proceeds thereof, as
shall be necessary to cause such benefitted Lender to share the
excess payment or benefits of such collateral or proceeds ratably
with each of the Lenders; provided, however, that if all or any
portion of such excess payment or benefits is thereafter
recovered from such benefitted Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the
extent of such recovery, but without interest.
(b) In addition to any rights and remedies of the Lenders
provided by law, each Lender shall have the right, without prior
notice to the Borrower, any such notice being expressly waived by
the Borrower to the extent permitted by applicable law, upon any
amount becoming due and payable by the Borrower hereunder or
under the Notes (whether at the stated maturity, by acceleration
or otherwise) to set-off and appropriate and apply against such
amount any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured,
at any time held or owing by such Lender or any branch or agency
thereof to or for the credit or the account of the Borrower.
Each Lender agrees promptly to notify the Borrower and the Agent
after any such set-off and application made by such Lender,
provided that the failure to give such notice shall not affect
the validity of such set-off and application.
9.8 Counterparts. This Agreement may be executed by
one or more of the parties to this Agreement on any number of
separate counterparts (including by telecopy), and all of said
counterparts taken together shall be deemed to constitute one and
the same instrument. A set of the copies of this Agreement
signed by all the parties shall be lodged with the Borrower and
the Agent.
9.9 Severability. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
9.10 Integration. This Agreement and the other Loan
Documents represent the agreement of the Borrower, the Agent and
the Lenders with respect to the subject matter hereof, and there
are no promises, undertakings, representations or warranties by
the Agent or any Lender relative to subject matter hereof not
expressly set forth or referred to herein or in the other Loan
Documents.
9.11 GOVERNING LAW. THIS AGREEMENT AND THE NOTES AND
THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT
AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
9.12 Submission To Jurisdiction; Waivers. The
Borrower hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal
action or proceeding relating to this Agreement and the
other Loan Documents to which it is a party, or for
recognition and enforcement of any judgement in respect
thereof, to the non-exclusive general jurisdiction of the
Courts of the State of New York, the courts of the
United States of America for the Southern District of
New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be
brought in such courts and waives any objection that it may
now or hereafter have to the venue of any such action or
proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees
not to plead or claim the same;
(c) agrees that service of process in any such action
or proceeding may be effected by mailing a copy thereof by
registered or certified mail (or any substantially similar
form of mail), postage prepaid, to the Borrower at its
address set forth in subsection 9.2 or at such other address
of which the Agent shall have been notified pursuant
thereto;
(d) agrees that nothing herein shall affect the right
to effect service of process in any other manner permitted
by law or shall limit the right to sue in any other
jurisdiction; and
(e) waives, to the maximum extent not prohibited by
law, any right it may have to claim or recover in any legal
action or proceeding referred to in this subsection any
special, exemplary, punitive or consequential damages.
9.13 Acknowledgements. The Borrower hereby
acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the Notes and
the other Loan Documents;
(b) neither the Agent nor any Lender has any fiduciary
relationship with or duty to the Borrower arising out of or
in connection with this Agreement or any of the other Loan
Documents, and the relationship between Agent and Lenders,
on one hand, and the Borrower, on the other hand, in
connection herewith or therewith is solely that of debtor
and creditor; and
(c) no joint venture is created hereby or by the other
Loan Documents or otherwise exists by virtue of the
transactions contemplated hereby among the Lenders or among
the Borrower and the Lenders.
9.14 WAIVERS OF JURY TRIAL. THE BORROWER, THE AGENT
AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE
TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT OR THE NOTES OR ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and
duly authorized officers as of the day and year first above
written.
SMITH CORONA CORPORATION
By: /s/ M. J. Eckhardt
Title: V.P. - Treasurer
CHEMICAL BANK,
as Agent and as a Lender
By: /s/ John J. Huber
Title: Managing Director
BANK OF AMERICA ILLINOIS
By: /s/ Brock T. Harris
Title: Vice President
SCHEDULE 2.12
Existing Letters of Credit
pursuant to subsection 2.12
Those certain Existing Letters of Credit issued on behalf of the Borrower
by BAI (formerly known as continental Bank N.A.), the aggregate amounts of
which as of April 6, 1995 are indicated on the attached list.
EXISTING LETTERS OF CREDIT
cc: J. Piontkowski
M. Wilson LETTERS OF CREDIT AT CONTINENTAL BANK 01:05 pm
From: Karen Pappalardo AS OF APRIL 6, 1995
L/C # BENEFICIARY DATE EXPIRY PAYMENT REQUESTED INVOICED BAL BANK
DATE DUE AMOUNT TO DATE CHARGES
6963090SAMSUNG CORP
SELJG SEC 02/14/94 04/30/94 $692,000
Label Printer
AMENDMENT #1 4/19/94 6/22/94
AMENDMENT #2 6/24/94 8/3/94 $45,460
AMENDMENT #3 8/5/94 9/6/94
AMENDMENT #4 8/18/94 10/4/94 $210,820
AMENDMENT #5 10/12/94 12/15/94 $147,418
AMENDMENT #6 12/14/94 2/3/95 $94,800
AMENDMENT #7 1/23/95 3/30/95 $28,800
AMENDMENT #8 3/14/95 5/25/95 $86,181
AT SIGHT $1,3 05,479 $1,190,298 $115,181 $3,829
6964212SAMSUNG CORP
SELJG SEC 04/01/94 06/30/94 $1,077,300
Mid-rg Fax
AMENDMENT #1 5/11/94 08/28/94 $207,700
AMENDMENT #2 6/6/94 chg address
AMENDMENT #3 8/18/94 11/15/94 $321,300
AMENDMENT #4 11/10/94 12/15/94
AT SIGHT $1,606,300 $1,606,500 $0 $4,711
6975148KOREA ELEC-
TRONICS CO. 5/13/94 11/15/94 $195,624
CRT 9"
AMENDMENT #1 6/3/94 $93,860
AT SIGHT $289,484 $289,484 $0 $1,202
6977429TAIWAN
TOTOKU 5/10/94 8/1/94 $39,165
for yoke
AMENDMENT #1 5/18/94 chg address
AMENDMENT #2 6/6/94 chg address
AMENDMENT #3 7/27/94 12/15/94 $14,920
AMENDMENT #4 9/7/94 2/15/95 $14,920
AMENDMENT #5 11/14/94 3/30/95 $59,680
AT SIGHT $128,685 $98,845 $29,840 $1,018
6988292KUO JAN ELECTRONICS
ENT 7/12/94 10/15/94 $10,500
flyback transformer
AMENDMENT #1 7/28/94 12/15/94 $14,000
AMENDMENT #2 09/12/94 2/15/95 $14,000
AT SIGHT $38,500 $38,500 $0 $565
6998188SAMSUNG
ELECTRIC 9/7/94 11/25/94 $1,480,000
Fax
AMENDMENT #1 10/20/94 12/10/94 $240,000
AMENDMENT #2 11/21/94 1/15/95 $740,000
AT SIGHT $2,460,000 $2,442,000 $0 $6,440
6009404KUO JAN ELECTRONICS
ENT 11/14/94 3/30/94 $49,000 $35,000 $14,000 $420
flyback transformer
6010523MORIMURA
BROS.(USA)11/18/94 1/15/95 $135,845
calculators
AMENDMENT #1 12/07/94 03/15/95 $112,562
AMENDMENT #2 12/14/94 3/30/95 $89,539
AMENDMENT #3 1/23/95 4/15/95 $143,728
60 DAYS $481,674 $281,674 $200,000 $4,779
$133,630 out-
standing invoice
to be paid 5/15/95
TOTALS $6,359,122 $5,982,300 $492,652 $22,964
SCHEDULE 3.15
SUBSIDIARIES
List of Subsidiaries
Hulse Manufacturing Company
P.T. Smith Corona Batam
SCM Inter-American Corporation
SCM (United Kingdom) Limited
Smith Corona Australia Pty. Ltd.
Smith Corona (Canada) Limited
Smith Corona de Mexico S.A. de C.V.
Smith Corona France S.A.R.L.
Smith Corona GmbH
Smith Corona International, Ltd.
Smith Corona Overseas Holdings, Inc.
Smith-Corona Private Limited
Smith Corona (UK) Limited
SCHEDULE 6.2
EXISTING INDEBTEDNESS
Existing Indebtedness pursuant to subsection 6.2(c)
None.
SCHEDULE 6.3
EXISTING LIENS
Pursuant to subsection 6.3(g)
None.
SCHEDULE 6.4
EXISTING GUARANTEE OBLIGATIONS
Existing Guarantee Obligations pursuant to subsection 6.4(a)
None.
SCHEDULE I
COMMITMENTS
From the Effective Date through March 30, 1996:
Commitment
Bank Commitment Percentage*
CHEMICAL BANK $18,750,000 62.5%
BANK OF AMERICA ILLINOIS $11,250,000 37.5%
$30,000,000 100%
From March 31, 1996, through the Termination Date:
Commitment
Bank Commitment Percentage*
CHEMICAL BANK $15,625,000 62.5%
BANK OF AMERICA ILLINOIS $ 9,375,000 37.5%
$25,000,000 100%
________________
*Rounded to the nearest one hundredth of a percent.
EXHIBIT A
FORM OF
REVOLVING CREDIT NOTE
$____________ New York, New York
____________, 1995
FOR VALUE RECEIVED, the undersigned, Smith Corona Corporation, a Delaware
corporation (the "Borrower"), hereby unconditionally promises to pay to the
order of Chemical Bank (the "Lender") at the office of Chemical Bank, located
at 270 Park Avenue, New York, New York 10017, in lawful money of the United
States of America and in immediately available funds, on the Termination Date
the principal amount of (a)_____________ DOLLARS ($___________), or, if less,
(b) the aggregate unpaid principal amount of all Revolving Credit Loans made by
the Lender to the Borrower pursuant to subsection 2.1 of the Credit Agreement,
as hereinafter defined. The Borrower further agrees to pay interest in like
money at such office on the unpaid principal amount hereof from time to time
outstanding at the rates and on the dates specified in subsections 2.7 and 2.9
of such Credit Agreement.
The holder of this Note is authorized to endorse on the schedules annexed
hereto and made a part hereof or on a continuation thereof which shall be
attached hereto and made a part hereof the date and amount of each Revolving
Credit Loan made pursuant to the Credit Agreement and the date and amount of
each payment or prepayment of principal thereof. Each such endorsement shall
constitute prima facie evidence of the accuracy of the information endorsed.
The failure to make any such endorsement shall not affect the obligations of
the Borrower in respect of such Revolving Credit Loan.
This Note (a) is one of the Revolving Credit Notes referred to in the Amended
and Restated Revolving Credit Agreement dated as of April __, 1995 (as amended,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
among the Borrower, the Lender, the other banks and financial institutions from
time to time parties thereto and Chemical Bank, as agent, (b) is subject to the
provisions of the Credit Agreement and (c) is subject to optional and mandatory
prepayment in whole or in part as provided in the Credit Agreement.
Upon the occurrence of any one or more of the Events of Default, all amounts
then remaining unpaid on this Note shall become, or may be declared to be,
immediately due and payable, all as provided in the Credit Agreement.
All parties now and hereafter liable with respect to this Note, whether
maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and all other notices of any kind.
Unless otherwise defined herein, terms defined in the Credit Agreement and
used herein shall have the meanings given to them in the Credit Agreement.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK.
SMITH CORONA CORPORATION
By:
Name:
Title:
Schedule A
to Revolving Credit Note
LOANS AND REPAYMENTS
Date Amount of Amount of Unpaid Principal Balance Notation Made By
Loans Principal of of Loans
Loans
- ---- --------- ------------ --------------- -------- ---------------
EXHIBIT B
FORM OF OPINION OF COUNSEL TO BORROWER
April __, 1995
Chemical Bank, as Agent
270 Park Avenue
New York, New York 10017
And each of the Lenders parties to the Credit Agreement referred to
below
We have acted as counsel to Smith Corona Corporation, a Delaware
corporation (the "Borrower"), in connection with (a) the Amended and
Restated Revolving Credit Agreement, dated as of April , 1995 (the
"Credit Agreement"), among the Borrower, the lenders
parties thereto (the "Lenders") and Chemical Bank, as agent for the
Lenders (in such capacity, the "Agent"), (b) the Revolving Credit Notes
and (c) the Security Agreement.
The opinions expressed below are furnished to you pursuant to
subsection 4.1(k) of the Credit Agreement. Unless otherwise defined herein,
terms defined in the Credit Agreement and used herein shall have the meanings
given to them in the Credit Agreement.
In arriving at the opinions expressed below,
(a) we have examined and relied on the originals,
or copies certified or otherwise
identified to our satisfaction, of each of
(1) the Credit Agreement, (2) the Revolving
Credit Notes dated the date hereof and (3)
the Security Agreement dated the date hereof (the
Credit Agreement, the Revolving Credit Notes and
the Security Agreement being hereinafter
referred to collectively as the "Transaction Documents");
(b) we have examined two (2) Connecticut form UCC-1
Financing Statements and two (2) New
York form UCC-1 Financing Statements, each naming the
Borrower as debtor and the Agent as
secured party (collectively, the "Financing Statements"); and
(c) we have examined such corporate documents and records
of the Borrower and such other
instruments and certificates of public p pcials, officers
and representatives of the Borrower and other Persons.
In arriving at the opinions expressed below, we have made such
investigations of law, in each case as we have deemed appropriate as
a basis for such opinions.
In rendering the opinions expressed below, we have assumed,
with your permission, without independent investigation or inquiry,
(a) the authenticity of all documents submitted to us as originals,
(b) the genuineness of all signatures on all documents that we
examined (other than those of the Borrower and officers of the Borrower)
and (c) the conformity to authentic originals of documents submitted
to us as certified, conformed or photostatic copies.
For all purposes of this opinion, we have also assumed, without
any independent investigation or inquiry on our part, that:
(a) the Collateral, as defined in the Security Agreement,
exists and the Borrower has title to such Collateral; and
(b) the information contained in each one of the Schedules
attached to the Security Agreement and each one of the Financing
Statements is accurate in all material respects.
When our opinions expressed below are stated "to the best of our
knowledge," we have made reasonable and diligent investigation of the
subject matters of such opinions and have no reason to believe that
there exist any facts or other information that would render such
opinions incomplete or incorrect.
Based upon and subject to the foregoing, we are of the opinion that:
1. The Borrower (a) is duly organized, validly existing
and in good standing under the laws of Delaware, (b) has the
corporate power and authority and the legal right to own and
operate its property, to lease the property it operates as lessee
and to conduct the business in which it is currently engaged and
(c) is duly qualified as a foreign corporation and in good standing
under the laws of each jurisdiction where its ownership,
lease or operation of property or the conduct of its business
requires such qualification, except to the extent that the failure
to be so qualified could not, in the aggregate, have a
Material Adverse Effect.
2. The Borrower has the corporate power and authority, and the
legal right, to make, deliver and perform its obligations under the
Credit Agreement, the Security Agreement and
each of the other Transaction Documents to which it is a party,
to borrow under the Credit Agreement and to grant security interests in
its property under the Security Agreement. The
Borrower has taken all necessary corporate action to authorize the
borrowings on the termsand conditions of the Credit Agreement, the
Security Agreement, and the other Transaction
Documents and to authorize the execution, delivery and performance of
the Credit Agreement, the Security Agreement and the other Transaction
Documents to which it is a party. No consent or authorization of,
approval by, notice to, filing with or other act by or in
respect of, any Governmental Authority or any other Person is required
in connection with the borrowings under the Credit Agreement, granting of
security interests under the Security Agreement or with the execution,
delivery, performance, validity or enforceability of the
Credit Agreement, the Security Agreement and the other Transaction Documents.
3. Each of the Credit Agreement, Security Agreement and the other
Transaction Documents to which the Borrower is a party has been duly
executed and delivered on behalf of the Borrower
and constitutes a legal, valid and binding obligation of the Borrower,
enforceable against the Borrower in accordance with its terms.
4. The execution and delivery of the Credit Agreement, Security
Agreement and the other Transaction Documents to which the Borrower
is a party, the performance by the Borrower of
its obligations thereunder, the consummation of the transactions
contemplated thereby, the compliance by the Borrower and each of
its Subsidiaries with any of the provisions thereof,
the borrowings under the Credit Agreement and the use of proceeds
thereof, all as provided therein, will not violate, or constitute a
default under, any Requirement of Law or, to the
best of our knowledge, any Contractual Obligations of the Borrower
or of any of its Subsidiaries and will not result in, or require,
the creation or imposition of any Lien on
any of its or their respective properties or revenues, except for
the Liens created by the Security Agreement.
5. Upon the filing of each one of the Financing Statements with
the office of the secretary of the State of Connecticut and with both
the Department of State for the State of New York and the office of
the filing officer of _____________ County, New York, the
Financing Statements and the Security Agreement will create in favor
of the Agent, for the ratable benefit of the Lenders, a valid and fully
perfected security interest in the Collateral as to which a security
interest may be perfected by filing under the laws of such
states.
6. To the best of our knowledge, no litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is
pending or threatened by or against the Borrower or any of its
Subsidiaries or against any of its or their respective properties or revenues
(18) with respect to the Credit Agreement or any of the other
Transaction Documents or (b) which could have a Material Adverse Effect.
7. To the best of our knowledge, neither the Borrower nor any of its
Subsidiaries is in default under or with respect to any Contractual
Obligations in any respect which could have a Material Adverse Effect.
8. The Borrower is not (a) an "investment company", or a company
"controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended, or (b) a "holding company"
as defined in, or otherwise subject to regulation under, the
Public Utility Holding Company Act of 1935. The Borrower is not subject
to regulation under any Federal or state statute or regulation which
limits its ability to incur Indebtedness.
Our opinions set forth in paragraph 3 above are subject to the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding
in equity or at law) and an implied covenant of good faith and
fair dealing.
We are members of the bar of the State of New York and we express no
opinion as to the laws of any jurisdiction other than the laws of the
State of New York, the General Corporate Law of the State of Delaware and
the Federal laws of the United States of America.
Very truly yours,
EXHIBIT C
FORM OF ASSIGNMENT AND ACCEPTANCE
Reference is made to the Amended and Restated Revolving Credit
Agreement, dated as of April __, 1995, (as amended, supplemented or
otherwise modified from time to time, the "Credit Agreement"),
among Smith Corona Corporation (the "Borrower"), the Lenders named
therein and Chemical Bank, as agent for the Lenders (in such capacity,
the "Agent"). Unless otherwise defined herein, terms defined in the
Credit Agreement and used herein shall have the meanings given to them
in the Credit Agreement.
(the "Assignor") --------------- and (the "Assignee") -------------
agree as follows:
1. The Assignor hereby irrevocably sells and assigns to the Assignee
without recourse to the Assignor, and the Assignee hereby irrevocably
purchases and assumes from the Assignor without recourse to the Assignor,
as of the Effective Date (as defined below), a ___%
interest (the "Assigned Interest") in and to the Assignor's rights and
obligations under the Credit Agreement with respect to those commitments
contained in the Credit Agreement as are set forth on Schedule I thereto
in a principal amount for each commitment as set forth on
Schedule 1 hereto.
2. The Assignor (a) makes no representation or warranty and assumes
no responsibility with respect to any statements, warranties or
representations made in or in connection with the
Credit Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Agreement, any other
Loan Document or any other instrument or document furnished pursuant
thereto, other than that it has not created any
adverse claim upon the interest being assigned by it hereunder and
that such interest is free and clear of any such adverse claim;
(b) makes no representation or warranty and assumes no responsibility
with respect to the financial condition of the Borrower, any of
its Subsidiaries or any other obligor or the performance or observance
by the Borrower, any of its Subsidiaries or any other obligor of any of
their respective obligations under the Credit Agreement or any other
Loan Document or any other instrument or document furnished
pursuant hereto or thereto; and (c) attaches the Note held by it
pursuant to the Credit Agreement and requests that the Agent exchange
such Note for a new Note payable to the Assignor (if the Assignor has
retained any interest in the Credit Agreement) and a new Note
or Notes payable to the Assignee in the respective amounts which
reflect the assignment being made hereby (and after giving effect
to any other assignments which have become
effective on the Effective Date).
3. The Assignee (a) represents and warrants that it is legally authorized
to enter into this Assignment and Acceptance; (b) confirms that it has
received a copy of the Credit Agreement, together with copies of the
financial statements delivered pursuant to subsection
3.1 thereof and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into
this Assignment and Acceptance; (c) agrees that it will, independently
and without reliance upon the Assignor, the Agent or any
other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Credit Agreement, the other Loan
Documents or any other instrument or document furnished
pursuant hereto or thereto; (d) appoints and authorizes the Agent to
take such action as agent on its behalf and to exercise such powers and
discretion under the Credit Agreement, the other Loan Documents or any
other instrument or document furnished pursuant hereto or
thereto as are delegated to the Agent by the terms thereof, together
with such powers as are incidental thereto; and (e) agrees that it will
be bound by the provisions of the Credit Agreement and will perform in
accordance with its terms all the obligations which by the
terms of the Credit Agreement are required to be performed by it as a
Lender including, if it is organized under the laws of a jurisdiction
outside the United States, its obligation pursuant to subsection 2.11(b)
of the Credit Agreement.
4. The effective date of this Assignment and Acceptance shall be
- ---------------, 19-- (the "Effective Date"). Following the execution
of this Assignment and Acceptance, it will be delivered to the Agent
for acceptance by it and recording by the Agent pursuant to
subsection 9.6 of the Credit Agreement, effective as of the Effective Date
(which shall not, unless otherwise agreed to by the Agent, be earlier than
five Business Days after the date of such acceptance and recording by
the Agent).
5. Upon such acceptance and recording, from and after the Effective
Date, the Agent shall make all payments in respect of the Assigned
Interest (including payments of principal, interest, fees and other
amounts) to the Assignee whether such amounts have accrued prior to
the Effective Date or accrue subsequent to the Effective Date. The
Assignor and the Assignee shall make all appropriate adjustments in
payments by the Agent for periods prior to the Effective Date or with
respect to the making of this assignment directly between
themselves.
6. From and after the Effective Date, (a) the Assignee shall be
a party to the Credit Agreement and, to the extent provided in this
Assignment and Acceptance, have the rights and obligations of a Lender
thereunder and under the other Loan Documents and shall be bound by
the provisions thereof and (b) the Assignor shall, to the extent
provided in this Assignment and Acceptance, relinquish its rights
and be released from its obligations under the Credit Agreement.
7. This Assignment and Acceptance shall be governed by and construed
in accordance with the laws of the State of New York.
8. The Assignor and Assignee respectively represent and warrant to
each other and to each of the Borrower and the Agent that this
Assignment and Acceptance, and the transaction contemplated hereby,
complies with the terms and provisions of the Credit Agreement related
hereto, including without limitation subsection 9.6 thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment
and Acceptance to be executed as of the date first above written by
their respective duly authorized officers on Schedule 1 hereto.
<PAGE>
Schedule 1
to Assignment and Acceptance
relating to the Amended and Restated
Revolving Credit Agreement,
dated as of April , 1995,
among
SMITH CORONA CORPORATION,
the Lenders named therein
and
Chemical Bank, as agent for the Lenders (in such capacity, the "Agent")
Name of Assignor:
Name of Assignee:
Effective Date of Assignment:
Principal Commitment Percentage
Amount Assigned Assigned
$ . %
[Name of Assignee] [Name of Assignor]
By By
Name: Name:
Title: Title:
Accepted: Consented To:
Chemical Bank, as Agent [Name of Borrower]
By By
Name: Name:
Title: Title:
- ----------
1. Calculate the Commitment Percentage that is assigned to at least
15 decimal places and show as a percentage of the aggregate commitments
of all Lenders.
EXHIBIT D
FORM OF BORROWING CERTIFICATE
Pursuant to subsection 4.1(c) of the Amended and Restated Revolving
Credit Agreement dated as of April __, 1995 by and among Smith Corona
Corporation, a Delaware corporation (the "Borrower"), Chemical Bank,
as Agent and the Lenders parties thereto (as the same may be
amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"; terms defined in the Credit Agreement being used
herein as therein defined), the Borrower hereby certifies as follows:
1. The representations and warranties of the Borrower set forth
in the Loan Documents or which are contained in any certificate,
document or financial or other statement furnished pursuant to or
in connection with any Loan Documents are true and correct in all material
respects on and as of the date hereof with the same effect as if made on
and as of the date hereof, except to the extent that such representations
and warranties relate to an earlier date.
2. No Default or Event of Default has occurred and is continuing as of
the date hereof or after giving effect to the making of the Loans as of
the date hereof.
3. There are no liquidation or dissolution proceedings pending or
to the Borrower's knowledge threatened against the Borrower, nor has
any other event occurred affecting or threatening the existence of the
Borrower.
4. The Borrower is a corporation duly incorporated and validly existing
under the laws of the State of Delaware.
IN WITNESS WHEREOF, the undersigned has executed this Certificate on
behalf of the Borrower as of the date indicated below.
SMITH CORONA CORPORATION
By: ___________________________
Title:
Date: ______________ __, ____
EXHIBIT E
BORROWING BASE CERTIFICATE
Pursuant to subsection 5.2(d) of the AMENDED AND RESTATED REVOLVING
CREDIT AGREEMENT dated as of April 7, 1995 (the "Credit Agreement"), among
SMITH CORONA CORPORATION, a Delaware corporation (the "Borrower"), the banks
parties thereto (the "Banks") and CHEMICAL BANK, as agent for the Banks
thereunder (in such capacity, the "Agent"), the Borrower hereby
certifies to the Agent as follows:
I. Set forth below for the Borrower and its Subsidiaries are (1) the total
amount of domestic accounts receivables excluding Puerto Rico, (2) each
item subtracted therefrom pursuant to the definition of Eligible Accounts
and (3) the amount of Eligible Accounts, each as of the last day of the
fiscal month of __________, 199_.
Total Accounts
Less adjustments to Accounts for:
(a) Accounts which do not meet the requirements of clause (a) and
(f) of the definition of "Eligible Accounts" in the Credit Agreement
(b) Accounts that are later than sixty (60) days after the due date
stated on the invoice therefor;
(c) amounts of net credit balances the dates of which are earlier
than 60 days prior to the date of determination (as calculated on the
Report RBAR4515-A) with respect to the aggregate Accounts of any Account
Debtor with original due dates more recent than 60 days prior to the date
of determination;
(d) for the ten Accounts with the highest aggregate balances on
the accounts receivable aging summary aging of the Borrower, the balance
in the current to 60 days past due aging categories, where 25% or more
of the total face value of such Account has been unpaid for more than
60 days, as calculated on the Report RBAR4515-B
(e) for all other Accounts, the aggregate balance in the current
to 60 days past due aging categories, where 50% or more of the total
face value of such Account has been unpaid for more than 60 days,
as calculated on the Report RBAR 4515-B
(f) advertising/preparation allowances, or "Key City" allowances,
volume and other rebate programs, and downward price adjustments or
price protection and transition programs (collectively referred to
as the "Programs"), equal to the greater of (i) or (ii):
(i) allowance earned but not taken with respect to the Programs,
calculated as follows:
general ledger provision for the Programs, after adjustments for additions
and/or reversals
less credits issued (also referred to as payments) to date
less total chargebacks requested by customers as recorded on the Transaction
Code Summary Aging of Accounts
Total of (i) ----------------------
(ii) estimate of the current liability for the Programs, calculated
as follows:
a one-month rolling average of the last twelve months of credits issued (also
referred to as payments)
plus chargebacks requested by customers as recorded in the current to 60
days past due aging categories on the Transaction Code Summary Aging of
Accounts
Total of (ii) ---------------------
Greater of (i) or (ii) ------------
(g) adjustments to reflect the return or rejection of, or any loss of or
damage to, any of the Inventory giving rise to such Account, and for any
material delivery, freight or financing charges, or late or other fees,
or set-offs, counterclaims, defenses, or disputes existing or asserted
with respect to such Account
(h) Accounts arising from transactions with employees, officers,
agents, directors, Stockholders, Subsidiaries or Affiliates
(i) Accounts arising from sales to the United States of America or
any state, territory, subdivision, department or agency thereof, unless
all applicable requirements of the Assignment of Claims Act of 1940 have
been met.
(j) Accounts arising from sales to debtors located outside the United
States not previously excluded
(k) Accounts arising from sales to customers which are insolvent or
the subject of any bankruptcy case or insolvency proceeding of any kind,
unless such Account is due from such Account Debtor as an administrative
claim under the Bankruptcy Code and the Agent, in the exercise of its
reasonable business judgment, deems such Account Debtor to be creditworthy
(l) non-trade receivables
(m) retainages or holdbacks
(n) Accounts which are not actually and absolutely owing to such
Borrower
(o) Accounts which are contingent for any reason or have been sold
or discounted without recourse;
(p) unbilled accounts
(q) accounts unacceptable to the Required Lenders
(r) Accounts which should be charged off or written off as
uncollectible in accordance with the customary business practice
of the Borrower
(s) Accounts which arise out of any claim in tort, is evidenced by
chattel paper, a promissory note, a negotiable instrument, or any other
instrument of any kind, unless the Borrower has delivered and properly
endorsed such chattel paper, promissory note, negotiable instrument or
other instrument to the Agent, on behalf of the Required Lenders
(t) Accounts based on a cash on delivery sale, unless cash has been
received on but not yet applied to any such Account
(u) Accounts arising out of the delivery of samples or trial
merchandise to customers of Account Debtors
Total Accounts Excluded
Total Eligible Accounts
Adjusted Eligible Accounts:
Eligible
Accounts x 70% = _________
II. Set forth below for the Borrower and its Subsidiaries are
(1) total Inventory, (2) each item subtracted from total Inventory
pursuant to the definition of Eligible Inventory, (3) Eligible Inventory,
and (4) Eligible Service Depot Inventory each as of the
last day of the fiscal month of _________, 199_.
Total domestic and in-transit Inventory from the Borrower's
Singapore and Mexico facilities Less Inventory consisting of:
(a) work-in-process and raw materials not previously excluded
(b) packaging materials and supplies
(c) damaged or unsalable Inventory
(d) Inventory located on premises other than those listed on
Schedule 4 of the Security Agreement
(e) Inventory to be returned to suppliers
(f) Inventory which has been consigned or sold pursuant to a
"bill and hold" or "sale or return" arrangement
(g) Inventory which is not subject to the Agent's duly perfected,
first priority Lien and no other Lien other than Liens permitted by
subsection 6.3 of the Credit Agreement
(h) reconditioned product, rework or discontinued (as each
such term is used in the inventory records of the Borrower delivered
to the Agent), Service Depot Inventory or Defective Stock
(i) Inventory which is in transit to third parties
(j) Inventory consisting of products using electrical current of
other than 110 volts
(k) intercompany profit
(l) Inventory unacceptable to the Required Lenders
Total Inventory Excluded ------------------
Eligible (Non-Service Depot) Inventory
Adjusted Eligible (Non-Service Depot) Inventory:
Eligible (Non-Service Depot) Inventory x 40% = ______________
Total Service Depot Inventory
Less: 30% of total Service Depot Inventory
Eligible Service Depot Inventory
Adjusted Eligible Service Depot Inventory (limited to the
lesser of the amount calculated below or $500,000):
Eligible Service Depot
Inventory X 20% = ______________
In Transit Inventory:
Finished goods Inventory in transit to the United States from
Samsung Corporation, Korea, and other approved vendors, and that is
subject to the Agent's security interest x 40% = _______________
Total Borrowing Base:
Adjusted Eligible Accounts
Adjusted Eligible Service Depot Inventory
Adjusted Eligible (Non-Service Depot) Inventory
In Transit Inventory
F/X Exposure
Reserve for Ocean Freight, Customs Duty and Other Fees for In
Transit Inventory
Acceptance Obligations
Total Borrowing Base ------------------
Terms defined in the Credit Agreement are used herein with their
meanings as defined therein.
By:
Title:
Dated as of
<PAGE>
EXHIBIT F
SECURITY AGREEMENT
among
SMITH CORONA CORPORATION
and
CHEMICAL BANK,
as Agent
Dated as of April 7, 1995
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of April 7, 1995, made by SMITH
CORONA CORPORATION, a Delaware corporation (the "Borrower"), in
favor of CHEMICAL BANK, as Agent (in such capacity, the "Agent")
for the Lenders parties to the Amended and Restated Revolving
Credit Agreement, dated as of April 7, 1995 (as amended,
supplemented or otherwise modified from time to time, the "Credit
Agreement"), among the Borrower, the Agent and such Lenders.
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement, the Lenders have
severally agreed to make extensions of credit to the Borrower
upon the terms and subject to the conditions set forth therein;
and
WHEREAS, it is a condition precedent to the obligation of
the Lenders to make their respective extensions of credit to the
Borrower under the Credit Agreement that the Borrower shall have
executed and delivered this Security Agreement to the Agent for
the ratable benefit of the Lenders;
NOW, THEREFORE, in consideration of the premises and to
induce the Agent and the Lenders to enter into the Credit
Agreement and to induce the Lenders to make their respective
extensions of credit to the Borrower, the Borrower hereby agrees
with the Agent, for the ratable benefit of the Lenders, as
follows:
1. Defined Terms.
1.1 Definitions. (a) Unless otherwise defined
herein, terms defined in the Credit Agreement and used herein
shall have the meanings given to them in the Credit Agreement,
and the following terms which are defined in the Uniform
Commercial Code in effect in the State of New York on the date
hereof are used herein as so defined: Accounts, Chattel Paper,
Documents, Equipment, Fixtures, General Intangibles, Instruments,
Inventory and Proceeds.
(b) The following terms shall have the following meanings:
"Agreement": this Security Agreement, as the same may be
amended, modified or otherwise supplemented from time to time.
"Collateral": as defined in Section 2 of this Agreement.
"Collateral Account": any collateral account established by
the Agent as provided in subsection 5.3 or subsection 7.2.
"Obligations": the collective reference to (a) the unpaid
principal of and interest on the Notes, the L/C Obligations and
all other obligations and liabilities of the Borrower to the
Agent and the Lenders (including, without limitation, interest
accruing at the then applicable rate provided in the Credit
Agreement after the Termination Date and interest accruing at the
then applicable rate provided in the Credit Agreement after the
filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding, relating to the
Borrower, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding), whether direct or
indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred, which may arise under, out of, or
in connection with, the Credit Agreement, the Notes, this
Agreement, the other Loan Documents or any other document made,
delivered or given in connection therewith, in each case whether
on account of principal, interest, reimbursement obligations,
fees, indemnities, costs, expenses or otherwise (including,
without limitation, all fees and disbursements of counsel to the
Agent or to the Lenders that are required to be paid by the
Borrower pursuant to the terms of the Credit Agreement or this
Agreement or any other Loan Document), (b) the F/X Exposure and
(c) the Acceptance Obligations.
"Patents": (a) all letters patent of the United States or
any other country and all reissues and extensions thereof,
including, without limitation, any thereof referred to in
Schedule 1 hereto, and (b) all applications for letters patent of
the United States or any other country and all divisions,
continuations and continuations-in-part thereof, including,
without limitation, any thereof referred to in Schedule 1 hereto.
"Patent License": all agreements, whether written or oral,
providing for the grant by or to the Borrower of any right to
manufacture, use or sell any invention covered by a Patent,
including, without limitation, any thereof referred to in
Schedule 1 hereto.
"Trademarks": (a) all trademarks, trade names, corporate
names, company names, business names, fictitious business names,
trade styles, service marks, logos and other source or business
identifiers, and the goodwill associated therewith, now existing
or hereafter adopted or acquired, all registrations and
recordings thereof, and all applications in connection therewith,
whether in the United States Patent and Trademark Office or in
any similar office or agency of the United States, any State
thereof or any other country or any political subdivision
thereof, or otherwise, including, without limitation, any thereof
referred to in Schedule 2 hereto, and (b) all renewals thereof.
"Trademark License": any agreement, written or oral,
providing for the grant by or to the Borrower of any right to use
any Trademark, including, without limitation, any thereof
referred to in Schedule 2 hereto.
"UCC": the Uniform Commercial Code as from time to time in
effect in the State of New York.
1.2 Other Definitional Provisions. (a) The words
"hereof," "herein" and "hereunder" and words of similar import
when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and
section and paragraph references are to this Agreement unless
otherwise specified.
(b) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such
terms.
2. Grant of Security Interest. As collateral security for
the prompt and complete payment and performance when due (whether
at the stated maturity, by acceleration or otherwise) of the
Obligations, the Borrower hereby grants to the Agent for the
ratable benefit of the Lenders a security interest in all of the
following property located in the United States now owned or at
any time hereafter acquired by the Borrower or in which the
Borrower now has or at any time in the future may acquire any
right, title or interest (collectively, the "Collateral"):
(a) all Accounts;
(b) all Chattel Paper;
(c) all Contracts;
(d) all Documents;
(e) all Equipment;
(f) all Fixtures;
(g) all General Intangibles;
(h) all Instruments;
(i) all Inventory;
(j) all Patents;
(k) all Patent Licenses;
(l) all Trademarks;
(m) all Trademark Licenses;
(n) all books and records pertaining to the Collateral; and
(o) to the extent not otherwise included, all Proceeds and
products of any and all of the foregoing.
3. Representations and Warranties. The Borrower hereby
represents and warrants that:
3.1 Title; No Other Liens. Except for the security
interest granted to the Agent for the ratable benefit of the
Lenders pursuant to this Agreement and the other Liens permitted
to exist on the Collateral pursuant to the Credit Agreement, the
Borrower owns each item of the Collateral free and clear of any
and all Liens or claims of others. No security agreement,
financing statement or other public notice with respect to all or
any part of the Collateral is on file or of record in any public
office, except such as have been filed in favor of the Agent, for
the ratable benefit of the Lenders, pursuant to this Agreement or
as are permitted pursuant to the Credit Agreement.
3.2 Perfected First Priority Liens. The security interests
granted pursuant to this Agreement (a) upon completion of the
filings and other actions specified on Schedule 3 attached hereto
will constitute perfected security interests in the Collateral in
the jurisdictions listed on such Schedule 3 to the extent
perfection may be accomplished by filing in favor of the Agent,
for the ratable benefit of the Lenders, (b) are prior to all
other Liens on the Collateral in existence on the date hereof
except for Liens permitted to exist pursuant to the Credit
Agreement and (c) are enforceable as such against (1) all
creditors of and purchasers from the Borrower (except purchasers
of Inventory in the ordinary course of business) and (2) any
Person having any interest in the real property where any of the
Equipment is located.
3.3 Inventory and Equipment. The Inventory and the
Equipment constituting part of the Collateral are kept at the
locations listed on Schedule 4 hereto.
3.4 Chief Executive Office. The Borrower's chief executive
office and chief place of business is located at 65 Locust
Avenue, New Canaan, Connecticut.
4. Covenants. The Borrower covenants and agrees with the
Agent and the Lenders that, from and after the date of this
Agreement until this Agreement is terminated and the security
interests created hereby are released:
4.1 Delivery of Instruments and Chattel Paper. If any
amount payable under or in connection with any of the Collateral
shall be or become evidenced by any Instrument or Chattel Paper,
such Instrument or Chattel Paper shall be immediately delivered
to the Agent, duly indorsed in a manner satisfactory to the
Agent, to be held as Collateral pursuant to this Agreement.
4.2 Marking of Records. The Borrower will mark its books
and records pertaining to the Collateral to evidence this
Agreement and the security interests created hereby.
4.3 Maintenance of Insurance. (a) The Borrower will
maintain, with financially sound and reputable companies,
insurance policies (1) insuring the Inventory and Equipment
constituting part of the Collateral against loss by fire,
explosion, theft and such other casualties as may be reasonably
satisfactory to the Agent and (2) insuring the Borrower, the
Agent and the Lenders against liability for personal injury and
property damage relating to such Inventory and Equipment, such
policies to be in such form and amounts and having such coverage
as may be reasonably satisfactory to the Agent and the Lenders,
with losses payable to the Borrower, the Agent and the Lenders as
their respective interests may appear.
(b) All such insurance shall (1) provide that no
cancellation, material reduction in amount or material change in
coverage thereof shall be effective until at least 30 days after
receipt by the Agent of written notice thereof, (2) name the
Agent and the Lenders as additional insured parties and, with
respect to property insurance policies only, having lender's loss
payable only endorsements naming the Agent and the Lenders as
loss payees and reasonably satisfactory in all material respects
to the Agent and (3) be otherwise reasonably satisfactory in all
material respects to the Agent, with losses payable under the
property insurance policies to the Borrower, to the Agent and the
Lenders as their respective interests may appear. If the
Borrower fails to provide and pay for any insurance required
herein, the Agent may, at the Borrower's expense, procure the
same, but shall not be under any obligation to do so.
(c) The Borrower shall deliver to the Agent and the Lenders
a report of a reputable insurance broker with respect to such
insurance during the first month of each fiscal year and such
supplemental reports with respect thereto as the Agent may from
time to time reasonably request.
4.4 Payment of Obligations. The Borrower will pay and
discharge or otherwise satisfy at or before maturity or before
they become delinquent, as the case may be, all taxes,
assessments and governmental charges or levies imposed upon the
Collateral or in respect of income or profits therefrom, as well
as all claims of any kind (including, without limitation, claims
for labor, materials and supplies) against or with respect to the
Collateral, except that no such charge need be paid if the amount
or validity thereof is currently being contested in good faith by
appropriate proceedings, reserves in conformity with GAAP with
respect thereto have been provided on the books of the Borrower
and such proceedings do not involve any material danger of the
sale, forfeiture or loss of any of the Collateral or any interest
therein.
4.5 Maintenance of Perfected Security Interest; Further
Documentation. (a) The Borrower shall maintain the security
interest created by this Agreement as a first, perfected security
interest subject only to Liens permitted to exist pursuant to the
Credit Agreement and shall defend such security interest against
claims and demands of all Persons whomsoever.
(b) At any time and from time to time, upon the written
request of the Agent, and at the sole expense of the Borrower,
the Borrower will promptly and duly execute and deliver such
further instruments and documents and take such further action as
the Agent may reasonably request for the purpose of obtaining or
preserving the full benefits of this Agreement and of the rights
and powers herein granted, including, without limitation, the
filing of any financing or continuation statements under the UCC
in effect in any jurisdiction with respect to the security
interests created hereby.
4.6 Changes in Locations, Name, etc. The Borrower will
not:
(a) permit any of the Inventory or Equipment constituting
part of the Collateral to be kept at a location other than those
listed on Schedule 4 hereto (it being understood that such
Inventory and Equipment may be relocated among such locations in
the ordinary course of the Borrower's Business); or
(b) change the location of its chief executive office and
chief place of business from that specified in subsection 3.4;
(c) change its name, identity or corporate structure to such
an extent that any financing statement filed by the Agent in
connection with this Agreement would become seriously misleading,
unless it shall have given the Agent and the Lenders at least 30
days' prior written notice of such change.
4.7 Further Identification of Collateral. The Borrower
will furnish to the Agent and the Lenders from time to time
statements and schedules further identifying and describing the
Collateral and such other reports in connection with the
Collateral as the Agent may reasonably request, all in reasonable
detail.
4.8 Notices. The Borrower will advise the Agent and the
Lenders promptly, in reasonable detail, at their respective
addresses set forth in the Credit Agreement of:
(a) any Lien (other than security interests created hereby
or Liens permitted under the Credit Agreement) on, or claim
asserted against, any of the Collateral; and
(b) of the occurrence of any other event which could
reasonably be expected to have a material adverse effect on the
aggregate value of the Collateral or on the security interests
created hereby.
4.9 Indemnification. The Borrower agrees to pay, and to
save the Agent and the Lenders harmless from, any and all
liabilities, costs and expenses (including, without limitation,
legal fees and expenses, which may include the allocated cost of
in-house counsel) (1) with respect to, or resulting from any
delay in paying, any and all excise, sales or other taxes which
may be payable or determined to be payable with respect to any of
the Collateral, (2) with respect to, or resulting from, any delay
in complying with any Requirement of Law applicable to any of the
Collateral and (3) in connection with any of the transactions
contemplated by this Agreement.
5. Provisions Relating to Accounts.
5.1 Borrower Remains Liable under Accounts. Anything
herein to the contrary notwithstanding, the Borrower shall remain
liable under each of the Accounts to observe and perform all the
conditions and obligations to be observed and performed by it
thereunder, all in accordance with the terms of any agreement
giving rise to each such Account. Neither the Agent nor any
Lender shall have any obligation or liability under any Account
(or any agreement giving rise thereto) by reason of or arising
out of this Agreement or the receipt by the Agent or any Lender
of any payment relating to such Account pursuant hereto, nor
shall the Agent or any Lender be obligated in any manner to
perform any of the obligations of the Borrower under or pursuant
to any Account (or any agreement giving rise thereto), to make
any payment, to make any inquiry as to the nature or the
sufficiency of any payment received by it or as to the
sufficiency of any performance by any party under any Account (or
any agreement giving rise thereto), to present or file any claim,
to take any action to enforce any performance or to collect the
payment of any amounts which may have been assigned to it or to
which it may be entitled at any time or times.
5.2 Analysis of Accounts. The Agent shall have the right
to make test verifications of the Accounts in any manner and
through any medium that it reasonably considers advisable, and
the Borrower shall furnish all such assistance and information as
the Agent may require in connection with such test verifications.
At any time and from time to time, upon the Agent's reasonable
request and at the expense of the Borrower, the Borrower shall
cause independent public accountants or others reasonably
satisfactory to the Agent to furnish to the Agent reports showing
reconciliations, aging and test verifications of, and trial
balances for, the Accounts. The Agent in its own name or on
behalf of the Lenders may communicate with account debtors on the
Accounts to verify with them to the Agent's satisfaction the
existence, amount and terms of any Accounts.
5.3 Collections on Accounts. (a) The Agent hereby
authorizes the Borrower to collect the Accounts, subject to the
Agent's direction and control, and the Agent may curtail or
terminate said authority at any time after the occurrence and
during the continuance of an Event of Default. If required by
the Agent at any time after the occurrence and during the
continuance of an Event of Default, any payments of Accounts,
when collected by the Borrower, (1) shall be forthwith (and, in
any event, within two Business Days) deposited by the Borrower in
the exact form received, duly indorsed by the Borrower to the
Agent if required, in a Collateral Account maintained under the
sole dominion and control of the Agent, subject to withdrawal by
the Agent for the account of the Lenders only as provided in
subsection 7.3, and (2) until so turned over, shall be held by
the Borrower in trust for the Agent and the Lenders, segregated
from other funds of the Borrower.
(b) Each such deposit of Proceeds of Accounts shall be
accompanied by a report identifying in reasonable detail the
nature and source of the payments included in the deposit.
(c) At the Agent's request, the Borrower shall deliver to
the Agent all original and other documents evidencing, and
relating to, the agreements and transactions which gave rise to
the Accounts, including, without limitation, all original orders,
invoices and shipping receipts.
5.4 Representations and Warranties. (a) No amount payable
to the Borrower under or in connection with any Account is
evidenced by any Instrument or Chattel Paper which has not been
delivered to the Agent.
(b) The places where the Borrower keeps its records
concerning the Accounts are 65 Locust Avenue, New Canaan,
Connecticut and 839 State Route 13, Cortland, New York.
(c) None of the obligors on any Accounts is a Governmental
Authority.
5.5 Covenants. (a) The amount represented by the Borrower
to the Lenders from time to time as owing by each account debtor
or by all account debtors in respect of the Accounts will at such
time be the correct amount actually owing by such account debtor
or debtors thereunder.
(b) The Borrower will not amend, modify, terminate or waive
any agreement giving rise to an Eligible Account in any manner
which could reasonably be expected to materially adversely affect
the value of such Account as Collateral.
(c) The Borrower will not fail to exercise promptly and
diligently each and every material right which it may have under
each agreement giving rise to an Eligible Account (other than any
right of termination).
(d) The Borrower will not fail to deliver to the Agent a
copy of each material demand, notice or document received by it
relating in any way to any agreement giving rise to an Eligible
Account.
(e) Other than in the ordinary course of business as
generally conducted by the Borrower over a period of time, the
Borrower will not grant any extension of the time of payment of
any of the Accounts, compromise, compound or settle the same for
less than the full amount thereof, release, wholly or partially,
any Person liable for the payment thereof, or allow any credit or
discount whatsoever thereon.
(f) The Borrower will not remove its books and records from
the location specified in paragraph 5.4(b).
(g) In any suit, proceeding or action brought by the Agent
or any Lender under any Account for any sum owing thereunder, the
Borrower will save, indemnify and keep the Agent and such Lender
harmless from and against all expense, loss or damage suffered by
reason of any defense, setoff, counterclaim, recoupment or
reduction or liability whatsoever of the account debtor
thereunder, arising out of a breach by the Borrower of any
obligation thereunder or arising out of any other agreement,
indebtedness or liability at any time owing to or in favor of
such account debtor or its successors from the Borrower.
6. Provisions Relating to Patents and Trademarks.
6.1 Representations and Warranties. (a) Schedule 1 hereto
includes all Patents and Patent Licenses owned by the Borrower in
its own name as of the date hereof.
(b) Schedule 2 hereto includes all Trademarks and Trademark
Licenses owned by the Borrower in its own name as of the date
hereof.
(c) To the best of the Borrower's knowledge, each Patent
and Trademark is valid, subsisting, unexpired, enforceable and
has not been abandoned.
(d) Except as set forth in either Schedule 1 or Schedule 2,
none of such Patents and Trademarks is the subject of any
licensing or franchise agreement.
(e) To the best of the Borrower's knowledge, no holding,
decision or judgment has been rendered by any Governmental
Authority which would limit, cancel or question the validity of
any Patent or Trademark.
(f) To the best of the Borrower's knowledge, no action or
proceeding is pending (other than with respect to any pending
Patent and Trademark applications) (1) seeking to limit, cancel
or question the validity of any Patent or Trademark, or (2)
which, if adversely determined, would have a material adverse
effect on the value of any Patent or Trademark.
6.2 Covenants.
(a) The Borrower (either itself or through licensees) will,
except with respect to any Trademark that the Borrower shall
reasonably determine is of negligible economic value to it, (1)
continue to use each Trademark on each and every trademark class
of goods applicable to its current line as reflected in its
current catalogs, brochures and price lists in order to maintain
such Trademark in full force free from any claim of abandonment
for non-use, (2) maintain as in the past the quality of products
and services offered under such Trademark, (3) employ such
Trademark with the appropriate notice of registration, (4) not
adopt or use any mark which is confusingly similar or a colorable
imitation of such Trademark unless the Agent, for the ratable
benefit of the Lenders, shall obtain a perfected security
interest in such mark pursuant to this Agreement, and (5) not
(and not permit any licensee or sublicensee thereof to) do any
act or knowingly omit to do any act whereby any Trademark may
become invalidated.
(b) The Borrower will not, except with respect to any
Patent that the Borrower shall reasonably determine is of
negligible economic value to it, do any act, or omit to do any
act, whereby any Patent may become abandoned or dedicated.
(c) The Borrower will notify the Agent and the Lenders
immediately if it knows, or has reason to know, that any
application or registration relating to any material Patent or
Trademark may become abandoned or dedicated, or of any adverse
determination or development (including, without limitation, the
institution of, or any such determination or development in, any
proceeding in the United States Patent and Trademark Office or
any court or tribunal in any country) regarding the Borrower's
ownership of any material Patent or Trademark or its right to
register the same or to keep and maintain the same.
(d) Whenever the Borrower, either by itself or through any
agent, employee, licensee or designee, shall file an application
for the registration of any material Patent or Trademark with the
United States Patent and Trademark Office or any similar office
or agency in any other country or any political subdivision
thereof, the Borrower shall report such filing to the Agent and
the Lenders within five Business Days after the last day of the
fiscal quarter in which such filing occurs. Upon request of the
Agent, the Borrower shall execute and deliver any and all
agreements, instruments, documents, and papers as the Agent may
request to evidence the Agent's and the Lenders' security
interest in any Patent or Trademark and the goodwill and general
intangibles of the Borrower relating thereto or represented
thereby;
(e) Subject to the provisions of subsections 6.2(a) and
(b), the Borrower will take all reasonable and necessary steps,
including, without limitation, in any proceeding before the
United States Patent and Trademark Office, or any similar office
or agency in any other country or any political subdivision
thereof, to maintain and pursue each application (and to obtain
the relevant registration) and to maintain each registration of
the Patents and Trademarks, including, without limitation, filing
of applications for renewal, affidavits of use and affidavits of
incontestability; provided, however, that this subsection 6.2(e)
shall not be deemed to obligate the Borrower to continue the
prosecution of any application which the Borrower reasonably
believes, after consultation with the Agent, is not patentable or
registrable or is of insignificant value to it.
(f) In the event that the Borrower should reasonably become
aware that any Patent or Trademark included in the Collateral is
infringed, misappropriated or diluted by a third party, the
Borrower shall promptly notify the Agent and the Lenders after it
learns thereof and shall, unless the Borrower shall reasonably
determine that such Patent or Trademark is of negligible economic
value to the Borrower, which determination the Borrower shall
promptly report to the Agent and the Lenders, promptly sue for
infringement, misappropriation or dilution, to seek injunctive
relief where appropriate and to recover any and all damages for
such infringement, misappropriation or dilution, or take such
other actions as the Borrower shall reasonably deem appropriate
under the circumstances to protect such Patent or Trademark.
7. Remedies.
7.1 Notice to Account Debtors. Upon the request of the
Agent at any time after the occurrence and during the continuance
of an Event of Default, the Borrower shall notify account debtors
on the Accounts that the Accounts have been assigned to the Agent
for the ratable benefit of the Lenders and that payments in
respect thereof shall be made directly to the Agent.
7.2 Proceeds to be Turned Over To Agent. In addition to
the rights of the Agent and the Lenders specified in subsection
5.3 with respect to payments of Accounts, if an Event of Default
shall occur and be continuing all Proceeds received by the
Borrower consisting of cash, checks and other near-cash items
shall be held by the Borrower in trust for the Agent and the
Lenders, segregated from other funds of the Borrower, and shall,
forthwith upon receipt by the Borrower, be turned over to the
Agent in the exact form received by the Borrower (duly indorsed
by the Borrower to the Agent, if required) and held by the Agent
in a Collateral Account maintained under the sole dominion and
control of the Agent. All Proceeds while held by the Agent in a
Collateral Account (or by the Borrower in trust for the Agent and
the Lenders) shall continue to be held as collateral security for
all the Obligations and shall not constitute payment thereof
until applied as provided in subsection 7.3.
7.3 Application of Proceeds. At such intervals as may be
agreed upon by the Borrower and the Agent, or, if an Event of
Default shall have occurred and be continuing, at any time at the
Agent's election, the Agent may apply all or any part of Proceeds
held in any Collateral Account in payment of the Obligations in
such order as the Agent may elect, and any part of such funds
which the Agent elects not so to apply and deems not required as
collateral security for the Obligations shall be paid over from
time to time by the Agent to the Borrower or to whomsoever may be
lawfully entitled to receive the same. Any balance of such
Proceeds remaining after the Obligations shall have been paid in
full and the Commitments shall have been terminated shall be paid
over to the Borrower or to whomsoever may be lawfully entitled to
receive the same.
7.4 UCC Remedies. If an Event of Default shall occur and
be continuing, the Agent, on behalf of the Lenders, may exercise,
in addition to all other rights and remedies granted to them in
this Agreement and in any other instrument or agreement securing,
evidencing or relating to the Obligations, all rights and
remedies of a secured party under the UCC. Without limiting the
generality of the foregoing, the Agent, without demand of
performance or other demand, presentment, protest, advertisement
or notice of any kind (except any notice required by law referred
to below) to or upon the Borrower or any other Person (all and
each of which demands, defenses, advertisements and notices are
hereby waived), may in such circumstances forthwith collect,
receive, appropriate and realize upon the Collateral, or any part
thereof, and/or may forthwith sell, lease, assign, give option or
options to purchase, or otherwise dispose of and deliver the
Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels at public or private sale or
sales, at any exchange, broker's board or office of the Agent or
any Lender or elsewhere upon such terms and conditions as it may
deem advisable and at such prices as it may deem best, for cash
or on credit or for future delivery without assumption of any
credit risk. The Agent or any 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 the whole
or any part of the Collateral so sold, free of any right or
equity of redemption in the Borrower, which right or equity is
hereby waived or released. The Borrower further agrees, at the
Agent's request, to assemble the Collateral and make it available
to the Agent at places which the Agent shall reasonably select,
whether at the Borrower's premises or elsewhere. The Agent shall
apply the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all
reasonable costs and expenses of every kind incurred therein or
incidental to the care or safekeeping of any of the Collateral or
in any way relating to the Collateral or the rights of the Agent
and the Lenders hereunder, including, without limitation,
reasonable attorneys' fees and disbursements, to the payment in
whole or in part of the Obligations, in such order as the Agent
may elect, and only after such application and after the payment
by the Agent of any other amount required by any provision of
law, including, without limitation, Section 9-504(1)(c) of the
UCC, need the Agent account for the surplus, if any, to the
Borrower. To the extent permitted by applicable law, the
Borrower waives all claims, damages and demands it may acquire
against the Agent or any Lender arising out of the exercise by
them of any rights hereunder. If any notice of a proposed sale
or other disposition of Collateral shall be required by law, such
notice shall be deemed reasonable and proper if given at least 10
days before such sale or other disposition.
7.5 Deficiency. The Borrower shall remain liable for any
deficiency if the proceeds of any sale or other disposition of
the Collateral are insufficient to pay the Obligations and the
fees and disbursements of any attorneys employed by the Agent or
any Lender to collect such deficiency.
8. Agent's Appointment as Attorney-in-Fact; Agent's
Performance of Borrower's Obligations.
8.1 Powers. The Borrower hereby irrevocably constitutes
and appoints the Agent and any officer or agent thereof, with
full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of the Borrower and in the name of the Borrower or in its
own name, from time to time in the Agent's discretion, for the
purpose of carrying out the terms of this Agreement, to take any
and all appropriate action and to execute any and all documents
and instruments which may be necessary or desirable to accomplish
the purposes of this Agreement, and, without limiting the
generality of the foregoing, the Borrower hereby gives the Agent
the power and right, on behalf of the Borrower, without assent by
the Borrower, to do the following:
(a) in the case of any Account, at any time when the
authority of the Borrower to collect the Accounts has been
curtailed or terminated pursuant to paragraph 5.3(a), or in the
case of any other Collateral, at any time when any Event of
Default shall have occurred and is continuing, in the name of the
Borrower or its own name or the names of the Lenders, to take
possession of and indorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due
under any Account, Instrument, General Intangible or Contract or
with respect to any other Collateral and to file any claim or to
take any other action or proceeding in any court of law or equity
or otherwise deemed appropriate by the Agent for the purpose of
collecting any and all such moneys due under any Account,
Instrument, General Intangible or Contract or with respect to any
other Collateral whenever payable;
(b) in the case of any Patents or Trademarks, to execute
and deliver any and all agreements, instruments, documents, and
papers as the Agent may request to evidence the Agent's and the
Lenders' security interest in any Patent or Trademark and the
goodwill and general intangibles of the Borrower relating thereto
or represented thereby;
(c) to pay or discharge taxes and Liens levied or placed on
or threatened against the Collateral, to effect any repairs or
any insurance called for by the terms of this Agreement and to
pay all or any part of the premiums therefor and the costs
thereof;
(d) to execute, in connection with the sale provided for in
Section 7.4 hereof, any indorsements, assignments or other
instruments of conveyance or transfer with respect to the
Collateral; and
(e) upon the occurrence and during the continuance of any
Event of Default, (1) to direct any party liable for any payment
under any of the Collateral to make payment of any and all moneys
due or to become due thereunder directly to the Agent or as the
Agent shall direct; (2) to ask or demand for, collect, receive
payment of and receipt for, any and all moneys, claims and other
amounts due or to become due at any time in respect of or arising
out of any Collateral; (3) to sign and indorse any invoices,
freight or express bills, bills of lading, storage or warehouse
receipts, drafts against debtors, assignments, verifications,
notices and other documents in connection with any of the
Collateral; (4) to commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral or any thereof and to
enforce any other right in respect of any Collateral; (5) to
defend any suit, action or proceeding brought against the
Borrower with respect to any Collateral; (6) to settle,
compromise or adjust any such suit, action or proceeding and, in
connection therewith, to give such discharges or releases as the
Agent may deem appropriate; (7) to assign any Patent or Trademark
(along with the goodwill of the business to which any such Patent
or Trademark pertains), throughout the world for such term or
terms, on such conditions, and in such manner, as the Agent shall
in its sole discretion determine; and (8) generally, to sell,
transfer, pledge and make any agreement with respect to or
otherwise deal with any of the Collateral as fully and completely
as though the Agent were the absolute owner thereof for all
purposes, and to do, at the Agent's option and the Borrower's
expense, at any time, or from time to time, all acts and things
which the Agent deems necessary to protect, preserve or realize
upon the Collateral and the Agent's and the Lenders' security
interests therein and to effect the intent of this Agreement, all
as fully and effectively as the Borrower might do.
8.2 Performance by Agent of Borrower's Obligations. If the
Borrower fails to perform or comply with any of its agreements
contained herein, the Agent, at its option, but without any
obligation so to do, may perform or comply, or otherwise cause
performance or compliance, with such agreement.
8.3 Borrower's Reimbursement Obligation. The expenses of
the Agent incurred in connection with actions undertaken as
provided in this Section, together with interest thereon at a
rate per annum equal to 6 1/2% above the ABR from the date of
payment by the Agent to the date reimbursed by the Borrower,
shall be payable by the Borrower to the Agent on demand.
8.4 Ratification; Power Coupled With An Interest. The
Borrower hereby ratifies all that said attorneys shall lawfully
do or cause to be done by virtue hereof. All powers,
authorizations and agencies contained in this Agreement are
coupled with an interest and are irrevocable until this Agreement
is terminated and the security interests created hereby are
released.
9. Duty of Agent. The Agent's sole duty with respect to
the custody, safekeeping and physical preservation of the
Collateral in its possession, under Section 9-207 of the UCC or
otherwise, shall be to deal with it in the same manner as the
Agent deals with similar property for its own account. Neither
the Agent, any Lender nor any of their respective directors,
officers, employees or agents shall be liable for failure to
demand, collect or realize upon any of the Collateral or for any
delay in doing so or shall be under any obligation to sell or
otherwise dispose of any Collateral upon the request of the
Borrower or any other Person or to take any other action
whatsoever with regard to the Collateral or any part thereof.
The powers conferred on the Agent and the Lenders hereunder are
solely to protect the Agent's and the Lenders' interests in the
Collateral and shall not impose any duty upon the Agent or any
Lender to exercise any such powers. The Agent and the Lenders
shall be accountable only for amounts that they actually receive
as a result of the exercise of such powers, and neither they nor
any of their officers, directors, employees or agents shall be
responsible to the Borrower for any act or failure to act
hereunder, except for their own gross negligence or willful
misconduct.
10. Execution of Financing Statements. Pursuant to Section
9-402 of the UCC, the Borrower authorizes the Agent to file
financing statements with respect to the Collateral without the
signature of the Borrower in such form and in such filing offices
as the Agent reasonably determines appropriate to perfect the
security interests of the Agent under this Agreement. A carbon,
photographic or other reproduction of this Agreement shall be
sufficient as a financing statement for filing in any
jurisdiction. The Agent shall, at the Borrower's expense,
provide the Borrower with prior written notice of such filing, as
well as a stamped file copy of such financing statement following
any such filing.
11. Authority of Agent. The Borrower acknowledges that the
rights and responsibilities of the Agent under this Agreement
with respect to any action taken by the Agent or the exercise or
non-exercise by the Agent of any option, voting right, request,
judgment or other right or remedy provided for herein or
resulting or arising out of this Agreement shall, as between the
Agent and the Lenders, be governed by the Credit Agreement and by
such other agreements with respect thereto as may exist from time
to time among them, but, as between the Agent and the Borrower,
the Agent shall be conclusively presumed to be acting as agent
for the Lenders with full and valid authority so to act or
refrain from acting, and the Borrower shall be under no
obligation, or entitlement, to make any inquiry respecting such
authority.
12. Notices. All notices, requests and demands to or upon
the Agent or the Borrower to be effective shall be in writing (or
by telex, fax or similar electronic transfer confirmed in
writing) and shall be deemed to have been duly given or made
(a) when delivered by hand or (b) if given by mail, when
deposited in the mails by certified mail, return receipt
requested, or (c) if by telex, fax or similar electronic
transfer, when sent and receipt has been confirmed, addressed to
the Agent or the Borrower at its address or transmission number
for notices provided in subsection 9.2 of the Credit Agreement.
The Agent and the Borrower may change their addresses and
transmission numbers for notices by notice in the manner provided
in this Section.
13. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
14. Amendments in Writing; No Waiver; Cumulative Remedies.
14.1 Amendments in Writing. None of the terms or
provisions of this Agreement may be waived, amended, supplemented
or otherwise modified except by a written instrument executed by
the Borrower and the Agent, provided, that any provision of this
Agreement may be waived by the Agent and the Lenders in a letter
or agreement executed by the Agent or by telex or facsimile
transmission from the Agent.
14.2 No Waiver by Course of Conduct. Neither the Agent nor
any Lender shall by any act (except by a written instrument
pursuant to subsection 14.1 hereof), delay, indulgence, omission
or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any Default or Event of
Default or in any breach of any of the terms and conditions
hereof. No failure to exercise, nor any delay in exercising, on
the part of the Agent or any Lender, any right, power or
privilege hereunder shall operate as a waiver thereof. No single
or partial exercise of any right, power or privilege hereunder
shall preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. A waiver by the
Agent or any Lender of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy
which the Agent or such Lender would otherwise have on any future
occasion.
14.3 Remedies Cumulative. The rights and remedies herein
provided are cumulative, may be exercised singly or concurrently
and are not exclusive of any other rights or remedies provided by
law.
15. Section Headings. The section and subsection headings
used in this Agreement are for convenience of reference only and
are not to affect the construction hereof or be taken into
consideration in the interpretation hereof.
16. Successors and Assigns. This Agreement shall be
binding upon the successors and assigns of the Borrower and shall
inure to the benefit of the Agent and the Lenders and their
successors and assigns.
17. Governing Law. This Agreement shall be governed by,
and construed and interpreted in accordance with, the law of the
State of New York.
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Security
Agreement to be duly executed and delivered as of the date first
above written.
SMITH CORONA CORPORATION
By
Title
Schedule 1
PATENTS AND PATENT LICENSES
Schedule 2
TRADEMARKS AND TRADEMARK LICENSES
Schedule 3
FILINGS AND OTHER ACTIONS REQUIRED TO PERFECT SECURITY INTERESTS
Uniform Commercial Code Filings
- -------------------------------
Connecticut: Secretary of State
New York: Department of State
Office of the filing officer, Cortland County
California: Secretary of State
Hawaii: Registrar of Conveyances, Bureau of Conveyances
Patent and Trademark Filings
- ----------------------------
U.S. Copyright Office
U.S. Patent and Trademark Office
Other Actions
- -------------
Obtain Collateral Access Agreements
Schedule 4
INVENTORY AND EQUIPMENT
Item Location
- ---- --------
Inventory 839 Route 13 South
Cortland, New York 13045
2055 Dublin Drive
Suite 102
San Diego, CA 92173
Citywide Transp. Co.
Trucking and Warehousing
933 North Nimitz Highway
Honolulu, Hawaii 96817
Equipment 839 Route 13 South
Cortland, New York 13045
Exhibit G
Smith Corona
Collateral Monitoring Reporting Requirements
Documents to be Submitted to the Bank
Reporting Frequency - Monthly:
1. Exhibit E - Borrowing Base Certificate with supporting
documentation for ineligible accounts receivable and
inventory and Monthly Activity Report (See #14 and #15 below).
2. Reconciliation of Month End A/R Aging Report to Monthly
Activity Report.
3. Consolidated Financial Statements and "Monthly Reporting
Package", including Commentary and Executive Summary.
4. Fiscal Calendar
5. Transaction Code Summary Aging by Customer and in Total
6. Month to Date A/R Transaction Record (Report NBAR2315)
7. "Net Invoice Amount by Order Type" - Detail Gross Sales and
Credits by Order Type #1 through #7.
8. Ten Largest Customer A/R Balances per the most recent aging
and Subsequent Cash Collections of these balances.
9. Summarized Inventory Perpetual referred to as "Domestic
Typewriter Inventory" and "Domestic Accessory Inventory"
Reports, reconciled to Summary Page of "Finished Goods
Inventory by Detail Account" (RBGLO817)
10. Finished Good Inventory by Location, reconciled to
"Inventory Valuation Report"(RBCI7201B)
11. Gross Margin Analysis by Product Line for "Domestic" and "New
Products". Please provide Monthly and Year to Date Reports
compared to Prior Year.
12. Aged Accounts Payable Report - Summary by Vendor
13. Cash Disbursement Ledger (Upon Request)
14. Detailed Supporting Documentation (mutually exclusive) for Ineligibles:
Accounts Receivable:
>60 Days Past Due
Credit Reclassifications (Report RBAR4515-A)
25% Cross Aging Report for Ten Largest Customer A/R Balances
50% cross Aging for all Other Customers (Report RBAR4515-B)
For Adv ertising/Preparation Allowances, Volume and Other
Reba te Programs, Price Protection and Transition Programs,
please provide the calculation of: (fI) allowance earned
but not taken, and (fII) estimated of current liability as
outlined in the Borrowing Base Certificated on Exhibit E.Supporting
documentation to include: "Marketing Reserves Summary, Life to Date,
As of Month End", and "Marketing Program Reserves, Fiscal Year (93-94-95)
Payments, Most Recent 20 Months".
Charge backs: Returned Merchandise
Customer Claiming Short Shipments
Other (Including Unearned Discounts,
(including finance charges)
unidentified underpayments, freight and
vendor audit adjustments)
Consignment
Government
Employee
Inventory:
Reconditioned Product (Department 283)
Service Depot (Department 390)
Rework (Department 277)
Discontinued Typewriters and Word Processors
Goods on Consignment
Defective Stock
Reserve for Ocean Freight, Customs Duty, and Other Fees for In-transit
Inventory from Singapore
15. Detailed Supporting Documentation for Monthly Accounts
Receivable Activity Report (Exhibit_____):
Summary Page of Invoice Register (Report 701-34)
Lockbox Deposit Activity Sheet and JV #120022
Reports should be addressed to:
Tara Hopkins
Chemical Bank
270 Park Avenue-29th Floor
New York, NY 10017
Phone: (212) 270-7649
Fax: (212) 270-7449
<PAGE>
Smith Corona Exhibit_____
Monthly Activity Report
As of________________________
Beginning of Month Accounts Receivable __________
Gross Invoices - Code 01 & Code 07 __________
Other Gross Sales __________
Collection Receipts Applied __________
Cash Discounts __________
Returns (Never Ordered) - Code 02 __________
Net Credit/Rebills - Code 03 & Code 05 __________
Defective Units - Code 04 __________
Price Adjustments - Code 06 __________
Write Offs - Net of Reversals __________
Other Debit/Credit Adjustments __________
End of Month Accounts Receivable __________
The undersigned certifies the information provided in this report
to Chemical Bank is accurate based on the accounting records of
Smith Corona
___________________________________________
