SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: Commission File Number:
March 31, 1996 0-19795
PCI SERVICES, INC.
(Exact name of registrant as specified in its charter)
Delaware 51-0336586
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1403 Foulk Road, Suite 102
Wilmington, Delaware 19803
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (302) 479-0281
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
As of May 3, 1996, there were 6,211,250 shares of Common Stock, par value $.001
per share, outstanding.
<PAGE>
PCI SERVICES, INC. AND SUBSIDIARIES
Quarter Ended March 31, 1996
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements.
Condensed Consolidated Statements of Operations -
Three and Six Months ended March 31, 1996 and 1995 (Unaudited) 4
Condensed Consolidated Balance Sheets -
March 31, 1996 (Unaudited) and September 30, 1995 5
Condensed Consolidated Statements of Cash Flows -
Six Months ended March 31, 1996 and 1995 (Unaudited) 6
Notes to Condensed Consolidated Financial Statements (Unaudited) 7-9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations. 10-13
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K. 14
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<PAGE>
PCI SERVICES, INC. AND SUBSIDIARIES
Quarter Ended March 31, 1996
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
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<PAGE>
PCI SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31, Six Months Ended March 31,
---------------------------- --------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net revenue $42,276,000 $31,912,000 $79,368,000 $60,522,000
Cost of goods sold 30,910,000 25,848,000 59,327,000 48,434,000
---------- ----------- ----------- -----------
Gross profit 11,366,000 6,064,000 20,041,000 12,088,000
Selling, general and administrative expenses 5,679,000 3,865,000 10,520,000 7,957,000
Interest expense 837,000 388,000 1,348,000 898,000
Other (income) expense (44,000) 15,000 (80,000) (72,000)
----------- ----------- ----------- -----------
Income before income tax expense 4,894,000 1,796,000 8,253,000 3,305,000
Income tax expense 1,649,000 675,000 2,891,000 1,143,000
----------- ----------- ----------- -----------
Net income $ 3,245,000 $ 1,121,000 $ 5,362,000 $ 2,162,000
=========== =========== =========== ===========
Earnings per share $ .53 $ .18 $ .87 $ .35
=========== =========== =========== ===========
Weighted average shares outstanding 6,171,000 6,127,000 6,148,000 6,150,000
=========== =========== =========== ===========
</TABLE>
See notes to condensed consolidated financial statements.
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<PAGE>
PCI SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, September 30,
1996 1995
----------- ----------
(Unaudited) (See Note)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 3,214,000 $ 3,619,000
Accounts receivable, net 24,645,000 17,940,000
Inventories 12,769,000 11,588,000
Deferred income taxes 3,919,000 1,241,000
Other 1,138,000 1,826,000
----------- -------------
Total current assets 45,685,000 36,214,000
Property, plant and equipment, net 79,287,000 61,901,000
Goodwill, net 19,218,000 10,182,000
Other assets 2,939,000 670,000
------------ ------------
$147,129,000 $108,967,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable to financial institutions $ 1,709,000 $ 2,005,000
Accounts payable 8,330,000 9,746,000
Accrued payroll and related taxes 2,378,000 1,747,000
Accrued insurance 2,065,000 1,649,000
Accrued taxes - other 2,670,000 228,000
Accrued expenses - other 5,446,000 3,367,000
Federal, state and foreign income taxes payable 1,672,000 1,650,000
Current maturities of long-term debt 5,777,000 3,642,000
------------ ------------
Total current liabilities 30,047,000 24,034,000
Long-term debt, less current maturities 51,427,000 27,208,000
Deferred income taxes 3,254,000 2,758,000
Other liabilities 2,997,000 1,431,000
Stockholders' equity 59,404,000 53,536,000
------------ ------------
$147,129,000 $108,967,000
============ ============
</TABLE>
Note: The balance sheet at September 30, 1995 has been condensed from the
audited financial statements at that date.
See notes to condensed consolidated financial statements.
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<PAGE>
PCI SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended March 31,
--------------------------
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 5,362,000 $ 2,162,000
Adjustments to reconcile net income to net cash
provided by operating activities (1,473,000) 287,000
------------ ------------
Net cash provided by operating activities 3,889,000 2,449,000
Cash flows from investing activities:
Cash portion of acquisition of Unipack, net of cash acquired (17,478,000) --
Capital expenditures (10,767,000) (9,082,000)
Proceeds from sale of equipment 301,000 996,000
Other 127,000 282,000
------------ ------------
Net cash used in investing activities (27,817,000) (7,804,000)
Cash flows from financing activities:
Borrowings 30,604,000 9,106,000
Debt repayments (6,144,000) (3,063,000)
Acquisition of treasury stock -- (382,000)
Acquisition of minority interest (900,000) --
Other (35,000) (189,000)
------------ -----------
Net cash provided by financing activities 23,525,000 5,472,000
Effect of exchange rate changes on cash (2,000) 5,000
------------ -----------
Net increase (decrease) in cash and cash equivalents (405,000) 122,000
Cash and cash equivalents:
Beginning of period 3,619,000 3,089,000
------------ ------------
End of period $ 3,214,000 $ 3,211,000
============ ============
Supplemental disclosure of cash flow information:
Interest paid $ 1,262,000 $ 919,000
============ ============
Income taxes paid $ 3,069,000 $ 1,620,000
============ ============
Supplemental disclosure of non-cash investing and financing activities:
Issuance of stock - acquisition of Unipack $ 765,000 --
============ =============
See notes to condensed consolidated financial statements.
</TABLE>
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<PAGE>
PCI SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Condensed Consolidated Financial Statements
The condensed consolidated balance sheet as of March 31, 1996, the
condensed consolidated statements of operations for the three and six months
ended March 31, 1996 and 1995, and the condensed consolidated statements of cash
flows for the six months then ended have been prepared by the Company without
audit. In the opinion of management, all adjustments (consisting only of normal
recurring adjustments) necessary to present fairly the financial position,
results of operations and cash flows at March 31, 1996 and for all periods
presented have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. These condensed consolidated
financial statements should be read in conjunction with the financial statements
for the fiscal year ended September 30, 1995 and notes thereto included in the
Company's September 30, 1995 Annual Report on Form 10-K. The results of
operations for the period ended March 31, 1996 are not necessarily indicative of
the operating results for the full year.
Note B - Acquisition
On February 29, 1996, the Company acquired all of the outstanding
capital stock of Unipack Limited ("Unipack"), a pharmaceutical packaging company
located in the United Kingdom, for approximately $18,000,000 in cash and 60,000
shares of the Company's common stock (valued at $765,000 as of the date of the
acquisition). The Company financed the acquisition with long-term debt (see Note
D). The acquisition was accounted for by the purchase method of accounting. The
excess of the cost of the acquisition over the preliminary fair values of the
net assets acquired, of $9,088,000, has been recorded as goodwill and will be
amortized over 20 years.
The operations of Unipack are included in the Company's Condensed
Consolidated Statement of Operations from the date of the acquisition. The
following unaudited pro forma summary presents the consolidated results of
operations of the Company for the six months ended March 31, 1996 and 1995 as if
the acquisition had occurred at the beginning of fiscal year 1995, after giving
effect to certain adjustments, including amortization of goodwill and loan
acquisition costs. The pro forma information is presented for comparative
purposes only and does not necessarily reflect the results of operations of the
Company had the acquisition been made at the beginning of fiscal year 1995.
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<PAGE>
PCI SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note B - Acquisition (continued)
<TABLE>
<CAPTION>
Pro Forma
Financial Information
Six Months Ended March 31,
--------------------------
1996 1995
---- ----
<S> <C> <C>
Revenues $ 87,253,000 $ 69,176,000
Net income $ 5,622,000 $ 2,404,000
Earnings per share $ .91 $ .39
Weighted average shares outstanding 6,198,000 6,210,000
</TABLE>
Note C - Inventories
Inventories are stated at the lower of cost (first-in, first-out method) or
market.
<TABLE>
<CAPTION>
March 31, September 30,
1996 1995
---- ----
<S> <C> <C>
Raw materials $ 7,981,000 $ 6,894,000
Work in process 1,352,000 1,000,000
Finished goods 3,436,000 3,694,000
----------- -----------
$12,769,000 $11,588,000
=========== ===========
</TABLE>
Note D - Long Term Debt
In February 1996, the Company refinanced certain of its debt
obligations, which included a $3,000,000 revolving credit facility and term
loans aggregating approximately $10,200,000, by an agreement with a commercial
bank which provides for a $9,000,000 revolving credit facility, a $14,200,000
term loan and a $5,000,000 equipment facility. The revolving credit facility
expires in March 1999 and bears interest, at the Company's option, at the prime
rate plus .25% or LIBOR plus 2.25%. At March 31, 1996, $4,000,000 was
outstanding and $2,657,000 of letters of credit were issued under the revolving
credit facility. The term loan is payable quarterly through March 2003, plus
interest, at the Company's option, at the prime rate plus .375% or LIBOR plus
2.50%. At March 31, 1996, $10,237,000 was borrowed under the term loan with
$3,963,000 available for additional borrowing. The equipment facility expires in
March 1997, and bears interest, at the Company's option, at the prime rate plus
.375% or LIBOR plus 2.50%. Advances under the equipment facility are converted
to term notes, payable over a maximum of 60 months. At March 31, 1996, there
were no advances outstanding under the equipment facility.
In connection with the acquisition of Unipack, the Company entered into
an agreement with a commercial lender in the United Kingdom for a revolving
credit facility and a term loan denominated and payable in pounds sterling.
The revolving credit facility in the amount of approximately $5,000,000 expires
February 1999, with interest payable at a
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<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note D - Long Term Debt (continued)
rate based upon LIBOR plus 2.5%. At March 31, 1996, approximately $5,000,000 was
outstanding under this revolving credit facility. The term loan of approximately
$12,900,000 is payable in 27 quarterly principal installments of approximately
$322,000, with interest at LIBOR plus 2.675%, with the remaining balance of
approximately $4,200,000 payable on March 31, 2003.
Interest on these facilities is subject to adjustment based upon the
Company's fixed charge coverage ratio. In addition, these facilities require the
maintenance of certain balance sheet and operating ratios and impose other
financial and dividend limitations. The most restrictive of these provisions
limits cash dividends to no more than 50% of net income in any one year. At
March 31, 1996, the Company complied with these ratios and limitations.
Note E - Acquisition of Minority Interest
Effective December 1, 1995, the Company exercised its option to
repurchase the outstanding shares of preferred stock of Tri-Line, a subsidiary
of the Company, issued in connection with the acquisition of Tri-Line in 1992.
The purchase price was $900,000, representing the book value of such shares,
which was included in other long-term liabilities in the Company's Balance Sheet
at September 30, 1995.
Note F - Employment Agreements
In February 1996, the Company entered into employment agreements with
certain executive officers which provide for base salaries, bonuses and
post-retirement benefits. The agreements also provide for certain payments in
the event of a change-of-control of the Company, as defined in the agreements.
As a result of satisfaction of the age requirement for retirement under the
agreement, the Company has accrued the estimated present value of
post-retirement benefits for one of such employees. Such amount is reflected as
a long-term liability of $2,200,000 and a non-current deferred asset of
$2,200,000, which is being amortized over three years. The occurrence of certain
events, as defined in the agreements, could result in the acceleration of the
amortization of the deferred asset. For the quarter ended March 31, 1996, the
Company recorded selling, general and administrative expense of $183,000 and
expects to record additional expense of $549,000 for the remainder of fiscal
1996, related to post-retirement benefits under all of such employment
agreements.
Note G - Other Developments
On March 29, 1996, the Company announced that it had authorized Lehman
Brothers, its investment banker, to explore strategic alternatives to maximize
shareholder value. MEDIQ Incorporated, the Company's principal shareholder,
previously announced its intention to pursue the realization of the value of its
investment in the Company, which may include the sale of its shares of the
Company's stock.
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<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion addresses the financial condition of the
Company as of March 31, 1996 and the results of operations for the three and six
month periods ended March 31, 1996, compared with the same periods last year.
This discussion should be read in conjunction with the Management's Discussion
and Analysis section (pages 9-11) for the fiscal year ended September 30, 1995
included in the Company's Annual Report on Form 10-K.
Some of the information presented in this report constitutes forward
looking statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Although the Company believes that its expectations are
based on reasonable assumptions within the bounds of its knowledge of its
business and operations, there can be no assurance that actual results will not
differ materially from its expectations. Factors which could cause actual
results to differ from expectations include the timing and amount of new product
introductions by the Company's customers, the timing of orders received from
customers, the dependence on major customers, the gain or loss of significant
customers, changes in the mix of services provided, the cost of raw materials,
and fluctuations in interest rates and currency exchange rates. In addition, the
Company's pharmaceutical packaging services are generally provided on an
as-needed basis, with prices determined based upon specifications of each order
and the services provided. As a result, revenue per customer and profit margins
per order can vary significantly from year to year and quarter to quarter.
Results for any particular quarter are not necessarily indicative of results for
any subsequent quarter or related fiscal year. For additional information
concerning these and other important factors which may cause the Company's
actual results to differ materially from expectations and underlying
assumptions, please refer to the Company's Annual Report on Form 10-K and other
reports filed by the Company with the Securities and Exchange Commission.
Results of Operations
On February 29, 1996, the Company acquired all of the outstanding
capital stock of Unipack Limited ("Unipack"), a pharmaceutical packaging company
located in the United Kingdom, for approximately $18,000,000 in cash and 60,000
shares of the Company's common stock (valued at $765,000 as of the date of the
acquisition). The operations of Unipack are included in the Company's operating
results from the date of the acquisition.
The following table sets forth for all periods indicated the percentage
relationship that items in the Company's Statements of Operations bear to
revenues.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
---------------------- ---------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net revenue 100.0% 100.0% 100.0% 100.0%
Cost of goods sold 73.1 81.0 74.7 80.0
----- ----- ----- -----
Gross profit 26.9 19.0 25.3 20.0
Selling, general and administrative expenses 13.4 12.1 13.3 13.1
Interest expense 1.9 1.3 1.6 1.4
----- ----- ----- -----
Income before income tax expense 11.6 5.6 10.4 5.5
Income tax expense 3.9 2.1 3.6 1.9
----- ----- ----- -----
Net income 7.7% 3.5% 6.8% 3.6%
===== ===== ===== =====
</TABLE>
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<PAGE>
Second Quarter 1996 Compared to Second Quarter 1995
Net revenue was $42,276,000, an increase of $10,364,000, or 32.5%, over
prior year quarter net revenue of $31,912,000. This increase reflects continued
strong demand for the Company's services in the United States, including the
Company's facilities in Puerto Rico, resulting primarily from the introduction
by the Company's customers of over-the-counter pharmaceutical products. This
increase also reflects revenues from Unipack of $1,798,000 (reflecting one month
of operations).
Gross profit was 26.9% of net revenue, as compared to 19.0% for the
prior year quarter. This increase was primarily attributable to changes in
product mix and increased production efficiencies, primarily related to the new
facility in Philadelphia as well as improved materials utilization at one of the
Company's facilities in Puerto Rico.
Selling, general and administrative expenses were $5,679,000, as
compared to $3,865,000 in the prior year quarter. As a percentage of net
revenue, selling, general and administrative expenses were 13.4%, as compared to
12.1% for the prior year quarter. This increase was primarily a result of
expenses incurred in connection with moving production into the new facility in
Schorndorf, Germany and costs related to the closure of the Company's facility
in Virginia, as well as, the inclusion of the operations of Unipack from the
date of acquisition. Production related to the Virginia facility is expected to
be transferred to the Company's new facility in Philadelphia, Pennsylvania
during the third quarter of 1996. The increase in selling, general and
administrative expenses also reflects $183,000 related to the accrual of
post-retirement benefits, which are set forth in employment agreements entered
into with certain executive officers in February 1996. The Company expects to
record selling, general and administrative expenses related to such agreements
of $549,000 for the remainder of fiscal 1996 and $1,100,000 for each year
thereafter through 1999. The occurrence of certain events, as defined in the
agreements, could result in the acceleration of such post-retirement benefits.
Interest expense was $837,000, as compared to $388,000 in the prior
year quarter. This increase was attributable to debt incurred in connection with
the new packaging facilities in Philadelphia, Pennsylvania and Schorndorf,
Germany and the acquisition of Unipack.
The Company's effective income tax rate was 33.7%, as compared to 37.6%
in the prior year quarter. The Company's effective tax rate is impacted by the
proportion of earnings from operations in Puerto Rico to consolidated earnings.
Earnings from operations in Puerto Rico are taxed at lower rates, in accordance
with Section 936 of the Internal Revenue Code. During fiscal 1995, the effective
tax rate increased to reflect lower earnings from operations in Puerto Rico.
Six Months Ended March 31, 1996 Compared with Six Months Ended March 31, 1995
Net revenue was $79,368,000, an increase of $18,846,000, or 31.1%, over
prior year period net revenue of $60,522,000. This increase reflects strong
demand for the Company's services in the United States, including facilities in
Puerto Rico, resulting primarily from the introduction by the Company's
customers of over-the-counter pharmaceutical products. This increase also
reflects revenues from Unipack of $1,798,000 (reflecting one month of
operations).
Gross profit was 25.3% of net revenue, as compared to 20.0% for the
prior year period. This increase resulted from changes in product mix and
increased production efficiencies, primarily related to the new facility in
Philadelphia as well as improved materials utilization at one of the Company's
facilities in Puerto Rico.
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<PAGE>
Selling, general and administrative expenses were $10,520,000, as
compared to $7,957,000 in the prior year period. As a percentage of net revenue,
selling, general and administrative expenses were comparable to the prior year
period.
Interest expense was $1,348,000, as compared to $898,000 in the prior
year period. This increase was attributable to debt incurred in connection with
the new packaging facilities in Philadelphia, Pennsylvania and Schorndorf,
Germany and the acquisition of Unipack. Capitalized interest expense related to
the new facility in Germany was $188,000 in the current period.
The Company's effective income tax rate was comparable to the prior
year period.
Liquidity and Capital Resources
At March 31, 1996, the Company had working capital of $15,638,000,
including cash and cash equivalents of $3,214,000. For the six months ended
March 31, 1996, net cash provided by operating activities was $3,889,000, as
compared to $2,449,000 in the prior year period. This increase was a result of
improved operating results, partially offset by increased levels of accounts
receivable, resulting from increased revenues.
Investing activities for the six months ended March 31, 1996, included
$17,478,000, representing the cash portion of the acquisition of Unipack, and
$10,767,000 of capital expenditures, of which approximately $4,200,000 was
attributable to the construction of the new pharmaceutical packaging facility in
Schorndorf, Germany, with the remainder for equipment and building improvements
to provide additional capacity. The Company anticipates additional capital
expenditures during the remainder of fiscal 1996 of approximately $5,000,000 for
equipment, of which approximately $3,000,000 is expected to be borrowed under
the Company's existing credit facilities. Also, the Company anticipates
additional capital expenditures of $3,000,000 during the remainder of fiscal
1996 for the completion of a new state-of-the-art packaging facility in
Manchester, England, which will replace one of Unipack's current facilities. The
Company expects to enter into a new credit facility to finance the completion of
the Manchester facility.
Financing activities for the six months ended March 31, 1996 included
borrowings of $30,604,000, of which $4,653,000 related to the refinancing of
existing debt, $17,924,000 related to the acquisition of Unipack, and $6,265,000
related to the new packaging facility in Schorndorf, Germany. Financing
activities also included debt repayments of $6,144,000 and the Company's
exercise of its option to repurchase the outstanding shares of preferred stock
of Tri-Line, a subsidiary of the Company, issued in connection with the Tri-Line
acquisition in 1992 for $900,000, representing the book value of such shares.
In February 1996, the Company refinanced certain of its debt
obligations, which included a $3,000,000 revolving credit facility and term
loans aggregating approximately $10,200,000, by an agreement with a commercial
bank which provides for a $9,000,000 revolving credit facility, a $14,200,000
term loan and a $5,000,000 equipment facility. The revolving credit facility
expires in March 1999 and bears interest, at the Company's option, at the prime
rate plus .25% or LIBOR plus 2.25%. At March 31, 1996, $4,000,000 was
outstanding and $2,657,000 of letters of credit were issued under the revolving
credit facility. The term loan is payable quarterly through March 2003, plus
interest, at the Company's option, at the prime rate plus .375% or LIBOR plus
2.50%. At March 31, 1996, $10,237,000 was borrowed under the term loan, with
$3,963,000 available for additional borrowing. The equipment facility expires in
March 1997 and bears interest, at the Company's option, at prime plus .375% or
LIBOR plus 2.50%. Advances under the equipment facility are converted to term
notes, payable over a maximum of 60 months. At March 31, 1996, there were no
advances outstanding under the equipment facility. Interest on the revolving
credit facility, the term loan and the equipment facility is subject to
adjustment based upon the Company's fixed charge coverage ratio.
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<PAGE>
In connection with the acquisition of Unipack, the Company entered
into an agreement with a commercial lender in the United Kingdom for a revolving
credit facility and a term loan denominated and payable in pounds sterling. The
revolving credit facility in the amount of approximately $5,000,000 expires in
February 1999 and bears interest at LIBOR plus 2.50%, subject to adjustment
based upon the Company's fixed charge coverage ratio. At March 31, 1996,
approximately $5,000,000 was outstanding under this revolving credit facility.
The term loan of approximately $12,900,000 is payable in quarterly principal
installments of approximately $322,000, plus interest at LIBOR plus 2.675%,
subject to adjustment based upon the Company's fixed charge coverage ratio, with
a final installment of approximately $4,200,000 payable March 2003. Under the
terms of the agreement, the Company is required to make prepayments of the
principal equal to 50% of excess cash flow (as defined). At March 31, 1996, no
prepayment was required.
Management believes that existing working capital, anticipated funds to
be generated from future operations, and available credit facilities will be
sufficient to meet the Company's anticipated operating and capital needs.
Depending upon the future growth of the business, additional financing may be
required.
Other Developments
On March 29, 1996, the Company announced that it had authorized Lehman
Brothers, its investment banker, to explore strategic alternatives to maximize
shareholder value. MEDIQ Incorporated, the Company's principal shareholder,
previously announced its intention to pursue the realization of the value of its
investment in the Company, which may include the sale of its shares of the
Company's stock.
- 13 -
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
10(jj) (pound)11,700,000 Facilities Agreement, dated February 29,
1996, between CoreStates Bank, N.A. and PCI Services, Inc.,
PCI Acquisition I, Inc., PCI Acquisition II, Inc., Packaging
Coordinators, Inc., and PCI Holdings (U.K.) Co.
10(kk) Security Agreement, dated February 29, 1996, by PCI Services,
Inc., Packaging Coordinators, Inc., PCI of Virginia, Inc.,
PCI/Delvco, Inc., PCI/Tri-Line (USA), Inc., PCI Holdings, Inc.
and P.C. Realty, Inc., in favor of CoreStates Bank, N.A., as
agent.
10(ll) Loan and Agency Agreement among PCI Services, Inc., Packaging
Coordinators, Inc., PCI Holdings, Inc., PCI of Virginia, Inc.,
PCI/Delvco, Inc., PCI/Tri-Line (USA), Inc., P.C. Realty, Inc.
and Meridian Bank, as Agent, Dated as of February 28, 1996.
10(mm) Security Agreement, dated February 28, 1996, by PCI Services,
Inc., Packaging Coordinators, Inc., PCI of Virginia, Inc.,
PCI/Delvco, Inc., PCI/Tri-Line (USA), Inc., PCI Holding, Inc.,
and P.C. Realty, Inc., in favor of Meridian Bank.
10(nn) Charge Over Shares, dated February 29, 1996, between PCI
Holdings (U.K.) Co., PCI Acquisition I, Inc., and PCI
Acquisition II, Inc., and CoreStates Bank, N.A.
10(oo) Charge Over Shares, dated February 29, 1996, between PCI
Holdings (U.K.) Co., PCI Acquisition I, Inc., and PCI
Acquisition II, Inc., and Meridian Bank.
27 Financial Data Schedule
(b) Reports on Form 8-K
A report on Form 8-K dated February 29, 1996 was filed to announce the
acquisition of all of the outstanding capital stock of Unipack Limited.
A report on Form 8-K dated March 20, 1996 was filed to announce
anticipated second quarter results.
<PAGE>
PCI SERVICES, INC. AND SUBSIDIARIES
Quarter Ended March 31, 1996
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 thereunto duly authorized.
PCI Services, Inc.
------------------
(Registrant)
May 10, 1996
------------
(Date) /s/ Michael F. Sandler
----------------------
Michael F. Sandler
Vice President and
Chief Financial Officer
DATED 29 FEBRUARY 1996
CORESTATES BANK, NA
and
PCI SERVICES, INC, PCI ACQUISITION I, INC,
PCI ACQUISITION II INC, PACKAGING COORDINATORS, INC.,
AND PCI HOLDINGS (UK) CO.
BP11,700,000 FACILITIES AGREEMENT
EDGE & ELLISON
Solicitors
18 Southampton Place
London WC1A 2AJ
Ref: KA/TNS/KS
Tel: 0171 404 4701
Fax: 0171 400 7948
Date: 27 February 1996
Doc: KA/DOCUMENT/LSPA1COR.2nd
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Index to Clauses
1 Definitions and Interpretation
2 The Facility
3 Purpose
4 Conditions
5 Drawdown
6 Currencies
7 Repayment, Prepayment and Cancellation
8 Interest
9 Fees and Expenses
10 Payments
11 Representations and Warranties
12 Undertakings
13 Default
14 Indemnities
15 Taxes
16 Changes in Circumstances
17 Automatic Release
18 Guarantee
19 The Agent and the Banks
20 Transfers of Participations
21 General
Schedule 1 Banks and Commitments
Schedule 2 Drawdown Notice
Schedule 3 Reserve Costs Rate
Schedule 4 Transfer Certificate
Schedule 5 Conditions Precedent
Schedule 6 Margin
Schedule 7 Cancellation Certificate
Schedule 8 Financial Covenants
Schedule 9 Security Documents
Schedule 10 Accession Notice
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THIS AGREEMENT is dated 29 February 1996
and made BETWEEN
(1) THE BANKS AND FINANCIAL INSTITUTIONS whose names are set out in Schedule 1
(the `Banks');
(2) CORESTATES BANK, NA, acting through its London lending office as agent for
the Banks (in this capacity the `Agent');
(3) PCI SERVICES, INC, a Delaware Corporation PCI ACQUISITION I, INC, a
Delaware Corporation, PCI ACQUISITION II, INC, a Delaware Corporation,
PACKAGING COORDINATORS, INC., a Pennsylvania Corporation and PCI HOLDINGS
(UK) CO, a Company incorporated in England and Wales (together, the
"Obligors");
IT IS AGREED as follows:
1 DEFINITIONS AND INTERPRETATION
1.1 Definitions
In this Agreement, unless the context otherwise requires:
`Advance' means an advance of either the Revolving Facility or the Term
Facility made or to be made by the Banks to the Borrower under this
Agreement or, as the context may require, the principal amount thereof from
time to time outstanding
`Alternative Currency' means any currency other than Sterling which is
freely transferable and convertible into Sterling and deposits in which are
readily available in the London Interbank Market and which is approved as
such by the Agent for the purposes of this Agreement
`Accession Notice' means a Notice in the form or substantially the form set
out in Schedule 10;
"Annual Capital Expenditure" means in any period of twelve consecutive
months expenditure on any capital item including (without limitation)
expenditure on plant and equipment, expenditure in relation to the
acquisition of any business and any shares or securities, and expenditure
attributable to the capitalised element of any finance leases but excluding
any expenditure relating to the acquisition or development of any real
property.
`Borrower' means the Initial Borrower and any of the Obligors who has
delivered an Accession Notice to the Agent under Clause 17 of this
Agreement and who have not served a Cancellation Certificate under Clause
17 of this Agreement
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`Business Day' means a day (not being Saturday or Sunday) on which banks
are open for business of the kind contemplated by this Agreement in London
and (if a transaction relates to Dollars) in Philadelphia and (if a
transaction relates to an Alternative Currency other than Dollars) in the
principal financial centre for that Alternative Currency
"Cancellation Certificate" means a Certificate in the form or substantially
the form set out in Schedule 7
`Commitment' means, in relation to each Bank, the amount set opposite its
name in Schedule 1 in relation to (as applicable) the Revolving Facility or
the Term Facility (or if applicable specified as such in a Transfer
Certificate), as reduced from time to time by the amount of its
participation in any outstanding Advance and otherwise as provided in this
Agreement. For this purpose any Advance or other amount denominated in an
Alternative Currency shall be regarded as its Sterling Amount
`Commitment Period' means the period commencing on the date of this
Agreement and ending on (in relation to the Term Facility) 31 March 1996
and on (in relation to the Revolving Facility) the date falling one month
before the Termination Date
`Covenantor' means PCI Services, Inc.
`Disclosure Letter' means the disclosure letter dated 29 February 1996
issued by Unipack Limited and all documents referred to therein;
`Dollars' or $ means the lawful currency of the United States of America
`Drawdown Date' means, in relation to any Advance, the date on which the
Advance is made
`Drawdown Notice' means a notice in the form set out in Schedule 2
`Encumbrance' means any mortgage, charge (whether fixed or floating),
pledge, lien, hypothecation, assignment by way of security, security
interest, title retention or other encumbrance, security agreement or
security arrangement of any kind
`Equivalent Amount' means, as at the first day of any Interest Period, an
amount in an Alternative Currency which could be purchased with the
relevant amount of Sterling at the Agent's spot buying rate based on market
rates then prevailing for such Alternative Currency against Sterling at or
about 11 am on the second Business Day preceding the first day of such
Interest Period
`Event of Default' means any of the events or circumstances described in
Clause 13.1
`Facility' means, together, the facilities the terms and conditions of
which are set out in this Agreement
"Final Borrower" means PCI Holdings (UK) Co.
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`Financial Indebtedness' means Indebtedness incurred in respect of:
(a) money borrowed;
(b) any bond bill of exchange note loan stock debenture commercial paper
or similar security or instrument;
(c) acceptance, documentary credit or guarantee facilities;
(d) deferred payments for assets or services acquired but excluding trade
credit in the ordinary course of business;
(e) rental payments so far as attributable to payments of capital under
finance leases, whether in respect of land buildings machinery
equipment or otherwise;
(f) payments under hire purchase contracts;
(g) factored debts, to the extent that there is recourse;
(h) guarantees, bonds, standby letters of credit or other instruments
issued in connection with the performance of contracts or obligations;
(i) guarantees, indemnities or other assurances against financial loss in
respect of Indebtedness of any person falling within any of paragraphs
(a) to (h) inclusive above; and
(j) amounts raised or obligations incurred under any other transaction
having the commercial effect of any of the above
`Group' means the Covenantor and its Subsidiaries (if any) for the time
being
"Group Companies" means the Final Borrower and its Subsidiaries (if any)
for the time being
`Indebtedness' means any obligation for the payment or repayment of money,
whether present or future, actual or contingent, sole or joint
`Initial Borrower' means PCI Services, Inc.
`Interest Payment Date' means the last day of each Interest Period or , in
respect of any Advance with an Interest Period of 6 months, the day falling
3 months after its commencement and its last day.
`Interest Period' means each period for the calculation of interest
determined in accordance with Clause 8.3
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"Investments" means any holding of stock, loanstock, securities of any kind
(other than shares), bills, notes, term deposits, bonds, debt instruments
or any similar financial interest.
`LIBOR' means, in respect of any Interest Period or other period and in
relation to any Advance or unpaid sum, the rate per annum determined by the
Agent to be the average rate per centum per annum (rounded upwards if
necessary to the next 1/16%) at which deposits in the relevant currency for
the relevant Interest Period or other period and in an amount comparable to
the relevant Advance or other sum (as applicable) were quoted by leading
banks in the London Interbank Market at or about 11.00am on (in the case of
an Advance or other sum denominated in Sterling) the first day of such
Interest Period or other period or (in any other case) on the second
Business Day preceding the first day of such Interest Period or other
period (on the Reuters or Telerate or other generally accepted on-screen
service quoting London Inter-bank offered rates).
`Loan' means the aggregate principal amount of all Advance(s) for the time
being outstanding under this Agreement
`Majority Banks' means at any time Banks to which more than one half in
aggregate of all Advances are owing at such time or, if no Advances are
then outstanding, Banks whose Commitments then aggregate more than one half
of the aggregate of all Commitments (or, if all Commitments have been
reduced to zero, aggregated more than one half of the aggregate of all
Commitments immediately before such reduction to zero)
`Margin' means in relation to the rate of interest payable in relation to
each of the Facilities, the percentage rates per annum determined in
accordance with Schedule 6
`Permitted Encumbrance' means any encumbrance referred to in Clause 12.2
`Potential Default' means any event which, with the giving of notice or any
certificate or the lapse of time or the making of any determination or the
satisfaction of any other condition (or any combination thereof), might
constitute an Event of Default
'Qualifying Bank' means a person recognised by the Inland Revenue as
carrying on through its lending office under this Agreement a bona fide
banking business in the United Kingdom for the purpose of s 349(3) of the
Income and Corporation Taxes Act 1988 and which brings any interest payable
under this Agreement into account as a trading receipt of that business or,
if that Section is amended repealed or re-enacted, such other category of
person as the Agent may at any time and from time to time (after
consultation with the Final Borrower and the Banks) reasonably determine to
be appropriate for the purpose of this definition in the light of such
amendment repeal or re-enactment, in which case the Agent will give notice
of the amendment to this definition, which will be binding on all the
parties to this Agreement, to the Borrower and the Banks
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`Related Document' means any document or instrument required by this
Agreement to be executed delivered or produced by an Obligor
`Repayment Date' means in relation to each Advance of the Revolving
Facility the last day of the Interest Period referable to such Advance and
in relation to the Term Facilities refers to each date upon which a
repayment is due under Clause 7.1.
`Reserve Costs Rate' means, in relation to any Bank's participation in any
Advance or other sum for any Interest Period or other period, the cost to
such Bank of compliance with Bank of England or other requirements,
determined in accordance with Schedule 3
`Revolving Facility' means the revolving multi-currency credit facility of
up to BP3,300,000 comprised in this Agreement
`Revolving Facility Amount' means the aggregate of all of the Commitments
in relation to the Revolving Facility
`Sterling' and `BP' means the lawful currency of the United Kingdom
`Sterling Amount' means, in relation to any Advance or part thereof
denominated in Sterling, the amount of such Advance or part and, in
relation to any Advance or part thereof denominated in an Alternative
Currency, the amount of Sterling of which such Advance or part was the
Equivalent Amount at the date on which it was last advanced under this
Agreement
`Subsidiary' has the meaning given to such expression by section 736 of the
Companies Act 1985 but shall also be deemed to include a subsidiary
undertaking within the meaning given to such expression by sections 258-260
of the Companies Act 1985 as substituted by sections 21 and 22 of the
Companies Act 1989
`Substantial Subsidiary' means a body corporate which is a Subsidiary of
the Final Borrower whose gross assets or revenues, at any time, represent 5
per cent or more of the consolidated gross assets or revenues of the Group
Companies at that time, and for this purpose:
(a) the gross assets or revenues of any such Subsidiary shall be
ascertained by reference to:
(i) the financial statements of such Subsidiary (consolidated if in
the normal course it prepares consolidated accounts) at the date
to which the latest audited consolidated financial statements of
the Group Companies have been prepared; or
(ii) if such body corporate becomes a Subsidiary of the Borrower after
that date, the latest financial statements of such Subsidiary
(consolidated if in the normal course it prepares consolidated
accounts) adjusted to take into account subsequent acquisitions
and disposals or other changes in
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circumstances;
(b) the consolidated gross assets or revenues of the Group Companies shall
be ascertained by reference to the latest audited consolidated
financial statements of the Group Companies; and
(c) once a body corporate has become a Substantial Subsidiary, it shall
remain one until it has been demonstrated to the Agent in audited
accounts that it has ceased to be a Substantial Subsidiary or in a
written report from its auditors if requested by the Agent.
`Taxes' includes all present and future taxes levies imposts duties fees
charges or withholdings of whatever nature and wherever levied charged or
assessed, together with any interest thereon and any penalties in respect
thereof
`Termination Date' means in relation to the Revolving Facility the earlier
of 1st April 1999 or the third anniversary of the date of this Agreement
2/27/99
`Term Facility' means the Sterling term loan facility of BP8,400,000
comprised in this Agreement
`Term Facility Amount' means BP8,400,000
`Transfer Certificate' means a certificate in the form or substantially in
the form set out in Schedule 4
1.2 Interpretation
(1) In this Agreement, unless otherwise expressly provided, any reference
to:
(a) the Borrower the Obligors the Banks and the Agent shall be construed
so as to include their respective successors and assigns from time to
time;
(b) a time of day is a reference to London time;
(c) a `person' shall be construed as a reference to any individual firm
company body corporate government state or state entity or any
association or partnership (whether or not having separate legal
personality) or any two or more of the foregoing;
(d) a `Consent' shall be construed so as to include any approval
authorisation consent exemption licence permission or registration by
of or from any governmental or other authority or any other person;
(e) fees costs and expenses shall be exclusive of any value added tax or
similar tax chargeable on them, which shall accordingly be payable in
addition;
(f) any other document or instrument is a reference to that other document
or
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instrument as the same may have been, or may from time to time be,
amended or supplemented;
(g) the liquidation winding-up or dissolution of a company or body
corporate or the appointment of a receiver manager or administrator of
or in relation to a company or body corporate or any of its assets
shall be construed so as to include any equivalent or analogous
proceedings or, as the case may be, person under the law of the
jurisdiction in which it is incorporated or any jurisdiction in which
it carries on business or has assets or liabilities;
(h) a Clause or a Schedule is a reference to a clause of or a schedule to
this Agreement;
(i) any statutory provision shall include a reference to such provision as
from time to time re-enacted amended extended or replaced.
(2) In this Agreement, words importing the singular shall include the
plural and vice versa.
(3) Headings in and the list of contents of this Agreement are for ease of
reference only and shall not affect its interpretation.
2 THE FACILITY
2.1 Commitments
Subject to the terms and conditions of, and in reliance upon the
representations, warranties, and covenants contained in this Agreement:
(a) the Banks agree to make available to the Borrower the Revolving
Facility
(b) each of the Banks agrees to participate in each Advance of the
Revolving Facility (in the same proportion to the amount of such
Advance as its Commitment in relation to the Revolving Facility bears
to the aggregate such Commitments of all the Banks) up to an aggregate
maximum principal amount not exceeding its Commitment relating to the
Revolving Facility;
(c) the Banks also agree to make available to the Borrower the Term
Facility; and
(d) each of the Banks agrees to participate in each Advance of the Term
Facility (in the same proportion to the amount of such Advance as its
Commitment in relation to the Term Facility bears to the aggregate
such Commitments of all the Banks) up to an aggregate maximum
principal amount not exceeding its Commitment relating to the Term
Facility.
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2.2 Obligations several
The obligations of each Bank under this Agreement are several. Any failure of a
Bank to perform any of its obligations under this Agreement shall not relieve
any other party hereto of any of its obligations hereunder. No Bank shall be
responsible for the obligations of any other Bank under this Agreement.
3 PURPOSE
(1) Advances shall be used by the Borrower for funding the acquisition
by the Borrower of the whole of the issued share capital of Unipack
Limited, meeting working capital needs and funding the acquisition of fixed
assets having a useful life exceeding one year (or any improvements,
replacements, substitutions or additions thereto or thereof) and such other
purposes as may be approved by the Agent from time to time.
(2) The Borrower shall not use any Advance for any purpose except that
permitted in this Clause. However, failure by the Borrower to comply with
this Clause shall not prejudice any rights of the Agent or the Banks, which
shall not be responsible for monitoring or ensuring the use or application
by the Borrower of any Advance.
4 CONDITIONS
4.1 Conditions for first Advance
The first Drawdown Notice may not be issued, and the Banks shall not be obliged
to make any Advance, until the Agent shall have received, in each case in form
and substance satisfactory to it, the documents items and evidence specified in
Schedule 5.
4.2 Conditions for all Advances
The obligation of the Banks to make each and every Advance is subject to the
further conditions precedent that:
(a) at the time of the giving of the relevant Drawdown Notice and at the
time of such Advance, the representations and warranties set out in
Clause 11 are true and correct on and as of each such time as if each
were made with reference to the facts and circumstances existing at
such time; and
(b) at the time of the giving of the relevant Drawdown Notice and at the
time of such Advance, no Event of Default or (in relation to an
Advance which results in the amount drawn under the Revolving Facility
exceeding the amount outstanding under such Facility prior to such
Advance being made) Potential Default shall have occurred and be
continuing or would result from the making of such Advance.
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5 DRAWDOWN
5.1 Drawdown
(1) Subject to the terms and conditions of this Agreement, the Borrower may
from time to time draw Advances provided that:
(a) the Agent shall have received a duly completed and executed Drawdown
Notice relating to each proposed Advance not later than 10 am on (for
a Sterling Advance) the first and (for an Advance in an Alternative
Currency) the third Business Day before the proposed Drawdown Date of
such Advance or at such other time as the Agent may agree;
(b) each proposed Drawdown Date shall be a Business Day during the
Commitment Period;
(c) each Advance of the Revolving Facility denominated in Sterling shall
be in the minimum amount of BP350,000 and shall be an integral
multiple of BP50,000 and the Term Facility shall be advanced in one
amount on one occasion only;
(d) each Advance of the Revolving Facility denominated in an Alternative
Currency shall be in such minimum amounts and integral multiples of
such amounts in such Alternative Currency as the Agent may from time
to time (acting reasonably) specify to the Borrower;
(e) no Advance of the Revolving Facility shall exceed the Revolving
Facility Amount or cause such Amount to be exceeded;
(f) no Advance of the Term Facility shall exceed the Term Facility Amount
or cause such Amount to be exceeded;
(g) no Advance shall be drawn if its duration would extend after the final
Repayment Date (in relation to the Term Facility) or the Termination
Date (in relation to the Revolving Facility);
(2) The Agent shall promptly notify each of the Banks of each Drawdown
Notice and the amount of its respective participation in the requested Advance.
(3) each Drawdown Notice shall be irrevocable and the Borrower shall be
obliged to borrow accordingly.
5.2 Payment of Advances
Subject as otherwise provided in this Agreement, each Advance shall be made
available on the Drawdown Date therefor by each Bank crediting the amount of its
participation in such Advance in such currency (in relation to the Revolving
Facility only) and to such account of the Agent as it may have notified to the
Banks for this purpose and the Agent shall make the amounts so credited
available to the Borrower by crediting the same to such bank account
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of the Borrower as it shall specify to the Agent for this purpose in the
relevant Drawdown Notice.
5.3 Cancellation of Undrawn Facility
Any part of the Revolving Facility or the Term Facility which shall not have
been drawn down or cancelled by the close of business on the last Business Day
of the relevant Commitment Period shall at that time be automatically cancelled
and the Commitment of each Bank shall at that time be reduced to zero in
relation to the applicable Facility.
6 CURRENCIES
6.1 Advances
(1) Subject to the provisions of this Clause, the Borrower may select the
currency, being Sterling or an Alternative Currency, in which each Advance of
the Revolving Facility will be denominated during each Interest Period. Such
selection shall be made in the Drawdown Notice relating to such Advance. If the
Agent shall not have so received notice of any such selection in respect of any
Interest Period then for such Interest Period the relevant Advance shall be
denominated in Sterling (and the Borrower shall be deemed to have selected
accordingly). The Agent shall promptly notify each Bank of any such selection or
deemed selection.
(2) No Advance may be drawn if as a result the aggregate Sterling Amounts
of all outstanding Advances would exceed (as applicable) the Revolving Facility
Amount or the Term Facility Amount.
(3) If the Borrower has so selected an Alternative Currency in respect of
an Interest Period but the Agent despatches to the Borrower not later than 4.30
pm on the second Business Day before the first day of such Interest Period a
notice to the effect that on the basis of notification from the Majority Banks,
the Agent has determined that the Majority Banks are unable to obtain matching
deposits in that Alternative Currency to fund the relevant Advance or any part
thereof in the London Interbank Market for such Interest Period, then unless all
the Banks through the Agent shall agree otherwise with the Borrower the relevant
Advance shall for that Interest Period be denominated in Sterling, being the
Sterling Amount of what would have been so made available in that Alternative
Currency.
6.2 Supervening events
(1) This Clause shall apply in the event of any change in national or
international financial political or economic conditions or currency
availability or exchange rates or exchange controls as (in any such case) would,
in the opinion of the Agent after consultation if practicable with the Banks and
the Borrower, make it impracticable for an Advance (or part thereof) to be
denominated during any Interest Period in an Alternative Currency selected by
the Borrower.
(2) If this Clause applies, the Agent may, at any time not later than 10 am
on the
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proposed Drawdown Date or, as the case may be, the first day of the relevant
Interest Period, give notice to the Borrower to the effect that as a consequence
the relevant Advance (or part thereof) will not be denominated in the
Alternative Currency in question. In such a case unless all the Banks through
the Agent shall agree otherwise with the Borrower the Advance (or, as the case
may be, such part thereof) shall be denominated in Sterling for such Interest
Period, the amount of such Advance being the Sterling Amount of what would have
been the amount of such Advance if it had been made available in the Alternative
Currency selected by the Borrower.
6.3 Drawdown of Advances
If any Advance is to be drawn down in an Alternative Currency, the Banks will on
the relevant Drawdown Date advance to the Borrower in accordance with this
Agreement the Amount in such Alternative Currency as may be specified in the
relevant Drawdown Notice.
6.4 Rollovers - Revolving Facility
Where, on any day for repayment of an Advance of the Revolving Facility, the
Borrower borrows a further Advance of the Revolving Facility in the same
currency in accordance with the provisions of this Agreement, the Agent shall
apply the amount advanced by the Banks in respect of such further Advance in or
towards repayment of the principal amount of such Advance required to be repaid
on that date.
6.5 Application of Advances
If the Agent so elects, (a) the Banks may apply the whole or any part of any
Advance in or towards purchasing for the account of the Borrower any sum to be
repaid by it on the same day and (b) the Banks may apply the whole or any part
of any sum to be re-advanced to the Borrower in or towards payment of any sum to
be repaid by the Borrower on the same day.
7 REPAYMENT PREPAYMENT AND CANCELLATION
7.1 Repayment
(1) The Borrower shall repay, for the account of the Banks, each Advance of
the Revolving Facility on the Repayment Date relating to such Advance.
(2) The Borrower shall repay, for the account of the Banks, the amount of
the Term Facility outstanding at the end of the Commitment Period in 27
instalments of BP210,000 each on the last days of March, June, September and
December of each year, commencing on 30th June 1996 together with a final
payment of BP2,730,000 to be paid on 31st March 2003.
(3) If the amount of the Term Facility outstanding at the close of business
on the last Business Day of the Commitment Period is less than the Term Facility
Amount, the amount of the shortfall shall be applied against and shall reduce or
if applicable extinguish the amounts specified in paragraph (2) above in inverse
order of maturity
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7.2 Prepayment
(1) The Borrower may (provided that it shall have given to the Agent not
less than 7 days' prior notice specifying the date and intended amount of the
prepayment) prepay for the account of the Banks on the last day of any Interest
Period relating to an Advance the whole or any part of such Advance but, if in
part, being the minimum amount of BP500,000 and an integral multiple of
BP100,000 (or in each case the equivalent in an Alternative Currency calculated
in accordance with Clause 7.3).
(2) Prepayments under this Agreement shall be made together with accrued
interest thereon and all other amounts payable under and in relation to this
Agreement and any Related Document.
(3) Following any prepayment under paragraph (1) above in relation to the
Revolving Facility, the Sterling Amount of such prepayment shall, subject to the
terms and conditions of this Agreement, be available for reborrowing under this
Agreement. In relation to the Term Facility no amount prepaid under this
Agreement may be redrawn.
(4) Any notice of prepayment given by the Borrower under this Agreement
shall be irrevocable and the Borrower shall be bound to prepay the relevant
amount(s) in accordance with such notice. The Borrower may not prepay all or any
part of any Advance except in accordance with the express terms of this
Agreement.
(5) If the Fixed Charge Coverage Ratio (as such expression is defined in
Schedule 8, but applied to the consolidated financial position of the Group
Companies and so that all relevant definitions shall be construed by references
to Group Companies) is in excess of 1.1:1 at any time when such Ratio is
measured in accordance with this Agreement the Final Borrower shall prepay
having given notice in accordance with Clause 7.2(i)) for the account of the
Banks an amount equal to 50% of the amount of Cash Flow which has caused such
Ratio to exceed 1.1:1 Provided always that the Final Borrower will not be
obliged to make any prepayments under this Clause 7.2(5) if at such time the
ratio of Consolidated Funded Debt to Tangible Net Worth is equal to or less than
1:1.
(6) Any prepayment of the Term Facility shall be applied against and shall
reduce or if applicable extinguish the amounts specified in Clause 7.1(a) in
inverse order of maturity.
7.3 Currency
Each repayment or prepayment under this Agreement shall be made in the currency
in which the relevant amount was denominated for the Interest Period or other
period ending on the date of such repayment or prepayment.
7.4 Cancellation
The Borrower may, by giving to the Agent not less than 30 days' prior notice
specifying the amount to be cancelled, cancel without penalty all or any part
(but, if in part, being an integral multiple of BP1,000,000) of the aggregate
Commitments of the Revolving Facility.
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Any cancellation in part shall reduce such Commitment of each Bank pro rata. Any
such notice of cancellation shall be irrevocable. The Borrower may not cancel
the whole or any part of such Commitments except in accordance with this Clause.
8 INTEREST
8.1 Interest
The Borrower shall pay to the Agent for the account of the Banks interest on
each Advance in respect of each Interest Period relating to such Advance at the
rate per annum determined by the Agent to be the aggregate of:
(a) the Margin;
(b) LIBOR relative to that Interest Period; and
(c) in the case of any Advance denominated in Sterling, the Reserve Costs
Rate.
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8.2 Payment
The Borrower shall pay interest on each Advance on each Interest Payment Date
relating to such Advance.
8.3 Interest Periods
(1) Subject to paragraph (2) below, the Borrower may select the duration
(being one, two, three or six months or, in relation to the first Interest
Period for an Advance under the Revolving Facility or Term Facility, four
months) of the Interest Period for any Advance. Such selection shall be made in
the Drawdown Notice relating to such Advance. If the Agent shall not have so
received notice of any such selection in respect of any Interest Period then
such Interest Period shall be of the duration of three months.
(2) For the purpose of determining the duration of any Interest Period:
(a) each Interest Period relative to an Advance shall commence on the
Drawdown Date relating to such Advance or in the case of the Term
Facility, forthwith on the expiry of the preceding Interest Period;
(b) the first Interest Period relating to any Advance of (as applicable)
the Term Facility or the Revolving Facility shall, if any other
Advance of such Facility is outstanding on the Drawdown Date thereof,
end upon the expiry of the Interest Period then current for such other
Advance so that all Interest Periods in relation to (as applicable)
the Term Facility or the Revolving Facility shall be co-terminous;
(c) if any Interest Period would end on a day which is not a Business Day,
such Interest Period shall be extended to the next Business Day unless
that would
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extend that Interest Period into the next following calendar month, in
which event that Interest Period shall be shortened so as to end on
the immediately preceding Business Day;
(d) if any Interest Period commences on the last Business Day in a
calendar month or if there is no corresponding date in the calendar
month in which an Interest Period is due to end, then such Interest
Period shall end on the last Business Day in the relevant later month;
(e) if, in relation to the Term Facility, any Repayment Date falls within
an Interest Period, the Loan shall be divided into two parts, one part
being the repayment instalment due on such Repayment Date and having
an Interest Period ending on that date and the other part being the
balance of the Loan and having an Interest Period ascertained in
accordance with the other provisions of this Clause; and
(f) the last Interest Period relating to each Advance shall end on the
Repayment Date for such Advance.
8.4 Default Interest
If any sums (including but without limitation default interest) are not paid on
their respective due dates under this Agreement the Margin shall forthwith be
increased by three percentage points per annum in the period from the due date
up to the date of actual payment (as well after as before judgment). If any
unpaid sum is of principal of an Advance repayable prior to the last day of an
Interest Period relating thereto, LIBOR applicable to such unpaid sum for the
remaining period up to the last day of that Interest Period shall remain LIBOR
applicable to it at the beginning of such Interest Period). If any such sum
unpaid relates to interest, interest shall be paid on such sum as if it were an
Advance of either the Revolving Facility or the Term Facility (as applicable).
8.5 Basis of calculation
All interest and other payments of an annual nature under this Agreement shall
accrue from day to day and be calculated on the basis of the actual number of
days elapsed and (in respect of Advances denominated in Sterling) a 365-day year
and (in respect of Advances denominated in an Alternative Currency) a 360-day
year. Any certificate or determination by the Agent as to any rate of interest
payable under this Agreement shall, in the absence of manifest error, be
conclusive and binding on the Borrower and the Banks.
8.6 Notification
The Agent shall promptly notify the Borrower and each Bank of each rate of
interest determined by it under this Clause.
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9 FEES AND EXPENSES
9.1 Commitment fee
The Borrower shall pay to the Agent for the account of the Banks (pro rata to
their Commitments) a commitment fee in Sterling at the rate of one-half per cent
per annum on the aggregate amount of the Commitments relating to the Revolving
Facility and undrawn, as from and including the date of this Agreement until and
including the last day of the Commitment Period. Such fee shall accrue from day
to day, shall be calculated on the basis of the actual number of days elapsed
and a 365-day year and shall be paid at three-monthly intervals after the date
of this Agreement and on the last day of the Commitment Period or, if earlier,
on final repayment of the Loan.
9.2 Agency fee
The Borrower will pay to the Agent, for its services under this Agreement and
for its own account, an agency fee and a closing fee to be determined on the
basis set out in a letter from the Agent to the Borrower prior to the execution
of this Agreement.
9.3 Expenses
(1) The Borrower shall pay, on demand, to the Agent the amount of all costs
and expenses (including legal and out-of-pocket expenses and any Value Added Tax
or similar Taxes on such costs and expenses) which the Agent reasonably incurs
in connection with the preparation negotiation execution and delivery of this
Agreement and any Related Document.
(2) The Borrower shall pay, on demand, to the Agent and each of the Banks
all costs and expenses (including legal and out-of-pocket expenses and any Value
Added Tax or similar Taxes on such costs and expenses) respectively reasonably
incurred by it in connection with any actual or proposed amendment or extension
of or any waiver or consent under this Agreement and in contemplation of or
otherwise in connection with the enforcement (or attempted enforcement) of, or
preservation (or attempted preservation) of any rights under, this Agreement
and/or any Related Document or otherwise in respect of any money from time to
time owing under this Agreement.
9.4 Duties
The Borrower shall pay all stamp documentary registration or other similar
duties or Taxes (including any payable by the Agent or the Banks) imposed on or
in connection with this Agreement and/or any other document referred to herein
and shall indemnify the Agent and the Banks against any liability arising by
reason of any delay or omission by the Borrower and not caused by the gross
negligence of the Agent or any Bank to pay such duties or Taxes.
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9.5 Payment by deduction
The Agent shall be entitled to effect payment (to the extent not already
discharged) of all fees expenses and other sums due and payable by the Borrower
under this Clause 9 out of and by deduction from any Advance and the Borrower
hereby irrevocably authorises the Agent to do so.
10 PAYMENTS
10.1 Payments
(1) All payments to be made by the Borrower under this Agreement shall be
made in full, without any set-off or counterclaim whatsoever and free and clear
of any deductions or withholdings, in immediately available, freely
transferable, cleared funds in the relevant currency not later than 11 am (local
time in the place of payment) on the due date to the account of the Agent as
follows:
(a) in the case of payments in Sterling, Account No 12251333 with the
Royal Bank of Scotland, 5-10 Great Tower Street, London; and
(b) in the case of payments in an Alternative Currency, such account with
such bank in the principal financial centre for such currency as the
Agent may prescribe for such purpose
or such other account of the Agent as the Agent may from time to time notify to
the Borrower.
(2) Unless otherwise provided in this Agreement, all payments made to the
Agent by the Borrower hereunder shall be promptly distributed by the Agent among
the Banks in the same proportions as their respective participations in the
relevant Advance and in like funds as they are received by the Agent.
(3) In the case of a partial payment by the Borrower, the Agent may
appropriate such payment towards such of the obligations of the Borrower under
this agreement as the Agent may decide or the Majority Banks direct. The
Borrower waives any right to make an appropriation in respect of a partial
payment. Any appropriation by the Agent or the Majority Banks shall apply to the
exclusion of any actual or purported appropriation by the Borrower.
10.2 Payments by the Agent
Where any sum is to be paid under this Agreement to the Agent for the account of
another person, the Agent shall not be obliged to pay the same to that other
person until it is satisfied that it has actually received such sum. It may
however assume that it has received such sum and, if it does make such a payment
when in fact it had not actually received the relevant sum, the person to which
such payment has been made shall forthwith on demand refund the amount of such
payment to the Agent together with interest thereon at the rate determined by
the Agent as being the cost to the Agent of funding such amount for the period
until
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receipt by the Agent thereof.
10.3 Business Days
Save as otherwise provided in this Agreement, if any payment would otherwise be
due on a day which is not a Business Day, the next following Business Day shall
be substituted for such day unless such Business Day shall be in a new calendar
month in which case such payment shall instead be made on the immediately
preceding Business Day. Interest and fees shall be adjusted accordingly.
10.4 Accounts
Account(s) maintained by each Bank in connection with the Facility shall (save
for manifest error) be conclusive evidence of the amounts from time to time
owing by the Borrower to such Bank under this Agreement.
11 REPRESENTATIONS AND WARRANTIES
11.1 Representations and warranties
The Obligors represent and warrant that:
(a) each of PCI Services, Inc., PCI Acquisition I, Inc. and PCI
Acquisition II, Inc., are Delaware Corporations, that Packaging
Coordinators, Inc. is a Pennsylvania Corporation and that the Final
Borrower is a company duly incorporated with unlimited liability and
validly existing under the laws of England and Wales and has power to
carry on its business and to own its property and assets;
(b) each of the Obligors has power and authority to execute deliver and
perform its obligations under this Agreement and any Related Document
and to use the Facility; all necessary action has been or will be
taken (and not revoked) to authorise the execution delivery and
performance of this Agreement and any Related Document; and subject to
all applicable insolvency laws this Agreement constitutes and any
Related Document is or when executed and delivered will be, its valid
and legally binding obligation enforceable in accordance with the
terms thereof;
(c) the execution delivery and performance of this Agreement and any
Related Document and the use of the Facility do not and will not:
(i) contravene any law regulation directive judgment or order to
which it is subject; or
(ii) result in any actual or potential breach of or default under any
obligation agreement instrument or Consent to which it is a party
or by which it is bound or which it requires to carry on its
business; or
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(iii) contravene any provision of its memorandum and articles of
association and/or statutes and/or constitutional documents; or
(iv) result in any limitation on its powers to borrow or incur
Financial Indebtedness being exceeded; or
(v) result in the creation or imposition of or oblige it to create
any Encumbrance (other than as provided for in this Agreement) on
its undertaking or any of its assets rights or revenues;
(d) its obligations under this Agreement and any Related Document are its
direct general and unconditional obligations and rank at least pari
passu with all other of its present and future unsecured and
unsubordinated Indebtedness (with the exception of any obligations
which are mandatorily preferred by law and not by contract);
(e) neither it nor any other Substantial Subsidiaries is (nor would with
the giving of notice or lapse of time or any certificate or the making
of any determination or any combination thereof be) in breach of or in
default under any agreement relating to Financial Indebtedness in an
amount in excess of BP250,000 to which it or such company is a party
or by which it or such company is bound;
(f) the latest consolidated report and financial statements of
(respectively) the Group and the Group Companies have been prepared in
accordance with accounting principles and practices generally accepted
in (as applicable) the State of Delaware, Pennsylvania or England and
Wales consistently applied and give a true and fair view of the
financial condition, assets and liabilities of respectively the Group
and the Group Companies at the date to which such financial statements
have been prepared; and since that date there has been no material
adverse change in the financial condition or the business, assets or
operations of the Borrower or any other member of the Group.
11.2 The Final Borrower represents and warrants that:
(a) no litigation arbitration or administrative proceeding and without
limitation no dispute with any statutory or governmental authority
involving an amount in excess of BP100,000 is pending or to its
knowledge threatened against it or any other Group Company or any of
its respective assets;
(b) no Event of Default or Potential Default has occurred and is
continuing;
(c) neither it nor any Group Company is in default in the payment of any
due and payable Taxes in an aggregate amount which does not exceed 10%
of net profits of such company, as shown by its most recent audited
accounts or in the filing registration or recording of any material
document or under any legal or statutory obligation or requirement.
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(d) there exists no Encumbrance other than any Permitted Encumbrance over
the whole or any part of the present or future undertaking assets
rights or revenues (including uncalled capital) of itself or any of
its Subsidiaries and no obligation to create any such Encumbrance;
(e) it and each Group Company has obtained and complied or will obtain and
comply with all Consents necessary or appropriate for (i) the carrying
on by it of its business and (ii) the execution delivery and
performance of this Agreement and any Related Document to which it is
a party and the use of the Facility (and the same are in full force
and effect);
(f) (save pursuant to the Restrictive Trade Practices Acts of 1976 and
1977) it is not necessary or advisable that this Agreement be filed
registered recorded or enrolled with any court, public office or other
authority in any jurisdiction or that any stamp documentary
registration or similar Tax or duty be paid on or in relation to this
Agreement or any Related Document;
(g) all information supplied by or on behalf of the Obligors to the Agent
or any of the Banks, (without limitation) in contemplation or for the
purpose of this Agreement, was true and accurate in all respects as at
its date and not misleading; and such information did not omit
anything, nor since the date of such information has anything
occurred, which renders that information untrue or misleading in any
material respect or which, if disclosed, might adversely affect the
decision of a person considering whether to enter into this Agreement;
and all projections and statements of belief and opinion given by the
Obligors to the Agent or any of the Banks were made honestly and in
good faith after due and careful enquiry and remain valid;
(h) all assets used by it or any Subsidiary in the conduct of its business
which are capable of being charged by way of fixed charge are the
unencumbered property of, as applicable, the Borrower or such
Subsidiary.
11.3 Repetition
The representations and warranties in Clauses 11.1 and 11.2 will be deemed to be
repeated by the Borrower on and as of each Drawdown Date and each Interest
Payment Date as if made with reference to the facts and circumstances existing
at such respective date.
11.4 Disclosure Letter
The representations and warranties in Clauses 11.1 and 11.2 are subject to, and
limited by, all matters disclosed in the Disclosure Letter.
11.5 Effect of investigation
The rights and remedies of the Agent and each of the Banks in respect of any
misrepresentation or breach of warranty on the part of the Obligors shall not be
prejudiced or affected by any investigation of the Obligors or any other person
by or on behalf of the
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Agent or any of the Banks or without limitation any other act or matter which,
but for this provision, would or might prejudice or affect any such rights or
remedies.
12 UNDERTAKINGS
12.1 General undertakings
The Final Borrower undertakes with the Agent and each of the Banks that, so long
as any Commitment is in force or any moneys or obligations are outstanding under
this Agreement:
(a) it will ensure that its obligations under this Agreement shall at all
times rank at least pari passu with all its other present and future
unsecured and unsubordinated Indebtedness (with the exception of any
obligations which are mandatorily preferred by law and not by
contract);
(b) it will prepare financial statements or procure that financial
statements are prepared in respect of each financial period in
accordance with Clause 12.4 and cause the same to be audited by its
auditors and deliver sufficient copies of the same to the Agent for
itself and each of the Banks promptly and in any event not later than
120 days after the end of the relevant financial period;
(c) it will deliver to the Agent in sufficient copies for itself and each
of the Banks, promptly and in any event not later than 60 days after
the relevant period, management accounts relating to the consolidated
financial position of, respectively, the Group and the Group Companies
containing at least sufficient financial information to enable the
Agent to test the financial performance of the Group and the Group
Companies against the financial covenants and undertakings comprised
in this Agreement in respect of successive quarterly periods during
each of the financial years of the Group and the Group Companies;
(d) it will promptly provide the Agent with copies of all notices and
other communications despatched to its shareholders or analogous
persons (or any class thereof) or its creditors (or any class thereof)
when despatched;
(e) it will promptly provide the Agent with such financial and other
information concerning its business, assets and affairs and those of
any of its Subsidiaries as the Agent, or any Bank through the Agent,
may from time to time reasonably require;
(f) it will obtain, maintain in full force and effect and comply with all
Consents and any conditions thereof necessary or appropriate for (i)
the carrying on by it of its business and (ii) the execution delivery
and performance of this Agreement and the use of the Facility;
(g) it will not make or permit any material change in the nature of its
business or commence any new type of business different from its
business at the date of
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this Agreement;
(h) it will maintain insurances on or in relation to its business and
assets with underwriters and insurance companies of repute against
such risks of the kinds customarily insured against by, and in amounts
reasonably and commercially prudent for, companies carrying on similar
businesses;
(i) it will promptly inform the Agent, upon its becoming so aware, of any
occurrence or circumstance which might adversely affect its ability to
perform its obligations under this Agreement or any Related Document
and of any Event of Default or Potential Default including the
cancellation of any contract with any major customer which might have
a substantial impact on the revenues of the Group Companies (taken as
a whole);
(j) it will from time to time, forthwith on request by the Agent, deliver
to the Agent a certificate signed by two of its directors (or
equivalent officers) (acting without personal liability except in the
case of wilful default or misconduct) confirming that, save as may be
notified in detail in such certificate, no Event of Default or
Potential Default has occurred and is then subsisting and, without
limitation, giving detailed computations so as to establish whether it
is in compliance with Clause 12.5 to be accompanied by such evidence
as to the information and matters contained in such certificate as the
Agent may from time to time reasonably require.
(k) it will ensure that Annual Capital Expenditure (other than expenditure
relating to the acquisition of Unipack Limited on the date hereof)
does not exceed Annual Depreciation in each financial year;
(l) it will not, nor will any of its Subsidiaries, acquire any shares in
any company (other than by the Borrower's subscribing for new shares
in any subsidiary) or dispose of any shares in any company held at the
date of this agreement;
(m) it will not make any dividend payment or distribution to its
shareholders without the Agent's prior written consent;
(n) it will procure that its Subsidiaries will not make any payment to its
respective shareholders (other than dividends and similar
distributions lawfully paid) without the Agent's prior written
consent;
(o) it will not, nor will any of its Subsidiaries, without the Bank's
prior written consent, redeem any shares or take any other step to
reduce its issued share capital;
(p) it will not, nor will any of its Subsidiaries make or own Investments
other than:
(i) certificates of deposit or time deposits maturing within one year
of the
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date of issue and issued by a clearing bank in the United
Kingdom;
(ii) gilts or other government stock maturing within one year of the
date of issue;
(iii)readily marketable commercial paper rated A-1 or better by
Standard & Poor's Corporation (or an equivalent rating by a
similar organisation which rates commercial paper).
(q) it will not, nor will any of its Subsidiaries without the Agent's
prior consent incur any Financial Indebtedness except for:
(a) Financial Indebtedness available (whether or not drawn) on the
date of this Agreement (and any refinancing thereof);
(b) any Financial Indebtedness the subject of subordination
arrangements entered into between the relevant lender and the
Agent;
(c) Financial Indebtedness owed to any other Group Company;
(d) Financial Indebtedness relating to equipment leasing or hire
purchase agreements; and
(e) Financial Indebtedness incurred under this Agreement or any
Related Documents or in connection with a loan and agency
agreement dated as of 28 February 1996 among, inter alia, PCI
Services, Inc., the financial insitutions listed therein and
Meridian Bank as agent.
(r) Net Profit before taxation (as shown in its annual audited accounts)
does not fall below zero in respect of any financial year.
(s) it shall within 60 days of being requested so to do by the Agent
issue, and shall cause Unipack Limited to issue the Security documents
set out in Part 2 of Schedule 9 provided that the restrictions and
covenants contained in such security are not, in any material respect,
more onerous than the restrictions and covenants imposed in this
Agreement but taking into account the nature of each security interest
comprised in such security and in the case of any issue of security by
Unipack Limited:
(i) such issue would not be made in breach of the provisions of
Sections 151-158 of the Companies Act 1985; and
(ii) the Borrower's obligation under this sub-clause (s) shall extend
only to using all reasonable endeavours to procure such issue.
12.2 Negative Pledge
(1) The Final Borrower undertakes with the Agent and each of the Banks
that, so
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long as any Commitment is in force or any moneys or obligations are outstanding
under this Agreement, it will not (and it will procure that none of its
Subsidiaries will):
(a) create or permit to subsist any Encumbrance other than any Permitted
Encumbrance over all or any part of its present or future undertaking
assets rights or revenues;
(b) sell, transfer or otherwise dispose of any of its assets on terms
whereby it is or may be leased to or acquired by it or any other
member of the Group or sell or otherwise dispose of any of its
receivables on recourse terms.
(2) Paragraph (1) above shall not apply to any Encumbrance:
(a) created or outstanding with the prior written consent of the Majority
Banks provided that, unless permitted by any other exception below,
the aggregate principal amount secured by such Encumbrance will not be
increased without further such consent;
(b) arising by operation of law and not as a result of any default or
omission on the part of the Final Borrower or any other Group Company
having regard to the custom in the relevant trade for settlement of
accounts;
(c) arising under any retention of title arrangements entered into in the
ordinary course of trading and not entered into primarily for the
purpose of securing any Financial Indebtedness;
(d) specified in the Disclosure Letter; or
(e) arising pursuant hereto, to any Related Document or Financial
Indebtedness incurred under this Agreement or any Related Documents or
in connection with a loan and agency agreement dated as of 28 February
1996 among, inter alia, PCI Services, Inc., the financial insitutions
listed therein and Meridian Bank as agent..
12.3 Disposals
(1) The Final Borrower undertakes with the Agent and each of the Banks
that, so long as any Commitment is in force or any moneys or obligations are
outstanding under this Agreement, it will not (and the Final Borrower shall
procure that no Group Company will) either in a single transaction or in a
series of transactions, whether related or not and whether voluntarily or
involuntarily, sell, transfer, lease or otherwise dispose of all or any part of
its respective assets other than with the prior written consent of the Agent
(not to be unreasonably withheld) trading stock sold in the ordinary course of
business on an arm's length basis or obsolete items replaced by items of the
same or a greater value and disregarding sales of items on an arm's length basis
where the aggregate sale proceeds do not exceed either BP50,000 in any financial
year or BP200,000 during the period when this Agreement is in force.
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(2) Paragraph (1) above shall not apply to disposals made with the prior
consent of the all of the Banks.
12.4 Financial statements
The Final Borrower and the Covenantor shall produce annual audited financial
statements to the Agent and will ensure that such statements delivered pursuant
to this Agreement shall be prepared in accordance with accounting principles and
practices generally accepted in the State of Delaware (in relation to the Group)
and England and Wales (in relation to the Group Companies) consistently applied
in respect of each financial period on an individual and if applicable
consolidated basis and that such financial statements shall contain a balance
sheet giving a true and fair view of the state of affairs of as applicable, the
Group and (separately) the Group Companies as at the end of the period to which
they relate and a profit and loss account giving a true and fair view of their
profit or loss for such period.
12.5 Financial undertakings
The Covenantor covenants with the Agent and the Banks in the terms set out
and comprised in Schedule 8.
13 DEFAULT
13.1 Events of Default
There shall be an Event of Default if:
(a) the Borrower fails to pay, in the currency and manner provided in this
Agreement, any sum payable by it under this Agreement or any Related
Document when due unless such failure to pay occurs as a result of an
administrative error in the transmission of funds arising otherwise
than through any fault or failure of the Borrower and such failure is
rectified within 3 days; or
(b) the Borrower commits any breach of any other provision of this
Agreement or any Related Document and either such breach is in the
opinion of the Agent not capable of remedy or such breach is in the
reasonable opinion of the Agent capable of remedy and is not remedied
within 15 days of the first occurrence of such breach; or
(c) any representation or warranty made or deemed to be made or repeated
by the Borrower or any Obligor in or pursuant to this Agreement or any
Related Document is or proves to have been untrue or incorrect when
made or when deemed to be repeated with reference to the facts and
circumstances existing at such time; or
(d) any Financial Indebtedness (in an aggregate amount in excess of
BP250,000) of any Obligor or any Subsidiary of any Obligor is not paid
when due or
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becomes due or capable of being declared due prior to its stated
maturity
(e) any Encumbrance to secure any Financial Indebtedness (in an aggregate
amount in excess of BP250,000) of any Obligor or any Subsidiary of any
Obligor becomes enforceable; or
(f) an encumbrancer takes possession or a receiver or administrative
receiver or manager or sequestrator (or equivalent) is appointed of
the whole or any substantial part of the undertaking assets rights or
revenues of any Obligor or any Subsidiary of any Obligor or a distress
or other process is levied or enforced upon any of the assets rights
or revenues of any Obligor or any Subsidiary of any Obligor;
(g) a petition is presented to, or any order is made by, any competent
court for the appointment of an administrator (or any equivalent in
any jurisdiction) in relation to any Obligor or any Subsidiary of any
Obligor; or
(h) any Obligor or any Subsidiary of the Obligor is, or is adjudicated or
found to be, insolvent or stops or suspends payment of its respective
debts or is (or is deemed to be) unable to or admits inability to pay
its respective debts as they fall due or proposes or enters into any
composition or other arrangement for the benefit of its creditors
generally or proceedings are commenced in relation to any Obligor or
any Subsidiary of the Obligor under any law regulation or procedure
relating to reconstruction or adjustment of debts; or
(i) any petition is presented by any person (other than a petition which,
in the reasonable opinion of the Agent, is frivolous or vexatious and
which is withdrawn or stayed within 7 days) or any order is made by
any competent court or any resolution is passed by any Obligor any
Subsidiary of any Obligor for its winding-up or dissolution (or
equivalent in any jurisdiction) or for the appointment of a liquidator
(or equivalent in any jurisdiction) of any Obligor or any Subsidiary
of any Obligor (except for the purpose of a solvent amalgamation or
reconstruction on terms and conditions which shall have first been
approved by the Majority Banks); or
(j) any Obligor or any Subsidiary of any Obligor ceases or threatens to
cease to carry on the whole or a substantial part of its business; or
(k) this Agreement or any Related Document is or becomes (or is alleged to
be) unlawful or unenforceable in any respect; or
(l) any such Consent referred to in Clause 12.1(f) is withdrawn or revoked
or expires or is modified or made subject to any condition which in
the reasonable opinion of the Agent may affect the Final Borrower or
any Subsidiary of the Borrower or its respective ability to perform or
comply with any of its respective obligations under this Agreement or
any Related Document; or
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(m) any Obligor (other than the Covenantor) becomes a Subsidiary of any
other person or one person or more than one person acting in concert
(within the meaning of The City Code on Takeovers and Mergers)
obtain(s) control (as defined in section 840 of the Income and
Corporation Taxes Act 1988) of such Obligor or if the Covenantor
becomes such a Subsidiary and the Loan is not repaid in full within 3
months of the Agent (acting on behalf of the Majority Banks)
requesting that the Loan be repaid in full; or
(n) any other event or series of events or any circumstances whether
related or not (including the cancellation of any contract of the type
referred to in Clause 12.1(i) which affects the ability of the Final
Borrower to meet its payment obligations hereunder on the due dates
thereof and, but without limitation, any adverse change in the
business, assets or financial condition of the Borrower or any
Subsidiary of the Borrower occur(s) or arise(s) which, in the
reasonable opinion of the Majority Banks, may have a material adverse
effect on the Borrower or any such Subsidiary, taken or on the
respective ability or willingness of the Borrower or any Group Company
to perform or comply with any of its respective obligations under this
Agreement and/or any Related Document to which it is a party.
13.2 Rights on a Default
The Agent may and, if so instructed by the Majority Banks, shall (without
prejudice to any rights of the Agent or any Bank) upon and at any time after the
happening of an Event of Default, so long as the same is continuing, by notice
to the Borrower declare that:
(a) the Commitment of each of the Banks and any obligation of the Banks to
make any Advance shall be terminated, whereupon such Commitment shall
be reduced to zero and such obligation shall be terminated forthwith;
and/or
(b) the Loan has become immediately due and payable, whereupon the
Borrower shall forthwith repay the same together with all interest
accrued and all other sums payable under this Agreement; and/or
(c) the Loan has become due and payable on demand, whereupon the Loan and
all interest and other sums payable under this Agreement shall at all
times after such declaration be due and payable forthwith on demand.
14 INDEMNITIES
14.1 Indemnities
The Borrower shall on demand indemnify the Agent and each of the Banks against
any liability loss or expense which the Agent or such Bank shall certify as
incurred by it as a consequence of:
(a) any default in payment by the Borrower of any sum under this Agreement
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when due;
(b) the occurrence of any Event of Default;
(c) any repayment or prepayment of any Advance or part thereof being
received otherwise than on the last day of an Interest Period; or
(d) any Advance not being made for any reason (excluding any default by
the Agent or a Bank) after a Drawdown Notice therefor has been given
or not being denominated in the currency originally selected
including in any such case, but not limited to, any loss of profit and any loss
or expense incurred in maintaining or funding the Loan or any Advance or other
sum or in liquidating or re-employing deposits from third parties acquired or
contracted for in order to effect or maintain the same.
14.2 Currency
If, under any applicable law or regulation or pursuant to a judgment or order
being made or registered against or the liquidation of the Borrower or without
limitation for any other reason, any payment under or in connection with this
Agreement is made or falls to be satisfied in a currency (the `payment
currency') other than the currency in which such payment is expressed to be due
under or in connection with this Agreement (the `contractual currency') then, to
the extent that the amount of such payment actually received by any Bank, when
converted into the contractual currency at the applicable rate of exchange,
falls short of the amount due under or in connection with this Agreement, the
Borrower, as a separate and independent obligation, shall indemnify and hold
harmless such Bank against the amount of such shortfall. To the extent that the
amount of such payment actually received by any Bank, when so converted, exceeds
the amount due under or in connection with this Agreement, such Bank shall pay
to the Borrower provided that it is then in compliance with its obligations
under this Agreement an amount equal to the excess. For the purposes of this
Clause, the `applicable rate of exchange' means the rate at which the relevant
Bank is able on or about the date of such payment to purchase, in accordance
with its normal practice, the contractual currency with the payment currency and
shall take into account (and the Borrower shall be liable for) any premium and
other costs of exchange including any Taxes incurred by reason of any such
exchange.
15 TAXES
15.1 Grossing up payments
All payments to be made by the Borrower under this Agreement shall be made free
and clear of and without deduction for or on account of Taxes unless the
Borrower, the Agent or any Bank through which a payment is made is required to
make such a payment subject to the deduction or withholding of Taxes, in which
case the amount payable by the Borrower in respect of which such deduction or
withholding is required to be made shall be increased to
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the extent necessary to ensure that, after the making of such deduction or
withholding, the Agent and each Bank receives and retains (free from any
liability in respect of any such deduction or withholding) a net amount equal to
the sum which it would have received and so retained had no such deduction or
withholding been made or required to be made.
15.2 Notification
If at any time the Borrower is required by law to make any deduction or
withholding from any sum payable by it under this Agreement (or if subsequently
there is any change in the rates at which or the manner in which such deductions
or withholdings are calculated), it shall promptly notify the Agent upon
becoming aware of the same.
15.3 Tax receipts
If the Borrower is required to make a payment pursuant to Clause 15.1, the
Borrower shall pay the full amount required to be deducted or withheld to the
relevant taxation or other authority within the time allowed for such payment
under applicable law and shall deliver to the Agent (for itself or the relevant
Bank) within 30 days after it has made such payment to the applicable authority
an original official receipt issued by such authority and any other appropriate
evidence of the payment to such authority of all amounts so required to be
deducted or withheld.
15.4 Indemnity
The Borrower shall indemnify and hold harmless the Agent and each Bank against,
and reimburse to each such person on demand, the amount of any Taxes so deducted
withheld or accounted for and paid by the Borrower, whether or not such Taxes
were correctly or legally assessed or demanded.
15.5 Tax Credits
If the Borrower pays any increased amount under Clause 15 and any Bank
effectively obtains a refund of tax or credit against tax by reason of that
payment, and if that Bank is able (in its sole opinion, which shall not be
capable of being challenged) to identify that refund or credit as being
attributable to that payment having regard to its other activities, then the
Agent or such Bank (as the case may be) shall reimburse to the Borrower such
amount as it shall determine (any such determination being conclusive) to be the
proportion of that refund or credit as will leave the Agent or the Bank (as the
case may be) after that reimbursement in no better or worse position than it
would have been in if that payment had not been required. Neither the Agent nor
any of the Banks shall be obliged to arrange its tax affairs in any particular
manner or to disclose any information regarding its tax affairs or computations
to the Borrower.
15.6 Qualifying Banks
(1) Each Bank severally warrants to the Borrower that it is a Qualifying
Bank. This warranty will be deemed to be repeated by each Bank on the due date
for payment of any interest to the Bank under this Agreement, unless any Bank is
unable to repeat it on that
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date. If at any time any Bank becomes aware that it is, or will become, unable
so to repeat this warranty for whatever reason, it will promptly notify the
Agent who will promptly notify the Borrower.
(2) If, otherwise than as a result of the introduction of or any change in,
or in the interpretation or application of, any law or regulation or any
practice or concession of the Inland Revenue after the date of this Agreement, a
Bank is not or ceases to be a Qualifying Bank, the Borrower shall not be liable
to pay to or for the account of that Bank any increased sum under Clause 15.1 in
excess of any sum which it would have been obliged to pay if that Bank had been
a Qualifying Bank.
16 CHANGES IN CIRCUMSTANCES
16.1 Increased costs
(1) If by reason of any change in or introduction of any law, regulation
treaty or official directive or any change in its interpretation application or
administration and/or compliance with any request from or agreement with or
requirement of any central bank or other fiscal monetary or other authority
(whether or not having the force of law) and made after the date of this
Agreement:
(a) the Agent or any Bank incurs a cost as a result of its having entered
into and/or performing any of its respective obligations under this
Agreement; or
(b) there is any increase in the cost to any Bank of funding or
maintaining any Advance or its participation in any Advance; or
(c) there is any reduction in any amount payable to any Bank hereunder or
any Bank suffers any reduction in the rate of return on its overall
capital as the result of a change in the manner in which its capital
resources are allocated to its obligations under this Agreement; or
(d) any Bank becomes liable to make any payment on or calculated by
reference to any Advance or its participation in any Advance
the Borrower shall from time to time on demand by the Agent or, as the case may
be, such Bank delivered through the Agent promptly pay to the Agent for the
account of the Agent or, as the case may be, such Bank amounts sufficient to
indemnify it against, as the case may be, such cost increased cost reduction or
liability.
(2) Notwithstanding paragraph (1) above, the Borrower shall not be obliged
to make any payment pursuant thereto to the extent that the relevant cost
increased cost reduction or liability:
(a) is compensated for by any payment calculated in accordance with the
Reserve Costs Rate;
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(b) results from the Agent or relevant Bank having exceeded some limit or
failed to comply with some obligation, if on the date on which the
matters referred to in paragraph (1) took effect the Agent or relevant
Bank did not (and was not committed to) exceed such limit or breach
such obligation;
(c) is incurred in consequence of the implementation of the matters set
out in the report of the Basle Committee on Banking Regulations and
Supervisory Practices dated July 1988 and entitled `International
Convergence of Capital Measurement and Capital Standards' (including
in particular but without limitation any directive of the Bank of
England implementing the same in the United Kingdom).
(3) The Agent or the relevant Bank shall promptly notify the Borrower of
the circumstances giving rise to the Borrower's obligation to make any such
payment, giving reasonable details of how such cost increased cost reduction or
liability has been calculated and attributed to the Facility, which shall be
conclusive in the absence of manifest error.
16.2 Illegality
If at any time it is or becomes unlawful, or contrary to any request from or
requirement of any central bank or other fiscal monetary or other authority
(whether or not having the force of law), for any Bank to make fund or allow to
remain outstanding its participation in any Advance or part of the Loan, then
such Bank shall promptly after becoming aware of the same deliver through the
Agent to the Borrower a certificate to that effect and:
(a) such Bank shall not thereafter be obliged to participate in any
Advance and its Commitment shall be reduced to zero; and
(b) if such Bank so requires, the Borrower shall not later than such date
as the Bank shall through the Agent have specified (such date not
being earlier than 3 Business Days prior to the latest permitted date)
repay the participation of such Bank in each Advance together with
accrued interest thereon and any other amounts then due to such Bank
hereunder.
16.3 Market disruption
If in respect of any proposed Advance or forthcoming Interest Period:
(a) the Agent cannot determine LIBOR or the Agent after consulting if
practicable the Borrower otherwise determines that adequate and fair
means do not exist for ascertaining the interest rate for any Interest
Period; or
(b) the Agent determines after consulting if practicable the Borrower that
by reason of circumstances affecting the London Interbank Market
generally it is impracticable for the Banks or any of them to fund or
continue to fund the Loan or any Advance (or their respective
participations) during any Interest Period,
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the Agent shall notify the Borrower accordingly. If such notification
is given before the drawdown of the first Advance, no Advance shall be
made available and, if such notification is given after the drawdown
of the first Advance, the Borrower and the Agent shall negotiate in
good faith with a view to arriving within a period of 30 days at an
acceptable alternative arrangement (pending which any right of the
Borrower to draw Advances shall be suspended), failing which the
Borrower shall promptly prepay the Loan together with accrued interest
thereon to the date of prepayment (calculated at the rate or rates
most lately applicable) and all other sums payable by the Borrower
under this Agreement and the Agent's and the Banks' obligations
hereunder shall terminate. In such case the Borrower shall also
reimburse to each Bank such amount as may be reasonably determined by
such Bank to be necessary to compensate it for the increased cost (if
any) of maintaining its participation in the Loan or any Advance
during the period of negotiation referred to in this Clause until such
prepayment. The commitment fee payable under Clause 9 shall not accrue
in respect of any day on which any right of the Borrower to draw
Advances is suspended pursuant to this Clause.
17 BORROWER ACCESSION AND AUTOMATIC RELEASE
17.1 Accession of Borrowers
If any of the Obligors (an "Acceding Obligor") wishes to assume the obligations
and liabilities of and become a Borrower under this Agreement it may do so by
delivering to the Agent a duly completed Accession Notice executed by the
Acceding Obligor.
17.2 Effect of an Accession Notice
Upon delivery to the Agent of any Accession Notice pursuant to Clause 17.1:
(a) the Acceding Obligor will forthwith be bound by and subject to all of
the liabilities and obligations expressed in this Agreement to be
those of the Borrower (whether arising or incurred before or after the
delivery of the relevant Accession Notice) jointly and severally with
any other Obligor who is a Borrower at such time; and
(b) the Acceding Obligor shall be deemed to have drawn down any Advances
drawn down at any time before the delivery of the relevant Accession
Notice.
17.3 Release of Borrowers Liability
If any of the Obligor, being or having been a Borrower (a "Cancelling Borrower")
wishes to cease to be a Borrower under this Agreement it may cease to have such
capacity by delivering to the Agent a duly completed Cancellation Certificate
executed by the Cancelling Borrower.
17.4 Effect of a Cancellation Certificate
Upon Delivery to the Agent of any Cancellation Certificate pursuant to Clause
17.3:
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(a) the Cancelling Borrower will stand released from all of the
liabilities and obligations expressed in this Agreement to be those of
the Borrower (whether arising or incurred before or after the delivery
of the relevant Cancellation Notice);
(b) the Borrower (other than the Cancelling Borrower) shall continue to be
liable for all of the obligations on the part of the Borrower under
this Agreement as if the Cancelling Borrower had never been a
Borrower; and
(c) the Cancelling Borrower will continue to be liable to the Agent and
the Banks as, and subject to the obligations of a guarantor under
Clause 18 of this Agreement;
(d) the continuing obligations of the Cancelling Borrower under Clause 18
of this Agreement shall be secured by any security which it may have
granted to the Agent prior to the delivery of the relevant
Cancellation Certificate.
18 GUARANTEE
18.1 Guarantee and indemnity
In consideration of the Banks or any of them making available the Facility or
advancing any money to the Borrower, which each Obligor confirms to be its
request, each Obligor unconditionally and irrevocably:
(a) guarantees to pay to the Agent and each Bank on demand, when the same
shall be due and payable, all monies obligations and liabilities which
are now, or at any time or times in the future shall become, due owing
or incurred by all or any of the Obligors (whether as borrower,
guarantor or otherwise) to the Agent or such Bank under or in
connection with this Agreement and/or any Related Document;
(b) as primary obligor, guarantees to the Agent and each Bank the due and
punctual payment performance and discharge by each of the Obligors of
each of and all its obligations (in whatever capacity) under this
Agreement and each Related Document; and
(c) undertakes to indemnify and keep indemnified the Agent and each Bank
on demand against any losses costs and/or expenses at any time
suffered or incurred by it by reason of or in connection with any
provision of this Agreement and/or Related Document being or becoming
invalid unenforceable or illegal.
18.2 Creditor protection
(1) This guarantee and indemnity is and at all times shall be a continuing
security, shall not be discharged or otherwise adversely affected by
any settlement of
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accounts whether partial or otherwise and shall extend to cover the
ultimate balance due to the Agent and each of the Banks under or in
connection with this Agreement and each Related Document.
(2) Each Obligor acknowledges and agrees that none of its obligations or
liabilities under this guarantee and indemnity shall be reduce
discharged or otherwise adversely affected by:
(a) any release compromise dealing with exchange renewal variation
modification or omission in taking up, perfecting or enforcing
any security guarantee, right or remedy which the Agent or any
Bank may now or in the future have from or against the Borrower
or any Obligor or any other person in respect of any of its
obligations or liabilities under or in connection with this
Agreement or any Related Document;
(b) any amendment or variation of or supplement to or novation or
transfer of any rights benefits and/or obligations under this
Agreement or any Related Document;
(c) the granting of any time indulgence waiver or concession to the
Borrower, any Obligor or any other person;
(d) the insolvency, liquidation, administration, winding up,
bankruptcy, incapacity, limitation, disability or discharge by
operation of law, or any change in the constitution name or
style, of the Borrower, any Obligor or any other person;
(e) any compounding with discharge or variation (whether by increase
or without limitation otherwise) of any liability of the
Borrower, any Obligor or any other person to the Agent or any
Bank or any concurrence in or acceptance or variation of any
compromise arrangement repudiation or settlement with the
Borrower, any Obligor or any other person;
(f) any invalidity illegality unenforceability irregularity or
frustration of any actual or purported obligation of the
Borrower, any Obligor or any other person;
(g) any claim or enforcement of payment from the Borrower, any
Obligor or any other person; and/or
(h) any act or omission which would not have reduced discharge of or
affected any obligation or liability of such Obligor had it been
a principal debtor instead of a surety or anything done or
omitted by any person which but for this provision might operate
to exonerate or discharge such Obligor or reduce or extinguish
its liability under this guarantee and indemnity.
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18.3 Primary obligation
(1) The obligations and liabilities expressed to be undertaken by each
Obligor under this guarantee and indemnity are those of primary
obligor and not merely as a surety.
(2) Neither the Agent nor any of the Banks shall be obliged, before taking
any steps to enforce any of its respective rights and remedies under
this guarantee and indemnity, to make demand enforce or seek to
enforce any claim right or remedy against, or to take any action
commence and proceedings or make or file any claim or enforce any
security against, the Borrower, any Obligor or any other person.
18.4 No Security
(1) Each Obligor represents and warrants that it has not taken, exercised
or received, and agrees not to take exercise or receive, the benefit
of any security or other right or benefit (whether by set-off
counterclaim subrogation indemnity proof in liquidation or otherwise)
from or against the Borrower or any Obligor in respect of any actual
or contingent liability of or payment by such Obligor under, or
otherwise in connection with, this guarantee and indemnity.
(2) If any security right or benefit is taken exercised or received by any
Obligor, such Obligor declares that such security right or benefit and
all monies at any time received or held in respect thereof shall be
held by such Obligor on trust for the Agent for itself and each of the
Banks and shall be paid to the Agent forthwith on demand.
18.5 General guarantee provisions
(1) The guarantee obligations and liabilities of the Obligors (for as long
as there is more than one such Obligor) under this Agreement are joint
and several obligations and liabilities.
(2) This guarantee and indemnity shall be in addition to and shall not
affect or be affected by or merge with any other security right remedy
or judgment obtained or held by or available to the Agent or any of
the Banks from time to time.
(3) The Agent and each of the Banks may place to the credit of a suspense
account any monies received under or in connection with this guarantee
and indemnity in order to preserve its rights to prove for the full
amount of all its claims against the Borrower, any Obligor or any
other person. The Agent and each of the Banks may at any time apply
any of such monies in or towards satisfaction of such of the monies
obligations and liabilities the subject of this guarantee and
indemnity as in its absolute discretion it may conclusively determine.
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(4) None of the Obligors shall be entitled, and each waives any right it
may have, to direct the application by the Agent or any of the Banks
of any sums received by it from such Obligor under or in connection
with this guarantee and indemnity.
(5) If this guarantee and indemnity ceases to be continuing for any
reason, the Agent and each of the Banks may open a new account or
accounts with the Borrower and, if the Agent or any Bank does not do
so, it shall nevertheless be treated as if it had done so at the time
that this guarantee and indemnity ceases to be continuing.
(6) Any release discharge or settlement between any Obligor and the Agent
or any of the Banks in respect of this guarantee and indemnity or any
security therefor shall be conditional upon no security disposition or
payment to the Agent or such Bank by such Obligor or any other person
being void, set aside or ordered to be refunded pursuant to any
enactment or law relating to bankruptcy liquidation administration or
insolvency or for any other reason. In such event the Agent and each
of the Banks shall be entitled subsequently to enforce this guarantee
and indemnity as if such release discharge or settlement had not
occurred.
(7) Any demand notification or certificate given by the Agent or any of
the Banks specifying amounts due and payable under or in connection
with any provision of this guarantee and indemnity shall, in the
absence of manifest error, be conclusive and binding on each of the
Obligors.
19 THE AGENT AND THE BANKS
19.1 Appointment of the Agent
(1) Each Bank (other than the Agent, if it is also a Bank) irrevocably
appoints the Agent to act as its agent for the purpose of this
Agreement and irrevocably authorises the Agent on its behalf to
exercise the rights powers and discretions that are specifically
delegated to it under or in connection with this Agreement and any
other incidental rights powers and discretions. The Agent may act
through its directors officers employees attorneys and agents.
(2) The relationship between the Agent and the Banks is that of agent and
principal only. The Agent shall not be trustee or fiduciary for any
other person and need not hold in trust any moneys paid to it for any
other party.
19.2 Instructions of Majority Banks
(1) The Agent shall (subject as otherwise provided in this Agreement) act
or refrain from acting in accordance with any instructions of the
Majority Banks in connection with any matter, whether or not expressly
provided for in this Agreement, and shall be fully protected if it so
acts or refrains from acting in accordance with any such instructions.
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However, the Agent shall not be obliged to seek instructions as to the exercise
of any right power or discretion or as to any such matter and, in the absence of
instructions, the Agent may act as it sees fit. Any instructions given by the
Majority Banks shall be binding on all the Banks.
(2) Before it commences any proceedings or takes any action under or in
respect of this Agreement, the Agent may require an indemnity and/or
security satisfactory to it, whether by way of payment in advance or
otherwise, against all liabilities losses costs and expenses which it
would or may incur in doing so.
19.3 Responsibility of the Agent
(1) The Agent shall have only those duties obligations and
responsibilities which are expressly specified in this Agreement.
(2) The Agent shall not be responsible to any other party for:
(a) the execution, authenticity, validity, enforceability or adequacy
of this Agreement or any other document;
(b) the sufficiency or accuracy of any representations warranties or
statements made in or in connection with this Agreement or any
other document;
(c) whether or not amounts payable under this Agreement are actually
paid (when due or without limitation otherwise); or
(d) any other failure of any other person to perform its respective
obligations under this Agreement or any other document.
(3) The Agent may:
(a) rely on any original or copy or facsimile print of any notice
document or signature believed by it to be authentic;
(b) rely on any statement made by any person regarding any matters
which may reasonably be assumed to be within his knowledge; and
(c) select, engage, pay for and (whether or not engaged by it) rely
on lawyers accountants surveyors or other professional advisers
and shall not be liable to any other party to this Agreement for any
consequences of such reliance.
19.4 Assessment of the Borrower
Without affecting the responsibility of the Borrower for information supplied by
it and any representation warranty or statement made by it in connection with
this Agreement, each Bank confirms that it has made and will in future continue
to make its own independent
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investigation assessment and appraisal of the business, financial condition,
creditworthiness, status and affairs of the Borrower and any other member of the
Group in connection with the participation of such Bank in the Facility and has
not relied and will not rely on the Agent therefor.
19.5 Default
The Agent shall not at any time be obliged to monitor or enquire as to whether
or not an Event of Default or a Potential Default has occurred or is continuing.
The Agent shall not at any time be deemed to have knowledge of the occurrence of
an Event of Default or a Potential Default unless it has received written notice
from a party referring to this Agreement, describing the relevant event or
circumstances and stating that the event is an Event of Default or a Potential
Default (as the case may be). If the Agent receives such a notice, it shall
promptly notify the Banks.
19.6 Information
The Agent shall promptly forward any document or copy of any document which it
receives from a party for another party and shall not be obliged to review or
check the same. The Agent shall otherwise not be obliged now or in the future to
provide any Bank with any information concerning the business, financial
condition, creditworthiness, status or affairs of the Borrower or any other
member of the Group or, unless requested to do so by a Bank in accordance with
this Agreement, to request any certificate or other document from the Borrower
or any other person.
19.7 The position of the Agent
The Agent may:
(a) carry on any banking or other business with the Borrower and/or any
other member of the Group;
(b) act as agent or trustee for or in relation to any financing involving
the Borrower and/or any other member of the Group;
(c) retain for its own account any fees profits or other remuneration
payable to it as Agent under this Agreement or in relation to any of
the above matters;
(d) if it is also a Bank, exercise all its rights and powers in such
capacity under this Agreement as if it were not also the Agent.
19.8 Liability
Neither the Agent nor any director, officer, employee, attorney or agent of the
Agent shall be liable to any other person for any action taken or not taken by
it or them under or in connection with this Agreement, unless caused by its or
their gross negligence or wilful misconduct.
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19.9 Indemnities
(1) Each Bank shall forthwith on demand indemnify the Agent for its
proportion (rateably according to the Banks' respective participation
in Advances or, if none, their respective Commitments or, if all
Commitments have been cancelled, their most recent respective
Commitments, each at the date of demand) of any liability, loss, cost
or expense incurred by or imposed on or claimed from the Agent in any
way relating to or arising out of its acting as the Agent except to
the extent that the liability loss or expense arises from the Agent's
gross negligence or wilful misconduct or is part of its normal
administrative costs and expenses.
(2) The Borrower shall forthwith on demand reimburse each Bank (including
the Agent, in its capacity as a Bank) for any payment made by it under
paragraph (1) above. The liability of the Borrower shall not be
limited or affected by paragraph (1) above.
19.10 Compliance
The Agent shall not be obliged to do anything which would or might, in its
opinion, be contrary to any law regulation or official directive or request of
any jurisdiction or render it liable to any person and may do anything which, in
its opinion, is necessary or desirable to comply with any such law regulation
directive or request. Without limitation, the Agent need not disclose any
information relating to the Borrower or any other member of the Group if
disclosure would or might, in the opinion of the Agent, be contrary to any duty
of secrecy or confidentiality or otherwise render it liable to any person.
19.11 Changes of Agent
(1) The Agent may resign (without stating any reason) by giving notice to
the Banks and the Borrower in which case the Agent may forthwith
appoint as successor Agent any affiliate of the Agent. Failing such
appointment, the Majority Banks may appoint a successor Agent.
(2) If the appointment of a successor Agent is to be made by the Majority
Banks but they have not, within 30 days after the Agent's notice of
resignation, appointed a successor Agent which accepts the
appointment, the Agent may appoint a successor Agent.
(3) Any successor Agent appointed under any provision in this Clause shall
only be appointed after consultation with the Borrower and provided
that it is a reputable and experienced bank or financial institution
with offices in London.
(4) The resignation of the Agent and the appointment of any successor
Agent will both become effective when and only when the successor
Agent notifies all the parties that it accepts the appointment, upon
which:
(a) the successor Agent shall succeed to and be vested with all the
rights powers and duties of the retiring Agent as if a party to
this Agreement in the capacity of the Agent;
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(b) the retiring Agent shall continue to have the benefit and
protection of this clause 18 in respect of the period while it
was the Agent; and
(c) subject to paragraph (5) below, the retiring Agent shall have no
further obligation as Agent under this Agreement.
(5) The retiring Agent shall, at its own cost, make available to the
successor Agent such documents and records and provide such assistance
as the successor Agent may reasonably request for the purposes of
performing its functions as the Agent under this Agreement.
(6) In this Clause 19.11, an `affiliate' of a person means any subsidiary
or holding company of such person or any subsidiary of any such
holding company (in each case within the meaning given to such
expressions by section 736 of the Companies Act 1985).
20 TRANSFERS OF PARTICIPATIONS
20.1 Novation by Transfer Certificate
If any Bank (the `Existing Bank') wishes to novate or transfer all or any part
of its rights benefits and/or obligations under this Agreement to another bank
or financial institution approved by the Agent, which approval will not be
unreasonably withheld or delayed (the `New Bank') then the Existing Bank may
after consultation with the Agent and the Borrower and, through the Agent, the
Borrower effect a substitution in respect thereof involving the New Bank by the
delivery to the Agent and acceptance by it of a duly completed Transfer
Certificate executed by the Existing Bank and the New Bank.
20.2 Effect of Transfer Certificate
Upon delivery to the Agent of any Transfer Certificate pursuant to Clause 20.1
and acceptance thereof by the Agent (which delivery and acceptance shall be
evidenced exclusively and conclusively by the Agent's countersignature on such
Transfer Certificate pursuant to Clause 20.4, without which such Transfer
Certificate shall be ineffective):
(a) save as provided in Clause 20.3, the respective rights of the Existing
Bank and the Borrower against each other under this Agreement with
respect to all or the relevant part of the Existing Bank's Commitment
and/or participation in Advances (all as specified in the schedule to
such Transfer Certificate) shall be terminated and each shall be
released from all further obligations to the other(s) under this
Agreement with respect thereto (all such rights and obligations to be
so terminated or released being referred to in this Clause as
`Discharged Rights and Obligations');
(b) the Borrower and the New Bank shall each acquire rights against each
other and assume obligations towards each other which (except as
regards the identity of the parties thereto) are identical to the
Discharged Rights and Obligations; and
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(c) the Agent, the New Bank and the other Banks shall acquire the same
rights and assume the same obligations between themselves as they
would have acquired and assumed had such New Bank been an original
party to this Agreement as a Bank with the Discharged Rights and
Obligations acquired or assumed by it in consequence of such Transfer
Certificate.
20.3 Obligations prior to Transfer Certificate
Discharged Rights and Obligations shall not include, and there shall be no
termination or release pursuant to this Clause 20 of, any rights or obligations
arising pursuant to Clause 15 or 16 in respect of the period, or in respect of
payments made under this Agreement during the period, prior to the effective
date of the relevant Transfer Certificate.
20.4 Signing of Transfer Certificate
Each of the Borrower and the Banks hereby appoints the Agent to receive and
countersign each Transfer Certificate as agent on its behalf as required by this
Clause and, to the extent relevant, the provisions of Clause 19 shall apply
mutatis mutandis with respect to such appointment. The Agent shall be entitled
(but not obliged) to decline to accept and/or countersign any proposed Transfer
Certificate which is not in the form set out in Schedule 4.
20.5 Administration Fee
On or before the effective date of any Transfer Certificate, the New Bank which
is party to it shall pay to the Agent an administration fee of BP1,000.
20.6 Partial transfers
A partial novation or transfer by a Bank shall only be permitted in respect of
either BP1,000,000 (or an integral multiple of such sum) or the balance of
such Bank's Commitment and participation in the Loan.
20.7 Protection of Agent
The Agent shall be entitled to rely on any Transfer Certificate delivered to it
pursuant to this Clause which appears on its face to be complete and regular and
appears to be signed on behalf of the Existing Bank and the New Bank named as
party to it. The Agent shall have no liability or responsibility to any party as
a consequence of placing reliance on and acting in accordance with and
countersigning any such Transfer Certificate.
20.8 Notification
The Agent shall notify the Borrower promptly of the receipt and execution on its
behalf by the Agent of any Transfer Certificate and shall deliver a copy of it
to the Borrower.
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20.9 No liability of Existing Bank
Nothing in this Agreement or any Transfer Certificate shall oblige an Existing
Bank to:
(a) accept a retransfer from a New Bank of any of the rights, benefits
and/or obligations transferred or novated under this Clause and/or a
Transfer Certificate; or
(b) be liable for or contribute to any losses incurred by the New Bank by
reason of the non-performance by any of the Obligors of its respective
obligations under this Agreement or otherwise.
20.10 Information
A Bank may disclose on a confidential basis to any actual or potential New Bank
or other assignee or transferee of any rights, benefits or obligations under
this Agreement such information about the Borrower and any Subsidiary of the
Borrower (and so that the Borrower shall procure any further requisite consent
from each Subsidiary) and their respective business and financial condition as
such Bank shall consider appropriate.
21 GENERAL
21.1 Set-off
(1) Each Bank may provided it believes, acting reasonably, that any of the
Events of Default in Clause 13.1(f), (g), (h) or (i) is likely to
occur or if an Event of Default has occurred, without prior notice to
the Borrower apply any credit balance (whether or not then due and in
whatever currency) which is at any time held by any office or branch
of such Bank for the account of the Borrower in or towards
satisfaction of any sum then due and payable from the Borrower under
this Agreement and it shall notify the Borrower thereafter.
(2) For the purposes of exercising any rights under this Clause, or any
rights under the general law, the relevant Bank may convert or
translate all or any part of such a credit balance into another
currency applying a rate which in its opinion fairly reflects
prevailing rates of exchange.
(3) No Bank is obliged to exercise any of its rights under this Clause,
which shall be without prejudice and in addition to any rights under
the general law.
(4) In this clause `rights under the general law' means any right of
set-off, combination or consolidation of accounts, lien or similar
right which any Bank has under any applicable law.
21.2 Assignment and Facility Offices
(1) This Agreement shall be binding upon, and enure for the benefit of,
each of the parties hereto and their respective successors and assigns
(and any person to whom any Bank shall transfer or novate any rights
and/or obligations under this Agreement).
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(2) The Borrower may not assign or transfer any of its respective rights
benefits or obligations under this Agreement.
(3) No Bank may assign all or any part of its rights or benefits or
transfer all or any part of its obligations under this Agreement
except in accordance with Clause 18. However, nothing in this
Agreement restricts the ability of a Bank to sub-contract or sub-
participate an obligation if that Bank remains liable under this
Agreement for that obligation.
(4) Each Bank may at any time and from time to time change its facility
office (being the office out of which it will make available and
maintain its Commitment and/or participation in any Advance or any
part thereof) but such Bank shall forthwith give the Agent notice
thereof (and until the Agent receives such notification it shall be
entitled to assume that such Bank is acting through the facility
office of which it last had notice).
21.3 Redistribution of payments, netting and set-off
(1) If during any period while any sum is due and payable by a Borrower
hereunder but remains unpaid the proportion which any Bank (a
"Recovering Bank") has received or recovered (whether by payment, the
exercise of a right of set-off or combination of accounts or
otherwise) in respect of any amount (a "Relevant Amount") payable
hereunder by such Borrower for the account of such Recovering Bank is
greater (the amount of such excess being called an "Excess Amount")
than the proportion which any other Bank has received or recovered
(whether by payment, the exercise of a right of set-off or combination
of accounts or otherwise) in respect of any other amount payable
hereunder by such Borrower for the account of such other Bank, then:
(a) such Recovering Bank shall promptly pay to the Agent an amount
equal to such Excess Amount; and
(b) such Borrower shall forthwith be obliged to reimburse to such
Recovering Bank an amount equal to the amount paid out by it
pursuant to paragraph (a) above and the amount to be so paid out
by way of reimbursement shall be treated, for the purposes
hereof, as if it were an unpaid part of such Recovering Bank's
portion of such Relevant Amount; and
(c) the Agent shall treat the amount received by it from such
Recovering Bank pursuant to paragraph (a) above as if such amount
had been received by it from such Borrower in respect of such
relevant amount and shall pay the same to the persons entitled
thereto (including such Recovering Bank) pro rata to their
respective entitlements thereto
Provided that notwithstanding anything contained herein a Bank which shall have
commenced an action or proceeding in any court to recover sums owing to it
pursuant to this Agreement and as a result thereof, or in connection therewith,
shall have received an Excess Amount shall not be required to share any portion
of such Excess Amount with a Bank which has been notified in advance of such
action and has had an opportunity to, but does not, join such action or
proceeding or commence and diligently pursue a separate action or proceeding to
enforce its rights in the same or another court.
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(2) Without prejudice to the provisions of sub-clause (1) of this Clause
21.3, if the Agent shall receive from a Borrower or otherwise funds
which are insufficient to satisfy in full the obligations of such
Borrower under this Agreement then due to be discharged, the Agent
shall allocate the funds so received in or towards discharging the
amounts then so due from such Borrower under this Agreement pro rata
to the amounts of such obligations and each party hereto irrevocably
authorises and directs the Agent so to act.
(3) The relevant Borrower shall not be entitled to make any designation of
the application of funds in the circumstances referred to in
sub-clause (2) above.
(4) Each Borrower authorises each Bank to apply any credit balance to
which the Borrower is entitled on any account with such Bank in or
towards satisfaction of any sum due and payable by such Borrower to
such Bank under this Agreement or any Related Document but unpaid and
outstanding and any such Bank shall notify the Borrower of any such
application. For that purpose each Bank is authorised to purchase with
the monies standing to the credit of any such account such other
currencies as may be necessary to effect such application. In
effecting such currency transaction, the applicable rate of exchange
shall be that Bank's spot rate of exchange at 11.00am on the day such
transaction was effected. No Bank shall be obliged to exercise any
right given to it by this sub-clause (4).
21.4 Notices
(1) Every notice or other communication under this Agreement shall be in
writing and may be delivered personally or by letter, telex or
facsimile transmission (forthwith confirmed by letter) despatched as
follows:
(a) if to the Agent, at its address specified at the head of this
Agreement or to the following numbers:
Facsimile 0171 962 2860 and 215 973 5387
for the attention, respectively, of Loan Administration and
Andrea Cohen
(b) if to a Bank, at its address or, if any, its facsimile number
(and for the attention of the contact, if any) specified in
Schedule 1 (or if applicable a Transfer Certificate);
(c) if to the Borrower, at its address specified at the head of this
Agreement or its registered or principal office for the time
being or to the following numbers:
Facsimile
for the attention of
or (in any case) to such other address and/or telex number and/or
facsimile number as may be notified in accordance with this Clause by
the relevant party to the other parties for such purpose.
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(2) Every notice or other communication shall, subject as otherwise
provided in this Agreement, be deemed to have been received (if sent
by post) 24 hours after despatch and (if delivered personally or
despatched by telex subject to receiving the correct telex answerback
or by facsimile transmission) at the time of delivery or despatch if
during normal business hours in the place of intended receipt on a
working day in that place and otherwise at the opening of business in
that place on the next succeeding such working day, provided that any
notice or communication to be made or delivered to the Agent shall be
effective only on actual receipt by the Agent.
21.5 Waivers amendments and consents
(1) No delay or omission on the part of the Agent or any Bank in
exercising any right or remedy under this Agreement shall impair that
right or remedy or operate as or be taken to be a waiver of it, nor
shall any single partial or defective exercise by the Agent or any
Bank of any such right or remedy preclude any other or further
exercise under this Agreement of that or any other right or remedy.
The remedies provided in this Agreement are cumulative and are not
exclusive of any remedies provided by law.
(2) The Agent may grant waivers and consents, vary (in agreement with the
Borrower) the terms of this Agreement and do or omit to do all such
acts and things in connection with this Agreement as may be authorised
in writing by the Majority Banks. Any such waiver consent variation
act or omission so authorised and effected by the Agent shall be
binding on all the Banks and the Agent shall be under no liability
whatsoever in respect of any such waiver consent variation act or
omission so authorised. However, except with the prior written
agreement of all the Banks, nothing in this Clause 20.5(2) shall
authorise:
(a) any variation of any provision hereof which provides for any
matter to be agreed or consented to or approved by all the Banks;
(b) (save as expressly provided in this Agreement) any change in any
rate at which interest or any fee is payable under this
Agreement;
(c) any extension of the date for, or alteration in the amount or
currency of, any payment of principal interest fees or other
amounts payable by the Borrower to the Agent or any Bank under
this Agreement;
(d) any extension of the duration of the Facility;
(e) any amendment to the definition of `Majority Banks' (in Clause
1.1) or Clause 15 or this Clause 20.5(2).
21.6 Severance
If at any time any of the provisions of this Agreement is or becomes illegal,
invalid or unenforceable in any respect under any law or regulation of any
jurisdiction, neither the legality validity and enforceability of the remaining
provisions of this Agreement nor the legality, validity or enforceability of
such provision under the law of any other jurisdiction shall be in any way
affected or impaired as a result.
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21.7 Counterparts
This Agreement may be executed in any number of counterparts in which case this
Agreement will be as effective as if all signatures on the counterparts were on
a single copy of this Agreement.
21.8 Language
All notices or communications under or in connection with this Agreement
(including without limitation documents to be delivered pursuant to Clause 4.1)
shall be in English or, if in any other language, accompanied by a translation
into English certified as the Agent may require. In the event of any conflict
between the English text and the text in any other language, the English text
shall prevail.
21.9 Law and Jurisdiction
(1) This Agreement shall be governed by and construed in accordance with
English law.
(2) Each of the parties irrevocably agrees for the exclusive benefit of the
Agent and each Bank that the courts of England shall have jurisdiction to hear
and determine any suit action or proceeding, and to settle any disputes, which
may arise out of or in connection with this Agreement and for such purposes
hereby irrevocably submits to the jurisdiction of such courts.
(3) Nothing contained in this Clause shall limit the right of any other
party to take proceedings against the Borrower in any other court of competent
jurisdiction, nor shall the taking of any such proceedings in one or more
jurisdictions preclude the taking of proceedings in any other jurisdiction,
whether concurrently or not (unless precluded by applicable law).
(4) Each party irrevocably waives any objection which it may have now or in
the future to the courts of England being nominated for the purpose of paragraph
(2) above and agrees not to claim that any such court is not a convenient or
appropriate forum.
(5) The Obligors (other than the Final Borrower) hereby authorises and
appoints the Final Borrower (or such other person being a firm of solicitors or
authorised institution in England as it may substitute by notice to the Agent
and, through the Agent, to each of the Banks) to accept service of all legal
process arising out of or connected with this Agreement. Service on such
person(s) (or substitute) shall be deemed to be service on the Borrower whether
or not process is forwarded to or received by it. Except upon such a
substitution, the Borrower undertakes not to revoke any such authority or
appointment, at all times to maintain an agent for service of process in England
and, if any such agent ceases for any reason to be an agent for this purpose,
forthwith to appoint another agent and advise the Agent accordingly.
AS WITNESS whereof this Agreement has been duly executed the day and year first
above written.
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SCHEDULE 1
Banks and Commitments - Revolving Facility
Commitment
CoreStates Bank, N.A. BP3,300,000
Banks and Commitments - Term Facility
Commitment
CoreStates Bank, N.A. BP8,400,000
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SCHEDULE 2
Drawdown Notice
To: [Agent's name and address]
For the attention of: [________]
Date: [________] 19[__]
Dear Sirs,
Facility Agreement dated [________] 19[__]
We wish to draw an Advance [of the Revolving Facility/Term Facility] under the
above Facility Agreement as follows:
(a) Drawdown Date: [________] 19[__]
(b) Currency: [________]
(c) Amount in such currency [________]
(d) [First] Interest Period relating to the Advance: [________] months
(e) Bank account to which proceeds are to be paid: [________]
We confirm that:
(a) the matters represented by us and set out in Clause 11 of the
Facility Agreement are true and accurate on the date of this
notice as if made on such date; and
(b) no Event of Default or Potential Default, each as defined in the
Facility Agreement, has occurred and is continuing or would result
from the drawing of the proposed Advance.
Yours faithfully,
For and on behalf of
[Name of Borrower]
Authorised Signatory
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SCHEDULE 3
Reserve Costs Rate
(1) The Reserve Costs Rate means the rate per annum determined by the
Agent (rounded upwards, if not an integral multiple of 1/16 of 1 per cent to the
nearest integral multiple of 1/16 of 1 per cent if necessary, to four decimal
places) of the percentage rate per annum and calculated by it at or about 11 am
on the first day of the relevant Interest Period, by reference to circumstances
existing at the time of calculation, in accordance with the following formula:
Reserve Costs Rate = (AB+C(B-D)+E(B-F))/(100-(A+E)) % per annum
where, on the date of calculation:
A is the average of the percentage of eligible liabilities which the Bank
of England then requires of the Agent to maintain on non-interest
bearing account with the Bank of England;
B is the average of the percentage rates per annum at which the Agent is
offered 3- month Sterling deposits of the relevant amount by leading
banks in the London Interbank Market for the relevant period at or
about 11 am on the date of calculation;
C is the average percentage of eligible liabilities which the Bank of
England requires the Agent to maintain as secured deposits with certain
financial institutions recognised for this purpose by the Bank of
England;
D is the lower of `B' and the percentage rate per annum at which the
Agent is able to place 3-month Sterling deposits in the relevant amount
with certain financial institutions recognised for this purpose by the
Bank of England at or about 11 am on the date of calculation;
E is the percentage of eligible liabilities which banks are then required to
place as special deposits with the Bank of England;
F is the percentage rate per annum at which interest is then paid by the Bank
of England on special deposits;
and so that, for the purpose of this formula:
(a) `relevant amount' means the amount of the relevant Advance; and
(b) each of the percentages so determined shall be expressed as a
number and not as a percentage.
(2) If the Agent determines that, by reason of the introduction of or
any change
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in any present or future reserve asset ratio cash ratio secured deposit special
deposit liquidity and/or other requirement imposed or requested from time to
time by the Bank of England or any other agency of the United Kingdom or any
change in the interpretation or application of any such requirement by the Bank
of England or other such agency, the above formula is or has become
inappropriate, the Agent may at any time (after consultation with and by notice
to the Banks and the Borrower) modify the manner in which the Reserve Costs Rate
will be calculated and specify the date from which such modification will apply.
Any such modification and date will, in the absence of manifest error, be
binding on all the parties to this Agreement.
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SCHEDULE 4
Transfer Certificate
To: [Agent]
(on its own behalf and as agent for each of the Banks and the Borrower as
defined in the Facility Agreement referred to below).
TRANSFER CERTIFICATE
This Transfer Certificate relates to the agreement (the `Facility Agreement')
dated [________] 19[__] made between (1) [The Banks], and (2) [the Borrower] and
(3) [the Agent] whereby the Banks agreed to make a facility available to the
Borrower. Terms defined in the Facility Agreement shall have the same respective
meanings in this Transfer Certificate.
(1) [Existing Bank] (the `Existing Bank') (a) confirms to [New Bank]
(the `New Bank') that the details set out in the Schedule hereto under the
headings `Existing Bank's Commitment' and `Relevant Participation' accurately
summarise its Commitment and the term and amount of its participation in one or
more existing Advances and (b) requests the New Bank to accept and procure the
novation to the New Bank in accordance with Clause 19 of the Facility Agreement
of the portion(s) (if any) specified in the Schedule hereto so as to be novated
of its Commitment and of its participation in any such Advances to the extent
specified.
(2) The New Bank hereby requests the Agent to accept this Transfer
Certificate as being delivered to the Agent pursuant to and for the purpose of
Clause 19 of the Facility Agreement so as to take effect on [date of novation]
[subject only to the Agent having previously received tested telex confirmation
from [Existing Bank's correspondent] that the sum of [________] has been
credited to the Existing Bank's account No [________] with [Existing Bank's
correspondent] for value [date of novation]].
(3) The New Bank confirms that:
(a) it has received a copy of the Facility Agreement together with
such other documents and information as it has required in
connection with this transaction;
(b) upon this Transfer Certificate coming into effect in
accordance with the Facility Agreement, it will be bound by
the terms and conditions of the Facility Agreement.
(4) This Transfer Certificate and the rights and obligations of the
parties hereunder shall be governed by and construed in accordance with English
law.
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(5) The facility office of the New Bank shall be [insert details of
facility office].
(6) For the purposes of Schedule 1 to the Facility Agreement, the New
Bank's address, telex number, telex answerback, facsimile number and contact are
as follows:
Address: [________]
Telex: [________] Answerback: [________]
Facsimile: [________]
Contact: [________]
Payment instructions:
Existing Bank's Commitment Portion to be novated
Relevant Participation Portion to be novated
SIGNED by [________]
For and on behalf of [________]
[EXISTING BANK]
SIGNED by [________]
For and on behalf of [________]
[NEW BANK]
SIGNED BY [________]
For and on behalf of [________]
[AGENT] as agent
for and on behalf of itself and
the other parties to the
Facility Agreement
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SCHEDULE 5
Conditions Precedent
In this Schedule, `certified' means certified by a Director or another duly
authorised officer of the Borrower or other relevant company as being a true
complete and up-to-date copy as at a date no earlier than the date of this
Agreement.
(1) A certified copy of the Memorandum and Articles of Association
statutes or other constitutional documents of each Obligor.
(2) A certified copy of a resolution of the Board of Directors or
Delaware or Pennsylvania equivalent (as applicable) of each Obligor approving
this Agreement and any Related Document required to be delivered under this
Agreement to which it is expressed to be a party, authorising the person(s)
executing the same to do so and authorising a person or persons to sign Drawdown
Notices and all notices or other communications to be given or made by or on
behalf of such Obligor under this Agreement or any such Related Document.
(3) A specimen signature, authenticated to the satisfaction of the
Agent, of each person authorised to sign by the resolutions referred to in
paragraphs (2) and (4) above.
(4) A written legal opinion of the Pennsylvania legal advisers to the
Agent and the Banks.
(5) Each fee payable pursuant to Clause 9 to the extent due and
payable.
(6) All security documents listed in Part 1 of Schedule 9.
(7) Confirmation from Barclays Bank plc of all sums required to
discharge all banking or financial facilities and accommodation available to or
drawn by the Borrower and that all security and/or guarantees and/or indemnities
in respect thereof will be released forthwith on payment or repayment thereof
and, if required by the Agent, a form of release discharge or vacating receipt
of each of the above, which has been agreed by the said Barclays Bank plc.
(8) (i) Agreement for the sale and purchase of the shares of Unipack
Limited dated 29 February 1996 between P. Speirs and others
and PCI Services, Inc.;
(ii) Option Agreement dated 19 February 1996 between L. Gillam
and PCI Services, Inc.;
(iii) Option Agreement dated 23 February 1996 between Robert
Fleming Investment Trust Limited and others and PCI
Services, Inc.;
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(iv) Release and Waiver Agreement re. Placing Agreement dated 23
February 1996 between Robert Fleming Investment Trust
Limited and others and PCI Services, Inc.;
(v) Tax Deed dated 29 February 1996 between P. Speirs and Others
and PCI Services, Inc.
(9) Confirmation that all steps required for completion of the
acquisition in accordance with the terms of the documents listed in (8) above
(except in so far as the Facility may be required for such purpose) have been
taken.
(10) Confirmation of the insurance cover of the Final Borrower and its
subsidiaries.
(11) Key man insurance.
(12) A Companies Registry and Winding-up search against each of the
Group Companies in a form satisfactory to the Agent.
(13) The Counter Indemnity, duly executed by the Initial Borrower.
(14) The Disclosure Letter.
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SCHEDULE 6
Margin
The Margin shall be 2.5% per annum in relation to the Revolving Facility and
2.675% per annum in relation to the Term Facility provided that if the Fixed
Charge Coverage Ratio (as defined and applied below) exceeds 1.2:1 according to
its latest measurement prior to the relevant Interest Payment Date, the Margin
shall reduce, respectively to 2.25% per annum and 2.5% per annum and if such
Fixed Charge Coverage Ratio according to such measurement exceeds 1.4:1, the
Margin shall reduce, respectively, to 1.75% per annum and 2.0% per annum.
In this Schedule 6 the Fixed Charge Coverage Ratio shall have the same meaning
as defined in Schedule 8 and measured in the same manner but shall relate to the
consolidated financial position of the Group Companies.
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SCHEDULE 7
Cancellation Certificate
TO: [Agent]
(On its own behalf and as agent for each of the Banks and the Borrower as
defined in the Facility Agreement referred to below).
CANCELLATION CERTIFICATE
This Cancellation Certificate relates to the agreement (the "Facility
Agreement") dated [ ] 1996 made between (1) [The Banks], (2) [the Obligors] and
(3) [the Agent] whereby the Banks agreed to make facilities available to the
Borrower. Terms defined in the Facility Agreement shall have the same respective
meanings in this Cancellation Certificate.
(1) [Cancelling Borrower] (the "Cancelling Borrower") confirms to the Agent
and to the Banks its desire to be released from its obligations as a
Borrower under the Facility Agreement and its willingness to continue
to undertake the guarantee obligations and liabilities under Clause 18
of the Facility Agreement.
(2) The Cancelling Borrower accordingly issues this Cancellation
Certificate in accordance with and subject to Clause 17 of the Facility
Agreement and confirms that it will following the delivery to the Agent
of this Cancellation Certificate, continue to have all of the guarantee
obligations and liabilities of an Obligor under Clause 18 of the
Facility Agreement.
SIGNED BY [ ]
for and on behalf of [ ]
[CANCELLING BORROWER]
Dated [ ]
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SCHEDULE 8
Financial Covenants
1 The Covenantor undertakes with the Agent and each of the Banks that at
all times the consolidated financial position of the Group (to be
measured at the end of each quarter of each fiscal year) shall be such
that:
1.1 there is a Fixed Charge Coverage Ratio of not less than:
(a) 1.0:1 from the date of this Agreement to 30th September 1996;
(b) 1.0:1 from 1st October 1996 to 30th September 1997;
(c) 1.1:1 from 1st October 1997 to 30th September 1998;
(c) 1.1:1 from 1st October 1998 to 30th September 1999; and
(d) 1.1:1 from 1st October 1999 and at all times thereafter.
1.2 Net Working Capital is not less than:
(a) $10,000,000 from the date of this Agreement to 30th September 1996;
(b) $11,000,000 from 1st October 1996 to 30th September 1997;
(c) $12,000,000 from 1st October 1997 to 30th September 1998; and
(d) $13,000,000 from 1st October 1998 to 30th September 1999; and
(e) $14,000,000 from 1st October 1999 and at all times thereafter.
1.3 a Quick Ratio is maintained of not less than:
(a) 0.65:1 from the date of this Agreement to 30th September 1996; and
(b) 0.70:1 from 1st October 1996 and at all times thereafter.
1.4 the ratio of Consolidated Funded Debt to Tangible Net Worth does not
exceed:
(a) 1.75:1 from the date of this Agreement to 30th September 1996;
(b) 1.5:1 from 1st October 1996 to 30th September 1997;
(c) 1.25:1 from 1st October 1997 to 30th September 1998; and
(d) 1.0:1 from 1st October 1998 and at all times thereafter.
1.5 Capital Expenditure does not exceed $10,000,000 for the fiscal year
ending 30th September 1996; and $12,000,000 for each subsequent fiscal
year.
1.6 Tangible Net Worth is not less than:
(a) $37,000,000 from the date of this Agreement to 30th September 1996;
(b) $43,000,000 from 1st October 1996 to 30th September 1997;
(c) $50,000,000 from 1st October 1997 to 30th September 1998;
(d) $60,000,000 from 1st October 1998 to 30th September 1999; and
(e) for each fiscal year ending after 30th September 1999 the amount equal
to $65,000,000 plus 50% of the net income of the Group plus 75% the
new equity offerings of the Covenantor in each such fiscal year.
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2 For the purposes of this Schedule, the following terms shall have the
following meanings:
"Capital Expenditures" means the aggregate amount of capital
expenditures of the Group required to be capitalised on the balance
sheet of the Group in accordance with US GAAP (excluding expenditures
for land, buildings and improvements thereto).
"Capital Lease" shall mean any lease of property which, in accordance
with US GAAP, should be capitalised on the lessee's balance sheet.
"Capital Lease Obligations" shall mean the amount of the liability
which, according to US GAAP, should be capitalised or disclosed with
respect to a Capital Lease.
"Consolidated Funded Debt" means, in relation to the Group all (i)
Indebtedness, excluding Subordinated Debt; (ii) Capitalised Lease
Obligations; (iii) all guarantees, direct or indirect, except (a) those
that guarantee obligations that would already be included in this
definition and (b) guarantees of obligations in connection with issued
and outstanding standby letters of credit except those obligations that
would already be included in this definition; and (v) obligations
arising under Operating Leases; (iv) contingent obligations in
connection with bankers' acceptances. "Current Assets" means, at any
time, all assets which, in accordance with US GAAP, should be
classified as current assets of the Group.
"Current Liabilities" means, at any time all liabilities which, in
accordance with US GAAP should be classified as current liabilities of
the Consolidated Group.
"Fixed Charge Coverage Ratio" means the quotient obtained by dividing
Cash Flow by the sum of Total Interest Expense, Current Maturities of
Long Term Debt, Unfunded Capital Expenditures, Buy-back of Shares and
Total Taxes, such ratio to be measured at the end of each fiscal
quarter under review, computed on a rolling four quarters' basis in
accordance with US GAAP. For purposes of determining the Fixed Charge
Coverage Ratio, the following terms shall have the following meanings:
(a) "Cash Flow" shall mean the aggregate sum of the net income
(excluding extraordinary gains or losses) of the Group plus
interest, taxes, depreciation and amortization, less
dividends, all the foregoing measured for the previous four
quarters;
(b) "Current Maturities of Long Term Debt" shall mean the
aggregate sum of all principal payments due on Indebtedness of
the Group during the next twelve months calculated in
accordance with US GAAP, except for any advances under the
Equipment Facility that have not been converted to Equipment
Term Loans;
(c) "Total Taxes" shall mean the aggregate amount of all income taxes
paid by the Group for the previous four quarters; and
(d) "Total Interest Expense" shall mean the aggregate amount of all
interest
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expense on Indebtedness of the Group for the previous four quarters.
(e) "Unfunded Capital Expenditures" shall mean the Capital
Expenditures of the Group not funded with Indebtedness for
borrowed money.
(f) "Buy-back of Shares" shall mean the amounts of shares
purchased by the Covenantor pursuant to Section 7.10 of the US
Loan Agreement.
"Net Working Capital" shall mean, at any time, the amount by which
Current Assets exceed Current Liabilities, less any amount due from any
Affiliate to the extent that such amount is included in Current Assets.
"Quick Assets" shall mean with respect to the Group the aggregate sum
of their (i) cash on hand or on deposit in banks, (ii) readily
marketable securities issued by the United States of America (iii)
readily marketable commercial paper rated A-3 or better by Standard &
Poor's Corporation (or a similar rating by any similar organisation
which rates commercial paper), (iv) certificates of deposit issued by
commercial banks of recognised standing operating in the United States
of America, and (v) Accounts.
"Quick Ratio" shall mean, at any time, the ratio of Quick Assets to
Current Liabilities.
"Stockholders Equity" shall mean, at any time the aggregate
stockholders' equity of the Consolidated Group as determined in
accordance with US GAAP.
"Subordinated Debt" shall mean all Indebtedness of the Group
subordinated to the Obligations in a manner satisfactory to the
Majority Banks in their sole discretion.
"Tangible Net Worth" shall mean, at any time, Stockholders' Equity,
less all intangible assets of the Group, including, without limitation,
organisation costs, securities issuance costs, unamortized debt
discount and expense, goodwill and negative goodwill, excess of
purchase costs over net assets acquired, patents, trademarks, trade
names, copyrights, trade secrets, knowhow, licenses, franchises,
research and development expenses, amounts owing from officers and/or
Affiliates and any amount reflected as treasury stock.
"US GAAP" means the generally accepted accounting principles and bases
generally adopted and accepted in connection with the preparation of
audited accounts for the Covenantor.
"US Loan Agreement" means the Loan and Agency Agreement dated as of 28
February 1996 entered into among PCI Services, Inc., and certain of its
Subsidiaries, the Banks and Meridian Bank.
Where any capitalised term appears in this Schedule which is not
defined in this Schedule or the body of this Agreement it shall have
the meaning attributed to it in the US Loan Agreement. In the event of
any inconsistency between the terms defined
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in Clause 1 of this Agreement and in the US Loan Agreement, the US Loan
Agreement shall prevail.
61
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SCHEDULE 9
Security Documents
Part 1
1 A Charge over shares granted by the Final Borrower (in respect of its shares
in Unipack Limited) and granted by PCI Acquisition I, Inc, and PCI
Acquisition II, Inc, (in respect of the shares of the Final Borrower);
2 A Security Agreement among PCI Services, Inc., Packaging Coordinators, Inc.,
PCI of Virginia, Inc., PCI/Delvco, Inc., PCI/TRI-LINE (USA), Inc., PCI
Holdings, Inc., PCI Services Holdings, Inc., and P.C. Realty, Inc. and
CoreStates Bank, N.A.
3 A Mortgage, Assignment of Leases, and Security Agreement between Packaging
Coordinators, Inc., and CoreStates Bank, N.A. relating to land adjacent to
the New Jersey State Highway.
4 A Pledge Agreement between PCI of Virginia, Inc., and CoreStates Bank, N.A.
5 A Pledge Agreement between PCI/All Pack Holdings, Inc., and CoreStates
Bank, N.A.
6 A Pledge Agreement between Packaging Coordinators, Inc., and CoreStates Bank,
N.A.
7 A Pledge Agreement between PCI Services, Inc., and CoreStates Bank, N.A.
8 A Guaranty among Packaging Coordinators, Inc., and others and CoreStates
Bank, N.A.
Part II
1 A guarantee by Unipack Limited of all of the facility agreement related
obligations of the Borrower to the Banks and the Agent; and
2 A Debenture (containing fixed and floating charges over all of the assets
and undertaking of each of Unipack Limited and the Final Borrower, each in
such form as the Agent may require).
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SCHEDULE 10
Accession Notice
To: [Agent]
(on its own behalf and as agent for each of the Banks as defined in the
Facility Agreement referred to below).
ACCESSION NOTICE
This Accession Notice relates to the Agreement (the "Facility Agreement") dated
[ ] 1996 made between (1) [the Bank] (2) [the Obligors] and (3) [the Agent]
whereby the Banks agreed to make facilities available to the Borrower. Terms
defined in the Facility Agreement shall have the same respective meanings in
this Accession Notice.
[ACCEDING OBLIGOR] (the "Acceding Obligor") confirms to the Agent and to the
Banks that it hereby undertakes all the obligations and liabilities of the
Borrower jointly and severally with any other Obligor who has become, prior to
the giving of this Accession Notice, a Borrower.
SIGNED BY [ ]
for and on behalf of [ACCEDING OBLIGOR]
Dated [ ]
63
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Signed by )
for and on behalf of ) Richard S. Sauter
PCI Services, Inc. ) G.E. Detwiler
Signed by )
for and on behalf of ) G.E. Detwiler
PCI Acquisition I, Inc. )
Signed by )
for and on behalf of ) G.E. Detwiler
PCI Acquisition II, Inc. )
Signed by )
for and on behalf of ) Richard S. Sauter
PCI Holdings (UK) Co. )
Signed by )
for and on behalf of ) G.E. Detwiler
Packaging Coordinators, Inc. )
The Agent
Signed by )
for and on behalf of ) STEVEN J. BELL
CoreStates Bank, N.A. )
The Bank
Signed by )
for and on behalf of ) STEVEN J. BELL
CoreStates Bank, N.A. )
64
SECURITY AGREEMENT
This SECURITY AGREEMENT is made and entered into on February ___, 1996 by
PCI SERVICES, INC., a Delaware corporation ("PCI Services"), PACKAGING
COORDINATORS, INC., a Pennsylvania corporation, PCI OF VIRGINIA, INC., a
Delaware corporation, PCI/DELVCO, INC., a Delaware corporation, PCI/TRI-LINE
(USA), INC., a Delaware corporation, PCI HOLDINGS, INC., a Delaware corporation,
and P.C. REALTY, INC., a Delaware corporation (collectively, the "Debtors" and
each individually, a "Debtor") in favor of CORESTATES BANK, N.A., a national
banking association, as agent (together with any successor(s) thereto in such
capacity, the "Agent") for itself and on behalf of each of the Banks (as defined
below).
BACKGROUND
A. The Banks (as defined in the Loan Agreement and used herein with the
same meaning), the Agent and, inter alia, PCI Services have executed a
Facilities Agreement of even date herewith (the "Loan Agreement").
B. In connection with the Loan Agreement, the Debtors, other than PCI
Services, have executed a Guaranty of the obligations of PCI Services and the
other obligors under the Loan Agreement (the "Guaranty").
C. The Banks are willing to grant the extensions of credit contemplated by
the Loan Agreement only on the condition that the Debtors execute and deliver
this Security Agreement to the Agent for the benefit of the Banks.
D. Capitalized terms which are used herein without definition shall have
the meanings ascribed to them in the Loan Agreement. Other terms used herein
without definition that are defined in the Uniform Commercial Code, as enacted
in Pennsylvania and in effect on the date hereof (the "Uniform Commercial Code")
shall have the meanings ascribed to them therein, unless the context requires
otherwise.
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NOW, THEREFORE, intending to be legally bound, the Debtors and the Agent
hereby agree as follows:
Section 1. Creation of Security Interest. PCI Services, as security for its
obligations under the Loan Agreement, whether now existing or hereafter
incurred, or under any guaranty hereafter executed in connection with such
obligations under the Loan Agreement, and the other Debtors, as security for all
of their obligations under their Guaranty of the obligations under the Loan
Agreement, each hereby pledge and assign to the Agent, for the benefit of the
Banks, and grant to the Agent for the benefit of the Banks, a first priority
lien and security interest in and to the property hereinafter described, whether
now owned or hereafter acquired or arising and wherever located ("Collateral"):
All tangible and intangible personal property of the Debtor, including
but not limited to:
(a) all accounts, accounts receivable, rights under contracts, chattel
paper, instruments, and all obligations due the Debtor for goods sold or to
be sold, consigned or leased or to be leased, or services rendered or to be
rendered ("Accounts");
(b) all inventory, whether raw materials, work-in- process, finished
goods, parts or supplies or otherwise; all goods, merchandise and other
property held for sale or lease or to be furnished under any contract of
service; all documents of title covering any goods which are or are to
become inventory and any such goods which are leased or consigned to others
and all returned, reclaimed or repossessed goods sold, consigned, leased or
otherwise furnished by each Debtor to others ("Inventory");
(c) all leases and rental agreements for personal property between the
Debtor as lessor (whether by origination or derivation) and any and all
persons or parties as lessee(s), and all rentals, purchase option amounts,
and other sums due thereunder; and all inventory, equipment, goods and
property subject to such leases and rental agreements and all accessions,
parts and tools attached thereto or used therewith and all of the Debtor's
residual or reversionary rights therein;
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(d) all machinery, equipment, furniture, fixtures, tools, and all
accessories, parts and equipment now or hereafter attached thereto or used
in connection therewith, whether or not the same shall be deemed affixed to
real property, and all other tangible personal property ("Equipment");
(e) all general intangibles, which term shall have the meaning given
to it in the Uniform Commercial Code and shall additionally include but not
be limited to all tax refunds, patents, trademarks, service marks,
tradenames, copyrights and other intellectual property and proprietary
rights;
(f) all the property listed on any Schedule of Collateral attached to
this Security Agreement and any other such schedule hereafter made a
schedule to this Agreement;
(g) all additions, replacements, attachments, accretions, accessions,
components and substitutions to or for any Inventory or Equipment;
(h) all property of the Debtor, including without limitation, monies,
securities, instruments, chattel paper and documents, which at any time the
Agent or any Bank shall have or have the right to have in its possession,
or which is in transit to it (pursuant to the terms of a letter of credit
or otherwise) and, independent of and in addition to the rights of setoff
of the Agent or any Bank (which the Debtor acknowledges), the balance of
any account or any amount which may be owing from time to time by the Agent
or any Bank to the Debtor;
(i) all books and records evidencing or relating to the foregoing,
including, without limitation, billing records of every kind and
description, customer lists, data storage and processing media, software
and related material, including computer programs, computer tapes, cards,
disks and printouts, and including any of the foregoing which are in the
possession of any affiliate or any computer service bureau; and
(j) all proceeds, which term shall have the meaning given to it in the
Uniform Commercial Code and shall additionally include but not be limited
to, whatever is received upon the use, lease, sale, exchange, collection or
other utilization or any disposition of any of the collateral
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<PAGE>
described in subparagraphs (a) through (i) above, whether cash or noncash,
and including without limitation, rental or lease payments, accounts,
chattel paper, instruments, documents, contract rights, general
intangibles, equipment, inventory and insurance proceeds; and all such
proceeds of the foregoing ("Proceeds").
Section 2. Representations and Warranties. Each Debtor, as of the date
hereof and at the time of each advance or extension of credit under the Loan
Agreement, represents and warrants as follows:
2.01 Good Title to Collateral. Each Debtor has good and marketable
title to the Collateral free and clear of all liens and encumbrances other
than the security interests granted hereunder and the Permitted
Encumbrances, as defined in the Loan Agreement.
2.02 Location of Books and Records. The locations of the offices where
each Debtor maintains its books and records concerning the Collateral are
as set forth in Exhibit A or at the location(s) hereafter disclosed to the
Agent pursuant to Section 4.10 hereof.
2.03 Chief Executive Office. The chief executive offices of each
Debtor are at the address set forth in Exhibit A or at the location(s)
hereafter disclosed to the Agent pursuant to Section 4.10 hereof
2.04 Location of Inventory and Equipment. All Inventory and Equipment
of each Debtor is located at one or more of the addresses set forth in
Exhibit A or at the location(s) hereafter disclosed to the Agent pursuant
to Section 4.10 hereof.
2.05 Other Representations. Each representation, warranty or other
statement by any Debtor in the Loan Agreement and any of the Related
Documents is true and correct in all material respects and states all
material facts necessary to make it not misleading.
Section 3 Collection, Disposition and Use of Collateral.
3.01 Accounts.The Agent on behalf of the Banks hereby authorizes the
Debtors to collect all Accounts from the account debtors. The Proceeds of
Accounts so collected by the Debtors shall be received and held by the
Debtors in trust for the Agent for the benefit of the Banks but may be
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applied by the Debtors in their discretion towards payment of the
Obligations or other corporate purposes. Upon the occurrence of a Default
as set forth in Section 6 hereof, the authority hereby given to the Debtors
to collect the Proceeds of Accounts may be terminated by the Agent at any
time and Agent shall have the right at any time thereafter, acting if it so
chooses in any Debtor's name, to collect Accounts itself, to sell, assign,
compromise, discharge or extend the time for payment of any Account, and to
do all acts and things necessary or incidental thereto and the Debtors
hereby ratify all such acts. Upon the occurrence of a Default as set forth
in Section 6 hereof, at the Agent's request, the Debtors will notify
account debtors and any guarantor thereof that the Accounts payable by such
account debtors have been assigned to the Agent for the benefit of the
Banks and shall indicate on all billings to account debtors that payments
thereon are to be made to the Agent.
3.02 Inventory. So long as there has been no Default hereunder, each
Debtor shall be permitted to process and sell its Inventory, but only to
the extent that such processing and sale are conducted in the ordinary
course of the Debtor's business.
3.03 Equipment. So long as there has been no Default hereunder, each
Debtor shall be permitted to use its Equipment in the ordinary course of
its business. No sale, lease or other disposition of any item of Equipment
valued at more than $100,000 shall be permitted, except in accordance with
such terms and conditions as the Agent shall have expressly approved in
writing and except for the sale or other disposition of obsolete Equipment
which is no longer used or useful in the Debtor's business.
Section 4. Covenants and Agreements of the Debtors.
4.01 Maintenance and Inspection of Books and Records. Each Debtor
shall maintain complete and accurate books and records and shall make all
necessary entries therein to reflect the costs, values and locations of its
Inventory and Equipment and the transactions and documents giving rise to
its Accounts and all payments, credits and adjustments thereto. Each Debtor
shall
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<PAGE>
keep the Agent fully informed as to the location of all such books and
records and shall permit the Agent and its authorized agents to have full,
complete and unrestricted access thereto at any reasonable time upon prior
notice and to inspect, audit and make copies of all books and records, data
storage and processing media, software, printouts, journals, orders,
receipts, invoices, correspondence and other documents and written or
printed matter related to any of the Collateral. The Agent's rights
hereunder shall be enforceable at law or in equity, and each Debtor
consents to the entry of judicial orders or injunctions enforcing specific
performance of such obligations hereunder.
4.02 Confirmation of Accounts. Each Debtor agrees that the Agent shall
reasonably at all times have the right to confirm orders and to verify any
or all of the Debtor's Accounts in the Agent's name, or in any fictitious
name used by the Agent's for verifications, or through any public
accountants.
4.03 Delivery of Accounts Documentation. At such intervals as the
Agent shall require, each Debtor shall deliver to the Agent copies of
purchase orders, invoices, contracts, shipping and delivery receipts and
any other document or instrument which evidences or gives rise to an
Account.
4.04 Physical Inspection of Inventory and Equipment. Each Debtor shall
permit the Agent and their authorized agents to inspect any or all of the
Debtor's Inventory and Equipment at all reasonable times upon prior notice,
provided no prior notice shall be required upon an Event of Default.
4.05 Notice of the Agent's Interests. If requested by the Agent, the
Debtors shall give notice of the security interests in the Collateral of
the Agent for the benefit of the Banks to any third person with whom any
Debtor has any actual or prospective contractual relationship or other
business dealings.
4.06 Delivery of Certain Accounts and Documents to the Agent.
Immediately upon receipt of any instrument, chattel paper, document of
title (including bills of lading and warehouse receipts), the Debtors shall
deliver such Collateral to the Agent and shall execute any form of
assignment requested by the Agent with respect thereto.
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4.07 Accounts Agings. Each Debtor shall furnish the Agent and the
Banks with agings of its Accounts in such form and detail and at such
intervals as the Agent may from time to time reasonably require.
4.08 Government Accounts. The Debtors shall immediately provide
written notice to the Agent of any and all Accounts which arise out of
contracts with the United States or any department, agency or
instrumentality thereof, and shall execute and deliver to the Agent for the
benefit of the Banks an assignment of claims for such Accounts and
cooperate with the Agent in taking any other steps required, in the Agent's
judgment, to perfect or continue the perfected status of the security
interest of the Agent for the benefit of the Banks in such Accounts and
proceeds thereof under the Federal Assignment of Claims Act.
4.09 Insurance of Collateral. Each Debtor shall keep its collateral
insured in accordance with Section 12.1(h) of the Loan Agreement. The Agent
and the Banks shall have the right (but shall be under no obligation) to
pay any of the premiums on such insurance. Any premiums paid by the Agent
and the Banks shall, if the Secured Party so elects, be considered an
advance at the highest rate of interest provided in the Loan Agreement, and
all such accrued interest shall be payable on demand. Any credit insurance
covering Accounts shall name the Agent as loss payee. Each Debtor expressly
authorizes its insurance carriers to pay proceeds of all insurance policies
covering any or all of the Collateral directly to the Agent for the benefit
of the Banks.
4.10 New Locations of Collateral and Books and Records. Each Debtor
shall immediately notify the Agent of any change in the location of its
chief executive office, of any new or additional address where its books
and records concerning the Collateral are located and of any new locations
of Inventory or Equipment not specified in Sections 2.02, 2.03 or 2.04 of
this Security Agreement, and if any such location is on leased or mortgaged
premises, promptly furnish the Agent with landlord's or mortgagee's waivers
in form and substance satisfactory to the Agent.
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4.11 Perfection of the Secured Party's Interests. Each Debtor agrees
to cooperate and join, at its expense, with the Agent in taking such steps
as are necessary, in the Agent's judgment, to perfect or continue the
perfected status of the security interests granted hereunder, including,
without limitation, the execution and delivery of any financing statements,
amendments thereto and continuation statements, the delivery of chattel
paper, documents or instruments to the Agent, the obtaining of landlords'
and mortgagees' waivers required by the Agent, the notation of encumbrances
in favor of the Agent for the benefit of the Banks on certificates of
title, and the execution and filing of any collateral assignments and any
other instruments requested by the Agent to perfect its security interest
in any and all of any Debtor's patents, trademarks, service marks,
tradenames, copyrights and other general intangibles. The Agent is
expressly authorized to file financing statements without the signature of
such Debtor.
4.12 Maintenance of Inventory and Equipment. Each Debtor shall care
for and preserve the Inventory and Equipment in good condition and repair,
and will pay the cost of all replacement parts, repairs to and maintenance
of the Equipment in accordance with past practices. Each Debtor will keep
complete and accurate maintenance records with respect to its Equipment.
4.13 Notification of Adverse Change in Collateral. Each Debtor agrees
immediately to notify the Agent if any event occurs or is discovered which
would cause any material diminution in the value of any significant item or
type of Collateral.
4.14 Reimbursement and Indemnification. Each Debtor agrees to
reimburse the Agent and the Banks on demand for reasonable out-of-pocket
expenses incurred in connection with the Agent's or any Bank's exercise of
its rights under this Security Agreement. Each Debtor agrees to indemnify
the Agent and the Banks and hold them harmless against any reasonable
costs, expenses, losses, damages and liabilities (including reasonable
attorney's fees) incurred in connection with this Security Agreement, other
than as a direct result of the Agent's or any Bank's gross negligence or
willful misconduct.
Section 5. Power of Attorney. Each Debtor hereby appoints the Agent as its
lawful attorney-in-fact to do, at the Agent's option, and at the Debtor's
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expense and liability, all acts and things which the Agent may deem necessary or
desirable to effectuate its rights under this Security Agreement, including
without limitation, (a) file financing statements and otherwise perfect any
security interest granted hereby, (b) correspond and negotiate directly with
insurance carriers, (c) upon the occurrence of a Default hereunder, receive,
open and dispose of in any reasonable manner all mail addressed to the Debtor
and notify Postal Service authorities to change the address for mail addressed
to the Debtor to an address designated by the Agent's, (d) upon the occurrence
of a Default hereunder, communicate with account debtors and other third parties
for the purpose of protecting or preserving the Collateral, and (e) upon the
occurrence of a Default hereunder, in any Debtor's, the Agent's or any Bank's
name, to demand, collect, receive, and receipt for, compound, compromise, settle
and give acquittance for, and prosecute and discontinue or dismiss, with or
without prejudice, any suit or proceeding respecting any of the Collateral.
Section 6. Default. The occurrence of any one or more of the following
shall be a default ("Default") hereunder:
6.01 Default Under Loan Agreement. The occurrence of an Event of
Default under the Loan Agreement or any of the Related Documents.
6.02 Failure to Observe Covenants. The failure of any Debtor to keep,
observe or perform any provisions of this Security Agreement which failure
is not cured and remedied within fifteen (15) days after notice thereof is
given to the Debtors.
6.03 Representations, Warranties. If any representation or warranty
made herein or certificate furnished by any Debtor pursuant to this
Security Agreement shall at any time when made, be proven to be materially
false or incorrect.
Section 7. Secured Party's Rights Upon Default. Upon the occurrence of a
Default hereunder, or at any time thereafter, at the request of the Bank, the
Agent may immediately and without notice do any or all of the following, which
rights and remedies are cumulative, may be exercised from time to time, and are
in addition to any rights and remedies available to the Agent under the Loan
Agreement or any other Loan Document:
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7.01 Uniform Commercial Code Rights. Exercise any and all of the
rights and remedies of a secured party under the Uniform Commercial Code,
including the right to require any or all of the Debtors to assemble the
Collateral and make it available to the Agent at a place reasonably
convenient to the parties.
7.02 Operation of Collateral. Operate, utilize, recondition and/or
refurbish (at the Agent's sole option and discretion and in any manner) any
of the Collateral which is Equipment, for the purpose of enhancing or
preserving the value thereof or the value of any other Collateral.
7.03 Notification of Account Debtors. Notify the account debtors for
any of the Accounts that such Accounts have been assigned to the Agent for
the benefit of the Banks and that payments are to be made directly to the
Agent, or to such post office box as the Agent may direct. No Debtor shall
compromise, discharge, extend the time for payment or otherwise grant any
indulgence or allowance with respect to any Account without the prior
written consent of the Agent.
7.04 Sale of Collateral. Upon five (5) calendar days' prior written
notice to the Debtors, which each Debtor hereby acknowledges to be
sufficient, commercially reasonable and proper, sell, lease or otherwise
dispose of any or all of the Collateral at any time and from time to time
at public or private sale, with or without advertisement thereof and apply
the proceeds of any such sale first to the expenses in preparing the
Collateral for sale (including reasonable attorneys' fees) and second to
the payment of the Obligations. Each Debtor waives the benefit of any
marshalling doctrine with respect to the Agent's exercise of its rights
hereunder. Each Debtor grants a royalty-free license to the Agent for the
benefit of the Banks for all patents, service marks, trademarks,
tradenames, copyrights, computer programs and other intellectual property
and proprietary rights sufficient to permit the Agent to exercise all
rights granted to the Agent under this Section.
Section 8. Notices. Any written notices required or permitted by this
Security Agreement shall be effective if delivered in accordance with Section
21.4 of the Loan Agreement.
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Section 9. Miscellaneous.
9.01 No Waiver. No delay or omission by the Agent or the Banks in
exercising any right or remedy hereunder shall operate as a waiver thereof
or of any other right or remedy, and no single or partial exercise thereof
shall preclude any further exercise thereof or the exercise of any other
right or remedy.
9.02 Preservation of Rights. Neither the Agent nor the Banks shall
have any obligation or responsibility to take any steps to enforce or
preserve rights against any parties to any Account and such obligation and
responsibility shall be those of the Debtors exclusively.
9.03 Successors. The provisions of this Security Agreement shall inure
to the benefit of and be binding upon the respective successors and assigns
of the parties, provided that the obligations of the Debtors hereunder may
not be assigned without the written consent of the Agent.
9.04 Amendments. No modification, rescission, waiver, release or
amendment of any provisions of this Security Agreement shall be effective
unless set forth in a written agreement signed by each Debtor and an
authorized officer of the Agent.
9.05 Governing Law. This Security Agreement shall be construed under
the internal laws of the Commonwealth of Pennsylvania without reference to
conflict of laws principles.
9.06 Severability. If any provision of this Security Agreement shall
be held invalid or unenforceable under applicable law in any jurisdiction,
such invalidity or unenforceability shall not affect the validity or
enforceability of such provision in any other jurisdiction or the validity
or enforceability of any other provision of this Security Agreement that
can be given effect without such invalid or unenforceable provision.
9.07 Judicial Proceedings. Each party to this Agreement agrees that
any suit, action or proceeding, whether claim or counterclaim, brought or
instituted by any party hereto or any successor or assign of any
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party, on or with respect to this Agreement or the dealings of the parties
with respect hereto, shall be tried only by a court and not by a jury. EACH
PARTY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT TO A
TRIAL BY JURY IN ANY SUCH SUIT, ACTION OR PROCEEDING. Further, each party
waives any right it may have to claim or recover, in any such suit, action
or proceeding, any special, exemplary, punitive or consequential damages or
any damages other than, or in addition to, actual damages. EACH DEBTOR
ACKNOWLEDGES AND AGREES THAT THIS PARAGRAPH IS A SPECIFIC AND MATERIAL
ASPECT OF THIS AGREEMENT AND THAT THE AGENT AND THE BANKS WOULD NOT EXTEND
CREDIT TO THE DEBTORS IF THE WAIVERS SET FORTH IN THIS PARAGRAPH WERE NOT A
PART OF THIS AGREEMENT.
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IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement
to be executed and delivered by their authorized officers the day and year first
above written.
PCI SERVICES, INC.
By:__________________________
Title:
PACKAGING COORDINATORS, INC.
By:__________________________
Title:
PCI OF VIRGINIA, INC.
By:__________________________
Title:
PCI/DELVCO, INC.
By:__________________________
Title:_______________________
PCI/TRI-LINE (USA), INC.
By:__________________________
Title
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PCI HOLDINGS, INC.
By:__________________________
Title:
P.C. REALTY, INC.
By:__________________________
Title:
CORESTATES BANK, as Agent
By:__________________________
Title:_______________________
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LOAN AND AGENCY AGREEMENT
among
PCI SERVICES, INC.
PACKAGING COORDINATORS, INC.
PCI HOLDINGS, INC.
PCI OF VIRGINIA, INC.
PCI/DELVCO, INC.
PCI/TRI-LINE (USA), INC.
P.C. REALTY, INC.
and
THE BANKS LISTED HEREIN
AND
MERIDIAN BANK, AS AGENT
Dated as of February 28, 1996
<PAGE>
TABLE OF CONTENTS
Article Page
- ------- ----
I. Definitions.................................................... 1
II. Credit Accommodations............................................... 12
2.1 The Revolving Credit......................................... 12
2.2 Term Loans................................................... 15
2.3 The Equipment Facility....................................... 17
2.4 Method of Borrowing.......................................... 19
2.5 Interest..................................................... 21
2.6 Conversion and Continuation of Loans......................... 24
2.7 Special Provisions Applicable to the Adjusted
LIBOR Rate................................................... 24
2.8 Repayment.................................................... 26
2.9 Prepayment................................................... 28
2.10 Requirements of Law; Changes in Circumstances;
Yield Protection............................................ 28
2.11 Tax Withholding.............................................. 29
2.12 Joint and Several Liability.................................. 30
III. Security............................................................ 31
3.1 Security Documents........................................... 31
IV. Representations and Warranties of the Borrowers..................... 31
4.1 Good Standing of the Borrowers; Authorization................ 31
4.2 Compliance with Laws; Permits Licensees...................... 31
4.3 No Conflict; Governmental Approvals.......................... 32
4.4 Financial and Other Information Regarding
Borrowers.................................................... 32
4.5 Taxes........................................................ 32
4.6 Encumbrances and Guaranties.................................. 33
4.7 Material Adverse Changes..................................... 33
4.8 Margin Securities............................................ 33
4.9 ERISA........................................................ 33
4.10 Pending Litigation........................................... 33
4.11 Valid, Binding and Enforceable............................... 34
4.12 Priority of Mortgage......................................... 34
4.13 Priority of Security Interests............................... 34
4.14 Environmental Matters........................................ 34
4.15 No Untrue Statements......................................... 35
4.16 Solvency .................................................... 35
V. Conditions Precedent to the Obligations of the Agent
and the Banks............................................... 35
5.1 Documents to be Delivered by the Borrowers
at Closing.................................................. 35
5.2 Conditions Precedent to Making Loans......................... 37
VI. Affirmative Covenants of the Borrowers.............................. 37
6.1 Use of Proceeds.............................................. 37
6.2 Financial Statements......................................... 37
6.3 Ordinary Course of Business; Records......................... 38
6.4 Information for the Agent and Banks.......................... 39
(i)
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Article Page
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6.5 Insurance.................................................... 39
6.6 Maintenance.................................................. 40
6.7 Taxes/Other Charges.......................................... 40
6.8 Leases....................................................... 40
6.9 Corporate Existence; Certain Rights; Laws.................... 40
6.10 Notice of Litigation or Other Proceedings.................... 40
6.11 Indebtedness................................................. 40
6.12 Notice of Events of Default.................................. 41
6.13 ERISA........................................................ 41
6.14 Deposit Accounts............................................. 41
6.15 Financial Covenants.......................................... 41
6.16 Compliance with Environmental Laws........................... 41
6.17 Further Actions ............................................. 41
6.18 Subsidiary Group Covenants................................... 42
6.19 Packaging Coordinators Mortgage.............................. 42
6.20 Acquisition.................................................. 42
6.21 Perfection of Stock.......................................... 42
6.22 Management................................................... 42
6.23 Corporate Documents.......................................... 42
6.24 Delivery of Collateral....................................... 42
VII. Negative Covenants.................................................. 43
7.1 Fundamental Corporate Changes................................ 43
7.2 Indebtedness................................................. 43
7.3 Encumbrances................................................. 44
7.4 Guaranties................................................... 45
7.5 Sales and Lease-Backs........................................ 45
7.6 Loans, Investments........................................... 45
7.7 Change in Business........................................... 45
7.8 Sale or Discount of Receivables.............................. 45
7.9 ERISA........................................................ 45
7.10 Restricted Payments.......................................... 46
7.11 Management and Service Fees.................................. 46
7.12 Compliance with Federal Reserve Board
Regulations.................................................. 46
VIII. Events of Default................................................... 47
8.1 Failure to Pay............................................... 47
8.2 Breach of Covenants or Conditions............................ 47
8.3 Defaults in Other Agreements................................. 47
8.4 Agreements Invalid........................................... 47
8.5 False Warranties; Breach of Representations.................. 47
8.6 Judgments.................................................... 47
8.7 Bankruptcy or Insolvency of the Borrowers.................... 48
8.8 Attachments.................................................. 48
8.9 PCI Services Change in Control............................... 48
IX. Remedies............................................................ 49
9.1 Further Advances; Acceleration; Setoff....................... 49
9.2 Further Remedies............................................. 50
X. Agency Agreement.................................................... 50
10.1 Appointment and Authorization................................ 50
10.2 Duties and Obligations....................................... 51
10.3 The Agent as a Bank.......................................... 52
10.4 Independent Credit Decisions................................. 52
(ii)
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Article Page
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10.5 Indemnification.............................................. 53
10.6 Successor Agent.............................................. 53
10.7 Additional Agents............................................ 53
10.8 Allocations Made by Agent.................................... 54
10.9 Liquidation.................................................. 54
10.10 Sharing of Collections....................................... 54
10.11 Survival..................................................... 55
XI. Miscellaneous....................................................... 55
11.1 Remedies Cumulative; No Waiver............................... 55
11.2 Notices...................................................... 55
11.3 Costs, Expenses and Attorneys' Fees.......................... 56
11.4 Survival of Covenants........................................ 56
11.5 Counterparts; Effectiveness.................................. 56
11.6 Headings..................................................... 57
11.7 Payment Due On A Day Other Than a Business Day............... 57
11.8 Judicial Proceedings......................................... 57
11.9 Governing Law................................................ 57
11.10 Integration.................................................. 57
11.11 Amendment and Waiver......................................... 57
11.12 Successors and Assigns....................................... 58
11.13 Severability of Provisions................................... 61
11.14 Consent to Jurisdiction and Service of Process............... 61
11.15 Indemnification.............................................. 61
(iii)
<PAGE>
LOAN AND AGENCY AGREEMENT
THIS LOAN AND AGENCY AGREEMENT (this "Agreement"), dated as of
February 28, 1996, is between PCI SERVICES, INC., a Delaware corporation ("PCI
Services"), PACKAGING COORDINATORS, INC., a Pennsylvania corporation ("Packaging
Coordinators"), PCI OF VIRGINIA, INC., a Delaware corporation ("Virginia"),
PCI/DELVCO, INC., a Delaware corporation ("Delvco"), PCI/TRI-LINE (USA), INC., a
Delaware corporation ("PCI/Tri-Line"), PCI HOLDINGS, INC., a Delaware
corporation ("Holdings"), and P.C. REALTY, INC., a Delaware corporation
("Realty"; together with PCI Services, Packaging Coordinators, Virginia, Delvco,
PCI/Tri-Line and Holdings, collectively referred to as the "Borrowers," and
individually a "Borrower"), the Banks parties hereto from time to time, and
MERIDIAN BANK, as Agent for the Banks (in such capacity, the "Agent").
BACKGROUND
The Banks, the Agent and the Borrowers desire to set forth the
terms and conditions under which the Banks will make available to the Borrowers
certain credit facilities to be used for the purposes specified in this
Agreement. Accordingly, the Banks, the Agent and the Borrowers, each intending
to be legally bound hereby, agree as follows:
ARTICLE I
DEFINITIONS
Terms used herein without definition that are defined in the
Uniform Commercial Code shall have the meanings ascribed to them therein, unless
the context requires otherwise. The following terms shall have the following
meanings in this Agreement:
"Acquisition" shall mean the acquisition by PCI Services of
all the Shares pursuant to the Acquisition Agreements and the other transactions
set forth therein.
"Acquisition Agreements" shall mean collectively, (i) the
Agreement for the Sale and Purchase of Shares of Unipack Limited between PCI
Services and P. Speirs and Others; (ii) the Option Agreement Re: Shares in
Unipack Limited among, inter alia, Robert Fleming Investment Trust Limited and
PCI Services; and (iii) the Option Agreement Re: Shares in Unipack Limited
between L. Gillam and PCI Services, together with all exhibits, amendments,
modifications schedules and supplements thereto as may be in effect from time to
time.
"Acquisition Guaranty" shall mean the Guaranty, dated
the same date of this Agreement, by PCI Acquisition I, Inc. and
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PCI Acquisition II, Inc., both Delaware corporations, as guarantors, together
with all amendments, modifications, exhibits and schedules thereto as may be in
effect from time to time.
"Adjusted LIBOR Rate" shall mean the interest rate equal to
the sum of LIBOR plus the applicable Adjustment Factor and shall be calculated
on the basis of a 360-day year, counting the actual number of days elapsed.
"Adjusted LIBOR Rate Loan" shall mean any Loan accruing
interest at the Adjusted LIBOR Rate.
"Adjusted Prime Rate" shall mean the interest rate equal to
the sum of the Prime Rate plus the applicable Adjustment Factor and shall be
calculated on the basis of a 360-day year.
"Adjusted Prime Rate Loan" shall mean any Loan accruing
interest at the Adjusted Prime Rate.
"Adjustment Factor" shall have the meaning set forth in
Section 2.5 of this Agreement.
"Affiliate" shall mean any Subsidiary of any Borrower and any
Person or entity that, now or hereafter, directly or indirectly through one or
more intermediaries, controls, is controlled by or is under common ownership or
control with any Borrower. For purposes of this definition, the terms "control,"
"controls" and "controlled" shall refer to the power to determine the management
or policies of a Person, whether resulting from an official position or capacity
with such Person, direct or indirect beneficial ownership of at least ten
percent (10%) of the voting securities or other equity interests of such Person,
or otherwise.
"Agent" shall have the meaning set forth in the initial
paragraph of this Agreement, together with its successors and assigns.
"Agreement" shall mean this agreement, together with all
exhibits, amendments, modifications and supplements hereto as may be in effect
from time to time.
"Allpack Holdings" shall mean PCI/Allpack Holdings,
Inc., a Delaware corporation.
"Allpack Holdings Pledge Agreement" shall mean the pledge
agreement between Allpack Holdings as pledgor and the Agent as pledgee, dated as
of the same date of this Agreement, by which the stock of Allpack Industrielle
Lohnverpackung GMBH, shall be pledged to the Agent for the benefit of the Banks,
together with all amendments, modifications, exhibits and schedules thereto as
may be in effect from time to time.
"Applicable Law" shall mean all applicable provisions
of (i) constitutions, statutes, rules, regulations and orders of
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governmental authorities of any kind having jurisdiction over the Bank or any
Borrower, (ii) authorizations, consents, approvals, and licenses of such
governmental authorities, (iii) judgments, and (iv) common law and equity.
"Applicable Rate" shall mean the Fixed Rate or a Floating
Rate, as appropriate.
"Assignee" has the meaning set forth in Section 11.12(c) of
this Agreement.
"Banks" or "Bank" shall mean each bank listed on the signature
pages hereof, together with its or their successors and assigns, and each
Assignee which becomes a Bank pursuant to Section 11.12 of this Agreement.
"Borrowers" or "Borrower" shall have the meaning specified in
the initial paragraph of this Agreement, together with its or their successors
and assigns.
"Business Day" shall mean any day other than a Saturday,
Sunday, public holiday under the laws of the Commonwealth of Pennsylvania or
other day on which banking institutions are authorized or obligated to close in
the City of Philadelphia and the City in which is located the office of any
successor Agent.
"Capital Lease" shall mean any lease of property which, in
accordance with GAAP, should be capitalized on the lessee's balance sheet.
"Capital Lease Obligation" shall mean the amount of the
liability which, according to GAAP, should be capitalized or disclosed with
respect to a Capital Lease.
"Closing" shall mean the execution and delivery to the Agent
and the Banks of all of the documents and instruments required by the terms of
this Agreement and the closing of the loan transactions contemplated by this
Agreement.
"Closing Date" shall mean the date on which the Closing
takes place.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and all rules and regulations with respect thereto in effect from time
to time.
"Collateral" shall have the meaning set forth in the Security
Agreement and shall also include the "Mortgaged Property" as defined in the
Mortgage and the Pledged Stock as set forth in the Pledge Agreements.
"Commitment" as to any Bank shall mean its Revolving Credit
Commitment, Term Loan Commitment and Equipment Facility Commitment;
collectively, as to all Banks, the "Commitments".
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"Commitment Percentage" of a Bank at any time shall mean the
Commitment Percentage for such Bank set forth below its name on the signature
page hereof, subject to transfer to another Bank as provided in Section 11.12 of
this Agreement.
"Consolidated Group" shall mean PCI Services and its direct
and indirect Subsidiaries.
"CoreStates" shall mean CoreStates Bank, N.A., a
national banking association.
"Covenant Compliance Certificate" shall mean a certificate
completed by an authorized officer of PCI Services on behalf of the Borrowers
and submitted to the Agent substantially in the form of Exhibit "A" of this
Agreement.
"Default Rate" shall mean the highest Applicable Rate as set
forth in Section 2.5 of this Agreement plus three percent (3%), provided such
interest rate shall not exceed the highest rate permitted by law.
"Delvco" shall have the meaning set forth in the initial
paragraph of this Agreement.
"Encumbrance" shall mean, as to any Person, any mortgage,
lien, pledge, adverse claim, charge, security interest or other encumbrance
(statutory or otherwise) in or on, or any interest or title of any vendor,
lessor, lender to, or other secured party of the Person under any conditional
sale or other title retention agreement or Capital Lease with respect to, any
property or asset of the Person, including any agreement to give any of the
foregoing.
"Environmental Laws" shall mean the Federal Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. ss. 9601
et. seq., the Federal Resource Conservation and Recovery Act, 42 U.S.C. ss.
6901 et. seq., the Hazardous Materials Transportation Act, 49 U.S.C. ss.
1801, et. seq., all other federal, state and local environmental or health laws
applicable to any Borrower or its business, operations or assets now or
hereafter enacted, and all rules, regulations, orders and publications adopted
or promulgated pursuant thereto from time to time.
"Equipment Facility" shall mean the equipment facility
established pursuant to Section 2.3 of this Agreement.
"Equipment Facility Commitment" as to any Bank shall mean its
obligation to make Equipment Facility Loans to the Borrowers pursuant to Section
2.3 hereof in the amount set forth as its Equipment Facility Commitment below
its name on the signature pages hereof, subject to transfer to or purchase from
another Bank, as provided in Section 11.12 of this Agreement; and collectively,
as to all Banks, the "Equipment Facility Commitments."
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"Equipment Facility Loans" or "Equipment Facility Loan" shall
mean the loans made by the Banks to the Borrowers pursuant to the Equipment
Facility.
"Equipment Facility Notes" or "Equipment Facility Note" shall
have the meaning set forth in Section 2.3(c) of this Agreement, together with
all replacements, amendments and renewals thereof.
"Equipment Facility Termination Date" shall have the meaning
set forth in Section 2.3(a) of this Agreement, or such later date to which such
date is extended in writing by the Banks.
"Equipment Term Loans" or "Equipment Term Loan" shall have the
meaning set forth in Section 2.3(a) of this Agreement.
"Equipment Term Notes" or "Equipment Term Note" shall have the
meaning set forth in Section 2.3(e) of this Agreement, together with all
replacements, amendments and renewals thereof.
"ERISA" shall mean the federal Employee Retirement Income
Security Act of 1974, as amended.
"Eurodollar Business Day" shall mean any day on which relevant
London international financial markets are open for dealings in deposits of U.S.
Dollars and which is also a Business Day.
"Event of Default" shall have the meaning set forth in Article
VIII of this Agreement.
"Existing Indebtedness" shall mean the Indebtedness to
Meridian as set forth on Exhibit "B" of this Agreement.
"Existing Letters of Credit" shall mean those letters of
credit issued by Meridian to Travelers Insurance Company in the amounts of
$1,800,000 and $857,000.
"Facilities Agreement" shall mean the Facilities Agreement
among CoreStates as Agent, the banks identified therein, and the Borrowers and
Guarantors named therein, as the same may be amended from time to time.
"Federal Funds Rate" shall mean, for any day, the rate per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day, provided that if the day for which such rate is to be
determined is not a Business Day, the Federal Funds Rate for such day shall be
such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day.
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<PAGE>
"Federal Reserve Board" shall mean the Board of Governors of
the United States Federal Reserve System.
"Financial Statements" shall have the meaning set forth in
Section 4.4(a) of this Agreement.
"Fixed Rate" shall mean a fixed rate of interest quoted to the
Borrowers by the Agent and selected by the Borrowers with respect to the Term
Loan in accordance with Section 2.2(b) of this Agreement, or with respect to an
Equipment Term Loan in accordance with Section 2.3(f) of this Agreement.
"Floating Rate" shall mean, with respect to any Outstandings,
the Adjusted Prime Rate or the Adjusted LIBOR Rate determined in accordance with
Section 2.5 of this Agreement, as the case may be.
"GAAP" shall mean generally accepted accounting principles, as
in effect at the time of application to the provisions hereof, and consistently
applied.
"Guarantor" shall mean any Person who guarantees the
payment and performance of all or any part of the Obligations.
"Guaranty" shall mean any guaranty or agreement to be a surety
or other contingent liability (other than any endorsement for collection or
deposit in the ordinary course of business), direct or indirect, with respect to
any obligation of another Person.
"Hazardous Materials" shall mean all materials of any kind
which are flammable, explosive, toxic, radioactive or otherwise hazardous to
animal or plant life or the environment, including, without limitation,
"hazardous wastes," "hazardous substances" and "contaminants," as such terms are
defined by Environmental Laws.
"Holdings" shall have the meaning set forth in the initial
paragraph of this Agreement.
"Indebtedness" shall mean any obligation for borrowed money
(other than accounts payable included in current liabilities and incurred in
respect of goods, materials, services and property purchased in the ordinary
course of business), including, without limitation: (a) any obligation owed for
all or any part of the purchase price of property or other assets or for the
cost of property or other assets constructed or of improvements thereto; and (b)
any Capital Lease Obligation.
"Interest Period" shall mean, with respect to any Adjusted
LIBOR Rate Loan, a period of 30, 60, 90, 120 or 180 days duration as the
Borrowers may elect; provided, however, that (a) if any Interest Period would
otherwise end on a day which shall not be a Eurodollar Business Day, such
Interest Period shall be extended to the next succeeding Business Day, subject
to clauses
- 6 -
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(c) and (d) below; (b) interest shall accrue from and including the first day of
each Interest Period to, but excluding, the day on which such Interest Period
expires; (c) any Interest Period which would otherwise end on a day which is not
a Eurodollar Business Day shall be extended to the next succeeding Eurodollar
Business Day, unless such Eurodollar Business Day falls in another calendar
month, in which case such Interest Period shall end on the next preceding
Eurodollar Business Day; and (d) with respect to any Interest Period which
begins on the last Eurodollar Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar month at the end
of such Interest Period) the Interest Period shall end on the last Eurodollar
Business Day of a calendar month.
"Judgment" shall have the meaning set forth in Section 8.6 of
this Agreement.
"LIBOR" shall mean the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) determined by the Agent pursuant to the
following formula:
London InterBank Offered Rate
-----------------------------
LIBOR = 1 - Reserve Percentage
For purposes of this Agreement, the term "London InterBank Offered
Rate" shall mean, for any Interest Period, as applied to any Adjusted LIBOR Rate
Loan, the rate per annum determined by the Agent (which determination shall be
conclusive) as the rate at approximately 11:00 a.m. London time (or as soon
thereafter as practicable) two Eurodollar Business Days prior to the first day
of such Interest Period at which leading banks in the London InterBank Market
offer the Agent deposits of U.S. Dollars for a period and in an amount
comparable to the Interest Period and principal amount of such Adjusted LIBOR
Rate Loan.
"Loan Account" shall mean the deposit account 4148-7364 of
Packaging Coordinators maintained with the Agent, or such other deposit account
maintained with the Agent and agreed to be used for such purposes by the
Borrowers.
"Loan Documents" shall mean this Agreement, the Notes, the Security
Agreement, the Mortgage, the Pledge Agreements, the Acquisition Guaranty and all
agreements, amendments, certificates, financing statements, schedules, reports,
notices, and exhibits now or hereafter executed or delivered in connection with
any of the foregoing, as may be in effect from time to time.
"Loans" shall mean collectively, the Revolving Credit Loans,
the Term Loans, the Equipment Facility Loans and the Equipment Term Loans.
"Meridian" shall mean Meridian Bank, a Pennsylvania banking
corporation.
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"Mortgage" shall mean a mortgage, dated the same day as this
Agreement, in form and substance satisfactory to the Agent and the Banks, by
which Packaging Coordinators shall grant to the Agent for the benefit of the
Banks a mortgage lien on real property located at Pennsauken Township, New
Jersey, together with all amendments, modifications, exhibits and schedules
thereto as may be in effect from time to time.
"Notes" shall mean the Revolving Credit Notes, the Term Notes, the
Equipment Facility Notes and the Equipment Term Notes, and all replacements,
amendments, extensions and renewals thereof.
"Notice of Borrowing" shall mean an irrevocable notice provided to
the Agent on a Business Day in the form of Exhibit "C" of this Agreement and in
accordance with the time requirements set forth in Section 2.5 of this Agreement
such Notice to include: (i) the date of such borrowing, which shall be a
Business Day in the case of an Adjusted Prime Rate Loan or a Eurodollar Business
Day in the case of an Adjusted LIBOR Rate Loan, (ii) the aggregate amount of
such borrowing, (iii) whether the Loans comprising such borrowing are to be
Prime Rate Loans or Adjusted LIBOR Rate Loans, and (iv) in the case of an
Adjusted LIBOR Rate Loan, the duration of the Interest Period applicable
thereto, subject to the provisions of the definition of Interest Period.
"Obligations" shall mean the joint and several obligations and
liabilities of the Borrowers to the Agent and the Banks to pay the principal,
interest, fees, charges and expenses and any other liabilities of the Borrowers
to the Agent and the Banks under this Agreement, the Notes and the other Loan
Documents and all of the other liabilities of the Borrowers to the Agent and the
Banks, whether hereunder or otherwise, whether now existing or hereafter
incurred, whether or not evidenced by any note or other instrument, matured or
unmatured, direct, absolute or contingent, joint or several, including any
extensions, modifications, renewals thereof and substitutions therefor.
"Outstandings" shall mean the aggregate unpaid principal balance of
the Loans outstanding from time to time hereunder.
"Packaging Coordinators" shall have the meaning set forth in the
initial paragraph of this Agreement.
"PBGC" shall mean the Pension Benefit Guaranty Corporation and
any successor thereto.
"PCI Group" shall mean collectively, Packaging Coordinators,
Delvco, Virginia, Realty and PCI/Tri-Line.
"PCI Services" shall have the meaning set forth in the initial
paragraph of this Agreement.
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"PCI Services Pledge Agreement" shall mean the pledge agreement
between PCI Services as pledgor and the Agent as pledgee, dated as of the same
date as this Agreement, by which the stock of Packaging Coordinators, Holdings
and Allpack Holdings, shall be pledged to the Agent for the benefit of the
Banks, together with all amendments, modifications, exhibits and schedules
thereto as may be in effect from time to time.
"PCI/Tri-Line" shall have the meaning set forth in the initial
paragraph of this Agreement.
"Permitted Encumbrances" shall have the meaning set forth in
Section 7.3 of this Agreement.
"Person" shall mean any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization, joint
venture, court or governmental or political subdivision or agency thereof, or
other entity of whatever nature.
"Packaging Coordinators Pledge Agreement" shall mean the pledge
agreement between Packaging Coordinators as pledgor and the Agent as pledgee,
dated as of the same date as this Agreement, by which the stock of Virginia,
PCI/Tri-Line, Delvco, Packaging Coordinators Incorporated, Caribe and The
Tri-Line Co., Inc. shall be pledged to the Agent for the benefit of the Banks,
together with all amendments, modifications, exhibits and schedules thereto as
may be in effect from time to time.
"Pledge Agreements" shall mean collectively the PCI Services
Pledge Agreement, the Packaging Coordinators Pledge Agreement, the Virginia
Pledge Agreement, and the Allpack Holdings Pledge Agreement.
"Potential Default" shall mean any event, condition or circumstance
that with the giving of notice or lapse of time or both would become an Event of
Default.
"Prime Rate" shall mean for any day, the higher of the Federal
Funds Rate plus one-half of one percent (0.50%) or the floating annual rate of
interest that is designated and announced or published from time to time by the
Agent as its "National Commercial Rate" or "Prime Rate" and is used as a
reference rate with respect to interest rates charged to borrowers. The
determination and statement of the National Commercial Rate or Prime Rate shall
not in any way preclude the Banks from making loans to other borrowers at rates
which are higher or lower than the Prime Rate.
"Pro Rata Share" of each Bank shall mean a share proportional to
such Bank's Commitment Percentage.
"Realty" shall have the meaning set forth in the initial
paragraph of this Agreement.
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"Regulatory Change" means (a) the enactment or effectuation after
the date of this Agreement of any new, or change in any existing, Applicable
Law, (b) the adoption after such date of any new, or the adoption or other
effectuation after such date of any change in any existing, interpretation,
directive or request (whether or not having the force of law), or (c) any change
after such date in the administration or enforcement of any Applicable Law to
which the Agent is subject. As used in this definition, the "effectuation" of a
change shall include, without limitation, that consisting of or resulting from a
determination of a court or regulatory authority.
"Release" shall mean with respect to any Borrower, without
limitation, the presence, leaking, leaching, pouring, emptying, discharging,
spilling, using, generating, manufacturing, refining, transporting, treating, or
storing of Hazardous Materials at, into, onto, from or about its property or the
threat thereof, regardless of whether the result of an intentional or
unintentional action or omission.
"Required Banks" shall mean the holders of Notes under which the
Outstandings are not less than sixty-six and two-thirds percent (66 2/3%) of the
Outstandings under all of the Notes, or, if there are no Outstandings, the Banks
having sixty-six and two-thirds percent (66 2/3%) of the Commitments.
"Reserve Percentage" shall mean, for any Adjusted LIBOR Rate Loan
for any Interest Period therefor, the daily average of the stated maximum rate
(expressed as a decimal) at which reserves (including, without limitation, any
basic, supplemental, marginal or emergency reserves) are required to be
maintained during such Interest Period against Eurocurrency liabilities (as that
term is defined in Regulation D of the Federal Reserve Board), as prescribed by
the Federal Reserve Board (or any successor or any other banking authority to
which Meridian is subject, including any board or governmental or administrative
agency of the United States or any other jurisdiction to which is subject). The
Adjusted LIBOR Rate shall be adjusted on and as of the effective day of any
change in the Reserve Percentage applicable to it. The Agent acknowledges that
the Reserve Percentage as of the Closing Date is zero.
"Review Date" shall mean (i) with respect to the Revolving Credit,
March 31, 1998, and each March 31 thereafter; and (ii) with respect to the
Equipment Facility, January 31, 1997, and each January 31 thereafter.
"Revolving Credit" shall mean the revolving credit established
pursuant to Section 2.1 of this Agreement.
"Revolving Credit Commitment" as to any Bank shall mean its
obligation to make Revolving Credit Loans to the Borrowers pursuant to Section
2.1 hereof in the amount set forth as its Revolving Credit Commitment below its
name on the signature pages hereof, subject to transfer to or purchase from
another Bank, as
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provided in Section 11.12 of this Agreement; and collectively, as to all Banks,
the "Revolving Credit Commitments".
"Revolving Credit Loans" or "Revolving Credit Loan" shall mean the
loans made by the Banks to the Borrowers pursuant to the Revolving Credit.
"Revolving Credit Notes" and "Revolving Credit Note" shall have the
meaning set forth in Section 2.1(e) of this Agreement, together with all
replacements, amendments and renewals thereof.
"Revolving Credit Termination Date" shall have the meaning set
forth in Section 2.1(a) of this Agreement, or such later date to which such date
is extended in writing by the Banks.
"Security Agreement" shall mean the agreement between each Borrower
as debtor and the Agent for the benefit of the Banks as secured party, dated the
same date as this Agreement, in form and substance satisfactory to the Banks, by
which each Borrower shall grant security interests in certain of its assets to
the Agent for the benefit of the Banks, together with all amendments,
modifications, exhibits, and schedules thereto as may be in effect from time to
time.
"Seller" shall mean collectively, the sellers of the Shares
identified in each of the Acquisition Agreements.
"Shares" shall mean, collectively, all of the shares of Unipack
Limited to be purchased by PCI Services pursuant to the Acquisition Agreements.
"Solvent" shall mean, with respect to any Person, that the
aggregate present fair saleable value of such Person's assets is in excess of
the total amount of its probable liabilities on its existing debts as they
become absolute and matured, such Person has not incurred debts beyond its
foreseeable ability to pay such debts as they mature, and such Person has
capital adequate to conduct the business it is presently engaged in or is about
to engage in.
"Subsidiary" shall mean, as to any designated corporation, any
other corporation, the outstanding capital shares of which having sufficient
voting power (not depending on the happening of a contingency) to elect at least
a majority of the members of its board of directors or other managers of such
corporation, 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 designated corporation, and shall include, without limitation, each
Subsidiary set forth on Schedule 4.1(b) of this Agreement.
"Syndication" shall mean the later of (i) the initial assignment or
participation of certain of the Outstandings and Commitments hereunder to one or
more other Banks, to the
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satisfaction of the Agent and the Banks, or (ii) September 30, 1996.
"Tax" means any federal, state or foreign tax, assessment or other
governmental levy or duty or other charge (including any withholding tax) upon a
person or entity or upon its assets, revenues, income or profits, other than
income and franchise taxes imposed upon the Bank by the jurisdictions (or any
political subdivision thereof) in which the Bank or any office of the Bank is
located.
"Term Loan" shall have the meaning set forth in Section 2.2(a) of
this Agreement, and "Term Loans" shall mean the Term Loans of the Banks
collectively.
"Term Loan Commitment" as to any Bank shall mean its obligation to
make a Term Loan to the Borrowers pursuant to Section 2.2 hereof in the amount
set forth as its Term Loan Commitment below its name on the signature pages
hereof, subject to transfer to or purchase from another Bank as provided in
Section 11.12 of this Agreement; and collectively, as to all Banks, the "Term
Loan Commitments".
"Term Loan Notes" and "Term Loan Note" shall have the meaning set
forth in Section 2.2(d) of this Agreement, together with all replacements,
amendments and renewals thereof.
"Uniform Commercial Code" shall mean the Uniform Commercial
Code of Pennsylvania as codified at 13 Pa. C.S.A. Section 101 et seq., as in
effect on the date of this Agreement.
"Virginia" shall have the meaning set forth in the initial
paragraph of this Agreement.
"Virginia Pledge Agreement" shall mean the pledge agreement between
Virginia as pledgor and the Agent as pledgee, dated as of the same date of this
Agreement, by which the stock of Realty shall be pledged to the Agent for the
benefit of the Banks, together with all amendments, modifications, exhibits and
schedules thereto as may be in effect from time to time.
ARTICLE II
CREDIT ACCOMMODATIONS
2.1 The Revolving Credit.
(a) Generally. Upon the request of the Borrowers,
each Bank severally agrees, on the terms and conditions hereinafter set forth,
to make loans (the "Revolving Credit Loans") to the Borrowers from time to time,
commencing on the Closing Date and ending on March 31, 1999 (the "Revolving
Credit Termination Date") up to an amount equal to that Bank's Revolving Credit
Commitment. Each Revolving Credit Loan shall be made by
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the Banks according to their Commitment Percentages and shall not exceed the
Banks' Revolving Credit Commitments. Subject to the other terms and conditions
of this Agreement and within the Banks' Revolving Credit Commitments, the
Borrowers may use the Revolving Credit during the period referred to in the
preceding sentence by borrowing, repaying and reborrowing in accordance with the
terms of this Agreement. The Revolving Credit shall be used for the repayment of
the Existing Indebtedness and for working capital. No Revolving Credit Loan
shall be made in a principal amount which is less than $500,000 in the aggregate
or the remaining amount of the Revolving Credit Commitment.
(b) Review and Termination. On or before the initial Review
Date and on or before each successive Review Date thereafter, if applicable, the
Agent shall notify the Borrowers of the Banks' decision, in their sole
discretion, to extend the Revolving Credit Termination Date of the Revolving
Credit for two years or to terminate the Revolving Credit on the then existing
Revolving Credit Termination Date. Upon notice to the Borrowers by the Agent of
the joint decision of the Banks to extend the Revolving Credit Termination Date
for two years and the written acceptance by the Borrowers, the Borrowers shall
execute, upon request of the Banks, all such documents required by the Banks for
the extension of such Revolving Credit Termination Date. Upon the Revolving
Credit Termination Date, unless the same has been extended by written agreement
between the Agent, the Banks and the Borrowers pursuant to this paragraph, the
Revolving Credit Commitment of each Bank to make Revolving Credit Loans shall
terminate, all Revolving Credit Loans shall immediately mature and all
Obligations under the Revolving Credit shall be immediately due and payable in
full.
(c) Letters of Credit. In addition to making Revolving Credit
Loans to the Borrowers under the Revolving Credit:
(1) Generally. The Borrowers may request the Agent, upon
five (5) Business Days' prior notice, that letters of credit ("Letters of
Credit") be issued under the Revolving Credit. The Agent shall notify each Bank
of the proposed request and each Bank, in its sole and absolute discretion,
shall decide whether or not to participate in such Letter of Credit and shall
notify the Agent of its decision within two (2) Business Days after having
received notification from the Agent of the requested Letter of Credit. No
Letter of Credit will be issued by the Agent unless all the Banks agree to
participate in such Letter of Credit according to their Pro Rata Share. After
approval of each request by each Bank, which shall be at the sole discretion of
each Bank, the Agent shall issue, from time to time, one or more Letters of
Credit for the account of the Borrowers. At no time may Letters of Credit be
outstanding under which the aggregate amount subject to being drawn and/or
reimbursed would exceed $3,500,000. All amounts drawn under Letters of Credit
shall be deemed to be loans made under the Revolving Credit and evidenced by the
Revolving Credit Notes, and
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the amount available to be borrowed under the Revolving Credit shall be reduced
by the aggregate amounts drawn and available to be drawn at any time under all
outstanding Letters of Credit. In no event shall the aggregate amount available
to be drawn on all outstanding Letters of Credit plus the outstanding principal
balance of Revolving Credit Loans exceed the aggregate of the Banks' Revolving
Credit Commitments. The duration of any Letters of Credit shall not extend
beyond the Revolving Credit Termination Date without the written consent of the
Agent and the Banks. The Existing Letters of Credit shall be deemed outstanding
hereunder on the Closing Date.
(2) Issuance of Letters of Credit. Subject to the
provisions of Section 2.1(c)(1), the Agent, on behalf of the Banks shall issue
Letters of Credit for the account of the Borrowers, provided that the Borrowers
(i) provide a written request therefor specifying the terms thereof, including,
without limitation, the amount and the name and address of the beneficiary of
any Letter of Credit; (ii) execute and deliver to the Agent an application for
each Letter of Credit pursuant to the form provided for such purpose by the
Agent; and (iii) execute and deliver to the Agent such other documents and
instruments which the Agent, in its sole and absolute discretion, deems
reasonable and necessary. The Borrowers shall pay to the Agent for its sole
account all transactional and customary fees required by the Agent in connection
with the issuance of each Letter of Credit hereunder which fees may be deducted
by the Agent from the Loan Account or any Borrower's deposit account as such
fees are incurred. Additionally, the Borrowers shall pay to (i) the Agent at the
time of issuance for its own account a negotiation commission equal to
one-quarter of one percent (.25%) for each Letter of Credit; and (ii) for the
account of Banks, a fee equal to one and one-half percent (1.5%) per annum for
each Letter of Credit which shall be payable by the Borrowers quarterly in
arrears to the Agent, as billed by the Agent to the Borrowers, and shall be
distributed to the Banks by the Agent in accordance with their Pro-Rata Share of
the Revolving Credit Commitment.
(d) Interest. Interest shall accrue on the Outstandings of the
Revolving Credit Loans at the Floating Rate and shall be payable as set forth in
Section 2.5 of this Agreement.
(e) Revolving Credit Notes. The joint and several obligations
of the Borrowers to repay the aggregate outstanding principal of the Revolving
Credit Loans made by each Bank and to pay accrued interest thereon shall be
evidenced by a separate promissory note to each Bank, in the form of Exhibit
2.1(e) of this Agreement, to be executed and delivered to each Bank concurrently
with the execution and delivery of this Agreement (collectively, the "Revolving
Credit Notes", and individually, a "Revolving Credit Note").
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(f) Unused Commitment Fee. In addition to the interest payable
by the Borrowers to the Banks in respect of the Revolving Credit, the Borrowers
shall pay to the Agent a fee equal to three-eighths of one percent (.375%) per
annum on the amount, if any, by which the average daily amount of the
outstanding Revolving Credit Loans, and the face amount of any issued but
undrawn Letters of Credit, during a calendar quarter are less than the Banks'
Revolving Credit Commitments. Such fee shall be computed for the actual number
of days elapsed and on the basis of a year of 360 days, and shall be payable by
the Borrowers quarterly in arrears to the Agent, as billed by the Agent to the
Borrowers, and shall be distributed to the Banks by the Agent according to their
Pro-Rata Share of the Revolving Credit Commitment.
(g) Reduction of Revolving Credit Commitments. The Borrowers
may, upon at least two Business Days notice to the Agent, terminate in whole or
reduce in part the unused portions of the Banks' Revolving Credit Commitments,
without premium or penalty, provided that each partial reduction shall be in an
amount of not less than $1,000,000, and provided all interest accrued thereon is
simultaneously paid. Any reduction of the unused portion of the Banks' Revolving
Credit Commitments shall be made according to the Commitment Percentages of the
Banks. The Banks' Revolving Credit Commitments, once reduced or terminated, may
not be reinstated.
2.2 Term Loans.
(a) Generally. Each Bank severally agrees, on the terms and
conditions hereinafter set forth, to make available to the Borrowers on the
Closing Date a term loan (each a "Term Loan" and collectively, the "Term Loans")
in an aggregate principal amount equal to such Bank's Term Loan Commitment to be
used by the Borrower to refinance the Existing Indebtedness and to finance a
portion of the Acquisition. The Borrowers shall be permitted to borrow the funds
available under the Term Loan Commitments in three tranches, the first one on
the Closing Date, the second in connection with the Acquisition, provided the
Borrowers are in compliance with Section 6.20 of this Agreement, and such
borrowing occurs no later than April 15, 1996, and the third in connection with
the funding of equipment purchases in an amount no greater than $2,989,071.00 to
occur no later than September 30, 1996 (the "Third Tranche"). The Borrower shall
repay the then outstanding balance of the Term Loans in twenty-eight equal
consecutive quarterly installments of principal, the first such quarterly
installment beginning on June 30, 1996, with the final such quarterly
installment of all remaining principal due and payable on March 31, 2003
provided if the Borrowers borrow under the Third Tranche, the amount of the
quarterly installments shall be recomputed by the Agent so that the remaining
quarterly installments beginning on December 31, 1996 shall equally and fully
amortize such Term Loans by March 31, 2003.
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(b) Interest. Interest shall accrue on the outstanding
principal of the Term Loan of each Bank at the Floating Rate and shall be
payable as set forth in Section 2.5 of this Agreement. After the completion of
the Syndication, the Borrowers may elect to have a fixed rate of interest apply
to any portion of the amounts outstanding under the Term Loans. To exercise this
option, the Borrowers shall request the Agent in writing to quote a fixed rate
of interest not less than ten (10) Business Days prior to the date on which the
Borrowers propose such conversion to take effect (the "Conversion Date"). The
Agent shall then request the Banks to agree on a fixed rate of interest to be
quoted to the Borrowers. If the Banks agree on a fixed rate of interest to be
quoted, the Agent shall notify the Borrowers of the fixed rate of interest no
later than the fifth Business Day preceding the Conversion Date (the "Fixed
Rate"). If the Banks cannot agree on a fixed rate of interest to be quoted, the
Agent shall notify the Borrowers and the Fixed Rate option shall not be
available to the Borrowers at such time; provided the Borrowers shall be
permitted to request another quotation of the Fixed Rate no earlier than one
month from the date of such quotation. If the Borrowers are offered the Fixed
Rate and elect in writing to the Agent to accept the Fixed Rate, and provided
all accrued and unpaid interest due on the Conversion Date including any funding
loss required by Section 2.7(c) of this Agreement shall have been paid, the Term
Loans of each Bank in an amount equal to the Bank's Pro Rata share of the Term
Loan to which such Fixed Rate is to apply shall on and after the Conversion Date
bear interest at the Fixed Rate. Interest on such portions of the Term Loans
shall then be payable monthly on the first day of the month beginning with the
first full month after the Conversion Date. The Borrowers shall be permitted to
convert a portion of the Term Loans hereunder to the Fixed Rate one time only.
(c) Mandatory Prepayment. In addition to the
principal payable to the Banks set forth in subsection (a) hereof, the Borrowers
shall be obligated to make annual mandatory prepayments of principal on the Term
Loans on each December 31, beginning December 31, 1997, in an amount equal to
fifty percent (50%) of the Excess Cash Flow of the PCI Group during the prior
fiscal year of the PCI Group. For purposes hereof, "Excess Cash Flow" shall mean
the sum of the net income of the PCI Group plus its depreciation, amortization,
interest expense and taxes less unfunded capital expenditures, buy-back of
shares permitted under Section 7.10 of this Agreement, taxes paid, principal on
scheduled lease amortization, and current maturities of long term debt. No
mandatory prepayment shall be required hereunder once the Consolidated Group
achieves a Consolidated Funded Debt to Tangible Net Worth ratio of 1.00:1. All
such prepayments shall be applied to installments of principal due thereunder in
the inverse order of their maturity and shall be distributed to the Banks in
accordance with their Pro-Rata Share of the Term Loan Commitment.
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(d) Term Loan Notes. The joint and several obligations of the
Borrowers to repay the aggregate outstanding principal of the Term Loan made by
each Bank and to pay accrued interest thereon shall be evidenced by a separate
promissory note, to be executed and delivered by the Borrowers to each Bank
concurrently with the execution and delivery of this Agreement (collectively,
the "Term Loan Notes" and individually, a "Term Loan Note").
2.3 The Equipment Facility.
(a) Generally. Upon the request of the Borrowers, each Bank
severally agrees, on the terms and conditions hereinafter set forth, to make
loans (the "Equipment Facility Loans") to the Borrowers from time to time,
commencing on the Closing Date and ending on March 31, 1997 (the "Equipment
Facility Termination Date") up to an amount equal to that Bank's Equipment
Facility Commitment. Each Equipment Facility Loan shall be made by the Banks
according to their Commitment Percentages and shall not exceed the Banks'
Equipment Facility Commitments. Subject to the requirements to convert Equipment
Facility Loans to Equipment Term Loans as hereinafter set forth and the other
terms and conditions of this Agreement and within the Banks' Equipment Facility
Commitments, the Borrowers may use the Equipment Facility during the period
referred to in the preceding sentence by borrowing, repaying and reborrowing in
accordance with the terms of this Agreement. As a condition to making any
Equipment Facility Loan to finance the purchase of equipment, the Borrowers
shall deliver to the Agent at least three (3) Business Days prior to the
proposed funding date (i) an invoice or purchase order for all equipment, and
(ii) all documentation required by the Agent, in its sole judgment, to perfect a
security interest in such equipment. The Borrowers shall be required to convert
to a loan for a term of years (each an "Equipment Term Loan", and collectively,
the "Equipment Term Loans") on September 30 of each successive fiscal year, any
Equipment Facility Loans advanced by the Banks to the Borrowers for the purchase
of equipment. Each Equipment Term Loan shall be repayable in accordance with and
subject to the conditions set forth in Section 2.3(e) of this Agreement.
(b) Review and Termination. On or before the initial Review
Date and on or before each successive Review Date thereafter, if applicable, the
Agent shall notify the Borrowers of the Banks' joint decision, in their sole
discretion, to extend the Equipment Facility Termination Date for one year or to
terminate the Equipment Facility on the then existing Equipment Facility
Termination Date. Upon notice to the Borrowers by the Agent of the Banks' joint
decision to extend the Equipment Facility Termination Date for one year, and the
terms and conditions thereof, including without limitation, the new Equipment
Facility Commitment, and the written acceptance by the Borrowers, the Borrowers
shall execute, upon request of the Banks, all such documents required by the
Banks for the extension of such Equipment Facility Termination Date. Upon the
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Equipment Facility Termination Date, unless the same has been extended by
written agreement among the Agent, the Banks and the Borrowers pursuant to this
paragraph, the Equipment Facility Commitment of each Bank to make Equipment
Facility Loans shall terminate, all Equipment Facility Loans shall immediately
mature and all Obligations under the Equipment Facility shall be immediately due
and payable in full, except to the extent that any portion of the Equipment
Facility Loans shall have been converted to an Equipment Term Loan or Loans, and
provided further that, at the option of the Borrowers, and in accordance with
and subject to the terms and conditions of Section 2.3(e) of this Agreement, the
outstanding principal balance of the Equipment Facility Loan of each Bank on the
Equipment Facility Termination Date may be converted into an Equipment Term Loan
provided no Potential Default or Event of Default has occurred and is continuing
under this Agreement. At no time may the aggregate outstanding principal of the
Equipment Facility Loans extended by the Banks to the Borrowers in accordance
with this Section 2.3 of this Agreement exceed the Equipment Facility
Commitment.
(c) Equipment Facility Notes. The joint and several
obligations of the Borrowers to repay the aggregate outstanding principal of the
Equipment Facility Loans made by each Bank and to pay accrued interest thereon
shall be evidenced by a promissory note to each Bank, in the form of Exhibit
2.3(c) of this Agreement, to be executed and delivered to each Bank concurrently
with the execution and delivery of this Agreement (collectively, the "Equipment
Facility Notes", and individually, a "Equipment Facility Note").
(d) Unused Commitment Fee. In addition to the interest payable
by the Borrowers to the Banks in respect of the Equipment Facility, the
Borrowers shall pay to the Agent a fee equal to three-eighths of one percent
(.375%) per annum on the amount, if any, by which the average outstanding
Equipment Facility Loans during a calendar quarter are less than the Banks'
Equipment Facility Commitments. Such fee shall be computed for the actual number
of days elapsed and on the basis of a year of 360 days, and shall be payable
quarterly in arrears to the Agent as billed by the Agent to the Borrowers and
shall be distributed to the Banks by the Agent according to their Commitment
Percentages.
(e) Equipment Term Loans. Each Equipment Term Loan shall be
made by the Banks according to their Equipment Facility Commitment Percentages.
The Borrowers shall repay the outstanding principal balance of each Equipment
Term Loan in equal consecutive, quarterly installments of principal equal to the
principal amount with respect thereto divided by a maximum number of such
installments not to exceed twenty, the number of such installments to be chosen
by the Borrowers. The first installment thereunder shall be due on the last day
of the first full month of the term thereof and shall continue throughout the
entire term thereof in accordance with the provisions of each respective
Equipment Term Note. The joint and several
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obligations of the Borrowers to repay the aggregate outstanding principal of
each Equipment Term Loan made by the Banks and to pay accrued interest thereon
shall be evidenced by a separate promissory note, substantially in the form of
Exhibit 2.3(e) hereto, to be executed and delivered to the Bank on the
Conversion Date with respect to the Equipment Term Loan (collectively, the
"Equipment Term Notes", and individually, an "Equipment Term Note").
(f) Interest. Interest shall accrue on the Outstandings of the
Equipment Facility Loans and the Equipment Term Loans at the Floating Rate and
shall be payable as set forth in Section 2.5 of this Agreement. After completion
of the Syndication, the Borrowers may elect to have a fixed rate of interest
apply to the amounts outstanding under any Equipment Term Loan made by the Banks
at the same time. To exercise this option, the Borrowers shall request the Agent
in writing to quote a fixed rate of interest not less than ten (10) Business
Days prior to the date on which the Borrowers propose such conversion to take
effect (the "Conversion Date"). The Agent shall then request the Banks to agree
on a fixed rate of interest to be quoted to the Borrowers. If the Banks agree on
a fixed rate of interest to be quoted, the Agent shall notify the Borrowers of
the fixed rate of interest no later than the fifth Business Day preceding the
Conversion Date (the "Fixed Rate"). If the Banks cannot agree on a fixed rate of
interest to be quoted, the Agent shall notify the Borrowers and the fixed rate
option shall not be available to the Borrowers at such a time; provided the
Borrowers shall be permitted to request another quotation of the fixed rate no
earlier than one month after such quotation. If the Borrowers are offered the
Fixed Rate and elect in writing to the Agent to accept the Fixed Rate, and
provided all accrued and unpaid interest due on the Conversion Date including
and funding loss required by Section 2.7(c) of this Agreement shall have been
paid, the Equipment Term Loans of each Bank in an amount equal to the Bank's Pro
Rata Share of such Equipment Term Loan shall bear interest at the Fixed Rate.
Interest shall then be payable monthly on the first day of the month beginning
with the first full month after the Conversion Date.
(g) Reduction of Equipment Facility Commitments. The Borrower
may, upon at least two Business Days notice to the Agent, terminate in whole or
reduce in part the unused portions of the Banks' Equipment Facility Commitments,
without premium or penalty, provided that each partial reduction shall be in an
amount of not less than $1,000,000, and in multiples of $100,000 above
$1,000,000 and provided all interest accrued thereon is simultaneously paid. Any
reduction of the unused portion of the Banks' Equipment Facility Commitments
shall be made according to the Commitment Percentages of the Banks. The Banks'
Commitments, once reduced or terminated, may not be reinstated.
2.4 Method of Borrowing. The Borrowers hereby appoint Packaging
Coordinators as their agent for requesting Loans from the Banks. Packaging
Coordinators shall maintain a separate
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accounting on a monthly basis indicating for which Borrower each Loan or
repayment hereunder has been made. In accordance with the time requirements set
forth in Section 2.5 of this Agreement, whenever the Borrowers desire that the
Banks make Revolving Credit Loans or Equipment Facility Loans, or convert or
renew an interest rate with respect to the Loan, the Borrowers shall provide to
the Agent a "Notice of Borrowing." If the conditions precedent for such Loan set
forth herein shall be satisfied at the time of such request, the Agent shall
promptly notify each Bank of each such notice and of such Bank's Pro Rata Share
of such Loan. Not later than 11:00 a.m. (Philadelphia time) on the date
specified for each Loan, each Bank will make available to the Agent at its
office referred to in Section 11.2 of this Agreement in immediately available
funds, such Bank's Commitment Percentage of such Loan. Unless the Agent knows
that any applicable condition specified herein has not been satisfied, the Agent
will make the funds so received from the Banks immediately available to the
Borrowers on the date of such Loan by crediting the amount thereof to the Loan
Account. Unless the Agent shall have received notice from a Bank prior to the
date on which such Bank is to provide funds to the Agent for a Loan to be made
by such Bank that such Bank will not make available to the Agent such funds, the
Agent may assume that such Bank has made such funds available to the Agent on
the date of such Loan in accordance with this Section 2.4 and the Agent may, in
reliance upon such assumption, make available to the Borrowers on such date a
corresponding amount. If and to the extent such Bank shall not have so made such
funds available to the Agent, such Bank agrees to repay to the Agent forthwith
on demand such corresponding amount together with interest thereon, for each day
from the date such amount is made available to the Borrowers until the date such
amount is repaid to the Agent, at the Federal Funds Rate plus one-half of one
percent (0.5%) for three Business Days and thereafter at the Prime Rate. If such
Bank shall repay to the Agent such corresponding amount, such amount so repaid
shall constitute such Bank's Loan for purposes of this Agreement. If such Bank
does not pay such corresponding amount forthwith upon the Agent's demand
therefor, the Agent shall promptly notify the Borrowers and the Borrowers shall
immediately pay such corresponding amount to the Agent with interest thereon,
for each day from the date such amount is made available to the Borrowers until
the date such amount is repaid to the Agent, at the rate of interest applicable
at the time to such proposed Loan. Nothing herein shall be deemed to relieve any
Bank of its obligation to fulfill its Commitments hereunder or to prejudice any
rights which the Borrowers may have against any Bank as a result of any default
by such Bank hereunder. If the Banks make a Loan on a day on which all or any
part of an outstanding Loan from the Banks is to be repaid, each Bank shall
apply the proceeds of its new Loan to make such repayment and only an amount
equal to the difference (if any) between the amount being borrowed and the
amount being repaid shall be made available by such Bank to the Agent. The Agent
shall maintain records of all Loans and of all payments thereon, which records
shall be conclusive absent manifest error.
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2.5 Interest. Interest Periods and the Floating Rates shall be
chosen with respect to the Outstandings as follows:
(a) Floating Rates. At the Borrowers' election in accordance
with the provisions of Section 2.5(c) below, the Outstandings shall bear
interest at any one of the following rates:
(i) The Adjusted Prime Rate, such rate to
change when and as the Prime Rate or the
Adjustment Factor changes; or
(ii) The Adjusted LIBOR Rate.
(b) Adjustment Factors. The Adjusted Prime Rate, and the
Adjusted LIBOR Rate shall be calculated by adding to the Prime Rate or LIBOR,
respectively, an "Adjustment Factor" determined in accordance with the schedule
set forth below. In each case, the Adjustment Factor shall be determined on the
date that the Borrowers request a quotation or indication of a rate with
reference to the financial ratios reflected on the certificate of the Borrowers
for the most recent financial quarter delivered to and accepted by the Bank in
accordance with Section 6.2(c) of this Agreement. The Adjustment Factor used in
computing the Adjusted LIBOR Rate applicable with respect to the Outstandings
during a given Interest Period selected by the Borrowers shall remain constant
until the end of such Interest Period at which time, if the Borrowers continue
such Adjusted LIBOR Rate Loan, the LIBOR Rate shall be adjusted by adding
thereto the appropriate Adjustment Factor as set forth below. The interest
accruing on the Adjusted Prime Rate Loans shall change immediately by adding
thereto the appropriate Adjustment Factor as set forth below in computing the
Adjusted Prime Rate.
REVOLVING CREDIT ADJUSTMENT FACTORS
Consolidated
Group
Fixed Charge
Coverage
Category Ratio Prime Rate LIBOR
-------- -------- ---------- ------
Category 1 greater than/equal to 1.0:1 .25% 2.50%
less than 1.2:1
Category 2 greater than/equal to 1.2:1 .25% 2.25%
less than 1.4:1
Category 3 greater than/equal to 1.4:1 .125% 2.00%
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TERM LOAN AND EQUIPMENT FACILITY ADJUSTMENT FACTORS
Consolidated
Group
Fixed Charge
Coverage
Category Ratio Prime Rate LIBOR
-------- -------- ---------- ------
Category 1 greater than/equal to 1.0:1 .50% 2.675%
less than 1.2:1
Category 2 greater than/equal to 1.2:1 .375% 2.50%
less than 1.4:1
Category 3 greater than/equal to 1.4:1 .25% 2.25%
(c) Determination of Interest Periods and Floating Rates.
Interest Periods and the Floating Rates shall be chosen with respect to the
Loans as follows:
(i) The Borrowers may ask the Agent for indications of
LIBOR and quotations of the Prime Rate, at any time. If the Borrowers
anticipate that they may elect the Adjusted LIBOR Rate to be applicable
to a Loan, the Borrowers shall request an indication of LIBOR from the
Agent prior to 11:00 a.m. (Philadelphia time) at least three Eurodollar
Business Days prior to the commencement of the applicable Interest
Period, and if the Borrowers desire to elect the Adjusted LIBOR Rate
for such Interest Period, the Borrowers must accept such indication of
LIBOR by notice to the Agent in writing or by telephone (confirmed
promptly in writing) prior to 11:00 a.m. (Philadelphia time) on the
date of acceptance at least two Eurodollar Business Days prior to the
commencement of the Interest Period selected by the Borrowers, such
election to be irrevocable once made by the Borrowers. If the Borrowers
desire to elect the Adjusted Prime Rate for any Loan, the Borrowers
must accept such indication of the Prime Rate by notice to the Agent in
writing or by telephone (confirmed promptly in writing) prior to 11:00
a.m. (Philadelphia time) on the date of acceptance at least one
Business Day prior to the intended date of such Loan, such election to
be irrevocable once made by the Borrowers. If the Borrowers do not
provide the applicable notice of election of the Adjusted LIBOR Rate,
then the Borrowers shall be deemed to have requested, with respect to
the Outstandings that the Adjusted Prime Rate apply to any Loan which
is subject to any expiring Interest Period and to any new Loan, as the
case may be, until the Borrowers shall have given appropriate notice of
a requested change in or determination of the rate of interest in
accordance with this Section 2.5. No request shall be effective until
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actually received in writing by the Agent. No acceptance of an
indication of rate hereunder shall bind the Agent unless made in
accordance with this Section 2.5(c)(i).
(ii) The Borrowers shall not request and the Agent shall
not be required to provide, an indication of LIBOR with respect to a
specified Interest Period for any Loans to be subject to such Interest
Period of less than $1,000,000 in the aggregate.
(iii) Notwithstanding anything to the contrary contained
herein, the Borrowers may not elect application of a rate of interest
based on LIBOR to any Loans if such election would require each Bank to
administer concurrently more than seven Adjusted LIBOR Rate Loans.
(iv) The Adjusted Prime Rate in effect on each day shall
apply to each Loan bearing interest at such rate on such day.
(v) All determinations and quotations or rate by the Agent
hereunder shall be conclusive and binding upon the Borrowers, in the
absence of manifest error.
(vi) If no Interest Period is elected with respect to any
Adjusted LIBOR Rate Loans, the request for such Loans shall be deemed
to be a request for a thirty day Interest Period in respect of any such
Adjusted LIBOR Rate Loans.
(vii) Upon the occurrence of any Event of Default, all
Interest Periods shall automatically terminate and all Adjusted LIBOR
Rate Loans shall be automatically converted to Loans bearing interest
at the Default Rate, and shall be subject to the payment of all amounts
then due with respect to such termination under Section 2.7 hereof.
(viii) All elections as to Interest Periods and Floating
Rates, and all interest paid thereunder shall have equal application to
each Bank and payments and repayment made thereunder shall be
distributed among the Banks as provided in Section 2.8 hereof. The
Borrowers may not elect separate Interest Periods or Floating Rates for
individual Banks.
(d) Payment of Interest. Notwithstanding anything to the
contrary in this Agreement, the Borrowers shall pay interest accruing on
Adjusted LIBOR Rate Loans with interest Periods of 30, 60 or 90 days duration on
the last day of such Interest Period. Accrued interest on Adjusted LIBOR Rate
Loans with Interest Periods greater than 90 days duration shall be due and
payable at the end of 90 days, and on the expiration date of such Interest
Period. The Borrowers shall pay interest accruing at the Adjusted Prime Rate
monthly in arrears on the first day of
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each calendar month. All accrued but unpaid interest under each of the Notes
shall also be payable, without demand, on the maturity thereof (whether by its
stated terms, or upon prepayment, acceleration or otherwise).
2.6 Conversion and Continuation of Loans. The Borrowers may convert
the Floating Rate from the Adjusted Prime Rate to an Adjusted LIBOR Rate
(subject to the availability thereof as a result of any of the circumstances
cited in Section 2.7) or extend an expiring or continue any Adjusted LIBOR Rate
Loan or for an additional Interest Period (subject to availability thereof)
immediately subsequent to the expiring Interest Period or convert the Loans
subject thereto to the Adjusted Prime Rate pursuant to a Notice of Borrowing
upon the same advance notice required pursuant to Section 2.5 hereof, subject,
however, to all of the terms of this Agreement, including, without limitation,
the following:
(a) Rate Availability. The Floating Rate shall be available,
notwithstanding Section 2.7 hereof.
(b) Limitation on Interest Period. No Interest Period may be
elected with respect to any Loans (i) which would expire after the maturity date
of the Notes evidencing such Loans, or (ii) for a period other than those
referred to in the definition of "Interest Period" set forth in Article I
hereof.
(c) Payment of Interest; No Default. All interest accrued
under an expiring Interest Period shall be paid by the Borrowers on the last day
of such Interest Period, and no continuation or conversion of a Loan subject to
an expiring Interest Period shall be made for so long as an Event of Default or
Potential Default shall be continuing or would thereby occur.
(d) Timing. No continuation or conversion of an Adjusted LIBOR
Rate Loan may be effected on other than the last day of the Interest Period then
in effect with respect to such Loan, and a Loan which is not an Adjusted LIBOR
Rate Loan may be converted into an Adjusted LIBOR Rate Loan only on a Eurodollar
Business Day.
(e) Failure to Give Notice. In the event that the Borrowers
shall not give timely notice to continue the applicability of the Adjusted LIBOR
Rate for a new Interest Period at the expiration of an Interest Period with
respect to any Adjusted LIBOR Rate Loan, the Borrowers shall be deemed to have
requested that the Adjusted Prime Rate apply to the principal amount of any such
Loan from and after the expiration of the then current Interest Period.
2.7 Special Provisions Applicable to the Adjusted LIBOR Rate.
The following special provisions shall apply to the Adjusted LIBOR Rate:
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(a) Mandatory Suspension and Conversion of Adjusted LIBOR Rate
Loans. Each Bank's obligations to make, maintain or convert into Adjusted LIBOR
Rate Loans of any type shall be suspended, all outstanding Loans of that type
shall be converted on the last day of their applicable Interest Periods (or, if
earlier, in the case of clause (ii) below, on the last day that any Bank may
lawfully continue to maintain Loans of that type or, in the case of clause (iii)
below, the day to be the last Business Day before the effective date of the
applicable restriction) into, and all pending requests for the making of or
conversion into Loans of such type shall be deemed requests for, Loans at the
Adjusted Prime Rate with respect to the Outstandings if:
(i) on or prior to the determination of the interest rate
for an Adjusted LIBOR Rate Loan of that type for any Interest Period,
the Agent determines that for any reason appropriate quotations are not
available to it (including, quotations in the interbank market selected
by it for deposits with it) for purposes of determining the Adjusted
LIBOR Rate or that such rate would not accurately reflect the cost to
the Banks of making, maintaining or converting into an Adjusted LIBOR
Rate Loan of such type for such Interest Period;
(ii) at any time any Bank notifies the Agent that any
Regulatory Change makes it unlawful or impracticable for such Bank to
make or maintain any Adjusted LIBOR Rate Loan of that type, or to
comply with its obligations hereunder in respect thereof; or
(iii) any Bank notifies the Agent that by reason of any
Regulatory Change such Bank is restricted, directly or indirectly, in
the amount that it may hold of (x) a category of liabilities that
include deposits by reference to which, or on the basis of which, the
interest rate applicable to Adjusted LIBOR Rate Loans of that type is
directly or indirectly determined, or (y) the category of assets that
includes Adjusted LIBOR Rate Loans of that type.
The Agent shall promptly give notice to the Borrowers of any
circumstance that would make the provisions of this Section 2.7(a) applicable,
but the failure to give any such notice shall not affect the Agent or any of the
Bank's rights hereunder.
(b) Intentionally Left Blank.
(c) Funding Losses. The Borrowers shall pay to each Bank, upon
request, such amount or amounts as such Bank determines are necessary to
compensate it for any loss, cost or expense incurred by it as a result of (i)
any payment, prepayment or conversion of an Adjusted LIBOR Rate Loan on a date
other than the last day of an Interest Period for such Adjusted LIBOR Rate
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<PAGE>
Loan or (ii) an Adjusted LIBOR Rate Loan for any reason not being made or
converted, or any payment of principal thereof or interest thereon not being
made, on the date therefor determined in accordance with the applicable
provisions of this Agreement. At the election of such Bank, and without
duplication, such compensation on account of losses may include an amount equal
to the excess of (x) the interest that would have been received from the
Borrowers under this Agreement on any amounts to be redeployed during an
Interest Period or its remaining portion over (y) the interest component of the
return that such Bank determines it could have obtained had it placed such
amount on deposit in the interbank market selected by it for a period equal to
such Interest Period or its remaining portion. This Section 2.7(c) shall not be
applicable to any Loan accruing interest at other than the Adjusted LIBOR Rate.
(d) Determinations. In making the determinations contemplated
by this Section 2.7 hereof, the Agent and the Banks may make such estimates,
assumptions, allocations and the like that it, in good faith, determines to be
appropriate. All such determinations shall be final, binding and conclusive upon
the Borrowers, except to the extent of any manifest error in computation or
transmission. The Agent shall, upon receipt thereof from the applicable Bank,
furnish to the Borrowers, upon request, a certificate outlining in reasonable
detail the computation of any amounts claimed under this Section 2.7 and the
assumptions underlying such computations, provided that the failure to deliver a
certificate shall not affect any Bank's right to such amounts.
2.8 Repayment.
(a) All amounts payable by the Borrowers to the Banks under
this Agreement or the Notes on account of principal (including prepayments),
interest and fees shall be made not later than 2:00 P.M. (Philadelphia time) on
the day when due, in immediately available funds, to the Agent for the account
of the Banks at the office of the Agent referred to in Section 11.2 of this
Agreement. Payments received in other than immediately available funds, shall
not be deemed received until they are in immediately available funds. Payments
received after 2:00 P.M. Philadelphia time shall be deemed received on the next
succeeding Business Day (except as provided in the definition of Interest
Period) and interest shall be payable on such amounts until deemed received at
the Applicable Rate. The Agent shall promptly distribute to each Bank by wire
transfer in immediately available funds each Bank's Pro-Rata Share of such
payments based upon such Bank's Commitment Percentage. If any payment hereunder
or under any other Loan Document becomes due and payable on a day other than a
Business Day, the due date thereof shall be extended to the next succeeding
Business Day (except as otherwise specified herein with respect to Outstandings
bearing interest at the Adjusted LIBOR Rate) and interest thereon shall be
payable at the Applicable Rate during such extension. The Borrowers hereby
authorize and direct the Agent to charge the Loan Account
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maintained at any office of the Agent for the amount of any principal, interest,
fees and other charges when the same becomes due and payable under the terms
hereof or of any of the Notes; provided that any account of the Borrowers at any
Bank may be charged for all principal, interest, fees and other charges then due
at any time during the continuation of an Event of Default. All computations of
interest hereunder shall be made by the Banks on the basis of a year of 360 days
for the actual number of days elapsed. All payments under each of the Notes
shall be applied first to the payment of interest due and payable thereunder and
then to the reduction of the outstanding principal balance thereof. The Agent's
failure to deliver any bill, statement or invoice with respect to amounts due
under this Agreement or under any Loan Document shall not affect the Borrowers'
obligation to pay any installment of principal, interest or any other amount
under this Agreement.
(b) All payments made to the Banks and the Agent by the
Borrowers hereunder, under any Note or under any other Loan Document will be
made without set off, counterclaim or other defense. All such payments will be
made free and clear of, and without deduction or withholding for, any present or
future taxes, levies, imposts, duties, fees, assessments or other charges of
whatever nature now or hereafter imposed by any jurisdiction or any political
subdivision thereof, or taxing authority of the United States of America or any
political subdivision thereof, in which the principal office or applicable
lending office of such Bank is located), and all interest, penalties or similar
liabilities with respect thereto (collectively, together with any amounts
payment pursuant to the next sentence, "Taxes"). The Borrowers shall also
reimburse each Bank, upon the written request of such Bank, for Taxes imposed on
or measured by the gross or net income of such Bank pursuant to the laws of the
United States of America (or any State or political subdivision thereof), or the
jurisdiction (or any political subdivision or taxing authority thereof) in which
the principal office or applicable lending office of such Bank is located as
such Bank shall determine are payable by such Bank due to the amount of Taxes
paid to or on behalf of such Bank pursuant to this or the preceding sentence. If
any Taxes are so levied or imposed, the Borrowers agree to pay the full amount
of such Taxes, and such additional amounts as may be necessary so that every
payment of all amounts due hereunder, under any Note or under any other Loan
Document, after withholding or deduction for or on account of any Taxes, will
not be less than the amount provided for herein or in such Note provided
however, that the Borrowers shall not be required to increase any amounts
payable to any Bank that is not organized under the laws of the United States of
America or a state thereof if such Bank fails to comply with the requirements of
Section 2.11 of this Agreement. The Borrowers will furnish to the Agent upon
request certified copies of tax receipts evidencing such payment by the
Borrowers. The Borrowers will indemnify and hold harmless the Agent and each
Bank, and reimburse the Agent or such Bank upon its written
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request, for the amount of any Taxes so levied or imposed and paid or withheld
by such Bank.
2.9 Prepayment. Prepayment of any amounts of principal of any Loan
(whether a voluntary prepayment or acceleration or otherwise) bearing interest
at a Fixed Rate, shall not be permitted unless accompanied by a prepayment
premium equal to the amount, if any, by which the aggregate present value of
scheduled principal and interest payments eliminated by the prepayment exceeds
the principal amount being prepaid. Said present value shall be calculated by
application of a discount rate determined by Bank in its reasonable judgment to
be the yield-to-maturity at the time of prepayment on U.S. Treasury securities
having a maturity which most closely approximates the final maturity date of the
principal balance then outstanding. The determination of the foregoing
prepayment premium by the Agent shall be final, binding and conclusive upon the
Borrowers, except to the extent of any manifest error in computation or
transmission. All prepayments of the Loans shall be accompanied by the payment
of accrued interest on the amount of such prepayment to the date thereof,
including any funding loss required pursuant to Section 2.7(c) of this
Agreement. Subject to the above prepayment premium, the Borrowers may make
payments and prepayments of the Loans in whole or in part at any time and from
time to time upon notification to the Agent not later than 10:00 a.m.
Philadelphia time one Business Day prior to the date of the proposed prepayment.
Each such notice shall set forth (i) the date, which shall be a Business Day, on
which the proposed prepayment is to be made; (ii) to which Loan such prepayment
is to be applied; (iii) the total amount of such prepayment which shall be in
the amount of $500,000 or a multiple thereof; and (iv) the principal amounts to
be applied to Adjusted Prime Rate Loans, the Adjusted LIBOR Rate Loans or the
Fixed Rate. Such notice, once given to the Agent, shall be irrevocable.
2.10 Changes in Circumstances; Yield Protection. (a) In the event
that after the date hereof, any Regulatory Change or compliance by the Banks
with any request made after the date of this Agreement by the Board of Governors
of the Federal Reserve System or by any Federal Reserve Bank or other central
bank or fiscal, monetary or similar authority (in each case whether or not
having the force of law) shall:
(i) subject any Bank to, or cause the withdrawal or
termination of any previously granted exemption with respect to, any
Tax of any kind whatsoever, or any levy, impost, duty, charge, fee or
deduction on or from any payments due from the Borrowers, with respect
to this Agreement, the Loans made hereunder or the issuance or
maintenance of the Letters of Credit hereunder, or changes the basis of
taxation of payments to any Bank of principal, commitment fees,
interest or any other amount payable hereunder (except for changes in
the rate of tax on the overall net income of such Bank);
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<PAGE>
(ii) imposes, modifies or holds or shall impose, modify or
hold applicable any Tax, reserve, insurance charge, special deposit,
assessment, compulsory loan or similar requirement against assets held
by, or deposits or other liabilities in or for the account of, advances
or loans by, or other credit extended by, or any other acquisition of
funds by, any office of any Bank, which reserve, special deposit,
compulsory loan or similar requirement is not otherwise included in
determination of the interest rate hereunder;
(iii) imposes or shall impose on any Bank any other
condition;
and the result of any of the foregoing is to, directly or indirectly, increase
the cost to such Bank of making, renewing or maintaining advances or extensions
of credit or issuing or maintaining Letters of Credit or to reduce any amount
receivable thereunder then, in any such case, the Borrowers shall promptly pay
the Agent, upon its demand, any additional amounts necessary to compensate any
Bank for such additional cost or reduced amount receivable. If any Bank becomes
entitled to claim any additional amounts pursuant to this subsection, the Agent
shall promptly notify the Borrowers of the event by reason of which it has
become so entitled. The good faith determination as to any additional amounts
payable pursuant to the foregoing sentence by any Bank shall be conclusive in
the absence of manifest error.
(b) If any Bank shall determine that any regulation regarding
capital adequacy or the adoption of any regulation regarding capital adequacy,
which regulation is applicable to banks (or their holding companies) generally
and not such Bank (or its holding company) specifically, or any change therein,
or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by such Bank (or its
holding company) with any such request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has the effect of reducing the rate of return on such Bank's
capital as a consequence of its obligations hereunder to a level below that
which such Bank could have achieved but for such adoption, change or compliance
(taking into consideration such Bank's policies with respect to capital
adequacy) by an amount deemed by such Bank to be material, the Borrowers shall
promptly pay to the Agent for the account of such Bank, upon the demand of such
Bank, such additional amount or amounts as will compensate such Bank for such
reduction.
2.11 Tax Withholding. At least five (5) Business Days prior to the
first date on which any payments are payable hereunder for the account of any
Bank, each Bank that is not incorporated under the laws of the United States of
America or a state thereof agrees that it will deliver to each of the Borrowers
and the Agent two duly completed copies of United
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States Internal Revenue Service Form W-8 or W-9, 4224 or 1001, or other
applicable form prescribed by the Internal Revenue Service of the United States,
certifying in either case that such Bank is entitled to receive payments under
the Agreement and the Notes without deduction or withholding of any United
States federal income taxes. Each Bank which so delivers a Form W-8, W-9, 4224
or 1001 further undertakes to deliver to each of the Borrowers and the Agent two
additional copies of such form (or a successor form) on or before the date that
such form expires or becomes obsolete or after the occurrence of any event
requiring a change in the most recent form so delivered by it, and such
amendments thereto or extensions or renewals thereof as may be reasonably
requested by the Borrowers or the Agent, certifying that such Bank is entitled
to receive payments under this Agreement and the Notes without deduction or
withholding of any United States federal income taxes. The Agent (and if the
Agent refuses, the Borrowers) shall be entitled to withhold United States
federal income taxes at the full withholding rate unless such Bank establishes
an exemption pursuant to the above provisions.
2.12 Joint and Several Liability. Each Borrower unconditionally and
irrevocably guarantees to each Bank the due, prompt and complete payment by each
other Borrower of its payment of principal of and interest on each Loan, when
and as the same shall become due and payable and any and all other amounts with
respect to which any other Borrower is obligated under any Loan Document. The
obligation of each Borrower under this Section 2.12 is a guaranty of payment and
not of collectability and is no way conditioned or contingent upon any attempt
to collect from or enforce compliance by any other Borrower or upon any other
event, contingency or circumstance whatsoever. The obligation of each Borrower
under this Section shall be primary, absolute and unconditional, shall not be
subject to any counterclaim, set-off, deduction, diminution, abatement,
recoupment, suspension, deferment, reduction, or defense based upon any claim
any Borrower or any other Person may have against any other Borrower or any
other Person, and shall remain in full force and effect without regard to, and
shall not be released, discharged or in any way affected by, any circumstance or
condition whatsoever (whether or not any Borrower shall have any knowledge or
notice thereof). No Borrower shall be subrogated to the rights of the Banks in
respect of any payment or other obligation with respect to which an amount has
been payable by such Borrower under this Section 2.12 and shall not seek to
exercise any rights of subrogation, reimbursement or indemnity arising from
payments made by it pursuant to the provisions of this Section 2.12.
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ARTICLE III
SECURITY
3.1 Security Documents. As security for the prompt payment,
performance, satisfaction and discharge when due of all the Obligations, the
Borrowers shall execute and deliver or shall cause to be executed and delivered
to the Bank, concurrently with the execution of this Agreement, the Security
Agreement, the Mortgage and the Pledge Agreements.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BORROWERS
In order to induce the Banks to execute and deliver this Agreement
and to make the Loans available to the Borrowers, each Borrower represents and
warrants to the Agent and the Banks that, as of the date hereof:
4.1 Good Standing of the Borrowers; Authorization. Each Borrower is
duly incorporated, organized and existing and in good standing in the state of
its incorporation or the jurisdiction of its incorporation as set forth on
Schedule 4.1(a) of this Agreement, and is duly qualified as a foreign
corporation and authorized to do business in all other jurisdictions wherein the
nature of its business or property makes such qualification necessary and the
failure to be so qualified would have a material adverse effect on such
Borrower, and has the corporate power to own its properties and to carry on its
business as now conducted. The execution, delivery and performance of this
Agreement, and the Loan Documents have been duly authorized by all necessary
corporate proceedings on the part of each Borrower. All issued and outstanding
capital stock of each Borrower is owned of record and beneficially by the
parties set forth on Schedule 4.1(b) of this Agreement; all such shares are
validly issued, fully paid and non-assessable, and the issuance and sale thereof
are in compliance with all applicable federal and state securities and other
applicable laws; and the shareholders' ownership thereof is free and clear of
any Encumbrances or other contractual restrictions. No Borrower has any
Subsidiary or Affiliate, except as set forth on Schedule 4.1(b) of this
Agreement.
4.2 Compliance with Laws; Permits; Licenses. Each Borrower is in
compliance with all laws, rules, regulations, judgments, decrees, orders,
agreements and requirements, and possesses all permits, licenses, franchises,
trademarks, copyrights and patents, which affect in any material way the
Borrower, its assets or the operation of its business and has not received, and
has no knowledge of, any order or notice of any governmental investigation or of
any violation or claim of
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violation of any law, regulation, judgment, decree, order, agreement, or other
governmental requirement.
4.3 No Conflict; Governmental Approvals. The execution, delivery,
and performance of this Agreement and each of the Loan Documents will not (i)
conflict with, violate, constitute a default under, or result in a breach of any
provision of any applicable law, rule, regulation, judgment, decree, order,
instrument or other material agreement, or (ii) conflict with or result in a
breach of any provision of the certificate of incorporation or by-laws of any
Borrower. No authorization, permit, consent or approval of or other action by,
and no filing, registration or declaration with, any of the Borrower's
shareholders, any other Person, any governmental authority or regulatory body is
required to be obtained or made by any Borrower for the due execution, delivery
and performance of this Agreement or any of the Loan Documents, except such as
have been duly obtained or made prior to the Closing Date and are in full force
and effect as of the Closing Date (copies of which have been delivered to the
Bank on or before the Closing Date).
4.4 Financial and Other Information Regarding Borrowers.
(a) The Borrowers have delivered to the Bank true, correct and
complete copies of (i) the consolidated audited financial statements contained
in the 10K report of the Consolidated Group as of September 30, 1995 and the
unqualified opinion thereon dated November 17, 1995 of Deloitte & Touche; and
(ii) the quarterly financial statements contained in the 10Q report of the
Consolidated Group as of December 31, 1995. Those financial statements
(collectively, the "Financial Statements") present fairly the financial position
of the Consolidated Group as of September 30, 1995 and December 31, 1995,
respectively, and the results of the operations for the periods then ended in
conformity with GAAP.
(b) No Borrower has any Indebtedness other than the
Indebtedness set forth on Schedule 4.4(b) of this Agreement.
(c) No Borrower has any "investment" (as such term is defined
under GAAP), whether by stock purchase, capital contribution, loan, advance,
purchase of property or otherwise, in any Person, other than in the
Subsidiaries.
4.5 Taxes. Each Borrower has filed all federal, state, local and
foreign tax returns and reports which it is required by law to file. No Borrower
is delinquent in payment of any income, property or other tax, including wage
taxes, assessments, withholdings and other governmental charges, except for any
delinquency in the payment of a tax which is contested in good faith by the
Borrower and for which appropriate reserves have been established in accordance
with GAAP, as set forth on Schedule 4.5 of this Agreement. The tax charges,
accruals and reserves on the books of the Borrower are adequate to pay all
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such taxes that have accrued but are not presently due and payable.
4.6 Encumbrances and Guaranties.
(a) All properties and assets of each Borrower are owned by
such Borrower free and clear of all Encumbrances except (i) those for taxes or
other government charges either not yet delinquent or the nonpayment of which is
permitted by Section 4.5 of this Agreement; (ii) those not arising in connection
with Indebtedness that do not materially impair the use or value of the
properties or assets of the Borrower in the conduct of its businesses; (iii)
Encumbrances whose release and termination is evidenced by the Borrower's
delivery to the Banks of appropriate documents on the Closing Date; (iv) the
Loan Documents and the Permitted Encumbrances; and (v) Encumbrances disclosed on
Schedule 4.6(a) of this Agreement.
(b) No Borrower is obligated under any Guaranty, except as set
forth on Schedule 4.6(b) of this Agreement.
4.7 Material Adverse Changes. Since September 30, 1995 there has
not been any material adverse change in the business, operations, properties or
financial position of any Borrower. No Borrower knows of any fact (other than
matters of a general economic or political nature) which materially adversely
affects, or, so far as any Borrower can now reasonably foresee, will materially
adversely affect, the business, operations, properties or financial position of
any Borrower or the performance by any Borrower of its obligations under this
Agreement and the other Loan Documents.
4.8 Margin Securities. None of the assets of any Borrower include
any "margin securities" within the meaning of Regulations G or U of the Board of
Governors of the Federal Reserve System (12 C.F.R. 207, 221), and no Borrower
has any present intention of acquiring any margin security.
4.9 ERISA. The provisions of each employee benefit plan as defined
in Section 3(3) of ERISA ("Plan") maintained by any Borrower complies in all
material respects with all applicable requirements of ERISA and of the Code, and
with all applicable rulings and regulations issued under the provisions of ERISA
and the Code setting forth those requirements. No reportable event, as defined
in Section 4043 of ERISA, has occurred with respect to any Plan; no Plan to
which Section 4021 of ERISA applies has been terminated; no Plan has incurred
any liability to PBGC as provided in Section 4062, 4063 and 4064 of ERISA; no
Plan has been involved in any prohibited transaction within the meaning of
Section 406 of ERISA or Section 4975 of the Code; and there are no unfunded
liabilities with respect to any Plan which are not disclosed in the Financial
Statements.
4.10 Pending Litigation. There are no actions, suits, proceedings
or investigations pending, or, to the knowledge of
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any Borrower, threatened against or affecting any Borrower before any court,
arbitrator or administrative or governmental body which, in the aggregate, might
adversely affect any action taken or to be taken by any Borrower under this
Agreement and the other Loan Documents or which, in the aggregate, might
adversely affect the business, operations, properties or financial position of
any Borrower, or the ability of any Borrower to perform its obligations under
this Agreement and the other Loan Documents.
4.11 Valid, Binding and Enforceable. This Agreement and the Loan
Documents have been duly and validly executed and delivered by the parties
thereto (other than the Agent and the Banks) and constitute the valid and
legally binding obligations of such parties enforceable in accordance with their
respective terms, except as enforcement of this Agreement and the other Loan
Documents may be limited by bankruptcy, insolvency or other laws of general
application relating to or affecting the enforcement of creditors' rights and
except as enforcement is subject to general equitable principles.
4.12 Priority of Mortgage. The Mortgage when recorded in the office
of the Recorder for the County of Camden, New Jersey, respectively, will create
a valid mortgage lien on the real property described therein, subject only to
such Encumbrances as may be expressly permitted by such Mortgage and the
Security Agreement.
4.13 Priority of Security Interests. The Security Agreement, upon
the filing of appropriate financing statements in the appropriate governmental
offices, will create valid first perfected security interests in the personal
property of each Borrower described therein as collateral for all the
Obligations except for Permitted Encumbrances.
4.14 Environmental Matters.
(a) Each Borrower has performed all of its obligations under,
has obtained all necessary material approvals, permits, authorizations and other
consents required by, and is not in material violation of any Environmental
Laws;
(b) No Borrower has received any notice, citation, summons,
directive, order or other communication, written or oral, from, and no Borrower
has any knowledge of the filing or giving of any such notice, citation, summons,
directive, order or other communication by, any governmental or
quasi-governmental authority or agency or any other Person concerning the
presence, generation, treatment, storage, transportation, transfer, disposal,
release or other handling of any Hazardous Materials in violation of any
Environmental Law within, on, from, related to, or affecting any real property
owned or occupied by any Borrower;
(c) To the best of each Borrower's knowledge, no real property
owned or occupied by the Borrower has ever been used, either by the Borrower or
by any of its predecessors in
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interest, to generate, treat, store, transport, transfer, dispose of, release or
otherwise handle any Hazardous Material in violation of any Environmental Law;
(d) To the best of each Borrower's knowledge, there are no
Hazardous Materials within, on or under any real property owned or occupied by
the Borrower in violation of any Environmental Law;
(e) No Borrower has given any written or oral notice, nor has
it failed to give required notice, to the Environmental Protection Agency
("EPA") or any state or local agency with regard to any actual or imminently
threatened Release of Hazardous Materials on properties owned, leased, or
operated by the Borrower or used in connection with the conduct of its business
and operations.
4.15 Solvency. Each of the Consolidated Group and Packaging
Coordinators (including its direct and indirect Subsidiaries) is, and after
giving effect to the transactions contemplated hereby, shall be Solvent.
4.16 No Untrue Statements. Neither this Agreement, the Loan
Documents nor any other document, certificate or statement furnished or to be
furnished by any Borrower in connection herewith contains, or at the time of
delivery will contain, any untrue statement of a material fact or omits or will
omit to state a material fact necessary in order to make the statements
contained herein and therein not misleading.
ARTICLE V
CONDITIONS PRECEDENT TO THE OBLIGATIONS
OF THE AGENT AND THE BANKS
The obligations of the Agent and the Banks hereunder are
conditioned upon the satisfaction by the Borrowers of the following conditions
precedent:
5.1 Documents to be Delivered by the Borrowers at Closing. The
Borrowers shall deliver or cause to be delivered to the Agent and the Banks at
the Closing the following, in each instance in form and substance satisfactory
to the Agent and the Banks:
(a) This Agreement duly executed by each Borrower;
(b) The Revolving Credit Notes duly executed by each Borrower;
(c) The Term Loan Notes duly executed by each Borrower;
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(d) The Equipment Facility Notes duly executed by each
Borrower;
(e) The Security Agreement duly executed by each Borrower,
together with such Uniform Commercial Code financing statements and other
documents as the Agent may reasonably require to be executed by the Borrowers;
(f) The Pledge Agreements duly executed by the pledgors named
therein and the delivery of the pledged shares together with stock powers
executed in blank;
(g) The Mortgage duly executed by the parties named therein
and acknowledged, in form suitable for recording;
(h) The Acquisition Guaranty duly executed by the guarantors
named therein;
(i) Evidence of each Borrower having complied with those
covenants regarding insurance as are contained in this Agreement and the other
Loan Documents;
(j) A certificate of the Secretary or an Assistant Secretary
of each Borrower dated the Closing Date including (i) resolutions duly adopted
by such Borrower authorizing the transactions under the Loan Documents; (ii) a
copy of the by-laws of such Borrower; (iii) evidence of the incumbency and
signature of the officers executing on its behalf any of the Loan Documents and
any other document to be delivered pursuant to any such documents, together with
evidence of the incumbency of such Secretary or Assistant Secretary; (iv) a copy
of such Borrower's Articles and Certificate of Incorporation, together with the
certification of the Secretary or Assistant Secretary of such Borrower as of the
Closing Date that such Articles and Certificate of Incorporation have not been
amended since the date of the aforesaid certification; and (v) certificates of
authority or good standing for the Borrower from its jurisdiction of
incorporation and any other jurisdiction where such Borrower is qualified to do
business;
(k) A copy of each and every authorization, permit, consent,
and approval of and other action by, and notice to and filing with, every
governmental authority and regulatory body or any other Person which is required
to be obtained or made by any Borrower for the due execution, delivery and
performance of this Agreement and the other Loan Documents;
(l) Policies of title insurance issued by a title company
satisfactory to the Bank insuring the Mortgage, as a valid mortgage lien,
subject only to exceptions approved by the Banks;
(m) Evidence of the pay-off of the Existing Indebtedness;
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(n) Evidence of completion of the Acquisition if the
Acquisition shall occur on the Closing Date;
(o) The Agent shall have received all certificates,
instruments and other documents required to be delivered pursuant to any Loan
Documents; and
(p) The opinion of Ballard, Spahr Andrews & Ingersoll dated as
of Closing Date, in form and substance reasonably satisfactory to the Agent, the
Banks and their counsel.
5.2 Conditions Precedent to Making Loans. The Banks shall not be
obligated to make any Loan hereunder unless:
(a) As of the date of the proposed advance, no Potential Event
of Default or Event of Default has occurred and is continuing;
(b) The representations and warranties contained in Article IV
are true and correct on the date of the proposed advance, except that the
representations and warranties in Section 4.4 shall refer to the financial
statements most recently supplied to the Banks pursuant to Section 6.2 of this
Agreement; and
(c) No material adverse change has occurred in the financial
condition of the Borrowers since the date hereof;
(d) The Borrowers shall have delivered to the Agent a Notice
of Borrowing; and
(e) The Borrowers have delivered to the Agent, upon its
request, a certificate executed by the chief executive officer of the Borrowers
confirming the statements made in paragraphs (a), (b), and (c) above.
ARTICLE VI
AFFIRMATIVE COVENANTS OF THE BORROWERS
Each Borrower hereby covenants and agrees that from the date hereof
and until satisfaction in full of the Obligations, and termination of the
Commitments, unless the Agent at the direction of the Required Banks shall
otherwise consent in writing, each Borrower shall do the following:
6.1 Use of Proceeds. Use the proceeds of the borrowings hereunder
only for the purposes specified in Sections 2.1, 2.2
and 2.3 of this Agreement.
6.2 Financial Statements. Furnish to each Bank:
(a) within one hundred twenty (120) days after the end of each
fiscal year, the annual 10K report of the
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Consolidated Group and the consolidated financial statements of such entities
including a balance sheet, statement of income and statement of cash flows, all
of which shall present fairly the financial condition of such entities as of the
close of such year and the results of their operations during such year, in
accordance with GAAP, and shall be audited and accompanied by the unqualified
opinion of a nationally recognized independent public accountant which ranks in
the top six accounting firms in the United States together with the
consolidating financial statements of such entities including a balance sheet
and statement of income, in accordance with GAAP;
(b) within sixty (60) days after the end of each fiscal
quarter, the quarterly 10Q report of the Consolidated Group to include the
consolidated financial statements of such entities, including a balance sheet,
statement of income and a statement of cash flows, together with consolidating
financial statements of such entities, including a balance sheet and statement
of income, which shall present fairly the financial condition of such entities
as of the close of such fiscal quarter and the results of their operations,
during such quarter, in accordance with GAAP, certified by the chief financial
officer of PCI Services;
(c) within sixty (60) days after the end of the first three
fiscal quarters, and within one hundred five (105) days after the end of the
fourth fiscal quarter, the consolidated and consolidating financial statements
of the PCI Group, including a balance sheet, statement of income and a statement
of cash flows, which shall present fairly the financial condition of such
entities as of the close of such fiscal quarter and the results of their
operations during such quarter, in accordance with GAAP, certified by the chief
financial officer of Packaging Coordinators;
(d) concurrently with the delivery of the financial statements
required by subsection (b) and (c) above, but in no event later than sixty (60)
days after the end of each fiscal quarter, a Covenant Compliance Certificate
certifying that the Borrowers are in compliance with all the terms and
conditions of this Agreement;
(e) within sixty (60) days after the end of each fiscal
quarter, the accounts receivable aging report of each Borrower; and
(f) such other financial information as the Bank shall
reasonably request.
6.3 Ordinary Course of Business; Records. Conduct its business only
in the ordinary course and keep accurate and complete books and records of its
assets, liabilities and operations consistent with sound business practices and
in accordance with GAAP.
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6.4 Information for the Agent and the Banks. Make available during
normal business hours for inspection by the Agent or any Bank or any of their
designated representatives, upon prior notice, any of its books and records when
reasonably requested by the Agent or any Bank to do so, and furnish the Agent or
any Bank any information reasonably requested regarding its operations, business
affairs and financial condition within a reasonable time after the Agent or such
Bank gives notice of its request therefor. In particular, and without limiting
the foregoing, the Borrowers shall permit, during normal business hours, and
upon prior notice, representatives of the Agent's Audit Department to make such
periodic inspections of books, records and assets of the Borrowers as such
representatives deem necessary and proper. The Borrowers acknowledge that such
audits shall be performed by the Agent at least once a year. Prior notice
hereunder need not be given by the Agent or any Bank to the Borrowers if an
Event of Default shall exist under this Agreement. The Borrowers shall reimburse
the Agent for its costs and expenses hereunder but the costs and expenses of any
Bank shall be borne by such Bank.
6.5 Insurance. Carry at all times in financially sound and
reputable insurers insurance against such other hazards as are usually insured
against by business entities of established reputation engaged in like
businesses and similarly situated and such other insurance as the Agent may from
time to time reasonably require, and pay all premiums on the policies for all
such insurance when and as they become due and take all other actions necessary
to maintain such policies in full force and effect at all times. Each Borrower
shall from time to time, upon request by the Agent, promptly furnish or cause to
be furnished to the Agent evidence, in form and substance satisfactory to the
Agent, of the maintenance of all insurance required to be maintained hereby,
including, without limitation, such originals or copies as the Agent may request
of policies, certificates of insurance, riders and endorsements relating to such
insurance and proof of premium payments. Each Borrower shall cause each hazard
insurance policy to provide, and the insurer issuing each such policy to certify
to the Agent that (a) if such insurance be proposed to be cancelled or
materially changed for any reason whatsoever, such insurer will promptly notify
the Agent and such cancellation or change shall not be effective for 30 days
after receipt by the Agent of such notice, unless the effect of such change is
to extend or increase coverage under the policy; (b) the Agent shall be named as
lender loss payee for the ratable benefit of the Banks with respect to personal
property and mortgagee with respect to real property; and (c) the Agent or the
Banks shall have the right, at their election, to remedy any default in the
payment of premiums within 30 days of notice from the insurer of such default.
The foregoing covenants regarding insurance are in addition to, and not intended
to supersede, those covenants regarding insurance set forth in the Security
Agreement. In the event and to the extent of any conflict between the provisions
of this Agreement and the provisions of the Security Agreement regarding the
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insuring of Collateral, the provisions of the Security Agreement with respect
thereto shall govern.
6.6 Maintenance. Maintain its equipment, real property and other
properties in good condition and repair (normal wear and tear excepted) and pay
and discharge the cost of repairs thereto or maintenance thereof.
6.7 Taxes/Other Charges. Pay all taxes, assessments, charges and
levies imposed upon it or on any of its property, or which it is required to
withhold and pay over, and pay all lawful claims for labor, materials and
supplies, or otherwise and provide evidence of payment thereto to the Agent if
the Agent so requests; provided however, that so long as any Borrower first
notifies the Agent of its intention to do so, the Borrower shall not be required
to pay such tax or other charges which are, contested in good faith by lawful
and appropriate proceedings and where adequate reserves therefor have been set
aside on its books so long as such nonpayment does not constitute or result in
an Event of Default or Potential Default provided, however, that the Borrowers
shall pay all such taxes, assessments, charges and levies forthwith whenever
foreclosure on any lien attaches or appears imminent.
6.8 Leases. Pay all rent or other sums required by every lease to
which the Borrower is a tenant as the same becomes due and payable, perform all
its obligations as tenant or lessee thereunder except where contested in good
faith by lawful and appropriate proceedings and where adequate reserves therefor
have been set aside; and keep all such leases at all times in full force and
effect during the terms thereof.
6.9 Corporate Existence; Certain Rights; Laws. Do all things
necessary to preserve and keep in full force and effect in each jurisdiction in
which it conducts business the business existence, licenses, permits, rights,
patents, trademarks, trade names and franchises of the Borrower and comply with
all present and future laws, ordinances, rules, regulations, judgments, orders
and decrees which affect in any material way the Borrower, its assets or the
operation of its business.
6.10 Notice of Litigation or Other Proceedings. Give immediate
notice to the Agent of (i) the existence of any dispute, (ii) the institution of
any litigation, administrative proceeding or governmental investigation
involving the Borrower or (iii) the entry of any judgment, decree or order
against or involving the Borrower, any of which might adversely affect the
operation, financial condition, property or business of the Borrower or affect
the enforceability of this Agreement or any of the other Loan Documents.
6.11 Indebtedness. Pay or cause to be paid when due (or within
applicable grace periods) all of its Indebtedness.
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6.12 Notice of Events of Default. Give immediate notice to the
Agent if the Borrower becomes aware of the occurrence of any Event of Default or
any Potential Event of Default, or of the failure of the Borrower to observe or
perform any of the conditions or covenants to be observed or performed by it
under this Agreement or any of the other Loan Documents.
6.13 ERISA. Maintain each Plan in material compliance with all
applicable requirements of ERISA and of the Code and with all applicable rulings
and regulations issued under the provisions of ERISA and of the Code. As
promptly as practicable (but in any event not later than ten days) after the
Borrower receives from the PBGC a notice of intent to terminate any Plan or to
appoint a trustee to administer any Plan, after the Borrower has notified the
PBGC that any reportable event, as defined in Section 4043 of ERISA, with
respect to any Plan has occurred, or after the Borrower has provided a notice of
intent to terminate to each affected party, as defined for purposes of Section
4041(a)(2) of ERISA, with respect to any Plan, a certificate of the chief
executive officer of the Borrower shall be furnished to the Agent setting forth
the details with respect to the events resulting in such reportable event, as
the case may be, and the action which the Borrower proposes to take with respect
thereto, together with a copy of the notice of intent to terminate or to appoint
a trustee from the PBGC, of the notice of such reportable event or of the
Borrower's notice of intent to terminate, as the case may be.
6.14 Deposit Accounts. Use the Agent as its primary depository
institution to the extent reasonably feasible unless otherwise agreed in writing
by the Agent; and notify the Agent, in writing and on a continuing basis, of all
deposit accounts and certificates of deposit (including the numbers thereof)
maintained with or purchased from other banks and other financial institutions.
6.15 Financial Covenants. Maintain the financial covenants with
respect to the Consolidated Group and the PCI Group set forth on Schedule 6.15
of this Agreement.
6.16 Compliance with Environmental Laws. Comply fully with all
Environmental Laws and not use any property which it owns or occupies to
generate, treat, store, transport, transfer, dispose of, release or otherwise
handle any Hazardous Material, except in compliance with all Environmental Laws.
6.17 Further Actions. Cooperate and join with the Banks and the
Agent, at its own expense, in taking all such further actions as the Agent and
the Banks, in their sole judgment, shall deem necessary to effectuate the
provisions of the Loan Documents and to perfect or continue the perfected status
of all Encumbrances granted to Agent for the benefit of the Banks pursuant to
the Loan Documents, including, without limitation, the execution, delivery and
filing of financing statements, amendments thereto and continuation statements.
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6.18 Subsidiary Covenants. Cause each Subsidiary to represent and
warrant or comply, as the case may be, with the first sentence of Section 4.1,
Sections 4.2, 4.10, 6.9, 6.10, 7.1(a) and 7.1(b), the first sentence of Section
7.7, and Section 7.10 and 7.12 of this Agreement. For purposes of this Section
6.18 only, the word "materially" shall be inserted before the word "adversely"
in Sections 4.10 and 6.10 of this Agreement.
6.19 Packaging Coordinators Mortgage. Use its best efforts to
obtain the consent of The Pennsylvania Industrial Development Authority ("PIDA")
and PIDC Local Development Corporation ("PIDCLDC") to the execution and delivery
of a mortgage, assignment of leases, and security agreement by Packaging
Coordinators and PIDC Financing Corporation ("PIDCFC"), securing the Loans and
encumbering the property located at Red Lion and Decatur Roads, Philadelphia,
Pennsylvania, the lien of which mortgage shall be subordinate to the existing
mortgage liens of PIDA and PIDCLDC. Upon obtaining the consent of PIDA and
PIDCLDC, Packaging Coordinators shall, and shall cause PIDCFC to, execute and
deliver such mortgage to the Agent, such mortgage to be in substantially the
same form as the Mortgage, Assignment of Leases and Security Agreement dated
December 22, 1994 from Packaging Coordinators and PICDCFC to Meridian Bank.
6.20 Acquisition. After the Closing Date, but no later than April
15, 1996, the Borrowers shall be permitted to borrow under the Term Loan to fund
certain costs of the Acquisition, provided the following conditions have been
met to the sole satisfaction of the Agent and the Banks as certified to the
extent required by the Banks, in a certificate of the chief financial officer of
the Borrowers:(i) PCI Services shall have acquired pursuant to the Acquisition
Agreements all of the Shares free and clear of all Encumbrances, except as
provided in the Acquisition Agreements; and (ii) the Borrowers shall be in
compliance with the requirements for borrowing set forth in Section 5.2 of this
Agreement.
6.21 Perfection of Stock. No later than thirty (30) days from the
Closing Date, deliver to the Agent for the benefit of the Banks, at its own
expense, all documentation that the Agent shall deem necessary to perfect a
security interest in the capital stock of Allpack Industrielle Lohnverpackung
GMBH.
6.22 Management. Retain management personnel at all times
satisfactory to the Agent and the Required Banks, it being understood that
management on the date hereof is satisfactory.
6.23 Corporate Documents. Deliver to the Agent within fifteen (15)
days from the Closing Date ratifying resolutions as may be required in
connection with any transactions hereunder.
6.24 Delivery of Collateral. Deliver to the Agent for the benefit
of the Banks a security interest in all collateral in which CoreStates as Agent
under the Facilities Agreement, is granted a security interest. All such
security interests granted
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to the Agent hereunder shall be delivered to the Agent concurrently with the
delivery thereof to CoreStates and shall be on a parity basis with such
collateral.
ARTICLE VII
NEGATIVE COVENANTS
Each Borrower hereby covenants and agrees that from the Closing
Date until satisfaction in full of the Obligations and termination of the
Commitments, it shall not permit any Borrower to do any one or more of the
following without first obtaining the written approval of the Agent and the
Required Banks:
7.1 Fundamental Corporate Changes.
(a) Change its name, enter into or effect any merger,
consolidation, share exchange, division, conversion, reclassification,
recapitalization, reorganization or other transaction of like effect, or
dissolve, or permit any change in the ownership of any capital stock of any
Borrower other than PCI Services, provided that any Subsidiary other than
Packaging Coordinators may merge into its sole shareholder or another Subsidiary
if such shareholder or other Subsidiary is a Borrower hereunder;
(b) Sell, transfer, lease or otherwise dispose of all or
(except in the ordinary course of business) any material part of its assets or
any significant product line or process;
(c) Have any Subsidiary, other than those set forth on
Schedule 4.1 of this Agreement.
7.2 Indebtedness. Incur, create, assume or have any Indebtedness
except:
(a) The Loans;
(b) Not more than $500,000 in the aggregate of Indebtedness of
the Borrowers constituting either Capital Lease Obligations or Indebtedness
under agreements for the installment purchase of equipment, provided that such
Indebtedness does not exceed 100% of the installment purchase price of such
equipment;
(c) Indebtedness to the Banks;
(d) Indebtedness to CoreStates as Agent under the Facilities
Agreement;
(e) Indebtedness to the Pennsylvania Department of Commerce
Machinery and Equipment Loan Fund in an amount not to exceed $500,000 in any
fiscal year; and
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(f) The Indebtedness set forth on Schedule 4.4(b) of this
Agreement.
7.3 Encumbrances.
(a) Execute a negative pledge agreement or otherwise enter
into an agreement with any Person which prohibits or otherwise restricts the
Borrower's ability to create or allow any Encumbrance to be on or otherwise
affect any of its properties, other than pursuant to this Agreement;
(b) Create or allow any Encumbrances to be on or otherwise
affect any of its property or assets except ("Permitted Encumbrances"):
(i) Encumbrances in favor of the Agent for the benefit of
the Banks;
(ii) Encumbrances for taxes, assessments and other
governmental charges incurred in the ordinary course of business which are not
yet due and payable;
(iii) Pledges or deposits made in the ordinary course of
business to secure payment of workmen's compensation or to participate in any
fund in connection with workmen's compensation, unemployment insurance or other
social security obligations;
(iv) Good faith pledges or deposits made in the ordinary
course of business to secure performance of tenders, contracts (other than for
the repayment of Indebtedness) or leases or to secure statutory obligations or
surety, appeal, indemnity, performance or other similar bonds required in the
ordinary course of business;
(v) Liens of mechanics, materialmen, warehousemen,
carriers or other similar liens, securing obligations incurred in the ordinary
course of business that are not yet due and payable;
(vi) Encumbrances securing Indebtedness permitted under
Section 7.2(b), provided that (i) no other covenants of this Agreement are
thereby violated and (ii) no equipment other than the equipment so acquired
secures such Indebtedness;
(vii) Encumbrances, if any, otherwise expressly permitted
by the Security Agreement or the Mortgage;
(viii) Encumbrances to the Banks; and
(ix) Encumbrances to CoreStates as Agent under the
Facilities Agreement; and
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(x) Encumbrances disclosed on Schedule 4.6(a) of this
Agreement.
7.4 Guaranties. Directly or indirectly make any Guaranty, except
those to CoreStates in connection with the Acquisition and those set forth on
Schedule 4.6(b) of this Agreement.
7.5 Sales and Lease-Backs. Sell, transfer or otherwise dispose of
any property, real or personal, now owned or hereafter acquired, with the
intention of directly or indirectly taking back a lease on such property.
7.6 Loans, Investments. Except as set forth in Section 7.10 of this
Agreement, purchase, invest in, or make any loan in the nature of an investment
in the stocks, bonds, notes or other securities or evidence of Indebtedness of
any Person, or make any loan or advance to or for the benefit of any Person,
including without limitation, loans or advances to MEDIQ Incorporated, except
for (i) loans or advances from one Borrower to another Borrower, except that
PCI/Tri-Line shall not be permitted to borrow under the Commitments in an amount
in excess of the greater of $150,000 or its Net Worth, as determined in
accordance with GAAP; (ii) loans or advances to any member of the Consolidated
Group which is not a Borrower hereunder not to exceed an additional $750,000 in
the aggregate at any one time in excess of that outstanding as of the date
hereof; (iii) short-term obligations of the Treasury of the United States of
America; (iv) certificates of deposit issued by banks with shareholders' equity
of at least $100,000,000; (v) repurchase agreements not exceeding 29 days in
duration issued by banks with shareholders' equity of at least $100,000,000;
(vi) notes and other instruments generally known as "commercial paper" which
arise out of current transactions, which have maturities at the time of issuance
thereof not exceeding nine months and which have, at the time of such purchase,
investment or other acquisition, a credit rating of (A-1) or better of Standard
& Poor's Corporation or P-1 or better by Moody's Investors Service, Inc.; and
(vii) investments contemplated by the Acquisition
7.7 Change in Business. Discontinue any substantial part, or change
the nature of, its business, or enter into any new business unrelated to the
present business conducted by it. Except in connection with the Acquisition, no
Borrower shall acquire any of the assets or corporate securities of any Person
in an amount greater than $500,000.
7.8 Sale or Discount of Receivables. Sell any notes receivable or
accounts receivable, with or without recourse.
7.9 ERISA.
(a) Terminate any Plan maintained by any Borrower to which
Section 4021 of ERISA applies;
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(b) Allow the value of the benefits guaranteed under Title
IV of ERISA to exceed the value of assets allocable to such benefits;
(c) Incur a withdrawal liability within the meaning of
Section 4201 of ERISA.
7.10 Restricted Payments. Declare or pay any dividend, or make any
distributions of cash or property, to holders of any shares of its capital
stock, or, directly or indirectly, redeem or otherwise acquire any such shares
or any option, warrant or right to acquire any such shares; provided that (i)
each Subsidiary may declare and pay dividends to its shareholder limited to its
Net Income (reduced by any net losses); and (ii) PCI Services may declare and
pay dividends and/or repurchase its common stock outstanding up to a maximum
aggregate amount of 300,000 shares ("Buy-Back") provided that at the time of the
payment of any dividend by PCI Services, the Consolidated Group shall have a
ratio of Consolidated Funded Debt to Tangible Net Worth (as such terms are
defined on Schedule 6.15 of this Agreement) of no greater than 1.00:1 and the
amounts paid or to be paid with respect to the dividends and Buy-Back permitted
hereunder shall not exceed 50% of the Net Income of the Consolidated Group
(reduced by any net losses) during any fiscal year, and provided further no
Event of Default or Potential Event of Default has occurred and is continuing at
the time of such declaration or payment and provided further that the payment of
such dividend or Buy-Back will not cause the occurrence of an Event of Default
or Potential Event of Default.
7.11 Management and Service Fees. Permit the fees for management or
other services to be paid by any of the Consolidated Group to MEDIQ Incorporated
to exceed $200,000 in the aggregate per fiscal year, as set forth in the
Services Agreement dated September 21, 1991 between MEDIQ Incorporated and PCI
Services.
7.12 Compliance with Federal Reserve Board Regulations. (i) Use any
of the proceeds of the Loans, directly or indirectly, for the purposes of
purchasing or carrying any "margin security" within the meaning of Regulations G
or U of the Board of Governors of the Federal Reserve System (12 C.F.R. 207,
221), (ii) use any of the proceeds of the Loans, directly or indirectly, for the
purpose of purchasing, carrying or trading in any securities under such
circumstances as to involve the Borrower in a violation of Regulation X of such
Board (12 C.F.R. 224), or (iii) take or permit to be taken any other action
which would result in the Loans or the consummation of any of the other
transactions contemplated hereby being violative of such regulations or any
other regulation of such Board.
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ARTICLE VIII
EVENTS OF DEFAULT
An event of default ("Event of Default") under this Agreement shall
be deemed to exist if any one or more of the following events occurs and is
continuing, whatever the reason therefor:
8.1 Failure to Pay. The Borrowers fail to pay any amount of
principal, interest, fees or other sums as and when due under this Agreement or
any of the Loan Documents, or any other Obligations, whether upon stated
maturity, acceleration, or otherwise.
8.2 Breach of Covenants or Conditions. The Borrowers fail to
perform or observe any term, covenant, agreement or condition in this Agreement
or any of the Loan Documents or are in violation of or non-compliance with any
other provisions of this Agreement or any of the Loan Documents, and have not,
if curable, remedied and fully cured such non-performance, non-observance,
violation of or non-compliance within fifteen (15), days from the occurrence
thereof provided, however, that during such fifteen (15) day period the
obligations of the Banks to make further Loans to the Borrowers shall be
suspended.
8.3 Defaults in other Agreements. Any Borrower fails to perform or
observe any material term, covenant, agreement or condition contained in, or
there shall occur any default under or as defined in, any other agreement
applicable to the Borrower or by which it is bound, involving a material
liability of the Borrower, including any agreement in connection with the
Acquisition, which shall not be remedied within the period of time (if any)
within which such other agreement permits such default to be remedied, unless
such default is waived by the other party thereto or excused as a matter of law.
8.4 Agreements Invalid. The validity, binding nature of, or
enforceability of any material term or provision of any of the Loan Documents is
disputed by, on behalf of, or in the right or name of any Borrower or any
material term or provision of any such Loan Document is found or declared to be
invalid, avoidable, or non-enforceable by any court of competent jurisdiction.
8.5 False Warranties; Breach of Representations. Any warranty or
representation made by any Borrower in this Agreement or any other Loan Document
or in any certificate or other writing delivered by any of the Borrowers under
or pursuant to this Agreement or any other Loan Document, or in connection with
any provision of this Agreement or related to the transactions contemplated
hereby shall prove to have been false or incorrect or breached in any material
respect on the date as of which made.
8.6 Judgments. A final judgment or judgments is entered, or an
order or orders of any judicial authority or
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governmental entity is issued against any Borrower (such judgment(s) and
order(s) hereinafter collectively referred to as "Judgment") (i) for payment of
money, which Judgment, in the aggregate, exceeds Two Hundred Fifty Thousand
($250,000) outstanding at any one time and is not fully covered by a valid
insurance policy issued by an insurer that is solvent at the time of such
Judgment; or (ii) for injunctive or declaratory relief which would have a
material adverse effect on the ability of any Borrower to conduct its business,
and such Judgment is not discharged or execution thereon or enforcement thereof
stayed pending appeal, within thirty days after entry or issuance thereof, or,
in the event of such a stay, such Judgment is not discharged within thirty days
after such stay expires.
8.7 Bankruptcy or Insolvency of the Borrowers.
(a) Any Borrower becomes insolvent, or generally fails to pay,
or is generally unable to pay, or admits in writing its inability to pay, its
debts as they become due or applies for, consents to, or acquiesces in, the
appointment of a trustee, receiver or other custodian for the Borrower, as the
case may be, or a substantial part of its property, or makes a general
assignment for the benefit of creditors;
(b) Any Borrower commences any bankruptcy, reorganization,
debt arrangement, or other case or proceeding under any state or federal
bankruptcy or insolvency law, or any dissolution or liquidation proceeding;
(c) Any bankruptcy, reorganization, debt arrangement, or other
case or proceeding under any state or federal bankruptcy or insolvency law, or
any dissolution or liquidation proceeding, is involuntarily commenced against or
in respect of any Borrower or an order for relief is entered in any such
proceeding and such proceeding is not dismissed within thirty (30) days from the
commencement thereof; and
(d) A trustee, receiver, or other custodian is appointed for
any Borrower or a substantial part of such Person's property and such
appointment is not dismissed within thirty (30) days from the commencement
thereof.
8.8 Attachments. Any assets of any Borrower shall be subject to
attachments, levies, or garnishments for amounts in excess of $250,000 in the
aggregate which have not been dissolved or satisfied within twenty (20) days
after service of notice thereof to the Borrower.
8.9 PCI Services Change in Control. Without obtaining the written
consent of the Agent and the Required Banks, permit any person or group, as such
terms are used in Section 13(d) of the Securities Exchange Act of 1934, as
amended (the "1934 Act") and the rules and regulations promulgated thereunder,
other than MEDIQ Incorporated, to have beneficial ownership (within the meaning
of Rule 13d-3 of the 1934 Act), directly or indirectly,
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of securities of PCI Services (or other securities convertible into such
securities) representing twenty percent (20%) or more of the combined voting
power of all securities of PCI Services entitled to vote in the election of
directors (hereinafter called a "Controlling Person"). For purposes hereof, a
person or group shall not be a Controlling Person if such person or group holds
voting power as an agent, bank, broker, nominee, trustee, or holder of revocable
proxies given in response to a solicitation pursuant to the 1934 Act, for one or
more beneficial owners who do not individually, or, if they are a group acting
in concert, as a group, have the voting power specified above. Notwithstanding
the above, a violation of this Section 8.9 shall not constitute an Event of
Default hereunder if the Borrowers within ninety (90) days from the occurrence
thereof have repaid all the Obligations in full and terminated the Commitments.
ARTICLE IX
REMEDIES
9.1 Further Advances; Acceleration; Setoff. Upon the occurrence
of any one or more Events of Default:
(a) if such event is an Event of Default specified in Section
8.7 of this Agreement, automatically the Commitments shall immediately terminate
and the Loans issued hereunder, together with all accrued interest thereon and
all other amounts owing under this Agreement and the Notes, shall immediately
become due and payable, as shall all other of the Obligations of the Borrowers
to the Agent and any of the Banks, and the Loans shall accrue interest at the
Default Rate;
(b) if such an event is (i) an Event of Default specified in
Section 8.1 through 8.6, 8.8 or 8.9 of this Agreement, the Agent shall upon
written request of the Required Banks, take any one or more of the following
actions by written notice to the Borrowers:
(i) declare the Commitments to be reduced to zero and
terminated forthwith, whereupon the Commitments shall immediately
terminate;
(ii) declare the Loans issued hereunder together with all
accrued interest thereon and all other amounts owing under this
Agreement and the Notes, as well as all other of the Obligations of the
Borrowers to the Agent and any of the Banks, to be due and payable
forthwith, whereupon the same shall immediately become due and payable;
presentment, demand, protest and all other notices of any kind in
connection with any Event of Default or acceleration are hereby
expressly waived by the Borrowers;
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(iii) increase the rate of interest on the Loans to the
Default Rate; and/or
(iv) take such other remedies as may be available to the
Agent and Banks under applicable law.
(c) If any of the Obligations shall be due and payable or any
one or more Events of Default shall have occurred, each Bank shall have the
right, in addition to all other rights and remedies available to it, without
notice to the Borrowers, to apply toward and set-off against and apply to the
then unpaid balance of the Notes and the other Obligations any items or funds
held by such Bank, any and all deposits (whether general or special, time or
demand, matured or unmatured, fixed or contingent, liquidated or unliquidated)
now or hereafter maintained by any Borrower for its own account with such Bank,
and any other indebtedness at any time held or owing by Bank to or for the
credit or the account of any Borrower. For such purpose each Bank shall have,
and each Borrower hereby grants to each Bank, a first lien on and assigns all
right and title and interest in all such deposits as security. Each Bank is
hereby authorized to charge any such account or indebtedness for any amounts due
to Bank. Such right of set-off shall exist whether or not the such Bank shall
have made any demand under this Agreement, the Notes or any other Loan Document
and whether or not the Notes and the other Obligations are matured or unmatured.
Each Borrower hereby confirms each Bank's lien on such accounts and right of
set-off, and nothing in this Agreement shall be deemed any waiver or prohibition
of such lien and right of set-off. Each Bank agrees that if it shall, by
exercising any right of set-off in respect to the Loans or other obligations
under this Agreement, receive any monies or funds of any Borrower, such Bank
shall hold such amount in trust for the Agent and shall promptly pay over the
same to the Agent for distribution in accordance with Article X of this
Agreement.
9.2 Further Remedies. Upon the occurrence of any one or more Events
of Default, the Agent may proceed to protect and enforce its rights under this
Agreement and the other Loan Documents by exercising such remedies as are
available to the Agent and the Banks in respect thereof under applicable law,
either by suit in equity or by action at law, or both, whether for specific
performance of any provision contained in this Agreement or any of the other
Loan Documents or in aid of the exercise of any power granted in this Agreement
or any of the other Loan Documents.
ARTICLE X
AGENCY AGREEMENT
10.1 Appointment and Authorization. Each Bank hereby irrevocably
appoints and authorizes the Agent to take such action
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on its behalf and to exercise such powers under this Agreement and the Loan
Documents as are specifically delegated to the Agent by the terms hereof or
thereof, together with such other powers as are reasonably incidental thereto.
The relationship between the Agent and each Bank has no fiduciary aspects, and
the Agent's duties (as Agent) hereunder are acknowledged to be only ministerial
and not involving the exercise of discretion on its part. Nothing in this
Agreement or any Loan Document shall be construed to impose on the Agent any
duties or responsibilities other than those for which express provision is made
herein or therein. In performing its duties and functions hereunder, the Agent
does not assume and shall not be deemed to have assumed, and hereby expressly
disclaims, any obligation with or for the Borrowers. As to matters not expressly
provided for in this Agreement or any Loan Document, the Agent shall not be
required to exercise any discretion or to take any action or communicate any
notice, but shall be fully protected in so acting or refraining from acting upon
the instructions of the Required Banks and their respective successors and
assigns; provided, however, that in no event shall the Agent be required to take
any action which exposes it to personal liability or which is contrary to this
Agreement, any Loan Document or applicable law, and the Agent shall be fully
justified in failing or refusing to take any action hereunder unless it shall
first be specifically indemnified to its satisfaction by the Banks against any
and all liability and expense which may be incurred by it by reason of taking or
omitting to take any such action. If an indemnity furnished to the Agent for any
purpose shall, in the reasonable opinion of the Agent, be insufficient or become
impaired, the Agent may call for additional indemnity from the Banks and not
commence or cease to do the acts for which such indemnity is requested until
such additional indemnity is furnished.
10.2 Duties and Obligations. In performing its functions and duties
hereunder on behalf of the Banks, the Agent shall exercise the same care and
skill as it would exercise in dealing with loans for its own account. Neither
the Agent nor any of its directors, officers, employees or other agents shall be
liable for any action taken or omitted to be taken by it or them under or in
connection with this Agreement or any Loan Document except for its or their own
gross negligence or willful misconduct. Without limiting the generality of the
foregoing, the Agent (a) may treat the payee of any Note as the holder thereof
until the Agent receives written notice of the assignment or transfer thereof
signed by such payee and in form satisfactory to the Agent; (b) may consult with
legal counsel (including counsel for the Borrowers) and other experts selected
by it and shall not be liable for any action taken or omitted to be taken by it
in good faith and in accordance with the advice of such experts; (c) makes no
representation or warranty to any Bank as to, and shall not be responsible to
any Bank for, any recital, statement, representation or warranty made in or in
connection with this Agreement, any Loan Document or in any written or oral
statement (including a financial or other such statement), instrument or other
document delivered in connection herewith or therewith or
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furnished to any Bank by or on behalf of the Borrowers; (d) shall have no duty
to ascertain or inquire into the Borrowers' performance or observance of any of
the covenants or conditions contained herein or to inspect any of the property
(including the books and records) of the Borrowers or inquire into the use of
the proceeds of the Loans or (unless the officers of the Agent active in their
capacity as officers of the Agent on the Borrowers' account have actual
knowledge thereof or have been notified in writing thereof) to inquire into the
existence or possible existence of any Event of Default or Default; (e) shall
not be responsible to any Bank for the due execution, legality, validity,
enforceability, effectiveness, genuineness, sufficiency, collectability or value
of this Agreement or any other Loan Document or any instrument or document
executed or issued pursuant hereto or in connection herewith, except to the
extent that such may be dependent on the due authorization and execution by the
Agent itself; (f) except as expressly provided herein in respect of information
and data furnished to the Agent for distribution to the Banks, shall have no
duty or responsibility, either initially or on a continuing basis, to provide to
any Bank any credit or other information with respect to the Borrowers, whether
coming into its possession before the making of the Loans or at any time or
times thereafter; and (g) shall incur no liability under or in respect of this
Agreement or any other Loan Document for, and shall be entitled to rely and act
upon, any notice, consent, certificate or other instrument or writing (which may
be by facsimile (telecopier), telegram, cable, or other electronic means)
believed by it to be genuine and correct and to have been signed or sent by the
proper party or parties.
10.3 The Agent as a Bank. With respect to its Commitment and the
Loans made and to be made by it, the Agent shall have the same rights and powers
under this Agreement and all other Loan Documents as the other Banks and may
exercise the same as if it were not the Agent. The terms "Bank" and "Banks" as
used herein shall, unless otherwise expressly indicated, include the Agent in
its individual capacity. The Agent and any successor Agent which is a commercial
bank, and their respective affiliates, may accept deposits from, lend money to,
act as trustee under indentures of and generally engage in any kind of business
with, the Borrowers and their affiliates from time to time, all as if such
entity were not the Agent hereunder and without any duty to account therefor to
any Bank.
10.4 Independent Credit Decisions. Each Bank acknowledges to the
Agent that it has, independently and without reliance upon the Agent or any
other Bank, and based upon such documents and information as it has deemed
appropriate, made its own independent credit analysis and decision to enter into
this Agreement. Each Bank also acknowledges that it will, independently or
through other advisers and representatives but without reliance upon the Agent
or any other Bank, and based upon such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in
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taking or refraining from taking any action under this Agreement or any Loan
Document.
10.5 Indemnification. The Banks agree to indemnify the Agent (to
the extent not reimbursed by the Borrowers), ratably in proportion to each
Bank's Commitment Percentage, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses and disbursements of any kind or nature whatsoever which may be imposed
on, incurred by or asserted against the Agent in such capacity in any way
relating to or arising out of this Agreement or any Loan Document or any action
taken or omitted to be taken by the Agent in such capacity hereunder or under
any Loan Document; provided that none of the Banks shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the Agent's
gross negligence or willful misconduct. Without limiting the generality of the
foregoing, each Bank agrees to reimburse the Agent, promptly on demand, for such
Bank's ratable share (based upon the aforesaid apportionment) of any
out-of-pocket expenses (including counsel fees and disbursements) incurred by
the Agent in connection with the preparation, execution, administration or
enforcement of, or the preservation of any rights under, this Agreement and the
Loan Documents to the extent that the Agent is not reimbursed for such expenses
by the Borrowers.
10.6 Successor Agent. The Agent may resign at any time by giving
thirty (30) days written notice thereof to the other Banks and the Borrowers.
Upon any such resignation, the Banks, with the prior written notice to the
Borrowers, shall have the right to appoint a successor Agent. If no successor
Agent shall have been so appointed and consented to, and shall have accepted
such appointment, within 30 days after such notice of resignation, then the
retiring Agent may (but shall not be required to) appoint a successor Agent,
upon notice to the Borrowers and the Banks. Each successor Agent shall be a
commercial bank or trust company organized under the laws of the United States
of America or any state thereof. Upon the acceptance by a successor Agent of its
appointment as Agent hereunder, such successor Agent shall thereupon succeed to
and become vested with all the properties, rights, powers, privileges and duties
of the former Agent in its capacity as such, without further act, deed or
conveyance. Upon the effective date of resignation of a retiring Agent, such
Agent shall be discharged from its duties under this Agreement and the other
Loan Documents, but the provisions of this Agreement shall inure to its benefit
as to any actions taken or omitted by it while it was Agent under this
Agreement.
10.7. Additional Agents. If the Agent, with the prior written
notice to the Borrowers, shall from time to time deem it necessary or advisable,
for its own protection in the performance of its duties hereunder or in the
interest of the Banks, the Agent and the Borrowers shall execute and deliver a
supplemental agreement and all other instruments and agreements necessary or
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advisable, in the opinion of the Agent, to constitute another commercial bank or
trust company, or one or more other Persons approved by the Agent, to act as
co-Agent or agent with such powers of the Agent as may be provided in such
supplemental agreement, and to vest in such bank, trust company or Person as
such co-Agent or separate agent, as the case may be, any properties, rights,
powers, privileges and duties of the Agent under this Agreement or any other
Loan Document.
10.8 Allocations Made By Agent. As between the Agent and the Banks,
unless a Bank objecting to a determination or allocation made by the Agent
pursuant to this Agreement delivers to the Agent written notice of such
objection within one hundred twenty (120) days after the date any distribution
was made by the Agent, such determination or allocation shall be conclusive on
such one hundred twentieth day and only those items expressly objected to in
such notice shall be deemed disputed by such Bank. The Agent shall not have any
duty to inquire as to the application by the Banks of any amounts distributed to
them.
10.9 Liquidation. After any acceleration of any of the Obligations
under this Agreement, all monies or other assets received by the Agent or any of
the Banks, as repayments of amounts advanced under any of the Notes or
otherwise, including proceeds of set-offs shall be applied to the following
categories, in the following order:
(1) First, to the Agent for any Agent fees then due and payable
under this Agreement until such fees are paid in full;
(2) Second, to the Agent for any fees, costs or expenses (including
expenses described in Section 11.3) incurred by the Agent under any of the Loan
Documents or this Agreement, then due and payable and not reimbursed by the
Borrowers or the Banks until such fees, costs and expenses are paid in full;
(3) Third, to the Banks for their percentage shares of any
commitment fee then due and payable under this Agreement until such fee is paid
in full;
(4) Fourth, to the Banks for their respective shares of all costs,
expenses and fees then due and payable from the Borrowers until such costs,
expenses and fees are paid in full;
(5) Fifth, to the Banks for their percentage shares of all interest
then due and payable from the Borrowers until such interest is paid in full; and
(6) Sixth, to the Banks for their percentage shares of the
principal amount of the Loans then due and payable from the Borrowers until such
principal is paid in full.
10.10. Sharing of Collections. The Banks hereby agree among
themselves that if any Bank shall receive (by voluntary payment, realization
upon security, set-off or from any other
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source) any amount on account of the Loans, interest thereon, or any other
Obligation contemplated by this Agreement or the other Loan Documents to be made
by the Borrowers ratably to all Banks in greater proportion than any such amount
received by any other Bank, then the Bank receiving such proportionately greater
payment shall notify each other Bank and the Agent of such receipt, and
equitable adjustment will be made in the manner stated in this Section 10.10 so
that, in effect, all such excess amounts will be shared ratably among all of the
Banks. The Bank receiving such excess amount shall purchase (which it shall be
deemed to have done simultaneously upon the receipt of such excess amount) for
cash from the other Banks a participation in the applicable Loan Obligations
owed to such other Banks in such amount as shall result in a ratable sharing by
all Banks of such excess amount (and to such extent the receiving Bank shall be
a Participant). If all or any portion of such excess amount is thereafter
recovered from the Bank making such purchase, such purchase shall be rescinded
and the purchase price restored to the extent of such recovery, together with
interest or other amounts, if any, required by Applicable Law to be paid by the
Bank making such purchase. The Borrowers hereby consent to and confirms the
foregoing arrangements. Each Participant shall be bound by this Section 10.10 as
fully as if it were a Bank hereunder.
10.11 Survival. The Agent and the Banks agree that the provisions
of Sections 10.1, 10.5 and 10.10 of this Agreement shall survive the payment of
the Loans and the termination of this Agreement.
ARTICLE XI
MISCELLANEOUS
11.1 Remedies Cumulative; No Waiver. The rights, powers and
remedies of the Agent or any Bank provided in this Agreement and the other Loan
Documents are cumulative and not exclusive of any right, power or remedy
provided by law or equity, and no failure or delay on the part of the Agent or
any Bank in the exercise of any right, power, or remedy shall operate as a
waiver thereof, nor shall any single or partial exercise of any right, power, or
remedy preclude other or further exercise thereof, or the exercise of any other
right, power or remedy.
11.2 Notices. Every notice and communication under this Agreement
or any of the other Loan Documents shall be in writing and shall be given by
either (i) hand-delivery, (ii) first class mail return receipt requested
(postage prepaid), (iii) reliable overnight commercial courier (charges
prepaid), or (iv) telecopy or other means of electronic transmission, if
confirmed promptly by any of the methods specified in clauses (i), (ii) and
(iii) of this sentence, to the addresses set forth on the signature pages
hereof. Notice given by telecopy or other means of electronic
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transmission shall be deemed to have been given and received when sent. Notice
by overnight courier shall be deemed to have been given and received on the date
scheduled for delivery. Notice by mail shall be deemed to have been given and
received three (3) calendar days after the date first deposited in the United
States Mail. Notice by hand delivery shall be deemed to have been given and
received upon delivery. Notwithstanding the foregoing, no Notice of Borrowing
hereunder shall be deemed given until received by the Agent. A party may change
its address by giving written notice to the other parties as specified herein.
Any Bank giving any notice to the Borrowers or any other party to a Loan
Document shall simultaneously send a copy thereof to the Agent, and the Agent
shall promptly notify the other Banks of the receipt by it of any such notice.
11.3 Costs, Expenses and Attorneys' Fees. Whether or not the
transactions contemplated by this Agreement and the other Loan Documents are
fully consummated, the Borrowers shall promptly pay (or reimburse, as the Agent
and the Banks may elect) all reasonable costs and expenses which the Agent and
the Banks have incurred or may hereafter incur in connection with the
negotiation, preparation, reproduction, interpretation and enforcement of this
Agreement and the other Loan Documents, the collection of all amounts due
hereunder and thereunder, and any amendment, modification, consent or waiver
which may be hereafter requested by the Borrowers or otherwise required. Such
costs and expenses shall include, without limitation, the reasonable fees and
disbursements of counsel, including without limitation, internal counsel to the
Agent and the Banks, the reasonable costs of appraisal fees, searches of public
records, costs of filing and recording documents with public offices, and
similar costs and expenses incurred by the Agent and the Banks. Upon the
occurrence of an Event of Default, such costs shall also include the fees of any
accountants, consultants or other professionals retained by the Agent and the
Banks. The reimbursement obligations of the Borrowers under this Section shall
survive any termination of this Agreement.
11.4 Survival of Covenants. This Agreement and all covenants,
agreements, representations and warranties made herein and in any certificates
delivered pursuant hereto shall survive the making of the Loans and the
execution and delivery of the Notes and, subject to the provisions of 11.15
hereof, shall continue in full force and effect until all of the Obligations
have been fully paid, performed, satisfied and discharged.
11.5 Counterparts; Effectiveness. This Agreement may be executed in
any number of counterparts and by the different parties on separate
counterparts. Each such counterpart shall be deemed to be an original, but all
such counterparts shall together constitute one and the same Agreement. This
Agreement shall be deemed to have been executed and delivered when the Agent and
the Banks have received counterparts hereof executed by all parties listed on
the signature page(s) hereto.
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11.6 Headings. The headings of sections have been included herein
for convenience only and shall not be considered in interpreting this Agreement.
11.7 Payment Due On A Day Other Than A Business Day. If any payment
due or action to be taken under this Agreement or any Loan Document falls due or
is required to be taken on a day which is not a Business Day, such payment or
action shall be made or taken on the next succeeding Business Day and such
extended time shall be included in the computation of interest.
11.8 Judicial Proceedings. Each party to this Agreement agrees that
any suit, action or proceeding, whether claim or counterclaim, brought or
instituted by any party hereto or any successor or assign of any party, on or
with respect to this Agreement or any of the other Loan Documents or the
dealings of the parties with respect hereto, or thereto, shall be tried only by
a court and not by a jury. EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH SUIT, ACTION OR
PROCEEDING. Further, each party waives any right it may have to claim or
recover, in any such suit, action or proceeding, any special, exemplary,
punitive or consequential damages or any damages other than, or in addition to,
actual damages. EACH BORROWER ACKNOWLEDGES AND AGREES THAT THIS SECTION IS A
SPECIFIC AND MATERIAL ASPECT OF THIS AGREEMENT AND THAT THE BANKS WOULD NOT
EXTEND CREDIT TO THE BORROWERS IF THE WAIVERS SET FORTH IN THIS SECTION WERE NOT
A PART OF THIS AGREEMENT.
11.9 Governing Law. This Agreement shall be construed in accordance
with and governed by the internal laws of the Commonwealth of Pennsylvania.
11.10 Integration. This Agreement and the other Loan Documents
constitute the sole agreement of the parties with respect to the subject matter
hereof and thereof and supersede all oral negotiations and prior writings with
respect to the subject matter hereof and thereof.
11.11 Amendment and Waiver. Any provisions of this Agreement or the
Notes may be amended or waived if, but only if, such amendment or waiver is in
writing and is signed by the Borrower and the Required Banks (and, if the rights
or duties of the Agent are affected thereby, by the Agent); provided that no
such amendment or waiver shall, unless signed by all the Banks, (i) increase or
decrease the Commitment of any Bank (except for a ratable decrease in the
Commitment of all Banks) or subject to any Bank to any additional obligation,
(ii) reduce the principal of or rate of interest on any Loan or any fees
hereunder, (iii) postpone the date fixed for any payment of principal of or
interest on any Loan or any fees hereunder or for any termination of any
Commitment (iv) postpone the Revolving Credit Termination Date, the Equipment
Facility Termination Date, or the maturity date of any Loan or (v) change the
Commitment Percentages or the aggregate unpaid principal amount of the Notes,
the definition of
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Required Banks, or the number of Banks, which shall be required for the Banks or
any of them to take any action under this Section or any other provision of this
Agreement and provided further that Assignments may be entered into in the
manner provided in Section 11.12 of this Agreement; and provided further that
the direction of the Required Banks shall not be necessary to permit the Agent
to enter into such amendments, modifications or supplements in order to cure any
ambiguity or to cure, correct or supplement any defective provision of this
Agreement or the other Loan Documents or to make such other changes herein or
therein as shall not be inconsistent with this Agreement and the other Loan
Documents, so long as the action described in this provision would not adversely
affect the interests of the Banks.
11.12 Successors and Assigns.
(a) This Agreement (i) shall be binding upon the Borrower, the
Agent and the Banks and their respective successors and assigns, and (ii) shall
inure to the benefit of the Borrowers, the Agent and the Banks and their
respective successors and assigns, provided, however, that no Borrower may
assign its rights hereunder or any interest herein without the prior written
consent of the Banks, and any such assignment or attempted assignment by any
Borrower shall be void and of no effect with respect to the Banks.
(b) Participation. Any Bank may, in the ordinary course of its
commercial banking business and in accordance with Applicable Law, at any time
sell participations to one or more commercial banks or other Persons (each a
"Participant"), in all or a portion of its rights and obligations under this
Agreement and the other Loan Documents (including, without limitation, all or a
portion of its Commitments and the Loans owing to it and any Note held by it);
provided that (i) any such Bank's obligations under this Agreement and the other
Loan Documents shall remain unchanged; (ii) such Bank shall remain solely
responsible to the other parties hereto for the performance of such obligations;
(iii) the parties hereto shall continue to deal solely and directly with such
Bank in connection with such Bank's rights and obligations under this Agreement
and each of the other Loan Documents; (iv) such Participant shall, by accepting
such participation, be bound by the provisions of Section 10.10 of this
Agreement; and (v) no Participant (unless such Participant is an affiliate of
such Bank, or is itself a Bank) shall be entitled to require such Bank to take
or refrain from taking action under this Agreement or under any other Loan
Document, except that such Bank may agree with such Participant that such Bank
will not, without such Participant's consent, take action of the type described
in subsections (i) through (iv) of Section 11.11 hereof. The Borrowers agree
that any such Participant shall be entitled to the benefits of Section 2.7, 2.9,
11.3 and 9.1(c) with respect to its participation in the Commitments and the
Loans outstanding from time to time; provided, that no such Participant shall be
entitled to receive any greater amount pursuant to such Sections than the
transferor Bank would have
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been entitled to receive with respect to the amount of the participation
transferred to such Participant had no such transfer occurred.
(c) Any Bank may at any time assign to one or more banks or
other institutions (each an "Assignee") all, or a proportionate part of its
rights and obligations under this Agreement and the Notes, and such Assignee
shall assume such rights and obligations, pursuant to an Assignment and
Assumption Agreement in substantially the form of Exhibit 11.12(c) hereto (the
"Assignment") executed by such Assignee and such transferor Bank, with (and
subject to) the subscribed consent of the Borrowers and the Agent; provided (i)
that if an Assignee is an Affiliate of such transferor Bank, no such consent of
the Borrowers shall be required; (ii) if a Bank makes such an assignment of less
than all of its then remaining rights and obligations under this Agreement and
the other Loan Documents to a purchasing Bank which is not already a Bank or an
Affiliate of a Bank, such assignment shall be in a minimum aggregate principal
amount of $10,000,000 of the Commitments; (iii) each such assignment shall be of
a constant, and not a varying, percentage of the Commitments and the
Outstandings, of the transferor Bank, and of all of the transferor Bank's
related rights and obligations under this Agreement and the other Loan
Documents. Upon execution and delivery of such instrument and payment by such
Assignee to such transferor Bank of an amount equal to the purchase price agreed
between such transferor Bank and such Assignee, such Assignee shall be a Bank
party to this Agreement and shall have all the rights and obligations of a Bank
with a Commitment as set forth in such instrument of assumption, and the
transferor Bank shall be released from its obligations hereunder to a
corresponding extent, and no further consent or action by any party shall be
required. Upon the consummation of any assignment pursuant to this subsection
(c), the transferor Bank, the Agent and the Borrowers shall make appropriate
arrangements so that, if required, new Notes are issued to the Assignee. In
connection with any such assignment, the transferor Bank shall pay to the Agent
an administrative fee for processing such assignment in the amount of $3,000. If
the Assignee is not incorporated under the laws of the United States of America
or a state thereof, it shall, prior to the first date on which interest or fees
are payable hereunder for its account, deliver to the Borrowers and the Agent
certification as to exemption from deduction or withholding of any United States
federal income taxes.
(d) Register. The Agent shall maintain at its office a copy of
each Assignment delivered to it and a register (the "Register") for the
recordation of the names and addresses of the Banks and the Commitment of, and
principal amount of the Loans owing to, each Bank from time to time. The entries
in the Register shall be conclusive absent manifest error and the Borrowers and
each Bank may treat each person whose name is recorded in the Register as a Bank
hereunder for all purposes of the Agreement. The Register shall be available for
inspection by
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<PAGE>
the Borrowers or any Bank at any reasonable time and from time to time upon
reasonable prior notice.
(e) Financial and Other Information. Subject to Section
11.12(g) hereof, the Borrowers authorize the Agent and each Bank to disclose to
any Participant or purchasing Bank, or prospective Participant or purchasing
Bank, any and all financial and other information in such Person's possession
concerning any Borrower and its Subsidiaries and Affiliates which has been or
may be delivered to such Person by or on behalf of the Borrowers in connection
with this Agreement or any other Loan Document or such Person's credit
evaluation of the Borrowers and its Subsidiaries and Affiliates. At the request
of any Bank, the Borrowers, at the Borrowers' expense, shall provide to each
prospective transferee the conformed copies of documents referred to in Section
3 of the form of Assignment.
(f) Syndication. The Borrowers shall, at the Agent's
reasonable request from time to time, at such Borrowers' expense, use all
reasonable efforts to cooperate with the Agent's syndication effort (including,
without limitation, assisting the Agent from time to time in preparing
information packages for delivery to prospective Participants and purchasing
Banks containing relevant information about the Borrowers, and the Loan
Documents, and causing appropriate officers, representative and experts to meet
with prospective Participants and purchasing Banks from time to time). The Agent
agrees to make such information packages available to the Borrowers for
reasonable review before initial dissemination of the same in the primary
syndication, and to consult with the Borrowers as to the content thereof.
(g) Confidentiality. Each Bank (including any Assignee),
agrees to take reasonable precautions to maintain the confidentiality of
information designated in writing as confidential and provided to it by the
Borrowers or any Subsidiary in connection with this Agreement; provided,
however, that any Bank may disclose such information (i) at the request of any
bank regulatory authority or other governmental authority or in connection with
an examination of such Bank by any such governmental authority, (ii) pursuant to
subpoena or other court process, (iii) to the extent such Bank is required (or
believes in good faith that it is required) to do so in accordance with any
Applicable Law, (iv) to such Bank's independent auditors and other professional
advisors, (v) in connection with the enforcement of any of its rights under or
in connection with any Loan Document, and (vi) to any actual or potential
Participant or purchasing Bank, so long as, in the case of this clause (vi),
such actual or potential Participant or purchasing Bank agrees to comply with
the provisions of this Section 11.12(g).
(h) Any Bank may at any time assign all or any portion of its
rights under this Agreement and its Note to a Federal Reserve Bank. No such
assignment shall release the transferor Bank from its obligations hereunder.
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<PAGE>
11.13 Severability of Provisions. Any provision in this Agreement
that is held to be inoperative, unenforceable, voidable, or invalid in any
jurisdiction shall, as to that jurisdiction, be ineffective, unenforceable, void
or invalid without affecting the remaining provisions, and to this end the
provisions of this Agreement are declared to be severable.
11.14 Consent to Jurisdiction and Service of Process. Each Borrower
irrevocably appoints each and every of its officers as its attorneys upon whom
may be served, by regular or certified mail at the address set forth in Section
11.2 hereof, any notice, process or pleading in any action or proceeding against
it arising out of or in connection with this Agreement or any of the other Loan
Documents; and each Borrower hereby consents that any action or proceeding
against it be commenced and maintained in any court within the Commonwealth of
Pennsylvania or in the United States District Court for the Eastern District of
Pennsylvania by service of process on any such officer; and each Borrower agrees
that the courts of the Commonwealth of Pennsylvania and the United States
District Court for the Eastern District of Pennsylvania shall have jurisdiction
with respect to the subject matter hereof and the person of the Borrower and the
Collateral. Notwithstanding the foregoing, the Agent or the Banks, in their
absolute discretion may also initiate proceedings in the courts of any other
jurisdiction in which any Borrower may be found or in which any of its
properties or the Collateral may be located.
11.15 Indemnification.
(a) If, after receipt of any payment of all or any part of the
Obligations, the Agent or any Bank is compelled to surrender such payment to any
Person or entity for any reason (including, without limitation, a determination
that such payment is void or voidable as a preference or fraudulent conveyance,
an impermissible setoff, or a diversion of trust funds), then this Agreement and
the other Loan Documents shall continue in full force and effect, and the
Borrowers shall be liable for, and shall indemnify, defend and hold harmless the
Agent and the Banks with respect to the full amount so surrendered.
(b) The Borrowers shall indemnify, defend and hold harmless
the Agent and the Banks with respect to any and all claims, expenses, demands,
losses, costs, fines or liabilities of any kind (including, without limitation,
those involving death, personal injury or property damage and including
reasonable attorneys fees and costs) arising from or in any way related to (i)
this Agreement or any of the other Loan Documents or any action taken or omitted
by the Agent or any of the Banks hereunder or thereunder, and (ii) any Hazardous
Materials or dangerous environmental condition within, on, from, related to or
affecting any real property owned or occupied by any Borrower.
(c) The provisions of this section shall survive the
termination of this Agreement and the other Loan Documents
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<PAGE>
and shall be and remain effective notwithstanding the payment of the
Obligations, the cancellation of any of the Notes, the release of any
Encumbrance securing the Obligations or any other action which the Agent and the
Banks may have taken in reliance upon its receipt of such payment. Any
cancellation of any of the Notes, release of any Encumbrance or other such
action shall be deemed to have been conditioned upon any payment of the
Obligations having become final and irrevocable.
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<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Agreement
to be executed by their duly authorized officers on the date first above
written.
PCI SERVICES, INC.
By: Charles H. Korman
-------------------------------
Title: Assistant Vice President
PACKAGING COORDINATORS, INC.
By: Charles H. Korman
-------------------------------
Title: Vice President
PCI OF VIRGINIA, INC.
By: Charles H. Korman
-------------------------------
Title: Assistant Vice President
PCI/DELVCO, INC.
By: Charles H. Korman
-------------------------------
Title: Assistant Vice President
PCI/TRI-LINE (USA), INC.
By: Charles H. Korman
-------------------------------
Title: Assistant Vice President
PCI HOLDINGS, INC.
By: Charles H. Korman
-------------------------------
Title: Assistant Vice President
P.C. REALTY, INC.
By: Charles H. Korman
-------------------------------
Title: Assistant Vice President
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<PAGE>
Address for Notices:
Packaging Coordinators, Inc.
3001 Red Lion Road
Philadelphia, PA 19114
Attn: George Detwiler, Treasurer
Telephone: (215) 637-8100
Fax: (215) 612-1512
With a Copy to:
MEDIQ Incorporated
One Mediq Plaza
Pennsauken, NJ 08110-1460
Attn: Michael F. Sandler, CFO
Telephone: (609) 665-6300
Fax: (609) 486-4720
and
Attn: Eugene M. Schloss, Jr., Esq.
Telephone: (609) 665-6300
Fax: (609) 486-4725
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<PAGE>
MERIDIAN BANK, as a Bank
and as Agent
By: Indu Madan
----------------------------
Name: Indu Madan
--------------------------
Title: Assistant Vice President
-------------------------
Revolving Credit
Commitment Amount:
$9,000,000
Term Loan Commitment
Amount: $14,200,000
Equipment Facility and Equipment
Term Loan Commitment
Amount: $5,000,000
Commitment Percentage:
100%
Address for Notices:
Meridian Bank
3600 One Liberty Place
Philadelphia, PA 19103
Attn: Indu Madan
Telephone:(215) 854-3922
Fax: (215) 854-3774
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<PAGE>
Schedule 6.15
FINANCIAL COVENANTS
I. Consolidated Group. PCI Services and its direct and indirect
Subsidiaries (collectively, the "Consolidated Group") shall maintain the
following financial covenants at all times which shall be measured at the end of
each calendar quarter:
A. A Fixed Charge Coverage Ratio of not less than:
(i) 1.0:1 from the Closing Date through September 30, 1996;
(ii) 1.0:1 from October 1, 1996 through September 30, 1997;
(iii) 1.1:1 from October 1, 1997 through September 30, 1998;
(iv) 1.1:1 from October 1, 1998 through September 30, 1999; and
(v) 1.1:1 from October 1, 1999, and at all times thereafter.
B. Net Working Capital of not less than:
(i) $10,000,000 from the Closing Date through September 30, 1996;
(ii) $11,000,000 from October 1, 1996 through September 30, 1997;
(iii) $12,000,000 from October 1, 1997 through September 30, 1998; and
(iv) $13,000,000 from October 1, 1998 through September 30, 1999; and
(v) $14,000,000 from October 1, 1999, and at all times thereafter.
C. A Quick Ratio of not less than:
(i) 0.65:1 from the Closing Date through September 30, 1996; and
(ii) 0.70:1 from October 1, 1996, and at all times thereafter.
D. A ratio of Consolidated Funded Debt to Tangible Net Worth of not greater
than:
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<PAGE>
(i) 1.75:1 from the Closing Date through September 30, 1996;
(ii) 1.5:1 from October 1, 1996 through September 30, 1997;
(iii) 1.25:1 from October 1, 1997 through September 30, 1998; and
(iv) 1.00:1 from October 1, 1998, and at all times thereafter.
E. Capital Expenditures of not greater than $10,000,000 for the fiscal year
ending September 30, 1996, and $12,000,000 for each fiscal year thereafter.
F. Tangible Net Worth of not less than:
(i) $37,000,000 from the Closing Date through September 30, 1996;
(ii) $43,000,000 from October 1, 1996 through September 30, 1997;
(iii) $50,000,000 from October 1, 1997 through September 30, 1998;
(iv) $60,000,000 from October 1, 1998 through September 30, 1999; and
(v) $65,000,000 from October 1, 1999 through September 30, 2000, such
sum to be increased at the end of each succeeding fiscal year
thereafter by an amount equal to the sum of (i) fifty percent
(50%) of the net income of the Consolidated Group plus (ii)
seventy-five percent (75%) of the proceeds of equity offerings to
Persons outside the Consolidated Group.
For purposes of this Schedule, all capitalized terms used in this Part
I and not otherwise defined shall have the meanings given to them, respectively,
in the Loan Agreement, and the following terms shall have the following
meanings:
"Capital Expenditures" shall mean the aggregate amount of capital
expenditures of the Consolidated Group required to be capitalized on the balance
sheet of the Consolidated Group in accordance with GAAP (excluding expenditures
for land, buildings and improvements thereto).
"Consolidated Funded Debt" with respect to the Consolidated Group shall
mean all (i) Indebtedness, excluding Subordinated Debt; (ii) Capitalized Lease
Obligations; (iii) all guarantees, direct or indirect, except (a) those that
guarantee obligations that would already be included in this definition and (b)
guarantees of obligations arising under Operating Leases; (iv) contingent
obligations in connection with issued and outstanding
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<PAGE>
standby letters of credit except those obligations that would already be
included in this definition; and (v) obligations in connection with bankers
acceptances.
"Current Assets" shall mean, at any time, all assets which, in
accordance with GAAP, should be classified as current assets of the Consolidated
Group.
"Current Liabilities" shall mean, at any time, all liabilities which,
in accordance with GAAP, should be classified as current liabilities of the
Consolidated Group.
"Fixed Charge Coverage Ratio" shall mean the quotient obtained by
dividing Cash Flow by the sum of Total Interest Expense, Current Maturities of
Long Term Debt, Total Taxes, Unfunded Capital Expenditures and Buy-Back of
Shares, such ratio to be measured at the end of the fiscal quarter under review,
computed on a rolling four quarters basis in accordance with GAAP. For purposes
of determining the Fixed Charge Coverage Ratio, the following terms shall have
the following meanings:
(a) "Cash Flow" shall mean the aggregate sum of the net income
(excluding extraordinary gains or losses) of the Consolidated Group plus their
interest, taxes, depreciation and amortization, less their dividends, all the
foregoing measured for the previous four quarters;
(b) "Current Maturities of Long Term Debt" shall mean the
aggregate sum of all principal payments due on Indebtedness of the Consolidated
Group during the next twelve months calculated in accordance with GAAP, except
for any advances under the Equipment Facility that have not been converted to
Equipment Term Loans;
(c) "Total Taxes" shall mean the aggregate amount of all
income taxes paid by the Consolidated Group for the previous four quarters; and
(d) "Total Interest Expense" shall mean the aggregate amount
of all interest expense on Indebtedness of the Consolidated Group for the
previous four quarters.
(e) "Unfunded Capital Expenditures" shall mean the Capital
Expenditures of the Consolidated Group not funded with Indebtedness for borrowed
money.
(f) "Buy-Back of Shares" shall mean the amount of shares
purchased by PCI Services pursuant to Section 7.10 of the Loan Agreement.
"Net Working Capital" shall mean, at any time, the amount by which
Current Assets exceed Current Liabilities, less any amount due from any
Affiliate to the extent that such amount is included in Current Assets.
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<PAGE>
"Quick Assets" shall mean with respect to the Consolidated Group the
aggregate sum of their (i) cash on hand or on deposit in banks, (ii) readily
marketable securities issued by the United States of America, (iii) readily
marketable commercial paper rated "A-3" or better by Standard & Poor's
Corporation (or a similar rating by any similar organization which rates
commercial paper), (iv) certificates of deposit issued by commercial banks of
recognized standing operating in the United States of America, and (v) Accounts.
"Quick Ratio" shall mean, at any time, the ratio of Quick Assets to
Current Liabilities.
"Stockholders Equity" shall mean, at any time, the aggregate
stockholders' equity of the Consolidated Group as determined in accordance with
GAAP.
"Subordinated Debt" shall mean all Indebtedness of the Consolidated
Group subordinated to the Obligations in a manner satisfactory to the Required
Banks in their sole discretion.
"Tangible Net Worth" shall mean, at any time, Stockholders' Equity,
less all intangible assets of the Consolidated Group, including, without
limitation, organization costs, securities issuance costs, unamortized debt
discount and expense, goodwill and negative goodwill, excess of purchase costs
over net assets acquired, patents, trademarks, trade names, copyrights, trade
secrets, knowhow, licenses, franchises, research and development expenses,
amounts owing from officers and/or Affiliates and any amount reflected as
treasury stock.
II. PCI Group. Packaging Coordinators, Delvco, Services, Virginia,
Realty and PCI/Tri-Line (collectively the "PCI Group") shall maintain the
following financial covenants at all times which shall be measured at the end of
each calendar quarter:
A. Net Working Capital of not less than $9,000,000 at all times.
B. A Fixed Charge Coverage Ratio of not less than:
(i) 1.0:1 from the Closing Date through October 30, 1996;
(ii) 1.0:1 from October 1, 1996 through October 30, 1997;
(iii) 1.1:1 from October 1, 1997 through October 30, 1998;
(iv) 1.1:1 from October 1, 1998, through September 30, 1999;
and
(v) 1.1:1 from October 1, 1999, and at all times thereafter.
C. Tangible Net Worth of not less than:
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<PAGE>
(i) $45,000,000 from the Closing Date through September 30,
1996;
(ii) $48,000,000 from October 1, 1996 through September 30,
1997;
(iii) $52,000,000 from October 1, 1997 through September 30,
1998; and
(iv) $55,000,000 from October 1, 1998 through September 30,
1999; and
(v) $58,000,000 from October 1, 1999, and at all times
thereafter.
For purposes of this Schedule, all capitalized terms used in this Part
II and not otherwise defined shall have the meanings given to them,
respectively, in the Loan Agreement, and the following terms shall have the
following meanings:
"Current Assets" shall mean, at any time, all assets which, in
accordance with GAAP, should be classified as current assets of the PCI Group.
"Current Liabilities" shall mean, at any time, all liabilities which,
in accordance with GAAP, should be classified as current liabilities of the PCI
Group.
"Fixed Charge Coverage Ratio" shall mean the quotient obtained by
dividing Cash Flow by the sum of Total Interest Expense, Current Maturities of
Long Term Debt and Total Taxes, such ratio to be measured at the end of the
fiscal quarter under review, computed on a rolling four quarters basis in
accordance with GAAP. For purposes of determining the Fixed Charge Coverage
Ratio, the following terms shall have the following meanings:
(a) "Cash Flow" shall mean the aggregate sum of the net income
(excluding extraordinary gains and losses) of the PCI Group plus their interest,
taxes, depreciation and amortization, less their dividends, all the foregoing
measured for the previous four quarters;
(b) "Current Maturities of Long Term Debt" shall mean the
aggregate sum of all principal payments due on Indebtedness of the PCI Group
during the next twelve months calculated in accordance with GAAP, except for any
advances under the Equipment Facility that have not been converted to Equipment
Term Loans;
(c) "Total Taxes" shall mean the aggregate amount of all
income taxes paid by the PCI Group for the previous four quarters; and
(d) "Total Interest Expense" shall mean the aggregate amount
of all interest expense on Indebtedness of the PCI Group for the previous four
quarters.
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<PAGE>
"Net Working Capital" shall mean, at any time, the amount by which
Current Assets exceed Current Liabilities, less any amount due from any
Affiliate to the extent that such amount is included in Current Assets.
"Stockholders Equity" shall mean, at any time, the aggregate
stockholders' equity of the PCI Group as determined in accordance with GAAP.
"Tangible Net Worth" shall mean, at any time, Stockholders' Equity,
less all intangible assets of the PCI Group, including, without limitation,
organization costs, securities issuance costs, unamortized debt discount and
expense, goodwill and negative goodwill, excess of purchase costs over net
assets acquired, patents, trademarks, trade names, copyrights, trade secrets,
knowhow, licenses, franchises, research and development expenses, amounts owing
from officers and/or Affiliates and any amount reflected as treasury stock.
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<PAGE>
EXHIBIT "2.1(e)"
FORM OF REVOLVING CREDIT NOTE
$______________________ Philadelphia, Pennsylvania
______________, 1996
FOR VALUE RECEIVED, PCI SERVICES, INC., a Delaware corporation, PACKAGING
COORDINATORS, INC., a Pennsylvania corporation, PCI OF VIRGINIA, INC., a
Delaware corporation, PCI/DELVCO, INC., a Delaware corporation, PCI/TRI-LINE
(USA), INC., a Delaware corporation, PCI HOLDINGS, INC., a Delaware corporation
and P.C. REALTY, INC., a Delaware corporation (collectively, the "Borrowers" and
individually, a "Borrower"), hereby jointly and severally promise to pay to the
order of MERIDIAN BANK (the "Bank") on the Revolving Credit Termination Date the
aggregate principal amount of _____________ DOLLARS ($___________) or, if less,
the aggregate outstanding principal under the Revolving Credit extended by the
Bank under the Loan and Agency Agreement dated the date hereof (the "Loan
Agreement") by and between the Borrowers, the Bank and the other banks listed on
the signature pages thereof and Meridian Bank, its successors and assigns, as
agent (the "Agent"). Terms capitalized but not defined herein shall have the
meanings given to them respectively in the Loan Agreement, and reference is made
to the Loan Agreement for a statement of the terms and conditions under which
the loans evidenced hereby have been made, are secured, and may be prepaid or
accelerated.
Until maturity (whether by acceleration or otherwise) interest shall accrue
on the outstanding principal balance hereof at the rate or rates provided for in
the Loan Agreement. Subsequent to maturity, interest shall accrue at the Default
Rate. Accrued interest shall be payable at the times provided for in the Loan
Agreement and if not paid when due, shall be added to the principal.
All amounts payable by the Borrowers to the Bank hereunder shall be paid
directly to the Agent at One Liberty Place, 1650 Market Street, Suite
3600/OL3620, Philadelphia, Pennsylvania 19103 (or at such other address of which
the Agent shall give notice to the Borrowers in accordance with the Loan
Agreement) in immediately available funds.
Each Borrower hereby waives the requirements of demand, presentment,
protest, notice of protest and dishonor and all other demands or notices of any
kind in connection with the delivery, acceptance, performance, default, dishonor
or enforcement of this Note.
The construction, interpretation and enforcement of this Note shall be
governed by the internal laws of the Commonwealth of Pennsylvania.
<PAGE>
IN WITNESS WHEREOF, and intending to be legally bound hereby, each Borrower
has caused this Note to be executed by its duly authorized officer as of the day
and year first above written.
PCI SERVICES, INC.
By:__________________________
Title:
PACKAGING COORDINATORS, INC.
By:__________________________
Title:
PCI OF VIRGINIA, INC.
By:__________________________
Title:
PCI/DELVCO, INC.
By:__________________________
Title:
PCI/TRI-LINE (USA), INC.
By:__________________________
Title:
PCI HOLDINGS, INC.
By:__________________________
Title:
P.C. REALTY, INC.
By:__________________________
Title:
- 2 -
<PAGE>
EXHIBIT "2.3(c)"
FORM OF EQUIPMENT FACILITY NOTE
$____________ Philadelphia, Pennsylvania
______________ , 1996
FOR VALUE RECEIVED, PCI SERVICES, INC., a Delaware corporation, PACKAGING
COORDINATORS, INC., a Pennsylvania corporation, PCI OF VIRGINIA, INC., a
Delaware corporation, PCI/DELVCO, INC., a Delaware corporation, PCI/TRI-LINE
(USA), INC., a Delaware corporation, PCI HOLDINGS, INC., a Delaware corporation
and P.C. REALTY, INC., a Delaware corporation (collectively, the "Borrowers" and
individually, a "Borrower"), hereby jointly and severally promise to pay to the
order of MERIDIAN BANK (the "Bank") on the Equipment Facility Termination Date
the aggregate principal amount of _____________ DOLLARS ($__________) or, if
less, the aggregate outstanding principal under the Equipment Facility Loans
extended by the Bank under the Loan and Agency Agreement (the "Loan Agreement")
dated the date hereof by and between the Borrowers, the Bank and the other banks
listed on the signature pages thereof and Meridian Bank, its successors and
assigns, as agent (the "Agent"). Terms capitalized but not defined herein shall
have the meanings given to them respectively in the Loan Agreement, and
reference is made to the Loan Agreement for a statement of the terms and
conditions under which the loans evidenced hereby have been made, are secured,
and may be prepaid or accelerated.
Until maturity (whether by acceleration or otherwise) interest shall accrue
on the outstanding principal balance hereof at the rate or rates provided for in
the Loan Agreement. Subsequent to maturity, interest shall accrue at the Default
Rate. Accrued interest shall be payable at the times provided for in the Loan
Agreement, and if not paid when due, shall be added to the principal.
All amounts payable by the Borrowers to the Bank hereunder shall be paid
directly to the Agent at One Liberty Place, 1650 Market Street, Suite
3600/OL3620, Philadelphia, Pennsylvania 19103 (or at such other address of which
the Agent shall give notice to the Borrowers in accordance with the Loan
Agreement) in immediately available funds.
Each Borrower hereby waives the requirements of demand, presentment,
protest, notice of protest and dishonor and all other demands or notices of any
kind in connection with the delivery, acceptance, performance, default, dishonor
or enforcement of this Note.
<PAGE>
The construction, interpretation and enforcement of this Note shall be
governed by the internal laws of the Commonwealth of Pennsylvania.
2
<PAGE>
IN WITNESS WHEREOF, and intending to be legally bound hereby, each Borrower
has caused this Note to be executed by its duly authorized officer as of the day
and year first above written.
PCI SERVICES, INC.
By:__________________________
Title:
PACKAGING COORDINATORS, INC.
By:__________________________
Title:
PCI OF VIRGINIA, INC.
By:__________________________
Title:
PCI/DELVCO, INC.
By:__________________________
Title:_______________________
PCI/TRI-LINE (USA), INC.
By:__________________________
Title
PCI HOLDINGS, INC.
By:__________________________
Title:
P.C. REALTY, INC.
By:__________________________
Title:
3
<PAGE>
EXHIBIT "2.3(e)"
FORM OF EQUIPMENT TERM LOAN NOTE
$____________ Philadelphia, Pennsylvania
_______________,______
FOR VALUE RECEIVED, PCI SERVICES, INC., a Delaware corporation ("PCI
Services"), PACKAGING COORDINATORS, INC., a Pennsylvania corporation ("Packaging
Coordinators"), PCI OF VIRGINIA, INC., a Delaware corporation ("Virginia"),
PCI/DELVCO, INC., a Delaware corporation ("Delvco"), PCI/TRI-LINE (USA), INC., a
Delaware corporation ("PCI/Tri-Line"), PCI HOLDINGS, INC., a Delaware _________
corporation ("Holdings"), and P.C. REALTY, INC., a Delaware corporation
("Realty"; together with PCI Services, Packaging Coordinators, Virginia, Delvco,
PCI/Tri-Line and Holdings collectively referred to as the "Borrowers," and
individually a "Borrower"), hereby promise to pay to the order of _____________
______________ (the "Bank") the principal amount of DOLLARS ($ ) in consecutive
quarterly installments equal to $_________ beginning on , and a final _________
installment of all remaining principal due and payable on , . This Equipment
Term Loan Note is issued under the Loan and Agency Agreement dated February ,
1996 (the "Loan Agreement") by and between the Borrowers, the banks listed on
the signature pages thereof and the Agent. Terms capitalized but not defined
herein shall have the meanings given to them respectively in the Loan Agreement.
This Note is one of the Equipment Term Loan Notes referred to in the Loan
Agreement, and reference is made to the Loan Agreement for a statement of the
terms and conditions under which the loans evidenced hereby have been made, are
secured, and may be prepaid or accelerated.
Until maturity or the occurrence of an Event of Default, interest shall
accrue on the outstanding principal balance hereof at a rate or rates as
provided for in the Loan Agreement. Interest shall be calculated on the basis of
a 360-day year, counting the actual number of days elapsed. Subsequent to
maturity or the occurrence of an Event of Default, interest shall accrue at the
Default Rate. Accrued interest shall be payable at the times provided for in the
Loan Agreement and if not paid when due, shall be added to the principal.
All amounts payable by the Borrowers to the Bank hereunder shall be paid
directly to the Agent at One Liberty Place, 1650 Market Street, Suite
3600/OL3620, Philadelphia, Pennsylvania 19103 (or at such other address of which
the Agent shall give notice to the Borrowers in accordance with the Loan
Agreement) in immediately available funds.
<PAGE>
Each Borrower hereby waives the requirements of demand, presentment,
protest, notice of protest and dishonor and all other demands or notices of any
kind in connection with the delivery, acceptance, performance, default, dishonor
or enforcement of this Note.
The construction, interpretation and enforcement of this Note shall be
governed by the internal laws of the Commonwealth of Pennsylvania.
<PAGE>
IN WITNESS WHEREOF, and intending to be legally bound hereby, the Borrowers
have caused this Note to be executed by its duly authorized officers as of the
day and year first above written.
PCI SERVICES, INC.,
By: _____________________
PACKAGING COORDINATORS, INC.,
By: _____________________
PCI OF VIRGINIA, INC.,
By: _____________________
PCI/DELVCO, INC.,
By: _____________________
PCI/TRI-LINE (USA), INC.,
By: _____________________
PCI HOLDINGS, INC.,
By: _____________________
P.C. REALTY, INC.,
By: _____________________
THE TRI-LINE CO., INC.
By: _____________________
- 3 -
<PAGE>
EXHIBIT 11.12(c)
ASSIGNMENT AND ASSUMPTION AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement") dated as of , 1996
among (the "Assignor"), (the "Assignee"), PCI SERVICES, INC., a Delaware
corporation ("PCI Services"), PACKAGING COORDINATORS, INC., a Pennsylvania
corporation ("Packaging Coordinators"), PCI OF VIRGINIA, INC., a Delaware
corporation ("Virginia"), PCI/DELVCO, INC., a Delaware corporation ("Delvco"),
PCI/TRI-LINE (USA), INC., a Delaware corporation ("PCI/Tri-Line"), PCI HOLDINGS,
INC., a Delaware corporation ("Holdings"), and P.C. REALTY, INC., a Delaware
corporation ("Realty"; together with PCI Services, Packaging Coordinators,
Virginia, Delvco, PCI/Tri-Line and Holdings collectively referred to as the
"Borrowers," and individually a "Borrower") and MERIDIAN BANK, as Agent (the
"Agent").
BACKGROUND
A. This Agreement relates to the Loan and Agency Agreement dated as of
___________________, 1996 among the Borrowers, the Assignor and the other Banks
party thereto, as Banks, and the Agent (the "Loan Agreement"). Terms capitalized
but not defined herein shall have the meaning given such terms in the Loan
Agreement.
B. As provided under the Loan Agreement, the Assignor has a Commitment to
make (i) Revolving Credit Loans to the Borrowers in an aggregate principal
amount at any time outstanding not to exceed $__________; (ii) a Term Loan to
the Borrowers in an aggregate principal amount at any time outstanding not to
exceed $__________; and (iii) Equipment Facility Loans to the Borrowers in an
aggregate principal amount at any time outstanding not to exceed $ .
C. Loans made to the Borrowers by the Assignor under the Loan Agreement in
the aggregate principal amount of $_____________ are outstanding at the date
hereof.
D. The Assignor proposes to assign to the Assignee all of the rights of the
Assignor under the Loan Agreement in respect of a portion of its Commitment
thereunder in an amount equal to $__________ (the "Assigned Amount"), together
with a corresponding portion of its outstanding Loans, and the Assignee proposes
to accept assignment of such rights and assume the corresponding obligations
from the Assignor on such terms.
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NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
contained herein, the parties hereto agree as follows:
SECTION 1. Assignment. The Assignor hereby sells and assigns to the
Assignee, and the Assignee hereby purchases and assumes from the Assignor,
WITHOUT RECOURSE, REPRESENTATION OR WARRANTY (except as expressly set forth
herein), a _____ percent (___%) interest in and to all of the Assignor's rights
and obligations under the Loan Agreement as of the Effective Date (as defined
below), including without limitation, such percentage interest in the Assignor's
Revolving Credit Commitment, its Term Loan Commitment and its Equipment Facility
Commitment as in effect on the Effective Date, the Loans owing to the Assignor
on the Effective Date and the Notes evidencing the outstanding Loans held by the
Assignor.
SECTION 2. Assignor Representations and Warranties. The Assignor represents
and warrants that (i) as of the date hereof, its Revolving Credit Commitment is
$______________ and the unpaid principal amount of the Revolving Credit Loans
owing to the Assignor is $_________________, (ii) as of the date hereof, its
Term Loan Commitment is $______ and the unpaid principal amount of the Term
Loans owing to the Assignor is $_________ , (iii) as of the date hereof, its
Equipment Facility Commitment is $___________________ and the unpaid principal
amount of Equipment Facility Loans and Equipment Term Loans owing to the
Assignor is $ , (iv) it is the legal and beneficial owner of the interest being
assigned by it hereunder and that such interest is free and clear of any adverse
claim. The Assignor makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Loan Agreement or any of the Loan Documents or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of the Loan Agreement or any of the Loan Documents or any other instrument
or document furnished pursuant thereto and assumes no responsibility with
respect to the financial condition of the Borrowers or the performance or
observance by the Borrowers of any of its respective obligations under the Loan
Agreement or any of the Loan Documents or any other instrument or document
furnished pursuant thereto. The Assignor attaches the Notes referred to in
paragraph 1 above and requests that the Agent exchange such Notes for new Notes
as follows:
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SECTION 3. Assignee Agreements. The Assignee (i) confirms that it has
received a copy of the Loan Agreement, together with copies of the financial
statements (if any) referred to in
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Section 6.2 of the Loan Agreement and such other documents and information as it
has deemed appropriate to make its own credit analysis and decision to enter
into this Agreement; (ii) agrees that it will, independently and without
reliance upon the Agent, the Assignor or any other Bank, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Loan
Agreement; (iii) appoints and authorizes the Agent to take such actions on its
behalf and to exercise such powers under the Loan Documents as are delegated to
the Agent by the terms thereof; (iv) agrees that it will become a party to and
be bound by the Loan Agreement on the Effective Date as if it were an original
Bank thereunder and will have the rights and obligations of a Bank thereunder
and will perform in accordance with their terms all of the obligations which by
the terms of the Loan Agreement are required to be performed by it as a Bank;
and (v) specifies as its address for notices the office set forth beneath its
name on the signature pages thereof.
SECTION 4. Effective Date. The effective date of this Agreement shall be
_______________, ____(the "Effective Date"). Following the execution of this
Agreement, it will be delivered to the Agent for acceptance and recording by the
Agent. Upon such acceptance and recording, as of the Effective Date (i) the
Assignee shall be a party to the Loan Agreement and, to the extent provided in
this Agreement, have the rights and obligations of a Bank thereunder and under
the Loan Documents and (ii) the Assignor shall, to the extent provided in this
Agreement, relinquish its rights and be released from its obligations under the
Loan Agreement and the Revolving Credit Commitment, Term Loan Commitment,
Equipment Facility Commitment and Commitment Percentages related thereto of the
Assignor and the Assignee shall be as set forth in Schedule I hereto. Upon such
acceptance and recording, from and after the Effective Date, the Agent shall
make all payments under the Loan Agreement and the Notes in respect of the
interest assigned hereby (including, without limitation, all payments of
principal, interest, commitment fees and other fees with respect thereto) to the
Assignor and the Assignee as their interests appear on Schedule I hereto. The
Assignor and the Assignee shall make all appropriate adjustments in payments
under the Loan Agreement and the Notes for periods prior to the Effective Date
directly between themselves.
SECTION 5. Consent of the Borrowers and the Agent. This Agreement is
conditioned upon the consent of the Borrowers and the Agent pursuant to Section
11.12(c) of the Loan Agreement. The execution of this Agreement by the Borrowers
and the Agent is evidence of this consent. Pursuant to Section 11.12(c) the
Borrowers agree to execute and deliver a Note payable to the
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order of the Assignee to evidence the assignment and assumption provided
for herein.
SECTION 6. Payments. The Assignor makes this assignment to the Assignee in
consideration of the payment by the Assignee to the Assignor of $______________,
receipt of which is hereby acknowledged by the Assignor. It is understood that
commitment and/or facility fees accrued to the date hereof are for the account
of the Assignor and such fees accruing from and including the date hereof are
for the account of the Assignee. Each of the Assignor and the Assignee hereby
agree that if it receives any amount under the Loan Agreement which is for the
account of the other party hereto, it shall receive the same for the account of
such other party to the extent of such other party's interest therein and shall
promptly pay the same to such other party.
SECTION 7. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Pennsylvania.
SECTION 8. Tax Withholding. The Assignee, if organized under the laws of a
jurisdiction outside the United States, attaches (A) in the case of an Assignee
as to which payments under the Loan Agreement and the Notes are exempt from
United States withholding tax, or are subject to such tax at a reduced rate
under an applicable tax treaty, a properly completed and executed Internal
Revenue Service Form W-9, Form 4224 or Form 1001 or other applicable form,
certificate or document prescribed by the Internal Revenue Service of the United
States certifying as to the Assignee's entitlement to such exemption or reduced
rate with respect to all such payments; or (B) in the case of an Assignee not
described in clause (A) above, a properly completed and executed Internal
Revenue Service Form W-8 or other applicable form or a certificate of the
Assignee indicating that no such exemption or reduced rate is allowable with
respect to such payments. The Assignee which so delivers a Form W-8, W-9, 4224
or 1001 further undertakes to deliver to the Borrowers and the Agent two
additional copies of such form (or a successor form) on or before the date that
such form expires or becomes obsolete or after the occurrence of any event
requiring a change in the most recent form so delivered by it, and such
amendments thereto or extensions or renewals thereof as may be reasonably
requested by the Borrowers or the Agent, either certifying that such Assignee is
entitled to receive payments under the Loan Agreement and the Notes without
deduction or withholding of any United States federal income taxes or are
subject to such tax at a reduced rate under an applicable tax treaty or stating
that no such exemption or reduced rate is allowable. The Agent shall be entitled
to withhold United States federal income taxes from payments to be made to
Assignee at the full withholding rate
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unless Assignee has established an exemption or at the applicable reduced rate
as established pursuant to the above provisions.
SECTION 9. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
[NAME OF ASSIGNOR]
By:_____________________________
Title:
[NAME OF ASSIGNEE]
By:_____________________________
Title:
Notice Address:
_________________________________
_________________________________
Telephone No.: __________________
Telecopier No.:__________________
Attention:_______________________
PCI SERVICES, INC.,
By: ____________________________
PACKAGING COORDINATORS, INC.,
By: ____________________________
PCI OF VIRGINIA, INC.,
By: ____________________________
PCI/DELVCO, INC.,
By: ___________________________
PCI/TRI-LINE (USA), INC.,
By: ___________________________
PCI HOLDINGS, INC.,
By: ___________________________
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P.C. REALTY, INC.,
By: ___________________________
THE TRI-LINE CO., INC.
By: ___________________________
MERIDIAN BANK, as Agent
By:____________________________
Title:
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Amount of
Revolving Credit
Commitment Amount of Revolving
for Revolving Credit Credit Loans held
Loans as of the as of the
Effective Date Effective Date
[Assignor] $______________ $______________
[Assignee] $______________ $_______________
Amount of
Term Loan Commitment Amount of Term Loans
for Term Loans as of held as of the
the Effective Date Effective Date
[Assignor] $______________ $______________
[Assignee] $______________ $_______________
Amount of
Equipment Facility
Commitment
for Equipment
Facility Loans and Amount of
Equipment Term Loans Equipment Facility
as of the Loans held as of the
Effective Date Effective Date
[Assignor] $______________ $______________
[Assignee] $______________ $______________
Amount of Equipment
Facility Term Loans
held as of the
Effective Date
[Assignor] $______________
[Assignee] $______________
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SECURITY AGREEMENT
This SECURITY AGREEMENT is made and entered into on 28th day of February ,
1996 by PCI SERVICES, INC., a Delaware corporation, PACKAGING COORDINATORS,
INC., a Pennsylvania corporation, PCI OF VIRGINIA, INC., a Delaware corporation,
PCI/DELVCO, INC., a Delaware corporation, PCI/TRI-LINE (USA), INC., a Delaware
corporation, PCI HOLDINGS, INC., a Delaware corporation, and P.C. REALTY, INC.,
a Delaware corporation (collectively, the "Borrowers," and individually, a
"Borrower") in favor of MERIDIAN BANK, a Pennsylvania banking corporation, as
agent (together with any successor(s) thereto in such capacity, the "Agent") for
itself and on behalf of each of the Banks (as defined below).
BACKGROUND
A. The Borrowers, the Banks (as defined in the Loan Agreement and used
herein with the same meaning) and the Agent have executed a Loan and Agency
Agreement of even date herewith (the "Loan Agreement").
B. The Banks are willing to grant the extensions of credit contemplated by
the Loan Agreement only on the condition that the Borrowers execute and deliver
this Security Agreement to the Agent for the benefit of the Banks.
C. Capitalized terms which are used herein without definition shall have
the meanings ascribed to them in the Loan Agreement. Other terms used herein
without definition that are defined in the Uniform Commercial Code, as enacted
in Pennsylvania and in effect on the date hereof (the "Uniform Commercial Code")
shall have the meanings ascribed to them therein, unless the context requires
otherwise.
NOW, THEREFORE, intending to be legally bound, the Borrower and the Agent
hereby agree as follows:
Section 1. Creation of Security Interest. Each Borrower hereby pledges and
assigns to the Agent, for the benefit of the Banks, and grants to the Agent for
the benefit of the Banks, a first priority lien and security interest in and to
the property hereinafter described, whether now owned or hereafter acquired or
arising and wherever located ("Collateral"):
All tangible and intangible personal property of the Borrower, including
but not limited to:
(a) all accounts, accounts receivable, rights under contracts, chattel
paper, instruments, and all obligations due
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the Borrower for goods sold or to be sold, consigned or leased or to be
leased, or services rendered or to be rendered ("Accounts");
(b) all inventory, whether raw materials, work-in- process, finished goods,
parts or supplies or otherwise; all goods, merchandise and other property held
for sale or lease or to be furnished under any contract of service; all
documents of title covering any goods which are or are to become inventory and
any such goods which are leased or consigned to others and all returned,
reclaimed or repossessed goods sold, consigned, leased or otherwise furnished by
the Borrower to others ("Inventory");
(c) all leases and rental agreements for personal property between the
Borrower as lessor (whether by origination or derivation) and any and all
persons or parties as lessee(s), and all rentals, purchase option amounts, and
other sums due thereunder; and all inventory, equipment, goods and property
subject to such leases and rental agreements and all accessions, parts and tools
attached thereto or used therewith and all of the Borrower's residual or
reversionary rights therein;
(d) all machinery, equipment, furniture, fixtures, tools, and all
accessories, parts and equipment now or hereafter attached thereto or used in
connection therewith, whether or not the same shall be deemed affixed to real
property, and all other tangible personal property ("Equipment");
(e) all general intangibles, which term shall have the meaning given to it
in the Uniform Commercial Code and shall additionally include but not be limited
to all tax refunds, patents, trademarks, service marks, tradenames, copyrights
and other intellectual property and proprietary rights;
(f) all the property listed on any Schedule of Collateral attached to this
Security Agreement and any other such schedule hereafter made a schedule to this
Agreement;
(g) all additions, replacements, attachments, accretions, accessions,
components and substitutions to or for any Inventory or Equipment;
(h) all property of the Borrower, including without limitation, monies,
securities, instruments, chattel paper and documents, which at any time the
Agent or any Bank shall have or have the right to have in its possession, or
which is in transit to it (pursuant to the terms of a letter of credit or
otherwise) and, independent of and in addition to the rights of setoff of the
Agent or any Bank (which the Borrower acknowledges), the balance of any account
or any amount which may be owing from time to time by the Agent or any Bank to
the Borrower;
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(i) all books and records evidencing or relating to the foregoing,
including, without limitation, billing records of every kind and description,
customer lists, data storage and processing media, software and related
material, including computer programs, computer tapes, cards, disks and
printouts, and including any of the foregoing which are in the possession of any
affiliate or any computer service bureau; and
(j) all proceeds, which term shall have the meaning given to it in the
Uniform Commercial Code and shall additionally include but not be limited to,
whatever is received upon the use, lease, sale, exchange, collection or other
utilization or any disposition of any of the collateral described in
subparagraphs (a) through (i) above, whether cash or noncash, and including
without limitation, rental or lease payments, accounts, chattel paper,
instruments, documents, contract rights, general intangibles, equipment,
inventory and insurance proceeds; and all such proceeds of the foregoing
("Proceeds").
Section 2. Secured Obligations. The security interest created herein is
given as security for the prompt payment, performance, satisfaction and
discharge of the following obligations ("Obligations"):
(a) To pay the principal, interest, commitment fees and any other
liabilities of the Borrowers to the Agent and the Banks under the Loan Agreement
and the other Loan Documents in accordance with the terms thereof;
(b) To satisfy all of the other liabilities of the Borrowers to the Agent
and the Banks, whether hereunder or otherwise, whether now existing or hereafter
incurred, whether or not evidenced by any Note or other instrument, matured or
unmatured, direct, absolute or contingent, joint or several, including any
extensions, modifications, renewals thereof and substitutions therefor;
(c) To repay the Agent and the Banks all amounts advanced by the Agent and
the Banks hereunder or otherwise on behalf of the Borrowers, including, but
without limitation, advances for principal or interest payments to prior secured
parties, mortgagors or lienors, or for taxes, levies, insurance, rent, wages,
repairs to or maintenance or storage of any Collateral; and
(d) To reimburse the Agent and the Banks, on demand, for all of the Agent's
and the Banks' reasonable expenses and costs, including the reasonable fees and
expenses of its counsel, in connection with the negotiation, preparation,
administration, amendment, modification, or enforcement of the Loan Agreement
and the other Loan Documents.
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Section 3. Representations and Warranties. Each Borrower, as of the date
hereof and at the time of each advance or extension of credit under the Loan
Agreement, represents and warrants as follows:
3.01 Good Title to Collateral. Each Borrower has good and marketable title
to the Collateral free and clear of all liens and encumbrances other than the
security interests granted hereunder and the Permitted Encumbrances, as defined
in the Loan Agreement.
3.02 Location of Books and Records. The locations of the offices where each
Borrower maintains its books and records concerning the Collateral are as set
forth in Exhibit A or at the location(s) hereafter disclosed to the Agent
pursuant to Section 5.10 hereof.
3.03 Chief Executive Office. The chief executive offices of each Borrower
are at the address set forth in Exhibit A or at the location(s) hereafter
disclosed to the Agent pursuant to Section 5.10 hereof
3.04 Location of Inventory and Equipment. All Inventory and Equipment of
each Borrower is located at one or more of the addresses set forth in Exhibit A
or at the location(s) hereafter disclosed to the Agent pursuant to Section 5.10
hereof.
3.05 Other Representations. Each representation, warranty or other
statement by any Borrower in any of the Loan Documents is true and correct in
all material respects and states all material facts necessary to make it not
misleading.
Section 4 Collection, Disposition and Use of Collateral.
4.01 Accounts. The Agent on behalf of the Banks hereby authorizes the
Borrowers to collect all Accounts from the account debtors. The Proceeds of
Accounts so collected by the Borrowers shall be received and held by the
Borrowers in trust for the Agent for the benefit of the Banks but may be applied
by the Borrowers in their discretion towards payment of the Obligations or other
corporate purposes. Upon the occurrence of a Default as set forth in Section 7
hereof, the authority hereby given to the Borrowers to collect the Proceeds of
Accounts may be terminated by the Agent at any time and Agent shall have the
right at any time thereafter, acting if it so chooses in any Borrower's name, to
collect Accounts itself, to sell, assign, compromise, discharge or extend the
time for payment of any Account, and to do all acts and things necessary or
incidental thereto and the Borrowers hereby ratify all such acts. Upon the
occurrence of a Default as set forth in Section 7 hereof, at the Agent's
request, the Borrowers will notify account debtors and
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any guarantor thereof that the Accounts payable by such account debtors have
been assigned to the Agent for the benefit of the Banks and shall indicate on
all billings to account debtors that payments thereon are to be made to the
Agent.
4.02 Inventory. So long as there has been no Default hereunder, each
Borrower shall be permitted to process and sell its Inventory, but only to the
extent that such processing and sale are conducted in the ordinary course of the
Borrower's business.
4.03 Equipment. So long as there has been no Default hereunder, each
Borrower shall be permitted to use its Equipment in the ordinary course of its
business. No sale, lease or other disposition of any item of Equipment valued at
more than $100,000 shall be permitted, except in accordance with such terms and
conditions as the Agent shall have expressly approved in writing and except for
the sale or other disposition of obsolete Equipment which is no longer used or
useful in the Borrower's business.
Section 5. Covenants and Agreements of the Borrowers.
5.01 Maintenance and Inspection of Books and Records. Each Borrower shall
maintain complete and accurate books and records and shall make all necessary
entries therein to reflect the costs, values and locations of its Inventory and
Equipment and the transactions and documents giving rise to its Accounts and all
payments, credits and adjustments thereto. Each Borrower shall keep the Agent
fully informed as to the location of all such books and records and shall permit
the Agent and its authorized agents to have full, complete and unrestricted
access thereto at any reasonable time upon prior notice and to inspect, audit
and make copies of all books and records, data storage and processing media,
software, printouts, journals, orders, receipts, invoices, correspondence and
other documents and written or printed matter related to any of the Collateral.
The Agent's rights hereunder shall be enforceable at law or in equity, and each
Borrower consents to the entry of judicial orders or injunctions enforcing
specific performance of such obligations hereunder.
5.02 Confirmation of Accounts. Each Borrower agrees that the Agent shall
reasonably at all times have the right to confirm orders and to verify any or
all of the Borrower's Accounts in the Agent's name, or in any fictitious name
used by the Agent's for verifications, or through any public accountants.
5.03 Delivery of Accounts Documentation. At such intervals as the Agent
shall require, each Borrower shall deliver to the Agent copies of purchase
orders, invoices, contracts,
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shipping and delivery receipts and any other document or instrument which
evidences or gives rise to an Account.
5.04 Physical Inspection of Inventory and Equipment. Each Borrower shall
permit the Agent and their authorized agents to inspect any or all of the
Borrower's Inventory and Equipment at all reasonable times upon prior notice,
provided no prior notice shall be required upon an Event of Default.
5.05 Notice of the Agent's Interests. If requested by the Agent, the
Borrowers shall give notice of the security interests in the Collateral of the
Agent for the benefit of the Banks to any third person with whom any Borrower
has any actual or prospective contractual relationship or other business
dealings.
5.06 Delivery of Certain Accounts and Documents to the Agent. Immediately
upon receipt of any instrument, chattel paper, document of title (including
bills of lading and warehouse receipts), the Borrowers shall deliver such
Collateral to the Agent and shall execute any form of assignment requested by
the Agent with respect thereto.
5.07 Accounts Agings. Each Borrower shall furnish the Agent and the Banks
with agings of its Accounts in such form and detail and at such intervals as the
Agent may from time to time reasonably require.
5.08 Government Accounts. The Borrowers shall immediately provide written
notice to the Agent of any and all Accounts which arise out of contracts with
the United States or any department, agency or instrumentality thereof, and
shall execute and deliver to the Agent for the benefit of the Banks an
assignment of claims for such Accounts and cooperate with the Agent in taking
any other steps required, in the Agent's judgment, to perfect or continue the
perfected status of the security interest of the Agent for the benefit of the
Banks in such Accounts and proceeds thereof under the Federal Assignment of
Claims Act.
5.09 Insurance of Collateral. Each Borrower shall keep its collateral
insured in accordance with Section 6.5 of the Loan Agreement. The Agent and the
Banks shall have the right (but shall be under no obligation) to pay any of the
premiums on such insurance. Any premiums paid by the Agent and the Banks shall,
if the Secured Party so elects, be considered an advance at the highest rate of
interest provided in the Loan Agreement, and all such accrued interest shall be
payable on demand. Any credit insurance covering Accounts shall name the Agent
as loss payee. Each Borrower expressly authorizes its insurance carriers to pay
proceeds of all insurance policies covering any or all of
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the Collateral directly to the Agent for the benefit of the Banks.
5.10 New Locations of Collateral and Books and Records. Each Borrower shall
immediately notify the Agent of any change in the location of its chief
executive office, of any new or additional address where its books and records
concerning the Collateral are located and of any new locations of Inventory or
Equipment not specified in Sections 3.02, 3.03 or 3.04 of this Security
Agreement, and if any such location is on leased or mortgaged premises, promptly
furnish the Agent with landlord's or mortgagee's waivers in form and substance
satisfactory to the Agent.
5.11 Perfection of the Secured Party's Interests. Each Borrower agrees to
cooperate and join, at its expense, with the Agent in taking such steps as are
necessary, in the Agent's judgment, to perfect or continue the perfected status
of the security interests granted hereunder, including, without limitation, the
execution and delivery of any financing statements, amendments thereto and
continuation statements, the delivery of chattel paper, documents or instruments
to the Agent, the obtaining of landlords' and mortgagees' waivers required by
the Agent, the notation of encumbrances in favor of the Agent for the benefit of
the Banks on certificates of title, and the execution and filing of any
collateral assignments and any other instruments requested by the Agent to
perfect its security interest in any and all of any Borrower's patents,
trademarks, service marks, tradenames, copyrights and other general intangibles.
The Agent is expressly authorized to file financing statements without the
signature of such Borrower.
5.12 Maintenance of Inventory and Equipment. Each Borrower shall care for
and preserve the Inventory and Equipment in good condition and repair, and will
pay the cost of all replacement parts, repairs to and maintenance of the
Equipment in accordance with past practices. Each Borrower will keep complete
and accurate maintenance records with respect to its Equipment.
5.13 Notification of Adverse Change in Collateral. Each Borrower agrees
immediately to notify the Agent if any event occurs or is discovered which would
cause any material diminution in the value of any significant item or type of
Collateral.
5.14 Reimbursement and Indemnification. Each Borrower agrees to reimburse
the Agent and the Banks on demand for reasonable out-of-pocket expenses incurred
in connection with the Agent's or any Bank's exercise of its rights under this
Security Agreement. Each Borrower agrees to indemnify the Agent and the Banks
and hold them harmless against any reasonable costs, expenses, losses, damages
and liabilities (including reasonable attorney's fees) incurred in connection
with this
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Security Agreement, other than as a direct result of the Agent's or any Bank's
gross negligence or willful misconduct.
Section 6. Power of Attorney. Each Borrower hereby appoints the Agent as
its lawful attorney-in-fact to do, at the Agent's option, and at the Borrower's
expense and liability, all acts and things which the Agent may deem necessary or
desirable to effectuate its rights under this Security Agreement, including
without limitation, (a) file financing statements and otherwise perfect any
security interest granted hereby, (b) correspond and negotiate directly with
insurance carriers, (c) upon the occurrence of a Default hereunder, receive,
open and dispose of in any reasonable manner all mail addressed to the Borrower
and notify Postal Service authorities to change the address for mail addressed
to the Borrower to an address designated by the Agent's, (d) upon the occurrence
of a Default hereunder, communicate with account debtors and other third parties
for the purpose of protecting or preserving the Collateral, and (e) upon the
occurrence of a Default hereunder, in any Borrower's, the Agent's or any Bank's
name, to demand, collect, receive, and receipt for, compound, compromise, settle
and give acquittance for, and prosecute and discontinue or dismiss, with or
without prejudice, any suit or proceeding respecting any of the Collateral.
Section 7. Default. The occurrence of any one or more of the following
shall be a default ("Default") hereunder:
7.01 Default Under Loan Agreement. The occurrence of an Event of Default
under the Loan Agreement or any of the Loan Documents.
7.02 Failure to Observe Covenants. The failure of any Borrower to keep,
observe or perform any provisions of this Security Agreement which failure is
not cured and remedied within fifteen (15) days after notice thereof is given to
the Borrowers.
7.03 Representations, Warranties. If any representation or warranty made
herein or certificate furnished by any Borrower pursuant to this Security
Agreement shall at any time when made, be proven to be materially false or
incorrect.
Section 8. Secured Party's Rights Upon Default. Upon the occurrence of a
Default hereunder, or at any time thereafter, at the request of the Bank, the
Agent may immediately and without notice do any or all of the following, which
rights and remedies are cumulative, may be exercised from time to time, and are
in addition to any rights and remedies available to the Agent under the Loan
Agreement or any other Loan Document:
8.01 Uniform Commercial Code Rights. Exercise any
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<PAGE>
and all of the rights and remedies of a secured party under the Uniform
Commercial Code, including the right to require any or all of the Borrowers to
assemble the Collateral and make it available to the Agent at a place reasonably
convenient to the parties.
8.02 Operation of Collateral. Operate, utilize, recondition and/or
refurbish (at the Agent's sole option and discretion and in any manner) any of
the Collateral which is Equipment, for the purpose of enhancing or preserving
the value thereof or the value of any other Collateral.
8.03 Notification of Account Debtors. Notify the account debtors for any of
the Accounts that such Accounts have been assigned to the Agent for the benefit
of the Banks and that payments are to be made directly to the Agent, or to such
post office box as the Agent may direct. No Borrower shall compromise,
discharge, extend the time for payment or otherwise grant any indulgence or
allowance with respect to any Account without the prior written consent of the
Agent.
8.04 Sale of Collateral. Upon five (5) calendar days' prior written notice
to the Borrowers, which each Borrower hereby acknowledges to be sufficient,
commercially reasonable and proper, sell, lease or otherwise dispose of any or
all of the Collateral at any time and from time to time at public or private
sale, with or without advertisement thereof and apply the proceeds of any such
sale first to the expenses in preparing the Collateral for sale (including
reasonable attorneys' fees) and second to the payment of the Obligations. Each
Borrower waives the benefit of any marshalling doctrine with respect to the
Agent's exercise of its rights hereunder. Each Borrower grants a royalty-free
license to the Agent for the benefit of the Banks for all patents, service
marks, trademarks, tradenames, copyrights, computer programs and other
intellectual property and proprietary rights sufficient to permit the Agent to
exercise all rights granted to the Agent under this Section.
Section 9. Notices. Any written notices required or permitted by this
Security Agreement shall be effective if delivered in accordance with Section
11.2 of the Loan Agreement.
Section 10. Miscellaneous.
10.01 No Waiver. No delay or omission by the Agent or the Banks in
exercising any right or remedy hereunder shall operate as a waiver thereof or of
any other right or remedy, and no single or partial exercise thereof shall
preclude any further exercise thereof or the exercise of any other right or
remedy.
10.02 Preservation of Rights. Neither the Agent nor the Banks shall have
any obligation or responsibility to take any
- 9 -
<PAGE>
steps to enforce or preserve rights against any parties to any Account and such
obligation and responsibility shall be those of the Borrowers exclusively.
10.03 Successors. The provisions of this Security Agreement shall inure to
the benefit of and be binding upon the respective successors and assigns of the
parties, provided that the obligations of the Borrowers hereunder may not be
assigned without the written consent of the Agent.
10.04 Amendments. No modification, rescission, waiver, release or amendment
of any provisions of this Security Agreement shall be effective unless set forth
in a written agreement signed by each Borrower and an authorized officer of the
Agent.
10.05 Governing Law. This Security Agreement shall be construed under the
internal laws of the Commonwealth of Pennsylvania without reference to conflict
of laws principles.
10.06 Severability. If any provision of this Security Agreement shall be
held invalid or unenforceable under applicable law in any jurisdiction, such
invalidity or unenforceability shall not affect the validity or enforceability
of such provision in any other jurisdiction or the validity or enforceability of
any other provision of this Security Agreement that can be given effect without
such invalid or unenforceable provision.
10.07 Judicial Proceedings. Each party to this Agreement agrees that any
suit, action or proceeding, whether claim or counterclaim, brought or instituted
by any party hereto or any successor or assign of any party, on or with respect
to this Agreement or the dealings of the parties with respect hereto, shall be
tried only by a court and not by a jury. EACH PARTY HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH
SUIT, ACTION OR PROCEEDING. Further, each party waives any right it may have to
claim or recover, in any such suit, action or proceeding, any special,
exemplary, punitive or consequential damages or any damages other than, or in
addition to, actual damages. EACH BORROWER ACKNOWLEDGES AND AGREES THAT THIS
PARAGRAPH IS A SPECIFIC AND MATERIAL ASPECT OF THIS AGREEMENT AND THAT THE AGENT
AND THE BANKS WOULD NOT EXTEND CREDIT TO THE BORROWERS IF THE WAIVERS SET FORTH
IN THIS PARAGRAPH WERE NOT A PART OF THIS AGREEMENT.
- 10 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement
to be executed and delivered by their authorized officers the day and year first
above written.
PCI SERVICES, INC.
By: Charles H. Korman
-------------------------------
Title: Assistant Vice President
PACKAGING COORDINATORS, INC.
By: Charles H. Korman
-------------------------------
Title: Vice President
PCI OF VIRGINIA, INC.
By: Charles H. Korman
-------------------------------
Title: Assistant Vice President
PCI/DELVCO, INC.
By: Charles H. Korman
-------------------------------
Title: Assistant Vice President
PCI/TRI-LINE (USA), INC.
By: Charles H. Korman
-------------------------------
Title: Assistant Vice President
PCI HOLDINGS, INC.
By: Charles H. Korman
-------------------------------
Title: Assistant Vice President
P.C. REALTY, INC.
By: Charles H. Korman
-------------------------------
Title: Assistant Vice President
- 11 -
<PAGE>
EXHIBIT A
Locations of Books and Records:
- ------------------------------
Packaging Coordinators, Inc.
K Street and Erie Avenue
Philadelphia, PA 19124
PCI/DELVCO, Inc.
1009 Polinsky Road
Ivyland, PA 18974
PCI/Tri-Line (USA), Inc.
K Street and Erie Avenue
Philadelphia, PA 19124
PCI Services, Inc.
K Street and Erie Avenue
Philadelphia, PA 19124
P.C. Realty, Inc.
5300 Klockner Drive
Richmond, VA 23231-0900
PCI of Virginia, Inc.
5300 Klockner Drive
Richmond, VA 23231-0900
PCI Holdings, Inc.
K Street and Erie Avenue
Philadelphia, PA 19124
Books and records for each of the above corporations are also located at:
3001 Red Lion Avenue
Philadelphia, PA 19114
Location of Chief Executive Offices:
- -----------------------------------
3001 Red Lion Avenue
Philadelphia, PA 19114
Page 1 of 2
<PAGE>
Locations of Inventory and Equipment:
Packaging Coordinators, Inc.
1665 John Tipton Boulevard
Pennsauken, NJ 08110
Packaging Coordinators, Inc.
3001 Red Lion Road
Philadelphia, PA 19114
Packaging Coordinators, Inc.
K Street and Erie Avenue
Philadelphia, PA 19124
PCI/DELVCO, Inc.
1009 Polinsky Road
Ivyland, PA 18974
PCI/Tri-Line (USA), Inc.
1256 Church Road
Morristown, NJ 08057
PCI of Virginia, Inc.
5300 Klockner Drive
Richmond, VA 23231-0900
Page 2 of 2
CONFORMED COPY
DATED 29 FEBRUARY 1996
PCI HOLDINGS (UK) CO., PCI ACQUISITION I, INC,
AND PCI ACQUISITION II, INC, - (1)
AND
CORESTATES BANK, N.A. - (2)
------------------
CHARGE OVER SHARES
------------------
EDGE & ELLISON
Solicitors
18 Southampton Place
London WC1A 2AJ
Tel: 0171 404 4701
Fax: 0171 400 7948
Ref: ACH/KA/KS/feb27-03.doc
<PAGE>
Index to Clauses
1 Definitions and Interpretation
2 Covenant to Pay
3 Charge
4 Deposit of Title Documents and Further Assurance
5 Representations Warranties and Covenants by the Chargors
6 Rights of the Agent
7 New Accounts
8 Enforcement
9 Power of Sale
10 Protection of Third Parties
11 Power of Attorney
12 Discharge of Security
13 Avoidance of Payments
14 Custody
15 Costs
16 Set-off
17 Communications
18 Currency Indemnity
19 Miscellaneous
20 Law and Jurisdiction
Schedule
<PAGE>
THIS DEED is dated 29 February 1996
and made BETWEEN :
(1) P.C.I. Holdings (UK) Co. (registered in England number 3167075) whose
registered office is at Hurricane Way, Wickford Business Park,
Shotgate, Essex SS11 8UJ, PCI ACQUISITION I, INC, a Delaware
Corporation and PCI ACQUISITION II, INC, a Delaware Corporation
("the Chargors"); and
(2) CORESTATES BANK, N.A. (the `Agent')
WITNESSES as follows:
1 Definitions and Interpretation
1.1 In this Charge unless the context otherwise requires:
"Agent" means CoreStates Bank, N.A. and any successor agent appointed
as such pursuant to the Facility Agreement
"Banks" means all or any of the Banks from time to time being parties
to and described as such in the Facility Agreement.
"Charged Property" means the property and rights of the Chargors which
are the subject of any security created or purported to be created by
this Charge
"Derivative Assets" means all stocks shares warrants or other
securities rights dividends interest or other property whether of a
capital or income nature accruing offered issued or deriving at any
time by way of dividend bonus redemption exchange purchase substitution
conversion consolidation subdivision preference option or otherwise
attributable to any of the Shares and Securities or any Derivative
Assets previously described
"Event of Default" means each and every event of default howsoever
described in the Facility Agreement
"Facility Agreement" means an agreement dated 29 February 1996 between
inter alia the Chargors and the Agent
"Financial Indebtedness" means each and every indebtedness howsoever
described in the Facility Agreement or under any Related Document
"LPA" means the Law of Property Act 1925
"Secured Liabilities" means all monies obligations and liabilities
whatsoever whether for principal interest or otherwise in whatever
currency which may now or at any time in the future be due owing or
incurred by the Chargors to the Agent and to the Banks under the terms
of the Facility Agreement, any Related Document and/or this
<PAGE>
Charge whether alone severally or jointly as principal guarantor
surety or otherwise
"Shares and Securities" means all stocks shares and other securities:
(i) listed in parts 1 and 2 of the Schedule for which the
stock or share certificates or other documents of
title have been deposited by the Chargors with the
Agent; or
(ii) for which the stock or share certificates or other
documents of title have been deposited by the
Chargors with the Agent or its agents or nominees or
are held to the order of the Agent; or
(iii) for which the stock or share certificates or other
documents of title are now held by the Agent or its
agents for the account of the Chargors; or
(iv) represented by any stock or share certificates or
other documents of title from time to time in the
future deposited by the Chargors with the Agent or
its agents or nominees or held to the order of the
Agent or belonging to the Chargors and received by
the Agent or its agents or nominees after the
execution of this Charge;
in each case whether held in the United Kingdom or elsewhere.
1.2 All terms defined in the Facility Agreement which are used in this
Charge shall bear the same meaning as in the Facility Agreement unless
the content requires otherwise.
1.3 References to Clauses and Schedules are to the clauses and schedules
to this Charge.
1.4 Clause headings are inserted for ease of reference only and are not to
affect the interpretation of this Charge.
1.5 Except to the extent the context otherwise requires any reference in
this document to `this Charge' and any other document referred to in it
includes any document expressed to be supplemental to or collateral
with or which is entered into pursuant to or in accordance herewith or
therewith and shall be deemed to include any instruments amending
varying supplementing novating or replacing the terms of any such
documents from time to time.
1.6 References to a person are to be construed to include corporations
firms companies partnerships individuals associations states and
administrative and governmental and other entities whether or not a
separate legal entity.
1.7 References to any person are to be construed to include references to
that person's successors transferees and assigns whether direct or
indirect.
<PAGE>
1.8 References to any statutory provision are to be construed as references
to that statutory provision as amended supplemented re-enacted or
replaced from time to time (whether before or after the date of this
Charge) and are to include any order regulations instruments or other
subordinated legislation made under or deriving validity from that
statutory provision.
1.9 The words `other' and `otherwise' are not to be construed ejusdem
generis with any foregoing words where a wider construction is
possible.
1.10 The words `including' and `in particular' are to be construed as being
by way of illustration or emphasis only and are not to be construed as,
nor shall they take effect as, limiting the generality of any foregoing
words.
2 Covenant to Pay
2.1 The Chargors covenants with the Agent and each of the Banks that it
will on demand pay and discharge the Secured Liabilities when due to
the Agent
2.2 The Chargors shall pay interest to the date of payment or discharge
(notwithstanding any demand or any judgment obtained by the Agent or
the liquidation or administration of or any arrangement or composition
with creditors by the Chargors) at the rate or rates applicable under
the agreements or arrangements giving rise to the relevant obligations
or liabilities.
2.3 All sums payable by the Chargors under this Charge shall be paid
without any set-off counterclaim withholding or deduction whatsoever
unless required by law in which event the Chargors will simultaneously
with making the relevant payment under this Charge pay to the Agent
such additional amount as will result in the receipt by the Agent of
the full amount which would otherwise have been receivable and will
supply the Agent promptly with evidence satisfactory to the Agent that
the Chargors has accounted to the relevant authority for the sum
withheld or deducted.
3 Charge
3.1 Each of the Chargors with absolute title guarantee (with the intent
that the security so constituted shall extend to all beneficial
interests of the Chargors in the Charged Property and to any proceeds
of sale or other realisation of the Charged Property or any part of it)
and as continuing security for the payment and discharge of the Secured
Liabilities charges the Shares and Securities and the Derivative Assets
to the Agent as follows:-
(i) PCI HOLDINGS (UK) CO. hereby charges the shares listed in
part 1 of the Schedule; and,
(ii) PCI ACQUISITION I, INC and PCI ACQUISITION II hereby charge
the shares listed in part 2 of the Schedule
4 Deposit of Title Documents and Further Assurance
<PAGE>
4.1 The Chargors shall on the execution of this Charge or as soon as
reasonably practicable thereafter deposit with the Agent all stock or
share certificates or other documents of title to or representing the
Charged Property together with such duly executed transfers or
assignments with the name of the transferee date and consideration left
blank as the Agent may require to enable the Agent to vest the same in
the Agent or its nominees or, after the occurrence of an Event of
Default, any purchaser to the intent that the Agent may at any time
without notice present them for registration.
4.2 The Chargors shall upon the accrual offer issue or receipt of any
Derivative Assets deliver or pay to the Agent or procure the delivery
or payment to the Agent of all such Derivative Assets or the stock or
share certificates or other documents of title to or representing them
together with such duly executed transfers or assignments with the name
of the transferee date and consideration left blank as the Agent may
require to enable the Agent to vest the same in the Agent or its
nominees or, after the occurrence of an Event of Default, any purchaser
to the intent that the Agent may at any time without notice present
them for registration.
4.3 Without prejudice to anything else contained in this Charge the
Chargors shall at any time at the request of the Agent but at the cost
of the Chargors promptly sign seal execute deliver and do all deeds
instruments transfers renunciations proxies notices documents acts and
things in such form as the Agent may from time to time require for
perfecting or protecting the security over the Charged Property or any
part of it or for facilitating its realisation.
4.4 The Agent shall only use nominees resident in England and Wales for the
purposes of holding or dealing with any of the Charged Property.
5 Representations Warranties and Covenants by the Chargors
5.1 The Chargors represent and warrant to the Agent and to all of the Banks
and undertakes that:
(a) it is and will be the sole absolute and beneficial owner and
(subject only to the relevant share transfers in favour of the
Chargor being duly stamped) will be the registered holder of
all of the Charged Property free from Encumbrances and will
not create or attempt to create or permit to arise or subsist
any Encumbrance (other than this Charge) on or over the
Charged Property;
(b) it has not sold or otherwise disposed of or agreed to sell or
otherwise dispose of or granted or agreed to grant any option
in respect of all or any of its right title and interest in
and to the Charged Property or any part of it and will not do
any of the foregoing at any time during the subsistence of
this Charge;
(c) Except as disclosed in writing to and approved by the Agent
the Shares and Securities are and will at all times be fully
paid and there are and will be no monies or liabilities
outstanding in respect of any of the Charged Property;
<PAGE>
(d) the Charged Property has been and will at all times be duly
authorised and validly issued and is and will at all times be
free from any restriction on transfer or rights of
pre-emption;
(e) it has and will at all times have the necessary power to enter
into and perform its obligations under this Charge;
(f) so far as the Chargor is aware this Charge constitutes its
legal valid binding and enforceable obligations and is a
security over all and every part of the Charged Property
effective in accordance with its terms;
(g) this Charge does not and will not conflict with or result in
any breach or constitute a default under any agreement
instrument or obligation to which the Chargors is a party or
by which it is bound;
(h) all necessary authorisations and consents to enable or entitle
it to enter into this Charge have been obtained and will
remain in full force and effect at all times during the
subsistence of the security constituted by this Charge; and
(i) it will procure due compliance with its obligations in this
Charge by all nominees in whose name or names any Charged
Property is registered or holding any certificates or other
documents of title relating to any Charged Property.
5.2 The Chargors shall promptly pay all calls or other payments due and
payable and will discharge all other obligations properly payable in
respect of any part of the Charged Property and if the Chargors fails
to fulfil any such obligations the Agent may, but shall not be obliged
to, make such payments on behalf of the Chargors in which event any
sums so paid shall be reimbursed on demand by the Chargors to the Agent
together with interest at the rate specified in Clause 8.4 of the
Facility Agreement from the date of payment by the Agent until demand
whether before or after judgment.
5.3 The Chargors shall indemnify the Agent on a full indemnity basis
against calls or other payments relating to the Charged Property and
any defect in the Chargors' title to the Charged Property and against
all actions proceedings losses costs claims and demands suffered or
incurred in respect of anything done or omitted in any way relating to
the Charged Property or in the exercise or purported exercise of the
powers contained in this Charge by the Agent acting in good faith.
5.4 The Chargors shall not do or cause or permit anything to be done
otherwise than in the ordinary course of business which is likely to
materially and adversely affect the security created or purported to be
created by this Charge or which is a variation or abrogation of the
rights attaching to or conferred by all or any part of the Charged
Property without the prior written consent of the Agent and shall take
such action as the Agent may in its discretion and after consultation
with the Chargor, reasonably direct in relation to any proposed
compromise arrangement reorganisation conversion repayment offer or
scheme of arrangement affecting all or any part of the Charged
Property.
<PAGE>
6 Rights of the Agent
6.1 The Agent may at its discretion (in the name of the Chargors) only
after the occurrence of any Event of Default which has not been
remedied or waived and without any consent or authority on the part of
the Chargors) exercise the following rights and powers in respect of
the Charged Property:
(a) any voting rights and any powers or rights which may be exercised
by the person or persons in whose name or names the Charged
Property is registered; and
(b) all the powers given to trustees by Section 10(3) and (4) of
the Trustee Act 1925 (as amended by Section 9 of the Trustee
Investments Act 1961) in respect of securities or property
subject to a trust.
6.2 Following the occurrence of an Event of Default all dividends interest
and other income forming part of the Charged Property shall, unless
otherwise agreed between the Agent and the Chargors, be paid without
any set-off or deduction whatsoever to an interest bearing suspense
account and retained by the Agent until applied as hereinafter provided
as part of the Charged Property and any such monies which may be
received by the Chargors shall pending such payment be held in trust
for the Agent.
6.3 The powers conferred on the Agent by this Charge are solely to protect
its interests in the Charged Property and shall not impose any duty on
it to exercise any such powers. The Agent shall not have any duty as to
any Charged Property and shall incur no liability for:
(a) ascertaining or taking action in respect of any calls
instalments conversions exchanges maturities tenders or other
matters in relation to any Charged Property or the nature or
sufficiency of any payment whether or not the Agent has or is
deemed to have knowledge of such matters; or
(b) taking any necessary steps to preserve rights against prior
parties or any other rights pertaining to any Charged
Property.
6.4 The Agent shall not be liable to account as mortgagee in possession in
respect of all or any of the Charged Property and shall not be liable
for any loss upon realisation or for any failure to present any
interest coupon or any bond or stock drawn for repayment or for any
failure to pay any call or instalment or to accept any offer or to
notify the Chargors of any such matter or for any failure to ensure
that the correct amounts (if any) are paid or received in respect of
the Charged Property or for any negligence or default by its nominees
or agents or for any other loss of any nature whatsoever in connection
with the Charged Property save for any failure to preserve the
certificates forming this security.
<PAGE>
7 New Accounts
7.1 If the Agent receives notice (whether actual or otherwise) of any
subsequent mortgage or charge affecting all or any part of the Charged
Property the Agent may open a new account or accounts with the Chargors
and, if it does not open a new account, it shall nevertheless be
treated as if it had done so at the time when it received or was deemed
to have received notice and as from that time all payments made by the
Chargors to the Agent shall be credited or be treated as having been
credited to the new account and shall not operate to reduce the amount
secured by this Charge at the time when the Agent received or was
deemed to have received such notice.
8 Enforcement
8.1 If any Event of Default shall occur and be continuing then the security
constituted by this Charge shall become immediately enforceable and the
power of sale and other powers conferred by Section 101 of the LPA as
varied or extended by this Charge shall become immediately exercisable
without the restrictions contained in the LPA as to the giving of
notice or otherwise.
8.2 The Secured Liabilities shall be deemed for the purposes of all powers
implied by statute to have become due and payable within the meaning of
Section 101 of the LPA immediately on the execution of this Charge and
Section 103 of the LPA (restricting the power of sale) and Section 93
of the LPA (restricting the right of consolidation) shall not apply to
this Charge.
9 Power of Sale
9.1 At any time after the security constituted by this Charge has become
enforceable the Agent may without further notice to the Chargors
exercise the power to sell or otherwise dispose of the whole or any
part of the Charged Property, in such manner and on such terms and for
such consideration (whether payable immediately or by instalments) as
the Agent shall in its absolute discretion think fit and without
liability for loss whatsoever, and may (without prejudice to any right
which it may have under any other provision of this Charge) treat such
part of the Charged Property as consists of money as if it were the
proceeds of such a sale or other disposal. The Agent shall after the
payment of any claims having priority to the security created by this
Charge apply the proceeds without prejudice to the right of the Agent
to recover any shortfall from the Chargors in paying the costs of sale
or other disposal and in or towards the discharge of the Secured
Liabilities in such order as the Agent in its absolute discretion
thinks fit and the surplus (if any) of such proceeds shall be paid to
the person or persons entitled to it.
10 Protection of Third Parties
<PAGE>
10.1 No purchaser mortgagee or other person dealing with the Agent shall be
concerned to enquire whether the Secured Liabilities have become
payable or whether any power which it is purporting to exercise has
become exercisable or whether any money is due under this Charge or as
to the application of any money paid raised or borrowed or as to the
propriety or regularity of any sale by or other dealing with the Agent.
All the protection to purchasers contained in Sections 104 and 107 of
the LPA shall apply to any person purchasing from or dealing with the
Agent as if the Secured Liabilities had become due and the statutory
powers of sale in relation to the Charged Property had arisen on the
date of this Charge.
11 Power of Attorney
11.1 The Chargors by way of security irrevocably appoint the Agent to be the
attorney of the Chargors (with full powers of substitution and
delegation) for the Chargors and in its name or otherwise and on its
behalf and as its act and deed to sign seal execute deliver perfect and
do all deeds instruments transfers renunciations proxies notices
documents acts and things necessary to perfect the security comprised
in this Charge.
11.2 The Chargors ratify and confirm and agree to ratify and confirm
anything such attorney shall lawfully and properly do or purport to do
by virtue of clause 11.1 and all money expended by any such attorney
shall be deemed to be expenses incurred by the Agent under this Charge.
11.3 The Chargors undertake to procure that all registered holders from time
to time of any of the Charged Property shall forthwith grant the Agent
a power of attorney on the terms set out in clause 11.1 in respect of
such Charged Property.
12 Discharge of Security
12.1 The security constituted by this Charge shall be continuing and shall
not be considered as satisfied or discharged by any intermediate
payment or settlement of the whole or any part of the Secured
Liabilities or any other matter or thing whatsoever including the
insolvency liquidation or administration of the Chargors and shall be
binding until all the Secured Liabilities have been unconditionally and
irrevocably paid and discharged in full.
12.2 Upon the irrevocable payment or discharge in full of the Secured
Liabilities the Agent will or will procure that its nominees will (as
the case may be) at the request and cost of the Chargors retransfer to
the Chargors all the Agent's right title and interest in or to the
Charged Property freed from this Charge.
12.3 Upon any release of the Charged Property the Agent or its nominees (as
the case may be) shall not be bound to release or transfer to the
Chargors the identical stocks shares or securities which were deposited
with or transferred to it or them where other securities represent the
Charged Property and the Chargors shall accept shares and securities of
the same class and denomination or such other securities as then
represent the Charged Property.
<PAGE>
13 Avoidance of Payments
No assurance security or payment which may be avoided or adjusted under
any enactment relating to bankruptcy or insolvency or under Sections
238-245 of the Insolvency Act 1986 or similar legislation binding on
the Chargors in a jurisdiction other than England and Wales and no
release settlement or discharge given or made by the Agent on the faith
of any such assurance security or payment shall prejudice or affect the
right of the Agent to recover from the Chargors (including the right to
recover any monies which it may have been compelled by due process of
law to refund under the provisions of the Insolvency Act 1986 and any
costs payable by it pursuant to or otherwise incurred in connection
with such process) or to enforce the security created by or pursuant to
this Charge to the full extent of the Secured Liabilities.
14 Custody
14.1 The Agent shall be entitled to provide for the safe custody by third
parties of all stock and share certificates and documents of title
deposited with the Agent or its nominees relating to the Charged
Property and shall not be responsible for any loss of or damage to any
such certificates or documents unless such loss or damage arises as a
result of a wilful default or gross negligence by the Agent.
15 Communications
15.1 Every notice demand or other communication under this Charge shall be
in writing and may be delivered personally or by letter or facsimile
transmission despatched
(a) if to the Agent to its address specified at the head of this
Charge or to the following numbers:
Facsimile 0171 962 2860
for the attention of Jill Enzmann; and
Facsimile 215 973 5387
for the attention of Andrea Cohen
(b) if to any of the Chargors to its registered or principal office
for the time being or to the following numbers:
Facsimile
for the attention of
<PAGE>
or to such other address and or facsimile number as may be
notified in accordance with this Clause by the relevant party
to the other party for such purpose.
15.2 Every notice demand or other communication shall be deemed to have been
received (if sent by post) twenty-four hours after being posted first
class postage prepaid (if posted from and to an address within the
United Kingdom) or 5 working days after being posted prepaid airmail
(if posted from or to an address outside the United Kingdom) and (if
delivered personally or despatched by telex subject to receiving the
correct telex answerback or by facsimile transmission) at the time of
delivery or despatch if during normal business hours in the place of
intended receipt on a working day in the place of intended receipt and
otherwise at the opening of business in that place on the next
succeeding such working day.
16 Currency Indemnity
16.1 If under any applicable law or regulation or pursuant to a judgment or
order being made or registered against the Chargors or the liquidation
of the Chargors or without limitation for any other reason any payment
under or in connection with this Charge is made or falls to be
satisfied in a currency (the `payment currency') other than the
currency in which such payment is expressed to be due under or in
connection with this Charge (the `contractual currency') then to the
extent that the amount of such payment actually received by the Agent
when converted into the contractual currency at the rate of exchange
falls short of the amount due under or in connection with this Charge
the Chargors as a separate and independent obligation shall indemnify
and hold harmless the Agent against the amount of such shortfall. For
the purposes of this Clause `rate of exchange' means the rate at which
the Agent is able on or about the date of such payment to purchase, in
accordance with its normal practice, the contractual currency with the
payment currency and shall take into account (and the Chargors shall be
liable for) any premium and other costs of exchange including any taxes
or duties incurred by reason of any such exchange.
17 Miscellaneous
17.1 No delay or omission on the part of the Agent in exercising any right
or remedy under this Charge shall impair that right or remedy or
operate as or be taken to be a waiver of it nor shall any single
partial or defective exercise of any such right or remedy preclude any
other or further exercise under this Charge or that or any other right
or remedy.
17.2 The Agent's rights under this Charge are cumulative and not exclusive
of any rights provided by law and may be exercised from time to time
and as often as the Agent deems expedient.
17.3 Any waiver by the Agent of any terms of this Charge or any consent or
approval given by the Agent under it shall only be effective if given
in writing and then only for the purpose and upon the terms and
conditions if any on which it is given.
<PAGE>
17.4 The security constituted by this Charge shall be in addition to and
shall not be prejudiced determined or affected by nor operate so as in
any way to determine prejudice or affect any Encumbrance which the
Agent may now or at any time in the future hold for or in respect of
the Secured Liabilities or any part of them and shall not be prejudiced
by time or indulgence granted to any person or any abstention by the
Agent in perfecting or enforcing any remedies securities guarantees or
rights it may now or in the future have from or against the Chargors or
any other person or any waiver release variation act omission
forbearance unenforceability indulgence or invalidity of any such
remedy security guarantee or right.
17.5 If at any time any one or more of the provisions of this Charge is or
becomes illegal invalid or unenforceable in any respect under any law
of any jurisdiction neither the legality validity or enforceability of
the remaining provisions of this Charge nor the legality validity or
enforceability of such provision under the law of any other
jurisdiction shall be in any way affected or impaired as a result.
17.6 Any statement certificate or determination of the Agent as to the
Secured Liabilities or without limitation any other matter provided for
in this Charge shall in the absence of manifest error be conclusive and
binding on the Chargors.
18 Law and Jurisdiction
18.1 This Charge is governed by and shall be construed in accordance with
English law.
18.2 The Chargors irrevocably agree for the exclusive benefit of
the Agent that the courts of England shall have jurisdiction to hear
and determine any suit action or proceeding and to settle any dispute
which may arise out of or in connection with this Charge and for such
purposes irrevocably submits to the jurisdiction of such courts.
18.3 Nothing contained in this Clause shall limit the right of the Agent to
take proceedings against the Chargors in any other court of competent
jurisdiction nor shall the taking of any such proceedings in one or
more jurisdictions preclude the taking of proceedings in any other
jurisdiction whether concurrently or not (unless precluded by
applicable law).
18.4 The Chargors irrevocably waive any objection which it may have now or
in the future to the courts of England being nominated for the purpose
of this Clause on the ground of venue or otherwise and agrees not to
claim that any such court is not a convenient or appropriate forum.
18.5 PCI Acquisition I, Inc, and PCI Acquisition II, Inc, authorises and
appoints PCI Holdings (UK) Co (or such other person being a firm of
solicitors in England as it may from time to time substitute by notice
to the Agent) to accept service of all legal process arising out of or
connected with this Charge and service on such person (or substitute)
shall be deemed to be service on the Chargors. Except upon such a
substitution the Chargors shall not revoke any such authority or
appointment shall at all times maintain an agent for service of process
<PAGE>
in England and if any such agent ceases for any reason to be an agent
for this purpose shall forthwith appoint another agent and advise the
Agent accordingly.
IN WITNESS whereof the Chargors have executed and delivered this Charge as a
Deed the day and year first before written.
<PAGE>
SCHEDULE
Number of shares or Description of stocks,
amount of stock shares, or other securities
Part 1 B. KORMAN 6,042,072
Shares in Unipack Limited ORDINARY SHARES
OF BP1 EACH
Part 2 R. SANTER
Shares in PCI Holdings (UK) Co. 2 shares of BP1 each
<PAGE>
The Chargors
Executed as a Deed by ) Director B. KORMAN
PCI Holdings (UK) Co )
Director R. SANTER
Executed as a Deed by )
PCI Acquisition I, Inc )
acting by )
) B. KORMAN
and )
) R. SANTER
in the presence of )
)
...................
Witness
Address:
Executed as a Deed by )
PCI Acquisition II, Inc )
acting by )
) B. KORMAN
and )
) R. SANTER
in the presence of )
)
...................
Witness
Address:
CONFORMED COPY
DATED 29 FEBRUARY 1996
PCI HOLDINGS (UK) CO., PCI ACQUISITION I, INC,
AND PCI ACQUISITION II, INC, - (1)
AND
MERIDIAN BANK - (2)
------------------
CHARGE OVER SHARES
------------------
EDGE & ELLISON
Solicitors
18 Southampton Place
London WC1A 2AJ
Tel: 0171 404 4701
Fax: 0171 400 7948
Ref: ACH/KA/KS/feb27-03.doc
<PAGE>
Index to Clauses
1 Definitions and Interpretation
2 Covenant to Pay
3 Charge
4 Deposit of Title Documents and Further Assurance
5 Representations Warranties and Covenants by the Chargors
6 Rights of the Agent
7 New Accounts
8 Enforcement
9 Power of Sale
10 Protection of Third Parties
11 Power of Attorney
12 Discharge of Security
13 Avoidance of Payments
14 Custody
15 Costs
16 Set-off
17 Communications
18 Currency Indemnity
19 Miscellaneous
20 Law and Jurisdiction
Schedule
<PAGE>
THIS DEED is dated 29 February 1996
and made BETWEEN:
(1) P.C.I. Holdings (UK) Co. (registered in England number 3167075) whose
registered office is at Hurricane Way, Wickford Business Park,
Shotgate, Essex SS11 8UJ, PCI ACQUISITION I, INC, a Delaware
Corporation, and PCI ACQUISITION II, INC, a Delaware Corporation
("the Chargors"); and
(2) MERIDIAN BANK (the `Agent')
WITNESSES as follows:
1 Definitions and Interpretation
1.1 In this Charge unless the context otherwise requires:
"Agent" means Meridian Bank and any successor agent appointed as such
pursuant to the Facility Agreement
"Banks" means all or any of the Banks from time to time being parties
to and described as such in the Facility Agreement.
"Charged Property" means the property and rights of the Chargors which
are the subject of any security created or purported to be created by
this Charge
"Derivative Assets" means all stocks shares warrants or other
securities rights dividends interest or other property whether of a
capital or income nature accruing offered issued or deriving at any
time by way of dividend bonus redemption exchange purchase substitution
conversion consolidation subdivision preference option or otherwise
attributable to any of the Shares and Securities or any Derivative
Assets previously described
"Event of Default" means each and every event of default howsoever
described in the Facility Agreement
"Facility Agreement" means a loan and agency agreement dated 29
February 1996 between inter alia PCI Services, Inc. and the Agent
"Financial Indebtedness" means each and every indebtedness howsoever
described in the Facility Agreement
"LPA" means the Law of Property Act 1925
"Secured Liabilities" means all monies obligations and liabilities
whatsoever whether for principal interest or otherwise in whatever
currency which may now or at any time in the future be due owing or
incurred by the Chargors to the Agent and to the Banks under the terms
of the Facility Agreement and/or this Charge whether alone
<PAGE>
severally or jointly as principal guarantor surety or otherwise
"Shares and Securities" means all stocks shares and other securities:
(i) listed in parts 1 and 2 of the Schedule for which the
stock or share certificates or other documents of
title have been deposited by the Chargors with the
Agent; or
(ii) for which the stock or share certificates or other
documents of title have been deposited by the
Chargors with the Agent or its agents or nominees or
are held to the order of the Agent; or
(iii) for which the stock or share certificates or other
documents of title are now held by the Agent or its
agents for the account of the Chargors; or
(iv) represented by any stock or share certificates or
other documents of title from time to time in the
future deposited by the Chargors with the Agent or
its agents or nominees or held to the order of the
Agent or belonging to the Chargors and received by
the Agent or its agents or nominees after the
execution of this Charge;
in each case whether held in the United Kingdom or elsewhere.
1.2 References to Clauses and Schedules are to the clauses and schedules to
this Charge.
1.3 Clause headings are inserted for ease of reference only and are not to
affect the interpretation of this Charge.
1.4 Except to the extent the context otherwise requires any reference in
this document to `this Charge' and any other document referred to in it
includes any document expressed to be supplemental to or collateral
with or which is entered into pursuant to or in accordance herewith or
therewith and shall be deemed to include any instruments amending
varying supplementing novating or replacing the terms of any such
documents from time to time.
1.5 References to a person are to be construed to include corporations
firms companies partnerships individuals associations states and
administrative and governmental and other entities whether or not a
separate legal entity.
1.6 References to any person are to be construed to include references to
that person's successors transferees and assigns whether direct or
indirect.
1.7 References to any statutory provision are to be construed as references
to that statutory provision as amended supplemented re-enacted or
replaced from time to time (whether before or after the date of this
Charge) and are to include any orders regulations instruments or other
subordinated legislation made under or deriving validity from that
statutory provision.
<PAGE>
1.8 The words `other' and `otherwise' are not to be construed ejusdem
generis with any foregoing words where a wider construction is
possible.
1.9 The words `including' and `in particular' are to be construed as being
by way of illustration or emphasis only and are not to be construed as,
nor shall they take effect as, limiting the generality of any foregoing
words.
2 Covenant to Pay
2.1 The Chargors covenants with the Agent and each of the Banks that it
will on demand pay and discharge the Secured Liabilities when due to
the Agent
2.2 The Chargors shall pay interest to the date of payment or discharge
(notwithstanding any demand or any judgment obtained by the Agent or
the liquidation or administration of or any arrangement or composition
with creditors by the Chargors) at the rate or rates applicable under
the agreements or arrangements giving rise to the relevant obligations
or liabilities.
2.3 All sums payable by the Chargors under this Charge shall be paid
without any set-off counterclaim withholding or deduction whatsoever
unless required by law in which event the Chargors will simultaneously
with making the relevant payment under this Charge pay to the Agent
such additional amount as will result in the receipt by the Agent of
the full amount which would otherwise have been receivable and will
supply the Agent promptly with evidence satisfactory to the Agent that
the Chargors has accounted to the relevant authority for the sum
withheld or deducted.
3 Charge
3.1 Each of the Chargors with absolute title guarantee (with the intent
that the security so constituted shall extend to all beneficial
interests of the Chargors in the Charged Property and to any proceeds
of sale or other realisation of the Charged Property or any part of it)
and as continuing security for the payment and discharge of the Secured
Liabilities charges the Shares and Securities and the Derivative Assets
to the Agent as follows:-
(i) PCI HOLDINGS (UK) CO. hereby charges the shares listed in part 1
of the Schedule; and,
(ii) PCI ACQUISITION I, INC and PCI ACQUISITION II hereby charge the
shares listed in part 2 of the Schedule
4 Deposit of Title Documents and Further Assurance
4.1 The Chargors shall on the execution of this Charge or as soon as
reasonably practicable thereafter deposit with the Agent all stock or
share certificates or other documents of title to or representing the
Charged Property together with such duly executed transfers or
<PAGE>
assignments with the name of the transferee date and consideration left
blank as the Agent may require to enable the Agent to vest the same in
the Agent or its nominees or, after the occurrence of an Event of
Default, any purchaser to the intent that the Agent may at any time
without notice present them for registration.
4.2 The Chargors shall upon the accrual offer issue or receipt of any
Derivative Assets deliver or pay to the Agent or procure the delivery
or payment to the Agent of all such Derivative Assets or the stock or
share certificates or other documents of title to or representing them
together with such duly executed transfers or assignments with the name
of the transferee date and consideration left blank as the Agent may
require to enable the Agent to vest the same in the Agent or its
nominees or, after the occurrence of an Event of Default, any purchaser
to the intent that the Agent may at any time without notice present
them for registration.
4.3 Without prejudice to anything else contained in this Charge the
Chargors shall at any time at the request of the Agent but at the cost
of the Chargors promptly sign seal execute deliver and do all deeds
instruments transfers renunciations proxies notices documents acts and
things in such form as the Agent may from time to time require for
perfecting or protecting the security over the Charged Property or any
part of it or for facilitating its realisation.
4.4 The Agent shall only use nominees resident in England and Wales for the
purposes of holding or dealing with any of the Charged Property.
5 Representations Warranties and Covenants by the Chargors
5.1 The Chargors represent and warrant to the Agent and to all of the
Banks and undertakes that:
(a) it is and will be the sole absolute and beneficial owner and
(subject only to the relevant share transfers in favour of the
Chargor being duly stamped) will be the registered holder of
all of the Charged Property free from encumbrances and will
not create or attempt to create or permit to arise or subsist
any encumbrance (other than this Charge) on or over the
Charged Property;
(b) it has not sold or otherwise disposed of or agreed to sell or
otherwise dispose of or granted or agreed to grant any option
in respect of all or any of its right title and interest in
and to the Charged Property or any part of it and will not do
any of the foregoing at any time during the subsistence of
this Charge;
(c) Except as disclosed in writing to and approved by the Agent
the Shares and Securities are and will at all times be fully
paid and there are and will be no monies or liabilities
outstanding in respect of any of the Charged Property;
<PAGE>
(d) the Charged Property has been and will at all times be duly
authorised and validly issued and is and will at all times be
free from any restriction on transfer or rights of
pre-emption;
(e) it has and will at all times have the necessary power to enter
into and perform its obligations under this Charge;
(f) so far as the Chargor is aware this Charge constitutes its
legal valid binding and enforceable obligations and is a
security over all and every part of the Charged Property
effective in accordance with its terms;
(g) this Charge does not and will not conflict with or result in
any breach or constitute a default under any agreement
instrument or obligation to which the Chargors is a party or
by which it is bound;
(h) all necessary authorisations and consents to enable or entitle
it to enter into this Charge have been obtained and will
remain in full force and effect at all times during the
subsistence of the security constituted by this Charge; and
(i) it will procure due compliance with its obligations in this
Charge by all nominees in whose name or names any Charged
Property is registered or holding any certificates or other
documents of title relating to any Charged Property.
5.2 The Chargors shall promptly pay all calls or other payments due and
payable and will discharge all other obligations properly payable in
respect of any part of the Charged Property and if the Chargors fails
to fulfil any such obligations the Agent may, but shall not be obliged
to, make such payments on behalf of the Chargors in which event any
sums so paid shall be reimbursed on demand by the Chargors to the Agent
together with interest at the Default Rate specified in the Facility
Agreement from the date of payment by the Agent until demand whether
before or after judgment.
5.3 The Chargors shall indemnify the Agent on a full indemnity basis
against calls or other payments relating to the Charged Property and
any defect in the Chargors' title to the Charged Property and against
all actions proceedings losses costs claims and demands suffered or
incurred in respect of anything done or omitted in any way relating to
the Charged Property or in the exercise or purported exercise of the
powers contained in this Charge by the Agent acting in good faith.
5.4 The Chargors shall not do or cause or permit anything to be done
otherwise than in the ordinary course of business which is likely to
materially and adversely affect the security created or purported to be
created by this Charge or which is a variation or abrogation of the
rights attaching to or conferred by all or any part of the Charged
Property without the prior written consent of the Agent and shall take
such action as the Agent may in its discretion and after consultation
with the Chargor, reasonably direct in relation to any proposed
compromise arrangement reorganisation conversion repayment offer or
scheme of arrangement affecting all or any part of the Charged
Property.
<PAGE>
6 Rights of the Agent
6.1 The Agent may at its discretion (in the name of the Chargors) only
after the occurrence of any Event of Default which has not been
remedied or waived and without any consent or authority on the part of
the Chargors) exercise the following rights and powers in respect of
the Charged Property:
(a) any voting rights and any powers or rights which may be exercised
by the person or persons in whose name or names the Charged
Property is registered; and
(b) all the powers given to trustees by Section 10(3) and (4) of
the Trustee Act 1925 (as amended by Section 9 of the Trustee
Investments Act 1961) in respect of securities or property
subject to a trust.
6.2 Following the occurrence of an Event of Default all dividends interest
and other income forming part of the Charged Property shall, unless
otherwise agreed between the Agent and the Chargors, be paid without
any set-off or deduction whatsoever to an interest bearing suspense
account and retained by the Agent until applied as hereinafter provided
as part of the Charged Property and any such monies which may be
received by the Chargors shall pending such payment be held in trust
for the Agent.
6.3 The powers conferred on the Agent by this Charge are solely to protect
its interests in the Charged Property and shall not impose any duty on
it to exercise any such powers. The Agent shall not have any duty as to
any Charged Property and shall incur no liability for:
(a) ascertaining or taking action in respect of any calls
instalments conversions exchanges maturities tenders or other
matters in relation to any Charged Property or the nature or
sufficiency of any payment whether or not the Agent has or is
deemed to have knowledge of such matters; or
(b) taking any necessary steps to preserve rights against prior
parties or any other rights pertaining to any Charged
Property.
6.4 The Agent shall not be liable to account as mortgagee in possession in
respect of all or any of the Charged Property and shall not be liable
for any loss upon realisation or for any failure to present any
interest coupon or any bond or stock drawn for repayment or for any
failure to pay any call or instalment or to accept any offer or to
notify the Chargors of any such matter or for any failure to ensure
that the correct amounts (if any) are paid or received in respect of
the Charged Property or for any negligence or default by its nominees
or agents or for any other loss of any nature whatsoever in connection
with the Charged Property save for any failure to preserve the
certificates forming this security.
<PAGE>
7 New Accounts
7.1 If the Agent receives notice (whether actual or otherwise) of any
subsequent mortgage or charge affecting all or any part of the Charged
Property the Agent may open a new account or accounts with the Chargors
and, if it does not open a new account, it shall nevertheless be
treated as if it had done so at the time when it received or was deemed
to have received notice and as from that time all payments made by the
Chargors to the Agent shall be credited or be treated as having been
credited to the new account and shall not operate to reduce the amount
secured by this Charge at the time when the Agent received or was
deemed to have received such notice.
8 Enforcement
8.1 If any Event of Default shall occur and be continuing then the security
constituted by this Charge shall become immediately enforceable and the
power of sale and other powers conferred by Section 101 of the LPA as
varied or extended by this Charge shall become immediately exercisable
without the restrictions contained in the LPA as to the giving of
notice or otherwise.
8.2 The Secured Liabilities shall be deemed for the purposes of all powers
implied by statute to have become due and payable within the meaning of
Section 101 of the LPA immediately on the execution of this Charge and
Section 103 of the LPA (restricting the power of sale) and Section 93
of the LPA (restricting the right of consolidation) shall not apply to
this Charge.
9 Power of Sale
9.1 At any time after the security constituted by this Charge has become
enforceable the Agent may without further notice to the Chargors
exercise the power to sell or otherwise dispose of the whole or any
part of the Charged Property, in such manner and on such terms and for
such consideration (whether payable immediately or by instalments) as
the Agent shall in its absolute discretion think fit and without
liability for loss whatsoever, and may (without prejudice to any right
which it may have under any other provision of this Charge) treat such
part of the Charged Property as consists of money as if it were the
proceeds of such a sale or other disposal. The Agent shall after the
payment of any claims having priority to the security created by this
Charge apply the proceeds without prejudice to the right of the Agent
to recover any shortfall from the Chargors in paying the costs of sale
or other disposal and in or towards the discharge of the Secured
Liabilities in such order as the Agent in its absolute discretion
thinks fit and the surplus (if any) of such proceeds shall be paid to
the person or persons entitled to it.
10 Protection of Third Parties
<PAGE>
10.1 No purchaser mortgagee or other person dealing with the Agent shall be
concerned to enquire whether the Secured Liabilities have become
payable or whether any power which it is purporting to exercise has
become exercisable or whether any money is due under this Charge or as
to the application of any money paid raised or borrowed or as to the
propriety or regularity of any sale by or other dealing with the Agent.
All the protection to purchasers contained in Sections 104 and 107 of
the LPA shall apply to any person purchasing from or dealing with the
Agent as if the Secured Liabilities had become due and the statutory
powers of sale in relation to the Charged Property had arisen on the
date of this Charge.
11 Power of Attorney
11.1 The Chargors by way of security irrevocably appoint the Agent to be the
attorney of the Chargors (with full powers of substitution and
delegation) for the Chargors and in its name or otherwise and on its
behalf and as its act and deed to sign seal execute deliver perfect and
do all deeds instruments transfers renunciations proxies notices
documents acts and things necessary to perfect the security comprised
in this Charge.
11.2 The Chargors ratify and confirm and agree to ratify and confirm
anything such attorney shall lawfully and properly do or purport to do
by virtue of clause 11.1 and all money expended by any such attorney
shall be deemed to be expenses incurred by the Agent under this Charge.
11.3 The Chargors undertake to procure that all registered holders from time
to time of any of the Charged Property shall forthwith grant the Agent
a power of attorney on the terms set out in clause 11.1 in respect of
such Charged Property.
12 Discharge of Security
12.1 The security constituted by this Charge shall be continuing and shall
not be considered as satisfied or discharged by any intermediate
payment or settlement of the whole or any part of the Secured
Liabilities or any other matter or thing whatsoever including the
insolvency liquidation or administration of the Chargors and shall be
binding until all the Secured Liabilities have been unconditionally and
irrevocably paid and discharged in full.
12.2 Upon the irrevocable payment or discharge in full of the Secured
Liabilities the Agent will or will procure that its nominees will (as
the case may be) at the request and cost of the Chargors retransfer to
the Chargors all the Agent's right title and interest in or to the
Charged Property freed from this Charge.
12.3 Upon any release of the Charged Property the Agent or its nominees (as
the case may be) shall not be bound to release or transfer to the
Chargors the identical stocks shares or securities which were deposited
with or transferred to it or them where other securities represent the
Charged Property and the Chargors shall accept shares and securities of
the same class and denomination or such other securities as then
represent the Charged Property.
<PAGE>
13 Avoidance of Payments
No assurance security or payment which may be avoided or adjusted under
any enactment relating to bankruptcy or insolvency or under Sections
238-245 of the Insolvency Act 1986 or similar legislation binding on
the Chargors in a jurisdiction other than England and Wales and no
release settlement or discharge given or made by the Agent on the faith
of any such assurance security or payment shall prejudice or affect the
right of the Agent to recover from the Chargors (including the right to
recover any monies which it may have been compelled by due process of
law to refund under the provisions of the Insolvency Act 1986 and any
costs payable by it pursuant to or otherwise incurred in connection
with such process) or to enforce the security created by or pursuant to
this Charge to the full extent of the Secured Liabilities.
14 Custody
14.1 The Agent shall be entitled to provide for the safe custody by third
parties of all stock and share certificates and documents of title
deposited with the Agent or its nominees relating to the Charged
Property and shall not be responsible for any loss of or damage to any
such certificates or documents unless such loss or damage arises as a
result of a wilful default or gross negligence by the Agent.
15 Communications
15.1 Every notice demand or other communication under this Charge shall be
in writing and may be delivered personally or by letter or facsimile
transmission despatched
(a) if to the Agent to its address specified at the head of this
Charge or to the following numbers:
Facsimile (215) 854 3774
for the attention of Indu Madau
(b) if to any of the Chargors to its registered or principal office
for the time being or to the following numbers:
Facsimile
for the attention of
or to such other address and or facsimile number as may be
notified in accordance with this Clause by the relevant party
to the other party for such purpose.
<PAGE>
15.2 Every notice demand or other communication shall be deemed to have been
received (if sent by post) twenty-four hours after being posted first
class postage prepaid (if posted from and to an address within the
United Kingdom) or 5 working days after being posted prepaid airmail
(if posted from or to an address outside the United Kingdom) and (if
delivered personally or despatched by telex subject to receiving the
correct telex answerback or by facsimile transmission) at the time of
delivery or despatch if during normal business hours in the place of
intended receipt on a working day in the place of intended receipt and
otherwise at the opening of business in that place on the next
succeeding such working day.
16 Currency Indemnity
16.1 If under any applicable law or regulation or pursuant to a judgment or
order being made or registered against the Chargors or the liquidation
of the Chargors or without limitation for any other reason any payment
under or in connection with this Charge is made or falls to be
satisfied in a currency (the `payment currency') other than the
currency in which such payment is expressed to be due under or in
connection with this Charge (the `contractual currency') then to the
extent that the amount of such payment actually received by the Agent
when converted into the contractual currency at the rate of exchange
falls short of the amount due under or in connection with this Charge
the Chargors as a separate and independent obligation shall indemnify
and hold harmless the Agent against the amount of such shortfall. For
the purposes of this Clause `rate of exchange' means the rate at which
the Agent is able on or about the date of such payment to purchase, in
accordance with its normal practice, the contractual currency with the
payment currency and shall take into account (and the Chargors shall
be liable for) any premium and other costs of exchange including any
taxes or duties incurred by reason of any such exchange.
17 Miscellaneous
17.1 No delay or omission on the part of the Agent in exercising any right
or remedy under this Charge shall impair that right or remedy or
operate as or be taken to be a waiver of it nor shall any single
partial or defective exercise of any such right or remedy preclude any
other or further exercise under this Charge or that or any other right
or remedy.
17.2 The Agent's rights under this Charge are cumulative and not exclusive
of any rights provided by law and may be exercised from time to time
and as often as the Agent deems expedient.
17.3 Any waiver by the Agent of any terms of this Charge or any consent or
approval given by the Agent under it shall only be effective if given
in writing and then only for the purpose and upon the terms and
conditions if any on which it is given.
<PAGE>
17.4 The security constituted by this Charge shall be in addition to and
shall not be prejudiced determined or affected by nor operate so as in
any way to determine prejudice or affect any encumbrance which the
Agent may now or at any time in the future hold for or in respect of
the Secured Liabilities or any part of them and shall not be prejudiced
by time or indulgence granted to any person or any abstention by the
Agent in perfecting or enforcing any remedies securities guarantees or
rights it may now or in the future have from or against the Chargors or
any other person or any waiver release variation act omission
forbearance unenforceability indulgence or invalidity of any such
remedy security guarantee or right.
17.5 If at any time any one or more of the provisions of this Charge is or
becomes illegal invalid or unenforceable in any respect under any law
of any jurisdiction neither the legality validity or enforceability of
the remaining provisions of this Charge nor the legality validity or
enforceability of such provision under the law of any other
jurisdiction shall be in any way affected or impaired as a result.
17.6 Any statement certificate or determination of the Agent as to the
Secured Liabilities or without limitation any other matter provided for
in this Charge shall in the absence of manifest error be conclusive and
binding on the Chargors.
18 Law and Jurisdiction
18.1 This Charge is governed by and shall be construed in accordance with
English law.
18.2 The Chargors irrevocably agree for the exclusive benefit of
the Agent that the courts of England shall have jurisdiction to hear
and determine any suit action or proceeding and to settle any dispute
which may arise out of or in connection with this Charge and for such
purposes irrevocably submits to the jurisdiction of such courts.
18.3 Nothing contained in this Clause shall limit the right of the Agent to
take proceedings against the Chargors in any other court of competent
jurisdiction nor shall the taking of any such proceedings in one or
more jurisdictions preclude the taking of proceedings in any other
jurisdiction whether concurrently or not (unless precluded by
applicable law).
18.4 The Chargors irrevocably waive any objection which it may have now or
in the future to the courts of England being nominated for the purpose
of this Clause on the ground of venue or otherwise and agrees not to
claim that any such court is not a convenient or appropriate forum.
18.5 PCI Acquisition I, Inc, and PCI Acquisition II, Inc, authorises and
appoints PCI Holdings (UK) Co (or such other person being a firm of
solicitors in England as it may from time to time substitute by notice
to the Agent) to accept service of all legal process arising out of or
connected with this Charge and service on such person (or substitute)
shall be deemed to be service on the Chargors. Except upon such a
substitution the Chargors shall not revoke any such authority or
<PAGE>
appointment shall at all times maintain an agent for service of process
in England and if any such agent ceases for any reason to be an agent
for this purpose shall forthwith appoint another agent and advise the
Agent accordingly.
IN WITNESS whereof the Chargors have executed and delivered this Charge as a
Deed the day and year first before written.
<PAGE>
SCHEDULE
Number of shares or Description of stocks,
amount of stock shares, or other securities
Part 1 B. KORMAN 6,042,072
Shares in Unipack Limited ORDINARY SHARES
OF BP1 EACH
Part 2 R. SANTER
Shares in PCI Holdings (UK) Co. 2 shares of BP1 each
<PAGE>
The Chargors
Executed as a Deed by ) Director B. KORMAN
PCI Holdings (UK) Co )
Director R. SANTER
Executed as a Deed by )
PCI Acquisition I, Inc )
acting by )
B. KORMAN ) B. KORMAN
and )
R. SANTER ) R. SANTER
in the presence of )
)
D. J. PUDGE
Witness
Address: LONDON EC1
SOLICITOR
Executed as a Deed by )
PCI Acquisition II, Inc )
acting by )
B. KORMAN ) B. KORMAN
and )
R. SANTER ) R. SANTER
in the presence of )
)
D. J. PUDGE
Witness
Address: LONDON EC1
SOLICITOR
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> MAR-31-1996
<CASH> $ 3,214,000
<SECURITIES> 0
<RECEIVABLES> 25,006,000
<ALLOWANCES> 361,000
<INVENTORY> 12,769,000
<CURRENT-ASSETS> 45,685,000
<PP&E> 106,095,000
<DEPRECIATION> 26,808,000
<TOTAL-ASSETS> 147,129,000
<CURRENT-LIABILITIES> 30,047,000
<BONDS> 51,427,000
0
0
<COMMON> 7,000
<OTHER-SE> 59,397,000
<TOTAL-LIABILITY-AND-EQUITY> 147,129,000
<SALES> 79,368,000
<TOTAL-REVENUES> 79,368,000
<CGS> 59,327,000
<TOTAL-COSTS> 10,520,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,348,000
<INCOME-PRETAX> 8,253,000
<INCOME-TAX> 2,891,000
<INCOME-CONTINUING> 5,362,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,362,000
<EPS-PRIMARY> .87
<EPS-DILUTED> 0
</TABLE>
