UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________________________
FORM 10-Q
__________________________________
(Mark One)
X Quarterly report pursuant to Section 13 or 15(d) of the
- --------- Securities Exchange Act of 1934
For the Quarterly Period Ended September 30, 1997
- --------- Transition Report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Commission File Number: 1-10991
VALASSIS COMMUNICATIONS, INC.
(EXACT NAME OF REGISTRANT
AS SPECIFIED IN ITS CHARTER)
Delaware 38-2760940
(State or Other Jurisdiction of (IRS Employer Identification Number)
Incorporation or Organization)
19975 VICTOR PARKWAY
LIVONIA, MICHIGAN 48152
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
TELEPHONE NUMBER: (313) 591-3000
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
______________________________________________________
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports) and, (2) has been
subject to such filing requirements for the past 90 days:
Yes X No _______
---------
As of October 31, 1997, there were 39,606,793 shares of the Registrant's
Common Stock outstanding.
1
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<TABLE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
VALASSIS COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<CAPTION>
SEPT. 30, DEC.31,
ASSETS 1997 1996
- ------ ---------- -------
(unaudited) (note)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 51,142 $ 60,172
Accounts receivable (less allowance for doubtful
accounts of $1,367 at September 30, 1997 and $684 at
December 31, 1996) 89,563 92,745
Inventories:
Raw materials 11,626 6,091
Work in progress 13,636 14,734
Prepaid expenses and other 2,019 1,931
Deferred income taxes 2,088 2,088
------- -------
Total current assets 170,074 177,761
------- -------
Property, plant and equipment, at cost:
Land and buildings 20,460 19,991
Machinery and equipment 110,289 108,800
Office furniture and equipment 21,289 17,782
Automobiles 1,043 887
Leasehold improvements 1,007 1,458
------- -------
154,088 148,918
Less accumulated depreciation and amortization (113,009) (114,100)
-------- --------
Net property, plant and equipment 41,079 34,818
------- -------
Intangible assets:
Goodwill 67,964 68,594
Other intangibles 83,706 83,706
------ ------
151,670 152,300
Less accumulated amortization (102,370) (96,396)
------- -------
Net intangible assets 49,300 55,904
------- -------
Other assets (primarily debt issuance costs) 2,462 5,251
------- -------
Total assets $262,915 $273,734
======= =======
2
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<TABLE>
VALASSIS COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS, CONTINUED
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<CAPTION>
SEPT. 30, DEC. 31,
LIABILITIES AND STOCKHOLDERS' DEFICIT 1997 1996
--------- --------
(unaudited) (note)
<S> <C> <C>
Current liabilities:
Accounts payable $ 67,407 $ 67,251
Accrued interest 8,725 6,066
Income taxes payable 2,375 1,124
Accrued expenses 22,250 22,435
Progress billings 52,514 57,234
Current portion, long-term debt --- 7,290
------- --------
Total current liabilities 153,271 161,400
------- -------
Long-term debt 383,229 395,865
Deferred income taxes 2,565 2,565
Minority interest (37) 498
Stockholders' deficit:
Common stock of $.01 par value. Authorized 100,000,000
shares; issued 44,393,351 at September 30, 1997 and
43,407,906 at December 31, 1996; outstanding
40,244,051 at September 30, 1997 and 42,077,196 at
December 31, 1996 444 434
Additional paid-in capital 65,239 41,337
Accumulated deficit (254,700) (306,555)
Foreign currency translations (88) (260)
Treasury stock, at cost (4,149,300 shares at
September 30, 1997 and 1,330,800 shares at
December 31, 1996) (87,008) (21,550)
-------- -------
Total stockholders' deficit (276,113) (286,594)
------- -------
Total liabilities and stockholders' deficit $262,915 $ 273,734
======= =======
<FN>
NOTE: The balance sheet at December 31, 1996 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles
for complete financial statements.
See accompanying notes to condensed consolidated financial statements.
3
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<TABLE>
VALASSIS COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<CAPTION>
QUARTER ENDED NINE MONTHS ENDED
------------------- --------------------
SEPT. 30, SEPT. 30, SEPT. 30, SEPT. 30,
1997 1996 1997 1996
--------- -------- -------- ---------
<S> <C> <C> <C> <C>
REVENUES:
Net sales $152,619 $151,467 $505,755 $493,580
Other 894 368 1,971 1,439
------- ------- ------- -------
153,513 151,835 507,726 495,019
COST AND EXPENSES:
Cost of products sold 97,861 107,009 327,538 358,292
Selling, general and administrative 17,307 15,690 59,035 49,145
Amortization of intangible assets 2,031 2,042 6,557 6,167
Interest 9,401 9,731 28,741 29,887
------- ------- ------- -------
126,600 134,472 421,871 443,491
------- ------- ------- -------
Earnings before income taxes 26,913 17,363 85,855 51,528
Income taxes 9,100 6,600 34,000 20,300
------- ------- ------- -------
Net earnings $ 17,813 $ 10,763 $ 51,855 $ 31,228
======= ======= ======= =======
Net earnings per common share $ .44 $ .25 $ 1.26 $ .72
======= ======= ======= =======
Shares used in computing net earnings
per share
40,231,768 42,852,044 41,043,981 43,109,929
========== ========== ========== ==========
<FN>
See accompanying notes to condensed consolidated financial statements
4
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<TABLE>
VALASSIS COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<CAPTION>
NINE MONTHS ENDED
-----------------
SEPT 30, SEPT 30,
1997 1996
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 51,855 $ 31,228
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 11,585 11,090
Provision for losses on accounts receivable 675 450
Minority interest (35) 122
(Gain)/loss on sale of property, plant and equipment (385) 200
Changes in assets and liabilities which increase
(decrease) cash flow:
Accounts receivable 2,507 (8,321)
Inventories (4,437) 8,259
Prepaid expenses and other (88) 448
Other assets 2,789 (1,733)
Accounts payable 156 (10,896)
Accrued expenses and interest 2,474 (319)
Income taxes 1,251 (921)
Progress billings (4,720) 4,591
Total adjustments 11,772 2,970
------ ------
Net cash provided by operating activities 63,627 34,198
------ ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (11,655) (3,910)
Return of capital to minority shareholder of Valcheck (500) ---
Proceeds from the sale of property, plant and equipment 862 105
Other 172 37
------- ------
Net cash used in investing activities (11,121) (3,768)
------- ------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of long-term debt (19,990) (13,000)
Proceeds from the issuance of common stock 23,912 1,521
Purchase of treasury shares (65,458) (11,745)
-------- --------
Net cash used in financing activities (61,536) (23,224)
------- -------
Net (decrease)/increase in cash (9,030) 7,206
Cash at beginning of period 60,172 34,408
-------
Cash at end of period $ 51,142 $ 41,614
======= ======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest $26,082 $27,611
Cash paid during the period for income taxes $32,749 $21,221
Dividends declared but unpaid $ --- $ ---
<FN>
See accompanying notes to condensed consolidated financial statements.
5
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VALASSIS COMMUNICATIONS, INC.
Notes to Condensed Consolidated Financial Statements
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and with
the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, the
information contained herein reflects all adjustments necessary for
a fair presentation of the information presented. All such
adjustments are of a normal recurring nature, except as noted below
in Footnote 5. The results of operations for the interim periods
are not necessarily indicative of results to be expected for the
fiscal year. For further information, refer to the consolidated
financial statements and footnotes thereto included in the
Company's Annual Report on Form 10-K for the year ended December
31, 1996.
2. SIGNIFICANT ACCOUNTING POLICIES - INVENTORIES
Inventories are stated at the lower of cost or market (net
realizable value). Cost has been principally determined by the
last-in, first-out (LIFO) method. As a result of decreases in
material costs compared to prior years, LIFO inventories at
September 30, 1997 and December 31, 1996 were written down by
$1,752,000 and $1,701,000, respectively, which represents the
excess of LIFO costs over market. There was no LIFO impact on
results of operations for the quarter and nine months ended
September 30, 1997, and the effect on both the quarter and nine
months ended September 30, 1996 was an increase in paper expense of
approximately $575,000.
3. CONTINGENCIES
The Company is involved in various claims and legal actions arising
in the ordinary course of business. In the opinion of management,
the ultimate disposition of these matters will not have a material
adverse effect on the Company's financial position.
4. EARNINGS PER SHARE
The Company will be required to adopt Statement of Financial
Accounting Standards No. 128-Earnings per Share effective for the
annual period ending after December 15, 1997. This standard revises
the calculation of EPS and will require the Company to report
diluted EPS in addition to basic EPS. Basic EPS is based on the
average shares outstanding, while diluted EPS gives effect to all
dilutive potential common shares outstanding. Under SFAS No. 128,
the Company's basic and diluted EPS amounts would have been $.44
and $.43, respectively, for the three months ended September 30,
1997, and $1.26 and $1.25, respectively, for the nine months ended
September 30, 1997. Both the Company's basic and diluted EPS
amounts for the three months and nine months ended September 30,
1996 would have been identical to the EPS amounts presented in its
consolidated statements of operations.
6
<PAGE>
5. UNUSUAL ITEMS
During the quarter ended June 30, 1997, the Company recorded a one-
time, pre-tax charge of $7.3 million ($6.4 million, net of taxes)
for a non-recurring, special payment to certain VCI executives,
funded by Consolidated Press Holdings, the parent of the selling
shareholder in the Company's secondary offering. A portion of this
charge is considered non-deductible, resulting in a tax rate for
the second quarter and year of 1997 that is higher than would
normally be expected.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
Certain statements under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations," constitute
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking
statements involve known and unknown risks and uncertainties and other
factors which may cause the actual results, performance or achievements
of the Company to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements. Such factors include, among others, the following: a new
competitor in the Company's core free-standing insert business and
consequent price competition; an increase in the Company's paper costs,
new technology that would make free-standing inserts less attractive; a
shift in customer preference for different promotional materials,
promotional strategies or coupon delivery modes, including in-store
advertising systems and other forms of coupon delivery; or general
business and economic conditions.
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1997 AND SEPTEMBER 30, 1996
Total revenues rose slightly for the quarter ended September 30, 1997 to
$153.5 million from $151.8 million for the year ago quarter. Free-
standing insert (FSI) revenue fell 2.8% from $120.1 million for the three
months ended September 30, 1996 to $116.7 million for the quarter ended
September 30, 1997. This decline was attributable to a softness in the
FSI industry during the quarter. Based on contracted business, management
expects page volume to rebound in the fourth quarter of 1997. Valassis
Impact Promotions (VIP) revenue continued to climb with an 11.7% increase
from $19.6 million for the third quarter 1996 to $21.9 million for the
third quarter of 1997. This increase occurred as a result of strong
demand from VIP's core customer base, which more than offset the loss of
several large one-time event orders which were placed in 1996. Sampling
revenues were up 93.8% to $3.1 million for the three months ended
September 30, 1997, primarily due to the variable timing of orders. Thus,
sales will not necessarily track from one quarter to the next.
Gross profit margin, up 23.1% to 36.3%, was favorably impacted by lower
paper costs in the quarter ended September 30, 1997, as compared to the
year-ago quarter, and, to a lesser extent, media purchasing and printing
efficiencies. Paper costs were higher than last quarter, and management
anticipates a modest paper price increase during the last quarter of
1997.
Selling, general and administrative expenses increased 10.2% to $17.3
million for the quarter ended September 30, 1997 from $15.7 million in
the comparable year-ago period. This increase was primarily the result of
additional expenses for various incentive programs, due to the increased
level of earnings, and to an increased emphasis on advertising.
Management expects selling, general and administrative expenses to remain
at these levels for the remainder of the year.
The effective tax rate for the quarter ended September 30, 1997 was
unusually low at 33.8%, as the result of credits due to foreign losses.
Net earnings increased 64.8% from $10.8 million for the three months
ended September 30, 1996, to $17.8 million for the same period of 1997.
This increase is primarily due to lower paper pricing during 1997,
combined with increased activity in diversified businesses.
8
<PAGE>
NINE MONTHS ENDED SEPTEMBER 30, 1997 AND SEPTEMBER 30, 1996
For the nine months ended September 30, 1997, total revenues increased
2.6% to $507.7 million from $495.0 million for the comparable period in
1996. This increase was a result of a .6% rise in FSI revenue from $386.0
million in the first nine months of 1996, to $388.2 million for the first
nine months of 1997, along with an 8% increase in VIP sales. Continued
strong demand from VIP's core customer base drove up sales to $66.2
million for the first nine months of 1997, compared to $61.3 million for
the same period in 1996. Management expects a solid year for VIP and
accelerated growth in 1998. In addition, Valassis Sampling revenue rose
18.8% for the nine months ended September 30, 1997 to $13.9 million,
compared to $11.7 million for the nine months ended September 30, 1996.
Management expects continued growth for this business. Run-of-Press sales
also contributed to the overall increase in total revenues. ROP sales
were up 18.6% from $17.7 million for the first nine months of 1996, to
$21.0 million for the comparable period in 1997. ROP sales for 1997
benefited from strong demand in the health and beauty category.
Increased sales, along with favorable paper pricing, resulted in a 28.6%
increase in gross profit margin from 27.6% for the first nine months of
1996, to 35.5% for the same period in 1997. Although lower paper pricing
has favorably impacted the 1997 gross margin, management expects modest
paper price increases during the remainder of 1997.
Selling, general and administrative expenses rose 19.9% to $59.0 million,
versus $49.2 million for the comparable prior year period. The nine
months ended September 30, 1997 includes a one-time charge of $7.3
million for a non-recurring special payment to certain VCI executives,
funded by Consolidated Press Holdings (CPH), the parent of the selling
shareholder in the Company's secondary offering. SG&A would have
increased 5.3% for the nine months ended September 30, 1997 without this
one-time charge. Increases in current year SG&A expenses are attributable
to higher incentive plan costs, as a result of stronger sales and profits
in 1997 as compared to 1996.
The effective tax rate was 39.6% for the nine months ended September 30,
1997, compared with 39.4% for the same period in 1996. The effective tax
rate increase is the result of a portion of the special one-time charge,
referred to above, which is non-deductible, nearly offset by credits due
to foreign losses.
Net earnings for the first nine months of 1997 were up 66.3% to $51.9
million versus $31.2 million for the same nine month period last year.
This earnings improvement is the result of higher volumes in VIP, ROP and
Sampling sales, along with increased pricing in the FSI business and
lower paper pricing.
FINANCIAL CONDITION, LIQUIDITY AND SOURCES OF CAPITAL
Cash and cash equivalents totaled $51.1 million at September 30, 1997,
down $9.0 million from December 31, 1996. Cash outflows from financing
activities increased $38.3 million, as the Company repurchased 2,818,500
shares for $65.5 million and retired $20.0 million of the Company's long-
term debt, while generating $23.9 million from the issuance of common
stock through employees' stock option plans.
Cash flow from operating activities increased $29.4 million for the nine
months ended September 30, 1997 to $63.6 million, as a result of
increased earnings and other positive working capital changes.
9
<PAGE>
The Company has scheduled principal payments on indebtedness of $128.5
million on March 15, 1999 and $255.0 million on December 1, 2003. The
Company intends to use cash generated by operations to meet interest and
principal repayment obligations, for general corporate purposes, to
reduce its indebtedness and from time to time repurchase stock through
the Company's stock repurchase program.
On May 30, 1997, Valcheck Company (a partnership owned 80% indirectly by
the Company and 20% by a third party) exercised a put option for $5.00
per share in connection with 500,000 shares of common stock of Artistic
Greetings, Inc. which it received as partial consideration for its sale
of its check business in 1995. Accordingly, Valcheck received $2.5
million on June 30, 1997, 20% of which has been paid to the third party
investor.
Management believes the Company will generate sufficient funds from
operations and will have sufficient lines of credit available to meet
current anticipated liquidity needs, including interest and required
principal payments on indebtedness.
10
<PAGE>
PART II - OTHER INFORMATION
Item 5. Other Information
On July 8, 1997, the Company's former majority stockholder, Conpress
International (Netherlands Antilles) N.V. (the "Selling Stockholder"),
sold its entire stock ownership (20,173,800 shares of common stock, par
value $.01 per share) in the Company at $24 per share through an
underwritten offering (the "Offering"). The Company did not receive any
of the proceeds from the Offering.
In connection with the Offering, Graham A. Cubbin and James D. Packer
(both affiliated with the Selling Stockholder) have resigned from the
Company's Board of Directors. In addition, David A. Brandon was appointed
Chairman of the Board of Directors, replacing Brian M. Powers, the
Company's former Chairman. Mr. Powers remains a member of the Company's
Board of Directors.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
The following exhibits are included herein:
10.4(i)Credit Agreement dated September 11, 1997
(27) Financial Data Schedule
b. Forms 8-K
The Company filed a Form 8-K, dated September 30, 1997, reporting a
change in auditors.
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
Dated: November 12, 1997
Valassis Communications, Inc.
(Registrant)
By: /s/Robert L. Recchia
--------------------
Robert L. Recchia
V.P. of Finance - Chief Financial
Officer
Signing on behalf of the Registrant and
as principal financial officer.
12
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 51142
<SECURITIES> 0
<RECEIVABLES> 90930
<ALLOWANCES> 1367
<INVENTORY> 25262
<CURRENT-ASSETS> 170074
<PP&E> 154088
<DEPRECIATION> 113009
<TOTAL-ASSETS> 262915
<CURRENT-LIABILITIES> 153271
<BONDS> 383229
0
0
<COMMON> 444
<OTHER-SE> (276557)
<TOTAL-LIABILITY-AND-EQUITY> 262915
<SALES> 505755
<TOTAL-REVENUES> 507726
<CGS> 327538
<TOTAL-COSTS> 527538
<OTHER-EXPENSES> 64917
<LOSS-PROVISION> 675
<INTEREST-EXPENSE> 28741
<INCOME-PRETAX> 85855
<INCOME-TAX> 34000
<INCOME-CONTINUING> 51855
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 51855
<EPS-PRIMARY> 1.26
<EPS-DILUTED> 1.26
</TABLE>
EXHIBIT 10.4(i)
CREDIT AGREEMENT DATED SEPTEMBER 11, 1997
THIS CREDIT AGREEMENT ("Agreement") is made as of the 11th day of
September, 1997, by and among Comerica Bank and the other financial
institutions from time to time parties hereto as lenders of the Revolving
Credit (individually, a "Revolving Credit Bank", and collectively the
"Revolving Credit Banks"), Comerica Bank, as lender of the Swing Line Credit
("Swing Line Bank" and together with Revolving Credit Banks, collectively
referred to as the "Banks"), Comerica Bank, as agent for the Banks (in such
capacity, "Agent"), and Valassis Communications, Inc., a Delaware corporation
("Company").
COMPANY, AGENT AND BANKS AGREE:
1. DEFINITIONS
For the purposes of this Agreement the following terms will have the
following meanings:
"Account(s)" shall mean any account or account receivable as defined
under the UCC, including without limitation, with respect to any Person, any
right of such Person to payment for goods sold or leased or for services
rendered.
"Account Debtor" shall mean the party who is obligated on or under any
Account.
"Account Party(ies)" shall mean, with respect to any Letter of Credit,
the account party or parties (which shall be Company) named in an application
to the Agent for the issuance of such Letter of Credit.
"Advance(s)" shall mean Revolving Credit Advance(s) and Swing Line
Advance(s).
"Affiliate" shall mean, with respect to any Person, any other Person or
group acting in concert in respect of the first Person that, directly or
indirectly, through one or more intermediaries, controls, or is controlled by,
or is under common control with such first Person. For purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlled by" and "under common control with"), as used with respect to any
Person or group of Persons, shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of management and policies of
such Person, whether through the ownership of voting securities or by contract
or otherwise.
"Agent" shall mean Comerica Bank, in its capacity as agent hereunder, or
any successor agent appointed in accordance with Section 13.4 hereof.
"Agent's Fees" shall mean those agency and other fees and expenses
required to be paid by Company to Agent under Section 13.7 hereof.
"Alternate Base Rate" shall mean, for any day, an interest rate per
annum equal to the Federal Funds Effective Rate in effect on such day, plus
one-half of one percent (.5%).
"Applicable Facility Fee Percentage" shall mean, as of any date of
determination thereof, the applicable percentage used to calculate the
Facility Fee due and payable hereunder, determined (based on the Company's
Moody's Rating and S&P Rating) by reference to the appropriate columns in the
pricing matrix attached to this Agreement as SCHEDULE 1.1.
"Applicable L/C Fee Percentage" shall mean, as any date of determination
thereof, the applicable percentage used to calculate the Letter of Credit Fees
due and payable hereunder, determined (based on the Company's Moody's Rating
and S&P Rating) by reference to the appropriate columns in the pricing matrix
attached to this Agreement as SCHEDULE 1.1.
"Applicable Interest Rate" shall mean (i) in respect of a Revolving
Credit Advance, the Eurocurrency-based Rate or the Prime-based Rate,
applicable to such Advance (in the case of a Eurocurrency-based Advance, for
the relevant Interest Period), (ii) in respect of a Swing Line Advance, the
Prime-based Rate or the Quoted Rate applicable to such Advance for the
relevant Interest Period, in either case as selected by Company from time to
time subject to the terms and conditions of this Agreement.
"Banks" shall mean Comerica Bank and such other financial institutions
from time to time hereto as lenders which shall include the Revolving Credit
Banks and the Swing Line Bank and any assignee which becomes a Bank pursuant
to Section 14.9 hereof.
"Business Day" shall mean (i) with respect to Eurocurrency-based
Advances, any day on which commercial banks are open for domestic business in
Detroit, London and New York and (ii) in all other instances, any day on which
commercial banks are open for domestic business in Detroit and New York.
"Capital Expenditures" shall mean for any period of determination,
without duplication, any amounts paid or accrued during such period which in
accordance with GAAP would be classified as capital expenditures on a balance
sheet.
"Change of Ownership or Control" shall mean an event or series of events
by which (i) any Person or Persons acting in concert, who as of the date
hereof does not have the power to elect a majority of the Board of Directors
of Company, acquires the power to vote sufficient number of shares of voting
stock of Company to enable such Person to elect a majority of the Board of
Directors of Company; or (ii) with respect to each Subsidiary, Company shall
own, directly or indirectly, less than 51% of the issued and outstanding
capital stock of such Subsidiary unless such change in ownership is the result
of a Permitted Merger.
"Collateral" shall mean all property or rights in which a security
interest, mortgage, lien or other encumbrance for the benefit of the Banks is
or has been granted or arises or has arisen, under or in connection with this
Agreement, the other Loan Documents or otherwise.
"Collateral Documents" shall mean the Company Collateral Documents and
the Subsidiaries Collateral Documents.
"Company Collateral Documents" shall mean the Security Agreements, the
Stock Pledges, the Mortgages, and all other security documents executed and
delivered by Company to the Agent, in accordance with the terms and conditions
of this Agreement, as the same may be amended, restated, supplemented or
replaced from time to time.
"Consolidated" or "Consolidating" shall mean, when used with reference
to any financial term in this Agreement, the aggregate for two or more Persons
of the amounts signified by such term for all such persons determined on a
consolidated basis in accordance with GAAP. Unless otherwise specified herein,
references to Consolidated or Consolidating financial statements or data of
Company includes consolidation with its Subsidiaries in accordance with GAAP.
"Consolidated Net Worth" shall mean, as at any date of determination,
shareholders' equity as of such date as determined in accordance with GAAP.
"Core Business" shall mean (i) with respect to Company and its
Subsidiaries (other than VCI Properties, Inc.), sales promotion and related
activities and (ii) with respect to VCI Properties, Inc., leasing and
subleasing real property located at 52 Vanderbilt Avenue, New York, New York.
"Covenant Compliance Report" shall mean the report to be furnished by
Company to the Agent, in the form of attached EXHIBIT "A" and certified by the
chief financial officer of Company pursuant to Section 8.3, hereof (or in the
absence of the chief financial officer, a responsible senior officer), in
which report Company shall set forth, among other things, detailed
calculations and the resultant ratios or financial tests with respect to the
financial covenants contained in Sections 8.4, 8.5 and 8.6 of this Agreement.
"Debt" shall mean, as of any applicable date of determination, all items
of indebtedness, obligation or liability of a Person, whether matured or
unmatured, liquidated or unliquidated, direct or indirect, absolute or
contingent, joint or several, that should be classified as liabilities on a
balance sheet of such Person; PROVIDED, however that for purposes of
calculating the aggregate Debt of Company and its Subsidiaries, the direct and
indirect and absolute and contingent obligations of Company and its
Subsidiaries (whether direct or contingent) shall be determined without
duplication.
"De Minimis Matters" shall mean environmental or other matters, the
existence of which and any liability which may result therefrom, would not,
individually or in the aggregate, reasonably be expected to have a material
adverse effect on the financial condition or businesses of the Company and its
Subsidiaries (taken as a whole) or on the ability of the Company and
Subsidiaries (taken as a whole) to pay their Debts, as such Debts become due.
"Default" shall mean any event which with the giving of notice or the
passage of time, or both, would constitute an Event of Default under this
Agreement.
"Dollar" or "Dollars" and the sign "$" shall mean lawful money of the
United States of America.
"EBITDA" shall mean, for any period of determination, on a Consolidated
basis for the Company and its Subsidiaries, the sum of the amounts for such
period of (i) Net Income, PLUS (ii) the amount deducted in determining Net
Income representing amortization expense of assets, PLUS (iii) Interest
Expense, PLUS (iv) the amount deducted in determining Net Income representing
all income taxes, PLUS (v) the amount deducted in determining Net Income
representing depreciation of assets, PLUS (vi) extraordinary losses (and any
unusual losses arising in or outside of the ordinary course of business not
included in extraordinary losses determined in accordance with GAAP which have
been included in the determination of Net Income) MINUS (vii) extraordinary
gains (and any unusual gains arising in or outside of the ordinary course of
business not included in extraordinary gains determined in accordance with
GAAP which have been included in the determination of Net Income).
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended, or any successor act or code and the regulations in effect from
time to time thereunder.
"ERISA Affiliate" shall mean (i) any corporation which is a member of
the same controlled group of corporations (within the meaning of Section
414(b) of the Internal Revenue Code) as the Company; (ii) a partnership or
other trade or business (whether or not incorporated) which is under common
control (within the meaning of Section 414(c) of the Internal Revenue Code)
with the Company; and (iii) a member of the same affiliated service group
(within the meaning of Section 414(m) of the Internal Revenue Code) as the
Company, any corporation described in CLAUSE (I) above or any partnership or
trade or business described in CLAUSE (II) above.
"Eurocurrency-based Advance" shall mean a Revolving Credit Advance which
bears interest at the Eurocurrency-based Rate.
"Eurocurrency-based Rate" shall mean, with respect to any Eurocurrency-
Interest Period, the per annum interest rate which is equal to the sum of the
Margin plus the quotient of:
(A) the per annum interest rate at which Dollar deposits are offered
to Agent's Eurocurrency Lending Office by other prime banks in the
Eurocurrency market in an amount comparable to the relevant
Eurocurrency-based Advance and for a period equal to the relevant
Eurocurrency-Interest Period at approximately 11:00 A.M. Detroit
time two (2) Business Days prior to the first day of such
Eurocurrency-Interest Period, divided by
(B) an amount equal to one minus the stated maximum rate (expressed as
a decimal) of all reserve requirements (including, without
limitation, any marginal, emergency, supplemental, special or
other reserves) that is specified on the first day of such
Eurocurrency-Interest Period by the Board of Governors of the
Federal Reserve System (or any successor agency thereto) for
determining the maximum reserve requirement with respect to
Eurocurrency funding (currently referred to as "Eurocurrency
liabilities" in Regulation D of such Board) maintained by a member
bank of such System,
all as conclusively determined (absent manifest error) by the Agent, such sum
to be rounded upward, if necessary, to the nearest whole multiple of 1/16th of
1%.
"Eurocurrency-Interest Period" shall mean the Interest Period applicable
to a Eurocurrency-based Advance.
"Eurocurrency Lending Office" shall mean, (a) with respect to the Agent,
Agent's office located at Grand Cayman, British West Indies or such other
branch or branches of Agent, domestic or foreign, as it may hereafter
designate as a Eurocurrency Lending Office by notice to Company and the Banks,
and (b) as to each of the Banks, its office, branch or Affiliate located at
its address set forth on the signature pages hereof (or identified thereon as
a Eurocurrency Lending Office), or at such other office, branch or Affiliate
of such Bank as it may hereafter designate as its Eurocurrency Lending Office
by notice to Company and Agent.
"Event of Default" shall mean each of the Events of Default specified in
Section 10.1 hereof.
"Facility Fee" shall mean the fee payable by Company to Agent for
distribution to the Banks based on their respective Percentages under Section
2.6 hereof.
"Federal Funds Effective Rate" shall mean, for any day, a fluctuating
interest rate per annum 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, as published for such day (or, if
such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on
such transactions received by Agent from three Federal funds brokers of
recognized standing selected by it, all as conclusively determined by the
Agent, such sum to be rounded upward, if necessary, to the nearest whole
multiple of 1/16th of 1%.
"Fees" shall mean the Facility Fee, the Letter of Credit Fees, the
Agent's Fees and the other fees and charges payable by Company to the Banks or
Agent hereunder.
"Financial Statements" shall mean all consolidated balance sheets,
statements of cash flows, statements of operations and other financial data
(whether of the Company, the Subsidiaries or otherwise) which have been
furnished by the Company or its public accountants to the Agent or the Banks
for the purposes of, or in connection with, this Agreement and the
transactions contemplated hereby.
"Fixed Charge Coverage Ratio" shall mean as of any date of
determination, a ratio (i) the numerator of which shall be the sum of the
amounts of (a) EBITDA for the four-quarter period ending on such date, MINUS
(b) Company's and the Subsidiaries' Capital Expenditures for such period
(MINUS Capital Expenditures permitted under Section 9.4(g) hereof), MINUS (c)
cash Tax Payments made during such period and (ii) the denominator of which
shall be the sum of the amount of (a) all principal payments due and paid on
Funded Debt during such period except (1) Funded Debt which, at the date of
issuance or incurrence thereof had a final maturity date of less than one
year, and (2) the amount of voluntary prepayments on Advances allocated and
actually paid during such period PLUS (b) Interest Expense for such period,
PLUS (c) dividends, excluding dividends to Company or any Subsidiary, accrued
or paid (without duplication) during such period, all as determined on a
Consolidated basis.
"Foreign Employee Benefit Plan" shall mean any employee benefit plan as
defined in Section 3(3) of ERISA which is maintained or contributed to for the
benefit of the employees of Company, any of its Subsidiaries or any of its
ERISA Affiliates and is not covered by ERISA pursuant to ERISA Section
4(b)(4).
"Funded Debt" as of any date of determination shall mean all
indebtedness, obligations or other liabilities for borrowed money or evidenced
by debt securities, debentures, acceptances, notes or other similar
instruments.
"GAAP" shall mean generally accepted accounting principles in the United
States of America, as in effect on the date hereof, consistently applied,
subject to the provisions of Section 14.2 hereof.
"Governmental Obligations" means noncallable direct general obligations
of the United States of America or obligations the payment of principal of and
interest on which is unconditionally guaranteed by the United States of
America.
"Gross-up" shall have the meaning set forth in Section 11.1(d) hereof.
"Guarantors" shall mean each Wholly-Owned Subsidiary which guarantees
the obligations of Company to Bank under the Loan Documents.
"Guaranties" shall mean collectively (unless the context indicates
otherwise), those joinder agreements or guaranties (each in form satisfactory
to Agent and the Banks) delivered by Wholly-Owned Subsidiaries at any time
before or after the date hereof and by any Person at the time it becomes a
Wholly-Owned Subsidiary of Company from time to time subsequent hereto, for
the benefit of the Banks and Agent, pursuant to this Agreement, as amended,
restated, supplemented or replaced from time to time.
"Hazardous Material" shall mean and include any hazardous, toxic or
dangerous waste, substance or material defined as such in (or for purposes of)
the Hazardous Material Laws.
"Hazardous Material Law(s)" shall mean all laws, codes, ordinances,
rules, regulations, orders, decrees and directives issued by any federal,
state, provincial, local, foreign or other governmental or quasi-governmental
authority or body (or any agency, instrumentality or political subdivision
thereof) pertaining to hazardous material or toxic or dangerous waste,
substances or material on or about any facilities owned, leased or operated by
Company or any of its Subsidiaries, or any portion thereof including, without
limitation, those relating to soil, surface, subsurface ground water
conditions and the condition of the ambient air; and any state and local laws
and regulations pertaining to such material and/or asbestos; any so-called
"superfund" or "superlien" law; and any other federal, state, provincial,
foreign or local statute, law, ordinance, code, rule, regulation, order or
decree regulating, relating to, or imposing liability or standards of conduct
concerning, any hazardous, toxic or dangerous waste, substance or material, as
now or at any time hereafter in effect.
"Hereof", "hereto", "hereunder" and similar terms shall refer to this
Agreement in its entirety and not to any particular paragraph or provision of
this Agreement.
"Indebtedness" shall mean all indebtedness and liabilities (including
without limitation interest, fees and other charges) arising under this
Agreement or the other Loan Documents, whether direct or indirect, absolute or
contingent, of Company and/or any Subsidiary to the Banks or to the Agent, in
any manner and at any time, whether evidenced by the Notes, or arising any of
the other Loan Documents, due or hereafter to become due, now owing or that
may hereafter be incurred by Company and/or Subsidiary to, or acquired by, the
Banks or by Agent, and any judgments that may hereafter be rendered on such
indebtedness or any part thereof, with interest according to the rates and
terms specified, or as provided by law, and any and all consolidations,
amendments, renewals, replacements, substitutions or extensions of any of the
foregoing; PROVIDED, however that for purposes of calculating the Indebtedness
outstanding under the Notes or any of the Loan Documents, the direct and
indirect and absolute and contingent obligations of the Company and/or its
Subsidiaries (whether direct or contingent) shall be determined without
duplication.
"Indentures" shall mean the Senior Indentures and the Subordinated
Indenture.
"Interest Expense" shall mean for any period, total interest expense,
whether paid or accrued (including the interest component of Capital Leases),
and all commissions, fees and discounts with respect to letters of credit and
other Debt of Company and its Subsidiaries on a Consolidated basis, but
excluding interest expense not payable in cash (including amortization of
discount), all as determined in accordance with GAAP.
"Intangible Assets" shall mean with respect to any Person, assets of
such Person having no physical existence and that, in conformity with GAAP,
should be classified as intangible assets, including, without limitation,
patents, patent rights, trademarks, trade names, copyrights, franchises,
licenses, customer lists, organizational expenses and goodwill.
"Interest Period" shall mean (i) with respect to a Eurocurrency-based
Advance, one (1), two (2), three (3) or six (6) months (or any lesser or
greater period of time agreed to in advance by Company, Agent and the Banks)
as selected by Company pursuant to Section 2.3 hereof, PROVIDED, however, that
any Eurocurrency-Interest Period which commences on the last Business Day of a
calendar month (or on any day for which there is no numerically corresponding
day in the appropriate subsequent calendar month) shall end on the last
Business Day of the appropriate subsequent calendar month and (ii) with
respect to a Swing Line Advance, a period of one (1) to thirty (30) days
agreed to in advance by Company and Swing Line Bank as selected by Company
pursuant to Section 4.3 hereof. Each Interest Period which would otherwise end
on a day which is not a Business Day shall end on the next succeeding Business
Day or, if such next succeeding Business Day falls in the next succeeding
calendar month, on the next preceding Business Day, and no Interest Period
which would end after the Revolving Credit Maturity Date shall be permitted
with respect to any Advance.
"Internal Revenue Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and the regulations promulgated thereunder.
"Investment" shall mean, as of any date of determination, any loan or
advance by Company or any of its Subsidiaries to, or any other loan, advance
or investment by Company or any of its Subsidiaries in, any Person (including
without limitation, any Subsidiary of Company or any Joint Venture), whether
such loan, advance or investment shall be in the nature of an investment in
shares of stock or other capital or securities, general or limited partnership
or joint venture interests, evidences of indebtedness or otherwise. The amount
of any Investment, as of any date of determination, shall be the aggregate
original principal or capital amount thereof less all returns of principal or
equity thereon as of such date (and otherwise without adjustment by reason of
the financial condition of such other Person) and shall, if made by the
transfer or exchange of property other than cash, be deemed to have been made
in an original principal or capital amount equal to the fair market value of
such property at the time such Investment was made.
"Issuing Office" shall mean Agent's office located at One Detroit
Center, 500 Woodward Avenue, Detroit, Michigan 48275 or such other office as
Agent shall designate as its Issuing Office.
"Joint Venture" shall mean any corporation, partnership, association,
joint stock company, business trust or other combined enterprise, other than a
Consolidated Subsidiary, in which (or to which) the Company or any of its
Subsidiaries has made a loan, investment or advance or has an ownership stake
or interest, whether in the nature of an equity capital interest or otherwise.
"Letter(s) of Credit" shall mean any standby or documentary letters of
credit issued by Agent at the request of or for the account of an Account
Party or Account Parties pursuant to Article 3 hereof.
"Letter of Credit Agreement" shall mean, in respect of each Letter of
Credit, the application and related documentation satisfactory to the Agent of
an Account Party or Account Parties requesting Agent to issue such Letter of
Credit, as amended, replaced, supplemented or restated from time to time.
"Letter of Credit Fees" shall mean the fees payable to Agent for the
accounts of the Banks in connection with Letters of Credit pursuant to Section
3.4 hereof.
"Letter of Credit Maximum Amount" shall mean as of any date of
determination Five Million Dollars ($5,000,000).
"Letter of Credit Obligation(s)" shall mean the obligation of an Account
Party or Account Parties under each Letter of Credit Agreement to reimburse
the Agent for each payment made by the Agent under the Letter of Credit issued
pursuant to such Letter of Credit Agreement, together with all other sums,
fees, charges and amounts which may be owing to the Agent under such Letter of
Credit Agreement.
"Letter of Credit Payment" shall mean any amount paid or required to be
paid by the Agent in its capacity hereunder as issuer of a Letter of Credit as
a result of a draft or other demand for payment under any Letter of Credit.
"Lien" shall mean any pledge, assignment, hypothecation, mortgage,
security interest, deposit arrangement, option, trust receipt, conditional
sale or title retaining contract, financing statement or comparable notice or
other filing or recording, lessor's or lessee's interest under any lease,
subordination or any claim or right, or any other type of lien, charge,
encumbrance, preferential or priority arrangement or other claim or right,
whether based on common law or statute.
"Loan Documents" shall mean, collectively, this Agreement, the Notes,
the Letter of Credit Documents, the Letters of Credit, the Collateral
Documents, and any other documents, certificates, instruments or agreements
executed pursuant to or in connection with any such document or this
Agreement, as such documents may be amended, replaced, supplemented or
restated from time to time.
"Majority Banks" shall mean at any time the Banks holding not less than
fifty one percent (51%) of the sum of the aggregate principal amount of the
Indebtedness then outstanding under the Notes (or, if no Indebtedness is then
outstanding, the Banks holding not less than fifty one percent (51%) of the
Revolving Credit Aggregate Commitment); PROVIDED, however, that for purposes
of determining Majority Banks hereunder, Indebtedness outstanding under the
Swing Line Note shall be allocated among the Banks based on their respective
Percentages; PROVIDED, FURTHER, however, that in the event any of the Banks (a
"Non-Advancing Bank") shall have failed to fund its Percentage of any Advance
requested by Company which such Non-Advancing Bank is obligated to fund under
the terms of this Agreement and such failure to fund has not been cured, then
for so long as such failure continues, "Majority Banks" shall mean the Banks
(excluding all Non-Advancing Banks) holding not less than fifty one percent
(51%) of the aggregate Percentage of Banks (excluding all Non-Advancing
Banks).
"Margin" shall mean, as of any date of determination thereof, the
applicable interest rate margin component of the Eurocurrency-based Rate,
determined in accordance with the provisions of Section 5.1 hereof (based on
Company's Moody's Rating and S&P Rating) by reference to the appropriate
columns in the pricing matrix attached to this Agreement as SCHEDULE 1.1.
"Maximum Subsidiary Investment Amount" shall mean (i) the sum of (A) all
cash Investments by Company now existing or hereafter made, or which the
Company is under a contract obligation to make, in any Subsidiary or Joint
Venture, (B) the amount of any guaranty obligations whether now existing or
hereafter incurred by Company in respect of obligations of any Subsidiary or
Joint Venture and (C) the fair market value of all assets of Company hereafter
contributed or sold to any Subsidiary or Joint Venture, MINUS (ii) any cash
dividends (but not intercompany loans) received by Company in respect of the
capital stock of its Subsidiaries after the date hereof. For purposes of this
definition, the amount of any Investment, as of any date of determination,
shall be the aggregate original principal or capital amount thereof less all
returns of principal or equity thereon as of such date (and otherwise without
adjustment by reason of the financial condition of such other Person) and
shall, if made by the transfer or exchange of property other than cash, be
deemed to have been made in an original principal or capital amount equal to
the fair market value of such property at the time such Investment was made.
"Moody's" shall mean Moody's Investors Service, Inc. or any successor
thereto.
"Moody's Rating" shall mean for any day, the rating of Company's senior
long-term unsecured and non-credit enhanced debt by Moody's in effect at 11:00
a.m. Detroit time on such day.
"Mortgages" shall mean any of the Collateral Documents (in form
substantially similar to that previously executed and delivered by Company to
Agent) pursuant to which Agent is granted a Lien for the benefit of Banks on
Company's or a Wholly-Owned Subsidiary's interest in real property.
"Net Income" shall mean for any period, the net earnings (or loss) after
taxes of Company and its Subsidiaries on a Consolidated basis for such period
taken as a single accounting period determined in conformity with GAAP.
"Notes" shall mean the Revolving Credit Notes and the Swing Line Note.
"Pension Plan(s)" shall mean all employee pension benefit plans of
Company or its Subsidiaries, as defined in Section 3(2) of ERISA.
"Percentage" shall mean, with respect to any Bank, its percentage share,
as set forth on EXHIBIT "C", hereto, of the Revolving Credit and its risk
participation in Letters of Credit, as such Exhibit may be revised from time
to time by Agent in accordance with Section 14.9(c) hereof.
"Permitted Acquisitions" shall mean any acquisition by the Company or
any Subsidiary of all or substantially all of the assets of another Person, or
of a division or line of business of another Person or fifty one percent (51%)
or more of the shares of stock or other ownership interests of another Person
which satisfies and/or is conducted in accordance with the following
requirements:
(i) each such stock acquisition shall, under GAAP, be required
to be consolidated by Company, and not treated by Company or any of its
Subsidiaries as an equity investment;
(ii) on the date of any such acquisition, all necessary
governmental, quasi-governmental, agency, regulatory or similar
approvals of applicable jurisdictions (or the respective agencies,
instrumentalities or political subdivisions, as applicable, of such
jurisdictions) and all necessary non-governmental and other third-party
approvals which, in each case, are material to such acquisition have
been obtained and are in effect, and Company and its Subsidiaries are in
full compliance thereunder, and all necessary declarations,
registrations or other filings with any court, governmental or
regulatory authority, securities exchange or any other person have been
made;
(iii) if a stock acquisition, the acquisition target must be
principally engaged in a Core Business and, if an asset acquisition, the
assets so acquired must be used by Company or such Subsidiary in a Core
Business;
(iv) if a stock acquisition, the acquisition shall have been
approved by the Board of Directors of the acquisition target or all of
the shareholders whose stock is being acquired of such acquisition
target not later than the date any Request for Advance is delivered to
Bank in connection with an Advance to be used to pay all or a portion of
the acquisition consideration and as of such date, no claim or challenge
has been asserted or threatened by any shareholder, director, officer or
employee of the acquisition target or by any other person which would
reasonably be expected to have a material adverse effect on Company and
its Consolidated Subsidiaries (taken as a whole);
(v) not less than five (5) Business Days prior to the date of
such acquisition, the Company provides to Agent written notice of the
proposed acquisition;
(vi) both immediately before and immediately after such
acquisition, no Default or Event of Default (whether or not related to
such acquisition), has occurred and is continuing under this Agreement,
or any of the other Loan Documents as evidenced by a certificate of an
authorized officer of Company; and
(vii) within ten (10) Business Days of any such acquisition,
Company shall have caused to be furnished, executed and delivered to
Agent as security for all Indebtedness of Company, in form and substance
similar to that previously executed and delivered by Company to Agent
and supported by appropriate resolutions in certified form authorizing
same, (A) the Subsidiaries Collateral Documents of the Subsidiary(ies)
so acquired and (B) a Stock Pledge by Company or a Subsidiary, as the
case may be, with respect to all of its stock in the Subsidiary(ies) so
acquired; and, if required or advisable under applicable law to perfect
the liens granted thereby, appropriate financing statements, collateral
and other documents covering such Collateral executed and delivered by
the appropriate parties, including without limitation, original
certificates evidencing any shares of stock pledged to Agent, under the
Collateral Documents delivered pursuant to this subparagraph (vii).
"Permitted Encumbrances" shall mean, with respect to any Person:
(a) the liens and encumbrances granted under or established by
this Agreement or the other Loan Documents;
(b) liens for taxes, assessments and other governmental charges
not yet due and payable or which are being contested in good faith by
appropriate proceedings diligently pursued, provided that such provision
for the payment of all such taxes known to such Person has been made on
the books of such Person as may be required by GAAP;
(c) mechanics', materialmen's, carrier's, warehousemen's and
similar liens and encumbrances arising in the ordinary course of
business and securing obligations of such Person that are not overdue
for a period of more than 60 days or are being contested in good faith
by appropriate proceedings diligently pursued, provided that in the case
of any such contest (i) any levy, execution or other enforcement of such
liens and encumbrances shall have been duly suspended; and (ii) such
provision for the payment of such liens and encumbrances has been made
on the books of such Person as may be required by GAAP;
(d) liens arising in connection with worker's compensation,
unemployment insurance, old age pensions (subject to the applicable
provisions of this Agreement) and social security benefits and other
forms of governmental insurance or similar benefits which are not
overdue or are being contested in good faith by appropriate proceedings
diligently pursued, provided that in the case of any such contest (i)
any levy, execution or other enforcement of such liens shall have been
duly suspended; and (ii) such provision for the payment of such liens
has been made on the books of such Person as may be required by GAAP;
(e)(i) liens incurred in the ordinary course of business to secure
the performance of statutory obligations arising in connection with
progress payments or advance payments due under contracts with the
United States or any foreign government or any agency thereof entered
into in the ordinary course of business and (ii) liens incurred or
deposits made in the ordinary course of business to secure the
performance of statutory obligations, bids, leases, fee and expense
arrangements with trustees and fiscal agents and other similar
obligations (exclusive of obligations incurred in connection with the
borrowing of money, any lease-purchase arrangements or the payment of
the deferred purchase price of property), provided that full provision
for the payment of all such obligations set forth in clauses (i) and
(ii) has been made on the books of such Person as may be required by
GAAP;
(f) those existing liens and encumbrances of the Company or its
Subsidiaries identified in SCHEDULE 1.2, hereto;
(g) liens in the nature of any minor imperfections of title,
including but not limited to easements, covenants, rights-of-way or
other similar restrictions, which, either individually or in the
aggregate would not (i) materially adversely affect the present or
future use of the property to which they relate, or (ii) have a material
adverse effect on the sale or lease of such property, or (iii) render
title thereto unmarketable; and
(h) any interest or title of a lessor under any lease of
property to, or of any consignor of goods cosigned to, or of any
creditor of any consignee in goods consigned to such consignee by,
Company or any of its Subsidiaries.
"Permitted Investments" shall mean:
(i) Governmental Obligations;
(ii) Obligations of a state of the United States, the District of
Columbia or any possession of the United States, or any political
subdivision thereof, which are described in Section 103(a) of the
Internal Revenue Code and are graded in any of the highest three (3)
major grades as determined by at least one nationally recognized rating
agency; or secured, as to payments of principal and interest, by a
letter of credit provided by a financial institution or insurance
provided by a bond insurance company which itself or its debt is rated
in the highest three (3) major grades as determined by at least one
Rating Agency;
(iii) Banker's acceptances, commercial accounts, certificates of
deposit, or depository receipts issued by a bank, trust company, savings
and loan association, savings bank or other financial institution whose
deposits are insured by the Federal Deposit Insurance Corporation and
whose reported capital and surplus equal at least $50,000,000;
(iv) Commercial paper rated at the time of purchase within the
two highest classifications established by not less than two nationally
recognized rating agencies, and which matures within 270 days after the
date of issue;
(v) Preferred stock (bearing a AAA rating by S&P and Moody's)
issued by closed-end municipal bond funds;
(vi) tax-exempt variable rate demand bonds and/or auction reset
securities that (A) are backed by letters of credit, bond insurance or
surety bonds, (B) have a long-term rating of AA or better by S&P or
Moody's, (C) have a maturity date within one year after the date of
issue;
(vii) Secured repurchase agreements against obligations itemized
in paragraph (i) above, and executed by a bank or trust company or by
members of the association of primary dealers or other recognized
dealers in United States government securities, the market value of
which must be maintained at levels at least equal to the amounts
advanced; and
(viii) Any fund or other pooling arrangement which exclusively
purchases and holds the investments itemized in (i) through (vi) above.
"Permitted Merger(s)" shall mean any merger of any Subsidiary into
Company, of any Subsidiary into any other Subsidiary (other than the merger of
a Wholly-Owned Subsidiary into a Subsidiary which is not a Wholly-Owned
Subsidiary) or of a Person into Company or a Wholly-Owned Subsidiary in
connection with a Permitted Acquisition which, in each case, satisfies and/or
is conducted in accordance with the following requirements:
(a) not less than five (5) Business Days nor more than
ninety (90) days prior to the commencement of such proposed
merger, Company provides written notice thereof to Agent along
with drafts of all material documents pertaining to such proposed
merger;
(b) (i) immediately following and as the direct result of
any such merger, the surviving or successor entity has succeeded
by operation of applicable law (as confirmed by an opinion(s) of
counsel in form and substance reasonably satisfactory to the
Majority Banks) to all of the obligations of the non-surviving
entity under this Agreement and the other Loan Documents, and to
all of the property rights of such non-surviving entity subject to
the applicable Loan Documents and (ii) in the case of a merger of
a Person into Company or a Wholly-Owned Subsidiary, the Company or
the Wholly-Owned Subsidiary, as applicable, is the surviving
entity;
(c) concurrently with such proposed merger, the surviving
entity involved in such merger shall execute or cause to be
executed, and provide or cause to be provided to Agent, for the
Banks, such documents and instruments (including without
limitation opinions of counsel, amendments, acknowledgments and
consents) as reasonably requested by the Majority Banks; and
(d) both immediately before and immediately after such
merger, no Default or Event of Default (whether or not related to
such restructuring), has occurred and is continuing under this
Agreement or any of the other Loan Documents.
"Permitted Subordinated Indebtedness" shall mean the Indebtedness
evidenced by the Subordinated Notes and any extension, renewal, refunding or
refinancing thereof, PROVIDED that any such extension, renewal, refunding or
refinancing is in an aggregate principal amount not greater than the principal
amount of the Subordinated Notes outstanding at the time thereof and is on
terms (including, without limitation, maturity, amortization, interest rate,
premiums, fees, covenants, events of default, remedies and subordination
terms) not materially less advantageous to the Company or materially adverse
to the Banks than the terms of the Subordinated Notes as of the date hereof.
"Permitted Transfer(s)" shall mean any (i) sale, assignment, transfer or
other disposition of inventory in the ordinary course of business, (ii) prior
to the occurrence of an Event of Default, the sale, assignment, transfer or
other disposition of worn-out or obsolete machinery or equipment the aggregate
value of which shall not exceed $750,000 during any fiscal year, (iii) sale
after the date hereof of other assets for consideration not less than fair
market value provided that (A) such sales do not exceed $10,000,000 in
aggregate fair market value, and (B) after the first $3,500,000 of such sales,
at least fifty percent (50%) of such sale price is paid in cash, and (iv) sale
of Permitted Investments.
"Person" shall mean an individual, corporation, partnership, trust,
incorporated or unincorporated organization, joint venture, joint stock
company, or a government or any agency or political subdivision thereof or
other entity of any kind.
"Prime Rate" shall mean the per annum rate of interest announced by the
Agent, at its main office from time to time as its "prime rate" (it being
acknowledged that such announced rate may not necessarily be the lowest rate
charged by the Agent, to any of its customers), which Prime Rate shall change
simultaneously with any change in such announced rate.
"Prime-based Advance" shall mean an Advance which bears interest at the
Prime-based Rate.
"Prime-based Rate" shall mean, for any day, that rate of interest which
is equal to the greater of (i) the Prime Rate, or (ii) the Alternate Base
Rate.
"Prior Agreement" shall mean that certain Amended and Restated Credit
Agreement dated August 11, 1995, by and among Company, the Prior Lenders and
Comerica Bank, as Agent, as amended to date.
"Prior Lenders" shall mean the financial institutions parties as lenders
under the Prior Agreement.
"Prior Notes" shall mean the promissory notes issued by Company under
the Prior Agreement.
"Quoted Rate" shall mean the rate of interest per annum offered by the
Swing Line Bank in its sole discretion with respect to a Swing Line Advance.
"Quoted Rate Advance" shall mean any Swing Line Advance which bears
interest at the Quoted Rate.
"Rating Agency" shall mean Moody's, S&P or any other nationally-
recognized statistical rating organization which is acceptable to the Agent.
"Request for Revolving Credit Advance" shall mean a Request for
Revolving Credit Advance issued by Company under Section 2.3 of this Agreement
in the form annexed hereto as EXHIBIT "D".
"Request for Swing Line Advance" shall mean a Request for Swing Line
Advance issued by Company under Section 4.3 of this Agreement in the form
annexed hereto as EXHIBIT "E".
"Revolving Credit" shall mean the revolving credit loans to be advanced
from time to time to the Company by the Banks pursuant to Article 2 hereof, in
an aggregate amount (subject to the terms hereof) not to exceed the Revolving
Credit Aggregate Commitment.
"Revolving Credit Advance" shall mean a borrowing requested by Company
and made by Banks under Section 2.1 of this Agreement, including without
limitation any readvance, refunding or conversion of such borrowing pursuant
to Section 2.3 hereof, and shall include, as applicable, a Eurocurrency-based
Advance and/or Prime-based Advance.
"Revolving Credit Aggregate Commitment" shall mean Forty Million Dollars
($40,000,000), subject to reduction or termination under Section 2.10 or 10.2
hereof.
"Revolving Credit Banks" shall mean Comerica Bank and such other
financial institutions from time to time parties hereto as lenders of the
Revolving Credit.
"Revolving Credit Maturity Date" shall mean September 11, 2000, subject
to extension pursuant to the terms of Section 2.9 hereof.
"Revolving Credit Notes" shall mean the revolving credit notes described
in Section 2.1 hereof, made by Company to each of the Banks in the form
annexed to this agreement as EXHIBIT "B", as such notes may be amended or
supplemented from time to time, and any other notes issued in substitution,
replacement or renewal thereof from time to time.
"S&P" shall mean Standard and Poor's Ratings Group or any successor
thereto.
"S&P Rating" shall mean for any day, the rating of the Company's senior
long term unsecured and non-credit enhanced debt by S&P in effect at 11:00
a.m. Detroit time on such day.
"Security Agreements" shall mean the security agreements (in form
substantially similar to that previously executed and delivered by Company to
Agent) encumbering the Accounts, inventory, general intangibles (including
patents and trademarks), machinery, equipment and all other tangible and
intangible personal property of Company or a Wholly-Owned Subsidiary, now
owned or hereafter acquired, executed and delivered by Company or a Wholly-
Owned Subsidiary to the Agent any time before or after the date hereof as the
same may be amended, restated, supplemented or replaced from time to time.
"Senior Debt to EBITDA Ratio" shall mean as of any date of
determination, a ratio, the numerator of which shall equal Funded Debt of
Company and its Subsidiaries as of such date MINUS the outstanding principal
amount of any Permitted Subordinated Indebtedness as of such date and the
denominator of which shall equal EBITDA for the four quarter period ending on
such date.
"Senior Indentures" shall mean the Indenture between Company (as
successor by merger to Valassis Inserts, Inc.) and The Bank of New York,
Trustee, dated as of March 15, 1992 and the Indenture between Company and The
Bank of New York, as Trustee dated as of November 15, 1994, pursuant to which
the Senior Notes were issued, as such Indentures may be amended, restated,
supplemented or replaced from time to time.
"Senior Notes" shall mean the $120,000,000 principal amount of Company's
Senior Notes due 1999, issued on March 15, 1992 pursuant to the Senior
Indenture dated as of such date and the $255,000,000 principal amount of
Company's Senior Notes due 2003, issued on November 28, 1994 pursuant to the
Senior Indenture dated November 15, 1994.
"Stock Pledges" shall mean any of the pledge agreements (in form
substantially similar to that previously executed and delivered by Company to
Agent) pursuant to which Agent is granted a Lien for the benefit of the Banks
in stock of a Wholly-Owned Subsidiary and the interest of a Wholly-Owned
Subsidiary in a Subsidiary.
"Subordinated Indenture" shall mean the Indenture between Company (as
successor by merger to Valassis Inserts, Inc.) and The Bank of New York,
Trustee, dated as of March 15, 1992, pursuant to which the Subordinated Notes
were issued, as may be amended, restated, supplemented or replaced from time
to time.
"Subordinated Notes" shall mean the $150,000,000 principal amount of
Company's Senior Subordinated Notes due 1999, issued on March 15, 1992,
pursuant to the Subordinated Indenture.
"Subsidiaries Collateral Documents" shall mean the Security Agreements,
the Guaranties, the Stock Pledges, the Mortgages and all other security
documents executed and delivered by each of the Company's Subsidiaries to the
Agent in accordance with the terms and conditions of this Agreement, as the
same may be amended, restated, supplemented or replaced from time to time.
"Subsidiary(ies)" shall mean any corporation, association, joint stock
company, or business trust of which fifty one percent (51%) or more of the
outstanding voting stock or share capital is owned either directly or
indirectly by any Person or one or more of its Subsidiaries or by any Person
and one or more of its Subsidiaries, or the management of which is otherwise
controlled, directly, or indirectly through one or more intermediaries, or
both, by any Person and/or its Subsidiaries. Unless otherwise specified to the
contrary herein, Subsidiary(ies) shall refer to the Company's Subsidiary(ies).
"Swing Line Bank" shall mean Comerica Bank, in its capacity as lender
under Article 4 of this Agreement, and its successors and assigns.
"Swing Line Note" shall mean the swing line note described in Section
4.1 hereof made by Company to Swing Line Bank in the form annexed hereto as
EXHIBIT "F", as such Note may be amended or supplemented from time to time,
and any notes issued in substitution, replacement or renewal thereof from time
to time.
"Swing Line Advance" shall mean an Advance made by Swing Line Bank to
Company pursuant to Section 4.1 hereof.
"Tax Payments" shall mean charges against income for federal and state
income taxes PLUS (or minus) any net decrease (or net increase) in deferred
and accrued income taxes.
"UCC" shall mean the Uniform Commercial Code, as in effect from time to
time in the State of Michigan.
"Wholly-Owned Subsidiary" shall mean any direct, wholly owned Subsidiary
of the Company with respect to which the following statements are true: (i)
such Subsidiary has guaranteed the Indebtedness unless (and only so long as)
such guaranty is prohibited by the terms of any of the Senior Indentures which
remains in full force and effect, without taking into account any amendments
thereto executed after the date hereof without the consent of the Majority
Banks, (ii) the Agent has a first priority Lien on all of the outstanding
capital stock of such Subsidiary and all or substantially all of the real and
personal property of such Subsidiary as security for the Indebtedness and such
guaranty, if any, and (iii) the form of such guaranty, if any, and collateral
security is on terms and conditions satisfactory to the Agent with such
documentation and opinions of counsel as the Agent may reasonably request.
2. REVOLVING CREDIT
2.1 REVOLVING CREDIT COMMITMENT. Subject to the terms and conditions
of this Agreement, each Bank severally and for itself alone agrees to make
Advances of the Revolving Credit to Company from time to time on any Business
Day during the period from the effective date hereof until (but excluding) the
Revolving Credit Maturity Date in an aggregate amount not to exceed at any one
time outstanding each such Bank's Percentage of the Revolving Credit Aggregate
Commitment. All of such Revolving Credit Advances hereunder shall be evidenced
by the Revolving Credit Notes, under which advances, repayments and readvances
may be made, subject to the terms and conditions of this Agreement.
2.2 ACCRUAL OF INTEREST AND MATURITY. (a) The Revolving Credit Notes,
and all principal and interest outstanding thereunder, shall mature and become
due and payable in full on the Revolving Credit Maturity Date, and each
Revolving Credit Advance evidenced by the Revolving Credit Notes from time to
time outstanding hereunder shall, from and after the date of such Advance,
bear interest at its Applicable Interest Rate. The amount and date of each
Revolving Credit Advance, its Applicable Interest Rate, its Interest Period
(if any), and the amount and date of any repayment shall be noted on Agent's
records, which records will be conclusive evidence thereof, absent manifest
error; PROVIDED, however, that any failure by the Agent to record any such
information shall not relieve Company of its obligation to repay the
outstanding principal amount of such Revolving Credit Advance, all interest
accrued thereon and any amount payable with respect thereto in accordance with
the terms of this Agreement and the other Loan Documents.
2.3 REQUESTS FOR REVOLVING CREDIT ADVANCES AND REQUESTS FOR REFUNDINGS
AND CONVERSIONS OF REVOLVING CREDIT ADVANCES. Company may request a Revolving
Credit Advance, refund any Revolving Credit Advance in the same type of
Revolving Credit Advance or convert any Advance to any other type of Revolving
Credit Advance only after delivery to Agent of a Request for Revolving Credit
Advance executed by an authorized officer of Company, subject to the following
and to the remaining provisions hereof:
(a) each such Request for Revolving Credit Advance shall set
forth the information required on the Request for Revolving Credit
Advance form annexed hereto as EXHIBIT "D", including without
limitation:
(i) the proposed date of Revolving Credit Advance, which must be
a Business Day;
(ii) whether the Revolving Credit Advance is a refunding or
conversion of an outstanding Revolving Credit Advance; and
(iii) whether such Revolving Credit Advance is to be a Prime-based
Advance or a Eurocurrency-based Advance, and, except in the
case of a Prime-based Advance, the first Interest Period
applicable thereto;
(b) each such Request for Revolving Credit Advance shall be
delivered to Agent by 11:00 a.m. (Detroit time) three (3) Business Days
prior to the proposed date of the Revolving Credit Advance, except in
the case of a Prime-based Advance, for which the Request for Revolving
Credit Advance must be delivered by 10 a.m. (Detroit time) on the
proposed date of the Revolving Credit Advance;
(c) the principal amount of such requested Revolving Credit
Advance, PLUS the principal amount of all other Advances then
outstanding hereunder, PLUS the aggregate undrawn portion of any Letters
of Credit which shall be then outstanding as of such date PLUS the
aggregate face amount of all Letters of Credit requested but not yet
issued as of such date, PLUS the aggregate amount of all outstanding
Letter of Credit Obligations, LESS the principal amount of any
outstanding Swing Line Advance to be refunded by the requested Revolving
Credit Advance shall not exceed the then applicable Revolving Credit
Aggregate Commitment;
(d) the principal amount of such Revolving Credit Advance, PLUS
the amount of any other outstanding Indebtedness under this Agreement to
be then combined therewith having the same Applicable Interest Rate and
Interest Period, if any, shall be (i) with respect to Eurocurrency-based
Advances, at least One Million Dollars ($1,000,000) or a larger multiple
thereof and (ii) with respect to Prime-based Advances, at least Five
Hundred Thousand Dollars ($500,000) or a larger multiple thereof, and at
any one time there shall not be in effect more than five (5) Interest
Periods; and
(e) each Request for Revolving Credit Advance, once delivered to
Agent, shall not be revocable by Company, and shall constitute and
include a certification by the Company as of the date thereof that:
(i) both before and after the Revolving Credit Advance, the
obligations of the Company and its Subsidiaries set forth in
this Agreement and the other Loan Documents, as applicable,
are valid, binding and enforceable obligations of such
parties;
(ii) to the best knowledge of Company all conditions to Advances
of the Revolving Credit (including, without limitation,
Section 6.8 hereof) have been satisfied; and
(iii) both before and after the Revolving Credit Advance, the
representations and warranties contained in this Agreement
and the Loan Documents are true and correct in all material
respects.
2.4 DISBURSEMENT OF REVOLVING CREDIT ADVANCES.
(a) Upon receiving any Request for Revolving Credit Advance from
Company under Section 2.3 hereof, Agent shall promptly notify each Bank
by wire, telecopy, telex or by telephone (confirmed by wire, telecopy or
telex) of the amount of such Revolving Credit Advance to be made and the
date such Revolving Credit Advance is to be made by said Bank pursuant
to its Percentage of the Revolving Credit Advance. Unless such Bank's
commitment to make Revolving Credit Advances hereunder shall have been
suspended or terminated in accordance with this Agreement, (or unless
such Revolving Credit Advance is a refunding or conversion of an
Revolving Credit Advance) each Bank shall send the amount of its
Percentage of the Revolving Credit Advance in same day funds in Dollars
to Agent at the office of Agent located at One Detroit Center, Detroit,
Michigan 48226 not later than 2:00 p.m. (Detroit time) on the date of
such Revolving Credit Advance.
(b) Subject to submission of an executed Request for Revolving
Credit Advance by Company without exceptions noted in the compliance
certification therein and to the other terms and conditions hereof,
Agent shall make available to Company the aggregate of the amounts so
received by it from the Banks under this Section 2.4, in like funds, not
later than 4:00 p.m. (Detroit time) on the date of such Revolving Credit
Advance by credit to an account of Company maintained with Agent or to
such other account or third party as Company may reasonably direct.
(c) Unless Agent shall have been notified by any Bank prior to
the date of any proposed Revolving Credit Advance that such Bank does
not intend to make available to Agent such Bank's Percentage of such
Revolving Credit Advance, Agent may assume that such Bank has made such
amount available to Agent on such date, as aforesaid and may, in its
sole discretion and without obligation to do so, in reliance upon such
assumption, make available to Company a corresponding amount. If such
amount is not in fact made available to Agent by such Bank in accordance
with Section 2.4(a), as aforesaid, Agent shall be entitled to recover
such amount on demand from such Bank. If such Bank does not pay such
amount forthwith upon Agent's demand therefor, the Agent shall promptly
notify Company, and Company shall pay such amount to Agent. Agent shall
also be entitled to recover from such Bank or from Company, as the case
may be, interest on such amount in respect of each day from the date
such amount was made available by Agent to Company to the date such
amount is recovered by Agent, at a rate per annum equal to:
(i) in the case of such Bank, the Federal Funds Effective Rate;
or
(ii) in the case of Company, the rate of interest then applicable
to the Revolving Credit Advance.
The obligation of any Bank to make any Revolving Credit Advance
hereunder shall not be affected by the failure of any other Bank to make
any Revolving Credit Advance hereunder, and no Bank shall have any
liability to the Company, the Agent, any other Bank, or any other party
for another Bank's failure to make any loan or Revolving Credit Advance
hereunder.
2.5 PRIME-BASED ADVANCE IN ABSENCE OF ELECTION OR UPON DEFAULT. If, as
to any outstanding Eurocurrency-based Advance, Agent has not received payment
on the last day of the Interest Period applicable thereto, or does not receive
a timely Request for Advance meeting the requirements of Section 2.3 hereof
with respect to the refunding or conversion of such Advance, or, subject to
Section 5.5 hereof, if on such day a Default or Event of Default shall have
occurred and be continuing, the principal amount thereof which is not then
prepaid shall be converted automatically to a Prime-based Advance and the
Agent shall thereafter promptly notify Company and the Banks of said action.
2.6 FACILITY FEE. From the date hereof to the Revolving Credit
Maturity Date, the Company shall pay to the Agent, for distribution to the
Banks pro rata, a Facility Fee equal to the Applicable Fee Percentage per
annum times the Revolving Credit Aggregate Commitment. The Facility Fee shall
be payable quarterly in arrears commencing October 1, 1997 (in respect of the
prior quarter or portion thereof), and on the first Business Day of each
calendar quarter thereafter and on the Revolving Credit Maturity Date, and
shall be computed on the basis of a year of three hundred sixty (360) days and
assessed for the actual numbers of days elapsed. Whenever any payment of the
Facility Fee shall be due on a day which is not a Business Day, the date for
payment thereof shall be extended to the next Business Day. Upon receipt of
such payment, Agent shall make prompt payment to each Bank of its share of the
Facility Fee based upon its respective Percentage. The Facility Fee shall not
be refundable under any circumstances.
2.7 REDUCTION OF INDEBTEDNESS; REVOLVING CREDIT AGGREGATE COMMITMENT.
If at any time and for any reason the aggregate principal amount of Advances
hereunder to Company, PLUS the aggregate undrawn amount of any Letters of
Credit which shall be outstanding at such time PLUS the face among of any
requested but not yet issued Letters of Credit PLUS any unreimbursed Letter of
Credit Obligations shall exceed the Revolving Credit Aggregate Commitment,
Company shall immediately reduce any pending request for an Advance on such
day by the amount of such excess and, to the extent any excess remains
thereafter, immediately repay an amount of the Indebtedness equal to such
excess. Company acknowledges that, in connection with any repayment required
hereunder, it shall also be responsible for the reimbursement of any
prepayment or other costs required under Section 12.1 hereof; PROVIDED,
however, that Company shall, in order to reduce any such prepayment costs and
expenses, first prepay such portion of the Indebtedness then carried as a
Prime-based Advance, if any.
2.8 REVOLVING CREDIT AS RENEWAL; APPLICATION OF ADVANCES THEREAFTER.
The Revolving Credit Notes issued by the Company shall constitute renewal and
replacement evidence of all present indebtedness, if any, of Company to the
Prior Lenders outstanding as of the date hereof under the Prior Agreement, and
the notes issued pursuant thereto. Thereafter, Revolving Credit Advances shall
be available, subject to the terms hereof, to fund working capital needs or
other general corporate purposes of the Company. The Prior Notes shall be
returned to Company promptly after the closing of this Agreement and the
transactions contemplated hereunder.
2.9 EXTENSION OF REVOLVING CREDIT MATURITY DATE. (a) Provided that no
Default or Event of Default has occurred and is continuing, Company may, by
written notice to Agent and each Bank (which notice shall be irrevocable and
which shall not be deemed effective unless actually received by Agent and each
Bank) not less than 90 nor more than 120 days prior to the first and second
anniversary dates of this Agreement, request that the Banks extend the
Revolving Credit Maturity Date then in effect to a date that is one year later
than the Revolving Credit Maturity Date then in effect (each such request, a
"Request"). Each Bank shall, not later than thirty (30) calendar days
following the date of its receipt of the Request, give written notice to the
Agent stating whether such Bank is willing to extend the Revolving Credit
Maturity Date as requested. If Agent has received the aforesaid written
approvals of such Request from each of the Banks, then, effective upon the
date of Agent's receipt of all such written approvals from the Banks, as
aforesaid, the Revolving Credit Maturity Date shall be so extended for an
additional one year period, the term Revolving Credit Maturity Date shall mean
such extended date and Agent shall promptly notify the Company that such
extension has occurred.
(b) If (i) any Bank gives the Agent written notice that it is
unwilling to extend the Revolving Credit Maturity Date as requested or (ii)
any Bank fails to provide written approval to Agent of such a Request within
thirty (30) calendar days of the date of such Bank's receipt of the Request,
then (w) the Banks shall be deemed to have declined to extend the Revolving
Credit Maturity Date, (x) the then-current Revolving Credit Maturity Date
shall remain in effect (with no further right on the part of Company to
request extensions thereof under this Section 2.9), and (y) the commitments of
the Banks to make Advances of the Revolving Credit hereunder shall terminate
on the Revolving Credit Maturity Date then in effect, and Agent shall promptly
notify Company thereof.
2.10 OPTIONAL REDUCTION OR TERMINATION OF REVOLVING CREDIT AGGREGATE
COMMITMENT. The Company may, upon at least five (5) Business Days' prior
written notice to Agent, permanently reduce the Revolving Credit Aggregate
Commitment in whole at any time, or in part from time to time, without premium
or penalty, provided that: (i) each partial reduction of the Revolving Credit
Aggregate Commitment shall be in an aggregate amount equal to at least Five
Million Dollars ($5,000,000) or a larger integral multiple of One Million
Dollars ($1,000,000); (ii) each reduction shall be accompanied by the payment
of the Facility Fee, if any, accrued to the date of such reduction; (iii) the
Company shall prepay in accordance with the terms hereof the amount, if any,
by which the aggregate unpaid principal amount of Advances PLUS the aggregate
amount of outstanding Letters of Credit PLUS the face amount of any requested
but not yet issued Letters of Credit PLUS any unreimbursed Letter of Credit
Obligations exceeds the amount of the Revolving Credit Aggregate Commitment,
taking into account the aforesaid reductions thereof, together with accrued
but unpaid interest on the principal amount of such prepaid Advances to the
date of prepayment; (iv) if the termination or reduction of the Revolving
Credit Aggregate Commitment requires the prepayment of a Eurocurrency-based
Advance, the termination or reduction may be made only on the last Business
Day of the then current Interest Period applicable to such Advance (subject to
the provisions of Section 12.1 hereof); and (v) no reduction shall reduce the
amount of the Revolving Credit Aggregate Commitment to an amount which is less
than the sum of the aggregate undrawn amount of any Letters of Credit PLUS the
aggregate amount of outstanding Letters of Credit PLUS the face amount of any
requested but not yet issued Letters of Credit PLUS any unreimbursed Letter of
Credit Obligations outstanding at such time. Reductions of the Revolving
Credit Aggregate Commitment and any accompanying prepayments of the Revolving
Credit Notes shall be distributed by Agent to each Revolving Credit Bank in
accordance with such Bank's Percentage thereof, and will not be available for
reinstatement by or readvance to the Company and any accompanying prepayments
of the Swing Line Note shall be distributed by Agent to the Swing Line Bank
and will be available for reinstatement by or readvance to the Company. Any
reductions of the Revolving Credit Aggregate Commitment hereunder shall reduce
each Revolving Credit Bank's portion thereof proportionately (based upon the
applicable Percentages), and shall be permanent and irrevocable. Any payments
made pursuant to this Section shall be applied first to outstanding Prime-
based Advances under the Revolving Credit, next to Prime-based Advances under
the Swing Line Note, next to Quoted Rate Advances and then to Eurocurrency-
based Advances.
3. LETTERS OF CREDIT.
3.1 LETTERS OF CREDIT. Subject to the terms and conditions of this
Agreement, Agent may through its Issuing Office, at any time and from time to
time from and after the date hereof until thirty (30) days prior to the
Revolving Credit Maturity Date, upon the written request of an Account Party
accompanied by a duly executed Letter of Credit Agreement and such other
documentation related to the requested Letter of Credit as the Agent may
reasonably require, issue standby or documentary Letters of Credit for the
account of such Account Party, in an aggregate amount for all Letters of
Credit issued hereunder at any one time outstanding not to exceed the Letter
of Credit Maximum Amount. Each Letter of Credit shall be in a minimum face
amount of One Million Dollars ($1,000,000) and shall have an expiration date
not later than one (1) year from its date of issuance; provided that each
Letter of Credit (including any renewal thereof) shall expire not later than
ten (10) Business Days prior to the Revolving Credit Maturity Date in effect
on the date of issuance thereof. The submission of all applications and the
issuance of each Letter of Credit hereunder shall be subject in all respects
to applicable provisions of U.S. law and regulations, including without
limitation, the Trading With the Enemy Act, Export Administration Act,
International Emergency Economic Powers Act, and the Regulations of the Office
of Foreign Assets Control of the U.S. Department of the Treasury.
3.2 CONDITIONS TO ISSUANCE. No Letter of Credit shall be issued at the
request and for the account of any Account Party unless, as of the date of
issuance of such Letter of Credit:
(a) the face amount of the Letter of Credit requested, PLUS any
other requested but not yet issued Letters of Credit PLUS
the undrawn portion of all other outstanding Letters of
Credit PLUS the aggregate principal amount of all
outstanding Letter of Credit Obligations, does not exceed
the Letter of Credit Maximum Amount;
(b) the face amount of the Letter of Credit requested, PLUS the
aggregate principal amount of all Advances outstanding under
the Notes, PLUS the aggregate undrawn portion of all other
outstanding Letters of Credit, PLUS any other requested but
not yet issued Letters of Credit PLUS the aggregate
principal amount of all outstanding Letter of Credit
Obligations do not exceed the then applicable Revolving
Credit Aggregate Commitment;
(c) the obligations of Company set forth in this Agreement and
the Loan Documents are valid, binding and enforceable
obligations of Company and the valid, binding and
enforceable nature of this Agreement and the Loan Documents
has not been disputed by Company;
(d) both immediately before and immediately after issuance of
the Letter of Credit requested, no Default or Event of
Default exists;
(e) the representations and warranties contained in this
Agreement and the Loan Documents are true in all material
respects as if made on such date;
(f) the execution of the Letter of Credit Agreement with respect
to the Letter of Credit requested will not violate the terms
and conditions of any material contract, agreement or other
borrowing of Company;
(g) the Account Party requesting the Letter of Credit shall have
delivered to Agent at its Issuing Office, not less than five
(5) Business Days prior to the requested date for issuance
(or such shorter time as the Agent, in its sole discretion,
may permit), the Letter of Credit Agreement related thereto,
together with such other documents and materials as may be
reasonably required pursuant to the terms thereof, and the
terms of the proposed Letter of Credit shall be satisfactory
to Agent and its Issuing Office in the exercise of its
reasonable discretion;
(h) no order, judgment or decree of any court, arbitrator or
governmental authority shall purport by its terms to enjoin
or restrain Agent from issuing the Letter of Credit, or any
Bank from taking a participation therein pursuant to Section
3.6 hereof, and no law, rule, regulation, request or
directive (whether or not having the force of law) shall
prohibit or request that Agent refrain from issuing, or any
Bank refrain from taking a participation in, the Letter of
Credit requested or letters of credit generally;
(i) there shall have been no introduction of or change in the
interpretation of any law or regulation that would make it
unlawful or unduly burdensome for the Agent to issue the
requested Letter of Credit, no general suspension on trading
on the New York Stock Exchange or any other national
securities exchange, no declaration of a general banking
moratorium by banking authorities in the United States,
Michigan or the respective jurisdictions in which the Banks,
the Account Party and the beneficiary of the requested
Letter of Credit are located, and no establishment of any
new restrictions on transactions involving letters of credit
or on banks materially affecting the extension of credit by
banks; and
(j) Agent shall have received the issuance fee required in
connection with the issuance of such Letter of Credit
pursuant to Section 3.5 hereof.
Each Letter of Credit Agreement submitted to Agent pursuant hereto shall
constitute the certification by the Company and the Account Party of the
matters set forth in this Section 3.2 (a) through (f). The Agent shall be
entitled to rely on such certification without any duty of inquiry.
3.3 NOTICE. Agent shall give notice, substantially in the form
attached as EXHIBIT "G", to each Revolving Credit Bank of the issuance of each
Letter of Credit, not later than three (3) Business Days after issuance of
each Letter of Credit, specifying the amount thereof and the amount of such
Bank's Percentage thereof.
3.4 LETTER OF CREDIT FEES. Company shall pay to the Agent for
distribution to the Revolving Credit Banks in accordance with the Percentages,
Letter of Credit Fees as follows:
(a) a per annum Letter of Credit Fee with respect to the undrawn
amount of each Letter of Credit issued pursuant hereto in the amount of the
Applicable L/C Fee Percentage (determined with reference to SCHEDULE 1.1 of
this Agreement), exclusive of the issuance fee of one-eighth of one percentage
point (1/8%) per annum on the face amount thereof to be paid to Agent under
Section 3.5 hereof.
(b) If any change in any law or regulation or in the
interpretation thereof by any court or administrative or governmental
authority charged with the administration thereof shall either (i) impose,
modify or cause to be deemed applicable any reserve, special deposit,
limitation or similar requirement against letters of credit issued by, or
assets held by, or deposits in or for the account of, Agent or the Banks or
(ii) impose on Agent or the Banks any other condition regarding this Agreement
or the Letters of Credit, and the result of any event referred to in clause
(i) or (ii) above shall be to increase in an amount deemed material by Agent
or the Banks the cost or expense to Agent or the Banks of issuing or
maintaining or participating in any of the Letters of Credit (which increase
in cost or expense shall be determined by the Agent's or such Bank's
reasonable allocation of the aggregate of such cost increases and expense
resulting from such events), then, upon demand by the Agent or such Bank, as
the case may be, the Company shall, within ten days following demand for
payment, pay to Agent or such Revolving Credit Bank, as the case may be, from
time to time as specified by the Agent or such Bank, additional amounts which
shall be sufficient to compensate the Agent or such Revolving Credit Bank for
such increased cost and expense, together with interest on each such amount
from ten days after the date demanded until payment in full thereof at the
Prime-based Rate. A certificate as to such increased cost or expense incurred
by the Agent or such Revolving Credit Bank, as the case may be, as a result of
any event mentioned in clause (i) or (ii) above, shall be promptly submitted
to the Company and shall be conclusive, absent manifest error, as to the
amount thereof.
(c) All payments by the Company to the Agent or the Revolving
Credit Banks under this Section 3.4 shall be made in Dollars and in
immediately available funds at the Agent's Issuing Office or such other office
of the Agent as may be designated from time to time by written notice to the
Company by the Agent. The aforesaid fees shall be nonrefundable under all
circumstances, shall be payable annually in advance (or such lesser period, if
applicable, for Letters of Credit issued with stated expiration dates of less
than one year) upon the issuance of each such Letter of Credit, and shall be
calculated on the basis of a 360 day year and assessed for the actual number
of days from the date of the issuance thereof to the stated expiration
thereof.
3.5 ISSUANCE FEES. In connection with the Letters of Credit, and in
addition to the Letter of Credit Fees, the Company and the applicable Account
Party shall pay, for the sole account of the Agent, (a) a letter of credit
issuance fee of one eighth percentage point (1/8%) to be retained by Agent for
its own account and (b) standard documentation, administration, payment and
cancellation charges assessed by Agent or its Issuing Office, at the times, in
the amounts and on the terms set forth or to be set forth from time to time in
the standard fee schedule of Agent's Issuing office in effect from time to
time.
3.6 DRAWS AND DEMANDS FOR PAYMENT UNDER LETTERS OF CREDIT.
(a) The Company and each applicable Account Party agrees to pay
to the Agent, on the day on which the Agent shall honor a draft or other
demand for payment presented or made under any Letter of Credit, an amount
equal to the amount paid by the Agent in respect of such draft or other demand
under such Letter of Credit and all expenses paid or incurred by the Agent
relative thereto. Unless the Company or the applicable Account Party shall
have made such payment to the Agent on such day, upon each such payment by the
Agent, the Agent shall be deemed to have disbursed to the Company or the
applicable Account Party, and the Company or the applicable Account Party
shall be deemed to have elected to substitute for its reimbursement
obligation, a Prime-based Advance from the Banks in an amount equal to the
amount so paid by the Agent in respect of such draft or other demand under
such Letter of Credit. Such Prime-based Advance shall be disbursed
notwithstanding any failure to satisfy any conditions for disbursement of any
Advance set forth in Article 2 hereof and, to the extent of the Prime-based
Advance so disbursed, the reimbursement obligation of the Company or the
applicable Account Party under this Section 3.6 shall be deemed satisfied.
(b) If the Agent shall honor a draft or other demand for payment
presented or made under any Letter of Credit, the Agent shall provide notice
thereof to the Company and the applicable Account Party on the date such draft
or demand is honored, and to each Revolving Credit Bank on such date unless
the Company or applicable Account Party shall have satisfied its reimbursement
obligation under Section 3.6(a) by payment to the Agent on such date. The
Agent shall further use reasonable efforts to provide notice to the Company or
applicable Account Party prior to honoring any such draft or other demand for
payment, but such notice, or the failure to provide such notice, shall not
affect the rights or obligations of the Agent with respect to any Letter of
Credit or the rights and obligations of the parties hereto, including without
limitation the obligations of the Company or applicable Account Party under
Section 3.6(a) hereof.
(c) Upon issuance by the Agent of each Letter of Credit hereunder,
each Revolving Credit Bank shall automatically acquire a pro rata risk
participation interest in such Letter of Credit and related Letter of Credit
Payment based on its respective Percentage. Each Revolving Credit Bank, on the
date a draft or demand under any Letter of Credit is honored, shall make its
Percentage share of the amount paid by the Agent, and not reimbursed by the
Company or applicable Account Party on such day, available in immediately
available funds at the principal office of the Agent for the account of the
Agent. If and to the extent such Bank shall not have made such pro rata
portion available to the Agent, such Bank, the Company and the applicable
Account Party severally agree to pay to the Agent forthwith on demand such
amount together with interest thereon, for each day from the date such amount
was paid by the Agent until such amount is so made available to the Agent at a
per annum rate equal to the interest rate applicable during such period to the
related Advance disbursed under Section 3.6(a) in respect of the reimbursement
obligation of the Company and the applicable Account Party. If such Bank shall
pay such amount to the Agent together with such interest, such amount so paid
shall constitute a Prime-based Advance by such Bank disbursed in respect of
the reimbursement obligation of the Company or applicable Account Party under
Section 3.6(a) for purposes of this Agreement, effective as of the date such
amount was paid by the Agent. The failure of any Revolving Credit Bank to make
its pro rata portion of any such amount paid by the Agent available to the
Agent shall not relieve any other Revolving Credit Bank of its obligation to
make available its pro rata portion of such amount, but no Bank shall be
responsible for failure of any other Bank to make such pro rata portion
available to the Agent.
(d) Nothing in this Agreement shall be construed to require or
authorize any Bank other than Comerica Bank to issue any Letter of Credit, it
being recognized that the Agent shall be the sole issuer of Letters of Credit
under this Agreement.
3.7 OBLIGATIONS IRREVOCABLE. The obligations of Company and any
Account Party to make payments to Agent or the Revolving Credit Banks with
respect to Letter of Credit Obligations under Section 3.6 hereof, shall be
unconditional and irrevocable and not subject to any qualification or
exception whatsoever, including, without limitation:
(a) Any lack of validity or enforceability of any Letter of
Credit or any documentation relating to any Letter of Credit or to any
transaction related in any way to such Letter of Credit (the "Letter of Credit
Documents");
(b) Any amendment, modification, waiver, consent, or any
substitution, exchange or release of or failure to perfect any interest in
collateral or security, with respect to any of the Letter of Credit Documents;
(c) The existence of any claim, setoff, defense or other right
which the Company or any Account Party may have at any time against any
beneficiary or any transferee of any Letter of Credit (or any persons or
entities for whom any such beneficiary or any such transferee may be acting),
the Agent or any Bank or any other person or entity, whether in connection
with any of the Letter of Credit Documents, the transactions contemplated
herein or therein or any unrelated transactions;
(d) Any draft or other statement or document presented under any
Letter of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any
respect;
(e) Payment by the Agent to the beneficiary under any Letter of
Credit against presentation of documents which do not comply with the terms of
the Letter of Credit, including failure of any documents to bear any reference
or adequate reference to such Letter of Credit;
(f) Any failure, omission, delay or lack on the part of the
Agent or any Bank or any party to any of the Letter of Credit Documents to
enforce, assert or exercise any right, power or remedy conferred upon the
Agent, any Bank or any such party under this Agreement, any of the Loan
Documents or any of the Letter of Credit Documents, or any other acts or
omissions on the part of the Agent, any Bank or any such party; or
(g) Any other event or circumstance that would, in the absence
of this Section 3.7, result in the release or discharge by operation of law or
otherwise of Company or any Account Party from the performance or observance
of any obligation, covenant or agreement contained in Section 3.6.
No setoff, counterclaim, reduction or diminution of any obligation or any
defense of any kind or nature which Company or any Account Party has or may
have against the beneficiary of any Letter of Credit shall be available
hereunder to Company or any Account Party against the Agent or any Bank.
Nothing contained in this Section 3.7 shall be deemed to prevent Company or
the Account Parties, after satisfaction in full of the absolute and
unconditional obligations of Company and the Account Parties hereunder, from
asserting in a separate action any claim, defense, set off or other right
which they (or any of them) may have against Agent or any Bank.
3.8 RISK UNDER LETTERS OF CREDIT. (a) In the issuance and the handling
of Letters of Credit and any security therefor, or any documents or
instruments given in connection therewith, Agent shall have the sole right to
take or refrain from taking any and all actions under or upon the Letters of
Credit.
(b) Subject to other terms and conditions of this Agreement,
Agent shall issue the Letters of Credit and shall hold the documents related
thereto in its own name and shall make all collections thereunder and
otherwise administer the Letters of Credit in accordance with Agent's
regularly established practices and procedures and, except pursuant to Section
13.3 hereof, Agent will have no further obligation with respect thereto. In
the administration of Letters of Credit, Agent shall not be liable for any
action taken or omitted on the advice of counsel, accountants, appraisers or
other experts selected by Agent with due care and Agent may rely upon any
notice, communication, certificate or other statement from Company, any
Account Party, beneficiaries of Letters of Credit, or any other Person which
Agent believes to be authentic. Agent will, upon request, furnish the Banks
with copies of Letter of Credit Agreements, Letters of Credit and documents
related thereto.
(c) In connection with the issuance and administration of
Letters of Credit and the assignments hereunder, Agent makes no representation
and shall, subject to Section 3.7 hereof, have no responsibility with respect
to (i) the obligations of Company or any Account Party or, the validity,
sufficiency or enforceability of any document or instrument given in
connection therewith, (ii) the financial condition of, any representations
made by, or any act or omission of Company, the applicable Account Party or
any other Person, or (iii) any failure or delay in exercising any rights or
powers possessed by Agent in its capacity as issuer of Letters of Credit in
the absence of its gross negligence or willful misconduct. Each of the Banks
expressly acknowledge that they have made and will continue to make their own
evaluations of Company's and the Account Parties' creditworthiness without
reliance on any representation of Agent or Agent's officers, agents and
employees.
(d) If at any time Agent shall recover any part of any
unreimbursed amount for any draw or other demand for payment under a Letter of
Credit, or any interest thereon, Agent shall receive same for the PRO RATA
benefit of the Banks in accordance with their respective Percentage interests
therein and shall promptly deliver to each Revolving Credit Bank its share
thereof, less such Bank's pro rata share of the costs of such recovery,
including court costs and attorney's fees. If at any time any Revolving Credit
Bank shall receive from any source whatsoever any payment on any such
unreimbursed amount or interest thereon in excess of such Bank's Percentage
share of such payment, such Bank will promptly pay over such excess to Agent,
for redistribution in accordance with this Agreement.
3.9 INDEMNIFICATION. (a) The Company and each Account Party hereby
indemnifies and agrees to hold harmless the Banks and the Agent, and their
respective officers, directors, employees and agents, from and against any and
all claims, damages, losses, liabilities, costs or expenses of any kind or
nature whatsoever which the Banks or the Agent or any such person may incur or
which may be claimed against any of them by reason of or in connection with
any Letter of Credit, and neither any Bank nor the Agent or any of their
respective officers, directors, employees or agents shall be liable or
responsible for: (i) the use which may be made of any Letter of Credit or for
any acts or omissions of any beneficiary in connection therewith; (ii) the
validity, sufficiency or genuineness of documents or of any endorsement
thereon, even if such documents should in fact prove to be in any or all
respects invalid, insufficient, fraudulent or forged; (iii) payment by the
Agent to the beneficiary under any Letter of Credit against presentation of
documents which do not comply with the terms of any Letter of Credit (unless
such payment resulted from the gross negligence or willful misconduct of the
Agent), including failure of any documents to bear any reference or adequate
reference to such Letter of Credit; (iv) any error, omission, interruption or
delay in transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit; or (v) any other event
or circumstance whatsoever arising in connection with any Letter of Credit
(unless such event or circumstance arose as a result of the gross negligence
or willful misconduct of the Agent); provided, however, that Company and
Account Parties shall not be required to indemnify the Banks and the Agent and
such other persons, and the Banks and Agent shall be liable to the Company and
the Account Parties to the extent, but only to the extent, of any direct, as
opposed to consequential or incidental, damages suffered by Company and/or the
Account Parties which were caused by the Agent's gross negligence, willful
misconduct or wrongful dishonor of any Letter of Credit after the presentation
to it by the beneficiary thereunder of a draft or other demand for payment and
other documentation strictly complying with the terms and conditions of such
Letter of Credit.
(b) It is understood that in making any payment under a Letter of
Credit the Agent will rely on documents presented to it under such Letter of
Credit as to any and all matters set forth therein without further
investigation and regardless of any notice or information to the contrary. It
is further acknowledged and agreed that Company or an Account Party may have
rights against the beneficiary or others in connection with any Letter of
Credit with respect to which the Banks are alleged to be liable and it shall
be a condition of the assertion of any liability of the Banks under this
Section that Company or applicable Account Party shall contemporaneously
pursue all remedies in respect of the alleged loss against such beneficiary
and any other parties obligated or liable in connection with such Letter of
Credit and any related transactions.
3.10 RIGHT OF REIMBURSEMENT. Each Revolving Credit Bank agrees to
reimburse the Agent on demand, pro rata in accordance with their Percentages,
for (i) the out-of-pocket costs and expenses of the Agent to be reimbursed by
Company or any Account Party pursuant to any Letter of Credit Agreement or any
Letter of Credit, to the extent not reimbursed by Company or Account Party and
(ii) any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, fees, expenses or disbursements of any kind
and nature whatsoever which may be imposed on, incurred by or asserted against
Agent (in its capacity as issuer of any Letter of Credit) in any way relating
to or arising out of this Agreement, any Letter of Credit, any documentation
or any transaction relating thereto, or any Letter of Credit Agreement, except
to the extent that such liabilities, losses, costs or expenses were incurred
by Agent solely as a result of Agent's gross negligence or willful misconduct
or wrongful dishonor of any Letter of Credit after the presentation to it by
the beneficiary thereunder of a draft or other demand for payment and other
documentation strictly complying with the terms and conditions of such Letter
of Credit.
4. SWING LINE CREDIT.
4.1 SWING LINE COMMITMENT. Swing Line Bank shall, on the terms and
subject to the conditions hereinafter set forth, make one or more advances
(each such advance being a "Swing Line Advance") to Company from time to time
on any Business Day during the period from the date hereof to (but excluding)
the Revolving Credit Maturity Date in an aggregate amount not to exceed Five
Million Dollars ($5,000,000) at any time outstanding; PROVIDED, however, that
after giving effect to all Swing Line Advances and all Revolving Credit
Advances requested to be made on such date, the aggregate principal amount of
all outstanding Advances PLUS the aggregate undrawn amount of all Letters of
Credit then outstanding PLUS the face amount of all Letters of Credit
requested but not yet issued, PLUS unreimbursed Letter of Credit Obligations
shall not exceed the then applicable Revolving Credit Aggregate Commitment.
All Swing Line Advances shall be evidenced by the Swing Line Note, under which
advances, repayments and readvances may be made, subject to the terms and
conditions of this Agreement. Each Swing Line Advance shall mature and the
principal amount thereof shall be due and payable by Company on the last day
of the Interest Period applicable thereto. In no event whatsoever shall any
outstanding Swing Line Advance be deemed to reduce, modify or affect any
Bank's commitment to make Revolving Credit Advances based upon its Percentage.
4.2 ACCRUAL OF INTEREST; MARGIN ADJUSTMENTS. Each Swing Line Advance
shall, from time to time after the date of such Advance, bear interest at its
Applicable Interest Rate. The amount and date of each Swing Line Advance, its
Applicable Interest Rate, its Interest Period, and the amount and date of any
repayment shall be noted on Agent's records, which records will be conclusive
evidence thereof, absent manifest error; PROVIDED, however, that any failure
by the Agent to record any such information shall not relieve Company of its
obligation to repay the outstanding principal amount of such Advance, all
interest accrued thereon and any amount payable with respect thereto in
accordance with the terms of this Agreement and the Loan Documents.
4.3 REQUESTS FOR SWING LINE ADVANCES. Company may request a Swing Line
Advance only after delivery to Swing Line Bank of a Request for Swing Line
Advance executed by an authorized officer of Company, subject to the following
and to the remaining provisions hereof:
(a) each such Request for Swing Line Advance shall set forth the
information required on the Request for Swing Line Advance form annexed hereto
as EXHIBIT "E", including without limitation:
(i) the proposed date of Swing Line Advance, which must be
a Business Day;
(ii) whether such Swing Line Advance is to be a Prime-based
Advance or Quoted Rate Advance; and
(iii) the duration of the Interest Period applicable
thereto;
(b) each such Request for Swing Line Advance shall be delivered
to Swing Line Bank by 12:00 p.m. (Detroit time) on the proposed date of the
Swing Line Advance;
(c) the principal amount of such requested Swing Line Advance,
plus the principal amount of all other Advances then outstanding hereunder,
plus the aggregate undrawn portion of any Letter of Credit which shall be
outstanding as of the date of the requested Swing Line Advance, plus the
aggregate face amount of Letters of Credit requested but not yet issued, plus
the aggregate amount of all outstanding Letter of Credit Obligations shall not
exceed the then applicable Revolving Credit Aggregate Commitment;
(d) the principal amount of such Swing Line Advance shall be at
least Two Hundred Fifty Thousand Dollars ($250,000) or a larger multiple
thereof;
(e) each Request for Swing Line Advance, once delivered to Swing
Line Bank, shall not be revocable by Company, and shall constitute and include
a certification by the Company as of the date thereof that:
(i) both before and after the Swing Line Advance, the
obligations of the Company and the Guarantors set forth in this
Agreement and the Loan Documents, as applicable, are valid, binding and
enforceable obligations of such parties;
(ii) to the best knowledge of Company all conditions to
Advances (including, without limitation, Section 6.8 hereof) have been
satisfied; and
(iii) both before and after the Advance, the representations
and warranties contained in this Agreement and the Loan Documents are
true and correct in all material respects.
Swing Line Bank shall promptly deliver to Agent by telecopier a copy of any
Request for Swing Line Advance received.
4.4 DISBURSEMENT OF SWING LINE ADVANCES. Subject to submission of an
executed Request for Swing Line Advance by Company without exceptions noted in
the compliance certification therein and to the other terms and conditions
hereof, Swing Line Bank shall make available to Company the amount so
requested, in same day funds, not later than 4:00 p.m. (Detroit time) on the
date of such Swing Line Advance by credit to an account of Company maintained
with Swing Line Bank or to such other account or third party as Company may
reasonably direct. Swing Line Bank shall promptly notify Agent of any Swing
Line Advance by telephone, telex or telecopier.
4.5 REFUNDING OF OR PARTICIPATION INTEREST IN SWING LINE ADVANCES.
(a) The Agent, at any time in its sole and absolute discretion,
may (or, upon the request of the Swing Line Bank, shall) on behalf of the
Company (which hereby irrevocably directs the Agent to act on its behalf)
request each Revolving Credit Bank (including the Swing Line Bank in its
capacity as a Revolving Credit Bank) to make a Prime-based Advance of the
Revolving Credit in an amount equal to such Revolving Credit Bank's Percentage
of the principal amount of the Swing Line Advances (the "Refunded Swing Line
Advances") outstanding on the date such notice is given; PROVIDED that (i) at
any time as there shall be a Swing Line Advance outstanding for more than
thirty days, the Agent shall, on behalf of the Company (which hereby
irrevocably directs the Agent to act on its behalf), promptly request each
Revolving Credit Bank (including the Swing Line Bank) to make a Prime-based
Advance of the Revolving Credit in an amount equal to such Revolving Credit
Bank's Percentage of the principal amount of such outstanding Swing Line
Advance and (ii) Swing Line Advances shall be prepaid by the Company in
accordance with the provisions of Section 5.7 hereof. Unless any of the events
described in Section 10.1(j) shall have occurred (in which event the
procedures of paragraph (b) of this Section 4.5 shall apply) and regardless of
whether the conditions precedent set forth in this Agreement to the making of
a Revolving Credit Advance are then satisfied, each Revolving Credit Bank
shall make the proceeds of its Revolving Credit Advance available to the Agent
for the benefit of the Swing Line Bank at the office of the Agent specified in
Section 2.4(a) prior to 11:00 a.m. Detroit time, in funds immediately
available on the Business Day next succeeding the date such notice is given.
The proceeds of such Revolving Credit Advances shall be immediately applied to
repay the Refunded Swing Line Advances.
(b) If, prior to the making of a Revolving Credit Advances
pursuant to paragraph (a) of this Section 4.5, one of the events described in
Section 10.1(j) shall have occurred, each Revolving Credit Bank will, on the
date such Revolving Credit Advance was to have been made, purchase from the
Swing Line Bank an undivided participating interest in each Refunded Swing
Line Advance in an amount equal to its Percentage of such Refunded Swing Line
Advance. Each Bank will immediately transfer to the Agent, in immediately
available funds, the amount of its participation and upon receipt thereof the
Agent will deliver to such Bank a Swing Line Bank Participation Certificate in
the form of EXHIBIT "H' dated the date of receipt of such funds and in such
amount.
(c) Each Bank's obligation to make Revolving Credit Advances and
to purchase participation interests in accordance with clauses (a) and (b)
above shall be absolute and unconditional and shall not be affected by any
circumstance, including, without limitation, (i) any set-off, counterclaim,
recoupment, defense or other right which such Bank may have against Swing Line
Bank, the Company or any other Person for any reason whatsoever; (ii) the
occurrence or continuance of any Default or Event of Default; (iii) any
adverse change in the condition (financial or otherwise) of the Company or any
other Person; (iv) any breach of this Agreement by the Company or any other
Person; (v) any inability of the Company to satisfy the conditions precedent
to borrowing set forth in this Agreement on the date upon which such
participating interest is to be purchased or (vi) any other circumstance,
happening or event whatsoever, whether or not similar to any of the foregoing.
If any Bank does not make available to the Agent the amount required pursuant
to clause (a) or (b) above, as the case may be, the Agent shall be entitled to
recover such amount on demand from such Bank, together with interest thereon
for each day from the date of non-payment until such amount is paid in full at
the Federal Funds Effective Rate.
5. MARGIN ADJUSTMENTS; INTEREST PAYMENTS
5.1 MARGIN ADJUSTMENTS. Adjustments in the Margin applicable to
Eurocurrency-based Advances, based on Company's Moody's Rating and S&P Rating,
shall be implemented as follows:
(i) Such Margin adjustments shall be given prospective effect
only, effective as to each Eurocurrency-based Advance
outstanding hereunder upon the effective date of change in
the Moody's Rating or S&P Rating, as the case may be, in
each case with no retroactivity or claw-back.
(ii) Such Margin adjustments under this Section 5.1 shall be made
irrespective of, and in addition to, any other interest rate
adjustments hereunder.
5.2 PRIME-BASED INTEREST PAYMENTS. Interest on the unpaid balance of
all Prime-based Advances from time to time outstanding shall accrue from the
date of such Advances until paid, at a per annum interest rate equal to the
Prime-based Rate, and shall be payable in immediately available funds
quarterly commencing on the first Business Day of the fiscal quarter next
succeeding the date the initial Advance is made and on the first Business Day
of each fiscal quarter thereafter. Interest accruing at the Prime-based Rate
shall be computed on the basis of a 360 day year and assessed for the actual
number of days elapsed, and in such computation effect shall be given to any
change in the interest rate resulting from a change in the Prime-based Rate on
the date of such change in the Prime-based Rate.
5.3 EUROCURRENCY-BASED INTEREST PAYMENTS. Interest on each
Eurocurrency-based Advance having a related Eurocurrency-Interest Period of 3
months or less shall accrue at its Eurocurrency-based Rate and shall be
payable in immediately available funds on the last day of the Interest Period
applicable thereto. Interest shall be payable in immediately available funds
on each Eurocurrency-based Advance outstanding from time to time having a
Eurocurrency-Interest Period of 6 months or longer, at intervals of 3 months
after the first day of the applicable Interest Period, and shall also be
payable on the last day of the Interest Period applicable thereto. Interest
accruing at the Eurocurrency-based Rate shall be computed on the basis of a
360 day year and assessed for the actual number of days elapsed from the first
day of the Interest Period applicable thereto to, but not including, the last
day thereof.
5.4 QUOTED RATE INTEREST PAYMENTS. Interest on each Quoted Rate
Advance shall accrue at its Quoted Rate and shall be payable in immediately
available funds on the last day of the Interest Period applicable thereto.
Interest accruing at the Quoted Rate shall be computed on the basis of a 360
day year and assessed for the actual number of days elapsed from the first day
of the Interest Period applicable thereto to, but not including, the last day
thereof.
5.5 INTEREST PAYMENTS ON CONVERSIONS. Notwithstanding anything to the
contrary in Sections 5.2 and 5.3 above, all accrued and unpaid interest on any
Revolving Credit Advance refunded or converted pursuant to Section 2.3 hereof
shall be due and payable in full on the date such Advance is refunded or
converted.
5.6 INTEREST ON DEFAULT. Notwithstanding anything to the contrary set
forth in Sections 5.2, 5.3 and 5.4, in the event and so long as any Event of
Default shall exist under this Agreement, interest shall be payable daily on
the principal amount of all Advances from time to time outstanding (and on all
other monetary obligations of Company hereunder and under the other Loan
Documents) at a per annum rate equal to the Applicable Interest Rate (and,
with respect to Eurocurrency-based Advances, calculated on the basis of the
maximum Margin chargeable hereunder, whether or not otherwise applicable) in
respect of each such Advance, plus, in the case of Eurocurrency-based Advances
and Quoted Rate Advances, three percent (3%) per annum for the remainder of
the then existing Interest Period, if any, and at all other such times and for
all Prime-based Advances, at a per annum rate equal to the Prime-based Rate,
plus three percent (3%).
5.7 PREPAYMENT. Company may prepay all or part of the outstanding
balance of any Prime-based Advance(s) (subject to not less than one (1)
Business Day's notice to Agent) at any time, provided that the amount of any
partial prepayment shall be at least Five Hundred Thousand Dollars ($500,000)
and the aggregate balance of Prime-based Advance(s) remaining outstanding, if
any, under the Notes shall be at least Five Hundred Thousand Dollars
($500,000). Company may prepay Quoted Rate Advances only on the last day of
the Interest Period applicable thereto. Company may prepay all or part of any
Eurocurrency-based Advance (subject to not less than three (3) Business Days'
notice to Agent) only on the last day of the Interest Period applicable
thereto (subject to the provisions of Section 10.1 hereof), provided that the
amount of any such partial prepayment shall be at least Five Hundred Thousand
Dollars ($500,000), and the unpaid portion of such Advance which is refunded
or converted under Section 2.3, if any, hereof shall be at least Five Million
Dollars ($5,000,000). Any prepayment made in accordance with this Section
shall be without premium, penalty or prejudice to Company
s right to reborrow
under the terms of this Agreement and shall not cause any reduction in the
Revolving Credit Aggregate Commitment. Any other prepayment of all or any
portion of the Revolving Credit, whether by acceleration, mandatory or
required prepayment or otherwise, shall be subject to Section 12.1 hereof, but
otherwise without premium, penalty or prejudice.
6. CONDITIONS
A. The obligations of Banks to make the initial Advance under this
Agreement are subject to the following conditions:
6.1 EXECUTION OF NOTES AND THIS AGREEMENT. Company shall have executed
and delivered to Agent for the account of each Bank, the Notes and this
Agreement (including all schedules, exhibits, certificates, opinions,
Financial Statements and other documents to be delivered pursuant hereto),
and, as applicable, the Loan Documents, and such Notes, this Agreement, and
the other Loan Documents shall be in full force and effect.
6.2 CORPORATE AUTHORITY. Agent shall have received, with a counterpart
thereof for each Bank: (i) certified copies of resolutions of the Board of
Directors of Company evidencing approval of the form of this Agreement, the
other Loan Documents and the Notes and authorizing the execution and delivery
thereof and the borrowing of Advances hereunder and of each of Company and its
Subsidiaries evidencing approval of its entering into the Collateral
Documents; and (ii) (A) certified copies of Company's and each of its
Subsidiaries' articles of incorporation and bylaws or other constituent
documents certified as true and complete as of a recent date by the
appropriate official of the jurisdiction of incorporation of each such entity
and (B) a certificate of good standing from the state or other jurisdictions
of Company's and each of its Subsidiaries' incorporation, and from every state
or other jurisdiction in which either Company or any of its Subsidiaries is
qualified to do business, if issued by such jurisdictions, subject to the
limitations (as to qualification and authorization to do business) contained
in Section 7.1 hereof.
6.3 COMPANY COLLATERAL DOCUMENTS. As security for all Indebtedness of
Company to the Banks hereunder, Company shall have furnished, executed and
delivered to the Agent, or caused to be furnished, executed and delivered to
the Agent, prior to or concurrently with the initial borrowing hereunder, in
form and substance satisfactory to the Agent and the Banks and supported by
appropriate resolutions in certified form authorizing same, the Company
Collateral Documents pursuant to which Company grants to Agent, for the
benefit of the Banks, a security interest in all of its real and personal
property, including without limitation, patents and trademarks, and all shares
of the issued and outstanding stock of each Subsidiary directly owned by
Company or other ownership interest in any Joint Venture directly owned by
Company. In addition, if required or advisable under applicable law to perfect
the liens granted thereby, the Agent shall have received, concurrently with or
prior to the making of Advances hereunder, appropriate financing statements,
collateral and other documents covering such Collateral executed and delivered
by the appropriate parties, including without limitation, original
certificates evidencing any shares of stock pledged to Agent on behalf of the
Banks under the Company Collateral Documents.
6.4 SUBSIDIARIES COLLATERAL DOCUMENTS. As security for all
Indebtedness of Company to the Banks hereunder, each of Company's Subsidiaries
shall have furnished, executed, and delivered to the Agent, or caused to be
furnished, executed and delivered to the Agent, prior to or concurrently with
the initial borrowing hereunder, in form and substance satisfactory to Agent
and the Banks and supported by appropriate resolutions in certified form
authorizing same, the Subsidiaries Collateral Documents pursuant to which (i)
each Wholly-Owned Subsidiary grants Agent, for the benefit of the Banks, a
security interest in all of its real and personal property, including without
limitation, patents and trademarks, and all shares of the issued and
outstanding stock of each Subsidiary directly owned by such Wholly-Owned
Subsidiary or other ownership interest in each Joint Venture directly owned by
such Wholly-Owned Subsidiary, (ii) each of the other Subsidiaries grants to
Agent, for the benefit of the Banks, a security interest in all of the issued
and outstanding stock of each Subsidiary directly owned by such Subsidiary and
the capital stock or other ownership interest in each Joint Venture directly
owned by such Subsidiary and (iii) each Wholly-Owned Subsidiary guaranties the
repayment of the Indebtedness subject to the terms of this Agreement. In
addition, if required or advisable under applicable law to perfect the liens
granted thereby, the Agent shall have received, concurrently with the making
of Advances hereunder, appropriate financing statements, collateral and other
documents covering such Collateral executed and delivered by the appropriate
parties, including without limitation, original certificates evidencing any
shares of stock pledged to Agent on behalf of the Banks under the Subsidiaries
Collateral Documents.
6.5 LICENSES, PERMITS, ETC. The Agent shall have received, with a
counterpart for each Bank, copies of each authorization, license, permit,
consent, order or approval of, or registration, declaration or filing with,
any governmental authority or any securities exchange or other Person
(including without limitation any securities holder) obtained or made by the
Company, any of Company's Subsidiaries, or any other Person (as of the
relevant date of Advance or loan hereunder) in connection with the
transactions contemplated by this Agreement or the Loan Documents.
6.6 REPRESENTATIONS AND WARRANTIES -- ALL PARTIES. The representations
and warranties made by Company, its Subsidiaries or any other party to any of
the Loan Documents (excluding the Agent and Banks) under this Agreement or any
of the Loan Documents, and the representations and warranties of any of the
foregoing which are contained in any certificate, document or financial or
other statement furnished at any time hereunder or thereunder or in connection
herewith or therewith shall have been true and correct in all material
respects when made and shall be true and correct in all material respects on
and as of the date of the making of any Advance hereunder except as may be
affected by subsequent transactions permitted by this Agreement.
6.7 OPINION OF COUNSEL. Company and each of its Subsidiaries shall
furnish Agent prior to the initial Advance under this Agreement, and with
signed copies for each Bank, opinions of counsel to the Company and each of
its Subsidiaries, dated the date hereof, and covering such matters as required
by and otherwise satisfactory in form and substance to the Agent and each of
the Banks.
6.8 NO DEFAULT; NO MATERIAL ADVERSE CHANGE. No Default or Event of
Default shall have occurred and be continuing, and there shall have been no
material adverse change in the financial condition, properties, business,
prospects of, results or operations of the Company and its Subsidiaries (taken
as a whole) from June 30, 1997 to the date of the making of the first Advance
hereunder.
6.9 COMPANY'S CERTIFICATE. The Agent shall have received, with a
signed counterpart for each Bank, a certificate of a responsible senior
officer of Company dated the date of the making of Advances hereunder, stating
that to the best of his or her knowledge after due inquiry, the conditions of
paragraphs 6.1 and 6.5 through 6.7, hereof have been fully satisfied.
6.10 OTHER DOCUMENTS AND INSTRUMENTS. The Agent shall have received,
with a photocopy for each Bank, such other instruments and documents as each
of the Banks may reasonably request in connection with the making of loans
hereunder, and all such instruments and documents shall be satisfactory in
form and substance to the Banks in the exercise of their reasonable
discretion.
6.11 CONTINUING CONDITIONS.
A. The obligations of the Banks to make Advances or loans under this
Agreement shall be subject to the continuing conditions that all documents
executed or submitted pursuant hereto shall be satisfactory in form and
substance (consistent with the terms hereof) to Agent and its counsel and to
each of the Banks; Agent and its counsel and each of the Banks and their
respective counsel shall have received all information, and such counterpart
originals or such certified or other copies of such materials, as Agent or its
counsel and each of the Banks and their respective counsel may reasonably
request; and all other legal matters relating to the transactions contemplated
by this Agreement (including, without limitation, matters arising from time to
time as a result of changes occurring with respect to any statutory,
regulatory or decisional law applicable hereto) shall be satisfactory to
counsel to Agent and counsel to each of the Banks in the exercise of their
reasonable discretion.
B. The obligations of Banks to make all other Advances under this
Agreement are subject to the conditions set forth in Sections 6.3, 6.4, 6.6,
6.8, 6.9, 6.10 and 6.11 hereof, provided, however, if an Advance is a
refunding or conversion of an Advance, such Advance shall not be subject to
Section 6.9 hereof.
7. REPRESENTATIONS AND WARRANTIES
Company represents and warrants and such representations and warranties
shall be deemed to be continuing representations and warranties until the
Revolving Credit Maturity Date and thereafter until final payment in full of
the Indebtedness and the performance by Company of all of its other
obligations under this Agreement:
7.1 CORPORATE AUTHORITY. Each of Company and its Subsidiaries is a
corporation duly organized and existing in good standing under the laws of the
applicable jurisdiction of organization, charter or incorporation; it is duly
qualified and authorized to do business as a corporation or foreign
corporation in each jurisdiction where the character of its assets or the
nature of its activities makes such qualification necessary, except where such
failure to qualify and be authorized to do business will not have a material
adverse impact on the financial condition of Company and its Subsidiaries
(taken as a whole).
7.2 DUE AUTHORIZATION - COMPANY. Execution, delivery and performance
of this Agreement, the Company Collateral Documents, the other Loan Documents
(to the extent applicable) and any other documents and instruments required
under or in connection with this Agreement or the other Loan Documents (or to
be so executed and delivered), and the issuance of the Notes by Company are
within its corporate powers, have been duly authorized, are not in
contravention of law or the terms of Company's Articles of Incorporation or
Bylaws, and, except as have been previously obtained or as referred to in
Section 7.18, below, and except for the filing of financing statements in
connection with the Collateral Documents, do not require the consent or
approval, material to the transactions contemplated by this Agreement or the
Loan Documents, of any governmental body, agency or authority not previously
delivered under Section 6.5 hereof.
7.3 DUE AUTHORIZATION - SUBSIDIARIES. Execution, delivery and
performance of the Subsidiaries Collateral Documents, the other Loan Documents
(to the extent applicable) and all other documents and instruments required of
Companies' Subsidiaries under or in connection with this Agreement or the Loan
Documents (or to be so executed and delivered) are within the corporate powers
of such Subsidiaries, have been duly authorized, are not in contravention of
law or the terms of any of the Subsidiaries' Articles of Incorporation or
Bylaws, and, except as have been previously obtained or as referred to in
Section 7.18, below, and except for the filing of financing statements in
connection with the Collateral Documents, do not require the consent or
approval, material to the transactions contemplated by this Agreement, and the
Loan Documents, of any governmental body, agency or authority not previously
obtained and delivered to Agent under Section 6.5 hereof.
7.4 TITLE TO COLLATERAL - COMPANY. Company has good and valid title to
the property pledged, mortgaged or otherwise encumbered or to be encumbered
under the Company Collateral Documents, subject to Liens permitted under
Section 9.5 hereof.
7.5 TITLE TO COLLATERAL - SUBSIDIARIES. Each of Company's Subsidiaries
has good and valid title to the property pledged, mortgaged or otherwise
encumbered or to be encumbered under the Subsidiaries Collateral Documents,
subject to Liens permitted under Section 9.5 hereof.
7.6 ENCUMBRANCES. There are no security interests in, liens,
mortgages, or other encumbrances on and no financing statements on file with
respect to, any of the property pledged, mortgaged or otherwise encumbered (or
to be encumbered) under the Collateral Documents, except Liens permitted under
Section 9.5 hereof.
7.7 CAPITAL STOCK; SHAREHOLDERS; SUBSIDIARIES. As of the date
hereof, (a) all present Wholly-Owned Subsidiaries and other Subsidiaries of
Company are set forth in the attached SCHEDULE 7.7, along with the percentage
of the outstanding voting stock in each such Wholly-Owned or other such
Subsidiary owned by Company or by a Subsidiary of Company (and identifying
that Subsidiary); and (b) other than as disclosed on SCHEDULE 7.7, there are
no outstanding options, warrants or rights to purchase, nor any agreement for
the subscription, purchase or acquisition of, any shares of the capital stock
of any of Company's Subsidiaries.
7.8 INVESTMENTS IN NON-SUBSIDIARIES. SCHEDULE 7.8 annexed hereto
contains a full and complete list of all Joint Ventures in which each of the
Subsidiaries has on ownership interest as of the date hereof, along with the
percentage voting stock or control of each such Subsidiary in the Joint
Ventures.
7.9 TAXES. Each of Company and its Subsidiaries has filed on or before
their respective due dates, all federal, state and foreign tax returns which
are required to be filed or has obtained extensions for filing such tax
returns and is not delinquent in filing such returns in accordance with such
extensions and has paid all taxes which have become due pursuant to those
returns or pursuant to any assessments received by any such party, as the case
may be, to the extent such taxes have become due, except to the extent such
tax payments are being actively contested in good faith by appropriate
proceedings and with respect to which adequate provision has been made on the
books of Company as may be required by GAAP.
7.10 NO DEFAULTS. There exists no default under the provisions of any
instrument evidencing any Debt of the Company or any of its Subsidiaries which
is permitted hereunder or any Debt connected with any of the Permitted
Encumbrances, or of any agreement relating thereto.
7.11 ENFORCEABILITY OF AGREEMENT AND LOAN DOCUMENTS -- COMPANY. This
Agreement, each of the other Loan Documents to which Company is a party, and
all other certificates, agreements and documents executed and delivered by
Company under or in connection herewith or therewith have each been duly
executed and delivered by its duly authorized officers and constitute the
valid and binding obligations of Company, enforceable in accordance with their
respective terms, except as enforcement thereof may be limited by applicable
bankruptcy, reorganization, insolvency, moratorium or similar laws affecting
the enforcement of creditor's rights, generally and by general principles of
equity.
7.12 ENFORCEABILITY OF LOAN DOCUMENTS -- SUBSIDIARIES. The Loan
Documents to which each of the Subsidiaries is a party, and all certificates,
documents and agreements executed in connection therewith by the Subsidiaries
have each been duly executed and delivered by the respective duly authorized
officers of the Subsidiaries and constitute the valid and binding obligations
of the Subsidiaries, enforceable in accordance with their respective terms,
except as enforcement thereof may be limited by applicable bankruptcy,
reorganization, insolvency, moratorium or similar laws affecting the
enforcement of creditor's rights, generally and by general principles of
equity.
7.13 COMPLIANCE WITH LAWS. Company and its Subsidiaries each has
complied with all applicable laws, including without limitation, Hazardous
Material Laws, to the extent that failure to comply therewith would have a
material adverse effect upon Company and its Subsidiaries (taken as a whole).
7.14 NON-CONTRAVENTION -- COMPANY. The execution, delivery and
performance of this Agreement and the other Loan Documents are not in
contravention of the terms of any material indenture, agreement or undertaking
to which Company or any of its Subsidiaries is a party or by which it or its
properties are bound or affected.
7.15 NON-CONTRAVENTION -- SUBSIDIARIES. The execution, delivery and
performance of those Loan Documents signed by the Subsidiaries, and any other
documents and instruments required under or in connection with this Agreement
by the Subsidiaries are not in contravention of the terms of any material
indenture, agreement or undertaking to which any Subsidiary or Company is a
party or by which it or its properties are bound or affected.
7.16 NO LITIGATION -- COMPANY. No litigation (including derivative
actions), arbitration proceeding, labor controversy or governmental
investigation or proceeding is pending or, to the Company's knowledge,
threatened against the Company which might reasonably be expected to
materially and adversely affect the financial condition, operations, assets,
business, properties or prospects of Company, except as set forth in SCHEDULE
7.16 hereto. Except as set forth in SCHEDULE 7.16, there is not outstanding
against Company any judgment, decree, injunction, rule, or order of any court,
government, department, commission, agency, instrumentality or arbitrator nor
is Company in violation of any applicable law, regulation, ordinance, order,
injunction, decree or requirement of any governmental body or court where such
violation would reasonably be expected to have a material adverse effect on
Company.
7.17 NO LITIGATION -- SUBSIDIARIES. No litigation (including derivative
actions), arbitration proceeding, labor controversy or governmental
investigation or proceeding is pending or, to the Company's knowledge,
threatened against any Subsidiary which might reasonably be expected to
materially and adversely affect the financial condition, operations, assets,
business, properties or prospects of Company and its Subsidiaries taken as a
whole, except as set forth in SCHEDULE 7.17 hereto. Except as set forth in
SCHEDULE 7.17, there is not outstanding against any Subsidiary any judgment,
decree, injunction, rule, or order of any court, government, department,
commission, agency, instrumentality or arbitrator nor is any such party in
violation of any applicable law, regulation, ordinance, order, injunction,
decree or requirement of any governmental body or court where such violation
would reasonably be expected to have a material adverse effect on Company and
its Subsidiaries (taken as a whole).
7.18 CONSENTS, APPROVALS AND FILINGS, ETC. Except for the filing of
financing statements in connection with the Collateral Documents and except as
have been previously obtained, no authorization, consent, approval, license,
qualification or formal exemption from, nor any filing, declaration or
registration with, any court, governmental agency or regulatory authority or
any securities exchange or any other Person (whether or not governmental) is
required in connection with the execution, delivery and performance: (i) by
Company of this Agreement, any of the Loan Documents to which it is a party;
and (ii) by any Subsidiary, of any of the Loan Documents to which any
Subsidiary is a party, and (iii) by Company and the Subsidiaries, of the
liens, pledges, mortgages, security interests or other encumbrances granted,
conveyed or otherwise established (or to be granted, conveyed or otherwise
established) by or under this Agreement or the Loan Documents. All such
authorizations, consents, approvals, licenses, qualifications, exemptions,
filings, declarations and registrations which have previously been obtained or
made, as the case may be, are in full force and effect and are not the subject
of any attack, or to the knowledge of Company threatened attack by appeal or
direct proceeding or otherwise which would have a material adverse effect on
the financial condition of Company and its Subsidiaries (taken as a whole).
7.19 AGREEMENTS AFFECTING FINANCIAL CONDITION. Neither the Company nor
any of its Subsidiaries is party to any agreement or instrument or subject to
any charter or other corporate restriction which materially adversely affects
the financial condition or operations of the Company and its Subsidiaries
(taken as a whole).
7.20 NO INVESTMENT COMPANY OR MARGIN STOCK. Neither the Company nor any
of its Subsidiaries is an "investment company" within the meaning of the
Investment Company Act of 1940, as amended. Neither the Company nor any of its
Subsidiaries is engaged principally, or as one of its important activities,
directly or indirectly, in the business of extending credit for the purpose of
purchasing or carrying margin stock. None of the proceeds of any of the Notes
will be used by the Company or any of its Subsidiaries to purchase or carry
margin stock or will be made available by the Company or any of its
Subsidiaries in any manner to any other Person to enable or assist such Person
in purchasing or carrying margin stock. Terms for which meanings are provided
in Regulation U of the Board of Governors of the Federal Reserve System or any
regulations substituted therefor, as from time to time in effect, are used in
this paragraph with such meanings.
7.21 ERISA. Neither Company nor any of its Subsidiaries maintains or
contributes to any Pension Plan subject to Title IV of ERISA, except as set
forth on SCHEDULE 7.21 hereto; and there is no accumulated funding deficiency
within the meaning of ERISA, or any existing liability with respect to any of
the Pension Plans owed to the Pension Benefit Guaranty Corporation or any
successor thereto, and no "reportable event" or "prohibited transaction", as
defined in ERISA, has occurred with respect to any Pension Plan, and all such
Pension Plans are in material compliance with the requirements of the Internal
Revenue Code and ERISA (and, if applicable, any comparable foreign law
provisions).
7.22 CONDITIONS AFFECTING BUSINESS OR PROPERTIES. Neither the
respective businesses nor the properties of Company or any of its Subsidiaries
is affected by any fire, explosion, accident, strike, lockout or other
dispute, drought, storm, hail, earthquake, embargo, Act of God or other
casualty which materially adversely affects, or if such event or condition
were to continue for more than ten (10) additional days would reasonably be
expected to materially adversely affect the businesses or properties of
Company and its Subsidiaries (taken as a whole).
7.23 ENVIRONMENTAL AND SAFETY MATTERS. (a) Each of the Company and its
Subsidiaries is in compliance with all federal, state and local laws,
ordinances and regulations relating to safety and industrial hygiene or to the
environment, including without limitation all Hazardous Materials Laws in
jurisdictions in which the Company or its Subsidiaries owns or operates, or
has owned or operated, a facility or site, or arranges or has arranged for
disposal or treatment of hazardous substances, solid waste, or other wastes,
accepts or has accepted for transport any hazardous substances, solid wastes
or other wastes or holds or has held any interest in real property or
otherwise, except for De Minimis Matters or as otherwise disclosed on SCHEDULE
7.23 hereto, and as to such matters disclosed on such Schedule, none will have
a material adverse effect on the financial condition or businesses of the
Company and its Subsidiaries (taken as a whole).
(b) No demand, claim, notice, suit, suit in equity, action,
administrative action, investigation or inquiry whether brought by any
governmental authority, private person or entity or otherwise, arising under,
relating to or in connection with any applicable Hazardous Materials Laws is
pending or, to the best knowledge of Company, after due investigation,
threatened against the Company or any of its Subsidiaries, any real property
in which the Company or any of its Subsidiaries holds or has held an interest
or any past or present operation of the Company or any of its Subsidiaries,
except as disclosed on SCHEDULE 7.23 hereto, and as to such matters disclosed
on such Schedule, none will have a material adverse effect on the financial
condition or business of the Company and its Subsidiaries (taken as a whole).
(c) Neither the Company nor any of its Subsidiaries (i) is, to
the best knowledge of Company, after due investigation, the subject of any
federal or state investigation evaluating whether any remedial action is
needed to respond to a release of any toxic substances, radioactive materials,
hazardous wastes or related materials into the environment, (ii) has received
any notice of any toxic substances, radioactive materials, hazardous waste or
related materials in, or upon any of its properties in violation of any
applicable Hazardous Materials Laws, or (iii) knows of any basis for any such
investigation, notice or violation, except as disclosed on SCHEDULE 7.23
hereto, and as to such matters disclosed on such Schedule, none will have a
material adverse effect on the financial condition or business of Company and
its Subsidiaries (taken as a whole).
(d) No release, threatened release or disposal of hazardous
waste, solid waste or other wastes is occurring or, to the best knowledge of
Company after due investigation, has occurred on, under or to any real
property in which the Company or any of its Subsidiaries holds any interest or
on which performs any of its operations, in violation of any Hazardous
Material Law except as disclosed on SCHEDULE 7.23 hereto, and as to such
matters disclosed on such Schedule, none will have a material adverse effect
on the financial condition or business of the Company and its Subsidiaries
(taken as a whole).
7.24 ACCURACY OF INFORMATION. Each of the Company's Financial
Statements previously furnished to Agent and the Banks prior to the date of
this Agreement, has been prepared in accordance with GAAP and is complete and
correct in all material respects and fairly presents the financial condition
of Company and the results of its operations for the periods covered thereby;
since June 30, 1997 there has been no material adverse change in the financial
condition of Company and its Subsidiaries (taken as a whole); to the best
knowledge of Company, neither Company nor any of its Subsidiaries has any
contingent obligations (including any liability for taxes) not disclosed by or
reserved against in the June 30, 1997 balance sheets, as applicable, except as
set forth on SCHEDULE 7.24 hereof, and at the present time there are no
unrealized or anticipated losses from any present commitment of Company or any
of its Subsidiaries.
7.25 FOREIGN EMPLOYEE BENEFIT PLANS. Neither the Company nor any
Subsidiary is now maintaining or contributing to or has ever maintained or
contributed to any Foreign Employee Benefit Plan. Each Foreign Employee
Benefit Plan established after the date hereof is in compliance in all
material respects with all laws, regulations and rules applicable thereto and
the respective requirements of the governing documents for such plan. With
respect to any Foreign Employee Benefit Plan established after the date hereof
and maintained or contributed to by the Company, any of its Subsidiaries or
any ERISA Affiliate (other than a Foreign Pension Plan) reasonable reserves
have been established where required by ordinary accounting practices in the
jurisdiction in which such plan is maintained or, in the case of an ERISA
Affiliate, the failure to establish such reserves would not have or would not
be reasonably likely to have, a material adverse effect on Company and its
Subsidiaries (taken as a whole). There are no actions, suits or claims other
than routine claims for benefits pending or threatened against the Company,
any of its Subsidiaries or any ERISA Affiliate with respect to any Foreign
Employee Benefit Plan established after the date hereof or, in the case of an
ERISA Affiliate, such actions, suits or claims would not have or would not be
reasonably likely to have, a material adverse effect on Company and its
Subsidiaries (taken as a whole).
8. AFFIRMATIVE COVENANTS
Company covenants and agrees that it will, and, as applicable, it will
cause each of its Subsidiaries, until the Revolving Credit Maturity Date and
thereafter until final payment in full of the Indebtedness and the performance
by the Company of all other obligations under this Agreement and the other
Loan Documents:
8.1 PRESERVATION OF EXISTENCE, ETC. Except as otherwise permitted
under this Agreement: (i) preserve and maintain its existence and such of its
rights, licenses, and privileges as are material to the business and
operations conducted by it; (ii) qualify and remain qualified to do business
in each jurisdiction in which such qualification is material to its business
and operations or ownership of its properties; (iii) continue to conduct and
operate its businesses substantially as conducted and operated during the
present and preceding fiscal years; (iv) at all times maintain, preserve and
protect all of its franchises and trade names and preserve all the remainder
of its property and keep the same in good repair, working order and condition,
if the failure to do so in any instance would have a material adverse effect
on the financial condition of Company and its Subsidiaries (taken as a whole);
and (v) from time to time make, or cause to be made, all necessary or
appropriate repairs, replacements, betterments and improvements thereto such
that the businesses carried on in connection therewith may be properly and
advantageously conducted at all times, if the failure to do so in any instance
would have a material adverse effect on the financial condition of Company and
its Subsidiaries (taken as a whole).
8.2 KEEPING OF BOOKS. Keep proper books of record and account in which
full and correct entries shall be made of all of its financial transactions
and its assets and businesses so as to permit the presentation of Financial
Statements prepared in accordance with GAAP.
8.3 REPORTING REQUIREMENTS. Furnish Agent with copies for each Bank:
(a) as soon as possible, and in any event within three Business
Days after becoming aware of the occurrence of any Default or Event of
Default or any other event or occurrence which has or would reasonably
be expected to have a materially adverse effect upon the business,
property or financial condition of Company and its Subsidiaries (taken
as a whole), or upon Company's or any of its Subsidiaries' ability to
comply with its obligations hereunder or under any of the other Loan
Documents, a written statement of a responsible senior officer of the
Company setting forth details of such Default, Event of Default or other
event or occurrence and the action which the Company has taken or has
caused to be taken or proposes to take or cause to be taken with respect
thereto;
(b) as soon as available, and in any event within one hundred
twenty (120) days after and as of the end of each of Company's fiscal
years, (i) audited Financial Statements of the Company on a Consolidated
basis containing the balance sheet of the Company and its Consolidated
Subsidiaries as of the close of each such fiscal year, statements of
income and retained earnings and a statement of cash flows for each such
fiscal year, and such Financial Statements to be prepared in accordance
with GAAP and certified by independent certified public accountants of
recognized standing selected by Company and acceptable to the Majority
Banks and containing unqualified opinions as to the fairness of the
statements therein contained; and (ii) a Covenant Compliance Report;
(c) as soon as available, and in any event within forty-five
(45) days after and as of the end of each fiscal quarter of Company
(including the last quarter of each fiscal year), (i) copies of
Company's Form 10-Q reports and (ii) a Covenant Compliance Report;
(d) So long as the outstanding Indebtedness is greater than or
equal to fifty percent (50%) of the Revolving Credit Aggregate
Commitment, as soon as available and in any event within forty five (45)
days after the end of each fiscal quarter of Company (including the
last quarter of each fiscal year) Company's financial projections for
the period commencing with the last day of such quarter and ending on
the last day of the fiscal year during which the Revolving Credit
Maturity Date falls, and so long as no Indebtedness is outstanding under
this Agreement, as soon as available and in any event within one hundred
twenty (120) days after the end of each of Company's fiscal years,
Company's financial projections for the period commencing on the last
day of such fiscal year and ending on the last day of the fiscal year
during which the Revolving Credit Maturity Date falls;
(e) promptly upon receipt thereof, copies of all reports and
management letters prepared with respect to Company or any of its
Subsidiaries by any independent certified public accountants in
connection with any annual, interim or other audit or review of the
books of Company or its Subsidiaries, irrespective of the party
requesting such an audit or review;
(f) to the extent not previously delivered, promptly upon
becoming available, a copy of all Financial Statements, reports,
notices, proxy statements and other communications sent by the Company
or any of its Subsidiaries to their stockholders, and all regular and
periodic reports filed by the Company or any of its Subsidiaries with
any securities exchange, the Securities and Exchange Commission, the
Corporations and Securities Bureau of the Department of Commerce of the
State of Michigan (excluding annual reports) or any governmental
authorities succeeding to any or all of the functions of said commission
or bureau;
(g) promptly, and in form and substance reasonably satisfactory
to Agent and the requesting Banks, such other information as Agent or
the Majority Banks (acting through Agent) may reasonably request from
time to time, including, without limitation, if requested by the
Majority Banks appraisals of the Collateral on a basis acceptable to the
Majority Banks and by an appraiser or appraisers acceptable to them, and
additional Covenant Compliance Reports.
8.4 EBITDA. Maintain as of the last day of each fiscal quarter of
Company EBITDA of not less than Ninety Million Dollars ($90,000,000) for the
preceding four quarter period ending on such date.
8.5 FIXED CHARGE COVERAGE RATIO. Maintain as of the end of each fiscal
quarter of Company a Fixed Charge Coverage Ratio of not less than 1.35 to 1.0.
8.6 SENIOR DEBT TO EBITDA RATIO. Maintain as of the end of each fiscal
quarter of Company a Senior Debt to EBITDA Ratio of not more than 4.0 to 1.0.
8.7 TAXES. Pay and discharge all taxes and other governmental charges,
and all material contractual obligations calling for the payment of money,
before the same shall become overdue, unless and to the extent only that such
payment is being contested in good faith by appropriate proceedings and is
reserved for, as required by GAAP, on its balance sheet.
8.8 INSPECTIONS. Permit Agent and each Bank, through their authorized
attorneys, accountants and representatives to examine Company's and each of
its Subsidiaries' books, accounts, records, ledgers and assets and properties
of every kind and description (including any and all Collateral) wherever
located at all reasonable times during normal business hours, upon reasonable
oral or written request of Agent or such Bank, which shall include collateral
audits at Company's sole cost and expense (provided that prior to the
occurrence of an Event of Default, Company shall not be required to reimburse
Agent or any Bank for the cost of more than one collateral audit per year);
and permit Agent and each Bank or their authorized representatives, at
reasonable times and intervals, to visit all of their respective offices,
discuss their respective financial matters with their respective officers and
independent certified public accountants, and, by this provision, Company
authorizes such accountants to discuss the finances and affairs of Company and
its Subsidiaries (provided that Company is given an opportunity to participate
in such discussions) and examine any of its or their books and other corporate
records.
8.9 FURTHER ASSURANCES; FINANCING STATEMENTS. Furnish to the Agent, at
Company's sole expense, upon Majority Banks' (or Agent's) request, in form
satisfactory to the Majority Banks, assignments, lien instruments or other
security instruments, consents, acknowledgments, subordinations and financing
statements covering any or all of the Collateral pledged, assigned, or
encumbered pursuant to the Collateral Documents, of every nature and
description, whether now owned or hereafter acquired (by Company or any of its
Subsidiaries), to the extent that the Agent may reasonably require, and
execute and deliver or cause to be executed and delivered such other documents
or instruments as the Agent may reasonably require to effectuate more fully
the purposes of this Agreement or the other Loan Documents.
8.10 COMPLIANCE WITH LEASES. Comply with the material terms and
conditions of any leases covering any premises or real property wherein any of
the Collateral pledged, assigned or encumbered pursuant to the Collateral
Documents is located and any orders, ordinances, laws or statutes of any city,
state or other governmental department having jurisdiction with respect to
such premises or property, or the conduct of business thereon.
8.11 INDEMNIFICATION. Indemnify and save Agent and each of the Banks
harmless from all loss, cost, damage, liability or expenses, including
reasonable attorneys' fees and disbursements, incurred by Agent and the Banks
by reason of an Event of Default, or, defending or protecting the security
interests or other liens granted hereby or under any of the Loan Documents or
the priority thereof or enforcing the obligations of Company or any of its
Subsidiaries under this Agreement or any of the other Loan Documents or in the
prosecution or defense of any action or proceeding concerning any matter
growing out of or connected with this Agreement or any of the Loan Documents,
excluding, however, any loss, cost, damage, liability or expenses arising
solely as a result of the gross negligence or willful misconduct of the party
seeking to be indemnified under this Section 8.11.
8.12 GOVERNMENTAL AND OTHER APPROVALS. Apply for, obtain and/or
maintain in effect, as applicable, all authorizations, consents, approvals,
licenses, qualifications, exemptions, filings, declarations and registrations
(whether with any court, governmental agency, regulatory authority, securities
exchange or otherwise) which are necessary in connection with the execution,
delivery and performance: (i) by Company, of this Agreement and the other Loan
Documents, and (ii) by any of Company's Subsidiaries, of the Loan Documents
and the liens, pledges, mortgages, security interests or other encumbrances
granted, conveyed or otherwise established (or to be granted, conveyed or
otherwise established) by or under the Loan Documents.
8.13 INSURANCE. Maintain insurance coverage on its physical assets and
against other business risks in such amounts and of such types as are
customarily carried by companies similar in size and nature, and in the event
of acquisition of additional property, real or personal, or of occurrence of
additional risks of any nature, increase such insurance coverage in such
manner and to such extent as prudent business judgment and then current
practice would dictate; and in the case of all policies covering property
subject to the Collateral Documents, or property in which the Banks shall have
a security interest of any kind whatsoever, other than those policies
protecting against casualty liabilities to third parties, all such insurance
policies shall conform to the requirements set forth in the applicable
Collateral Documents and shall provide that the proceeds thereunder shall be
payable to Company or a Subsidiary, as applicable, and to the Agent (for
application to the Indebtedness); and with all said policies or copies
thereof, including all endorsements thereon and those required hereunder, to
be deposited with the Agent.
8.14 COMPLIANCE WITH LAWS.
(a) Comply in all material respects with all applicable laws,
rules, regulations and orders of any governmental authority, whether federal,
state, local or foreign (including without limitation Hazardous Materials
Laws), in effect from time to time.
(b) Conduct and complete, or cause to be conducted and
completed, all investigations, studies, sampling and testing, and all
remedial, removal and other actions necessary to clean-up and remove all
Hazardous Materials on or affecting any premises owned or occupied by Company
or any of its Subsidiaries, whether resulting from conduct of Company or any
of its Subsidiaries or any other Person, if required by Hazardous Material
Laws, all such actions shall be taken in accordance with such laws, and the
orders and directives of all applicable federal, state and local governmental
authorities; and
(c) Defend, indemnify and hold harmless Agent and each of the
Banks, and their respective employees, agents, officers and directors from and
against any and all claims, demands, penalties, fines, liabilities,
settlements, damages, costs or expenses of whatever kind or nature arising out
of or related to (i) the presence, disposal, release or threatened release of
any Hazardous Materials on, from or affecting any premises owned or occupied
by Company or any of its Subsidiaries, (ii) any personal injury (including
wrongful death) or property damage (real or personal) arising out of or
related to such Hazardous Materials, (iii) any lawsuit or other proceeding
brought or threatened, settlement reached or governmental order or decree
relating to such Hazardous Materials, (iv) the cost of removal of all
Hazardous Materials from all or any portion of any premises owned by Company
or its Subsidiaries, (v) the taking of necessary precautions to protect
against the release of Hazardous Materials on or affecting any premises owned
by Company or any of its Subsidiaries, (vi) complying with all Hazardous
Material Laws and/or (vii) any violation of Hazardous Material Laws, including
without limitation, reasonable attorneys and consultants fees, investigation
and laboratory fees, environmental studies required by Agent or any Bank, but
with respect to environmental studies only following a violation of Hazardous
Material Laws, (whether before or after the occurrence of any Default or Event
of Default hereunder), court costs and litigation expenses; and, if so
requested by Agent or any Bank, Company shall execute, and shall cause the
Subsidiaries to execute, separate indemnities covering the foregoing matters.
The obligations of Company under this Section 8.15 shall be in addition to any
and all other obligations and liabilities the Company may have to Agent or any
of the Banks at common law or pursuant to any other agreement.
8.15 COMPLIANCE WITH ERISA. Comply in all material respects with all
requirements imposed by ERISA as presently in effect or hereafter promulgated
or the Internal Revenue Code, including, but not limited to, the minimum
funding requirements of any Pension Plan.
8.16 ERISA NOTICES. Promptly notify Agent and each of the Banks upon
the occurrence of any of the following events:
(a) the termination of any Pension Plan pursuant to Subtitle C
of Title IV of ERISA or otherwise;
(b) the appointment of a trustee by a United States District
Court to administer any Pension Plan;
(c) the commencement by the PBGC, or any successor thereto, of
any proceeding to terminate any Pension Plan;
(d) the failure of the Company or any Subsidiary to make any
payment in respect of any Pension Plan required under Section 412 of the
Internal Revenue Code;
(e) the withdrawal of the Company or any Subsidiary from any
Pension Plan, including, without limitation, any multiemployer plan; or
(f) the occurrence of a reportable event which is required to be
reported by the Company under the regulations, within the meaning of
Title IV of ERISA or a "prohibited transaction" (as defined in Section
406 of ERISA or Section 4975 of the Internal Revenue Code) which could
have a material adverse effect on Company or any of its Subsidiaries.
8.17 FOREIGN EMPLOYEE BENEFIT PLANS. Establish, maintain and operate
all Foreign Employee Benefit Plans to comply with all material respects with
all laws, regulations and rules applicable thereto and the respective
requirements of the governing documents for such plans.
8.18 NOTICES RE OTHER DEBT. Deliver or cause to be delivered to Agent
within five (5) Business Days of receipt thereof a copy of each report, notice
or communication regarding potential or actual defaults delivered by or on
behalf of Company or any Subsidiary to the trustee under any of the Indentures
or to the holders of any instrument evidencing any Debt and each notice or
communication received by Company or any Subsidiary from any such trustee or
holder.
8.19 RATING CHANGE. Promptly notify Agent and each of the Banks of any
change in Company's Moody's Rating or S&P Rating and furnish Agent and each of
the Banks with a copy of any report issued by Moody's or S&P in connection
therewith.
9. NEGATIVE COVENANTS
Company covenants and agrees that, until the Revolving Credit Maturity
Date and thereafter until final payment in full of the Indebtedness and the
performance by Company and the Subsidiaries of all other obligations under
this Agreement and the other Loan Documents, without the prior written consent
of the Majority Banks it will not, and will not permit the Subsidiaries
(including without limitation Subsidiaries acquired or created after the date
hereof) to:
9.1 CAPITAL STRUCTURE AND REDEMPTIONS. Purchase, acquire or redeem any
of its capital stock (other than (i) redemptions of the capital stock of
Company not to exceed Sixty Million Dollars ($60,000,000) in aggregate
purchase price from the date hereof through December 31, 1998 and (ii) on and
after January 1, 1999 purchases, acquisitions or redemptions of the capital
stock of Company not to exceed $2,000,000 in any fiscal year paid, provided
that such stock is purchased solely for use in connection with an employee
benefit plan or other employee incentive plan and is held by Company as
treasury stock until used for such purpose) or make any material change in its
capital structure other than the issuance of additional capital stock.
9.2 BUSINESS PURPOSES. Make any material changes in its business
objects or engage in business other than the Core Business.
9.3 MERGERS OR DISPOSITIONS. Enter into any merger or consolidation,
except for Permitted Mergers, or sell, lease, transfer, relocate or dispose of
all, substantially all, or any material part of its assets, except for
Permitted Transfers.
9.4 INDEBTEDNESS. Subject to the provisions of Section 9.17 hereof,
become or remain obligated for any Debt, except for:
(a) the Indebtedness;
(b) Current unsecured trade, utility and non-extraordinary
accounts payable arising in the ordinary course of Company's or any
Subsidiary's business (including any such payables assumed by Company or
a Subsidiary in connection with a Permitted Acquisition) and other Debt
arising in the ordinary course of Company's or any Subsidiary's
business;
(c) existing Debt as set forth on SCHEDULE 9.4 annexed hereto;
(d) Debt in respect of taxes, assessment, governmental charges
and claims for labor, materials or supplies to the extent that payment
thereof is not required pursuant to Section 8.7 hereof;
(e) Debt incurred in connection with the making of Investments
permitted under Section 9.8(b) hereof or in connection with the making
of an Investment in the form of a loan to Company by a Subsidiary;
(f) Debt in respect of interest rate exchange, swap, collar or
cap or similar agreements providing interest rate protection and foreign
exchange contracts;
(g) Secured purchase money Debt (including capitalized leases)
not to exceed $10,000,000 in the aggregate at any time outstanding
incurred after the date hereof to finance the acquisition of fixed
assets, provided that (A) such Debt has a scheduled maturity and is not
due on demand and (B) immediately prior to and after giving effect to
the incurrence of such Debt no Default or Event of Default has occurred
and is continuing; and
(h) Other unsecured Debt incurred after the date hereof not to
exceed $10,000,000 in the aggregate at any time, provided that (A) such
Debt has a scheduled maturity and is not due on demand and (B)
immediately prior to and after giving effect to the incurrence of such
Debt, no Default or Event of Default has occurred and is continuing.
9.5 LIENS. Permit or suffer any Lien to exist on any of its
properties, real, personal or mixed, tangible or intangible, whether now owned
or hereafter acquired, except:
(a) in favor of Agent, as security for the Indebtedness;
(b) purchase money security interests in fixed assets to secure
the purchase money Debt permitted under Section 9.4(g) hereof, provided
that such security interest is (or was, to the extent such security
interest exists at the time of a Permitted Acquisition) created
substantially contemporaneously with the acquisition of such fixed
assets and does not extend to any property other than the fixed asset so
financed and provided further that the sum of all such purchase money
Debt outstanding at any time shall not exceed the aggregate amount set
forth in Section 9.4(g), hereof; and
(c) the Permitted Encumbrances.
9.6 ACQUISITIONS. Subject to the provisions of Section 9.17 hereof,
purchase or otherwise acquire or become obligated for the purchase of all or
substantially all or any material portion of the assets or business interests
of any Person, firm or corporation, or any shares of stock (or other ownership
interests) of any corporation, trusteeship or association, or any business or
going concern, or in any other manner effectuate or attempt to effectuate an
expansion of present business by acquisition, except for Permitted
Acquisitions and Permitted Mergers.
9.7 DIVIDENDS. Declare or pay any dividends in cash or property on or
make any other distribution in cash or property with respect to any shares of
its capital stock or other equity interests, whether by reduction of
stockholders' equity or otherwise, except for (i) dividends and other
distributions by Subsidiaries to Company and (ii) so long as immediately prior
thereto and after giving effect thereto no Default and Event of Default has
occurred and is continuing, cash dividends on the capital stock of Company in
an amount not to exceed $12,500,000 in the aggregate during any fiscal quarter
of Company.
9.8 INVESTMENTS. Subject to the provisions of Section 9.17 hereof,
make or allow to remain outstanding any Investment in, or any loans or
advances to, any Person, firm, corporation or other entity or association,
other than:
(a) Permitted Investments;
(b) Investments in Subsidiaries and Joint Ventures
existing as of the date of this Agreement or established
subsequent to the date hereof (in compliance with this Agreement),
provided that (i) within ten (10) days of making such Investment,
the Agent has a first priority Lien on the capital stock or other
ownership interest of Company or the Subsidiary making such
Investment in such Subsidiary or Joint Venture as security for the
Indebtedness and (ii) the form of such collateral security is on
terms substantially similar to the terms of the security documents
executed by Company in favor of Agent and satisfactory to Agent
and Agent has received such other documentation and opinions of
counsel as Agent may reasonably require in connection therewith;
(c) Permitted Acquisitions (excluding any Investments
owned by the target of the Permitted Acquisition not otherwise
permitted by Section 9.8(e) below);
(d) the Investments set forth on SCHEDULE 9.8, hereto;
(e) Investments in any Joint Venture owned by the target
of a Permitted Acquisition upon the effective date of such
Permitted Acquisition and not made in contemplation of such
Permitted Acquisition, which shall not exceed One Million Dollars
($1,000,000) in the aggregate outstanding at any time for all such
Investments
(f) Investments received in connection with the bankruptcy
or reorganization of suppliers and customers and in settlement of
delinquent obligations of, and other disputes with, customers and
suppliers arising in the ordinary course of business; and
(g) Investments in the form of non-cash consideration
received in connection with a Permitted Transfer in accordance
with this Agreement.
9.9 ACCOUNTS RECEIVABLE. Sell or assign any account, note or trade
acceptance receivable, except to Agent on behalf of the Banks or in the
ordinary course of business for collection.
9.10 TRANSACTIONS WITH AFFILIATES. Enter into any transaction with any
of its or their stockholders or officers or its or their Affiliates, except in
the ordinary course of business and on terms not materially less favorable
than would be usual and customary in similar transactions between Persons
dealing at arm's length.
9.11 NO FURTHER NEGATIVE PLEDGES. Enter into or become subject to any
agreement (other than this Agreement, the Loan Documents or the Indentures)
(i) prohibiting the guaranteeing by the Company or any Subsidiary of any
obligations, (ii) prohibiting the creation or assumption of any Lien upon the
properties or assets of the Company or any Subsidiary, whether now owned or
hereafter acquired, or (iii) requiring an obligation to become secured (or
further secured) if another obligation is secured or further secured.
9.12 PERMITTED SUBORDINATED INDEBTEDNESS. (i) Amend, supplement or
otherwise modify the Subordinated Indenture or the Subordinated Notes (each as
in effect as of the date hereof) or the terms of any other Permitted
Subordinated Indebtedness in any way that would be materially less
advantageous to the Company or materially adverse to the Banks, including,
without limitation, with respect to amount, maturity, amortization, interest
rate, premiums, fees, covenants, events of default, remedies and subordination
provisions; or (ii) declare or make any payment on the Permitted Subordinated
Indebtedness except regularly scheduled payments of principal, interest and
premium, unless such payments are prohibited by the terms of the Permitted
Subordinated Indebtedness, and only so long as immediately prior to such
payment and after giving effect thereto, no Default or Event of Default has
occurred and is continuing; PROVIDED, however, so long as immediately prior
thereto and after giving effect thereto no Event of Default has occurred and
is continuing hereunder, Company may redeem or repurchase the Permitted
Subordination Indebtedness in an amount which together with the Senior Notes
redeemed after the date hereof pursuant to Section 9.16(B) hereof does not
exceed $40,000,000 in aggregate principal amount.
9.13 SALE AND LEASEBACK. Become liable, directly or indirectly, with
respect to any lease of any real or personal property (i) which it or one of
its Subsidiaries sold or transferred or will sell or transfer to any other
Person or (ii) which it or one of its Subsidiaries intends to use for
substantially the same purpose as any other real or personal property which
has been or will be sold or transferred by it or one of its Subsidiaries to
any other Person in connection with such lease.
9.14 CORPORATE DOCUMENTS. Amend, modify or otherwise change any of the
terms or provisions of any of its constituent documents (other than its
bylaws, in which case, any of the material terms or provisions thereof) as in
effect on the date hereof.
9.15 FISCAL YEAR. Change its fiscal year for accounting or tax purposes
from a period consisting of the twelve month period ending on December 31 of
each year.
9.16 SENIOR NOTES. (i) Amend, supplement or otherwise modify the Senior
Indenture or the Senior Notes (each as in effect as of the date hereof) in any
way that would be materially less advantageous to the Company, including,
without limitation, with respect to amount, maturity, amortization, interest
rate, premiums, fees, covenants, events of default and remedies; or (ii)
purchase, redeem, prepay or repay any principal of, premium, if any, interest
or other amount payable in respect of the Senior Notes unless required to do
so by the terms of such Senior Notes except (A) the purchase, redemption,
prepayment or repayment from proceeds of any refunding or refinancing of the
Senior Notes permitted under Section 9.4(c) hereof and (B) the redemption of
the balance of the outstanding Senior Notes 1999 in an amount which together
with the Permitted Subordinated Indebtedness redeemed after the date hereof
pursuant to Section 9.12 hereof does not exceed Forty Million Dollars
($40,000,000) in the aggregate, and in each case only so long as immediately
prior thereto and after giving effect thereto, no Default or Event of Default
has occurred and is continuing.
9.17 MAXIMUM SUBSIDIARY INVESTMENT AMOUNT. Allow the Maximum Subsidiary
Investment Amount to exceed Fifty Million Dollars ($50,000,000) in the
aggregate at any time.
10. DEFAULTS
10.1 EVENTS OF DEFAULT. The occurrence of any of the following events
shall constitute an Event of Default hereunder:
(a) non-payment when due of (i) the principal or interest under
any of the Notes issued hereunder in accordance with the terms thereof
or (ii) any Fees;
(b) non-payment of any money by Company under this Agreement or
by Company or any Subsidiary under any of the Loan Documents, other than
as set forth in subsection (a) above, within five (5) Business Days
after written notice from Agent that the same is due and payable;
(c) default in the observance or performance of any of the
conditions, covenants or agreements of Company set forth in Section 2.7,
8.1, 8.3 through 8.6 (both inclusive), 8.8, 8.9, 8.11, 8.13, 8.15
through 8.19 (both inclusive), or 9 (in its entirety);
(d) default in the observance or performance of any of the other
conditions, covenants or agreements set forth in this Agreement by
Company and continuance thereof for a period of thirty (30) consecutive
days;
(e) any representation or warranty made by Company or any
Subsidiary herein or in any instrument submitted pursuant hereto or by
any other party to the Loan Documents proves untrue or misleading in any
material adverse respect when made;
(f) default in the observance or performance of or failure to
comply with any of the conditions, covenants or agreements of Company or
any Subsidiary set forth in any of the other Loan Documents, and the
continuance thereof beyond any period of grace or cure specified in any
such document;
(g) default in the payment of or failure to comply with the
terms of any other obligation of Company or any of its Subsidiaries for
Debt of Company or any of its Subsidiaries in excess of Ten Million
Dollars ($10,000,000) in the aggregate which (taking into account
applicable periods of notice or cure, if any), would permit the holder
or holders thereto to accelerate the Debt or terminate its commitment
thereunder;
(h) the rendering of any judgment(s) for the payment of money in
excess of the sum of Ten Million Dollars ($10,000,000) individually or
in the aggregate against Company or any of its Subsidiaries, and such
judgments shall remain unpaid, unvacated, unbonded or unstayed by appeal
or otherwise for a period of sixty (60) consecutive days, except as
covered by adequate insurance with a reputable carrier and to the extent
an action is pending in which an active defense is being made with
respect thereto; PROVIDED, however, if such judgment(s) are in excess of
Thirty Million Dollars ($30,000,000) in the aggregate, the entry thereof
shall immediately constitute an Event of Default hereunder;
(i) the occurrence of a "reportable event", as defined in
ERISA, which is determined to constitute grounds for termination by the
Pension Benefit Guaranty Corporation of any Pension Plan maintained or
contributed to by or on behalf of the Company or any of its Subsidiaries
for the benefit of any of its employees or for the appointment by the
appropriate United States District Court of a trustee to administer such
Pension Plan and such reportable event is not corrected and such
determination is not revoked within sixty (60) days after notice thereof
has been given to the plan administrator of such Pension Plan (without
limiting any of Agent's or any Bank's other rights or remedies
hereunder), or the institution of proceedings by the Pension Benefit
Guaranty Corporation to terminate any such Pension Plan or to appoint a
trustee by the appropriate United States District Court to administer
any such Pension Plan;
(j) the Company or any of its Subsidiaries shall be dissolved or
liquidated (or any judgment, order or decree therefor shall be entered)
other than in connection with a Permitted Merger or; if a creditors'
committee shall have been appointed for the business of Company or any
of its Subsidiaries; or if Company or any of its Subsidiaries shall have
made a general assignment for the benefit of creditors or shall have
been adjudicated bankrupt, or shall have filed a voluntary petition in
bankruptcy or for reorganization or to effect a plan or arrangement with
creditors or shall fail to pay its debts generally as such debts become
due in the ordinary course of business (except as contested in good
faith and for which adequate reserves are made in such party's Financial
Statements) or becomes the subject of an involuntary petition in
bankruptcy, or a reorganization, arrangement or creditor composition
proceeding which is not dismissed within sixty (60) days of commencement
thereof, or shall file an answer to a creditor's petition or other
petition filed against it, admitting the material allegations thereof
for an adjudication in bankruptcy or for reorganization; or shall have
applied for or permitted the appointment of a receiver or trustee or
custodian for any of its property or assets; or such receiver, trustee
or custodian shall have been appointed for any of its property or assets
(otherwise than upon application or consent of Company or any of its
Subsidiaries); or if an order shall be entered approving any petition
for reorganization of Company or any of its Subsidiaries; or the Company
or any of its Subsidiaries shall take any action (corporate or other)
authorizing or in furtherance any of the actions described above in this
subsection;
(k) the occurrence of a Change of Ownership or Control; or
(l) the revocation or attempted revocation of any Guaranty.
10.2 EXERCISE OF REMEDIES. If an Event of Default has occurred and is
continuing hereunder: (v) the Agent shall, upon being directed to do so by the
Majority Banks, declare the Revolving Credit Aggregate Commitment (and any
commitment to increase the Revolving Credit Aggregate Commitment) terminated;
(w) the Agent shall, upon being directed to do so by the Majority Banks,
declare the entire unpaid principal Indebtedness, including the Notes,
immediately due and payable, without presentment, notice or demand, all of
which are hereby expressly waived by Company; (x) upon the occurrence of any
Event of Default specified in subsection 10.1(j), above, and notwithstanding
the lack of any declaration by Agent under preceding clause (w), the entire
unpaid principal Indebtedness, including the Notes, shall become automatically
and immediately due and payable, and the Revolving Credit Aggregate Commitment
shall be automatically and immediately terminated; (y) the Agent shall, upon
being directed to do so by the Majority Banks, demand immediate delivery of
cash collateral, and the Company and each Account Party agrees to deliver such
cash collateral upon demand, in an amount equal to the maximum amount that may
be available to be drawn at any time prior to the stated expiring of all
outstanding Letters of Credit; and (z) the Agent shall, if directed to do so
by the Majority Banks or the Banks, as applicable (subject to the terms
hereof), exercise any remedy permitted by this Agreement, the other Loan
Documents or law.
10.3 RIGHTS CUMULATIVE. No delay or failure of Agent and/or Banks in
exercising any right, power or privilege hereunder shall affect such right,
power or privilege, nor shall any single or partial exercise thereof preclude
any other or further exercise thereof, or the exercise of any other power,
right or privilege. The rights of Agent and Banks under this Agreement are
cumulative and not exclusive of any right or remedies which Banks would
otherwise have.
10.4 WAIVER BY COMPANY OF CERTAIN LAWS. To the extent permitted by
applicable law, Company hereby agrees to waive, and does hereby absolutely and
irrevocably waive and relinquish the benefit and advantage of any valuation,
stay, appraisement, extension or redemption laws now existing or which may
hereafter exist, which, but for this provision, might be applicable to any
sale made under the judgment, order or decree of any court, on any claim for
interest on the Notes, or any security interest or mortgage contemplated by or
granted under or in connection with this Agreement. These waivers have been
voluntarily given, with full knowledge of the consequences thereof.
10.5 WAIVER OF DEFAULTS. No Event of Default shall be waived by the
Banks except in a writing signed by an officer of the Agent in accordance with
Section 14.12 hereof. No single or partial exercise of any right, power or
privilege hereunder, nor any delay in the exercise thereof, shall preclude any
other or further exercise of their rights by Agent or the Banks. No waiver of
any Event of Default shall extend to any other or further Event of Default. No
forbearance on the part of the Agent or the Banks in enforcing any of their
rights shall constitute a waiver of any of their rights. Company expressly
agrees that this Section may not be waived or modified by the Banks or Agent
by course of performance, estoppel or otherwise.
10.6 SET OFF. Upon the occurrence and during the continuance of any
Event of Default, each Bank may at any time and from time to time, without
notice to the Company (any requirement for such notice being expressly waived
by the Company) set off and apply against any and all of the obligations of
the Company now or hereafter existing under this Agreement, whether owing to
such Bank or any other Bank or the Agent, any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by such Bank to or for the credit or the
account of the Company and any property of the Company from time to time in
possession of such Bank, irrespective of whether or not such deposits held or
indebtedness owing by such Bank may be contingent and unmatured and regardless
of whether any Collateral then held by Agent or any Bank is adequate to cover
the Indebtedness. Promptly following any such setoff, such Bank shall give
written notice to Agent and to Company of the occurrence thereof. The Company
hereby grants to the Banks and the Agent a lien on and security interest in
all such deposits, indebtedness and property as collateral security for the
payment and performance of all of the obligations of the Company under this
Agreement. The rights of each Bank under this Section 10.6 are in addition to
the other rights and remedies (including, without limitation, other rights of
setoff) which such Bank may have.
11. PAYMENTS, RECOVERIES AND COLLECTIONS
11.1 PAYMENT PROCEDURE.
(a) All payments by Company of principal of, or interest on, the
Notes, or any other Indebtedness, shall be made on the date specified
for payment under this Agreement not later than 11:00 a.m. (Detroit
time) in immediately available funds to Agent, for the ratable account
of the Banks, at Agent's office located at One Detroit Center, Detroit,
Michigan 48226, (care of Agent's Eurocurrency Lending Office, for
Eurocurrency-based Advances). Upon receipt by the Agent of each such
payment, the Agent shall make prompt payment in like funds received to
each Bank as appropriate, or, in respect of Eurocurrency-based Advances,
to such Bank's Eurocurrency Lending Office.
(b) Unless the Agent shall have been notified by Company prior
to the date on which any payment to be made by Company is due that
Company does not intend to remit such payment, the Agent may, in its
sole discretion and without obligation to do so, assume that the Company
has remitted such payment when so due and the Agent may, in reliance
upon such assumption, make available to each Bank on such payment date
an amount equal to such Bank's share of such assumed payment. If Company
has not in fact remitted such payment to the Agent each Bank shall
forthwith on demand repay to the Agent the amount of such assumed
payment made available or transferred to such Bank, together with the
interest thereon, in respect of each day from and including the date
such amount was made available by the Agent to such Bank to the date
such amount is repaid to the Agent at a rate per annum equal to (i) for
Prime-based Advances, the Federal Funds Effective Rate (daily average),
as the same may vary from time to time, and (ii) with respect to
Eurocurrency-based Advances, Agent's aggregate marginal cost (including
the cost of maintaining any required reserves or deposit insurance and
of any fees, penalties, overdraft charges or other costs or expenses
incurred by Agent) of carrying such amount.
(c) Subject to the definition of Interest Period, whenever any
payment to be made hereunder shall otherwise be due on a day which is
not a Business Day, such payment shall be made on the next succeeding
Business Day and such extension of time shall be included in computing
interest, if any, in connection with such payment.
(d) Subject to the provisions of Sections 14.13 and 14.15
hereof, all payments to be made by Company hereunder shall be made
without set-off or counterclaim and without deduction for or on account
of any present or future withholding or other taxes of any nature
imposed by any governmental authority thereof or any federation or
organization of which such governmental authority may at the time of
payment be a member, unless Company is compelled by law to make payment
subject to such tax. In such event, Company shall
(i) pay to the Agent, for Agent's own account and/or, as the case
may be, for the account of the Banks, such additional amount (the
"Gross-Up") as may be necessary to ensure that the Agent and the
Banks receive a net amount equal to the full amount which would
have been receivable had payment not been made subject to such
tax; and
(ii) remit such tax to the relevant taxing authorities according
to applicable law, and send to the Agent such certificates or
certified copy receipts as the Agent shall reasonably require as
proof of the payment by the Company of any such taxes payable by
the Company.
If Agent or any Bank receives a cash refund with respect to taxes paid
by Company pursuant to this Section 11.1(d), it shall promptly remit
such cash refund, in the amount received, to Company.
As used herein, the terms "tax", "taxes" and "taxation" include all
existing taxes, levies, imposts, duties, charges, fees, deductions and
withholdings and any restrictions or conditions resulting in a charge
together with interest thereon and fines and penalties with respect
thereto which may be imposed by reason of any violation or default with
respect to the law regarding such tax, assessed as a result of or in
connection with the transactions hereunder, or the payment and or
receipt of funds hereunder, or the payment or delivery of funds into or
out of any jurisdiction other than the United States (whether assessed
against Company, Agent or any of the Banks).
11.2 APPLICATION OF PROCEEDS OF COLLATERAL. Notwithstanding anything to
the contrary in this Agreement, after an Event of Default, the proceeds of any
of the Collateral, together with any offsets, voluntary payments by Company or
any Subsidiary or others and any other sums received or collected in respect
of the Indebtedness, shall be applied, first, to the Notes (to the extent
secured by the Collateral in accordance with the Loan Documents) on a pro rata
basis, next, to any other Indebtedness on a PRO RATA basis, and then, if there
is any excess, to Company or the applicable Subsidiary as the case may be. The
application of such proceeds and other sums to the Revolving Credit Notes
shall be based on each Bank's Percentage of the aggregate of the loans.
11.3 PRO-RATA RECOVERY. If any Bank shall obtain any payment or other
recovery (whether voluntary, involuntary, by application of offset or
otherwise) on account of principal of, or interest on, any of the Indebtedness
in excess of its pro rata share of payments then or thereafter obtained by all
Banks upon principal of and interest on all Indebtedness, such Bank shall
purchase from the other Banks such participations in the Revolving Credit
Notes and/or Letter of Credit Obligations held by them as shall be necessary
to cause such purchasing Bank to share the excess payment or other recovery
ratably in accordance with the Percentage with each of them; PROVIDED,
however, that if all or any portion of the excess payment or other recovery is
thereafter recovered from such purchasing holder, the purchase shall be
rescinded and the purchase price restored to the extent of such recovery, but
without interest.
11.4 DEPOSITS AND ACCOUNTS. In addition to and not in limitation of any
rights of any Bank or other holder of any of the Notes under applicable law,
each Bank and each other such holder shall, upon acceleration of the
Indebtedness under the Notes and without notice or demand of any kind, have
the right to appropriate and apply to the payment of the Notes owing to it any
and all balances, credits, deposits, accounts or moneys of Company then or
thereafter with such Bank or other holder; PROVIDED, however, that any such
amount so applied by any Bank or other holder on any of the Notes owing to it
shall be subject to the provisions of Section 11.3, hereof.
12. CHANGES IN LAW OR CIRCUMSTANCES; INCREASED COST
12.1 REIMBURSEMENT OF PREPAYMENT COSTS. If Company makes any payment of
principal with respect to any Eurocurrency-based Advance or Quoted Rate
Advance (or converts or refunds, or attempts to convert or refund any such
Advance) on any day other than the last day of the Interest Period applicable
thereto (whether voluntarily, by acceleration, or otherwise), or if Company
fails to borrow, refund or convert any Eurocurrency-based Advance or Quoted
Rate Advance after notice has been given by Company to Agent in accordance
with the terms hereof requesting such Advance, or if Company fails to make any
payment of principal or interest in respect of a Eurocurrency-based Advance or
Quoted Rate Advance when due, Company shall reimburse Agent and each Bank, as
the case may be on demand for any resulting loss, cost or expense incurred by
Agent and Banks, as the case may be as a result thereof, including, without
limitation, any such loss, cost or expense incurred in obtaining, liquidating,
employing or redeploying deposits from third parties, whether or not Agent and
Banks, as the case may be shall have funded or committed to fund such Advance.
Such amount payable by Company to Agent and Banks, as the case may be may
include, without limitation, an amount equal to the excess, if any, of (a) the
amount of interest which would have accrued on the amount so prepaid, or not
so borrowed, refunded or converted, for the period from the date of such
prepayment or of such failure to borrow, refund or convert, through the last
day of the relevant Interest Period, at the applicable rate of interest for
said Advance(s) provided under this Agreement, over (b) the amount of interest
(as reasonably determined by Agent and Banks, as the case may be) which would
have accrued to Agent and Banks, as the case may be on such amount by placing
such amount on deposit for a comparable period with leading banks in the
interbank eurodollar market. Calculation of any amounts payable to any Bank
(including Swing Line Bank) under this paragraph shall be made as though such
Bank shall have actually funded or committed to fund the relevant Advance
through the purchase of an underlying deposit in an amount equal to the amount
of such Advance and having a maturity comparable to the relevant Interest
Period; PROVIDED, however, that any Bank may fund any Eurocurrency-based
Advance or Quoted Rate Advance in any manner it deems fit and the foregoing
assumptions shall be utilized only for the purpose of the calculation of
amounts payable under this paragraph. Upon the written request of Company,
Agent and Banks shall deliver to Company a certificate setting forth the basis
for determining such losses, costs and expenses, which certificate shall be
conclusively presumed correct, absent manifest error.
12.2 AGENT'S EUROCURRENCY LENDING OFFICE. For any Advance to which the
Eurocurrency-based Rate is applicable, if Agent shall designate a Eurocurrency
Lending Office which maintains books separate from those of the rest of Agent,
Agent shall have the option of maintaining and carrying the relevant Advance
on the books of such Eurocurrency Lending Office.
12.3 CIRCUMSTANCES AFFECTING EUROCURRENCY-BASED RATE AVAILABILITY. If
with respect to any Interest Period, Agent or any of the Banks (after
consultation with Agent) shall determine that, by reason of circumstances
affecting the interbank markets generally, deposits in Eurocurrencys in the
applicable amounts are not being offered to the Agent or such Bank for such
Interest Period, then Agent shall forthwith give notice thereof to the
Company. Thereafter, until Agent notifies Company that such circumstances no
longer exist, the obligation of Banks to make Eurocurrency-based Advances, and
the right of Company to convert an Advance to or refund an Advance as a
Eurocurrency-based Advance shall be suspended, and the Company shall repay in
full (or cause to be repaid in full) the then outstanding principal amount of
each such Eurocurrency-based Advance covered hereby together with accrued
interest thereon, any amounts payable under Section 12.1, hereof, and all
other amounts payable hereunder on the last day of the then current Interest
Period applicable to such Advance. Upon the date for repayment as aforesaid
and unless Company notifies Agent to the contrary within two (2) Business Days
after receiving a notice from Agent pursuant to this Section, such outstanding
principal amount shall be converted to a Prime-based Advance as of the last
day of such Interest Period.
12.4 LAWS AFFECTING EUROCURRENCY-BASED ADVANCE AVAILABILITY. In the
event that any applicable law, rule or regulation (whether domestic or
foreign) now or hereafter in effect and whether or not currently applicable to
any Bank or the Agent or any interpretation or administration thereof by any
governmental authority charged with the interpretation or administration
thereof, or compliance by the Agent or any of the Banks (or any of their
respective Eurocurrency Lending Offices) with any request or directive
(whether or not having the force of law) of any such authority, shall make it
unlawful or impossible for any of the Banks (or any of their respective
Eurocurrency Lending Offices) to honor its obligations hereunder to make or
maintain any Advance with interest at the Eurocurrency-based Rate, such Bank,
or the Agent, shall notify the Company (and the Agent, as the case may be) and
the right of Company to convert an Advance or refund an Advance as a
Eurocurrency-based Advance, shall be suspended and thereafter Company may
select as Applicable Interest Rates only those which remain available and
which are permitted to be selected hereunder, and if any of the Banks may not
lawfully continue to maintain an Advance to the end of the then current
Interest Period applicable thereto as a Eurocurrency-based Advance, Company
shall immediately prepay such Advance, together with interest to the date of
payment, and any amounts payable under Section 12.1 with respect to such
prepayment and the applicable Advance shall immediately be converted to a
Prime-based Advance and the Prime-based Rate shall be applicable thereto.
12.5 INCREASED COST OF EUROCURRENCY-BASED ADVANCES. In the event that
any applicable law, rule or regulation (whether domestic or foreign) now or
hereafter in effect and whether or not currently applicable to any Bank or the
Agent or any interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation
or administration thereof, or compliance by Agent or any of the Banks (or
their respective Eurocurrency Lending Offices) with any request or directive
(whether or not having the force of law) made by any such authority, central
bank or comparable agency after the date hereof:
(a) shall subject the Agent or any of the Banks (or their
respective Eurocurrency Lending Offices) to any tax, duty or other
charge with respect to any Advance or any Note or shall change the basis
of taxation of payments to the Agent or any of the Banks of the
principal of or interest on any Advance or any Note or any other amounts
due under this Agreement in respect thereof (except for changes in the
rate of tax on the overall net income or revenues of the Agent or of any
of the Banks (or their respective Eurocurrency Lending Offices) imposed
by the United States of America or the jurisdiction in which such Bank's
principal executive office is located); or
(b) shall impose, modify or deem applicable any reserve
(including, without limitation, any imposed by the Board of Governors of
the Federal Reserve System), special deposit or similar requirement
against assets of, deposits with or for the account of, or credit
extended by the Agent or any of the Banks (or their respective
Eurocurrency Lending Offices) or shall impose on the Agent or any of the
Banks or the interbank markets any other condition affecting any Advance
or any of the Notes;
and the result of any of the foregoing is to increase the costs to the Agent
or any of the Banks of making, funding or maintaining any part of the
Indebtedness hereunder as a Eurocurrency-based Advance or to reduce the amount
of any sum received or receivable by the Agent or any of the Banks under this
Agreement or under the Notes in respect of a Eurocurrency-based Advance then
Agent or Bank, as the case may be, shall promptly notify the Company of such
fact and demand compensation therefor and, within fifteen (15) days after such
notice, Company agrees to pay to Agent or such Bank such additional amount or
amounts as will compensate Agent or such Bank or Banks for such increased cost
or reduction. A certificate of Agent or such Bank setting forth the basis for
determining such additional amount or amounts necessary to compensate or such
Bank or Banks shall be conclusively presumed to be correct save for manifest
error.
12.6 OTHER INCREASED COSTS. In the event that after the date hereof the
adoption of or any change in any applicable law, treaty, rule or regulation
(whether domestic or foreign) now or hereafter in effect and whether or not
presently applicable to any Bank or Agent, or any interpretation or
administration thereof by any governmental authority charged with the
interpretation or administration thereof, or compliance by any Bank or Agent
with any guideline, request or directive of any such authority (whether or not
having the force of law), including any risk based capital guidelines, affects
or would affect the amount of capital required or expected to be maintained by
such Bank or Agent (or any corporation controlling such Bank or Agent) and
such Bank or Agent, as the case may be, determines that the amount of such
capital is increased by or based upon the existence of such Bank's or Agent's
obligations or Advances hereunder and such increase has the effect of reducing
the rate of return on such Bank's or Agent's (or such controlling
corporation's) capital as a consequence of such obligations or Advances
hereunder to a level below that which such Bank or Agent (or such controlling
corporation) could have achieved but for such circumstances (taking into
consideration its policies with respect to capital adequacy) by an amount
deemed by such Bank or Agent to be material, then the Company shall pay to
such Bank or Agent, as the case may be, from time to time, upon request by
such Bank or Agent, additional amounts sufficient to compensate such Bank or
Agent (or such controlling corporation) for any increase in the amount of
capital and reduced rate of return which such Bank or Agent reasonably
determines to be allocable to the existence of such Bank's or Agent's
obligations or Advances hereunder. A statement as to the amount of such
compensation, prepared in good faith and in reasonable detail by such Bank or
Agent, as the case may be, shall be submitted by such Bank or by Agent to the
Company, reasonably promptly after becoming aware of any event described in
this Section 12.6 and shall be conclusive, absent manifest error in
computation.
13. AGENT
13.1 APPOINTMENT OF AGENT. Each Bank and the holder of each Note
irrevocably appoints and authorizes the Agent to act on behalf of such Bank or
holder under this Agreement and the Loan Documents and to exercise such powers
hereunder and thereunder as are specifically delegated to Agent by the terms
hereof and thereof, together with such powers as may be reasonably incidental
thereto, including without limitation the power to execute or authorize the
execution of financing or similar statements or notices, and other documents.
In performing its functions and duties under this Agreement, the Agent shall
act solely as agent of the Banks and does not assume and shall not be deemed
to have assumed any obligation towards or relationship of agency or trust with
or for Company. Each Bank agrees (which agreement shall survive any
termination of this Agreement) to reimburse Agent for all reasonable out-of-
pocket expenses (including house and outside attorneys' fees and
disbursements) incurred by Agent hereunder or in connection herewith or with
an Event of Default or in enforcing the obligations of Company under this
Agreement or the Loan Documents or any other instrument executed pursuant
hereto, and for which Agent is not reimbursed by Company, pro rata according
to such Bank's Percentage. Agent shall not be required to take any action
under the Loan Documents, or to prosecute or defend any suit in respect of the
Loan Documents, unless indemnified to its satisfaction by the Banks against
loss, costs, liability and expense. If any indemnity furnished to Agent shall
become impaired, it may call for additional indemnity and cease to do the acts
indemnified against until such additional indemnity is given.
13.2 DEPOSIT ACCOUNT WITH AGENT. Company hereby authorizes Agent, in
Agent's sole discretion, to charge its general deposit account(s), if any,
maintained with Agent for the amount of any principal, interest, or other
amounts or costs due under this Agreement when the same become due and payable
under the terms of this Agreement or the Notes.
13.3 SCOPE OF AGENT'S DUTIES. The Agent shall have no duties or
responsibilities except those expressly set forth herein, and shall not, by
reason of this Agreement or otherwise, have a fiduciary relationship with any
Bank (and no implied covenants or other obligations shall be read into this
Agreement against the Agent). Neither Agent nor any of its directors,
officers, employees or agents shall be liable to any Bank for any action taken
or omitted to be taken by it under this Agreement or any document executed
pursuant hereto, or in connection herewith or therewith with the consent or at
the request of the Majority Banks or in the absence of their own gross
negligence or wilful misconduct, nor be responsible for or have any duties to
ascertain, inquire into or verify (a) any recitals or warranties herein or
therein, (b) the effectiveness, enforceability, validity or due execution of
this Agreement or any document executed pursuant hereto or any security
thereunder, (c) the performance by Company of its obligations hereunder or
thereunder, or (d) the satisfaction of any condition hereunder or thereunder,
including without limitation the making of any Advance or the issuance of any
Letter of Credit. Agent shall be entitled to rely upon any certificate,
notice, document or other communication (including any cable, telegraph,
telex, facsimile transmission or oral communication) believed by it to be
genuine and correct and to have been sent or given by or on behalf of a proper
person. Agent may treat the payee of any Note as the holder thereof. Agent may
employ agents and may consult with legal counsel (who may be counsel for
Company), independent public accountants and other experts selected by it and
shall not be liable to the Banks (except as to money or property received by
them or their authorized agents), for the negligence or misconduct of any such
agent selected by it with reasonable care or for any action taken or omitted
to be taken by it in good faith in accordance with the advice of such counsel,
accountants or experts.
13.4 SUCCESSOR AGENT. Agent may resign as such at any time upon at
least thirty (30) days prior notice to Company and all Banks. If Agent at any
time shall resign or if the office of Agent shall become vacant for any other
reason, Majority Banks shall, by written instrument, appoint successor
agent(s) satisfactory to such Majority Banks, and, so long as no Default or
Event of Default has occurred and is continuing, to Company; provided, that
Company shall be entitled to deal with the Agent until receiving notice of
appointment of a successor agent. Such successor agent shall thereupon become
the Agent hereunder, as applicable, and shall be entitled to receive from the
prior Agent such documents of transfer and assignment as such successor Agent
may reasonably request. Any such successor Agent shall be a commercial bank
organized under the laws of the United States or any state thereof and shall
have a combined capital and surplus of at least $500,000,000. If a successor
is not so appointed or does not accept such appointment before the resigning
Agent's resignation becomes effective, the resigning Agent may appoint a
temporary successor which is one of the Banks to act until such appointment by
the Majority Banks is made and accepted or if no such temporary successor is
appointed as provided above by the resigning Agent, the Majority Banks shall
thereafter perform all of the duties of the resigning Agent hereunder until
such appointment by the Majority Banks is made and accepted. Such successor
Agent shall succeed to all of the rights and obligations of the resigning
Agent as if originally named. The resigning Agent shall duly assign, transfer
and deliver to such successor Agent all moneys at the time held by the
resigning Agent hereunder after deducting therefrom its expenses for which it
is entitled to be reimbursed. Upon such succession of any such successor
Agent, the provisions of this Article 13 shall continue in effect for the
benefit of the resigning Agent in respect of any actions taken or omitted to
be taken by it while it was acting as Agent.
13.5 LOANS BY AGENT. Comerica Bank and its successors and assigns, in
its capacity as a Bank hereunder, shall have the same rights and powers
hereunder as any other Bank and may exercise or refrain from exercising the
same as though it were not the Agent. Comerica Bank and its Affiliates may
(without having to account therefor to any Bank) accept deposits from, lend
money to, and generally engage in any kind of banking, trust, financial
advisory or other business with Company (or the shareholders of Company) as if
it were not acting as Agent hereunder, and may accept fees and other
consideration therefor without having to account for the same to the Banks.
13.6 CREDIT DECISIONS. Each Bank acknowledges that it has,
independently of Agent and each other Bank and based on the Financial
Statements of Company and such other documents, information and investigations
as it has deemed appropriate, made its own credit decision to extend credit
hereunder from time to time. Each Bank also acknowledges that it will,
independently of Agent and each other Bank and based on such other documents,
information and investigations as it shall deem appropriate at any time,
continue to make its own credit decisions as to exercising or not exercising
from time to time any rights and privileges available to it under this
Agreement or any document executed pursuant hereto.
13.7 AGENT'S FEES. Commencing on January 2, 1998 and on the first
Business Day of each succeeding year until the Indebtedness has been repaid
and no commitment to fund any Advance hereunder is outstanding, Company shall
pay to Agent an annual agency fee and such other fees and charges as set forth
in a letter agreement between Company and Agent dated even date herewith, as
may be amended, restated, and replaced from time to time. The Agent's Fees
described in this Section 13.7 shall not be refundable under any circumstance.
13.8 AUTHORITY OF AGENT TO ENFORCE NOTES AND THIS AGREEMENT. Each Bank,
subject to the terms and conditions of this Agreement, authorizes the Agent
with full power and authority as attorney-in-fact to institute and maintain
actions, suits or proceedings for the collection and enforcement of the Notes
and to file such proofs of debt or other documents as may be necessary to have
the claims of the Banks allowed in any proceeding relative to Company, or any
of its Subsidiaries, or their respective creditors or affecting their
respective properties, and to take such other actions which Agent considers to
be necessary or desirable for the protection, collection and enforcement of
the Notes, this Agreement or the Loan Documents.
13.9 INDEMNIFICATION. The Banks agree to indemnify the Agent (to the
extent not reimbursed by Company, but without limiting any obligation of
Company to make such reimbursement), ratably according to their respective
Percentages, from and against any and all claims, damages, losses,
liabilities, costs or expenses of any kind or nature whatsoever (including,
without limitation, fees and disbursements of counsel) which may be imposed
on, incurred by, or asserted against the Agent in any way relating to or
arising out of this Agreement, any of the other Loan Documents or the
transactions contemplated hereby or any action taken or omitted by the Agent
under this Agreement or any of the other Loan Documents; PROVIDED, however,
that no Bank shall be liable for any portion of such claims, damages, losses,
liabilities, costs or expenses resulting from the Agent's gross negligence or
willful misconduct. Without limitation of the foregoing, each Bank agrees to
reimburse the Agent promptly upon demand for its ratable share of any out-of-
pocket expenses (including, without limitation, fees and expenses of counsel)
incurred by the Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect
of rights or responsibilities under, this Agreement or any of the other Loan
Documents, to the extent that the Agent is not reimbursed for such expenses by
Company, but without limiting the obligation of Company to make such
reimbursement. Each Bank agrees to reimburse the Agent promptly upon demand
for its ratable share of any amounts owing to the Agent by the Banks pursuant
to this Section. If the indemnity furnished to the Agent under this Section
shall, in the judgment of the Agent, be insufficient or become impaired, the
Agent may call for additional indemnity from the Banks and cease, or not
commence, to take any action until such additional indemnity is furnished.
13.10 KNOWLEDGE OF DEFAULT. It is expressly understood and agreed that
the Agent shall be entitled to assume that no Event of Default has occurred
and is continuing, unless the officers of the Agent immediately responsible
for matters concerning this Agreement shall have been notified in a writing
specifying such Event of Default and stating that such notice is a "notice of
default" by a Bank or by Company. Upon receiving such a notice, the Agent
shall promptly notify each Bank of such Event of Default and provide each Bank
with a copy of such notice. Agent shall also furnish the Banks, promptly upon
receipt, with copies of all other notices or other information required to be
provided by Company under this Agreement.
13.11 AGENT'S AUTHORIZATION; ACTION BY BANKS. Except as otherwise
expressly provided herein, whenever the Agent is authorized and empowered
hereunder on behalf of the Banks to give any approval or consent, or to make
any request, or to take any other action on behalf of the Banks (including
without limitation the exercise of any right or remedy hereunder or under the
other Loan Documents), the Agent shall be required to give such approval or
consent, or to make such request or to take such other action only when so
requested in writing by the Majority Banks or all of the Banks, as applicable
hereunder. Action that may be taken by Majority Banks or all of the Banks, as
the case may be (as provided for hereunder) may be taken (i) pursuant to a
vote at a meeting (which may be held by telephone conference call) as to which
all of the Banks have been given reasonable advance notice, or (ii) pursuant
to the written consent of the requisite Percentages of the Banks as required
hereunder, provided that all of the Banks are given reasonable advance notice
of the requests for such consent.
13.12 ENFORCEMENT ACTIONS BY THE AGENT. Except as otherwise expressly
provided under this Agreement or in any of the other Loan Documents and
subject to the terms hereof, Agent will take such action, assert such rights
and pursue such remedies under this Agreement and the other Loan Documents as
the Majority Banks or all of the Banks, as the case may be (as provided for
hereunder), shall direct; PROVIDED, however, that the Agent shall not be
required to act or omit to act if, in the judgment of the Agent, such action
or omission may expose the Agent to personal liability or is contrary to this
Agreement, any of the other Loan Documents or applicable law. Except as
expressly provided above or elsewhere in this Agreement or the other Loan
Documents, no Bank (other than the Agent, acting in its capacity as agent)
shall be entitled to take any enforcement action of any kind under any of the
Loan Documents.
14. MISCELLANEOUS
14.1 RESTATEMENT OF PRIOR AGREEMENT. This Agreement amends, restates
and replaces in its entirety the Prior Agreement.
14.2 ACCOUNTING PRINCIPLES.
(a) Where the character or amount of any asset or liability or
item of income or expense is required to be determined or any
consolidation or other accounting computation is required to be made for
the purposes of this Agreement, it shall be done, unless otherwise
specified herein, in accordance with GAAP. Furthermore, all Financial
Statements required to be delivered hereunder shall be prepared in
accordance with GAAP.
(b) If any change in the accounting principles used in the
preparation of the most recent financial statements referred to in
Section 8.3 hereof are hereafter required or permitted by the rules,
regulations, pronouncements and opinions of the Financial Accounting
Standards Board or the American Institute of Certified Public
Accountants (or successors thereto or agencies with similar functions)
and are adopted by Company with the agreement of its independent
certified public accountants and such changes result in a change in the
method of calculation of any of the covenants, standards or terms found
in Section 8 (in its entirety) or Section 9 (in its entirety), the
parties hereto agree to enter into negotiations in order to amend such
provisions so as to equitably reflect such changes with the desired
result that the criteria for evaluating compliance with such covenants,
standards and terms by the Company shall be the same after such changes
as if such changes had not been made; PROVIDED, HOWEVER, no change in
GAAP that would affect the method of calculation of any of the
covenants, standards or terms shall be given effect in such calculations
until such provisions are amended, in a manner satisfactory to Majority
Banks and the Company, to so reflect such change in accounting
principles.
14.3 CONSENT TO JURISDICTION. Company and Banks hereby irrevocably
submit to the non-exclusive jurisdiction of any United States Federal,
Michigan state court sitting in Detroit or New York state court sitting in New
York City in any action or proceeding arising out of or relating to this
Agreement or any of the other Loan Documents and Company and Banks hereby
irrevocably agree that all claims in respect of such action or proceeding may
be heard and determined in any such United States Federal, Michigan state
court or New York state court. Company irrevocably consents to the service of
any and all process in any such action or proceeding brought in any court in
or of the State of Michigan or State of New York by the delivery of copies of
such process to Company at its address specified on the signature page hereto
or by certified mail directed to such address or such other address as may be
designated by Company in a notice to the other parties that complies as to
delivery with the terms of Section 14.7. Nothing in this Section shall affect
the right of the Banks and the Agent to serve process in any other manner
permitted by law or limit the right of the Banks or the Agent (or any of them)
to bring any such action or proceeding against Company or any Subsidiary or
any of its or their property in the courts of any other jurisdiction. Company
hereby irrevocably waives any objection to the laying of venue of any such
suit or proceeding in the above described courts.
14.4 LAW OF MICHIGAN. This Agreement and the Notes have been delivered
at Detroit, Michigan, and shall be governed by and construed and enforced in
accordance with the laws of the State of Michigan, except to the extent that
the Uniform Commercial Code, other personal property law or real property law
of a jurisdiction where Collateral is located is applicable and except as and
to the extent expressed to the contrary in any of the Loan Documents. Whenever
possible each provision of this Agreement shall be interpreted in such manner
as to be effective and valid under applicable law, but if any provision of
this Agreement shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
14.5 INTEREST. In the event the obligation of Company to pay interest
on the principal balance of the Notes is or becomes in excess of the maximum
interest rate which Company is permitted by law to contract or agree to pay,
giving due consideration to the execution date of this Agreement, then, in
that event, the rate of interest applicable with respect to each Bank's
Percentage shall be deemed to be immediately reduced to such maximum rate and
all previous payments in excess of the maximum rate shall be deemed to have
been payments in reduction of principal and not of interest.
14.6 CLOSING COSTS AND OTHER COSTS. Company agrees to pay, or reimburse
the Agent for payment of, on demand (a) all reasonable closing costs and
expenses, including, by way of description and not limitation, house and
outside attorney fees and advances, appraisal and accounting fees, and lien
search fees incurred by Agent (but not any of the other Banks) in connection
with the commitment, consummation and closing of the loans contemplated hereby
or in connection with the administration of this Agreement or any amendment,
waiver, refinancing or restructuring of the credit arrangements provided under
this Agreement, (b) all stamp and other taxes and fees payable or determined
to be payable in connection with the execution, delivery, filing, recording of
this Agreement or any amendment thereto and the other Loan Documents and the
consummation of the transactions contemplated hereby, and any and all
liabilities with respect to or resulting from any delay in paying or omitting
to pay such taxes or fees, (c) all reasonable costs and expenses of the Agent
or any of the Banks (including reasonable fees and expenses of counsel and
whether incurred through negotiations, legal proceedings or otherwise) in
connection with any Default or Event of Default or the enforcement of this
Agreement, or the other Loan Documents or in connection with any refinancing
or restructuring of the Indebtedness in the nature of a "work-out" or in any
insolvency or bankruptcy proceeding and (d) all reasonable fees and expenses
of the Agent or any of the Banks (including reasonable fees and expenses of
counsel) in connection with any action or proceeding relating to a court
order, injunction or other process or decree restraining or seeking to
restrain the Agent or any of the Banks from paying any amount under, otherwise
relating in any way to, any Letter of Credit and any and all costs and
expenses which any of them may incur relative to any payment under any Letter
of Credit. All of said amounts required to be paid by Company, may, at Agent's
option, be charged by Agent as a Prime-based Advance against the Indebtedness.
14.7 NOTICES. Except as expressly provided otherwise in this Agreement,
all notices and other communications provided to any party hereto under this
Agreement or any other Loan Document shall be in writing and shall be given by
personal delivery, by mail, by reputable overnight courier, by telex or by
facsimile and addressed or delivered to it at its address set forth on the
signature pages hereof or at such other address as may be designated by such
party in a notice to the other parties that complies as to delivery with the
terms of this Section 14.7. Any notice, if personally delivered or if mailed
and properly addressed with postage prepaid and sent by registered or
certified mail, shall be deemed given when received or when delivery is
refused; any notice, if given to a reputable overnight courier and properly
addressed, shall be deemed given two (2) Business Days after the date on which
it was sent, unless it is actually received sooner by the named addressee; and
any notice, if transmitted by telex or facsimile, shall be deemed given when
received (answerback confirmed in the case of telexes and receipt confirmed in
the case of telecopies). Agent may, but shall not be required to, take any
action on the basis of any notice given to it by telephone, but the giver of
any such notice shall promptly confirm such notice in writing or by telex or
facsimile, and such notice will not be deemed to have been received until such
confirmation is deemed received in accordance with the provisions of this
Section set forth above. If such telephonic notice conflicts with any such
confirmation, the terms of such telephonic notice shall control.
14.8 FURTHER ACTION. Company, from time to time, upon written request
of Agent will make, execute, acknowledge and deliver or cause to be made,
executed, acknowledged and delivered, all such further and additional
instruments, and take all such further action as may reasonably be required to
carry out the intent and purpose of this Agreement or the other Loan
Documents, and to provide for Advances under and payment of the Notes,
according to the intent and purpose herein and therein expressed.
14.9 SUCCESSORS AND ASSIGNS; PARTICIPATIONS; ASSIGNMENTS.
(a) This Agreement shall be binding upon and shall inure to the
benefit of Company, the Agent and the Banks, and their respective successors
and assigns.
(b) The foregoing shall not authorize any assignment by Company
of its rights or duties hereunder, and no such assignment shall be made (or
effective) without the prior written approval of the Banks.
(c) None of the Banks may assign or grant participations in its
rights or obligations hereunder or under the other Loan Documents without the
prior written approval of the Agent, and, so long as no Event of Default has
occurred and is continuing, the Company except that the approval of Company
and Agent shall not be required for the grant of a participation by a Bank to
its Affiliate. Upon the consummation of any assignment under this Section,
Agent shall prepare and distribute to Company and each Bank, a revised EXHIBIT
"C" to this Agreement setting forth the applicable new Percentages of the
Banks (including the assignee Bank) taking into account such assignment.
(d) Nothing in this Agreement, the other Loan Documents or the
Notes, expressed or implied, is intended to or shall confer on any Person
other than the respective parties hereto and thereto and their successors
permitted hereunder and thereunder any benefit or any legal or equitable
right, remedy or other claim under this Agreement, the Notes or the other Loan
Documents.
14.10 INDULGENCE. No delay or failure of Agent and the Banks in
exercising any right, power or privilege hereunder shall affect such right,
power or privilege nor shall any single or partial exercise thereof preclude
any other or further exercise thereof, nor the exercise of any other right,
power or privilege. The rights of Agent and the Banks hereunder are cumulative
and are not exclusive of any rights or remedies which Agent and the Banks
would otherwise have.
14.11 COUNTERPARTS. This Agreement may be executed in several
counterparts, and each executed copy shall constitute an original instrument,
but such counterparts shall together constitute but one and the same
instrument.
14.12 AMENDMENT AND WAIVER. No amendment or waiver of any provision of
this Agreement or any other Loan Document, nor consent to any departure by
Company therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Majority Banks or, if this Agreement expressly so
requires with respect to the subject matter thereof, by all Banks (and, with
respect to any amendments to this Agreement or the other Loan Documents, by
Company or the Subsidiaries which are signatories thereto), and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given; PROVIDED, however, that no amendment, waiver
or consent shall, unless in writing and signed by all the Banks, do any of the
following: (a) subject the Banks to any additional obligations, (b) reduce the
principal of, or interest on, the Notes or any Fees (other than the Agent's
Fees) or other amounts payable hereunder, (c) postpone any date fixed for any
payment of principal of, or interest on, the Notes or any Fees (other than the
Agent's Fees) or other amounts payable hereunder, (d) waive any Event of
Default specified in Section 10.1(a) or (b) hereof, (e) subject to Section
14.16 hereof, release or defer the granting or perfecting of a Lien in any
Collateral or release any guaranty or similar undertaking provided by any
Person, or alter the required priority of any Lien or terminate or modify any
indemnity provided to the Banks hereunder or under the Loan Documents, except
as shall be otherwise expressly provided in this Agreement or any other Loan
Document, (f) take any action which requires the signing of all Banks pursuant
to the terms of this Agreement or any other Loan Document, (g) change the
aggregate unpaid principal amount of the Notes which shall be required for the
Banks or any of them to take any action under this Agreement or any other Loan
Document, or (h) change the definition of "Majority Banks" or this Section
14.12; PROVIDED FURTHER, that no amendment, wavier or consent shall, unless in
writing signed by the Swing Line Bank do either of the following: (x) reduce
the principal of, or interest on, the Swing Line Note or (y) postpone any date
fixed any payment of principal of, or interest on, the Swing Line Note;
PROVIDED FURTHER, that no amendment, waiver, or consent shall, unless in
writing and signed by the Agent in addition to all the Banks, affect the
rights or duties of the Agent under this Agreement or any other Loan Document.
All references in this Agreement to "Banks" or "the Banks" shall refer to all
Banks, unless expressly stated to refer to Majority Banks.
14.13 TAXES AND FEES. Should any documentary, stamp or similar tax
(other than a franchise tax or tax based upon the net income of any Bank or
Agent imposed by the jurisdiction in which such Bank or Agent have their
respective principal executive offices), or recording or filing fee become
payable in respect of this Agreement or any of the other Loan Documents (or
the execution, filing or recording thereof) or any amendment, modification or
supplement hereof or thereof, Company agrees to pay the same together with any
interest or penalties thereon and agrees to hold the Agent and the Banks
harmless with respect thereto.
14.14 CONFIDENTIALITY. Each Bank agrees that it will not disclose
without the prior written consent of Company (other than to its employees, to
another Bank or to its auditors or counsel) any information with respect to
Company, which is furnished pursuant to this Agreement or any of the other
Loan Documents; provided that any Bank may disclose any such information (a)
as has become generally available to the public or has been lawfully obtained
by such Bank from any third party under no duty of confidentiality to Company,
(b) as may be required or appropriate in any report, statement or testimony
submitted to, or in respect to any inquiry, by, any municipal, state or
federal regulatory body having or claiming to have jurisdiction over such
Bank, including the Board of Governors of the Federal Reserve System of the
United States, the Office of the Comptroller of the Currency or the Federal
Deposit Insurance Corporation or similar organizations (whether in the United
States or elsewhere) or their successors, (c) as may be required or
appropriate in respect to any summons or subpoena or in connection with any
litigation, (d) in order to comply with any law, order, regulation or ruling
applicable to such Bank, and (e) to any permitted transferee or assignee or to
any permitted participant of, or with respect to, the Notes, as aforesaid so
long as such transferee or assignee agrees in writing to be bound by the terms
and conditions of this Section 14.14. Each Bank shall give notice to Company
of any disclosure made by such Bank under this Section unless such notice is
prohibited by law, order, regulation or ruling.
14.15 WITHHOLDING TAXES. If any Bank is not incorporated under the laws
of the United States or a state thereof, such Bank shall, prior to the
effective date of this Agreement in the case of the lenders which are Banks as
of the date of this Agreement and prior to the effective date of any
assignment permitted under Section 14.9 hereof in the case of any lender which
becomes or Bank after the date hereof, deliver to the Agent two executed
copies of (i) Internal Revenue Service Form 1001 specifying the applicable tax
treaty between the United States and the jurisdiction of such Bank's domicile
which provides for the exemption from withholding on interest payments to such
Bank, (ii) Internal Revenue Service Form 4224 evidencing that the income to be
received by such Bank hereunder is effectively connected with the conduct of a
trade or business in the United States or (iii) other evidence satisfactory to
the Agent and Company that such Bank is exempt from United States income tax
withholding with respect to such income. Such Bank shall amend or supplement
any such form or evidence (and submit new forms or evidence upon the
expiration of any forms or other evidence previously delivered to Agent) as
required to insure that it is accurate, complete and non-misleading at all
times. Promptly upon notice from the Agent of any determination by the
Internal Revenue Service that any payments previously made to such Bank
hereunder were subject to United States income tax withholding when made, such
Bank shall pay to the Agent the excess of the aggregate amount required to be
withheld from such payments over the aggregate amount actually withheld by the
Agent. In addition, from time to time upon the reasonable request and at the
sole expense of the Company, each Bank and the Agent shall (to the extent it
is able to do so based upon applicable facts and circumstances), complete and
provide the Company with such forms, certificates or other documents as may be
reasonably necessary to allow the Company to make any payment under this
Agreement or the other Loan Documents without any withholding for or on the
account of any tax under Section 11.1(d) hereof (or with such withholding at a
reduced rate), provided that the execution and delivery of such forms,
certificates or other documents does not adversely affect or otherwise
restrict the right and benefits (including without limitation economic
benefits) available to such Bank or the Agent, as the case may be, under this
Agreement or any of the other Loan Documents, or under or in connection with
any transactions not related to the transactions contemplated hereby.
Notwithstanding any provision of this Section 14.15 or Section 11.1(d) to the
contrary, Company shall have no obligation to pay a Gross-Up with respect to
withholding tax paid by Company pursuant to Section 11.1(d) to the extent such
Gross-Up results from any agreement or certificate delivered pursuant to this
Section having been incorrect in any material respect when made.
14.16 RELEASE OF COLLATERAL. Agent shall be entitled (for and on behalf
of itself and the Banks) to release any Collateral which Company or any of the
Subsidiaries is permitted to sell or transfer under the terms of this
Agreement, without any further action or consent of the Banks but with notice
to the Banks.
14.17 POWER OF ATTORNEY. Company does hereby make, constitute and
appoint any officer or agent of Agent as its true and lawful attorney-in-fact,
with power, upon the occurrence of any Event of Default (exercisable only so
long as such Event of Default is continuing and with full power of
substitution), to endorse its name, or the names of any of its officers or
agents, upon any notes, checks, drafts, money orders, or other instruments of
payment (including payments payable under any policy of insurance) or
Collateral that may come into possession of the Agent in full or part payment
of any amounts owing to the Banks; to sign and endorse the name of Company,
and/or any of its officers or agents, upon any invoice, freight or express
bill, bill of lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications and notices in connection with Accounts of the
Company, and any instrument or document relating thereto or to Company's
rights therein; to request from any insurance company providing insurance
coverage in accordance with Section 6.14 hereof to issue certificates of
insurance, at Company's expense, evidencing the loss payable provisions
required under Section 6.14 hereof; to execute on behalf of Company any
financing statements, amendments, subordinations or other filings pursuant to
this Agreement or any of the Loan Documents, granting unto Agent, as the
attorney-in-fact of Company, full power to do any and all things necessary to
be done in and about the Company's or any Subsidiary's premises as fully and
effectually as Company might or could do, and hereby ratifying all that any
said attorney shall lawfully do or cause to be done by virtue hereof. The
power of attorney described herein shall be deemed coupled with an interest
and shall be irrevocable until the Revolving Credit Maturity Date and
thereafter until payment in full of all the Indebtedness and the performance
by Company and the Subsidiaries of all other obligations under this Agreement
and the Loan Documents; Agent may, at any time after the occurrence of an
Event of Default, notify Account Debtors that Collateral has been assigned to
Agent on behalf of the Banks and that payments shall be made directly to
Agent. Upon request of the Agent, Company will so notify such Account Debtors
and will indicate on all billings to such Account Debtors that their accounts
must be paid to or as directed by Agent. The Agent acting on behalf of the
Banks shall have full power to collect, compromise, endorse, sell or otherwise
deal with the Collateral or proceeds thereof in the name of the Agent or in
the name of Company, provided that Agent shall act in a commercially
reasonable manner. Company further shall cause the Subsidiaries to provide
powers of attorney to Agent on substantially the foregoing terms.
14.18 WAIVER OF JURY TRIAL. THE BANKS, THE AGENT AND THE COMPANY AFTER
CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT ANY OF THEM MAY HAVE TO A TRIAL
BY JURY IN ANY LITIGATION BASED UPON OR ARISING OUT OF THIS AGREEMENT, ANY OF
THE OTHER LOAN DOCUMENTS OR ANY RELATED INSTRUMENT OR AGREEMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY COURSE OF CONDUCT, DEALING,
STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTION OF ANY OF THEM. NEITHER THE
BANKS, THE AGENT, NOR COMPANY SHALL SEEK TO CONSOLIDATE, BY COUNTERCLAIM OR
OTHERWISE, ANY SUCH ACTION IN WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY
OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THESE
PROVISIONS SHALL NOT BE DEEMED TO HAVE BEEN MODIFIED IN ANY RESPECT OR
RELINQUISHED BY THE BANKS AND THE AGENT OR COMPANY EXCEPT BY A WRITTEN
INSTRUMENT EXECUTED BY ALL OF THEM.
14.19 COMPLETE AGREEMENT; CONFLICTS. This Agreement, the Notes, any
Requests for Advance hereunder, and the other Loan Documents contain the
entire agreement of the parties hereto, superseding all prior agreements,
discussions and understandings relating to the subject matter hereof, and none
of the parties shall be bound by anything not expressed in writing. In the
event of any conflict between the terms of this Agreement and the other Loan
Documents, this Agreement shall govern.
14.20 SEVERABILITY. In case any one or more of the obligations of
Company under this Agreement, the Notes or any of the other Loan Documents
shall be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining obligations of Company shall not
in any way be affected or impaired thereby, and such invalidity, illegality or
unenforceability in one jurisdiction shall not affect the validity, legality
or enforceability of the obligations of Company under this Agreement, the
Notes or any of the other Loan Documents in any other jurisdiction.
14.21 TABLE OF CONTENTS AND HEADINGS. The table of contents and the
headings of the various subdivisions hereof are for convenience of reference
only and shall in no way modify or affect any of the terms or provisions
hereof.
14.22 CONSTRUCTION OF CERTAIN PROVISIONS. If any provision of this
Agreement or any of the other Loan Documents refers to any action to be taken
by any Person, or which such Person is prohibited from taking, such provision
shall be applicable whether such action is taken directly or indirectly by
such Person, whether or not expressly specified in such provision.
14.23 INDEPENDENCE OF COVENANTS. Each covenant hereunder shall be given
independent effect (subject to any exceptions stated in such covenant) so that
if a particular action or condition is not permitted by any such covenant
(taking into account any such stated exception), the fact that it would be
permitted by an exception to, or would be otherwise within the limitations of,
another covenant shall not avoid the occurrence of a Default or an Event of
Default.
14.24 RELIANCE ON AND SURVIVAL OF VARIOUS PROVISIONS. All terms,
covenants, agreements, representations and warranties of Company or any party
to any of the Loan Documents made herein or in any of the Loan Documents or in
any certificate, report, Financial Statement or other document furnished by or
on behalf of Company or any Subsidiary in connection with this Agreement or
any of the other Loan Documents shall be deemed to have been relied upon by
the Banks, notwithstanding any investigation heretofore or hereafter made by
any Bank or on such Bank's behalf, and those covenants and agreements of
Company set forth in Sections 8.11, 8.14(c), 12.1, 12.6, and 14.6 hereof
(together with any other indemnities of Company or any Subsidiary contained
elsewhere in this Agreement or in any of the other Loan Documents) and of
Banks set forth in Section 14.14 hereof shall, notwithstanding anything to the
contrary contained in this Agreement, survive the repayment in full of the
Indebtedness and the termination of the Revolving Credit Aggregate Commitment.
14.25 EFFECTIVE UPON EXECUTION. This Agreement shall become effective
upon the execution hereof by Banks, Agent and Company and the issuance by
Company of the Notes hereunder and satisfaction of all conditions precedent
forth herein, and shall remain effective until the Indebtedness has been
repaid and discharged in full and no commitment to extend any credit hereunder
or under any of the other Loan Documents, whether optional or obligatory,
remains outstanding.
14.26 PAYMENT OF FEES. Concurrent with the execution and delivery of
this Agreement, Company shall pay to the Agent all costs and expenses required
hereunder to be paid to Agent upon execution of this Agreement.
[The rest of this page intentionally left blank.]
WITNESS the due execution hereof as of the day and year first above
written.
COMPANY: VALASSIS COMMUNICATIONS, INC.
By:
Barry P. Hoffman
Its: Secretary
19975 Victor Parkway
Livonia, Michigan 48152
Attn: Barry P. Hoffman, Esq.
Telephone (313) 591-3000
Facsimile No. (313) 591-4460
AGENT: COMERICA BANK, as Agent
By:
Its:
One Detroit Center
500 Woodward Avenue
23rd Floor
Detroit, Michigan 48226
Attention: M. Scot Zimmerman
REVOLVING CREDIT BANKS:
Operations Contact: COMERICA BANK
Comerica Bank
One Detroit Center By:
500 Woodward Ave.
MC 3289 Its:
Detroit, Michigan 48226 One Detroit Center
Attention: Nekold Oliphant 500 Woodward Avenue, 23rd
Floor
Telephone No. (313) 222-5270 Detroit, Michigan 48226
Facsimile No. (313) 222-5199 Attention: M. Scot Zimmerman
Telephone: (313) 222-3078
Facsimile No. (313) 961-8516
Operations Contact: HARRIS TRUST AND SAVINGS BANKS
Harris Trust and Savings Bank
111 W. Monroe, Tenth Floor West By:
Chicago, Illinois 60603 Jeffrey C. Nicholson
Telephone No. (312) 461-2736 Its: Vice President
Facsimile No. (312) 461-5225 111 West Monroe Street, Tenth Floor
West
Chicago, Illinois 60603
Attention: Jeffrey C. Nicholson
Telephone: (312) 461-2736
Voce Mail: (800) 433-5857
Facsimile No. (312) 461-5225
Operations Contact: THE LONG-TERM CREDIT BANK OF
JAPAN, LTD.
The Long-Term Credit Bank of
Japan, Ltd.
New York Branch
165 Broadway By:
48th Floor
New York, New York 10006 Its:
Attention: Robert Pacifici 190 S. LaSalle Street
Telephone No. (212) 335-4801 Suite 800
Facsimile No. (212) 608-3452 Chicago, IL 60603
Attention: Tetsuya Fujii
Telephone: (312) 704-5471
Facsimile No. (312) 704-8505
SWING LINE BANK: COMERICA BANK
By:
Its:
One Detroit Center
500 Woodward Avenue, 23rd Floor
Detroit, Michigan 48226
Attention: M. Scot Zimmerman
Telephone: (313) 222-3078
Facsimile No. (313) 961-8516
EXHIBIT "A"
BORROWING BASE AND COVENANT COMPLIANCE REPORT
To: Comerica Bank
Re: Valassis Communications, Inc. Revolving Credit Agreement dated as
of September 11, 1997(the "Agreement")
This Borrowing Base and Covenant Compliance Report ("Report") is
furnished pursuant to Section 8.3 of the Agreement and sets forth various
information as of , 19 (the "Computation Date").
Part I.
1. EBITDA. On the Computation Date, EBITDA, which is required to be
not less than $90,000,000, was $ as computed in the supporting
documents attached hereto as Schedule 1.
2. FIXED CHARGE COVERAGE RATIO. On the Computation Date, the Fixed
Charge Coverage Ratio, which is required to be not less than 1.35 to 1.0, was
to 1.0 as computed in the supporting documents attached hereto as
Schedule 2.
3. SENIOR DEBT TO EBITDA RATIO. As of the Computation Date, the
Senior Debt to EBITDA Ratio, which is required to be not more than 4.0 to 1.0,
was to 1.0 as computed in the supporting documents attached hereto
as Schedule 3.
Part II
The undersigned officer of Company hereby certifies that:
A. All of the information set forth in this Report (and in any
Schedule attached hereto) is true and correct in all material respects.
B. As of the Computation Date, the Company has observed and performed
all of its covenants and other agreements contained in the Agreement and in
the Notes and any other Loan Documents to be observed, performed and satisfied
by them.
C. I have reviewed the Agreement and this Report is based on an
examination sufficient to assure that this Report is accurate.
D. Except as stated in Schedule 5 hereto (which shall describe any
existing Event of Default or event which with the passage of time and/or the
giving of notice, would constitute an Event of Default and the notice and
period of existence thereof and any action taken with respect thereto or
contemplated to be taken by Company), no Event of Default, or event which with
the passage of time and/or the giving of notice would constitute an Event of
Default, has occurred and is continuing on the date of this Report.
Capitalized terms used in this Report and in the schedules hereto,
unless specifically defined to the contrary, have the meanings given to them
in the Agreement.
IN WITNESS WHEREOF, Company has caused this Report to be executed and
delivered by its duly authorized officer this day of
, 19 .
VALASSIS COMMUNICATIONS, INC.
By:
Its:
EXHIBIT "B"
REVOLVING CREDIT NOTE
$ September 11, 1997
On the Revolving Credit Maturity Date, FOR VALUE RECEIVED, Valassis
Communications, Inc., a Delaware corporation ("Company") promises to pay to
the order of [INSERT BANK] ("Bank") at , in lawful money of the
United States of America, the sum of [INSERT AMOUNT DERIVED FROM PERCENTAGES]
Dollars ($ ), or so much of said sum as may from time to time have
been advanced and then be outstanding hereunder pursuant to the Valassis
Communications, Inc. Revolving Credit Agreement dated as of September 11,
1997, made by and among the Company, certain banks, including the Bank, and
Comerica Bank as Agent for such banks, as the same may be amended from time to
time (the "Agreement"), together with interest thereon as hereinafter set
forth.
Each of the Advances made hereunder shall bear interest at the
Applicable Interest Rate from time to time applicable thereto under the
Agreement or as otherwise determined thereunder, and interest shall be
computed, assessed and payable as set forth in the Agreement.
This Note is a note under which advances (including refundings and
conversions), repayments and readvances may be made from time to time, but
only in accordance with the terms and conditions of the Agreement. This Note
evidences borrowings under, is subject to, is secured in accordance with, and
may be accelerated or matured under, the terms of the Agreement, to which
reference is hereby made. Definitions and terms of the Agreement are hereby
incorporated by reference herein.
This Note shall be interpreted and the rights of the parties hereunder
shall be determined under the laws of, and enforceable in, the State of
Michigan.
Company hereby waives presentment for payment, demand, protest and
notice of dishonor and nonpayment of this Note and agrees that no obligation
hereunder shall be discharged by reason of any extension, indulgence, release,
or forbearance granted by any holder of this Note to any party now or
hereafter liable hereon or any present or subsequent owner of any property,
real or personal, which is now or hereafter security for this Note.
Nothing herein shall limit any right granted Bank by any other
instrument or by law.
VALASSIS COMMUNICATIONS, INC.
By:
Its:
EXHIBIT "C"
PERCENTAGES
BANK PERCENTAGE
Comerica Bank 50
Harris Trust and Savings Bank 25
The Long-Term Credit Bank of Japan, Ltd. 25
------
100%
EXHIBIT "D"
REQUEST FOR REVOLVING CREDIT ADVANCE
No. Dated:
To: Comerica Bank - Agent
Re: Valassis Communications, Inc. Revolving Credit Agreement by and among
Comerica Bank (individually and as Agent), the lenders from time to time
parties thereto (collectively, "Banks"), and Valassis Communications,
Inc. ("Company") dated as of September 11, 1997 (as amended from time to
time, the "Agreement").
Pursuant to the Agreement, the Company requests a Revolving Credit
Advance from Banks as follows:
A. Date of Advance:
B. Amount of Advance: $
Comerica Bank Account No. _______________
Other: __________________________________
__________________________________
C. Type of Activity:
1. Advance
2. Refunding of an Advance
3. Conversion
D. Interest Rate:
1. Prime-based Rate
2. Eurocurrency-based Rate
E. Interest Period (for Eurocurrency-based Advances only):
1. One (1) Month
2. Two (2) Months
3. Three (3) Months
4. Six (6) Months
The Company certifies to the matters specified in Section 2.3(e) of the
Agreement.
VALASSIS COMMUNICATIONS, INC.
By:
Its:
Agent Approval:
EXHIBIT "E"
REQUEST FOR SWING LINE ADVANCE
No. Dated:
To: Comerica Bank, Swing Line Bank
Re: Valassis Communications, Inc. Credit Agreement by and among Comerica
Bank (individually and as Agent), the lenders from time to time parties
thereto (collectively, "Banks"), and Valassis Communications, Inc.
("Company") dated as of September 11, 1997 (as amended from time to
time, the "Agreement").
Pursuant to the Agreement, the Company requests a Swing Line Advance
from the Swing Line Bank as follows:
A. Date of Advance:
B. Amount of Advance: $
Comerica Bank Account No.
Other:
C. Interest Rate:
1. Prime-based Rate
2. Quoted Rate
D. Interest Period:
1. days
The Company certifies to the matters specified in Section 4.3(e) of the
Agreement.
VALASSIS COMMUNICATIONS, INC.
By:
Its:
Swing Line Bank Approval:
EXHIBIT "F"
SWING LINE NOTE
$5,000,000 September 11, 1997
On the Revolving Credit Maturity Date, FOR VALUE RECEIVED, VALASSIS
COMMUNICATIONS, INC., a Michigan corporation ("Company") promises to pay to
the order of Comerica Bank ("Bank") at 500 Woodward Avenue, Detroit, Michigan
in lawful money of the United States of America, the sum of Five Million
Dollars ($5,000,000), or so much of said sum as may from time to time have
been advanced and then be outstanding hereunder pursuant to Article 4 of the
Credit Agreement dated as of September 11, 1997, executed by and among the
Company, certain banks, including the Bank, and Comerica Bank as Agent for
such banks, as the same may be amended from time to time (the "Agreement"),
together with interest thereon as hereinafter set forth.
The unpaid principal indebtedness from time to time outstanding under
this Note shall be due and payable on the last day of the Interest Period
applicable thereto or as otherwise set forth in the Agreement, provided that
no Swing Line Advance may mature or be payable on a day later than the
Revolving Credit Maturity Date.
Each of the Swing Line Advances made hereunder shall bear interest at
the Prime-based Rate or the Quoted Rate from time to time applicable thereto
under the Agreement or as otherwise determined thereunder, and interest shall
be computed, assessed and payable as set forth in the Agreement.
This Note is a note under which advances, repayments and readvances may
be made from time to time, but only in accordance with the terms and
conditions of the Agreement. This Note evidences borrowings under, is subject
to, is secured in accordance with, and may be accelerated or matured under,
the terms of the Agreement, to which reference is hereby made. Definitions and
terms of the Agreement are hereby incorporated by reference herein.
This Note shall be interpreted and the rights of the parties hereunder
shall be determined under the laws of, and enforceable in, the State of
Michigan.
Company hereby waives presentment for payment, demand, protest and
notice of dishonor and nonpayment of this Note and agrees that no obligation
hereunder shall be discharged by reason of any extension, indulgence, release,
or forbearance granted by any holder of this Note to any party now or
hereafter liable hereon or any present or subsequent owner of any property,
real or personal, which is now or hereafter security for this Note.
Nothing herein shall limit any right granted Bank by any other
instrument or by law.
VALASSIS COMMUNICATIONS, INC.
By:
Its:
EXHIBIT "G"
LETTER OF CREDIT NOTICE
TO: Members of the Bank Group
RE: Issuance of Letter of Credit pursuant to Article 3 of the Valassis
Communications, Inc. ("Company") Credit Agreement ("Agreement") dated
September 11, 1997 between Company, Agent and the Banks.
On , 19 , Agent, in accordance with Article 3 of
the Agreement, issued its Letter of Credit number , in favor of
for the account of Company [and
]. The face amount of such Letter of Credit is $ . The
amount of each Bank's participation in the Letter of Credit is as follows:
Comerica Bank $
$
$
$
$
This notification is delivered this day of , 19 ,
pursuant to Section 3.3 of the Agreement. Except as otherwise defined,
capitalized terms used herein have the meanings given them in the Agreement.
Signed:
COMERICA BANK
EXHIBIT "H"
FORM OF SWING LINE LOAN PARTICIPATION CERTIFICATE
, 19
[Name of Bank]
Dear Sirs:
Pursuant to subsection 4.5(b) of the Credit Agreement dated as of
September 11, 1997, among Valassis Communications, Inc., the Banks named
therein and Comerica Bank, as Agent, the undersigned hereby acknowledges
receipt from you of $ as payment for a participating interest
in the following Swing Line Loan:
Date of Swing Line Loan:
Principal Amount of Swing Line Loan:
The participation evidenced by this certificate shall be subject to the terms
and conditions of the Agreement including without limitation Section 4.5(b)
thereof.
Very truly yours,
COMERICA BANK, as Agent
By:
Its:
SCHEDULE 1.2
ADDITIONAL PERMITTED ENCUMBRANCES
1. Liens referenced in Schedule 1.2(A) hereto relating to the Livonia,
Michigan property owned by Company.
2. Liens referenced in Schedule 1.2(B) hereto relating to the Wichita,
Kansas property owned by Company.
3. Liens referenced in Schedule 1.2(C) hereto relating to the Durham, North
Carolina property owned by Company.
4. Liens on the equipment subject to the equipment leases listed as Item 4
on Schedule 9.4 hereof.
5. Liens on deposits for equipment purchases relating to equipment ordered
by Company but not yet delivered, not exceeding $2 million in the
aggregate amount.
SCHEDULE 7.8
JOINT VENTURES
None.
SCHEDULE 7.16
LITIGATION - COMPANY
None.
SCHEDULE 7.17
LITIGATION - SUBSIDIARIES
None.
SCHEDULE 7.21
PENSION PLANS SUBJECT TO TITLE IV OF ERISA
None.
SCHEDULE 7.23
ENVIRONMENTAL MATTERS
SCHEDULE 7.24
CONTINGENT OBLIGATIONS
(NOT DISCLOSED BY OR RESERVED AGAINST
IN JUNE 30, 1997 BALANCE SHEETS)
None.
SCHEDULE 9.4
EXISTING DEBT
SCHEDULE 9.8
ADDITIONAL INVESTMENTS
