SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) April 14,
1998 UNIROYAL TECHNOLOGY CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State of other jurisdiction of incorporation)
0-20686 65-0341868
(Commission File Number) (IRS Employer Identification No.)
Two North Tamiami Trail, Suite 900
Sarasota, Florida 34236
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (941) 366-2100
(Former name or former address, if changed since last report.)
<PAGE>
Item 5. Other Events.
On April 14, 1998, Uniroyal Technology Corporation (the "Company")
defeased its 11-3/4% Senior Secured Notes Due June 1, 2003 (the "Senior Secured
Notes") and issued a notice of redemption of the Senior Secured Notes. The
redemption of the Senior Secured Notes is to be completed on June 1, 1998.
Also on June 14, 1998, the Company transferred all of the assets of its
High Performance Plastics segment to a newly created wholly-owned subsidiary,
High Performance Plastics, Inc. ("HPPI"), and HPPI , as borrower, entered into a
Credit Agreement with Uniroyal HPP Holdings, Inc., the Company, the banks,
financial institutions and other institutional lenders named therein , Fleet
National Bank (as Initial Issuing Bank, Swing Line Bank and Administrative
Agent) and DLJ Capital Funding,Inc., as Documentation Agent, providing, among
other things, for the borrowing by HPPI of an aggregate principal amount of up
to $110 million. A copy of the Credit Agreement is filed herewith as Exhibit A.
HPPI then paid a dividend of $95 million to the Company. The Company used such
amount to defease the Senior Secured Notes and to pay down its revolving credit
line with The CIT Group/Business Credit, Inc. ("CIT").
Also on June 14, 1998, the Company entered into an Amendment
and Consent Agreement with CIT, whereby the Company's existing revolving credit
arrangement was amended to reduce the total potential borrowing by the Company
to an aggregate principal amount of up to $10 million and to add inventories to
the collateral securing the credit line.. The collateral securing the Credit
Line does not include any assets of HPPI. A copy of the Amendment and Consent
Agreement is filed herewith as Exhibit B
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
UNIROYAL TECHNOLOGY CORPORATION
By:
George J. Zulanas, Jr.
Vice President, Treasurer and
Chief Financial Officer
Dated: April 21, 1998
<PAGE>
EXHIBIT A
$110,000,000
CREDIT AGREEMENT
Dated as of April 14, 1998
among
HIGH PERFORMANCE PLASTICS, INC.,
as Borrower,
UNIROYAL TECHNOLOGY CORPORATION,
UNIROYAL HPP HOLDINGS, INC.,
THE BANKS, FINANCIAL INSTITUTIONS AND
OTHER INSTITUTIONAL LENDERS NAMED HEREIN,
as Initial Lenders,
FLEET NATIONAL BANK,
as Initial Issuing Bank,
FLEET NATIONAL BANK,
as Swing Line Bank,
FLEET NATIONAL BANK,
as Administrative Agent,
and
DLJ CAPITAL FUNDING, INC.,
as Documentation Agent
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS 1
SECTION 1.01. Certain Defined Terms 1
SECTION 1.02. Computation of Time Periods 28
SECTION 1.03. Accounting Terms 29
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
AND THE LETTERS OF CREDIT 29
SECTION 2.01. The Advances 29
(a) The Term A Advances 29
(b) The Term B Advances 29
(c) The Revolving Credit Advances 29
(d) The Swing Line Advances 30
(e) Letters of Credit 30
SECTION 2.02. Making the Advances 31
SECTION 2.03. Issuance of and Drawings and
Reimbursement Under Letters
of Credit 33
(a) Request for Issuance 33
(b) Letter of Credit Reports 34
(c) Drawing and Reimbursement 34
(d) Failure to Make Letter of Credit
Advances 35
SECTION 2.04. Repayment of Advances 35
(a) Term A Advances 35
(b) Term B Advances 36
(c) Revolving Credit Advances 37
(d) Swing Line Advances 37
(e) Letter of Credit Advances 37
SECTION 2.05. Termination or Reduction of the
Commitments 38
(a) Optional 38
(b) Mandatory 38
SECTION 2.06. Prepayments 39
(a) Optional 39
(b) Mandatory 39
(c) Application of Prepayments
to the Term A Facility and
the Term B Facility 41
SECTION 2.07. Interest 41
(a) Scheduled Interest 41
(i) Prime Rate Advances 41
(ii) Eurodollar Rate
Advances 41
(b) Default Interest 42
(c) Notice of Interest Rate 42
SECTION 2.08. Fees 42
(a) Commitment Fees 42
(b) Letter of Credit Fees 42
(c) Administrative Agent's Fees 43
SECTION 2.09. Conversion of Advances 43
(a) Optional 43
(b) Mandatory 43
SECTION 2.10. Increased Costs, Etc 44
--------------------
SECTION 2.11. Payments and Computations 45
-------------------------
SECTION 2.12. Taxes 47
-----
SECTION 2.13. Sharing of Payments, Etc 49
------------------------
SECTION 2.14. Use of Proceeds 50
---------------
SECTION 2.15. Defaulting Lenders 50
------------------
SECTION 2.16. Source of Funds 52
---------------
ARTICLE III
CONDITIONS OF LENDING 54
SECTION 3.01. Conditions Precedent to
Initial Extension of Credit 54
SECTION 3.02. Conditions Precedent to Each
Borrowing and Issuance 61
SECTION 3.03. Determinations Under Section 3.01 62
ARTICLE IV
REPRESENTATIONS AND WARRANTIES 62
SECTION 4.01. Representations and Warranties
of the Borrower 62
ARTICLE V
COVENANTS OF THE BORROWER AND ITS SUBSIDIARIES 69
SECTION 5.01. Affirmative Covenants 69
(a) Compliance with Law 69
(b) Payment of Taxes, Etc 69
(c) Compliance with Environmental
Laws 69
(d) Preparation of Environmental
Reports. 70
------------------------------------
(e) Maintenance of Insurance 70
------------------------
(f) Preservation of Corporate
Existence, Etc 71
----------------------------------------
(g) Visitation Rights 71
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(h) Keeping of Books 71
----------------
(i) Maintenance of Properties, Etc 71
------------------------------
(j) Compliance with Terms of
Leaseholds 71
-----------------------------------
(k) Performance of Material
Contracts 71
---------------------------------
(l) Transactions with Affiliates 72
----------------------------
(m) Agreement to Grant Additional
Security 72
--------------------------------------
(n) Interest Rate Protection 74
------------------------
SECTION 5.02. Negative Covenants with Respect
to the Borrower and its
Subsidiaries 74
(a) Liens, Etc. 74
(b) Debt 75
(c) Accounts Payable 76
(d) Fundamental Changes 76
(e) Sales, Etc. of Assets 76
(f) Investments in Other Persons 77
----------------------------
(g) Dividends, Etc 78
--------------
(h) Change in Nature of Business 78
----------------------------
(i) Charter Amendments 79
------------------
(j) Accounting Changes 79
------------------
(k) Prepayments, Etc. of Debt 79
-------------------------
(l) Amendment, Etc. of Material
Contracts 79
-------------------------------------
(m) Negative Pledge 79
---------------
(n) Partnerships, New Subsidiaries 80
------------------------------
(o) Speculative Transactions 80
------------------------
(p) Capital Expenditures 80
--------------------
(q) Issuance of Stock 80
-----------------
SECTION 5.03. Negative Covenants with Respect
to UTC. 80
(a) Liens, Etc. 81
(b) Negative Pledge 81
(c) Amendment, Etc. of Management
and Tax Sharing Agreements 81
SECTION 5.04. Negative Covenants with Respect
to Holdings. 81
(a) Liens, Etc. 81
(b) Debt 81
(c) Negative Pledge 81
SECTION 5.05. Reporting Requirements 81
----------------------
(a) Default Notice 82
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(b) Opening Balance Sheet. 82
---------------------
(c) Quarterly Financials 82
--------------------
(d) Annual Financials 82
-----------------
(e) Annual Forecasts 83
----------------
(f) ERISA Events and ERISA Reports 83
------------------------------
(g) Plan Terminations 83
-----------------
(h) Actuarial Report 83
-----------------
(i) Plan Annual Reports 84
-------------------
(j) Annual Plan Summaries 84
---------------------
(k) Multiemployer Plan Notices 84
--------------------------
(l) Litigation 84
----------
(m) Securities Reports 84
------------------
(n) Agreement Notices 84
-----------------
(o) Environmental Conditions 85
------------------------
(p) Real Property 85
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(q) Insurance 85
---------
(r) Borrowing Base Certificate 85
--------------------------------
(s) Management Letters 85
------------------------
(t) Other Information 85
-----------------
SECTION 5.06. Financial Covenants 86
(a) Consolidated Debt to EBITDA
Ratio 86
(b) Fixed Charge Coverage Ratio 86
(c) Minimum EBITDA 88
ARTICLE VI
EVENTS OF DEFAULT 89
SECTION 6.01 Events of Default 89
SECTION 6.02. Actions in Respect of the Letters
of Credit upon Default 91
ARTICLE VII
THE ADMINISTRATIVE AGENT 92
SECTION 7.01. Authorization and Action 92
------------------------
SECTION 7.02. Agent's Reliance, Etc 92
---------------------
SECTION 7.03. Fleet and Affiliates 93
--------------------
SECTION 7.04. Lender Party Credit Decision 93
----------------------------
SECTION 7.05. Indemnification 93
---------------
SECTION 7.06. Successor Administrative Agents 95
-------------------------------
ARTICLE VIII
MISCELLANEOUS 96
SECTION 8.01. Amendments, Etc 96
---------------
SECTION 8.02. Notices Etc 96
-----------
SECTION 8.03. No Waiver; Remedies 98
-------------------
SECTION 8.04. Costs and Expenses 98
------------------
SECTION 8.05. Right of Set-off 100
----------------
SECTION 8.06. Binding Effect 100
--------------
SECTION 8.07. Assignments and Participations 100
------------------------------
SECTION 8.08. Execution in Counterparts 103
-------------------------
SECTION 8.09. No Liability of the Issuing Bank 103
--------------------------------
SECTION 8.10. Confidentiality 104
---------------
SECTION 8.11. JURISDICTION, ETC 104
-----------------
SECTION 8.12. GOVERNING LAW 105
-------------
SECTION 8.13. WAIVER OF JURY TRIAL 105
--------------------
EXHIBITS
Exhibit A - Form of Assignment and Acceptance
Exhibit B - Form of Borrowing Base Certificate
Exhibit C - Form of Revolving Credit Note
Exhibit D - Form of Term A Note
Exhibit E - Form of Term B Note
Exhibit F - Form of Notice of Borrowing
Exhibit G - Form of Security Agreement
Exhibit H - Form of Intellectual Property Security Agreement
Exhibit I - Form of Holdings Pledge Agreement
Exhibit J - Form of Holdings Guaranty
Exhibit K - Form of Subsidiary Guaranty
SCHEDULES
Schedule I Commitments and Applicable Lending Offices Schedule 3.01(a)(x) States
in which Loan Parties are Qualified to do Business Schedule 3.01(e) Disclosed
Litigation Schedule 4.01(b) Subsidiaries Schedule 4.01(d) Required
Authorizations and Approvals Schedule 4.01(j) Welfare Plans Schedule 4.01(m)
Compliance with Environmental Laws Schedule 4.01(n) Environmental Assessment
Reports Schedule 4.01(o) Certain Environmental Matters Schedule 4.01(p) Certain
Agreements Schedule 4.01(s) Open Tax Years Schedule 4.01(y) Existing Debt
Schedule 4.01(z) Surviving Debt Schedule 4.01(aa) Owned Real Estate Schedule
4.01(bb) Leased Real Estate Schedule 4.01(cc) Material Contracts Schedule
4.01(dd) Investments Schedule 4.01(ee) Intellectual Property Schedule
5.02(a)(iii) Liens Schedule 5.02(f)(i) Investments in Subsidiaries Schedule
5.02(f)(vi) Existing Investments Schedule 5.02(q) Existing Issuances, Etc. of
Stock
<PAGE>
CREDIT AGREEMENT
CREDIT AGREEMENT, dated as of April 14, 1998, by and among
HIGH PERFORMANCE PLASTICS, INC., a Delaware corporation (the "Borrower"),
UNIROYAL TECHNOLOGY CORPORATION, a Delaware corporation, UNIROYAL HPP HOLDINGS,
INC., a Delaware corporation, the banks, financial institutions and other
institutional lenders listed on the signature pages hereof as the Initial
Lenders (the "Initial Lenders"), FLEET NATIONAL BANK, as Initial Issuing Bank
(the "Initial Issuing Bank"), FLEET NATIONAL BANK, as the Swing Line Bank (the
"Swing Line Bank"), FLEET NATIONAL BANK, as administrative agent (together with
any successor appointed pursuant to Article VII, the "Administrative Agent") for
the Lender Parties (as hereinafter defined) and DLJ CAPITAL FUNDING INC., as
Documentation Agent (the "Documentation Agent").
PRELIMINARY STATEMENT:
The Borrower has requested that the Lender Parties (as hereinafter
defined) make loans to the Borrower and issue letters of credit having an
aggregate principal and face amount at any one time outstanding of up to One
Hundred Ten Million Dollars ($110,000,000), to be used by the Borrower (i) to
finance, in part, the defeasance or repayment of the UTC Senior Notes (as
hereinafter defined), (ii) to reduce the principal amount outstanding under the
UTC Existing Revolving Credit Facility (as hereinafter defined), (iii) to pay
fees and expenses related to the items referred to in clauses (i) and (ii), and
(iv) to provide working capital for the Borrower, and the Lender Parties have
agreed to make such loans and issue such letters of credit all on and subject to
the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, the parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms . As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Acquired Indebtedness" means, with respect to any specified Person,
(i) Debt of any other Person existing at the time such other Person consolidates
or merges with or into or becomes a Subsidiary of such specified Person, (ii)
Debt of any other Person existing at the time that a specified Person or a
Subsidiary of such specified Person acquires all or substantially all of the
assets of such other Person in accordance with this Agreement which Debt is
assumed by such specified Person or such Subsidiary in connection with such
acquisition and (iii) Debt secured by a Lien encumbering any asset acquired by
such specified Person or Subsidiary. Acquired Indebtedness shall be deemed
incurred at the time such other Person is consolidated or merged with or into or
becomes a Subsidiary of such specified Person, or such Debt is assumed by such
specified Person or such Subsidiary or any asset securing such Debt is acquired.
"Additional Collateral Documents" has the meaning specified in Section
5.01(m)(v).
"Administrative Agent" has the meaning specified in the recital of
parties to this Agreement.
"Administrative Agent's Account" means the account of the
Administrative Agent maintained by the Administrative Agent with Fleet at its
office at Fleet National Bank, One Federal Street, Boston, Massachusetts
02110, Account No. 151035203156, Attention: Loan Administration.
"Advance" means a Term A Advance, a Term B Advance, a Revolving Credit
Advance, a Swing Line Advance or a Letter of Credit Advance.
"Affiliate" means, as to any Person, any other Person that, directly or
indirectly, controls, is controlled by or is under common control with such
Person or is a director or officer of such Person. For purposes of this
definition, the term "control" (including the terms "controlling," "controlled
by" and "under common control with") of a Person means the possession, direct or
indirect, of the power to vote 25% or more of the Voting Stock of such Person or
to direct or cause the direction of the management and policies of such Person,
whether through the ownership of Voting Stock, by contract or otherwise.
"Applicable Lending Office" means, with respect to each Lender Party,
such Lender Party's Domestic Lending Office in the case of a Prime Rate Advance
and such Lender Party's Eurodollar Lending Office in the case of a Eurodollar
Rate Advance.
"Applicable Margin" means on any date a percentage per annum determined
pursuant to the last paragraph of this definition by reference to the ratio of
Consolidated Debt to EBITDA for the four consecutive full fiscal quarters most
recently ended on or prior to such date, as set forth below:
Applicable Margin for Eurodollar Rate Advances
Ratio of Consolidated Revolving Credit
Debt/EBITDA and Term A Facilities Term B Facility
Greater than or
equal to 3.75:1 2.250% 2.500%
Greater than or
equal to 3.25:1 and
less than 3.75:1 2.000% 2.250%
Greater than or
equal to 2.75:1 and
less than 3.25:1 1.750% 2.125%
Less than 2.75:1 1.500% 2.000%
Applicable Margin for Prime Rate Advances
Ratio of Consolidated Revolving Credit
Debt/EBITDA and Term A Facilities Term B Facility
Greater than or
equal to 3.75:1 1.250% 1.500%
Greater than or
equal to 3.25:1 and
less than 3.75:1 1.000% 1.250%
Greater than or
equal to 2.75:1 and
less than 3.25:1 0.750% 1.125%
Less than 2.75:1 0.500% 1.000%
Notwithstanding the above rates, for the period ending on the date
which is six months from the date hereof, the Applicable Margin for (i) a
Revolving Credit Advance and a Term A Advance shall be 2.250% for a Eurodollar
Rate Advance and 1.250% for a Prime Rate Advance, and (ii) a Term B Advance
shall be 2.500% for a Eurodollar Rate Advance and 1.500% for a Prime Rate
Advance.
The Applicable Margin for each Prime Rate Advance and each Eurodollar
Rate Advance shall be determined by reference to the ratio of Consolidated Debt
to EBITDA which shall be determined three Business Days after the date on which
the Administrative Agent receives financial statements pursuant to Section
5.05(c) or (d) and a certificate of the Chief Financial Officer of the Borrower
demonstrating the ratio of Consolidated Debt to EBITDA. If the Borrower has not
submitted to the Administrative Agent the information described above as and
when required under Section 5.05(c) or (d), as the case may be, the Applicable
Margin shall be as determined by the Administrative Agent in its discretion for
so long as such information has not been received by the Administrative Agent.
In the event that the financial statements received pursuant to Section 5.05(d)
indicate that the Applicable Margin determined on the basis of financial
statements theretofore received pursuant to Section 5.05(c) is different from
the Applicable Margin that would have been determined on the basis of the
Section 5.05(d) financial statements, the Applicable Margin shall be adjusted
retroactively for the relevant period.
"Assignment and Acceptance" means an assignment and acceptance entered
into by a Lender Party and an Eligible Assignee, and accepted by the
Administrative Agent and, so long as no Event of Default shall have occurred and
be continuing, by the Borrower, in accordance with Section 8.07 and in
substantially the form of Exhibit A hereto.
"Available Amount" of any Letter of Credit means, at any time, the
maximum amount available to be drawn under such Letter of Credit at such time
(assuming compliance at such time with all conditions to drawing).
"Bank Hedge Agreement" means any interest rate Hedge Agreement required
or permitted under Section 5.01(n) that is entered into by and between the
Borrower and any Hedge Bank.
"Borrower" has the meaning specified in the recital of parties to this
Agreement.
"Borrower's Account" means the account of the Borrower maintained by
the Borrower with First Union National Bank of Florida at its office at 1819
Main Street, Sarasota, Florida 34236.
"Borrowing" means a Term A Borrowing, a Term B Borrowing, a Revolving
Credit Borrowing or a Swing Line Borrowing.
"Borrowing Base" on any date means the sum of (i) 85% of the value of
the Eligible Receivables plus (ii) 50% of the value of the Eligible Inventory,
in each case set forth in the most recent Borrowing Base Certificate delivered
to the Administrative Agent pursuant to the terms of this Agreement on or prior
to such date.
"Borrowing Base Certificate" means a certificate in substantially the
form of Exhibit B hereto, duly certified by the Chief Financial Officer of the
Borrower.
"Borrowing Base Deficiency" means, at any time, the failure of the
Borrowing Base at such time to equal or exceed the sum of (i) the aggregate
principal amount of the Revolving Credit Advances, the Letter of Credit Advances
and the Swing Line Advances outstanding at such time plus (ii) the aggregate
Available Amount under all Letters of Credit outstanding at such time.
"Business Day" means a day of the year on which banks are not required
or authorized by law to close in Sarasota, Florida and New York, New York and,
if the applicable Business Day relates to any Eurodollar Rate Advances, on which
dealings are carried on in the London interbank market.
"Capital Expenditures" means, for any Person for any period, the sum of
all expenditures, without duplication, made, directly or indirectly, by such
Person or any of its Subsidiaries during such period for equipment, fixed
assets, real property or improvements, or for replacements or substitutions
therefor or additions thereto, that have been or should be, in accordance with
GAAP, reflected as additions to property, plant or equipment on a Consolidated
balance sheet of such Person; provided, however, that Capital Expenditures shall
not include expenditures made for replacements or substitutions of equipment,
fixed assets, real property or improvements which were replaced or substituted
utilizing cash receipts received from proceeds of insurance, condemnation awards
(and payments in lieu thereof) or indemnity payments to the extent that such
proceeds, awards or payments (i) in respect of loss or damage to equipment,
fixed assets, real property or improvements are applied to replace or substitute
the equipment, fixed assets, real property or improvements in respect of which
such proceeds, awards or payments were received in accordance with the terms of
the Loan Documents, so long as (A) such application is made within one hundred
eighty (180) days after such Person's receipt of such proceeds, awards or
payments and (B) such proceeds, awards or payments are received by such Person
within fifteen (15) months after the occurrence of such damage or loss; or (ii)
are received by any Person in respect of any third party claim against such
Person and applied to pay (or to reimburse such Person for its prior payment of)
such claim and the costs and expenses of such Person with respect thereto;
provided, further, that in no event shall insurance proceeds or condemnation
awards to be applied to the restoration of improvements encumbered by a Mortgage
be deemed Capital Expenditures if the proceeds or awards are applied to such
restoration in accordance with the terms of the relevant Mortgage.
"Capitalized Leases" means all leases that have been or should be, in
accordance with GAAP, recorded as capitalized leases.
"Cash Equivalents" means any of the following, to the extent owned by
the Borrower or any of its Subsidiaries, free and clear of all Liens other than
Liens created under the Loan Documents: (i) readily marketable direct
obligations of the Government of the United States or any agency or
instrumentality thereof or obligations unconditionally guaranteed by the full
faith and credit of the Government of the United States having a maturity of not
greater than 360 days from the date of issuance thereof, (ii) insured
certificates of deposit or time deposits having a maturity of not greater than
360 days from the date of issuance thereof with any commercial bank that is a
Lender Party or a member of the Federal Reserve System, issues (or the parent of
which issues) commercial paper rated as described in clause (iii), is organized
under the laws of the United States or any State thereof and has combined
capital and surplus of at least $1 billion, (iii) commercial paper or banker
acceptances having a maturity of not greater than 180 days from the date of
issuance thereof in an aggregate amount of no more than $2,500,000 per issuer
outstanding at any time, issued by any corporation organized under the laws of
any State of the United States and rated at least "Prime-1" (or the then
equivalent grade) by Moody's Investors Service, Inc. or "A-1" (or the then
equivalent grade) by Standard & Poor's Ratings Group, (iv) investments in money
market or mutual funds substantially all of whose assets are comprised of
securities of the types described in clauses (i) through (iii) above or (v)
demand deposit accounts maintained in the ordinary course of business.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, 42 U.S.C. ss. 9601 et seq., as amended from time to
time.
"CERCLIS" means the Comprehensive Environmental Response, Compensation
and Liability Information System maintained by the U.S. Environmental Protectio
Agency.
"Change of Control" means any of the following events: (i) Holdings
shall at any time cease to own 100% of the capital stock of the Borrower; (ii)
UTC shall at any time cease to own at least a majority of the Voting Stock of
Holdings; or (iii) with respect to UTC, a change of control of UTC that would be
required to be reported in response to Item 6(e) of Schedule 14A of Regulation
14A, as in effect on the date hereof, promulgated under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), shall occur; provided that,
without limitation, such a Change of Control shall be deemed to occur if: (A)
any "Person" (as such term is used in ss.13(d) and ss.14(d) of the Exchange
Act), except for any employee benefit plan of UTC or any Subsidiary or related
corporation, or any entity holding voting securities of UTC for or pursuant to
the terms of any such plan, shall become the beneficial owner, directly or
indirectly, of securities of UTC representing 25% or more of the combined voting
power of UTC's then outstanding securities; (B) there shall occur a contested
proxy solicitation of UTC's shareholders that results in the contesting party
obtaining the ability to vote securities representing 25% or more of the
combined voting power of UTC's then outstanding securities; (C) there shall
occur: (1) a sale, exchange, transfer or other disposition of substantially all
of the assets of UTC to another entity, except to an entity controlled directly
or indirectly by UTC or by the same Persons (as defined in this Agreement) that
controlled UTC immediately prior to such sale, exchange, transfer or other
disposition, (2) a merger or consolidation in which UTC is a constituent unless
the surviving entity is controlled directly or indirectly by the same Persons
(as defined in this Agreement) that controlled UTC immediately prior to such
merger or consolidation or (3) the adoption of a plan of liquidation or
dissolution of UTC other than pursuant to bankruptcy or insolvency laws; or (D)
during any period of two consecutive years, individuals who at the beginning of
such period constituted the Board of Directors of UTC shall cease for any reason
to constitute at least a majority thereof unless the election, or the nomination
for election by UTC's shareholders, of each new director shall be approved by a
vote of at least two-thirds (b) of the directors then still in office who were
directors at the beginning of the period. For purposes of this definition
"control", when used with respect to any specified Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have the meanings correlative to
the foregoing.
"CIT Financing Agreement" means the Financing Agreement, dated June 5,
1996, between The CIT Group/Business Credit, Inc. and UTC.
"Closing Date" means the date on which all of the conditions precedent
set forth in Section 3.01 to the Initial Extension of Credit shall have been
satisfied or waived.
"Collateral" means all "Collateral" referred to in the Collateral
Documents and all other property that is or is intended to be subject to any
Lien in favor of the Administrative Agent for the benefit of the Secured
Parties.
"Collateral Documents" means the Security Agreement, the Intellectual
Property Security Agreement, the Mortgages, the Holdings Pledge Agreement and
any other agreement that creates or purports to create a Lien in favor of the
Administrative Agent for the benefit of the Secured Parties, including the
Additional Collateral Documents delivered pursuant to Section 5.01(m).
"Commitment" means a Term A Commitment, a Term B Commitment, a
Revolving Credit Commitment or a Letter of Credit Commitment.
"Confidential Information" means information that the Borrower or UTC
furnishes to the Administrative Agent or any Lender Party, but does not include
any such information that is or becomes generally available to the public other
than as a result of a breach by the Administrative Agent or any Lender Party of
its obligations hereunder or that is or becomes available to the Administrative
Agent or such Lender Party from a source other than the Borrower or UTC that is
not, to the best of the Administrative Agent's or such Lender Party's knowledge,
acting in violation of a confidentiality agreement with the Borrower or UTC.
"Consolidated" refers to the consolidation of accounts, in accordance
with GAAP, of the Borrower and all of its Subsidiaries.
"Conversion", "Convert" and "Converted" each refer to a conversion of
Advances of one Type into Advances of the other Type pursuant to Section 2.09 or
2.10.
"Current Assets" of any Person means all assets of such Person that
would, in accordance with GAAP, be classified as current assets of a company
conducting a business the same as or similar to that of such Person, after
deducting adequate reserves in each case in which a reserve is proper in
accordance with GAAP.
"Current Liabilities" of any Person means (i) Debt of such Person,
except Funded Debt, that by its terms is payable on demand or matures within one
year after the date of determination (excluding any Debt renewable or
extendible, at the option of such Person, to a date more than one year from such
date or arising under a revolving credit or similar agreement that obligates the
lender or lenders to extend credit during a period of more than one year from
such date), (ii) all amounts of Funded Debt of such Person required to be paid
or prepaid within one year after such date and (iii) all other items (including
taxes accrued as estimated) that in accordance with GAAP would be classified as
current liabilities of such Person.
"Debt" of any Person means, without duplication, (i) all indebtedness
of such Person for borrowed money, (ii) all Obligations of such Person for the
deferred purchase price of property or services other than trade payables
incurred in the ordinary course of business, (iii) all Obligations of such
Person evidenced by notes, bonds, debentures or other similar instruments, (iv)
all Obligations of such Person created or arising under any conditional sale or
other title retention agreement with respect to property acquired by such Person
(even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property), (v) all Obligations of such Person as lessee under Capitalized
Leases, (vi) all Obligations, contingent or otherwise, of such Person under
acceptance, letter of credit or similar facilities, (vii) all Obligations of
such Person to purchase, redeem, retire, defease or otherwise make any payment
in respect of any capital stock of or other ownership or profit interest in such
Person or any other Person or any warrants, rights or options to acquire such
capital stock, (viii) all Obligations of such Person in respect of Hedge
Agreements, (ix) all Debt of others referred to in clauses (i) through (viii)
above or clause (x) below guaranteed directly or indirectly in any manner by
such Person, or in effect guaranteed directly or indirectly by such Person
through an agreement (A) to pay or purchase such Debt or to advance or supply
funds for the payment or purchase of such Debt, (B) to purchase, sell or lease
(as lessee or lessor) property, or to purchase or sell services, primarily for
the purpose of enabling the debtor to make payment of such Debt or to assure the
holder of such Debt against loss, (C) to supply funds to or in any other manner
invest in the debtor (including any agreement to pay for property or services
irrespective of whether such property is received or such services are rendered)
or (D) otherwise to assure a creditor against loss, and (x) all Debt referred to
in clauses (i) through (ix) above of another Person secured by (or for which the
holder of such Debt has an existing right, contingent or otherwise, to be
secured by) any Lien on property (including, without limitation, accounts,
contract rights or inventory) owned by such Person, even though such Person has
not assumed or become liable for the payment of such Debt.
"Debt Issuance" means any issuance or sale or other incurrence by the
Borrower or any of its Subsidiaries of any Debt; provided, however, that for
purposes of determination of Net Cash Proceeds under Section 2.06(b)(iii), the
term "Debt Issuance" shall not include the incurrence of Debt permitted under
Section 5.02(b).
"Default" means any Event of Default or any event that would constitute
an Event of Default but for the requirement that notice be given or time elapse
or both.
"Defaulted Advance" means, with respect to any Lender Party at any
time, the portion of any Advance required to be made by such Lender Party to the
Borrower pursuant to Section 2.01 or 2.02 at or prior to such time which has not
been made by such Lender Party or by the Administrative Agent for the account of
such Lender Party pursuant to Section 2.02(e) as of such time. In the event that
a portion of a Defaulted Advance shall be deemed made pursuant to Section
2.15(a), the remaining portion of such Defaulted Advance shall be considered a
Defaulted Advance originally required to be made pursuant to Section 2.01 on the
same date as the Defaulted Advance so deemed made in part.
"Defaulted Amount" means, with respect to any Lender Party at any time,
any amount required to be paid by such Lender Party to the Administrative Agent
or any other Lender Party hereunder or under any other Loan Document at or prior
to such time which has not been so paid as of such time, including, without
limitation, any amount required to be paid by such Lender Party to (i) the Swing
Line Bank pursuant to Section 2.02(b) to purchase a portion of a Swing Line
Advance made by the Swing Line Bank, (ii) the Issuing Bank pursuant to Section
2.03(c) to purchase a portion of a Letter of Credit Advance made by the Issuing
Bank, (iii) the Administrative Agent pursuant to Section 2.02(e) to reimburse
the Administrative Agent for the amount of any Advance made by the
Administrative Agent for the account of such Lender Party, (iv) any other Lender
Party pursuant to Section 2.13 to purchase any participation in Advances owing
to such other Lender Party and (v) the Administrative Agent or the Issuing Bank
pursuant to Section 7.05 to reimburse the Administrative Agent or the Issuing
Bank for such Lender Party's ratable share of any amount required to be paid by
the Lender Parties to the Administrative Agent or the Issuing Bank as provided
therein. In the event that a portion of a Defaulted Amount shall be deemed paid
pursuant to Section 2.15(b), the remaining portion of such Defaulted Amount
shall be considered a Defaulted Amount originally required to be paid hereunder
or under any other Loan Document on the same date as the Defaulted Amount so
deemed paid in part.
"Defaulting Lender" means, at any time, any Lender Party that, at such
time, (i) owes a Defaulted Advance or a Defaulted Amount or (ii) shall take any
action or be the subject of any action or proceeding of a type described in
Section 6.01(f).
"Disclosed Litigation" has the meaning specified in Section 3.01(e).
"Disposal" means the discharge, deposit, injection, dumping, spilling,
leaking or placing of any solid waste or hazardous waste, as those terms are
defined by any federal, state, local or foreign law, into or on any land or
water so that such solid waste or hazardous waste or any constituents thereof
may enter the environment or be emitted into the air or discharged into any
waters, including ground waters.
"Documentation Agent" has the meaning specified in the recital of
parties to this Agreement.
"Domestic Lending Office" means, with respect to any Lender Party, the
office of such Lender Party specified as its "Domestic Lending Office" opposite
its name on Schedule I hereto or in the Assignment and Acceptance pursuant to
which it became a Lender Party, as the case may be, or such other office of such
Lender Party as such Lender Party may from time to time specify to the Borrower
and the Administrative Agent.
"Domestic Subsidiary" means any Subsidiary organized under the laws of
the United States of America or any State thereof.
"EBITDA" means, for any period, the sum, determined on a Consolidated
basis, of (i) net income (or net loss), (ii) Interest Expense, (iii) income tax
expense and, without duplication, payments made pursuant to the Tax Sharing
Agreement, (iv) depreciation expense, (v) extraordinary and nonrecurring losses
and charges and (vi) amortization expense, minus extraordinary and nonrecurring
gains (in each case determined in accordance with GAAP). The Borrower shall
include EBITDA (calculated on a basis reasonably acceptable to the
Administrative Agent and on a pro forma basis with respect to periods prior to
acquisition by the Borrower) of any newly acquired or created wholly-owned
Subsidiary (acquired or created by the Borrower in accordance with this
Agreement) for purposes of calculating compliance with the financial covenants
in Section 5.06.
"Eligible Assignee" means with respect to any Facility (other than the
Letter of Credit Facility), (A) a Lender; (B) an Affiliate of a Lender; and (C)
subject to the prior approval of the Administrative Agent, such approval by the
Administrative Agent not to be unreasonably withheld or delayed and, so long as
no Event of Default shall have occurred and be continuing, the Borrower, such
approval by the Borrower not to be unreasonably withheld or delayed, (i) a
commercial bank organized under the laws of the United States, or any State
thereof, and having total assets in excess of $500,000,000; (ii) a savings and
loan association or savings bank organized under the laws of the United States,
or any State thereof, and having total assets in excess of $500,000,000; (iii) a
commercial bank organized under the laws of any other country that is a member
of the OECD or has concluded special lending arrangements with the International
Monetary Fund associated with its General Arrangements to Borrow or of the
Cayman Islands, or a political subdivision of any such country, and having total
assets in excess of $500,000,000, so long as such bank is acting through a
branch or agency located in the United States; (iv) the central bank of any
country that is a member of the OECD; and (v) a finance company, insurance
company or other financial institution or fund (whether a corporation,
partnership, trust or other entity) that is engaged in making, purchasing or
otherwise investing in commercial loans in the ordinary course of its business
and having total assets in excess of $500,000,000 (or with respect to the Term B
Facility only, $100,000,000); and, with respect to the Letter of Credit
Facility, a Person that is an Eligible Assignee under subclause (i) or (iii) of
clause (C) of this definition and is approved by the Administrative Agent and
the Borrower, such approval by the Borrower not to be unreasonably withheld or
delayed; provided, however, that no Loan Party or Affiliate of a Loan Party
shall qualify as an Eligible Assignee under this definition.
"Eligible Inventory" means Inventory of the Borrower located in the
continental United States (minus any reserves reasonably requested by the
Administrative Agent) as to which (i) the Borrower has acquired title, (ii) the
Lenders have a first perfected security interest and (iii) the Borrower shall
have furnished to the Administrative Agent information reasonably adequate for
purposes of identification at times and in form and substance as may be
reasonably requested by the Administrative Agent; provided, that Inventory shall
not constitute Eligible Inventory (i) if and when the Borrower sells it,
otherwise passes title thereto or consumes it, (ii) if the Lenders release their
security interest therein, or (iii) to the extent that it (v) is obsolete or not
useable or salable in the ordinary course of the Borrower's business, (w) is
produced in violation of the Fair Labor Standards Act and subject to the
so-called "hot goods" provision contained in Title 29, ss.215(a) (1) of the
United States Code, (x) is Inventory in excess of one year's supply, (y)
constitutes work in process, or (z) is Inventory held for consumption by the
Borrower or a Subsidiary of the Borrower and not for sale in the ordinary course
of business. Any Inventory which is Eligible Inventory at any time, but which
subsequently fails to meet any of the foregoing requirements, shall forthwith
cease to be Eligible Inventory until such time as it once again meets all of the
foregoing requirements.
"Eligible Receivables" means only such Receivables of the Borrower as
the Administrative Agent, in its reasonable judgment, shall from time to time
elect to consider Eligible Receivables for purposes of this Agreement. The value
of such Receivables shall be determined by the Administrative Agent in its
reasonable judgment taking into consideration, among other factors, their book
value determined in accordance with GAAP. By way of example only, and without
limiting the discretion of the Administrative Agent to consider any Receivables
not to be Eligible Receivables, the Administrative Agent may consider any of the
following classes of Receivables not to be Eligible Receivables:
(a) Receivables that do not arise out of sales of goods or
rendering of services in the ordinary course of the Borrower's business;
(b) Receivables on terms other than those normal or customary in the
Borrower's business;
(c) Receivables owing from any Person that is an Affiliate of the
Borrower;
(d) Receivables more than 90 days past original invoice date or
more than 60 days past the date due;
(e) Receivables owing from any Person from which an aggregate amount of
more than 50% of the Receivables owing is more than 60 days past due;
(f) Receivables owing from any Person that shall take or be the subject
of any action or proceeding of a type described in Section 6.01(f);
(g) Receivables (i) owing from any Person that is also a supplier to or
creditor of the Borrower other than by reason of customary rebates unless such
Person has waived any right of set-off in a manner reasonably acceptable to the
Administrative Agent or (ii) representing any manufacturer's or supplier's
credits, discounts, incentive plans or similar arrangements entitling a Borrower
to discounts on future purchases therefrom, in each case to the extent of the
amount owed by the Borrower to such supplier or creditor, the amount of such
actual or asserted right of set-off or the amount of such credit, discount,
incentive plan or similar arrangement, as the case may be;
(h) Receivables arising out of sales on a bill-and-hold, guaranteed
sale, sale-or-return, sale on approval or consignment basis or subject to any
right of return, set-off or charge-back;
(i) Receivables owing from an account debtor that is an agency,
department or instrumentality of the United States or any State thereof unless
the Borrower shall have satisfied the requirements of the Assignment of Claims
Act of 1940, as amended, and any similar State legislation and the
Administrative Agent is reasonably satisfied as to the absence of set-offs,
counterclaims and other defenses on the part of such account debtor;
(j) Receivables the full and timely payment of which the Administrative
Agent in its reasonable judgment, after consultation with the Borrower, believes
to be doubtful; and
(k) Receivables in respect of which the Security Agreement, after
giving effect to the related filings of financing statements that have then been
made, if any, does not or has ceased to create a valid and perfected first
priority lien or security interest in favor of the Secured Parties securing the
Secured Obligations.
"Environmental Action" means any action, suit, demand, demand letter,
claim, notice of non-compliance or violation, notice of liability or potential
liability, investigation, proceeding, consent order or consent agreement
relating in any way to any Environmental Law, any Environmental Permit or
Hazardous Material or arising from alleged injury or threat to public health and
safety or the environment, including, without limitation, (i) by any
governmental or regulatory authority or third party for enforcement, cleanup,
Removal, Response, Remedial or other actions or damages and (ii) by any
governmental or regulatory authority or third party for damages, contribution,
indemnification, cost recovery, compensation or injunctive relief.
"Environmental Law" means any applicable international or transnational
law, federal, state, local or foreign statute, law, ordinance, rule, regulation,
code, order, writ, judgment, injunction, decree or judicial interpretation
relating to pollution or protection of the environment or natural resources,
including, without limitation, those relating to the use, handling,
transportation, treatment, storage, disposal, threatened release, release or
discharge of Hazardous Materials.
"Environmental Permit" means any permit, approval, identification
number, license or other authorization required under any Environmental Law.
"Equipment" has the meaning specified in Section 1(a) of the Security
Agreement.
"Equity Issuance" means any sale or issuance for cash to the public by
any Loan Party or any of its Subsidiaries of any capital stock or other
ownership or profit interest, any securities convertible or exchangeable for
capital stock or other ownership or profit interest or any warrants, rights or
options to acquire capital stock or other ownership or profit interest.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"ERISA Affiliate" means any Person that for purposes of Title IV of
ERISA is a member of the controlled group of any Loan Party, or under common
control with any Loan Party, within the meaning of Section 414 of the Internal
Revenue Code.
"ERISA Event" means (i) (y) the occurrence of a reportable event,
within the meaning of Section 4043 of ERISA, with respect to any Plan unless the
30-day notice requirement with respect to such event has been waived by the
PBGC, or (z) the requirements of subsection (1) of Section 4043(b) of ERISA
(without regard to subsection (2) of such Section) are met with respect to a
contributing sponsor, as defined in Section 4001(a)(13) of ERISA, of a Plan, and
an event described in paragraph (9), (10), (11), (12) or (13) of Section 4043(c)
of ERISA is reasonably expected to occur with respect to such Plan within the
following 30 days; (ii) the application for a minimum funding waiver with
respect to a Plan; (iii) the provision by the administrator of any Plan of a
notice of intent to terminate such Plan under ERISA Section 4041(c), pursuant to
Section 4041(a)(2) of ERISA (including any such notice with respect to a plan
amendment referred to in Section 4041(e) of ERISA); (iv) the cessation of
operations at a facility of any Loan Party or any ERISA Affiliate in the
circumstances described in Section 4062(e) of ERISA; (v) the withdrawal by any
Loan Party or any ERISA Affiliate from a Multiple Employer Plan during a plan
year for which it was a substantial employer, as defined in Section 4001(a)(2)
of ERISA; (vi) the conditions for imposition of a lien under Section 302(f) of
ERISA shall have been met with respect to any Plan; (vii) the adoption of an
amendment to a Plan requiring the provision of security to such Plan pursuant to
Section 307 of ERISA; or (viii) the institution by the PBGC of proceedings to
terminate a Plan pursuant to Section 4042 of ERISA, or the occurrence of any
event or condition described in Section 4042 of ERISA that constitutes grounds
for the termination of, or the appointment of a trustee to administer, such
Plan.
"Eurocurrency Liabilities" has the meaning specified in Regulation D of
the Board of Governors of the Federal Reserve System, as in effect from time to
time.
"Eurodollar Lending Office" means, with respect to any Lender Party,
the office of such Lender Party specified as its "Eurodollar Lending Office"
opposite its name on Schedule I hereto or in the Assignment and Acceptance
pursuant to which it became a Lender Party (or, if no such office is specified,
its Domestic Lending Office), or such other office of such Lender Party as such
Lender Party may from time to time specify to the Borrower and the
Administrative Agent.
"Eurodollar Rate" means, for any Interest Period for all Eurodollar
Rate Advances comprising part of the same Borrowing, an interest rate per annum
equal to the rate per annum obtained by dividing the interest rate per annum
(rounded upward, if necessary, to the nearest 1/32 of one percent) as determined
on the basis of the offered rates for deposits in U.S. dollars, for a period of
time comparable to such Interest Period which appears on the Telerate Page 3750
as of 11:00 a.m. (New York time) two Business Days before the first day of such
Interest Period; provided, however, that if the rate described above does not
appear on the Telerate System on any applicable interest determination date, the
Eurodollar Rate shall be the rate (rounded upward as described above, if
necessary) for deposits in U.S. dollars for a period substantially equal to the
interest period on the Reuters Page "LIBO" (or such other page as may replace
the LIBO page on that service for the purpose of displaying such rates), as of
11:00 a.m. (London time) two Business Days before the first day of such Interest
Period.
If both the Telerate and Reuters system are unavailable, then the rate
for that date will be determined on the basis of the offered rates for deposits
in U.S. dollars for a period of time comparable to such Interest Period which
are offered by four major banks in the London interbank market at approximately
11:00 a.m. (New York time) two Business Days before the first day of such
Interest Period as selected by the Administrative Agent. The principal London
office of each of the four major London banks will be requested to provide a
quotation of its U.S. dollar deposit offered rate. If at least two such
quotations are provided, the rate for that date will be the arithmetic mean of
the quotations. If fewer than two quotations are provided as requested, the rate
for that date will be determined on the basis of the rates quoted for loans in
U.S. dollars to leading European banks for a period of time comparable to such
Interest Period offered by major banks in New York City at approximately 11:00
a.m. (New York time) two Business Days before the first day of such Interest
Period. In the event that the Administrative Agent is unable to obtain any such
quotation as provided above, it will be deemed that the Eurodollar Rate for such
Interest Rate cannot be determined.
In the event that the Board of Governors of the Federal Reserve System
shall impose a Eurodollar Rate Reserve Percentage with respect to Eurocurrency
Liabilities, the Eurodollar Rate for an Interest Period shall be equal to the
amount determined above for such Interest Period divided by a percentage equal
to 100% minus the Eurodollar Rate Reserve Percentage for such Interest Period.
"Eurodollar Rate Advance" means an Advance that bears interest as
provided in Section 2.07(a)(ii).
"Eurodollar Rate Reserve Percentage" means, for any Interest Period for
all Eurodollar Rate Advances comprising part of the same Borrowing, the reserve
percentage applicable two Business Days before the first day of such Interest
Period under regulations issued from time to time by the Board of Governors of
the Federal Reserve System (or any successor) for determining the maximum
reserve requirement (including, without limitation, any emergency, supplemental
or other marginal reserve requirement) for a member bank of the Federal Reserve
System in New York City with respect to liabilities or assets consisting of or
including Eurocurrency Liabilities (or with respect to any other category of
liabilities that includes deposits by reference to which the interest rate on
Eurodollar Rate Advances is determined) having a term equal to such Interest
Period.
"Events of Default" has the meaning specified in Section 6.01.
"Excess Cash Flow" means for any period the sum of (i) EBITDA of the
Borrower and its Subsidiaries for such period plus (ii) the aggregate amount of
all non-cash charges deducted from Consolidated net income for such period, but
not added back in arriving at EBITDA plus (iii) if there was a net increase in
Consolidated Current Liabilities of the Borrower and its Subsidiaries during
such period, the amount of such net increase other than arising out of Debt
permitted pursuant to Section 5.02(b) plus (iv) if there was a net decrease in
Consolidated Current Assets (excluding cash and Cash Equivalents) of the
Borrower and its Subsidiaries during such period the amount of such net decrease
less (v) the aggregate amount of mandatory and optional prepayments (other than
optional prepayments of the Swing Line Advances, Letter of Credit Advances or
Revolving Credit Advances made pursuant to clause (i) of the second sentence of
Section 2.06(a)) or repayments of principal made by the Borrower and its
Subsidiaries on any Funded Debt of the Borrower and its Subsidiaries during such
period less (vi) Capital Expenditures of the Borrower and its Subsidiaries
during such period less (vii) the aggregate amount of all federal, state, local
and foreign taxes paid or payments made pursuant to the Tax Sharing Agreement by
the Borrower and its Subsidiaries during such period less (viii) the aggregate
amount of interest paid on any Debt of the Borrower and its Subsidiaries during
such period less (ix) the aggregate amount of all non-cash credits included in
arriving at such EBITDA less (x) if there was a net decrease in Consolidated
Current Liabilities of the Borrower and its Subsidiaries during such period, the
amount of such net decrease less (xi) if there was a net increase in
Consolidated Current Assets (excluding cash and Cash Equivalents) of the
Borrower and its Subsidiaries during such period the amount of such increase
less (xii) dividends paid by the Borrower to the holders of its common stock
during such period to the extent that the Borrower is expressly permitted to pay
such dividends under this Agreement.
"Existing Debt" means Debt of the Borrower and its Subsidiaries
outstanding immediately before giving effect to the Transaction.
"Extraordinary Receipt" means any cash received by or paid to or for
the account of any Person not in the ordinary course of business, including,
without limitation, tax refunds, pension plan reversions, proceeds of insurance
(other than proceeds of business interruption insurance to the extent such
proceeds constitute compensation for lost earnings), condemnation awards (and
payments in lieu thereof) and indemnity payments; provided, however, that an
Extraordinary Receipt shall not include cash receipts received from proceeds of
insurance, condemnation awards (and payments in lieu thereof) or indemnity
payments to the extent that such proceeds, awards or payments (i) in respect of
loss or damage to equipment, fixed assets or real property are applied (or in
respect of which expenditures were previously incurred) to replace or repair the
equipment, fixed assets or real property in respect of which such proceeds,
awards or payments were received in accordance with the terms of the Loan
Documents, so long as (A) such application is made within one hundred eighty
(180) days after such Person's receipt of such proceeds, awards or payments and
(B) such proceeds, awards or payments are received by such Person within fifteen
(15) months after the occurrence of such damage or loss; or (ii) are received by
any Person in respect of any third party claim against such Person and applied
to pay (or to reimburse such Person for its prior payment of) such claim and the
costs and expenses of such Person with respect thereto.
"Facility" means the Term A Facility, the Term B Facility, the
Revolving Credit Facility, the Letter of Credit Facility or the Swing Line
Facility.
"Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal for each day during such period 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 that is a Business Day, the average of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"Fiscal Year" means a fiscal year of the Borrower and its Consolidated
Subsidiaries ending on the Sunday following the last Friday in September in any
calendar year.
"Fleet" means Fleet National Bank.
"Foreign Subsidiary" means any Subsidiary organized under the laws of
any jurisdiction other than the United States of America or any State thereof.
"Funded Debt" means, with respect to the Borrower, the Advances, and
with respect to the Borrower and the other Loan Parties and any other Person,
all other Debt of such Person that by its terms matures more than one year after
the date of determination or matures within one year from such date but is
renewable or extendible, at the option of such Person, to a date more than one
year after such date or arises under a revolving credit or similar agreement
that obligates the lender or lenders to extend credit during a period of more
than one year after such date, including the current portion of all such Debt.
"GAAP" has the meaning specified in Section 1.03.
"Guaranteed Obligations" has the meaning specified in the Guaranties.
"Guarantors" means (i) each Domestic Subsidiary of the Borrower, (ii)
Holdings and (iii) each Person which shall have executed and delivered or become
a party to a Subsidiary Guaranty hereunder.
"Guaranty" means each of the Holdings Guaranty and the Subsidiary
Guaranty.
"Hazardous Materials" means (i) petroleum, petroleum products, crude
oil or any fraction thereof, radioactive materials, asbestos-containing
materials, polychlorinated biphenyls and radon gas and (ii) any other chemicals,
materials or substances designated or regulated as hazardous or toxic or as a
pollutant or contaminant under any Environmental Law.
"Hedge Agreements" means interest rate swap, cap, collar or floor
agreements, interest rate future or option contracts, currency swap agreements,
currency future or option contracts and other similar agreements.
"Hedge Bank" means any Lender Party in its capacity as a party to a
Bank Hedge Agreement.
"Holdings" means Uniroyal HPP Holdings, Inc., a Delaware corporation
and the holder of all of the issued and outstanding shares of capital stock of
the Borrower.
"Holdings Guaranty" has the meaning specified Section 3.01(a)(vi).
"Holdings Pledge Agreement" has the meaning assigned to such term in
Section 3.01(a)(v) hereof.
"Indemnified Party" has the meaning specified in Section 8.04(b).
"Information Memorandum" means the information memorandum, dated March
1998, delivered by the Administrative Agent to the Lenders.
"Initial Extension of Credit" means the earlier to occur of the initial
Borrowing and the initial issuance of a Letter of Credit.
"Initial Issuing Bank" has the meaning specified in the recital of
parties to this Agreement.
"Initial Lenders" has the meaning specified in the recital of parties
to this Agreement.
"Insufficiency" means, with respect to any Plan, the amount, if any, of
its unfunded benefit liabilities, as defined in Section 4001(a)(18) of ERISA.
"Intellectual Property Security Agreement" has the meaning specified i
Section 3.01(a)(iv).
"Interest Expense" means, with respect to any Person for any period,
interest expense on all Debt of such Person for such period net of interest
income for such period, whether paid or accrued, determined on a Consolidated
basis for such Person and its Subsidiaries and in accordance with GAAP, and
including, without limitation and without duplication, (i) in the case of the
Borrower, interest expense in respect of Debt resulting from Advances, (ii) the
interest component of all obligations under Capitalized Leases, (iii)
commissions, discounts and other fees and charges payable in connection with
letters of credit (including, without limitation, Letters of Credit), (iv) the
net payment, if any, payable in connection with Hedge Agreements less the net
credit, if any, received in connection with Hedge Agreements, (v) amortization
of deferred financing costs and (vi) all fees paid by the Borrower pursuant to
Section 2.08(a).
"Interest Period" means, for each Eurodollar Rate Advance comprising
part of the same Borrowing, the period commencing on the date of such Eurodollar
Rate Advance or the date of the Conversion of any Prime Rate Advance into such
Eurodollar Rate Advance, and ending on the last day of the period selected by
the Borrower pursuant to the provisions below and, thereafter, each subsequent
period commencing on the last day of the immediately preceding Interest Period
and ending on the last day of the period selected by the Borrower pursuant to
the provisions below. The duration of each such Interest Period shall be one,
two, three or six months, as the Borrower may, upon notice received by the
Administrative Agent not later than 11:00 A.M. (New York time) on the third
Business Day prior to the first day of such Interest Period, select; provided,
however, that:
(a) The Borrower may not select any Interest Period with
respect to any Eurodollar Rate Advance under a Facility that ends after
any principal repayment installment date for such Facility unless,
after giving effect to such selection, the aggregate principal amount
of Prime Rate Advances and of Eurodollar Rate Advances having Interest
Periods that end on or prior to such principal repayment installment
date for such Facility shall be at least equal to the aggregate
principal amount of Advances under such Facility due and payable on or
prior to such date;
(b) Whenever the last day of any Interest Period would
otherwise occur on a day other than a Business Day, the last day of
such Interest Period shall be extended to occur on the next succeeding
Business Day, provided, however, that, if such extension would cause
the last day of such Interest Period to occur in the next following
calendar month, the last day of such Interest Period shall occur on the
next preceding Business Day;
(c) Whenever the first day of any Interest Period occurs on a
day of an initial calendar month for which there is no numerically
corresponding day in the calendar month that succeeds such initial
calendar month by the number of months equal to the number of months in
such Interest Period, such Interest Period shall end on the last
Business Day of such succeeding calendar month; and
(d) Until the earlier of (i) 120 days after the Closing Date,
or (ii) the date on which the Administrative Agent notifies the
Borrower that the syndication of the Facilities has been completed,
only Interest Periods with a duration of seven days, if available to
all the Lenders, shall be available to the Borrower for Eurodollar Rate
Advances, or if such Interest Periods are not available to all the
Lenders, Interest Periods of such duration as may be selected by the
Administrative Agent and are acceptable to the other Lenders.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"Inventory" of any person means all of such Person's now owned and
hereafter acquired inventory, goods, merchandise and other personal property,
wherever located, to be furnished under any contract of service or held for sale
or lease, all returned goods, raw materials, other materials and supplies of any
kind, nature or description which are or might be consumed in such Person's
business or used in connection with the packing, shipping, advertising, selling
or finishing of such goods, merchandise and such other personal property, and
all documents of title or other documents representing them.
"Investment" in any Person means any loan or advance to such Person,
any purchase or other acquisition of any capital stock or other ownership or
profit interest, warrants, rights, options, obligations or other securities of
such Person, any capital contribution to such Person or any other investment in
such Person, including, without limitation, any arrangement pursuant to which
the investor incurs Debt of the types referred to in clause (ix) or (x) of the
definition of "Debt" in respect of such Person.
"Issuing Bank" means the Initial Issuing Bank and each Eligible
Assignee to which a Letter of Credit Commitment hereunder has been assigned
pursuant to Section 8.07.
"L/C Cash Collateral Account" has the meaning specified in the
Security Agreement.
"L/C Related Documents" has the meaning specified in Section
2.04(e)(ii)(A).
"Lender Party" means any Lender, the Issuing Bank or the Swing Line
Bank.
"Lenders" means the Initial Lenders and each Person that shall become a
Lender hereunder pursuant to Section 8.07.
"Letter of Credit" means any Letter of Credit issued hereunder (as
specified in Section 2.03(a)).
"Letter of Credit Advance" means an advance made by the Issuing Bank or
any Revolving Credit Lender pursuant to Section 2.03(c).
"Letter of Credit Agreement" has the meaning specified in Section
2.03(a).
"Letter of Credit Commitment" means, with respect to the Issuing Bank,
$5,000,000 or, if the Issuing Bank has entered into one or more Assignments and
Acceptances, set forth for the Issuing Bank in the Register maintained by the
Administrative Agent pursuant to Section 8.07(d) as the Issuing Bank's "Letter
of Credit Commitment", as such amount may be reduced at or prior to such time
pursuant to Section 2.05.
"Letter of Credit Facility" means, at any time, an amount equal to the
amount of the Issuing Bank's Letter of Credit Commitment at such time, as such
amount may be reduced pursuant to Section 2.05.
"Lien" means any lien, security interest or other charge or encumbrance
of any kind, or any other type of preferential arrangement, including, without
limitation, the lien or retained security title of a conditional vendor and any
easement, right of way or other encumbrance on title to real property.
"Loan Documents" means (i) this Agreement, (ii) the Notes, (iii) the
Holdings Guaranty, (iv) the Subsidiary Guaranty, (v) the Collateral Documents,
(vi) each Letter of Credit Agreement, (vii) each Bank Hedge Agreement, (viii)
each Additional Collateral Document, in each case as the same may at any time be
amended, supplemented, restated or otherwise modified and in effect.
"Loan Parties" means the Borrower, the Guarantors, and each other
Person who shall, at any time, have executed and delivered a Collateral Document
to the Administrative Agent, but does not include UTC.
"Management Agreement" has the meaning specified in Section 3.01(r).
"Management Services Fee" has the meaning specified in Section 3.01(r).
"Margin Stock" has the meaning specified in Regulation U.
"Material Adverse Change" means, (i) with respect to periods prior to
the Closing Date, any material adverse change in the business, condition
(financial or otherwise), results of operations or properties of UTC and its
Subsidiaries (taken as a whole) and (ii) with respect to periods after (but
including) the Closing Date, any material adverse change in (A) the business,
financial condition, results of operations or properties of the Loan Parties and
their Subsidiaries (taken as a whole), (B) the ability of any Loan Party to
perform its obligations under the Loan Documents to which it is a party or (C)
any material aspect of the Transaction.
"Material Adverse Effect" has the meaning specified in Section 3.01(e).
"Material Contract" means, with respect to any Person, each contract
listed on Schedule 4.01(cc), each contract which is a replacement or a
substitute for any contract listed on Schedule 4.01(cc) and each other contract
to which such Person is a party which is material to the business, financial
condition, operations, properties or the business of the Borrower as currently
conducted.
"Mortgage" means each mortgage, deed of trust or other similar document
to be executed and delivered by the appropriate Loan Party, in form and
substance reasonably acceptable to the Administrative Agent and the Lenders in
order (i) to provide that such Loan Party is the mortgagor or grantor, (ii) to
comply with and/or provide for specific laws of the jurisdictions in which the
property to be encumbered is located, and (iii) to assure that the
Administrative Agent for the benefit of the Secured Parties has a perfected Lien
on the Mortgaged Property.
"Mortgage Policies" has the meaning assigned to that term in Section
3.01(a)(iii)(B).
"Mortgaged Property" shall have the meaning assigned to such term in
Section 4.01(aa), and shall also include any parcel (or adjoining parcels) of
real property (including any leaseholds) acquired by any Loan Party after the
Closing Date subject to a Mortgage granted to the Administrative Agent for the
benefit of the Secured Parties pursuant to Section 5.01(m).
"Multiemployer Plan" means a multiemployer plan, as defined in Section
4001(a)(3) of ERISA and subject to the funding requirements of Title IV of
ERISA, to which any Loan Party or any ERISA Affiliate is making or accruing an
obligation to make contributions, or has within any of the preceding five plan
years made or accrued an obligation to make contributions.
"Multiple Employer Plan" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (i) is maintained for employees of any Loan
Party or any ERISA Affiliate and at least one Person other than the Loan Parties
and the ERISA Affiliates or (ii) was so maintained and in respect of which any
Loan Party or any ERISA Affiliate could have liability under Section 4064 or
4069 of ERISA in the event such plan has been or were to be terminated.
"Net Cash Proceeds" means, with respect to any sale, lease, transfer or
other disposition of any asset or any Debt Issuance or Equity Issuance by any
Person, or any Extraordinary Receipt received by or paid to or for the account
of any Person, the aggregate amount of cash received from time to time (whether
as initial consideration or through payment or disposition of deferred
consideration) by or on behalf of such Person in connection with such
transaction after deducting therefrom only (without duplication) (i) reasonable
and customary brokerage commissions, underwriting fees and discounts, legal
fees, accounting fees, printing costs, finder's fees and other similar fees and
commissions, (ii) the amount of taxes payable in connection with or as a result
of such transaction and (iii) the amount of any Debt (including accrued interest
thereon and any prepayment fee with respect thereto) secured by a Lien on such
asset that, by the terms of such transaction, is required to be repaid upon such
disposition, in each case to the extent, but only to the extent, that the
amounts so deducted are, at the time of receipt of such cash, actually paid to a
Person that is not an Affiliate of such Person or any Loan Party or any
Affiliate of any Loan Party and are properly attributable to such transaction or
to the asset that is the subject thereof.
"Note" means a Term A Note, a Term B Note, or a Revolving Credit Note.
"Notice of Borrowing" has the meaning specified in Section 2.02(a).
"Notice of Issuance" has the meaning specified in Section 2.03(a).
"Notice of Renewal" has the meaning specified in Section 2.01(e).
"Notice of Swing Line Borrowing" has the meaning specified in Section
2.02(b).
"Notice of Termination" has the meaning specified in Section 2.01(e).
"NPL" means the National Priorities List under CERCLA.
"Obligation" means, with respect to any Person, any payment,
performance or other obligation of such Person of any kind, including, without
limitation, any liability of such Person on any claim, whether or not the right
of any creditor to payment in respect of such claim is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, disputed, undisputed,
legal, equitable, secured or unsecured, and whether or not such claim is
discharged, stayed or otherwise affected by any proceeding referred to in
Section 6.01(f). Without limiting the generality of the foregoing, the
Obligations of the Loan Parties under the Loan Documents include (i) the
obligation to pay principal, interest, Letter of Credit commissions, charges,
expenses, fees, reasonable attorneys' fees and disbursements, indemnities and
other amounts payable by any Loan Party under any Loan Document, (ii) the
obligation of any Loan Party to reimburse any amount in respect of any of the
foregoing that any Lender Party may, after the occurrence and during the
continuance of an Event of Default, elect to pay or advance on behalf of such
Loan Party, and (iii) any other obligations arising out of or under, based upon
or relating to the Loan Documents.
"OECD" means the Organization for Economic Cooperation and Development.
"Open Year" has the meaning specified in Section 4.01(s).
"Other Taxes" has the meaning specified in Section 2.12(b).
"PBGC" means the Pension Benefit Guaranty Corporation (or any
successor).
"Permitted Liens" means such of the following as to which no
enforcement, collection, execution, levy or foreclosure proceeding shall have
been commenced: (i) Liens for taxes, assessments and governmental charges or
levies not yet due and payable; provided that provisions for the payment of such
Liens has been made on the books of such Person only if required by GAAP; (ii)
Liens imposed by law, such as materialmen's, mechanics', carriers', workmen's
and repairmen's Liens and other similar Liens arising in the ordinary course of
business not bonded or discharged within 30 days after notice of filing unless
disputed in good faith or unless such Liens would not be material; provided that
provisions for the payment of such Liens has been made on the books of such
Person only if required by GAAP; (iii) pledges or deposits to secure obligations
under workers' compensation laws or similar legislation or to secure public or
statutory obligations; provided that provisions for the payment of such Liens
has been made on the books of such Person only if required by GAAP; and (iv)
Permitted Real Property Encumbrances.
"Permitted Real Property Encumbrances" means, with respect to any
particular Mortgaged Property, (i) those liens, encumbrances and other matters
affecting title to any Mortgaged Property listed in the Mortgage Policies in
respect thereof and as of the date of delivery of such Mortgage Policies to
Administrative Agent in accordance with the terms hereof, reasonably acceptable
to the Lenders, (ii) such easements, encroachments, covenants, rights of way,
minor defects, irregularities or encumbrances on title which do not arise out of
the incurrence of any Debt and which do not materially impair the use of such
Mortgaged Property for the purpose for which it is held by the mortgagor
thereof, or the Lien granted to the Administrative Agent for the benefit of the
Secured Parties, and (iii) municipal and zoning ordinances; provided that no
violation exists thereunder that could materially impair the use of the existing
improvements and the present use made by the mortgagor thereof of the Premises
(as defined in the respective Mortgage).
"Person" means an individual, partnership, corporation (including a
business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity, or a government or
any political subdivision or agency thereof.
"Plan" means a Single Employer Plan or a Multiple Employer Plan.
"Plastics and Chemicals Business" means the development, production,
manufacture, fabrication, modification, extrusion, formulation or compounding of
chemicals, plastics, rubber, adhesives, sealants, coatings, resins, foams,
films, composites, laminates, fibers and other engineered materials (and the
development, production, manufacture, fabrication, modification, extrusion,
formulation or compounding of products primarily comprised of such materials),
the marketing, distribution and sale thereof; and expansion or extension of the
foregoing; and businesses and products incidental or primarily related to any of
the foregoing.
"Pre-Commitment Information" has the meaning specified in Section
3.01(g).
"Prime Rate" means a fluctuating interest rate per annum in effect from
time to time, which rate per annum shall at all times be equal to the higher of:
(a) the rate of interest announced publicly by Fleet in
Boston, Massachusetts, from time to time, as Fleet's prime rate, which
is not necessarily the lowest rate made available by Fleet; or
(b) 1/2 of one percent per annum above the Federal Funds Rate.
"Prime Rate Advance" means an Advance that bears interest as provided
in Section 2.07(a)(i).
"Pro Rata Share" of any amount means, with respect to any Revolving
Credit Lender at any time, the product of such amount times a fraction the
numerator of which is the amount of such Lender's Revolving Credit Commitment at
such time and the denominator of which is the Revolving Credit Facility at such
time.
"Receivables" means all Receivables referred to in Section 1(c) of the
Security Agreement.
"Reduction Amount" has the meaning specified in Section 2.06(b)(v).
"Register" has the meaning specified in Section 8.07(d).
"Regulation G" means Regulation G of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Release" shall have the meaning as set forth in CERCLA at 42 U.S.C.
ss. 9601(22).
"Remedial" shall have the meaning as set forth in CERCLA at 42 U.S.C.
ss. 9601(24).
"Removal" shall have the meaning as set forth in CERCLA at 42 U.S.C.
ss. 9601(23).
"Required Lenders" means at any time Lenders owed or holding greater
than 50% of the sum of (i) the aggregate principal amount of the Advances
outstanding at such time and (ii) the aggregate Available Amount of all Letters
of Credit outstanding at such time, or, if no such principal amount and no
Letters of Credit are outstanding at such time, Lenders holding greater than 50%
of the aggregate of the Term A Commitments, Term B Commitments and Revolving
Credit Commitments; provided, however, that if any Lender shall be a Defaulting
Lender at such time, there shall be excluded from the determination of Required
Lenders at such time (i) the aggregate principal amount of the Advances owing to
such Lender (in its capacity as a Lender) and outstanding at such time, and (ii)
the aggregate Term A Commitment, Term B Commitment and Revolving Credit
Commitment of such Lender at such time. For purposes of this definition, the
aggregate principal amount of Swing Line Advances owing to the Swing Line Bank,
Letter of Credit Advances owing to the Issuing Bank and the Available Amount of
each Letter of Credit shall be considered to be owed to the Revolving Credit
Lenders ratably in accordance with their respective Revolving Credit
Commitments.
"Response" shall have the meaning as set forth in CERCLA at 42 U.S.C.
ss. 9601(25).
"Responsible Officer" means, with respect to any Loan Party, the Chief
Executive Officer, the President, the Chief Financial Officer, any Vice
President, the Controller or the Treasurer of such Loan Party.
"Revolving Credit Advance" has the meaning specified in Section
2.01(c).
"Revolving Credit Availability" means, at any time, the lesser of (a)
the Revolving Credit Facility and (b) the Borrowing Base.
"Revolving Credit Borrowing" means a borrowing consisting of
simultaneous Revolving Credit Advances of the same Type made by the Revolving
Credit Lenders.
"Revolving Credit Commitment" means, with respect to any Revolving
Credit Lender at any time, the amount set forth opposite such Lender's name on
Schedule I hereto under the caption "Revolving Credit Commitment" or, if such
Lender has entered into one or more Assignments and Acceptances, set forth for
such Lender in the Register maintained by the Administrative Agent pursuant to
Section 8.07(d) as such Lender's "Revolving Credit Commitment," as such amount
may be reduced at or prior to such time pursuant to Section 2.05.
"Revolving Credit Facility" means, at any time, the aggregate amount of
the Revolving Credit Lenders' Revolving Credit Commitments at such time.
"Revolving Credit Lender" means any Lender that has a Revolving Credit
Commitment.
"Revolving Credit Note" means a promissory note of the Borrower payable
to the order of any Revolving Credit Lender, in substantially the form of
Exhibit C hereto, evidencing the aggregate indebtedness of the Borrower to such
Lender resulting from the Revolving Credit Advances made by such Lender.
"Revolving Credit Termination Date" means the earlier of (i) September
30, 2003, and (ii) the Termination Date.
"Secured Obligations" has the meaning specified in the Security
Agreement.
"Secured Parties" means the Administrative Agent, the Lender Parties,
and the Hedge Banks and the other Persons the Obligations owing to which are or
are purported to be secured by the Collateral under the terms of the Collateral
Documents.
"Security Agreement" has the meaning specified in Section 3.01(a)(ii).
"Single Employer Plan" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (i) is maintained for employees of any Loan
Party or any ERISA Affiliate and no Person other than the Loan Parties and the
ERISA Affiliates or (ii) was so maintained and in respect of which any Loan
Party or any ERISA Affiliate could have liability under Section 4069 of ERISA in
the event such plan has been or were to be terminated.
"Solvent" and "Solvency" mean, with respect to any Person on a
particular date, that on such date (i) the fair value of the property of such
Person is greater than the total amount of liabilities, including, without
limitation, contingent liabilities, of such Person, (ii) the present fair
saleable value of the assets of such Person is not less than the amount that
will be required to pay the probable liability of such Person on its debts as
they become absolute and matured, (iii) such Person does not intend to, and does
not believe that it will, incur debts or liabilities beyond such Person's
ability to pay such debts and liabilities as they mature and (iv) such Person is
not engaged in business or a transaction, and is not about to engage in business
or a transaction, for which such Person's property would constitute an
unreasonably small capital. The amount of contingent liabilities at any time
shall be computed as the amount that, in the light of all the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability.
"Standby Letter of Credit" means any Letter of Credit other than a
Trade Letter of Credit.
"Subordinated Management Fee" has the meaning specified in Section
3.01(r).
"Subsidiary" of any Person means any corporation, partnership, joint
venture, limited liability company, trust or estate of which (or in which) more
than 50% of (i) the issued and outstanding capital stock having ordinary voting
power to elect a majority of the Board of Directors of such corporation
(irrespective of whether at the time capital stock of any other class or classes
of such corporation shall or might have voting power upon the occurrence of any
contingency), (ii) the interest in the capital or profits of such partnership,
joint venture or limited liability company or (iii) the beneficial interest in
such trust or estate is at the time directly or indirectly owned or controlled
by such Person, by such Person and one or more of its other Subsidiaries or by
one or more of such Person's other Subsidiaries.
"Subsidiary Guaranty" has the meaning specified Section 5.01(m).
"Surviving Debt" shall have the meaning specified in Section 3.01(c).
"Swing Line Advance" means an advance made by (i) the Swing Line Bank
pursuant to Section 2.01(e) or (ii) any Revolving Credit Lender pursuant to
Section 2.02(b).
"Swing Line Bank" has the meaning specified in the recital of parties
to this Agreement.
"Swing Line Borrowing" means a borrowing consisting of a Swing Line
Advance made by the Swing Line Bank.
"Swing Line Facility" has the meaning specified in Section 2.01(d).
"Taxes" has the meaning specified in Section 2.12(a).
"Tax Liability Dividend" has the meaning specified in Section 3.01(q).
"Tax Sharing Agreement" has the meaning specified in Section 3.01(q).
"Term A Advance" has the meaning specified in Section 2.01(a).
"Term A Borrowing" means a borrowing consisting of simultaneous Term A
Advances of the same Type made by the Term A Lenders.
"Term A Commitment" means, with respect to any Term A Lender at any
time, the amount set forth opposite such Lender's name on Schedule I hereto
under the caption "Term A Commitment" or, if such Lender has entered into one or
more Assignments and Acceptances, set forth for such Lender in the Register
maintained by the Administrative Agent pursuant to Section 8.07(d) as such
Lender's "Term A Commitment," as such amount may be reduced at or prior to such
time pursuant to Section 2.05.
"Term A Facility" means, at any time, the aggregate amount of the Term
A Lenders' Term A Commitments at such time.
"Term A Lender" means any Lender that has a Term A Commitment.
"Term A Note" means a promissory note of the Borrower payable to the
order of any Term A Lender, in substantially the form of Exhibit D hereto,
evidencing the indebtedness of the Borrower to such Lender resulting from the
Term A Advance made by such Lender.
"Term B Advance" has the meaning specified in Section 2.01(b).
"Term B Borrowing" means a borrowing consisting of simultaneous Term B
Advances of the same Type made by the Term B Lenders.
"Term B Commitment" means, with respect to any Term B Lender at any
time, the amount set forth opposite such Lender's name on Schedule I hereto
under the caption "Term B Commitment" or, if such Lender has entered into one or
more Assignments and Acceptances, set forth for such Lender in the Register
maintained by the Administrative Agent pursuant to Section 8.07(d) as such
Lender's "Term B Commitment", as such amount may be reduced at or prior to such
time pursuant to Section 2.05.
"Term B Facility" means, at any time, the aggregate amount of the Term
B Lenders' Term B Commitments at such time.
"Term B Lender" means any Lender that has a Term B Commitment.
"Term B Note" means a promissory note of the Borrower payable to the
order of any Term B Lender, in substantially the form of Exhibit E hereto,
evidencing the indebtedness of the Borrower to such Lender resulting from the
Term B Advance made by such Lender.
"Term Facilities" means the Term A Facility and the Term B Facility.
"Termination Date" means the date of termination in whole of the
Commitments pursuant to Section 2.05 or 6.01.
"Trade Letter of Credit" means any Letter of Credit that is issued for
the benefit of a supplier of Inventory to the Borrower or any of its
Subsidiaries to effect payment for such Inventory, the conditions to drawing
under which include the presentation to the Issuing Bank of negotiable bills of
lading, invoices and related documents sufficient, in the commercially
reasonable judgment of the Issuing Bank, to create a valid and perfected lien on
or security interest in such Inventory, bills of lading, invoices and related
documents in favor of the Issuing Bank.
"Transaction" means the transactions contemplated by the Loan
Documents.
"Type" refers to the distinction between Advances bearing interest at
the Prime Rate and Advances bearing interest at the Eurodollar Rate.
"Unused Revolving Credit Commitment" means, with respect to any
Revolving Credit Lender, at any time, (x) such Lender's Revolving Credit
Commitment at such time minus (y) the sum of (1) the aggregate principal amount
of all Revolving Credit Advances and Letter of Credit Advances made by such
Lender (in its capacity as a Lender) and outstanding at such time, plus (2) such
Lender's Pro Rata Share of (A) the aggregate Available Amount of all Letters of
Credit outstanding at such time and (B) the aggregate principal amount of all
Letter of Credit Advances made by the Issuing Bank pursuant to Section 2.03(c)
and outstanding at such time.
"UTC" means Uniroyal Technology Corporation, a Delaware corporation and
the holder of all of the issued and outstanding shares of capital stock of
Holdings.
"UTC Existing Revolving Credit Facility" means the commitment of The
CIT Group/Business Credit, Inc. to make revolving loans pursuant to the CIT
Financing Agreement and to assist the Borrower in obtaining letters of credit
under the CIT Financing Agreement in an aggregate amount up to $25,000,000.
"UTC Senior Notes" means the Uniroyal Technology Corporation 11 3/4%
Senior Secured Notes Due 2003.
"Voting Stock" means capital stock issued by a corporation, or
equivalent interests in any other Person, the holders of which are ordinarily,
in the absence of contingencies, entitled to vote for the election of directors
(or persons performing similar functions) of such Person, even if the right so
to vote has been suspended by the happening of such a contingency.
"Welfare Plan" means a welfare plan, as defined in Section 3(1) of
ERISA, that is maintained for employees of any Loan Party or in respect of which
any Loan Party could have liability.
"Withdrawal Liabilities" has the meaning specified in Part I of
Subtitle E of Title IV of ERISA.
SECTION 1.02. Computation of Time Periods . In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
mean "to but excluding."
SECTION 1.03. Accounting Terms . All accounting terms not specifically
defined herein shall be construed in accordance with generally accepted
accounting principles consistent with those applied in the preparation of the
financial statements referred to in Section 4.01(f) ("GAAP").
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
AND THE LETTERS OF CREDIT
SECTION 2.01. The Advances .
(a) The Term A Advances . Each Term A Lender severally agrees, on the
terms and conditions hereinafter set forth, to make a single advance (a "Term A
Advance") to the Borrower on the Closing Date in an amount not to exceed such
Lender's Term A Commitment at such time. The Term A Borrowing shall consist of
Term A Advances made simultaneously by the Term A Lenders ratably according to
their Term A Commitments. Amounts borrowed under this Section 2.01(a) and repaid
or prepaid may not be reborrowed.
(b) The Term B Advances . Each Term B Lender severally agrees, on the
terms and conditions hereinafter set forth, to make a single advance (a "Term B
Advance") to the Borrower on the Closing Date in an amount not to exceed such
Lender's Term B Commitment at such time. The Term B Borrowing shall consist of
Term B Advances made simultaneously by the Term B Lenders ratably according to
their Term B Commitments. Amounts borrowed under this Section 2.01(b) and repaid
or prepaid may not be reborrowed.
(c) The Revolving Credit Advances . Each Revolving Credit Lender
severally agrees, on the terms and conditions hereinafter set forth, to make
advances (each a "Revolving Credit Advance") to the Borrower from time to time
on any Business Day during the period from the date hereof until the Revolving
Credit Termination Date in an amount for each such Advance not to exceed such
Lender's Unused Revolving Credit Commitment at such time; provided, however,
that no Revolving Credit Lender shall have any obligation to make a Revolving
Credit Advance under this Section 2.01(c) to the extent such Revolving Credit
Advance would cause the aggregate amount of Revolving Credit Advances
outstanding (after giving effect to any immediate application of the proceeds
thereof) to exceed the Revolving Credit Availability; provided, further, that
the aggregate amount of the Revolving Credit Advances made to the Borrower on
the Closing Date shall not exceed $7,500,000. Each Revolving Credit Borrowing
shall be in an aggregate amount of $100,000 or an integral multiple of $100,000
(other than, in each case, a Borrowing the proceeds of which shall be used
solely to repay or prepay in full outstanding Swing Line Advances or outstanding
Letter of Credit Advances) and shall consist of Revolving Credit Advances made
simultaneously by the Revolving Credit Lenders ratably according to their
Revolving Credit Commitments. Within the limits of each Revolving Credit
Lender's Unused Revolving Credit Commitment in effect from time to time, the
Borrower may borrow, repay and reborrow Revolving Credit Advances.
(d) The Swing Line Advances . The Borrower may request the Swing Line
Bank to make, and the Swing Line Bank may, if in its discretion it elects to do
so, make, on the terms and conditions hereinafter set forth, Swing Line Advances
to the Borrower from time to time on any Business Day during the period from the
date hereof until the Revolving Credit Termination Date (i) in an aggregate
amount not to exceed at any time outstanding $5,000,000 (the "Swing Line
Facility") and (ii) in an amount for each such Swing Line Borrowing not to
exceed the aggregate of the Unused Revolving Credit Commitments of the Revolving
Credit Lenders at such time. No Swing Line Advance shall be used for the purpose
of funding the payment of principal of any other Swing Line Advance. Each Swing
Line Borrowing shall be made as a Prime Rate Advance. Within the limits of the
Swing Line Facility and within the limits referred to in clause (ii) above, so
long as the Swing Line Bank, in its discretion, elects to make Swing Line
Advances, the Borrower may borrow and reborrow under this Section 2.01(d) and
may repay or prepay the Swing Line Advances at such times prior to the
Termination Date, and in such integral multiples, as the Borrower may elect.
(e) Letters of Credit . The Issuing Bank agrees, on the terms and
conditions hereinafter set forth, to issue letters of credit for the account of
the Borrower from time to time on any Business Day during the period from the
Closing Date until sixty (60) days before the Revolving Credit Termination Date
(i) in an aggregate Available Amount for all Letters of Credit not to exceed at
any time the Issuing Bank's Letter of Credit Commitment at such time and (ii) in
an Available Amount for each such Letter of Credit not to exceed an amount equal
to the Unused Revolving Credit Commitments of the Revolving Credit Lenders at
such time. No Letter of Credit shall have an expiration date (including all
rights of the Borrower or the beneficiary to require renewal) later than (A) the
earlier of sixty (60) days before the Revolving Credit Termination Date, (B) in
the case of a Standby Letter of Credit, 365 days after the date of issuance
thereof and (C) in the case of a Trade Letter of Credit, 180 days after the date
of issuance thereof. The foregoing notwithstanding, any Standby Letter of Credit
may, by its terms, be renewable annually upon notice (a "Notice of Renewal")
given to the Issuing Bank and the Administrative Agent on or prior to any date
for notice of renewal set forth in such Letter of Credit (but in any event at
least five (5) Business Days prior to the date of the proposed renewal of such
Standby Letter of Credit) and upon fulfillment of the applicable conditions set
forth in Article III unless such Issuing Bank shall have notified the Borrower
(with a copy to the Administrative Agent) on or prior to the date for notice of
termination set forth in such Letter of Credit (but in any event at least thirty
(30) Business Days prior to the date of automatic renewal) of its election not
to renew such Standby Letter of Credit (a "Notice of Termination"); provided
that the terms of each Standby Letter of Credit that is automatically renewable
annually shall not permit the expiration date (after giving effect to any
renewal) of such Standby Letter of Credit in any event to be extended to a date
later than sixty (60) days before the Revolving Credit Termination Date. If
either a Notice of Renewal is not given by the Borrower or a Notice of
Termination is given by the Issuing Bank pursuant to the immediately preceding
sentence, such Standby Letter of Credit shall expire on the date on which it
otherwise would have been automatically renewed; provided, however, that even in
the absence of receipt of a Notice of Renewal, the Issuing Bank may, in its
discretion unless instructed to the contrary by the Administrative Agent or the
Borrower, deem that a Notice of Renewal had been timely delivered and, in such
case, a Notice of Renewal shall be deemed to have been so delivered for all
purposes under this Agreement. Within the limits of the Letter of Credit
Facility, and subject to the limits referred to above, the Borrower may request
the issuance of Letters of Credit under this Section 2.01(e), repay any Letter
of Credit Advances resulting from drawings under Letters of Credit pursuant to
Section 2.03(c) and request the issuance of additional Letters of Credit under
this Section 2.01(e).
SECTION 2.02. Making the Advances . (a) Except as otherwise provided in
Section 2.03 or, with respect to Swing Line Advances, in Section 2.02(b), each
Borrowing shall be made on notice, given not later than 11:00 A.M. (New York
time) on the third Business Day prior to the date of the proposed Borrowing in
the case of Eurodollar Rate Advances and on the first Business Day prior to the
date of the proposed Borrowing in the case of Prime Rate Advances by the
Borrower to the Administrative Agent, which shall give to each appropriate
Lender prompt notice thereof by telex or telecopier. Each such notice of a
Borrowing (a "Notice of Borrowing") may be by telephone, confirmed immediately
in writing, or telex or telecopier in substantially the form of Exhibit F
hereto, specifying therein the requested (i) date of such Borrowing, (ii)
Facility under which such Borrowing is to be made, (iii) Type of Advances
comprising such Borrowing, (iv) aggregate amount of such Borrowing and (v) in
the case of a Borrowing consisting of Eurodollar Rate Advances, initial Interest
Period for each such Advance. Each appropriate Lender shall, before 11:00 A.M.
(New York time) on the date of such Borrowing, make available for the account of
its Applicable Lending Office to the Administrative Agent at the Administrative
Agent's Account, in same day funds, such Lender's ratable portion of such
Borrowing in accordance with the respective Commitments under the applicable
Facility of such Lender and the other appropriate Lenders. After the
Administrative Agent's receipt of such funds and upon fulfillment of the
applicable conditions set forth in Article III, the Administrative Agent will
make such funds available to the Borrower by crediting the Borrower's Account;
provided, however, that in the case of any Revolving Credit Borrowing, the
Administrative Agent shall first make a portion of such funds equal to the
aggregate principal amount of any Swing Line Advances and Letter of Credit
Advances made by the Swing Line Bank, the Issuing Bank and by any other
Revolving Credit Lender and outstanding on the date of such Revolving Credit
Borrowing, plus interest accrued and unpaid thereon to and as of such date,
available to the Swing Line Bank, the Issuing Bank and such other Revolving
Credit Lenders for repayment of such Swing Line Advances and Letter of Credit
Advances.
(b) Each Swing Line Borrowing shall be made either (x) on notice, given
not later than 3:00 P.M. (New York time) on the date of the proposed Swing Line
Borrowing, by the Borrower to the Swing Line Bank and the Administrative Agent
or (y) pursuant to other arrangements, including, by way of example and not of
limitation, arrangements for daily repayments and borrowings on each Business
Day, which are satisfactory in form and substance to the Swing Line Bank, the
Administrative Agent and the Borrower. Each notice of a Swing Line Borrowing
pursuant to clause (x) in the immediately preceding sentence (a "Notice of Swing
Line Borrowing") shall be by telephone, confirmed immediately in writing, or
telex or telecopier, specifying therein the requested (i) date of such
Borrowing, (ii) amount of such Borrowing and (iii) maturity of such Borrowing
(which maturity shall be no later than the seventh day after the requested date
of such Borrowing). If, in its discretion, it elects to make a requested Swing
Line Advance, the Swing Line Bank will make the amount thereof available to the
Administrative Agent at the Administrative Agent's Account, in same day funds.
After the Administrative Agent's receipt of such funds and upon fulfillment of
the applicable conditions set forth in Article III, the Administrative Agent
will make such funds available to the Borrower by crediting the Borrower's
Account. Upon written demand by the Swing Line Bank, with a copy of such demand
to the Administrative Agent, each other Revolving Credit Lender shall purchase
from the Swing Line Bank, and the Swing Line Bank shall sell and assign to each
such other Revolving Credit Lender, such other Lender's Pro Rata Share of all
outstanding Swing Line Advances as of the date of such demand, by deposit to the
Administrative Agent's Account, in same day funds, an amount equal to the
portion of the outstanding principal amount of Swing Line Advances to be
purchased by such Lender. The Borrower hereby agrees to each such sale and
assignment. Each Revolving Credit Lender agrees to purchase its Pro Rata Share
of outstanding Swing Line Advances on (i) the Business Day on which demand
therefor is made by the Swing Line Bank; provided that notice of such demand is
given not later than 3:00 P.M. (New York time) on such Business Day, or (ii) the
first Business Day next succeeding such demand if notice of such demand is given
after such time. Upon any such assignment by the Swing Line Bank to any other
Revolving Credit Lender of a portion of a Swing Line Advance, the Swing Line
Bank represents and warrants to such other Lender that the Swing Line Bank is
the legal and beneficial owner of such interest being assigned by it, but makes
no other representation or warranty and assumes no responsibility with respect
to such Swing Line Advance, the Loan Documents or any Loan Party. If and to the
extent that any Revolving Credit Lender shall not have so made the amount of
such Swing Line Advance available to the Administrative Agent, such Revolving
Credit Lender agrees to pay to the Administrative Agent, for the account of the
Swing Line Bank, forthwith on demand such amount together with interest thereon,
for each day from the date of demand by the Swing Line Bank until the date such
amount is paid to the Administrative Agent, at the Federal Funds Rate. If such
Lender shall pay to the Administrative Agent such amount for the account of the
Swing Line Bank on any Business Day, such amount so paid in respect of principal
shall constitute a Swing Line Advance made by such Lender on such Business Day
for purposes of this Agreement, and the outstanding principal amount of the
Swing Line Advance made by the Swing Line Bank shall be reduced by such amount
on such Business Day.
(c) Anything in subsection (a) above to the contrary notwithstanding,
(i) the Borrower may not select Eurodollar Rate Advances if the obligation of
the appropriate Lenders to make Eurodollar Rate Advances shall then be suspended
pursuant to Section 2.09 or Section 2.10, and (ii) the Eurodollar Rate Advances
made on any date may not be outstanding as part of more than ten (10) separate
Borrowings.
(d) Each Notice of Borrowing and Notice of Swing Line Borrowing shall
be irrevocable and binding on the Borrower. In the case of any Borrowing that
the related Notice of Borrowing specifies is to be comprised of Eurodollar Rate
Advances, the Borrower shall indemnify each appropriate Lender against any loss,
cost or expense incurred by such Lender as a result of any failure to fulfill on
or before the date specified in such Notice of Borrowing for such Borrowing the
applicable conditions set forth in Article III, including, without limitation,
any loss (including loss of anticipated profits as reasonably determined by such
Lender), cost or expense incurred by reason of the liquidation or redeployment
of deposits or other funds acquired by such Lender to fund the Advance to be
made by such Lender as part of such Borrowing when such Advance, as a result of
such failure, is not made on such date.
(e) Unless the Administrative Agent shall have received notice from an
appropriate Lender prior to the date of any Borrowing under a Facility under
which such Lender has a Commitment that such Lender will not make available to
the Administrative Agent such Lender's ratable portion of such Borrowing, the
Administrative Agent may assume that such Lender has made such portion available
to the Administrative Agent on the date of such Borrowing in accordance with
subsection (a) or (b) of this Section 2.02 and the Administrative Agent may, in
reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent that such Lender shall not have so
made such ratable portion available to the Administrative Agent, such Lender and
the Borrower severally agree to repay or pay to the Administrative Agent
forthwith on demand such corresponding amount and to pay interest thereon, for
each day from the date such amount is made available to the Borrower until the
date such amount is repaid or paid to the Administrative Agent, at (i) in the
case of the Borrower, the interest rate applicable at such time under Section
2.07 to Advances comprising such Borrowing and (ii) in the case of such Lender,
the Federal Funds Rate. If such Lender shall pay to the Administrative Agent
such corresponding amount, such amount so paid shall constitute such Lender's
Advance as part of such Borrowing for all purposes.
(f) The failure of any Lender to make the Advance to be made by it as
part of any Borrowing shall not relieve any other Lender of its obligation, if
any, hereunder to make its Advance on the date of such Borrowing, but no Lender
shall be responsible for the failure of any other Lender to make the Advance to
be made by such other Lender on the date of any Borrowing.
SECTION 2.03. Issuance of and Drawings and Reimbursement
Under Letters of Credit .
(a) Request for Issuance . Each Letter of Credit shall be issued upon
notice, given not later than 11:00 A.M. (New York time) on the third Business
Day prior to the date of the proposed issuance of such Letter of Credit, by the
Borrower to the Issuing Bank, which shall give to the Administrative Agent and
each Revolving Credit Lender prompt notice thereof by telex or telecopier. Each
such notice of issuance of a Letter of Credit (a "Notice of Issuance") shall be
by telephone, confirmed immediately in writing, or telex or telecopier,
specifying therein the requested (i) date of such issuance (which shall be a
Business Day), (ii) Available Amount of such Letter of Credit, (iii) expiration
date of such Letter of Credit, (iv) name and address of the beneficiary of such
Letter of Credit and (v) form of such Letter of Credit, and shall be accompanied
by such application and agreement for letter of credit as the Issuing Bank may
specify to the Borrower for use in connection with such requested Letter of
Credit (a "Letter of Credit Agreement"). If the requested form of such Letter of
Credit is acceptable to the Issuing Bank, in its sole discretion, the Issuing
Bank will, upon fulfillment of the applicable conditions set forth in Article
III, make such Letter of Credit available to the Borrower at its office referred
to in Section 8.02 or as otherwise agreed with the Borrower in connection with
such issuance. In the event and to the extent that the provisions of any such
Letter of Credit Agreement shall conflict with this Agreement, the provisions of
this Agreement shall govern.
(b) Letter of Credit Reports . The Issuing Bank shall furnish (i) to
the Administrative Agent on the first Business Day of each week a written report
summarizing issuance and expiration dates of Letters of Credit issued during the
previous week and drawings during such week under all Letters of Credit, (ii) to
the Administrative Agent, the Borrower and each Revolving Credit Lender on the
first Business Day of each month a written report summarizing issuance and
expiration dates of Letters of Credit issued during the preceding month and
drawings during such month under all Letters of Credit and (iii) to the
Administrative Agent, the Borrower and each Revolving Credit Lender on the first
Business Day of each calendar quarter a written report setting forth the average
daily aggregate Available Amount during the preceding calendar quarter of all
Letters of Credit.
(c) Drawing and Reimbursement . The payment by the Issuing Bank of a
draft drawn under any Letter of Credit shall constitute for all purposes of this
Agreement the making by the Issuing Bank of a Letter of Credit Advance, which
shall be a Prime Rate Advance in the amount of such draft. Each of the Borrower,
the Administrative Agent and each Revolving Credit Lender hereby acknowledges
and agrees that Letter of Credit Advances may be made, or deemed made, by the
Issuing Bank in respect of any Letter of Credit and to participate in all Letter
of Credit Advances made hereunder as provided herein. Upon written demand by the
Issuing Bank, with a copy of such demand to the Administrative Agent, each
Revolving Credit Lender shall purchase from the Issuing Bank, and the Issuing
Bank shall sell and assign to each such Revolving Credit Lender, such Lender's
Pro Rata Share of such outstanding Letter of Credit Advance as of the date of
such purchase, by making available (for the account of its Applicable Lending
Office) to the Administrative Agent (for the account of the Issuing Bank), by
deposit to the Administrative Agent's Account, in same day funds, an amount
equal to the portion of the outstanding principal amount of such Letter of
Credit Advance to be purchased by such Lender. Promptly after receipt thereof,
the Administrative Agent shall transfer such funds to the Issuing Bank. The
Borrower hereby agrees to each such sale and assignment. Each Revolving Credit
Lender agrees to purchase its Pro Rata Share of an outstanding Letter of Credit
Advance on (i) the Business Day on which demand therefor is made by the Issuing
Bank; provided that notice of such demand is given not later than 11:00 A.M.
(New York time) on such Business Day or (ii) the first Business Day next
succeeding such demand if notice of such demand is given after such time. Upon
any such assignment by the Issuing Bank to any other Revolving Credit Lender of
a portion of a Letter of Credit Advance, the Issuing Bank represents and
warrants to such other Lender that the Issuing Bank is the legal and beneficial
owner of such interest being assigned by it, free and clear of any Liens, but
makes no other representation or warranty and assumes no responsibility with
respect to such Letter of Credit Advance, the Loan Documents or any Loan Party.
If and to the extent that any Revolving Credit Lender shall not have so made the
amount of such Letter of Credit Advance available to the Administrative Agent,
such Revolving Credit Lender agrees to pay to the Administrative Agent forthwith
on demand such amount together with interest thereon, for each day from the date
of demand by the Issuing Bank until the date such amount is paid to the
Administrative Agent, at the Federal Funds Rate for its account or the account
of the Issuing Bank, as applicable. If such Lender shall pay to the
Administrative Agent such amount for the account of the Issuing Bank on any
Business Day, such amount so paid in respect of principal shall constitute a
Letter of Credit Advance made by such Lender on such Business Day for purposes
of this Agreement, and the outstanding principal amount of the Letter of Credit
Advance made by the Issuing Bank shall be reduced by such amount on such
Business Day.
(d) Failure to Make Letter of Credit Advances . The failure of any
Lender to make any Letter of Credit Advance to be made by it on the date
specified in Section 2.03(c) shall not relieve any other Lender of its
obligation hereunder to make its Letter of Credit Advance on such date, but no
Lender shall be responsible for the failure of any other Lender to make the
Letter of Credit Advance to be made by such other Lender on such date.
SECTION 2.04. Repayment of Advances .
(a) Term A Advances . The Borrower shall repay to the Administrative
Agent for the ratable account of the Term A Lenders the aggregate outstanding
principal amount of the Term A Advances on the following dates in the amounts
indicated (which amounts shall be reduced as a result of the application of
prepayments in accordance with the order of priority set forth in Section 2.06):
Date Amount
December 31, 1998 $1,500,000.00
March 31, 1999 $1,500,000.00
June 30, 1999 $1,500,000.00
September 30, 1999 $1,500,000.00
December 31, 1999 $1,500,000.00
March 31, 2000 $1,500,000.00
June 30, 2000 $1,500,000.00
September 30, 2000 $1,500,000.00
December 31, 2000 $1,500,000.00
March 31, 2001 $1,500,000.00
June 30, 2001 $1,500,000.00
September 30, 2001 $1,500,000.00
December 31, 2001 $1,500,000.00
March 31, 2002 $1,500,000.00
June 30, 2002 $1,500,000.00
September 30, 2002 $1,500,000.00
December 31, 2002 $1,500,000.00
March 31, 2003 $1,500,000.00
June 30, 2003 $1,500,000.00
September 30, 2003 $1,500,000.00;
provided, however, that the final principal installment shall be in an amount
equal to the aggregate principal amount of the Term A Advances outstanding on
such date.
(b) Term B Advances . The Borrower shall repay to the Administrative
Agent for the ratable account of the Term B Lenders the aggregate outstanding
principal amount of the Term B Advances on the following dates in the amounts
indicated (which amounts shall be reduced as a result of the application of
prepayments in accordance with the order of priority set forth in Section 2.06):
Date Amount
December 31, 1998 $ 150,000.00
March 31, 1999 $ 150,000.00
June 30, 1999 $ 150,000.00
September 30, 1999 $ 150,000.00
December 31, 1999 $ 150,000.00
March 31, 2000 $ 150,000.00
June 30, 2000 $ 150,000.00
September 30, 2000 $ 150,000.00
December 31, 2000 $ 150,000.00
March 31, 2001 $ 150,000.00
June 30, 2001 $ 150,000.00
September 30, 2001 $ 150,000.00
December 31, 2001 $ 150,000.00
March 31, 2002 $ 150,000.00
June 30, 2002 $ 150,000.00
September 30, 2002 $ 150,000.00
December 31, 2002 $ 150,000.00
March 31, 2003 $ 150,000.00
June 30, 2003 $ 150,000.00
September 30, 2003 $ 150,000.00
March 31, 2004 $5,000,000.00
September 30, 2004 $5,000,000.00
March 31, 2005 $47,000,000.00;
provided, however, that the final principal installment shall be equal to the
aggregate principal amount of the Term B Advances outstanding on such date.
(c) Revolving Credit Advances . The Borrower shall repay to the
Administrative Agent for the ratable account of the Revolving Credit Lenders on
the Revolving Credit Termination Date the aggregate principal amount of the
Revolving Credit Advances then outstanding.
(d) Swing Line Advances . The Borrower shall repay to the
Administrative Agent for the account of the Swing Line Bank and each other
Revolving Credit Lender that has made a Swing Line Advance the outstanding
principal amount of each Swing Line Advance made by each of them on the earlier
of the maturity date for such Swing Line Advance (which maturity date shall be
no later than the seventh day after the requested date of such Swing Line
Advance) and the Revolving Credit Termination Date.
(e) Letter of Credit Advances . (i) The Borrower shall repay to the
Administrative Agent for the account of the Issuing Bank and each other
Revolving Credit Lender that has made a Letter of Credit Advance on the earlier
of demand and the Revolving Credit Termination Date the outstanding principal
amount of each Letter of Credit Advance made by each of them.
(ii) The Obligations of the Borrower under this Agreement, any
Letter of Credit Agreement and any other agreement or instrument relating to any
Letter of Credit shall be unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement, such Letter of Credit
Agreement and such other agreement or instrument under all circumstances,
including, without limitation, the following circumstances:
(A) any lack of validity or enforceability of any
Loan Document, any Letter of Credit Agreement, any Letter of Credit or
any other agreement or instrument relating to any of the foregoing (all
of the foregoing being, collectively, the "L/C Related Documents");
(B) any change in the time, manner or place of
payment of, or in any other term of, all or any of the Obligations of
the Borrower in respect of any L/C Related Document or any other
amendment or waiver of or any consent to departure from all or any of
the L/C Related Documents;
(C) the existence of any claim, set-off, defense or
other right that the Borrower may have at any time against any
beneficiary or any transferee of a Letter of Credit (or any Persons for
whom any such beneficiary or any such transferee may be acting), the
Issuing Bank, or any other Person, whether in connection with the
transactions contemplated by the L/C Related Documents or any unrelated
transaction;
(D) any statement or any other document presented
under a Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any material respect or any statement therein being
untrue or inaccurate in any material respect; or
(E) any exchange, release or non-perfection of any
Collateral or other collateral, or any release or amendment or waiver
of or consent to departure from any Guaranty or any other guarantee,
for all or any of the Obligations of the Borrower in respect of the L/C
Related Documents.
SECTION 2.05. Termination or Reduction of the Commitments .
(a) Optional . The Borrower may, upon at least three Business Days'
notice to the Administrative Agent, terminate in whole or reduce in part the
unused portions of the Unused Revolving Credit Commitments; provided, however,
that each partial reduction of a Facility (i) shall be in an aggregate amount of
$1,000,000 or an integral multiple of $1,000,000 in excess thereof, and (ii)
shall be made ratably among the appropriate Lenders in accordance with their
Commitments with respect to such Facility.
(b) Mandatory . (i) On the date of the Term A Borrowing, after giving
effect to such Term A Borrowing, and from time to time thereafter upon each
repayment or prepayment of the Term A Advances, the aggregate Term A Commitments
of the Term A Lenders shall be automatically and permanently reduced, on a pro
rata basis, by an amount equal to the amount by which the aggregate Term A
Commitments immediately prior to such reduction exceed the aggregate unpaid
principal amount of the Term A Advances then outstanding; provided, however,
that the Term A Commitments shall terminate, and all Advances made thereunder
shall be repaid in full, no later than September 30, 2003.
(ii) On the date of the Term B Borrowing, after giving effect
to such Term B Borrowing, and from time to time thereafter upon each repayment
or prepayment of the Term B Advances, the aggregate Term B Commitments of the
Term B Lenders shall be automatically and permanently reduced, on a pro rata
basis, by an amount equal to the amount by which the aggregate Term B
Commitments immediately prior to such reduction exceed the aggregate unpaid
principal amount of the Term B Advances then outstanding; provided, however,
that the Term B Commitments shall terminate, and all Advances made thereunder
shall be repaid in full, no later than March 31, 2005.
(iii) On and after the date that all Term A Advances and Term
B Advances shall have been permanently reduced to zero, the Revolving Credit
Facility shall be automatically and permanently reduced on each date on which
prepayment thereof is required to be made pursuant to Section 2.06(b)(i), (ii),
(iii) or (iv) in an amount equal to the applicable Reduction Amount, provided
that each such reduction of the Revolving Credit Facility shall be made ratably
among the Revolving Credit Lenders in accordance with their Revolving Credit
Commitments.
(iv) The Swing Line Facility and the Letter of Credit Facility
shall be permanently reduced from time to time on the date of each reduction in
the Revolving Credit Facility (i) by the amount, if any, by which the amount of
any such Facility exceeds the Revolving Credit Facility, and (ii) on a pro rata
basis in the event the aggregate of all such Facilities exceeds the Revolving
Credit Facility, in each case, after giving effect to such reduction of the
Revolving Credit Facility.
(v) In the event the Closing Date shall not have occurred by
April 30, 1998, then all of the Commitments shall be automatically terminated
and this Agreement shall be of no further force or effect, unless the Closing
Date is extended by mutual agreement.
SECTION 2.06. Prepayments .
(a) Optional . The Borrower may, without premium or penalty, upon at
least three (3) Business Days' notice to the Administrative Agent stating the
proposed date and aggregate principal amount of the prepayment, and if such
notice is given, the Borrower shall, prepay the outstanding aggregate principal
amount of the Advances, in whole or ratably in part, together with accrued
interest to the date of such prepayment on the aggregate principal amount
prepaid; provided, however, that (i) each partial prepayment shall be in an
aggregate principal amount of $1,000,000 or an integral multiple of $1,000,000
in excess thereof and (ii) no such prepayment of a Eurodollar Rate Advance shall
be made other than on the last day of an Interest Period therefor without
payment by the Borrower of the amounts, if any, provided for in Section 8.04(c).
Each prepayment made pursuant to this Section 2.06(a) shall, at the Borrower's
option, be applied to either (i) repay the Facilities in the following manner:
first, to prepay Letter of Credit Advances then outstanding until such Advances
are paid in full; second, to prepay Swing Line Advances then outstanding until
such Advances are paid in full; and third, to prepay Revolving Credit Advances
then outstanding until such Revolving Credit Advances are paid in full; or (ii)
be applied to repay the Facilities in the following manner: first, ratably to
the Term A Facility and the Term B Facility, and ratably to each unpaid
installment of principal of each of the Term Facilities until such installments
are paid in full; second, to prepay Letter of Credit Advances then outstanding
until such Advances are paid in full; third, to prepay Swing Line Advances then
outstanding until such Advances are paid in full; fourth, to prepay Revolving
Credit Advances then outstanding (whereupon the Revolving Credit Facility shall
be permanently reduced as set forth in Section 2.05(b)(iii)) until such
Revolving Credit Advances are paid in full; and fifth, deposited in the L/C Cash
Collateral Account to cash collateralize 100% of the Available Amount of the
Letters of Credit then outstanding. Upon the drawing of any Letter of Credit for
which funds are on deposit in the L/C Cash Collateral Account, such funds shall
be applied to reimburse the Issuing Bank or the Revolving Credit Lenders, as
applicable.
(b) Mandatory . (i) Effective September 29, 1999, within ninety (90)
days following the end of each Fiscal Year in which the ratio of Consolidated
Debt to EBITDA for such Fiscal Year exceeds 2.00:1, the Borrower shall execute
and deliver to the Administrative Agent a certificate of the Borrower's Chief
Executive Officer or Chief Financial Officer demonstrating its calculation of
Excess Cash Flow for such Fiscal Year along with a prepayment of the then
outstanding Advances equal to fifty percent (50%) of the annual Excess Cash
Flow.
(ii) Within fifteen (15) days after receipt by the Borrower or
any of its Subsidiaries of Net Cash Proceeds from the sale, lease, transfer or
other disposition of any property or assets of the Borrower or any of its
Subsidiaries (other than any sale, lease, transfer or other disposition of
Inventory in the ordinary course of business or sales in the ordinary course of
business of Equipment that is no longer used or useful in the business of the
Borrower or such Subsidiary), the Borrower shall prepay the then outstanding
Advances in an amount equal to one-hundred percent (100%) of such Net Cash
Proceeds in excess of $1,000,000 in any Fiscal Year.
(iii) Within fifteen (15) days after receipt by the Borrower
or any of its Subsidiaries of Net Cash Proceeds from any Debt Issuance and, if
the ratio of Consolidated Debt to EBITDA at the end of each fiscal quarter in
the most recently completed four consecutive fiscal quarters of the Borrower
exceeds 2.50:1, within fifteen (15) days after the receipt by any Loan Party or
any of its Subsidiaries of Net Cash Proceeds from any Equity Issuance, the
Borrower shall prepay the then outstanding Advances in an amount equal to, with
respect to any (x) Debt Issuance, one hundred percent (100%), and (y) Equity
Issuance, thirty three percent (33%), of such Net Cash Proceeds.
(iv) Within fifteen (15) days after receipt of Net Cash
Proceeds by the Borrower or any of its Subsidiaries from any Extraordinary
Receipt received by or paid to or for the account of the Borrower or any of its
Subsidiaries and not otherwise included in clause (i), (ii) or (iii) above, the
Borrower shall prepay the then outstanding Advances in an amount equal to one
hundred percent (100%) of such Net Cash Proceeds in excess of $1,000,000 in the
aggregate.
(v) Each prepayment made pursuant to clause (i), (ii), (iii)
or (iv) shall be applied to prepay the Facilities in the following manner:
first, ratably to the Term A Facility and the Term B Facility, and ratably to
each unpaid installment of principal of each of the Term Facilities until such
installments are paid in full; second, to prepay Letter of Credit Advances then
outstanding until such Advances are paid in full; third, to prepay Swing Line
Advances then outstanding until such Advances are paid in full; fourth, to
prepay Revolving Credit Advances then outstanding (whereupon the Revolving
Credit Facility shall be permanently reduced as set forth in Section
2.05(b)(iii)) until such Revolving Credit Advances are paid in full; and fifth,
deposited in the L/C Cash Collateral Account to cash collateralize 100% of the
Available Amount of the Letters of Credit then outstanding. Upon the drawing of
any Letter of Credit for which funds are on deposit in the L/C Cash Collateral
Account, such funds shall be applied to reimburse the Issuing Bank or the
Revolving Credit Lenders, as applicable. The amount remaining (if any) after the
required prepayment of the Advances then outstanding and the 100% cash
collateralization of the aggregate Available Amount of Letters of Credit then
outstanding (the sum of such prepayment amounts, cash collateralization amounts
and remaining amount being referred to herein as the "Reduction Amount") may be
retained by the Borrower. Upon the drawing of any Letter of Credit for which
funds are on deposit in the L/C Cash Collateral Account, such funds shall be
applied to reimburse the Issuing Bank or the Revolving Credit Lenders, as
applicable. Upon the termination of all of the Commitments and the indefeasible
payment in full of all Obligations, including, without limitation, termination
or expiration of all Letters of Credit and the indefeasible payment in full of
all Obligations in respect of all Letters of Credit, then all amounts remaining
on deposit in the L/C Cash Collateral Account shall be returned to the Borrower.
(vi) The Borrower shall, within fifteen (15) days following
the end of each month in each Fiscal Year, pay to the Administrative Agent for
deposit in the L/C Cash Collateral Account an amount sufficient to cause the
aggregate amount on deposit in such Account to equal the amount by which the
aggregate Available Amount of all Letters of Credit then outstanding exceeds the
Letter of Credit Facility on such Business Day.
(vii) At any time that the aggregate amount of Revolving
Credit Advances outstanding exceeds the Revolving Credit Availability, the
Borrower shall immediately repay Revolving Credit Advances to the extent
necessary to reduce the principal balance of Revolving Credit Borrowings to an
amount equal to or less than the Revolving Credit Availability.
(c) Application of Prepayments to the Term A Facility and the Term B
Facility . Upon receipt of any amounts to be applied to the prepayment in
respect of the Term A Facility and the Term B Facility pursuant to this Section
2.06, the Administrative Agent shall apply such amounts to the prepayment of the
Term A Advances and Term B Advances ratably; provided, however, that if within
five (5) Business Days of receiving notice from the Administrative Agent of a
prepayment any Term B Lender notifies the Administrative Agent that it elects to
refuse to accept the prepayment of its Term B Advances, and the Borrower upon
five (5) Business Days' notice consents to such refusal, the Administrative
Agent shall apply the portion of such prepayment that would have been allocated
to the repayment of such Lender's Term B Advances, to the prepayment of the
Advances of the Lenders under the Term A Facility and of the Advances of the
Term B Lenders which have not so refused ratably to each unpaid installment of
principal of each such Facility (and, if all Lenders under the Term B Facility
elect to refuse their ratable share of such prepayment, only to the Advances of
the Lenders under the Term A Facility). If any Term B Lender shall not give
notice to the Administrative Agent within such five (5) Business Day period, the
Administrative Agent shall assume that such Lender shall have accepted such
prepayment.
SECTION 2.07. Interest .
(a) Scheduled Interest . The Borrower shall pay to the Administrative
Agent, for the benefit of the Lenders, interest on the unpaid principal amount
of each Advance owing to each Lender from the date of such Advance until such
principal amount shall be paid in full, at the following rates per annum:
(i) Prime Rate Advances . During such periods as such Advance
is a Prime Rate Advance, a rate per annum equal at all times to the sum of (x)
the Prime Rate in effect from time to time plus (y) the Applicable Margin for
such Advance in effect from time to time, payable in arrears monthly on the last
day of each month during such periods and on the date such Prime Rate Advance
shall be Converted or paid in full.
(ii) Eurodollar Rate Advances . During such periods as such
Advance is a Eurodollar Rate Advance, a rate per annum equal at all times during
each Interest Period for such Advance to the sum of (x) the Eurodollar Rate for
such Interest Period for such Advance plus (y) the Applicable Margin for such
Advance in effect on the first day of such Interest Period, payable in arrears
on the last day of such Interest Period and, if such Interest Period has a
duration of more than three months, on each day that occurs during such Interest
Period every three months from the first day of such Interest Period and on the
date such Eurodollar Rate Advance shall be Converted or paid in full.
(b) Default Interest . (i) With respect to any principal amount of any
Advance not paid when due by the Borrower (whether at the stated maturity, by
acceleration or otherwise), the Borrower shall pay interest on such unpaid
principal amount, in arrears on the dates referred to in clause (a)(i) or
(a)(ii) above and on demand, at a rate per annum equal at all times to 2% per
annum above the rate per annum required to be paid on such Advance pursuant to
clause (a)(i) or (a)(ii) above and (ii) with respect to the amount of any
interest, fee or other amount payable hereunder not paid when due (whether at
the stated maturity, by acceleration or otherwise) the Borrower shall pay
interest on such amount to the fullest extent permitted by law from the date
such amount shall be due until such amount shall be paid in full, in arrears on
the date such amount shall be paid in full and on demand, at a rate per annum
equal at all times to 2% per annum above the rate per annum required to be paid,
in the case of interest, on the Type of Advance on which such interest has
accrued pursuant to clause (a)(i) or (a)(ii) above, and, in all other cases, on
Prime Rate Advances pursuant to clause (a)(i) above.
(c) Notice of Interest Rate . Promptly after receipt of a Notice of
Borrowing pursuant to Section 2.02(a), the Administrative Agent shall give
notice to the Borrower and each appropriate Lender of the applicable interest
rate determined by the Administrative Agent for purposes of clause (a)(i) or
(ii).
SECTION 2.08. Fees .
(a) Commitment Fees . The Borrower shall pay to the Administrative
Agent, for the account of the Lenders, commitment fees, from the Closing Date in
the case of each Initial Lender and from the effective date specified in the
Assignment and Acceptance pursuant to which it became a Lender in the case of
each other Lender, until the Revolving Credit Termination Date payable in
arrears quarterly on the last Business Day of each March, June, September and
December, commencing June 30, 1998, and on the Revolving Credit Termination
Date, at a rate per annum equal to 0.500% per annum on the average daily Unused
Revolving Credit Commitment of such Lender; provided, however, that the
commitment fee shall be decreased to .375% per annum for any periods when the
ratio of Consolidated Debt to EBITDA is less than 3.25:1, determined in the same
manner as is the Applicable Margin for the Term A Facility or the Revolving
Credit Facility. For purposes of this clause (a), Swing Line Advances shall not
constitute utilization of the Revolving Credit Commitments of the Revolving
Credit Lenders. Notwithstanding the foregoing, prior to the date which is six
months from the date hereof, the rate per annum on the average daily Unused
Revolving Credit Commitment of such Lender shall be equal to .500%.
(b) Letter of Credit Fees . (i) The Borrower shall pay to the
Administrative Agent for the account of each Revolving Credit Lender a
commission, payable in arrears quarterly on the last Business Day of each March,
June, September and December, commencing June 30, 1998, and on the earliest to
occur of the full drawing, expiration, termination or cancellation of any such
Letter of Credit and on the Revolving Credit Termination Date, .25% of which
shall be payable to the Issuing Bank for its own account, and the remainder of
which shall be payable based on each such Lender's (including the Issuing
Bank's) Pro Rata Share of the average daily aggregate Available Amount during
such quarter of all Letters of Credit outstanding from time to time at the rate
per annum equal to the Applicable Margin then in effect for Eurodollar Advances
under the Revolving Credit Facility.
(ii) In addition to the foregoing fees described in (i) above,
the Borrower shall pay to the Issuing Bank, for its own account, transfer fees
and other customary fees and charges in connection with the issuance or
administration of each Letter of Credit as the Borrower and the Issuing Bank
shall agree.
(c) Administrative Agent's Fees . The Borrower shall pay to the
Administrative Agent for its own account such fees as may from time to time be
agreed between the Borrower and the Administrative Agent.
SECTION 2.09. Conversion of Advances .
(a) Optional . The Borrower may on any Business Day, upon notice given
to the Administrative Agent not later than 11:00 A.M. (New York time) on the
third Business Day prior to the date of the proposed Conversion and subject to
the provisions of Sections 2.07 and 2.10, Convert all or any portion of the
Advances of one Type comprising the same Borrowing into Advances of the other
Type; provided, however, that any Conversion of Eurodollar Rate Advances into
Prime Rate Advances shall be made only on the last day of an Interest Period for
such Eurodollar Rate Advances unless the Borrower pays the amounts, if any,
provided for in Section 8.04(c), any Conversion of Prime Rate Advances into
Eurodollar Rate Advances shall be in an amount not less than the minimum amount
specified in Section 2.01(c), no Conversion of any Advances shall result in more
separate Borrowings than permitted under Section 2.02(c) and each Conversion of
Advances comprising part of the same Borrowing under any Facility shall be made
ratably among the appropriate Lenders in accordance with their Commitments under
such Facility. Each such notice of Conversion shall, within the restrictions
specified above, specify (i) the date of such Conversion, (ii) the Advances to
be Converted and (iii) if such Conversion is into Eurodollar Rate Advances, the
duration of the initial Interest Period for such Advances. Each notice of
Conversion shall be irrevocable and binding on the Borrower.
(b) Mandatory . (i) On the date on which the aggregate unpaid principal
amount of Eurodollar Rate Advances comprising any Borrowing shall be reduced, by
payment or prepayment or otherwise, to less than $500,000, such Advances shall
automatically Convert into Prime Rate Advances.
(ii) If the Borrower shall fail to select the duration of any
Interest Period for any Eurodollar Rate Advances in accordance with the
provisions contained in the definition of "Interest Period" in Section 1.01, the
Administrative Agent will forthwith so notify the Borrower and the appropriate
Lenders, whereupon each such Eurodollar Rate Advance will automatically, on the
last day of the then existing Interest Period therefor, Convert into a Prime
Rate Advance.
(iii) Upon the occurrence and during the continuance of any
Event of Default and the acceleration of the Notes, interest thereon and other
amounts payable by the Borrower under this Agreement and the other Loan
Documents pursuant to Article VI, (x) each Eurodollar Rate Advance will
automatically, on the last day of the then existing Interest Period therefor,
Convert into a Prime Rate Advance and (y) the obligation of the Lenders to make,
or to Convert Advances into, Eurodollar Rate Advances shall be suspended.
SECTION 2.10. Increased Costs, Etc .
(a) If, due to either (i) any change in reserve requirements included
in the Eurodollar Rate Reserve Percentage, or in the interpretation of any law
or regulation, or (ii) the compliance with any guideline or request from any
central bank or other governmental authority (whether or not having the force of
law) effective after the date hereof, there shall be any increase in the cost to
any Lender Party of agreeing to make or of making, funding or maintaining
Eurodollar Rate or Prime Rate Advances or of agreeing to issue or of issuing or
maintaining Letters of Credit or of agreeing to make or of making or maintaining
Letter of Credit Advances (excluding for purposes of this Section 2.10 any such
increased costs resulting from (x) Taxes or Other Taxes (as to which Section
2.12 shall govern) and (y) changes in the basis of taxation of overall net
income or overall gross income by the United States or by the foreign
jurisdiction or state under the laws of which such Lender Party is organized or
has its Applicable Lending Office or any political subdivision thereof), then
the Borrower shall from time to time, upon demand by such Lender Party (with a
copy of such demand to the Administrative Agent), pay to the Administrative
Agent for the account of such Lender Party additional amounts sufficient to
compensate such Lender Party for such increased cost; provided, however, that a
Lender Party claiming additional amounts under this Section 2.10(a) agrees to
use reasonable efforts (consistent with its internal policy and legal and
regulatory restrictions) to designate a different Applicable Lending Office if
the making of such a designation would avoid the need for, or reduce the amount
of, such increased cost that may thereafter accrue and would not, in the
reasonable judgment of such Lender Party, be otherwise disadvantageous to such
Lender Party. A certificate as to the amount of such increased cost, submitted
to the Borrower by such Lender Party, shall be conclusive and binding for all
purposes, absent manifest error.
(b) If, due to either (i) any change in or in the interpretation of any
law or regulation or (ii) the compliance with any guideline or request from any
central bank or other governmental authority (whether or not having the force of
law) effective after the date hereof, there shall be any increase in the amount
of capital required or reasonably expected to be maintained by any Lender Party
or any corporation controlling such Lender Party as a result of or based upon
the existence of such Lender Party's commitment to lend or to issue Letters of
Credit hereunder and other commitments of such type or the issuance or
maintenance of the Letters of Credit (or similar contingent obligations), then,
upon demand by such Lender Party (with a copy of such demand to the
Administrative Agent), the Borrower shall pay to the Administrative Agent for
the account of such Lender Party, from time to time as specified by such Lender
Party, additional amounts sufficient to compensate such Lender Party in the
light of such circumstances, to the extent that such Lender Party reasonably
determines such increase in capital to be allocable to the existence of such
Lender Party's commitment to lend or to issue Letters of Credit hereunder or to
the issuance or maintenance of any Letters of Credit. A certificate as to such
amounts submitted to the Borrower by such Lender Party shall be conclusive and
binding for all purposes, absent manifest error.
(c) If, with respect to any Eurodollar Rate Advances under any
Facility, Lenders owed greater than 50% of the then aggregate unpaid principal
amount thereof notify the Administrative Agent that the Eurodollar Rate for any
Interest Period for such Advances will not adequately reflect the cost to such
Lenders of making, funding or maintaining their Eurodollar Rate Advances for
such Interest Period, the Administrative Agent shall forthwith so notify the
Borrower and the appropriate Lenders, whereupon (i) each such Eurodollar Rate
Advance under any Facility will automatically, on the last day of the then
existing Interest Period therefor, Convert into a Prime Rate Advance and (ii)
the obligation of the appropriate Lenders to make, or to Convert Advances into,
Eurodollar Rate Advances shall be suspended until the Administrative Agent shall
notify the Borrower that such Lenders have determined that the circumstances
causing such suspension no longer exist.
(d) Notwithstanding any other provision of this Agreement, if the
introduction of or any change in or in the interpretation of any law or
regulation shall make it unlawful, or any central bank or other governmental
authority shall assert that it is unlawful, for any Lender or its Eurodollar
Lending Office to perform its obligations hereunder to make Eurodollar Rate
Advances or to continue to fund or maintain Eurodollar Rate Advances hereunder,
then, on notice thereof and demand therefor by such Lender to the Borrower
through the Administrative Agent, (i) each Eurodollar Rate Advance under each
Facility under which such Lender has a Commitment will automatically, upon such
demand, Convert into a Prime Rate Advance and (ii) the obligation of the
appropriate Lenders to make, or to Convert Advances into, Eurodollar Rate
Advances shall be suspended until the Administrative Agent shall notify the
Borrower that such Lender has determined that the circumstances causing such
suspension no longer exist; provided, however, that before making any such
demand, such Lender agrees to use reasonable efforts (consistent with its
internal policy and legal and regulatory restrictions) to designate a different
Eurodollar Lending Office if the making of such a designation would allow such
Lender or its Eurodollar Lending Office to continue to perform its obligations
to make Eurodollar Rate Advances or to continue to find or maintain Eurodollar
Rate Advances and would not, in the judgment of such Lender, be otherwise
materially disadvantageous to such Lender.
SECTION 2.11. Payments and Computations .
(a) The Borrower shall make each payment hereunder and under the Notes,
irrespective of any right of counterclaim or set-off (except as otherwise
provided in Section 2.15), not later than 3:00 P.M. (New York time) on the day
when due in U.S. dollars to the Administrative Agent at the Administrative
Agent's Account in same day funds. The Administrative Agent will promptly
thereafter cause like funds to be distributed (i) if such payment by the
Borrower is in respect of principal, interest, commitment fees or any other
Obligation then payable hereunder and under the Notes to more than one Lender
Party, to such Lender Parties for the account of their respective Applicable
Lending Offices ratably in accordance with the amounts of such respective
Obligations then payable to such Lender Parties and (ii) if such payment by the
Borrower is in respect of any Obligation then payable hereunder to one Lender
Party, to such Lender Party for the account of its Applicable Lending Office, in
each case to be applied in accordance with the terms of this Agreement. Upon its
acceptance of an Assignment and Acceptance and recording of the information
contained therein in the Register pursuant to Section 8.07(d), from and after
the effective date of such Assignment and Acceptance, the Administrative Agent
shall make all payments hereunder and under the Notes in respect of the interest
assigned thereby to the Lender Party assignee thereunder, and the parties to
such Assignment and Acceptance shall make all appropriate adjustments in such
payments for periods prior to such effective date directly between themselves.
(b) If the Administrative Agent receives funds for application to the
Obligations under the Loan Documents under circumstances for which the Loan
Documents do not specify the Advances or the Facility to which, or the manner in
which, such funds are to be applied, the Administrative Agent shall distribute
such funds to each Lender Party ratably in accordance with such Lender Party's
proportionate share of the principal amount of all outstanding Advances and the
Available Amount of all Letters of Credit then outstanding in repayment or
prepayment of such of the outstanding Advances or other Obligations owed to such
Lender Party, and for application to such principal installments, as the
Administrative Agent shall direct.
(c) The Borrower hereby authorizes each Lender Party, if and to the
extent payment owed to such Lender Party is not made when due hereunder or, in
the case of a Lender, under the Note held by such Lender, to charge from time to
time against any or all of the Borrower's accounts with such Lender Party any
amount so due.
(d) All computations of interest, fees and Letter of Credit commissions
shall be made by the Administrative Agent on the basis of a year of 360 days, in
each case for the actual number of days (including the first day but excluding
the last day) occurring in the period for which such interest, fees or
commissions are payable. Each determination by the Administrative Agent of an
interest rate, fee or commission hereunder shall be conclusive and binding for
all purposes, absent manifest error.
(e) Whenever any payment hereunder or under the Notes shall be stated
to be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or commitment fee, as the
case may be; provided, however, that, if such extension would cause payment of
interest on or principal of Eurodollar Rate Advances to be made in the next
following calendar month, such payment shall be made on the next preceding
Business Day.
(f) Unless the Administrative Agent shall have received notice from the
Borrower prior to the date on which any payment is due to any Lender Party
hereunder that the Borrower will not make such payment in full, the
Administrative Agent may assume that the Borrower has made such payment in full
to the Administrative Agent on such date and the Administrative Agent may, in
reliance upon such assumption, cause to be distributed to each such Lender Party
on such due date an amount equal to the amount then due such Lender Party. If
and to the extent the Borrower shall not have so made such payment in full to
the Administrative Agent, each such Lender Party shall repay to the
Administrative Agent forthwith on demand such amount distributed to such Lender
Party together with interest thereon, for each day from the date such amount is
distributed to such Lender Party until the date such Lender Party repays such
amount to the Administrative Agent, at the Federal Funds Rate.
SECTION 2.12. Taxes .
(a) Any and all payments by the Borrower hereunder or under the Notes
shall be made, in accordance with Section 2.11, free and clear of and without
deduction for any and all present or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto, excluding, in
the case of each Lender Party and the Administrative Agent, net income taxes
that are imposed by the United States and net income taxes (or franchise taxes
imposed in lieu thereof) that are imposed on such Lender Party or the
Administrative Agent by the state or foreign jurisdiction under the laws of
which such Lender Party or the Administrative Agent (as the case may be) is
organized or any political subdivision thereof and, in the case of each Lender
Party, net income taxes (or franchise taxes imposed in lieu thereof) that are
imposed on such Lender Party by the state or foreign jurisdiction of such Lender
Party's Applicable Lending Office or any political subdivision thereof (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities in respect of payments hereunder or under the Notes being
hereinafter referred to as "Taxes"). If the Borrower shall be required by law to
deduct any Taxes from or in respect of any sum payable hereunder or under any
Note to any Lender Party or the Administrative Agent, (i) the sum payable shall
be increased as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
2.12) such Lender Party or the Administrative Agent (as the case may be)
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions and (iii) the
Borrower shall pay the full amount deducted to the relevant taxation authority
or other authority in accordance with applicable law.
(b) In addition, the Borrower shall pay any present or future stamp,
documentary, excise, property or similar taxes, charges or levies that arise
from any payment made hereunder or under the Notes or from the execution,
delivery or registration of, performing under, or otherwise with respect to,
this Agreement or the Notes (hereinafter referred to as "Other Taxes").
(c) The Borrower shall indemnify each Lender Party and the
Administrative Agent for the full amount of Taxes and Other Taxes, and for the
full amount of taxes imposed by any jurisdiction on amounts payable under this
Section 2.12, imposed on or paid by such Lender Party or the Administrative
Agent (as the case may be) and any liability (including penalties, additions to
tax, interest and expenses) arising therefrom or with respect thereto, except
with respect to any Lender Party or the Administrative Agent, as the case may
be, for such a liability arising from such Lender Party's or the Administrative
Agent's, as the case may be, willful misconduct or gross negligence. This
indemnification shall be made within thirty (30) days from the date such Lender
Party or the Administrative Agent, as the case may be, makes written demand
specifying in reasonable detail the basis therefor.
(d) Within thirty (30) days after the date of any payment of Taxes, the
Borrower shall furnish to the Administrative Agent, at its address referred to
in Section 8.02, the original receipt of payment thereof or a certified copy of
such receipt. In the case of any payment hereunder or under the Notes by or on
behalf of the Borrower through an account or branch outside the United States or
by or on behalf of the Borrower by a payor that is not a United States person,
if the Borrower determines that no Taxes are payable in respect thereof, the
Borrower shall furnish, or shall cause such payor to furnish, to the
Administrative Agent, at such address, an opinion of counsel acceptable to the
Administrative Agent stating that such payment is exempt from Taxes. For
purposes of this subsection (d) and subsection (e), the terms "United States"
and "United States person" shall have the meanings specified in Section 7701 of
the Internal Revenue Code.
(e) Each Lender Party organized under the laws of a jurisdiction
outside the United States shall, on or prior to the date of its execution and
delivery of this Agreement in the case of each Initial Lender or Initial Issuing
Bank, as the case may be, and on the date of the Assignment and Acceptance
pursuant to which it became a Lender Party in the case of each other Lender
Party, and from time to time thereafter as requested in writing by the Borrower
or the Administrative Agent (but only so long thereafter as such Lender Party
remains lawfully able to do so), provide each of the Administrative Agent and
the Borrower with two (2) original Internal Revenue Service forms 1001 or 4224,
as appropriate, or any successor or other form prescribed by the Internal
Revenue Service, certifying that such Lender is exempt from or entitled to a
reduced rate of United States withholding tax on payments pursuant to this
Agreement or the Notes. If the forms provided by a Lender Party at the time such
Lender Party first becomes a party to this Agreement indicates a United States
interest withholding tax rate in excess of zero, withholding tax at such rate
shall be considered excluded from Taxes unless and until such Lender Party
provides the appropriate form certifying that a lesser rate applies, whereupon
withholding tax at such lesser rate only shall be considered excluded from Taxes
for periods governed by such form; provided, however, that, if at the date of
the Assignment and Acceptance pursuant to which a Lender Party becomes a party
to this Agreement, the Lender Party assignor was entitled to payments under
subsection (a) in respect of United States withholding tax with respect to
interest paid at such date, then, to such extent, the term Taxes shall include
(in addition to withholding taxes that may be imposed in the future or other
amounts otherwise includable in Taxes) United States withholding tax, if any,
applicable with respect to the Lender Party assignee on such date. If any form
or document referred to in this subsection (e) requires the disclosure of
information, other than information necessary to compute the tax payable and
information required on the date hereof by Internal Revenue Service form 1001 or
4224, that the Lender Party reasonably considers to be confidential, the Lender
Party shall give notice thereof to the Borrower and shall not be obligated to
include in such form or document such confidential information.
(f) For any period with respect to which a Lender Party has failed to
provide the Borrower with the appropriate form described in subsection (e)
(other than if such failure is due to a change in law occurring after the date
on which a form originally was required to be provided or if such form otherwise
is not required under subsection (e)), such Lender Party shall not be entitled
to indemnification under subsection (a) or (c) with respect to Taxes imposed by
the United States by reason of such failure; provided, however, that should a
Lender Party become subject to Taxes because of its failure to deliver a form
required hereunder, the Borrower shall take such steps as such Lender Party
shall reasonably request to assist such Lender Party to recover such Taxes.
(g) Any Lender Party claiming any additional amounts payable pursuant
to this Section 2.12 agrees to use reasonable efforts (consistent with its
internal policy and legal and regulatory restrictions) to change the
jurisdiction of its Eurodollar Lending Office if the making of such a change
would avoid the need for, or reduce the amount of, any such additional amounts
that may thereafter accrue and would not, in the reasonable judgment of such
Lender Party, be otherwise disadvantageous to such Lender Party.
SECTION 2.13. Sharing of Payments, Etc . If any Lender Party shall
obtain at any time any payment (whether voluntary, involuntary, through the
exercise of any right of set-off, or otherwise) (i) on account of Obligations
due and payable to such Lender Party hereunder or under the Notes at such time
in excess of its ratable share (according to the proportion of (x) the amount of
such Obligations due and payable to such Lender Party at such time to (y) the
aggregate amount of the Obligations due and payable to all Lender Parties
hereunder and under the Notes at such time) of payments on account of the
Obligations due and payable to all Lender Parties hereunder or under the Notes
at such time obtained by all the Lender Parties at such time or (ii) on account
of Obligations owing (but not due and payable) to such Lender Party hereunder
and under the Notes at such time in excess of its ratable share (according to
the proportion of (x) the amount of such Obligations owing to such Lender Party
at such time to (y) the aggregate amount of the Obligations owing (but not due
and payable) to all Lender Parties hereunder and under the Notes at such time)
of payments on account of the Obligations owing (but not due and payable) to all
Lender Parties hereunder and under the Notes at such time obtained by all of the
Lender Parties at such time, such Lender Party shall forthwith purchase from the
other Lender Parties such participations in the Obligations due and payable or
owing to them, as the case may be, as shall be necessary to cause such
purchasing Lender Party to share the excess payment ratably with each of them;
provided, however, that if all or any portion of such excess payment is
thereafter recovered from such purchasing Lender Party, such purchase from each
other Lender Party shall be rescinded and each such other Lender Party shall
repay to the purchasing Lender Party the purchase price to the extent of such
Lender Party's ratable share (according to the proportion of (x) the purchase
price paid to such Lender Party to (y) the aggregate purchase price paid to all
Lender Parties) of such recovery together with an amount equal to such Lender
Party's ratable share (according to the proportion of (x) the amount of such
other Lender Party's required repayment to (y) the total amount of such required
repayments to the purchasing Lender Party) of any interest or other amount paid
or payable by the purchasing Lender Party in respect of the total amount so
recovered.
The Borrower agrees that any Lender Party so purchasing a participation from
another Lender Party pursuant to this Section 2.13 may, to the fullest extent
permitted by law, exercise all its rights of payment (including the right of
set-off) with respect to such participation as fully as if such Lender Party
were the direct creditor of the Borrower in the amount of such participation.
SECTION 2.14. Use of Proceeds . The proceeds of the Term A Advances and
Term B Advances shall be available and the Borrower shall use such proceeds
solely to fund a dividend to Holdings (and ultimately to UTC) which shall be
used by UTC to (i) finance, in part, the defeasance or repayment of the UTC
Senior Notes, (ii) to reduce the principal amount outstanding under the UTC
Existing Revolving Credit Facility, and (iii) to pay fees and expenses related
to the items referred to in clauses (i) and (ii). The proceeds of the Revolving
Credit Advances and issuances of Letters of Credit shall be available, and the
Borrower shall use such proceeds and Letters of Credit solely (A) to finance
working capital of the Borrower, (B) to fund a dividend to Holdings on the
Closing Date in an amount not to exceed $5,000,000 and (C) to pay fees and
expenses related to the Facilities. In no event shall the dividend to Holdings
from the Borrower on the Closing Date exceed $95,000,000.
SECTION 2.15. Defaulting Lenders . (a) In the event that, at any one
time, (i) any Lender Party shall be a Defaulting Lender, (ii) such Defaulting
Lender shall owe a Defaulted Advance to the Borrower and (iii) the Borrower
shall be required to make any payment hereunder or under any other Loan Document
to or for the account of such Defaulting Lender, then the Borrower may, so long
as no Default shall occur or be continuing at such time and to the fullest
extent permitted by applicable law, set off and otherwise apply the obligation
of the Borrower to make such payment to or for the account of such Defaulting
Lender against the obligation of such Defaulting Lender to make such Defaulted
Advance. In the event that, on any date, the Borrower shall so set off and
otherwise apply its obligation to make any such payment against the obligation
of such Defaulting Lender to make any such Defaulted Advance on or prior to such
date, the amount so set off and otherwise applied by the Borrower shall
constitute for all purposes of this Agreement and the other Loan Documents an
Advance by such Defaulting Lender made on the date under the Facility pursuant
to which such Defaulted Advance was originally required to have been made
pursuant to Section 2.01. Such Advance shall be a Prime Rate Advance and shall
be considered, for all purposes of this Agreement, to comprise part of the
Borrowing in connection with which such Defaulted Advance was originally
required to have been made pursuant to Section 2.01, even if the other Advances
comprising such Borrowing shall be Eurodollar Rate Advances on the date such
Advance is deemed to be made pursuant to this subsection (a). The Borrower shall
notify the Administrative Agent at any time the Borrower exercises its right of
set-off pursuant to this subsection (a) and shall set forth in such notice (i)
the name of the Defaulting Lender and the Defaulted Advance required to be made
by such Defaulting Lender and (ii) the amount set off and otherwise applied in
respect of such Defaulted Advance pursuant to this subsection (a). Any portion
of such payment otherwise required to be made by the Borrower to or for the
account of such Defaulting Lender which is paid by the Borrower, after giving
effect to the amount set off and otherwise applied by the Borrower pursuant to
this subsection (a), shall be applied by the Administrative Agent as specified
in subsection (b) or (c) of this Section 2.15.
(b) In the event that, at any one time, (i) any Lender Party shall be a
Defaulting Lender, (ii) such Defaulting Lender shall owe a Defaulted Amount to
the Administrative Agent or any of the other Lender Parties and (iii) the
Borrower shall make any payment hereunder or under any other Loan Document to
the Administrative Agent for the account of such Defaulting Lender, then the
Administrative Agent may, on its behalf or on behalf of such other Lender
Parties and to the fullest extent permitted by applicable law, apply at such
time the amount so paid by the Borrower to or for the account of such Defaulting
Lender to the payment of each such Defaulted Amount to the extent required to
pay such Defaulted Amount. In the event that the Administrative Agent shall so
apply any such amount to the payment of any such Defaulted Amount on any date,
the amount so applied by the Administrative Agent shall constitute for all
purposes of this Agreement and the other Loan Documents, payment, to such
extent, of such Defaulted Amount on such date. Any such amount so applied by the
Administrative Agent shall be retained by the Administrative Agent or
distributed by the Administrative Agent to such other Lender Parties, ratably in
accordance with the respective portions of such Defaulted Amounts payable at
such time to the Administrative Agent and such other Lender Parties and, if the
amount of such payment made by the Borrower shall at such time be insufficient
to pay all Defaulted Amounts owing at such time to the Administrative Agent and
the other Lender Parties, in the following order of priority:
(i) first, to the Administrative Agent for any Defaulted
Amount then owing to the Administrative Agent; and
(ii) second, to the Lender Parties for any Defaulted Amounts
then owing to such Lender Parties, ratably in accordance with such respective
Defaulted Amounts then owing to such Lender Parties.
Any portion of such amount paid by the Borrower for the account of such
Defaulting Lender remaining, after giving effect to the amount applied by the
Administrative Agent pursuant to this subsection (b), shall be applied by the
Administrative Agent as specified in subsection (c) of this Section 2.15.
(c) In the event that, at any one time, (i) any Lender Party shall be a
Defaulting Lender, (ii) such Defaulting Lender shall not owe a Defaulted Advance
or a Defaulted Amount and (iii) the Borrower, the Administrative Agent or any
other Lender Party shall be required to pay or distribute any amount hereunder
or under any other Loan Document to or for the account of such Defaulting
Lender, then the Borrower or such other Lender Party shall pay such amount to
the Administrative Agent to be held by the Administrative Agent, to the fullest
extent permitted by applicable law, in escrow or the Administrative Agent shall,
to the fullest extent permitted by applicable law, hold in escrow such amount
otherwise held by it. Any funds held by the Administrative Agent in escrow under
this subsection (c) shall be deposited by the Administrative Agent in an account
with Fleet, in the name and under the control of the Administrative Agent, but
subject to the provisions of this subsection (c). The terms applicable to such
account, including the rate of interest payable with respect to the credit
balance of such account from time to time, shall be Fleet's standard terms
applicable to escrow accounts maintained with it. Any interest credited to such
account from time to time shall be held by the Administrative Agent in escrow
under, and applied by the Administrative Agent from time to time in accordance
with the provisions of, this subsection (c). The Administrative Agent shall, to
the fullest extent permitted by applicable law, apply all funds so held in
escrow from time to time to the extent necessary to make any Advances required
to be made by such Defaulting Lender and to pay any amount payable by such
Defaulting Lender hereunder and under the other Loan Documents to the
Administrative Agent or any other Lender Party, as and when such Advances or
amounts are required to be made or paid and, if the amount so held in escrow
shall at any time be insufficient to make and pay all such Advances and amounts
required to be made or paid at such time, in the following order of priority:
(i) first, to the Administrative Agent for any amount
then due and payable by such Defaulting Lender to the Administrative Agent
hereunder;
(ii) second, to the Lender Parties for any amount then due and
payable by such Defaulting Lender to such Lender Parties hereunder, ratably in
accordance with such respective amounts then due and payable to such Lender
Parties; and
(iii) third, to the Borrower for any Advance then required to
be made by such Defaulting Lender pursuant to a Commitment of such Defaulting
Lender.
In the event that any Lender Party that is a Defaulting Lender shall, at any
time, cease to be a Defaulting Lender, any funds held by the Administrative
Agent in escrow at such time with respect to such Lender Party shall be
distributed by the Administrative Agent to such Lender Party and applied by such
Lender Party to the Obligations owing to such Lender Party at such time under
this Agreement and the other Loan Documents in such manner as the Administrative
Agent shall reasonably direct.
(d) The rights and remedies against a Defaulting Lender under this
Section 2.15 are in addition to other rights and remedies that the Borrower may
have against such Defaulting Lender with respect to any Defaulted Advance and
that the Administrative Agent or any Lender Party may have against such
Defaulting Lender with respect to any Defaulted Amount.
SECTION 2.16. Source of Funds . To the extent payment of the Advances
hereunder is made by or on behalf of an insurance company, bank or an entity
deemed to hold assets of any employee benefit plan subject to ERISA or other
plan as defined in and subject to the prohibited transaction provisions of
Section 4975 of the Internal Revenue Code pursuant to the applicable Department
of Labor regulations (the "Plan Asset Regulations"), or any such plan acting on
its own behalf, such insurance company, bank, entity or plan warrants and
represents that at least one of the following statements is an accurate
representation as to each source of funds (a "Source") to be used by such
insurance company, bank, entity or plan to pay the Advances hereunder:
(a) the Source consists of plan assets subject to discretionary
authority or control of an in-house asset manager ("INHAM") as such term is
defined in Section IV(a) of Prohibited Transaction Class Exemption 96-23 (issued
April 10, 1996) ("PTCE 96-23"), and the payment of the Advances hereunder is
exempt under the provisions of PTCE 96-23; or
(b) the Source is an "insurance company general account" as such term
is defined in Section V(e) of Prohibited Transaction Class Exemption 95-60
(issued July 12, 1995) "PTCE 95-60"), and the payment of the Advances hereunder
is exempt under the provisions of PTCE 95-60; or
(c) the Source is (x) an insurance company pooled separate account
within the meaning of Prohibited Transaction Class Exemption 90-1 (issued
January 29, 1990) "PTCE 90-1") or (y) a bank collective investment fund, within
the meaning of Prohibited Transaction Class Exemption 91-38 (issued July 12,
1991) ("PTCE 91-38") and, except as such insurance company or bank has disclosed
to the Borrower in writing pursuant to this paragraph (c), no plan or group of
plans maintained by the same employer or employee organization, beneficially
owns more than 10% of all assets allocated to such pooled separate account or
collective investment fund; and, in either such case, all records necessary to
establish the availability of each exemption by reason thereof will be
maintained and made available as required by the terms of such exemption; or
(d) the Source is an "investment fund" within the meaning of Part V of
Prohibited Transaction Class Exemption 84-14 (issued March 13, 1984) (the "QPAM
Exemption") managed by a "qualified professional asset manager" ("QPAM") within
the meaning of Part V of the QPAM Exemption) which has been identified pursuant
to this paragraph (d), such that the payment of the Advances by or on behalf of
such investment fund is exempt from the application of the prohibited
transaction rules of ERISA and Section 4975 of the Internal Revenue Code,
provided that no party to the transactions described in this Agreement and no
affiliate (within the meaning of Section V(c)(1) of the QPAM Exemption) of such
party has, or at any time during the immediately preceding year exercised, the
authority to appoint or terminate the identified QPAM as manager of the assets
of any employee benefit plan that has an interest in such investment fund (which
plans have been identified pursuant to this paragraph (d)) or to negotiate the
terms of such QPAM's management agreement on behalf of any such identified plan;
or
(e) the Source is a "governmental plan" as defined in Title I, Section
3(32) of ERISA; or
(f) the Source is one or more "employee benefit plans" (or other plan
as defined in and subject to Section 4975 of the Internal Revenue Code) or a
separate account, trust fund or other entity comprised of one or more such plans
(determined after giving effect to the Plan Asset Regulations) each of which has
been identified to the Borrower in writing pursuant to this paragraph (f); or
(g) the Source does not include assets of any employee benefit plan or
other plan, other than a plan exempt from coverage under ERISA and from the
prohibited transactions of Section 4975 of the Internal Revenue Code.
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. Conditions Precedent to Initial Extension of Credit . The
obligation of each Lender to make an Advance or of the Issuing Bank to issue a
Letter of Credit on the occasion of the Initial Extension of Credit hereunder is
subject to the satisfaction of each of the following conditions precedent before
or concurrently with the Initial Extension of Credit:
(a) The Administrative Agent shall have received on or before the day
of the Initial Extension of Credit the following, each dated such day (unless
otherwise specified), in form and substance reasonably satisfactory to the
Administrative Agent and the Lenders, and in sufficient copies (except for the
Notes), for each Lender Party:
(i) The Notes payable to the order of the Lenders duly
executed by the Borrower.
(ii) A security agreement in substantially the form of Exhibit
G granting to the Administrative Agent, for the ratable benefit of the Lenders,
a first priority security interest in all of the personal property and assets of
the Borrower and each Domestic Subsidiary of the Borrower (together with each
other security agreement delivered pursuant to Section 5.01(m), in each case as
amended, supplemented or otherwise modified from time to time in accordance with
its terms, each a "Security Agreement"), duly executed by the Borrower and each
Domestic Subsidiary of the Borrower, together with:
(A) proper, duly executed financing statements under
the Uniform Commercial Code of all jurisdictions that the
Administrative Agent may deem necessary or desirable in order to
perfect and protect the Liens created under the Security Agreement,
covering the Collateral described in the Security Agreement;
(B) completed requests for information, dated on or
before the date of the Initial Extension of Credit, listing all
effective financing statements filed that name the Borrower, any other
Loan Party or UTC as debtor, together with copies of such financing
statements;
(C) evidence of the completion of all other
recordings and filings of or with respect to the Security Agreement
that the Administrative Agent may deem necessary or desirable in order
to perfect and protect the Liens created thereby;
(D) evidence of the insurance required by the terms
of the Security Agreement;
(E) copies of the Assigned Agreements, if any,
referred to in the Security Agreement, together with a consent to such
assignments, if any, in substantially the form of Exhibit C to the
Security Agreement, duly executed by each party to such Assigned
Agreements other than the Borrower;
(F) certificates representing the Pledged Shares
referred to in the Security Agreement, accompanied by undated stock
powers executed in blank;
(G) evidence that all other action that the
Administrative Agent may reasonably deem necessary or desirable in
order to perfect and protect the Liens and security interests created
under the Security Agreement has been taken.
(iii) (A) Fully executed counterparts of Mortgages duly
executed by the applicable Loan Party, together with evidence that counterparts
of the Mortgages have been delivered to a title insurance company (reasonably
acceptable to the Lenders) insuring the Lien of the Mortgages for recording in
all places to the extent necessary or desirable, in the reasonable judgment of
the Lenders, to create a valid and enforceable first priority lien on each
Mortgaged Property listed on Schedule 4.01(aa) (subject only to Permitted Real
Property Encumbrances) in favor of Administrative Agent (or a trustee acting on
behalf of Administrative Agent required or desired under local law) for the
benefit of the Secured Parties;
(B) Mortgagee title insurance policies (or binding
commitments to issue such title insurance policies) which shall (1) be
issued to Administrative Agent for the benefit of the Secured Parties
by title insurance companies reasonably satisfactory to the
Administrative Agent (the "Mortgage Policies") in amounts reasonably
satisfactory to the Administrative Agent insuring that the Mortgages
are valid and enforceable first priority mortgage liens on the
respective Mortgaged Properties, free and clear of all defects,
encumbrances and other Liens except Permitted Real Property
Encumbrances, (2) be in form and substance reasonably satisfactory to
the Administrative Agent (3) include, as appropriate, an endorsement
for future advances under this Agreement, the Notes and the Mortgages
and such other endorsements that the Administrative Agent in its
discretion may reasonably request, (4) not include an exception for
mechanics' liens, and (5) provide for affirmative insurance and such
reinsurance (including direct access agreements) as the Administrative
Agent in its discretion may reasonably request; and
(C) Surveys, in form and substance reasonably
satisfactory to the Administrative Agent, of each Mortgaged Property
listed on Schedule 4.01(aa), dated a recent date reasonably acceptable
to the Administrative Agent, certified by a licensed professional
surveyor in a manner reasonably satisfactory to the Administrative
Agent for the benefit of the Lenders.
(iv) An intellectual property security agreement in
substantially the form of Exhibit H hereto granting to the Administrative Agent
for the ratable benefit of the Lenders a first priority security interest in all
of the Borrower's and each of its Domestic Subsidiaries' intellectual property
(together with each other intellectual property security agreement delivered
pursuant to Section 5.01(m), in each case as amended, supplemented or otherwise
modified from time to time in accordance with its terms, each an "Intellectual
Property Security Agreement"), duly executed by the Borrower and each Domestic
Subsidiary of the Borrower, together with evidence that all action that the
Administrative Agent may deem reasonably necessary or desirable in order to
perfect and protect the Liens created under the Intellectual Property Security
Agreement has been taken.
(v) A pledge agreement substantially in the form of Exhibit I
hereto (as hereafter amended, supplemented or otherwise modified from time to
time in accordance with its terms, the "Holdings Pledge Agreement") pursuant to
which all of the issued and outstanding capital stock of the Borrower shall be
pledged to the Administrative Agent as security for the Obligations, together
with the certificates representing all shares pledged thereunder and undated
stock powers executed in blank with respect thereto.
(vi) A guaranty in substantially the form of Exhibit J hereto
(as hereafter amended, supplemented or otherwise modified from time to time in
accordance with its terms, the "Holdings Guaranty"), duly executed by Holdings.
(vii) Certified copies of resolutions of the Board of
Directors of each Loan Party approving this Agreement, the Notes, and each other
Loan Document to which it is or is to be a party, and of all documents
evidencing other necessary corporate action and governmental and other third
party approvals and consents, if any, with respect to this Agreement, the Notes
and each other Loan Document.
(viii) A copy of the charter of each Loan Party and each
amendment thereto, certified (as of a date reasonably near the date of the
Initial Extension of Credit) by the Secretary of State of the jurisdiction of
its incorporation as being a true and correct copy thereof.
(ix) A copy of a certificate of the Secretary of State of the
jurisdiction of its incorporation, dated within five (5) Business Days of the
date of the Initial Extension of Credit, listing the charter of each Loan Party
and each amendment thereto on file in its office and certifying that (A) such
amendments are the only amendments to such Loan Party's charter on file in its
office, (B) such Loan Party has paid all franchise taxes to the date of such
certificate and (C) such Loan Party is duly incorporated and in good standing
under the laws of the State of the jurisdiction of its incorporation.
(x) A copy of a certificate of the Secretary of State of each
State listed on Schedule 3.01(a)(x), dated reasonably near the date of the
Initial Extension of Credit, stating that each Loan Party is duly qualified and
in good standing as a foreign corporation in such State and has filed all annual
reports required to be filed to the date of such certificate.
(xi) A certificate of each Loan Party signed on behalf of such
Loan Party by a Responsible Officer and the Secretary or an Assistant Secretary
of such Loan Party, dated the date of the Initial Extension of Credit (the
statements made in such certificate shall be true on and as of the date of the
Initial Extension of Credit), certifying as to (A) the absence of any amendments
to the charter of such Loan Party since the date of the Secretary of State's
certificate referred to in Section 3.01(a)(viii), (B) a true and correct copy of
the bylaws of such Loan Party as in effect on the date of the Initial Extension
of Credit, (C) the due incorporation and good standing of such Loan Party as a
corporation organized under the laws of the jurisdiction of its incorporation,
and the absence of any proceeding for the dissolution or liquidation of such
Loan Party, (D) the truth in all material respects of the representations and
warranties contained in the Loan Documents as though made on and as of the date
of the Initial Extension of Credit and (E) the absence of any event occurring
and continuing, or resulting from the Initial Extension of Credit, that
constitutes a Default.
(xii) A certificate of the Secretary or an Assistant Secretary
of each Loan Party certifying the names and true signatures of the officers of
such Loan Party authorized to sign this Agreement, the Notes, each other Loan
Document to which they are or are to be parties and the other documents to be
delivered hereunder and thereunder.
(xiii) Such financial, business and other information
regarding each Loan Party and each such Person's Subsidiaries as any of the
Lenders shall have reasonably requested, including, without limitation,
information as to possible contingent liabilities, tax matters, Environmental
Actions, Environmental Permits, obligations under Plans, Multiemployer Plans and
Welfare Plans, collective bargaining agreements and other arrangements with
employees, audited annual financial statements of UTC dated September 28, 1997,
interim financial statements dated the end of the most recent fiscal quarter for
which financial statements are available, pro forma financial statements as to
each of the Loan Parties and forecasts prepared by management of the Borrower,
all in form and substance reasonably satisfactory to the Lenders.
(xiv) A Notice of Borrowing with respect to each Facility
pursuant to which the Borrower shall request an Initial Extension of Credit in
an aggregate amount of not more than $97,500,000.
(xv) A Borrowing Base Certificate.
(b) The Initial Lenders shall be reasonably satisfied with the
corporate and legal structure and capitalization of each Loan Party and each of
its Subsidiaries, including, without limitation, the terms and conditions of the
charter, by-laws and each class of capital stock of each Loan Party and each
such Subsidiary and of each agreement or instrument relating to such structure
or capitalization.
(c) The Initial Lenders shall be satisfied that all Existing Debt,
other than the Debt identified on Schedule 4.01(z) (the "Surviving Debt"),
shall, contemporaneously with the Initial Extension of Credit, be prepaid,
redeemed or defeased in full or otherwise satisfied and extinguished. The
Initial Lenders shall be satisfied that the UTC Senior Notes shall,
contemporaneously with the Initial Extension of Credit, be prepaid, redeemed or
defeased in full or otherwise satisfied and extinguished. The principal amount
outstanding under the UTC Existing Revolving Credit Facility shall not exceed
$10,000,000 and the terms of the CIT Financing Agreement shall have been amended
to the reasonable satisfaction of the Administrative Agent to, in addition to
other amendments which the Administrative Agent may have reasonably requested,
eliminate (i) the Lien on those assets which are Collateral, including, without
limitation, the Lien on the issued and outstanding shares of the Borrower held
by Holdings, (ii) the Lien on the issued and outstanding shares of Holdings and
(iii) any obligations of the Borrower or Holdings under the UTC Existing
Revolving Credit Facility.
(d) There shall have occurred no Material Adverse Change with respect
to UTC and its Subsidiaries, taken as a whole, or of the High Performance
Plastics segment of UTC individually (or, after the Closing Date, of the
Borrower and its Subsidiaries, taken as a whole), since September 28, 1997.
(e) Other than the litigation described in Schedule 3.01(e) (the
"Disclosed Litigation"), there shall exist no action, suit, investigation,
litigation or proceeding pending or threatened in any court or before any
arbitrator or governmental or regulatory agency or authority that (i) could
reasonably be expected to (A) have a material adverse effect on the business,
financial condition, results of operations or properties of the Borrower and its
Subsidiaries, taken as a whole, (B) adversely affect the ability of the Borrower
or any Guarantor to perform its obligations under the Loan Documents or (C)
materially and adversely affect the rights and remedies of the Administrative
Agent and the Lender Parties under the Loan Documents or (ii) purports to
materially and adversely affect any aspect of the Transaction or the Facilities
(collectively, a "Material Adverse Effect").
(f) All governmental and third party consents and approvals necessary
in connection with each aspect of the Facilities shall have been obtained
(without the imposition of any conditions that are not acceptable to the Initial
Lenders in their reasonable judgment) and shall remain in effect; all applicable
waiting periods shall have expired without any adverse action being taken by any
competent authority; and no law or regulation shall be applicable in the
reasonable judgment of the Initial Lenders that restrains, prevents or imposes
materially adverse conditions upon any aspect of the Facilities.
(g) All of the information, taken as a whole, provided by or on behalf
of the Borrower or any of its Subsidiaries to the Administrative Agent and the
Initial Lenders prior to their commitment in respect of the Facilities (the
"Pre-Commitment Information") shall be true and correct in all material
respects, and no development or change shall have occurred, and no additional
information shall have come to the attention of the Administrative Agent or the
Initial Lenders, that (i) has resulted in or could reasonably be expected to
result in a material change in, or material deviation from, the Pre-Commitment
Information, taken as a whole, or (ii) has had or could reasonably be expected
to have a Material Adverse Effect.
(h) UTC, the Borrower and each Guarantor shall have each delivered a
certificate, in form and substance reasonably satisfactory to the Administrative
Agent, attesting to the Solvency of UTC, the Borrower or Guarantor, as
applicable, immediately before and immediately after giving effect to the
Transaction, from its respective Chief Financial Officer.
(i) The Borrower shall have demonstrated to the Administrative Agent's
reasonable satisfaction that: (i) the operations of the Borrower and its
Subsidiaries comply in all material respects with applicable Environmental Laws;
(ii) such operations are not the subject of any federal, state or local
investigation evaluating the need for remedial action involving a material
expenditure to respond to such Environmental Actions; (iii) neither the Borrower
nor any Guarantor has or could reasonably be expected to have any material
contingent liability in connection with any Environmental Action; and (iv) the
Borrower has provided to the Administrative Agent and any required government
agency the environmental disclosure documents or waiver thereof required under
the Indiana Responsible Property Transfer Law for the Mortgaged Property located
in Warsaw, Indiana.
(j) The Lenders shall be reasonably satisfied that (i) the Borrower and
its Subsidiaries will be able to meet in all material respects their respective
obligations under all employee and retiree welfare plans, (ii) the employee
benefit plans of the Borrower and its Subsidiaries are, in all material
respects, funded in accordance with the minimum statutory requirements, (iii) no
material "reportable event" (as defined in ERISA, but excluding events for which
reporting has been waived) has occurred as to any such employee benefit plan and
(iv) no termination of, or withdrawal from, any such employee benefit plan has
occurred or is contemplated that could reasonably be expected to result in a
material liability. The Borrower shall have delivered to the Administrative
Agent copies of each employment agreement and other compensation arrangement
with each executive officer of each Loan Party.
(k) The Administrative Agent shall be reasonably satisfied with the
amount, types and terms and conditions of all insurance maintained by the
Borrower and its Subsidiaries, and the Administrative Agent shall have received
endorsements naming the Administrative Agent, on behalf of the Lenders, as an
additional insured under all insurance policies to be maintained with respect to
the properties of the Borrower and its Subsidiaries forming any part of the
Lenders' Collateral under the Security Agreement and the other Loan Documents
and Collateral Documents.
(l) The Administrative Agent shall have received reasonably
satisfactory opinions of counsel for the Borrower and the Guarantors and local
and special counsel to the extent reasonably requested by the Administrative
Agent, as to the Transaction.
(m) There shall exist no Default or Event of Default under any of the
Loan Documents, and all legal matters incident to the Initial Extension of
Credit shall be reasonably satisfactory to counsel for the Administrative Agent.
(n) All accrued reasonable fees and expenses of the Administrative
Agent and the Initial Lenders (including the reasonable fees and expenses of
counsel for the Administrative Agent and local counsel for the Administrative
Agent) shall have been paid.
(o) All Advances made under this Agreement shall be in full compliance
with all applicable requirements of law, including, without limitation, Federal
Reserve Regulations G, T, U, and X.
(p) The Administrative Agent shall have received a duly executed and
delivered counterparts of landlord waivers from all landlords and leasehold
mortgage holders and bailee letters from all warehousemen and bailees with
respect to any Inventory located at a location that is not owned by the
Borrower, as reasonably deemed necessary or desirable by the Administrative
Agent, to preserve the Administrative Agent's rights in Collateral. The
Administrative Agent shall also have received such bank consent agreements,
third party consents, intercreditor agreements or other agreements, as
reasonably deemed necessary or desirable by the Administrative Agent, to
preserve the Administrative Agent's rights in the Collateral.
(q) The Borrower and UTC shall have entered into a tax sharing
agreement (the "Tax Sharing Agreement") on terms and conditions reasonably
satisfactory to the Administrative Agent which shall provide, among other
things, that (i) if no Event of Default shall have occurred and be continuing,
the Borrower may fund dividends to Holdings (and ultimately to UTC) in an amount
equal to the tax liability which would have been payable by the Borrower if it
were an independent taxpayer (irrespective of any net operating losses which UTC
may possess) and (ii) if an Event of Default shall exist and be continuing, the
Borrower may fund dividends to Holdings (and ultimately to UTC) in the amount of
the actual tax liability incurred by UTC (after giving effect to any net
operating losses which UTC may possess) which would have been payable by the
Borrower if it were an independent taxpayer (each of the dividends described in
(i) and (ii), a "Tax Liability Dividend").
(r) The Borrower and UTC shall have entered into a management agreement
(the "Management Agreement") on terms and conditions reasonably satisfactory to
the Administrative Agent which agreement shall provide that: (i) the obligation
of the Borrower to pay a management fee to UTC for certain management consulting
services provided by UTC to the Borrower shall not exceed 2% of the annual sales
of the Borrower (the "Subordinated Management Fee") and such fee shall be
subordinate to, and rank junior in right of payment to, the Obligations of the
Borrower under the Loan Documents, (ii) no payments of the Subordinated
Management Fee shall be made after the occurrence and during the continuation of
an Event of Default, (iii) the obligation of the Borrower to pay a management
fee to UTC for certain administrative services provided by UTC to the Borrower
shall not exceed 1.5% of the annual sales of the Borrower (the "Management
Services Fee") and such services shall be provided by UTC on terms that are fair
and reasonable and no less favorable to the Borrower than it could obtain in a
comparable arms-length transaction with a Person not an Affiliate, (iv) the
directors and officers of UTC that are executives of the Borrower shall own as a
group and retain a certain minimum ownership of the issued and outstanding
shares of UTC throughout the term of such agreement and (v) certain of the
existing directors and officers of UTC that are executives of the Borrower shall
continue to be executives of the Borrower throughout the term of such agreement.
(s) The Administrative Agent shall have received such other approvals,
opinions or documents as any Lender through the Administrative Agent may
reasonably request, and all legal matters incident to such Borrowing shall be
reasonably satisfactory to counsel for the Administrative Agent.
SECTION 3.02. Conditions Precedent to Each Borrowing and Issuance . The
obligation of each appropriate Lender to make an Advance (other than a Letter of
Credit Advance made by the Issuing Bank or a Revolving Credit Lender pursuant to
Section 2.03(c) and a Swing Line Advance made by a Revolving Credit Lender
pursuant to Section 2.02(b)), and the obligation of the Issuing Bank to issue a
Letter of Credit (including the initial issuance thereof) or renew a Letter of
Credit and the right of the Borrower to request the issuance or renewal of a
Letter of Credit, shall each be subject to the further conditions precedent that
on the date of each such Borrowing or issuance or renewal:
(a) Each of the conditions precedent listed in Section 3.01 shall
continue to have been satisfied in all material respects or waived in accordance
with this Agreement.
(b) The Administrative Agent shall have received a certificate signed
by a duly authorized Responsible Officer of the Borrower, dated the date of such
Borrowing or issuance or renewal, stating that (and each of the giving of the
applicable Notice of Borrowing, Notice of Swing Line Borrowing, or Notice of
Issuance or Notice of Renewal and the acceptance by the Borrower of the proceeds
of a Borrowing or of a Letter of Credit or the renewal of a Letter of Credit
shall constitute a representation and warranty by the Borrower that both on the
date of such notice and on the date of such Borrowing or issuance or renewal
such statements are true in all material respects):
(i) the representations and warranties contained in each Loan
Document are correct in all material respects on and as of such date, before and
after giving effect to such Borrowing or issuance or renewal and to the
application of the proceeds therefrom, as though made on and as of such date (it
being understood and agreed that any representation or warranty which by its
terms is made as of a specified date shall be required to be correct in all
material respects only as of such specified date);
(ii) no event has occurred and is continuing, or would result
from such Borrowing or issuance or renewal or from the application of the
proceeds therefrom, that constitutes a Default; and
(iii) for each Revolving Credit Advance, Swing Line Advance
made by the Swing Line Bank or issuance or renew of any Letter of Credit, the
Borrowing Base equals or exceeds the aggregate principal amount of the Revolving
Credit Advances plus Swing Line Advances plus Letter of Credit Advances plus the
aggregate Available Amount of all Letters of Credit then outstanding after
giving effect to such Advances or issuance or renewal, respectively.
(c) The Administrative Agent shall have received such other approvals,
opinions or documents as any appropriate Lender through the Administrative Agent
may reasonably request.
SECTION 3.03. Determinations Under Section 3.01 . For purposes of
determining compliance with the conditions specified in Section 3.01, each
Initial Lender shall be deemed to have consented to, approved or accepted or to
be satisfied with each document or other matter required thereunder to be
consented to or approved by or acceptable or satisfactory to the Initial Lenders
unless an officer of the Administrative Agent responsible for the Transaction
shall have received written notice from such Initial Lender prior to the Initial
Extension of Credit specifying its objection thereto and, if the Initial
Extension of Credit consists of a Borrowing, such Initial Lender shall not have
made available to the Administrative Agent such Initial Lender's ratable portion
of such Borrowing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Borrower .
The Borrower represents and warrants as follows:
(a) Each Loan Party (i) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, (ii) is duly qualified and in good standing as a foreign
corporation in each other jurisdiction in which it owns or leases property or in
which the conduct of its business requires it to so qualify or be licensed
except where the failure to so qualify or be licensed could not reasonably be
expected to have a Material Adverse Effect and (iii) has all requisite corporate
power and authority (including, without limitation, all governmental licenses,
permits and other approvals) to own or lease and operate its properties and to
carry on its business as now conducted and as proposed to be conducted, except
for such government licenses, permits and other approvals, the failure of which
to have could not have a Material Adverse Effect.
(b) Set forth on Schedule 4.01(b) hereto is a complete and accurate
list of all Subsidiaries of each Loan Party, showing as of the date hereof (as
to each such Subsidiary) the jurisdiction of its incorporation, the number of
shares of each class of capital stock authorized, and the number outstanding, on
the date hereof and the percentage of the outstanding shares of each such class
owned (directly or indirectly) by such Loan Party and the number of shares
covered by all outstanding options, warrants, rights of conversion or purchase
and similar rights at the date hereof. All of the outstanding capital stock of
all of such Subsidiaries has been validly issued, is fully paid and
non-assessable and is owned by such Loan Party or one or more of its
Subsidiaries free and clear of all Liens, except those created under the
Collateral Documents. Each such Subsidiary (i) is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, (ii) is duly qualified and in good standing as a foreign
corporation in each other jurisdiction in which it owns or leases property or in
which the conduct of its business requires it to so qualify or be licensed,
except where the failure to so qualify or be licensed could not reasonably be
expected to have a Material Adverse Effect, and (iii) has all requisite
corporate power and authority (including, without limitation, all governmental
licenses, permits and other approvals) to own or lease and operate its
properties and to carry on its business as now conducted and as proposed to be
conducted, except for such government licenses, permits and other approvals, the
failure of which to have could not have a Material Adverse Effect. UTC
beneficially owns and controls, directly or indirectly, one hundred percent
(100%) of the issued and outstanding shares of each class of the capital stock
of the Borrower.
(c) The execution, delivery and performance by each Loan Party of this
Agreement, the Notes and each other Loan Document to which it is or is to be a
party, and the consummation by such Loan Party of the Transaction, are within
such Loan Party's corporate powers, have been duly authorized by all necessary
corporate action, and do not (i) contravene such Loan Party's charter or bylaws,
(ii) violate any law (including, without limitation, the Securities Act of 1933,
as amended, the Securities Exchange Act of 1934, as amended, and the Racketeer
Influenced and Corrupt Organizations Chapter of the Organized Crime Control Act
of 1970), rule, regulation (including, without limitation, Regulation G, T, U or
X of the Board of Governors of the Federal Reserve System), order, writ,
judgment, injunction, decree, determination or award, (iii) conflict with or
result in the breach of, or constitute a default under, any material contract,
loan agreement, indenture, mortgage, deed of trust, lease or other material
instrument or agreement binding on or affecting any Loan Party, any of its
Subsidiaries or any of their respective properties or (iv) except for the Liens
created under the Collateral Documents, result in or require the creation or
imposition of any Lien upon or with respect to any of the properties of any Loan
Party or any of its Subsidiaries. No Loan Party or any of its Subsidiaries is in
violation of any such law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award or in breach of any such material contract, loan
agreement, indenture, mortgage, deed of trust, lease or other instrument or
agreement, the violation or breach of which could reasonably be expected to have
a Material Adverse Effect.
(d) No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body or any other third
party is or was required by any Loan Party for (i) the due execution, delivery,
recordation, filing or performance by any Loan Party of this Agreement, the
Notes or any other Loan Document to which it is or is to be a party, or for the
consummation of the Transaction, (ii) the grant by any Loan Party of the Liens
granted by it pursuant to the Collateral Documents, (iii) the perfection or
maintenance of the Liens created by the Collateral Documents or (iv) the
exercise by the Administrative Agent or any Lender Party of its rights under the
Loan Documents or the remedies in respect of the Collateral pursuant to the
Collateral Documents, except for the authorizations, approvals, actions, notices
and filings listed on Schedule 4.01(d), all of which have been duly obtained,
taken, given or made and are in full force and effect in all material respects.
All applicable waiting periods in connection with the Transaction have expired
without any action having been taken by any competent authority restraining,
preventing or imposing materially adverse conditions upon the Transaction or the
rights of the Loan Parties or their Subsidiaries freely to transfer or otherwise
dispose of, or to create any Lien on, any properties now owned or hereafter
acquired by any of them.
(e) This Agreement has been, and each of the Notes and each other Loan
Document has been or when delivered hereunder will have been, duly executed and
delivered by each Loan Party thereto. This Agreement is, and each of the Notes
and each other Loan Document has been or when delivered hereunder will be, the
legal, valid and binding obligation of each Loan Party thereto, enforceable
against such Loan Party in accordance with its terms, subject to the effect of
any applicable bankruptcy, insolvency, reorganization, moratorium or similar law
affecting creditor's' rights generally.
(f) (i) The consolidated balance sheets of UTC and its Subsidiaries as
at September 28, 1997, and the related consolidated statements of income and
consolidated statements of cash flows of UTC and its Subsidiaries for the Fiscal
Year then ended, accompanied by an opinion of Deloitte & Touche LLP
("Deloitte"), independent public accountants; (ii) the consolidating balance
sheets of UTC and its segments as at September 28, 1997, and the related
consolidating statements of income and consolidating statements of cash flows of
UTC and its segments for the Fiscal Year then ended, accompanied by an opinion
or a review report of Deloitte; and (iii) the Consolidated and consolidating
balance sheet of UTC and its Subsidiaries and segments as at December 28, 1997
and the related Consolidated and consolidating statements of income and cash
flows of UTC and its Subsidiaries and segments for the three (3) months then
ended, duly certified by the Chief Financial Officer of the Borrower copies of
which have been furnished to the Administrative Agent, fairly present in all
material respects, subject, in the case of said balance sheet as at December 28,
1997 and said statements of income and cash flows for the three (3) months then
ended, to normal year-end and audit adjustments, the Consolidated and
consolidating financial condition of UTC and its Subsidiaries as at such dates
and the Consolidated and consolidating results of the operations of UTC and its
Subsidiaries and segments for the period ended on such date, all in accordance
with GAAP applied on a consistent basis, and, since September 28, 1997, there
has been no Material Adverse Change in the business, condition (financial or
otherwise), results of operations or properties of UTC and its Subsidiaries,
taken as a whole, or the Borrower and its Subsidiaries, taken as a whole.
(g) The Information Memorandum and the Pre-Commitment Information,
taken as a whole, and the representations and warranties in, and Schedules to,
this Agreement and the other Loan Documents do not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made therein not misleading.
(h) Other than the Disclosed Litigation, there is no action, suit,
investigation, litigation or proceeding pending against the Borrower, any other
Loan Party or any of their respective Subsidiaries, including, without
limitation, any Environmental Action, pending or threatened before any court,
governmental agency or arbitrator that could reasonably be expected to have a
Material Adverse Effect.
(i) Neither the Borrower nor any other Loan Party nor any of their
respective Subsidiaries is engaged in the business of extending credit for the
purpose of purchasing or carrying Margin Stock.
(j) Except as set forth on Schedule 4.01(j) hereto, neither the
Borrower nor any of its ERISA Affiliates maintains or has maintained any Plans
or Multiemployer Plans. Set forth on Schedule 4.01(j) is a complete and accurate
list of all Welfare Plans and all defined contribution plans in respect of which
any Loan Party could have liability.
(k) Except as set forth in the financial statements referred to in this
Section 4.01 and in Section 5.05, neither the Borrower, any of the other Loan
Parties nor any of their respective Subsidiaries has any material liability with
respect to "expected post retirement benefit obligations" within the meaning of
Statement of Financial Accounting Standards No. 106.
(l) Neither the business nor the properties of any Loan Party or any of
its Subsidiaries are affected by any fire, explosion, accident, strike, lockout
or other labor dispute, drought, storm, hail, earthquake, embargo, act of God or
of the public enemy or other casualty (whether or not covered by insurance) that
could reasonably be expected to have a Material Adverse Effect.
(m) Except as set forth on Schedule 4.01(m), the operations and
properties of each Loan Party and each of its Subsidiaries comply in all known
material respects with all applicable Environmental Laws and Environmental
Permits, all known past non-compliance with such Environmental Laws and
Environmental Permits has been resolved without ongoing material obligations or
costs owing by any Loan Party, and, to the best of such Loan Party's knowledge,
no circumstances exist that could reasonably be expected to (i) form the basis
of an Environmental Action against any Loan Party or any of its Subsidiaries or
any of their properties that could reasonably be expected to have a Material
Adverse Effect or (ii) cause any such property to be subject to any material
restrictions on ownership, occupancy, use or transferability under any
Environmental Law.
(n) Except as disclosed on Schedule 4.01(n) or in the environmental
assessment reports listed on Schedule 4.01(n) hereto, (i) none of the properties
currently or, to the best of such Loan Party's knowledge, formerly owned or
operated by any Loan Party or any of its Subsidiaries is listed or proposed for
listing on the NPL or on the CERCLIS or any analogous state or local list or is
adjacent to any such property; (ii) there are no and, to the best of its
knowledge, never have been any underground or aboveground storage tanks or any
surface impoundments, septic tanks, pits, sumps or lagoons in which Hazardous
Materials are being or, to the best of its knowledge, have been treated, stored
or disposed on any property currently owned or operated by any Loan Party or any
of its Subsidiaries or, to the best of its knowledge, on any property formerly
owned or operated by any Loan Party or any of its Subsidiaries; (iii) there is
no asbestos or asbestos-containing material on any property currently owned or
operated by any Loan Party or any of its Subsidiaries; and (iv) to the best of
such Loan Party's knowledge, Hazardous Materials have not been released,
discharged or disposed of on any property currently owned or operated by any
Loan Party or any of its Subsidiaries, or, to the best of its knowledge, on any
property formerly owned or operated by any Loan Party or any of its
Subsidiaries.
(o) Except as disclosed on Schedule 4.01(o) or in the environmental
assessment reports listed on Schedule 4.01(n), none of UTC (with respect to
periods prior to the Closing Date and with respect to the High Performance
Plastics segment of UTC only), any Loan Party or any of the Subsidiaries of any
Loan Party is undertaking or has not completed, either individually or together
with other potentially responsible parties, any investigation or assessment or
Remedial, Response or Removal action relating to any actual or threatened
release, discharge or disposal of Hazardous Materials at any site, location or
operation owned, leased, used or operated by the Borrower on and after the
Closing Date, either voluntarily or pursuant to the order of any governmental or
regulatory authority or the requirements of any Environmental Law; and, to the
best of such Loan Party's knowledge, all Hazardous Materials generated, used,
treated, handled or stored at, or transported to or from, any property currently
owned or operated by any Loan Party or any of its Subsidiaries or any property
formerly owned or operated by any Loan Party or any of its Subsidiaries have
been disposed of in a manner not reasonably expected to result in material
liability to any Loan Party or any of its Subsidiaries.
(p) Except as set forth on Schedule 4.01(p), none of UTC, any Loan
Party or any of the Subsidiaries of any Loan Party is a party to any indenture,
loan or credit agreement or any lease or other agreement or instrument or
subject to any charter or corporate restriction that could reasonably be
expected to have a Material Adverse Effect.
(q) The Collateral Documents create in favor of the Administrative
Agent, for the ratable benefit of the Lenders, a valid security interest in the
Collateral securing the payment of the Obligations. The Loan Parties are the
legal and beneficial owners of the Collateral free and clear of any Lien, except
for the liens and security interests created or expressly permitted under the
Loan Documents.
(r) UTC and each of its Subsidiaries has filed, has caused to be filed
or has been included in all tax returns (Federal, state, local and foreign)
required to be filed and has paid all taxes shown thereon to be due, together
with applicable interest and penalties.
(s) Set forth on Schedule 4.01(s) is a complete and accurate list of
each taxable year of UTC and each of its Subsidiaries for which Federal income
tax returns have been filed and for which the expiration of the applicable
statute of limitations for assessment or collection has not occurred by reason
of extension or otherwise (an "Open Year").
(t) There is no unpaid amount of adjustments to the Federal income tax
liability of UTC or any of its Subsidiaries proposed by the Internal Revenue
Service with respect to Open Years. No issues have been raised by the Internal
Revenue Service in respect of Open Years that, in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
(u) There is no unpaid amount of adjustments to the state, local and
foreign tax liability of UTC or any of its Subsidiaries proposed by any state,
local or foreign taxing authorities (other than amounts arising from adjustments
to Federal income tax returns). No issues have been raised by such taxing
authorities that, individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect.
(v) No "ownership change" as defined in Section 382(g) of the Internal
Revenue Code, and no event that would result in the application of the "separate
return limitation year" or "consolidated return change of ownership" limitations
under the Federal income tax consolidated return regulations, has occurred with
respect to UTC.
(w) Neither UTC nor any Loan Party or any of such Loan Party's
Subsidiaries is an "investment company," or an "affiliated person" of, or
"promoter" or "principal underwriter" for, an "investment company," as such
terms are defined in the Investment Company Act of 1940, as amended. Neither the
making of any Advances, nor the issuance of any Letters of Credit, nor the
application of the proceeds or repayment thereof by the Borrower, nor the
consummation of the Transaction, will violate any provision of such Act or any
rule, regulation or order of the Securities and Exchange Commission thereunder
or any takeover, disclosure or other federal, state or foreign securities law or
Regulations G, T, U or X of the Federal Reserve Board. The Borrower is not
subject to regulation under any federal, state or foreign statute or regulation
which limits its ability to incur Debt.
(x) Each Loan Party is, individually and together with its
Subsidiaries, Solvent.
(y) Set forth on Schedule 4.01(y) is a complete and accurate list of
all Existing Debt the principal amount of which is greater than $250,000,
showing as of the date hereof the principal amount outstanding thereunder, the
maturity date thereof and the amortization schedule therefor.
(z) Set forth on Schedule 4.01(z) is a complete and accurate list of
all Surviving Debt the principal amount of which is greater than $100,000,
showing as of the date hereof the principal amount outstanding thereunder, the
maturity date thereof and the amortization schedule therefor.
(aa) Set forth on Schedule 4.01(aa) is a complete and accurate, in all
material respects, list of all real property owned by any Loan Party or any of
its Subsidiaries or in which any Loan Party has an interest as a contract vendee
(each a "Mortgaged Property" and, collectively, the "Mortgaged Properties"),
showing as of the date hereof the street address, county or other relevant
jurisdiction, state, record owner and book and estimated fair value thereof.
Such Loan Party or such Subsidiary has good and marketable fee simple title to
such Mortgaged Property, free and clear of all Liens, other than Permitted Real
Property Encumbrances and Permitted Liens. The Mortgages create, as security for
the obligations purported to be secured thereby, a valid and enforceable
security interest in and Lien on all of the Mortgaged Property (and will create
a valid and enforceable security interest in and Lien on all fixtures and
improvements related to such Mortgaged Property and affixed or added thereto on
or after the Closing Date) in favor of the Administrative Agent (or such other
trustees that may be named therein) for the benefit of the Secured Parties,
superior to and prior to the rights of all third Persons (except that the
security interest created in the Mortgaged Property may be subject to the
Permitted Real Property Encumbrances related thereto and Permitted Liens) and
subject to no other Liens (other than Permitted Real Property Encumbrances and
Permitted Liens).
(bb) Set forth on Schedule 4.01(bb) is a complete and accurate, in all
material respects, list of all leases of real property under which any Loan
Party or any of its Subsidiaries is the lessee, showing as of the date hereof
the street address, county or other relevant jurisdiction, state, lessor,
lessee, expiration date and annual rental cost thereof. To the best knowledge of
each Loan Party, each such lease is the legal, valid and binding obligation of
the lessor thereof, enforceable in accordance with its terms.
(cc) Set forth on Schedule 4.01(cc) is a complete and accurate, in all
material respects, list of all Material Contracts of each Loan Party and its
Subsidiaries, showing as of the date hereof the parties, subject matter and term
thereof. Except as could not reasonably be expected to have a Material Adverse
Effect, each such Material Contract has been duly authorized, executed and
delivered by the Loan Parties that are parties thereto, has not been amended or
otherwise modified (except as set forth on Schedule 4.01(cc)), is in full force
and effect and is binding upon and enforceable against the Loan Parties that are
parties thereto in accordance with its terms. There exists no material default
under any Material Contract by the Borrower or any of its Subsidiaries party
thereto and, to the best knowledge of each Loan Party, there exists no material
default under any Material Contract by any other party thereto.
(dd) Set forth on Schedule 4.01(dd) is a complete and accurate list of
all Investments in excess of $250,000 held by any Loan Party or any of its
Subsidiaries, showing as of the date hereof the amount, obligor or issuer and
maturity, if any, thereof.
(ee) Set forth on Schedule 4.01(ee) is a complete and accurate, in all
material respects, list of all patents, trademarks, trade names, service marks
and copyrights, and all applications therefor and licenses thereof, of each Loan
Party or any of its Subsidiaries, showing as of the date hereof the jurisdiction
in which registered, the registration number, the date of registration and the
expiration date. Each Loan Party and each of their respective Subsidiaries owns
or has rights to use all patents, trademarks, trade names, service marks,
copyrights and other intellectual property necessary to conduct its business as
now or heretofore conducted by it except, in any case, where the failure to so
own or have rights, either individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect. Each Loan Party and
each of their respective Subsidiaries conducts its business and affairs without
infringement of or interference with any patent, trademark, trade name, service
mark, copyright or other intellectual property of any other Person that could
reasonably be expected to have a Material Adverse Effect or as otherwise
disclosed on Schedule 4.01(ee). The Intellectual Property Security Agreement
creates, as security for the obligations purported to be secured thereby, a
valid and enforceable security interest in and Lien on all of the Collateral
purported to be covered thereby in favor of the Administrative Agent for the
benefit of the Secured Parties, superior to and prior to the rights of all third
Persons.
(ff) No broker's or finder's fees or commissions or any similar fees or
commissions will be payable by any Loan Party or any of its Subsidiaries with
respect to the incurrence and maintenance of the Obligations, any other
transaction or any services rendered in connection with such Transaction except
that the Borrower has retained Jesup & Lamont Capital Markets, Inc. to advise it
on the Transaction and will be responsible for payment of all of such firm's
fees. The Borrower hereby covenants and agrees to indemnify the Administrative
Agent and each Lender Party against and hold the Administrative Agent and each
Lender Party harmless from any claim, demand or liability for broker's or
finder's fees or similar fees or commissions.
ARTICLE V
COVENANTS OF THE BORROWER AND ITS SUBSIDIARIES
SECTION 5.01. Affirmative Covenants . So long as any Advance shall
remain unpaid, any Letter of Credit shall be outstanding or any Lender Party
shall have any Commitment hereunder, the Borrower will:
(a) Compliance with Law . Comply, and cause each of its Subsidiaries to
comply, in all material respects, with all applicable laws, rules, regulations
and orders, such compliance to include, without limitation, compliance in all
material respects with ERISA.
(b) Payment of Taxes, Etc . Timely pay and discharge, and cause each of
its Subsidiaries to timely pay and discharge before the same shall become
delinquent, (i) all taxes, assessments and governmental charges or levies
imposed upon it or upon its property and (ii) all lawful claims that, if unpaid,
might by law (without the entry of a judgment) become a Lien upon its property;
provided, however, that the Borrower and its Subsidiaries shall not be required
to pay or discharge any such tax, assessment, charge or claim that is being
contested in good faith and by proper proceedings and as to which appropriate
reserves are being maintained if required by GAAP, unless and until any Lien
resulting therefrom attaches to its property and becomes enforceable against the
Borrower or any of its Subsidiaries.
(c) Compliance with Environmental Laws . Comply, cause each of its
Subsidiaries and use its best efforts to cause all lessees and other Persons
operating or occupying its properties to comply, in all material respects, with
all applicable Environmental Laws and Environmental Permits; obtain and renew
and cause each of its Subsidiaries to obtain and renew all Environmental Permits
reasonably necessary for its operations and properties; and conduct, and cause
each of its Subsidiaries to conduct, any Removal, Remedial or other Response
action necessary to remove and clean up all Hazardous Materials from any of its
properties as required or ordered by any governmental authority under any
applicable Environmental Laws; provided, however, that the Borrower and its
Subsidiaries shall not be required to undertake any such Removal, Remedial or
Response action to the extent that its obligation to do so is being contested in
good faith and by proper proceedings and adequate reserves as reasonably
determined by the Administrative Agent are being maintained with respect to such
circumstances.
(d) Preparation of Environmental Reports. Upon a reasonable belief that
the Borrower or any of its Subsidiaries has breached any covenant or
representation with respect to environmental matters in any material respect or
that there has been a material violation of Environmental Laws by the Borrower
or one of its Subsidiaries, the Administrative Agent may, upon reasonable prior
written notice, from time to time in its reasonable discretion, retain, at the
Borrower's expense, an independent professional consultant reasonably acceptable
to the Borrower to prepare environmental site assessment reports for the
Borrower or any of its Subsidiaries and/or to review any report relating to
Hazardous Materials prepared by or for the Borrower and the Administrative Agent
may conduct its own investigation of such matter at any facility or property
currently owned, leased, operated or used by the Borrower or one of its
Subsidiaries and the Borrower agrees to use its best efforts to obtain
permission for the Administrative Agent's professional consultant to conduct its
own investigation of any such matter at any facility or property previously
owned, leased, operated or used by the Borrower or one of its Subsidiaries. The
Borrower and its Subsidiaries hereby grant to the Administrative Agent, its
employees, consultants and contractors, the right to enter into or onto the
facilities or properties currently owned, leased, operated or used by the
Borrower or its Subsidiaries upon reasonable notice to the Borrower to perform
such assessments on such property as are necessary to conduct such a review
and/or investigation. Any such investigation of any such facility or property
shall be conducted, unless otherwise agreed to by the Borrower and the
Administrative Agent, during normal business hours and, to the extent reasonably
practicable, shall be conducted so as not to interfere with the ongoing
operations at any facility or property or to cause any damage or loss to any
facility or property. The Borrower and the Administrative Agent hereby
acknowledge and agree that any report of any investigation conducted at the
request of the Administrative Agent will be obtained and shall be used by the
Administrative Agent and Lender Parties for the sole purpose of internal credit
decisions to monitor and police the Advances and/or protect the Administrative
Agent's and Lender Parties' security interests in the Collateral. The
Administrative Agent agrees to deliver a copy of any such report to the Borrower
with the understanding that the Borrower acknowledges and agrees that (i) the
Borrower will indemnify and hold harmless the Administrative Agent and each
Lender Party from any costs, losses or liabilities relating to the Borrower's
use of or reliance on such report and (ii) neither the Administrative Agent nor
any Lender Party makes any representation or warranty with respect to such
report.
(e) Maintenance of Insurance . Maintain, and cause each of its
Subsidiaries to maintain, insurance with responsible and reputable insurance
companies or associations in such amounts and covering such risks as is usually
carried by companies engaged in similar businesses and owning similar properties
in the same general areas in which the Borrower or such Subsidiary operates.
(f) Preservation of Corporate Existence, Etc . Preserve and maintain,
and cause each of its Subsidiaries to preserve and maintain, its existence,
legal structure, legal name, rights (charter and statutory), and all material
permits, licenses, approvals, privileges and franchises.
(g) Visitation Rights . (i) At any reasonable time and from time to
time during normal business hours, upon reasonable notice, permit the
Administrative Agent, or, after the occurrence of a Default, the Lender Parties,
or any agents or representatives thereof, to examine and make copies of and
abstracts from the records and books of account of and visit the properties of
the Borrower and its Subsidiaries, and to discuss the affairs, finances and
accounts of the Borrower and any such Subsidiaries with any of their officers or
directors.
(ii) At any reasonable time and from time to time during
normal business hours, permit the Administrative Agent and the Lender Parties to
conduct such commercial finance examinations and/or Collateral audits of the
Borrower and its Subsidiaries during each calendar year as the Administrative
Agent may reasonably request; provided, that so long as no Event of Default
shall have occurred and be continuing, no more than two (2) examinations and/or
audits may be conducted by the Administrative Agent and the Lender Parties each
calendar year during the term of this Agreement.
(h) Keeping of Books . Keep, and cause each of its Subsidiaries to
keep, proper books of record and account in which adequate entries shall be made
of all financial transactions and the assets and business of the Borrower and
each Subsidiary in accordance with GAAP.
(i) Maintenance of Properties, Etc . Maintain and preserve, and cause
each of its Subsidiaries to maintain and preserve, all of its material
properties that are reasonably necessary in the conduct of its business in good
working order and condition, ordinary wear and tear excepted.
(j) Compliance with Terms of Leaseholds . Make all payments and
otherwise perform in all material respects all obligations in respect of all
leases of real property to which the Borrower or any of its Subsidiaries is a
party, keep such leases in full force and effect and not allow such leases to
lapse or be terminated (other than by the passage of time) or any rights to
renew such leases to be forfeited or canceled, notify the Administrative Agent
of any default by any party with respect to such leases and cooperate with the
Administrative Agent in all reasonable respects to cure any such default, and
cause each of its Subsidiaries to do any of the foregoing except, in any case,
where the failure to do so, either individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
(k) Performance of Material Contracts . Perform and observe, and cause
each of its Subsidiaries to perform and observe, in all material respects all of
the material terms and provisions of each Material Contract to be performed or
observed by it, maintain, and cause each of its Subsidiaries to maintain, each
such Material Contract in full force and effect, and enforce, and cause each of
its Subsidiaries to enforce, each such Material Contract in accordance with its
terms except where the failure to maintain or enforce could not reasonably be
expected to have a Material Adverse Effect.
(l) Transactions with Affiliates . Other than with respect to the
Management Agreement and the Tax Sharing Agreement, conduct, and cause each of
its Subsidiaries to conduct, all transactions otherwise permitted under the Loan
Documents with any of their Affiliates on terms that are fair and reasonable and
no less favorable to the Borrower or such Subsidiary than it would obtain in a
comparable arms-length transaction with a Person not an Affiliate.
(m) Agreement to Grant Additional Security . (i) Promptly, and in any
event within thirty (30) days after the acquisition of assets of the type that
would have constituted Collateral at the date hereof and investments of the type
that would have constituted Collateral on the date hereof (other than assets
with a fair market value of less than $50,000), including the capital stock of
any direct or indirect Subsidiary of the Borrower, notify the Administrative
Agent of the acquisition of such assets or investments and, to the extent not
already Collateral in which the Administrative Agent has a perfected security
interest pursuant to the Collateral Documents, such assets and investments will
become additional Collateral hereunder to the extent the Administrative Agent
reasonably deems the pledge of such assets reasonable and practicable (the
"Additional Collateral"), and the Borrower will, and will cause each of its
direct and indirect Subsidiaries to, take all necessary and reasonable action,
including the filing of appropriate financing statements under the provisions of
the UCC, applicable foreign, domestic or local laws, rules or regulations in
each of the offices where such filing is necessary or reasonably desirable to
grant Administrative Agent a perfected Lien in such Collateral (or comparable
interest under foreign law in the case of foreign Collateral) pursuant to and to
the full extent required by the Collateral Documents and this Agreement.
(ii) Promptly, and in any event no later than thirty (30) days
after a request with respect thereto, cause each of the Borrower's direct or
indirect Subsidiaries as the Administrative Agent shall request to become party
to, or to execute and deliver, a guaranty in substantially the form of Exhibit K
hereto (as hereafter amended, supplemented or otherwise modified from time to
time in accordance with its terms, the "Subsidiary Guaranty"), guarantying to
the Administrative Agent and the Lenders the prompt payment, when and as due, of
all Obligations of the Loan Parties under the Loan Documents, including all
obligations under any Hedge Agreements or other hedging agreements.
(iii) Promptly, and in any event no later than thirty (30)
days after a request with respect thereto, cause each Guarantor created or
established after the date hereof to grant to the Administrative Agent, for the
ratable benefit of the Lenders, a first priority Lien on all property (tangible
and intangible) of such Guarantor, including, without limitation, all of the
stock of any of its Domestic Subsidiaries and 65% of the stock of any of its
Foreign Subsidiaries, upon terms similar to those set forth in the Collateral
Documents and otherwise reasonably satisfactory in form and substance to
Administrative Agent. The Borrower shall cause each Guarantor, at its own
expense, to become a party to a Security Agreement, an Intellectual Property
Security Agreement, a Mortgage and any other Collateral Document and to execute,
acknowledge and deliver, or cause the execution, acknowledgment and delivery of,
and thereafter register, file or record in any appropriate governmental office,
any document or instrument reasonably deemed by Administrative Agent to be
necessary or reasonably desirable for the creation and perfection of the
foregoing Liens (including legal opinion, title insurance, consents, corporate
documents and any additional or substitute security agreements or mortgages or
deeds of trust). The Borrower will cause each such Guarantor to take all actions
reasonably requested by Administrative Agent (including, without limitation, the
filing of UCC-1's) in connection with the granting of such security interests.
(iv) Promptly, and in any event not later than thirty (30)
days after a request with respect thereto, (A) deliver to the Administrative
Agent the original of all instruments, documents and chattel paper, and all
other Collateral of which the Administrative Agent determines it should have
physical possession in order to perfect and protect its security interest
therein, duly pledged, endorsed or assigned to the Administrative Agent without
restriction; (B) use its reasonable efforts to obtain landlord waivers, in form
and substance reasonably satisfactory to the Administrative Agent, with respect
to any Inventory or other Collateral located at a location that is not owned by
the Borrower or a Subsidiary; (C) deliver to the Administrative Agent warehouse
receipts covering any portion of the Inventory or other Collateral located in
warehouses and for which warehouse receipts are issued; (D) when an Event of
Default exists, transfer Inventory to locations designated by the Administrative
Agent; (E) if any Collateral is at any time in the possession or control of any
warehousemen, bailee or the Borrower's agents or processors, notify the
Administrative Agent thereof and notify such person of the Administrative
Agent's security interest in such Collateral and use reasonable efforts to
obtain a landlord waiver or bailee letter, in form and substance reasonably
satisfactory to the Administrative Agent, from such person and instruct such
person to hold all such Collateral for the Administrative Agent's account
subject to the Administrative Agent's instructions; (F) if at any time any
Inventory or other Collateral is located on any real property of the Borrower
which is subject to a mortgage or other Lien, use reasonable efforts to obtain a
mortgagee waiver, in form and substance reasonably satisfactory to the
Administrative Agent, from the holder of each mortgage or other Lien on such
real property; and (G) take all such other actions and obtain all such other
agreements as the Administrative Agent may reasonably deem necessary or
desirable in respect of any Collateral.
(v) The security interests required to be granted pursuant to
this Section shall be granted pursuant to the Collateral Documents or, in the
Administrative Agent's reasonable discretion, such other security documentation
(which shall be substantially similar to the Collateral Documents already
executed and delivered by the Borrower and the Guarantors) as is reasonably
satisfactory in form and substance to Administrative Agent (the "Additional
Collateral Documents") and shall constitute valid and enforceable perfected
security interests prior to the rights of all third Persons and subject to no
other Liens except Liens permitted under Section 5.02(a). The Additional
Collateral Documents and other instruments related thereto shall be duly
recorded or filed in such manner and in such places and at such times as are
required by law to establish, perfect, preserve and protect the Liens, in favor
of Administrative Agent, for the benefit of the Lender Parties, granted pursuant
to the Additional Collateral Documents and, all taxes, fees and other charges
payable in connection therewith shall be paid in full by the Borrower. At the
time of the execution and delivery of Additional Collateral Documents, the
Borrower shall cause to be delivered to the Administrative Agent such
agreements, opinions of counsel, and other related documents as may be
reasonably requested by the Administrative Agent or the Required Lenders to
assure themselves that this Section has been complied with.
(n) Interest Rate Protection . On or prior to June 30, 1998, the
Borrower shall obtain and thereafter keep in effect one or more interest rate
Bank Hedge Agreements (the terms and other provisions of all such Bank Hedge
Agreements to be subject to the prior written consent of the Administrative
Agent which consent will not be unreasonably withheld or delayed) covering at
least 50% of the Term A and Term B Advances outstanding on the Closing Date for
an aggregate period of not less than three (3) years commencing on the Closing
Date.
SECTION 5.02. Negative Covenants with Respect to the Borrower and its
Subsidiaries . So long as any Advance shall remain unpaid, any Letter of Credit
shall be outstanding or any Lender Party shall have any Commitment hereunder,
the Borrower will not, at any time, without the prior consent of the Required
Lenders:
(a) Liens, Etc. Create, incur, assume or suffer to exist, or permit any
of its Subsidiaries to create, incur, assume or suffer to exist, any Lien on or
with respect to any of its properties of any character (including, without
limitation, Accounts, Inventory and other Collateral) whether now owned or
hereafter acquired, sign or file or suffer to exist, or permit any of its
Subsidiaries to sign or file or suffer to exist, under the Uniform Commercial
Code or any other statute of any jurisdiction, a financing statement that names
the Borrower or any of its Subsidiaries as debtor, or sign or suffer to exist,
or permit any of its Subsidiaries to sign or suffer to exist, any security
agreement authorizing any secured party thereunder to file any such financing
statement, or assign, or permit any of its Subsidiaries to assign, any accounts
or other right to receive income, excluding, however, from the operation of the
foregoing restrictions the following:
(i) Liens created under the Loan Documents;
(ii) Permitted Liens;
(iii) Liens existing on the date hereof and described on
Schedule 5.02(a)(iii);
(iv) purchase money Liens securing Debt permitted under
Section 5.02(b)(iii)(A) upon real property or Equipment acquired or held by the
Borrower or any of its Subsidiaries in the ordinary course of business to secure
the purchase price of such real property or Equipment or to secure Debt incurred
solely for the purpose of financing the acquisition, construction or improvement
of any such real property or Equipment to be subject to such Liens, or Liens
existing on any such real property or Equipment at the time of acquisition
(other than any such Liens created in contemplation of such acquisition that do
not secure the purchase price), or extensions, renewals or replacements of any
of the foregoing for the same or a lesser amount; provided, however, that no
such Lien shall extend to or cover any property other than the real property or
Equipment being acquired, constructed or improved, and no such extension,
renewal or replacement shall extend to or cover any property not theretofore
subject to the Lien being extended, renewed or replaced;
(v) Liens arising in connection with Capitalized Leases
permitted under Section 5.02(b)(iii)(A); provided, that no such Lien shall
extend to or cover any Collateral or any assets other than the assets subject to
such Capitalized Leases;
(vi) the replacement, extension or renewal of any Lien
permitted by clauses (iii) through (v) above upon or in the same property
theretofore subject thereto in connection with the replacement, extension or
renewal (without increase in the amount or any change in any direct or
contingent obligor) of the Debt secured thereby; and
(vii) Liens securing Acquired Indebtedness.
(b) Debt . Create, incur, assume or suffer to exist, or permit any of
its Subsidiaries to create, incur, assume or suffer to exist, any Debt other
than:
(i) in the case of the Borrower, (x) Debt incurred pursuant to
the Loan Documents and (y) Debt owed by the Borrower to a direct or indirect
wholly-owned Subsidiary of the Borrower;
(ii) in the case of any of the Subsidiaries of the Borrower,
Debt owed to the Borrower or to a direct or indirect wholly-owned Subsidiary of
the Borrower;
(iii) in the case of the Borrower and any of its Subsidiaries:
(A) Debt (x) secured by Liens permitted by Section
5.02(a)(iv) and (y) Capitalized Leases, collectively not to exceed in
the aggregate $10,000,000 at any time outstanding;
(B) endorsement of negotiable instruments for deposit
or collection or similar transactions in the ordinary course of
business;
(C) (x) unsecured Debt issued to a seller in
connection with the acquisition by the Borrower or any of its
Subsidiaries of assets or securities in accordance with this Agreement;
provided that such Debt shall be subordinated in right of payment to
the Obligations of the Borrower hereunder on terms reasonably
satisfactory to the Administrative Agent and (y) Acquired Indebtedness
incurred by the Borrower and/or any of its Subsidiaries, collectively
not to exceed in the aggregate $10,000,000 at any time outstanding; and
(D) unsecured Debt which shall be subordinated in
right of payment to the Obligations of the Borrower hereunder on terms
reasonably satisfactory to the Administrative Agent not to exceed
$5,000,000 at any time outstanding.
(c) Accounts Payable . No accounts payable of the Borrower or any of
its Subsidiaries arising from the purchase of property or services, including,
without limitation, Inventory acquired for resale shall be outstanding for
longer than 120 days from the date of incurrrence, except (i) accounts payable
which by their terms become payable after 120 days from incurrence or (ii)
accounts payable that are subject to good faith dispute by the Borrower.
(d) Fundamental Changes . (i) Merge into or consolidate with any Person
or permit any Person to merge into it, or permit any of its Subsidiaries to do
so, except that any Subsidiary of the Borrower may merge into or consolidate
with any other Subsidiary of the Borrower or the Borrower, as the case may be,
provided that in the case of any such merger or consolidation, the Person
resulting from such merger or consolidation shall be the Borrower or a
wholly-owned Subsidiary of the Borrower, as the case may be;
(ii) liquidate, wind-up or dissolve itself (or suffer any
liquidation or dissolution), convey, sell, assign, lease, transfer or otherwise
dispose of (or agree to do any of the foregoing at any future time) all or
substantially all of its property, business or assets, or permit any of its
Subsidiaries to do any of the foregoing;
(iii) acquire or permit any Subsidiary to acquire all or
substantially all of the assets of any other Person (including capital stock),
unless the Borrower complies with the following: (A) prior to the consummation
of any such acquisition, the Borrower shall furnish to the Administrative Agent
financial statements and projections in form and substance reasonably
satisfactory to the Administrative Agent which shall evidence compliance, on a
pro forma basis for the four consecutive full fiscal quarters most recently
ended on or prior to the proposed date of such acquisition and the periods
covered by such projections by the Borrower and its Subsidiaries, after giving
effect to such acquisition, with the financial covenants contained in Section
5.06 and (B) such Person shall be engaged in the Plastics and Chemicals
Business.
(e) Sales, Etc. of Assets . Sell, lease, transfer or otherwise dispose
of, or permit any of its Subsidiaries to sell, lease, transfer or otherwise
dispose of, any assets or grant any option or other right to purchase, lease or
otherwise acquire any assets, except:
(i) sales of Inventory in the ordinary course of
business;
(ii) sales in the ordinary course of business of Equipment
that is no longer used or useful in the business of the Borrower or such
Subsidiary;
(iii) sales of assets (other than an asset included in Section
5.02(e)(i), (ii) or (iv)) the aggregate purchase price of which in any Fiscal
Year does not exceed $500,000;
(iv) the sale of any asset by the Borrower or any of its
Subsidiaries (other than an asset included in Section 5.02(e)(i), (ii) or (iii))
so long as (A) the purchase price paid to the Borrower or such Subsidiary for
such asset shall be no less than the fair market value of such asset at the time
of such sale, (B) at least 75% of the purchase price for such asset shall be
paid to the Borrower or such Subsidiary in cash and (C) the aggregate purchase
price paid to the Borrower and all of its Subsidiaries for such asset and all
other assets sold by the Borrower and its Subsidiaries (other than an asset
included in Section 5.02(e)(i), (ii) or (iii)) (x) since the Closing Date
pursuant to this clause (iv) shall not exceed $25,000,000 and (y) in any Fiscal
Year pursuant to this clause (iv) shall not exceed $5,000,000;
provided that in the case of sales of assets pursuant to Section 5.02(e)(iv)
above, the Borrower shall, on the date of receipt thereof, apply the entire Net
Cash Proceeds from such sale in accordance with Section 2.06(b)(ii).
(f) Investments in Other Persons . Make or hold, or permit any of its
Subsidiaries to make or hold, any Investment in any Person other than:
(i) Investments by the Borrower and its Subsidiaries in their
Subsidiaries outstanding on the date hereof and described on Schedule
5.02(f)(i), and additional investments in wholly-owned Subsidiaries of the
Borrower (other than Foreign Subsidiaries, except as permitted by Section
5.02(f)(vii)); provided, however, that with respect to Investments in any newly
acquired or created wholly-owned Subsidiary, any such Subsidiary shall become a
Guarantor pursuant to the terms of the Subsidiary Guaranty and an additional
grantor pursuant to the terms of the Security Agreement and Intellectual
Property Security Agreement;
(ii) Loans and advances to officers and other employees in the
ordinary course of the business of the Borrower and its Subsidiaries in an
aggregate principal amount not to exceed $2,000,000 at any time outstanding;
(iii) Investments by the Borrower and its Subsidiaries in Cash
Equivalents;
(iv) Investments by the Borrower and its Subsidiaries in Bank
Hedge Agreements permitted under Section 5.01(n);
(v) Investments consisting of intercompany Debt permitted
under Sections 5.02(b)(i) and 5.02(b)(ii);
(vi) Investments existing on the date hereof and described on
Schedule 5.02(f)(vi) hereto;
(vii) Investments by the Borrower and its Subsidiaries in (x)
joint ventures in the aggregate not to exceed $10,000,000 and (y) Foreign
Subsidiaries in the aggregate not to exceed $10,000,000; collectively not to
exceed in the aggregate $15,000,000; and
(viii) Investments by the Borrower and its Subsidiaries in
securities of trade creditors or customers received in any plan of
reorganization or similar arrangement on the bankruptcy or insolvency of such
trade creditors or customers or received in settlement of delinquent obligations
of, and other disputes with, suppliers arising in the ordinary course of
business.
(g) Dividends, Etc . Declare or pay any dividends, purchase, redeem,
retire, defease or otherwise acquire for value any of its capital stock or any
warrants, rights or options to acquire such capital stock, now or hereafter
outstanding, return any capital to its stockholders as such, make any
distribution of assets, capital stock, warrants, rights, options, obligations or
securities to its stockholders as such or issue or sell any capital stock or any
warrants, rights or options to acquire such capital stock, or permit any of its
Subsidiaries to do any of the foregoing or permit any of its Subsidiaries to
purchase, redeem, retire, defease or otherwise acquire for value any capital
stock of the Borrower or any warrants, rights or options to acquire such capital
stock or to issue or sell any such capital stock or any warrants, rights or
options to acquire such capital stock, except:
(i) the Borrower may declare and pay dividends and
distributions payable solely in common stock of the Borrower;
(ii) a Subsidiary of the Borrower may declare and pay
dividends and distributions to the Borrower or to a direct or indirect
wholly-owned Subsidiary of the Borrower;
(iii) the Borrower may declare and pay a cash dividend to
Holdings on the Closing Date in an amount not to exceed $95,000,000 to enable
Holdings to declare a dividend to UTC which shall be used to (A) defease or
repay the UTC Senior Notes and (B) reduce the principal amount outstanding under
the UTC Existing Revolving Credit Facility to an amount not greater than
$10,000,000;
(iv) the Borrower may (A) pay to UTC the Subordinated
Management Fee and the Management Services Fee in accordance with the provisions
of the Management Agreement as such agreement exists on the date hereof and (B)
declare and pay to Holdings the Tax Liability Dividends in accordance with the
provisions of the Tax Sharing Agreement as such agreement exists on the date
hereof; and
(v) for issuances of stock expressly permitted by Section
5.02(q).
(h) Change in Nature of Business . Make, or permit any of its
Subsidiaries to make, any material change in the nature of its business as
carried on at the date hereof.
(i) Charter Amendments . Amend, or permit any of its Subsidiaries to
amend, its certificate or articles of incorporation or bylaws if such amendment
could impair the interests or rights of the Administrative Agent or any Lender
Party.
(j) Accounting Changes . Make or permit, or permit any of its
Subsidiaries to make or permit, any change in (i) accounting policies or
reporting practices, except as mandated by GAAP or the Securities and Exchange
Commission, or (ii) its Fiscal Year.
(k) Prepayments, Etc. of Debt . (i) Prepay, redeem, purchase, defease
or otherwise satisfy prior to the scheduled maturity thereof in any manner, or
make any payment in violation of any subordination terms of, any Debt, other
than the prepayment of the Advances in accordance with the terms of this
Agreement, or (ii) amend, modify or change in any material respect any material
term or condition of any Existing Debt, or (iii) permit any of its Subsidiaries
to do any of the foregoing other than to repay any Debt payable to the Borrower
or to any direct or indirect Subsidiary of the Borrower to the extent the
incurrence of such Debt was permitted hereunder.
(l) Amendment, Etc. of Material Contracts . (i) Cancel or terminate any
Material Contract (other than the Management Agreement or the Tax Sharing
Agreement) or consent to or accept any cancellation or termination thereof,
amend or otherwise modify in any material respect any Material Contract (other
than the Management Agreement or the Tax Sharing Agreement) or give any consent,
waiver or approval thereunder, waive any default under or breach of any Material
Contract (other than the Management Agreement or the Tax Sharing Agreement) or
take any other action in connection with any Material Contract (other than the
Management Agreement or the Tax Sharing Agreement) that would materially impair
the value of the interests or rights of the Borrower thereunder or that could
reasonably be expected to materially impair the interests or rights of the
Administrative Agent or any Lender Party, or permit any of their Subsidiaries to
do any of the foregoing; or (ii) without the consent of the Administrative
Agent, cancel or terminate either the Management Agreement or the Tax Sharing
Agreement or consent to or accept any cancellation or termination thereof, amend
or otherwise modify either of such agreements or give any consent, waiver or
approval thereunder, waive any default under or breach of either of such
agreements; provided, that the Tax Sharing Agreement may be terminated in
accordance with the terms thereof and; provided, further, that if the Management
Agreement expires by its terms, then the Borrower shall renew such agreement on
the same terms as are in existence on the date hereof, or enter into a
management agreement on terms and conditions substantially similar to those in
existence on the date hereof and which are reasonably satisfactory to the
Administrative Agent.
(m) Negative Pledge . Enter into or suffer to exist, or permit any of
the Subsidiaries of the Borrower to enter into or suffer to exist, any agreement
prohibiting or conditioning the creation or assumption of any Lien upon any of
its properties or assets, other than as provided in the Loan Documents.
(n) Partnerships, New Subsidiaries . (i) Become a general partner in
any general or limited partnership or joint venture, or permit any of its
Subsidiaries to do so (in each case, other than as expressly permitted pursuant
to Section 5.02(f)(vii)) or (ii) create any new Subsidiary, unless such newly
created Subsidiary shall become a Guarantor pursuant to the terms of the
Subsidiary Guaranty and an additional grantor pursuant to the terms of the
Security Agreement and Intellectual Property Security Agreement and all shares
of the capital stock of such Subsidiary (or 65% of such shares if such
Subsidiary is a Foreign Subsidiary) are pledged to the Administrative Agent
pursuant to the Security Agreement.
(o) Speculative Transactions . Engage, or permit any of its
Subsidiaries to engage, in any transaction involving commodity options or
futures contracts or derivatives or any similar speculative transactions, except
for Bank Hedge Agreements expressly permitted under Section 5.01(n).
(p) Capital Expenditures . Make, or permit any of its Subsidiaries to
make, any Capital Expenditures that would cause the aggregate of all such
Capital Expenditures made by the Borrower and its Subsidiaries in any period set
forth below to exceed the amount set forth below for such period.
Period Amount
Fiscal Year ending on or about September 30, 1998 $14,000,000
Fiscal Year ending on or about September 30, 1999 $8,000,000
Fiscal Year ending on or about September 30, 2000 $8,000,000
Fiscal Year ending on or about September 30, 2001 $8,000,000
Fiscal Year ending on or about September 30, 2002 $8,000,000
Fiscal Year ending on or about September 30, 2003 $8,000,000
Fiscal Year ending on or about September 30, 2004 $8,000,000
Fiscal Year ending on or about September 30, 2005 $8,000,000
; provided, however, that amounts permitted to be expended in a Fiscal Year that
are not expended in such fiscal year, but not in excess of fifty (50%) percent
of such prior year's unused amount (not including any amount permitted to be
carried forward from a prior year) shall be permitted to be expended in the
subsequent fiscal year.
(q) Issuance of Stock . The Borrower will not, and will not permit any
of its Subsidiaries to, directly or indirectly, issue, sell, assign, pledge or
otherwise encumber or dispose of any shares of capital stock of the Borrower or
any Subsidiary of the Borrower, except (x) to the Borrower or any Subsidiary of
the Borrower, (y) to qualify directors if required by applicable law and (z) as
set forth in Schedule 5.02(q).
SECTION 5.03. Negative Covenants with Respect to UTC. So long as any
Advance shall remain unpaid, any Letter of Credit shall be outstanding or any
Lender Party shall have any Commitment hereunder, UTC will not, at any time,
without the prior consent of the Required Lenders:
(a) Liens, Etc. Create, incur, assume or suffer to exist any Lien on or
with respect to the shares of capital stock of Holdings owned by UTC, whether
now owned or hereafter acquired.
(b) Negative Pledge . Enter into or suffer to exist any agreement
(other than this Agreement) prohibiting or conditioning the creation or
assumption of any Lien on the shares of capital stock of Holdings owned by UTC.
(c) Amendment, Etc. of Management and Tax Sharing Agreements . Cancel
or terminate either the Management Agreement or the Tax Sharing Agreement
(collectively the "UTC Material Contracts"), or consent to or accept any
cancellation or termination thereof, amend or otherwise modify in any material
respect any UTC Material Contract or give any consent, waiver or approval
thereunder, waive any default under or breach of any UTC Material Contract or
take any other action in connection with any UTC Material Contract, in any case
without the consent of the Administrative Agent, or permit the Borrower to do
any of the foregoing; provided, that the Tax Sharing Agreement may be terminated
in accordance with the terms thereof and; provided, further, that if the
Management Agreement expires by its terms, then UTC shall, and shall cause the
Borrower to, renew such agreement on the same terms as are in existence on the
date hereof, or to enter into a management agreement on terms and conditions
substantially similar to those in existence on the date hereof and which are
reasonably satisfactory to the Administrative Agent.
SECTION 5.04. Negative Covenants with Respect to Holdings. So long as
any Advance shall remain unpaid, any Letter of Credit shall be outstanding or
any Lender Party shall have any Commitment hereunder, Holdings will not, at any
time, without the prior consent of the Required Lenders:
(a) Liens, Etc. Create, incur, assume or suffer to exist any Lien on or
with respect to the shares of capital stock of the Borrower owned by Holdings,
whether now owned or hereafter acquired, other than Liens created under the Loan
Documents.
(b) Debt . Create, incur, assume or suffer to exist any Debt, other
than Debt created under the Holdings Guaranty.
(c) Negative Pledge . Enter into or suffer to exist any agreement
prohibiting or conditioning the creation or assumption of any Lien on the shares
of capital stock of the Borrower owned by Holdings, other than as provided in
the Loan Documents.
SECTION 5.05. Reporting Requirements . So long as any Advance shall
remain unpaid, any Letter of Credit shall be outstanding or any Lender Party
shall have any Commitment hereunder, the Borrower will furnish to the
Administrative Agent on behalf of the Lender Parties:
(a) Default Notice . As soon as possible and in any event within two
(2) Business Days after a Responsible Officer of the Borrower obtains knowledge
of the occurrence of any Default, a statement of the Chief Financial Officer of
the Borrower setting forth details of such Default or event, development or
occurrence and the action that the Borrower has taken and proposes to take with
respect thereto.
(b) Opening Balance Sheet. As soon as available and in any event not
later than May 13, 1998, a Consolidated opening balance sheet of the Borrower
and its Subsidiaries as at March 29, 1998.
(c) Quarterly Financials . As soon as available and in any event within
forty-five (45) days after the end of each fiscal quarter of each Fiscal Year, a
Consolidated balance sheet of the Borrower and its Subsidiaries, and
consolidating balance sheets of the Borrower and its Subsidiaries, as of the end
of such quarter and a Consolidated statement of income and a Consolidated
statement of cash flows of the Borrower and its Subsidiaries, and consolidating
statements of income and consolidating statements of cash flows of the Borrower
and its Subsidiaries, for the period commencing at the end of the previous
fiscal quarter and ending with the end of such fiscal quarter and a Consolidated
statement of income and a Consolidated statement of cash flows of the Borrower
and its Subsidiaries and consolidating statements of income and consolidating
statements of cash flows of the Borrower and its Subsidiaries for the period
commencing at the end of the previous Fiscal Year and ending with the end of
such fiscal quarter, setting forth in each case in comparative form the
corresponding figures for the corresponding period of the preceding Fiscal Year
and the corresponding figures from the budgets for such period and for the
Fiscal Year which includes such period, all in reasonable detail and certified
by the Chief Financial Officer of the Borrower as having been prepared in
accordance with GAAP (subject to normal year-end audit adjustments), together
with (i) a certificate of said officer stating that, to his knowledge after due
inquiry, no Default has occurred and is continuing or, if a Default has occurred
and is continuing, a statement as to the nature thereof and the action that the
Borrower has taken and proposes to take with respect thereto and (ii) a schedule
in form reasonably satisfactory to the Administrative Agent of the computations
used by the Borrower in determining compliance with the financial covenants
contained in Sections 5.06(a) through (c), provided, that in the event of any
change in GAAP used in the preparation of such financial statements, the
Borrower shall also provide, if necessary for the determination of compliance
with Section 5.06, a statement of reconciliation conforming such financial
statements to GAAP.
(d) Annual Financials . As soon as available and in any event within
ninety (90) days after the end of each Fiscal Year, a copy of the annual audit
report for such year for the Borrower and its Subsidiaries, including therein a
Consolidated balance sheet of the Borrower and its Subsidiaries, and
consolidating balance sheets of Borrower and its Subsidiaries, as of the end of
such Fiscal Year and a Consolidated statement of income and a Consolidated
statement of cash flows of the Borrower and its Subsidiaries, and consolidating
statements of income and consolidating statements of cash flows of the Borrower
and its Subsidiaries, for such Fiscal Year, in each case setting forth in
comparative form the corresponding figures for the prior Fiscal Year and the
corresponding figures from the budget for such Fiscal Year and in each case
accompanied (in the case of such Consolidated financial statements) by an
opinion acceptable to the Administrative Agent of Deloitte & Touche LLP or other
independent certified public accountants of recognized national standing
reasonably acceptable to the Administrative Agent, with the consent of the
Required Lenders, together with (i) a letter of such accounting firm to the
Administrative Agent and Lender Parties stating that in the course of the
regular audit of the business of the Borrower and its Subsidiaries, which audit
was conducted by such accounting firm in accordance with generally accepted
auditing standards, such accounting firm has obtained no knowledge that a
Default has occurred and is continuing, or if, in the opinion of such accounting
firm, a Default has occurred and is continuing, a statement as to the nature
thereof, (ii) a schedule in form reasonably satisfactory to the Administrative
Agent of the computations used by such accountants in determining, as of the end
of such Fiscal Year, compliance with the covenants contained in Sections 5.06(a)
through (c), provided, that in the event of any change in GAAP used in the
preparation of such financial statements, the Borrower shall also provide, if
necessary for the determination of compliance with Section 5.06, a statement of
reconciliation conforming such financial statements to GAAP and (iii) a
certificate of the Chief Financial Officer of the Borrower stating that, to his
knowledge after due inquiry, no Default has occurred and is continuing or, if a
Default has occurred and is continuing, a statement as to the nature thereof and
the action that the Borrower has taken and proposes to take with respect
thereto.
(e) Annual Forecasts . As soon as available and in any event no later
than thirty (30) days after the end of each Fiscal Year, (i) forecasts prepared
by management of the Borrower, including balance sheets, income statements and
cash flow statements on a quarterly basis, and (ii) a business plan, in each
case for the Fiscal Year following such Fiscal Year then ended and in form
reasonably satisfactory to the Administrative Agent.
(f) ERISA Events and ERISA Reports . (i) Promptly and in any event
within twenty (20) days after any Loan Party or any ERISA Affiliate knows or has
reason to know that any ERISA Event has occurred, a statement of the Chief
Financial Officer of the Borrower describing such ERISA Event and the action, if
any, that such Loan Party or such ERISA Affiliate has taken and proposes to take
with respect thereto and (ii) on the date any records, documents or other
information must be furnished to the PBGC with respect to any Plan pursuant to
Section 4010 of ERISA, a copy of such records, documents and information.
(g) Plan Terminations . Promptly and in any event within five (5)
Business Days after receipt thereof by any Loan Party or any ERISA Affiliate,
copies of each notice from the PBGC stating its intention to terminate any Plan
or to have a trustee appointed to administer any Plan or correspondence from the
PBGC indicating it is considering termination of any Plan.
(h) Actuarial Reports . Promptly upon receipt thereof by any Loan Party
or any ERISA Affiliate, a copy of the annual actuarial valuation report for each
Plan the funded current liability percentage (as defined in Section 302(d)(8)(B)
of ERISA) of which is less than 90% or the unfunded current liability (as
defined in Section 302(d)(8)(A) of ERISA) of which exceeds $500,000 or the
present value of benefit liabilities as of the latest actuarial valuation date
for such Plan (but not prior to 12 months prior to the date hereof), determined
on the basis of a shut down of the company in accordance with actuarial
assumptions used by the PBGC in single-employer plan terminations, exceeds the
market value of assets exclusive of any contributions due to the Plan by
$500,000.
(i) Plan Annual Reports . Upon the request, from time to time, of the
Administrative Agent, promptly and in any event within thirty (30) days after
the filing thereof with the Internal Revenue Service, copies of each Schedule B
(Actuarial Information) to the annual report (Form 5500 Series) with respect to
each Plan.
(j) Annual Plan Summaries . As soon as available and in any event
within one hundred eighty (180) days after the end of each calendar year, an
annual summary of actuarial valuation and other information with respect to each
Plan in form, substance and detail reasonably satisfactory to the Administrative
Agent.
(k) Multiemployer Plan Notices . Promptly and in any event within five
(5) Business Days after receipt thereof by any Loan Party or any ERISA Affiliate
from the sponsor of a Multiemployer Plan, copies of each notice concerning, or
other correspondence with respect to, (i) the imposition of Withdrawal Liability
by any such Multiemployer Plan, (ii) the reorganization or termination, within
the meaning of Title IV of ERISA, of any such Multiemployer Plan or (iii) the
amount of liability incurred, or that may be incurred, by such Loan Party or any
ERISA Affiliate in connection with any event described in clause (i) or (ii).
(l) Litigation . Promptly after the commencement thereof, notice of all
material actions, suits, investigations, litigation and proceedings before any
court or governmental department, commission, board, bureau, agency or
instrumentality, Federal, state, local or foreign, to which any Loan Party or
any of its Subsidiaries is a party and, promptly after the occurrence thereof,
notice of any Material Adverse Change in the status or the financial effect on
any Loan Party or any of its Subsidiaries of the Disclosed Litigation from that
described on Schedule 3.01(e).
(m) Securities Reports . Promptly after the sending or filing thereof,
copies of all proxy statements, financial statements and reports that any Loan
Party or any of its Subsidiaries sends to its stockholders, and copies of all
regular, periodic and special reports, and all registration statements, that any
Loan Party or any of its Subsidiaries files with the Securities and Exchange
Commission or any other governmental authority or with any national securities
exchange.
(n) Agreement Notices . Promptly upon receipt thereof, copies of all
notices, requests and other documents received by any Loan Party or any of its
Subsidiaries under or pursuant to any Material Contract or indenture, loan or
credit agreement or similar agreement or instrument regarding or related to any
breach or default by any party thereto or any event that could materially impair
the value of the interests or the rights of any Loan Party or any of its
Subsidiaries or otherwise have a Material Adverse Effect and copies of any
amendment, modification or waiver of any material provision of any Material
Contract or indenture, loan or credit agreement or similar agreement or
indenture and, from time to time upon request by the Administrative Agent, such
information and reports regarding the foregoing as the Administrative Agent may
reasonably request.
(o) Environmental Conditions . Within five (5) Business Days after
obtaining knowledge of the assertion or occurrence thereof, notice of any
Environmental Action against or of any noncompliance by any Loan Party or any of
its Subsidiaries with any Environmental Law or Environmental Permit that could
reasonably be expected to have a Material Adverse Effect.
(p) Real Property . Upon the request, from time to time, of the
Administrative Agent, promptly and in any event within thirty (30) days after
any such request, a report supplementing Schedules 4.01(aa) and 4.01(bb) hereto,
including an identification of all real and leased property disposed of by the
Borrower or any of its Subsidiaries during such Fiscal Year, a list and
description (including the street address, county or other relevant
jurisdiction, state, record owner and, in the case of leases of property,
lessor, lessee, expiration date and annual rental cost thereof) of all real
property acquired or leased during such Fiscal Year and a description of such
other material changes in the information included in such Schedules as may be
necessary for such Schedules to remain accurate and complete in all material
respects.
(q) Insurance . Upon the request, from time to time, of the
Administrative Agent, promptly and in any event within thirty (30) days after
any such request, a report summarizing the insurance coverage (specifying type,
amount and carrier) in effect for each Loan Party and its Subsidiaries and
containing such additional information as the Administrative Agent may
reasonably request.
(r) Borrowing Base Certificate . As soon as available and in any event
within fifteen (15) days after the end of each month, a Borrowing Base
Certificate, as at the end of the previous month, certified by the Chief
Financial Officer of the Borrower.
(s) Management Letters . As soon as available and in any event within
five (5) Business Days after the receipt thereof, copies of any "management
letter" or similar letter received by the Borrower or its Board of Directors (or
any Committee thereof) from its independent public accountants.
(t) Other Information . Such other information respecting the business,
condition (financial or otherwise), operations, performance or properties of any
Loan Party or any of its Subsidiaries or the Collateral as the Administrative
Agent or any Lender Party (through the Administrative Agent) may from time to
time reasonably request.
SECTION 5.06. Financial Covenants . So long as any Advance shall remain
unpaid, any Letter of Credit shall be outstanding or any Lender Party shall have
any Commitment hereunder, the Borrower will:
(a) Consolidated Debt to EBITDA Ratio . Maintain as of the end of each
fiscal quarter of the Borrower a ratio of (i) Consolidated Debt to (ii) EBITDA
for the most recently completed four fiscal quarters of the Borrower or, for
periods prior to the Closing Date, of the High Performance Plastics segment of
UTC, of not more than the ratio set forth below:
Four Fiscal Quarters ending on or about: Ratio
June 30, 1998 4.80:1
September 30, 1998 4.80:1
December 31, 1998 4.80:1
March 31, 1999 4.80:1
June 30, 1999 4.30:1
September 30, 1999 4.30:1
December 31, 1999 3.80:1
March 31, 2000 3.80:1
June 30, 2000 3.80:1
September 30, 2000 3.80:1
December 31, 2000 3.30:1
March 31, 2001 3.30:1
June 30, 2001 3.30:1
September 30, 2001 3.30:1
December 31, 2001 3.00:1
March 31, 2002 3.00:1
June 30, 2002 3.00:1
September 30, 2002 3.00:1
December 31, 2002 3.00:1
March 31, 2003 3.00:1
June 30, 2003 2.75:1
September 30, 2003 2.75:1
December 31, 2003 2.75:1
March 31, 2004 2.75:1
June 30, 2004 2.75:1
September 30, 2004 2.75:1
December 31, 2004 2.75:1
March 31, 2005 2.75:1
(b) Fixed Charge Coverage Ratio . Maintain as of the end of each fiscal
quarter of the Borrower a ratio of (i) EBITDA for the most recently completed
four fiscal quarters of the Borrower or, for periods prior to the Closing Date,
of the High Performance Plastics segment of UTC, less Capital Expenditures made
during such period by the Borrower and its Subsidiaries or, for periods prior to
the Closing Date, made by the High Performance Plastics segment of UTC
(excluding, for the fiscal quarters ending during the period from the date
hereof though and including March 31, 1999, the amount of Capital Expenditures
actually spent during such fiscal quarters on the Polycast modernization,
consolidation and infrastructure project and/or on the Townsend Glasflex
consolidation (as such project and consolidation are described in the
Information Memorandum), in an aggregate amount not to exceed $9,000,000), less
the aggregate amount of federal, state, local and foreign taxes paid by the
Borrower and its Subsidiaries in cash or otherwise pursuant to the Tax Sharing
Agreement during such period or, for periods prior to the Closing Date, would
have been payable had the Tax Sharing Agreement been in effect, less cash
dividends paid by the Borrower to the holders of its common stock during such
period, to the (ii) sum of (x) cash interest payable by the Borrower and its
Subsidiaries on all Debt during such period (except that in respect of the first
three testing periods referred to below, actual cash interest payable in each
case since the Closing Date, shall be computed on an annualized basis), plus (y)
principal amounts of all Debt payable by the Borrower and its Subsidiaries
during such period (except that in respect of the first three testing periods
referred to below, actual principal amounts payable in each case since the
Closing Date, shall be computed on an annualized basis), of not less than the
ratio set forth below for such period:
Four Fiscal Quarters ending on or about: Ratio
June 30, 1998 1.10:1
September 30, 1998 1.10:1
December 31, 1998 1.10:1
March 31, 1999 1.10:1
June 30, 1999 1.10:1
September 30, 1999 1.10:1
December 31, 1999 1.10:1
March 31, 2000 1.10:1
June 30, 2000 1.10:1
September 30, 2000 1.10:1
December 31, 2000 1.20:1
March 31, 2001 1.20:1
June 30, 2001 1.20:1
September 30, 2001 1.20:1
December 31, 2001 1.20:1
March 31, 2002 1.20:1
June 30, 2002 1.20:1
September 30, 2002 1.20:1
December 31, 2002 1.20:1
March 31, 2003 1.20:1
June 30, 2003 1.20:1
September 30, 2003 1.20:1
December 31, 2003 1.20:1
March 31, 2004 1.20:1
June 30, 2004 1.20:1
September 30, 2004 1.20:1
December 31, 2004 1.20:1
March 31, 2005 1.20:1
(c) Minimum EBITDA . Maintain for each period set forth below EBITDA
for the most recently completed four fiscal quarters of the Borrower or, for
periods prior to the Closing Date, of the High Performance Plastics segment of
UTC, at not less than the respective amounts set forth below:
Four Fiscal Quarters ending on or about: Minimum EBITDA
June 30, 1998 $20,000,000
September 30, 1998 $20,000,000
December 31, 1998 $20,000,000
March 31, 1999 $20,000,000
June 30, 1999 $22,000,000
September 30, 1999 $22,000,000
December 31, 1999 $22,000,000
March 31, 2000 $22,000,000
June 30, 2000 $24,000,000
September 30, 2000 $24,000,000
December 31, 2000 $24,000,000
March 31, 2001 $24,000,000
June 30, 2001 $26,000,000
September 30, 2001 $26,000,000
December 31, 2001 $26,000,000
March 31, 2002 $26,000,000
June 30, 2002 $26,000,000
September 30, 2002 $26,000,000
December 31, 2002 $26,000,000
March 31, 2003 $26,000,000
June 30, 2003 $27,000,000
September 30, 2003 $27,000,000
December 31, 2003 $27,000,000
March 31, 2004 $27,000,000
June 30, 2004 $27,000,000
September 30, 2004 $27,000,000
December 31, 2004 $27,000,000
March 31, 2005 $27,000,000
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01 Events of Default . If any of the following
("Events of Default") shall occur and be continuing:
(a) (i) the Borrower shall fail to pay any principal of any Advance
when the same shall become due and payable or (ii) the Borrower shall fail to
pay any interest on any Advance, or any Loan Party shall fail to make any other
payment under any Loan Document, in each case under this clause (ii) within two
(2) Business Days after the same becomes due and payable; or
(b) any representation or warranty made by any Loan Party (or any of
its officers) under or in connection with any Loan Document shall prove to have
been incorrect in any material respect when made or confirmed; or
(c) the Borrower shall fail to perform or observe any term, covenant or
agreement contained in Section 2.14, 5.01 (l), (m) or (n), 5.02 or 5.06; or
(d) any Loan Party shall fail to perform any other term, covenant or
agreement contained in any Loan Document on its part to be performed or observed
if such failure shall remain unremedied for thirty (30) days after the earlier
of the date on which (i) a Responsible Officer of any Loan Party becomes aware
of such failure or (ii) written notice thereof shall have been given to the
Borrower by the Administrative Agent or any Lender Party; or
(e) any Loan Party or any of its Subsidiaries shall fail to pay any
principal of, premium or interest on or any other amount payable in respect of
any Debt that is outstanding in a principal or notional amount of at least
$1,000,000 either individually or in the aggregate (but excluding Debt
outstanding hereunder) of such Loan Party or such Subsidiary (as the case may
be), when the same becomes due and payable (whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise); or any other event
shall occur or condition shall exist under any agreement or instrument relating
to any such Debt, in each case if the effect of such event or condition is to
accelerate, or to permit the acceleration of, the maturity of such Debt or
otherwise to cause, or to permit the holder thereof to cause, such Debt to
mature; or any such Debt shall be declared to be due and payable or required to
be prepaid or redeemed (other than by a regularly scheduled required prepayment
or redemption), purchased or defeased, or an offer to prepay, redeem, purchase
or defease such Debt shall be required to be made, in each case prior to the
stated maturity thereof; or
(f) any Loan Party or any of its Subsidiaries shall generally not pay
its debts as such debts become due, or shall admit in writing its inability to
pay its debts generally, or shall make a general assignment for the benefit of
creditors; or any proceeding shall be instituted by or against any Loan Party or
any of its Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver, trustee or other
similar official for it or for any substantial part of its property and, in the
case of any such proceeding instituted against it (but not instituted by it)
that is being diligently contested by it in good faith, either such proceeding
shall remain undismissed or unstayed for a period of sixty (60) days or any of
the actions sought in such proceeding (including, without limitation, the entry
of an order for relief against, or the appointment of a receiver, trustee,
custodian or other similar official for, it or any substantial part of its
property) shall occur and not be dismissed within sixty (60) days, or any Loan
Party or any of its Subsidiaries shall take any corporate action to authorize
any of the actions set forth above in this subsection (f); or
(g) any judgment or order for the payment of money in excess of
$1,000,000 (other than such a judgment or order which is fully covered by
insurance subject to deductibles not in excess of $1,000,000 shall be rendered
against any Loan Party or any of its Subsidiaries and either (i) enforcement
proceedings shall have been commenced by any creditor upon such judgment or
order or (ii) there shall be a period of seven (7) consecutive days during which
a stay of enforcement of such judgment or order, by reason of a pending appeal
or otherwise, shall not be in effect; or
(h) any non-monetary judgment or order shall be rendered against any
Loan Party or any of its Subsidiaries that is reasonably likely to have a
Material Adverse Effect; or
(i) any material provision of any Loan Document after delivery thereof
shall for any reason cease to be valid and binding on or enforceable against any
Loan Party which is party to it, or any such Loan Party shall so state in
writing; or
(j) any Collateral Document after delivery thereof shall for any reason
cease to or otherwise not create a valid and perfected Lien on and security
interest in the Collateral covered thereby; or
(k) any Change of Control shall occur; or
(1) any ERISA Event shall have occurred with respect to a Plan and the
sum (determined as of the date of occurrence of the last such ERISA Event) of
the Insufficiency of such Plan and the Insufficiency of any and all other Plans
with respect to which an ERISA Event shall have occurred and then exist (or the
liability of the Loan Parties and the ERISA Affiliates related to such ERISA
Events) exceeds $1,000,000; or
(m) any Loan Party or any ERISA Affiliate shall have been notified by
the sponsor of a Multiemployer Plan that it has incurred Withdrawal Liability to
such Multiemployer Plan in an amount that, when aggregated with all other
amounts required to be paid to Multiemployer Plans by the Loan Parties and the
ERISA Affiliates as Withdrawal Liability (determined as of the date of such
notification), exceeds $1,000,000 or requires payments exceeding $400,000 per
annum; or
(n) any Loan Party or any ERISA Affiliate shall have been notified by
the sponsor of a Multiemployer Plan that such Multiemployer Plan is in
reorganization or is being terminated, within the meaning of Title IV of ERISA,
and as a result of such reorganization or termination the aggregate annual
contributions of the Loan Parties and the ERISA Affiliates to all Multiemployer
Plans that are then in reorganization or being terminated have been or will be
increased over the amounts contributed to such Multiemployer Plans for the plan
years of such Multiemployer Plans immediately preceding the plan year in which
such reorganization or termination occurs by an amount exceeding $1,000,000; or
(o) any Borrowing Base Deficiency shall occur and be continuing which
is not eliminated by the Borrower's prepayment within seven (7) Business Days of
then outstanding Swing Line Advances and Revolving Credit Advances in an amount
sufficient to eliminate such Borrowing Base Deficiency;
then, and in any such event, the Administrative Agent (i) shall at the request,
or may with the consent, of the Required Lenders, by notice to the Borrower,
declare the Commitments of each appropriate Lender (other than the Commitment in
respect of Letter of Credit Advances by the Issuing Bank or a Revolving Credit
Lender pursuant to Section 2.03(c) and Swing Line Advances by a Revolving Credit
Lender pursuant to Section 2.02(b)) and of the Issuing Bank to issue Letters of
Credit to be terminated, whereupon the same shall forthwith terminate, and (ii)
shall at the request, or may with the consent, of the Required Lenders, (A) by
notice to the Borrower, declare the Notes, all interest thereon and all other
amounts payable under this Agreement and the other Loan Documents to be
forthwith due and payable, whereupon the Notes, all such interest and all such
other amounts shall become and be forthwith due and payable, without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by the Borrower and (B) by notice to each party required
under the terms of any agreement in support of which a Standby Letter of Credit
is issued, request that all Obligations under such agreement be declared to be
due and payable; provided, however, that in the event of an actual or deemed
entry of an order for relief with respect to any Loan Party or any of its
Subsidiaries under the Federal Bankruptcy Code, (x) the obligation of each
Lender to make Advances (other than Letter of Credit Advances by the Issuing
Bank or a Revolving Credit Lender pursuant to Section 2.03(c) and Swing Line
Advances by a Revolving Credit Lender pursuant to Section 2.02(b)) and of the
Issuing Bank to issue Letters of Credit shall automatically be terminated and
(y) the Notes, all such interest and all such amounts shall automatically become
and be due and payable, without presentment, demand, protest or any notice of
any kind, all of which are hereby expressly waived by the Borrower.
SECTION 6.02. Actions in Respect of the Letters of Credit upon Default
. If any Event of Default shall have occurred and be continuing, the
Administrative Agent may, or shall at the request of the Required Lenders,
irrespective of whether it is taking any of the actions described in Section
6.01 or otherwise, make demand upon the Borrower to, and forthwith upon such
demand the Borrower will, pay to the Administrative Agent on behalf of the
Lender Parties in same day funds at the Administrative Agent's office designated
in such demand, for deposit in the L/C Cash Collateral Account, an amount equal
to the aggregate Available Amount of all Letters of Credit then outstanding. If
at any time the Administrative Agent determines that any funds held in the L/C
Cash Collateral Account are subject to any right or claim of any Person other
than the Administrative Agent and the Lender Parties or that the total amount of
such funds is less than the aggregate Available Amount of all Letters of Credit,
the Borrower will, forthwith upon demand by the Administrative Agent, pay to the
Administrative Agent, as additional funds to be deposited and held in the L/C
Cash Collateral Account, an amount equal to the excess of (a) such aggregate
Available Amount over (b) the total amount of funds, if any, then held in the
L/C Cash Collateral Account that the Administrative Agent determines to be free
and clear of any such right and claim.
ARTICLE VII
THE ADMINISTRATIVE AGENT
SECTION 7.01. Authorization and Action . Each Lender Party (in its
capacities as a Lender, the Issuing Bank, the Swing Line Bank and any Hedge
Bank) hereby appoints and authorizes the Administrative Agent to take such
action as agent on its behalf and to exercise such powers and discretion under
this Agreement and the other Loan Documents as are delegated to the
Administrative Agent by the terms hereof and thereof, together with such powers
and discretion as are reasonably incidental thereto. As to any matters not
expressly provided for by the Loan Documents (including, without limitation,
enforcement or collection of the Notes), the Administrative Agent shall not be
required to exercise any discretion or take any action, but shall be required to
act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Required Lenders, and such
instructions shall be binding upon all Lender Parties and all holders of Notes;
provided, however, that the Administrative Agent shall not be required to take
any action that exposes the Administrative Agent to personal liability or that
is contrary to this Agreement, any other Loan Document or applicable law. The
Administrative Agent agrees to give to each Lender Party prompt notice of each
notice given to it by the Borrower pursuant to the terms of this Agreement. The
Administrative Agent shall not be a trustee or fiduciary for any Lender.
SECTION 7.02. Agent's Reliance, Etc . Neither the Administrative Agent
nor any of its directors, officers, agents or employees shall be liable for any
action taken or omitted to be taken by it or them under or in connection with
the Loan Documents, except for its or their own gross negligence or willful
misconduct. Without limitation of the generality of the foregoing, the
Administrative Agent: (a) may treat the payee of any Note as the holder thereof
until the Administrative Agent receives and accepts an Assignment and Acceptance
entered into by the Lender that is the payee of such Note, as assignor, and an
Eligible Assignee, as assignee, as provided in Section 8.07; (b) may consult
with legal counsel (including counsel for any Loan Party), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken in good faith by it in accordance with the
advice of such counsel, accountants or experts; (c) makes no warranty or
representation to any Lender Party and shall not be responsible to any Lender
Party for any statements, warranties or representations (whether written or
oral) made in or in connection with the Loan Documents; (d) shall not have any
duty to ascertain or to inquire as to the performance or observance of any of
the terms, covenants or conditions of any Loan Document on the part of any Loan
Party or to inspect the property (including the books and records) of any Loan
Party; (e) shall not be responsible to any Lender Party for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of, or the
perfection or priority of any lien or security interest created or purported to
be created under or in connection with, any Loan Document or any other
instrument or document furnished pursuant thereto; and (f) shall incur no
liability under or in respect of any Loan Document by acting upon any notice,
consent, certificate or other instrument or writing (which may be by telegram,
telecopy or telex) believed by it to be genuine and signed or sent by the proper
party or parties.
SECTION 7.03. Fleet and Affiliates . With respect to its Commitments,
the Advances made by it and the Notes issued to it, Fleet shall have the same
rights and powers under the Loan Documents as any other Lender Party and may
exercise the same as though it were not the Administrative Agent; and the term
"Lender Party" or "Lender Parties" shall, unless otherwise expressly indicated,
include Fleet in its individual capacity. Fleet and its affiliates may accept
deposits from, lend money to, act as trustee under indentures of, accept
investment banking engagements from and generally engage in any kind of business
with, any Loan Party, any of its Subsidiaries and any Person who may do business
with or own securities of any Loan Party or any such Subsidiary, all as if Fleet
were not the Administrative Agent and without any duty to account therefor to
the Lender Parties.
SECTION 7.04. Lender Party Credit Decision . Each Lender Party
acknowledges that it has, independently and without reliance upon the
Administrative Agent or any other Lender Party and based on the financial
statements referred to in Section 4.01 and such other documents and information
as it has deemed appropriate, made its own credit analysis and decision to enter
into this Agreement. Each Lender Party also acknowledges that it will,
independently and without reliance upon the Administrative Agent or any other
Lender Party and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement.
SECTION 7.05. Indemnification . (a) Each Lender Party severally agrees
to indemnify the Administrative Agent (to the extent not promptly reimbursed by
the Borrower) from and against such Lender Party's ratable share (determined as
provided below) of any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever that may be imposed on, incurred by, or asserted
against the Administrative Agent in any way relating to or arising out of any of
the Loan Documents or any action taken or omitted by the Administrative Agent
under any of the Loan Documents; provided, however, that no Lender Party shall
be liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from the Administrative Agent's gross negligence or willful misconduct. Without
limitation of the foregoing, each Lender Party agrees to reimburse the
Administrative Agent promptly upon demand for its ratable share of any costs and
expenses (including, without limitation, fees and expenses of counsel) payable
by the Borrower under Section 8.04, to the extent that the Administrative Agent
is not promptly reimbursed for such costs and expenses by the Borrower.
(b) Each Lender Party severally agrees to indemnify the Issuing Bank
(to the extent not promptly reimbursed by the Borrower) from and against such
Lender Party's ratable share (determined as provided below) of any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever that may be
imposed on, incurred by, or asserted against the Issuing Bank in any way
relating to or arising out of any of the Loan Documents or any action taken or
omitted by the Issuing Bank under any of the Loan Documents; provided, however,
that no Lender Party shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the Issuing Bank's gross negligence or
willful misconduct. Without limitation of the foregoing, each Lender Party
agrees to reimburse the Issuing Bank promptly upon demand for its ratable share
of any costs and expenses (including, without limitation, fees and expenses of
counsel) payable by the Borrower under Section 8.04, to the extent that the
Issuing Bank is not promptly reimbursed for such costs and expenses by the
Borrower.
(c) For purposes of Sections 7.05(a) and 7.05(b), the Lender Parties'
respective ratable shares of any amount shall be determined, at any time,
according to the sum of (a) the aggregate principal amount of the Advances
outstanding at such time and owing to the respective Lender Parties, (b) their
respective Pro Rata Shares of the aggregate Available Amount of all Letters of
Credit outstanding at such time, (c) the aggregate unused portions of their
respective Term A Commitments and Term B Commitments at such time, and (d) their
respective Unused Revolving Credit Commitments at such time; provided, that the
aggregate principal amount of Swing Line Advances owing to the Swing Line Bank
and Letter of Credit Advances owing to the Issuing Bank shall be considered to
be owed to the Revolving Credit Lenders ratably in accordance with their
respective Revolving Credit Commitments. In the event that any Defaulted Advance
shall be owing by any Defaulting Lender at any time, such Lender Party's
Commitment with respect to the Facility under which such Defaulted Advance was
required to have been made shall be considered to be unused for purposes of this
Section 7.05 to the extent of the amount of such Defaulted Advance. The failure
of any Lender Party to reimburse the Administrative Agent or the Issuing Bank,
as the case may be, promptly upon demand for its ratable share of any amount
required to be paid by the Lender Parties to the Administrative Agent or the
Issuing Bank, as the case may be, as provided herein shall not relieve any other
Lender Party of its obligation hereunder to reimburse the Administrative Agent
or the Issuing Bank, as the case may be, for its ratable share of such amount,
but no Lender Party shall be responsible for the failure of any other Lender
Party to reimburse the Administrative Agent or the Issuing Bank, as the case may
be, for such other Lender Party's ratable share of such amount. Without
prejudice to the survival of any other agreements of any Lender Party hereunder,
the agreement and obligations of each Lender Party contained in this Section
7.05 shall survive the payment in full of principal, interest and all other
amounts payable hereunder and under the other Loan Documents.
SECTION 7.06. Successor Administrative Agents . The Administrative
Agent may resign as to any or all of the Facilities at any time by giving
written notice thereof to the Lender Parties and the Borrower and may be removed
as to all of the Facilities at any time with or without cause by the Required
Lenders. Upon any such resignation or removal, the Required Lenders shall have
the right to appoint a successor Administrative Agent as to such of the
Facilities as to which the Administrative Agent has resigned or been removed. If
no successor Administrative Agent shall have been so appointed by the Required
Lenders, and shall have accepted such appointment, within thirty (30) days after
the retiring Administrative Agent's giving of notice of resignation or the
Required Lenders' removal of the retiring Administrative Agent, then the
retiring Administrative Agent may, on behalf of the Lender Parties, appoint a
successor Administrative Agent, which shall be a Lender which is a commercial
bank organized under the laws of the United States or of any State thereof and
having a combined capital and surplus of at least $250,000,000. Upon the
acceptance of any appointment as Administrative Agent hereunder by a successor
Administrative Agent as to all of the Facilities and upon the execution and
filing or recording of such financing statements, or amendments thereto, and
such other instruments or notices, as may be necessary or desirable, or as the
Required Lenders may request, in order to continue the perfection of the Liens
granted or purported to be granted by the Collateral Documents, such successor
Administrative Agent shall succeed to and become vested with all the rights,
powers, discretion, privileges and duties of the retiring Administrative Agent,
and the retiring Administrative Agent shall be discharged from all of its duties
and obligations under this Agreement and the other Loan Documents. Upon the
acceptance of any appointment as Administrative Agent hereunder by a successor
Administrative Agent as to less than all of the Facilities and upon the
execution and filing or recording of such financing statements, or amendments
thereto, and such other instruments or notices, as may be necessary or
desirable, or as the Required Lenders may request, in order to continue the
perfection of the Liens granted or purported to be granted by the Collateral
Documents, such successor Administrative Agent shall succeed to and become
vested with all the rights, powers, discretion, privileges and duties of the
retiring Administrative Agent as to such Facilities, other than with respect to
funds transfers and other similar aspects of the administration of Borrowings
under such Facilities, issuances of Letters of Credit (notwithstanding any
resignation as Administrative Agent with respect to the Letter of Credit
Facility) and payments by the Borrower in respect of such Facilities, and the
retiring Administrative Agent shall be discharged from its duties and
obligations under this Agreement as to such Facilities, other than as aforesaid.
After any retiring Administrative Agent's resignation or removal hereunder as
Administrative Agent as to all of the Facilities, the provisions of this Article
VII shall inure to its benefit as to any actions taken or omitted to be taken by
it while it was Administrative Agent as to any Facilities under this Agreement.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Amendments, Etc . No amendment or waiver of any provision
of this Agreement or the Notes or any other Loan Document, nor consent to any
departure by the Borrower therefrom, shall in any event be effective unless the
same shall be in writing and signed (or, in the case of the Collateral
Documents, consented to) by the Required Lenders and Revolving Credit Lenders
holding greater than 50% of the aggregate Revolving Credit Commitments, 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 (a) no amendment,
waiver or consent shall, unless in writing and signed by all of the Lenders
(other than any Lender Party that is, at such time, a Defaulting Lender), do any
of the following at any time: (i) change the percentage of (x) the Commitments,
(y) the aggregate unpaid principal amount of the Advances or (z) the aggregate
Available Amount of outstanding Letters of Credit that, in each case, shall be
required for the Lenders or any of them to take any action hereunder; (ii)
release all or substantially all of the Collateral in any transaction or series
of related transactions or permit the creation, incurrence, assumption or
existence of any Lien on any material portion of the Collateral in any
transaction or series of related transactions to secure any liabilities or
obligations other than Obligations owing to the Secured Parties under the Loan
Documents; (iii) release any of the Guarantors from their Guaranty; (iv) amend
this Section 8.01; or (v) limit the liability of any Loan Party under any of the
Loan Documents and (b) no amendment, waiver or consent shall, unless in writing
and signed by the Required Lenders and each Lender that has a Commitment under
the Term A Facility, Term B Facility, or Revolving Credit Facility if affected
by such amendment, waiver or consent, (i) increase the Commitments of such
Lender or subject such Lender to any additional obligations, (ii) reduce the
principal of, or interest on, the Notes held by such Lender or any fees or other
amounts payable hereunder to such Lender, (iii) change any date fixed for any
payment of principal of, or interest on, the Notes held by such Lender or any
fees or other amounts payable hereunder to such Lender or (iv) change the order
of application of any prepayment set forth in Section 2.06 in any manner that
materially affects such Lender; provided, further, that no amendment, waiver or
consent shall, unless in writing and signed by the Swing Line Bank or the
Issuing Bank, as the case may be, in addition to the Lenders required above to
take such action, affect the rights or obligations of the Swing Line Bank or the
Issuing Bank, as the case may be, under this Agreement or any other Loan
Document; and provided, further, that no amendment, waiver or consent shall,
unless in writing and signed by the Administrative Agent in addition to the
Lenders required above to take such action, affect the rights or duties of the
Administrative Agent under this Agreement or any other Loan Document.
SECTION 8.02. Notices Etc . All notices and other communications
provided for hereunder shall be in writing (including telegraphic, telecopy or
telex communication) and mailed, telegraphed, telecopied, telexed or delivered,
(i) if to the Borrower:
High Performance Plastics, Inc.
One Sarasota Tower
Suite 900
Two North Tamiami Trail
Sarasota, Florida 34236-5568
Attention: George J. Zulanas, Jr.
Oliver J. Janney, Esq.
Telephone No.: (941) 361-2220/361-2212
Facsimile No.: (941) 361-2214
with a copy to:
Kramer, Levin, Naftalis & Frankel
919 Third Avenue
New York, New York 10022
Attention: Peter S. Kolevzon, Esq.
Telephone No.: (212) 715-9100
Facsimile No.: (212) 715-8000
(ii) if to the Administrative Agent:
Fleet National Bank
One Federal Street
Boston, Massachusetts 02110
Attention: Eric Vander Mel
Telephone No.: (617) 346-4853
Facsimile No.: (617) 346-4806
with a copy to:
Winston & Strawn
200 Park Avenue
New York, New York 10166
Attention: Richard B. Teiman, Esq.
Telephone No.: (212) 294-6730
Facsimile No.: (212) 294-4700
(iii) if to any Initial Lender or the Initial Issuing Bank, at
its Domestic Lending Office specified opposite its name on Schedule I
attached hereto.
(iv) if to any other Lender Party, at its Domestic Lending
Office specified in the Assignment and Acceptance pursuant to which it
became a Lender Party;
or, as to the Borrower or the Administrative Agent, at such other address or
telephone or facsimile number, or to such other person's attention as shall be
designated by such party in a written notice to the other parties in accordance
with this Section 8.02 and, as to each other party, at such other address or
telephone or facsimile number, or to such other person's attention as shall be
designated by such party in a written notice in accordance with this Section
8.02 to the Borrower and the Administrative Agent. All such notices and
communications shall, when mailed by certified mail, return receipt requested,
telegraphed, telecopied or telexed, be effective 3 days after mailing, upon
delivery to the telegraph company, upon transmission by telecopier or upon
confirmation by telex answerback, respectively, except that notices and
communications to the Administrative Agent or the Borrower pursuant to Article
II, III or VII shall not be effective until received by the Administrative Agent
or the Borrower, as the case may be. Delivery by telecopier of an executed
counterpart of this Agreement, the Notes or any other Loan Document or of any
Exhibit hereto or thereto or of any amendment or waiver of any provision thereof
shall be as effective as delivery of a manually executed counterpart thereof.
SECTION 8.03. No Waiver; Remedies . No failure on the part of any
Lender Party or the Administrative Agent to exercise, and no delay in
exercising, any right hereunder or under any Note or under any other Loan
Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law or in equity.
SECTION 8.04. Costs and Expenses . (a) The Borrower agrees to pay on
demand (i) all reasonable costs and expenses of the Administrative Agent in
connection with the preparation, execution, delivery, administration,
modification and amendment of the Loan Documents (including, without limitation,
(A) all reasonable out-of-pocket due diligence, collateral review, syndication
(including printing, distribution and bank meetings), transportation, computer,
duplication, appraisal, audit, insurance, consultant, search, filing and
recording fees and expenses, and (B) the reasonable fees and expenses of counsel
for the Administrative Agent with respect thereto, with respect to advising the
Administrative Agent as to its rights and responsibilities, or the perfection,
protection or preservation of rights or interests under the Loan Documents, with
respect to negotiations with any Loan Party or with other creditors of any Loan
Party or any of its Subsidiaries arising out of any Default or any events or
circumstances that may give rise to a Default and with respect to presenting
claims in or otherwise participating in or monitoring any bankruptcy, insolvency
or other similar proceeding involving creditors' rights generally and any
proceeding ancillary thereto) and (ii) all reasonable costs and expenses of the
Administrative Agent and the Lender Parties in connection with the enforcement
of the Loan Documents, whether in any action, suit or litigation or any
bankruptcy, insolvency or other similar proceeding affecting creditors' rights
generally or otherwise (including, without limitation, the reasonable fees and
expenses of counsel for the Administrative Agent and each Lender Party with
respect thereto).
(b) The Borrower agrees to indemnify and hold harmless the
Administrative Agent, each Lender Party and each of their respective Affiliates
and their respective officers, directors, employees, agents and advisors (each,
an "Indemnified Party") from and against any and all claims, damages, losses,
liabilities and expenses (including, without limitation, reasonable fees and
expenses of counsel) that may be incurred by or asserted or awarded against any
Indemnified Party, in each case arising out of or in connection with or by
reason of, or in connection with the preparation for a defense of, any
investigation, litigation or proceeding arising out of, related to or in
connection with (i) the Transaction, (ii) any acquisition or proposed
acquisition or similar business combination or proposed business combination by
the Borrower or any of its Subsidiaries or other Affiliates of all or any
portion of the shares of capital stock or substantially all of the property and
assets of any other Person, (iii) the Facilities, the actual or proposed use of
the proceeds of the Advances or the Letters of Credit by the Borrower or any of
its Subsidiaries or other Affiliates and any of the other transactions
contemplated by the Loan Documents, or (iv) the actual or alleged presence of
Hazardous Materials on any property of any Loan Party or any of its Subsidiaries
or any Environmental Action relating in any way to any Loan Party or any of its
Subsidiaries, in each case whether or not such investigation, litigation or
proceeding is brought by any Loan Party, its directors, officers, employees,
stockholders or creditors or an Indemnified Party or any Indemnified Party is
otherwise a party thereto and whether or not the Transaction is consummated,
except to the extent such claim, damage, loss, liability or expense is found in
a final, non-appealable judgment by a court of competent jurisdiction to have
resulted from such Indemnified Party's gross negligence or willful misconduct.
The Borrower also agrees not to assert any claim against the Administrative
Agent, any Lender Party or any of their respective Affiliates, or any of their
respective officers, directors, employees, attorneys and agents, on any theory
of liability, for special, indirect, consequential or punitive damages arising
out of or otherwise relating to the Facilities, the actual or proposed use of
the proceeds of the Advances or the Letters of Credit, the Loan Documents or the
Transaction, other than claims for direct, as opposed to consequential, damages.
(c) If any payment of principal of, or Conversion of, any Eurodollar
Rate Advance is made by the Borrower to or for the account of a Lender Party
other than on the last day of the Interest Period for such Advance, as a result
of a payment or Conversion pursuant to Section 2.09(b)(i) or 2.10(d),
acceleration of the maturity of the Notes pursuant to Section 6.01 or for any
other reason, the Borrower shall, upon demand by such Lender Party (with a copy
of such demand to the Administrative Agent), pay to the Administrative Agent for
the account of such Lender Party any amounts required to compensate such Lender
Party for any additional losses, costs or expenses that it may reasonably incur
as a result of such payment, including, without limitation, any loss (including
loss of anticipated profits), cost or expense incurred by reason of the
liquidation or re-employment of deposits or other funds required by any Lender
Party to fund or maintain such Advance.
(d) If any Loan Party fails to pay when due any costs, expenses or
other amounts payable by it under any Loan Document, including, without
limitation, fees and expenses of counsel and indemnities, such amount may be
paid on behalf of such Loan Party by the Administrative Agent, in its sole
discretion.
(e) Without prejudice to the survival of any other agreement of any
Loan Party hereunder or under any other Loan Document, the agreements and
obligations of the Borrower contained in Sections 2.10 and 2.12 and this Section
8.04 shall survive the payment in full of principal, interest and all other
amounts payable hereunder and under any of the other Loan Documents.
SECTION 8.05. Right of Set-off . Upon (a) the occurrence and during the
continuance of any Event of Default and (b) the making of the request or the
granting of the consent specified by Section 6.01 to authorize the
Administrative Agent to declare the Notes due and payable pursuant to the
provisions of Section 6.01, each Lender Party and each of its respective
Affiliates is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and otherwise apply 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 Lender Party or such
Affiliate to or for the credit or the account of the Borrower or any of its
Subsidiaries against any and all of the Obligations of the Borrower now or
hereafter existing under this Agreement and the Note or Notes (if any) held by
such Lender Party, irrespective of whether such Lender Party shall have made any
demand under this Agreement or such Note or Notes and although such obligations
may be unmatured. Each Lender Party agrees promptly to notify the Borrower and
the Administrative Agent after any such set-off and application; provided,
however, that the failure to give such notice shall not affect the validity of
such set-off and application. The rights of each Lender Party and its respective
Affiliates under this Section are in addition to other rights and remedies
(including, without limitation, other rights of set-off) that such Lender Party
and its respective Affiliates may have at law, in equity or otherwise.
SECTION 8.06. Binding Effect This Agreement shall become effective when
it shall have been executed by the Borrower and the Administrative Agent and
when the Administrative Agent shall have been notified by each Initial Lender
and the Initial Issuing Bank that each such Initial Lender and the Initial
Issuing Bank has executed it and thereafter shall be binding upon and inure to
the benefit of the Borrower, the Administrative Agent and each Lender Party and
their respective successors and assigns, except that the Borrower shall not have
the right to assign any of its rights hereunder or any interest herein without
the prior written consent of the Lender Parties.
SECTION 8.07. Assignments and Participations . (a) Each Lender may
assign to one or more Eligible Assignees all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Commitment or Commitments, the Advances owing to it and the Note
or Notes held by it); provided, however, that (i) each such assignment shall be
of a uniform, and not a varying, percentage of all rights and obligations under
and in respect of one or more Facilities, (ii) except in the case of an
assignment to a Person that, immediately prior to such assignment, was a Lender
or an assignment of all of a Lender's rights and obligations under this
Agreement, the amount of the Commitment of the assigning Lender being assigned
pursuant to each such assignment (determined as of the date of the Assignment
and Acceptance with respect to such assignment) shall in no event be less than
$5,000,000, (iii) no such assignments shall be permitted without the prior
consent of the Administrative Agent (which may be withheld for any reason) until
the Administrative Agent shall have notified the Lender Parties that syndication
of the Commitments hereunder has been completed, but in any event not later than
90 days following the Closing Date, (iv) no such assignment shall be permitted
if, immediately after giving effect thereto, the Borrower would be required to
make payments to or on behalf of the assignee Lender Party pursuant to Section
2.10(a) or (b) and the assignor Lender Party was not, at the time of such
assignment, entitled to receive any payment pursuant to Section 2.10(a) or (b),
and (v) the parties to each such assignment shall execute and deliver to the
Administrative Agent, for its acceptance and recording in the Register, an
Assignment and Acceptance, together with any Note or Notes subject to such
assignment and a processing and recordation fee of $3,000.
(b) Upon such execution, delivery, acceptance and recording, from and
after the effective date specified in such Assignment and Acceptance, (x) the
assignee thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, have the rights and obligations of a Lender or Issuing Bank, as the
case may be, hereunder and (y) the Lender or Issuing Bank assignor thereunder
shall, to the extent that rights and obligations hereunder have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of an assigning
Lender's or Issuing Bank's rights and obligations under this Agreement, such
Lender or Issuing Bank shall cease to be a party hereto).
(c) By executing and delivering an Assignment and Acceptance, the
Lender Party assignor thereunder and the assignee thereunder confirm to and
agree with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such assigning Lender Party makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or any other Loan Document or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of, or the perfection or
priority of any lien or security interest created or purported to be created
under or in connection with, this Agreement or any other Loan Document or any
other instrument or document furnished pursuant hereto or thereto; (ii) such
assigning Lender Party makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or any
other Loan Party or the performance or observance by any Loan Party of any of
its obligations under any Loan Document or any other instrument or document
furnished pursuant thereto; (iii) such assignee confirms that it has received a
copy of this Agreement, together with copies of the financial statements
referred to in Section 4.01 and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance; (iv) such assignee will, independently and
without reliance upon the Administrative Agent, such assigning Lender Party or
any other Lender Party and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement; (v) such assignee confirms
that it is an Eligible Assignee; (vi) such assignee appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to exercise
such powers and discretion under this Agreement and the other Loan Documents as
are delegated to the Administrative Agent by the terms hereof and thereof,
together with such powers and discretion as are reasonably incidental thereto;
and (vii) such assignee agrees that it will perform in accordance with their
terms all of the obligations which by the terms of this Agreement are required
to be performed by it as a Lender or Issuing Bank, as the case may be.
(d) The Administrative Agent shall maintain at its address referred to
in Section 8.02 a copy of each Assignment and Acceptance delivered to and
accepted by it and a register for the recordation of the names and addresses of
the Lender Parties and the Commitment under each Facility of, and principal
amount of the Advances owing under each Facility to, each Lender Party from time
to time (the "Register"). The entries in the Register shall be conclusive and
binding for all purposes, absent manifest error, and the Borrower, the
Administrative Agent and the Lender Parties may treat each Person whose name is
recorded in the Register as a Lender Party hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Borrower or any
Lender Party at any reasonable time and from time to time upon reasonable prior
notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender Party and an assignee, together with any Note or Notes subject
to such assignment and the appropriate processing and reconciliation fee, the
Administrative Agent shall, if such Assignment and Acceptance has been completed
and is in substantially the form of Exhibit A hereto, (i) accept such Assignment
and Acceptance, (ii) record the information contained therein in the Register
and (iii) give prompt notice thereof to the Borrower. In the case of any
assignment by a Lender, within five (5) Business Days after its receipt of such
notice, the Borrower, at its own expense, shall execute and deliver to the
Administrative Agent in exchange for the surrendered Note or Notes a new Note to
the order of such Eligible Assignee in an amount equal to the Commitment assumed
by it under a Facility pursuant to such Assignment and Acceptance and, if the
assigning Lender has retained a Commitment hereunder under such Facility, a new
Note to the order of the assigning Lender in an amount equal to the Commitment
retained by it hereunder. Such new Note or Notes shall be in an aggregate
principal amount equal to the aggregate principal amount of such surrendered
Note or Notes, shall be dated the effective date of such Assignment and
Acceptance and shall otherwise be in substantially the form of Exhibit C, D or E
hereto, as the case may be .
(f) The Issuing Bank may assign to an Eligible Assignee all of its
rights and obligations under the undrawn portion of its Letter of Credit
Commitment at any time; provided, however, that (i) each such assignment shall
be to an Eligible Assignee and (ii) the parties to each such assignment shall
execute and deliver to the Administrative Agent, for its acceptance and
recording in the Register, an Assignment and Acceptance, together with a
processing and recordation fee of $3,000.
(g) Each Lender Party may sell participations to one or more Persons
(other than any Loan Party or any of its Affiliates) in or to all or a portion
of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitments, the Advances owing to it and
the Note or Notes, if any, held by it); provided, however, that (i) such Lender
Party's obligations under this Agreement (including, without limitation, its
Commitments) shall remain unchanged, (ii) such Lender Party shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) such Lender Party shall remain the holder of any such Note for all
purposes of this Agreement, (iv) the Borrower, the Administrative Agent and the
other Lender Parties shall continue to deal solely and directly with such Lender
Party in connection with such Lender Party's rights and obligations under this
Agreement and (v) no participant under any such participation shall have any
right to approve any amendment, waiver or other modification of any provision of
this Agreement or any other Loan Document, or any consent to any departure by
any Loan Party therefrom, except to the extent that such amendment, waiver,
modification or consent would reduce the principal of, or interest on, the Notes
or any fees or other amounts payable hereunder, in each case to the extent
subject to such participation, postpone any date fixed for any payment of
principal of, or interest on, the Notes or any fees or other amounts payable
hereunder, in each case to the extent subject to such participation, or release
all or substantially all of the Collateral.
(h) Any Lender Party may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
8.07, disclose to the assignee or participant or proposed assignee or
participant, any information relating to the Borrower furnished to such Lender
Party by or on behalf of the Borrower; provided, however, that, prior to any
such disclosure, the assignee or participant or proposed assignee or participant
shall agree to preserve the confidentiality of any Confidential Information
received by it from such Lender Party.
(i) Notwithstanding any other provision set forth in this Agreement,
any Lender Party may at any time create a security interest in all or any
portion of its rights under this Agreement (including, without limitation, the
Advances owing to it and the Note or Notes held by it) in favor of any Federal
Reserve Bank in accordance with Regulation A of the Board of Governors of the
Federal Reserve System.
SECTION 8.08. Execution in Counterparts . This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be as effective as delivery of a manually executed
counterpart of this Agreement.
SECTION 8.09. No Liability of the Issuing Bank . The Borrower assumes
all risks of the acts or omissions of any beneficiary or transferee of any
Letter of Credit with respect to its use of such Letter of Credit. Neither the
Issuing Bank nor any of its officers, directors, employees or agents shall be
liable or responsible for: (a) the use that may be made of any Letter of Credit
or any acts or omissions of any beneficiary or transferee in connection
therewith; (b) the validity, sufficiency or genuineness of documents, or of any
endorsement thereon, even if such documents should prove to be in any or all
respects invalid, insufficient, fraudulent or forged; (c) payment by the Issuing
Bank against presentation of documents that do not comply with the terms of a
Letter of Credit, including failure of any documents to bear any reference or
adequate reference to the Letter of Credit; or (d) any other circumstances
whatsoever in making or failing to make payment under any Letter of Credit,
except that the Borrower shall have a claim against the Issuing Bank, and the
Issuing Bank shall be liable to the Borrower, to the extent of any direct, but
not consequential, damages suffered by the Borrower that the Borrower proves
were caused by (i) the Issuing Bank's willful misconduct or gross negligence in
determining whether documents presented under any Letter of Credit comply with
the terms of the Letter of Credit or (ii) the Issuing Bank's willful failure to
make lawful payment under a Letter of Credit after the presentation to it of a
draft and certificates strictly complying with the terms and conditions of the
Letter of Credit. In furtherance and not in limitation of the foregoing, the
Issuing Bank may accept documents that appear on their face to be in order,
without responsibility for further investigation, regardless of any notice or
information to the contrary.
SECTION 8.10. Confidentiality . Neither the Administrative Agent nor
any Lender Party shall disclose any Confidential Information to any Person
without the consent of the Borrower, other than (a) to the Administrative
Agent's or such Lender Party's Affiliates and their officers, directors,
employees, agents and advisors and to actual or prospective Eligible Assignees
and participants, and then only on a confidential basis, (b) as required by any
law, rule or regulation or judicial process and (c) as required by any state,
federal or foreign authority or examiner regulating banks or banking.
SECTION 8.11. JURISDICTION, ETC . (a) EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE
NONEXCLUSIVE JURISDICTION OF ANY NEW YORK STATE COURT OR FEDERAL COURT OF THE
UNITED STATES OF AMERICA SITTING IN NEW YORK CITY, AND ANY APPELLATE COURT FROM
ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS TO WHICH IT IS A PARTY, OR FOR
RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY
SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH NEW YORK STATE
COURT OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH OF THE
PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING
SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE
JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT SHALL
AFFECT ANY RIGHT THAT ANY LENDER PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS IN THE
COURTS OF ANY JURISDICTION.
(b) EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES,
TO THE FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION THAT
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS TO WHICH IT IS A PARTY IN ANY NEW YORK STATE OR FEDERAL COURT. EACH OF
THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT.
SECTION 8.12. GOVERNING LAW . THIS AGREEMENT, THE NOTES AND THE OTHER
LOAN DOCUMENTS (OTHER THAN THE MORTGAGES WHICH SHALL BE GOVERNED BY THE LAW OF
THE JURISDICTION WHERE THE PROPERTY COVERED THEREBY IS LOCATED) SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO ITS RULES PERTAINING TO CONFLICTS OF LAWS
OTHER THAN GENERAL OBLIGATIONS LAW SECTION 5-1401.
SECTION 8.13. WAIVER OF JURY TRIAL . EACH OF THE BORROWER, THE LOAN
PARTIES, THE ADMINISTRATIVE AGENT AND THE LENDER PARTIES IRREVOCABLY WAIVES, TO
THE EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ALL RIGHT TO TRIAL BY JURY IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS, THE ADVANCES OR THE ACTIONS OF THE ADMINISTRATIVE AGENT OR ANY LENDER
PARTY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.
[SIGNATURE PAGES FOLLOW]
<PAGE>
utcfrm8k.IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
HIGH PERFORMANCE PLASTICS, INC.
By /S/ GEORGE J.ZULANAS, JR.
Title: Vice President & Treasurer
UNIROYAL TECHNOLOGY CORPORATION
By /S/ GEORGE J.ZULANAS, JR.
Title: Vice President & Treasurer
UNIROYAL HPP HOLDINGS, INC.
By /S/ GEORGE J.ZULANAS, JR.
Title: Vice President & Treasurer
FLEET NATIONAL BANK,
as Administrative Agent
By: /S/ JAMES T. ANDERSON
Title: Managing Director
<PAGE>
FLEET NATIONAL BANK,
as Initial Issuing Bank
By: /S/ JAMES T. ANDERSON
Title: Managing Director
FLEET NATIONAL BANK,
as Swing Line Bank
By: /S/ JAMES T. ANDERSON
Title: Managing Director
DLJ CAPITAL FUNDING, INC.,
as Documentation Agent
By: /S/ STEPHEN HICKEY
Title:________________________________
<PAGE>
Initial Lenders
FLEET NATIONAL BANK
By: /S/ JAMES T. ANDERSON
Title: Managing Director
DLJ CAPITAL FUNDING, INC.
By: /S/ STEPHEN HICKEY
Title:________________________________
GENERAL ELECTRIC CAPITAL CORPORATION
By: /S/ PEGGY ERLENKOTTER
Title:________________________________
THE CIT GROUP/BUSINESS CREDIT, INC.
By: /S/ KAREN HOFFMAN
Title: Assistant Vice President
LEHMAN COMMERCIAL PAPER, INC.
By: /S/ WILLIAM J. GALLAGHER
Title: Authorized Signatury
<PAGE>
EXHBIT B
AMENDMENT AND CONSENT AGREEMENT
April 14, 1998
Uniroyal Technology Corporation
2 North Tamiami Trail
Sarasota, FL 34236
Gentlemen:
Reference is made to the Financing Agreement between us dated June 5, 1996, as
amended (the "Financing Agreement"). Capitalized terms used herein and defined
in the Financing Agreement shall have the same meanings as set forth therein
unless otherwise specifically defined herein.
You have advised us that you intend to spin-off your High Performance Plastics
Division to High Performance Plastics, Inc., which will be a 100% subsidiary of
Uniroyal HPP Holdings, Inc., which will be a 100% subsidiary of yours (herein
the "Restructuring"). In conjunction with the Restructuring, the Company's
indebtedness under the Senior Note Indenture will be paid in full. As a result
of the foregoing, you have requested that we restructure your Obligations, and
amend certain provisions of the Financing Agreement with respect to our
continuing to finance your Coated Fabrics and Specialty Adhesives Divisions, and
we have agreed to do so subject to, and in accordance with, the terms,
provisions and conditions set forth herein.
Effective immediately upon fulfillment to CITBC's satisfaction of the Conditions
Precedent (as defined below) the Financing Agreement shall be, and hereby is,
amended as follows:
(A) Section 1 of the Financing Agreement shall be, and hereby is, amended by the
addition thereto of the following new definitions:
"Documents of Title shall mean all present and future documents (as
defined in the U.C.C.) and any and all warehouse receipts, bills of
lading, shipping documents, chattel paper, instruments and similar
documents, all whether negotiable or not and all goods and Inventory
relating thereto and all cash and non-cash proceeds of the foregoing."
"Eligible Inventory shall mean the gross amount of the Company's
Inventory that is subject to a valid, first priority and fully
perfected security interest in favor of CITBC and which conform to the
warranties contained herein and which at all times continue
<PAGE>
to be acceptable to CITBC in the exercise of its reasonable business judgment
less any (a) work-in-process, (b) supplies (other than raw material), (c) goods
not present in the United States of America, (d) goods returned or rejected by
the Company's customers other than goods that are undamaged and resalable in the
normal course of business, goods to be returned to the Company's suppliers, (e)
goods in transit to third parties (other than the Company's agents or
warehouses), Inventory in possession of a warehouseman, bailee or other third
party unless such warehouseman, bailee or third party has executed a notice of
security interest agreement (in form and substance satisfactory to CITBC) and
CITBC has taken all other action required to perfect its security interest in
such Inventory, (f) any reserves required by CITBC in its reasonable discretion
including for special order goods, market value declines and bill and hold
(deferred shipment) or consignment sales and (g) such other reserves determined
by CITBC in its sole discretion exercised in a reasonable manner."
"Inventory Advance Percentage shall mean fifty-five percent (55%),
provided that such percentage may be reduced by CITBC, in its sole
discretion exercised in a reasonable manner from time to time, to a
percentage not less than forty-five percent (45%), as a result of (i)
negative forecasts and/or trends in the Company's business, industry,
prospects, profits, operations or financial condition or (ii) other
issues, circumstances or facts that could otherwise negatively impact
the Company, it business, profit, operation, industry, financial
condition or assets."
(B) Section 1 of the Financing Agreement shall be further amended by amending
the definition of Accounts Advance Percentage, Anniversary Date, Availability,
Availability Reserve, Collateral and Line of Credit in their entirety to read as
follows:
"Accounts Receivable Advance Percentage shall mean eighty-five percent
(85%), provided that such percentage may be reduced by CITBC, in its
sole discretion exercised in a reasonable manner from time to time, to
a percentage not less than seventy-five percent (75%), as a result of
(i) negative forecasts and/or trends in the Company's business,
industry, prospects, profits, operations or financial condition or (ii)
other issues, circumstances or facts that could otherwise negatively
impact the Company, its business, profits, operations, industry,
financial condition or assets."
"Availability shall mean at any time the excess of the sum of a)
Eligible Accounts Receivable multiplied by the Accounts Receivable
Advance Percentage and b) Eligible Inventory multiplied by the
Inventory Advance Percentage over the sum of x) the outstanding
aggregate amount of all Obligations, including without limitation, all
Obligations with respect to Revolving Loans and Letters of Credit and
y) the Availability Reserve."
"Availability Reserve shall mean the sum of three (3) months rental
payments on all of the Company's leased premises at which Collateral is
maintained by or for the Company for which the Company has not
delivered to CITBC a landlord's waiver in form and substance
satisfactory to CITBC in the exercise of its reasonable business
judgment, provided that such amount shall be adjusted from time to time
hereafter upon (i) delivery to CITBC of any such acceptable waiver,
(ii) the opening or closing of a Collateral location and/or (iii) any
change in rental payment."
"Collateral shall mean all present and future Accounts, Inventory,
Documents of Title and Other Collateral."
"Line of Credit shall mean the commitment of CITBC to make Revolving
Loans pursuant to Section 3 of this Financing Agreement and to assist
the Company in opening Letters of Credit pursuant to Section 4 of this
Financing Agreement, in the aggregate amount equal to $10,000,000."
(C) Section 1 of the Financing Agreement shall be further amended by deleting
the definitions of "Senior Note Indenture" and "Senior Notes Limitation" in
their entirety and amending the definition of "Line of Credit Fee" by deleting
the phrase "$19,500,000" as it appears in clause ii) thereof and inserting the
phrase "the Line of Credit" in lieu thereof.
(D) Section 3, Paragraph 1 of the Financing Agreement shall be and hereby is
amended in its entirety to read as follows:
"1. CITBC agrees, subject to the terms and conditions of this Financing
Agreement from time to time, and within x) the Availability and y) the
Line of Credit, but subject to CITBC's right to make "overadvances", to
make loans and advances to the Company on a revolving basis (i.e.
subject to the limitations set forth herein, the Company may borrow,
repay and re-borrow Revolving Loans). Such loans and advances shall be
in amounts up to the sum of: a) outstanding Eligible Accounts
Receivable of the Company multiplied by the Accounts Receivable Advance
Percentage, plus b) the aggregate value of Eligible Inventory of the
Company as determined at the lower of cost or market multiplied by the
Inventory Advance Percentage. Each request shall constitute, unless
otherwise disclosed in writing to CITBC, a representation and warranty
by the Company that (i) after giving effect to the requested advance,
no Default or Event of Default has occurred and (ii) such requested
Revolving Loan is within the Line of Credit and Availability. All
requests for loans and advances must be received by an officer of CITBC
no later than 2:00 p.m., New York time, of the day on which such loans
and advances are required. Should CITBC for any reason honor requests
for advances in excess of the limitations set forth herein, such
advances shall be considered "overadvances" and shall be made in
CITBC's sole discretion, subject to any additional terms CITBC deems
necessary."
(E) Section 3, Paragraph 2 of the Financing Agreement shall be, and hereby
is, amended in its entirety to read as follows:
"2. In furtherance of the continuing assignment and security interest
in the Company's Accounts and Inventory, the Company will, within
fifteen (15) Business Days after the end of each month, deliver to
CITBC a Borrowing Base Certificate, provided that after the occurrence
of a Default and/or Event of Default hereunder CITBC may require more
frequent reporting with respect to Accounts and Inventory. In addition,
upon CITBC's request the Company shall provide CITBC with such other
appropriate reports designating, identifying and describing the
Collateral as CITBC may reasonably request from time to time, copies of
agreements with, or purchase orders from, the Company's customers, and
copies of invoices to customers, proof of shipment or delivery and such
other documentation and information relating to said Accounts and other
Collateral as CITBC may reasonably require. Failure to provide CITBC
with any of the foregoing shall in no way affect, diminish, modify or
otherwise limit the security interests granted herein. The Company
hereby authorizes CITBC to regard the Company's printed name or rubber
stamp signature on assignment schedules or invoices as the equivalent
of a manual signature by one of the Company's authorized officers or
agents.
(F) Exhibit (A) - Form of Borrowing Base Certificate shall be, and hereby
is, amended in its entirety to be the form annexed hereto as Exhibit A.
(G) Section 5 of the Financing Agreement shall be, and hereby is, deleted in its
entirety and the following shall be, and hereby is, inserted in lieu thereof:
"1. As security for the prompt payment in full of all loans and
advances made and to be made to the Company from time to time by CITBC
pursuant hereto, as well as to secure the payment in full of the other
Obligations, the Company hereby pledges and grants to CITBC a
continuing general lien upon and security interest in all of its:
(a) present and hereafter acquired Inventory;
(b) present and future Accounts;
(c) present and future Documents of Title; and
(d) present and future Other Collateral."
"2. The security interests granted hereunder shall extend and attach
to:
(a) All Collateral which is presently in existence and which is owned
by the Company or in which the Company has any interest, whether held
by the Company or others for its account;
(b) All Inventory and any portion thereof which may be returned,
rejected, reclaimed or repossessed by either CITBC or the Company from
the Company's customers, as well as to all supplies, goods,
incidentals, packaging materials, labels and any other items which
contribute to the finished goods or products manufactured or processed
by the Company, or to the sale, promotion or shipment thereof."
"3. The Company agrees to safeguard, protect and hold all Inventory for
CITBC's account and make no disposition thereof except in the regular
course of the business of the Company as herein provided. Until CITBC
has given the Company notice to the contrary, as provided for below,
any Inventory may be sold and shipped by the Company to its customers
in the ordinary course of the Company's business, on open account and
on terms customarily being extended by the Company to its customers,
provided that all proceeds of all sales (including cash, accounts
receivable, checks, notes, instruments for the payment of money and
similar proceeds) are forthwith transferred, endorsed, and turned over
and delivered to CITBC in accordance with Section 3, Paragraph 4 of
this Financing Agreement. CITBC shall have the right to withdraw this
permission at any time upon the occurrence of an Event of Default and
until such time as such Event of Default is waived in writing by CITBC
or cured to CITBC's satisfaction, in which event no further disposition
shall be made of the Inventory by the Company without CITBC's prior
written approval. Cash Sales (which shall specifically exclude COD and
CBD sales which are evidenced by an invoice and paid by check or other
payment instrument) or sales of inventory in which a lien upon, or
security interest in, Inventory is retained by the Company shall be
made by the Company only with the approval of CITBC, and the proceeds
of such sales or sales of inventory for cash shall not be commingled
with the Company's other property, but shall be segregated, held by the
Company in trust for CITBC as CITBC's exclusive property, and shall be
delivered immediately by the Company to CITBC in the identical form
received by the Company by deposit to the Depository Accounts. Upon the
sale, exchange, or other disposition of Inventory, as herein provided,
the security interest in the Company's Inventory provided for herein
shall, without break in continuity and without further formality or
act, continue in, and attach to, all proceeds, including any
instruments for the payment of money, accounts receivable, contract
rights, documents of title, shipping documents, chattel paper and all
other cash and non-cash proceeds of such sale, exchange or disposition.
As to any such sale, exchange or other disposition, CITBC shall have
all of the rights of an unpaid seller, including stoppage in transit,
replevin, rescission and reclamation. Notwithstanding the foregoing the
Company may make Cash Sales of Inventory, provided that (i) the
aggregate amount thereof for the Company during any Fiscal Year does
not exceed $500,000 for such Fiscal Year and (ii) the proceeds of such
sales are turned over to CITBC by deposit in the Depository Accounts."
"4. Intentionally Omitted
"5. The rights and security interests granted to CITBC hereunder are to
continue in full force and effect, notwithstanding the termination of
this Financing Agreement or the fact that the account maintained in the
Company's name on the books of CITBC may from time to time be
temporarily in a credit position, until the final payment in full to
CITBC of all Obligations and the termination of this Financing
Agreement. Any delay, or omission by CITBC to exercise any right
hereunder, shall not be deemed a waiver thereof, or be deemed a waiver
of any other right, unless such waiver be in writing and signed by
CITBC. A waiver on any one occasion shall not be construed as a bar to
or waiver of any right or remedy on any future occasion."
"6. To the extent that the Obligations are now or hereafter secured by
any assets or property other than the Collateral or by the guarantee,
endorsement, assets or property of any other person, then CITBC shall
have the right in its sole discretion to determine which rights,
security, liens, security interests or remedies CITBC shall at any time
pursue, foreclose upon, relinquish, subordinate, modify or take any
other action with respect to, without in any way modifying or affecting
any of them, or any of CITBC's rights hereunder."
"7. Any reserves or balances to the credit of the Company and any other
property or assets of the Company in the possession of CITBC may be
held by CITBC as security for any Obligations and applied in whole or
partial satisfaction of such Obligations when due. The liens and
security interests granted herein and any other lien or security
interest CITBC may have in any other assets of the Company, shall
secure payment and performance of all now existing and future
Obligations. CITBC may in its discretion charge any or all of the
Obligations to the Revolving Loan Account of the Company when due."
(H) Section 6 shall be, and hereby is, amended by amending Paragraph 5 thereof
in its entirety to read as follows:
"5. The Company agrees to maintain insurance on the Inventory under
such policies of insurance, with such insurance companies, in such
reasonable amounts and covering such insurable risks as are at all
times reasonably satisfactory to CITBC. All policies covering the
Inventory are, subject to the rights of any holders of Permitted
Encumbrances holding claims senior to CITBC, to be made payable to
CITBC, in case of loss, under a standard non-contributory "mortgagee",
"lender" or "secured party" clause and are to contain such other
provisions as CITBC may require to fully protect CITBC's interest in
the Inventory and to any payments to be made under such policies. All
original policies or true copies thereof are to be delivered to CITBC,
premium prepaid, with the loss payable endorsement in CITBC's favor,
and shall provide for not less than thirty (30) days prior written
notice to CITBC of the exercise of any right of cancellation. At the
Company's request, or if the Company fails to maintain such insurance,
CITBC may arrange for such insurance, but at the Company's expense and
without any responsibility on CITBC's part for: obtaining the
insurance, the solvency of the insurance companies, the adequacy of the
coverage, or the collection of claims. Upon the occurrence of an Event
of Default which is not waived or cured to CITBC's satisfaction, CITBC
shall, subject to the rights of any holders of Permitted Encumbrances
holding claims senior to CITBC, have the sole right, in the name of
CITBC or the Company, to file claims under any insurance policies, to
receive, receipt and give acquittance for any payments that may be
payable thereunder, and to execute any and all endorsements, receipts,
releases, assignments, reassignments or other documents that may be
necessary to effect the collection, compromise or settlement of any
claims under any such insurance policies. In the event of any loss or
damage by fire or other casualty, insurance proceeds relating to
Inventory shall be applied to the Company's Revolving Loan Account.
(I) Section 6, Paragraph 9 shall be and hereby is amended by the addition
thereto of the following additional negative covenant as clause G:
"G. Assume, guarantee, endorse, or otherwise become liable upon the
indebtedness, liabilities or obligations of High Performance Plastics,
Inc."
(J) It is hereby further agreed that:
(i) The definition of Permitted Indebtedness shall be, and hereby is,
amended by amending clause "vii)" thereof by reducing the dollar amount
of "$5,000,000" to "$2,000,000";
(ii) Section 3, Paragraph 4 of the Financing Agreement shall be, and
hereby is, amended by reducing the dollar amount of "$5,000,000" as it
appears in two (2) places therein to "$3,000,000" and the dollar amount
of "$3,000,000" as it appears therein in two (2) places to
"$1,200,000".
(iii) Section 9, Paragraph 1 h) of the Financing Agreement shall be,
and hereby is, amended by reducing the "$5,000,000" amount as it
appears therein to "$2,000,000".
(iv) The definition of Permitted Acquisition shall be, and hereby is,
amended by reducing the dollar amount of "$3,750,000" as it appears
therein to "$1,500,000".
(v) The definition of Permitted Advances shall be, and hereby is,
amended by reducing the dollar amount of "$3,750,000" as it appears
therein to "$1,500,000".
(vi) Schedule 3 - Specified Customers to the Financing Agreement shall
be, and hereby is, amended in its entirety to be Schedule 3 annexed
hereto.
(K) It is further agreed that CITBC hereby consents to the Restructuring and
releases its liens upon all assets and properties of the Company's High
Performance Plastics Division which are more fully described on Schedule 1
hereto (the "Transferred Assets") upon consummation of the Restructuring. CITBC
will upon the Company's reasonable request execute and deliver lien releases
with respect to the Transferred Assets.
(L) The effectiveness of all of the amendments and/or consents set forth above
shall be, and hereby is, subject to the fulfillment to CITBC's satisfaction of
the Amendment and Consent Conditions Precedent. The Amendment and Consent
"Conditions Precedent" shall mean each of the following:
(i) the execution and delivery to CITBC of all documentation reasonably
requested by CITBC to validly perfect CITBC's first lien upon the
Company's Accounts, Inventory, Documents of Title, and Other Collateral
to secure all Obligations (subject to such liens and encumbrances as
may be satisfactory to CITBC in its sole discretion);
(ii) the absence of (x) any Default and/or Event of Default and (y) any
material adverse change in the financial condition, business,
prospects, profitability, assets or operations of the Company
("Material Adverse Change");
(iii) the Company shall pay all Out-of-Pocket Expenses incurred by
CITBC in connection with this agreement.
(iv) CITBC's receipt of a secretary's certificate certifying Board of
Directors Resolutions authorizing the execution, delivery and
performance by the Company of this agreement and all documents and
transactions contemplated hereby.
(v) CITBC shall have completed to the satisfaction of CITBC an
examination and verification of the Accounts, Inventory, books and
records of the Company which examination shall indicate that, after
giving effect to all loans, advances and extensions of credit to be
made at closing, the Company shall have an opening additional
Availability of $5,000,000. It is understood that such requirement
contemplates that all debts and obligations are current and payables
(other than those involving bona fide disputes) are being handled in
the normal course of the Company's business and consistent with its
past practices.
(vi) CITBC's receipt of and satisfaction with:
(x) evidence satisfactory to CITBC that (A) the Company has
deposited cash with the Indenture Trustee under the Senior
Note Indenture to pay all the Company's indebtedness,
obligations and liabilities thereunder (including principal,
interest, premium and all other amounts due thereon) in full
on June 1, 1998, all in accordance with the defeasance
provisions of such Indenture and (B) all liens securing such
indebtedness, obligations and liabilities have been released
and terminated of record; and (y) all agreements and/or
documentation executed in connection with the transfer of
assets in conjunction with the Restructuring; and (z) evidence
satisfactory to CITBC that the Restructuring has been
consummated.
(vii) CITBC shall have received tax, judgment and Uniform Commercial
Code searches satisfactory to CITBC for all locations presently
occupied or used by the Company.
(viii) The Company shall have delivered to CITBC evidence satisfactory
to CITBC that casualty insurance policies listing CITBC as loss payee
or mortgagee, as the case may be, are in full force and effect, all as
set forth in Section 6, Paragraph 5 of this Financing Agreement.
(ix) Any documents (including without limitation, financing statements)
required to be filed in order to create, in favor of CITBC, a first and
exclusive perfected security interest in the Collateral with respect to
which a security interest may be perfected by a filing under the U.C.C.
shall have been properly filed in each office in each jurisdiction
required in order to create in favor of CITBC a perfected lien on the
Collateral. CITBC shall have received acknowledgment copies of all such
filings (or, in lieu thereof, CITBC shall have received other evidence
satisfactory to CITBC that all such filings have been made); and CITBC
shall have received evidence that all necessary filing fees and all
taxes or other expenses related to such filings have been paid in full;
(x) CITBC shall have received payment in full of all of the Company's
outstanding Obligations under the Financing Agreement on the effective
date of the Restructuring.
Except to the extent set forth herein, no other waiver of, or change in any of
the terms, provisions or conditions of the Financing Agreement is intended or
implied.
If the foregoing is in accordance with your understanding of our agreement,
kindly so indicate by signing and returning the enclosed copy of this letter.
Each of such guarantors and/or pledgors have signed below to confirm that its
respective guaranty and/or pledge or security agreement shall continue in full
force and effect notwithstanding the foregoing agreement.
Very truly yours,
THE CIT GROUP/BUSINESS CREDIT, INC.
By: /s/ KAREN HOFFMAN
Title: Assistant Vice President
Read and Agreed to:
UNIROYAL TECHNOLOGY CORPORATION
By: George J. Zulanas, Jr.
Title: Vice President
Confirmed and Agreed:
ULC CORP.
By: George J. Zulanas, Jr.
Title: Vice President
