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Exhibit 10(a)
FOURTH AMENDED AND RESTATED CREDIT
AND
SECURITY AGREEMENT
GMAC COMMERCIAL CREDIT LLC
(AS LENDER)
WITH
COLD METAL PRODUCTS, INC.
AND
ALKAR STEEL CORPORATION
(BORROWERS)
AND
COLD METAL PRODUCTS, LIMITED (CANADIAN GUARANTOR)
As of September 29, 2000
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FOURTH AMENDED AND RESTATED CREDIT
AND
SECURITY AGREEMENT
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Fourth Amended and Restated Credit and Security Agreement dated as of
September 29, 2000 between COLD METAL PRODUCTS, INC., a corporation organized
under the laws of the State of New York ("CMP") and ALKAR STEEL CORPORATION, a
corporation organized under the laws of the State of Michigan ("Alkar") (CMP and
Alkar each individually a "Borrower" and collectively the "Borrowers") and COLD
METAL PRODUCTS, LIMITED, an Ontario, Canada corporation ("Canadian Guarantor")
and GMAC COMMERCIAL CREDIT LLC ("Lender"), a limited liability company organized
under the laws of the State of New York.
BACKGROUND
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CMP and Lender have previously entered into a Third Amended and
Restated Credit and Security Agreement dated as of April 1, 1998 (the "Original
Loan Agreement"). Canadian Guarantor executed and delivered to Lender the
Canadian Guarantee and the Canadian Guarantor Security Documents (each as
defined below). Alkar executed and delivered to Lender a Guaranty dated March
30, 2000 (the "Alkar Guaranty") of CMP's obligations to Lender under the
Original Loan Agreement. CMP, Alkar and Canadian Guarantor have requested that
Lender join Alkar as a Borrower under the Loan Agreement and amend and restate
the Original Loan Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings herein contained, Loan Parties and Lender hereby agree as follows:
AMENDMENT AND RESTATEMENT
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As of the date of this Agreement, (i) Alkar is hereby joined as an
additional Borrower, (ii) Canadian Guarantor is hereby joined as a Loan Party
and (iii) the terms, conditions, covenants, agreements, representations and
warranties contained in the Original Loan Agreement are hereby amended and
restated in their entirety as follows and the Original Loan Agreement shall be
consolidated with and into and superseded by this Agreement. Notwithstanding the
foregoing, (a) each Loan Party agrees that nothing contained in this Agreement
shall impair, limit or affect the Liens heretofore granted, pledged or assigned
to Lender as security for Borrowers' and Canadian Guarantor's obligations to
Lender under the Original Loan Agreement and Other Documents and (b) Canadian
Guarantor hereby ratifies and affirms the Canadian Guarantee and the Canadian
Security Documents and agrees that all terms and provisions thereof remain in
full force and effect after giving effect to the execution and effectiveness of
this Agreement and in particular, the Canadian Guarantor acknowledges and
confirms that the Canadian Guarantee extends to the obligations of Alkar
hereunder.
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I. DEFINITIONS.
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1.1. ACCOUNTING TERMS. As used in this Agreement or any certificate,
report or other document made or delivered pursuant to this Agreement,
accounting terms not defined in Section 1.2 or elsewhere in this Agreement and
accounting terms partly defined in Section 1.2 to the extent not defined, shall
have the respective meanings given to them under GAAP; PROVIDED, HOWEVER,
whenever such accounting terms are used for the purposes of determining
compliance with financial covenants in this Agreement, such accounting terms
shall be defined in accordance with GAAP applied in preparation of the audited
financial statements of Loan Parties for the fiscal year ended March 31, 2000.
1.2. GENERAL TERMS. For purposes of this Agreement the following terms
shall have the following meanings:
"ACCEPTANCES" shall have the meaning set forth in Section 2.9
hereof.
"ACCEPTANCE FEES" shall have the meaning set forth in Section
3.2(i)(C) hereof.
"ADVANCES" shall mean and include the Revolving Advances, Capital
Expenditure Loans, Letters of Credit and Acceptances.
"ADVANCE RATES" shall have the meaning set forth in Section 2.1(a)
hereof.
"AFFILIATE" of any Person shall mean (a) any Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is controlled by,
or is under common control with such Person, or (b) any Person who is a director
or officer (i) of such Person, (ii) of any Subsidiary of such Person or (iii) of
any Person described in clause (a) above. For purposes of this definition,
control of a Person shall mean the power, direct or indirect, (x) to vote 5% or
more of the securities having ordinary voting power for the election of
directors of such Person, or (y) to direct or cause the direction of the
management and policies of such Person whether by contract or otherwise.
"ALTERNATE BASE RATE" shall mean, for any day, a rate per annum
equal to the higher of (i) the Prime Rate in effect on such day and (ii) the
Federal Funds Rate in effect on such day plus 1/2 of 1%.
"AMORTIZING AVAILABILITY" shall mean the sum of $14,100,000 less
$100,000 per month commencing November 1, 2000 and on the first day of each
month thereafter until April 1, 2004 when such amount shall be reduced to $0,
subject to earlier reduction pursuant to Section 2.13 hereof..
"APPLICABLE MARGIN" shall mean a percentage equal to (i) one-half
of one percent (.50%) with respect to Domestic Rate Loans and (ii) one percent
(1.00%) with respect to LIBOR Rate Loans.
"AUTHORITY" shall have the meaning set forth in Section 4.19(d).
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"AVERAGE MONTHLY LIBOR RATE" shall mean, at any date of
determination, the rate per annum for the one month LIBOR rate as published in
THE WALL STREET JOURNAL, averaged monthly on a calendar month basis.
"BANK" shall mean The Bank of New York and any successor thereto.
"BLOCKED ACCOUNTS" shall have the meaning set forth in Section
4.15(h).
"BORG WARNER AUTOMOTIVE RECEIVABLES" shall mean Receivables
payable to any Loan Party from Borg Warner, Inc. or any of its Subsidiaries or
divisions.
"BORROWER" or "BORROWERS" shall have the meaning set forth in the
preamble to this Agreement and shall extend to all permitted successors and
assigns of such Persons.
"BORROWERS ON A CONSOLIDATED BASIS" means the consolidation in
accordance with GAAP of CMP and its Subsidiaries.
"BORROWERS' ACCOUNT" shall have the meaning set forth in Section
2.8.
"BORROWERS' EXEMPT PROPERTY" shall mean and include any and all
property of CMP, real or personal, which is subject to a security interest in
favor of The CIT Group/Equipment Financing, Inc. pursuant to the Ottawa
Financing.
"BORROWING AGENT" shall mean CMP.
"BORROWING BASE CERTIFICATE" means a certificate duly executed by
an officer of Borrowing Agent appropriately completed and in substantially the
form of EXHIBIT 1.2 hereto.
"BORROWING PERIOD" shall have the meaning set forth in Section
2.4(b).
"BUSINESS DAY" shall mean any day other than a day on which Lender
is authorized or required by law to close.
"CANADIAN DOLLAR" shall mean the lawful money of Canada.
"CANADIAN GUARANTEE" shall mean collectively, the guarantee dated
as of August 4, 1987 whereby the Canadian Guarantor's predecessor guaranteed the
obligations of the CMP to the Bank, the supplemental guarantee dated May 14,
1997 whereby the Canadian Guarantor's predecessor guaranteed the obligations of
CMP to Lender, the acknowledgment and confirmation dated May 14, 1997 whereby
the Canadian Guarantor's predecessor acknowledged and confirmed the obligation
of its predecessor to Lender and the acknowledgement and assumption agreement
dated April 1, 1998 whereby the Canadian Guarantor, inter alia, acknowledged and
assumed the obligations of its predecessors as assigned to Lender and the
Canadian Guarantor's acknowledgement and confirmation hereunder with respect to
the obligations of Alkar, as the same may be amended, supplemented, revised or
replaced from time to time.
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"CANADIAN GUARANTOR" shall mean Cold Metal Products, Limited, an
Ontario, Canada corporation, the surviving company resulting from the
amalgamation of Cold Metal Products Company, Ltd. and Direct Steel Inc.
"CANADIAN GUARANTOR SECURITY DOCUMENTS" shall mean, collectively,
a US $100,000,000 fixed and floating charge debenture, a pledge of the
debenture, a hypothec of moveable and immoveable property, an assumption
agreement in regard to certain existing security and charges/mortgages of lands
in respect of the one parcel of real estate of the Canadian Guarantor in
Hamilton, Ontario, and one parcel in Pointe Claire, Quebec as the same may be
amended, supplemented, revised, replaced or restated from time to time.
"CAPITAL EXPENDITURE LOANS" shall have the meaning set forth in
Section 2.4 hereof.
"CAPITAL EXPENDITURE NOTE" shall have the meaning set forth in
Section 2.4(b) hereof.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. Secs. 9601 ET SEQ.
"CHANGE OF CONTROL" shall mean (a) the occurrence of any event
(whether in one or more transactions) which results in a transfer of control of
any Loan Party to a Person who is not an Original Owner or (b) any merger or
consolidation of or with any Loan Party or sale of all or substantially all of
the property or assets of any Loan Party. For purposes of this definition,
"control of any Loan Party" shall mean the power, direct or indirect (x) to vote
35% or more of the securities having ordinary voting power for the election of
directors of any Loan Party or (y) to direct or cause the direction of the
management and policies of any Loan Party by contract or otherwise.
"CHARGES" shall mean all taxes, charges, fees, imposts, levies or
other assessments, including, without limitation, all net income, gross income,
gross receipts, sales, use, ad valorem, value added, transfer, franchise,
profits, inventory, capital stock, license, withholding, payroll, employment,
social security, unemployment, excise, severance, stamp, occupation and property
taxes, custom duties, fees, assessments, liens and charges of any kind
whatsoever, together with any interest and any penalties, additions to tax or
additional amounts, imposed by any taxing or other authority, domestic or
foreign (including, without limitation, the Pension Benefit Guaranty
Corporation, the Pension Regulator or any environmental agency or superfund),
upon the Collateral, any Loan Party or any of its or their Affiliates.
"CLOSING DATE" shall mean September 29, 2000 or such other date as
may be agreed to by the parties hereto.
"CODE" shall mean the Internal Revenue Code of 1986, as amended
from time to time and the regulations promulgated thereunder.
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"COLLATERAL" shall mean and include, in each case whether now or
hereafter existing or now owned or hereafter acquired by any Loan Party (and
whether or not the same is subject to Article 8 or 9 of the Uniform Commercial
Code or constitutes Collateral by reason of one or more than one of the
following clauses), the following:
(a) all Receivables;
(b) all Inventory;
(c) all Equipment;
(d) all General Intangibles;
(e) all Investment Property
(f) all books, records, ledgercards, files, correspondence,
computer programs, tapes, disks and related data processing software (owned by
any Loan Party or any Loan Party's respective interests in any of the foregoing)
which at any time evidence or contain information relating to any of the
Collateral or are otherwise necessary or helpful in the collection thereof or
realization thereupon;
(g) all of each Loan Party's right, title and interest in and to
all goods and other property, whether or not delivered, (i) the sale, lease or
furnishing of which gives or purports to give rise to any Receivable, including
but not limited to all merchandise returned or rejected by or repossessed from
customers, or (ii) securing any Receivable, including all of any Loan Party's
rights as an unpaid vendor or lienor, including stoppage in transit, replevin
and reclamation with respect to such goods and other properties;
(h) all documents of title, policies and certificates of
insurance, securities, chattel paper, other documents or instruments evidencing
or pertaining to any and all items of Collateral;
(i) all guaranties, Liens on real or personal property, leases,
and other agreements and property which in any way secure or relate to any
Collateral, or are acquired for the purpose of securing and enforcing any item
thereof;
(j) (i) all cash held as cash collateral pursuant to Section 3.2
and, to the extent not otherwise constituting Collateral, all other cash at any
time on deposit with or held by Lender for the account of any Loan Party
(whether for safekeeping, custody, pledge, transmission or otherwise), (ii) all
deposit accounts (whether time or demand or interest or non-interest bearing) of
any Loan Party with (A) Lender, including those to which any such cash may at
any time and from time to time be credited, and (B) with other institutions, but
only if, in the case of accounts with other institutions, proceeds of Collateral
have been or are to be deposited in or credited to such accounts, (iii) all
investments and reinvestments (however evidenced) of amounts from time to time
credited to such accounts, and (iv) all interest, dividends, distributions and
other proceeds payable on or with respect to (A) such investments and
reinvestments and (B) such accounts;
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(k) to the extent not included in the foregoing, all Guarantor
Collateral, and
(l) all products and proceeds of such Collateral in whatever form,
including, but not limited to, all claims to items referred to in the definition
of Collateral and all claims of any Loan Party against third parties (i) for (A)
loss, destruction or infringement of, or damage to, and (B) payments due or to
become due under leases, rentals and hires of, any or all of the Collateral and
(ii) for proceeds payable under or unearned premiums with respect to policies of
insurance; provided, however, that notwithstanding any of the foregoing
provisions, "Collateral" shall not include any of Borrowers' Exempt Property.
"CONSENTS" shall mean all filings and all licenses, permits,
consents, approvals, authorizations, qualifications and orders of governmental
authorities and other third parties, domestic or foreign, necessary to carry on
any Loan Party's, business, including, without limitation, any Consents required
under all applicable federal, state, provincial or other applicable law.
"CONTROLLED GROUP" shall mean all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with any Loan Party, are treated as a single
employer under Section 414 of the Code.
"CUSTOMER" shall mean and include the account debtor with respect
to any Receivable or the prospective purchaser of goods, services or both with
respect to any contract or contract right, or any party who enters into or
proposes to enter into any contract or other arrangement with any Loan Party,
pursuant to which any Loan Party is to deliver any personal property or perform
any services.
"DEFAULT" shall mean an event which, with the giving of notice or
passage of time or both, would constitute an Event of Default.
"DEFAULT RATE" shall have the meaning set forth in Section 3.1
hereof.
"DEPOSITORY ACCOUNTS" shall have the meaning set forth in Section
4.15(h) hereof.
"DOCUMENTS" shall have the meaning set forth in Section 8.1(b)
hereof.
"DOLLAR" and the sign "$" shall mean lawful money of the United
States of America.
"DOLLAR EQUIVALENT" shall mean, on any date of determination
thereof, the amount of Dollars which could be purchased with the amount of
Canadian Dollars at the spot rate then being offered by the Bank as determined
by Lender.
"DOMESTIC RATE LOAN" shall mean any Advance based upon the
Alternate Base Rate.
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"ELIGIBLE INVENTORY" shall mean and include Inventory valued at
the lower of cost or market value, determined on a first-in-first-out basis,
which, in Lender's opinion, meets all of the following requirements:
(a) such Inventory (i) is subject to the security interest of
Lender and such security interest is perfected as to such Inventory, and (ii) is
subject to no other Lien whatsoever;
(b) such Inventory is in good condition and meets all standards
imposed by any governmental agency, or department or division thereof, having
regulatory authority over such goods, their use or sale;
(c) such Inventory is currently either readily usable or salable,
at prices approximating at least cost, in the normal course of any Loan Party's
business ;
(d) no event has occurred and no condition exists which would
substantially impede any Loan Party's, ability to continue to use or sell such
Inventory in the normal course ;
(e) no claim disputing any Loan Party's title to, or right to
possession of or dominion over, its respective Inventory has been asserted ;
(f) such Inventory is not determined by Lender to be ineligible
for any other reason generally accepted in the commercial finance business as a
reason for ineligibility.
"ELIGIBLE RECEIVABLES" shall mean each Receivable arising in the
ordinary course of any Loan Party's business and which Lender, in its sole
credit judgment, shall deem to be an Eligible Receivable, based on such
considerations as Lender may from time to time deem appropriate. A Receivable
will not be "eligible" unless Lender in its sole and absolute discretion
determines that it meets all of the following requirements:
(a) such Receivable represents a complete bona fide transaction
which requires no further act under any circumstances on the part of any Loan
Party to make such Receivable payable by the Customer and which arises from an
arm's length transaction between unrelated parties in the ordinary course of any
Loan Party's, business ;
(b) such Receivable shall not be unpaid more than (i) 120 days
from the date of the original invoice in the case of Borg Warner Automotive
Receivables and (ii) 90 days from the date of the original invoice in the case
of all other Receivables.;
(c) the goods the sale of which gave rise to such Receivable were
shipped or delivered to the Customer on an absolute sale basis and not on a bill
and hold sale basis, a consignment sale basis, a guaranteed sale basis, a sale
or return basis, or on the basis of any other similar understanding, and no part
of such goods has been returned or rejected;
(d) such Receivable is not evidenced by chattel paper or an
instrument of any kind;
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(e) the Customer with respect to such Receivable is not insolvent
or the subject of any bankruptcy or insolvency proceedings of any kind or of any
other proceeding or action, threatened or pending, which might have a materially
adverse effect on the business of such Customer or is not, in the sole
discretion of Lender, deemed ineligible for credit or other reasons;
(f) if such Receivable arises from the performance of services,
such services have been fully rendered;
(g) if the Customer with respect thereto is located outside of
Canada or the United States of America (excluding for this purpose the
Commonwealth of Puerto Rico), the goods which gave rise to such Receivable were
shipped after receipt by any Loan Party, from the Customer of an irrevocable
letter of credit, which letter of credit has been issued or confirmed by a
financial institution acceptable to Lender and is in form and substance
acceptable to Lender, payable in the full face amount of the face value of the
Receivable in freely convertible United States dollars at a place of payment
located within such United States, or Lender is otherwise satisfied with the
collectability of the Receivable;
(h) such Receivable is a valid, legally enforceable obligation of
the Customer with respect thereto and is not subject to any present, or
contingent, and no facts exist which are the basis for any future, offset or
counterclaim or other defense or dispute on the part of such Customer;
(i) such Receivable is subject to the security interest of Lender
and such security interest is perfected as to such Receivable and such
Receivable is subject to no other Lien whatsoever;
(j) such Receivable is evidenced by an invoice or other
documentation in form acceptable to Lender;
(k) such Loan Party has observed and complied with all laws of the
State, province or other political unit in which the Customer on such Receivable
is located which, if not observed and complied with, would deny to any Loan
Party access to the courts of such State, province or other political unit;
(l) such Receivable does not arise out of any transaction with a
subsidiary or affiliate of any Loan Party or with a Governmental Authority,
entity or agency;
(m) such Receivable is not subject to any provision prohibiting
its assignment or requiring notice of or consent to such assignment;
(n) the goods giving rise to such Receivable were not, at the time
of the sale or leasing thereof, subject to any Lien, except the security
interest of Lender or the security interest under the Guarantor Security
Documents or Permitted Liens;
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(o) such Receivable is payable in freely transferable United
States Dollars or, in the case of Canadian Guarantor, Canadian Dollars; and
(p) such Receivable is not determined by Lender to be ineligible
for any other reason generally accepted in the commercial finance business as a
reason for ineligibility.
"ENVIRONMENTAL COMPLAINT" shall have the meaning set forth in
Section 4.19(d) hereof.
"ENVIRONMENTAL LAWS" shall mean all federal, state, provincial and
local environmental, land use, health, chemical use, statutes, regulations,
rules, decrees, orders, programs, duties, ordinances and codes relating to the
protection of the environment or governing the use, storage, treatment,
generation, transportation, processing, handling, production or disposal of
Hazardous Substances and the rules, regulations, decisions, orders and
directives of federal, state, provincial and local governmental agencies and
authorities with respect thereto.
"EQUIPMENT" shall mean and include all of Borrower's, and each
Guarantor's goods, (other than Inventory and Borrowers' Exempt Property) whether
now owned or hereafter acquired and wherever located including, without
limitation, all equipment, machinery, apparatus, motor vehicles, fittings,
furniture, furnishings, fixtures, parts, accessories and all replacements and
substitutions therefor or accessions thereto.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time and the rules and regulations promulgated
thereunder.
"EVENT OF DEFAULT" shall mean the occurrence of any of the events
set forth in Article X hereof.
"FEDERAL FUNDS RATE" shall mean, for any day, the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Lender of New York, or if such rate is not so published for any
day which is a Business Day, the average of quotations for such day on such
transactions received by the Bank from three Federal funds brokers of recognized
standing selected by the Bank.
"FIXED RATE LOAN" shall mean a LIBOR Rate Loan.
"FORMULA AMOUNT" shall have the meaning set forth in Section
2.1(a).
"GAAP" shall mean generally accepted accounting principles in the
United States of America in effect from time to time.
"GENERAL INTANGIBLES" shall mean and include all of each Loan
Party's general intangibles, whether now owned or hereafter acquired including,
without limitation, all choses in
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action, causes of action, corporate or other business records, inventions,
designs, patents, patent applications, equipment formulations, manufacturing
procedures, quality control procedures, trademarks, trade secrets, goodwill,
copyrights, registrations, licenses, franchises, customer lists, tax refunds,
tax refund claims, computer programs, all claims under guaranties, security
interests or other security held by or granted to any Loan Party to secure
payment of any of the Receivables by a Customer, all rights of indemnification
and all other intangible property of every kind and nature (other than
Receivables).
"GOVERNMENTAL AUTHORITY" means any nation or government, any
state, any province, territory or other political subdivision thereof, any
central bank (or similar monetary or regulatory authority) thereof, any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, and any corporation or other entity
owned or controlled, through stock or capital ownership or otherwise, by any of
the foregoing.
"GUARANTEE" or "GUARANTEES" shall mean, individually or
collectively, the Canadian Guarantee and any other guaranty of the Obligations
executed by a Guarantor in favor of Lender.
"GUARANTOR" or "GUARANTORS" shall mean, individually and
collectively, Canadian Guarantor and any other Person who executes and delivers
to Lender a Guarantee.
"GUARANTOR COLLATERAL" shall mean all property and assets, real or
personal, moveable or immoveable, tangible or intangible, now owned or hereafter
acquired, of any Guarantor.
"GUARANTOR PLAN" shall mean a Plan listed on Schedule 5.8(d)(2).
"GUARANTOR SECURITY DOCUMENTS" shall mean, collectively, the
Canadian Guarantor Security Documents and any other security agreements,
mortgages, deeds of trust, financing statements and other security documents
executed and delivered by a Guarantor as security for its Guarantee.
"HAZARDOUS DISCHARGE" shall have the meaning set forth in Section
4.19(d) hereof.
"HAZARDOUS SUBSTANCE" shall mean, without limitation, any
flammable explosives, radon, radioactive materials, asbestos, urea formaldehyde
foam insulation, polychlorinated biphenyls, petroleum and petroleum products,
methane, hazardous materials, Hazardous Wastes, hazardous or toxic substances or
related materials as defined in CERCLA, the Hazardous Materials Transportation
Act, as amended (49 U.S.C. Sections 1801, ET SEQ.), RCRA, Ontario EPA or any
other applicable Environmental Law and in the regulations adopted pursuant
thereto.
"HAZARDOUS WASTES" shall mean all waste materials subject to
regulation under CERCLA, RCRA, Ontario EPA or applicable federal, provincial or
state law, and any other applicable federal, provincial or state laws now in
force or hereafter enacted relating to hazardous waste disposal.
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"INDEBTEDNESS" of a Person at a particular date shall mean all
obligations of such Person which in accordance with GAAP would be classified
upon a balance sheet as liabilities (except capital stock and surplus earned or
otherwise) and in any event, without limitation by reason of enumeration, shall
include all indebtedness, debt and other similar monetary obligations of such
Person whether direct or guaranteed, and all premiums, if any, due at the
required prepayment dates of such indebtedness, and all indebtedness secured by
a Lien on assets owned by such Person, whether or not such indebtedness actually
shall have been created, assumed or incurred by such Person. Any indebtedness of
such Person resulting from the acquisition by such Person of any assets subject
to any Lien shall be deemed, for the purposes hereof, to be the equivalent of
the creation, assumption and incurring of the indebtedness secured thereby,
whether or not actually so created, assumed or incurred.
"INVENTORY" shall mean all of any Loan Party's now owned or
hereafter acquired goods, merchandise and other personal property, wherever
located, to be furnished under any contract of service or held for sale or
lease, all raw materials, scrap metal, work in process, finished goods and
materials and supplies of any kind, nature or description which are or might be
used or consumed in Loan Party's business or used in selling or furnishing such
goods, merchandise and other personal property, and all documents of title or
other documents representing them.
"INVENTORY ADVANCE RATE" shall have the meaning set forth in
Section 2.1(a)(ii) hereof.
"INVESTMENT PROPERTY" shall mean and include as to each Loan
Party, all of such Loan Party's now owned or hereafter acquired "investment
property" as such term is defined in the Uniform Commercial Code, including,
without limitation, securities (whether certificated or uncertificated),
securities entitlements, securities accounts, commodities contracts and
commodities accounts.
"LENDER" shall mean GMAC Commercial Credit LLC and any successor
or assign.
"LETTERS OF CREDIT" shall have the meaning set forth in Section
2.9.
"LETTER OF CREDIT FEES" shall have the meaning set forth in
Section 3.2.
"LIBOR RATE LOAN" shall mean an Advance at any time that it bears
interest based on the Average Monthly LIBOR Rate.
"LIEN" shall mean (a) any mortgage, deed of trust, pledge,
hypothecation, assignment, security interest, lien (whether statutory or
otherwise), Charge, claim or encumbrance, or preference, priority or other
security agreement or preferential arrangement held or asserted in respect of
any asset of any kind or nature whatsoever including, without limitation, any
conditional sale or other title retention agreement, any lease having
substantially the same economic effect as any of the foregoing, and the filing
of, or agreement to give, any financing statement under the Uniform Commercial
Code, PPSA, the Civil Code of Quebec or
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comparable law of any jurisdiction and (b) to the extent not included under
clause (a), and only with respect to any Guarantor, (i) any rights of
repossession or similar rights of unpaid suppliers, (ii) any reservation,
exception, encroachment, easement, right-of-way, covenant, condition,
restrictment, lease or other title exception or encumbrance affecting property,
and (iii) any other lien, charge, privilege, secured claim, title retention,
garnishment right, deemed trust, encumbrance or other right affecting property,
choate or inchoate, whether or not crystallized or fixed, whether or not for
amounts due or accruing due, arising by any statute or law of any jurisdiction,
at common law, in equity or by any agreement.
"LOAN PARTY" shall mean, individually, each Borrower and each
Guarantor which is a party to this Agreement and each additional Person that
becomes a Borrower or a Guarantor after the Closing Date and joins this
Agreement as an additional Loan Party pursuant to a joinder agreement
satisfactory to lender. "LOAN PARTIES" shall mean, collectively, the Borrowers
and the Guarantors.
"MAXIMUM CAPITAL EXPENDITURE AMOUNT" shall mean an amount equal to
(x) $15,000,000 minus (y) the total amount of principal payments received by
Lender with respect to the Capital Expenditure Loans.
"MAXIMUM LOAN AMOUNT" shall mean $70,000,000.
"MAXIMUM REVOLVING ADVANCE AMOUNT" shall mean $70,000,000.
"MULTIEMPLOYER PLAN" shall mean a "multiemployer plan" as defined
in Sections 3(37) and 4001(a)(3) of ERISA.
"OBLIGATIONS" shall mean and include any and all of each Loan
Party's Indebtedness or liabilities to Lender or any corporation that directly
or indirectly controls or is controlled by or is under common control with
Lender of every kind, nature and description, direct or indirect, secured or
unsecured, joint, several, joint and several, absolute or contingent, due or to
become due, now existing or hereafter arising, contractual or tortious,
liquidated or unliquidated, regardless of how such indebtedness or liabilities
arise or by what agreement or instrument they may be evidenced or whether
evidenced by any agreement or instrument, including, but not limited to, any and
all of each Loan Party's Indebtedness or liabilities under this Agreement, the
Other Documents or under any other agreement between Lender and any Loan Party
and all obligations of any Loan Party to Lender to perform acts or refrain from
taking any action.
"ONTARIO EPA" shall mean the Environmental Protection Act of
Ontario, Canada as the same may be amended or replaced from time to time.
"ORIGINAL CLOSING DATE" shall mean April 1, 1998.
"ORIGINAL LOAN AGREEMENT" shall have the meaning set forth in the
Background section of this Agreement.
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"ORIGINAL OWNERS" shall mean AARQUE Management Corporation, a New
York corporation.
"OTHER DOCUMENTS" shall mean the Guarantee, the Guarantor Security
Documents, the Pledge Agreement and any and all other agreements, instruments
and documents, including, without limitation, guaranties, pledges, mortgages,
powers of attorney, consents, and all other writings heretofore, now or
hereafter executed by any Loan Party and delivered to Lender or to Bank in
respect of the transactions contemplated by this Agreement.
"OTTAWA FINANCING" shall mean and include any and all Indebtedness
of CMP in connection with that certain Loan and Security Agreement dated
November 22, 1996 between CMP and CIT Group/Equipment Financing, Inc., and shall
also refer to any and all documents executed in connection therewith, each as in
effect on the Original Closing Date.
"PARENT" of any Person shall mean a corporation or other entity
owning, directly or indirectly, at least 50% of the shares of stock or other
ownership interests having ordinary voting power to elect a majority of the
directors of the Person, or other Persons performing similar functions for any
such Person.
"PBA" shall mean the Pension Benefits Act (Ontario) and the
Supplemental Pension Plans Act (Quebec), each as amended and replaced from time
to time, each as applicable, and the applicable acts, statutes, laws or
regulations of any other applicable jurisdiction regulating to or governing
Plans.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
Governmental Authority succeeding to the functions thereof.
"PAYMENT OFFICE" shall mean initially 1290 Avenue of the Americas,
New York, New York 10104; thereafter, such other office of Lender, if any, which
it may designate by notice to Borrowing Agent to be the Payment Office.
"PENSION REGULATOR" shall mean the Superintendent of Pensions or,
to the extent applicable, Pension Commission of Ontario or its successors or any
similar Governmental Authority of any other applicable jurisdiction having
authority to regulate, govern or administer Plans, and any Governmental
Authority succeeding to the functions thereof.
"PERMITTED ENCUMBRANCE" shall mean (a) (i) a Lien consented to in
writing by the Lender and (ii) (A) a Lien for taxes not yet due and (B) any
other Lien, such as those in favor of a landlord, warehouseman, carrier, or the
like, arising by operation of law and incurred in the ordinary course of
business that does not (1) arise under ERISA or, except for contribution amounts
not due and unpaid and for an inchoate Lien in connection with a solvency
deficiency or unfunded liability greater than the Threshold Amount or as
consented to by the Lender from time to time, the PBA or under any environmental
law, or (2) secure an obligation (aa) which is (x) due and payable or (y) for
borrowed money, or (bb) which, when aggregated with all other obligations
secured by Liens otherwise permitted by this clause (a)(ii)(B)(2) would exceed
$100,000 at any time outstanding, but only, in the case of a Lien referred to in
either clause (i) or
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(ii), until Lender shall have requested the discharge thereof and so long as
availability is sufficient to permit adequate reserves against such Lien, (b)
Liens with respect to Borrowers' Exempt Property or any refinancing, restructure
or replacement of the indebtedness in connection therewith as permitted by
Schedule 7.8 and in the case of any Real Property, any and all exceptions or
other qualifications included in any title option for Real Property or in any
title policy for such Real Property delivered to Lender through the Closing
Date, (c) the encumbrances described on Schedule 7.2 and (d) Liens created in
favor of Lender.
"PERSON" shall mean an individual, a partnership, a corporation, a
business trust, a joint stock company, a trust, an unincorporated association, a
joint venture, a governmental authority or any other entity of whatever nature.
"PLAN" shall mean any employee benefit plan within the meaning of
Section 3(3) of ERISA, maintained for employees of Borrowers or any member of a
Controlled Group or any such Plan to which any Borrower or any member of a
Controlled Group is required to contribute on behalf of any of its employees and
includes, in the case of the Canadian Guarantor, any pension plan required to be
registered under the PBA which the Canadian Guarantor sponsors, maintains or to
which it makes or is obligated to make contributions or in respect of which the
Canadian Guarantor has incurred or may incur any liability, including contingent
liability, either to such plan, the Pension Regulator, any administrator,
trustee, Governmental Authority or other Person.
"PLEDGE AGREEMENT" shall mean the Pledge Agreement dated March 30,
2000 made by CMP in favor of Lender pursuant to which CMP pledged to Lender 100%
of the outstanding shares of Alkar as security for the Obligations.
"PPSA" means the Personal Property Security Act of Ontario, as the
same may be amended or replaced from time to time.
"PRE-TAX PROFIT" shall mean, with respect to any period, the sum
of aggregate net income of Borrowers on a consolidated basis during such period
plus the aggregate amount of income tax deducted in determining such net income
during such period.
"PRIME RATE" shall mean the prime commercial lending rate of the
Bank as publicly announced to be in effect from time to time, such rate to be
adjusted automatically, without notice, on the effective date of any change in
such rate. This rate of interest is determined from time to time by the Bank as
a means of pricing some loans to its customers and is neither tied to any
external rate of interest or index nor does it necessarily reflect the lowest
rate of interest actually charged by the Bank to any particular class or
category of customers of the Bank.
"RCRA" shall mean the Resource Conservation and Recovery Act, 42
U.S.C. Secs. 6901 ET SEQ., as same may be amended from time to time.
"REAL PROPERTY" shall mean all of each Loan Party's right, title
and interest in and to the premises set forth on Schedule 1.2(a) hereof.
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"RECEIVABLES" shall mean and include all of each Loan Party's
accounts, contract rights, instruments (including those evidencing indebtedness
owed to Loan Parties by their Affiliates), documents, chattel paper, general
intangibles relating to accounts, drafts and acceptances, and all other forms of
obligations owing to any Loan Party arising out of or in connection with the
sale or lease of Inventory or the rendition of services, all guarantees and
other security therefor, whether secured or unsecured, now existing or hereafter
created, and whether or not specifically sold or assigned to Lender hereunder.
"RECEIVABLES ADVANCE RATE" shall have the meaning set forth in
Section 2.1(a)(i) hereof.
"REGULATORY CHANGE" means an applicable law, interpretation,
directive, request or guideline (whether or not having the force of law), or any
change therein or in the administration or enforcement thereof, that becomes
effective or is implemented or first required or expected to be complied with,
whether the same is (i) the result of an enactment by a government or any agency
or political subdivision thereof, a determination of a court or regulatory
authority, or otherwise or (ii) enacted, adopted, or issued after the date
hereof, that imposes, increases or modifies any tax, reserve requirement,
insurance charge, special deposit requirement, assessment or capital adequacy
requirement, but excluding any such that imposes, increases or modifies any
income or franchise tax imposed upon Lender by any jurisdiction (or any
political subdivision thereof) in which Lender or any lending office is located.
"RELATED PERSON" shall mean as to any Person, any other Person
which, together with such Person, is treated as a single employer under Section
414(c) of the Code.
"RELEASE" shall have the meaning set forth in Section 5.7(c)(i)
hereof.
"REPORTABLE EVENT" shall mean a reportable event described in
Section 4043(b) of ERISA or the regulations promulgated thereunder or any event
which any Loan Party is required to report to the Pension Regulator or otherwise
under the PBA which may give rise to, or to the assertion of, any Lien or which
may otherwise adversely affect the property, business, prospects or condition
(financial or otherwise) of any Loan Party.
"RESPONSIBLE PREMISES" means all property which is now or, to the
extent that the Canadian Guarantor has any actual or potential liability or
responsibility, whether by operation of law, by order of any court or by any
agreement, has ever been in the charge, management or control (as such phrases
are interpreted under the Ontario EPA or similar agency in the Province of
Quebec) of the Canadian Guarantor, and as used herein, shall apply only to the
Canadian Guarantor.
"REVOLVING ADVANCES" shall mean Advances made other than the
Capital Expenditure Loans, Letters of Credit and Acceptances.
"REVOLVING INTEREST RATE" shall mean an interest rate per annum
equal to, as appropriate, (a) the Alternate Base Rate plus the Applicable Margin
with respect to Domestic
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Rate Loans, or (b) the sum of the Average Monthly LIBOR Rate plus the Applicable
Margin with respect to LIBOR Rate Loans.
"SUBSIDIARY" shall mean a corporation or other entity of whose
shares of stock or other ownership interests having ordinary voting power (other
than stock or other ownership interests having such power only by reason of the
happening of a contingency) to elect a majority of the directors of such
corporation, or other Persons performing similar functions for such entity, are
owned, directly or indirectly, by such Person.
"TERM" shall mean the Closing Date through April 1, 2004, as same
may be extended in accordance with Section 13.1.
"TERMINATION DATE" shall have the meaning set forth in Section
13.1 hereof.
"TERMINATION EVENT" shall mean (a) in respect of Borrowers (i) a
Reportable Event with respect to any Plan or Multiemployer Plan; (ii) the
withdrawal of any Borrower or any member of the Controlled Group from a Plan or
Multiemployer Plan during a plan year in which such entity was a "substantial
employer" as defined in Section 4001(a)(2) of ERISA; (iii) the providing of
notice of intent to terminate a Plan in a distress termination described in
Section 4041(c) of ERISA; (iv) the institution by the PBGC of proceedings to
terminate a Plan or Multiemployer Plan; (v) any event or condition (a) which
might constitute grounds under Section 4042 of ERISA for the termination of, or
the appointment of a trustee to administer, any Plan or Multiemployer Plan, or
(b) that may result in termination of a Multiemployer Plan pursuant to Section
4041A of ERISA; or (vi) the partial or complete withdrawal within the meaning of
Sections 4203 and 4205 of ERISA, of any Borrower or any member of the Controlled
Group from a Multiemployer Plan and (b) in respect of the Canadian Guarantor (i)
the Canadian Guarantor ceases to be an employer under any Multiemployer Plan; or
(ii) the filing of a notice of intent to terminate or wind up (in whole or in
part) a Plan or (iii) the doing of or failure to do any act or thing in
furtherance of any termination or wind up (in whole or in part) of a Plan or
which may result in such termination or wind up; or (iv) the institution of any
proceedings or action by the Pension Regulator or any other Person to terminate,
wind up (in whole or in part) or have a trustee appointed to administer a Plan;
or (v) the issuance of any notice of proposal to windup a Plan or notice of
proposal to appoint an administrator for any Plan or any determination that a
wind up (in whole or in part) or termination of any Plan has occurred or will
occur; (vi) any Borrower or the Canadian Guarantor is required to make any
payment in respect of any unfunded liability or solvency deficiency in respect
of any Plan in addition to its minimum regular monthly contribution amounts from
time to time required (inclusive of current service, solvency and unfunded
liability payments) in respect thereof; (vii) any other event or condition which
may, as determined by Lender in the exercise of its discretion, give rise to any
Lien in favor of any Person (except in respect of the regular monthly
contribution amount not overdue).
"THRESHOLD AMOUNT" shall mean the amount identified on Schedule
5.8(d)(2) as the "Threshold Amount."
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"TOXIC SUBSTANCE" shall mean and include any material present on
the Real Property or the Leasehold Interests or any Responsible Premises which
is subject to regulation under the Toxic Substances Control Act (TSCA), 15
U.S.C. Secs. 2601 ET SEQ., Ontario EPA, applicable federal, provincial or state
law, or any other applicable federal, provincial or state laws now in force or
hereafter enacted relating to toxic substances. "Toxic Substance" includes but
is not limited to asbestos, polychlorinated biphenyls (PCBs) and lead-based
paints.
"UNDRAWN AVAILABILITY" at a particular date shall mean an amount
equal to (a) the lesser of (i) the Formula Amount or (ii) the Maximum Revolving
Advance Amount, MINUS (b) the sum of (i) the outstanding amount of Advances plus
(ii) all amounts due and owing to any Loan Party's trade creditors which are
outstanding beyond normal trade terms.
1.3. UNIFORM COMMERCIAL CODE TERMS. All terms used herein and defined
in the Uniform Commercial Code as adopted in the State of New York shall have
the meaning given therein unless otherwise defined herein.
1.4. CERTAIN MATTERS OF CONSTRUCTION. The terms "herein", "hereof" and
"hereunder" and other words of similar import refer to this Agreement as a whole
and not to any particular section, paragraph or subdivision. Any pronoun used
shall be deemed to cover all genders. Wherever appropriate in the context, terms
used herein in the singular also include the plural and VICE VERSA. All
references to statutes and related regulations shall include any amendments of
same and any successor statutes and regulations. All references to any
instruments or agreements, including, without limitation, references to any of
the Other Documents shall include any and all modifications or amendments
thereto and any and all extensions or renewals thereof.
II. ADVANCES, PAYMENTS.
-------------------
2.1. (a) REVOLVING ADVANCES. Subject to the terms and conditi
ons set forth in this Agreement, Lender will make Revolving Advances to
Borrowers in aggregate amounts outstanding at any time equal to the lesser of
(x) the Maximum Revolving Advance Amount less the aggregate amount of
outstanding Letters of Credit, Acceptances and Capital Expenditure Loans or (y)
an amount equal to the sum of:
(i) up to 85%, subject to the provisions of Section 2.1(b)
hereof ("Receivables Advance Rate"), of Eligible Receivables
(calculated based upon the Dollar Equivalent of Receivables of
Canadian Guarantor), PLUS
(ii) up to 60%, subject to the provisions of Section
2.1(b) hereof ("Inventory Advance Rate"), of the value of the
Eligible Inventory (calculated based upon the Dollar
Equivalent of the Inventory of Canadian Guarantor) (the
Receivables Advance Rate and the Inventory Advance Rate shall
be referred to collectively, as the "Advance Rates");
PROVIDED, however, the maximum amount of outstanding Advances
against Eligible Inventory shall not exceed $41,000,000 at any
one time, PLUS
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(iii) but only until the release of Lender's Liens in
accordance with Section 4.21 of this Agreement, Amortizing
Availability, MINUS
(iv) the aggregate amount of outstanding Letters of Credit
and Acceptances, MINUS
(v) such reserves as Lender may reasonably deem proper and
necessary from time to time, including, as determined by
Lender to be appropriate in respect of the Guarantor
Collateral, reserves for goods and services, sales and excise
taxes and for the rights of unpaid suppliers.
The amount derived from (x) the sum of Sections
2.1(a)(y)(i), (ii) and (iii) minus (y) Section 2.1(a)(y)(v) at
any time and from time to time shall be referred to as the
"Formula Amount".
(b) DISCRETIONARY RIGHTS. Lender's determination of Eligible
Receivables and Eligible Inventory may result in an increase or decrease by
Lender of the Advance Rates at any time and from time to time in the exercise of
its reasonable discretion. Each Borrower consents to any such increases or
decreases and acknowledges that decreasing the Advance Rates may limit or
restrict Advances requested by Borrowing Agent.
2.2. PROCEDURE FOR REVOLVING ADVANCES BORROWING. Borrowing Agent may
notify Lender prior to 1:00 p.m. on a Business Day of a Borrower's request to
incur, on that day, a Revolving Advance hereunder. Should any amount required to
be paid as interest hereunder, or as fees or other charges under this Agreement
or any other agreement with Lender, or with respect to any other Obligation,
become due, same shall be deemed a request for a Revolving Advance as of the
date such payment is due, in the amount required to pay in full such interest,
fee, charge or Obligation under this Agreement or any other agreement with
Lender, and such request shall be irrevocable. Notwithstanding the foregoing,
Lender will not make any Advance pursuant to any notice unless Lender has also
received the most recent Borrowing Base Certificate required under Section 9.2
hereof. Each request for a Revolving Advance shall be deemed to be a request for
a LIBOR Rate Loan unless a Domestic Rate Loan is specifically requested.
Whenever, subsequent to the date of this Agreement, the Alternate Base Rate or
Average Monthly LIBOR Rate is increased or decreased, the applicable Revolving
Interest Rate shall be similarly changed without notice or demand by an amount
equal to the amount of such change in the Alternate Base Rate or Average Monthly
LIBOR Rate, as applicable.
2.3. DISBURSEMENT OF ADVANCE PROCEEDS. All Advances shall be disbursed
from whichever office or other place Lender may designate from time to time and,
together with any and all other Obligations of Borrowers to Lender, shall be
charged to Borrowers' Account on Lender's books. During the Term, except as
otherwise provided in Section 4.21 hereof, Borrowers may use the Revolving
Advances by borrowing, prepaying and reborrowing, all in accordance with the
terms and conditions hereof. The proceeds of each Revolving Advance requested by
Borrowers or deemed to have been requested by Borrowers under Section 2.2 hereof
shall, with respect to requested Revolving Advances to the extent Lender makes
such
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Revolving Advances, be made available to Borrower on the day so requested by way
of credit to such Borrower's operating account at Lender, or such other bank as
Borrowing Agent may designate following notification to Lender, in federal funds
or other immediately available funds or, with respect to Revolving Advances
deemed to have been requested by any Borrower, be disbursed to Lender to be
applied to the outstanding Obligations giving rise to such deemed request.
2.4. CAPITAL EXPENDITURE LOANS. (a) Subject to the terms and conditions
set forth in this Agreement (including, but not limited to, Section 8.3 hereof),
Lender agrees to make Advances to Borrowers to finance a Loan Party's purchase
of Equipment for use in such Loan Party's business ("Capital Expenditure Loans")
in the sum not to exceed eighty-five percent (85%) of the net invoice cost of
such Equipment purchased by a Loan Party (which shall be exclusive of shipping,
handling, taxes, installation and all other "soft" costs), PROVIDED that the
total amount of all outstanding Capital Expenditure Loans shall not exceed the
Maximum Capital Expenditure Amount. All Capital Expenditure Loans must be in
original principal amounts of not less than $100,000. Once repaid, a Capital
Expenditure Loan may not be reborrowed. Capital Expenditure Loans may consist of
either Domestic Rate Loans or LIBOR Rate Loans.
(b) Advances constituting Capital Expenditure Loans shall be
accumulated during each quarter (each a "Borrowing Period") during the Term.
Each Borrowing Period shall consist of three months with the first Borrowing
Period commencing on October 1, 2000 and ending on December 31, 2000. At the end
of each Borrowing Period, the sum of the principal amount of all Capital
Expenditure Loans made during such Borrowing Period will be amortized on the
basis of an eighty-four (84) month amortization schedule (such amount as
determined with respect to any Borrowing Period, the "Amortization Amount").
Monthly principal payments will be initially determined for the Capital
Expenditure Loans made during the initial Borrowing Period and the amount of
such monthly principal payments shall be increased upon the completion of each
subsequent Borrowing Period by the Amortization Amount for each such subsequent
Borrowing Period. The Capital Expenditure Loans shall be, with respect to
principal, payable in equal monthly installments based upon the amortization
schedule set forth above, commencing on the first Business Day of the month
following the Borrowing Period in which such Capital Expenditure Loans were made
and on the first day of each month thereafter, subject to acceleration upon the
occurrence of an Event of Default under this Agreement or termination of this
Agreement. Capital Expenditure Loans shall be evidenced by and subject to the
terms of one or more secured promissory notes, in substantially the form
attached hereto as EXHIBIT 2.4(b) (collectively, the "Capital Expenditure
Note").
(c) Subject to the satisfaction of the conditions set forth in
Section 8.3 hereof, in the event any Borrower desires a Capital Expenditure
Loan, Borrowing Agent shall give Lender at least three (3) Business Days prior
written notice.
2.5. MAXIMUM ADVANCES. The aggregate balance of Advances outstanding at
any time shall not exceed the Maximum Loan Amount.
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2.6. REPAYMENT OF ADVANCES.
(a) The Advances shall be due and payable in full on the last day
of the Term subject to earlier prepayment as herein provided.
(b) Each Borrower recognizes that the amounts evidenced by checks,
notes, drafts or any other items of payment relating to or proceeds of
Collateral may not be collectible by Lender on the date received. Lender shall
credit to Borrowers' Account (conditional upon final collection) all payments of
Receivables (whether received by it from a Borrower, through a lock box
arrangement or otherwise), in the case of a payment in the form of a wire
transfer, upon the Business Day following the Business Day it is received by
Lender, in the case of a payment in the form of a depository transfer check,
upon the second Business Day following the Business Day Lender deposits it for
collection and, in the case of payment in any other form, upon the third
Business Day following the Business Day after the day Lender deposits it for
collection, and for this purpose deposits of checks and other instruments by a
lock box depository bank other than Lender shall not be deemed to be deposits by
Lender.
(c) All payments of principal, interest and other amounts payable
hereunder, or under any of the related agreements shall be made to Lender at the
Payment Office not later than 1:00 P.M. (New York Time) on the due date therefor
in lawful money of the United States of America in federal funds or other funds
immediately available to Lender. Lender shall have the right to effectuate
payment on any and all Obligations due and owing hereunder by charging
Borrowers' Account or by making Advances as provided in Section 2.2 hereof.
(d) Borrowers shall pay principal, interest, and all other amounts
payable hereunder, or under any related agreement, without any deduction
whatsoever, including, but not limited to, any deduction for any setoff or
counterclaim.
2.7. REPAYMENT OF EXCESS ADVANCES. The aggregate balance of Advances
outstanding at any time in excess of the maximum amount of Advances permitted
hereunder shall be immediately due and payable without the necessity of any
demand, at the Payment Office, whether or not a Default or Event of Default has
occurred.
2.8. STATEMENT OF ACCOUNT. Lender shall maintain, in accordance with
its customary procedures, a loan account ("Borrowers' Account") in the name of
Borrowers in which shall be recorded the date and amount of each Advance made by
Lender and the date and amount of each payment in respect thereof; PROVIDED,
HOWEVER, the failure by Lender to record the date and amount of any Advance
shall not adversely affect Lender. For each month, Lender shall send to
Borrowing Agent a statement showing the accounting for the Advances made,
payments made or credited in respect thereof, and other transactions between
Lender and Borrowers, during such month. The monthly statements shall be deemed
correct and binding upon Borrowers in the absence of manifest error and shall
constitute an account stated between Lender and Borrowers unless Lender receives
a written statement of Borrowers' specific exceptions thereto within thirty-five
(35) days after such statement is received by Borrowing Agent. The records of
Lender with respect to the loan account shall be PRIMA FACIE evidence of the
amounts of Advances and other charges thereto and of payments applicable
thereto.
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2.9. LETTERS OF CREDIT AND ACCEPTANCES. Subject to the terms and
conditions hereof, Lender shall (a) issue or cause the issuance of Letters of
Credit ("Letters of Credit") or (b) accept, or cause to be accepted, drafts for
any Borrower under such Letters of Credit or drafts unrelated to drafts under
Letters of Credit ("Acceptances"); PROVIDED, HOWEVER, that Lender will not be
required to issue or cause to be issued any Letters of Credit or accept or cause
to be accepted any Acceptances to the extent that the face amount of such
Letters of Credit and Acceptances would then cause the sum of (i) the
outstanding Revolving Advances PLUS (ii) outstanding Letters of Credit (with the
requested Letter of Credit being deemed to be outstanding for purposes of this
calculation) PLUS (iii) outstanding Acceptances to exceed the lesser of (x) the
Maximum Revolving Advance Amount or (y) the Formula Amount. The maximum amount
of outstanding Letters of Credit shall not exceed $15,000,000 in the aggregate
at any time. The maximum amount of outstanding Acceptances shall not exceed
sixty (60%) percent of the amount of Revolving Advances (minus the amount
outstanding under clause (iii) of Section 2.1(a)(y) hereof) outstanding. All
disbursements or payments related to Letters of Credit and Acceptances shall be
deemed to be Revolving Advances and shall bear interest at the Revolving Advance
Rate for Domestic Loans; Letters of Credit that have not been drawn upon and
unmatured Acceptances shall not bear interest. The amount that Lender shall make
available with respect to Acceptances shall be the face amount of the applicable
draft less a discount calculated at Lender's banker's acceptance rate in effect
on the date of such discount.
2.10. ISSUANCE OF LETTERS OF CREDIT; CREATION OF ACCEPTANCES.
(a) Borrowing Agent, on behalf of Borrowers, may request Lender
to issue or cause the issuance of a Letter of Credit or create an Acceptance by
delivering to Lender at the Payment Office, Lender's standard form of Letter of
Credit and Security Agreement together with Bank's standard form of Letter of
Credit Application (collectively, the "Letter of Credit Application") with
respect to Letters of Credit to be issued and any draft, if applicable,
completed to the satisfaction of Lender and, such other certificates, documents
and other papers and information as Lender may reasonably request.
(b) Each Letter of Credit shall, among other things, (i) provide
for the payment of sight drafts when presented for honor thereunder in
accordance with the terms thereof and when accompanied by the documents
described therein and (ii) have an expiry date not later than twelve months
after such Letter of Credit's date of issuance and in no event later than the
last day of the Term. Each Letter of Credit Application and each Letter of
Credit shall be subject to the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce Publication No. 500,
and any amendments or revision thereof and, to the extent not inconsistent
therewith, the laws of the State of New York.
2.11. REQUIREMENTS FOR ISSUANCE OF LETTERS OF CREDIT AND ACCEPTANCES.
(a) In connection with the issuance of any Letter of Credit or
Acceptance, Borrowers shall indemnify, save and hold Lender harmless from any
loss, cost, expense or liability, including, without limitation, payments made
by Lender, and expenses and reasonable attorneys' fees incurred by Lender
arising out of, or in connection with, any Letter of Credit or
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Acceptance to be issued or created for any Borrower. Borrowers shall be bound by
Lender's or any issuing or accepting bank's regulations and good faith
interpretations of any Letter of Credit or Acceptance issued or created for
Borrowers' Account, although this interpretation may be different from
Borrower's own; and, neither Lender, the bank which opened the Letter of Credit,
nor any of its correspondents shall be liable for any error, negligence, or
mistakes, whether of omission or commission, in following Borrowing Agent's or
any Borrower's instructions or those contained in any Letter of Credit,
Acceptance or of any modifications, amendments or supplements thereto or in
issuing or paying any Letter of Credit or Acceptance, except for Lender's or
such correspondents' willful misconduct.
(b) Borrowing Agent shall authorize and direct any bank which
issues a Letter of Credit to name Borrower as the "Account Party" therein and to
deliver to Lender all instruments, documents, and other writings and property
received by the bank pursuant to the Letter of Credit or in connection with any
Acceptance and to accept and rely upon Lender's instructions and agreements with
respect to all matters arising in connection with the Letter of Credit, the
application therefor or any Acceptance therefor.
(c) In connection with all Letters of Credit and Acceptances
issued or caused to be issued or created by Lender under this Agreement, each
Borrower hereby appoints Lender, or its designee, as its attorney, with full
power and authority if an Event of Default or Default shall have occurred, (i)
to sign or endorse such Borrower's name upon any warehouse or other receipts,
letter of credit applications and acceptances; (ii) to sign such Borrower's name
on bills of lading; (iii) to clear Inventory through the United States of
America Customs Department ("Customs") in the name of such Borrower or Lender or
Lender's designee, and to sign and deliver to Customs officials powers of
attorney in the name of such Borrower for such purpose; and (iv) to complete in
such Borrower's name or Lender's, or in the name of Lender's designee, any
order, sale or transaction, obtain the necessary documents in connection
therewith, and collect the proceeds thereof. Neither Lender nor its attorneys
will be liable for any acts or omissions nor for any error of judgment or
mistakes of fact or law, except for Lender's or its attorney's willful
misconduct. This power, being coupled with an interest, is irrevocable as long
as any Letters of Credit or Acceptances remain outstanding.
2.12. ADDITIONAL PAYMENTS. Any sums expended by Lender due to Loan
Party's failure to perform or comply with its obligations under this Agreement
or any Other Document including, without limitation, any Loan Party's
obligations under Sections 4.2, 4.4, 4.12, 4.13, 4.14 and 6.1 hereof, may be
charged to Borrowers' Account as a Revolving Advance and added to the
Obligations.
2.13. MANDATORY PREPAYMENTS. When any Borrower sells or otherwise
disposes of any Collateral other than (i) Inventory in the ordinary course of
business, and (ii) as permitted by Section 4.3, Borrower shall repay the
Advances in an amount equal to the net proceeds of such sale (i.e., gross
proceeds less the reasonable costs of such sales or other dispositions), such
repayments to be made promptly but in no event more than one (1) Business Day
following receipt of such net proceeds. Until the date of payment, such proceeds
shall be held in trust for Lender. The foregoing shall not be deemed to be
implied consent to any such sale otherwise prohibited by the terms and
conditions hereof. Such repayments shall be applied (i) if the
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Collateral disposed of is Equipment, the purchase of which was financed by a
Capital Expenditure Loan, (x) first, to the outstanding principal installments
of the Capital Expenditure Loans in the inverse order of the maturities thereof,
(y) second, to the outstanding balance of Revolving Advances constituting
Amortizing Availability, which repayment shall reduce Amortizing Availability on
a dollar for dollar basis and (z) third, to the remaining Advances in such order
as Lender may determine, subject to Borrowers' ability to reborrow Revolving
Advances in accordance with the terms hereof or (ii) with respect to all
Collateral (other than Inventory sold in the ordinary course of business and
Equipment the purchase of which was financed by a Capital Expenditure Loan), (x)
first, to the outstanding balance of Revolving Advances constituting Amortizing
Availability, which repayment shall reduce Amortizing Availability on a dollar
for dollar basis, (y) second, to the outstanding principal installments of the
Capital Expenditure Loans in the inverse order of the maturities thereof and (z)
third, to the remaining Advances in such order as Lender may determine, subject
to Borrowers' ability to reborrow Revolving Advances in accordance with the
terms hereof.
III. INTEREST AND FEES.
3.1. INTEREST. Interest on Advances shall be payable in arrears on the
last day of each month. Interest charges shall be computed on the actual
principal amount of Advances outstanding at the end of each day at a rate per
annum equal to the Revolving Interest Rate for Domestic Rate Loans and the
Average Monthly LIBOR Rate with respect to LIBOR Rate Loans. Commencing thirty
(30) days after the due date for any financial statement required hereunder
which financial statement indicates the occurrence of an Event of Default, and
during the continuation of such Event of Default, the Obligations shall bear
interest at the applicable Revolving Interest Rate plus two (2%) percent per
annum (the "Default Rate").
3.2. LETTER OF CREDIT AND ACCEPTANCE FEES.
Borrowers shall pay Lender (i) (A) for issuing or causing the
issuance of a standby Letter of Credit, a fee computed at a rate per annum of
one and one half percent (1.5%) on the outstanding amount thereof from time to
time, (B) for issuing or causing the issuance of a Letter of Credit that is not
a standby Letter of Credit, a fee equal to one percent (1%) per annum of the
original and each increase in the face amount thereof computed on the
undisbursed amount thereof from time to time, on the actual number of days
elapsed (the fees set forth in (A) and (B) referred to as "Letter of Credit
Fees"), and (C) for the acceptance of a draft (whether or not discounted by
Lender), a fee ("Acceptance Fee") consisting of: (1) the then prevailing
discount rate applicable to Acceptances of a like tenor and amount and (2) one
percent (1%) per annum of the face amount of the accepted draft, and (ii) Bank's
other customary charges payable in connection with Letters of Credit or
Acceptances, as the case may be, as in effect from time to time (which charges
shall be furnished to Borrowing Agent by Lender upon request). Such fees and
charges shall be payable (i) in the case of any Letter of Credit, on its opening
(ii) in the case of a standby Letter of Credit, (A) monthly thereafter in
advance and (B) upon each increase in the outstanding amount thereof, (iii) in
the case of any Letter of Credit that is not a standby Letter of Credit, at the
time of each increase in face amount thereof and (iv) in the case of an
Acceptance, at the time thereof. Any such charge in effect at the time of a
particular transaction
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shall be the charge for that transaction, notwithstanding any subsequent change
in Bank's prevailing charges for that type of transaction. All Letter of Credit
Fees and Acceptance Fees payable hereunder shall be deemed earned in full on the
date when the same are due and payable hereunder and shall not be subject to
rebate or proration upon the termination of this Agreement for any reason.
On demand following acceleration of all Obligations in accordance
with the terms hereof, Borrowers will cause cash to be deposited and maintained
in an account with Lender, as cash collateral, in an amount equal to outstanding
Letters of Credit and Acceptances, and each Borrower hereby irrevocably
authorizes Lender, in its discretion, on such Borrower's behalf and in such
Borrower's name, to open such an account and to make and maintain deposits
therein, or in an account opened by such Borrower, in the amounts required to be
made by such Borrower, out of the proceeds of Receivables or other Collateral or
out of any other funds of such Borrower coming into Lender's possession at any
time. Lender will invest such cash collateral (less applicable reserves) in such
short-term money-market items as to which Lender and such Borrower mutually
agree and the net return on such investments shall be credited to such account
and constitute additional cash collateral. No Borrower may withdraw amounts
credited to any such account except upon payment and performance in full of all
Obligations and termination of this Agreement.
3.3. EARLY TERMINATION FEE. In the event Borrowers shall prepay the
Obligations in full prior to the last day of the Term (the date of such
prepayment hereinafter referred to as the "Prepayment Date"), Borrowers shall
pay to Lender an early termination fee equal to the amount set forth below if
the Prepayment Date occurs during the periods corresponding thereto:
PREPAYMENT DATE EARLY TERMINATION FEE
--------------- ---------------------
Closing Date - 12/31/00 $300,000
1/1/01 - 3/31/01 $280,000
4/1/01 - 6/30/01 $260,000
7/1/01 - 9/30/01 $240,000
10/1/01 - 12/31/01 $220,000
1/1/02 - 3/31/02 $200,000
4/1/02 - 6/30/02 $180,000
7/1/02 - 9/30/02 $160,000
10/1/02 - 12/31/02 $140,000
1/1/03 - 3/31/03 $120,000
4/1/03 - 4/01/04 $100,000
3.4. COLLATERAL MONITORING FEE. Borrowers shall pay Lender a collateral
monitoring fee equal to $5,000.00 per month commencing on the first day of the
month following the Closing Date and on the first day of each month thereafter
during the Term. The collateral monitoring fee shall be deemed earned in full on
the date when same is due and payable hereunder and shall not be subject to
rebate or proration upon termination of this Agreement for any reason.
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3.5. COMPUTATION OF INTEREST AND FEES. Interest and fees hereunder
shall be computed on the basis of a year of 360 days and for the actual number
of days elapsed. If any payment to be made hereunder becomes due and payable on
a day other than a Business Day, the due date thereof shall be extended to the
next succeeding Business Day and interest thereon shall be payable at the
Revolving Interest Rate applicable to Domestic Rate Loans during such extension.
3.6. MAXIMUM CHARGES. In no event whatsoever shall interest and other
charges charged hereunder exceed the highest rate permissible under law which a
court of competent jurisdiction shall, in a final determination, deem applicable
hereto. In the event that a court determines that Lender has received interest
and other charges hereunder in excess of the highest rate applicable hereto,
such excess interest shall be first applied to any unpaid principal balance owed
by Borrowers, and if the then remaining excess interest is greater than the
previously unpaid principal balance, Lender shall promptly refund such excess
amount to Borrowers as of the date paid and the provisions hereof shall be
deemed amended to provide for such permissible rate.
3.7. REGULATORY CHANGES. If (a) any Regulatory Change shall directly or
indirectly (i) reduce the amount of any sum received or receivable by Lender
with respect to any Advance or the return to be earned by Lender on any Advance,
(ii) impose any reserve requirements on Lender or any affiliate of Lender that
is attributable to the making or maintaining of, or Lender's commitment to make,
any Advance, (iii) reduce, or have the effect of reducing, the rate of return on
the capital of Lender or any affiliate of Lender allocable to any Advance or
Lender's commitment to make any Advance and (b) such reduction, increased
reserve or payment shall not be fully compensated for by an adjustment in the
applicable rates of interest payable hereunder, then Lender shall promptly
notify Borrowing Agent of such amounts as Lender determines will, together with
any adjustment in the applicable rates of interest payable hereunder, fully
compensate for such reduction, increased cost or payment. Borrowers and Lender
shall thereafter in good faith negotiate an adjustment to the fees payable or
increased interest payable hereunder which, in the reasonable judgment of
Borrowers and Lender, will adequately compensate Lender (or Lender affiliate) in
light of these circumstances. In the event that Borrowers and Lender are unable
to agree on such adjustment within thirty (30) days after the date on which
Lender sends such notice to Borrowing Agent, Borrowers may pay the Advances and
terminate this Agreement without payment of the Termination Fee provided for in
Section 13.1 at any time within the next one hundred eighty (180) days, but with
payment of the amount of money that Lender has determined will adequately
compensate Lender or its affiliate in these circumstances for the period from
the later of the date of such Regulatory Change or the date that is three (3)
months prior to the date of Lender's notice to Borrowing Agent of such
Regulatory Change. In the event Borrowers and Lender agree on such adjustment,
such amounts shall be paid, in the case of those applicable to prior periods,
within fifteen (15) days after request by Lender for such payment or, in the
case of those applicable to future periods, on the dates specified, or
determined in accordance with a method specified, by Lender.
3.8. CLOSING FEE. Borrowers shall pay Lender a closing fee equal to
$25,000 on the Closing Date.
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3.9. TAXES. (a) Any and all payments by any Loan Party to Lender under
this Agreement, the Guarantee and the Guarantor Security Documents shall be paid
in full without set off or counterclaim and made free and clear of, and without
deduction or withholding for, any present or future taxes.
(b) Each Loan Party agrees to indemnify and hold harmless the
Lender for the full amount of taxes (including any taxes imposed by any
jurisdiction on amounts payable under this Section) paid by Lender (save its
income taxes) and any liability (including penalties, interest, additions to tax
and expenses) arising therefrom or with respect thereto, whether or not such
taxes were correctly or legally asserted. Payment under this indemnification
shall be made within thirty (30) days after the date Lender makes written demand
therefor.
(c) If any Loan Party shall be required by law to deduct or
withhold any taxes from or in respect of any sum payable hereunder to Lender,
then:
(i) the sum payable shall be increased as necessary so that
after making all required deductions and withholdings (including
deductions and withholdings applicable to additional sums payable
under this Section) the Lender receives an amount equal to the sum
it would have received had no such deductions or withholdings been
made;
(ii) Borrowers shall, or, if applicable, CMP shall cause
Canadian Guarantor to, make such deductions and withholdings;
(iii) Borrowers shall, or, if applicable, CMP shall cause
Canadian Guarantor to, pay the full amount deducted or withheld to
the relevant taxing authority or other authority in accordance
with applicable law; and
(iv) Borrowers shall, or, if applicable, CMP shall cause
Canadian Guarantor to, also pay to Lender, at the time interest is
paid, all additional amounts which the Lender specifies as
necessary to preserve the after-tax yield the Lender would have
received if such taxes had not been imposed.
(d) Within thirty (30) days after the date of any payment by
any Loan Party of taxes, such Loan Party shall furnish Lender the original or a
certified copy of a receipt evidencing payment thereof, or other evidence of
payment satisfactory to the Lender.
3.10. SURVIVAL. The obligations of Loan Parties under Sections 2.2(f),
3.7 and 3.9 shall survive termination of this Agreement and the Other Documents
and payment in full of the Obligations.
IV. COLLATERAL: GENERAL TERMS
4.1. SECURITY INTEREST IN THE COLLATERAL. To secure the prompt payment
and performance to Lender of the Obligations, each Loan Party confirms its prior
grant of a security
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interest to Lender in all of the Collateral and each Loan Party hereby assigns,
pledges and grants to Lender a continuing security interest in and to all of its
Collateral, whether now owned or existing or hereafter acquired or arising and
wheresoever located. Each Loan Party shall mark its books and records as may be
necessary or appropriate to evidence, protect and perfect Lender's security
interest and shall cause its financial statements to reflect such security
interest.
4.2. PERFECTION OF SECURITY INTEREST. Each Loan Party take all action
that may be necessary or desirable, or that Lender may request, so as at all
times to maintain the validity, perfection, enforceability and priority of
Lender's security interest in the Collateral or to enable Lender to protect,
exercise or enforce its rights hereunder and in the Collateral, including, but
not limited to (i) immediately discharging all Liens other than Permitted
Encumbrances, (ii) obtaining landlords' or mortgagees' lien waivers, (iii)
delivering to Lender, endorsed or accompanied by such instruments of assignment
as Lender may specify, and stamping or marking, in such manner as Lender may
specify, any and all chattel paper, instruments, letters of credit and advices
thereof and documents evidencing or forming a part of the Collateral, (iv)
entering into warehousing, lockbox and other custodial arrangements satisfactory
to Lender, and (v) executing and delivering financing statements, instruments of
pledge, mortgages, notices and assignments, in each case in form and substance
satisfactory to Lender, relating to the creation, validity, perfection,
maintenance or continuation of Lender's security interest under the Uniform
Commercial Code, the PPSA, or other applicable law. All charges, expenses and
fees Lender may incur in doing any of the foregoing, and any local taxes
relating thereto, shall be charged to Borrowers' Account and added to the
Obligations, or, at Lender's option, shall be paid to Lender immediately upon
demand.
4.3. DISPOSITION OF COLLATERAL. Each Loan Party shall safeguard and
protect all Collateral for Lender's general account and make no disposition
thereof whether by sale, lease or otherwise except (a) the sale of Inventory in
the ordinary course of business and (b) the disposition or transfer of obsolete
and worn-out Equipment in the ordinary course of business during any fiscal year
having an aggregate fair market value of not more than $250,000 and only to the
extent that (i) the proceeds of any such disposition are used to acquire
replacement Equipment which is subject to Lender's first priority security
interest or (ii) the proceeds of which are remitted to Lender to be applied to
the Advances, provided that the proceeds of Equipment originally purchased with
the proceeds of a Capital Expenditure Loan shall first be applied as a
prepayment of the outstanding balance of Capital Expenditure Loans and second to
the balance of Advances as determined by Agent.
4.4. PRESERVATION OF COLLATERAL. Following the occurrence and during
the continuance of a Default or Event of Default, in addition to the rights and
remedies set forth in Section 11.1 hereof, Lender: (a) may at any time take such
steps as Lender deems necessary to protect Lender's interest in and to preserve
the Collateral, including the hiring of such security guards or the placing of
other security protection measures as Lender may deem appropriate; (b) may
employ and maintain at any Loan Party's premises a custodian who shall have full
authority to do all acts necessary to protect Lender's interests in the
Collateral; (c) may lease warehouse facilities to which Lender may move all or
part of the Collateral; (d) may use any Loan Party's owned or leased lifts,
hoists, trucks and other facilities or equipment for handling or removing the
Collateral; and (e) shall have, and is hereby granted, a right of ingress and
egress to the
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places where the Collateral is located, and may proceed over and through any of
any Loan Party's owned or leased property. Each Loan Party shall and CMP shall
cause Canadian Guarantor to, cooperate fully with all of Lender's efforts to
preserve the Collateral and will take such actions to preserve the Collateral as
Lender may direct. All of Lender's expenses of preserving the Collateral,
including any expenses relating to the bonding of a custodian, shall be charged
to Borrowers' Account and added to the Obligations.
4.5. OWNERSHIP OF COLLATERAL. With respect to the Collateral, at the
time the Collateral becomes subject to Lender's security interest: (a) Borrower
or in the case of the Guarantor Collateral, the respective Guarantor, shall be
the sole owner of and fully authorized and able to sell, transfer, pledge or
grant a first security interest in each and every item of the Collateral to
Lender; and, except for Permitted Encumbrances the Collateral shall be free and
clear of all Liens and encumbrances whatsoever; (b) each document and agreement
executed by any Loan Party or delivered to Lender in connection with this
Agreement shall be true and correct in all respects; (c) all signatures and
endorsements of each Loan Party that appear on such documents and agreements
shall be genuine and each Loan Party shall have full capacity to execute same;
and (d) each Loan Party's Equipment and Inventory shall be located at the
locations set forth on SCHEDULE 4.5 and shall not be removed from such
location(s) without the prior written consent of Lender except with respect to
(i) the sale of Inventory in the ordinary course of business, (ii) Equipment to
the extent permitted in Section 4.3 hereof, and (iii) up to five percent (5%) of
the book value of Inventory which may at any time be located at outside
processors not set forth on SCHEDULE 4.5.
4.6. DEFENSE OF LENDER'S INTERESTS. Until (a) payment and performance
in full of all of the Obligations and (b) termination of this Agreement,
Lender's interests in the Collateral shall continue in full force and effect.
During such period no Loan Party shall, without Lender's prior written consent,
pledge, sell (except Inventory in the ordinary course of business and Equipment
to the extent permitted in Section 4.3 hereof), assign, transfer, create or
suffer to exist a Lien upon or encumber or allow or suffer to be encumbered in
any way except for Permitted Encumbrances, any part of the Collateral. Each Loan
Party shall defend Lender's interests in the Collateral against any and all
Persons whatsoever. At any time following demand by Lender for payment of all
Obligations, Lender shall have the right to take possession of the indicia of
the Collateral and the Collateral in whatever physical form contained, including
without limitation: labels, stationery, documents, instruments and advertising
materials. If Lender exercises this right to take possession of the Collateral,
the applicable Loan Party shall, upon demand, assemble it in the best manner
possible and make it available to Lender at a place reasonably convenient to
Lender. In addition, with respect to all Collateral, Lender shall be entitled to
all of the rights and remedies set forth herein and further provided by the
Uniform Commercial Code, the PPSA or other applicable law. Each Loan Party
shall, and Lender may, at its option, instruct all suppliers, carriers,
forwarders, warehouses or others receiving or holding cash, checks, Inventory,
documents or instruments in which Lender holds a security interest to deliver
same to Lender or subject to Lender's order and if they shall come into any Loan
Party's possession, they, and each of them, shall be held by such Loan Party in
trust as Lender's trustee, and the applicable Loan Party will immediately
deliver them to Lender in their original form together with any necessary
endorsement.
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4.7. BOOKS AND RECORDS. Each Loan Party shall (a) keep proper books of
record and account in which full, true and correct entries will be made of all
dealings or transactions of or in relation to its business and affairs; (b) set
up on its books accruals with respect to all taxes, assessments, charges, levies
and claims; and (c) on a reasonably current basis set up on its books, from its
earnings, allowances against doubtful Receivables, advances and investments and
all other proper accruals (including without limitation by reason of
enumeration, accruals for premiums, if any, due on required payments and
accruals for depreciation, obsolescence, or amortization of properties), which
should be set aside from such earnings in connection with its business. All
determinations pursuant to this subsection shall be made in accordance with, or
as required by, GAAP consistently applied in the opinion of such independent
public accountant as shall then be regularly engaged by Loan Parties.
4.8. FINANCIAL DISCLOSURE. Each Loan Party hereby authorizes all
federal, state and municipal authorities to furnish to Lender copies of reports
or examinations relating to any Loan Party, whether made by such Loan Party or
otherwise; however, Lender will attempt to obtain such information or materials
directly from Borrowing Agent prior to obtaining such information or materials.
4.9. COMPLIANCE WITH LAWS. Each Loan Party shall comply in all material
respects with all acts, rules, regulations and orders of any legislative,
administrative or judicial body or official applicable to the Collateral or any
part thereof or to the operation of any Loan Party's business the non-compliance
with which would have a material adverse effect on the Collateral, or the
operations, business or condition (financial or otherwise) of Loan Parties. Any
Loan Party may, however, contest or dispute any acts, rules, regulations, orders
and directions of those bodies or officials in any reasonable manner, provided
that any related Lien is inchoate or stayed and sufficient reserves are
established to the reasonable satisfaction of Lender to protect Lender's lien on
or security interest in the Collateral. The Collateral at all times shall be
maintained in accordance with the requirements of all insurance carriers which
provide insurance with respect to the Collateral so that such insurance shall
remain in full force and effect.
4.10. INSPECTION OF PREMISES. At all reasonable times Lender shall have
full access to and the right to audit, check, inspect and make abstracts and
copies from each Loan Party's books, records, audits, correspondence and all
other papers relating to the Collateral and the operation of each Loan Party's
business. Upon two (2) days prior notice, Lender and its agents may enter upon
any of each Loan Party's premises at any time during business hours and at any
other reasonable time, and from time to time, for the purpose of inspecting the
Collateral and any and all records pertaining thereto and the operation of each
Loan Party's business; PROVIDED, THAT, no notice shall be required upon the
occurrence and during the continuance of a Default.
4.11. INSURANCE. Each Loan Party shall bear the full risk of any loss
of any nature whatsoever with respect to the Collateral. At Borrowers' own cost
and expense in amounts and with carriers acceptable to Lender, each Loan Party
shall (a) keep all its insurable properties and properties in which such Loan
Party has an interest insured against the hazards of fire, flood, sprinkler
leakage, those hazards covered by extended coverage insurance and such other
hazards, and for such amounts, as is customary in the case of companies engaged
in businesses similar to each Loan Party's including, without limitation,
business interruption insurance; (b) maintain a
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bond in such amounts as is customary in the case of companies engaged in
businesses similar to each Loan Party's insuring against larceny, embezzlement
or other criminal misappropriation of insured's officers and employees who may
either singly or jointly with others at any time have access to the assets or
funds of such Loan Party either directly or through authority to draw upon such
funds or to direct generally the disposition of such assets; (c) maintain public
and product liability insurance against claims for personal injury, death or
property damage suffered by others; (d) maintain all such worker's compensation
or similar insurance as may be required under the laws of any state or
jurisdiction in which such Loan Party is engaged in business; (e) furnish Lender
with (i) certificates of insurance in form and substance reasonably satisfactory
to Lender showing continual maintenance and renewal, and (ii) appropriate loss
payable endorsements in form and substance satisfactory to Lender, naming Lender
as a co-insured and loss payee as its interests may appear with respect to all
insurance coverage referred to in clauses (a), (b) and (c) above, and providing
(A) that all proceeds thereunder shall be payable to Lender, (B) no such
insurance shall be affected by any act or neglect of the insured or owner of the
property described in such policy, and (C) that such policy and loss payable
clauses may not be cancelled, amended or terminated unless at least thirty (30)
days' prior written notice is given to Lender. In the event of any loss
thereunder, the carriers named therein hereby are directed by Lender, each Loan
Party to make payment for such loss to Lender and not to such Loan Party and
Lender jointly. If any insurance losses are paid by check, draft or other
instrument payable to any Loan Party and Lender jointly, Lender may endorse such
Loan Party's name thereon and do such other things as Lender may deem advisable
to reduce the same to cash. Upon the occurrence and during the continuance of a
Default, Lender is hereby authorized to adjust and compromise claims under
insurance coverage referred to in clauses (a) and (b) above. All loss recoveries
received by Lender upon any such insurance may be applied to the Obligations, in
such order as Lender in its sole discretion shall determine. Any surplus shall
be paid by Lender to Borrowing Agent or applied as may be otherwise required by
law. Any deficiency thereon shall be paid by Loan Parties to Lender, on demand.
4.12. FAILURE TO PAY INSURANCE. If any Loan Party fails to obtain
insurance as hereinabove provided, or to keep the same in force, Lender, if
Lender so elects, may obtain such insurance and pay the premium therefor for
Borrowers' account, and charge Borrowers' Account therefor and such expenses so
paid shall be part of the Obligations.
4.13. PAYMENT OF TAXES. Each Loan Party shall pay, when due, all taxes,
assessments and other Charges lawfully levied or assessed upon such Loan Party
or any of the Collateral including, without limitation, real and personal
property taxes, assessments and charges and all franchise, income, employment,
social security benefits, withholding, and sales taxes. If any tax by any
governmental authority is or may be imposed on or as a result of any transaction
between any Loan Party and Lender which Lender may be required to withhold or
pay or if any taxes, assessments, or other Charges remain unpaid after the date
fixed for their payment, or if any claim shall be made which, in Lender's
opinion, may possibly create a valid Lien on the Collateral, upon reasonable
notice to Borrowing Agent, Lender may pay the taxes, assessments or Charges and
each Borrower hereby indemnifies and holds Lender harmless in respect thereof.
Lender will not pay any taxes, assessments or Charges to the extent that any
Loan Party has contested or disputed those taxes, assessments or Charges in good
faith, by expeditious protest, administrative or judicial appeal or similar
proceeding provided that any related tax lien is stayed
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and sufficient reserves are established to the reasonable satisfaction of Lender
to protect Lender's security interest in or Lien on the Collateral. The amount
of any payment by Lender under this Section 4.13 shall be charged to Borrowers'
Account as a Revolving Advance and added to the Obligations and, until Borrower
shall furnish Lender with an indemnity therefor (or supply Lender with evidence
satisfactory to Lender that due provision for the payment thereof has been
made), Lender may hold without interest any balance standing to any Loan Party's
credit and Lender shall retain its security interest in any and all Collateral
held by Lender.
4.14. PAYMENT OF LEASEHOLD OBLIGATIONS. Each Loan Party shall at all
times pay, when and as due (and before the expiration of any applicable grace
period), its rental obligations under all leases under which it is a tenant, and
shall otherwise comply, in all material respects, with all other terms of such
leases and keep them in full force and effect and, at Lender's request, will
provide evidence of having done so.
4.15. RECEIVABLES.
(a) NATURE OF RECEIVABLES. Each of the Receivables shall be a
bona fide and valid account representing a bona fide indebtedness incurred by
the Customer therein named, for a fixed sum as set forth in the invoice relating
thereto (provided immaterial or unintentional invoice errors shall not be deemed
to be a breach hereof) with respect to an absolute sale or lease and delivery of
goods upon stated terms of any Loan Party, as the case may be, or work, labor or
services theretofore rendered by such Loan Party as of the date each Receivable
is created. Same shall be due and owing in accordance with the applicable Loan
Party's standard terms of sale without dispute, setoff or counterclaim except as
may be stated on the accounts receivable schedules delivered by Loan Parties to
Lender.
(b) SOLVENCY OF CUSTOMERS. Each Customer, to the best of each
Loan Party's knowledge, as of the date each Receivable is created, is and will
be solvent and able to pay all Receivables on which the Customer is obligated in
full when due or with respect to such Customers of any Loan Party who are not
solvent such Loan Party has set up on its books and in its financial records bad
debt reserves adequate to cover such Receivables.
(c) LOCATIONS OF BORROWERS AND GUARANTORS. CMP's chief executive
office is located at 2200 Georgetown Drive, Suite 301, Sewickley, Pennsylvania
15143. Canadian Guarantor's chief executive office and principal place of
business is located at 65 Imperial Street, P.O. Box 66, Station "B", Hamilton,
Ontario, Canada L8L 7V2. Alkar's chief executive office is 29685 Calahan Road,
Roseville, Michigan 48066. Until written notice is given to Lender by Borrowing
Agent of any other office at which any Loan Party keeps its records pertaining
to Receivables, all such records shall be kept at such executive office except
that original invoices of the Borrowers may be kept at 45 South Montgomery
Avenue, Youngstown, Ohio.
(d) COLLECTION OF RECEIVABLES. Until any Loan Party's authority
to do so is terminated by Lender (which notice Lender may give at any time
following the occurrence and during the continuance of an Event of Default or a
Default), each Borrower will, at such Borrower's sole cost and expense, but on
Lender's behalf and for Lender's account, collect as
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Lender's property and in trust for Lender all amounts received on such
Borrower's Receivables, and shall not, in the case of such Borrower's
Receivables, commingle such collections with any Loan Party's funds or use the
same except to pay Obligations. Each Borrower shall, upon request, deliver (and,
in the case of any Guarantor, upon request following the occurrence and during
the continuance of an Event of Default or a Default, cause such Guarantor to
deliver) to Lender in original form and on the date of receipt thereof, all
checks, drafts, notes, money orders, acceptances, cash and other evidences of
Indebtedness.
(e) NOTIFICATION OF ASSIGNMENT OF RECEIVABLES. At any time
following the occurrence and during the continuance of an Event of Default or a
Default, Lender shall have the right to send notice of the assignment of, and
Lender's security interest in, the Receivables to any and all Customers or any
third party holding or otherwise concerned with any of the Collateral.
Thereafter, Lender shall have the sole right to collect the Receivables, take
possession of the Collateral, or both. Lender's actual collection expenses,
including, but not limited to, stationery and postage, telephone and telegraph,
secretarial and clerical expenses and the salaries of any collection personnel
used for collection, may be charged to Borrowers' Account and added to the
Obligations.
(f) POWER OF LENDER TO ACT ON EACH LOAN PARTY'S BEHALF. Lender
shall have the right to receive, endorse, assign or deliver in the name of
Lender or any Loan Party any and all checks, drafts and other instruments for
the payment of money relating to the Receivables, and each Loan Party hereby
waives notice of presentment, protest and non-payment of any instrument so
endorsed. Each Loan Party hereby constitutes Lender or Lender's designee as each
Loan Party's attorney with power (i) to endorse such Borrower's name upon any
notes, acceptances, checks, drafts, money orders or other evidences of payment
or Collateral; (ii) to sign such Borrower's name on any invoice or bill of
lading relating to any of the Receivables, drafts against Customers, assignments
and verifications of Receivables; (iii) to send verifications of Receivables to
any Customer; (iv) to sign each Loan Party's name on all financing statements or
any other documents or instruments deemed necessary or appropriate by Lender to
preserve, protect, or perfect Lender's interest in the Collateral and to file
same; and (v) to do all other acts and things necessary to carry out this
Agreement, Lender shall have the right at any time following the occurrence and
during the continuance of an Event of Default or Default (i) to demand payment
of the Receivables; (ii) to enforce payment of the Receivables by legal
proceedings or otherwise; (iii) to exercise all of each Loan Party's rights and
remedies with respect to the collection of the Receivables and any other
Collateral; (iv) to settle, adjust, compromise, extend or renew the Receivables;
(v) to settle, adjust or compromise any legal proceedings brought to collect
Receivables; (vi) to prepare, file and sign such Loan Party's name on a proof of
claim in bankruptcy or similar document against any Customer; (vii) to prepare,
file and sign such Loan Party's name on any notice of Lien, assignment or
satisfaction of Lien or similar document in connection with the Receivables; and
(viii) to change the address for delivery of mail addressed to each Loan Party
to such address as Lender may designate and to receive, open and dispose of all
mail addressed to each Loan Party (with all mail not constituting, evidencing or
relating to the Collateral to be forwarded by Lender to each Loan Party). All
acts of said attorney or designee are hereby ratified and approved, and said
attorney or designee shall not be liable for any acts of omission or commission
nor for any error of judgment or mistake of
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fact or of law, unless done maliciously or with gross (not mere) negligence;
this power being coupled with an interest is irrevocable while any of the
Obligations remain unpaid.
(g) NO LIABILITY. Lender shall not, under any circumstances or in
any event whatsoever, have any liability for any error or omission or delay of
any kind occurring in the settlement, collection or payment of any of the
Receivables or any instrument received in payment thereof, or for any damage
resulting therefrom. Following the occurrence and during the continuance of an
Event of Default or Default the Lender may, without notice or consent from any
Loan Party, sue upon or otherwise collect, extend the time of payment of,
compromise or settle for cash, credit or upon any terms any of the Receivables
or any other securities, instruments or insurance applicable thereto or release
any obligor thereof. Lender is authorized and empowered to accept following the
occurrence of an Event of Default or Default the return of the goods represented
by any of the Receivables, without notice to or consent by any Loan Party, all
without discharging or in any way affecting any Loan Party's liability
hereunder.
(h) ESTABLISHMENT OF A LOCKBOX ACCOUNT, DOMINION ACCOUNT. All
proceeds of Collateral other than Guarantor Collateral shall, at the direction
of Lender, be deposited by each Borrower into a lockbox account, dominion
account or such other "blocked account" ("Blocked Accounts") as Lender may
require pursuant to an arrangement with such bank as may be selected by
Borrowing Agent and be acceptable to Lender. Each Borrower shall issue to any
such bank, an irrevocable letter of instruction directing said bank to transfer
such funds so deposited to Lender, either to any account maintained by Lender at
said bank or by wire transfer to appropriate account(s) of Lender. All funds
deposited in such "blocked account" shall immediately become the property of
Lender and each Borrower shall obtain the agreement by such bank to waive any
offset rights against the funds so deposited. Lender assumes no responsibility
for such "blocked account" arrangement, including without limitation, any claim
of accord and satisfaction or release with respect to deposits accepted by any
bank thereunder. Alternatively in the case of Borrowers, and upon demand by
Lender in the case of each Guarantor, Lender may establish depository accounts
("Depository Accounts") in the name of Lender at a bank or banks for the deposit
of such funds and such Loan Party, as the case may be, shall deposit all
proceeds of Collateral or cause same to be deposited, in kind, in such
Depository Accounts of Lender in lieu of depositing same to the Blocked
Accounts.
(i) ADJUSTMENTS. No Borrower will and will not permit any
Guarantor to, without Lender's consent, compromise or adjust any Receivables (or
extend the time for payment thereof) or accept any returns of merchandise or
grant any additional discounts, allowances or credits thereon except for those
compromises, adjustments, returns, discounts, credits and allowances as have
been heretofore customary in the business of such Loan Party.
4.16. INVENTORY. All Inventory of Borrowers has been, and will be,
produced by Borrowers in accordance with the Federal Fair Labor Standards Act of
1938, as amended, and all rules, regulations and orders thereunder.
4.17. MAINTENANCE OF EQUIPMENT. Except as set forth in Section 4.3, the
Equipment shall be maintained in good operating condition and repair (reasonable
wear and tear excepted) and all necessary replacements of and repairs thereto
shall be made so that the value and
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operating efficiency of the Equipment shall be maintained and preserved.
Borrowers shall not, and will not permit any Guarantor to, use or operate the
Equipment in violation of any law, statute, ordinance, code, rule or regulation.
4.18. EXCULPATION OF LIABILITY. Nothing herein contained shall be
construed to constitute Lender as any Loan Party's agent for any purpose
whatsoever, nor shall Lender be responsible or liable for any shortage,
discrepancy, damage, loss or destruction of any part of the Collateral wherever
the same may be located and regardless of the cause thereof. Lender does not,
whether by anything herein or in any assignment or otherwise, assume any of any
Loan Party's obligations under any contract or agreement assigned to Lender, and
Lender shall not be responsible in any way for the performance by any Loan Party
of any of the terms and conditions thereof.
4.19. ENVIRONMENTAL MATTERS.
(a) Borrowers will, and CMP will cause each Guarantor to, ensure
that the Real Property and Responsible Premises remains in material compliance
with all Environmental Laws and it will not place any Hazardous Substances on
any Real Property or Responsible Premises except as not prohibited by applicable
law or appropriate governmental authorities.
(b) Each Loan Party will maintain a system to assure and monitor
continued compliance with all applicable Environmental Laws which system shall
include periodic reviews of such compliance.
(c) Borrowers will, and, in the case of the Responsible Premises,
Canadian Guarantor shall, (i) employ in connection with its use of the Real
Property and Responsible Premises appropriate technology necessary to maintain
compliance with any applicable Environmental Laws and (ii) dispose of any and
all Hazardous Waste generated at the Real Property and Responsible Premises only
at facilities and with carriers that maintain valid permits under RCRA, Ontario
EPA and any other applicable Environmental Laws. Each Loan Party shall use its
best efforts to obtain certificates of disposal, such as hazardous waste
manifest receipts, from all treatment, transport, storage or disposal facilities
or operators employed by such Loan Party, as the case may be, in connection with
the transport or disposal of any Hazardous Waste generated at the Real Property
or Responsible Premises.
(d) Within thirty (30) Business Days after receipt by any Loan
Party of a Notice of Release of Hazardous Discharge (as hereafter defined) or
Environmental Complaint (as hereafter defined), Borrowing Agent shall give
written notice thereof to the Lender and simultaneously therewith Borrowing
Agent shall furnish such information about the Notice of Release of Hazardous
Discharge or Environmental Complaint as may be in its or such Loan Party's
possession. Such information is to be provided to allow Lender to protect its
security interest in the Collateral and is not intended to create nor shall it
create any obligation upon Lender with respect thereto. For purposes of this
paragraph, the following shall have the following meanings:
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"Notice of Release of Hazardous Discharge" shall mean written notice of
any Release of a reportable quantity of any Hazardous Substance at the Real
Property or Responsible Premises (such a Release of any Hazardous Substance
herein referred to as a "Hazardous Discharge") whether received by any Loan
Party or given by any Loan Party to an applicable Governmental Authority which
is likely to or may result in an expenditure in excess of $500,000 with respect
to any Release or in excess of $2,000,000 in the aggregate during the Term with
respect to all Releases.
"Environmental Complaint" shall mean any written notice of violation,
notification of potential responsibility for investigation of clean-up of
environmental conditions at the Real Property or Responsible Premises, any
demand letter or complaint, order, citation or other written notice with regard
to any Hazardous Discharge or violation of Environmental Laws affecting the Real
Property or Responsible Premises or any Loan Party's interest therein which by
the express terms thereof or absence such express terms in such Loan Party's
reasonable judgment is likely to or may result in an expenditure in excess of
$500,000 with respect to any Release or in excess of $2,000,000 in the aggregate
during the Term with respect to all Releases.
Loan Parties shall, and in the case of the Responsible Premises,
Canadian Guarantor shall, promptly forward to Lender all documents and reports
concerning a Hazardous Discharge at the Real Property or Responsible Premises
for which Borrowing Agent has furnished notice to the Lender as required under
this Section 4.19(d).
(e) Borrowing Agent shall promptly forward to Lender copies of
any written notification of potential liability, demand letter relating to
potential responsibility with respect to the investigation or cleanup of
Hazardous Substances at any other site owned, operated or used by any Loan Party
to dispose of Hazardous Substances which by the express terms thereof or absent
such express terms is likely to or may result in an expenditure in excess of
$500,000 with respect to any Release or in excess of $2,000,000 in the aggregate
during the Term with respect to all Releases. Such information is to be provided
solely to allow Lender to protect Lender's security interest in the Real
Property and the Collateral.
(f) Each Loan Party shall respond as a reasonably prudent owner
within a reasonable time to any Notice of Release of Hazardous Discharge or
Environmental Complaint and take all necessary action in order to safeguard the
health of any Person and to avoid subjecting the Collateral or Real Property to
any Lien. If any Loan Party shall fail to respond promptly to any Notice of
Release of Hazardous Discharge or Environmental Complaint or any Loan Party
shall fail to comply with any of the requirements of any Environmental Laws,
Lender may, but without the obligation to do so, for the sole purpose of
protecting Lender's interest in Collateral: (A) give such notices or (B) enter
onto the Real Property or Responsible Premises (or authorize third parties to
enter onto the Real Property or Responsible Premises) and take such actions as
Lender (or such third parties as directed by Lender) deem reasonably necessary
or advisable, to clean up, remove, mitigate or otherwise deal with any such
Hazardous Discharge or Environmental Complaint. All reasonable costs and
expenses incurred by Lender (or such third parties) in the exercise of any such
rights, including any sums paid in connection with any judicial or
administrative investigation or proceedings, fines and penalties, together with
interest thereon from the date expended at the Default Rate for Domestic Rate
Loans constituting
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Revolving Advances shall be paid upon demand by Borrowers, and until paid shall
be added to and become a part of the Obligations secured by the Liens created by
the terms of this Agreement or any other agreement between Lender and any Loan
Party.
(g) Within a reasonable time upon receipt of Notice of Release of
Hazardous Discharge or Environmental Complaint under Section 4.19(d) hereof,
Borrowing Agent shall provide Lender, at Borrowers' expense, with an
environmental site assessment or environmental audit report prepared by an
environmental engineering firm acceptable in the reasonable opinion of Lender,
to assess with a reasonable degree of certainty the existence of a Hazardous
Discharge and the potential costs in connection with abatement, cleanup and
removal of any Hazardous Substances found on, under, at or within the Real
Property or Responsible Premises and whether or not any abatement or remediation
is necessary. Any report or investigation of such Hazardous Discharge proposed
and deemed to be acceptable to an appropriate Authority that is charged to
oversee the clean-up of such Hazardous Discharge shall be acceptable to Lender.
If such estimates, individually or in the aggregate, exceed $500,000 with
respect to any Release or $2,000,000 in the aggregate during the Term with
respect to all Releases, Lender shall have the right to require Borrowers to
post a bond, letter of credit or other security reasonably satisfactory to
Lender to secure payment of these costs and expenses.
(h) Loan Parties shall defend and indemnify Lender and hold
Lender harmless from and against all loss, liability, damage and expense,
claims, costs, fines and penalties, including attorney's fees, suffered or
incurred by Lender under or on account of any Environmental Laws, including,
without limitation, the assertion of any lien thereunder, with respect to any
Hazardous Discharge, the presence of any Hazardous Substances affecting the Real
Property or Responsible Premises, whether or not the same originates or emerges
from the Real Property or Responsible Premises or any contiguous real estate,
including as a result of any loss of value of the Real Property or the
Collateral as a result of the foregoing except to the extent such loss,
liability, damage and expense is attributable to any Hazardous Discharge
resulting from actions on the part of Lender. Loan Parties' obligations under
this Section 4.19 shall arise upon the discovery of the presence of any
Hazardous Substances at the Real Property or Responsible Premises, whether or
not any federal, provincial, state, or local environmental agency has taken or
threatened any action in connection with the presence of any Hazardous
Substances. Loan Parties' obligation and the indemnifications hereunder shall
survive the termination of this Agreement.
(i) For purposes of Section 4.19 and 5.7, all references to Real
Property shall be deemed to include all of Loan Parties' right, title and
interest in and to leased premises.
4.20. FINANCING STATEMENTS. Except for the financing statements filed
by Lender and the financing statements described on SCHEDULE 1.2(b), no
financing statement covering any of the Collateral or any proceeds thereof is on
file in any public office.
4.21. RELEASE OF SECURITY INTEREST IN EQUIPMENT. At such time as
Amortizing Availability is reduced to zero, whether as a result of scheduled
reductions in Amortizing Availability or by prepayment without penalty at the
option of Borrowers (which prepayment shall be made via financing from a third
party lender as set forth in Section 7.8 hereof), and all
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accrued interest on such Amortizing Availability to such time has been paid by
Borrower, Lender shall release its Liens upon the fixed assets, including
Equipment, of each Loan Party other than Equipment purchased with the proceeds
of a Capital Expenditure Loan.
V. REPRESENTATIONS AND WARRANTIES.
Each Loan Party represents and warrants as follows:
5.1. AUTHORITY. Each Loan Party has, with respect to any and all of
this Agreement or the Other Documents into which it may be required to enter or
under which it assumes any Obligations, full power, authority and legal right to
enter into this Agreement and the Other Documents and perform all Obligations
hereunder and thereunder. The execution, delivery and performance hereof and of
the Other Documents (a) are within such Loan Party's corporate powers, have been
duly authorized, are not in contravention of law or the terms of any Loan
Party's by-laws, certificate of incorporation, articles of amalgamation or other
applicable documents relating to any Loan Party's formation or to the conduct of
any Loan Party's business or of any material agreement or undertaking to which
any Loan Party is a party or by which any Loan Party is bound, and (b) will not
conflict with nor result in any breach in any of the provisions of or constitute
a default under or result in the creation of any Lien except Permitted
Encumbrances upon any asset of any Loan Party under the provisions of any
agreement, charter document, instrument, by-law, or other instrument to which
any Loan Party is a party or by which it may be bound.
5.2. FORMATION AND QUALIFICATION.
(a) CMP is duly incorporated and in good standing under the laws
of the State of New York, Canadian Guarantor is duly amalgamated and in good
standing under the laws of Ontario, Alkar is duly incorporated and in good
standing under the laws of the State of Michigan, and each Loan Party is
qualified to do business and is in good standing in the respective jurisdictions
listed on SCHEDULE 5.2 which constitute all jurisdictions in which qualification
and good standing are necessary for any Loan Party, as applicable, to conduct
its respective business and own its respective property and where the failure to
so qualify would have a material adverse effect on such Loan Party or its
respective business. Each Loan Party has delivered to Lender true and complete
copies of its certificate of incorporation or articles of amalgamation, as the
case may be, and by-laws and will promptly notify Lender of any amendment or
changes thereto.
(b) The only Subsidiaries of each Loan Party are listed on
SCHEDULE 5.2.
5.3. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties of each Loan Party contained in this Agreement and the Other
Documents shall be true at the time of such Loan Party's execution of this
Agreement and the Other Documents, and shall survive the execution, delivery and
acceptance thereof by Lender and the parties thereto and the closing of the
transactions described therein or related thereto.
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5.4. TAX RETURNS. CMP's federal tax identification number is
16-1144965. Alkar's federal tax identification number is 38-2055240. Each Loan
Party has filed all federal, state, provincial and local tax returns and other
reports it is required by law to file and has paid all taxes, assessments, fees
and other governmental charges that are due and payable. Federal, state,
provincial and local income tax returns of each Loan Party have been examined
and reported upon by the appropriate taxing authority or closed by applicable
statute and satisfied for all fiscal years prior to and including the fiscal
year ending March 31, 1996 with respect to CMP and March 31, 1998 with respect
to Revenue Canada for Canadian Guarantor. The provision for taxes on the books
of each Loan Party are adequate for all years not closed by applicable statutes,
and for its current fiscal year, and no Loan Party has any knowledge of any
deficiency or additional assessment in connection therewith not provided for on
its books.
5.5. FINANCIAL STATEMENTS.
The balance sheet of Borrowers on a Consolidated Basis as of March
31, 2000, and the related consolidated statements of income, changes in
stockholder's equity, and changes in cash flow for the period ended on such
date, all accompanied by a report thereon containing the opinion without
qualification by independent certified public accountants, copies of which have
been delivered to Lender, have been prepared in accordance with GAAP,
consistently applied (except for changes in application in which such
accountants concur) and present fairly the financial position of Borrowers on a
Consolidated Basis and the consolidated results of their operations for such
period. Since March 31, 2000 there has been no change in the condition,
financial or otherwise, of any Loan Party or any Subsidiary of any Loan Party,
except changes in the ordinary course of business, none of which individually or
in the aggregate has been materially adverse.
5.6. CORPORATE NAME. No Loan Party has been known by any corporate name
other than its current corporate name in the past five years except: in the case
of CMP - Cold Metal Products Company, Inc., and in the case of Canadian
Guarantor - Cold Metal Products Co., Limited and Direct Steel Inc. No Loan Party
sells Inventory under any other name except as set forth on SCHEDULE 5.6, nor
has any Loan Party been the surviving corporation of a merger or consolidation
(except for the Canadian Guarantor amalgamation on or about April 1, 1998) or
acquired all or substantially all of the assets of any Person during the
preceding five (5) years except as set forth in Schedule 5.6(b).
5.7. O.S.H.A. AND ENVIRONMENTAL COMPLIANCE.
(a) Each Loan Party has duly complied with, and its facilities,
business, assets, property, leaseholds and Equipment are in compliance in all
material respects with, to the extent applicable, the provisions of the Federal
Occupational Safety and Health Act, RCRA, Ontario EPA and all other
Environmental Laws; except as set forth on SCHEDULE 5.7(a), there have been no
outstanding citations, notices or orders of non-compliance issued to any Loan
Party or relating to its business, assets, property, leaseholds or equipment
under any such laws, rules or regulations.
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(b) Each Loan Party has been issued or duly applied for all
required federal, state, provincial and local licenses, certificates or permits
relating to all applicable Environmental Laws.
(c) Except as disclosed to Lender in SCHEDULE 5.7, (i) there are
no visible signs of releases, spills, discharges, leaks or disposal
(collectively referred to as "Releases") of Hazardous Substances at, upon, under
or within any Real Property or Responsible Premises or any premises leased by
Loan Parties; (ii) there are no underground storage tanks or polychlorinated
biphenyls on the Real Property or Responsible Premises or any premises leased by
Loan Parties; (iii) neither the Real Property nor any Responsible Premises or
premises leased by any Loan Party has ever been used as a treatment, storage or
disposal facility of Hazardous Waste; and (iv) no Hazardous Substances are
present on the Real Property or Responsible Premises or any premises leased by
any Loan Party, excepting such quantities as are handled in accordance with all
Environmental Laws.
5.8. SOLVENCY; NO LITIGATION, VIOLATION, INDEBTEDNESS OR DEFAULT.
(a) Each Loan Party is solvent, able to pay its debts as they
mature, has capital sufficient to carry on its business and all businesses in
which it is about to engage, and (i) as of the Closing Date, the fair present
saleable value of its assets (calculated on a going concern basis) is in excess
of the amount of its liabilities and (ii) subsequent to the Closing Date, the
fair saleable value of its assets (calculated on a going concern basis) will be
in excess of the amount of its liabilities.
(b) Except as disclosed in SCHEDULE 5.8(b), no Loan Party has (i)
any pending or threatened litigation, actions or proceedings which involve the
possibility of materially and adversely affecting its business, assets,
operations, condition or prospects, financial or otherwise, or the Collateral,
or the ability of any Loan Party to perform this Agreement, and (ii) any
Indebtedness which would have a material adverse effect on the business of
Borrowers and Guarantors, nor Indebtedness other than the Obligations except as
permitted by Section 7.8 and as disclosed on SCHEDULE 7.8.
(c) No Loan Party is in violation of any applicable statute,
regulation or ordinance in any respect materially and adversely affecting the
Collateral or its business, assets, operations or condition (financial or
otherwise), or prospects, nor is any Loan Party in violation of any order of any
court, governmental authority or arbitration board or tribunal.
(d) (1) No Loan Party (excluding Canadian Guarantor) nor any
member of a Controlled Group maintains or contributes to any Plan other than
those listed on Schedule 5.8(d)(1) hereto. Except as set forth in Schedule
5.8(d)(1): (i) no Plan has incurred any "accumulated funding deficiency", as
defined in Section 302(a)(2) of ERISA and Section 412(a) of the Code, whether or
not waived, and each Loan Party (excluding Canadian Guarantor) and each member
of the Controlled Group has met all applicable minimum funding requirements
under Section 302 of ERISA and the applicable laws of all other jurisdictions in
respect of each Plan, (ii) each Plan which is intended to be a qualified plan
under Section 401(a) of the Code as currently in effect has been determined by
the Internal Revenue Service to be qualified under
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Section 401(a) of the Code and the trust related thereto is exempt from federal
income tax under Section 501(a) of the Code, (iii) neither any Loan Party
(excluding Canadian Guarantor) nor any member of the Controlled Group has
incurred any liability to the PBGC, any plan administrator or trustee or any
other Person in respect of a Plan other than for the payment of premiums, and
there are no premium payments which have become due which are unpaid, (iv) no
Plan has been terminated (in whole or in part) by the plan administrator thereof
or by the PBGC, and there is no occurrence which would cause the PBGC, any Plan
administrator or trustee or any other Person in respect of a Plan to institute
proceedings under Title IV of ERISA to terminate (in whole or in part) any Plan,
(v) at this time, the current value of the assets of each Plan exceeds the
present value of the accrued benefits and other liabilities of such Plan and
neither any Loan Party nor any member of the Controlled Group knows of any facts
or circumstances which would materially change the value of such assets and
accrued benefits and other liabilities, (vi) neither any Loan Party (excluding
Canadian Guarantor) nor any member of the Controlled Group has breached any of
the responsibilities, obligations or duties imposed on it by ERISA, or the
applicable laws of any other jurisdiction with respect to any Plan, (vii)
neither any Loan Party (excluding Canadian Guarantor) nor any member of a
Controlled Group has incurred any liability for any excise tax including arising
under Section 4972 or 4980B of the Code, and no fact exists which could give
rise to any such liability, (viii) neither any Loan Party (excluding Canadian
Guarantor) nor any member of the Controlled Group nor any fiduciary of, nor any
trustee to, any Plan, has engaged in a "prohibited transaction" described in
Section 406 of the ERISA or Section 4975 of the Code nor taken any action which
would constitute or result in a Termination Event with respect to any such Plan,
(ix) each Loan Party (excluding Canadian Guarantor) and each member of the
Controlled Group has made all contributions due and payable with respect to each
Plan, (x) there exists no event described in Section 4043(b) of ERISA, for which
the thirty (30) day notice period contained in 29 CFR ss.2615.3 has not been
waived, (xi) neither any Loan Party (excluding Canadian Guarantor) nor any
member of the Controlled Group has any fiduciary responsibility for investments
with respect to any plan existing for the benefit of persons other than
employees or former employees of any Loan Party (excluding Canadian Guarantor)
and any member of the Controlled Group, and (xii) neither any Loan Party
(excluding Canadian Guarantor) nor any member of the Controlled Group has
withdrawn, completely or partially, from any Multiemployer Plan including so as
to incur liability under the Multiemployer Pension Plan Amendments Act of 1980,
(xiii) neither any Loan Party (excluding Canadian Guarantor) has made any
application for a funding waiver or holiday or any extension of an amortization
period in respect of any Plan; (xiv) all vacation pay, bonuses, salaries and
wages, to the extent accruing due, are properly reflected in each Loan Party's
(excluding Canadian Guarantor) books and records; (xv) no Lien (except for
contribution amounts not yet due and owing) has arisen in connection with any
Plan; and (xvi) there are no outstanding or pending or threatened
investigations, claims, suits or proceedings in respect of any Plans (including
to assert rights or claims to benefits) that has resulted or could reasonably
result in a material adverse effect on the Collateral, the business, property,
condition (financial or otherwise) or prospects of any Loan Party.
(d) (2) Canadian Guarantor does not maintain or contribute to any
Plan other than the Guarantor Plans. Except as set forth in Schedule 5.8(d)(2):
to the extent applicable (i) no Guarantor Plan has incurred any funding
deficiency on a solvency basis or going concern unfunded liability, as such
terms are interpreted under the PBA, whether or not
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waived, and Canadian Guarantor has met all applicable minimum funding
requirements under the PBA and the applicable laws of all other jurisdictions in
respect of each Guarantor Plan, (ii) each Guarantor Plan is duly registered
where required by, and is in compliance and good standing in all material
respects under, to the extent applicable, the PBA and all other applicable laws,
acts, statutes, regulations, orders, directives and agreements, including,
without limitation, the Income Tax Act of Canada, (iii) Canadian Guarantor has
not incurred any liability to the extent applicable to the Pension Regulator,
any Plan administrator or trustee or any other Pension in respect of a Guarantor
plan, other than for payment of premiums and plan benefits, and there are no
premium payments which have become due which are unpaid, (iv) no Guarantor Plan
has been terminated or, to the extent applicable, wound up (in either case, in
whole or in part) by the Pension Regulator or the plan administrator thereof,
and there is no occurrence which would cause any plan administrator or trustee
or to the knowledge of such Guarantor, the Pension Regulator or any other Person
in respect of a Plan to institute proceedings to terminate or wind up (in either
case, in whole or in part) any Guarantor Plan, (v) the current value of the
assets of each Guarantor Plan exceeds the present value of the accrued benefits
and other liabilities of such Guarantor Plan, and no Loan Party knows of any
facts or circumstances which would materially change the value of such assets
and accrued benefits and other liabilities, (vi) no Loan Party has breached any
of the responsibilities, obligations or duties imposed on it by the PBA or the
applicable laws of any other jurisdiction with respect to any Guarantor Plan,
(vii) Canadian Guarantor has not to its knowledge taken any action which would
constitute or result in a Termination Event with respect to any such Guarantor
Plan, (viii) Canadian Guarantor has made all contributions due and payable with
respect to each Guarantor Plan, (ix) Canadian Guarantor has no fiduciary
responsibility for investments with respect to any Plan existing for the benefit
of persons other than employees and former employees of Canadian Guarantor and
their beneficiaries, and (x) Canadian Guarantor has not made any application for
any extension of an amortization period in respect of any Guarantor Plan; (xi)
all vacation pay, bonuses, salaries and wages, to the extent accruing due, are
properly reflected in Canadian Guarantor's books and records; (xii) no Lien has
arisen in connection with any Guarantor Plan, except for Permitted Encumbrances;
and (xiii) to the knowledge of Canadian Guarantor there are no outstanding or
pending or threatened investigations, claims, suits or proceedings in respect of
any Guarantor Plans (including to assert rights or claims to benefits) that has
resulted or could reasonably result in a material adverse effect on the
Collateral, the business property, condition (financial or otherwise) or
prospects of any Borrower or Canadian Guarantor.
5.9. PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES. All patents, patent
applications, trademarks, trademark applications, service marks, service mark
applications, copyrights, copyright applications, tradenames, assumed names, and
trade secrets, and licenses with respect to the foregoing, owned or utilized by
any Loan Party are set forth on SCHEDULE 5.9, are valid and have been duly
registered (or application for registration duly filed) or filed with all
appropriate governmental authorities and constitute all of the intellectual
property rights which are necessary for the operation of its business; there is
no objection to or pending challenge to the validity of any such material
patent, trademark, copyright, tradename, trade secret or license and no Loan
Party is aware of any grounds for any challenge, except as set forth in
SCHEDULE 5.9 hereto. Each patent, patent application, patent license,
trademark, trademark application, trademark license, service mark, service mark
application, service mark license, copyright, copyright application and
copyright license owned or held by any Loan Party and all trade secrets used
by any Loan
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Party consists of original material or property developed by such Loan
Party or was lawfully acquired by such Loan Party from the proper and lawful
owner thereof. Each of such items has been maintained so as to preserve the
value thereof from the date of creation or acquisition thereof. With respect to
all software used by any Loan Party, such Loan Party is in possession of all
source and object codes related to each piece of software or is the beneficiary
of a source code escrow agreement, each such source code escrow agreement being
listed on SCHEDULE 5.9 hereto.
5.10. LICENSES AND PERMITS. Except as set forth in SCHEDULE 5.10, each
Loan Party (a) is in compliance with and (b) has procured and is now in
possession of, all material licenses or permits required by any applicable
federal, state, provincial or local law or regulation for the operation of its
business in each jurisdiction wherein it is now conducting or proposes to
conduct business and where the failure to procure such licenses or permits would
have a material adverse effect on the business, properties, condition (financial
or otherwise) or operations, present or prospective of any Loan Party.
5.11. DEFAULT OF INDEBTEDNESS. No Loan Party is in default in the
payment of the principal of or interest on any Indebtedness in excess of
$100,000 or under any instrument or agreement under or subject to which any
Indebtedness has been issued and no event has occurred under the provisions of
any such instrument or agreement which with or without the lapse of time or the
giving of notice, or both, constitutes or would constitute an event of default
thereunder and result in the acceleration of such Indebtedness.
5.12. NO DEFAULT. No Loan Party is in default in any material respect
in the payment or performance of any of its contractual obligations and no
Default has occurred.
5.13. NO BURDENSOME RESTRICTIONS. No Loan Party is party to any
contract or agreement the performance of which would materially adversely affect
the business, assets, operations, condition (financial or otherwise) or
prospects of any Loan Party. No Loan Party has agreed or consented to cause or
permit in the future (upon the happening of a contingency or otherwise) any of
its property, whether now owned or hereafter acquired, to be subject to a Lien
which is not a Permitted Encumbrance.
5.14. NO LABOR DISPUTES. No Loan Party is involved in any labor
dispute; there are no strikes or walkouts or union organization of any of any
Loan Party's employees threatened or in existence and no labor contract is
scheduled to expire during the Term other than as set forth on SCHEDULE 5.14
hereto.
5.15. MARGIN REGULATIONS. No Loan Party is engaged, nor will it engage,
principally or as one of its important activities, in the business of extending
credit for the purpose of "purchasing" or "carrying" any "margin stock" within
the respective meanings of each of the quoted terms under Regulation U of the
Board of Governors of the Federal Reserve System as now and from time to time
hereafter in effect. No part of the proceeds of any Advance will be used for
"purchasing" or "carrying" "margin stock" as defined in Regulation U of such
Board of Governors.
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5.16. INVESTMENT COMPANY ACT. No Loan Party is an "investment company"
registered or required to be registered under the Investment Company Act of
1940, as amended, nor is it controlled by such a company.
5.17. DISCLOSURE. No representation or warranty made by any Loan Party
in this Agreement or in any financial statement, report, certificate or any
other document furnished in connection herewith contains any untrue statement of
a material fact or omits to state any material fact necessary to make the
statements herein or therein not misleading. There is no fact known to any Loan
Party or which reasonably should be known to any Loan Party which any Loan Party
has not disclosed to Lender in writing with respect to the transactions
contemplated by this Agreement which materially and adversely affects the
condition (financial or otherwise), results of operations, business, or assets
of any Loan Party.
5.18. INTENTIONALLY OMITTED
5.19. SWAPS. No Loan Party is a party to, nor will it be a party to,
any swap agreement whereby such Loan Party has agreed or will agree to swap
interest rates or currencies unless same provides that damages upon termination
following an event of default thereunder are payable on an unlimited "two-way
basis" without regard to fault on the part of either party.
5.20. CONFLICTING AGREEMENTS. No provision of any mortgage, indenture,
contract, agreement, judgment, decree or order binding on any Loan Party or
affecting the Collateral conflicts with, or requires any Consent which has not
already been obtained to, or would in any way prevent the execution, delivery or
performance of, the terms of this Agreement or the Other Documents.
5.21. APPLICATION OF CERTAIN LAWS AND REGULATIONS. No Loan Party nor
any Affiliate of any Loan Party is subject to any statute, rule or regulation
which regulates the incurrence of any Indebtedness, including without
limitation, statutes or regulations relative to common or interstate carriers or
to the sale of electricity, gas, steam, water, telephone, telegraph or other
public utility services.
5.22. BUSINESS AND PROPERTY OF LOAN PARTY . Upon and after the Closing
Date, Loan Parties do not propose to engage in any business other than as
described in CMP's Form 10-K Annual Report for the fiscal year ended March 31,
2000. On the Closing Date, each Loan Party will own all the property and possess
all of the rights and Consents necessary for the conduct of the business of such
Loan Party.
5.23. WORKERS' COMPENSATION. No Loan Party has any unpaid workers'
compensation or like obligations which could in the aggregate, have a material
adverse effect on the business or affairs of any Loan Party, except as are being
incurred, and paid on a current basis in the ordinary course of business, and
there are no proceedings, claims, actions, orders or investigations relating to
worker's compensation outstanding, pending or, to their knowledge, threatened
relating to them or any of their employees or former employees which could, in
the aggregate, have such material adverse effect.
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5.24. RESPONSIBLE PREMISES. Except as set forth in Schedule 5.24 (a) no
part of the Responsible Premises has been condemned, taken or expropriated by
any provincial, state, municipal or any other competent authority, and no
alteration, repair, improvement or other work has been ordered or directed to be
done or performed to or in respect of such property by any provincial, state,
municipal or any other competent authority; (b) there are no Liens, easements,
encroachments, rights-of-way, work orders, licenses, concession agreements,
leases or tenancies affecting the Responsible Premises, save and except for
Permitted Encumbrances; (c) there is nothing owing in respect of the Responsible
Premises including any leasehold property (to the extent any Loan Party is or
may be liable for same) to any municipality or to any corporation or commission
owning or operating a public utility for water, gas, electrical power or energy,
steam or hot water or for the use thereof or for the fittings, machines,
apparatus, meters or other things leased in respect thereof or for any work or
service performed for any such corporation or commission in connection with such
public utilities, except current charges and Permitted Encumbrances; (d) no such
Loan Party retains any interest, beneficially or otherwise, in any land abutting
the Responsible Premises either by way of fee or equity of redemption in or a
power or right to grant or exercise a power of appointment with respect to, any
such land abutting the Responsible Premises; (e) the buildings on the
Responsible Premises are located entirely within the limits of such Responsible
Premises, and all present uses in respect of the Responsible Premises may
lawfully be continued, and all permitted uses are satisfactory for the
Borrowers' and Canadian Guarantor's current and intended purposes; (f) there are
no unsatisfied judgments against Borrowers or Canadian Guarantor and there are
no writs of execution which would affect the Responsible Premises, including or
any of their interests in any leasehold property; (g) all real property taxes,
including local improvement rates, have been paid when due to date in respect of
the Responsible Premises; (h) all accounts for work and service performed, and
materials placed or furnished upon or in respect of the Responsible Premises,
including any of its leasehold property, including any claims by any municipal,
provincial or other competent authority, have been fully paid, and no one is
entitled to claim a lien under the Construction Lien Act of Ontario (or any
similar law or legislation of any jurisdiction applicable to the Responsible
Premises) against such Responsible Premises or any part thereof; and (i) no
portion of the loans are being advanced or used in connection with any
alteration, addition or improvement to or work on or in respect of the
Responsible Premises.
VI. AFFIRMATIVE COVENANTS.
Each Loan Party shall, until payment in full of the Obligations and
termination of this Agreement:
6.1. PAYMENT OF FEES. Pay to Lender on demand all usual and customary
fees and expenses which Lender incurs in connection with (a) the forwarding of
Advance proceeds and (b) the establishment and maintenance of any Blocked
Accounts or Depository Accounts as provided for in Section 4.15(h). Lender may,
without making demand, charge the Borrowers' Account for all such fees and
expenses.
6.2. CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE AND ASSETS. (a)
Conduct continuously and operate actively its business according to good
business practices and maintain
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all of its properties useful or necessary in its business in good working order
and condition (reasonable wear and tear excepted and except as may be disposed
of in accordance with the terms of this Agreement), including, without
limitation, all licenses, patents, copyrights, tradenames, trade secrets and
trademarks and take all actions necessary to enforce and protect the validity of
any intellectual property right or other right included in the Collateral; (b)
keep in full force and effect its existence and comply in all material respects
with the laws and regulations governing the conduct of its business where the
failure to do so would have a material adverse effect on any Loan Party or its
business; and (c) make all such reports and pay all such franchise and other
taxes and license fees and do all such other acts and things as may be lawfully
required to maintain its rights, licenses, leases, powers and franchises under
the laws of the United States or any political subdivision thereof.
6.3. VIOLATIONS. Promptly notify Lender in writing of any violation of
any law, statute, regulation or ordinance of any governmental entity, or of any
agency thereof, applicable to any Loan Party which may materially and adversely
affect the Collateral or any Loan Party's business, assets, operations,
condition (financial or otherwise) or prospects.
6.4. GOVERNMENT RECEIVABLES. Take all steps necessary to protect
Lender's interest in the Collateral under the Federal Assignment of Claims Act
or other applicable state or local statutes or ordinances and deliver to Lender
appropriately endorsed, any instrument or chattel paper connected with any
Receivable arising out of contracts between any Loan Party and the United
States, any state or any department, agency or instrumentality of any of them.
The Lender and each Loan Party acknowledge that the Canadian Guarantor will not
comply with the Financial Administration Act of Canada or similar provincial
laws and that no Receivables payable by the Government of Canada or any
province, or any agency or instrumentality thereof will be "Eligible
Receivables".
6.5. CURRENT RATIO. Cause the ratio of consolidated current assets to
consolidated current liabilities, exclusive of current liabilities which
comprise Indebtedness to Lender, for Borrowers on a Consolidated Basis, to be
not less than 1.65 to 1 at the end of each fiscal quarter during the Term.
6.6. INTENTIONALLY OMITTED.
6.7. INTENTIONALLY OMITTED.
6.8. FIXED CHARGE COVERAGE. Commencing with the fiscal quarter ending
on and after September 30, 2000 and each fiscal quarter ending thereafter, in
each case for the four fiscal quarters then ended, cause the ratio of (x) the
sum of aggregate net income of Borrowers on a Consolidated Basis for such fiscal
period plus any Capital Expenditure Loans advanced by Lender to Borrowers plus
the aggregate amount of income tax, interest, depreciation and amortization, and
all other non-cash expense used in determining such net income during such
fiscal period as set forth in the adjustments to reconcile net income to net
cash provided by operating activities as reflected on the Borrowers and
Guarantors Consolidated Statement of Cash Flows to (y) aggregate consolidated
interest expense during such fiscal period plus aggregate amount of tax expense
and capital expenditures paid in cash during such fiscal period
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(and not financed with the proceeds of a Capital Expenditure Loan) plus, without
duplication, the aggregate amount of scheduled reductions in availability during
such fiscal period pursuant to Section 2.1(a)(y)(iii) hereof to be not less than
1.0:1.0.
6.9. TOTAL LIABILITIES TO EQUITY. Cause the ratio of total consolidated
Indebtedness to consolidated stockholders equity (exclusive of Borrowers'
foreign currency translation adjustment account) for Borrowers on a Consolidated
Basis to be not more than 4.11 to 1 at the end of each fiscal quarter during the
Term.
6.10. EXECUTION OF SUPPLEMENTAL INSTRUMENTS. Execute and deliver to
Lender, from time to time, upon demand, such supplemental agreements,
statements, assignments and transfers, or instructions or documents relating to
the Collateral, and such other instruments as Lender may request, in order that
the full intent of this Agreement may be carried into effect.
6.11. PAYMENT OF INDEBTEDNESS. Pay, discharge or otherwise satisfy at
or before maturity (subject, where applicable, to specified grace periods and,
in the case of the trade payables, to normal payment practices) all its
obligations and liabilities of whatever nature, except when the amount or
validity thereof is currently being contested in good faith by appropriate
proceedings and each Loan Party shall have provided for such reserves as Lender
may reasonably deem proper and necessary, subject at all times to any applicable
subordination arrangement in favor of Lender.
6.12. STANDARDS OF FINANCIAL STATEMENTS. Cause all financial statements
referred to in Sections 9.7, 9.9, 9.10, 9.12 and 9.13 as to which GAAP is
applicable to be complete and correct in all material respects (subject, in the
case of interim financial statements, to normal year-end audit adjustments) and
to be prepared in reasonable detail and in accordance with GAAP applied
consistently throughout the periods reflected therein (except as concurred in by
such reporting accountants or officer, as the case may be, and disclosed
therein).
VII. NEGATIVE COVENANTS.
No Loan Party shall until satisfaction in full of the Obligations and
termination of this Agreement:
7.1. MERGER, CONSOLIDATION, ACQUISITION AND SALE OF ASSETS.
(a) Enter into any merger, consolidation, amalgamation or other
reorganization with or into any other Person or acquire all or a substantial
portion of the assets or stock of any Person or permit any other Person to
consolidate with or merge with it; PROVIDED, HOWEVER, that Loan Parties may
enter into any such transaction if (i) the aggregate amount of all such
transactions during any fiscal year does not exceed $3,000,000, (ii) Lender has
a valid and enforceable lien on and security interest in the assets of any such
acquired Person and (iii) no Default or Event of Default would be in existence
after giving effect thereto.
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(b) Sell, lease, transfer or otherwise dispose of any of its
properties or assets, except in the ordinary course of its business and except
as otherwise permitted elsewhere in this agreement.
7.2. CREATION OF LIENS. Create or suffer to exist any Lien or transfer
upon or against any of its property or assets now owned or hereafter acquired,
except Permitted Encumbrances.
7.3. GUARANTEES. Become liable upon the obligations of any Person by
assumption, endorsement or guaranty thereof or otherwise (other than to Lender)
except (a) as disclosed on SCHEDULE 7.3, and (b) the endorsement of checks in
the ordinary course of business.
7.4. INVESTMENTS. Except as otherwise provided in this Agreement,
purchase or acquire obligations or stock of, or any other interest in, any
Person, except (a) obligations issued or guaranteed by the United States of
America or any agency thereof, (b) commercial paper with maturities of not more
than 180 days and a published rating of not less than A-1 or P-1 (or the
equivalent rating), (c) certificates of time deposit and bankers' acceptances
having maturities of not more than 180 days and repurchase agreements backed by
United States government securities of a commercial bank if (i) such bank has a
combined capital and surplus of at least $500,000,000, or (ii) its debt
obligations, or those of a holding company of which it is a Subsidiary, are
rated not less than A (or the equivalent rating) by a nationally recognized
investment rating agency, and (d) U.S. money market funds that invest solely in
obligations issued or guaranteed by the United States of America or an agency
thereof.
7.5. LOANS. Make advances, loans or extensions of credit to any Person,
including without limitation, any Parent, Subsidiary or Affiliate except with
respect to (a) the extension of commercial trade credit in connection with the
sale of Inventory in the ordinary course of its business, (b) loans to its
employees in the ordinary course of business not to exceed the aggregate amount
of (i) $1,000,000 at any time outstanding from the Closing Date to and including
March 31, 2001, and (ii) $250,000 at any time outstanding from April 1, 2001 and
thereafter during the Term and (c) loans by any Loan Party to (and repayments of
loans by) any other Loan Party.
7.6. CAPITAL EXPENDITURES. Contract for, purchase or make any
expenditure or commitments for fixed or capital assets (including capitalized
leases) in any fiscal year in an amount in excess of $12,000,000 in the
aggregate for Loan Parties, Guarantors and their respective Subsidiaries;
7.7. DIVIDENDS. Declare, pay or make any dividend or distribution on
any shares of the common stock or preferred stock of any Loan Party (other than
dividends or distributions payable in its stock, or split-ups or
reclassifications of its stock) or apply any of its funds, property or assets to
the purchase, redemption or other retirement of any common or preferred stock,
or of any options to purchase or acquire any such shares of common or preferred
stock of any Loan Party except that:
(a) dividends may be declared and paid by any Loan Party or a
Subsidiary of any Loan Party to a Borrower provided that all applicable
withholding taxes are withheld and
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remitted when required and Canadian Guarantor may redeem some or all of its
Class A Special Shares upon delivery to Lender of a letter in the form of
Exhibit 7.7(a) attached to this Agreement along with a replacement stock
certificate representing 100% of the issued Class A Special Shares of Canadian
Guarantor and a stock power signed in blank and medallion guaranteed, and
(b) so long as (i) a notice of termination with regard to this
Agreement shall not be outstanding, (ii) no Event of Default or Default shall
have occurred, and (iii) the purpose for such purchase, redemption or dividend
shall be as set forth in writing to Lender at least ten (10) days prior to such
purchase, redemption or dividend and such purchase, redemption or dividend shall
in fact be used for such purpose, CMP shall be permitted to (x) pay dividends in
an aggregate, cumulative amount not to exceed $2,286,000 (which was calculated
in accordance with prior agreements) plus twenty-five percent (25%) of CMP's
after-tax income on a cumulative basis calculated commencing with the results of
CMP's fiscal year ending March 31, 2001 and (y) repurchase or redeem its common
stock not to exceed the aggregate amount of $3,000,000; PROVIDED, HOWEVER, that
after giving effect to the payment of any redemption of CMP's stock under this
Subsection 7.7(b) in addition to the foregoing requirement Borrowers shall also
have Undrawn Availability equal to no less than $10,000,000.
7.8. INDEBTEDNESS. Create, incur, assume or suffer to exist any
Indebtedness (exclusive of trade debt) of any Loan Party except in respect of
(i) Indebtedness to Lender; (ii) Indebtedness incurred for capital expenditures
permitted under Section 7.6 hereof, (iii) Indebtedness disclosed on SCHEDULE
7.8, (iv) Indebtedness in connection with loans permitted under Section 7.5 and
(v) Indebtedness to third party lenders in connection with a refinancing of
Obligations constituting Amortizing Availability permitted under Section 4.21,
provided that such third party lender shall subordinate such debt and any Liens
securing such debt to the Obligations pursuant to a subordination agreement in
form and substance satisfactory to Lender.
7.9. NATURE OF BUSINESS. Substantially change the nature of the
business in which it is presently engaged, nor except as specifically permitted
hereby purchase or invest, directly or indirectly, in any assets or property
other than in the ordinary course of business for assets or property which are
useful in, necessary for and are to be used in its business as presently
conducted.
7.10. TRANSACTIONS WITH AFFILIATES. Except as permitted by Section 7.5
hereof or disclosed on SCHEDULE 7.10 hereto, directly or indirectly, purchase,
acquire or lease any property from, or sell, transfer or lease any property to,
or otherwise deal with, any Affiliate, except transactions in the ordinary
course of business, on an arm's-length basis on terms no less favorable than
terms which would have been obtainable from a Person other than an Affiliate.
7.11. LEASES. Enter as lessee into any lease arrangement for real or
personal property (unless capitalized and permitted under Section 7.6 hereof) if
after giving effect thereto, aggregate annual rental payments for all leased
property (unless capitalized and permitted under Section 7.6 hereof) for Loan
Parties would exceed $5,000,000 in any one fiscal year.
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7.12. SUBSIDIARIES.
(a) Form any Subsidiary unless (i) there is not then continuing
an Event of Default and no Default or Event of Default would occur as a result
of such formation, (ii) Lender shall be satisfied with the capital and debt
structure of the Subsidiary, (iii) such Subsidiary expressly joins in this
Agreement as a Guarantor and becomes jointly and severally liable for the
obligations of the Loan Parties hereunder and under the Other Documents, (iv)
Lender shall have obtained a valid and enforceable first priority perfected Lien
on the Collateral of such Subsidiary, and (v) Lender shall have received all
documents, including legal opinions and financial statements, it may reasonably
require to establish compliance with each of the foregoing conditions.
(b) Enter into any partnership, joint venture or similar
arrangement; PROVIDED, HOWEVER, that Borrowers may enter into any such
transactions or arrangements to the extent that (i) the aggregate value of all
such transactions or arrangements do not exceed $3,000,000 during any fiscal
year and (ii) there is no existing Default or Event of Default and no Default or
Event of Default would occur as a result of such transaction or arrangement.
7.13. FISCAL YEAR AND ACCOUNTING CHANGES. Change its fiscal year from
March 31 or make any significant change (i) in accounting treatment and
reporting practices except as required by GAAP or (ii) in tax reporting
treatment except as required by law.
7.14. PLEDGE OF CREDIT. Now or hereafter pledge Lender's credit on any
purchases or for any purpose whatsoever or use any portion of any Advance in or
for any business other than any Loan Party's business as conducted on the date
of this Agreement.
7.15. AMENDMENT OF ARTICLES OF INCORPORATION, BY-LAWS. Amend, modify or
waive any material term or provision of its Articles of Incorporation or
Amalgamation or By-Laws unless required by law.
7.16. COMPLIANCE WITH ERISA AND PBA. (i) (x) Maintain, or permit any
member of a Controlled Group to maintain, or (y) become obligated to contribute,
or permit any member of a Controlled Group to become obligated to contribute, to
any Plan, other than those Plans disclosed on Schedule 5.8(d), (ii) in the case
of the Borrowers, engage, or permit any member of a Controlled Group to engage,
in any non-exempt "prohibited transaction", as that term is defined in section
406 of ERISA and Section 4975 of the Code, (iii) incur, or permit any member of
a Controlled Group to incur, any, in the case of Loan Parties (other than
Canadian Guarantor) "accumulated funding deficiency," as that term is defined in
Section 302 of ERISA or Section 412 of the Code or, in the case of the Canadian
Guarantor, any funding deficiency on a solvency basis as such term is
interpreted under the PBA that is greater than the Threshold Amount, (iv)
terminate or wind up (in whole or in part), or permit any member of a Controlled
Group to terminate or wind up (in whole or in part), any Plan where such event
could result in the imposition of a Lien (other than a Permitted Encumbrance) on
the property of any Loan Party or any member of a Controlled Group pursuant to
Section 4068 of ERISA or applicable provisions of the PBA, (v) assume, or permit
any member of a Controlled Group to assume, any obligation to contribute to any
Multiemployer Plan not disclosed on Schedule 5.8(d), (vi) incur, or permit
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any member of a Controlled Group to incur, any withdrawal liability to any
Multiemployer Plan; (vii) fail promptly to notify Lender of the occurrence of
any Termination Event of which it is aware, (viii) fail to comply, or permit a
member of a Controlled Group to fail to comply, with the requirements of ERISA,
the PBA or the Code or other applicable laws in respect of any Plan, or (ix)
fail to meet, or permit any member of a Controlled Group to fail to meet, all
minimum funding requirements under ERISA, the PBA or the Code or postpone or
delay or allow any member of a Controlled Group to postpone or delay any funding
requirement with respect of any Plan.
7.17. PREPAYMENT OF INDEBTEDNESS. At any time, directly or indirectly,
prepay any Indebtedness (other than to Lender and other than trade accounts
payable and pension obligations), or repurchase, redeem, retire or otherwise
acquire any Indebtedness of Loan Parties for borrowed money; PROVIDED, HOWEVER,
that, so long as no Default or Event of Default shall have occurred and be
continuing or would exist after giving effect thereto, (i) Loan Parties may
modify, refinance or prepay any Indebtedness related to the Ottawa Financing,
(ii) Loan Parties may prepay Indebtedness in the ordinary course of business not
to exceed $100,000 in the aggregate in any fiscal year and (iii) Loan Parties
may repay loans by each of them to the other.
VIII. CONDITIONS PRECEDENT.
8.1. CONDITIONS TO INITIAL ADVANCES. The obligations of Lender
hereunder and the effectiveness of the amendment and restatement of the Original
Loan Agreement are each subject to the following conditions precedent:
(a) FILINGS, REGISTRATIONS AND RECORDINGS. Each document
(including, without limitation, any Uniform Commercial Code financing statement)
required by this Agreement, any related agreement or under law or reasonably
requested by Lender to be filed, registered or recorded in order to create, in
favor of Lender, a perfected security interest in or lien upon the Collateral
shall have been properly filed, registered or recorded in each jurisdiction in
which the filing, registration or recordation thereof is so required or
requested, and Lender shall have received an acknowledgment copy, or other
evidence satisfactory to it, of each such filing, registration or recordation
and satisfactory evidence of the payment of any necessary fee, tax or expense
relating thereto;
(b) CORPORATE PROCEEDINGS OF LOAN PARTIES . Lender shall have
received a copy of the resolutions in form and substance reasonably satisfactory
to Lender, of the Board of Directors of each Loan Party authorizing (i) the
execution, delivery and performance of this Agreement, and any Other Documents,
(collectively the "Documents") and (ii) the granting by each Loan Party of the
security interests in and liens upon the Collateral in each case certified by
the Secretary or an Assistant Secretary of such Loan Party as of the Closing
Date; and, such certificate shall state that the resolutions thereby certified
have not been amended, modified, revoked or rescinded as of the date of such
certificate;
(c) INCUMBENCY CERTIFICATES OF LOAN PARTIES. Lender shall have
received a certificate of the Secretary or an Assistant Secretary of each Loan
Party, dated the Closing Date,
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as to the incumbency and signature of the officers of such Loan Party executing
this Agreement, any certificate or other documents to be delivered by it
pursuant hereto, together with evidence of the incumbency of such Secretary or
Assistant Secretary;
(d) CERTIFICATES. Lender shall have received a copy of the
Articles or Certificate of Incorporation and Amalgamation of each Loan Party,
and all amendments thereto, certified by the Secretary of State or other
appropriate official of its jurisdiction of incorporation together with copies
of the By-Laws of each Loan Party and all agreements of each Loan Party's
shareholders certified as accurate and complete by the Secretary or Assistant
Secretary of such Loan Party ;
(e) GOOD STANDING CERTIFICATES. Lender shall have received good
standing certificates for each Loan Party dated not more than 25 days prior to
the Closing, issued by the Secretary of State or other appropriate official of
each Loan Party's jurisdiction of incorporation and each jurisdiction where the
conduct of each Loan Party's business activities or the ownership of its
properties necessitates qualification;
(f) LEGAL OPINION. Lender shall have received the executed legal
opinions of Cohen Swados Wright Hanifin Bradford & Brett, LLP and of Blake,
Cassels & Graydon and Quebec counsel to the Canadian Guarantor, in form and
substance satisfactory to Lender, which shall cover such matters incident to the
transactions contemplated by this Agreement and related agreements as Lender may
reasonably require;
(g) CONSENTS. Lender shall have received any and all Consents
necessary to permit the effectuation of the transactions contemplated by this
Agreement and the Other Documents; and, Lender shall have received such Consents
and waivers of such third parties as might assert claims with respect to the
Collateral, as Lender and its counsel shall deem necessary; and
(h) NO ADVERSE MATERIAL CHANGE. (i) Since March 31, 2000, there
shall have occurred (x) no material adverse change in the condition, financial
or otherwise, operations, properties or prospects of any Loan Party, (y) no
material damage or destruction to any of the Collateral nor any material
depreciation in the value thereof and (z) no event, condition or state of facts
which would reasonably be expected materially and adversely to affect the
business, financial condition or results of operations of any Loan Party and
(ii) no representations made or information supplied to Lender shall have been
proven to be inaccurate or misleading in any material respect.
(i) CONSENT OF PARTICIPANTS. Lender shall have received the
consent of the existing Transferee lenders to the execution of this Agreement
and the transactions contemplated herein.
(j) CLOSING FEE. Lender shall have received the Closing Fee
required by Section 3.8.
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8.2. CONDITIONS TO EACH ADVANCE. The agreement of Lender to make any
Advance requested to be made on any date (including, without limitation, the
initial Advance), is subject to the satisfaction of the following conditions
precedent as of the date such Advance is made:
(a) REPRESENTATIONS AND WARRANTIES. Except for such events or
changes in circumstances which are permitted under this Agreement and of which
Borrowing Agent has notified Lender, each of the representations and warranties
made by any Loan Party in or pursuant to this Agreement and any related
agreements to which it is a party, and each of the representations and
warranties contained in any certificate, document or financial or other
statement furnished at any time under or in connection with this Agreement or
any related agreement shall be true and correct in all material respects on and
as of such date as if made on and as of such date;
(b) NO DEFAULT. No Event of Default or Default shall have occurred
and be continuing on such date, or would exist after giving effect to the
Advances requested to be made, on such date; PROVIDED, HOWEVER that Lender, in
its sole discretion, may continue to make Advances notwithstanding the existence
of an Event of Default or Default and that any Advances so made shall not be
deemed a waiver of any such Event of Default or Default; and
(c) MAXIMUM ADVANCES. In the case of any Advances requested to be
made, after giving effect thereto, the aggregate Advances shall not exceed the
maximum Advances permitted under Section 2.1 hereof.
Each request for an Advance by Borrowing Agent hereunder shall constitute a
representation and warranty by each Loan Party as of the date of such Advance
that the conditions contained in this subsection shall have been satisfied.
8.3. CONDITIONS TO EACH CAPITAL EXPENDITURE LOAN. The agreement of
Lender to make any Capital Expenditure Loan is subject to satisfaction of the
following additional conditions precedent: (a) receipt by Lender of (i) a copy
of the invoice relating to the Equipment being purchased, (ii) evidence that
such Equipment has been shipped to a Borrower, (iii) evidence that the requested
Capital Expenditure Loan does not exceed eighty-five percent (85%) of the net
invoice cost of such Equipment purchased by a Borrower (which shall be exclusive
of shipping, handling, taxes, installation and all other "soft" costs), and (iv)
such other documentation and evidence that Agent may request; (b) after giving
effect thereto, the aggregate Capital Expenditure Loans shall not exceed the
Maximum Capital Expenditure Amount and the sum of all Advances, including
Capital Expenditure Loans shall not exceed the Maximum Revolving Advance Amount
or the Maximum Loan Amount; and (c) Lender shall have obtained a perfected,
first priority lien upon the Equipment.
Each request for a Capital Expenditure Loan by Borrowing Agent hereunder shall
constitute a representation and warranty by each Loan Party as of the date of
such Capital Expenditure Loan that the conditions contained in this subsection
shall have been satisfied.
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IX. INFORMATION AS TO LOAN PARTIES.
Borrowing Agent shall, until satisfaction in full of the Obligations
and the termination of this Agreement:
9.1. DISCLOSURE OF MATERIAL MATTERS. Immediately upon learning thereof,
report to Lender all matters materially affecting the value, enforceability or
collectability of any portion of the Collateral including, without limitation,
any Loan Party's reclamation or repossession of, or the return to any Loan Party
of, a material amount of goods or claims or disputes asserted by any Customer or
other obligor.
9.2. SCHEDULES. Deliver to Lender on or before the thirtieth (30th) day
of each month as and for the prior month (a) accounts receivable ageings, (b)
accounts payable schedules, (c) Inventory reports and (d) Borrowing Base
Certificate, PROVIDED, HOWEVER, Lender may require reporting on a daily basis
following the occurrence and during the continuance of an Event of Default. In
addition, Borrowing Agent will deliver to Lender at such intervals as Lender may
require: (i) confirmatory assignment schedules together with invoice registers,
and (ii) such further schedules, documents or information regarding the
Collateral as Lender may require including, without limitation, trial balances
and test verifications. Lender shall have the right to confirm and verify all
Receivables by any manner and through any medium it considers advisable and do
whatever it may deem reasonably necessary to protect its interests hereunder.
The items to be provided under this Section are to be in form satisfactory to
Lender and executed by Borrowing Agent and delivered to Lender from time to time
solely for Lender's convenience in maintaining records of the Collateral, and
Borrowing Agent's failure to deliver any of such items to Lender shall not
affect, terminate, modify or otherwise limit Lender's Lien with respect to the
Collateral.
9.3. ENVIRONMENTAL REPORTS. Furnish Lender, concurrently with the
delivery of the financial statements referred to in Sections 9.7, with a
certificate of Borrowing Agent signed by the President of Borrowing Agent
stating, to the best of his knowledge, that there have been no events requiring
notice to the Lender as required under Section 4.19 of this Agreement other than
such notices as have been furnished to the Lender since the last such
certificate furnished by the Borrowing Agent.
9.4. LITIGATION. Promptly notify Lender in writing of any litigation,
suit or administrative proceeding affecting any Loan Party, whether or not the
claim is covered by insurance, which may materially and adversely affect the
Collateral or Borrower's business, assets, operations, condition or prospects
(financial or otherwise).
9.5. MATERIAL OCCURRENCES. Promptly notify Lender in writing upon the
occurrence of (a) any Event of Default or Default; (b) any event, development or
circumstance whereby any financial statements or other reports furnished to
Lender fail in any material respect to present fairly, in accordance with GAAP
consistently applied, the financial condition or operating results of any Loan
Party as of the date of such statements; (c) any accumulated retirement plan
funding deficiency which, if such deficiency continued for two plan years and
was not corrected as provided in Section 4971 of the Internal Revenue Code,
could subject any Loan Party to a tax
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imposed by Section 4971 of the Internal Revenue Code; (d) any matter which may
give rise to a Termination Event or any termination or windup (in whole or in
part) of any Plan or any Lien (choate or inchoate, except for monthly
contribution amounts not due and unpaid) on any of Collateral, (e) each and
every default by any Loan Party which might result in the acceleration of the
maturity of Indebtedness in excess of $750,000, including the names and
addresses of the holders of such Indebtedness with respect to which there is a
default existing or with respect to which the maturity has been or could be
accelerated, and the amount of such Indebtedness; and (f) any other development
in the business or affairs of any Loan Party which might reasonably be expected
to be materially adverse; in each case describing the nature thereof and the
action Borrowing Agent proposes to take with respect thereto.
9.6. GOVERNMENT RECEIVABLES. Notify Lender immediately if any Loan
Party's Receivables arise out of contracts between such Loan Party and the
United States or Canada, any state, province or any department, agency or
instrumentality of any of them.
9.7. ANNUAL FINANCIAL STATEMENTS. Furnish Lender within ninety (90)
days after the end of each fiscal year of Loan Parties, financial statements of
Borrowers on a Consolidated Basis and on a consolidating basis including, but
not limited to, statements of income and stockholders' equity and cash flow from
the beginning of the current fiscal year to the end of such fiscal year and the
balance sheet as at the end of such fiscal year, all prepared in accordance with
GAAP applied on a basis consistent with prior practices, and in reasonable
detail and reported upon without qualification by an independent certified
public accounting firm selected by Loan Parties and satisfactory to Lender (the
"Accountants"). The report of such accounting firm shall be accompanied by a
statement of such accounting firm certifying Loan Parties compliance with the
requirements or restrictions imposed by Sections 6.5, 6.8 and 6.9. In addition,
the reports shall be accompanied by a certificate of Borrowing Agent's Chief
Financial Officer which shall state that, based on an examination sufficient to
permit him to make an informed statement, no Default or Event of Default exists,
or, if such is not the case, specifying such Default or Event of Default, its
nature, when it occurred, whether it is continuing and the steps being taken by
Loan Parties with respect to such event and, such certificate shall have
appended thereto calculations which set forth Loan Parties' compliance with the
requirements or restrictions imposed by Sections 6.5, 6.8 and 6.9 hereof.
9.8. INTENTIONALLY OMITTED.
9.9. MONTHLY FINANCIAL STATEMENTS. Furnish Lender within thirty (30)
days after the end of each month, an unaudited balance sheet and statement of
stockholders' equity and cash flow of Borrowers on a Consolidated Basis and
unaudited statements of income of Borrowers on a Consolidated Basis and on a
consolidating basis reflecting results of operations from the beginning of the
fiscal year to the end of such month and for such month, prepared on a basis
consistent with prior practices and complete and correct in all material
respects, subject to normal year end adjustments. The reports shall be
accompanied by a certificate of Borrowing Agent, signed by the President or
Chief Financial Officer of Borrowing Agent, which shall state whether an Event
of Default or a Default has occurred. With respect to the monthly financial
statements relating to the last month of a fiscal quarter, such certificate
shall have appended
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thereto calculations which set forth Loan Parties' compliance with the
requirements or restrictions imposed by Sections 6.5, 6.8 and 6.9 hereof.
9.10. OTHER REPORTS. Furnish Lender as soon as available, but in any
event within thirty (30) days after the issuance thereof, with copies of such
financial statements, reports and returns as each Loan Party shall send to its
stockholders generally.
9.11. ADDITIONAL INFORMATION. Furnish Lender with such additional
information as Lender shall reasonably request in order to enable Lender to
determine whether the terms, covenants, provisions and conditions of this
Agreement have been complied with by Loan Parties including, without limitation
and without the necessity of any request by Lender, (a) copies of all
environmental audits and reviews, (b) at least thirty (30) days prior thereto,
notice of any Loan Party's opening of any new office or place of business or any
Loan Party's closing of any existing office or place of business, and (c)
promptly upon any Loan Party's learning thereof, notice of any labor dispute to
which any Loan Party may become a party, any strikes or walkouts relating to any
of its plants or other facilities, and the expiration of any labor contract to
which any Loan Party is a party or by which any Loan Party is bound.
9.12. PROJECTED OPERATING BUDGET. Furnish Lender, no later than
forty-five (45) days after the beginning of each Loan Party's fiscal years
commencing with fiscal year 2001, a month by month projected operating budget
and cash flow of Loan Parties (on a consolidated basis) for such fiscal year
(including an income statement for each month and a balance sheet as at the end
of the last month in each fiscal quarter), such projections to be accompanied by
a certificate signed by Borrowing Agent's President or Chief Financial Officer
to the effect that such projections have been prepared on the basis of sound
financial planning practice consistent with past budgets and financial
statements and that such officer has no reason to question the reasonableness of
any material assumptions on which such projections were prepared.
9.13. REVISIONS TO PROJECTIONS. Promptly furnish Lender, on a quarterly
basis, any revisions of the projections delivered pursuant to Section 9.12
hereof, giving effect to actual year to date results and anticipated results for
the balance of the applicable fiscal year.
9.14. NOTICE OF SUITS, ADVERSE EVENTS. Furnish Lender with prompt
notice of (i) any lapse or other termination of any Consent issued to any Loan
Party by any Governmental Authority or any other Person that is material to the
operation of any Loan Party's business, (ii) any refusal by any Governmental
Authority or any other Person to renew or extend any such Consent; and (iii)
copies of any periodic or special reports filed by any Loan Party with any
Governmental Authority or Person, if such reports indicate any material change
in the business, operations, affairs or condition of such Loan Party, or if
copies thereof are requested by Lender, and (iv) copies of any material notices
and other communications from any Governmental Authority or Person which
specifically relate to any Loan Party.
9.15. ERISA NOTICES AND REQUESTS. Furnish Lender with immediate written
notice in the event that (i) any Loan Party or any member of a Controlled Group
knows or has reason to know that a Lien has arisen in respect of any Plan
(except for current contribution amounts not due and unpaid) or that a
Termination Event has occurred, together with a written statement
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describing such Termination Event and the action, if any, which such Loan Party
or member of a Controlled Group has taken, is taking, or proposes to take with
respect thereto and, when known, any action taken or threatened by the Internal
Revenue Service, Department of Labor, Pension Regulator, PBGC or any other
Governmental Authority or Person (except for benefit claims in the ordinary
course)with respect thereto, (ii) any Loan Party or any member of a Controlled
Group knows or has reason to know that a prohibited transaction (as defined in
Sections 406 of ERISA and 4975 of the Internal Revenue Code) has occurred
together with a written statement describing such transaction and the action
which such Loan Party or any member of the Controlled Group has taken, is taking
or proposes to take with respect thereto, (iii) a funding waiver or holiday
request has been filed or taken with respect to any Plan together with all
communications received by any Loan Party or any member of the Controlled Group
with respect to such request or action, (iv) the establishment of any new Plan
or the commencement of contributions to any Plan to which any Loan Party or any
member of the Controlled Group was not previously contributing shall occur, (v)
any Loan Party or any member of the Controlled Group shall receive from the
PBGC, Pension Regulator or other Governmental Authority or notice of proposal to
windup any Plan or notice of proposal to appoint an administrator in respect of
any Plan or any other notice of intention to terminate or wind up (in whole or
in part) a Plan or to have a trustee appointed to administer a Plan, together
with copies of each such notice, (vi) any Loan Party or any member of the
Controlled Group shall receive any unfavorable determination letter from the
Internal Revenue Service regarding the qualification of a Plan under Section
401(a) of the Internal Revenue Code, together with copies of each such letter;
(vii) any Loan Party or any member of the Controlled Group shall receive a
notice regarding the imposition of withdrawal liability, together with copies of
each such notice; (viii) any Loan Party or any member of the Controlled Group
shall fail to make a required installment or any other required payment or
remittance in respect of any Plan on or before the due date for such installment
or payment; (ix) any Loan Party or any member of the Controlled Group knows that
(a) a Multiemployer Plan has been terminated, (b) the administrator or plan
sponsor of a Multiemployer Plan intends to terminate a Multiemployer Plan, or
(c) the PBGC has instituted or will institute proceedings under Section 4042 of
ERISA to terminate a Multiemployer Plan. Each Loan Party shall forthwith provide
to Lender a copy of each actuarial valuation made in respect of any Plan of such
Loan Party that is filed with a Pension Regulator.
9.16. ADDITIONAL DOCUMENTS. Execute and deliver to Lender, upon
request, such documents and agreements as Lender may, from time to time,
reasonably request to carry out the purposes, terms or conditions of this
Agreement.
X. EVENTS OF DEFAULT.
The occurrence of any one or more of the following events shall
constitute an "Event of Default":
10.1. failure by any Loan Party to pay any principal or interest on the
Obligations when due, whether at maturity or by reason of acceleration pursuant
to the terms of this Agreement or by notice of intention to prepay, or by
required prepayment or failure to pay any other liabilities or make any other
payment, fee or charge provided for herein when due;
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10.2. any representation or warranty made or deemed made by any Loan
Party in this Agreement, any of the Other Documents or any related agreement or
in any certificate, document or financial or other statement furnished at any
time in connection herewith or therewith shall prove to have been misleading in
any material respect on the date when made or deemed to have been made;
10.3. failure by any Loan Party to (i) furnish financial information
when due or when requested, or (ii) permit the inspection of its books or
records;
10.4. issuance of a notice of Lien, levy, assessment, injunction or
attachment against a material portion of any Loan Party's property which is not
stayed or lifted within thirty (30) days;
10.5. failure or neglect of any Loan Party to perform, keep or observe
any term, provision, condition, covenant herein contained, or contained in any
other agreement or arrangement, now or hereafter entered into between any Loan
Party and Lender other than a failure or neglect of any Loan Party to perform,
keep or observe any term, provision, condition or covenant, contained in
Sections 4.6, 4.7, 4.9, 6.4 or 9.6 hereof which is cured within thirty (30) days
from the occurrence of such failure or neglect;
10.6. one or more judgments is rendered or judgment liens or writs of
seizure, execution or similar process or distress or hypothecary right of a
landlord or any right of an unpaid seller to reclaim or repossess any property
shall be issued, exercised or filed against any Loan Party for an amount in
excess of $500,000 in the aggregate for all Loan Parties which within thirty
(30) days of such rendering or filing are not either satisfied, stayed or
discharged of record;
10.7. any Loan Party shall (i) apply for or consent to the appointment
of, or the taking of possession by, a receiver, custodian, trustee or liquidator
of itself or of all or a substantial part of its property, (ii) make a general
assignment for the benefit of creditors, (iii) commence a voluntary case under
any state or federal bankruptcy laws (as now or hereafter in effect), (iv) be
adjudicated a bankrupt or insolvent, (v) file a petition seeking to take
advantage of any other law providing for the relief of debtors, (vi) acquiesce
to, or fail to have dismissed, within thirty (30) days, (x) any petition filed
against it in any involuntary case under such bankruptcy laws, or (y) any
proceeding or petition seeking the appointment of a receiver, custodian, trustee
or liquidator of itself or all or a substantial part of its property, or (vii)
take any action for the purpose of effecting any of the foregoing;
10.8. any Loan Party shall admit in writing its inability, or be
generally unable, to pay its debts as they become due or cease operations of its
present business;
10.9. Canadian Guarantor or any other Subsidiary of CMP shall (i) apply
for or consent to the appointment of, or the taking of possession by, a
receiver, custodian, trustee or liquidator of itself or of all or a substantial
part of its property, (ii) admit in writing its inability, or be generally
unable, to pay its debts as they become due or cease operations of its present
business,
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(iii) make a general assignment for the benefit of creditors or, in the case of
Canadian Guarantor or any Canadian Subsidiary, file any proposal or notice of
intent to file a proposal, (iv) commence a voluntary proceeding under any state,
province or federal bankruptcy, insolvency, liquidation, winding up or
restructuring laws (as now or hereafter in effect) (collectively "Bankruptcy
Laws"), (v) be adjudicated a bankrupt or insolvent, (vi) file a petition or
otherwise institute any proceeding seeking to take advantage of any other law
providing for the relief of debtors, (vii) acquiesce to, or fail to have
dismissed, within thirty (30) days, (x) any petition, action, proposal or
proceeding filed or instituted against it in any involuntary case under such
Bankruptcy Laws or (y) any action or proceeding or petition seeking the
appointment of a receiver, custodian, administrator, monitor, trustee or
liquidator of itself or all or a substantial part of its property, or (viii)
take any action for the purpose of effecting any of the foregoing;
10.10. any change in any Loan Party's condition or affairs (financial
or otherwise) which in Lender's good faith opinion materially and adversely
impairs the Collateral or the ability of such Loan Party to perform its
Obligations under this Agreement or of any Guarantor under the Guarantee;
10.11. any Lien created hereunder or provided for hereby or under the
Other Documents for any reason ceases to be or is not a valid and perfected Lien
having a first priority interest;
10.12. a default of the obligations of any Loan Party under the Other
Documents or any other agreement to which it is a party shall occur which
materially and adversely affects its condition, affairs or prospects (financial
or otherwise) which default is not cured within any applicable grace period;
10.13. termination or breach of any Guarantee or similar agreement
executed and delivered to Lender in connection with the Obligations of any Loan
Party, or if any Guarantor attempts to terminate, challenges the validity of, or
its liability under, any such Guarantee or similar agreement or, any Guarantor
fails to perform or observe any of its obligations under the Other Documents to
which it is party or shall challenge the validity, binding effect or
enforceability of any such Other Documents;
10.14. any Change of Control or if CMP ceases to own 100% of the
capital stock of Alkar or Canadian Guarantor;
10.15. any material provision of this Agreement shall, for any reason,
cease to be valid and binding on any Loan Party, or any Loan Party shall so
claim in writing to Lender;
10.16. (i) any Governmental Authority shall (A) revoke, terminate,
suspend or adversely modify any license, permit, patent trademark or tradename
of any Loan Party, the continuation of which is material to the continuation of
any Loan Party's business, or (B) commence proceedings to suspend, revoke,
terminate or adversely modify any such license, permit, trademark, tradename or
patent and such proceedings shall not be dismissed or discharged within sixty
(60) days, or (c) schedule or conduct a hearing on the renewal of any license,
permit, trademark, tradename or patent necessary for the continuation of any
Loan Party's business and the staff of such Governmental Authority issues a
report recommending the termination,
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revocation, suspension or material, adverse modification of such license,
permit, trademark, tradename or patent; (ii) any agreement which is necessary or
material to the operation of any Loan Party's business shall be revoked or
terminated and not replaced by a substitute acceptable to Lender within thirty
(30) days after the date of such revocation or termination, and such revocation
or termination and non-replacement would have a material adverse effect on any
Loan Party's business or financial condition;
10.17. any portion of the Collateral shall be seized or taken by a
Governmental Authority, or any Loan Party or the title and rights of any Loan
Party or any Original Owner which is the owner of any material portion of the
Collateral shall have become the subject matter of litigation which might, in
the opinion of Lender, upon final determination, result in impairment or loss of
the security provided by this Agreement or the Other Documents;
10.18. an event or condition specified in Sections 7.16 or 9.15 hereof
shall occur or exist with respect to any Plan and, as a result of such event or
condition, together with all other such events or conditions, any Loan Party or
any member of the Controlled Group shall incur, or in the opinion of Lender be
reasonably likely to incur, a liability to a Plan or the applicable Governmental
Authority, including as applicable the Pension Regulator or PBGC, (or both)
which, in the reasonable judgment of Lender, would have a material adverse
effect upon the Collateral or the ability of any Loan Party to perform its
Obligations under this Agreement or the Other Documents; or
10.19. any Event of Default shall occur under any of the Guarantor
Security Documents.
XI. BANK'S RIGHTS AND REMEDIES AFTER DEFAULT.
11.1. RIGHTS AND REMEDIES. Upon the occurrence of (i) an Event of
Default pursuant to Article 10.7 all Obligations shall be immediately due and
payable and this Agreement and the obligation of Lender to make Advances shall
be deemed terminated; (ii) any of the other Events of Default and at any time
thereafter (such default not having previously been cured), at the option of
Lender all Obligations shall be immediately due and payable and Lender shall
have the right to terminate this Agreement and to terminate the obligation of
Lender to make Advances; and (iii) a filing of a petition against any Loan Party
in any involuntary case under any state or federal bankruptcy laws the
obligation of Lender to make Advances hereunder shall be terminated other than
as may be required by an appropriate order of the bankruptcy court having
jurisdiction over any Loan Party. Upon the occurrence of any Event of Default,
Lender shall have the right to exercise any and all other rights and remedies
provided for herein, under the Uniform Commercial Code, the PPSA, including
rights as a hypothecary creditor under the Civil Code of Quebec, and at law or
equity generally, including, without limitation, the right to foreclose the
security interests granted herein and to realize upon any Collateral by any
available judicial procedure or to take possession of and sell any or all of the
Collateral with or without judicial process. Lender may enter any of any Loan
Party's premises or other premises without legal process and without incurring
liability to any Loan Party therefor, and Lender may thereupon, or at any time
thereafter, in its discretion without notice or demand, take the Collateral and
remove the same to such place as Lender may deem advisable and Lender may
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require one or more of the Loan Parties to make the Collateral available to
Lender at a convenient place. With or without having the Collateral at the time
or place of sale, Lender may sell the Collateral, or any part thereof, at public
or private sale, at any time or place, in one or more sales, at such price or
prices, and upon such terms, either for cash, credit or future delivery (other
than Guarantor Collateral), as Lender may elect. Except as to that part of the
Collateral which is perishable or threatens to decline speedily in value or is
of a type customarily sold on a recognized market, Lender shall give Loan
Parties reasonable notification of such sale or sales, it being agreed that in
all events written notice mailed to Loan Parties at least five (5) days prior to
such sale or sales is reasonable notification. At any public sale Lender may bid
for and become the purchaser, and Lender or any other purchaser at any such sale
thereafter shall hold the Collateral sold absolutely free from any claim or
right of whatsoever kind, including any equity of redemption and such right and
equity are hereby expressly waived and released by each Loan Party. In
connection with the exercise of the foregoing remedies, Lender is granted
permission to use without charge all of each Loan Party's trademarks, trade
styles, trade names, patents, patent applications, licenses, franchises and
other proprietary rights which are used in connection with (a) Inventory for the
purpose of disposing of such Inventory and (b) Equipment for the purpose of
completing the manufacture of unfinished goods. The proceeds realized from the
sale of any Collateral (other than Guarantor Collateral) shall be applied as
follows: first, to the reasonable costs, expenses and attorneys' fees and
expenses incurred by Lender for collection and for acquisition, completion,
protection, removal, storage, sale and delivery of the Collateral; second, to
interest due upon any of the Obligations; and, third, to the principal of the
Obligations. If any deficiency shall arise, Loan Parties shall remain liable to
Lender therefor. All proceeds realized from the sale of any Guarantor Collateral
and payments made by any Guarantor pursuant to the Guarantee or otherwise shall
be applied as follows: first, to the principal of the Obligations; second, to
reasonable costs and expenses incurred by the Lender; and third, to interest due
upon or compromised in the Obligations and to any other Obligations then due.
11.2. LENDER'S DISCRETION. Lender shall have the right in its sole
discretion to determine which rights, Liens, security interests or remedies
Lender may at any time pursue, relinquish, subordinate, or modify or to take any
other action with respect thereto and such determination will not in any way
modify or affect any of Lender's rights hereunder.
11.3. SETOFF. In addition to any other rights which Lender may have
under applicable law, upon the occurrence of an Event of Default hereunder,
Lender shall have a right to apply any of any Loan Party's property held by
Lender to reduce the Obligations.
11.4. RIGHTS AND REMEDIES NOT EXCLUSIVE. The enumeration of the
foregoing rights and remedies is not intended to be exhaustive and the exercise
of any right or remedy shall not preclude the exercise of any other right or
remedies, all of which shall be cumulative and not alternative.
XII. WAIVERS AND JUDICIAL PROCEEDINGS.
12.1. WAIVER OF NOTICE. Each Loan Party hereby waives notice of
non-payment of any of the Receivables, demand, presentment, protest and notice
thereof with respect to any and all
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instruments, notice of acceptance hereof, notice of loans or advances made,
credit extended, Collateral received or delivered, or any other action taken in
reliance hereon, and all other demands and notices of any description, except
such as are expressly provided for herein.
12.2. DELAY. No delay or omission on Lender's part in exercising any
right, remedy or option shall operate as a waiver of such or any other right,
remedy or option or of any default.
12.3. JURY WAIVER. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES
ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A)
ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN ANY WAY CONNECTED WITH
OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM
WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO
OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND EACH PARTY HEREBY CONSENTS THAT
ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT
TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENTS OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
XIII. EFFECTIVE DATE AND TERMINATION.
13.1. TERM. This Agreement, which shall inure to the benefit of and
shall be binding upon the respective successors and permitted assigns of each
Loan Party and Lender, shall become effective on the date hereof and shall
continue in full force and effect until the last day of the Term unless sooner
terminated as herein provided. The Term shall be automatically extended for
successive periods of one (1) year each unless terminated by either party at the
end of such initial Term or any successive Term by giving the other party sixty
(60) days prior written notice. Borrowers may terminate this Agreement at any
time upon ten (10) days' prior written notice ("Termination Date") upon payment
in full of the Obligations.
13.2. TERMINATION. The termination of the Agreement shall not affect
any of Loan Party's or Lender's rights, or any of the Obligations having their
inception prior to the effective date of such termination, and the provisions
hereof shall continue to be fully operative until all transactions entered into,
rights or interests created or Obligations have been fully disposed of,
concluded or liquidated. The security interests, Liens and rights granted to
Lender hereunder and the financing statements filed hereunder shall continue in
full force and effect except as set forth in Section 4.21, notwithstanding the
termination of this Agreement or the fact that Borrowers' Account may from time
to time be temporarily in a zero or credit position, until all of the
Obligations of Loan Party have been paid or performed in full after the
termination of this Agreement or each Loan Party has furnished Lender with an
indemnification satisfactory to
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Lender with respect thereto. Accordingly, each Loan Party waives any rights
which it may have under Section 9-404(1) of the Uniform Commercial Code to
demand the filing of termination statements with respect to the Collateral, and
Lender shall not be required to send such termination statements to any Loan
Party, or to file them with any filing office, unless and until this Agreement
shall have been terminated in accordance with its terms and all Obligations paid
in full in immediately available funds. All representations, warranties,
covenants, waivers and agreements contained herein shall survive termination
hereof until all Obligations are repaid or performed in full.
XIV. MISCELLANEOUS.
14.1. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York applied to contracts to be
performed wholly within the State of New York. Any judicial proceeding brought
by or against any Loan Party with respect to any of the Obligations, this
Agreement or any related agreement may be brought in any court of competent
jurisdiction in the State of New York, United States of America, and, by
execution and delivery of this Agreement, each Loan Party accepts for itself and
in connection with its properties, generally and unconditionally, the
non-exclusive jurisdiction of the aforesaid courts, and irrevocably agrees to be
bound by any judgment rendered thereby in connection with this Agreement.
Nothing herein shall affect the right to serve process in any manner permitted
by law or shall limit the right of Lender to bring proceedings against any Loan
Party in the courts of any other jurisdiction. Each Loan Party waives any
objection to jurisdiction and venue of any action instituted hereunder and shall
not assert any defense based on lack of jurisdiction or venue or based upon
FORUM NON CONVENIENS. Any judicial proceeding by any Loan Party against Lender
involving, directly or indirectly, any matter or claim in any way arising out
of, related to or connected with this Agreement or any related agreement, shall
be brought only in a federal or state court located in the City of New York,
State of New York.
14.2. ENTIRE UNDERSTANDING. This Agreement and the documents executed
concurrently herewith contain the entire understanding between each Loan Party
and Lender and supersedes all prior agreements and understandings, if any,
relating to the subject matter hereof. Any promises, representations, warranties
or guarantees not herein contained and hereinafter made shall have no force and
effect unless in writing, signed by each Loan Party's and Lender's respective
officers. Neither this Agreement nor any portion or provisions hereof may be
changed, modified, amended, waived, supplemented, discharged, cancelled or
terminated orally or by any course of dealing, or in any manner other than by an
agreement in writing, signed by the party to be charged. Each Loan Party
acknowledges that it has been advised by counsel in connection with the
execution of this Agreement and Other Documents and is not relying upon oral
representations or statements inconsistent with the terms and provisions of this
Agreement.
14.3. SUCCESSORS AND ASSIGNS; PARTICIPATIONS; NEW LENDERS.
(a) This Agreement shall be binding upon and inure to the benefit
of each Loan Party, Lender, all future holders of the Notes and their respective
successors and assigns,
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except that no Loan Party may assign or transfer any of its rights or
obligations under this Agreement without the prior written consent of Lender.
(b) Lender may sell, assign or transfer all or any part of its
rights under this Agreement and all related agreements, instruments and
documents provided Borrowing Agent is given notice of such sale as soon as
practicable and the transferee agrees to perform the obligations of the
transferor; in addition to the foregoing, each Loan Party acknowledges that in
the regular course of commercial banking business Lender may at any time and
from time to time sell participating interests in the Advances to other
financial institutions (each such transferee or purchaser of a participating
interest, a "Transferee"). Each Transferee may exercise all rights of payment
(including without limitation rights of set-off) with respect to the portion of
such Advances held by it or other Obligations payable hereunder as fully as if
such Transferee were the direct holder thereof. Each Loan Party hereby grants to
any Transferee a continuing security interest in any deposits, moneys or other
property actually or constructively held by such Transferee as security for the
Transferee's interest in the Advances.
14.4. APPLICATION OF PAYMENTS. Lender shall, subject to Section 11.1
hereof, have the continuing and exclusive right to apply or reverse and re-apply
any payment and any and all proceeds of Collateral to any portion of the
Obligations. To the extent that any Loan Party makes a payment or Lender
receives any payment or proceeds of the Collateral for any Loan Party's benefit,
which are subsequently invalidated, declared to be fraudulent or preferential,
set aside or required to be repaid to a trustee, debtor in possession, receiver,
custodian or any other party under any bankruptcy law, common law or equitable
cause, then, to such extent, the Obligations or part thereof intended to be
satisfied shall be revived and continue as if such payment or proceeds had not
been received by Lender.
14.5. INDEMNITY. Loan Parties shall indemnify Lender from and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses and disbursements of any kind or nature
whatsoever (including, without limitation, fees and disbursements of counsel)
which may be imposed on, incurred by, or asserted against Lender in any
litigation, proceeding or investigation instituted or conducted by any
governmental agency or instrumentality or any other Person with respect to any
aspect of, or any transaction contemplated by, or referred to in, or any matter
related to, this Agreement or the Other Documents, whether or not Lender is a
party thereto, except to the extent that any of the foregoing arises out of the
willful misconduct of Lender.
14.6. NOTICE. Any notice or request hereunder may be given to any Loan
Party or to Lender at their respective addresses set forth below or at such
other address as may hereafter be specified in a notice designated as a notice
of change of address under this Section. Any notice or request hereunder shall
be given by (a) hand delivery, (b) overnight courier, (c) registered or
certified mail, return receipt requested, or (c) telecopy to the number set out
below (or such other number as may hereafter be specified in a notice designated
as a notice of change of address) with telephone communication to a duly
authorized officer of the recipient confirming its receipt as subsequently
confirmed by registered or certified mail. Any notice or other communication
required or permitted pursuant to this Agreement shall be deemed given (a) when
personally delivered to any officer of the party to whom it is addressed, (b) on
the earlier
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of actual receipt thereof or three (3) days following posting thereof by
certified or registered mail, postage prepaid, or (c) upon actual receipt
thereof when sent by a recognized overnight delivery service or (d) upon actual
receipt thereof when sent by telecopier to the number set forth below with
telephone communication confirming receipt and subsequently confirmed by
registered, certified or overnight mail to the address set forth below, in each
case addressed to each party at its address set forth below or at such other
address as has been furnished in writing by a party to the other by like notice:
(A) If to Lender, at: GMAC COMMERCIAL CREDIT LLC
1290 Avenue of the Americas
New York, New York 10104
Attention: Anthony Viola
Telephone: (212) 884-7096
Telecopier: (212) 884-7313
with a copy to: Hahn & Hessen, LLP
350 Fifth Avenue
New York, New York 10118-0075
Attention: Steven J. Seif, Esq.
Telephone: (212) 946-0294
Telecopier: (212) 594-7167
(B) If to any Loan
Party, c/o Borrowing
Agent, at: Cold Metal Products, Inc.
2200 Georgetown Drive, Suite 301
Sewickley, Pennsylvania 15143
Attention: Joseph C. Horvath
Telephone: (724) 933-1441
Telecopier: (724) 933-1451
with a copy to: Cohen Swados Wright Hanifin
Bradford & Brett, LLP
Seventy Niagara Street
Buffalo, New York 14202-3467
Attention: Douglas G. Kirkpatrick, Esq.
Telephone: (716) 856-4600
Telecopier: (716) 856-5228
14.7. SEVERABILITY. If any part of this Agreement is contrary to,
prohibited by, or deemed invalid under applicable laws or regulations, such
provision shall be inapplicable and deemed omitted to the extent so contrary,
prohibited or invalid, but the remainder hereof shall not be invalidated thereby
and shall be given effect so far as possible.
14.8. EXPENSES. All costs and expenses including, without limitation,
reasonable attorneys' fees and disbursements incurred by Lender (a) in all
efforts made to enforce payment
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of any Obligation or effect collection of any Collateral, or (b) in connection
with the entering into, modification, amendment, administration and enforcement
of this Agreement or the Other Documents or any consents or waivers hereunder
and all related agreements, documents and instruments, or (c) in instituting,
maintaining, preserving, enforcing and foreclosing on Lender's security interest
in or Lien on any of the Collateral, whether through judicial proceedings or
otherwise, or (d) in defending or prosecuting any actions or proceedings arising
out of or relating to Lender's transactions with Borrower, or (e) in connection
with any advice given to Lender with respect to its rights and obligations under
this Agreement and all related agreements, may be charged to Borrowers' Account
and shall be part of the Obligations.
14.9. INJUNCTIVE RELIEF. Each Loan Party recognizes that, in the event
any Loan Party fails to perform, observe or discharge any of its obligations or
liabilities under this Agreement, any remedy at law may prove to be inadequate
relief to Lender; therefore, Lender, if Lender so requests, shall be entitled to
temporary and permanent injunctive relief in any such case without the necessity
of proving actual damages.
14.10. CONSEQUENTIAL DAMAGES. Neither Lender nor any agent or attorney
for Lender shall be liable to any Loan Party for consequential damages arising
from any breach of contract, tort or other wrong relating to the establishment,
administration or collection of the Obligations.
14.11. CAPTIONS. The captions at various places in this Agreement are
intended for convenience only and do not constitute and shall not be interpreted
as part of this Agreement.
14.12. COUNTERPARTS; TELECOPIED SIGNATURES. This Agreement may be
executed in any number of and by different parties hereto on separate
counterparts, all of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute one and the same agreement. Any signature
delivered by a party by facsimile transmission shall be deemed to be an original
signature..
14.13. CONSTRUCTION. The parties acknowledge that each party and its
counsel have reviewed this Agreement and that the normal rule of construction to
the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Agreement or any amendments,
schedules or exhibits thereto.
XV. BORROWING AGENCY.
15.1. BORROWING AGENCY PROVISIONS.
(a) Each Loan Party hereby irrevocably designates Borrowing Agent
to be its attorney and agent and in such capacity to borrow, sign and endorse
notes, and execute and deliver all instruments, documents, writings and further
assurances now or hereafter required hereunder, on behalf of such Loan Party or
Borrowers, and hereby authorizes Lender to pay over or credit all loan proceeds
hereunder in accordance with the request of Borrowing Agent; PROVIDED, HOWEVER,
Borrowing Agent shall not be permitted to borrow, sign and endorse notes on
behalf of Canadian Guarantor pursuant to this Section 15.1(a).
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(b) The handling of this credit facility as a co-borrowing
facility with a borrowing agent in the manner set forth in this Agreement is
solely as an accommodation to Borrowers and at their request. Lender shall not
incur liability to Loan Parties as a result thereof. To induce Lender to do so
and in consideration thereof, each Loan Party hereby indemnifies Lender and
holds Lender harmless from and against any and all liabilities, expenses,
losses, damages and claims of damage or injury asserted against Lender by any
Person arising from or incurred by reason of the handling of the financing
arrangements of Borrowers as provided herein, reliance by Lender on any request
or instruction from Borrowing Agent or any other action taken by Lender with
respect to this Section 15.1 except due to willful misconduct or gross (not
mere) negligence by the indemnified party.
(c) All Obligations shall be joint and several, and each Borrower
shall make payment upon the maturity of the Obligations by acceleration or
otherwise, and such obligation and liability on the part of each Borrower shall
in no way be affected by any extensions, renewals and forbearance granted by
Lender to any Loan Party, failure of Lender to give any Loan Party notice of
borrowing or any other notice, any failure of Lender to pursue or preserve its
rights against any Loan Party, the release by Lender of any Collateral now or
thereafter acquired from any Loan Party, and such agreement by each Loan Party
to pay upon any notice issued pursuant thereto is unconditional and unaffected
by prior recourse by Lender to the other Loan Parties or any Collateral for such
Loan Party's Obligations or the lack thereof.
15.2. Waiver of Subrogation. Each Loan Party expressly waives any
and all rights of subrogation, reimbursement, indemnity, exoneration,
contribution of any other claim which such Loan Party may now or hereafter have
against the other Loan Parties or other Person directly or contingently liable
for the Obligations hereunder, or against or with respect to the other Loan
Parties' property (including, without limitation, any property which is
Collateral for the Obligations), arising from the existence or performance of
this Agreement, until termination of this Agreement and repayment in full of the
Obligations.
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Each of the parties has signed this Agreement as of the day and year
first above written.
COLD METAL PRODUCTS, INC.
By: /s/Joseph C. Horvath
----------------------
Name: Joseph C. Horvath
Title: Vice President and
Chief Financial Officer
ALKAR STEEL CORPORATION
By: /s/Joseph C. Horvath
---------------------
Name: Joseph C. Horvath
Title: Vice President
COLD METAL PRODUCTS, LIMITED
By: /s/Joseph C. Horvath
----------------------
Name: Joseph C. Horvath
Title: Vice President
GMAC COMMERCIAL CREDIT LLC
By: /s/ Frank Imperato
------------------------------
Its: Senior Vice President
------------------------------
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STATE OF Pennsylvania )
ss.
COUNTY OF Allegheny )
On this 25th day of October, 2000, before me personally came Joseph C.
Horvath, to me known, who, being by me duly sworn, did depose and say that he is
the Vice President and Chief Financial Officer of COLD METAL PRODUCTS, INC. the
corporation described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by order of the board of directors
of said corporation, and that he signed his name thereto by like order.
/s/ Carol A. Lawlor
-----------------------------
Notary Public
STATE OF Pennsylvania )
ss.
COUNTY OF Allegheny )
On this 25th day of October, 2000, before me personally came Joseph C.
Horvath, to me known, who, being by me duly sworn, did depose and say that he is
the Vice President of COLD METAL PRODUCTS, LIMITED the corporation described in
and which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by order of the board of directors of said corporation,
and that he signed his name thereto by like order.
/s/ Carol A. Lawlor
-----------------------------
Notary Public
STATE OF Pennsylvania )
ss.
COUNTY OF Allegheny )
On this 25th day of October, 2000, before me personally came Joseph C.
Horvath, to me known, who, being by me duly sworn, did depose and say that he is
the Vice President of ALKAR STEEL CORPORATION the corporation described in and
which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by order of the board of directors of said corporation,
and that he signed his name thereto by like order.
/s/ Carol A. Lawlor
-----------------------------
Notary Public
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STATE OF NEW YORK. )
ss.
COUNTY OF NEW YORK )
On this 9th day of October, 2000, before me personally came
Frank Imperato, to me known, who, being by me duly sworn, did
depose and say that he is the Sr. Vice President of GMAC COMMERCIAL CREDIT LLC,
the limited liability company described in and which executed the foregoing
instrument and that he signed his name thereto by order of the members of said
limited liability company.
/s/ Eugenia H. Hunt
-----------------------------
Notary Public
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<TABLE>
TABLE OF CONTENTS
<S> <C>
I. DEFINITIONS.............................................................................................2
1.1 Accounting Terms...............................................................................2
1.2 General Terms..................................................................................2
1.3. Uniform Commercial Code Terms.................................................................17
1.4. Certain Matters of Construction...............................................................17
II. ADVANCES, PAYMENTS.....................................................................................17
2.1. (a) Revolving Advances........................................................................17
(b) Discretionary Rights.................................................................18
2.2. Procedure for Revolving Advances Borrowing....................................................18
2.3. Disbursement of Advance Proceeds..............................................................18
2.4. Capital Expenditure Loans.....................................................................19
2.5. Maximum Advances..............................................................................19
2.6. Repayment of Advances.........................................................................20
2.7. Repayment of Excess Advances..................................................................20
2.8. Statement of Account..........................................................................20
2.9. Letters of Credit and Acceptances.............................................................21
2.10. Issuance of Letters of Credit; Creation of Acceptances........................................21
2.11. Requirements For Issuance of Letters of Credit and Acceptances................................21
2.12. Additional Payments...........................................................................22
2.13. Mandatory Prepayments.........................................................................22
III. INTEREST AND FEES......................................................................................23
3.1 Interest......................................................................................23
3.2 Letter of Credit and Acceptance Fees..........................................................23
3.3. Early Termination Fee.........................................................................24
3.4 Collateral Monitoring Fee.....................................................................24
3.5 Computation of Interest and Fees..............................................................25
3.6 Maximum Charges...............................................................................25
3.7 Regulatory Changes............................................................................25
3.8. Closing Fee...................................................................................25
3.9. Taxes.........................................................................................26
3.10. Survival......................................................................................26
IV. COLLATERAL: GENERAL TERMS..............................................................................26
4.1 Security Interest in the Collateral...........................................................26
4.2 Perfection of Security Interest...............................................................27
4.3 Disposition of Collateral.....................................................................27
4.4 Preservation of Collateral....................................................................27
4.5 Ownership of Collateral.......................................................................28
4.6 Defense of Lender's Interests.................................................................28
4.7 Books and Records.............................................................................29
4.8 Financial Disclosure..........................................................................29
4.9 Compliance with Laws..........................................................................29
</TABLE>
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<TABLE>
<S> <C>
4.10 Inspection of Premises........................................................................29
4.11 Insurance.....................................................................................29
4.12 Failure to Pay Insurance......................................................................30
4.13 Payment of Taxes..............................................................................30
4.14 Payment of Leasehold Obligations..............................................................31
4.15 Receivables...................................................................................31
(a) Nature of Receivables.................................................................31
(b) Solvency of Customers.................................................................31
(c) Locations of Borrowers and Guarantors.................................................31
(d) Collection of Receivables.............................................................31
(e) Notification of Assignment of Receivables.............................................32
(f) Power of Lender to Act on each Loan Party's Behalf....................................32
(g) No Liability..........................................................................33
(h) Establishment of a Lockbox Account, Dominion Account..................................33
(i) Adjustments...........................................................................33
4.16 Inventory.....................................................................................33
4.17 Maintenance of Equipment......................................................................33
4.18 Exculpation of Liability......................................................................34
4.19 Environmental Matters.........................................................................34
4.20 Financing Statements..........................................................................36
4.21 Release of Security Interest in Equipment.....................................................36
V. REPRESENTATIONS AND WARRANTIES.........................................................................37
5.1 Authority.....................................................................................37
5.2 Formation and Qualification...................................................................37
5.3 Survival of Representations and Warranties....................................................37
5.4 Tax Returns...................................................................................38
5.5 Financial Statements..........................................................................38
5.6 Corporate Name................................................................................38
5.7 O.S.H.A. and Environmental Compliance.........................................................38
5.8 Solvency; No Litigation, Violation, Indebtedness or Default...................................39
5.9 Patents, Trademarks, Copyrights and Licenses..................................................41
5.10 Licenses and Permits..........................................................................42
5.11 Default of Indebtedness.......................................................................42
5.12 No Default....................................................................................42
5.13 No Burdensome Restrictions....................................................................42
5.14 No Labor Disputes.............................................................................42
5.15 Margin Regulations............................................................................42
5.16 Investment Company Act........................................................................43
5.17 Disclosure....................................................................................43
5.18 INTENTIONALLY OMITTED.........................................................................43
5.19 Swaps.........................................................................................43
5.20 Conflicting Agreements........................................................................43
5.21 Application of Certain Laws and Regulations...................................................43
5.22 Business and Property of Loan Party...........................................................43
5.23. Workers' Compensation.........................................................................43
5.24. Responsible Premises..........................................................................44
</TABLE>
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<TABLE>
<S> <C>
VI. AFFIRMATIVE COVENANTS..................................................................................44
6.1 Payment of Fees...............................................................................44
6.2 Conduct of Business and Maintenance of Existence and Assets...................................44
6.3 Violations....................................................................................45
6.4 Government Receivables.......................................................................45
6.5 Current Ratio.................................................................................45
6.6 INTENTIONALLY OMITTED.........................................................................45
6.7 INTENTIONALLY OMITTED.........................................................................45
6.8 Fixed Charge Coverage.........................................................................45
6.9 Total Liabilities to Equity...................................................................46
6.10 Execution of Supplemental Instruments.........................................................46
6.11 Payment of Indebtedness.......................................................................46
6.12 Standards of Financial Statements.............................................................46
VII. NEGATIVE COVENANTS.....................................................................................46
7.1 Merger, Consolidation, Acquisition and Sale of Assets.........................................46
7.2 Creation of Liens.............................................................................47
7.3 Guarantees....................................................................................47
7.4 Investments...................................................................................47
7.5 Loans.........................................................................................47
7.6 Capital Expenditures..........................................................................47
7.7 Dividends.....................................................................................47
7.8 Indebtedness..................................................................................48
7.9 Nature of Business............................................................................48
7.10 Transactions with Affiliates..................................................................48
7.11 Leases........................................................................................48
7.12 Subsidiaries..................................................................................49
7.13 Fiscal Year and Accounting Changes............................................................49
7.14 Pledge of Credit..............................................................................49
7.15 Amendment of Articles of Incorporation, By-Laws...............................................49
7.16 Compliance with ERISA and PBA.................................................................49
7.17 Prepayment of Indebtedness....................................................................50
VIII. CONDITIONS PRECEDENT...................................................................................50
8.1 Conditions to Initial Advances................................................................50
(a) Filings, Registrations and Recordings.................................................50
(b) Corporate Proceedings of Loan Parties.................................................50
(c) Incumbency Certificates of Loan Parties...............................................50
(d) Certificates..........................................................................51
(e) Good Standing Certificates............................................................51
(f) Legal Opinion.........................................................................51
(g) Consents..............................................................................51
(h) No Adverse Material Change............................................................51
(i) Consent of Participants...............................................................51
(j) Closing Fee...........................................................................51
8.2 Conditions to Each Advance....................................................................52
(a) Representations and Warranties........................................................52
(b) No Default............................................................................52
</TABLE>
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<TABLE>
<S> <C>
(c) Maximum Advances......................................................................52
8.3. Conditions to Each Capital Expenditure Loan......................................................52
IX. INFORMATION AS TO LOAN PARTIES.........................................................................53
9.1 Disclosure of Material Matters................................................................53
9.2 Schedules.....................................................................................53
9.3 Environmental Reports.........................................................................53
9.4 Litigation....................................................................................53
9.5 Material Occurrences..........................................................................53
9.6 Government Receivables........................................................................54
9.7 Annual Financial Statements...................................................................54
9.8 INTENTIONALLY OMITTED.........................................................................54
9.9 Monthly Financial Statements..................................................................54
9.10 Other Reports.................................................................................55
9.11 Additional Information........................................................................55
9.12 Projected Operating Budget....................................................................55
9.13 Revisions to Projections......................................................................55
9.14 Notice of Suits, Adverse Events...............................................................55
9.15 ERISA Notices and Requests....................................................................55
9.16 Additional Documents..........................................................................56
X. EVENTS OF DEFAULT......................................................................................56
XI. BANK'S RIGHTS AND REMEDIES AFTER DEFAULT...............................................................59
11.1 Rights and Remedies...........................................................................59
11.2 Lender's Discretion...........................................................................60
11.3 Setoff........................................................................................60
11.4 Rights and Remedies not Exclusive.............................................................60
XII. WAIVERS AND JUDICIAL PROCEEDINGS.......................................................................60
12.1 Waiver of Notice..............................................................................60
12.2 Delay.........................................................................................61
12.3 Jury Waiver...................................................................................61
XIII. EFFECTIVE DATE AND TERMINATION.........................................................................61
13.1 Term..........................................................................................61
13.2 Termination...................................................................................61
XIV. MISCELLANEOUS..........................................................................................62
14.1 Governing Law.................................................................................62
14.2 Entire Understanding..........................................................................62
14.3 Successors and Assigns; Participations; New Lenders...........................................62
14.4 Application of Payments.......................................................................63
14.5 Indemnity.....................................................................................63
14.6 Notice........................................................................................63
14.7 Severability..................................................................................64
14.8 Expenses......................................................................................64
14.9 Injunctive Relief.............................................................................65
14.10 Consequential Damages.........................................................................65
14.11 Captions......................................................................................65
</TABLE>
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<TABLE>
<S> <C>
14.12 Counterparts; Telecopied Signatures...........................................................65
14.13 Construction..................................................................................65
XIV. BORROWING AGENCY.......................................................................................65
15.1. Borrowing Agency Provisions...................................................................65
</TABLE>
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EXHIBITS AND SCHEDULES
Exhibit 1.2 Borrowing Base Certificate
Exhibit 2.4(b) Capital Expenditure Note
Exhibit 7.7(a) Form of Redemption Letter
Schedule 1.2(a) Real Property
Schedule 1.2(b) Financing Statements
Schedule 4.5 Borrower's Equipment and Inventory Locations
Schedule 5.2 Formation
Schedule 5.6 Corporate Names
Schedule 5.7 Environmental
Schedule 5.8(b) Litigation
Schedule 5.8(d)(1) Plans
Schedule 5.8(d)(2) Guarantor Plans
Schedule 5.9 Patents, Trademarks, Copyrights and Licenses
Schedule 5.10 Licenses and Permits
Schedule 5.14 Labor Contracts
Schedule 5.24 Responsible Premises
Schedule 7.2 Permitted Encumbrances
Schedule 7.3 Guaranties
Schedule 7.8 Indebtedness
Schedule 7.10 Affiliate Transactions
<PAGE> 77
SCHEDULE 1.2(c)
---------------
BORROWING BASE CERTIFICATE FOR COLD METAL PRODUCTS, INC.
--------------------------------------------------------
This Certificate is delivered pursuant to Section 9.2 of the Fourth
Amended and Restated Revolving Credit and Security Agreement dated as of
September __, 2000 (as amended, supplemented, amended and restated or otherwise
modified from time to time, the "Loan Agreement"), by and between Cold Metal
Products, Inc. ("CMP") and Alkar Steel Corporation ("Alkar") (individually, each
a "Borrower" and collectively, "Borrowers") and Cold Metal Products, Limited
("Canadian Guarantor") and GMAC Commercial Credit LLC (the "Lender"). Unless
otherwise defined herein, capitalized terms used herein have the meanings
provided in the Loan Agreement.
The undersigned hereby certifies that he is the Chief Financial Officer
of Borrowing Agent and that, as such, he is authorized to execute this
Certificate on behalf of Borrowing Agent and further certifies that:
For purposes of this Certificate, the term "Borrowing Base Calculation
Date" shall mean _______________ __, 200_.
(a) The net face amount of all Eligible Receivables (including
Receivables of Canadian Guarantor calculated after converting such Receivables
from Canadian Dollars to U.S. Dollars based upon the Dollar Equivalent thereof)
as reflected on the books of Loan Parties as at the Borrowing Base Calculation
Date, net of all credits, discounts, reserves and allowances applicable to such
Eligible Receivables is $_____________.
(b) The product of (a) the Receivables Advance Rate applicable to
Borrowers times (b) the amount designated in Item (a) above is: $_____________.
(c) The value (calculated at the lower of cost or market value,
determined on a first-in-first-out basis), of all Eligible Inventory (including
Inventory of Canadian Guarantor calculated after converting such Inventory from
Canadian Dollars to U.S. Dollars based upon the Dollar Equivalent thereof) as
reflected on the books of Loan Parties as at the Borrowing Base Calculation Date
applicable to such Eligible Inventory is: $________________.
(d) The product of (i) the Inventory Advance Rate applicable to
Borrowers times (ii) the amount designated in Item (c) above is: $____________.
(e) Amortizing Availability as of the Borrowing Base Calculation Date
is: $____________.
(f) The aggregate face amount of outstanding Letters of Credit and
Acceptances as of the Borrowing Base Calculation Date is: $____________.
(g) The aggregate face amount of Capital Expenditure Loans as of
Borrowing Base Calculation Date is $___________________.
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(h) As of the Borrowing Base Calculation Date, the Formula Amount
(without giving effect to any reserves established by you under Section
2.1(a)(vi)) which is the sum of the amount designated in Item b above PLUS the
amount designated in Item d PLUS the amount designated in Item e above is
$_______.
(i) As of the Borrowing Base Calculation Date, the aggregate
outstanding principal amount of all Advances to Borrower on such date does not
exceed the lesser of (x) $70,000,000 less the aggregate amount of outstanding
Letters of Credit and Acceptances, or (y) the sum of the amount designated in
Item (h) and Item (g) above.
(j) As of the Borrowing Base Calculation Date the aggregate outstanding
principal amount of all Advances based upon Eligible Inventory of Borrowers does
not exceed $41,000,000.
(k) The information contained in this Certificate (including the
information upon which the foregoing calculations are based) is true and
complete in all material respects.
(l) Except as disclosed in this Certificate or in a prior certificate
issued pursuant to Section 9.2 of the Loan Agreement, there has been no material
adverse change in the Eligible Receivables or Eligible Inventory of Loan Parties
since the most recent certificate issued pursuant to Section 9.2 of the Loan
Agreement.
(m) The calculations contained herein are determined in accordance with
GAAP consistently applied. All of the foregoing information regarding Eligible
Receivables and Eligible Inventory is true and correct on the date hereof and
relates solely to Eligible Receivables and Eligible Inventory within the meaning
given such terms in the Loan Agreement.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this ___
day of September, 2000.
COLD METAL PRODUCTS, INC.,
Borrowing Agent
By:
-------------------------
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<PAGE> 79
EXHIBIT 2.4(b)
--------------
CAPITAL EXPENDITURE NOTE
$________________ New York, New York
September __, 2000
This Capital Expenditure Note (this "Note") is executed and delivered
under and pursuant to the terms of that certain Fourth Amended and Restated
Credit and Security Agreement dated as of the date hereof (as amended, modified,
supplemented or restated from time to time, the "Loan Agreement") by and between
COLD METAL PRODUCTS, INC., a New York corporation ("CMP"), ALKAR STEEL
CORPORATION, a Michigan corporation ("Alkar", and together with CMP, each a
"Borrower" and jointly and severally, the "Borrowers"), COLD METAL PRODUCTS,
LIMITED and GMAC COMMERCIAL CREDIT LLC ("Lender"). Capitalized terms not
otherwise defined herein shall have the meanings ascribed thereto in the Loan
Agreement.
FOR VALUE RECEIVED, Borrowers jointly and severally promise to pay to
the order of Lender at its offices located at 1290 Avenue of the Americas, New
York, New York 10104 or at such other place as the holder hereof may from time
to time designate to Borrowing Agent in writing:
(i) the principal sum of ___________________________ DOLLARS
($____________), or if different from such amount, the unpaid principal balance
of Capital Expenditure Loans as may be due and owing from time to time under the
Loan Agreement, payable in accordance with the provisions of the Loan Agreement,
subject to acceleration upon the occurrence of an Event of Default under the
Loan Agreement or earlier termination of the Loan Agreement pursuant to the
terms thereof; and
(ii) interest on the principal amount of this Note from time to time
outstanding, payable at the applicable Revolving Interest Rate in accordance
with the provisions of the Loan Agreement. Upon and after the occurrence of an
Event of Default, and during the continuation thereof, interest shall be payable
at the applicable Default Rate. In no event, however, shall interest hereunder
exceed the maximum interest rate permitted by law.
This Note is the Capital Expenditure Note referred to in the Loan
Agreement and is secured, INTER ALIA, by the liens granted pursuant to the Loan
Agreement and the Other Documents, is entitled to the benefits of the Loan
Agreement and the Other Documents, and is subject to all of the agreements,
terms and conditions therein contained.
This Note is subject to mandatory prepayment and may be voluntarily
prepaid, in whole or in part, on the terms and conditions set forth in the Loan
Agreement.
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If an Event of Default under Section 10.7 of the Loan Agreement shall
occur, then this Note shall immediately become due and payable, without notice,
together with attorneys' fees if the collection hereof is placed in the hands of
an attorney to obtain or enforce payment hereof. If any other Event of Default
shall occur under the Loan Agreement or any of the Other Documents, then this
Note may, as provided in the Loan Agreement, be declared to be immediately due
and payable, without notice, together with attorneys' fees if the collection
hereof is placed in the hands of an attorney to obtain or enforce payment
hereof.
This Note shall be governed by and construed in accordance with the
laws of the State of New York.
Each Borrower expressly waives any presentment, demand, protest, notice
of protest, or notice of any kind except as expressly provided in the Loan
Agreement.
COLD METAL PRODUCTS, INC.
By:
---------------------------
Name:
Title:
ALKAR STEEL CORPORATION
By:
---------------------------
Name:
Title:
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<PAGE> 81
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the ___ day of September, 2000, before me personally came
______________, to me known, who being by me duly sworn, did depose and say that
s/he is the ______________ of Cold Metal Products, Inc., the corporation
described in and which executed the foregoing instrument, and that s/he was
authorized to sign her/his name thereto.
-------------------------------
Notary Public
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the ___ day of September, 2000, before me personally came
______________, to me known, who being by me duly sworn, did depose and say that
s/he is the ______________ of Alkar Steel Corporation, the corporation described
in and which executed the foregoing instrument, and that s/he was authorized to
sign her/his name thereto.
-------------------------------
Notary Public
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<PAGE> 82
EXHIBIT 7.7
[Letterhead of Cold Metal Products, Inc.]
[Date]
GMAC Commercial Credit LLC
1290 Avenue of the Americas
Third Floor
New York, New York 10104
Attention: Anthony Viola
Re: Fourth Amended and Restated Credit and Security Agreement
between GMAC Commercial Credit LLC, Lender and Cold Metal
Products, Inc. and Alkar Steel Corporation dated as of
September 29, 2000 (the "Credit Agreement")
Gentlemen:
This letter is being delivered pursuant to Section 7.7(a) of the Credit
Agreement. The Board of Directors of Cold Metal Products, Limited, an Ontario
corporation and wholly owned subsidiary of Cold Metal Products, Inc. has
authorized the redemption of ____ Class A Special Shares of Cold Metal Products,
Limited. Following that redemption _________ Class A Special Shares of Cold
Metal Products Limited will remain issued and outstanding, and enclosed with
this letter is Stock Certificate No. ____ of Cold Metal Products, Limited,
reflecting that number of shares and associated Stock Power executed in blank.
Please return to us Certificate No. ___ and the existing Stock Power.
Very truly yours,
COLD METAL PRODUCTS, INC.
By:
--------------------------
Joseph C. Horath, CFO
cc: Steven J. Seif, Esq.
Jane F. Clemens, Esq.
vi
