<PAGE> 1
FORM 10-Q
U.S. Securities and Exchange Commission
Washington, D.C. 20549
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1998
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT For the
transition period from ____________________to________________________.
Commission file number: 0-25634
-------
AMERICAN ARCHITECTURAL PRODUCTS CORPORATION
(Exact name of business issuer as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
(IRS Employer Identification No.) 87-0365268
755 BOARDMAN-CANFIELD ROAD, BOARDMAN, OHIO 44512
(Address of principal executive offices)
(330) 965-9910
(Issuer's telephone number)
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the
past 90 days.
Yes (X) No ( )
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date:
Common stock, $.001 par value, 13,487,354 shares outstanding at June
30, 1998
<PAGE> 2
AMERICAN ARCHITECTURAL PRODUCTS CORPORATION
FORM 10-Q
INDEX
Part I -- FINANCIAL INFORMATION
Item 1. Financial Statements
American Architectural Products Corporation
As of June 30, 1998 and for the three and six months ended
June 30, 1998 and 1997
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Part II -- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
S-16
<PAGE> 3
Item 1. FINANCIAL STATEMENTS
American Architectural Products Corporation
Consolidated Balance Sheets
<TABLE>
<CAPTION>
(Unaudited)
December 31 June 30
1997 1998
--------------------------------------
Assets
------
<S> <C> <C>
Current Assets
Cash $ 40,132,238 $ 4,714,189
Accounts receivable 18,737,290 32,906,514
Inventories 21,458,399 34,943,871
Prepaid expenses and other current assets 1,619,946 1,214,194
--------------------------------------
Total Current Assets 81,947,873 73,778,768
Other Assets
Property and equipment, net 37,947,648 77,685,280
Cost in excess of net assets acquired, net 29,846,895 32,096,560
Deferred financing costs, net 5,985,360 6,736,544
Deposits and other assets 2,595,933 3,256,756
--------------------------------------
Total Noncurrent Assets 76,375,836 119,775,140
Total Assets $ 158,323,709 $ 193,553,908
======================================
Liabilities & Stockholders' Equity
----------------------------------
Current Liabilities
Accounts payable $ 9,352,228 $ 15,316,721
Accrued expenses 8,497,788 12,746,300
Accrued warranty obligations--current portion 1,991,544 1,857,609
Capital lease obligations--current portion 573,161 711,342
Line of credit - 19,739,033
Long term debt--current portion 60,848 7,500,000
--------------------------------------
Total Current Liabilities 20,475,569 57,871,005
Long-Term Liabilities
Long-term debt, less current maturities 125,114,401 125,000,000
Long-term capital lease obligations, less current portion 769,620 368,202
Accrued warranty obligations, less current portion 2,834,183 2,651,312
Other liabilities 3,548,801 4,429,502
--------------------------------------
Total Long-Term Liabilities 132,267,005 132,449,016
--------------------------------------
Total Liabilities 152,742,574 190,320,021
Stockholders' Equity:
Common stock, $.001 par, authorized 100,000,000 shares;
outstanding 13,458,479 shares and 13,487,354 shares
at December 31, 1997 and June 30, 1998, respectively 13,458 13,487
Additional paid in capital 6,310,641 6,453,612
Accumulated deficit (742,964) (3,233,212)
--------------------------------------
Total Stockholders' Equity 5,581,135 3,233,887
Total Liabilities & Stockholders' Equity $ 158,323,709 $ 193,553,908
======================================
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE> 4
American Architectural Products Corporation
Consolidated Statements of Operations
<TABLE>
<CAPTION>
(Unaudited)
For the Three For the Six
Months Ended June 30 Months Ended June 30
1997 1998 1997 1998
------------------------------ -------------------------------
<S> <C> <C> <C> <C>
Net sales $ 22,968,393 $ 61,637,868 $ 39,609,732 $107,246,034
Cost of sales 17,490,571 47,049,974 31,013,569 83,544,152
------------------------------ -------------------------------
Gross profit 5,477,822 14,587,894 8,596,163 23,701,882
Selling expense 1,681,836 5,532,039 3,184,004 10,016,170
General and administrative expenses 2,082,803 5,288,404 3,929,335 10,206,848
------------------------------ -------------------------------
Income from operations 1,713,183 3,767,451 1,482,824 3,478,864
Interest expense 781,551 3,762,944 1,396,311 7,441,396
Interest income - (242,660) - (598,136)
Other (income) expense (53,407) 57,259 (40,820) 148,903
------------------------------ -------------------------------
Income (loss) before taxes 985,039 189,908 127,333 (3,513,299)
Income tax provision (benefit) 389,546 71,066 46,539 (1,023,051)
------------------------------ -------------------------------
Net income (loss) $ 595,493 $ 118,842 $ 80,794 $ (2,490,248)
============================== ===============================
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE> 5
American Architectural Products Corporation
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
(Unaudited)
For the Six
Months Ended June 30
1997 1998
------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 80,794 $ (2,490,248)
Adjustments to reconcile net income to cash from
operating activities
Depreciation 994,981 2,480,263
Amortization 200,288 1,061,711
Gain on sale of fixed assets (1,817) -
Changes in operating assets and liabilities:
Accounts receivable, net (1,750,163) (9,304,617)
Inventories (499,237) (1,223,136)
Prepaid expenses and other current assets (435,141) (23,200)
Accounts payable (1,640,572) 4,777,459
Accrued expenses (480,651) (527,719)
Other (149,315) 253,480
------------------------------
Net cash from operating activities (3,680,833) (4,996,007)
------------------------------
Cash flows from investing activities:
Acquisition of businesses, net of cash acquired (938,964) (47,621,962)
Sale of business - 1,186,000
Purchase of property and equipment (544,617) (3,240,627)
Other, net (125,247) -
------------------------------
Net cash from investing activities (1,608,828) (49,676,589)
------------------------------
Cash flows from financing activities:
Net borrowings on line-of-credit 4,183,379 19,739,033
Payments on long-term debt (947,262) (175,249)
Proceeds from long-term debt 1,100,000 -
Capital lease payments (273,530) (343,237)
Proceeds from preferred stock, Series B 400,000 -
Other 250,000 34,000
------------------------------
Net cash from financing activities 4,712,587 19,254,547
------------------------------
Net decrease in cash (577,074) (35,418,049)
Cash, beginning balance 964,062 40,132,238
------------------------------
Cash, ending balance $ 386,988 $ 4,714,189
==============================
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE> 6
AMERICAN ARCHITECTURAL PRODUCTS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
American Architectural Products Corporation (the "Company") is principally
engaged in the business of manufacturing residential, non-residential and
architectural windows and doors through its wholly owned subsidiaries Eagle &
Taylor Company, Forte, Inc., Western Insulated Glass, Co. ("Western"), Thermetic
Glass, Inc. ("Thermetic"), Binnings Building Products, Inc. ("Binnings"), Danvid
Window Company ("Danvid"), American Glassmith Corporation ("American
Glassmith"), Modern Window Corporation ("Modern"), VinylSource, Inc.
("VinylSource"), Denver Window Corporation ("Denver") and American Weather-Seal
Company ("Weather-Seal").
In the opinion of management, all adjustments, consisting only of normal
recurring adjustments, necessary for the fair presentation of financial position
and results of operations have been made. Operating results for interim periods
are not necessarily indicative of results that may be expected for a full year.
The information included in this Form 10-Q should be read in conjunction with
Management's Discussion and Analysis of Financial Condition and Results of
Operations and the financial statements and notes thereto of the Company for the
year ended December 31, 1997 included in the annual report on Form 10-K.
2. Acquisitions & Divestiture
Acquisition of VinylSource
On January 23, 1998, the Company acquired substantially all of the assets of the
vinyl division of Easco, Inc., an Austintown, Ohio manufacturer of vinyl
extrusions for the fenestration industry, and operates the facility through its
wholly-owned subsidiary VinylSource. The purchase price approximated $13,475,000
and was allocated to net assets acquired based on estimated fair market values
including current assets of $4,654,000, property and equipment and other
noncurrent assets of $9,929,000 and current liabilities of $1,108,000. The
Company used cash to finance the acquisition. The accounts of VinylSource are
included in the Company's consolidated financial statements from the January 23,
1998 acquisition date.
Divestiture of Mallyclad Corporation
On March 1, 1998, the Company sold Mallyclad Corporation, a division of Eagle &
Taylor Company, to a related party, for approximately $1.2 million. The Company
sold this division, a manufacturer of vinyl laminates for steel and aluminum
consumer and commercial customers, at its basis and therefore recognized no
gain or loss on this transaction.
Acquistion of Denver
On April 16, 1998, the Company acquired substantially all of the assets of
Denver. The acquisition was accounted for as a purchase. The purchase price
approximated $221,000 and was allocated to net assets acquired based on
estimated fair market values including current assets of $396,000, property and
equipment of $67,000 and current liabilities of $242,000. The Company used cash
to finance the acquisition. The accounts of Denver are included in the
Company's consolidated financial statements from the April 16, 1998 acquisition
date.
Acquisition of Weather-Seal
On June 12, 1998, the Company acquired substantially all of the assets of the
Weather-Seal division of Louisiana-Pacific Corporation. The acquisition was
accounted for as a purchase, with the purchase
<PAGE> 7
price of $40,000,000 allocated to net assets acquired based on estimated fair
market values including current assets of $13,800,000, property and equipment of
$29,500,000, current liabilities of $2,600,000 and long-term liabilities of
$700,000.
The acquisition was financed with $16,600,000 in borrowings from the Company's
line-of-credit facility, $7,500,000 in a subordinated seller note (the "Seller
Note") and the remainder with cash. The accounts of Weather-Seal are included in
the Company's consolidated financial statements from the June 12, 1998
acquisition date. See Note 6 regarding financing arrangements.
The following pro forma information for the six months ended June 30, 1997 has
been prepared assuming that the acquisitions of Western, Thermetic, Binnings,
Danvid, American Glassmith, Modern, VinylSource, Denver and Weather-Seal
(collectively, the "Acquisitions"), the December 10, 1997 offering of the $125
million of 11 3/4% Senior Notes due 2007 (the "Senior Notes"), the issuance of
the Seller Note and the advances on the line-of-credit facility relating to the
Acquisitions, as well as the sale of Mallyclad, had occurred at the beginning of
that period. The pro forma information for the six months ended June 30, 1998
has been prepared assuming that the acquisitions of VinylSource, Denver and
Weather-Seal (collectively, the "1998 Acquisitions") and the sale of Mallyclad
had occurred at the beginning of that period. The pro forma information includes
adjustments to interest expense for the offering of the Senior Notes, Seller
Note and the Company's line-of-credit facility, adjustments to selling, general
and administrative expenses for decreases in compensation expenses for certain
officers and members of Board of Directors of the acquired companies,
adjustments to depreciation expense based on the fair market value of the
property and equipment acquired, adjustments to amortization for cost in excess
of net assets acquired arising from the acquisitions and adjustments to income
taxes. The pro forma sales and net loss amounts are as follows for the six
months ended June 30:
<TABLE>
<CAPTION>
1997 1998
----------------------------------
<S> <C> <C>
Sales $ 125,229 $ 128,645
Net loss (5,781) (3,850)
Net loss per share - basic and diluted (.43) (.28)
</TABLE>
3. Net Income (Loss) Per Share
Basic income (loss) per common share amounts were computed by dividing net
income (loss) by the weighted average number of common shares outstanding. A
summary of the basic and dilutive income (loss) per share amounts for the three
and six months ended June 30 is as follows.
<TABLE>
<CAPTION>
Three months Six months
--------------------------------------------------------------
1997 1998 1997 1998
--------------------------------------------------------------
<S> <C> <C> <C> <C>
Net income (loss) $ 595,493 $ 118,842 $ 80,794 $ (2,490,248)
Shares 12,374,474 13,785,767 12,616,405 13,772,199
Basic income (loss) per share $ .05 $ .01 $ .01 $ (.18)
Effect of dilutive securities 461,652 508,770 373,308 -
Diluted income (loss) per share $ .05 $ .01 $ .01 $ (.18)
</TABLE>
<PAGE> 8
The weighted average number of common shares outstanding for the three and six
months ended June 30, 1998 include 300,000 additional common shares issuable in
January 1999 in connection with the Thermetic acquisition based on average
market prices.
4. Inventories
Inventories at June 30 consisted of the following:
<TABLE>
<CAPTION>
1998
---------------------
<S> <C>
Raw materials $ 18,028,000
Work-in-process 4,658,000
Finished goods 12,258,000
---------------------
$ 34,944,000
=====================
</TABLE>
5. Comprehensive Income
On January 1, 1998, the Company adopted the Financial Accounting Standards Board
Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income" (SFAS 130) which establishes standards for reporting and displaying
comprehensive income, its components and accumulated balances. Comprehensive
income is defined to include all changes in equity except those resulting from
investments by owners and distributions to owners. For the six months ended June
30, 1998, comprehensive income for the Company does not differ from net income.
6. Financing Arrangements
In connection with the Company's acquisition of Weather-Seal on June 12, 1998,
the Company issued an unsecured subordinated promissory note to the seller in
the amount of $7.5 million. The note bears interest based on LIBOR plus 1.5% and
is due June 30, 1999 unless the Company consummates a debt or equity offering,
in which case the Company is required to repay the note in full from the
proceeds therefrom. The interest rate at June 30, 1998 was 7.3%.
In June 1998, the Company secured a revolving credit facility to provide
additional liquidity of up to $25 million. The facility has a three year term,
is secured by substantially all assets of the Company and bears interest based
on one of two options at the Company's election, a LIBOR based rate or an
alternative rate based on the bank's rate in effect. The Company used
approximately $16.6 million to pay a portion of the Weather-Seal acquisition. At
June 30, 1998, the Company had $5.3 million available under the facility, which
has certain restrictive covenants, the most significant of which pertain to
fixed charge coverage and minimum net worth. Borrowings on the facility were
bearing interest at a rate of 8.75% at June 30, 1998.
7. Subsequent Events
In August 1998, the Company entered into definitive agreements to acquire TSG
Industries, Inc. ("TSG"), NuSash of Indianapolis, Inc. and Jarar Window Systems,
Inc. (together, "NuSash"), RC Aluminum Industries, Inc. ("RC Aluminum") and four
affiliated corporations located in the southwest region of the United States
(the "Southwestern U.S. Businesses").
<PAGE> 9
The Company has also entered into letters of intent to acquire Airmaster Window
Systems, Inc. ("Airmaster") and Northern Building Products, Inc. ("Northern").
TSG is a fabricator and installer of engineered glazing systems, including
glass windows, walls and doors and aluminum curtain walls for large
non-residential construction projects. NuSash distributes Weather-Seal and
other vinyl replacement windows for residential use. RC Aluminum manufactures a
wide range of non-residential fenestration products including windows, sliding
glass doors, railings and curtain walls and specializes in prestigious
high-rise development projects. The Southwestern U.S. Businesses distribute
aluminum windows and doors, dimensional lumber and millwork to contractors in
various metropolitan areas for residential applications. Airmaster, located in
Harrison, New York, is a distributor and installer of non-residential,
architectural and monumental windows and primarily sells its products in New
York City and the surrounding areas. Northern, a manufacturer of double-hung,
casement, fixed and sliding aluminum windows and sliding and swing doors, is
principally distributed by Airmaster.
The total purchase price of the above pending acquisitions is collectively
estimated to be $94.0 million. The cash portion of this purchase price is
estimated to approximate $84.5 million and is expected to be financed from the
proceeds of an equity offering by the Company.
<PAGE> 10
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS:
Management's Discussion and Analysis of Results of Operations
COMPARISON OF THREE MONTHS ENDED JUNE 30, 1998 AND 1997
Net Sales
Net sales for the three months ended June 30, 1998 increased to $61.6 million
from $23.0 million for the three months ended June 30, 1997. The $38.6 million
increase is primarily due to $36.0 million in incremental sales volumes as a
result of the acquisition of Thermetic, Binnings, Danvid, American Glassmith,
Modern, VinylSource, Denver and Weather-Seal and a $2.3 million increase in
net sales at the Company's wood and aluminum-clad wood window manufacturer. This
unit's increase in sales has resulted primarily from higher volumes associated
with its existing customer base.
Gross Profit
The Company's gross profit increased to $14.6 million for the three months ended
June 30, 1998 from $5.5 million for the three months ended June 30, 1997. The
increase of $9.1 million resulted primarily from $8.5 million of gross profit
added by the acquired companies. The remaining portion of the gross profit
increase was generated by the Company's wood and aluminum-clad wood window
manufacturer. The Company's gross margin was 23.7% and 23.8% for the three
months ended June 30, 1998 and 1997, respectively. The companies acquired in
1997 and 1998 generated a gross margin of 23.7%. The Company's wood and
aluminum-clad wood window manufacturer has generated a higher margin resulting
from increased sales volumes; however, this has been offset in part by a
negative margin at the Company's non-residential aluminum contract window
manufacturer.
Selling, General & Administrative Expenses
Selling, general & administrative expenses were $10.8 million for the three
months ended June 30, 1998 compared to $3.8 million for the three months ended
June 30, 1997. Selling, general & administrative expenses relating to the
inclusion of the companies acquired in 1997 and 1998 were $5.6 million. The
remainder of the $7.0 million increase is primarily due to $1.0 million in
increased costs associated with the administration of a larger and more
diversified window and door manufacturer.
Income from Operations
The Company had income from operations of $3.8 million for the three months
ended June 30, 1998 compared to $1.7 million for the three months ended June 30,
1997. Operating income from the acquired companies amounted to $2.9 million and
was partially offset by the increased administrative costs totaling $1.0
million.
Interest Expense
Interest expense for the three months ended June 30, 1998 was $3.8 million
compared to interest expense of $0.8 million for the three months ended June 30,
1997. The increase is due primarily to the additional indebtedness the Company
incurred in connection with the Senior
<PAGE> 11
Notes. A portion of the proceeds of the Senior Notes and the proceeds of the
seller note and line-of-credit advances have been used to finance the Company's
acquisitions.
Income Taxes
The Company has recorded a provision for income taxes in the amount of $0.1
million based on an estimated effective tax rate.
COMPARISON OF SIX MONTHS ENDED JUNE 30, 1998 AND 1997
Net Sales
Net sales for the six months ended June 30, 1998 increased to $107.2 million
from $39.6 million for the six months ended June 30, 1997. The $67.6 million
increase is primarily due to $63.2 million in incremental volume from the
inclusion of Western, Thermetic, Binnings, Danvid, American Glassmith, Modern,
VinylSource, Denver and Weather-Seal and a $4.1 million increase in sales at
the Company's wood and aluminum-clad wood window manufacturer. This unit's
increase in net sales has resulted primarily from higher volumes associated with
its existing customer base.
Gross Profit
The Company's gross profit increased to $23.7 million for the six months ended
June 30, 1998 from $8.6 million for the six months ended June 30, 1997. The
increase of $15.1 million resulted primarily from $14.3 million of gross profit
added by the companies acquired in 1997 and 1998. The remaining portion of the
gross profit increase was generated by the Company's wood and aluminum-clad wood
window manufacturer. The Company's gross margin was 22.1% and 21.7% for the six
months ended June 30, 1998 and 1997, respectively. The Company's margin has
improved as the acquired companies generated a gross margin of 22.7%. The
Company's wood and aluminum-clad wood window manufacturer has generated a higher
margin resulting from increased volumes; however, this has been offset in part
by a negative margin at the Company's non-residential aluminum contract window
manufacturer.
Selling, General & Administrative Expenses
Selling, general & administrative expenses were $20.2 million for the six months
ended June 30, 1998 compared to $7.1 million for the six months ended June 30,
1997. Selling, general & administrative expenses relating to the inclusion of
the acquired companies were $10.3 million. The remainder of the $13.1 million
increase is primarily due to $2.0 million in increased costs associated with the
administration of a larger and more diversified window and door manufacturer and
$0.6 million in increased costs at the Company's wood and aluminum-clad wood
window manufacturer.
Income from Operations
The Company had income from operations of $3.5 million for the six months ended
June 30, 1998 compared to $1.5 million for the six months ended June 30, 1997.
Operating income from the companies acquired in 1997 and 1998 amounted to $4.1
million and was offset by increased corporate administrative costs totaling $2.0
million.
<PAGE> 12
Interest Expense
Interest expense for the six months ended June 30, 1998 was $7.4 million
compared to interest expense of $1.4 million for the six months ended June 30,
1997. The increase is due primarily to the additional indebtedness the Company
incurred in connection with the issuance of the Senior Notes.
Income Taxes
The Company has recorded an income tax benefit in the amount of $1.0 million.
The Company has established a seasonal pattern of losses earlier in its fiscal
year offset by income later in the year. Therefore, the Company has recorded a
tax benefit which is expected to be realized during the year.
Liquidity and Capital Resources
Cash used in operating activities for the six months ended June 30, 1998 was
$5.0 million compared to $3.7 million for the six months ended June 30, 1997.
The uses reflect the seasonal aspect of the Company's business which is affected
by the cycle of the building products industry. This seasonality affects the
need for additional working capital since it is necessary to carry larger
receivables and inventories into the spring and early summer months.
Cash used in investing activities amounted to $49.7 million for the six months
ended June 30, 1998 and resulted primarily from the acquisition of VinylSource,
Denver and Weather-Seal which required cash outlays of $47.6 million.
Additionally, the Company purchased $3.2 million in property and equipment
during the period. The Company also received $1.2 million in cash from the sale
of its Mallyclad division.
Cash flows from financing activities for the six months ended June 30, 1998
amounted to $19.3 million. The Company borrowed $16.6 million on its revolving
credit facility in the acquisition of Weather-Seal. Additionally, the Company
made $0.3 million in payments on capital lease obligations.
The Company believes that cash flow from operations together with other sources
of funding, will be adequate to meet its anticipated requirements for working
capital, capital expenditures and debt service costs. However, the acquisitions
that the Company is contemplating will require either additional equity or debt
financing. The Company believes that an equity offering will be completed in the
third or fourth quarter of 1998, the proceeds of which will be used to
consummate the pending acquisitions. However, the success of this offering is
subject to market conditions and other external factors which may be beyond the
Company's control.
Seasonality
The Company's business is seasonal since its primary revenues are driven by
residential construction. Inclement weather during the winter months,
particularly in the northeast and midwest regions of the United States, usually
reduces the level of building and remodeling activity in both the home
improvement and new construction markets and, accordingly, has an adverse impact
on the demand
<PAGE> 13
for fenestration products. Traditionally, the Company's lowest sales levels
occur in the first and fourth quarters which is generally consistent with cycle
of the building products industry. The Company believes that its 1997
acquisitions in the southwestern and southeastern United States will minimize
the risk to the Company for potentially unusual inclement weather conditions in
the midwest and the northeast. Because a high percentage of the Company's
manufacturing overhead and operating expenses are relatively fixed throughout
the year, operating income has historically been lower in quarters with lower
sales. Working capital, and borrowings to satisfy working capital requirements,
are usually at their highest level during the second and third quarters.
<PAGE> 14
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.12 Credit Agreement, dated as of June 12, 1998, by and among
American Architectural Products Corporation, Eagle & Taylor
Company, Forte, Inc., Western Insulated Glass, Co. Thermetic
Glass, Inc., Binnings Building Products, Inc., Danvid Window
Company, Modern Window Acquisition Corporation, Vinyl Source,
Inc. Weather-Seal Acquisition Corporation, Eagle Window & Door
Center, Inc., Denver Window Acquisition Corporation, AAPC One
Acquisition Corporation, AAPC Two Acquisition Corporation and
the Institutions from time to time party hereto as Lenders
and BankBoston, N.A. as Agent.
(b) The Company filed the following reports on Form 8-K during the period.
June 12, 1998 Form 8-K was filed reporting the acquisition of the
Weather-Seal Division of Louisiana-Pacific Corporation
<PAGE> 15
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
AMERICAN ARCHITECTURAL PRODUCTS CORPORATION
Date: August 14, 1998 /s/ Frank J. Amedia
-----------------------------
Frank J. Amedia
President & Chief Executive Officer
/s/ Richard L. Kovach
-----------------------------
Richard L. Kovach
Chief Financial Officer
<PAGE> 1
Exhibit 10.12
EXECUTION COPY
CREDIT AGREEMENT
Dated as of June 9, 1998
among
AMERICAN ARCHITECTURAL PRODUCTS CORPORATION
EAGLE & TAYLOR COMPANY
FORTE, INC.
WESTERN INSULATED GLASS, CO.
THERMETIC GLASS, INC.
BINNINGS BUILDING PRODUCTS, INC.
DANVID WINDOW COMPANY
MODERN WINDOW ACQUISITION CORPORATION
AMERICAN GLASSMITH ACQUISITION CORPORATION
VINYLSOURCE, INC.
WEATHER-SEAL ACQUISITION CORPORATION
EAGLE WINDOW & DOOR CENTER, INC.
DENVER WINDOW ACQUISITION CORPORATION
AAPC ONE ACQUISITION CORPORATION
AAPC TWO ACQUISITION CORPORATION
THE INSTITUTIONS FROM TIME TO TIME
PARTY HERETO AS LENDERS
and
BANKBOSTON, N.A.,
as Agent
<PAGE> 2
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<S> <C>
ARTICLE I: DEFINITIONS
1.1 Certain Defined Terms...................................................................................1
1.2 References.............................................................................................27
1.3 Supplemental Disclosure................................................................................27
ARTICLE II: THE REVOLVING LOAN FACILITIES
2.1 Revolving Loans........................................................................................28
2.2 Rate Options for all Advances..........................................................................28
2.3 Optional Payments; Mandatory Prepayments...............................................................28
2.4 Reduction of Commitments...............................................................................29
2.5 Method of Borrowing....................................................................................30
2.6 Method of Selecting Types and Interest Periods for Advances............................................30
2.7 Minimum Amount of Each Advance.........................................................................30
2.8 Method of Selecting Types and Interest Periods for Conversion and Continuation of Advances.............31
2.9 Default Rate...........................................................................................31
2.10 Method of Payment.....................................................................................31
2.11 Notes.................................................................................................32
2.12 Telephonic Notices....................................................................................32
2.13 Promise to Pay; Interest, Commitment Fees and Termination Fees; Interest Payment Dates; Interest
and Fee Basis; Taxes; Loan and Control Accounts.......................................................32
2.14 Notification of Advances, Interest Rates, Prepayments and Aggregate Revolving Loan Commitment
Reductions............................................................................................38
2.15 Lending Installations.................................................................................38
2.16 Non-Receipt of Funds by the Agent.....................................................................38
2.17 Termination Date......................................................................................38
2.18 Replacement of Certain Lenders........................................................................38
2.19 Collection Account Arrangements.......................................................................39
ARTICLE III: THE LETTER OF CREDIT FACILITY
3.1 Obligation to Issue....................................................................................40
3.2 Types and Amounts......................................................................................40
3.3 Conditions.............................................................................................40
3.4 Procedure for Issuance of Letters of Credit............................................................41
3.5 Letter of Credit Participation.........................................................................41
3.6 Reimbursement Obligation...............................................................................42
3.7 Letter of Credit Fees..................................................................................42
3.8 Issuing Bank Reporting Requirements....................................................................43
3.9 Indemnification; Exoneration...........................................................................43
3.10 Cash Collateral.......................................................................................44
</TABLE>
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ARTICLE IV: CHANGE IN CIRCUMSTANCES
4.1 Yield Protection.......................................................................................44
4.2 Changes in Capital Adequacy Regulations................................................................45
4.3 Availability of Types of Advances......................................................................46
4.4 Funding Indemnification................................................................................46
4.5 Lender Statements; Survival of Indemnity...............................................................47
ARTICLE V: CONDITIONS PRECEDENT
5.1 Initial Advances and Letters of Credit.................................................................47
5.2 Each Advance and Letter of Credit......................................................................49
ARTICLE VI: REPRESENTATIONS AND WARRANTIES
6.1 Organization; Corporate Powers.........................................................................49
6.2 Authority..............................................................................................49
6.3 No Conflict; Governmental Consents.....................................................................50
6.4 Financial Statements...................................................................................50
6.5 No Material Adverse Change.............................................................................51
6.6 Taxes..................................................................................................51
6.7 Litigation; Loss Contingencies and Violations..........................................................52
6.8 Subsidiaries...........................................................................................52
6.9 ERISA..................................................................................................52
6.10 Accuracy of Information...............................................................................53
6.11 Securities Activities.................................................................................54
6.12 Material Agreements...................................................................................54
6.13 Compliance with Laws..................................................................................54
6.14 Assets and Properties.................................................................................54
6.15 Statutory Indebtedness Restrictions...................................................................54
6.16 Insurance.............................................................................................55
6.17 Labor Matters.........................................................................................55
6.18 Environmental Matters.................................................................................55
6.19 Solvency..............................................................................................56
6.20 Year 2000 Issues......................................................................................56
ARTICLE VII : COVENANTS
7.1 Reporting..............................................................................................56
7.2 Affirmative Covenants..................................................................................62
7.3 Negative Covenants.....................................................................................64
7.4 Financial Covenants....................................................................................72
ARTICLE VIII: DEFAULTS
8.1 Defaults...............................................................................................73
</TABLE>
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ARTICLE IX: ACCELERATION, DEFAULTING LENDERS; WAIVERS, AMENDMENTS AND REMEDIES
9.1 Termination of Commitments; Acceleration...............................................................76
9.2 Defaulting Lender......................................................................................76
9.3 Amendments.............................................................................................77
9.4 Preservation of Rights.................................................................................78
ARTICLE X: GENERAL PROVISIONS
10.1 Survival of Representations...........................................................................79
10.2 Governmental Regulation...............................................................................79
10.3 Performance of Obligations............................................................................79
10.4 Headings..............................................................................................79
10.5 Entire Agreement......................................................................................79
10.6 Several Obligations; Benefits of this Agreement.......................................................80
10.7 Expenses; Indemnification.............................................................................80
10.8 Numbers of Documents..................................................................................82
10.9 Accounting............................................................................................82
10.10 Severability of Provisions...........................................................................82
10.11 Nonliability of Lenders..............................................................................82
10.12 GOVERNING LAW........................................................................................82
10.13 CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL..............................................82
ARTICLE XI: THE AGENT
11.1 Appointment; Nature of Relationship...................................................................84
11.2 Powers................................................................................................84
11.3 General Immunity......................................................................................84
11.4 No Responsibility for Loans, Creditworthiness, Recitals, Etc..........................................84
11.5 Action on Instructions of Lenders.....................................................................85
11.6 Employment of Agents and Counsel......................................................................85
11.7 Reliance on Documents; Counsel........................................................................85
11.8 The Agent's Reimbursement and Indemnification.........................................................85
11.9 Rights as a Lender....................................................................................86
11.10 Lender Credit Decision...............................................................................86
11.11 Successor Agent......................................................................................86
11.12 Collateral Documents.................................................................................86
ARTICLE XII: SETOFF; RATABLE PAYMENTS
12.1 Setoff................................................................................................87
12.2 Ratable Payments......................................................................................87
12.3 Application of Payments...............................................................................87
12.4 Relations Among Lenders...............................................................................88
</TABLE>
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ARTICLE XIII: BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
13.1 Successors and Assigns................................................................................88
13.2 Participations........................................................................................89
13.3 Assignments...........................................................................................90
13.4 Confidentiality.......................................................................................91
13.5 Dissemination of Information..........................................................................91
ARTICLE XIV: NOTICES
14.1 Giving Notice.........................................................................................92
14.2 Change of Address.....................................................................................92
ARTICLE XV: COUNTERPARTS
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EXHIBITS AND SCHEDULES
EXHIBITS
--------
EXHIBIT A -- Commitments
(Definitions)
EXHIBIT B -- Form of Revolving Note
(Definitions)
EXHIBIT C -- Form of Borrowing Base Certificate
(Definitions)
EXHIBIT D -- Form of Borrowing Notice (Section 2.6)
EXHIBIT E -- Form of Request for Letter of Credit (Section 3.3)
EXHIBIT F -- Form of Assignment and Acceptance Agreement
(Sections 2.18 and 13.3)
EXHIBIT G -- Form of Borrower's Counsel's Opinion
(Section 5.1)
EXHIBIT H -- List of Closing Documents
(Section 5.1)
EXHIBIT I -- Form of Officer's Certificate
(Sections 5.2 and 7.1(A)(iv))
EXHIBIT J -- Form of Compliance Certificate
(Sections 5.2 and 7.1(A)(iv))
EXHIBIT K -- Form of Subordinated Promissory Note
(Definitions)
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SCHEDULES
---------
Schedule 1.1.1 -- Permitted Existing Indebtedness (Definitions)
Schedule 1.1.2 -- Permitted Existing Investments (Definitions)
Schedule 1.1.3 -- Permitted Existing Liens (Definitions)
Schedule 6.3 -- Conflicts; Governmental Consents (Section 6.3)
Schedule 6.4 -- Pro Forma Financial Statements (Section 6.4(A))
Schedule 6.7 -- Litigation; Loss Contingencies (Section 6.7)
Schedule 6.8 -- Subsidiaries (Section 6.8)
Schedule 6.9 -- ERISA (Section 6.9)
Schedule 6.16 -- Insurance (Sections 6.16 and 7.2(E))
Schedule 6.18 -- Environmental Matters (Section 6.18)
Schedule 7.3 -- Transactions with Shareholders and Affiliates (Section 7.3(H))
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<PAGE> 8
CREDIT AGREEMENT
This Credit Agreement dated as of June 9, 1998 is entered into among
American Architectural Products Corporation, a Delaware corporation, Eagle &
Taylor Company, a Delaware corporation, Forte, Inc., an Ohio corporation,
Western Insulated Glass, Co., an Arizona corporation, Thermetic Glass, Inc., a
Delaware corporation, Binnings Building Products, Inc., a Delaware corporation,
Danvid Window Company, a Delaware corporation, Modern Window Acquisition
Corporation, a Delaware corporation, American Glassmith Acquisition Corporation,
a Delaware corporation, VinylSource, Inc., a Delaware corporation, Weather-Seal
Acquisition Corporation, a Delaware corporation, Eagle Window & Door Center,
Inc., a Delaware corporation, Denver Window Acquisition Corporation, a Delaware
corporation, AAPC One Acquisition Corporation, a Delaware corporation, and AAPC
Two Acquisition Corporation, a Delaware corporation, as Borrowers, the
institutions from time to time parties hereto as Lenders, whether by execution
of this Agreement or an Assignment Agreement pursuant to SECTION 13.3, and
BankBoston, N.A., in its capacity as contractual representative for itself and
the other Lenders. The parties hereto agree as follows:
ARTICLE I: DEFINITIONS
- ---------- -----------
1.1 CERTAIN DEFINED TERMS. In addition to the terms defined above, the
following terms used in this Agreement shall have the following meanings,
applicable both to the singular and the plural forms of the terms defined.
As used in this Agreement:
"ACQUISITION" means any transaction, or any series of related
transactions, consummated on or after the date of this Agreement, by which any
of the Borrowers or any of their respective Subsidiaries (i) acquires any
ongoing business or all or substantially all of the assets of any firm,
corporation or division thereof, whether through purchase of assets, merger or
otherwise or (ii) directly or indirectly acquires (in one transaction or as the
most recent transaction in a series of transactions) at least a majority (in
number of votes) of the securities of a corporation which have ordinary voting
power for the election of directors (other than securities having such power
only by reason of the happening of a contingency) or a majority (by percentage
of voting power) of the outstanding equity interests of another Person.
"ADVANCE" means a borrowing hereunder consisting of the aggregate
amount of the Loans made by the Lenders to any of the Borrowers of the same Type
and, in the case of Eurodollar Rate Advances, for the same Interest Period.
"AFFECTED LENDER" is defined in SECTION 2.18 hereof.
"AFFILIATE" of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person. A Person
shall be deemed to
<PAGE> 9
control another Person if the controlling Person is the "beneficial owner" (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934) of greater than
ten percent (10%) or more of any class of voting securities (or other voting
interests) of the controlled Person or possesses, directly or indirectly, the
power to direct or cause the direction of the management or policies of the
controlled Person, whether through ownership of Capital Stock, by contract or
otherwise.
"AGENT" means BankBoston in its capacity as contractual representative
for itself and the Lenders pursuant to ARTICLE XI hereof and any successor Agent
appointed pursuant to ARTICLE XI hereof.
"AGGREGATE REVOLVING LOAN COMMITMENT" means the aggregate of the
Revolving Loan Commitments of all the Lenders, as reduced from time to time
pursuant to the terms hereof. The initial Aggregate Revolving Loan Commitment is
Twenty-five Million and 00/100 Dollars ($25,000,000.00).
"AGREEMENT" means this Credit Agreement, as it may be amended, restated
or otherwise modified and in effect from time to time.
"AGREEMENT ACCOUNTING PRINCIPLES" means generally accepted accounting
principles as in effect as of the date of this Agreement, applied in a manner
consistent with that used in preparing the financial statements referred to in
SECTION 6.4(B)(1) hereof, PROVIDED, HOWEVER, that with respect to the
calculation of financial ratios and other financial tests required by this
Agreement, "Agreement Accounting Principles" means generally accepted accounting
principles as in effect as of the date of this Agreement, applied in a manner
consistent with that used in preparing the financial statements referred to in
SECTION 6.4(A) hereof.
"ALTERNATE BASE RATE" means, the higher of (i) the annual rate of
interest announced from time to time by BankBoston at its head office in Boston,
Massachusetts, as its "base rate" and (ii) one-half of one percent (?%) above
the Federal Funds Effective Rate.
"APPLICABLE EURODOLLAR MARGIN" means, as at any date of determination,
the rate per annum then applicable to Eurodollar Rate Loans determined in
accordance with the provisions of SECTION 2.13(D)(II) hereof.
"APPLICABLE FLOATING MARGIN" means, as at any date of determination,
the rate per annum then applicable to Floating Rate Loans determined in
accordance with the provisions of SECTION 2.13(D)(II) hereof.
"APPLICABLE L/C FEE PERCENTAGE" means, as at any date of determination,
a rate per annum equal to the Applicable Eurodollar Margin in effect on such
date.
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<PAGE> 10
"ASSIGNMENT AGREEMENT" shall mean an assignment and acceptance
agreement entered into in connection with an assignment pursuant to Section 13.3
hereof in substantially the form of Exhibit F.
"ASSET SALE" means, with respect to any Person, the sale, lease,
conveyance, disposition or other transfer by such Person of any of its assets
(including by way of a sale-leaseback transaction and including the sale or
other transfer of any of the Equity Interests of any Subsidiary of such Person).
"AUTHORIZED OFFICER" means, with respect to any of the Borrowers, any
of the President or Chief Financial Officer, acting singly.
"BANKBOSTON" means BankBoston, N.A., and its successors and assigns.
"BENEFIT PLAN" means a defined benefit plan as defined in Section 3(35)
of ERISA (other than a Multiemployer Plan) in respect of which the Borrower or
any other member of the Controlled Group is, or within the immediately preceding
six (6) years was, an "employer" as defined in Section 3(5) of ERISA.
"BORROWER" means any of American Architectural Products Corporation, a
Delaware corporation, Eagle & Taylor Company, a Delaware corporation, Forte,
Inc., an Ohio corporation, Western Insulated Glass, Co., an Arizona corporation,
Thermetic Glass, Inc., a Delaware corporation, Binnings Building Products, Inc.,
a Delaware corporation, Danvid Window Company, a Delaware corporation, Modern
Window Acquisition Corporation, a Delaware corporation, American Glassmith
Acquisition Corporation, a Delaware corporation, VinylSource, Inc., a Delaware
corporation, Weather-Seal Acquisition Corporation, a Delaware corporation, Eagle
Window & Door Center, Inc., a Delaware corporation, Denver Window Acquisition
Corporation, a Delaware corporation, AAPC One Acquisition Corporation, a
Delaware corporation, and AAPC Two Acquisition Corporation, a Delaware
corporation (taken together, the "BORROWERS"), together with their respective
successors and assigns, including any debtor-in-possession on behalf of any of
the Borrowers.
"BORROWER PLEDGE AGREEMENT(S)" means those certain Share Pledge
Agreements of even date herewith executed by the Borrowers in favor of the Agent
for the benefit of the holders of Secured Obligations, as amended, restated or
otherwise modified from time to time pledging 100% of the stock of each of the
Borrowers' Subsidiaries.
"BORROWING BASE" means, as of any date of calculation, an amount, as
set forth on the most current Borrowing Base Certificate delivered to the Agent,
equal to: (i) eighty-five percent (85%) of the Gross Amount of the Borrowers'
Eligible Receivables; PLUS (ii) the lesser of (a) Ten Million Dollars
($10,000,000) and (b) the sum of (1) fifty percent (50%) of the raw materials
component and forty percent (40%) of the finished goods component of the Gross
Amount of Eligible Inventory of VinylSource, Inc. and 0% of any other portion of
the Inventory of VinylSource, Inc., (2) fifty percent (50%) of the raw materials
component and
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<PAGE> 11
fifty percent (50%) of the finished goods component of the Gross Amount of
Eligible Inventory of Taylor Building Products and 0% of any other portion of
the Inventory of Taylor Building Products, (3) fifty percent (50%) of the stock
wood component of the Gross Amount of Eligible Inventory of Eagle & Taylor
Company and 0% of any other portion of the Inventory of Eagle & Taylor Company,
(4) twenty-five percent (25%) of the raw materials component and fifty percent
(50%) of the finished goods component of the Gross Amount of Eligible Inventory
of Binnings Building Products, Inc., (5) fifty percent (50%) of the finished
goods component of the Gross Amount of Eligible Inventory of Weather-Seal
Acquisition Corporation where such Inventory is manufactured at its Ottawa Plant
and 0% of any other portion of its Inventory at the Ottawa Plant, (6) fifty
percent (50%) of the finished goods component of the Gross Amount of Eligible
Inventory of Weather-Seal Acquisition Corporation where such Inventory is
manufactured at its Winesburg Plant and 0% of any other portion of its Inventory
at the Winesburg Plant, (7) fifty percent (50%) of the raw glass component and
fifty percent (50%) of the trans-heat mirror film component of the Gross Amount
of Eligible Inventory of Weather-Seal Acquisition Corporation where such
Inventory is manufactured at its Orrville Glass Plant and 0% of any other
portion of its Inventory at the Orrville Glass Plant, (8) fifty percent (50%) of
the finished goods component of the Gross Amount of Eligible Inventory of
Weather-Seal Acquisition Corporation where such Inventory is manufactured at its
Orrville Window Plant and 0% of any other portion of its Inventory at the
Orrville Window Plant, and (9) sixty percent (60%) of the raw billets component
and fifty percent (50%) of the finished goods component of the Gross Amount of
Eligible Inventory of Weather-Seal Acquisition Corporation where such Inventory
is manufactured at its Boardman Aluminum Plant and 0% of any other portion of
its Inventory at the Boardman Aluminum Plant.
"BORROWING BASE CERTIFICATE" means a certificate, in substantially the
same form of Exhibit C attached hereto and made a part hereof, setting forth the
Borrowing Base and the component calculations thereof.
"BORROWING DATE" means a date on which an Advance is made hereunder.
"BORROWING NOTICE" is defined in SECTION 2.6 hereof.
"BUSINESS DAY" means (i) with respect to any borrowing, payment or rate
selection of Loans bearing interest at the Eurodollar Rate, a day (other than a
Saturday or Sunday) on which banks are open for business in Boston,
Massachusetts and New York, New York and on which dealings in Dollars are
carried on in the London interbank market and (ii) for all other purposes a day
(other than a Saturday or Sunday) on which banks are open for business in
Boston, Massachusetts and New York, New York.
"CAPITAL EXPENDITURES" means, for any period, the aggregate of all
expenditures (whether paid in cash or accrued as liabilities and including
Capitalized Leases and Permitted Purchase Money Indebtedness) by each of the
Borrowers and their respective Subsidiaries during that period that, in
conformity with Agreement Accounting Principles, are required to
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<PAGE> 12
be included in or reflected by the property, plant, equipment or similar fixed
asset accounts reflected in the consolidated balance sheet of each of the
Borrowers and their respective Subsidiaries.
"CAPITAL STOCK" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership, partnership
interests (whether general or limited) and (iv) any other interest or
participation that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, the issuing Person.
"CAPITALIZED LEASE" of a Person means any lease of property by such
Person as lessee which would be capitalized on a balance sheet of such Person
prepared in accordance with Agreement Accounting Principles.
"CAPITALIZED LEASE OBLIGATIONS" of a Person means the amount of the
obligations of such Person under Capitalized Leases which would be capitalized
on a balance sheet of such Person prepared in accordance with Agreement
Accounting Principles.
"CASH EQUIVALENTS" means (i) marketable direct obligations issued or
unconditionally guaranteed by the United States government and backed by the
full faith and credit of the United States government; (ii) domestic and
Eurodollar certificates of deposit and time deposits, bankers' acceptances and
floating rate certificates of deposit issued by any commercial bank organized
under the laws of the United States, any state thereof, the District of
Columbia, any foreign bank, or its branches or agencies (fully protected against
currency fluctuations for any such deposits with a term of more than ninety (90)
days); (iii) shares of money market, mutual or similar funds having assets in
excess of $100,000,000 and the investments of which are limited to investment
grade securities (i.e., securities rated at least Baa by Moody's Investors
Service, Inc. or at least BBB by Standard & Poor's Ratings Group, a division of
the McGraw-Hill Companies, Inc.); and (iv) commercial paper of United States and
foreign banks and bank holding companies and their subsidiaries and United
States and foreign finance, commercial industrial or utility companies which, at
the time of acquisition, are rated A-1 (or better) by Standard & Poor's Ratings
Group, a division of the McGraw-Hill Companies, Inc. or P-1 (or better) by
Moody's Investors Service, Inc.; PROVIDED that the maturities of such Cash
Equivalents shall not exceed 365 days.
"CHANGE" is defined in SECTION 4.2 hereof.
"CHANGE OF CONTROL" means (a) any sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of all or
substantially all of the assets of any of the Borrowers and their respective
Subsidiaries; or (b) a majority of the Board of Directors of any Borrower or of
any direct or indirect holding company thereof shall consist of Persons who are
not Continuing Directors of any Borrower; or (c) the acquisition by any Person
of the power, directly or indirectly, to vote or direct the voting of securities
having more than 35%
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<PAGE> 13
of the ordinary voting power for the election of directors of any Borrower or of
any direct or indirect holding company thereof; provided that no Change of
Control shall be deemed to occur pursuant to this clause (c) so long as the
Management Group owns an amount of securities representing the power, directly
or indirectly, to vote or direct the voting of securities having more than 50.0%
of the ordinary voting power for the election of directors of any Borrower or of
any direct or indirect holding company thereof.
"CLOSING DATE" means the date on which the initial Revolving Loans are
advanced hereunder.
"CODE" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"COLLATERAL" means all property and interests in property now owned or
hereafter acquired by any of the Borrowers or any of their respective
Subsidiaries in or upon which a security interest, lien or mortgage is granted
to the Agent, for the benefit of the Holders of Secured Obligations, or to the
Agent, for the benefit of the Lenders, whether under the Security Agreement,
under any of the other Collateral Documents or under any of the other Loan
Documents.
"COLLATERAL DOCUMENTS" means all agreements, instruments and documents
executed in connection with this Agreement, including, without limitation, the
Security Agreement, the Borrower Pledge Agreements, the Collection Account
Agreements, and all other security agreements, loan agreements, notes,
guarantees, pledges, powers of attorney, consents, assignments, contracts, fee
letters, notices, leases, financing statements and all other written matter
whether heretofore, now, or hereafter executed by or on behalf of any of the
Borrowers or any of their respective Subsidiaries and delivered to the Agent or
any of the Lenders, together with all agreements and documents referred to
therein or contemplated thereby.
"COLLECTION ACCOUNT" means each lock-box and blocked depository account
maintained by the Borrowers, subject to a Collection Account Agreement, for the
collection of Receivables and other proceeds of Collateral.
"COLLECTION ACCOUNT AGREEMENT" means a written agreement among one of
the Borrowers, the Agent, and, as applicable, each of the banks at which such
Borrowers maintain a Collection Account in substantially the Form Attached as
EXHIBIT C to the Security Agreement or such other form as may be reasonably
acceptable to the Agent.
"COMMISSION" means the Securities and Exchange Commission and any
Person succeeding to the functions thereof.
"COMMITMENT" means, for each Lender, collectively, such Lender's
Revolving Loan Commitment.
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<PAGE> 14
"CONSOLIDATED ASSETS" means the total assets of the Borrowers and their
respective Subsidiaries on a consolidated basis, calculated in accordance with
Agreement Accounting Principles.
"CONSOLIDATED NET WORTH" means, at a particular date, all amounts which
would be included under shareholders' equity for the Borrowers and their
consolidated Subsidiaries determined in accordance with Agreement Accounting
Principles, calculated in accordance with Agreement Accounting Principles.
"CONTAMINANT" means any waste, pollutant, hazardous substance, toxic
substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, asbestos, polychlorinated biphenyls ("PCBs"), or any
constituent of any such substance or waste, and includes but is not limited to
these terms as defined in Environmental, Health or Safety Requirements of Law.
"CONTINGENT OBLIGATION", as applied to any Person, means any
Contractual Obligation, contingent or otherwise, of that Person with respect to
any Indebtedness of another or other obligation or liability of another,
including, without limitation, any such Indebtedness, obligation or liability of
another directly or indirectly guaranteed, endorsed (otherwise than for
collection or deposit in the ordinary course of business), co-made or discounted
or sold with recourse by that Person, or in respect of which that Person is
otherwise directly or indirectly liable, including Contractual Obligations
(contingent or otherwise) arising through any agreement to purchase, repurchase,
or otherwise acquire such Indebtedness, obligation or liability or any security
therefor, or to provide funds for the payment or discharge thereof (whether in
the form of loans, advances, stock purchases, capital contributions or
otherwise), or to maintain solvency, assets, level of income, or other financial
condition, or to make payment other than for value received.
"CONTINUING DIRECTOR" of any Person means, as of the date of
determination, any Person who (i) was a member of the Board of Directors of such
Person on the date of this Agreement or (ii) was nominated for election or
elected to the Board of Directors of such Person with the affirmative vote of a
majority of the Continuing Directors of such Person who were members of such
Board of Directors at the time of such nomination or election.
"CONTRACTUAL OBLIGATION", as applied to any Person, means any provision
of any equity or debt securities issued by that Person or any indenture,
mortgage, deed of trust, security agreement, pledge agreement, guaranty,
contract, undertaking, agreement or instrument, in any case in writing, to which
that Person is a party or by which it or any of its properties is bound, or to
which it or any of its properties is subject.
"CONTROLLED GROUP" means the group consisting of (i) any corporation
which is a member of the same controlled group of corporations (within the
meaning of Section 414(b) of the Code) as any Borrower; (ii) a partnership or
other trade or business (whether or not incorporated) which is under common
control (within the meaning of Section 414(c) of the
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<PAGE> 15
Code) with any Borrower; and (iii) a member of the same affiliated service group
(within the meaning of Section 414(m) of the Code) as any Borrower, any
corporation described in CLAUSE (I) above or any partnership or trade or
business described in CLAUSE (II) above.
"CONTROLLED SUBSIDIARY" of any Person means a Subsidiary of such Person
(i) 90% or more of the total Equity Interests or other ownership interests of
which (other than directors' qualifying shares) shall at the time be owned by
such Person or by one or more wholly-owned Subsidiaries of such Person and (ii)
of which such Person possesses, directly or indirectly, the power to direct or
cause the direction of the management or policies, whether through the ownership
of voting securities, by agreement or otherwise.
"CONVERSION/CONTINUATION NOTICE" is defined in SECTION 2.8(D) hereof.
"CURE LOAN" is defined in SECTION 9.2(III) hereof.
"CUSTOMARY PERMITTED LIENS" means:
(i) Liens (other than Environmental Liens and Liens in favor
of the IRS or the PBGC) with respect to the payment of taxes,
assessments or governmental charges in all cases which are not yet due
or (if foreclosure, distraint, sale or other similar proceedings shall
not have been commenced) which are being contested in good faith by
appropriate proceedings properly instituted and diligently conducted
and with respect to which adequate reserves or other appropriate
provisions are being maintained in accordance with Agreement Accounting
Principles;
(ii) statutory Liens of landlords and Liens of suppliers,
mechanics, carriers, materialmen, warehousemen or workmen and other
similar Liens imposed by law created in the ordinary course of business
for amounts not yet due or which are being contested in good faith by
appropriate proceedings properly instituted and diligently conducted
and with respect to which adequate reserves or other appropriate
provisions are being maintained in accordance with Agreement Accounting
Principles;
(iii) Liens (other than Environmental Liens and Liens in favor
of the IRS or the PBGC) incurred or deposits made in the ordinary
course of business in connection with worker's compensation,
unemployment insurance or other types of social security benefits or to
secure the performance of bids, tenders, sales, contracts (other than
for the repayment of borrowed money), surety, appeal and performance
bonds; PROVIDED that (A) all such Liens do not in the aggregate
materially detract from the value of any Borrower's or its respective
Subsidiary's assets or property taken as a whole or materially impair
the use thereof in the operation of the businesses taken as a whole,
and (B) all Liens securing bonds to stay judgments or in connection
with appeals do not secure at any time an aggregate amount exceeding
$2,000,000;
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<PAGE> 16
(iv) Liens arising with respect to zoning restrictions,
easements, licenses, reservations, covenants, rights-of-way, utility
easements, building restrictions and other similar charges or
encumbrances on the use of real property which do not in any case
materially detract from the value of the property subject thereto or
interfere with the ordinary conduct of the business of the applicable
Borrower or any of its respective Subsidiaries;
(v) Liens of attachment or judgment with respect to judgments,
writs or warrants of attachment, or similar process against any
Borrower or any of its respective Subsidiaries which do not constitute
a Default under SECTION 8.1(H) hereof;
(vi) any interest or title of the lessor in the property
subject to any operating lease entered into by any Borrower or any of
its respective Subsidiaries in the ordinary course of business;
(vii) licenses of intellectual property granted in the
ordinary course of business;
(viii) leases or subleases of any real property owned or held
by any Borrower;
(ix) Liens incurred in the ordinary course of business
pursuant to construction upon or improvement of any Borrower's real
property, PROVIDED that such Liens shall be discharged within 90 days
after the completion of the construction upon or improvement of the
above-mentioned real property;
(x) Liens incurred under any Collateral Document; and
(xi) Liens in favor of any regulatory agency within the United
States where such agency controls the payment of duties upon goods
imported into the United States by any Borrower.
"DEFAULT" means an event described in ARTICLE VIII hereof.
"DOL" means the United States Department of Labor and any Person
succeeding to the functions thereof.
"DOLLAR" and "$" means dollars in the lawful currency of the United
States.
"EBITDA" means, for any period, on a consolidated basis for the
Borrowers and their respective Subsidiaries, the sum of the amounts for such
period, without duplication, of (i) Net Income, PLUS (ii) Interest Expense, PLUS
(iii) charges against income for foreign, federal, state and local taxes to the
extent deducted in computing Net Income, PLUS (iv) depreciation expense to the
extent deducted in computing Net Income, PLUS (v) amortization expense,
including, without limitation, amortization of goodwill and other intangible
assets to the extent deducted in computing Net Income, PLUS (vi) other non-cash
charges classified as long-term deferrals in
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accordance with Agreement Accounting Principles to the extent deducted in
computing Net Income, PLUS (vii) other extraordinary non-cash charges to the
extent deducted in computing Net Income.
"ELIGIBLE INVENTORY" means Inventory of any Borrower which is held, by
a Borrower or any party contractually obligated to store or handle such
Inventory, for sale or lease in the ordinary course of business or furnished
under any contract of service by a Borrower which continues to meet standards of
eligibility from time to time established in accordance with this Agreement.
Standards of eligibility will be established by the Agent in its reasonable
credit judgment and may be revised from time to time by the Agent in its
reasonable credit judgment (which credit judgment shall be exercised in a manner
that is not arbitrary or capricious and is consistent with the standards of
eligibility and credit judgement applied by the Agent to other borrowers). In
general, without limiting the foregoing, the following inventory is not Eligible
Inventory:
(i) Inventory which is obsolete, not in good condition, not either
currently usable or currently saleable in the ordinary course of the relevant
Borrower's business or does not meet all material standards imposed by any
governmental authority having regulatory authority over such item of Inventory,
its use or its sale;
(ii) Inventory consisting of packaging material, supplies or work in
process;
(iii) Inventory which (a) is consigned to a third party for sale or (b)
is on consignment from a third party to any Borrower for sale;
(iv) Inventory which consists of goods in transit which has been sold
to a dealer or distributor of any Borrower and is in the process of being
delivered to that dealer or distributor;
(v) Inventory which is subject to a Lien in favor of any Person other
than the Agent;
(vi) Inventory with respect to which the Agent does not have a first
and valid fully-perfected security interest;
(vii) Inventory which is not located either (a) on any Borrower's owned
premises in the United States listed on Schedule 2 to the relevant Borrower's
Security Agreement or (b) in other owned or leased premises, warehouses or with
bailees in the United States not listed on Schedule 2 to the relevant Borrower's
Security Agreement permitted to be established under such Security Agreement, in
each case in connection with which the Agent shall have received landlord,
mortgagee, bailee and/or warehousemen's access and lien waiver agreements, as
applicable, in each case in form and substance acceptable to the Agent.
(viii) Inventory which is evidenced by a Receivable;
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(ix) Inventory which has been returned to any Borrower, including,
without limitation, Inventory which has been used by customers of any Borrower
or other Persons for demonstration or marketing purposes; and
(x) Inventory which is not in full conformity with the representations
and warranties made by any Borrower to the Agent with respect thereto whether
contained in this Agreement or the Security Agreement executed by such Borrower.
(xi) Inventory of Forte, Inc. or Danvid Window Company.
Without limiting the foregoing, (i) Inventory of any Borrower which is acquired
pursuant to a Permitted Acquisition or created from a line of business acquired
pursuant to a Permitted Acquisition shall not be deemed Eligible Inventory
unless and until the Agent, after concluding any due diligence it reasonably
deems necessary (which the Agent agrees to undertake as soon as reasonably
practicable after the Borrowers have provided it with access to the information
and/or Persons necessary to conduct such due diligence), shall be satisfied as
to the condition thereof, that such Inventory is of the same general collateral
value as the Borrowers' Inventory prior to such Acquisition and that such
Inventory would otherwise meet the standards of eligibility set forth herein
(including, without limitation, perfection of the Agent's security interests in
such Inventory) but for the fact that it was acquired by a Borrower outside of
the ordinary course of business; and (ii) Inventory acquired pursuant to such
Permitted Acquisition or created from a line of business acquired pursuant to
such Permitted Acquisition may be deemed Eligible Inventory from and after such
Permitted Acquisition if the foregoing determinations have been made to the
Agent's satisfaction. To the extent that the Agent's due diligence reveals the
existence of facts which indicate that the acquired Inventory in a Permitted
Acquisition is not of similar collateral value as the Inventory of any Borrower
analyzed in connection with establishing the initial Borrowing Base percentages,
the Agent shall have the option, in lieu of treating such Inventory as
ineligible, to set a lower Borrowing Base percentage for such Inventory, it
being understood and agreed that before doing so, the Agent will discuss its
analysis with Holdings.
"ELIGIBLE RECEIVABLES" means Receivables created by any Borrower in the
ordinary course of its business arising out of the sale of goods or rendition of
services by any Borrower, which Receivables are and at all times shall continue
to meet standards of eligibility from time to time established in accordance
with this Agreement. Standards of eligibility will be established by the Agent
in its reasonable credit judgment and may be revised from time to time by the
Agent in its reasonable credit judgment (which credit judgment shall be
exercised in a manner that is not arbitrary or capricious and is consistent with
the standards of eligibility and credit judgement applied by the Agent to other
borrowers). In general, without limiting the foregoing, the following
Receivables are not Eligible Receivables:
(i) Receivables which remain unpaid ninety (90) days after the date of
the original applicable invoice or sixty (60) days after the due date, whichever
is earlier;
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(ii) all Receivables owing by a single account debtor if fifty percent
(50%) of the balance owing by such account debtor, calculated without taking
into account any credit balances of such account debtor, remains unpaid ninety
(90) days after the date of the original applicable invoice or sixty (60) days
after the due date, whichever is earlier;
(iii) Receivables with respect to which the account debtor is a
director, officer, employee, Subsidiary or Affiliate of any Borrower;
(iv) if the Agent, in its discretion, elects to treat such Receivables
as ineligible Receivables with respect to which the account debtor is any
federal governmental authority, the United States of America or any department
or agency thereof, unless with respect to any such Receivable, the Borrower has
complied to the Agent's satisfaction with the provisions of the Federal
Assignment of Claims Act or other applicable statutes, including, without
limitation, executing and delivering to Agent all statements of assignment
and/or notification which are in form and substance acceptable to Agent and
which are deemed necessary by Agent to effectuate the assignment to the Agent of
such Receivables;
(v) Receivables not denominated in U.S. Dollars;
(vi) Receivables with respect to which the account debtor is not a
resident of the United States, unless the account debtor has supplied a Borrower
with an irrevocable letter of credit issued by a financial institution
satisfactory to the Agent sufficient to cover such Receivable in form and
substance satisfactory to the Agent;
(vii) Receivables with respect to which the account debtor has (a)
asserted a counterclaim, (b) a right of setoff, or (c) a receivable owing from
any Borrower but only to the extent of such counterclaim, setoff or receivable;
(viii) Receivables with respect to which the Agent does not have a
first and valid fully perfected and enforceable security interest for which
notice has been provided to the applicable Borrower;
(ix) Receivables with respect to which the account debtor is the
subject of bankruptcy or a similar insolvency proceeding or has made an
assignment for the benefit of creditors or whose assets have been conveyed to a
receiver, trustee or assignee for the benefit of creditors;
(x) Receivables with respect to which the account debtor's obligation
to pay the Receivable is conditional upon the account debtor's approval or is
otherwise subject to any contractual repurchase obligation or return right, as
with sales made on a bill-and-hold, guaranteed sale, sale-and-return, sale on
approval (except with respect to Receivables in connection with which account
debtors are entitled to return Inventory on the basis of the quality of such
Inventory) or consignment basis;
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(xi) Receivables with respect to which the account debtor is located in
Minnesota (or any other jurisdiction which adopts a statute or other requirement
with respect to which any Person that obtains business from within such
jurisdiction or is otherwise subject to such jurisdiction's tax law requiring
such Person to file a business activity report or make any other required
filings in a timely manner in order to enforce its claims in such jurisdiction's
courts or arising under such jurisdiction's laws); PROVIDED, HOWEVER, such
Receivables shall nonetheless be eligible if the Borrower has filed a business
activity report (or other applicable report or filing) with the applicable state
office by the time required or is qualified to do business in such jurisdiction
and, at the time the Receivable was created, was qualified to do business in
such jurisdiction or had on file with the applicable state office a current
business activity report (or other applicable report or filing);
(xii) Receivables with respect to which the account debtor's obligation
does not constitute its legal, valid and binding obligation, enforceable against
it in accordance with its terms;
(xiii) Receivables with respect to which any Borrower has not yet
shipped the applicable goods, performed the applicable service or issued the
applicable invoice;
(xiv ) any Receivable which is not in conformity with the
representations and warranties made by any Borrower to the Agent with respect
thereto whether contained in this Agreement or the relevant Security Agreement;
(xv) Receivables in connection with which any Borrower or any other
party to such Receivable is in default in the performance or observance of any
of the terms thereof in any material respect; and
(xvi) Receivables for which the prospect of payment or performance by
the account debtor is or will be impaired as determined by the Agent in the
exercise of its reasonable credit judgment (which credit judgment shall not be
exercised in a manner that is arbitrary or capricious).
(xvii) Receivables owed to Forte, Inc.
Without limiting the foregoing, (i) Receivables of any Borrower which are
acquired pursuant to a Permitted Acquisition or created from a line of business
acquired pursuant to a Permitted Acquisition shall not be deemed Eligible
Receivables unless and until the Agent, after concluding any due diligence it
reasonably deems necessary (which the Agent agrees to undertake as soon as
reasonably practicable after the Borrowers have provided it with access to the
information and/or Persons necessary to conduct such due diligence), shall be
satisfied as to the condition thereof, that such Receivables are of the same
general collateral value as the Borrowers' Receivables prior to such Acquisition
and that such Receivables would otherwise meet the standards of eligibility set
forth herein (including, without limitation, perfection of the Agent's security
interests in such Receivables) but for the fact that it was acquired by a
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Borrower outside of the ordinary course of business; and (ii) Receivables
acquired pursuant to such Permitted Acquisition or created from a line of
business acquired pursuant to such Permitted Acquisition may be deemed Eligible
Receivables from and after such Permitted Acquisition if the foregoing
determinations have been made to the Agent's satisfaction. To the extent that
the Agent's due diligence reveals the existence of facts which indicate that the
acquired Receivables in a Permitted Acquisition is not of similar collateral
value as the Receivables of the Borrowers analyzed in connection with
establishing the initial Borrowing Base percentages, the Agent shall have the
option, in lieu of treating such Receivables as ineligible, to set a lower
Borrowing Base percentage for such Receivables, it being understood and agreed
that before doing so, the Agent will discuss its analysis with Holdings.
"ENVIRONMENTAL, HEALTH OR SAFETY REQUIREMENTS OF LAW" means all
Requirements of Law derived from or relating to federal, state and local laws or
regulations relating to or addressing pollution or protection of the
environment, or protection of worker health or safety, including, but not
limited to, the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. ? 9601 ET SEQ., the Occupational Safety and Health Act of 1970,
29 U.S.C. ? 651 ET SEQ., and the Resource Conservation and Recovery Act of 1976,
42 U.S.C. ? 6901 ET SEQ., in each case including any amendments thereto, any
successor statutes, and any regulations or guidance promulgated thereunder, and
any state or local equivalent thereof.
"ENVIRONMENTAL LIEN" means a lien in favor of any Governmental
Authority for (a) any liability under Environmental, Health or Safety
Requirements of Law, or (b) damages arising from, or costs incurred by such
Governmental Authority in response to, a Release or threatened Release of a
Contaminant into the environment.
"ENVIRONMENTAL PROPERTY TRANSFER ACT" means any applicable requirement
of law that conditions, restricts, prohibits or requires any notification or
disclosure triggered by the closure of any property or the transfer, sale or
lease of any property or deed or title for any property for environmental
reasons, including, but not limited to, any so-called "Industrial Site Recovery
Act" or "Responsible Property Transfer Act."
"EQUITY INTERESTS" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time including (unless the context otherwise requires) any
rules or regulations promulgated thereunder.
"EURODOLLAR BASE RATE" means, for any Interest Period with respect to a
Eurodollar Rate Loan, the rate of interest equal to the rate of interest
(rounded upward to the nearest 1/16 of one percent) at which BankBoston offers
Dollar deposits two Business Days prior to the beginning of such Interest Period
in the interbank eurodollar market in London, England, for
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delivery on the first day of such Interest Period for the number of days
comprised therein and in an amount comparable to the amount of the Eurodollar
Rate Loan.
"EURODOLLAR RATE" means, with respect to a Eurodollar Rate Loan for the
relevant Interest Period, the Eurodollar Base Rate applicable to such Interest
Period PLUS the then Applicable Eurodollar Margin. The Eurodollar Rate shall be
rounded to the next higher multiple of 1/16 of 1% if the rate is not such a
multiple.
"EURODOLLAR RATE ADVANCE" means an Advance which bears interest at the
Eurodollar Rate.
"EURODOLLAR RATE LOAN" means a Loan, or portion thereof, which bears
interest at the Eurodollar Rate.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any day, an interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for on such day on such transactions
received by BankBoston from three Federal funds brokers of recognized standing
selected by BankBoston.
"FINANCING" means, with respect to any Person, the issuance or sale by
such Person of any Equity Interests of such Person or any Indebtedness
consisting of debt securities of such Person.
"FIXED CHARGE COVERAGE RATIO" is defined in SECTION 7.4(A) hereof.
"FLOATING RATE" means, for any day for any Revolving Loan, a rate per
annum equal to the Alternate Base Rate for such day, changing and as the
Alternate Base Rate changes, PLUS the then Applicable Floating Margin.
"FLOATING RATE ADVANCE" means an Advance which bears interest at the
Floating Rate.
"FLOATING RATE LOAN" means a Loan, or portion thereof, which bears
interest at the Floating Rate.
"GOVERNMENTAL ACTS" is defined in SECTION 3.9(A) hereof.
"GOVERNMENTAL AUTHORITY" means any nation or government, any federal,
state, local or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
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<PAGE> 23
"GROSS AMOUNT OF ELIGIBLE INVENTORY" means Eligible Inventory valued at
cost determined on a first-in-first-out basis (determined in accordance with
GAAP, consistently applied) minus the value of reserves which have been recorded
by any Borrower with respect to obsolete, slow-moving or excess Inventory and
such other reserves as the Agent elects to establish in accordance with its
reasonable credit judgment (which credit judgment shall be exercised in a manner
that is not arbitrary or capricious and is consistent with the standards of
eligibility and credit judgement applied by the Agent to other borrowers).
"GROSS AMOUNT OF ELIGIBLE RECEIVABLES" means the outstanding face
amount of Eligible Receivables, determined in accordance with GAAP, consistently
applied, less (i) all finance charges, late fees and other fees that are
unearned, (ii) the value of any accrual which has been recorded by any Borrower
with respect to downward price adjustments, and (iii) such other reserves as the
Agent elects to establish in accordance with its reasonable credit judgment
(which credit judgment shall be exercised in a manner that is not arbitrary or
capricious and is consistent with the standards of eligibility and credit
judgement applied by the Agent to other borrowers).
"GROSS NEGLIGENCE" means recklessness, the absence of the slightest
care or the complete disregard of consequences. Gross Negligence does not mean
the absence of ordinary care or diligence, or an inadvertent act or inadvertent
failure to act. If the term "gross negligence" is used with respect to the Agent
or any Lender or any indemnitee in any of the other Loan Documents, it shall
have the meaning set forth herein.
"HEDGING OBLIGATIONS" of a Person means any and all obligations of such
Person, whether absolute or contingent and howsoever and whensoever created,
arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (i) any and all
agreements, devices or arrangements designed to protect at least one of the
parties thereto from the fluctuations of interest rates, commodity prices,
exchange rates or forward rates applicable to such party's assets, liabilities
or exchange transactions, including, but not limited to, dollar-denominated or
cross-currency interest rate exchange agreements, forward currency exchange
agreements, interest rate cap or collar protection agreements, forward rate
currency or interest rate options, puts and warrants, and (ii) any and all
cancellations, buy backs, reversals, terminations or assignments of any of the
foregoing.
"HOLDERS OF SECURED OBLIGATIONS" means the holders of the Secured
Obligations from time to time and shall include their respective successors,
transferees and assigns.
"HOLDINGS" means American Architectural Products Corporation, its
successors and assigns.
"INDEBTEDNESS" of any Person means, without duplication, such Person's
(a) obligations for borrowed money, (b) obligations representing the deferred
purchase price of property or services (other than accounts payable arising in
the ordinary course of such
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<PAGE> 24
Person's business payable on terms customary in the trade), (c) obligations,
whether or not assumed, secured by Liens or payable out of the proceeds or
production from property or assets now or hereafter owned or acquired by such
Person, (d) obligations which are evidenced by notes, acceptances or other
instruments, (e) Capitalized Lease Obligations, (f) Contingent Obligations, (g)
obligations with respect to letters of credit, (h) Hedging Obligations and (i)
Off Balance Sheet Liabilities. The amount of Indebtedness of any Person at any
date shall be without duplication (i) the outstanding balance at such date of
all unconditional obligations as described above and the maximum liability of
any such Contingent Obligations at such date and (ii) in the case of
Indebtedness of others secured by a Lien to which the property or assets owned
or held by such Person is subject, the lesser of the fair market value at such
date of any asset subject to a Lien securing the Indebtedness of others and the
amount of the Indebtedness secured.
"INDEMNIFIED MATTERS" is defined in SECTION 10.7(B) hereof.
"INDEMNITEES" is defined in SECTION 10.7(B) hereof.
"INTEREST EXPENSE" means, for any period, the total interest expense of
any Borrower and its respective consolidated Subsidiaries, whether paid or
accrued (including the interest component of Capitalized Leases, commitment and
letter of credit fees), but excluding interest expense not payable in cash
(including amortization of discount), all as determined in conformity with
Agreement Accounting Principles.
"INTEREST PERIOD" means, with respect to a Eurodollar Rate Loan, a
period of one (1), two (2) or three (3) months commencing on a Business Day
selected by a Borrower pursuant to this Agreement. Such Interest Period shall
end on (but exclude) the day which corresponds numerically to such date one, two
or three months thereafter; PROVIDED, HOWEVER, that if there is no such
numerically corresponding day in such next, second or third succeeding month,
such Interest Period shall end on the last Business Day of such next, second or
third succeeding month. If an Interest Period would otherwise end on a day which
is not a Business Day, such Interest Period shall end on the next succeeding
Business Day, PROVIDED, HOWEVER, that if said next succeeding Business Day falls
in a new calendar month, such Interest Period shall end on the immediately
preceding Business Day.
"INTEREST RATE AGREEMENTS" is defined in SECTION 7.3(Q) hereof.
"INVENTORY" shall mean any and all goods, including, without
limitation, goods in transit, wheresoever located, whether now owned or
hereafter acquired by a Borrower, which are held for sale or lease, furnished
under any contract of service or held as raw materials, work in process or
supplies, and all materials used or consumed in the business of a Borrower, and
shall include all right, title and interest of a Borrower in any property the
sale or other disposition of which has given rise to Receivables and which has
been returned to or repossessed or stopped in transit by a Borrower.
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"INVESTMENT" means, with respect to any Person, (i) any purchase or
other acquisition by that Person of any Indebtedness, Equity Interests or other
securities, or of a beneficial interest in any Indebtedness, Equity Interests or
other securities, issued by any other Person, (ii) any purchase by that Person
of all or substantially all of the assets of a business conducted by another
Person, and (iii) any loan, advance (other than deposits with financial
institutions available for withdrawal on demand, prepaid expenses, accounts
receivable, advances to employees and similar items made or incurred in the
ordinary course of business) or capital contribution by that Person to any other
Person, including all Indebtedness to such Person arising from a sale of
property by such Person other than in the ordinary course of its business.
"IRS" means the Internal Revenue Service and any Person succeeding to
the functions thereof.
"ISSUING BANKS" means BankBoston and any other Lender which, at a
Borrower's request, agrees, in each such Lender's sole discretion, to become an
Issuing Bank for the purpose of issuing Letters of Credit, and their respective
successors and assigns, in each case in such Lender's separate capacity as an
issuer of Letters of Credit pursuant to SECTION 3.1. The designation of any
Lender as an Issuing Bank after the date hereof shall be subject to the prior
written consent of the Agent.
"L/C DRAFT" means a draft drawn on an Issuing Bank pursuant to a Letter
of Credit.
"L/C INTEREST" shall have the meaning ascribed to such term in SECTION
3.5 hereof.
"L/C OBLIGATIONS" means, without duplication, an amount equal to the
sum of (i) the aggregate of the amount then available for drawing under each of
the Letters of Credit, (ii) the face amount of all outstanding L/C Drafts
corresponding to the Letters of Credit, which L/C Drafts have been accepted by
the applicable Issuing Bank, (iii) the aggregate outstanding amount of all
Reimbursement Obligations at such time and (iv) the aggregate face amount of all
Letters of Credit requested by a Borrower but not yet issued (unless the request
for an unissued Letter of Credit has been denied).
"LENDERS" means the lending institutions listed on the signature pages
of this Agreement and their respective successors and assigns.
"LENDING INSTALLATION" means, with respect to a Lender or the Agent,
any office, branch, subsidiary or affiliate of such Lender or the Agent.
"LETTER OF CREDIT" means the letters of credit to be issued by the
Issuing Banks pursuant to SECTION 3.1 hereof.
"LIEN" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or security agreement or preferential arrangement of any kind or nature
whatsoever (including, without limitation,
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the interest of a vendor or lessor under any conditional sale, Capitalized Lease
or other title retention agreement).
"LOAN(S)" means, with respect to a Lender, such Lender's portion of any
Advance made pursuant to SECTION 2.1 hereof whether made or continued as or
converted to Floating Rate Loans or Eurodollar Rate Loans.
"LOAN ACCOUNT" is defined in SECTION 2.13(F) hereof.
"LOAN DOCUMENTS" means this Agreement, the Notes and all other
documents, instruments and agreements executed in connection therewith or
contemplated thereby, as the same may be amended, restated or otherwise modified
and in effect from time to time.
"LOUISIANA-PACIFIC ACQUISITION" means the acquisition by the Borrowers
of substantially all of the assets of Louisiana-Pacific Corporation's
Weather-Seal Division pursuant to that certain Asset Purchase Agreement dated as
of June 5, 1998 between Weather-Seal Acquisition Corporation, a Delaware
corporation and Louisiana-Pacific Corporation, a Delaware corporation ("L-P
Asset Purchase Agreement").
"L-P ASSET PURCHASE AGREEMENT" is defined in the definition of
Louisiana-Pacific Acquisition.
"MANAGEMENT GROUP" means George S. Hofmeister, Frank J. Amedia and AAP
Holdings, Inc. and each member of the immediate family of any of the foregoing
natural persons and any trust or similar device created for the benefit of any
one or more of the foregoing and each Person which acquires a direct or indirect
beneficial ownership interest in shares of Capital Stock of any Borrower as an
executor or administrator for or by way of inheritance or bequest from one or
more of the foregoing natural persons following the death of such Person.
"MARGIN STOCK" shall have the meaning ascribed to such term in
Regulation U.
"MATERIAL ADVERSE EFFECT" means a material adverse effect upon (a) the
business, condition (financial or otherwise), operations, performance,
properties or prospects of any Borrower, or any Borrower and its respective
Subsidiaries, taken as a whole, (b) the ability of any Borrower or any of its
respective Subsidiaries to perform their respective obligations under the Loan
Documents in any material respect, or (c) the ability of the Lenders or the
Agent to enforce in any material respect the Obligations.
"MULTIEMPLOYER PLAN" means a "Multiemployer Plan" as defined in Section
4001(a)(3) of ERISA which is, or within the immediately preceding six (6) years
was, contributed to by either the Borrower or any member of the Controlled
Group.
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"NET CASH PROCEEDS" from an Asset Sale means cash payments received
(including any cash payments received by way of deferred payment of principal
pursuant to a note or installment receivable or otherwise, but only as and when
received, but excluding any other consideration received in the form of
assumption by the acquiring Person of Indebtedness or other obligations relating
to the properties or assets subject to such Asset Sale) therefrom in each case
net of (i) all legal, title and recording tax expenses, commissions and other
fees and expenses incurred, and all Federal, state, foreign and local taxes
required to be paid or accrued as a liability under GAAP, as a consequence of
such Asset Sale, (ii) all distributions and other payments required to be made
to any Person owning a beneficial interest in assets subject to sale or minority
interest holders in Subsidiaries or joint ventures as a result of such Asset
Sale, (iii) the deduction of appropriate amounts to be provided by the seller as
a reserve, in accordance with GAAP, against any liabilities associated with the
assets disposed of in such Asset Sale, PROVIDED, however, that upon any
reduction in such reserves (other than to the extent resulting from payments of
the respective reserved liabilities), Net Cash Proceeds shall be increased by
the amount of such reduction to reserves, and retained by any Borrower or any
Subsidiary of such Borrower after such Asset Sale and (iv) any portion of the
purchase price from an Asset Sale placed in escrow (whether as a reserve for
adjustment of the purchase price, for satisfaction of indemnities in respect of
such Asset Sale or otherwise in connection with such Asset Sale), PROVIDED,
however, that upon the termination of such escrow, Net Cash Proceeds shall be
increased by any portion of funds therein released to any Borrower or its
Subsidiaries.
"NET INCOME" means, for any period, the net earnings (or loss) after
taxes of any Borrower and its respective Subsidiaries on a consolidated basis
for such period taken as a single accounting period determined in conformity
with Agreement Accounting Principles.
"NON PRO RATA LOAN" is defined in SECTION 9.2 hereof.
"NOTES" means the Revolving Notes.
"NOTICE OF ASSIGNMENT" is defined in SECTION 13.3(B) hereof.
"OBLIGATIONS" means all Loans, advances, debts, liabilities,
obligations, covenants and duties owing by any Borrower to the Agent, any
Lender, any Affiliate of the Agent or any Lender, or any Indemnitee, of any kind
or nature, present or future, arising under this Agreement, the Notes or any
other Loan Document, whether or not evidenced by any note, guaranty or other
instrument, whether or not for the payment of money, whether arising by reason
of an extension of credit, loan, guaranty, indemnification, or in any other
manner, whether direct or indirect (including those acquired by assignment),
absolute or contingent, due or to become due, now existing or hereafter arising
and however acquired. The term includes, without limitation, all interest,
charges, expenses, fees, attorneys' fees and disbursements, paralegals' fees,
and any other sum chargeable to a Borrower under this Agreement or any other
Loan Document.
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"OFF BALANCE SHEET LIABILITIES" of a Person means (a) any repurchase
obligation or liability of such Person or any of its Subsidiaries with respect
to accounts or notes receivable sold by such Person or any of its Subsidiaries,
(b) any liability under any sale and leaseback transactions which do not create
a liability on the consolidated balance sheet of such Person, (c) any liability
under any financing lease or so-called "synthetic" lease transaction, or (d) any
obligations arising with respect to any other transaction which is the
functional equivalent of or takes the place of borrowing but which does not
constitute a liability on the consolidated balance sheets of such Person and its
Subsidiaries.
"OTHER TAXES" is defined in SECTION 2.13(E)(ii) hereof.
"PARTICIPANTS" is defined in SECTION 13.2(a) hereof.
"PAYMENT DATE" means the last Business Day of each month.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"PERMITTED ACQUISITION" is defined in SECTION 7.3(G) hereof.
"PERMITTED EXISTING INDEBTEDNESS" means the Indebtedness of any
Borrower and its respective Subsidiaries identified as such on SCHEDULE 1.1.1 to
this Agreement.
"PERMITTED EXISTING INVESTMENTS" means the Investments of any Borrower
and its respective Subsidiaries identified as such on SCHEDULE 1.1.2 to this
Agreement.
"PERMITTED EXISTING LIENS" means the Liens on assets of any Borrower
and its respective Subsidiaries identified as such on SCHEDULE 1.1.3 to this
Agreement.
"PERMITTED PURCHASE MONEY INDEBTEDNESS" is defined in SECTION
7.3(A)(vii) hereof.
"PERMITTED REFINANCING INDEBTEDNESS" means any replacement, renewal,
refinancing or extension of any Indebtedness permitted by this Agreement that
(i) does not exceed the aggregate principal amount (plus accrued interest and
any applicable premium and associated fees and expenses) of the Indebtedness
being replaced, renewed, refinanced or extended, (ii) does not have a Weighted
Average Life to Maturity at the time of such replacement, renewal, refinancing
or extension that is less than the Weighted Average Life to Maturity of the
Indebtedness being replaced, renewed, refinanced or extended, (iii) does not
rank at the time of such replacement, renewal, refinancing or extension senior
to the Indebtedness being replaced, renewed, refinanced or extended, and (iv)
does not contain terms (including, without limitation, terms relating to
security, amortization, interest rate, premiums, fees, covenants, event of
default and remedies) materially less favorable to the Borrowers or to the
Lenders than those applicable to the Indebtedness being replaced, renewed,
refinanced or extended.
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"PERSON" means any individual, corporation, firm, enterprise,
partnership, trust, incorporated or unincorporated association, joint venture,
joint stock company, limited liability company or other entity of any kind, or
any government or political subdivision or any agency, department or
instrumentality thereof.
"PLAN" means an employee benefit plan defined in Section 3(3) of ERISA
in respect of which the Borrower or any member of the Controlled Group is, or
within the immediately preceding six (6) years was, an "employer" as defined in
Section 3(5) of ERISA.
"PRO RATA SHARE" means, with respect to any Lender, (i) at any time
prior to the Closing Date, the percentage obtained by dividing (A) such Lender's
Commitments at such time (in each case, as adjusted from time to time in
accordance with the provisions of this Agreement) by (B) the sum of the
Aggregate Revolving Loan Commitment at such time and (ii) at any time after the
Closing Date, the percentage obtained by dividing (A) the sum of such Lender's
Revolving Loan Commitment at such time (in each case, as adjusted from time to
time in accordance with the provisions of this Agreement) by (B) the sum of the
aggregate amount of the Aggregate Revolving Loan Commitment at such time;
PROVIDED, HOWEVER, if all of the Commitments are terminated pursuant to the
terms of this Agreement, then "Pro Rata Share" means the percentage obtained by
dividing (x) the sum of such Lender's Revolving Loans, by (y) the aggregate
amount of all Revolving Loans.
"PURCHASERS" is defined in SECTION 13.3(A) hereof.
"RATE OPTION" means the Eurodollar Rate or the Floating Rate.
"RECEIVABLE(S)" means and includes all of any Borrower's presently
existing and hereafter arising or acquired accounts, accounts receivable, and
all present and future rights of any Borrower to payment for goods sold or
leased or for services rendered (except those evidenced by instruments or
chattel paper), whether or not they have been earned by performance, and all
rights in any merchandise or goods which any of the same may represent, and all
rights, title, security and guaranties with respect to each of the foregoing,
including, without limitation, any right of stoppage in transit.
"REGISTER" is defined in SECTION 13.3(C) hereof.
"REGULATION G" means Regulation G of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by nonbank, nonbroker lenders for the purpose of purchasing
or carrying margin stock (as defined therein).
"REGULATION T" means Regulation T of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by and to brokers
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and dealers of securities for the purpose of purchasing or carrying margin stock
(as defined therein).
"REGULATION U" means Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by banks for the purpose of purchasing or carrying Margin
Stock applicable to member banks of the Federal Reserve System.
"REGULATION X" means Regulation X of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by foreign lenders for the purpose of purchasing or carrying
margin stock (as defined therein).
"REIMBURSEMENT OBLIGATION" is defined in SECTION 3.6 hereof.
"RELEASE" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment, including the movement of Contaminants
through or in the air, soil, surface water or groundwater.
"RENTALS" of a Person means the aggregate fixed amounts payable by such
Person under any lease of real or personal property but does not include any
amounts payable under Capitalized Leases of such Person.
"REPLACEMENT LENDER" is defined in SECTION 2.18 hereof.
"REPORTABLE EVENT" means a reportable event as defined in Section 4043
of ERISA and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC by regulation waived the
requirement of Section 4043(a) of ERISA that it be notified within 30 days after
such event occurs, PROVIDED, HOWEVER, that a failure to meet the minimum funding
standards of Section 412 of the Code and of Section 302 of ERISA shall be a
Reportable Event regardless of the issuance of any such waiver of the notice
requirement in accordance with either Section 4043(a) of ERISA or Section 412(d)
of the Code.
"REQUIRED LENDERS" means Lenders whose Pro Rata Shares, in the
aggregate, are greater than fifty percent (50%); PROVIDED, HOWEVER, that, if any
of the Lenders shall have failed to fund its Pro Rata Share of any Revolving
Loan requested by any Borrower, which such Lenders are obligated to fund under
the terms of this Agreement and any such failure has not been cured, then for so
long as such failure continues, "REQUIRED LENDERS" means Lenders (excluding all
Lenders whose failure to fund their respective Pro Rata Shares of such Revolving
Loans has not been so cured) whose Pro Rata Shares represent greater than fifty
percent (50%) of the aggregate Pro Rata Shares of such Lenders; PROVIDED
FURTHER, HOWEVER,
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that, if the Commitments have been terminated pursuant to the terms of this
Agreement, "REQUIRED LENDERS" means Lenders (without regard to such Lenders'
performance of their respective obligations hereunder) whose aggregate ratable
shares (stated as a percentage) of the aggregate outstanding principal balance
of all Loans and L/C Obligations are greater than fifty percent (50%).
"REQUIREMENTS OF LAW" means, as to any Person, the charter and by-laws
or other organizational or governing documents of such Person, and any law, rule
or regulation, or determination of an arbitrator or a court or other
Governmental Authority, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is subject
including, without limitation, the Securities Act of 1933, the Securities
Exchange Act of 1934, Regulations G, T, U and X, ERISA, the Fair Labor Standards
Act, the Worker Adjustment and Retraining Notification Act, Americans with
Disabilities Act of 1990, and any certificate of occupancy, zoning ordinance,
building, environmental or land use requirement or permit or environmental,
labor, employment, occupational safety or health law, rule or regulation,
including Environmental, Health or Safety Requirements of Law.
"RESERVES" shall mean the maximum reserve requirement, as prescribed by
the Board of Governors of the Federal Reserve System (or any successor) with
respect to "Eurocurrency liabilities" or in respect of any other category of
liabilities which includes deposits by reference to which the interest rate on
Eurodollar Rate Loans is determined or category of extensions of credit or other
assets which includes loans by a non-United States office of any Lender to
United States residents.
"RESTRICTED PAYMENT" means (i) any dividend or other distribution,
direct or indirect, on account of any Equity Interests of any Borrower now or
hereafter outstanding, (ii) any redemption, retirement, purchase or other
acquisition for value, direct or indirect, of any Equity Interests of any
Borrower or any of its respective Subsidiaries now or hereafter outstanding,
(iii) any payments of principal or interest on or any redemption, purchase,
retirement, defeasance, prepayment or other acquisition for value, direct or
indirect, of any Indebtedness other than the Obligations, and (iv) any payment
of a claim for the rescission of the purchase or sale of, or for material
damages arising from the purchase or sale of, any Indebtedness (other than the
Obligations) or any Equity Interests of any Borrower or any of such Borrower's
Subsidiaries, or of a claim for reimbursement, indemnification or contribution
arising out of or related to any such claim for damages or rescission.
"REVOLVING CREDIT AVAILABILITY" means, at any particular time, the
amount by which the lesser of the Aggregate Revolving Loan Commitment or the
Borrowing Base at such time exceeds the Revolving Credit Obligations at such
time.
"REVOLVING CREDIT OBLIGATIONS" means, at any particular time, the sum
of (i) the outstanding principal amount of the Revolving Loans at such time,
PLUS (ii) the L/C Obligations at such time.
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"REVOLVING LOAN" is defined in SECTION 2.1 hereof.
"REVOLVING LOAN COMMITMENT" means, for each Lender, the obligation of
such Lender to make Revolving Loans and to purchase participations in Letters of
Credit not exceeding the amount set forth on EXHIBIT A to this Agreement
opposite its name thereon under the heading "Revolving Loan Commitment" or the
signature page of the assignment and acceptance by which it became a Lender, as
such amount may be modified from time to time pursuant to the terms of this
Agreement or to give effect to any applicable assignment and acceptance.
"REVOLVING LOAN TERMINATION DATE" means June 9, 2001.
"REVOLVING NOTE" means a promissory note, in substantially the form of
EXHIBIT B hereto, duly executed by each Borrower and payable to the order of a
Lender in the amount of its Revolving Loan Commitment, including any amendment,
restatement, modification, renewal or replacement of such Revolving Note.
"RISK-BASED CAPITAL GUIDELINES" is defined in SECTION 4.2 hereof.
"SECURED OBLIGATIONS" means, collectively, (i) the Obligations and (ii)
all Hedging Obligations owing under Interest Rate Agreements to any Lender or
any affiliate of any Lender.
"SECURITY AGREEMENT(S)" means those certain Security Agreements of even
date herewith executed by each of the Borrowers in favor of the Agent for the
benefit of the Holders of Secured Obligations as amended, restated or otherwise
modified from time to time.
"SELLER NOTE" means that certain Subordinated Promissory Note dated
June 12, 1998 issued by Holdings to Louisiana-Pacific Corporation in the
principal amount of $7,500,000 in substantially the form of the draft attached
as EXHIBIT K to this Agreement.
"SENIOR NOTES" means those certain Senior Notes due December 1, 2007
issued by American Architectural Products Corporation in the aggregate principal
amount of $125,000,000.
"SINGLE EMPLOYER PLAN" means a Plan maintained by the Borrower or any
member of the Controlled Group for employees of the Borrower or any member of
the Controlled Group.
"SOLVENT" shall mean, when used with respect to any Person, that at the
time of determination:
(i) the fair value of its assets (both at fair valuation and
at present fair saleable value) is equal to or in excess of the total
amount of its liabilities, including, without limitation, contingent
liabilities; and
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(ii) it is then able and expects to be able to pay its debts
as they mature; and
(iii) it has capital sufficient to carry on its business as
conducted and as proposed to be conducted.
With respect to contingent liabilities (such as litigation, guarantees and
pension plan liabilities), such liabilities shall be computed at the amount
which, in light of all the facts and circumstances existing at the time,
represent the amount which can be reasonably be expected to become an actual or
matured liability.
"SUBSIDIARY" of a Person means (i) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or more
of its Subsidiaries or by such Person and one or more of its Subsidiaries, or
(ii) any partnership, association, joint venture or similar business
organization more than 50% of the ownership interests having ordinary voting
power of which shall at the time be so owned or controlled. Unless otherwise
expressly provided, all references herein to a "Subsidiary" shall mean a
Subsidiary of any of the Borrowers.
"TAXES" is defined in SECTION 2.13(E)(i) hereof.
"TERMINATION DATE" means the earlier of (a) the Revolving Loan
Termination Date, and (b) the date of termination of the Aggregate Revolving
Loan Commitment pursuant to SECTION 2.4 hereof or the Commitments pursuant to
SECTION 9.1 hereof.
"TERMINATION EVENT" means (i) a Reportable Event with respect to any
Benefit Plan; (ii) the withdrawal of any Borrower or any member of the
Controlled Group from a Benefit Plan during a plan year in which such Borrower
or such Controlled Group member was a "substantial employer" as defined in
Section 4001(a)(2) of ERISA or the cessation of operations which results in the
termination of employment of twenty percent (20%) of Benefit Plan participants
who are employees of any Borrower or any member of the Controlled Group; (iii)
the imposition of an obligation on any Borrower or any member of the Controlled
Group under Section 4041 of ERISA to provide affected parties written notice of
intent to terminate a Benefit Plan in a distress termination described in
Section 4041(c) of ERISA; (iv) the institution by the PBGC of proceedings to
terminate a Benefit Plan; (v) any event or condition which might constitute
grounds under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Benefit Plan; or (vi) the partial or complete
withdrawal of any Borrower or any member of the Controlled Group from a
Multiemployer Plan.
"TRANSFEREE" is defined in SECTION 13.5 hereof.
"TYPE" means, with respect to any Loan, its nature as a Floating Rate
Loan or a Eurodollar Rate Loan.
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"UNFUNDED LIABILITIES" means (i) in the case of Single Employer Plans,
the amount (if any) by which the present value of all vested nonforfeitable
benefits under all Single Employer Plans exceeds the fair market value of all
such Plan assets allocable to such benefits, all determined as of the then most
recent valuation date for such Plans, and (ii) in the case of Multiemployer
Plans, the withdrawal liability that would be incurred by the Controlled Group
if all members of the Controlled Group completely withdrew from all
Multiemployer Plans.
"UNMATURED DEFAULT" means an event which, but for the lapse of time or
the giving of notice, or both, would constitute a Default.
"WEIGHTED AVERAGE LIFE TO MATURITY" means when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"YEAR 2000 ISSUES" means any anticipated costs, problems and
uncertainties associated with the inability of certain computer applications to
effectively handle data including dates on and after January 1, 2000, as it
affects the business, operations and financial condition of any Borrower or any
of its Subsidiaries.
The foregoing definitions shall be equally applicable to both the
singular and plural forms of the defined terms. Any accounting terms used in
this Agreement which are not specifically defined herein shall have the meanings
customarily given them in accordance with generally accepted accounting
principles in existence in the United States as of the date hereof.
1.3 SUPPLEMENTAL DISCLOSURE. At any time at the request of the Agent
and at such additional times as the Borrowers determine, each Borrower shall
supplement each schedule or representation herein or in the other Loan Documents
with respect to any matter hereafter arising which, if existing or occurring at
the date of this Agreement, would have been required to be set forth or
described in such schedule or as an exception to such representation or which is
necessary to correct any information in such schedule or representation which
has been rendered inaccurate thereby. Unless any such supplement to such
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schedule or representation discloses the existence or occurrence of events,
facts or circumstances which are not prohibited by the terms of this Agreement
or any other Loan Documents, such supplement to such schedule or representation
shall not be deemed an amendment thereof unless expressly consented to in
writing by Agent and the Required Lenders, and no such amendments, except as the
same may be consented to in a writing which expressly includes a waiver, shall
be or be deemed a waiver by the Agent or any Lender of any Default disclosed
therein.
ARTICLE II: THE REVOLVING LOAN FACILITIES
2.1 REVOLVING LOANS. Upon the satisfaction of the conditions precedent
set forth in SECTIONS 5.1 and 5.2, from and including the date of this Agreement
and prior to the Termination Date, each Lender severally and not jointly agrees,
on the terms and conditions set forth in this Agreement, to make revolving loans
to any Borrower from time to time, in Dollars, in an amount not to exceed such
Lender's Pro Rata Share of Revolving Credit Availability at such time (each
individually, a "REVOLVING LOAN" and, collectively, the "REVOLVING LOANS");
PROVIDED, HOWEVER, at no time shall the Revolving Credit Obligations exceed the
Aggregate Revolving Loan Commitment or the Borrowing Base. Subject to the terms
of this Agreement, any Borrower may borrow, repay and reborrow Revolving Loans
at any time prior to the Termination Date. The Revolving Loans made on the
Closing Date shall initially be Floating Rate Loans and thereafter may be
continued as Floating Rate Loans or converted into Eurodollar Rate Loans in the
manner provided in SECTION 2.8 and subject to the other conditions and
limitations therein set forth and set forth in this ARTICLE II. On the
Termination Date, the applicable Borrower shall repay in full the outstanding
principal balance of the Revolving Loans. Each Advance under this SECTION 2.1
shall consist of Revolving Loans made by each Lender ratably in proportion to
such Lender's respective Pro Rata Share.
2.2 RATE OPTIONS FOR ALL ADVANCES. The Revolving Loans may be Floating
Rate Advances or Eurodollar Rate Advances, or a combination thereof, selected by
the applicable Borrower in accordance with SECTION 2.8. The applicable Borrower
may select, in accordance with SECTION 2.8, Rate Options and Interest Periods
applicable to portions of the Revolving Loans; PROVIDED that there shall be no
more than three (3) Interest Periods in effect with respect to all of the Loans
at any time.
2.3 OPTIONAL PAYMENTS; MANDATORY PREPAYMENTS.
(A) OPTIONAL PAYMENTS. Each Borrower may from time to time repay or
prepay, without penalty or premium all or any part of outstanding Floating Rate
Advances. Eurodollar Rate Advances may be voluntarily repaid or prepaid prior to
the last day of the applicable Interest Period, subject to the indemnification
provisions contained in SECTION 4.4, PROVIDED, that such Borrower may not so
prepay Eurodollar Rate Advances unless it shall have provided at least three
Business Days' written notice to the Agent of such prepayment.
(B) MANDATORY PREPAYMENTS.
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(i) MANDATORY PREPAYMENTS OF REVOLVING LOANS. If at any time and for
any reason the Revolving Credit Obligations are greater than the Aggregate
Revolving Loan Commitment or the Borrowing Base, the Borrowers shall immediately
make a mandatory prepayment of the Obligations in an amount equal to such
excess.
(ii) Upon the consummation of any Asset Sale or any Financing by
Holdings, any other Borrower or any Subsidiary of any Borrower, other than (1)
Asset Sales permitted pursuant to Section 7.3(B)(i) and (ii); (2) equity
contributions, the Net Cash Proceeds of which are used to fund all or a portion
of the consideration in connection with a Permitted Acquisition; (3) Financings
consisting of the issuance of Equity Interests to the extent the proceeds
thereof are used to pay the Seller Note, to pay the Senior Notes, to repurchase
Equity Interests in any of the Borrowers or are used to effect Permitted
Acquisitions; and (4) proceeds from Indebtedness permitted pursuant to Section
7.3(A) and except (A) to the extent that the Net Cash Proceeds of such Asset
Sale or Financing, when combined with the Net Cash Proceeds of all such Asset
Sales and Financing during the immediately preceding twelve-month period, do not
exceed $200,000 and (B) as provided in the second sentence of this Section
2.3(B)(ii), within three (3) Business Days after any Borrower's or any of its
Subsidiaries' (i) receipt of any Net Cash Proceeds from any such Asset Sale or
Financing, or (ii) conversion to cash or Cash Equivalents of non-cash proceeds
(whether principal or interest and including securities, release of escrow
arrangements or lease payments) received from any Asset Sale or Financing, the
Borrowers shall make a mandatory prepayment of the Obligations in an amount
equal to one hundred percent (100%) of such Net Cash Proceeds or such proceeds
converted from non-cash to cash or Cash Equivalents. Net Cash Proceeds of Asset
Sales with respect to which the Borrower shall have given the Agent written
notice of its intention to replace the assets within six (6) months following
such Asset Sale shall not be subject to the provisions of the first sentence of
this Section 2.3(B)(ii) unless and to the extent that such six-month period
shall have expired without such replacement having been made or a Default has
occurred at any time during that six-month period.
(iii) Nothing in this Section 2.3(B) shall be construed to constitute
the Lenders' consent to any transaction referred to in paragraph (ii) above
which is not expressly permitted by the terms of this Agreement.
(iv) Each mandatory prepayment required by paragraphs (i) and (ii) of
this Section 2.3(B) shall be referred to herein as a "Designated Prepayment."
Designated Prepayments shall be allocated and applied to the Obligations
according to Section 12.3 herein.
(v) Subject to the preceding provisions of this SECTION 2.3(B), all of
the mandatory prepayments made under this SECTION 2.3(B) shall be applied first
to Floating Rate Loans and to any Eurodollar Rate Loans maturing on such date
and then to subsequently maturing Eurodollar Rate Loans in order of maturity.
2.4 REDUCTION OF COMMITMENTS. Each Borrower may permanently reduce the
Aggregate Revolving Loan Commitment in whole, or in part ratably among the
Lenders, in an
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aggregate minimum amount of $500,000 and integral multiples of $500,000 in
excess of that amount (unless the Aggregate Revolving Loan Commitment is reduced
in whole), upon at least one Business Day's written notice to the Agent, which
notice shall specify the amount of any such reduction; PROVIDED, HOWEVER, that
the amount of the Aggregate Revolving Loan Commitment may not be reduced below
the aggregate principal amount of the outstanding Revolving Credit Obligations.
All accrued commitment fees shall be payable on the effective date of any
termination of the obligations of the Lenders to make Loans hereunder.
2.5 METHOD OF BORROWING. Not later than 3:00 p.m. (Boston time) on each
Borrowing Date, each Lender shall make available its Revolving Loan or Revolving
Loans, in funds immediately available in Boston to the Agent at its address
specified pursuant to ARTICLE XIV. The Agent will promptly make the funds so
received from the Lenders available to the applicable Borrower at the Agent's
aforesaid address.
2.6 METHOD OF SELECTING TYPES AND INTEREST PERIODS FOR ADVANCES. The
applicable Borrower shall select the Type of Advance and, in the case of each
Eurodollar Rate Advance, the Interest Period applicable to each Advance from
time to time. Such Borrower shall give the Agent irrevocable notice in
substantially the form of EXHIBIT D hereto (a "BORROWING NOTICE") not later than
10:00 a.m. (Boston time) (a) on the Borrowing Date of each Floating Rate Advance
and (b) three Business Days before the Borrowing Date for each Eurodollar Rate
Advance, specifying: (i) the Borrowing Date (which shall be a Business Day) of
such Advance; (ii) the aggregate amount of such Advance; (iii) the Type of
Advance selected; and (iv) in the case of each Eurodollar Rate Advance, the
Interest Period applicable thereto. The applicable Borrower shall select
Interest Periods so that, to the best of the such Borrower's knowledge, it will
not be necessary to prepay all or any portion of any Eurodollar Rate Advance
prior to the last day of the applicable Interest Period in order to make
mandatory prepayments as required pursuant to the terms hereof. Each Floating
Rate Advance and all Obligations other than Loans shall bear interest from and
including the date of the making of such Advance to (but not including) the date
of repayment thereof at the Floating Rate, changing when and as such Floating
Rate changes. Changes in the rate of interest on that portion of any Advance
maintained as a Floating Rate Loan will take effect simultaneously with each
change in the Alternate Base Rate. Each Eurodollar Rate Advance shall bear
interest from and including the first day of the Interest Period applicable
thereto to (but not including) the last day of such Interest Period at the
interest rate determined as applicable to such Eurodollar Rate Advance.
2.7 MINIMUM AMOUNT OF EACH ADVANCE. Each Eurodollar Rate Advance (other
than an Advance to repay a Reimbursement Obligation) shall be in the minimum
amount of $1,000,000 (and in multiples of $500,000 if in excess thereof),
PROVIDED, HOWEVER, that any Floating Rate Advance may be in the amount of the
unused Aggregate Revolving Loan Commitment.
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2.8 METHOD OF SELECTING TYPES AND INTEREST PERIODS FOR CONVERSION AND
CONTINUATION OF ADVANCES.
(A) RIGHT TO CONVERT. The applicable Borrower may elect from time to
time, subject to the provisions of SECTION 2.2 and this SECTION 2.8, to convert
all or any part of a Loan of any Type into any other Type or Types of Loans;
PROVIDED that any conversion of any Eurodollar Rate Advance shall be made on,
and only on, the last day of the Interest Period applicable thereto.
(B) AUTOMATIC CONVERSION AND CONTINUATION. Floating Rate Loans shall
continue as Floating Rate Loans unless and until such Floating Rate Loans are
converted into Eurodollar Rate Loans. Eurodollar Rate Loans shall continue as
Eurodollar Rate Loans until the end of the then applicable Interest Period
therefor, at which time such Eurodollar Rate Loans shall be automatically
converted into Floating Rate Loans unless the applicable Borrower shall have
given the Agent notice in accordance with SECTION 2.8(D) requesting that, at the
end of such Interest Period, such Eurodollar Rate Loans continue as a Eurodollar
Rate Loan.
(C) NO CONVERSION POST-DEFAULT OR POST-UNMATURED DEFAULT.
Notwithstanding anything to the contrary contained in SECTION 2.8(A) or SECTION
2.8(B), no Loan may be converted into or continued as a Eurodollar Rate Loan
(except with the consent of the Required Lenders) when any Default or Unmatured
Default has occurred and is continuing.
(D) CONVERSION/CONTINUATION NOTICE. The applicable Borrower shall give
the Agent irrevocable notice (a "CONVERSION/CONTINUATION NOTICE") of each
conversion of a Floating Rate Loan into a Eurodollar Rate Loan or continuation
of a Eurodollar Rate Loan not later than 11:00 a.m. (Boston time) three Business
Days prior to the date of the requested conversion or continuation, specifying:
(1) the requested date (which shall be a Business Day) of such conversion or
continuation; (2) the amount and Type of the Loan to be converted or continued;
and (3) the amount of Eurodollar Rate Loan(s) into which such Loan is to be
converted or continued and the duration of the Interest Period applicable
thereto.
2.9 DEFAULT RATE. After the occurrence and during the continuance of a
Default, at the option of the Agent or at the direction of the Required Lenders,
the interest rate(s) applicable to the Obligations and the fees payable under
SECTION 3.7 with respect to Letters of Credit shall be increased by two and
one-half percent (2.5%) per annum above the Floating Rate.
2.10 METHOD OF PAYMENT. All payments of principal, interest, and fees
hereunder shall be made, without setoff, deduction or counterclaim, in
immediately available funds to the Agent at the Agent's address specified
pursuant to ARTICLE XIV, or at any other Lending Installation of the Agent
specified in writing by the Agent to the Borrowers, by 2:00 p.m. (Boston time)
on the date when due and shall be made ratably among the Lenders (unless such
amount is not to be shared ratably in accordance with the terms hereof). Each
payment delivered to the Agent for the account of any Lender shall be delivered
promptly by the Agent to such Lender in the same type of funds which the Agent
received at its address specified
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pursuant to ARTICLE XIV or at any Lending Installation specified in a notice
received by the Agent from such Lender. Each Borrower authorizes the Agent to
charge the account of such Borrower maintained with BankBoston for each payment
of principal, interest and fees as it becomes due hereunder.
2.11 NOTES. Each Lender is authorized to record the principal amount of
each of its Loans and each repayment with respect to its Loans on the schedule
attached to its respective Notes; PROVIDED, HOWEVER, that the failure to so
record shall not affect each Borrower's obligations under any such Note.
2.12 TELEPHONIC NOTICES. Each of the Borrowers authorizes the Lenders
and the Agent to extend Advances, effect selections of Types of Advances and to
transfer funds based on telephonic notices made by any person or persons the
Agent or any Lender in good faith believes to be acting on behalf of the
Borrowers. Each Borrower agrees to deliver promptly to the Agent a written
confirmation, signed by an Authorized Officer, if such confirmation is requested
by the Agent or any Lender, of each telephonic notice. If the written
confirmation differs in any material respect from the action taken by the Agent
and the Lenders, (i) the telephonic notice shall govern absent manifest error
and (ii) the Agent or the Lender, as applicable, shall promptly notify the
Authorized Officer who provided such confirmation of such difference.
2.13 PROMISE TO PAY; INTEREST, COMMITMENT FEES AND TERMINATION FEES;
INTEREST PAYMENT DATES; INTEREST AND FEE BASIS; TAXES; LOAN AND CONTROL
ACCOUNTS.
(A) PROMISE TO PAY. Each Borrower, jointly and severally,
unconditionally promises to pay when due the principal amount of each Loan and
all other Obligations incurred by a Borrower, and to pay all unpaid interest
accrued thereon, in accordance with the terms of this Agreement and the Notes.
(B) INTEREST PAYMENT DATES. Interest accrued on each Floating Rate Loan
shall be payable in arrears on each Payment Date, commencing with the first such
date to occur after the date hereof, and at maturity (whether by acceleration or
otherwise). Interest accrued on each Eurodollar Rate Loan shall be payable on
the last day of its applicable Interest Period, on any date on which the
Eurodollar Rate Loan is prepaid, whether by acceleration or otherwise, and at
maturity. Interest accrued on the principal balance of all other Obligations
shall be payable in arrears (i) on the last day of each calendar month,
commencing on the first such day following the incurrence of such Obligation,
(ii) upon repayment thereof in full or in part, and (iii) if not theretofore
paid in full, at the time such other Obligation becomes due and payable (whether
by acceleration or otherwise).
(C) COMMITMENT FEES. (i) The Borrowers shall pay to the Agent, for the
account of the Lenders in accordance with their Pro Rata Shares, from and after
the Closing Date until the date on which the Aggregate Revolving Loan Commitment
shall be terminated in whole, a commitment fee accruing at the rate of
three-eighths of one percent (.375%) on the amount by
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which (A) the Aggregate Revolving Loan Commitment in effect from time to time
exceeds (B) the Revolving Credit Obligations in effect from time to time. All
such commitment fees payable under this CLAUSE (C) shall be payable monthly in
arrears on the last day of each month occurring after the Closing Date (with the
first such payment being calculated for the period from the Closing Date and
ending on June 30, 1998), and, in addition, on the date on which the Aggregate
Revolving Loan Commitment shall be terminated in whole.
(ii) If the Borrowers select to terminate this Agreement before June 9,
1999, the Borrowers shall pay a termination fee ("TERMINATION FEE") equal to one
percent (1.0%) of the Aggregate Revolving Loan Commitment. The Termination Fee
will be waived if such termination is in conjunction with a refinancing of the
Commitments under this Agreement by BankBoston.
(iii) The Borrowers agree to pay to the Agent for the sole account of
the Agent (unless otherwise agreed between the Agent and any Lender) the fees
set forth in the letter agreement between the Agent and the Borrowers dated June
9, 1998, payable at the times and in the amounts set forth therein.
(D) INTEREST AND FEE BASIS; APPLICABLE EURODOLLAR MARGIN AND APPLICABLE
FLOATING RATE MARGIN.
(i) Interest and fees shall be calculated for actual days elapsed on
the basis of a 360-day year. Interest shall be payable for the day an Obligation
is incurred but not for the day of any payment on the amount paid if payment is
received prior to 2:00 p.m. (Boston time) at the place of payment. If any
payment of principal of or interest on a Loan or any payment of any other
Obligations shall become due on a day which is not a Business Day, such payment
shall be made on the next succeeding Business Day and, in the case of a
principal payment, such extension of time shall be included in computing
interest in connection with such payment.
(ii) The Applicable Floating Rate and Applicable Eurodollar Margins
shall be determined from time to time by reference to the table set forth below,
on the basis of the then applicable Fixed Charge Coverage Ratio as described in
SECTION 7.4 contained herein:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Fixed Charge Applicable Floating Rate Applicable Eurodollar
Coverage Ratio Margin for Revolving Margins for Revolving
Loans Loans
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Less than 1.2 to 1.0 .250% 2.50%
- --------------------------------------------------------------------------------------------------------------------
Greater than or equal to 1.2 to 1.0
but less than 1.5 to 1.0 .125% 2.25%
- --------------------------------------------------------------------------------------------------------------------
Greater than or equal to 1.5 to 1.0
0% 2.00%
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE> 41
Upon receipt of the second Quarterly Report for each fiscal year, as
provided for in SECTION 7.1(A)(ii), and the Annual Report provided for in
SECTION 7.1(A)(iii), the Applicable Floating Rate and Applicable Eurodollar
Margins shall be adjusted, such adjustment being effective five (5) Business
Days following the Agent's receipt of such financial statements and the
compliance certificate required to be delivered in connection therewith pursuant
to SECTION 7.1(A)(iv); PROVIDED, that if the Borrowers shall not have timely
delivered their financial statements in accordance with SECTION 7.1(A)(ii) or
(iii), as applicable, then commencing on the date upon which such financial
statements should have been delivered and continuing until such financial
statements are actually delivered, it shall be assumed for purposes of
determining the Applicable Floating Rate and Applicable Eurodollar Margins that
the Fixed Charge Coverage Ratio was less than 1.2 to 1.0. Notwithstanding
anything herein to the contrary, from the Closing Date to but not including the
fifth Business Day following receipt of each Borrower's financial statements in
accordance with SECTION 7.1(A)(iii) for the 1998 fiscal year, the Applicable
Floating Rate and Applicable Eurodollar Rate Margins shall be determined based
upon an assumption that the Fixed Charge Coverage Ratio is less than 1.2 to 1.0.
(E) TAXES.
(i) Any and all payments by the Borrowers hereunder shall be
made free and clear of and without deduction for any and all present or
future taxes, levies, imposts, deductions, charges or withholdings or
any liabilities with respect thereto including those arising after the
date hereof as a result of the adoption of or any change in any law,
treaty, rule, regulation, guideline or determination of a Governmental
Authority or any change in the interpretation or application thereof by
a Governmental Authority but excluding, in the case of each Lender and
the Agent, such taxes (including income taxes, franchise taxes and
branch profit taxes) as are imposed on or measured by such Lender's or
Agent's, as the case may be, income by the United States of America or
any Governmental Authority of the jurisdiction or any political
subdivision of or taxing authority therein under the laws of which such
Lender or Agent, as the case may be, is organized or maintains a
Lending Installation (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings, and liabilities which the Agent or a
Lender determines to be applicable to this Agreement, the other Loan
Documents, the Revolving Loan Commitments, the Loans or the Letters of
Credit being hereinafter referred to as "TAXES"). If any Borrower shall
be required by law to deduct any Taxes from or in respect of any sum
payable hereunder or under the other Loan Documents to any Lender or
the Agent, (i) the sum payable shall be increased as may be necessary
so that after making all required deductions (including deductions
applicable to additional sums payable under this SECTION 2.13(E)) such
Lender or the Agent (as the case may be) receives an amount equal to
the sum it would have received had no such deductions been made, (ii)
the applicable Borrower shall make such deductions, and (iii) the
applicable Borrower shall pay the full amount deducted to the relevant
taxation authority or other authority in accordance with applicable
law. If a withholding tax of
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the United States of America or any other Governmental Authority shall
be or become applicable (y) after the date of this Agreement, to such
payments by any Borrower made to the Lending Installation or any other
office that a Lender may claim as its Lending Installation, or (z)
after such Lender's selection and designation of any other Lending
Installation, to such payments made to such other Lending Installation,
such Lender shall use reasonable efforts to make, fund and maintain its
Loans through another Lending Installation of such Lender in another
jurisdiction so as to reduce such Borrower's liability hereunder, if
the making, funding or maintenance of such Loans through such other
Lending Installation of such Lender does not, in the judgment of such
Lender, otherwise adversely affect such Loans, or obligations under the
Revolving Loan Commitments or such Lender.
(ii) In addition, the Borrowers agree to pay any present or
future stamp or documentary taxes or any other excise or property
taxes, charges, or similar levies which arise from any payment made
hereunder, from the issuance of Letters of Credit hereunder, or from
the execution, delivery or registration of, or otherwise with respect
to, this Agreement, the other Loan Documents, the Revolving Loan
Commitments, the Loans or the Letters of Credit (hereinafter referred
to as "OTHER TAXES").
(iii) Each Borrower indemnifies each Lender and the Agent for
the full amount of Taxes and Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed by any Governmental
Authority on amounts payable under this SECTION 2.13(E)) paid by such
Lender or the Agent (as the case may be) and any liability (including
penalties, interest, and expenses) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted. This indemnification shall be made within thirty (30)
days after the date such Lender or the Agent (as the case may be) makes
written demand therefor. A certificate as to any additional amount
payable to any Lender or the Agent under this SECTION 2.13(E) submitted
to any Borrower and the Agent (if a Lender is so submitting) by such
Lender or the Agent shall show in reasonable detail the amount payable
and the calculations used to determine such amount and shall, absent
manifest error, be final, conclusive and binding upon all parties
hereto. With respect to such deduction or withholding for or on account
of any Taxes and to confirm that all such Taxes have been paid to the
appropriate Governmental Authorities, each Borrower shall promptly (and
in any event not later than thirty (30) days after receipt) furnish to
each Lender and the Agent such certificates, receipts and other
documents as may be required (in the judgment of such Lender or the
Agent) to establish any tax credit to which such Lender or the Agent
may be entitled.
(iv) Within thirty (30) days after the date of any payment of
Taxes or Other Taxes by any Borrower, such Borrower shall furnish to
the Agent the original or a certified copy of a receipt evidencing
payment thereof.
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(v) Without prejudice to the survival of any other agreement
of the Borrowers hereunder, the agreements and obligations of the
Borrowers contained in this SECTION 2.13(E) shall survive the payment
in full of principal and interest hereunder, the termination of the
Letters of Credit and the termination of this Agreement.
(vi) Without limiting the obligations of the Borrowers under
this SECTION 2.13(E), each Lender that is not created or organized
under the laws of the United States of America or a political
subdivision thereof shall deliver to the Borrowers and the Agent on or
before the Closing Date, or, if later, the date on which such Lender
becomes a Lender pursuant to SECTION 13.3, a true and accurate
certificate executed in duplicate by a duly authorized officer of such
Lender, in a form satisfactory to the Borrowers and the Agent, to the
effect that such Lender is capable under the provisions of an
applicable tax treaty concluded by the United States of America (in
which case the certificate shall be accompanied by two executed copies
of Form 1001 of the IRS) or under Section 1442 of the Code (in which
case the certificate shall be accompanied by two copies of Form 4224 of
the IRS) of receiving payments of interest hereunder without deduction
or withholding of United States federal income tax. Each such Lender
further agrees to deliver to the Borrowers and the Agent from time to
time a true and accurate certificate executed in duplicate by a duly
authorized officer of such Lender substantially in a form satisfactory
to the Borrowers and the Agent, before or promptly upon the occurrence
of any event requiring a change in the most recent certificate
previously delivered by it to the Borrowers and the Agent pursuant to
this SECTION 2.13(E)(vi). Further, each Lender which delivers a
certificate accompanied by Form 1001 of the IRS covenants and agrees to
deliver to the Borrowers and the Agent within fifteen (15) days prior
to January 1, 1999, and every anniversary of such date thereafter on
which this Agreement is still in effect, another such certificate and
two accurate and complete original signed copies of Form 1001 (or any
successor form or forms required under the Code or the applicable
regulations promulgated thereunder), and each Lender that delivers a
certificate accompanied by Form 4224 of the IRS covenants and agrees to
deliver to the Borrowers and the Agent within fifteen (15) days prior
to the beginning of each subsequent taxable year of such Lender during
which this Agreement is still in effect, another such certificate and
two accurate and complete original signed copies of IRS Form 4224 (or
any successor form or forms required under the Code or the applicable
regulations promulgated thereunder). Each such certificate shall
certify as to one of the following:
(a) that such Lender is capable of receiving payments
of interest hereunder without deduction or withholding of
United States of America federal income tax;
(b) that such Lender is not capable of receiving
payments of interest hereunder without deduction or
withholding of United States of America federal income tax as
specified therein but is capable of recovering the full amount
of any such deduction or withholding from a
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source other than the Borrowers and will not seek any such
recovery from any Borrower; or
(c) that, as a result of the adoption of or any
change in any law, treaty, rule, regulation, guideline or
determination of a Governmental Authority or any change in the
interpretation or application thereof by a Governmental
Authority after the date such Lender became a party hereto,
such Lender is not capable of receiving payments of interest
hereunder without deduction or withholding of United States of
America federal income tax as specified therein and that it is
not capable of recovering the full amount of the same from a
source other than the Borrowers.
Each Lender shall promptly furnish to the Borrowers and the Agent such
additional documents as may be reasonably required by the Borrowers or
the Agent to establish any exemption from or reduction of any Taxes or
Other Taxes required to be deducted or withheld and which may be
obtained without undue expense to such Lender.
(F) LOAN ACCOUNT. Each Lender shall maintain in accordance with its
usual practice an account or accounts (a "LOAN ACCOUNT") evidencing the
Obligations of each of the Borrowers to such Lender owing to such Lender from
time to time, including the amount of principal and interest payable and paid to
such Lender from time to time hereunder and under the Notes.
(G) CONTROL ACCOUNT. The Register maintained by the Agent pursuant to
SECTION 13.3(C) shall include a control account, and a subsidiary account for
each Lender, in which accounts (taken together) shall be recorded (i) the date
and amount of each Advance made hereunder, the type of Loan comprising such
Advance and any Interest Period applicable thereto, (ii) the effective date and
amount of each Assignment Agreement delivered to and accepted by it and the
parties thereto pursuant to SECTION 13.3, (iii) the amount of any principal or
interest due and payable or to become due and payable from each of the Borrowers
to each Lender hereunder or under the Notes, (iv) the amount of any sum received
by the Agent from any Borrower hereunder and each Lender's share thereof, and
(v) all other appropriate debits and credits as provided in this Agreement,
including, without limitation, all fees, charges, expenses and interest.
(H) ENTRIES BINDING. The entries made in the Register and each Loan
Account shall be conclusive and binding for all purposes, absent manifest error,
unless a Borrower objects to information contained in the Register and each Loan
Account within thirty (30) days of such Borrower's receipt of such information.
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<PAGE> 45
2.14 NOTIFICATION OF ADVANCES, INTEREST RATES, PREPAYMENTS AND
AGGREGATE REVOLVING LOAN COMMITMENT REDUCTIONS. Promptly after receipt thereof,
the Agent will notify each Lender of the contents of each Aggregate Revolving
Loan Commitment reduction notice, Borrowing Notice, Continuation/Conversion
Notice, and repayment notice received by it hereunder. The Agent will notify
each Lender of the interest rate applicable to each Eurodollar Rate Loan
promptly upon determination of such interest rate and will give each Lender
prompt notice of each change in the Alternate Base Rate.
2.15 LENDING INSTALLATIONS. Each Lender may book its Loans at any
Lending Installation selected by such Lender and may change its Lending
Installation from time to time. All terms of this Agreement shall apply to any
such Lending Installation and the Notes shall be deemed held by each Lender for
the benefit of such Lending Installation. Each Lender may, by written or
facsimile notice to the Agent and the Borrowers, designate a Lending
Installation through which Loans will be made by it and for whose account Loan
payments are to be made.
2.16 NON-RECEIPT OF FUNDS BY THE AGENT. Unless a Borrower or a Lender,
as the case may be, notifies the Agent prior to the date on which it is
scheduled to make payment to the Agent of (i) in the case of a Lender, the
proceeds of a Loan or (ii) in the case of a Borrower, a payment of principal,
interest or fees to the Agent for the account of the Lenders, that it does not
intend to make such payment, the Agent may assume that such payment has been
made. The Agent may, but shall not be obligated to, make the amount of such
payment available to the intended recipient in reliance upon such assumption. If
such Lender or Borrower, as the case may be, has not in fact made such payment
to the Agent, the recipient of such payment shall, on demand by the Agent, repay
to the Agent the amount so made available together with interest thereon in
respect of each day during the period commencing on the date such amount was so
made available by the Agent until the date the Agent recovers such amount at a
rate per annum equal to (i) in the case of payment by a Lender, the Federal
Funds Effective Rate for such day or (ii) in the case of payment by a Borrower,
the interest rate applicable to the relevant Loan.
2.17 TERMINATION DATE. This Agreement shall be effective until the
Termination Date. Notwithstanding the termination of this Agreement on the
Termination Date, until all of the Obligations (other than contingent indemnity
obligations) shall have been fully and indefeasibly paid and satisfied, all
financing arrangements among the Borrowers and the Lenders shall have been
terminated (other than under Interest Rate Agreements or other agreements with
respect to Hedging Obligations) and all of the Letters of Credit shall have
expired, been cancelled or terminated, all of the rights and remedies under this
Agreement and the other Loan Documents shall survive.
2.18 REPLACEMENT OF CERTAIN LENDERS. In the event a Lender ("AFFECTED
LENDER") shall have: (i) failed to fund its Pro Rata Share of any Advance
requested by any Borrower, which such Lender is obligated to fund under the
terms of this Agreement and which failure has not been cured, (ii) requested
compensation from any Borrower under SECTIONS 2.13(E), 4.1 or 4.2 to recover
Taxes, Other Taxes or other additional costs incurred by such Lender
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which are not being incurred generally by the other Lenders, (iii) delivered a
notice pursuant to SECTION 4.3 claiming that such Lender is unable to extend
Eurodollar Rate Loans to any Borrower for reasons not generally applicable to
the other Lenders or (iv) has invoked SECTION 10.2, then, in any such case, any
Borrower or the Agent may make written demand on such Affected Lender (with a
copy to the Agent in the case of a demand by any Borrower and a copy to the
Borrowers in the case of a demand by the Agent) for the Affected Lender to
assign, and such Affected Lender shall use its best efforts to assign pursuant
to one or more duly executed Assignments Agreements five (5) Business Days after
the date of such demand, to one or more financial institutions that comply with
the provisions of SECTION 13.3(A) which the Borrowers or the Agent, as the case
may be, shall have engaged for such purpose ("REPLACEMENT LENDER"), all of such
Affected Lender's rights and obligations under this Agreement and the other Loan
Documents (including, without limitation, its Revolving Loan Commitment, all
Loans owing to it, all of its participation interests in existing Letters of
Credit, and its obligation to participate in additional Letters of Credit
hereunder) in accordance with SECTION 13.3. The Agent agrees, upon the
occurrence of such events with respect to an Affected Lender and upon the
written request of the Borrowers, to use its reasonable efforts to obtain the
commitments from one or more financial institutions to act as a Replacement
Lender. The Agent is authorized to execute one or more of such assignment
agreements as attorney-in-fact for any Affected Lender failing to execute and
deliver the same within five (5) Business Days after the date of such demand.
Further, with respect to such assignment the Affected Lender shall have
concurrently received, in cash, all amounts due and owing to the Affected Lender
hereunder or under any other Loan Document, including, without limitation, the
aggregate outstanding principal amount of the Loans owed to such Lender,
together with accrued interest thereon through the date of such assignment,
amounts payable under SECTIONS 2.13(E), 4.1, and 4.2 with respect to such
Affected Lender and compensation payable under SECTION 2.13(C) in the event of
any replacement of any Affected Lender under CLAUSE (II) or CLAUSE (III) of this
SECTION 2.18; PROVIDED that upon such Affected Lender's replacement, such
Affected Lender shall cease to be a party hereto but shall continue to be
entitled to the benefits of SECTIONS 2.13(E), 4.1, 4.2, 4.4, and 10.7, as well
as to any fees accrued for its account hereunder and not yet paid, and shall
continue to be obligated under SECTION 11.8. Upon the replacement of any
Affected Lender pursuant to this SECTION 2.18, the provisions of SECTION 9.2
shall continue to apply with respect to Loans which are then outstanding with
respect to which the Affected Lender failed to fund its Pro Rata Share and which
failure has not been cured.
2.19 COLLECTION ACCOUNT ARRANGEMENTS.
(a) ESTABLISHMENT OF COLLECTION ACCOUNTS. On or prior to the date that
is thirty (30) days after the Closing Date, the Borrower shall have entered into
and shall thereafter maintain lock-box services agreements, cash collection
account arrangements and/or similar arrangements for the collection of
Receivables included in the Collateral and other proceeds of Collateral into one
or more Collection Accounts, in form and substance reasonably acceptable to the
Agent, and in connection with such arrangements, the Borrowers shall have
entered into and shall thereafter maintain in effect Collection Account
Agreements for each of such
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<PAGE> 47
Collection Accounts. On or prior to the date that is thirty (30) days after the
Closing Date, the Borrowers shall put in place arrangements so that its account
debtors directly remit all payments on Receivables to the Collection Accounts
(or lock boxes established in connection therewith). Any of the foregoing
collections received by the Borrowers and not deposited in the Collection
Accounts, shall be deemed to have been received by the Borrowers as the Agent?s
trustee and, upon the receipt thereof, the Borrowers shall promptly transfer all
such amounts into a Collection Account in their original form. All deposits in
any Collection Account shall be remitted to the Agent or as the Agent may
direct, all in accordance with the provisions of the Collection Account
Agreements.
(b) DISBURSEMENT OF COLLECTIONS HELD IN THE COLLECTION ACCOUNTS. All
payments received by the Agent, all collection of Receivables received by the
Agent and all proceeds of other Collateral received by the Agent, whether
through payment or otherwise, will be the sole property of the Agent for the
benefit of the Holders of Secured Obligations and will be deemed to be received
by the Agent for application to the Obligations.
ARTICLE III: THE LETTER OF CREDIT FACILITY
3.1 OBLIGATION TO ISSUE. Subject to the terms and conditions of this
Agreement and in reliance upon the representations, warranties and covenants of
the Borrowers herein set forth, each Issuing Bank hereby agrees to issue for the
account of each Borrower through such Issuing Bank's branches as it and the
Borrowers may jointly agree, one or more Letters of Credit denominated in
Dollars in accordance with this ARTICLE III, from time to time during the
period, commencing on the date hereof and ending on the Business Day prior to
the Termination Date.
3.2 TYPES AND AMOUNTS. No Issuing Bank shall have any obligation to and
no Issuing Bank shall:
(i) issue any Letter of Credit if on the date of issuance,
before or after giving effect to the Letter of Credit requested
hereunder, (a) the Revolving Credit Obligations at such time would
exceed the Aggregate Revolving Loan Commitment or the Borrowing Base at
such time, or (b) the aggregate outstanding amount of the L/C
Obligations would exceed $2,000,000; or
(ii) issue any Letter of Credit which has an expiration date
later than the date which is the earlier of one (1) year after the date
of issuance thereof or five (5) Business Days immediately preceding the
Termination Date.
3.3 CONDITIONS. In addition to being subject to the satisfaction of the
conditions contained in SECTIONS 5.1 and 5.2, the obligation of an Issuing Bank
to issue any Letter of Credit is subject to the satisfaction in full of the
following conditions:
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(i) the applicable Borrower shall have delivered to the
applicable Issuing Bank at such times and in such manner as such
Issuing Bank may reasonably prescribe, a request for issuance of such
Letter of Credit in substantially the form of EXHIBIT E hereto, duly
executed applications for such Letter of Credit, and such other
documents, instructions and agreements as may be required pursuant to
the terms thereof, and the proposed Letter of Credit shall be
reasonably satisfactory to such Issuing Bank as to form and content;
and
(ii) as of the date of issuance no order, judgment or decree
of any court, arbitrator or Governmental Authority shall purport by its
terms to enjoin or restrain the applicable Issuing Bank from issuing
such Letter of Credit and no law, rule or regulation applicable to such
Issuing Bank and no request or directive (whether or not having the
force of law) from a Governmental Authority with jurisdiction over such
Issuing Bank shall prohibit or request that such Issuing Bank refrain
from the issuance of Letters of Credit generally or the issuance of
that Letter of Credit.
3.4 PROCEDURE FOR ISSUANCE OF LETTERS OF CREDIT. (a) Subject to the
terms and conditions of this ARTICLE III and provided that the applicable
conditions set forth in SECTIONS 5.1 and 5.2 hereof have been satisfied, the
applicable Issuing Bank shall, on the requested date, issue a Letter of Credit
on behalf of the applicable Borrower in accordance with such Issuing Bank's
usual and customary business practices and, in this connection, such Issuing
Bank may assume that the applicable conditions set forth in SECTION 5.2 hereof
have been satisfied unless it shall have received notice to the contrary from
the Agent or a Lender or has knowledge that the applicable conditions have not
been met.
(b) The applicable Issuing Bank shall give the Agent written or telex
notice, or telephonic notice confirmed promptly thereafter in writing, of the
issuance of a Letter of Credit, PROVIDED, HOWEVER, that the failure to provide
such notice shall not result in any liability on the part of such Issuing Bank.
(c) No Issuing Bank shall extend or amend any Letter of Credit unless
the requirements of this SECTION 3.4 are met as though a new Letter of Credit
was being requested and issued.
3.5 LETTER OF CREDIT PARTICIPATION. Immediately upon the issuance of
each Letter of Credit hereunder, each Lender shall be deemed to have
automatically, irrevocably and unconditionally purchased and received from the
applicable Issuing Bank an undivided interest and participation in and to such
Letter of Credit, the obligations of the applicable Borrower in respect thereof,
and the liability of such Issuing Bank thereunder (collectively, an "L/C
INTEREST" in an amount equal to the amount available for drawing under such
Letter of Credit multiplied by such Lender's Pro Rata Share. Each Issuing Bank
will notify each Lender promptly upon presentation to it of an L/C Draft or upon
any other draw under a Letter of Credit. On or before the Business Day on which
an Issuing Bank makes payment of each such
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L/C Draft or, in the case of any other draw on a Letter of Credit, on demand by
the Agent, each Lender shall make payment to the Agent, for the account of the
applicable Issuing Bank, in immediately available funds in an amount equal to
such Lender's Pro Rata Share of the amount of such payment or draw. The
obligation of each Lender to reimburse the Issuing Banks under this SECTION 3.5
shall be unconditional, continuing, irrevocable and absolute. In the event that
any Lender fails to make payment to the Agent of any amount due under this
SECTION 3.5, the Agent shall be entitled to receive, retain and apply against
such obligation the principal and interest otherwise payable to such Lender
hereunder until the Agent receives such payment from such Lender or such
obligation is otherwise fully satisfied; PROVIDED, HOWEVER, that nothing
contained in this sentence shall relieve such Lender of its obligation to
reimburse the applicable Issuing Bank for such amount in accordance with this
SECTION 3.5.
3.6 REIMBURSEMENT OBLIGATION. Each Borrower jointly and severally
agrees unconditionally, irrevocably and absolutely to pay immediately to the
Agent, for the account of the Lenders, the amount of each advance which may be
drawn under or pursuant to a Letter of Credit or an L/C Draft related thereto
(such obligation of each Borrower to reimburse the Agent for an advance made
under a Letter of Credit or L/C Draft being hereinafter referred to as a
"REIMBURSEMENT OBLIGATION" with respect to such Letter of Credit or L/C Draft).
If any Borrower at any time fails to repay a Reimbursement Obligation pursuant
to this SECTION 3.6, the Borrowers shall be deemed to have elected to borrow
Revolving Loans from the Lenders, as of the date of the advance giving rise to
the Reimbursement Obligation, equal in amount to the amount of the unpaid
Reimbursement Obligation. Such Revolving Loans shall be made as of the date of
the payment giving rise to such Reimbursement Obligation, automatically, without
notice and without any requirement to satisfy the conditions precedent otherwise
applicable to an Advance of Revolving Loans. Such Revolving Loans shall
constitute a Floating Rate Advance, the proceeds of which Advance shall be used
to repay such Reimbursement Obligation. If, for any reason, the Borrowers fail
to repay a Reimbursement Obligation on the day such Reimbursement Obligation
arises and, for any reason, the Lenders are unable to make or have no obligation
to make Revolving Loans, then such Reimbursement Obligation shall bear interest
from and after such day, until paid in full, at the interest rate applicable to
a Floating Rate Advance.
3.7 LETTER OF CREDIT FEES. Each Borrower agrees to pay (i) monthly, in
arrears, to the Agent for the ratable benefit of the Lenders, except as set
forth in SECTION 9.2, a letter of credit fee at a rate per annum equal to the
Applicable L/C Fee Percentage on the average daily outstanding face amount
available for drawing under all Letters of Credit, (ii) monthly, in arrears, to
the Agent for the sole account of each Issuing Bank, a letter of credit fronting
fee of one-eighth of one percent (0.125%) per annum on the average daily
outstanding face amount available for drawing under all Letters of Credit issued
by such Issuing Bank, and (iii) to the Agent for the benefit of each Issuing
Bank, all customary fees and other issuance, amendment, document examination,
negotiation and presentment expenses and related charges in connection with the
issuance, amendment, presentation of L/C Drafts, and the like customarily
charged by such Issuing Banks with respect to standby and commercial Letters of
Credit,
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including, without limitation, standard commissions with respect to commercial
Letters of Credit, payable at the time of invoice of such amounts.
3.8 ISSUING BANK REPORTING REQUIREMENTS. In addition to the notices
required by SECTION 3.4(C), each Issuing Bank shall, no later than the tenth
Business Day following the last day of each month, provide to the Agent, upon
the Agent's request, schedules, in form and substance reasonably satisfactory to
the Agent, showing the date of issue, account party, amount, expiration date and
the reference number of each Letter of Credit issued by it outstanding at any
time during such month and the aggregate amount payable by any Borrower during
such month. In addition, upon the request of the Agent, each Issuing Bank shall
furnish to the Agent copies of any Letter of Credit and any application for or
reimbursement agreement with respect to a Letter of Credit to which the Issuing
Bank is party and such other documentation as may reasonably be requested by the
Agent. Upon the request of any Lender, the Agent will provide to such Lender
information concerning such Letters of Credit.
3.9 INDEMNIFICATION; EXONERATION. (A) In addition to amounts payable as
elsewhere provided in this ARTICLE III, each Borrower hereby agrees to protect,
indemnify, pay and save harmless the Agent, each Issuing Bank and each Lender
from and against any and all liabilities and costs which the Agent, such Issuing
Bank or such Lender may incur or be subject to as a consequence, direct or
indirect, of (i) the issuance of any Letter of Credit other than, in the case of
the applicable Issuing Bank, as a result of its Gross Negligence or willful
misconduct, as determined by the final judgment of a court of competent
jurisdiction, or (ii) the failure of the applicable Issuing Bank to honor a
drawing under a Letter of Credit as a result of any act or omission, whether
rightful or wrongful, of any present or future DE JURE or DE FACTO Governmental
Authority (all such acts or omissions herein called "GOVERNMENTAL ACTS").
(B) As among the Borrowers, the Lenders, the Agent and the Issuing
Banks, the Borrowers assume all risks of the acts and omissions of, or misuse of
such Letter of Credit by, the beneficiary of any Letters of Credit. In
furtherance and not in limitation of the foregoing, subject to the provisions of
the Letter of Credit applications and Letter of Credit reimbursement agreements
executed by any Borrower at the time of request for any Letter of Credit,
neither the Agent, any Issuing Bank nor any Lender shall be responsible (in the
absence of Gross Negligence or willful misconduct in connection therewith, as
determined by the final judgment of a court of competent jurisdiction): (i) for
the form, validity, sufficiency, accuracy, genuineness or legal effect of any
document submitted by any party in connection with the application for and
issuance of the Letters of Credit, even if it should in fact prove to be in any
or all respects invalid, insufficient, inaccurate, fraudulent or forged; (ii)
for the validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign a Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason; (iii) for failure of the beneficiary of a
Letter of Credit to comply duly with conditions required in order to draw upon
such Letter of Credit; (iv) for errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable, telegraph, telex, or
other similar form of teletransmission or otherwise; (v) for errors in
interpretation of technical trade terms; (vi) for
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any loss or delay in the transmission or otherwise of any document required in
order to make a drawing under any Letter of Credit or of the proceeds thereof;
(vii) for the misapplication by the beneficiary of a Letter of Credit of the
proceeds of any drawing under such Letter of Credit; and (viii) for any
consequences arising from causes beyond the control of the Agent, the Issuing
Banks and the Lenders, including, without limitation, any Governmental Acts.
None of the above shall affect, impair, or prevent the vesting of any Issuing
Bank's rights or powers under this SECTION 3.9.
(C) In furtherance and extension and not in limitation of the specific
provisions hereinabove set forth, any action taken or omitted by any Issuing
Bank under or in connection with the Letters of Credit or any related
certificates shall not, in the absence of Gross Negligence or willful
misconduct, as determined by the final judgment of a court of competent
jurisdiction, put the applicable Issuing Bank, the Agent or any Lender under any
resulting liability to any Borrower or relieve any Borrower of any of its
obligations hereunder to any such Person.
(D) Without prejudice to the survival of any other agreement of any
Borrower hereunder, the agreements and obligations of the Borrowers contained in
this SECTION 3.9 shall survive the payment in full of principal and interest
hereunder, the termination of the Letters of Credit and the termination of this
Agreement.
3.10 CASH COLLATERAL. Notwithstanding anything to the contrary herein
or in any application for a Letter of Credit, after the occurrence and during
the continuance of Default, the Borrowers shall, upon the Agent's demand,
deliver to the Agent for the benefit of the Lenders and the Issuing Banks, cash,
or other collateral of a type satisfactory to the Required Lenders, having a
value, as determined by such Lenders, equal to the aggregate outstanding L/C
Obligations. Any such collateral shall be held by the Agent in a separate
account appropriately designated as a cash collateral account in relation to
this Agreement and the Letters of Credit and retained by the Agent for the
benefit of the Lenders and the Issuing Banks as collateral security for each
Borrower's obligations in respect of this Agreement and each of the Letters of
Credit and L/C Drafts. Such amounts shall be applied to reimburse the Issuing
Banks for drawings or payments under or pursuant to Letters of Credit or L/C
Drafts, or if no such reimbursement is required, to payment of such of the other
Obligations as the Agent shall determine. If no Default shall be continuing,
amounts remaining in any cash collateral account established pursuant to this
SECTION 3.10 which are not to be applied to reimburse an Issuing Bank for
amounts actually paid or to be paid by such Issuing Bank in respect of a Letter
of Credit or L/C Draft, shall be returned to the Borrowers (after deduction of
the Agent's expenses incurred in connection with such cash collateral account).
ARTICLE IV: CHANGE IN CIRCUMSTANCES
4.1 YIELD PROTECTION. If any law or any governmental or
quasi-governmental rule, regulation, policy, guideline or directive (whether or
not having the force of law) adopted after
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the date of this Agreement and having general applicability to all banks within
the jurisdiction in which such Lender operates (excluding, for the avoidance of
doubt, the effect of and phasing in of capital requirements or other regulations
or guidelines passed prior to the date of this Agreement), or any interpretation
or application thereof by any Governmental Authority charged with the
interpretation or application thereof, or the compliance of any Lender
therewith,
(i) subjects any Lender or any applicable Lending Installation
to any tax, duty, charge or withholding on or from payments due from
any Borrower (excluding federal taxation of the overall net income of
any Lender or applicable Lending Installation), or changes the basis of
taxation of payments to any Lender in respect of its Loans, its L/C
Interests, the Letters of Credit or other amounts due it hereunder, or
(ii) imposes or increases or deems applicable any reserve,
assessment, insurance charge, special deposit or similar requirement
against assets of, deposits with or for the account of, or credit
extended by, any Lender or any applicable Lending Installation (other
than reserves and assessments taken into account in determining the
interest rate applicable to Eurodollar Rate Loans) with respect to its
Loans, L/C Interests or the Letters of Credit, or
(iii) imposes any other condition the result of which is to
increase the cost to any Lender or any applicable Lending Installation
of making, funding or maintaining the Loans, the L/C Interests or the
Letters of Credit or reduces any amount received by any Lender or any
applicable Lending Installation in connection with Loans or Letters of
Credit, or requires any Lender or any applicable Lending Installation
to make any payment calculated by reference to the amount of Loans or
L/C Interests held or interest received by it or by reference to the
Letters of Credit, by an amount deemed material by such Lender;
and the result of any of the foregoing is to increase the cost to that Lender of
making, renewing or maintaining its Loans, L/C Interests or Letters of Credit or
to reduce any amount received under this Agreement, then, within 15 days after
receipt by the Borrowers of written demand by such Lender pursuant to SECTION
4.5, the Borrowers shall pay such Lender that portion of such increased expense
incurred or reduction in an amount received which such Lender determines is
attributable to making, funding and maintaining its Loans, L/C Interests,
Letters of Credit and its Revolving Loan Commitment.
4.2 CHANGES IN CAPITAL ADEQUACY REGULATIONS. If a Lender determines (i)
the amount of capital required or expected to be maintained by such Lender, any
Lending Installation of such Lender or any corporation controlling such Lender
is increased as a result of a "Change" (as defined below), and (ii) such
increase in capital will result in an increase in the cost to such Lender of
maintaining its Loans, L/C Interests, the Letters of Credit or its obligation to
make Loans hereunder, then, within 15 days after receipt by the Borrowers of
written demand by such Lender pursuant to SECTION 4.5, the Borrowers shall pay
such Lender the amount
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necessary to compensate for any shortfall in the rate of return on the portion
of such increased capital which such Lender determines is attributable to this
Agreement, its Loans, its L/C Interests, the Letters of Credit or its obligation
to make Loans hereunder (after taking into account such Lender's policies as to
capital adequacy). "CHANGE" means (i) any change after the date of this
Agreement in the "Risk-Based Capital Guidelines" (as defined below) excluding,
for the avoidance of doubt, the effect of any phasing in of such Risk-Based
Capital Guidelines or any other capital requirements passed prior to the date
hereof, or (ii) any adoption of or change in any other law, governmental or
quasi-governmental rule, regulation, policy, guideline, interpretation, or
directive (whether or not having the force of law) after the date of this
Agreement and having general applicability to all banks and financial
institutions within the jurisdiction in which such Lender operates which affects
the amount of capital required or expected to be maintained by any Lender or any
Lending Installation or any corporation controlling any Lender. "RISK-BASED
CAPITAL GUIDELINES" means (i) the risk-based capital guidelines in effect in the
United States on the date of this Agreement, including transition rules, and
(ii) the corresponding capital regulations promulgated by regulatory authorities
outside the United States implementing the July 1988 report of the Basle
Committee on Banking Regulation and Supervisory Practices Entitled
"International Convergence of Capital Measurements and Capital Standards,"
including transition rules, and any amendments to such regulations adopted prior
to the date of this Agreement.
4.3 AVAILABILITY OF TYPES OF ADVANCES. If (i) any Lender determines
that maintenance of its Eurodollar Rate Loans at a suitable Lending Installation
would violate any applicable law, rule, regulation or directive, whether or not
having the force of law, or (ii) the Required Lenders determine that (x)
deposits of a type and maturity appropriate to match fund Eurodollar Rate
Advances are not available or (y) the interest rate applicable to a Type of
Advance does not accurately reflect the cost of making or maintaining such an
Advance, then the Agent shall suspend the availability of the affected Type of
Advance and, in the case of any occurrence set forth in clause (i) require any
Advances of the affected Type to be repaid.
4.4 FUNDING INDEMNIFICATION. If any payment of a Eurodollar Rate
Advance occurs on a date which is not the last day of the applicable Interest
Period, whether because of acceleration, prepayment, or otherwise, or a
Eurodollar Rate Advance is not made on the date specified by the applicable
Borrower for any reason other than default by the Lenders, such Borrower
indemnifies each Lender for any loss or cost incurred by it resulting therefrom,
including, without limitation, any loss or cost in liquidating or employing
deposits acquired to fund or maintain the Eurodollar Rate Advance. In connection
with any assignment by any Lender of any portion of the Loans made pursuant to
SECTION 13.3 and made during the Syndication Period, and if, notwithstanding the
provisions of SECTION 2.2, the Borrowers have requested and the Agent has
consented to the use of the Eurodollar Rate, the Borrowers shall be deemed to
have repaid all outstanding Eurodollar Rate Advances as of the effective date of
such assignment and reborrowed such amount as a Floating Rate Advance and/or
Eurodollar Rate Advance (chosen in accordance with the provisions of SECTION
2.2) and the indemnification provisions under this SECTION 4.4 shall apply.
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4.5 LENDER STATEMENTS; SURVIVAL OF INDEMNITY. If reasonably possible,
each Lender shall designate an alternate Lending Installation with respect to
its Eurodollar Rate Loans to reduce any liability of the Borrowers to such
Lender under SECTIONS 4.1 and 4.2 or to avoid the unavailability of a Type of
Advance under SECTION 4.3, so long as such designation is not disadvantageous to
such Lender. Each Lender requiring compensation pursuant to SECTION 2.13(E) or
to this ARTICLE IV shall use its reasonable efforts to notify the Borrowers and
the Agent in writing of any Change, law, policy, rule, guideline or directive
giving rise to such demand for compensation not later than ninety (90) days
following the date upon which the responsible account officer of such Lender
knows or should have known of such Change, law, policy, rule, guideline or
directive. Any demand for compensation pursuant to this ARTICLE IV shall be in
writing and shall state the amount due, if any, under SECTION 4.1, 4.2 or 4.4
and shall set forth in reasonable detail the calculations upon which such Lender
determined such amount. Such written demand shall be rebuttably presumed correct
for all purposes. Determination of amounts payable under such Sections in
connection with a Eurodollar Rate Loan shall be calculated as though each Lender
funded its Eurodollar Rate Loan through the purchase of a deposit of the type
and maturity corresponding to the deposit used as a reference in determining the
Eurodollar Rate applicable to such Loan, whether in fact that is the case or
not. The obligations of the Borrowers under SECTIONS 4.1, 4.2 and 4.4 shall
survive payment of the Obligations and termination of this Agreement.
ARTICLE V: CONDITIONS PRECEDENT
5.1 INITIAL ADVANCES AND LETTERS OF CREDIT. The Lenders shall not be
required to make the initial Loans or issue any Letters of Credit unless the
Borrowers have furnished to the Agent each of the following, with sufficient
copies for the Lenders, all in form and substance satisfactory to the Agent and
the Lenders:
(1) Copies of the Certificates and Articles of Incorporation,
as applicable, of each Borrower, together with all amendments and
certificates of good standing, both certified by the appropriate
governmental officer in its jurisdiction of incorporation;
(2) Copies, certified by the Secretary or Assistant Secretary
of each Borrower, of its respective By-Laws and of its respective Board
of Directors' resolutions (and resolutions of other bodies, if any are
deemed necessary by counsel for any Lender) authorizing the execution
of the Loan Documents;
(3) An incumbency certificate, executed by the Secretary or
Assistant Secretary of each Borrower and their respective Subsidiaries,
which shall identify by name and title and bear the signature of the
officers of each Borrower and their respective Subsidiaries authorized
to sign the Loan Documents and to make borrowings hereunder, upon which
certificate the Lenders shall be entitled to rely until informed of any
change in writing by the applicable Borrower;
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(4) A certificate, in form and substance satisfactory to the
Agent, signed by the chief financial officer of each Borrower, stating
that on Closing Date no Default or Unmatured Default has occurred and
is continuing;
(5) A written opinion of the Borrowers' counsel, addressed to
the Agent and the Lenders, addressing the issues identified in EXHIBIT
G hereto containing assumptions and qualifications acceptable to the
Agent and the Lenders;
(6) Notes payable to the order of each of the applicable
Lenders;
(7) Such other documents as the Agent or any Lender or its
counsel may have reasonably requested, including, without limitation
all of the documents reflected on the List of Closing Documents
attached as EXHIBIT H to this Agreement;
(8) Satisfactory evidence that each Borrower and its
respective Subsidiaries: (a) has made a full and complete assessment of
the Year 2000 Issues; (b) has a realistic and achievable program for
remediating the Year 2000 Issues, including a timetable and budget of
anticipated costs; and (c) has a source of funds as required in the
budget;
(9) Satisfactory evidence that, upon the Closing Date, and
after giving effect to or assuming payment of interest due on the Senior Notes
on June 1, 1998, the Revolving Credit Availability shall equal or exceed
$7,500,000; and
(10) Management letters from each of Holdings and
Louisiana-Pacific Corporation.
(11) Satisfactory evidence that all sums due and payable under
SECTION 10.7(A) and that certain Fee Letter dated as of even date herewith,
between the Agent and Holdings, have been paid.
(12) Satisfactory evidence that (a) the L-P Asset Purchase
Agreement is in full force and effect, no material breach or default of any term
or provision of the L-P Asset Purchase Agreement by Louisiana-Pacific
Corporation, the Borrowers or any of their respective Subsidiaries or, to the
best of Borrowers' knowledge, the other parties thereto has occurred (except for
such defaults, if any, consented to in writing by the Agent) and no action has
been taken by any competent authority which restrains, prevents or imposes any
material adverse condition upon, or seeks to restrain, prevent or impose any
material adverse condition upon, the Louisiana-Pacific Acquisition; (b) the
representations and warranties of each of Louisiana-Pacific Corporation and any
Borrower contained in the L-P Asset Purchase Agreement, if any, are true and
correct in all material respects; (c) all material conditions precedent to, and
all material consents necessary to permit, the Louisiana-Pacific Acquisition
pursuant to the such acquisition's documentation have been satisfied or waived
with the prior written consent of the Agent and the Required Lenders, and the
Louisiana-Pacific Acquisition has been consummated in accordance with the L-P
Asset Purchase Agreement; and (d)
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concurrently with the initial funding of the Loans made under this Agreement the
Louisiana-Pacific Acquisition will be consummated.
(13) a copy of the executed Seller Note.
5.2 EACH ADVANCE AND LETTER OF CREDIT. The Lenders shall not be
required to make any Advance or issue any Letter of Credit, unless on the
applicable Borrowing Date, or in the case of a Letter of Credit, the date on
which the Letter of Credit is to be issued:
(i) There exists no Default or Unmatured Default; and
(ii) The representations and warranties contained in ARTICLE
VI are true and correct as of such Borrowing Date except for changes in
the Schedules to this Agreement reflecting transactions permitted by
this Agreement.
Each Borrowing Notice with respect to each such Advance and the letter
of credit application with respect to a Letter of Credit shall constitute a
representation and warranty by the applicable Borrower that the conditions
contained in SECTIONS 5.2(I) and (II) have been satisfied. Any Lender may
require a duly completed officer's certificate in substantially the form of
EXHIBIT I hereto and/or a duly completed compliance certificate in substantially
the form of EXHIBIT J hereto as a condition to making an Advance.
ARTICLE VI: REPRESENTATIONS AND WARRANTIES
In order to induce the Agent and the Lenders to enter into this
Agreement and to make the Loans and the other financial accommodations to the
Borrowers and to issue the Letters of Credit described herein, each of the
Borrowers represents and warrants as follows to each Lender and the Agent as of
the Closing Date, and thereafter on each date as required by SECTION 5.2:
6.1 ORGANIZATION; CORPORATE POWERS. Each Borrower and each of its
respective Subsidiaries (i) is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization,
(ii) is duly qualified to do business as a foreign corporation and is in good
standing under the laws of each jurisdiction in which failure to be so qualified
and in good standing could not reasonably be expected to have a Material Adverse
Effect, and (iii) has all requisite corporate power and authority to own,
operate and encumber its property and to conduct its business as presently
conducted and as proposed to be conducted.
6.2 AUTHORITY.
(A) Each Borrower has the requisite corporate power and authority to
execute, deliver and perform each of the Loan Documents.
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(B) The execution, delivery and performance of each of the Loan
Documents and the consummation of the transactions contemplated thereby,
including the Louisiana-Pacific Acquisition, have been duly approved by the
respective boards of directors and, if necessary, the shareholders of the
Borrowers, and such approvals have not been rescinded. No other corporate action
or proceedings on the part of the Borrowers are necessary to consummate such
transactions.
(C) Each of the Loan Documents to which each of the Borrowers is a
party has been duly executed and delivered by it and constitutes its legal,
valid and binding obligation, enforceable against it in accordance with its
terms (except as enforceability may be limited by bankruptcy, insolvency, or
similar laws affecting the enforcement of creditors' rights generally), and no
unmatured default, default or breach of any covenant by any such party exists
thereunder.
6.3 NO CONFLICT; GOVERNMENTAL CONSENTS. The execution, delivery and
performance of each of the L-P Asset Purchase Agreement and the Loan Documents
to which each of the Borrowers is a party do not and will not (i) conflict with
the certificate or articles of incorporation or by-laws of each of the
Borrowers, (ii) with respect to the Loan Documents, constitute a tortious
interference with any Contractual Obligation of any Person or conflict with,
result in a breach of or constitute (with or without notice or lapse of time or
both) a default under any Requirement of Law (including, without limitation, any
Environmental Property Transfer Act) or Contractual Obligation of any Borrower,
or require termination of any Contractual Obligation, except such interference,
breach, default or termination which individually or in the aggregate could not
reasonably be expected to have a Material Adverse Effect, (iii) result in or
require the creation or imposition of any Lien whatsoever upon any of the
property or assets of the Borrowers or any such Subsidiary, other than Liens
permitted by the Loan Documents, or (iv) require any approval of any Borrower's
or any of its respective Subsidiary's shareholders except such as have been
obtained. Except as set forth on SCHEDULE 6.3 to this Agreement, the execution,
delivery and performance of each of the Loan Documents to which any of the
Borrowers or their respective Subsidiaries is a party do not and will not
require any registration with, consent or approval of, or notice to, or other
action to, with or by any Governmental Authority, including under any
Environmental Property Transfer Act, except filings, consents or notices which
have been made, obtained or given, or which, if not made, obtained or given,
individually or in the aggregate could not reasonably be expected to have a
Material Adverse Effect.
6.4 FINANCIAL STATEMENTS.
(A) The PRO FORMA financial statements of the Borrowers and their
respective Subsidiaries, copies of which are attached hereto as SCHEDULE 6.4 to
this Agreement, present on a PRO FORMA basis the consolidated financial
condition of the Borrowers and their respective Subsidiaries as of such date,
and reflect on a PRO FORMA basis those liabilities resulting from the
Louisiana-Pacific Acquisition and the other transactions contemplated by this
Agreement, and the payment or accrual of all transaction costs payable on the
Closing Date with respect to any
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of the foregoing. The projections and assumptions expressed in the PRO FORMA
financials referenced in this SECTION 6.4(A) were prepared in good faith and
represent management's opinion based on the information available to the
Borrowers at the time so furnished.
(B) Complete and accurate copies of the following financial statements
and the following related information have been delivered to the Agent: (1) the
consolidated balance sheet of the Borrowers and their respective Subsidiaries as
at December 31, 1997 and the related combined statements of income, changes in
stockholders' equity and cash flows of the Borrowers and their respective
Subsidiaries for the fiscal year then ended, and the audit report related
thereto; and (2) the unaudited balance sheet of the Borrowers and their
respective Subsidiaries for the fiscal period ended March 31, 1998, and the
related statements of operations, changes in stockholder's equity and cash flows
of the Borrowers and their respective Subsidiaries for the fiscal quarter then
ended.
6.5 NO MATERIAL ADVERSE CHANGE. (a) Since March 31, 1998 up to the
Closing Date, there has occurred no change in the business, properties,
condition (financial or otherwise) or results of operations of any Borrower, or
any Borrower and its respective Subsidiaries taken as a whole or any other event
which has had or could reasonably be expected to have a Material Adverse Effect.
(b) Since the Closing Date, there has occurred no change in the
business, properties, condition (financial or otherwise) or results of
operations of any Borrower or any Borrower and its respective Subsidiaries taken
as a whole or any other event which has had or could reasonably be expected to
have a Material Adverse Effect.
6.6 TAXES.
(A) TAX EXAMINATIONS. All deficiencies which have been asserted against
any Borrower or any of its respective Subsidiaries as a result of any federal,
state, local or foreign tax examination for each taxable year in respect of
which an examination has been conducted have been fully paid or finally settled
or are being contested in good faith, and as of the Closing Date no issue has
been raised by any taxing authority in any such examination which, by
application of similar principles, reasonably can be expected to result in
assertion by such taxing authority of a material deficiency for any other year
not so examined which has not been reserved for in the applicable Borrower's
consolidated financial statements to the extent, if any, required by Agreement
Accounting Principles. Except as permitted pursuant to SECTION 7.2(D), no
Borrower nor any of its Subsidiaries anticipates any material tax liability with
respect to the years which have not been closed pursuant to applicable law.
(B) PAYMENT OF TAXES. All tax returns and reports of each Borrower and
its respective Subsidiaries required to be filed have been timely filed, and all
taxes, assessments, fees and other governmental charges thereupon and upon their
respective property, assets, income and franchises which are shown in such
returns or reports to be due and payable have been paid except those items which
are being contested in good faith and have been reserved for in
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accordance with Agreement Accounting Principles. No Borrower has knowledge of
any proposed tax assessment against any Borrower or any of its respective
Subsidiaries that will have or could reasonably be expected to have a Material
Adverse Effect.
6.7 LITIGATION; LOSS CONTINGENCIES AND VIOLATIONS. Except as set forth
in SCHEDULE 6.7 to this Agreement, there is no action, suit, proceeding,
arbitration or (to any Borrower's knowledge) investigation before or by any
Governmental Authority or private arbitrator pending or, to any Borrower's
knowledge, threatened against any Borrower or any of its respective Subsidiaries
or any property of any of them which will have or could reasonably be expected
to have a Material Adverse Effect. There is no material loss contingency within
the meaning of Agreement Accounting Principles which has not been reflected in
the consolidated financial statements of the Borrowers prepared and delivered
pursuant to SECTION 7.1(A) for the fiscal period during which such material loss
contingency was incurred. No Borrower nor any of its respective Subsidiaries is
(A) in violation of any applicable Requirements of Law which violation will have
or could reasonably be expected to have a Material Adverse Effect, or (B)
subject to or in default with respect to any final judgment, writ, injunction,
restraining order or order of any nature, decree, rule or regulation of any
court or Governmental Authority which will have or could reasonably be expected
to have a Material Adverse Effect.
6.8 SUBSIDIARIES. SCHEDULE 6.8 to this Agreement (i) contains a
description of the corporate structure of the Borrowers, their Subsidiaries and
any other Person in which the Borrowers or any of their Subsidiaries holds an
Equity Interest (both narratively and in chart form); and (ii) accurately sets
forth (A) the correct legal name, the jurisdiction of incorporation and the
jurisdictions in which each of the Borrowers and the direct and indirect
Subsidiaries of the Borrowers is qualified to transact business as a foreign
corporation, (B) the authorized, issued and outstanding shares of each class of
Capital Stock of each Borrower and each of its respective Subsidiaries and the
owners of such shares (both as of the Closing Date and on a fully-diluted
basis), and (C) a summary of the direct and indirect partnership, joint venture,
or other Equity Interests, if any, of the Borrowers and the Subsidiaries of the
Borrowers in any Person that is not a corporation. None of the issued and
outstanding Capital Stock of the Borrowers or any of their respective
Subsidiaries is subject to any vesting, redemption, or repurchase agreement, and
there are no warrants or options outstanding with respect to such Capital Stock,
except as disclosed on SCHEDULE 6.8. The outstanding Capital Stock of the
Borrowers and each of their respective Subsidiaries is duly authorized, validly
issued, fully paid and nonassessable and is not Margin Stock. American
Architectural Products Corporation has no Subsidiaries other than Eagle & Taylor
Company, Forte, Inc., Western Insulated Glass, Co., Thermetic Glass, Inc.,
Binnings Building Products, Inc., Danvid Window Company, Modern Window
Acquisition Corporation, American Glassmith Acquisition Corporation,
VinylSource, Inc., Weather-Seal Acquisition Corporation, Eagle Window & Door
Center, Inc., Denver Window Acquisition Corporation, AAPC One Acquisition
Corporation, and AAPC Two Acquisition Corporation.
6.9 ERISA. Except as disclosed on SCHEDULE 6.9, no Benefit Plan has
incurred any accumulated funding deficiency (as defined in Sections 302(a)(2) of
ERISA and 412(a) of the
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Code) whether or not waived. No Borrower nor any member of the Controlled Group
has incurred any liability to the PBGC which remains outstanding other than the
payment of premiums, and there are no premium payments which have become due
which are unpaid. Schedule B to the most recent annual report filed with the IRS
with respect to each Benefit Plan and furnished to the lenders is complete and
accurate. Since the date of each such Schedule B, there has been no material
adverse change in the funding status or financial condition of the Benefit Plan
relating to such Schedule B. No Borrower nor any member of the Controlled Group
has (i) failed to make a required contribution or payment to a Multiemployer
Plan or (ii) made a complete or partial withdrawal under Sections 4203 or 4205
of ERISA from a Multiemployer Plan. No Borrower nor any member of the Controlled
Group has failed to make a required installment or any other required payment
under Section 412 of the Code on or before the due date for such installment or
other payment. No Borrower nor any member of the Controlled Group is required to
provide security to a Benefit Plan under Section 401(a)(29) of the Code due to a
Plan amendment that results in an increase in current liability for the plan
year. No Borrower nor any of its respective Subsidiaries maintains or
contributes to any employee welfare benefit plan within the meaning of Section
3(1) of ERISA which provides benefits to employees after termination of
employment other than as required by Section 601 of ERISA. Each Plan which is
intended to be qualified under Section 401(a) of the Code as currently in effect
is so qualified, and each trust related to any such Plan is exempt from federal
income tax under Section 501(a) of the Code as currently in effect. Each
Borrower and all of its respective Subsidiaries are in compliance in all
material respects with the responsibilities, obligations and duties imposed on
them by ERISA and the Code with respect to all Plans. No Borrower nor any of its
respective Subsidiaries nor any fiduciary of any Plan has engaged in a nonexempt
prohibited transaction described in Sections 406 of ERISA or 4975 of the Code
which could reasonably be expected to subject any Borrower to liability in
excess of $2,000,000. No Borrower nor any member of the Controlled Group has
taken or failed to take any action which would constitute or result in a
Termination Event, which action or inaction could reasonably be expected to
subject any Borrower to liability in excess of $2,000,000. No Borrower nor any
of its respective Subsidiaries is subject to any liability under Sections 4063,
4064, 4069, 4204 or 4212(c) of ERISA and no other member of the Controlled Group
is subject to any liability under Sections 4063, 4064, 4069, 4204 or 4212(c) of
ERISA which could reasonably be expected to subject the Borrower to liability in
excess of $1,000,000. No Borrower nor any of its respective Subsidiaries has, by
reason of the transactions contemplated hereby, any obligation to make any
payment to any employee pursuant to any Plan or existing contract or
arrangement.
6.10 ACCURACY OF INFORMATION. The information, exhibits and reports
furnished by or on behalf of the Borrowers and any of their Subsidiaries to the
Agent or to any Lender in connection with the negotiation of, or compliance
with, the Loan Documents, the representations and warranties of the Borrowers
and their Subsidiaries contained in the Loan Documents, and all certificates and
documents delivered to the Agent and the Lenders pursuant to the terms thereof,
taken as a whole, do not contain as of the date furnished any untrue statement
of a material fact or omit to state a material fact necessary in order to make
the
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statements contained herein or therein, in light of the circumstances under
which they were made, not misleading.
6.11 SECURITIES ACTIVITIES. No Borrower nor any of its respective
Subsidiaries is engaged in the business of extending credit for the purpose of
purchasing or carrying Margin Stock.
6.12 MATERIAL AGREEMENTS. No Borrower nor any of its respective
Subsidiaries is a party to any Contractual Obligation or subject to any charter
or other corporate restriction which, if complied with or performed in
accordance with its terms, will have or could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. No Borrower nor any
of its respective Subsidiaries has received notice or has knowledge that (i) it
is in default in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any Contractual Obligation
applicable to it, or (ii) any condition exists which, with the giving of notice
or the lapse of time or both, would constitute a default with respect to any
such Contractual Obligation, in each case, except where such default or
defaults, if any, individually or in the aggregate will not have or could not
reasonably be expected to have a Material Adverse Effect.
6.13 COMPLIANCE WITH LAWS. The Borrowers and their Subsidiaries are in
compliance with all Requirements of Law applicable to them and their respective
businesses, in each case where the failure to so comply individually or in the
aggregate could reasonably be expected to have a Material Adverse Effect.
6.14 ASSETS AND PROPERTIES. The Borrowers and each of their
Subsidiaries have good and marketable title to all of their assets and
properties (tangible and intangible, real or personal) owned by them or a valid
leasehold interest in all of their leased assets (except insofar as
marketability may be limited by any laws or regulations of any Governmental
Authority affecting such assets), and all such assets and property are free and
clear of all Liens, except Liens permitted under SECTION 7.3(C). Substantially
all of the assets and properties owned by, leased to or used by the Borrowers
and/or each such Subsidiary of the Borrowers are in adequate operating condition
and repair, ordinary wear and tear excepted. Except for Liens granted to the
Agent for the benefit of the Agent and the Holders of Secured Obligations,
neither this Agreement nor any other Loan Document, nor any transaction
contemplated under any such agreement, will affect any right, title or interest
of the Borrowers or their Subsidiaries in and to any of such assets in a manner
that would have or could reasonably be expected to have a Material Adverse
Effect.
6.15 STATUTORY INDEBTEDNESS RESTRICTIONS. None of the Borrowers nor any
of their Subsidiaries are subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, the Interstate Commerce Act, or the
Investment Company Act of 1940, or any other federal or state statute or
regulation which limits its ability to incur indebtedness or its ability to
consummate the transactions contemplated hereby.
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6.16 INSURANCE. SCHEDULE 6.16 to this Agreement accurately sets forth
as of the Closing Date all insurance policies and programs currently in effect
with respect to the respective properties and assets and business of each
Borrower and its respective Subsidiaries, specifying, for each such policy and
program, (i) the amount thereof, (ii) the risks insured against thereby, (iii)
the name of the insurer and each insured party thereunder, (iv) the policy or
other identification number thereof, (v) the expiration date thereof, (vi) the
annual premium with respect thereto, and (vii) any reserves relating to any
self-insurance program that is in effect. Such insurance policies and programs
reflect coverage that is reasonably consistent with prudent industry practice.
6.17 LABOR MATTERS.
As of the Closing Date, no attempt to organize the employees of any
Borrower, and no labor disputes, strikes or walkouts affecting the operations of
any Borrower or any of its Subsidiaries, is pending, or, to any Borrower's
knowledge, threatened, planned or contemplated.
6.18 ENVIRONMENTAL MATTERS. (A) Except as disclosed on SCHEDULE 6.18 to
this Agreement
(i) the operations of the Borrowers and their respective
Subsidiaries comply in all material respects with Environmental, Health
or Safety Requirements of Law;
(ii) the Borrowers and their respective Subsidiaries have all
permits, licenses or other authorizations required under Environmental,
Health or Safety Requirements of Law and are in material compliance
with such permits;
(iii) none of the Borrowers, nor any of their Subsidiaries,
nor any of their respective present property or operations, or, to the
best of, any Borrower's or any of its respective Subsidiaries'
knowledge, any of their respective past property or operations, are
subject to or the subject of, any investigation known to any Borrower
or any of its respective Subsidiaries, any judicial or administrative
proceeding, order, judgment, decree, settlement or other agreement
respecting: (A) any material violation of Environmental, Health or
Safety Requirements of Law; (B) any remedial action; or (C) any
material claims or liabilities arising from the Release or threatened
Release of a Contaminant into the environment;
(iv) there is not now, nor to the best of any Borrower's or
any of its respective Subsidiaries' knowledge has there ever been on or
in the property of any Borrower or any of its respective Subsidiaries
any landfill, waste pile, underground storage tanks, aboveground
storage tanks, surface impoundment or hazardous waste storage facility
of any kind, any polychlorinated biphenyls (PCBs) used in hydraulic
oils, electric transformers or other equipment, or any asbestos
containing material; and
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(v) no Borrower nor any of its Subsidiaries has any material
Contingent Obligation in connection with any Release or threatened
Release of a Contaminant into the environment.
(B) For purposes of this SECTION 6.18 "material" means any
noncompliance or basis for liability which could reasonably be likely to subject
the Borrowers, jointly and severally, to liability in excess of $2,000,000.
6.19 SOLVENCY. After giving effect to the (i) Loans to be made on the
Closing Date or such other date as Loans requested hereunder are made, (ii) the
Louisiana-Pacific Acquisition and the other transactions contemplated by this
Agreement and (iii) the payment and accrual of all transaction costs with
respect to the foregoing, the Borrowers and their respective Subsidiaries taken
as a whole are Solvent.
6.20 YEAR 2000 ISSUES. Each Borrower and its respective Subsidiaries
has made a full and complete assessment of the Year 2000 Issues and has a
realistic and achievable program for remediating the Year 2000 Issues on a
timely basis. Based on this assessment and program, no Borrower or Subsidiary
reasonably anticipates any material adverse effect on its operations, business
or financial condition as a result of Year 2000 Issues.
ARTICLE VII : COVENANTS
The Borrowers covenant and agree that so long as any Commitments are
outstanding and thereafter until payment in full of all of the Obligations
(other than contingent indemnity obligations), unless the Required Lenders shall
otherwise give prior written consent:
7.1 REPORTING. The Borrowers shall:
(A) FINANCIAL REPORTING. Furnish to the Lenders:
(i) MONTHLY REPORTS. As soon as practicable, and in any event
within twenty (20) days after the end of each calendar month beginning
with the month ending May 31, 1998, the consolidated and consolidating
balance sheets of the Borrowers and their respective Subsidiaries as at
the end of such period and the related consolidated and consolidating
statements of income and cash flows of the Borrowers and their
respective Subsidiaries for such calendar month, certified by the chief
financial officer of Holdings on behalf of the Borrowers as fairly
presenting the consolidated and consolidating financial position of the
Borrowers and their Subsidiaries as at the dates indicated and the
results of their operations and cash flows for the calendar months
indicated in accordance with Agreement Accounting Principles, subject
to normal year end adjustments.
(ii) QUARTERLY REPORTS. As soon as practicable, and in any
event within forty-five (45) days after the end of each fiscal quarter
in each fiscal year, the consolidated
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and consolidating balance sheet of the Borrowers and their respective
Subsidiaries as at the end of such period and the related consolidated
and consolidating statements of income and cash flows of the Borrowers
and their respective Subsidiaries for such fiscal quarter and for the
period from the beginning of the then current fiscal year to the end of
such fiscal quarter, certified by the chief financial officer of
Holdings on behalf of the Borrowers as fairly presenting the
consolidated and consolidating financial position of the Borrowers and
its Subsidiaries as at the dates indicated and the results of their
operations and cash flows for the periods indicated in accordance with
Agreement Accounting Principles, subject to normal year end
adjustments, and in comparative form the corresponding figures from the
consolidated financial budget for the current fiscal year delivered
pursuant to SECTION 7.1(A)(v).
(iii) ANNUAL REPORTS. As soon as practicable, and in any event
within ninety (90) days after the end of each fiscal year, (a) the
consolidated balance sheet of the Borrowers and their respective
Subsidiaries as at the end of such fiscal year and the related
consolidated statements of income, stockholders' equity and cash flows
of the Borrowers and their respective Subsidiaries for such fiscal
year, and in comparative form the corresponding figures for the
previous fiscal year along with consolidating schedules in form and
substance sufficient to calculate the financial covenants set forth in
SECTION 7.4, (b) a schedule from each Borrower setting forth for each
item in CLAUSE (A) hereof, the corresponding figures from the
consolidated financial budget for the current fiscal year delivered
pursuant to SECTION 7.1(A)(v), (c) an audit report on the items listed
in CLAUSE (A) hereof of independent certified public accountants of
recognized national standing, which audit report shall be unqualified
and shall state that such financial statements fairly present the
consolidated and consolidating financial position of each of the
Borrowers and their respective Subsidiaries as at the dates indicated
and the results of their operations and cash flows for the periods
indicated in conformity with Agreement Accounting Principles and that
the examination by such accountants in connection with such
consolidated and consolidating financial statements has been made in
accordance with generally accepted auditing standards and (d)
management letters from Holdings. The deliveries made pursuant to this
CLAUSE (iii) shall be accompanied, within one-hundred twenty (120) days
after the end of each fiscal year by (x) any management letter prepared
by the above-referenced accountants, and (y) a certificate of such
accountants that, in the course of their examination necessary for
their certification of the foregoing, they have obtained no knowledge
of any Default or Unmatured Default, or if, in the opinion of such
accountants, any Default or Unmatured Default shall exist, stating the
nature and status thereof.
(iv) OFFICER'S CERTIFICATE. Together with each delivery of any
financial statement (a) pursuant to CLAUSES (i), (ii) and (iii) of this
SECTION 7.1(A), an Officer's Certificate of the Borrower, substantially
in the form of EXHIBIT I attached hereto and made a part hereof,
stating that no Default or Unmatured Default exists, or if any Default
or Unmatured Default exists, stating the nature and status thereof and
(b) pursuant to CLAUSES (ii) and (iii) of this SECTION 7.1(A), a
compliance certificate,
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substantially in the form of EXHIBIT J attached hereto and made a part
hereof, signed by the applicable Borrower's Chief Financial Officer or
Treasurer, setting forth calculations for the period then ended for
SECTION 2.3(B), if applicable, which demonstrate compliance, when
applicable, with the provisions of SECTION 7.4.
(v) As soon as practicable, and in any event within fifteen
(15) days after the close of each calendar month, a Borrowing Base
Certificate, together with such supporting documents as the Agent deems
desirable, all certified as being true and correct by the chief
financial officer of Holdings. The Borrowers will update the status of
accounts receivable in the Borrowing Base at least once each week. The
Borrowers may update the Borrowing Base Certificate and supporting
documents more frequently than monthly and the most recently delivered
Borrowing Base Certificate shall be the applicable Borrowing Base
Certificate for purposes of determining the Borrowing Base at any time;
(vi) BUDGETS; BUSINESS PLANS; FINANCIAL PROJECTIONS. As soon
as practicable and in any event not later than thirty (30) days prior
to the beginning of each fiscal year, a copy of the plan and forecast
(including a projected balance sheet, income statement and a statement
of cash flow) of each Borrower and its respective Subsidiaries for the
upcoming fiscal year on a monthly basis and for the succeeding fiscal
year in its entirety prepared in such detail as shall be reasonably
satisfactory to the Agent.
(B) NOTICE OF DEFAULT. Promptly upon any of the chief executive
officer, chief operating officer, chief financial officer, treasurer or
controller of any Borrower obtaining knowledge (i) of any condition or event
which constitutes a Default or Unmatured Default, or becoming aware that any
Lender or Agent has given any written notice with respect to a claimed Default
or Unmatured Default under this Agreement, or (ii) that any Person has given any
written notice to any Borrower or any Subsidiary of any Borrower or taken any
other action with respect to a claimed default or event or condition of the type
referred to in SECTION 8.1(E), deliver to the Agent and the Lenders an Officer's
Certificate specifying (a) the nature and period of existence of any such
claimed default, Default, Unmatured Default, condition or event, (b) the notice
given or action taken by such Person in connection therewith, and (c) what
action the Borrowers have taken, are taking and propose to take with respect
thereto.
(C) LAWSUITS. (i) Promptly upon any Borrower obtaining knowledge of the
institution of, or written threat of, any action, suit, proceeding, governmental
investigation or arbitration against or affecting any Borrower or any of its
respective Subsidiaries or any property of any Borrower or any of its respective
Subsidiaries not previously disclosed pursuant to SECTION 6.7, which action,
suit, proceeding, governmental investigation or arbitration exposes, or in the
case of multiple actions, suits, proceedings, governmental investigations or
arbitrations arising out of the same general allegations or circumstances which
expose, in any Borrower's reasonable judgment, the Borrowers or any of its
respective Subsidiaries to liability in an amount aggregating $2,000,000 or more
(exclusive of claims covered by insurance policies of the Borrowers or any of
its respective Subsidiaries unless the insurers of such claims have
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disclaimed coverage or reserved the right to disclaim coverage on such claims
and exclusive of claims covered by the indemnity of a financially responsible
indemnitor in favor of the Borrowers or any of its respective Subsidiaries
unless the indemnitor has disclaimed or reserved the right to disclaim coverage
thereof), give written notice thereof to the Agent and the Lenders and provide
such other information as may be reasonably available to enable each Lender and
the Agent and its counsel to evaluate such matters; and (ii) in addition to the
requirements set forth in CLAUSE (i) of this SECTION 7.1(C), upon request of the
Agent or the Required Lenders, promptly give written notice of the status of any
action, suit, proceeding, governmental investigation or arbitration covered by a
report delivered pursuant to CLAUSE (i) above and provide such other information
as may be reasonably available to it that would not violate any attorney-client
privilege by disclosure to the Lenders to enable each Lender and the Agent and
its counsel to evaluate such matters.
(D) ERISA NOTICES. Deliver or cause to be delivered to the Agent and
the Lenders, at the Borrowers' expense, the following information and notices as
soon as reasonably possible, and in any event:
(i) (a) within ten (10) Business Days after any Borrower
obtains knowledge that a Termination Event has occurred, a written
statement of the chief financial officer of such Borrower describing
such Termination Event and the action, if any, which such Borrower has
taken, is taking or proposes to take with respect thereto, and when
known, any action taken or threatened by the IRS, DOL or PBGC with
respect thereto and (b) within ten (10) Business Days after any member
of the Controlled Group obtains knowledge that a Termination Event has
occurred which could reasonably be expected to subject the Borrowers to
liability, individually or in the aggregate, in excess of $2,000,000, a
written statement of the chief financial officer of a Borrower
describing such Termination Event and the action, if any, which the
member of the Controlled Group has taken, is taking or proposes to take
with respect thereto, and when known, any action taken or threatened by
the IRS, DOL or PBGC with respect thereto;
(ii) within ten (10) Business Days after any Borrower or any
of its Subsidiaries obtains knowledge that a prohibited transaction
(defined in Sections 406 of ERISA and Section 4975 of the Code) has
occurred, a statement of the chief financial officer of such Borrower
describing such transaction and the action which such Borrower or such
Subsidiary has taken, is taking or proposes to take with respect
thereto;
(iii) within ten (10) Business Days after the material
increase in the benefits of any existing Plan or the establishment of
any new Benefit Plan or the commencement of, or obligation to commence,
contributions to any Benefit Plan or Multiemployer Plan to which any
Borrower, any of their Subsidiaries, or any member of the Controlled
Group was not previously contributing, notification of such increase,
establishment, commencement or obligation to commence and the amount of
such contributions;
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(iv) within ten (10) Business Days after any Borrower or any
of its Subsidiaries receives notice of any unfavorable determination
letter from the IRS regarding the qualification of a Plan under Section
401(a) of the Code, copies of each such letter;
(v) within ten (10) Business Days after the establishment of
any foreign employee benefit plan or the commencement of, or obligation
to commence, contributions to any foreign employee benefit plan to
which any Borrower or any of its Subsidiaries was not previously
contributing, notification of such establishment, commencement or
obligation to commence and the amount of such contributions;
(vi) within ten (10) Business Days after the filing thereof
with the DOL, IRS or PBGC, copies of each annual report (form 5500
series), including Schedule B thereto, filed with respect to each
Benefit Plan;
(vii) within ten (10) Business Days after receipt by any
Borrower or any member of the Controlled Group of each actuarial report
for any Benefit Plan or Multiemployer Plan and each annual report for
any Multiemployer Plan, copies of each such report;
(viii) within ten (10) Business Days after the filing thereof
with the IRS, a copy of each funding waiver request filed with respect
to any Benefit Plan and all communications received by any Borrower,
any of Borrower's Subsidiaries, or a member of the Controlled Group
with respect to such request;
(ix) within ten (10) Business Days after receipt by any
Borrower or any member of the Controlled Group of the PBGC's intention
to terminate a Benefit Plan or to have a trustee appointed to
administer a Benefit Plan, copies of each such notice;
(x) within ten (10) Business Days after receipt by any
Borrower, any of Borrower's Subsidiaries, or any member of the
Controlled Group of a notice from a Multiemployer Plan regarding the
imposition of withdrawal liability, copies of each such notice;
(xi) within ten (10) Business Days after any Borrower, any of
Borrower's Subsidiaries, or any member of the Controlled Group fails to
make a required installment or any other required payment under Section
412 of the Code on or before the due date for such installment or
payment, a notification of such failure; and
(xii) within ten (10) Business Days after any Borrower, any of
Borrower's Subsidiaries, or any member of the Controlled Group knows or
has reason to know 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.
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For purposes of this SECTION 7.1(D), the Borrowers, any of their Subsidiaries
and any member of the Controlled Group shall be deemed to know all facts known
by the Administrator of any Plan of which any Borrower or any member of the
Controlled Group or such Subsidiary is the plan sponsor.
(E) LABOR MATTERS. Notify the Agent and the Lenders in writing,
promptly upon any Borrower's learning thereof, of (i) any material labor dispute
to which any Borrower or any of its respective Subsidiaries may become a party,
including, without limitation, any strikes, lockouts or other disputes relating
to such Persons' plants and other facilities and (ii) any Worker Adjustment and
Retraining Notification Act liability incurred with respect to the closing of
any plant or other facility of any Borrower or any of its respective
Subsidiaries.
(F) OTHER INDEBTEDNESS. Deliver to the Agent (i) a copy of each regular
report, notice or communication regarding potential or actual defaults
(including any accompanying officer's certificate) delivered by or on behalf of
any Borrower or its respective Subsidiaries to the holders of funded
Indebtedness pursuant to the terms of the agreements governing such
Indebtedness, such delivery to be made at the same time and by the same means as
such notice or other communication is delivered to such holders, and (ii) a copy
of each notice or other communication received by any Borrower or its respective
Subsidiaries from the from the holders of funded Indebtedness pursuant to the
terms of such Indebtedness, such delivery to be made promptly after such notice
or other communication is received by any Borrower or its respective
Subsidiaries.
(G) OTHER REPORTS. Deliver or cause to be delivered to the Agent and
the Lenders copies of all financial statements, reports and notices, if any,
sent or made available generally by any Borrower or its respective Subsidiaries
to their securities holders or filed with the Commission by any Borrower or its
respective Subsidiaries, all press releases made available generally by any
Borrower or its respective Subsidiaries to the public concerning material
developments in the business of any Borrower or any such Subsidiary and all
notifications received from the Commission by any Borrower or its respective
Subsidiaries pursuant to the Securities Exchange Act of 1934 and the rules
promulgated thereunder; PROVIDED, HOWEVER, that no Borrower shall be required to
provide copies of routine correspondence with the Commission regarding filings
under the Securities Act of 1933 or any comments of the Commission with respect
thereto or responses to any such comments.
(H) ENVIRONMENTAL NOTICES. As soon as possible and in any event within
ten (10) days after receipt by any Borrower, a copy of (i) any notice or claim
to the effect that any Borrower or any of its Subsidiaries is or may be liable
to any Person as a result of the Release by any Borrower, any of its
Subsidiaries, or any other Person of any Contaminant into the environment, and
(ii) any notice alleging any violation of any Environmental, Health or Safety
Requirements of Law by any Borrower or any of its Subsidiaries if, in either
case, such notice or claim relates to an event which could reasonably be
expected to subject any Borrower or its Subsidiaries to liability, individually
or in the aggregate, in excess of $2,000,000.
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(I) Each Borrower and its respective Subsidiaries will take all actions
reasonably necessary to assure that the Year 2000 Issues will not have a
Material Adverse Effect on the business operations or financial condition of any
Borrower or its respective Subsidiaries. Each Borrower and its respective
Subsidiaries will provide the Lenders with a copy of its Year 2000 program,
including updates and progress reports upon request. Each Borrower and its
respective Subsidiaries will advise the Lenders of any reasonably anticipated
Material Adverse Effect as a result of Year 2000 Issues.
(J) OTHER INFORMATION. Promptly upon receiving a request therefor from
the Agent, prepare and deliver to the Agent and the Lenders such other
information with respect to any Borrower, any of its Subsidiaries, or the
Collateral, including, without limitation, schedules identifying and describing
the Collateral and any dispositions thereof or any Asset Sale or Financing (and
the use of the Net Cash Proceeds thereof), as from time to time may be
reasonably requested by the Agent.
7.2 AFFIRMATIVE COVENANTS.
(A) CORPORATE EXISTENCE, ETC. The Borrowers shall, and shall cause each
of their Subsidiaries to, at all times maintain their corporate existence and
preserve and keep, or cause to be preserved and kept, in full force and effect
their rights and franchises material to their businesses.
(B) CORPORATE POWERS; CONDUCT OF BUSINESS. The Borrowers shall, and
shall cause each of their Subsidiaries to, qualify and remain qualified to do
business in each jurisdiction in which the nature of their business requires
them to be so qualified and where the failure to be so qualified will have or
could reasonably be expected to have a Material Adverse Effect. The Borrowers
will, and will cause each Subsidiary to, carry on and conduct their businesses
in substantially the same manner and in substantially the same fields of
enterprise as they are presently conducted.
(C) COMPLIANCE WITH LAWS, ETC. The Borrowers shall, and shall cause
their Subsidiaries to, (a) comply with all Requirements of Law and all
restrictive covenants affecting such Person or the business, properties, assets
or operations of such Person, and (b) obtain as needed all Permits necessary for
their operations and maintain such Permits in good standing unless failure to
comply or obtain could not reasonably be expected to have a Material Adverse
Effect.
(D) PAYMENT OF TAXES AND CLAIMS; TAX CONSOLIDATION. The Borrowers shall
pay, and cause each of their Subsidiaries to pay, (i) all taxes, assessments and
other governmental charges imposed upon them or on any of their properties or
assets or in respect of any of their franchises, business, income or property
before any penalty or interest accrues thereon, and (ii) all claims (including,
without limitation, claims for labor, services, materials and supplies) for sums
which have become due and payable and which by law have or may become a Lien
(other than a Lien permitted by SECTION 7.3(C)) upon any Borrower's or any
Subsidiary's
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property or assets, prior to the time when any penalty or fine shall be incurred
with respect thereto; PROVIDED, HOWEVER, that no such taxes, assessments and
governmental charges referred to in CLAUSE (i) above or claims referred to in
CLAUSE (ii) above (and interest, penalties or fines relating thereto) need be
paid if being contested in good faith by appropriate proceedings diligently
instituted and conducted and if such reserve or other appropriate provision, if
any, as shall be required in conformity with Agreement Accounting Principles
shall have been made therefor.
(E) INSURANCE. The Borrowers shall maintain for themselves and their
Subsidiaries, or shall cause each of their Subsidiaries to maintain in full
force and effect, the insurance policies and programs listed on SCHEDULE 6.16 to
this Agreement or substantially similar policies and programs or other policies
and programs as reflect coverage that is reasonably consistent with prudent
industry practice. The Borrowers shall deliver to the Agent endorsements (x) to
all "All Risk" physical damage insurance policies on all of the Borrowers'
tangible real and personal property and assets and business interruption
insurance policies naming the Agent loss payee, and (y) to all general liability
and other liability policies naming the Agent an additional insured. In the
event the Borrowers or any of their Subsidiaries at any time or times hereafter
shall fail to obtain or maintain any of the policies or insurance required
herein or to pay any premium in whole or in part relating thereto, then the
Agent, without waiving or releasing any obligations or resulting Default
hereunder, may at any time or times thereafter (but shall be under no obligation
to do so) obtain and maintain such policies of insurance and pay such premiums
and take any other action with respect thereto which the Agent deems advisable.
All sums so disbursed by the Agent shall constitute part of the Obligations,
payable as provided in this Agreement.
(F) INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS. The
Borrowers shall permit and cause each of their Subsidiaries to permit, any
authorized representative(s) designated by either the Agent or any Lender to
visit and inspect any of the properties of the Borrowers or any of their
Subsidiaries, to examine, audit, check and make copies of their respective
financial and accounting records, books, journals, orders, receipts and any
correspondence and other data relating to their respective businesses or the
transactions contemplated hereby (including, without limitation, in connection
with environmental compliance, hazard or liability), and to discuss their
affairs, finances and accounts with their officers and independent certified
public accountants, all upon reasonable notice and at such reasonable times
during normal business hours, as often as may be reasonably requested. The
Borrowers shall keep and maintain, and cause each of their Subsidiaries to keep
and maintain, in all material respects, proper books of record and account in
which entries in conformity with Agreement Accounting Principles shall be made
of all dealings and transactions in relation to their respective businesses and
activities. If a Default has occurred and is continuing, the Borrowers, upon the
Agent's request, shall turn over any such records to the Agent or its
representatives.
(G) ERISA COMPLIANCE. The Borrowers shall, and shall cause each of
their Subsidiaries to, establish, maintain and operate all Plans to comply in
all material respects with
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the provisions of ERISA, the Code, all other applicable laws, and the
regulations and interpretations thereunder and the respective requirements of
the governing documents for such Plans.
(H) MAINTENANCE OF PROPERTY. The Borrowers shall cause all property
used or useful in the conduct of their businesses or the businesses of any of
their Subsidiaries to be maintained and kept in good condition, repair and
working order and supplied with all necessary equipment and shall cause to be
made all necessary repairs, renewals, replacements, betterments and improvements
thereof, all as in the judgment of the Borrowers may be necessary so that the
businesses carried on in connection therewith may be properly and advantageously
conducted at all times; PROVIDED, HOWEVER, that nothing in this SECTION 7.2(H)
shall prevent the Borrowers from discontinuing the operation or maintenance of
any of such property if such discontinuance is, in the judgment of the
Borrowers, desirable in the conduct of their businesses or the businesses of any
of their Subsidiaries and not disadvantageous in any material respect to the
Agent or the Lenders.
(I) ENVIRONMENTAL COMPLIANCE. The Borrowers and their Subsidiaries
shall comply with all Environmental, Health or Safety Requirements of Law,
except where noncompliance will not have or is not reasonably likely to subject
the Borrowers to liability, individually or in the aggregate, in excess of
$1,000,000.
(J) USE OF PROCEEDS. The Borrowers shall use the proceeds of the
Revolving Loans to (i) finance the Louisiana-Pacific Acquisition, (ii) repay
existing Indebtedness, and (iii) provide funds for the additional working
capital needs and other general corporate purposes of the Borrowers. The
Borrowers will not, nor will they permit any Subsidiaries to, use any of the
proceeds of the Loans to purchase or carry any Margin Stock or to make any
Acquisition, other than a Permitted Acquisition pursuant to SECTION 7.3(G).
(K) MAINTENANCE OF INTELLECTUAL PROPERTY. The Borrowers shall exercise
commercially reasonable efforts to preserve, protect and, if appropriate, file
applications with the United States Patent and Trademark Office, to register its
existing and future material U.S. trademarks or to seek U.S. patent protection.
7.3 NEGATIVE COVENANTS.
(A) INDEBTEDNESS. None of the Borrowers nor any of their respective
Subsidiaries shall directly or indirectly create, incur, assume or otherwise
become or remain directly or indirectly liable with respect to any Indebtedness,
except:
(i) the Obligations;
(ii) Indebtedness evidenced by the Senior Notes;
(iii) Permitted Existing Indebtedness and Permitted
Refinancing Indebtedness;
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(iv) Indebtedness in respect of obligations secured by
Customary Permitted Liens;
(v) Indebtedness constituting Contingent Obligations permitted
by SECTION 7.3(E);
(vi) Indebtedness owed to the Lenders in respect of Hedging
Obligations permitted under SECTION 7.3(Q);
(vii) secured or unsecured purchase money Indebtedness
(including Capitalized Leases) incurred by any Borrower or any of its
respective Subsidiaries after the Closing Date to finance the
acquisition of fixed assets, if (1) at the time of such incurrence, no
Default or Unmatured Default has occurred and is continuing or would
result from such incurrence, (2) such Indebtedness has a scheduled
maturity and is not due on demand, (3) such Indebtedness does not
exceed the lower of the fair market value or the cost of the applicable
fixed assets on the date acquired, (4) such Indebtedness does not
exceed $5,000,000 in the aggregate outstanding at any time, and (5) any
Lien securing such Indebtedness is permitted under SECTION 7.3(C) (such
Indebtedness being referred to herein as "PERMITTED PURCHASE MONEY
INDEBTEDNESS");
(viii) Indebtedness (a) in respect of performance bonds and
surety or appeal bonds provided by any Borrower or any of its
Subsidiaries to their customers in the ordinary course of their
business, (b) in respect of performance bonds or similar obligations of
any Borrower or any of its Subsidiaries for or in connection with or to
secure statutory, regulatory or similar obligations, including
obligations under health, safety or environmental obligations and (c)
arising from guarantees to suppliers, lessors, licensees, contractors,
franchises or customers of obligations (other than Indebtedness)
incurred in the ordinary course of business;
(ix) Indebtedness permitted under Section 7.3(G)(vii);
(x) Indebtedness of any Borrower owing to and held by any
other Borrower;
(xi) Indebtedness arising from agreements providing for
indemnification, adjustment of purchase price or similar obligations,
or from guarantees or letters of credit, surety bonds or performance
bonds securing any obligations of any Borrower pursuant to such
agreement, in each case incurred in connection with the disposition of
any business assets of any Borrower (other than a guarantee or other
obligation incurred by a Person acquiring such assets for the purpose
of financing such purchase) in a principal amount not to exceed the
gross proceeds actually received by any Borrower or any of its
Subsidiaries in connection with such disposition; PROVIDED, HOWEVER,
that the principal amount of any Indebtedness incurred pursuant to this
clause, when taken together with all Indebtedness incurred pursuant to
this clause and then outstanding, shall not exceed $2,000,000; and
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(xii) Indebtedness arising from the honoring by a bank or
other financial institution of a check, draft or similar instrument
issued by any Borrower drawn against insufficient funds in the ordinary
course of business in an amount not to exceed $250,000 at any time,
PROVIDED that such Indebtedness is extinguished within two Business
Days of its incurrence.
(B) SALES OF ASSETS. None of the Borrowers nor any of its respective
Subsidiaries shall sell, assign, transfer, lease, convey or otherwise dispose of
any property, whether now owned or hereafter acquired, or any income or profits
therefrom, or enter into any agreement to do so, except:
(i) sales of Inventory in the ordinary course of business;
(ii) the disposition in the ordinary course of business of
equipment that is obsolete, excess or no longer useful in the
Borrowers' or their Subsidiaries' business; and
(iii) sales, assignments, transfers, leases, conveyances or
other dispositions of other assets if such transaction (a) is for
consideration consisting at least 75% of cash, (b) is for not less than
fair market value, and (c) when combined with all such other
transactions (each such transaction being valued at book value) (i)
during the immediately preceding twelve-month period, represents the
disposition of not greater than ten percent (10%) of each Borrower's
Consolidated Assets at the end of the fiscal year immediately preceding
that in which such transaction is proposed to be entered into, and (ii)
during the period from the Closing Date to the date of such proposed
transaction, represents the disposition of not greater than ten percent
(10%) of each Borrower's Consolidated Assets at the end of the fiscal
year immediately preceding that in which such transaction is proposed
to be entered into.
(C) LIENS. None of the Borrowers nor any of their respective
Subsidiaries shall directly or indirectly create, incur, assume or permit to
exist any Lien on or with respect to any of their respective property or assets
except:
(i) Liens securing the Secured Obligations pursuant to the
Collateral Documents;
(ii) Permitted Existing Liens;
(iii) Customary Permitted Liens; and
(iv) purchase money Liens (including the interest of a lessor
under a Capitalized Lease and Liens to which any property is subject at
the time of any Borrower's acquisition thereof) securing Permitted
Purchase Money Indebtedness;
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PROVIDED that such Liens shall not apply to any property of any
Borrower or its respective Subsidiaries other than that purchased or
subject to such Capitalized Lease.
In addition, none of the Borrowers nor any of their respective Subsidiaries
shall become a party to any agreement, note, indenture or other instrument, or
take any other action, which would prohibit the creation of a Lien on any of its
properties or other assets in favor of the Agent for the benefit of itself and
the Lenders, as collateral for the Obligations; PROVIDED that any agreement,
note, indenture or other instrument in connection with Permitted Purchase Money
Indebtedness (including Capitalized Leases) may prohibit the creation of a Lien
in favor of the Agent for the benefit of itself and the Lenders on the items of
property obtained with the proceeds of such Permitted Purchase Money
Indebtedness.
(D) INVESTMENTS. Except to the extent permitted pursuant to PARAGRAPH
(G) below, none of the Borrowers nor any of their respective Subsidiaries shall
directly or indirectly make or own any Investment except:
(i) Investments in Cash Equivalents;
(ii) Permitted Existing Investments in an amount not greater
than the amount thereof on the Closing Date;
(iii) Investments in trade receivables or received in
connection with the bankruptcy or reorganization of suppliers and
customers and in settlement of delinquent obligations of, and other
disputes with, customers and suppliers arising in the ordinary course
of business;
(iv) Investments consisting of deposit accounts maintained by
any Borrower or its respective Subsidiaries;
(v) Investments consisting of non-cash consideration from a
sale, assignment, transfer, lease, conveyance or other disposition of
property permitted by SECTION 7.3(B); and
(vi) Investments constituting Permitted Acquisitions.
PROVIDED, HOWEVER, that the Investments described in CLAUSE (vi) above shall not
be permitted if either a Default or an Unmatured Default shall have occurred and
be continuing on the date thereof or would result therefrom.
(E) CONTINGENT OBLIGATIONS. None of the Borrowers nor any of their
respective Subsidiaries shall directly or indirectly create or become or be
liable with respect to any Contingent Obligation, except: (i) recourse
obligations resulting from endorsement of negotiable instruments for collection
in the ordinary course of business; (ii) obligations, warranties, and
indemnities, not relating to Indebtedness of any Person, which have been or
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are undertaken or made in the ordinary course of business and not for the
benefit of or in favor of an Affiliate of any Borrower or its respective
Subsidiaries; (iii) additional Contingent Obligations which do not exceed
$100,000 in the aggregate at any time; (iv) Contingent Obligations with respect
to surety, appeal and performance bonds obtained by any Borrower or its
respective Subsidiaries in the ordinary course of business; and (v) guarantees
by Subsidiaries of the Senior Notes.
(F) RESTRICTED PAYMENTS. None of the Borrowers nor any of their
respective Subsidiaries shall declare or make any Restricted Payment, except:
(i) the defeasance, redemption or repurchase of any
Indebtedness with the Net Cash Proceeds of Permitted Refinancing
Indebtedness;
(ii) mandatory payments of interest due on the Senior Notes in
accordance with repayment provisions in effect with respect to such
Indebtedness as of the Closing Date;
(iii) regularly scheduled payments of principal or interest on
the Seller Note; and
(iv) the repurchase of any Capital Stock in any Borrower with
the proceeds of the issuance of an Equity Interest in any Borrower.
PROVIDED, HOWEVER, that the Restricted Payments described in CLAUSES (ii) AND
(iii) above shall not be permitted if either a Default or an Unmatured Default
shall have occurred and be continuing at the date of declaration or payment
thereof or would result therefrom.
(G) CONDUCT OF BUSINESS; SUBSIDIARIES; ACQUISITIONS. None of the
Borrowers nor any of their respective Subsidiaries shall engage in any business
other than the businesses engaged in by the Borrowers on the date hereof and any
businesses or activities which are substantially similar, related or incidental
thereto. The Borrowers shall not make any Acquisitions unless such Acquisitions
meet the following requirements (each such Acquisition constituting a "PERMITTED
ACQUISITION"):
(i) no Default or Unmatured Default shall have occurred and be
continuing or would result from such Acquisition or the incurrence of
any Indebtedness in connection therewith;
(ii) in the case of an Acquisition of Equity Interests of an
entity, such Acquisition shall be of at least one-hundred percent
(100%) of the Equity Interests of such entity, and such acquired entity
shall be merged with and into the applicable Borrower immediately
following such Acquisition, with such Borrower being the surviving
corporation following such merger;
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(iii) the businesses being acquired shall be substantially
similar, related or incidental to the businesses or activities engaged
in by the applicable Borrower on the Closing Date;
(iv) prior to each such Acquisition, Holdings or the
applicable Borrower shall deliver to the Agent and the Lenders a
certificate from one of the Authorized Officers, demonstrating to the
satisfaction of the Agent and the Required Lenders that after giving
effect to such Acquisition and the incurrence of any Indebtedness
permitted by SECTION 7.3(A) in connection therewith, on a PRO FORMA
basis using historical audited and reviewed unaudited financial
statements obtained from the seller, broken down by fiscal quarter in
the applicable Borrower's reasonable judgment, as if the Acquisition
and such incurrence of Indebtedness had occurred on the first day of
the twelve-month period ending on the last day of the applicable
Borrower's most recently completed fiscal quarter, the Borrowers would
have been in compliance with the financial covenants in SECTION 7.4 and
not otherwise in Default. Holdings or the applicable Borrower also
shall provide projections indicating that the Borrowers will be in
compliance with the financial covenants in SECTION 7.4 from the date of
closing of such Acquisition through the first anniversary of the date
of the closing of such Acquisition;
(v) any business being acquired shall maintain its primary
operations and substantially all of its assets in the United States of
America;
(vi) concurrently with the closing of each such Acquisition,
the Lenders shall receive a first-priority perfected Lien against
substantially all of the assets of the entity to be acquired and, if
applicable, against all of the assets or stock of any Subsidiary formed
solely to acquire such entity;
(vii) no Indebtedness other than Obligations shall be incurred
or assumed in connection with any such Acquisition unless such
Indebtedness (a) is unsecured and subordinated to all Obligations to
the Lenders on terms (including the interest rate, subordination
provisions, blockage and standstill periods, covenants, defaults and
remedies) which are satisfactory to the Agent and (b) does not exceed
$5,000,000 in connection with any single Acquisition or $10,000,000 in
the aggregate for all such Acquisitions (excluding the
Louisiana-Pacific Acquisition);
(viii) immediately prior to and immediately after any such
Acquisition, the Revolving Credit Availability shall equal or exceed
$10,000,000;
(ix) the purchase price for any Acquisition (including any
assumption of debt) shall not exceed $15,000,000; and
(x) the entity to be acquired shall not have incurred an
operating loss (on a proforma basis) within the twelve (12) months
preceding the date of closing of the Acquisition.
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If any such Acquisition is to be effected using the proceeds of Loans made by
the Lenders to one or more of the Borrowers under this Agreement, then Holdings
shall notify the Agent of such prospective Acquisition in writing not less than
45 days prior to the date of the closing of such Acquisition, and such
Acquisition shall be a Permitted Acquisition only if the Required Lenders shall
have consented to and approved of such Acquisition. The Louisiana-Pacific
Acquisition is a Permitted Acquisition.
(H) TRANSACTIONS WITH SHAREHOLDERS AND AFFILIATES. Except for the
transactions listed on SCHEDULE 7.3, none of the Borrowers nor any of their
respective Subsidiaries shall directly or indirectly enter into or permit to
exist any transaction (including, without limitation, the purchase, sale, lease
or exchange of any property or the rendering of any service) with any holder or
holders of any of the Equity Interests of any Borrower, or with any Affiliate of
any Borrower which is not its Subsidiary, on terms that are less favorable to
such Borrower or any of its Subsidiaries, as applicable, than those that might
be obtained in an arm's length transaction at the time from Persons who are not
such a holder or Affiliate, except for Restricted Payments permitted by SECTION
7.3(F).
(I) RESTRICTION ON FUNDAMENTAL CHANGES. None of the Borrowers nor any
of their respective Subsidiaries shall enter into any merger or consolidation,
or liquidate, wind-up or dissolve (or suffer any liquidation or dissolution), or
convey, lease, sell, transfer or otherwise dispose of, in one transaction or
series of transactions, all or substantially all of any Borrower's or its
respective Subsidiary's business or property, whether now or hereafter acquired,
except transactions permitted under SECTIONS 7.3(B) or 7.3(G).
(J) SALES AND LEASEBACKS. None of the Borrowers nor any of their
respective Subsidiaries shall become liable, directly, by assumption or by
Contingent Obligation, with respect to any lease, whether an operating lease or
a Capitalized Lease, of any property (whether real or personal or mixed) (i)
which they or one of their respective Subsidiaries sold or transferred or is to
sell or transfer to any other Person, or (ii) which they or one of their
respective Subsidiaries intends to use for substantially the same purposes as
any other property which has been or is to be sold or transferred by them or one
of their respective Subsidiaries to any other Person in connection with such
lease, unless in either case the sale involved is not prohibited under SECTION
7.3(B) and the lease involved is not prohibited under SECTION 7.3(A).
(K) MARGIN REGULATIONS. None of the Borrowers nor any of their
respective Subsidiaries shall use all or any portion of the proceeds of any
credit extended under this Agreement to purchase or carry Margin Stock.
(L) ERISA. The Borrowers shall not
(i) engage, or permit any of their Subsidiaries to engage, in
any prohibited transaction described in Sections 406 of ERISA or 4975
of the Code for which a statutory or class exemption is not available
or a private exemption has not been previously obtained from the DOL;
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(ii) permit to exist any accumulated funding deficiency (as
defined in Sections 302 of ERISA and 412 of the Code), with respect to
any Benefit Plan, whether or not waived;
(iii) fail, or permit any Controlled Group member to fail, to
pay timely required contributions or annual installments due with
respect to any waived funding deficiency to any Benefit Plan;
(iv) terminate, or permit any Controlled Group member to
terminate, any Benefit Plan which would result in any liability of the
Borrower or any Controlled Group member under Title IV of ERISA;
(v) fail to make any contribution or payment to any
Multiemployer Plan which any Borrower or any Controlled Group member
may be required to make under any agreement relating to such
Multiemployer Plan, or any law pertaining thereto;
(vi) fail, or permit any Controlled Group member to fail, to
pay any required installment or any other payment required under
Section 412 of the Code on or before the due date for such installment
or other payment; or
(vii) amend, or permit any Controlled Group member to amend, a
Plan resulting in an increase in current liability for the plan year
such that any Borrower or any Controlled Group member is required to
provide security to such Plan under Section 401(a)(29) of the Code.
(M) CORPORATE DOCUMENTS. None of the Borrowers nor any of their
respective Subsidiaries shall amend, modify or otherwise change any of the terms
or provisions in any of their respective constituent documents as in effect on
the date hereof in any manner adverse to the interests of the Lenders, without
the prior written consent of the Required Lenders.
(N) OTHER INDEBTEDNESS. None of the Borrowers shall amend, supplement
or otherwise modify the terms of any Indebtedness (other than the Obligations)
in any way that would be materially less advantageous to any Borrower or
materially adverse to the Lenders, including, without limitation, with respect
to amount, maturity, amortization, interest rate, premiums, fees, covenants,
events of default, remedies and dividend provisions.
(O) FISCAL YEAR. None of the Borrowers nor any of their consolidated
Subsidiaries shall change their fiscal year for accounting or tax purposes from
a period consisting of the 12-month period ending on the last day of December of
each year.
(P) SUBSIDIARY COVENANTS. The Borrowers will not, and will not permit
any of their respective Subsidiaries to, create or otherwise cause to become
effective any consensual encumbrance or restriction of any kind on the ability
of any Subsidiary to pay dividends or make any other distribution on its stock,
or make any other Restricted Payment, pay any
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Indebtedness or other Obligation owed to any Borrower or any other Subsidiary,
make loans or advances or other Investments in any Borrower or any other
Subsidiary, or sell, transfer or otherwise convey any of its property to any
Borrower or any other Subsidiary.
(Q) HEDGING OBLIGATIONS. The Borrowers shall not and shall not permit
any of their Subsidiaries to enter into any interest rate, commodity or foreign
currency exchange, swap, collar, cap or similar agreements evidencing Hedging
Obligations, other than interest rate, foreign currency or commodity exchange,
swap, collar, cap or similar agreements entered into by the Borrowers pursuant
to which the Borrowers have hedged their actual interest rate, foreign currency
or commodity exposure (such permitted hedging agreements are sometimes referred
to herein as "INTEREST RATE AGREEMENTS").
(R) CHANGE OF DEPOSIT ACCOUNTS. Except to the extent permitted in
SECTION 7.3(D)(iv), no Borrower shall establish or maintain any deposit account
with any bank or other financial institution other than those which have entered
into a Collection Account Agreement in form and substance acceptable to the
Agent.
(S) LIMITATION ON REVOLVING CREDIT AVAILABILITY. The Borrowers shall
not permit the Revolving Credit Availability to be less than Ten Million Dollars
($10,000,000.00) at any time between April 15 and June 1 or between October 15
and December 1 of any year.
7.4 FINANCIAL COVENANTS. The Borrower shall comply with the following:
(A) MINIMUM FIXED CHARGE COVERAGE RATIO. The Borrowers shall maintain a
ratio ("FIXED CHARGE COVERAGE RATIO") of (i) the sum of the amounts of (a)
EBITDA for the applicable period MINUS (b) Capital Expenditures for the
applicable period MINUS (c) cash taxes paid by the Borrowers and their
respective consolidated Subsidiaries during the applicable period to (ii) the
sum of the amounts of (a) Interest Expense for the applicable period PLUS (b)
scheduled amortization of the principal portion of all Indebtedness for borrowed
money of the Borrowers for the applicable period of at least:
(i) 1.15 to 1.00 for each fiscal quarter for the period
commencing with the fiscal quarter ending September 30, 1998 through
the fiscal quarter ending December 31, 1999;
(ii) 1.25 to 1.00 for each fiscal quarter thereafter until the
Termination Date.
In each case, the Fixed Charge Coverage Ratio shall be determined as of the last
day of each fiscal quarter for the four fiscal quarter period ending on such day
(PROVIDED, HOWEVER, for the first three of such calculations made after the date
of this Agreement, such calculations shall be done based upon the period
commencing with June 1, 1998 and ending with the quarterly period then ended).
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(B) MINIMUM CONSOLIDATED NET WORTH. Holdings shall not permit its
Consolidated Net Worth as of September 30, 1998 or at any time thereafter to be
less than the sum of (a) $3,115,045, PLUS (b) one hundred percent (100%) of Net
Income (if positive) for the fiscal quarter ending June 30, 1998 PLUS (c) fifty
percent (50%) of Net Income (if positive) calculated separately for each fiscal
quarter ending after June 30, 1998, PLUS (d) one hundred percent (100%) of the
net cash proceeds resulting from the issuance by any Borrower of any Capital
Stock.
ARTICLE VIII: DEFAULTS
8.1 DEFAULTS. Each of the following occurrences shall constitute a
Default under this Agreement:
(A) FAILURE TO MAKE PAYMENTS WHEN DUE. Any Borrower shall (i) fail to
pay when due any of the Obligations consisting of principal with respect to the
Loans or (ii) shall fail to pay within three (3) Business Days of the date when
due any of the other Obligations under this Agreement or the other Loan
Documents.
(B) BREACH OF CERTAIN COVENANTS. Any Borrower shall fail duly and
punctually to perform or observe any agreement, covenant or obligation binding
on such Borrower under:
(i) SECTION 7.1(C) through and including 7.1(I), 7.2(B) or
7.2(F) and such failure shall continue unremedied for ten (10) Business
Days;
(ii) SECTIONS 7.1(A), 7.1(B), 7.2(A), 7.2(C), 7.2(D), 7.2(E)
and 7.2(G) through and including 7.2(K) and such failure shall continue
unremedied for five (5) Business Days; or
(iii) SECTION 7.3 or 7.4.
(C) BREACH OF REPRESENTATION OR WARRANTY. Any representation or
warranty made or deemed made by any Borrower to the Agent or any Lender herein
or by any Borrower or any of its respective Subsidiaries in any of the other
Loan Documents or in any statement or certificate at any time given by any such
Person pursuant to any of the Loan Documents shall be false or misleading in any
material respect on the date as of which made (or deemed made).
(D) OTHER DEFAULTS. Any Borrower shall default in the performance of or
compliance with any term contained in this Agreement (other than as covered by
PARAGRAPHS (A), (B) or (C) of this SECTION 8.1), or any of the Borrowers or any
of their respective Subsidiaries shall default in the performance of or
compliance with any term contained in any of the other Loan Documents, and such
default shall continue for thirty (30) days after the occurrence thereof.
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(E) DEFAULT AS TO OTHER INDEBTEDNESS. Any Borrower or any of its
respective Subsidiaries shall fail to make any payment when due (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise) with
respect to any Indebtedness the outstanding principal amount of which
Indebtedness is in excess of $2,000,000; or any breach, default or event of
default shall occur, or any other condition shall exist under any instrument,
agreement or indenture pertaining to any such Indebtedness, if the effect
thereof is to cause an acceleration, mandatory redemption, a requirement that
any Borrower offer to purchase such Indebtedness or other required repurchase of
such Indebtedness, or permit the holder(s) of such Indebtedness to accelerate
the maturity of any such Indebtedness or require a redemption or other
repurchase of such Indebtedness; or any such Indebtedness shall be otherwise
declared to be due and payable (by acceleration or otherwise) or required to be
prepaid, redeemed or otherwise repurchased by any Borrower or any of its
respective Subsidiaries (other than by a regularly scheduled required
prepayment) prior to the stated maturity thereof.
(F) INVOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
(i) An involuntary case shall be commenced against any
Borrower or any of such Borrower's Subsidiaries and the petition shall
not be dismissed, stayed, bonded or discharged within sixty (60) days
after commencement of the case; or a court having jurisdiction in the
premises shall enter a decree or order for relief in respect of any
Borrower or any of such Borrower's Subsidiaries in an involuntary case,
under any applicable bankruptcy, insolvency or other similar law now or
hereinafter in effect; or any other similar relief shall be granted
under any applicable federal, state, local or foreign law.
(ii) A decree or order of a court having jurisdiction in the
premises for the appointment of a receiver, liquidator, sequestrator,
trustee, custodian or other officer having similar powers over any
Borrower or any of such Borrower's Subsidiaries or over all or a
substantial part of the property of any Borrower or any of such
Borrower's Subsidiaries shall be entered; or an interim receiver,
trustee or other custodian of any Borrower or any of such Borrower's
Subsidiaries or of all or a substantial part of the property of any
Borrower or any of such Borrower's Subsidiaries shall be appointed or a
warrant of attachment, execution or similar process against any
substantial part of the property of any Borrower or any of such
Borrower's Subsidiaries shall be issued and any such event shall not be
stayed, dismissed, bonded or discharged within sixty (60) days after
entry, appointment or issuance.
(G) VOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC. Any Borrower or
any of such Borrower's Subsidiaries shall (i) commence a voluntary case under
any applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, (ii) consent to the entry of an order for relief in an involuntary case,
or to the conversion of an involuntary case to a voluntary case, under any such
law, (iii) consent to the appointment of or taking possession by a receiver,
trustee or other custodian for all or a substantial part of its property, (iv)
make any
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assignment for the benefit of creditors or (v) take any corporate action to
authorize any of the foregoing.
(H) JUDGMENTS AND ATTACHMENTS. Any money judgment(s) (other than a
money judgment covered by insurance as to which the insurance company has not
disclaimed or reserved the right to disclaim coverage), writ or warrant of
attachment, or similar process against any Borrower or any of its respective
Subsidiaries or any of their respective assets involving in any single case or
in the aggregate an amount in excess of $2,000,000 is or are entered and shall
remain undischarged, unvacated, unbonded or unstayed for a period of sixty (60)
days or in any event later than fifteen (15) days prior to the date of any
proposed sale thereunder.
(I) DISSOLUTION. Any order, judgment or decree shall be entered against
any Borrower decreeing its involuntary dissolution or split up and such order
shall remain undischarged and unstayed for a period in excess of sixty (60)
days; or any Borrower shall otherwise dissolve or cease to exist except as
specifically permitted by this Agreement.
(J) LOAN DOCUMENTS. At any time, for any reason, any Loan Document as a
whole that materially affects the ability of the Agent, or any of the Lenders to
enforce the Obligations ceases to be in full force and effect or any Borrower or
any of such Borrower's Subsidiaries party thereto seeks to repudiate its
obligations thereunder.
(K) TERMINATION EVENT. Any Termination Event occurs which the Required
Lenders believe is reasonably likely to subject any Borrower to liability in
excess of $2,000,000.
(L) WAIVER OF MINIMUM FUNDING STANDARD. If the plan administrator of
any Plan applies under Section 412(d) of the Code for a waiver of the minimum
funding standards of Section 412(a) of the Code and any Lender believes the
substantial business hardship upon which the application for the waiver is based
could reasonably be expected to subject any Borrower or any Controlled Group
member to liability in excess of $2,000,000.
(M) CHANGE OF CONTROL. A Change of Control shall occur.
(N) INTEREST RATE AGREEMENTS. Nonpayment by any Borrower of any
obligation under any Interest Rate Agreement or the breach by any Borrower of
any term, provision or condition contained in any such Interest Rate Agreement.
(O) ENVIRONMENTAL MATTERS. Any Borrower or any of its respective
Subsidiaries shall be the subject of any proceeding or investigation pertaining
to (i) the Release by any Borrower or any of its respective Subsidiaries of any
Contaminant into the environment, (ii) the liability of any Borrower or any of
its respective Subsidiaries arising from the Release by any other Person of any
Contaminant into the environment, or (iii) any violation of any Environmental,
Health or Safety Requirements of Law which by any Borrower or any of its
respective Subsidiaries, which, in any case, has or is reasonably likely to
subject any Borrower or any of
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its respective Subsidiaries to liability, individually and in the aggregate, in
excess of $2,000,000.
A Default shall be deemed "continuing" until cured or until waived in
writing in accordance with SECTION 9.3.
ARTICLE IX: ACCELERATION, DEFAULTING LENDERS; WAIVERS, AMENDMENTS AND REMEDIES
9.1 TERMINATION OF COMMITMENTS; ACCELERATION. If any Default described
in SECTION 8.1(F) or 8.1(G) occurs with respect to any Borrower, the obligations
of the Lenders to make Loans hereunder and the obligation of the Agent to issue
Letters of Credit hereunder shall automatically terminate and the Obligations
shall immediately become due and payable without any election or action on the
part of the Agent or any Lender. If any other Default occurs, the Required
Lenders may terminate or suspend the obligations of the Lenders to make Loans
hereunder and the obligation of the Issuing Banks to issue Letters of Credit
hereunder, or declare the Obligations to be due and payable, or both, whereupon
the Obligations shall become immediately due and payable, without presentment,
demand, protest or notice of any kind, all of which the Borrowers expressly
waive.
9.2 DEFAULTING LENDER. In the event that any Lender fails to fund its
Pro Rata Share of any Advance requested or deemed requested by any Borrower,
which such Lender is obligated to fund under the terms of this Agreement (the
funded portion of such Advance being hereinafter referred to as a "NON PRO RATA
Loan"), until the earlier of such Lender's cure of such failure and the
termination of the Revolving Loan Commitments, the proceeds of all amounts
thereafter repaid to the Agent by such Borrower and otherwise required to be
applied to such Lender's share of all other Obligations pursuant to the terms of
this Agreement shall be advanced to such Borrower by the Agent on behalf of such
Lender to cure, in full or in part, such failure by such Lender, but shall
nevertheless be deemed to have been paid to such Lender in satisfaction of such
other Obligations. Notwithstanding anything in this Agreement to the contrary:
(i) the foregoing provisions of this SECTION 9.2 shall apply
only with respect to the proceeds of payments of Obligations and shall
not affect the conversion or continuation of Loans pursuant to SECTION
2.8;
(ii) any such Lender shall be deemed to have cured its failure
to fund its Pro Rata Share of any Advance at such time as an amount
equal to such Lender's original Pro Rata Share of the requested
principal portion of such Advance is fully funded to the applicable
Borrower, whether made by such Lender itself or by operation of the
terms of this SECTION 9.2, and whether or not the Non Pro Rata Loan
with respect thereto has been repaid, converted or continued;
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(iii) amounts advanced to the applicable Borrower to cure, in
full or in part, any such Lender's failure to fund its Pro Rata Share
of any Advance ("CURE LOANS") shall bear interest at the rate
applicable to Floating Rate Loans in effect from time to time, and for
all other purposes of this Agreement shall be treated as if they were
Floating Rate Loans;
(iv) regardless of whether or not a Default has occurred or is
continuing, and notwithstanding the instructions of the applicable
Borrower as to its desired application, all repayments of principal
which, in accordance with the other terms of this Agreement, would be
applied to the outstanding Floating Rate Loans shall be applied FIRST,
ratably to all Floating Rate Loans constituting Non Pro Rata Loans,
SECOND, ratably to Floating Rate Loans other than those constituting
Non Pro Rata Loans or Cure Loans and, THIRD, ratably to Floating Rate
Loans constituting Cure Loans;
(v) for so long as and until the earlier of any such Lender's
cure of the failure to fund its Pro Rata Share of any Advance and the
termination of the Revolving Loan Commitments, the term "Required
Lenders" for purposes of this Agreement shall mean Lenders (excluding
all Lenders whose failure to fund their respective Pro Rata Shares of
such Advance have not been so cured) whose Pro Rata Shares represent
greater than fifty percent (50%) of the aggregate Pro Rata Shares of
such Lenders; and
(vi) for so long as and until any such Lender's failure to
fund its Pro Rata Share of any Advance is cured in accordance with
SECTION 9.2(ii), (A) such Lender shall not be entitled to any
commitment fees with respect to its Revolving Loan Commitment and (B)
such Lender shall not be entitled to any letter of credit fees, which
commitment fees and letter of credit fees shall accrue in favor of the
Lenders which have funded their respective Pro Rata Share of such
requested Advance, shall be allocated among such performing Lenders
ratably based upon their relative Revolving Loan Commitments, and shall
be calculated based upon the average amount by which the aggregate
Revolving Loan Commitments of such performing Lenders exceeds the sum
of (I) the outstanding principal amount of the Loans owing to such
performing Lenders, PLUS (II) the outstanding Reimbursement Obligations
owing to such performing Lenders, PLUS (III) the aggregate
participation interests of such performing Lenders arising pursuant to
SECTION 3.5 with respect to undrawn and outstanding Letters of Credit.
9.3 AMENDMENTS. Subject to the provisions of this ARTICLE IX, the
Required Lenders (or the Agent with the consent in writing of the Required
Lenders) and the Borrowers may enter into agreements supplemental hereto for the
purpose of adding or modifying any provisions to the Loan Documents or changing
in any manner the rights of the Lenders or the
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Borrowers hereunder or waiving any Default hereunder; PROVIDED, HOWEVER, that no
such supplemental agreement shall, without the consent of each Lender affected
thereby:
(i) Postpone or extend the Revolving Loan Termination Date or
any other date fixed for any payment of principal of, or interest on,
the Loans, the Reimbursement Obligations or any fees or other amounts
payable to such Lender (except with respect to (a) any modifications of
the provisions relating to prepayments of Loans and other Obligations
and (b) a waiver of the application of the default rate of interest
pursuant to SECTION 2.9 hereof).
(ii) Reduce the principal amount of any Loans or L/C
Obligations, or reduce the rate or extend the time of payment of
interest or fees thereon.
(iii) Reduce the percentage specified in the definition of
Required Lenders or any other percentage of Lenders specified to be the
applicable percentage in this Agreement to act on specified matters.
(iv) Increase the amount of the Revolving Loan Commitment of
any Lender hereunder.
(v) Permit the Borrower to assign its rights under this
Agreement.
(vi) Release all or substantially all of the Collateral.
(vii) Amend this SECTION 9.3.
No amendment of any provision of this Agreement relating to the Agent shall be
effective without the written consent of the Agent. The Agent may waive payment
of the fee required under SECTION 13.3(B) without obtaining the consent of any
of the Lenders.
9.4 PRESERVATION OF RIGHTS. No delay or omission of the Lenders or the
Agent to exercise any right under the Loan Documents shall impair such right or
be construed to be a waiver of any Default or an acquiescence therein, and the
making of a Loan or the issuance of a Letter of Credit notwithstanding the
existence of a Default or the inability of any Borrower to satisfy the
conditions precedent to such Loan or issuance of such Letter of Credit shall not
constitute any waiver or acquiescence. Any single or partial exercise of any
such right shall not preclude other or further exercise thereof or the exercise
of any other right, and no waiver, amendment or other variation of the terms,
conditions or provisions of the Loan Documents whatsoever shall be valid unless
in writing signed by the Lenders required pursuant to SECTION 9.3, and then only
to the extent in such writing specifically set forth. All remedies contained in
the Loan Documents or by law afforded shall be cumulative and all shall be
available to the Agent and the Lenders until the Obligations have been paid in
full.
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ARTICLE X: GENERAL PROVISIONS
10.1 SURVIVAL OF REPRESENTATIONS. All representations and warranties of
each Borrower contained in this Agreement shall survive delivery of the Notes
and the making of the Loans herein contemplated.
10.2 GOVERNMENTAL REGULATION. Anything contained in this Agreement to
the contrary notwithstanding, no Lender shall be obligated to extend credit to
any Borrower in violation of any limitation or prohibition provided by any
applicable statute or regulation.
10.3 PERFORMANCE OF OBLIGATIONS. Each Borrower agrees that the Agent
may, but shall have no obligation, after the occurrence and during the
continuance of a Default, to make any other payment or perform any act required
of any Borrower under any Loan Document. The Agent shall use its reasonable
efforts to give the Borrowers notice of any action taken under this SECTION 10.3
prior to the taking of such action or promptly thereafter provided the failure
to give such notice shall not affect any Borrower's obligations in respect
thereof. Each Borrower agrees to pay the Agent, upon demand, the principal
amount of all funds advanced by the Agent under this SECTION 10.3, together with
interest thereon at the rate from time to time applicable to Floating Rate Loans
from the date of such advance until the outstanding principal balance thereof is
paid in full. If any Borrower fails to make payment in respect of any such
advance under this SECTION 10.3 within one (1) Business Day after the date such
Borrower receives written demand therefor from the Agent, the Agent shall
promptly notify each Lender and each Lender agrees that it shall thereupon make
available to the Agent, in Dollars in immediately available funds, the amount
equal to such Lender's Pro Rata Share of such advance. If such funds are not
made available to the Agent by such Lender within one (1) Business Day after the
Agent's demand therefor, the Agent will be entitled to recover any such amount
from such Lender together with interest thereon at the Federal Funds Effective
Rate for each day during the period commencing on the date of such demand and
ending on the date such amount is received. The failure of any Lender to make
available to the Agent its Pro Rata Share of any such unreimbursed advance under
this SECTION 10.3 shall neither relieve any other Lender of its obligation
hereunder to make available to the Agent such other Lender's Pro Rata Share of
such advance on the date such payment is to be made nor increase the obligation
of any other Lender to make such payment to the Agent. All outstanding principal
of, and interest on, advances made under this SECTION 10.3 shall constitute
Obligations.
10.4 HEADINGS. Section headings in the Loan Documents are for
convenience of reference only, and shall not govern the interpretation of any of
the provisions of the Loan Documents.
10.5 ENTIRE AGREEMENT. The Loan Documents embody the entire agreement
and understanding among the Borrowers, the Agent and the Lenders and supersede
all prior
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agreements and understandings among the Borrowers, the Agent and the
Lenders relating to the subject matter thereof.
10.6 SEVERAL OBLIGATIONS; BENEFITS OF THIS AGREEMENT. The respective
obligations of the Lenders hereunder are several and not joint and no Lender
shall be the partner or agent of any other Lender (except to the extent to which
the Agent is authorized to act as such). The failure of any Lender to perform
any of its obligations hereunder shall not relieve any other Lender from any of
its obligations hereunder. This Agreement shall not be construed so as to confer
any right or benefit upon any Person other than the parties to this Agreement
and their respective successors and assigns.
10.7 EXPENSES; INDEMNIFICATION.
(A) EXPENSES. The Borrowers shall reimburse the Agent for any
reasonable costs, internal charges and out-of-pocket expenses (including
attorneys' and paralegals' fees and time charges of attorneys and paralegals for
the Agent, which attorneys and paralegals may be employees of the Agent) paid or
incurred by the Agent in connection with the preparation, negotiation,
execution, delivery, syndication, review, amendment, modification, and
administration of the Loan Documents. The Borrowers also agree to reimburse the
Agent and the Lenders for any costs, internal charges and out-of-pocket expenses
(including attorneys' and paralegals' fees and time charges of attorneys and
paralegals for the Agent and the Lenders, which attorneys and paralegals may be
employees of the Agent or the Lenders) paid or incurred by the Agent or any
Lender in connection with the collection of the Obligations and enforcement of
the Loan Documents. In addition to expenses set forth above, the Borrowers agree
to reimburse the Agent, promptly after the Agent's request therefor, for each
audit, or other business analysis performed by Agent for the benefit of the
Lenders in connection with this Agreement or the other Loan Documents in an
amount equal to the Agent's then customary charges for each person employed to
perform such audit or analysis, plus all costs and expenses (including without
limitation, travel expenses) incurred by the Agent in the performance of such
audit or analysis. Agent shall provide the Borrower with a detailed statement of
all reimbursements requested under this SECTION 10.7(A). The Borrowers and the
Agent agree that the Agent, or a representative of the Agent, shall perform no
more than three (3) such audits in any twelve-month period at a time when no
Default or Event of Default has occurred or is continuing.
(B) INDEMNITY. The Borrowers further agree to defend, protect,
indemnify, and hold harmless the Agent and each and all of the Lenders and each
of their respective Affiliates, and each of such Agent's, Lender's, or
Affiliate's respective officers, directors, employees, attorneys and agents
(including, without limitation, those retained in connection with the
satisfaction or attempted satisfaction of any of the conditions set forth in
ARTICLE V) (collectively, the "INDEMNITEES") from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs, expenses of any kind or nature whatsoever (including, without
limitation, the fees and disbursements of counsel for such Indemnitees in
connection with any investigative, administrative or judicial proceeding,
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whether or not such Indemnitees shall be designated a party thereto), imposed
on, incurred by, or asserted against such Indemnitees in any manner relating to
or arising out of:
(i) this Agreement, the other Loan Documents, the
Louisiana-Pacific Acquisition or any act, event or transaction related
or attendant thereto or to the making of the Loans, and the issuance of
and participation in Letters of Credit hereunder, the management of
such Loans or Letters of Credit, the use or intended use of the
proceeds of the Loans or Letters of Credit hereunder, or any of the
other transactions contemplated by the Loan Documents; or
(ii) any liabilities, obligations, responsibilities, losses,
damages, personal injury, death, punitive damages, economic damages,
consequential damages, treble damages, intentional, willful or wanton
injury, damage or threat to the environment, natural resources or
public health or welfare, costs and expenses (including, without
limitation, attorney, expert and consulting fees and costs of
investigation, feasibility or remedial action studies), fines,
penalties and monetary sanctions, interest, direct or indirect, known
or unknown, absolute or contingent, past, present or future relating to
violation of any Environmental, Health or Safety Requirements of Law
arising from or in connection with the past, present or future
operations of any Borrower, its respective Subsidiaries or any of their
respective predecessors in interest, or, the past, present or future
environmental, health or safety condition of any respective property of
any Borrower or its respective Subsidiaries, the presence of
asbestos-containing materials at any respective property of any
Borrower or its respective Subsidiaries or the Release or threatened
Release of any Contaminant into the environment (collectively, the
"INDEMNIFIED MATTERS");
PROVIDED, HOWEVER, the Borrowers shall have no obligation to an Indemnitee
hereunder with respect to Indemnified Matters caused solely by or resulting
solely from the willful misconduct or Gross Negligence of such Indemnitee or
breach of contract by such Indemnitee with respect to the Loan Documents, in
each case, as determined by the final non-appealed judgment of a court of
competent jurisdiction. If the undertaking to indemnify, pay and hold harmless
set forth in the preceding sentence may be unenforceable because it is violative
of any law or public policy, each of the Borrowers shall contribute the maximum
portion which it is permitted to pay and satisfy under applicable law, to the
payment and satisfaction of all Indemnified Matters incurred by the Indemnitees.
(C) WAIVER OF CERTAIN CLAIMS; SETTLEMENT OF CLAIMS. The Borrowers
further agree to assert no claim against any of the Indemnitees on any theory of
liability for consequential, special, indirect, exemplary or punitive damages.
No settlement shall be entered into by any Borrower or any of its respective
Subsidiaries with respect to any claim, litigation, arbitration or other
proceeding relating to or arising out of the transactions evidenced by this
Agreement or the other Loan Documents (whether or not the Agent or any Lender or
any Indemnitee is a party thereto) unless such settlement releases all
Indemnitees from any and all liability with respect thereto.
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(D) SURVIVAL OF AGREEMENTS. The obligations and agreements of each
Borrower under this SECTION 10.7 shall survive the termination of this
Agreement.
10.8 NUMBERS OF DOCUMENTS. All statements, notices, closing documents,
and requests hereunder shall be furnished to the Agent with sufficient
counterparts so that the Agent may furnish one to each of the Lenders.
10.9 ACCOUNTING. Except as provided to the contrary herein, all
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with Agreement Accounting
Principles.
10.10 SEVERABILITY OF PROVISIONS. Any provision in any Loan Document
that is held to be inoperative, unenforceable, or invalid in any jurisdiction
shall, as to that jurisdiction, be inoperative, unenforceable, or invalid
without affecting the remaining provisions in that jurisdiction or the
operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of all Loan Documents are declared
to be severable.
10.11 NONLIABILITY OF LENDERS. The relationship between the Borrowers
and the Lenders and the Agent shall be solely that of borrower and lender.
Neither the Agent nor any Lender shall have any fiduciary responsibilities to
any Borrower. Neither the Agent nor any Lender undertakes any responsibility to
any Borrower to review or inform such Borrower of any matter in connection with
any phase of such Borrower's business or operations.
10.12 GOVERNING LAW. ANY DISPUTE BETWEEN ANY BORROWER AND THE AGENT OR
ANY LENDER ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY
OF THE OTHER LOAN DOCUMENTS, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR
OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE WITH THE INTERNAL LAWS (WITHOUT
REGARD TO THE CONFLICTS OF LAWS PROVISIONS) OF THE STATE OF ILLINOIS.
10.13 CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL.
(A) EXCLUSIVE JURISDICTION. EXCEPT AS PROVIDED IN SUBSECTION (B), EACH
OF THE PARTIES HERETO AGREES THAT ALL DISPUTES AMONG THEM ARISING OUT OF,
CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG
THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS
WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED
EXCLUSIVELY BY STATE OR FEDERAL COURTS LOCATED IN CHICAGO, ILLINOIS, BUT THE
PARTIES HERETO ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE
HEARD BY A COURT LOCATED OUTSIDE OF CHICAGO, ILLINOIS. EACH OF THE PARTIES
HERETO WAIVES IN
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ALL DISPUTES BROUGHT PURSUANT TO THIS SUBSECTION (A) ANY OBJECTION THAT IT MAY
HAVE TO THE LOCATION OF THE COURT CONSIDERING THE DISPUTE.
(B) OTHER JURISDICTIONS. EACH OF THE BORROWERS AGREES THAT THE AGENT,
OR ANY LENDER SHALL HAVE THE RIGHT TO PROCEED AGAINST ANY BORROWER OR ITS
PROPERTY IN A COURT IN ANY LOCATION TO ENABLE SUCH PERSON TO (1) OBTAIN PERSONAL
JURISDICTION OVER SUCH BORROWER OR (2) REALIZE ON ANY SECURITY FOR THE
OBLIGATIONS OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF
SUCH PERSON. EACH OF THE BORROWERS AGREES THAT IT WILL NOT ASSERT ANY PERMISSIVE
COUNTERCLAIMS IN ANY PROCEEDING BROUGHT BY SUCH PERSON TO REALIZE ON ANY
SECURITY FOR THE OBLIGATIONS OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN
FAVOR OF SUCH PERSON. EACH OF THE BORROWERS WAIVES ANY OBJECTION THAT IT MAY
HAVE TO THE LOCATION OF THE COURT IN WHICH SUCH PERSON HAS COMMENCED A
PROCEEDING DESCRIBED IN THIS SUBSECTION (B).
(C) VENUE. EACH OF THE BORROWERS IRREVOCABLY WAIVES ANY OBJECTION
(INCLUDING, WITHOUT LIMITATION, ANY OBJECTION OF THE LAYING OF VENUE OR BASED ON
THE GROUNDS OF FORUM NON CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY
OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH IN ANY JURISDICTION SET FORTH ABOVE.
(D) WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES
ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING
IN CONTRACT, TORT, OR OTHERWISE, ARISING OUT OF, CONNECTED WITH, RELATED TO OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED
IN CONNECTION HEREWITH. EACH OF THE PARTIES HERETO AGREES AND CONSENTS THAT ANY
SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL
WITHOUT A JURY AND THAT ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A
COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
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ARTICLE XI: THE AGENT
11.1 APPOINTMENT; NATURE OF RELATIONSHIP. BankBoston, N.A. is appointed
by the Lenders as the Agent hereunder and under each other Loan Document, and
each of the Lenders irrevocably authorizes the Agent to act as the contractual
representative of such Lender with the rights and duties expressly set forth
herein and in the other Loan Documents. The Agent agrees to act as such
contractual representative upon the express conditions contained in this ARTICLE
XI. Notwithstanding the use of the defined term "Agent," it is expressly
understood and agreed that the Agent shall not have any fiduciary
responsibilities to any Lender by reason of this Agreement and that the Agent is
merely acting as the representative of the Lenders with only those duties as are
expressly set forth in this Agreement and the other Loan Documents. In its
capacity as the Lenders' contractual representative, the Agent (i) does not
assume any fiduciary duties to any of the Lenders, (ii) is a "representative" of
the Lenders within the meaning of Section 9-105 of the Uniform Commercial Code
and (iii) is acting as an independent contractor, the rights and duties of which
are limited to those expressly set forth in this Agreement and the other Loan
Documents. Each of the Lenders agrees to assert no claim against the Agent on
any agency theory or any other theory of liability for breach of fiduciary duty,
all of which claims each Lender waives.
11.2 POWERS. The Agent shall have and may exercise such powers under
the Loan Documents as are specifically delegated to the Agent by the terms of
each thereof, together with such powers as are reasonably incidental thereto.
The Agent shall have no implied duties or fiduciary duties to the Lenders, or
any obligation to the Lenders to take any action hereunder or under any of the
other Loan Documents except any action specifically provided by the Loan
Documents required to be taken by the Agent.
11.3 GENERAL IMMUNITY. Neither the Agent nor any of its directors,
officers, agents or employees shall be liable to any Borrower, the Lenders or
any Lender for any action taken or omitted to be taken by it or them hereunder
or under any other Loan Document or in connection herewith or therewith except
to the extent such action or inaction is found in a final judgment by a court of
competent jurisdiction to have arisen solely from the Gross Negligence or
willful misconduct of such Person.
11.4 NO RESPONSIBILITY FOR LOANS, CREDITWORTHINESS, RECITALS, ETC.
Neither the Agent nor any of its directors, officers, agents or employees shall
be responsible for or have any duty to ascertain, inquire into, or verify (i)
any statement, warranty or representation made in connection with any Loan
Document or any borrowing hereunder; (ii) the performance or observance of any
of the covenants or agreements of any obligor under any Loan Document; (iii) the
satisfaction of any condition specified in ARTICLE V, except receipt of items
required to be delivered solely to the Agent; (iv) the existence or possible
existence of any Default or (v) the validity, effectiveness or genuineness of
any Loan Document or any other instrument or writing furnished in connection
therewith. The Agent shall not be responsible to any Lender for any recitals,
statements, representations or warranties herein or in any of the other Loan
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Documents, for the perfection or priority of the Liens on any of the Collateral,
or for the execution, effectiveness, genuineness, validity, legality,
enforceability, collectibility, or sufficiency of this Agreement or any of the
other Loan Documents or the transactions contemplated thereby, or for the
financial condition of any guarantor of any or all of the Obligations, any
Borrower or any of its Subsidiaries.
11.5 ACTION ON INSTRUCTIONS OF LENDERS. The Agent shall in all cases be
fully protected in acting, or in refraining from acting, hereunder and under any
other Loan Document in accordance with written instructions signed by the
Required Lenders, and such instructions and any action taken or failure to act
pursuant thereto shall be binding on all of the Lenders and on all holders of
Notes. The Agent shall be fully justified in failing or refusing to take any
action hereunder and under any other Loan Document unless it shall first be
indemnified to its satisfaction by the Lenders pro rata against any and all
liability, cost and expense that it may incur by reason of taking or continuing
to take any such action.
11.6 EMPLOYMENT OF AGENTS AND COUNSEL. The Agent may execute any of its
duties as the Agent hereunder and under any other Loan Document by or through
employees, agents, and attorney-in-fact and shall not be answerable to the
Lenders, except as to money or securities received by it or its authorized
agents, for the default or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care. The Agent shall be entitled to advice of
counsel concerning the contractual arrangement between the Agent and the Lenders
and all matters pertaining to the Agent's duties hereunder and under any other
Loan Document.
11.7 RELIANCE ON DOCUMENTS; COUNSEL. The Agent shall be entitled to
rely upon any Note, notice, consent, certificate, affidavit, letter, telegram,
statement, paper or document believed by it to be genuine and correct and to
have been signed or sent by the proper person or persons, and, in respect to
legal matters, upon the opinion of counsel selected by the Agent, which counsel
may be employees of the Agent.
11.8 THE AGENT'S REIMBURSEMENT AND INDEMNIFICATION. The Lenders agree
to reimburse and indemnify the Agent ratably in proportion to their respective
Revolving Loan Commitments (i) for any amounts not reimbursed by the Borrowers
for which the Agent is entitled to reimbursement by any Borrower under the Loan
Documents, (ii) for any other expenses incurred by the Agent on behalf of the
Lenders, in connection with the preparation, execution, delivery, administration
and enforcement of the Loan Documents and (iii) for any liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind and nature whatsoever which may be imposed
on, incurred by or asserted against the Agent in any way relating to or arising
out of the Loan Documents or any other document delivered in connection
therewith or the transactions contemplated thereby, or the enforcement of any of
the terms thereof or of any such other documents, provided that no Lender shall
be liable for any of the foregoing to the extent any of the foregoing is found
in a final non-appealable judgment by a court of competent jurisdiction to have
arisen solely from the Gross Negligence or willful misconduct of the Agent.
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11.9 RIGHTS AS A LENDER. With respect to its Revolving Loan Commitment,
Loans made by it, and the Notes issued to it, the Agent shall have the same
rights and powers hereunder and under any other Loan Document as any Lender and
may exercise the same as through it were not the Agent, and the term "Lender" or
"Lenders" shall, unless the context otherwise indicates, include the Agent in
its individual capacity. The Agent may accept deposits from, lend money to, and
generally engage in any kind of trust, debt, equity or other transaction, in
addition to those contemplated by this Agreement or any other Loan Document,
with the Borrowers or any of their respective Subsidiaries in which such Person
is not prohibited hereby from engaging with any other Person.
11.10 LENDER CREDIT DECISION. Each Lender acknowledges that it has,
independently and without reliance upon the Agent or any other Lender and based
on the financial statements prepared by the Borrowers and such other documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement and the other Loan Documents. Each Lender
also acknowledges that it will, independently and without reliance upon the
Agent or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement and the other Loan Documents.
11.11 SUCCESSOR AGENT. The Agent may resign at any time by giving
written notice thereof to the Lenders and the Borrowers. Upon any such
resignation, the Required Lenders shall have the right to appoint, on behalf of
the Borrowers and the Lenders, a successor Agent. If no successor Agent shall
have been so appointed by the Required Lenders and shall have accepted such
appointment within thirty days after the retiring Agent's giving notice of
resignation, then the retiring Agent may appoint, on behalf of the Borrowers and
the Lenders, a successor Agent. Notwithstanding anything herein to the contrary,
so long as no Default has occurred and is continuing, each such successor Agent
shall be subject to approval by the Borrowers, which approval shall not be
unreasonably withheld. Such successor Agent shall be a commercial bank having
capital and retained earnings of at least $500,000,000. Upon the acceptance of
any appointment as the Agent hereunder by a successor Agent, such successor
Agent shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations hereunder and under the other Loan
Documents. After any retiring Agent's resignation hereunder as Agent, the
provisions of this ARTICLE XI shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting as
the Agent hereunder and under the other Loan Documents.
11.12 COLLATERAL DOCUMENTS. Each Lender authorizes the Agent to enter
into each of the Collateral Documents to which it is a party and to take all
action contemplated by such documents. Each Lender agrees that no Lender shall
have the right individually to seek to realize upon the security granted by any
Collateral Document, it being understood and agreed that such rights and
remedies may be exercised solely by the Agent for the benefit of the Holders of
Secured Obligations upon the terms of the Collateral Documents.
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ARTICLE XII: SETOFF; RATABLE PAYMENTS
12.1 SETOFF. In addition to, and without limitation of, any rights of
the Lenders under applicable law, if any Default occurs and is continuing, any
indebtedness from any Lender to any Borrower (including all account balances,
whether provisional or final and whether or not collected or available) may be
offset and applied toward the payment of the Obligations owing to such Lender,
whether or not the Obligations, or any part hereof, shall then be due.
12.2 RATABLE PAYMENTS. If any Lender, whether by setoff or otherwise,
has payment made to it upon its Loans (other than payments received pursuant to
SECTIONS 4.1, 4.2 or 4.4) in a greater proportion than that received by any
other Lender, such Lender agrees, promptly upon demand, to purchase a portion of
the Loans held by the other Lenders so that after such purchase each Lender will
hold its ratable proportion of Loans. If any Lender, whether in connection with
setoff or amounts which might be subject to setoff or otherwise, receives
collateral or other protection for its Obligation or such amounts which may be
subject to setoff, such Lender agrees, promptly upon demand, to take such action
necessary such that all Lenders share in the benefits of such collateral ratably
in proportion to the obligations owing to them. In case any such payment is
disturbed by legal process, or otherwise, appropriate further adjustments shall
be made.
12.3 APPLICATION OF PAYMENTS. Subject to the provisions of SECTION 9.2,
the Agent shall, unless otherwise specified at the direction of the Required
Lenders which direction shall be consistent with the last sentence of this
SECTION 12.3, apply all payments and prepayments in respect of any Obligations
and all proceeds of the Collateral in the following order:
(A) first, to pay interest on and then principal of any
portion of the Loans which the Agent may have advanced on behalf of any
Lender for which the Agent has not then been reimbursed by such Lender
or any Borrower;
(B) second, to pay interest on and then principal of any
advance made under SECTION 10.3 for which the Agent has not then been
paid by any Borrower or reimbursed by the Lenders;
(C) third, to pay Obligations in respect of any fees, expense
reimbursements or indemnities then due to the Agent;
(D) fourth, to pay Obligations in respect of any fees,
expenses, reimbursements or indemnities then due to the Lenders and the
issuer(s) of Letters of Credit;
(E) fifth, to pay interest due in respect of Loans and L/C
Obligations;
(F) sixth, to the ratable payment or prepayment of principal
outstanding on Loans, Reimbursement Obligations and Hedging Obligations
under Interest Rate Agreements in such order as the Agent may determine
in its sole discretion;
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(G) seventh, to provide required cash collateral, if required
pursuant to SECTION 3.10 and
(H) eighth, to the ratable payment of all other Obligations.
Unless otherwise designated (which designation shall only be applicable prior to
the occurrence of a Default) by any Borrower, all principal payments in respect
of Loans shall be applied FIRST, to repay outstanding Floating Rate Loans, and
THEN to repay outstanding Eurodollar Rate Loans with those Eurodollar Rate Loans
which have earlier expiring Interest Periods being repaid prior to those which
have later expiring Interest Periods. The order of priority set forth in this
SECTION 12.3 and the related provisions of this Agreement are set forth solely
to determine the rights and priorities of the Agent, the Lenders, and the
issuer(s) of Letters of Credit as among themselves. The order of priority set
forth in CLAUSES (D) through (H) of this SECTION 12.3 may at any time and from
time to time be changed by the Required Lenders without necessity of notice to
or consent of or approval by the Borrowers, or any other Person. The order of
priority set forth in CLAUSES (A) through (C) of this SECTION 12.3 may be
changed only with the prior written consent of the Agent.
12.4 RELATIONS AMONG LENDERS.
(A) Except with respect to the exercise of set-off rights of any Lender
in accordance with SECTION 12.1, the proceeds of which are applied in accordance
with this Agreement, and except as set forth in the following sentence, each
Lender agrees that it will not take any action, nor institute any actions or
proceedings, against any Borrower or any other obligor hereunder or with respect
to any Loan Document, without the prior written consent of the Required Lenders
or, as may be provided in this Agreement or the other Loan Documents, at the
direction of the Agent.
(B) The Lenders are not partners or co-venturers, and no Lender shall
be liable for the acts or omissions of, or (except as otherwise set forth herein
in case of the Agent) authorized to act for, any other Lender. The Agent shall
have the exclusive right on behalf of the Lenders to enforce on the payment of
the principal of and interest on any Loan after the date such principal or
interest has become due and payable pursuant to the terms of this Agreement.
ARTICLE XIII: BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
13.1 SUCCESSORS AND ASSIGNS. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of the Borrower and the
Lenders and their respective successors and assigns, except that (i) no Borrower
shall have the right to assign its rights or obligations under the Loan
Documents and (ii) any assignment by any Lender must be made in compliance with
SECTION 13.3 hereof. Notwithstanding clause (ii) of this SECTION 13.1, any
Lender may at any time, without the consent of the Borrowers or the Agent,
assign all or any portion of its rights under this Agreement and its Notes to a
Federal Reserve Bank; PROVIDED,
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HOWEVER, that no such assignment shall release the transferor Lender from its
obligations hereunder. The Agent may treat the payee of any Note as the owner
thereof for all purposes hereof unless and until such payee complies with
SECTION 13.3 hereof in the case of an assignment thereof or, in the case of any
other transfer, a written notice of the transfer is filed with the Agent. Any
assignee or transferee of a Note agrees by acceptance thereof to be bound by all
the terms and provisions of the Loan Documents. Any request, authority or
consent of any Person, who at the time of making such request or giving such
authority or consent is the holder of any Note, shall be conclusive and binding
on any subsequent holder, transferee or assignee of such Note or of any Note or
Notes issued in exchange therefor.
13.2 PARTICIPATIONS.
(A) PERMITTED PARTICIPANTS; EFFECT. Subject to the terms set forth in
this SECTION 13.2, any Lender may, in the ordinary course of its business and in
accordance with applicable law, at any time sell to one or more banks or other
entities ("PARTICIPANTS") participating interests in any Loan owing to such
Lender, any Note held by such Lender, any Revolving Loan Commitment of such
Lender, any L/C Interest of such Lender or any other interest of such Lender
under the Loan Documents on a pro rata or non-pro rata basis. Notice of such
participation to the Borrowers and the Agent shall be required prior to any
participation becoming effective with respect to a Participant which is not a
Lender or an Affiliate thereof. In the event of any such sale by a Lender of
participating interests to a Participant, such Lender's obligations under the
Loan Documents shall remain unchanged, such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
such Lender shall remain the holder of any such Note for all purposes under the
Loan Documents, all amounts payable by the Borrowers under this Agreement shall
be determined as if such Lender had not sold such participating interests, and
the Borrowers and the Agent shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under the Loan
Documents except that, for purposes of ARTICLE IV hereof, the Participants shall
be entitled to the same rights as if they were Lenders.
(B) VOTING RIGHTS. Each Lender shall retain the sole right to approve,
without the consent of any Participant, any amendment, modification or waiver of
any provision of the Loan Documents other than any amendment, modification or
waiver with respect to any Loan or Revolving Loan Commitment in which such
Participant has an interest which forgives principal, interest or fees or
reduces the interest rate or fees payable pursuant to the terms of this
Agreement with respect to any such Loan or Revolving Loan Commitment, postpones
any date fixed for any regularly-scheduled payment of principal of, or interest
or fees on, any such Loan or Revolving Loan Commitment, or releases all or
substantially all of the Collateral, if any, securing any such Loan.
(C) BENEFIT OF SETOFF. Each of the Borrowers agrees that each
Participant shall be deemed to have the right of setoff provided in SECTION 12.1
hereof in respect to its participating interest in amounts owing under the Loan
Documents to the same extent as if the amount of its participating interest were
owing directly to it as a Lender under the Loan Documents,
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PROVIDED that each Lender shall retain the right of setoff provided in SECTION
12.1 hereof with respect to the amount of participating interests sold to each
Participant except to the extent such Participant exercises its right of setoff.
The Lenders agree to share with each Participant, and each Participant, by
exercising the right of setoff provided in SECTION 12.1 hereof, agrees to share
with each Lender, any amount received pursuant to the exercise of its right of
setoff, such amounts to be shared in accordance with SECTION 12.2 as if each
Participant were a Lender.
13.3 ASSIGNMENTS.
(A) PERMITTED ASSIGNMENTS. Any Lender may, in the ordinary course of
its business and in accordance with applicable law, at any time assign to one or
more banks or other entities ("PURCHASERS") all or a portion of its rights and
obligations under this Agreement (including, without limitation, its Revolving
Loan Commitment, all Loans owing to it, all of its participation interests in
existing Letters of Credit, and its obligation to participate in additional
Letters of Credit hereunder) in accordance with the provisions of this SECTION
13.3. Each assignment shall be of a constant, and not a varying, ratable
percentage of all of the assigning Lender's rights and obligations under this
Agreement. Such assignment shall be substantially in the form of EXHIBIT F
hereto and shall not be permitted hereunder unless such assignment is either for
all of such Lender's rights and obligations under the Loan Documents or, without
the prior written consent of the Agent, involves loans and commitments in an
aggregate amount of at least $10,000,000 (which minimum amount may be waived by
the Required Lenders after the occurrence of a Default or Unmatured Event of
Default). The consent of the Agent and, prior to the occurrence of a Default or
Unmatured Default, the Borrowers (which consent, in each such case, shall not be
unreasonably withheld), shall be required prior to an assignment becoming
effective with respect to a Purchaser which is not a Lender or an Affiliate
thereof.
(B) EFFECT; EFFECTIVE DATE. Upon (i) delivery to the Agent of a notice
of assignment, substantially in the form attached as APPENDIX I to EXHIBIT F
hereto (a "NOTICE OF ASSIGNMENT"), together with any consent required by SECTION
13.3.(A) hereof, and (ii) payment of a $3,500 fee to the Agent for processing
such assignment, such assignment shall become effective on the effective date
specified in such Notice of Assignment. The Notice of Assignment shall contain a
representation by the Purchaser to the effect that none of the consideration
used to make the purchase of the Commitment, Loans and L/C Obligations under the
applicable assignment agreement are "plan assets" as defined under ERISA and
that the rights and interests of the Purchaser in and under the Loan Documents
will not be "plan assets" under ERISA. On and after the effective date of such
assignment, such Purchaser, if not already a Lender, shall for all purposes be a
Lender party to this Agreement and any other Loan Documents executed by the
Lenders and shall have all the rights and obligations of a Lender under the Loan
Documents, to the same extent as if it were an original party hereto, and no
further consent or action by the Borrowers, the Lenders or the Agent shall be
required to release the transferor Lender with respect to the percentage of the
Aggregate Revolving Loan Commitment, Loans and Letter of Credit participations
assigned to such Purchaser.
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Upon the consummation of any assignment to a Purchaser pursuant to this SECTION
13.3(B), the transferor Lender, the Agent and the Borrowers shall make
appropriate arrangements so that replacement Notes are issued to such transferor
Lender and new Notes or, as appropriate, replacement Notes, are issued to such
Purchaser, in each case in principal amounts reflecting their Revolving Loan
Commitment, as adjusted pursuant to such assignment.
(C) THE REGISTER. The Agent shall maintain at its address referred to
in SECTION 14.1 a copy of each assignment delivered to and accepted by it
pursuant to this SECTION 13.3 and a register (the "REGISTER") for the
recordation of the names and addresses of the Lenders and the Revolving Loan
Commitment of and principal amount of the Loans owing to, each Lender from time
to time and whether such Lender is an original Lender or the assignee of another
Lender pursuant to an assignment under this SECTION 13.3. The entries in the
Register shall be conclusive and binding for all purposes, absent manifest
error, and the Borrowers and each of their respective Subsidiaries, the Agent
and the Lenders may treat each Person whose name is recorded in the Register as
a Lender hereunder for all purposes of this Agreement. The Register shall be
available for inspection by any Borrower or any Lender at any reasonable time
and from time to time upon reasonable prior notice.
13.4 CONFIDENTIALITY. Subject to SECTION 13.5, the Agent and the
Lenders shall hold all nonpublic information obtained pursuant to the
requirements of this Agreement and identified as such by the Borrowers in
accordance with such Person's customary procedures for handling confidential
information of this nature and in accordance with safe and sound banking
practices and in any event may make disclosure reasonably required by a
prospective Transferee in connection with the contemplated participation or
assignment or as required or requested by any Governmental Authority or
representative thereof or pursuant to legal process and shall require any such
Transferee to agree (and require any of its Transferees to agree) to comply with
this SECTION 13.4. In no event shall the Agent or any Lender be obligated or
required to return any materials furnished by any Borrower; PROVIDED, HOWEVER,
each prospective Transferee shall be required to agree that if it does not
become a participant or assignee it shall return all materials furnished to it
by or on behalf of the Borrowers in connection with this Agreement.
13.5 DISSEMINATION OF INFORMATION. Each of the Borrowers authorizes
each Lender to disclose to any Participant or Purchaser or any other Person
acquiring an interest in the Loan Documents by operation of law (each a
"TRANSFEREE") and any prospective Transferee any and all information in such
Lender's possession concerning any Borrower and its respective Subsidiaries;
PROVIDED that prior to any such disclosure, such prospective Transferee shall
agree to preserve in accordance with SECTION 13.4 the confidentiality of any
confidential information described therein.
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ARTICLE XIV: NOTICES
14.1 GIVING NOTICE. Except as otherwise permitted by SECTION 2.12 with
respect to borrowing notices, all notices and other communications provided to
any party hereto under this Agreement or any other Loan Documents shall be in
writing or by telex or by facsimile and addressed or delivered to such party at
its address set forth below its signature hereto or at such other address as may
be designated by such party in a notice to the other parties. Any notice, if
mailed and properly addressed with postage prepaid, shall be deemed given when
received; any notice, if transmitted by telex or facsimile, shall be deemed
given when transmitted (answerback confirmed in the case of telexes).
14.2 CHANGE OF ADDRESS. The Borrowers, the Agent and any Lender may
each change the address for service of notice upon it by a notice in writing to
the other parties hereto.
ARTICLE XV: COUNTERPARTS
This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one agreement, and any of the parties
hereto may execute this Agreement by signing any such counterpart. This
Agreement shall be effective when it has been executed by each of the Borrowers,
the Agent and the Lenders and each party has notified the Agent by telex or
telephone, that it has taken such action.
[Remainder of This Page Intentionally Blank]
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SIGNATURE PAGE TO AAPC CREDIT AGREEMENT IN WITNESS WHEREOF, the
Borrowers, the Lenders and the Agent have executed this Agreement as of the date
first above written.
AMERICAN ARCHITECTURAL
PRODUCTS CORPORATION,
as a Borrower
By: /s/ Joseph Dominijanni
-------------------------------
Name: Joseph Dominijanni
Title: Treasurer
Address:
755 Boardman-Canfield Road
South Bridge Executive Park
Building G-West
Boardman, Ohio 44512
Attention: Jonathan K. Schoenike
Telephone No.:330-965-9910
Facsimile No.: 330-965-9915
S-1
<PAGE> 101
EAGLE & TAYLOR COMPANY,
as a Borrower
By: /s/ Joseph Dominijanni
------------------------------
Name: Joseph Dominijanni
Title: Vice President
Address:
755 Boardman-Canfield Road
South Bridge Executive Park
Building G-West
Boardman, Ohio 44512
Attention: Jonathan K. Schoenike
Telephone No.:330-965-9910
Facsimile No.: 330-965-9915
S-2
<PAGE> 102
FORTE, INC., as a Borrower
By: /s/ Joseph Dominijanni
-------------------------
Name: Joseph Dominijanni
Title: Vice President
Address:
755 Boardman-Canfield Road
South Bridge Executive Park
Building G-West
Boardman, Ohio 44512
Attention: Jonathan K. Schoenike
Telephone No.:330-965-9910
Facsimile No.: 330-965-9915
S-3
<PAGE> 103
WESTERN INSULATED GLASS, CO.,
as a Borrower
By: /s/ Joseph Dominijanni
---------------------------
Name: Joseph Dominijanni
Title: Vice President
Address:
755 Boardman-Canfield Road
South Bridge Executive Park
Building G-West
Boardman, Ohio 44512
Attention: Jonathan K. Schoenike
Telephone No.:330-965-9910
Facsimile No.: 330-965-9915
S-4
<PAGE> 104
THERMETIC GLASS, INC.,
as a Borrower
By: /s/ Joseph Dominijanni
-------------------------
Name: Joseph Dominijanni
Title: Vice President
Address:
755 Boardman-Canfield Road
South Bridge Executive Park
Building G-West
Boardman, Ohio 44512
Attention: Jonathan K. Schoenike
Telephone No.:330-965-9910
Facsimile No.: 330-965-9915
S-5
<PAGE> 105
BINNINGS BUILDING PRODUCTS, INC.,
as a Borrower
By: /s/ Joseph Dominijanni
-------------------------
Name: Joseph Dominijanni
Title: Vice President
Address:
755 Boardman-Canfield Road
South Bridge Executive Park
Building G-West
Boardman, Ohio 44512
Attention: Jonathan K. Schoenike
Telephone No.:330-965-9910
Facsimile No.: 330-965-9915
S-6
<PAGE> 106
DANVID WINDOW COMPANY,
as a Borrower
By: /s/ Joseph Dominijanni
-------------------------
Name: Joseph Dominijanni
Title: Vice President
Address:
755 Boardman-Canfield Road
South Bridge Executive Park
Building G-West
Boardman, Ohio 44512
Attention: Jonathan K. Schoenike
Telephone No.:330-965-9910
Facsimile No.: 330-965-9915
S-7
<PAGE> 107
MODERN WINDOW ACQUISITION
CORPORATION, as a Borrower
By: /s/ Joseph Dominijanni
-------------------------
Name: Joseph Dominijanni
Title: Vice President
Address:
755 Boardman-Canfield Road
South Bridge Executive Park
Building G-West
Boardman, Ohio 44512
Attention: Jonathan K. Schoenike
Telephone No.:330-965-9910
Facsimile No.: 330-965-9915
S-8
<PAGE> 108
AMERICAN GLASSMITH ACQUISITION
CORPORATION, as a Borrower
By: /s/ Joseph Dominijanni
-------------------------
Name: Joseph Dominijanni
Title: Vice President
Address:
755 Boardman-Canfield Road
South Bridge Executive Park
Building G-West
Boardman, Ohio 44512
Attention: Jonathan K. Schoenike
Telephone No.:330-965-9910
Facsimile No.: 330-965-9915
S-9
<PAGE> 109
VINYLSOURCE, INC., as a Borrower
By: /s/ Joseph Dominijanni
-------------------------------
Name: Joseph Dominijanni
Title: Vice President
Address:
755 Boardman-Canfield Road
South Bridge Executive Park
Building G-West
Boardman, Ohio 44512
Attention: Jonathan K. Schoenike
Telephone No.:330-965-9910
Facsimile No.: 330-965-9915
S-10
<PAGE> 110
WEATHER-SEAL ACQUISITION
CORPORATION, as a Borrower
By: /s/ Joseph Dominijanni
--------------------------
Name: Joseph Dominijanni
Title: Vice President
Address:
755 Boardman-Canfield Road
South Bridge Executive Park
Building G-West
Boardman, Ohio 44512
Attention: Jonathan K. Schoenike
Telephone No.:330-965-9910
Facsimile No.: 330-965-9915
S-11
<PAGE> 111
EAGLE WINDOW & DOOR CENTER, INC.,
as a Borrower
By: /s/ Joseph Dominijanni
--------------------------
Name: Joseph Dominijanni
Title: Vice President
Address:
755 Boardman-Canfield Road
South Bridge Executive Park
Building G-West
Boardman, Ohio 44512
Attention: Jonathan K. Schoenike
Telephone No.:330-965-9910
Facsimile No.: 330-965-9915
S-12
<PAGE> 112
DENVER WINDOW ACQUISITION
CORPORATION, as a Borrower
By: /s/ Joseph Dominijanni
-------------------------
Name: Joseph Dominijanni
Title: Vice President
Address:
755 Boardman-Canfield Road
South Bridge Executive Park
Building G-West
Boardman, Ohio 44512
Attention: Jonathan K. Schoenike
Telephone No.:330-965-9910
Facsimile No.: 330-965-9915
S-13
<PAGE> 113
AAPC ONE ACQUISITION CORPORATION,
as a Borrower
By: /s/ Joseph Dominijanni
-------------------------
Name: Joseph Dominijanni
Title: Vice President
Address:
755 Boardman-Canfield Road
South Bridge Executive Park
Building G-West
Boardman, Ohio 44512
Attention: Jonathan K. Schoenike
Telephone No.:330-965-9910
Facsimile No.: 330-965-9915
S-14
<PAGE> 114
AAPC TWO ACQUISITION CORPORATION,
as a Borrower
By: /s/ Joseph Dominijanni
-------------------------
Name: Joseph Dominijanni
Title: Vice President
Address:
755 Boardman-Canfield Road
South Bridge Executive Park
Building G-West
Boardman, Ohio 44512
Attention: Jonathan K. Schoenike
Telephone No.:330-965-9910
Facsimile No.: 330-965-9915
S-15
<PAGE> 115
BANKBOSTON, N.A.,
Individually and as Agent
By: /s/ Brent E. Shay
----------------------
Name: BRENT E. SHAY
Title: MANAGING DIRECTOR
Address:
Asset Based Finance
100 Federal Street
Mail Stop 01-09-06
Boston, MA 02110
Attention: Brent E. Shay, Managing Director
Telephone: 617-434-3556
Facsimile: 617-434-6241
S-16
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDTED FINANCIAL STATEMENTS OF AMERICAN ARCHITECTURAL PRODUCTS CORPORATION
AS OF JUNE 30, 1998 AND FOR THE THREE MONTHS THEN ENDED AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> APR-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 4,714,189
<SECURITIES> 0
<RECEIVABLES> 33,809,465
<ALLOWANCES> 902,951
<INVENTORY> 34,943,871
<CURRENT-ASSETS> 73,778,768
<PP&E> 83,621,038
<DEPRECIATION> 5,935,758
<TOTAL-ASSETS> 193,553,908
<CURRENT-LIABILITIES> 57,871,005
<BONDS> 125,000,000
0
0
<COMMON> 13,487
<OTHER-SE> 3,220,400
<TOTAL-LIABILITY-AND-EQUITY> 193,553,908
<SALES> 61,637,868
<TOTAL-REVENUES> 61,637,868
<CGS> 47,049,974
<TOTAL-COSTS> 47,049,974
<OTHER-EXPENSES> 10,820,443
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,762,944
<INCOME-PRETAX> 189,908
<INCOME-TAX> 71,066
<INCOME-CONTINUING> 118,842
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 118,842
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
