EXHIBIT 10.12
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AMENDED AND RESTATED
CREDIT AGREEMENT
Dated as of July 14, 1999
among
VERDANT BRANDS, INC.
SAFER, INC.,
SURECO, INC.,
CONSEP, INC.,
▇▇▇▇▇▇▇ ▇▇▇▇ INC.,
PACOAST INC., and
VALLEY GREEN CENTER, INC.
as Borrowers,
THE OTHER CREDIT PARTIES SIGNATORY HERETO,
as Credit Parties,
THE LENDERS SIGNATORY HERETO FROM TIME TO TIME,
as Lenders,
and
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent and Lender
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TABLE OF CONTENTS
1. AMOUNT AND TERMS OF CREDIT...............................................2
1.1 Credit Facilities.................................................2
1.2 Letters of Credit.................................................6
1.3 Prepayment........................................................6
1.4 Use of Proceeds...................................................8
1.5 Interest..........................................................9
1.6 Eligible Accounts................................................11
1.7 Eligible Inventory...............................................13
1.8 Cash Management Systems..........................................15
1.9 Fees.............................................................15
1.10 Receipt of Payments..............................................16
1.11 Application and Allocation of Payments...........................16
1.12 Loan Account and Accounting......................................17
1.13 Indemnity........................................................17
1.14 Access...........................................................18
1.15 Taxes............................................................19
1.16 Capital Adequacy; Increased Costs; Illegality....................20
1.17 Single Loan......................................................21
1.18 Effect of Amendment and Restatement..............................21
2. CONDITIONS PRECEDENT....................................................22
2.1 Conditions to Effectiveness of Agreement.........................22
2.2 Further Conditions to Each Loan..................................23
3. REPRESENTATIONS AND WARRANTIES..........................................23
3.1 Corporate Existence; Compliance with Law.........................24
3.2 Executive Offices; FEIN..........................................24
3.3 Corporate Power, Authorization, Enforceable Obligations..........24
3.4 Financial Statements.............................................25
3.5 Material Adverse Effect..........................................25
3.6 Ownership of Property; Liens.....................................25
3.7 Labor Matters....................................................26
3.8 Ventures, Subsidiaries and Affiliates; Outstanding Stock
and Indebtedness.................................................26
3.9 Government Regulation............................................26
3.10 Margin Regulations...............................................27
3.11 Taxes............................................................27
3.12 ERISA............................................................28
3.13 No Litigation....................................................28
3.14 Brokers..........................................................28
3.15 Intellectual Property............................................29
3.16 Full Disclosure..................................................29
3.17 Environmental Matters............................................29
3.18 Insurance........................................................30
3.19 Deposit and Disbursement Accounts................................30
3.20 Government Contracts.............................................30
3.21 Customer and Trade Relations.....................................30
3.22 Agreements and Other Documents...................................30
3.23 Solvency.........................................................31
3.24 Year 2000 Representations........................................31
3.25 Dexol Acquisition Agreement......................................31
3.26 Subordinated Debt................................................32
3.27 SRI Acquisition Agreement........................................32
3.28 SureCo Notes.....................................................32
3.29 Consep Merger Agreement..........................................33
4. FINANCIAL STATEMENTS AND INFORMATION....................................33
4.1 Reports and Notices..............................................33
4.2 Communication with Accountants...................................33
5. AFFIRMATIVE COVENANTS...................................................34
5.1 Maintenance of Existence and Conduct of Business.................34
5.2 Payment of Obligations...........................................34
5.3 Books and Records................................................34
5.4 Insurance; Damage to or Destruction of Collateral................35
5.5 Compliance with Laws.............................................36
5.6 Supplemental Disclosure..........................................36
5.7 Intellectual Property............................................37
5.8 Environmental Matters............................................37
5.9 Landlords' Agreements, Mortgagee Agreements and Bailee Letters...38
5.10 Year 2000 Problems...............................................38
5.11 Further Assurances...............................................38
6. NEGATIVE COVENANTS......................................................38
6.1 Mergers, Subsidiaries, Etc.......................................38
6.2 Investments......................................................41
6.3 Indebtedness.....................................................42
6.4 Employee Loans and Affiliate Transactions........................43
6.5 Capital Structure and Business...................................44
6.6 Guaranteed Indebtedness..........................................44
6.7 Liens............................................................44
6.8 Sale of Stock and Assets.........................................45
6.9 ERISA............................................................45
6.10 Financial Covenants..............................................45
6.11 Hazardous Materials..............................................46
6.12 Sale-Leasebacks..................................................46
6.13 Cancellation of Indebtedness.....................................46
6.14 Restricted Payments..............................................46
6.15 Change of Corporate Name or Location; Change of Fiscal Year......46
6.16 No Impairment of Intercompany Transfers..........................47
6.17 No Speculative Transactions......................................47
6.18 Leases...........................................................47
6.19 Changes Relating to Subordinated Debt............................47
7. TERM....................................................................48
7.1 Termination......................................................48
7.2 Survival of Obligations Upon Termination of Financing
Arrangements.....................................................48
8. EVENTS OF DEFAULT: RIGHTS AND REMEDIES..................................48
8.1 Events of Default................................................48
8.2 Remedies.........................................................50
8.3 Waivers by Credit Parties........................................51
9. ASSIGNMENTS AND PARTICIPATIONS; APPOINTMENT OF AGENT....................51
9.1 Assignment and Participations....................................51
9.2 Appointment of Agent.............................................53
9.3 Agent's Reliance, Etc............................................54
9.4 GE Capital and Affiliates........................................54
9.5 Lender Credit Decision...........................................55
9.6 Indemnification..................................................55
9.7 Successor Agent..................................................55
9.8 Setoff and Sharing of Payments...................................56
9.9 Advances; Payments; Non-Funding Lenders; Information;
Actions in Concert...............................................57
10. SUCCESSORS AND ASSIGNS..................................................59
10.1 Successors and Assigns...........................................59
11. MISCELLANEOUS...........................................................59
11.1 Complete Agreement; Modification of Agreement....................59
11.2 Amendments and Waivers...........................................59
11.3 Fees and Expenses................................................62
11.4 No Waiver........................................................63
11.5 Remedies.........................................................63
11.6 Severability.....................................................63
11.7 Conflict of Terms................................................63
11.8 Confidentiality..................................................64
11.9 GOVERNING LAW....................................................64
11.10 Notices..........................................................65
11.11 Section Titles...................................................65
11.12 Counterparts.....................................................65
11.13 WAIVER OF JURY TRIAL.............................................65
11.14 Press Releases...................................................66
11.15 Reinstatement....................................................66
11.16 Advice of Counsel................................................66
11.17 No Strict Construction...........................................67
12. CROSS-GUARANTY..........................................................67
12.1 Cross-Guaranty...................................................67
12.2 Waivers by Borrowers.............................................67
12.3 Benefit of Guaranty..............................................68
12.4 Subordination of Subrogation, Etc................................68
12.5 Election of Remedies.............................................68
12.6 Limitation.......................................................69
12.7 Contribution with Respect to Guaranty Obligations................69
12.8 Liability Cumulative.............................................70
INDEX OF APPENDICES
Exhibit 1.1(a)(i) - Form of Notice of Revolving Credit Advance
Exhibit 1.1(a)(ii) - Form of Revolving Note
Exhibit 1.1(b) - Form of Term Note
Exhibit 1.1(c)(ii) - Form of Swing Line Note
Exhibit 1.5(e) - Form of Notice of Conversion/Continuation
Exhibit 4.1(b) - Form of Borrowing Base Certificate
Exhibit 9.1(a) - Form of Assignment Agreement
Schedule 1.1 - Responsible Individual
Schedule 3.2 - Executive Offices; FEIN
Schedule 3.6 - Real Estate and Leases
Schedule 3.7 - Labor Matters
Schedule 3.8 - Ventures, Subsidiaries and Affiliates; Outstanding Stock
Schedule 3.11 - Tax Matters
Schedule 3.12 - ERISA Plans
Schedule 3.13 - Litigation
Schedule 3.15 - Intellectual Property
Schedule 3.17 - Hazardous Materials
Schedule 3.18 - Insurance
Schedule 3.19 - Deposit and Disbursement Accounts
Schedule 3.20 - Government Contracts
Schedule 3.22 - Material Agreements
Schedule 3.24 - Year 2000
Schedule 5.1 - Trade Names
Schedule 6.3 - Indebtedness
Schedule 6.4(a) - Transactions with Affiliates
Schedule 6.6 - Guaranteed Indebtedness
Schedule 6.7 - Existing Liens
Annex A (Recitals) - Definitions
Annex B (Section 1.2) - Letters of Credit
Annex C (Section 1.8) - Cash Management System
Annex D (Section 2.1(a)) - Schedule of Additional Closing Documents
Annex E (Section 4.1(a)) - Financial Statements and Projections -- Reporting
Annex F (Section 4.1(b)) - Collateral Reports
Annex G (Section 6.10) - Financial Covenants
Annex H (Section 9.9(a)) - Lenders' Wire Transfer Information
Annex I (Section 11.10) - Notice Addresses
Annex J (from Annex A - Commitments as of Closing Date
Commitments definition)
AMENDED AND RESTATED CREDIT AGREEMENT, dated as of July 14, 1999 among
VERDANT BRANDS, INC., a Minnesota corporation ("Verdant"), SAFER, INC., a
Delaware corporation ("Safer"), SURECO, INC., a Georgia corporation ("SureCo"),
CONSEP, INC., an Oregon corporation ("Consep"), ▇▇▇▇▇▇▇ ▇▇▇▇ INC., a California
corporation ("▇▇▇▇"), PACOAST INC., a California corporation ("Pacoast"), and
VALLEY GREEN CENTER, INC., a Massachusetts corporation ("Valley Green")
(Verdant, Safer, SureCo, Consep, ▇▇▇▇, Pacoast, and Valley Green are sometimes
referred to herein individually as a "Borrower" and collectively with any other
Credit Parties which hereafter become Borrowers hereunder in accordance with the
terms hereof, the "Borrowers"); and GENERAL ELECTRIC CAPITAL CORPORATION, a New
York corporation, for itself, as Lender, and as Agent for Lenders, and the other
Lenders signatory hereto from time to time.
RECITALS
WHEREAS, the parties hereto are parties to a Credit Agreement dated as of
May 2, 1997 (as amended, supplemented or otherwise modified, the "Prior Credit
Agreement") pursuant to which GE Capital provided to Borrowers aggregate
commitments of up to Twenty-Five Million Dollars ($25,000,000), subject to the
terms and conditions set forth therein;
WHEREAS, each Borrower secured all of its obligations under the Loan
Documents by granting to GE Capital a security interest in and lien upon all of
its existing and after-acquired personal property;
WHEREAS, the parties hereto desire to amend and restate the Prior Credit
Agreement for the purpose of reconstituting the Indebtedness outstanding
thereunder in the form of revolving and term credit facilities of up to
Thirty-Seven Million Dollars ($37,000,000), subject to the terms and conditions
set forth herein; and
WHEREAS, in connection with such amendment and restatement, each Borrower
desires to secure the Obligations, as amended and restated, under the Loan
Documents by continuing its grant to Agent, for the benefit of Agent and
Lenders, of a security interest in and lien upon all of its existing and
after-acquired personal property;
WHEREAS, capitalized terms used in this Agreement shall have the meanings
ascribed to them in Annex A. All Annexes, Disclosure Schedules, Exhibits and
other attachments (collectively, "Appendices") hereto, or expressly identified
to this Agreement, are incorporated herein by reference, and taken together,
shall constitute but a single agreement. These Recitals shall be construed as
part of the Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, and for other good and valuable consideration, the
parties hereto agree as follows:
1. AMOUNT AND TERMS OF CREDIT
1.1 Credit Facilities.
(a) Revolving Credit Facility. (i) Subject to the terms and conditions
hereof, each Revolving Lender agrees to make or continue to make available from
time to time until the Commitment Termination Date its Pro Rata Share of
advances (each, a "Revolving Credit Advance"). The Pro Rata Share of the
Revolving Loan of any Revolving Lender shall not at any time exceed its separate
Revolving Loan Commitment. The obligations of each Revolving Lender hereunder
shall be several and not joint. The aggregate amount of Revolving Credit
Advances outstanding shall not exceed at any time the lesser of (A) the Maximum
Amount and (B) the Aggregate Borrowing Base, in each case less the sum of the
Letter of Credit Obligations and the Swing Line Loan outstanding at such time
("Borrowing Availability"). Moreover, the sum of the Revolving Loan and Swing
Line Loan outstanding to any Borrower shall not exceed at any time that
Borrower's separate Borrowing Base. Until the Commitment Termination Date,
Borrowers may from time to time borrow, repay and reborrow under this Section
1.1(a). Each Revolving Credit Advance shall be made on notice by Borrower
Representative on behalf of the applicable Borrower to the representative of
Agent identified on Schedule 1.1 at the address specified thereon. Those notices
must be given no later than (1) 12:00 noon (Chicago time) on the Business Day of
the proposed Revolving Credit Advance in the case of an Index Rate Loan, or (2)
12:00 noon (Chicago time) on the date which is three (3) Business Days prior to
the proposed Revolving Credit Advance, in the case of a LIBOR Loan. Each such
notice (a "Notice of Revolving Credit Advance") must be given in writing (by
telecopy or overnight courier) substantially in the form of Exhibit 1.1(a)(i),
and shall include the information required in such Exhibit and such other
information as may be required by Agent. If any Borrower desires to have the
Revolving Credit Advances bear interest by reference to a LIBOR Rate, Borrower
Representative must comply with Section 1.5(e).
(ii) Each Borrower shall execute and deliver to each Revolving Lender an
amended and restated note to evidence the Revolving Loan Commitment of that
Revolving Lender. Each note shall be in the principal amount of the Revolving
Loan Commitment of the applicable Revolving Lender, dated the Closing Date and
substantially in the form of Exhibit 1.1(a)(ii) (each a "Revolving Note" and,
collectively, the "Revolving Notes"). Each Revolving Note shall represent the
obligation of each Borrower to pay the amount of the each Revolving Lender's
Revolving Loan Commitment or, if less, the applicable Revolving Lender's Pro
Rata Share of the aggregate unpaid principal amount of all Revolving Credit
Advances to such Borrower together with interest thereon as prescribed in
Section 1.5. The entire unpaid balance of the aggregate Revolving Loan and all
other non-contingent Obligations shall be immediately due and payable in full in
immediately available funds on the Commitment Termination Date.
(iii) At the request of Borrower Representative, in its discretion Agent
may (but shall have absolutely no obligation to), make Revolving Credit Advances
to Borrowers on behalf of Revolving Lenders in amounts which cause the
outstanding balance of the aggregate
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Revolving Loan to exceed the Aggregate Borrowing Base (less the Swing Line Loan)
or which cause the outstanding balance of the Revolving Loan owing by any
Borrower to exceed that Borrower's separate Borrowing Base (less the Swing Line
Loan advanced to that Borrower) (any such excess Revolving Credit Advances are
herein referred to collectively as "Overadvances"), and no such event or
occurrence shall cause or constitute a waiver by Agent or Lenders of any Default
or Event of Default that may result therefrom or of Agent's, Swing Line Lender's
or Revolving Lenders' right to refuse to make any further Overadvances, Swing
Line Advances or Revolving Credit Advances, or incur any Letter of Credit
Obligations, as the case may be, at any time that an Overadvance exists or would
result therefrom. In addition, Overadvances may be made even if the conditions
to lending set forth in Section 2 have not been met. All Overadvances shall
constitute Index Rate Loans, shall bear interest at the Default Rate and shall
be payable on demand. Except as otherwise provided in Section 1.11(b), the
authority of Agent to make Overadvances is limited to an aggregate amount not to
exceed $1,000,000 at any time, shall not cause the aggregate Revolving Loan to
exceed the Maximum Amount, and may be revoked prospectively by a written notice
to Agent signed by Revolving Lenders holding fifty percent (50%) or more of the
Revolving Loan Commitments.
(b) Term Loan. (i) Subject to the terms and conditions hereof, each Term
Lender agrees to make a term loan to Verdant on the Closing Date to (the "Term
Loan") in the original principal amount of its Term Loan Commitment. The
obligations of each Term Lender hereunder shall be several and not joint. Each
such Term Loan shall be evidenced by promissory notes substantially in the form
of Exhibit 1.1(b) (each a "Term Note" and collectively, the "Term Notes"), and
Verdant shall execute and deliver a Term Note to each Term Lender. Each Term
Note shall represent the obligation of Verdant to pay the amount of the
applicable Term Lender's Term Loan Commitment to Verdant, together with interest
thereon as prescribed in Section 1.5.
(ii) Notwithstanding anything contained herein to the contrary, Verdant
shall pay the aggregate outstanding principal balance of the Term Loan on the
Commitment Termination Date, if not sooner paid in full.
(iii) Each payment of principal with respect to the Term Loan shall be paid
to Agent for the ratable benefit of each Term Lender making a Term Loan ratably
in proportion to each such Term Lender's respective Term Loan Commitment.
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(c) Swing Line Facility.
(i) Agent shall notify the Swing Line Lender upon Agent's receipt of any
Notice of Revolving Credit Advance. Subject to the terms and conditions hereof,
the Swing Line Lender may, in its discretion, make available from time to time
until the Commitment Termination Date advances (each, a "Swing Line Advance") in
accordance with any such notice. The aggregate amount of Swing Line Advances
outstanding shall not exceed the lesser of (A) the Swing Line Commitment and (B)
the lesser of the Maximum Amount and (except for Overadvances) the Aggregate
Borrowing Base, in each case, less the outstanding balance of the Revolving Loan
at such time ("Swing Line Availability"). Moreover, except for Overadvances, the
Swing Line Loan outstanding to any Borrower shall not exceed at any time that
Borrower's separate Borrowing Base less the Revolving Loan outstanding to such
Borrower. Until the Commitment Termination Date, Borrowers may from time to time
borrow, repay and reborrow under this Section 1.1(c). Each Swing Line Advance
shall be made pursuant to a Notice of Revolving Credit Advance delivered to
Agent by Borrower Representative on behalf of the applicable Borrower in
accordance with Section 1.1(a). Those notices must be given no later than 12:00
noon (Chicago time) on the Business Day of the proposed Swing Line Advance.
Notwithstanding any other provision of this Agreement or the other Loan
Documents, the Swing Line Loan shall constitute an Index Rate Loan. Borrowers
shall repay the aggregate outstanding principal amount of the Swing Line Loan
upon demand therefor by Agent.
(ii) Each Borrower shall execute and deliver to the Swing Line Lender a
promissory note to evidence the Swing Line Commitment. Each note shall be in the
principal amount of the Swing Line Commitment of the Swing Line Lender, dated
the Closing Date and substantially in the form of Exhibit 1.1(c)(ii) (each a
"Swing Line Note" and, collectively, the "Swing Line Notes"). Each Swing Line
Note shall represent the obligation of each Borrower to pay the amount of the
Swing Line Commitment or, if less, the aggregate unpaid principal amount of all
Swing Line Advances made to such Borrower together with interest thereon as
prescribed in Section 1.5. The entire unpaid balance of the Swing Line Loan and
all other non-contingent Obligations shall be immediately due and payable in
full in immediately available funds on the Commitment Termination Date if not
sooner paid in full.
(iii) Refunding of Swing Line Loans. The Swing Line Lender, at any time and
from time to time in its sole and absolute discretion, may on behalf of any
Borrower (and each Borrower hereby irrevocably authorizes the Swing Line Lender
to so act on its behalf) request each Revolving Lender (including the Swing Line
Lender) to make a Revolving Credit Advance to such Borrower (which shall be an
Index Rate Loan) in an amount equal to such Revolving Lender's Pro Rata Share of
the principal amount of such Borrower's Swing Line Loan (the "Refunded Swing
Line Loan") outstanding on the date such notice is given. Unless any of the
events described in Sections 8.1(h) or 8.1(i) shall have occurred (in which
event the procedures of Section 1.1(c)(iv) shall apply) and regardless of
whether the conditions precedent set forth in this Agreement to the making of a
Revolving Credit Advance are then satisfied, each Revolving Lender shall
disburse directly to Agent, its Pro Rata Share of a Revolving Credit Advance on
behalf of the Swing Line Lender, prior to 2:00
4
p.m. (Chicago time), in immediately available funds on the Business Day next
succeeding the date such notice is given. The proceeds of such Revolving Credit
Advances shall be immediately paid to the Swing Line Lender and applied to repay
the Refunded Swing Line Loan of the applicable Borrower.
(iv) Participation in Swing Line Loans. If, prior to refunding a Swing Line
Loan with a Revolving Credit Advance pursuant to Section 1.1(c)(iii), one of the
events described in Sections 8.1(h) or 8.1(i) shall have occurred, then, subject
to the provisions of Section 1.1(c)(v) below, each Revolving Lender will, on the
date such Revolving Credit Advance was to have been made for the benefit of the
applicable Borrower, purchase from the Swing Line Lender an undivided
participation interest in the Swing Line Loan to such Borrower in an amount
equal to its Pro Rata Share of such Swing Line Loan. Upon request, each
Revolving Lender will promptly transfer to the Swing Line Lender, in immediately
available funds, the amount of its participation.
(v) Revolving Lenders' Obligations Unconditional. Each Revolving Lender's
obligation to make Revolving Credit Advances in accordance with Section
1.1(c)(iii) and to purchase participating interests in accordance with Section
1.1(c)(iv) shall be absolute and unconditional and shall not be affected by any
circumstance, including (A) any setoff, counterclaim, recoupment, defense or
other right which such Revolving Lender may have against the Swing Line Lender,
any Borrower or any other Person for any reason whatsoever; (B) the occurrence
or continuance of any Default or Event of Default; (C) any inability of any
Borrower to satisfy the conditions precedent to borrowing set forth in this
Agreement on the date upon which such participating interest is to be purchased
or (D) any other circumstance, happening or event whatsoever, whether or not
similar to any of the foregoing. If any Revolving Lender does not make available
to Agent or the Swing Line Lender, as applicable, the amount required pursuant
to Section 1.1(c)(iii) or 1.1(c)(iv), as the case may be, the Swing Line Lender
shall be entitled to recover such amount on demand from such Revolving Lender,
together with interest thereon for each day from the date of non-payment until
such amount is paid in full at the Federal Funds Rate for the first two Business
Days and at the Index Rate thereafter.
(d) Reliance on Notices; Appointment of Borrower Representative. Agent
shall be entitled to rely upon, and shall be fully protected in relying upon,
any Notice of Revolving Credit Advance, Notice of Conversion/Continuation or
similar notice believed by Agent to be genuine. Agent may assume that each
Person executing and delivering such a notice was duly authorized, unless the
responsible individual acting thereon for Agent has actual knowledge to the
contrary. Each Borrower hereby designates Verdant as its representative and
agent on its behalf for the purposes of issuing Notices of Revolving Credit
Advances and Notices of Conversion/Continuation, giving instructions with
respect to the disbursement of the proceeds of the Loans, selecting interest
rate options, requesting Letters of Credit, giving and receiving all other
notices and consents hereunder or under any of the other Loan Documents and
taking all other actions (including in respect of compliance with covenants) on
behalf of any Borrower or Borrowers under the Loan Documents. Borrower
Representative hereby accepts such appointment. Agent and each Lender may regard
any notice or other communication pursuant to
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any Loan Document from Borrower Representative as a notice or communication from
all Borrowers, and may give any notice or communication required or permitted to
be given to any Borrower or Borrowers hereunder to Borrower Representative on
behalf of such Borrower or Borrowers. Each Borrower agrees that each notice,
election, representation and warranty, covenant, agreement and undertaking made
on its behalf by Borrower Representative shall be deemed for all purposes to
have been made by such Borrower and shall be binding upon and enforceable
against such Borrower to the same extent as if the same had been made directly
by such Borrower.
1.2 Letters of Credit. Subject to and in accordance with the terms and
conditions contained herein and in Annex B, Borrower Representative, on behalf
of the applicable Borrower, shall have the right to request, and Revolving
Lenders agree to incur, or purchase participations in, Letter of Credit
Obligations in respect of each Borrower.
1.3 Prepayment.
(a) Voluntary Prepayment. Borrowers may at any time on at least five (5)
days' prior written notice by Borrower Representative to Agent voluntarily
prepay all or part of the Term Loans; provided that any such prepayments shall
be in a minimum amount of $500,000 and integral multiples of $250,000 in excess
of such amount. In addition, Borrowers may at any time on at least ten (10)
days' prior written notice by Borrower Representative to Agent terminate the
Revolving Loan Commitment; provided that upon such termination, all Loans and
other Obligations shall be immediately due and payable in full. Any such
voluntary prepayment and any such termination of the Revolving Loan Commitment
must be accompanied by the payment of the fee required by Section 1.9(c), if
any, plus the payment of any LIBOR funding breakage costs in accordance with
Section 1.13(b). Upon any such prepayment and termination of the Revolving Loan
Commitment, each Borrower's right to request Revolving Credit Advances, or
request that Letter of Credit Obligations be incurred on its behalf, or request
Swing Line Advances, shall simultaneously be terminated. Any partial prepayments
of the Term Loan shall be applied to prepay the scheduled installments of the
Term Loan in inverse order of maturity.
(b) Mandatory Prepayments. (i) If at any time the outstanding balance of
the aggregate Revolving Loan exceeds the lesser of (A) the Maximum Amount and
(B) the Aggregate Borrowing Base, less, in each case, the aggregate outstanding
Swing Line Loan at such time, Borrowers shall immediately repay the aggregate
outstanding Revolving Credit Advances to the extent required to eliminate such
excess. If any such excess remains after repayment in full of the aggregate
outstanding Revolving Credit Advances, Borrowers shall provide cash collateral
for the Letter of Credit Obligations in the manner set forth in Annex B to the
extent required to eliminate such excess. Furthermore, if the outstanding
balance of the Revolving Loan of any Borrower exceeds that Borrower's separate
Borrowing Base at any time less the outstanding balance of the Swing Line Loan
of such Borrower at such time, the applicable Borrower shall immediately repay
its Revolving Credit Advances in the amount of such excess (and, if necessary,
shall provide cash collateral for its Letter of Credit Obligations as described
above).
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Notwithstanding the foregoing, any Overadvance made pursuant to Section
1.1(a)(iii) shall be repaid only on demand.
(ii) Immediately upon receipt by any Credit Party of proceeds of any asset
disposition (including condemnation proceeds, but excluding proceeds of asset
dispositions permitted by Section 6.8(a)) or any sale of Stock of any Subsidiary
of any Credit Party, Borrowers shall prepay the Revolving Loan and Swing Line
Loan in an amount equal to all such proceeds, net of (A) commissions and other
reasonable and customary transaction costs, fees and expenses properly
attributable to such transaction and payable by Borrowers in connection
therewith (in each case, paid to non-Affiliates), (B) transfer taxes, (C)
amounts payable to holders of senior Liens (to the extent such Liens constitute
Permitted Encumbrances hereunder), if any, and (D) an appropriate reserve for
income taxes in accordance with GAAP in connection therewith. Any such
prepayment shall be applied in accordance with clause (c) below.
(iii) If any Borrower issues Stock other than as a result of an equity
contribution in connection with a Permitted Acquisition, no later than the
Business Day following the date of receipt of the cash proceeds thereof, the
issuing Borrower shall prepay the Revolving Loan and Swing Line Loan in an
amount equal to all such proceeds, net of underwriting discounts and commissions
and other reasonable costs paid to non-Affiliates in connection therewith. Any
such prepayment shall be applied in accordance with clause (c) below.
(c) Application of Certain Mandatory Prepayments. Any prepayments made by
any Borrower pursuant to clauses (b)(ii) or (b)(iii) above shall be applied as
follows: first, to Fees and reimbursable expenses of Agent then due and payable
pursuant to any of the Loan Documents; second, in the case of Verdant, to
interest then due and payable on the Term Loan; third, to interest then due and
payable on such Borrower's Swing Line Loan; fourth, to the principal balance of
the Swing Line Loan outstanding to such Borrower until the same shall have been
repaid in full; fifth, to interest then due and payable on Revolving Credit
Advances made to such Borrower; sixth, to the principal balance of Revolving
Credit Advances outstanding to such Borrower until the same shall have been paid
in full; seventh, to any Letter of Credit Obligations of such Borrower to
provide cash collateral therefor in the manner set forth in Annex B, until all
such Letter of Credit Obligations have been fully cash collateralized in the
manner set forth in Annex B; eighth, in the case of each Borrower other than
Verdant, to interest then due and payable on the Term Loan; ninth, if the Swing
Line Commitment is permanently reduced by the amount of such prepayment, to
interest then due and payable on the Swing Line Loan of each other Borrower, pro
rata, tenth, if the Swing Line Commitment is permanently reduced by the amount
of such prepayment, to the principal balance of the Swing Line Loan outstanding
to each other Borrower, pro rata, until the same shall have been repaid in full;
eleventh, if the Revolving Loan Commitment is permanently reduced by the amount
of such prepayment, to interest then due and payable on the Revolving Credit
Advances outstanding to each other Borrower, pro rata; twelfth, if the Revolving
Loan Commitment is permanently reduced by the amount of such prepayment, to the
principal balance of the Revolving Credit Advances made to each other Borrower,
pro rata, until the same shall have been paid in full; thirteenth, to prepay the
scheduled
7
installments of the Term Loan in inverse order of maturity, until such Loan
shall have been prepaid in full; fourteenth, if the Swing Line Commitment is not
permanently reduced by the amount of such prepayment, to interest then due and
payable on the Swing Line Loan of each other Borrower, pro rata, fifteenth, if
the Swing Line Commitment is not permanently reduced by the amount of such
prepayment, to the principal balance of the Swing Line Loan outstanding to each
other Borrower, pro rata, until the same shall have been repaid in full;
sixteenth, if the Revolving Loan Commitment is not permanently reduced by the
amount of such prepayment, to interest then due and payable on the Revolving
Credit Advances outstanding to each other Borrower, pro rata; seventeenth, if
the Revolving Loan Commitment is not permanently reduced by the amount of such
prepayment, to the principal balance of the Revolving Credit Advances made to
each other Borrower, pro rata, until the same shall have been paid in full; and
last to any Letter of Credit Obligations of each other Borrower, pro rata, to
provide cash collateral therefor in the manner set forth in Annex B, until all
such Letter of Credit Obligations have been fully cash collateralized. To the
extent practicable, prepayments of the Loans pursuant to this clause (c) shall
be applied, with any particular Loan, first, to that portion of such Loan
constituting Index Rate Loans and, thereafter, to that portion of such Loan
constituting LIBOR Loans (with application to Interest Periods in a manner which
would minimize LIBOR funding breakage costs payable under Section 1.13(b)).
(d) Application of Prepayments from Insurance Proceeds. Prepayments from
insurance proceeds in accordance with Section 5.4(c) shall be applied as follows
(except as otherwise provided in Section 5.4(c)): insurance proceeds from
casualties or losses to cash, Inventory or unencumbered Equipment, Fixtures and
Real Estate of Verdant shall be applied (i) if the Revolving Loan Commitment and
the Swing Line Commitment, as the case may be, are permanently reduced by the
amount of such prepayment, first, to the Swing Line Loans, second, to the
Revolving Credit Advances of the Borrower that incurred such casualties or
losses and third to the Term Loan and (ii) if the Revolving Loan Commitment and
the Swing Line Commitment, as the case may be, are not permanently reduced by
the amount of such prepayment, first, to the Term Loan, second, to the Swing
Line Loans and third, to the Revolving Credit Advances of the Borrower that
incurred such casualties or losses. If the insurance proceeds received as to a
particular Borrower exceed the outstanding principal balances of the Loans to
that Borrower or if the precise amount of insurance proceeds allocable to
Inventory as compared to Equipment, Fixtures and Real Estate are not otherwise
determined, the allocation and application of those proceeds shall be determined
by Agent, subject to the approval of Requisite Lenders.
(e) Nothing in this Section 1.3 shall be construed to constitute Agent's or
any Lender's consent to any transaction referred to in clauses (b)(ii) and
(b)(iii) above which is not permitted by other provisions of this Agreement or
the other Loan Documents.
1.4 Use of Proceeds. Borrowers shall utilize the proceeds of the Term Loan,
the Revolving Loan and the Swing Line Advances solely for the financing of
Borrowers' ordinary working capital and general corporate needs (but excluding
in any event the making of any Restricted Payment not specifically permitted by
Section 6.14). Borrowers shall utilize the
8
proceeds of the Revolving Loan received after the Closing Date for the financing
of Borrowers' ordinary working capital and general corporate needs (but
excluding in any event the making of any Restricted Payment not specifically
permitted by Section 6.14) and, to the extent permitted pursuant to Section 6.1,
for the financing of Permitted Acquisitions.
1.5 Interest. (a) Borrowers shall pay interest to Agent, for the ratable
benefit of Lenders in accordance with the various Loans being made by each
Lender, in arrears on each applicable Interest Payment Date, at the following
rates: (i) with respect to the Revolving Credit Advances, the Index Rate plus
the Applicable Revolver Index Margin per annum or, at the election of Borrower
Representative, the applicable LIBOR Rate plus the Applicable Revolver LIBOR
Margin per annum, based on the aggregate Revolving Credit Advances outstanding
from time to time; (ii) with respect to the Term Loan, the Index Rate plus the
Applicable Term Loan Index Margin per annum or, at the election of Borrower
Representative, the applicable LIBOR Rate plus the Applicable Term Loan LIBOR
Margin per annum; and (iii) with respect to the Swing Line Loan, the Index Rate
plus the Applicable Revolver Index Margin per annum.
The Applicable Revolver Index Margin, Applicable Revolver LIBOR Margin,
Applicable Term Loan Index Margin, Applicable Term Loan LIBOR Margin and
Applicable Unused Line Fee Margin will be 0.55%, 3.25%, 0.80%, 3.50% and 0.50%
per annum, respectively; provided, however, that, notwithstanding the
foregoing,for the period from the Closing Date until May 2, 2000, the Applicable
Revolver Index Margin will be 0.35%; provided, further, that, notwithstanding
the foregoing, the Applicable Revolver Index Margin and Applicable Revolver
LIBOR Margin for the portion of the principal amount of the Revolving Loan
attributable to the portion of the Verdant Borrowing Base consisting of the
Overadvance Amount outstanding from time to time will be 2.55% and 5.25% per
annum, respectively.
(b) If any payment on any Loan becomes due and payable on a day other than
a Business Day, the maturity thereof will be extended to the next succeeding
Business Day (except as set forth in the definition of LIBOR Period) and, with
respect to payments of principal, interest thereon shall be payable at the then
applicable rate during such extension.
(c) All computations of Fees calculated on a per annum basis and interest
shall be made by Agent on the basis of a three hundred and sixty (360) day year,
in each case for the actual number of days occurring in the period for which
such interest and Fees are payable. The Index Rate shall be determined each day
based upon the Index Rate as in effect each day. Each determination by Agent of
an interest rate and Fees hereunder shall be conclusive, absent manifest error.
(d) So long as any Default or Event of Default shall have occurred and be
continuing under Section 8.1(a), (g), (h) or (i) or, at the election of Agent
(or upon the written request of Requisite Lenders) confirmed by written notice
from Agent to Borrower Representative, so long as any other Default or Event of
Default shall have occurred and be continuing, the interest rates applicable to
the Loans and the Letter of Credit Fees shall be
9
increased by two percent (2%) per annum above the rates of interest or the rate
of such Fees otherwise applicable hereunder ("Default Rate"), and, if such
election is made, all outstanding Obligations shall bear interest at the Default
Rate applicable to such Obligations. Interest and Letter of Credit Fees at the
Default Rate shall accrue from the initial date of such Default or Event of
Default until that Default or Event of Default is cured or waived and shall be
payable upon demand.
(e) So long as no Default or Event of Default shall have occurred and be
continuing, and subject to the additional conditions precedent set forth in
Section 2.2, Borrower Representative shall have the option to (i) request that
any Revolving Credit Advances be made as a LIBOR Loan, (ii) convert at any time
all or any part of outstanding Loans (other than the Swing Line Loan) from Index
Rate Loans to LIBOR Loans, (iii) convert any LIBOR Loan to an Index Rate Loan,
subject to payment of LIBOR breakage costs in accordance with Section 1.13(b) if
such conversion is made prior to the expiration of the LIBOR Period applicable
thereto, or (iv) continue all or any portion of any Loan (other than the Swing
Line Loan) as a LIBOR Loan upon the expiration of the applicable LIBOR Period
and the succeeding LIBOR Period of that continued Loan shall commence on the
last day of the LIBOR Period of the Loan to be continued. Any Loan to be made or
continued as, or converted into, a LIBOR Loan must be in a minimum amount of
$1,000,000 and integral multiples of $250,000 in excess of such amount. Any such
election must be made by 12:00 noon (Chicago time) on the third (3rd) Business
Day prior to (1) the date of any proposed Advance which is to bear interest at
the LIBOR Rate, (2) the end of each LIBOR Period with respect to any LIBOR Loans
to be continued as such, or (3) the date on which Borrower Representative wishes
to convert any Index Rate Loan to a LIBOR Loan for a LIBOR Period designated by
Borrower Representative in such election. If no election is received with
respect to a LIBOR Loan by 12:00 noon (Chicago time) on the third (3rd) Business
Day prior to the end of the LIBOR Period with respect thereto (or if a Default
or an Event of Default shall have occurred and be continuing or if the
additional conditions precedent set forth in Section 2.2 shall not have been
satisfied), that LIBOR Loan shall be converted to an Index Rate Loan at the end
of its LIBOR Period. Borrower Representative must make such election by notice
to Agent in writing, by telecopy or overnight courier. In the case of any
conversion or continuation, such election must be made pursuant to a written
notice (a "Notice of Conversion/Continuation") in the form of Exhibit 1.5(e).
(f) Notwithstanding anything to the contrary set forth in this Section 1.5,
if a court of competent jurisdiction determines in a final order that the rate
of interest payable hereunder exceeds the highest rate of interest permissible
under law (the "Maximum Lawful Rate"), then so long as the Maximum Lawful Rate
would be so exceeded, the rate of interest payable hereunder shall be equal to
the Maximum Lawful Rate; provided, however, that if at any time thereafter the
rate of interest payable hereunder is less than the Maximum Lawful Rate,
Borrowers shall continue to pay interest hereunder at the Maximum Lawful Rate
until such time as the total interest received by Agent, on behalf of Lenders,
is equal to the total interest which would have been received had the interest
rate payable hereunder been (but for the operation of this paragraph) the
interest rate payable since the Closing Date as otherwise provided in this
10
Agreement. Thereafter, interest hereunder shall be paid at the rate(s) of
interest and in the manner provided in Sections 1.5(a) through (e) above, unless
and until the rate of interest again exceeds the Maximum Lawful Rate, and at
that time this paragraph shall again apply. In no event shall the total interest
received by any Lender pursuant to the terms hereof exceed the amount which such
Lender could lawfully have received had the interest due hereunder been
calculated for the full term hereof at the Maximum Lawful Rate. If the Maximum
Lawful Rate is calculated pursuant to this paragraph, such interest shall be
calculated at a daily rate equal to the Maximum Lawful Rate divided by the
number of days in the year in which such calculation is made. If,
notwithstanding the provisions of this paragraph, a court of competent
jurisdiction shall finally determine that a Lender has received interest
hereunder in excess of the Maximum Lawful Rate, Agent shall, to the extent
permitted by applicable law, promptly apply such excess in the order specified
in Section 1.11 and thereafter shall refund any excess to Borrowers or as a
court of competent jurisdiction may otherwise order.
(g) Notwithstanding anything contained in this Agreement or any other Loan
Document to the contrary, Borrowers may not request that any Revolving Credit
Advances be made as a LIBOR Loan or convert all or any part of outstanding Loans
from Index Rate Loans to LIBOR Loans unless otherwise agreed to in writing in
advance by Borrower Representative and Agent.
1.6 Eligible Accounts. Based on the most recent Borrowing Base Certificate
delivered by each Borrower to Agent and on other information available to Agent,
Agent shall in its reasonable credit judgment determine which Accounts of each
Borrower shall be "Eligible Accounts" for purposes of this Agreement. In
determining whether a particular Account of any Borrower constitutes an Eligible
Account, Agent shall not include any such Account to which any of the
exclusionary criteria set forth below applies. Agent reserves the right, at any
time and from time to time after the Closing Date, to adjust any such criteria,
to establish new criteria and to adjust advance rates with respect to Eligible
Accounts, in its reasonable credit judgment, subject to the approval of
Supermajority Revolving Lenders in the case of adjustments or new criteria or
changes in advance rates which have the effect of making more credit available.
Eligible Accounts shall not include any Account of any Borrower:
(a) which does not arise from the sale of goods or the performance of
services by such Borrower in the ordinary course of its business;
(b) upon which (i) such Borrower's right to receive payment is not absolute
or is contingent upon the fulfillment of any condition whatsoever or (ii) as to
which such Borrower is not able to bring suit or otherwise enforce its remedies
against the Account Debtor through judicial process;
(c) to the extent any defense, counterclaim, setoff or dispute is asserted
as to such Account or if the Account represents a progress billing consisting of
an invoice for goods sold or used or services rendered pursuant to a contract
under which the Account Debtor's
11
obligation to pay that invoice is subject to such Borrower's completion of
further performance under such contract or is subject to the equitable lien of a
surety bond issuer;
(d) that is not a true and correct statement of bona fide indebtedness
incurred in the amount of the Account for merchandise sold to or services
rendered and accepted by the applicable Account Debtor;
(e) with respect to which an invoice, acceptable to Agent in form and
substance, has not been sent to the applicable Account Debtor;
(f) that (i) is not owned by such Borrower or (ii) is subject to any right,
claim, security interest or other interest of any other Person, other than Liens
in favor of Agent, on behalf of itself and Lenders;
(g) that arises from a sale to any director, officer, other employee or
Affiliate of any Credit Party, or to any entity which has any common officer or
director with any Credit Party;
(h) that is the obligation of an Account Debtor that is the United States
government or a political subdivision thereof, or any state or municipality or
department, agency or instrumentality thereof unless Agent, in its sole
discretion, has agreed to the contrary in writing and such Borrower, if
necessary or desirable, has complied with the Federal Assignment of Claims Act
of 1940, and any amendments thereto, or any applicable state statute or
municipal ordinance of similar purpose and effect, with respect to such
obligation;
(i) that is the obligation of an Account Debtor located in a foreign
country other than Canada (excluding the provinces of Quebec, Newfoundland, Nova
Scotia and ▇▇▇▇▇▇ ▇▇▇▇▇▇ Island) unless such Account is payable in Dollars and
(A) payment thereof is assured by a letter of credit assigned and delivered to
Agent, satisfactory to Agent as to form, amount and issuer or (B) is otherwise
approved in writing by Agent in its sole discretion;
(j) to the extent such Borrower or any Subsidiary thereof is liable for
goods sold or services rendered by the applicable Account Debtor to such
Borrower or any Subsidiary thereof but only to the extent of the potential
offset;
(k) that arises with respect to goods which are delivered on a
▇▇▇▇-and-hold, cash-on-delivery basis or placed on consignment, guaranteed sale
or other terms by reason of which the payment by the Account Debtor is or may be
conditional;
(l) that is in default; provided, that, without limiting the generality of
the foregoing, an Account shall be deemed in default upon the occurrence of any
of the following:
(A) it is not paid within sixty (60) days following its due date;
12
(B) it is not invoiced in accordance with such Borrower's customary
business practices in effect on the Closing Date;
(C) if any Account Debtor obligated upon such Account suspends
business, makes a general assignment for the benefit of creditors or fails
to pay its debts generally as they come due; or
(D) if any petition is filed by or against any Account Debtor
obligated upon such Account under any bankruptcy law or any other federal,
state or foreign (including any provincial) receivership, insolvency relief
or other law or laws for the relief of debtors;
(m) which is the obligation of an Account Debtor if fifty percent (50%) or
more of the dollar amount of all Accounts owing by that Account Debtor are
ineligible under the other criteria set forth in this Section 1.6;
(n) as to which Agent's Lien thereon, on behalf of itself and Lenders, is
not a first priority perfected Lien;
(o) as to which any of the representations or warranties pertaining to
Accounts set forth in this Agreement or the Security Agreements is untrue;
(p) to the extent such Account is evidenced by a judgment, Instrument or
Chattel Paper;
(q) to the extent such Account exceeds any credit limit established by
Agent, in its reasonable discretion;
(r) to the extent that such Account, together with all other Accounts owing
by such Account Debtor and its Affiliates as of any date of determination,
exceeds thirty percent (30%) of all Eligible Accounts;
(s) which is payable in any currency other than Dollars (or, in the case of
Accounts owing from a Canadian Account Debtor, Canadian dollars); or
(t) which is unacceptable to Agent in its reasonable credit judgment.
1.7 Eligible Inventory. Based on the most recent Borrowing Base Certificate
delivered by each Borrower to Agent and on other information available to Agent,
Agent shall in its reasonable credit judgment determine which Inventory of each
Borrower shall be "Eligible Inventory" for purposes of this Agreement. In
determining whether any particular Inventory of any Borrower constitutes
Eligible Inventory, Agent shall not include any such Inventory to which any of
the exclusionary criteria set forth below applies. Agent reserves the right, at
any time and
13
from time to time after the Closing Date, to adjust any such criteria, to
establish new criteria and to adjust advance rates with respect to Eligible
Inventory, in its reasonable credit judgment, subject to the approval of
Supermajority Revolving Lenders in the case of adjustments or new criteria or
changes in advance rates which have the effect of making more credit available.
Eligible Inventory shall not include any Inventory of any Borrower that:
(a) is not owned by such Borrower free and clear of all Liens and rights of
any other Person (including the rights of a purchaser that has made progress
payments and the rights of a surety that has issued a bond to assure such
Borrower's performance with respect to that Inventory), except the Liens in
favor of Agent, on behalf of itself and Lenders;
(b) is (i) not located on premises owned, leased or operated by such
Borrower or (ii) is stored with a bailee, warehouseman or similar Person, unless
Agent has given its prior consent thereto and unless (x) a satisfactory bailee
letter or landlord waiver has been delivered to Agent, or (y) Reserves
satisfactory to Agent have been established with respect thereto, or (iii)
located at any site if the aggregate book value of Inventory at any such
location is less than $50,000 at all times during the year;
(c) is placed on consignment, is in transit or is otherwise not located on
premises owned or leased by such Borrower;
(d) is covered by a negotiable document of title, unless such document has
been delivered to Agent with all necessary endorsements, free and clear of all
Liens except those in favor of Agent and Lenders;
(e) in Agent's reasonable determination, is excess, obsolete, unsalable,
shopworn, seconds, damaged or unfit for sale;
(f) consists of display items or packing or shipping materials (other than
commodity packaging acceptable to Agent in its discretion in an amount not to
exceed $500,000 in the aggregate) manufacturing supplies, work-in-process
Inventory or replacement parts;
(g) consists of goods which have been returned by the buyer;
(h) is not of a type held for sale in the ordinary course of such
Borrower's business;
(i) as to which Agent's Lien thereon, on behalf of itself and Lenders, is
not a first priority perfected Lien;
(j) as to which any of the representations or warranties pertaining to
Inventory set forth in this Agreement or the Security Agreements is untrue;
14
(k) consists of Hazardous Materials or goods that can be transported or
sold only with licenses that are not readily available;
(l) is not covered by casualty insurance acceptable to Agent;
(m) exceeds projected sales volume during the six months immediately
following the date of the most recent Borrowing Base Certificate (the relevant
six month prospective sales forecast shall be based on management's best
estimates taking into account sales volumes during the same period and expected
changes (favorable or unfavorable) during the then current Fiscal Year)
delivered by such Borrower to Agent; provided that this clause (m) shall apply
only to those Borrowers whose sales volume varies by more than 15% in any Fiscal
Quarter; or
(n) is otherwise unacceptable to Agent in its reasonable credit judgment.
1.8 Cash Management Systems. On or prior to the Closing Date, Borrowers
will establish and will maintain until the Termination Date, the cash management
systems described on Annex C (the "Cash Management Systems").
1.9 Fees. (a) Borrowers shall pay to GE Capital, individually, the Fees
specified in the GE Capital Fee Letter, at the times specified for payment
therein.
(b) As additional compensation for the Revolving Lenders, Borrowers agree
to pay to Agent, for the ratable benefit of such Lenders, in arrears, on the
first Business Day of each month prior to the Commitment Termination Date and on
the Commitment Termination Date, a fee for Borrowers' non-use of available funds
in an amount equal to the Applicable Unused Line Fee Margin per annum
(calculated on the basis of a 360 day year for actual days elapsed) of the
difference between (x) the Maximum Amount (as it may be reduced from time to
time) and (y) the average for the period of the daily closing balance of the
aggregate Revolving Loan and the Swing Line Loan outstanding during the period
for which such fee is due.
(c) If Borrowers prepay all or any portion of the Term Loan or prepay the
Revolving Loan and reduce or terminate the Revolving Loan Commitment, whether
voluntarily or involuntarily and whether before or after acceleration of the
Obligations, Borrowers shall pay to Agent, for the benefit of Lenders, as
liquidated damages and compensation for the costs of being prepared to make
funds available hereunder an amount determined by multiplying the Applicable
Percentage (as defined below) by (i) the principal amount of the Term Loan
prepaid, and (ii) the amount of the reduction of the Revolving Loan Commitment.
As used herein, the term "Applicable Percentage" shall mean (x) two percent
(2.0%), in the case of a prepayment on or prior to the first anniversary of the
Closing Date and (y) one percent (1.0%), in the case of a prepayment after the
first anniversary of the Closing Date but on or prior to the second anniversary
of the Closing Date. Notwithstanding the foregoing, no prepayment fee shall be
payable by Borrowers upon (i) a mandatory prepayment made pursuant to Sections
1.3(b) or 1.16(c) or (ii) a one-time reduction of the Revolving Loan Commitment
in an amount not exceeding $5,000,000 prior to the first
15
anniversary of the Closing Date; provided that (except as permitted above)
Borrowers do not permanently reduce the Revolving Loan Commitment upon any such
prepayment and, in the case of prepayments made pursuant to Section 1.3(b)(ii)
or (b)(iii), the transaction giving rise to the applicable prepayment is
expressly permitted under Section 6.
1.10 Receipt of Payments. Borrowers shall make each payment under this
Agreement not later than 2:00 p.m. (Chicago time) on the day when due in
immediately available funds in Dollars to the Collection Account. For purposes
of computing interest and Fees and determining Borrowing Availability or Net
Borrowing Availability as of any date, all payments shall be deemed received on
the day of receipt of immediately available funds therefor in the Collection
Account prior to 2:00 p.m. Chicago time. Payments received after 2:00 p.m.
Chicago time on any Business Day shall be deemed to have been received on the
following Business Day.
1.11 Application and Allocation of Payments. (a) So long as no Default or
Event of Default shall have occurred and be continuing, (i) payments consisting
of proceeds of Accounts received in the ordinary course of business shall be
applied to the Swing Line Loan and the Revolving Loan; (ii) payments matching
specific scheduled payments then due shall be applied to those scheduled
payments; (iii) voluntary prepayments shall be applied as determined by Borrower
Representative, subject to the provisions of Section 1.3(a); and (iv) mandatory
prepayments shall be applied as set forth in Section 1.3. All payments and
prepayments applied to a particular Loan shall be applied ratably to the portion
thereof held by each Lender as determined by its Pro Rata Share. As to each
other payment, and as to all payments made when a Default or Event of Default
shall have occurred and be continuing or following the Commitment Termination
Date, each Borrower hereby irrevocably waives the right to direct the
application of any and all payments received from or on behalf of such Borrower,
and each Borrower hereby irrevocably agrees that Agent shall have the continuing
exclusive right to apply any and all such payments against the Obligations of
Borrowers as Agent may deem advisable notwithstanding any previous entry by
Agent in the Loan Account or any other books and records. In the absence of a
specific determination by Agent with respect thereto, payments shall be applied
to amounts then due and payable in the following order: (1) to Fees and Agent's
expenses reimbursable hereunder; (2) to interest on the Swing Line Loan; (3) to
principal payments on the Swing Line Loan; (4) to interest on the other Loans,
ratably in proportion to the interest accrued as to each Loan; (5) to principal
payments on the other Loans and to provide cash collateral for Letter of Credit
Obligations in the manner described in Annex B, ratably to the aggregate,
combined principal balance of the other Loans and outstanding Letter of Credit
Obligations; and (6) to all other Obligations including expenses of Lenders to
the extent reimbursable under Section 11.3.
(b) Agent is authorized to, and at its sole election may, charge to the
Revolving Loan balance on behalf of each Borrower and cause to be paid all Fees,
expenses, Charges, costs (including insurance premiums in accordance with
Section 5.4(a)) and interest and principal, other than principal of the
Revolving Loan, owing by Borrowers under this Agreement or any of the other Loan
Documents if and to the extent Borrowers fail to promptly pay any such amounts
as and when due, even if such charges would cause the balance of the aggregate
Revolving Loan and the Swing
16
Line Loan to exceed Borrowing Availability or would cause the balance of the
Revolving Loan and the Swing Loan of any Borrower to exceed such Borrower's
separate Borrowing Base. At Agent's option and to the extent permitted by law,
any charges so made shall constitute part of the Revolving Loan hereunder.
1.12 Loan Account and Accounting. Agent shall maintain a loan account (the
"Loan Account") on its books to record: (a) all Advances and the Term Loan, (b)
all payments made by Borrowers, and (c) all other debits and credits as provided
in this Agreement with respect to the Loans or any other Obligations. All
entries in the Loan Account shall be made in accordance with Agent's customary
accounting practices as in effect from time to time. The balance in the Loan
Account, as recorded on Agent's most recent printout or other written statement,
shall, absent manifest error, be presumptive evidence of the amounts due and
owing to Agent and Lenders by each Borrower; provided that any failure to so
record or any error in so recording shall not limit or otherwise affect any
Borrower's duty to pay the Obligations. Agent shall render to Borrower
Representative a monthly accounting of transactions with respect to the Loans
setting forth the balance of the Loan Account as to each Borrower. Unless
Borrower Representative notifies Agent in writing of any objection to any such
accounting (specifically describing the basis for such objection), within
forty-five (45) days after the date thereof, each and every such accounting
shall (absent manifest error) be deemed final, binding and conclusive upon
Borrowers in all respects as to all matters reflected therein. Only those items
expressly objected to in such notice shall be deemed to be disputed by
Borrowers. Notwithstanding any provision herein contained to the contrary, any
Lender may elect (which election may be revoked) to dispense with the issuance
of Notes to that Lender and may rely on the Loan Account as evidence of the
amount of Obligations from time to time owing to it.
1.13 Indemnity. (a) Each Credit Party that is a signatory hereto shall
jointly and severally indemnify and hold harmless each of Agent, Lenders and
their respective Affiliates, and each such Person's respective officers,
directors, employees, attorneys, agents and representatives (each, an
"Indemnified Person"), from and against any and all suits, actions, proceedings,
claims, damages, losses, liabilities and expenses (including attorneys' fees and
disbursements and other costs of investigation or defense, including those
incurred upon any appeal) which may be instituted or asserted against or
incurred by any such Indemnified Person as the result of credit having been
extended, suspended or terminated under this Agreement and the other Loan
Documents and the administration of such credit, and in connection with or
arising out of the transactions contemplated hereunder and thereunder and any
actions or failures to act in connection therewith, including any and all
Environmental Liabilities and legal costs and expenses arising out of or
incurred in connection with disputes between or among any parties to any of the
Loan Documents (collectively, "Indemnified Liabilities"); provided, that no
Credit Party shall be liable for any indemnification to an Indemnified Person to
the extent that any such suit, action, proceeding, claim, damage, loss,
liability or expense results solely from that Indemnified Person's gross
negligence or willful misconduct, as finally determined by a court of competent
jurisdiction. NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY OTHER
PARTY TO ANY LOAN DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD
17
PARTY BENEFICIARY OF SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS
DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR
CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN
EXTENDED, SUSPENDED OR TERMINATED UNDER ANY LOAN DOCUMENT OR AS A RESULT OF ANY
OTHER TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.
(b) To induce Lenders to provide the LIBOR Rate option on the terms
provided herein, if (i) any LIBOR Loans are repaid in whole or in part prior to
the last day of any applicable LIBOR Period (whether that repayment is made
pursuant to any provision of this Agreement or any other Loan Document or is the
result of acceleration, by operation of law or otherwise); (ii) any Borrower
shall default in payment when due of the principal amount of or interest on any
LIBOR Loan; (iii) any Borrower shall default in making any borrowing of,
conversion into or continuation of LIBOR Loans after Borrower Representative has
given notice requesting the same in accordance herewith; or (iv) any Borrower
shall fail to make any prepayment of a LIBOR Loan after Borrower Representative
has given a notice thereof in accordance herewith, Borrowers shall jointly and
severally indemnify and hold harmless each Lender from and against all losses,
costs and expenses resulting from or arising from any of the foregoing. Such
indemnification shall include any loss (including loss of margin) or expense
arising from the reemployment of funds obtained by it or from fees payable to
terminate deposits from which such funds were obtained. For the purpose of
calculating amounts payable to a Lender under this subsection, each Lender shall
be deemed to have actually funded its relevant LIBOR Loan through the purchase
of a deposit bearing interest at the LIBOR Rate in an amount equal to the amount
of that LIBOR Loan and having a maturity comparable to the relevant LIBOR
Period; provided, however, that each Lender may fund each of its LIBOR Loans in
any manner it sees fit, and the foregoing assumption shall be utilized only for
the calculation of amounts payable under this subsection. This covenant shall
survive the termination of this Agreement and the payment of the Notes and all
other amounts payable hereunder. As promptly as practicable under the
circumstances, each Lender shall provide Borrower Representative with its
written calculation of all amounts payable pursuant to this Section 1.13(b), and
such calculation shall be binding on the parties hereto unless Borrower
Representative shall object in writing within ten (10) Business Days of receipt
thereof, specifying the basis for such objection in detail.
1.14 Access. (a) Each Credit Party which is a party hereto shall, during
normal business hours, from time to time upon one (1) Business Day's prior
notice as frequently as Agent reasonably determines to be appropriate: (a)
provide Agent and any of its officers, employees and agents access to its
properties, facilities, advisors and employees (including officers) of each
Credit Party and to the Collateral, (b) permit Agent, and any of its officers,
employees and agents, to inspect, audit and make extracts from any Credit
Party's books and records, (c) permit Agent, and its officers, employees and
agents, to inspect, review, evaluate and make test verifications and counts of
the Accounts, Inventory and other Collateral of any Credit Party, and (d)
provide Agent and any of its officers, employees and agents access to all
relevant books and records and other information (financial or otherwise)
necessary to enable Agent to complete its business and legal
18
due diligence with respect to any proposed Permitted Acquisition and with
respect to the inclusion of receivables and inventory in the applicable
Borrowing Base resulting from any Permitted Acquisition. If a Default or Event
of Default shall have occurred and be continuing or if access is necessary to
preserve or protect the Collateral as determined by Agent, each such Credit
Party shall provide such access to Agent and to each Lender at all times and
without advance notice. Furthermore, so long as any Event of Default shall have
occurred and be continuing, Borrowers shall provide Agent and each Lender with
access to their suppliers and customers. Each Credit Party shall make available
to Agent and its counsel, as quickly as is possible under the circumstances,
originals or copies of all books and records which Agent may request. Each
Credit Party shall deliver any document or instrument necessary for Agent, as it
may from time to time request, to obtain records from any service bureau or
other Person which maintains records for such Credit Party, and shall maintain
duplicate records or supporting documentation on media, including computer tapes
and discs owned by such Credit Party. Agent will give Lenders at least ten (10)
days' prior written notice of regularly scheduled audits.
1.15 Taxes. (a) Any and all payments by each Borrower hereunder (including
any payments made pursuant to Section 12) or under the Revolving Notes shall be
made, in accordance with this Section 1.15, free and clear of and without
deduction for any and all present or future Taxes. If any Borrower shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder (including any sum payable pursuant to Section 12) or under the
Revolving Notes, (i) the sum payable shall be increased as much as shall be
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 1.15) Agent or Lenders,
as applicable, receive an amount equal to the sum they would have received had
no such deductions been made, (ii) such Borrower shall make such deductions, and
(iii) such Borrower shall pay the full amount deducted to the relevant taxing or
other authority in accordance with applicable law. Within thirty (30) days after
the date of any payment of Taxes, Borrower Representative shall furnish to Agent
the original or a certified copy of a receipt evidencing payment thereof.
(b) Each Credit Party that is a signatory hereto shall jointly and
severally indemnify and, within ten (10) days of demand therefor, pay Agent and
each Lender for the full amount of Taxes (including any Taxes imposed by any
jurisdiction on amounts payable under this Section 1.15) paid by Agent or such
Lender, as appropriate, and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not such Taxes
were correctly or legally asserted.
(c) Each Lender organized under the laws of a jurisdiction outside the
United States (a "Foreign Lender") as to which payments to be made under this
Agreement or under the Notes are exempt from United States withholding tax under
an applicable statute or tax treaty shall provide to Borrower Representative and
Agent a properly completed and executed IRS Form 4224 or Form 1001 or other
applicable form, certificate or document prescribed by the IRS or the United
States certifying as to such Foreign Lender's entitlement to such exemption (a
"Certificate of Exemption"). Any foreign Person that seeks to become a Lender
under this Agreement shall provide
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a Certificate of Exemption to Borrower Representative and Agent prior to
becoming a Lender hereunder. No foreign Person may become a Lender hereunder if
such Person is unable to deliver a Certificate of Exemption.
1.16 Capital Adequacy; Increased Costs; Illegality. (a) If any Lender shall
have determined that any law, treaty, governmental (or quasi-governmental) rule,
regulation, guideline or order regarding capital adequacy, reserve requirements
or similar requirements or compliance by any Lender with any request or
directive regarding capital adequacy, reserve requirements or similar
requirements (whether or not having the force of law), in each case, adopted
after the Closing Date, from any central bank or other Governmental Authority
increases or would have the effect of increasing the amount of capital, reserves
or other funds required to be maintained by such Lender and thereby reducing the
rate of return on such Lender's capital as a consequence of its obligations
hereunder, then Borrowers shall from time to time upon demand by such Lender
(with a copy of such demand to Agent) pay to Agent, for the account of such
Lender, additional amounts sufficient to compensate such Lender for such
reduction. A certificate as to the amount of that reduction and showing the
basis of the computation thereof submitted by such Lender to Borrower
Representative and to Agent shall, absent manifest error, be final, conclusive
and binding for all purposes.
(b) If, due to either (i) the introduction of or any change in any law or
regulation (or any change in the interpretation thereof) or (ii) the compliance
with any guideline or request from any central bank or other Governmental
Authority (whether or not having the force of law), in each case adopted after
the Closing Date, there shall be any increase in the cost to any Lender of
agreeing to make or making, funding or maintaining any Loan, then Borrowers
shall from time to time, upon demand by such Lender (with a copy of such demand
to Agent), pay to Agent for the account of such Lender additional amounts
sufficient to compensate such Lender for such increased cost. A certificate as
to the amount of such increased cost, submitted to Borrower Representative and
to Agent by such Lender, shall be conclusive and binding on Borrowers for all
purposes, absent manifest error. Each Lender agrees that, as promptly as
practicable after it becomes aware of any circumstances referred to above which
would result in any such increased cost, the affected Lender shall, to the
extent not inconsistent with such Lender's internal policies of general
application, use reasonable commercial efforts to minimize costs and expenses
incurred by it and payable to it by Borrowers pursuant to this Section 1.16(b).
(c) Notwithstanding anything to the contrary contained herein, if the
introduction of or any change in any law or regulation (or any change in the
interpretation thereof) shall make it unlawful, or any central bank or other
Governmental Authority shall assert that it is unlawful, for any Lender to agree
to make or to make or to continue to fund or maintain any LIBOR Loan, then,
unless that Lender is able to make or to continue to fund or to maintain such
LIBOR Loan at another branch or office of that Lender without, in that Lender's
opinion, adversely affecting it or its Loans or the income obtained therefrom,
on notice thereof and demand therefor by such Lender to Borrower Representative
through Agent, (i) the obligation of such Lender to agree to make or to make or
to continue to fund or maintain LIBOR Loans shall terminate and (ii) each
Borrower shall forthwith prepay in full all outstanding LIBOR Loans owing by
such Borrower to such Lender,
20
together with interest accrued thereon, unless Borrower Representative on behalf
of such Borrower, within five (5) Business Days after the delivery of such
notice and demand, converts all such Loans into a Loan bearing interest based on
the Index Rate.
(d) Replacement of Lender in Respect of Increased Costs. Within fifteen
(15) days after receipt by Borrower Representative of written notice and demand
from any Lender (an "Affected Lender") for payment of additional amounts or
increased costs as provided in Section 1.15(a), 1.16(a), 1.16(b) or 1.16(c),
Borrower Representative may, at its option, notify Agent and such Affected
Lender of its intention to replace the Affected Lender. So long as no Default or
Event of Default shall have occurred and be continuing, Borrower Representative,
with the consent of Agent, may obtain, at Borrowers' expense, a replacement
Lender ("Replacement Lender") for the Affected Lender, which Replacement Lender
must be satisfactory to Agent. If Borrowers obtain a Replacement Lender within
ninety (90) days following notice of their intention to do so, the Affected
Lender must sell and assign its Loans and Commitments to such Replacement Lender
for an amount equal to the principal balance of all Loans held by the Affected
Lender and all accrued interest and Fees with respect thereto through the date
of such sale, provided that Borrowers shall have reimbursed such Affected Lender
for the additional amounts or increased costs that it is entitled to receive
under this Agreement through the date of such sale and assignment.
Notwithstanding the foregoing, Borrowers shall not have the right to obtain
a Replacement Lender if the Affected Lender rescinds its demand for increased
costs or additional amounts within fifteen (15) days following its receipt of
Borrowers' notice of intention to replace such Affected Lender. Furthermore, if
Borrowers give a notice of intention to replace and do not so replace such
Affected Lender within ninety (90) days thereafter, Borrowers' rights under this
Section 1.16(d) shall terminate and Borrowers shall promptly pay all increased
costs or additional amounts demanded by such Affected Lender pursuant to
Sections 1.15(a), 1.16(a), 1.16(b) and 1.16(c).
1.17 Single Loan. All Loans to each Borrower and all of the other
Obligations of each Borrower arising under this Agreement and the other Loan
Documents shall constitute one general obligation of that Borrower and, subject
to Section 11.2, shall be secured, until the Termination Date, by all of its
Collateral.
1.18 Effect of Amendment and Restatement. This Agreement amends and
restates in its entirety the Prior Credit Agreement and, upon effectiveness of
this Agreement, the terms and provisions of the Prior Credit Agreement shall,
subject to this Section 1.18, be superseded hereby. All references to "Credit
Agreement" contained in the Loan Documents delivered in connection with the
Prior Credit Agreement shall be deemed to refer to this Agreement. All
references to "Lender" contained in the Collateral Documents delivered in
connection with the Prior Credit Agreement shall be deemed to refer to Agent, on
behalf of itself and Lenders, unless in Agent's determination the context
otherwise requires. Notwithstanding the amendment and restatement of the Prior
Credit Agreement by this Agreement, the Obligations outstanding under the Prior
Credit Agreement as of the Closing Date (except to the extent repaid
21
in accordance herewith) shall remain outstanding and constitute continuing
Obligations hereunder and shall continue to be secured by the Collateral. Such
outstanding Obligations and the Liens securing payment thereof shall in all
respects be continuing, and this Agreement shall not be deemed to evidence or
result in a novation or repayment and re-borrowing of such Obligations. In
furtherance of and without limiting the foregoing, from and after the Closing
Date and except as expressly specified herein, the terms, conditions, and
covenants governing the Obligations outstanding under the Prior Credit Agreement
shall be solely as set forth in this Agreement, which shall supersede the Prior
Credit Agreement in its entirety.
2. CONDITIONS PRECEDENT
2.1 Conditions to Effectiveness of Agreement.
No Lender shall be obligated to make or continue any Loan or incur or
continue any Letter of Credit Obligations on the Closing Date, or to take,
fulfill, or perform any other action hereunder, until the following conditions
have been satisfied or provided for in a manner satisfactory to Agent, or waived
in writing by Agent and Lenders. This Agreement shall not become effective and
the Prior Credit Agreement shall continue to govern the Obligations outstanding
thereunder unless the following conditions have been satisfied:
(a) Agreement; Loan Documents. This Agreement or counterparts hereof shall
have been duly executed by, and delivered to, Borrowers, Agent and Lenders; and
Agent shall have received such documents, instruments, reaffirmation of
guarantees and agreements and legal opinions as Agent shall request in
connection with the transactions contemplated by this Agreement and the other
Loan Documents, including all those listed in the Closing Checklist attached
hereto as Annex D, each in form and substance satisfactory to Agent.
(b) Approvals. Agent shall have received (i) satisfactory evidence that the
Credit Parties have obtained all required consents, waivers, acknowledgments,
orders, authorizations and approvals of all Persons including all requisite
Governmental Authorities, to the execution, delivery and performance of this
Agreement and the other Loan Documents and the consummation of the Related
Transactions or (ii) an officer's certificate in form and substance satisfactory
to Agent affirming that no such consents or approvals are required.
(c) Payment of Fees. Borrowers shall have paid the Fees required to be paid
on the Closing Date in the respective amounts specified in Section 1.9
(including the Fees specified in the GE Capital Fee Letter) and shall have
reimbursed Agent for all fees, costs and expenses of closing presented as of the
Closing Date.
(d) Capital Structure: Other Indebtedness. The capital structure of each
Credit Party and the terms and conditions of all Indebtedness of each Credit
Party shall be acceptable to Agent in its sole discretion.
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2.2 Further Conditions to Each Loan. Except as otherwise expressly provided
herein, no Lender shall be obligated to fund any Loan, convert or continue any
Loan as a LIBOR Loan or incur any Letter of Credit Obligation, if, as of the
date thereof:
(a) Any representation or warranty by any Credit Party contained herein or
in any of the other Loan Documents shall be untrue or incorrect as of such date,
except to the extent that such representation or warranty expressly relates to
an earlier date and except for changes therein expressly permitted or expressly
contemplated by this Agreement; or
(b) Any event or circumstance having a Material Adverse Effect shall have
occurred since the date hereof as determined by the Requisite Revolving Lenders;
or
(c) (i) Any Event of Default shall have occurred and be continuing or would
result after giving effect to any Loan (or the incurrence of any Letter of
Credit Obligations), or (ii) a Default shall have occurred and be continuing or
would result after giving effect to any Loan, and Agent or Requisite Revolving
Lenders shall have determined not to make any Loan or incur any Letter of Credit
Obligation so long as that Default is continuing; or
(d) After giving effect to any Advance or the incurrence of any Letter of
Credit Obligations, (i) the outstanding principal amount of the aggregate
Revolving Loan would exceed the lesser of the Aggregate Borrowing Base and the
Maximum Amount, less, in each case, the then outstanding principal amount of the
Swing Line Loan, or (ii) the outstanding principal amount of the Revolving Loan
of the applicable Borrower would exceed such Borrower's separate Borrowing Base
less the outstanding principal amount of the Swing Line Loan to that Borrower;
or
(e) After giving effect to any Swing Line Advance, (i) the outstanding
principal amount of the Swing Line Loan would exceed Swing Line Availability, or
(ii) the outstanding principal amount of the Swing Line Loan of the applicable
Borrower would exceed such Borrower's separate Borrowing Base less the
outstanding principal amount of the Revolving Loan to that Borrower.
The request and acceptance by any Borrower of the proceeds of any Loan or the
incurrence of any Letter of Credit Obligations or the conversion or continuation
of any Loan into, or as, a LIBOR Loan, as the case may be, shall be deemed to
constitute, as of the date of such request or acceptance, (i) a representation
and warranty by Borrowers that the conditions in this Section 2.2 have been
satisfied and (ii) a reaffirmation by Borrowers of the cross-guaranty provisions
set forth in Section 12 and of the granting and continuance of Agent's Liens, on
behalf of itself and Lenders, pursuant to the Collateral Documents.
3. REPRESENTATIONS AND WARRANTIES
23
To induce Lenders to make or continue the Loans and to incur or continue
Letter of Credit Obligations, the Credit Parties executing this Agreement,
jointly and severally, make the following representations and warranties to
Agent and each Lender with respect to all Credit Parties, each and all of which
shall survive the execution and delivery of this Agreement.
3.1 Corporate Existence; Compliance with Law. Each Credit Party (a) is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation; (b) is duly qualified to conduct business
and is in good standing in each other jurisdiction where its ownership or lease
of property or the conduct of its business requires such qualification; (c) has
the requisite corporate power and authority and the legal right to own, pledge,
mortgage or otherwise encumber and operate its properties, to lease the property
it operates under lease and to conduct its business as now, heretofore and
proposed to be conducted; (d) has all licenses, permits, consents or approvals
from or by, and has made all filings with, and has given all notices to, all
Governmental Authorities having jurisdiction, to the extent required for such
ownership, operation and conduct; (e) is in compliance with its charter and
by-laws; and (f) subject to specific representations set forth herein regarding
ERISA, Environmental Laws, tax and other laws, is in compliance with all
applicable provisions of law, except where the failure to comply, individually
or in the aggregate, could not reasonably be expected to have a Material Adverse
Effect. No inventory is subject to any licensing, patent, royalty, trademark,
tradename or copyright agreements with any third parties which materially
restricts the ability of either Borrower or, in the case of the exercise of its
remedies, the Lender to sell such Inventory.
3.2 Executive Offices; FEIN. As of the Closing Date, the current location
of each Credit Party's chief executive office and principal place of business is
set forth in Disclosure Schedule (3.2) and none of such locations have changed
within the twelve (12) months preceding the Closing Date. In addition,
Disclosure Schedule (3.2) lists the federal employer identification number of
each Credit Party.
3.3 Corporate Power, Authorization, Enforceable Obligations. The execution,
delivery and performance by each Credit Party of the Loan Documents to which it
is a party and the creation of all Liens provided for therein: (a) are within
such Person's corporate power; (b) have been duly authorized by all necessary or
proper corporate and shareholder action; (c) do not contravene any provision of
such Person's charter or bylaws; (d) do not violate any law or regulation, or
any order or decree of any court or Governmental Authority; (e) do not conflict
with or result in the breach or termination of, constitute a default under or
accelerate or permit the acceleration of any performance required by, any
indenture, mortgage, deed of trust, lease, agreement or other instrument to
which such Person is a party or by which such Person or any of its property is
bound; (f) do not result in the creation or imposition of any Lien upon any of
the property of such Person other than those in favor of Agent, on behalf of
itself and Lenders, pursuant to the Loan Documents; and (g) do not require the
consent, waiver, acknowledgment, order, authorization or approval of any
Governmental Authority or any other Person, except those referred to in Section
2.1(c), all of which will have been duly obtained, made or complied with prior
to the Closing Date. On or prior to the Closing Date, each of the Loan Documents
shall
24
have been duly executed and delivered by each Credit Party thereto and each such
Loan Document shall then constitute a legal, valid and binding obligation of
such Credit Party enforceable against it in accordance with its terms.
3.4 Financial Statements. Except for the Projections, all Financial
Statements concerning Borrowers and their respective Subsidiaries required to be
delivered pursuant to the Prior Credit Agreement have been delivered and have
been prepared in accordance with GAAP consistently applied throughout the
periods covered (except as disclosed therein and except, with respect to
unaudited Financial Statements, for the absence of footnotes and normal year-end
audit adjustments) and present fairly in all material respects the financial
position of the Persons covered thereby as at the dates thereof and the results
of their operations and cash flows for the periods then ended.
3.5 Material Adverse Effect. Between December 31, 1998 and the Closing
Date, (a) no Credit Party has incurred any obligations, contingent or
non-contingent liabilities, liabilities for Charges, long-term leases or unusual
forward or long-term commitments which are not reflected in the Pro Forma and
which, alone or in the aggregate, could reasonably be expected to have a
Material Adverse Effect, (b) no contract, lease or other agreement or instrument
has been entered into by any Credit Party or has become binding upon any Credit
Party's assets and no law or regulation applicable to any Credit Party has been
adopted which has had or could reasonably be expected to have a Material Adverse
Effect, and (c) no Credit Party is in default and to the best of Borrowers'
knowledge no third party is in default under any material contract, lease or
other agreement or instrument, which alone or in the aggregate could reasonably
be expected to have a Material Adverse Effect. Between December 31, 1998 and the
Closing Date no event has occurred, which alone or together with other events,
could reasonably be expected to have a Material Adverse Effect.
3.6 Ownership of Property; Liens. (a) As of the Closing Date, the real
estate ("Real Estate") listed on Disclosure Schedule (3.6) constitutes all of
the real property owned, leased, subleased, or used by any Credit Party. Each
Credit Party owns good and marketable fee simple title to all of its owned Real
Estate, and valid and marketable leasehold interests in all of its leased Real
Estate, all as described on Disclosure Schedule (3.6), and copies of all such
leases or a summary of terms thereof satisfactory to Agent have been delivered
to Agent. Disclosure Schedule (3.6) further describes any Real Estate with
respect to which any Credit Party is a lessor, sublessor or assignor as of the
Closing Date. Each Credit Party also has good and marketable title to, or valid
leasehold interests in, all of its personal properties and assets. As of the
Closing Date, none of the properties and assets of any Credit Party are subject
to any Liens other than Permitted Encumbrances, and there are no facts,
circumstances or conditions known to any Credit Party that may result in any
Liens (including Liens arising under Environmental Laws) other than Permitted
Encumbrances. Each Credit Party has received all deeds, assignments, waivers,
consents, non-disturbance and recognition or similar agreements, bills of sale
and other documents, and has duly effected all recordings, filings and other
actions necessary to establish, protect and perfect such Credit Party's right,
title and interest in and to all such Real Estate and other properties and
25
assets. Disclosure Schedule (3.6) also describes any purchase options, rights of
first refusal or other similar contractual rights pertaining to any Real Estate.
As of the Closing Date, no portion of any Credit Party's Real Estate has
suffered any material damage by fire or other casualty loss which has not
heretofore been repaired and restored in all material respects to its original
condition or otherwise remedied. As of the Closing Date, all material permits
required to have been issued or appropriate to enable the Real Estate to be
lawfully occupied and used for all of the purposes for which they are currently
occupied and used have been lawfully issued and are in full force and effect.
3.7 Labor Matters. As of the Closing Date (a) no strikes or other material
labor disputes against any Credit Party are pending or, to any Credit Party's
knowledge, threatened; (b) hours worked by and payment made to employees of each
Credit Party comply with the Fair Labor Standards Act and each other federal,
state, local or foreign law applicable to such matter; (c) all payments due from
any Credit Party for employee health and welfare insurance have been paid or
accrued as a liability on the books of such Credit Party; (d) except as set
forth in Disclosure Schedule (3.7), no Credit Party is a party to or bound by
any collective bargaining agreement, management agreement, consulting agreement
or any employment agreement (and true and complete copies of any agreements
described on Disclosure Schedule (3.7) have been delivered to Agent); (e) there
is no organizing activity involving any Credit Party pending or, to any Credit
Party's knowledge, threatened by any labor union or group of employees; (f)
there are no representation proceedings pending or, to any Credit Party's
knowledge, threatened with the National Labor Relations Board, and no labor
organization or group of employees of any Credit Party has made a pending demand
for recognition; and (g) except as set forth in Disclosure Schedule (3.7), there
are no complaints or charges against any Credit Party pending or, to the
knowledge of any Credit Party, threatened to be filed with any Governmental
Authority or arbitrator based on, arising out of, in connection with, or
otherwise relating to the employment or termination of employment by any Credit
Party of any individual.
3.8 Ventures, Subsidiaries and Affiliates; Outstanding Stock and
Indebtedness. Except as set forth in Disclosure Schedule (3.8), no Credit Party
has any Subsidiaries, is engaged in any joint venture or partnership with any
other Person, or is an Affiliate of any other Person. All of the issued and
outstanding Stock of each Credit Party is owned by each of the stockholders and
in the amounts set forth on Disclosure Schedule (3.8). Except as set forth in
Disclosure Schedule (3.8), there are no outstanding rights to purchase, options,
warrants or similar rights or agreements pursuant to which any Credit Party may
be required to issue, sell, repurchase or redeem any of its Stock or other
equity securities or any Stock or other equity securities of its Subsidiaries.
All outstanding Indebtedness of each Credit Party as of the Closing Date is
described in Section 6.3 (including Disclosure Schedule (6.3)).
3.9 Government Regulation. No Credit Party is an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment Company Act of
1940 as amended. No Credit Party is subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power
26
Act, or any other federal or state statute that restricts or limits its ability
to incur Indebtedness or to perform its obligations hereunder. The making or
continuation of the Loans by Lenders to Borrowers, the incurrence or
continuation of the Letter of Credit Obligations on behalf of Borrowers, the
application of the proceeds thereof and repayment thereof and the consummation
of the Related Transactions will not violate any provision of any such statute
or any rule, regulation or order issued by the Securities and Exchange
Commission.
3.10 Margin Regulations. No Credit Party is engaged, nor will it engage,
principally or as one of its important activities, in the business of extending
credit for the purpose of "purchasing" or "carrying" any "margin security" as
such terms are defined in Regulation U or G of the Federal Reserve Board as now
and from time to time hereafter in effect (such securities being referred to
herein as "Margin Stock"). No Credit Party owns any Margin Stock, and none of
the proceeds of the Loans or other extensions of credit under this Agreement
will be used, directly or indirectly, for the purpose of purchasing or carrying
any Margin Stock, for the purpose of reducing or retiring any Indebtedness which
was originally incurred to purchase or carry any Margin Stock or for any other
purpose which might cause any of the Loans or other extensions of credit under
this Agreement to be considered a "purpose credit" within the meaning of
Regulation T, U or X of the Federal Reserve Board. No Credit Party will take or
permit to be taken any action which might cause any Loan Document to violate any
regulation of the Federal Reserve Board.
3.11 Taxes. All tax returns, reports and statements, including information
returns, required by any Governmental Authority to be filed by any Credit Party
have been filed with the appropriate Governmental Authority by their due date
(subject to any extensions agreed to by such Governmental Authority) and all
Charges have been paid prior to the date on which any fine, penalty, interest or
late charge may be added thereto for nonpayment thereof (or any such fine,
penalty, interest, late charge or loss has been paid), excluding Charges or
other amounts being contested in accordance with Section 5.2(b). Proper and
accurate amounts have been withheld by each Credit Party from its respective
employees for all periods in full and complete compliance with all applicable
federal, state, local and foreign law and such withholdings have been timely
paid to the respective Governmental Authorities. Disclosure Schedule (3.11) sets
forth as of the Closing Date those taxable years for which any Credit Party's
tax returns are currently being audited by the IRS or any other applicable
Governmental Authority and any assessments or threatened assessments in
connection with such audit, or otherwise currently outstanding. Except as
described on Disclosure Schedule (3.11), no Credit Party has executed or filed
with the IRS or any other Governmental Authority any agreement or other document
extending, or having the effect of extending, the period for assessment or
collection of any Charges. None of the Credit Parties and their respective
predecessors are liable for any Charges: (a) under any agreement (including any
tax sharing agreements) or (b) to each Credit Party's knowledge, as a
transferee. As of the Closing Date, no Credit Party has agreed or been requested
to make any adjustment under IRC Section 481(a), by reason of a change in
accounting method or otherwise, which would have a Material Adverse Effect.
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3.12 ERISA. (a) Disclosure Schedule (3.12) lists and separately identifies
all Title IV Plans, Multiemployer Plans, ESOPs and Retiree Welfare Plans. Copies
of all such listed Plans, together with a copy of the latest form 5500 for each
such Plan, have been delivered to Agent. Each Qualified Plan has been determined
by the IRS to qualify under Section 401 of the IRC, and the trusts created
thereunder have been determined to be exempt from tax under the provisions of
Section 501 of the IRC, and nothing has occurred which would cause the loss of
such qualification or tax-exempt status. Each Plan is in compliance with the
applicable provisions of ERISA and the IRC, including the filing of reports
required under the IRC or ERISA. No Credit Party or ERISA Affiliate has failed
to make any contribution or pay any amount due as required by either Section 412
of the IRC or Section 302 of ERISA or the terms of any such Plan. No Credit
Party or ERISA Affiliate has engaged in a prohibited transaction, as defined in
Section 4975 of the IRC, in connection with any Plan, which would subject any
Credit Party to a material tax on prohibited transactions imposed by Section
4975 of the IRC.
(b) Except as set forth in Disclosure Schedule (3.12): (i) no Title IV Plan
has any Unfunded Pension Liability; (ii) no ERISA Event or event described in
Section 4062(e) of ERISA with respect to any Title IV Plan has occurred or is
reasonably expected to occur; (iii) there are no pending, or to the knowledge of
any Credit Party, threatened claims (other than claims for benefits in the
normal course), sanctions, actions or lawsuits, asserted or instituted against
any Plan or any Person as fiduciary or sponsor of any Plan; (iv) no Credit Party
or ERISA Affiliate has incurred or reasonably expects to incur any liability as
a result of a complete or partial withdrawal from a Multiemployer Plan; (v)
within the last five years no Title IV Plan with Unfunded Pension Liabilities
has been transferred outside of the "controlled group" (within the meaning of
Section 4001(a)(14) of ERISA) of any Credit Party or ERISA Affiliate; and (vi)
no liability under any Title IV Plan has been satisfied with the purchase of a
contract from an insurance company that is not rated AAA by the Standard &
Poor's Corporation or the equivalent by another nationally recognized rating
agency.
3.13 No Litigation. No action, claim, lawsuit, demand, investigation or
proceeding is now pending or, to the knowledge of any Credit Party, threatened
against any Credit Party, before any Governmental Authority or before any
arbitrator or panel of arbitrators (collectively, "Litigation"), (a) which
challenges any Credit Party's right or power to enter into or perform any of its
obligations under the Loan Documents to which it is a party, or the validity or
enforceability of any Loan Document or any action taken thereunder, or (b) which
has a reasonable risk of being determined adversely to any Credit Party and
which, if so determined, could have a Material Adverse Effect. Except as set
forth on Disclosure Schedule (3.13), as of the Closing Date there is no
Litigation pending or threatened which seeks damages in excess of $100,000 or
injunctive relief or alleges criminal misconduct of any Credit Party.
3.14 Brokers. No broker or finder acting on behalf of any Credit Party
brought about the obtaining, making or closing of the Loans or the Related
Transactions, and no Credit Party has any obligation to any Person in respect of
any finder's or brokerage fees in connection therewith.
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3.15 Intellectual Property. As of the Closing Date, each Credit Party owns
or has rights to use all Intellectual Property necessary to continue to conduct
its business as now or heretofore conducted by it or proposed to be conducted by
it, and each Patent, Trademark, Copyright and License is listed, together with
application or registration numbers, as applicable, in Disclosure Schedule
(3.15) hereto. Each Credit Party conducts its business and affairs without
infringement of or interference with any Intellectual Property of any other
Person.
3.16 Full Disclosure. No information contained in this Agreement, any of
the other Loan Documents, any Projections, Financial Statements or Collateral
Reports or other reports from time to time delivered hereunder or any written
statement furnished by or on behalf of any Credit Party to Agent or any Lender
pursuant to the terms of this Agreement contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary to make the statements contained herein or therein not misleading in
light of the circumstances under which they were made. The Liens granted to
Agent, on behalf of itself and Lenders pursuant to the Collateral Documents will
at all times be fully perfected first priority Liens in and to the Collateral
described therein, subject, as to priority, only to Permitted Encumbrances with
respect to the Collateral other than Accounts.
3.17 Environmental Matters. (a) To the knowledge of the Borrowers, except
as set forth in Disclosure Schedule (3.17), as of the Closing Date: (i) the Real
Estate is free of contamination from any Hazardous Material except for such
contamination that would not adversely impact the value or marketability of such
Real Estate and which would not result in Environmental Liabilities which could
reasonably be expected to exceed $35,000; (ii) no Credit Party has caused or
suffered to occur any Release of Hazardous Materials on, at, in, under, above,
to, from or about any of its Real Estate; (iii) the Credit Parties are and have
been in compliance with all Environmental Laws, except for such noncompliance
which would not result in Environmental Liabilities which could reasonably be
expected to exceed $35,000; (iv) the Credit Parties have obtained, and are in
compliance with, all Environmental Permits required by Environmental Laws for
the operations of their respective businesses as presently conducted or as
proposed to be conducted, except where the failure to so obtain or comply with
such Environmental Permits would not result in Environmental Liabilities which
could reasonably be expected to exceed $35,000, and all such Environmental
Permits are valid, uncontested and in good standing; (v) no Credit Party is
involved in operations or knows of any facts, circumstances or conditions,
including any Releases of Hazardous Materials, that are likely to result in any
Environmental Liabilities of such Credit Party which could reasonably be
expected to exceed $35,000, and no Credit Party has permitted any current or
former tenant or occupant of the Real Estate to engage in any such operations;
(vi) the Credit Parties' estimated costs of compliance with Environmental Laws
and Environmental Permits (excluding the filing fees and costs for all regularly
scheduled periodic reports and license renewals) for each of the two Fiscal
Years following the Closing Date are not in excess of $35,000 in either Fiscal
Year; (vii) there is no Litigation arising under or related to any Environmental
Laws, Environmental Permits or Hazardous Material which seeks damages,
penalties, fines, costs or expenses in excess of $25,000 or injunctive relief,
or which alleges criminal misconduct by any Credit Party; (viii) no notice has
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been received by any Credit Party identifying it as a "potentially responsible
party" or requesting information under CERCLA or analogous state statutes, and
to the knowledge of the Credit Parties, there are no facts, circumstances or
conditions that may result in any Credit Party being identified as a
"potentially responsible party" under CERCLA or analogous state statutes; and
(ix) the Credit Parties have provided to Agent copies of all existing
environmental reports, reviews and audits and all written information pertaining
to actual or potential Environmental Liabilities, in each case relating to any
Credit Party.
(b) Each Credit Party hereby acknowledges and agrees that Agent (i) is not
now, and has not ever been, in control of any of the Real Estate or any Credit
Party's affairs, and (ii) does not have the capacity through the provisions of
the Loan Documents or otherwise to influence any Credit Party's conduct with
respect to the ownership, operation or management of any of its Real Estate or
compliance with Environmental Laws or Environmental Permits.
3.18 Insurance. Disclosure Schedule (3.18) lists all insurance policies of
any nature maintained, as of the Closing Date, for current occurrences by each
Credit Party, as well as a summary of the terms of each such policy.
3.19 Deposit and Disbursement Accounts. Disclosure Schedule (3.19) lists
all banks and other financial institutions at which any Credit Party maintains
deposits and/or other accounts as of the Closing Date, including any
Disbursement Accounts, and such Schedule correctly identifies the name, address
and telephone number of each depository, the name in which the account is held,
a description of the purpose of the account, and the complete account number.
3.20 Government Contracts. Except as set forth in Disclosure Schedule
(3.20), as of the Closing Date, no Credit Party is a party to any contract or
agreement with any Governmental Authority and no Credit Party's Accounts are
subject to the Federal Assignment of Claims Act, as amended (31 U.S.C. Section
3727) or any similar state or local laws.
3.21 Customer and Trade Relations. As of the Closing Date, there exists no
actual or, to the knowledge of any Credit Party, threatened termination or
cancellation of, or any material adverse modification or change in: (a) the
business relationship of any Credit Party with any customer or group of
customers whose purchases during the preceding twelve (12) months caused them to
be ranked among the ten largest customers of such Credit Party; or (b) the
business relationship of any Credit Party with any supplier material to its
operations.
3.22 Agreements and Other Documents. As of the Closing Date, each Credit
Party has provided to Agent or its counsel, on behalf of Lenders, accurate and
complete copies (or summaries) of all of the following agreements or documents
to which it is subject and each of which are listed on Disclosure Schedule
(3.22): (a) supply agreements and purchase agreements not terminable by such
Credit Party within sixty (60) days following written notice issued by such
Credit Party and involving transactions in excess of $250,000 per annum; (b) any
lease of Equipment having a remaining term of one year or longer and requiring
aggregate rental and other
30
payments in excess of $100,000 per annum; (c) licenses and permits held by the
Credit Parties, the absence of which could be reasonably likely to have a
Material Adverse Effect; (d) instruments or documents evidencing Indebtedness of
such Credit Party and any security interest granted by such Credit Party with
respect thereto; and (e) instruments and agreements evidencing the issuance of
any equity securities, warrants, rights or options to purchase equity securities
of such Credit Party.
3.23 Solvency. Both before and after giving effect to (a) the Loans and
Letter of Credit Obligations to be made or extended on the Closing Date or such
other date as Loans and Letter of Credit Obligations requested hereunder are
made or extended, (b) the disbursement of the proceeds of such Loans pursuant to
the instructions of Borrower Representative, (c) the consummation of the other
Related Transactions and (d) the payment and accrual of all transaction costs in
connection with the foregoing, each Credit Party is Solvent.
3.24 Year 2000 Representations. Disclosure Schedule (3.24) lists each
Credit Party's Year 2000 Assessment and Year 2000 Corrective Plan. Each Credit
Party has completed a Year 2000 Assessment and a Year 2000 Corrective Plan,
copies of which have been delivered to Agent, and each Credit Party will have
completed all Year 2000 Corrective Actions by October 31, 1999.
3.25 Dexol Acquisition Agreement As of the Closing Date, Verdant has
delivered to Agent a complete and correct copy of the Dexol Acquisition
Agreement (including all schedules, exhibits, amendments, supplements,
modifications, assignments and all other documents delivered pursuant thereto or
in connection therewith). No Credit Party and no other Person party thereto is
in default in the performance or compliance with any provisions thereof. The
Dexol Acquisition Agreement complies with, and the Dexol Transaction has been
consummated in accordance with, all applicable laws. The Dexol Acquisition
Agreement is in full force and effect as of the Closing Date, has not been
terminated, rescinded or withdrawn. All requisite approvals by Governmental
Authorities having jurisdiction over Dexol, any Credit Party and other Persons
referenced therein, with respect to the transactions contemplated by the Dexol
Acquisition Agreement, have been obtained, and no such approvals impose any
conditions to the consummation of the transactions contemplated by the Dexol
Acquisition Agreement or to the conduct by any Credit Party of its business
thereafter. To the best of each Credit Party's knowledge, none of Dexol's
representations or warranties in the Dexol Acquisition Agreement contain any
untrue statement of a material fact or omit any fact necessary to make the
statements therein not misleading. Each of the representations and warranties
given by each applicable Credit Party in the Dexol Acquisition Agreement is true
and correct in all material respects. Notwithstanding anything contained in the
Dexol Acquisition Agreement to the contrary, such representations and warranties
of the Credit Parties are incorporated into this Agreement by this Section 3.25
and shall, solely for purposes of this Agreement and the benefit of Agent and
Lenders, survive the consummation of the Dexol Transaction.
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3.26 Subordinated Debt. As of the Closing Date, Borrowers have delivered to
Agent a complete and correct copy of the Subordinated Note (including all
schedules, exhibits, amendments, supplements, modifications, assignments and all
other documents delivered pursuant thereto or in connection therewith). Verdant
has the corporate power and authority to incur the Indebtedness evidenced by the
Subordinated Note. The subordination provisions of the Subordinated Note are
enforceable against the holders of the Subordinated Note by Agent and Lenders.
All Obligations, including the Obligations to pay principal of and interest on
the Loans and the Letter of Credit Obligations, constitute senior Indebtedness
entitled to the benefits of the subordination provisions contained in the
Subordinated Note. The principal of and interest on the Notes, all Letter of
Credit Obligations and all other Obligations will constitute "senior debt" as
that or any similar term is or may be used in any other instrument evidencing or
applicable to any other Subordinated Debt. Borrowers acknowledge that Agent and
each Lender is entering into this Agreement and is extending the Commitments in
reliance upon the subordination provisions of the Subordinated Note and this
Section 3.26.
3.27 SRI Acquisition Agreement. Verdant has delivered to Agent a complete
and correct copy of the SRI Acquisition Agreement (including all schedules,
exhibits, amendments, supplements, modifications, assignments and all other
documents delivered pursuant thereto or in connection therewith). No Credit
Party and no other Person party thereto is in default in the performance or
compliance with any provisions thereof. The SRI Acquisition Agreement complies
with, and the SRI Transaction has been consummated in accordance with, all
applicable laws. The SRI Acquisition Agreement is in full force and effect and
has not been terminated, rescinded or withdrawn. All requisite approvals by
Governmental Authorities having jurisdiction over SRI, any other Credit Party
and other Persons referenced therein, with respect to the transactions
contemplated by the SRI Acquisition Agreement, have been obtained, and no such
approvals impose any conditions to the consummation of the transactions
contemplated by the SRI Acquisition Agreement or to the conduct by any Credit
Party of its business thereafter. To the best of each Credit Party's knowledge,
none of SRI's representations or warranties in the SRI Acquisition Agreement
contain any untrue statement of a material fact or omit any fact necessary to
make the statements therein not misleading. Each of the representations and
warranties given by each applicable Credit Party in the SRI Acquisition
Agreement is true and correct in all material respects. Notwithstanding anything
contained in the SRI Acquisition Agreement to the contrary, such representations
and warranties of the Credit Parties are incorporated into this Agreement by
this Section 3.27 and shall, solely for purposes of this Agreement and the
benefit of Agent and Lenders, survive the consummation of the SRI Transaction.
3.28 SureCo Notes. Verdant has delivered to Agent a complete and correct
copy of each of the SureCo Notes (including all schedules, exhibits, amendments,
supplements, modifications, assignments and all other documents delivered
pursuant thereto or in connection therewith). The subordination provisions
related to certain of the SureCo Notes are enforceable against the holders
thereof by Agent and each Lender. All Obligations, including the Obligations
32
to pay principal of and interest on the Loans and the Letter of Credit
Obligations, constitute senior Indebtedness entitled to the benefits of such
subordination provisions.
3.29 Consep Merger Agreement. Verdant has delivered to Agent a complete and
correct copy of the Consep Merger Agreement (including all schedules, exhibits,
amendments, supplements, modifications, assignments and all other documents
delivered pursuant thereto or in connection therewith). No Credit Party and no
other Person party thereto is in default in the performance or compliance with
any provisions thereof. The Consep Merger Agreement complies with, and the
Consep Transaction has been consummated in accordance with, all applicable laws.
All requisite approvals by Governmental Authorities having jurisdiction over
Consep, any other Credit Party and other Persons referenced therein, with
respect to the transactions contemplated by the Consep Merger Agreement, have
been obtained, and no such approvals impose any conditions to the consummation
of the transactions contemplated by the Consep Merger Agreement or to the
conduct by any Credit Party of its business thereafter. To the best of each
Credit Party's knowledge, none of Consep's representations or warranties in the
Consep Merger Agreement contain any untrue statement of a material fact or omit
any fact necessary to make the statements therein not misleading. Each of the
representations and warranties given by each applicable Credit Party in the
Consep Merger Agreement is true and correct in all material respects.
Notwithstanding anything contained in the Consep Merger Agreement to the
contrary, such representations and warranties of the Credit Parties are
incorporated into this Agreement by this Section 3.29 and shall, solely for
purposes of this Agreement and the benefit of Agent and Lenders, survive the
consummation of the Consep Transaction.
4. FINANCIAL STATEMENTS AND INFORMATION
4.1 Reports and Notices. (a) Each Credit Party executing this Agreement
hereby agrees that from and after the Closing Date and until the Termination
Date, it shall deliver to Agent and/or Lenders, as required, the Financial
Statements, notices, Projections and other information at the times, to the
Persons and in the manner set forth in Annex E.
(b) Each Credit Party executing this Agreement hereby agrees that from and
after the Closing Date and until the Termination Date, it shall deliver to Agent
and/or Lenders, as required, the various Collateral Reports (including Borrowing
Base Certificates in the form of Exhibit 4.1(b)) at the times, to the Persons
and in the manner set forth in Annex F.
4.2 Communication with Accountants. Each Credit Party executing this
Agreement authorizes Agent and, so long as a Default or Event of Default shall
have occurred and be continuing, each Lender (accompanied by Agent), to
communicate directly with its independent certified public accountants, and
authorizes and shall instruct those accountants and advisors to disclose and
make available to Agent and each Lender any and all Financial Statements and
other supporting financial documents, schedules and information relating to any
Credit Party (including copies of any issued management letters) with respect to
the business, financial condition and other affairs of any Credit Party.
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5. AFFIRMATIVE COVENANTS
Each Credit Party executing this Agreement jointly and severally agrees as
to all Credit Parties that from and after the Closing Date and until the
Termination Date:
5.1 Maintenance of Existence and Conduct of Business. Each Credit Party
shall: (a) do or cause to be done all things necessary to preserve and keep in
full force and effect its corporate existence and its rights and franchises; (b)
continue to conduct its business substantially as now conducted or as otherwise
permitted hereunder; (c) except as otherwise provided herein, at all times
maintain, preserve and protect all of its assets and properties used or useful
in the conduct of its business, and keep the same in good repair, working order
and condition in all material respects (taking into consideration ordinary wear
and tear) and from time to time make, or cause to be made, all necessary or
appropriate repairs, replacements and improvements thereto consistent with
industry practices; and (d) transact business only in such corporate and trade
names as are set forth in Disclosure Schedule (5.1).
5.2 Payment of Obligations. (a) Subject to Section 5.2(b), each Credit
Party shall pay and discharge or cause to be paid and discharged promptly all
Charges payable by it, including (A) Charges imposed upon it, its income and
profits, or any of its property (real, personal or mixed) and all Charges with
respect to tax, social security and unemployment withholding with respect to its
employees, and (B) lawful claims for labor, materials, supplies and services or
otherwise, before any thereof shall become past due.
(b) Each Credit Party may in good faith contest, by appropriate
proceedings, the validity or amount of any Charges or claims described in
Section 5.2(a); provided, that (i) at the time of commencement of any such
contest no Default or Event of Default shall have occurred and be continuing,
(ii) adequate reserves with respect to such contest are maintained on the books
of such Credit Party, in accordance with GAAP, (iii) such contest is maintained
and prosecuted continuously and with diligence and operates to suspend
collection or enforcement of such Charges or claims or any Lien in respect
thereof, (iv) none of the Collateral becomes subject to forfeiture or loss as a
result of such contest, (v) no Lien shall be imposed to secure payment of such
Charges or claims other than Permitted Encumbrances, (vi) such Credit Party
shall promptly pay or discharge such contested Charges or claims and all
additional charges, interest, penalties and expenses, if any, and shall deliver
to Agent evidence acceptable to Agent of such compliance, payment or discharge,
if such contest is terminated or discontinued adversely to such Credit Party or
the conditions set forth in this Section 5.2(b) are no longer met, and (vii)
Agent has not advised Borrowers in writing that Agent reasonably believes that
nonpayment or nondischarge thereof could have or result in a Material Adverse
Effect.
5.3 Books and Records. Each Credit Party shall keep adequate books and
records with respect to its business activities in which proper entries,
reflecting all financial transactions, are made in accordance with GAAP and on a
basis consistent with the Financial Statements most recently delivered pursuant
to the Prior Credit Agreement.
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5.4 Insurance; Damage to or Destruction of Collateral. (a) The Credit
Parties shall, at their sole cost and expense, maintain the policies of
insurance described on Disclosure Schedule (3.18) as in effect on the date
hereof or otherwise in form and amounts and with insurers acceptable to Agent.
If any Credit Party at any time or times hereafter shall fail to obtain or
maintain any of the policies of insurance required above or to pay all premiums
relating thereto, Agent may at any time or times thereafter obtain and maintain
such policies of insurance and pay such premiums and take any other action with
respect thereto which Agent deems advisable. Agent shall have no obligation to
obtain insurance for any Credit Party or pay any premiums therefor. By doing so,
Agent shall not be deemed to have waived any Default or Event of Default arising
from any Credit Party's failure to maintain such insurance or pay any premiums
therefor. All sums so disbursed, including attorneys' fees, court costs and
other charges related thereto, shall be payable on demand by Borrowers to Agent
and shall be additional Obligations hereunder secured by the Collateral.
(b) Agent reserves the right at any time upon any change in any Credit
Party's risk profile (including any change in the product mix maintained by any
Credit Party or any laws affecting the potential liability of such Credit Party)
to require additional forms and limits of insurance to, in Agent's opinion,
adequately protect both Agent's and Lender's interests in all or any portion of
the Collateral and to ensure that each Credit Party is protected by insurance in
amounts and with coverage customary for its industry. If requested by Agent,
each Credit Party shall deliver to Agent from time to time a report of a
reputable insurance broker, satisfactory to Agent, with respect to its insurance
policies.
(c) Each Borrower shall deliver to Agent, in form and substance
satisfactory to Agent, endorsements to (i) all "All Risk" and business
interruption insurance naming Agent, on behalf of itself and Lenders, as loss
payee, and (ii) all general liability and other liability policies naming Agent,
on behalf of itself and Lenders, as additional insured, which endorsements shall
provide for at least 30 days' written notice to Lender prior to any renewal,
cancellation or material amendment of any referenced policies. Each Borrower
irrevocably makes, constitutes and appoints Agent (and all officers, employees
or agents designated by Agent), so long as any Default or Event of Default shall
have occurred and be continuing or the anticipated insurance proceeds exceed
$250,000, as such Borrower's true and lawful agent and attorney-in-fact for the
purpose of making, settling and adjusting claims under such "All Risk" policies
of insurance, endorsing the name of such Borrower on any check or other item of
payment for the proceeds of such "All Risk" policies of insurance and for making
all determinations and decisions with respect to such "All Risk" policies of
insurance. Agent shall have no duty to exercise any rights or powers granted to
it pursuant to the foregoing power-of-attorney. Borrower Representative shall
promptly (and in any event within five (5) Business Days) notify Agent of any
loss, damage, or destruction to the Collateral in the amount of $100,000 or
more, whether or not covered by insurance. After deducting from such proceeds
the expenses, if any, incurred by Agent in the collection or handling thereof,
Agent may, at its option, apply such proceeds to the reduction of the
Obligations in accordance with Section 1.3(d); provided that in the case of
insurance proceeds pertaining to any Credit Party that is not a Borrower, such
insurance proceeds shall be applied
35
ratably to all of the Loans owing by each Borrower; or permit or require the
applicable Borrower to use such money, or any part thereof, to replace, repair,
restore or rebuild the Collateral in a diligent and expeditious manner with
materials and workmanship of substantially the same quality as existed before
the loss, damage or destruction. Notwithstanding the foregoing, if the casualty
giving rise to such insurance proceeds would not reasonably be expected to have
a Material Adverse Effect and such insurance proceeds do not exceed $250,000 in
the aggregate during any Fiscal Year, Agent shall permit the applicable Borrower
to replace, restore, repair or rebuild the property; provided that if such
Borrower shall not have completed or entered into binding agreements to complete
such replacement, restoration, repair or rebuilding within 180 days of such
casualty, Agent may apply such insurance proceeds to the Obligations in
accordance with Section 1.3(d); provided that in the case of insurance proceeds
pertaining to any Credit Party that is not a Borrower, such insurance proceeds
shall be applied ratably to all of the Loans owing by each Borrower. All
insurance proceeds which are to be made available to any Borrower to replace,
repair, restore or rebuild the Collateral shall be applied by Agent to reduce
the outstanding principal balance of the Revolving Loan of such Borrower (which
application shall not result in a permanent reduction of the Revolving Loan
Commitment) and upon such application, Agent shall establish a Reserve against
the separate Borrowing Base of the affected Borrower in an amount equal to the
amount of such proceeds so applied. Thereafter, such funds shall be made
available to that Borrower to provide funds to replace, repair, restore or
rebuild the Collateral as follows: (i) Borrower Representative shall request a
Revolving Credit Advance be made to such Borrower in the amount requested to be
released; (ii) so long as the conditions set forth in Section 2.2 have been met,
Revolving Lenders shall make such Revolving Credit Advance; and (iii) in the
case of insurance proceeds applied against the Revolving Loan, the Reserve
established with respect to such insurance proceeds shall be reduced by the
amount of such Revolving Credit Advance. To the extent not used to replace,
repair, restore or rebuild the Collateral, such insurance proceeds shall be
applied in accordance with Section 1.3(d); provided that in the case of
insurance proceeds pertaining to any Credit Party that is not a Borrower, such
insurance proceeds shall be applied ratably to all of the Loans owing by each
Borrower.
5.5 Compliance with Laws. Each Credit Party shall comply with all federal,
state, local and foreign laws and regulations applicable to it, including those
relating to licensing, ERISA and labor matters and Environmental Laws and
Environmental Permits except to the extent that the failure to comply,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
5.6 Supplemental Disclosure. From time to time as may be requested by Agent
(which request will not be made more frequently than once each year absent the
occurrence and continuance of a Default or an Event of Default), the Credit
Parties shall supplement each Disclosure Schedule hereto, or any representation
herein or in any other Loan Document, 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 Disclosure Schedule or
as an exception to such representation or which is necessary to correct any
information in such Disclosure Schedule or representation which has been
rendered inaccurate thereby (and, in the
36
case of any supplements to any Disclosure Schedule, such Disclosure Schedule
shall be appropriately marked to show the changes made therein); provided that
(a) no such supplement to any such Disclosure Schedule or representation shall
be or be deemed a waiver of any Default or Event of Default resulting from the
matters disclosed therein, except as consented to by Agent and Requisite Lenders
in writing; and (b) no supplement shall be required as to representations and
warranties that relate solely to the Closing Date.
5.7 Intellectual Property. Each Credit Party will conduct its business and
affairs without infringement of or interference with any Intellectual Property
of any other Person.
5.8 Environmental Matters. Each Credit Party shall and shall cause each
Person within its control to: (a) conduct its operations and keep and maintain
its Real Estate in compliance with all Environmental Laws and Environmental
Permits other than noncompliance which could not reasonably be expected to have
a Material Adverse Effect; (b) implement any and all investigation, remediation,
removal and response actions which are appropriate or necessary to maintain the
value and marketability of the Real Estate or to otherwise comply with
Environmental Laws and Environmental Permits pertaining to the presence,
generation, treatment, storage, use, disposal, transportation or Release of any
Hazardous Material on, at, in, under, above, to, from or about any of its Real
Estate; (c) notify Agent promptly after such Credit Party becomes aware of any
violation of Environmental Laws or Environmental Permits or any Release on, at,
in, under, above, to, from or about any Real Estate which is reasonably likely
to result in Environmental Liabilities in excess of $35,000; and (d) promptly
forward to Agent a copy of any order, notice, request for information or any
communication or report received by such Credit Party in connection with any
such violation or Release or any other matter relating to any Environmental Laws
or Environmental Permits that could reasonably be expected to result in
Environmental Liabilities in excess of $35,000, in each case whether or not the
Environmental Protection Agency or any Governmental Authority has taken or
threatened any action in connection with any such violation, Release or other
matter. If Agent at any time has a reasonable basis to believe that there may be
a violation of any Environmental Laws or Environmental Permits by any Credit
Party or any Environmental Liability arising thereunder, or a Release of
Hazardous Materials on, at, in, under, above, to, from or about any of its Real
Estate, which, in each case, could reasonably be expected to have a Material
Adverse Effect, then each Credit Party shall, upon Agent's written request (i)
cause the performance of such environmental audits including subsurface sampling
of soil and groundwater, and preparation of such environmental reports, at
Borrowers' expense, as Agent may from time to time request, which shall be
conducted by reputable environmental consulting firms acceptable to Agent and
shall be in form and substance acceptable to Agent, and (ii) permit Agent or its
representatives to have access to all Real Estate for the purpose of conducting
such environmental audits and testing as Agent deems appropriate, including
subsurface sampling of soil and groundwater. Borrowers shall reimburse Agent for
the costs of such audits and tests and the same will constitute a part of the
Obligations secured hereunder.
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5.9 Landlords' Agreements, Mortgagee Agreements and Bailee Letters. Each
Credit Party shall use its best efforts to obtain a landlord's agreement,
mortgagee agreement or bailee letter, as applicable, from the lessor of each
leased property or mortgagee of owned property or with respect to any warehouse,
processor or converter facility or other location where Collateral is located,
which letter or agreement shall contain a waiver or subordination of all Liens
or claims that the landlord, mortgagee or bailee may assert against the
Inventory or Collateral at that location and shall otherwise be satisfactory in
form and substance to Agent. With respect to such locations or warehouse space
leased or owned as of the Closing Date and thereafter, if Agent has not received
a satisfactory landlord or mortgagee agreement or bailee letter as of the
Closing Date (or, if later, as of the date such location is acquired or leased),
any Borrower's Eligible Inventory at that location shall, in Agent's discretion,
be excluded from the Borrowing Base or be subject to such Reserves as may be
established by Agent in its reasonable credit judgment. After the Closing Date,
no real property or warehouse space shall be leased or acquired by any Credit
Party and no Inventory shall be shipped to a processor or converter under
arrangements established after the Closing Date, unless and until a satisfactory
landlord or mortgagee agreement or bailee letter, as appropriate, shall first
have been obtained with respect to such location; provided that Borrowers may
hold Inventory with a book value not to exceed $300,000 in the aggregate at
newly established locations with Agent's prior approval and subject to a Reserve
established at Agent's discretion. Each Credit Party shall timely and fully pay
and perform its obligations under all leases and other agreements with respect
to each leased location or public warehouse where any Collateral is or may be
located.
5.10 Year 2000 Problems. On or prior to July 31, 1999, each Credit Party
shall complete Year 2000 Implementation Testing. On or before October 31, 1999,
each Credit Party shall eliminate all Year 2000 Problems, except where the
failure to correct the same could not reasonably be expected to have a Material
Adverse Effect, individually or in the aggregate.
5.11 Further Assurances. Each Credit Party executing this Agreement agrees
that it shall and shall cause each other Credit Party to, at such Credit Party's
expense and upon request of Agent, duly execute and deliver, or cause to be duly
executed and delivered, to Agent such further instruments and do and cause to be
done such further acts as may be necessary or proper in the reasonable opinion
of Agent to carry out more effectively the provisions and purposes of this
Agreement or any other Loan Document.
6. NEGATIVE COVENANTS
Each Credit Party executing this Agreement jointly and severally agrees as
to all Credit Parties that, without the prior written consent of Agent and
Requisite Lenders, from and after the date hereof until the Termination Date:
6.1 Mergers, Subsidiaries, Etc. No Credit Party shall directly or
indirectly, by operation of law or otherwise, (a) form or acquire any
Subsidiary, or (b) merge with, consolidate with, acquire all or substantially
all of the assets or capital stock of, or otherwise combine with
38
or acquire, any Person, except that any Borrower may merge with another
Borrower, provided that Verdant shall be the survivor of any such merger to
which it is a party.
Notwithstanding the foregoing, Verdant or any Subsidiary of Verdant which
is a Borrower may acquire all or substantially all of the assets or capital
Stock of any Person (the "Target") (in each case, a "Permitted Acquisition")
subject to the satisfaction of each of the following conditions:
(i) Agent shall receive at least thirty (30) Business Days' prior written
notice of such proposed Permitted Acquisition, which notice shall include a
reasonably detailed description of such proposed Permitted Acquisition;
(ii) such Permitted Acquisition shall only involve assets comprising a
business, or those assets of a business, of the type engaged in by Borrowers as
of the Closing Date or a similar related business, and which business would not
subject Agent or any Lender to regulatory or third party approvals in connection
with the exercise of its rights and remedies under this Agreement or any other
Loan Documents other than approvals applicable to the exercise of such rights
and remedies with respect to Borrowers prior to such Permitted Acquisition;
(iii) such Permitted Acquisition shall be consensual and shall have been
approved by the Target's board of directors;
(iv) no additional Indebtedness, Guaranteed Indebtedness, contingent
obligations or other liabilities shall be incurred, assumed or otherwise be
reflected on a consolidated balance sheet of Borrowers and Target after giving
effect to such Permitted Acquisition, except (A) the Loans made hereunder to
fund such Permitted Acquisition, (B) ordinary course trade payables and accrued
expenses of the Target to the extent no Default or Event of Default shall have
occurred and be continuing or would result after giving effect to such Permitted
Acquisition and (C) other Indebtedness, Guaranteed Indebtedness obligations and
liabilities permitted by Agent and Requisite Lenders in their sole discretion;
(v) such Permitted Acquisition shall be structured as an asset acquisition
by Verdant or as an acquisition of one hundred percent (100%) (or, in the
discretion of Agent and Requisite Lenders, such lower percentage) of the capital
stock of the Target directly by Verdant; provided that if any material portion
of the Target's business or assets shall be held through any Subsidiary of the
Target, at the discretion of Agent and Requisite Lenders, such Subsidiary shall
become a Borrower under this Agreement;
(vi) the business and assets acquired in such Permitted Acquisition shall
be free and clear of all Liens (other than Permitted Encumbrances);
(vii) at or prior to the closing of any Permitted Acquisition, Agent, on
behalf of itself and Lenders, will be granted a first priority perfected Lien
(subject to Permitted
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Encumbrances) (x) in the case of an asset acquisition, all assets of the Target
(and its Subsidiaries, if any) acquired pursuant thereto, or (y) in the case of
an acquisition of the capital stock of the Target, the assets of the Target (and
its Subsidiaries, if any) and one hundred percent (100%) (or, in the discretion
of Agent and Requisite Lenders, such lower percentage with respect to foreign
entities) of the capital stock of the Target (and its Subsidiaries, if any)
acquired by Verdant and Borrowers, the Target and the Target's Subsidiaries (if
any) shall have executed such documents and taken such other actions as may be
required by Agent in connection therewith including, in the case of a Permitted
Acquisition in which the Target (and/or a Subsidiary of the Target) becomes a
Subsidiary of Verdant, such documents and actions as may be required by Agent to
make the Target (and/or such Subsidiary) a Credit Party under this Agreement (as
a Borrower or Guarantor, as applicable);
(viii) Agent shall have completed all business and legal due diligence with
respect to the Target and the proposed acquisition with results satisfactory to
Agent including the capital structure, corporate structure, governing documents
and material agreements of Borrowers and the Target and their respective
Subsidiaries after giving effect to the proposed acquisition, and the legal and
tax effects resulting from such proposed acquisition;
(ix) Agent shall have received satisfactory evidence that the Credit
Parties have obtained all required consents, waivers, acknowledgments, orders,
authorizations and approvals of all Persons including all requisite Governmental
Authorities, to the consummation of the proposed acquisition;
(x) as soon as possible after delivery of the notice referred to in clause
(i) above but in no event later than ten (10) Business Days after delivery of
such notice, Borrowers shall have delivered to Agent, in form and substance
satisfactory to Agent:
(A) a pro forma consolidated balance sheet of Verdant and its
Subsidiaries (the "Acquisition Pro Forma"), based on recent financial data,
which shall be complete and shall accurately and fairly represent the
assets, liabilities, financial condition and results of operations of
Verdant and its Subsidiaries in accordance with GAAP consistently applied,
but taking into account such Permitted Acquisition and the funding of the
Revolving Credit Advance, and the assumption of liabilities permitted to be
assumed pursuant to Section 6.1(iv)(B), in connection therewith, and such
Acquisition Pro Forma shall reflect that on a pro forma basis, no Event of
Default shall have occurred and be continuing or would result after giving
effect to such Permitted Acquisition;
(B) updated versions of the most recently delivered Projections
covering the one (1) year period commencing on the date of such Permitted
Acquisition and otherwise prepared in accordance with the Projections (the
"Acquisition Projections") and based upon historical financial data of a
recent date satisfactory to Agent and Requisite Lenders, taking into
account such Permitted Acquisition;
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(C) a Fair Salable Balance Sheet, prepared on the same basis as the
Acquisition Pro Forma, setting forth therein Borrowers' assets at their
fair salable value on a going-concern basis with the liabilities set forth
therein including all contingent liabilities of Borrowers stated at the
reasonably estimated present values thereof; and
(D) a certificate of the Chief Financial Officer of each Borrower to
the effect that: (w) each Borrower (after taking into consideration all
rights of contribution and indemnity such Borrower has against each other
Subsidiary of Verdant) will be Solvent upon the consummation of the
Permitted Acquisition; (x) the Acquisition Pro Forma fairly presents the
financial condition of Borrowers (on a consolidated basis) as of the date
thereof after giving effect to the Permitted Acquisition; (y) the
Acquisition Projections are reasonable estimates of the future financial
performance of Borrowers subsequent to the date thereof based upon the
historical performance of Borrowers and the Target; and (z) Borrowers have
substantially completed their due diligence investigation with respect to
the Target and such Permitted Acquisition, which investigation was
conducted in a manner similar to that which would have been conducted by a
prudent purchaser of a comparable business and the results of which
investigation were delivered to Agent and Lenders;
(xi) on or prior to the date of such Permitted Acquisition, Agent shall
have received, in form and substance satisfactory to Agent, all acquisition
documents related thereto, legal opinions, evidence of solvency, certificates,
lien search results, amendments to the Loan Documents including Annex G and
execution of additional Loan Documents and other documentation as may be
requested by Agent to reflect the Permitted Acquisition, the additional Credit
Parties, and other matters related to the Permitted Acquisition, which
collectively shall confirm to Agent's satisfaction that the conditions set forth
herein have been satisfied; and
(xii) at the time of such Permitted Acquisition and after giving effect
thereto, no Default or Event of Default shall have occurred and be continuing.
Notwithstanding the foregoing, the Accounts and Inventory of the Target (or
of any Subsidiary of the Target) shall not be included in Eligible Accounts and
Eligible Inventory without the prior written consent of Agent and Requisite
Revolving Lenders and shall not be included in the Borrowing Base in any event
until completion by Agent of its audit examination of the Target. If the
Accounts and Inventory of the Target (or any Subsidiary of the Target) which is
to become a Subsidiary of Verdant are included in Eligible Accounts and Eligible
Inventory pursuant to the preceding sentence, then such Person shall become a
Borrower under this Agreement.
6.2 Investments. Except as otherwise expressly permitted by this Section 6,
no Credit Party shall make or permit to exist any investment in, or make, accrue
or permit to exist
41
loans or advances of money to, any Person, through the direct or indirect
lending of money, holding of securities or otherwise, except that:
(a) Borrowers may hold investments comprised of notes payable, or stock or
other securities issued by Account Debtors to any Borrower pursuant to
negotiated agreements with respect to settlement of such Account Debtor's
Accounts in the ordinary course of business, so long as the aggregate amount of
such Accounts so settled by Borrowers does not exceed $300,000;
(b) each Credit Party may maintain its existing investments in its
Subsidiaries as of December 8, 1998; provided, however, that the aggregate value
of Inventory transferred or otherwise conveyed from all Credit Parties to, and
held by, Consep GmbH and Consep De Mexico collectively shall not exceed
$1,000,000 in the aggregate at any time;
(c) Verdant or any Subsidiary of Verdant which is a Borrower may make
Permitted Acquisitions;
(d) Borrowers may make intercompany loans permitted under Section
6.3(a)(viii); and
(e) so long as (A) no Revolving Loan Obligations or Letter of Credit
Obligations are outstanding and (B) no Default or Event of Default shall have
occurred and be continuing, Borrowers may make investments up to $5,000,000 in
the aggregate, subject to Control Letters in favor of Agent or otherwise subject
to a perfected security interest in favor of Agent, for the benefit of Lenders,
in Cash Equivalents Investments; provided that Borrowers may maintain cash in
Cash Equivalents Investments consisting of money market funds in amounts
necessary to meet minimum balance requirements.
6.3 Indebtedness. (a) No Credit Party shall create, incur, assume or permit
to exist any Indebtedness, except (without duplication):
(i) Indebtedness secured by purchase money security interests
permitted in clause (c) of Section 6.7;
(ii) the Loans and the other Obligations;
(iii) deferred taxes;
(iv) unfunded pension fund and other employee benefit plan obligations
and liabilities to the extent they are permitted to remain unfunded under
applicable law;
(v) the Subordinated Note;
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(vi) existing Indebtedness described in Disclosure Schedule (6.3) and
refinancings thereof or amendments or modifications thereto which do not
have the effect of increasing the principal amount thereof or changing the
amortization thereof (other than to extend the same) and which are
otherwise on terms and conditions no less favorable to any Credit Party,
Agent or any Lender, as determined by Agent, than the terms of the
Indebtedness being refinanced, amended or modified;
(vii) Indebtedness specifically permitted under Section 6.1;
(viii) Indebtedness consisting of intercompany loans and advances made
by any Borrower to any other Borrower, provided that (A) each Borrower
shall have executed and delivered to each other Borrower, on the Closing
Date or, if later, on the date such Person becomes a Borrower under this
Agreement, as applicable, a demand note (collectively, the "Intercompany
Notes") to evidence any such intercompany Indebtedness owing at any time by
such Borrower to such other Borrowers, which Intercompany Notes shall be in
form and substance satisfactory to Agent and shall be pledged and delivered
to Agent pursuant to the Pledge Agreement or applicable Security Agreement
as additional collateral security for the Obligations; (B) each Borrower
shall record all intercompany transactions on its books and records in a
manner satisfactory to Agent; (C) the obligations of each Borrower under
any such Intercompany Notes shall be subordinated to the Obligations of
such Borrower hereunder in a manner satisfactory to Agent; (D) at the time
any such intercompany loan or advance is made by any Borrower to any other
Borrower and after giving effect thereto, each such Borrower shall be
Solvent; and (E) no Default or Event of Default would occur and be
continuing after giving effect to any such proposed intercompany loan; and
(ix) the SureCo Notes.
(b) No Credit Party shall, directly or indirectly, voluntarily purchase,
redeem, defease or prepay any principal of, premium, if any, interest or other
amount payable in respect of any Indebtedness, other than (i) the Obligations
and (ii) Indebtedness secured by a Permitted Encumbrance if the asset securing
such Indebtedness has been sold or otherwise disposed of in accordance with
Sections 6.8(b) or (c).
6.4 Employee Loans and Affiliate Transactions.
(a) Except as otherwise expressly permitted in this Section 6 with respect
to Affiliates, no Credit Party shall enter into or be a party to any transaction
with any other Credit Party or any Affiliate thereof except in the ordinary
course of and pursuant to the reasonable requirements of such Credit Party's
business and upon fair and reasonable terms that are no less favorable to such
Credit Party than would be obtained in a comparable arm's length transaction
with a Person not an Affiliate of such Credit Party. In addition, if any such
transaction or series of related transactions involves payments in excess of
$50,000 in the aggregate, the terms of these
43
transactions must be disclosed in advance to Agent and Lenders. All such
transactions existing or pending as of the Closing Date are described on
Disclosure Schedule (6.4).
(b) No Credit Party shall enter into any lending or borrowing transaction
with any employees of any Credit Party, except loans to their respective
employees on an arm's-length basis in the ordinary course of business consistent
with past practices for travel expenses, relocation costs and similar purposes
up to a maximum of $100,000 to any employee and up to a maximum of $300,000 at
any one time outstanding in the aggregate for all Credit Parties.
6.5 Capital Structure and Business. No Credit Party shall (a) make any
changes in any of its business objectives, purposes or operations which could in
any way adversely affect the repayment of the Loans or any of the other
Obligations or could have or result in a Material Adverse Effect, (b) make any
change in its capital structure as described on Disclosure Schedule (3.8)
including (other than with respect to Verdant) the issuance of any shares of
Stock, warrants or other securities convertible into Stock or any revision of
the terms of its outstanding Stock or (c) amend its charter or bylaws in a
manner which would adversely affect Agent or Lenders or such Credit Party's duty
or ability to repay the Obligations. No Credit Party shall engage in any
business other than the businesses currently engaged in by it or businesses
reasonably related thereto.
6.6 Guaranteed Indebtedness. No Credit Party shall create, incur, assume or
permit to exist any Guaranteed Indebtedness except (a) by endorsement of
instruments or items of payment for deposit to the general account of any Credit
Party, (b) for Guaranteed Indebtedness incurred for the benefit of any other
Credit Party if the primary obligation is expressly permitted by this Agreement
other than Indebtedness, if any, of a Target existing at the time such Target is
acquired and (c) Guaranteed Indebtedness summarized on Disclosure Schedule
(6.6).
6.7 Liens. No Credit Party shall create, incur, assume or permit to exist
any Lien on or with respect to its Accounts or any of its other properties or
assets (whether now owned or hereafter acquired) except for:
(a) Permitted Encumbrances;
(b) Liens summarized on Disclosure Schedule (6.7); and
(c) Liens created after the date hereof by conditional sale or other title
retention agreements (including Capital Leases) or in connection with purchase
money Indebtedness with respect to Equipment and Fixtures acquired by any Credit
Party in the ordinary course of business, involving the incurrence of an
aggregate amount of purchase money Indebtedness and Capital Lease Obligations of
not more than $2,000,000 outstanding at any one time for all such Liens
(provided that such Liens attach only to the assets subject to such purchase
money debt and such Indebtedness is incurred within twenty (20) days following
such purchase and does not exceed 100% of the purchase price of the subject
assets).
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In addition, no Credit Party shall become a party to any agreement, note,
indenture or 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 Agent,
on behalf of itself and Lenders, as additional collateral for the Obligations,
except operating leases, Capital Leases or Licenses which prohibit Liens upon
the assets that are subject thereto.
6.8 Sale of Stock and Assets. No Credit Party shall sell, transfer, convey,
assign or otherwise dispose of any of its properties or other assets, including
its capital Stock or the capital Stock of any of its Subsidiaries (whether in a
public or a private offering or otherwise) or any of their Accounts, other than:
(a) the sale of Inventory in the ordinary course of business, and
(b) the sale, transfer, conveyance or other disposition by a Credit Party
of Equipment, Fixtures, Real Estate or Inventory that are obsolete or no longer
used or useful in such Credit Party's business and, in the case of Equipment,
Fixtures, Real Estate or Inventory subject to a purchase money security interest
or a Capital Lease permitted by this Agreement, having a value not exceeding
$500,000 in any single transaction or $1,000,000 in the aggregate in any Fiscal
Year for all Credit Parties;
(c) other Equipment and Fixtures having a value not exceeding $250,000 in
any single transaction or $500,000 in the aggregate in any Fiscal Year for all
Credit Parties;
(d) transfers or assignments of properties and assets of Verdant to a
Subsidiary in connection with a Permitted Acquisition subject to the
satisfaction of the conditions set forth in Section 6.1; and
(e) the issuance of Stock pursuant to the terms of the Warrant to the
Holder thereof (as defined in the Warrant).
With respect to any disposition of assets or other properties permitted
pursuant to clause (b) and clause (c) above, Agent agrees on reasonable prior
written notice to release its Lien on such assets or other properties in order
to permit the applicable Credit Party to effect such disposition and shall
execute and deliver to Borrower Representative, at Borrowers' expense,
appropriate UCC-3 termination statements and other releases as reasonably
requested by Borrower Representative.
6.9 ERISA. No Credit Party shall, or shall cause or permit any ERISA
Affiliate to, cause or permit to occur an event which could result in the
imposition of a Lien under Section 412 of the IRC or Section 302 or 4068 of
ERISA.
6.10 Financial Covenants. Borrowers shall not breach or fail to comply with
any of the Financial Covenants (the "Financial Covenants") set forth in Annex G.
45
6.11 Hazardous Materials. No Credit Party shall cause or permit a Release
of any Hazardous Material on, at, in, under, above, to, from or about any of the
Real Estate where such Release would (a) violate in any respect, or form the
basis for any Environmental Liabilities under, any Environmental Laws or
Environmental Permits or (b) otherwise adversely impact the value or
marketability of any of the Real Estate or any of the Collateral, other than
such violations or Environmental Liabilities which could not reasonably be
expected to have a Material Adverse Effect.
6.12 Sale-Leasebacks. No Credit Party shall engage in any sale-leaseback,
synthetic lease or similar transaction involving any of its assets.
6.13 Cancellation of Indebtedness. No Credit Party shall cancel any claim
or debt owing to it, except for reasonable consideration negotiated on an
arm's-length basis and in the ordinary course of its business consistent with
past practices.
6.14 Restricted Payments. No Credit Party shall make any Restricted
Payment, except:
(a) intercompany loans and advances between Borrowers to the extent
permitted by Section 6.3 above;
(b) dividends and distributions by Subsidiaries of any Borrower paid to
such Borrower;
(c) employee loans permitted under Section 6.4(b) above; and
(d) regularly scheduled payments of principal and interest with respect to
the Subordinated Debt in accordance with the terms of the Subordination
Agreement or other agreement related to such Subordinated Debt;
provided that (i) no Default or Event of Default shall have occurred and be
continuing or would result after giving effect to any payment pursuant to clause
(d) above, (ii) the Borrowers collectively shall have Net Borrowing Availability
(on a pro forma basis, with trade payables being paid currently, and expenses
and liabilities being paid in the ordinary course of business and without
acceleration of sales) of not less than $3,500,000 after giving effect to the
final principal payment pursuant to clause (d) above (which shall occur no
sooner than December 15, 2000) and (iii) the timing of the payments referred to
in clause (d) above shall be set at dates which permit the delivery of Financial
Statements necessary to determine current financial covenant compliance prior to
each payment.
6.15 Change of Corporate Name or Location; Change of Fiscal Year. No Credit
Party shall (a) change its corporate name, or (b) change its chief executive
office, principal place of business, corporate offices or warehouses or
locations at which Collateral is held or stored, or
46
the location of its records concerning the Collateral, in any case without at
least thirty (30) days prior written notice to Agent and after Agent's written
acknowledgment that any reasonable action requested by Agent in connection
therewith, including to continue the perfection of any Liens in favor of Agent,
on behalf of Lenders, in any Collateral, has been completed or taken, and
provided that any such new location shall be in the continental United States.
Without limiting the foregoing, no Credit Party shall change its name, identity
or corporate structure in any manner which might make any financing or
continuation statement filed in connection herewith seriously misleading within
the meaning of Section 9-402(7) of the Code or any other then applicable
provision of the Code except upon prior written notice to Agent and Lenders and
after Agent's written acknowledgment that any reasonable action requested by
Agent in connection therewith, including to continue the perfection of any Liens
in favor of Agent, on behalf of Lenders, in any Collateral, has been completed
or taken. No Credit Party shall change its Fiscal Year.
6.16 No Impairment of Intercompany Transfers. No Credit Party shall
directly or indirectly enter into or become bound by any agreement, instrument,
indenture or other obligation (other than this Agreement and the other Loan
Documents) which could directly or indirectly restrict, prohibit or require the
consent of any Person with respect to the payment of dividends or distributions
or the making or repayment of intercompany loans by a Subsidiary of any Borrower
to any Borrower or between Borrowers.
6.17 No Speculative Transactions. No Credit Party shall engage in any
transaction involving commodity options, futures contracts or similar
transactions, except solely to hedge against fluctuations in the prices of
commodities owned or purchased by it and the values of foreign currencies
receivable or payable by it and interest swaps, caps or collars.
6.18 Leases. No Credit Party shall enter into any operating lease for
Equipment or Real Estate, if the aggregate of all such operating lease payments
payable in any year for Borrowers and their Subsidiaries on a consolidated basis
would exceed $2,000,000.
6.19 Changes Relating to Subordinated Debt. No Credit Party shall change or
amend the terms of any Subordinated Debt (or any indenture or agreement in
connection therewith) if the effect of such amendment is to: (a) increase the
interest rate on such Subordinated Debt; (b) change the dates upon which
payments of principal or interest are due on such Subordinated Debt other than
to extend such dates; (c) change any default or event of default other than to
delete or make less restrictive any default provision therein, or add any
covenant with respect to such Subordinated Debt; (d) change the redemption or
prepayment provisions of such Subordinated Debt other than to extend the dates
therefor or to reduce the premiums payable in connection therewith; (e) grant
any security or collateral to secure payment of such Subordinated Debt; or (f)
change or amend any other term if such change or amendment would materially
increase the obligations of the obligor or confer additional material rights to
the holder of such Subordinated Debt in a manner adverse to any Credit Party,
Agent or any Lender.
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7. TERM
7.1 Termination. The financing arrangements contemplated hereby shall be in
effect until the Commitment Termination Date, and the Loans and all other
Obligations shall be automatically due and payable in full on such date.
7.2 Survival of Obligations Upon Termination of Financing Arrangements.
Except as otherwise expressly provided for in the Loan Documents, no termination
or cancellation (regardless of cause or procedure) of any financing arrangement
under this Agreement shall in any way affect or impair the obligations, duties
and liabilities of the Credit Parties or the rights of Agent and Lenders
relating to any unpaid portion of the Loans or any other Obligations, due or not
due, liquidated, contingent or unliquidated or any transaction or event
occurring prior to such termination, or any transaction or event, the
performance of which is required after the Commitment Termination Date. Except
as otherwise expressly provided herein or in any other Loan Document, all
undertakings, agreements, covenants, warranties and representations of or
binding upon the Credit Parties, and all rights of Agent and each Lender, all as
contained in the Loan Documents, shall not terminate or expire, but rather shall
survive any such termination or cancellation and shall continue in full force
and effect until the Termination Date; provided however, that in all events the
provisions of Section 11, the payment obligations under Sections 1.15 and 1.16,
and the indemnities contained in the Loan Documents shall survive the
Termination Date.
8. EVENTS OF DEFAULT: RIGHTS AND REMEDIES
8.1 Events of Default. The occurrence of any one or more of the following
events (regardless of the reason therefor) shall constitute an "Event of
Default" hereunder:
(a) Any Borrower (i) fails to make any payment of principal of, or interest
on, or Fees owing in respect of, the Loans or any of the other Obligations when
due and payable, or (ii) fails to pay or reimburse Agent or Lenders for any
expense reimbursable hereunder or under any other Loan Document within ten (10)
days following Agent's demand for such reimbursement or payment of expenses.
(b) Any Credit Party shall fail or neglect to perform, keep or observe any
of the provisions of Sections 1.4, 1.8, 5.4 or 6, or any of the provisions set
forth in Annexes C or G, respectively.
(c) Any Borrower shall fail or neglect to perform, keep or observe any of
the provisions of Section 4 or any provisions set forth in Annexes E or F,
respectively, and the same shall remain unremedied for five (5) days or more.
(d) Any Credit Party shall fail or neglect to perform, keep or observe any
other provision of this Agreement or of any of the other Loan Documents (other
than any provision
48
embodied in or covered by any other clause of this Section 8.1) and the same
shall remain unremedied for thirty (30) days or more after the earlier of (i)
Borrower Representative's receipt of written notice from Agent or (ii) actual
knowledge of such breach by any Borrower.
(e) A default or breach shall occur under any other agreement, document or
instrument to which any Credit Party is a party which is not cured within any
applicable grace period, and such default or breach (i) involves the failure to
make any payment when due in respect of any Indebtedness (other than the
Obligations) of any Credit Party in excess of $250,000 in the aggregate, or (ii)
causes, or permits any holder of such Indebtedness or a trustee to cause,
Indebtedness or a portion thereof in excess of $250,000 in the aggregate to
become due prior to its stated maturity or prior to its regularly scheduled
dates of payment, regardless of whether such default is waived, or such right is
exercised, by such holder or trustee.
(f) Any information contained in any Borrowing Base Certificate is untrue
or incorrect in any respect, or any representation or warranty herein or in any
Loan Document or in any written statement, report, financial statement or
certificate (other than a Borrowing Base Certificate) made or delivered to Agent
or any Lender by any Credit Party is untrue or incorrect in any material respect
as of the date when made or deemed made.
(g) Assets of any Credit Party with a fair market value of $100,000 or more
shall be attached, seized, levied upon or subjected to a writ or distress
warrant, or come within the possession of any receiver, trustee, custodian or
assignee for the benefit of creditors of any Credit Party and such condition
continues for thirty (30) days or more.
(h) A case or proceeding shall have been commenced against any Credit Party
seeking a decree or order in respect of any Credit Party (i) under Title 11 of
the United States Code, as now constituted or hereafter amended or any other
applicable federal, state or foreign bankruptcy or other similar law, (ii)
appointing a custodian, receiver, liquidator, assignee, trustee or sequestrator
(or similar official) for any Credit Party or of any substantial part of any
such Person's assets, or (iii) ordering the winding-up or liquidation of the
affairs of any Credit Party, and such case or proceeding shall remain
undismissed or unstayed for sixty (60) days or more or such court shall enter a
decree or order granting the relief sought in such case or proceeding.
(i) Any Credit Party (i) shall file a petition seeking relief under Title
11 of the United States Code, as now constituted or hereafter amended, or any
other applicable federal, state or foreign bankruptcy or other similar law, (ii)
shall fail to contest in a timely and appropriate manner or shall consent to the
institution of proceedings thereunder or to the filing of any such petition or
to the appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee or sequestrator (or similar official) of any Credit Party or
of any substantial part of any such Person's assets, (iii) shall make an
assignment for the benefit of creditors, (iv) shall take any corporate action in
furtherance of any of the foregoing; or (v) shall admit in writing its inability
to, or shall be generally unable to, pay its debts as such debts become due.
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(j) A final judgment or judgments for the payment of money in excess of (i)
$300,000 in the aggregate at any time outstanding with respect to outstanding
obligations or liabilities acquired in the Dexol Transaction or (ii) $100,000 in
the aggregate at any time outstanding in all other cases shall be rendered
against any Credit Party and the same shall not, within thirty (30) days after
the entry thereof, have been discharged or execution thereof stayed or bonded
pending appeal, or shall not have been discharged prior to the expiration of any
such stay.
(k) Any material provision of any Loan Document shall for any reason cease
to be valid, binding and enforceable in accordance with its terms (or any Credit
Party shall challenge the enforceability of any Loan Document or shall assert in
writing, or engage in any action or inaction based on any such assertion, that
any provision of any of the Loan Documents has ceased to be or otherwise is not
valid, binding and enforceable in accordance with its terms), or any security
interest created under any Loan Document shall cease to be a valid and perfected
first priority security interest or Lien (except as otherwise permitted herein
or therein) in any of the Collateral purported to be covered thereby.
(l) Any "Change of Control" shall occur.
(m) Any event shall occur, whether or not insured or insurable, as a result
of which revenue-producing activities cease or are substantially curtailed at
any facility of Borrowers generating more than twenty-five percent (25%) of
Borrowers' consolidated revenues for the Fiscal Year preceding such event and
such cessation or curtailment continues for more than thirty (30) days.
8.2 Remedies. (a) If any Event of Default shall have occurred and be
continuing or if a Default shall have occurred and be continuing and Agent or
Requisite Revolving Lenders shall have determined not to make any Advances or
incur any Letter of Credit Obligations so long as that specific Default is
continuing, Agent may (and at the written request of the Requisite Revolving
Lenders shall), without notice, suspend the Revolving Loan facility with respect
to further Advances and/or the incurrence of further Letter of Credit
Obligations whereupon any further Advances and Letter of Credit Obligations
shall be made or extended in Agent's sole discretion (or in the sole discretion
of the Requisite Revolving Lenders, if such suspension occurred at their
direction) so long as such Default or Event of Default is continuing. If any
Default or Event of Default shall have occurred and be continuing, Agent may
(and at the written request of Requisite Lenders shall), without notice except
as otherwise expressly provided herein, increase the rate of interest applicable
to the Loans and the Letter of Credit Fees to the Default Rate.
(b) If any Event of Default shall have occurred and be continuing, Agent
may (and at the written request of the Requisite Lenders shall), without notice,
(i) terminate the Revolving Loan facility with respect to further Advances or
the incurrence of further Letter of
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Credit Obligations; (ii) declare all or any portion of the Obligations,
including all or any portion of any Loan to be forthwith due and payable, and
require that the Letter of Credit Obligations be cash collateralized as provided
in Annex B, all without presentment, demand, protest or further notice of any
kind, all of which are expressly waived by Borrowers and each other Credit
Party; and (iii) exercise any rights and remedies provided to Agent under the
Loan Documents and/or at law or equity, including all remedies provided under
the Code; provided, however, that upon the occurrence of an Event of Default
specified in Sections 8.1(g), (h) or (i), the Revolving Loan facility shall be
immediately terminated and all of the Obligations, including the aggregate
Revolving Loan, shall become immediately due and payable without declaration,
notice or demand by any Person.
8.3 Waivers by Credit Parties. Except as otherwise provided for in this
Agreement or by applicable law, each Credit Party waives (including for purposes
of Section 12): (a) presentment, demand and protest and notice of presentment,
dishonor, notice of intent to accelerate, notice of acceleration, protest,
default, nonpayment, maturity, release, compromise, settlement, extension or
renewal of any or all commercial paper, accounts, contract rights, documents,
instruments, chattel paper and guaranties at any time held by Agent on which any
Credit Party may in any way be liable, and hereby ratifies and confirms whatever
Agent may do in this regard, (b) all rights to notice and a hearing prior to
Agent's taking possession or control of, or to Agent's replevy, attachment or
levy upon, the Collateral or any bond or security which might be required by any
court prior to allowing Agent to exercise any of its remedies, and (c) the
benefit of all valuation, appraisal, marshaling and exemption laws.
9. ASSIGNMENTS AND PARTICIPATIONS; APPOINTMENT OF AGENT.
9.1 Assignment and Participations. (a) The Credit Parties signatory hereto
consent to any Lender's assignment of, and/or sale of participations in, at any
time or times, the Loan Documents, Loans, Letter of Credit Obligations and any
Commitment or of any portion thereof or interest therein, including any Lender's
rights, title, interests, remedies, powers or duties thereunder, whether
evidenced by a writing or not. Any assignment by a Lender shall (i) require the
consent of Agent (which shall not be unreasonably withheld or delayed) and the
execution of an assignment agreement (an "Assignment Agreement") substantially
in the from attached hereto as Exhibit 9.1(a) and otherwise in form and
substance satisfactory to, and acknowledged by, Agent; (ii) be conditioned on
such assignee Lender representing to the assigning Lender and Agent that it is
purchasing the applicable Loans to be assigned to it for its own account, for
investment purposes and not with a view to the distribution thereof; (iii) if a
partial assignment, be in an amount at least equal to $5,000,000 and, after
giving effect to any such partial assignment, the assigning Lender shall have
retained Commitments in an amount at least equal to $5,000,000; and (iv) include
a payment to Agent of an assignment fee of $3,500. In the case of an assignment
by a Lender under this Section 9.1, the assignee shall have, to the extent of
such assignment, the same rights, benefits and obligations as it would if it
were a Lender hereunder. The assigning Lender shall be relieved of its
obligations hereunder with respect to its Commitments or assigned portion
thereof from and after the date of such assignment. Each
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Borrower hereby acknowledges and agrees that any assignment will give rise to a
direct obligation of Borrowers to the assignee and that the assignee shall be
considered to be a "Lender". In all instances, each Lender's liability to make
Loans hereunder shall be several and not joint and shall be limited to such
Lender's Pro Rata Share of the applicable Commitment. In the event Agent or any
Lender assigns or otherwise transfers all or any part of the Obligations, Agent
or any such Lender shall so notify Borrowers and Borrowers shall, upon the
request of Agent or such Lender, execute new Notes in exchange for the Notes, if
any, being assigned. Notwithstanding the foregoing provisions of this Section
9.1(a), any Lender may at any time pledge the Obligations held by it and such
Lender's rights under this Agreement and the other Loan Documents to a Federal
Reserve Bank, and any Lender that is an investment fund may assign the
Obligations held by it and such Lender's rights under this Agreement and the
other Loan Documents to another investment fund managed by the same investment
advisor; provided, however, that no such pledge to a Federal Reserve Bank shall
release such Lender from such Lender's obligations hereunder or under any other
Loan Document.
(b) Any participation by a Lender of all or any part of its Commitments
shall be made with the understanding that all amounts payable by Borrowers
hereunder shall be determined as if that Lender had not sold such participation,
and that the holder of any such participation shall not be entitled to require
such Lender to take or omit to take any action hereunder except actions directly
affecting (i) any reduction in the principal amount of, or interest rate or Fees
payable with respect to, any Loan in which such holder participates, (ii) any
extension of the scheduled amortization of the principal amount of any Loan in
which such holder participates or the final maturity date thereof, and (iii) any
release of all or substantially all of the Collateral (other than in accordance
with the terms of this Agreement, the Collateral Documents or the other Loan
Documents). Solely for purposes of Sections 1.13, 1.15, 1.16 and 9.8, each
Borrower acknowledges and agrees that a participation shall give rise to a
direct obligation of Borrowers to the participant and the participant shall be
considered to be a "Lender". Except as set forth in the preceding sentence no
Borrower or Credit Party shall have any obligation or duty to any participant.
Neither Agent nor any Lender (other than the Lender selling a participation)
shall have any duty to any participant and may continue to deal solely with the
Lender selling a participation as if no such sale had occurred.
(c) Except as expressly provided in this Section 9.1, no Lender shall, as
between Borrowers and that Lender, or Agent and that Lender, be relieved of any
of its obligations hereunder as a result of any sale, assignment, transfer or
negotiation of, or granting of participation in, all or any part of the Loans,
the Notes or other Obligations owed to such Lender.
(d) Each Credit Party executing this Agreement shall assist any Lender
permitted to sell assignments or participations under this Section 9.1 as
reasonably required to enable the assigning or selling Lender to effect any such
assignment or participation, including the execution and delivery of any and all
agreements, notes and other documents and instruments as shall be requested and,
if requested by Agent, the preparation of informational materials for,
52
and the participation of management in meetings with, potential assignees or
participants. Each Credit Party executing this Agreement shall certify the
correctness, completeness and accuracy of all descriptions of the Credit Parties
and their affairs contained in any selling materials provided by them and all
other information provided by them and included in such materials, except that
any Projections delivered by Borrowers shall only be certified by Borrowers as
having been prepared by Borrowers in compliance with the representations
contained in Section 3.4.
(e) A Lender may furnish any information concerning Credit Parties in the
possession of such Lender from time to time to assignees and participants
(including prospective assignees and participants). Each Lender shall obtain
from assignees or participants confidentiality covenants substantially
equivalent to those contained in Section 11.8.
(f) So long as no Event of Default shall have occurred and be continuing,
no Lender shall assign or sell participations in any portion of its Loans or
Commitments to a potential Lender or participant, if, as of the date of the
proposed assignment or sale, the assignee Lender or participant would be subject
to capital adequacy or similar requirements under Section 1.16(a), increased
costs under Section 1.16(b), an inability to fund LIBOR Loans under Section
1.16(c), or withholding taxes in accordance with Section 1.15(a).
9.2 Appointment of Agent. GE Capital is hereby appointed to act on behalf
of all Lenders as Agent under this Agreement and the other Loan Documents. The
provisions of this Section 9.2 are solely for the benefit of Agent and Lenders
and no Credit Party nor any other Person shall have any rights as a third party
beneficiary of any of the provisions hereof. In performing its functions and
duties under this Agreement and the other Loan Documents, Agent shall act solely
as an agent of Lenders and does not assume and shall not be deemed to have
assumed any obligation toward or relationship of agency or trust with or for any
Credit Party or any other Person. Agent shall have no duties or responsibilities
except for those expressly set forth in this Agreement and the other Loan
Documents. The duties of Agent shall be mechanical and administrative in nature
and Agent shall not have, or be deemed to have, by reason of this Agreement, any
other Loan Document or otherwise a fiduciary relationship in respect of any
Lender. Neither Agent nor any of its Affiliates nor any of their respective
officers, directors, employees, agents or representatives shall be liable to any
Lender for any action taken or omitted to be taken by it hereunder or under any
other Loan Document, or in connection herewith or therewith, except for damages
caused by its or their own gross negligence or willful misconduct.
If Agent shall request instructions from Requisite Lenders, Requisite
Revolving Lenders, Supermajority Revolving Lenders or all affected Lenders with
respect to any act or action (including failure to act) in connection with this
Agreement or any other Loan Document, then Agent shall be entitled to refrain
from such act or taking such action unless and until Agent shall have received
instructions from Requisite Lenders, Requisite Revolving Lenders, Supermajority
Revolving Lenders or all affected Lenders, as the case may be, and Agent shall
not incur liability to any Person by reason of so refraining. Agent shall be
fully justified in failing or refusing to take any action hereunder or under any
other Loan Document (a) if such action
53
would, in the opinion of Agent, be contrary to law or the terms of this
Agreement or any other Loan Document, (b) if such action would, in the opinion
of Agent, expose Agent to Environmental Liabilities or (c) if Agent shall not
first be indemnified to its satisfaction against any and all liability and
expense which may be incurred by it by reason of taking or continuing to take
any such action. Without limiting the foregoing, no Lender shall have any right
of action whatsoever against Agent as a result of Agent acting or refraining
from acting hereunder or under any other Loan Document in accordance with the
instructions of Requisite Lenders, Requisite Revolving Lenders, Supermajority
Revolving Lenders or all affected Lenders, as applicable.
9.3 Agent's Reliance, Etc. Neither Agent nor any of its Affiliates nor any
of their respective directors, officers, agents or employees shall be liable for
any action taken or omitted to be taken by it or them under or in connection
with this Agreement or the other Loan Documents, except for damages caused by
its or their own gross negligence or willful misconduct. Without limitation of
the generality of the foregoing, Agent: (a) may treat the payee of any Note as
the holder thereof until Agent receives written notice of the assignment or
transfer thereof signed by such payee and in form satisfactory to Agent; (b) may
consult with legal counsel, independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (c) makes no warranty or representation to any Lender
and shall not be responsible to any Lender for any statements, warranties or
representations made in or in connection with this Agreement or the other Loan
Documents; (d) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of this
Agreement or the other Loan Documents on the part of any Credit Party or to
inspect the Collateral (including the books and records) of any Credit Party;
(e) shall not be responsible to any Lender for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement or
the other Loan Documents or any other instrument or document furnished pursuant
hereto or thereto; and (f) shall incur no liability under or in respect of this
Agreement or the other Loan Documents by acting upon any notice, consent,
certificate or other instrument or writing (which may be by telecopy, telegram,
cable or telex) believed by it to be genuine and signed or sent by the proper
party or parties.
9.4 GE Capital and Affiliates. With respect to its Commitments hereunder,
GE Capital shall have the same rights and powers under this Agreement and the
other Loan Documents as any other Lender and may exercise the same as though it
were not Agent; and the term "Lender" or "Lenders" shall, unless otherwise
expressly indicated, include GE Capital in its individual capacity. GE Capital
and its Affiliates may lend money to, invest in, and generally engage in any
kind of business with, any Credit Party, any of their Affiliates and any Person
who may do business with or own securities of any Credit Party or any such
Affiliate, all as if GE Capital were not Agent and without any duty to account
therefor to Lenders. GE Capital and its Affiliates may accept fees and other
consideration from any Credit Party for services in connection with this
Agreement or otherwise without having to account for the same to Lenders. GE
Capital and/or an Affiliate of GE Capital has also received a warrant from
Verdant. Each Lender acknowledges the potential conflict of interest between GE
Capital as a Lender holding
54
disproportionate interests in the Loans, GE Capital and/or an Affiliate of GE
Capital as a warrant holder of Verdant, and GE Capital as Agent.
9.5 Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon Agent or any other Lender and based on
the Financial Statements referred to in Section 5.3 and such other documents and
information as it has deemed appropriate, made its own credit and financial
analysis of the Credit Parties and its own decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance upon 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. Each
Lender acknowledges the potential conflict of interest of each other Lender as a
result of Lenders holding disproportionate interests in the Loans, and expressly
consents to, and waives any claim based upon, such conflict of interest.
9.6 Indemnification. Lenders agree to indemnify Agent (to the extent not
reimbursed by Credit Parties and without limiting the obligations of Credit
Parties hereunder), ratably according to their respective Pro Rata Shares, from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against
Agent in any way relating to or arising out of this Agreement or any other Loan
Document or any action taken or omitted by Agent in connection therewith;
provided, however, that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from Agent's gross negligence or
willful misconduct. Without limiting the foregoing, each Lender agrees to
reimburse Agent promptly upon demand for its ratable share of any out-of-pocket
expenses (including counsel fees) incurred by Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement
and each other Loan Document, to the extent that Agent is not reimbursed for
such expenses by Credit Parties.
9.7 Successor Agent. Agent may resign at any time by giving not less than
thirty (30) days' prior written notice thereof to Lenders and Borrower
Representative. Upon any such resignation, the Requisite Lenders shall have the
right to appoint a successor Agent. If no successor Agent shall have been so
appointed by the Requisite Lenders and shall have accepted such appointment
within 30 days after the resigning Agent's giving notice of resignation, then
the resigning Agent may, on behalf of Lenders, appoint a successor Agent, which
shall be a Lender, if a Lender is willing to accept such appointment, or
otherwise shall be a commercial bank or financial institution or a subsidiary of
a commercial bank or financial institution if such commercial bank or financial
institution is organized under the laws of the United States of America or of
any State thereof and has a combined capital and surplus of at least
$300,000,000. If no successor Agent has been appointed pursuant to the
foregoing, by the 30th day after the date such notice of resignation was given
by the resigning Agent, such resignation shall become effective and the
Requisite Lenders shall thereafter perform all the duties of Agent hereunder
until such time, if any, as the Requisite
55
Lenders appoint a successor Agent as provided above. Any successor Agent
appointed by Requisite Lenders hereunder shall be subject to the approval of
Borrower Representative, such approval not to be unreasonably withheld or
delayed; provided that such approval shall not be required if a Default or an
Event of Default shall have occurred and be continuing. Upon the acceptance of
any appointment as Agent hereunder by a successor Agent, such successor Agent
shall succeed to and become vested with all the rights, powers, privileges and
duties of the resigning Agent. Upon the earlier of the acceptance of any
appointment as Agent hereunder by a successor Agent or the effective date of the
resigning Agent's resignation, the resigning Agent shall be discharged from its
duties and obligations under this Agreement and the other Loan Documents, except
that any indemnity rights or other rights in favor of such resigning Agent shall
continue. After any resigning Agent's resignation hereunder, the provisions of
this Section 9 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Agent under this Agreement and the other Loan
Documents.
9.8 Setoff and Sharing of Payments. In addition to any rights now or
hereafter granted under applicable law and not by way of limitation of any such
rights, upon the occurrence and during the continuance of any Event of Default,
each Lender and each holder of any Note is hereby authorized at any time or from
time to time, without notice to any Credit Party or to any other Person, any
such notice being hereby expressly waived, to set off and to appropriate and to
apply any and all balances held by it at any of its offices for the account of
any Borrower or Guarantor (regardless of whether such balances are then due to
such Borrower or Guarantor) and any other properties or assets any time held or
owing by that Lender or that holder to or for the credit or for the account of
any Borrower or Guarantor against and on account of any of the Obligations which
are not paid when due. Any Lender or holder of any Note exercising a right to
set off or otherwise receiving any payment on account of the Obligations in
excess of its Pro Rata Share thereof shall purchase for cash (and the other
Lenders or holders shall sell) such participations in each such other Lender's
or holder's Pro Rata Share of the Obligations as would be necessary to cause
such Lender to share the amount so set off or otherwise received with each other
Lender or holder in accordance with their respective Pro Rata Shares. Each
Lender's obligation under this Section 9.8 shall be in addition to and not
limitation of its obligations to purchase a participation in an amount equal to
its Pro Rata Share of the Swing Line Loans under Section 1.1. Each Credit Party
that is a Borrower or Guarantor agrees, to the fullest extent permitted by law,
that (a) any Lender or holder may exercise its right to set off with respect to
amounts in excess of its Pro Rata Share of the Obligations and may sell
participations in such amount so set off to other Lenders and holders and (b)
any Lender or holders so purchasing a participation in the Loans made or other
Obligations held by other Lenders or holders may exercise all rights of set-off,
bankers' lien, counterclaim or similar rights with respect to such participation
as fully as if such Lender or holder were a direct holder of the Loans and the
other Obligations in the amount of such participation. Notwithstanding the
foregoing, if all or any portion of the set-off amount or payment otherwise
received is thereafter recovered from the Lender that has exercised the right of
set-off, the purchase of participations by that Lender shall be rescinded and
the purchase price restored without interest.
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9.9 Advances; Payments; Non-Funding Lenders; Information; Actions in
Concert.
(a) Advances; Payments. Revolving Lenders shall refund or participate in
the Swing Line Loan in accordance with clauses (iii) and (iv) of Section 1.1(c).
If the Swing Line Lender declines to make a Swing Line Loan or if Swing Line
Availability is zero, Agent shall notify Revolving Lenders, promptly after
receipt of a Notice of Revolving Credit Advance and in any event prior to 1:00
p.m. (New York time) on the date such Notice of Revolving Advance is received,
by telecopy, telephone or other similar form of transmission. Each Revolving
Lender shall make the amount of such Lender's Pro Rata Share of such Revolving
Credit Advance available to Agent in same day funds by wire transfer to Agent's
account as set forth in Annex H not later than 3:00 p.m. (New York time) on the
requested funding date, in the case of an Index Rate Loan and not later than
11:00 a.m. (New York time) on the requested funding date in the case of a LIBOR
Loan. After receipt of such wire transfers (or, in the Agent's sole discretion,
before receipt of such wire transfers), subject to the terms hereof, Agent shall
make the requested Revolving Credit Advance to the Borrower designated by
Borrower Representative in the Notice of Revolving Credit Advance. All payments
by each Revolving Lender shall be made without setoff, counterclaim or deduction
of any kind.
(i) On the second (2nd) Business Day of each calendar week or more
frequently as aggregate cumulative payments in excess of $2,000,000 are received
with respect to the Loans (other than the Swing Line Loan) (each, a "Settlement
Date"), Agent will advise each Lender by telephone, or telecopy of the amount of
such Lender's Pro Rata Share of principal, interest and Fees paid for the
benefit of Lenders with respect to each applicable Loan. Provided that such
Lender has funded all payments or Advances required to be made by it and has
purchased all participations required to be purchased by it under this Agreement
and the other Loan Documents as of such Settlement Date, Agent will pay to each
Lender such Lender's Pro Rata Share of principal, interest and Fees paid by
Borrowers since the previous Settlement Date for the benefit of that Lender on
the Loans held by it. To the extent that any Lender (a "Non-Funding Lender") has
failed to fund all such payments and Advances or failed to fund the purchase of
all such participations, Agent shall be entitled to set off the funding
short-fall against that Non-Funding Lender's Pro Rata Share of all payments
received from Borrowers. Such payments shall be made by wire transfer to such
Lender's account (as specified by such Lender in Annex H or the applicable
Assignment Agreement) not later than 2:00 p.m. (New York time) on the next
Business Day following each Settlement Date.
(b) Availability of Lender's Pro Rata Share. Agent may assume that each
Revolving Lender will make its Pro Rata Share of each Revolving Credit Advance
available to Agent on each funding date. If such Pro Rata Share is not, in fact,
paid to Agent by such Revolving Lender when due, Agent will be entitled to
recover such amount on demand from such Revolving Lender without set-off,
counterclaim or deduction of any kind. If any Revolving Lender fails to pay the
amount of its Pro Rata Share forthwith upon Agent's demand, Agent shall promptly
notify Borrower Representative and Borrowers shall immediately repay such amount
to Agent. Nothing in this Section 9.9(b) or elsewhere in this Agreement or the
other Loan Documents shall be deemed
57
to require Agent to advance funds on behalf of any Revolving Lender or to
relieve any Revolving Lender from its obligation to fulfill its Commitments
hereunder or to prejudice any rights that Borrowers may have against any
Revolving Lender as a result of any default by such Revolving Lender hereunder.
To the extent that Agent advances funds to any Borrower on behalf of any
Revolving Lender and is not reimbursed therefor on the same Business Day as such
Advance is made, Agent shall be entitled to retain for its account all interest
accrued on such Advance until reimbursed by the applicable Revolving Lender.
(c) Return of Payments (i) If Agent pays an amount to a Lender under this
Agreement in the belief or expectation that a related payment has been or will
be received by Agent from Borrowers and such related payment is not received by
Agent, then Agent will be entitled to recover such amount from such Lender on
demand without set-off, counterclaim or deduction of any kind.
(ii) If Agent determines at any time that any amount received by Agent
under this Agreement must be returned to any Borrower or paid to any other
Person pursuant to any insolvency law or otherwise, then, notwithstanding any
other term or condition of this Agreement or any other Loan Document, Agent will
not be required to distribute any portion thereof to any Lender. In addition,
each Lender will repay to Agent on demand any portion of such amount that Agent
has distributed to such Lender, together with interest at such rate, if any, as
Agent is required to pay to any Borrower or such other Person, without set-off,
counterclaim or deduction of any kind.
(d) Non-Funding Lenders. The failure of any Non-Funding Lender to make any
Revolving Credit Advance or any payment required by it hereunder or to purchase
any participation in any Swing Line Loan to be made or purchased by it on the
date specified therefor shall not relieve any other Revolving Lender (each such
other Revolving Lender, an "Other Lender") of its obligations to make such
Advance or purchase such participation on such date, but neither any Other
Lender nor Agent shall be responsible for the failure of any Non-Funding Lender
to make an Advance or to purchase a participation required hereunder.
Notwithstanding anything set forth herein to the contrary, a Non-Funding Lender
shall not have any voting or consent rights under or with respect to any Loan
Document or constitute a "Lender" or a "Revolving Lender" (or be included in the
calculation of "Requisite Lenders", "Requisite Revolving Lenders" or
"Supermajority Revolving Lenders" hereunder) for any voting or consent rights
under or with respect to any Loan Document.
(e) Dissemination of Information. Agent will use reasonable efforts to
provide Lenders with any notice of Default or Event of Default received by Agent
from, or delivered by Agent to, any Credit Party, with notice of any Event of
Default of which Agent has actually become aware and with notice of any action
taken by Agent following any Event of Default; provided, however, that Agent
shall not be liable to any Lender for any failure to do so, except to the extent
that such failure is attributable to Agent's gross negligence or willful
misconduct. Lenders acknowledge that Borrowers are required to provide Financial
Statements and Collateral Reports to
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Lenders in accordance with Annexes E and F hereto and agree that Agent shall
have no duty to provide the same to Lenders.
(f) Actions in Concert. Anything in this Agreement to the contrary
notwithstanding, each Lender hereby agrees with each other Lender that no Lender
shall take any action to protect or enforce its rights arising out of this
Agreement or the Notes (including exercising any rights of set-off) without
first obtaining the prior written consent of Agent and Requisite Lenders, it
being the intent of Lenders that any such action to protect or enforce rights
under this Agreement and the Notes shall be taken in concert and at the
direction or with the consent of Agent.
10. SUCCESSORS AND ASSIGNS
10.1 Successors and Assigns. This Agreement and the other Loan Documents
shall be binding on and shall inure to the benefit of each Credit Party, Agent,
Lenders and their respective successors and assigns (including, in the case of
any Credit Party, a debtor-in-possession on behalf of such Credit Party), except
as otherwise provided herein or therein. No Credit Party may assign, transfer,
hypothecate or otherwise convey its rights, benefits, obligations or duties
hereunder or under any of the other Loan Documents without the prior express
written consent of Agent and Lenders. Any such purported assignment, transfer,
hypothecation or other conveyance by any Credit Party without the prior express
written consent of Agent and Lenders shall be void. The terms and provisions of
this Agreement are for the purpose of defining the relative rights and
obligations of each Credit Party, Agent and Lenders with respect to the
transactions contemplated hereby and no Person shall be a third party
beneficiary of any of the terms and provisions of this Agreement or any of the
other Loan Documents.
11. MISCELLANEOUS
11.1 Complete Agreement; Modification of Agreement. The Loan Documents
constitute the complete agreement between the parties with respect to the
subject matter thereof and may not be modified, altered or amended except as set
forth in Section 11.2 below. Any letter of interest, commitment letter, fee
letter (other than the GE Capital Fee Letter) and/or confidentiality agreement
between any Credit Party and Agent or any Lender or any of their respective
affiliates, predating this Agreement and relating to a financing of
substantially similar form, purpose or effect shall be superseded by this
Agreement.
11.2 Amendments and Waivers. (a) Except for actions expressly permitted to
be taken by Agent, no amendment, modification, termination or waiver of any
provision of this Agreement or any of the Notes, or any consent to any departure
by any Credit Party therefrom, shall in any event be effective unless the same
shall be in writing and signed by Agent and Borrowers, and by Requisite Lenders,
Requisite Revolving Lenders, Supermajority Revolving Lenders or all affected
Lenders, as applicable. Except as set forth in clauses (b) and (c) below, all
such amendments, modifications, terminations or waivers requiring the consent of
any Lenders shall require the written consent of Requisite Lenders.
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(b) No amendment, modification, termination or waiver of or consent with
respect to any provision of this Agreement which increases the percentage
advance rates set forth in the definition of the Verdant Borrowing Base, the
Safer Borrowing Base, the SureCo Borrowing Base, the Consep Borrowing Base, the
▇▇▇▇ Borrowing Base, the Pacoast Borrowing Base and the Valley Borrowing Base,
or which makes less restrictive the nondiscretionary criteria for exclusion from
Eligible Accounts and Eligible Inventory set forth in Sections 1.6 and 1.7,
shall be effective unless the same shall be in writing and signed by Agent,
Supermajority Revolving Lenders and Borrowers. No amendment, modification,
termination or waiver of or consent with respect to any provision of this
Agreement which waives compliance with the conditions precedent set forth in
Section 2.2 to the making of any Loan or the incurrence of any Letter of Credit
Obligations shall be effective unless the same shall be in writing and signed by
Agent, Requisite Revolving Lenders and Borrowers. Notwithstanding anything
contained in this Agreement to the contrary, no waiver or consent with respect
to any Default (if in connection therewith Agent or Requisite Revolving Lenders,
as the case may be, have exercised its or their right to suspend the making or
incurrence of further Advances or Letter of Credit Obligations pursuant to
Section 8.2(a)) or any Event of Default shall be effective for purposes of the
conditions precedent to the making of Loans or the incurrence of Letter of
Credit Obligations set forth in Section 2.2 unless the same shall be in writing
and signed by Agent, Requisite Revolving Lenders and Borrowers.
(c) No amendment, modification, termination or waiver shall, unless in
writing and signed by Agent and each Lender directly affected thereby, do any of
the following: (i) increase the principal amount of any Lender's Commitment
(which action shall be deemed to directly affect all Lenders); (ii) reduce the
principal of, rate of interest on or Fees payable with respect to any Loan or
Letter of Credit Obligations of any affected Lender; (iii) extend any scheduled
payment date or final maturity date of the principal amount of any Loan of any
affected Lender; (iv) waive, forgive, defer, extend or postpone any payment of
interest or Fees as to any affected Lender; (v) release any Guaranty or, except
as otherwise permitted herein or in the other Loan Documents, release, or permit
any Credit Party to sell or otherwise dispose of, any Collateral with a value
exceeding $5,000,000 in the aggregate (which action shall be deemed to directly
affect all Lenders); (vi) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Loans which shall be required for
Lenders or any of them to take any action hereunder; and (vii) amend or waive
this Section 11.2 or the definitions of the terms "Requisite Lenders",
"Requisite Revolving Lenders" or "Supermajority Revolving Lenders" insofar as
such definitions affect the substance of this Section 11.2. Furthermore, no
amendment, modification, termination or waiver affecting the rights or duties of
Agent under this Agreement or any other Loan Document shall be effective unless
in writing and signed by Agent, in addition to Lenders required hereinabove to
take such action. Each amendment, modification, termination or waiver shall be
effective only in the specific instance and for the specific purpose for which
it was given. No amendment, modification, termination or waiver shall be
required for Agent to take additional Collateral pursuant to any Loan Document.
No amendment, modification, termination or waiver of any provision of any Note
shall be effective without the written concurrence of the holder of that Note.
No notice to or demand on any Credit Party in any case shall entitle such Credit
Party or any other Credit Party to any other or further notice or demand in
similar or other circumstances. Any amendment, modification, termination, waiver
or consent
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effected in accordance with this Section 11.2 shall be binding upon each holder
of the Notes at the time outstanding and each future holder of the Notes.
(d) If, in connection with any proposed amendment, modification, waiver or
termination (a "Proposed Change"):
(i) requiring the consent of all affected Lenders, the consent of
Requisite Lenders is obtained, but the consent of other Lenders whose
consent is required is not obtained (any such Lender whose consent is not
obtained as described this clause (i) and in clauses (ii), (iii) and (iv)
below being referred to as a "Non-Consenting Lender"), or
(ii) requiring the consent of Supermajority Revolving Lenders, the
consent of Requisite Revolving Lenders is obtained, but the consent of
Supermajority Revolving Lenders is not obtained, or
(iii) requiring the consent of Requisite Revolving Lenders, the
consent of Revolving Lenders holding 51% or more of the aggregate Revolving
Loan Commitments is obtained, but the consent of Requisite Revolving
Lenders is not obtained, or
(iv) requiring the consent of Requisite Lenders, the consent of
Lenders holding 51% or more of the aggregate Commitments is obtained, but
the consent of Requisite Lenders is not obtained,
then, so long as Agent is not a Non-Consenting Lender, at Borrower
Representative's request, Agent or a Person acceptable to Agent shall have the
right with Agent's consent and in Agent's sole discretion (but shall have no
obligation) to purchase from such Non-Consenting Lenders, and such
Non-Consenting Lenders agree that they shall, upon Agent's request, sell and
assign to Agent or such Person, all of the Commitments of such Non-Consenting
Lender for an amount equal to the principal balance of all Loans held by the
Non-Consenting Lender and all accrued interest and Fees with respect thereto
through the date of sale, such purchase and sale to be consummated pursuant to
an executed Assignment Agreement.
(e) Upon indefeasible payment (which shall not be deemed that no such
payment could arise prior to the expiration of a preference period under Section
547(b)(4)(A) of the Bankruptcy Code) in full in cash and performance of all of
the Obligations (other than indemnification Obligations under Section 1.13),
termination of the Commitments and a release of all claims against Agent and
Lenders, and so long as no suits, actions, proceedings, or claims are pending or
threatened against any Indemnified Person asserting any damages, losses or
liabilities that are Indemnified Liabilities, Agent shall deliver to Borrowers
termination statements, mortgage releases and other documents necessary or
appropriate to evidence the termination of the Liens securing payment of the
Obligations.
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11.3 Fees and Expenses. Borrowers shall reimburse Agent for all reasonable
out-of-pocket expenses reasonably incurred in connection with the preparation of
the Loan Documents (including the reasonable fees and expenses of all of its
loan counsel (including Canadian local counsel) and auditors retained in
connection with the Loan Documents and the Related Transactions and advice in
connection therewith). Borrowers shall reimburse Agent (and, with respect to
clauses (c) and (d) below, all Lenders) for all fees, costs and expenses,
including the fees, costs and expenses of counsel or other advisors (including
environmental and management consultants and appraisers) for advice, assistance,
or other representation in connection with:
(a) the forwarding to Borrowers or any other Person on behalf of
Borrowers by Agent of the proceeds of the Loans;
(b) any amendment, modification or waiver of, or consent with respect
to, any of the Loan Documents or Related Transactions Documents or advice
in connection with the administration of the Loans made pursuant hereto or
its rights hereunder or thereunder;
(c) any litigation, contest, dispute, suit, proceeding or action
(whether instituted by Agent, any Lender, any Borrower or any other Person)
in any way relating to the Collateral, any of the Loan Documents or any
other agreement to be executed or delivered in connection therewith or
herewith, whether as party, witness, or otherwise, including any
litigation, contest, dispute, suit, case, proceeding or action, and any
appeal or review thereof, in connection with a case commenced by or against
any or all of the Borrowers or any other Person that may be obligated to
Agent or any Lender by virtue of the Loan Documents; including any such
litigation, contest, dispute, suit, proceeding or action arising in
connection with any work-out or restructuring of the Loans during the
pendency of one or more Events of Default; provided that in the case of
reimbursement of counsel for Lenders other than Agent, such reimbursement
shall be limited to one counsel for all such Lenders;
(d) any attempt to enforce any remedies of Agent against any or all of
the Credit Parties or any other Person that may be obligated to Agent or
any Lender by virtue of any of the Loan Documents; including any such
attempt to enforce any such remedies in the course of any work-out or
restructuring of the Loans during the pendency of one or more Events of
Default; provided that in the case of reimbursement of counsel for Lenders
other than Agent, such reimbursement shall be limited to one counsel for
all such Lenders;
(e) any work-out or restructuring of the Loans during the pendency of
one or more Events of Default;
(f) subject to Section 1.14(b), efforts to (i) monitor the Loans or
any of the other Obligations, (ii) evaluate, observe or assess any of the
Credit Parties or their respective affairs, and (iii) verify, protect,
evaluate, assess, appraise, collect, sell, liquidate or otherwise dispose
of any of the Collateral;
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including, without limitation, all reasonable attorneys' and other
professional and service providers' fees arising from such services,
including those in connection with any appellate proceedings; and all
reasonable expenses, costs, charges and other fees incurred by such counsel
and others in any way or respect arising in connection with or relating to
any of the events or actions described in this Section 11.3 shall be
payable, on demand, by Borrowers to Agent. Without limiting the generality
of the foregoing, such expenses, costs, charges and fees may include: fees,
costs and expenses of accountants, environmental advisors, appraisers,
investment bankers, management and other consultants and paralegals; court
costs and expenses; photocopying and duplication expenses; court reporter
fees, costs and expenses; long distance telephone charges; air express
charges; telegram or telecopy charges; secretarial overtime charges; and
expenses for travel, lodging and food paid or incurred in connection with
the performance of such legal or other advisory services.
11.4 No Waiver. Agent's or any Lender's failure, at any time or times, to
require strict performance by the Credit Parties of any provision of this
Agreement and any of the other Loan Documents shall not waive, affect or
diminish any right of Agent or such Lender thereafter to demand strict
compliance and performance therewith. Any suspension or waiver of an Event of
Default shall not suspend, waive or affect any other Event of Default whether
the same is prior or subsequent thereto and whether the same or of a different
type. Subject to the provisions of Section 11.2, none of the undertakings,
agreements, warranties, covenants and representations of any Credit Party
contained in this Agreement or any of the other Loan Documents and no Default or
Event of Default by any Credit Party shall be deemed to have been suspended or
waived by Agent or any Lender, unless such waiver or suspension is by an
instrument in writing signed by an officer of or other authorized employee of
Agent and the applicable Required Lenders and directed to Borrowers specifying
such suspension or waiver.
11.5 Remedies. Agent's and Lenders' rights and remedies under this
Agreement shall be cumulative and nonexclusive of any other rights and remedies
which Agent or any Lender may have under any other agreement, including the
other Loan Documents, by operation of law or otherwise. Recourse to the
Collateral shall not be required.
11.6 Severability. Wherever possible, each provision of this Agreement and
the other Loan Documents shall be interpreted in such a manner as to be
effective and valid under applicable law, but if any provision of this Agreement
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
11.7 Conflict of Terms. Except as otherwise provided in this Agreement or
any of the other Loan Documents by specific reference to the applicable
provisions of this Agreement, if any provision contained in this Agreement is in
conflict with, or inconsistent with, any provision in any of the other Loan
Documents, the provision contained in this Agreement shall govern and control.
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11.8 Confidentiality. Agent and each Lender agree to use commercially
reasonable efforts (equivalent to the efforts Agent or such Lender applies to
maintaining the confidentiality of its own confidential information) to maintain
as confidential all confidential information provided to them by the Credit
Parties and designated as confidential for a period of two (2) years following
receipt thereof, except that Agent and any Lender may disclose such information
(a) to Persons employed or engaged by Agent or such Lender in evaluating,
approving, structuring or administering the Loans and the Commitments; (b) to
any bona fide assignee or participant or potential assignee or participant that
has agreed to comply with the covenant contained in this Section 11.8 (and any
such bona fide assignee or participant or potential assignee or participant may
disclose such information to Persons employed or engaged by them as described in
clause (a) above); (c) as required or requested by any Governmental Authority or
reasonably believed by Agent or such Lender to be compelled by any court decree,
subpoena or legal or administrative order or process; (d) as, on the advice of
Agent's or such Lender's counsel, required by law; (e) in connection with the
exercise of any right or remedy under the Loan Documents or in connection with
any Litigation to which Agent or such Lender is a party; or (f) which ceases to
be confidential through no fault of Agent or such Lender.
11.9 GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE
LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY
AND PERFORMANCE, THE LOAN DOCUMENTS AND THE OBLIGATIONS SHALL BE GOVERNED BY,
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF ILLINOIS
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE AND ANY APPLICABLE LAWS
OF THE UNITED STATES OF AMERICA. EACH CREDIT PARTY HEREBY CONSENTS AND AGREES
THAT THE STATE OR FEDERAL COURTS LOCATED IN ▇▇▇▇ COUNTY, CITY OF CHICAGO,
ILLINOIS SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR
DISPUTES BETWEEN THE CREDIT PARTIES, AGENT AND LENDERS PERTAINING TO THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, PROVIDED, THAT
AGENT, LENDERS AND THE CREDIT PARTIES ACKNOWLEDGE THAT ANY APPEALS FROM THOSE
COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF ▇▇▇▇ COUNTY, CITY OF
CHICAGO, ILLINOIS AND, PROVIDED, FURTHER NOTHING IN THIS AGREEMENT SHALL BE
DEEMED OR OPERATE TO PRECLUDE AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL
ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER
SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN
FAVOR OF AGENT. EACH CREDIT PARTY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO
SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH
CREDIT PARTY HEREBY WAIVES ANY OBJECTION WHICH SUCH CREDIT PARTY MAY HAVE BASED
UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND
64
HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY SUCH COURT. EACH CREDIT PARTY HEREBY WAIVES PERSONAL SERVICE OF
THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH CREDIT PARTY AT THE ADDRESS SET
FORTH IN ANNEX I OF THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED
COMPLETED UPON THE EARLIER OF SUCH CREDIT PARTY'S ACTUAL RECEIPT THEREOF OR
THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID.
11.10 Notices. Except as otherwise provided herein, whenever it is provided
herein that any notice, demand, request, consent, approval, declaration or other
communication shall or may be given to or served upon any of the parties by any
other parties, or whenever any of the parties desires to give or serve upon any
other parties any communication with respect to this Agreement, each such
notice, demand, request, consent, approval, declaration or other communication
shall be in writing and shall be deemed to have been validly served, given or
delivered (a) upon the earlier of actual receipt and three (3) Business Days
after deposit in the United States Mail, registered or certified mail, return
receipt requested, with proper postage prepaid, (b) upon transmission, when sent
by telecopy or other similar facsimile transmission (with such telecopy or
facsimile promptly confirmed by delivery of a copy by personal delivery or
United States Mail as otherwise provided in this Section 11.10), (c) one (1)
Business Day after deposit with a reputable overnight courier with all charges
prepaid or (d) when delivered, if hand-delivered by messenger, all of which
shall be addressed to the party to be notified and sent to the address or
facsimile number indicated on Annex I or to such other address (or facsimile
number) as may be substituted by notice given as herein provided. The giving of
any notice required hereunder may be waived in writing by the party entitled to
receive such notice. Failure or delay in delivering copies of any notice,
demand, request, consent, approval, declaration or other communication to any
Person (other than Borrower Representative or Agent) designated on Annex I to
receive copies shall in no way adversely affect the effectiveness of such
notice, demand, request, consent, approval, declaration or other communication.
11.11 Section Titles. The Section titles and Table of Contents contained in
this Agreement are and shall be without substantive meaning or content of any
kind whatsoever and are not a part of the agreement between the parties hereto.
11.12 Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which shall collectively and separately
constitute one agreement.
11.13 WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION WITH
COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN
EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL
LAWS TO APPLY
65
(RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE
RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE
BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE
PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR
PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE, AMONG AGENT, LENDERS AND ANY CREDIT PARTY 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 OR THE
TRANSACTIONS RELATED THERETO.
11.14 Press Releases. Each Credit Party executing this Agreement agrees
that neither it nor its Affiliates will in the future issue any press releases
or other public disclosure using the name of GE Capital or its affiliates or
referring to this Agreement, the other Loan Documents or the Related
Transactions Documents without at least two (2) Business Days' prior notice to
GE Capital and without the prior written consent of GE Capital unless (and only
to the extent that) such Credit Party or Affiliate is required to do so under
law and then, in any event, such Credit Party or Affiliate will consult with GE
Capital before issuing such press release or other public disclosure. Each
Credit Party consents to the publication by Agent or any Lender of a tombstone
or similar advertising material relating to the financing transactions
contemplated by this Agreement. Agent or such Lender shall provide a draft of
any such tombstone or similar advertising material to each Credit Party for
review and comment prior to the publication thereof. Agent reserves the right to
provide to industry trade organizations information necessary and customary for
inclusion in league table measurements with Borrowers' consent which shall not
be unreasonably withheld or delayed.
11.15 Reinstatement. This Agreement shall remain in full force and effect
and continue to be effective should any petition be filed by or against any
Borrower for liquidation or reorganization, should any Borrower become insolvent
or make an assignment for the benefit of any creditor or creditors or should a
receiver or trustee be appointed for all or any significant part of any
Borrower's assets, and shall continue to be effective or to be reinstated, as
the case may be, if at any time payment and performance of the Obligations, or
any part thereof, is, pursuant to applicable law, rescinded or reduced in
amount, or must otherwise be restored or returned by any obligee of the
Obligations, whether as a "voidable preference," "fraudulent conveyance," or
otherwise, all as though such payment or performance had not been made. In the
event that any payment, or any part thereof, is rescinded, reduced, restored or
returned, the Obligations shall be reinstated and deemed reduced only by such
amount paid and not so rescinded, reduced, restored or returned.
11.16 Advice of Counsel. Each of the parties represents to each other party
hereto that it has discussed this Agreement and, specifically, the provisions of
Sections 11.9 and 11.13, with its counsel.
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11.17 No Strict Construction. The parties hereto have participated jointly
in the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties hereto and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any provisions of this Agreement.
12. CROSS-GUARANTY
12.1 Cross-Guaranty. Each Borrower hereby agrees that such Borrower is
jointly and severally liable for, and hereby absolutely and unconditionally
guarantees to Agent and Lenders and their respective successors and assigns, the
full and prompt payment (whether at stated maturity, by acceleration or
otherwise) and performance of, all Obligations owed or hereafter owing to Agent
and Lenders by each other Borrower. Each Borrower agrees that its guaranty
obligation hereunder is a continuing guaranty of payment and performance and not
of collection, that its obligations under this Section 12 shall not be
discharged until payment and performance, in full, of the Obligations has
occurred, and that its obligations under this Section 12 shall be absolute and
unconditional, irrespective of, and unaffected by,
(a) the genuineness, validity, regularity, enforceability or any
future amendment of, or change in, this Agreement, any other Loan Document
or any other agreement, document or instrument to which any Borrower is or
may become a party;
(b) the absence of any action to enforce this Agreement (including
this Section 12) or any other Loan Document or the waiver or consent by
Agent and Lenders with respect to any of the provisions thereof;
(c) the existence, value or condition of, or failure to perfect its
Lien against, any security for the Obligations or any action, or the
absence of any action, by Agent and Lenders in respect thereof (including
the release of any such security);
(d) the insolvency of any Credit Party; or
(e) any other action or circumstances which might otherwise constitute
a legal or equitable discharge or defense of a surety or guarantor.
Each Borrower shall be regarded, and shall be in the same position, as principal
debtor with respect to the Obligations guaranteed hereunder.
12.2 Waivers by Borrowers. Each Borrower expressly waives all rights it may
have now or in the future under any statute, or at common law, or at law or in
equity, or otherwise, to compel Agent or Lenders to ▇▇▇▇▇▇▇▇ assets or to
proceed in respect of the Obligations guaranteed hereunder against any other
Credit Party, any other party or against any security for the payment and
performance of the Obligations before proceeding against, or as a condition to
proceeding against,
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such Borrower. It is agreed among each Borrower, Agent and Lenders that the
foregoing waivers are of the essence of the transaction contemplated by this
Agreement and the other Loan Documents and that, but for the provisions of this
Section 12 and such waivers, Agent and Lenders would decline to enter into this
Agreement.
12.3 Benefit of Guaranty. Each Borrower agrees that the provisions of this
Section 12 are for the benefit of Agent and Lenders and their respective
successors, transferees, endorsees and assigns, and nothing herein contained
shall impair, as between any other Borrower and Agent or Lenders, the
obligations of such other Borrower under the Loan Documents.
12.4 Subordination of Subrogation, Etc. Notwithstanding anything to the
contrary in this Agreement or in any other Loan Document, and except as set
forth in Section 12.7, each Borrower hereby expressly and irrevocably
subordinates to payment of the Obligations any and all rights at law or in
equity to subrogation, reimbursement, exoneration, contribution, indemnification
or set off and any and all defenses available to a surety, guarantor or
accommodation co-obligor until the Obligations are indefeasibly paid in full in
cash. Each Borrower acknowledges and agrees that this subordination is intended
to benefit Agent and Lenders and shall not limit or otherwise affect such
Borrower's liability hereunder or the enforceability of this Section 12, and
that Agent, Lenders and their respective successors and assigns are intended
third party beneficiaries of the waivers and agreements set forth in this
Section 12.4.
12.5 Election of Remedies. If Agent or any Lender may, under applicable
law, proceed to realize its benefits under any of the Loan Documents giving
Agent or such Lender a Lien upon any Collateral, whether owned by any Borrower
or by any other Person, either by judicial foreclosure or by non-judicial sale
or enforcement, Agent or any Lender may, at its sole option, determine which of
its remedies or rights it may pursue without affecting any of its rights and
remedies under this Section 12. If, in the exercise of any of its rights and
remedies, Agent or any Lender shall forfeit any of its rights or remedies,
including its right to enter a deficiency judgment against any Borrower or any
other Person, whether because of any applicable laws pertaining to "election of
remedies" or the like, each Borrower hereby consents to such action by Agent or
such Lender and waives any claim based upon such action, even if such action by
Agent or such Lender shall result in a full or partial loss of any rights of
subrogation which each Borrower might otherwise have had but for such action by
Agent or such Lender. Any election of remedies which results in the denial or
impairment of the right of Agent or any Lender to seek a deficiency judgment
against any Borrower shall not impair any other Borrower's obligation to pay the
full amount of the Obligations. In the event Agent or any Lender shall bid at
any foreclosure or trustee's sale or at any private sale permitted by law or the
Loan Documents, Agent or such Lender may bid all or less than the amount of the
Obligations and the amount of such bid need not be paid by Agent or such Lender
but shall be credited against the Obligations. The amount of the successful bid
at any such sale, whether Agent, Lender or any other party is the successful
bidder, shall be conclusively deemed to be the fair market value of the
Collateral and the difference between such bid amount and the remaining balance
of the Obligations shall be conclusively deemed to be the amount of the
Obligations guaranteed under this Section 12, notwithstanding that any present
or future law or court
68
decision or ruling may have the effect of reducing the amount of any deficiency
claim to which Agent or any Lender might otherwise be entitled but for such
bidding at any such sale.
12.6 Limitation. Notwithstanding any provision herein contained to the
contrary, each Borrower's liability under this Section 12 (which liability is in
any event in addition to amounts for which such Borrower is primarily liable
under Section 1) shall be limited to an amount not to exceed as of any date of
determination the greater of:
(a) the net amount of all Loans advanced to any other Borrower under this
Agreement and then re-loaned or otherwise transferred to, or for the benefit of,
such Borrower; and
(b) the amount which could be claimed by Agent and Lenders from such
Borrower under this Section 12 without rendering such claim voidable or
avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or under any
applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance
Act or similar statute or common law after taking into account, among other
things, such Borrower's right of contribution and indemnification from each
other Borrower under Section 12.7.
12.7 Contribution with Respect to Guaranty Obligations. (a) To the extent
that any Borrower shall make a payment under this Section 12 of all or any of
the Obligations (other than Loans made to that Borrower for which it is
primarily liable) (a "Guarantor Payment") which, taking into account all other
Guarantor Payments then previously or concurrently made by any other Borrower,
exceeds the amount which such Borrower would otherwise have paid if each
Borrower had paid the aggregate Obligations satisfied by such Guarantor Payment
in the same proportion that such Borrower's "Allocable Amount" (as defined
below) (as determined immediately prior to such Guarantor Payment) bore to the
aggregate Allocable Amounts of each of the Borrowers as determined immediately
prior to the making of such Guarantor Payment, then, following indefeasible
payment in full in cash of the Obligations and termination of the Commitments,
such Borrower shall be entitled to receive contribution and indemnification
payments from, and be reimbursed by, each other Borrower for the amount of such
excess, pro rata based upon their respective Allocable Amounts in effect
immediately prior to such Guarantor Payment.
(b) As of any date of determination, the "Allocable Amount" of any Borrower
shall be equal to the maximum amount of the claim which could then be recovered
from such Borrower under this Section 12 without rendering such claim voidable
or avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or under any
applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance
Act or similar statute or common law.
(c) This Section 12.7 is intended only to define the relative rights of
Borrowers and nothing set forth in this Section 12.7 is intended to or shall
impair the obligations of Borrowers, jointly and severally, to pay any amounts
as and when the same shall become due and payable in accordance with the terms
of this Agreement, including Section 12.1. Nothing contained in this Section
12.7 shall limit the liability of any Borrower to pay the Loans made directly or
indirectly to
69
that Borrower and accrued interest, Fees and expenses with respect thereto for
which such Borrower shall be primarily liable.
(d) The parties hereto acknowledge that the rights of contribution and
indemnification hereunder shall constitute assets of the Borrower to which such
contribution and indemnification is owing.
(e) The rights of the indemnifying Borrowers against other Credit Parties
under this Section 12.7 shall be exercisable upon the full and indefeasible
payment of the Obligations and the termination of the Commitments.
12.8 Liability Cumulative. The liability of Borrowers under this Section 12
is in addition to and shall be cumulative with all liabilities of each Borrower
to Agent and Lenders under this Agreement and the other Loan Documents to which
such Borrower is a party or in respect of any Obligations or obligation of the
other Borrower, without any limitation as to amount, unless the instrument or
agreement evidencing or creating such other liability specifically provides to
the contrary.
[signature pages follow]
70
IN WITNESS WHEREOF, this Agreement has been duly executed as of the date
first written above.
VERDANT BRANDS, INC.
SAFER, INC.
SURECO, INC.
By:
------------------------------------
Title: Executive Vice President,
Secretary and Treasurer
CONSEP, INC.
PACOAST INC.
▇▇▇▇▇▇▇ ▇▇▇▇ INC.
VALLEY GREEN CENTER, INC.
By:
------------------------------------
Title: Vice President, Secretary and
Treasurer
GENERAL ELECTRIC CAPITAL
CORPORATION, as Agent and Lender
By:
------------------------------------
Title: Duly Authorized Signatory
Each of the following Persons is a signatory to this Agreement in its
capacity as a Credit Party and not as a Borrower.
SAFER, LTD.
SOUTHERN RESOURCES, INC.
By:
------------------------------------
Title: Executive Vice President,
Secretary and Treasurer
71
FARCHAN LABORATORIES, INC.
By:
------------------------------------
Title: Vice President, Secretary and
Treasurer
72
ANNEX A (Recitals)
to
CREDIT AGREEMENT
DEFINITIONS
Capitalized terms used in the Loan Documents shall have (unless otherwise
provided elsewhere in the Loan Documents) the following respective meanings and
all section references in the following definitions shall refer to Sections of
the Agreement:
"Account Debtor" shall mean any Person who may become obligated to any
Credit Party under, with respect to, or on account of, an Account.
"Accounts" shall mean all "accounts," as such term is defined in the Code,
now owned or hereafter acquired by any Credit Party and, in any event, including
(a) all accounts receivable, other receivables, book debts and other forms of
obligations (other than forms of obligations evidenced by Chattel Paper,
Documents or Instruments) now owned or hereafter received or acquired by or
belonging or owing to any Credit Party, whether arising out of goods sold or
services rendered by it or from any other transaction (including any such
obligations which may be characterized as an account or contract right under the
Code), (b) all of each Credit Party's rights in, to and under all purchase
orders or receipts now owned or hereafter acquired by it for goods or services,
(c) all of each Credit Party's rights to any goods represented by any of the
foregoing (including unpaid sellers' rights of rescission, replevin, reclamation
and stoppage in transit and rights to returned, reclaimed or repossessed goods),
(d) all monies due or to become due to any Credit Party, under all purchase
orders and contracts for the sale of goods or the performance of services or
both by such Credit Party or in connection with any other transaction (whether
or not yet earned by performance on the part of such Credit Party) now or
hereafter in existence, including the right to receive the proceeds of said
purchase orders and contracts, and (e) all collateral security and guarantees of
any kind, now or hereafter in existence, given by any Person with respect to any
of the foregoing.
"Acquisition Pro Forma" shall have the meaning assigned to it in Section
6.1(x).
"Acquisition Projections" shall have the meaning assigned to it in Section
6(x).
"Advance" shall mean any Revolving Credit Advance or Swing Line Advance, as
the context may require.
"Affiliate" shall mean, with respect to any Person, (a) each Person that,
directly or indirectly, owns or controls, whether beneficially, or as a trustee,
guardian or other fiduciary,
A-1
five percent (5%) or more of the Stock having ordinary voting power in the
election of directors of such Persons, (b) each Person that controls, is
controlled by or is under common control with such Person, (c) each of such
Person's officers, directors, joint venturers and partners and (d) in the case
of Borrowers, the immediate family members, spouses and lineal descendants of
individuals who are Affiliates of any Borrower. For the purposes of this
definition, "control" of a Person shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of its management or
policies, whether through the ownership of voting securities, by contract or
otherwise; provided, however, that the term "Affiliate" shall specifically
exclude Agent and each Lender.
"Agent" shall mean GE Capital or its successor appointed pursuant to
Section 9.7.
"Aggregate Borrowing Base"shall mean, as of any date of determination, an
amount equal to the sum of the Verdant Borrowing Base, the Safer Borrowing Base,
the SureCo Borrowing Base, the Consep Borrowing Base, the ▇▇▇▇ Borrowing Base,
the Pacoast Borrowing Base and the Valley Borrowing Base and, following the
consummation of any Permitted Acquisition in which the Target acquired therein
(or any Subsidiary of the Target) becomes a Subsidiary of Verdant and a Borrower
in accordance with the terms of the Agreement, the Target Borrowing Base of such
Person.
"Agreement" shall mean the Amended and Restated Credit Agreement by and
among Borrowers, the other Credit Parties named therein, GE Capital, as Agent
and Lender, and the other Lenders signatory from time to time to the Agreement,
as the same may be amended, restated, modified or otherwise supplemented from
time to time.
"Appendices" shall have the meaning assigned to it in the recitals to the
Agreement.
"Applicable Margins" means, collectively, the Applicable Unused Line Fee
Margin, the Applicable Revolver Index Margin, the Applicable Revolver LIBOR
Margin, the Applicable Term Loan Index Margin and the Applicable Term Loan LIBOR
Margin.
"Applicable Revolver Index Margin" shall mean the per annum interest rate
margin from time to time in effect and payable in addition to the Index Rate
applicable to the Revolving Loan, as determined by reference to Section 1.5(a)
of the Agreement.
"Applicable Revolver LIBOR Margin" shall mean the per annum interest rate
from time to time in effect and payable in addition to the LIBOR Rate applicable
to the Revolving Loan, as determined by reference to Section 1.5(a) of the
Agreement.
"Applicable Term Loan Index Margin" shall mean the per annum interest rate
from time to time in effect and payable in addition to the Index Rate applicable
to the Term Loan, as determined by reference to Section 1.5(a) of the Agreement.
A-2
"Applicable Term Loan LIBOR Margin" shall mean the per annum interest rate
from time to time in effect and payable in addition to the LIBOR Rate applicable
to the Term Loan, as determined by reference to Section 1.5(a) of the Agreement.
"Applicable Unused Line Fee Margin" shall mean the per annum fee, from time
to time in effect, payable in respect to Borrowers' non-use of committed funds
pursuant to Section 1.9(b), which fee is determined by reference to Section
1.5(a).
"Assignment Agreement" shall have the meaning assigned to it in Section
9.1(a).
"Borrower Accounts" shall have the meaning assigned to it in Annex C.
"Borrower Representative" shall mean Verdant in its capacity as Borrower
Representative pursuant to the provisions of Section 1.1(c).
"Borrowers" and "Borrower" shall have the respective meanings assigned
thereto in the recitals to the Agreement.
"Borrowing Availability" shall have the meaning assigned to it in Section
1.1(a)(i).
"Borrowing Base"shall mean, as the context may require, the Verdant
Borrowing Base, the Safer Borrowing Base, the SureCo Borrowing Base, the Consep
Borrowing Base, the ▇▇▇▇ Borrowing Base, the Pacoast Borrowing Base and the
Valley Borrowing Base and, following the consummation of any Permitted
Acquisition in which the Target acquired therein (or any Subsidiary of the
Target) becomes a Subsidiary of Verdant and a Borrower in accordance with the
terms of the Agreement, the Target Borrowing Base of such Person, or any such
Borrowing Base.
"Borrowing Base Certificate" shall mean a certificate to be executed and
delivered from time to time by each Borrower in the form attached to the
Agreement as Exhibit 4.1(b).
"Business Day" shall mean any day that is not a Saturday, a Sunday or a day
on which banks are required or permitted to be closed in the State of Illinois
or New York and in reference to LIBOR Loans shall mean any such day that is also
a LIBOR Business Day.
"Capital Expenditures" shall mean, with respect to any Person, all
expenditures (by the expenditure of cash or the incurrence of Indebtedness and
including the principal portion of payments under Capital Leases, installment
purchase agreements and other similar purchase money financing agreements) by
such Person during any measuring period for any fixed assets or improvements or
for replacements, substitutions or additions thereto, that have a useful life of
more than one year and that are required to be capitalized under GAAP.
A-3
"Capital Lease" shall mean, with respect to any Person, any lease of any
property (whether real, personal or mixed) by such Person as lessee that, in
accordance with GAAP, would be required to be classified and accounted for as a
capital lease on a balance sheet of such Person.
"Capital Lease Obligation" shall mean, with respect to any Capital Lease of
any Person, the amount of the obligation of the lessee thereunder that, in
accordance with GAAP, would appear on a balance sheet of such lessee in respect
of such Capital Lease.
"Cash Collateral Account" shall have the meaning assigned to it in Annex B.
"Cash Equivalents" shall have the meaning assigned to it in Annex B.
"Cash Equivalents Investments" shall mean (i) marketable direct obligations
issued or unconditionally guaranteed by the United States of America or any
agency thereof maturing within one year from the date of acquisition thereof,
(ii) commercial paper maturing no more than one year from the date of creation
thereof and currently having the highest rating obtainable from either Standard
& Poor's Corporation or ▇▇▇▇▇'▇ Investors Service, Inc., (iii) certificates of
deposit, maturing no more than one year from the date of creation thereof, and
time deposits, maturing no more than 30 days from the date of creation thereof,
in each case issued by commercial banks incorporated under the laws of the
United States of America, each having combined capital, surplus and undivided
profits of not less than $300,000,000 and having a senior secured rating of "A"
or better by a nationally recognized rating agency, which do not have setoff
rights against the foregoing other than setoffs for nominal service charges and
similar fees incurred in the ordinary course, and (iv) money market funds
substantially all of the assets of which are comprised of securities of the
types described in clauses (i) through (iii) above.
"Cash Management Systems" shall have the meaning assigned to it in Section
1.8.
"Change of Control" means any of the following: (a) any person or group of
persons (within the meaning of the Securities Exchange Act of 1934, as amended)
shall have acquired beneficial ownership (within the meaning of Rule 13d-3
promulgated by the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended) of 35% or more of the issued and outstanding
shares of capital Stock of Verdant having the right to vote for the election of
directors of Verdant under ordinary circumstances; (b) during any period of
twelve consecutive calendar months, individuals who at the beginning of such
period constituted the board of directors of Verdant (together with any new
directors whose election by the board of directors of Verdant or whose
nomination for election by the stockholders of Verdant was approved by a vote of
at least two-thirds of the directors then still in office who either were
directors at the beginning of such period or whose elections or nomination for
election was previously so approved) cease for any reason other than death or
disability to constitute a majority of the directors then in office, (c) Verdant
shall cease to own and control all of the economic and voting rights associated
with all of the outstanding capital Stock of its Subsidiaries.
A-4
"Charges" shall mean all federal, state, county, city, municipal, local,
foreign or other governmental taxes (including taxes owed to the PBGC at the
time due and payable), levies, assessments, charges, liens, claims or
encumbrances upon or relating to (a) the Collateral, (b) the Obligations, (c)
the employees, payroll, income or gross receipts of any Credit Party, (b) any
Credit Party's ownership or use of any properties or other assets, or (e) any
other aspect of any Credit Party's business.
"Chattel Paper" shall mean any "chattel paper," as such term is defined in
the Code, now owned or hereafter acquired by any Credit Party, wherever located.
"Closing Date" shall mean July 14, 1999.
"Closing Checklist" shall mean the schedule, including all appendices,
exhibits or schedules thereto, listing certain documents and information to be
delivered in connection with the Agreement, the other Loan Documents and the
transactions contemplated thereunder, substantially in the form attached hereto
as Annex D.
"Code" shall mean the Uniform Commercial Code as the same may, from time to
time, be enacted and in effect in the State of Illinois; provided, however, in
the event that, by reason of mandatory provisions of law, any or all of the
attachment, perfection or priority of Agent's or any Lender's security interest
in any Collateral is governed by the Uniform Commercial Code as enacted and in
effect in a jurisdiction other than the State of Illinois, the term "Code" shall
mean the Uniform Commercial Code as enacted and in effect in such other
jurisdiction solely for purposes of the provisions hereof relating to such
attachment, perfection or priority and for purposes of definitions related to
such provisions.
"Collateral" shall mean the property covered by the Security Agreements and
the other Collateral Documents and any other property, real or personal,
tangible or intangible, now existing or hereafter acquired, that may at any time
be or become subject to a security interest or Lien in favor of Agent, on behalf
of itself and Lenders, to secure the Obligations.
"Collateral Documents" shall mean the Security Agreement, the Safer Canada
Security Agreement, the Pledge Agreement, the Guarantees, the Patent Security
Agreements, the Trademark Security Agreements, the Copyright Security Agreements
and all similar agreements entered into guaranteeing payment of, or granting a
Lien upon property as security for payment of, the Obligations.
"Collateral Reports" shall mean the reports with respect to the Collateral
referred to in Annex F.
"Collection Account" shall mean that certain account of Agent, account
number ▇▇▇-▇▇▇-▇▇ in the name of Agent at Bankers Trust Company in New York, New
York or such other account as Agent shall specify.
A-5
"Commitment Termination Date" shall mean the earliest of (a) July 14, 2002,
(b) the date of termination of Lenders' obligations to (i) make Advances and/or
incur Letter of Credit Obligations or (ii) permit existing Loans to remain
outstanding pursuant to Section 8.2(b), and (c) the date of indefeasible
prepayment in full by Borrowers of the Loans and the cancellation and return (or
stand-by guarantee) of all Letters of Credit or the cash collateralization of
all Letter of Credit Obligations pursuant to Annex B, and the permanent
reduction of the Revolving Loan Commitment and the Swing Line Commitment to zero
dollars ($0).
"Commitments" shall mean (a) as to any Lender, the aggregate of such
Lender's Revolving Loan Commitment (including without duplication the Swing Line
Lender's Swing Line Commitment as a subset of its Revolving Loan Commitment) and
Term Loan Commitment as set forth on Annex J to the Agreement or in the most
recent Assignment Agreement executed by such Lender and (b) as to all Lenders,
the aggregate of all Lenders' Revolving Loan Commitments (including without
duplication the Swing Line Lender's Swing Line Commitment as a subset of its
Revolving Loan Commitment) and Term Loan Commitments, which aggregate commitment
shall be Thirty-Seven Million Dollars ($37,000,000) on the Closing Date, as to
each of clauses (a) and (b), as such Commitments may be reduced, amortized or
adjusted from time to time in accordance with the Agreement.
"Compliance Certificate" shall have the meaning assigned to it in Annex E.
"Concentration Account Bank" shall have the meaning assigned to it in Annex
C.
"Concentration Accounts" shall have the meaning assigned to it in Annex C.
"Consep" shall mean Consep, Inc., an Oregon corporation.
"Consep Borrowing Base" shall mean, as of any date of determination by
Agent, from time to time, an amount equal to the sum at such time of:
(a) up to eighty-five percent (85%) of the Eligible Accounts of
Consep, less any Reserves established by Agent at such time; and
(b) up to sixty-five percent (65%) of the book value of the Eligible
Inventory of Consep; the book value of Eligible Inventory shall be valued
on a first-in, first-out basis (at the lower of cost or market), less any
Reserves established by Agent at such time.
"Consep De Mexico" shall mean Consep De Mexico, a Mexican corporation
wholly-owned by Consep.
"Consep GmbH" shall mean Consep GmbH, an Austrian corporation wholly-owned
by Consep.
A-6
"Consep Merger Agreement" shall mean that certain Agreement and Plan of
Merger, dated September 8, 1998, by and among Verdant, Consep Acquisition, Inc.
and Consep, together with all schedules and exhibits related thereto, as the
same may have been heretofore or may hereafter be amended, restated, modified or
otherwise supplemented from time to time.
"Consep Transaction" shall mean the acquisition by Verdant pursuant to the
Consep Merger Agreement of all of the capital stock of Consep.
"Contracts" shall mean all "contracts," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, in any event,
including all contracts, undertakings, or agreements (other than rights
evidenced by Chattel Paper, Documents or Instruments) in or under which any
Credit Party may now or hereafter have any right, title or interest, including
any agreement relating to the terms of payment or the terms of performance of
any Account.
"Control Letter" means a letter agreement between Agent and (i) the issuer
of uncertificated securities with respect to uncertificated securities in the
name of any Credit Party, (ii) a securities intermediary with respect to
securities, whether certificated or uncertificated, securities entitlements and
other financial assets held in a securities account in the name of any Credit
Party, (iii) a futures commission merchant or clearing house with respect to
commodity accounts and commodity contracts held by any Credit Party, whereby,
among other things, the issuer, securities intermediary or futures commission
merchant disclaims any security interest in the applicable financial assets,
acknowledges the Lien of Agent, on behalf of itself and Lenders, on such
financial assets, and agrees to follow the instructions or entitlement orders of
Agent without further consent by the affected Credit Party.
"Copyright License" shall mean any and all rights now owned or hereafter
acquired by any Credit Party under any written agreement granting any right to
use any Copyright or Copyright registration.
"Copyright Security Agreements" shall mean the Copyright Security
Agreements made in favor of Agent, on behalf of itself and Lenders, by each
applicable Credit Party.
"Copyrights" shall mean all of the following now owned or hereafter
acquired by any Credit Party: (a) all copyrights and general intangibles of like
nature (whether registered or unregistered), now owned or existing or hereafter
adopted or acquired, all registrations and recordings thereof, and all
applications in connection therewith, including all registrations, recordings
and applications in the United States Copyright Office or in any similar office
or agency of the United States, any state or territory thereof, or any other
country or any political subdivision thereof, and (b) all reissues, extensions
or renewals thereof.
"Credit Parties" shall mean each Borrower and each of its respective
Subsidiaries.
A-7
"Default" shall mean any event which, with the passage of time or notice or
both, would, unless cured or waived, become an Event of Default.
"Default Rate" shall have the meaning assigned to it in Section 1.5(d).
"Dexol" shall mean Dexol Industries, Inc., a California corporation.
"Dexol Acquisition Agreement" shall mean that certain Agreement for
Purchase and Sale of Assets, dated as of March 28, 1997, by and between Dexol
and Verdant, together with all schedules and exhibits related thereto, as the
same may have been heretofore or may hereafter be amended, restated, modified or
otherwise supplemented from time to time.
"Dexol Transaction" shall mean the acquisition by Verdant pursuant to the
Dexol Acquisition Agreement of all or substantially all of the assets of Dexol
used in the business of developing, manufacturing and selling pesticide
products.
"Disbursement Accounts" shall have the meaning assigned to it on Annex C.
"Disclosure Schedules" shall mean the Schedules prepared by Borrowers and
denominated as Disclosure Schedules 1.4 through 6.7 in the Index to the
Agreement.
"Documents" shall mean any "documents," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, wherever located.
"Dollars" or "$" shall mean lawful currency of the United States of
America.
"EBITDA" shall mean, with respect to any Person for any fiscal period, an
amount equal to (a) consolidated net income of such Person for such period,
minus (b) the sum of (i) income tax credits, (ii) interest income, (iii) gain
from extraordinary items for such period, (iv) any aggregate net gain (but not
any aggregate net loss) during such period arising from the sale, exchange or
other disposition of capital assets by such Person (including any fixed assets,
whether tangible or intangible, all inventory sold in conjunction with the
disposition of fixed assets and all securities), and (v) any other non-cash
gains which have been added in determining consolidated net income, in each case
to the extent included in the calculation of consolidated net income of such
Person for such period in accordance with GAAP, but without duplication, plus
(c) the sum of (i) any provision for income taxes, (ii) Interest Expense, (iii)
loss from extraordinary items for such period, (iv) the amount of non-cash
charges (including depreciation and amortization) for such period, (v) amortized
debt discount for such period, and (vi) the amount of any deduction to
consolidated net income as the result of any grant to any members of the
management of such Person of any Stock, in each case to the extent included in
the calculation of consolidated net income of such Person for such period in
accordance with GAAP, but without duplication. For purposes of this definition,
the following items shall be excluded in determining consolidated net income of
a Person: (1) the income (or deficit) of any other Person accrued prior
A-8
to the date it became a Subsidiary of, or was merged or consolidated into, such
Person or any of such Person's Subsidiaries; (2) the income (or deficit) of any
other Person (other than a Subsidiary) in which such Person has an ownership
interest, except to the extent any such income has actually been received by
such Person in the form of cash dividends or distributions; (3) the
undistributed earnings of any Subsidiary of such Person to the extent that the
declaration or payment of dividends or similar distributions by such Subsidiary
is not at the time permitted by the terms of any contractual obligation or
requirement of law applicable to such Subsidiary; (4) any restoration to income
of any contingency reserve, except to the extent that provision for such reserve
was made out of income accrued during such period; (5) any write-up of any
asset; (6) any net gain from the collection of the proceeds of life insurance
policies; (7) any net gain arising from the acquisition of any securities, or
the extinguishment, under GAAP, of any Indebtedness, of such Person, (8) in the
case of a successor to such Person by consolidation or merger or as a transferee
of its assets, any earnings of such successor prior to such consolidation,
merger or transfer of assets, and (9) any deferred credit representing the
excess of equity in any Subsidiary of such Person at the date of acquisition of
such Subsidiary over the cost to such Person of the investment in such
Subsidiary.
"Eligible Accounts" shall have the meaning assigned to it in Section 1.6 of
the Agreement.
"Eligible Inventory" shall have the meaning assigned to it in Section 1.7
of the Agreement.
"Environmental Laws" shall mean all applicable federal, state, local and
foreign laws, statutes, ordinances, codes, rules, standards and regulations, now
or hereafter in effect, and in each case as amended or supplemented from time to
time, and any applicable judicial or administrative interpretation thereof,
including any applicable judicial or administrative order, consent decree, order
or judgment, imposing liability or standards of conduct for or relating to the
regulation and protection of human health, safety, the environment and natural
resources (including ambient air, surface water, groundwater, wetlands, land
surface or subsurface strata, wildlife, aquatic species and vegetation).
Environmental Laws include the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 (42 U.S.C. ▇▇.▇▇. 9601 et seq.)
("CERCLA"); the Hazardous Materials Transportation Authorization Act of 1994 (49
U.S.C. ▇▇.▇▇. 5101 et seq.); the Federal Insecticide, Fungicide, and Rodenticide
Act (7 U.S.C. ▇▇.▇▇. 136 et seq.); the Solid Waste Disposal Act (42 U.S.C.
▇▇.▇▇. 6901 et seq.); the Toxic Substance Control Act (15 U.S.C. ▇▇.▇▇. 2601 et
seq.); the Clean Air Act (42 U.S.C. ▇▇.▇▇. 7401 et seq.); the Federal Water
Pollution Control Act (33 U.S.C. ▇▇.▇▇. 1251 et seq.); the Occupational Safety
and Health Act (29 U.S.C. ▇▇.▇▇. 651 et seq.); and the Safe Drinking Water Act
(42 U.S.C. ▇▇.▇▇. 300(f) et seq.), each as from time to time amended, and any
and all regulations promulgated thereunder, and all analogous state, local and
foreign counterparts or equivalents and any transfer of ownership notification
or approval statutes.
A-9
"Environmental Liabilities" shall mean, with respect to any Person, all
liabilities, obligations, responsibilities, response, remedial and removal
costs, investigation and feasibility study costs, capital costs, operation and
maintenance costs, losses, damages, punitive damages, property damages, natural
resource damages, consequential damages, treble damages, costs and expenses
(including all fees, disbursements and expenses of counsel, experts and
consultants), fines, penalties, sanctions and interest incurred as a result of
or related to any claim, suit, action, investigation, proceeding or demand by
any Person, whether based in contract, tort, implied or express warranty, strict
liability, criminal or civil statute or common law, including any arising under
or related to any Environmental Laws, Environmental Permits, or in connection
with any Release or threatened Release or presence of a Hazardous Material
whether on, at, in, under, from or about or in the vicinity of any real or
personal property.
"Environmental Permits" shall mean all permits, licenses, authorizations,
certificates, approvals or registrations required by any Governmental Authority
under any Environmental Laws.
"Equipment" shall mean all "equipment," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, wherever located and,
in any event, including all such Credit Party's machinery and equipment,
including processing equipment, conveyors, machine tools, data processing and
computer equipment with software and peripheral equipment (other than software
constituting part of the Accounts), and all engineering, processing and
manufacturing equipment, office machinery, furniture, materials handling
equipment, tools, attachments, accessories, automotive equipment, trailers,
trucks, forklifts, molds, dies, stamps, motor vehicles, rolling stock and other
equipment of every kind and nature, trade fixtures and fixtures not forming a
part of real property, all whether now owned or hereafter acquired, and wherever
situated, together with all additions and accessions thereto, replacements
therefor, all parts therefor, all substitutes for any of the foregoing, fuel
therefor, and all manuals, drawings, instructions, warranties and rights with
respect thereto, and all products and proceeds thereof and condemnation awards
and insurance proceeds with respect thereto.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974 (or
any successor legislation thereto), as amended from time to time, and any
regulations promulgated thereunder.
"ERISA Affiliate" shall mean, with respect to any Credit Party, any trade
or business (whether or not incorporated) which, together with such Credit
Party, are treated as a single employer within the meaning of Sections 414(b),
(c), (m) or (o) of the IRC.
"ERISA Event" shall mean, with respect to any Credit Party or any ERISA
Affiliate, (a) any event described in Section 4043(c) of ERISA with respect to a
Title IV Plan; (b) the withdrawal of any Credit Party or ERISA Affiliate from a
Title IV Plan subject to Section 4063 of ERISA during a plan year in which it
was a substantial employer, as defined in Section 4001(a)(2) of ERISA; (c) the
complete or partial withdrawal of any Credit Party or any ERISA Affiliate from
any Multiemployer Plan; (d) the filing of a notice of intent to terminate a
Title IV
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Plan or the treatment of a plan amendment as a termination under Section 4041 of
ERISA; (e) the institution of proceedings to terminate a Title IV Plan or
Multiemployer Plan by the PBGC; (f) the failure by any Credit Party or ERISA
Affiliate to make when due required contributions to a Multiemployer Plan or
Title IV Plan unless such failure is cured within 30 days; (g) any other event
or condition which might reasonably be expected to constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Title IV Plan or Multiemployer Plan or for the imposition of
liability under Section 4069 or 4212(c) of ERISA; (h) the termination of a
Multiemployer Plan under Section 4041A of ERISA or the reorganization or
insolvency of a Multiemployer Plan under Section 4241 of ERISA; (i) the loss of
a Qualified Plan's qualification or tax exempt status; or (j) the termination of
a Plan described in Section 4604 of ERISA.
"ESOP" shall mean a Plan which is intended to satisfy the requirements of
Section 4975(e)(7) of the IRC.
"Event of Default" shall have the meaning assigned to it in Section 8.1.
"Fair Salable Balance Sheet" shall mean a balance sheet of Borrowers
prepared in accordance with Section 6.1(x).
"Farchan" shall mean Farchan Laboratories, Inc., a Florida corporation.
"Federal Funds Rate" shall mean, for any day, a floating rate equal to the
weighted average of the rates on overnight Federal funds transactions among
members of the Federal Reserve System, as determined by Agent.
"Federal Reserve Board" means the Board of Governors of the Federal Reserve
System, or any successor thereto.
"Fees" shall mean any and all fees payable to Agent or any Lender pursuant
to the Agreement or any of the other Loan Documents.
"Financial Statements" shall mean the consolidated and consolidating income
statements, statements of cash flows and balance sheets of Borrowers delivered
in accordance with Annex E to the Agreement.
"Fiscal Month" shall mean any of the monthly accounting periods of
Borrowers.
"Fiscal Quarter" shall mean any of the quarterly accounting periods of
Borrowers, ending on March, June, September and December of each year.
"Fiscal Year" shall mean any of the annual accounting periods of Borrowers
ending on December 31 of each year.
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"Fixtures" shall mean any "fixtures" as such term is defined in the Code,
now owned or hereafter acquired by any Credit Party.
"Funded Debt" shall mean, with respect to any Person, all Indebtedness for
borrowed money evidenced by notes, bonds, debentures, or similar evidences of
Indebtedness and which by its terms matures more than one year from, or is
directly or indirectly renewable or extendible at such Person's option under a
revolving credit or similar agreement obligating the lender or lenders to extend
credit over a period of more than one year from the date of creation thereof,
and specifically including Capital Lease Obligations, current maturities of
long-term debt, revolving credit and short-term debt extendible beyond one year
at the option of the debtor, and also including, in the case of Borrowers, the
Obligations.
"GAAP" shall mean generally accepted accounting principles in the United
States of America consistently applied, as such term is further defined in Annex
G to the Agreement.
"GE Capital Fee Letter" shall mean that certain letter, dated as of the
Closing Date, between GE Capital and Borrowers with respect to certain Fees to
be paid from time to time by Borrowers to GE Capital.
"General Intangibles" shall mean any "general intangibles," as such term is
defined in the Code, now owned or hereafter acquired by any Credit Party, and,
in any event, including all right, title and interest which such Credit Party
may now or hereafter have in or under any Contract, all customer lists,
Licenses, Copyrights, Trademarks, Patents, and all applications therefor and
reissues, extensions or renewals thereof, rights in Intellectual Property,
interests in partnerships, joint ventures and other business associations,
licenses, permits, copyrights, trade secrets, proprietary or confidential
information, inventions (whether or not patented or patentable), technical
information, procedures, designs, knowledge, know-how, software, data bases,
data, skill, expertise, experience, processes, models, drawings, materials and
records, goodwill (including the goodwill associated with any Trademark or
Trademark License), all rights and claims in or under insurance policies
(including insurance for fire, damage, loss and casualty, whether covering
personal property, real property, tangible rights or intangible rights, all
liability, life, key man and business interruption insurance, and all unearned
premiums), uncertificated securities, choses in action, deposit, checking and
other bank accounts, rights to receive tax refunds and other payments, rights of
indemnification, all books and records, correspondence, credit files, invoices
and other papers, including without limitation all tapes, cards, computer runs
and other papers and documents in the possession or under the control of such
Credit Party or any computer bureau or service company from time to time acting
for such Credit Party.
"Governmental Authority" shall mean any nation or government, any state or
other political subdivision thereof, and any agency, department or other entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
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"Guaranteed Indebtedness" shall mean, as to any Person, any obligation of
such Person guaranteeing any indebtedness, lease, dividend, or other obligation
("primary obligations") of any other Person (the "primary obligor") in any
manner, including any obligation or arrangement of such Person (a) to purchase
or repurchase any such primary obligation, (b) to advance or supply funds (i)
for the purchase or payment of any such primary obligation or (ii) to maintain
working capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency or any balance sheet condition of the primary
obligor, (c) to purchase property, securities or services primarily for the
purpose of assuring the owner of any such primary obligation of the ability of
the primary obligor to make payment of such primary obligation, or (d) to
indemnify the owner of such primary obligation against loss in respect thereof.
The amount of any Guaranteed Indebtedness at any time shall be deemed to be an
amount equal to the lesser at such time of (x) the stated or determinable amount
of the primary obligation in respect of which such Guaranteed Indebtedness is
made and (y) the maximum amount for which such Person may be liable pursuant to
the terms of the instrument embodying such Guaranteed Indebtedness; or, if not
stated or determinable, the maximum reasonably anticipated liability (assuming
full performance) in respect thereof.
"Guarantees" shall mean, collectively, the Safer Canada Guarantee and the
Amended and Restated Guarantee of even date herewith executed by Farchan and SRI
in favor of Agent and any other guaranty executed by any Guarantor in favor of
Agent and Lenders in respect of the Obligations.
"Guarantor Payment" shall have the meaning assigned to it in Section
12.7(a).
"Guarantors" shall mean each Subsidiary of each Borrower, and each other
Person, if any, which executes a guarantee or other similar agreement in favor
of Agent in connection with the transactions contemplated by the Agreement and
the other Loan Documents.
"Hazardous Material" shall mean any substance, material or waste which is
regulated by or forms the basis of liability now or hereafter under, any
Environmental Laws, including any material or substance which is (a) defined as
a "solid waste," "hazardous waste," "hazardous material," "hazardous substance,"
"extremely hazardous waste," "restricted hazardous waste," "pollutant,"
"contaminant," "hazardous constituent," "special waste," "toxic substance" or
other similar term or phrase under any Environmental Laws, (b) petroleum or any
fraction or by-product thereof, asbestos, polychlorinated biphenyls (PCB's), or
any radioactive substance.
"▇▇▇▇" shall mean ▇▇▇▇▇▇▇ ▇▇▇▇ Inc., a California corporation.
"▇▇▇▇ Borrowing Base" shall mean, as of any date of determination by Agent,
from time to time, an amount equal to the sum at such time of:
(a) up to eighty-five (85%) of the Eligible Accounts of ▇▇▇▇, less any
Reserves established by Agent at such time; and
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(b) up to sixty-five percent (65%) of the book value of the Eligible
Inventory of ▇▇▇▇; the book value of Eligible Inventory shall be valued on
a first-in, first-out basis (at the lower of cost or market), less any
Reserves established by Agent at such time.
"Indebtedness" of any Person shall mean without duplication (a) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property payment for which is deferred six (6) months or more, but
excluding (i) obligations to trade creditors acquired by such Person in the
Dexol Transaction in an aggregate amount not to exceed $750,000 that are not
overdue by more than eighteen (18) months, and (ii) obligations to all other
trade creditors of such Person incurred in the ordinary course of business that
are not overdue by more than six (6) months unless, in either case, being
contested in good faith, (b) all reimbursement and other obligations with
respect to letters of credit, bankers' acceptances and surety bonds, whether or
not matured, (c) all obligations evidenced by notes, bonds, debentures or
similar instruments, (d) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such property), (e) all Capital Lease Obligations, (f) all
obligations of such Person under commodity purchase or option agreements or
other commodity price hedging arrangements, in each case whether contingent or
matured, (g) all obligations of such Person under any foreign exchange contract,
currency swap agreement, interest rate swap, cap or collar agreement or other
similar agreement or arrangement designed to alter the risks of that Person
arising from fluctuations in currency values or interest rates, in each case
whether contingent or matured, (h) all Indebtedness referred to above secured by
(or for which the holder of such Indebtedness has an existing right, contingent
or otherwise, to be secured by) any Lien upon or in property or other assets
(including accounts and contract rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such Indebtedness,
and (i) the Obligations.
"Indemnified Liabilities" shall have the meaning assigned to it in Section
1.13.
"Index Rate" shall mean, for any day, a floating rate equal to the higher
of (i) the rate publicly quoted from time to time by The Wall Street Journal as
the "base rate on corporate loans at large U.S. money center commercial banks"
(or, if The Wall Street Journal ceases quoting a base rate of the type
described, the highest per annum rate of interest published by the Federal
Reserve Board in Federal Reserve statistical release H.15 (519) entitled
"Selected Interest Rates" as the Bank prime loan rate or its equivalent), and
(ii) the Federal Funds Rate plus fifty (50) basis points per annum. Each change
in any interest rate provided for in the Agreement based upon the Index Rate
shall take effect at the time of such change in the Index Rate.
"Index Rate Loan" shall mean a Loan or portion thereof bearing interest by
reference to the Index Rate.
"Instruments" shall mean any "instrument," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, wherever located,
and, in any event,
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including all certificated securities, all certificates of deposit, and all
notes and other, without limitation, evidences of indebtedness, other than
instruments that constitute, or are a part of a group of writings that
constitute, Chattel Paper.
"Intellectual Property" shall mean any and all Licenses, Patents,
Copyrights, Trademarks, trade secrets and customer lists.
"Intercompany Notes" shall have the meaning assigned to it in Section 6.3.
"Intercreditor Agreement" shall mean that certain agreement, dated as of
April 22, 1998, between B & I Lending, LLC and Agent, as the same may hereafter
be amended, restated, modified or otherwise supplemented from time to time.
"Interest Coverage Ratio" shall mean the ratio of EBITDA to Interest
Expense.
"Interest Expense" shall mean, for any applicable fiscal period, the
aggregate of all interest paid or payable in cash by the Borrowers and their
Subsidiaries on a consolidated basis during such fiscal period including
interest paid with respect to the Obligations.
"Interest Payment Date" means (a) as to any Index Rate Loan, the first
Business Day of each month to occur while such Loan is outstanding, (b) as to
any LIBOR Loan, the last day of the applicable LIBOR Period; provided, that, in
addition to the foregoing, each of (x) the date upon which all of the
Commitments have been terminated and the Loans have been paid in full and (y)
the Commitment Termination Date shall be deemed to be an "Interest Payment Date"
with respect to any interest which is then accrued under the Agreement.
"Inventory" shall mean any "inventory," as such term is defined in the
Code, now or hereafter owned or acquired by any Credit Party, wherever located,
and in any event including inventory, merchandise, goods and other personal
property which are held by or on behalf of any Credit Party for sale or lease or
are furnished or are to be furnished under a contract of service, or which
constitute raw materials, work in process or materials used or consumed or to be
used or consumed in such Credit Party's business or in the processing,
production, packaging, promotion, delivery or shipping of the same, including
other supplies.
"Investment Property" shall have the meaning ascribed thereto in Section
9-115 of the Code in those jurisdictions in which such definition has been
adopted and shall include (i) all securities, whether certificated or
uncertificated, including stocks, bonds, interests in limited liability
companies, partnership interests, treasuries, certificates of deposit, and
mutual fund shares; (ii) all securities entitlements of any Credit Party,
including the rights of any Credit Party to any securities account and the
financial assets held by a securities intermediary in such securities account
and any free credit balance or other money owing by any securities intermediary
with respect to that account; (iii) all securities accounts held by any Credit
Party; (iv) all
A-15
commodity contracts held by any Credit Party; and (v) all commodity accounts
held by any Credit Party.
"IRC" shall mean the Internal Revenue Code of 1986, as amended, and any
successor thereto.
"IRS" shall mean the Internal Revenue Service, or any successor thereto.
"L/C Issuer" shall have the meaning assigned to such term in Annex B.
"L/C Sublimit" shall have the meaning assigned to such term in Annex B.
"Lenders" shall mean GE Capital, the other Lenders named on the signature
page of the Agreement, and, if any such Lender shall decide to assign all or any
portion of the Obligations, such term shall include such assignee.
"Letter of Credit Fee" has the meaning ascribed thereto in Annex B.
"Letter of Credit Obligations" shall mean all outstanding obligations
incurred by Agent and Lenders at the request of Borrower Representative, whether
direct or indirect, contingent or otherwise, due or not due, in connection with
the issuance of a reimbursement agreement or guaranty by Agent or purchase of a
participation as set forth in Annex B with respect to any Letter of Credit. The
amount of such Letter of Credit Obligations shall equal the maximum amount which
may be payable by Agent or Lenders thereupon or pursuant thereto.
"Letters of Credit" shall mean commercial or standby letters of credit
issued for the account of any Borrower by any L/C Issuer, and bankers'
acceptances issued by any Bor rower, for which Agent and Lenders have incurred
Letter of Credit Obligations.
"LIBOR Business Day" shall mean a Business Day on which banks in the city
of London are generally open for interbank or foreign exchange transactions.
"LIBOR Loan" shall mean a Loan or any portion thereof bearing interest by
reference to the LIBOR Rate.
"LIBOR Period" shall mean, with respect to any LIBOR Loan, each period
commencing on a LIBOR Business Day selected by Borrower Representative pursuant
to the Agreement and ending one, two or three months thereafter, as selected by
Borrower Representative's irrevocable notice to Agent as set forth in Section
1.5(e); provided that the foregoing provision relating to LIBOR Periods is
subject to the following:
(a) if any LIBOR Period would otherwise end on a day that is not a
LIBOR Business Day, such LIBOR Period shall be extended to the next
succeeding LIBOR
A-16
Business Day unless the result of such extension would be to carry such
LIBOR Period into another calendar month in which event such LIBOR Period
shall end on the immediately preceding LIBOR Business Day;
(b) any LIBOR Period that would otherwise extend beyond the Commitment
Termination Date shall end two (2) LIBOR Business Days prior to such date;
(c) any LIBOR Period pertaining to a LIBOR Loan that begins on the
last LIBOR Business Day of a calendar month (or on a day for which there is
no numerically corresponding day in the calendar month at the end of such
LIBOR Period) shall end on the last LIBOR Business Day of a calendar month;
(d) Borrower Representative shall select LIBOR Periods so as not to
require a payment or prepayment of any LIBOR Loan during a LIBOR Period for
such Loan; and
(e) Borrower Representative shall select LIBOR Periods so that there
shall be no more than five (5) separate LIBOR Loans in existence at any one
time.
"LIBOR Rate" shall mean for each LIBOR Period, a rate of interest
determined by Agent equal to:
(a) the offered rate for deposits in United States Dollars for the
applicable LIBOR Period which appears on Telerate Page 3750 as of 11:00
a.m., London time, on the second full LIBOR Business Day next preceding the
first day of each LIBOR Period (unless such date is not a Business Day, in
which event the next succeeding Business Day will be used); divided by
(b) a number equal to 1.0 minus the aggregate (but without
duplication) of the rates (expressed as a decimal fraction) of reserve
requirements in effect on the day which is two (2) LIBOR Business Days
prior to the beginning of such LIBOR Period (including basic, supplemental,
marginal and emergency reserves under any regulations of the Board of
Governors of the Federal Reserve system or other governmental authority
having jurisdiction with respect thereto, as now and from time to time in
effect) for Eurocurrency funding (currently referred to as "Eurocurrency
liabilities" in Regulation D of such Board which are required to be
maintained by a member bank of the Federal Reserve System.
If such interest rates shall cease to be available from Telerate News
Service, the LIBOR Rate shall be determined from such financial reporting
service or other information as shall be mutually acceptable to Agent and
Borrower Representative.
"License" shall mean any Copyright License, Patent License, Trademark
License or other license of rights or interests now held or hereafter acquired
by any Credit Party.
A-17
"Lien" shall mean any mortgage or deed of trust, pledge, hypothecation,
assignment, deposit arrangement, lien, charge, claim, security interest,
easement or encumbrance, or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including any lease
or title retention agreement, any financing lease having substantially the same
economic effect as any of the foregoing, and the filing of, or agreement to
give, any financing statement perfecting a security interest under the Code or
comparable law of any jurisdiction).
"Litigation" shall have the meaning assigned to it in Section 3.13.
"Loan Account" shall have the meaning assigned to it in Section 1.12.
"Loan Documents" shall mean the Agreement, the Notes, the Collateral
Documents, the Warrant and all other agreements, instruments, documents and
certificates identified in the Closing Checklist executed and delivered to, or
in favor of, Agent and/or Lenders and including all other pledges, powers of
attorney, consents, assignments, contracts, notices, and all other written
matter whether heretofore, now or hereafter executed by or on behalf of any
Credit Party, or any employee of any Credit Party, and delivered to Agent or any
Lender in connection with the Agreement or the transactions contemplated hereby.
Any reference in the Agreement or any other Loan Document to a Loan Document
shall include all appendices, exhibits or schedules thereto, and all amendments,
restatements, supplements or other modifications thereto, and shall refer to
such Agreement as the same may be in effect at any and all times such reference
becomes operative.
"Loans" shall mean the Revolving Loan, the Swing Line Loan and the Term
Loan.
"Material Adverse Effect" shall mean a material adverse effect on (a) the
business, assets, operations, prospects or financial or other condition of any
Credit Party or the Credit Parties considered as a whole, (b) any Borrower's
ability to pay any of the Loans or any of the other Obligations in accordance
with the terms of the Agreement, (c) the Collateral or Agent's Liens, on behalf
of itself and Lenders, on the Collateral or the priority of such Liens, or (d)
Agent's or any Lender's rights and remedies under the Agreement and the other
Loan Documents. Without limiting the foregoing, any event or occurrence adverse
to one or more Credit Parties which results or could reasonably be expected to
result in costs or liabilities in excess of the lesser of $1,000,000 and 40% of
Borrowing Availability as of any date of determination shall be deemed to have
had Material Adverse Effect.
"Maximum Amount" shall mean, at any particular time, an amount equal to the
Revolving Loan Commitment of all Lenders.
"Maximum Lawful Rate" shall have the meaning assigned to it in Section
1.5(e).
A-18
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA, and to which any Credit Party or ERISA Affiliate is
making, is obligated to make, has made or been obligated to make, contributions
on behalf of participants who are or were employed by any of them.
"Net Borrowing Availability" shall mean as of any date of determination (a)
as to all Borrowers, the lesser of (i) the Maximum Amount and (ii) the Aggregate
Borrowing Base, in each case less the sum of the aggregate Revolving Loan and
Swing Line Loan then outstanding, or (b) as to an individual Borrower, the
lesser of (i) the Maximum Amount less the sum of the Revolving Loan and Swing
Line Loan outstanding to all other Borrowers and (ii) that Borrower's separate
Borrowing Base, less the sum of the Revolving Loan and Swing Line Loan
outstanding to that Borrower.
"Net Worth" shall mean, at any date of determination, the consolidated
stockholders' equity of Verdant and its Subsidiaries.
"Non-Funding Lender" shall have the meaning assigned to it in Section
9.9(a)(ii).
"Notes" shall mean the Revolving Notes, the Swing Line Notes and the Term
Notes, collectively.
"Notice of Conversion/Continuation" shall have the meaning assigned to it
in Section 1.5(e).
"Notice of Revolving Credit Advance" shall have the meaning assigned to it
in Section 1.1(a).
"Obligations" shall mean all loans, advances, debts, liabilities and
obligations, for the performance of covenants, tasks or duties or for payment of
monetary amounts (whether or not such performance is then required or
contingent, or such amounts are liquidated or determinable) owing by any Credit
Party to Agent or any Lender (including GE Capital and/or any Affiliate of GE
Capital in its individual capacity as a holder of the Warrant), and all
covenants and duties regarding such amounts, of any kind or nature, present or
future, whether or not evidenced by any note, agreement or other instrument,
arising under the Prior Credit Agreement, the Agreement or any of the other Loan
Documents. This term includes all principal, interest (including all interest
which accrues after the commencement of any case or proceeding in bankruptcy
after the insolvency of, or for the reorganization of any Credit Party, whether
or not allowed in such proceeding), Fees, Charges, expenses, attorneys' fees and
any other sum chargeable to any Credit Party under the Agreement or any of the
other Loan Documents; provided, however, in no event shall the Obligations with
respect the Warrant be secured by any Lien granted in favor of Agent or Lenders.
"Overadvance Amount" shall have the meaning assigned to it in Section
1.1(a)(iii).
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"Pacoast" shall mean Pacoast Inc., a California corporation.
"Pacoast Borrowing Base" shall mean, as of any date of determination by
Agent, from time to time, an amount equal to the sum at such time of:
(a) up to eighty-five percent (85%) of the Eligible Accounts of
Pacoast, less any Reserves established by Agent at such time; and
(b) up to sixty-five percent (65%) of the book value of the Eligible
Inventory of Pacoast; the book value of Eligible Inventory shall be valued
on a first-in, first-out basis (at the lower of cost or market), less any
Reserves established by Agent at such time.
"Patent License" shall mean rights under any written agreement now owned or
hereafter acquired by any Credit Party granting any right with respect to any
invention on which a Patent is in existence.
"Patent Security Agreements" shall mean the Patent Security Agreements made
in favor of Agent, on behalf of itself and Lenders, by each applicable Credit
Party.
"Patents" shall mean all of the following in which any Credit Party now
holds or hereafter acquires any interest: (a) all letters patent of the United
States or any other country, all registrations and recordings thereof, and all
applications for letters patent of the United States or any other country,
including registrations, recordings and applications in the United States Patent
and Trademark Office or in any similar office or agency of the United States,
any State or Territory thereof, or any other country, and (b) all reissues,
continuations, continuations-in-part or extensions thereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any successor
thereto.
"Permitted Acquisition" shall have the meaning assigned to it in Section
6.1.
"Permitted Encumbrances" shall mean the following encumbrances: (a) Liens
for taxes or assessments or other governmental Charges not yet due and payable;
(b) pledges or deposits of money securing statutory obligations under workmen's
compensation, unemployment insurance, social security or public liability laws
or similar legislation (excluding Liens under ERISA); (c) pledges or deposits of
money securing bids, tenders, contracts (other than contracts for the payment of
money) or leases to which any Credit Party is a party as lessee made in the
ordinary course of business; (d) inchoate and unperfected workers', mechanics'
or similar liens arising in the ordinary course of business, so long as such
Liens attach only to Equipment, Fixtures and/or Real Estate; (e) carriers',
warehousemen's, suppliers' or other similar possessory liens arising in the
ordinary course of business and securing liabilities in an outstanding aggregate
amount not in excess of $100,000 at any time, so long as such Liens attach only
to Inventory; (f)
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deposits securing, or in lieu of, surety, appeal or customs bonds in proceedings
to which any Credit Party is a party; (g) any attachment or judgment lien not
constituting an Event of Default under Section 8.1(j), so long as such Lien only
attaches to Real Estate; (h) zoning restrictions, easements, licenses, or other
restrictions on the use of any Real Estate or other minor irregularities in
title (including leasehold title) thereto, so long as the same do not materially
impair the use, value, or marketability of such Real Estate; (i) presently
existing or hereinafter created Liens in favor of Agent, on behalf of Lenders;
and (j) Liens expressly permitted under clauses (b) and (c) of Section 6.7 of
the Agreement.
"Person" shall mean any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation, limited
liability company, institution, public benefit corporation, other entity or
government (whether federal, state, county, city, municipal, local, foreign, or
otherwise, including any instrumentality, division, agency, body or department
thereof).
"Plan" shall mean, at any time, an employee benefit plan, as defined in
Section 3(3) of ERISA, which any Credit Party maintains, contributes to or has
an obligation to contribute to on behalf of participants who are or were
employed by any Credit Party.
"Pledge Agreement" shall mean, collectively, the Amended and Restated
Pledge Agreement of even date herewith entered into among Agent and each Credit
Party that is a signatory thereto pledging all Stock of such Credit Party's
Subsidiaries and all Intercompany Notes owing to or held by it and any pledge
agreements entered into after the Closing Date by any Credit Party (as required
by the Agreement or any other Loan Document).
"Prior Credit Agreement" shall have the meaning assigned thereto in the
Recitals to the Agreement.
"Proceeds" shall mean "proceeds," as such term is defined in the Code and,
in any event, shall include (a) any and all proceeds of any insurance,
indemnity, warranty or guaranty payable to any Credit Party from time to time
with respect to any of the Collateral, (b) any and all payments (in any form
whatsoever) made or due and payable to any Credit Party from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any Governmental Authority
(or any Person acting under color of governmental authority), (c) any claim of
any Credit Party against third parties (i) for past, present or future
infringement of any Patent or Patent License, or (ii) for past, present or
future infringement or dilution of any Copyright, Copyright License, Trademark
or Trademark License, or for injury to the goodwill associated with any
Trademark or Trademark License, (d) any recoveries by any Credit Party against
third parties with respect to any litigation or dispute concerning any of the
Collateral, and (e) any and all other amounts from time to time paid or payable
under or in connection with any of the Collateral, upon disposition or
otherwise.
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"Projections" means Borrowers' forecasted consolidated and consolidating:
(a) balance sheets; (b) profit and loss statements; (c) cash flow statements;
and (d) capitalization statements, all prepared on a Subsidiary by Subsidiary or
division by division basis, if applicable, and otherwise consistent with the
historical Financial Statements of the Borrowers, together with appropriate
supporting details and a statement of underlying assumptions.
"Pro Rata Share" shall mean with respect to all matters relating to any
Lender (a) with respect to the Revolving Loan (including the Swing Line Loan as
a subset of the Swing Line Lender's Revolving Loan), the percentage obtained by
dividing (i) the Revolving Loan Commitment (including the Swing Line Commitment
as a subset of the Swing Line Lender's Revolving Loan Commitment) by (ii) the
aggregate Revolving Loan Commitments, (b) with respect to the Term Loan(s), the
percentage obtained by dividing (i) the Term Loan Commitment of that Lender by
(ii) the aggregate Term Loan Commitments of all Lenders, as any such percentages
may be adjusted by assignments permitted pursuant to Section 9.1, (c) with
respect to all Loans, the percentage obtained by dividing (i) the aggregate
Commitments of that Lender by (ii) the aggregate Commitments of all Lenders, and
(d) with respect to all Loans on and after the Commitment Termination Date, the
percentage obtained by dividing (i) the aggregate outstanding principal balance
of the Loans held by that Lender, by (ii) the outstanding principal balance of
the Loans held by all Lenders.
"Qualified Plan" shall mean a Plan which is intended to be tax-qualified
under Section 401(a) of the IRC.
"Real Estate" shall have the meaning assigned to it in Section 3.6.
"Refunded Swing Line Loan" shall have the meaning assigned to it in Section
1.1(c)(iii).
"Related Person" shall have the meaning assigned to it in Annex C.
"Related Transactions" means each borrowing under the Revolving Loan on the
Closing Date, the consummation of the transactions contemplated or permitted
under the Loan Documents and the Prior Credit Agreement and related documents as
of the Closing Date, the payment of all fees, costs and expenses associated with
all of the foregoing and the execution and delivery of all of the Related
Transactions Documents.
"Related Transactions Documents" shall mean the Loan Documents and the
other documents executed and delivered in connection with the Related
Transactions.
"Relationship Bank" shall have the meaning assigned to it in Annex C.
"Release" shall mean any release, threatened release, spill, emission,
leaking, pumping, pouring, emitting, emptying, escape, injection, deposit,
disposal, discharge, dispersal, dumping, leaching or migration of Hazardous
Material in the indoor or outdoor environment,
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including the movement of Hazardous Material through or in the air, soil,
surface water, ground water or property.
"Requisite Lenders" shall mean (a) Lenders having more than sixty-six and
two-thirds percent (66 2/3%) of the Commitments of all Lenders, or (b) if the
Commitments have been terminated, more than sixty-six and two-thirds percent (66
2/3%) of the aggregate outstanding amount of all Loans.
"Requisite Revolving Lenders" shall mean (a) Lenders having more than
sixty-six and two-thirds percent (66 2/3%) of the Revolving Loan Commitments of
all Lenders, or (b) if the Revolving Loan Commitments have been terminated, more
than sixty-six and two-thirds percent (66 2/3%) of the aggregate outstanding
amount of the Revolving Loan.
"Reserves" shall mean, with respect to the Borrowing Base of any Borrower
(a) reserves established by Agent from time to time against Eligible Inventory
pursuant to Section 5.9, (b) reserves established pursuant to Section 5.4(c),
and (c) such other reserves against Eligible Accounts, Eligible Inventory or
Borrowing Availability of any Borrower which Agent may, in its reasonable credit
judgment, establish from time to time. Without limiting the generality of the
foregoing, Reserves established to ensure the payment of accrued Interest
Expenses or Indebtedness shall be deemed to be a reasonable exercise of Agent's
credit judgment.
"Restricted Payment" of any Person shall mean (a) the declaration or
payment of any dividend or the incurrence of any liability to make any other
payment or distribution of cash or other property or assets in respect of such
Person's Stock, (b) any payment on account of the purchase, redemption,
defeasance, sinking fund or other retirement of such Person's Stock or any other
payment or distribution made in respect thereof, either directly or indirectly,
(c) any payment or prepayment of principal of, premium, if any, or interest,
fees or other charges on or with respect to, and any redemption, purchase,
retirement, defeasance, sinking fund or similar payment and any claim for
rescission with respect to, any Subordinated Debt; (d) any payment made to
redeem, purchase, repurchase or retire, or to obtain the surrender of, any
outstanding warrants, options or other rights to acquire Stock of such Person
now or hereafter outstanding; (e) 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 shares of such Person's Stock or of a claim for reimbursement,
indemnification or contribution arising out of or related to any such claim for
damages or rescission; (f) any payment, loan, contribution, or other transfer of
funds or other property to any Stockholder of such Person; (g) any payment of
management fees (or other fees of a similar nature) by such Person to any
Stockholder of such Person or its Affiliates; and (h) in the case of any Credit
Party, any payment of any earn-out, non-compete, consulting or similar
obligation incurred in connection with any Permitted Acquisition.
"Retiree Welfare Plan" shall mean, at any time, a Plan that is a "welfare
plan" as defined in Section 3(2) of ERISA, that provides for continuing coverage
or benefits for any participant or any beneficiary of a participant after such
participant's termination of employment,
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other than continuation coverage provided pursuant to Section 4980B of the IRC
and at the sole expense of the participant or the beneficiary of the
participant.
"Revolving Credit Advance" shall have the meaning assigned to it in Section
1.1(a)(i).
"Revolving Lenders" shall mean, as of any date of determination, Lenders
having a Revolving Loan Commitment.
"Revolving Loan" shall mean, at any time, the sum of (i) the aggregate
amount of Revolving Credit Advances outstanding to any Borrower or to all
Borrowers plus (ii) the aggregate Letter of Credit Obligations incurred on
behalf of any Borrower or all Borrowers. Unless the context otherwise requires,
references to the outstanding principal balance of the Revolving Loan shall
include the outstanding balance of Letter of Credit Obligations.
"Revolving Loan Commitment" shall mean (a) as to any Lender, the aggregate
commitment of such Lender to make Revolving Credit Advances (including without
duplication Swing Line Advances as a subset of the Swing Line Lender's Revolving
Loan Commitment) and/or incur Letter of Credit Obligations as set forth on Annex
J to the Agreement or in the most recent Assignment Agreement executed by such
Lender and (b) as to all Lenders, the aggregate commitment of all Lenders to
make Revolving Credit Advances (including without duplication Swing Line
Advances as a subset of the Swing Line Lender's Revolving Loan Commitment)
and/or incur Letter of Credit Obligations, which aggregate commitment shall be
Thirty-Five Million Dollars ($35,000,000) on the Closing Date, as such amount
may be adjusted, if at all, from time to time in accordance with the Agreement.
"Revolving Note" shall have the meaning assigned to it in Section
1.1(a)(ii).
"Safer" means Safer, Inc., a Delaware corporation.
"Safer Borrowing Base" shall mean, as of any date of determination by
Agent, from time to time, an amount equal to the sum at such time of:
(a) up to eighty-five percent (85%) of Safer's Eligible Accounts, less
any Reserves established by Agent at such time; and
(b) up to sixty-five percent (65%) of the book value of Safer's
Eligible Inventory; the book value of Eligible Inventory shall be valued on
a first-in, first-out basis (at the lower of cost or market), less any
Reserves established by Agent at such time.
"Safer Canada" shall mean Safer Ltd., an Ontario Canada corporation.
A-24
"Safer Canada Guarantee" shall mean that certain amended and restated
guaranty dated as of even date herewith executed by Safer Canada in favor of
Agent.
"Safer Canada Security Agreement" shall mean the Amended and Restated
Security Agreement of even date herewith entered into by Agent and Safer Canada.
"Security Agreement" shall mean the Amended and Restated Security Agreement
of even date herewith entered into among Agent and each Credit Party that is a
signatory thereto.
"Security Agreements" shall mean the Security Agreement and the Safer
Canada Security Agreement and each other security agreement entered into
pursuant to the Agreement.
"Solvent" shall mean, with respect to any Person on a particular date, that
on such date (a) the fair value of the property of such Person is greater than
the total amount of liabilities, including contingent liabilities, of such
Person; (b) the present fair salable value of the assets of such Person is not
less than the amount that will be required to pay the probable liability of such
Person on its debts as they become absolute and matured; (c) such Person does
not intend to, and does not believe that it will, incur debts or liabilities
beyond such Person's ability to pay as such debts and liabilities mature; and
(d) such Person is not engaged in a business or transaction, and is not about to
engage in a business or transaction, for which such Person's property would
constitute an unreasonably small capital. The amount of contingent liabilities
(such as litigation, guarantees and pension plan liabilities) at any time shall
be computed as the amount which, in light of all the facts and circumstances
existing at the time, represents the amount which can be reasonably be expected
to become an actual or matured liability.
"SRI" shall mean Southern Resources Inc., a Georgia corporation.
"SRI Acquisition Agreement" shall mean that certain Agreement and Plan of
Merger, dated as of October 3, 1997, by and among SRI, SRI Acquisition Corp. and
Verdant, together with all schedules and exhibits related thereto, as the same
may have been heretofore or may hereafter be amended, restated, modified or
otherwise supplemented from time to time.
"SRI Transaction" shall mean the acquisition by Verdant pursuant to the SRI
Acquisition Agreement of all of the Stock of SRI and its Subsidiaries.
"Stock" shall mean all shares, options, warrants, general or limited
partnership interests or other equivalents (regardless of how designated) of or
in a corporation, partnership or equivalent entity whether voting or nonvoting,
including common stock, preferred stock or any other "equity security" (as such
term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated
by the Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended).
A-25
"Subordination Agreement" shall mean that certain Subordination Agreement,
dated as of May 2, 1997, between Dexol and the Lender, as the same may be
amended, restated, modified or otherwise supplemented from time to time.
"Subordinated Debt" shall mean the Indebtedness of Verdant evidenced by the
Subordinated Note and any other Indebtedness of any Credit Party subordinated to
the Obligations in a manner and form satisfactory to Agent and Lenders in their
sole discretion, as to right and time of payment and as to any other rights and
remedies thereunder.
"Subordinated Note" shall mean that certain unsecured promissory note due
December 15, 2000 issued by Verdant in favor of Dexol in a principal amount not
to exceed $1,500,000 with monthly principal payments not to exceed $1,600, which
promissory note shall be subordinated to the Obligations in a manner and form
satisfactory to Agent in its sole discretion.
"Subsidiary" shall mean, with respect to any Person, (a) any corporation of
which an aggregate of more than fifty percent (50%) of the outstanding Stock
having ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether, at the time, Stock of any other class
or classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at the time, directly or indirectly,
owned legally or beneficially by such Person and/or one or more Subsidiaries of
such Person, or with respect to which any such Person has the right to vote or
designate the vote of fifty percent (50%) or more of such Stock whether by
proxy, agreement, operation of law or otherwise, and (b) any partnership or
limited liability company in which such Person and/or one or more Subsidiaries
of such Person shall have an interest (whether in the form of voting or
participation in profits or capital contribution) of more than fifty percent
(50%) or of which any such Person is a general partner or may exercise the
powers of a general partner.
"Supermajority Revolving Lenders" shall mean (a) Lenders having eighty
percent (80%) or more of the Revolving Loan Commitments of all Lenders, or (b)
if the Revolving Loan Commitments have been terminated, eighty percent (80%) or
more of the aggregate outstanding amount of the Revolving Loan (with the Swing
Line Loan being attributed to the Lender making such Loan) and Letter of Credit
Obligations.
"SureCo" shall mean SureCo, Inc., a Georgia corporation.
"SureCo Borrowing Base" shall mean, as of any date of determination by
Agent, from time to time, an amount equal to the sum at such time of:
(a) up to eighty-five percent (85%) of the Eligible Accounts of
SureCo, less any Reserves established by Agent at such time; and
A-26
(b) up to sixty-five percent (65%) of the book value of the Eligible
Inventory of SureCo; the book value of Eligible Inventory shall be valued
on a first-in, first-out basis (at the lower of cost or market), less any
Reserves established by Agent at such time.
"SureCo Notes" shall mean, collectively, (a) that certain Term Note, dated
August 21, 1997, in the original principal amount of $1,650,000 issued by SureCo
in favor of B & I Lending, LLC, (b) that certain Demand Promissory Note, dated
July 31, 1997, in the aggregate original principal amount of $1,044,479 issued
by SRI in favor of ▇▇▇▇▇▇▇▇ ▇. Law, and (c) that certain promissory note, dated
December 14, 1994, in the original principal amount of $140,525 issued by SRI in
favor of First Liberty Bank f/k/a Middle Georgia Bank.
"Swing Line Advance" has the meaning assigned to it in Section 1.1(c)(i).
"Swing Line Availability" has the meaning assigned to it in Section
1.1(c)(i).
"Swing Line Commitment" shall mean, as to the Swing Line Lender, the
commitment of the Swing Line Lender to make Swing Line Loans as set forth on
Annex J to the Agreement, which commitment constitutes a subfacility of the
Revolving Loan Commitment of the Swing Line Lender.
"Swing Line Lender" shall mean GE Capital.
"Swing Line Loan" shall mean, as the context may require, at any time, the
aggregate amount of Swing Line Advances outstanding to any Borrower or to all
Borrowers.
"Swing Line Note" has the meaning assigned to it in Section 1.1(c)(ii).
"Target" shall have the meaning assigned to it in Section 6.1.
"Target Borrowing Base" shall mean, as of any date of determination by
Agent, from time to time, an amount equal to the sum at such time of:
(a) up to eighty-five percent (85%) of a relevant Target's Eligible
Accounts, less any Reserves established by Agent at such time; and
(b) up to sixty-five percent (65%) of the book value of a relevant Target's
Eligible Inventory; the book value of Eligible Inventory shall be valued on a
first-in, first-out basis (at the lower of cost or market), less any Reserves
established by Agent at such time.
"Taxes" shall mean taxes, levies, imposts, deductions, Charges or
withholdings, and all liabilities with respect thereto, excluding taxes imposed
on or measured by the net income of Agent or a Lender by the jurisdictions under
the laws of which Agent and Lenders are organized or any political subdivision
thereof.
A-27
"Term Lenders" shall mean those Lenders having Term Loan Commitments.
"Term Loan" shall have the meaning assigned to it in Section 1.1(b)(i).
"Term Loan Commitment" shall mean (a) as to any Lender with a Term Loan
Commitment, the commitment of such Lender to make its Pro Rata Share of the Term
Loan as set forth on Annex J to the Agreement or in the most recent Assignment
Agreement executed by such Lender, and (b) as to all Lenders with a Term Loan
Commitment, the aggregate commitment of all Lenders to make the Term Loan, which
aggregate commitment shall be Two Million Dollars ($2,000,000) on the Closing
Date, as to each of clauses (a) and (b), as such Term Loan Commitments may be
reduced, amortized or adjusted from time to time in accordance with the
Agreement.
"Term Note" shall have the meaning assigned to it in Section 1.1(b)(i).
"Termination Date" shall mean the date on which the Loans have been
indefeasibly repaid in full and all other Obligations under the Agreement and
the other Loan Documents have been completely discharged and Letter of Credit
Obligations have been cash collateralized, canceled or backed by stand-by
letters of credit in accordance with Annex B, and none of Borrowers shall have
any further right to borrow any monies under the Agreement.
"Third Party Interactives" shall mean all Persons with whom any Credit
Party exchanges data electronically in the ordinary course of business,
including, without limitation, customers, suppliers, third-party vendors,
subcontractors, processors-converters, shippers and warehousemen.
"Title IV Plan" shall mean an employee pension benefit plan, as defined in
Section 3 (2) of ERISA (other than a Multiemployer Plan), which is covered by
Title IV of ERISA, and which any Credit Party or ERISA Affiliate maintains,
contributes to or has an obligation to contribute to on behalf of participants
who are or were employed by any of them.
"Trademark License" shall mean rights under any written agreement now owned
or hereafter acquired by any Credit Party granting any right to use any
Trademark.
"Trademark Security Agreements" shall mean the Trademark Security
Agreements made in favor of Agent by each applicable Credit Party.
"Trademarks" shall mean all of the following now owned or hereafter
acquired by any Credit Party: (a) all trademarks, trade names, corporate names,
business names, trade styles, service marks, logos, other source or business
identifiers, prints and labels on which any of the foregoing have appeared or
appear, designs and general intangibles of like nature (whether registered or
unregistered), now owned or existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, including registrations, recordings and applications in the United
States Patent and Trademark Office or in
A-28
any similar office or agency of the United States, any state or territory
thereof, or any other country or any political subdivision thereof; (b) all
reissues, extensions or renewals thereof; and (c) all goodwill associated with
or symbolized by any of the foregoing.
"Unfunded Pension Liability" shall mean, at any time, the aggregate amount,
if any, of the sum of (a) the amount by which the present value of all accrued
benefits under each Title IV Plan exceeds the fair market value of all assets of
such Title IV Plan allocable to such benefits in accordance with Title IV of
ERISA, all determined as of the most recent valuation date for each such Title
IV Plan using the actuarial assumptions for funding purposes in effect under
such Title IV Plan, and (b) for a period of five (5) years following a
transaction which might reasonably be expected to be covered by Section 4069 of
ERISA, the liabilities (whether or not accrued) that could be avoided by any
Credit Party or any ERISA Affiliate as a result of such transaction.
"Valley" shall mean Valley Green Center, Inc., a Massachusetts corporation.
"Valley Borrowing Base" shall mean, as of any date of determination by
Agent, from time to time, an amount equal to the sum at such time of:
(a) up to eighty-five percent (85%) of the Eligible Accounts of
Valley, less any Reserves established by Agent at such time; and
(b) up to sixty-five percent (65%) of the book value of the Eligible
Inventory of Valley; the book value of Eligible Inventory shall be valued
on a first-in, first-out basis (at the lower of cost or market), less any
Reserves established by Agent at such time.
"Verdant" shall mean Verdant Brands, Inc., a Minnesota corporation.
"Verdant Borrowing Base" shall mean, as of any date of determination by
Agent, from time to time, an amount equal to the sum at such time of:
(a) up to eighty-five percent (85%) of the Eligible Accounts of
Verdant and of Safer Canada, less any Reserves established by Agent at such
time;
(b) up to sixty-five percent (65%) of the book value of the Eligible
Inventory of Verdant and of Safer Canada; the book value of Eligible
Inventory shall be valued on a first-in, first-out basis (at the lower of
cost or market), less any Reserves established by Agent at such time;
provided, however, that not more than $1,000,000 of Eligible Inventory of
Safer Canada shall be included in the Borrowing Base at any time.
A-29
"Warrant" shall mean that certain Common Stock Purchase Warrant dated as of
the Closing Date entitling GE Capital and/or an Affiliate of GE Capital to
subscribe for and purchase from Verdant shares of its common Stock.
"Year 2000 Assessment" shall mean a comprehensive written assessment of the
nature and extent of each Credit Party's Year 2000 Problems and Year 2000
Date-Sensitive Systems/Components, including, without limitation, Year 2000
Problems regarding data exchanges with Third Party Interactives.
"Year 2000 Corrective Actions" shall mean, as to each Credit Party, all
actions necessary to eliminate such Person's Year 2000 Problems, including,
without limitation, computer code enhancements and revisions, upgrades and
replacements of Year 2000 Date-Sensitive Systems/Components, and coordination of
such enhancements, revisions, upgrades and replacements with Third Party
Interactives.
"Year 2000 Corrective Plan" shall mean, with respect to each Credit Party,
a comprehensive plan to eliminate all of its Year 2000 Problems on or before
November 30, 1999, including without limitation (i) computer code enhancements
or revisions, (ii) upgrades or replacements of Year 2000 Date-Sensitive
Systems/Components, (iii) test and validation procedures, (iv) an implementation
time line and budget and (v) designation of specific employees who will be
responsible for planning, coordinating and implementing each phase or subpart of
the Year 2000 Corrective Plan.
"Year 2000 Date-Sensitive System/Component" shall mean, as to any Person,
any system software, network software, applications software, data base,
computer file, embedded microchip, firmware or hardware that accepts, creates,
manipulates, sorts, sequences, calculates, compares or outputs calendar-related
data accurately; such systems and components shall include, without limitation,
mainframe computers, file server/client systems, computer workstations, routers,
hubs, other network-related hardware, and other computer-related software,
firmware or hardware and information processing and delivery systems of any kind
and telecommunications systems and other communications processors, security
systems, alarms, elevators and HVAC systems.
"Year 2000 Implementation Testing" shall mean, as to each Credit Party, (i)
the performance of test and validation procedures regarding Year 2000 Corrective
Actions on a unit basis and on a systemwide basis; (ii) the performance of test
and validation procedures regarding data exchanges among the Credit Parties'
Year 2000 Date-Sensitive Systems/Components and data exchanges with Third Party
Interactives, and (iii) the design and implementation of additional Corrective
Actions, the need for which has been demonstrated by test and validation
procedures.
"Year 2000 Problems" shall mean, with respect to each Credit Party,
limitations on the capacity or readiness of any such Credit Party's Year 2000
Date-Sensitive Systems/Components to accurately accept, create, manipulate,
sort, sequence, calculate, compare or output calendar date information with
respect to calendar year 1999 or any subsequent calendar year beginning on or
after
▇-▇▇
▇▇▇▇▇▇▇ ▇, ▇▇▇▇ (▇▇▇▇▇▇▇▇▇ leap year computations), including, without
limitation, exchanges of information among Year 2000 Date-Sensitive
Systems/Components of the Credit Parties and exchanges of information among the
Credit Parties and Year 2000 Date-Sensitive Systems/Components of Third Party
Interactives and functionality of peripheral interfaces, firmware and embedded
microchips.
All other undefined terms contained in any of the Loan Documents shall,
unless the context indicates otherwise, have the meanings provided for by the
Code as in effect in the State of Illinois to the extent the same are used or
defined therein. Unless otherwise specified, references in the Agreement or any
of the Appendices to a Section, subsection or clause refer to such Section,
subsection or clause as contained in the Agreement. The words "herein," "hereof"
and "hereunder" and other words of similar import refer to the Agreement as a
whole, including all Annexes, Exhibits and Schedules, as the same may from time
to time be amended, restated, modified or supplemented, and not to any
particular section, subsection or clause contained in the Agreement or any such
Annex, Exhibit or Schedule.
Wherever from the context it appears appropriate, each term stated in
either the singular or plural shall include the singular and the plural, and
pronouns stated in the masculine, feminine or neuter gender shall include the
masculine, feminine and neuter genders. The words "including", "includes" and
"include" shall be deemed to be followed by the words "without limitation";
references to Persons include their respective successors and assigns (to the
extent and only to the extent permitted by the Loan Documents) or, in the case
of governmental Persons, Persons succeeding to the relevant functions of such
Persons; and all references to statutes and related regulations shall include
any amendments of the same and any successor statutes and regulations. Whenever
any provision in any Loan Document refers to the knowledge (or an analogous
phrase) of any Credit Party, such words are intended to signify that such Credit
Party has actual knowledge or awareness of a particular fact or circumstance or
that such Credit Party, if it had exercised reasonable diligence, would have
known or been aware of such fact or circumstance.
A-31
ANNEX B (Section 1.2)
to
CREDIT AGREEMENT
LETTERS OF CREDIT
(a) Issuance. Subject to the terms and conditions of the Agreement, Agent
and Revolving Lenders agree to incur, from time to time prior to the Commitment
Termination Date, upon the request of Borrower Representative on behalf of the
applicable Borrower and for such Borrower's account, Letter of Credit
Obligations by causing Letters of Credit to be issued (by a bank or other
legally authorized Person selected by or acceptable to Agent in its sole
discretion (each, an "L/C Issuer")) for such Borrower's account and guaranteed
by Agent; provided, however, that if the L/C Issuer is a Revolving Lender, then
such Letters of Credit shall not be guaranteed by Agent but rather each
Revolving Lender shall, subject to the terms and conditions hereinafter set
forth, purchase (or be deemed to have purchased) risk participations in all such
Letters of Credit issued with the written consent of Agent, as more fully
described in paragraph (b)(ii) below. The aggregate amount of all such Letter of
Credit Obligations shall not at any time exceed the least of (i) Two Million
Dollars ($2,000,000) (the "L/C Sublimit"), and (ii) the Maximum Amount less the
aggregate outstanding principal balance of the Revolving Credit Advances and the
Swing Line Loan, and (iii) the Aggregate Borrowing Base less the aggregate
outstanding principal balance of the Revolving Credit Advances and the Swing
Line Loan. Furthermore, the aggregate amount of any Letter of Credit Obligations
incurred on behalf of any Borrower shall not at any time exceed such Borrower's
separate Borrowing Base less the aggregate principal balance of the Revolving
Credit Advances and the Swing Line Loan to such Borrower. No such Letter of
Credit shall have an expiry date which is more than one year following the date
of issuance thereof, and neither Agent nor Revolving Lenders shall be under any
obligation to incur Letter of Credit Obligations in respect of, or purchase risk
participations in, any Letter of Credit having an expiry date which is later
than the Commitment Termination Date.
(b)(i) Advances Automatic; Participations. In the event that Agent or any
Revolving Lender shall make any payment on or pursuant to any Letter of Credit
Obligation, such payment shall then be deemed automatically to constitute a
Revolving Credit Advance to the applicable Borrower under Section 1.1(a) of the
Agreement regardless of whether a Default or Event of Default shall have
occurred and be continuing and notwithstanding any Borrower's failure to satisfy
the conditions precedent set forth in Section 2, and each Revolving Lender shall
be obligated to pay its Pro Rata Share thereof in accordance with the Agreement.
The failure of any Revolving Lender to make available to Agent for Agent's own
account its Pro Rata Share of any such Revolving Credit Advance or payment by
Agent under or in respect of a Letter of Credit shall not relieve any other
Revolving Lender of its obligation hereunder to make available to Agent its Pro
Rata Share thereof, but no Revolving Lender shall be responsible for the failure
of any other Revolving Lender to make available such other Revolving Lender's
Pro Rata Share of any such payment.
B-1
(ii) If it shall be illegal or unlawful for any Borrower to incur Revolving
Credit Advances as contemplated by paragraph (b)(i) above because of an Event of
Default described in Section 8.1(h) or (i) or otherwise or if it shall be
illegal or unlawful for any Revolving Lender to be deemed to have assumed a
ratable share of the reimbursement obligations owed to an L/C Issuer, or if the
L/C Issuer is a Revolving Lender, then (i) immediately and without further
action whatsoever, each Revolving Lender shall be deemed to have irrevocably and
unconditionally purchased from Agent (or such L/C Issuer, as the case may be) an
undivided interest and participation equal to such Revolving Lender's Pro Rata
Share (based on the Revolving Loan Commitments) of the Letter of Credit
Obligations in respect of all Letters of Credit then outstanding and (ii)
thereafter, immediately upon issuance of any Letter of Credit, each Revolving
Lender shall be deemed to have irrevocably and unconditionally purchased from
Agent (or such L/C Issuer, as the case may be) an undivided interest and
participation in such Revolving Lender's Pro Rata Share (based on the Revolving
Loan Commitments) of the Letter of Credit Obligations with respect to such
Letter of Credit on the date of such issuance. Each Revolving Lender shall fund
its participation in all payments or disbursements made under the Letters of
Credit in the same manner as provided in the Agreement with respect to Revolving
Credit Advances.
(c) Cash Collateral. If Borrowers are required to provide cash collateral
for any Letter of Credit Obligations pursuant to the Agreement prior to the
Commitment Termination Date, each Borrower will pay to Agent for the benefit of
Revolving Lenders cash or cash equivalents acceptable to Agent ("Cash
Equivalents") in an amount equal to 105% of the maximum amount then available to
be drawn under each applicable Letter of Credit outstanding for the benefit of
such Borrower. Such funds or Cash Equivalents shall be held by Agent in a cash
collateral account (the "Cash Collateral Account") maintained at a bank or
financial institution acceptable to Agent. The Cash Collateral Account shall be
in the name of the applicable Borrower and shall be pledged to, and subject to
the control of, Agent, for the benefit of Agent and Lenders, in a manner
satisfactory to Agent. Each Borrower hereby pledges and grants to Agent, on
behalf of Lenders, a security interest in all such funds and Cash Equivalents
held in the Cash Collateral Account from time to time and all proceeds thereof,
as security for the payment of all amounts due in respect of the Letter of
Credit Obligations and other Obligations, whether or not then due. The
Agreement, including this Annex B, shall constitute a security agreement under
applicable law.
If any Letter of Credit Obligations, whether or not then due and payable,
shall for any reason be outstanding on the Commitment Termination Date,
Borrowers shall either (i) provide cash collateral therefor in the manner
described above, or (ii) cause all such Letters of Credit and guaranties thereof
to be canceled and returned, or (iii) deliver a stand-by letter (or letters) of
credit in guaranty of such Letter of Credit Obligations, which stand-by letter
(or letters) of credit shall be of like tenor and duration (plus thirty (30)
additional days) as, and in an amount equal to 105% of, the aggregate maximum
amount then available to be drawn under, the Letters of Credit to which such
outstanding Letter of Credit Obligations relate and shall be issued by a Person,
and shall be subject to such terms and conditions, as are be satisfactory to
Agent in its sole discretion.
B-2
From time to time after funds are deposited in the Cash Collateral Account
by any Borrower, whether before or after the Commitment Termination Date, Agent
may apply such funds or Cash Equivalents then held in the Cash Collateral
Account to the payment of any amounts, in such order as Agent may elect, as
shall be or shall become due and payable by such Borrower to Lenders with
respect to such Letter of Credit Obligations of such Borrower and, upon the
satisfaction in full of all Letter of Credit Obligations of such Borrower, to
any other Obligations of any Borrower then due and payable.
No Borrower nor any Person claiming on behalf of or through any Borrower
shall have any right to withdraw any of the funds or Cash Equivalents held in
the Cash Collateral Account, except that upon the termination of all Letter of
Credit Obligations and the payment of all amounts payable by Borrowers to
Lenders in respect thereof, any funds remaining in the Cash Collateral Account
shall be applied to other Obligations when due and owing and upon payment in
full of such Obligations, any remaining amount shall be paid to Borrowers or as
otherwise required by law.
(d) Fees and Expenses. Borrowers agree to pay to Agent for the benefit of
Revolving Lenders, as compensation to such Lenders for Letter of Credit
Obligations incurred hereunder, (x) all costs and expenses incurred by Agent or
any Lender on account of such Letter of Credit Obligations, and (y) for each
month during which any Letter of Credit Obligation shall remain outstanding, a
fee (the "Letter of Credit Fee") in an amount equal to one and three-quarters
percent (1.75%) multiplied by the maximum amount available from time to time to
be drawn under the applicable Letter of Credit. Such fee shall be paid to Agent
for the benefit of the Revolving Lenders in arrears, on the first day of each
month. In addition, Borrowers shall pay to any L/C Issuer, on demand, such fees
(including all per annum fees), charges and expenses of such L/C Issuer in
respect of the issuance, negotiation, acceptance, amendment, transfer and
payment of such Letter of Credit or otherwise payable pursuant to the
application and related documentation under which such Letter of Credit is
issued.
(e) Request for Incurrence of Letter of Credit Obligations. Borrower
Representative shall give Agent at least two (2) Business Days prior written
notice requesting the incurrence of any Letter of Credit Obligation, specifying
the date such Letter of Credit Obligation is to be incurred, identifying the
beneficiary and the Borrower to which such Letter of Credit Obligation relates
and describing the nature of the transactions proposed to be supported thereby.
The notice shall be accompanied by the form of the Letter of Credit (which shall
be acceptable to the L/C Issuer) to be guarantied and, to the extent not
previously delivered to Agent, copies of all agreements between any Borrower and
the L/C Issuer pertaining to the issuance of Letters of Credit. Notwithstanding
anything contained herein to the contrary, Letter of Credit applications by
Borrower Representative and approvals by Agent and the L/C Issuer may be made
and transmitted pursuant to electronic codes and security measures mutually
agreed upon and established by and among Borrower Representative, Agent and the
L/C Issuer.
B-3
(f) Obligation Absolute. The obligation of Borrowers to reimburse Agent and
Revolving Lenders for payments made with respect to any Letter of Credit
Obligation shall be absolute, unconditional and irrevocable, without necessity
of presentment, demand, protest or other formalities, and the obligations of
each Revolving Lender to make payments to Agent with respect to Letters of
Credit shall be unconditional and irrevocable. Such obligations of Borrowers and
Revolving Lenders shall be paid strictly in accordance with the terms hereof
under all circumstances including the following circumstances:
(i) any lack of validity or enforceability of any Letter of Credit or
the Agreement or the other Loan Documents or any other agreement;
(ii) the existence of any claim, set-off, defense or other right which
any Borrower or any of their respective Affiliates or any Lender may at any
time have against a beneficiary or any transferee of any Letter of Credit
(or any Persons or entities for whom any such transferee may be acting),
Agent, any Lender, or any other Person, whether in connection with the
Agreement, the Letter of Credit, the transactions contemplated herein or
therein or any unrelated transaction (including any underlying transaction
between any Borrower or any of their respective Affiliates and the
beneficiary for which the Letter of Credit was procured);
(iii) any draft, demand, certificate or any other document presented
under any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) payment by Agent (except as otherwise expressly provided in
paragraph (g)(ii)(C) below) or any L/C Issuer under any Letter of Credit or
guaranty thereof against presentation of a demand, draft or certificate or
other document which does not comply with the terms of such Letter of
Credit or such guaranty;
(v) any other circumstance or happening whatsoever, which is similar
to any of the foregoing; or
(vi) the fact that a Default or an Event of Default shall have
occurred and be continuing.
(g) Indemnification; Nature of Lenders' Duties. (i) In addition to amounts
payable as elsewhere provided in the Agreement, Borrowers hereby agree to pay
and to protect, indemnify, and save harmless Agent and each Lender from and
against any and all claims, demands, liabilities, damages, losses, costs,
charges and expenses (including attorneys' fees and allocated costs of internal
counsel) which Agent or any Lender may incur or be subject to as a consequence,
direct or indirect, of (A) the issuance of any Letter of Credit or guaranty
thereof, or (B) the failure of Agent or any Lender seeking indemnification or of
any L/C Issuer to honor a demand for payment under any Letter of Credit or
guaranty thereof as a result of any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto government or
Governmental Authority, in each case
B-4
other than to the extent solely as a result of the gross negligence or willful
misconduct of Agent or such Lender (as finally determined by a court of
competent jurisdiction).
(ii) As between Agent and any Lender and Borrowers, Borrowers assume all
risks of the acts and omissions of, or misuse of any Letter of Credit by
beneficiaries of any Letter of Credit. In furtherance and not in limitation of
the foregoing, to the fullest extent permitted by law neither Agent nor any
Lender shall be responsible: (A) for the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document issued by any party in connection
with the application for and issuance of any Letter of Credit, even if it should
in fact prove to be in any or all respects invalid, insufficient, inaccurate,
fraudulent or forged; (B) for the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign any 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; (C) for
failure of the beneficiary of any Letter of Credit to comply fully with
conditions required in order to demand payment under such Letter of Credit;
provided that, in the case of any payment by Agent under any Letter of Credit or
guaranty thereof, Agent shall be liable to the extent such payment was made
solely as a result of its gross negligence or willful misconduct (as finally
determined by a court of competent jurisdiction) in determining that the demand
for payment under such Letter of Credit or guaranty thereof complies on its face
with any applicable requirements for a demand for payment under such Letter of
Credit or guaranty thereof; (D) for errors, omissions, interruptions or delays
in transmission or delivery of any messages, by mail, cable, telegraph, telex or
otherwise, whether or not they be in cipher; (E) for errors in interpretation of
technical terms; (F) for any loss or delay in the transmission or otherwise of
any document required in order to make a payment under any Letter of Credit or
guaranty thereof or of the proceeds thereof; (G) for the credit of the proceeds
of any drawing under any Letter of Credit or guaranty thereof; and (H) for any
consequences arising from causes beyond the control of Agent or any Lender. None
of the above shall affect, impair, or prevent the vesting of any of Agent's or
any Lender's rights or powers hereunder or under the Agreement.
(iii) Nothing contained herein shall be deemed to limit or to expand any
waivers, covenants or indemnities made by Borrowers in favor of any L/C Issuer
in any letter of credit application, reimbursement agreement or similar
document, instrument or agreement between or among Borrowers and such L/C
Issuer.
B-5
ANNEX C (Section 1.8)
to
CREDIT AGREEMENT
CASH MANAGEMENT SYSTEMS
Each Borrower shall, and shall cause its Subsidiaries to, establish and
maintain the Cash Management Systems described below:
(a) On or before the Closing Date or, if later, on the date a Person
becomes a Borrower under the Agreement and until the Termination Date, each
Borrower shall (i) establish lock boxes ("Lock Boxes") at one or more of the
banks set forth on Disclosure Schedule (3.19), and shall request in writing and
otherwise take such reasonable steps to ensure that all Account Debtors forward
payment directly to such Lock Boxes, and (ii) deposit and cause its Subsidiaries
to deposit or cause to be deposited promptly, and in any event no later than the
first Business Day after the date of receipt thereof, all cash (other than
insurance proceeds deposited by Borrowers in accordance with Section 5.4(c)),
checks, drafts or other similar items of payment relating to or constituting
payments made in respect of any and all Collateral (whether or not otherwise
delivered to a Lock Box) into bank accounts in such Borrower's name or any such
Subsidiary's name (collectively, the "Borrower Accounts") at banks set forth on
Disclosure Schedule (3.19) (each, a "Relationship Bank"). On or before the
Closing Date, each Borrower shall have established a concentration account in
its name (each a "Concentration Account" and collectively, the "Concentration
Accounts") at the bank or banks which shall be designated as the Concentration
Account bank for each such Borrower on Disclosure Schedule (3.19) (each a
"Concentration Account Bank" and collectively, the "Concentration Account
Banks"), which bank or banks shall be satisfactory to Agent. Each Borrower, any
of its Affiliates, employees, agents or other Persons acting for or in concert
with such Borrower, shall, acting as trustee for Agent, receive any monies,
checks, drafts or other similar items of payment relating to or constituting
payments made in respect of any Collateral which come into the possession or
under control of such Borrower or any such Affiliates, employees, agents or
other Persons, and immediately upon receipt thereof, such Borrower or other
Persons shall remit the same or cause the same to be deposited, in kind, into a
Concentration Account.
(b) On or before the Closing Date (or such later date as may be permitted
by clause (a) or clause (c) or as Agent shall consent to in writing), each
Concentration Account Bank, each bank where a Disbursement Account is located
and all other Relationship Banks, shall have entered into tri-party blocked
account agreements with Agent, for the benefit of itself and Lenders, and the
applicable Borrower and Subsidiaries thereof, as applicable, in form and
substance acceptable to Agent, which shall become operative on or prior to the
Closing Date. Each such blocked account agreement shall provide, among other
things, that (i) all items of payment deposited in such account and proceeds
thereof deposited in the applicable Concentration Account are held by such bank
as agent or bailee-in-possession for Agent, on behalf of Lenders, (ii) the
C-1
bank executing such agreement has no rights of setoff or recoupment or any other
claim against such account, as the case may be, other than for payment of its
service fees and other charges directly related to the administration of such
account and for returned checks or other items of payment, and (iii) from and
after the Closing Date such bank agrees to immediately forward all amounts
received in the applicable Concentration Account to the Collection Account
through daily sweeps from such Concentration Account into the Collection
Account. No Borrower shall, or shall cause or permit any Subsidiary thereof to,
accumulate or maintain cash in disbursement or payroll accounts as of any date
of determination in excess of checks outstanding against such accounts as of
that date and amounts necessary to meet minimum balance requirements; provided
that Verdant may maintain a cash balance in account no. ▇▇-▇▇▇-▇▇▇ maintained at
Bankers Trust Company in an aggregate amount not to exceed $3,000 at any one
time.
(c) So long as no Default or Event of Default has occurred and is
continuing, Borrowers may amend Disclosure Schedule (3.19) to add or replace a
Relationship Bank, Lock Box or Borrower Account or to replace any Concentration
Account or any Disbursement Account; provided, however, that (i) Agent shall
have consented in writing in advance to the opening of such account or Lock Box
with the relevant bank and (ii) prior to the time of the opening of such account
or Lock Box, the applicable Borrower and/or the Subsidiaries thereof, as
applicable, and such bank shall have executed and delivered to Agent a tri-party
blocked account agreement, in form and substance satisfactory to Agent.
Borrowers shall close any of their accounts (and establish replacement accounts
in accordance with the foregoing sentence) promptly and in any event within
thirty (30) days of notice from Agent that the creditworthiness of any bank
holding an account is no longer acceptable in Agent's reasonable judgment, or as
promptly as practicable and in any event within sixty (60) days of notice from
Agent that the operating performance, funds transfer and/or availability
procedures or performance with respect to accounts or lockboxes of the bank
holding such accounts or Agent's liability under any tri-party blocked account
agreement with such bank is no longer acceptable in Agent's reasonable judgment.
(d) The Lock Boxes, Borrower Accounts, Disbursement Accounts and the
Concentration Accounts shall be cash collateral accounts, with all cash, checks
and other similar items of payment in such accounts securing payment of the
Loans and all other Obligations, and in which each Borrower and each Subsidiary
thereof shall have granted a Lien to Agent, on behalf of itself and Lenders,
pursuant to the Security Agreement.
(e) All amounts deposited in the Collection Account shall be deemed
received by Agent in accordance with Section 1.10 of the Agreement and shall be
applied (and allocated) by Agent in accordance with Section 1.11 of the
Agreement. In no event shall any amount be so applied unless and until such
amount shall have been credited in immediately available funds to the Collection
Account.
(f) Each Borrower may maintain, in its name, an account (each a
"Disbursement Account" and collectively, the "Disbursement Accounts") at a bank
acceptable to Agent into which Agent shall, from time to time, deposit proceeds
of Revolving Credit Advances and Swing Line
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Advances made to such Borrower pursuant to Section 1.1 for use by such Borrower
solely in accordance with the provisions of Section 1.4.
(g) Each Borrower shall and shall cause its Affiliates, officers,
employees, agents, directors or other Persons acting for or in concert with such
Borrower (each a "Related Person") to (i) hold in trust for Agent, for the
benefit of itself and Lenders, all checks, cash and other items of payment
received by such Borrower or any such Related Person, and (ii) within one (1)
Business Day after receipt by such Borrower or any such Related Person of any
checks, cash or other items or payment, deposit the same into a Borrower Account
of such Borrower. Each Borrower and each Related Person thereof acknowledges and
agrees that all cash, checks or items of payment constituting proceeds of
Collateral are the property of Agent and Lenders. All proceeds of the sale or
other disposition of any Collateral, shall be deposited directly into the
applicable Borrower Accounts.
C-3
ANNEX D (Section 2.1(a))
to
CREDIT AGREEMENT
SCHEDULE OF ADDITIONAL CLOSING DOCUMENTS
In addition to, and not in limitation of, the conditions described in Section
2.1 of the Agreement, pursuant to Section 2.1(a), the following items must be
received by Lender in form and substance satisfactory to Agent on or prior to
the Closing Date (each capitalized term used but not otherwise defined herein
shall have the meaning ascribed thereto in Annex A to the Agreement):
A. Appendices. All Appendices to the Agreement, in form and substance
satisfactory to Agent.
B. Revolving Notes, Swing Line Notes and Terms Notes. Duly executed
originals of the Revolving Notes, Swing Line Notes and Term Notes dated the
Closing Date.
C. Security Agreements. Duly executed originals of modifications requested
by Agent to the Security Agreements and all instruments, documents and
agreements executed pursuant thereto.
D. Insurance. Satisfactory evidence that the insurance policies required by
Section 5.4 are in full force and effect, together with appropriate evidence
showing loss payable and/or additional insured clauses or endorsements, as
requested by Agent, in favor of Agent, on behalf of Lenders.
E. Security Interests and Code Filings. (a) Evidence satisfactory to Agent
that Agent (for the benefit of itself and Lenders) has a valid and perfected
first priority security interest in the Collateral, including (i) such documents
duly executed by each Credit Party (including financing statements under the
Code and other applicable documents under the laws of any jurisdiction with
respect to the perfection of Liens) as Agent may request in order to perfect its
security interests in the Collateral and (ii) copies of Code search reports
listing all effective financing statements that name any Credit Party as debtor,
together with copies of such financing statements, none of which shall cover the
Collateral, except for Permitted Encumbrances.
(b) Evidence satisfactory to Agent, including copies, of all UCC-1 and
other financing statements filed in favor of any Credit Party with respect to
each location, if any, at which Inventory may be consigned.
(c) Control Letters from (i) all issuers of uncertificated securities and
financial assets held by each Borrower, (ii) all securities intermediaries with
respect to all securities accounts and securities entitlements of each Borrower
and (iii) all futures commission agents and
D-1
clearing houses with respect to all commodities contracts and commodities
accounts held by any Borrower.
F. Intellectual Property Security Agreements. Duly executed originals of
such modifications as Agent may request to Trademark Security Agreements,
Copyright Security Agreements and Patent Security Agreements, each dated the
Closing Date and signed by each Credit Party which owns Trademarks, Copyrights
and/or Patents, as applicable, all in form and substance satisfactory to Agent,
together with all instruments, documents and agreements executed pursuant
thereto.
G. Guarantees. Duly executed originals of such modifications as Agent may
request to the Guarantees and all documents, instruments and agreements executed
pursuant thereto.
H. Initial Borrowing Base Certificate. Duly executed originals of an
initial Borrowing Base Certificate from each Borrower, dated the Closing Date,
reflecting information concerning Eligible Accounts and Eligible Inventory of
such Borrower.
I. Notice of Revolving Credit Advance. Duly executed originals of a Notice
of Revolving Credit Advance, dated the Closing Date, with respect to the
Revolving Credit Advance, if any, to be requested by Borrower Representative on
the Closing Date.
J. Cash Management System; Blocked Account Agreements. Evidence
satisfactory to Agent that, as of the Closing Date, Cash Management Systems
complying with Annex C to the Agreement have been established and are currently
being maintained in the manner set forth in such Annex C, together with copies
of duly executed tri-party blocked account and lock box agreements, satisfactory
to Agent, with the banks as required by Annex C.
K. Charter and Good Standing. For each Credit Party, such Person's (a)
charter and all amendments thereto, (b) good standing certificates in its state
of incorporation and (c) good standing certificates and certificates of
qualification to conduct business in each jurisdiction where its ownership or
lease of property or the conduct of its business requires such qualification,
each dated a recent date prior to the Closing Date and certified by the
applicable Secretary of State or other authorized Governmental Authority.
L. Bylaws and Resolutions. For each Credit Party, (a) such Person's bylaws,
together with all amendments thereto and (b) resolutions of such Person's Board
of Directors (and, if necessary), approving and authorizing the execution,
delivery and performance of the Loan Documents to which such Person is a party
and the transactions to be consummated in connection therewith, each certified
as of the Closing Date by such Person's corporate secretary or an assistant
secretary as being in full force and effect without any modification or
amendment.
M. Incumbency Certificates. For each Credit Party, signature and incumbency
certificates of the officers of each such Person executing any of the Loan
Documents, certified as
D-2
of the Closing Date by such Person's corporate secretary or an assistant
secretary as being true, accurate, correct and complete.
N. Opinions of Counsel. Duly executed originals of opinions of ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇ LLP, counsel for the Credit Parties, and such other local counsel
reasonably requested by Agent, all in form and substance satisfactory to Agent
and its counsel, dated the Closing Date, and each accompanied by a letter
addressed to such counsel from the Credit Parties, authorizing and directing
such counsel to address its opinion to Agent, on behalf of Lenders, and to
include in such opinion an express statement to the effect that Agent, on behalf
of Lenders, are authorized to rely on such opinion.
O. Pledge Agreement. Duly executed originals of such modifications as Agent
may request to each of the Pledge Agreement accompanied by (as applicable) (a)
share certificates representing all of the outstanding Stock being pledged
pursuant to such Pledge Agreement and undated stock powers for such share
certificates executed in blank and (b) the original Intercompany Notes and other
instruments evidencing Indebtedness being pledged pursuant to such Pledge
Agreement, duly endorsed in blank.
P. Warrant. Duly executed original Warrant.
Q. Accountants' Letters. Within thirty (30) calendar days of the Closing
Date, a letter from the Credit Parties to their independent auditors authorizing
the independent certified public accountants of the Credit Parties to
communicate with Agent and Lenders in accordance with Section 4.2, and a letter
from such auditors acknowledging Lenders' reliance on the auditor's
certification of past and future Financial Statements.
R. Appointment of Agent for Service. An appointment of CT Corporation as
each Credit Party's agent for service of process.
S. Officer's Certificate. Agent shall have received duly executed originals
of a certificate of the Chief Executive Officer or Chief Financial Officer of
each Borrower, dated the Closing Date, stating that, since December 31, 1998 (a)
no event or condition has occurred or is existing which could reasonably be
expected to have a Material Adverse Effect; (b) there has been no material
adverse change in the industry in which any Borrower operates; (c) no Litigation
has been commenced which, if successful, would have a Material Adverse Effect or
could challenge any of the transactions contemplated by the Agreement and the
other Loan Documents; (d) there have been no Restricted Payments made by any
Credit Party; and (e) there has been no material increase in liabilities,
liquidated or contingent, and no material decrease in assets of any Borrower or
any of its Subsidiaries.
T. Fee Letter. Duly executed originals of the GE Capital Fee Letter.
D-3
U. Waivers. Agent, on behalf of Lenders, shall have received landlord
waivers and consents and bailee letters in form and substance satisfactory to
Agent, in each case as required pursuant to Section 5.9.
V. Subordination Agreement. Agent shall have received originals of such
modifications as Agent may request to the duly executed Subordination Agreement,
in form and substance reasonably satisfactory to Agent, in its sole discretion,
as Agent shall have deemed necessary or appropriate, together with a copy of the
duly executed Subordinated Note.
W. Intercreditor Agreement. Agent shall have received originals of such
modifications as Agent may request to the duly executed Intercreditor Agreement
and intercreditor agreement with ▇▇▇▇▇▇▇▇ ▇. Law dated April 22, 1998, in form
and substance reasonably satisfactory to Agent, in its sole discretion, as Agent
shall have deemed necessary or appropriate, together with a copy of each duly
executed SureCo Note.
X. Other Documents. Such other certificates, documents and agreements
respecting any Credit Party as Agent may, in its sole discretion, request.
D-4
ANNEX E (Section 4.1(a))
to
CREDIT AGREEMENT
FINANCIAL STATEMENTS AND PROJECTIONS -- REPORTING
Borrowers shall deliver or cause to be delivered to Agent or to Agent and
Lenders, as indicated, the following:
(a) Monthly Financials. To Agent and Lenders, within thirty (30) days after
the end of each Fiscal Month, financial information regarding Borrowers and
their Subsidiaries, certified by the Chief Financial Officer of Borrower
Representative, consisting of consolidated and consolidating (i) unaudited
balance sheets as of the close of such Fiscal Month and the related statements
of income and cash flow for that portion of the Fiscal Year ending as of the
close of such Fiscal Month; (ii) unaudited statements of income and cash flows
for such Fiscal Month, setting forth in comparative form the figures for the
corresponding period in the prior year and the figures contained in the
Projections for such Fiscal Year, all prepared in accordance with GAAP (subject
to normal year-end adjustments); and (iii) a summary of the outstanding balance
of all Intercompany Notes as of the last day of that Fiscal Month. Such
financial information shall be accompanied by the certification of the Chief
Financial Officer of Borrower Representative that (i) such financial information
presents fairly in accordance with GAAP (subject to normal year-end adjustments)
the financial position and results of operations of Borrowers and their
Subsidiaries, on a consolidated and consolidating basis, in each case as at the
end of such month and for the period then ended and (ii) any other information
presented is true, correct and complete in all material respects and that there
was no Default or Event of Default in existence as of such time or, if a Default
or Event of Default shall have occurred and be continuing, describing the nature
thereof and all efforts undertaken to cure such Default or Event of Default. In
addition, Borrowers shall deliver to Agent and Lenders, within thirty (30) days
after the end of each Fiscal Month, a management discussion and analysis which
includes a comparison to budget for that Fiscal Month and a comparison of
performance for that Fiscal Month to the corresponding period in the prior year;
(b) Quarterly Financials. To Agent and Lenders, within forty-five (45) days
after the end of each Fiscal Quarter, consolidated and consolidating financial
information regarding Borrowers and their Subsidiaries, certified by the Chief
Financial Officer of Borrower Representative, including (i) unaudited balance
sheets as of the close of such Fiscal Quarter and the related statements of
income and cash flow for that portion of the Fiscal Year ending as of the close
of such Fiscal Quarter and (ii) unaudited statements of income and cash flows
for such Fiscal Quarter, in each case setting forth in comparative form the
figures for the corresponding period in the prior year and the figures contained
in the Projections for such Fiscal Year, all prepared in accordance with GAAP
(subject to normal year-end adjustments). Such financial information shall be
accompanied by (A) a statement in reasonable detail (each, a "Compliance
Certificate")
E-1
showing the calculations used in determining compliance with each of the
financial covenants set forth on Annex G which is tested on a quarterly basis
and (B) the certification of the Chief Financial Officer of Borrower
Representative that (i) such financial information presents fairly in accordance
with GAAP (subject to normal year-end adjustments) the financial position,
results of operations and statements of cash flows of Borrowers and their
Subsidiaries, on both a consolidated and consolidating basis, as at the end of
such Fiscal Quarter and for the period then ended, (ii) any other information
presented is true, correct and complete in all material respects and that there
was no Default or Event of Default in existence as of such time or, if a Default
or Event of Default shall have occurred and be continuing, describing the nature
thereof and all efforts undertaken to cure such Default or Event of Default;
(c) Operating Plan. To Agent and Lenders, as soon as available, but not
later than thirty (30) days after the end of each Fiscal Year, an annual
operating plan for each Borrower, approved by the Board of Directors of such
Borrower, for the following year, which will include a statement of all of the
material assumptions on which such plan is based, will include monthly balance
sheets and a monthly budget for the following year and will integrate sales,
gross profits, operating expenses, operating profit, cash flow projections and
Borrowing Availability projections all prepared on the same basis and in similar
detail as that on which operating results are reported (and in the case of cash
flow projections, representing management's good faith estimates of future
financial performance based on historical performance), and including plans for
personnel, Capital Expenditures and facilities;
(d) Annual Audited Financials. To Agent and Lenders, within ninety (90)
days after the end of each Fiscal Year, audited Financial Statements for
Borrowers and their Subsidiaries on a consolidated basis (and internal
consolidating basis), consisting of balance sheets and statements of income and
retained earnings and cash flows, setting forth in comparative form in each case
the figures for the previous Fiscal Year and the figures contained in the
Projections for such Fiscal Year, which Financial Statements shall be prepared
in accordance with GAAP, certified without qualification, by an independent
certified public accounting firm of national standing or otherwise acceptable to
Agent. Such Financial Statements shall be accompanied by (i) a statement
prepared in reasonable detail showing the calculations used in determining
compliance with each of the financial covenants set forth on Annex G, (ii) a
report from such accounting firm to the effect that, in connection with their
audit examination, nothing has come to their attention to cause them to believe
that a Default or Event of Default has occurred (or specifying those Defaults
and Events of Default that they became aware of), it being understood that such
audit examination extended only to accounting matters and that no special
investigation was made with respect to the existence of Defaults or Events of
Default, (iii) a letter addressed to Agent, on behalf of itself and Lenders, in
form and substance reasonably satisfactory to Agent and subject to standard
qualifications taken by nationally recognized accounting firms, signed by such
accounting firm acknowledging that Agent and Lenders are entitled to rely upon
such accounting firm's certification of such audited Financial Statements, (iv)
the annual letters to such accountants in connection with their audit
examination detailing contingent liabilities and material litigation matters,
and (v) the certification of the Chief Executive Officer or Chief Financial
E-2
Officer of Borrowers that all such Financial Statements present fairly in
accordance with GAAP the financial position, results of operations and
statements of cash flows of Borrowers and their Subsidiaries on a consolidated
and consolidating basis, as at the end of such year and for the period then
ended, and that there was no Default or Event of Default in existence as of such
time or, if a Default or Event of Default shall have occurred and be continuing,
describing the nature thereof and all efforts undertaken to cure such Default or
Event of Default;
(e) Management Letters. To Agent and Lenders, within five (5) Business Days
after receipt thereof by any Credit Party, copies of all management letters,
exception reports or similar letters or reports received by such Credit Party
from its independent certified public accountants;
(f) Default Notices. To Agent and Lenders, as soon as practicable, and in
any event within five (5) Business Days after an executive officer of any
Borrower has actual knowledge of the existence of any Default, Event of Default
or other event which has had a Material Adverse Effect, telephonic or telecopied
notice specifying the nature of such Default or Event of Default or other event,
including the anticipated effect thereof, which notice, if given telephonically,
shall be promptly confirmed in writing on the next Business Day;
(g) SEC Filings and Press Releases. To Agent and Lenders, promptly upon
their becoming available, copies of: (i) all Financial Statements, reports,
notices and proxy statements made publicly available by any Credit Party to its
security holders; (ii) all regular and periodic reports and all registration
statements and prospectuses, if any, filed by any Credit Party with any
securities exchange or with the Securities and Exchange Commission or any
governmental or private regulatory authority; and (iii) all press releases and
other statements made available by any Credit Party to the public concerning
material adverse changes or developments in the business of any such Person;
(h) Subordinated Debt and Equity Notices. To Agent, as soon as practicable,
copies of all material written notices given or received by any Credit Party
with respect to any Subordinated Debt or Stock of such Person, and, within two
(2) Business Days after any Credit Party obtains knowledge of any matured or
unmatured event of default with respect to any Subordinated Debt, notice of such
event of default;
(i) Supplemental Schedules. To Agent, supplemental disclosures, if any,
required by Section 5.6 of the Agreement;
(j) Litigation. To Agent in writing, promptly upon learning thereof,
written notice of any Litigation commenced or threatened against any Credit
Party that (i) seeks damages in excess of $100,000, (ii) seeks injunctive
relief, (iii) is asserted or instituted against any Plan, its fiduciaries or its
assets or against any Credit Party or ERISA Affiliate in connection with any
Plan, (iv) alleges criminal misconduct by any Credit Party, (v) alleges the
violation of any law
E-3
regarding, or seeks remedies in connection with, any Environmental Liabilities
or (vi) involves any product recall;
(k) Insurance Notices. To Agent, disclosure of losses or casualties
required by Section 5.4 of the Agreement;
(l) Default and Other Notices. To Agent, copies of (i) any and all default
notices received under or with respect to any leased location or public
warehouse where Collateral is located, and (ii) such other notices or documents
as Agent may request in its reasonable discretion;
(m) Projections. To Agent and Lenders, within thirty (30) days after the
Closing Date, Projections for the one year period beginning on January 1, 1999
on a month by month basis and for the three year period beginning January 1,
2000 on a year by year basis. Such Projections shall be accompanied by the
certification of the Chief Financial Officer of Borrower Representative that the
Projections are based upon estimates and assumptions stated therein, all of
which Borrowers believe to be reasonable and fair in light of current conditions
and current facts known to Borrowers and, as of the date of such Projections,
reflect Borrowers' good faith and reasonable estimated of the future financial
performance of Borrowers and of the other information projected therein for the
period set forth therein.
(n) Acquisition Balance Sheet. To Agent and Lenders, within ninety (90)
days after the closing date of each Permitted Acquisition, consolidated and
consolidating balance sheets of Borrowers and their Subsidiaries, prepared in
accordance with GAAP, demonstrating the solvency of all such Persons and
affirming the Fair Salable Value Balance Sheet delivered previously to Agent and
Lenders in connection with such Permitted Acquisition, certified by the Chief
Financial Officer of Borrower Representative in the same manner as required by
paragraph (a) of this Annex E; and
(o) Other Documents. To Agent and Lenders, such other financial and other
information respecting any Credit Party's business or financial condition as
Agent or any Lender shall, from time to time, request.
E-4
ANNEX F (Section 4.1(b))
to
CREDIT AGREEMENT
COLLATERAL REPORTS
Borrowers shall deliver or cause to be delivered the following:
(a) To Agent, upon its request, and in no event less frequently than five
(5) Business Days after the end of each Fiscal Month (together with a copy of
all or any part of such delivery requested by any Lender in writing after the
Closing Date), each of the following:
(i) a Borrowing Base Certificate with respect to each Borrower, in
each case accompanied by such supporting detail and documentation as shall
be requested by Agent in its reasonable discretion;
(ii) with respect to each Borrower, a summary of Inventory by location
and type with a supporting perpetual Inventory report, in each case
accompanied by such supporting detail and documentation as shall be
requested by Agent in its reasonable discretion; and
(iii) with respect to each Borrower, a monthly trial balance showing
Accounts outstanding aged from invoice due date as follows: 1 to 30 days,
31 to 60 days, 61 to 90 days and 91 days or more, accompanied by such
supporting detail and documentation as shall be requested by Agent in its
reasonable discretion.
(b) To Agent, on a weekly basis or at such more frequent intervals as Agent
may request from time to time (together with a copy of all or any part of such
delivery requested by any Lender in writing after the Closing Date), collateral
reports with respect to each Borrower, including all additions and reductions
(cash and non-cash) with respect to Accounts of such Borrower, in each case
accompanied by such supporting detail and documentation as shall be requested by
Agent in its reasonable discretion;
(c) To Agent, at the time of delivery of each of the monthly Financial
Statements delivered pursuant to Annex E, a reconciliation of the Accounts trial
balance and month-end Inventory reports of each Borrower to such Borrower's
general ledger and monthly Financial Statements delivered pursuant to such Annex
E, in each case accompanied by such supporting detail and documentation as shall
be requested by Agent in its reasonable discretion;
(d) To Agent, at the time of delivery of each of the annual Financial
Statements delivered pursuant to Annex E, (i) a listing of government contracts
of each Borrower subject to the Federal Assignment of Claims Act of 1940; and
(ii) a list of any applications for the registration of any Patent, Trademark or
Copyright with the United States Patent and Trademark
F-1
Office, the United States Copyright Office or any similar office or agency which
any Credit Party thereof has filed in the prior Fiscal Quarter;
(e) Each Borrower, at its own expense, shall deliver to Agent the results
of each physical verification, if any, which such Borrower or any of its
Subsidiaries may in their discretion have made, or caused any other Person to
have made on their behalf, of all or any portion of their Inventory (and, if a
Default or an Event of Default shall have occurred and be continuing, each
Borrower shall, upon the request of Agent, conduct, and deliver the results of,
such physical verifications as Agent may require);
(f) Each Borrower, at its own expense, shall deliver to Agent such
appraisals of its assets as Agent may request at any time after the occurrence
and during the continuance of a Default or an Event of Default, such appraisals
to be conducted by an appraiser, and in form and substance, satisfactory to
Agent; and
(g) Such other reports, statements and reconciliations with respect to the
Borrowing Base or Collateral of any or all Credit Parties as Agent shall from
time to time request in its reasonable discretion.
F-2
ANNEX G (Section 6.10)
to
CREDIT AGREEMENT
FINANCIAL COVENANTS
Borrowers shall not breach or fail to comply with any of the following
financial covenants, each of which shall be calculated in accordance with GAAP
consistently applied:
(a) Maximum Capital Expenditures. Borrowers and their Subsidiaries on a
consolidated basis shall not make Capital Expenditures in excess of the
following amounts for each of the following Fiscal Years on a non-cumulative
basis:
Fiscal Year Amount
----------- ----------
1999 $ 500,000
2000 $ 750,000
2001 and each $1,000,000
Fiscal Year thereafter
(b) Minimum Net Worth. Borrowers and their Subsidiaries on a consolidated
basis shall maintain at all times during each Fiscal Quarter set forth below Net
Worth equal to or greater than the amount set forth opposite such Fiscal
Quarter:
Fiscal Quarter Ending Net Worth
--------------------- -----------
June 30, 1999 $10,550,000
September 30, 1999 $10,687,500
December 31, 1999 $10,825,000
March 31, 2000 $10,962,500
June 30, 2000 and each $11,100,000
Fiscal Quarter Ending thereafter
(c) Interest Coverage Ratio. Borrowers and their Subsidiaries on a
consolidated basis shall maintain an Interest Coverage Ratio as of the end of
each Fiscal Quarter calculated for the 12-month period then ended (or with
respect to the Fiscal Quarters ending on or before December 31, 1999, the period
commencing on January 1, 1999 and ending on the last day of such Fiscal Quarter)
of not less than 1.55 to 1.0.
Unless otherwise specifically provided herein, any accounting term used in
the Agreement shall have the meaning customarily given such term in accordance
with GAAP, and all financial computations hereunder shall be computed in
accordance with GAAP consistently applied.
G-1
That certain items or computations are explicitly modified by the phrase "in
accordance with GAAP" shall in no way be construed to limit the foregoing. If
any "Accounting Changes" (as defined below) occur and such changes result in a
change in the calculation of the financial covenants, standards or terms used in
the Agreement or any other Loan Document, then Borrowers, Agent and Lenders
agree to enter into negotiations in order to amend such provisions of the
Agreement so as to equitably reflect such Accounting Changes with the desired
result that the criteria for evaluating Borrowers' and their Subsidiaries'
financial condition shall be the same after such Accounting Changes as if such
Accounting Changes had not been made; provided, however, that the agreement of
Requisite Lenders to any required amendments of such provisions shall be
sufficient to bind all Lenders. "Accounting Changes" means (a) changes in
accounting principles required by the promulgation of any rule, regulation,
pronouncement or opinion by the Financial Accounting Standards Board of the
American Institute of Certified Public Accountants (or successor thereto or any
agency with similar functions), (b) changes in accounting principles concurred
in by any Borrower's certified public accountants; (c) purchase accounting
adjustments under A.P.B. 16 and/or 17 and EITF 88-16, and the application of the
accounting principles set forth in FASB 109, including the establishment of
reserves pursuant thereto and any subsequent reversal (in whole or in part) of
such reserves; and (d) the reversal of any reserves established as a result of
purchase accounting adjustments. All such adjustments resulting from
expenditures made subsequent to the Closing Date (including capitalization of
costs and expenses or payment of pre-Closing Date liabilities) shall be treated
as expenses in the period the expenditures are made and deducted as part of the
calculation of EBITDA in such period. If Agent, Borrowers and Requisite Lenders
agree upon the required amendments, then after appropriate amendments have been
executed and the underlying Accounting Change with respect thereto has been
implemented, any reference to GAAP contained in the Agreement or in any other
Loan Document shall, only to the extent of such Accounting Change, refer to
GAAP, consistently applied after giving effect to the implementation of such
Accounting Change. If Agent, Borrowers and Requisite Lenders cannot agree upon
the required amendments within thirty (30) days following the date of
implementation of any Accounting Change, then all Financial Statements delivered
and all calculations of financial covenants and other standards and terms in
accordance with the Agreement and the other Loan Documents shall be prepared,
delivered and made without regard to the underlying Accounting Change.
G-2
ANNEX H (Section 9.9(a))
to
CREDIT AGREEMENT
WIRE TRANSFER INFORMATION
Lender: General Electric Capital Corporation
Bank: Bankers Trust Company
ABA #: 021 001 033
Acct #: 50232854
Name: GECC/CF Depositary
Ref: Verdant Brands, Inc.
H-1
ANNEX I (Section 11.10)
to
CREDIT AGREEMENT
NOTICE ADDRESSES
(A) If to Lender, at
General Electric Capital Corporation
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Verdant Account Manager
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
Winston & ▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
General Electric Capital Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Counsel
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
(B) If to any Borrower, to Borrower Representative at
Verdant Brands, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
I-1
With copies to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ Center South
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
I-2
ANNEX J (from Annex A - Commitments definition)
to
CREDIT AGREEMENT
Lender Revolving Loan Commitment Term Loan Commitment
------ ------------------------- --------------------
General Electric Capital $35,000,000* $2,000,000
Corporation
* Includes a Swing Line Commitment of $3,500,000
J-1
SCHEDULE 1.1
to
CREDIT AGREEMENT
RESPONSIBLE INDIVIDUAL
General Electric Capital Corporation
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Verdant Brands Account Manager
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
J-2
