01/30/98
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AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
Dated: February 3, 1998
US $65,000,000
by and among
▇▇▇▇▇▇ PRODUCTS LTD.
as Borrower,
THE LENDERS NAMED HEREIN,
as Lenders
and
FLEET CAPITAL CORPORATION,
as Agent and Lender
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TABLE OF CONTENTS
PAGE
SECTION 1. CREDIT FACILITY...............................................1
1.1 Revolving Credit Loans........................................1
1.2 Acquisition Loan and Acquisition Loan Commitments.............3
1.3 Letters of Credit; LC Guaranties..............................4
SECTION 2. INTEREST, FEES AND CHARGES....................................5
2.1 Interest......................................................5
2.2 Computation of Interest and Fees..............................8
2.3 Letter of Credit and LC Guaranty Fees.........................8
2.4 Unused Line Fee...............................................8
2.5 Closing Fee. Borrower .......................................9
2.6 Agency Fee....................................................9
2.7 Audit and Appraisal Fees......................................9
2.8 Reimbursement of Expenses.....................................9
2.9 Bank Charges.................................................10
2.10 Capital Adequacy Charge......................................10
SECTION 3. LOAN ADMINISTRATION..........................................10
3.1 Manner of Borrowing Loans....................................10
3.2 Payments.....................................................12
3.3 Mandatory Prepayments........................................13
3.4 Application of Payments and Collections......................14
3.5 All Loans to Constitute One Obligation.......................14
3.6 Loan Account.................................................14
3.7 Statements of Account........................................14
SECTION 4. TERM AND TERMINATION.........................................15
4.1 Term of Agreement............................................15
4.2 Termination..................................................15
SECTION 5. SECURITY INTERESTS...........................................16
5.1 Security Interest in Collateral..............................16
5.2 Lien Perfection; Further Assurances..........................17
5.3 Lien on Realty...............................................17
SECTION 6. COLLATERAL ADMINISTRATION....................................18
6.1 General......................................................18
6.2 Administration of Accounts...................................19
6.3 Administration of Inventory..................................21
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6.4 Administration of Equipment..................................21
6.5 Payment of Charges...........................................22
SECTION 7. REPRESENTATIONS AND WARRANTIES...............................22
7.1 General Representations and Warranties.......................22
7.2 Continuous Nature of Representations and Warranties..........28
7.3 Survival of Representations and Warranties...................28
SECTION 8. COVENANTS AND CONTINUING AGREEMENTS..........................28
8.1 Affirmative Covenants........................................28
8.2 Negative Covenants...........................................31
8.3 Specific Financial Covenants.................................34
SECTION 9. CONDITIONS PRECEDENT.........................................34
9.1 Documentation................................................35
9.2 No Default...................................................35
9.3 Other Loan Documents.........................................35
9.4 No Litigation................................................35
9.5 Sale of ▇▇▇▇▇▇ Manufacturing Division........................35
9.6 Effectiveness of this Agreement..............................35
9.7 Conditions Precedent to Acquisition Loans....................35
SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT............36
10.1 Events of Default............................................36
10.2 Acceleration of the Obligations..............................38
10.3 Other Remedies...............................................39
10.4 Remedies Cumulative; No Waiver...............................40
SECTION 11. THE AGENT....................................................41
11.1 Authorization and Action.....................................41
11.2 Agent's Reliance, Etc........................................41
11.3 FCC and Affiliates...........................................41
11.4 Lender Credit Decision.......................................42
11.5 Indemnification..............................................42
11.6 Successor Agent..............................................42
SECTION 12. MISCELLANEOUS................................................43
12.1 Power of Attorney............................................43
12.2 INDEMNITY....................................................43
12.3 Modification of Agreement; Sale of Interest..................44
12.4 Severability.................................................47
12.5 Successors and Assigns.......................................47
12.6 Cumulative Effect; Conflict of Terms.........................47
12.7 Execution in Counterparts....................................48
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12.8 Notice.......................................................48
12.9 Lender's Consent.............................................49
12.10 Credit Inquiries.............................................49
12.11 Time of Essence..............................................49
12.12 Entire Agreement.............................................49
12.13 Interpretation...............................................49
12.14 GOVERNING LAW; CONSENT TO FORUM..............................49
12.15 WAIVERS BY BORROWER..........................................50
12.16 Publicity....................................................51
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AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is made this 3rd day
of February, 1998, by and among ▇▇▇▇▇▇ PRODUCTS LTD. ("Borrower"), a Delaware
corporation having its chief executive office at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, the lenders who are signatories hereto ("Lenders")
and FLEET CAPITAL CORPORATION ("FCC"), a Rhode Island corporation having an
office at ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as agent
for the Lenders hereunder (FCC, in such capacity, being "Agent"). Capitalized
terms used in this Agreement have the meanings assigned to them in Appendix A,
General Definitions. Accounting terms not otherwise specifically defined herein
shall be construed in accordance with GAAP consistently applied.
WHEREAS, Borrower, certain of the Lenders and Agent entered into a
certain Loan and Security Agreement dated as of July 14, 1994 (said Loan and
Security Agreement, as amended from time to time, the "Original Loan
Agreement"); and
WHEREAS, Borrowers, Lenders and Agent wish to amend and restate the
Original Loan Agreement pursuant to the terms hereof;
NOW THEREFORE, in consideration of the following terms and
conditions, the parties agree as follows:
SECTION 1. CREDIT FACILITY
Subject to the terms and conditions of, and in reliance upon the
representations and warranties made in, this Agreement and the other Loan
Documents, Lenders severally agree to make a Total Credit Facility of up to
Sixty-Five Million Dollars ($65,000,000) available upon Borrower's request
therefor, as follows:
1.1 Revolving Credit Loans.
1.1.1 Loans and Reserves. (A) The aggregate amount of the Revolving
Credit Loans to be made by each Lender (such Lender's "Revolving Credit Loan
Commitment"), pursuant to the terms hereof, shall be the amount set below such
Lender's name on the signature pages hereof. The aggregate principal amount of
the Revolving Credit Loan Commitments is Sixty-Five Million Dollars
($65,000,000). The percentage equal to the quotient of (x) each Lender's
Revolving Credit Loan Commitment, divided by (y) the aggregate of all Revolving
Credit Loan Commitments, is that Lender's "Revolving Credit Percentage". Subject
to all of the terms and conditions of this Agreement, each Lender agrees, for so
long as no Default or Event of Default exists, to make Revolving Credit Loans to
Borrower from time to time, as requested by Borrower in accordance with the
terms of Section 3.1 hereof, up to a maximum principal amount at any time
outstanding equal to the product of (A) the Borrowing Base at such time,
multiplied by (B) such Lender's Revolving Credit Percentage. It is expressly
understood and agreed that Agent and Lenders may use the Borrowing Base as a
maximum ceiling on Revolving Credit Loans outstanding to Borrower
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at any time. If the unpaid balance of the Revolving Credit Loans should exceed
the ceiling so determined or any other limitation set forth in this Agreement,
such Revolving Credit Loans shall nevertheless constitute Obligations that are
secured by the Collateral and entitled to all the benefits thereof. In no event
shall Lenders be required to make a Revolving Credit Loan at any time that there
exists a Default or an Event of Default. Notwithstanding the foregoing
provisions of this Section 1.1.1, Agent shall have the right to establish
reserves in such amounts, and with respect to such matters, as Agent shall deem
necessary or appropriate, against the amount of Revolving Credit Loans which
Borrower may otherwise request under this Section 1.1.1, including, without
limitation, with respect to (i) other sums which Agent reasonably believes will
be chargeable against Borrower's Loan Account as Revolving Credit Loans under
any Section of this Agreement; and (ii) matters, events, conditions or
contingencies as to which Agent, in its reasonable discretion, determines
reserves should be established from time to time hereunder, upon such notice to
Borrower as is commercially practical.
(B) The Revolving Credit Loans shall be evidenced by promissory
notes to be executed and delivered by Borrower at the time of the initial
Revolving Credit Loan, the form of which is attached hereto and made a part
hereof as Exhibit A (the "Revolving Credit Notes"). Each Revolving Credit Note
shall be payable to the order of a Lender and shall represent the obligation of
Borrower to pay the amount of such Lender's Revolving Credit Loan Commitment or,
if less, the aggregate unpaid principal amount of all Revolving Credit Loans
made by such Lender to Borrower with interest thereon as prescribed in Section
2.1.1.
(C) Insofar as Borrower may request and Lenders may be willing in
their sole and absolute discretion to make Revolving Credit Loans to Borrower at
a time when the unpaid balance of Revolving Credit Loans exceeds, or would
exceed with the making of any such Revolving Credit Loan, the Borrowing Base
(any such Loan or Loans being herein referred to individually as an
"Overadvance" and collectively as "Overadvances"), Agent shall enter such
Overadvances as debits in the Loan Account. All Overadvances shall be repaid on
demand, shall be secured by the Collateral and shall bear interest as provided
in this Agreement for Revolving Credit Loans generally. Any Overadvance to be
made by Lenders pursuant to the terms hereof shall be made by Lenders ratably in
accordance with their Revolving Credit Percentages. Overadvances in an aggregate
amount of Seven Hundred Fifty Thousand Dollars ($750,000) or less may, prior to
occurrence and continuation of a Default or an Event of Default, be made in the
sole and absolute discretion of Agent. Overadvances in an aggregate amount of
more than Seven Hundred Fifty Thousand Dollars ($750,000) but less than One
Million Five Hundred Thousand Dollars ($1,500,000) may, prior to the occurrence
and continuation of a Default or an Event of Default, be made in the sole and
absolute discretion of Required Lenders. Overadvances in an aggregate amount of
One Million Five Hundred Thousand Dollars ($1,500,000) or more and Overadvances
to be made after the occurrence, and during the continuation, of a Default or an
Event of Default shall require the consent of all Lenders.
1.1.2 Use of Proceeds. The Revolving Credit Loans shall be used
solely for Borrower's general operating and capital needs and for other
corporate purposes in a manner consistent with the provisions of this Agreement
and all applicable laws.
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1.2 Acquisition Loan and Acquisition Loan Commitments.
1.2.1 Acquisition Loans. (a) During the period between the Closing
Date and the Commitment Termination Date, each Lender agrees, for so long as no
Default or Event of Default exists, to make acquisition loans ("Acquisition
Loan(s)") to Borrower to finance Permitted Acquisitions. The aggregate amount of
the Acquisition Loans to be made by each Lender (such Lender's "Acquisition Loan
Commitment"), pursuant to the terms hereof, shall be the amount set below such
Lender's name on the signature pages hereof. The aggregate principal amount of
the Acquisition Loan Commitments is Thirty Million Dollars ($30,000,000). The
percentage equal to the quotient of (x) each Lender's Acquisition Loan
Commitment, divided by (y) the aggregate of all Acquisition Loan Commitments, is
that Lender's "Acquisition Loan Percentage." Subject to all of the terms and
conditions of this Agreement, each Lender agrees, for so long as no Default or
Event of Default exists, to make Acquisition Loans to Borrower from time to
time, as requested by Borrower in accordance with the terms of Section 3.1
hereof, up to a maximum principal amount at any time outstanding equal to the
product of (A) Thirty Million Dollars ($30,000,000), multiplied by (B) such
Lender's Acquisition Loan Percentage.
(b) Each Acquisition Loan shall be in an amount equal to One Million
Dollars ($1,000,000) or an integral multiple of One Hundred Thousand Dollars
($100,000) in excess thereof and shall be made on the date specified in the
written notice or telephonic notice (confirmed in writing) for such Acquisition
Loan. All such Acquisition Loans shall be secured by the Collateral. The
principal amount of any Acquisition Loan shall be due on the Commitment
Termination Date, provided that Borrower may prepay, without penalty or premiums
the outstanding principal balance of any Acquisition Loan. The Acquisition Loans
shall be evidenced by promissory notes to be executed and delivered by Borrower
to Lenders on the Closing Date, the form of which is attached hereto and made a
part hereof as Exhibit A-1 (the "Acquisition Note(s)"), shall bear interest as
specified in Section 3.1 and shall be repayable in accordance with the terms
hereof and of the Acquisition Notes.
(c) At any one time during the Original Term hereof, for so long as no
Default or Event of Default exists, Borrower may convert outstanding Acquisition
Loans in an aggregate principal amount not to exceed Ten Million Dollars
($10,000,000) into acquisition term loans ("Acquisition Term Loans"). Any such
conversion shall be made upon at least ten days notice to Agent and each Lender.
Any such notice shall specify the principal amount of the outstanding
Acquisition Loans to be so converted and the date of the conversion. Upon the
conversion date, Borrower shall execute and deliver to each Lender, a promissory
note ("each on "Acquisition Term Note") in an amount equal to such Lender's
Acquisition Loan Percentage multiplied by the aggregate principal amount of the
Acquisition Loans to be so converted. The principal amount of such Acquisition
Term Loans shall be amortized on the basis of sixty (60) equal monthly payments,
commencing on the first day of the calendar month after the calendar month in
which the conversion occurs. The foregoing notwithstanding, the entire principal
balance of the Acquisition Term Loan shall be due and payable on the Commitment
Termination Date. Borrower shall be able to exercise its right to convert
Acquisition Loans into Acquisition Term Loan on not more than three separate
occasions. The minimum aggregate amount of Acquisition
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Loans convertible into Acquisition Term Loans on any one such occasion shall be
at least Two Million Dollars ($2,000,000). In no event shall the aggregate
principal amount of Acquisition Loans converted into Acquisition Term Loans
pursuant to the terms hereof exceed Ten Million Dollars ($10,000,000).
1.2.2 Use of Proceeds. The Acquisition Loans shall be used solely to
finance Permitted Acquisitions in a manner consistent with the provisions of
this Agreement and all applicable laws.
1.3 Letters of Credit; LC Guaranties.(A) Subject to all of the terms and
conditions of this Agreement, if requested to do so by Borrower, Agent shall, on
behalf of Lenders, issue its, or cause to be issued Bank's Letters of Credit for
the account of Borrower or shall execute LC Guaranties by which Lenders shall
guaranty the payment or performance by Borrower of its reimbursement obligation
with respect to Letters of Credit issued for Borrower's account by Bank or
Agent; provided that the aggregate face amount of all Letters of Credit and LC
Guaranties outstanding at any time shall not exceed Five Million Dollars
($5,000,000) and no Letter of Credit may have an expiration date that is after
the Commitment Termination Date, unless Borrower provides on or prior to the
Commitment Termination Date, Agent with cash collateral for said Letter of
Credit or LC Guaranty, in a manner and amount acceptable to Agent. Any amounts
paid by Agent or any Lender under any LC Guaranty or in connection with any
Letter of Credit (i) shall become part of the Obligations, (ii) unless paid by
Borrower pursuant to Section 1.3(C) below, shall be paid from the proceeds of a
Revolving Credit Loan requested pursuant to Section 3.1.1 above, to the extent
Lenders are required to make Revolving Credit Loans pursuant to the terms hereof
and (iii) otherwise, shall be payable on demand. In no event shall Agent, Bank
or Lenders be required to issue or cause to be issued Letters of Credit or LC
Guaranties at any time there exists a Default or an Event of Default.
(B) Immediately upon the issuance of each Letter of Credit by Agent
or Bank or LC Guaranty by the Agent hereunder, each Lender shall be deemed to
have automatically, irrevocably and unconditionally purchased from the Agent an
undivided interest and participation in and to such Letter of Credit or LC
Guaranty, the obligations of Borrower in respect thereof and the liability of
the Agent, thereunder in an amount equal to the amount available for drawing
under such Letter of Credit or, in the case of a LC Guaranty, the amount
guaranteed thereunder, multiplied by such Lender's Revolving Credit Percentage.
The Agent will notify each Lender promptly upon presentation to it of a draw
under a Letter of Credit or a demand for payment under a LC Guaranty. On a
weekly basis, or more frequently if requested by Agent, each Lender shall make
payment to the Agent in immediately available funds, of an amount equal to such
Lender's pro rata share of the amount of any payment made by Agent in respect to
any Letter of Credit or LC Guaranty. The obligation of each Lender to reimburse
the Agent under this Section 1.3 shall be unconditional, continuing, irrevocable
and absolute, except in respect of indemnity claims arising out of Agent's
wilful misconduct. In the event that any Lender fails to make payment to the
Agent of any amount due under this Section 1.3, the Agent shall be entitled to
receive, retain and apply against such obligation the principal and interest
otherwise payable to such Lender hereunder until the Agent receives such payment
from such Lender or such obligation is otherwise fully satisfied; provided,
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however, that nothing contained in this sentence shall relieve such Lender of
its obligation to reimburse the Agent for such amount in accordance with this
Section 1.3(B).
(C) Borrower agrees, unconditionally, irrevocably and absolutely, to
pay immediately to the Agent, for the account of the Lenders, the amount drawn
under a Letter of Credit or paid pursuant to a LC Guaranty. If Borrower at any
time fails to make such payment in accordance with the terms of this Agreement,
Borrower shall be deemed to have elected to borrow from the Lenders on such date
Revolving Credit Loans equal in aggregate amount to the amount paid by Agent or
the issuing Lender, as the case may be, under such Letter of Credit or LC
Guaranty.
SECTION 2. INTEREST, FEES AND CHARGES
2.1 Interest.
2.1.1 Rates of Interest.
(A) Interest. (i) Interest shall accrue on the Base Rate
Portion outstanding at the end of each day (computed on the basis of a
calendar year of 360 days and actual days elapsed) at a fluctuating rate
per annum equal to the sum the Base Rate plus the Applicable Margin. After
the date hereof, the foregoing rates of interest shall be increased or
decreased, as the case may be, by an amount equal to any increase or
decrease in the Base Rate, with such adjustments to be effective as of the
opening of business on the day that any such change in the Base Rate
becomes effective. The Base Rate in effect on the date hereof shall be the
Base Rate effective on the opening of business on the date hereof, but if
this Agreement is executed on a day that is not a Business Day, the Base
Rate in effect on the date hereof shall be the Base Rate effective as of
the opening of business on the last Business Day immediately preceding the
date hereof.
(ii) Interest shall accrue on each LIBOR Portion
outstanding at the end of each day (computed on the basis of a calendar
year of 360 days and actual days elapsed) at rates equal to the sum of the
LIBOR Rate applicable to each such LIBOR Portion plus the Applicable
Margin.
(B) LIBOR Option.
(i) Conditions for Basing Interest on the LIBOR Rate.
Upon the condition that:
(a) Agent shall have received a LIBOR Request from
Borrower at least 3 Business Days prior to the first day of the
LIBOR Period requested;
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(b) There shall have occurred no change in applicable
law which would make it unlawful for any Lender to obtain deposits
of U.S. dollars in the London interbank foreign currency deposits
market;
(c) As of the date of the LIBOR Request and the first
day of the LIBOR Period, there shall exist no Default or Event of
Default which has not been waived by Required Lenders; and
(d) Agent shall have determined in good faith that
Lenders are able to determine the LIBOR Rate in respect of the
requested LIBOR Period and that Lenders are able to obtain deposits
of U.S. dollars in the London interbank foreign currency deposits
market in the applicable amounts and for the requested LIBOR Period;
then interest on the LIBOR Portion requested during the LIBOR Period
requested will be based on the applicable LIBOR Rate. Agent shall give
each Lender prompt written notice by telecopier, telex or cable of any
LIBOR Request made by Borrower in accordance with the terms hereof. The
foregoing notwithstanding, Borrower acknowledges that there may not be
more than five LIBOR Portions outstanding at any one time.
(ii) Indemnification for Funding and Other Losses. Each LIBOR
Request shall be irrevocable and binding on Borrower. Borrower shall
indemnify Agent and Lenders against any expense or loss suffered by Agent
or any Lender as a result of any failure on the part of Borrower to
fulfill, on or before the date specified in any LIBOR Request, the
applicable conditions set forth in this Agreement or as a result of the
prepayment by Borrower of the applicable LIBOR Portion prior to the last
day of the applicable LIBOR Period, including, without limitation, any
loss (including loss of anticipated profits) or expense incurred by reason
of the liquidation or redeployment of deposits or other funds acquired by
Agent or any Lender to fund or maintain the requested LIBOR Portion. Upon
request by Borrower, Agent or any applicable Lender shall provide Borrower
with a certificate of an officer of Agent or such Lender setting forth the
calculation of the amount of any such loss and the basis therefor, which
calculation shall, in the absence of manifest error be conclusive.
(iii) Change in Applicable Laws, Regulations, etc. If any
Legal Requirement becoming effective after the date hereof shall make it
unlawful for any Lender to fund through the purchase of U.S. dollar
deposits any LIBOR Portion or otherwise to give effect to its obligations
as contemplated under this Section 2.1.1(B), or shall impose on any Lender
any costs based on or measured by the excess above a specified level of
the amount of a category of deposits or other liabilities of such Lender
which includes deposits by reference to which the LIBOR Rate is determined
as provided herein or a category of extensions of credit or other assets
of such Lender which includes any LIBOR Portion, or shall impose on any
Lender any restrictions on the amount of such a category of liabilities or
assets which such Lender may hold, (a) Agent may by notice thereof to
Borrower
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terminate the LIBOR Option as of a date which is no earlier than the date
required by applicable law, the date on which any such cost is imposed or
the date on which any such restriction becomes effective, with respect to
the Loans made or to be made by such Lender, (b) any LIBOR Portion
outstanding as of the date the LIBOR Option is terminated shall thereafter
bear interest at the rate provided for in Section 2.1.1(A)(i) payable on
the dates provided for in Section 3.2.2 and (c) Borrower shall indemnify
such Lender against any out-of-pocket loss, penalty or expense incurred by
such Lender by reason of the liquidation or redeployment of deposits or
other funds acquired by such Lender to fund or maintain such LIBOR
Portion. The applicable Lender shall promptly give Borrower and Agent
prompt written notice of when such condition shall cease to exist, after
which time Agent and Lenders shall, subject to the other terms and
conditions of this Section 2.1.1(B), honor future LIBOR Requests.
Notwithstanding anything contained in this clause (iii) to the contrary,
each Lender hereby agrees to change the lending office at which it accepts
payments of principal and interest from Borrower pursuant to this
Agreement if, as a result of such change, it would be lawful for such
Lender to fund through the purchase of U.S. dollar deposits any LIBOR
Portion or otherwise to give effect to its obligations as contemplated
under this Section 2.1.1(B), and if any such change in lending office(s)
does not impose additional costs upon such Lender.
(iv) Taxes. It is the understanding of Borrower and Agent and
Lenders that Lenders shall receive payments of amounts of principal of and
interest on the Revolving Credit Loans, the Acquisition Loans and the
Acquisition Term Loan with respect to the LIBOR Portions from time to time
subject to a LIBOR Option free and clear of, and without deduction for,
any Taxes. If (i) any Lender shall be subject to any such Tax in respect
of any such LIBOR Portion or any part thereof or (ii) Borrower shall be
required to withhold or deduct any such Tax from any such amount, the
LIBOR Rate applicable to such LIBOR Portion shall be adjusted by Agent on
behalf of any such Lender to reflect all additional costs incurred by such
Lender in connection with the payments by any such Lender or the
withholding by Borrower of such Tax and Borrower shall provide Agent and
such Lender with a statement detailing the amount of any such Tax actually
paid by Borrower. Determination by Agent on behalf of such Lender of the
amount of such costs shall, in the absence of manifest error, be
conclusive, and at Borrower's request, Agent shall demonstrate the basis
of such determination. If after any such adjustment, any part of any Tax
paid by any such Lender is subsequently recovered by such Lender, such
Lender shall promptly reimburse Borrower to the extent of the amount so
recovered. A certificate of an officer of such Lender setting forth the
amount of such recovery and the basis therefor shall, in the absence of
manifest error, be conclusive. Notwithstanding anything contained in this
clause (iv) to the contrary each Lender hereby agrees to change the
lending office at which it accepts payments of principal and interest from
Borrower pursuant to this Agreement if, as a result of such change, any
such Taxes could be legally avoided and if any such change in lending
office(s) does not impose additional costs upon such Lender.
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2.1.2 Default Rate of Interest. Upon and after the occurrence of an
Event of Default, and during the continuation thereof, the principal amount of
all Loans shall bear interest at the rate in effect pursuant to Section
2.1.1(A)(i) above plus two percent
(2%) (the "Default Rate").
2.1.3 Maximum Interest. In no contingency or event whatsoever shall
the aggregate of all amounts deemed interest hereunder or under the Revolving
Credit Notes, the Acquisition Notes or the Acquisition Term Notes and charged or
collected pursuant to the terms of this Agreement or pursuant to the Revolving
Credit Notes, the Acquisition Notes or the Acquisition Term Notes exceed the
highest rate permissible under any law which a court of competent jurisdiction
shall, in a final determination deem applicable hereto. In the event that such a
court determines that Lenders have charged or received interest hereunder in
excess of the highest applicable rate, the rate in effect hereunder shall
automatically be reduced to the maximum rate permitted by applicable law and
Lenders shall promptly refund to Borrower any interest received by Lenders in
excess of the maximum lawful rate or, if so requested by Borrower, shall apply
such excess to the principal balance of the Obligations. It is the intent hereof
that Borrower not pay or contract to pay, and that Lenders not receive or
contract to receive, directly or indirectly in any manner whatsoever, interest
in excess of that which may be paid by Borrower under applicable law.
2.2 Computation of Interest and Fees. Interest, unused line fees, Letter
of Credit and LC Guaranty fees and collection charges hereunder shall be
calculated daily and shall be computed on the actual number of days elapsed over
a year of 360 days.
2.3 Letter of Credit and LC Guaranty Fees. As additional consideration for
issuing or causing to be issued, Letters of Credit for Borrower's account or for
issuing its LC Guaranties at Borrower's request pursuant to Section 1.3 hereof,
Borrower agrees to pay fees in respect to each Letter of Credit or LC Guaranty
so issued. Said fees shall be payable on the date which such Letter of Credit or
LC Guaranty is issued and shall be in an amount equal to (i) one percent (1%) of
the amount of the Letter of Credit or LC Guaranty multiplied by a fraction, the
numerator of which is the number of days in the term of the applicable Letter of
Credit or LC Guaranty and the denominator of which is 360, plus (ii) one percent
(1%) of the amount of the Letter of Credit multiplied by a fraction, the
numerator of which is the number of days in the form of the applicable Letter of
Credit and the denominator of which is 360. The fees payable pursuant to clause
(i) of the preceding sentence shall be paid to Agent for the benefit of Lenders.
The fees payable pursuant to clause (ii) of the preceding sentence shall be paid
to Agent for the benefit of the issuer of said Letter of Credit, which shall be
either Agent or Bank. In the event a Letter of Credit or LC Guaranty is renewed
or extended a fee calculated in the manner provided above shall be payable for
any such renewal or extended period. Further, Borrower shall pay and/or
reimburse Agent and/or Lenders all fees and charges paid by Agent or Lenders on
account of any Letter of Credit or LC Guaranty.
2.4 Unused Line Fee. Borrower shall pay to Agent for the ratable benefit
of Lenders an unused line fee equal to one-half percent (1/2%) per annum of the
average daily amount by which the Maximum Available Amount exceeds the sum of
the outstanding principal balance of the Revolving
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Credit Loans plus the LC Amount plus the sum of the outstanding balance of the
Acquisition Loans.The unused line fee shall be payable monthly in arrears on the
first day of each calendar month hereafter.
2.5 Closing Fee. Borrower shall pay to Agent for the pro rata benefit of
Lenders an aggregate closing fee of Sixty-Five Thousand Dollars ($65,000) which
fee shall be deemed fully earned and non-refundable at the closing of the
transactions contemplated hereby and shall be paid concurrently with the initial
Loan hereunder.
2.6 Agency Fee. On the Closing Date Borrower shall pay to Agent, for its
benefit, an agency fee in the amount of Forty-Nine Thousand Five Hundred
Eighty-Three Dollars ($49,583). On each subsequent anniversary of the Closing
Date, Borrower shall pay Agent, for its benefit, an annual agency fee in the
amount of Eight-Seven Thousand Five Hundred Dollars ($87,500). Each such agency
fee shall be deemed fully earned and nonrefundable on the due date thereof.
Borrower's obligation to pay Agent such agency fees shall expire on the date on
which the Obligations are paid in full and this Agreement is terminated in
accordance with the provisions hereof.
2.7 Audit and Appraisal Fees. Borrower shall pay to Agent for its
out-of-pocket audit and appraisal costs in connection with audits and appraisals
of Borrower's books and records and such other matters as Agent shall deem
appropriate as and when permitted under this Agreement. Such fees shall be
payable on the first day of the month following the date of issuance by Agent of
a request (which shall include a statement of such fees and expenses) for
payment thereof to Borrower.
2.8 Reimbursement of Expenses. If, at any time or times regardless of
whether or not an Event of Default then exists, Agent or any Lender (in respect
to clauses (i), (iii) and (iv) only) incurs reasonable legal or accounting
expenses or any other costs or out-of-pocket expenses in connection with (i) the
negotiation and preparation of this Agreement or any of the other Loan Documents
any amendment of or modification of this Agreement or any of the other Loan
Documents; (ii) the administration of this Agreement or any of the other Loan
Documents and the transactions contemplated hereby and thereby; (iii) any
litigation, contest, dispute, suit, proceeding or action (whether instituted by
Agent, any Lender, Borrower or any other Person) in any way relating to the
Collateral, this Agreement or any of the other Loan Documents or Borrower's
affairs except where, pursuant to a final non-appealable order, such litigation,
contest, dispute, suit, proceeding or action is determined adversely to Agent or
any Lender; (iv) any attempt to enforce any rights of Agent or any Lender
against Borrower or any other Person which may be obligated to Agent or any
Lender by virtue of this Agreement or any of the other Loan Documents,
including, without limitation, the Account Debtors; or (v) any attempt to
inspect, verify, protect, preserve, restore, collect, sell, liquidate or
otherwise dispose of or realize upon the Collateral in accordance with the terms
of this Agreement; then all such reasonable legal and accounting expenses,
reasonable other costs and reasonable out of pocket expenses of Agent or any
Lender shall be charged to Borrower. All amounts chargeable to Borrower under
this Section 2.8 shall be Obligations secured by all of the Collateral, shall be
payable on demand to Agent or to such Lender, as the case may be,
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and shall bear interest from the date such demand is made until paid in full at
the rate applicable to Base Rate Portions from time to time. Borrower shall also
reimburse Agent or Lenders for expenses incurred by Agent or Lenders in its or
their administration of the Collateral to the extent and in the manner provided
in Section 6 hereof.
2.9 Bank Charges. Borrower shall pay to Agent (for its own benefit or the
benefit of a Lender, as applicable) on demand, any and all fees, costs or
expenses which Agent or any Lender pays to a bank or other similar institution
arising out of or in connection with (i) the forwarding to Borrower or any other
Person on behalf of Borrower, by Agent or any Lender, of proceeds of loans made
by Lenders to Borrower pursuant to this Agreement and (ii) the depositing for
collection, by Agent or any Lender, of any check or item of payment received or
delivered to Agent or any Lender on account of the Obligations.
2.10 Capital Adequacy Charge. In the event that any Lender shall have
determined that the adoption (effected after the date hereof) of any law, rule
or regulation regarding capital adequacy, or any change therein or in the
interpretation or application thereof or compliance by any Lender with any
request or directive regarding capital adequacy (whether or not having the force
of law) from any central bank or governmental authority, does or shall have the
effect of reducing the rate of return on such Lender's capital as a consequence
of its obligations hereunder to a level below that which such Lender could have
achieved but for such adoption, change or compliance (taking into consideration
such Lender's policies with respect to capital adequacy) by an amount deemed by
such Lender, in its reasonable discretion, to be material, then from time to
time, after submission by such Lender to Borrower of a written demand therefor,
which demand shall be made within sixty (60) days of such reduction, Borrower
shall pay to such Lender such additional amount or amounts as will compensate
such Lender for such reduction. A certificate of such Lender claiming
entitlement to payment as set forth above shall be conclusive in the absence of
manifest error. Such certificate shall set forth the nature of the occurrence
giving rise to such payment, the additional amount or amounts to be paid to such
Lender, and the method by which such amounts were determined. In determining
such amount, such Lender may use any reasonable averaging and attribution
methods. Each Lender and Agent agrees to allocate any such cost increase among
its similarly situated customers in good faith and on an equitable basis;
provided, however, that any such Lender shall not be entitled to such amounts
unless similar assessments are imposed by such Lenders on other comparable
borrowers of such Lender.
SECTION 3. LOAN ADMINISTRATION.
3.1 Manner of Borrowing Loans. Borrowings under the credit facility
established pursuant to Section 1 hereof shall be as follows:
3.1.1 Loan Requests. A request for a Revolving Credit Loan or an
Acquisition Loan shall be made, or shall be deemed to be made, in the following
manner: (i) Borrower may give Agent a Notice of Revolving Credit Loan or
Acquisition Loan, in which notice Borrower shall specify the amount of the
proposed borrowing and the proposed borrowing date, provided, however, that no
such request may be made at a time when there exists a Default or an Event of
Default; and
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(ii) the becoming due of any amount required to be paid under this Agreement,
any Revolving Credit Note, any Acquisition Note or any Acquisition Term Note,
whether as interest or for any other Obligation, shall be deemed irrevocably to
be a request for a Revolving Credit Loan on the due date in the amount required
to pay such interest or other Obligation. As an accommodation to Borrower, Agent
may permit telephonic requests for loans and electronic transmittal of
instructions, authorizations, agreements or reports to Agent by Borrower. Unless
Borrower specifically directs Agent in writing not to accept or act upon
telephonic or electronic communications from Borrower, Agent shall have no
liability to Borrower for any loss or damage suffered by Borrower as a result of
Agent's honoring of any requests, execution of any instructions, authorizations
or agreements or reliance on any reports communicated to it telephonically or
electronically and purporting to have been sent to Agent by Borrower and Agent
shall have no duty to verify the origin of any such communication or the
authority of the person sending it. Except as otherwise provided in Section
2.1.1(B), each Revolving Credit Loan and each Acquisition Loan shall be made on
notice, given not later than 11:00 a.m. (Chicago time) on the Business Day of
the proposed Revolving Credit Loan or Acquisition Loan, by Borrower to Agent,
which shall give to each Lender prompt written notice thereof by telecopy, telex
or cable. Each such notice (a "Notice of Revolving Credit Loan" or a "Notice of
Acquisition Loan," as applicable) shall be in writing or by telephone to Agent
at (▇▇▇) ▇▇▇-▇▇▇▇, confirmed immediately in writing, specifying therein the
requested date and amount of such Revolving Credit Loan or Acquisition Loan.
Each Lender shall, not later than 2:00 p.m. (Chicago time) on each requested
date, wire to a bank designated by Agent the amount of that Lender's Revolving
Credit Percentage of the requested Revolving Credit Loan or the amount of that
Lender's Acquisition Loan Percentage of the requested Acquisition Loan. Agent
shall, before 2:30 P.M. (Chicago time) on the date of the proposed Revolving
Credit Loan or proposed Acquisition Loan, subject to the provisions hereof, wire
to a bank designated by Borrower and reasonably acceptable to Agent, the amount
of such Revolving Credit Loan or Acquisition Loan to the extent received from
the Lenders. The failure of any Lender to make the Revolving Credit Loan or
Acquisition Loan to be made by it shall not relieve any other Lender of its
obligation hereunder to make its Revolving Credit Loan or Acquisition Loan.
Neither Agent nor any other Lender shall be responsible for the failure of any
other Lender to make the Revolving Credit Loan or Acquisition Loan to be made by
such other Lender. The foregoing notwithstanding, unless otherwise notified by
any Lender, Agent, in its sole discretion, may, from its own funds, make a
Revolving Credit Loan or Acquisition Loan on behalf of any Lender hereto. In
such event, the Lender on behalf of whom Agent made the Revolving Credit Loan or
Acquisition Loan shall reimburse Agent for the amount of Revolving Credit Loan
or Acquisition Loan so made on its behalf, on a weekly (or more frequent basis
as determined by Agent, in its sole discretion) basis and the entire amount of
interest attributable to such Revolving Credit Loan or Acquisition Loan for the
period from the date on which said Revolving Credit Loan or Acquisition Loan was
made by Agent on such Lender's behalf until Agent is reimbursed by such Lender,
shall be paid to Agent. The foregoing notwithstanding, Lenders shall not be
required to make any Acquisition Loans, unless Borrower have fully complied with
the provisions of Section 9.5.
If at any time one or more Lenders refuse or fail to make a requested
Revolving Credit Loan or Acquisition Loans when all conditions to a Revolving
Credit Loan or Acquisition Loan have been satisfied or waived, then Agent may,
at its option, but shall have no obligation whatsoever to,
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purchase all, but not less than all, of the Revolving Credit Notes, Acquisition
Loan Notes and Acquisition Term Note held by the Lender(s) who so fail or
refuse, and to assume such Lender's commitments to make Revolving Credit Loans
or Acquisition Loans and each such Lender shall be obligated to sell and
transfer such Revolving Credit Notes, Acquisition Notes or Acquisition Term
Notes to Agent for a price in cash equal to the principal balance outstanding
plus all accrued but unpaid interest thereon plus all accrued fees due any such
Lender under the terms hereof, and the foregoing provisions of this Section will
be applicable to Agent with respect to the Revolving Credit Notes, Acquisition
Notes or Acquisition Term Notes so purchased by it. Any such purchase, however,
shall not relieve any such Lender from any breach of contract claims available
to Agent and/or Borrower against such Lender as a result of its failure to make
any such Revolving Credit Loan or Acquisition Loan.
3.1.2 Disbursement. Borrower hereby irrevocably authorizes Agent to
disburse the proceeds of each Revolving Credit Loan and/or Acquisition Loan
requested, or deemed to be requested, pursuant to this Section 3.1.2 as follows:
(i) the proceeds of the each Acquisition Loan and of each Revolving Credit Loan
shall be disbursed by Agent in lawful money of the United States of America in
immediately available funds, in the case of the initial borrowing, in accordance
with the terms of the written disbursement letter from Borrower, and in the case
of each subsequent borrowing, by wire transfer to such bank account as may be
agreed upon by Borrower and Agent from time to time or elsewhere if pursuant to
a written direction from Borrower; and (ii) the proceeds of each Revolving
Credit Loan requested under Section 3.1.1(ii) shall be disbursed by Agent by way
of direct payment of the relevant interest or other Obligation.
3.1.3 Authorization. Borrower hereby irrevocably authorizes Agent,
in Agent's sole discretion, to advance to Borrower, and to charge to Borrower's
Loan Account hereunder as a Revolving Credit Loan, a sum sufficient to pay all
interest accrued on the Obligations during the immediately preceding month and
to pay all costs, fees and expenses at any time owed by Borrower to Agent or
Lenders hereunder. Agent shall provide Borrower with a statement of any such
costs, fees or expenses in accordance with Section 3.7 hereof.
3.2 Payments. Except where evidenced by notes or other instruments issued
or made by Borrower to Agent or Lenders specifically containing payment
provisions which are in conflict with this Section 3.2 (in which event the
conflicting provisions of said notes or other instruments shall govern and
control), the Obligation shall be payable as follows:
3.2.1 Principal. Principal payable on account of Revolving Credit
Loans shall be payable by Borrower to Agent for its benefit and the ratable
benefit of Lenders immediately upon the earliest of (i) the receipt by Agent or
Borrower of any proceeds of any Collateral other than Equipment or real
Property, to the extent of said proceeds, (ii) the occurrence of an Event of
Default in consequence of which Agent or Required Lenders elect to accelerate
the maturity and payment of the Obligations, or (iii) termination of this
Agreement pursuant to Section 4 hereof; provided, however, that if an
Overadvance shall exist at any time, Borrower shall, on demand, repay the
Overadvance; provided, further, that if any such payment pursuant to clause (i)
above would result in the prepayment of any LIBOR Portion, Agent, upon request
by Borrower, agrees to hold any such
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proceeds from Collateral other than Equipment or real Property in trust for the
benefit of Borrower, and shall not apply such proceeds to the outstanding LIBOR
Portions until the earlier of the expiration of the applicable LIBOR Period or
the occurrence of an Event of Default. Any such funds so held in trust shall not
bear interest and may be commingled with Agent's other funds. Principal payable
on account of any Acquisition Term Loan shall be payable by Borrower to Agent
for the ratable benefit of Lenders in accordance with the terms and conditions
of the applicable Acquisition Term Note and the provisions of this Agreement.
Principal payable on account of the Acquisition Loan shall be payable by
Borrower to Agent for the ratable benefit of Lenders in accordance with the
terms and conditions of the applicable Acquisition Note and the provisions of
this Agreement.
3.2.2 Interest. Interest accrued on the Base Rate Portion and each
LIBOR Portion shall be due on the earliest of (i) the first day of each calendar
month (for the immediately preceding calendar month), computed through the last
calendar day of the preceding month, (ii) the occurrence of an Event of Default
in the consequence of which Agent or Required Lenders elect to accelerate the
maturity and payment of the Obligations or (iii) termination of this Agreement
pursuant to Section 4 hereof; provided, however, Borrower hereby irrevocably
authorizes Agent on behalf of Lenders, in Agent's sole discretion, to advance to
Borrower and to charge to Borrower's Loan Account hereunder as a Revolving
Credit Loan, a sum sufficient each month to pay all interest accrued on the Base
Rate Portion and each LIBOR Portion during the immediately preceding calendar
month.
3.2.3 Costs, Fees and Charges. Costs, fees and charges payable
pursuant to this Agreement shall be payable by Borrower as and when provided in
Section 2 hereof, to Agent for its benefit and the ratable benefit of Lenders or
to any other Person designated by Agent in writing.
3.2.4 Other Obligations. The balance of the Obligations requiring
the payment of money, if any, shall be payable by Borrower to Agent for its
benefit and the ratable benefit of Lenders as and when provided in this
Agreement, the Other Agreements or the Security Documents, or on demand,
whichever is later.
3.3 Mandatory Prepayments.
3.3.1 Proceeds of Sale, Loss, Destruction or Condemnation of
Collateral. Except as provided in Section 6.4.2 hereof, if Borrower sells any of
the Equipment or real Property, or if any of the Collateral is lost or destroyed
or taken by condemnation, Borrower shall pay to Agent for the ratable benefit of
Lenders, unless otherwise agreed by Required Lenders, as and when received by
Borrower and as a mandatory prepayment of (x) any Acquisition Term Loan, or (y)
if such Acquisition Term Loan is paid in full or if there is no such applicable
Acquisition Term Loan, the Acquisition Loans or (z) if all such Acquisition
Loans are paid in full or if there are no Acquisition Loans, the outstanding
Revolving Credit Loans a sum equal to the proceeds (including insurance
payments) net of any reasonable costs of sale or disposition and provisions for
any income tax expense incurred as a result of such sale or disposition received
by Borrower from such sale, loss, destruction or condemnation. Any such
prepayments of the Acquisition Term Loan shall be applied to principal
installments due under the Acquisition Term Notes in inverse order of maturity.
All
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such prepayments of the Acquisition Term Loan, Acquisition Loans or Revolving
Credit Loans shall be applied pro rata among Lenders. The foregoing
notwithstanding, if the insurance or condemnation proceeds from any such loss or
condemnation are Five Hundred Thousand Dollars ($500,000) or less and if there
is no existing and continuing Event of Default, Agent shall apply such proceeds
to outstanding Revolving Credit Loans and, absent any subsequent Event of
Default, shall disburse such insurance or condemnation proceeds to Borrower in
order to permit Borrower to replace or repair such lost, damaged, destroyed or
condemned Equipment, Property or other Collateral.
3.4 Application of Payments and Collections. All items of payment received
by Agent by 12:00 noon, Chicago time, on any Business Day shall be deemed
received on that Business Day. All items of payment received after 12:00 noon,
Chicago time, on any Business Day shall be deemed received on the following
Business Day. For the purpose of computing interest hereunder, all items of
payment received by Agent shall be deemed applied by Agent on account of the
Obligations (subject to final payment of such items) on the first Business Day
after receipt of such item in immediately good funds. After the occurrence and
during the continuance of an Event of Default, Borrower irrevocably waives the
right to direct the application of any and all payments and collections at any
time or times hereafter received by Agent from or on behalf of Borrower, and
Borrower does hereby irrevocably agree that, subject to Borrower's rights under
Section 3.2.1 and 6.4.2, Agent shall have the continuing exclusive right to
apply and reapply any and all such payments and collections received at any time
or times hereafter by Agent or its agent against the Obligations, in such manner
as Agent may deem advisable, notwithstanding any entry by Agent upon any of its
books and records. If as the result of collections of Accounts as authorized by
Section 6.2.6 hereof a credit balance exists in the Loan Account, Agent shall
use its commercially reasonable best efforts to give Borrower prompt notice
(which may be oral) of any such credit balance. Such credit balance shall not
accrue interest in favor of Borrower, but shall be available to Borrower at any
time or times for so long as no Default or Event of Default exists. Such credit
balance shall not be applied or be deemed to have been applied as a prepayment
of the Acquisition Loans or the Acquisition Term Loans, except that Agent may,
at its option, offset such credit balance against any of the Obligations after
the occurrence and during the continuance of an Event of Default.
3.5 All Loans to Constitute One Obligation. The Loans shall constitute one
general Obligation of Borrower, and shall be secured by Agent's Lien (for its
benefit and the ratable benefit of Lenders) upon all of the Collateral.
3.6 Loan Account. Agent shall enter all Loans as debits to the Loan
Account and shall also record in the Loan Account all payments made by Borrower
on any Obligations and all proceeds of Collateral which are finally paid to
Agent, and may record therein, in accordance with customary accounting practice,
other debits and credits, including interest and all charges and expenses
properly chargeable to Borrower.
3.7 Statements of Account. Agent will account to Borrower monthly with a
statement of Loans, charges and payments made pursuant to this Agreement, and,
absent manifest error, such
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account rendered by Agent shall be deemed final, binding and conclusive upon
Borrower unless Agent is notified by Borrower in writing to the contrary within
30 days of the date each accounting is mailed to Borrower. Such notice shall
only be deemed an objection to those items specifically objected to therein. In
the event that any expense or other item is charged by Agent or Lenders to
Borrower as a Revolving Credit Loan and is later reversed, the interest accrued
on such reversed item or expense shall be refunded to Borrower either as a
credit against outstanding Obligations or as a cash refund, if no Obligations
are outstanding.
SECTION 4. TERM AND TERMINATION
4.1 Term of Agreement. Subject to Agent's and Lenders' right to cease
making Loans to Borrower after the occurrence, and during the continuation, of
any Default or Event of Default, this Agreement shall be in effect for a period
ending on February 1, 2001,
(the "Original Term").
4.2 Termination.
4.2.1 Termination by Lenders. Upon at least 90 days prior written
notice to Borrower, any Lender may terminate this Agreement as of the last day
of the Original Term and Agent or Required Lenders may terminate this Agreement
without notice after the occurrence and during the continuation of an Event of
Default.
4.2.2 Termination by Borrower. (a) Upon at least 90 days prior
written notice to Agent, Borrower may, at its option, terminate this Agreement;
provided, however, no such termination shall be effective until Borrower has
paid all of the Obligations in immediately available funds and all Letters of
Credit and LC Guaranties have expired or have been cash collateralized to
Agent's satisfaction. Any notice of termination given by Borrower shall be
irrevocable unless Required Lenders otherwise agree in writing, and Lenders
shall have no obligation to make any Loans or issue or procure any Letters of
Credit or LC Guaranties on or after the termination date stated in any such
termination notice given pursuant to this Section 4.2.2 or pursuant to Section
4.2.1 above in such notice. Borrower may elect to terminate this Agreement in
its entirety only. No section of this Agreement or type of Loan available
hereunder may be terminated singly. The Acquisition Loans, the Acquisition Term
Loans and the Revolving Credit Loans may be prepaid in whole or in part at any
time, without penalty or premium.
4.2.3 Effect of Termination. All of the Obligations shall be
immediately due and payable upon the termination date stated in any notice of
termination of this Agreement. All undertakings, agreements, covenants,
warranties and representations of Borrower contained in the Loan Documents shall
survive any such termination and Agent shall retain its Liens (for its own
benefit and the ratable benefit of Lenders) in the Collateral and all of its
rights and remedies under the Loan Documents notwithstanding such termination
until Borrower has paid the Obligations (including, without limitation, the
expiration, termination or cash collateralization of all outstanding Letters of
Credit and LC Guaranties (but excluding any contingent indemnity Obligations
related to any claim unknown to Borrower, Agent or any Lenders)) to Agent for
the benefit of Lenders, in full, in immediately available funds, together with
the applicable termination charge, if any.
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Notwithstanding the payment in full of the Obligations, Agent shall not be
required to terminate its security interests in the Collateral unless, with
respect to any loss or damage Agent or Lender may incur as a result of
dishonored checks or other items of payment received by Agent from Borrower or
any Account Debtor and applied to the Obligations, Agent shall, at its option,
(i) have received a customary written indemnity and release agreement, executed
by Borrower and by any Person whose loans or other advances to Borrower are used
in whole or in part to satisfy the Obligations, indemnifying Agent and Lender
from any such loss or damage; or (ii) have retained such monetary reserves and
Liens on the Collateral for such period of time as Agent, in its reasonable
discretion, may deem necessary to protect Agent and Lenders from any such loss
or damage. Upon the satisfaction of the foregoing condition, payment in full of
the Obligations and termination of this Agreement, Agent and Lenders agree to
execute such UCC-3 termination statements, releases and other similar release
documents evidencing the termination of Agent's and Lenders' Lien on the
Collateral.
SECTION 5. SECURITY INTERESTS
5.1 Security Interest in Collateral. To secure the prompt payment and
performance to Agent and Lenders of the Obligations, Borrower hereby grants to
Agent for its benefit and the ratable benefit of Lenders a continuing Lien upon
all of Borrower's assets, including all of the following Property and interests
in Property of Borrower, whether now owned or existing or hereafter created,
acquired or arising and wheresoever located:
(i) Accounts;
(ii) Inventory;
(iii) Equipment;
(iv) General Intangibles;
(v) Investment Property;
(vi) All monies and other Property of any kind now or at any
time or times hereafter in the possession or under the control of Agent or
any Lender or a bailee or Affiliate of Agent or any Lender;
(vii) All accessions to, substitutions for and all
replacements, products and cash and non-cash proceeds of (i) through (vi)
above, including, without limitation, proceeds of and unearned premiums
with respect to insurance policies insuring any of the Collateral; and
(viii) All books and records (including, without limitation,
customer lists, credit files, computer programs, print-outs, and other
computer materials and records) of Borrower pertaining to any of (i)
through (vii) above.
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Notwithstanding the foregoing, Collateral shall not include (1) any
licenses or permits the encumbrance of which would violate any law, statute or
regulation; or (2) any material contract rights (including, without limitation,
any contracts or leases), the encumbrance of which would violate the terms of
the agreements establishing such rights; provided that Borrower shall use
reasonable good faith efforts to obtain any necessary consent to enable any such
contract right to be included within the Collateral.
5.2 Lien Perfection; Further Assurances. Borrower shall execute such UCC-1
financing statements as are required by the Code and such other instruments,
assignments or documents as are necessary to perfect Agent's Lien (for its
benefit and the ratable benefit of Lenders) upon any of the Collateral and shall
take such other action as may be required to perfect or to continue the
perfection of Agent's Lien (for its benefit and the ratable benefit of Lenders)
upon the Collateral. Unless prohibited by applicable law, Borrower hereby
authorizes Agent to execute and file any such financing statement on Borrower's
behalf. The parties agree that a carbon, photographic or other reproduction of
this Agreement shall be sufficient as a financing statement and may be filed in
any appropriate office in lieu thereof. Borrower shall also execute and deliver
to Agent, upon Agent's request, any and all documents deemed reasonably
necessary or appropriate by Agent to cause Agent's Lien to be noted on any motor
vehicle, tractor or trailer title certificates for motor vehicles, tractors or
trailers forming a part of the Collateral. At Agent's request, Borrower shall
also promptly execute or cause to be executed and shall deliver to Agent any and
all other documents, instruments and agreements deemed necessary by Agent,
acting in a commercially reasonable manner, to give effect to or carry out the
terms or intent of the Loan Documents.
5.3 Lien on Realty. If Borrower shall acquire at any time or times
hereafter any interest in other real Property (other than leasehold interests in
sales offices), Borrower agrees, at Agent's request, promptly to execute and
deliver to Agent, as additional security and Collateral for the Obligations,
deeds of trust, security deeds, mortgages or other collateral assignments
prepared by and satisfactory in form and substance to Agent and its counsel
(herein collectively referred to as "New Mortgages") covering such real
Property. Each New Mortgage shall be duly recorded (at Borrower's expense) in
each office where such recording is required to constitute a valid Lien on the
real Property covered thereby. In respect to each New Mortgage, Borrower shall
deliver to Agent, at Borrower's expense, mortgagee title insurance policies
issued by a title insurance company satisfactory to Agent, insuring Agent, as
mortgagee; such policies shall be in form and substance reasonably satisfactory
to Agent, and shall insure a valid first Lien in favor of Agent on the Real
Property covered thereby, subject only to Permitted Liens and to those
exceptions reasonably acceptable to Agent and its counsel. Said policies shall
be in form and substance reasonably satisfactory to Agent. Borrower shall also
deliver to Agent such other documents, including, without limitation, ALTA
Surveys of the real Property, as Agent and its counsel may reasonably request
relating to the real Property subject to any such New Mortgage.
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SECTION 6. COLLATERAL ADMINISTRATION
6.1 General
6.1.1 Location of Collateral. All Collateral, other than Inventory
in transit, Inventory being sold in the ordinary course of business, motor
vehicles, tractors and trailers, will at all times be kept by Borrower at one or
more of the business locations set forth in Exhibit B hereto and shall not,
without the prior written approval of Agent, be moved therefrom except, prior to
an Event of Default and Agent's acceleration of the maturity of the Obligations
in consequence thereof, for (i) removals in connection with dispositions of
Equipment that are authorized by subsection 6.4.2 hereof; (ii) the storage of
Inventory or Equipment by Borrower at locations within the continental United
States other than those shown on Exhibit B if (a) Borrower gives Agent written
notice of the new storage location at least thirty (30) days prior to storing
Inventory or Equipment at such location, (b) Agent's security interest in such
Inventory and Equipment is and continues to be a duly perfected, first priority
Lien thereon, (c) neither Borrower's nor Agent's right of entry upon the
premises where such Inventory is stored, or its right to remove the Inventory or
Equipment therefrom, is in any way restricted or Agent has received from the
lessor or bailee of such premises a landlord waiver or bailee letter in form and
substance acceptable to Agent, (d) the owner of such premises agrees with Agent
not to assert any landlord's bailee's or other Lien in respect of the Inventory
for unpaid rent or storage charges and (e) all negotiable documents and receipts
in respect of any Collateral maintained at such premises are promptly delivered
to Agent; and (iii) removals of Inventory or Equipment by Borrower from one
business location of Borrower to another business location of Borrower (which
location shall be listed on Exhibit B).
6.1.2 Insurance of Collateral. Borrower shall maintain and pay for
insurance upon all Collateral owned by it wherever located and with respect to
Borrower's business, covering casualty, hazard, public liability and such other
risks in such amounts and with such insurance companies as are reasonably
satisfactory to Agent. Borrower shall deliver the originals of such policies or
copies of the originals of such policies with original certificates of insurance
to Agent with satisfactory lender's loss payable endorsements or collateral
assignments thereof, naming Agent for its benefit and the ratable benefit of
Lenders as loss payee, assignee or additional insured, as appropriate. Each
policy of insurance or endorsement shall contain a clause requiring the insurer
to give not less than 30 days prior written notice to Agent in the event of
cancellation of the policy for any reason whatsoever and a clause specifying
that the interest of Agent shall not be impaired or invalidated by any act or
neglect of Borrower or the owner of the Property or by the occupation of the
premises for purposes more hazardous than are permitted by said policy. If
Borrower fails to provide and pay for such insurance, Agent may, at its option
but shall not be required to, procure the same and charge Borrower therefor.
Borrower agrees to deliver to Agent, promptly as rendered, true copies of all
material reports made in any reporting forms to insurance companies. The
foregoing notwithstanding, the provisions of this Section 6.1.2 shall not apply
to the life insurance policies Borrower maintains on the lives of certain of its
highly compensated employees in connection with deferred compensation
obligations owed to such employees.
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6.1.3 Protection of Collateral. All expenses of protecting, storing,
warehousing, insuring, handling, maintaining and shipping the Collateral, any
and all excise, property, sales, and use taxes imposed by any state, federal, or
local authority on any of the Collateral or in respect of the sale thereof shall
be borne and paid by Borrower. If Borrower fails to promptly pay any portion
thereof when due and is not actively contesting such charge in the manner
described in Section 7.1.14, Agent may, at its option, but shall not be required
to, pay the same and charge Borrower therefor. Agent shall not be liable or
responsible in any way for the safekeeping of any of the Collateral or for any
loss or damage thereto (except for reasonable care in the custody thereof while
any Collateral is in Agent's actual possession) or for any diminution in the
value thereof, or for any act or default of any warehouseman, carrier,
forwarding agency, or other person whomsoever, but the same shall be at
Borrower's sole risk.
6.2 Administration of Accounts.
6.2.1 Records, Schedules and Assignments of Accounts. Borrower shall
execute and deliver to Agent a Borrowing Base Certificate in the form attached
hereto as Exhibit C, on a monthly basis on the sixteenth day of each fiscal
month of Borrower or, if requested by Agent, more frequently or at Borrower's
option, semi-monthly. Borrower shall keep accurate and complete records of its
Accounts and all payments and collections thereon and shall submit to Agent on
such periodic basis as Agent shall request a sales and collections report for
the preceding period, in form satisfactory to Agent. On or before the sixteenth
day of each month from and after the date hereof, Borrower shall deliver to
Agent, in form acceptable to Agent, a summary aged trial balance of all of its
Accounts (unless Agent requests full details) existing as of the last day of the
preceding fiscal month, specifying, if and to the extent requested by Agent, the
names, addresses, face value, dates of invoices and due dates for each Account
Debtor obligated on an Account so listed ("Schedule of Accounts"), and, upon
Agent's request therefor, copies of proof of delivery and the original copy of
all documents, including, without limitation, repayment histories and present
status reports relating to the Accounts so scheduled and such other matters and
information relating to the status of then existing Accounts as Agent shall
reasonably request. In addition, if Accounts in an aggregate face amount in
excess of Two Hundred Thousand Dollars ($200,000) become ineligible because they
are all within one of the specified categories of ineligibility set forth in the
definition of Eligible Accounts or otherwise established by Agent, Borrower
shall notify Agent of such occurrence on the first Business Day following the
date on which Borrower knows or reasonably should have known of such occurrence
and the Borrowing Base shall thereupon be adjusted to reflect such occurrence.
If requested by Agent, Borrower shall execute and deliver to Agent formal
written assignments of all of its Accounts on a monthly basis or, if requested
by Agent, more frequently, which shall include all Accounts that have been
created since the date of the last assignment, together with copies of invoices
or invoice registers related thereto.
6.2.2 Discounts, Allowances, Disputes. If Borrower grants any
discounts, allowances or credits that are not shown on the face of the invoice
for the Account involved, Borrower shall report such discounts, allowances or
credits, as the case may be, to Agent as part of the next required Schedule of
Accounts. If any amounts due and owing in excess of Two Hundred Thousand Dollars
($200,000) are in dispute between Borrower and any Account Debtor, the
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applicable Borrower shall provide Agent with written notice thereof at the time
of submission of the next Schedule of Accounts, explaining in detail the reason
for the dispute, all claims related thereto and the amount in controversy. Upon
and during the continuation of an Event of Default, Agent shall have the right
to settle or adjust all disputes and claims directly with the Account Debtor and
to compromise the amount or extend the time for payment of the Accounts upon
such terms and conditions as Agent may deem advisable, and to charge the
deficiencies, costs and expenses thereof, including reasonable attorney's fees,
to Borrower.
6.2.3 Taxes. If an Account includes a charge for any tax payable to
any governmental taxing authority and if Borrower is not contesting any such tax
in the manner described in Section 7.1.14 hereof, Agent is authorized, in its
sole discretion, to pay the amount thereof to the proper taxing authority for
the account of Borrower and to charge Borrower therefor, provided, however that
Agent shall not be liable for any taxes to any governmental taxing authority
that may be due by Borrower.
6.2.4 Account Verification. Whether or not a Default or an Event of
Default has occurred, any of Agent's officers, employees or agents shall have
the right, at any time or times hereafter, in the name of Agent, any designee of
Agent or Borrower, to verify the validity, amount or any other matter relating
to any Accounts by mail, telephone, telegraph or otherwise. Borrower shall
cooperate fully with Agent in an effort to facilitate and promptly conclude any
such verification process.
6.2.5 Maintenance of Dominion Account. Borrower shall maintain a
Dominion Account pursuant to a lockbox arrangement acceptable to Agent with such
banks as may be selected by Borrower and be reasonably acceptable to Agent.
Borrower shall issue to any such banks selected by Borrower an irrevocable
letter of instruction directing such banks to deposit all payments or other
remittances received in the lockbox to the Dominion Account for application on
account of the Obligations. All funds deposited in the Dominion Account shall
immediately become the property of Agent and Borrower shall obtain the agreement
by such banks in favor of Agent to waive any offset rights against the funds so
deposited. Agent assumes no responsibility for such lockbox arrangement,
including, without limitation, any claim of accord and satisfaction or release
with respect to deposits accepted by any bank thereunder.
6.2.6 Collection of Accounts, Proceeds of Collateral. To expedite
collection, Borrower shall endeavor in the first instance to make collection of
its Accounts for Agent. All remittances received by Borrower on account of its
Accounts, together with the proceeds of any other Collateral, shall be held as
Agent's property by Borrower as trustee of an express trust for Agent's benefit
and Borrower shall immediately deposit same in kind in the Dominion Account.
Agent retains the right at all times after the occurrence and during the
continuation of a Default or an Event of Default to notify Account Debtors that
Accounts have been assigned to Agent and to collect Accounts directly in its own
name and to charge the reasonable collection costs and expenses, including
reasonable attorneys' fees to Borrower.
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6.3 Administration of Inventory.
6.3.1 Records and Reports of Inventory. Borrower shall keep accurate
and complete records of its Inventory. Borrower shall furnish Agent Inventory
reports in form and detail satisfactory to Agent at such times as Agent may
request, but at least once each fiscal month, not later than the sixteenth day
of such fiscal month, Borrower shall deliver to Agent the Inventory information
required to be contained in a Borrowing Base Certificate. Borrower shall conduct
a physical inventory no less frequently than annually and shall provide to Agent
a report based on each such physical inventory promptly thereafter, together
with such supporting information as Agent shall request.
6.3.2 Returns of Inventory. If at any time or times hereafter any
Account Debtor returns any Inventory to Borrower the shipment of which generated
an Account on which such Account Debtor is obligated in excess of Two Hundred
Thousand Dollars ($200,000), Borrower shall immediately notify Agent of the
same, specifying the reason for such return and the location, condition and
intended disposition of the returned Inventory.
6.4 Administration of Equipment.
6.4.1 Records and Schedules of Equipment. Borrower shall keep
accurate records itemizing and describing the kind, type, quantity and value of
its Equipment and all dispositions made in accordance with Section 6.4.2 hereof,
and, if requested by Agent, shall furnish Agent with a current schedule
containing the foregoing information on at least an annual basis and more often
if requested by Agent. Immediately on request therefor by Agent, Borrower shall
deliver to Agent any and all evidence of ownership, if any, of any of its
Equipment or operating or track lease.
6.4.2 Dispositions of Equipment. Borrower will not sell, lease or
otherwise dispose of or transfer any of the Equipment or any part thereof
without the prior written consent of Agent; provided, however, that the
foregoing restriction shall not apply, for so long as no Default or Event of
Default exists, to (i) dispositions of Borrower's Equipment which, in the
aggregate in respect to all such dispositions by Borrower during any consecutive
twelve-month period, has a fair market value or book value, whichever is less,
of Five Hundred Thousand Dollars ($500,000) or less, provided that all proceeds
thereof are remitted to Agent for application to the Loans pursuant to Section
3.3.1 or are expended pursuant to clause (ii) of this sentence, or (ii)
replacements of Equipment that is substantially worn, damaged, redundant,
replaceable with better Equipment or obsolete with Equipment of like kind,
function and value provided that the replacement Equipment shall be acquired
prior to or concurrently or within 90 days of the disposition of the worn,
damaged, redundant, replaceable with better Equipment, or obsolete Equipment,
and that the replacement Equipment shall be free and clear of Liens other than
Permitted Liens that are not Purchase Money Liens (except to the extent that the
replaced equipment was subject to a Purchase Money Lien). Borrower shall give
Agent at least 5 days prior written notice of any such sale, lease or other
disposition or transfer of Equipment other than dispositions described in
clauses (i) or (ii) of the previous sentence.
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6.5 Payment of Charges. All amounts chargeable to Borrower under Section 6
hereof shall be Obligations secured by all of the Collateral, shall be payable
on demand and shall bear interest from the date such advance was made until paid
in full at the rate applicable to the Base Rate Portion of Revolving Credit
Loans from time to time.
SECTION 7. REPRESENTATIONS AND WARRANTIES
7.1 General Representations and Warranties. To induce Agent and Lenders to
enter into this Agreement and to make advances hereunder, Borrower warrants,
represents and covenants to Agent and Lenders that:
7.1.1 Organization and Qualification. Except as otherwise disclosed
on Exhibit D, Borrower and each of its Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation. Borrower and each of its Subsidiaries is duly
qualified and is authorized to do business and is in good standing as a foreign
corporation in each state or jurisdiction listed on Exhibit D hereto and in all
other states and jurisdictions in which the failure of Borrower or such
Subsidiary to be so qualified would have a material adverse effect on the
financial condition, business or Properties of Borrower or such Subsidiary.
7.1.2 Corporate Power and Authority. Borrower and each of its
Subsidiaries is duly authorized and empowered to enter into, execute, deliver
and perform this Agreement and each of the other Loan Documents to which it is a
party. The execution, delivery and performance of this Agreement and each of the
other Loan Documents have been duly authorized by all necessary corporate action
and do not and will not: (i) require any consent or approval of the shareholders
of Borrower or any of its Subsidiaries; (ii) contravene Borrower's or any of its
Subsidiaries' charter, articles or certificate of incorporation or by-laws;
(iii) violate, or cause Borrower or any of its Subsidiaries to be in default
under, any provision of any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award in effect having applicability to
Borrower or any of its Subsidiaries; (iv) result in a breach of or constitute a
default, in any material respect, under any indenture or loan or credit
agreement or any other material agreement, lease or instrument to which Borrower
or any of its Subsidiaries is a party or by which it or its Properties may be
bound or affected; or (v) result in, or require, the creation or imposition of
any Lien (other than Permitted Liens) upon or with respect to any of the
Properties now owned or hereafter acquired by Borrower or any of its
Subsidiaries.
7.1.3 Legally Enforceable Agreement. This Agreement is, and each of
the other Loan Documents to which Borrower is a party when delivered under this
Agreement will be, a legal, valid and binding obligation of Borrower enforceable
against it in accordance with its respective terms (subject, as to enforcement,
to general principles of equity, and to bankruptcy, insolvency and similar laws
affecting creditors' rights generally).
7.1.4 Capital Structure. Exhibit E hereto states: (i) the correct
name of each Subsidiary of Borrower, its jurisdiction of incorporation and the
percentage of its Voting Stock
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owned by Borrower; (ii) the name of each of Borrower's corporate or joint
venture Affiliates and the nature of the affiliation; (iii) the number, nature
and holder of all outstanding Securities of Borrower and each Subsidiary of
Borrower; and (iv) the number of authorized, issued and treasury shares of
Borrower and each Subsidiary of Borrower. Borrower has good title to all of the
shares it purports to own of the stock of each of its Subsidiaries, free and
clear in each case of any Lien other than Permitted Liens. All such shares have
been duly issued and are fully paid and non-assessable. Except as otherwise
provided in Exhibit E, there are no outstanding options to purchase, or any
rights or warrants to subscribe for, or any commitments or agreements to issue
or sell, or any Securities or obligations convertible into, or any powers of
attorney relating to, shares of the capital stock of Borrower or any of their
Subsidiaries. Except as set forth on Exhibit E, there are no outstanding
agreements or instruments binding upon any of Borrower's shareholders relating
to the ownership of its shares of capital stock.
7.1.5 Corporate Names. During the five years prior to the Closing
Date, neither Borrower nor any of its Subsidiaries has been known as or used any
corporate, fictitious or trade names except those listed on Exhibit F hereto.
Except as set forth on Exhibit F or as otherwise permitted by Section 8.2.1,
neither Borrower nor any of its Subsidiaries has been the surviving corporation
of a merger or consolidation or acquired all or substantially all of the assets
of any Person.
7.1.6 Business Locations; Agent for Process. Borrower's and each of
its Subsidiaries' chief executive office and other places of business are as
listed on Exhibit B hereto. During the preceding one-year period, Borrower has
not had an office, place of business or agent for service of process other than
as listed on Exhibit B. No Inventory is stored with a bailee, warehouseman or
similar party. No Inventory is or will be consigned to any Person by Borrower
without Agent's prior written consent, and, if such consent is given, Borrower
shall, prior to the delivery of any Inventory on consignment, (i) provide Agent
with all consignment agreements to be used in connection with such consignment,
all of which shall be reasonably acceptable to Agent, (ii) prepare, execute and
file appropriate financing statements with respect to any consigned Inventory,
showing Agent as assignee, (iii) conduct a search of all filings made against
the consignee in all jurisdictions in which any consigned Inventory is to be
located and deliver to Agent copies of the results of all such searches and (iv)
notify, in writing, all the creditors of the consignee which are or may be
holders of Liens in the Inventory to be consigned that Borrower expects to
deliver certain Inventory to the consignee, all of which Inventory shall be
described in such notice by item or type. Lender consents to Borrower consigning
Inventory to certain of its customers provided that the amount of such consigned
Inventory shall not exceed, at any time, Five Hundred Thousand Dollars
($500,0000).
7.1.7 Title to Properties; Priority of Liens. Borrower and each of
its Subsidiaries has good and insurable, title to or valid and subsisting
leasehold estate in, as applicable, all of its real Property, and good title to
all of the Collateral and all of its other Property, in each case, free and
clear of all Liens except for Permitted Liens and for Liens being contested in
the manner provided for in Section 7.1.14. Borrower has paid or discharged all
lawful claims which, if unpaid, might become a Lien against any of Borrower's
Properties that is not a Permitted Lien, unless any such
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claim is being contested in the manner provided for in Section 7.1.14. The Liens
granted to Agent for its benefit and the ratable benefit of Lender under Section
5 hereof are first priority Liens, subject only to Permitted Liens.
7.1.8 Accounts. Agent may rely, in determining which Accounts are
Eligible Accounts, on all statements and representations made by Borrower with
respect to any Account or Accounts. Unless otherwise indicated in writing to
Agent, with respect to each Account:
(i) It is genuine and in all respects what it purports to be,
and it is not evidenced by a judgment;
(ii) It arises out of a completed, bona fide sale and delivery
of goods or rendition of services by Borrower in the ordinary course of
its business and in accordance with the terms and conditions of all
purchase orders, contracts or other documents relating thereto and forming
a part of the contract between Borrower and the Account Debtor;
(iii) It is for a liquidated amount maturing as stated in the
duplicate invoice covering such sale or rendition of services, a copy of
which has been furnished or is available to Agent;
(iv) Such Account, and Agent's security interest therein, is
not, and, to the best of Borrower's knowledge, will not (by voluntary act
or omission of Borrower) be in the future, subject to any offset, Lien,
deduction, defense, dispute, counterclaim or any other adverse condition
except for disputes resulting in returned goods where the amount in
controversy is deemed by Agent to be immaterial, and each such Account is
absolutely owing to Borrower and is not contingent in any respect or for
any reason;
(v) Borrower has not made any agreement with any Account
Debtor thereunder for any extension, compromise, settlement or
modification of any such Account or any deduction therefrom, except
discounts or allowances which are granted by Borrower in the ordinary
course of its business in accordance with past practice and which are
reflected in the calculation of the net amount of each respective invoice
related thereto and are reflected in the Schedules of Accounts submitted
to Agent pursuant to subsection 6.2.1 hereof;
(vi) To the best of Borrower's knowledge, there are no facts,
events or occurrences which in any way impair the validity or
enforceability of any Accounts or tend to reduce the amount payable
thereunder from the face amount of the invoice and statements delivered to
Agent with respect thereto (other than normal refunds and refunds
consistent with past practice);
(vii) To the best of Borrower's knowledge, the Account Debtor
thereunder (1) had the capacity to contract at the time any contract or
other document giving rise to the Account was executed and (2) such
Account Debtor is Solvent; and
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(viii)To the best of Borrower's knowledge, there are no
proceedings or actions which are threatened or pending against any Account
Debtor thereunder which might result in any material adverse change in
such Account Debtor's financial condition or the collectibility of such
Account.
7.1.9 Equipment. The Equipment of Borrower is in good operating
condition and repair, and all necessary replacements of and repairs thereto
shall be made so that the value and operating efficiency of the Equipment shall
be maintained and preserved, reasonable wear and tear excepted. Borrower will
not permit any material portion of the Equipment to become affixed to any real
Property leased to Borrower so that an interest arises therein under the real
estate laws of the applicable jurisdiction unless the landlord of such real
Property has executed a landlord waiver or leasehold mortgage in favor of and in
form acceptable to Agent, and Borrower will not permit any of the Equipment to
become an accession to any personal Property other than Equipment that is
subject to first priority (except for Permitted Liens) Liens in favor of Agent.
7.1.10 Financial Statements; Fiscal Year. The Consolidated balance
sheets of Borrower and such other Persons described therein (including the
accounts of all Subsidiaries of Borrower for the respective periods during which
a Subsidiary relationship existed) as of December 31, 1996 and the related
statements of income, shareholders equity and cash flow for the periods ended on
such dates, have been prepared in accordance with GAAP (other than the absence
of footnotes), and present fairly, in all material respects, the financial
position of Borrower and such Persons at such dates and the results of
Borrower's operations for such periods (subject to normal year-end non-material
adjustments). Since December 31, 1996, except for the consummation of the
transactions contemplated by the Sale Documents and any restructuring,
reorganization or similar charge (in an aggregate amount not to exceed Twenty
Million Five Hundred Thousand Dollars ($20,500,000)) taken in connection
therewith, there has been no material adverse change in the condition, financial
or otherwise, of Borrower and such other Persons, on a consolidated basis, as
shown on the Consolidated balance sheet as of such date and no change in the
aggregate value of Equipment and real Property owned by Borrower or such other
Persons, except changes in the ordinary course of business, none of which
individually or in the aggregate has been materially adverse. The fiscal year of
Borrower and each of its Subsidiaries ends on December 31st of each year.
7.1.11 Full Disclosure. The financial statements referred to in
Section 7.1.10 hereof do not, nor does this Agreement or any other written
statement of Borrower to Agent or any Lender, contain any untrue statement of a
material fact or omit a material fact necessary to make the statements contained
therein or herein not misleading. There is no fact known to Borrower which
Borrower has failed to disclose to Agent in writing which materially affects
adversely or, so far as Borrower can, as of the Closing Date, reasonably
foresee, will materially affect adversely the respective Properties, business,
prospects, profits or condition (financial or otherwise) of Borrower or any of
its Subsidiaries or the ability of Borrower or its Subsidiaries to perform this
Agreement or the other Loan Documents.
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7.1.12 Solvent Financial Condition. Borrower and each of its
Subsidiaries is now and, after giving effect to the Loans to be made hereunder,
at all times will be, Solvent.
7.1.13 Surety Obligations. Neither Borrower nor any of its
Subsidiaries is obligated as surety or indemnitor under any surety or similar
bond or other contract issued or entered into any agreement to assure payment,
performance or completion of performance of any undertaking or obligation of any
Person.
7.1.14 Taxes. Borrower's federal tax identification number is
▇▇-▇▇▇▇▇▇▇. The federal tax identification number of each of Borrower's
Subsidiaries is shown on Exhibit G hereto. Borrower and each of its Subsidiaries
has filed all federal, state and local tax returns and other reports it is
required by law to file and has paid, or made provision for the payment of, all
taxes, assessments, fees, levies and other governmental charges upon it, its
income and Properties as and when such taxes, assessments, fees, levies and
charges that are due and payable, except where the failure to so file could not
reasonably be expected to have a material adverse effect on Borrower or its
Properties or business operations, unless and to the extent any thereof are
being actively contested in good faith and by appropriate proceedings and
Borrower maintains reasonable reserves on its books therefor. The provision for
taxes on the books of Borrower and its Subsidiaries are adequate for all years
not closed by applicable statutes, and for its current fiscal year.
7.1.15 Brokers. There are no claims for brokerage commissions,
finder's fees or investment banking fees in connection with the transactions
contemplated by this Agreement.
7.1.16 Patents, Trademarks, Copyrights and Licenses. Borrower and
each of its Subsidiaries owns or possesses all the patents, trademarks, service
marks, trade names, copyrights and licenses necessary for the present and
planned future conduct of its business without any known conflict with the
rights of others. All such patents, trademarks, service marks, tradenames,
copyrights, licenses and other similar rights owned or possessed by Borrower are
listed on Exhibit H hereto.
7.1.17 Governmental Consents. Borrower and each of its Subsidiaries
has, and is in good standing with respect to, all governmental consents,
approvals, licenses, authorizations, permits, certificates, inspections and
franchises necessary to continue to conduct its business as heretofore or
proposed to be conducted by it and to own or lease and operate its Properties as
now owned or leased by it.
7.1.18 Compliance with Laws. Borrower and each of its Subsidiaries
has duly complied with, in all material respects, and its Properties, business
operations and leaseholds are in compliance in all material respects with, the
provisions of all federal, state and local laws, rules and regulations
applicable to Borrower or such Subsidiary, as applicable, its Properties or the
conduct of its business and there have been no citations, notices or orders of
noncompliance issued to Borrower or any of its Subsidiaries under any such law,
rule or regulation, which could reasonably be expected to have a material
adverse affect on Borrower or its business. Borrower and each of its
Subsidiaries has established and maintains an adequate monitoring system to
insure that it remains
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in compliance, in all material respects, with all federal, state and local laws,
rules and regulations applicable to it. No Inventory has been produced by a
Borrower in violation of the Fair Labor Standards Act (29 U.S.C. ss.201 et seq.)
as amended.
7.1.19 Restrictions. Neither Borrower nor any of its Subsidiaries is
a party or subject to any contract, agreement, or charter or other corporate
restriction, which materially and adversely affects its business or the use or
ownership of any of its Properties. Neither Borrower nor any of its Subsidiaries
is a party or subject to any contract or agreement which restricts its right or
ability to incur Indebtedness, other than as set forth on Exhibit I hereto, none
of which prohibit the execution of or compliance with this Agreement or the
other Loan Documents by Borrower or any of its Subsidiaries, as applicable.
7.1.20 Litigation. Except as set forth on Exhibit J hereto, as of
the date hereof, there are no actions, suits, proceedings or investigations
pending, or to the knowledge of Borrower, threatened, against or affecting
Borrower or any of its Subsidiaries, or the business, operations, Properties,
prospects, profits or condition of Borrower or any of its Subsidiaries, which
could reasonably be expected to have a material adverse effect of Borrower in
the amount of One Hundred Thousand Dollars ($100,000) or more individually or
One Million Dollars ($1,000,000) or more in the aggregate. Except as set forth
on Exhibit I hereto, neither Borrower nor any of its Subsidiaries is in default,
with respect to any order, writ, injunction, judgment, decree or rule of any
court, governmental authority or arbitration board or tribunal to which Borrower
or any of its Subsidiaries or any of their respective Properties are subject,
which default could reasonably be expected to have a material adverse affect
upon Borrower or its business.
7.1.21 No Defaults. No event has occurred and no condition exists
which would, upon or after the execution and delivery of this Agreement or
Borrower's performance hereunder, constitute a Default or an Event of Default.
Neither Borrower nor any of its Subsidiaries is in default, and no event has
occurred and no condition exists which constitutes, or which with the passage of
time or the giving of notice or both would constitute, a default in the payment
of any Indebtedness to any Person for Money Borrowed.
7.1.22 Leases. Exhibit K hereto is a complete listing of all Capital
Leases of Borrower and its Subsidiaries and Exhibit L hereto is a complete
listing of all operating leases, as of the date hereof, of Borrower and its
Subsidiaries, involving annual Rentals of $50,000 or more. Borrower and each of
its Subsidiaries is in full compliance, in all material respects, with all of
the terms of each of its respective capitalized and operating leases.
7.1.23 Pension Plans. Except as disclosed on Exhibit M hereto,
neither Borrower nor any of its Subsidiaries has any Plan. Borrower and each of
its Subsidiaries is in full compliance, in all material respects, with the
requirements of ERISA and the regulations promulgated thereunder with respect to
each Plan. To Borrower's knowledge, no fact or situation that could reasonably
be expected to result in a material adverse change in the financial condition of
Borrower or any of its Subsidiaries exists in connection with any Plan. As of
the Closing Date, neither Borrower nor any
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of its Subsidiaries has any withdrawal liability in connection with a
Multiemployer Plan, except as disclosed on Exhibit M.
7.1.24 Trade Relations. There exists no actual or, to Borrower's
knowledge, threatened termination, cancellation or limitation of, or any
modification or change in, the business relationship between Borrower or any of
its Subsidiaries and any customer or any group of customers whose purchases
individually or in the aggregate are material to the business of Borrower or any
of its Subsidiaries, or with any material supplier, and, to Borrower's
knowledge, there exists no present condition or state of facts or circumstances
which would materially affect adversely Borrower or any of its Subsidiaries or
prevent Borrower or any of its Subsidiaries from conducting such business after
the consummation of the transaction contemplated by this Agreement in
substantially the same manner in which it has heretofore been conducted. The
foregoing representation and warranties shall not be deemed to apply to the
Supply Agreement.
7.1.25 Labor Relations. Except as described on Exhibit N hereto,
neither Borrower nor any of its Subsidiaries is a party to any collective
bargaining agreement. Except as set forth on Exhibit N hereto, there are no
material grievances, disputes or controversies with any union or any other
organization of Borrower's or any of its Subsidiaries' employees, or threats of
strikes, work stoppages or any asserted pending demands for collective
bargaining by any union or organization.
7.2 Continuous Nature of Representations and Warranties. Each request for
a Loan made by Borrower pursuant to this Agreement or any of the other Loan
Documents shall constitute (i) an automatic representation and warranty by
Borrower to Agent and Lenders that there does not then exist any Default or
Event of Default; (ii) a reaffirmation as of the date of said request that the
representations and warranties of Borrower as to the completeness and accuracy
of any Exhibit were true and correct as of the date thereof; (iii) a
reaffirmation as of the date of such request that any representation and
warranty relating to a specific time was true in all material respects as of
such time; and (iv) a reaffirmation as of the date of said request that all of
the other representations and warranties of Borrower contained in this Agreement
and the other Loan Documents are true in all material respects except for
changes in Borrower's business or operations that would render the information
in any Exhibit attached hereto either inaccurate or incomplete, in any material
respect, so long as Required Lenders has consented to such changes or such
changes are not prohibited by this Agreement.
7.3 Survival of Representations and Warranties. All representations and
warranties of Borrower contained in this Agreement or any of the other Loan
Documents shall survive the execution, delivery and acceptance thereof by Agent
and the parties thereto and the closing of the transactions described therein or
related thereto.
SECTION 8. COVENANTS AND CONTINUING AGREEMENTS
8.1 Affirmative Covenants. During the term of this Agreement, and
thereafter for so long as there are any outstanding Obligations (other than
contingent indemnity Obligations arising from
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any claim unknown to Borrower, Agent or any Lender) owed by Borrower to Agent or
any Lender, Borrower covenants that, unless otherwise consented to by Required
Lenders in writing, it shall:
8.1.1 Visits and Inspections. Permit representatives of Agent or any
Lender, from time to time, as often as may be reasonably requested, but only
during normal business hours, to visit and inspect the Properties of Borrower
and each of its Subsidiaries, inspect, audit and make extracts from its books
and records, and discuss with its officers, its employees and its independent
accountants, Borrower's and each of its Subsidiaries' business, assets,
liabilities, financial condition, business prospects and results of operations.
8.1.2 Notices. Promptly notify Agent in writing of the occurrence of
any event or the existence of any fact which renders any representation or
warranty in this Agreement or any of the other Loan Documents inaccurate,
incomplete or misleading, in any material respect.
8.1.3 Financial Statements. Keep, and cause and each Subsidiary to
keep, adequate records and books of account with respect to its business
activities in which proper entries are made in accordance with GAAP reflecting
all its financial transactions; and cause to be prepared and furnished to Agent
and Lenders the following (all to be prepared in accordance with GAAP applied on
a consistent basis, unless Borrower's certified public accountants concur in any
change therein and such change is disclosed to Agent and Lenders and is
consistent with GAAP):
(i) as soon as possible, but not later than 90 days after the
close of each fiscal year of Borrower, unqualified audited (in respect to
the Consolidated financial statements only) financial statements of
Borrower and its Subsidiaries as of the end of such year, on a
Consolidated and consolidating basis, certified by a firm of independent
certified (in respect to the Consolidated financial statements only)
public accountants of recognized standing selected by Borrower but
acceptable to Agent (except for a qualification for a change in accounting
principles with which the accountant concurs);
(ii) as soon as possible, but not later than 30 days after the
end of each fiscal month hereafter, which is not the end of any fiscal
quarter, unaudited interim Consolidated financial statements of Borrower
and its Subsidiaries as of the end of such fiscal month and of the portion
of Borrower's fiscal year then elapsed, on a Consolidated and
consolidating basis, certified by the principal financial officer of
Borrower as prepared in accordance with GAAP and fairly presenting the
Consolidated financial position and results of operations of Borrower and
its Subsidiaries for such month and period subject only to changes from
audit and year-end adjustments and except that such statements need not
contain notes;
(iii) as soon as possible, but not later than 45 days (90 days
in respect to the last fiscal quarter of each fiscal year) after the end
of each fiscal quarter hereafter, unaudited interim Consolidated financial
statements of Borrower and its Subsidiaries as of the end of such fiscal
quarter and of the portion of Borrower's financial year then elapsed, on a
Consolidated basis, certified by the principal financial officer of
Borrower
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as prepared in accordance with GAAP and fairly presenting the Consolidated
financial position and results of operations of Borrower and its
Subsidiaries for such fiscal quarter and period subject only to changes
from audit and year-end adjustments and except that such statements need
not contain notes;
(iv) promptly after the sending or filing thereof, as the case
may be, copies of any proxy statements, financial statements or reports
which Borrower has made available to its shareholders and copies of any
regular, periodic and special reports or registration statements which
Borrower files with the Securities and Exchange Commission or any
governmental authority which may be substituted therefor, or any national
securities exchange;
(v) if requested by Agent, promptly after the filing thereof,
copies of any annual report to be filed with ERISA in connection with each
Plan; and
(vi) such other data and information (financial and otherwise)
as Agent or Required Lenders, from time to time, may reasonably request,
bearing upon or related to the Collateral or Borrower and each of
Borrower's Subsidiaries' financial condition or results of operations.
Concurrently with the delivery of the financial statements described
in clause (i) of this Section 8.1.3, Borrower shall forward to Agent and Lenders
a copy of the final accountants' letter issued to Borrower's management that is
prepared in connection with such financial statements and also shall cause to be
prepared and shall furnish to Agent and Lenders a certificate of the aforesaid
certified public accountants certifying to Agent and Lenders that, based upon
their examination of the financial statements of Borrower and its Subsidiaries,
they are not aware of any Default or Event of Default relating to accounting
matters, or, if they are aware of such Default or Event of Default, specifying
the nature thereof, and acknowledging, in a manner satisfactory to Agent, that
they are aware that Agent and Lenders are relying on such financial statements
in making their decisions with respect to the Loans. Concurrently with the
delivery of the financial statements described in clauses (i) and (ii) of this
Section 8.1.3, or more frequently if requested by Agent, Borrower shall cause to
be prepared and furnished to Agent and Lenders a Compliance Certificate in
substantially the form of Exhibit O hereto executed by the Chief Financial
Officer of Borrower. The Compliance Certificates delivered with monthly
financial statements need only contain information concerning compliance with
Section 8.3 if such statements are dated as of the last day of a fiscal quarter
of Borrower.
Subject to the provisions of Section 8.1.1, Borrower authorizes
Agent or its designated representatives to communicate directly with its
independent certified public accountants and authorizes those accountants to
disclose to Agent any and all financial statements and other supporting
financial documents and schedules. Within five (5) days after the earlier of the
last day of each fiscal year of Borrower and the date Borrower engaged
independent certified public accountants to audit Borrower's financial
statements, Borrower shall deliver to such independent certified public
accountants a letter from Borrower addressed to such independent certified
public
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accountants indicating that it is a primary intention of Borrower in engaging
such accountants that Agent and Lenders rely upon such financial statements of
Borrower and its Subsidiaries.
8.1.4 Landlord and Storage Agreements. Provide Agent with copies of
all material agreements between Borrower or any of its Subsidiaries and any
landlord or warehouseman which owns any premises at which any Inventory or
Equipment may, from time to time, be kept.
8.1.5 Projections. No later than 30 days after the end of each
fiscal year of Borrower (March 1, 1998 in respect to fiscal year 1998) deliver
to Agent and Lenders Projections of Borrower and its Subsidiaries, in each case
for the forthcoming fiscal year, quarter by quarter on a unconsolidated,
consolidating and Consolidated basis.
8.2 Negative Covenants. During the term of this Agreement, and thereafter
for so long as there are any Obligations (other than contingent indemnity
Obligations arising from any claim unknown to Borrower, Agent or any Lender) to
Agent and Lenders, Borrower covenants that, unless Required Lenders (all Lenders
in respect to Section 8.2.1) have first consented thereto in writing, it will
not:
8.2.1 Mergers; Consolidations; Acquisitions. Merge or consolidate,
or permit any Subsidiary of Borrower to merge or consolidate, with any Person;
nor acquire, nor permit any of its Subsidiaries to acquire, all or any
substantially all of the Properties of any Person, except for Permitted
Acquisitions.
8.2.2 Loans. Make, or permit any Subsidiary to make, any loans or
other advances of money (other than for salary, travel advances, advances
against commissions, loans to employees for the purchase of personal computers
and other similar advances in the ordinary course of business and employee
relocation loans provided that the aggregate amount of all employee relocation
loans shall not exceed at any time One Million Dollars ($1,000,000)) to any
Person, including, without limitation, any of Borrower's Affiliates, officers or
employees.
8.2.3 Total Indebtedness. Create, incur, assume, or suffer to exist,
or permit any Subsidiary of Borrower to create, incur or suffer to exist, any
Indebtedness, except: (i) Obligations owing to Agent and Lenders; (ii)
Indebtedness of any Subsidiary to Borrower; or (iii) accounts payable to trade
creditors which are not more than thirty (30) days past due and current
operating expenses (other than for Money Borrowed) which are not more than
thirty (30) days past due, in each case incurred in the ordinary course of
business and paid within such time period, unless the same are actively being
contested in good faith and, if appropriate, and lawful proceedings and the
Borrower shall have set aside such reserves, if any, with respect thereto as are
required by GAAP and deemed adequate by Borrower and, in respect to reserves
contained on year-end statements, its independent accountants; (iv) obligations
to pay Rentals permitted by Section 8.2.16; (v) Permitted Purchase Money
Indebtedness; (vi) contingent liabilities arising out of endorsements of checks
and other negotiable instruments for deposit or collection in the ordinary
course of business; (vii) Indebtedness to Agent, any Lender or any Affiliate of
either under any interest rate hedging, swap, cap or similar agreement between
Borrower and such Person; (viii) obligations under Capitalized
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Leases to the extent not prohibited by any other section of this Section 8.2.3;
(ix) Indebtedness for deferred compensation owed by Borrower to its highly
compensated employees; (x) Indebtedness arising in connection with employee
benefit plans entered into or incurred in the ordinary course of business; (xi)
Indebtedness for deferred taxes; (xii) Indebtedness incurred in obtaining life
insurance in respect to the lives of certain highly compensated employees of
Borrower in connection with deferred compensation obligations owed to such
employees; (xiii) for the period from the Closing Date until the date which is
60 days from the Closing Date, Indebtedness outstanding under the Industrial
Revenue Bonds; and (xiv) Indebtedness not included in paragraphs (i) through
(xiii) above which does not exceed at any time, in the aggregate, the sum of One
Million Five Hundred Thousand Dollars ($1,500,000).
8.2.4 Affiliate Transactions. Except as provided below, enter into,
or be a party to, or permit any Subsidiary to enter into or be a party to, any
transaction with any Affiliate, except in the ordinary course of and pursuant to
the reasonable requirements of Borrower's or such Subsidiary's business and upon
fair and reasonable terms which are fully disclosed to Agent and are no less
favorable to Borrower than would be obtainable in a comparable arm's length
transaction with a Person not an Affiliate of Borrower or such Subsidiary.
8.2.5 Limitation on Liens. Create or suffer to exist, or permit any
Subsidiary of Borrower to create or suffer to exist, any Lien upon any of its
Property, income or profits, whether now owned or hereafter acquired, except:
(i) Liens at any time granted in favor of Agent, for its benefit and the ratable
benefit of Lenders; (ii) Liens for taxes (excluding any Lien imposed pursuant to
any of the provisions of ERISA) not yet due or which are being contested as
permitted by the terms hereof other than any Lien which would, as a matter of
law, exist notwithstanding such contest and late payment, but only if in Agent's
reasonable judgment such Lien does not affect adversely Agent's or Lenders'
rights or the priority of Agent's Lien in Collateral; (iii) Liens securing the
claims or demands of materialmen, mechanics, carriers, warehousemen, landlords
and other like Persons for labor, materials, supplies or rentals incurred in the
ordinary course of Borrower's business, but only if the payment thereof is not
at the time required or if the aggregate amount of such payments does not exceed
Two Hundred Fifty Thousand Dollars ($250,000); (iv) deposits made in the
ordinary course of business in connection with workmen's compensation,
unemployment insurance, social security and other like laws; (v) attachment,
judgment and other similar non-tax Liens arising in connection with court
proceedings, but only if and for so long as the execution or other enforcement
of such Liens is and continues to be effectively stayed and bonded on appeal,
the validity and amount of the claims secured thereby are being actively
contested in good faith and by appropriate lawful proceedings and such Liens do
not, in the aggregate, materially detract from the value of the Property of
Borrower or materially impair the use thereof in the operation of Borrower's
business; (vi) Purchase Money Liens securing Permitted Purchase Money
Indebtedness which is not incurred in violation of Section 8.2.3 of this
Agreement; (vii) reservations, exceptions, easements, rights of way, and other
similar encumbrances affecting real Property, provided that, in Agent's
reasonable judgment, they do not in the aggregate materially detract from the
value of said Properties or materially interfere with their use in the ordinary
conduct of Borrower's business and, if said real Property constitutes
Collateral, such Liens existed as of the Closing Date
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or Agent has consented thereto; (viii) Liens securing Indebtedness of a
Subsidiary to Borrower or another Subsidiary; (ix) such other Liens as appear on
Exhibit P attached hereto; (x) any other Permitted Encumbrance; or (xi) such
other Liens as Required Lenders may hereafter approve in writing.
8.2.6 Permitted Subordinated Debt. Make, or permit any Subsidiary of
Borrower to make, any payment of any part or all of any Permitted Subordinated
Debt or take any other action or omit to take any other action in respect of any
Permitted Subordinated Debt, except in accordance with the subordination
agreement relative thereto. Amend, supplement or modify in any manner adverse to
Borrower, Agent or Lenders the provisions of any document, instrument or
agreement relating to any Permitted Subordinated Debt.
8.2.7 Partnership or Joint Ventures. Become or agree to become a
general or limited partner in any general or limited partnership or a joint
venturer in any joint venture.
8.2.8 Distributions. Declare or make, or permit any Subsidiary of
Borrower to declare or make, any Distributions, other than Distributions made by
a Subsidiary of Borrower
solely to Borrower .
8.2.9 Disposition of Assets. Sell, lease or otherwise dispose of any
of, or permit any Subsidiary of Borrower to sell, lease (as lessor) or otherwise
dispose any of, its Properties, including any disposition of Property as part of
a sale and leaseback transaction, to or in favor of any Person, except (i) sales
of Inventory in the ordinary course of business for so long as no Event of
Default exists hereunder, (ii) a transfer of Property to Borrower by a
Subsidiary of Borrower or (iii) dispositions expressly authorized by this
Agreement, including, without limitation, dispositions permitted pursuant to
Section 6.4.2.
8.2.10 Subsidiaries. Hereafter create any Subsidiary or divest
itself of any material assets by transferring them to any Subsidiary. Permit any
of its Subsidiaries to issue any additional share of its capital stock to any
Person other than Borrower, except director's qualifying shares.
8.2.11 Restricted Investment. Make or have, or permit any Subsidiary
of Borrower to make or have, any Restricted Investment.
8.2.12 Margin Securities. Own, purchase or acquire (or enter into
any contract to purchase or acquire) any "margin security" as defined by any
regulation of the Federal Reserve Board as now in effect or as the same may
hereafter be in effect unless, prior to any such purchase or acquisition or
entering into any such contract, Agent shall have received an opinion of counsel
satisfactory to Agent to the effect that such purchase or acquisition will not
cause this Agreement to violate Regulations G or U or any other regulation of
the Federal Reserve Board then in effect.
8.2.13 Tax Consolidation. File or consent to the filing of any
consolidated income tax return with any Person other than a Subsidiary of
Borrower and Parent.
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8.2.14 Hedging Transactions. Without Agent's prior written consent,
engage in any currency, commodity or interest rate hedging or similar
transactions.
8.2.15 ▇▇▇▇-and-Hold Sales, Etc. Except in respect to consignment
sales permitted by the terms hereof, make a sale to any customer on a
▇▇▇▇-and-hold, guaranteed sale, sale and return, sale on approval or consignment
basis, or any sale on a repurchase or return basis (it being understood that
contingent liabilities to repurchase equipment pursuant to floor plan and retail
consumer financing arrangements do not violate the provisions of this Section).
8.2.16 Leases. Become a lessee under any operating lease of Property
if the aggregate Rentals payable during any current or future period of twelve
(12) consecutive months during the Term hereof under the lease in question and
all other leases under which Borrower is then lessee would exceed Eight Million
Dollars ($8,000,000). The term "Rentals" means, as of the date of determination
all payments which the lessee is required to make by the terms of any lease,
exclusive of payments for taxes, insurance, common area maintenance and the
like.
8.3 Specific Financial Covenants. During the term of this Agreement, and
thereafter for so long as there are any Obligations (other than contingent
indemnity Obligations arising from any claim unknown to Borrower, Agent or any
Lender) to Lenders, Borrower covenants that, unless otherwise consented to by
Required Lenders in writing, it shall:
8.3.1 Money Borrowed to EBITDA Ratio. Have at the end of the fiscal
quarters ending April 4, 1998, July 4, 1998 and October 3, 1998 a ratio of Money
Borrowed as at the end of the applicable fiscal quarter to Annualized EBITDA
equal to or less than 5.50 to 1. Have at the end of each other fiscal quarter
within the Original Term a ratio of Money Borrowed as at the end of the
applicable fiscal quarter to EBITDA for the twelve consecutive months then ended
equal to or less than 5.50 to 1.
8.3.2 Interest Coverage Ratio. Have at the end of each of the fiscal
quarters ending April 4, 1998, July 4, 1998 and October 3, 1998 a year-to-date
Interest Coverage Ratio as at the end of the applicable fiscal quarter equal to
or greater than 2.0 to 1. Have at the end of each other fiscal quarter within
the Original Term, an Interest Coverage Ratio for the twelve consecutive months
then ended equal to or greater than 2.0 to 1.
8.3.3 Fixed Charge Coverage Ratio. Have at the end of each of the
fiscal quarters ending April 4, 1998, July 4, 1998 and October 3, 1998 a
year-to-date Fixed Charge Ratio as of the end of the applicable fiscal quarter
equal to or greater than 1.25 to 1. Have at the end of each other fiscal quarter
within the Original Term, a Fixed Charge Coverage Ratio for the twelve
consecutive months then ended equal to or greater than 1.25 to 1.
SECTION 9. CONDITIONS PRECEDENT
Notwithstanding any other provision of this Agreement or any of the
other Loan Documents, and without affecting in any manner the rights of Agent
and Lenders under the other
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sections of this Agreement, Lenders shall not be required to make any Loan under
this Agreement unless and until each of the following conditions has been and
continues to be satisfied:
9.1 Documentation. Agent and Lenders shall have received, in form and
substance satisfactory to Agent and Lenders and their counsel, a duly executed
copy of this Agreement and the other Loan Documents, together with such
additional documents, instruments and certificates as Agent and Lenders and
their counsel shall require in connection therewith, including all documents,
instruments, agreements and schedules listed in the Schedule of Documents
attached hereto and incorporated herein as Exhibit Q, all in form and substance
satisfactory to Agent and Lenders and their counsel.
9.2 No Default. No Default or Event of Default shall exist.
9.3 Other Loan Documents. Each of the conditions precedent set forth in
the other Loan Documents shall have been satisfied.
9.4 No Litigation. No action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before any court,
governmental agency or legislative body to enjoin, restrain or prohibit, or to
obtain damages in respect of, or which is related to or arises out of this
Agreement or the consummation of the transactions contemplated hereby.
9.5 Sale of ▇▇▇▇▇▇ Manufacturing Division. The Sale Documents, in form and
substance acceptable to Agent and Lender, have been executed and delivered by
Borrower and JELD-WEN, inc. and the transactions contemplated thereby have been
consummated in accordance with the terms and conditions of such sale Documents.
The proceeds payable to Borrower upon the consummation of the transactions
contemplated by the Sale Documents shall equal or exceed Thirty-Six Million
Dollars ($36,000,000), Thirty-Six Million Dollars ($36,000,000) of which shall
be paid to Agent for the benefit of Lenders first to repay all obligations owing
in respect to "Acquisition Loans" outstanding under the Original Loan Agreement
and secondly to repay outstanding Revolving Credit Loans.
9.6 Effectiveness of this Agreement. Upon the fulfillment or waiver of
each of the conditions precedent listed in Sections 9.1, 9.2, 9.3, 9.4 and 9.5
above, Agent and Lenders shall be deemed (i) to have consented to the
transactions described in Section 9.5 above and (ii) Agent and Lenders shall be
deemed to have waived any violations of the financial covenants contained in
Section 9.3 of the Original Loan Agreement for the fiscal periods ended December
31, 1997 and February 1, 1998.
9.7 Conditions Precedent to Acquisition Loans. The obligations of Lenders
to make any Acquisition Loan is further subject to the determination by Agent,
in the reasonable exercise of its discretion, that the proposed acquisition to
be financed with the proceeds of the requested Acquisition Loan is a Permitted
Acquisition.
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SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
10.1 Events of Default. The occurrence of one or more of the following
events shall constitute an "Event of Default":
10.1.1 Payment of Interest, Principal and Fees. Borrower shall fail
to pay any interest or principal due in respect to outstanding Revolving Credit
Loans, the Acquisition Loans, the Acquisition Term Loans or any fees payable in
respect to unused Revolving Credit and Acquisition Loans or outstanding Letters
of Credit or LC Guaranties on the due date thereof (whether due at stated
maturity, on demand, upon acceleration or otherwise).
10.1.2 Payment of Other Obligations. Borrower shall fail to pay any
of the Obligations (other than interest and principal due in respect to
outstanding Revolving Credit Loans, the Acquisition Loans or the Acquisition
Term Loans or any fees payable in respect to unused Revolving Credit and
Acquisition Loans or outstanding Letters of Credit on LC Guaranties) on or
within five (5) days after the due date for such Obligation (whether due at
stated maturity, on demand, upon acceleration or otherwise).
10.1.3 Misrepresentations. Any representation, warranty or other
statement made or furnished to Agent or Lenders by or on behalf of Borrower or
any Subsidiary of Borrower in this Agreement, any of the other Loan Documents or
any instrument, certificate or financial statement furnished in compliance with
or in reference thereto proves to have been false or misleading in any material
respect when made or furnished or when reaffirmed pursuant to Section 7.2
hereof.
10.1.4 Breach of Specific Covenants. Borrower shall fail or neglect
to perform, keep or observe any covenant contained in Sections 5.2, 5.3, 6.1.1,
6.2, 8.1.1, 8.1.3 (i) and (ii), 8.2 or 8.3 hereof on the date that Borrower is
required to perform, keep or observe such covenant.
10.1.5 Breach of Other Covenants. Borrower shall fail or neglect to
perform, keep or observe any covenant contained in this Agreement (other than a
covenant which is dealt with specifically elsewhere in Section 10.1 hereof) and
the breach of such other covenant is not cured to Required Lender's satisfaction
within 15 days after the sooner to occur of Borrower's receipt of notice of such
breach from Agent or Lenders or the date on which such failure or neglect first
becomes known to any senior officer of Borrower.
10.1.6 Default Under Security Documents/Other Agreements. Any event
of default shall occur under, or Borrower shall default in the performance or
observance of any material term, covenant, condition or agreement contained in,
any of the Security Documents or the Other Agreements and such default shall
continue beyond any applicable grace period.
10.1.7 Other Defaults. There shall occur any default or event of
default on the part of Borrower under any agreement, document or instrument to
which Borrower is a party or by which Borrower or any of its Property is bound,
creating or relating to any Indebtedness in an aggregate principal value of One
Million Dollars ($1,000,000) or more if the payment or maturity of such
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Indebtedness is accelerated in consequence of such event of default or a valid
and enforceable demand for payment of such Indebtedness is made prior to
maturity in accordance with the terms thereof.
10.1.8 Uninsured Losses; Unauthorized Dispositions. Any loss, theft,
damage or destruction involving $500,000 or more not covered by insurance (to
the extent required by this Agreement), or sale, lease or encumbrance of any of
the Collateral by Borrower or the making of any levy, seizure, or attachment
thereof or thereon except in all cases as may be specifically permitted by other
provisions to this Agreement.
10.1.9 Insolvency and Related Proceedings. Borrower shall cease to
be Solvent or shall suffer the appointment of a receiver, trustee, custodian or
similar fiduciary, or shall make an assignment for the benefit of creditors, or
any petition for an order for relief shall be filed by or against Borrower under
the Bankruptcy Code (if against Borrower, the continuation of such proceeding
for more than 60 days), or Borrower shall make any offer of settlement,
extension or composition to its unsecured creditors generally.
10.1.10 Business Disruption: Condemnation. There shall occur a
cessation of a substantial part of the business of Borrower, any Subsidiary of
Borrower for a period which significantly affects Borrower's capacity to
continue its business, on a profitable basis; or Borrower or any Subsidiary of
Borrower shall suffer the loss or revocation of any license or permit now held
or hereafter acquired by Borrower which is necessary to the continued or lawful
operation of Borrower's business; or Borrower shall be enjoined, restrained or
in any way prevented by court, governmental or administrative order from
conducting all or any material part of its business affairs; or any material
lease or agreement pursuant to which Borrower leases, uses or occupies any
Property shall be canceled or terminated prior to the expiration of its stated
term and such cancellation or termination materially and adversely affects
Borrower's capacity to continue business, on a profitable basis; or any part of
the Collateral shall be taken through condemnation or the value of such Property
shall be impaired through condemnation, and such taking or impairment materially
and adversely affects Borrower's capacity to continue its business, on a
profitable basis.
10.1.11 Change of Ownership. There shall have occurred a "Change in
Control." "Change of Control" shall mean the occurrence of any of the foregoing:
(1) any Person, or any group within the meaning of Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and the rules
and regulations promulgated thereunder, shall have acquired after the date
hereof beneficial ownership (within the meaning of Rule 13d-3 of the Exchange
Act), directly or indirectly, of Securities (or other Securities convertible
into such Securities) representing fifty percent (50%) of the combined voting
power of all Securities of Borrower entitled to vote in the election of
directors, other than Securities having such power only by reason of the
happening of a contingency (hereinafter called a "Controlling Person"); or (2) a
majority of the Board of Directors of Borrower shall cease for any reason to
consist of (A) individuals who on the date hereof were serving as directors of
Borrower and (B) individuals who subsequently become members of the Board if
such individuals' nomination for election or election to the Board is
recommended or approved by a majority of the Board of Directors or
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Stockholders of Borrower. For purposes of clause (1) above, a person or group
shall not be a Controlling Person if such Person or group holds voting power in
good faith and not for the purposes of circumventing this provision as an agent,
bank, broker, nominee, trustee, or holder of revocable proxies given in response
to a solicitation pursuant to the Exchange Act, for one or more beneficial
owners who do not individually, or, if they are a group acting in concert, as a
group, have the voting power specified in clause (1).
10.1.12 ERISA. A Reportable Event shall occur which Required
Lenders, in their sole discretion, shall determine in good faith constitutes
reasonable grounds for the termination by the Pension Benefit Guaranty
Corporation of any Plan or for the appointment by the appropriate United States
district court of a trustee for any Plan, or if any Plan shall be terminated
other than in a standard termination or any such trustee shall be requested or
appointed, or if Borrower is in "default" (as defined in Section 4219(c) (5) of
ERISA) with respect to payments to a Multiemployer Plan resulting from
Borrower's complete or partial withdrawal from such Plan aggregating Eight
Hundred Thousand Dollars ($800,000) or more.
10.1.13 Challenge to Agreement. Borrower or any Subsidiary of
Borrower or any Affiliate of any of them, shall challenge or contest in any
action, suit or proceeding the validity or enforceability of this Agreement, or
any of the other Loan Documents, the legality or enforceability of any of the
Obligations or the perfection or priority of any Lien granted to Agent for its
benefit and the ratable benefit of Lenders.
10.1.14 Criminal Forfeiture. Borrower or any Subsidiary of Borrower
shall be criminally indicted or convicted under any law that could reasonably be
expected to lead to a forfeiture of any Property of Borrower or any Subsidiary
of Borrower having an aggregate book value of $25,000 or more.
10.1.15 Judgments. Final judgment or judgments (after the expiration
of all times to appeal therefrom) for the payment of money in excess of $100,000
in the aggregate shall be rendered against Borrower and the same shall not (i)
to such extent be covered by insurance, or (ii) within sixty days after the
entry thereof, have been discharged or execution thereof stayed pending appeal,
or shall not have been discharged within five days after the expiration of any
such stay.
10.2 Acceleration of the Obligations. Upon the occurrence of an Event of
Default and during the continuance thereof, Agent shall, at the request of
Required Lenders, (i) without notice, terminate this facility with respect to
further Revolving Credit Loans, Acquisition Loans, and Letters of Credit and LC
Guaranties, whereupon no Revolving Credit Loans or Acquisition Loans may be made
hereunder and no Letters of Credit or LC Guaranties may be issued hereunder,
and/or (ii) with notice, declare all Obligations to be forthwith due and
payable, whereupon all Obligations shall become and be due and payable, without
presentment, demand, protest or further notice of any kind, all of which are
expressly waived by Borrower; provided, however, that upon the occurrence of an
Event of Default specified in Section 10.1.10 hereof, the Obligations shall
become due and payable without declaration, notice or demand by Agent.
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Agent shall take such action with respect to any Default or Event of
Default as shall be directed by the Required Lenders; provided that, unless and
until Agent shall have received such directions, Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable and in the best
interests of Agent and Lenders taken as a whole, including any action (or the
failure to act) pursuant to the Loan Documents.
10.3 Other Remedies. After the occurrence, and during the continuation, of
an Event of Default, Agent and/or Lenders shall have and may exercise from time
to time the following rights and remedies:
10.3.1 All of the rights and remedies of a secured party under the
Code or under other applicable law, and all other legal and equitable rights to
which Agent or Lenders may be entitled, all of which rights and remedies shall
be cumulative and shall be in addition to any other rights or remedies contained
in this Agreement or any of the other Loan Documents, and none of which shall be
exclusive.
10.3.2 The right to take immediate possession of the Collateral, and
to (i) require Borrower to assemble the Collateral, at Borrower's expense, and
make it available to Agent at a place designated by Agent which is reasonably
convenient to both parties, and (ii) enter any premises where any of the
Collateral shall be located and to keep and store the Collateral on said
premises until sold (and if said premises be the Property of Borrower, Borrower
agrees not to charge Agent for storage thereof).
10.3.3 The right to sell or otherwise dispose of all or any
Collateral in its then condition, or after any further manufacturing or
processing thereof, at public or private sale or sales, with such notice as may
be required by law, in lots or in bulk, for cash or on credit, all as Agent, in
its sole discretion, may deem advisable. Borrower agrees that 10 days written
notice to Borrower of any public or private sale or other disposition of
Collateral shall be reasonable notice thereof, and such sale shall be at such
locations as Agent may designate in said notice. Agent shall have the right to
conduct such sales on Borrower's premises, without charge therefor, and such
sales may be adjourned from time to time in accordance with applicable law.
Agent shall have the right to sell, lease or otherwise dispose of the
Collateral, or any part thereof, for cash, credit or any combination thereof,
and Agent may purchase all or any part of the Collateral at public or, if
permitted by law, private sale and, in lieu of actual payment of such purchase
price, may set off the amount of such price against the Obligations. The
proceeds realized from the sale of any Collateral may be applied, after allowing
2 Business Days for collection, first to the reasonable costs, expenses and
attorneys' fees incurred by Agent or any Lender in collecting the Obligations,
in enforcing the rights of Agent and Lenders under the Loan Documents and in
collecting, retaking, completing, protecting, removing, storing, advertising for
sale, selling and delivering any Collateral; second to the interest due upon any
of the Obligations; third, to the principal of the Obligations; and fourth, to
any remaining Obligations. If, after payment in full of all remaining
Obligations, there are any excess proceeds, such excess proceeds shall either be
paid to Borrower or to such other party as directed
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by a court of competent jurisdiction. If any deficiency shall arise, Borrower
shall remain liable to Agent and Lenders therefor.
10.3.4 Agent is hereby granted a license or other right to use,
without charge, Borrower's labels, patents, copyrights, rights of use of any
name, trade secrets, tradenames, trademarks and advertising matter, or any
Property of a similar nature, as it pertains to the Collateral, in advertising
for sale and selling any Collateral and Borrower's rights under all licenses and
all franchise agreements shall inure to Agent's benefit.
10.3.5 Agent or Required Lenders may, at its or their option,
require Borrower to deposit with Agent funds equal to the LC Amount and, if
Borrower fails to promptly make such deposit, Lenders may advance such amount as
a Revolving Credit Loan (whether or not an Overadvance is created thereby). Any
such deposit or advance shall be held by Agent as a reserve to fund future
payments on such LC Guaranties and future drawings against such Letters of
Credit. At such time as all LC Guaranties have been paid or terminated and all
Letters of Credit have been drawn upon or expired, any amounts remaining in such
reserve shall be applied against any outstanding Obligations, or, if all
Obligations have been indefeasibly paid in full, promptly returned to Borrower.
10.4 Remedies Cumulative; No Waiver. All covenants, conditions,
provisions, warranties, guaranties, indemnities, and other undertakings of
Borrower contained in this Agreement and the other Loan Documents, or in any
document referred to herein or contained in any agreement supplementary hereto
or in any schedule or contained in any other agreement between Agent and/or
Lenders and Borrower, heretofore, concurrently, or hereafter entered into, shall
be deemed cumulative to and not in derogation or substitution of any of the
terms, covenants, conditions, or agreements of Borrower herein contained. The
failure or delay of Agent or Lenders to require strict performance by Borrower
of any provision of this Agreement or to exercise or enforce any rights, Liens,
powers, or remedies hereunder or under any of the aforesaid agreements or other
documents or security or Collateral shall not operate as a waiver of such
performance, Liens, rights, powers and remedies, but all such requirements,
Liens, rights, powers, and remedies shall continue in full force and effect
until all Loans and all other Obligations owing or to become owing from Borrower
to Agent and/or Lenders shall have been fully satisfied. None of the
undertakings, agreements, warranties, covenants and representations of Borrower
contained in this Agreement or any of the other Loan Documents and no Event of
Default by Borrower under this Agreement or any other Loan Documents shall be
deemed to have been suspended or waived by Agent or Lenders unless such
suspension or waiver is by an instrument in writing specifying such suspension
or waiver and is signed by duly authorized representatives of Agent and Required
Lenders and directed to Borrower.
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SECTION 11. THE AGENT
11.1 Authorization and Action. Each Lender hereby appoints and authorizes
Agent to take such action on its behalf and to exercise such powers under this
Agreement, and the other Loan documents as are delegated to Agent by the terms
hereof and thereof, together with such powers as are reasonably incidental
thereto. As to any matters not expressly provided for by this Agreement and the
other Loan Documents (including, without limitation, enforcement or collection
of the Notes), Agent shall not be required to exercise any discretion or take
any action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Required Lenders, and such instructions shall be binding upon all Lenders;
provided, however, that Agent shall not be required to take any action which
exposes Agent to personal liability or which is contrary to this Agreement or
the other Loan Documents or applicable law. Agent agrees to give each Lender
promptly a copy of each notice given to it by Borrower pursuant to the terms of
this Agreement and the other Loan Documents.
11.2 Agent's Reliance, Etc. Neither Agent nor any of its directors,
officers, agents or employees shall be liable for any action taken or omitted to
be taken by it or them under or in connection with this Agreement or the other
Loan Documents, except for its or their own gross negligence or willful
misconduct. Without limitation of the generality of the foregoing, Agent: (i)
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; (ii) 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; (iii) makes no warranty or
representations 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; (iv) shall not have any duty beyond
Agent's customary practices 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 Borrower or to inspect the property
(including the books and records) of Borrower; (v) 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
(vi) 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 in good faith by it to be genuine and signed or sent by the proper
party or parties.
11.3 FCC and Affiliates. With respect to its commitment hereunder to make
Revolving Credit Loans and the Acquisition Loans, FCC 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 FCC in its
individual capacity. FCC and its Affiliates may lend money to, and generally
engage in any kind of business with, Borrower, any of their Subsidiaries and any
Person who may do business with or own securities of Borrower or any such
Subsidiary, all as if FCC were not Agent and without any duty to account
therefor to Lenders.
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11.4 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 7.1.10 and such other documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender 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.
11.5 Indemnification. Lenders agree to indemnify Agent (to the extent not
reimbursed by Borrower), ratably according to the respective principal amounts
of the Notes then held by each of them, 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 under this Agreement, provided 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 wilful misconduct. Without limitation of the
foregoing, each Lender agrees to reimburse Agent promptly upon demand for its
ratable shares of any out-of-pocket expenses (including reasonable 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 Borrower.
11.6 Successor Agent. Agent may resign at any time by giving written
notice thereof to Lenders and Borrower. Upon any such resignation, the Required
Lenders shall have the right to appoint a successor Agent which shall be
reasonably acceptable to Borrower. If no successor Agent shall have been so
appointed by the Required Lenders, and shall have accepted such appointment,
within 30 days after the retiring Agent's giving notice of resignation, then the
retiring Agent may, on behalf of the Lenders, appoint a successor Agent, which
shall be a commercial bank or financial institution organized under the laws of
the United States of America or of any State thereof and having a combined
capital and surplus of at least Five Hundred Million Dollars ($500,000,000) and
which shall be reasonably acceptable to Borrower. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations under this Agreement and the other Loan
Documents. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Section 11 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.
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SECTION 12. MISCELLANEOUS
12.1 Power of Attorney. Borrower hereby irrevocably designates, makes,
constitutes and appoints Agent (and all Persons designated by Agent) as
Borrower's true and lawful attorney (and agent-in-fact) and Agent, or Agent's
agent, may, without notice to Borrower and in either Borrower's or Agent's name,
but at the cost and expense of Borrower:
12.1.1 At such time or times upon or after the occurrence, and
during the continuation, of a Default or an Event of Default as Agent or said
agent, in its sole discretion, may determine, endorse Borrower's name on any
checks, notes, acceptances, drafts, money orders or any other evidence of
payment or proceeds of the Collateral which come into the possession of Agent or
under Agent's control.
12.1.2 At such time or times after the occurrence, and during the
continuation, of an Event of Default as Agent or its agent in its sole
discretion may determine: (i) demand payment of the Accounts from the Account
Debtors, enforce payment of the Accounts by legal proceedings or otherwise, and
generally exercise all of Borrower's rights and remedies with respect to the
collection of the Accounts; (ii) settle, adjust, compromise, discharge or
release any of the Accounts or other Collateral or any legal proceedings brought
to collect any of the Accounts or other Collateral; (iii) sell or assign any of
the Accounts and other Collateral upon such terms, for such amounts and at such
time or times as Agent deems advisable; (iv) take control, in any manner, of any
item of payment or proceeds relating to any Collateral; (v) prepare, file and
sign Borrower's name to a proof of claim in bankruptcy or similar document
against any Account Debtor or to any notice of lien, assignment or satisfaction
of lien or similar document in connection with any of the Collateral; (vi)
receive, open and dispose of all mail addressed to Borrower and to notify postal
authorities to change the address for delivery thereof to such address as Agent
may designate; (vii) endorse the name of Borrower upon any of the items of
payment or proceeds relating to any Collateral and deposit the same to the
account of Agent on account of the Obligations; (viii) endorse the name of
Borrower upon any chattel paper, document, instrument, invoice, freight ▇▇▇▇,
▇▇▇▇ of lading or similar document or agreement relating to the Accounts,
Inventory and any other Collateral; (ix) use Borrower's stationery and sign the
name of Borrower to verifications of the Accounts and notices thereof to Account
Debtors; (x) use the information recorded on or contained in any data processing
equipment and computer hardware and software relating to the Accounts,
Inventory, Investment Property, Equipment and any other Collateral; (xi) make
and adjust claims under policies of insurance; and (xii) do all other acts and
things necessary, in Agent's determination, to fulfill Borrower's obligations
under this Agreement.
12.1.3 In the event that Agent designates any Person to act as
Borrower's true and lawful attorney, Agent shall use its commercially reasonable
best efforts to notify Borrower of such designation, but the failure to do so
shall not affect the validity of any such designation.
12.2 INDEMNITY. BORROWER HEREBY AGREES TO INDEMNIFY AGENT AND EACH LENDER
AND HOLD AGENT AND EACH LENDER HARMLESS FROM AND AGAINST ANY LIABILITY, LOSS,
DAMAGE, SUIT, ACTION OR PROCEEDING
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SUFFERED OR INCURRED BY AGENT OR ANY LENDER (INCLUDING REASONABLE ATTORNEYS FEES
AND LEGAL EXPENSES) AS THE RESULT OF BORROWER'S FAILURE TO OBSERVE, PERFORM OR
DISCHARGE BORROWER'S DUTIES HEREUNDER; PROVIDED, HOWEVER, THAT BORROWER SHALL
NOT HAVE THE OBLIGATION TO INDEMNIFY AGENT OR ANY LENDER FOR ANY LIABILITIES,
LOSSES, DAMAGES, SUITS, ACTIONS OR PROCEEDINGS ARISING FROM AGENT'S OR ANY
LENDER'S GROSS NEGLIGENCE OR WILFUL MISCONDUCT. IN ADDITION, EXCEPT AS OTHERWISE
PROVIDED IN THE PREVIOUS SENTENCE, BORROWER AGREES TO DEFEND AGENT AND EACH
LENDER AGAINST AND SAVE IT AND THEM HARMLESS FROM ALL CLAIMS OF ANY PERSON WITH
RESPECT TO THE COLLATERAL. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING,
THESE INDEMNITIES SHALL EXTEND TO ANY CLAIMS ASSERTED AGAINST AGENT OR ANY
LENDER BY ANY PERSON UNDER ANY ENVIRONMENTAL LAWS OR SIMILAR LAWS BY REASON OF
BORROWER'S OR ANY OTHER PERSON'S FAILURE TO COMPLY WITH LAWS APPLICABLE TO SOLID
OR HAZARDOUS WASTE MATERIALS OR OTHER TOXIC SUBSTANCES. NOTWITHSTANDING ANY
CONTRARY PROVISION IN THIS AGREEMENT, THE OBLIGATIONS OF BORROWER UNDER THIS
SECTION 12.2 SHALL SURVIVE THE PAYMENT IN FULL OF THE OBLIGATIONS AND THE
TERMINATION OF THIS AGREEMENT, BUT SHALL NOT THEREAFTER BE SECURED BY THE
COLLATERAL.
12.3 Modification of Agreement; Sale of Interest. (a) The Loan Documents
constitute the complete agreement between the parties with respect to the
subject matter hereof and may not be modified, altered or amended except by an
agreement in writing signed by Borrower, Required Lenders and, if required by
the terms hereof, Agent. Borrower may not sell, assign or transfer any of the
Loan Documents or any portion thereof, including without limitation, Borrower's
rights, title, interests, remedies, powers and duties hereunder or thereunder.
Borrower hereby consents to Agent's and any Lender's sale of participation,
assignment, transfer or other disposition in accordance with the terms hereof,
at any time or times, of any of the Loan Documents or of any portion thereof or
interest therein, including, without limitation, Agent's and any Lender's
rights, title, interests, remedies, powers or duties thereunder, whether
evidenced in writing or not; Borrower agrees that it will use commercially
reasonable efforts to assist and cooperate with Agent and any Lender in any
manner reasonably requested by Agent or such Lender to effect the sale of
participation in or assignment of any of the Loan Documents or of any portion
thereof or interest therein, including, without limitation, assistance in the
preparation of appropriate disclosure documents or placement memoranda and
executing appropriate amendments to the signature pages hereto to reflect the
addition of any Lenders and such Lender's respective commitments. The foregoing
notwithstanding, except with respect to sales, assignments or transfers to
Affiliates under common control pursuant to which the selling, assigning or
transferring Lender retains its voting rights, no Lender shall sell
participation or assign, transfer or otherwise dispose of any of the Loan
Documents or any portion thereof or interest therein, without the prior written
consent of Agent and, if no Event of Default has occurred and is continuing in
respect to sales and assignments, Borrower, which consent, in either case, shall
not be unreasonably withheld or delayed.
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(b) In respect to any assignment by a Lender of its rights and obligations
under this Agreement (including, without limitation, all or a portion of its
Revolving Loan Commitments, the Revolving Credit Loans owed to it and the
Revolving Credit Note held by it, all or a portion of the Acquisition Loan
Commitments, Acquisition Loans owned to it and the Acquisition Note(s) held by
it and the Acquisition Term Loan owed to it and the Acquisition Term Loan
Note(s) held by it) (i) each such assignment shall be of a uniform, and not a
varying, percentage of all rights and obligations, (ii) except in the case of an
assignment of all of a Lender's rights and obligations under this Agreement, (A)
the aggregate amount of the Revolving Loan and Acquisition Loan Commitments and
Acquisition Term Loan of the assigning Lender being assigned pursuant to each
such assignment (determined as of the date of the Assignment and Acceptance with
respect to such assignment) shall in no event be less than $5,000,000, and in
integral multiples of $1,000,000 thereafter, or such lesser amount as to which
Borrower and the Agent may consent to and (B) after giving effect to each such
assignment, the amount of the Revolving Loan and Acquisition Loan Commitments
and Acquisition Term Loan of the assigning Lender shall in no event be less than
$5,000,000, (iii) the parties to each such assignment shall execute and deliver
to the Agent, for its acceptance, an Assignment and Acceptance in the form of
Exhibit R hereto (an "Assignment and Acceptance"), together with any Revolving
Credit Note, Acquisition Note(s) or Acquisition Term Note(s) subject to such
assignment and a processing and recordation fee of $3,500, and (iv) any Lender
may without the consent of Borrower or the Agent, and without paying any fee,
assign to any Affiliate of such Lender that is a bank or financial institution
all of its rights and obligations under this Agreement. The foregoing
notwithstanding, no Person may become a Lender or a Participating Lender
hereunder, unless such Person is a financial institution having stockholders'
equity (or the equivalent) of at least One Hundred Million Dollars
($100,000,000) and, in respect to Lenders, such Person has been approved by
Borrower, which approval shall not be unreasonably withheld or delayed. Upon
such execution, delivery, acceptance and recording, from and after the effective
date specified in such Assignment and Acceptance (x) the assignee thereunder
shall be a party hereto and, to the extent that rights and obligations hereunder
have been assigned to it pursuant to such Assignment and Acceptance, have the
rights and obligations of a Lender hereunder and (y) the Lender assignor
thereunder shall, to the extent that rights and obligations hereunder have been
assigned by it pursuant to such Assignment and Acceptance, relinquish its rights
and be released from its obligations under this Agreement (and, in the case of
an Assignment and Acceptance covering all of the remaining portion of an
assigning Lender's rights and obligations under this Agreement, such Lender
shall cease to be a party hereto). If, pursuant to this Section 12.3, any
interest in this Agreement or any Revolving Credit Loan, Acquisition Loan or the
Acquisition Term Loan, Notes, Letter of Credit or LC Guaranty is transferred to
any transferee which is organized under the laws of any jurisdiction other than
the United States or any state thereof, the transferor Lender shall cause such
transferee (other than any Participating Lender), and may cause any
Participating Lender, concurrently with the effectiveness of such transfer, (a)
to represent to the transferor Lender (for the benefit of the transferor Lender,
Agent, and Borrower) that under applicable law and treaties no Taxes will be
required to be withheld by Agent, Borrower or the transferor Lender with respect
to any payments to be made to such transferee in respect of the Revolving Credit
Loans, Acquisition Loans, Acquisition Term Loans, Notes, Letters of Credit or LC
Guaranties, (b) to furnish to the transferor Lender, Agent and Borrower either
U.S. Internal Revenue Service Form 4224 or U.S. Internal Revenue Service Form
1001 (wherein such transfer
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claims entitlement to complete exemption form U.S. federal withholding tax on
all interest payments hereunder), and (c) to agree (for the benefit of the
transferor Lender, Agent and Borrower) to provide the transferor Lender, Agent
and Borrower a new Form 4224 or Form 1001 upon the obsolescence of any
previously delivered form and comparable statements in accordance with
applicable U.S. laws and regulations and amendments duly executed and completed
by such transferee, and to comply from time to time with all applicable U.S.
laws and regulations with regard to such withholding tax exemption.
(c) In the event any Lender assigns or otherwise transfers all or any part
of its Revolving Credit Note, Acquisition Note(s) or Acquisition Term Note any
such Lender shall so notify Borrower and Borrower shall, upon the request of
such Lender, issue new Revolving Credit Notes, Acquisition Notes and Acquisition
Term Notes in exchange for the old Revolving Credit Notes, Acquisition Notes and
Acquisition Term Notes.
(d) Any Lender may at any time sell to one or more commercial banks,
financial institutions, or other Persons not Affiliates of Borrower (a
"Participating Lender") participating interests in any Loans, the commitments of
that Lender and the other interests of that Lender (the "originating Lender")
hereunder and under the other Loan Documents; provided, however, that (i) the
originating Lender's obligations under this Agreement shall remain unchanged,
(ii) the originating Lender shall remain solely responsible for the performance
of such obligations, (iii) Borrower and the Agent shall continue to deal solely
and directly with the originating Lender in connection with the originating
Lender's rights and obligations under this Agreement and the other Loan
Documents, and (iv) no Lender shall grant any participation under which the
Participating Lender shall have rights to approve any amendment to or waiver of
this Agreement or the Loan Documents, except to the extent such amendment or
waiver would: (A) extend the final maturity date for payment of the Loans in
which such Participating Lender is participating; (B) reduce the interest rate
or the amount of principal or fees applicable to the Loans in which such
Participating Lender is participating; or (C) release all or substantially all
of the Collateral, except as expressly provided herein. In those cases in which
an originating Lender grants rights to a Participating Lender to approve any
amendment to or waiver of this Agreement or the other Loan Documents respecting
the matters described in clauses (A) through (C) of the preceding sentence, the
relevant participation agreements shall provide for a voting mechanism whereby a
majority of the amount of such Lender's portion of the Loans (irrespective of
whether held by such Lender or a Participating Lender) shall control the vote
for all of such Lender's portion of the Loans. In the case of any participation,
the Participating Lender shall not have any rights under this Agreement or any
of the other Loan Documents entered into in connection herewith (the
Participating Lender's right against such Lender in respect of such
participation to be those set forth in the participation or other agreement
executed by such Lender and the Participating Lender relating thereto). In no
event shall any Participating Lender grant a participation in its participation
interest in the Loans without the prior written consent of Agent, which approval
shall not be unreasonably withheld or delayed. All amounts payable by the
Borrower hereunder shall be determined as if the originating Lender had not sold
any such participation, except that, if amounts outstanding under this Agreement
are due and unpaid, or shall have been declared or shall have become due and
payable upon the occurrence of an Event of Default, each Participating Lender
shall be deemed to have the right of set-off in
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respect of its participating interest in amounts owing under this Agreement to
the same extent as if the amount of its participating interest were owing
directly to it as a Lender under this Agreement.
(e) Notwithstanding any other provision in this Agreement, any Lender may
at any time create a security interest in, or pledge, all or any portion of its
rights under and interest in this Agreement in favor of any Federal Reserve Bank
in accordance with Regulation A of the Board or U.S. Treasury Regulation 31 CFR
ss.203.14, and such Federal Reserve Bank may enforce such pledge or security
interest in any manner permitted under applicable law.
(f) No amendment or waiver of any provision of this Agreement or the Notes
or any other Loan Document, nor consent to any departure by Borrower therefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Required Lenders, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given; provided,
however: (a) that no amendment, waiver or consent shall, unless in writing and
signed by each Lender affected thereby do any of the following: (i) increase the
aggregate Revolving Loan Commitments, increase the aggregate Acquisition Loan
Commitments or subject any Lender to any additional obligations, (ii) reduce the
principal of, or decrease the rate of interest on, the Notes or other amount
payable hereunder other than those payable only to FCC in its capacity as Agent
which may be reduced by FCC unilaterally, (iii) postpone any date fixed for any
payment of principal of, or interest on, the Notes or other amounts payable
hereunder, other than those payable only to FCC in its capacity as Agent which
may be postponed by FCC unilaterally, (iv) reduce the aggregate unpaid principal
amount of the Notes, or the number of Lenders which shall be required for the
Lenders or any of them to take any action hereunder, (v) release or discharge
any Person liable for the performance of any obligations of Borrower hereunder
or under any of the Loan Documents except in accordance with the terms of such
Loan Documents or as otherwise permitted herein, (vi) subject to the provisions
of Section 1.1.1(C) increase the advance rates contained in the definition of
the Borrowing Base, (vii) to the extent Agent's or Lenders' consent is required
by the terms hereof, release all or substantially all of the Collateral or
(viii) amend this Section 12.3; (b) that no amendment, waiver or consent shall
be effective unless in writing and signed by either Required Lenders or all
Lenders, as required by the terms hereof and, if such amendment, waiver or
consent affects Agent or its rights hereunder, Agent.
12.4 Severability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
12.5 Successors and Assigns. This Agreement, the Other Agreements and the
Security Documents shall be binding upon and inure to the benefit of the
successors and assigns of each Borrower, Agent and Lenders permitted under
Section 12.3 hereof.
12.6 Cumulative Effect; Conflict of Terms. The provisions of the Other
Agreements and the Security Documents are hereby made cumulative with the
provisions of this Agreement. Except
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as otherwise provided in Section 3.2 hereof and except as otherwise provided in
any of the other Loan Documents by specific reference to the applicable
provision of this Agreement, if any provision contained in this Agreement is in
direct conflict with, or inconsistent with, any provision in any of the other
Loan Documents, the provision contained in this Agreement shall govern and
control.
12.7 Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original
and all of which counterparts taken together shall constitute but one and the
same instrument.
12.8 Notice. Except as otherwise provided herein, all notices, requests
and demands to or upon a party hereto, to be effective, shall be in writing and
shall be sent by certified or registered mail, return receipt requested, by
personal delivery against receipt, by overnight courier or by facsimile and,
unless otherwise expressly provided herein, shall be deemed to have been validly
served, given or delivered immediately when delivered against receipt, four
Business Days after deposit in the mail, postage prepaid, or one Business Day
after delivery to an overnight courier or, in the case of facsimile notice, when
sent, addressed as follows:
(A) If to Agent: Fleet Capital Corporation
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Vedder, Price, ▇▇▇▇▇▇▇ & Kammholz
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
(B) If to Borrower: ▇▇▇▇▇▇ Products Ltd.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Winthrop, Stimson, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
Financial Centre
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
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Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
(C) If to any Lender, at its address indicated on the signature
pages hereof or in a notice to Borrower of assignment of a
Note.
or to such other address as each party may designate for itself by notice given
in accordance with this Section 12.8; provided, however, that any notice,
request or demand to or upon Agent Lenders pursuant to subsection 3.1.1 or 4.2.2
hereof shall not be effective until received by Agent or Lenders.
12.9 Lender's Consent. Whenever Agent's, Required Lenders' or Lenders'
consent is required to be obtained under this Agreement, any of the Other
Agreements or any of the Security Documents as a condition to any action,
inaction, condition or event, unless otherwise specifically provided herein,
Agent, Required Lenders or Lenders, as applicable, shall be authorized to give
or withhold such consent in its sole and absolute discretion and to condition
its consent upon the giving of additional collateral security for the
Obligations, the payment of money or any other matter.
12.10 Credit Inquiries. Borrower hereby authorizes and permits Agent to
respond to usual and customary credit inquiries from third parties concerning
such Borrower or any of its Subsidiaries.
12.11 Time of Essence. Time is of the essence of this Agreement, the
Other Agreements and the Security Documents.
12.12 Entire Agreement. This Agreement and other Loan Documents, together
with all other instruments, agreements and certificates executed by the parties
in connection therewith or with reference thereto, embody the entire
understanding and agreement between the parties hereto and thereto with respect
to the subject matter hereof and thereof and supersede all prior agreements,
understandings and inducements, whether express or implied, oral and written.
12.13 Interpretation. No provision of this Agreement or any of the other
Loan Documents shall be construed against or interpreted to the disadvantage of
any party hereto by any court or other governmental or judicial authority by
reason of such party having or being deemed to have structured or dictated such
provision.
12.14 GOVERNING LAW; CONSENT TO FORUM. THIS AGREEMENT HAS BEEN NEGOTIATED,
EXECUTED AND DELIVERED AT AND SHALL BE DEEMED TO HAVE BEEN MADE IN CHICAGO, ▇▇▇▇
COUNTY, ILLINOIS. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS: PROVIDED, HOWEVER, THAT IF
ANY OF THE COLLATERAL SHALL BE LOCATED IN ANY JURISDICTION OTHER THAN ILLINOIS,
THE LAWS OF SUCH JURISDICTION SHALL GOVERN THE METHOD, MANNER AND PROCEDURE AND
FORECLOSURE OF AGENT'S LIEN (FOR ITS BENEFIT OR THE RATABLE BENEFIT OF LENDERS)
UPON SUCH COLLATERAL
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AND THE ENFORCEMENT OF AGENT'S AND LENDERS' OTHER REMEDIES IN RESPECT OF SUCH
COLLATERAL TO THE EXTENT THAT THE LAWS OF SUCH JURISDICTION ARE DIFFERENT FROM
OR INCONSISTENT WITH THE LAWS OF ILLINOIS. AS PART OF THE CONSIDERATION FOR NEW
VALUE RECEIVED, AND REGARDLESS OF ANY PRESENT OR FUTURE DOMICILE OR PRINCIPAL
PLACE OF BUSINESS OF BORROWER, AGENT OR ANY LENDER, BORROWER HEREBY CONSENTS AND
AGREES THAT THE DISTRICT COURT OF ▇▇▇▇ COUNTY, ILLINOIS, OR, AT AGENT'S OPTION,
THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS, EASTERN
DIVISION, SHALL HAVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES
BETWEEN BORROWER AND AGENT AND/OR LENDERS PERTAINING TO THIS AGREEMENT OR TO ANY
MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT. BORROWER EXPRESSLY SUBMITS
AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN
ANY SUCH COURT, AND BORROWER HEREBY WAIVES ANY OBJECTION WHICH BORROWER MAY HAVE
BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS
AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS
DEEMED APPROPRIATE BY SUCH COURT. BORROWER 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, COMPLAINT AND OTHER PROCESS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWER AT THE ADDRESS SET FORTH IN
THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE
EARLIER OF BORROWER'S ACTUAL RECEIPT THEREOF OR 5 BUSINESS DAYS AFTER DEPOSIT IN
THE U.S. MAILS, PROPER POSTAGE PREPAID. NOTHING IN THIS AGREEMENT SHALL BE
DEEMED OR OPERATE TO AFFECT THE RIGHT OF AGENT OR LENDERS TO SERVE LEGAL PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY AGENT OR
LENDERS OF ANY JUDGMENT OR ORDER OBTAINED IN SUCH FORUM OR THE TAKING OF ANY
ACTION UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM OR
JURISDICTION.
12.15 WAIVERS BY BORROWER. BORROWER WAIVES (i) THE RIGHT TO TRIAL BY JURY
(WHICH AGENT AND LENDERS HEREBY ALSO WAIVE) IN ANY ACTION, SUIT, PROCEEDING OR
COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE LOAN DOCUMENTS,
THE OBLIGATIONS OR THE COLLATERAL: (ii) PRESENTMENT, DEMAND AND PROTEST AND
NOTICE OF PRESENTMENT, PROTEST, DEFAULT, NON PAYMENT, 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 OR ANY LENDER ON WHICH BORROWER MAY IN ANY WAY BE
LIABLE AND HEREBY RATIFY AND CONFIRM WHATEVER AGENT OR LENDERS MAY DO
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IN THIS REGARD; (iii) NOTICE PRIOR TO TAKING POSSESSION OR CONTROL OF THE
COLLATERAL OR ANY BOND OR SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO
ALLOWING AGENT OR LENDERS TO EXERCISE ANY OF AGENT'S OR ANY LENDERS' REMEDIES;
(iv) THE BENEFIT OF ALL VALUATION, APPRAISEMENT AND EXEMPTION LAWS; AND (v)
NOTICE OF ACCEPTANCE HEREOF. BORROWER ACKNOWLEDGES THAT THE FOREGOING WAIVERS
ARE A MATERIAL INDUCEMENT TO AGENT OR ANY LENDER ENTERING INTO THIS AGREEMENT
AND THAT AGENT AND LENDERS ARE RELYING UPON THE FOREGOING WAIVERS IN THEIR
FUTURE DEALINGS WITH BORROWER. BORROWER WARRANTS AND REPRESENTS THAT IT HAS
REVIEWED THE FOREGOING WAIVERS WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND
VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.
12.16 Publicity. Borrower hereby consents to Agent's use of the name or
tradestyle of such Borrower in any announcements or advertisements relating to
the completion of the transactions contemplated hereby and the role played by
Agent in providing financing to Borrower hereunder in such media and in such
manner as Agent, in its reasonable discretion, with the prior written consent of
Borrower, which shall not be unreasonably withheld or delayed, deems
appropriate.
IN WITNESS WHEREOF, this Agreement has been duly executed in Chicago,
Illinois, on the day and year specified at the beginning of this Agreement.
▇▇▇▇▇▇ PRODUCTS LTD.
("Borrower")
By:
Name:
Title:
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Accepted in Chicago, Illinois:
FLEET CAPITAL CORPORATION
("Agent" and "Lender")
By:
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President
Revolving Loan Commitment of: $38,235,294.11
Acquisition Loan Commitment: $17,647,058.82
Address:
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇ TRUST AND SAVINGS BANK
("Lender")
By:
Name:
Title:
Revolving Loan Commitment: $11,470,588.24
Acquisition Loan Commitment: $5,294,117.65
Address:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, 10 East
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
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BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION ("Lender")
By:
Name:
Title:
Revolving Loan Commitment: $15,294,117.65
Acquisition Loan Commitment: $7,058,823.53
- Address:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
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APPENDIX A
GENERAL DEFINITIONS
When used in the Amended and Restated Loan and Security Agreement
dated as of February 3, 1998, by and among ▇▇▇▇▇▇ Products Ltd. ("Borrower"),
the lender signatories thereto ("Lenders") and Fleet Capital Corporation ("FCC")
as agent for said Lenders (FCC, in such capacity, "Agent"), the following terms
shall have the following meanings (terms defined in the singular to have the
same meaning when used in the plural and vice versa):
Account Debtor - any Person who is or may become obligated under or
on account of an Account of Borrower.
Accounts - all accounts, contract rights, chattel paper, instruments
and documents, whether now owned or hereafter created or acquired by
Borrower or in which Borrower now has or hereafter acquires any interest.
Acquisition Loans - the Loans to be made by Lenders to Borrower
pursuant to Section 1.2.1 of the Agreement.
Acquisition Loan Commitment(s) - as defined in Section 1.2.1(a) of
the Agreement.
Acquisition Note - each Acquisition Promissory Note to be executed
in favor of each Lender as provided in Section 1.2.1(b) of the Agreement
which shall be in the form of Exhibit A-2 to the Agreement.
Acquisition Term Loan - as defined in Section 1.2.1(c) of the
Agreement
Acquisition Term Note - each Acquisition Term Promissory Note to be
executed in favor of each Lender as provided in Section 1.2.1(c) of the
Agreement which shall be in the form of Exhibit A-3 to the Agreement.
Adjusted Net Earnings (or Loss) - with respect to any fiscal period,
means the net earnings (or loss) after provision for income taxes for such
fiscal period of Borrower, as reflected on the financial statement of
Borrower supplied to Agent and Lenders pursuant to Section 8.1.3 of the
Agreement, but excluding:
(i) any gain or loss arising from the sale of capital
assets;
(ii) any gain arising from any write-up of assets;
(iii) earnings of any Subsidiary of Borrower accrued prior to
the date it became a Subsidiary;
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(iv) earnings of any corporation, substantially all the assets
of which have been acquired in any manner by Borrower, realized by such
corporation prior to the date of such acquisition;
(v) net earnings of any business entity (other than a domestic
Subsidiary of Borrower) in which Borrower has an ownership interest unless
such net earnings shall have actually been received by Borrower in the
form of cash distributions;
(vi) any portion of the net earnings of any Subsidiary of
Borrower which for any reason (other than the provisions of this
Agreement) is unavailable for payment of dividends to Borrower;
(vii) the earnings of any Person to which any assets of
Borrower shall have been sold, transferred of disposed of, or into which
Borrower shall have merged, or been a party to any consolidation or other
form of reorganization, prior to the date of such transaction;
(viii)any gain arising from the acquisition of any Securities
of Borrower;
(ix) the effect of the application of the rules of Purchase
Accounting (as set forth in APB No. 16, as amended); and
(x) any gain arising from extraordinary or non-recurring
items.
Affiliate - a Person (other than a Subsidiary): (i) which directly
or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, a Person; (ii) which
beneficially owns or holds 10% or more of any class of the Voting Stock of
a Person; or (iii) 10% or more of the Voting Stock (or in the case of a
Person which is not a corporation, 10% or more of the equity interest) of
which is beneficially owned or held by a Person or a Subsidiary of a
Person. For the purpose 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 policies, whether through the
ownership of voting securities, by contract or otherwise.
Agreement - the Loan and Security Agreement referred to in the first
sentence of this Appendix A, all Exhibits thereto and this Appendix A.
ALTA Survey - a survey prepared in accordance with the standards
adopted by the American Land Title Association and the American Congress
on Surveying and Mapping in 1986, known as the "Minimum Standard Detail
Requirements of Land Title Surveys". The ALTA Survey shall be in
sufficient form to satisfy the requirements of Chicago Title Insurance
Company to provide extended coverage over survey defects and shall also
show the location of all easements, utilities, and covenants of record,
dimensions of all improvements, encroachments from any adjoining property,
and certify as to the location of any flood plain area affecting the
subject real estate. The ALTA Survey shall contain the
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following certification: "To ▇▇▇▇▇▇ Products Ltd. Fleet Capital
Corporation, as agent and Chicago Title Insurance Company. This is to
certify that this map of plat and the survey on which it is based were
made in accordance with the "Minimum Standard Detail Requirements for Land
Title Surveys" jointly established and adopted by ALTA and ACSM in 1986.
(signed (SEAL) License No. __________".
Annualized EBITDA - with respect to each of the fiscal quarters
ended April 4, 1998, July 4, 1998 and October 3, 1998, the year to date
EBITDA multiplied by (i) four (4) in respect to the fiscal quarter ended
April 4, 1998, (ii) two (2) in respect to the fiscal quarter ended July 4,
1998 and (iii) one and one-third (11/3) in respect to the fiscal quarter
ended October 3, 1998.
Applicable Margin - a percent determined by the ratio of the
Borrower's Money Borrowed to Annualized EBITDA as of end of the applicable
fiscal quarter (in respect to the fiscal quarters ended July 4, 1998 and
October 3, 1998) or the ratio of Money Borrowed to EBITDA for the twelve
months then ended (in respect to all other fiscal quarters), as set forth
in Borrower's annual or quarterly financial statements delivered pursuant
to Section 8.1.3 of the Agreement pursuant to the following schedule:
Ratio of Money Borrowed to
Annualized EBITDA or Applicable Margin Applicable Margin
EBITDA (as applicable) (Prime Portion) (LIBOR Portions)
less than 1.5 to 1 0% 1%
greater than less 0% 1.25%
and equal to 1.5 to 1 but than 2.0 to 1
greater than less
and equal to 2.0 to 1 but than 2.50 to 1 0% 1.50%
greater than less
and equal to 2.5 to 1 but than 3.0 to 1 0% 1.75%
greater than less
and equal to 3.0 to 1 but than 3.5 to 1 .25% 2.00%
greater than
and equal to 3.5 to 1 .50% 2.25%
As of February 3, 1998 the Applicable Margins shall be zero percent
(0%) (Prime Portion) and one and one-half percent (1 1/2%) (LIBOR Portions).
Changes in the Applicable Margins shall be made quarterly, commencing with the
fiscal quarter ended July 4, 1998 and shall be effective as of the first day of
the month in which Borrower delivers to Agent the financial statements for the
applicable fiscal quarter or year in accordance with Section 8.1.3.
Availability - the amount of money which Borrower is entitled to
borrow from time to time as Revolving Credit Loans, such amount being the
difference derived when the sum of the principal amount of Revolving
Credit Loans then outstanding (including any amounts which Agent or any
Lender may have paid for the account of Borrower pursuant to any of the
Loan Documents and which have not been reimbursed by Borrower) plus (to
the extent
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not already included in the calculation of the Borrowing Base) the amount
of any reserves established by Agent pursuant to Section 1.1.1 hereof is
subtracted from the Borrowing Base. If the amount outstanding is equal to
or greater than the Borrowing Base, Availability is 0.
Bank - Fleet National Bank.
Base Rate - the rate of interest announced or quoted by Bank from
time to time as its prime rate for commercial loans, whether or not such
rate is the lowest rate charged by Bank to its most preferred borrowers;
and, if such prime rate for commercial loans is discontinued by Bank as a
standard, a comparable reference rate designated by Bank as a substitute
therefor shall be the Base Rate.
Base Rate Portion - that portion of the Loans not subject to a LIBOR
Option.
Board - the Board of Governors of the Federal Reserve System of the
United States.
Borrowing Base - as at any date of determination thereof, an amount
equal to the lesser of:
(a) Maximum Available Amount minus the outstanding principal
balance of the Acquisition Term Loans; and
(b) an amount equal to:
(i) eighty-five percent (85%) or such lesser percentage as
Agent in its reasonable discretion deems appropriate, of the net
amount of Eligible Accounts outstanding at such date:
PLUS
(ii) the lesser of (A) Maximum Inventory Amount and (B)
sixty-five percent (65%) or such lesser percentage as Agent in its
reasonable discretion deems appropriate of the value of Eligible
Inventory at such date consisting of raw materials and finished
goods, calculated on the basis of the lower of cost or market, as
determined by Agent, in its reasonable discretion, on a first-in,
first-out ("FIFO") basis;
MINUS (subtract from the lesser of clauses (a) and (b) above)
(c) an amount equal to the sum of (x) the face amount of all LC
Guaranties and Letters of Credit issued by Agent or Bank and outstanding at such
date, plus (y) any amounts which Agent and/or Lenders may then be obligated to
pay for the account of Borrower under this Agreement, plus (z) the aggregate
outstanding principal balance of the Acquisition Loans.
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For purposes hereof, the net amount of Eligible Accounts at any time shall
be the face amount of such Eligible Accounts less any and all returns, rebates,
discounts (which, if granted outside the ordinary course of business as in
effect on the Closing Date, may, at Agent's option, be calculated on shortest
terms), credits, allowances or excise taxes of any nature at any time issued,
owing, claimed by Account Debtors, granted, outstanding or payable in connection
with such Accounts at such time, all as determined by Agent in the reasonable
exercise of its discretion.
Business Day - (i) when used with respect to the LIBOR Option, shall
mean a day on which dealings may be effected in deposits of United States
dollars in the London interbank foreign currency deposits market and on
which the Lenders are conducting business and on which banks may conduct
business in London, England, Chicago, Illinois, and New York, New York and
(ii) when used with respect to the other provisions of this Agreement,
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
the State of Wisconsin.
Capital Expenditures - expenditures made or liabilities incurred by
Borrower for the acquisition of any fixed assets or improvements,
replacements, substitutions or additions thereto which have a useful life
of more than one year, including the total principal portion of such
Borrower's Capitalized Lease Obligations.
Capital Leases - a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.
Capitalized Lease Obligation - any Indebtedness of any Person
represented by obligations under a Capital Lease.
Closing Date - the date on which all of the conditions precedent in
Section 9 of the Agreement are satisfied and the initial Loan is made.
Code - the Uniform Commercial Code as adopted and in force in the
State of Illinois, as from time to time in effect.
Collateral - all of the Property and interests in Property described
in Section 5 of the Agreement, and all other Property and interests in
Property that now or hereafter secure the payment and performance of any
of the Obligations.
Commitment Termination Date - the earliest of (i) the last day of
the Original Term, (ii) the date of termination of the commitment to make
further Revolving Credit Loans pursuant to Section 4.2 hereof, and (iii)
the date of termination of the commitment to make further Revolving Credit
Loans pursuant to Section 10.2 hereof.
Consolidated - the consolidation in accordance with GAAP of the
accounts or other items as to which such term applies.
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Default - an event or condition the occurrence of which would, with
the lapse of time or the giving of notice, or both, become an Event of
Default.
Default Rate - as defined in subsection 2.1.2 of the Agreement.
Distribution - in respect of any corporation means and includes: (i)
the payment of any dividends or other distributions on capital stock of
the corporation (except distributions in such stock) and (ii) the
redemption or acquisition of Securities unless made contemporaneously from
the net proceeds of the sale of Securities.
Dominion Account - a special account of Agent for its benefit and
the ratable benefit of Lenders established by Borrower pursuant to the
Agreement at a bank selected by Borrower, but acceptable to Agent in its
reasonable discretion, and over which Agent for its benefit and the
ratable benefit of Lenders shall have sole and exclusive access and
control for withdrawal purposes.
EBIT - with respect to any fiscal period, the Consolidated Adjusted
Net Earnings (or Loss) of Borrower, before interest expense and taxes for
said period as determined in accordance with GAAP, excluding the impact,
if any, from purchase accounting.
EBITDA - with respect to any fiscal period, EBIT plus deprecation
and amortization expense for such period.
Eligible Account - an Account arising in the ordinary course of
Borrower's business from the sale of goods or rendition of services which
Agent, in its reasonable credit judgment, deems to be an Eligible Account.
Without limiting the generality of the foregoing, no Account shall be an
Eligible Account if: (i) it arises out of a sale made by Borrower to a
Subsidiary or an Affiliate of Borrower or to a Person controlled by an
Affiliate of Borrower; or (ii) it is unpaid for more than sixty (60) days
after the original due date shown on the invoice; or (iii) it arises from
service charges or similar charges or is subject to a debit memo(s), to
the extent of any such service charges or similar charge or debit memo(s),
or (iv) twenty-five percent (25%) or more of the Accounts from the Account
Debtor are not deemed Eligible Accounts hereunder; or (v) the total unpaid
Accounts of the Account Debtor exceed twenty percent (20%) of the net
amount of all Accounts, to the extent of such excess; or (vi) any
covenant, representation or warranty contained in this Agreement with
respect to such Account has been breached; or (vii) the Account Debtor is
also Borrower's creditor or supplier; or the Account Debtor has disputed
liability with respect to such Account, or the Account Debtor has made any
claim with respect to any other Account due from such Account Debtor to
Borrower, or the Account otherwise is subject to any right of set-off by
the Account Debtor, all to the extent of such dispute, claim or asserted
right of set-off; or (viii) the Account Debtor has commenced a voluntary
case under the federal bankruptcy laws, as now constituted or hereafter
amended, or made an assignment for the benefit of creditors, or a decree
or order for relief has been entered by a court having jurisdiction in the
premises in respect
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of the Account Debtor in an involuntary case under the federal bankruptcy
laws, as now constituted or hereafter amended, or any other petition or
other application for relief under the federal bankruptcy laws has been
filed against the Account Debtor, or if the Account Debtor has failed,
suspended business, ceased to be Solvent, or consented to or suffered a
receiver, trustee, liquidator or custodian to be appointed for it or for
all or a significant portion of its assets or affairs; or (ix) it arises
from a sale to an Account Debtor outside the United States or Canada
(other than Quebec), unless the sale is on letter of credit, guaranty or
acceptance terms, in each case acceptable to Agent in its reasonable
discretion; or (x) it arises from a sale to the Account Debtor on a
▇▇▇▇-and-hold, guaranteed sale, sale-or-return, sale-on-approval,
consignment or any other repurchase or return basis; or (xi) Agent
believes, in its reasonable judgment, that collection of such Account is
insecure or that payment thereof is doubtful or will be delayed by reason
of the Account Debtor's financial condition; or (xii) the Account Debtor
is the United States of America or any department, agency or
instrumentality thereof, unless Borrower assigns its right to payment of
such Account to Agent, in form and substance satisfactory to Agent, so as
to comply with the Assignment of Claims Act of 1940, as amended (31 U.S.C.
Sub-Section 203 et seq.); or (xiii) the Account Debtor is located in the
State of New Jersey unless Borrower has filed a notice of business
activities report with the appropriate officials in such state for the
then current year; or (xiv) the Account is subject to a Lien other than a
Permitted Lien; or (xv) the goods giving rise to such Account have not
been shipped or delivered to or have been rejected by the Account Debtor
or the services giving rise to such Account have not been performed by
Borrower and accepted by the Account Debtor or the Account otherwise does
not represent a final sale; or (xvi) the Account is evidenced by chattel
paper or an instrument of any kind, or has been reduced to judgment; or
(xvii) Borrower has made any agreement with the Account Debtor for any
deduction therefrom, except for discounts or allowances which are made in
the ordinary course of business for returns, rebates, cash discounts,
volume discounts, performance discounts, co-op advertising discounts,
price concession discounts, service charges or credit discounts or
allowances and which discounts or allowances are reflected in the
calculation of the face value of each invoice related to such Account or
in the Borrowing Certificates, to the extent of such deduction; or (xviii)
after the issuance of an invoice evidencing an Account, Borrower has made
an agreement with the Account Debtor to extend the time of payment
thereof; or (xix) the Account arises from a retail sale of goods to a
Person who is purchasing same primarily for personal, family or household
purposes.
Eligible Inventory - Inventory of Borrower (other than packaging
materials and supplies) which Agent, in the exercise of its reasonable
credit judgment, deemed to be Eligible Inventory. Without limiting the
generality of the foregoing, no Inventory shall be Eligible Inventory
unless, in Agent's opinion, it (i) is raw materials or finished goods that
is, in Agent's opinion, readily marketable in its current form, (ii) is in
good, new and saleable condition, (iii) is not obsolete or unmerchantable,
(iv) meets all standards imposed by any governmental agency or authority,
(v) conforms in all respects to the warranties and representations set
forth in the Agreement, (vi) is at all times subject to
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Agent's duly perfected, first priority security interest and no other Lien
except a Permitted Lien, (vii) is not slow-moving, discontinued, or
non-stock finished goods Inventory, (viii) is not Inventory which consists
of capitalized warehouse costs, (ix) is situated at a location in
compliance with the Agreement, and (x) is not in-transit.
Environmental Laws - all federal, state and local laws, rules,
regulations, ordinances, programs, permits, guidances, orders and consent
decrees relating to health, safety and environmental matters.
Equipment - all machinery, apparatus, equipment, fittings,
furniture, fixtures, motor vehicles and other tangible personal Property
(other than Inventory) of every kind and description used in Borrower's
operations or owned by Borrower or in which Borrower has an interest,
whether now owned or hereafter acquired by Borrower and wherever located,
and all parts, accessories and special tools and all increases and
accessions thereto and substitutions and replacements therefor.
ERISA - the Employee Retirement Income Security Act of 1974, as
amended, and all rules and regulations from time to time promulgated
thereunder.
Event of Default - as defined in Section 10.1 of the Agreement.
Fixed Charge Coverage Ratio - with respect to any fiscal period, the
ratio of Borrower's (a) net income plus (i) depreciation and amortization
expense, minus (ii) Capital Expenditures (other than the principal portion
of payments with respect to Capitalized Lease Obligations) made within
such period to (b) the sum of (i) the principal portion of payments made
within such period with respect to Capitalized Lease Obligations, plus
(ii) the total amount of Retirement Income Plan payments made within such
period plus (iii) the aggregate amount of all principal installments
scheduled to be made within such period in respect to the outstanding
Acquisition Term Loan.
GAAP - generally accepted accounting principles in the United States
of America in effect from time to time.
General Intangibles - all general intangibles of Borrower, whether
now owned or hereafter created or acquired by Borrower, including, without
limitation, all choses in action, causes of action, corporate or other
business records, deposit accounts, inventions, designs, patents, patent
applications, trademarks, trade names, trade secrets, goodwill,
copyrights, registrations, licenses, franchises, customer lists, tax
refund claims, computer programs, all claims under guaranties, security
interests or other security held by or granted to such Borrower to secure
payment of any of the Accounts by an Account Debtor, all rights to
indemnification and all other intangible property of every kind and nature
(other than Accounts).
Indebtedness - as applied to a Person means, without duplication
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(i) all items which in accordance with GAAP would be included
in determining total liabilities as shown on the liability side of a
balance sheet of such Person as at the date as of which Indebtedness
is to be determined, including, without limitation, Capitalized
Lease Obligations,
(ii) all obligations of other Persons which such Person has
guaranteed,
(iii) all reimbursement obligations in connection with letters
of credit or letter of credit guaranties issued for the account of
such Person, and
(iv) in the case of Borrower (without duplication), the
Obligations.
Industrial Revenue Bonds - those certain $3,300,000 City of Oshkosh,
Wisconsin Variable Rate Demand Industrial Development Revenue Bonds
(▇▇▇▇▇▇ Products Ltd. Project) Series 1991A and 1991B.
Interest Coverage Ratio - with respect to any fiscal period, the
ratio of Borrower's (a) net income before interest, income tax expense,
depreciation expense, amortization expense, any gain or loss (in excess of
$40,000 within the immediately previous twelve month period) from the sale
of assets outside the ordinary course of business and any charge or
expense to net income in respect to the restructuring of Borrower for or
taken within such period to (b) Borrower's interest expense for such
period.
Inventory - all of Borrower's inventory, whether now owned or
hereafter acquired including, but not limited to, all goods intended for
sale or lease by Borrower, or for display or demonstration; all work in
process; all raw materials and other materials and supplies of every
nature and description used or which might be used in connection with the
manufacture, printing, packing, shipping, advertising, selling, leasing or
furnishing of such goods or otherwise used or consumed in Borrower's
business; and all documents evidencing and General Intangibles relating to
any of the foregoing, whether now owned or hereafter acquired by Borrower.
Investment Property - all of Borrower's investment property, whether
now owned or hereinafter acquired by Borrower, including, without
limitation, all securities (certificated or uncertificated), securities
accounts, securities entitlements, commodity accounts and contracts.
LC Amount - at any time, the aggregate undrawn face amount of all
Letters of Credit and LC Guaranties then outstanding.
LC Guaranty - any guaranty pursuant to which Agent, on behalf of
Lenders, shall guaranty the payment or performance by Borrower of its
reimbursement obligation under any letter of credit.
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Legal Requirement - any requirement imposed upon any Lender by any
law of the United States of America or the United Kingdom or by any
regulation, order, interpretation, ruling of official directive (whether
or not having the force of law) of the Board, the Bank of England or any
other board, central bank or governmental or administrative agency,
institution or authority of the United States of America, the United
Kingdom or any political subdivision of either thereof.
Letter of Credit - any letter of credit issued by Agent or Bank for
the account of Borrower.
LIBOR Option - the option granted pursuant to Section 2.1.1 to have
the interest on all or any portion of the principal amount of the
Revolving Credit Loans, the Acquisition Loans or the Acquisition Term Loan
based on a LIBOR Rate.
LIBOR Period - any period, selected as provided below in Section
2.1.1, of 1 month, 2 month, or 3 months, commencing on any Business Day,
subject to the provisions of Section 2.1.1; provided, however, that no
LIBOR Period shall extend beyond the last day of the Original Term, unless
Borrower and Agent and Lenders have agreed to an extension of the Original
Term beyond the expiration of the LIBOR Period in question. If any LIBOR
Period so elected shall end on a date that is not a Business Day, such
LIBOR Period shall instead end on the next preceding or succeeding
Business Day as determined by Agent in accordance with the then current
banking practice in London. Each determination by Agent of a LIBOR Period
shall, in the absence of manifest error, be conclusive, and at Borrowers'
request, Agent shall demonstrate the basis for such determination.
LIBOR Portion - that portion of the Revolving Credit Loans, of the
Acquisition Loans or of the Acquisition Term Loan specified in a LIBOR
Request (including any portion of Revolving Credit Loans or any
Acquisition Loan which is being borrowed by Borrower concurrently with
such LIBOR Request) which is not less than $2,500,000 and an integral
multiple of $100,000, which does not exceed the outstanding balance of
Revolving Credit Loans, Acquisition Loans and/or Acquisition Term Loan not
already subject to a LIBOR Option and, which, as of the date of the LIBOR
Request specifying such LIBOR Portion, has met the conditions for basing
interest on the LIBOR Rate in Section 2.1.1(B) hereof and the LIBOR Period
of which was commenced and not terminated.
LIBOR Rate - with respect to any LIBOR Portion for the related LIBOR
Period, an interest rate per annum (rounded upwards, if necessary, to the
next higher 1/8 of 1%) equal to the product of (a) the Base LIBOR Rate (as
hereinafter defined) and (b) Statutory Reserves. For purposes of this
definition, the term "Base LIBOR Rate" shall mean the rate (rounded to the
nearest 1/8 of 1% or, if there is no nearest 1/8 of 1%, the next higher
1/8 of 1%) at which deposits of U.S. dollars approximately equal in
principal amount to the LIBOR Portion specified in the applicable LIBOR
Request are offered to Bank by prime banks, in the London interbank
foreign currency deposits market at approximately 11:00 a.m., London time,
two (2) Business Days prior to the commencement of such LIBOR Period, for
delivery
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on the first day of such LIBOR Period. Each determination by Agent of any
LIBOR Rate shall in the absence of manifest error, be conclusive, and at
Borrower's request, Agent shall promptly demonstrate the basis of such
determination.
LIBOR Request - a notice in writing (or by telephonic communication
confirmed by telex, telecopy or other facsimile transmission on the same
day as the telephone request) from Borrower to Agent requesting that
interest on all or a portion of the outstanding Revolving Credit Loans,
the Acquisition Loans and/or Acquisition Term Loan be based on a LIBOR
Rate, specifying: (i) the first day of the LIBOR Period, (ii) the length
of the LIBOR Period consistent with the definition of that term, and (iii)
a dollar amount of the LIBOR Portion consistent with the definition of
such term.
Lien - any interest in Property securing an obligation owed to, or a
claim by, a Person other than the owner of the Property, whether such
interest is based on common law, statute or contract. The term "Lien"
shall also include reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, leases and other title
exceptions and encumbrances affecting Property. For the purpose of the
Agreement, Borrower shall be deemed to be the owner of any Property which
it has acquired or holds subject to a conditional sale agreement or other
arrangement pursuant to which title to the Property has been retained by
or vested in some other Person for security purposes.
Loan Account - the loan account established on the books of Agent
pursuant to Section 3.6 of the Agreement.
Loan Documents - the Agreement, the Other Agreements and the
Security Documents.
Loans - all loans and advances of any kind made by any Lender
pursuant to the Agreement.
Maximum Available Amount - Sixty-Five Million Dollars ($65,000,000);
provided, however, that on at least 30 days prior written notice to Agent
Borrower may reduce the Maximum Available Amount by an amount not less
than One Million Dollars ($1,000,000) and an integral multiple of One
Hundred Thousand Dollars ($100,000). Once the amount of the Maximum
Available Amount has been reduced by Borrower, it shall not be thereafter
increased.
Maximum Acquisition Loan - Thirty Million Dollars ($30,000,000)
minus the amount of Acquisition Loans converted into Acquisition Term
Loans.
Maximum Inventory Amount - Twenty-Five Million Dollars ($25,000,000)
until the date on which the aggregate principal amount of Acquisition
Loans made by Lenders pursuant to the terms hereof exceeds Ten Million
Dollars ($10,000,000) at which time the Maximum Inventory Amount shall be
increased to Thirty Million Dollars ($30,000,000).
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Money Borrowed - means (i) Indebtedness arising from the lending of
money by any Person to Borrower; (ii) Indebtedness, whether or not in any
such case arising from the lending by any Person of money to Borrower, (A)
which is represented by notes payable or drafts accepted that evidence
extensions of credit, (B) which constitutes obligations evidenced by
bonds, debentures, notes or similar instruments, or (C) upon which
interest charges are customarily paid (other than accounts payable) or
that was issued or assumed as full or partial payment for Property; (iii)
Indebtedness that constitutes a Capitalized Lease Obligation; (iv)
reimbursement obligations with respect to letters of credit or guaranties
of letters of credit and (v) Indebtedness of Borrower under any guaranty
of obligations that would constitute Indebtedness for Money Borrowed under
clauses (i) through (iii) hereof, if owed directly by Borrower.
Multiemployer Plan - has the meaning set forth in Section 4001(a)(3)
of ERISA.
New Mortgages - as defined in Section 5.3 of the Agreement.
Notes - collectively, the Revolving Credit Notes, the Acquisition
Notes and the Acquisition Term Notes.
Notice of Revolving Credit Loan or Notice of Acquisition Loan as
defined in Section 3.1.1 of the Agreement.
Obligations - all Loans and all other advances, debts, liabilities,
obligations, covenants and duties, together with all interest, fees and
other charges thereon, owing, arising, due or payable from Borrower to
Agent and/or Lenders of any kind or nature, present or future, whether or
not evidenced by any note, guaranty or other instrument, arising under the
Agreement or any of the other Loan Documents whether direct or indirect
(including those acquired by assignment), absolute or contingent, primary
or secondary, due or to become due, now existing or hereafter arising and
however acquired.
Original Closing Date - July 14, 1994 the Closing Date of the
Original Loan Agreement.
Original Loan Agreement - as defined in the first WHEREAS hereof.
Original Term - as defined in Section 4.1 of the Agreement.
Other Agreements - any and all agreements, instruments and documents
(other than the Agreement and the Security Documents), heretofore, now or
hereafter executed by Borrower, any Subsidiary of Borrower or any other
third party and delivered to Agent or Lenders in respect of the
transactions contemplated by the Agreement.
Overadvance - the amount, if any, by which the outstanding principal
amount of Revolving Credit Loans exceeds the Borrowing Base.
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Patent Assignment - the Patent and License Security Agreement
executed by Borrower on or about July 14, 1994 in favor of Agent for its
benefit and the ratable benefit of Lenders and by which Borrower assigned
to Agent for its benefit and the ratable benefit of Lenders, and granted
to Agent for its benefit and the ratable benefit of Lenders a security
interest in, as security for the Obligations all of Borrower's right,
title and interest in and to all of its patents, as such Patent and
License Security Agreement has been or will be amended from time to time.
Participating Lender - shall have the meaning assigned such term in
Section 12.3(e).
Permitted Acquisition(s) - means any acquisition(s) by Borrower of
assets or all of the outstanding capital stock of a Person, which in
either case, constitutes a business unit and which acquisition is closed
prior to the Commitment Termination Date so long as each of the following
conditions precedent (collectively, the "Acquisition Conditions") have
been fulfilled to the satisfaction of Agent: (i) no Default or Event of
Default shall have occurred and be continuing at the time of such
acquisition or would occur as a result thereof; (ii) the business unit
being acquired (the "Target") is primarily located in the United States of
America and is in the same line of business as Borrower; (iii) the
aggregate purchase price for the Target does not exceed Fifteen Million
Dollars ($15,000,000); (iv) average Availability for the thirty days prior
to the consummation of the proposed acquisition and Availability
immediately after giving effect to the proposed acquisition equals or
exceeds Five Million Dollars ($5,000,000); (v) Borrower and Target shall
have executed such amendments to the Agreement, assumption agreements,
security agreements, guarantees, financing statements, promissory notes or
other loan documentation as reasonably requested by Required Lenders to,
inter alia, make the Target a guarantor of the Obligations or co-borrower
under the Loan Agreement, as determined by Required Lenders in their sole
discretion, if the acquisition is not an asset acquisition, and to grant
to Agent for its benefit and the ratable benefit of Lenders a first,
perfected security interest in substantially all of the assets of the
Target; (vi) Required Lenders shall have received projections of
Borrower's and the Target's pro forma financial projections, in form and
substance reasonably acceptable to Agent, which projections shall
demonstrate to Required Lenders' satisfaction that, upon the consummation
of the proposed acquisition, Borrower and the Target on a consolidated
basis will remain in compliance with the provisions of Section 8.3 of the
Loan Agreement; (vii) Agent shall have received a certified copy of
resolutions of the Board of Directors (or the Executive Committee of the
Board of Directors, if so empowered) of Borrower and the Board of
Directors (or comparable governing body) of Target approving the
acquisition of the Target; (viii) Agent if, in its sole discretion it has
elected to do so, shall have completed an audit of the Target's working
capital assets (inventory and accounts receivable) to be included in the
Borrowing Base and the results of such audit shall have been satisfactory
to Agent; and (ix) Agent shall have received a certificate, in form, scope
and substance acceptable to the Agent and in such detail as Agent shall
have required, of the chief financial officer of the Borrower
demonstrating or confirming, as the case may be, satisfaction of each of
the conditions precedent listed in clauses (i) through (ix) above (such
certificate being
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required to be delivered to Agent at least fifteen (15) Business Days'
prior to the date of any such acquisition) and Agent shall not have,
within ten (10) Business Days following such delivery, objected to the
designation of such acquisition as a "Permitted Acquisition" or questioned
any calculation or assertion contained in such certificate, in any case,
in writing.
Permitted Encumbrances - the following encumbrances: (i) pledges or
deposits securing obligations under workmen's compensation, unemployment
insurance, social security or public liability laws or similar
legislation; (ii) performance bonds, pledges or deposits securing bids,
tenders, contracts (other than contracts for the payment of money) or
lease to which Borrower or any of its Subsidiaries is a party as lessee
made in the ordinary course of business; (iii) deposits securing public or
statutory obligations of Borrower or any of its Subsidiaries; (iv)
workers' mechanics', suppliers', carriers', warehousemen's, noncontractual
landlords' or other similar liens arising in the ordinary course of
business; (v) deposits securing or in lieu of surety, appeal or customs
bonds in proceedings to which Borrower or any of its Subsidiaries is a
party; (vi) any attachment or judgment Lien, unless such attachment or
judgment Lien would result in an Event of Default pursuant to Section
10.1.16 hereof; and (vii) zoning restrictions, easements, licenses, or
other restrictions on the use of real property or other minor
irregularities in title (including leasehold title) thereto, so long as
the same do not materially impair the present use, value or marketability
of such real property, leases or leasehold estates.
Permitted Liens - any Lien of a kind specified in subsection 8.2.5
of the Agreement.
Permitted Purchase Money Indebtedness - Purchase Money Indebtedness
of Borrower incurred after the date hereof which is secured by a Purchase
Money Lien. For the purposes of this definition, the principal amount of
any Purchase Money Indebtedness consisting of capitalized leases shall be
computed as a Capitalized Lease Obligation.
Permitted Subordinated Debt - Money Borrowed of Borrower which does
not require any mandatory payment of interest or principal within the
Original Term and which is subject to such other subordination terms and
conditions as are reasonably acceptable to Agent.
Person - an individual, partnership, corporation, limited liability
company, joint stock company, land trust, business trust, or
unincorporated organization, or a government or agency or political
subdivision thereof.
Plan - an employee benefit plan now or hereafter maintained by
either Borrower that is covered by Title IV of ERISA.
Projections - Borrower's forecasted Consolidated and consolidating
(a) balance sheets, (b) profit and loss statements, (c) cash flow
statements, and (d) capitalization statements, all prepared on a
consistent basis with the projections provided to Agent prior
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to the Closing Date, together with appropriate supporting details and a
statement of underlying assumptions.
Property - any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
Purchase Money Indebtedness - means and includes (i) Indebtedness
(other than the Obligations) for the payment of all or any part of the
purchase price of any fixed assets, (ii) any Indebtedness (other than the
Obligations) incurred at the time of or within 30 days prior to or after
the acquisition of any fixed assets for the purpose of financing all or
any part of the purchase price thereof, and (iii) any renewals, extensions
or refinancings thereof, but not any increases in the principal amounts
thereof outstanding at the time.
Purchase Money Lien - a Lien upon fixed assets which secures
Purchase Money Indebtedness, but only if such Lien shall at all times be
confined solely to the fixed assets the purchase price of which was
financed through the incurrence of the Purchase Money Indebtedness secured
by such Lien.
Rentals - as defined in Section 8.2.16 of the Agreement.
Reportable Event - any of the events set forth in Section 4043(c) of
ERISA (other than subsections (c) 9 and (c) (11) thereof), with respect to
which the applicable notice requirements have not been waived.
Required Lenders - as of any date, the Lenders with at least
sixty-six and sixty-seven hundreds percent (66.67%) of the aggregate
principal amount of the Revolving Loan Commitments and Acquisition Loan
Commitments.
Restricted Investment - any investment made in cash or by delivery
of Property to any Person, whether by acquisition of stock, Indebtedness
or other obligation or Security, or by loan, advance or capital
contribution, or otherwise, or in any Property except the following:
(i) investments in one or more Subsidiaries of Borrower to the
extent existing on the Closing Date;
(ii) Property to be used in the ordinary course of business;
(iii) Current assets arising from the sale of goods and
services in the ordinary course of business of Borrower and its
Subsidiaries; promissory notes or other instruments received in
connection with past due Accounts;
(iv) investments in direct obligations of the United States of
America, or any agency thereof or obligations guaranteed by the
United States of America,
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provided that such obligations mature within one year from the
date of acquisition
thereof;
(v) investments in certificates of deposit maturing within one
year from the date of acquisition issued by a bank or trust company
organized under the laws of the United States or any state thereof
having capital surplus and undivided profits aggregating at least
$100,000,000;
(vi) investments in commercial paper given the highest rating
by a national credit rating agency and maturing not more than 270
days from the date of creation thereof;
(vii) hedging or similar contracts to the extent permitted by
Section 8.2.14;
(viii) investments in money market or deposit accounts at a
bank or trust company organized under the laws of the United States
of America or any state thereof having capital surplus and undivided
profits aggregating at least $100,000,000;
(ix) life insurance policies on the lives of certain highly
compensated employees of Borrower in connection with deferred
compensation owed to such employees;
(x) Indebtedness of ▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. to Borrower in an
amount not to exceed $675,000; and
(xi) investments not included in paragraphs (i) through (x)
above which do not exceed at any time, in the aggregate, the sum of
Five Hundred Thousand Dollars ($500,000).
Revolving Credit Loans - Loans made by Lenders as provided in
Section 1.1.1 of the Agreement.
Revolving Credit Loan Commitments - as defined in Section 1.1.1 of
the Agreement.
Revolving Credit Note - the Revolving Credit Note(s) to be executed
by Borrower in favor of Lenders to evidence the Revolving Credit Loans,
which shall be in the form of Exhibit A attached hereto.
Sale Documents - (i) that certain Asset Purchase Agreement dated
February 2, 1998 by and between JELD-WEN, inc. and Borrower together with
all schedules, exhibits, and all amendments, modifications or supplements
thereto, (ii) the Supply Agreement, (iii) the Noncompetition Agreement
dated February 2, 1998 by and between Borrower and JELD-WEN, inc. and (iv)
all agreements, contracts or other documents executed and/or delivered in
connection with any of the foregoing.
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Schedule of Accounts - as defined in Section 6.2.1 of the Agreement.
Security - shall have the same meaning as in Section 2(1) of the
Securities Act of 1933, as amended.
Security Documents - any New Mortgage, the Patent Assignment, the
Trademark Assignment, and all other instruments and agreements now or at
any time hereafter securing the whole or any part of the Obligations.
Solvent - as to any Person, such Person (i) owns Property whose fair
saleable value is greater than the amount required to pay all of such
Person's Indebtedness (including contingent debts), (ii) is able to pay
all of its Indebtedness as such Indebtedness matures and (iii) has capital
sufficient to carry on its business and transactions and all business and
transactions in which it is about to engage.
Statutory Reserves - a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the
number one minus the aggregate of the maximum reserve percentages
(including, without limitation, any marginal, special, emergency or
supplemental reserves), expressed as a decimal, established by the Board
and any other banking authority to which Bank or any Lender is subject for
Eurocurrency Liabilities (as defined in Regulation D of the Board or any
successor thereto). Such reserve percentages shall include, without
limitation, those imposed under such Regulation D. LIBOR Portions shall be
deemed to constitute Eurocurrency Liabilities and as such shall be deemed
to be subject to such reserve requirements without benefit of or credit
for proration, exceptions or offsets which may be available from time to
time to Bank or any Lender under such Regulation D. Statutory Reserves
shall be adjusted automatically on and as of the effective date of any
change in any reserve percentage, provided that no adjustment shall reduce
Statutory Reserves below the amount in effect on the Closing Date.
Stock - all shares, options, warrants, interests, participations or
other equivalents (regardless of how designated) of or in a corporation or
equivalent entity, whether voting or nonvoting, including, without
limitation, common stock, preferred stock, or any other "equity security"
(as such term in defined in Rule 3a11-1 of the General Rules and
Regulations promulgated by the Securities and Exchange Commission under
the Securities Act of 1934, as amended).
Subsidiary - any corporation of which a Person owns, directly or
indirectly through one or more intermediaries, more than 50% of the Voting
Stock at the time of determination. When such term is used in respect to
Borrower, Subsidiary shall mean only those Subsidiaries that are either
incorporated in any state, commonwealth or territory of the United States
or have material assets in any state, commonwealth or territory of the
United States.
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Supply Agreement - that certain Supply Agreement dated as of
February 2, 1998 by and between JELD-WEN, Inc. and Borrower together with
all amendments, modifications or supplements thereto.
Tax - in relation to any LIBOR Portion and the applicable LIBOR
Rate, any tax, levy, impost, duty, deduction, withholding or charges of
whatever nature required by any Legal Requirement (i) to be paid by any
Lender and/or (ii) to be withheld or deducted from any payment otherwise
required hereby to be made by Borrower to any Lender; provided, that the
term "Tax" shall not include any taxes imposed upon the net income or
profits of any Lender.
Term - the Original Term.
Trademark Assignment - the Trademark and License Security Agreement
executed by Borrower on or about July 14, 1994 in favor of Agent for its
benefit and the ratable benefit of Lenders and by which such Borrower
assigned to Lender, and granted to Agent for its benefit and the ratable
benefit of Lenders for its benefit and the ratable benefit of Lenders a
security interest in, as security for the Obligations all of such
Borrower's right, title and interest in and to all of its trademarks, as
such Trademark and License Security Agreement has been or will be amended
from time to time.
Total Credit Facility - Sixty-Five Million Dollars ($65,000,000).
Voting Stock - Securities of any class or classes of a corporation
the holders of which are ordinarily, in the absence of contingencies,
entitled to elect a majority of the corporate directors (or Persons
performing similar functions).
Other Terms. All other terms contained in the Agreement shall have,
when the context so indicates, the meanings provided for by the Code to the
extent the same are used or defined therein.
Certain Matters of Construction. The terms "herein", "hereof" and
"hereunder" and other words of similar import refer to the Agreement as a whole
and not to any particular section, paragraph or subdivision. Any pronoun used
shall be deemed to cover all genders. The section titles, table of contents and
list of exhibits appear as a matter of convenience only and shall not affect the
interpretation of the Agreement. All references to statutes and related
regulations shall include any amendments of same and any successor statutes and
regulations. All references to any of the Loan Documents shall include any and
all modifications thereto and any and all extensions or renewals thereof.
Accounting Terms. Any accounting term used in this Agreement shall
have, unless otherwise specifically provided herein, the meaning customarily
given such term in accordance with GAAP, and all financial computations
hereunder shall be computed, unless otherwise specifically provided herein, in
accordance with GAAP consistently applied. That certain terms or computations
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are explicitly modified by the phrase "in accordance with GAAP" shall in no way
be construed to limit the foregoing.
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LIST OF EXHIBITS AND SCHEDULES
Exhibits
Exhibit A Revolving Credit Note
Exhibit A-1 Acquisition Note
Exhibit A-2 Acquisition Term Note
Exhibit B Borrower's and each Subsidiary's Business Locations
Exhibit C Form of Borrowing Base Certificate
Exhibit D Jurisdictions in which Borrower and each Subsidiary are
Authorized to do Business
Exhibit E Capital Structure of Borrower
Exhibit F Corporate Names
Exhibit G Tax Identification Numbers of Subsidiaries
Exhibit H Patents, Trademarks, Copyrights and Licenses
Exhibit I Contracts Restricting Borrower's Right to Incur Debts
Exhibit J Litigation
Exhibit K Capitalized Leases
Exhibit L Operating Leases
Exhibit M Pension Plans
Exhibit N Labor Contracts
Exhibit O Compliance Certificate
Exhibit P Permitted Liens
Exhibit Q Schedule of Documents
Exhibit R Assignment and Acceptance
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