1
EXHIBIT 10.9
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AMENDED AND RESTATED
CREDIT AGREEMENT
DATED AS OF MAY 20, 1997
Among
UNIONTOOLS, INC.
as Borrower
▇▇▇▇▇▇ FINANCIAL, INC.
as Agent and as a Lender
SANWA BUSINESS CREDIT CORPORATION
as a Lender
FLEET CAPITAL CORPORATION
as a Lender
PNC BANK, OHIO NATIONAL ASSOCIATION
as a Lender
BANKBOSTON, N.A., formerly known as
The First National Bank Of Boston
as a Lender
and
STAR BANK, N.A.
as a Lender
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TABLE OF CONTENTS
SECTION 1
AMOUNTS AND TERMS OF LOANS................................................. 2
1.1 Loans.................................................... 2
1.2 Interest and Related Fees................................ 7
1.3 Other Fees and Expenses.................................. 11
1.4 Payments................................................. 11
1.5 Prepayments.............................................. 12
1.6 Term of the Agreement.................................... 13
1.7 Loan Accounts............................................ 13
1.8 Capital Adequacy and Other Adjustments................... 14
1.9 Taxes.................................................... 14
1.10 Optional Prepayment/Replacement of Lender in Respect of
Increased Costs.......................................... 16
SECTION 2
AFFIRMATIVE COVENANTS...................................................... 16
2.1 Compliance With Laws..................................... 16
2.2 Maintenance of Properties; Insurance..................... 17
2.3 Inspection; Lender Meeting............................... 17
2.4 Corporate Existence, Etc................................. 18
2.5 Further Assurances....................................... 18
SECTION 3
NEGATIVE COVENANTS......................................................... 18
3.1 Indebtedness............................................. 18
3.2 Liens and Related Matters................................ 19
3.3 Investments; Joint Ventures.............................. 20
3.4 Contingent Obligations................................... 21
3.5 Restricted Junior Payments............................... 22
3.6 Restriction on Fundamental Changes....................... 23
3.7 Disposal of Assets or Subsidiary Stock................... 24
3.8 Transactions with Affiliates............................. 24
3.9 Management Fees and Compensation......................... 24
3.10 Conduct of Business...................................... 24
3.11 Changes Relating to Subordinated Indebtedness............ 25
3.12 Fiscal Year.............................................. 25
3.13 Press Release; Public Offering Materials................. 25
3.14 Subsidiaries............................................. 25
3.15 Bank Accounts............................................ 25
3.16 Non-Operating Expenditures............................... 25
SECTION 4
FINANCIAL COVENANTS/REPORTING.............................................. 25
4.1 Capital Expenditure Limits............................... 25
(i)
3
4.2 Lease Limits............................................. 26
4.3 EBIDAT................................................... 26
4.4 Fixed Charge Coverage.................................... 26
4.5 Total Interest Coverage.................................. 27
4.6 Total Indebtedness to Operating Cash Flow Ratio.......... 28
4.7 [Intentionally Deleted.]................................. 28
4.8 [Intentionally Deleted.]................................. 28
4.9 [Intentionally Deleted.]................................. 28
4.10 Financial Statements and Other Reports................... 28
4.11 Accounting Terms; Utilization of GAAP for Purposes of
Calculations Under Agreement............................. 32
SECTION 5
REPRESENTATIONS AND WARRANTIES............................................. 32
5.1 Disclosure............................................... 32
5.2 No Material Adverse Effect............................... 32
5.3 No Default............................................... 33
5.4 Organization, Powers, Capitalization and Good Standing... 33
5.5 Financial Statements..................................... 33
5.6 Intellectual Property.................................... 34
5.7 Investigations, Audits, Etc.............................. 34
5.8 Employee Matters......................................... 34
5.9 Solvency................................................. 34
SECTION 6
DEFAULT, RIGHTS AND REMEDIES............................................... 34
6.1 Event of Default......................................... 34
6.2 Suspension of Commitments................................ 38
6.3 Acceleration............................................. 38
6.4 Performance by Agent..................................... 38
SECTION 7
EFFECTIVENESS OF THIS AGREEMENT AND CONDITIONS TO LOANS.................... 39
7.1 Effectiveness of this Agreement.......................... 39
7.2 Conditions to All Loans.................................. 40
SECTION 8
ASSIGNMENT AND PARTICIPATION............................................... 40
8.1 Assignments and Participations in Loans and Notes........ 40
8.2 Agent.................................................... 42
8.3 Amendments, Consents and Waivers for Certain Actions..... 46
8.4 Set Off and Sharing of Payments.......................... 47
8.5 Disbursement of Funds.................................... 47
8.6 Disbursements of Advances; Payment....................... 47
(ii)
4
SECTION 9
MISCELLANEOUS.............................................................. 50
9.1 Indemnities.............................................. 50
9.2 Amendments and Waivers................................... 50
9.3 Notices.................................................. 51
9.4 Failure or Indulgence Not Waiver; Remedies Cumulative.... 52
9.5 Marshalling; Payments Set Aside.......................... 52
9.6 Severability............................................. 52
9.7 Lenders' Obligations Several; Independent Nature of
Lenders' Rights ......................................... 52
9.8 Headings................................................. 52
9.9 Applicable Law........................................... 52
9.10 Successors and Assigns................................... 52
9.11 No Fiduciary Relationship................................ 53
9.12 Construction............................................. 53
9.13 Confidentiality.......................................... 53
9.14 Consent to Jurisdiction and Service of Process........... 53
9.15 Waiver of Jury Trial..................................... 54
9.16 Survival of Warranties and Certain Agreements............ 54
9.17 Entire Agreement......................................... 54
9.18 Counterparts; Effectiveness.............................. 55
SECTION 10
DEFINITIONS................................................................ 55
10.1 Certain Defined Terms.................................... 55
10.2 Other Definitional Provisions............................ 60
(iii)
5
INDEX OF DEFINED TERMS
Defined Term Defined in Section
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Accounting Changes Section 4.11
Acquisition Loans Section 1.1(C)
Acquisition Loan Commitment Section 1.1(C)
Adjusted Total Indebtedness to
Operating Cash Flow Ratio Section 1.2(A)
Affected Lender Section 1.10
Affiliate Section 10.1
Agent Section 10.1
Agreement Section 10.1
Asset Disposition Section 10.1
Assigning Lender Section 8.3(C)
Bankruptcy Code Section 10.1
Base Rate Section 1.2(A)
Base Rate Loans Section 1.2(A)
Base Rate Margin Section 1.2(A)
Borrower Preamble & Section 10.1
Borrowing Base Section 1.1(A)(1)
Borrowing Base Certificate Section 1.1(A)(1)
Business Day Section 10.1
Calculation Period Section 1.2(A)
Capex Limit Section 4.1
Capital Expenditures Section 4.1
Cash Equivalents Section 3.3
Certificate of Exemption Section 1.9(C)
Closing Date Section 10.1
Collateral Section 10.1
Contingent Obligation Section 3.4
Contractual Obligation Section 2.1
Daily Interest Amount Section 8.6(A)(3)
Daily Interest Rate Section 8.6(A)(3)
Daily Loan Balance Section 8.6(A)(3)
Default Section 10.1
EBIDAT Section 4.3
Event of Default Section 6.1
Excess Cash Flow Exhibit 1.5(B)
Excess Revolving Loans Section 1.1(A)(2)
Expiry Date Section 10.1
Fixed Charge Coverage Section 4.4
Foreign Lenders Section 1.9(C)
Funding Date Section 7.2
GAAP Section 10.1
(iv)
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▇▇▇▇▇▇ Preamble
Holdings 3rd Recital
Indebtedness Section 10.1
Indemnities Section 9.1
Intellectual Property Section 5.6
Interest Period Section 1.2(A)(2)
Interest Ratio Section 8.6(A)(3)
Interest Settlement Date Section 8.6(A)(3)
Investments Section 3.3
IPO 4th Recital
IRC Section 10.1
Lender(s) Section 10.1
Lender Addition Agreement Section 10.1
Lender Letter of Credit Section 1.1(B)
Letter of Non-Exemption Section 1.9(C)
LIBOR Section 1.2(A)(2)
LIBOR Breakage Fee Section 1.3(B)
LIBOR Loans Section 1.2(A)(2)
LIBOR Margin Section 1.2(A)
Lien Section 10.1
Loan(s) Section 10.1
Loan Documents Section 10.1
Loan Party Section 10.1
Loan Year Section 10.1
Material Adverse Effect Section 10.1
Maximum Revolving Loan Balance Section 1.1(A)(1)
Net Proceeds Section 10.1
Note(s) Section 10.1
Oaktree Section 6.1(T)
Obligations Section 10.1
Operating Cash Flow Section 4.6
Original Credit Agreement 1st Recital
Permitted Acquisitions Section 3.3
Permitted Encumbrances Section 3.2(A)
Person Section 10.1
Pro Forma Total Indebtedness to
Operating Cash Flow Ratio Section 1.1(C)
Pro Rata Share Section 10.1
Projections Section 10.1
Related Transactions Section 10.1
Related Transactions Documents Section 10.1
Replacement Lender Section 1.10(A)
Requisite Lenders Section 10.1
Restricted Junior Payment Section 3.5
Revolving Loan Commitment Section 1.1(A)
Revolving Loans Section 1.1(A)
(v)
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Risk Participation Agreement Section 1.1(B)
Risk Participation Liability Section 10.1
Scheduled Acquisition Loan Installments Section 1.1(C)
Security Documents Section 10.1
Settlement Date Section 8.6(A)(2)
Statement Section 4.10(B)
Subordinated Indebtedness Section 10.1
Subsidiary Section 10.1
Target Section 1.1(C)
Tax Liabilities Section 1.9(A)
TCW Notes 5th Recital
Total Indebtedness Section 4.6
Total Interest Coverage Section 4.5
(vi)
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LIST OF EXHIBITS AND SCHEDULES
Exhibits
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Exhibit 1.2(G) - LIBOR Loan Request
Exhibit 1.5(B) - Excess Cash Flow Computation
Exhibit 4.10(C) - Compliance Certificate
Exhibit 4.10(F) - Borrowing Base Certificate
Exhibit 10.1(A) - Notes
Schedules
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Schedule 3.2(A)(10) - Liens
Schedule 3.4 - Contingent Obligations
Schedule 3.8 - Affiliate Transactions
Schedule 3.10 - Business Description
Schedule 3.16 - Non-Operating Expenditures
Schedule 5.3 - Violations, Conflicts, Breaches and Defaults
Schedule 5.4(A) - Jurisdictions of Organization
Schedule 5.4(B) - Capitalization
Schedule 5.4(D) - Foreign Qualifications
Schedule 5.6 - Intellectual Property
Schedule 5.7 - Investigations and Audits
Schedule 5.8 - Employee Matters
(vii)
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AMENDED AND RESTATED CREDIT AGREEMENT
This AMENDED AND RESTATED CREDIT AGREEMENT is dated as of May 20, 1997 and
entered into by and among UNIONTOOLS, INC., a Delaware corporation ("Borrower"),
with its principal place of business at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇ FINANCIAL, INC., a Delaware corporation ("▇▇▇▇▇▇"), with offices at ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, in its capacity as a Lender (as
hereinafter defined in Section 10), and in its capacity as Agent (as hereinafter
defined in Section 10) for all Lenders, and such other Persons executing this
Agreement as Lenders.
R E C I T A L S:
WHEREAS, Borrower, Agent and Lenders are parties to that certain Credit
Agreement dated as of December 27, 1996, as amended and modified by Amendment
No. 1 to Credit Agreement dated as of February 28, 1997 (as so amended and
modified, the "Original Credit Agreement"), pursuant to which Lenders extended a
certain term credit facility, revolving credit facility and acquisition credit
facility to Borrower, to fund the repayment of certain indebtedness of Borrower,
to provide working capital financing for Borrower, to fund certain permitted
acquisitions, and to provide funds for other general corporate purposes of
Borrower; and
WHEREAS, Borrower secured all of its Obligations (as hereinafter defined
in Section 10) under the Loan Documents (as hereinafter defined in Section 10)
by granting to Agent, for the benefit of Agent and Lenders, a security interest
in and lien upon substantially all of its personal and real property; and
WHEREAS, Acorn Products, Inc., a Delaware corporation formerly known as
Vision Hardware Group, Inc. ("Holdings"), which owns all of the issued and
outstanding capital stock of Borrower, guaranteed all of the Obligations of
Borrower to Lenders under the Loan Documents and pledged to Agent, for the
benefit of Agent and Lenders, all of the capital stock of Borrower to secure
such guaranty; and
WHEREAS, Holdings intends to make an initial public offering of its Common
Stock pursuant to Registration Statement Number 333-25325 filed on Form S-1
pursuant to the Securities Act of 1933 ("IPO"); and
WHEREAS, one-half of the net proceeds of the IPO shall be used first to
pay accrued but unpaid dividends on the Series A Preferred Stock of Holdings,
second to redeem such Series A Preferred Stock, third to pay accrued but unpaid
interest on the $25,000,000 Subordinated Unsecured Promissory Note and the
$6,304,167 Temporary Subordinated Unsecured Promissory Note, both dated May 26,
1994 and executed by Holdings to the order of TCW Special Credits, a California
general partnership (collectively, the "TCW Notes"), and fourth to repay the
principal balance of the TCW Notes; and any balance of the TCW Notes and
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such Series A Preferred Stock remaining outstanding shall be converted into
Common Stock of Holdings at the IPO price; and
WHEREAS, the remainder of the net proceeds of the IPO shall be used first
to satisfy, in whole or in part, the principal balance of the Term Loan (as
defined in the Original Credit Agreement), and then to satisfy, in whole or in
part, the principal balance of the Acquisition Loans; and any remaining
principal balance of such Term Loan shall be added to the principal balance of
the Acquisition Loans; and
WHEREAS, the parties now desire to amend and restate the Original Credit
Agreement upon the terms and provisions set forth below;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Borrower, Agent and Lenders agree as
follows:
SECTION 1
AMOUNTS AND TERMS OF LOANS
1.1 Loans. Subject to the terms and conditions of this Agreement and in
reliance upon the representations and warranties of Borrower contained herein:
(A) Revolving Loans.
(1) Subject to the satisfaction of the terms and conditions
set forth herein and in reliance upon the representations and warranties set
forth herein, each Lender agrees, severally and not jointly, to lend to Borrower
from the Closing Date to the Expiry Date its Pro Rata Share of the loans
requested by Borrower to be made by Lenders under this subsection 1.1(A), up to
an aggregate maximum for all Lenders of $30,000,000 (as the same may be reduced
from time to time hereunder, the "Revolving Loan Commitment"). Advances or
amounts outstanding under the Revolving Loan Commitment will be called
"Revolving Loans". Revolving Loans may be repaid and reborrowed. The "Maximum
Revolving Loan Balance" will be the lesser of (a) the "Borrowing Base" (as
calculated on Exhibit 4.10(F), the "Borrowing Base Certificate") or (b) the
Revolving Loan Commitment less outstanding Risk Participation Liability. If at
any time the outstanding Revolving Loans exceed the Maximum Revolving Loan
Balance (as it may be deemed increased from time to time pursuant to subsection
1.1(A)(2)), Lenders shall not be obligated to make Revolving Loans and issue
Lender Letters of Credit and Risk Participation Agreements, and Revolving Loans
must be repaid immediately, in an amount sufficient to eliminate any excess.
Revolving Loans may be requested in any amount with one (1) Business Day prior
notice required for amounts greater than $5,000,000. For amounts less than
$5,000,000, written or telephonic notice must be provided by noon CT on the day
on which the Loan is to be made. All LIBOR Loans require three (3) Business Days
notice. All Loans requested telephonically must be confirmed in writing within
twenty-four (24) hours. Neither Agent nor any Lender shall incur any liability
to Borrower for acting upon any telephonic notice that Agent believes in good
faith to have been given by a duly authorized officer or other person authorized
to borrow on behalf of Borrower.
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(2) If Borrower requests that Lenders make, or permit to
remain outstanding, Revolving Loans in an aggregate amount in excess of the
Borrowing Base, Requisite Lenders may in their discretion elect to cause all
Lenders to make, or permit to remain outstanding, such excess Revolving Loans
(such Revolving Loans in excess of the Borrowing Base being referred to as
"Excess Revolving Loans"), provided that, Requisite Lenders may not cause all
Lenders to make, or permit to remain outstanding, aggregate Revolving Loans in
excess of the Revolving Loan Commitment or Excess Revolving Loans in excess of
15% of the Revolving Loan Commitment. If Excess Revolving Loans are made, or
permitted to remain outstanding, pursuant to the preceding sentence, then (a)
the Maximum Revolving Loan Balance shall be deemed increased by the amount of
such Excess Revolving Loans, but only for so long as Requisite Lenders allow
such Excess Revolving Loans to be outstanding and (b) all Lenders that have
committed to make Revolving Loans shall be bound to make, or permit to remain
outstanding, such Excess Revolving Loans based upon their Pro Rata Shares in
accordance with the terms of this Agreement. If Excess Revolving Loans remain
outstanding for more than ninety (90) days during any 360-day period, Revolving
Loans must be repaid immediately, in an amount sufficient to eliminate all of
such Excess Revolving Loans.
(B) Letters of Credit and Risk Participation Agreements. The
Revolving Loan Commitment may, in addition to advances under the Revolving Loan,
be utilized, upon the request of Borrower, for (i) the issuance of letters of
credit for the benefit of Borrower by Agent, including without limitation a
letter of credit issued for the account of Holdings in the amount of $1,000,000
with respect to certain insurance maintained for the benefit of Borrower (each
such letter of credit, a "Lender Letter of Credit") or (ii) the issuance by
Agent of risk participation agreements (each such agreement, a "Risk
Participation Agreement") to confirm payment to banks which issue letters of
credit for the account of Borrower.
(1) Maximum Amount. The aggregate amount of Risk Participation
Liability with respect to all Lender Letters of Credit and Risk Participation
Agreements outstanding for the account of Borrower at any time shall not exceed
$3,000,000.
(2) Reimbursement. Borrower shall be irrevocably and
unconditionally obligated forthwith without presentment, demand, protest or
other formalities of any kind, to reimburse Agent for any amounts paid by Agent
with respect to a Lender Letter of Credit or a Risk Participation Agreement
issued for the account of Borrower, including all fees, costs and expenses paid
by Agent to any bank that issues letters of credit. Borrower hereby authorizes
and directs Agent, at Agent's option, to make a Revolving Loan in the amount of
any payment made by Agent with respect to any Lender Letter of Credit or any
Risk Participation Agreement. All amounts paid by Agent with respect to any
Lender Letter of Credit or Risk Participation Agreement that are not immediately
repaid by Borrower with the proceeds of a Revolving Loan or otherwise shall bear
interest at the interest rate applicable to Revolving Loans calculated using the
Base Rate. Each Lender agrees to fund its Pro Rata Share of any Revolving Loan
made pursuant to this subsection 1.1(B)(2). If no such Revolving Loan is made,
each Lender agrees to purchase, and shall be deemed to have purchased, a
participation in such Lender Letter of Credit or Risk Participation Agreement,
as the case may be, in an amount equal to its Pro Rata Share of the Risk
Participation Liability of such Lender Letter of Credit or Risk Participation
Agreement, as the case may be, and each Lender agrees to pay to Agent such
Lender's Pro Rata
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Share of any payments made by Agent under such Lender Letter of Credit and Risk
Participation Agreement. The obligation of each Lender to deliver to Agent an
amount equal to its respective Pro Rata Share pursuant to the preceding two (2)
sentences shall be absolute and unconditional and such remittance shall be made
notwithstanding the occurrence or continuation of an Event of Default or Default
or the failure to satisfy any condition set forth in subsection 7.2. If any
Lender fails to make available to Agent the amount of such Lender's Pro Rata
Share of any payments made by Agent in respect of such Lender Letter of Credit
or Risk Participation Agreement as provided in this subsection 1.1(B)(2), Agent
shall be entitled to recover such amount on demand from such Lender together
with interest at the Base Rate.
(3) Conditions of Issuance of Letters of Credit or Risk
Participation Agreements. In addition to all other terms and conditions set
forth in this Agreement, the issuance by Agent of any Lender Letter of Credit or
Risk Participation Agreement shall be subject to the conditions precedent that
the Lender Letter of Credit, the Risk Participation Agreement or the letter of
credit for which Borrower requests a Risk Participation Agreement shall support
a transaction entered into in the ordinary course of Borrower's business and
shall be in such form, be for such amount, and contain such terms and conditions
as are reasonably satisfactory to Agent. The expiration date of each Lender
Letter of Credit and each letter of credit to be issued under a Risk
Participation Agreement shall be on a date which is the earlier of (a) one year
from its date of issuance, or (b) the thirtieth (30th) day before the date set
forth in clause (c) of the definition of the term Expiry Date. Each Risk
Participation Agreement shall provide that the agreement terminates and all
demand or claims for payment must be presented by a date certain, which date
will be at least thirty (30) days before the date set forth in clause (c) of the
definition of the term Expiry Date.
(4) Request for Lender Letters of Credit or Risk Participation
Agreements. Borrower shall give Agent at least three (3) Business Days prior
notice specifying the date a Lender Letter of Credit or Risk Participation
Agreement (or a letter of credit to be issued under a Risk Participation
Agreement) is requested to be issued, identifying the beneficiary and describing
the nature of the transactions proposed to be supported thereby. After the
issuance of a Risk Participation Agreement in favor of a bank that will issue
letters of credit on behalf of Borrower, Borrower shall give Agent at least two
(2) Business Days prior written notice specifying the date a letter of credit is
to be issued under a Risk Participation Agreement (five (5) Business Days in the
case of the first letter of credit to be issued under a particular Risk
Participation Agreement), identifying the beneficiary and describing the nature
of the transactions proposed to be supported thereby. Any notice described in
this paragraph shall be accompanied by the form of the Lender Letter of Credit
or the letter of credit to which such Risk Participation Agreement relates.
(C) Acquisition Loans. Subject to the satisfaction of the terms and
conditions set forth herein and in reliance upon the representations and
warranties set forth herein, each Lender agrees, severally and not jointly, to
lend to Borrower from the Closing Date to the third anniversary thereof its Pro
Rata Share of the loans requested by Borrower (upon not less than thirty (30)
days prior written notice to Agent) to be made by Lenders under this subsection
1.1(C) (the "Acquisition Loans"), up to an aggregate maximum for all Lenders of
$35,000,000 (the "Acquisition Loan Commitment"). An Acquisition Loan shall be
made only upon the
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acquisition by Borrower of all of the issued and outstanding capital stock of
another Person, or of all or substantially all of the assets of another Person
or of a division of another Person (a "Target") and shall be limited in amount
to the purchase price of such acquisition, and the proceeds of the Acquisition
Loan may be used only to fund such purchase price. Amounts borrowed under this
subsection 1.1(C) and repaid may not be reborrowed, except for such amounts
repaid from the net proceeds of the IPO as set forth in the Recitals hereof. The
obligations of Lenders to make any Acquisition Loan are further subject to the
following conditions precedent:
(1) At least ten (10) Business Days prior to the acquisition
of the subject Target, Agent shall have received a certificate demonstrating
compliance with subsections 1.1(C)(3), (4), (5), (6) and (7);
(2) Agent shall have received such financial and other
information concerning the subject Target as Agent may reasonably request;
(3) Requisite Lenders shall have approved the acquisition of
the subject Target, provided, however, that such approval shall not be required
if the purchase price for the subject Target is not greater than $7,500,000 and
the sum of the purchase price for the subject Target plus the purchase price(s)
for any other Target(s) previously acquired by Borrower during the then current
Loan Year, is not greater than $15,000,000;
(4) The subject Target's EBIDAT (as defined in Exhibit
4.10(C)) during the twelve (12) months immediately preceding the acquisition of
the subject Target, plus those expenses deducted in calculating such earnings
that would be eliminated upon such acquisition (as agreed to by Requisite
Lenders), shall have been positive;
(5) Based upon the financial performance of both Borrower and
the subject Target during the twelve (12) months immediately preceding the
acquisition of the subject Target, the combined financial performance of
Borrower and the subject Target would comply with the financial covenants set
forth in Article 4 hereof after giving effect to the Acquisition Loan;
(6) The Maximum Revolving Loan Balance as of the acquisition
of the subject Target must exceed the Revolving Loans then outstanding by not
less than the applicable amount set forth below (based upon the period in which
such acquisition occurs), after giving effect to such acquisition:
Period Amount
------ ------
January 1 through March 31 of any calendar year $6,000,000
April 1 through June 30 of any calendar year $7,000,000
July 1 through September 30 of any calendar year $9,000,000
October 1 through December 31 of any calendar year $8,000,000
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(7) Based upon the financial performance of both Borrower and
the subject Target during the twelve (12) months immediately preceding the
acquisition of the subject Target, the Pro Forma Total Indebtedness to Operating
Cash Flow Ratio of Borrower and the subject Target on a pro forma combined basis
would not be more than 4.25:1 as of the last day of any month in the first Loan
Year, 4.00:1 as of the last day of any month in the second Loan Year and 3.75:1
as of the last day of any month in the third Loan Year. For the purposes of this
subsection 1.1(C)(7), "Pro Forma Total Indebtedness to Operating Cash Flow
Ratio" means the ratio of (i) the sum of (a) the average daily principal balance
of the Revolving Loans during the twelve (12) month period ending on the last
day of the subject month (for any month preceding the Closing Date, such average
daily principal balance shall be deemed to be $13,000,000), plus (b) the
aggregate outstanding principal balance of the Acquisition Loans, the Lender
Letters of Credit and Risk Participation Agreements as of the last day of such
month plus (c) all other Indebtedness for borrowed money of the Borrower and its
Subsidiaries on a consolidated basis as of the last day of such month, to (ii)
Operating Cash Flow (calculated as illustrated on Exhibit 4.10(C)) for the
twelve (12) month period ending on the last day of such month;
(8) The subject Target shall be in the same or similar type of
business as Borrower;
(9) No event shall have occurred and be continuing or would
result from the acquisition of the subject Target or the Acquisition Loan which
would reasonably be expected to cause a Material Adverse Effect; and
(10) No event shall have occurred and be continuing or would
result from the acquisition of the subject Target or the Acquisition Loan that
would constitute an Event of Default or a Default.
On the dates indicated below, Borrower shall repay the Acquisition Loans
through periodic installments in the amounts equal to the applicable percentage
of the Acquisition Loans outstanding as of the third anniversary of the Closing
Date ("Scheduled Acquisition Loan Installments").
Date Percentage
---- ----------
Each September 30th of calendar years
2000, 2001 and 2002 8.333%
Each December 31st of calendar years
2000, 2001 and 2002 2.083%
Each March 31st of calendar years
2001, 2002 and 2003 2.083%
Each June 30th of calendar years 2001
and 2002 12.50%
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On June 30, 2003, the entire remaining principal balance of the Acquisition
Loans, together with all accrued but unpaid interest thereon, shall be due and
payable in full.
(D) Notes. Borrower shall execute and deliver to each Lender (i) a
Note to evidence the Revolving Loans, such Note to be in the principal amount of
such Lender's Pro Rata Share of the Revolving Loan Commitment and (ii) a Note to
evidence the Acquisition Loans, such Note to be in the principal amount of such
Lender's Pro Rata Share of the Acquisition Loan Commitment. In the event of an
assignment under subsection 8.1, Borrower shall, upon surrender of the assigning
Lender's Notes, issue new Notes to reflect the interests of the assigning Lender
and the Person to which interests are to be assigned.
1.2 Interest and Related Fees.
(A) Interest. From the date the Loans are made and the date the
other Obligations become due, depending upon Borrower's election from time to
time, as permitted herein, to have portions of the Loans accrue interest based
upon the LIBOR, the Loans and the other Obligations shall bear interest at the
rates set forth in paragraphs (1) and (2)below:
(1) If a Base Rate Loan, then at the sum of the Base Rate plus
the Base Rate Margin then applicable.
(2) If a LIBOR Loan, then at the sum of the LIBOR plus the
LIBOR Margin then applicable.
"Base Rate" means a variable rate of interest per annum equal to the
rate of interest from time to time published by the Board of Governors of the
Federal Reserve System in Federal Reserve statistical release H.15 (519)
entitled "Selected Interest Rates" as the Bank prime loan rate. Base Rate also
includes rates published in any successor publications of the Federal Reserve
System reporting the Bank prime loan rate or its equivalent. The statistical
release generally sets forth a Bank prime loan rate for each business day. The
applicable Bank prime loan rate for any date not set forth shall be the rate set
forth for the last preceding date. In the event the Board of Governors of the
Federal Reserve System ceases to publish a Bank prime loan rate or equivalent,
the term "Base Rate" shall mean a variable rate of interest per annum equal to
the highest of the "prime rate," "reference rate," "base rate" or other similar
rate as determined by Agent announced from time to time by any of Bankers Trust
Company, The Chase Manhattan Bank, National Association and Citibank, N.A. (with
the understanding that any such rate may merely be a reference rate and may not
necessarily represent the lowest or best rate actually charged to any customer
by such bank).
"Base Rate Loans" means Loans bearing interest at rates determined
by reference to the Base Rate.
"Base Rate Margin" shall mean, (i) for the period commencing on the
Closing Date and ending on January 1, 1998, three quarters of one percent
(0.75%) per annum, and (ii) for each period commencing on January 2, 1998, or
any subsequent first Business Day of a calendar quarter after Agent has received
a new Compliance Certificate delivered by Borrower
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pursuant to subsection 4.10(C) (each such First Business Day being hereinafter
referred to as an "Adjustment Date"), and ending on the day immediately
preceding each subsequent Adjustment Date (each such period being hereinafter
referred to as a "Calculation Period"), the applicable percent per annum set
forth in the pricing table below opposite the Adjusted Total Indebtedness to
Operating Cash Flow Ratio calculated for such Calculation Period.
"LIBOR" means, for each Interest Period, a rate equal to: (a) the
rate of interest determined by Agent at which deposits in U.S. dollars for the
relevant Interest Period are offered based on information presented on the
Reuters Screen LIBO Page as of 11:00 a.m. (London time) on the day which is two
(2) Business Days prior to the first day of such Interest Period, provided that
if at least two such offered rates appear on the Reuters Screen LIBO Page in
respect of such Interest Period, the arithmetic mean of all such rates will be
the rate used, provided, further, that if fewer than two offered rates appear or
if Reuters ceases to provide LIBOR quotations, such rate shall be the rate of
interest at which deposits in U.S. dollars are offered for the relevant Interest
Period by any of Bankers Trust Company, The Chase Manhattan Bank, National
Association or Citibank, N.A. to prime banks in the London interbank market,
divided by (b) a number equal to 1.0 minus the aggregate (but without
duplication) of the rates (expressed as a decimal fraction) of reserve
requirements in effect on the day which is two (2) Business Days prior to the
beginning of such Interest Period (including, without limitation, basic,
supplemental, marginal and emergency reserves under any regulations of the Board
of Governors of the Federal Reserve System or other governmental authority
having jurisdiction with respect thereto, as now and from time to time in
effect) for Eurocurrency funding (currently referred to as "Eurocurrency
Liabilities" in Regulation D of such Board) which are required to be maintained
by a member bank of the Federal Reserve System; such rate to be rounded upward
to the next whole multiple of one-sixteenth of one percent (.0625%).
"LIBOR Loans" means Loans bearing interest at rates determined by
reference to the LIBOR.
"LIBOR Margin" shall mean, (i) for all LIBOR Loans having an
Interest Period commencing during the period commencing on the Closing Date and
ending on the day immediately preceding the first Adjustment Date, two and three
quarters percent (2.75%) per annum, and (ii) for all LIBOR Loans having an
Interest Period commencing during a subsequent period commencing on an
Adjustment Date and ending on the day immediately preceding the subsequent
Adjustment Date (each such period being hereinafter referred to as a
"Calculation Period"), the applicable percent per annum set forth in the pricing
table below opposite the Adjusted Total Indebtedness to Operating Cash Flow
Ratio calculated for such Calculation Period.
For the purposes of this subsection 1.2(A), "Adjusted Total
Indebtedness to Operating Cash Flow Ratio" means, for any Calculation Period,
the ratio of (i) the sum of (a) the average daily principal balance of the
Revolving Loans during the twelve (12) month period ending on the last day of
the month for which the Compliance Certificate most recently delivered pursuant
to subsection 4.10(C) was prepared, plus (b) the aggregate outstanding principal
balance of the Acquisition Loans, the Lender Letters of Credit and Risk
Participation Agreements as of the last day of such month plus (c) all other
Indebtedness for borrowed money of the Borrower
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and its Subsidiaries on a consolidated basis as of the last day of such month,
to (ii) Operating Cash Flow (calculated as illustrated on Exhibit 4.10(C)) for
the twelve (12) month period ending on the last day of such month.
PRICING TABLE
----------------------------------------------------------------------------------------
Adjusted Total Indebtedness
to Operating Cash
Flow Ratio Base Rate Margin LIBOR Margin
----------------------------------------------------------------------------------------
Greater than 3.75:1 0.75% 2.75%
----------------------------------------------------------------------------------------
Equal to or greater than 3.00:1 but equal to or less 0.50% 2.50%
than 3.75:1
----------------------------------------------------------------------------------------
Less than 3:00:1 0.25% 2.25%
----------------------------------------------------------------------------------------
If Borrower shall fail to deliver a Compliance Certificate by the
date required pursuant to subsection 4.10(C), effective as of the first Business
Day of the immediately succeeding calendar month and continuing through the day
preceding the next succeeding Adjustment Date, each applicable Base Rate Margin
and each applicable LIBOR Margin shall be conclusively presumed to equal the
highest Base Rate Margin and the highest LIBOR Margin specified in the pricing
table set forth above.
Each LIBOR Loan may be obtained for a one (1), two (2), three (3),
or six (6) month period (each being an "Interest Period"). With respect to all
LIBOR Loans: (a) the Interest Period will commence on the date that the LIBOR
Loan is made or the date on which a Base Rate Loan is converted into a LIBOR
Loan, as applicable, or in the case of immediately successive Interest Periods,
each successive Interest Period shall commence on the day on which the next
preceding Interest Period expires, (b) if the Interest Period expires on a day
that is not a Business Day, then it will expire on the next Business Day, and
(c) no Interest Period shall extend beyond the date set forth in clause (c) of
the definition of the term "Expiry Date."
If the introduction of or the interpretation of any law, rule, or
regulation would increase the reserve requirement or otherwise increase the cost
to any Lender of making or maintaining a LIBOR Loan, then Agent, on behalf of
all affected Lenders, shall submit a certificate to Borrower demonstrating the
calculation of the increased cost and requiring payment thereof to Agent for the
benefit of the affected Lenders within ten (10) days after the date of the
certificate. There are no limitations on the number of times such certificate
may be submitted.
(B) Unused Line Fees. On the first day of each month, Borrower shall
pay Agent, for the benefit of all Lenders committed to make Revolving Loans and
Acquisition Loans (based upon their respective Pro Rata Shares), an unused line
fee in an amount equal to one-half of one percent (0.5%) per annum of the sum of
(1) the amount by which the Revolving Loan Commitment exceeded the average daily
outstanding Revolving Loans, Lender Letters of Credit and Risk Participation
Agreements during the immediately preceding month, plus (2) the amount
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by which the Acquisition Loan Commitment exceeded the average daily outstanding
Acquisition Loans during the immediately preceding month.
(C) Risk Participation Fee. From the Closing Date, Borrower shall
pay Agent, for the benefit of all Lenders committed to make Revolving Loans
(based upon their respective Pro Rata Shares), a fee for each Lender Letter of
Credit and each Risk Participation Agreement, from the date of issuance to the
date of termination, equal to (1) the average daily outstanding amount of the
Risk Participation Liability, multiplied by (2) two and three quarters percent
(2.75%) per annum. Such fee is to be paid monthly in arrears on the first day of
each month. Borrower shall also reimburse Agent for any and all fees and
expenses paid to the issuer of any letter of credit that is in any way related
to a Risk Participation Agreement.
(D) Computation of Interest and Related Fees. Interest on all Loans
and all other Obligations and any fees set forth in this subsection 1.2 shall be
calculated daily on the basis of a three hundred sixty (360) day year for the
actual number of days elapsed in the period during which it accrues. The date of
funding a Base Rate Loan and the first day of an Interest Period with respect to
a LIBOR Loan shall be included in the calculation of interest. The date of
payment of a Base Rate Loan and the last day of an Interest Period with respect
to a LIBOR Loan shall be excluded from the calculation of interest. If a Loan is
repaid on the same day that it is made, one (1) days' interest shall be charged.
Interest on all Base Rate Loans is payable in arrears on the first day of each
calendar quarter and on the Expiry Date, whether by acceleration or otherwise.
Interest on LIBOR Loans shall be payable on the last day of the applicable
Interest Period, unless the Interest Period is greater than three (3) months, in
which case interest will be payable on the last day of each three (3) month
interval. In addition, interest on LIBOR Loans is due on the Expiry Date,
whether by acceleration or otherwise.
(E) Default Rate of Interest. At the election of Agent or Requisite
Lenders, after the occurrence of an Event of Default and for so long as it
continues, the Loans and other Obligations shall bear interest at a rate that is
two percent (2%) in excess of the rates otherwise payable under this Agreement.
Furthermore, during any period in which any Event of Default is continuing, as
the Interest Periods for LIBOR Loans then in effect expire, such Loans shall be
converted at Agent's discretion into Base Rate Loans and the LIBOR election will
not be available to Borrower until all Events of Default are cured or waived.
(F) Excess Interest. Under no circumstances will the rate of
interest chargeable be in excess of the maximum amount permitted by law. If
excess interest is charged and paid in error, then the excess amount will be
promptly refunded.
(G) LIBOR Rate Election. Borrower may request, upon not less than
three (3) Business Days' notice to Agent, that Revolving Loans to be made be
LIBOR Loans and that outstanding portions of the Acquisition Loans be converted
to LIBOR Loans. Agent shall provide a copy of any such request to each Lender at
least two (2) Business Days prior to the commencement of the subject Interest
Period. Any such request, which will be made by submitting a LIBOR Loan request,
in the form of Exhibit 1.2(G), shall pertain to Loans in an aggregate minimum
amount of $500,000 and integral multiples of $10,000 in excess thereof. Once
given, a LIBOR Loan request shall be irrevocable and Borrower shall be bound
thereby.
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Upon the expiration of an Interest Period, in the absence of a new LIBOR Loan
request submitted to Agent not less than three (3) Business Days prior to the
end of such Interest Period, the LIBOR Loan then maturing shall be automatically
converted to a Base Rate Loan. There may be no more than six (6) LIBOR Loans
outstanding at any one time. Loans which are not the subject of a LIBOR Loan
request shall be Base Rate Loans.
1.3 Other Fees and Expenses.
(A) Certain Fees. Borrower shall pay to ▇▇▇▇▇▇, individually, on
each December 30th, the fees specified in that certain letter agreement dated
November 20, 1996 between Borrower and ▇▇▇▇▇▇. On the Closing Date, Borrower
shall pay Agent, for the benefit of all Lenders (based upon their respective Pro
Rata Shares), an amendment fee in the amount of $75,000.
(B) LIBOR Breakage Fee. Upon any payment of a LIBOR Loan on any day
that is not the last day of the Interest Period applicable thereto (regardless
of the source of such prepayment and whether voluntary, by acceleration or
otherwise) or if for any reason (other than a default by Agent or Lenders) a
borrowing or advance of, or conversion to or continuation of, a LIBOR Loan does
not take place on the date specified therefor, Borrower shall pay Agent, for the
benefit of all affected Lenders, an amount (the "LIBOR Breakage Fee") equal to
the amount of any losses, expenses and liabilities (including, without
limitation, any loss (including interest paid) sustained by each such affected
Lender in connection with the re-employment of such funds) that any such
affected Lender may sustain as a result of the payment of such LIBOR Loan on a
day that is not the last day of the Interest Period applicable thereto or as a
result of a borrowing or advance of, or conversion to or continuation of, a
LIBOR Loan not taking place on the date specified therefor.
(C) Expenses and Attorneys Fees. Borrower agrees to promptly pay the
reasonable fees, out-of-pocket costs and expenses (including those of attorneys)
incurred by Agent in connection with any matters contemplated by or arising out
of the Loan Documents, in connection with the examination, review, due diligence
investigation, documentation, negotiation and closing of the transactions
contemplated herein and in connection with the continued administration of the
Loan Documents including any amendments, modifications and waivers. Borrower
agrees to promptly pay all fees, costs and expenses incurred by Agent and
Lenders in connection with any action to enforce any Loan Document or to collect
any payments due from Borrower or any other Loan Party. All fees, costs and
expenses for which Borrower is responsible under this subsection 1.3(C) shall be
deemed part of the Obligations when incurred, payable in accordance with the
final two sentences of subsection 1.4 and secured by the Collateral.
1.4 Payments. All payments by Borrower of the Obligations shall be made in
same day funds and delivered to Agent, for the benefit of Agent and Lenders, as
applicable, by wire transfer to the following account or such other place as
Agent may from time to time designate.
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ABA No. ▇▇▇▇-▇▇▇▇-▇
Account Number 55-00540
The First National Bank of Chicago
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Reference: ▇▇▇▇▇▇ Corporate Finance Group
for the benefit of UnionTools, Inc.
Borrower shall receive credit on the day of receipt for funds received by Agent
by 1:00 p.m. CST. In the absence of timely receipt, such funds shall be deemed
to have been paid on the next Business Day. Whenever any payment to be made
hereunder shall be stated to be due on a day that is not a Business Day, the
payment may be made on the next succeeding Business Day and such extension of
time shall be included in the computation of the amount of interest and fees due
hereunder.
Borrower hereby authorizes Lenders to make Revolving Loans, on the
basis of their Pro Rata Shares, for the payment of Scheduled Acquisition Loan
Installments, interest, unused line fees, amendment fees, Risk Participation
Liability fees, LIBOR Breakage Fees, and Risk Participation Liability payments.
Prior to an Event of Default, other fees, costs and expenses (including those of
attorneys) reimbursable to Agent pursuant to subsections 1.3(A) and (C) or
elsewhere in any Loan Document may be debited to the Revolving Loan after
fifteen (15) days notice. After the occurrence of an Event of Default, no prior
notice will be required, but Agent will promptly notify Borrower of the amount
of any such debit.
1.5 Prepayments.
(A) Voluntary Prepayment of Term Loan and Acquisition Loans. At any
time, Borrower may prepay the Acquisition Loans in whole or in part, in minimum
amounts of $500,000, without penalty, but with LIBOR Breakage Fees, if
applicable, after not less than five (5) Business Days' prior written notice to
Agent specifying how such prepayment shall be applied.
(B) Prepayments from Excess Cash Flow. On or before the first (1st)
day of the December following the end of each of its fiscal years, commencing
with the fiscal year ending July 31, 1998, Borrower shall prepay the Loans in an
amount equal to fifty percent (50%) of the Excess Cash Flow for such fiscal year
pursuant to the calculation on Exhibit 1.5(B). The calculation shall be based on
the audited financial statements for Borrower. The payments shall be applied in
accordance with subsection 1.5(E).
(C) Prepayments from Asset Dispositions. Immediately upon receipt of
the Net Proceeds in excess of $250,000 for any single transaction or series of
transactions, or in excess of $500,000 in the aggregate during any fiscal year
of Borrower, Borrower shall repay the outstanding principal balance of the
Revolving Loan by the amount of any reduction in the Borrowing Base attributable
to the Asset Disposition giving rise to such Net Proceeds. Borrower or any
Subsidiary may, upon prior written notice to Agent, reinvest all remaining Net
Proceeds of such Asset Disposition, within ninety (90) days, in productive
replacement assets of a kind
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then used or usable in the business of Borrower. If Borrower does not intend to
so reinvest such Net Proceeds or if the period set forth in the immediately
preceding sentence expires without Borrower having reinvested such Net Proceeds,
Borrower shall prepay the Loans in an amount equal to the remaining Net Proceeds
of such Asset Disposition. The payments shall be applied in accordance with
subsection 1.5(E).
(D) Prepayment from Issuance of Securities. Unless otherwise agreed
by Requisite Lenders, immediately upon the receipt by Holdings, Borrower or any
of its Subsidiaries of the proceeds of the issuance of equity securities (other
than (1) proceeds of the IPO and any other issuance of equity securities
received on or before the Closing Date, (2) proceeds from the issuance of equity
securities to members of the management of Borrower and (3) proceeds of the
issuance of equity securities to Borrower or any Subsidiary), Borrower shall
prepay the Loans in an amount equal to such proceeds, net of underwriting
discounts and commissions and other reasonable costs associated therewith. The
prepayments under this subsection 1.5(D) shall be applied in accordance with
subsection 1.5(E).
(E) Application of Proceeds. With respect to the mandatory
prepayments described in subsections 1.5(B), 1.5(C) and 1.5(D), such prepayments
shall first be applied in payment of the Acquisition Loans pro rata against all
remaining Scheduled Acquisition Loan Installments and, at any time after the
Acquisition Loans shall have been prepaid in full, such prepayments shall be
applied to reduce the outstanding principal balance of the Revolving Loans and
as a permanent reduction of the Revolving Loan Commitment.
1.6 Term of the Agreement. All of the Obligations shall become due and
payable as otherwise set forth herein, but in any event, all of the remaining
Obligations shall become due and payable on the date set forth in clause (c) of
the definition of the term "Expiry Date." Upon such date and following repayment
in full of the Obligations, this Agreement will terminate. Notwithstanding any
such termination, until all Obligations have been fully paid and satisfied,
Agent, for the benefit of Agent and Lenders, shall be entitled to retain the
security interests in the Collateral granted under the Security Documents and
the ability to exercise all rights and remedies available to them under the Loan
Documents and applicable laws.
1.7 Loan Accounts. Agent will maintain loan account records for (a) all
Loans, interest charges and payments thereof, (b) all Risk Participation
Liability, (c) the charging and payment of all fees, costs and expenses and (d)
all other debits and credits pursuant to this Agreement. The balance in the loan
accounts shall be presumptive evidence of the amounts due and owing to Lenders,
provided that any failure by Agent to so record shall not limit or affect the
Borrower's obligation to pay. Within five (5) days of the first of each month,
Agent shall provide a statement for each loan account setting forth the
principal of each account and interest due thereon. Borrower must deliver a
written objection within sixty (60) days after receipt of the statement or the
statement will be presumptive evidence of the Obligations absent manifest error.
During the continuance of an Event of Default, Borrower irrevocably waives the
right to direct the application of any and all payments and Borrower hereby
irrevocably agrees that Agent shall have the continuing exclusive right to apply
and reapply payments in any manner it deems appropriate.
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1.8 Capital Adequacy and Other Adjustments. In the event that any Lender
shall have determined that the adoption after the date hereof of any law,
treaty, governmental (or quasi-governmental) rule, regulation, guideline or
order regarding capital adequacy, reserve requirements or similar requirements
or compliance by any Lender or any corporation controlling such Lender with any
request or directive regarding capital adequacy, reserve requirements or similar
requirements (whether or not having the force of law and whether or not failure
to comply therewith would be unlawful) from any central bank or governmental
agency or body having jurisdiction does or shall have the effect of increasing
the amount of capital, reserves or other funds required to be maintained by such
Lender or any corporation controlling such Lender and thereby reducing the rate
of return on such Lender's or such corporation's capital as a consequence of its
obligations hereunder, then Borrower shall from time to time within fifteen (15)
days after notice and demand from such Lender (together with the certificate
referred to in the next sentence and with a copy to Agent) pay to Agent, for the
account of such Lender, additional amounts sufficient to compensate such Lender
for such reduction. A certificate as to the amount of such cost and showing the
basis of the computation of such cost submitted by such Lender to Borrower and
Agent shall, absent manifest error, be final, conclusive and binding for all
purposes.
1.9 Taxes.
(A) No Deductions. Any and all payments or reimbursements made
hereunder or under the Notes shall be made free and clear of and without
deduction for any and all taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto (all such taxes, levies,
imposts, deductions, charges or withholdings and all liabilities with respect
thereto excluding such taxes imposed on net income, herein "Tax Liabilities"),
excluding, however, taxes imposed on the net income of a Lender or Agent. If
Borrower shall be required by law to deduct any such amounts from or in respect
of any sum payable hereunder to any Lender or Agent, then the sum payable
hereunder shall be increased as may be necessary so that, after making all
required deductions, such Lender or Agent receives an amount equal to the sum it
would have received had no such deductions been made.
(B) Changes in Tax Laws. In the event that, subsequent to the
Closing Date, (1) any changes in any existing law, regulation, treaty or
directive or in the interpretation or application thereof, (2) any new law,
regulation, treaty or directive enacted or any interpretation or application
thereof, or (3) compliance by Agent or any Lender with any request or directive
(whether or not having the force of law) from any governmental authority, agency
or instrumentality:
(a) does or shall subject Agent or any Lender to any tax of
any kind whatsoever with respect to this Agreement, the other Loan
Documents or any Loans made or Lender Letters of Credit or Risk
Participation Agreements issued hereunder, or change the basis of taxation
of payments to Agent or such Lender of principal, fees, interest or any
other amount payable hereunder (except for net income taxes, or franchise
taxes imposed in lieu of net income taxes, imposed generally by federal,
state or local taxing authorities with respect to
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interest or commitment or other fees payable hereunder or changes in the
rate of tax on the overall net income of Agent or such Lender); or
(b) does or shall impose on Agent or any Lender any other
condition or increased cost in connection with the transactions
contemplated hereby or participations herein;
and the result of any of the foregoing is to increase the cost to Agent or any
such Lender of issuing any Lender Letter of Credit or Risk Participation
Agreement or making or continuing any Loan hereunder, as the case may be, or to
reduce any amount receivable hereunder, then, in any such case, Borrower shall
promptly pay to Agent or such Lender, upon its demand, any additional amounts
necessary to compensate Agent or such Lender, on an after-tax basis, for such
additional cost or reduced amount receivable, as determined by Agent or such
Lender with respect to this Agreement or the other Loan Documents. If Agent or
such Lender becomes entitled to claim any additional amounts pursuant to this
subsection, it shall promptly notify Borrower of the event by reason of which
Agent or such Lender has become so entitled. A certificate as to any additional
amounts payable pursuant to the foregoing sentence submitted by Agent or such
Lender to Borrower and Agent shall, absent manifest error, be final, conclusive
and binding for all purposes.
(C) Foreign Lenders. Each Lender organized under the laws of a
jurisdiction outside the United States (a "Foreign Lender") as to which payments
to be made under this Agreement or under the Notes are exempt from United States
withholding tax or are subject to United States withholding tax at a reduced
rate under an applicable statute or tax treaty shall provide to Borrower and
Agent (1) a properly completed and executed Internal Revenue Service Form 4224
or Form 1001 or other applicable form, certificate or document prescribed by the
Internal Revenue Service of the United States certifying as to such Foreign
Lender's entitlement to such exemption or reduced rate of withholding with
respect to payments to be made to such Foreign Lender under this Agreement and
under the Notes (a "Certificate of Exemption") or (2) a letter from any such
Foreign Lender stating that it is not entitled to any such exemption or reduced
rate of withholding (a "Letter of Non-Exemption"). Prior to becoming a Lender
under this Agreement and within fifteen (15) days after a reasonable written
request of Borrower or Agent from time to time thereafter, each Foreign Lender
that becomes a Lender under this Agreement shall provide a Certificate of
Exemption or a Letter of Non-Exemption to Borrower and Agent.
If a Foreign Lender is not entitled to an exemption or reduced rate
of withholding with respect to payments to be made to such Foreign Lender under
this Agreement or if a Foreign Lender is entitled to an exemption with respect
to payments to be made to such Foreign Lender under this Agreement (or to a
reduced rate of withholding) and does not provide a Certificate of Exemption to
Borrower and Agent within the time periods set forth in the preceding paragraph,
Borrower shall withhold taxes from payments to such Foreign Lender at the
applicable statutory rates and Borrower shall not be required to pay any
additional amounts as a result of such withholding, provided that all such
withholding shall cease upon delivery by such Foreign Lender of a Certificate of
Exemption to Borrower and Agent.
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1.10 Optional Prepayment/Replacement of Lender in Respect of Increased
Costs. Within fifteen (15) days after receipt by Borrower of written notice and
demand from any Lender (an "Affected Lender") for payment of additional costs as
provided in subsection 1.8, Borrower may, at its option, notify Agent and such
Affected Lender of its intention to do one of the following:
(A) Borrower may obtain, at Borrower's expense, a replacement Lender
("Replacement Lender") for such Affected Lender, which Replacement Lender shall
be reasonably satisfactory to Agent. In the event Borrower obtains a Replacement
Lender within ninety (90) days following notice of its intention to do so, the
Affected Lender shall sell and assign its Loans and its obligations under the
Revolving Loan Commitment and Acquisition Loan Commitment to such Replacement
Lender, provided that Borrower has reimbursed such Affected Lender for its
increased costs for which it is entitled to reimbursement under this Agreement
through the date of such sale and assignment; or
(B) Borrower may prepay in full all outstanding Obligations owed to
such Affected Lender and terminate such Affected Lender's Pro Rata Share of the
Revolving Loan Commitment and Acquisition Loan Commitment, in which case the
Revolving Loan Commitment and Acquisition Loan Commitment will be reduced by the
amount of such Pro Rata Share. Borrower shall, within ninety (90) days following
notice of its intention to do so, prepay in full all outstanding Obligations
owed to such Affected Lender (including such Affected Lender's increased costs
for which it is entitled to reimbursement under this Agreement through the date
of such prepayment), and terminate such Affected Lender's obligations under the
Revolving Loan Commitment and Acquisition Loan Commitment.
SECTION 2
AFFIRMATIVE COVENANTS
Borrower covenants and agrees that so long as the Revolving Loan
Commitment or Acquisition Loan Commitment is in effect and until payment in full
of all Obligations and termination of all Lender Letters of Credit and Risk
Participation Agreements, unless Requisite Lenders shall otherwise give their
prior written consent, Borrower shall perform and comply with, and shall cause
each of the other Loan Parties to perform and comply with, all covenants in this
Section 2 applicable to such Person.
2.1 Compliance With Laws. Borrower will (a) comply with and will cause
each of its Subsidiaries to comply with (i) the requirements of all applicable
laws, rules, regulations and orders of any governmental authority (including,
without limitation, laws, rules, regulations and orders relating to taxes,
employer and employee contributions, securities, employee retirement and welfare
benefits, environmental protection matters and employee health and safety) as
now in effect and which may be imposed in the future in all jurisdictions in
which Borrower or its Subsidiaries are now doing business or may hereafter be
doing business, and (ii) the obligations, covenants, and conditions contained in
any Contractual Obligation of Borrower and/or such Subsidiary, other than those
laws, rules, regulations, orders and Contractual Obligations the noncompliance
with which could not be reasonably expected to have, either individually or in
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the aggregate, a Material Adverse Effect, and (b) maintain or obtain and will
cause each of its Subsidiaries to maintain or obtain, all licenses,
qualifications and permits now held or hereafter required to be held by Borrower
and its Subsidiaries, for which the loss, suspension, revocation or failure to
obtain or renew, could have a Material Adverse Effect. This subsection 2.1 shall
not preclude the Borrower or any Subsidiary from contesting any taxes, fees,
assessments, charges, levies or other payments, if they are being diligently
contested in good faith and if appropriate expense provisions have been recorded
in conformity with GAAP. Borrower represents and warrants that as of the date
hereof, it (i) is in compliance and each of its Subsidiaries is in compliance
with the requirements of all applicable laws, rules, regulations and orders of
any governmental authority as now in effect, and all Contractual Obligations,
and (ii) maintains and each of its Subsidiaries maintains all licenses,
qualifications and permits referred to above, except in each case as could not
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect.
"Contractual Obligations", as applied to any Person, means any indenture,
mortgage, deed of trust, contract, undertaking, agreement or other instrument to
which that Person is a party or by which it or any of its properties is bound or
to which it or any of its properties is subject including, without limitation,
the Related Transactions Documents.
2.2 Maintenance of Properties; Insurance. Borrower will maintain or cause
to be maintained in good repair, working order and condition all material
properties used in the business of Borrower and its Subsidiaries and will make
or cause to be made all appropriate repairs, renewals and replacements thereof.
Borrower will maintain or cause to be maintained, with financially sound and
reputable insurers, public liability and property damage insurance with respect
to its business and properties and the business and properties of its
Subsidiaries against loss or damage of the kinds customarily carried or
maintained by corporations of established reputation engaged in similar
businesses and in amounts acceptable to Agent and will deliver evidence thereof
to Agent. Borrower will maintain business interruption insurance in an amount
not less than $30,000,000. Borrower shall cause, pursuant to endorsements and
assignments and assignments in form and substance reasonably satisfactory to
Agent, Agent, for the benefit of Agent and Lenders, to be named as lender's loss
payee in the case of casualty insurance, Agent for the benefit of Agent and
Lenders, to be named as additional insured in the case of all liability
insurance and Agent, for the benefit of Agent and Lenders, to be named as
assignee in the case of all business interruption insurance. Borrower represents
and warrants that it and each of its Subsidiaries currently maintains all
material properties as set forth above and maintains all insurance described
above.
2.3 Inspection; Lender Meeting. Borrower shall permit any authorized
representatives of Agent to visit and inspect any of the properties of Borrower
or any of its Subsidiaries, including its and their financial and accounting
records, and to make copies and take extracts therefrom, and to discuss its and
their affairs, finances and business with its and their officers and certified
public accountants, at such reasonable times during normal business hours and as
often as may be reasonably requested. Representatives of each Lender will be
permitted to accompany representatives of Agent during each visit, inspection
and discussion referred to in the immediately preceding sentence. Without in any
way limiting the foregoing, Borrower will participate and will cause its key
management personnel to participate in a meeting with Agent
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and Lenders at least once during each year, which meeting shall be held at such
time and such place as may be reasonably requested by Agent.
2.4 Corporate Existence, Etc. Except as otherwise permitted by subsection
3.6, Borrower will, and will cause each of its Subsidiaries to, at all times
preserve and keep in full force and effect its corporate existence and all
rights and franchises material to its business.
2.5 Further Assurances.
(A) Borrower shall and shall cause each Loan Party to, from time to
time, execute such guaranties, financing statements, documents, security
agreements and reports as Agent or Requisite Lenders at any time may reasonably
request to evidence, perfect or otherwise implement the guaranties and security
for repayment of the Obligations contemplated by the Loan Documents.
(B) At Agent's or Requisite Lenders' request, Borrower shall cause
any Subsidiaries of Borrower promptly to guaranty the Obligations and to grant
to Agent, for the benefit of Agent and Lenders, a security interest in the real,
personal and mixed property of such Subsidiary to secure the Obligations. The
documentation for such guaranty or security shall be substantially similar to
the Loan Documents executed concurrently herewith with such modifications as are
reasonably requested by Agent.
SECTION 3
NEGATIVE COVENANTS
Borrower covenants and agrees that so long as the Revolving Loan
Commitment or Acquisition Loan Commitment is in effect and until payment in full
of all Obligations and termination of all Lender Letters of Credit and Risk
Participation Agreements, unless Requisite Lenders shall otherwise give their
prior written consent, Borrower shall perform and comply with, and shall cause
each of the other Loan Parties to perform and comply with, all covenants in this
Section 3 applicable to such Person.
3.1 Indebtedness. Borrower will not and will not permit any of its
Subsidiaries or Holdings directly or indirectly to create, incur, assume,
guaranty, or otherwise become or remain directly or indirectly liable with
respect to any Indebtedness except:
(A) the Obligations;
(B) intercompany Indebtedness among Borrower, its Subsidiaries or
Holdings; provided that the obligations of each obligor of such Indebtedness
shall: (1) be subordinated in right of payment to the Obligations from and after
such time as any portion of the Obligations shall become due and payable
(whether at stated maturity, by acceleration or otherwise); (2) be evidenced by
promissory notes, which shall have been pledged to Agent, for the benefit of
Agent and Lenders, as security for the Obligations; and (3) have such other
terms and provisions as Agent or Requisite Lenders may reasonably require; and
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(C) Indebtedness not to exceed $2,000,000 in the aggregate at any
time outstanding secured by purchase money Liens or incurred with respect to
capital leases.
3.2 Liens and Related Matters.
(A) No Liens. Borrower will not and will not permit any of its
Subsidiaries directly or indirectly to create, incur, assume or permit to exist
any Lien on or with respect to any property or asset (including any document or
instrument with respect to goods or accounts receivable) of Borrower or any of
its Subsidiaries, whether now owned or hereafter acquired, or any income or
profits therefrom, except Permitted Encumbrances. "Permitted Encumbrances" means
the following:
(1) Liens for taxes, assessments or other governmental charges
not yet due and payable;
(2) statutory Liens of landlords, carriers, warehousemen,
mechanics, materialmen and other similar liens imposed by law, which are
incurred in the ordinary course of business for sums not more than thirty (30)
days delinquent or which are being contested in good faith; provided that a
reserve or other appropriate provision shall have been made therefor and the
aggregate amount of liabilities secured by such Liens is less than $100,000;
(3) Liens (other than any Lien imposed by the Employee
Retirement Income Security Act of 1974 or any rule or regulation promulgated
thereunder) incurred or deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other types of
social security, or to secure the performance of tenders, statutory obligations,
surety, stay, customs and appeal bonds, bids, leases, government contracts,
trade contracts, performance and return of money bonds and other similar
obligations (exclusive of obligations for the payment of borrowed money);
(4) deposits, in an aggregate amount not to exceed $50,000,
made in the ordinary course of business to secure liability to insurance
carriers, excluding the Lender Letters of Credit and the letters of credit
issued under the Risk Participation Agreements;
(5) Liens for purchase money obligations; provided that: (a)
the purchase of the asset subject to any such Lien is permitted under subsection
4.1; (b) the Indebtedness secured by any such Lien is permitted under subsection
3.1; and (c) any such Lien encumbers only the asset so purchased;
(6) any attachment or judgment Lien not constituting an Event
of Default under subsection 6.1(I);
(7) easements, rights of way, restrictions, and other similar
charges or encumbrances not interfering in any material respect with the
ordinary conduct of the business of Borrower or any of its Subsidiaries;
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(8) any interest or title of a lessor or sublessor under any
lease permitted by subsection 4.2;
(9) Liens in favor of Agent, for the benefit of Agent and
Lenders;
(10) Liens existing on the date hereof and renewals and
extensions thereof, which Liens are set forth on Schedule 3.2(A)(10) hereto;
(11) Liens existing on any fixed assets acquired by Borrower
or its Subsidiaries at the time of its acquisition; provided that the
acquisition is a Permitted Acquisition hereunder and the Lien is confined solely
to the fixed assets so acquired; and
(12) Liens on fixed assets of corporations which become
subsidiaries of Borrower after the date hereof; provided that such corporations
become subsidiaries of Borrower under a Permitted Acquisition hereunder and such
Liens existed at the time the respective corporations became Subsidiaries of
Borrower and were not created in anticipation thereof.
(B) No Negative Pledges. Borrower will not and will not permit any
of its Subsidiaries directly or indirectly to enter into or assume any agreement
(other than the Loan Documents) prohibiting the creation or assumption of any
Lien upon its properties or assets, whether now owned or hereafter acquired.
(C) No Restrictions on Subsidiary Distributions to Borrower. Except
as provided herein, Borrower will not and will not permit any of its
Subsidiaries directly or indirectly to create or otherwise cause or suffer to
exist or become effective any consensual encumbrance or restriction of any kind
on the ability of any such Subsidiary to: (1) pay dividends or make any other
distribution on any of such Subsidiary's capital stock owned by Borrower or any
Subsidiary of Borrower; (2) subject to subordination provisions for the benefit
of Agent and Lenders, pay any Indebtedness owed to Borrower or any other
Subsidiary; (3) make loans or advances to Borrower or any other Subsidiary; or
(4) transfer any of its property or assets to Borrower or any other Subsidiary.
3.3 Investments; Joint Ventures. Borrower will not and will not permit any
of its Subsidiaries directly or indirectly to make or own any Investment in any
Person except:
(A) Borrower and its Subsidiaries may make and own Investments in
Cash Equivalents; provided that such Cash Equivalents are not subject to setoff
rights;
(B) Borrower and its Subsidiaries may make intercompany loans to the
extent permitted under subsection 3.1;
(C) Borrower and its Subsidiaries may make loans and advances to
employees for moving, entertainment, travel and other similar expenses in the
ordinary course of business not to exceed $100,000 in the aggregate at any time
outstanding;
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(D) Borrower or a Subsidiary may make Investments of up to $750,000
in the aggregate in a United States corporation, limited liability company or
limited liability partnership, for the purposes of a joint venture with Mexican
investors for the purchase and sale of wheelbarrows.
(E) Permitted Acquisitions.
"Investment" means (i) any direct or indirect purchase or other
acquisition by Borrower or any of its Subsidiaries of any beneficial interest
in, including stock, partnership interest or other equity securities of, any
other Person; and (ii) any direct or indirect loan (including the purchase of
Indebtedness), advance or capital contribution by Borrower or any of its
Subsidiaries to any other Person, including all indebtedness and accounts
receivable from that other Person that are not current assets or did not arise
from sales to that other Person in the ordinary course of business. The amount
of any Investment shall be the original cost of such Investment plus the cost of
all additions thereto, without any adjustments for increases or decreases in
value, or write-ups, write-downs or write-offs with respect to such Investment.
"Cash Equivalents" means: (i) marketable direct obligations issued or
unconditionally guarantied by the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one (1) year from the date of acquisition thereof;
(ii) commercial paper maturing no more than one (1) year from the date issued
and, at the time of acquisition, having a rating of at least A-1 from Standard &
Poor's Corporation or at least P-1 from ▇▇▇▇▇'▇ Investors Service, Inc.; (iii)
certificates of deposit or bankers' acceptances maturing within one (1) year
from the date of issuance thereof issued by, or overnight reverse repurchase
agreements from, any commercial bank organized under the laws of the United
States of America or any state thereof or the District of Columbia having
combined capital and surplus of not less than $500,000,000; (iv) time deposits
maturing no more than thirty (30) days from the date of creation thereof with
commercial banks having membership in the Federal Deposit Insurance Corporation
in amounts not exceeding the lesser of $100,000 or the maximum amount of
insurance applicable to the aggregate amount of Borrower's deposits at such
institution; and (v) deposits or investments in mutual or similar funds offered
or sponsored by brokerage or other companies having membership in the Securities
Investor Protection Corporation in amounts not exceeding the lesser of $100,000
or the maximum amount of insurance applicable to the aggregate amount of
Borrower's deposits at such institution.
"Permitted Acquisitions" shall mean acquisitions by Borrower or any of its
Subsidiaries of the stock or assets of any Person in a negotiated transaction;
provided that such acquisition either is funded by an Acquisition Loan made
pursuant to subsection 1.1(C) or is consented to in writing by the Requisite
Lenders.
3.4 Contingent Obligations. Borrower will not and will not permit any of
its Subsidiaries directly or indirectly to create or become or be liable with
respect to any Contingent Obligation except those:
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(A) resulting from endorsement of negotiable instruments for
collection in the ordinary course of business;
(B) existing on the Closing Date and described in Schedule 3.4
annexed hereto;
(C) arising under indemnity agreements to title insurers to cause
such title insurers to issue to Agent mortgagee title insurance policies;
(D) arising with respect to customary indemnification obligations
incurred in connection with Asset Dispositions;
(E) incurred in the ordinary course of business with respect to
surety and appeal bonds, performance and return-of-money bonds and other similar
obligations not exceeding at any time outstanding $25,000 in aggregate
liability;
(F) incurred with respect to Indebtedness permitted by subsection
3.1; and
(G) not permitted by clauses (A) through (F) above, so long as any
such Contingent Obligations, in the aggregate at any time outstanding, do not
exceed $25,000.
"Contingent Obligation", as applied to any Person, means any direct or
indirect liability of that Person: (i) with respect to any indebtedness, lease,
dividend or other obligation of another Person if the primary purpose or intent
of the Person incurring such liability, or the primary effect thereof, is to
provide assurance to the obligee of such liability that such liability will be
paid or discharged, or that any agreements relating thereto will be complied
with, or that the holders of such liability will be protected (in whole or in
part) against loss with respect thereto; (ii) with respect to any letter of
credit issued for the account of that Person or as to which that Person is
otherwise liable for reimbursement of drawings; or (iii) under any foreign
exchange contract, currency swap agreement, interest rate swap agreement or
other similar agreement or arrangement designed to alter the risks of that
Person arising from fluctuations in currency values or interest rates.
Contingent Obligations shall also include (a) the direct or indirect guaranty,
endorsement (other than for collection or deposit in the ordinary course of
business), co-making, discounting with recourse or sale with recourse by such
Person of the obligation of another, (b) the obligation to make take-or-pay or
similar payments if required regardless of nonperformance by any other party or
parties to an agreement, and (c) any liability of such Person for the
obligations of another through any agreement to purchase, repurchase or
otherwise acquire such obligation or any property constituting security
therefor, to provide funds for the payment or discharge of such obligation or to
maintain the solvency, financial condition or any balance sheet item or level of
income of another. The amount of any Contingent Obligation shall be equal to the
amount of the obligation so guaranteed or otherwise supported or, if not a fixed
and determined amount, the maximum amount so guaranteed.
3.5 Restricted Junior Payments. Borrower will not and will not permit any
of its Subsidiaries directly or indirectly to declare, order, pay, make or set
apart any sum for any Restricted Junior Payment, except that if after giving
effect thereto no Default or Event of
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Default would exist, Borrower may make the following Restricted Junior Payments
(without duplication):
(A) Borrower may make payments and distributions to Holdings to
permit Holdings to pay federal and state income taxes then due and owing,
franchise taxes and other similar licensing expenses incurred in the ordinary
course of business; provided that Borrower's aggregate contribution to taxes as
a result of the filing of a consolidated return by Holdings shall not be
greater, nor the aggregate receipt of tax benefits less, than they would have
been had Borrower not filed a consolidated return with Holdings;
(B) Wholly-owned Subsidiaries of Borrower may make Restricted Junior
Payments with respect to their common stock;
(C) Borrower may make payments and distributions to Holdings for
corporate expenditures in cash of up to a maximum aggregate amount of $125,000
per month; provided, however, that such dollar limitation shall not apply if (i)
after giving effect to such payments and distributions, the Fixed Charge
Coverage (calculated as illustrated on Exhibit 4.10(C)) during the immediately
preceding twelve (12) month period (or such lesser number of months that have
elapsed since January 1, 1997) would not be less than 1.2:1 for such periods
ending prior to July 31, 1998 and 1.3:1 for such periods ending on or after July
31 1998, and the Maximum Revolving Loan Balance would exceed the outstanding
Revolving Loans by an amount not less than $5,000,000, (ii) all such payments
and distributions held by Holdings shall be pledged to Agent in a manner
reasonably satisfactory to Agent, and shall be used only for the current
ordinary business expenses of Holdings and specifically not for any expenditures
related to any Subsidiary of Holdings other than Borrower and its Subsidiaries,
and (iii) Agent shall have received a certificate demonstrating compliance with
the foregoing requirements; and
(D) Borrower may make payments and distributions to Holdings to
cover those non-operating expenses of Holdings set forth on Schedule 3.16.
"Restricted Junior Payment" means: (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of stock
of Borrower or any of its Subsidiaries now or hereafter outstanding, except a
dividend payable solely in shares of that class of stock to the holders of that
class; (ii) any redemption, conversion, exchange, retirement, sinking fund or
similar payment, purchase or other acquisition for value, direct or indirect, of
any shares of any class of stock of Borrower or any of its Subsidiaries now or
hereafter outstanding; (iii) any payment or prepayment of interest on, principal
of, premium, if any, redemption, conversion, exchange, purchase, retirement,
defeasance, sinking fund or similar payment with respect to, any Subordinated
Indebtedness; and (iv) any payment made to retire, or to obtain the surrender
of, any outstanding warrants, options or other rights to acquire shares of any
class of stock of Borrower or any of its Subsidiaries now or hereafter
outstanding.
3.6 Restriction on Fundamental Changes. Borrower will not and will not
permit any of its Subsidiaries directly or indirectly to: (a) amend, modify or
waive any term or provision of its articles of incorporation, certificates of
designations pertaining to preferred stock or by-laws unless required by law;
(b) enter into any transaction of merger or consolidation except
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any Subsidiary of Borrower may be merged with or into Borrower (provided that
Borrower is the surviving entity) or any other Subsidiary of Borrower; (c)
liquidate, wind-up or dissolve itself (or suffer any liquidation or
dissolution); or (d) acquire by purchase or otherwise all or any substantial
part of the business or assets of any other Person, except for any Permitted
Acquisition.
3.7 Disposal of Assets or Subsidiary Stock. Borrower will not and will not
permit any of its Subsidiaries directly or indirectly to: convey, sell, lease,
sublease, transfer or otherwise dispose of, or grant any Person an option to
acquire, in one transaction or a series of transactions, any of its property,
business or assets, or the capital stock of or other equity interests in any of
its Subsidiaries, whether now owned or hereafter acquired, except for (a) bona
fide sales of inventory to customers for fair value in the ordinary course of
business and dispositions of obsolete equipment not used or useful in the
business and (b) Asset Dispositions if all of the following conditions are met:
(i) the market value of assets sold or otherwise disposed of in any single
transaction or series of related transactions does not exceed $250,000 and the
aggregate market value of assets sold or otherwise disposed of in any fiscal
year of Borrower does not exceed $500,000; (ii) the consideration received is at
least equal to the fair market value of such assets; (iii) the sole
consideration received is cash; (iv) the Net Proceeds of such Asset Disposition
are applied as required by subsection 1.5(C); (v) after giving effect to the
sale or other disposition of the assets included within the Asset Disposition
and the repayment of Indebtedness with the proceeds thereof, Borrower is in
compliance on a pro forma basis with the covenants set forth in Section 4
recomputed for the most recently ended month for which information is available
and is in compliance with all other terms and conditions contained in this
Agreement; and (vi) no Default or Event of Default then exists or shall result
from such sale or other disposition.
3.8 Transactions with Affiliates. Borrower will not and will not permit
any of its Subsidiaries directly or indirectly to enter into or permit to exist
any transaction (including the purchase, sale, lease or exchange of any property
or the rendering of any service) with any Affiliate or with any director,
officer or employee of any Loan Party, except (a) as set forth on Schedule 3.8
or (b) transactions in the ordinary course of and pursuant to the reasonable
requirements of the business of Borrower or any of its Subsidiaries and upon
fair and reasonable terms which are fully disclosed to Agent and are no less
favorable to Borrower or such Subsidiary than would be obtained in a comparable
arm's length transaction with a Person that is not an Affiliate. Notwithstanding
the foregoing, upon the election of Agent no payments may be made with respect
to any items set forth on Schedule 3.8 upon the occurrence and during the
continuation of a Default or Event of Default.
3.9 Management Fees and Compensation. Borrower will not and will not
permit any of its Subsidiaries directly or indirectly to pay any management,
consulting or similar fees to any Affiliate or to any director, officer or
employee of any Loan Party.
3.10 Conduct of Business. Borrower will not and will not permit any of its
Subsidiaries directly or indirectly to engage in any business other than
businesses of the type described on Schedule 3.10.
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3.11 Changes Relating to Subordinated Indebtedness. Borrower will not and
will not permit any of its Subsidiaries or Holdings directly or indirectly to
change or amend the terms of any Subordinated Indebtedness if the effect of such
amendment is to: (a) increase the interest rate on such Indebtedness; (b) change
the dates upon which payments of principal or interest are due on such
Indebtedness; (c) change any event of default or add or change any covenant with
respect to such Indebtedness; (d) change the prepayment provisions of such
Indebtedness; (e) change the subordination provisions thereof (or the
subordination terms of any guaranty thereof); or (f) change or amend any other
term if such change or amendment would materially increase the obligations of
the obligor or confer additional material rights on the holder of such
Indebtedness in a manner adverse to Borrower, any of its Subsidiaries, Holdings
or Lenders.
3.12 Fiscal Year. Neither Borrower nor any Subsidiary of Borrower shall
change its fiscal year.
3.13 Press Release; Public Offering Materials. Borrower will not and will
not permit any of its Subsidiaries to disclose the name of Agent or any Lender
in any press release or in any prospectus, proxy statement or other materials
filed with any governmental entity relating to a public offering of the capital
stock of any Loan Party, except as required by applicable law.
3.14 Subsidiaries. Borrower will not and will not permit any of its
Subsidiaries directly or indirectly to establish, create or acquire any new
Subsidiary, except for Permitted Acquisitions.
3.15 Bank Accounts. Borrower will not and will not permit any of its
Subsidiaries to establish any new bank accounts without prior written notice to
Agent and unless Agent and the bank at which the account is to be opened enter
into a bank agency agreement in form and substance satisfactory to Agent.
3.16 Non-Operating Expenditures. Borrower will not make any expenditures
that are not related to its current or future business operations, except as
described on Schedule 3.16.
SECTION 4
FINANCIAL COVENANTS/REPORTING
Borrower covenants and agrees that so long as the Revolving Loan
Commitment or the Acquisition Loan Commitment is in effect, and until payment in
full of all Obligations and termination of all Lender Letters of Credit and Risk
Participation Agreements, unless Requisite Lenders shall otherwise give their
prior written consent, Borrower shall perform and comply with, and shall cause
each of the other Loan Parties to perform and comply with, all covenants in this
Section 4 applicable to such Person.
4.1 Capital Expenditure Limits. The aggregate amount of all Capital
Expenditures of Borrower and its Subsidiaries will not exceed $3,500,000 (the
"Capex Limit") in any fiscal year of Borrower. Notwithstanding the foregoing, in
the event Borrower and its Subsidiaries do not expend the entire Capex Limit
permitted in any fiscal year, Borrower and its Subsidiaries
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may carry forward to the immediately succeeding fiscal year 50% of the
unutilized portion of the Capex Limit. All Capital Expenditures made by Borrower
and its Subsidiaries shall first be applied to reduce the applicable Capex Limit
and then to reduce the carry forward from the previous fiscal year, if any.
"Capital Expenditures" will be calculated as illustrated on Exhibit 4.10(C).
4.2 Lease Limits. Borrower will not and will not permit any of its
Subsidiaries directly or indirectly to become or remain liable in any way,
whether directly or by assignment or as a guarantor or other surety, for the
obligations of the lessee under any operating lease (other than intercompany
leases between Borrower and its Subsidiaries), if the aggregate amount of all
rents paid by Borrower and its Subsidiaries under all such leases would exceed
$3,000,000 in any fiscal year of Borrower.
4.3 EBIDAT.
(a) Borrower shall not permit EBIDAT for any of the periods set
forth below to be less than the amount set forth for such period.
Period Amount
------ ------
January 1, 1997 through April 30, 1997 $ 7,000,000
January 1, 1997 through July 31, 1997 $ 9,100,000
January 1, 1997 through October 31, 1997 $10,200,000
(b) Borrower shall not permit EBIDAT for the twelve (12) month
period ending on the last day of any fiscal quarter ending on the dates or
during the periods set forth below to be less than the amount set forth below
for such date or period.
Date/
Period Amount
------ ------
January 31, 1998 $11,100,000
April 30, 1998 $12,500,000
July 31, 1998 $13,200,000
October 31, 1998 $13,500,000
January 31, 1999 $14,000,000
April 30, 1999 $15,100,000
On or after July 31, 1999 $15,600,000
"EBIDAT" will be calculated as illustrated on Exhibit 4.10(C).
4.4 Fixed Charge Coverage.
(a) Borrower shall not permit Fixed Charge Coverage for any of the
periods set forth below to be less than the amount set forth below for such
period.
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Period Amount
------ ------
January 1, 1997 through April 30, 1997 1.1:1
January 1, 1997 through July 31, 1997 1.1:1
January 1, 1997 through October 31, 1997 1.1:1
(b) Borrower shall not permit Fixed Charge Coverage for the twelve
(12) month period ending on the last day of any fiscal quarter ending on the
dates or during the periods set forth below to be less than the amount set forth
below for such date or period.
Date/
Period Amount
------ ------
January 31, 1998 1.1:1
On or after April 30, 1998 1.2:1
"Fixed Charge Coverage" will be calculated as illustrated on Exhibit 4.10(C).
4.5 Total Interest Coverage.
(a) Borrower shall not permit Total Interest Coverage for any of the
periods set forth to be less than the amount set forth below for such period.
Period Amount
------ ------
January 1, 1997 through April 30, 1997 6.2:1
January 1, 1997 through July 31, 1997 4.7:1
January 1, 1997 through October 31, 1997 4.2:1
(b) Borrower shall not permit Total Interest Coverage for the twelve
(12) month period ending on the last day of any fiscal quarter ending on the
dates or during the periods set forth below to be less than the amount set forth
below for such date or period.
Date/
Period Amount
------ ------
January 31, 1998 3.4:1
April 30, 1998 3.8:1
July 31, 1998 4.0:1
October 31, 1998 4.2:1
January 31, 1999 4.4:1
April 30, 1999 4.9:1
On or after July 31, 1999 5.2:1
"Total Interest Coverage" will be calculated as illustrated on Exhibit 4.10(C).
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4.6 Total Indebtedness to Operating Cash Flow Ratio.
(a) Borrower shall not permit the ratio of Total Indebtedness
calculated as of the last day of any of the periods set forth below to Operating
Cash Flow for such period to be greater than the amount set forth below for such
period.
Period Amount
------ ------
January 1, 1997 through April 30, 1997 5.7:1
January 1, 1997 through July 31, 1997 3.4:1
January 1, 1997 through October 31, 1997 3.0:1
(b) Borrower shall not permit the ratio of Total Indebtedness
calculated as of the last day of any fiscal quarter ending on the dates or
during the periods set forth below to Operating Cash Flow for the twelve (12)
month period ending on such day to be greater than the amount set forth below
for such date or period.
Date/
Period Amount
------ ------
January 31, 1998 4.0:1
April 30, 1998 3.8:1
July 31, 1998 2.7:1
October 31, 1998 2.3:1
January 31, 1999 3.0:1
April 30, 1999 3.0:1
On or after July 31, 1999 2.0:1
"Total Indebtedness" and "Operating Cash Flow" will be calculated as illustrated
on Exhibit 4.10(C).
4.7 [Intentionally Deleted.]
4.8 [Intentionally Deleted.]
4.9 [Intentionally Deleted.]
4.10 Financial Statements and Other Reports. Borrower will maintain, and
cause each of its Subsidiaries and Holdings to maintain, a system of accounting
established and administered in accordance with sound business practices to
permit preparation of financial statements in conformity with GAAP (it being
understood that monthly financial statements are not required to have footnote
disclosures and are subject to changes resulting from normal year-end
adjustments). Borrower will deliver each of the financial statements and other
reports described below to Agent (and each Lender in the case of the financial
statements and other reports described in subsections (A), (B), (C), (G), (I)
and (K)).
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(A) Monthly Financials. As soon as available and in any event within
thirty (30) days after the end of each month, Borrower will deliver (1) the
consolidated and consolidating balance sheets of Holdings, Borrower and their
Subsidiaries, as at the end of such month, and the related consolidated and
consolidating statements of income, stockholders' equity and cash flow for such
month and for the period from the beginning of the then current fiscal year of
Borrower to the end of such month and (2) a schedule of the outstanding
Indebtedness for borrowed money of Holdings, Borrower and their Subsidiaries
describing in reasonable detail each such debt issue or loan outstanding and the
principal amount and amount of accrued and unpaid interest with respect to each
such debt issue or loan.
(B) Year-End Financials. As soon as available and in any event on or
before the fifteenth (15th) day of the November following the end of each fiscal
year of Borrower, Borrower will deliver (1) the consolidated and consolidating
balance sheets of Holdings, Borrower and their Subsidiaries, as at the end of
such year, and the related consolidated and consolidating statements of income,
stockholders' equity and cash flow for such fiscal year, (2) a schedule of the
outstanding Indebtedness for borrowed money of Holdings, Borrower and their
Subsidiaries describing in reasonable detail each such debt issue or loan
outstanding and the principal amount and amount of accrued and unpaid interest
with respect to each such debt issue or loan and (3) a report with respect to
the financial statements from a firm of Certified Public Accountants selected by
Borrower and reasonably acceptable to Agent, which report shall be prepared in
accordance with Statement of Auditing Standards No. 58 (the "Statement")
entitled "Reports on Audited Financial Statements" and such report shall be
"Unqualified" (as such term is defined in such Statement).
(C) Borrower Compliance Certificate. Together with each delivery of
financial statements of Holdings, Borrower and their Subsidiaries pursuant to
subsections 4.10(A) and 4.10(B) above for periods ending on the last day of any
fiscal quarter or fiscal year, Borrower will deliver a fully and properly
completed Compliance Certificate (in substantially the same form as Exhibit
4.10(C)) signed by Borrower's chief executive officer or chief financial
officer.
(D) Accountants' Reliance Letter. Together with each delivery of
consolidated financial statements of Borrower pursuant to subsection 4.10(B),
Borrower will deliver a copy of a letter addressed to Borrower's certified
public accountants informing such accountants that a primary intent of Borrower
was for the professional services such accountants provided to Borrower in
preparing their audit report was to benefit or influence Lenders and their
successors or assigns, and identifying Lenders as parties that Borrower has
indicated intend to rely on such professional services provided to Borrower by
such accountants.
(E) Accountants' Reports. Promptly upon receipt thereof, Borrower
will deliver copies of all significant reports submitted by Borrower's firm of
certified public accountants in connection with each annual, interim or special
audit or review of any type of the financial statements or related internal
control systems of Borrower made by such accountants, including any comment
letter submitted by such accountants to management in connection with their
services.
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(F) Borrowing Base Certificate. As soon as available and in any
event within thirty (30) days after the end of each month, and from time to time
upon the request of Agent, Borrower will deliver a Borrowing Base Certificate
(in substantially the same form as Exhibit 4.10(F)) as at the last day of such
period.
(G) Management Report. Together with each delivery of financial
statements of Borrower pursuant to subsections 4.10(A) and 4.10(B), Borrower
will deliver a management report (1) describing the operations and financial
condition of Holdings, Borrower and their Subsidiaries for the month then ended
and the portion of the current fiscal year then elapsed (or for the fiscal year
then ended in the case of year-end financials), (2) setting forth in comparative
form the corresponding figures for the corresponding periods of the previous
fiscal year and the corresponding figures from the most recent Projections for
the current fiscal year delivered pursuant to subsection 4.10(J) and (3)
discussing the reasons for any significant variations. The information above
shall be presented in reasonable detail and shall be certified by the chief
financial officer of Borrower to the effect that such information fairly
presents the results of operations and financial condition of Holdings, Borrower
and their Subsidiaries as at the dates and for the periods indicated, subject to
normal year-end adjustments.
(H) Collateral Value Report. Upon the request of Agent, which may be
made not more than once each year prior to an Event of Default and at any time
(but not more often than quarterly) while and so long as an Event of Default
shall be continuing, Borrower will obtain and deliver to Agent a report of an
independent collateral auditor satisfactory to Agent (which may be, or be
affiliated with, a Lender) with respect to the accounts and inventory components
included in the Borrowing Base, which report shall indicate whether or not the
information set forth in the Borrowing Base Certificate most recently delivered
is accurate and complete in all material respects based upon a review by such
auditors of the accounts (including verification with respect to the amount,
aging, identity and credit of the respective account debtors and the billing
practices of Borrower) and inventory (including verification as to the value,
location and respective types).
(I) Appraisals. From time to time, if Agent or any Lender determines
that obtaining appraisals is necessary in order for Agent or such Lender to
comply with applicable laws or regulations, Agent will, at Borrower's expense,
obtain appraisal reports in form and substance and from appraisers satisfactory
to Agent stating the then current fair market values of all or any portion of
the real estate owned by Borrower or any of its Subsidiaries. In addition to the
foregoing, from time to time, but in the absence of a Default or Event of
Default not more than once during each calendar year, Agent may require Borrower
to obtain and deliver to Agent appraisal reports in form and substance and from
appraisers satisfactory to Agent stating the then current market values of all
or any portion of the real estate and personal property owned by Borrower or any
of its Subsidiaries.
(J) Projections. As soon as available and in any event no later than
September 30th of each of Borrower's fiscal years, Borrower will deliver
Projections of Borrower and its Subsidiaries for the then current fiscal year
and the forthcoming two (2) fiscal years, year by year, and for the then current
fiscal year, month by month.
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(K) SEC Filings and Press Releases. Promptly upon their becoming
available, Borrower will deliver copies of (1) all financial statements,
reports, notices and proxy statements sent or made available by Holdings,
Borrower or any of their respective Subsidiaries to their security holders, (2)
all regular and periodic reports and all registration statements and
prospectuses, if any, filed by Holdings, Borrower or any of their respective
Subsidiaries with any securities exchange or with the Securities and Exchange
Commission or any governmental or private regulatory authority, and (3) all
press releases and other statements made available by Holdings, Borrower or any
of their respective Subsidiaries to the public concerning developments in the
business of any such Person.
(L) Events of Default, Etc. Promptly upon any officer of Borrower
obtaining knowledge of any of the following events or conditions, Borrower shall
deliver copies of all notices given or received by Borrower or Holdings with
respect to any such event or condition and a certificate of Borrower's chief
executive officer specifying the nature and period of existence of such event or
condition and what action Borrower has taken, is taking and proposes to take
with respect thereto: (1) any condition or event that constitutes an Event of
Default or Default; (2) any notice that any Person has given to Borrower or any
of its Subsidiaries or any other action taken with respect to a claimed default
or event or condition of the type referred to in subsection 6.1(B); or (3) any
event or condition that could reasonably be expected to result in any Material
Adverse Effect.
(M) Litigation. Promptly upon any officer of Borrower obtaining
knowledge of (1) the institution of any action, suit, proceeding, governmental
investigation or arbitration against or affecting any Loan Party or any property
of any Loan Party not previously disclosed by Borrower to Agent or (2) any
material development in any action, suit, proceeding, governmental investigation
or arbitration at any time pending against or affecting any Loan Party or any
property of any Loan Party which, in each case, could reasonably be expected to
have a Material Adverse Effect, Borrower will promptly give notice thereof to
Agent and provide such other information as may be reasonably available to them
to enable Agent and its counsel to evaluate such matter.
(N) Supplemented Schedules; Notice of Corporate Changes. Annually,
concurrently with Borrower's delivery of the Projections required by subsection
4.10(J), Borrower shall supplement in writing and deliver revisions of the
Schedules annexed to this Agreement to the extent necessary to disclose new or
changed facts or circumstances after the Closing Date; provided that subsequent
disclosures shall not constitute a cure or waiver of any Default or Event of
Default resulting from the matters disclosed. Borrower shall provide prompt
written notice of (1) all jurisdictions in which a Loan Party becomes qualified
after the Closing Date to transact business, (2) any material change after the
Closing Date in the authorized and issued capital stock or other equity
interests of any Loan Party or any of their respective Subsidiaries or any other
material amendment to their charter, by-laws or other organization documents and
(3) any Subsidiary created or acquired by any Loan Party after the Closing Date,
such notice, in each case, to identify the applicable jurisdictions, capital
structures or Subsidiaries, as applicable.
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(O) Other Information. With reasonable promptness, Borrower will
deliver such other information and data with respect to any Loan Party or any
Subsidiary of any Loan Party as from time to time may be reasonably requested by
Agent.
4.11 Accounting Terms; Utilization of GAAP for Purposes of Calculations
Under Agreement. For purposes of this Agreement, all accounting terms not
otherwise defined herein shall have the meanings assigned to such terms in
conformity with GAAP. Financial statements and other information furnished to
Agent pursuant to subsection 4.10 shall be prepared in accordance with GAAP as
in effect at the time of such preparation. No "Accounting Changes" (as defined
below) shall affect financial covenants, standards or terms in this Agreement;
provided that Borrower shall prepare footnotes to each Compliance Certificate
and the financial statements required to be delivered hereunder that show the
differences between the financial statements delivered (which reflect such
Accounting Changes) and the basis for calculating financial covenant compliance
(without reflecting such Accounting Changes). "Accounting Changes" means: (a)
changes in accounting principles required by GAAP and implemented by Borrower;
(b) changes in accounting principles recommended by Borrower's certified public
accountants and implemented by Borrower; and (c) changes in carrying value of
Borrower's or any of its Subsidiaries' assets, liabilities or equity accounts
resulting from (i) the application of purchase accounting principles (A.P.B. 16
and/or 17 and EITF 88-16 and FASB 109) or (ii) as the result of any other
adjustments that, in each case, were applicable to, but not included in, the Pro
Forma. All such adjustments resulting from expenditures made subsequent to the
Closing Date (including, but not limited to, capitalization of costs and
expenses or payment of pre-Closing Date liabilities) shall be treated as
expenses in the period the expenditures are made.
SECTION 5
REPRESENTATIONS AND WARRANTIES
In order to induce Agent and Lenders to enter into this Agreement, to make
Loans and to issue Lender Letters of Credit and Risk Participation Agreements,
Borrower represents and warrants to Agent and each Lender that the following
statements are and, after giving effect to the Related Transactions, will be
true, correct and complete:
5.1 Disclosure. No representation or warranty of any Loan Party contained
in this Agreement, the financial statements referred to in subsection 5.5, the
other Related Transactions Documents or any other document, certificate or
written statement furnished to Agent or any Lender by or on behalf of any such
Person for use in connection with the Loan Documents or the Related Transactions
Documents contains any untrue statement of a material fact or omitted, omits or
will omit to state a material fact necessary in order to make the statements
contained herein or therein not misleading in light of the circumstances in
which the same were made.
5.2 No Material Adverse Effect. Since the date of the most recent
financial statements delivered to Agent, there have been no events or changes in
facts or circumstances affecting any Loan Party which individually or in the
aggregate have had or could reasonably be expected to have a Material Adverse
Effect and that have not been disclosed herein or in the attached Schedules.
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5.3 No Default. The consummation of the Related Transactions does not and
will not violate, conflict with, result in a breach of, or constitute a default
(with due notice or lapse of time or both) under any contract of any Loan Party
except if such violations, conflicts, breaches or defaults have either been
waived on or before the Closing Date and are disclosed on Schedule 5.3 or could
not reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect.
5.4 Organization, Powers, Capitalization and Good Standing.
(A) Organization and Powers. Each of the Loan Parties is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation (which jurisdiction is set forth on
Schedule 5.4(A)). Each of the Loan Parties has all requisite corporate power and
authority to own and operate its properties, to carry on its business as now
conducted and proposed to be conducted, to enter into each Related Transactions
Document to which it is a party and to carry out the Related Transactions.
(B) Capitalization. The authorized capital stock of each of the Loan
Parties is as set forth on Schedule 5.4(B). All issued and outstanding shares of
capital stock of each of the Loan Parties are duly authorized and validly
issued, fully paid, nonassessable, free and clear of all Liens other than those
in favor of Agent, for the benefit of Agent and Lenders, and such shares were
issued in compliance with all applicable state and federal laws concerning the
issuance of securities. The capital stock of the Borrower is owned by the
stockholders and in the amounts set forth on Schedule 5.4(B). No shares of the
capital stock of any Loan Party, other than those described above, are issued
and outstanding. There are no preemptive or other outstanding rights, options,
warrants, conversion rights or similar agreements or understandings for the
purchase or acquisition from any Loan Party, of any shares of capital stock or
other securities of any such entity, except as disclosed in Schedule 5.4(B).
(C) Binding Obligation. This Agreement is, and the other Related
Transactions Documents when executed and delivered will be, the legally valid
and binding obligations of the applicable parties thereto, each enforceable
against each of such parties, as applicable, in accordance with their respective
terms.
(D) Qualification. Each of the Loan Parties is duly qualified and in
good standing wherever necessary to carry on its business and operations, except
in jurisdictions in which the failure to be qualified and in good standing could
not reasonably be expected to have a Material Adverse Effect. All jurisdictions
in which each Loan Party is qualified to do business are set forth on Schedule
5.4(D).
5.5 Financial Statements. All financial statements concerning Holdings,
Borrower and their respective Subsidiaries which have been or will hereafter be
furnished to Agent pursuant to this Agreement, have been or will be prepared in
accordance with GAAP consistently applied (except as disclosed therein) and do
or will present fairly the financial condition of the corporations covered
thereby as at the dates thereof and the results of their operations for the
periods then ended, subject to normal year-end adjustments.
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5.6 Intellectual Property. Borrower and each of its Subsidiaries owns, is
licensed to use or otherwise has the right to use, all patents, trademarks,
trade names, copyrights, technology, know-how and processes used in or necessary
for the conduct of its business as currently conducted that are material to the
condition (financial or other), business or operations of Borrower or its
Subsidiaries (collectively called "Intellectual Property") and all such
Intellectual Property is identified on Schedule 5.6 and fully protected and/or
duly and properly registered, filed or issued in the appropriate office and
jurisdictions for such registrations, filings or issuances. Except as disclosed
in Schedule 5.6, the use of such Intellectual Property by Borrower and its
Subsidiaries does not and has not been alleged by any Person to infringe on the
rights of any Person.
5.7 Investigations, Audits, Etc. Except as set forth on Schedule 5.7, none
of Holdings, Borrower or any of their respective Subsidiaries, is the subject of
any review or audit by the Internal Revenue Service or any governmental
investigation concerning the violation or possible violation of any law.
5.8 Employee Matters. Except as set forth on Schedule 5.8, (a) no Loan
Party nor any of their respective employees is subject to any collective
bargaining agreement, (b) no petition for certification or union election is
pending with respect to the employees of any Loan Party and no union or
collective bargaining unit has sought such certification or recognition with
respect to the employees of any Loan Party and (c) there are no strikes,
slowdowns, work stoppages or controversies pending or, to the best knowledge of
Borrower after due inquiry, threatened between any Loan Party and its respective
employees, other than employee grievances arising in the ordinary course of
business which could not reasonably be expected to have, either individually or
in the aggregate, a Material Adverse Effect. Except as set forth on Schedule
5.8, neither Borrower nor any of its Subsidiaries is party to an employment
contract.
5.9 Solvency. Borrower: (a) owns and will own assets the fair saleable
value of which are (i) greater than the total amount of liabilities (including
contingent liabilities) of Borrower and (ii) greater than the amount that will
be required to pay the probable liabilities of Borrower's then existing debts as
they become absolute and matured considering all financing alternatives and
potential asset sales reasonably available to Borrower; (b) has capital that is
not unreasonably small in relation to its business as presently conducted or
after giving effect to any contemplated transaction; and (c) does not intend to
incur and does not believe that it will incur debts beyond its ability to pay
such debts as they become due.
SECTION 6
DEFAULT, RIGHTS AND REMEDIES
6.1 Event of Default. "Event of Default" shall mean the occurrence or
existence of any one or more of the following:
(A) Payment. Failure to pay any installment of principal of any Loan
when due, or to repay Revolving Loans to reduce their balance to the Maximum
Revolving Loan Balance or to reimburse Agent for any payment made by Agent under
or in respect of any
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Lender Letters of Credit or Risk Participation Agreements when due or failure to
pay, within five (5) days after the due date, any interest on any Loan or any
other amount due under this Agreement or any of the other Loan Documents; or
(B) Default in Other Agreements. (1) Failure of Holdings, Borrower
or any of its Subsidiaries to pay when due or within any applicable grace period
any principal or interest on Indebtedness (other than the Loans) or any
Contingent Obligations or (2) breach or default of Holdings, Borrower or any of
its Subsidiaries with respect to any Indebtedness (other than the Loans) or any
Contingent Obligations, if the effect of such breach or default is to cause or
to permit the holder or holders then to cause, Indebtedness and/or Contingent
Obligations having an individual principal amount in excess of $250,000 or
having an aggregate principal amount in excess of $500,000 to become or be
declared due prior to their stated maturity; or
(C) Breach of Certain Provisions. Failure of Borrower to perform or
comply with any term or condition contained in that portion of subsection 2.2
relating to Borrower's obligation to maintain insurance, subsection 2.3, Section
3 or Section 4; or
(D) Breach of Warranty. Any representation, warranty, certification
or other statement made by any Loan Party in any Loan Document or in any
statement or certificate at any time given by such Person in writing pursuant or
in connection with any Loan Document is false in any material respect on the
date made; or
(E) Other Defaults Under Loan Documents. Borrower or any other Loan
Party defaults in the performance of or compliance with any term contained in
this Agreement or the other Loan Documents and such default is not remedied or
waived within fifteen (15) days after receipt by Borrower of notice from Agent
or Requisite Lenders of such default (other than occurrences described in other
provisions of this subsection 6.1 for which a different grace or cure period is
specified or which constitute immediate Events of Default); or
(F) Involuntary Bankruptcy; Appointment of Receiver, Etc. (1) A
court enters a decree or order for relief with respect to Holdings, Borrower or
any of its Subsidiaries in an involuntary case under the Bankruptcy Code, which
decree or order is not stayed or other similar relief is not granted under any
applicable federal or state law; or (2) the continuance of any of the following
events for sixty (60) days unless dismissed, bonded or discharged: (a) an
involuntary case is commenced against Holdings, Borrower or any of its
Subsidiaries, under any applicable bankruptcy, insolvency or other similar law
now or hereafter in effect; or (b) a decree or order of a court for the
appointment of a receiver, liquidator, sequestrator, trustee, custodian or other
officer having similar powers over Holdings, Borrower or any of its
Subsidiaries, or over all or a substantial part of its property, is entered; or
(c) an interim receiver, trustee or other custodian is appointed without the
consent of Holdings, Borrower or any of its Subsidiaries, for all or a
substantial part of the property of Holdings, Borrower or any such Subsidiary;
or
(G) Voluntary Bankruptcy; Appointment of Receiver, Etc. (1) An order
for relief is entered with respect to Holdings, Borrower or any of its
Subsidiaries or Holdings, Borrower or any of its Subsidiaries commences a
voluntary case under the Bankruptcy Code,
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or consents to the entry of an order for relief in an involuntary case or to the
conversion of an involuntary case to a voluntary case under any such law or
consents to the appointment of or taking possession by a receiver, trustee or
other custodian for all or a substantial part of its property; or (2) Holdings,
Borrower or any of its Subsidiaries makes any assignment for the benefit of
creditors; or (3) the Board of Directors of Holdings, Borrower or any of its
Subsidiaries adopts any resolution or otherwise authorizes action to approve any
of the actions referred to in this subsection 6.1(G); or
(H) Governmental Liens. Any lien, levy or assessment is filed or
recorded with respect to or otherwise imposed upon all or any part of the
Collateral or the assets of Holdings, Borrower or any of its Subsidiaries by the
United States or any department or instrumentality thereof or by any state,
county, municipality or other governmental agency (other than Permitted
Encumbrances); or
(I) Judgment and Attachments. Any money judgment, writ or warrant of
attachment, or similar process (other than those described in subsection 6.1(H))
involving (1) an amount in any individual case in excess of $50,000 or (2) an
amount in the aggregate at any time in excess of $100,000 (in either case not
adequately covered by insurance as to which the insurance company has
acknowledged coverage) is entered or filed against Holdings, Borrower or any of
its Subsidiaries or any of their respective assets and remains undischarged,
unvacated, unbonded or unstayed for a period of thirty (30) days or in any event
later than five (5) Business Days prior to the date of any proposed sale
thereunder; or
(J) Dissolution. Any order, judgment or decree is entered against
Holdings, Borrower or any of its Subsidiaries decreeing the dissolution or split
up of Holdings, Borrower or that Subsidiary and such order remains undischarged
or unstayed for a period in excess of fifteen (15) days; or
(K) Solvency. Borrower ceases to be solvent (as represented by
Borrower in subsection 5.9) or admits in writing its present or prospective
inability to pay its debts as they become due; or
(L) Injunction. Holdings, Borrower or any of its Subsidiaries is
enjoined, restrained or in any way prevented by the order of any court or any
administrative or regulatory agency from conducting all or any material part of
its business and such order continues for more than fifteen (15) days; or
(M) ERISA; Pension Plans. (1) Borrower or any of its Affiliates
fails to make full payment when due of all amounts which, under the provisions
of any employee benefit plans or any applicable provisions of the IRC, any such
Person is required to pay as contributions thereto and such failure results in
or is likely to result in a Material Adverse Effect; or (2) an accumulated
funding deficiency in excess of $25,000 occurs or exists in relation to the
minimum funding requirements of the IRC, whether or not waived, with respect to
any such employee benefit plans; or (3) any employee benefit plan loses its
status as a qualified plan under the IRC which results in or could reasonably be
expected to result in a Material Adverse Effect; or
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(N) Environmental Matters. Holdings, Borrower or any of their
respective Subsidiaries fails to: obtain or maintain any operating licenses or
permits required by environmental authorities; begin, continue or complete any
remediation activities as required by any environmental authorities; store or
dispose of any hazardous materials in accordance with applicable environmental
laws and regulations; or comply with any other environmental laws; if such
failure could reasonably be expected to have a Material Adverse Effect; or
(O) Invalidity of Loan Documents. Any of the Loan Documents for any
reason, other than a partial or full release in accordance with the terms
thereof, ceases to be in full force and effect or is declared to be null and
void, or any Loan Party denies that it has any further liability under any Loan
Documents to which it is party, or gives notice to such effect; or
(P) Damage; Strike; Casualty. Any material damage to, or loss, theft
or destruction of, any Collateral, whether or not insured, or any strike,
lockout, labor dispute, embargo, condemnation, act of God or public enemy, or
other casualty which causes, for more than fifteen (15) consecutive days, the
cessation or substantial curtailment of revenue producing activities at any
facility of Borrower or any of its Subsidiaries if any such event or
circumstance could reasonably be expected to have a Material Adverse Effect; or
(Q) Licenses and Permits. The loss, suspension or revocation of, or
failure to renew, any license or permit now held or hereafter acquired by
Borrower or any of its Subsidiaries, if such loss, suspension, revocation or
failure to renew could reasonably be expected to have a Material Adverse Effect;
or
(R) Failure of Security. Agent, for the benefit of Agent and
Lenders, does not have or ceases to have a valid and perfected first priority
security interest in the Collateral (subject to Permitted Encumbrances) or any
substantial portion thereof, in each case, for any reason other than the failure
of Agent to take any action within its control; or
(S) Business Activities. Holdings engages in any type of business
activity other than the ownership of stock of Borrower, ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇
Company, a California corporation, or other Person engaged in the same or
similar business or acquired in a Permitted Acquisition, and performance of its
obligations under the Related Transaction Documents to which it is a party; or
(T) Change in Control or Ownership. (1) Oaktree Capital Management,
LLC ("Oaktree") ceases to beneficially own (as determined under Rules 13d-3 and
13d-5 under the Securities Exchange Act of 1934) at least ten percent (10%) of
the issued and outstanding shares of each class of capital stock of Holdings
entitled (without regard to the occurrence of any contingency) to vote for the
election of a majority of the members of the boards of directors of Holdings,
(2) in connection with any shareholders' election of the board of directors of
Holdings, Holdings' board of directors shall have failed to nominate at least
two (2) candidates for election to such board designated by Oaktree, or (3)
Holdings ceases to beneficially own, directly, one hundred percent (100%) of the
issued and outstanding shares of capital stock of Borrower.
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6.2 Suspension of Commitments. Upon the occurrence of any Default or Event
of Default, Agent and each Lender without notice or demand, may immediately
cease making additional Loans and issuing Lender Letters of Credit and Risk
Participation Agreements and cause its obligation to lend its Pro Rata Share of
the Revolving Loan Commitment and the Acquisition Loan Commitment to be
suspended; provided that, in the case of a Default, if the subject condition or
event is waived, cured or removed by Requisite Lenders within any applicable
grace or cure period, any suspended portion of the Revolving Loan Commitment and
the Acquisition Loan Commitment shall be reinstated. Each Lender may
alternatively suspend only a portion of its obligation to lend its Pro Rata
Share of the Revolving Loan Commitment and the Acquisition Loan Commitment.
6.3 Acceleration. Upon the occurrence of any Event of Default described in
the foregoing subsections 6.1(F) or 6.1(G), the unpaid principal amount of and
accrued interest and fees on the Revolving Loans and the Acquisition Loans,
payments under the Lender Letters of Credit and Risk Participation Agreements
and all other Obligations shall automatically become immediately due and
payable, without presentment, demand, protest, notice of intent to accelerate,
notice of acceleration or other requirements of any kind, all of which are
hereby expressly waived by Borrower, and the obligations of Agent and Lenders to
make Revolving Loans and Acquisition Loans and issue Lender Letters of Credit
and Risk Participation Agreements shall thereupon terminate. Upon the occurrence
and during the continuance of any other Event of Default, Agent may, and upon
written demand by Requisite Lenders shall, by written notice to Borrower (a)
declare all or any portion of the Loans and all or some of the other Obligations
to be, and the same shall forthwith become, immediately due and payable together
with accrued interest thereon, and the obligations of Agent and Lenders to make
Revolving Loans and Acquisition Loans and issue Lender Letters of Credit and
Risk Participation Agreements shall thereupon terminate and (b) demand that
Borrower immediately deposit with Agent an amount equal to the aggregate
outstanding Risk Participation Liability to enable Agent to make payments under
the Lender Letters of Credit and Risk Participation Agreements when required and
such amount shall become immediately due and payable.
6.4 Performance by Agent. If Borrower shall fail to perform any covenant,
duty or agreement contained in any of the Loan Documents, Agent may perform or
attempt to perform such covenant, duty or agreement on behalf of Borrower after
the expiration of any cure or grace periods set forth herein. In such event,
Borrower shall, at the request of Agent, promptly pay any amount reasonably
expended by Agent in such performance or attempted performance to Agent,
together with interest thereon at the highest rate of interest in effect upon
the occurrence of an Event of Default as specified in subsection 1.2(E) from the
date of such expenditure until paid. Notwithstanding the foregoing, it is
expressly agreed that Agent shall not have any liability or responsibility for
the performance of any obligation of Borrower under this Agreement or any other
Loan Document.
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SECTION 7
EFFECTIVENESS OF THIS AGREEMENT AND
CONDITIONS TO LOANS
7.1 Effectiveness of this Agreement. The effectiveness of this Agreement
is subject to the satisfaction of all of the following conditions precedent on
or before July 31, 1997:
(A) The proceeds of the IPO, net of underwriting discounts and
commissions and other reasonable costs associated therewith, shall have been not
less than $35,000,000, and such net proceeds shall have been used in accordance
with the Recitals hereof;
(B) Oaktree shall beneficially own (as determined under Rules 13d-3
and 13d-5 under the Securities Exchange Act of 1934) at least ten percent (10%)
of the Common Stock of Holdings;
(C) Agent shall have received such amendments, modifications,
reaffirmations, replacements, restatements, endorsements and other agreements
and documents as it may require in accordance with the terms and provisions
hereof;
(D) Agent shall have received all of the following documents in form
and substance satisfactory to Agent:
(1) Certified copies of the certificates or articles of
incorporation of Borrower and each Loan Party together with good standing
certificates from the respective states of incorporation and the respective
states in which the principal places of business of each is located and from all
states in which the activities of such Persons require them to be qualified
and/or licensed to do business, each to be dated a recent date prior to the
Closing Date;
(2) Copies of the bylaws of Borrower and each Loan Party
certified as of the Closing Date by its corporate secretary or an assistant
secretary;
(3) Resolutions of the boards of directors of Borrower and
each Loan Party authorizing and approving the execution, delivery and
performance of the Loan Documents to which such Person is a party, certified as
of the Closing Date by its corporate secretary or an assistant secretary as
being in full force and effect without modification or amendment;
(4) Signature and incumbency certificates of (i) the officers
of Borrower executing the Loan Documents, and (ii) the officers of each Loan
Party executing the Loan Documents to which any of them is a party; and
(5) Written opinions of ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel
for Borrower and the Loan Parties, dated as of the Closing Date; and
(E) No Default or Event of Default shall have occurred and be
continuing.
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Subject to the satisfaction of all of the above conditions precedent, (i)
this Agreement shall amend and restate the Original Credit Agreement in its
entirety, (ii) each reference in any other Loan Document to the Original Credit
Agreement shall mean and be a reference to this Agreement, and (iii) Agent and
Lenders consent to the IPO and the use of the net proceeds thereof as set forth
in the Recitals hereof.
7.2 Conditions to All Loans. The obligations of Lenders to make Loans and
of Agent to issue Lender Letters of Credit and Risk Participation Agreements on
any date ("Funding Date") are subject to the further conditions precedent set
forth below.
(A) Agent shall have received, in accordance with the provisions of
subsection 1.1, a notice requesting an advance of a Revolving Loan or issuance
of a Lender Letter of Credit or Risk Participation Agreement.
(B) The representations and warranties contained in Section 5 of
this Agreement and elsewhere herein and in the Loan Documents shall be (and each
request by Borrower for a Loan or a Lender Letter of Credit and Risk
Participation Agreement shall constitute a representation and warranty by
Borrower that such representations and warranties are) true, correct and
complete in all material respects on and as of that Funding Date to the same
extent as though made on and as of that date, except for any representation or
warranty limited by its terms to a specific date and taking into account any
amendments to the Schedules or Exhibits as a result of any disclosures made in
writing by Borrower to Agent after the Closing Date and approved by Agent in
writing.
(C) No event shall have occurred and be continuing or would result
from the consummation of the borrowing contemplated (or notice requesting
issuance of a Lender Letters of Credit and Risk Participation Agreement) that
would constitute an Event of Default or a Default.
(D) No order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain any Lender from
making any Loan or Agent from issuing any Lender Letter of Credit or Risk
Participation Agreement.
SECTION 8
ASSIGNMENT AND PARTICIPATION
8.1 Assignments and Participations in Loans and Notes. Each Lender
(including ▇▇▇▇▇▇) may assign, subject to the terms of a Lender Addition
Agreement, its rights and delegate its obligations under this Agreement to
another Person, provided that (a) such Lender (excluding ▇▇▇▇▇▇) shall first
obtain the written consent of Agent and Borrower, which consent shall not be
unreasonably withheld; (b) the Pro Rata Share of the Revolving Loan Commitment
and the Acquisition Loan Commitment being assigned shall in no event be less
than the lesser of (i) $5,000,000 and (ii) the entire amount of the Pro Rata
Share of the Revolving Loan Commitment and the Acquisition Loan Commitment of
the assigning Lender; and (c) upon the consummation of each such assignment the
Lender accepting the assignment shall pay Agent an administrative
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fee of $3,000. The administrative fee referred to in clause (c) of the preceding
sentence shall not apply to an assignment from a Lender to an affiliate of such
Lender. In the case of an assignment authorized under this subsection 8.1, the
assignee shall have, to the extent of such assignment, the same rights, benefits
and obligations as it would if it were an initial Lender hereunder. The
assigning Lender shall be relieved of its obligations hereunder with respect to
its Pro Rata Share of the Revolving Loan Commitment and the Acquisition Loan
Commitment or assigned portion thereof. Borrower hereby acknowledges and agrees
that any assignment will give rise to a direct obligation of Borrower to the
assignee and that the assignee shall be considered to be a "Lender".
Each Lender (including ▇▇▇▇▇▇) may sell participations in all or any
part of its Pro Rata Share of the Revolving Loan Commitment and the Acquisition
Loan Commitment to another Person, provided that (a) such Lender (excluding
▇▇▇▇▇▇) shall first obtain the prior written consent of Agent, which consent
shall not be unreasonably withheld; and (b) any such participation shall be in a
minimum amount of $5,000,000, and provided, further, that all amounts payable by
Borrower hereunder shall be determined as if that Lender had not sold such
participation and the holder of any such participation shall not be entitled to
require such Lender to take or omit to take any action hereunder except action
directly effecting (i) any reduction in the principal amount, interest rate or
fees payable with respect to any Loan in which such holder participates; (ii)
any extension of the Expiry Date, any extension of the date on which any
Scheduled Acquisition Loan Installment is to be paid or any change of any date
fixed for any payment of interest or fees payable with respect to any Loan in
which such holder participates; (iii) any change of the aggregate unpaid
principal amount of the Loans; (iv) any change of the percentage of Lenders
which shall be required for Lenders or any of them to take any action hereunder;
(v) any release of Collateral (except if the sale or disposition of such
Collateral is permitted under subsection 8.2 or any other Loan Document); (vi)
any amendment or waiver of this subsection 8.1 or the definitions of the terms
used in this subsection 8.1 insofar as the definitions affect the substance of
this subsection 8.1; (vii) any consent to the assignment, delegation or other
transfer by any Loan Party of any of its rights and obligations under any Loan
Document; (viii) any change in the form in which interest is required to be
paid; and (ix) any change of any advance rate set forth in the Borrowing Base
Certificate. Borrower hereby acknowledges and agrees that any participation will
give rise to a direct obligation of Borrower to the participant, and the
participant shall for purposes of subsections 1.8, 1.9, 8.4 and 9.1 be
considered to be a "Lender".
Except as otherwise provided in this subsection 8.1 no Lender shall,
as between Borrower and that Lender, be relieved of any of its obligations
hereunder as a result of any sale, assignment, transfer or negotiation of, or
granting of a participation in, all or any part of the Loans, the Notes or other
Obligations owed to such Lender. Each Lender may furnish any information
concerning Borrower and its Subsidiaries in the possession of that Lender from
time to time to assignees and participants (including prospective assignees and
participants), subject to the provisions of subsection 9.13.
Borrower agrees that it will assist and cooperate with Agent and any
Lender in any manner reasonably requested by Agent or such Lender to effect the
sale of a participation
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or an assignment described above, including without limitation assistance in the
preparation of appropriate disclosure documents or placement memoranda.
Agent shall provide Borrower with written notice of the name and
address of any new Lender after the date hereof. In the event that ▇▇▇▇▇▇
assigns all or a portion of its Pro Rata Share of the Revolving Loan Commitment
or the Acquisition Loan Commitment, or sells participation(s) therein, where the
effect of such assignment(s) or participation(s) is to reduce ▇▇▇▇▇▇'▇ Pro Rata
Share (less the aggregate amount of any percentage participation interests held
therein by another Person) to less than twenty-three percent (23%), ▇▇▇▇▇▇ shall
give reasonably prompt subsequent notice thereof to each Lender.
Notwithstanding anything contained in this Agreement to the
contrary, so long as the Requisite Lenders shall remain capable of making LIBOR
Loans, no Person shall become a "Lender" hereunder unless such Person shall also
be capable of making LIBOR Loans.
8.2 Agent.
(A) Appointment. Each Lender hereby designates and appoints ▇▇▇▇▇▇
as its Agent under this Agreement and the other Loan Documents, and each Lender
hereby irrevocably authorizes Agent to take such action or to refrain from
taking such action on its behalf under the provisions of this Agreement and the
other Loan Documents and to exercise such powers as are set forth herein or
therein, together with such other powers as are reasonably incidental thereto.
Agent is authorized and empowered to amend, modify, or waive any provisions of
this Agreement or the other Loan Documents on behalf of Lenders subject to the
requirement that certain of Lenders' consent be obtained in certain instances as
provided in subsections 8.3 and 9.2. Agent agrees to act as such on the express
conditions contained in this subsection 8.2. The provisions of this subsection
8.2 are solely for the benefit of Agent and Lenders and neither Borrower nor any
Loan Party shall have any rights as a third party beneficiary of any of the
provisions hereof. In performing its functions and duties under this Agreement,
Agent shall act solely as agent of Lenders and does not assume and shall not be
deemed to have assumed any obligation toward or relationship of agency or trust
with or for Borrower or any other Loan Party. Agent may perform any of its
duties hereunder, or under the Loan Documents, by or through its agents or
employees.
(B) Nature of Duties. The duties of Agent shall be mechanical and
administrative in nature. Agent shall not have by reason of this Agreement a
fiduciary relationship in respect of any Lender. Nothing in this Agreement or
any of the Loan Documents, express or implied, is intended to or shall be
construed to impose upon Agent any obligations in respect of this Agreement or
any of the Loan Documents except as expressly set forth herein or therein. Each
Lender shall make its own independent investigation of the financial condition
and affairs of Borrower in connection with the extension of credit hereunder and
shall make its own appraisal of the creditworthiness of Borrower, and Agent
shall have no duty or responsibility, either initially or on a continuing basis,
to provide any Lender with any credit or other information with respect thereto
(other than as expressly required herein). If Agent seeks the consent or
approval of any Lenders to the taking or refraining from taking any action
hereunder, then Agent shall send notice thereof to each Lender. Agent shall
promptly
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notify each Lender any time that the Requisite Lenders have instructed Agent to
act or refrain from acting pursuant hereto. In the event that Agent receives a
written notice or certificate from Borrower pursuant to subsection 4.10(L),
Agent shall provide a copy thereof to each Lender in a reasonably prompt manner.
(C) Rights, Exculpation, Etc. Neither Agent nor any of its officers,
directors, employees or agents shall be liable to any Lender for any action
taken or omitted by them hereunder or under any of the Loan Documents, or in
connection herewith or therewith, except that Agent shall be liable with respect
to its own gross negligence or willful misconduct. Agent shall not be liable for
any apportionment or distribution of payments made by it in good faith and if
any such apportionment or distribution is subsequently determined to have been
made in error the sole recourse of any Lender to whom payment was due but not
made, shall be to recover from other Lenders any payment in excess of the amount
to which they are determined to be entitled (and such other Lenders hereby agree
to return to such Lender any such erroneous payments received by them). In
performing its functions and duties hereunder, Agent shall exercise the same
care which it would in dealing with loans for its own account, but Agent shall
not be responsible to any Lender for any recitals, statements, representations
or warranties herein or for the execution, effectiveness, genuineness, validity,
enforceability, collectibility, or sufficiency of this Agreement or any of the
Loan Documents or the transactions contemplated thereby, or for the financial
condition of any Loan Party. Agent shall not be required to make any inquiry
concerning either the performance or observance of any of the terms, provisions
or conditions of this Agreement or any of the Loan Documents or the financial
condition of any Loan Party, or the existence or possible existence of any
Default or Event of Default. Agent may at any time request instructions from
Lenders with respect to any actions or approvals which by the terms of this
Agreement or of any of the Loan Documents Agent is permitted or required to take
or to grant, and if such instructions are promptly requested, Agent shall be
absolutely entitled to refrain from taking any action or to withhold any
approval and shall not be under any liability whatsoever to any Person for
refraining from any action or withholding any approval under any of the Loan
Documents until it shall have received such instructions from Requisite Lenders
or all of the Lenders, as applicable. Without limiting the foregoing, no Lender
shall have any right of action whatsoever against Agent as a result of Agent
acting or refraining from acting under this Agreement, the Notes, or any of the
other Loan Documents in accordance with the instructions of Requisite Lenders.
(D) Reliance. Agent shall be entitled to rely, and shall be fully
protected in relying, upon any written or oral notices, statements,
certificates, orders or other documents or any telephone message or other
communication (including any writing, telex, telecopy or telegram) believed by
it in good faith to be genuine and correct and to have been signed, sent or made
by the proper Person, and with respect to all matters pertaining to this
Agreement or any of the Loan Documents and its duties hereunder or thereunder,
upon advice of counsel selected by it. Agent shall be entitled to rely upon the
advice of legal counsel, independent accountants, and other experts selected by
Agent in its sole discretion.
(E) Indemnification. Lenders will reimburse and indemnify Agent for
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses (including, without limitation,
attorneys' fees and expenses), advances or
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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 of the Loan Documents or any action taken or omitted by Agent
under this Agreement or any of the Loan Documents, in proportion to each
Lender's Pro Rata Share; provided, however, that no Lender shall be liable for
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses, advances or disbursements resulting
from Agent's gross negligence or willful misconduct. If any indemnity furnished
to Agent for any purpose shall, in the opinion of Agent, be insufficient or
become impaired, Agent may call for additional indemnity and cease, or not
commence, to do the acts indemnified against until such additional indemnity is
furnished. The obligations of Lenders under this subsection 8.2(E) shall survive
the payment in full of the Obligations and the termination of this Agreement.
(F) ▇▇▇▇▇▇ Individually. With respect to its obligations under the
Revolving Loan Commitment and the Acquisition Loan Commitment, the Loans made by
it, and the Notes issued to it, ▇▇▇▇▇▇ shall have and may exercise the same
rights and powers hereunder and is subject to the same obligations and
liabilities as and to the extent set forth herein for any other Lender. The
terms "Lenders" or "Requisite Lenders" or any similar terms shall, unless the
context clearly otherwise indicates, include ▇▇▇▇▇▇ in its individual capacity
as a Lender or one of the Requisite Lenders. ▇▇▇▇▇▇ may lend money to, and
generally engage in any kind of banking, trust or other business with any Loan
Party as if it were not acting as Agent pursuant hereto.
(G) Successor Agent.
(1) Resignation. Agent may resign from the performance of all
its agency functions and duties hereunder at any time by giving at least thirty
(30) Business Days' prior written notice to Borrower and the Lenders. Such
resignation shall take effect upon the acceptance by a successor Agent of
appointment pursuant to clause (2) below or as otherwise provided below.
(2) Appointment of Successor. Upon any such notice of
resignation pursuant to clause (1) above, Requisite Lenders shall, upon receipt
of Borrower's prior consent which shall not be unreasonably withheld, appoint a
successor Agent. If a successor Agent shall not have been so appointed within
the thirty (30) Business Day period, referred to in clause (1) above, the
retiring Agent, upon notice to Borrower, shall then appoint a successor Agent
who shall serve as Agent until such time, if any, as Requisite Lenders, upon
receipt of Borrower's prior written consent which shall not be unreasonably
withheld, appoint a successor Agent as provided above.
(3) Successor Agent. Upon the acceptance of any appointment as
Agent under the Loan Documents 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 the Loan Documents. After any retiring
Agent's resignation as Agent under the Loan Documents, the provisions of this
subsection 8.2 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Agent under the Loan Documents.
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(H) Collateral Matters.
(1) Release of Collateral. Lenders hereby irrevocably
authorize Agent, at its option and in its discretion, to release any Lien
granted to or held by Agent upon any property covered by the Security Documents
(i) upon termination of the Revolving Loan Commitment and payment and
satisfaction of all Obligations (other than contingent indemnification
Obligations not then due and payable); (ii) constituting property being sold or
disposed of if Borrower certifies to Agent that the sale or disposition is made
in compliance with the provisions of this Agreement (and Agent may rely in good
faith conclusively on any such certificate, without further inquiry); (iii)
constituting property leased to Borrower under a lease which has expired or been
terminated in a transaction permitted under this Agreement or is about to expire
and which has not been, and is not intended by Borrower to be, renewed or
extended; or (iv) in accordance with the provisions of the succeeding sentence.
Agent may release or compromise any Collateral and the proceeds thereof having a
value not greater than ten percent (10%) of the total book value of all
Collateral, either in a single transaction or in a series of related
transactions, with the consent of Lenders owning an aggregate of at least eighty
percent (80%) of the Revolving Loan Commitment and the Acquisition Loan
Commitment, provided that in no event will Agent, acting under the authority
granted to it pursuant to this sentence, release or compromise Collateral or the
proceeds thereof having a total book value in excess of twenty percent (20%) of
the book value of all Collateral, as determined by Agent, during any calendar
year.
(2) Confirmation of Authority; Execution of Releases. Without
in any manner limiting Agent's authority to act without any specific or further
authorization or consent by Lenders (as set forth in subsection 8.2(H)(1)), each
Lender agrees to confirm in writing, upon request by Agent or Borrower, the
authority to release any property covered by the Security Documents conferred
upon Agent under clauses (i) through (iii) of subsection 8.2(H)(1). Upon receipt
by Agent of confirmation from the requisite percentage of Lenders required by
subsection 8.2(H)(1), if any, of its authority to release or compromise any
particular item or types of property covered by the Security Documents, and upon
at least ten (10) Business Days prior written request by Borrower, Agent shall
(and is hereby irrevocably authorized by Lenders to) execute such documents as
may be necessary to evidence the release or compromise of the Liens granted to
Agent, for the benefit of Agent and Lenders, upon such Collateral, provided that
(i) Agent shall not be required to execute any such document on terms which, in
Agent's opinion, would expose Agent to liability or create any obligation or
entail any consequence other than the release or compromise of such Liens
without recourse or warranty, and (ii) such release or compromise shall not in
any manner discharge, affect or impair the Obligations or any Liens upon (or
obligations of any Loan Party, in respect of), all interests retained by any
Loan Party, including (without limitation) the proceeds of any sale, all of
which shall continue to constitute part of the property covered by the Security
Documents.
(3) Absence of Duty. Agent shall have no obligation whatsoever
to any Lender or any other Person to assure that the property covered by the
Security Documents exists or is owned by Borrower or is cared for, protected or
insured or has been encumbered or that the Liens granted to Agent have been
properly or sufficiently or lawfully created, perfected, protected or enforced
or are entitled to any particular priority, or to exercise at all or in any
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particular manner or under any duty of care, disclosure or fidelity, or to
continue exercising, any of the rights, authorities and powers granted or
available to Agent in this subsection 8.2(H) or in any of the Loan Documents, it
being understood and agreed that in respect of the property covered by the
Security Documents or any act, omission or event related thereto, Agent may act
in any manner it may deem appropriate, in its discretion, given Agent's own
interest in property covered by the Security Documents as one of the Lenders and
that Agent shall have no duty or liability whatsoever to any of the other
Lenders, provided that Agent shall exercise the same care which it would in
dealing with loans for its own account.
(I) Agency for Perfection. Agent and each Lender hereby appoint each
other Lender as agent for the purpose of perfecting Agent's security interest in
assets which, in accordance with Article 9 of the Uniform Commercial Code in any
applicable jurisdiction, can be perfected only by possession. Should any Lender
(other than Agent) obtain possession of any such Collateral, such Lender shall
notify Agent thereof, and, promptly upon Agent's request therefor, shall deliver
such Collateral to Agent or in accordance with Agent's instructions. Each Lender
agrees that it will not have any right individually to enforce or seek to
enforce any Security Document or to realize upon any collateral security for the
Loans, it being understood and agreed that such rights and remedies may be
exercised only by Agent.
(J) Dissemination of Information. Agent will use its best efforts to
provide Lenders with any information received by Agent from Borrower or any
other Loan Party which is required to be provided to a Lender hereunder,
provided that Agent shall not be liable to Lenders for any failure to do so,
except to the extent that such failure is attributable to Agent's gross
negligence or willful misconduct.
8.3 Amendments, Consents and Waivers for Certain Actions.
(A) Except as otherwise provided in this subsection 8.3, in
subsection 9.2 or in any Lender Addition Agreement and except as to matters set
forth in other subsections hereof or in any other Loan Document as requiring
only Agent's consent, the consent of Requisite Lenders and Borrower will be
required to amend, modify, terminate, or waive any provision of this Agreement
or any of the other Loan Documents.
(B) In the event Agent requests the consent of a Lender and does not
receive a written consent or denial thereof within ten (10) Business Days after
such Lender's receipt of such request, then such Lender will be deemed to have
denied the giving of such consent.
(C) In the event Agent requests the consent of a Lender and such
consent is denied, then ▇▇▇▇▇▇ or the Lender which assigned its interest in the
Loans to such Lender (the "Assigning Lender") may, at its option, require such
Lender to reassign its interest in the Loans to ▇▇▇▇▇▇ or the Assigning Lender,
as applicable, for a price equal to the then outstanding principal amount
thereof plus accrued and unpaid interest and fees due such Lender, which
interest and fees will be paid when collected from Borrower. In the event that
▇▇▇▇▇▇ or the Assigning Lender elects to require any Lender to reassign its
interest to ▇▇▇▇▇▇ or the Assigning Lender, ▇▇▇▇▇▇ or the Assigning Lender, as
applicable, will so notify such Lender in writing within forty-five (45) days
following such Lender's denial, and such Lender will reassign its
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interest to ▇▇▇▇▇▇ or the Assigning Lender, as applicable, no later than five
(5) days following receipt of such notice.
8.4 Set Off and Sharing of Payments. In addition to any rights now or
hereafter granted under applicable law and not by way of limitation of any such
rights, during the continuance of any Event of Default, each Lender is hereby
authorized by Borrower at any time or from time to time, with reasonably prompt
subsequent notice to Borrower and Agent (any prior or contemporaneous notice
being hereby expressly waived) to set off and to appropriate and to apply any
and all (A) balances held by such Lender at any of its offices for the account
of Borrower or any of its Subsidiaries (regardless of whether such balances are
then due to Borrower or its Subsidiaries), and (B) other property at any time
held or owing by such Lender to or for the credit or for the account of Borrower
or any of its Subsidiaries, against and on account of any of the Obligations.
Any Lender exercising a right to set off shall, to the extent the amount of any
such set off exceeds its Pro Rata Share of the amount set off, purchase for cash
(and the other Lenders shall sell) interests in each such other Lender's Pro
Rata Share of the Obligations as would be necessary to cause such Lender to
share such excess with each other Lender in accordance with their respective Pro
Rata Shares. Borrower agrees, to the fullest extent permitted by law, that any
Lender may exercise its right to set off with respect to amounts in excess of
its Pro Rata Share of the Obligations and upon doing so shall deliver such
excess to the Agent for the benefit of all Lenders in accordance with their Pro
Rata Shares.
8.5 Disbursement of Funds. Agent may, on behalf of Lenders, disburse funds
to Borrower for Loans requested. Each Lender shall reimburse Agent on demand for
all funds disbursed on its behalf by Agent, or if Agent so requests, each Lender
will remit to Agent its Pro Rata Share of any Loan before Agent disburses same
to Borrower. If Agent elects to require that each Lender make funds available to
Agent, prior to a disbursement by Agent to Borrower, Agent shall advise each
Lender by telephone or telecopy of the amount of such Lender's Pro Rata Share of
the Loan requested by Borrower no later than 1:00 p.m. CST on the Funding Date
applicable thereto, and each such Lender shall pay Agent such Lender's Pro Rata
Share of such requested Loan, in same day funds, by wire transfer to Agent's
account on such Funding Date. If any Lender fails to pay the amount of its Pro
Rata Share forthwith upon Agent's demand, Agent shall promptly notify Borrower,
and Borrower shall immediately repay such amount to Agent. Any repayment
required pursuant to this subsection 8.5 shall be without premium or penalty.
Nothing in this subsection 8.5 or elsewhere in this Agreement or the other Loan
Documents, including without limitation the provisions of subsection 8.6, shall
be deemed to require Agent to advance funds on behalf of any Lender or to
relieve any Lender from its obligation to fulfill its commitments hereunder or
to prejudice any rights that Agent or Borrower may have against any Lender as a
result of any default by such Lender hereunder.
8.6 Disbursements of Advances; Payment.
(A) Revolving Loan Advances, Payments and Settlements; Related Fee
Payments.
(1) The Revolving Loan balance may fluctuate from day to day
through Agent's disbursement of funds to, and receipt of funds from, Borrower.
In order to minimize
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the frequency of transfers of funds between Agent and each Lender
notwithstanding terms to the contrary set forth in Section 1 or subsection 8.5,
Revolving Loan advances and payments will be settled among Agent and Lenders
according to the procedures described in this subsection 8.6. Notwithstanding
these procedures, each Lender's obligation to fund its portion of any advances
made by Agent to Borrower will commence on the date such advances are made by
Agent. Such payments will be made by such Lender without set-off, counterclaim
or reduction of any kind.
(2) On the second (2nd) Business Day of each week, or more
frequently (including daily), if Agent so elects (each such day being a
"Settlement Date"), Agent will advise each Lender by telephone or telecopy of
the amount of each such Lender's Pro Rata Share of the Revolving Loan balance as
of the close of business of the (2nd) second Business Day immediately preceding
the Settlement Date. In the event that payments are necessary to adjust the
amount of such Lender's required Pro Rata Share of the Revolving Loan balance to
such Lender's actual Pro Rata Share of the Revolving Loan balance as of any
Settlement Date, the party from which such payment is due will pay the other, in
same day funds, by wire transfer to the other's account not later than 3:00 p.m.
CST on the Business Day following the Settlement Date.
(3) For purposes of this subsection 8.6(A)(3), the following
terms and conditions will have the meanings indicated:
(a) "Daily Loan Balance" means an amount calculated as
of the end of each calendar day by subtracting (i) the cumulative
principal amount paid by Agent to a Lender on a Loan from the Closing Date
through and including such calendar day, from (ii) the cumulative
principal amount on a Loan advanced by such Lender to Agent on that Loan
from the Closing Date through and including such calendar day.
(b) "Daily Interest Rate" means an amount calculated by
dividing the interest rate payable to a Lender on a Loan (as set forth in
subsection 1.2) as of each calendar day by three hundred sixty (360).
(c) "Daily Interest Amount" means an amount calculated
by multiplying the Daily Loan Balance of a Loan by the associated Daily
Interest Rate on that Loan.
(d) "Interest Ratio" means a number calculated by
dividing the total amount of the interest on a Loan received by Agent with
respect to the immediately preceding month by the total amount of interest
on that Loan due from Borrower during the immediately preceding month.
On the first (1st) Business Day of each month ("Interest Settlement Date"),
Agent will advise each Lender by telephone, telex, or telecopy of the amount of
such Lender's Pro Rata Share of interest and fees on each of the Loans as of the
end of the last day of the immediately preceding month. Provided that such
Lender has made all payments required to be made by it under this
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Agreement, Agent will pay to such Lender, by wire transfer to such Lender's
account (as specified by such Lender on the signature page of this Agreement or
the applicable Lender Addition Agreement, as amended by such Lender from time to
time after the date hereof pursuant to the notice provisions contained herein or
in the applicable Lender Addition Agreement) not later than 3:00 p.m. (Chicago
time) on the next Business Day following the Interest Settlement Date, such
Lender's Pro Rata Share of interest and fees on each of the Loans. Such Lender's
Pro Rata Share of interest on each Loan will be calculated for that Loan by
adding together the Daily Interest Amounts for each calendar day of the prior
month for that Loan and multiplying the total thereof by the Interest Ratio for
that Loan. Such Lender's Pro Rata Share of each of the commitment fee described
in subsection 1.2(B) and the Risk Participation Liability fee described in
subsection 1.2(C) shall be paid and calculated in a manner consistent with the
payment and calculation of interest as described in this subsection 8.6(A).
(B) Acquisition Loan Payments; Related Fee Payments. Payments of
principal, interest and fees in respect of the Acquisition Loans, and payment of
all other fees and expenses not otherwise described in subsection 8.6(A) will be
settled on the Business Day received by Agent in accordance with the provisions
of Section 1.
(C) Availability of Lender's Pro Rata Share.
(1) Unless Agent has been notified by a Lender prior to a
Funding Date of such Lender's intention not to fund its Pro Rata Share of the
Loan amount requested by Borrower, Agent may assume that such Lender will make
such amount available to Agent on the Business Day following the next Settlement
Date. If such amount is not, in fact, made available to Agent by such Lender
when due, Agent will be entitled to recover such amount on demand from such
Lender without set-off, counterclaim or deduction of any kind.
(2) Nothing contained in this subsection 8.6(C) will be deemed
to relieve a Lender of its obligation to fulfill its commitments or to prejudice
any rights Agent or Borrower may have against such Lender as a result of any
default by such Lender under this Agreement.
(3) Without limiting the generality of the foregoing, each
Lender shall be obligated to fund its Pro Rata Share of any Revolving Loan or
Acquisition Loan made after any Event of Default or acceleration of the
Obligations with respect to any draw on a Lender Letter of Credit or a Risk
Participation Agreement.
(D) Return of Payments
(1) If Agent pays an amount to a Lender under this Agreement
in the belief or expectation that a related payment has been or will be received
by Agent from Borrower and such related payment is not received by Agent, then
Agent will be entitled to recover such amount from such Lender without set-off,
counterclaim or deduction of any kind.
(2) If Agent determines at any time that any amount received
by Agent under this Agreement must be returned to Borrower or paid to any other
person pursuant to any
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solvency law or otherwise, then, notwithstanding any other term or condition of
this Agreement, Agent will not be required to distribute any portion thereof to
any Lender. In addition, each Lender will repay to Agent on demand any portion
of such amount that Agent has distributed to such Lender, together with interest
at such rate, if any, as Agent is required to pay to Borrower or such other
Person, without set-off, counterclaim or deduction of any kind.
SECTION 9
MISCELLANEOUS
9.1 Indemnities. Borrower agrees to indemnify, pay, and hold Agent, each
Lender and their respective officers, directors, employees, agents, and
attorneys (the "Indemnitees") harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits and claims of
any kind or nature whatsoever that may be imposed on, incurred by, or asserted
against the Indemnitee as a result of its being a party to this Agreement;
provided that Borrower shall have no obligation to an Indemnitee hereunder with
respect to liabilities arising from the gross negligence or willful misconduct
of that Indemnitee as determined by a court of competent jurisdiction. This
subsection and other indemnification provisions contained within the Loan
Documents shall survive the termination of this Agreement.
9.2 Amendments and Waivers. Except as otherwise provided herein, no
amendment, modification, termination or waiver of any provision of this
Agreement, the Notes or any of the other Loan Documents, or consent to any
departure by any Loan Party therefrom, shall in any event be effective unless
the same shall be in writing and signed by Requisite Lenders (or Agent, if
expressly set forth herein, in any Note or in any other Loan Document) and the
applicable Loan Party; provided, that except to the extent permitted by the
applicable Lender Addition Agreement, no amendment, modification, termination or
waiver shall, unless in writing and signed by all Lenders, do any of the
following: (a) increase any Lender's Pro Rata Share of the Revolving Loan
Commitment or the Acquisition Loan Commitment; (b) reduce the principal of, rate
of interest on or fees payable with respect to any Loan; (c) extend the Expiry
Date, extend the date on which any Scheduled Acquisition Loan Installment is to
be paid or change any date fixed for any payment of interest or fees; (d) change
the aggregate unpaid principal amount of the Loans; (e) change the percentage of
Lenders which shall be required for Lenders or any of them to take any action
hereunder; (f) release Collateral (except if the sale or disposition of such
Collateral is permitted under subsection 8.2 or any other Loan Document); (g)
amend or waive this subsection 9.2 or the definitions of the terms used in this
subsection 9.2 insofar as the definitions affect the substance of this
subsection 9.2; (h) consent to the assignment, delegation or other transfer by
any Loan Party of any of its rights and obligations under any Loan Document; (i)
change the form in which interest is required to be paid and (j) change the
advance rates set forth in the Borrowing Base Certificate; and provided,
further, that no amendment, modification, termination or waiver affecting the
rights or duties of Agent under any Loan Document shall in any event be
effective, unless in writing and signed by Agent, in addition to Lenders
required hereinabove to take such action. Each amendment, modification,
termination or waiver shall be effective only in the specific instance and for
the specific purpose for which it was given. No amendment, modification,
termination or waiver shall be required for Agent to take additional Collateral
pursuant to any Loan Document. No amendment,
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modification, termination or waiver of any provision of any Note shall be
effective without the written concurrence of the holder of that Note. No notice
to or demand on Borrower or any other Loan Party in any case shall entitle
Borrower or any other Loan Party to any other or further notice or demand in
similar or other circumstances. Any amendment, modification, termination, waiver
or consent effected in accordance with this subsection 9.2 shall be binding upon
each holder of the Notes at the time outstanding, each future holder of the
Notes, and, if signed by a Loan Party, on such Loan Party. Agent shall provide a
copy of any written amendments, modifications, terminations and waivers as
provided in this subsection 9.2 to each Lender in a reasonably prompt manner.
9.3 Notices. Any notice or other communication required shall be in
writing addressed to the respective party as set forth below and may be
personally served, telecopied, sent by overnight courier service or U.S. mail
and shall be deemed to have been given: (a) if delivered in person, when
delivered; (b) if delivered by telecopy, on the date of transmission if
transmitted on a Business Day before 4:00 p.m. CST; (c) if delivered by
overnight courier, two (2) days after delivery to the courier properly
addressed; or (d) if delivered by U.S. mail, four (4) Business Days after
deposit with postage prepaid and properly addressed.
Notices shall be addressed as follows:
If to Borrower: UNIONTOOLS, INC.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
ATTN: Chief Financial Officer
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
ATTN: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to Agent or ▇▇▇▇▇▇: ▇▇▇▇▇▇ FINANCIAL, INC.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
ATTN: Portfolio Manager
Corporate Finance Group
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇ FINANCIAL, INC.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
ATTN: Legal Department
Corporate Finance Group
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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If to a Lender: To the address set forth in the applicable Lender
Addition Agreement
9.4 Failure or Indulgence Not Waiver; Remedies Cumulative. No failure or
delay on the part of Agent or any Lender to exercise, nor any partial exercise
of, any power, right or privilege hereunder or under any other Loan Documents
shall impair such power, right, or privilege or be construed to be a waiver of
any Default or Event of Default. All rights and remedies existing hereunder or
under any other Loan Document are cumulative to and not exclusive of any rights
or remedies otherwise available.
9.5 Marshalling; Payments Set Aside. Neither Agent nor any Lender shall be
under any obligation to ▇▇▇▇▇▇▇▇ any assets in payment of any or all of the
Obligations. To the extent that Borrower makes payment(s) or Agent enforces its
Liens or Agent or any Lender exercises its right of set-off, and such payment(s)
or the proceeds of such enforcement or set-off is subsequently invalidated,
declared to be fraudulent or preferential, set aside, or required to be repaid
by anyone, then to the extent of such recovery, the Obligations or part thereof
originally intended to be satisfied, and all Liens, rights and remedies
therefor, shall be revived and continued in full force and effect as if such
payment had not been made or such enforcement or set-off had not occurred.
9.6 Severability. The invalidity, illegality, or unenforceability in any
jurisdiction of any provision under the Loan Documents shall not affect or
impair the remaining provisions in the Loan Documents.
9.7 Lenders' Obligations Several; Independent Nature of Lenders' Rights.
The obligation of each Lender hereunder is several and not joint and no Lender
shall be responsible for the obligation or commitment of any other Lender
hereunder. In the event that any Lender at any time should fail to make a Loan
as herein provided, the Lenders, or any of them, at their sole option, may make
the Loan that was to have been made by the Lender so failing to make such Loan.
Nothing contained in any Loan Document and no action taken by Agent or any
Lender pursuant hereto or thereto shall be deemed to constitute Lenders to be a
partnership, an association, a joint venture or any other kind of entity. The
amounts payable at any time hereunder to each Lender shall be a separate and
independent debt.
9.8 Headings. Section and subsection headings are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purposes or be given substantive effect.
9.9 Applicable Law. THIS AGREEMENT SHALL BE GOVERNED BY AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
ILLINOIS, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES.
9.10 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns except that Borrower may not assign its rights or obligations hereunder
without the written consent of all Lenders.
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9.11 No Fiduciary Relationship. No provision in the Loan Documents and no
course of dealing between the parties shall be deemed to create any fiduciary
duty owing to Borrower by Agent or any Lender.
9.12 Construction. Agent, each Lender and Borrower acknowledge that each
of them has had the benefit of legal counsel of its own choice and has been
afforded an opportunity to review the Loan Documents with its legal counsel and
that the Loan Documents shall be constructed as if jointly drafted by Agent,
each Lender and Borrower.
9.13 Confidentiality. Agent and each Lender agree to exercise their best
efforts to keep any non-public information delivered pursuant to the Loan
Documents confidential from Persons other than those employed by or engaged by
Agent or such Lender and those employed by or engaged by Agent's or such
Lender's assignees or participants, or potential assignees or participants. This
subsection shall not apply to disclosures required to be made by Agent or any
Lender to any regulatory or governmental agency or pursuant to legal process.
9.14 Consent to Jurisdiction and Service of Process.
(A) BORROWER HEREBY IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE
JURISDICTION OF ANY UNITED STATES FEDERAL OR ILLINOIS STATE COURT SITTING IN
CHICAGO IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN
DOCUMENTS AND BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF
SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND
IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF
ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT
IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF AGENT OR ANY
LENDER TO BRING PROCEEDINGS AGAINST BORROWER IN THE COURTS OF ANY OTHER
JURISDICTION. ANY JUDICIAL PROCEEDING BY BORROWER AGAINST AGENT OR ANY LENDER OR
ANY AFFILIATE THEREOF INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY
ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT SHALL BE BROUGHT
ONLY IN A COURT IN CHICAGO, ILLINOIS.
(B) BORROWER DESIGNATES AND APPOINTS CT CORPORATION SYSTEM AND SUCH
OTHER PERSONS AS MAY HEREAFTER BE SELECTED BY BORROWER WHICH IRREVOCABLY AGREE
IN WRITING TO SO SERVE AS ITS AGENT TO RECEIVE ON ITS BEHALF SERVICE OF ALL
PROCESS IN ANY SUCH PROCEEDINGS IN ANY SUCH COURT, SUCH SERVICE BEING HEREBY
ACKNOWLEDGED BY BORROWER TO BE EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT. A
COPY OF ANY SUCH PROCESS SO SERVED SHALL BE MAILED BY REGISTERED MAIL TO
BORROWER AT ITS ADDRESS PROVIDED IN SUBSECTION 9.3 EXCEPT THAT UNLESS OTHERWISE
PROVIDED BY APPLICABLE LAW, ANY FAILURE TO MAIL SUCH COPY SHALL NOT AFFECT THE
VALIDITY OF SERVICE OF PROCESS. IF ANY AGENT APPOINTED BY BORROWER REFUSES TO
ACCEPT
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SERVICE, BORROWER HEREBY AGREES THAT SERVICE UPON IT BY MAIL SHALL CONSTITUTE
SUFFICIENT NOTICE. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW.
9.15 Waiver of Jury Trial. BORROWER, AGENT AND EACH LENDER HEREBY WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF THIS AGREEMENT, ANY OF THE OTHER LOAN DOCUMENTS, OR ANY
DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION
AND THE LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. THE SCOPE OF
THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY
BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION,
INCLUDING WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. BORROWER, AGENT AND EACH
LENDER ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A
BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THE WAIVER IN ENTERING
INTO THIS AGREEMENT AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR
RELATED FUTURE DEALINGS. BORROWER, AGENT AND EACH LENDER FURTHER WARRANT AND
REPRESENT THAT EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT
EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY
NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THE LOAN
DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS OR THE
LENDER LETTERS OF CREDIT OR RISK PARTICIPATION AGREEMENTS. IN THE EVENT OF
LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT. BORROWER, AGENT AND EACH LENDER ALSO WAIVE ANY BOND OR SURETY OR SECURITY
UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF AGENT AND EACH
LENDER.
9.16 Survival of Warranties and Certain Agreements. All agreements,
representations and warranties made herein shall survive the execution and
delivery of this Agreement, the making of the Loans, issuances of Lender Letters
of Credit and Risk Participation Agreements and the execution and delivery of
the Notes. Notwithstanding anything in this Agreement or implied by law to the
contrary, the agreements of Borrower set forth in subsections 1.3(C), 1.8 and
9.1 shall survive the payment of the Loans and the termination of this
Agreement.
9.17 Entire Agreement. This Agreement, the Notes and the other Loan
Documents referred to herein embody the final, entire agreement among the
parties hereto and supersede any and all prior commitments, agreements,
representations, understandings, whether oral or written, relating to the
subject matter hereof and may not be contradicted or varied by evidence of
prior, contemporaneous or subsequent oral agreements or discussions of the
parties hereto.
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9.18 Counterparts; Effectiveness. This Agreement and any amendments,
waivers, consents or supplements 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 an original, but all of which
counterparts together shall constitute but one in the same instrument. This
Agreement shall become effective upon the execution of a counterpart hereof by
each of the parties hereto, subject to subsection 7.1.
SECTION 10
DEFINITIONS
10.1 Certain Defined Terms. The terms defined below are used in this
Agreement as so defined. Terms defined in the preamble and recitals to this
Agreement are used in this Agreement as so defined.
"Affiliate" means any Person: (a) directly or indirectly
controlling, controlled by, or under common control with, Borrower; (b)
directly or indirectly owning or holding five percent (5%) or more of any
equity interest in Borrower; or (c) five percent (5%) or more of whose
voting stock or other equity interest is directly or indirectly owned or
held by Borrower. For purposes of this definition, "control" (including
with correlative meanings, the terms "controlling", "controlled by" and
"under common control with") means the possession directly or indirectly
of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities
or by contract or otherwise.
"Agent" means ▇▇▇▇▇▇ in its capacity as agent for the Lenders under
this Agreement and each of the other Loan Documents and any successor in
such capacity appointed pursuant to subsection 8.2.
"Agreement" means this Amended and Restated Credit Agreement
(including all schedules and exhibits hereto).
"Asset Disposition" means the disposition whether by sale, lease,
transfer, loss, damage, destruction, condemnation or otherwise of any of
the following: (a) any of the stock of any of Borrower's Subsidiaries or
(b) any or all of the assets of Borrower or any of its Subsidiaries other
than sales of inventory in the ordinary course of business.
"Bankruptcy Code" means Title 11 of the United States Code entitled
"Bankruptcy", as amended from time to time or any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect and all rules
and regulations promulgated thereunder.
"Borrower" shall have the meaning ascribed to that term in the
preamble of this Agreement.
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"Business Day" means (a) for all purposes other than as covered by
clause (b) below, any day excluding Saturday, Sunday and any day which is
a legal holiday under the laws of the Commonwealth of Pennsylvania or the
State of Illinois, or is a day on which banking institutions located in
any such states are closed, and (b) with respect to all notices,
determinations, fundings and payments in connection with Loans bearing
interest at the LIBOR, any day that is a Business Day described in clause
(a) above and that is also a day for trading by and between banks in
Dollar deposits in the applicable interbank LIBOR market.
"Closing Date" means July 31, 1997, or such earlier date on which
all of the conditions precedent set forth in Section 7.1 have been
satisfied in full.
"Collateral" means, collectively: (a) all capital stock and other
property pledged pursuant to the Security Documents; (b) all "Collateral"
as defined in the Security Documents; (c) all real property mortgaged
pursuant to the Security Documents; and (d) any property or interest
provided in addition to or in substitution for any of the foregoing.
"Default" means a condition or event that, after notice or lapse of
time or both, would constitute an Event of Default if that condition or
event were not cured or removed within any applicable grace or cure
period.
"Expiry Date" means the earlier of (a) the suspension (subject to
reinstatement) of the Lenders' obligations to make Revolving Loans and
Acquisition Loans pursuant to subsection 6.2, (b) the acceleration of the
Obligations pursuant to subsection 6.3 or (c) June 30, 2003.
"GAAP" means generally accepted accounting principles as set forth
in statements from Auditing Standards No. 69 entitled "The Meaning of
'Present Fairly in Conformance with Generally Accepted Accounting
Principles in the Independent Auditors Reports'" issued by the Auditing
Standards Board of the American Institute of Certified Public Accountants
and statements and pronouncements of the Financial Accounting Standards
Board that are applicable to the circumstances as of the date of
determination.
"Indebtedness", as applied to any Person, means: (a) all
indebtedness for borrowed money; (b) that portion of obligations with
respect to capital leases that is properly classified as a liability on a
balance sheet in conformity with GAAP; (c) notes payable and drafts
accepted representing extensions of credit whether or not representing
obligations for borrowed money; (d) any obligation owed for all or any
part of the deferred purchase price of property or services if the
purchase price is due more than six (6) months from the date the
obligation is incurred or is evidenced by a note or similar written
instrument; and (e) all indebtedness secured by any Lien on any property
or asset owned or held by that Person regardless of whether the
indebtedness secured thereby shall have been assumed by that Person or is
nonrecourse to the credit of that Person.
▇▇
▇▇
"▇▇▇" means the Internal Revenue Code of 1986, as amended from time
to time and all rules and regulations promulgated thereunder.
"Lender" or "Lenders" means ▇▇▇▇▇▇ together with its successors and
permitted assigns pursuant to subsection 8.1.
"Lender Addition Agreement" means an agreement among Agent, a Lender
and such Lender's assignee regarding their respective rights and
obligations with respect to assignments of the Loans, the Revolving Loan
Commitment, the Acquisition Loan Commitment and other interests under this
Agreement and the other Loan Documents.
"Lien" means any lien, mortgage, pledge, security interest, charge
or encumbrance of any kind, whether voluntary or involuntary (including
any conditional sale or other title retention agreement and any lease in
the nature thereof), and any agreement to give any lien, mortgage, pledge,
security interest, charge or encumbrance.
"Loan" or "Loans" means an advance or advances under the Revolving
Loan Commitment or the Acquisition Loans.
"Loan Documents" means this Agreement, the Notes, the Security
Documents and all other instruments, documents and agreements executed by
or on behalf of any Loan Party and delivered heretofore, concurrently
herewith or at any time hereafter to or for the benefit of Agent or any
Lender in connection with the Loans and other transactions contemplated by
this Agreement, all as amended, supplemented or modified from time to
time.
"Loan Party" means, collectively, Holdings, Borrower and any other
Person (other than Agent and each Lender) which is or becomes a party to
any Loan Document.
"Loan Year" means any period of twelve (12) consecutive months
commencing on December 30, 1996, or any anniversary thereof.
"Material Adverse Effect" means (a) a material adverse effect upon
the business, operations, properties, assets or condition (financial or
otherwise) either of Borrower or any of its Subsidiaries, taken as a
whole, or of Holdings or (b) the impairment of the ability of any Loan
Party to perform its material obligations under any Loan Document to which
it is a party or of Agent or any Lender to enforce any Loan Document or
collect any of the Obligations. In determining whether any individual
event would result in a Material Adverse Effect, notwithstanding that such
event does not of itself have such effect, a Material Adverse Effect shall
be deemed to have occurred if the cumulative effect of such event and all
other then existing events would result in a Material Adverse Effect.
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"Net Proceeds" means cash proceeds received by Borrower or any of
its Subsidiaries from any Asset Disposition (including insurance proceeds,
awards of condemnation, and payments under notes or other debt securities
received in connection with any Asset Disposition), net of (a) the costs
of such sale, lease, transfer or other disposition (including taxes
attributable to such sale, lease or transfer) and (b) amounts applied to
repayment of Indebtedness (other than the Obligations) secured by a Lien
on the asset or property disposed.
"Note" or "Notes" means one or more of the notes of Borrower
substantially in the form of Exhibit 10.1(A), or any combination thereof.
"Obligations" means all obligations, liabilities and indebtedness of
every nature of each Loan Party from time to time owed to Agent or any
Lender under the Loan Documents including the principal amount of all
debts, claims and indebtedness, accrued and unpaid interest and all fees,
costs and expenses, whether primary, secondary, direct, contingent, fixed
or otherwise, heretofore, now and/or from time to time hereafter owing,
due or payable whether before or after the filing of a proceeding under
the Bankruptcy Code by or against Borrower or any of its Subsidiaries.
"Person" means and includes natural persons, corporations, limited
liability companies, limited partnerships, limited liability partnerships,
general partnerships, joint stock companies, joint ventures, associations,
companies, trusts, banks, trust companies, land trusts, business trusts or
other organizations, whether or not legal entities, and governments and
agencies and political subdivisions thereof and their respective permitted
successors and assigns (or in the case of a governmental person, the
successor functional equivalent of such Person).
"Pro Rata Share" means the percentage obtained by dividing (i) such
Lender's commitment to make Revolving Loans and Acquisition Loans, as set
forth on the signature page of this agreement opposite such Lender's
signature or in the most recent Lender Addition Agreement, if any,
executed by such Lender, by (ii) all such commitments of all Lenders to
make Revolving Loans and Acquisition Loans.
"Projections" means Borrower's forecasted consolidated: (a) balance
sheets; (b) profit and loss statements; (c) cash flow statements; and (d)
capitalization statements, all prepared on a consistent basis with
Borrower's historical financial statements, together with appropriate
supporting details and a statement of underlying assumptions. The
Projections represent and will represent as of the date thereof the good
faith estimate of Borrower and its senior management concerning the most
probable course of its business.
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"Related Transactions" means the funding of all Loans on the Closing
Date, and the payment of all fees, costs and expenses associated with all
of the foregoing.
"Related Transactions Documents" means the Loan Documents, and all
other agreements, instruments and documents executed or delivered in
connection with the Related Transactions.
"Requisite Lenders" means Lenders having sixty-six and two-thirds
percent (66-2/3%) or more of the sum of the Revolving Loan Commitment and
the Acquisition Loan Commitment.
"Risk Participation Liability" means, as to each Lender Letter of
Credit and each Risk Participation Agreement, all reimbursement
obligations of Borrower to the issuer of the Lender Letter of Credit or to
the issuer of the letter of credit with respect to the transaction for
which the Risk Participation Agreement was executed and delivered,
consisting of (a) the amount available to be drawn or which may become
available to be drawn; (b) all amounts which have been paid and made
available by the issuing bank to the extent not reimbursed by Borrower,
whether by the making of a Revolving Loan or otherwise; and (c) all
accrued and unpaid interest, fees and expenses with respect thereto. For
purposes of determining the outstanding amount of Risk Participation
Liability, the maximum amount potentially owing under any Risk
Participation Agreement will be considered outstanding unless the bank
which is the beneficiary of such Risk Participation Agreement reports
daily activity to Agent showing actual outstanding letters of credit
subject to such Risk Participation Agreement.
"Security Documents" means all instruments, documents and agreements
executed by or on behalf of any Loan Party to guaranty or provide
collateral security with respect to the Obligations including, without
limitation, any security agreement or pledge agreement, any guaranty of
the Obligations, any mortgage, any subordination and intercreditor
agreements, and all instruments, documents and agreements executed
pursuant to the terms of the foregoing.
"Subordinated Indebtedness" means the "Junior Note" as defined in
that certain Subordination and Intercreditor Agreement dated as of
December 27, 1996 among Agent, Borrower and Holdings, and all other
Indebtedness of Borrower, Holdings or any of their Subsidiaries which is
subordinated, in a manner satisfactory to Agent, in right of payment to
the Obligations.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, association or other business entity of which more than fifty
percent (50%) of the total voting power of shares of stock (or equivalent
ownership or controlling interest) entitled (without regard to the
occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time
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owned or controlled, directly or indirectly, by that Person or one or more
of the other Subsidiaries of that Person or a combination thereof.
10.2 Other Definitional Provisions. References to "Sections",
"subsections", "Exhibits" and "Schedules" shall be to Sections, subsections,
Exhibits and Schedules, respectively, of this Agreement unless otherwise
specifically provided. Any of the terms defined in subsection 10.1 may, unless
the context otherwise requires, be used in the singular or the plural depending
on the reference. In this Agreement, "hereof," "herein," "hereto," "hereunder"
and the like mean and refer to this Agreement as a whole and not merely to the
specific section, paragraph or clause in which the respective word appears;
words importing any gender include the other gender; references to "writing"
include printing, typing, lithography and other means of reproducing words in a
tangible visible form; the words "including," "includes" and "include" shall be
deemed to be followed by the words "without limitation"; references to
agreements and other contractual instruments shall be deemed to include
subsequent amendments, assignments, and other modifications thereto, but only to
the extent such amendments, assignments and other modifications are not
prohibited by the terms of this Agreement or any other Loan Document; references
to Persons include their respective permitted successors and assigns or, in the
case of governmental Persons, Persons succeeding to the relevant functions of
such Persons; and all references to statutes and related regulations shall
include any amendments of same and any successor statutes and regulations.
WITNESS the due execution hereof by the respective duly authorized
officers of the undersigned as of the date first written above.
UNIONTOOLS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------
Title: Vice Presidient
---------------------------------
Commitment to make Revolving Loans ▇▇▇▇▇▇ FINANCIAL, INC., as Agent and
and Acquisition Loans: a Lender
$15,000,000 (23.077%)
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
Title: Vice President
---------------------------------
Commitment to make Revolving Loans SANWA BUSINESS CREDIT
and Acquisition Loans: CORPORATION
$10,000,000 (15.385%)
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Title: Vice President
---------------------------------
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Commitment to make Revolving Loans FLEET CAPITAL CORPORATION
and Acquisition Loans:
$10,000,000 (15.385%)
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------
Title: Vice President
---------------------------------
Commitment to make Revolving Loans PNC BANK, OHIO, NATIONAL
and Acquisition Loans: ASSOCIATION
$10,000,000 (15.385%)
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------
Title: Assistant Vice President
---------------------------------
Commitment to make Revolving Loans BANKBOSTON, N.A., formerly known as
and Acquisition Loans: The First National Bank Of Boston
$12,500,000 (19.231%)
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
Title: Division Executive
---------------------------------
Commitment to make Revolving Loans STAR BANK, N.A.
and Acquisition Loans:
$7,500,000 (11.537%)
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------
Title: Vice President
---------------------------------
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