EXHIBIT 4.1
LOAN AND SECURITY AGREEMENT
Dated as of July 20, 1998
Among
THE FINANCIAL INSTITUTIONS NAMED HEREIN
as the Lenders
and
BANKAMERICA BUSINESS CREDIT, INC.
as the Agent
and
UNITED STATES LEATHER, INC.
as the Borrower
TABLE OF CONTENTS
Section Page
ARTICLE 1 INTERPRETATION OF THIS AGREEMENT
1.1 Definitions -2-
1.2 Accounting Terms -26-
1.3 Interpretive Provisions -27-
ARTICLE 2 LOANS AND LETTERS OF CREDIT
2.1 Total Facility -28-
2.2 Revolving Loans -28-
2.3 Reserved -34-
2.4 Letters of Credit -34-
2.5 Automated Clearing House Transfers and Overdrafts -40-
ARTICLE 3 INTEREST AND FEES
3.1 Interest -40-
3.2 Conversion and Continuation Elections -41-
3.3 Maximum Interest Rate -42-
3.4 Reserved -43-
3.5 Unused Line Fee -43-
3.6 Letter of Credit Fee -43-
3.7 Administration Fee -43-
ARTICLE 4 PAYMENTS AND PREPAYMENTS
4.1 Revolving Loans -44-
4.2 Termination of Facility -44-
4.3 Reserved -44-
4.4 Reserved -44-
4.5 Reserved -44-
4.6 Payments by the Borrower -45-
4.7 Payments as Revolving Loans -45-
4.8 Apportionment and Application of Payments -45-
4.9 Indemnity for Returned Payments -46-
4.10 Agent's and Lenders' Books and Records;
Monthly Statements -46-
ARTICLE 5 TAXES, YIELD PROTECTION AND ILLEGALITY
5.1 Taxes. -47-
5.2 Illegality -48-
5.3 Increased Costs and Reduction of Return -48-
5.4 Funding Losses -48-
5.5 Inability to Determine Rates -49-
5.6 Certificates of Lenders -49-
5.7 Survival -49-
ARTICLE 6 COLLATERAL
6.1 Grant of Security Interest -49-
6.2 Perfection and Protection of Security Interest -50-
6.3 Location of Collateral -51-
6.4 Title to, Liens on, and Sale and Use of Collateral -52-
6.5 Appraisals -52-
6.6 Access and Examination; Confidentiality -52-
6.7 Collateral Reporting -53-
6.8 Accounts -54-
6.9 Collection of Accounts; Payments -55-
6.10 Inventory; Perpetual Inventory -56-
6.11 Equipment -56-
6.12 Assigned Contracts -57-
6.13 Documents, Instruments, and Chattel Paper -58-
6.14 Right to Cure -58-
6.15 Power of Attorney -58-
6.16 The Agent's and Lenders' Rights,
Duties and Liabilities -59-
ARTICLE 7 BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES
7.1 Books and Records -59-
7.2 Financial Information -59-
7.3 Notices to the Lenders -62-
ARTICLE 8 GENERAL WARRANTIES AND REPRESENTATIONS
8.1 Authorization, Validity, and Enforceability
of this Agreement and the Loan Documents -65-
8.2 Validity and Priority of Security Interest -65-
8.3 Organization and Qualification -65-
8.4 Corporate Name; Prior Transactions -65-
8.5 Subsidiaries and Affiliates -65-
8.6 Financial Statements and Projections -66-
8.7 Capitalization -66-
8.8 Reserved -66-
8.9 Debt -66-
8.10 Distributions -67-
8.11 Title to Property -67-
8.12 Real Estate; Leases -67-
8.13 Proprietary Rights -67-
8.14 Trade Names -67-
8.15 Litigation -67-
8.16 Restrictive Agreements -67-
8.17 Labor Disputes -68-
8.18 Environmental Laws -68-
8.19 No Violation of Law -69-
8.20 No Default -69-
8.21 ERISA Compliance -69-
8.22 Taxes. -70-
8.23 Regulated Entities -70-
8.24 Use of Proceeds; Margin Regulations -70-
8.25 Copyrights, Patents, Trademarks and Licenses, etc -70-
8.26 No Material Adverse Change -71-
8.27 Full Disclosure -71-
8.28 Material Agreements -71-
8.29 Bank Accounts -71-
8.30 Governmental Authorization -71-
8.31 Reorganization Matters -71-
ARTICLE 9 AFFIRMATIVE AND NEGATIVE COVENANTS
9.1 Taxes and Other Obligations -72-
9.2 Corporate Existence and Good Standing -72-
9.3 Compliance with Law and Agreements;
Maintenance of Licenses -72-
9.4 Maintenance of Property -72-
9.5 Insurance -72-
9.6 Condemnation -74-
9.7 Environmental Laws -74-
9.8 Compliance with ERISA -75-
9.9 Mergers, Consolidations or Sales -75-
9.10 Distributions; Capital Change;
Restricted Investments -75-
9.11 Transactions Affecting Collateral or Obligations -75-
9.12 Guaranties -75-
9.13 Debt -75-
9.14 Prepayment -75-
9.15 Transactions with Affiliates -76-
9.16 Investment Banking and Finder's Fees -76-
9.17 Business Conducted -76-
9.18 Liens -76-
9.19 Sale and Leaseback Transactions -76-
9.20 New Subsidiaries -76-
9.21 Fiscal Year -76-
9.22 Capital Expenditures -77-
9.23 Coverage Ratio -77-
9.24 Adjusted Tangible Net Worth -77-
9.25 Use of Proceeds -77-
9.26 Further Assurances -77-
9.27 Plan of Reorganization -77-
ARTICLE 10 CONDITIONS OF LENDING
10.1 Conditions Precedent to Making of
Loans on the Closing Date -77-
10.2 Conditions Precedent to Each Loan -80-
ARTICLE 11 DEFAULT; REMEDIES
11.1 Events of Default -81-
11.2 Remedies -84-
ARTICLE 12 TERM AND TERMINATION
12.1 Term and Termination -85-
ARTICLE 13 AMENDMENTS; WAIVER; PARTICIPATIONS;
ASSIGNMENTS; SUCCESSORS
13.1 No Waivers; Cumulative Remedies -85-
13.2 Amendments and Waivers -86-
13.3 Assignments; Participations -86-
ARTICLE 14 THE AGENT
14.1 Appointment and Authorization -88-
14.2 Delegation of Duties -89-
14.3 Liability of Agent -89-
14.4 Reliance by Agent -89-
14.5 Notice of Default -90-
14.6 Credit Decision -90-
14.7 Indemnification -91-
14.8 Agent in Individual Capacity -91-
14.9 Successor Agent -91-
14.10 Withholding Tax -92-
14.11 Reserved -93-
14.12 Collateral Matters -93-
14.13 Restrictions on Actions by Lenders;
Sharing of Payments -94-
14.14 Agency for Perfection -94-
14.15 Payments by Agent to Lenders. -95-
14.16 Concerning the Collateral and the
Related Loan Documents -95-
14.17 Field Audit and Examination Reports;
Disclaimer by Lenders -95-
14.18 Relation Among Lenders -96-
ARTICLE 15 MISCELLANEOUS
15.1 Cumulative Remedies; No Prior Recourse
to Collateral -96-
15.2 Severability -96-
15.3 Governing Law; Choice of Forum;
Service of Process; Jury Trial Waiver -97-
15.4 WAIVER OF JURY TRIAL -97-
15.5 Survival of Representations and Warranties -98-
15.6 Other Security and Guaranties -98-
15.7 Fees and Expenses -98-
15.8 Notices -99-
15.9 Waiver of Notices -100-
15.10 Binding Effect -100-
15.11 Indemnity of the Agent and the Lenders
by the Borrower -100-
15.12 Limitation of Liability -101-
15.13 Final Agreement -101-
15.14 Counterparts -101-
15.15 Captions -102-
15.16 Right of Setoff -102-
EXHIBITS AND SCHEDULES
EXHIBIT A - PLAN OF REORGANIZATION
EXHIBIT B - FORM OF BORROWING BASE CERTIFICATE
EXHIBIT C - FINANCIAL STATEMENTS
EXHIBIT D - FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
EXHIBIT E - FORM OF NOTICE OF BORROWING
EXHIBIT F - FORM OF NOTICE OF CONVERSION/CONTINUATION
EXHIBIT G - CONFIRMATION ORDER
SCHEDULES
Schedules
Schedule 1.1A Assigned Contracts
Schedule 1.1B Certain Account Debtors
Schedule 6.3 Location of Collateral
Schedule 8.3 Organization and Qualification
Schedule 8.4 Corporate Name; Prior Transactions
Schedule 8.5 Subsidiaries and Affiliates
Schedule 8.7 Shareholders of Borrower
Schedule 8.9 Debt
Schedule 8.12 Real Estate; Leases
Schedule 8.13 Proprietary Rights
Schedule 8.14 Trade Names
Schedule 8.15 Litigation
Schedule 8.17 Labor Disputes
Schedule 8.18 Environmental Laws
Schedule 8.21 ERISA Compliance
Schedule 8.28 Material Agreements
Schedule 8.29 Bank Accounts
Schedule 9.18 Liens
LOAN AND SECURITY AGREEMENT
Loan and Security Agreement, dated as of July 20, 1998, among
the financial institutions listed on the signature pages hereof (such
financial institutions, together with their respective successors and
assigns, are referred to hereinafter each individually as a "Lender" and
collectively as the "Lenders"), BankAmerica Business Credit, Inc., a
Delaware corporation ("BABC") with an office at ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇, as agent for the Lenders (in its capacity as agent, the
"Agent"), and United States Leather, Inc., a Wisconsin corporation, with
offices at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ (the "Borrower").
W I T N E S S E T H
WHEREAS, the Borrower, certain lenders (the "Prepetition
Lenders") and BABC, as agent for such lenders, entered into a Loan and
Security Agreement, dated as of January 14, 1998, as amended (as so
amended, the "Prepetition Loan and Security Agreement"), pursuant to which
the Prepetition Lenders agreed, subject to the terms and conditions
therein contained, to make available to the Borrower a revolving line of
credit for loans and letters of credit in an amount not to exceed
$55,000,000;
WHEREAS, on May 11, 1998 (the "Petition Date"), the Borrower
filed in the United States Bankruptcy Court for the Eastern District of
Wisconsin (the "Bankruptcy Court") a voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (as hereinafter defined);
WHEREAS, the Borrower, as a debtor and debtor-in-possession
under Chapter 11 of the Bankruptcy Code, certain lenders (the "DIP
Lenders") and BABC, as agent for such lenders, entered into a Loan and
Security Agreement, dated as of May 12, 1998 (the "DIP Loan and Security
Agreement"), pursuant to which the DIP Lenders agreed, subject to the
terms and conditions therein contained, to make available to the Borrower
a debtor-in-possession revolving line of credit for loans and letters of
credit (all such letters of credit, together with any letters of credit
issued under the Prepetition Loan and Security Agreement which, pursuant
to the DIP Loan and Security Agreement, are deemed to be letters of credit
issued under the DIP Loan and Security Agreement, the "DIP Letters of
Credit") in an amount not to exceed $70,000,000;
WHEREAS, in connection with the implementation of the Borrower's
Plan of Reorganization (as hereinafter defined), the Borrower has
requested the Lenders to make available to the Borrower an emergence
revolving line of credit for loans and letters of credit in an amount not
to exceed $70,000,000, which extensions of credit the Borrower will use to
repay all amounts owing under the DIP Loan and Security Agreement and
after payment in full of such amounts to pay administrative claims under
the Plan of Reorganization, to fund costs and expenses incurred by the
Borrower in connection with the transactions contemplated hereby and for
its working capital needs;
WHEREAS, the Lenders have agreed to make available to the
Borrower an emergence revolving credit facility upon the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth in this Agreement, and for good and valuable
consideration, the receipt of which is hereby acknowledged, the Lenders,
the Agent, and the Borrower hereby agree as follows.
ARTICLE 1
INTERPRETATION OF THIS AGREEMENT
1.1 Definitions. As used herein:
"Accounts" means all of the Borrower's now owned or hereafter
acquired or arising accounts, and any other rights to payment for the sale
or lease of goods or rendition of services, whether or not they have been
earned by performance.
"Account Debtor" means each Person obligated in any way on or in
connection with an Account.
"ACH Settlement Risk Reserve" means any and all reserves which
the Agent from time to time establishes, in its sole discretion, with
respect to ACH Transactions.
"ACH Transactions" means all debts, liabilities, and obligations
now or hereafter owing from the Borrower to Bank of America arising from
or related to the automatic clearing house transfer of funds by Bank of
America for the account of the Borrower pursuant to agreement or
overdrafts.
"Adjusted Tangible Assets" means all of the Borrower's and its
consolidated Subsidiaries' assets except: (a) deferred assets, other than
prepaid insurance and prepaid taxes; (b) patents, copyrights, trademarks,
trade names, franchises, goodwill, and other similar intangibles; (c)
Restricted Investments; (d) unamortized debt discount and expense; (e)
assets of the Borrower or any consolidated Subsidiary constituting
Intercompany Accounts; and (f) fixed assets to the extent of any write-up
in the book value thereof resulting from a revaluation effective after the
Closing Date.
"Adjusted Tangible Net Worth" means, at any date: (a) the book
value (after deducting related depreciation, obsolescence, amortization,
valuation, and other proper reserves as determined in accordance with
GAAP) at which the Adjusted Tangible Assets would be shown on a
consolidated balance sheet of the Borrower and its Subsidiaries at such
date prepared in accordance with GAAP; less (b) the amount at which the
Borrower's and its consolidated Subsidiaries' liabilities would be shown
on such balance sheet, including as liabilities all reserves for
contingencies and other potential liabilities which would be shown on such
balance sheet.
"Affiliate" means, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under
common control with, such Person or which owns, directly or indirectly,
ten percent (10%) or more of the outstanding equity interest of such
Person. A Person shall be deemed to control another Person if the
controlling Person possesses, directly or indirectly, the power to direct
or cause the direction of the management and policies of the other Person,
whether through the ownership of voting securities, by contract, or
otherwise.
"Agent" means BankAmerica Business Credit, Inc., solely in its
capacity as agent for the Lenders, and any successor agent.
"Agent Advances" has the meaning specified in Section 2.2(i).
"Agent's Liens" means the Liens granted to the Agent, for the
ratable benefit of the Lenders, BABC, and Agent pursuant to this Agreement
and the other Loan Documents.
"Agent-Related Persons" means the Agent and any successor agent,
together with their respective Affiliates, and the officers, directors,
employees, agents and attorneys-in-fact of such Persons and Affiliates.
"Agreement" means this Loan and Security Agreement.
"Anniversary Date" means each anniversary of January 14, 1998.
"Applicable Margin" means, with respect to any Loan, except as
otherwise provided in the immediately succeeding sentence the amount set
forth below which corresponds to the Coverage Ratio set forth below for
the four (4) fiscal quarter period of the Borrower ended with the most
recent fiscal quarter of the Borrower for which the Agent receives the
financial statements and Coverage Ratio Certificate required below,
determined and adjusted as provided herein. On the Closing Date and
thereafter, the Libor Applicable Margin shall be 2.50% and the Base Rate
Applicable Margin shall be 1.00% and each shall thereafter be adjusted
after each delivery to the Agent of the quarterly financial statements of
the Borrower and its Subsidiaries required pursuant to Section 7.2(c) for
each quarter (commencing with the quarter ending March 31, 1999) together
with the corresponding Coverage Ratio Certificate for the four fiscal
quarter period ending on the last day of such fiscal quarter, each such
adjustment to be effective on the first day of the first full calendar
month after each such delivery.
Libor Applicable Base Rate
Coverage Ratio Margin Applicable Margin
Greater than 1.60 to 1.00 2.00% .25%
Greater than 1.15 to 2.25% .50%
1.00 but less than or
equal to 1.60 to 1.00
Less than or equal to 2.50% 1.00%
1.15 to 1.00
Notwithstanding anything in this definition to the contrary,
(i) in the event that the Agent shall fail to receive any such financial
statements and the related Coverage Ratio Certificate for any fiscal
quarter of the Borrower within forty-five (45) days following the end of
such fiscal quarter (within ninety (90) days following the end of such
fiscal quarter if such fiscal quarter is the last fiscal quarter of any
Fiscal Year), then the Applicable Margin shall, at the end of such forty-
fifth or ninetieth day, as appropriate, immediately and without notice or
further action be the highest Applicable Margin provided herein (such
Applicable Margin to be in effect until the first day of the first full
calendar month after the Agent receives the quarterly financial statements
of the Borrower and its Subsidiaries required under Section 7.2(c) for the
most recent fiscal quarter of the Borrower and the related Coverage Ratio
Certificate) and (ii) in the event that, with respect to any four (4)
fiscal quarter period of the Borrower which shall be a Fiscal Year, the
audited financial statements of the Borrower and its Subsidiaries required
under Section 7.2(a) for such Fiscal Year shall indicate a Coverage Ratio
for such four (4) fiscal quarter period (as determined by the Agent) less
than that reflected in the Coverage Ratio Certificate delivered to the
Agent for such four (4) fiscal quarter period, the Applicable Margin shall
be adjusted retroactively (to the effective date of the Applicable Margin
which was determined based upon the delivery of such Coverage Ratio
Certificate and the related quarterly financial statements of the Borrower
delivered pursuant to Section 7.2(c) for the last quarter of such four (4)
fiscal quarter period) to reflect an Applicable Margin based upon the
Coverage Ratio determined from the audited financial statements and the
Borrower shall make payments to the Agent on behalf of the Lenders to
reflect such adjustment.
"Assigned Contracts" means, collectively, all of the Borrower's
rights and remedies under, and all moneys and claims for money due or to
become due to the Borrower under those contracts set forth on Schedule
1.1A, and any other material contracts, and any and all amendments,
supplements, extensions, and renewals thereof including, without
limitation, all rights and claims of the Borrower now or hereafter
existing: (i) under any insurance, indemnities, warranties, and
guarantees provided for or arising out of or in connection with any of the
foregoing agreements; (ii) for any damages arising out of or for breach or
default under or in connection with any of the foregoing contracts ; (iii)
to all other amounts from time to time paid or payable under or in
connection with any of the foregoing agreements; or (iv) to exercise or
enforce any and all covenants, remedies, powers and privileges thereunder.
"Assignee" has the meaning specified in Section 13.3(a).
"Assignment and Acceptance" has the meaning specified in Section
13.3(a).
"Attorney Costs" means and includes all reasonable fees,
expenses and disbursements of any law firm or other external counsel
engaged by the Agent, the allocated cost of internal legal services of the
Agent and all expenses and disbursements of internal counsel of the Agent.
"Availability" means, at any time, (a) the lesser of (i) the
Maximum Revolver Amount or (ii) the sum of (A) eighty-five percent (85%)
of the Net Amount of Eligible Accounts; plus (B) sixty-five percent (65%)
of the value of Eligible Inventory consisting of finished goods and raw
materials (excluding chemicals); plus (C) forty percent (40%) of the value
of Eligible Inventory consisting of chemicals that are raw material
inventory; plus (D) sixty percent (60%) of the value of Eligible Inventory
consisting of work-in-process; plus (E) without duplication, fifty-five
percent (55%) of the value of Inventory (other than chemicals) which meets
all of the criteria for Eligible Inventory except that it is in transit
and covered under a merchandise Letter of Credit; provided, that at no
time shall the sum of outstanding Revolving Loans based upon the value of
Eligible Inventory and Inventory covered under merchandise Letters of
Credit in accordance with clauses (B), (C), (D) and (E) above exceed
$40,000,000 and, provided further that at no time shall the value of
Eligible Inventory consisting of work-in-process under clause (D) above
(excluding the value of "wet blue" Inventory) exceed 40% of the sum of the
values of Eligible Inventory under clauses (B), (C) and (D) above; minus
(b) the sum of (i) the unpaid balance of Revolving Loans at such time,
(ii) the aggregate amount of Pending Revolving Loans at such time,
(iii) the aggregate undrawn amount of all outstanding Letters of Credit,
(iv) the aggregate amount of any unpaid reimbursement obligations in
respect of the Letters of Credit, (v) reserves for accrued interest on the
Obligations, (vi) the Environmental Compliance Reserve, (vii) ACH
Settlement Risk Reserve, (viii) amounts due suppliers of hides in excess
of the undrawn amounts of letters of credit in such suppliers favor, to
the extent such suppliers have liens on any inventory or other assets of
Borrower and (ix) all other reserves which the Agent deems necessary in
the exercise of its reasonable credit judgment to maintain with respect to
the Borrower's account, including, without limitation, reserves for any
amounts which the Agent or any Lender may be obligated to pay in the
future for the account of the Borrower.
"BABC" means BankAmerica Business Credit, Inc.
"BABC Loan" and "BABC Loans" have the meanings specified in
Section 2.2(h).
"Bank of America" means Bank of America National Trust and
Savings Association, a national banking association, or any successor
entity thereto.
"Bankruptcy Code" means Title 11 of the United States Code (11
U.S.C. Section 101 et seq.).
"Bankruptcy Court" has the meaning specified in the recitals to
this Agreement.
"Base Rate" means, for any day, the rate of interest in effect
for such day as publicly announced from time to time by Bank of America in
San Francisco, California, as its "reference rate" (the "reference rate"
being a rate set by Bank of America based upon various factors including
Bank of America's costs and desired return, general economic conditions
and other factors, and is used as a reference point for pricing some
loans, which may be priced at, above, or below such announced rate). Any
change in the reference rate announced by Bank of America shall take
effect at the opening of business on the day specified in the public
announcement of such change. Each Interest Rate based upon the Base Rate
shall be adjusted simultaneously with any change in the Base Rate.
"Base Rate Revolving Loan" means a Revolving Loan during any
period in which it bears interest based on the Base Rate.
"Borrowing" means a borrowing hereunder consisting of Revolving
Loans made on the same day by the Lenders to the Borrower (or by BABC in
the case of a Borrowing funded by BABC Loans) or by the Agent in the case
of a Borrowing consisting of an Agent Advance.
"Borrowing Base Certificate" means a certificate by a
Responsible Officer of the Borrower, substantially in the form of Exhibit
B (or another form acceptable to the Agent) setting forth the calculation
of the Availability, including a calculation of each component thereof, as
of the close of business no more than five (5) Business Days prior to the
date of such certificate, all in such detail as shall be satisfactory to
the Agent. All calculation of Availability in connection with the
preparation of any Borrowing Base Certificate shall originally be made by
the Borrower and certified to the Agent; provided, that the Agent shall
have the right to review and adjust, in the exercise of its reasonable
credit judgment, any such calculation (1) to reflect its reasonable
estimate of declines in value of any of the Collateral described therein,
and (2) to the extent that such calculation is not in accordance with this
Agreement.
"Business Day" means (a) any day that is not a Saturday,
Sunday, or a day on which banks in San Francisco, California, are required
or permitted to be closed, and (b) with respect to all notices,
determinations, fundings and payments in connection with the LIBOR Rate or
LIBOR Rate Loans, any day that is a Business Day pursuant to clause (a)
above and that is also a day on which trading is carried on by and between
banks in the London interbank market.
"Capital Adequacy Regulation" means any guideline, request or
directive of any central bank or other Governmental Authority, or any
other law, rule or regulation, whether or not having the force of law, in
each case, regarding capital adequacy of any bank or of any corporation
controlling a bank.
"Capital Expenditures" means all payments due (whether or not
paid) in respect of the cost of any fixed asset or improvement, or
replacement, substitution, or addition thereto, which has a useful life
of more than one year, including, without limitation, those costs arising
in connection with the direct or indirect acquisition of such asset by way
of increased product or service charges or offset items or in connection
with a Capital Lease and also including, without limitation, all
expenditures in respect of hardware and software for computer systems.
With respect to financed Capital Expenditures, any interest expense on the
financed portion of the Capital Expenditure will not be included as a
Capital Expenditure.
"Capital Lease" means any lease of property by the Borrower
which, in accordance with GAAP, is or should be reflected as a capital
lease on the balance sheet of Borrower.
"Change of Control" means the occurrence of any of the following
events:
(i) any "person" or "group" (as such terms are used in Section
13(d) or 14(d) of the Exchange Act as such term is defined below),
other than a "person" or "group" consisting of one or more Permitted
Holders, is or becomes the Beneficial Owner of Voting Stock which
represents a percentage of the total voting power of the Voting Stock
of the Borrower which is (A) greater than twenty-five percent (25%)
or more of the total voting power of the Voting Stock of the Borrower
or (B) greater than that percentage of the total voting power of the
Voting Stock of the Borrower which the Permitted Holders in the
aggregate Beneficially Own; provided that at such time the Permitted
Holders do not have the right or ability by voting power, contract or
otherwise, to elect or designate for election a majority of the Board
of Directors of the Borrower; or
(ii) after the first Public Equity Offering of the Borrower,
during any one-year period, individuals who at the beginning of such
period constituted the Board of Directors of the Borrower (together
with any new directors whose election by such Board of Directors or
whose nomination for election by the shareholders of the Borrower was
approved by a vote of a majority of the directors of the Borrower
then still in office who were either directors at the beginning of
such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority
of the Board of Directors of the Borrower then in office; or
(iii) the Borrower shall fail at any time to be the
Beneficial Owner of 100% of the outstanding equity interests of
▇▇▇▇▇▇.
For purposes of this definition of "Change of Control", and the
definitions used within this definition (and only for such purposes), the
following terms shall have the following meanings:
"Beneficial Owner", and terms having similar import, shall
mean any direct or indirect "beneficial owner", as such term is
defined in Rules 13d-3 and 13d-5 under the Exchange Act (except
that, for purposes of clause (i) of the definition of "Change of
Control", a person shall be deemed to have "Beneficial
Ownership" of all shares that any such person has the right to
acquire, whether such right is exercisable immediately or only
after the passage of time). The Permitted Holders shall be
deemed to Beneficially Own all the Voting Stock of a corporation
held by any other corporation (such other corporation, the
"parent corporation") so long as the Permitted Holders
Beneficially Own, directly or indirectly, in the aggregate a
majority of the voting power of the Voting Stock of the parent
corporation.
"Board of Directors" shall mean, with respect to any
Person, such Person's Board of Directors or any committee
thereof duly authorized to act on behalf of such Board of
Directors.
"Capital Stock" of any Person shall mean any and all
shares, interests, rights to purchase, warrants, options,
contingent share issuances, participations or other equivalents
of or interests in (however designated) equity of such Person,
including any Preferred Stock, but excluding any debt securities
convertible into or exchangeable for such equity.
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated
thereunder.
"Permitted Holders" shall mean the financial institutions
which became shareholders of the Borrower on the Effective Date
as contemplated by the Plan of Reorganization and each of their
respective Affiliates.
"Preferred Stock", as applied to the Capital Stock of any
corporation, shall mean Capital Stock of any class or classes
(however designated) which is preferred as to the payment of
dividends, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of
such corporation.
"Public Equity Offering" shall mean an underwritten
primary, or combined primary and secondary, public offering of
Capital Stock (other than Redeemable Stock) of the Borrower (or
any entity of which the Borrower is a Subsidiary, to the extent
the cash proceeds of such offering are contributed to the
Borrower or used to acquire Capital Stock (other than Redeemable
Stock) of the Borrower) pursuant to an effective registration
statement under the Securities Act, and any similar private
placement of securities effected substantially concurrently with
any such offering.
"Redeemable Stock" shall mean any Capital Stock that by its
terms or otherwise is required to be redeemed on or prior to the
first anniversary of the Stated Termination Date or is
redeemable at the option of the holder thereof at any time on or
prior to the first anniversary of the Stated Termination Date.
"Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"Voting Stock" of a corporation shall mean all classes of
Capital Stock of such corporation then outstanding and normally
entitled to vote in the election of directors.
"Chapter 11 Case" means the Borrower's reorganization case under
Chapter 11 of the Bankruptcy Code commenced in the Bankruptcy Court.
"▇▇▇▇▇▇" means A. R. ▇▇▇▇▇▇ Limited, a Canadian corporation.
"Closing Date" means the date of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from
time to time, and any successor statute, and regulations promulgated
thereunder.
"Collateral" has the meaning specified in Section 6.1.
"Commitment" means, at any time with respect to a Lender, the
principal amount set forth beside such Lender's name under the heading
"Commitment" on the signature pages of this Agreement or on the signature
page of the Assignment and Acceptance pursuant to which such Lender became
a Lender hereunder in accordance with the provisions of Section 13.3, as
such Commitment may be adjusted from time to time in accordance with the
provisions of Section 13.3, and "Commitments" means, collectively, the
aggregate amount of the commitments of all of the Lenders.
"Confirmation Date" means the date on which the Confirmation
Order is entered on the docket of the Bankruptcy Court.
"Confirmation Order" means an order of the Bankruptcy Court in
form and substance acceptable to the Agent and the Majority Lenders
confirming the Plan of Reorganization in accordance with the provisions of
Chapter 11 of the Bankruptcy Code.
"Contaminant" means any waste, pollutant, hazardous substance,
toxic substance, hazardous waste, special waste, petroleum or petroleum-
derived substance or waste, asbestos in any form or condition,
polychlorinated biphenyls ("PCBs"), or any constituent of any such
substance or waste.
"Coverage Ratio" means, for any four fiscal quarter period, the
ratio of (a) EBITDA for such period to (b) Fixed Charges for such period.
"Coverage Ratio Certificate" means a certificate of a
Responsible Officer of the Borrower setting forth the Coverage Ratio for
the four (4) fiscal quarter period of the Borrower ending on the last day
of each fiscal quarter of the Borrower, together with such supporting
documentation and calculations as the Agent may reasonably request with
respect to such Coverage Ratio.
"Credit Support" has the meaning specified in Section 2.4(a).
"Debt" means all liabilities, obligations and indebtedness of
the Borrower to any Person, of any kind or nature, now or hereafter owing,
arising, due or payable, howsoever evidenced, created, incurred, acquired
or owing, whether primary, secondary, direct, contingent, fixed or
otherwise, and including, without in any way limiting the generality of
the foregoing: (i) the Borrower's liabilities and obligations to trade
creditors; (ii) all Obligations; (iii) all obligations and liabilities of
any Person secured by any Lien on the Borrower's property, even though the
Borrower shall not have assumed or become liable for the payment thereof;
provided, however, that all such obligations and liabilities which are
limited in recourse to such property shall be included in Debt only to the
extent of the book value of such property as would be shown on a balance
sheet of the Borrower prepared in accordance with GAAP; (iv) all
obligations or liabilities created or arising under any Capital Lease or
conditional sale or other title retention agreement with respect to
property used or acquired by the Borrower, even if the rights and remedies
of the lessor, seller or lender thereunder are limited to repossession of
such property; provided, however, that all such obligations and
liabilities which are limited in recourse to such property shall be
included in Debt only to the extent of the book value of such property as
would be shown on a balance sheet of the Borrower
prepared in accordance with GAAP; (v) all accrued pension fund and other
employee benefit plan obligations and liabilities; (vi) all obligations
and liabilities under Guaranties; and (vii) deferred taxes.
"Debt For Borrowed Money" means Debt for borrowed money or as
evidenced by notes, bonds, debentures or similar evidences of any such
Debt of such Person, the deferred and unpaid purchase price of any
property or business (other than trade accounts payable incurred in the
ordinary course of business and constituting current liabilities) and all
obligations under Capital Leases.
"Default" means any event or circumstance which, with the giving
of notice, the lapse of time, or both, would (if not cured or otherwise
remedied during such time) constitute an Event of Default.
"Default Rate" means a fluctuating per annum interest rate at
all times equal to the sum of (a) the otherwise applicable Interest Rate
plus (b) two percent (2%). Each Default Rate shall be adjusted
simultaneously with any change in the applicable Interest Rate. In
addition, with respect to Letters of Credit, the Default Rate shall mean
an increase in the Letter of Credit Fee by two percentage points.
"Defaulting Lender" has the meaning specified in Section
2.2(g)(ii).
"DIP Lenders" has the meaning specified in the recitals to this
Agreement.
"DIP Letters of Credit" has the meaning specified in the
recitals to this Agreement.
"DIP Loan and Security Agreement" has the meaning specified in
the recitals to this Agreement.
"Distribution" means, in respect of any corporation: (a) the
payment or making of any dividend or other distribution of property in
respect of capital stock (or any options or warrants for such stock) of
such corporation, other than distributions in capital stock (or any
options or warrants for such stock) of the same class; or (b) the
redemption or other acquisition of any capital stock (or any options or
warrants for such stock) of such corporation.
"DOL" means the United States Department of Labor or any
successor department or agency.
"Dollar" and "$" means dollars in the lawful currency of the
United States.
"EBITDA" means, with respect to any fiscal period of the
Borrower, the Borrower's net income after provision for income taxes for
such fiscal period, as determined in accordance with GAAP and reported on
the Financial Statements for such period, excluding any and all of the
following included in such net income: (a) gain or loss arising from the
sale of any capital assets; (b) gain arising from any write-up in the book
value of any asset; (c) earnings of any corporation, substantially all the
assets of which have been acquired by the Borrower in any manner, to the
extent realized by such other corporation prior to the date of
acquisition; (d) earnings of any business entity in which the Borrower has
an ownership interest unless (and only to the extent) such earnings shall
actually have been received by the Borrower in the form of cash
distributions; provided that earnings of ▇▇▇▇▇▇, in an amount of up to
$3,000,000 in any Fiscal Year, will not be excluded regardless of whether
such earnings actually have been received by the Borrower; (e) earnings of
any Person to which assets of the Borrower shall have been sold,
transferred or disposed of, or into which the Borrower shall have been
merged, or which has been a party with the Borrower to any consolidation
or other form of reorganization, prior to the date of such transaction;
(f) gain arising from the acquisition of debt or equity securities of the
Borrower or from cancellation or forgiveness of Debt; (g) gain or loss
arising from extraordinary items, as determined in accordance with GAAP,
or from any other non-recurring transaction; (h) non-cash writedowns of
fixed assets, (i) the sum of the provisions for income taxes, interest
expense, depreciation and amortization expense, other non-cash charges,
the effect of accounting changes and extraordinary items, in each case, to
the extent deducted in determining net income for such period and (j)
charges or credits to the Borrower's cost of goods sold to revalue
inventory from the FIFO to LIFO basis.
"Effective Date" has the meaning specified in the Plan of
Reorganization.
"Eligible Accounts" means all Accounts of the Borrower which the
Agent in the exercise of its reasonable commercial discretion determines
to be Eligible Accounts. Without limiting the discretion of the Agent to
establish other criteria of ineligibility, Eligible Accounts shall not,
unless the Agent in its sole discretion elects, include any Account:
(a) with respect to which more than 90 days have elapsed
since the date of the original invoice therefor or it is more than 60 days
past due;
(b) with respect to which any of the representations,
warranties, covenants, and agreements contained in Section 6.8 are not or
have ceased to be complete and correct or have been breached;
(c) with respect to which, in whole or in part, a check,
promissory note, draft, trade acceptance or other instrument for the
payment of money has been received, presented for payment and returned
uncollected for any reason;
(d) which represents a progress billing (as hereinafter
defined) or as to which the Borrower has extended the time for payment
upon notice to the Agent (but in no event beyond 90 days from invoice
date); for the purposes hereof, "progress billing" means any invoice for
goods sold or leased or services rendered under a contract or agreement
pursuant to which the Account Debtor's obligation to pay such invoice is
conditioned upon the Borrower's completion of any further performance
under the contract or agreement;
(e) as to which any one or more of the following events
has occurred with respect to the Account Debtor on such Account: death or
judicial declaration of incompetency of an Account Debtor who is an
individual; the filing by or against the Account Debtor of a request or
petition for liquidation, reorganization, arrangement, adjustment of
debts, adjudication as a bankrupt, winding-up, or other relief under the
bankruptcy, insolvency, or similar laws of the United States, any state or
territory thereof, or any foreign jurisdiction, now or hereafter in
effect; the making of any general assignment by the Account Debtor for the
benefit of creditors; the appointment of a receiver or trustee for the
Account Debtor or for any of the assets of the Account Debtor, including,
without limitation, the appointment of or taking possession by a
"custodian," as defined in the Federal Bankruptcy Code; the institution by
or against the Account Debtor of any other type of insolvency proceeding
(under the bankruptcy laws of the United States or otherwise) or of any
formal or informal proceeding for the dissolution or liquidation of,
settlement of claims against, or winding up of affairs of, the Account
Debtor; the sale, assignment, or transfer of all or any material part of
the assets of the Account Debtor; the nonpayment generally by the Account
Debtor of its debts as they become due; or the cessation of the business
of the Account Debtor as a going concern;
(f) if fifty percent (50%) or more of the aggregate Dollar
amount of outstanding Accounts owed at such time by the Account Debtor
thereon is classified as ineligible under the other criteria set forth
herein or otherwise established by the Agent in accordance with this
Agreement;
(g) owed by an Account Debtor which: (i) does not maintain
its chief executive office in the United States or Canada; or (ii) is not
organized under the laws of the United States or any state thereof or
Canada or any province thereof; or (iii) is the government of any foreign
country or sovereign state, or of any state, province, municipality, or
other political subdivision thereof, or of any department, agency, public
corporation, or other instrumentality thereof; except (A) to the extent
that such Account is secured or payable by a letter of credit or guaranty
satisfactory to the Agent in its discretion; or (B) is otherwise
acceptable to the Agent in its discretion; or (C) is an account owing by
the Account Debtors listed on Schedule 1.1B;
(h) owed by an Account Debtor which is an Affiliate or
employee of the Borrower;
(i) except as provided in (k) below, as to which either
the perfection, enforceability, or validity of the Agent's Lien in such
Account, or the Agent's right or ability to obtain direct payment to the
Agent of the proceeds of such Account, is governed by any federal, state,
or local statutory requirements other than those of the UCC;
(j) which is owed by an Account Debtor to which the
Borrower is indebted in any way, or which is subject to any right of
setoff or recoupment by the Account Debtor, unless the Account Debtor has
entered into an agreement acceptable to the Agent to waive setoff rights;
or if the Account Debtor thereon has disputed liability or made any claim
with respect to any other Account due from such Account Debtor; but in
each such case only to the extent of such indebtedness, setoff,
recoupment, dispute, or claim;
(k) which is owed by the government of the United States
of America, or any department, agency, public corporation, or other
instrumentality thereof, unless the Federal Assignment of Claims Act of
1940, as amended (31 U.S.C. Section 3727 et seq.), and any other steps
necessary to perfect the Agent's Lien therein, have been complied with to
the Agent's satisfaction with respect to such Account;
(l) which is owed by any state, municipality, or other
political subdivision of the United States of America, or any department,
agency, public corporation, or other instrumentality thereof and as to
which the Agent determines that its Lien therein is not or cannot be
perfected;
(m) which represents a sale on a ▇▇▇▇-and-hold, guaranteed
sale, sale and return, sale on approval, consignment, or other repurchase
or return basis;
(n) which is evidenced by a promissory note or other
instrument or by chattel paper;
(o) if the Agent believes, in the exercise of its
reasonable judgment, that the prospect of collection of such Account is
impaired or that the Account may not be paid by reason of the Account
Debtor's financial inability to pay;
(p) with respect to which the Account Debtor is located in
any state requiring the filing of a Notice of Business Activities Report
or similar report in order to permit the Borrower to seek judicial
enforcement in such State of payment of such Account, unless such Borrower
has qualified to do business in such state or has filed a Notice of
Business Activities Report or equivalent report for the then current year;
or
(q) which arises out of a sale not made in the ordinary
course of the Borrower's business;
(r) as to which the goods giving rise to such Account have
not been shipped and delivered to and accepted by the Account Debtor or
the services giving rise to such Account have not been performed by the
Borrower, and, if applicable, accepted by the Account Debtor, or the
Account Debtor revokes its acceptance of such goods or services;
(s) is owed by an Account Debtor which is obligated to the
Borrower respecting Accounts the aggregate unpaid balance of which exceeds
fifteen (15%) percent of the aggregate unpaid balance of all Accounts owed
to the Borrower at such time by all of the Borrower's Account Debtors, but
only to the extent of such excess;
(t) arises out of a contract or order which, by its terms,
forbids, restricts or makes void or unenforceable the granting of a Lien
by the Borrower to the Agent with respect to such Account; or
(u) which is not subject to a first priority and perfected
security interest in favor of the Agent for the benefit of the Lenders.
If any Account at any time ceases to be an Eligible Account by
reason of any of the foregoing exclusions or any failure to meet any other
eligibility criteria established by the Agent in the exercise of its
reasonable discretion, then such Account shall promptly be excluded from
the calculation of Eligible Accounts.
"Eligible Inventory" means Inventory, valued at the lower of
cost (on a FIFO basis) or market, that constitutes raw materials, work in
process and finished goods and that, unless the Agent in its sole
discretion elects,: (a) is not, in the Agent's reasonable opinion,
obsolete, slow moving, or unmerchantable; (b) is located at premises owned
by the Borrower or on premises otherwise reasonably acceptable to the
Agent, provided, however, that Inventory located on premises leased to the
Borrower shall not be Eligible Inventory unless the Borrower shall have
delivered to the Agent a written waiver, duly executed on behalf of the
appropriate landlord and in form and substance acceptable to the Agent, of
all Liens which the landlord for such premises may be entitled to assert
against such Inventory; (c) upon which the Agent for the benefit of the
Lenders has a first priority perfected security interest; (d) is not spare
parts, service parts, used parts, packaging and shipping materials,
supplies, ▇▇▇▇-and-hold Inventory, returned or defective Inventory, or
Inventory delivered to the Borrower on consignment; and (e) the Agent, in
the exercise of its reasonable commercial discretion, deems eligible as
the basis for Revolving Loans based on such collateral and credit criteria
as the Agent may from time to time establish. If any Inventory at any
time ceases to be Eligible Inventory, such Inventory shall promptly be
excluded from the calculation of Eligible Inventory. Defective or slow
moving Inventory that has been written down to a net realizable value
acceptable to the Agent may be included as part of Eligible Inventory.
"Environmental Claims" means all claims, however asserted, by
any Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for release or
injury to the environment.
"Environmental Compliance Reserve" means any reserves which the
Agent, after the Closing Date, establishes from time to time for amounts
that are reasonably likely to be expended by the Borrower in order for the
Borrower and its operations and property (a) to comply with any notice
from a Governmental Authority asserting material non-compliance with
Environmental Laws, or (b) to correct any such material non-compliance
identified in a report delivered to the Agent and the Lenders pursuant to
Section 9.7.
"Environmental Laws" means all federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and codes,
together with all administrative orders, directed duties, requests,
licenses, authorizations and permits of, and agreements with, any
Governmental Authority, in each case relating to environmental, health,
safety and land use matters.
"Environmental Lien" means a Lien in favor of any Governmental
Authority for (1) any liability under any Environmental Laws, or
(2) damages arising from, or costs incurred by such Governmental Authority
in response to, a Release or threatened Release of a Contaminant into the
environment.
"Environmental Property Transfer Act" means any applicable
requirement of law that conditions, restricts, prohibits or requires any
notification or disclosure triggered by the closure of any property or the
transfer, sale or lease of any property or deed or title for any property
for environmental reasons, including, but not limited to, any so-called
"Environmental Cleanup Responsibility Acts" or "Responsible Property
Transfer Acts."
"Equipment" means all of the Borrower's now owned and hereafter
acquired machinery, equipment, furniture, furnishings, fixtures, and other
tangible personal property (except Inventory), including motor vehicles
with respect to which a certificate of title has been issued, aircraft,
dies, tools, jigs, and office equipment, as well as all of such types of
property leased by the Borrower and all of the Borrower's rights and
interests with respect thereto under such leases (including, without limi-
tation, options to purchase); together with all present and future
additions and accessions thereto, replacements therefor, component and
auxiliary parts and supplies used or to be used in connection therewith,
and all substitutes for any of the foregoing, and all manuals, drawings,
instructions, warranties and rights with respect thereto; wherever any of
the foregoing is located.
"ERISA" means the Employee Retirement Income Security Act of
1974, and regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with the Borrower within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code
for purposes of provisions relating to Section 412 of the Code) but not
including Equitable or its Affiliates.
"ERISA Event" means (a) a Reportable Event with respect to a
Pension Plan; (b) a withdrawal by the Borrower or any ERISA Affiliate from
a Pension Plan subject to Section 4063 of ERISA during a plan year in
which it was a substantial employer (as defined in Section 4001(a)(2) of
ERISA) or a cessation of operations which is treated as such a withdrawal
under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by
the Borrower or any ERISA Affiliate from a Multi-employer Plan or
notification that a Multi-employer Plan is in reorganization; (d) the
filing of a notice of intent to terminate, the treatment of a Plan
amendment as a termination under Section 4041 or 4041A of ERISA, or the
commencement of proceedings by the PBGC to terminate a Pension Plan or
Multi-employer Plan; (e) an event or condition which might reasonably be
expected to constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Pension
Plan or Multi-employer Plan; or (f) the imposition of any liability under
Title IV of ERISA, other than PBGC premiums due but not delinquent under
Section 4007 of ERISA, upon the Borrower or any ERISA Affiliate.
"Event of Default" has the meaning specified in Section 11.1.
"Exchange Act" means the Securities and Exchange Act of 1934,
and regulations promulgated thereunder.
"FDIC" means the Federal Deposit Insurance Corporation, and any
Governmental Authority succeeding to any of its principal functions.
"Federal Funds Rate" means, for any day, the rate set forth in
the weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York (including
any such successor, "H.15(519)") on the preceding Business Day opposite
the caption "Federal Funds (Effective)"; or, if for any relevant day such
rate is not so published on any such preceding Business Day, the rate for
such day will be the arithmetic mean as determined by the Agent of the
rates for the last transaction in overnight Federal funds arranged prior
to 9:00 a.m. (New York City time) on that day by each of three leading
brokers of Federal funds transactions in New York City selected by the
Agent.
"Federal Reserve Board" means the Board of Governors of the
Federal Reserve System or any successor thereto.
"Final Order" means an order of the Bankruptcy Court (a) as to
which the time to appeal, petition for certiorari or move for reargument
or rehearing has expired and as to which no appeal, petition for
certiorari or other proceedings for reargument or rehearing shall then be
pending, or (b) if an appeal, writ of certiorari, reargument or rehearing
thereof has been filed or sought, such order of the Bankruptcy Court shall
have been affirmed by the highest court to which such order was appealed,
or certiorari shall have been denied or reargument or rehearing shall have
been denied or resulted in no modification of such order, and the time to
take any further appeal, petition for certiorari or move or reargument or
rehearing shall have expired; provided, however, that the possibility that
a motion under Rule 59 or Rule 60 of the Federal Rules of Civil Procedure,
or any analogous rule under the Federal Rules of Bankruptcy Procedure, may
be filed with respect to such order shall not cause such order not to be a
Final Order.
"Financial Statements" means, according to the context in which
it is used, the financial statements referred to in Section 8.6 or any
other financial statements required to be given to the Lenders pursuant to
this Agreement.
"Fiscal Year" means the Borrower's fiscal year for financial
accounting purposes. The current Fiscal Year of the Borrower will end on
December 31, 1998.
"Fixed Assets" means Equipment and Real Estate of the Borrower.
"Fixed Charges" means for the Borrower for any period of
determination the sum of (i) cash interest expense, (ii) principal
payments on account of all Debt for Borrowed Money having an original
maturity greater than one year, (iii) Capital Expenditures, (iv) cash
payments on account of income taxes and (v) all other cash payments in
connection with or in contemplation of the Chapter 11 Case.
"Funding Date" means the date on which a Borrowing occurs.
"GAAP" means generally accepted accounting principles set forth
from time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board (or agencies with similar functions of comparable stature
and authority within the U.S. accounting profession); provided, however,
that for the purpose of determining book value of Eligible Inventory, the
Coverage Ratio and compliance with Sections 9.22, 9.23 and 9.24, AGAAP"
means generally accepted accounting principles as in effect as of the
Closing Date and consistent with those applied in the preparation of the
unaudited June 30, 1998 Financial Statements of the Borrower; and
provided, further, that if (i) any changes in accounting principles from
those in effect on the Closing Date are hereafter occasioned by
promulgation of rules, regulations, pronouncements or opinions by or are
otherwise required by the Accounting Principles Board, the Financial
Accounting Standards Board or the American Institute of Certified Public
Accountants (or agencies with similar functions of comparable stature and
authority within the U.S accounting profession) or (ii) the Borrower shall
after the Closing Date otherwise change any of the accounting principles
it utilizes and such change is permitted under GAAP and any of such
changes in clauses (i) or (ii) above results in a change in the method of
calculation of, or affects the results of such calculation of, book value
of Eligible Inventory, the Coverage Ratio or any of the financial
covenants set forth in Sections 9.22, 9.23 and 9.24, then the Borrower,
the Agent and the Lenders agree to enter into and diligently pursue in
good faith negotiations in order to amend such valuation and financial
covenants and tests (or the terms used therein or the calculation thereof)
so as to equitably reflect such accounting changes with the desired result
that the criteria for evaluating the book value of Eligible Inventory and
the financial condition and results of operations of the Borrower based
upon such financial covenants and tests shall be the same after such
accounting changes as if such accounting changes had not been made (and,
to the extent that the Borrower, the Agent and the Lenders shall fail to
agree in writing to any such amendment, then for purposes of such
valuation and financial covenants and tests, GAAP shall be generally
accepted accounting principles as in effect as of the Closing Date and
consistent with those applied in the preparation of the unaudited June 30,
1998 Financial Statements of the Borrower or as otherwise previously
agreed to in writing by the Borrower, the Agent and the Lenders).
"General Intangibles" means all of the Borrower's now owned or
hereafter acquired general intangibles, choses in action and causes of
action and all other intangible personal property of the Borrower of every
kind and nature (other than Accounts), including, without limitation, all
contract rights, Proprietary Rights, corporate or other business records,
inventions, designs, blueprints, plans, specifications, patents, patent
applications, trademarks, service marks, trade names, trade secrets,
goodwill, copyrights, computer software, customer lists, registrations,
licenses, franchises, tax refund claims, any funds which may become due to
the Borrower in connection with the termination of any Plan or other
employee benefit plan or any rights thereto and any other amounts payable
to the Borrower from any Plan or other employee benefit plan, rights and
claims against carriers and shippers, rights to indemnification, business
interruption insurance and proceeds thereof, property, casualty or any
similar type of insurance and any proceeds thereof, proceeds of insurance
covering the lives of key employees on which the Borrower is beneficiary,
and any letter of credit, guarantee, claim, security interest or other
security held by or granted to the Borrower.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof, any central bank (or similar
monetary or regulatory authority) thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions
of or pertaining to government, and any corporation or other entity owned
or controlled, through stock or capital ownership or otherwise, by any of
the foregoing.
"Guaranty" means, with respect to any Person, all obligations of
such Person which in any manner directly or indirectly guarantee or
assure, or in effect guarantee or assure, the payment or performance of
any indebtedness, dividend or other obligations of any other Person (the
"guaranteed obligations"), or assure or in effect assure the holder of the
guaranteed obligations against loss in respect thereof, including, without
limitation, any such obligations incurred through an agreement, contingent
or otherwise: (a) to purchase the guaranteed obligations or any property
constituting security therefor; (b) to advance or supply funds for the
purchase or payment of the guaranteed obligations or to maintain a working
capital or other balance sheet condition; or (c) to lease property or to
purchase any debt or equity securities or other property or services.
"Intercompany Accounts" means all assets and liabilities,
however arising, which are due to the Borrower from, which are due from
the Borrower to, or which otherwise arise from any transaction by the
Borrower with, any Affiliate.
"Interest Period" means, as to any LIBOR Rate Loan, the period
commencing on the Funding Date of such Loan or on the
Conversion/Continuation Date on which the Loan is converted into or
continued as a LIBOR Rate Loan, and ending on the date one, two, or three
months thereafter as selected by the Borrower in its Notice of Borrowing
or Notice of Conversion/Continuation; provided that:
(i) if any Interest Period would otherwise end on a day
that is not a Business Day, that Interest Period shall be extended to the
following Business Day unless the result of such extension would be to
carry such Interest Period into another calendar month, in which event
such Interest Period shall end on the preceding Business Day;
(ii) any Interest Period pertaining to a LIBOR Rate Loan
that begins on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar month at
the end of such Interest Period) shall end on the last Business Day of the
calendar month at the end of such Interest Period; and
(iii) no Interest Period shall extend beyond the Stated
Termination Date.
"Interest Rate" means each or any of the interest rates,
including the Default Rate, set forth in Section 3.1.
"Inventory" means all of the Borrower's now owned and hereafter
acquired inventory, goods and merchandise, wherever located, to be
furnished under any contract of service or held for sale or lease, all
returned goods, raw materials, work in process, other materials and
supplies of any kind, nature or description which are or might be consumed
in the Borrower's business or used in connection with the packing,
shipping, advertising, selling or finishing of such goods, merchandise and
such other personal property, and all documents of title or other
documents representing them.
"IRS" means the Internal Revenue Service and any Governmental
Authority succeeding to any of its principal functions under the Code.
"Latest Projections" means: (a) on the Closing Date and
thereafter until the Agent receives new projections pursuant to
Section 7.2(f), the projections of the Borrower's financial condition,
results of operations, and cash flow, for the period commencing on January
1, 1998 and ending on December 31, 2000 and delivered to the Agent prior
to the Closing Date; and (b) thereafter, the projections most recently
received by the Agent pursuant to Section 7.2(f).
"Lender" and "Lenders" have the meanings specified in the
introductory paragraph hereof and shall include the Agent to the extent of
any Agent Advance outstanding and BABC to the extent of any BABC Loan
outstanding; provided that no such Agent Advance or BABC Loan shall be
taken into account in determining any Lender's Pro Rata Share.
"Letter of Credit" means a letter of credit issued or caused to
be issued for the account of the Borrower pursuant to Section 2.4.
"Letter of Credit Fee" has the meaning specified in Section 3.6.
"LIBOR Rate" means, for any Interest Period, with respect to
LIBOR Rate Loans comprising part of the same Borrowing, the rate of
interest per annum (rounded upward to the next 1/1000th of 1.0%)
determined by the Agent as follows:
LIBOR Rate = LIBOR
1.00 - Eurodollar Reserve Percentage
Where,
"Eurodollar Reserve Percentage" means for any day
for any Interest Period the maximum reserve percentage
(expressed as a decimal, rounded upward to the next
1/100th of 1%) in effect on such day (whether or not
applicable to any Lender) under regulations issued
from time to time by the Federal Reserve Board for
determining the maximum reserve requirement (including
any emergency, supplemental or other marginal reserve
requirement) with respect to Eurocurrency funding
(currently referred to as "Eurocurrency liabilities");
and
"LIBOR" means the rate of interest per annum
(rounded upward to the next 1/16th of 1%) notified to
the Agent by Bank of America as the rate of interest
at which dollar deposits in the approximate amount of
the Loan to be made or continued as, or converted
into, a LIBOR Rate Loan and having a maturity
comparable to such Interest Period would be offered by
Bank of America's applicable lending office to major
banks in the London Eurodollar market at approximately
11:00 a.m. (London time) two Business Days prior to
the commencement of such Interest Period.
"LIBOR Revolving Loan" or "LIBOR Rate Loan" means a Revolving
Loan during any period in which it bears interest based on the LIBOR Rate.
"Lien" means: (a) any interest in property securing an
obligation owed to, or a claim by, a Person other than the owner of the
property, whether such interest is based on the common law, statute, or
contract, and including without limitation, a security interest, charge,
claim, or lien arising from a mortgage, deed of trust, encumbrance,
pledge, hypothecation, assignment, deposit arrangement, agreement,
security agreement, conditional sale or trust receipt or a lease,
consignment or bailment for security purposes; and (b) to the extent not
included under clause (a), any reservation, exception, encroachment,
easement, right-of-way, covenant, condition, restriction, lease or other
title exception or encumbrance affecting property.
"Loan Account" means the loan account of the Borrower, which
account shall be maintained by the Agent.
"Loan Documents" means this Agreement, the Patent and Trademark
Agreements, the Mortgages, the Pledge Agreement, and any other agreements,
instruments, and documents heretofore, now or hereafter evidencing,
securing, guaranteeing or otherwise relating to the Obligations, the
Collateral, or any other aspect of the transactions contemplated by this
Agreement.
"Loans" means, collectively, all loans and advances provided for
in Article 2.
"Majority Lenders" means at anytime Lenders whose Pro Rata
shares aggregate more than 50% of the Commitments or, if no Commitments
shall then be in effect, Lenders who hold more than 50% of the aggregate
principal amount of the Loans then outstanding.
"Margin Stock" means "margin stock" as such term is defined in
Regulation T, U or X of the Federal Reserve Board.
"Material Adverse Effect" means (a) a material adverse change
in, or a material adverse effect upon, the operations, business,
properties, condition (financial or otherwise) or prospects of the
Borrower or the Collateral; (b) a material impairment of the ability of
the Borrower to perform under any Loan Document and to avoid any Event of
Default; or (c) a material adverse effect upon the legality, validity,
binding effect or enforceability against the Borrower of any Loan
Document.
"Maximum Revolver Amount" means $70,000,000.
"Mortgages" means: (a) each Mortgage, Security Agreement, and
Assignments of Leases and Rents dated the date hereof between the Borrower
and the Agent and delivered to the Agent; and (b) all other real property
mortgages, leasehold mortgages, assignments of leases, mortgage deeds,
deeds of trust, deeds to secure debt, security agreements, and other
similar instruments hereafter entered into which provide the Agent a lien,
for the benefit of the Agent and Lenders, on or other interest in any
portion of the Premises or the Real Estate or which relate to any such
Lien or interest.
"Multi-employer Plan" means a "multi-employer plan" as defined
in Section 4001(a)(3) of ERISA which is or was at any time during the
current year or the immediately preceding six (6) years contributed to by
the Borrower or any ERISA Affiliate.
"Net Amount of Eligible Accounts" means, at any time, the gross
amount of Eligible Accounts less returns, discounts, claims, credits and
allowances of any nature at any time issued, owing, granted, outstanding,
available or claimed.
"Notice of Borrowing" has the meaning specified in Section
2.2(b).
"Notice of Conversion/Continuation" has the meaning specified in
Section 3.2(b).
"Obligations" means all present and future loans, advances,
liabilities, obligations, covenants, duties, and debts owing by the
Borrower to the Agent and/or any Lender, arising under or pursuant to this
Agreement or any of the other Loan Documents, whether or not evidenced by
any note, or other instrument or document, whether arising from an
extension of credit, opening of a letter of credit, acceptance, loan,
guaranty, indemnification or otherwise, whether direct or indirect
(including, without limitation, those acquired by assignment from others,
and any participation by the Agent and/or any Lender in the Borrower's
debts owing to others), absolute or contingent, due or to become due,
primary or secondary, as principal or guarantor, and including, without
limitation, all principal, interest, charges, expenses, fees, attorneys'
fees, filing fees and any other sums chargeable to the Borrower hereunder
or under any of the other Loan Documents. "Obligations" includes, without
limitation, (a) all debts, liabilities, and obligations now or hereafter
owing from the Borrower to the Agent and/or any Lender under or in
connection with the Letters of Credit (including, without limitation, DIP
Letters of Credit) and (b) all debts, liabilities and obligations now or
hereafter owing from the Borrower to the Agent and Lenders arising from or
related to ACH Transactions.
"Other Taxes" means any present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies
which arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement
or any other Loan Documents.
"Participating Lender" means any Person who shall have been
granted the right by any Lender to participate in the financing provided
by such Lender under this Agreement, and who shall have entered into a
participation agreement in form and substance satisfactory to such Lender.
"Patent and Trademark Agreements" means the Security Agreement
and Mortgage-Patents and Trademarks, each dated as of the date hereof,
executed and delivered by the Borrower to the Agent to evidence and
perfect the Agent's security interest in the Borrower's present and future
patents, trademarks, and related licenses and rights, for the benefit of
the Agent and the Lenders.
"Payment Account" means each blocked bank account established
pursuant to Section 6.9, to which the funds of the Borrower (including,
without limitation, proceeds of Accounts and other Collateral) are
deposited or credited, and which is maintained in the name of the Agent or
the Borrower, as the Agent may determine, on terms acceptable to the
Agent.
"PBGC" means the Pension Benefit Guaranty Corporation or any
Governmental Authority succeeding to the functions thereof.
"Pending Revolving Loans" means, at any time, the aggregate
principal amount of all Revolving Loans requested in any Notice(s) of
Borrowing received by the Agent which have not yet been advanced.
"Pension Plan" means a pension plan (as defined in Section 3(2)
of ERISA) subject to Title IV of ERISA which the Borrower sponsors,
maintains, or to which it makes, is making, or is obligated to make
contributions, or in the case of a Multiple-employer Plan has made
contributions at any time during the immediately preceding five (5) plan
years.
"Permitted Liens" means:
(a) Liens for taxes not delinquent or statutory Liens for
taxes in an amount not to exceed $100,000 provided that the payment of
such taxes which are due and payable is being contested in good faith and
by appropriate proceedings diligently pursued and as to which adequate
financial reserves have been established on Borrower's books and records
and a stay of enforcement of any such Lien is in effect.
(b) the Agent's Liens;
(c) deposits under worker's compensation, unemployment
insurance, social security and other similar laws, or to secure the
performance of bids, tenders or contracts (other than for the repayment of
borrowed money) or to secure indemnity, performance or other similar bonds
for the performance of bids, tenders or contracts (other than for the
repayment of borrowed money) or to secure statutory obligations (other
than liens arising under ERISA or Environmental Liens) or surety or appeal
bonds, or to secure indemnity, performance or other similar bonds in the
ordinary course of business;
(d) Liens securing the claims or demands of materialmen,
mechanics, carriers, warehousemen, landlords and other like Persons,
provided that if any such Lien arises from the nonpayment of such claims
or demand when due, such claims or demands do not exceed
$500,000 in the aggregate;
(e) Reservations, exceptions, encroachments, easements,
rights of way, covenants running with the land, and other similar title
exceptions or encumbrances affecting any Real Estate; provided that they
do not in the aggregate materially detract from the value of the Real
Estate or materially interfere with its use in the ordinary conduct of the
Borrower's business;
(f) Judgment and other similar Liens arising in connection
with court proceedings to the extent the attachment or enforcement of such
Liens would not result in an Event of Default hereunder;
(g) Purchase Money Liens;
(h) Liens listed on Schedule 9.18; and
(i) Liens granted by ▇▇▇▇▇▇.
"Person" means any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association,
corporation, Governmental Authority, or any other entity.
"Petition Date" has the meaning specified in the recitals to
this Agreement.
"Plan" means an employee benefit plan (as defined in Section
3(3) of ERISA) which the Borrower sponsors or maintains or to which the
Borrower makes, is making, or is obligated to make contributions and
includes any Pension Plan.
"Plan of Reorganization"means the Plan of Reorganization of
United States Leather, Inc. filed with the Bankruptcy Court pursuant to
Section 1121(a) of the Bankruptcy Code in the form of Exhibit A, as the
same may be amended, modified or otherwise supplemented from time to time
with the express written consent of the Agent and the Majority Lenders.
"Pledge Agreement" means the Pledge Agreement dated the Closing
Date made by the Borrower in favor of the Agent for the benefit of the
Lenders, as in effect from time to time.
"Premises" means the land identified by addresses on Schedule
8.12, together with all buildings, improvements, and fixtures thereon and
all tenements, hereditaments, and appurtenances belonging or in any way
appertaining thereto, and which constitutes all of the real property in
which the Borrower has any interests on the Closing Date.
"Prepetition Lenders" has the meaning specified in the recitals
to this Agreement.
"Prepetition Loan and Security Agreement" has the meaning
specified in the recitals to this Agreement.
"Pro Rata Share" means, with respect to a Lender, a fraction
(expressed as a percentage), the numerator of which is the amount of such
Lender's Commitment and the denominator of which is the sum of the amounts
of all of the Lenders' Commitments, or if no Commitments are outstanding,
a fraction (expressed as a percentage), the numerator of which is the
amount of Obligations owed to such Lender and the denominator of which is
the aggregate amount of the Obligations owed to the Lenders.
"Proprietary Rights" means all of the Borrower's now owned and
hereafter arising or acquired: licenses, franchises, permits, patents,
patent rights, copyrights, works which are the subject matter of
copyrights, trademarks, service marks, trade names, trade styles, patent,
trademark and service ▇▇▇▇ applications, and all licenses and rights
related to any of the foregoing, including, without limitation, those
patents, trademarks, service marks, trade names and copyrights set forth
on Schedule 8.13 hereto, and all other rights under any of the foregoing,
all extensions, renewals, reissues, divisions, continuations, and
continuations-in-part of any of the foregoing, and all rights to ▇▇▇ for
past, present and future infringement of any of the foregoing.
"Purchase Money Liens" means purchase money mortgages or other
purchase money Liens (including, without limitation, Capital Leases) in
favor of non-Affiliates of the Borrower upon any fixed or capital assets
hereafter acquired by Borrower constituting real property interests or
machinery and equipment, or purchase money mortgages (including, without
limitation, Capital Leases) on any such assets hereafter acquired or
existing at the time of acquisition of such assets by Borrower, whether or
not assumed, so long as (i) any such Lien does not extend to or cover any
other asset of Borrower, (ii) such Lien secures only the obligation to pay
the purchase price of such asset (or the obligation under such Capital
Leases), interest thereon and other customary incidental obligations
relating thereto only, and (iii) the cost of each such acquisition
constitutes a Capital Expenditure permitted by Section 9.22.
"Real Estate" means all of the present and future interests of
the Borrower, as owner, lessee, or otherwise, in the Premises, including,
without limitation, any interest arising from an option to purchase or
lease the Premises or any portion thereof.
"Release" means a release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration
of a Contaminant into the indoor or outdoor environment or into or out of
any Real Estate or other property, including the movement of Contaminants
through or in the air, soil, surface water, groundwater or Real Estate or
other property.
"Reportable Event" means, any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder, other than any such event
for which the 30-day notice requirement under ERISA has been waived in
regulations issued by the PBGC.
"Required Lenders" means at any time Lenders whose Pro Rata
Shares aggregate more than 66-2/3% of the Commitments or, if no
Commitments shall then be in effect, Lenders who hold more than 66-2/3% of
the aggregate principal amount of the Loans then outstanding.
"Requirement of Law" means, as to any Person, any law (statutory
or common), treaty, rule or regulation or determination of an arbitrator
or of a Governmental Authority, in each case applicable to or binding upon
the Person or any of its property or to which the Person or any of its
property is subject.
"Responsible Officer" means the chief executive officer or the
president of the Borrower, or any other officer having substantially the
same authority and responsibility; or, with respect to compliance with
financial covenants and the preparation of the Coverage Ratio Certificate
and Borrowing Base Certificate, the chief financial officer, chief
accounting officer or the treasurer of the Borrower, or any other officer
having substantially the same authority and responsibility.
"Restricted Investment" means any acquisition of property by the
Borrower in exchange for cash or other property, whether in the form of an
acquisition of stock, debt, or other indebtedness or obligation, or the
purchase or acquisition of any other property, or a loan, advance, capital
contribution, or subscription, except acquisitions of the following: (a)
Equipment to be used in the business of the Borrower so long as the
acquisition costs thereof constitute Capital Expenditures permitted
hereunder; (b) Inventory in the ordinary course of business; (c) current
assets arising from the sale or lease of goods or the rendition of
services in the ordinary course of business of the Borrower; (d) direct
obligations of the United States of America, or any agency thereof, or
obligations guaranteed by the United States of America, provided that such
obligations mature within one year from the date of acquisition thereof;
(e) certificates of deposit maturing within one year from the date of
acquisition, bankers' acceptances, Eurodollar bank deposits, or overnight
bank deposits, in each case issued by, created by, or with a bank or trust
company organized under the laws of the United States or any state thereof
having capital and surplus aggregating at least $100,000,000; (f) loans to
▇▇▇▇▇▇ not to exceed (i) $6,000,000 outstanding at any time when ▇▇▇▇▇▇
shall not have financing from a lender other than the Borrower and
(ii) $500,000 outstanding at all other times; and (g) commercial paper
given a rating of "A2" or better by Standard & Poor's Corporation or "P2"
or better by ▇▇▇▇▇'▇ Investors Service, Inc. and maturing not more than 90
days from the date of creation thereof; provided that at the request of
the Agent each Restricted Investment described in (d), (e) and (g) shall
be pledged to the Agent for the benefit of the Lenders pursuant to
documentation satisfactory to the Agent.
"Revolving Loans" has the meaning specified in Section 2.2 and
includes each Agent Advance and BABC Loan.
"Settlement" and "Settlement Date" have the meanings specified
in Section 2.2(j)(l).
"Stated Termination Date" means January 14, 2001.
"Subsidiary" of a Person means any corporation, association,
partnership, joint venture or other business entity of which more than
fifty percent (50%) of the voting stock or other equity interests (in the
case of Persons other than corporations), is owned or controlled directly
or indirectly by the Person, or one or more of the Subsidiaries of the
Person, or a combination thereof. Unless the context otherwise clearly
requires, references herein to a "Subsidiary" refer to a Subsidiary of the
Borrower.
"Taxes" means any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, excluding, in the case of each Lender and the Agent, such
taxes (including income taxes or franchise taxes) as are imposed on or
measured by each Lender's net income by the jurisdiction (or any political
subdivision thereof) under the laws of which such Lender or the Agent, as
the case may be, is organized or maintains a lending office.
"Termination Date" means the earliest to occur of (i) the Stated
Termination Date, (ii) the date the Total Facility is terminated either by
the Borrower pursuant to Section 4.2 or by the Majority Lenders pursuant
to Section 11.2, and (iii) the date this Agreement is otherwise terminated
for any reason whatsoever.
"Total Facility" has the meaning specified in Section 2.1.
"UCC" means the Uniform Commercial Code (or any successor
statute) of the State of New York or of any other state the laws of which
are required by Section 9-103 thereof to be applied in connection with the
issue of perfection of security interests.
"Unfunded Pension Liability" means the excess of a Plan's
benefit liabilities under Section 4001(a)(16) of ERISA, over the current
value of that Plan's assets, determined in accordance with the assumptions
used for funding the Plan pursuant to Section 412 of the Code for the
applicable plan year.
"Unused Letter of Credit Subfacility" means an amount equal to
$15,000,000 minus the sum of (a) the aggregate undrawn amount of all
outstanding Letters of Credit plus (b) the aggregate unpaid reimbursement
obligations with respect to all Letters of Credit.
"Unused Line Fee" has the meaning specified in Section 3.5.
1.2 Accounting Terms. Any accounting term used in this Agreement
shall have, unless otherwise specifically provided herein, the meaning
customarily given in accordance with GAAP, and all financial computations
hereunder shall be computed, unless otherwise specifically provided
herein, in accordance with GAAP as consistently applied and using the same
method for inventory valuation as used in the preparation of the Financial
Statements delivered to Agent and Lenders pursuant to Section 8.6.
1.3 Interpretive Provisions. (a) The meanings of defined terms are
equally applicable to the singular and plural forms of the defined terms.
(b) The words "hereof," "herein," "hereunder" and similar words
refer to this Agreement as a whole and not to any particular provision of
this Agreement; and Subsection, Section, Schedule and Exhibit references
are to this Agreement unless otherwise specified.
(c) (i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other
writings, however evidenced.
(ii) The term "including" is not limiting and means
"including without limitation."
(iii) In the computation of periods of time from a
specified date to a later specified date, the word "from" means "from and
including," the words "to" and "until" each mean "to but excluding" and
the word "through" means "to and including."
(d) Unless otherwise expressly provided herein, (i) references
to agreements (including this Agreement) and other contractual instruments
shall be deemed to include all subsequent amendments and other
modifications thereto, but only to the extent such amendments and other
modifications are not prohibited by the terms of any Loan Document, and
(ii) references to any statute or regulation are to be construed as
including all statutory and regulatory provisions consolidating, amending,
replacing, supplementing or interpreting the statute or regulation.
(e) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation of
this Agreement.
(f) This Agreement and other Loan Documents may use several
different limitations, tests or measurements to regulate the same or
similar matters. All such limitations, tests and measurements are
cumulative and shall each be performed in accordance with their terms.
(g) This Agreement and the other Loan Documents are the result
of negotiations among and have been reviewed by counsel to the Agent, the
Borrower and the other parties, and are the products of all parties.
Accordingly, they shall not be construed against the Lenders or the Agent
merely because of the Agent's or Lenders' involvement in their
preparation.
ARTICLE 2
LOANS AND LETTERS OF CREDIT
2.1 Total Facility. Subject to all of the terms and conditions of
this Agreement, the Lenders severally agree to make available a total
credit facility of up to $70,000,000 (the "Total Facility") for the
Borrower's use from time to time during the term of this Agreement. The
Total Facility shall be comprised of a revolving line of credit consisting
of revolving loans and letters of credit up to the Maximum Revolver
Amount, as described in Sections 2.2 and 2.4.
2.2 Revolving Loans. (a) Amounts. Subject to the satisfaction of
the conditions precedent set forth in Article 10, each Lender severally
agrees, upon the Borrower's request from time to time on any Business Day
during the period from the Closing Date to but excluding the Termination
Date, to make revolving loans (the "Revolving Loans") to the Borrower, in
amounts not to exceed (except for BABC with respect to BABC Loans or Agent
Advances) such Lender's Pro Rata Share of the Borrower's Availability.
The Lenders, however, in their discretion, may elect to make Revolving
Loans or participate (as provided for in Section 2.4(f)) in the credit
support or enhancement provided through the Agent to the issuers of
Letters of Credit in excess of the Availability on one or more occasions,
but if they do so, neither the Agent nor the Lenders shall be deemed
thereby to have changed the limits of the Maximum Revolver Amount or the
Availability or to be obligated to exceed such limits on any other
occasion. If the sum of outstanding Revolving Loans, the aggregate amount
of Pending Revolving Loans, the undrawn amount of outstanding Letters of
Credit and any unpaid reimbursement obligations in respect of Letters of
Credit exceeds the Availability, the Lenders may refuse to make or
otherwise restrict the making of Revolving Loans as the Lenders determine
until such excess has been eliminated, subject to the Agent's authority,
in its sole discretion, to make Agent Advances pursuant to the terms of
Section 2.2(i).
(b) Procedure for Borrowing. (1) Each Borrowing shall be made
upon the Borrower's irrevocable written notice delivered to the Agent in
the form of a Notice of Borrowing (which must be received by the Agent
prior to 11:00 a.m. (New York time) (i) three Business Days prior to the
requested Funding Date, in the case of LIBOR Rate Loans and (ii) no later
than 1:00 p.m. on the requested Funding Date, in the case of Base Rate
Loans), specifying:
(A) the amount of the Borrowing;
(B) the requested Funding Date, which shall be a
Business Day;
(C) whether the Revolving Loans requested are to be
Base Rate Revolving Loans or LIBOR Revolving Loans; and
(D) the duration of the Interest Period if the
requested Revolving Loans are to be LIBOR Revolving Loans. If the Notice
of Borrowing fails to specify the duration of the Interest Period for any
Borrowing comprised of LIBOR Rate Loans, such Interest Period shall be
three months;
provided, however, that with respect to the Borrowing to be made on the
Closing Date, such Borrowings will consist of Base Rate Revolving Loans
only.
(2) After giving effect to any Borrowing, there may not be
more than five different Interest Periods in effect.
(3) With respect to any request for Base Rate Revolving
Loans, in lieu of delivering the above-described Notice of Borrowing the
Borrower may give the Agent telephonic notice of such request by the
required time, with such telephonic notice to be confirmed in writing
within 24 hours of the giving of such notice but Agent shall be entitled
to rely on the telephonic notice in making such Revolving Loans.
(c) Reliance upon Authority. On or prior to the Closing Date
and thereafter prior to any change with respect to any of the information
contained in the following clauses (i) and (ii), the Borrower shall
deliver to the Agent a writing setting forth (i) the account of the
Borrower to which the Agent is authorized to transfer the proceeds of the
Revolving Loans requested pursuant to this Section 2.2, and (ii) the names
of the officers and any other designated representatives authorized to
request Revolving Loans on behalf of the Borrower, and shall provide the
Agent with a specimen signature of each such officer and other designated
representatives. The Agent shall be entitled to rely conclusively on such
officer's or designated representatives' authority to request Revolving
Loans on behalf of the Borrower, the proceeds of which are to be
transferred to any of the accounts specified by the Borrower pursuant to
the immediately preceding sentence, until the Agent receives written
notice to the contrary. The Agent shall have no duty to verify the
identity of any individual representing him or herself as one of the
officers or designated representatives authorized by the Borrower to make
such requests on its behalf.
(d) No Liability. The Agent shall not incur any liability to
the Borrower as a result of acting upon any notice referred to in Sections
2.2(b) and (c), which notice the Agent believes in good faith to have been
given by an officer duly authorized by the Borrower to request Revolving
Loans on its behalf or for otherwise acting in good faith under this
Section 2.2, and the crediting of Revolving Loans to the Borrower's
deposit account, or transmittal to such Person as the Borrower shall
direct, shall conclusively establish the obligation of the Borrower to
repay such Revolving Loans as provided herein.
(e) Notice Irrevocable. Any Notice of Borrowing (or telephonic
notice in lieu thereof) made pursuant to Section 2.2(b) shall be
irrevocable and the Borrower shall be bound to borrow the funds requested
therein in accordance therewith.
(f) Agent's Election. Promptly after receipt of a Notice of
Borrowing (or telephonic notice in lieu thereof) pursuant to Section
2.2(b), the Agent shall elect, in its discretion, (i) to have the terms of
Section 2.2(g) apply to such requested Borrowing, or (ii) to request BABC
to make a BABC Loan pursuant to the terms of Section 2.2(h) in the amount
of the requested Borrowing; provided, however, that if BABC declines in
its sole discretion to make a BABC Loan pursuant to Section 2.2(h), the
Agent shall elect to have the terms of Section 2.2(g) apply to such
requested Borrowing.
(g) Making of Revolving Loans. (i) In the event that the Agent
shall elect to have the terms of this Section 2.2(g) apply to a requested
Borrowing as described in Section 2.2(f), then promptly after receipt of a
Notice of Borrowing or telephonic notice pursuant to Section 2.2(b), the
Agent shall notify the Lenders by telecopy, telephone or other similar
form of transmission, of the requested Borrowing. Each Lender shall make
the amount of such Lender's Pro Rata Share of the requested Borrowing
available to the Agent in same day funds, to such account of the Agent as
the Agent may designate, not later than 1:00 p.m. (New York time) on the
Funding Date applicable thereto. After the Agent's receipt of the
proceeds of such Revolving Loans, upon satisfaction of the applicable
conditions precedent set forth in Article 10, the Agent shall make the
proceeds of such Revolving Loans available to the Borrower on the
applicable Funding Date by transferring same day funds equal to the
proceeds of such Revolving Loans received by the Agent to the account of
the Borrower, designated in writing by the Borrower and acceptable to the
Agent; provided, however, that the amount of Revolving Loans so made on
any date shall in no event exceed the Availability of the Borrower on such
date.
(ii) Unless the Agent receives notice from a Lender on or prior
to the Closing Date or, with respect to any Borrowing after the Closing
Date, at least one Business Day prior to the date of such Borrowing, that
such Lender will not make available as and when required hereunder to the
Agent for the account of the Borrower the amount of that Lender's Pro Rata
Share of the Borrowing, the Agent may assume that each Lender has made
such amount available to the Agent in immediately available funds on the
Funding Date and the Agent may (but shall not be so required), in reliance
upon such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent any Lender shall not have made
its full amount available to the Agent in immediately available funds and
the Agent in such circumstances has made available to the Borrower such
amount, that Lender shall on the Business Day following such Funding Date
make such amount available to the Agent, together with interest at the
Federal Funds Rate for each day during such period. A notice of the Agent
submitted to any Lender with respect to amounts owing under this
subsection shall be conclusive, absent manifest error. If such amount is
so made available, such payment to the Agent shall constitute such
Lender's Loan on the date of Borrowing for all purposes of this Agreement.
If such amount is not made available to the Agent on the Business Day
following the Funding Date, the Agent will notify the Borrower of such
failure to fund and, upon demand by the Agent, the Borrower shall pay such
amount to the Agent for the Agent's account, together with interest
thereon for each day elapsed since the date of such Borrowing, at a rate
per annum equal to the interest rate applicable at the time to the Loans
comprising such Borrowing. The failure of any Lender to make any Loan on
any Funding Date (any such Lender, prior to the cure of such failure,
being hereinafter referred to as a "Defaulting Lender") shall not relieve
any other Lender of any obligation hereunder to make a Loan on such
Funding Date, but no Lender shall be responsible for the failure of any
other Lender to make the Loan to be made by such other Lender on any
Funding Date.
(iii) The Agent shall not be obligated to transfer to a
Defaulting Lender any payments made by Borrower to the Agent for the
Defaulting Lender's benefit; nor shall a Defaulting Lender be entitled to
the sharing of any payments hereunder. Amounts payable to a Defaulting
Lender shall instead be paid to or retained by the Agent. The Agent may
hold and, in its discretion, re-lend to Borrower the amount of all such
payments received or retained by it for the account of such Defaulting
Lender. Any amounts so re-lent to the Borrower shall bear interest at the
rate applicable to Base Rate Revolving Loans and for all other purposes of
this Agreement shall be treated as if they were Revolving Loans, provided,
however, that for purposes of voting or consenting to matters with respect
to the Loan Documents and determining Pro Rata Shares, such Defaulting
Lender shall be deemed not to be a "Lender" and such Lender's Commitment
shall be deemed to be zero (-0-). Until a Defaulting Lender cures its
failure to fund its Pro Rata Share of any Borrowing (1) such Defaulting
Lender shall not be entitled to any portion of the Unused Line Fee and (2)
the Unused Line Fee shall accrue in favor of the Lenders which have funded
their respective Pro Rata Shares of such requested Borrowing, shall be
allocated among such performing Lenders ratably based upon their relative
Commitments, and shall be calculated based upon the average amount by
which the aggregate Commitments of such performing Lenders exceeds the sum
of outstanding Revolving Loans and the undrawn face amount of all
outstanding Letters of Credit. This section shall remain effective with
respect to such Lender until such time as the Defaulting Lender shall no
longer be in default of any of its obligations under this Agreement. The
terms of this Section shall not be construed to increase or otherwise
affect the Commitment of any Lender, or relieve or excuse the performance
by Borrower of its duties and obligations hereunder.
(h) Making of BABC Loans. (i) In the event the Agent shall
elect, with the consent of BABC, to have the terms of this Section 2.2(h)
apply to a requested Borrowing as described in Section 2.2(f), BABC shall
make a Revolving Loan in the amount of such Borrowing (any such Revolving
Loan made solely by BABC pursuant to this Section 2.2(h) being referred to
as a "BABC Loan" and such Revolving Loans being referred to collectively
as "BABC Loans") available to the Borrower on the Funding Date applicable
thereto by transferring same day funds to an account of the Borrower,
designated in writing by the Borrower and acceptable to the Agent. Each
BABC Loan is a Revolving Loan hereunder and shall be subject to all the
terms and conditions applicable to other Revolving Loans except that all
payments thereon shall be payable to BABC solely for its own account (and
for the account of the holder of any participation interest with respect
to such Revolving Loan). The Agent shall not request BABC to make any
BABC Loan if (i) the Agent shall have received written notice from any
Lender, or otherwise has actual knowledge, that one or more of the
applicable conditions precedent set forth in Article 10 will not be
satisfied on the requested Funding Date for the applicable Borrowing, or
(ii) the requested Borrowing would exceed the Availability of the Borrower
on such Funding Date. BABC shall not otherwise be required to determine
whether the applicable conditions precedent set forth in Article 10 have
been satisfied or the requested Borrowing would exceed the Availability of
the Borrower on the Funding Date applicable thereto prior to making, in
its sole discretion, any BABC Loan.
(ii) The BABC Loans shall be repayable as provided herein
(including without limitation Section 2.2(j)) and secured by the
Collateral, shall constitute Revolving Loans and Obligations hereunder,
and shall bear interest at the rate applicable to the Revolving Loans from
time to time.
(i) Agent Advances. (i) Subject to the limitations set forth
in the provisos contained in this Section 2.2(i), the Agent is hereby
authorized by the Borrower and the Lenders, from time to time in the
Agent's sole discretion, (1) after the occurrence of a Default or an Event
of Default, or (2) at any time that any of the other applicable conditions
precedent set forth in Article 10 have not been satisfied, to make
Revolving Loans to the Borrower on behalf of the Lenders which the Agent,
in its reasonable business judgment, deems necessary or desirable (A) to
preserve or protect the Collateral, or any portion thereof, (B) to enhance
the likelihood of, or maximize the amount of, repayment of the Loans and
other Obligations, or (C) to pay any other amount chargeable to the
Borrower pursuant to the terms of this Agreement, including, without
limitation, costs, fees and expenses as described in Section 15.7 (any of
the advances described in this Section 2.2(i) being hereinafter referred
to as "Agent Advances"); provided, that the Required Lenders may at any
time revoke the Agent's authorization contained in this Section 2.2(i) to
make Agent Advances, any such revocation to be in writing and to become
effective prospectively upon the Agent's receipt thereof; and provided
further, that the Agent shall not make Agent Advances for purposes
described in clauses (B) and (C) above which would cause the Revolving
Loans and Letters of Credit otherwise permitted to be outstanding under
the Agreement to exceed $5,000,000.
(ii) The Agent Advances shall be repayable on demand and secured
by the Collateral, shall constitute Revolving Loans and Obligations
hereunder, and shall bear interest at the rate applicable to the Revolving
Loans from time to time. The Agent shall notify each Lender in writing of
each such Agent Advance.
(j) Settlement. It is agreed that each Lender's funded portion
of the Revolving Loan is intended by the Lenders to be equal at all times
to such Lender's Pro Rata Share of the outstanding Revolving Loans.
Notwithstanding such agreement, the Agent, BABC, and the other Lenders
agree (which agreement shall not be for the benefit of or enforceable by
the Borrower) that in order to facilitate the administration of this
Agreement and the other Loan Documents, settlement among them as to the
Revolving Loans, the BABC Loans and the Agent Advances shall take place on
a periodic basis in accordance with the following provisions:
(i) The Agent shall request settlement ("Settlement") with the
Lenders on a weekly basis, or on a more frequent basis if so determined by
the Agent, (1) on behalf of BABC, with respect to each outstanding BABC
Loan, (2) for itself, with respect to each Agent Advance, and (3) with
respect to collections received, in each case, by notifying the Lenders of
such requested Settlement by telecopy, telephone or other similar form of
transmission, of such requested Settlement, no later than 1:00 p.m. (New
York time) on the date of such requested Settlement (the "Settlement
Date"). Each Lender (other than BABC, in the case of BABC Loans) shall
make the amount of such Lender's Pro Rata Share of the outstanding
principal amount of the BABC Loans and Agent Advances with respect to
which Settlement is requested available to the Agent, for itself or for
the account of BABC, in same day funds, to such account of the Agent as
the Agent may designate, not later than 3:00 p.m. (New York time), on the
Settlement Date applicable thereto, regardless of whether the applicable
conditions precedent set forth in Article 10 have then been satisfied.
Such amounts made available to the Agent shall be applied against the
amounts of the applicable BABC Loan or Agent Advance and, together with
the portion of such BABC Loan or Agent Advance representing BABC's Pro
Rata Share thereof, shall constitute Revolving Loans of such Lenders. If
any such amount is not made available to the Agent by any Lender on the
Settlement Date applicable thereto, the Agent shall be entitled to recover
such amount on demand from such Lender together with interest thereon at
the Federal Funds Rate for the first three (3) days from and after the
Settlement Date and thereafter at the Interest Rate then applicable to the
Revolving Loans.
(ii) Notwithstanding the foregoing, not more than one (1)
Business Day after demand is made by the Agent (whether before or after
the occurrence of a Default or an Event of Default and regardless of
whether the Agent has requested a Settlement with respect to a BABC Loan
or Agent Advance), each other Lender shall irrevocably and unconditionally
purchase and receive from BABC or the Agent, as applicable, without
recourse or warranty, an undivided interest and participation in such BABC
Loan or Agent Advance to the extent of such Lender's Pro Rata Share
thereof by paying to the Agent, in same day funds, an amount equal to such
Lender's Pro Rata Share of such BABC Loan or Agent Advance. If such
amount is not in fact made available to the Agent by any Lender, the Agent
shall be entitled to recover such amount on demand from such Lender
together with interest thereon at the Federal Funds Rate for the first
three (3) days from and after such demand and thereafter at the Interest
Rate then applicable to the Revolving Loans.
(iii) From and after the date, if any, on which any Lender
purchases an undivided interest and participation in any BABC Loan or
Agent Advance pursuant to subsection (ii) above, the Agent shall promptly
distribute to such Lender at such address as such Lender may request in
writing, such Lender's Pro Rata Share of all payments of principal and
interest and all proceeds of Collateral received by the Agent in respect
of such BABC Loan or Agent Advance.
(iv) Between Settlement Dates, the Agent, to the extent no Agent
Advances or BABC Loans are outstanding, may pay over to BABC any payments
received by Agent, which in accordance with the terms of this Agreement
would be applied to the reduction of the Revolving Loans, for application
to BABC's other outstanding Revolving Loans. If, as of any Settlement
Date, collections received since the then immediately preceding Settlement
Date have been applied to BABC's other outstanding Revolving Loans other
than to BABC Loans or Agent Advances, as provided for in the previous
sentence, BABC shall pay to the Agent for the accounts of the Lenders, to
be applied to the outstanding Revolving Loans of such Lenders, an amount
such that each Lender shall, upon receipt of such amount, have, as of such
Settlement Date, its Pro Rata Share of the Revolving Loans. During the
period between Settlement Dates, BABC with respect to BABC Loans, the
Agent with respect to Agent Advances, and each Lender with respect to the
Revolving Loans other than BABC Loans and Agent Advances, shall be
entitled to interest at the applicable rate or rates payable under this
Agreement on the actual average daily amount of funds employed by BABC,
the Agent and the other Lenders.
(k) Notation. The Agent shall record on its books the
principal amount of the Revolving Loans owing to each Lender, including
the BABC Loans owing to BABC, and the Agent Advances owing to the Agent,
from time to time. In addition, each Lender is authorized, at such
Lender's option, to note the date and amount of each payment or prepayment
of principal of such Lender's Revolving Loans in its books and records,
including computer records, such books and records constituting rebuttably
presumptive evidence, absent manifest error, of the accuracy of the
information contained therein.
(l) Lenders' Failure to Perform. All Loans (other than BABC
Loans and Agent Advances) shall be made by the Lenders simultaneously and
in accordance with their Pro Rata Shares. It is understood that (a) no
Lender shall be responsible for any failure by any other Lender to perform
its obligation to make any Loans hereunder, nor shall any Commitment of
any Lender be increased or decreased as a result of any failure by any
other Lender to perform its obligation to make any Loans hereunder, (b) no
failure by any Lender to perform its obligation to make any Loans
hereunder shall excuse any other Lender from its obligation to make any
Loans hereunder, and (c) the obligations of each Lender hereunder shall be
several, not joint and several.
2.3 Reserved.
2.4 Letters of Credit.
(a) Agreement to Cause Issuance. Subject to the terms and
conditions of this Agreement, and in reliance upon the representations and
warranties of the Borrower herein set forth, the Agent agrees to take
reasonable steps to cause to be issued for the account of the Borrower and
to provide credit support or other enhancement to banks acceptable to
Agent, which issue Letters of Credit for the account of the Borrower (any
such credit support or enhancement being herein referred to a "Credit
Support") in accordance with this Section 2.4 from time to time during the
term of this Agreement. Upon the Closing Date, all DIP Letters of Credit
then outstanding shall constitute Letters of Credit hereunder with the
same effect and status as if such Letters of Credit were originally issued
pursuant to this Agreement. All fees payable with respect to such DIP
Letters of Credit accruing through the Closing Date shall be paid on the
Closing Date. Until the Closing Date, the Letter of Credit fees with
respect to all DIP Letters of Credit shall accrue and be payable at the
rates set forth in the DIP Loan and Security Agreement and on and after
the Closing Date such fees shall accrue and be payable at the rates set
forth herein.
(b) Amounts; Outside Expiration Date. The Agent shall not have
any obligation to take steps to cause to be issued any Letter of Credit or
to provide Credit Support for any Letter of Credit at any time if: (1) the
maximum undrawn amount of the requested Letter of Credit is greater than
the Unused Letter of Credit Subfacility at such time; (2) the maximum
undrawn amount of the requested Letter of Credit and all commissions,
fees, and charges due from the Borrower in connection with the opening
thereof exceed the Availability of the Borrower at such time; or (3) such
Letter of Credit has an expiration date later than the Stated Termination
Date or more than twelve (12) months from the date of issuance in the case
of a standby Letter of Credit and 180 days in the case of a merchandise
Letter of Credit.
(c) Other Conditions. In addition to being subject to the
satisfaction of the applicable conditions precedent contained in Article
10, the obligation of the Agent to take reasonable steps to cause to be
issued any Letter of Credit or to provide Credit Support for any Letter of
Credit is subject to the following conditions precedent having been
satisfied in a manner satisfactory to the Agent:
(1) The Borrower shall have delivered to the proposed
issuer of such Letter of Credit, at such times and in such manner as such
proposed issuer may prescribe, an application in form and substance
satisfactory to such proposed issuer and the Agent for the issuance of the
Letter of Credit and such other documents as may be required pursuant to
the terms thereof, and the form and terms of the proposed Letter of Credit
shall be satisfactory to the Agent and such proposed issuer; and
(2) As of the date of issuance, no order of any court,
arbitrator or Governmental Authority shall purport by its terms to enjoin
or restrain money center banks generally from issuing letters of credit of
the type and in the amount of the proposed Letter of Credit, and no law,
rule or regulation applicable to money center banks generally and no
request or directive (whether or not having the force of law) from any
Governmental Authority with jurisdiction over money center banks generally
shall prohibit, or request that the proposed issuer of such Letter of
Credit refrain from, the issuance of letters of credit generally or the
issuance of such Letters of Credit.
(d) Issuance of Letters of Credit.
(1) Request for Issuance. The Borrower shall give the
Agent two (2) Business Days' prior written notice of the Borrower's
request for the issuance of a Letter of Credit. Such notice shall be
irrevocable and shall specify the original face amount of the Letter of
Credit requested, the effective date (which date shall be a Business Day)
of issuance of such requested Letter of Credit, whether such Letter of
Credit may be drawn in a single or in partial draws, the date on which
such requested Letter of Credit is to expire (which date shall be a
Business Day), the purpose for which such Letter of Credit is to be
issued, and the beneficiary of the requested Letter of Credit. The
Borrower shall attach to such notice the proposed form of the Letter of
Credit.
(2) Responsibilities of the Agent; Issuance. The Agent
shall determine, as of the Business Day immediately preceding the
requested effective date of issuance of the Letter of Credit set forth in
the notice from the Borrower pursuant to Section 2.4(d)(1), (i) the amount
of the applicable Unused Letter of Credit Subfacility and (ii) the
Availability of the Borrower as of such date. If (i) the undrawn amount
of the requested Letter of Credit is not greater than the applicable
Unused Letter of Credit Subfacility and (ii) the issuance of such
requested Letter of Credit and all commissions, fees, and charges due from
the Borrower in connection with the opening thereof would not exceed the
Availability of the Borrower, the Agent shall take reasonable steps to
cause such issuer to issue the requested Letter of Credit on such
requested effective date of issuance.
(3) Notice of Issuance. On each Settlement Date the Agent
shall give notice to each Lender of the issuance of all Letters of Credit
issued since the last Settlement Date.
(4) No Extensions or Amendment. The Agent shall not be
obligated to cause any Letter of Credit to be extended or amended unless
the requirements of this Section 2.4(d) are met as though a new Letter of
Credit were being requested and issued. With respect to any Letter of
Credit which contains any "evergreen" or automatic renewal provision, each
Lender shall be deemed to have consented to any such extension or renewal
unless any such Lender shall have provided to the Agent, not less than 30
days prior to the last date on which the applicable issuer can in
accordance with the terms of the applicable Letter of Credit decline to
extend or renew such Letter of Credit, written notice that it declines to
consent to any such extension or renewal, provided, that if all of the
requirements of this Section 2.4 are met and no Default or Event of
Default exists, no Lender shall decline to consent to any such extension
or renewal.
(e) Payments Pursuant to Letters of Credit.
(1) Payment of Letter of Credit Obligations. The Borrower
agrees to reimburse the issuer for any draw under any Letter of Credit and
the Agent for the account of the Lenders upon any payment pursuant to any
Credit Support immediately upon demand, and to pay the issuer of the
Letter of Credit the amount of all other obligations and other amounts
payable to such issuer under or in connection with any Letter of Credit
immediately when due, irrespective of any claim, setoff, defense or other
right which the Borrower may have at any time against such issuer or any
other Person.
(2) Revolving Loans to Satisfy Reimbursement Obligations.
In the event that the issuer of any Letter of Credit honors a draw under
such Letter of Credit or the Agent shall have made any payment pursuant to
any Credit Support and the Borrower shall not have repaid such amount to
the issuer of such Letter of Credit or the Agent, as applicable, pursuant
to Section 2.4(e)(1), the Agent shall, upon receiving notice of such
failure, notify each Lender of such failure, and each Lender shall
unconditionally pay to the Agent, for the account of such issuer or the
Agent, as applicable, as and when provided hereinbelow, an amount equal to
such Lender's Pro Rata Share of the amount of such payment in Dollars and
in same day funds. If the Agent so notifies the Lenders prior to 1:00
p.m. (New York time) on any Business Day, each Lender shall make available
to the Agent the amount of such payment, as provided in the immediately
preceding sentence, on such Business Day. Such amounts paid by the
Lenders to the Agent shall constitute Revolving Loans which shall be
deemed to have been requested by the Borrower pursuant to Section 2.2
as set forth in Section 4.7.
(f) Participations.
(1) Purchase of Participations. Immediately upon issuance
of any Letter of Credit in accordance with Section 2.4(d), each Lender
shall be deemed to have irrevocably and unconditionally purchased and
received without recourse or warranty, an undivided interest and
participation in the Letter of Credit or the Credit Support provided
through the Agent to such issuer in connection with the issuance of such
Letter of Credit, equal to such Lender's Pro Rata Share of the face amount
of such Letter of Credit or the amount of such Credit Support (including,
without limitation, all obligations of the Borrower with respect thereto,
and any security therefor or guaranty pertaining thereto).
(2) Sharing of Reimbursement Obligation Payments.
Whenever the Agent receives a payment from the Borrower on account of
reimbursement obligations in respect of a Letter of Credit or Credit
Support as to which the Agent has previously received for the account of
the issuer thereof payment from a Lender pursuant to Section 2.4(e)(2),
the Agent shall promptly pay to such Lender such Lender's Pro Rata Share
of such payment from the Borrower in Dollars. Each such payment shall be
made by the Agent on the Business Day on which the Agent receives
immediately available funds paid to such Person pursuant to the
immediately preceding sentence, if received prior to 3:00 p.m. (New York
time) on such Business Day and otherwise on the next succeeding Business
Day.
(3) Documentation. Upon the request of any Lender, the
Agent shall furnish to such Lender copies of any Letter of Credit,
reimbursement agreements executed in connection therewith, application for
any Letter of Credit and credit support or enhancement provided through
the Agent in connection with the issuance of any Letter of Credit, and
such other documentation as may reasonably be requested by such Lender.
(4) Obligations Irrevocable. The obligations of each
Lender to make payments to the Agent with respect to any Letter of Credit
or with respect to any Credit Support provided through the Agent with
respect to a Letter of Credit, and the obligations of the Borrower to make
payments to the Agent, for the account of the Lenders, shall be
irrevocable, not subject to any qualification or exception whatsoever ,
including, without limitation, any of the following circumstances:
(i) any lack of validity or enforceability of this
Agreement or any of the other Loan Documents;
(ii) the existence of any claim, setoff, defense or
other right which the Borrower may have at any time against a beneficiary
named in a Letter of Credit or any transferee of any Letter of Credit (or
any Person for whom any such transferee may be acting), any
Lender, the Agent, the issuer of such Letter of Credit, or any other
Person, whether in connection with this Agreement, any Letter of Credit,
the transactions contemplated herein or any unrelated transactions
(including any underlying transactions between the Borrower or any other
Person and the beneficiary named in any Letter of Credit);
(iii) any draft, certificate or any other document
presented under the Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect;
(iv) the surrender or impairment of any security for
the performance or observance of any of the terms of any of the Loan
Documents; or
(v) the occurrence of any Default or Event of
Default.
(g) Recovery or Avoidance of Payments. In the event any
payment by or on behalf of the Borrower received by the Agent with respect
to any Letter of Credit or Credit Support provided for any Letter of
Credit (or any guaranty by the Borrower or reimbursement obligation of the
Borrower relating thereto) and distributed by the Agent to the Lenders on
account of their respective participations therein is thereafter set
aside, avoided or recovered from the Agent in connection with any
receivership, liquidation or bankruptcy proceeding, the Lenders shall,
upon demand by the Agent, pay to the Agent their respective Pro Rata
Shares of such amount set aside, avoided or recovered, together with
interest at the rate required to be paid by the Agent upon the amount
required to be repaid by it.
(h) Compensation for Letters of Credit.
(1) Letter of Credit Fee. The Borrower agrees to pay to
the Agent with respect to each Letter of Credit, for the account of the
Lenders, the Letter of Credit Fee specified in, and in accordance with the
terms of, Section 3.6.
(2) Issuer Fees and Charges. The Borrower shall pay to
the issuer of any Letter of Credit, or to the Agent, for the account of
the issuer of any such Letter of Credit, solely for such issuer's account,
such fees and other charges as are charged by such issuer for letters of
credit issued by it, including, without limitation, its standard fees for
issuing, administering, amending, renewing, paying and canceling letters
of credit and all other fees associated with issuing or servicing letters
of credit, as and when assessed.
(i) Indemnification; Exoneration; Power of Attorney
(1) Indemnification. In addition to amounts payable as
elsewhere provided in this Section 2.4, the Borrower hereby agrees to
protect, indemnify, pay and save the Lenders and the Agent harmless from
and against any and all claims, demands, liabilities, damages, losses,
costs, charges and expenses (including reasonable attorneys' fees) which
any Lender or the Agent may incur or be subject to as a consequence,
direct or indirect, of the issuance of any Letter of Credit or the
provision of any credit support or enhancement in connection therewith.
The agreement in this Section 2.4(i)(1) shall survive payments of all
Obligations.
(2) Assumption of Risk by the Borrower. As among the
Borrower, the Lenders, and the Agent, the Borrower assumes all risks of
the acts and omissions of, or misuse of any of the Letters of Credit by,
the respective beneficiaries of such Letters of Credit. In furtherance
and not in limitation of the foregoing, the Lenders and the Agent shall
not be responsible for: (A) the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document submitted by any Person in
connection with the application for and issuance of and presentation of
drafts with respect to any of the Letters of Credit, even if it should
prove to be in any or all respects invalid, insufficient, inaccurate,
fraudulent or forged; (B) the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign any Letter
of Credit or the rights or benefits thereunder or proceeds thereof, in
whole or in part, which may prove to be invalid or ineffective for any
reason; (C) the failure of the beneficiary of any Letter of Credit to
comply duly with conditions required in order to draw upon such Letter of
Credit; (D) errors, omissions, interruptions, or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex or otherwise,
whether or not they be in cipher; (E) errors in interpretation of
technical terms; (F) any loss or delay in the transmission or otherwise of
any document required in order make a drawing under any Letter of Credit
or of the proceeds thereof; (G) the misapplication by the beneficiary of
any Letter of Credit of the proceeds of any drawing under such Letter of
Credit; or (H) any consequences arising from causes beyond the control of
the Lenders or the Agent, including, without limitation, any act or
omission, whether rightful or wrongful, of any present or future de jure
or de facto Governmental Authority. None of the foregoing shall affect,
impair or prevent the vesting of any rights or powers of the Agent or any
Lender under this Section 2.4(i).
(3) Exoneration. In furtherance and extension, and not in
limitation, of the specific provisions set forth above, any action taken
or omitted by the Agent or any Lender under or in connection with any of
the Letters of Credit or any related certificates, if taken or omitted in
the absence of gross negligence or willful misconduct, shall not put the
Agent or any Lender under any resulting liability to the Borrower or
relieve the Borrower of any of its obligations hereunder to any such
Person.
(4) Power of Attorney. In connection with all Inventory
financed by Letters of Credit, the Borrower hereby appoints the Agent, or
the Agent's designee, as its attorney, with full power and authority: (a)
to sign and/or endorse the Borrower's name upon any warehouse or other
receipts; (b) to sign the Borrower's name on bills of lading and other
negotiable and non-negotiable documents; (c) to clear Inventory through
customs in the Agent's or the Borrower's name, and to sign and deliver to
customs officials powers of attorney in the Borrower's name for such
purpose; (d) to complete in the Borrower's or the Agent's name, any order,
sale, or transaction, obtain the necessary documents in connection
therewith, and collect the proceeds thereof; and (e) to do such other acts
and things as are necessary in order to enable the Agent to obtain
possession of the Inventory and to obtain payment of the Obligations.
Neither the Agent nor its designee, as the Borrower's attorney, will be
liable for any acts or omissions, nor for any error of judgement or
mistakes of fact or law. This power, being coupled with an interest, is
irrevocable until all Obligations have been paid and satisfied.
(5) Account Party. The Borrower hereby authorizes and
directs any issuer of a Letter of Credit to name the Borrower as the
"Account Party" therein and to deliver to the Agent, with notice thereof
to Borrower, all instruments, documents and other writings and property
received by the issuer pursuant to the Letter of Credit, and to accept and
rely upon the Agent's instructions and agreements with respect to all
matters arising in connection with the Letter of Credit or the application
therefor.
(6) Control of Inventory. In connection with all
Inventory financed by Letters of Credit, the Borrower will, at the Agent's
request, instruct all suppliers, carriers, forwarders, warehouses or
others receiving or holding cash, checks, Inventory, documents or
instruments in which the Agent holds a security interest to deliver them
to the Agent and/or subject to the Agent's order, and if they shall come
into the Borrower's possession, to deliver them, upon request, to the
Agent in their original form. The Borrower shall also, at the Agent's
request, designate the Agent as the consignee on all bills of lading and
other negotiable and non-negotiable documents.
(j) Supporting Letter of Credit; Cash Collateral. If,
notwithstanding the provisions of Section 2.4(b) and Section 12.1 any
Letter of Credit is outstanding upon the termination of this Agreement,
then upon such termination the Borrower shall deposit with the Agent, for
the ratable benefit of the Agent and the Lenders, with respect to each
Letter of Credit then outstanding, as the Majority Lenders, in their
discretion shall specify, either (A) a standby letter of credit (a
"Supporting Letter of Credit") in form and substance satisfactory to the
Agent, issued by an issuer satisfactory to the Agent in an amount equal to
the greatest amount for which such Letter of Credit may be drawn plus any
fees and expenses associated with such Letter of Credit, under which
Supporting Letter of Credit the Agent is entitled to draw amounts
necessary to reimburse the Agent and the Lenders for payments made by the
Agent and the Lenders under such Letter of Credit or under any credit
support or enhancement provided through the Agent with respect thereto and
any fees and expenses associated with such Letter of Credit, or (B) cash
in amounts necessary to reimburse the Agent and the Lenders for payments
made by the Agent or the Lenders under such Letter of Credit or under any
credit support or enhancement provided through the Agent with respect
thereto and any fees and expenses associated with such Letter of Credit.
Such Supporting Letter of Credit or deposit of cash shall be held by the
Agent, for the ratable benefit of the Agent and the Lenders, as security
for, and to provide for the payment of, the aggregate undrawn amount of
such Letters of Credit remaining outstanding.
2.5 Automated Clearing House Transfers and Overdrafts. The Borrower
may request and the Agent may, in its sole and absolute discretion,
arrange for the Borrower to obtain from Bank of America ACH Transactions.
The Borrower agrees to indemnify and hold the Agent and the Lenders
harmless from all losses, liabilities, costs, expenses and claims incurred
by the Agent and Lenders arising from or related to such ACH Transactions.
The Borrower acknowledges and agrees that the obtaining of ACH
Transactions from Bank of America (a) is in the sole and absolute
discretion of Bank of America, (b) is subject to all rules and regulations
of Bank of America, and (c) is due to Bank of America relying on the
indemnity of the Agent and the Lenders to Bank of America with respect to
all risks of loss associated with the ACH Transactions.
ARTICLE 3
INTEREST AND FEES
3.1 Interest.
(a) Interest Rates. All outstanding Obligations shall bear
interest on the unpaid principal amount thereof (including, to the extent
permitted by law, on interest thereon not paid when due) from the date
made until paid in full in cash at a rate determined by reference to the
Base Rate or the LIBOR Rate and Sections 3.1(a)(i) or (ii), as applicable,
but not to exceed the Maximum Rate described in Section 3.3. Subject to
the provisions of Section 3.2, any of the Loans may be converted into, or
continued as, Base Rate Loans or LIBOR Rate Loans in the manner provided
in Section 3.2. If at any time Loans are outstanding with respect to
which notice has not been delivered to the Agent in accordance with the
terms of this Agreement specifying the basis for determining the interest
rate applicable thereto, then those Loans shall be Base Rate Revolving
Loans and shall bear interest at a rate determined by reference to the
Base Rate until notice to the contrary has been given to the Agent in
accordance with this Agreement and such notice has become effective.
Except as otherwise provided herein, the outstanding Obligations shall
bear interest as follows:
(i) For all Base Rate Revolving Loans and other
Obligations (other than Libor Revolving Loans) at a fluctuating per annum
rate equal to the Base Rate plus the Applicable Margin; and
(ii) For all Libor Revolving Loans at a per annum rate
equal to the Libor Rate plus the Applicable Margin.
Each change in the Base Rate shall be reflected in the interest rate
described in (i) above as of the effective date of such change. All
interest charges shall be computed on the basis of a year of 360 days and
actual days elapsed (which results in more interest being paid than if
computed on the basis of a 365-day year). Interest accrued on all Loans
will be payable in arrears on the first day of each month hereafter and on
the last day of each Interest Period.
(b) Default Rate. If any Default or Event of Default occurs
and is continuing and the Majority Lenders in their discretion so elect,
then, while any such Default or Event of Default is outstanding, all of
the Obligations shall bear interest at the Default Rate applicable
thereto.
3.2 Conversion and Continuation Elections. (a) The Borrower may,
upon irrevocable written notice to the Agent in accordance with Subsection
3.2(b):
(i) elect, as of any Business Day, in the case of Base
Rate Loans to convert any such Loans (or any part thereof in an amount not
less than $2,000,000, or that is in an integral multiple of $500,000 in
excess thereof) into LIBOR Rate Loans; or
(ii) elect, as of the last day of the applicable Interest
Period, to continue any LIBOR Rate Loans having Interest Periods expiring
on such day (or any part thereof in an amount not less than $2,000,000, or
that is in an integral multiple of $500,000 in excess thereof);
provided, that if at any time the aggregate amount of LIBOR Rate Loans in
respect of any Borrowing is reduced, by payment, prepayment, or conversion
of part thereof to be less than $2,000,000, such LIBOR Rate Loans shall
automatically convert into Base Rate Loans, and on and after such date the
right of the Borrower to continue such Loans as, and convert such Loans
into, LIBOR Rate Loans, as the case may be, shall terminate.
(b) The Borrower shall deliver a Notice of
Conversion/Continuation to be received by the Agent not later than 11:00
a.m. (New York time) at least three Business Days in advance of the
Conversion/Continuation Date, if the Loans are to be converted into or
continued as LIBOR Rate Loans and specifying:
(i) the proposed Conversion/Continuation Date;
(ii) the aggregate amount of Loans to be converted or
renewed;
(iii) the type of Loans resulting from the proposed
conversion or continuation; and
(iv) the duration of the requested Interest Period.
(c) If upon the expiration of any Interest Period applicable to
LIBOR Rate Loans, the Borrower has failed to select timely a new Interest
Period to be applicable to LIBOR Rate Loans or if any Default or Event of
Default then exists, the Borrower shall be deemed to have elected to
convert such LIBOR Rate Loans into Base Rate Loans effective as of the
expiration date of such Interest Period.
(d) The Agent will promptly notify each Lender of its receipt
of a Notice of Conversion/Continuation. All conversions and continuations
shall be made ratably according to the respective outstanding principal
amounts of the Loans with respect to which the notice was given held by
each Lender.
(e) During the existence of a Default or Event of Default, the
Borrower may not elect to have a Loan converted into or continued as a
LIBOR Rate Loan.
(f) After giving effect to any conversion or continuation of
Loans, there may not be more than five different Interest Periods in
effect.
3.3 Maximum Interest Rate. In no event shall any interest rate
provided for hereunder exceed the maximum rate legally chargeable by
Lender under applicable law for loans of the type provided for hereunder
(the "Maximum Rate"). If, in any month, any interest rate, absent such
limitation, would have exceeded the Maximum Rate, then the interest rate
for that month shall be the Maximum Rate, and, if in future months, that
interest rate would otherwise be less than the Maximum Rate, then that
interest rate shall remain at the Maximum Rate until such time as the
amount of interest paid hereunder equals the amount of interest which
would have been paid if the same had not been limited by the Maximum Rate.
In the event that, upon payment in full of the Obligations, the total
amount of interest paid or accrued under the terms of this Agreement is
less than the total amount of interest which would, but for this Section
3.3, have been paid or accrued if the interest rates otherwise set forth
in this Agreement had at all times been in effect, then the Borrower
shall, to the extent permitted by applicable law, pay the Agent, for the
account of the Lenders, an amount equal to the difference between (a) the
lesser of (i) the amount of interest which would have been charged if the
Maximum Rate had, at all times, been in effect or (ii) the amount of
interest which would have accrued had the interest rates otherwise set
forth in this Agreement, at all times, been in effect and (b) the amount
of interest actually paid or accrued under this Agreement. In the event
that a court determines that the Agent and/or any Lender has received
interest and other charges hereunder in excess of the Maximum Rate, such
excess shall be deemed received on account of, and shall automatically be
applied to reduce, the Obligations other than interest, in the inverse
order of maturity, and if there are no Obligations outstanding, the Agent
and/or such Lender shall refund to the Borrower such excess.
3.4 Reserved.
3.5 Unused Line Fee. Until the Obligations have been paid in full
and this Agreement is terminated, the Borrower agrees to pay, on the first
day of each month and on the Termination Date, to the Agent, for the
ratable account of the Lenders, an unused line fee equal to three-eighths
of one percent (3/8%) per annum on the average daily amount by which the
Maximum Revolver Amount exceeded the sum of the average daily outstanding
amount of Revolving Loans and the undrawn face amount of all outstanding
Letters of Credit, during the immediately preceding month or shorter
period if calculated on the Termination Date. The unused line fee shall
be computed on the basis of a 360-day year for the actual number of days
elapsed. All payments received by the Agent on account of Accounts or as
proceeds of other Collateral shall be deemed to be credited to the
Borrower's Loan Account immediately upon receipt for purposes of
calculating the unused line fee pursuant to this Section 3.5.
3.6 Letter of Credit Fee. The Borrower agrees to pay to the Agent,
for the ratable account of the Lenders, for each Letter of Credit
(including, without limitation, each DIP Letter of Credit outstanding on
the Closing Date, but without duplication of any letter of credit fees for
any such DIP Letters of Credit which were paid under the DIP Loan and
Security Agreement for any period prior to the Closing Date), a fee (the
"Letter of Credit Fee") equal to two and one-quarter percent (2.25%) per
annum of the undrawn face amount of each Letter of Credit issued for the
Borrower's account at the Borrower's request, plus all out-of-pocket
costs, fees and expenses incurred by the Agent in connection with the
application for, issuance of, or amendment to any Letter of Credit, which
costs, fees and expenses could include a "fronting fee" required to be
paid by the Agent to such issuer for the assumption of the settlement risk
in connection with the issuance of such Letter of Credit; provided that
all such costs, fees and expenses shall be without duplication of any
costs, fees and expenses charged to the Borrower pursuant to Section
2.4(h)(2). The Letter of Credit Fee shall be payable monthly in arrears
on the first day of each month following any month in which a Letter of
Credit was issued and/or in which a Letter of Credit remains outstanding.
The Letter of Credit Fee shall be computed on the basis of a 360-day year
for the actual number of days elapsed.
3.7 Administration Fee. The Borrower agrees to pay the Agent, for
the account of the Agent, an annual administration fee of $25,000, payable
in advance on January 14, 1999 and on each anniversary thereof. This fee,
and all other fees hereunder, shall be fully earned and non-refundable
upon payment. The annual administration fee shall be financed as a
Revolving Loan.
ARTICLE 4
PAYMENTS AND PREPAYMENTS
4.1 Revolving Loans. The Borrower shall repay the outstanding
principal balance of the Revolving Loans, plus all accrued but unpaid
interest thereon, on the Termination Date. The Borrower may prepay
Revolving Loans at any time, and reborrow subject to the terms of this
Agreement; provided, however, that with respect to any LIBOR Revolving
Loans prepaid by the Borrower prior to the expiration date of the Interest
Period applicable thereto, the Borrower promises to pay to the Agent for
account of the Lenders the amounts described in Section 5.4. In addition,
and without limiting the generality of the foregoing, upon demand the
Borrower promises to pay to the Agent, for account of the Lenders, the
amount, without duplication, by which the sum of outstanding Revolving
Loans, the aggregate amount of Pending Revolving Loans, the aggregate
undrawn amounts of all outstanding Letters of Credit and the amount of all
unpaid reimbursement obligations with respect to the Letters of Credit
exceeds the Availability.
4.2 Termination of Facility. The Borrower may terminate this
Agreement upon at least thirty (30) Business Days' notice to the Agent
and the Lenders, upon (a) the payment in full of all outstanding Revolving
Loans, together with accrued interest thereon, and the cancellation of all
outstanding Letters of Credit, (b) the payment of the early termination
fee set forth in the next sentence, (c) the payment in full in cash of all
other Obligations together with accrued interest thereon, and (d) with
respect to any LIBOR Rate Loans prepaid in connection with such
termination prior to the expiration date of the Interest Period applicable
thereto, the payment of the amounts described in Section 5.4. If this
Agreement is terminated at any time prior to the Stated Termination Date,
whether pursuant to this Section or pursuant to Section 11.2, the Borrower
shall pay to the Agent, for the account of the Lenders, an early
termination fee determined in accordance with the following table:
Period during which early Early Termination Fee
termination occurs
On or prior to the first $700,000
Anniversary Date
After the first Anniversary $350,000
Date but on or prior to the
second Anniversary Date
After the second Anniversary $175,000
Date but on or prior to the
Stated Termination Date
provided, however, that the early termination fee described in this
Section 4.2 shall not be payable in the event the Borrower terminates this
Agreement and pays all Obligations utilizing the proceeds of a credit
facility agented by Bank of America or BankAmerica Business Credit, Inc.
4.3 Reserved.
4.4 Reserved.
4.5 Reserved.
4.6 Payments by the Borrower. (a) All payments to be made by the
Borrower shall be made without set-off, recoupment or counterclaim.
Except as otherwise expressly provided herein, all payments by the
Borrower shall be made to the Agent for the account of the Lenders at the
Agent's address set forth in Section 15.8, and shall be made in Dollars
and in immediately available funds, no later than 3:00 p.m. (New York
time) on the date specified herein. Any payment received by the Agent
later than 3:00 p.m. (New York time) shall be deemed to have been received
on the following Business Day and any applicable interest or fee shall
continue to accrue.
(b) Subject to the provisions set forth in the definition of
"Interest Period" herein, whenever any payment is due on a day other than
a Business Day, such payment shall be made on the following Business Day,
and such extension of time shall in such case be included in the
computation of interest or fees, as the case may be.
(c) Unless the Agent receives notice from the Borrower prior to
the date on which any payment is due to the Lenders that the Borrower will
not make such payment in full as and when required, the Agent may assume
that the Borrower has made such payment in full to the Agent on such date
in immediately available funds and the Agent may (but shall not be so
required), in reliance upon such assumption, distribute to each Lender on
such due date an amount equal to the amount then due such Lender. If and
to the extent the Borrower has not made such payment in full to the Agent,
each Lender shall repay to the Agent on demand such amount distributed to
such Lender, together with interest thereon at the Federal Funds Rate for
each day from the date such amount is distributed to such Lender until the
date repaid.
4.7 Payments as Revolving Loans. All payments of principal,
interest, reimbursement obligations in connection with Letters of Credit,
fees, premiums and other sums payable hereunder, including all
reimbursement for expenses pursuant to Section 15.7, may, at the option of
the Agent, in its sole discretion, subject only to the terms of this
Section 4.7, be paid from the proceeds of Revolving Loans made hereunder,
whether made following a request by the Borrower pursuant to Section 2.2
or a deemed request as provided in this Section 4.7. The Borrower hereby
irrevocably authorizes the Agent to charge the Loan Account for the
purpose of paying principal, interest, reimbursement obligations in
connection with Letters of Credit, fees, premiums and other sums payable
hereunder, including reimbursing expenses pursuant to Section 15.7, and
agrees that all such amounts charged shall constitute Revolving Loans
(including BABC Loans and Agent Advances) and that all such Revolving
Loans so made shall be deemed to have been requested by Borrower pursuant
to Section 2.2.
4.8 Apportionment and Application of Payments. Aggregate principal
and interest payments shall be apportioned ratably among the Lenders
(according to the unpaid principal balance of the Loans to which such
payments relate held by each Lender) and payments of the fees shall, as
applicable, be apportioned ratably among the Lenders. All payments shall
be remitted to the Agent and all such payments not relating to principal
or interest of specific Loans, or not constituting payment of specific
fees, and all proceeds of Accounts or other Collateral received by the
Agent, shall be applied, ratably, subject to the provisions of this
Agreement, first, to pay any fees, indemnities or expense reimbursements
including any amounts relating to ACH Transactions then due to the Agent
from the Borrower; second, to pay any fees or expense reimbursements then
due to the Lenders from the Borrower; third, to pay interest due in
respect of all Revolving Loans, including BABC Loans and Agent Advances;
fourth, to pay or prepay principal of the BABC Loans and Agent Advances;
fifth, to pay or prepay principal of the Revolving Loans (other than BABC
Loans and Agent Advances) and unpaid reimbursement obligations in respect
of Letters of Credit and sixth, to the payment of any other Obligation due
to the Agent or any Lender by the Borrower. Notwithstanding anything to
the contrary contained in this Agreement, unless so directed by the
Borrower, or unless an Event of Default is outstanding, neither the Agent
nor any Lender shall apply any payments which it receives to any LIBOR
Revolving Loan, except (a) on the expiration date of the Interest Period
applicable to any such LIBOR Revolving Loan, or (b) in the event, and only
to the extent, that there are no outstanding Base Rate Revolving Loans.
The Agent shall promptly distribute to each Lender, pursuant to the
applicable wire transfer instructions received from each Lender in
writing, such funds as it may be entitled to receive, subject to a
Settlement delay as provided for in Section 2.2(j).
4.9 Indemnity for Returned Payments. If, after receipt of any
payment of, or proceeds applied to the payment of, all or any part of the
Obligations, the Agent or any Lender is for any reason compelled to
surrender such payment or proceeds to any Person, because such payment or
application of proceeds is invalidated, declared fraudulent, set aside,
determined to be void or voidable as a preference, impermissible setoff,
or a diversion of trust funds, or for any other reason, then the
Obligations or part thereof intended to be satisfied shall be revived and
continue and this Agreement shall continue in full force as if such
payment or proceeds had not been received by the Agent or such Lender, and
the Borrower shall be liable to pay to the Agent, and hereby does
indemnify the Agent and the Lenders and hold the Agent and the Lenders
harmless for, the amount of such payment or proceeds surrendered. The
provisions of this Section 4.9 shall be and remain effective
notwithstanding any contrary action which may have been taken by the Agent
or any Lender in reliance upon such payment or application of proceeds,
and any such contrary action so taken shall be without prejudice to the
Agent's and the Lenders' rights under this Agreement and shall be deemed
to have been conditioned upon such payment or application of proceeds
having become final and irrevocable. The provisions of this Section 4.9
shall survive the termination of this Agreement.
4.10 Agent's and Lenders' Books and Records; Monthly Statements. The
Borrower agrees that the Agent's and each Lender's books and records
showing the Obligations and the transactions pursuant to this Agreement
and the other Loan Documents shall be admissible in any action or
proceeding arising therefrom, and shall constitute rebuttably presumptive
proof thereof, irrespective of whether any Obligation is also evidenced by
a promissory note or other instrument. The Agent will provide to the
Borrower a monthly statement of Loans, payments, and other transactions
pursuant to this Agreement. Such statement shall be deemed correct,
accurate, and binding on the Borrower and an account stated (except for
corrections of errors discovered by the Agent), unless the Borrower
notifies the Agent in writing to the contrary within thirty (30) days
after such statement is rendered. In the event a timely written notice of
objections is given by the Borrower, only the items to which exception is
expressly made will be considered to be disputed by the Borrower.
ARTICLE 5
TAXES, YIELD PROTECTION AND ILLEGALITY
5.1 Taxes. (a) Any and all payments by the Borrower to each Lender
or the Agent under this Agreement and any other Loan Document shall be
made free and clear of, and without deduction or withholding for any
Taxes. In addition, the Borrower shall pay all Other Taxes.
(b) The Borrower agrees to indemnify and hold harmless each
Lender and the Agent for the full amount of Taxes or Other Taxes
(including any Taxes or Other Taxes imposed by any jurisdiction on amounts
payable under this Section) paid by the Lender or the Agent and any
liability (including penalties, interest, additions to tax and expenses)
arising therefrom or with respect thereto, whether or not such Taxes or
Other Taxes were correctly or legally asserted. Payment under this
indemnification shall be made within 30 days after the date the Lender or
the Agent makes written demand therefor.
(c) If the Borrower shall be required by law to deduct or
withhold any Taxes or Other Taxes from or in respect of any sum payable
hereunder to any Lender or the Agent, then:
(i) the sum payable shall be increased as necessary so
that after making all required deductions and withholdings (including
deductions and withholdings applicable to additional sums payable under
this Section) such Lender or the Agent, as the case may be, receives an
amount equal to the sum it would have received had no such deductions or
withholdings been made;
(ii) the Borrower shall make such deductions and
withholdings;
(iii) the Borrower shall pay the full amount deducted
or withheld to the relevant taxing authority or other authority in
accordance with applicable law; and
(iv) the Borrower shall also pay to each Lender or the
Agent for the account of such Lender, at the time interest is paid, all
additional amounts which the respective Lender specifies as necessary to
preserve the after-tax yield the Lender would have received if such Taxes
or Other Taxes had not been imposed.
(d) Within 30 days after the date of any payment by the
Borrower of Taxes or Other Taxes, the Borrower shall furnish the Agent the
original or a certified copy of a receipt evidencing payment thereof, or
other evidence of payment satisfactory to the Agent.
(e) If the Borrower is required to pay additional amounts to
any Lender or the Agent pursuant to subsection (c) of this Section, then
such Lender shall use reasonable efforts (consistent with legal and
regulatory restrictions) to change the jurisdiction of its lending office
so as to eliminate any such additional payment by the Borrower which may
thereafter accrue, if such change in the judgment of such Lender is not
otherwise disadvantageous to such Lender.
5.2 Illegality. (a) If any Lender determines that the introduction
of any Requirement of Law, or any change in any Requirement of Law, or in
the interpretation or administration of any Requirement of Law, has made
it unlawful, or that any central bank or other Governmental Authority has
asserted that it is unlawful, for any Lender or its applicable lending
office to make LIBOR Rate Loans, then, on notice thereof by the Lender to
the Borrower through the Agent, any obligation of that Lender to make
LIBOR Rate Loans shall be suspended until the Lender notifies the Agent
and the Borrower that the circumstances giving rise to such determination
no longer exist.
(b) If a Lender determines that it is unlawful to maintain any
LIBOR Rate Loan, the Borrower shall, upon its receipt of notice of such
fact and demand from such Lender (with a copy to the Agent), prepay in
full such LIBOR Rate Loans of that Lender then outstanding, together with
interest accrued thereon and amounts required under Section 5.4, either on
the last day of the Interest Period thereof, if the Lender may lawfully
continue to maintain such LIBOR Rate Loans to such day, or immediately, if
the Lender may not lawfully continue to maintain such LIBOR Rate Loan. If
the Borrower is required to so prepay any LIBOR Rate Loan, then
concurrently with such prepayment, the Borrower shall borrow from the
affected Lender, in the amount of such repayment, a Base Rate Loan.
5.3 Increased Costs and Reduction of Return. (a) If any Lender
determines that, due to either (i) the introduction of or any change in
the interpretation of any law or regulation or (ii) the compliance by that
Lender with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law), there
shall be any increase in the cost to such Lender of agreeing to make or
making, funding or maintaining any LIBOR Rate Loans, then the Borrower
shall be liable for, and shall from time to time, upon demand (with a copy
of such demand to be sent to the Agent), pay to the Agent for the account
of such Lender, additional amounts as are sufficient to compensate such
Lender for such increased costs.
(b) If any Lender shall have determined that (i) the
introduction of any Capital Adequacy Regulation, (ii) any change in any
Capital Adequacy Regulation, (iii) any change in the interpretation or
administration of any Capital Adequacy Regulation by any central bank or
other Governmental Authority charged with the interpretation or
administration thereof, or (iv) compliance by the Lender or any
corporation or other entity controlling the Lender with any Capital
Adequacy Regulation, affects or would affect the amount of capital
required or expected to be maintained by the Lender or any corporation or
other entity controlling the Lender and (taking into consideration such
Lender's or such corporation's or other entity's policies with respect to
capital adequacy and such Lender's desired return on capital) determines
that the amount of such capital is increased as a consequence of its
Commitment, loans, credits or obligations under this Agreement, then, upon
demand of such Lender to the Borrower through the Agent, the Borrower
shall pay to the Lender, from time to time as specified by the Lender,
additional amounts sufficient to compensate the Lender for such increase.
(c) Any demand made by any Lender pursuant to this Section 5.3
shall not cover any period more than 180 days prior to the date of demand.
5.4 Funding Losses. The Borrower shall reimburse each Lender and
hold each Lender harmless from any loss or expense which the Lender may
sustain or incur as a consequence of:
(a) the failure of the Borrower to make on a timely basis any
payment of principal of any LIBOR Rate Loan;
(b) the failure of the Borrower to borrow, continue or convert
a Loan after the Borrower has given (or is deemed to have given) a Notice
of Borrowing or a Notice of Conversion/ Continuation;
(c) the prepayment or other payment (including after
acceleration thereof) of an LIBOR Rate Loan on a day that is not the last
day of the relevant Interest Period;
including any such loss or expense arising from the liquidation or
reemployment of funds obtained by it to maintain its LIBOR Rate Loans or
from fees payable to terminate the deposits from which such funds were
obtained.
5.5 Inability to Determine Rates. If the Agent determines that for
any reason adequate and reasonable means do not exist for determining the
LIBOR Rate for any requested Interest Period with respect to a proposed
LIBOR Rate Loan, or that the LIBOR Rate for any requested Interest Period
with respect to a proposed LIBOR Rate Loan does not adequately and fairly
reflect the cost to the Lenders of funding such Loan, the Agent will
promptly so notify the Borrower and each Lender. Thereafter, the
obligation of the Lenders to make or maintain LIBOR Rate Loans hereunder
shall be suspended until the Agent revokes such notice in writing. Upon
receipt of such notice, the Borrower may revoke any Notice of Borrowing or
Notice of Conversion/Continuation then submitted by it. If the Borrower
does not revoke such Notice, the Lenders shall make, convert or continue
the Loans, as proposed by the Borrower, in the amount specified in the
applicable notice submitted by the Borrower, but such Loans shall be made,
converted or continued as Base Rate Loans instead of LIBOR Rate Loans.
5.6 Certificates of Lenders. Any Lender claiming reimbursement or
compensation under this Article 5 shall deliver to the Borrower (with a
copy to the Agent) within 90 days of demand a certificate setting forth in
reasonable detail the amount payable to the Lender hereunder and such
certificate shall be conclusive and binding on the Borrower in the absence
of manifest error.
5.7 Survival. The agreements and obligations of the Borrower in
this Article 5 shall survive the payment of all other Obligations.
ARTICLE 6
COLLATERAL
6.1 Grant of Security Interest. (a) As security for all present and
future Obligations, the Borrower hereby grants to the Agent, for the
ratable benefit of the Agent and the Lenders, a continuing security
interest in, lien on, and right of set-off against, all of the following
property of the Borrower, whether now owned or existing or hereafter
acquired or arising, regardless of where located:
(i) all Accounts;
(ii) all Inventory;
(iii) all contract rights (other than contract rights
which by their terms are non-assignable), letters of credit, Assigned
Contracts, chattel paper, instruments, notes, documents, and documents of
title;
(iv) all General Intangibles;
(v) all Equipment (other than leased Equipment as to which
the terms of the applicable lease prohibit a Lien on the Equipment subject
to such lease);
(vi) all money, investment property, securities and other
property of any kind of the Borrower in the possession or under the
control of the Agent or any Lender, any assignee of or participant in the
Obligations, or a bailee of any such party or such party's affiliates;
(vii) all deposit accounts, credits and balances with
and other claims against the Agent or any Lender or any of its affiliates
or any other financial institution in which the Borrower maintains
deposits;
(viii) all books, records and other property related to
or referring to any of the foregoing, including, without limitation,
books, records, account ledgers, data processing records, computer soft-
▇▇▇▇ and other property and General Intangibles at any time evidencing or
relating to any of the foregoing; and
(ix) all accessions to, substitutions for and replacements,
products and proceeds of any of the foregoing, including, but not limited
to, proceeds of any insurance policies, claims against third parties, and
condemnation or requisition payments with respect to all or any of the
foregoing.
All of the foregoing, together with the Real Estate covered by the
Mortgage(s), and all other property of the Borrower in which the Agent or
any Lender may at any time be granted a Lien, is herein collectively
referred to as the "Collateral."
(b) As security for all Obligations, the Borrower shall
simultaneously herewith execute and deliver to the Agent the Mortgage(s)
to grant to the Agent, for the ratable benefit of the Agent and the
Lenders, a continuing mortgage lien on the Real Estate and Premises.
(c) All of the Obligations shall be secured by all of the
Collateral.
6.2 Perfection and Protection of Security Interest. (a) The
Borrower shall, at its expense, perform all steps requested by the Agent
at any time to perfect, maintain, protect, and enforce the Agent's Liens,
including, without limitation: (i) executing, delivering and/or filing
and recording of the Mortgage(s) and Patent and Trademark Agreements and
executing and filing financing or continuation statements, and amendments
thereof, in form and substance satisfactory to the Agent; (ii) delivering
to the Agent the originals of all instruments, documents, and chattel
paper, and all other Collateral of which the Agent determines it should
have physical possession in order to perfect and protect the Agent's
security interest therein, duly pledged, endorsed or assigned to the Agent
without restriction; (iii) delivering to the Agent warehouse receipts
covering any portion of the Collateral located in warehouses and for which
warehouse receipts are issued; (iv) when an Event of Default exists,
transferring Inventory to warehouses designated by the Agent; (v) placing
notations on the Borrower's books of account to disclose the Agent's
security interest; (vii) delivering to the Agent all letters of credit on
which the Borrower is named beneficiary; and (viii) taking such other
steps as are deemed necessary or desirable by the Agent to maintain and
protect the Agent's Liens. To the extent permitted by applicable law, the
Agent may file, without the Borrower's signature, one or more financing
statements disclosing the Agent's Liens. The Borrower agrees that a
carbon, photographic, photostatic, or other reproduction of this Agreement
or of a financing statement is sufficient as a financing statement.
(b) If any Collateral is at any time in the possession or
control of any warehouseman, bailee or any of the Borrower's agents or
processors, then the Borrower shall notify the Agent thereof and shall
notify such Person of the Agent's security interest in such Collateral
and, upon the Agent's request, instruct such Person to hold all such
Collateral for the Agent's account subject to the Agent's instructions.
If at any time any Collateral is located on any operating facility of the
Borrower which is not owned by the Borrower, then the Borrower shall, at
the request of the Agent, obtain written waivers, in form and substance
satisfactory to the Agent, of all present and future Liens to which the
owner or lessor of such premises may be entitled to assert against the
Collateral.
(c) From time to time, the Borrower shall, upon the Agent's
request, execute and deliver confirmatory written instruments pledging to
the Agent, for the ratable benefit of the Agent and the Lenders, the
Collateral with respect to the Borrower, but the Borrower's failure to do
so shall not affect or limit the Agent's security interest or the Agent's
other rights in and to the Collateral with respect to the Borrower. So
long as this Agreement is in effect and until all Obligations have been
fully satisfied, the Agent's Liens shall continue in full force and effect
in all Collateral (whether or not deemed eligible for the purpose of
calculating the Availability or as the basis for any advance, loan,
extension of credit, or other financial accommodation).
6.3 Location of Collateral. The Borrower represents and warrants to
the Agent and the Lenders that: (a) Schedule 6.3 is a correct and
complete list of the Borrower's chief executive office, the location of
its books and records, the locations of the Collateral (other than
Collateral in transit), and the locations of all of its other places of
business; and (b) Schedule 6.3 correctly identifies any of such facilities
and locations that are not owned by the Borrower and sets forth the names
of the owners and lessors or sublessors of and, if known to Borrower, the
holders of any mortgages on, such facilities and locations. The Borrower
covenants and agrees that it will not (i) maintain any Collateral at any
location other than those locations listed for the Borrower on Schedule
6.3 (other than Collateral in transit), (ii) otherwise change or add to
any of such locations, provided that Borrower may eliminate its Berlin,
Wisconsin and New Albany, Indiana locations, or (iii) change the location
of its chief executive office from the location identified in Schedule
6.3, unless (with respect to (i), (ii) and (iii) above) it gives the Agent
at least thirty (30) days' prior written notice thereof and executes any
and all financing statements and other documents that the Agent requests
in connection therewith. Without limiting the foregoing, the Borrower
represents that all of its Inventory (other than Inventory in transit) is,
and covenants that all of its Inventory will be, located either (a) on
premises owned by the Borrower, (b) on premises leased by the Borrower,
provided that the Agent has received an executed landlord waiver from the
landlord of such premises in form and substance satisfactory to the Agent,
or (c) in a public warehouse, provided that the Agent has received an
executed bailee letter from the applicable public warehouseman in form and
substance satisfactory to the Agent.
6.4 Title to, Liens on, and Sale and Use of Collateral. The
Borrower represents and warrants to the Agent and the Lenders and agrees
with the Agent and the Lenders that: (a) all of the Collateral is and will
continue to be owned by the Borrower free and clear of all Liens
whatsoever, except for Permitted Liens; (b) the Agent's Liens in the
Collateral will not be subject to any prior Lien other than Permitted
Liens pursuant to clauses (d), (e), (g) or (h) of the definition thereof;
(c) the Borrower will use, store, and maintain the Collateral with all
reasonable care and will use such Collateral for lawful purposes only; and
(d) the Borrower will not, without the Agent's prior written approval,
sell, or dispose of or permit the sale or disposition of any of the
Collateral except for sales of Inventory in the ordinary course of
business and sales of Equipment as permitted by Section 6.11 and except
for sales or other dispositions of Borrower's facilities in Berlin,
Wisconsin and New Albany, Indiana. The inclusion of proceeds in the
Collateral shall not be deemed to constitute the Agent's or any Lender's
consent to any sale or other disposition of the Collateral except as
expressly permitted herein.
6.5 Appraisals. Whenever a Default or Event of Default exists, and
at such other times not more frequently than once a year as the Agent
requests, the Borrower shall, at its expense and upon the Agent's request,
provide the Agent with appraisals or updates thereof of any or all of the
Collateral from an appraiser, and prepared on a basis, satisfactory to the
Agent, such appraisals and updates to include, without limitation,
information required by applicable law and regulation and by the internal
policies of the Lenders.
6.6 Access and Examination; Confidentiality. (a) The Agent,
accompanied by any Lender which so elects, may at all reasonable times
during regular business hours (and at any time when a Default or Event of
Default exists) have access to, examine, audit, make extracts from or
copies of and inspect any or all of the Borrower's records, files, and
books of account and the Collateral, and discuss the Borrower's affairs
with the Borrower's officers and management. The Borrower will deliver to
the Agent any instrument necessary for the Agent to obtain records from
any service bureau maintaining records for the Borrower. The Agent may,
and at the direction of the Majority Lenders shall, at any time when a
Default or Event of Default exists, and at the Borrower's expense, make
copies of all of the Borrower's books and records, or require the Borrower
to deliver such copies to the Agent. The Agent may, without expense to
the Agent, use such of the Borrower's respective personnel, supplies, and
premises as may be reasonably necessary for maintaining or enforcing the
Agent's Liens. The Agent shall have the right, at any time, in the
Agent's name or in the name of a nominee of the Agent, to verify the
validity, amount or any other matter relating to the Accounts, Inventory,
or other Collateral, by mail, telephone, or otherwise.
(b) The Borrower agrees that, subject to the Borrower's prior
consent for uses other than in a traditional tombstone, which consent
shall not be unreasonably withheld or delayed, the Agent and each Lender
may use the Borrower's name in advertising and promotional material and in
conjunction therewith disclose the general terms of this Agreement. The
Agent and each Lender agree to take normal and reasonable precautions and
exercise due care to maintain the confidentiality of all information
provided to the Agent or such Lender by or on behalf of the Borrower,
under this Agreement or any other Loan Document, and neither the Agent,
nor such Lender nor any of their respective Affiliates shall use any such
information other than in connection with or in enforcement of this
Agreement and the other Loan Documents, except to the extent that such
information (i) was or becomes generally available to the public other
than as a result of disclosure by the Agent or such Lender, or (ii) was or
becomes available on a nonconfidential basis from a source other than the
Borrower, provided that such source is not bound by a confidentiality
agreement with the Borrower known to the Agent or such Lender; provided,
however, that the Agent and any Lender may disclose such information (1)
at the request or pursuant to any requirement of any Governmental
Authority to which the Agent or such Lender is subject or in connection
with an examination of the Agent or such Lender by any such Governmental
Authority; (2) pursuant to subpoena or other court process; (3) when
required to do so in accordance with the provisions of any applicable
requirement of law; (4) to the extent reasonably required in connection
with any litigation or proceeding (including, but not limited to, any
bankruptcy proceeding) to which the Agent, any Lender or their respective
Affiliates may be party; (5) to the extent reasonably required in
connection with the exercise of any remedy hereunder or under any other
Loan Document; (6) to the Agent's or such Lender's independent auditors,
accountants, attorneys and other professional advisors; (7) to any
prospective Participating Lender or assignee under any Assignment and
Acceptance, actual or potential, provided that such prospective
Participating Lender or assignee agrees to keep such information
confidential to the same extent required of the Agent and the Lenders
hereunder; (8) as expressly permitted under the terms of any other
document or agreement regarding confidentiality to which the Borrower is
party or is deemed party with the Agent or such Lender, and (9) to its
Affiliates.
6.7 Collateral Reporting. The Borrower shall provide the Agent with
the following documents at the following times in form satisfactory to the
Agent: (a) on a weekly basis, or more frequently if requested by the
Agent, a schedule of the Borrower's Accounts created since the last such
schedule; (b) on a monthly basis, an aging of the Borrower's Accounts,
together with a reconciliation to the previous month's aging of the
Borrower's Accounts and to the Borrower's general ledger; (c) on a monthly
basis, an aging of the Borrower's accounts payable; (d) on a semi-monthly
basis (or more frequently if requested by the Agent), within five Business
Days of the 15th and 30th day of each month, Inventory reports by
category, with additional detail showing additions to and deletions from
the Inventory; (e) upon request, copies of invoices in connection with the
Borrower's Accounts, customer statements, credit memos, remittance advices
and reports, deposit slips, shipping and delivery documents in connection
with the Borrower's Accounts and for Inventory and Equipment acquired by
the Borrower, purchase orders and invoices; (f) upon request, a statement
of the balance of each of the Intercompany Accounts; (g) such other
reports as to the Collateral of the Borrower as the Agent shall reasonably
request from time to time; (h) on a weekly basis, within five Business
Days following each Saturday, a Borrowing Base Certificate; and (i) with
the delivery of each of the foregoing, a certificate of the Borrower
executed by an officer thereof certifying as to the accuracy and
completeness of the foregoing. If any of the Borrower's records or
reports of the Collateral are prepared by an accounting service or other
agent, the Borrower hereby authorizes such service or agent to deliver
such records, reports, and related documents to the Agent, for
distribution to the Lenders. The Agent shall promptly send to each Lender
a copy of each Borrowing Base Certificate received from the Borrower.
6.8 Accounts. (a) The Borrower hereby represents and warrants to
the Agent and the Lenders, with respect to the Borrower's Accounts, that:
(i) each existing Account represents, and each future Account will
represent, a bona fide sale or lease and delivery of goods by the
Borrower, or rendition of services by the Borrower, in the ordinary course
of the Borrower's business; (ii) each existing Account is, and each future
Account will be, for a liquidated amount payable by the Account Debtor
thereon on the terms set forth in the invoice therefor or in the schedule
thereof delivered to the Agent, without any offset, deduction, defense, or
counterclaim except those reported to the Agent and the Lenders pursuant
to this Agreement; (iii) no payment will be received with respect to any
Account, and no credit, discount, or extension, or agreement therefor will
be granted on any Account, except as reported to the Agent and the Lenders
in accordance with this Agreement; (iv) each copy of an invoice delivered
to the Agent by the Borrower will be a genuine copy of the original
invoice sent to the Account Debtor named therein; and (v) all goods
described in each invoice will have been delivered to the Account Debtor
and all services of the Borrower described in each invoice will have been
performed.
(b) Borrower shall not re-date any invoice or sale or make
sales on extended dating beyond that customary in the Borrower's business
or modify any Account or extend any account beyond 90 days from invoice
date. If the Borrower becomes aware of any matter adversely affecting the
collectability of any Account or Account Debtor involving an amount
greater than $250,000, including information regarding the Account
Debtor's creditworthiness, the Borrower will promptly so advise the Agent.
(c) Borrower shall not accept any note or other instrument
(except a check or other instrument for the immediate payment of money)
with respect to any Account without the Agent's written consent. If the
Agent consents to the acceptance of any such instrument, it shall be
considered as evidence of the Account and not payment thereof and the
Borrower will promptly deliver such instrument to the Agent, endorsed by
the Borrower to the Agent in a manner satisfactory in form and substance
to the Agent. Regardless of the form of presentment, demand, notice of
protest with respect thereto, the Borrower shall remain liable thereon
until such instrument is paid in full.
(d) The Borrower shall notify the Agent promptly of all
disputes and claims in excess of $250,000 individually, or $500,000 in the
aggregate with any Account Debtor, and agrees to settle, contest, or
adjust such dispute or claim at no expense to the Agent or any Lender. No
discount, credit or allowance shall be granted to any such Account Debtor
without the Agent's prior written consent, except for discounts, credits
and allowances made or given in the ordinary course of the Borrower's
business when no Event of Default exists hereunder. The Borrower shall
send the Agent a copy of each credit memorandum in excess of $50,000 as
soon as issued. The Agent may, and at the direction of the Majority
Lenders shall, at all times when an Event of Default exists hereunder,
settle or adjust disputes and claims directly with Account Debtors for
amounts and upon terms which the Agent or the Majority Lenders, as
applicable, shall consider advisable and, in all cases, the Agent will
credit the Borrower's Loan Account with only the net amounts received by
the Agent in payment of any Accounts.
(e) If an Account Debtor returns any Inventory to the Borrower
when no Event of Default exists, then the Borrower shall promptly
determine the reason for such return and shall issue a credit memorandum
to the Account Debtor in the appropriate amount. The Borrower shall
immediately report to the Agent any return involving an amount in excess
of $50,000. Each such report shall indicate the reasons for the returns
and the locations and condition of the returned Inventory. In the event
any Account Debtor returns Inventory to the Borrower when an Event of
Default exists, the Borrower, upon request of the Agent, shall: (i) hold
the returned Inventory in trust for the Agent; (ii) segregate all returned
Inventory from all of its other property; (iii) dispose of the returned
Inventory solely according to the Agent's written instructions; and (iv)
not issue any credits or allowances with respect thereto without the
Agent's prior written consent. All returned Inventory shall be subject to
the Agent's Liens thereon. Whenever any Inventory is returned, the
related Account shall be deemed ineligible to the extent of the amount
owing by the Account Debtor with respect to such returned Inventory.
6.9 Collection of Accounts; Payments. (a) The Borrower shall
establish a lock-box service for collections of Accounts at a bank
acceptable to the Agent and pursuant to documentation satisfactory to the
Agent. The Borrower shall instruct all Account Debtors to make all
payments directly to the address established for such service. If,
notwithstanding such instructions, the Borrower receives any proceeds of
Accounts, it shall receive such payments as the Agent's trustee, and shall
immediately deliver such payments to the Agent in their original form duly
endorsed in blank or deposit them into a Payment Account, as the Agent
may direct. All collections received in any such lock-box or Payment
Account or directly by the Borrower or the Agent, and all funds in any
Payment Account or other account to which such collections are deposited
shall be subject to the Agent's sole control. The Agent or the Agent's
designee may, at any time after the occurrence and during the continuance
of an Event of Default, notify Account Debtors that the Accounts have been
assigned to the Agent and of the Agent's security interest therein, and
may collect them directly and charge the collection costs and expenses to
the Borrower's Loan Account as a Revolving Loan. So long as an Event of
Default has occurred and is continuing, the Borrower, at the Agent's
request, shall execute and deliver to the Agent such documents as the
Agent shall require to grant the Agent access to any post office box in
which collections of Accounts are received.
(b) If sales of Inventory are made for cash, the Borrower shall
immediately deliver to the Agent or deposit into a Payment Account the
cash which the Borrower receives.
(c) All payments, including immediately available funds
received by the Agent at a bank designated by it, received by the Agent on
account of Accounts or as proceeds of other Collateral will be the Agent's
sole property for its benefit and the benefit of the Lenders and will be
credited to the Borrower's Loan Account (conditional upon final
collection) after allowing One (1) Business Day for collection after such
receipt of good funds by the Agent; provided, however, that such payments
shall be deemed to be credited to the Borrower's Loan Account immediately
upon receipt for purposes of (i) determining Availability, (ii)
calculating the unused line fee pursuant to Section 3.5, and (iii)
calculating the amount of interest to be distributed by the Agent to the
Lenders (but not the amount of interest payable by the Borrower).
(d) In the event the Borrower repays all of the Obligations
upon the termination of this Agreement or upon acceleration of the
Obligations, other than through the Agent's receipt of payments on account
of the Accounts or proceeds of the other Collateral, such payment will be
credited (conditional upon final collection) to the Borrower's Loan
Account one (1) Business Day after the Agent's receipt of such funds.
6.10 Inventory; Perpetual Inventory. The Borrower represents and
warrants to the Agent and the Lenders and agrees with the Agent and the
Lenders that all of the Inventory owned by the Borrower is and will be
held for sale or lease (and in the case of raw materials and work in
process for further processing into finished goods to be held for sale),
or to be furnished in connection with the rendition of services, in the
ordinary course of the Borrower's business, and is and will be fit for
such purposes. The Borrower will keep its Inventory in good and
marketable condition, at its own expense. The Borrower agrees that all
Inventory produced in the United States will be produced in accordance
with the Federal Fair Labor Standards Act of 1938, as amended, and all
rules, regulations, and orders thereunder. The Borrower will conduct a
physical count of the Inventory at least once per Fiscal Year, and after
and during the continuation of an Event of Default, at such other times as
the Agent requests. The Borrower will maintain a perpetual inventory
reporting system at all times. The Borrower will not, without the Agent's
written consent, sell any Inventory on a ▇▇▇▇-and-hold, guaranteed sale,
sale and return, sale on approval, consignment, or other repurchase or
return basis. Any inventory of others which is on the premises of the
Borrower for processing, cutting, manufacturing, finishing or otherwise,
shall be segregated and shall not be reported or included on any Borrowing
Base Certificate as Inventory or Eligible Inventory of the Borrower.
6.11 Equipment. (a) The Borrower represents and warrants to the
Agent and the Lenders and agrees with the Agent and the Lenders that
substantially all of the Equipment owned by the Borrower is and will be
used or held for use in the Borrower's business, and is and will be fit
for such purposes. The Borrower shall keep and maintain its Equipment
used or useful in its business in good operating condition and repair
(ordinary wear and tear excepted) and shall make all necessary
replacements thereof, all in accordance with past practices..
(b) The Borrower shall promptly inform the Agent of any
material additions to or deletions from the Equipment. Except as
disclosed to Agent, the Borrower shall not permit any Equipment to become
a fixture with respect to real property or to become an accession with
respect to other personal property with respect to which real or personal
property the Agent does not have a Lien. The Borrower will not, without
the Agent's prior written consent, alter or remove any identifying symbol
or number on any of the Borrower's Equipment consisting of Collateral.
(c) The Borrower shall not, without the Lender's prior written
consent, sell, lease as a lessor, or otherwise dispose of any of the
Borrower's Equipment; provided, however, that the Borrower may dispose of
obsolete or unusable Equipment having an orderly liquidation value no
greater than $500,000 in the aggregate in any Fiscal Year and the
Equipment at its New Albany, Indiana and Berlin, Wisconsin locations, in
each case without the Majority Lender's consent, subject to the conditions
set forth in the next sentence. All cash proceeds of each sale shall be
remitted to the Agent for application to the Revolving Loans. All
replacement Equipment purchased by the Borrower shall be free and clear of
all Liens except the Agent's Lien.
6.12 Assigned Contracts. The Borrower shall fully perform all of its
obligations under each of the Assigned Contracts, and shall enforce all of
its rights and remedies thereunder, in each case, as it deems appropriate
in its business judgment; provided, however, that the Borrower shall not
take any action or fail to take any action with respect to its Assigned
Contracts which would cause the termination of a material Assigned
Contract unless a replacement contract is contemporaneously being entered
into. Without limiting the generality of the foregoing, the Borrower
shall take all action necessary or appropriate to permit, and shall not
take any action which would have any materially adverse effect upon, the
full enforcement of all indemnification rights under its Assigned
Contracts. The Borrower shall not, without the Agent's and the Majority
Lenders' prior written consent, modify, amend, supplement, compromise,
satisfy, release, or discharge any of its Assigned Contracts, any
collateral securing the same, any Person liable directly or indirectly
with respect thereto, or any agreement relating to any of its Assigned
Contracts or the collateral therefor. The Borrower shall notify the Agent
and the Lenders in writing, promptly after the Borrower becomes aware
thereof, of any event or fact which could give rise to a claim by it for
indemnification under any of its Assigned Contracts, and shall diligently
pursue such right and report to the Agent on all further developments with
respect thereto. The Borrower shall remit directly to the Agent for
application to the Obligations in such order as the Majority Lenders shall
determine, all amounts received by the Borrower as indemnification or
otherwise pursuant to its Assigned Contracts. If the Borrower shall fail
after the Agent's demand to pursue diligently any right under its Assigned
Contracts, or if an Event of Default then exists, the Agent may, and at
the direction of the Majority Lenders shall, directly enforce such right
in its own or the Borrower's name and may enter into such settlements or
other agreements with respect thereto as the Agent or the Majority
Lenders, as applicable, shall determine. In any suit, proceeding or
action brought by the Agent for the benefit of the Lenders under any
Assigned Contract for any sum owing thereunder or to enforce any provision
thereof, the Borrower shall indemnify and hold the Agent and Lenders
harmless from and against all expense, loss or damage suffered by reason
of any defense, setoff, counterclaims, recoupment, or reduction of
liability whatsoever of the obligor thereunder arising out of a breach by
the Borrower of any obligation thereunder or arising out of any other
agreement, indebtedness or liability at any time owing from the Borrower
to or in favor of such obligor or its successors. All such obligations of
the Borrower shall be and remain enforceable only against the Borrower and
shall not be enforceable against the Agent. Notwithstanding any provision
hereof to the contrary, the Borrower and not the Agent or the Lenders
shall at all times remain liable to observe and perform all of its duties
and obligations under its Assigned Contracts, and the Agent's or any
Lender's exercise of any of their respective rights with respect to the
Collateral shall not release the Borrower from any of such duties and
obligations. Neither the Agent nor any Lender shall be obligated to
perform or fulfill any of the Borrower's duties or obligations under its
Assigned Contracts or to make any payment thereunder, or to make any
inquiry as to the nature or sufficiency of any payment or property
received by it thereunder or the sufficiency of performance by any party
thereunder, or to present or file any claim, or to take any action to
collect or enforce any performance, any payment of any amounts, or any
delivery of any property.
6.13 Documents, Instruments, and Chattel Paper. The Borrower
represents and warrants to the Agent and the Lenders that (a) all
documents, instruments, and chattel paper describing, evidencing, or
constituting Collateral, and all signatures and endorsements thereon, are
and will be complete, valid, and genuine, and (b) all goods evidenced by
such documents, instruments, and chattel paper are and will be owned by
the Borrower, free and clear of all Liens other than Permitted Liens.
6.14 Right to Cure. The Agent may, in its discretion, and shall, at
the direction of the Majority Lenders, pay any amount or do any act
required of the Borrower hereunder or under any other Loan Document in
order to preserve, protect, maintain or enforce the Obligations, the
Collateral or the Agent's Liens therein, and which the Borrower fails to
pay or do, including, without limitation, payment of any judgment against
the Borrower, any insurance premium, any warehouse charge, any finishing
or processing charge, any landlord's claim, and any other Lien upon or
with respect to the Collateral. All payments that the Agent makes under
this Section 6.14 and all out-of-pocket costs and expenses that the Agent
pays or incurs in connection with any action taken by it hereunder shall
be charged to the Borrower's Loan Account as a Revolving Loan. Any
payment made or other action taken by the Agent under this Section 6.14
shall be without prejudice to any right to assert an Event of Default
hereunder and to proceed thereafter as herein provided.
6.15 Power of Attorney. The Borrower hereby appoints the Agent and
the Agent's designee as the Borrower's attorney, with power: (a) to
endorse the Borrower's name on any checks, notes, acceptances, money
orders, or other forms of payment or security that come into the Agent's
or any Lender's possession; (b) to sign the Borrower's name on any
invoice, ▇▇▇▇ of lading, warehouse receipt or other document of title
relating to any Collateral, on drafts against customers, on assignments of
Accounts, on notices of assignment, financing statements and other public
records and to file any such financing statements by electronic means with
or without a signature as authorized or required by applicable law or
filing procedure; (c) so long as any Event of Default has occurred and is
continuing, to notify the post office authorities to change the address
for delivery of the Borrower's mail to an address designated by the Agent
and to receive, open and dispose of all mail addressed to the Borrower;
(d) to send requests for verification of Accounts to customers or Account
Debtors in conformity with this Agreement; (e) to clear Inventory, the
purchase of which was financed with Letters of Credit, through customs in
the Borrower's name, the Agent's name or the name of the Agent's designee,
and to sign and deliver to customs officials powers of attorney in the
Borrower's name for such purpose; and (f) to do all things necessary to
carry out this Agreement. The Borrower ratifies and approves all acts of
such attorney. None of the Lenders or the Agent nor their attorneys will
be liable for any acts or omissions taken in good faith or for any good
faith error of judgment or mistake of fact or law. This power, being
coupled with an interest, is irrevocable until this Agreement has been
terminated and the Obligations have been fully satisfied.
6.16 The Agent's and Lenders' Rights, Duties and Liabilities. The
Borrower assumes all responsibility and liability arising from or relating
to the use, sale or other disposition of the Collateral. The Obligations
shall not be affected by any failure of the Agent or any Lender to take
any steps to perfect the Agent's Liens or to collect or realize upon the
Collateral, nor shall loss of or damage to the Collateral release the
Borrower from any of the Obligations. Following the occurrence and
continuation of an Event of Default, the Agent may (but shall not be
required to), and at the direction of the Majority Lenders shall, without
notice to or consent from the Borrower, ▇▇▇ upon or otherwise collect,
extend the time for payment of, modify or amend the terms of, compromise
or settle for cash, credit, or otherwise upon any terms, grant other
indulgences, extensions, renewals, compositions, or releases, and take or
omit to take any other action with respect to the Collateral, any security
therefor, any agreement relating thereto, any insurance applicable
thereto, or any Person liable directly or indirectly in connection with
any of the foregoing, without discharging or otherwise affecting the
liability of the Borrower for the Obligations or under this Agreement or
any other agreement now or hereafter existing between the Agent and/or any
Lender and the Borrower.
ARTICLE 7
BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES
7.1 Books and Records. The Borrower shall maintain, at all times,
correct and complete books, records and accounts in which complete,
correct and timely entries are made of its transactions in accordance with
GAAP applied consistently with the audited Financial Statements required
to be delivered pursuant to Section 7.2(a). The Borrower shall, by means
of appropriate entries, reflect in such accounts and in all Financial
Statements proper liabilities and reserves for all taxes and proper provi-
sion for depreciation and amortization of property and bad debts, all in
accordance with GAAP. The Borrower shall maintain at all times books and
records pertaining to the Collateral in such detail, form and scope as the
Agent or any Lender shall reasonably require, including, but not limited
to, records of (a) all payments received and all credits and extensions
granted with respect to the Accounts; (b) the return, rejections,
repossession, stoppage in transit, loss, damage, or destruction of any
Inventory; and (c) all other dealings affecting the Collateral.
7.2 Financial Information. The Borrower shall promptly furnish to
each Lender, all such financial information as the Agent or any Lender
shall reasonably request, and notify its auditors and accountants that the
Agent, on behalf of the Lenders, is authorized to obtain such information
directly from them. Without limiting the foregoing, the Borrower will
furnish to the Agent, in sufficient copies for distribution by the Agent
to each Lender, in such detail as the Agent or the Lenders shall request,
the following:
(a) As soon as available, but in any event not later than
ninety (90) days after the close of each Fiscal Year, consolidated audited
and consolidating balance sheets, and statements of income and expense,
cash flow and of stockholders' equity for the Borrower and its Subsid-
iaries for such Fiscal Year, and the accompanying notes thereto, setting
forth in each case in comparative form figures for the previous Fiscal
Year, all in reasonable detail, fairly presenting the financial position
and the results of operations of the Borrower and its consolidated
Subsidiaries as at the date thereof and for the Fiscal Year then ended,
and prepared in accordance with GAAP. Such statements shall be examined
in accordance with generally accepted auditing standards by and, in the
case of such statements performed on a consolidated basis, accompanied by
a report thereon unqualified as to scope of independent certified public
accountants selected by the Borrower and reasonably satisfactory to the
Agent. The Borrower, simultaneously with retaining such independent
public accountants to conduct such annual audit, shall send a letter to
such accountants, with a copy to the Agent and the Lenders, notifying such
accountants that one of the primary purposes for retaining such
accountants' services and having audited financial statements prepared by
them is for use by the Agent and the Lenders. The Borrower hereby
authorizes the Agent to communicate directly with its certified public
accountants and, by this provision, authorizes those accountants to
disclose to the Agent any and all financial statements and other
supporting financial documents and schedules relating to the Borrower and
to discuss directly with the Agent the finances and affairs of the
Borrower.
(b) As soon as available, but in any event not later than
thirty (30) days after the end of each month, consolidated and
consolidating unaudited balance sheets of the Borrower and its
consolidated Subsidiaries as at the end of such month, and consolidated
and consolidating unaudited statements of income and expense and cash flow
for the Borrower and its consolidated Subsidiaries for such month and for
the period from the beginning of the Fiscal Year to the end of such month,
all in reasonable detail, fairly presenting the financial position and
results of operations of the Borrower and its consolidated Subsidiaries as
at the date thereof and for such periods, and prepared in accordance with
GAAP applied consistently with the audited Financial Statements required
to be delivered pursuant to Section 7.2(a). The Borrower shall certify by
a certificate signed by its chief financial officer or chief accounting
officer that all such statements have been prepared in accordance with
GAAP and present fairly, subject to normal year-end adjustments, the
Borrower's financial position as at the dates thereof and its results of
operations for the periods then ended. The Borrower shall include with
the monthly financial statements required to be delivered by this Section
a backlog report and a report of open orders as at the end of the month
for which such financial statement is being delivered. Such reports shall
be in form and substance satisfactory to the Agent.
(c) As soon as available, but in any event not later than
forty-five (45) days after the close of each fiscal quarter other than the
fourth quarter of a Fiscal Year, consolidated and consolidating unaudited
balance sheets of the Borrower and its consolidated Subsidiaries as at the
end of such quarter, and consolidated and consolidating unaudited
statements of income and expense and statement of cash flows for the
Borrower and its Subsidiaries for such quarter and for the period from the
beginning of the Fiscal Year to the end of such quarter, all in reasonable
detail, fairly presenting the financial position and results of operation
of the Borrower and its Subsidiaries as at the date thereof and for such
periods, prepared in accordance with GAAP consistent with the audited
Financial Statements required to be delivered pursuant to Section 7.2(a).
The Borrower shall certify by a certificate signed by its chief financial
officer or chief accounting officer that all such statements have been
prepared in accordance with GAAP and present fairly, subject to normal
year-end adjustments, the Borrower's financial position as at the dates
thereof and its results of operations for the periods then ended.
(d) With each of the audited Financial Statements delivered
pursuant to Section 7.2(a), a certificate of the independent certified
public accountants that examined such statement to the effect that they
have reviewed this Agreement and that, in examining such Financial
Statements, they did not become aware of any fact or condition which then
constituted a Default or Event of Default, except for those, if any,
described in reasonable detail in such certificate.
(e) With each of the annual audited Financial Statements
delivered pursuant to Section 7.2(a), and within forty-five (45) days
after the end of each fiscal quarter, a certificate of the chief financial
officer or chief accounting officer of the Borrower (i) setting forth in
reasonable detail the calculations required to establish that the Borrower
was in compliance with the covenants set forth in Sections 9.22 through
9.24 during the period covered in such Financial Statements and as at the
end thereof, and (ii) stating that, except as explained in reasonable
detail in such certificate, (A) all of the representations and warranties
of the Borrower contained in this Agreement and the other Loan Documents
are correct and complete in all material respects as at the date of such
certificate as if made at such time, (B) the Borrower is, at the date of
such certificate, in compliance in all material respects with all of its
respective covenants and agreements in this Agreement and the other Loan
Documents, (C) no Default or Event of Default then exists or existed
during the period covered by such Financial Statements, (D) describing and
analyzing in reasonable detail all material trends, changes, and
developments in each and all Financial Statements; and (E) explaining the
variances of the figures in the corresponding budgets and prior Fiscal
Year financial statements. If such certificate discloses that a
representation or warranty is not correct or complete, or that a covenant
has not been complied with, or that a Default or Event of Default existed
or exists, such certificate shall set forth what action the Borrower has
taken or proposes to take with respect thereto.
(f) No sooner than 60 days prior but not more than 30 days
after the beginning of each Fiscal Year, annual forecasts (to include
forecasted consolidated and consolidating balance sheets, statements of
income and expenses and statements of cash flow) for the Borrower and its
Subsidiaries as at the end of and for each month of such Fiscal Year.
(g) Promptly after filing with the PBGC and the IRS, a copy of
each annual report or other filing filed with respect to each Plan of the
Borrower.
(h) Promptly upon the filing thereof, copies of all reports, if
any, to or other documents filed by the Borrower or any of its
Subsidiaries with the Securities and Exchange Commission under the
Exchange Act, and all reports, notices, or statements sent or received by
the Borrower or any of its Subsidiaries to or from the holders of any
equity interests of the Borrower (other than routine non-material
correspondence sent by shareholders of the Borrower to the Borrower and
other than material sent to members of the Borrower's board of directors
in their capacity as members of the board) or any such Subsidiary or of
any Debt for borrowed money of the Borrower or any of its Subsidiaries
registered under the Securities Act of 1933 or to or from the trustee
under any indenture under which the same is issued.
(i) As soon as available, but in any event not later than 15
days after the Borrower's receipt thereof, a copy of all management
reports and management letters prepared for the Borrower by ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP or any other independent certified public accountants of the
Borrower.
(j) Promptly after their preparation, copies of any and all
proxy statements, financial statements, and reports which the Borrower
makes available to its shareholders, to the extent the same are required
pursuant to the Exchange Act, or the Securities Act of 1933 or other
federal or state securities laws.
(k) Promptly after filing with the IRS, a copy of each tax
return filed by the Borrower or by any of its Subsidiaries.
(l) As promptly as practicable with respect to the period
commencing on and at all times after the Closing Date relating to any of
the Borrower, the Plan of Reorganization, the Chapter 11 Case, the
Prepetition Loan and Security Agreement or the DIP Loan and Security
Agreement , copies of all filings with the Bankruptcy Court by any Person,
all notices of hearings, all reports with respect to Claims (as defined in
the Plan of Reorganization), all reports from the disbursing agent, if
any, under the Plan of Reorganization and copies of all other materials
relating to any matter over which the Bankruptcy Court has retained
jurisdiction.
(m) Such additional information as the Agent and/or any Lender
may from time to time reasonably request regarding the financial and
business affairs of the Borrower or any Subsidiary.
7.3 Notices to the Lenders. The Borrower shall notify the Agent, in
writing of the following matters at the following times:
(a) Immediately after becoming aware of any Default or Event of
Default.
(b) Immediately after becoming aware of the assertion by the
holder of any capital stock of the Borrower or Subsidiary thereof or of
any material Debt that a default exists with respect thereto or that the
Borrower is not in compliance with the terms thereof, or the threat or
commencement by such holder of any enforcement action because of such
asserted default or non-compliance.
(c) Immediately after becoming aware of any material adverse
change in the Borrower's or any Subsidiary's property, business,
operations, or condition (financial or otherwise).
(d) Immediately after becoming aware of any pending or
threatened action, suit, proceeding, or counterclaim by any Person, or any
pending or threatened investigation by a Governmental Authority, or which
could reasonably be expected to materially and adversely affect the
Collateral, the repayment of the Obligations, the Agent's or any Lender's
rights under the Loan Documents, or the Borrower's or any Subsidiary's
property, business, operations, or condition (financial or otherwise).
(e) Immediately after becoming aware of any pending or
threatened strike, work stoppage, unfair labor practice claim, or other
labor dispute affecting the Borrower or any of its Subsidiaries in a
manner which could reasonably be expected to have a Material Adverse
Effect.
(f) Immediately after becoming aware of any violation of any
law, statute, regulation, or ordinance of a Governmental Authority
affecting the Borrower which could reasonably be expected to have a
Material Adverse Effect.
(g) Immediately after receipt of any notice of any violation by
the Borrower or any of its Subsidiaries of any Environmental Law which
could reasonably be expected to have a Material Adverse Affect or that any
Governmental Authority has asserted that the Borrower or any Subsidiary
thereof is not in compliance with any Environmental Law or is
investigating the Borrower's or such Subsidiary's compliance therewith.
(h) Immediately after receipt of any written notice that the
Borrower or any of its Subsidiaries is or may be liable to any Person as a
result of the Release or threatened Release of any Contaminant or that the
Borrower or any Subsidiary is subject to investigation by any Governmental
Authority evaluating whether any remedial action is needed to respond to
the Release or threatened Release of any Contaminant which, in either
case, is reasonably likely to give rise to liability in excess of
$100,000.
(i) Immediately after receipt of any written notice of the
imposition of any Environmental Lien against any property of the Borrower
or any of its Subsidiaries.
(j) Any change in the Borrower's name, state of incorporation,
or form of organization, trade names or styles under which the Borrower
will sell Inventory or create Accounts, or to which instruments in payment
of Accounts may be made payable, in each case at least thirty (30) days
prior thereto.
(k) Within ten (10) Business Days after the Borrower or any
ERISA Affiliate knows or has reason to know, that an ERISA Event or a
prohibited transaction (as defined in Sections 406 of ERISA and 4975 of
the Code) has occurred, and, when known, any action taken or threatened by
the IRS, the DOL or the PBGC with respect thereto.
(l) Upon request, or, in the event that such filing reflects a
significant change with respect to the matters covered thereby, within
three (3) Business Days after the filing thereof with the PBGC, the DOL or
the IRS, as applicable, copies of the following: (i) each annual report
(form 5500 series), including Schedule B thereto, filed with the PBGC, the
DOL or the IRS with respect to each Plan, (ii) a copy of each funding
waiver request filed with the PBGC, the DOL or the IRS with respect to any
Plan and all communications received by the Borrower or any ERISA
Affiliate from the PBGC, the DOL or the IRS with respect to such request,
and (iii) a copy of each other filing or notice filed with the PBGC, the
DOL or the IRS, with respect to each Plan of either Borrower or any ERISA
Affiliate.
(m) Upon request, copies of each actuarial report for any Plan
or Multi-employer Plan and annual report for any Multi-employer Plan; and
within three (3) Business Days after receipt thereof by the Borrower or
any ERISA Affiliate, copies of the following: (i) any notices of the
PBGC's intention to terminate a Plan or to have a trustee appointed to
administer such Plan; (ii) any favorable or unfavorable determination
letter from the IRS regarding the qualification of a Plan under Sec-
tion 401(a) of the Code; or (iii) any notice from a Multi-employer Plan
regarding the imposition of withdrawal liability.
(n) Within three (3) Business Days after the occurrence
thereof: (i) any changes in the benefits of any existing Plan which
increase the Borrower's annual costs with respect thereto by an amount in
excess of $100,000, or the establishment of any new Plan or the com-
mencement of contributions to any Plan to which the Borrower or any ERISA
Affiliate was not previously contributing; or (ii) any failure by the
Borrower or any ERISA Affiliate to make a required installment or any
other required payment under Section 412 of the Code on or before the due
date for such installment or payment.
(o) Within three (3) Business Days after the Borrower or any
ERISA Affiliate knows or has reason to know that any of the following
events has or will occur: (i) a Multi-employer Plan has been or will be
terminated; (ii) the administrator or plan sponsor of a Multi-employer
Plan intends to terminate a Multi-employer Plan; or (iii) the PBGC has
instituted or will institute proceedings under Section 4042 of ERISA to
terminate a Multi-employer Plan.
Each notice given under this Section shall describe the subject
matter thereof in reasonable detail, and shall set forth the action that
the Borrower, its Subsidiary, or any ERISA Affiliate, as applicable, has
taken or proposes to take with respect thereto.
ARTICLE 8
GENERAL WARRANTIES AND REPRESENTATIONS
The Borrower warrants and represents to the Agent and the
Lenders that except as hereafter disclosed to and accepted by the Agent
and the Majority Lenders in writing; provided that acceptance by the Agent
and the Majority Lenders shall not be required for the updating of
Schedules 8.3, 8.5 or 8.13 or written disclosure to the Agent and to
Lenders, in each case solely as a result of transactions expressly
permitted under this Agreement:
8.1 Authorization, Validity, and Enforceability of this Agreement
and the Loan Documents. The Borrower has the corporate power and
authority to execute, deliver and perform this Agreement and the other
Loan Documents, to incur the Obligations, and to grant to the Agent Liens
upon and security interests in the Collateral. The Borrower has taken all
necessary corporate action (including without limitation, obtaining
approval of its stockholders if necessary) to authorize its execution,
delivery, and performance of this Agreement and the other Loan Documents.
No consent, approval, or authorization of, or declaration or filing with,
any Governmental Authority, and no consent of any other Person, is
required in connection with the Borrower's execution, delivery and
performance of this Agreement and the other Loan Documents, except for the
Confirmation Order and those already duly obtained. This Agreement and
the other Loan Documents have been duly executed and delivered by the
Borrower, and constitute the legal, valid and binding obligations of the
Borrower, enforceable against it in accordance with their respective terms
without defense, setoff or counterclaim. The Borrower's execution,
delivery, and performance of this Agreement and the other Loan Documents
do not and will not conflict with, or constitute a violation or breach of,
or constitute a default under, or result in the creation or imposition of
any Lien upon the property of the Borrower or any of its Subsidiaries by
reason of the terms of (a) any contract, mortgage, Lien, lease, agreement,
indenture, or instrument to which the Borrower is a party or which is
binding upon it, (b) any Requirement of Law applicable to the Borrower or
any of its Subsidiaries, or (c) the certificate or articles of
incorporation or by-laws of the Borrower or any of its Subsidiaries.
8.2 Validity and Priority of Security Interest. The provisions of
this Agreement, the Mortgages, and the other Loan Documents create legal
and valid Liens on all the Collateral (other than Liens on motor vehicles
and on real estate in which a Lien was not granted to the Agent on the
Closing Date) in favor of the Agent, for the ratable benefit of the Agent
and the Lenders, and such Liens constitute perfected and continuing Liens
on all the Collateral, having priority over all other Liens on the
Collateral other than Permitted Liens pursuant to clauses (d), (e), (g) or
(h) of the definition thereof, securing all the Obligations, and
enforceable against the Borrower and all third parties.
8.3 Organization and Qualification. The Borrower (a) is duly in-
corporated and organized and validly existing in good standing under the
laws of the state of its incorporation, (b) is qualified to do business as
a foreign corporation and is in good standing in the jurisdictions set
forth on Schedule 8.3 which are the only jurisdictions in which
qualification is necessary in order for it to own or lease its property
and conduct its business and (c) has all requisite power and authority to
conduct its business and to own its property.
8.4 Corporate Name; Prior Transactions. Except as set forth in
Schedule 8.4, the Borrower has not, during the past five (5) years, been
known by or used any other corporate or fictitious name, or been a party
to any merger or consolidation, or acquired all or substantially all of
the assets of any Person, or acquired any of its property outside of the
ordinary course of business.
8.5 Subsidiaries and Affiliates. Schedule 8.5 is a correct and
complete list of the name and relationship to the Borrower of each and all
of the Borrower's Subsidiaries and other Affiliates. Each Subsidiary is
(a) duly incorporated and organized and validly existing in good standing
under the laws of its state of incorporation set forth on Schedule 8.5,
and (b) qualified to do business as a foreign corporation and in good
standing in each jurisdiction in which the failure to so qualify or be in
good standing could reasonably be expected to have a material adverse
effect on any such Subsidiary's business, operations, prospects, property,
or condition (financial or otherwise) and (c) has all requisite power and
authority to conduct its business and own its property.
8.6 Financial Statements and Projections. (a) The Borrower has
delivered to the Agent and the Lenders the audited balance sheet and
related statements of income, retained earnings, cash flows, and changes
in stockholders equity for the Borrower and its consolidated Subsidiaries
as of December 31, 1997, and for the Fiscal Year then ended, accompanied
by the report thereon of the Borrower's independent certified public
accountants, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP. The Borrower has also delivered to the
Agent and the Lenders the unaudited balance sheet and related statements
of income and cash flows for the Borrower and its consolidated
Subsidiaries as of June 30, 1998. Such financial statements are attached
hereto as Exhibit C. All such financial statements have been prepared in
accordance with GAAP and present accurately and fairly the financial
position of the Borrower and its consolidated Subsidiaries as at the dates
thereof and their results of operations for the periods then ended.
(b) The Latest Projections when submitted to the Lenders as
required herein represent the Borrower's best estimate of the future
financial performance of the Borrower and its consolidated Subsidiaries
for the periods set forth therein on the date when submitted. The Latest
Projections have been prepared on the basis of the assumptions set forth
therein, which the Borrower believes are fair and reasonable in light of
current and reasonably foreseeable business conditions at the time
submitted to the Lender.
8.7 Capitalization. At Closing, the Borrower's authorized capital
stock consists of 45,000,000 shares of common stock, par value $0.01 per
share, of which approximately 10,000,000 shares are validly issued and
outstanding, fully paid and non-assessable (other than in accordance with
Wisconsin corporate law). Pursuant to the Plan of Reorganization, those
Persons identified on Schedule 8.7 (other than the last five Persons on
such Schedule, which Persons on the Effective Date will be registered
holders of the common stock of the Borrower in the amount set forth
opposite their respective names) shall be entitled to become record
holders of common stock of the Borrower in the amount set forth opposite
their respective names upon the surrender by such Persons of the Senior
Notes of the Borrower due 2003 registered in their respective names.
8.8 Reserved.
8.9 Debt. After giving effect to the making of the Revolving Loans
to be made on the Closing Date, the Borrower and its Subsidiaries have no
Debt, except (a) the Obligations, (b) Debt described on Schedule 8.9, (c)
trade payables, and other contractual obligations and liabilities arising
in the ordinary course of business, (d) Debt secured by Permitted Liens,
(e) contingent liabilities (other than Guaranties) in an amount not to
exceed $500,000 and (f) Debt of ▇▇▇▇▇▇.
8.10 Distributions. Since December 31, 1996, no Distribution has
been declared, paid, or made upon or in respect of any capital stock or
other securities of the Borrower or any of its Subsidiaries.
8.11 Title to Property. The Borrower has good and marketable title
in fee simple to its real property listed in Schedule 8.12 hereto, and the
Borrower has good, indefeasible, and merchantable title to all of its
other property (including, without limitation, the assets reflected on the
June 30, 1998 Financial Statements delivered to the Agent and the Lenders,
except as disposed of in the ordinary course of business since the date
thereof), free of all Liens except Permitted Liens.
8.12 Real Estate; Leases. Schedule 8.12 sets forth a correct and
complete list of all Real Estate owned by the Borrower or any of its
Subsidiaries as of the Closing Date, all leases and subleases of real or
personal property by the Borrower or its Subsidiaries as lessee or
sublessee (other than leases of personal property as to which the Borrower
is lessee or sublessee for which the value of such personal property is
less than $100,000 individually or $1,000,000 in the aggregate), and all
leases and subleases of real or personal property by the Borrower or its
Subsidiaries as lessor, lessee, sublessor or sublessee. Each of such
leases and subleases is valid and enforceable in accordance with its terms
and is in full force and effect, and no default by any party to any such
lease or sublease exists.
8.13 Proprietary Rights. Schedule 8.13 sets forth a correct and
complete list of all of the Borrower's Proprietary Rights. None of the
Proprietary Rights is subject to any licensing agreement or similar
arrangement except as set forth on Schedule 8.13. To the best of the
Borrower's knowledge, none of the Proprietary Rights infringes on or
conflicts with any other Person's property, and no other Person's property
infringes on or conflicts with the Proprietary Rights. The Proprietary
Rights described on Schedule 8.13 constitute all of the property of such
type necessary to the current and anticipated future conduct of the
Borrower's business.
8.14 Trade Names. All trade names or styles under which the Borrower
or any of its Subsidiaries will sell Inventory or create Accounts, or to
which instruments in payment of Accounts may be made payable, are listed
on Schedule 8.14.
8.15 Litigation. Except as set forth on Schedule 8.15, there is no
pending or (to the best of the Borrower's knowledge) threatened, action,
suit, proceeding, or counterclaim by any Person, or investigation by any
Governmental Authority, or any basis for any of the foregoing, which could
reasonably be expected to cause a Material Adverse Effect.
8.16 Restrictive Agreements. Neither the Borrower nor any of its
Subsidiaries is a party to any contract or agreement, or subject to any
charter or other corporate restriction, which affects its ability to
execute, deliver, and perform the Loan Documents and repay the Obligations
or which materially and adversely affects or, insofar as the Borrower can
reasonably foresee, could reasonably be expected to materially and
adversely affect, the property, business, operations, or condition
(financial or otherwise) of the Borrower or such Subsidiary, or would in
any respect cause a Material Adverse Effect.
8.17 Labor Disputes. Except as set forth on Schedule 8.17, (a) there
is no collective bargaining agreement or other labor contract covering
employees of the Borrower or any of its Subsidiaries, (b) no such
collective bargaining agreement or other labor contract is scheduled to
expire during the term of this Agreement, (c) no union or other labor
organization is seeking to organize, or to be recognized as, a collective
bargaining unit of employees of the Borrower or any of its Subsidiaries or
for any similar purpose, and (d) there is no pending or (to the best of
the Borrower's knowledge) threatened, strike, work stoppage, material
unfair labor practice claim, or other material labor dispute against or
affecting the Borrower or its Subsidiaries or their employees.
8.18 Environmental Laws. Except as otherwise disclosed on Schedule
8.18:
(a) The Borrower and its Subsidiaries have complied in all
material respects with all Environmental Laws applicable to its Premises
and business, and neither the Borrower nor any Subsidiary nor any of its
present Premises or operations, nor its past property or operations, is
subject to any enforcement order from or liability agreement with any
Governmental Authority or private Person respecting (i) compliance with
any Environmental Law or (ii) any potential liabilities and costs or
remedial action arising from the Release or threatened Release of a
Contaminant.
(b) The Borrower and its Subsidiaries have obtained all permits
necessary for their current operations under Environmental Laws, and all
such permits are in good standing and the Borrower and its Subsidiaries
are in compliance with all terms and conditions of such permits.
(c) Neither the Borrower nor any of its Subsidiaries, nor, to
the best of the Borrower's knowledge, any of its predecessors in interest,
has stored, treated or disposed of any hazardous waste on any Premises, as
defined pursuant to 40 CFR Part 261 or any equivalent Environmental Law.
(d) Neither the Borrower nor any of its Subsidiaries has
received any summons, complaint, order or similar written notice that it
is not currently in compliance with, or that any Governmental Authority is
investigating its compliance with, any Environmental Laws or that it is or
may be liable to any other Person as a result of a Release or threatened
Release of a Contaminant.
(e) None of the present or past operations of the Borrower and
its Subsidiaries is the subject of any investigation by any Governmental
Authority evaluating whether any remedial action is needed to respond to a
Release or threatened Release of a Contaminant.
(f) There is not now, nor to the best of the Borrower's
knowledge has there ever been on or in the Premises:
(1) any underground storage tanks or surface impoundments,
(2) any asbestos-containing material, or
(3) any polychlorinated biphenyls (PCB's) used in
hydraulic oils, electrical transformers or other equipment.
(g) Neither the Borrower nor any of its Subsidiaries has filed
any notice under any requirement of Environmental Law reporting a spill or
accidental and unpermitted release or discharge of a Contaminant into the
environment.
(h) Neither the Borrower nor any of its Subsidiaries has
entered into any negotiations or settlement agreements with any Person
(including, without limitation, the prior owner of its property) imposing
material obligations or liabilities on the Borrower or any of its
Subsidiaries with respect to any remedial action in response to the
Release of a Contaminant or environmentally related claim.
(i) None of the products manufactured, distributed or sold by
the Borrower or any of its Subsidiaries contain asbestos containing
material.
(j) No Environmental Lien has attached to any Premises of the
Borrower or any of its Subsidiaries.
8.19 No Violation of Law. Neither the Borrower nor any of its
Subsidiaries is in violation of any law, statute, regulation, ordinance,
judgment, order, or decree applicable to it which violation could
reasonably be expected to have a Material Adverse Effect.
8.20 No Default. Neither the Borrower nor any of its Subsidiaries is
in default with respect to any note, indenture, loan agreement, mortgage,
lease, deed, or other agreement to which the Borrower or such Subsidiary
is a party or by which it is bound, which default could reasonably be
expected to have a Material Adverse Effect.
8.21 ERISA Compliance. Except as specifically disclosed in Schedule
8.21:
(a) Each Plan is in compliance in all material respects with
the applicable provisions of ERISA, the Code and other federal or state
law. Each Plan which is intended to qualify under Section 401(a) of the
Code has received a favorable determination letter from the IRS and to the
best knowledge of the Borrower, nothing has occurred which would cause the
loss of such qualification. The Borrower and each ERISA Affiliate has
made all required contributions to any Plan subject to Section 412 of the
Code, and no application for a funding waiver or an extension of any
amortization period pursuant to Section 412 of the Code has been made with
respect to any Plan.
(b) There are no pending or, to the best knowledge of Borrower,
threatened claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan which has resulted or could reasonably
be expected to result in a Material Adverse Effect. There has been no
prohibited transaction or violation of the fiduciary responsibility rules
with respect to any Plan which has resulted or could reasonably be
expected to result in a Material Adverse Effect.
(c) (i) No ERISA Event has occurred or is reasonably expected
to occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii)
neither the Borrower nor any ERISA Affiliate has incurred, or reasonably
expects to incur, any liability under Title IV of ERISA with respect to
any Pension Plan (other than premiums due and not delinquent under Section
4007 of ERISA); (iv) neither the Borrower nor any ERISA Affiliate has
incurred, or reasonably expects to incur, any liability (and no event has
occurred which, with the giving of notice under Section 4219 of ERISA,
would result in such liability) under Section 4201 or 4243 of ERISA with
respect to a Multi-employer Plan; and (v) neither the Borrower nor any
ERISA Affiliate has engaged in a transaction that could be subject to
Section 4069 or 4212(c) of ERISA.
8.22 Taxes. The Borrower and its Subsidiaries have filed all Federal
and other tax returns and reports required to be filed, and have paid all
Federal and other taxes, assessments, fees and other governmental charges
levied or imposed upon them or their properties, income or assets
otherwise due and payable, except to the extent being contested in good
faith by appropriate proceedings, reserves in accordance with GAAP have
been taken and no Lien on any Collateral shall have arisen, which Lien
would be senior to that of the Agent.
8.23 Regulated Entities. None of the Borrower, any Person
controlling the Borrower, or any Subsidiary, is an "Investment Company"
within the meaning of the Investment Company Act of 1940. The Borrower is
not subject to regulation under the Public Utility Holding Company Act of
1935, the Federal Power Act, the Interstate Commerce Act, any state public
utilities code, or any other Federal or state statute or regulation
limiting its ability to incur indebtedness.
8.24 Use of Proceeds; Margin Regulations. The proceeds of the Loans
are to be used solely to repay all amounts owing under the DIP Loan and
Security Agreement and after payment in full of such amounts to pay
administrative claims under the Plan of Reorganization (which proceeds
shall not be used to pay administrative claims that are not payable in the
ordinary course of business of the Borrower in an aggregate amount, when
added without duplication to all professional fees and expenses relating
to the Chapter 11 Case unpaid immediately prior to the Closing Date or
incurred on or after the Closing Date (whether or not such fees are
administrative claims), in excess of $2,500,000), to fund costs and
expenses incurred by the Borrower in connection with the transactions
contemplated hereby and for the Borrower's working capital purposes.
Neither the Borrower nor any Subsidiary is engaged in the business of
purchasing or selling Margin Stock or extending credit for the purpose of
purchasing or carrying Margin Stock.
8.25 Copyrights, Patents, Trademarks and Licenses, etc. The Borrower
owns or is licensed or otherwise has the right to use all of the patents,
trademarks, service marks, trade names, copyrights, contractual
franchises, authorizations and other rights that are reasonably necessary
for the operation of its businesses, without conflict with the rights of
any other Person. To the best knowledge of the Borrower, no slogan or
other advertising device, product, process, method, substance, part or
other material now employed, or now contemplated to be employed, by the
Borrower or any Subsidiary infringes upon any rights held by any other
Person. No claim or litigation regarding any of the foregoing is pending
or threatened, and no patent, invention, device, application, principle or
any statute, law, rule, regulation, standard or code is pending or, to the
knowledge of the Borrower, proposed, which, in either case, could
reasonably be expected to have a Material Adverse Effect.
8.26 No Material Adverse Change. Except for the commencement of the
Chapter 11 Case, no Material Adverse Effect has occurred since the date of
the Financial Statements referred to in Section 8.6. On the basis of a
comprehensive review and assessment undertaken by the Borrower of the
Borrower's computer applications and inquiry made of the Borrower's
material suppliers, vendors and customers, the Borrower reasonably
believes that the AYear 2000 problem" (that is, the risk that computer
applications used by any Person may be unable to recognize and perform
properly date sensitive functions involving certain dates prior to and any
date after December 31, 1999) will not result in a Material Adverse
Effect.
8.27 Full Disclosure. None of the representations or warranties made
by the Borrower or any Subsidiary in the Loan Documents as of the date
such representations and warranties are made or deemed made, and none of
the statements contained in any exhibit, report, statement or certificate
furnished by or on behalf of the Borrower or any Subsidiary in connection
with the Loan Documents (including the offering and disclosure materials
delivered by or on behalf of the Borrower to the Lenders prior to the
Closing Date), contains any untrue statement of a material fact or omits
any material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they
are made, not misleading as of the time when made or delivered.
8.28 Material Agreements. Schedule 8.28 hereto sets forth all
material agreements and contracts to which the Borrower or any of its
Subsidiaries is a party or is bound as of the date hereof.
8.29 Bank Accounts. Schedule 8.29 contains a complete and accurate
list of all bank accounts maintained by the Borrower with any bank or
other financial institution.
8.30 Governmental Authorization. Except for the Confirmation Order
confirming the Plan of Reorganization, no approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required in connection with the
execution, delivery or performance by, or enforcement against, the
Borrower or any of its Subsidiaries of the Agreement or any other Loan
Document.
8.31 Reorganization Matters. Attached hereto as Exhibit G is a
certified copy of the Confirmation Order confirming the Plan of
Reorganization and such Plan of Reorganization and the Confirmation Order
have not been amended or modified without the prior written consent of the
Agent and the Majority Lenders and no conditions contained therein have
been waived by the Borrower without the prior written consent of the Agent
and the Majority Lenders and such order has become a Final Order.
Simultaneously with the making of the initial Loans and the issuance of
Letters of Credit on the Closing Date, the Effective Date shall have
occurred and the Plan of Reorganization will be substantially consummated.
ARTICLE 9
AFFIRMATIVE AND NEGATIVE COVENANTS
The Borrower covenants to the Agent and each Lender that, so
long as any of the Obligations remain outstanding or this Agreement is in
effect:
9.1 Taxes and Other Obligations. The Borrower shall, and shall
cause each of its Subsidiaries to, (a) file when due all tax returns and
other reports which it is required to file; (b) pay, or provide for the
payment, when due, of all taxes, fees, assessments and other governmental
charges against it or upon its property, income and franchises, make all
required withholding and other tax deposits, and establish adequate
reserves for the payment of all such items, and provide to the Agent and
the Lenders, upon request, satisfactory evidence of its timely compliance
with the foregoing; and (c) pay when due all Debt owed by it and all
claims of materialmen, mechanics, carriers, warehousemen, landlords and
other like Persons, and all other indebtedness owed by it and perform and
discharge in a timely manner all other obligations undertaken by it; pro-
vided, however, so long as Borrower has notified the Agent in writing,
neither the Borrower nor any of its Subsidiaries need pay any tax, fee,
assessment, governmental charge or the items set forth in (c) above, that
(i) it is contesting in good faith by appropriate proceedings diligently
pursued, (ii) the Borrower or its Subsidiary, as the case may be, has
established proper reserves for as provided in GAAP, and (iii) no Lien
(other than a Permitted Lien) results from such non-payment.
9.2 Corporate Existence and Good Standing. The Borrower shall, and
shall cause each of its Subsidiaries to, maintain its corporate existence
and its qualification and good standing in all jurisdictions in which the
failure to maintain such existence and qualification or good standing
could reasonably be expected to have a material adverse effect on the
Borrower's or such Subsidiary's property, business, operations, prospects,
or condition (financial or otherwise).
9.3 Compliance with Law and Agreements; Maintenance of Licenses.
The Borrower shall comply, and shall cause each Subsidiary to comply, in
all material respects with all Requirements of Law of any Governmental
Authority having jurisdiction over it or its business (including the
Federal Fair Labor Standards Act). The Borrower shall, and shall cause
each of its Subsidiaries to, obtain and maintain all licenses, permits,
franchises, and governmental authorizations necessary to own its property
and to conduct its business as conducted on the Closing Date. The
Borrower shall not modify, amend or alter its certificate or article of
incorporation other than in a manner which does not adversely affect the
rights of the Lenders or the Agent.
9.4 Maintenance of Property. The Borrower shall, and shall cause
each of its Subsidiaries to, maintain all of its property necessary and
useful in the conduct of its business, in good operating condition and
repair, ordinary wear and tear excepted.
9.5 Insurance. (a) The Borrower shall maintain, and shall cause
each of its Subsidiaries to maintain, with financially sound and reputable
insurers having a rating of at least A-VII or better
by Best Rating Guide, insurance against loss or damage by fire with
extended coverage; theft, burglary, pilferage and loss in transit; public
liability and third party property damage; larceny, embezzlement or other
criminal liability; business interruption; public liability and third
party property damage; and such other hazards or of such other types as is
customary for Persons engaged in the same or similar business, as the
Agent, in its discretion, or acting at the direction of the Majority
Lenders, shall specify, in amounts, and under policies acceptable to the
Agent and the Majority Lenders. Without limiting the foregoing, the
Borrower shall also maintain, and shall cause each of its Subsidiaries to
maintain, flood insurance, in the event of a designation of the area in
which any Real Estate covered by the Mortgages and any of the Equipment
and Inventory located on such Real Estate is located as "flood prone" or a
"flood risk area," (hereinafter "SFHA") as defined by the Flood Disaster
Protection Act of 1973, in an amount to be reasonably determined by the
Agent, and shall comply with the additional requirements of the National
Flood Insurance Program as set forth in said Act. Upon the Majority
Lenders' request, the Borrower shall maintain flood insurance for its
Inventory and Equipment which is, at any time, located in a SFHA.
(b) The Borrower shall cause the Agent, for the ratable benefit
of the Agent and the Lenders, to be named in each such policy as secured
party or mortgagee and sole loss payee or additional insured, in a manner
acceptable to the Agent. Each policy of insurance shall contain a clause
or endorsement requiring the insurer to give not less than thirty (30)
days' prior written notice to the Agent in the event of cancellation of
the policy for any reason whatsoever and a clause or endorsement stating
that the interest of the Agent shall not be impaired or invalidated by any
act or neglect of the Borrower or any of its Subsidiaries or the owner of
any premises for purposes more hazardous than are permitted by such
policy. All premiums for such insurance shall be paid by the Borrower
when due, and certificates of insurance and, if requested by the Agent or
any Lender, photocopies of the policies, shall be delivered to the Agent,
in each case in sufficient quantity for distribution by the Agent to each
of the Lenders. If the Borrower fails to procure such insurance or to pay
the premiums therefor when due, the Agent may, and at the direction of the
Majority Lenders shall, do so from the proceeds of Revolving Loans.
(c) The Borrower shall promptly notify the Agent and the
Lenders of any loss, damage, or destruction to a material portion of the
Collateral arising from its use, whether or not covered by insurance. The
Agent is hereby authorized to collect all insurance proceeds directly, and
to apply or remit them as follows:
(i) With respect to insurance proceeds relating to
property other than Collateral, after deducting from such proceeds the
reasonable expenses, if any, incurred by the Agent in the collection or
handling thereof, the Agent shall promptly remit to the Borrower such
proceeds.
(ii) With respect to insurance proceeds relating to
Collateral other than Fixed Assets, after deducting from such proceeds the
reasonable expenses, if any, incurred by the Agent in the collection or
handling thereof, the Agent shall apply such proceeds, to the Revolving
Loan.
(iii) With respect to insurance proceeds relating to
Collateral consisting of Fixed Assets, after deducting from such proceeds
the reasonable expenses, if any, incurred by the Agent in the collection
or handling thereof, the Agent shall apply such proceeds to the Revolving
Loans.
9.6 Condemnation. (a) The Borrower shall, immediately upon
learning of the institution of any proceeding for the condemnation or
other taking of any of its property, notify the Agent of the pendency of
such proceeding, and agrees that the Agent may participate in any such
proceeding, and the Borrower from time to time will deliver to the Agent
all instruments reasonably requested by the Agent to permit such partici-
pation.
(b) The Agent is hereby authorized to collect the proceeds of
any condemnation claim or award directly, and to apply or remit them as
follows:
(i) With respect to condemnation proceeds relating to
property other than Collateral, after deducting from such proceeds the
reasonable expenses, if any, incurred by the Agent in the collection or
handling thereof, the Agent shall remit to the Borrower such proceeds.
(ii) With respect to condemnation proceeds relating to
Collateral other than Fixed Assets, after deducting from such proceeds the
reasonable expenses, if any, incurred by the Agent in the collection or
handling thereof, the Agent shall apply such proceeds, ratably, to the
reduction of the Obligations in the order provided for in Section 4.8.
(iii) With respect to condemnation proceeds relating to
Collateral consisting of Fixed Assets, after deducting from such proceeds
the reasonable expenses, if any, incurred by the Agent in the collection
or handling thereof, the Agent shall apply such proceeds to the Revolving
Loans.
9.7 Environmental Laws. (a) The Borrower shall, and shall cause
each of its Subsidiaries to, conduct its business in material compliance
with all Environmental Laws applicable to it, including, without
limitation, those relating to the generation, handling, use, storage, and
disposal of any Contaminant. The Borrower shall, and shall cause each of
its Subsidiaries to, take prompt and appropriate action to respond to any
non-compliance with Environmental Laws and shall regularly report to the
Agent on such response.
(b) Without limiting the generality of the foregoing, the
Borrower shall submit to the Agent and the Lenders annually, commencing
March 1, 1999, and on each March 1 thereafter, an update of the status of
each material environmental compliance or liability issue. The Agent or
any Lender may request copies of technical reports prepared by the
Borrower and its communications with any Governmental Authority to
determine whether the Borrower or any of its Subsidiaries is proceeding
reasonably to correct, cure or contest in good faith any alleged non-
compliance or environmental liability. The Borrower shall, at the Agent's
or the Majority Lenders' request and at the Borrower's expense, (a) retain
an independent environmental engineer acceptable to the Agent to evaluate
the site, including tests if appropriate, where the non-compliance or
alleged non-compliance with Environmental Laws has occurred and prepare
and deliver to the Agent, in sufficient quantity for distribution by the
Agent to the Lenders, a report setting forth the results of such
evaluation, a proposed plan for responding to any environmental problems
described therein, and an estimate of the costs thereof, and (b) provide
to the Agent and the Lenders a supplemental report of such engineer
whenever the scope of the environmental problems, or the response thereto
or the estimated costs thereof, shall change in any material respect.
9.8 Compliance with ERISA. The Borrower shall, and shall cause each
of its ERISA Affiliates to: (a) maintain each Plan in compliance in all
material respects with the applicable provisions of ERISA, the Code and
other federal or state law; (b) cause each Plan which is qualified under
Section 401(a) of the Code to maintain such qualification; (c) make all
required contributions to any Plan subject to Section 412 of the Code; (d)
not engage in a prohibited transaction or violation of the fiduciary
responsibility rules with respect to any Plan; and (e) not engage in a
transaction that could be subject to Section 4069 or 4212(c) of ERISA.
9.9 Mergers, Consolidations or Sales. Neither the Borrower nor any
of its Subsidiaries shall enter into any transaction of merger,
reorganization, or consolidation, or transfer, sell, assign, lease, or
otherwise dispose of all or any part of its property, or wind up,
liquidate or dissolve, or agree to do any of the foregoing, except (i) for
sales of Inventory in the ordinary course of its business, (ii) for sales
or other dispositions of Equipment in the ordinary course of business that
are obsolete or no longer useable by Borrower in its business as permitted
by Section 6.11 and (iii) for sales or other dispositions of fixed assets
located at its Berlin, Wisconsin and New Albany, Indiana locations.
9.10 Distributions; Capital Change; Restricted Investments. Neither
the Borrower nor any of its Subsidiaries shall (i) directly or indirectly
declare or make, or incur any liability to make, any Distribution, except
Distributions to the Borrower by its Subsidiaries, (ii) make any change in
its capital structure which could have a Material Adverse Effect or issue
any capital stock other than common stock or (iii) make any Restricted
Investment.
9.11 Transactions Affecting Collateral or Obligations. Neither the
Borrower nor any of its Subsidiaries shall enter into any transaction
which would be reasonably expected to have a Material Adverse Effect.
9.12 Guaranties. Neither the Borrower nor any of its Subsidiaries
shall make, issue, or become liable on any Guaranty, except Guaranties of
the Obligations in favor of the Agent and endorsement of negotiable
instruments in the ordinary course of business.
9.13 Debt. Neither the Borrower nor any of its Subsidiaries shall
incur or maintain any Debt, other than: (a) the Obligations; (b) trade
payables; (c) Debt secured by Purchase Money Liens to the extent permitted
under the definition of Permitted Liens and contractual obligations and
liabilities to suppliers and customers and others incurred in the ordinary
course of business; and (d) other Debt existing on the Closing Date and
reflected in the Financial Statements attached hereto as Exhibit C, (e)
Debt of ▇▇▇▇▇▇, (f) Debt owed to employees in the ordinary course of
business and (g) contingent liabilities (other than Guaranties) in an
amount not to exceed $500,000.
9.14 Prepayment. Neither the Borrower nor any of its Subsidiaries
shall voluntarily prepay, acquire or defease any Debt for Borrowed Money,
except the Obligations in accordance with the terms of this Agreement,
prepayments of Capital Leases in an amount not to exceed $250,000 and as
contemplated by Section 10.1(k).
9.15 Transactions with Affiliates. Except as set forth below,
neither the Borrower nor any of its Subsidiaries shall, sell, transfer,
distribute, or pay any money or property, including, but not limited to,
any fees or expenses of any nature (including, but not limited to, any
fees or expenses for management services), to any Affiliate, or lend or
advance money or property to any Affiliate, or invest in (by capital
contribution or otherwise) or purchase or repurchase any stock or indebt-
edness, or any property, of any Affiliate, or become liable on any
Guaranty of the indebtedness, dividends, or other obligations of any
Affiliate. Notwithstanding the foregoing, the Borrower and its Subsi-
diaries may engage in transactions with Affiliates in the ordinary course
of business, in amounts and upon terms fully disclosed to the Agent and
the Lenders, and no less favorable to the Borrower and its Subsidiaries
than would be obtained in a comparable arm's-length transaction with a
third party who is not an Affiliate and Borrower may advance monies to
▇▇▇▇▇▇ to the extent permitted under the definition of Restricted
Investment.
9.16 Investment Banking and Finder's Fees. Neither the Borrower nor
any of its Subsidiaries shall pay or agree to pay, or reimburse any other
party with respect to, any investment banking or similar or related fee,
underwriter's fee, finder's fee, or broker's fee to any Person in
connection with this Agreement, except for a fee payable to ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇ Inc. The Borrower shall defend and indemnify the Agent and
the Lenders against and hold them harmless from all claims of any Person
that the Borrower is obligated to pay for any such fees, and all costs and
expenses (including without limitation, attorneys' fees) incurred by the
Agent and/or any Lender in connection therewith.
9.17 Business Conducted. The Borrower shall not and shall not permit
any of its Subsidiaries to, engage directly or indirectly, in any line of
business other than the businesses in which the Borrower is engaged on the
Closing Date.
9.18 Liens. Neither the Borrower nor any of its Subsidiaries shall
create, incur, assume, or permit to exist any Lien on any property now
owned or hereafter acquired by any of them, except Permitted Liens
(including those listed on Schedule 9.18).
9.19 Sale and Leaseback Transactions. Neither the Borrower nor any
of its Subsidiaries shall, directly or indirectly, enter into any
arrangement with any Person providing for the Borrower or such Subsidiary
to lease or rent property that the Borrower or such Subsidiary has sold or
will sell or otherwise transfer to such Person.
9.20 New Subsidiaries. The Borrower shall not, directly or
indirectly, organize, create, acquire or permit to exist any Subsidiary
other than those listed on Schedule 8.5.
9.21 Fiscal Year. The Borrower shall not change its Fiscal Year.
9.22 Capital Expenditures. Neither the Borrower nor any of its
Subsidiaries shall make or incur any Capital Expenditure if, after giving
effect thereto, the aggregate amount of all Capital Expenditures by the
Borrower and its Subsidiaries on a consolidated basis would exceed
$8,000,000 during any Fiscal Year.
9.23 Coverage Ratio. The Borrower shall not permit the Coverage
Ratio to be less than the following ratio for the four fiscal quarter
period ending on each of the following dates:
Date Ratio
December 31, 1998 .8:1
March 31, 1999 and each fiscal
quarter end thereafter 1.0:1
9.24 Adjusted Tangible Net Worth. The Borrower will maintain
Adjusted Tangible Net Worth, determined as of the last day of each fiscal
quarter commencing December 31, 1998 of not less than $65,000,000.
9.25 Use of Proceeds. The Borrower shall not, and shall not suffer
or permit any Subsidiary to, use any portion of the Loan proceeds,
directly or indirectly, (i) to purchase or carry Margin Stock, (ii) to
repay or otherwise refinance indebtedness of the Borrower or others
incurred to purchase or carry Margin Stock, (iii) to extend credit for the
purpose of purchasing or carrying any Margin Stock, or (iv) to acquire any
security in any transaction that is subject to Section 13 or 14 of the
Exchange Act.
9.26 Further Assurances. The Borrower shall execute and deliver, or
cause to be executed and delivered, to the Agent and/or the Lenders such
documents and agreements, and shall take or cause to be taken such
actions, as the Agent or any Lender may, from time to time, request to
carry out the terms and conditions of this Agreement and the other Loan
Documents.
9.27 Plan of Reorganization. Without the prior written consent of
the Agent and the Majority Lenders, the Borrower shall not cause or permit
the Plan of Reorganization to be amended or modified or waive any of the
conditions contained therein.
ARTICLE 10
CONDITIONS OF LENDING
10.1 Conditions Precedent to Making of Loans on the Closing Date.
The obligation of the Lenders to make the initial Revolving Loans on the
Closing Date, and the obligation of the Agent to cause to be issued or
provide Credit Support for any Letter of Credit on the Closing Date and
the obligation of the Lenders to participate in Letters of Credit issued
on the Closing Date or in Credit Support for any Letters of Credit, are
subject to the following conditions precedent having been satisfied in a
manner satisfactory to the Agent and each Lender:
(a) This Agreement and the other Loan Documents have been
executed by each party thereto and the Borrower shall have performed and
complied with all covenants, agreements and conditions contained herein
and the other Loan Documents which are required to be performed or
complied with by the Borrower before or on such Closing Date.
(b) Upon making the Revolving Loans on the Closing Date
(including such Revolving Loans made pursuant to Section 4.7 as
reimbursement for fees, costs and expenses then payable under this
Agreement) the Borrower would have Availability in an amount no less than
$1,000,000. The Agent shall have received evidence that not more than
$4,000,000 of the Borrower's accounts payable and other contractual
obligations are not current.
(c) All representations and warranties made hereunder and in
the other Loan Documents shall be true and correct as of the Closing Date
as if made on such date (both immediately prior to, and after giving
effect to, such extension of credit).
(d) No Default or Event of Default shall exist on the Closing
Date, or would exist after giving effect to the Loans to be made on such
date or the Credit Support to be issued or provided on such date.
(e) The Agent and the Lenders shall have received such opinions
of counsel for the Borrower and its Subsidiaries as the Agent or any
Lender shall request, each such opinion to be in a form, scope, and
substance satisfactory to the Agent, the Lenders, and their respective
counsel.
(f) The Agent and the Lenders shall have received title
policies, in form and substance acceptable to Agent, with respect to the
Mortgages.
(g) The Agent shall have received:
(i) acknowledgment copies of proper financing statements,
duly filed on or before the Closing Date under the UCC of all
jurisdictions that the Agent may deem necessary or desirable in order to
perfect the Agent's Lien; and
(ii) duly executed UCC-3 Termination Statements and such
other instruments, in form and substance satisfactory to the Agent, as
shall be necessary to terminate and satisfy all Liens on the Property of
the Borrower and its Subsidiaries except Permitted Liens.
(h) The Borrower shall have paid all fees and expenses of the
Agent and the Lenders and the Attorney Costs incurred in connection with
any of the Loan Documents and the transactions contemplated thereby.
(i) The Agent shall have received evidence, in form, scope, and
substance, reasonably satisfactory to the Agent, of all insurance coverage
as required by the Agreement.
(j) The Agent and the Lenders shall have had an opportunity, if
they so choose, to examine the books of account and other records and
files of the Borrower and to make copies thereof, and to conduct a pre-
closing audit which shall include, without limitation, verification of
Inventory, Accounts, and Availability, and the results of such examination
and audit shall have been satisfactory to the Agent and the Lenders in all
respects.
(k) All advances made under the DIP Loan and Security Agreement
(including principal, accrued interest and fees) and all other obligations
owing under the DIP Loan and Security Agreement and related documents
shall have been paid in full with the proceeds of the initial Loans and
the commitments of the DIP Lenders under the DIP Loan and Security
Agreement shall have been terminated.
(l) Except for the commencement of the Chapter 11 Case, there
shall have been no Material Adverse Effect since June 30, 1998.
(m) The Agent shall be satisfied as to the continued
implementation by the Borrower of a cash management system reasonably
satisfactory to the Agent, which cash management system shall include,
among other things, the remittance procedures of the type contained in
this Agreement.
(n) The Plan of Reorganization shall be in form and substance
acceptable to the Agent and the Lenders, including without limitation,
with respect to the terms and provisions providing for the restructuring
of the debt and capitalization of the Borrower and resulting in a capital
structure acceptable to the Agent and the Lenders.
(o) The Confirmation Order shall have been entered by the
Bankruptcy Court and the Agent shall have received a certified copy of
same, and such order shall be in full force and effect and shall not have
been reversed, stayed, modified or amended absent the prior written
consent of the Agent, the Majority Lenders and the Borrower.
(p) The Confirmation Date shall have occurred not later than
September 30, 1998.
(q) The Agent shall have received evidence satisfactory to it
that the Effective Date shall occur contemporaneously with the Closing
Date hereunder.
(r) The Borrower shall have satisfied the Agent that (a) the
Borrower has taken and is taking all necessary and appropriate steps to
ascertain the extent of, quantify and successfully address the business
and financial risks facing the Borrower as a result of what is commonly
referred to as the AYear 2000 problem" (i.e., the inability of certain
computer applications to recognize correctly and perform properly date-
sensitive functions involving certain dates prior to and any date after
December 31, 1999), including risks resulting from the failure of key
customers and suppliers of the Borrower to address successfully the Year
2000 problem, and (b) the Borrower's material computer applications will
on a timely basis adequately address the Year 2000 problem in all material
respects.
(s) [Intentionally Omitted.]
(t) All proceedings taken in connection with the execution of
this Agreement, all other Loan Documents and all documents and papers
relating thereto shall be satisfactory in form, scope, and substance to
the Agent and the Lenders.
The acceptance by the Borrower of any Loans made on the Closing
Date or of any Credit Support or Letters of Credit issued or provided on
the Closing Date shall be deemed to be a representation and warranty made
by the Borrower to the effect that all of the conditions precedent to the
making of such Loans or the issuance or provision of such Credit Support
or Letters of Credit have been satisfied, with the same effect as
delivery to the Agent and the Lenders of a certificate signed by a
Responsible Officer of the Borrower, dated the Closing Date, to such
effect.
Execution and delivery to the Agent by a Lender of a counterpart
of this Agreement shall be deemed confirmation by such Lender that (i) all
conditions precedent in this Section 10.1 have been fulfilled to the
satisfaction of such Lender and (ii) the decision of such Lender to
execute and deliver to the Agent an executed counterpart of this Agreement
was made by such Lender independently and without reliance on the Agent or
any other Lender as to the satisfaction of any condition precedent set
forth in this Section 10.1.
10.2 Conditions Precedent to Each Loan. The obligation of the
Lenders to make each Loan, including the initial Revolving Loans on the
Closing Date, and the obligation of the Agent to take reasonable steps to
cause to be issued or to provide Credit Support for any Letter of Credit
and the obligation of the Lenders to participate in Letters of Credit or
Credit Support for Letters of Credit, shall be subject to the further
conditions precedent that on and as of the date of any such extension of
credit:
(a) the following statements shall be true, and the acceptance
by the Borrower of any extension of credit shall be deemed to be a
statement to the effect set forth in clauses (i) and (ii), with the same
effect as the delivery to the Agent and the Lenders of a certificate
signed by a Responsible Officer, dated the date of such extension of
credit, stating that:
(i) The representations and warranties contained in this
Agreement and the other Loan Documents are correct in all material
respects on and as of the date of such extension of credit as though made
on and as of such date (both immediately prior to, and after giving effect
to, such extension of credit), other than any such representation or
warranty which relates to a specified prior date and except to the extent
the Agent and the Lenders have been notified by the Borrower that any
representation or warranty is not correct and the Majority Lenders have
explicitly waived in writing compliance with such representation or
warranty; and
(ii) No event has occurred and is continuing, or would
result from such extension of credit, which constitutes a Default or an
Event of Default; and
(b) without limiting Section 10.1(b), the amount of the
Availability shall be sufficient to make such Revolving Loan or Credit
Support without exceeding the Availability, provided, however, that the
foregoing conditions precedent are not conditions to each Lender
participating in or reimbursing BABC or the Agent for such Lenders' Pro
Rata Share of any BABC Loan or Agent Advance as provided in
Sections 2.2(h), (i) and (j); and
(c) the Confirmation Order shall be in full force and effect
and shall not have been reversed, stayed, modified or amended, except for
such modifications and amendments mutually agreed to by the Borrower, the
Agent and the Majority Lenders.
ARTICLE 11
DEFAULT; REMEDIES
11.1 Events of Default. It shall constitute an event of default
("Event of Default") if any one or more of the following shall occur for
any reason:
(a) any failure to pay the principal of or interest or premium
on any of the Obligations when due, whether upon demand or otherwise;
(b) any representation or warranty made or deemed made by the
Borrower in this Agreement or by the Borrower or any of its Subsidiaries
in any of the other Loan Documents, any Financial Statement, or any
certificate furnished by the Borrower or any of its Subsidiaries at any
time to the Agent or any Lender shall prove to be untrue in any material
respect as of the date on which made, deemed made, or furnished;
(c) (i) any default shall occur in the observance or
performance of any of the covenants and agreements contained in Sections
6.1, 6.2, 6.3, 6.7, 6.9, Article 7 or Article 9 or (ii) any default shall
occur in the observance or performance of any of the covenants and
agreements contained in this Agreement (other than as specified in clause
(a) or (c)(i) above), any other Loan Documents, or any other agreement
entered into at any time to which the Borrower or any Subsidiary and the
Agent or any Lender are party and such default shall continue unremedied
for a period of 15 days after the earlier of notice to the Borrower
thereof or Borrower obtaining knowledge thereof, or (iii) if any agreement
or document referred to in clauses (i) or (ii) above shall terminate
(other than in accordance with its terms or the terms hereof or with the
written consent of the Agent and the Majority Lenders) or become void or
unenforceable, without the written consent of the Agent and the Majority
Lenders;
(d) default shall occur with respect to any Debt For Borrowed
Money (other than the Obligations) in an outstanding principal amount
which exceeds $250,000, or under any agreement or instrument under or
pursuant to which any such Debt For Borrowed Money may have been issued,
created, assumed, or guaranteed by the Borrower or any of its Sub-
sidiaries, and such default shall continue for more than the period of
grace, if any, therein specified, if the effect thereof (with or without
the giving of notice or further lapse of time or both) is to accelerate,
or to permit the holders of any such Debt For Borrowed Money to
accelerate, the maturity of any such Debt For Borrowed Money; or any such
Debt For Borrowed Money shall be declared due and payable or be required
to be prepaid (other than by a regularly scheduled required prepayment)
prior to the stated maturity thereof;
(e) the Borrower or any of its Subsidiaries shall (i) file a
voluntary petition in bankruptcy or file a voluntary petition or an answer
or otherwise commence any action or proceeding seeking reorganization,
arrangement or readjustment of its debts or for any other relief under the
federal Bankruptcy Code, as amended, or under any other bankruptcy or
insolvency act or law, state or federal, now or hereafter existing, or
consent to, approve of, or acquiesce in, any such petition, action or
proceeding; (ii) apply for or acquiesce in the appointment of a receiver,
assignee, liquidator, sequestrator, custodian, monitor, trustee or similar
officer for it or for all or any part of its property; (iii) make an
assignment for the benefit of creditors; or (iv) be unable generally to
pay its debts as they become due;
(f) an involuntary petition or proposal shall be filed or an
action or proceeding otherwise commenced seeking reorganization,
arrangement, consolidation or readjustment of the debts of the Borrower or
any of its Subsidiaries or for any other relief under the federal
Bankruptcy Code, as amended, or under any other bankruptcy or insolvency
act or law, state or federal, now or hereafter existing and either (i)
such petition, proposal, action or proceeding shall not have been
dismissed within a period of sixty (60) days after its commencement or
(ii) an order for relief against the Borrower or such Subsidiary shall
have been entered in such proceeding;
(g) a receiver, assignee, liquidator, sequestrator, custodian,
monitor, trustee or similar officer for the Borrower or any of its
Subsidiaries or for all or any part of its property shall be appointed or
a warrant of attachment, execution or similar process shall be issued
against any part of the property of the Borrower or any of its
Subsidiaries;
(h) the Borrower or any of its Subsidiaries shall file a
certificate of dissolution under applicable state law or shall be
liquidated, dissolved or wound-up or shall commence or have commenced
against it any action or proceeding for dissolution, winding-up or
liquidation, or shall take any corporate action in furtherance thereof;
(i) all or any material part of the property of the Borrower or
any of its Subsidiaries shall be nationalized, expropriated or condemned,
seized or otherwise appropriated, or custody or control of such property
or of the Borrower or such Subsidiary shall be assumed by any Governmental
Authority or any court of competent jurisdiction at the instance of any
Governmental Authority, except where contested in good faith by proper
proceedings diligently pursued where a stay of enforcement is in effect;
(j) any guaranty of the Obligations shall be terminated,
revoked or declared void or invalid;
(k) one or more judgments or orders for the payment of money
aggregating in excess of $100,000, which amount shall not be fully covered
by insurance, shall be rendered against the Borrower or any of its
Subsidiaries;
(l) any loss, theft, damage or destruction of any item or items
of Collateral or other property of the Borrower or any Subsidiary occurs
which (i) materially and adversely affects the property, business,
operation, prospects, or condition of the Borrower or any of its
Subsidiaries; or (ii) is material in amount and is not adequately covered
by insurance;
(m) there occurs a Material Adverse Effect;
(n) there is filed against the Borrower or any of its
Subsidiaries any civil or criminal action, suit or proceeding under any
federal or state racketeering statute (including, without limitation, the
Racketeer Influenced and Corrupt Organization Act of 1970), which action,
suit or proceeding (1) is not dismissed within one hundred twenty (120)
days, and (2) could result in the confiscation or forfeiture of any
material portion of the Collateral;
(o) for any reason other than the failure of the Agent to take
any action available to it to maintain perfection of the Agent's Liens,
pursuant to the Loan Documents, any Loan Document ceases to be in full
force and effect or any Lien with respect to any material portion of the
Collateral intended to be secured thereby ceases to be, or is not, valid,
perfected and prior to all other Liens (other than Permitted Liens) or is
terminated, revoked or declared void;
(p) (i) an ERISA Event shall occur with respect to a Pension
Plan or Multi-employer Plan which has resulted or could reasonably be
expected to result in liability of the Borrower under Title IV of ERISA to
the Pension Plan, Multi-employer Plan or the PBGC in an aggregate amount
in excess of $1,000,000; (ii) the aggregate amount of Unfunded Pension
Liability among all Pension Plans at any time exceeds $1,000,000; or (iii)
the Borrower or any ERISA Affiliate shall fail to pay when due, after the
expiration of any applicable grace period, any installment payment with
respect to its withdrawal liability under Section 4201 of ERISA under a
Multi-employer Plan in an aggregate amount in excess of $1,000,000;
(q) there occurs a Change of Control;
(r) the Borrower shall attempt to invalidate, reduce or
otherwise impair the Agent's or any Prepetition Lender's or DIP Lender's
pre or post Petition Date claims against the Borrower or to subject any
collateral securing any such claims to assessment pursuant to Section
506(c) of the Bankruptcy Code;
(s) the Confirmation Order shall have been modified in any
material respect without the prior written consent of the Agent and the
Majority Lenders or a determination shall have been made regarding the
Confirmation Order that is adverse in any material respect to the Agent
and the Lenders; or
(t) one or more defaults shall occur under any material
provision of the Plan of Reorganization, and such default(s) shall
continue for more than the grace period, if any, therein specified.
11.2 Remedies. (a) If a Default or an Event of Default exists, the
Agent may, in its discretion, and shall, at the direction of the Majority
Lenders, do one or more of the following at any time or times and in any
order, without notice to or demand on the Borrower: (i) reduce the
Maximum Revolver Amount, or the advance rates against Eligible Accounts
and/or Eligible Inventory used in computing the Availability, or reduce
one or more of the other elements used in computing the Availability;
(ii) restrict the amount of or refuse to make Revolving Loans; and
(iii) restrict or refuse to arrange for or provide Letters of Credit or
Credit Support. If an Event of Default exists, the Agent shall, at the
direction of the Majority Lenders, do one or more of the following, in
addition to the actions described in the preceding sentence, at any time
or times and in any order, without notice to or demand on the Borrower:
(a) terminate the Commitments and this Agreement; (b) declare any or
all Obligations to be immediately due and payable; provided, however,
that upon the occurrence of any Event of Default described in
Sections 11.1(e), 11.1(f), 11.1(g), or 11.1(h), the Commitments shall
automatically and immediately expire and all Obligations shall
automatically become immediately due and payable without notice or
demand of any kind; and (c) pursue its other rights and remedies under
the Loan Documents and applicable law.
(b) If an Event of Default exists: (i) the Agent shall have
for the benefit of the Lenders, in addition to all other rights of the
Agent and the Lenders, the rights and remedies of a secured party under
the UCC; (ii) the Agent may, at any time, take possession of the
Collateral and keep it on the Borrower's premises, at no cost to the Agent
or any Lender, or remove any part of it to such other place or places as
the Agent may desire, or the Borrower shall, upon the Agent's demand, at
the Borrower's cost, assemble the Collateral and make it available to the
Agent at a place reasonably convenient to the Agent; and (iii) the Agent
may sell and deliver any Collateral at public or private sales, for cash,
upon credit or otherwise, at such prices and upon such terms as the Agent
deems advisable, in its sole discretion, and may, if the Agent deems it
reasonable, postpone or adjourn any sale of the Collateral by an
announcement at the time and place of sale or of such postponed or
adjourned sale without giving a new notice of sale. Without in any way
requiring notice to be given in the following manner, the Borrower agrees
that any notice by the Agent of sale, disposition or other intended action
hereunder or in connection herewith, whether required by the UCC or
otherwise, shall constitute reasonable notice to the Borrower if such
notice is mailed by registered or certified mail, return receipt
requested, postage prepaid, or is delivered personally against receipt, at
least five (5) Business Days prior to such action to the Borrower's
address specified in or pursuant to Section 15.8. If any Collateral is
sold on terms other than payment in full at the time of sale, no credit
shall be given against the Obligations until the Agent or the Lenders
receive payment, and if the buyer defaults in payment, the Agent may
resell the Collateral without further notice to the Borrower. In the
event the Agent seeks to take possession of all or any portion of the
Collateral by judicial process, the Borrower irrevocably waives: (a) the
posting of any bond, surety or security with respect thereto which might
otherwise be required; (b) any demand for possession prior to the
commencement of any suit or action to recover the Collateral; and (c) any
requirement that the Agent retain possession and not dispose of any
Collateral until after trial or final judgment. The Borrower agrees that
the Agent has no obligation to preserve rights to the Collateral or
marshal any Collateral for the benefit of any Person. The Agent is hereby
granted a license or other right to use, without charge, the Borrower's
labels, patents, copyrights, name, trade secrets, trade names, trademarks,
and advertising matter, or any similar property, in completing production
of, advertising or selling any Collateral, and the Borrower's rights under
all licenses and all franchise agreements shall inure to the Agent's
benefit for such purpose. The proceeds of sale shall be applied first to
all expenses of sale, including attorneys' fees, and then to the
Obligations in whatever order the Agent elects. The Agent will return any
excess to the Borrower and the Borrower shall remain liable for any
deficiency.
(c) If an Event of Default occurs, the Borrower hereby waives
all rights to notice and hearing prior to the exercise by the Agent of the
Agent's rights to repossess the Collateral without judicial process or to
replevy, attach or levy upon the Collateral without notice or hearing.
ARTICLE 12
TERM AND TERMINATION
12.1 Term and Termination. The term of this Agreement shall end on
the Stated Termination Date. The Agent upon direction from the Majority
Lenders may terminate this Agreement without notice upon the occurrence
and during the continuance of an Event of Default. Upon the effective
date of termination of this Agreement for any reason whatsoever, all
Obligations (including, without limitation, all unpaid principal, accrued
interest and any early termination or prepayment fees or penalties) shall
become immediately due and payable and Borrower shall immediately arrange
for the cancellation of Letters of Credit then outstanding.
Notwithstanding the termination of this Agreement, until all Obligations
are indefeasibly paid and performed in full in cash, the Borrower shall
remain bound by the terms of this Agreement and shall not be relieved of
any of its Obligations hereunder, and the Agent and the Lenders shall
retain all their rights and remedies hereunder (including, without
limitation, the Agent's Liens in and all rights and remedies with respect
to all then existing and after-arising Collateral).
ARTICLE 13
AMENDMENTS; WAIVER; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS
13.1 No Waivers; Cumulative Remedies. No failure by the Agent or
any Lender to exercise any right, remedy, or option under this Agreement
or any present or future supplement thereto, or in any other agreement
between or among the Borrower and the Agent and/or any Lender, or delay by
the Agent or any Lender in exercising the same, will operate as a waiver
thereof. No waiver by the Agent or any Lender will be effective unless it
is in writing, and then only to the extent specifically stated. No
waiver by the Agent or the Lenders on any occasion shall affect or
diminish the Agent's and each Lender's rights thereafter to require
strict performance by the Borrower of any provision of this Agreement.
The Agent's and each Lender's rights under this Agreement will be
cumulative and not exclusive of any other right or remedy which the Agent
or any Lender may have.
13.2 Amendments and Waivers. No amendment or waiver of any provision
of this Agreement or any other Loan Document, and no consent with respect
to any departure by the Borrower therefrom, shall be effective unless the
same shall be in writing and signed by the Majority Lenders (or by the
Agent at the written request of the Majority Lenders) and the Borrower and
then any such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given; provided, however,
that no such waiver, amendment, or consent shall, unless in writing and
signed by all the Lenders and the Borrower and acknowledged by the Agent,
do any of the following:
(a) increase or extend the Commitment of any Lender;
(b) postpone or delay any date fixed by this Agreement or any
other Loan Document for any payment of principal, interest, fees or other
amounts due to the Lenders (or any of them) hereunder or under any other
Loan Document;
(c) reduce the principal of, or the rate of interest specified
herein on any Loan, or any fees or other amounts payable hereunder or
under any other Loan Document;
(d) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Loans which is required for the
Lenders or any of them to take any action hereunder;
(e) increase any of the percentages set forth in the definition
of Availability or amend the definitions of Eligible Inventory or Eligible
Accounts; provided that nothing herein shall limit or restrict the Agent's
discretion as set forth in such definitions;
(f) amend this Section or any provision of the Agreement
providing for consent or other action by all Lenders;
(g) release Collateral other than as permitted by Section
14.12;
(h) change the definitions of "Majority Lenders" or "Required
Lenders."
and, provided further, that no amendment, waiver or consent shall, unless
in writing and signed by the Agent, affect the rights or duties of the
Agent under this Agreement or any other Loan Document.
13.3 Assignments; Participations.
(a) Any Lender may, with the written consent of the Agent,
assign and delegate to one or more assignees (provided that no written
consent of the Agent shall be required in connection with any assignment
and delegation by a Lender to an Affiliate of such Lender) (each an
"Assignee") all, or any ratable part of all, of the Loans, the Commitments
and the other rights and obligations of such Lender hereunder, in a
minimum amount of $5,000,000 and, if the remaining Commitment of such
Lender would be less than $5,000,000, the entire amount of such Lender's
Commitment; provided, however, that the Borrower and the Agent may
continue to deal solely and directly with such Lender in connection with
the interest so assigned to an Assignee until (i) written notice of such
assignment, together with payment instructions, addresses and related
information with respect to the Assignee, shall have been given to the
Borrower and the Agent by such Lender and the Assignee; (ii) such Lender
and its Assignee shall have delivered to the Borrower and the Agent an
Assignment and Acceptance in the form of Exhibit D ("Assignment and
Acceptance") and (iii) the assignor Lender or Assignee has paid to the
Agent a processing fee in the amount of $3,000.
(b) From and after the date that the Agent notifies the
assignor Lender that it has received an executed Assignment and Acceptance
and payment of the above-referenced processing fee, (i) the Assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations, including, but not limited to, the obligation to participate
in Letters of Credit and Credit Support have been assigned to it pursuant
to such Assignment and Acceptance, shall have the rights and obligations
of a Lender under the Loan Documents, and (ii) the assignor Lender shall,
to the extent that rights and obligations hereunder and under the other
Loan Documents have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its obligations
under this Agreement (and in the case of an Assignment and Acceptance
covering all or the remaining portion of an assigning Lender's rights and
obligations under this Agreement, such Lender shall cease to be a party
hereto).
(c) By executing and delivering an Assignment and Acceptance,
the assigning Lender thereunder and the Assignee thereunder confirm to and
agree with each other and the other parties hereto as follows: (1) other
than as provided in such Assignment and Acceptance, such assigning Lender
makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with this Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any
other Loan Document furnished pursuant hereto; (2) such assigning Lender
makes no representation or warranty and assumes no responsibility with
respect to the financial condition of the Borrower or the performance or
observance by the Borrower of any of its obligations under this Agreement
or any other Loan Document furnished pursuant hereto; (3) such Assignee
confirms that it has received a copy of this Agreement, together with such
other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into such Assignment and
Acceptance; (4) such Assignee will, independently and without reliance
upon the Agent, such assigning Lender or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action
under this Agreement; (5) such Assignee appoints and authorizes the Agent
to take such action as agent on its behalf and to exercise such powers
under this Agreement as are delegated to the Agent by the terms hereof,
together with such powers as are reasonably incidental thereto; and (6)
such Assignee agrees that it will perform in accordance with their terms
all of the obligations which by the terms of this Agreement are required
to be performed by it as a Lender.
(d) Immediately upon each Assignee's making its processing fee
payment under the Assignment and Acceptance, this Agreement shall be
deemed to be amended to the extent, but only to the extent, necessary to
reflect the addition of the Assignee and the resulting adjustment of the
Commitments arising therefrom. The Commitment allocated to each Assignee
shall reduce such Commitments of the assigning Lender pro tanto.
(e) Any Lender may at any time sell to one or more commercial
banks, financial institutions, or other Persons not Affiliates of the
Borrower (a "Participant") participating interests in any Loans, the
Commitment of that Lender and the other interests of that Lender (the
"originating Lender") hereunder and under the other Loan Documents;
provided, however, that (i) the originating Lender's obligations under
this Agreement shall remain unchanged, (ii) the originating Lender shall
remain solely responsible for the performance of such obligations,
(iii) the Borrower and the Agent shall continue to deal solely and
directly with the originating Lender in connection with the originating
Lender's rights and obligations under this Agreement and the other Loan
Documents, and (iv) no Lender shall transfer or grant any participating
interest under which the Participant has rights to approve any amendment
to, or any consent or waiver with respect to, this Agreement or any other
Loan Document, and all amounts payable by the Borrower hereunder shall be
determined as if such Lender had not sold such participation; except that,
if amounts outstanding under this Agreement are due and unpaid, or shall
have been declared or shall have become due and payable upon the
occurrence of an Event of Default, each Participant shall be deemed to
have the right of set-off in respect of its participating interest in
amounts owing under this Agreement to the same extent as if the amount of
its participating interest were owing directly to it as a Lender under
this Agreement.
(f) Notwithstanding any other provision in this Agreement, any
Lender may at any time create a security interest in, or pledge, all or
any portion of its rights under and interest in this Agreement in favor of
any Federal Reserve Bank in accordance with Regulation A of the FRB or
U.S. Treasury Regulation 31 CFR '203.14, and such Federal Reserve Bank may
enforce such pledge or security interest in any manner permitted under
applicable law.
ARTICLE 14
THE AGENT
14.1 Appointment and Authorization. Each Lender hereby designates
and appoints BankAmerica Business Credit, Inc. as its Agent under this
Agreement and the other Loan Documents and each Lender hereby irrevocably
authorizes the Agent to take such action on its behalf under the
provisions of this Agreement and each other Loan Document and to exercise
such powers and perform such duties as are expressly delegated to it by
the terms of this Agreement or any other Loan Document, together with such
powers as are reasonably incidental thereto. The Agent agrees to act as
such on the express conditions contained in this Article 14. The
provisions of this Article 14 are solely for the benefit of the Agent and
the Lenders and the Borrower shall have no rights as a third party
beneficiary of any of the provisions contained herein. Notwithstanding
any provision to the contrary contained elsewhere in this Agreement or in
any other Loan Document, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein, nor shall the
Agent have or be deemed to have any fiduciary relationship with any
Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other
Loan Document or otherwise exist against the Agent. Without limiting the
generality of the foregoing sentence, the use of the term "agent" in this
Agreement with reference to the Agent is not intended to connote any
fiduciary or other implied (or express) obligations arising under agency
doctrine of any applicable law. Instead, such term is used merely as a
matter of market custom, and is intended to create or reflect only an
administrative relationship between independent contracting parties.
Except as expressly otherwise provided in this Agreement, the Agent shall
have and may use its sole discretion with respect to exercising or
refraining from exercising any discretionary rights or taking or
refraining from taking any actions which the Agent is expressly entitled
to take or assert under this Agreement and the other Loan Documents,
including, without limitation, (a) the determination of the applicability
of ineligibility criteria with respect to the calculation of the
Availability, (b) the making of Agent Advances pursuant to Section 2.2(i),
and (c) the exercise of remedies pursuant to Section 11.2, and any action
so taken or not taken shall be deemed consented to by the Lenders.
14.2 Delegation of Duties. The Agent may execute any of its duties
under this Agreement or any other Loan Document by or through agents,
employees or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Agent shall not be
responsible for the negligence or misconduct of any agent or
attorney-in-fact that it selects as long as such selection was made
without gross negligence or willful misconduct.
14.3 Liability of Agent. None of the Agent-Related Persons shall (i)
be liable for any action taken or omitted to be taken by any of them under
or in connection with this Agreement or any other Loan Document or the
transactions contemplated hereby (except for its own gross negligence or
willful misconduct), or (ii) be responsible in any manner to any of the
Lenders for any recital, statement, representation or warranty made by the
Borrower or any Subsidiary or Affiliate of the Borrower, or any officer
thereof, contained in this Agreement or in any other Loan Document, or in
any certificate, report, statement or other document referred to or
provided for in, or received by the Agent under or in connection with,
this Agreement or any other Loan Document, or the validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other
Loan Document, or for any failure of the Borrower or any other party to
any Loan Document to perform its obligations hereunder or thereunder. No
Agent-Related Person shall be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other
Loan Document, or to inspect the properties, books or records of the
Borrower or any of the Borrower's Subsidiaries or Affiliates.
14.4 Reliance by Agent. (a) The Agent shall be entitled to rely,
and shall be fully protected in relying, upon any writing, resolution,
notice, consent, certificate, affidavit, letter, telegram, facsimile,
telex or telephone message, statement or other document or conversation
believed by it to be genuine and correct and to have been signed, sent or
made by the proper Person or Persons, and upon advice and statements of
legal counsel (including counsel to the Borrower), independent accountants
and other experts selected by the Agent. The Agent shall be fully
justified in failing or refusing to take any action under this Agreement
or any other Loan Document unless it shall first receive such advice or
concurrence of the Majority Lenders (or such higher percentage, if any,
required under Section 13.2) as it deems appropriate and, if it so
requests, it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. The Agent shall
in all cases be fully protected in acting, or in refraining from acting,
under this Agreement or any other Loan Document in accordance with a
request or consent of the Majority Lenders (subject in the case of any
amendment or waiver to any higher percentage required under Section 13.2)
and such request and any action taken or failure to act pursuant thereto
shall be binding upon all of the Lenders.
(b) For purposes of determining compliance with the conditions
specified in Section 10.1, each Lender that has executed this Agreement
shall be deemed to have consented to, approved or accepted or to be
satisfied with, each document or other matter either sent by the Agent to
such Lender for consent, approval, acceptance or satisfaction, or required
thereunder to be consented to or approved by or acceptable or satisfactory
to the Lender.
14.5 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default,
except with respect to defaults in the payment of principal, interest and
fees required to be paid to the Agent for the account of the Lenders,
unless the Agent shall have received written notice from a Lender or the
Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default." The Agent
will notify the Lenders of its receipt of any such notice. The Agent
shall take such action with respect to such Default or Event of Default as
may be requested by the Majority Lenders in accordance with Section 11;
provided, however, that unless and until the Agent has received any such
request, the Agent may (but shall not be obligated to) take such action,
or refrain from taking such action, with respect to such Default or Event
of Default as it shall deem advisable.
14.6 Credit Decision. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and
that no act by the Agent hereinafter taken, including any review of the
affairs of the Borrower and its Subsidiaries, shall be deemed to
constitute any representation or warranty by any Agent-Related Person to
any Lender. Each Lender represents to the Agent that it has,
independently and without reliance upon any Agent-Related Person and based
on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, prospects,
operations, property, financial and other condition and creditworthiness
of the Borrower and its Subsidiaries, and all applicable bank regulatory
laws relating to the transactions contemplated hereby, and made its own
decision to enter into this Agreement and to extend credit to the
Borrower. Each Lender also represents that it will, independently and
without reliance upon any Agent-Related Person and based on such documents
and information as it shall deem appropriate at the time, continue to make
its own credit analysis, appraisals and decisions in taking or not taking
action under this Agreement and the other Loan Documents, and to make such
investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of the Borrower. Except for notices, reports and other
documents expressly herein required to be furnished to the Lenders by the
Agent, the Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business,
prospects, operations, property, financial and other condition or
creditworthiness of the Borrower which may come into the possession of any
of the Agent-Related Persons.
14.7 Indemnification. Whether or not the transactions contemplated
hereby are consummated, the Lenders shall indemnify upon demand the
Agent-Related Persons (to the extent not reimbursed by or on behalf of the
Borrower and without limiting the obligation of the Borrower to do so),
pro rata, from and against any and all Indemnified Liabilities as such
term is defined in Section 15.11; provided, however, that no Lender shall
be liable for the payment to the Agent-Related Persons of any portion of
such Indemnified Liabilities resulting solely from such Person's gross
negligence or willful misconduct. Without limitation of the foregoing,
each Lender shall reimburse the Agent upon demand for its ratable share of
any costs or out-of-pocket expenses (including Attorney Costs) incurred by
the Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Agreement, any other
Loan Document, or any document contemplated by or referred to herein, to
the extent that the Agent is not reimbursed for such expenses by or on
behalf of the Borrower. The undertaking in this Section shall survive the
payment of all Obligations hereunder and the resignation or replacement of
the Agent.
14.8 Agent in Individual Capacity. BABC and its Affiliates may make
loans to, issue letters of credit for the account of, accept deposits
from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business with
the Borrower and its Subsidiaries and Affiliates as though BABC were not
the Agent hereunder and without notice to or consent of the Lenders. The
Lenders acknowledge that, pursuant to such activities, BABC or its
Affiliates may receive information regarding the Borrower or its
Affiliates (including information that may be subject to confidentiality
obligations in favor of the Borrower or such Subsidiary) and acknowledge
that the Agent shall be under no obligation to provide such information to
them. With respect to its Loans, BABC shall have the same rights and
powers under this Agreement as any other Lender and may exercise the same
as though it were not the Agent, and the terms "Lender" and "Lenders"
include BABC in its individual capacity.
14.9 Successor Agent. The Agent may resign as Agent upon 30 days'
notice to the Lenders and the Borrower. If the Agent resigns under this
Agreement, the Majority Lenders shall appoint from among the Lenders a
successor agent for the Lenders. If no successor agent is appointed prior
to the effective date of the resignation of the Agent, the Agent may
appoint, after consulting with the Lenders and the Borrower, a successor
agent from among the Lenders. Upon the acceptance of its appointment as
successor agent hereunder, such successor agent shall succeed to all the
rights, powers and duties of the retiring Agent and the term "Agent" shall
mean such successor agent and the retiring Agent's appointment, powers and
duties as Agent shall be terminated. After any retiring Agent's
resignation hereunder as Agent, the provisions of this Section 14 shall
inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent under this Agreement. If no successor agent has
accepted appointment as Agent by the date which is 30 days following a
retiring Agent's notice of resignation, the retiring Agent's resignation
shall nevertheless thereupon become effective and the Lenders shall
perform all of the duties of the Agent hereunder until such time, if any,
as the Majority Lenders appoint a successor agent as provided for above.
14.10 Withholding Tax. (a) If any Lender is a "foreign
corporation, partnership or trust" within the meaning of the Code and such
Lender claims exemption from, or a reduction of, U.S. withholding tax
under Sections 1441 or 1442 of the Code, such Lender agrees with and in
favor of the Agent, to deliver to the Agent:
(i) if such Lender claims an exemption from, or a
reduction of, withholding tax under a United States tax treaty, properly
completed IRS Forms 1001 and W-8 before the payment of any interest in the
first calendar year and before the payment of any interest in each third
succeeding calendar year during which interest may be paid under this
Agreement;
(ii) if such Lender claims that interest paid under this
Agreement is exempt from United States withholding tax because it is
effectively connected with a United States trade or business of such
Lender, two properly completed and executed copies of IRS Form 4224 before
the payment of any interest is due in the first taxable year of such
Lender and in each succeeding taxable year of such Lender during which
interest may be paid under this Agreement, and IRS Form W-9; and
(iii) such other form or forms as may be required under
the Code or other laws of the United States as a condition to exemption
from, or reduction of, United States withholding tax.
Such Lender agrees to promptly notify the Agent of any change in
circumstances which would modify or render invalid any claimed exemption
or reduction.
(b) If any Lender claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form
1001 and such Lender sells, assigns, grants a participation in, or
otherwise transfers all or part of the Obligations of the Borrower to such
Lender, such Lender agrees to notify the Agent of the percentage amount in
which it is no longer the beneficial owner of Obligations of the Borrower
to such Lender. To the extent of such percentage amount, the Agent will
treat such Lender's IRS Form 1001 as no longer valid.
(c) If any Lender claiming exemption from United States
withholding tax by filing IRS Form 4224 with the Agent sells, assigns,
grants a participation in, or otherwise transfers all or part of the
Obligations of the Borrower to such Lender, such Lender agrees to
undertake sole responsibility for complying with the withholding tax
requirements imposed by Sections 1441 and 1442 of the Code.
(d) If any Lender is entitled to a reduction in the applicable
withholding tax, the Agent may withhold from any interest payment to such
Lender an amount equivalent to the applicable withholding tax after taking
into account such reduction. If the forms or other documentation required
by subsection (a) of this Section are not delivered to the Agent, then the
Agent may withhold from any interest payment to such Lender not providing
such forms or other documentation an amount equivalent to the applicable
withholding tax.
(e) If the IRS or any other Governmental Authority of the
United States or other jurisdiction asserts a claim that the Agent did not
properly withhold tax from amounts paid to or for the account of any
Lender (because the appropriate form was not delivered, was not properly
executed, or because such Lender failed to notify the Agent of a change in
circumstances which rendered the exemption from, or reduction of,
withholding tax ineffective, or for any other reason) such Lender shall
indemnify the Agent fully for all amounts paid, directly or indirectly, by
the Agent as tax or otherwise, including penalties and interest, and
including any taxes imposed by any jurisdiction on the amounts payable to
the Agent under this Section, together with all costs and expenses
(including Attorney Costs). The obligation of the Lenders under this
subsection shall survive the payment of all Obligations and the
resignation or replacement of the Agent.
14.11 Reserved.
14.12 Collateral Matters.
(a) The Lenders hereby irrevocably authorize the Agent, at its
option and in its sole discretion, to release any Agent's Lien upon any
Collateral (i) upon the termination of the Commitments and payment and
satisfaction in full by Borrower of all Loans and reimbursement
obligations in respect of Letters of Credit and Credit Support, and the
termination of all outstanding Letters of Credit (whether or not any of
such obligations are due) and payment of all other Obligations;
(ii) constituting property being sold or disposed of if the Borrower
certifies to the Agent that the sale or disposition is made in compliance
with Section 9.9 (and the Agent may rely conclusively on any such
certificate, without further inquiry); (iii) constituting property in
which the Borrower owned no interest at the time the Lien was granted or
at any time thereafter; or (iv) constituting property leased to the
Borrower under a lease which has expired or been terminated in a
transaction permitted under this Agreement. Except as provided above, the
Agent will not release any of the Agent's Liens without the prior written
authorization of the Lenders; provided that the Agent may, in its
discretion, release the Agent's Liens on Collateral valued in the
aggregate not in excess of $1,000,000 without the prior written
authorization of the Lenders. Upon request by the Agent or the Borrower
at any time, the Lenders will confirm in writing the Agent's authority to
release any Agent's Liens upon particular types or items of Collateral
pursuant to this Section 14.12.
(b) Upon receipt by the Agent of any authorization required
pursuant to Section 14.12(a) from the Lenders of the Agent's authority to
release any Agent's Liens upon particular types or items of Collateral,
and upon at least five (5) Business Days' prior written request by the
Borrower, the Agent shall (and is hereby irrevocably authorized by the
Lenders to) execute such documents as may be necessary to evidence the
release of the Agent's Liens upon such Collateral; provided, however, that
(i) the Agent shall not be required to execute any such document on terms
which, in the Agent's opinion, would expose the Agent to liability or
create any obligation or entail any consequence other than the release of
such Liens without recourse or warranty, and (ii) such release shall not
in any manner discharge, affect or impair the Obligations or any Liens
(other than those expressly being released) upon (or obligations of the
Borrower in respect of) all interests retained by the Borrower, including
(without limitation) the proceeds of any sale, all of which shall continue
to constitute part of the Collateral.
(c) The Agent shall have no obligation whatsoever to any of the
Lenders to assure that the Collateral exists or is owned by the Borrower
or is cared for, protected or insured or has been encumbered, or that the
Agent's Liens have been properly or sufficiently or lawfully created, per-
fected, protected or enforced or are entitled to any particular priority,
or to exercise at all or in any 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 the Agent pursuant
to any of the Loan Documents, it being understood and agreed that in
respect of the Collateral, or any act, omission or event related thereto,
the Agent may act in any manner it may deem appropriate, in its sole
discretion given the Agent's own interest in the Collateral in its
capacity as one of the Lenders and that the Agent shall have no other duty
or liability whatsoever to any Lender as to any of the foregoing.
14.13 Restrictions on Actions by Lenders; Sharing of Payments.
(a) Each of the Lenders agrees that it shall not, without the express
consent of all Lenders, and that it shall, to the extent it is lawfully
entitled to do so, upon the request of all Lenders, set off against the
Obligations, any amounts owing by such Lender to the Borrower or any ac-
counts of the Borrower now or hereafter maintained with such Lender. Each
of the Lenders further agrees that it shall not, unless specifically
requested to do so by the Agent, take or cause to be taken any action to
enforce its rights under this Agreement or against the Borrower,
including, without limitation, the commencement of any legal or equitable
proceedings, to foreclose any Lien on, or otherwise enforce any security
interest in, any of the Collateral.
(b) If at any time or times any Lender shall receive (i) by
payment, foreclosure, setoff or otherwise, any proceeds of Collateral or
any payments with respect to the Obligations of the Borrower to such
Lender arising under, or relating to, this Agreement or the other Loan
Documents, except for any such proceeds or payments received by such
Lender from the Agent pursuant to the terms of this Agreement, or
(ii) payments from the Agent in excess of such Lender's ratable portion of
all such distributions by the Agent, such Lender shall promptly (1) turn
the same over to the Agent, in kind, and with such endorsements as may be
required to negotiate the same to the Agent, or in same day funds, as
applicable, for the account of all of the Lenders and for application to
the Obligations in accordance with the applicable provisions of this
Agreement, or (2) purchase, without recourse or warranty, an undivided
interest and participation in the Obligations owed to the other Lenders so
that such excess payment received shall be applied ratably as among the
Lenders in accordance with their Pro Rata Shares; provided, however, that
if all or part of such excess payment received by the purchasing party is
thereafter recovered from it, those purchases of participations shall be
rescinded in whole or in part, as applicable, and the applicable portion
of the purchase price paid therefor shall be returned to such purchasing
party, but without interest except to the extent that such purchasing
party is required to pay interest in connection with the recovery of the
excess payment.
14.14 Agency for Perfection. Each Lender hereby appoints each
other Lender as agent for the purpose of perfecting the Lenders' security
interest in assets which, in accordance with Article 9 of the UCC can be
perfected only by possession. Should any Lender (other than the Agent)
obtain possession of any such Collateral, such Lender shall notify the
Agent thereof, and, promptly upon the Agent's request therefor shall
deliver such Collateral to the Agent or in accordance with the Agent's
instructions.
14.15 Payments by Agent to Lenders. All payments to be made by
the Agent to the Lenders shall be made by bank wire transfer or internal
transfer of immediately available funds to:
if to BABC: Bank of America NT & SA
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ABA No. ▇▇▇▇▇▇▇▇▇
Account No. 12353-03848
Account Name: BankAmerica Business Credit, Inc.
Reference: U.S. Leather
Contact: ▇▇ ▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or pursuant to such other wire transfer instructions as each party may
designate for itself by written notice to the Agent. Concurrently with
each such payment, the Agent shall identify whether such payment (or any
portion thereof) represents principal, premium or interest on the
Revolving Loans, or otherwise.
14.16 Concerning the Collateral and the Related Loan Documents.
Each Lender authorizes and directs the Agent to enter into this Agreement
and the other Loan Documents relating to the Collateral, for the ratable
benefit of the Agent and the Lenders. Each Lender agrees that any action
taken by the Agent, Majority Lenders or Required Lenders, as applicable,
in accordance with the terms of this Agreement or the other Loan Documents
relating to the Collateral, and the exercise by the Agent, the Majority
Lenders, or the Required Lenders, as applicable, of their respective
powers set forth therein or herein, together with such other powers that
are reasonably incidental thereto, shall be binding upon all of the
Lenders.
14.17 Field Audit and Examination Reports; Disclaimer by Lenders.
By signing this Agreement, each Lender:
(a) is deemed to have requested that the Agent furnish such
Lender, promptly after it becomes available, a copy of each field audit or
examination report (each a "Report" and collectively, "Reports") prepared
by the Agent;
(b) expressly agrees and acknowledges that neither BABC nor the
Agent (i) makes any representation or warranty as to the accuracy of any
Report, or (ii) shall be liable for any information contained in any
Report;
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that the Agent or other party
performing any audit or examination will inspect only specific information
regarding the Borrower and will rely significantly upon the Borrower's
books and records, as well as on representations of the Borrower's
personnel;
(d) agrees to keep all Reports confidential and strictly for
its internal use, and not to distribute except to its participants, or use
any Report in any other manner; and
(e) without limiting the generality of any other
indemnification provision contained in this Agreement, agrees: (i) to
hold the Agent and any such other Lender preparing a Report harmless from
any action the indemnifying Lender may take or conclusion the indemnifying
Lender may reach or draw from any Report in connection with any loans or
other credit accommodations that the indemnifying Lender has made or may
make to the Borrower, or the indemnifying Lender's participation in, or
the indemnifying Lender's purchase of, a loan or loans of
the Borrower; and (ii) to pay and protect, and indemnify, defend and hold
the Agent and any such other Lender preparing a Report harmless from and
against, the claims, actions, proceedings, damages, costs, expenses and
other amounts (including, without limitation attorney costs) incurred by
the Agent and any such other Lender preparing a Report as the direct or
indirect result of any third parties who might obtain all or part of any
Report through the indemnifying Lender.
14.18 Relation Among Lenders. The Lenders are not partners or
co-venturers, and no Lender shall be liable for the acts or omissions of,
or (except as otherwise set forth herein in case of the Agent) authorized
to act for, any other Lender.
ARTICLE 15
MISCELLANEOUS
15.1 Cumulative Remedies; No Prior Recourse to Collateral. The
enumeration herein of the Agent's and each Lender's rights and remedies is
not intended to be exclusive, and such rights and remedies are in addition
to and not by way of limitation of any other rights or remedies that the
Agent and the Lenders may have under the UCC or other applicable law. The
Agent and the Lenders shall have the right, in their sole discretion, to
determine which rights and remedies are to be exercised and in which
order. The exercise of one right or remedy shall not preclude the exer-
cise of any others, all of which shall be cumulative. The Agent and the
Lenders may, without limitation, proceed directly against the Borrower to
collect the Obligations without any prior recourse to the Collateral. No
failure to exercise and no delay in exercising, on the part of the Agent
or any Lender, any right, remedy, power or privilege hereunder, shall
operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder preclude any other or
further exercise thereof or the exercise of any other right, remedy, power
or privilege.
15.2 Severability. The illegality or unenforceability of any
provision of this Agreement or any instrument or agreement required
hereunder shall not in any way affect or impair the legality or
enforceability of the remaining provisions of this Agreement or any
instrument or agreement required hereunder.
15.3 Governing Law; Choice of Forum; Service of Process; Jury Trial
Waiver. (a) THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND
LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE
INTERNAL LAWS (AS OPPOSED TO THE CONFLICT OF LAWS PROVISIONS PROVIDED THAT
PERFECTION ISSUES WITH RESPECT TO ARTICLE 9 OF THE UCC MAY GIVE EFFECT TO
APPLICABLE CHOICE OR CONFLICT OF LAW RULES SET FORTH IN ARTICLE 9 OF THE
UCC) OF THE STATE OF NEW YORK; PROVIDED THAT THE AGENT AND THE LENDERS
SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE
STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN
DISTRICT OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT,
EACH OF THE BORROWER, THE AGENT AND THE LENDERS CONSENTS, FOR ITSELF AND
IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE
COURTS. EACH OF THE BORROWER, THE AGENT AND THE LENDERS IRREVOCABLY
WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR
BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO.
NOTWITHSTANDING THE FOREGOING: (1) THE AGENT AND THE LENDERS SHALL HAVE
THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST THE BORROWER OR ITS
PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION THE AGENT OR THE LENDERS
DEEM NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR
OTHER SECURITY FOR THE OBLIGATIONS AND (2) EACH OF THE PARTIES HERETO
ACKNOWLEDGES THAT ANY APPEALS FROM THE COURTS DESCRIBED IN THE IMMEDIATELY
PRECEDING SENTENCE MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE THOSE
JURISDICTIONS.
(c) THE BORROWER HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE
BY REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO THE BORROWER AT
ITS ADDRESS SET FORTH IN SECTION 15.8 AND SERVICE SO MADE SHALL BE DEEMED
TO BE COMPLETED FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED
IN THE U.S. MAILS. NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF
AGENT OR THE LENDERS TO SERVE LEGAL PROCESS BY ANY OTHER MANNER PERMITTED
BY LAW.
15.4 WAIVER OF JURY TRIAL. THE BORROWER, THE LENDERS AND THE AGENT
EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT,
THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT
BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON,
PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT
CLAIMS, OR OTHERWISE. THE BORROWER, THE LENDERS AND THE AGENT EACH AGREE
THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL
WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE
THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF
THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH
SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF
THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR
THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS.
15.5 Survival of Representations and Warranties. All of the
Borrower's representations and warranties contained in this Agreement
shall survive the execution, delivery, and acceptance thereof by the
parties, notwithstanding any investigation by the Agent or the Lenders or
their respective agents.
15.6 Other Security and Guaranties. The Agent, may, without notice
or demand and without affecting the Borrower's obligations hereunder, from
time to time: (a) take from any Person and hold collateral (other than
the Collateral) for the payment of all or any part of the Obligations and
exchange, enforce or release such collateral or any part thereof; and (b)
accept and hold any endorsement or guaranty of payment of all or any part
of the Obligations and release or substitute any such endorser or
guarantor, or any Person who has given any Lien in any other collateral as
security for the payment of all or any part of the Obligations, or any
other Person in any way obligated to pay all or any part of the
Obligations.
15.7 Fees and Expenses. The Borrower agrees to pay to the Agent, for
its benefit, on demand, all costs and expenses that the Agent pays or
incurs in connection with the negotiation, preparation, consummation,
administration, enforcement, and termination of this Agreement and the
Borrower agrees to pay to each Lender all costs and expenses that such
Lender pays or incurs in connection with the enforcement of this
Agreement, including, in each case, without limitation: (a) Attorney
Costs; (b) costs and expenses (including attorneys' and paralegals' fees
and disbursements which shall include the allocated costs of Agent's in-
house counsel fees and disbursements) for any amendment, supplement,
waiver, consent, or subsequent closing in connection with the Loan
Documents and the transactions contemplated thereby; (c) costs and
expenses of lien and title searches and title insurance; (d) taxes, fees
and other charges for recording the Mortgages, filing financing statements
and continuations, and other actions to perfect, protect, and continue the
Agent's Liens (including costs and expenses paid or incurred by the Agent
in connection with the consummation of Agreement); (e) sums paid or
incurred to pay any amount or take any action required of the Borrower
under the Loan Documents that the Borrower fails to pay or take; (f) costs
of appraisals, inspections, and verifications of the Collateral,
including, without limitation, travel, lodging, and meals for inspections
of the Collateral and the Borrower's operations by the Agent plus the
Agent's then customary charge for field examinations and audits and the
preparation of reports thereof (such charge is currently $750 per day (or
portion thereof) for each agent or employee of the Agent with respect to
each field examination or audit), provided that prior to the occurrence of
an Event of Default the Agent's charge for audits shall not exceed $40,000
per year; (g) costs and expenses of forwarding loan proceeds, collecting
checks and other items of payment, and establishing and maintaining
Payment Accounts and lock boxes; (h) costs and expenses of preserving and
protecting the Collateral; and (i) costs and expenses (including attor-
neys' and paralegals' fees and disbursements which shall include the
allocated cost of Agent's in-house counsel fees and disbursements) paid or
incurred to obtain payment of the Obligations, enforce the Agent's Liens,
sell or otherwise realize upon the Collateral, and otherwise enforce the
provisions of the Loan Documents, or to defend any claims made or
threatened against the Agent or any Lender arising out of the transactions
contemplated hereby (including without limitation, preparations for and
consultations concerning any such matters); provided that in the event the
Agent or any Lender seeks payment from the Borrower of any costs or
expenses incurred arising out of a claim made against it by the Borrower,
then the Borrower shall have no such reimbursement obligation to the
extent that the Borrower obtains a final non-appealable judgment in its
favor against the Agent or such Lender for the matter for which payment of
costs and expenses is being sought. The foregoing shall not be construed
to limit any other provisions of the Loan Documents regarding costs and
expenses to be paid by the Borrower. All of the foregoing costs and
expenses shall be charged to the Borrower's Loan Account as Revolving
Loans as described in Section 4.7.
15.8 Notices. Except as otherwise provided herein, all notices,
demands and requests that any party is required or elects to give to any
other shall be in writing, or by a telecommunications device capable of
creating a written record, and any such notice shall become effective
(a) upon personal delivery thereof, including, but not limited to,
delivery by overnight mail and courier service, (b) four (4) days after it
shall have been mailed by United States mail, first class, certified or
registered, with postage prepaid, or (c) in the case of notice by such a
telecommunications device, when properly transmitted, in each case
addressed to the party to be notified as follows:
If to the Agent or to BABC:
BankAmerica Business Credit, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: Portfolio Manager
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
Bank of America NT & SA
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: Legal Department
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
If to the Borrower: United States Leather, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Kinzie ▇. ▇▇▇▇▇▇
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as each party may designate for itself by like
notice. Failure or delay in delivering copies of any notice, demand,
request, consent, approval, declaration or other communication to the
persons designated above to receive copies shall not adversely affect the
effectiveness of such notice, demand, request, consent, approval, declara-
tion or other communication.
15.9 Waiver of Notices. Unless otherwise expressly provided herein,
the Borrower waives presentment, protest and notice of demand or dishonor
and protest as to any instrument, notice of intent to accelerate the
Obligations and notice of acceleration of the Obligations, as well as any
and all other notices to which it might otherwise be entitled. No notice
to or demand on the Borrower which the Agent or any Lender may elect to
give shall entitle the Borrower to any or further notice or demand in the
same, similar or other circumstances.
15.10 Binding Effect. The provisions of this Agreement shall be
binding upon and inure to the benefit of the respective representatives,
successors, and assigns of the parties hereto; provided, however, that no
interest herein may be assigned by the Borrower without prior written
consent of the Agent and each Lender. The rights and benefits of the
Agent and the Lenders hereunder shall, if such Persons so agree, inure to
any party acquiring any interest in the Obligations or any part thereof.
15.11 Indemnity of the Agent and the Lenders by the Borrower.
(a) The Borrower agrees to defend indemnify and hold the Agent-Related
Persons, and each Lender and each of its respective officers, directors,
employees, counsel, agents and attorneys-in-fact (each, an "Indemnified
Person") harmless from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, charges,
expenses and disbursements (including Attorney Costs) of any kind or
nature whatsoever which may at any time (including at any time following
repayment of the Loans and the termination, resignation or replacement of
the Agent or replacement of any Lender) be imposed on, incurred by or
asserted against any such Person in any way relating to or arising out of
this Agreement or any document contemplated by or referred to herein, or
the transactions contemplated hereby, or any action taken or omitted by
any such Person under or in connection with any of the foregoing,
including with respect to any investigation, litigation or proceeding
(including any Insolvency Proceeding or appellate proceeding) related to
or arising out of this Agreement, any other Loan Document, or the Loans or
the use of the proceeds thereof, whether or not any Indemnified Person is
a party thereto (all the foregoing, collectively, the "Indemnified
Liabilities"); provided, that the Borrower shall have no obligation
hereunder to any Indemnified Person with respect to Indemnified
Liabilities resulting solely from the willful misconduct of such
Indemnified Person. The agreements in this Section shall survive payment
of all other Obligations. Notwithstanding the foregoing, in the event an
Indemnified Person claims indemnification from the Borrower arising out of
a litigation or other proceeding between the Borrower on the one hand and
such Indemnified Person on the other hand, the Borrower shall have no
indemnification obligation to such Indemnified Person with respect to such
litigation or other proceeding to the extent that the Borrower obtains a
final non-appealable judgment in its favor against such Indemnified Person
as to the matters for which indemnification is being claimed.
(b) The Borrower hereby indemnifies, defends and holds harmless
the Indemnified Persons from any loss or liability directly or indirectly
arising out of the use, generation, manufacture, production, storage,
release, threatened release, discharge, disposal or presence of a
hazardous substance. This indemnity will apply whether the hazardous
substance is on, under or about any of the Borrower's property or
operations or property leased to the Borrower. The indemnity includes but
is not limited to attorneys' fees (including the reasonable estimate of
the allocated cost of in-house counsel and staff). The indemnity extends
to the Agent-Related Persons, and each Lender, its parent, subsidiaries
and all of their directors, officers, employees, agents, successors,
attorneys and assigns. "Hazardous Substances" means any substance,
material or waste that is or becomes designated or regulated as "toxic,"
"hazardous," "pollutant," or "contaminate" or a similar designation or
regulation under any federal, state or local law (whether under a common
law, statute, regulation or otherwise) or judicial or administrative
interpretation of such, including without limitation petroleum or natural
gas. This indemnity will survive termination of this Agreement.
15.12 Limitation of Liability. No claim may be made by the
Borrower, any Lender or other Person against the Agent, any Lender, or the
affiliates, directors, officers, officers, employees, or agents of any of
them for any special, indirect, consequential or punitive damages in
respect of any claim for breach of contract or any other theory of
liability arising out of or related to the transactions contemplated by
this Agreement or any other Loan Document, or any act, omission or event
occurring in connection therewith, and the Borrower and each Lender hereby
waive, release and agree not to ▇▇▇ upon any claim for such damages,
whether or not accrued and whether or not know or suspected to exist in
its favor.
15.13 Final Agreement. This Agreement and the other Loan
Documents are intended by the Borrower, the Agent and the Lenders to be
the final, complete, and exclusive expression of the agreement between
them. This Agreement supersedes any and all prior oral or written
agreements relating to the subject matter hereof. No modification,
rescission, waiver, release, or amendment of any provision of this
Agreement or any other Loan Document shall be made, except by a written
agreement signed by the Borrower and a duly authorized officer of each of
the Agent and the requisite Lenders.
15.14 Counterparts. This Agreement may be executed in any number
of counterparts, and by the Agent, each Lender and the Borrower in
separate counterparts, each of which shall be an original, but all of
which shall together constitute one and the same agreement.
15.15 Captions. The captions contained in this Agreement are for
convenience of reference only, are without substantive meaning and should
not be construed to modify, enlarge, or restrict any provision.
15.16 Right of Setoff. In addition to any rights and remedies of
the Lenders provided by law, if an Event of Default exists or the Loans
have been accelerated, each Lender is authorized at any time and from time
to time, without prior notice to the Borrower, any such notice being
waived by the Borrower to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held by, and other indebtedness at any
time owing by, such Lender to or for the credit or the account of the
Borrower against any and all Obligations owing to such Lender, now or
hereafter existing, irrespective of whether or not the Agent or such
Lender shall have made demand under this Agreement or any Loan Document
and although such Obligations may be contingent or unmatured. Each Lender
agrees promptly to notify the Borrower and the Agent after any such
set-off and application made by such Lender; provided, however, that the
failure to give such notice shall not affect the validity of such set-off
and application. NOTWITHSTANDING THE FOREGOING, NO LENDER SHALL EXERCISE
ANY RIGHT OF SET-OFF, BANKER'S LIEN, OR THE LIKE AGAINST ANY DEPOSIT
ACCOUNT OR PROPERTY OF THE BORROWER HELD OR MAINTAINED BY SUCH LENDER
WITHOUT THE PRIOR WRITTEN UNANIMOUS CONSENT OF THE LENDERS.
IN WITNESS WHEREOF, the parties have entered into this Agreement
on the date first above written.
UNITED STATES LEATHER, INC.
By________________________________
Name:
Title:
"AGENT"
BANKAMERICA BUSINESS CREDIT, INC., as the
Agent
By________________________________
Name:
Title:
[Signatures of Lenders appear on the following page.]
"LENDERS"
Commitment: $25,000,000 BANKAMERICA BUSINESS CREDIT, INC., as a
Lender
By________________________________
Name:
Title:
Commitment: $15,000,000 PNC BANK NATIONAL ASSOCIATION, as a
Lender
By________________________________
Name:
Title:
Commitment: $10,000,000 LASALLE BUSINESS CREDIT, INC., as a
Lender
By________________________________
Name:
Title:
Commitment: $10,000,000 FOOTHILL CAPITAL CORPORATION, as a Lender
By________________________________
Name:
Title:
Commitment: $10,000,000 FREMONT FINANCIAL CORP., as a Lender
By________________________________
Name:
Title:
EXHIBIT A
PLAN OF REORGANIZATION
EXHIBIT B
FORM OF BORROWING BASE CERTIFICATE
EXHIBIT C
FINANCIAL STATEMENTS
EXHIBIT D
[FORM OF] ASSIGNMENT AND ACCEPTANCE AGREEMENT
This ASSIGNMENT AND ACCEPTANCE AGREEMENT (this "Assignment and
Acceptance") dated as of _______ 199__ is made between
______________________________ (the "Assignor") and
__________________________ (the "Assignee").
RECITALS
WHEREAS, the Assignor is party to that certain Loan and Security
Agreement dated as of July __, 1998 (as amended, amended and restated,
modified, supplemented or renewed, the "Credit Agreement") among United
States Leather, Inc., a Wisconsin corporation (the "Borrower"), the
several financial institutions from time to time party thereto (including
the Assignor, the "Lenders"), and BankAmerica Business Credit, Inc., as
agent for the Lenders (the "Agent"). Any terms defined in the Credit
Agreement and not defined in this Assignment and Acceptance are used
herein as defined in the Credit Agreement;
WHEREAS, as provided under the Credit Agreement, the Assignor
has committed to making Loans (the "Committed Loans") to the Borrower in
an aggregate amount not to exceed $__________ (the "Commitment");
WHEREAS, the Assignor has made Committed Loans in the aggregate
principal amount of $__________ to the Borrower;
WHEREAS, [the Assignor has acquired a participation in its pro
rata share of the Lenders' liabilities under Letters of Credit in an
aggregate principal amount of $____________ (the "L/C Obligations")] [no
Letters of Credit are outstanding under the Credit Agreement]; and
WHEREAS, the Assignor wishes to assign to the Assignee [part of
the] [all] rights and obligations of the Assignor under the Credit
Agreement in respect of its Commitment, together with a corresponding
portion of each of its outstanding Committed Loans and L/C Obligations, in
an amount equal to $__________ (the "Assigned Amount") on the terms and
subject to the conditions set forth herein and the Assignee wishes to
accept assignment of such rights and to assume such obligations from the
Assignor on such terms and subject to such conditions;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
1. Assignment and Acceptance.
(a) Subject to the terms and conditions of this Assignment and
Acceptance, (i) the Assignor hereby sells, transfers and assigns to the
Assignee, and (ii) the Assignee hereby purchases, assumes and undertakes
from the Assignor, without recourse and without representation or warranty
(except as provided in this Assignment and Acceptance) __% (the
"Assignee's Percentage Share") of (A) the Commitment, the Committed Loans
and the L/C Obligations of the Assignor and (B) all related rights,
benefits, obligations, liabilities and indemnities of the Assignor under
and in connection with the Credit Agreement and the other Loan Documents.
(b) With effect on and after the Effective Date (as defined in
Section 5 hereof), the Assignee shall be a party to the Credit Agreement
and succeed to all of the rights and be obligated to perform all of the
obligations of a Lender under the Credit Agreement, including the
requirements concerning confidentiality and the payment of
indemnification, with a Commitment in an amount equal to the Assigned
Amount. The Assignee agrees that it will perform in accordance with their
terms all of the obligations which by the terms of the Credit Agreement
are required to be performed by it as a Lender. It is the intent of the
parties hereto that the Commitment of the Assignor shall, as of the
Effective Date, be reduced by an amount equal to the Assigned Amount and
the Assignor shall relinquish its rights and be released from its
obligations under the Credit Agreement to the extent such obligations have
been assumed by the Assignee; provided, however, the Assignor shall not
relinquish its rights under Sections 4.1, 4.2 and 4.6 of the Credit
Agreement to the extent such rights relate to the time prior to the
Effective Date.
(c) After giving effect to the assignment and assumption set
forth herein, on the Effective Date the Assignee's Commitment will be
$__________.
(d) After giving effect to the assignment and assumption set
forth herein, on the Effective Date the Assignor's Commitment will be
$__________.
2. Payments.
(a) As consideration for the sale, assignment and transfer
contemplated in Section 1 hereof, the Assignee shall pay to the Assignor
on the Effective Date in immediately available funds an amount equal to
$__________, representing the Assignee's Pro Rata Share of the principal
amount of all Committed Loans.
(b) The Assignee further agrees to pay to the Agent a
processing fee in the amount specified in Section 13.3 of the Credit
Agreement.
3. Reallocation of Payments.
Any interest, fees and other payments accrued to the Effective Date
with respect to the Commitment, and Committed Loans and L/C Obligations
shall be for the account of the Assignor. Any interest, fees and other
payments accrued on and after the Effective Date with respect to the
Assigned Amount shall be for the account of the Assignee. Each of the
Assignor and the Assignee agrees that it will hold in trust for the other
party any interest, fees and other amounts which it may receive to which
the other party is entitled pursuant to the preceding two sentences and
pay to the other party any such amounts which it may receive promptly upon
receipt.
4. Independent Credit Decision.
The Assignee (a) acknowledges that it has received a copy of the
Credit Agreement and the Schedules and Exhibits thereto, together with
copies of the most recent financial statements of the Borrower, and such
other documents and information as it has deemed appropriate to make its
own credit and legal analysis and decision to enter into this Assignment
and Acceptance; and (b) agrees that it will, independently and without
reliance upon the Assignor, the Agent or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit and legal decisions in taking or not
taking action under the Credit Agreement.
5. Effective Date; Notices.
(a) As between the Assignor and the Assignee, the effective
date for this Assignment and Acceptance shall be __________, 199__ (the
"Effective Date"); provided that the following conditions precedent have
been satisfied on or before the Effective Date:
(i) this Assignment and Acceptance shall be executed and
delivered by the Assignor and the Assignee;
(ii) the consent of the Agent required for an effective
assignment of the Assigned Amount by the Assignor to the Assignee shall
have been duly obtained and shall be in full force and effect as of the
Effective Date;
(iii) the Assignee shall pay to the Assignor all amounts due
to the Assignor under this Assignment and Acceptance;
(iv) the processing fee referred to in Section 2(b) hereof
and in Section 13.3 of the Credit Agreement shall have been paid to the
Agent; and
(b) Promptly following the execution of this Assignment and
Acceptance, the Assignor shall deliver to the Borrower and the Agent for
acknowledgment by the Agent, a Notice of Assignment in the form attached
hereto as Schedule 1.
[6. Agent. [INCLUDE ONLY IF ASSIGNOR IS AGENT]
(a) The Assignee hereby appoints and authorizes the Assignor to
take such action as agent on its behalf and to exercise such powers under
the Credit Agreement as are delegated to the Agent by the Lenders pursuant
to the terms of the Credit Agreement.
(b) The Assignee shall assume no duties or obligations held by
the Assignor in its capacity as Agent under the Credit Agreement.]
7. Withholding Tax.
The Assignee (a) represents and warrants to the Assignor, the Agent
and the Borrower that under applicable law and treaties no tax will be
required to be withheld by the Assignor with respect to any payments to be
made to the Assignee hereunder, (b) agrees to furnish (if it is organized
under the laws of any jurisdiction other than the United States or any
State thereof) to the Agent and the Borrower prior to the time that the
Agent or Borrower is required to make any payment of principal, interest
or fees hereunder, duplicate executed originals of either U.S. Internal
Revenue Service Form 4224 or U.S. Internal Revenue Service Form 1001
(wherein the Assignee claims entitlement to the benefits of a tax treaty
that provides for a complete exemption from U.S. federal income
withholding tax on all payments hereunder) and agrees to provide new Forms
4224 or 1001 upon the expiration of any previously delivered form or
comparable statements in accordance with applicable U.S. law and
regulations and amendments thereto, duly executed and completed by the
Assignee, and (c) agrees to comply with all applicable U.S. laws and
regulations with regard to such withholding tax exemption.
8. Representations and Warranties.
(a) The Assignor represents and warrants that (i) it is the
legal and beneficial owner of the interest being assigned by it hereunder
and that such interest is free and clear of any Lien or other adverse
claim; (ii) it is duly organized and existing and it has the full power
and authority to take, and has taken, all action necessary to execute and
deliver this Assignment and Acceptance and any other documents required or
permitted to be executed or delivered by it in connection with this
Assignment and Acceptance and to fulfill its obligations hereunder;
(iii) no notices to, or consents, authorizations or approvals of, any
Person are required (other than any already given or obtained) for its due
execution, delivery and performance of this Assignment and Acceptance, and
apart from any agreements or undertakings or filings required by the
Credit Agreement, no further action by, or notice to, or filing with, any
Person is required of it for such execution, delivery or performance; and
(iv) this Assignment and Acceptance has been duly executed and delivered
by it and constitutes the legal, valid and binding obligation of the
Assignor, enforceable against the Assignor in accordance with the terms
hereof, subject, as to enforcement, to bankruptcy, insolvency, moratorium,
reorganization and other laws of general application relating to or
affecting creditors' rights and to general equitable principles.
(b) The Assignor makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Credit Agreement or the
execution, legality, validity, enforceability, genuineness, sufficiency or
value of the Credit Agreement or any other instrument or document
furnished pursuant thereto. The Assignor makes no representation or
warranty in connection with, and assumes no responsibility with respect
to, the solvency, financial condition or statements of the Borrower, or
the performance or observance by the Borrower, of any of its respective
obligations under the Credit Agreement or any other instrument or document
furnished in connection therewith.
(c) The Assignee represents and warrants that (i) it is duly
organized and existing and it has full power and authority to take, and
has taken, all action necessary to execute and deliver this Assignment and
Acceptance and any other documents required or permitted to be executed or
delivered by it in connection with this Assignment and Acceptance, and to
fulfill its obligations hereunder; (ii) no notices to, or consents,
authorizations or approvals of, any Person are required (other than any
already given or obtained) for its due execution, delivery and performance
of this Assignment and Acceptance; and apart from any agreements or
undertakings or filings required by the Credit Agreement, no further
action by, or notice to, or filing with, any Person is required of it for
such execution, delivery or performance; and (iii) this Assignment and
Acceptance has been duly executed and delivered by it and constitutes the
legal, valid and binding obligation of the Assignee, enforceable against
the Assignee in accordance with the terms hereof, subject, as to
enforcement, to bankruptcy, insolvency, moratorium, reorganization and
other laws of general application relating to or affecting creditors'
rights and to general equitable principles.
9. Further Assurances.
The Assignor and the Assignee each hereby agree to execute and
deliver such other instruments, and take such other action, as either
party may reasonably request in connection with the transactions
contemplated by this Assignment and Acceptance, including the delivery of
any notices or other documents or instruments to the Borrower or the
Agent, which may be required in connection with the assignment and
assumption contemplated hereby.
10. Miscellaneous.
(a) Any amendment or waiver of any provision of this Assignment
and Acceptance shall be in writing and signed by the parties hereto. No
failure or delay by either party hereto in exercising any right, power or
privilege hereunder shall operate as a waiver thereof and any waiver of
any breach of the provisions of this Assignment and Acceptance shall be
without prejudice to any rights with respect to any other or further
breach thereof.
(b) All payments made hereunder shall be made without any set-
off or counterclaim.
(c) The Assignor and the Assignee shall each pay its own costs
and expenses incurred in connection with the negotiation, preparation,
execution and performance of this Assignment and Acceptance.
(d) This Assignment and Acceptance may be executed in any
number of counterparts and all of such counterparts taken together shall
be deemed to constitute one and the same instrument.
(e) THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. The
Assignor and the Assignee each irrevocably submits to the non-exclusive
jurisdiction of any State or Federal court sitting in the City and State
of New York over any suit, action or proceeding arising out of or relating
to this Assignment and Acceptance and irrevocably agrees that all claims
in respect of such action or proceeding may be heard and determined in
such State or Federal court. Each party to this Assignment and Acceptance
hereby irrevocably waives, to the fullest extent it may effectively do so,
the defense of an inconvenient forum to the maintenance of such action or
proceeding.
(f) THE ASSIGNOR AND THE ASSIGNEE EACH HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER,
OR IN CONNECTION WITH THIS ASSIGNMENT AND ACCEPTANCE, THE CREDIT
AGREEMENT, ANY RELATED DOCUMENTS AND AGREEMENTS OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, OR STATEMENTS (WHETHER ORAL OR WRITTEN).
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
Assignment and Acceptance to be executed and delivered by their duly
authorized officers as of the date first above written.
[ASSIGNOR]
By: ___________________________
Title: ________________________
Address: ______________________
[ASSIGNEE]
By: ___________________________
Title: ________________________
Address: ______________________
SCHEDULE 1
NOTICE OF ASSIGNMENT AND ACCEPTANCE
_______________, 19__
BankAmerica Business Credit, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇
Attn: Portfolio Manager
Re: United States Leather, Inc.
Ladies and Gentlemen:
We refer to the Loan and Security Agreement dated as of July __, 1998
(as amended, amended and restated, modified, supplemented or renewed from
time to time the "Credit Agreement") among United States Leather, Inc.
(the "Borrower"), the Lenders referred to therein and BankAmerica Business
Credit, Inc., as agent for the Lenders (the "Agent"). Terms defined in
the Credit Agreement are used herein as therein defined.
1. We hereby give you notice of, and request your consent to, the
assignment by __________________ (the "Assignor") to _______________ (the
"Assignee") of _____% of the right, title and interest of the Assignor in
and to the Credit Agreement (including, without limitation, the right,
title and interest of the Assignor in and to the Commitments of the
Assignor, all outstanding Loans made by the Assignor and the Assignor's
participation in the Letters of Credit) pursuant to the Assignment and
Acceptance Agreement attached hereto (the "Assignment and Acceptance").
We understand and agree that the Assignor's Commitment, as of
___________, 19 __, is $___________, the aggregate amount of its
outstanding Loans is $_____________, and its participation in L/C
Obligations is $_____________.
2. The Assignee agrees that, upon receiving the consent of the
Agent to such assignment, the Assignee will be bound by the terms of the
Credit Agreement as fully and to the same extent as if the Assignee were
the Lender originally holding such interest in the Credit Agreement.
3. The following administrative details apply to the Assignee:
(A) Notice Address:
Assignee name: __________________________
Address: _______________________________
_______________________________
_______________________________
Attention: _____________________________
Telephone: (___) _______________________
Telecopier: (___) ______________________
(B) Payment Instructions:
Account No.: ___________________________
At: ___________________________
___________________________
___________________________
Reference: ___________________________
Attention: ___________________________
4. You are entitled to rely upon the representations, warranties
and covenants of each of the Assignor and Assignee contained in the
Assignment and Acceptance.
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
Notice of Assignment and Acceptance to be executed by their respective
duly authorized officials, officers or agents as of the date first above
mentioned.
Very truly yours,
[NAME OF ASSIGNOR]
By: _____________________________
Title: __________________________
[NAME OF ASSIGNEE]
By: _____________________________
Title: __________________________
ACKNOWLEDGED AND ASSIGNMENT
CONSENTED TO:
BankAmerica Business Credit, Inc,
as Agent
By: _____________________________
Title: __________________________
EXHIBIT E
NOTICE OF BORROWING
Date: _________ __, 199_
To: BankAmerica Business Credit, Inc. as Agent for the Lenders who are
parties to the Loan and Security Agreement dated as of July __, 1998
(as extended, renewed, amended or restated from time to time, the
"Loan and Security Agreement") among United States Leather, Inc.,
certain Lenders which are signatories thereto and BankAmerica
Business Credit, Inc., as Agent
Ladies and Gentlemen:
The undersigned, United States Leather, Inc. (the "Borrower"), refers
to the Loan and Security Agreement, the terms defined therein being used
herein as therein defined, and hereby gives you notice irrevocably of the
Borrowing specified below:
1. The Business Day of the proposed Borrowing is ___________ __,
199_.
2. The aggregate amount of the proposed Borrowing is $___________.
3. The Borrowing is to be comprised of $_______ of Base Rate
and $__________ of LIBOR Rate Loans.
4. The duration of the Interest Period for the LIBOR Rate Loans, if
any, included in the Borrowing shall be _____ months.
The undersigned hereby certifies that the following statements are
true on the date hereof, and will be true on the date of the proposed
Borrowing, before and after giving effect thereto and to the application
of the proceeds therefrom:
(a) The representations and warranties of the Borrower contained in
the Loan and Security Agreement are true and correct in all material
respects as though made on and as of such date;
(b) No Default or Event of Default has occurred and is continuing,
or would result from such proposed Borrowing; and
(c) The proposed Borrowing will not cause the aggregate principal
amount of all outstanding Revolving Loans plus the aggregate amount
available for drawing under all outstanding Letters of Credit, to exceed
the Availability or the combined Commitments of the Lenders.
UNITED STATES LEATHER, INC.
By: _____________________
Title:___________________
EXHIBIT F
NOTICE OF CONVERSION/CONTINUATION
Date: __________ __, 1998
To: BankAmerica Business Credit, Inc. as Agent for the Lenders to the
Loan and Security Agreement dated as of July __, 1998 (as extended,
renewed, amended or restated from time to time, the "Loan and
Security Agreement") among United States Leather, Inc., certain
Lenders which are signatories thereto and BankAmerica Business
Credit, Inc., as Agent
Ladies and Gentlemen:
The undersigned, United States Leather, Inc., (the "Borrower"),
refers to the Loan and Security Agreement, the terms defined therein being
used herein as therein defined, and hereby gives you notice irrevocably of
the [conversion] [continuation] of the Loans specified herein, that:
1. The Conversion/Continuation Date is ___________, 19__.
2. The aggregate amount of the Loans to be [converted] [continued] is
$_______________.
3. The Loans are to be [converted into] [continued as] [LIBOR Rate]
[Base Rate] Loans.
4. The duration of the Interest Period for the Libor Rate Loans included
in the [conversion] [continuation] shall be _______ months.
The undersigned hereby certifies that the following statements are
true on the date hereof, and will be true on the proposed
Conversion/Continuation Date, before and after giving effect thereto and
to the application of the proceeds therefrom:
(a) The representations and warranties of the Borrower
contained in the Loan and Security Agreement are true and correct in all
material respects as though made on and as of such date;
(b) No Default or Event of Default has occurred and is
continuing, or would result from such proposed [conversion]
[continuation]; and
(c) The proposed conversion-continuation will not cause the
aggregate principal amount of all outstanding Revolving Loans plus the
aggregate amount available for drawing under all outstanding Letters of
Credit to exceed the Availability or the combined Commitments of the
Lenders.
UNITED STATES LEATHER, INC.
By:________________________
Title:_____________________