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EXHIBIT 10.9
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CREDIT AGREEMENT
DATED AS OF DECEMBER 27, 1996
Between
UNIONTOOLS, INC.
as Borrower
and
▇▇▇▇▇▇ FINANCIAL, INC.
as Agent and as a Lender
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TABLE OF CONTENTS
SECTION 1
AMOUNTS AND TERMS OF LOANS...................................................................................... 1
1.1 Loans................................................................................ 1
1.2 Interest and Related Fees............................................................ 7
1.3 Other Fees and Expenses.............................................................. 11
1.4 Payments............................................................................. 12
1.5 Prepayments.......................................................................... 12
1.6 Term of the Agreement................................................................ 13
1.7 Loan Accounts........................................................................ 14
1.8 Capital Adequacy and Other Adjustments............................................... 14
1.9 Taxes................................................................................ 14
1.10 Optional Prepayment/Replacement of Lender in Respect
of Increased Costs................................................................... 16
SECTION 2
AFFIRMATIVE COVENANTS........................................................................................... 17
2.1 Compliance With Laws................................................................. 17
2.2 Maintenance of Properties; Insurance................................................. 17
2.3 Inspection; Lender Meeting........................................................... 18
2.4 Corporate Existence, Etc............................................................. 18
2.5 Further Assurances................................................................... 18
SECTION 3
NEGATIVE COVENANTS.............................................................................................. 19
3.1 Indebtedness......................................................................... 19
3.2 Liens and Related Matters............................................................ 19
3.3 Investments; Joint Ventures.......................................................... 21
3.4 Contingent Obligations............................................................... 22
3.5 Restricted Junior Payments........................................................... 23
3.6 Restriction on Fundamental Changes................................................... 24
3.7 Disposal of Assets or Subsidiary Stock............................................... 24
3.8 Transactions with Affiliates......................................................... 25
3.9 Management Fees and Compensation..................................................... 25
3.10 Conduct of Business.................................................................. 25
3.11 Changes Relating to Subordinated Indebtedness........................................ 25
3.12 Fiscal Year.......................................................................... 25
3.13 Press Release; Public Offering Materials............................................. 25
3.14 Subsidiaries......................................................................... 25
3.15 Bank Accounts........................................................................ 25
3.16 Non-Operating Expenditures........................................................... 26
(1)
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SECTION 4
FINANCIAL COVENANTS/REPORTING................................................................................... 26
4.1 Capital Expenditure Limits........................................................... 26
4.2 Lease Limits......................................................................... 26
4.3 EBIDAT............................................................................... 26
4.4 Fixed Charge Coverage................................................................ 27
4.5 Total Interest Coverage.............................................................. 27
4.6 Total Indebtedness to Operating Cash Flow Ratio...................................... 28
4.7 [Intentionally Deleted.]............................................................. 29
4.8 [Intentionally Deleted.]............................................................. 29
4.9 [Intentionally Deleted.]............................................................. 29
4.10 Financial Statements and Other Reports............................................... 29
4.11 Accounting Terms; Utilization of GAAP for Purposes of
Calculations Under Agreement......................................................... 32
SECTION 5
REPRESENTATIONS AND WARRANTIES.................................................................................. 33
5.1 Disclosure........................................................................... 33
5.2 No Material Adverse Effect........................................................... 33
5.3 No Default........................................................................... 33
5.4 Organization, Powers, Capitalization and Good Standing............................... 33
5.5 Financial Statements................................................................. 34
5.6 Intellectual Property................................................................ 34
5.7 Investigations, Audits, Etc.......................................................... 34
5.8 Employee Matters..................................................................... 35
5.9 Solvency............................................................................. 35
SECTION 6
DEFAULT, RIGHTS AND REMEDIES.................................................................................... 35
6.1 Event of Default..................................................................... 35
6.2 Suspension of Commitments............................................................ 38
6.3 Acceleration......................................................................... 38
6.4 Performance by Agent................................................................. 39
SECTION 7
CONDITIONS TO LOANS............................................................................................. 39
7.1 Conditions to Initial Loans.......................................................... 39
7.2 Conditions to All Loans.............................................................. 39
SECTION 8
ASSIGNMENT AND PARTICIPATION.................................................................................... 40
8.1 Assignments and Participations in Loans and Notes.................................... 40
8.2 Agent................................................................................ 41
8.3 Amendments, Consents and Waivers for Certain Actions................................. 46
8.4 Set Off and Sharing of Payments...................................................... 46
(2)
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8.5 Disbursement of Funds................................................................ 47
8.6 Disbursements of Advances; Payment................................................... 47
SECTION 9
MISCELLANEOUS................................................................................................... 49
9.1 Indemnities.......................................................................... 49
9.2 Amendments and Waivers............................................................... 50
9.3 Notices.............................................................................. 50
9.4 Failure or Indulgence Not Waiver; Remedies Cumulative................................ 51
9.5 Marshalling; Payments Set Aside...................................................... 51
9.6 Severability......................................................................... 52
9.7 Lenders' Obligations Several; Independent Nature of
Lenders' Rights...................................................................... 52
9.8 Headings............................................................................. 52
9.9 Applicable Law....................................................................... 52
9.10 Successors and Assigns............................................................... 52
9.11 No Fiduciary Relationship............................................................ 52
9.12 Construction......................................................................... 52
9.13 Confidentiality...................................................................... 52
9.14 Consent to Jurisdiction and Service of Process....................................... 53
9.15 Waiver of Jury Trial................................................................. 53
9.16 Survival of Warranties and Certain Agreements........................................ 54
9.17 Entire Agreement..................................................................... 54
9.18 Counterparts; Effectiveness.......................................................... 54
SECTION 10
DEFINITIONS..................................................................................................... 54
10.1 Certain Defined Terms................................................................ 54
10.2 Other Definitional Provisions........................................................ 60
(3)
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INDEX OF DEFINED TERMS
Defined Term Defined in Section
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Acquisition Loan Commitment Section 1.1(D)
Acquisition Loans Section 1.1(D)
Affiliate Section 10.1
Agent Section 10.1
Agreement Section 10.1
Asset Disposition Section 10.1
Bankruptcy Code Section 10.1
Base Rate Section 1.2(A)(1)
Base Rate Loans Section 1.2(A)(1)
Borrower Preamble & Section 10.1
Borrowing Base Section 1.1(B)(1)
Borrowing Base Certificate Section 1.1(B)(1)
Business Day Section 10.1
Cash Equivalents Section 3.3
Closing Date Section 10.1
Collateral Section 10.1
Contingent Obligation Section 3.4
Default Section 10.1
Event of Default Section 6.1
Excess Cash Flow Exhibit 1.5(B)
Expiry Date Section 10.1
Funding Date Section 7.2
GAAP Section 10.1
▇▇▇▇▇▇ Preamble
Holdings 3rd Recital
Indebtedness Section 10.1
Interest Period Section 1.2(A)(2)
Investments Section 3.3
IRC Section 10.1
Lender(s) Section 10.1
Lender Addition Agreement Section 10.1
Lender Letter of Credit Section 1.1(C)
LIBOR Section 1.2(A)(2)
LIBOR Breakage Fee Section 1.3(B)
LIBOR Loans Section 1.2(A)(2)
Lien Section 10.1
Loan(s) Section 10.1
Loan Documents Section 10.1
Loan Party Section 10.1
(4)
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Loan Year Section 10.1
Material Adverse Effect Section 10.1
Maximum Revolving Loan Balance Section 1.1(B)(1)
Net Proceeds Section 10.1
Note(s) Section 10.1
Obligations Section 10.1
Operating Cash Flow Section 4.7
Permitted Acquisitions Section 3.3
Permitted Encumbrances Section 3.2(A)
Person Section 10.1
Pro Forma Section 10.1
Pro Rata Share Section 10.1
Projections Section 10.1
Related Transactions Section 10.1
Related Transactions Documents Section 10.1
Requisite Lenders Section 10.1
Restricted Junior Payment Section 3.5
Revolving Loan Commitment Section 1.1(B)
Revolving Loans Section 1.1(B)
Risk Participation Agreement Section 1.1(C)
Risk Participation Liability Section 10.1
Scheduled Term Loan Installments Section 1.1(A)
Scheduled Acquisition Loan Installments Section 1.1(D)
Security Documents Section 10.1
Subordinated Indebtedness Section 10.1
Subsidiary Section 10.1
Target Section 1.1(D)
Term Loan Section 1.1(A)
Total Indebtedness Section 4.7
(5)
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LIST OF EXHIBITS AND SCHEDULES
Exhibits
Exhibit 1.2(G) - LIBOR Loan Request
Exhibit 1.5(B) - Excess Cash Flow Computation
Exhibit 4.10(C) - Compliance Certificate
Exhibit 4.10(F) - Borrowing Base Certificate
Exhibit 10.1(A) - Notes
Schedules
Schedule 3.2(A)(10) - Liens
Schedule 3.4 - Contingent Obligations
Schedule 3.8 - Affiliate Transactions
Schedule 3.10 - Business Description
Schedule 3.16 - Non-Operating Expenditures
Schedule 5.3 - Violations, Conflicts, Breaches and Defaults
Schedule 5.4(A) - Jurisdictions of Organization
Schedule 5.4(B) - Capitalization
Schedule 5.4(D) - Foreign Qualifications
Schedule 5.6 - Intellectual Property
Schedule 5.7 - Investigations and Audits
Schedule 5.8 - Employee Matters
Schedule 7.1 - List of Closing Documents
Schedule 10.1(A) - Pro Forma
Schedule 10.1(B) - Indebtedness to be Repaid
(6)
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CREDIT AGREEMENT
This CREDIT AGREEMENT is dated as of December 27, 1996 and entered into
by and between UNIONTOOLS, INC., a Delaware corporation ("Borrower"), with its
principal place of business at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ and
▇▇▇▇▇▇ FINANCIAL, INC., a Delaware corporation ("▇▇▇▇▇▇"), with offices at ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, in its capacity as a Lender (as
hereinafter defined in Section 10), and in its capacity as Agent (as hereinafter
defined in Section 10) for all Lenders.
R E C I T A L S:
WHEREAS, Borrower desires that Lenders extend a certain term credit
facility, revolving credit facility and acquisition credit facility to Borrower,
to fund the repayment of certain indebtedness of Borrower, to provide working
capital financing for Borrower, to fund certain permitted acquisitions, and to
provide funds for other general corporate purposes of Borrower; and
WHEREAS, Borrower desires to secure all of its Obligations (as
hereinafter defined in Section 10) under the Loan Documents (as hereinafter
defined in Section 10) by granting to Agent, for the benefit of Agent and
Lenders, a security interest in and lien upon substantially all of its personal
and real property; and
WHEREAS, Vision Hardware Group, Inc., a Delaware corporation
("Holdings"), which owns all of the issued and outstanding capital stock of
Borrower, is willing to guaranty all of the Obligations of Borrower to Lenders
under the Loan Documents and to pledge to Agent, for the benefit of Agent and
Lenders, all of the capital stock of Borrower to secure such guaranty;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Borrower, ▇▇▇▇▇▇ and Agent agree as
follows:
SECTION 1
AMOUNTS AND TERMS OF LOANS
1.1 Loans. Subject to the terms and conditions of this Agreement and in
reliance upon the representations and warranties of Borrower contained herein:
(A) Term Loan. ▇▇▇▇▇▇ agrees to lend to Borrower, in one draw,
on the Closing Date, the aggregate amount of $20,000,000 (the "Term Loan").
Borrower shall repay the Term Loan through periodic payments on the dates and in
the amounts indicated below ("Scheduled Term Loan Installments"). Amounts
borrowed under this subsection 1.1(A) and repaid may not be reborrowed.
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Date Scheduled Installment
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June 30, 1997 $1,500,000
September 30, 1997 $1,000,000
December 31, 1997 $ 500,000
Each March 31st of calendar years
1998, 1999, 2000 and 2001 $ 250,000
Each June 30th of calendar years
1998, 1999, 2000 and 2001 $1,500,000
Each September 30th of calendar years
1998, 1999, 2000 and 2001 $1,000,000
Each December 31st of calendar years
1998, 1999 and 2000 $ 250,000
December 31, 2001 $5,250,000
(B) Revolving Loans.
(1) Subject to the satisfaction of the terms and
conditions set forth herein and in reliance upon the representations and
warranties set forth herein, each Lender agrees, severally and not jointly, to
lend to Borrower from the Closing Date to the Expiry Date its Pro Rata Share of
the loans requested by Borrower to be made by Lenders under this subsection
1.1(B), up to an aggregate maximum for all Lenders of $30,000,000 (as the same
may be reduced from time to time hereunder, the "Revolving Loan Commitment").
Advances or amounts outstanding under the Revolving Loan Commitment will be
called "Revolving Loans". Revolving Loans may be repaid and reborrowed. The
"Maximum Revolving Loan Balance" will be the lesser of (a) the "Borrowing Base"
(as calculated on Exhibit 4.10(F), the "Borrowing Base Certificate") or (b) the
Revolving Loan Commitment less outstanding Risk Participation Liability. If at
any time the outstanding Revolving Loans exceed the Maximum Revolving Loan
Balance (as it may be deemed increased from time to time pursuant to subsection
1.1(B)(2)), Lenders shall not be obligated to make Revolving Loans and issue
Lender Letters of Credit and Risk Participation Agreements, and Revolving Loans
must be repaid immediately, in an amount sufficient to eliminate any excess.
Revolving Loans may be requested in any amount with one (1) Business Day prior
notice required for amounts greater than $5,000,000. For amounts less than
$5,000,000, written or telephonic notice must be provided by noon CT on the day
on which the Loan is to be made. All LIBOR Loans require three (3) Business Days
notice. All Loans requested telephonically must be confirmed in writing within
twenty-four (24) hours. Neither
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Agent nor any Lender shall incur any liability to Borrower for acting upon any
telephonic notice that Agent believes in good faith to have been given by a duly
authorized officer or other person authorized to borrow on behalf of Borrower.
(2) If Borrower requests that Lenders make, or permit
to remain outstanding, Revolving Loans in an aggregate amount in excess of the
Borrowing Base, Requisite Lenders may in their discretion elect to cause all
Lenders to make, or permit to remain outstanding, such excess Revolving Loans
(such Revolving Loans in excess of the Borrowing Base being referred to as
"Excess Revolving Loans"), provided that, Requisite Lenders may not cause all
Lenders to make, or permit to remain outstanding, aggregate Revolving Loans in
excess of the Revolving Loan Commitment or Excess Revolving Loans in excess of
15% of the Revolving Loan Commitment. If Excess Revolving Loans are made, or
permitted to remain outstanding, pursuant to the preceding sentence, then (a)
the Maximum Revolving Loan Balance shall be deemed increased by the amount of
such Excess Revolving Loans, but only for so long as Requisite Lenders allow
such Excess Revolving Loans to be outstanding and (b) all Lenders that have
committed to make Revolving Loans shall be bound to make, or permit to remain
outstanding, such Excess Revolving Loans based upon their Pro Rata Shares in
accordance with the terms of this Agreement. If Excess Revolving Loans remain
outstanding for more than ninety (90) days during any 360-day period, Revolving
Loans must be repaid immediately, in an amount sufficient to eliminate all of
such Excess Revolving Loans.
(C) Letters of Credit and Risk Participation Agreements. The
Revolving Loan Commitment may, in addition to advances under the Revolving Loan,
be utilized, upon the request of Borrower, for (i) the issuance of letters of
credit for the benefit of Borrower by Agent, including without limitation a
letter of credit issued for the account of Holdings in the amount of $1,000,000
with respect to certain insurance maintained for the benefit of Borrower (each
such letter of credit, a "Lender Letter of Credit") or (ii) the issuance by
Agent of risk participation agreements (each such agreement, a "Risk
Participation Agreement") to confirm payment to banks which issue letters of
credit for the account of Borrower.
(1) Maximum Amount. The aggregate amount of Risk
Participation Liability with respect to all Lender Letters of Credit and Risk
Participation Agreements outstanding for the account of Borrower at any time
shall not exceed $3,000,000.
(2) Reimbursement. Borrower shall be irrevocably and
unconditionally obligated forthwith without presentment, demand, protest or
other formalities of any kind, to reimburse Agent for any amounts paid by Agent
with respect to a Lender Letter of Credit or a Risk Participation Agreement
issued for the account of Borrower, including all fees, costs and expenses paid
by Agent to any bank that issues letters of credit. Borrower hereby authorizes
and directs Agent, at Agent's option, to make a Revolving Loan in the amount of
any payment made by Agent with respect to any Lender Letter of Credit or any
Risk Participation Agreement. All amounts paid by Agent with respect to any
Lender Letter of Credit or Risk Participation Agreement that are not immediately
repaid by Borrower with the proceeds of a Revolving Loan or otherwise shall bear
interest at the interest rate applicable to Revolving Loans
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calculated using the Base Rate. Each Lender agrees to fund its Pro Rata Share of
any Revolving Loan made pursuant to this subsection 1.1(C)(2). If no such
Revolving Loan is made, each Lender agrees to purchase, and shall be deemed to
have purchased, a participation in such Lender Letter of Credit or Risk
Participation Agreement, as the case may be, in an amount equal to its Pro Rata
Share of the Risk Participation Liability of such Lender Letter of Credit or
Risk Participation Agreement, as the case may be, and each Lender agrees to pay
to Agent such Lender's Pro Rata Share of any payments made by Agent under such
Lender Letter of Credit and Risk Participation Agreement. The obligation of each
Lender to deliver to Agent an amount equal to its respective Pro Rata Share
pursuant to the preceding two (2) sentences shall be absolute and unconditional
and such remittance shall be made notwithstanding the occurrence or continuation
of an Event of Default or Default or the failure to satisfy any condition set
forth in subsection 7.2. If any Lender fails to make available to Agent the
amount of such Lender's Pro Rata Share of any payments made by Agent in respect
of such Lender Letter of Credit or Risk Participation Agreement as provided in
this subsection 1.1(C)(2), Agent shall be entitled to recover such amount on
demand from such Lender together with interest at the Base Rate.
(3) Conditions of Issuance of Letters of Credit or
Risk Participation Agreements. In addition to all other terms and conditions set
forth in this Agreement, the issuance by Agent of any Lender Letter of Credit or
Risk Participation Agreement shall be subject to the conditions precedent that
the Lender Letter of Credit, the Risk Participation Agreement or the letter of
credit for which Borrower requests a Risk Participation Agreement shall support
a transaction entered into in the ordinary course of Borrower's business and
shall be in such form, be for such amount, and contain such terms and conditions
as are reasonably satisfactory to Agent. The expiration date of each Lender
Letter of Credit and each letter of credit to be issued under a Risk
Participation Agreement shall be on a date which is the earlier of (a) one year
from its date of issuance, or (b) the thirtieth (30th) day before the date set
forth in clause (c) of the definition of the term Expiry Date. Each Risk
Participation Agreement shall provide that the agreement terminates and all
demand or claims for payment must be presented by a date certain, which date
will be at least thirty (30) days before the date set forth in clause (c) of the
definition of the term Expiry Date.
(4) Request for Lender Letters of Credit or Risk
Participation Agreements. Borrower shall give Agent at least three (3) Business
Days prior notice specifying the date a Lender Letter of Credit or Risk
Participation Agreement (or a letter of credit to be issued under a Risk
Participation Agreement) is requested to be issued, identifying the beneficiary
and describing the nature of the transactions proposed to be supported thereby.
After the issuance of a Risk Participation Agreement in favor of a bank that
will issue letters of credit on behalf of Borrower, Borrower shall give Agent at
least two (2) Business Days prior written notice specifying the date a letter of
credit is to be issued under a Risk Participation Agreement (five (5) Business
Days in the case of the first letter of credit to be issued under a particular
Risk Participation Agreement), identifying the beneficiary and describing the
nature of the transactions proposed to be supported thereby. Any notice
described in this paragraph shall be accompanied by the form of the Lender
Letter of Credit or the letter of credit to which such Risk Participation
Agreement relates.
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(D) Acquisition Loans. Subject to the satisfaction of the
terms and conditions set forth herein and in reliance upon the representations
and warranties set forth herein, each Lender agrees, severally and not jointly,
to lend to Borrower from the Closing Date to the second anniversary thereof its
Pro Rata Share of the loans requested by Borrower (upon not less than thirty
(30) days prior written notice to Agent) to be made by Lenders under this
subsection 1.1(D) (the "Acquisition Loans"), up to an aggregate maximum for all
Lenders of $15,000,000 (the "Acquisition Loan Commitment"). An Acquisition Loan
shall be made only upon the acquisition by Borrower of all of the issued and
outstanding capital stock of another Person, or of all or substantially all of
the assets of another Person or of a division of another Person (a "Target") and
shall be limited in amount to the purchase price of such acquisition, and the
proceeds of the Acquisition Loan may be used only to fund such purchase price.
Amounts borrowed under this subsection 1.1(D) and repaid may not be reborrowed.
The obligations of Lenders to make any Acquisition Loan are further subject to
the following conditions precedent:
(1) At least ten (10) Business Days prior to the
acquisition of the subject Target, Agent shall have received a certificate
demonstrating compliance with subsections 1.1(D)(3), (4), (5), (6) and (7);
(2) Agent shall have received such financial and
other information concerning the subject Target as Agent may reasonably request;
(3) Requisite Lenders shall have approved the
acquisition of the subject Target, provided, however, that such approval shall
not be required if the sum of the purchase price for the subject Target plus the
purchase price(s) for any other Target(s) previously acquired by Borrower during
the then current Loan Year, is not greater than $7,500,000;
(4) The subject Target's EBIDAT (as defined in
Exhibit 4.10(C)) during the twelve (12) months immediately preceding the
acquisition of the subject Target, plus those expenses deducted in calculating
such earnings that would be eliminated upon such acquisition (as agreed to by
Requisite Lenders), shall have been positive;
(5) Based upon the financial performance of both
Borrower and the subject Target during the twelve (12) months immediately
preceding the acquisition of the subject Target, the combined financial
performance of Borrower and the subject Target would comply with the financial
covenants set forth in Article 4 hereof after giving effect to the Acquisition
Loan;
(6) The Maximum Revolving Loan Balance as of the
acquisition of the subject Target must exceed the Revolving Loans then
outstanding by not less than the applicable amount set forth below (based upon
the period in which such acquisition occurs), after giving effect to such
acquisition:
Period Amount
------ ------
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January 1 through March 31 of any calendar year $6,000,000
April 1 through June 30 of any calendar year $7,000,000
July 1 through September 30 of any calendar year $9,000,000
October 1 through December 31 of any calendar year $8,000,000
(7) Based upon the financial performance of both
Borrower and the subject Target during the twelve (12) months immediately
preceding the acquisition of the subject Target, the Pro Forma Total
Indebtedness to Operating Cash Flow Ratio of Borrower and the subject Target on
a pro forma combined basis would not be more than 4.25:1 as of the last day of
any month in the first Loan Year and 4.00:1 as of the last day of any month in
the second Loan Year. For the purposes of this subsection 1.1(D)(7), "Pro Forma
Total Indebtedness to Operating Cash Flow Ratio" means the ratio of (i) the sum
of (a) the average daily principal balance of the Revolving Loans during the
twelve (12) month period ending on the last day of the subject month (for any
month preceding the Closing Date, such average daily principal balance shall be
deemed to be $13,000,000), plus (b) the aggregate outstanding principal balance
of the Term Loan, the Acquisition Loans, the Lender Letters of Credit and Risk
Participation Agreements as of the last day of such month plus (c) all other
Indebtedness for borrowed money of the Borrower and its Subsidiaries on a
consolidated basis as of the last day of such month, to (ii) Operating Cash Flow
(calculated as illustrated on Exhibit 4.10(C)) for the twelve (12) month period
ending on the last day of such month;
(8) The subject Target shall be in the same or
similar type of business as Borrower;
(9) No event shall have occurred and be continuing or
would result from the acquisition of the subject Target or the Acquisition Loan
which would reasonably be expected to cause a Material Adverse Effect; and
(10) No event shall have occurred and be continuing
or would result from the acquisition of the subject Target or the Acquisition
Loan that would constitute an Event of Default or a Default.
On the dates indicated below, Borrower shall repay the Acquisition
Loans through periodic installments in the amounts equal to the applicable
percentage of the Acquisition Loans outstanding as of the second anniversary of
the Closing Date ("Scheduled Acquisition Loan Installments").
Date Percentage
---- ----------
Each March 31st of calendar years
1999 and 2000 2.083%
Each June 30th of calendar years
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1999 and 2000 12.50%
Each September 30th of calendar years
1999 and 2000 8.333%
Each December 31st of calendar years
1999 and 2000 2.083%
March 31, 2001 1.563%
June 30, 2001 9.375%
September 30, 2001 6.25%
On December 31, 2001, the entire remaining principal balance of the Acquisition
Loans, together with all accrued but unpaid interest thereon, shall be due and
payable in full.
(E) Notes. Borrower shall execute and deliver to each Lender
(i) a Note to evidence the Revolving Loans, such Note to be in the principal
amount of such Lender's Pro Rata Share of the Revolving Loan Commitment, (ii) a
Note to evidence the Term Loan, such Note to be in the principal amount of such
Lender's Pro Rata Share of the Term Loan, and (iii) a Note to evidence the
Acquisition Loans, such Note to be in the principal amount of such Lender's Pro
Rata Share of the Acquisition Loan Commitment. In the event of an assignment
under subsection 8.1, Borrower shall, upon surrender of the assigning Lender's
Notes, issue new Notes to reflect the interests of the assigning Lender and the
Person to which interests are to be assigned.
1.2 Interest and Related Fees.
(A) Interest. From the date the Loans are made and the date
the other Obligations become due, depending upon Borrower's election from time
to time, as permitted herein, to have portions of the Loans accrue interest
based upon the LIBOR, the Loans and the other Obligations shall bear interest at
the rates set forth in paragraphs (1) and (2) below:
(1) If a Base Rate Loan, then at the sum of the Base
Rate plus the Base Rate Margin then applicable.
(2) If a LIBOR Loan, then at the sum of the LIBOR
plus the LIBOR Margin then applicable.
"Base Rate" means a variable rate of interest per annum equal
to the rate of interest from time to time published by the Board of Governors of
the Federal Reserve System in Federal Reserve statistical release H.15 (519)
entitled "Selected Interest Rates" as the Bank
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prime loan rate. Base Rate also includes rates published in any successor
publications of the Federal Reserve System reporting the Bank prime loan rate or
its equivalent. The statistical release generally sets forth a Bank prime loan
rate for each business day. The applicable Bank prime loan rate for any date not
set forth shall be the rate set forth for the last preceding date. In the event
the Board of Governors of the Federal Reserve System ceases to publish a Bank
prime loan rate or equivalent, the term "Base Rate" shall mean a variable rate
of interest per annum equal to the highest of the "prime rate," "reference
rate," "base rate" or other similar rate as determined by Agent announced from
time to time by any of Bankers Trust Company, The Chase Manhattan Bank, National
Association and Citibank, N.A. (with the understanding that any such rate may
merely be a reference rate and may not necessarily represent the lowest or best
rate actually charged to any customer by such bank).
"Base Rate Loans" means Loans bearing interest at rates
determined by reference to the Base Rate.
"Base Rate Margin" shall mean, (i) for the period commencing
on the Closing Date and ending on the day immediately preceding such first
Business Day of a calendar quarter that follows the first anniversary of the
Closing Date, three quarters of one percent (0.75%) per annum, and (ii) for each
period commencing on such first Business Day of a calendar quarter that follows
the first anniversary of the Closing Date, or any subsequent first Business Day
of a calendar quarter after Agent has received a new Compliance Certificate
delivered by Borrower pursuant to subsection 4.10(C) (each such First Business
Day being hereinafter referred to as an "Adjustment Date"), and ending on the
day immediately preceding each subsequent Adjustment Date (each such period
being hereinafter referred to as a "Calculation Period"), the applicable percent
per annum set forth in the pricing table below opposite the Adjusted Total
Indebtedness to Operating Cash Flow Ratio calculated for such Calculation
Period.
"LIBOR" means, for each Interest Period, a rate equal to: (a)
the rate of interest determined by Agent at which deposits in U.S. dollars for
the relevant Interest Period are offered based on information presented on the
Reuters Screen LIBO Page as of 11:00 a.m. (London time) on the day which is two
(2) Business Days prior to the first day of such Interest Period, provided that
if at least two such offered rates appear on the Reuters Screen LIBO Page in
respect of such Interest Period, the arithmetic mean of all such rates will be
the rate used, provided, further, that if fewer than two offered rates appear or
if Reuters ceases to provide LIBOR quotations, such rate shall be the rate of
interest at which deposits in U.S. dollars are offered for the relevant Interest
Period by any of Bankers Trust Company, The Chase Manhattan Bank, National
Association or Citibank, N.A. to prime banks in the London interbank market,
divided by (b) a number equal to 1.0 minus the aggregate (but without
duplication) of the rates (expressed as a decimal fraction) of reserve
requirements in effect on the day which is two (2) Business Days prior to the
beginning of such Interest Period (including, without limitation, basic,
supplemental, marginal and emergency reserves under any regulations of the Board
of Governors of the Federal Reserve System or other governmental authority
having jurisdiction with respect thereto, as now and from time to time in
effect) for Eurocurrency funding (currently referred to as "Eurocurrency
Liabilities" in Regulation D of such Board) which are required to be
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maintained by a member bank of the Federal Reserve System; such rate to be
rounded upward to the next whole multiple of one-sixteenth of one percent
(.0625%).
"LIBOR Loans" means Loans bearing interest at rates determined
by reference to the LIBOR.
"LIBOR Margin" shall mean, (i) for all LIBOR Loans having an
Interest Period commencing during the period commencing on the Closing Date and
ending on the day immediately preceding the first Adjustment Date, two and three
quarters percent (2.75%) per annum, and (ii) for all LIBOR Loans having an
Interest Period commencing during a subsequent period commencing on an
Adjustment Date and ending on the day immediately preceding the subsequent
Adjustment Date (each such period being hereinafter referred to as a
"Calculation Period"), the applicable percent per annum set forth in the pricing
table below opposite the Adjusted Total Indebtedness to Operating Cash Flow
Ratio calculated for such Calculation Period.
For the purposes of this subsection 1.2(A), "Adjusted Total
Indebtedness to Operating Cash Flow Ratio" means, for any Calculation Period,
the ratio of (i) the sum of (a) the average daily principal balance of the
Revolving Loans during the twelve (12) month period ending on the last day of
the month for which the Compliance Certificate most recently delivered pursuant
to subsection 4.10(C) was prepared, plus (b) the aggregate outstanding principal
balance of the Term Loan, the Acquisition Loans, the Lender Letters of Credit
and Risk Participation Agreements as of the last day of such month plus (c) all
other Indebtedness for borrowed money of the Borrower and its Subsidiaries on a
consolidated basis as of the last day of such month, to (ii) Operating Cash Flow
(calculated as illustrated on Exhibit 4.10(C)) for the twelve (12) month period
ending on the last day of such month.
PRICING TABLE
--------------------------------------------------------------------------------------------------------------------------
Adjusted Total Indebtedness
to Operating Cash
Flow Ratio Base Rate Margin LIBOR Margin
--------------------------------------------------------------------------------------------------------------------------
Greater than 3.75:1 0.75% 2.75%
--------------------------------------------------------------------------------------------------------------------------
Equal to or greater than 3.00:1 but equal to or less 0.50% 2.50%
than 3.75:1
--------------------------------------------------------------------------------------------------------------------------
Less than 3:00:1 0.25% 2.25%
--------------------------------------------------------------------------------------------------------------------------
If Borrower shall fail to deliver a Compliance Certificate by
the date required pursuant to subsection 4.10(C), effective as of the first
Business Day of the immediately succeeding calendar month and continuing through
the day preceding the next succeeding Adjustment Date, each applicable Base Rate
Margin and each applicable LIBOR Margin shall be
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conclusively presumed to equal the highest Base Rate Margin and the highest
LIBOR Margin specified in the pricing table set forth above.
Each LIBOR Loan may be obtained for a one (1), two (2), three
(3), or six (6) month period (each being an "Interest Period"). With respect to
all LIBOR Loans: (a) the Interest Period will commence on the date that the
LIBOR Loan is made or the date on which a Base Rate Loan is converted into a
LIBOR Loan, as applicable, or in the case of immediately successive Interest
Periods, each successive Interest Period shall commence on the day on which the
next preceding Interest Period expires, (b) if the Interest Period expires on a
day that is not a Business Day, then it will expire on the next Business Day,
and (c) no Interest Period shall extend beyond the date set forth in clause (c)
of the definition of the term "Expiry Date."
If the introduction of or the interpretation of any law, rule,
or regulation would increase the reserve requirement or otherwise increase the
cost to any Lender of making or maintaining a LIBOR Loan, then Agent, on behalf
of all affected Lenders, shall submit a certificate to Borrower demonstrating
the calculation of the increased cost and requiring payment thereof to Agent for
the benefit of the affected Lenders within ten (10) days after the date of the
certificate. There are no limitations on the number of times such certificate
may be submitted.
(B) Unused Line Fees. On the first day of each month, Borrower
shall pay Agent, for the benefit of all Lenders committed to make Revolving
Loans and Acquisition Loans (based upon their respective Pro Rata Shares), an
unused line fee in an amount equal to one-half of one percent (0.5%) per annum
of the sum of (1) the amount by which the Revolving Loan Commitment exceeded the
average daily outstanding Revolving Loans, Lender Letters of Credit and Risk
Participation Agreements during the immediately preceding month, plus (2) the
amount by which $15,000,000 exceeded the average daily outstanding Acquisition
Loans during the immediately preceding month.
(C) Risk Participation Fee. From the Closing Date, Borrower
shall pay Agent, for the benefit of all Lenders committed to make Revolving
Loans (based upon their respective Pro Rata Shares), a fee for each Lender
Letter of Credit and each Risk Participation Agreement, from the date of
issuance to the date of termination, equal to (1) the average daily outstanding
amount of the Risk Participation Liability, multiplied by (2) two and three
quarters percent (2.75%) per annum. Such fee is to be paid monthly in arrears on
the first day of each month. Borrower shall also reimburse Agent for any and all
fees and expenses paid to the issuer of any letter of credit that is in any way
related to a Risk Participation Agreement.
(D) Computation of Interest and Related Fees. Interest on all
Loans and all other Obligations and any fees set forth in this subsection 1.2
shall be calculated daily on the basis of a three hundred sixty (360) day year
for the actual number of days elapsed in the period during which it accrues. The
date of funding a Base Rate Loan and the first day of an Interest Period with
respect to a LIBOR Loan shall be included in the calculation of interest. The
date of payment of a Base Rate Loan and the last day of an Interest Period with
respect to a LIBOR Loan shall be excluded from the calculation of interest. If a
Loan is repaid on the same day that
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it is made, one (1) days' interest shall be charged. Interest on all Base Rate
Loans is payable in arrears on the first day of each calendar quarter and on the
Expiry Date, whether by acceleration or otherwise. Interest on LIBOR Loans shall
be payable on the last day of the applicable Interest Period, unless the
Interest Period is greater than three (3) months, in which case interest will be
payable on the last day of each three (3) month interval. In addition, interest
on LIBOR Loans is due on the Expiry Date, whether by acceleration or otherwise.
(E) Default Rate of Interest. At the election of Agent or
Requisite Lenders, after the occurrence of an Event of Default and for so long
as it continues, the Loans and other Obligations shall bear interest at a rate
that is two percent (2%) in excess of the rates otherwise payable under this
Agreement. Furthermore, during any period in which any Event of Default is
continuing, as the Interest Periods for LIBOR Loans then in effect expire, such
Loans shall be converted at Agent's discretion into Base Rate Loans and the
LIBOR election will not be available to Borrower until all Events of Default are
cured or waived.
(F) Excess Interest. Under no circumstances will the rate of
interest chargeable be in excess of the maximum amount permitted by law. If
excess interest is charged and paid in error, then the excess amount will be
promptly refunded.
(G) LIBOR Rate Election. All Loans made on the Closing Date
shall be Base Rate Loans and remain so for three (3) Business Days. Any LIBOR
Loans made during the sixty (60) days immediately following such three (3)
Business Days shall have an Interest Period of no more than thirty (30) days.
Thereafter, Borrower may request, upon not less than three (3) Business Days'
notice, that Revolving Loans to be made be LIBOR Loans and that outstanding
portions of the Term Loan or the Acquisition Loans be converted to LIBOR Loans.
Any such request, which will be made by submitting a LIBOR Loan request, in the
form of Exhibit 1.2(G), shall pertain to Loans in an aggregate minimum amount of
$500,000 and integral multiples of $10,000 in excess thereof. Once given, a
LIBOR Loan request shall be irrevocable and Borrower shall be bound thereby.
Upon the expiration of an Interest Period, in the absence of a new LIBOR Loan
request submitted to Agent not less than three (3) Business Days prior to the
end of such Interest Period, the LIBOR Loan then maturing shall be automatically
converted to a Base Rate Loan. There may be no more than six (6) LIBOR Loans
outstanding at any one time. Loans which are not the subject of a LIBOR Loan
request shall be Base Rate Loans.
1.3 Other Fees and Expenses.
(A) Certain Fees. Borrower shall pay to ▇▇▇▇▇▇, individually,
on the Closing Date and on each anniversary thereof, the fees specified in that
certain letter agreement dated November 20, 1996 between Borrower and ▇▇▇▇▇▇.
(B) LIBOR Breakage Fee. Upon any payment of a LIBOR Loan on
any day that is not the last day of the Interest Period applicable thereto
(regardless of the source of such prepayment and whether voluntary, by
acceleration or otherwise) or if for any reason (other than a default by Agent
or Lenders) a borrowing or advance of, or conversion to or continuation of, a
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LIBOR Loan does not take place on the date specified therefor, Borrower shall
pay Agent, for the benefit of all affected Lenders, an amount (the "LIBOR
Breakage Fee") equal to the amount of any losses, expenses and liabilities
(including, without limitation, any loss (including interest paid) sustained by
each such affected Lender in connection with the re-employment of such funds)
that any such affected Lender may sustain as a result of the payment of such
LIBOR Loan on a day that is not the last day of the Interest Period applicable
thereto or as a result of a borrowing or advance of, or conversion to or
continuation of, a LIBOR Loan not taking place on the date specified therefor.
(C) Expenses and Attorneys Fees. Borrower agrees to promptly
pay the reasonable fees, out-of-pocket costs and expenses (including those of
attorneys) incurred by Agent in connection with any matters contemplated by or
arising out of the Loan Documents, in connection with the examination, review,
due diligence investigation, documentation, negotiation and closing of the
transactions contemplated herein and in connection with the continued admini-
stration of the Loan Documents including any amendments, modifications and
waivers. Borrower agrees to promptly pay all fees, costs and expenses incurred
by Agent and Lenders in connection with any action to enforce any Loan Document
or to collect any payments due from Borrower or any other Loan Party. All fees,
costs and expenses for which Borrower is responsible under this subsection
1.3(C) shall be deemed part of the Obligations when incurred, payable in
accordance with the final two sentences of subsection 1.4 and secured by the
Collateral.
1.4 Payments. All payments by Borrower of the Obligations shall be made
in same day funds and delivered to Agent, for the benefit of Agent and Lenders,
as applicable, by wire transfer to the following account or such other place as
Agent may from time to time designate.
ABA No. ▇▇▇▇-▇▇▇▇-▇
Account Number 55-00540
The First National Bank of Chicago
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Reference: ▇▇▇▇▇▇ Corporate Finance Group
for the benefit of UnionTools, Inc.
Borrower shall receive credit on the day of receipt for funds received by Agent
by 1:00 p.m. CST. In the absence of timely receipt, such funds shall be deemed
to have been paid on the next Business Day. Whenever any payment to be made
hereunder shall be stated to be due on a day that is not a Business Day, the
payment may be made on the next succeeding Business Day and such extension of
time shall be included in the computation of the amount of interest and fees due
hereunder.
Borrower hereby authorizes Lenders to make Revolving Loans, on
the basis of their Pro Rata Shares, for the payment of Scheduled Term Loan
Installments, Scheduled Acquisition Loan Installments, interest, commitment
fees, Risk Participation Liability fees,
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LIBOR Breakage Fees, and Risk Participation Liability payments. Prior to an
Event of Default, other fees, costs and expenses (including those of attorneys)
reimbursable to Agent pursuant to subsections 1.3(A) and (C) or elsewhere in any
Loan Document may be debited to the Revolving Loan after fifteen (15) days
notice. After the occurrence of an Event of Default, no prior notice will be
required, but Agent will promptly notify Borrower of the amount of any such
debit.
1.5 Prepayments.
(A) Voluntary Prepayment of Term Loan and Acquisition Loans.
At any time, Borrower may prepay the Term Loan and Acquisition Loans in whole or
in part, in minimum amounts of $500,000, without penalty, but with LIBOR
Breakage Fees, if applicable, after not less than five (5) Business Days' prior
written notice to Agent specifying how such prepayment shall be applied.
(B) Prepayments from Excess Cash Flow. On or before the first
(1st) day of the December following the end of each of its fiscal years,
commencing with the fiscal year ending July 31, 1998, Borrower shall prepay the
Loans in an amount equal to fifty percent (50%) of the Excess Cash Flow for such
fiscal year pursuant to the calculation on Exhibit 1.5(B). The calculation
shall be based on the audited financial statements for Borrower. The payments
shall be applied in accordance with subsection 1.5(E).
(C) Prepayments from Asset Dispositions. Immediately upon
receipt of the Net Proceeds in excess of $250,000 for any single transaction or
series of transactions, or in excess of $500,000 in the aggregate during any
fiscal year of Borrower, Borrower shall repay the outstanding principal balance
of the Revolving Loan by the amount of any reduction in the Borrowing Base
attributable to the Asset Disposition giving rise to such Net Proceeds. Borrower
or any Subsidiary may, upon prior written notice to Agent, reinvest all
remaining Net Proceeds of such Asset Disposition, within ninety (90) days, in
productive replacement assets of a kind then used or usable in the business of
Borrower. If Borrower does not intend to so reinvest such Net Proceeds or if the
period set forth in the immediately preceding sentence expires without Borrower
having reinvested such Net Proceeds, Borrower shall prepay the Term Loan in an
amount equal to the remaining Net Proceeds of such Asset Disposition. The
payments shall be applied in accordance with subsection 1.5(E).
(D) Prepayment from Issuance of Securities. Unless otherwise
agreed by Requisite Lenders, immediately upon the receipt by Holdings, Borrower
or any of its Subsidiaries of the proceeds of the issuance of equity securities
(other than (1) proceeds of the issuance of equity securities received on or
before the Closing Date, (2) proceeds from the issuance of equity securities to
members of the management of Borrower and (3) proceeds of the issuance of equity
securities to Borrower or any Subsidiary), Borrower shall prepay the Loans in an
amount equal to such proceeds, net of underwriting discounts and commissions and
other reasonable costs associated therewith; provided, however, that with
respect to any such net proceeds from the issuance of equity securities by
Holdings during the first eighteen (18) months following the Closing Date, and
so long as no Default or Event of Default has occurred and is
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continuing or would result therefrom, such net proceeds may first be used to
repay the existing Subordinated Indebtedness of Holdings and, upon the repayment
of such Subordinated Indebtedness in full, may then be used to redeem or
repurchase the preferred capital stock of Holdings issued and outstanding as of
the date hereof, and any remaining balance shall be applied as a prepayment of
the Loans. The prepayments under this subsection 1.5(D) shall be applied in
accordance with subsection 1.5(E).
(E) Application of Proceeds. With respect to the mandatory
prepayments described in subsections 1.5(B), 1.5(C) and 1.5(D), such prepayments
shall first be applied in payment of the Term Loan pro rata against all
remaining Scheduled Term Loan Installments and, at any time after the Term Loan
shall have been prepaid in full, such prepayments shall be applied in payment of
the Acquisition Loans pro rata against all remaining Scheduled Acquisition Loan
Installments and, at any time after the Term Loan and the Acquisition Loans
shall have been prepaid in full, such prepayments shall be applied to reduce the
outstanding principal balance of the Revolving Loans and as a permanent
reduction of the Revolving Loan Commitment.
1.6 Term of the Agreement. All of the Obligations shall become due and
payable as otherwise set forth herein, but in any event, all of the remaining
Obligations shall become due and payable on the date set forth in clause (c) of
the definition of the term "Expiry Date." Upon such date and following repayment
in full of the Obligations, this Agreement will terminate. Notwithstanding any
such termination, until all Obligations have been fully paid and satisfied,
Agent, for the benefit of Agent and Lenders, shall be entitled to retain the
security interests in the Collateral granted under the Security Documents and
the ability to exercise all rights and remedies available to them under the Loan
Documents and applicable laws.
1.7 Loan Accounts. Agent will maintain loan account records for (a) all
Loans, interest charges and payments thereof, (b) all Risk Participation
Liability, (c) the charging and payment of all fees, costs and expenses and (d)
all other debits and credits pursuant to this Agreement. The balance in the loan
accounts shall be presumptive evidence of the amounts due and owing to Lenders,
provided that any failure by Agent to so record shall not limit or affect the
Borrower's obligation to pay. Within five (5) days of the first of each month,
Agent shall provide a statement for each loan account setting forth the
principal of each account and interest due thereon. Borrower must deliver a
written objection within sixty (60) days after receipt of the statement or the
statement will be presumptive evidence of the Obligations absent manifest error.
During the continuance of an Event of Default, Borrower irrevocably waives the
right to direct the application of any and all payments and Borrower hereby
irrevocably agrees that Agent shall have the continuing exclusive right to apply
and reapply payments in any manner it deems appropriate.
1.8 Capital Adequacy and Other Adjustments. In the event that any
Lender shall have determined that the adoption after the date hereof of any law,
treaty, governmental (or quasi-governmental) rule, regulation, guideline or
order regarding capital adequacy, reserve requirements or similar requirements
or compliance by any Lender or any corporation
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controlling such Lender with any request or directive regarding capital
adequacy, reserve requirements or similar requirements (whether or not having
the force of law and whether or not failure to comply therewith would be
unlawful) from any central bank or governmental agency or body having
jurisdiction does or shall have the effect of increasing the amount of capital,
reserves or other funds required to be maintained by such Lender or any
corporation controlling such Lender and thereby reducing the rate of return on
such Lender's or such corporation's capital as a consequence of its obligations
hereunder, then Borrower shall from time to time within fifteen (15) days after
notice and demand from such Lender (together with the certificate referred to in
the next sentence and with a copy to Agent) pay to Agent, for the account of
such Lender, additional amounts sufficient to compensate such Lender for such
reduction. A certificate as to the amount of such cost and showing the basis of
the computation of such cost submitted by such Lender to Borrower and Agent
shall, absent manifest error, be final, conclusive and binding for all purposes.
1.9 Taxes.
(A) No Deductions. Any and all payments or reimbursements made
hereunder or under the Notes shall be made free and clear of and without
deduction for any and all taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto (all such taxes, levies,
imposts, deductions, charges or withholdings and all liabilities with respect
thereto excluding such taxes imposed on net income, herein "Tax Liabilities"),
excluding, however, taxes imposed on the net income of a Lender or Agent. If
Borrower shall be required by law to deduct any such amounts from or in respect
of any sum payable hereunder to any Lender or Agent, then the sum payable
hereunder shall be increased as may be necessary so that, after making all
required deductions, such Lender or Agent receives an amount equal to the sum it
would have received had no such deductions been made.
(B) Changes in Tax Laws. In the event that, subsequent to the
Closing Date, (1) any changes in any existing law, regulation, treaty or
directive or in the interpretation or application thereof, (2) any new law,
regulation, treaty or directive enacted or any interpretation or application
thereof, or (3) compliance by Agent or any Lender with any request or directive
(whether or not having the force of law) from any governmental authority, agency
or instrumentality:
(a) does or shall subject Agent or any Lender to any
tax of any kind whatsoever with respect to this Agreement, the other
Loan Documents or any Loans made or Lender Letters of Credit or Risk
Participation Agreements issued hereunder, or change the basis of
taxation of payments to Agent or such Lender of principal, fees,
interest or any other amount payable hereunder (except for net income
taxes, or franchise taxes imposed in lieu of net income taxes, imposed
generally by federal, state or local taxing authorities with respect to
interest or commitment or other fees payable hereunder or changes in
the rate of tax on the overall net income of Agent or such Lender); or
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(b) does or shall impose on Agent or any Lender any
other condition or increased cost in connection with the transactions
contemplated hereby or participations herein;
and the result of any of the foregoing is to increase the cost to Agent or any
such Lender of issuing any Lender Letter of Credit or Risk Participation
Agreement or making or continuing any Loan hereunder, as the case may be, or to
reduce any amount receivable hereunder, then, in any such case, Borrower shall
promptly pay to Agent or such Lender, upon its demand, any additional amounts
necessary to compensate Agent or such Lender, on an after-tax basis, for such
additional cost or reduced amount receivable, as determined by Agent or such
Lender with respect to this Agreement or the other Loan Documents. If Agent or
such Lender becomes entitled to claim any additional amounts pursuant to this
subsection, it shall promptly notify Borrower of the event by reason of which
Agent or such Lender has become so entitled. A certificate as to any additional
amounts payable pursuant to the foregoing sentence submitted by Agent or such
Lender to Borrower and Agent shall, absent manifest error, be final, conclusive
and binding for all purposes.
(C) Foreign Lenders. Each Lender organized under the laws of a
jurisdiction outside the United States (a "Foreign Lender") as to which payments
to be made under this Agreement or under the Notes are exempt from United States
withholding tax or are subject to United States withholding tax at a reduced
rate under an applicable statute or tax treaty shall provide to Borrower and
Agent (1) a properly completed and executed Internal Revenue Service Form 4224
or Form 1001 or other applicable form, certificate or document prescribed by the
Internal Revenue Service of the United States certifying as to such Foreign
Lender's entitlement to such exemption or reduced rate of withholding with
respect to payments to be made to such Foreign Lender under this Agreement and
under the Notes (a "Certificate of Exemption") or (2) a letter from any such
Foreign Lender stating that it is not entitled to any such exemption or reduced
rate of withholding (a "Letter of Non-Exemption"). Prior to becoming a Lender
under this Agreement and within fifteen (15) days after a reasonable written
request of Borrower or Agent from time to time thereafter, each Foreign Lender
that becomes a Lender under this Agreement shall provide a Certificate of
Exemption or a Letter of Non-Exemption to Borrower and Agent.
If a Foreign Lender is not entitled to an exemption or reduced
rate of withholding with respect to payments to be made to such Foreign Lender
under this Agreement or if a Foreign Lender is entitled to an exemption with
respect to payments to be made to such Foreign Lender under this Agreement (or
to a reduced rate of withholding) and does not provide a Certificate of
Exemption to Borrower and Agent within the time periods set forth in the
preceding paragraph, Borrower shall withhold taxes from payments to such Foreign
Lender at the applicable statutory rates and Borrower shall not be required to
pay any additional amounts as a result of such withholding, provided that all
such withholding shall cease upon delivery by such Foreign Lender of a
Certificate of Exemption to Borrower and Agent.
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1.10 Optional Prepayment/Replacement of Lender in Respect of Increased
Costs. Within fifteen (15) days after receipt by Borrower of written notice and
demand from any Lender (an "Affected Lender") for payment of additional costs as
provided in subsection 1.8, Borrower may, at its option, notify Agent and such
Affected Lender of its intention to do one of the following:
(A) Borrower may obtain, at Borrower's expense, a replacement
Lender ("Replacement Lender") for such Affected Lender, which Replacement Lender
shall be reasonably satisfactory to Agent. In the event Borrower obtains a
Replacement Lender within ninety (90) days following notice of its intention to
do so, the Affected Lender shall sell and assign its Loans and its obligations
under the Revolving Loan Commitment to such Replacement Lender, provided that
Borrower has reimbursed such Affected Lender for its increased costs for which
it is entitled to reimbursement under this Agreement through the date of such
sale and assignment; or
(B) Borrower may prepay in full all outstanding Obligations
owed to such Affected Lender and terminate such Affected Lender's Pro Rata Share
of the Revolving Loan Commitment, in which case the Revolving Loan Commitment
will be reduced by the amount of such Pro Rata Share. Borrower shall, within
ninety (90) days following notice of its intention to do so, prepay in full all
outstanding Obligations owed to such Affected Lender (including such Affected
Lender's increased costs for which it is entitled to reimbursement under this
Agreement through the date of such prepayment), and terminate such Affected
Lender's obligations under the Revolving Loan Commitment.
SECTION 2
AFFIRMATIVE COVENANTS
Borrower covenants and agrees that so long as the Revolving Loan
Commitment is in effect and until payment in full of all Obligations and
termination of all Lender Letters of Credit and Risk Participation Agreements,
unless Requisite Lenders shall otherwise give their prior written consent,
Borrower shall perform and comply with, and shall cause each of the other Loan
Parties to perform and comply with, all covenants in this Section 2 applicable
to such Person.
2.1 Compliance With Laws. Borrower will (a) comply with and will cause
each of its Subsidiaries to comply with (i) the requirements of all applicable
laws, rules, regulations and orders of any governmental authority (including,
without limitation, laws, rules, regulations and orders relating to taxes,
employer and employee contributions, securities, employee retirement and welfare
benefits, environmental protection matters and employee health and safety) as
now in effect and which may be imposed in the future in all jurisdictions in
which Borrower or its Subsidiaries are now doing business or may hereafter be
doing business, and (ii) the obligations, covenants, and conditions contained in
any Contractual Obligation of Borrower and/or such Subsidiary, other than
those laws, rules, regulations, orders and Contractual Obligations the
noncompliance with which could not be reasonably expected to have, either
individually or in the
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aggregate, a Material Adverse Effect, and (b) maintain or obtain and will cause
each of its Subsidiaries to maintain or obtain, all licenses, qualifications and
permits now held or hereafter required to be held by Borrower and its
Subsidiaries, for which the loss, suspension, revocation or failure to obtain or
renew, could have a Material Adverse Effect. This subsection 2.1 shall not
preclude the Borrower or any Subsidiary from contesting any taxes, fees,
assessments, charges, levies or other payments, if they are being diligently
contested in good faith and if appropriate expense provisions have been recorded
in conformity with GAAP. Borrower represents and warrants that as of the date
hereof, it (i) is in compliance and each of its Subsidiaries is in compliance
with the requirements of all applicable laws, rules, regulations and orders of
any governmental authority as now in effect, and all Contractual Obligations,
and (ii) maintains and each of its Subsidiaries maintains all licenses,
qualifications and permits referred to above, except in each case as could not
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect.
"Contractual Obligations", as applied to any Person, means any
indenture, mortgage, deed of trust, contract, undertaking, agreement or other
instrument to which that Person is a party or by which it or any of its
properties is bound or to which it or any of its properties is subject
including, without limitation, the Related Transactions Documents.
2.2 Maintenance of Properties; Insurance. Borrower will maintain or
cause to be maintained in good repair, working order and condition all material
properties used in the business of Borrower and its Subsidiaries and will make
or cause to be made all appropriate repairs, renewals and replacements thereof.
Borrower will maintain or cause to be maintained, with financially sound and
reputable insurers, public liability and property damage insurance with respect
to its business and properties and the business and properties of its
Subsidiaries against loss or damage of the kinds customarily carried or
maintained by corporations of established reputation engaged in similar
businesses and in amounts acceptable to Agent and will deliver evidence thereof
to Agent. Borrower will maintain business interruption insurance in an amount
not less than $30,000,000. Borrower shall cause, pursuant to endorsements and
assignments and assignments in form and substance reasonably satisfactory to
Agent, Agent, for the benefit of Agent and Lenders, to be named as lender's loss
payee in the case of casualty insurance, Agent for the benefit of Agent and
Lenders, to be named as additional insured in the case of all liability
insurance and Agent, for the benefit of Agent and Lenders, to be named as
assignee in the case of all business interruption insurance. Borrower represents
and warrants that it and each of its Subsidiaries currently maintains all
material properties as set forth above and maintains all insurance described
above.
2.3 Inspection; Lender Meeting. Borrower shall permit any authorized
representatives of Agent to visit and inspect any of the properties of Borrower
or any of its Subsidiaries, including its and their financial and accounting
records, and to make copies and take extracts therefrom, and to discuss its and
their affairs, finances and business with its and their officers and certified
public accountants, at such reasonable times during normal business hours and as
often as may be reasonably requested. Representatives of each Lender will be
permitted to accompany representatives of Agent during each visit, inspection
and discussion
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referred to in the immediately preceding sentence. Without in any way limiting
the foregoing, Borrower will participate and will cause its key management
personnel to participate in a meeting with Agent and Lenders at least once
during each year, which meeting shall be held at such time and such place as may
be reasonably requested by Agent.
2.4 Corporate Existence, Etc. Except as otherwise permitted by
subsection 3.6, Borrower will, and will cause each of its Subsidiaries to, at
all times preserve and keep in full force and effect its corporate existence and
all rights and franchises material to its business.
2.5 Further Assurances.
(A) Borrower shall and shall cause each Loan Party to, from
time to time, execute such guaranties, financing statements, documents, security
agreements and reports as Agent or Requisite Lenders at any time may reasonably
request to evidence, perfect or otherwise implement the guaranties and security
for repayment of the Obligations contemplated by the Loan Documents.
(B) At Agent's or Requisite Lenders' request, Borrower shall
cause any Subsidiaries of Borrower promptly to guaranty the Obligations and to
grant to Agent, for the benefit of Agent and Lenders, a security interest in the
real, personal and mixed property of such Subsidiary to secure the Obligations.
The documentation for such guaranty or security shall be substantially similar
to the Loan Documents executed concurrently herewith with such modifications as
are reasonably requested by Agent.
SECTION 3
NEGATIVE COVENANTS
Borrower covenants and agrees that so long as the Revolving Loan
Commitment is in effect and until payment in full of all Obligations and
termination of all Lender Letters of Credit and Risk Participation Agreements,
unless Requisite Lenders shall otherwise give their prior written consent,
Borrower shall perform and comply with, and shall cause each of the other Loan
Parties to perform and comply with, all covenants in this Section 3 applicable
to such Person.
3.1 Indebtedness. Borrower will not and will not permit any of its
Subsidiaries directly or indirectly to create, incur, assume, guaranty, or
otherwise become or remain directly or indirectly liable with respect to any
Indebtedness except:
(A) the Obligations;
(B) intercompany Indebtedness among Borrower, its Subsidiaries
or Holdings; provided that the obligations of each obligor of such Indebtedness
shall: (1) be subordinated in right of payment to the Obligations from and after
such time as any portion of the Obligations shall become due and payable
(whether at stated maturity, by acceleration or otherwise); (2) be
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evidenced by promissory notes, which shall have been pledged to Agent, for the
benefit of Agent and Lenders, as security for the Obligations; and (3) have such
other terms and provisions as Agent or Requisite Lenders may reasonably require;
and
(C) Indebtedness not to exceed $2,000,000 in the aggregate at
any time outstanding secured by purchase money Liens or incurred with respect to
capital leases.
3.2 Liens and Related Matters.
(A) No Liens. Borrower will not and will not permit any of its
Subsidiaries directly or indirectly to create, incur, assume or permit to exist
any Lien on or with respect to any property or asset (including any document or
instrument with respect to goods or accounts receivable) of Borrower or any of
its Subsidiaries, whether now owned or hereafter acquired, or any income or
profits therefrom, except Permitted Encumbrances. "Permitted Encumbrances" means
the following:
(1) Liens for taxes, assessments or other
governmental charges not yet due and payable;
(2) statutory Liens of landlords, carriers,
warehousemen, mechanics, materialmen and other similar liens imposed by law,
which are incurred in the ordinary course of business for sums not more than
thirty (30) days delinquent or which are being contested in good faith; provided
that a reserve or other appropriate provision shall have been made therefor and
the aggregate amount of liabilities secured by such Liens is less than $100,000;
(3) Liens (other than any Lien imposed by the
Employee Retirement Income Security Act of 1974 or any rule or regulation
promulgated thereunder) incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance and
other types of social security, or to secure the performance of tenders,
statutory obligations, surety, stay, customs and appeal bonds, bids, leases,
government contracts, trade contracts, performance and return of money bonds and
other similar obligations (exclusive of obligations for the payment of borrowed
money);
(4) deposits, in an aggregate amount not to exceed
$50,000, made in the ordinary course of business to secure liability to
insurance carriers, excluding the Lender Letters of Credit and the letters of
credit issued under the Risk Participation Agreements;
(5) Liens for purchase money obligations; provided
that: (a) the purchase of the asset subject to any such Lien is permitted under
subsection 4.1; (b) the Indebtedness secured by any such Lien is permitted
under subsection 3.1; and (c) any such Lien encumbers only the asset so
purchased;
(6) any attachment or judgment Lien not constituting
an Event of Default under subsection 6.1(I);
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(7) easements, rights of way, restrictions, and other
similar charges or encumbrances not interfering in any material respect with the
ordinary conduct of the business of Borrower or any of its Subsidiaries;
(8) any interest or title of a lessor or sublessor
under any lease permitted by subsection 4.2;
(9) Liens in favor of Agent, for the benefit of Agent
and Lenders;
(10) Liens existing on the date hereof and renewals
and extensions thereof, which Liens are set forth on Schedule 3.2(A)(10) hereto;
(11) Liens existing on any fixed assets acquired by
Borrower or its Subsidiaries at the time of its acquisition; provided that the
acquisition is a Permitted Acquisition hereunder and the Lien is confined solely
to the fixed assets so acquired; and
(12) Liens on fixed assets of corporations which
become subsidiaries of Borrower after the date hereof; provided that such
corporations become subsidiaries of Borrower under a Permitted Acquisition
hereunder and such Liens existed at the time the respective corporations became
Subsidiaries of Borrower and were not created in anticipation thereof.
(B) No Negative Pledges. Borrower will not and will not permit
any of its Subsidiaries directly or indirectly to enter into or assume any
agreement (other than the Loan Documents) prohibiting the creation or assumption
of any Lien upon its properties or assets, whether now owned or hereafter
acquired.
(C) No Restrictions on Subsidiary Distributions to Borrower.
Except as provided herein, Borrower will not and will not permit any of its
Subsidiaries directly or indirectly to create or otherwise cause or suffer to
exist or become effective any consensual encumbrance or restriction of any kind
on the ability of any such Subsidiary to: (1) pay dividends or make any other
distribution on any of such Subsidiary's capital stock owned by Borrower or any
Subsidiary of Borrower; (2) subject to subordination provisions for the benefit
of Agent and Lenders, pay any Indebtedness owed to Borrower or any other
Subsidiary; (3) make loans or advances to Borrower or any other Subsidiary; or
(4) transfer any of its property or assets to Borrower or any other Subsidiary.
3.3 Investments; Joint Ventures. Borrower will not and will not permit
any of its Subsidiaries directly or indirectly to make or own any Investment in
any Person except:
(A) Borrower and its Subsidiaries may make and own Investments
in Cash Equivalents; provided that such Cash Equivalents are not subject to
setoff rights;
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(B) Borrower and its Subsidiaries may make intercompany loans
to the extent permitted under subsection 3.1;
(C) Borrower and its Subsidiaries may make loans and advances
to employees for moving, entertainment, travel and other similar expenses in the
ordinary course of business not to exceed $100,000 in the aggregate at any time
outstanding;
(D) Borrower or a Subsidiary may make Investments of up to
$750,000 in the aggregate in a United States corporation, limited liability
company or limited liability partnership, for the purposes of a joint venture
with Mexican investors for the purchase and sale of wheelbarrows.
(E) Permitted Acquisitions.
"Investment" means (i) any direct or indirect purchase or other
acquisition by Borrower or any of its Subsidiaries of any beneficial interest
in, including stock, partnership interest or other equity securities of, any
other Person; and (ii) any direct or indirect loan (including the purchase of
Indebtedness), advance or capital contribution by Borrower or any of its
Subsidiaries to any other Person, including all indebtedness and accounts
receivable from that other Person that are not current assets or did not arise
from sales to that other Person in the ordinary course of business. The amount
of any Investment shall be the original cost of such Investment plus the cost of
all additions thereto, without any adjustments for increases or decreases in
value, or write-ups, write-downs or write-offs with respect to such Investment.
"Cash Equivalents" means: (i) marketable direct obligations issued or
unconditionally guaranteed by the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one (1) year from the date of acquisition thereof;
(ii) commercial paper maturing no more than one (1) year from the date issued
and, at the time of acquisition, having a rating of at least A-1 from Standard &
Poor's Corporation or at least P-1 from ▇▇▇▇▇'▇ Investors Service, Inc.; (iii)
certificates of deposit or bankers' acceptances maturing within one (1) year
from the date of issuance thereof issued by, or overnight reverse repurchase
agreements from, any commercial bank organized under the laws of the United
States of America or any state thereof or the District of Columbia having
combined capital and surplus of not less than $500,000,000; (iv) time deposits
maturing no more than thirty (30) days from the date of creation thereof with
commercial banks having membership in the Federal Deposit Insurance Corporation
in amounts not exceeding the lesser of $100,000 or the maximum amount of
insurance applicable to the aggregate amount of Borrower's deposits at such
institution; and (v) deposits or investments in mutual or similar funds offered
or sponsored by brokerage or other companies having membership in the Securities
Investor Protection Corporation in amounts not exceeding the lesser of $100,000
or the maximum amount of insurance applicable to the aggregate amount of
Borrower's deposits at such institution.
"Permitted Acquisitions" shall mean acquisitions by Borrower or any of
its Subsidiaries of the stock or assets of any Person engaged in a business that
is the same or similar to the
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business of Borrower as of the Closing Date in a negotiated transaction;
provided that such acquisition either is funded by an Acquisition Loan made
pursuant to subsection 1.1(D) or is consented to in writing by the Requisite
Lenders.
3.4 Contingent Obligations. Borrower will not and will not permit any
of its Subsidiaries directly or indirectly to create or become or be liable with
respect to any Contingent Obligation except those:
(A) resulting from endorsement of negotiable instruments for
collection in the ordinary course of business;
(B) existing on the Closing Date and described in Schedule 3.4
annexed hereto;
(C) arising under indemnity agreements to title insurers to
cause such title insurers to issue to Agent mortgagee title insurance policies;
(D) arising with respect to customary indemnification
obligations incurred in connection with Asset Dispositions;
(E) incurred in the ordinary course of business with respect
to surety and appeal bonds, performance and return-of-money bonds and other
similar obligations not exceeding at any time outstanding $25,000 in aggregate
liability;
(F) incurred with respect to Indebtedness permitted by
subsection 3.1; and
(G) not permitted by clauses (A) through (F) above, so long as
any such Contingent Obligations, in the aggregate at any time outstanding, do
not exceed $25,000.
"Contingent Obligation", as applied to any Person, means any direct or
indirect liability of that Person: (i) with respect to any indebtedness, lease,
dividend or other obligation of another Person if the primary purpose or intent
of the Person incurring such liability, or the primary effect thereof, is to
provide assurance to the obligee of such liability that such liability will be
paid or discharged, or that any agreements relating thereto will be complied
with, or that the holders of such liability will be protected (in whole or in
part) against loss with respect thereto; (ii) with respect to any letter of
credit issued for the account of that Person or as to which that Person is
otherwise liable for reimbursement of drawings; or (iii) under any foreign
exchange contract, currency swap agreement, interest rate swap agreement or
other similar agreement or arrangement designed to alter the risks of that
Person arising from fluctuations in currency values or interest rates.
Contingent Obligations shall also include (a) the direct or indirect guaranty,
endorsement (other than for collection or deposit in the ordinary course of
business), co-making, discounting with recourse or sale with recourse by such
Person of the obligation of another, (b) the obligation to make take-or-pay or
similar payments if required regardless of nonperformance by any other party or
parties to an agreement, and (c) any liability
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of such Person for the obligations of another through any agreement to purchase,
repurchase or otherwise acquire such obligation or any property constituting
security therefor, to provide funds for the payment or discharge of such
obligation or to maintain the solvency, financial condition or any balance sheet
item or level of income of another. The amount of any Contingent Obligation
shall be equal to the amount of the obligation so guaranteed or otherwise
supported or, if not a fixed and determined amount, the maximum amount so
guaranteed.
3.5 Restricted Junior Payments. Borrower will not and will not permit
any of its Subsidiaries directly or indirectly to declare, order, pay, make or
set apart any sum for any Restricted Junior Payment, except that if after giving
effect thereto no Default or Event of Default would exist, Borrower may make the
following Restricted Junior Payments (without duplication):
(A) Borrower may make payments and distributions to Holdings
to permit Holdings to pay federal and state income taxes then due and owing,
franchise taxes and other similar licensing expenses incurred in the ordinary
course of business; provided that Borrower's aggregate contribution to taxes as
a result of the filing of a consolidated return by Holdings shall not be
greater, nor the aggregate receipt of tax benefits less, than they would have
been had Borrower not filed a consolidated return with Holdings;
(B) Wholly-owned Subsidiaries of Borrower may make Restricted
Junior Payments with respect to their common stock;
(C) Borrower may make payments and distributions to Holdings
for corporate expenditures in cash of up to a maximum aggregate amount of
$1,500,000 per fiscal year;
(D) Borrower may make payments and distributions to Holdings
to enable Holdings to make payments on the Subordinated Indebtedness of Holdings
provided that such payments by Holdings are permitted pursuant to that certain
Subordination and Intercreditor Agreement of even date herewith among Agent,
Holdings and the holders of such Subordinated Indebtedness;
(E) Borrower may make payments and distributions to the extent
provided in subsection 1.5(D); and
(F) Borrower may make payments and distributions to Holdings
to cover those non-operating expenses of Holdings set forth on Schedule 3.16.
"Restricted Junior Payment" means: (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of stock
of Borrower or any of its Subsidiaries now or hereafter outstanding, except a
dividend payable solely in shares of that class of stock to the holders of that
class; (ii) any redemption, conversion, exchange, retirement, sinking fund or
similar payment, purchase or other acquisition for value, direct or indirect, of
any shares of any class of stock of Borrower or any of its Subsidiaries now or
hereafter outstanding; (iii) any
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payment or prepayment of interest on, principal of, premium, if any, redemption,
conversion, exchange, purchase, retirement, defeasance, sinking fund or similar
payment with respect to, any Subordinated Indebtedness; and (iv) any payment
made to retire, or to obtain the surrender of, any outstanding warrants, options
or other rights to acquire shares of any class of stock of Borrower or any of
its Subsidiaries now or hereafter outstanding.
3.6 Restriction on Fundamental Changes. Borrower will not and will not
permit any of its Subsidiaries directly or indirectly to: (a) amend, modify or
waive any term or provision of its articles of incorporation, certificates of
designations pertaining to preferred stock or by-laws unless required by law;
(b) enter into any transaction of merger or consolidation except any Subsidiary
of Borrower may be merged with or into Borrower (provided that Borrower is the
surviving entity) or any other Subsidiary of Borrower; (c) liquidate, wind-up or
dissolve itself (or suffer any liquidation or dissolution); or (d) acquire by
purchase or otherwise all or any substantial part of the business or assets of
any other Person, except for any Permitted Acquisition.
3.7 Disposal of Assets or Subsidiary Stock. Borrower will not and will
not permit any of its Subsidiaries directly or indirectly to: convey, sell,
lease, sublease, transfer or otherwise dispose of, or grant any Person an option
to acquire, in one transaction or a series of transactions, any of its property,
business or assets, or the capital stock of or other equity interests in any of
its Subsidiaries, whether now owned or hereafter acquired, except for (a) bona
fide sales of inventory to customers for fair value in the ordinary course of
business and dispositions of obsolete equipment not used or useful in the
business and (b) Asset Dispositions if all of the following conditions are met:
(i) the market value of assets sold or otherwise disposed of in any single
transaction or series of related transactions does not exceed $250,000 and the
aggregate market value of assets sold or otherwise disposed of in any fiscal
year of Borrower does not exceed $500,000; (ii) the consideration received is
at least equal to the fair market value of such assets; (iii) the sole
consideration received is cash; (iv) the Net Proceeds of such Asset Disposition
are applied as required by subsection 1.5(C); (v) after giving effect to the
sale or other disposition of the assets included within the Asset Disposition
and the repayment of Indebtedness with the proceeds thereof, Borrower is in
compliance on a pro forma basis with the covenants set forth in Section 4
recomputed for the most recently ended month for which information is available
and is in compliance with all other terms and conditions contained in this
Agreement; and (vi) no Default or Event of Default then exists or shall result
from such sale or other disposition.
3.8 Transactions with Affiliates. Borrower will not and will not permit
any of its Subsidiaries directly or indirectly to enter into or permit to exist
any transaction (including the purchase, sale, lease or exchange of any property
or the rendering of any service) with any Affiliate or with any director,
officer or employee of any Loan Party, except (a) as set forth on Schedule 3.8
or (b) transactions in the ordinary course of and pursuant to the reasonable
requirements of the business of Borrower or any of its Subsidiaries and upon
fair and reasonable terms which are fully disclosed to Agent and are no less
favorable to Borrower or such Subsidiary than would be obtained in a comparable
arm's length transaction with a Person that is
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not an Affiliate. Notwithstanding the foregoing, upon the election of Agent no
payments may be made with respect to any items set forth on Schedule 3.8 upon
the occurrence and during the continuation of a Default or Event of Default.
3.9 Management Fees and Compensation. Borrower will not and will not
permit any of its Subsidiaries directly or indirectly to pay any management,
consulting or similar fees to any Affiliate or to any director, officer or
employee of any Loan Party.
3.10 Conduct of Business. Borrower will not and will not permit any of
its Subsidiaries directly or indirectly to engage in any business other than
businesses of the type described on Schedule 3.10.
3.11 Changes Relating to Subordinated Indebtedness. Borrower will not
and will not permit any of its Subsidiaries or Holdings directly or indirectly
to change or amend the terms of any Subordinated Indebtedness if the effect of
such amendment is to: (a) increase the interest rate on such Indebtedness; (b)
change the dates upon which payments of principal or interest are due on such
Indebtedness; (c) change any event of default or add or change any covenant with
respect to such Indebtedness; (d) change the prepayment provisions of such
Indebtedness; (e) change the subordination provisions thereof (or the
subordination terms of any guaranty thereof); or (f) change or amend any other
term if such change or amendment would materially increase the obligations of
the obligor or confer additional material rights on the holder of such
Indebtedness in a manner adverse to Borrower, any of its Subsidiaries, Holdings
or Lenders.
3.12 Fiscal Year. Neither Borrower nor any Subsidiary of Borrower shall
change its fiscal year.
3.13 Press Release; Public Offering Materials. Borrower will not and
will not permit any of its Subsidiaries to disclose the name of Agent or any
Lender in any press release or in any prospectus, proxy statement or other
materials filed with any governmental entity relating to a public offering of
the capital stock of any Loan Party, except as required by applicable law.
3.14 Subsidiaries. Borrower will not and will not permit any of its
Subsidiaries directly or indirectly to establish, create or acquire any new
Subsidiary, except for Permitted Acquisitions.
3.15 Bank Accounts. Borrower will not and will not permit any of its
Subsidiaries to establish any new bank accounts without prior written notice to
Agent and unless Agent and the bank at which the account is to be opened enter
into a bank agency agreement in form and substance satisfactory to Agent.
3.16 Non-Operating Expenditures. Borrower will not make any
expenditures that are not related to its current or future business operations,
except as described on Schedule 3.16.
SECTION 4
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FINANCIAL COVENANTS/REPORTING
Borrower covenants and agrees that so long as the Revolving Loan
Commitment or the Acquisition Loan Commitment is in effect, and until payment in
full of all Obligations and termination of all Lender Letters of Credit and Risk
Participation Agreements, unless Requisite Lenders shall otherwise give their
prior written consent, Borrower shall perform and comply with, and shall cause
each of the other Loan Parties to perform and comply with, all covenants in this
Section 4 applicable to such Person.
4.1 Capital Expenditure Limits. The aggregate amount of all Capital
Expenditures of Borrower and its Subsidiaries will not exceed $3,500,000 (the
"Capex Limit") in any fiscal year of Borrower. Notwithstanding the foregoing, in
the event Borrower and its Subsidiaries do not expend the entire Capex Limit
permitted in any fiscal year, Borrower and its Subsidiaries may carry forward to
the immediately succeeding fiscal year 50% of the unutilized portion of the
Capex Limit. All Capital Expenditures made by Borrower and its Subsidiaries
shall first be applied to reduce the applicable Capex Limit and then to reduce
the carry forward from the previous fiscal year, if any. "Capital Expenditures"
will be calculated as illustrated on Exhibit 4.10(C).
4.2 Lease Limits. Borrower will not and will not permit any of its
Subsidiaries directly or indirectly to become or remain liable in any way,
whether directly or by assignment or as a guarantor or other surety, for the
obligations of the lessee under any operating lease (other than intercompany
leases between Borrower and its Subsidiaries), if the aggregate amount of all
rents paid by Borrower and its Subsidiaries under all such leases would exceed
$3,000,000 in any fiscal year of Borrower.
4.3 EBIDAT.
(a) Borrower shall not permit EBIDAT for any of the periods
set forth below to be less than the amount set forth for such period.
Period Amount
------ ------
January 1, 1997 through April 30, 1997 $ 7,000,000
January 1, 1997 through July 31, 1997 $ 9,100,000
January 1, 1997 through October 31, 1997 $10,200,000
(b) Borrower shall not permit EBIDAT for the twelve (12) month
period ending on the last day of any fiscal quarter ending on the dates or
during the periods set forth below to be less than the amount set forth below
for such date or period.
Date/
Period Amount
------ ------
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January 31, 1998 $11,100,000
April 30, 1998 $12,500,000
July 31, 1998 $13,200,000
October 31, 1998 $13,500,000
January 31, 1999 $14,000,000
April 30, 1999 $15,100,000
On or after July 31, 1999 $15,600,000
"EBIDAT" will be calculated as illustrated on Exhibit 4.10(C).
4.4 Fixed Charge Coverage.
(a) Borrower shall not permit Fixed Charge Coverage for any of
the periods set forth below to be less than the amount set forth below for such
period.
Period Amount
------ ------
January 1, 1997 through April 30, 1997 1.1:1
January 1, 1997 through July 31, 1997 1.1:1
January 1, 1997 through October 31, 1997 1.1:1
(b) Borrower shall not permit Fixed Charge Coverage for the
twelve (12) month period ending on the last day of any fiscal quarter ending on
the dates or during the periods set forth below to be less than the amount set
forth below for such date or period.
Date/
Period Amount
------ ------
January 31, 1998 1.1:1
April 30, 1998 1.1:1
On or after July 31, 1998 1.2:1
"Fixed Charge Coverage" will be calculated as illustrated on Exhibit 4.10(C).
4.5 Total Interest Coverage.
(a) Borrower shall not permit Total Interest Coverage for any
of the periods set forth to be less than the amount set forth below for such
period.
Period Amount
------ ------
January 1, 1997 through April 30, 1997 6.2:1
January 1, 1997 through July 31, 1997 4.7:1
January 1, 1997 through October 31, 1997 4.2:1
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(b) Borrower shall not permit Total Interest Coverage for the
twelve (12) month period ending on the last day of any fiscal quarter ending on
the dates or during the periods set forth below to be less than the amount set
forth below for such date or period.
Date/
Period Amount
------ ------
January 31, 1998 3.4:1
April 30, 1998 3.8:1
July 31, 1998 4.0:1
October 31, 1998 4.2:1
January 31, 1999 4.4:1
April 30, 1999 4.9:1
On or after July 31, 1999 5.2:1
"Total Interest Coverage" will be calculated as illustrated on Exhibit 4.10(C).
4.6 Total Indebtedness to Operating Cash Flow Ratio.
(a) Borrower shall not permit the ratio of Total Indebtedness
calculated as of the last day of any of the periods set forth below to Operating
Cash Flow for such period to be greater than the amount set forth below for such
period.
Period Amount
------ ------
January 1, 1997 through April 30, 1997 5.7:1
January 1, 1997 through July 31, 1997 3.4:1
January 1, 1997 through October 31, 1997 3.0:1
(b) Borrower shall not permit the ratio of Total Indebtedness
calculated as of the last day of any fiscal quarter ending on the dates or
during the periods set forth below to Operating Cash Flow for the twelve (12)
month period ending on such day to be greater than the amount set forth below
for such date or period.
Date/
Period Amount
------ ------
January 31, 1998 4.0:1
April 30, 1998 3.8:1
July 31, 1998 2.7:1
October 31, 1998 2.3:1
January 31, 1999 3.0:1
April 30, 1999 3.0:1
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On or after July 31, 1999 2.0:1
"Total Indebtedness" and "Operating Cash Flow" will be calculated as illustrated
on Exhibit 4.10(C).
4.7 [Intentionally Deleted.]
4.8 [Intentionally Deleted.]
4.9 [Intentionally Deleted.]
4.10 Financial Statements and Other Reports. Borrower will maintain,
and cause each of its Subsidiaries and Holdings to maintain, a system of
accounting established and administered in accordance with sound business
practices to permit preparation of financial statements in conformity with GAAP
(it being understood that monthly financial statements are not required to have
footnote disclosures and are subject to changes resulting from normal year-end
adjustments). Borrower will deliver each of the financial statements and other
reports described below to Agent (and each Lender in the case of the financial
statements and other reports described in subsections (A), (B), (C), (G), (I)
and (K)).
(A) Monthly Financials. As soon as available and in any event
within thirty (30) days after the end of each month, Borrower will deliver (1)
the consolidated and consolidating balance sheets of Holdings, Borrower and
their Subsidiaries, as at the end of such month, and the related consolidated
and consolidating statements of income, stockholders' equity and cash flow for
such month and for the period from the beginning of the then current fiscal year
of Borrower to the end of such month and (2) a schedule of the outstanding
Indebtedness for borrowed money of Holdings, Borrower and their Subsidiaries
describing in reasonable detail each such debt issue or loan outstanding and the
principal amount and amount of accrued and unpaid interest with respect to each
such debt issue or loan.
(B) Year-End Financials. As soon as available and in
any event on or before the fifteenth (15th) day of the November following the
end of each fiscal year of Borrower, Borrower will deliver (1) the consolidated
and consolidating balance sheets of Holdings, Borrower and their Subsidiaries,
as at the end of such year, and the related consolidated and consolidating
statements of income, stockholders' equity and cash flow for such fiscal year,
(2) a schedule of the outstanding Indebtedness for borrowed money of Holdings,
Borrower and their Subsidiaries describing in reasonable detail each such debt
issue or loan outstanding and the principal amount and amount of accrued and
unpaid interest with respect to each such debt issue or loan and (3) a report
with respect to the financial statements from a firm of Certified Public
Accountants selected by Borrower and reasonably acceptable to Agent, which
report shall be prepared in accordance with Statement of Auditing Standards No.
58 (the "Statement") entitled "Reports on Audited Financial Statements" and such
report shall be "Unqualified" (as such term is defined in such Statement).
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(C) Borrower Compliance Certificate. Together with each
delivery of financial statements of Holdings, Borrower and their Subsidiaries
pursuant to subsections 4.10(A) and 4.10(B) above for periods ending on the last
day of any fiscal quarter or fiscal year, Borrower will deliver a fully and
properly completed Compliance Certificate (in substantially the same form as
Exhibit 4.10(C)) signed by Borrower's chief executive officer or chief financial
officer.
(D) Accountants' Reliance Letter. Together with each delivery
of consolidated financial statements of Borrower pursuant to subsection 4.10(B),
Borrower will deliver a copy of a letter addressed to Borrower's certified
public accountants informing such accountants that a primary intent of Borrower
was for the professional services such accountants provided to Borrower in
preparing their audit report was to benefit or influence Lenders and their
successors or assigns, and identifying Lenders as parties that Borrower has
indicated intend to rely on such professional services provided to Borrower by
such accountants.
(E) Accountants' Reports. Promptly upon receipt thereof,
Borrower will deliver copies of all significant reports submitted by Borrower's
firm of certified public accountants in connection with each annual, interim or
special audit or review of any type of the financial statements or related
internal control systems of Borrower made by such accountants, including any
comment letter submitted by such accountants to management in connection with
their services.
(F) Borrowing Base Certificate. As soon as available and in
any event within thirty (30) days after the end of each month, and from time to
time upon the request of Agent, Borrower will deliver a Borrowing Base
Certificate (in substantially the same form as Exhibit 4.10(F)) as at the last
day of such period.
(G) Management Report. Together with each delivery of
financial statements of Borrower pursuant to subsections 4.10(A) and 4.10(B),
Borrower will deliver a management report (1) describing the operations and
financial condition of Holdings, Borrower and their Subsidiaries for the month
then ended and the portion of the current fiscal year then elapsed (or for the
fiscal year then ended in the case of year-end financials), (2) setting forth in
comparative form the corresponding figures for the corresponding periods of the
previous fiscal year and the corresponding figures from the most recent
Projections for the current fiscal year delivered pursuant to subsection 4.10(J)
and (3) discussing the reasons for any significant variations. The information
above shall be presented in reasonable detail and shall be certified by the
chief financial officer of Borrower to the effect that such information fairly
presents the results of operations and financial condition of Holdings, Borrower
and their Subsidiaries as at the dates and for the periods indicated, subject to
normal year-end adjustments.
(H) Collateral Value Report. Upon the request of Agent, which
may be made not more than once each year prior to an Event of Default and at any
time (but not more often than quarterly) while and so long as an Event of
Default shall be continuing, Borrower will obtain and deliver to Agent a report
of an independent collateral auditor satisfactory to Agent
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(which may be, or be affiliated with, a Lender) with respect to the accounts and
inventory components included in the Borrowing Base, which report shall indicate
whether or not the information set forth in the Borrowing Base Certificate most
recently delivered is accurate and complete in all material respects based upon
a review by such auditors of the accounts (including verification with respect
to the amount, aging, identity and credit of the respective account debtors and
the billing practices of Borrower) and inventory (including verification as to
the value, location and respective types).
(I) Appraisals. From time to time, if Agent or any Lender
determines that obtaining appraisals is necessary in order for Agent or such
Lender to comply with applicable laws or regulations, Agent will, at Borrower's
expense, obtain appraisal reports in form and substance and from appraisers
satisfactory to Agent stating the then current fair market values of all or any
portion of the real estate owned by Borrower or any of its Subsidiaries. In
addition to the foregoing, from time to time, but in the absence of a Default or
Event of Default not more than once during each calendar year, Agent may require
Borrower to obtain and deliver to Agent appraisal reports in form and substance
and from appraisers satisfactory to Agent stating the then current market values
of all or any portion of the real estate and personal property owned by Borrower
or any of its Subsidiaries.
(J) Projections. As soon as available and in any event no
later than September 30th of each of Borrower's fiscal years, Borrower will
deliver Projections of Borrower and its Subsidiaries for the then current fiscal
year and the forthcoming two (2) fiscal years, year by year, and for the then
current fiscal year, month by month.
(K) SEC Filings and Press Releases. Promptly upon their
becoming available, Borrower will deliver copies of (1) all financial
statements, reports, notices and proxy statements sent or made available by
Holdings, Borrower or any of their respective Subsidiaries to their security
holders, (2) all regular and periodic reports and all registration statements
and prospectuses, if any, filed by Holdings, Borrower or any of their respective
Subsidiaries with any securities exchange or with the Securities and Exchange
Commission or any governmental or private regulatory authority, and (3) all
press releases and other statements made available by Holdings, Borrower or any
of their respective Subsidiaries to the public concerning developments in the
business of any such Person.
(L) Events of Default, Etc. Promptly upon any officer of
Borrower obtaining knowledge of any of the following events or conditions,
Borrower shall deliver copies of all notices given or received by Borrower or
Holdings with respect to any such event or condition and a certificate of
Borrower's chief executive officer specifying the nature and period of existence
of such event or condition and what action Borrower has taken, is taking and
proposes to take with respect thereto: (1) any condition or event that
constitutes an Event of Default or Default; (2) any notice that any Person has
given to Borrower or any of its Subsidiaries or any other action taken with
respect to a claimed default or event or condition of the type referred to in
subsection 6.1(B); or (3) any event or condition that could reasonably be
expected to result in any Material Adverse Effect.
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(M) Litigation. Promptly upon any officer of Borrower
obtaining knowledge of (1) the institution of any action, suit, proceeding,
governmental investigation or arbitration against or affecting any Loan Party or
any property of any Loan Party not previously disclosed by Borrower to Agent or
(2) any material development in any action, suit, proceeding, governmental
investigation or arbitration at any time pending against or affecting any Loan
Party or any property of any Loan Party which, in each case, could reasonably be
expected to have a Material Adverse Effect, Borrower will promptly give notice
thereof to Agent and provide such other information as may be reasonably
available to them to enable Agent and its counsel to evaluate such matter.
(N) Supplemented Schedules; Notice of Corporate Changes.
Annually, concurrently with Borrower's delivery of the Projections required by
subsection 4.10(J), Borrower shall supplement in writing and deliver revisions
of the Schedules annexed to this Agreement to the extent necessary to disclose
new or changed facts or circumstances after the Closing Date; provided that
subsequent disclosures shall not constitute a cure or waiver of any Default or
Event of Default resulting from the matters disclosed. Borrower shall provide
prompt written notice of (1) all jurisdictions in which a Loan Party becomes
qualified after the Closing Date to transact business, (2) any material change
after the Closing Date in the authorized and issued capital stock or other
equity interests of any Loan Party or any of their respective Subsidiaries or
any other material amendment to their charter, by-laws or other organization
documents and (3) any Subsidiary created or acquired by any Loan Party after the
Closing Date, such notice, in each case, to identify the applicable
jurisdictions, capital structures or Subsidiaries, as applicable.
(O) Other Information. With reasonable promptness, Borrower
will deliver such other information and data with respect to any Loan Party or
any Subsidiary of any Loan Party as from time to time may be reasonably
requested by Agent.
4.11 Accounting Terms; Utilization of GAAP for Purposes of Calculations
Under Agreement. For purposes of this Agreement, all accounting terms not
otherwise defined herein shall have the meanings assigned to such terms in
conformity with GAAP. Financial statements and other information furnished to
Agent pursuant to subsection 4.10 shall be prepared in accordance with GAAP as
in effect at the time of such preparation. No "Accounting Changes" (as defined
below) shall affect financial covenants, standards or terms in this Agreement;
provided that Borrower shall prepare footnotes to each Compliance Certificate
and the financial statements required to be delivered hereunder that show the
differences between the financial statements delivered (which reflect such
Accounting Changes) and the basis for calculating financial covenant compliance
(without reflecting such Accounting Changes). "Accounting Changes" means: (a)
changes in accounting principles required by GAAP and implemented by Borrower;
(b) changes in accounting principles recommended by Borrower's certified public
accountants and implemented by Borrower; and (c) changes in carrying value of
Borrower's or any of its Subsidiaries' assets, liabilities or equity accounts
resulting from (i) the application of purchase accounting principles (A.P.B. 16
and/or 17 and EITF 88-16 and FASB 109) or (ii) as
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the result of any other adjustments that, in each case, were applicable to, but
not included in, the Pro Forma. All such adjustments resulting from expenditures
made subsequent to the Closing Date (including, but not limited to,
capitalization of costs and expenses or payment of pre-Closing Date liabilities)
shall be treated as expenses in the period the expenditures are made.
SECTION 5
REPRESENTATIONS AND WARRANTIES
In order to induce Agent and Lenders to enter into this Agreement, to
make Loans and to issue Lender Letters of Credit and Risk Participation
Agreements, Borrower represents and warrants to Agent and each Lender that the
following statements are and, after giving effect to the Related Transactions,
will be true, correct and complete:
5.1 Disclosure. No representation or warranty of any Loan Party
contained in this Agreement, the financial statements referred to in subsection
5.5, the other Related Transactions Documents or any other document, certificate
or written statement furnished to Agent or any Lender by or on behalf of any
such Person for use in connection with the Loan Documents or the Related
Transactions Documents contains any untrue statement of a material fact or
omitted, omits or will omit to state a material fact necessary in order to make
the statements contained herein or therein not misleading in light of the
circumstances in which the same were made.
5.2 No Material Adverse Effect. Since August 2, 1996, there have been
no events or changes in facts or circumstances affecting any Loan Party which
individually or in the aggregate have had or could reasonably be expected to
have a Material Adverse Effect and that have not been disclosed herein or in the
attached Schedules.
5.3 No Default. The consummation of the Related Transactions does not
and will not violate, conflict with, result in a breach of, or constitute a
default (with due notice or lapse of time or both) under any contract of any
Loan Party except if such violations, conflicts, breaches or defaults have
either been waived on or before the Closing Date and are disclosed on Schedule
5.3 or could not reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect.
5.4 Organization, Powers, Capitalization and Good Standing.
(A) Organization and Powers. Each of the Loan Parties is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation (which jurisdiction is set forth on
Schedule 5.4(A)). Each of the Loan Parties has all requisite corporate power and
authority to own and operate its properties, to carry on its business as now
conducted and proposed to be conducted, to enter into each Related Transactions
Document to which it is a party and to carry out the Related Transactions.
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(B) Capitalization. The authorized capital stock of each of
the Loan Parties is as set forth on Schedule 5.4(B). All issued and outstanding
shares of capital stock of each of the Loan Parties are duly authorized and
validly issued, fully paid, nonassessable, free and clear of all Liens other
than those in favor of Agent, for the benefit of Agent and Lenders, and such
shares were issued in compliance with all applicable state and federal laws
concerning the issuance of securities. The capital stock of each of the Loan
Parties is owned by the stockholders and in the amounts set forth on Schedule
5.4(B). No shares of the capital stock of any Loan Party, other than those
described above, are issued and outstanding. There are no preemptive or other
outstanding rights, options, warrants, conversion rights or similar agreements
or understandings for the purchase or acquisition from any Loan Party, of any
shares of capital stock or other securities of any such entity, except as
disclosed in Schedule 5.4(B).
(C) Binding Obligation. This Agreement is, and the other
Related Transactions Documents when executed and delivered will be, the legally
valid and binding obligations of the applicable parties thereto, each
enforceable against each of such parties, as applicable, in accordance with
their respective terms.
(D) Qualification. Each of the Loan Parties is duly qualified
and in good standing wherever necessary to carry on its business and operations,
except in jurisdictions in which the failure to be qualified and in good
standing could not reasonably be expected to have a Material Adverse Effect. All
jurisdictions in which each Loan Party is qualified to do business are set forth
on Schedule 5.4(D).
5.5 Financial Statements. All financial statements concerning Holdings,
Borrower and their respective Subsidiaries which have been or will hereafter be
furnished to Agent pursuant to this Agreement, including those listed below,
have been or will be prepared in accordance with GAAP consistently applied
(except as disclosed therein) and do or will present fairly the financial
condition of the corporations covered thereby as at the dates thereof and the
results of their operations for the periods then ended, subject to normal
year-end adjustments.
(A) The consolidated balance sheets at August 2, 1996 and the
related statement of income of Borrower and its Subsidiaries, for the fiscal
year then ended, certified by Ernst & Young LLP.
(B) The consolidated balance sheet at December 6, 1996 and the
related statement of income of Borrower and its Subsidiaries for the four (4)
months then ended.
5.6 Intellectual Property. Borrower and each of its Subsidiaries owns,
is licensed to use or otherwise has the right to use, all patents, trademarks,
trade names, copyrights, technology, know-how and processes used in or necessary
for the conduct of its business as currently conducted that are material to the
condition (financial or other), business or operations of Borrower or its
Subsidiaries (collectively called "Intellectual Property") and all such
Intellectual Property is identified on Schedule 5.6 and fully protected and/or
duly and properly registered, filed or issued in the appropriate office and
jurisdictions for such registrations, filings
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or issuances. Except as disclosed in Schedule 5.6, the use of such Intellectual
Property by Borrower and its Subsidiaries does not and has not been alleged by
any Person to infringe on the rights of any Person.
5.7 Investigations, Audits, Etc. Except as set forth on Schedule 5.7,
none of Holdings, Borrower or any of their respective Subsidiaries, is the
subject of any review or audit by the Internal Revenue Service or any
governmental investigation concerning the violation or possible violation of any
law.
5.8 Employee Matters. Except as set forth on Schedule 5.8, (a) no Loan
Party nor any of their respective employees is subject to any collective
bargaining agreement, (b) no petition for certification or union election is
pending with respect to the employees of any Loan Party and no union or
collective bargaining unit has sought such certification or recognition with
respect to the employees of any Loan Party and (c) there are no strikes,
slowdowns, work stoppages or controversies pending or, to the best knowledge of
Borrower after due inquiry, threatened between any Loan Party and its respective
employees, other than employee grievances arising in the ordinary course of
business which could not reasonably be expected to have, either individually or
in the aggregate, a Material Adverse Effect. Except as set forth on Schedule
5.8, neither Borrower nor any of its Subsidiaries is party to an employment
contract.
5.9 Solvency. Borrower: (a) owns and will own assets the fair saleable
value of which are (i) greater than the total amount of liabilities (including
contingent liabilities) of Borrower and (ii) greater than the amount that will
be required to pay the probable liabilities of Borrower's then existing debts as
they become absolute and matured considering all financing alternatives and
potential asset sales reasonably available to Borrower; (b) has capital that is
not unreasonably small in relation to its business as presently conducted or
after giving effect to any contemplated trans action; and (c) does not intend to
incur and does not believe that it will incur debts beyond its ability to pay
such debts as they become due.
SECTION 6
DEFAULT, RIGHTS AND REMEDIES
6.1 Event of Default. "Event of Default" shall mean the occurrence or
existence of any one or more of the following:
(A) Payment. Failure to pay any installment of principal of
any Loan when due, or to repay Revolving Loans to reduce their balance to the
Maximum Revolving Loan Balance or to reimburse Agent for any payment made by
Agent under or in respect of any Lender Letters of Credit or Risk Participation
Agreements when due or failure to pay, within five (5) days after the due date,
any interest on any Loan or any other amount due under this Agreement or any of
the other Loan Documents; or
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(B) Default in Other Agreements. (1) Failure of Holdings,
Borrower or any of its Subsidiaries to pay when due or within any applicable
grace period any principal or interest on Indebtedness (other than the Loans) or
any Contingent Obligations or (2) breach or default of Holdings, Borrower or any
of its Subsidiaries with respect to any Indebtedness (other than the Loans) or
any Contingent Obligations, if the effect of such breach or default is to cause
or to permit the holder or holders then to cause, Indebtedness and/or Contingent
Obligations having an individual principal amount in excess of $250,000 or
having an aggregate principal amount in excess of $500,000 to become or be
declared due prior to their stated maturity; or
(C) Breach of Certain Provisions. Failure of Borrower to
perform or comply with any term or condition contained in that portion of
subsection 2.2 relating to Borrower's obligation to maintain insurance,
subsection 2.3, Section 3 or Section 4; or
(D) Breach of Warranty. Any representation, warranty,
certification or other statement made by any Loan Party in any Loan Document or
in any statement or certificate at any time given by such Person in writing
pursuant or in connection with any Loan Document is false in any material
respect on the date made; or
(E) Other Defaults Under Loan Documents. Borrower or any other
Loan Party defaults in the performance of or compliance with any term contained
in this Agreement or the other Loan Documents and such default is not remedied
or waived within fifteen (15) days after receipt by Borrower of notice from
Agent or Requisite Lenders of such default (other than occurrences described in
other provisions of this subsection 6.1 for which a different grace or cure
period is specified or which constitute immediate Events of Default); or
(F) Involuntary Bankruptcy; Appointment of Receiver, Etc. (1)
A court enters a decree or order for relief with respect to Holdings, Borrower
or any of its Subsidiaries in an involuntary case under the Bankruptcy Code,
which decree or order is not stayed or other similar relief is not granted under
any applicable federal or state law; or (2) the continuance of any of the
following events for sixty (60) days unless dismissed, bonded or discharged: (a)
an involuntary case is commenced against Holdings, Borrower or any of its
Subsidiaries, under any applicable bankruptcy, insolvency or other similar law
now or hereafter in effect; or (b) a decree or order of a court for the
appointment of a receiver, liquidator, sequestrator, trustee, custodian or other
officer having similar powers over Holdings, Borrower or any of its
Subsidiaries, or over all or a substantial part of its property, is entered; or
(c) an interim receiver, trustee or other custodian is appointed without the
consent of Holdings, Borrower or any of its Subsidiaries, for all or a
substantial part of the property of Holdings, Borrower or any such Subsidiary;
or
(G) Voluntary Bankruptcy; Appointment of Receiver, Etc. (1) An
order for relief is entered with respect to Holdings, Borrower or any of its
Subsidiaries or Holdings, Borrower or any of its Subsidiaries commences a
voluntary case under the Bankruptcy Code, or consents to the entry of an order
for relief in an involuntary case or to the conversion of an involuntary case to
a voluntary case under any such law or consents to the appointment of or taking
possession by a receiver, trustee or other custodian for all or a substantial
part of its
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property; or (2) Holdings, Borrower or any of its Subsidiaries makes any
assignment for the benefit of creditors; or (3) the Board of Directors of
Holdings, Borrower or any of its Subsidiaries adopts any resolution or otherwise
authorizes action to approve any of the actions referred to in this subsection
6.1(G); or
(H) Governmental Liens. Any lien, levy or assessment is filed
or recorded with respect to or otherwise imposed upon all or any part of the
Collateral or the assets of Holdings, Borrower or any of its Subsidiaries by the
United States or any department or instrumentality thereof or by any state,
county, municipality or other governmental agency (other than Permitted
Encumbrances); or
(I) Judgment and Attachments. Any money judgment, writ or
warrant of attachment, or similar process (other than those described in
subsection 6.1(H)) involving (1) an amount in any individual case in excess of
$50,000 or (2) an amount in the aggregate at any time in excess of $100,000 (in
either case not adequately covered by insurance as to which the insurance
company has acknowledged coverage) is entered or filed against Holdings,
Borrower or any of its Subsidiaries or any of their respective assets and
remains undischarged, unvacated, unbonded or unstayed for a period of thirty
(30) days or in any event later than five (5) Business Days prior to the date of
any proposed sale thereunder; or
(J) Dissolution. Any order, judgment or decree is entered
against Holdings, Borrower or any of its Subsidiaries decreeing the dissolution
or split up of Holdings, Borrower or that Subsidiary and such order remains
undischarged or unstayed for a period in excess of fifteen (15) days; or
(K) Solvency. Borrower ceases to be solvent (as represented by
Borrower in subsection 5.9) or admits in writing its present or prospective
inability to pay its debts as they become due; or
(L) Injunction. Holdings, Borrower or any of its Subsidiaries
is enjoined, restrained or in any way prevented by the order of any court or any
administrative or regulatory agency from conducting all or any material part of
its business and such order continues for more than fifteen (15) days; or
(M) ERISA; Pension Plans. (1) Borrower or any of its
Affiliates fails to make full payment when due of all amounts which, under the
provisions of any employee benefit plans or any applicable provisions of the
IRC, any such Person is required to pay as contributions thereto and such
failure results in or is likely to result in a Material Adverse Effect; or (2)
an accumulated funding deficiency in excess of $25,000 occurs or exists in
relation to the minimum funding requirements of the IRC, whether or not waived,
with respect to any such employee benefit plans; or (3) any employee benefit
plan loses its status as a qualified plan under the IRC which results in or
could reasonably be expected to result in a Material Adverse Effect; or
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(N) Environmental Matters. Holdings, Borrower or any of their
respective Subsidiaries fails to: obtain or maintain any operating licenses or
permits required by environmental authorities; begin, continue or complete any
remediation activities as required by any environmental authorities; store or
dispose of any hazardous materials in accordance with applicable environmental
laws and regulations; or comply with any other environmental laws; if such
failure could reasonably be expected to have a Material Adverse Effect; or
(O) Invalidity of Loan Documents. Any of the Loan Documents
for any reason, other than a partial or full release in accordance with the
terms thereof, ceases to be in full force and effect or is declared to be null
and void, or any Loan Party denies that it has any further liability under any
Loan Documents to which it is party, or gives notice to such effect; or
(P) Damage; Strike; Casualty. Any material damage to, or loss,
theft or destruction of, any Collateral, whether or not insured, or any strike,
lockout, labor dispute, embargo, condemnation, act of God or public enemy, or
other casualty which causes, for more than fifteen (15) consecutive days, the
cessation or substantial curtailment of revenue producing activities at any
facility of Borrower or any of its Subsidiaries if any such event or
circumstance could reasonably be expected to have a Material Adverse Effect; or
(Q) Licenses and Permits. The loss, suspension or revocation
of, or failure to renew, any license or permit now held or hereafter acquired by
Borrower or any of its Subsidiaries, if such loss, suspension, revocation or
failure to renew could reasonably be expected to have a Material Adverse Effect;
or
(R) Failure of Security. Agent, for the benefit of Agent and
Lenders, does not have or ceases to have a valid and perfected first priority
security interest in the Collateral (subject to Permitted Encumbrances) or any
substantial portion thereof, in each case, for any reason other than the failure
of Agent to take any action within its control; or
(S) Business Activities. Holdings engages in any type of
business activity other than the ownership of stock of Borrower and
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Company, a California corporation, and performance of its
obligations under the Related Transaction Documents to which it is a party; or
(T) Change in Control or Ownership. (1) Oaktree Capital
Management, LLC ("Oaktree") and Messrs. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇, D.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ together cease to exercise the exclusive
management and control of at least fifty-one percent (51%) of the issued and
outstanding shares of each class of capital stock of Holdings entitled (without
regard to the occurrence of any contingency) to vote for the election of a
majority of the members of the boards of directors of Holdings, (2) TCW Asset
Management Company ("TCW") or any Person directly or indirectly controlling,
controlled by, or under common control with, TCW shall be entitled, directly or
indirectly, to receive more than twenty percent (20%) of the distributions that
could be made on the issued and outstanding shares of
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capital stock of Holdings, or (3) Holdings ceases to beneficially own, directly,
one hundred percent (100%) of the issued and outstanding shares of capital stock
of Borrower.
6.2 Suspension of Commitments. Upon the occurrence of any Default or
Event of Default, Agent and each Lender without notice or demand, may
immediately cease making additional Loans and issuing Lender Letters of Credit
and Risk Participation Agreements and cause its obligation to lend its Pro Rata
Share of the Revolving Loan Commitment and the Acquisition Loan Commitment to be
suspended; provided that, in the case of a Default, if the subject condition or
event is waived, cured or removed by Requisite Lenders within any applicable
grace or cure period, any suspended portion of the Revolving Loan Commitment and
the Acquisition Loan Commitment shall be reinstated. Each Lender may
alternatively suspend only a portion of its obligation to lend its Pro Rata
Share of the Revolving Loan Commitment and the Acquisition Loan Commitment.
6.3 Acceleration. Upon the occurrence of any Event of Default described
in the foregoing subsections 6.1(F) or 6.1(G), the unpaid principal amount of
and accrued interest and fees on the Term Loan, the Revolving Loans and the
Acquisition Loans, payments under the Lender Letters of Credit and Risk
Participation Agreements and all other Obligations shall automatically become
immediately due and payable, without presentment, demand, protest, notice of
intent to accelerate, notice of acceleration or other requirements of any kind,
all of which are hereby expressly waived by Borrower, and the obligations of
Agent and Lenders to make Revolving Loans and Acquisition Loans and issue Lender
Letters of Credit and Risk Participation Agreements shall thereupon terminate.
Upon the occurrence and during the continuance of any other Event of Default,
Agent may, and upon written demand by Requisite Lenders shall, by written notice
to Borrower (a) declare all or any portion of the Loans and all or some of the
other Obligations to be, and the same shall forthwith become, immediately due
and payable together with accrued interest thereon, and the obligations of Agent
and Lenders to make Revolving Loans and Acquisition Loans and issue Lender
Letters of Credit and Risk Participation Agreements shall thereupon terminate
and (b) demand that Borrower immediately deposit with Agent an amount equal to
the aggregate outstanding Risk Participation Liability to enable Agent to make
payments under the Lender Letters of Credit and Risk Participation Agreements
when required and such amount shall become immediately due and payable.
6.4 Performance by Agent. If Borrower shall fail to perform any
covenant, duty or agreement contained in any of the Loan Documents, Agent may
perform or attempt to perform such covenant, duty or agreement on behalf of
Borrower after the expiration of any cure or grace periods set forth herein. In
such event, Borrower shall, at the request of Agent, promptly pay any amount
reasonably expended by Agent in such performance or attempted performance to
Agent, together with interest thereon at the highest rate of interest in effect
upon the occurrence of an Event of Default as specified in subsection 1.2(E)
from the date of such expenditure until paid. Notwithstanding the foregoing, it
is expressly agreed that Agent shall not have any liability or responsibility
for the performance of any obligation of Borrower under this Agreement or any
other Loan Document.
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SECTION 7
CONDITIONS TO LOANS
The obligations of Lenders to make Loans and of Agent to issue Lender
Letters of Credit and Risk Participation Agreements are subject to satisfaction
of all of the applicable conditions set forth below.
7.1 Conditions to Initial Loans. The obligations of Lenders to make the
initial Loans and of Agent to issue any Lender Letters of Credit and Risk
Participation Agreements on the Closing Date are, in addition to the conditions
precedent specified in subsection 7.2, subject to the delivery of all documents
listed on Schedule 7.1, all in form and substance satisfactory to Agent, and the
satisfaction of all other conditions precedent contained in Schedule 7.1.
7.2 Conditions to All Loans. The obligations of Lenders to make Loans
and of Agent to issue Lender Letters of Credit and Risk Participation Agreements
on any date ("Funding Date") are subject to the further conditions precedent set
forth below.
(A) Agent shall have received, in accordance with the
provisions of subsection 1.1, a notice requesting an advance of a Revolving Loan
or issuance of a Lender Letter of Credit or Risk Participation Agreement.
(B) The representations and warranties contained in Section 5
of this Agreement and elsewhere herein and in the Loan Documents shall be (and
each request by Borrower for a Loan or a Lender Letter of Credit and Risk
Participation Agreement shall constitute a representation and warranty by
Borrower that such representations and warranties are) true, correct and
complete in all material respects on and as of that Funding Date to the same
extent as though made on and as of that date, except for any representation or
warranty limited by its terms to a specific date and taking into account any
amendments to the Schedules or Exhibits as a result of any disclosures made in
writing by Borrower to Agent after the Closing Date and approved by Agent in
writing.
(C) No event shall have occurred and be continuing or would
result from the consummation of the borrowing contemplated (or notice requesting
issuance of a Lender Letters of Credit and Risk Participation Agreement) that
would constitute an Event of Default or a Default.
(D) No order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain any Lender from
making any Loan or Agent from issuing any Lender Letter of Credit or Risk
Participation Agreement.
SECTION 8
ASSIGNMENT AND PARTICIPATION
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8.1 Assignments and Participations in Loans and Notes. Each Lender
(including ▇▇▇▇▇▇) may assign, subject to the terms of a Lender Addition
Agreement, its rights and delegate its obligations under this Agreement to
another Person, provided that (a) such Lender (excluding ▇▇▇▇▇▇) shall first
obtain the written consent of Agent and Borrower, which consent shall not be
unreasonably withheld; (b) the Pro Rata Share of the Revolving Loan Commitment,
the Acquisition Loan Commitment and Term Loan being assigned shall in no event
be less than the lesser of (i) $5,000,000 and (ii) the entire amount of the Pro
Rata Share of the Revolving Loan Commitment, the Acquisition Loan Commitment and
Term Loan of the assigning Lender; and (c) upon the consummation of each such
assignment the Lender accepting the assignment shall pay Agent an administrative
fee of $3,000. The administrative fee referred to in clause (c) of the preceding
sentence shall not apply to an assignment from a Lender to an affiliate of such
Lender. In the case of an assignment authorized under this subsection 8.1, the
assignee shall have, to the extent of such assignment, the same rights, benefits
and obligations as it would if it were an initial Lender hereunder. The
assigning Lender shall be relieved of its obligations hereunder with respect to
its Pro Rata Share of the Revolving Loan Commitment and the Acquisition Loan
Commitment or assigned portion thereof. Borrower hereby acknowledges and agrees
that any assignment will give rise to a direct obligation of Borrower to the
assignee and that the assignee shall be considered to be a "Lender".
Each Lender (including ▇▇▇▇▇▇) may sell participations in all
or any part of its Pro Rata Share of the Revolving Loan Commitment, the
Acquisition Loan Commitment and the Term Loan to another Person, provided that
(a) such Lender (excluding ▇▇▇▇▇▇) shall first obtain the prior written consent
of Agent, which consent shall not be unreasonably withheld; and (b) any such
participation shall be in a minimum amount of $5,000,000, and provided, further,
that all amounts payable by Borrower hereunder shall be determined as if that
Lender had not sold such participation and the holder of any such participation
shall not be entitled to require such Lender to take or omit to take any action
hereunder except action directly effecting (i) any reduction in the principal
amount, interest rate or fees payable with respect to any Loan in which such
holder participates; (ii) any extension of the Expiry Date, any extension of the
date on which any Scheduled Term Loan Installment or Scheduled Acquisition Loan
Installment is to be paid or any change of any date fixed for any payment of
interest or fees payable with respect to any Loan in which such holder
participates; (iii) any change of the aggregate unpaid principal amount of the
Loans; (iv) any change of the percentage of Lenders which shall be required for
Lenders or any of them to take any action hereunder; (v) any release of
Collateral (except if the sale or disposition of such Collateral is permitted
under subsection 8.2 or any other Loan Document); (vi) any amendment or waiver
of this subsection 8.1 or the definitions of the terms used in this subsection
8.1 insofar as the definitions affect the substance of this subsection 8.1;
(vii) any consent to the assignment, delegation or other transfer by any Loan
Party of any of its rights and obligations under any Loan Document; (viii) any
change in the form in which interest is required to be paid; and (ix) any change
of any advance rate set forth in the Borrowing Base Certificate. Borrower hereby
acknowledges and agrees that any participation will give rise to a direct
obligation of Borrower to the participant, and the participant shall for
purposes of subsections 1.8, 1.9, 8.4 and 9.1 be considered to be a "Lender".
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Except as otherwise provided in this subsection 8.1 no Lender
shall, as between Borrower and that Lender, be relieved of any of its
obligations hereunder as a result of any sale, assignment, transfer or
negotiation of, or granting of a participation in, all or any part of the Loans,
the Notes or other Obligations owed to such Lender. Each Lender may furnish any
information concerning Borrower and its Subsidiaries in the possession of that
Lender from time to time to assignees and participants (including prospective
assignees and participants), subject to the provisions of subsection 9.13.
Borrower agrees that it will assist and cooperate with Agent
and any Lender in any manner reasonably requested by Agent or such Lender to
effect the sale of a participation or an assignment described above, including
without limitation assistance in the preparation of appropriate disclosure
documents or placement memoranda.
Agent shall provide Borrower with written notice of the name
and address of any new Lender after the date hereof.
Notwithstanding anything contained in this Agreement to the
contrary, so long as the Requisite Lenders shall remain capable of making LIBOR
Loans, no Person shall become a "Lender" hereunder unless such Person shall also
be capable of making LIBOR Loans.
8.2 Agent.
(A) Appointment. Each Lender hereby designates and appoints
▇▇▇▇▇▇ as its Agent under this Agreement and the other Loan Documents, and each
Lender hereby irrevocably authorizes Agent to take such action or to refrain
from taking such action on its behalf under the provisions of this Agreement and
the other Loan Documents and to exercise such powers as are set forth herein or
therein, together with such other powers as are reasonably incidental thereto.
Agent is authorized and empowered to amend, modify, or waive any provisions of
this Agreement or the other Loan Documents on behalf of Lenders subject to the
requirement that certain of Lenders' consent be obtained in certain instances as
provided in subsections 8.3 and 9.2. Agent agrees to act as such on the express
conditions contained in this subsection 8.2. The provisions of this subsection
8.2 are solely for the benefit of Agent and Lenders and neither Borrower nor any
Loan Party shall have any rights as a third party beneficiary of any of the
provisions hereof. In performing its functions and duties under this Agreement,
Agent shall act solely as agent of Lenders and does not assume and shall not be
deemed to have assumed any obligation toward or relationship of agency or trust
with or for Borrower or any other Loan Party. Agent may perform any of its
duties hereunder, or under the Loan Documents, by or through its agents or
employees.
(B) Nature of Duties. The duties of Agent shall be mechanical
and administrative in nature. Agent shall not have by reason of this Agreement a
fiduciary relationship in respect of any Lender. Nothing in this Agreement or
any of the Loan Documents, express or implied, is intended to or shall be
construed to impose upon Agent any
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obligations in respect of this Agreement or any of the Loan Documents except as
expressly set forth herein or therein. Each Lender shall make its own
independent investigation of the financial condition and affairs of Borrower in
connection with the extension of credit hereunder and shall make its own
appraisal of the creditworthiness of Borrower, and Agent shall have no duty or
responsibility, either initially or on a continuing basis, to provide any Lender
with any credit or other information with respect thereto (other than as
expressly required herein). If Agent seeks the consent or approval of any
Lenders to the taking or refraining from taking any action hereunder, then Agent
shall send notice thereof to each Lender. Agent shall promptly notify each
Lender any time that the Requisite Lenders have instructed Agent to act or
refrain from acting pursuant hereto.
(C) Rights, Exculpation, Etc. Neither Agent nor any of its
officers, directors, employees or agents shall be liable to any Lender for any
action taken or omitted by them hereunder or under any of the Loan Documents, or
in connection herewith or therewith, except that Agent shall be liable with
respect to its own gross negligence or willful misconduct. Agent shall not be
liable for any apportionment or distribution of payments made by it in good
faith and if any such apportionment or distribution is subsequently determined
to have been made in error the sole recourse of any Lender to whom payment was
due but not made, shall be to recover from other Lenders any payment in excess
of the amount to which they are determined to be entitled (and such other
Lenders hereby agree to return to such Lender any such erroneous payments
received by them). In performing its functions and duties hereunder, Agent shall
exercise the same care which it would in dealing with loans for its own account,
but Agent shall not be responsible to any Lender for any recitals, statements,
representations or warranties herein or for the execution, effectiveness,
genuineness, validity, enforceability, collectibility, or sufficiency of this
Agreement or any of the Loan Documents or the transactions contemplated thereby,
or for the financial condition of any Loan Party. Agent shall not be required to
make any inquiry concerning either the performance or observance of any of the
terms, provisions or conditions of this Agreement or any of the Loan Documents
or the financial condition of any Loan Party, or the existence or possible
existence of any Default or Event of Default. Agent may at any time request
instructions from Lenders with respect to any actions or approvals which by the
terms of this Agreement or of any of the Loan Documents Agent is permitted or
required to take or to grant, and if such instructions are promptly requested,
Agent shall be absolutely entitled to refrain from taking any action or to
withhold any approval and shall not be under any liability whatsoever to any
Person for refraining from any action or withholding any approval under any of
the Loan Documents until it shall have received such instructions from Requisite
Lenders or all of the Lenders, as applicable. Without limiting the foregoing, no
Lender shall have any right of action whatsoever against Agent as a result of
Agent acting or refraining from acting under this Agreement, the Notes, or any
of the other Loan Documents in accordance with the instructions of Requisite
Lenders.
(D) Reliance. Agent shall be entitled to rely, and shall be
fully protected in relying, upon any written or oral notices, statements,
certificates, orders or other documents or any telephone message or other
communication (including any writing, telex, telecopy or telegram) believed by
it in good faith to be genuine and correct and to have been signed, sent or
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made by the proper Person, and with respect to all matters pertaining to this
Agreement or any of the Loan Documents and its duties hereunder or thereunder,
upon advice of counsel selected by it. Agent shall be entitled to rely upon the
advice of legal counsel, independent accountants, and other experts selected by
Agent in its sole discretion.
(E) Indemnification. Lenders will reimburse and indemnify
Agent for and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses (including, without
limitation, attorneys' fees and expenses), advances or disbursements of any kind
or nature whatsoever which may be imposed on, incurred by, or asserted against
Agent in any way relating to or arising out of this Agreement or any of the Loan
Documents or any action taken or omitted by Agent under this Agreement or any of
the Loan Documents, in proportion to each Lender's Pro Rata Share; provided,
however, that no Lender shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses, advances or disbursements resulting from Agent's gross negligence or
willful misconduct. If any indemnity furnished to Agent for any purpose shall,
in the opinion of Agent, be insufficient or become impaired, Agent may call for
additional indemnity and cease, or not commence, to do the acts indemnified
against until such additional indemnity is furnished. The obligations of Lenders
under this subsection 8.2(E) shall survive the payment in full of the
Obligations and the termination of this Agreement.
(F) ▇▇▇▇▇▇ Individually. With respect to its obligations under
the Revolving Loan Commitment and the Acquisition Loan Commitment, the Loans
made by it, and the Notes issued to it, ▇▇▇▇▇▇ shall have and may exercise the
same rights and powers hereunder and is subject to the same obligations and
liabilities as and to the extent set forth herein for any other Lender. The
terms "Lenders" or "Requisite Lenders" or any similar terms shall, unless the
context clearly otherwise indicates, include ▇▇▇▇▇▇ in its individual capacity
as a Lender or one of the Requisite Lenders. ▇▇▇▇▇▇ may lend money to, and
generally engage in any kind of banking, trust or other business with any Loan
Party as if it were not acting as Agent pursuant hereto.
(G) Successor Agent.
(1) Resignation. Agent may resign from the
performance of all its agency functions and duties hereunder at any time by
giving at least thirty (30) Business Days' prior written notice to Borrower and
the Lenders. Such resignation shall take effect upon the acceptance by a
successor Agent of appointment pursuant to clause (2) below or as otherwise
provided below.
(2) Appointment of Successor. Upon any such notice of
resignation pursuant to clause (1) above, Requisite Lenders shall, upon receipt
of Borrower's prior consent which shall not be unreasonably withheld, appoint a
successor Agent. If a successor Agent shall not have been so appointed within
the thirty (30) Business Day period, referred to in clause (1) above, the
retiring Agent, upon notice to Borrower, shall then appoint a successor Agent
who shall serve as Agent until such time, if any, as Requisite Lenders, upon
receipt of Borrower's
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prior written consent which shall not be unreasonably withheld, appoint a
successor Agent as provided above.
(3) Successor Agent. Upon the acceptance of any
appointment as Agent under the Loan Documents by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations under the Loan
Documents. After any retiring Agent's resignation as Agent under the Loan
Documents, the provisions of this subsection 8.2 shall inure to its benefit as
to any actions taken or omitted to be taken by it while it was Agent under the
Loan Documents.
(H) Collateral Matters.
(1) Release of Collateral. Lenders hereby irrevocably
authorize Agent, at its option and in its discretion, to release any Lien
granted to or held by Agent upon any property covered by the Security Documents
(i) upon termination of the Revolving Loan Commitment and payment and
satisfaction of all Obligations (other than contingent indemnification
Obligations not then due and payable); (ii) constituting property being sold or
disposed of if Borrower certifies to Agent that the sale or disposition is made
in compliance with the provisions of this Agreement (and Agent may rely in good
faith conclusively on any such certificate, without further inquiry); (iii)
constituting property leased to Borrower under a lease which has expired or been
terminated in a transaction permitted under this Agreement or is about to expire
and which has not been, and is not intended by Borrower to be, renewed or
extended; or (iv) in accordance with the provisions of the succeeding sentence.
Agent may release or compromise any Collateral and the proceeds thereof having a
value not greater than ten percent (10%) of the total book value of all
Collateral, either in a single transaction or in a series of related
transactions, with the consent of Lenders owning an aggregate of at least eighty
percent (80%) of the Revolving Loan Commitment, the Acquisition Loan Commitment
and the outstanding Term Loan, provided that in no event will Agent, acting
under the authority granted to it pursuant to this sentence, release or
compromise Collateral or the proceeds thereof having a total book value in
excess of twenty percent (20%) of the book value of all Collateral, as
determined by Agent, during any calendar year.
(2) Confirmation of Authority; Execution of Releases.
Without in any manner limiting Agent's authority to act without any specific or
further authorization or consent by Lenders (as set forth in subsection
8.2(H)(1)), each Lender agrees to confirm in writing, upon request by Agent or
Borrower, the authority to release any property covered by the Security
Documents conferred upon Agent under clauses (i) through (iii) of subsection
8.2(H)(1). Upon receipt by Agent of confirmation from the requisite percentage
of Lenders required by subsection 8.2(H)(1), if any, of its authority to release
or compromise any particular item or types of property covered by the Security
Documents, and upon at least ten (10) Business Days prior written request by
Borrower, Agent shall (and is hereby irrevocably authorized by Lenders to)
execute such documents as may be necessary to evidence the release or compromise
of the Liens granted to Agent, for the benefit of Agent and Lenders, upon such
Collateral, provided that (i)
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Agent shall not be required to execute any such document on terms which, in
Agent's opinion, would expose Agent to liability or create any obligation or
entail any consequence other than the release or compromise of such Liens
without recourse or warranty, and (ii) such release or compromise shall not in
any manner discharge, affect or impair the Obligations or any Liens upon (or
obligations of any Loan Party, in respect of), all interests retained by any
Loan Party, including (without limitation) the proceeds of any sale, all of
which shall continue to constitute part of the property covered by the Security
Documents.
(3) Absence of Duty. Agent shall have no obligation
whatsoever to any Lender or any other Person to assure that the property covered
by the Security Documents exists or is owned by Borrower or is cared for,
protected or insured or has been encumbered or that the Liens granted to Agent
have been properly or sufficiently or lawfully created, perfected, protected or
enforced or are entitled to any particular priority, or to exercise at all or in
any particular manner or under any duty of care, disclosure or fidelity, or to
continue exercising, any of the rights, authorities and powers granted or
available to Agent in this subsection 8.2(H) or in any of the Loan Documents, it
being understood and agreed that in respect of the property covered by the
Security Documents or any act, omission or event related thereto, Agent may act
in any manner it may deem appropriate, in its discretion, given Agent's own
interest in property covered by the Security Documents as one of the Lenders and
that Agent shall have no duty or liability whatsoever to any of the other
Lenders, provided that Agent shall exercise the same care which it would in
dealing with loans for its own account.
(I) Agency for Perfection. Agent and each Lender hereby
appoint each other Lender as agent for the purpose of perfecting Agent's
security interest in assets which, in accordance with Article 9 of the Uniform
Commercial Code in any applicable jurisdiction, can be perfected only by
possession. Should any Lender (other than Agent) obtain possession of any such
Collateral, such Lender shall notify Agent thereof, and, promptly upon Agent's
request therefor, shall deliver such Collateral to Agent or in accordance with
Agent's instructions. Each Lender agrees that it will not have any right
individually to enforce or seek to enforce any Security Document or to realize
upon any collateral security for the Loans, it being understood and agreed that
such rights and remedies may be exercised only by Agent.
(J) Dissemination of Information. Agent will use its best
efforts to provide Lenders with any information received by Agent from Borrower
or any other Loan Party which is required to be provided to a Lender hereunder,
provided that Agent shall not be liable to Lenders for any failure to do so,
except to the extent that such failure is attributable to Agent's gross
negligence or willful misconduct.
8.3 Amendments, Consents and Waivers for Certain Actions.
(A) Except as otherwise provided in this subsection 8.3, in
subsection 9.2 or in any Lender Addition Agreement and except as to matters set
forth in other subsections hereof or in any other Loan Document as requiring
only Agent's consent, the consent of Requisite
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Lenders and Borrower will be required to amend, modify, terminate, or waive any
provision of this Agreement or any of the other Loan Documents.
(B) In the event Agent requests the consent of a Lender and
does not receive a written consent or denial thereof within ten (10) Business
Days after such Lender's receipt of such request, then such Lender will be
deemed to have denied the giving of such consent.
(C) In the event Agent requests the consent of a Lender and
such consent is denied, then ▇▇▇▇▇▇ or the Lender which assigned its interest in
the Loans to such Lender (the "Assigning Lender") may, at its option, require
such Lender to reassign its interest in the Loans to ▇▇▇▇▇▇ or the Assigning
Lender, as applicable, for a price equal to the then outstanding principal
amount thereof plus accrued and unpaid interest and fees due such Lender, which
interest and fees will be paid when collected from Borrower. In the event that
▇▇▇▇▇▇ or the Assigning Lender elects to require any Lender to reassign its
interest to ▇▇▇▇▇▇ or the Assigning Lender, ▇▇▇▇▇▇ or the Assigning Lender, as
applicable, will so notify such Lender in writing within forty-five (45) days
following such Lender's denial, and such Lender will reassign its interest to
▇▇▇▇▇▇ or the Assigning Lender, as applicable, no later than five (5) days
following receipt of such notice.
8.4 Set Off and Sharing of Payments. In addition to any rights now or
hereafter granted under applicable law and not by way of limitation of any such
rights, during the continuance of any Event of Default, each Lender is hereby
authorized by Borrower at any time or from time to time, with reasonably prompt
subsequent notice to Borrower (any prior or contemporaneous notice being hereby
expressly waived) to set off and to appropriate and to apply any and all (A)
balances held by such Lender at any of its offices for the account of Borrower
or any of its Subsidiaries (regardless of whether such balances are then due to
Borrower or its Subsidiaries), and (B) other property at any time held or owing
by such Lender to or for the credit or for the account of Borrower or any of its
Subsidiaries, against and on account of any of the Obligations; except that no
Lender shall exercise any such right without the prior written consent of Agent.
Any Lender exercising a right to set off shall, to the extent the amount of any
such set off exceeds its Pro Rata Share of the amount set off, purchase for cash
(and the other Lenders shall sell) interests in each such other Lender's Pro
Rata Share of the Obligations as would be necessary to cause such Lender to
share such excess with each other Lender in accordance with their respective Pro
Rata Shares. Borrower agrees, to the fullest extent permitted by law, that any
Lender may exercise its right to set off with respect to amounts in excess of
its Pro Rata Share of the Obligations and upon doing so shall deliver such
excess to the Agent for the benefit of all Lenders in accordance with their Pro
Rata Shares.
8.5 Disbursement of Funds. Agent may, on behalf of Lenders, disburse
funds to Borrower for Loans requested. Each Lender shall reimburse Agent on
demand for all funds disbursed on its behalf by Agent, or if Agent so requests,
each Lender will remit to Agent its Pro Rata Share of any Loan before Agent
disburses same to Borrower. If Agent elects to require that each Lender make
funds available to Agent, prior to a disbursement by Agent to Borrower, Agent
shall advise each Lender by telephone or telecopy of the amount of such Lender's
Pro
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Rata Share of the Loan requested by Borrower no later than 1:00 p.m. CST on the
Funding Date applicable thereto, and each such Lender shall pay Agent such
Lender's Pro Rata Share of such requested Loan, in same day funds, by wire
transfer to Agent's account on such Funding Date. If any Lender fails to pay the
amount of its Pro Rata Share forthwith upon Agent's demand, Agent shall promptly
notify Borrower, and Borrower shall immediately repay such amount to Agent. Any
repayment required pursuant to this subsection 8.5 shall be without premium or
penalty. Nothing in this subsection 8.5 or elsewhere in this Agreement or the
other Loan Documents, including without limitation the provisions of subsection
8.6, shall be deemed to require Agent to advance funds on behalf of any Lender
or to relieve any Lender from its obligation to fulfill its commitments
hereunder or to prejudice any rights that Agent or Borrower may have against any
Lender as a result of any default by such Lender hereunder.
8.6 Disbursements of Advances; Payment.
(A) Revolving Loan Advances, Payments and Settlements; Related
Fee Payments.
(1) The Revolving Loan balance may fluctuate from day
to day through Agent's disbursement of funds to, and receipt of funds from,
Borrower. In order to minimize the frequency of transfers of funds between Agent
and each Lender notwithstanding terms to the contrary set forth in Section 1 or
subsection 8.5, Revolving Loan advances and payments will be settled among Agent
and Lenders according to the procedures described in this subsection 8.6.
Notwithstanding these procedures, each Lender's obligation to fund its portion
of any advances made by Agent to Borrower will commence on the date such
advances are made by Agent. Such payments will be made by such Lender without
set-off, counterclaim or reduction of any kind.
(2) On the second (2nd) Business Day of each week, or
more frequently (including daily), if Agent so elects (each such day being a
"Settlement Date"), Agent will advise each Lender by telephone or telecopy of
the amount of each such Lender's Pro Rata Share of the Revolving Loan balance as
of the close of business of the (2nd) second Business Day immediately preceding
the Settlement Date. In the event that payments are necessary to adjust the
amount of such Lender's required Pro Rata Share of the Revolving Loan balance to
such Lender's actual Pro Rata Share of the Revolving Loan balance as of any
Settlement Date, the party from which such payment is due will pay the other, in
same day funds, by wire transfer to the other's account not later than 3:00 p.m.
CST on the Business Day following the Settlement Date.
(3) For purposes of this subsection 8.6(A)(3), the
following terms and conditions will have the meanings indicated:
(a) "Daily Loan Balance" means an amount
calculated as of the end of each calendar day by subtracting (i) the
cumulative principal amount paid by Agent to a Lender on a Loan from
the Closing Date through and
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including such calendar day, from (ii) the cumulative principal amount
on a Loan advanced by such Lender to Agent on that Loan from the
Closing Date through and including such calendar day.
(b) "Daily Interest Rate" means an amount
calculated by dividing the interest rate payable to a Lender on a Loan
(as set forth in subsection 1.2) as of each calendar day by three
hundred sixty (360).
(c) "Daily Interest Amount" means an amount
calculated by multiplying the Daily Loan Balance of a Loan by the
associated Daily Interest Rate on that Loan.
(d) "Interest Ratio" means a number
calculated by dividing the total amount of the interest on a Loan
received by Agent with respect to the immediately preceding month by
the total amount of interest on that Loan due from Borrower during the
immediately preceding month.
On the first (1st) Business Day of each month ("Interest Settlement Date"),
Agent will advise each Lender by telephone, telex, or telecopy of the amount of
such Lender's Pro Rata Share of interest and fees on each of the Loans as of the
end of the last day of the immediately preceding month. Provided that such
Lender has made all payments required to be made by it under this Agreement,
Agent will pay to such Lender, by wire transfer to such Lender's account (as
specified by such Lender on the signature page of this Agreement or the
applicable Lender Addition Agreement, as amended by such Lender from time to
time after the date hereof pursuant to the notice provisions contained herein or
in the applicable Lender Addition Agreement) not later than 3:00 p.m. (Chicago
time) on the next Business Day following the Interest Settlement Date, such
Lender's Pro Rata Share of interest and fees on each of the Loans. Such Lender's
Pro Rata Share of interest on each Loan will be calculated for that Loan by
adding together the Daily Interest Amounts for each calendar day of the prior
month for that Loan and multiplying the total thereof by the Interest Ratio for
that Loan. Such Lender's Pro Rata Share of each of the commitment fee described
in subsection 1.2(B) and the Risk Participation Liability fee described in
subsection 1.2(C) shall be paid and calculated in a manner consistent with the
payment and calculation of interest as described in this subsection 8.6(A).
(B) Term Loan and Acquisition Loan Payments; Related Fee
Payments. Payments of principal, interest and fees in respect of the Term Loan
and the Acquisition Loans, and payment of all other fees and expenses not
otherwise described in subsection 8.6(A) will be settled on the Business Day
received by Agent in accordance with the provisions of Section 1.
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(C) Availability of Lender's Pro Rata Share.
(1) Unless Agent has been notified by a Lender prior
to a Funding Date of such Lender's intention not to fund its Pro Rata Share of
the Loan amount requested by Borrower, Agent may assume that such Lender will
make such amount available to Agent on the Business Day following the next
Settlement Date. If such amount is not, in fact, made available to Agent by such
Lender when due, Agent will be entitled to recover such amount on demand from
such Lender without set-off, counterclaim or deduction of any kind.
(2) Nothing contained in this subsection 8.6(C) will
be deemed to relieve a Lender of its obligation to fulfill its commitments or to
prejudice any rights Agent or Borrower may have against such Lender as a result
of any default by such Lender under this Agreement.
(3) Without limiting the generality of the foregoing,
each Lender shall be obligated to fund its Pro Rata Share of any Revolving Loan
or Acquisition Loan made after any Event of Default or acceleration of the
Obligations with respect to any draw on a Lender Letter of Credit or a Risk
Participation Agreement.
(D) Return of Payments
(1) If Agent pays an amount to a Lender under this
Agreement in the belief or expectation that a related payment has been or will
be received by Agent from Borrower and such related payment is not received by
Agent, then Agent will be entitled to recover such amount from such Lender
without set-off, counterclaim or deduction of any kind.
(2) If Agent determines at any time that any amount
received by Agent under this Agreement must be returned to Borrower or paid to
any other person pursuant to any solvency law or otherwise, then,
notwithstanding any other term or condition of this Agreement, Agent will not be
required to distribute any portion thereof to any Lender. In addition, each
Lender will repay to Agent on demand any portion of such amount that Agent has
distributed to such Lender, together with interest at such rate, if any, as
Agent is required to pay to Borrower or such other Person, without set-off,
counterclaim or deduction of any kind.
SECTION 9
MISCELLANEOUS
9.1 Indemnities. Borrower agrees to indemnify, pay, and hold Agent,
each Lender and their respective officers, directors, employees, agents, and
attorneys (the "Indemnitees") harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits and claims of
any kind or nature whatsoever that may be imposed on, incurred by, or asserted
against the Indemnitee as a result of its being a party to this Agreement;
provided
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that Borrower shall have no obligation to an Indemnitee hereunder with respect
to liabilities arising from the gross negligence or willful misconduct of that
Indemnitee as determined by a court of competent jurisdiction. This subsection
and other indemnification provisions contained within the Loan Documents shall
survive the termination of this Agreement.
9.2 Amendments and Waivers. Except as otherwise provided herein, no
amendment, modification, termination or waiver of any provision of this
Agreement, the Notes or any of the other Loan Documents, or consent to any
departure by any Loan Party therefrom, shall in any event be effective unless
the same shall be in writing and signed by Requisite Lenders (or Agent, if
expressly set forth herein, in any Note or in any other Loan Document) and the
applicable Loan Party; provided, that except to the extent permitted by the
applicable Lender Addition Agreement, no amendment, modification, termination or
waiver shall, unless in writing and signed by all Lenders, do any of the
following: (a) increase any Lender's Pro Rata Share of the Term Loan, Revolving
Loan Commitment or the Acquisition Loan Commitment; (b) reduce the principal of,
rate of interest on or fees payable with respect to any Loan; (c) extend the
Expiry Date, extend the date on which any Scheduled Term Loan Installment or
Scheduled Acquisition Loan Installment is to be paid or change any date fixed
for any payment of interest or fees; (d) change the aggregate unpaid principal
amount of the Loans; (e) change the percentage of Lenders which shall be
required for Lenders or any of them to take any action hereunder; (f) release
Collateral (except if the sale or disposition of such Collateral is permitted
under subsection 8.2 or any other Loan Document); (g) amend or waive this
subsection 9.2 or the definitions of the terms used in this subsection 9.2
insofar as the definitions affect the substance of this subsection 9.2; (h)
consent to the assignment, delegation or other transfer by any Loan Party of any
of its rights and obligations under any Loan Document; (i) change the form in
which interest is required to be paid and (j) change the advance rates set forth
in the Borrowing Base Certificate; and provided, further, that no amendment,
modification, termination or waiver affecting the rights or duties of Agent
under any Loan Document shall in any event be effective, unless in writing and
signed by Agent, in addition to Lenders required hereinabove to take such
action. Each amendment, modification, termination or waiver shall be effective
only in the specific instance and for the specific purpose for which it was
given. No amendment, modification, termination or waiver shall be required for
Agent to take additional Collateral pursuant to any Loan Document. No amendment,
modification, termination or waiver of any provision of any Note shall be
effective without the written concurrence of the holder of that Note. No notice
to or demand on Borrower or any other Loan Party in any case shall entitle
Borrower or any other Loan Party to any other or further notice or demand in
similar or other circumstances. Any amendment, modification, termination, waiver
or consent effected in accordance with this subsection 9.2 shall be binding upon
each holder of the Notes at the time outstanding, each future holder of the
Notes, and, if signed by a Loan Party, on such Loan Party.
9.3 Notices. Any notice or other communication required shall be in
writing addressed to the respective party as set forth below and may be
personally served, telecopied, sent by overnight courier service or U.S. mail
and shall be deemed to have been given: (a) if delivered in person, when
delivered; (b) if delivered by telecopy, on the date of transmission if
transmitted on a Business Day before 4:00 p.m. CST; (c) if delivered by
overnight courier, two
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(2) days after delivery to the courier properly addressed; or (d) if delivered
by U.S. mail, four (4) Business Days after deposit with postage prepaid and
properly addressed.
Notices shall be addressed as follows:
If to Borrower: UNIONTOOLS, INC.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
ATTN: Chief Financial Officer
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
ATTN: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to Agent or ▇▇▇▇▇▇: ▇▇▇▇▇▇ FINANCIAL, INC.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
ATTN: Portfolio Manager
Corporate Finance Group
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇ FINANCIAL, INC.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
ATTN: Legal Department
Corporate Finance Group
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to a Lender: To the address set forth
in the applicable Lender
Addition Agreement
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9.4 Failure or Indulgence Not Waiver; Remedies Cumulative. No failure
or delay on the part of Agent or any Lender to exercise, nor any partial
exercise of, any power, right or privilege hereunder or under any other Loan
Documents shall impair such power, right, or privilege or be construed to be a
waiver of any Default or Event of Default. All rights and remedies existing
hereunder or under any other Loan Document are cumulative to and not exclusive
of any rights or remedies otherwise available.
9.5 Marshalling; Payments Set Aside. Neither Agent nor any Lender shall
be under any obligation to ▇▇▇▇▇▇▇▇ any assets in payment of any or all of the
Obligations. To the extent that Borrower makes payment(s) or Agent enforces its
Liens or Agent or any Lender exercises its right of set-off, and such payment(s)
or the proceeds of such enforcement or set-off is subsequently invalidated,
declared to be fraudulent or preferential, set aside, or required to be repaid
by anyone, then to the extent of such recovery, the Obligations or part thereof
originally intended to be satisfied, and all Liens, rights and remedies
therefor, shall be revived and
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continued in full force and effect as if such payment had not been made or such
enforcement or set-off had not occurred.
9.6 Severability. The invalidity, illegality, or unenforceability in
any jurisdiction of any provision under the Loan Documents shall not affect or
impair the remaining provisions in the Loan Documents.
9.7 Lenders' Obligations Several; Independent Nature of Lenders'
Rights. The obligation of each Lender hereunder is several and not joint and no
Lender shall be responsible for the obligation or commitment of any other Lender
hereunder. In the event that any Lender at any time should fail to make a Loan
as herein provided, the Lenders, or any of them, at their sole option, may make
the Loan that was to have been made by the Lender so failing to make such Loan.
Nothing contained in any Loan Document and no action taken by Agent or any
Lender pursuant hereto or thereto shall be deemed to constitute Lenders to be a
partnership, an association, a joint venture or any other kind of entity. The
amounts payable at any time hereunder to each Lender shall be a separate and
independent debt.
9.8 Headings. Section and subsection headings are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purposes or be given substantive effect.
9.9 Applicable Law. THIS AGREEMENT SHALL BE GOVERNED BY AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
ILLINOIS, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES.
9.10 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns except that Borrower may not assign its rights or obligations hereunder
without the written consent of all Lenders.
9.11 No Fiduciary Relationship. No provision in the Loan Documents and
no course of dealing between the parties shall be deemed to create any fiduciary
duty owing to Borrower by Agent or any Lender.
9.12 Construction. Agent, each Lender and Borrower acknowledge that
each of them has had the benefit of legal counsel of its own choice and has been
afforded an opportunity to review the Loan Documents with its legal counsel and
that the Loan Documents shall be constructed as if jointly drafted by Agent,
each Lender and Borrower.
9.13 Confidentiality. Agent and each Lender agree to exercise their
best efforts to keep any non-public information delivered pursuant to the Loan
Documents confidential from Persons other than those employed by or engaged by
Agent or such Lender and those employed by or engaged by Agent's or such
Lender's assignees or participants, or potential assignees or
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participants. This subsection shall not apply to disclosures required to be made
by Agent or any Lender to any regulatory or governmental agency or pursuant to
legal process.
9.14 Consent to Jurisdiction and Service of Process.
(A) BORROWER HEREBY IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE
JURISDICTION OF ANY UNITED STATES FEDERAL OR ILLINOIS STATE COURT SITTING IN
CHICAGO IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN
DOCUMENTS AND BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF
SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND
IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF
ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT
IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF AGENT OR ANY
LENDER TO BRING PROCEEDINGS AGAINST BORROWER IN THE COURTS OF ANY OTHER
JURISDICTION. ANY JUDICIAL PROCEEDING BY BORROWER AGAINST AGENT OR ANY LENDER OR
ANY AFFILIATE THEREOF INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY
ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT SHALL BE BROUGHT
ONLY IN A COURT IN CHICAGO, ILLINOIS.
(B) BORROWER DESIGNATES AND APPOINTS CT CORPORATION SYSTEM AND
SUCH OTHER PERSONS AS MAY HEREAFTER BE SELECTED BY BORROWER WHICH IRREVOCABLY
AGREE IN WRITING TO SO SERVE AS ITS AGENT TO RECEIVE ON ITS BEHALF SERVICE OF
ALL PROCESS IN ANY SUCH PROCEEDINGS IN ANY SUCH COURT, SUCH SERVICE BEING HEREBY
ACKNOWLEDGED BY BORROWER TO BE EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT.
A COPY OF ANY SUCH PROCESS SO SERVED SHALL BE MAILED BY REGISTERED MAIL TO
BORROWER AT ITS ADDRESS PROVIDED IN SUBSECTION 9.3 EXCEPT THAT UNLESS OTHERWISE
PROVIDED BY APPLICABLE LAW, ANY FAILURE TO MAIL SUCH COPY SHALL NOT AFFECT THE
VALIDITY OF SERVICE OF PROCESS. IF ANY AGENT APPOINTED BY BORROWER REFUSES TO
ACCEPT SERVICE, BORROWER HEREBY AGREES THAT SERVICE UPON IT BY MAIL SHALL
CONSTITUTE SUFFICIENT NOTICE. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
9.15 Waiver of Jury Trial. BORROWER, AGENT AND EACH LENDER HEREBY WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF THIS AGREEMENT, ANY OF THE OTHER LOAN DOCUMENTS, OR ANY
DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION
AND THE LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. THE SCOPE OF
THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL
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DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF
THIS TRANSACTION, INCLUDING WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. BORROWER,
AGENT AND EACH LENDER ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO
ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THE WAIVER
IN ENTERING INTO THIS AGREEMENT AND THAT EACH WILL CONTINUE TO RELY ON THE
WAIVER IN THEIR RELATED FUTURE DEALINGS. BORROWER, AGENT AND EACH LENDER FURTHER
WARRANT AND REPRESENT THAT EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL,
AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY
NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THE LOAN
DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS OR THE
LENDER LETTERS OF CREDIT OR RISK PARTICIPATION AGREEMENTS. IN THE EVENT OF
LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT. BORROWER, AGENT AND EACH LENDER ALSO WAIVE ANY BOND OR SURETY OR SECURITY
UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF AGENT AND EACH
LENDER.
9.16 Survival of Warranties and Certain Agreements. All agreements,
representations and warranties made herein shall survive the execution and
delivery of this Agreement, the making of the Loans, issuances of Lender Letters
of Credit and Risk Participation Agreements and the execution and delivery of
the Notes. Notwithstanding anything in this Agreement or implied by law to the
contrary, the agreements of Borrower set forth in subsections 1.3(C), 1.8 and
9.1 shall survive the payment of the Loans and the termination of this
Agreement.
9.17 Entire Agreement. This Agreement, the Notes and the other Loan
Documents referred to herein embody the final, entire agreement among the
parties hereto and supersede any and all prior commitments, agreements,
representations, understandings, whether oral or written, relating to the
subject matter hereof and may not be contradicted or varied by evidence of
prior, contemporaneous or subsequent oral agreements or discussions of the
parties hereto.
9.18 Counterparts; Effectiveness. This Agreement and any amendments,
waivers, consents or supplements may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all of which
counterparts together shall constitute but one in the same instrument. This
Agreement shall become effective upon the execution of a counterpart hereof by
each of the parties hereto.
SECTION 10
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DEFINITIONS
10.1 Certain Defined Terms. The terms defined below are used in this
Agreement as so defined. Terms defined in the preamble and recitals to this
Agreement are used in this Agreement as so defined.
"Affiliate" means any Person: (a) directly or indirectly
controlling, controlled by, or under common control with, Borrower; (b)
directly or indirectly owning or holding five percent (5%) or more of
any equity interest in Borrower; or (c) five percent (5%) or more of
whose voting stock or other equity interest is directly or indirectly
owned or held by Borrower. For purposes of this definition, "control"
(including with correlative meanings, the terms "controlling",
"controlled by" and "under common control with") means the possession
directly or indirectly of the power to direct or cause the direction of
the management and policies of a Person, whether through the ownership
of voting securities or by contract or otherwise.
"Agent" means ▇▇▇▇▇▇ in its capacity as agent for the Lenders
under this Agreement and each of the other Loan Documents and any
successor in such capacity appointed pursuant to subsection 8.2.
"Agreement" means this Credit Agreement (including all
schedules and exhibits hereto).
"Asset Disposition" means the disposition whether by sale,
lease, transfer, loss, damage, destruction, condemnation or otherwise
of any of the following: (a) any of the stock of any of Borrower's
Subsidiaries or (b) any or all of the assets of Borrower or any of its
Subsidiaries other than sales of inventory in the ordinary course of
business.
"Bankruptcy Code" means Title 11 of the United States Code
entitled "Bankruptcy", as amended from time to time or any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect
and all rules and regulations promulgated thereunder.
"Borrower" shall have the meaning ascribed to that term in the
preamble of this Agreement.
"Business Day" means (a) for all purposes other than as
covered by clause (b) below, any day excluding Saturday, Sunday and any
day which is a legal holiday under the laws of the Commonwealth of
Pennsylvania or the State of Illinois, or is a day on which banking
institutions located in any such states are closed, and (b) with
respect to all notices, determinations, fundings and payments
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in connection with Loans bearing interest at the LIBOR, any day that is
a Business Day described in clause (a) above and that is also a day for
trading by and between banks in Dollar deposits in the applicable
interbank LIBOR market.
"Closing Date" means December 30, 1996, or such later date on
which all of the conditions precedent set forth in Section 7.1 have
been satisfied in full.
"Collateral" means, collectively: (a) all capital stock and
other property pledged pursuant to the Security Documents; (b) all
"Collateral" as defined in the Security Documents; (c) all real
property mortgaged pursuant to the Security Documents; and (d) any
property or interest provided in addition to or in substitution for any
of the foregoing.
"Default" means a condition or event that, after notice or
lapse of time or both, would constitute an Event of Default if that
condition or event were not cured or removed within any applicable
grace or cure period.
"Expiry Date" means the earlier of (a) the suspension (subject
to reinstatement) of the Lenders' obligations to make Revolving Loans
and Acquisition Loans pursuant to subsection 6.2, (b) the acceleration
of the Obligations pursuant to subsection 6.3 or (c) December 31, 2001.
"GAAP" means generally accepted accounting principles as set
forth in statements from Auditing Standards No. 69 entitled "The
Meaning of 'Present Fairly in Conformance with Generally Accepted
Accounting Principles in the Independent Auditors Reports'" issued by
the Auditing Standards Board of the American Institute of Certified
Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board that are applicable to the circumstances as
of the date of determination.
"Indebtedness", as applied to any Person, means: (a) all
indebtedness for borrowed money; (b) that portion of obligations with
respect to capital leases that is properly classified as a liability on
a balance sheet in conformity with GAAP; (c) notes payable and drafts
accepted representing extensions of credit whether or not representing
obligations for borrowed money; (d) any obligation owed for all or any
part of the deferred purchase price of property or services if the
purchase price is due more than six (6) months from the date the
obligation is incurred or is evidenced by a note or similar written
instrument; and (e) all indebtedness secured by any Lien on any
property or asset owned or held by that Person regardless of whether
the indebtedness secured thereby shall have been assumed by that Person
or is nonrecourse to the credit of that Person.
"IRC" means the Internal Revenue Code of 1986, as
amended from time to time and all rules and regulations promulgated
thereunder.
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"Lender" or "Lenders" means ▇▇▇▇▇▇ together with its
successors and permitted assigns pursuant to subsection 8.1.
"Lender Addition Agreement" means an agreement among Agent, a
Lender and such Lender's assignee regarding their respective rights and
obligations with respect to assignments of the Loans, the Revolving
Loan Commitment, the Acquisition Loan Commitment and other interests
under this Agreement and the other Loan Documents.
"Lien" means any lien, mortgage, pledge, security interest,
charge or encumbrance of any kind, whether voluntary or involuntary
(including any conditional sale or other title retention agreement and
any lease in the nature thereof), and any agreement to give any lien,
mortgage, pledge, security interest, charge or encumbrance.
"Loan" or "Loans" means an advance or advances under the
Revolving Loan Commitment, the Acquisition Loans, or the Term Loan.
"Loan Documents" means this Agreement, the Notes, the Security
Documents and all other instruments, documents and agreements executed
by or on behalf of any Loan Party and delivered concurrently herewith
or at any time hereafter to or for the benefit of Agent or any Lender
in connection with the Loans and other transactions contemplated by
this Agreement, all as amended, supplemented or modified from time to
time; but excluding all Capitalization/Acquisition Documents.
"Loan Party" means, collectively, Holdings, Borrower and any
other Person (other than Agent and each Lender) which is or becomes a
party to any Loan Document.
"Loan Year" means any period of twelve (12) consecutive months
commencing on the Closing Date or any anniversary thereof.
"Material Adverse Effect" means (a) a material adverse effect
upon the business, operations, properties, assets or condition
(financial or otherwise) either of Borrower or any of its Subsidiaries,
taken as a whole, or of Holdings or (b) the impairment of the ability
of any Loan Party to perform its material obligations under any Loan
Document to which it is a party or of Agent or any Lender to enforce
any Loan Document or collect any of the Obligations. In determining
whether any individual event would result in a Material Adverse Effect,
notwithstanding that such event does not of itself have such effect, a
Material Adverse Effect shall be deemed to have occurred if the
cumulative effect of such event and all other then existing events
would result in a Material Adverse Effect.
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"Net Proceeds" means cash proceeds received by Borrower or any
of its Subsidiaries from any Asset Disposition (including insurance
proceeds, awards of condemnation, and payments under notes or other
debt securities received in connection with any Asset Disposition), net
of (a) the costs of such sale, lease, transfer or other disposition
(including taxes attributable to such sale, lease or transfer) and (b)
amounts applied to repayment of Indebtedness (other than the
Obligations) secured by a Lien on the asset or property disposed.
"Note" or "Notes" means one or more of the notes of Borrower
substantially in the form of Exhibit 10.1(A), or any combination
thereof.
"Obligations" means all obligations, liabilities and
indebtedness of every nature of each Loan Party from time to time owed
to Agent or any Lender under the Loan Documents including the principal
amount of all debts, claims and indebtedness, accrued and unpaid
interest and all fees, costs and expenses, whether primary, secondary,
direct, contingent, fixed or otherwise, heretofore, now and/or from
time to time hereafter owing, due or payable whether before or after
the filing of a proceeding under the Bankruptcy Code by or against
Borrower or any of its Subsidiaries.
"Person" means and includes natural persons, corporations,
limited liability companies, limited partnerships, limited liability
partnerships, general partnerships, joint stock companies, joint
ventures, associations, companies, trusts, banks, trust companies, land
trusts, business trusts or other organizations, whether or not legal
entities, and governments and agencies and political subdivisions
thereof and their respective permitted successors and assigns (or in
the case of a governmental person, the successor functional equivalent
of such Person).
"Pro Forma" means the unaudited consolidated balance sheet of
Borrower and its Subsidiaries as of the Closing Date, based upon the
financial statements dated as of December 6, 1996 prepared in
accordance with GAAP, but after giving effect to the Related
Transactions. The Pro Forma is annexed hereto as Schedule 10.1(A).
"Pro Rata Share" means (a) with respect to a Lender's
obligation to lend a portion of the Term Loan and receive payments of
interest and principal with respect thereto, the percentage obtained by
dividing (i) such Lender's commitment to make a portion of the Term
Loan, as set forth on the signature page of this Agreement opposite
such Lender's signature or in the most recent Lender Addition
Agreement, if any, executed by such Lender, by (ii) all such
commitments of all Lenders to make the Term Loan, (b) with respect to a
Lender's obligation to make Revolving Loans and receive payments of
interest
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and principal with respect thereto and with respect to a Lender's
obligation to share in Risk Participation Liability (and with respect
to the related Risk Participation Liability fee described in subsection
1.2(C)), the percentage obtained by dividing (i) such Lender's
commitment to make Revolving Loans, as set forth on the signature page
of this agreement opposite such Lender's signature or in the most
recent Lender Addition Agreement, if any, executed by such Lender, by
(ii) all such commitments of all Lenders to make Revolving Loans and
(c) with respect to the Acquisition Loan Commitment and all other
matters (including without limitation the indemnification obligations
arising under subsection 8.2(E)), the percentage obtained by dividing
(i) the sum of the then outstanding portion of the Term Loan which was
funded by such Lender, plus the commitment of such Lender to make
Revolving Loans, as set forth on the signature page of this Agreement
opposite such Lender's signature or in the most recent Lender Addition
Agreement, if any, executed by such Lender, by (ii) the sum of the then
outstanding Term Loan, plus the aggregate Revolving Loan Commitment.
"Projections" means Borrower's forecasted consolidated: (a)
balance sheets; (b) profit and loss statements; (c) cash flow
statements; and (d) capitalization statements, all prepared on a
consistent basis with Borrower's historical financial statements,
together with appropriate supporting details and a statement of
underlying assumptions. The Projections represent and will represent as
of the date thereof the good faith estimate of Borrower and its senior
management concerning the most probable course of its business.
"Related Transactions" means the funding of all Loans on the
Closing Date, the repayment of the Indebtedness identified on Schedule
10.1(B) which is to be paid in full on the Closing Date, and the
payment of all fees, costs and expenses associated with all of the
foregoing.
"Related Transactions Documents" means the Loan Documents, and
all other agreements, instruments and documents executed or delivered
in connection with the Related Transactions.
"Requisite Lenders" means Lenders having (a) sixty-six and
two-thirds percent (66-2/3%) or more of the sum of the Revolving Loan
Commitment, the Acquisition Loan Commitment and the outstanding
principal balance of the Term Loan or, (b) if the Revolving Loan
Commitment has been terminated, sixty-six and two-thirds percent
(66-2/3%) or more of the aggregate outstanding principal balance of the
Loans.
"Risk Participation Liability" means, as to each Lender Letter
of Credit and each Risk Participation Agreement, all reimbursement
obligations of Borrower to the issuer of the Lender Letter of Credit or
to the issuer of the letter
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of credit with respect to the transaction for which the Risk
Participation Agreement was executed and delivered, consisting of (a)
the amount available to be drawn or which may become available to be
drawn; (b) all amounts which have been paid and made available by the
issuing bank to the extent not reimbursed by Borrower, whether by the
making of a Revolving Loan or otherwise; and (c) all accrued and unpaid
interest, fees and expenses with respect thereto. For purposes of
determining the outstanding amount of Risk Participation Liability, the
maximum amount potentially owing under any Risk Participation Agreement
will be considered outstanding unless the bank which is the beneficiary
of such Risk Participation Agreement reports daily activity to Agent
showing actual outstanding letters of credit subject to such Risk
Participation Agreement.
"Security Documents" means all instruments, documents and
agreements executed by or on behalf of any Loan Party to guaranty or
provide collateral security with respect to the Obligations including,
without limitation, any security agreement or pledge agreement, any
guaranty of the Obligations, any mortgage, and all instruments,
documents and agreements executed pursuant to the terms of the
foregoing.
"Subordinated Indebtedness" means the "Junior Note" as defined
in that certain Subordination and Intercreditor Agreement of even date
herewith among Agent, Holdings and the holders of Subordinated
Indebtedness set forth therein, the "Junior Note" as defined in that
certain Subordination and Intercreditor Agreement of even date herewith
among Agent, Borrower and Holdings, and all other Indebtedness of
Borrower, Holdings or any of their Subsidiaries which is subordinated,
in a manner satisfactory to Agent, in right of payment to the
Obligations.
"Subsidiary" means, with respect to any Person, any
corporation, partnership, association or other business entity of which
more than fifty percent (50%) of the total voting power of shares of
stock (or equivalent ownership or controlling interest) entitled
(without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by that Person or one or
more of the other Subsidiaries of that Person or a combination
thereof.
10.2 Other Definitional Provisions. References to "Sections",
"subsections", "Exhibits" and "Schedules" shall be to Sections, subsections,
Exhibits and Schedules, respectively, of this Agreement unless otherwise
specifically provided. Any of the terms defined in subsection 10.1 may, unless
the context otherwise requires, be used in the singular or the plural depending
on the reference. In this Agreement, "hereof," "herein," "hereto," "hereunder"
and the like mean and refer to this Agreement as a whole and not merely to the
specific section, paragraph or clause in which the respective word appears;
words importing any gender include
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the other gender; references to "writing" include printing, typing, lithography
and other means of reproducing words in a tangible visible form; the words
"including," "includes" and "include" shall be deemed to be followed by the
words "without limitation"; references to agreements and other contractual
instruments shall be deemed to include subsequent amendments, assignments, and
other modifications thereto, but only to the extent such amendments, assignments
and other modifications are not prohibited by the terms of this Agreement or any
other Loan Document; references to Persons include their respective permitted
successors and assigns or, in the case of governmental Persons, Persons
succeeding to the relevant functions of such Persons; and all references to
statutes and related regulations shall include any amendments of same and any
successor statutes and regulations.
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WITNESS the due execution hereof by the respective duly authorized
officers of the undersigned as of the date first written above.
UNIONTOOLS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Title: Vice President
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▇▇▇▇▇▇ FINANCIAL, INC., as Agent and
a Lender
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Title: Assistant Vice President
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