LOAN AND SECURITY AGREEMENT
BY AND AMONG
THE GSI GROUP, INC.,
AS BORROWER
AND
▇▇▇▇▇ MANUFACTURING CO., AND
ASSUMPTION LEASING COMPANY, INC.,
AS GUARANTORS
CONGRESS FINANCIAL CORPORATION (CENTRAL),
AS AGENT
AND
THE LENDERS NAMED HEREIN,
AS LENDERS
DATED: OCTOBER 31, 2003
1
TABLE OF CONTENTS
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PAGE
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SECTION 1. DEFINITIONS 1
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SECTION 2. CREDIT FACILITIES 30
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2.1 Revolving Loans. 30
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2.2 Letter of Credit Accommodations. 32
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2.3 Term Loan. 36
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2.4 Fixed Asset Amount 36
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2.5 Commitments 37
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2.6 Maximum Revolving Credit Increases 37
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SECTION 3. INTEREST AND FEES 38
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3.1 Interest. 38
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3.2 Fees. 39
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3.3 Changes in Laws and Increased Costs of Loans. 39
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SECTION 4. CONDITIONS PRECEDENT 41
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4.1 Conditions Precedent to Initial Loans and Letter of Credit
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Accommodations 41
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4.2 Conditions Precedent to All Loans and Letter of Credit Accommodations
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44
4.3 Additional Conditions Precedent to Exim Revolving Loans and Exim Letter
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of Credit Accommodations 45
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SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST 45
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5.1 Grant of Security Interest 45
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5.2 Perfection of Security Interests. 47
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SECTION 6. COLLECTION AND ADMINISTRATION 51
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6.1 Borrower's Loan Accounts 51
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6.2 Statements 51
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6.3 Collection of Accounts. 51
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6.4 Payments. 53
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6.5 Authorization to Make Loans 56
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6.6 Use of Proceeds 56
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6.7 [Intentionally Omitted]. 56
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6.8 Pro Rata Treatment 57
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6.9 Sharing of Payments, Etc. 57
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6.10 Settlement Procedures. 58
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6.11 Obligations Several; Independent Nature of Lenders' Rights 60
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SECTION 7. COLLATERAL REPORTING AND COVENANTS 60
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7.1 Collateral Reporting. 60
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7.2 Accounts Covenants. 61
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7.3 Inventory Covenants 62
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7.4 Equipment and Real Property Covenants 63
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7.5 Power of Attorney 64
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7.6 Right to Cure 65
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7.7 Access to Premises 65
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SECTION 8. REPRESENTATIONS AND WARRANTIES 65
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8.1 Corporate Existence, Power and Authority 65
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8.2 Name; State of Organization; Chief Executive Office; Collateral
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Locations. 66
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8.3 Financial Statements; No Material Adverse Change 66
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8.4 Priority of Liens; Title to Properties 67
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8.5 Tax Returns 67
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8.6 Litigation 67
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8.7 Compliance with Other Agreement and Applicable Laws. 67
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8.8 Environmental Compliance. 68
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8.9 Employee Benefits. 69
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8.10 Bank Accounts 69
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8.11 Intellectual Property 69
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8.12 Subsidiaries; Affiliates; Capitalization; Solvency. 70
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8.13 Labor Disputes. 71
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8.14 Restrictions on Subsidiaries 71
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8.15 Material Contracts 71
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8.16 Payable Practices 71
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8.17 Accuracy and Completeness of Information 72
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8.18 Senior Indebtedness 72
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8.19 Single Economic Enterprise 72
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8.20 Survival of Warranties; Cumulative 72
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SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS 72
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9.1 Maintenance of Existence. 72
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9.2 New Collateral Locations 73
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9.3 Compliance with Laws, Regulations, Etc. 73
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9.4 Payment of Taxes and Claims 74
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9.5 Insurance 74
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9.6 Financial Statements and Other Information. 75
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9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc 77
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9.8 Encumbrances 79
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9.9 Indebtedness 80
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9.10 Loans, Investments, Etc 83
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9.11 Dividends and Redemptions 85
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9.12 Transactions with Affiliates 86
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9.13 Compliance with ERISA 86
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9.14 End of Fiscal Years; Fiscal Quarters 87
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9.15 Change in Business 87
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9.16 Limitation of Restrictions Affecting Subsidiaries 87
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9.17 Secured Indebtedness to EBITDA Ratio 88
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9.18 License Agreements. 88
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9.19 After Acquired Real Property 89
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9.20 Costs and Expenses 89
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9.21 Further Assurances 90
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9.22 Fixed Charge Coverage Ratio 90
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9.23 Permitted Bond Repurchases 90
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9.24 Sale Leasebacks 91
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9.25 Excess Availability 91
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9.26 Exim Covenants 91
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9.27 Bank Accounts 91
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SECTION 10. EVENTS OF DEFAULT AND REMEDIES 92
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10.1 Events of Default 92
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10.2 Remedies. 94
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SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW 98
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11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver.
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98
11.2 Waiver of Notices 99
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11.3 Amendments and Waivers. 99
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11.4 Waiver of Counterclaims 102
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11.5 Indemnification 102
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SECTION 12. THE AGENT 103
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12.1 Appointment, Powers and Immunities 103
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12.2 Reliance by Agent 103
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12.3 Events of Default. 104
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12.4 Congress in its Individual Capacity 104
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12.5 Indemnification 104
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12.6 Non-Reliance on Agent and Other Lenders 105
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12.7 Failure to Act 105
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12.8 Additional Loans 105
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12.9 Concerning the Collateral and the Related Financing Agreements
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106
12.10 Field Audit, Examination Reports and Other Information; Disclaimer by
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Lenders 106
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12.11 Collateral Matters. 107
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12.12 Agency for Perfection 108
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12.13 Successor Agent 109
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SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS 109
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13.1 Term. 109
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13.2 Interpretative Provisions. 111
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13.3 Notices 112
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13.4 Partial Invalidity 113
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13.5 Successors 113
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13.6 Assignments; Participations. 114
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13.7 Entire Agreement 117
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13.8 Counterparts, Etc 117
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2
INDEX TO
EXHIBITS AND SCHEDULES
Exhibit A
Form of Assignment and Acceptance
Exhibit B
Information Certificate
Exhibit C . . . . . . . . . . . . . Form of Compliance Certificate
Exhibit D . . . . . . . . . . . . . Form of Borrowing Base Certificate
Exhibit E . . . . . . . . . . . . . Closing Checklist
Schedule 1
Existing Lenders
Schedule 2
Existing Letters of Credit
Schedule 3
Permitted Holders
Schedule 4
Commitments
Schedule 5
Eligibility Matters
Schedule 6
Fiscal Months
3
LOAN AND SECURITY AGREEMENT
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This Loan and Security Agreement dated October 31, 2003 is entered into by
and among The GSI Group, Inc., a Delaware corporation ("Borrower"), ▇▇▇▇▇
Manufacturing Co., an Iowa corporation ("DMC"), Assumption Leasing Company,
Inc., an Illinois corporation ("ALC" and together with DMC, each individually a
"Guarantor" and collectively, "Guarantors"), the lenders from time to time
parties hereto, whether by execution of this Agreement or an Assignment and
Acceptance (each individually, a "Lender" and collectively, "Lenders") and
Congress Financial Corporation (Central) , an Illinois corporation, in its
capacity as agent for Lenders (in such capacity, "Agent").
W I T N E S S E T H:
WHEREAS, Borrower and Guarantors have requested that Agent and Lenders
enter into financing arrangements with Borrower pursuant to which Lenders may
make loans and provide other financial accommodations to Borrower; and
WHEREAS, each Lender is willing to agree (severally and not jointly) to make
such loans and provide such financial accommodations to Borrower on a pro rata
basis according to its Commitment (as defined below) on the terms and conditions
set forth herein and Agent is willing to act as agent for Lenders on the terms
and conditions set forth herein and the other Financing Agreements;
NOW, THEREFORE, in consideration of the mutual conditions and agreements set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. DEFINITIONS
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For purposes of this Agreement, the following terms shall have the
respective meanings given to them below:
"Ableco" shall mean Ableco Finance LLC, a Delaware limited liability company.
"Accounts" shall mean, as to Borrower and each Guarantor, all present and future
rights of Borrower and such Guarantor to payment of a monetary obligation,
whether or not earned by performance, which is not evidenced by chattel paper or
an instrument, (a) for property that has been or is to be sold, leased,
licensed, assigned, or otherwise disposed of, (b) for services rendered or to be
rendered, (c) for a secondary obligation incurred or to be incurred, or (d)
arising out of the use of a credit or charge card or information contained on or
for use with the card.
"Adjusted Eurodollar Rate" shall mean, with respect to each Interest Period for
any Eurodollar Rate Loan, the rate per annum (rounded upwards, if necessary, to
the next one-sixteenth (1/16) of one (1%) percent) determined by dividing (a)
the Eurodollar Rate for such Interest Period by (b) a percentage equal to: (i)
one (1) minus (ii) the Reserve Percentage. For purposes hereof, "Reserve
Percentage" shall mean the reserve percentage, expressed as a decimal,
prescribed by any United States or foreign banking authority for determining the
reserve requirement which is or would be applicable to deposits of United States
dollars in a non-United States or an international banking office of Reference
Bank used to fund a Eurodollar Rate Loan or any Eurodollar Rate Loan made with
the proceeds of such deposit, whether or not the Reference Bank actually holds
or has made any such deposits or loans. The Adjusted Eurodollar Rate shall be
adjusted on and as of the effective day of any change in the Reserve Percentage.
4
"Affiliate" shall mean, with respect to a specified Person, any other Person
which directly or indirectly, through one or more intermediaries, controls or is
controlled by or is under common control with such Person, and without limiting
the generality of the foregoing, includes (a) any Person which beneficially owns
or holds five (5%) percent or more of any class of Voting Stock of such Person
or other equity interests in such Person, (b) any Person of which such Person
beneficially owns or holds five (5%) percent or more of any class of Voting
Stock or in which such Person beneficially owns or holds five (5%) percent or
more of the equity interests and (c) any director or executive officer of such
Person. For the purposes of this definition, the term "control" (including with
correlative meanings, the terms "controlled by" and "under common control
with"), as used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of Voting Stock, by
agreement or otherwise.
"Agent" shall mean Congress Financial Corporation (Central) in its capacity as
agent on behalf of Lenders pursuant to the terms hereof and any replacement or
successor agent hereunder.
"Agent Payment Account" shall mean account no. 5000000030266 of Agent at
Wachovia Bank, National Association, or such other account of Agent as Agent may
from time to time designate to Borrower as the Agent Payment Account for
purposes of this Agreement and the other Financing Agreements.
"Applicable Margin" shall mean, at any time, as to the Interest Rate for Prime
Rate Loans (other than the Term Loan), Eurodollar Rate Loans and Letter of
Credit Accommodations, the applicable row of percentages set forth below if the
Excess Availability as of the last Business Day of the immediately preceding
Fiscal Month is at or within the amounts indicated for such row:
Applicable Margin
for Prime Rate Applicable Margin
Loans (other for Eurodollar Letter of Credit
Excess Availability than the Term Loan) Rate Loans Accommodations
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(a) $15,000,000 or more. . 0.00% 2.50% 2.00%
(b) Greater than or equal
to $7,500,000 and less than
$ 15,000,000 0.25% 2.75% 2.25%
(c) Less than $7,500,000 . 0.50% 3.00% 2.50%
5
provided however, that, beginning on the date hereof and continuing through
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April 30, 2004, the Applicable Margin shall be (i) one quarter of one (0.25%)
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percent for Prime Rate Loans (other than the Term Loan), (ii) two and three
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quarters (2.75%) percent for Eurodollar Rate Loans and (iii) two and one quarter
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(2.25%) percent for Letter of Credit Accommodations.
"Approved Fund" shall mean with respect to Ableco or any other Lender that
is a fund or similar investment vehicle that makes or invests in commercial
loans, any fund or similar investment vehicle that invests in commercial loans
which is managed or advised by the same investment advisor as such Lender or by
an Affiliate of such investment advisor.
"Assignment and Acceptance" shall mean an Assignment and Acceptance
substantially in the form of Exhibit A attached hereto (with blanks
appropriately completed) delivered to Agent in connection with an assignment of
a Lender's interest hereunder in accordance with the provisions of Section 13.6
hereof.
"Blocked Accounts" shall have the meaning set forth in Section 6.3 hereof.
"Bond Repurchase" shall have the meaning set forth in Section 9.23 hereof.
"Bond Repurchase Reserve" shall mean an amount equal to $12,500,000; provided,
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that such Bond Repurchase Reserve (i) may be reduced by Borrower, in its sole
discretion, from time to time by an aggregate amount not to exceed $5,000,000
upon one (1) Business Day's prior written notice provided by Borrower to Agent
specifying the amount of such reduction and (ii) shall be reduced by Agent from
time to time in accordance with Section 9.23 hereof by an aggregate amount not
to exceed $7,500,000.
"Borrowing Base" shall mean, at any time, without duplication, the amount equal
to:
(a) the amount equal to eighty-five (85%) percent of the Net Amount of
the Eligible Accounts;
plus
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(b) the lesser of: (i) eighty-five (85%) percent of the Net Amount of
Eligible FarmPro Accounts and (ii) $1,000,000;
plus
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(c) the lesser of:
(i) the sum of (A) forty-five (45%) percent of the Value of Eligible
Inventory consisting of raw materials plus (B) the lesser of (1) fifty (50%)
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percent of the Value of Eligible Inventory consisting of work-in-process and (2)
the WIP Limit at such time plus (C) fifty (50%) percent of the Value of Eligible
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Inventory consisting of finished goods,
(ii) eighty-five (85%) percent of the Net Orderly Liquidation Value
Factor (based on the most recent appraisal) multiplied by the Value of Eligible
Inventory; provided, that (x) such eighty-five (85%) percent advance rate shall
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6
be increased to ninety (90%) percent from April 1 through and including
September 30 of each year and shall remain at eighty-five (85%) percent at all
other times and (y) the applicable advance rate (i.e., eighty-five (85%) percent
or ninety (90%) percent, as applicable, of the Net Orderly Liquidation Value
Factor) when applied against the Value of Eligible Inventory consisting of
work-in-process shall not result in an amount in excess of the WIP Limit then in
effect for purposes of this clause (ii), and
(iii) the Inventory Loan Limit;
plus
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(d) the Fixed Asset Amount at such time;
minus
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(e) Reserves;
minus
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(f) Bond Repurchase Reserve;
provided, however that notwithstanding the foregoing calculation, the amount of
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Borrowing Base actually attributed to the assets of DMC at any time shall not
exceed the DMC Sublimit then in effect.
For purposes only of applying the Inventory Loan Limit, Agent may treat the then
undrawn amounts of outstanding Non-Exim Letter of Credit Accommodations for the
purpose of purchasing Eligible Inventory as Non-Exim Revolving Loans to the
extent Agent is in effect basing the issuance of the Non-Exim Letter of Credit
Accommodations on the Value of the Eligible Inventory being purchased with such
Non-Exim Letter of Credit Accommodations. In determining the actual amounts of
such Non-Exim Letter of Credit Accommodations to be so treated for purposes of
the sublimit, the outstanding Non-Exim Revolving Loans and Reserves shall be
attributed first to any components of the lending formulas set forth above that
are not subject to such sublimit, before being attributed to the components of
the lending formulas subject to such sublimit. The amounts of Eligible
Inventory shall, at Agent's option, be determined based on the lesser of (A) the
amount of Inventory set forth in the general ledger of Borrower and DMC or (B)
the sum of the perpetual inventory record maintained by Borrower and DMC plus
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those reconciling items set forth on Part III of Schedule 5 hereto.
"Business Day" shall mean any day other than a Saturday, Sunday, or other
day on which commercial banks are authorized or required to close under the laws
of the State of New York, or the State of North Carolina, and a day on which
Agent is open for the transaction of business, except that if a determination of
a Business Day shall relate to any Eurodollar Rate Loans, the term Business Day
shall also exclude any day on which banks are closed for dealings in dollar
deposits in the London interbank market or other applicable Eurodollar Rate
market.
7
"Capital Leases" shall mean, as applied to any Person, any lease of (or any
agreement conveying the right to use) any property (whether real, personal or
mixed) by such Person as lessee which in accordance with GAAP, is required to be
reflected as a liability on the balance sheet of such Person.
"Capital Stock" shall mean, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated) of such
Person's capital stock or partnership, limited liability company or other equity
interests at any time outstanding, and any and all rights, warrants or options
exchangeable for or convertible into such capital stock or other interests (but
excluding any debt security that is exchangeable for or convertible into such
capital stock).
"Cash Equivalents" shall mean, at any time, (a) any evidence of Indebtedness
with a maturity date of ninety (90) days or less issued or directly and fully
guaranteed or insured by the United States of America of any agency or
instrumentality thereof; provided, that the full faith and credit of the United
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States of America is pledged in support thereof; (b) certificates of deposit or
bankers' acceptances with a maturity of ninety (90) days or less of any
financial institution that is a member of the Federal Reserve System having
combined capital and surplus and undivided profits of not less than
$250,000,000; (c) commercial paper (including variable rate demand notes) with a
maturity of ninety (90) days or less issued by a corporation (except an
Affiliate of Borrower or any Guarantor) organized under the laws of any State of
the United States of America or the District of Columbia and rated at least A-1
by Standard & Poor's Ratings Service, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies,
Inc. or at least P-1 by ▇▇▇▇▇'▇ Investors Service, Inc.; (d) repurchase
obligations with a term of not more than thirty (30) days for underlying
securities of the types described in clause (a) above entered into with any
financial institution having combined capital and surplus and undivided profits
of not less than $250,000,000; (e) repurchase agreements and reverse repurchase
agreements relating to marketable direct obligations issued or unconditionally
guaranteed by the United States of America or issued by any governmental agency
thereof and backed by the full faith and credit of the United States of America,
in each case maturing within ninety (90) days or less from the date of
acquisition; provided, that the terms of such agreements comply with the
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guidelines set forth in the Federal Financial Agreements of Depository
Institutions with Securities Dealers and Others, as adopted by the Comptroller
of the Currency on October 31, 1985; and (f) investments in money market funds
and mutual funds which invest substantially all of their assets in securities of
the types described in clauses (a) through (e) above.
"Change of Control" shall mean (a) the transfer (in one transaction or a series
of transactions) of all or substantially all of the assets of Borrower or any
Guarantor to any Person or group (as such term is used in Section 13(d)(3) of
the Exchange Act), other than as permitted in Section 9.7 hereof; (b) the
liquidation or dissolution of Borrower or any Guarantor or the adoption of a
plan by the stockholders of Borrower or any Guarantor relating to the
dissolution or liquidation of Borrower or such Guarantor, other than as
permitted in Section 9.7 hereof; (c) the acquisition by any Person or group (as
such term is used in Section 13(d)(3) of the Exchange Act), except for one or
more Permitted Holders, of beneficial ownership, directly or indirectly, of a
majority of the voting power of the total outstanding Voting Stock of Borrower
or any Guarantor or the Board of Directors of Borrower or any Guarantor; (d)
during any period of two (2) consecutive years, individuals who at the beginning
of such period constituted the Board of Directors of Borrower or any Guarantor
(together with any new directors who have been appointed by any Permitted
Holder, or whose nomination for election by the stockholders of Borrower or such
Guarantor, as the case may be, was approved by a vote of at least sixty-six and
two-thirds (66 2/3%) percent of the directors then still in office who were
either directors at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors of Borrower or any Guarantor then still in
office; (e) the failure of the Permitted Holders to own directly or indirectly
one hundred (100%) percent of the voting power of the total outstanding Voting
Stock of Borrower; (f) the failure of Borrower to own directly or indirectly one
hundred (100%) percent of the voting power of the total outstanding Voting Stock
of any Guarantor; or (g) the occurrence of any "Change of Control" (as such term
is defined in the Indenture).
8
"Code" shall mean the Internal Revenue Code of 1986, as the same now exists or
may from time to time hereafter be amended, modified, recodified or
supplemented, together with all rules, regulations and interpretations
thereunder or related thereto.
"Collateral" shall have the meaning set forth in Section 5.1 hereof.
"Collateral Access Agreement" shall mean an agreement in writing, in form and
substance satisfactory to Agent, from any lessor of premises to Borrower or any
Guarantor, or any other person to whom any Collateral is consigned or who has
custody, control or possession of any such Collateral or is otherwise the owner
or operator of any premises on which any of such Collateral is located, pursuant
to which such lessor, consignee or other person, inter alia, acknowledges the
first priority security interest of Agent in such Collateral, agrees to waive
any and all claims such lessor, consignee or other person may, at any time, have
against such Collateral, whether for processing, storage or otherwise, and
agrees to permit Agent access to, and the right to remain on, the premises of
such lessor, consignee or other person so as to exercise Agent's rights and
remedies and otherwise deal with such Collateral and in the case of any
consignee or other person who at any time has custody, control or possession of
any Collateral, acknowledges that it holds and will hold possession of the
Collateral for the benefit of Agent and Lenders and agrees to follow all
instructions of Agent with respect thereto.
"Commitment" shall mean, at any time subject to the last sentence of this
definition, as to each Lender, the principal amount set forth next to such
Lender's name on Schedule 4 hereto designated as the Revolving Commitment and/or
Term Commitment or on Schedule I to the Assignment and Acceptance Agreement
pursuant to which such Lender became a Lender hereunder in accordance with the
provisions of Section 13.6 hereof, as the same may be adjusted from time to time
in accordance with the terms hereof; sometimes being collectively referred to
herein as "Commitments". The term "Commitment" with respect to any Term Lender
once the Term Loan is advanced, shall mean the outstanding amount of such Term
Lender's Term Loan.
"Commitment Letter" shall mean the letter agreement, dated September 18, 2003,
between Borrower and Agent, setting forth certain fees payable by Borrower to
Agent for the benefit of itself and Revolving Lenders and setting forth certain
terms and conditions of the financing arrangements among the parties hereto, as
the same now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.
"Congress" shall mean Congress Financial Corporation (Central), an Illinois
corporation, in its individual capacity, and its successors and assigns.
9
"Credit Facility" shall mean the Loans and Letter of Credit Accommodations
provided to or for the benefit of Borrower pursuant to Sections 2.1 and 2.2
hereof.
"Default" shall mean an act, condition or event which with notice or passage of
time or both would constitute an Event of Default.
"Defaulting Revolving Lender" shall have the meaning set forth in Section
6.10(d) hereof.
"Deposit Account Control Agreement" shall mean an agreement in writing, in form
and substance satisfactory to Agent, by and among Agent, Borrower or a Guarantor
with a deposit account at any bank and the bank at which such deposit account is
at any time maintained which provides that such bank will comply with
instructions originated by Agent directing disposition of the funds in the
deposit account without further consent by Borrower or such Guarantor and such
other terms and conditions as Agent may require, including as to any such
agreement with respect to any Blocked Account, providing that all items received
or deposited in the Blocked Accounts are the property of Agent, that the bank
has no lien upon, or right to setoff against, the Blocked Accounts, the items
received for deposit therein, or the funds from time to time on deposit therein
and that the bank will wire, or otherwise transfer, in immediately available
funds, on a daily basis to the Agent Payment Account all funds received or
deposited into the Blocked Accounts.
"DMC Sublimit" shall mean as of any date of determination, the sum of (a) the
aggregate amount of outstanding Indebtedness and other monetary obligations
owing by DMC to Borrower plus (b) the product of (i) ninety (90%) multiplied by
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(ii) the amount by which the Fair and Present Fair Saleable Value of DMC's
assets exceeds DMC's liabilities as reflected on DMC's latest consolidating
financial statements delivered to Agent, in each case above as certified to
Agent pursuant to Section 9.6(a) hereof.
"EBITDA" shall mean, with respect to Borrower and its Subsidiaries on a
consolidated basis for any fiscal period, (a) consolidated net income for such
period; plus (b) without duplication, an amount which, in the determination of
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such consolidated net income has been deducted for (i) Interest Expense,
accretion of original issue discount, amortization of debt issuance costs and
any other fees and costs under any Financing Agreement, (ii) depreciation and
amortization, (iii) provisions for federal, state, local and foreign taxes based
on income or profits, (iv) non-cash restructuring and closing costs associated
with the closure of facilities and operations and non-cash operating losses of
such closed facilities and operations in the month of and subsequent to their
closure, (v) extraordinary non-cash losses and non-cash impairment charges,
including goodwill impairment charges, (vi) write-offs in connection with
Borrower's joint venture with Resin Tech. in an amount not to exceed $500,000
for the six (6) month period ending June 30, 2003, (vii) write-offs in
connection with royalty payments that will not materialize from Borrower's sale
of its Hatchery division in an amount not to exceed $94,000 for the nine (9)
month period ending December 31, 2003 and (viii) write-offs of foreign accounts
receivable in connection with Borrower's restructuring in an amount not to
exceed $129,000 for Borrower's fiscal year ending December 31, 2003; minus (c)
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an amount which, in the determination of such consolidated net income has been
included for extraordinary gains and gains associated with the purchase and
retirement of securities subject to the Indentures, all calculated in accordance
with GAAP; and minus (d) the amount of any cash items not otherwise deducted in
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determining net income (or loss) to the extent that such items were previously
added back to EBITDA as non-recurring, non-cash items in any prior fiscal
period.
10
"Eligible Accounts" shall mean Accounts (other than Eligible FarmPro Accounts
and Eligible Export-Related Accounts Receivable) created by Borrower or DMC
which are and continue to be acceptable to Agent based on the criteria set forth
below. In general, Accounts (other than Eligible FarmPro Accounts and Eligible
Export-Related Accounts) shall be Eligible Accounts if:
(a) such Accounts arise from the actual and bona fide sale and delivery
of goods by Borrower or DMC or rendition of services by Borrower or DMC in the
ordinary course of its business which transactions are completed in accordance
with the terms and provisions contained in any documents related thereto;
(b) such Accounts are not unpaid more than sixty (60) days past the original
due date for them;
(c) such Accounts are not unpaid more than (i) ninety (90) days after the
date of the original invoice for them or (ii) one hundred fifty (150) days from
the original invoice date thereof for Accounts with special dating terms arising
under existing programs of Borrower set forth on Part I of Schedule 5 hereto or
such other programs which are otherwise approved by Agent in writing;
(d) such Accounts comply with the terms and conditions contained in Section
7.2(b) of this Agreement;
(e) such Accounts do not arise from sales on consignment, guaranteed sale,
sale and return, sale on approval, or other terms under which payment by the
account debtor may be conditional or contingent;
(f) the chief executive office of the account debtor with respect to such
Accounts is located in the United States of America or Canada (provided, that at
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any time promptly upon Agent's request, Borrower and DMC shall execute and
deliver, or cause to be executed and delivered, such other agreements, documents
and instruments as may be required by Agent to perfect the security interests of
Agent in those Accounts of an account debtor with its chief executive office or
principal place of business in Canada in accordance with the applicable laws of
the Province of Canada in which such chief executive office or principal place
of business is located and take or cause to be taken such other and further
actions as Agent may request to enable Agent as secured party with respect
thereto to collect such Accounts under the applicable Federal or Provincial laws
of Canada) or, at Agent's option, if the chief executive office and principal
place of business of the account debtor with respect to such Accounts is located
other than in the United States of America or Canada, then if either: (i) the
account debtor has delivered to Borrower or DMC an irrevocable letter of credit
issued or confirmed by a bank satisfactory to Agent and payable only in the
United States of America and in U.S. dollars, sufficient to cover such Account,
in form and substance satisfactory to Agent and if required by Agent, the
original of such letter of credit has been delivered to Agent or Agent's agent
and the issuer thereof, and Borrower and DMC have complied with the terms of
Section 5.2(f) hereof with respect to the assignment of the proceeds of such
letter of credit to Agent or naming Agent as transferee beneficiary thereunder,
as Agent may specify, or (ii) such Account is subject to credit insurance
payable to Agent issued by an insurer and on terms and in an amount acceptable
to Agent, or (iii) such Account is otherwise acceptable in all respects to Agent
(subject to such lending formula with respect thereto as Agent may determine);
11
(g) such Accounts do not consist of progress ▇▇▇▇▇▇▇▇ (such that the
obligation of the account debtors with respect to such Accounts is conditioned
upon Borrower's or DMC's satisfactory completion of any further performance
under the agreement giving rise thereto), ▇▇▇▇ and hold invoices or retainage
invoices, except as to ▇▇▇▇ and hold invoices, if Agent shall have received an
agreement in writing from the account debtor, in form and substance satisfactory
to Agent, confirming the unconditional obligation of the account debtor to take
the goods related thereto and pay such invoice;
(h) the account debtor with respect to such Accounts has not asserted a
counterclaim, defense or dispute and does not have, and does not engage in
transactions which may give rise to any right of setoff or recoupment against
such Accounts (but the portion of the Accounts of such account debtor in excess
of the amount at any time and from time to time owed by Borrower or DMC to such
account debtor or claimed owed by such account debtor may be deemed Eligible
Accounts),
(i) there are no facts, events or occurrences which would impair the
validity, enforceability or collectability of such Accounts or reduce the amount
payable or delay payment thereunder;
(j) such Accounts are subject to the first priority, valid and perfected
security interest of Agent and any goods giving rise thereto are not, and were
not at the time of the sale thereof, subject to any liens except those permitted
in this Agreement;
(k) neither the account debtor nor any officer or employee of the account
debtor with respect to such Accounts is an officer, employee, agent or other
Affiliate of Borrower, DMC or any Guarantor except as set forth on Part II of
Schedule 5 hereto or as otherwise approved by Agent in writing;
(l) the account debtors with respect to such Accounts are not any foreign
government, the United States of America, any State, political subdivision,
department, agency or instrumentality thereof, unless, (i) a letter of credit,
in form and substance satisfactory to Agent, has been obtained with respect to
such Account and account debtor, or (ii) if the account debtor is the United
States of America, any State, political subdivision, department, agency or
instrumentality thereof, upon Agent's request, the Federal Assignment of Claims
Act of 1940, as amended or any similar State or local law, if applicable, has
been complied with in a manner satisfactory to Agent;
(m) there are no proceedings or actions which are threatened or pending
against the account debtors with respect to such Accounts which might result in
any material adverse change in any such account debtor's financial condition
(including, without limitation, any bankruptcy, dissolution, liquidation,
reorganization or similar proceeding);
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(n) such Accounts are not evidenced by or arising under any instrument or
chattel paper;
(o) the aggregate amount of such Accounts owing by a single account debtor
does not constitute more than ten (10%) percent of the aggregate amount of all
otherwise Eligible Accounts (but the portion of the Accounts not in excess of
ten (10%) percent may be deemed Eligible Accounts);
(p) such Accounts are not owed by an account debtor who has Accounts unpaid
more than the number of days set forth in clauses (b) and (c) of this definition
after the original due date or invoice date, as applicable, which collectively
constitute more than fifty (50%) percent of the total Accounts of such account
debtor;
(q) the account debtor is not located in a state requiring the filing of a
Notice of Business Activities Report or similar report in order to permit
Borrower or DMC to seek judicial enforcement in such State of payment of such
Account, unless Borrower has qualified to do business in such state or has filed
a Notice of Business Activities Report or equivalent report for the then current
year or such failure to file and inability to seek judicial enforcement is
capable of being remedied without any material delay or material cost;
(r) such Accounts are owed by account debtors deemed creditworthy at all
times by Agent.
The criteria for Eligible Accounts set forth above may only be changed and any
new criteria for Eligible Accounts may only be established by Agent in good
faith based on either: (i) an event, condition or other circumstance arising
after the date hereof, or (ii) an event, condition or other circumstance
existing on the date hereof to the extent Agent has no written notice thereof
from Borrower or DMC prior to the date hereof, in either case under clause (i)
or (ii) which adversely affects or could reasonably be expected to adversely
affect the Accounts in the good faith determination of Agent. Any Accounts
which are not Eligible Accounts shall nevertheless be part of the Collateral.
"Eligible Equipment" shall mean Equipment of Borrower or DMC which (a) have
been appraised by an appraiser acceptable to Agent and which appraisals are
satisfactory to Agent as to form, scope and methodology in accordance with
Section 7.4(a), (b) do not consist of fixtures, (c) can be readily removed from
the Real Property unless Agent also has a first priority perfected lien on such
Real Property or otherwise has a Collateral Access Agreement with all necessary
parties permitting the removal thereof, (d) are not leased, worn-out or
obsolete, (e) are subject to the first priority, valid and perfected security
interest of Agent and are subject to no other junior liens, (f) are located on
properties which are owned by Borrower or DMC or as to which the lessor of any
such property has executed a Collateral Access Agreement in favor of Agent and
(g) are otherwise acceptable to Agent for inclusion in the Borrowing Base.
"Eligible Export-Related Accounts Receivable" shall have the meaning set forth
in the Exim Borrower Agreement.
13
"Eligible Export-Related Inventory" shall have the meaning set forth in the
Exim Borrower Agreement.
"Eligible FarmPro Accounts" shall mean Accounts owing by FarmPro, Inc. to
Borrower or DMC which are and continue to be acceptable to Agent based on the
criteria set forth below. In general, such Accounts shall be Eligible FarmPro
Accounts if:
(a) such Accounts meet all of the eligibility requirements stated in
the definition of "Eligible Accounts";
(b) such Accounts are secured by a first priority perfected security
interest (including, without limitation, in the case of any material real
estate, a mortgage lien) in the assets of FarmPro, Inc. in favor of Borrower and
DMC and such security interests and liens are documented and assigned to Agent
in form and substance acceptable to Agent; and
(c) Agent has received current information about FarmPro, Inc. reasonably
satisfactory to Agent to allow Agent to determine that it is satisfied with
FarmPro, Inc.'s ability to pay such Accounts in accordance with their terms.
"Eligible Inventory" shall mean, as to each of Borrower and DMC, Inventory
of Borrower and DMC consisting of finished goods held for resale in the ordinary
course of the business of Borrower and DMC, raw materials for such finished
goods and work-in-process, in each case which are acceptable to Agent based on
the criteria set forth below. In general, Eligible Inventory shall not include:
(a) spare parts for equipment other than Inventory consisting of spare parts
held for sale to customers; (b) packaging and shipping materials not
specifically identified as a component of any finished goods; (c) supplies used
or consumed in Borrower's or DMC's business; (d) Inventory at premises other
than those owned and controlled by Borrower or DMC, except any Inventory which
would otherwise be deemed Eligible Inventory that is not located at premises
owned and operated by Borrower or DMC may nevertheless be considered Eligible
Inventory: (i) as to locations which are leased by Borrower or DMC, if Agent
shall have received a Collateral Access Agreement from the owner and lessor of
such location, duly authorized, executed and delivered by such owner and lessor,
or if Agent shall not have received such Collateral Access Agreement (or Agent
shall determine to accept a Collateral Access Agreement that does not include
all required provisions or provisions in the form otherwise required by Agent),
Agent may, at its option, nevertheless consider Inventory at such location to be
Eligible Inventory to the extent Agent shall have established such Reserves in
respect of amounts at any time payable by Borrower or DMC to the owner and
lessor thereof as Agent shall determine, and (ii) as to any location owned and
operated by a third person (other than consignment locations under clause (i)
below), if Agent shall have received a Collateral Access Agreement from such
owner and operator with respect to such location to the extent the Value of
Inventory at such location is in excess of $100,000 or if Agent has requested a
Collateral Access Agreement for such location during the existence of a Trigger
Event, in such case duly authorized, executed and delivered by such owner and
operator or if Agent shall not have received such Collateral Access Agreement
(or Agent shall determine to accept a Collateral Access Agreement that does not
include all required provisions or provisions in the form otherwise required by
Agent), Agent may, at its option, nevertheless consider Inventory at such
14
location to be Eligible Inventory to the extent Agent shall have established
such Reserves in respect of amounts at any time payable by Borrower or DMC to
the owner and operator thereof as Agent shall determine, and in addition, if
required by Agent, if Agent shall have received: (A) UCC financing statements
between the owner and operator, as consignee or bailee and Borrower or DMC, as
consignor or ▇▇▇▇▇▇, in form and substance satisfactory to Agent, which are duly
assigned to Agent and (B) a written notice to any lender to the owner and
operator of the first priority security interest in such Inventory of Agent; (e)
Inventory subject to a security interest or lien in favor of any Person other
than Agent except those permitted in this Agreement (but without limiting the
right of Agent to establish any Reserves with respect to amounts secured by such
security interest or lien in favor of any Person even if permitted herein); (f)
▇▇▇▇ and hold goods; unserviceable, obsolete or slow moving Inventory; (g)
Inventory which is not subject to the first priority, valid and perfected
security interest of Agent; (h) returned, damaged and/or defective Inventory;
(i) Inventory purchased or sold on consignment unless, in the case of Inventory
sold on consignment, the requirements of Section 5.2(j) with respect to such
consigned Inventory are satisfied; provided, that if Agent shall not have
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received a Collateral Access Agreement from the consignee in accordance with
Section 5.2(j), such consigned Inventory shall be considered to be Eligible
Inventory to the extent the Value of such Inventory, together with the Value of
all other consigned Inventory at any location without a Collateral Access
Agreement, is less than $100,000 and no Trigger Event exists; provided, that
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Agent may, at its option, nevertheless consider such consigned Inventory to be
Eligible Inventory to the extent Agent shall have established such Reserves as
Agent shall determine; (j) Inventory that qualifies as Eligible Export-Related
Inventory; (k) Inventory located in the United States that is to be sold outside
the United States; (l) Inventory located outside the United States of America;
and (m) Inventory which has been returned or repurchased under any warranty
issued by Borrower or DMC. The criteria for Eligible Inventory set forth above
may only be changed and any new criteria for Eligible Inventory may only be
established by Agent in good faith based on either: (i) an event, condition or
other circumstance arising after the date hereof, or (ii) an event, condition or
other circumstance existing on the date hereof to the extent Agent has no
written notice thereof from Borrower or DMC prior to the date hereof, in either
case under clause (i) or (ii) which adversely affects or could reasonably be
expected to adversely affect the Inventory in the good faith determination of
Agent. Any Inventory which is not Eligible Inventory shall nevertheless be part
of the Collateral.
"Eligible Real Property" shall mean Real Property of Borrower or DMC (i) subject
to a Mortgage pursuant to which Agent has been granted a valid first mortgage
lien in such Real Property, (ii) as to which Agent has received, in each case,
in form and substance satisfactory to Agent (A) a valid and effective title
policy insuring such Mortgage meeting the requirements set forth in Section
4.1(n), (B) an environmental audit meeting the requirements set forth in Section
4.1(m) and (C) written appraisals meeting the requirements set forth in Section
7.4(a) and (iii) which has otherwise been approved by Agent for inclusion in the
Borrowing Base prior to the date hereof.
"Eligible Transferee" shall mean (a) any Lender; (b) the parent company of any
Lender and/or any Affiliate of such Lender which is at least fifty (50%) percent
owned by such Lender or its parent company; (c) any person (whether a
corporation, partnership, trust or otherwise) that is engaged in the business of
making, purchasing, holding or otherwise investing in bank loans and similar
extensions of credit in the ordinary course of its business and is administered
or managed by a Lender or with respect to any Lender that is a fund which
15
invests in bank loans and similar extensions of credit, any other fund that
invests in bank loans and similar extensions of credit and is managed by the
same investment advisor as such Lender or by an Affiliate of such investment
advisor, and in each case is approved by Agent; and (d) any other commercial
bank, financial institution or "accredited investor" (as defined in Regulation D
under the Securities Act of 1933) approved by Agent, provided, that, (i) neither
Borrower nor any Guarantor or any Affiliate of Borrower or any Guarantor shall
qualify as an Eligible Transferee and (ii) no Person to whom any Indebtedness
which is in any way subordinated in right of payment to any other Indebtedness
of Borrower or any Guarantor shall qualify as an Eligible Transferee, except as
Agent may otherwise specifically agree.
"Enforcement Action" shall mean the exercise by Agent in good faith of any of
its material enforcement rights and remedies as a secured creditor hereunder or
under the other Financing Agreements, applicable law or otherwise at any time
following the occurrence and during the continuance of an Event of Default
(including, without limitation, the demand for the immediate payment of all of
the Obligations, the solicitation of bids from third parties to conduct the
liquidation of the Collateral, the engagement or retention of sales brokers,
marketing agents, investment bankers, accountants, appraisers, auctioneers or
other third parties for the purposes of valuing, marketing, promoting and
selling the Collateral, the commencement of any action to foreclose on the
security interests or liens of Agent in all or any material portion of the
Collateral, notification of account debtors to make payments to Agent, any
action to take possession of all or any material portion of the Collateral or
commencement of any legal proceedings or actions against or with respect to all
or any portion of the Collateral).
"Environmental Laws" shall mean all foreign, Federal, State and local laws
(including common law), legislation, rules, codes, licenses, permits (including
any conditions imposed therein), authorizations, judicial or administrative
decisions, injunctions or agreements between Borrower or any Guarantor and any
Governmental Authority, (a) relating to pollution and the protection,
preservation or restoration of the environment (including air, water vapor,
surface water, ground water, drinking water, drinking water supply, surface
land, subsurface land, plant and animal life or any other natural resource), or
to human health or safety, (b) relating to the exposure to, or the use,
storage, recycling, treatment, generation, manufacture, processing,
distribution, transportation, handling, labeling, production, release or
disposal, or threatened release, of Hazardous Materials, or (c) relating to all
laws with regard to recordkeeping, notification, disclosure and reporting
requirements respecting Hazardous Materials. The term "Environmental Laws"
includes (i) the Federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the Federal Superfund Amendments and Reauthorization Act,
the Federal Water Pollution Control Act of 1972, the Federal Clean Water Act,
the Federal Clean Air Act, the Federal Resource Conservation and Recovery Act of
1976 (including the Hazardous and Solid Waste Amendments thereto), the Federal
Solid Waste Disposal and the Federal Toxic Substances Control Act, the Federal
Insecticide, Fungicide and Rodenticide Act, and the Federal Safe Drinking Water
Act of 1974, (ii) applicable state counterparts to such laws and (iii) any
common law or equitable doctrine that may impose liability or obligations for
injuries or damages due to, or threatened as a result of, the presence of or
exposure to any Hazardous Materials.
"Equipment" shall mean, as to Borrower or any Guarantor, all of Borrower's or
such Guarantor's now owned and hereafter acquired equipment, wherever located,
including machinery, data processing and computer equipment (whether owned or
licensed and including embedded software), vehicles, tools, furniture, fixtures,
all attachments, accessions and property now or hereafter affixed thereto or
used in connection therewith, and substitutions and replacements thereof,
wherever located.
16
"Equipment Sublimit" shall have the meaning set forth in the definition of Fixed
Asset Amount.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, together
with all rules, regulations and interpretations thereunder or related thereto.
"ERISA Affiliate" shall mean any person required to be aggregated with Borrower,
any Guarantor or any of its or their respective Subsidiaries under Sections
414(b), 414(c), 414(m) or 414(o) of the Code.
"ERISA Event" shall mean (a) any "reportable event", as defined in Section
4043(c) of ERISA or the regulations issued thereunder, with respect to a Plan;
(b) the adoption of any amendment to a Plan that would require the provision of
security pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA; (c)
the existence with respect to any Plan of an "accumulated funding deficiency"
(as defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (d) the filing pursuant to Section 412 of the Code or Section 303(d) of
ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (e) the occurrence of a "prohibited transaction" with
respect to which Borrower, any Guarantor or any of its or their respective
Subsidiaries is a "disqualified person" (within the meaning of Section 4975 of
the Code) or with respect to which Borrower, any Guarantor or any of its or
their respective Subsidiaries could otherwise be liable; (f) a complete or
partial withdrawal by Borrower, any Guarantor or any ERISA Affiliate from a
Multiemployer Plan or a cessation of operations which is treated as such a
withdrawal or notification that a Multiemployer Plan is in reorganization; (g)
the filing of a notice of intent to terminate, the treatment of a Plan amendment
as a termination under Section 4041 or 4041A of ERISA, or the commencement of
proceedings by the Pension Benefit Guaranty Corporation to terminate a Plan; (h)
an event or condition which might reasonably be expected to constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan; (i) the imposition of any liability under Title
IV of ERISA, other than the Pension Benefit Guaranty Corporation premiums due
but not delinquent under Section 4007 of ERISA, upon Borrower, any Guarantor or
any ERISA Affiliate in excess of $500,000; and (j) any other event or condition
with respect to a Plan including any Plan subject to Title IV of ERISA
maintained, or contributed to, by any ERISA Affiliate that could reasonably be
expected to result in liability of Borrower in excess of $500,000.
"Eurodollar Rate" shall mean with respect to the Interest Period for a
Eurodollar Rate Loan, the interest rate per annum equal to the arithmetic
average of the rates of interest per annum (rounded upwards, if necessary, to
the next one-sixteenth (1/16) of one (1%) percent) at which Reference Bank is
offered deposits of United States dollars in the London interbank market (or
other Eurodollar Rate market selected by Borrower and approved by Agent) on or
about 9:00 a.m. (New York time) two (2) Business Days prior to the commencement
of such Interest Period in amounts substantially equal to the principal amount
of the Eurodollar Rate Loans requested by and available to Borrower in
accordance with this Agreement, with a maturity of comparable duration to the
Interest Period selected by Borrower.
17
"Eurodollar Rate Loans" shall mean any Loans or portion thereof on which
interest is payable based on the Adjusted Eurodollar Rate in accordance with the
terms hereof. For the avoidance of doubt, the Term Loan shall not constitute a
Eurodollar Rate Loan at any time.
"Event of Default" shall mean the occurrence or existence of any event or
condition described in Section 10.1 hereof.
"Excess Availability" shall mean, as to Borrower, the amount, as determined by
Agent, calculated at any date, equal to: (a) the lesser of: (i) the sum of (A)
the Borrowing Base plus, to the extent all the conditions set forth in Section
----
4.3 hereof are satisfied, (B) the lesser of (1) the Export-Related Borrowing
Base and (2) the Maximum Exim Revolving Credit and (ii) the Maximum Revolving
Credit, minus (b) the sum of: (i) the amount of all then outstanding and unpaid
Obligations of Borrower (other than Term Loan Obligations), plus (ii) the
aggregate amount of all then outstanding and unpaid trade payables and other
obligations of Borrower or DMC which are outstanding more than sixty (60) days
past due as of such time (other than trade payables or other obligations being
contested or disputed by Borrower or DMC in good faith), plus (iii) without
duplication, the amount of checks issued by Borrower or DMC to pay trade
payables and other obligations which are more than sixty (60) days past due as
of such time (other than trade payables or other obligations being contested or
disputed by Borrower or DMC in good faith), but not yet sent.
"Exchange Act" shall mean the Securities Exchange Act of 1934, together with all
rules, regulations and interpretations thereunder or related thereto.
"Exim" shall mean Export-Import Bank of the United States.
"Exim Borrower Agreement" shall mean that certain Borrower Agreement, among
Borrower, Agent and Exim, as modified by any applicable loan authorization
agreements and by any waivers approved by Agent and Exim, and as otherwise
amended or modified from time to time.
"Exim Excess Availability" shall mean as to Borrower, the amount, as determined
by Agent, calculated at any date, equal to: (a) the lesser of: (i) the
Export-Related Borrowing Base and (ii) the lesser of: (A) the Maximum Exim
Revolving Credit and (B) the Maximum Revolving Credit less the outstanding
amount of Non-Exim Revolving Loans and Non-Exim Letter of Credit Accommodations,
minus (b) the amount of all then outstanding and unpaid Exim Revolving Loans and
-----
Exim Letter of Credit Accommodations.
"Exim Facility" shall mean the Exim Revolving Loans and the Exim Letter of
Credit Accommodations provided under this Agreement to the extent all the
conditions under Section 4.3 have been satisfied.
"Exim Guarantee" shall mean the Master Guaranty Agreement issued by Exim in form
and substance satisfactory to Agent which guarantees to Agent, for the benefit
of the Revolving Lenders, the outstanding amount of any Exim Revolving Loans
and/or Exim Letter of Credit Accommodations (or such portion thereof as shall be
acceptable to Agent and Required Revolving Lenders).
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"Exim Guarantee Documents" shall mean, collectively, the Exim Borrower
Agreement, the Exim Guarantee, and all other agreements, documents and
instruments now or at any time hereafter executed and/or delivered by Exim,
Agent, any Lender, Borrower or any Obligor in connection with the Exim Borrower
Agreement and Exim Guarantee, in each case as amended or otherwise modified from
time to time.
"Exim Letter of Credit Accommodations" shall mean, collectively, (a) the letters
of credit, merchandise purchase or other guaranties which are from time to time
either issued or opened by Agent or any Lender for the account of Borrower or
any Obligor or (b) with respect to which Agent or Lenders have agreed to
indemnify the issuer or guaranteed to the issuer the performance by Borrower or
any Obligor of its obligations to such issuer; sometimes being referred to
herein individually as "Exim Letter of Credit Accommodation", in each case
provided under Section 2.2(a)(ii) hereof and in each case supported by an Exim
Guarantee.
"Exim Primary Collateral" shall mean the Collateral designated under the terms
of the Exim Guarantee Documents as constituting primary collateral securing the
Exim Revolving Loans and the Exim Letter of Credit Accommodations.
"Exim Revolving Loans" shall mean the loans now or hereafter made by or on
behalf of any Revolving Lender or by Agent for the account of any Revolving
Lender on a revolving basis pursuant to the Credit Facility (involving advances,
repayments and readvances) as set forth in Section 2.1(b) hereof and which are
supported by an Exim Guarantee.
"Existing Lenders" shall mean the lenders to Borrower and its Subsidiaries
listed on Schedule 1 hereto (and including LaSalle Bank National Association in
its capacity as agent acting for such lenders) and their respective
predecessors, successors and assigns.
"Existing Letters of Credit" shall mean, collectively, the letters of credit
issued for the account of Borrower or a Guarantor or for which Borrower or such
Guarantor is otherwise liable listed on Schedule 2 hereto, as the same now exist
or may hereafter be amended, modified, supplemented, extended, renewed, restated
or replaced.
"Export-Related Borrowing Base" shall mean the "Export-Related Borrowing Base"
(as defined in the Exim Borrower Agreement) less such Reserves as Agent shall
establish.
"Export-Related Account Receivable" shall have the meaning set forth in the
Exim Borrower Agreement.
"Export-Related Inventory" shall have the meaning set forth in the Exim Borrower
Agreement.
"Fair and Present Fair Saleable Value" shall mean the amount which may be
realized within a reasonable time, either through collection or sale of assets
at the regular market value on an ongoing business basis.
19
"Fee Letter" shall mean the letter agreement, dated as of the date hereof,
between Borrower and Agent, setting forth certain fees payable by Borrower to
Agent for the benefit of itself, Revolving Lenders and/or Ableco, as the case
may be, as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
"Financing Agreements" shall mean, collectively, this Agreement and all notes,
guarantees, security agreements, deposit account control agreements, investment
property control agreements, intercreditor agreements and all other agreements,
documents and instruments now or at any time hereafter executed and/or delivered
by Borrower or any Obligor in connection with this Agreement and including,
without limitation, the Exim Guarantee Documents.
"Fiscal Month" means for any fiscal year of Borrower, each of the twelve-month
periods set forth for such fiscal year on Schedule 6 hereto which schedule shall
be updated by Borrower on the first Business Day of December of each fiscal year
(commencing on December 1, 2005) to reflect the twelve Fiscal Months for the
immediately following fiscal year.
"Fixed Asset Amount" shall mean, as of any date of determination, the amount, as
reasonably determined by Agent, to be the lesser (a) $15,000,000; or (b) the sum
of (x) eighty percent (80%) of the appraised net orderly liquidation value of
Eligible Equipment as determined by Agent pursuant to the most recently
delivered appraisal received by Agent prior to the date hereof (the "Equipment
Sublimit") plus (y) sixty percent (60%) of the appraised fair market value of
Eligible Real Property as determined by Agent pursuant to the most recently
delivered appraisal received by Agent prior to the date hereof (the "Real
Property Sublimit"), in each case under clause (b), as reduced (or increased in
the case of the Equipment Sublimit) from time to time pursuant to Section 2.4
and Section 9.9(h).
"Fixed Charge Coverage Ratio" shall mean, with respect to Borrower and its
Subsidiaries on a consolidated basis for any fiscal period, the ratio of EBITDA
to Fixed Charges.
"Fixed Charges" shall mean, with respect to Borrower and its Subsidiaries on a
consolidated basis for any fiscal period, without duplication, (a) the aggregate
of all Interest Expense for such period, plus (b) principal payments, capital
lease payments, reimbursement obligations and redemption obligations paid in
cash, whether paid or accrued, of Indebtedness which are scheduled to be paid
during such period, and including any mandatory prepayments of such Indebtedness
(but excluding the first $12,500,000 of prepayments under the Indenture to the
extent such prepayments are made in accordance with Section 9.23 hereof) plus
(c) the cash portion of any capital expenditures determined in accordance with
GAAP, made during such period (to the extent not already included in clause (b)
above), plus (d) the cash portion of dividends or distributions paid by Borrower
during such period, minus (e) cash proceeds received for Equipment and Real
Property sold by Borrower or DMC to the extent such sales are permitted under
Section 9.7 and the terms of the Exim Guarantee Documents or are otherwise
approved by the requisite number of Lenders and Exim, if applicable.
"Foreign Subsidiary" shall mean any Subsidiary of Borrower organized outside of
the United States.
20
"GAAP" shall mean generally accepted accounting principles in the United States
of America as in effect from time to time as set forth in the opinions and
pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants and the statements and pronouncements of the
Financial Accounting Standards Board which are applicable to the circumstances
as of the date of determination consistently applied, except that, for purposes
of Sections 9.17 and 9.18 hereof, GAAP shall be determined on the basis of such
principles in effect on the date hereof and consistent with those used in the
preparation of the most recent audited financial statements delivered to Agent
prior to the date hereof.
"Governmental Authority" shall mean any nation or government, any state,
province, or other political subdivision thereof, any central bank (or similar
monetary or regulatory authority) thereof, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Guarantor(s)" shall have the meaning set forth in the Preamble hereof.
"Hazardous Materials" shall mean any hazardous, toxic or dangerous substances,
materials and wastes, including hydrocarbons (including naturally occurring or
man-made petroleum and hydrocarbons), flammable explosives, asbestos, urea
formaldehyde insulation, radioactive materials, biological substances,
polychlorinated biphenyls, pesticides, herbicides and any other kind and/or type
of pollutants or contaminants (including materials which include hazardous
constituents), sewage, sludge, industrial slag, solvents and/or any other
similar substances, materials, or wastes and including any other substances,
materials or wastes that are or become regulated under any Environmental Law
(including any that are or become classified as hazardous or toxic under any
Environmental Law).
"Indebtedness" shall mean, with respect to any Person, any liability, whether or
not contingent, (a) in respect of borrowed money (whether or not the recourse of
the lender is to the whole of the assets of such Person or only to a portion
thereof) or evidenced by bonds, notes, debentures or similar instruments; (b)
representing the balance deferred and unpaid of the purchase price of any
property or services (except any such balance that constitutes an account
payable to a trade creditor (whether or not an Affiliate) created, incurred,
assumed or guaranteed by such Person in the ordinary course of business of such
Person in connection with obtaining goods, materials or services that is not
overdue by more than ninety (90) days, unless the trade payable is being
contested in good faith); (c) all obligations as lessee under leases which have
been, or should be, in accordance with GAAP recorded as Capital Leases; (d) any
contractual obligation, contingent or otherwise, of such Person to pay or be
liable for the payment of any indebtedness described in this definition of
another Person, including, without limitation, any such indebtedness, directly
or indirectly guaranteed, or any agreement to purchase, repurchase, or otherwise
acquire such indebtedness, obligation or liability or any security therefor, or
to provide funds for the payment or discharge thereof, or to maintain solvency,
assets, level of income, or other financial condition; (e) all obligations with
respect to redeemable stock and redemption or repurchase obligations under any
Capital Stock or other equity securities issued by such Person; (f) all
reimbursement obligations and other liabilities of such Person with respect to
surety bonds (whether bid, performance or otherwise), letters of credit,
banker's acceptances, drafts or similar documents or instruments issued for such
Person's account; (g) all indebtedness of such Person in respect of indebtedness
of another Person for borrowed money or indebtedness of another Person otherwise
21
described in this definition which is secured by any consensual lien, security
interest, collateral assignment, conditional sale, mortgage, deed of trust, or
other encumbrance on any asset of such Person, whether or not such obligations,
liabilities or indebtedness are assumed by or are a personal liability of such
Person, all as of such time; (h) all obligations, liabilities and indebtedness
of such Person (marked to market) arising under swap agreements, cap agreements
and collar agreements and other agreements or arrangements designed to protect
such person against fluctuations in interest rates or currency or commodity
values; and (i) all obligations owed by such Person under License Agreements
with respect to non-refundable, advance or minimum guarantee royalty payments.
"Indenture" shall mean that certain Indenture dated November 1, 1997 between
Borrower and LaSalle National Bank, as trustee.
"Information Certificate" shall mean, collectively, the Information Certificates
of Borrower and Guarantors constituting Exhibit B hereto containing material
information with respect to Borrower and Guarantors, their respective businesses
and assets provided by Borrower and Guarantors to Agent in connection with the
preparation of this Agreement and the other Financing Agreements and the
financing arrangements provided for herein.
"Insolvency Case" shall mean, as to any Person, any of the following: (i) any
case or proceeding with respect to such person under the Bankruptcy Code, or any
other Federal, State or other bankruptcy, insolvency, reorganization or other
law affecting creditors' rights or any other or similar proceedings seeking any
stay, reorganization, arrangement, composition or readjustment of all or
substantially all of the obligations and indebtedness of such person or (ii) any
proceeding seeking the appointment of any receiver, trustee, administrator,
liquidator, custodian or other insolvency official with similar powers with
respect to such person or all or substantially all of its assets or (iii) any
proceeding for liquidation, dissolution or other winding up of the business of
such person or (iv) any general assignment for the benefit of creditors or any
general marshaling of all or substantially all of the assets of such person.
"Insolvency Event" shall mean the commencement of an Insolvency Case by or
against Borrower or any Obligor.
"Intellectual Property" shall mean, as to Borrower and each Guarantor,
Borrower's and such Guarantor's now owned and hereafter arising or acquired,
whether statutory or based in common law: patents, patent rights, patent
applications, copyrights, works which are the subject matter of copyrights,
copyright registrations and applications, trademarks, trademark registrations,
trade names, trade styles, trademark and service ▇▇▇▇ applications; all
extensions, renewals, reissues, divisions, continuations, and
continuations-in-part of any of the foregoing; all rights to ▇▇▇ for past,
present and future infringement of, and collect damages related to, any of the
foregoing; inventions, trade secrets, formulae, processes, compounds, drawings,
designs, blueprints, surveys, reports, manuals, and operating standards;
goodwill (including, without limitation, any goodwill associated with any
trademark or the license of any trademark); customer and other lists, business
plans and any proprietary information in whatever form maintained; trade secret
rights, copyright rights, rights in works of authorship, work for hire and work
product, domain names and domain name registration; software and contract rights
relating to computer software programs, in whatever form created or maintained;
and licenses and rights to use any and all of the foregoing.
22
"Interest Expense" shall mean, with respect to Borrower and its
Subsidiaries on a consolidated basis for any fiscal period, cash interest
expense of such Persons determined in accordance with GAAP for such period.
"Interest Period" shall mean for any Eurodollar Rate Loan, a period of
approximately one (1), two (2), or three (3) months duration as Borrower may
elect, the exact duration to be determined in accordance with the customary
practice in the applicable Eurodollar Rate market; provided, that, Borrower may
not elect an Interest Period which will end after the last day of the
then-current term of this Agreement.
"Interest Rate" shall mean:
(a) Subject to clauses (b) and (c) of this definition below:
(i) as to Prime Rate Loans consisting of Revolving Loans, a rate
equal to the Applicable Margin for Prime Rate Loans then in effect plus the
Prime Rate,
(ii) as to Prime Rate Loans consisting of the Term Loan, a rate
equal to eight (8.00%) percent per annum in excess of the Prime Rate, provided,
that, the Interest Rate with respect to the Term Loan shall not be less than
twelve and one quarter of one (12.25%) percent per annum or greater than
fourteen and one half of one (14.50%) percent per annum at any time.
(iii) as to Eurodollar Rate Loans, a rate equal to the Applicable
Margin for Eurodollar Rate Loans then in effect plus the Adjusted Eurodollar
Rate (in each case, based on the Eurodollar Rate applicable for the Interest
Period selected by Borrower, as in effect three (3) Business Days after the date
of receipt by Agent of the request of Borrower for such Eurodollar Rate Loans in
accordance with the terms hereof, whether such rate is higher or lower than any
rate previously quoted to Borrower), and
(iv) as to Letter of Credit Accommodations, a rate equal to the
Applicable Margin for Letter of Credit Accommodations then in effect;
(b) If, in any month commencing after April 30, 2004, Borrower fails to
deliver a Borrowing Base Certificate reflecting the Borrowing Base as of the
last Business Day of the immediately preceding Fiscal Month in accordance with
Section 7.1(a)(i), the Applicable Margins shall be increased to their highest
levels (without regard to the amount of Excess Availability) effective as of the
first Business Day of such month until such time as Borrower satisfies such
delivery requirement as determined by Agent; and
(c) Notwithstanding anything to the contrary contained in clauses (a)
and (b) of this definition,
23
(i) with respect to Revolving Loans and Letter of Credit
Accommodations, the Applicable Margin otherwise used to calculate the Interest
Rate for Prime Rate Loans, Eurodollar Rate Loans and Letter of Credit
Accommodations shall be the highest respective percentages set forth in the
definition of the term Applicable Margin for each such category (without regard
to the amount of Excess Availability) plus in each case two percent (2%) per
annum, at Agent's option, without notice, (A) either (x) for the period on and
after the date of termination or non-renewal hereof until such time as all
Obligations owing to Agent and Revolving Lenders are indefeasibly paid and
satisfied in full in immediately available funds, or (y) for the period from and
after the date of the occurrence of any Event of Default, and for so long as
such Event of Default is continuing as determined by Agent and (B) on the
Revolving Loans (or any portion thereof) to Borrower at any time outstanding
which are in excess of the Borrowing Base, the Export-Related Borrowing Base,
the Maximum Revolving Credit or the Maximum Exim Revolving Credit (whether or
not such excess(es) arise or are made with or without Agent's or any Revolving
Lender's knowledge or consent and whether made before or after an Event of
Default), and
(ii) with respect to the Term Loan, the Interest Rate applicable
thereto shall be increased by two (2%) percent per annum (which may possibly
increase the Interest Rate above the limitation set forth in clause (a)(ii)
above), at Required Term Lenders' option without notice to Borrower, for the
period (A) from and after the effective date of termination hereof until Agent
and Term Lenders have received full and final payment of all outstanding and
unpaid Term Loan Obligations owing to them (notwithstanding entry of a judgment
against Borrower) and (B) from and after the date of the occurrence of an Event
of Default for so long as such Event of Default is continuing.
"Inventory" shall mean, as to Borrower and each Guarantor, all of Borrower's and
such Guarantor's now owned and hereafter existing or acquired goods, wherever
located, which (a) are leased by Borrower or such Guarantor as lessor; (b) are
held by Borrower for sale or lease or to be furnished under a contract of
service; (c) are furnished by Borrower or such Guarantor under a contract of
service; or (d) consist of raw materials, work in process, finished goods or
materials used or consumed in its business.
"Inventory Loan Limit" shall mean an amount equal to $30,000,000.
"Investment Property Control Agreement" shall mean an agreement in writing, in
form and substance satisfactory to Agent, by and among Agent, Borrower or any
Guarantor (as the case may be) and any securities intermediary, commodity
intermediary or other person who has custody, control or possession of any
investment property of Borrower or such Guarantor acknowledging that such
securities intermediary, commodity intermediary or other person has custody,
control or possession of such investment property on behalf of Agent, that it
will comply with entitlement orders originated by Agent with respect to such
investment property, or other instructions of Agent, or (as the case may be)
apply any value distributed on account of any commodity contract as directed by
Agent, in each case, without the further consent of Borrower or such Guarantor
and including such other terms and conditions as Agent may require.
"Lenders" shall mean the lenders that are signatories hereto as Lenders and
other persons made a party to this Agreement as a Lender in accordance with
Section 13.6 hereof, and their respective successors and assigns; each sometimes
being referred to herein individually as a "Lender".
24
"Letter of Credit Accommodations" shall mean Exim Letter of Credit
Accommodations and Non-Exim Letter of Credit Accommodations.
"License Agreements" shall have the meaning set forth in Section 8.11 hereof.
"Loans" shall mean the Revolving Loans, the Special Agent Advances and the Term
Loans.
"Margin Stock" means "margin stock" as such term is defined in Regulation T, U
or X of the Federal Reserve Board.
"Material Adverse Effect" shall mean a material adverse effect on (a) the
financial condition, business, performance or operations of Borrower or the
legality, validity or enforceability of this Agreement or any of the other
Financing Agreements; (b) the legality, validity, enforceability, perfection or
priority of the security interests and liens of Agent upon the Collateral; (c)
the Collateral or its value, (d) the ability of Borrower to repay the
Obligations or of Borrower to perform its obligations under this Agreement or
any of the other Financing Agreements as and when to be performed; or (e) the
ability of Agent or any Lender to enforce the Obligations or realize upon the
Collateral or otherwise with respect to the rights and remedies of Agent and
Lenders under this Agreement or any of the other Financing Agreements.
"Material Contract" shall mean (a) any contract or other agreement (other than
the Financing Agreements), written or oral, of Borrower or any Guarantor
involving monetary liability of or to any Person in an amount in excess of
$250,000 in any fiscal year and (b) any other contract or other agreement (other
than the Financing Agreements), whether written or oral, to which Borrower or
any Guarantor is a party as to which the breach, nonperformance, cancellation or
failure to renew by any party thereto would have a Material Adverse Effect.
"Maximum Credit" shall mean, at any time, the lesser of (a) the sum of the
Maximum Revolving Credit and the aggregate principal amount of the Term Loan
outstanding and (b) the sum of eighty-five (85%) percent of the consolidated
book value of the net accounts receivable and sixty-five (65%) percent of the
consolidated book value of the inventory of Borrower and its "Restricted
Subsidiaries", in each case determined in accordance with "GAAP" (as such terms
are defined in the Indenture).
"Maximum Exim Revolving Credit" shall mean an amount approved by Exim not to
exceed $5,000,000.
"Maximum Revolving Credit" shall initially mean $65,000,000 as may be increased
in $5,000,000 increments pursuant to Section 2.6 but not to exceed $75,000,000.
"Maximum Term Credit" shall mean $12,500,000.
"Mortgages" shall mean, individually and collectively, each of the following (as
the same now exist or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced): (a) the Mortgage, dated of even date
herewith, by Borrower in favor of Agent with respect to the Real Property and
related assets of Borrower located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇, (b) the Mortgage, dated of even date herewith, by Borrower in favor of Agent
25
with respect to the Real Property and related assets of Borrower located at ▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇, (▇) the Mortgage, dated of even date herewith, by
Borrower in favor of Agent with respect to the Real Property and related assets
of Borrower located at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇, (d) the Mortgage, dated
of even date herewith, by Borrower in favor of Agent with respect to the Real
Property and related assets of Borrower located at ▇▇▇-▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇, (e) the Mortgage, dated of even date herewith, by Borrower in
favor of Agent with respect to the Real Property and related assets of Borrower
located at ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇, (f) the Mortgage, dated of
even date herewith, by Borrower in favor of Agent with respect to the Real
Property and related assets of Borrower located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇,
(g) the Mortgage, dated of even date herewith, by Borrower in favor of Agent
with respect to the Real Property and related assets of Borrower located at ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇, ▇▇, (h) the Mortgage, dated of even date herewith,
by Borrower in favor of Agent with respect to the Real Property and related
assets of Borrower located at ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇, ▇▇ and (i) the
Mortgage, dated of even date herewith, by Borrower in favor of Agent with
respect to the Real Property and related assets of Borrower located at ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇.
"Multiemployer Plan" shall mean a "multi-employer plan" as defined in Section
3(37) of ERISA which is or was at any time during the current year or the
immediately preceding six (6) years contributed to by Borrower, any Guarantor or
any ERISA Affiliate.
"Net Amount" shall mean, with respect to the Eligible Accounts or the Eligible
FarmPro Accounts, the gross amount of the Eligible Accounts or Eligible FarmPro
Accounts, as applicable, less (a) sales, excise or similar taxes included in the
amount thereof and (b) returns, discounts, claims, credits and allowances of any
nature at any time issued, owing, granted, outstanding, available or claimed
with respect thereto.
"Net Orderly Liquidation Value" means, with respect to Inventory, the estimated
net recovery value as determined by Agent in good faith based on the most recent
appraisal delivered in accordance with Section 7.3, which reflects the estimated
net cash value expected by the appraiser to be derived from a sale or
disposition at a liquidation or going-out-of-business sale of such Inventory
after deducting all costs, expenses and fees attributable to such sale or
disposition, including, without limitation, all fees, costs and expenses of any
liquidator(s) engaged to conduct such sale or disposition and all costs and
expenses of removing and delivering the same to a purchaser.
"Net Orderly Liquidation Value Factor" means the ratio of the Net Orderly
Liquidation Value to the book value of Inventory, expressed as a percentage.
The Net Orderly Liquidation Value Factor shall be determined as of the date
hereof based on the appraisal delivered prior to the date hereof and shall be
updated pursuant to appraisals delivered under Section 7.3.
------------
"Non-Exim Letter of Credit Accommodations" shall mean, collectively, (a) the
letters of credit, merchandise purchase or other guaranties which are from time
to time either issued or opened by Agent or any Lender for the account of
Borrower or any Obligor or (b) with respect to which Agent or Lenders have
agreed to indemnify the issuer or guaranteed to the issuer the performance by
Borrower or any Obligor of its obligations to such issuer; sometimes being
referred to herein individually as "Non-Exim Letter of Credit Accommodations",
in each case provided under Section 2.2(a)(i) hereof.
26
"Non-Exim Revolving Loans" shall mean the loans now or hereafter made by or on
behalf of any Revolving Lender or by Agent for the account of any Revolving
Lender on a revolving basis pursuant to the Credit Facility (involving advances,
repayments and readvances) as set forth in Section 2.1(a) hereof.
"Non-Exim Excess Availability" shall mean, as to Borrower, the amount, as
determined by Agent, calculated at any date, equal to: (a) the lesser of: (i)
the Borrowing Base and (ii) the Maximum Revolving Credit less the then
outstanding amount of Exim Revolving Loans and Exim Letter of Credit
Accommodations, minus (b) the amount of all then outstanding Non-Exim Revolving
-----
Loans and Non-Exim Letter of Credit Accommodations.
"Obligations" shall mean any and all Loans, Letter of Credit Accommodations and
all other obligations, liabilities and indebtedness of every kind, nature and
description owing by Borrower and Guarantors to Agent or any Lender and/or any
of their Affiliates, including principal, interest, charges, fees, costs and
expenses, however evidenced, whether as principal, surety, endorser, guarantor
or otherwise, arising under this Agreement or any of the other Financing
Agreements or pursuant to any Product Obligations, whether now existing or
hereafter arising, whether arising before, during or after the initial or any
renewal term of this Agreement or after the commencement of any case with
respect to Borrower or any Guarantor under the United States Bankruptcy Code or
any similar statute (including the payment of interest and other amounts which
would accrue and become due but for the commencement of such case, whether or
not such amounts are allowed or allowable in whole or in part in such case),
whether direct or indirect, absolute or contingent, joint or several, due or not
due, primary or secondary, liquidated or unliquidated, or secured or unsecured.
"Obligor" shall mean any guarantor, endorser, acceptor, surety or other person
liable on or with respect to the Obligations or who is the owner of any property
which is security for the Obligations (including, without limitation,
Guarantors), other than Borrower.
"Participant" shall mean any Person that acquires and holds a participation in
the interest of any Lender in any of the Loans and Letter of Credit
Accommodations in conformity with the provisions of Section 13.6 of this
Agreement governing participations.
"Participant Register" shall have the meaning set forth in Section 13.6(h).
"Permitted Bond Repurchase" shall have the meaning set forth in Section 9.23
hereof.
"Permitted Holders" shall mean the persons listed on Schedule 3 hereto and their
respective successors and assigns.
"Person" or "person" shall mean any individual, sole proprietorship,
partnership, corporation (including any corporation which elects subchapter S
status under the Code), limited liability company, limited liability
partnership, business trust, unincorporated association, joint stock
corporation, trust, joint venture or other entity or any government or any
agency or instrumentality or political subdivision thereof.
27
"Plan" means an employee benefit plan (as defined in Section 3(3) of ERISA)
which Borrower or any Guarantor sponsors, maintains, or to which it makes, is
making, or is obligated to make contributions, or in the case of a Multiemployer
Plan has made contributions at any time during the immediately preceding six (6)
plan years.
"Prime Rate" shall mean the rate from time to time publicly announced by
Reference Bank, or its successors, as its prime rate, whether or not such
announced rate is the best rate available at such bank.
"Prime Rate Loans" shall mean any Loans or portion thereof on which interest is
payable based on the Prime Rate in accordance with the terms thereof.
"Priority Event" shall mean the occurrence of any one or more of the following:
(a) the occurrence and continuance of an Event of Default under Section
10.1(a)(i) hereof with respect to Borrower's failure to pay any of the Revolving
Loan Obligations arising pursuant to the Revolving Loans (including principal,
interest, fees and expenses attributable thereto); (b) the occurrence and
continuance of an Event of Default under Sections 10.1(g) or 10.1(h) hereof; or
(c) the occurrence of any other Event of Default and the acceleration by Agent
of the payment of all or a material portion of the Revolving Loan Obligations,
in each case after giving effect to any applicable cure periods, if any.
"Product Obligations" shall mean every obligation of Borrower or any Guarantor
under and in respect of any one or more of the following types of services or
facilities extended to Borrower or any Guarantor by Agent, any Lender or any
Affiliate of any Lender or Agent: (i) credit cards, (ii) cash management or
related services including the automatic clearing house transfer of funds for
the account of Borrower or any Guarantor pursuant to agreement or overdraft and
(iii) cash management, including controlled disbursement services.
"Pro Rata Share" shall mean:
(a) as to any Lender, the fraction (expressed as a percentage) the
numerator of which is such Lender's Commitment and the denominator of which is
the aggregate amount of all of the Commitments of Lenders, as adjusted from time
to time in accordance with the provisions of Section 13.6 hereof; provided,
that, if the Commitments have been terminated, the numerator shall be the unpaid
amount of such Lender's Loans and its interest in the Letter of Credit
Accommodations and the denominator shall be the aggregate amount of all unpaid
Loans and Letter of Credit Accommodations;
(b) as to any Revolving Lender, the fraction (expressed as a percentage) the
numerator of which is such Revolving Lender's Revolving Commitment and the
denominator of which is the aggregate amount of all of the Revolving Commitments
of Revolving Lenders, as adjusted from time to time in accordance with the
provisions of Section 13.6 hereof; provided, that, if the Revolving Commitments
have been terminated, the numerator shall be the unpaid amount of such Revolving
Lender's Revolving Loans and its interest in the Letter of Credit Accommodations
and the denominator shall be the aggregate amount of all unpaid Revolving Loans
and Letter of Credit Accommodations;
28
(c) as to any Term Lender, the percentage obtained by dividing (i) the
aggregate outstanding principal balance of the Term Loan held by that Term
Lender by (ii) the outstanding principal balance of the Term Loan held by all
Term Lenders; and
(d) notwithstanding clauses (a), (b) and (c) above or any other
provision of this Agreement, to the extent the term "Pro Rata Share" is used to
describe the rights of a Lender to interest, repayments or other amounts
hereunder, then, subject to any priority in application of proceeds pursuant to
Section 6.4 hereof, the term "Pro Rata Share" shall mean, as of any date of
determination, the fraction (expressed as a percentage), the numerator of which
is the amount equal to the outstanding amount of all Loans and interests in
Letter of Credit Accommodations owing to such Lender as of such date, and the
denominator of which is the outstanding amount of all Loans and Letter of Credit
Accommodations owing to all Lenders as of such date.
"Real Property" shall mean all now owned and hereafter acquired real property of
Borrower and each Guarantor, including leasehold interests, together with all
buildings, structures, and other improvements located thereon and all licenses,
easements and appurtenances relating thereto, wherever located, including the
real property and related assets more particularly described in the Mortgages.
"Real Property Sublimit" shall have the meaning set forth in the definition of
Fixed Asset Amount.
"Receivables" shall mean all of the following now owned or hereafter arising or
acquired property of Borrower and each Guarantor: (a) all Accounts; (b) all
interest, fees, late charges, penalties, collection fees and other amounts due
or to become due or otherwise payable in connection with any Account; (c) all
payment intangibles of Borrower or such Guarantor; (d) letters of credit,
indemnities, guarantees, security or other deposits and proceeds thereof issued
payable to Borrower or any Guarantor or otherwise in favor of or delivered to
Borrower or any Guarantor in connection with any Account; or (e) all other
accounts, contract rights, chattel paper, instruments, notes, general
intangibles and other forms of obligations owing to Borrower or any Guarantor,
whether from the sale and lease of goods or other property, licensing of any
property (including Intellectual Property or other general intangibles),
rendition of services or from loans or advances by Borrower or any Guarantor or
to or for the benefit of any third person (including loans or advances to any
Affiliates or Subsidiaries of Borrower or any Guarantor) or otherwise associated
with any Accounts, Inventory or general intangibles of Borrower or any Guarantor
(including, without limitation, choses in action, causes of action, tax refunds,
tax refund claims, any funds which may become payable to Borrower or any
Guarantor in connection with the termination of any Plan or other employee
benefit plan and any other amounts payable to Borrower or any Guarantor from any
Plan or other employee benefit plan, rights and claims against carriers and
shippers, rights to indemnification, business interruption insurance and
proceeds thereof, casualty or any similar types of insurance and any proceeds
thereof and proceeds of insurance covering the lives of employees on which
Borrower or any Guarantor is a beneficiary).
"Records" shall mean, as to Borrower and each Guarantor, all of Borrower's and
such Guarantor's present and future books of account of every kind or nature,
purchase and sale agreements, invoices, ledger cards, bills of lading and other
shipping evidence, statements, correspondence, memoranda, credit files and other
29
data relating to the Collateral or any account debtor, together with the tapes,
disks, diskettes and other data and software storage media and devices, file
cabinets or containers in or on which the foregoing are stored (including any
rights of Borrower or any Guarantor with respect to the foregoing maintained
with or by any other person).
"Reference Bank" shall mean Wachovia Bank, National Association, or such other
bank as Agent may from time to time designate.
"Register" shall have the meaning set forth in Section 13.6 hereof.
"Registered Term Note" shall have the meaning set forth in Section 2.3(c)
hereof.
"Renewal Date" shall have the meaning set forth in Section 13.1 hereof.
"Required Lenders" shall mean, at any time, those Lenders whose Pro Rata Shares
aggregate sixty-six and two-thirds (66%) percent or more of the aggregate of the
Commitments of all Lenders, or if the Commitments shall have been terminated,
Lenders to whom at least sixty-six and two-thirds (66%) percent of the then
outstanding Obligations are owing; provided, that to the extent only the
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Revolving Lenders have Obligations outstanding under this Agreement, "Required
Lenders" shall mean, at any time, those Lenders whose Revolving Commitments
aggregate seventy (70%) percent or more of the aggregate of the Revolving
Commitments of all Lenders, or if the Revolving Commitments shall have been
terminated, Lenders to whom at least seventy (70%) percent of the then
outstanding Obligations are owing.
"Required Revolving Lenders" shall mean, at any time, those Revolving Lenders
whose Revolving Commitments aggregate seventy (70%) percent or more of the
aggregate of the Revolving Commitments of all Revolving Lenders, or if the
Revolving Commitments shall have been terminated, Revolving Lenders to whom at
least seventy (70%) percent of the then outstanding Revolving Loan Obligations
are owing.
"Required Term Lenders" shall mean, at any time, those Term Lenders who hold at
least fifty-one (51%) percent of the aggregate outstanding Term Loan balance.
"Reserves" shall mean as of any date of determination, such amounts as Agent may
from time to time establish and revise in good faith reducing the amount of
Revolving Loans and Letter of Credit Accommodations which would otherwise be
available to Borrower under the lending formulas provided for herein: (a) to
reflect events, conditions, contingencies or risks which, as determined by Agent
in good faith, adversely affect, or would have a reasonable likelihood of
adversely affecting, either (i) the Collateral or any other property which is
security for the Obligations or its value or (ii) the assets, business or
prospects of Borrower or any Obligor or (iii) the security interests and other
rights of Agent or any Lender in the Collateral (including the enforceability,
perfection and priority thereof and the absence of any Collateral Access
Agreement required to be obtained under this Agreement) or (b) to reflect
Agent's good faith belief that any collateral report or financial information
furnished by Borrower or any Obligor to Agent is or may have been incomplete,
inaccurate or misleading in any material respect or (c) to reflect outstanding
Letter of Credit Accommodations as provided in Section 2.2 hereof or (d) in
30
respect of any state of facts which Agent determines in good faith constitutes a
Default or an Event of Default or (e) to reflect reserves required to be taken
by Agent under the terms of the Exim Guarantee Documents. Without limiting the
generality of the foregoing, Reserves may be established to reflect that
dilution with respect to the Accounts (based on the ratio of the aggregate
amount of non-cash reductions in Accounts for any period to the aggregate dollar
amount of the sales of Borrower for such period) as calculated by Agent for any
period is or is reasonably anticipated to be greater than five (5%) percent or
to reflect that the orderly liquidation value of the Equipment or fair market
value of any of the Real Property as set forth in the most recent acceptable
appraisals received by Agent with respect thereto has declined so that the then
outstanding principal amount of the Term Loans is greater than the applicable
percentages with respect to such appraised values as Agent used in establishing
the original principal amount of the Term Loans multiplied by such appraised
values. To the extent Agent may revise the lending formulas used to determine
the Borrowing Base or Exim-Related Borrowing Base or establish new criteria or
revise existing criteria for Eligible Accounts, Eligible Inventory,
Export-Related Accounts Receivable or Export-Related Inventory so as to address
any circumstances, condition, event or contingency in a manner satisfactory to
Agent, Agent shall not establish a Reserve for the same purpose. The amount of
any Reserve established by Agent shall have a reasonable relationship to the
event, condition or other matter which is the basis for such reserve as
determined by Agent in good faith. Notwithstanding anything to the contrary
stated herein, Reserves shall not include Bond Repurchase Reserves.
"Revolving Commitment" shall mean, at any time, as to each Revolving Lender, the
principal amount set forth next to such Lender's name on Schedule 4 hereto
designated as the Revolving Commitment or on Schedule 1 to the Assignment and
Acceptance Agreement pursuant to which such Revolving Lender became a Revolving
Lender hereunder in accordance with the provisions of Section 13.6 hereof, as
the same may be adjusted from time to time in accordance with the terms hereof;
sometimes being collectively referred to herein as "Revolving Commitments".
"Revolving Lenders" shall mean those Lenders having a Revolving Commitment.
"Revolving Loan Obligations" shall mean all Obligations owing to the Revolving
Lenders under this Agreement or any other Financing Agreement.
"Revolving Loans" shall mean Exim Revolving Loans and Non-Exim Revolving Loans.
"Secured Funded Debt" means with respect to any Person, without duplication, (a)
all Loans and Letter of Credit Accommodations outstanding as of any date of
determination plus (b) all other secured Indebtedness for borrowed money
evidenced by notes, bonds, debentures, or similar evidences of Indebtedness
which by its terms matures more than one year from, or is directly or indirectly
renewable or extendible at such Person's option under a revolving credit or
similar agreement obligating the lender or lenders to extend credit over a
period of more than one year from, the date of creation thereof.
"Solvent" shall mean, at any time with respect to any Person, that at such time
such Person (a) is able to pay its debts as they mature and has (and has a
reasonable basis to believe it will continue to have) sufficient capital (and
not unreasonably small capital) to carry on its business consistent with its
practices as of the date hereof, and (b) the assets and properties of such
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Person at a fair valuation (and including as assets for this purpose at a fair
valuation all rights of subrogation, contribution or indemnification arising
pursuant to any guarantees given by such Person) are greater than the
Indebtedness of such Person, and including subordinated and contingent
liabilities computed at the amount which, such person has a reasonable basis to
believe, represents an amount which can reasonably be expected to become an
actual or matured liability (and including as to contingent liabilities arising
pursuant to any guarantee the face amount of such liability as reduced to
reflect the probability of it becoming a matured liability).
"Special Agent Advances" shall have the meaning set forth in Section 12.11
hereof.
"Specified Amounts" shall have the meaning set forth in Section 6.4(a) hereof.
"Specified Default" shall mean an Event of Default under Sections 10.1(a)(i),
10.1(g), 10.1(h) and 10.1(a)(iii) (to the extent arising as a result of the
failure to comply with Sections 9.7, 9.8, 9.9, 9.10, 9.11, 9.12, 9.17, 9.22,
9.23 or 9.25 hereof), in each case after giving effect to all applicable cure
periods.
"Standstill Period" shall mean the 120 day period commencing on the date that
Agent receives a written notice executed and delivered by the Required Term
Lenders of a Specified Default, demanding the accelerated payment by Borrower of
all Term Loan Obligations and requesting that Agent commence one or more
Enforcement Actions.
"Subsidiary" or "subsidiary" shall mean, with respect to any Person, any
corporation, limited liability company, limited liability partnership or other
limited or general partnership, trust, association or other business entity of
which an aggregate of at least a majority of the outstanding Capital Stock or
other interests entitled to vote in the election of the board of directors of
such corporation (irrespective of whether, at the time, Capital Stock of any
other class or classes of such corporation shall have or might have voting power
by reason of the happening of any contingency), managers, trustees or other
controlling persons, or an equivalent controlling interest therein, of such
Person is, at the time, directly or indirectly, owned by such Person and/or one
or more subsidiaries of such Person.
"Tax Distributions" shall have the meaning set forth in Section 9.11(c) hereof.
"Term Commitment" shall mean, at any time, as to each Term Lender, the
outstanding principal balance of the Term Loan held by such Term Lender.
"Term Lenders" shall mean those Lenders having a Term Commitment.
"Term Loan" shall have the meaning set forth in Section 2.3(a) hereof.
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"Term Loan Obligations" shall mean all Obligations owing to the Term Lenders
under this Agreement or any other Financing Agreement.
"Term Loan Termination Date" shall mean October 31, 2006.
"Trigger Event" shall mean at any time (a) an Event of Default shall have
occurred and/or (b) Excess Availability shall be less than $10,000,000;
provided, that a Trigger Event shall remain in existence until Agent has
determined that (i) Excess Availability has exceeded $10,000,000 for four (4)
consecutive weekly periods (with each such weekly period ending on a Friday)
following the occurrence of such Trigger Event and (ii) no Event of Default has
occurred or continues to exist during such four (4) week period; provided,
further, that if a Trigger Event has been declared by Agent three (3) times in
any 360 day period, any subsequent Trigger Event to occur in such 360 day period
shall remain in existence until Agent has determined that the requirements set
forth in clauses (i) and (ii) in this definition have been satisfied for four
(4) consecutive weekly periods commencing after the sixtieth (60th) day
following the occurrence of such subsequent Trigger Event.
"UCC" shall mean the Uniform Commercial Code as in effect in the State of
Illinois, and any successor statute, as in effect from time to time (except that
terms used herein which are defined in the Uniform Commercial Code as in effect
in the State of Illinois on the date hereof shall continue to have the same
meaning notwithstanding any replacement or amendment of such statute except as
Agent may otherwise determine).
"Value" shall mean, as determined by Agent in good faith, with respect to
Inventory, the lower of (a) cost computed on a first-in first-out basis in
accordance with GAAP or (b) market value; provided, that, for purposes of the
calculation of the Borrowing Base, (i) the Value of the Inventory shall not
include: (A) the portion of the value of Inventory equal to the profit earned
by any Affiliate on the sale thereof to Borrower or (B) write-ups or
write-downs in value with respect to currency exchange rates and (ii)
notwithstanding anything to the contrary contained herein, the cost of the
Inventory shall be computed in the same manner and consistent with the most
recent appraisal of the Inventory received and accepted by Agent prior to the
date hereof, if any.
"Voting Stock" shall mean with respect to any Person, (a) one (1) or more
classes of Capital Stock of such Person having general voting powers to elect at
least a majority of the board of directors, managers or trustees of such Person,
irrespective of whether at the time Capital Stock of any other class or classes
have or might have voting power by reason of the happening of any contingency,
and (b) any Capital Stock of such Person convertible or exchangeable without
restriction at the option of the holder thereof into Capital Stock of such
Person described in clause (a) of this definition.
"WIP Limit" shall mean $10,000,000 as of the date hereof, reduced by $104,166.67
on the first day of each month (commencing on December 1, 2003) but in no event
shall the WIP Limit be less than $7,500,000.
SECTION 2. CREDIT FACILITIES
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2.1 Revolving Loans.
(a) Non-Exim Revolving Loans. (i) Subject to and upon the terms and
--------------------------
conditions contained herein, each Revolving Lender severally (and not jointly)
agrees to fund its Pro Rata Share of Non-Exim Revolving Loans to Borrower from
time to time in amounts requested by Borrower up to the amount outstanding at
any time equal to the lesser of: (A) the Borrowing Base at such time or (B) the
33
Maximum Revolving Credit at such time minus the aggregate amount of outstanding
Exim Revolving Loans and Letter of Credit Accommodations.
(ii) Agent may, in its discretion, from time to time, upon
not less than five (5) days prior notice to Borrower, reduce the lending
formulas with respect to Eligible Inventory to the extent that Agent determines
in good faith that: (A) the number of days of the turnover of the Inventory
for any period has adversely changed or (B) the liquidation value of the
Eligible Inventory, or any category thereof, has decreased, including any
decrease attributable to a change in the nature, quality or mix of the
Inventory. The amount of any decrease in the lending formulas shall have a
reasonable relationship to the event, condition or circumstance which is the
basis for such decrease as determined by Agent in good faith. In determining
whether to reduce the lending formulas, Agent may consider events, conditions,
contingencies or risks which are also considered in determining Eligible
Accounts, Eligible Inventory or in establishing Reserves.
(iii) Except in Agent's discretion, with the consent of all
Revolving Lenders, or as otherwise provided herein, but subject to Section 12.8
hereof, in the event that the aggregate principal amount of the Non-Exim
Revolving Loans and Non-Exim Letter of Credit Accommodations outstanding exceed
the Borrowing Base or the Maximum Revolving Credit minus the aggregate amount of
outstanding Exim Revolving Loans and Exim Letter of Credit Accommodations, or
the aggregate principal amount of Non-Exim Revolving Loans and Non-Exim Letter
of Credit Accommodations based on Eligible Inventory exceed the Inventory Loan
Limit or the aggregate amount of the outstanding Letter of Credit Accommodations
exceed the sublimit for Letter of Credit Accommodations set forth in Section
2.2(e), such event shall not limit, waive or otherwise affect any rights of
Agent or Revolving Lenders in such circumstances or on any future occasions and
Borrower shall, upon demand by Agent, which may be made at any time or from time
to time, immediately repay to Agent the entire amount of any such excess for
which payment is demanded.
(b) Exim Revolving Loans. (i) Subject to and upon the terms and
----------------------
conditions contained herein, each Lender severally (and not jointly) agrees to
fund its Pro Rata Share of Exim Revolving Loans to Borrower from time to time in
amounts requested by Borrower up to the amount outstanding at any time equal to
the lesser of: (A) the Export-Related Borrowing Base at such time, (B) the
Maximum Exim Revolving Credit or (C) the Maximum Revolving Credit minus the
aggregate amount of outstanding Non-Exim Revolving Loans and Letter of Credit
Accommodations at such time.
(ii) Except in Agent's discretion, with the consent of all
Revolving Lenders, or as otherwise provided herein, in the event that the
aggregate principal amount of Exim Revolving Loans and Exim Letter of Credit
Accommodations outstanding exceed (x) the Export-Related Borrowing Base, (y) the
Maximum Exim Revolving Credit or (z) the Maximum Revolving Credit minus the
aggregate amount of outstanding Non-Exim Revolving Loans and Non-Exim Letter of
Credit Accommodations, such event shall not limit, waive or otherwise affect any
rights of Agent or Revolving Lenders in such circumstances or on any future
occasions and Borrower shall, upon demand by Agent, which may be made at any
time or from time to time, immediately repay to Agent the entire amount of any
such excess for which payment is demanded.
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2.2 Letter of Credit Accommodations.
(a) (i) Subject to and upon the terms and conditions contained herein,
at the request of Borrower, Agent agrees, for the ratable risk of each Revolving
Lender according to its Pro Rata Share, to provide or arrange for Non-Exim
Letter of Credit Accommodations for the account of Borrower containing terms and
conditions acceptable to Agent and the issuer thereof. Any payments made by or
on behalf of Agent or any Revolving Lender to any issuer thereof and/or related
parties in connection with the Non-Exim Letter of Credit Accommodations provided
to or for the benefit of Borrower shall constitute additional Non-Exim Revolving
Loans to Borrower pursuant to this Section 2.
(i) hidden level
(ii) Subject to and upon the terms and conditions contained herein, at the
request of Borrower, Agent agrees, for the ratable risk of each Revolving Lender
according to its Pro Rata Share, to provide or arrange for Exim Letter of Credit
Accommodations for the account of Borrower containing terms and conditions
acceptable to Agent and the issuer thereof. Any payments made by or on behalf
of Agent or any Revolving Lender to any issuer thereof and/or related parties in
connection with the Letter of Credit Accommodations provided to or for the
benefit of Borrower shall constitute additional Exim Revolving Loans to Borrower
pursuant to this Section 2.
(b) In addition to any charges, fees or expenses charged by any bank or
issuer in connection with the Letter of Credit Accommodations, Borrower shall
pay to Agent, for the benefit of Revolving Lenders, a letter of credit fee at a
rate equal to the Interest Rate on the daily outstanding balance of the Letter
of Credit Accommodations for the immediately preceding month (or part thereof),
payable in arrears as of the first day of each succeeding month, except that
Agent may, and upon the written direction of Required Revolving Lenders shall,
require Borrower to pay to Agent for the ratable benefit of Revolving Lenders
such letter of credit fee, at a rate equal to the otherwise applicable Interest
Rate plus two (2.0%) percent per annum on such daily outstanding balance for:
(i) the period from and after the date of termination hereof until Agent and
Revolving Lenders have received full and final payment of all Obligations
(notwithstanding entry of a judgment against Borrower) and (ii) the period from
and after the date of the occurrence of an Event of Default for so long as such
Event of Default is continuing as determined by Agent. Such letter of credit
fee shall be calculated on the basis of a three hundred sixty (360) day year and
actual days elapsed and the obligation of Borrower to pay such fee shall survive
the termination of this Agreement.
(c) Borrower shall give Agent two (2) Business Days' prior written notice of
Borrower's request for the issuance of a Letter of Credit Accommodation. Such
notice shall be irrevocable and shall specify whether such Letter of Credit
Accommodation is an Exim Letter of Credit Accommodation or a Non-Exim Letter of
Credit Accommodation the original face amount of the Letter of Credit
Accommodation requested, the effective date (which date shall be a Business Day)
of issuance of such requested Letter of Credit Accommodation, whether such
Letter of Credit Accommodations may be drawn in a single or in partial draws,
the date on which such requested Letter of Credit Accommodation is to expire
(which date shall be a Business Day), the purpose for which such Letter of
Credit Accommodation is to be issued, and the beneficiary of the requested
Letter of Credit Accommodation. Borrower shall attach to such notice the
proposed form of the Letter of Credit Accommodation.
35
(d) In addition to being subject to the satisfaction of the applicable
conditions precedent contained in Section 4 hereof and the other terms and
conditions contained herein, no Letter of Credit Accommodations shall be
available unless each of the following conditions precedent have been satisfied
in a manner satisfactory to Agent: (i) Borrower shall have delivered to the
proposed issuer of such Letter of Credit Accommodation at such times and in such
manner as such proposed issuer may require, an application, in form and
substance satisfactory to such proposed issuer and Agent, for the issuance of
the Letter of Credit Accommodation and such other documents as may be required
pursuant to the terms thereof, and the form and terms of the proposed Letter of
Credit Accommodation shall be satisfactory to Agent and such proposed issuer,
(ii) as of the date of issuance, no order of any court, arbitrator or other
Governmental Authority shall purport by its terms to enjoin or restrain money
center banks generally from issuing letters of credit of the type and in the
amount of the proposed Letter of Credit Accommodation, and no law, rule or
regulation applicable to money center banks generally and no request or
directive (whether or not having the force of law) from any Governmental
Authority with jurisdiction over money center banks generally shall prohibit, or
request that the proposed issuer of such Letter of Credit Accommodation refrain
from, the issuance of letters of credit generally or the issuance of such
Letters of Credit Accommodation; and (iii) the Exim Excess Availability or
Non-Exim Excess Availability, as applicable, of Borrower, prior to giving effect
to any Reserves with respect to such Letter of Credit Accommodations, on the
date of the proposed issuance of any Letter of Credit Accommodations, shall be
equal to or greater than: (A) if the proposed Letter of Credit Accommodation is
for the purpose of purchasing Eligible Inventory or Eligible Export-Related
Inventory, as applicable, and the documents of title with respect thereto are
consigned to the issuer, the sum of (1) the percentage equal to one hundred
(100%) percent minus the then applicable percentage with respect to Eligible
Inventory or Eligible Export-Related Inventory, as applicable, set forth in the
definition of the term Borrowing Base or Export-Related Borrowing Base, as
applicable, multiplied by the Value of such Eligible Inventory or Eligible
Export-Related Inventory, as applicable, plus (2) freight, taxes, duty and other
amounts which Agent estimates must be paid in connection with such Inventory
upon arrival and for delivery to one of Borrower's locations for Eligible
Inventory or Eligible Export-Related Inventory, as applicable, within the United
States of America and (B) if the proposed Letter of Credit Accommodation is for
any other purpose or the documents of title are not consigned to the issuer in
connection with a Letter of Credit Accommodation for the purpose of purchasing
Inventory, an amount equal to one hundred (100%) percent of the face amount
thereof and all other commitments and obligations made or incurred by Agent with
respect thereto. Effective on the issuance of each Non-Exim Letter of Credit
Accommodation, a Reserve shall be established in the applicable amount set forth
in Section 2.2(d)(iii)(A) or Section 2.2(d)(iii)(B) and effective on the
issuance of each Exim Letter of Credit Accommodation, Agent shall reserve from
the Export-Related Borrowing Base, the applicable amount set forth in Section
2.2(d)(iii)(A) or Section 2.2(d)(iii)(B).
(e) Except in Agent's discretion, with the consent of all Revolving Lenders,
the amount of all outstanding Letter of Credit Accommodations and all other
commitments and obligations made or incurred by Agent or any Revolving Lender in
connection therewith shall not at any time exceed $15,000,000.
36
(f) Borrower and Guarantors shall indemnify and hold Agent and Revolving
Lenders harmless from and against any and all losses, claims, damages,
liabilities, costs and expenses which Agent or any Revolving Lender may suffer
or incur in connection with any Letter of Credit Accommodations and any
documents, drafts or acceptances relating thereto, including any losses, claims,
damages, liabilities, costs and expenses due to any action taken by any issuer
or correspondent with respect to any Letter of Credit Accommodation, except for
such losses, claims, damages, liabilities, costs or expenses that are a direct
result of the gross negligence or willful misconduct of Agent or any Revolving
Lender as determined pursuant to a final non-appealable order of a court of
competent jurisdiction. Borrower and each Guarantor assumes all risks with
respect to the acts or omissions of the drawer under or beneficiary of any
Letter of Credit Accommodation and for such purposes the drawer or beneficiary
shall be deemed Borrower's agent. Borrower and each Guarantor assumes all risks
for, and agrees to pay, all foreign, Federal, State and local taxes, duties and
levies relating to any goods subject to any Letter of Credit Accommodations or
any documents, drafts or acceptances thereunder. Borrower and each Guarantor
hereby releases and holds Agent and Revolving Lenders harmless from and against
any acts, waivers, errors, delays or omissions, whether caused by Borrower, any
Guarantor, by any issuer or correspondent or otherwise with respect to or
relating to any Letter of Credit Accommodation, except for the gross negligence
or willful misconduct of Agent or any Revolving Lender as determined pursuant to
a final, non-appealable order of a court of competent jurisdiction. The
provisions of this Section 2.2(f) shall survive the payment of Obligations and
the termination of this Agreement.
(g) In connection with Inventory purchased pursuant to Letter of Credit
Accommodations, Borrower and Guarantors shall, at Agent's request, instruct all
suppliers, carriers, forwarders, customs brokers, warehouses or others receiving
or holding cash, checks, Inventory, documents or instruments in which Agent
holds a security interest to deliver them to Agent and/or subject to Agent's
order, and if they shall come into Borrower's or such Guarantor's possession, to
deliver them, upon Agent's request, to Agent in their original form. Borrower
and Guarantors shall also, at Agent's request, designate Agent as the consignee
on all bills of lading and other negotiable and non-negotiable documents.
(h) Borrower and each Guarantor hereby irrevocably authorizes and directs
any issuer of a Letter of Credit Accommodation to name Borrower or such
Guarantor as the account party therein and to deliver to Agent all instruments,
documents and other writings and property received by issuer pursuant to the
Letter of Credit Accommodations and to accept and rely upon Agent's instructions
and agreements with respect to all matters arising in connection with the Letter
of Credit Accommodations or the applications therefor. Nothing contained herein
shall be deemed or construed to grant Borrower or any Guarantor any right or
authority to pledge the credit of Agent or any Revolving Lender in any manner.
Agent and Revolving Lenders shall have no liability of any kind with respect to
any Letter of Credit Accommodation provided by an issuer other than Agent or any
Revolving Lender unless Agent has duly executed and delivered to such issuer the
application or a guarantee or indemnification in writing with respect to such
Letter of Credit Accommodation. Borrower and Guarantors shall be bound by any
reasonable interpretation made in good faith by Agent, or any other issuer or
correspondent under or in connection with any Letter of Credit Accommodation or
any documents, drafts or acceptances thereunder, notwithstanding that such
interpretation may be inconsistent with any instructions of Borrower or any
Guarantor. Agent shall have the sole and exclusive right and authority to, and
Borrower and Guarantors shall not: (i) at any time an Event of Default exists or
has occurred and is continuing, (A) approve or resolve any questions of
non-compliance of documents, (B) give any instructions as to acceptance or
rejection of any documents or goods or (C) execute any and all applications for
37
steamship or airway guaranties, indemnities or delivery orders, and (ii) at all
times (provided that if no Event of Default has occurred, Agent shall not
exercise any of the following unless agreed to by Borrower), (A) grant any
extensions of the maturity of, time of payment for, or time of presentation of,
any drafts, acceptances, or documents, and (B) agree to any amendments,
renewals, extensions, modifications, changes or cancellations of any of the
terms or conditions of any of the applications, Letter of Credit Accommodations,
or documents, drafts or acceptances thereunder or any letters of credit included
in the Collateral. Agent may take such actions either in its own name or in
Borrower's name or in any Guarantor's name.
(i) Any rights, remedies, duties or obligations granted or undertaken by
Borrower or any Guarantor to any issuer or correspondent in any application for
any Letter of Credit Accommodation, or any other agreement in favor of any
issuer or correspondent relating to any Letter of Credit Accommodation, shall be
deemed to have been granted or undertaken by Borrower or such Guarantor to Agent
for the ratable benefit of Revolving Lenders. Any duties or obligations
undertaken by Agent to any issuer or correspondent in any application for any
Letter of Credit Accommodation, or any other agreement by Agent in favor of any
issuer or correspondent to the extent relating to any Letter of Credit
Accommodation, shall be deemed to have been undertaken by Borrower and
Guarantors to Agent for the ratable benefit of Revolving Lenders and to apply in
all respects to Borrower and Guarantors.
(j) Immediately upon the issuance or amendment of any Letter of Credit
Accommodation, each Revolving Lender shall be deemed to have irrevocably and
unconditionally purchased and received, without recourse or warranty, an
undivided interest and participation to the extent of such Revolving Lender's
Pro Rata Share of the liability with respect to such Letter of Credit
Accommodation (including, without limitation, all Obligations with respect
thereto).
(k) Borrower is irrevocably and unconditionally obligated, without
presentment, demand or protest, to pay to Agent any amounts paid by an issuer of
a Letter of Credit Accommodation with respect to such Letter of Credit
Accommodation (whether through the borrowing of Non-Exim Revolving Loans or Exim
Revolving Loans in accordance with Section 2.2(a) or otherwise). In the event
that Borrower fails to pay Agent on the date of any payment under a Letter of
Credit Accommodation in an amount equal to the amount of such payment, Agent (to
the extent it has actual notice thereof) shall promptly notify each Revolving
Lender of the unreimbursed amount of such payment and each Revolving Lender
agrees, upon one (1) Business Day's notice, to fund to Agent the purchase of its
participation in such Letter of Credit Accommodation in an amount equal to its
Pro Rata Share of the unpaid amount. The obligation of each Revolving Lender to
deliver to Agent an amount equal to its respective participation pursuant to the
foregoing sentence is absolute and unconditional and such remittance shall be
made notwithstanding the occurrence or continuance of any Event of Default, the
failure to satisfy any other condition set forth in Section 4 or any other event
or circumstance. If such amount is not made available by a Revolving Lender
when due, Agent shall be entitled to recover such amount on demand from such
Revolving Lender with interest thereon, for each day from the date such amount
was due until the date such amount is paid to Agent at the interest rate then
payable by Borrower in respect of Loans that are Prime Rate Loans as set forth
in Section 3.1(a) hereof.
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2.3 Term Loan.
(a) Subject to and upon the terms and conditions contained herein, in
addition to the Revolving Loans and Letter of Credit Accommodations under
Sections 2.1 and 2.2 hereof, as a one-time accommodation to Borrower, each Term
Lender severally (and not jointly) agrees to fund its Pro Rata Share of a term
loan to Borrower in the original principal amount of $12,500,000 on the date
hereof (the "Term Loan"). The Term Loan is (i) to be repaid, together with
interest and other amounts, in accordance with this Agreement and the other
Financing Agreements and (ii) secured by all of the Collateral (subject to the
application of proceeds provisions contained herein). The entire unpaid
principal amount of the Term Loan and all accrued and unpaid interest thereon
shall be due and payable on the earlier of the Term Loan Termination Date or the
acceleration of the Obligations. Except for the making of the Term Loan as set
forth in this Section, Borrower shall have no right to request and Term Lenders
shall have no obligation to make any additional loans or advances to Borrowers
under this Section and any repayments of the Term Loan shall not be subject to
any readvance to or reborrowing by Borrower. The parties hereto agree and
acknowledge that proceeds from the making of the Term Loan in the amount of
$12,500,000 shall be applied to prepay the Revolving Loans initially funded on
the date hereof.
(b) Borrower may prepay the Term Loan at any time without penalty; provided
that, (i) each such prepayment of the Term Loan shall be in a minimum principal
amount of $1,000,000 and integral multiples of $100,000 in excess thereof, (ii)
no Event of Default shall exist immediately before, and immediately after giving
effect to, such prepayment and (iii) Borrower shall have Excess Availability of
at least $10,000,000 after giving effect to such prepayment.
(c) Agent, on behalf of Borrower, agrees to record the Term Loan on the
Register referred to in Section 13.6(b). The Term Loan recorded on the Register
(the "Registered Term Loan") may not be evidenced by promissory notes other than
a Registered Term Note (as defined below). Upon the registration of a Term
Loan, any promissory note (other than a Registered Term Note) evidencing the
same shall be null and void and shall be returned to the Borrowers. Borrowers
agree, at the request of Required Term Lenders, to execute and deliver to Term
Lenders a promissory note in registered form to evidence such Registered Term
Loan (i.e., containing registered note language) and registered as provided in
Section 13.6(b) hereof (a "Registered Term Note"), payable to the order of each
Term Lender and otherwise duly completed. Once recorded on the Register, the
Obligations evidenced by such Registered Note may not be removed from the
Register so long as it remains outstanding, and a Registered Term Note may not
be exchanged for a promissory note that is not a Registered Term Note.
2.4 Fixed Asset Amount
. The Equipment Sublimit (determined as of the date hereof and as adjusted
pursuant to the last sentence hereof) shall be reduced on the first Business Day
of each month, commencing on the first Business Day of December, 2003, by an
amount sufficient (assuming a like repayment each month) to reduce such
Equipment Sublimit to zero ($0) by the first Business Day of November, 2009.
The Real Property Sublimit (determined as of the date hereof) shall be reduced
on the first Business Day of each month, commencing on the first Business Day of
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December, 2003, by an amount sufficient (assuming a like repayment each month)
to reduce such Real Property Sublimit to zero ($0) by the first Business Day of
November, 2010. Notwithstanding the foregoing, in the event of any disposition,
condemnation or casualty of Equipment or Real Property of Borrower pursuant to
Section 9.7 (or in the event of receipt of any condemnation awards or casualty
insurance proceeds in respect thereof), the value of which Equipment or Real
Property has been included in the Fixed Asset Amount, the Fixed Asset Amount
shall be reduced on the date of such event by an amount equal to a fraction
(expressed as a percentage) where the numerator is the remaining Fixed Asset
Amount and the denominator is the original Fixed Asset Amount (determined as of
the date hereof) multiplied by (a) in the case of such Equipment, 80% of the net
orderly liquidation value of such Equipment (as determined by Agent on the date
hereof) and (b) in the case of such Real Property, 60% of the appraised fair
market value of such Real Property (as determined by Agent on the date hereof),
and such reduction shall be allocated to the installment reductions described
above proportionally. To the extent any Equipment would be deemed "Eligible
Equipment" but for the fact that it is subject to a lease, upon written notice
provided by Borrower to Agent stating that such lease has terminated and that
Borrower owns such Equipment free and clear of any encumbrances or restrictions
(attaching to such notice applicable documentation evidencing the termination of
such lease and resulting ownership by Borrower), the Equipment Sublimit shall be
increased by an amount equal to the difference between (x) eighty (80%) percent
of the appraised net orderly liquidation value of such Equipment as determined
by Agent pursuant to the most recently delivered appraisals less (y) the amount
----
under clause (x) that would have been amortized had such amount been included in
the Equipment Sublimit on the date hereof.
2.5 Commitments
. The aggregate amount of each Lender's Pro Rata Share of the Loans and
Letter of Credit Accommodations shall not exceed the amount of such Lender's
Commitment, as the same may from time to time be amended in accordance with the
provisions hereof. If at any time the outstanding Obligations exceed the
Maximum Credit, Borrower shall immediately prepay the Revolving Loans by an
amount equal to the amount of such excess.
2.6 Maximum Revolving Credit Increases
. Borrower may elect to increase the Maximum Revolving Credit in minimum
increments of $5,000,000; provided, that (a) Borrower shall have provided Agent
--------
with five (5) Business Days' prior written notice of such election, (b) no Event
of Default shall have occurred and be continuing immediately before, and
immediately after giving effect to, such increase and (c) the Maximum Revolving
Credit shall in no event exceed $75,000,000. An election to increase the
Maximum Revolving Credit shall be irrevocable and once increased, the Maximum
Revolving Credit may not be reduced without the prior written consent of Agent.
SECTION 3. INTEREST AND FEES
-------------------
3.1 Interest.
(a) Borrower shall pay to Agent, for the benefit of Lenders, interest
on the outstanding principal amount of the Loans at the Interest Rate. All
interest accruing hereunder on and after the date of any Event of Default or
termination hereof shall be payable on demand.
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(b) Borrower may from time to time request Eurodollar Rate Loans or may
request that Prime Rate Loans (other than the Term Loan) be converted to
Eurodollar Rate Loans or that any existing Eurodollar Rate Loans continue for an
additional Interest Period. Such request from Borrower shall specify the amount
of the Eurodollar Rate Loans or the amount of the Prime Rate Loans to be
converted to Eurodollar Rate Loans or the amount of the Eurodollar Rate Loans to
be continued (subject to the limits set forth below) and the Interest Period to
be applicable to such Eurodollar Rate Loans. Subject to the terms and
conditions contained herein, three (3) Business Days after receipt by Agent of
such a request from Borrower, such Eurodollar Rate Loans shall be made or Prime
Rate Loans shall be converted to Eurodollar Rate Loans or such Eurodollar Rate
Loans shall continue, as the case may be, provided, that, (i) no Default or
Event of Default shall exist or have occurred and be continuing, (ii) no party
hereto shall have sent any notice of termination of this Agreement, (iii)
Borrower shall have complied with such customary procedures as are established
by Agent and specified by Agent to Borrower from time to time for requests by
Borrower for Eurodollar Rate Loans, (iv) no more than eight (8) Interest Periods
may be in effect at any one time, (v) the aggregate amount of the Eurodollar
Rate Loans must be in an amount not less than $5,000,000 or an integral multiple
of $1,000,000 in excess thereof, (vi) the maximum amount of the Eurodollar Rate
Loans in the aggregate at any time requested by Borrower shall not exceed the
amount equal to eighty (80%) percent of the lowest principal amount of the
Revolving Loans which it is anticipated will be outstanding during the
applicable Interest Period, as determined by Agent in good faith (but with no
obligation of Agent or Revolving Lenders to make such Revolving Loans), and
(vii) Agent and each Revolving Lender shall have determined that the Interest
Period or Adjusted Eurodollar Rate is available to Agent and such Revolving
Lender and can be readily determined as of the date of the request for such
Eurodollar Rate Loan by Borrower. Any request by Borrower for Eurodollar Rate
Loans or to convert Prime Rate Loans to Eurodollar Rate Loans or to continue any
existing Eurodollar Rate Loans shall be irrevocable. Notwithstanding anything
to the contrary contained herein, Agent and Revolving Lenders shall not be
required to purchase United States Dollar deposits in the London interbank
market or other applicable Eurodollar Rate market to fund any Eurodollar Rate
Loans, but the provisions hereof shall be deemed to apply as if Agent and
Revolving Lenders had purchased such deposits to fund the Eurodollar Rate Loans.
(c) Any Eurodollar Rate Loans shall automatically convert to Prime Rate
Loans upon the last day of the applicable Interest Period, unless Agent has
received and approved a request to continue such Eurodollar Rate Loan at least
three (3) Business Days prior to such last day in accordance with the terms
hereof. Any Eurodollar Rate Loans shall, at Agent's option, upon notice by
Agent to Borrower, be subsequently converted to Prime Rate Loans in the event
that this Agreement shall terminate or not be renewed. Borrower shall pay to
Agent, for the benefit of Revolving Lenders, upon demand by Agent (or Agent may,
at its option, charge the loan account of Borrower) any amounts required to
compensate any Lender or Participant for any loss (including loss of anticipated
profits), cost or expense incurred by such person, as a result of the conversion
of Eurodollar Rate Loans to Prime Rate Loans pursuant to any of the foregoing.
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(d) Interest shall be payable by Borrower to Agent, for the account of
Lenders, monthly in arrears not later than the first day of each calendar month
and shall be calculated on the basis of a three hundred sixty (360) day year and
actual days elapsed. The interest rate on non-contingent Obligations (other
than Eurodollar Rate Loans) shall increase or decrease by an amount equal to
each increase or decrease in the Prime Rate effective on the first day of the
month after any change in such Prime Rate is announced based on the Prime Rate
in effect on the last day of the month in which any such change occurs. In no
event shall charges constituting interest payable by Borrower to Agent and
Lenders exceed the maximum amount or the rate permitted under any applicable law
or regulation, and if any such part or provision of this Agreement is in
contravention of any such law or regulation, such part or provision shall be
deemed amended to conform thereto.
3.2 Fees.
(a) Borrower shall pay to Agent, for the account of Revolving Lenders,
monthly an unused line fee at a rate equal to one quarter of one (.25%) percent
per annum calculated upon the amount by which the Maximum Revolving Credit then
in effect exceeds the average daily principal balance of the outstanding
Revolving Loans and Letter of Credit Accommodations during the immediately
preceding month (or part thereof) while this Agreement is in effect and for so
long thereafter as any of the Obligations (other than Term Loan Obligations) are
outstanding, which fee shall be payable on the first day of each month in
arrears.
(b) With respect to amounts, up to the first $7,500,000, applied to make
Permitted Bond Repurchases in accordance with Section 9.23 hereof, Borrower
agrees to pay to Ableco a bond repurchase fee equal to two (2%) percent of the
face amount of any bonds issued under the Indenture that are repurchased, such
fee to be due and payable on the date of the consummation of such purchase.
(c) Borrower agrees to pay to Agent the other fees and amounts set forth in
the Fee Letter and the Commitment Letter in the amounts and at the times
specified therein.
(d) Borrower agrees to immediately reimburse Agent upon demand for any fees
required to be paid by Agent or any of its affiliates to Exim in connection with
the Exim Guarantee Documents.
3.3 Changes in Laws and Increased Costs of Loans.
(a) If after the date hereof, either (i) any change in, or in the
interpretation of, any law or regulation is introduced, including, without
limitation, with respect to reserve requirements, applicable to Lender or any
banking or financial institution from whom any Lender borrows funds or obtains
credit (a "Funding Bank"), or (ii) a Funding Bank or any Lender complies with
any future guideline or request from any central bank or other Governmental
Authority or (iii) a Funding Bank or any Lender determines that the adoption of
any applicable law, rule or regulation regarding capital adequacy, or any change
therein, or any change in the interpretation or administration thereof by any
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof has or would have the effect described
below, or a Funding Bank or any Lender complies with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, and in the case of any event set
forth in this clause (iii), such adoption, change or compliance has or would
have the direct or indirect effect of reducing the rate of return on any
Lender's capital as a consequence of its obligations hereunder to a level below
that which Lender could have achieved but for such adoption, change or
compliance (taking into consideration the Funding Bank's or Lender's policies
with respect to capital adequacy) by an amount deemed by such Lender to be
material, and the result of any of the foregoing events described in clauses
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(i), (ii) or (iii) is or results in an increase in the cost to any Lender of
funding or maintaining the Loans or the Letter of Credit Accommodations, then
Borrower and Guarantors shall from time to time upon demand by Agent pay to
Agent additional amounts sufficient to indemnify Lenders against such increased
cost on an after-tax basis (after taking into account applicable deductions and
credits in respect of the amount indemnified). A certificate as to the amount
of such increased cost shall be submitted to Borrower by Agent and shall be
conclusive, absent manifest error.
(b) If prior to the first day of any Interest Period, (i) Agent shall have
determined in good faith (which determination shall be conclusive and binding
upon Borrower and Guarantors) that, by reason of circumstances affecting the
relevant market, adequate and reasonable means do not exist for ascertaining the
Eurodollar Rate for such Interest Period, (ii) Agent has received notice from
the Required Revolving Lenders that the Eurodollar Rate determined or to be
determined for such Interest Period will not adequately and fairly reflect the
cost to Revolving Lenders of making or maintaining Eurodollar Rate Loans during
such Interest Period, or (iii) Dollar deposits in the principal amounts of the
Eurodollar Rate Loans to which such Interest Period is to be applicable are not
generally available in the London interbank market, Agent shall give telecopy or
telephonic notice thereof to Borrower as soon as practicable thereafter, and
will also give prompt written notice to Borrower when such conditions no longer
exist. If such notice is given (A) any Eurodollar Rate Loans requested to be
made on the first day of such Interest Period shall be made as Prime Rate Loans,
(B) any Loans that were to have been converted on the first day of such Interest
Period to or continued as Eurodollar Rate Loans shall be converted to or
continued as Prime Rate Loans and (C) each outstanding Eurodollar Rate Loan
shall be converted, on the last day of the then-current Interest Period thereof,
to Prime Rate Loans. Until such notice has been withdrawn by Agent, no further
Eurodollar Rate Loans shall be made or continued as such, nor shall Borrower
have the right to convert Prime Rate Loans to Eurodollar Rate Loans.
(c) Notwithstanding any other provision herein, if the adoption of or any
change in any law, treaty, rule or regulation or final, non-appealable
determination of an arbitrator or a court or other Governmental Authority or in
the interpretation or application thereof occurring after the date hereof shall
make it unlawful for Agent or any Revolving Lender to make or maintain
Eurodollar Rate Loans as contemplated by this Agreement, (i) Agent or such shall
promptly give written notice of such circumstances to Borrower (which notice
shall be withdrawn whenever such circumstances no longer exist), (ii) the
commitment of such Revolving Lender hereunder to make Eurodollar Rate Loans,
continue Eurodollar Rate Loans as such and convert Prime Rate Loans to
Eurodollar Rate Loans shall forthwith be canceled and, until such time as it
shall no longer be unlawful for such Revolving Lender to make or maintain
Eurodollar Rate Loans, such Revolving Lender shall then have a commitment only
to make a Prime Rate Loan when a Eurodollar Rate Loan is requested and (iii)
such Revolving Lender's Revolving Loans then outstanding as Eurodollar Rate
Loans, if any, shall be converted automatically to Prime Rate Loans on the
respective last days of the then current Interest Periods with respect to such
Loans or within such earlier period as required by law. If any such conversion
of a Eurodollar Rate Loan occurs on a day which is not the last day of the then
current Interest Period with respect thereto, Borrower and Guarantors shall pay
to such Revolving Lender such amounts, if any, as may be required pursuant to
Section 3.3(d) below.
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(d) Borrower and Guarantors shall indemnify Agent and each Revolving Lender
and to hold Agent and each Revolving Lender harmless from any loss or expense
which Agent or such Revolving Lender may sustain or incur as a consequence of
(i) default by Borrower in making a borrowing of, conversion into or extension
of Eurodollar Rate Loans after Borrower has given a notice requesting the same
in accordance with the provisions of this Loan Agreement, (ii) default by
Borrower in making any prepayment of a Eurodollar Rate Loan after Borrower has
given a notice thereof in accordance with the provisions of this Agreement, and
(iii) the making of a prepayment of Eurodollar Rate Loans on a day which is not
the last day of an Interest Period with respect thereto. With respect to
Eurodollar Rate Loans, such indemnification may include an amount equal to the
excess, if any, of (A) the amount of interest which would have accrued on the
amount so prepaid, or not so borrowed, converted or extended, for the period
from the date of such prepayment or of such failure to borrow, convert or extend
to the last day of the applicable Interest Period (or, in the case of a failure
to borrow, convert or extend, the Interest Period that would have commenced on
the date of such failure) in each case at the applicable rate of interest for
such Eurodollar Rate Loans provided for herein over (B) the amount of interest
(as determined by such Agent or such Revolving Lender) which would have accrued
to Agent or such Lender on such amount by placing such amount on deposit for a
comparable period with leading banks in the interbank Eurodollar market. This
covenant shall survive the termination or non-renewal of this Agreement and the
payment of the Obligations.
SECTION 4. CONDITIONS PRECEDENT
---------------------
4.1 Conditions Precedent to Initial Loans and Letter of Credit
Accommodations
. Each of the following is a condition precedent to Agent and Lenders
making the initial Loans and providing the initial Letter of Credit
Accommodations hereunder:
(a) Agent shall have received, in form and substance satisfactory to
Agent, all releases, terminations and such other documents as Agent may request
to evidence and effectuate the termination by the Existing Lenders of their
respective financing arrangements with Borrower and Guarantors and the
termination and release by it or them, as the case may be, of any interest in
and to any assets and properties of Borrower and each Guarantor, duly
authorized, executed and delivered by it or each of them, including, but not
limited to, (i) UCC termination statements for all UCC financing statements
previously filed by it or any of them or their predecessors, as secured party
and Borrower or any Guarantor, as debtor; (ii) the replacement, cash
collateralization or issuance of a Letter of Credit Accommodation to secure the
Existing Letters of Credit; and (iii) satisfactions and discharges of any
mortgages, deeds of trust or deeds to secure debt by Borrower or any Guarantor
in favor of it or any of them, in form acceptable for recording with the
appropriate Governmental Authority.
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(b) Agent shall have received, in form and substance satisfactory to Agent
and its counsel, a duly executed copy of this Agreement and the other Financing
Agreements, together with such additional documents, instruments, opinions and
certificates as Agent and its counsel shall reasonably require in connection
therewith from time to time (including, without limitation, all items set forth
in Exhibit E except to the extent such items are not required to be delivered on
the date hereof), all in form and substance satisfactory to Agent and its
counsel.
(c) all requisite corporate action and proceedings in connection with this
Agreement and the other Financing Agreements shall be satisfactory in form and
substance to Agent, and Agent shall have received all information and copies of
all documents, including records of requisite corporate action and proceedings
which Agent may have requested in connection therewith, such documents where
requested by Agent or its counsel to be certified by appropriate corporate
officers or Governmental Authority (and including a copy of the certificate of
incorporation of Borrower and each Guarantor certified by the Secretary of State
(or equivalent Governmental Authority) which shall set forth the same complete
corporate name of Borrower or such Guarantor as is set forth herein and such
document as shall set forth the organizational identification number of Borrower
or such Guarantor, if one is issued in its jurisdiction of incorporation);
(d) no material adverse change shall have occurred in the assets, business
or prospects of Borrower or any Obligor since the date of Agent's latest field
examination (not including for this purpose the field review referred to in
clause (g) below) and no change or event shall have occurred which would impair
the ability of Borrower or any Obligor to perform its obligations hereunder or
under any of the other Financing Agreements to which it is a party or of Agent
or any Lender to enforce the Obligations or realize upon the Collateral;
(e) Borrower and its Subsidiaries shall be in compliance, in all material
respects, with all applicable foreign and U.S. federal, state and local laws and
regulations, including all applicable environmental laws and regulations;
(f) All necessary governmental and material third party approvals required
in connection with this Agreement shall have been obtained and shall be in
effect;
(g) Agent shall have completed a field review of the Records and such other
information with respect to the Collateral as Agent may require to determine the
amount of Loans available to Borrower (including, without limitation, current
perpetual inventory records and/or roll-forwards of Accounts and Inventory
through the date of closing and test counts of the Inventory in a manner
satisfactory to Agent, together with such supporting documentation as may be
necessary or appropriate, and other documents and information that will enable
Agent to accurately identify and verify the Collateral), the results of which in
each case shall be satisfactory to Agent, not more than seven (7) Business Days
prior to the date hereof;
(h) Agent shall have received, in form and substance satisfactory to Agent,
all consents, waivers, acknowledgments and other agreements from third persons
which Agent may deem necessary or desirable in order to permit, protect and
perfect its security interests in and liens upon the Collateral or to effectuate
the provisions or purposes of this Agreement and the other Financing Agreements,
including, without limitation, Collateral Access Agreements by owners and
lessors of leased premises of Borrower and each Guarantor and by processors and
warehouses at which Collateral is located;
(i) Excess Availability as determined by Agent (based on the Borrowing Base
and Export-Related Borrowing Base reflected in the most recent Borrowing Base
Certificate delivered to Agent on or prior to the date hereof), as of the date
hereof, shall be not less than $10,000,000 after giving effect to (i) all Loans
made or to be made and the Letter of Credit Accommodations issued or to be
issued in connection with the closing of the transactions hereunder and (ii)
payment of all fees and expenses in connection with the transactions under this
Agreement and the other Financing Agreements;
45
(j) Agent shall have received, in form and substance satisfactory to Agent,
Deposit Account Control Agreements by and among Agent, Borrower and each
Guarantor, as the case may be, and each bank where Borrower or such Guarantor,
as the case may be, has a deposit account, in each case, duly authorized,
executed and delivered by such bank and Borrower or such Guarantor, as the case
may be (or Agent shall be the bank's customer with respect to such deposit
account as Agent may specify);
(k) Agent shall have received evidence, in form and substance satisfactory
to Agent, that Agent has a valid perfected first priority security interest in
all of the Collateral;
(l) Agent shall have received and reviewed lien and judgment search results
for the jurisdiction of incorporation of Borrower and each Guarantor, the
jurisdiction of the chief executive office of Borrower and each Guarantor and
all jurisdictions in which assets of Borrower and Guarantors are located, which
search results shall be in form and substance satisfactory to Agent;
(m) Agent shall have received environmental audits of the Real Property to
be subject to the Mortgages conducted by an independent environmental
engineering firm acceptable to Agent, and in form, scope and methodology
satisfactory to Agent, confirming that (i) Borrower and each Guarantor is in
compliance with all applicable Environmental Laws and (ii) the absence of any
material environmental problems;
(n) Agent shall have received, in form and substance satisfactory to Agent,
evidence of insurance coverage, including (i) casualty insurance certificates of
Borrower and Guarantors naming Agent as an additional insured, (ii) mortgagee's
and lender's loss payee endorsements in favor of Agent as to casualty and
business interruption insurance and containing all endorsements, assurances or
affirmative coverage requested by Agent for protection of its interests and
(iii) mortgagee's title insurance by a company and agent acceptable to Agent,
(A) insuring the priority, amount and sufficiency of the mortgage, deed of trust
or deed to secure debt in favor of Agent on each parcel or real estate included
in the calculation of the Borrowing Base, (B) insuring against (except to the
extent waived by Agent) matters that would be disclosed by surveys and (C)
containing any endorsements and assurances of affirmative coverage requested by
Agent for protection of its interests;
(o) Agent shall have received originals of the shares of the stock
certificates representing (i) all of the issued and outstanding shares of the
Capital Stock of each Subsidiary of Borrower organized in the United States and
owned by Borrower or any Guarantor and (ii) 66 2/3% of the issued and
outstanding shares of the Capital Stock of each Subsidiary of Borrower organized
outside the United States (other than Agromarau Industria E Commercio Ltda.) and
directly owned by Borrower or any Guarantor, in each case together with stock
powers duly executed in blank with respect thereto;
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(p) Agent shall have received, in form and substance satisfactory to Agent,
such opinion letters of counsel to Borrower and Guarantors with respect to the
Financing Agreements and such other matters as Agent may request;
(q) the other Financing Agreements and all instruments and documents
hereunder and thereunder shall have been duly executed and delivered to Agent,
in form and substance satisfactory to Agent;
(r) Agent and the Term Lenders shall have received Borrower's financial
statements which confirm that EBITDA for the twelve month period ending July 31,
2003 exceeds $18,000,000; and
(s) Agent and Ableco shall have received payment of all fees and expenses
owing to them, including with out limitation those fees due and owing under
Section 3.2.
4.2 Conditions Precedent to All Loans and Letter of Credit
Accommodations
. Each of the following is an additional condition precedent to the Loans
and/or providing Letter of Credit Accommodations to Borrower, including the
initial Loans and Letter of Credit Accommodations and any future Loans and
Letter of Credit Accommodations:
(a) all representations and warranties contained herein and in the
other financing Agreements shall be true and correct in all material respects
with the same effect as though such representations and warranties had been made
on and as of the date of the making of each such Loan or providing each such
Letter of Credit Accommodation and after giving effect thereto, except to the
extent that such representations and warranties expressly relate solely to an
earlier date (in which case such representations and warranties shall have been
true and accurate on and as of such earlier date);
(b) no law, regulation, order, judgment or decree of any Governmental
Authority shall exist, and no action, suit, investigation, litigation or
proceeding shall be pending or threatened in any court or before any arbitrator
or Governmental Authority, which (i) purports to enjoin, prohibit, restrain or
otherwise affect (A) the making of the Loans or providing the Letter of Credit
Accommodations, or (B) the consummation of the transactions contemplated
pursuant to the terms hereof or the other Financing Agreements or (ii) has or
has a reasonable likelihood of having a Material Adverse Effect; and
(c) no Default or Event of Default shall exist or have occurred and be
continuing on and as of the date of the making of such Loan or providing each
such Letter of Credit Accommodation and after giving effect thereto.
4.3 Additional Conditions Precedent to Exim Revolving Loans and Exim
Letter of Credit Accommodations
. Each of the following is an additional condition precedent to the Exim
Revolving Loans and/or providing Exim Letter of Credit Accommodations, including
the initial Exim Revolving Loans and initial Letter of Credit Accommodations and
any future Exim Revolving Loans and Exim Letter of Credit Accommodations:
(a) Agent shall have received a duly executed copy of each of the Exim
Guarantee Documents, together with such additional agreements, documents,
instruments, opinions and certificates as Exim and Agent shall require in
connection therewith from time to time, all in form and substance satisfactory
to Exim, Agent and Required Revolving Lenders;
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(b) All other conditions and requirements for the making of an Exim
Revolving Loan and/or an Exim Letter of Credit Accommodation, as set forth in
the Exim Guarantee Documents, shall have been satisfied as determined by Agent;
(c) Agent and the Revolving Lenders shall not otherwise be prohibited from
making an Exim Revolving Loan or providing an Exim Letter of Credit
Accommodation pursuant to the terms and conditions of the Exim Guarantee
Documents; and
(d) Agent shall be satisfied that the Exim Guarantee is in full force and
effect and that no defenses exist to the enforcement by Agent of the guarantee
provisions under the Exim Guarantee.
SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST
----------------------------------------------
5.1 Grant of Security Interest
. To secure payment and performance of all Obligations, Borrower and each
Guarantor hereby grants to Agent, for itself and the ratable benefit of Lenders,
a continuing security interest in, a lien upon, and a right of set off against,
and hereby assigns to Agent, for itself and the ratable benefit of Lenders, as
security, all personal and real property and fixtures (except for the real
property and fixtures located at Illinois Highway 133 in Paris, Illinois), and
interests in property and fixtures, of Borrower and each Guarantor, whether now
owned or hereafter acquired or existing, and wherever located (together with all
other collateral security for the Obligations at any time granted by Borrower or
any Obligor to or held or acquired by Agent or any Lender, collectively, the
"Collateral"), including, without limitation:
(a) all Accounts;
(b) all general intangibles, including, without limitation, all Intellectual
Property;
(c) all goods, including, without limitation, Inventory and Equipment;
(d) all Real Property and fixtures;
(e) all chattel paper, including, without limitation, all tangible and
electronic chattel paper;
(f) all instruments, including, without limitation, all promissory notes;
(g) all documents;
(h) all deposit accounts;
(i) all letters of credit, banker's acceptances and similar instruments and
including all letter-of-credit rights;
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(j) all supporting obligations and all present and future liens, security
interests, rights, remedies, title and interest in, to and in respect of
Receivables and other Collateral, including (i) rights and remedies under or
relating to guaranties, contracts of suretyship, letters of credit and credit
and other insurance related to the Collateral, (ii) rights of stoppage in
transit, replevin, repossession, reclamation and other rights and remedies of an
unpaid vendor, lienor or secured party, (iii) goods described in invoices,
documents, contracts or instruments with respect to, or otherwise representing
or evidencing, Receivables or other Collateral, including returned, repossessed
and reclaimed goods, and (iv) deposits by and property of account debtors or
other persons securing the obligations of account debtors;
(k) all (i) investment property (including securities, whether certificated
or uncertificated, securities accounts, security entitlements, commodity
contracts or commodity accounts) and (ii) monies, credit balances, deposits and
other property of Borrower or any Guarantor now or hereafter held or received by
or in transit to Agent, any Lender or its Affiliates or at any other depository
or other institution from or for the account of Borrower or any Guarantor,
whether for safekeeping, pledge, custody, transmission, collection or otherwise;
(l) all commercial tort claims, including, without limitation, those
identified in the Information Certificate;
(m) to the extent not otherwise described above, all Receivables;
(n) all Records; and
(o) all products and proceeds of the foregoing, in any form, including
insurance proceeds and all claims against third parties for loss or damage to or
destruction of or other involuntary conversion of any kind or nature of any or
all of the other Collateral.
Notwithstanding the foregoing, in no event shall the Collateral consist of
the Capital Stock of Agromarau Industria E. Commercio Ltda. or more than
sixty-six and two-thirds (66%) percent of the Capital Stock of any other Foreign
Subsidiary; provided, that in connection with the satisfaction of the conditions
--------
in Section 4.3(a) hereof, the Collateral shall consist of one-hundred (100%) of
the Capital Stock of each Foreign Subsidiary (other than Agromarau Industria E.
Commercio Ltda.) as Agent shall require and Borrower shall, and shall cause each
of its applicable Subsidiaries to, execute and deliver such documents,
agreements, instruments and certificates as Agent shall require to cause Agent
to have a first priority perfected security interest in such Capital Stock
enforceable under the laws of the country in which such Foreign Subsidiary is
organized.
5.2 Perfection of Security Interests.
(a) Borrower and each Guarantor irrevocably and unconditionally
authorizes Agent (or its agent) to file at any time and from time to time such
financing statements with respect to the Collateral naming Agent or its designee
as the secured party and Borrower or such Guarantor as debtor, as Agent may
require, and including any other information with respect to Borrower or such
Guarantor or otherwise required by part 5 of Article 9 of the Uniform Commercial
Code of such jurisdiction as Agent may determine, together with any amendment
and continuations with respect thereto, which authorization shall apply to all
financing statements filed on, prior to or after the date hereof. Borrower and
each Guarantor hereby ratifies and approves all financing statements naming
Agent or its designee as secured party and Borrower or such Guarantor, as the
case may be, as debtor with respect to the Collateral (and any amendments with
49
respect to such financing statements) filed by or on behalf of Agent prior to
the date hereof and ratifies and confirms the authorization of Agent to file
such financing statements (and amendments, if any). Borrower and each Guarantor
hereby authorizes Agent to adopt on behalf of Borrower or such Guarantor any
symbol required for authenticating any electronic filing. In the event that the
description of the collateral in any financing statement naming Agent or its
designee as the secured party and Borrower or any Guarantor as debtor includes
assets and properties of Borrower or such Guarantor that do not at any time
constitute Collateral, whether hereunder, under any of the other Financing
Agreements or otherwise, the filing of such financing statement shall
nonetheless be deemed authorized by Borrower or such Guarantor to the extent of
the Collateral included in such description and it shall not render the
financing statement ineffective as to any of the Collateral or otherwise affect
the financing statement as it applies to any of the Collateral. In no event
shall Borrower or any Guarantor at any time file, or permit or cause to be
filed, any correction statement or termination statement with respect to any
financing statement (or amendment or continuation with respect thereto) naming
Agent or its designee as secured party and Borrower or such Guarantor as debtor.
(b) Borrower and each Guarantor does not have any chattel paper (whether
tangible or electronic) or instruments as of the date hereof, except as set
forth in the Information Certificate. In the event that Borrower or any
Guarantor shall be entitled to or shall receive any chattel paper or instrument
after the date hereof, Borrower or such Guarantors shall promptly notify Agent
thereof in writing. Promptly upon the receipt thereof by Borrower or any
Guarantor (including by any agent or representative), Borrower or such Guarantor
shall deliver, or cause to be delivered to Agent, all tangible chattel paper and
instruments that Borrower or such Guarantor has or may at any time acquire,
accompanied by such instruments of transfer or assignment duly executed in blank
as Agent may from time to time specify, in each case except as Agent may
otherwise agree. At Agent's option, Borrower and each Guarantor shall, or Agent
may at any time on behalf of Borrower or any Guarantor, cause the original of
any such instrument or chattel paper to be conspicuously marked in a form and
manner acceptable to Agent with the following legend referring to chattel paper
or instruments as applicable: "This [chattel paper][instrument] is subject to
the security interest of Congress Financial Corporation and any sale, transfer,
assignment or encumbrance of this [chattel paper][instrument] violates the
rights of such secured party."
(c) In the event that Borrower or any Guarantor shall at any time hold or
acquire an interest in any electronic chattel paper or any "transferable record"
(as such term is defined in Section 201 of the Federal Electronic Signatures in
Global and National Commerce Act or in Section 16 of the Uniform Electronic
Transactions Act as in effect in any relevant jurisdiction), Borrower or such
Guarantor shall promptly notify Agent thereof in writing. Promptly upon Agent's
request, Borrower or such Guarantor shall take, or cause to be taken, such
actions as Agent may request to give Agent control of such electronic chattel
paper under Section 9-105 of the UCC and control of such transferable record
under Section 201 of the Federal Electronic Signatures in Global and National
Commerce Act or, as the case may be, Section 16 of the Uniform Electronic
Transactions Act, as in effect in such jurisdiction.
50
(d) Borrower and each Guarantor does not have any deposit accounts as of the
date hereof, except as set forth in the Information Certificate. Borrower and
Guarantors shall not, directly or indirectly, after the date hereof open,
establish or maintain any deposit account unless each of the following
conditions is satisfied: (i) Agent shall have received not less than five (5)
Business Days prior written notice of the intention of Borrower or any Guarantor
to open or establish such account which notice shall specify in reasonable
detail and specificity acceptable to Agent the name of the account, the owner of
the account, the name and address of the bank at which such account is to be
opened or established, the individual at such bank with whom Borrower or such
Guarantor is dealing and the purpose of the account, (ii) the bank where such
account is opened or maintained shall be acceptable to Agent, and (iii) on or
before the opening of such deposit account, Borrower or such Guarantor shall as
Agent may specify either (A) deliver to Agent a Deposit Account Control
Agreement with respect to such deposit account duly authorized, executed and
delivered by Borrower or such Guarantor and the bank at which such deposit
account is opened and maintained or (B) arrange for Agent to become the customer
of the bank with respect to the deposit account on terms and conditions
acceptable to Agent. The terms of this subsection (d) shall not apply to
deposit accounts specifically and exclusively used for payroll, payroll taxes
and other employee wage and benefit payments to or for the benefit of Borrower's
or any Guarantor's salaried employees.
(e) Neither Borrower nor any Guarantor owns or holds, directly or
indirectly, beneficially or as record owner or both, any investment property, as
of the date hereof, or have any investment account, securities account,
commodity account or other similar account with any bank or other financial
institution or other securities intermediary or commodity intermediary as of the
date hereof, in each case except as set forth in the Information Certificate.
(i) In the event that Borrower or any Guarantor shall be entitled to or
shall at any time after the date hereof hold or acquire any certificated
securities, Borrower or such Guarantor shall promptly endorse, assign and
deliver the same to Agent, accompanied by such instruments of transfer or
assignment duly executed in blank as Agent may from time to time specify. If
any securities, now or hereafter acquired by Borrower or any Guarantor are
uncertificated and are issued to Borrower or such Guarantor or its nominee
directly by the issuer thereof, Borrower or such Guarantor shall immediately
notify Agent thereof and shall as Agent may specify, either (A) cause the issuer
to agree to comply with instructions from Agent as to such securities, without
further consent of Borrower or any Guarantor or such nominee, or (B) arrange for
Agent to become the registered owner of the securities.
(ii) Borrower and Guarantors shall not, directly or indirectly, after the
date hereof open, establish or maintain any investment account, securities
account, commodity account or any other similar account (other than a deposit
account) with any securities intermediary or commodity intermediary unless each
of the following conditions is satisfied: (A) Agent shall have received not
less than five (5) Business Days prior written notice of the intention of
Borrower or such Guarantor to open or establish such account which notice shall
specify in reasonable detail and specificity acceptable to Agent the name of the
account, the owner of the account, the name and address of the securities
intermediary or commodity intermediary at which such account is to be opened or
established, the individual at such intermediary with whom Borrower or such
Guarantor is dealing and the purpose of the account, (B) the securities
intermediary or commodity intermediary (as the case may be) where such account
is opened or maintained shall be acceptable to Agent, and (C) on or before the
opening of such investment account, securities account or other similar account
51
with a securities intermediary or commodity intermediary, Borrower or such
Guarantor shall as Agent may specify either (1) execute and deliver, and cause
to be executed and delivered to Agent, an Investment Property Control Agreement
with respect thereto duly authorized, executed and delivered by Borrower or such
Guarantor and such securities intermediary or commodity intermediary or (2)
arrange for Agent to become the entitlement holder with respect to such
investment property on terms and conditions acceptable to Agent.
(f) Borrower and Guarantors are not the beneficiary or otherwise
entitled to any right to payment under any letter of credit, banker's acceptance
or similar instrument as of the date hereof, except as set forth in the
Information Certificate. In the event that Borrower or any Guarantor shall be
entitled to or shall receive any right to payment under any letter of credit,
banker's acceptance or any similar instrument, whether as beneficiary thereof or
otherwise after the date hereof, Borrower or such Guarantor shall promptly
notify Agent thereof in writing. Borrower or such Guarantor shall immediately,
as Agent may specify, either (i) deliver, or cause to be delivered to Agent,
with respect to any such letter of credit, banker's acceptance or similar
instrument, the written agreement of the issuer and any other nominated person
obligated to make any payment in respect thereof (including any confirming or
negotiating bank), in form and substance satisfactory to Agent, consenting to
the assignment of the proceeds of the letter of credit to Agent by Borrower or
such Guarantor and agreeing to make all payments thereon directly to Agent or as
Agent may otherwise direct or (ii) cause Agent to become, at Borrower's expense,
the transferee beneficiary of the letter of credit, banker's acceptance or
similar instrument (as the case may be).
(g) Borrower and Guarantors do not have any commercial tort claims as of the
date hereof, except as set forth in the Information Certificate. In the event
that Borrower or any Guarantor shall at any time after the date hereof have any
commercial tort claims, Borrower or such Guarantor shall promptly notify Agent
thereof in writing, which notice shall (i) set forth in reasonable detail the
basis for and nature of such commercial tort claim and (ii) include the express
grant by Borrower or such Guarantor to Agent of a security interest in such
commercial tort claim (and the proceeds thereof). In the event that such notice
does not include such grant of a security interest, the sending thereof by
Borrower or such Guarantor to Agent shall be deemed to constitute such grant to
Agent. Upon the sending of such notice, any commercial tort claim described
therein shall constitute part of the Collateral and shall be deemed included
therein. Without limiting the authorization of Agent provided in Section 5.2(a)
hereof or otherwise arising by the execution by Borrower or such Guarantor of
this Agreement or any of the other Financing Agreements, Agent is hereby
irrevocably authorized from time to time and at any time to file such financing
statements naming Agent or its designee as secured party and Borrower or such
Guarantor as debtor, or any amendments to any financing statements, covering any
such commercial tort claim as Collateral. In addition, Borrower and each
Guarantor shall promptly upon Agent's request, execute and deliver, or cause to
be executed and delivered, to Agent such other agreements, documents and
instruments as Agent may require in connection with such commercial tort claim.
52
(h) Borrower and Guarantors do not have any goods, documents of title or
other Collateral in the custody, control or possession of a third party as of
the date hereof, except as set forth in the Information Certificate and except
for goods located in the United States in transit to a location of Borrower or
Guarantor permitted herein in the ordinary course of business of Borrower or
such Guarantor in the possession of the carrier transporting such goods. In the
event that any goods, documents of title or other Collateral are at any time
after the date hereof in the custody, control or possession of any other person
not referred to in the Information Certificate or such carriers, Borrower and
Guarantors shall promptly notify Agent thereof in writing. Promptly upon
Agent's request, Borrower and Guarantors shall deliver to Agent a Collateral
Access Agreement duly authorized, executed and delivered by such person and
Borrower or the Guarantor that is the owner of such Collateral.
(i) Borrower and Guarantors shall take any other actions reasonably
requested by Agent from time to time to cause the attachment, perfection and
first priority of, and the ability of Agent to enforce, the security interest of
Agent in any and all of the Collateral, including, without limitation, (i)
executing, delivering and, where appropriate, filing financing statements and
amendments relating thereto under the UCC or other applicable law, to the
extent, if any, that Borrower's or Guarantor's signature thereon is required
therefor, (ii) causing Agent's name to be noted as secured party on any
certificate of title for a titled good if such notation is a condition to
attachment, perfection or priority of, or ability of Agent to enforce, the
security interest of Agent in such Collateral, (iii) complying with any
provision of any statute, regulation or treaty of the United States as to any
Collateral if compliance with such provision is a condition to attachment,
perfection or priority of, or ability of Agent to enforce, the security interest
of Agent in such Collateral, (iv) obtaining the consents and approvals of any
Governmental Authority or third party, including, without limitation, any
consent of any licensor, lessor or other person obligated on Collateral, and
taking all actions required by any earlier versions of the UCC or by other law,
as applicable in any relevant jurisdiction.
(j) To the extent Borrower or any Guarantor consigns Inventory to any
consignee, Borrower will, prior to such consignment, cause the following to be
delivered to Agent with respect to each consigned location, in each case in form
and substance satisfactory to Agent: (i) copies of UCC financing statements
naming Borrower or such Guarantor as consignor and the applicable customer as
consignee covering such Inventory and naming Agent as assignee thereof, (ii) if
applicable, a copy of a notification letter executed by Borrower or such
Guarantor as delivered to any secured lender of such consignee which has a lien
on consignee's Inventory notifying such secured lender of Agent's lien on such
consigned Inventory; provided, that, if such Inventory is already consigned to
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such consignee prior to such secured lender receiving said notice, to the extent
Borrower desires to include such consigned Inventory within Eligible Inventory,
Agent shall receive an acknowledgement letter from such secured lender pursuant
to which such lender waives any lien on such consigned Inventory and recognizes
Agent's lien on such consigned Inventory and (iii) to the extent the Value of
Inventory at any consigned location is in excess of $10,000, a Collateral Access
Agreement from such consignee in favor of Agent plus, at Agent's request upon
----
the occurrence and during the continuation of an Event of Default, copies of
applicable shipping and invoice documents evidencing and identifying the
Inventory delivered to such consigned location.
53
SECTION 6. COLLECTION AND ADMINISTRATION
-------------------------------
6.1 Borrower's Loan Accounts
. Agent shall maintain one or more loan account(s) on its books in which
shall be recorded (a) all Loans, Letter of Credit Accommodations and other
Obligations and the Collateral, (b) all payments made by Borrower or any
Guarantor and (c) all other appropriate debits and credits as provided in this
Agreement, including fees, charges, costs, expenses and interest. All entries
in the loan account(s) shall be made in accordance with Agent's customary
practices as in effect from time to time.
6.2 Statements
. Agent shall render to Borrower each month a statement setting forth the
balance in Borrower's loan account(s) maintained by Agent for Borrower pursuant
to the provisions of this Agreement, including principal, interest, fees, costs
and expenses. Each such statement shall be subject to subsequent adjustment by
Agent but shall, absent manifest errors or omissions, be considered correct and
deemed accepted by Borrower and Guarantors and conclusively binding upon
Borrower and Guarantors as an account stated except to the extent that Agent
receives a written notice from Borrower of any specific exceptions of Borrower
thereto within thirty (30) days after the date such statement has been received
by Borrower. Until such time as Agent shall have rendered to Borrower a written
statement as provided above, the balance in Borrower's loan account(s) shall be
presumptive evidence of the amounts due and owing to Agent and Lenders by
Borrower and Guarantors.
6.3 Collection of Accounts.
(a) Borrower and each Guarantor shall establish and maintain, at their
expense, blocked accounts or lockboxes and related blocked accounts (in either
case, "Blocked Accounts"), as Agent may specify, with such banks as are
acceptable to Agent into which Borrower and each Guarantor shall promptly
deposit and direct their respective account debtors to directly remit all
payments on Receivables and all payments constituting proceeds of Inventory or
other Collateral in the identical form in which such payments are made, whether
by cash, check or other manner. Borrower and each Guarantor shall deliver, or
cause to be delivered to Agent a Depository Account Control Agreement duly
authorized, executed and delivered by each bank where a Blocked Account is
maintained as provided in Section 5.2 hereof or at any time and from time to
time Agent may become the bank's customer with respect to any of the Blocked
Accounts and promptly upon Agent's request, Borrower and each Guarantor shall
execute and deliver such agreements and documents as Agent may require in
connection therewith. Borrower and each Guarantor agrees that all payments made
to such Blocked Accounts or other funds received and collected by Agent or any
Lender, whether in respect of the Receivables, as proceeds of Inventory or other
Collateral or otherwise shall be treated as payments to Agent and Lenders in
respect of the Obligations and therefore shall constitute the property of Agent
and Lenders to the extent of the then outstanding Obligations.
(b) For purposes of calculating the amount of the Loans available to
Borrower, such payments will be applied (conditional upon final collection) to
the Obligations on the Business Day of receipt by Agent of immediately available
funds in the Agent Payment Account provided such payments and notice thereof are
received in accordance with Agent's usual and customary practices as in effect
from time to time and within sufficient time to credit Borrower's loan account
on such day, and if not, then on the next Business Day. For the purposes of
54
calculating interest on the Obligations, such payments or other funds received
will be applied (conditional upon final collection) to the Obligations the next
Business Day following the date of receipt of immediately available funds by
Agent in the Agent Payment Account provided such payments or other funds and
notice thereof are received in accordance with Agent's usual and customary
practices as in effect from time to time and within sufficient time to credit
Borrower's loan account on such day, and if not, then on the next Business Day.
In the event that at any time or from time to time there are no Revolving Loans
outstanding, Agent shall be entitled to an administrative charge in an amount
equivalent to the interest that would have been payable for such Business Day
had there been Revolving Loans outstanding on such day as calculated by Agent in
accordance with its customary practice. The economic benefit of the timing in
the application of payments (and the administrative charge with respect thereto,
if applicable) shall be for the sole benefit of Agent.
(c) Borrower and each Guarantor and their respective shareholders,
directors, employees, agents, Subsidiaries or other Affiliates shall, acting as
trustee for Agent, receive, as the property of Agent, any monies, checks, notes,
drafts or any other payment relating to and/or proceeds of Accounts or other
Collateral which come into their possession or under their control and
immediately upon receipt thereof, shall deposit or cause the same to be
deposited in the Blocked Accounts, or remit the same or cause the same to be
remitted, in kind, to Agent. In no event shall the same be commingled with
Borrower's or Guarantor's own funds. Borrower and each Guarantor agrees to
reimburse Agent on demand for any amounts owed or paid to any bank at which a
Blocked Account or any other deposit account is established or any other bank or
person involved in the transfer of funds to or from the Blocked Accounts arising
out of Agent's payments to or indemnification of such bank or person. The
obligation of Borrower and each Guarantor to reimburse Agent for such amounts
pursuant to this Section 6.3 shall survive the termination of this Agreement.
(d) Notwithstanding anything herein to the contrary, all proceeds received
in the Agent Payment Account that originated from a Guarantor shall, to the
extent applied to the Obligations, be deemed (i) if Agent has made demand of
payment under such Guarantor's guaranty or an Event of Default has occurred
under Section 10.1(g) or Section 10.1(h) hereof with respect to such Guarantor,
a payment on such Guarantor's guaranty in favor of Agent, (ii) to the extent
such Guarantor owes monetary obligations to Borrower and clause (i) is not
otherwise applicable, a repayment of such Guarantor's obligations to Borrower or
(iii) to the extent no such monetary obligations are owing from such Guarantor
to Borrower and clause (i) is not otherwise applicable, a loan from such
Guarantor to Borrower subject to the terms of Section 9.10(g) hereof.
6.4 Payments.
(a) All Obligations shall be payable to the Agent Payment Account as
provided in Section 6.3 or such other place as Agent may designate from time to
time in writing to Borrower. Agent shall apply payments to the extent received
or collected from any Borrower or any Obligor or for the account of such
Borrower or such Obligor (including the monetary proceeds of collections or of
realization upon any Collateral) as follows (provided that payments received
55
from the Exim Guarantee, proceeds of Exim Primary Collateral and allocations
among Exim Revolving Loans, Non-Exim Revolving Loans, Exim Letter of Credit
Accommodations and Non-Exim Revolving Credit Accommodations shall be applied and
allocated solely in accordance with clause (D) of this Section 6.4):
(i) so long as no Priority Event shall have occurred and be continuing,
or will result from any of the following payment applications,
first, to pay in full all indemnities or expense reimbursements then due to
Agent from Borrower and Guarantors (other than fees);
second, to pay in full indemnities or expense reimbursements then due to Lenders
from Borrower and Guarantors (other than fees);
third, to pay in full all fees payable by Borrower under the Financing
Agreements then due;
fourth, to pay in full interest due in respect of the Loans (including interest
payable in respect of the Revolving Loans, Special Agent Advances, Term Loan or
otherwise);
fifth, to pay or prepay principal in respect of Special Agent Advances;
sixth, to pay the regularly scheduled principal amounts then due and payable, if
any (other than prepayments or payments pursuant to acceleration), in respect of
the Term Loan;
seventh, to pay principal in respect of the Revolving Loans then outstanding
(whether or not then due) until paid in full;
eighth, to cash collateralize any outstanding Letter of Credit Accommodations,
ninth, to pay the principal in respect of the Term Loan then outstanding
(whether or not then due) in the inverse order of maturity of the installments
due thereunder until paid in full; and
tenth, to pay or prepay any other Obligations whether or not then due, in such
order and manner as Agent determines.
provided, that, in each instance set forth above in Section 6.4(a)(i), so long
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as no Priority Event has occurred and is continuing, Section 6.4(a)(i) shall not
be deemed to apply to any payment by a Borrower specified by such Borrower to be
for the payment of specific Obligations then due and payable (or prepayable)
under and in accordance with any provision of this Agreement;
and
(ii) from and after the occurrence and during the continuance of a
Priority Event,
56
first, to pay in full the expenses of Agent for the collection and
enforcement of the Obligations and for the protection, preservation or sale,
disposition or other realization upon the Collateral, including all expenses,
liabilities and advances incurred or made by or on behalf of Agent, in
connection therewith (including attorneys' fees and legal expenses and other
expenses of Agent);
second, to the extent proceeds remain after the application pursuant to the
preceding clause, to pay all Obligations (other than (i) the Term Loan
Obligations, (ii) Product Obligations and (iii) the early termination fee
payable under Section 13.1(c)) until paid in full, in cash or other immediately
available funds, in such order and manner as Agent shall elect in its discretion
(including cash collateral for any outstanding Letter of Credit Accommodations
in accordance with Section 13.1(a) hereof);
third, to the extent proceeds remain after the application pursuant to the
preceding two clauses, to pay any outstanding Product Obligations up to an
amount not to exceed $500,000;
fourth, to the extent proceeds remain after the application pursuant to the
preceding three clauses, to pay the Term Loan Obligations until paid in full;
fifth, to the extent proceeds remain after the application pursuant to the
preceding four clauses, to pay in full the early termination fee payable under
Sections 13.1(c)); and
sixth, to the extent proceeds remain after the application pursuant to the
preceding five clauses, ratably to pay in full all other Obligations (including
any remaining Product Obligations then outstanding).
Notwithstanding anything contained in this Section 6.4 or this Agreement to the
contrary,
(A) if the payment of any expenses, costs, scheduled servicing fees
(such servicing fees to consist of scheduled servicing fees existing on the date
hereof along with any increases to such servicing fees which have been consented
to be Ableco) and/or interest (other than default interest charged during the
existence of an Event of Default) to Agent for the account of itself and
Revolving Lenders would accrue and become due but for the occurrence of an
Insolvency Event and any such amounts are not allowed or allowable in whole or
in part (any such amounts are hereinafter referred to as the "Specified
Amounts"), then Agent and Revolving Lenders shall receive payment in full of the
Specified Amounts (but not the items excluded from Specified Amounts above)
before any payment of any Term Loan Obligations; provided, that nothing herein
shall prevent Agent or the Revolving Lenders from recovering any default
interest charged during the existence of an Event of Default from any Borrower
or Obligor not subject to an Insolvency Event, which amounts shall be payable to
Agent and Revolving Lenders before any payment of any Term Loan Obligations;
(B) should any payment or distribution on security or instrument or proceeds
thereof be received by a Lender other than in accordance with this Section 6.4,
such Lender shall receive and hold the same in trust, for the benefit of Agent
and Lenders and shall forthwith deliver the same to Agent (together with any
endorsement or assignment of such Lender where necessary), for application by
Agent to the Obligations in accordance with the terms of Section 6.4;
57
(C) unless so directed by Borrower, or unless a Default or an Event of
Default shall exist or have occurred and be continuing, Agent shall not apply
any payments which it receives to any Eurodollar Rate Loans, except (1) on the
expiration date of the Interest Period applicable to any such Eurodollar Rate
Loans or (2) in the event that there are no outstanding Prime Rate Loans. With
respect to any Loans to the extent not specified above, Agent may apply payments
to such Loans in such order as Agent shall determine; and
(D) unless otherwise agreed to by Agent, Required Revolving Lenders and
Exim, (1) all proceeds of Exim Primary Collateral and all payments received from
the Exim Guarantee shall be applied first, to reduce the "Loan Facility
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Obligations" (as such term is defined in the Exim Guarantee) in such order as
set forth in the Exim Guarantee Documents or, if not set forth therein, in such
order as Agent shall determine, until paid in full and second, to any other
------
Obligations in such order as set forth in the Exim Guarantee Documents or, if
not set forth therein, in such order as set forth in Section 6.4(a)(i) or (ii),
as applicable, and (2) all proceeds from other Collateral that is required under
Section 6.4(a)(i) or (ii) to be applied to the Revolving Loans and to cash
collateralize the Letter of Credit Accommodations shall be applied first, to
reduce the Non-Exim Revolving Loans until paid in full, second, to cash
collateralize the Non-Exim Letter of Credit Accommodations, third, to reduce the
Exim Revolving Loans until paid in full and fourth, to cash collateralize the
Exim Letter of Credit Accommodations.
(b) At Agent's option, all principal, interest, fees, costs, expenses
and other charges provided for in this Agreement or the other Financing
Agreements may be charged directly to the loan account(s) of Borrower and a
description thereof shall be set forth in the monthly statement provided under
Section 6.2 hereof. Agent shall, upon the direction of the Required Term
Lenders, charge the account(s) of Borrower for all principal, interest, fees,
costs, expenses and other charges provided for in this Agreement or the other
Financing Agreements so long as (i) such amounts are due and payable to the Term
Lenders and (ii) such amounts are paid for by advancing Non-Exim Revolving Loans
and all conditions to the making of such Non-Exim Revolving Loans under Section
4.2 have been satisfied. Borrowers shall make all payments to Agent and Lenders
on the Obligations free and clear of, and without deduction or withholding for
or on account of, any setoff, counterclaim, defense, duties, taxes, levies,
imposts, fees, deductions, withholding, restrictions or conditions of any kind.
If after receipt of any payment of, or proceeds of Collateral applied to the
payment of, any of the Obligations, Agent or any Lender is required to surrender
or return such payment or proceeds to any Person for any reason, then the
Obligations intended to be satisfied by such payment or proceeds shall be
reinstated and continue and this Agreement shall continue in full force and
effect as if such payment or proceeds had not been received by Agent or such
Lender. Borrowers shall be liable to pay to Agent, and do hereby indemnify and
hold Agent and Lenders harmless for the amount of any payments or proceeds
surrendered or returned. This Section 6.4(b) shall remain effective
notwithstanding any contrary action which may be taken by Agent or any Lender in
reliance upon such payment or proceeds. This Section 6.4 shall survive the
payment of the Obligations and the termination of this Agreement.
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6.5 Authorization to Make Loans
. Agent and Lenders are authorized to make the Loans and provide the
Letter of Credit Accommodations based upon telephonic or other instructions
received from anyone purporting to be an officer of Borrower or any other
authorized person or, at the discretion of Agent, if such Loans are necessary to
satisfy any Obligations. All requests for Loans or Letter of Credit
Accommodations hereunder shall specify whether such Loan or Letter of Credit
Accommodation is an Exim Revolving Loan, Exim Letter of Credit Accommodation,
Non-Exim Revolving Loan or Non-Exim Letter of Credit Accommodation, the date on
which the requested advance is to be made or Letter of Credit Accommodations
established (which day shall be a Business Day) and the amount of the requested
Loan. Requests received after 11:00 a.m. Chicago time on any day shall be
deemed to have been made as of the opening of business on the immediately
following Business Day. All Loans and Letter of Credit Accommodations under
this Agreement shall be conclusively presumed to have been made to, and at the
request of and for the benefit of, Borrower or any Guarantor when deposited to
the credit of Borrower or any Guarantor or otherwise disbursed or established in
accordance with the instructions of Borrower or any Guarantor or in accordance
with the terms and conditions of this Agreement.
6.6 Use of Proceeds
. Borrower shall use the initial proceeds of the Non-Exim Revolving Loans
provided by Revolving Lenders hereunder only for: (a) payments to each of the
Persons listed in the disbursement direction letter furnished by Borrower to
Agent on or about the date hereof and (b) costs, expenses and fees in connection
with the preparation, negotiation, execution and delivery of this Agreement and
the other Financing Agreements. All other Non-Exim Revolving Loans made or
Non-Exim Letter of Credit Accommodations provided to or for the benefit of
Borrower pursuant to the provisions hereof shall be used by Borrower for general
operating, working capital and other proper corporate purposes of Borrower not
otherwise prohibited by the terms hereof; provided, that a portion of the
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Non-Exim Revolving Loans may be used to repay Indebtedness existing under the
Indenture in accordance with Section 9.23. All Exim Revolving Loans made or
Exim Letter of Credit Accommodations provided to or for the benefit of Borrower
pursuant to the provisions hereof shall be used by Borrower only for the
manufacturing of, production of, or purchase and subsequent export sale of,
finished goods which are intended for export from the United States and as more
particularly described in the Exim Guarantee Documents. None of the proceeds of
the Loans will be used, directly or indirectly, for the purpose of purchasing or
carrying any margin security or for the purposes of reducing or retiring any
indebtedness which was originally incurred to purchase or carry any margin
security or for any other purpose which might cause any of the Loans to be
considered a "purpose credit" within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System, as amended.
6.7 [Intentionally Omitted].
6.8 Pro Rata Treatment
. Except to the extent otherwise provided in this Agreement: (a) the
making and conversion of Loans shall be made among the Lenders based on their
respective Pro Rata Shares as to the applicable Loans and (b) each payment on
account of any Obligations to or for the account of one or more of Lenders in
respect of any Obligations due on a particular day shall be allocated among the
Lenders entitled to such payments based on their respective Pro Rata Shares of
such Obligations and shall be distributed accordingly.
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6.9 Sharing of Payments, Etc.
(a) Borrower and each Guarantor agrees that, in addition to (and
without limitation of) any right of setoff, banker's lien or counterclaim Agent
or any Lender may otherwise have, each Lender shall be entitled, at its option
(but subject, as among Agent and Lenders, to the provisions of Section 12.3(b)
hereof), to offset balances held by it for the account of Borrower or such
Guarantor at any of its offices, in dollars or in any other currency, against
any principal of or interest on any Loans owed to such Lender or any other
amount payable to such Lender hereunder, that is not paid when due (regardless
of whether such balances are then due to Borrower or such Guarantor), in which
case it shall promptly notify Borrower and Agent thereof; provided, that, such
Lender's failure to give such notice shall not affect the validity thereof.
(b) If any Lender (including Agent) shall obtain from Borrower or any
Guarantor payment of any principal of or interest on any Loan owing to it or
payment of any other amount under this Agreement or any of the other Financing
Agreements through the exercise of any right of setoff, banker's lien or
counterclaim or similar right or otherwise (other than from Agent as provided
herein), and, as a result of such payment, such Lender shall have received more
than its Pro Rata Share of the principal of the Loans or more than its share of
such other amounts then due hereunder or thereunder by Borrower or any Guarantor
to such Lender than the percentage thereof received by any other Lender, it
shall promptly pay to Agent, for the benefit of Lenders, the amount of such
excess and simultaneously purchase from such other Lenders a participation in
the Loans or such other amounts, respectively, owing to such other Lenders (or
such interest due thereon, as the case may be) in such amounts, and make such
other adjustments from time to time as shall be equitable, to the end that all
Lenders shall share the benefit of such excess payment (net of any expenses that
may be incurred by such Lender in obtaining or preserving such excess payment)
in accordance with their respective Pro Rata Shares or as otherwise agreed by
Lenders. To such end all Lenders shall make appropriate adjustments among
themselves (by the resale of participation sold or otherwise) if such payment is
rescinded or must otherwise be restored.
(c) Borrower and each Guarantor agrees that any Lender purchasing a
participation (or direct interest) as provided in this Section may exercise, in
a manner consistent with this Section, all rights of setoff, banker's lien,
counterclaim or similar rights with respect to such participation as fully as if
such Lender were a direct holder of Loans or other amounts (as the case may be)
owing to such Lender in the amount of such participation.
(d) Nothing contained herein shall require any Lender to exercise any right
of setoff, banker's lien, counterclaims or similar rights or shall affect the
right of any Lender to exercise, and retain the benefits of exercising, any such
right with respect to any other Indebtedness or obligation of Borrower or any
Guarantor. If, under any applicable bankruptcy, insolvency or other similar
law, any Lender receives a secured claim in lieu of a setoff to which this
Section applies, such Lender shall, to the extent practicable, assign such
rights to Agent for the benefit of Lenders and, in any event, exercise its
rights in respect of such secured claim in a manner consistent with the rights
of Lenders entitled under this Section to share in the benefits of any recovery
on such secured claim.
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6.10 Settlement Procedures.
(a) In order to administer the Credit Facility in an efficient manner
and to minimize the transfer of funds between Agent and Revolving Lenders, Agent
may, at its option, subject to the terms of this Section, make available, on
behalf of Revolving Lenders, the full amount of the Revolving Loans requested or
charged to Borrower's loan account(s) or otherwise to be advanced by Revolving
Lenders pursuant to the terms hereof, without requirement of prior notice to
Revolving Lenders of the proposed Revolving Loans.
(b) With respect to all Revolving Loans made by Agent on behalf of Revolving
Lenders as provided in this Section, the amount of each Revolving Lender's Pro
Rata Share of the outstanding Revolving Loans shall be computed weekly, and
shall be adjusted upward or downward on the basis of the amount of the
outstanding Revolving Loans as of 5:00 p.m. Chicago time on the Business Day
immediately preceding the date of each settlement computation; provided, that,
Agent retains the absolute right at any time or from time to time to make the
above described adjustments at intervals more frequent than weekly, but in no
event more than twice in any week. Agent shall deliver to each of the Revolving
Lenders after the end of each week, or at such lesser period or periods as Agent
shall determine, a summary statement of the amount of outstanding Revolving
Loans for such period (such week or lesser period or periods being hereinafter
referred to as a "Settlement Period"). If the summary statement is sent by
Agent and received by a Revolving Lender prior to 12:00 p.m. Chicago time, then
such Revolving Lender shall make the settlement transfer described in this
Section by no later than 3:00 p.m. Chicago time on the same Business Day and if
received by a Revolving Lender after 12:00 p.m. Chicago time, then such
Revolving Lender shall make the settlement transfer by not later than 3:00 p.m.
Chicago time on the next Business Day following the date of receipt. If, as of
the end of any Settlement Period, the amount of a Revolving Lender's Pro Rata
Share of the outstanding Revolving Loans is more than such Revolving Lender's
Pro Rata Share of the outstanding Revolving Loans as of the end of the previous
Settlement Period, then such Revolving Lender shall forthwith (but in no event
later than the time set forth in the preceding sentence) transfer to Agent by
wire transfer in immediately available funds the amount of the increase.
Alternatively, if the amount of a Revolving Lender's Pro Rata Share of the
outstanding Revolving Loans in any Settlement Period is less than the amount of
such Revolving Lender's Pro Rata Share of the outstanding Revolving Loans for
the previous Settlement Period, Agent shall forthwith transfer to such Revolving
Lender by wire transfer in immediately available funds the amount of the
decrease. The obligation of each of the Revolving Lenders to transfer such
funds and effect such settlement shall be irrevocable and unconditional and
without recourse to or warranty by Agent. Agent and each Revolving Lender
agrees to ▇▇▇▇ its books and records at the end of each Settlement Period to
show at all times the dollar amount of its Pro Rata Share of the outstanding
Revolving Loans and Letter of Credit Accommodations. Each Revolving Lender
shall only be entitled to receive interest on its Pro Rata Share of the
Revolving Loans to the extent such Revolving Loans have been funded by such
Revolving Lender. Because Agent on behalf of Revolving Lenders may be advancing
and/or may be repaid Revolving Loans prior to the time when Revolving Lenders
will actually advance and/or be repaid such Revolving Loans, interest with
respect to Revolving Loans shall be allocated by Agent in accordance with the
amount of Revolving Loans actually advanced by and repaid to each Revolving
Lender and Agent and shall accrue from and including the date such Revolving
Loans are so advanced to but excluding the date such Revolving Loans are either
repaid by Borrower or actually settled with the applicable Revolving Lender as
described in this Section.
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(c) To the extent that Agent has made any such amounts available and the
settlement described above shall not yet have occurred, upon repayment of any
Revolving Loans by Borrower, Agent may apply such amounts repaid directly to any
amounts made available by Agent pursuant to this Section. In lieu of weekly or
more frequent settlements, Agent may, at its option, at any time require each
Revolving Lender to provide Agent with immediately available funds representing
its Pro Rata Share of each Revolving Loan, prior to Agent's disbursement of such
Revolving Loan to Borrower. In such event, all Revolving Loans under this
Agreement shall be made by the Revolving Lenders simultaneously and
proportionately to their Pro Rata Shares. No Revolving Lender shall be
responsible for any default by any other Revolving Lender in the other Revolving
Lender's obligation to make a Revolving Loan requested hereunder nor shall the
Revolving Commitment of any Revolving Lender be increased or decreased as a
result of the default by any other Revolving Lender in the other Revolving
Lender's obligation to make a Revolving Loan hereunder.
(d) If Agent is not funding a particular Revolving Loan to Borrower pursuant
to this Section on any day, Agent may assume that each Revolving Lender will
make available to Agent such Revolving Lender's Pro Rata Share of the Revolving
Loan requested or otherwise made on such day and Agent may, in its discretion,
but shall not be obligated to, cause a corresponding amount to be made available
to or for the benefit of Borrower on such day. If Agent makes such
corresponding amount available to Borrower and such corresponding amount is not
in fact made available to Agent by such Revolving Lender, Agent shall be
entitled to recover such corresponding amount on demand from such Revolving
Lender together with interest thereon for each day from the date such payment
was due until the date such amount is paid to Agent at the Federal Funds Rate
for each day during such period (as published by the Federal Reserve Bank of New
York or at Agent's option based on the arithmetic mean determined by Agent of
the rates for the last transaction in overnight Federal funds arranged prior to
9:00 a.m. (New York City time) on that day by each of the three leading brokers
of Federal funds transactions in New York City selected by Agent) and if such
amounts are not paid within three (3) days of Agent's demand, at the highest
Interest Rate provided for in Section 3.1 hereof applicable to Prime Rate
Revolving Loans consisting of Revolving Loans. During the period in which such
Revolving Lender has not paid such corresponding amount to Agent,
notwithstanding anything to the contrary contained in this Agreement or any of
the other Financing Agreements, the amount so advanced by Agent shall, for all
purposes hereof, be a Loan made by Agent for its own account. Upon any such
failure by a Revolving Lender to pay Agent, Agent shall promptly thereafter
notify Borrower of such failure and Borrower shall pay such corresponding amount
to Agent for its own account within five (5) Business Days of Borrower's receipt
of such notice. A Revolving Lender who fails to pay Agent its Pro Rata Share of
any Revolving Loans made available by Agent on such Revolving Lender's behalf,
or any Revolving Lender who fails to pay any other amount owing by it to Agent,
is a "Defaulting Revolving Lender". Agent shall not be obligated to transfer to
a Defaulting Revolving Lender any payments received by Agent for the Defaulting
Revolving Lender's benefit, nor shall a Defaulting Revolving Lender be entitled
to the sharing of any payments hereunder (including any principal, interest or
fees). Amounts payable to a Defaulting Revolving Lender shall instead be paid
to or retained by Agent. Agent may hold and, in its discretion, relend to
Borrower the amount of all such payments received or retained by it for the
account of such Defaulting Revolving Lender. For purposes of voting or
consenting to matters with respect to this Agreement and the other Financing
Agreements and determining Pro Rata Shares, such Defaulting Revolving Lender
shall be deemed not to be a "Revolving Lender" and such Revolving Lender's
Revolving Commitment shall be deemed to be zero (0). This Section shall remain
effective with respect to a Defaulting Revolving Lender until such default is
cured. The operation of this Section shall not be construed to increase or
otherwise affect the Revolving Commitment of any Revolving Lender, or relieve or
excuse the performance by Borrower or any Obligor of their duties and
obligations hereunder.
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(e) Nothing in this Section or elsewhere in this Agreement or the other
Financing Agreements shall be deemed to require Agent to advance funds on behalf
of any Revolving Lender or to relieve any Revolving Lender from its obligation
to fulfill its Revolving Commitment hereunder or to prejudice any rights that
Borrower may have against any Revolving Lender as a result of any default by any
Revolving Lender hereunder in fulfilling its Revolving Commitment.
6.11 Obligations Several; Independent Nature of Lenders' Rights
. The obligation of each Lender hereunder is several, and no Lender shall
be responsible for the obligation or commitment of any other Lender hereunder.
Nothing contained in this Agreement or any of the other Financing Agreements and
no action taken by the Lenders pursuant hereto or thereto shall be deemed to
constitute the 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, and subject to Section 12.3
hereof, each Lender shall be entitled to protect and enforce its rights arising
out of this Agreement and it shall not be necessary for any other Lender to be
joined as an additional party in any proceeding for such purpose.
SECTION 7. COLLATERAL REPORTING AND COVENANTS
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7.1 Collateral Reporting.
(a) Borrower shall provide Agent with the following documents in a form
satisfactory to Agent:
(i) as soon as possible after the end of each Fiscal Month (but in any
event within ten (10) Business Days after the end thereof), a monthly Borrowing
Base Certificate in the form of Exhibit D hereto setting forth the calculation
of the Borrowing Base and the Export-Related Borrowing Base as of the last
Business Day of the immediately preceding Fiscal Month (or more frequently as
Agent shall require if a Trigger Event exists and is continuing), which
Borrowing Base Certificate shall be complete and accurate in all material
respects as determined by Agent;
(ii) on a regular basis as required by Agent, schedules of sales made,
credits issued and cash received;
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(iii) as soon as possible after the end of each Fiscal Month (but in any
event within ten (10) Business Days after the end thereof), on a monthly basis
or more frequently as Agent may request after the occurrence of a Trigger Event,
(A) perpetual inventory reports, (B) inventory reports by location and category
(and including the amounts of Inventory and the value thereof at any leased
locations and at premises of warehouses, processors or other third parties), (C)
agings of accounts receivable (together with a reconciliation to the previous
month's aging and general ledger) and (D) agings of accounts payable (and
including information indicating the amounts owing to owners and lessors of
leased premises, warehouses, processors and other third parties from time to
time in possession of any Collateral);
(iv) upon Agent's request, (A) copies of customer statements and credit
memos, remittance advices and reports, and copies of deposit slips and bank
statements, (B) copies of shipping and delivery documents, and (C) copies of
purchase orders, invoices and delivery documents for Inventory and Equipment
acquired by Borrower or any Guarantor;
(v) such other reports as to the Collateral as Agent shall request from time
to time.
(b) During the existence of a Trigger Event, Borrower shall provide to
Agent on a regularly scheduled basis as required by Agent, schedules in a form
satisfactory to Agent reflecting sales made, credits issued, cash or other items
of payment received and other data relating to the current calculation of the
Borrowing Base and the Export-Related Borrowing Base, as well as the level of
intercompany loan balances as Agent shall request.
(c) If Borrower's or Guarantor's records or reports of the Collateral are
prepared or maintained by an accounting service, contractor, shipper or other
agent, Borrower and such Guarantor hereby irrevocably authorizes such service,
contractor, shipper or agent to deliver such records, reports, and related
documents to Agent and to follow Agent's instructions with respect to further
services at any time that an Event of Default exists or has occurred and is
continuing.
All documents delivered pursuant to this Section shall include the U.S. dollar
equivalent of any values stated in a currency other than U.S. dollars.
7.2 Accounts Covenants.
(a) Borrower shall notify Agent promptly of: (i) any material delay in
Borrower's or any of its Subsidiaries performance of any of their respective
material obligations to any account debtor or the assertion of any material
claims, offsets, defenses or counterclaims by any account debtor, or any
material disputes with account debtors, or any settlement, adjustment or
compromise thereof, (ii) all material adverse information known to Borrower or
any Guarantor relating to the financial condition of any account debtor and
(iii) any event or circumstance which, to the best of Borrower's or Guarantor's
knowledge, would cause Agent to consider any then existing Accounts as no longer
constituting Eligible Accounts or Eligible Export-Related Accounts Receivable.
No credit, discount, allowance or extension or agreement for any of the
foregoing shall be granted to any account debtor without Agent's consent, except
in the ordinary course of Borrower's or a Guarantor's business in accordance
with practices and policies previously disclosed in writing to Agent and except
as set forth in the schedules delivered to Agent pursuant to Section 7.1(a)
above. So long as no Event of Default exists or has occurred and is continuing,
Borrower and Guarantors shall settle, adjust or compromise any claim, offset,
counterclaim or dispute with any account debtor. At any time that an Event of
Default exists or has occurred and is continuing, Agent shall, at its option,
have the exclusive right to settle, adjust or compromise any claim, offset,
counterclaim or dispute with account debtors or grant any credits, discounts or
allowances.
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(b) With respect to each Account: (i) the amounts shown on any invoice
delivered to Agent or schedule thereof delivered to Agent shall be true and
complete, (ii) no payments shall be made thereon except payments immediately
delivered to Agent pursuant to the terms of this Agreement, (iii) no credit,
discount, allowance or extension or agreement for any of the foregoing shall be
granted to any account debtor except as reported to Agent in accordance with
this Agreement and except for credits, discounts, allowances or extensions made
or given in the ordinary course of Borrower's business in accordance with
practices and policies previously disclosed to Agent, (iv) there shall be no
setoffs, deductions, contras, defenses, counterclaims or disputes existing or
asserted with respect thereto except as reported to Agent in accordance with the
terms of this Agreement, (v) none of the transactions giving rise thereto will
violate any applicable foreign, Federal, State or local laws or regulations, all
documentation relating thereto will be legally sufficient under such laws and
regulations and all such documentation will be legally enforceable in accordance
with its terms.
(c) Agent shall have the right at any time or times, in Agent's name or in
the name of a nominee of Agent, to verify the validity, amount or any other
matter relating to any Receivables or other Collateral, by mail, telephone,
facsimile transmission or otherwise.
7.3 Inventory Covenants
. With respect to the Inventory: (a) Borrower and each Guarantor shall at
all times maintain inventory records reasonably satisfactory to Agent, keeping
correct and accurate records itemizing and describing the kind, type, quality
and quantity of Inventory, Borrower's or such Guarantor's cost therefor and
daily withdrawals therefrom and additions thereto; (b) Borrower and Guarantors
shall conduct cycle counts of the Inventory at least once each year which shall
include counts of at least 85% of the Borrower's and Guarantors' Inventory;
provided that Borrower and Guarantors shall conduct a physical count of the
----
Inventory at any time or times as Agent may request on or after an Event of
Default, and promptly following such cycle count or physical count, as
applicable, shall supply Agent with a report in the form and with such
specificity as may be satisfactory to Agent concerning such count; (c) Borrower
and Guarantors shall not remove any Inventory from the locations set forth or
permitted herein, without the prior written consent of Agent, except for sales
of Inventory in the ordinary course of its business and except to move Inventory
directly from one location set forth or permitted herein to another such
location and except for Inventory shipped from the manufacturer thereof to
Borrower or such Guarantor which is in transit to the locations set forth or
permitted herein; (d) upon Agent's request, Borrower shall, at its expense, no
more than once during any fiscal year, but at any time or times as Agent may
request on or after an Event of Default, deliver or cause to be delivered to
Agent written appraisals as to the Inventory in form, scope and methodology
acceptable to Agent and by an appraiser acceptable to Agent, addressed to Agent
and Lenders and upon which Agent and Lenders are expressly permitted to rely;
(e) Borrower and Guarantors shall produce, use, store and maintain the Inventory
with all reasonable care and caution and in accordance with applicable standards
of any insurance and in conformity with applicable laws (including the
requirements of the Federal Fair Labor Standards Act of 1938, as amended and all
rules, regulations and orders related thereto); (f) none of the Inventory or
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other Collateral constitutes farm products or the proceeds thereof; (g) Borrower
and each Guarantor assumes all responsibility and liability arising from or
relating to the production, use, sale or other disposition of the Inventory; (h)
Borrower and Guarantors shall not sell Inventory to any customer on approval, or
any other basis which entitles the customer to return or may obligate Borrower
or any Guarantor to repurchase such Inventory except for returns and repurchases
in connection with any warranties issued on such Inventory in the ordinary
course of business and upon accepting any return or making any repurchase,
Borrower shall provide Agent with prompt notice thereof to the extent any return
or repurchase involves Inventory with a Value in excess of $100,000 and Agent
may adjust the Borrowing Base accordingly to reflect such returned or
repurchased Inventory and the related Accounts; (i) Borrower and Guarantors
shall keep the Inventory in good and marketable condition; and (j) Borrower and
Guarantors shall not, without prior written notice to Agent or the specific
identification of such Inventory in a report with respect thereto provided by
Borrower to Agent pursuant to Section 7.1(a) hereof, acquire or accept any
Inventory on consignment or approval.
7.4 Equipment and Real Property Covenants
. With respect to the Equipment and Real Property: (a) upon Agent's
request, Borrower and Guarantors shall, at their expense, no more than once
during each fiscal year, but at any time or times as Agent may request on or
after an Event of Default, deliver or cause to be delivered to Agent written
appraisals as to the Equipment and/or the Real Property in form, scope and
methodology acceptable to Agent and by an appraiser acceptable to Agent,
addressed to Agent and upon which Agent is expressly permitted to rely; (b)
Borrower and Guarantors shall keep the Equipment in good order, repair, running
and marketable condition (ordinary wear and tear excepted); (c) Borrower and
Guarantors shall use the Equipment and Real Property with all reasonable care
and caution and in accordance with applicable standards of any insurance and in
conformity with all applicable laws; (d) the Equipment is and shall be used in
the business of Borrower and Guarantors and not for personal, family, household
or farming use; (e) Borrower and Guarantors shall not remove any Equipment from
the locations set forth or permitted herein, except to the extent necessary to
have any Equipment repaired or maintained in the ordinary course of its business
or to move Equipment directly from one location set forth or permitted herein to
another such location and except for the movement of motor vehicles used by or
for the benefit of Borrower or such Guarantor in the ordinary course of
business; (f) the Equipment is now and shall remain personal property and
Borrower and Guarantors shall not permit any of the Equipment to be or become a
part of or affixed to real property unless such real property is subject to one
of the Mortgages; and (g) Borrower and each Guarantor assumes all responsibility
and liability arising from the use of the Equipment and Real Property.
7.5 Power of Attorney
. Borrower and each Guarantor hereby irrevocably designates and appoints
Agent (and all persons designated by Agent) as Borrower's and such Guarantor's
true and lawful attorney-in-fact, and authorizes Agent, in Borrower's, such
Guarantor's or Agent's name, to: (a) at any time an Event of Default exists or
has occurred and is continuing (i) demand payment on Receivables or other
Collateral, (ii) enforce payment of Receivables by legal proceedings or
otherwise, (iii) exercise all of Borrower's or such Guarantor's rights and
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remedies to collect any Receivable or other Collateral, (iv) sell or assign any
Receivable upon such terms, for such amount and at such time or times as Agent
deems advisable, (v) settle, adjust, compromise, extend or renew an Account,
(vi) discharge and release any Receivable, (vii) prepare, file and sign
Borrower's or such Guarantor's name on any proof of claim in bankruptcy or other
similar document against an account debtor or other obligor in respect of any
Receivables or other Collateral, (viii) notify the post office authorities to
change the address for delivery of remittances from account debtors or other
obligors in respect of Receivables or other proceeds of Collateral to an address
designated by Agent, and open and dispose of all mail addressed to Borrower or
Guarantor and handle and store all mail relating to the Collateral; and (ix) do
all acts and things which are necessary, in Agent's determination, to fulfill
Borrower's or such Guarantor's obligations under this Agreement and the other
Financing Agreements and (b) at any time to (i) take control in any manner of
any item of payment in respect of Receivables or constituting Collateral or
otherwise received in or for deposit in the Blocked Accounts or otherwise
received by Agent or any Lender, (ii) have access to any lockbox or postal box
into which remittances from account debtors or other obligors in respect of
Receivables or other proceeds of Collateral are sent or received, (iii) endorse
Borrower's or such Guarantor's name upon any items of payment in respect of
Receivables or constituting Collateral or otherwise received by Agent and any
Lender and deposit the same in Agent's account for application to the
Obligations, (iv) endorse Borrower's or such Guarantor's name upon any chattel
paper, document, instrument, invoice, or similar document or agreement relating
to any Receivable or any goods pertaining thereto or any other Collateral,
including any warehouse or other receipts, or bills of lading and other
negotiable or non-negotiable documents, (v) clear Inventory the purchase of
which was financed with Letter of Credit Accommodations through U.S. Customs or
foreign export control authorities in Borrower's or such Guarantor's name,
Agent's name or the name of Agent's designee, and to sign and deliver to customs
officials powers of attorney in Borrower's or such Guarantor's name for such
purpose, and to complete in Borrower's or such Guarantor's or Agent's name, any
order, sale or transaction, obtain the necessary documents in connection
therewith and collect the proceeds thereof, and (vi) sign Borrower's or such
Guarantor's name on any verification of Receivables and notices thereof to
account debtors or any secondary obligors or other obligors in respect thereof.
Borrower and each Guarantor hereby releases Agent and Lenders and their
respective officers, employees and designees from any liabilities arising from
any act or acts under this power of attorney and in furtherance thereof, whether
of omission or commission, except as a result of Agent's or any Lender' s own
gross negligence or willful misconduct as determined pursuant to a final
non-appealable order of a court of competent jurisdiction.
7.6 Right to Cure
. Agent may, at its option, upon notice to Borrower, (a) cure any default
by Borrower or any Guarantor under any material agreement with a third party
that affects the Collateral, its value or the ability of Agent to collect, sell
or otherwise dispose of the Collateral or the rights and remedies of Agent or
any Lender therein or the ability of Borrower or any Guarantor to perform its
obligations hereunder or under any of the other Financing Agreements, (b) pay or
bond on appeal any judgment entered against Borrower or any Guarantor, (c)
discharge taxes, liens, security interests or other encumbrances at any time
levied on or existing with respect to the Collateral and pay any amount, incur
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any expense or perform any act which, in Agent's judgment, is necessary or
appropriate to preserve, protect, insure or maintain the Collateral and the
rights of Agent and Lenders with respect thereto. Agent may add any amounts so
expended to the Obligations and charge Borrower's account therefor, such amounts
to be repayable by Borrower on demand. Agent and Lenders shall be under no
obligation to effect such cure, payment or bonding and shall not, by doing so,
be deemed to have assumed any obligation or liability of Borrower or any
Guarantor. Any payment made or other action taken by Agent or any Lender under
this Section shall be without prejudice to any right to assert an Event of
Default hereunder and to proceed accordingly.
7.7 Access to Premises
. From time to time as requested by Agent, at the cost and expense of
Borrower, (a) Agent or its designee shall have complete access to all of
Borrower's and Guarantor's premises during normal business hours and after
notice to Borrower, or at any time and without notice to Borrower if an Event of
Default exists or has occurred and is continuing, for the purposes of
inspecting, verifying and auditing the Collateral and all of Borrower's and
Guarantor's books and records, including the Records, and (b) Borrower and each
Guarantor shall promptly furnish to Agent such copies of such books and records
or extracts therefrom as Agent may request, and Agent or any Lender or Agent's
designee may use during normal business hours such of Borrower's and Guarantor's
personnel, equipment, supplies and premises as may be reasonably necessary for
the foregoing and if an Event of Default exists or has occurred and is
continuing for the collection of Receivables and realization of other
Collateral; provided that, so long as no Event of Default exists and is
continuing and Excess Availability is at least $10,000,000, Agent shall not
conduct such inspections, verifications and audits more than three (3) times
during any twelve-month period.
SECTION 8. REPRESENTATIONS AND WARRANTIES
--------------------------------
Borrower and each Guarantor hereby represents and warrants to Agent and
Lenders the following (which shall survive the execution and delivery of this
Agreement), the truth and accuracy of which are a continuing condition of the
making of Loans and providing Letter of Credit Accommodations to Borrower:
8.1 Corporate Existence, Power and Authority
. Borrower and each Guarantor is a corporation duly organized and in good
standing under the laws of its state of incorporation and is duly qualified as a
foreign corporation and in good standing in all states or other jurisdictions
where the nature and extent of the business transacted by it or the ownership of
assets makes such qualification necessary, except for those jurisdictions in
which the failure to so qualify would not have a material adverse effect on
Borrower's or Guarantor' s financial condition, results of operation or business
or the rights of Agent in or to any of the Collateral. The execution, delivery
and performance of this Agreement, the other Financing Agreements and the
transactions contemplated hereunder and thereunder (a) are all within Borrower's
and Guarantor's corporate powers, (b) have been duly authorized, (c) are not in
contravention of law or the terms of Borrower's or such Guarantor's certificate
of incorporation, by-laws, or other organizational documentation, or any
indenture, agreement or undertaking to which Borrower or any Guarantor is a
party or by which Borrower or any Guarantor or its property are bound and (d)
will not result in the creation or imposition of, or require or give rise to any
obligation to grant, any lien, security interest, charge or other encumbrance
upon any property of Borrower or any Guarantor. This Agreement and the other
Financing Agreements to which Borrower or any Guarantor is a party constitute
legal, valid and binding obligations of Borrower or such Guarantor enforceable
in accordance with their respective terms.
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8.2 Name; State of Organization; Chief Executive Office; Collateral
Locations.
(a) The exact legal name of Borrower and each Guarantor is as set forth
on the signature page of this Agreement and in the Information Certificate.
Neither Borrower nor any Guarantor has, during the past five years, been known
by or used any other corporate or fictitious name or been a party to any merger
or consolidation, or acquired all or substantially all of the assets of any
Person, or acquired any of its property or assets out of the ordinary course of
business, except as set forth in the Information Certificate.
(b) Borrower and each Guarantor is an organization of the type and organized
in the jurisdiction set forth in the Information Certificate. The Information
Certificate accurately sets forth the organizational identification number of
Borrower and each Guarantor or accurately states that Borrower or such Guarantor
has none and accurately sets forth the federal employer identification number of
Borrower and each Guarantor.
(c) The chief executive office and mailing address of Borrower and each
Guarantor and Borrower's and Guarantor's Records concerning Accounts are located
only at the address identified as such in Schedule 8.2 to the Information
Certificate and its only other places of business and the only other locations
of Collateral, if any, are the addresses set forth in Schedule 8.2 to the
Information Certificate, subject to the rights of Borrower or any Guarantor to
establish new locations in accordance with Section 9.2 below. The Information
Certificate correctly identifies any of such locations which are not owned by
Borrower or Guarantor and sets forth the owners and/or operators thereof.
8.3 Financial Statements; No Material Adverse Change
. All financial statements relating to Borrower or any Guarantor which
have been or may hereafter be delivered by Borrower or any Guarantor to Agent
and Lenders have been prepared in accordance with GAAP (except as to any interim
financial statements, to the extent such statements are subject to normal
year-end adjustments and do not include any notes) and fairly present in all
material respects the financial condition and the results of operation of
Borrower and such Guarantor as at the dates and for the periods set forth
therein. Except as disclosed in any interim financial statements furnished by
Borrower and Guarantors to Agent prior to the date of this Agreement, there has
been no act, condition or event which has had or is reasonably likely to have a
Material Adverse Effect since the date of the most recent audited financial
statements of Borrower or any Guarantor furnished by Borrower or any Guarantor
to Agent prior to the date of this Agreement.
8.4 Priority of Liens; Title to Properties
. The security interests and liens granted to Agent under this Agreement
and the other Financing Agreements constitute valid and perfected first priority
liens and security interests in and upon the Collateral subject only to the
liens indicated on Schedule 8.4 to the Information Certificate and the other
liens permitted under Section 9.8 hereof. Borrower and each Guarantor has good
and marketable fee simple title to or valid leasehold interests in all of its
Real Property and good, valid and merchantable title to all of its other
properties and assets subject to no liens, mortgages, pledges, security
interests, encumbrances or charges of any kind, except those granted to Agent
and such others as are specifically listed on Schedule 8.4 to the Information
Certificate or permitted under Section 9.8 hereof.
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8.5 Tax Returns
. Borrower and each Guarantor has filed, or caused to be filed, in a
timely manner all tax returns, reports and declarations which are required to be
filed by it. All information in such tax returns, reports and declarations is
complete and accurate in all material respects. Borrower and each Guarantor has
paid or caused to be paid all taxes due and payable or claimed due and payable
in any assessment received by it, except taxes the validity of which are being
contested in good faith by appropriate proceedings diligently pursued and
available to Borrower or such Guarantor and with respect to which adequate
reserves have been set aside on its books. Adequate provision has been made for
the payment of all accrued and unpaid Federal, State, county, local, foreign and
other taxes whether or not yet due and payable and whether or not disputed.
8.6 Litigation
. Except as set forth on Schedule 8.6 to the Information Certificate, (a)
there is no investigation by any Governmental Authority pending, or to the best
of Borrower's or Guarantor's knowledge threatened, against or affecting Borrower
or any Guarantor, its or their assets or business and (b) there is no action,
suit, proceeding or claim by any Person pending, or to the best of Borrower's or
Guarantor's knowledge threatened, against Borrower or any Guarantor or its or
their assets or goodwill, or against or affecting any transactions contemplated
by this Agreement, in each case, which if adversely determined against Borrower
or such Guarantor has or could reasonably be expected to have a Material Adverse
Effect.
8.7 Compliance with Other Agreement and Applicable Laws.
(a) Borrower and Guarantors are not in default in any respect under, or
in violation in any respect of the terms of, any material agreement, contract,
instrument, lease or other commitment to which it is a party or by which it or
any of its assets are bound. Borrower and Guarantors are in compliance with the
requirements of all applicable laws, rules, regulations and orders of any
Governmental Authority relating to their respective businesses, including,
without limitation, those set forth in or promulgated pursuant to the
Occupational Safety and Health Act of 1970, as amended, the Fair Labor Standards
Act of 1938, as amended, ERISA, the Code, as amended, and the rules and
regulations thereunder, and all Environmental Laws.
(b) Borrower and Guarantors have obtained all material permits, licenses,
approvals, consents, certificates, orders or authorizations of any Governmental
Authority required for the lawful conduct of its business (the "Permits"). All
of the Permits are valid and subsisting and in full force and effect. There are
no actions, claims or proceedings pending or to the best of Borrower's or
Guarantor's knowledge, threatened that seek the revocation, cancellation,
suspension or modification of any of the Permits.
8.8 Environmental Compliance.
(a) Except as set forth on Schedule 8.8 to the Information Certificate,
Borrower, Guarantors and its Subsidiaries of Borrower or any Guarantor have not
generated, used, stored, treated, transported, manufactured, handled, produced,
released or disposed of any Hazardous Materials, on or off its premises (whether
or not owned by it) in any manner which at any time violates or has violated any
applicable Environmental Law or Permit, and the operations of Borrower,
Guarantors and its Subsidiaries of Borrower or any Guarantor complies in all
material respects with all Environmental Laws and all Permits.
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(b) Except as set forth on Schedule 8.8 to the Information Certificate,
there has been no investigation by any Governmental Authority or any proceeding,
complaint, order, directive, claim, citation or notice by any Governmental
Authority or any other person nor is any pending or threatened, with respect to
any non-compliance with or violation of the requirements of any Environmental
Law by Borrower or any Guarantor and any Subsidiary of Borrower or any Guarantor
or the release, spill or discharge, threatened or actual, of any Hazardous
Material or the generation, use, storage, treatment, transportation,
manufacture, handling, production or disposal of any Hazardous Materials or any
other environmental, health or safety matter, which adversely affects or could
reasonably be expected to adversely affect in any material respect Borrower or
any Guarantor or its or their business, operations or assets or any properties
at which Borrower or such Guarantor has transported, stored or disposed of any
Hazardous Materials.
(c) Except as set forth on Schedule 8.8 to the Information Certificate,
Borrower, Guarantors and their Subsidiaries have no material liability
(contingent or otherwise) in connection with a release, spill or discharge,
threatened or actual, of any Hazardous Materials or the generation, use,
storage, treatment, transportation, manufacture, handling, production or
disposal of any Hazardous Materials.
(d) Borrower, Guarantors and their Subsidiaries have all Permits required to
be obtained or filed in connection with the operations of Borrower and
Guarantors under any Environmental Law and all of such licenses, certificates,
approvals or similar authorizations and other Permits are valid and in full
force and effect.
(e) No conditions exist at any property, whether or not owned or previously
owned by Borrower, which could reasonably be expected to give rise to any
liability under any Environmental Laws.
8.9 Employee Benefits.
(a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other Federal or State law. Each
Plan which is intended to qualify under Section 401(a) of the Code has received
a favorable determination letter from the Internal Revenue Service and to the
best of Borrower's or Guarantor's knowledge, nothing has occurred which would
cause the loss of such qualification. Borrower and its ERISA Affiliates have
made all required contributions to any Plan subject to Section 412 of the Code,
and no application for a funding waiver or an extension of any amortization
period pursuant to Section 412 of the Code has been made with respect to any
Plan.
(b) There are no pending, or to the best of Borrower's or Guarantor's
knowledge, threatened claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan. There has been no prohibited transaction
or violation of the fiduciary responsibility rules with respect to any Plan.
(c) (i) No ERISA Event has occurred or is reasonably expected to occur;
(ii) the current value of each Plan's assets (determined in accordance with the
assumptions used for funding such Plan pursuant to Section 412 of the Code) are
not less than such Plan's liabilities under Section 4001(a)(16) of ERISA; (iii)
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Borrower and each Guarantor, and their ERISA Affiliates, have not incurred and
do not reasonably expect to incur, any liability under Title IV of ERISA with
respect to any Plan (other than premiums due and not delinquent under Section
4007 of ERISA); (iv) Borrower and each Guarantor, and their ERISA Affiliates,
have not incurred and do not reasonably expect to incur, any liability (and no
event has occurred which, with the giving of notice under Section 4219 of ERISA,
would result in such liability) under Section 4201 or 4243 of ERISA with respect
to a Multiemployer Plan; and (v) Borrower and each Guarantor, and their ERISA
Affiliates, have not engaged in a transaction that would be subject to Section
4069 or 4212(c) of ERISA.
8.10 Bank Accounts
. All of the deposit accounts, investment accounts or other accounts in
the name of or used by Borrower or any Guarantor maintained at any bank or other
financial institution are set forth on Schedule 8.10 to the Information
Certificate, subject to the right of Borrower and each Guarantor to establish
new accounts in accordance with Section 5.2 hereof.
8.11 Intellectual Property
. Borrower and each Guarantor owns or licenses or otherwise has the right
to use all Intellectual Property necessary for the operation of its business as
presently conducted or proposed to be conducted. As of the date hereof,
Borrower and Guarantors do not have any Intellectual Property registered, or
subject to pending applications, in the United States Patent and Trademark
Office or any similar office or agency in the United States, any State thereof,
any political subdivision thereof or in any other country, other than those
described in Schedule 8.11 to the Information Certificate and has not granted
any licenses with respect thereto other than as set forth in Schedule 8.11 to
the Information Certificate. No event has occurred which permits or would
permit after notice or passage of time or both, the revocation, suspension or
termination of such rights. To the best of Borrower's and Guarantor's
knowledge, (a) no slogan or other advertising device, product, process, method,
substance or other Intellectual Property or goods bearing or using any
Intellectual Property presently contemplated to be sold by or employed by
Borrower or any Guarantor infringes any patent, trademark, servicemark,
tradename, copyright, license or other Intellectual Property owned by any other
Person presently and no claim or litigation is pending or threatened against or
affecting Borrower or any Guarantor contesting its right to sell or use any such
Intellectual Property and (b) no third party has infringed or misappropriated
any Intellectual Property owned or used by Borrower or any Guarantor. Schedule
8.11 to the Information Certificate sets forth all of the agreements or other
arrangements of Borrower and each Guarantor pursuant to which Borrower or
Guarantor has a license or other right to use any trademarks, logos, designs,
representations or other Intellectual Property owned by another person as in
effect on the date hereof and the dates of the expiration of such agreements or
other arrangements of Borrower or such Guarantor as in effect on the date hereof
(collectively, together with such agreements or other arrangements as may be
entered into by Borrower or any Guarantor after the date hereof, collectively,
the "License Agreements" and individually, a "License Agreement"). No
trademark, servicemark, copyright or other Intellectual Property at any time
used by Borrower or any Guarantor which is owned by another person, or owned by
Borrower or such Guarantor is (i) subject to any security interest, lien,
collateral assignment, pledge or other encumbrance in favor of any person other
than Agent, or (ii) affixed to any Eligible Inventory, except (x) to the extent
permitted under the term of the license agreements listed on Schedule 8.11 to
the Information Certificate and (y) to the extent the sale of Inventory to which
such Intellectual Property is affixed is permitted to be sold by Borrower or
such Guarantor under applicable law (including the United States Copyright Act
of 1976).
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8.12 Subsidiaries; Affiliates; Capitalization; Solvency.
(a) Borrower and each Guarantor does not have any direct or indirect
Subsidiaries or Affiliates and is not engaged in any joint venture or
partnership except as set forth in Schedule 8.12 to the Information Certificate.
(b) Borrower and each Guarantor is the record and beneficial owner of all of
the issued and outstanding shares of Capital Stock of each of the Subsidiaries
listed on Schedule 8.12 to the Information Certificate as being owned by
Borrower or such Guarantor and there are no proxies, irrevocable or otherwise,
with respect to such shares and no equity securities of any of the Subsidiaries
are or may become required to be issued by reason of any options, warrants,
rights to subscribe to, calls or commitments of any kind or nature and there are
no contracts, commitments, understandings or arrangements by which its
Subsidiaries is or may become bound to issue additional shares of it Capital
Stock or securities convertible into or exchangeable for such shares.
(c) The issued and outstanding shares of Capital Stock of Borrower and each
Guarantor are directly and beneficially owned and held by the persons indicated
in the Information Certificate, and in each case all of such shares have been
duly authorized and are fully paid and non-assessable, free and clear of all
claims, liens, pledges and encumbrances of any kind, except as disclosed in
writing to Agent prior to the date hereof.
(d) Borrower and each Guarantor is Solvent and will continue to be Solvent
after the creation of the Obligations, the security interests of Agent and the
other transaction contemplated hereunder.
8.13 Labor Disputes.
(a) Set forth on Schedule 8.13 to the Information Certificate is a list
(including dates of termination) of all collective bargaining or similar
agreements between or applicable to Borrower and each Guarantor and any union,
labor organization or other bargaining agent in respect of the employees of
Borrower or any Guarantor on the date hereof.
(b) There is (i) no significant unfair labor practice complaint pending
against Borrower or any Guarantor or, to the best of Borrower's or Guarantor's
knowledge, threatened against it, before the National Labor Relations Board, and
no significant grievance or significant arbitration proceeding arising out of or
under any collective bargaining agreement is pending on the date hereof against
Borrower or any Guarantor or, to best of Borrower's or Guarantor' s knowledge,
threatened against it, and (ii) no significant strike, labor dispute, slowdown
or stoppage is pending against Borrower or any Guarantor or, to the best of
Borrower's or Guarantor's knowledge, threatened against Borrower or any
Guarantor.
8.14 Restrictions on Subsidiaries
. Except for restrictions contained in this Agreement or any other
agreement with respect to Indebtedness of Borrower or any Guarantor permitted
hereunder as in effect on the date hereof, there are no contractual or
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consensual restrictions on Borrower or any Guarantor or any of its Subsidiaries
which prohibit or otherwise restrict (a) the transfer of cash or other assets
(i) between Borrower or any Guarantor and any of its or their Subsidiaries or
(ii) between any Subsidiaries of Borrower or any Guarantor or (b) the ability of
Borrower or any Guarantor or any of its or their Subsidiaries to incur
Indebtedness or grant security interests to Agent or any Lender in the
Collateral.
8.15 Material Contracts
. Schedule 8.15 to the Information Certificate sets forth all Material
Contracts to which Borrower or any Guarantor is a party or is bound as of the
date hereof. Borrower and Guarantors have delivered true, correct and complete
copies of such Material Contracts to Agent on or before the date hereof.
Borrower and Guarantors are not in breach or in default in any material respect
of or under any Material Contract and have not received any notice of the
intention of any other party thereto to terminate any Material Contract.
8.16 Payable Practices
. Borrower and each Guarantor have not made any material change in the
historical accounts payable practices from those in effect at the time of
Agent's most recent field examination conducted prior to the date hereof.
8.17 Accuracy and Completeness of Information
. All information furnished by Borrower or any Guarantor in writing to
Agent or any Lender in connection with this Agreement or any of the other
Financing Agreements or any transaction contemplated hereby or thereby,
including all information on the Information Certificate is true and correct in
all material respects on the date as of which such information is dated or
certified and does not omit any material fact necessary in order to make such
information not misleading. No event or circumstance has occurred which has had
or could reasonably be expected to have a Material Adverse Affect, which has not
been fully and accurately disclosed to Agent in writing prior to the date
hereof.
8.18 Senior Indebtedness
. All the Obligations constitute "Senior Indebtedness", as such term is
defined in the Indenture.
8.19 Single Economic Enterprise
. Borrower and Guarantors make up a related organization of various
entities constituting a single economic and business enterprise so that Borrower
and Guarantors share an identity of interests such that any benefit received by
any one of them benefits the others. Borrower and Guarantors render certain
services to or for the benefit of each other, purchase or sell and supply
certain goods to or from or for the benefit of the others, make loans, advances
and provide certain other financial accommodations to or for the benefit of each
other (including, inter alia, the payment by Borrower and Guarantors of
creditors of each other and guarantees by Borrower and Guarantors of the
indebtedness of each other) and provide certain administrative, marketing,
payroll and management services to or for the benefit of each other.
8.20 Survival of Warranties; Cumulative
. All representations and warranties contained in this Agreement or any of
the other Financing Agreements shall survive the execution and delivery of this
Agreement and shall be deemed to have been made again to Agent and Lenders on
the date of each additional borrowing or other credit accommodation hereunder
and shall be conclusively presumed to have been relied on by Agent and Lenders
regardless of any investigation made or information possessed by Agent or any
Lender. The representations and warranties set forth herein shall be cumulative
and in addition to any other representations or warranties which Borrower or any
Guarantor shall now or hereafter give, or cause to be given, to Agent or any
Lender.
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SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS
-------------------------------------
9.1 Maintenance of Existence.
(a) Borrower and each of its Subsidiaries shall at all times preserve,
renew and keep in full force and effect its corporate existence and rights and
franchises with respect thereto and maintain in full force and effect all
licenses, trademarks, tradenames, approvals, authorizations, leases, contracts
and Permits necessary to carry on the business as presently or proposed to be
conducted, except as to any Subsidiary as permitted in Section 9.7 hereto.
(b) Neither Borrower nor any of its Subsidiaries shall change its name
unless each of the following conditions is satisfied: (i) Agent shall have
received not less than thirty (30) days prior written notice from Borrower of
such proposed change in its corporate name, which notice shall accurately set
forth the new name; and (ii) Agent shall have received a copy of the amendment
to the Certificate of Incorporation of Borrower or such Subsidiary providing for
the name change certified by the Secretary of State of the jurisdiction of
incorporation or organization of Borrower or such Subsidiary as soon as it is
available.
(c) Neither Borrower nor any of its Subsidiaries shall change its chief
executive office or its mailing address or organizational identification number
(or if it does not have one, shall not acquire one) unless Agent shall have
received not less than thirty (30) days' prior written notice from Borrower of
such proposed change, which notice shall set forth such information with respect
thereto as Agent may require and Agent shall have received such agreements as
Agent may reasonably require in connection therewith. Neither Borrower nor any
of its Subsidiaries shall change its type of organization, jurisdiction of
organization or other legal structure.
9.2 New Collateral Locations
. Borrower and each Subsidiary may only open any new location within the
continental United States provided Borrower or such Subsidiary (a) gives Agent
thirty (30) days prior written notice of the intended opening of any such new
location and (b) executes and delivers, or causes to be executed and delivered,
to Agent such agreements, documents, and instruments as Agent may deem
reasonably necessary or desirable to protect its interests in the Collateral at
such location.
9.3 Compliance with Laws, Regulations, Etc.
(a) Borrower and each Guarantor shall, and shall cause its Subsidiaries
to, at all times, comply in all material respects with all laws, rules,
regulations, licenses, approvals, orders and other Permits applicable to it and
duly observe all requirements of any foreign, Federal, State or local
Governmental Authority, including ERISA, the Code, the Occupational Safety and
Health Act of 1970, as amended, the Fair Labor Standards Act of 1938, as
amended, and all statutes, rules, regulations, orders, permits and stipulations
relating to environmental pollution and employee health and safety, including
all of the Environmental Laws.
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(b) Borrower and each Guarantor shall, and shall cause its Subsidiaries to,
give written notice to Agent immediately upon Borrower's or such Guarantor's
receipt of any notice of, or Borrower's or such Guarantor's otherwise obtaining
knowledge of, (i) the occurrence of any event involving the release, spill or
discharge, threatened or actual, of any Hazardous Material or (ii) any
investigation, proceeding, complaint, order, directive, claims, citation or
notice with respect to: (A) any non-compliance with or violation of any
Environmental Law by Borrower or such Guarantor or (B) the release, spill or
discharge, threatened or actual, of any Hazardous Material other than in the
ordinary course of business and other than as permitted under any applicable
Environmental Law. Copies of all environmental surveys, audits, assessments,
feasibility studies and results of remedial investigations shall be promptly
furnished, or caused to be furnished, by Borrower or Guarantors to Agent.
Borrower and each Guarantor shall take prompt action to respond to any material
non-compliance with any of the Environmental Laws and shall regularly report to
Agent on such response.
(c) Without limiting the generality of the foregoing, whenever Agent
reasonably determines that there is non-compliance, or any condition which
requires any action by Borrower or any Guarantor in order to avoid any
non-compliance, with any Environmental Law, Borrower shall, at Agent's request
and Borrower's expense: (i) cause an independent environmental engineer
reasonably acceptable to Agent to conduct such tests of the site where
non-compliance or alleged non-compliance with such Environmental Laws has
occurred as to such non-compliance and prepare and deliver to Agent a report as
to such non-compliance setting forth the results of such tests, a proposed plan
for responding to any environmental problems described therein, and an estimate
of the costs thereof and (ii) provide to Agent a supplemental report of such
engineer whenever the scope of such non-compliance, or Borrower's or such
Guarantor's response thereto or the estimated costs thereof, shall change in any
material respect.
(d) Borrower and each Guarantor shall, jointly and severally, indemnify and
hold harmless Agent and Lenders and their respective directors, officers,
employees, agents, invitees, representatives, successors and assigns, from and
against any and all losses, claims, damages, liabilities, costs, and expenses
(including reasonable attorneys' fees and expenses) directly or indirectly
arising out of or attributable to the use, generation, manufacture,
reproduction, storage, release, threatened release, spill, discharge, disposal
or presence of a Hazardous Material, including the costs of any required or
necessary repair, cleanup or other remedial work with respect to any property of
Borrower or any Guarantor and the preparation and implementation of any closure,
remedial or other required plans. All representations, warranties, covenants
and indemnifications in this Section 9.3 shall survive the payment of the
Obligations and the termination of this Agreement.
9.4 Payment of Taxes and Claims
. Borrower and each Guarantor shall, and shall cause its Subsidiaries to,
duly pay and discharge all taxes, assessments, contributions and governmental
charges upon or against it or its properties or assets, except for taxes the
validity of which are being contested in good faith by appropriate proceedings
diligently pursued and available to Borrower, such Guarantor or such Subsidiary,
as the case may be, and with respect to which adequate reserves have been set
aside on its books. Borrower and each Guarantor shall be liable for any tax or
penalties imposed on Agent or any Lender as a result of the financing
arrangements provided for herein and Borrower and each Guarantor agrees to
indemnify and hold Agent harmless with respect to the foregoing, and to repay to
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Agent, for the benefit of Lenders, on demand the amount thereof, and until paid
by Borrower or such Guarantor such amount shall be added and deemed part of the
Loans, provided, that, nothing contained herein shall be construed to require
Borrower or any Guarantor to pay any income or franchise taxes attributable to
the income of Lenders from any amounts charged or paid hereunder to Lenders. The
foregoing indemnity shall survive the payment of the Obligations and the
termination of this Agreement.
9.5 Insurance
. Borrower and each Guarantor shall, and shall cause its Subsidiaries to,
at all times, maintain with financially sound and reputable insurers insurance
with respect to the Collateral against loss or damage and all other insurance of
the kinds and in the amounts customarily insured against or carried by
corporations of established reputation engaged in the same or similar businesses
and similarly situated. Said policies of insurance shall be reasonably
satisfactory to Agent as to form, amount and insurer. Borrower and Guarantors
shall furnish certificates, policies or endorsements to Agent as Agent shall
reasonably require as proof of such insurance, and, if Borrower or any Guarantor
fails to do so, Agent is authorized, but not required, to obtain such insurance
at the expense of Borrower. All policies shall provide for at least thirty (30)
days prior written notice to Agent of any cancellation or reduction of coverage
and that Agent may act as attorney for Borrower and each Guarantor in obtaining,
and at any time an Event of Default exists or has occurred and is continuing,
adjusting, settling, amending and canceling such insurance. Borrower and
Guarantors shall cause Agent to be named as a loss payee and an additional
insured (but without any liability for any premiums) under such insurance
policies and Borrower and any Guarantors shall obtain non-contributory lender's
loss payable endorsements to all insurance policies in form and substance
satisfactory to Agent. Such lender 's loss payable endorsements shall specify
that the proceeds of such insurance shall be payable to Agent as its interests
may appear and further specify that Agent and Lenders shall be paid regardless
of any act or omission by Borrower, Guarantor or any of its or their Affiliates.
At its option, Agent may apply any insurance proceeds received by Agent at any
time to the cost of repairs or replacement of Collateral and/or to payment of
the Obligations, whether or not then due, in any order and in such manner as
Agent may determine or hold such proceeds as cash collateral for the
Obligations.
9.6 Financial Statements and Other Information.
(a) Borrower and each Guarantor shall, and shall cause its Subsidiaries
to, keep proper books and records in which true and complete entries shall be
made of all dealings or transactions of or in relation to the Collateral and the
business of Borrower, such Guarantor and such Subsidiary in accordance with
GAAP. Borrower and Guarantors shall promptly furnish to Agent and Lenders all
such financial and other information as Agent shall reasonably request relating
to the Collateral and the assets, business and operations of Borrower and
Guarantors, and to notify the auditors and accountants of Borrower and
Guarantors that Agent is authorized to obtain such information directly from
them. Without limiting the foregoing, Borrower and Guarantors shall furnish or
cause to be furnished to Agent, the following: (i) within thirty (30) days after
the end of each Fiscal Month (or, for the Fiscal Month which is the final Fiscal
Month in Borrower's fiscal quarter, within forty-five (45) days after the end of
such Fiscal Month), monthly unaudited consolidated financial statements, and
unaudited consolidating financial statements (including in each case balance
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sheets, statements of income and loss, statements of cash flow (which cash flow
statements may be on a consolidated basis), and statements of shareholders'
equity), all in reasonable detail, fairly presenting the financial position and
the results of the operations of Borrower and its Subsidiaries as of the end of
and through such Fiscal Month, certified to be correct by the chief financial
officer of Borrower, subject to normal year-end adjustments and no footnotes and
accompanied by a compliance certificate substantially in the form of Exhibit C
hereto, along with a schedule in a form satisfactory to Agent of the
calculations used in determining, as of the end of such month, (x) whether
Borrower and Guarantors are in compliance with the covenants set forth in
Sections 9.17, 9.22, 9.23 and 9.25 of this Agreement for such month and (y) the
DMC Sublimit as of the end of such month, (ii) within forty-five (45) days after
the end of each fiscal quarter, quarterly unaudited consolidated financial
statements, and unaudited consolidating financial statements (including in each
case balance sheets, statements of income and loss, statements of cash flow
(which cash flow statements may be on a consolidated basis), and statements of
shareholders' equity), all in reasonable detail, fairly presenting the financial
position and the results of the operations of Borrower and its Subsidiaries as
of the end of and through such fiscal quarter, certified to be correct by the
chief financial officer of Borrower, subject to normal year-end adjustments and
the absence of footnotes and (iii) within ninety (90) days after the end of each
fiscal year, audited consolidated financial statements and unaudited
consolidating financial statements of Borrower and its Subsidiaries (including
in each case balance sheets, statements of income and loss, statements of cash
flow, and statements of shareholders' equity), and the accompanying notes
thereto, all in reasonable detail, fairly presenting the financial position and
the results of the operations of Borrower and its Subsidiaries as of the end of
and for such fiscal year, together with the unqualified opinion of independent
certified public accountants with respect to the audited consolidated financial
statements, which accountants shall be BKD, LLP or another independent
accounting firm selected by Borrower and acceptable to Agent, that such audited
consolidated financial statements have been prepared in accordance with GAAP,
and present fairly the results of operations and financial condition of Borrower
and its Subsidiaries as of the end of and for the fiscal year then ended.
(b) Borrower and Guarantors shall promptly notify Agent in writing of the
details of (i) any loss, damage, investigation, action, suit, proceeding or
claim relating to Collateral having a value of more than $500,000 or which if
adversely determined would result in any material adverse change in Borrower's
or any Guarantor's business, properties, assets, goodwill or condition,
financial or otherwise, (ii) any Material Contract being terminated or amended
or any new Material Contract entered into (in which event Borrower and
Guarantors shall provide Agent with a copy of such Material Contract), (iii) any
order, judgment or decree in excess of $500,000 shall have been entered against
Borrower or any Guarantor or any of its or their properties or assets, (iv) any
notification of a material violation of laws or regulations received by Borrower
or any Guarantor, (v) any ERISA Event, and (vi) the occurrence of any Default or
Event of Default.
(c) Borrower and Guarantors shall promptly after the sending or filing
thereof furnish or cause to be furnished to Agent copies of all reports which
Borrower or any Guarantor sends to its stockholders generally and copies of all
reports and registration statements which Borrower or any Guarantor files with
the Securities and Exchange Commission, any national securities exchange or the
National Association of Securities Dealers, Inc.
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(d) Borrower and Guarantors shall furnish or cause to be furnished to Agent
such budgets, forecasts, projections and other information respecting the
Collateral and the business of Borrower and Guarantors, as Agent may, from time
to time, reasonably request (including, without limitation, an annually prepared
monthly budget within thirty (30) days of the start of Borrower's fiscal year
indicating line items for budgeted Borrowing Base levels and credit
utilization). Agent is hereby authorized to deliver a copy of any financial
statement or any other information relating to the business of Borrower and
Guarantors to any court or other Governmental Authority or to any Lender or
Participant or prospective Lender or Participant or any Affiliate of any Lender
or Participant. Borrower and each Guarantor hereby irrevocably authorizes and
directs all accountants or auditors to deliver to Agent, at Borrower's expense,
copies of the financial statements of Borrower and Guarantor and any reports or
management letters prepared by such accountants or auditors on behalf of
Borrower or any Guarantor and to disclose to Agent and Lenders such information
as they may have regarding the business of Borrower and Guarantor. Any
documents, schedules, invoices or other papers delivered to Agent or any Lender
may be destroyed or otherwise disposed of by Agent or such Lender one (1) year
after the same are delivered to Agent or such Lender, except as otherwise
designated by Borrower to Agent or such Lender in writing.
(e) Borrower shall furnish to Agent on the first Business Day of December of
each fiscal year (commencing on December 1, 2005) a revised Schedule 6 to this
Agreement setting forth each of the twelve (12) Fiscal Months for the
immediately following fiscal year of Borrower.
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc
. Borrower and each Guarantor shall not, and shall not permit any of its
Subsidiaries (other than Agromarau Industria E. Commercio Ltda.) to, directly or
indirectly,
(a) merge into or with or consolidate with any other Person or permit
any other Person to merge into or with or consolidate with it except that any
wholly-owned domestic Subsidiary of Borrower may merge with and into or
consolidate with any other wholly-owned domestic Subsidiary of Borrower or any
wholly-owned foreign Subsidiary of Borrower may merge with and into or
consolidate with any other wholly-owned foreign Subsidiary of Borrower,
provided, that, each of the following conditions is satisfied as determined by
Agent in good faith: (i) Agent shall have received not less than ten (10)
Business Days' prior written notice of the intention of such Subsidiaries to so
merge or consolidate, which notice shall set forth in reasonable detail
satisfactory to Agent, the persons that are merging or consolidating, which
person will be the surviving entity, the locations of the assets of the persons
that are merging or consolidating, and the material agreements and documents
relating to such merger or consolidation, (ii) Agent shall have received such
other information with respect to such merger or consolidation as Agent may
reasonably request, (iii) as of the effective date of the merger or
consolidation and after giving effect thereto, no Default or Event of Default
shall exist or have occurred, (iv) Agent shall have received, true, correct and
complete copies of all agreements, documents and instruments relating to such
merger or consolidation, including, but not limited to, the certificate or
certificates of merger to be filed with each appropriate Secretary of State
(with a copy as filed promptly after such filing), (v) the surviving corporation
shall expressly confirm, ratify and assume the Obligations and the Financing
Agreements to which it is a party in writing, in form and substance satisfactory
to Agent, and Borrower and Guarantors shall execute and deliver such other
agreements, documents and instruments as Agent may request in connection
therewith;
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(b) sell, assign, lease, transfer, abandon or otherwise dispose of any
Capital Stock or Indebtedness to any other Person or any of its assets to any
other Person, except for
(i) sales of Inventory in the ordinary course of business,
(ii) the sale or other disposition of Equipment in the ordinary course of
business (including worn-out or obsolete Equipment or Equipment no longer used
or useful in the business of Borrower or any Guarantor) so long as (A) such
sales or other dispositions do not involve Equipment having an aggregate fair
market value in excess of $250,000 for all such Equipment disposed of in any
fiscal year of Borrower or as Agent may otherwise agree and (B) to the extent
such Equipment to be sold is Eligible Equipment, Borrower provides Agent with
prior written notice identifying such Equipment to be sold, and
(iii) the issuance and sale by Borrower of Capital Stock of Borrower after
the date hereof; provided, that, (A) Agent shall have received not less than ten
(10) Business Days' prior written notice of such issuance and sale by Borrower,
which notice shall specify the parties to whom such shares are to be sold, the
terms of such sale, the total amount which it is anticipated will be realized
from the issuance and sale of such stock and the net cash proceeds which it is
anticipated will be received by Borrower from such sale, (B) Borrower shall not
be required to pay any cash dividends or repurchase or redeem such Capital Stock
or make any other payments in respect thereof, except as otherwise permitted in
Section 9.11 hereof, (C) the terms of such Capital Stock, and the terms and
conditions of the purchase and sale thereof, shall not include any terms that
include any limitation on the right of Borrower to request or receive Loans or
Letter of Credit Accommodations or the right of Borrower to amend or modify any
of the terms and conditions of this Agreement or any of the other Financing
Agreements or otherwise in any way relate to or affect the arrangements of
Borrower with Agent and Lenders or are more restrictive or burdensome to
Borrower than the terms of any Capital Stock in effect on the date hereof, (D)
except as Agent may otherwise agree in writing, all of the proceeds of the sale
and issuance of such Capital Stock shall be paid to Agent for application to the
Obligations in such order and manner as Agent may determine or at Agent's
option, to be held as cash collateral for the Obligations and (E) as of the date
of such issuance and sale and after giving effect thereto, no Default or Event
of Default shall exist or have occurred,
(iv) the issuance of Capital Stock of Borrower consisting of common stock
pursuant to an employee stock option or grant or similar equity plan or 401(k)
plans of Borrower or such Guarantor for the benefit of its employees, directors
and consultants, provided, that, in no event shall Borrower or such Guarantor be
required to issue, or shall Borrower or such Guarantor issue, Capital Stock
pursuant to such stock plans or 401(k) plans which would result in a Change of
Control or other Event of Default,
(c) wind up, liquidate or dissolve except that any Guarantor may wind
up, liquidate and dissolve, provided, that, each of the following conditions is
satisfied, (i) the winding up, liquidation and dissolution of such Guarantor
shall not violate any law or any order or decree of any court or other
Governmental Authority in any material respect and shall not conflict with or
80
result in the breach of, or constitute a default under, any indenture, mortgage,
deed of trust, or any other agreement or instrument to which Borrower or any
Guarantor is a party or may be bound, (ii) such winding up, liquidation or
dissolution shall be done in accordance with the requirements of all applicable
laws and regulations, (iii) effective upon such winding up, liquidation or
dissolution, all of the assets and properties of such Guarantor shall be duly
and validly transferred and assigned to Borrower, free and clear of any liens,
restrictions or encumbrances other than the security interest and liens of Agent
(and Agent shall have received such evidence thereof as Agent may require) and
Agent shall have received such deeds, assignments or other agreements as Agent
may request to evidence and confirm the transfer of such assets to of such
Guarantor to Borrower, (iv) Agent shall have received all documents and
agreements that Borrower or any Guarantor has filed with any Governmental
Authority or as are otherwise required to effectuate such winding up,
liquidation or dissolution, (v) neither Borrower nor any Guarantor shall assume
any Indebtedness, obligations or liabilities as a result of such winding up,
liquidation or dissolution, or otherwise become liable in respect of any
obligations or liabilities of the entity that is winding up, liquidating or
dissolving, unless such Indebtedness is otherwise expressly permitted hereunder,
(vi) Agent shall have received not less than ten (10) Business Days prior
written notice of the intention of such Guarantor to wind up, liquidate or
dissolve, and (vii) as of the date of such winding up, liquidation or
dissolution and after giving effect thereto, no Default or Event of Default
shall exist or have occurred; or
(d) agree to do any of the foregoing which are otherwise prohibited pursuant
to Sections 9.7(a), 9.7(b) or 9.7(c) hereof.
9.8 Encumbrances
. Borrower and each Guarantor shall not, and shall not permit any of its
Subsidiaries to, create, incur, assume or suffer to exist any security interest,
mortgage, pledge, lien, charge or other encumbrance of any nature whatsoever on
any of its assets or properties, including the Collateral, except:
(a) the security interests and liens of Agent for itself and the
benefit of Lenders;
(b) liens securing the payment of taxes, assessments or other governmental
charges or levies either not yet overdue or the validity of which are being
contested in good faith by appropriate proceedings diligently pursued and
available to Borrower, such Guarantor or such Subsidiary, as the case may be and
with respect to which adequate reserves have been set aside on its books;
(c) non-consensual statutory liens (other than liens securing the payment of
taxes) arising in the ordinary course of Borrower's, such Guarantor's or such
Subsidiary's business to the extent: (i) such liens secure Indebtedness which is
not overdue or (ii) such liens secure Indebtedness relating to claims or
liabilities which are fully insured and being defended at the sole cost and
expense and at the sole risk of the insurer or being contested in good faith by
appropriate proceedings diligently pursued and available to Borrower, such
Guarantor or such Subsidiary, in each case prior to the commencement of
foreclosure or other similar proceedings and with respect to which adequate
reserves have been set aside on its books;
81
(d) zoning restrictions, easements, licenses, covenants and other
restrictions affecting the use of Real Property which do not interfere in any
material respect with the use of such Real Property or ordinary conduct of the
business of Borrower, such Guarantor or such Subsidiary as presently conducted
thereon or materially impair the value of the Real Property which may be subject
thereto;
(e) purchase money security interests in Equipment (including Capital
Leases) and purchase money mortgages on Real Property to secure Indebtedness
permitted under Section 9.9(b) hereof;
(f) pledges and deposits of cash by Borrower or any Guarantor after the date
hereof in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security benefits
consistent with the current practices of Borrower or such Guarantor as of the
date hereof;
(g) pledges and deposits of cash by Borrower or any Guarantor after the date
hereof to secure the performance of tenders, bids, leases, trade contracts
(other than for the repayment of Indebtedness), statutory obligations and other
similar obligations in each case in the ordinary course of business consistent
with the current practices of Borrower or such Guarantor as of the date hereof;
provided, that, in connection with any performance bonds issued by a surety or
other person, the issuer of such bond shall have waived in writing any rights in
or to, or other interest in, any of the Collateral in an agreement, in form and
substance satisfactory to Agent;
(h) liens arising from (i) operating leases and the precautionary UCC
financing statement filings in respect thereof and (ii) equipment or other
materials which are not owned by Borrower or any Guarantor located on the
premises of Borrower or such Guarantor (but not in connection with, or as part
of, the financing thereof) from time to time in the ordinary course of business
and consistent with current practices of Borrower or such Guarantor and the
precautionary UCC financing statement filings in respect thereof;
(i) judgments and other similar liens arising in connection with court
proceedings that do not constitute an Event of Default, provided, that, (i) such
liens are being contested in good faith and by appropriate proceedings
diligently pursued, (ii) adequate reserves or other appropriate provision, if
any, as are required by GAAP have been made therefor, (iii) a stay of
enforcement of any such liens is in effect and (iv) Agent may establish a
Reserve with respect thereto;
(j) the security interests and liens set forth on Schedule 8.4 to the
Information Certificate; and
(k) the security interests and liens on the assets of a Foreign Subsidiary
securing Indebtedness of such Foreign Subsidiary to the extent such Indebtedness
is permitted under Section 9.9 hereof.
9.9 Indebtedness
. Borrower and each Guarantor shall not, and shall not permit any of its
Subsidiaries to, incur, create, assume, become or be liable in any manner with
respect to, or permit to exist, any Indebtedness, or guarantee, assume, endorse,
or otherwise become responsible for (directly or indirectly), the Indebtedness,
performance, obligations or dividends of any other Person, except:
------
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(a) the Obligations;
(b) purchase money Indebtedness (including Capital Leases but excluding
operating leases) arising after the date hereof to the extent secured by
purchase money security interests in Equipment (including Capital Leases) and
purchase money mortgages on Real Property not to exceed $500,000 in the
aggregate at any time outstanding so long as such security interests and
mortgages do not apply to any property of Borrower, such Guarantor or such
Subsidiary other than the Equipment or Real Property so acquired, and the
Indebtedness secured thereby does not exceed the cost of the Equipment or Real
Property so acquired, as the case may be;
(c) guarantees by Borrower or any Guarantor of the Obligations of the other
Borrower or such Guarantors in favor of Agent for the benefit of Lenders;
(d) the Indebtedness of Borrower or any Guarantor arising after the date
hereof pursuant to loans by Borrower or any Guarantor permitted under Section
9.10(g) hereof;
(e) unsecured Indebtedness of Borrower arising after the date hereof to any
third person (but not to Borrower or any other Guarantor), provided, that, each
of the following conditions is satisfied as determined by Agent: (i) such
Indebtedness shall be on terms and conditions acceptable to Agent, Required
Revolving Lenders and Ableco and shall be subject and subordinate in right of
payment to the right of Agent and Lenders to receive the prior indefeasible
payment and satisfaction in full payment of all of the Obligations pursuant to
the terms of an intercreditor agreement between Agent and such third party, in
form and substance satisfactory to Agent, (ii) Agent shall have received not
less than ten (10) days prior written notice of the intention of Borrower or
such Guarantor to incur such Indebtedness, which notice shall set forth in
reasonable detail satisfactory to Agent the amount of such Indebtedness, the
person or persons to whom such Indebtedness will be owed, the interest rate, the
schedule of repayments and maturity date with respect thereto and such other
information as Agent may request with respect thereto, (iii) Agent shall have
received true, correct and complete copies of all agreements, documents and
instruments evidencing or otherwise related to such Indebtedness, (iv) except as
Agent may otherwise agree in writing, all of the proceeds of the loans or other
accommodations giving rise to such Indebtedness shall be paid to Agent for
application to the Obligations in such order and manner as Agent may determine
or at Agent's option, to be held as cash collateral for the Obligations, (v) as
of the date of incurring such Indebtedness and after giving effect thereto, no
Default or Event of Default shall exist or have occurred, (vi) Borrower and such
Guarantor shall not, directly or indirectly, (A) amend, modify, alter or change
the terms of such Indebtedness or any agreement, document or instrument related
thereto, except that Borrower or such Guarantor may, after prior written notice
to Agent, amend, modify, alter or change the terms thereof so as to extend the
maturity thereof, or defer the timing of any payments in respect thereof, or to
forgive or cancel any portion of such Indebtedness (other than pursuant to
payments thereof), or to reduce the interest rate or any fees in connection
therewith, or (B) redeem, retire, defease, purchase or otherwise acquire such
Indebtedness (except pursuant to regularly scheduled payments permitted herein),
or set aside or otherwise deposit or invest any sums for such purpose, and (vii)
Borrower and Guarantors shall furnish to Agent all notices or demands in
connection with such Indebtedness either received by Borrower or any Guarantor
or on its behalf promptly after the receipt thereof, or sent by Borrower or any
Guarantor or on its behalf concurrently with the sending thereof, as the case
may be;
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(f) the Indebtedness set forth on Schedule 9.9 to the Information
Certificate (including, without limitation, Indebtedness under the Indenture);
provided, that, (i) Borrower and Guarantors may only make regularly scheduled
payments of principal and interest in respect of such Indebtedness in accordance
with the terms of the agreement or instrument evidencing or giving rise to such
Indebtedness as in effect on the date hereof; provided, that Borrower may make
Permitted Bond Repurchases in accordance with Section 9.23 hereof, (ii) Borrower
and Guarantors shall not, directly or indirectly, (A) amend, modify, alter or
change the terms of such Indebtedness or any agreement, document or instrument
related thereto as in effect on the date hereof, except that Borrower and
Guarantors may, after prior written notice to Agent, amend, modify, alter or
change the terms thereof so as to extend the maturity thereof, or defer the
timing of any payments in respect thereof, or to forgive or cancel any portion
of such Indebtedness (other than pursuant to payments thereof), or to reduce the
interest rate or any fees in connection therewith, or (B) redeem, retire,
defease, purchase or otherwise acquire such Indebtedness, or set aside or
otherwise deposit or invest any sums for such purpose, and (iii) Borrower and
Guarantors shall furnish to Agent all notices or demands in connection with such
Indebtedness either received by Borrower or any Guarantor or on its behalf,
promptly after the receipt thereof, or sent by Borrower or any Guarantor or on
its behalf, concurrently with the sending thereof, as the case may be;
(g) Indebtedness consisting of unsecured loans made by J. ▇▇▇▇▇ ▇▇▇▇▇ to
Borrower from time to time; provided, that, (i) the aggregate principal amount
-------- ----
of such loans outstanding at any time shall not exceed $2,500,000, (ii) the
interest rate applicable to such loans shall never exceed the then applicable
Interest Rate with respect to Prime Rate loans that are Revolving Loans, (iii)
all proceeds of such loans shall be paid to Agent for application to the
Obligations in such order as Agent shall determine, (iv) Borrower shall not make
any interest or principal payments on such loans at any time when an Event of
Default has occurred and is continuing or would result from any such payment and
(v) Borrower shall not make any interest or principal payments on such loans if
immediately before, and immediately after giving effect to, such payment, Excess
Availability is less than $5,000,000; and
(h) Indebtedness incurred after the date hereof by a Foreign Subsidiary to
any Person (other than to Borrower or any Subsidiary of Borrower); provided,
--------
that, (i) at the time of incurring such Indebtedness, such Foreign Subsidiary is
-
not an Obligor with respect to the Exim Revolving Loans and is not otherwise
subject to the Exim Guarantee Documents, (ii) recourse for any such Indebtedness
shall only be against such Foreign Subsidiary and the terms and conditions of
such Indebtedness shall not restrict or in any manner affect the obligations of
Borrower and the Guarantors under the Financing Agreements, (iii) at the time
and after giving effect to such incurrence of Indebtedness, no Event of Default
shall have occurred and be continuing, (iv) the aggregate amount of such
Indebtedness that may be outstanding at any time to all Foreign Subsidiaries
(other than Agromarau Industria E. Commercio Ltda.) shall not exceed $6,000,000
and (v) the proceeds of all such Indebtedness incurred under this clause (h) in
excess of $1,000,000 at any time outstanding shall be used to prepay the Loans
by (A) applying 50% of such excess proceeds (or such greater percentage to the
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extent the outstanding amount of Revolving Loans is or will become paid in full
after the application in clause (B) below) to prepay the outstanding principal
amount of the Term Loan and (B) applying the other 50% of such excess proceeds
(or such greater percentage to the extent the Term Loan is or will become
prepaid in full after the application in clause A above) against the then
outstanding Fixed Asset Amount, in inverse order of maturity until reduced to
$0, then to the remaining outstanding principal amount of Revolving Loans.
9.10 Loans, Investments, Etc
. Borrower and each Guarantor shall not, and shall not permit its
Subsidiaries to, directly or indirectly, make any loans or advance money
(including trade credit outstanding to any Foreign Subsidiary) or property to
any person, or invest in (by capital contribution, dividend or otherwise) or
purchase or repurchase the Capital Stock or Indebtedness or all or a substantial
part of the assets or property of any person, or form or acquire any
Subsidiaries, or agree to do any of the foregoing, except:
(a) the endorsement of instruments for collection or deposit in the
ordinary course of business;
(b) investments in cash or Cash Equivalents, provided, that, (i) no Loans
are then outstanding and (ii) the terms and conditions of Section 5.2 hereof
shall have been satisfied with respect to the deposit account, investment
account or other account in which such cash or Cash Equivalents are held;
(c) the existing equity investments of Borrower and each Guarantor as of the
date hereof in its Subsidiaries, provided, that, neither Borrower nor any
Guarantor shall have any further obligations or liabilities to make any capital
contributions or other additional investments or other payments to or in or for
the benefit of any of such Subsidiaries;
(d) loans and advances by Borrower or any Guarantor to employees of Borrower
or such Guarantor not to exceed the principal amount of $250,000 in the
aggregate at any time outstanding for: (i) reasonably and necessary work-related
travel or other ordinary business expenses to be incurred by such employee in
connection with their work for Borrower or such Guarantor and (ii) reasonable
and necessary relocation expenses of such employees (including home mortgage
financing for relocated employees);
(e) stock or obligations issued to Borrower or any Guarantor by any Person
(or the representative of such Person) in respect of Indebtedness of such Person
owing to Borrower or such Guarantor in connection with the insolvency,
bankruptcy, receivership or reorganization of such Person or a composition or
readjustment of the debts of such Person; provided, that, the original of any
such stock or instrument evidencing such obligations shall be promptly delivered
to Agent, upon Agent's request, together with such stock power, assignment or
endorsement by Borrower or such Guarantor as Agent may request;
(f) obligations of account debtors to Borrower or any Guarantor arising from
Accounts which are past due evidenced by a promissory note made by such account
debtor payable to Borrower or such Guarantor; provided, that, promptly upon the
receipt of the original of any such promissory note by Borrower or such
Guarantor, such promissory note shall be endorsed to the order of Agent by
Borrower or such Guarantor and promptly delivered to Agent as so endorsed;
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(g) loans by Borrower or any Guarantor to Borrower or any other Guarantor
after the date hereof, provided, that,
(i) as to all of such loans, (A) within thirty (30) days after the end
of each Fiscal Month, Borrower shall provide to Agent a report in form and
substance satisfactory to Agent of the outstanding amount of such loans as of
the last day of the immediately preceding month and indicating any loans made
and payments received during the immediately preceding month, (B) the
Indebtedness arising pursuant to any such loan shall not be evidenced by a
promissory note or other instrument, unless the single original of such note or
other instrument is promptly delivered to Agent upon its request to hold as part
of the Collateral, with such endorsement and/or assignment by the payee of such
note or other instrument as Agent may require, (C) as of the date of any such
loan (except for Loans deemed made pursuant to Section 6.3(d) hereof) and after
giving effect thereto, Borrower or any Guarantor making such loan shall be
Solvent, and (D) as of the date of any such loan (except for Loans deemed made
pursuant to Section 6.3(d) hereof) and after giving effect thereto, no Default
or Event of Default shall exist or have occurred and be continuing,
(ii) as to loans by a Guarantor to Borrower, (A) the Indebtedness arising
pursuant to such loan shall be subject to, and subordinate in right of payment
to, the right of Agent and Lenders to receive the prior final payment and
satisfaction in full of all of the Obligations on terms and conditions
acceptable to Agent, (B) promptly upon Agent's request, Agent shall have
received a subordination agreement, in form and substance satisfactory to Agent,
providing for the terms of the subordination in right of payment of such
Indebtedness of Borrower to the prior final payment and satisfaction in full of
all of the Obligations, duly authorized, executed and delivered by such
Guarantor and Borrower, and (C) Borrower shall not, directly or indirectly make,
or be required to make, any payments in respect of such Indebtedness prior to
the end of the then current term of this Agreement;
(iii) as to loans by a Borrower to a Guarantor, as of the date of any such
loan and after giving effect thereto, (A) Excess Availability shall be not less
than $5,000,000 and (B) the aggregate amount of loans made to Guarantors which
are outstanding at any time shall not exceed $3,000,000;
(h) loans by Borrower after the date hereof to any Foreign Subsidiary;
provided, that, (i) as to any such loan, Borrower complies with all the
-------- ----
conditions set forth in clause (g)(i) of this Section 9.10, (ii) Excess
--------
Availability shall be no less than $5,000,000 after giving effect to such loan,
--------
(iii) the aggregate amount of loans made to such Foreign Subsidiaries (excluding
Agromarau Industria E. Commercio Ltda.) which are outstanding at any time shall
not exceed $500,000 and (iv) the aggregate amount of loans made to Agromarau
Industria E. Commercio Ltda. which are outstanding at any time shall not exceed
$500,000;
(i) the loans and advances set forth on Schedule 9.10 to the Information
Certificate; provided, that, as to such loans and advances, Borrower and
-------- ----
Guarantors shall not, directly or indirectly, amend, modify, alter or change the
terms of such loans and advances or any agreement, document or instrument
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related thereto and Borrower and Guarantors shall furnish to Agent all notices
or demands in connection with such loans and advances either received by
Borrower or any Guarantor or on its behalf, promptly after the receipt thereof,
or sent by Borrower or any Guarantor or on its behalf, concurrently with the
sending thereof, as the case may be;
(j) the making of Permitted Bond Repurchases in accordance with Section 9.23
hereof; and
(k) intercompany advances which consist of the deferred and/or unpaid
balance of the purchase price of goods, materials and/or services provided by
Borrower to any Foreign Subsidiary; provided, that the aggregate amount of such
--------
advances does not exceed (i) $5,000,000 outstanding at any time in the aggregate
for all Foreign Subsidiaries (other than Agromarau Industria E. Commercio Ltda.)
and (ii) $500,000 outstanding at any time in the aggregate for Agromarau
Industria E. Commercio Ltda.
9.11 Dividends and Redemptions
. Borrower and each Guarantor shall not, directly or indirectly, declare
or pay any dividends on account of any shares of class of any Capital Stock of
Borrower or such Guarantor now or hereafter outstanding, or set aside or
otherwise deposit or invest any sums for such purpose, or redeem, retire,
defease, purchase or otherwise acquire any shares of any class of Capital Stock
(or set aside or otherwise deposit or invest any sums for such purpose) for any
consideration or apply or set apart any sum, or make any other distribution (by
reduction of capital or otherwise) in respect of any such shares or agree to do
any of the foregoing, except that:
(a) Borrower or any Guarantor may declare and pay such dividends or
redeem, retire, defease, purchase or otherwise acquire any shares of any class
of Capital Stock for consideration in the form of shares of common stock (so
long as after giving effect thereto no Change of Control or other Default or
Event of Default shall exist or occur);
(b) any Subsidiary of Borrower or a Guarantor may pay dividends to Borrower;
(c) so long as Borrower remains a Subchapter S Corporation under the Code
for any fiscal year, Borrower may make distributions to its shareholders in the
amounts of state and federal income tax payments (including estimated payments)
to the extent then due and attributable to income of Borrower, determined using
the highest state and federal income tax rates applicable to the shareholders of
Borrower (herein "Tax Distributions"); provided, that, (i) prior to the making
-------- ----
of Tax Distributions in any fiscal quarter, Borrower shall have provided to
Agent (A) a schedule prepared by Borrower's tax accountants detailing the
calculations of estimated Tax Distributions for such fiscal quarter and (B) any
such additional information as Agent may reasonably request pertaining to such
Tax Distributions; (ii) Agent has provided its prior written consent to such Tax
Distributions which consent shall not be unreasonably withheld or delayed so
long as (A) Agent is satisfied that the amount of such Tax Distributions has
been properly ascertained and (B) no Event of Default has occurred and is
continuing; and (iii) in the event that aggregate Tax Distributions in respect
of any fiscal year exceed the actual state and federal income taxes of such
shareholders attributable to the income of Borrower in respect of such fiscal
year, Borrower shall demand a repayment of such excess from the applicable
shareholders and, to the extent not repaid, shall offset such excess against any
future Tax Distributions to such shareholders;
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(d) Borrower may pay dividends, to the extent permitted by applicable law,
in an aggregate amount of up to $83,333 in any calendar month so long as no (i)
Event of Default has occurred and is continuing immediately before, and
immediately after giving effect to, such dividend and (ii) Borrower is in
compliance with Section 10.12 of the Indenture at the time of, and after giving
effect to, such dividend; and
(e) Borrower and Guarantors may repurchase Capital Stock consisting of
common stock held by employees pursuant to any employee stock ownership plan
thereof upon the termination, retirement or death of any such employee in
accordance with the provisions of such plan, provided, that, as to any such
repurchase, each of the following conditions is satisfied: (i) as of the date of
the payment for such repurchase and after giving effect thereto, no Default or
Event of Default shall exist or have occurred and be continuing, (ii) such
repurchase shall be paid with funds legally available therefor, (iii) such
repurchase shall not violate any law or regulation or the terms of any
indenture, agreement or undertaking to which Borrower or such Guarantor is a
party or by which Borrower or such Guarantor or its or their property are bound,
and (iv) the aggregate amount of all payments for such repurchases in any
calendar year shall not exceed $100,000.
9.12 Transactions with Affiliates
. Borrower and each Guarantor shall not, directly or indirectly:
(a) purchase, acquire or lease any property from, or sell, transfer or
lease any property to, any officer, director or other Affiliate of Borrower or
such Guarantor, except in the ordinary course of and pursuant to the reasonable
requirements of Borrower's or Guarantor's business (as the case may be) and upon
fair and reasonable terms no less favorable to Borrower or such Guarantor than
Borrower or such Guarantor would obtain in a comparable arm's length transaction
with an unaffiliated person; provided that, in any event, Borrower may lease
-------- ----
real estate and equipment from RAD Properties, Inc. and from ▇▇▇▇▇ ▇▇▇▇▇▇▇ for
rents not to exceed an aggregate amount of $450,000 per fiscal year; or
(b) make any payments (whether by fees, advances, loans or otherwise) of
management, consulting or other fees for management or similar services, or of
any Indebtedness owing to any officer, employee, shareholder, director or any
other Affiliate of Borrower or such Guarantor, except (i) reasonable
compensation to officers, employees and directors for services rendered to
Borrower or such Guarantor in the ordinary course of business, and (ii) payments
by Borrower or any Guarantor to Borrower for actual and necessary reasonable
out-of-pocket legal and accounting, insurance, marketing, payroll and similar
types of services paid for by Borrower on behalf of Borrower or such Guarantor,
in the ordinary course of their respective businesses, provided, that, the
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aggregate amount of all such payments in any fiscal year shall not exceed
$250,000.
9.13 Compliance with ERISA
. Borrower and each Guarantor shall, and shall cause each of its ERISA
Affiliates, to: (a) maintain each Plan in compliance in all material respects
with the applicable provisions of ERISA, the Code and other Federal and State
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law; (b) cause each Plan which is qualified under Section 401(a) of the Code to
maintain such qualification; (c) not terminate any of such Plans so as to incur
any material liability to the Pension Benefit Guaranty Corporation; (d) not
allow or suffer to exist any prohibited transaction involving any of such Plans
or any trust created thereunder which would subject Borrower or such Guarantor
to a material tax or penalty or other liability on prohibited transactions
imposed under Section 4975 of the Code or ERISA; (e) make all required
contributions to any Plan which it is obligated to pay under Section 302 of
ERISA, Section 412 of the Code or the terms of such Plan; (f) not allow or
suffer to exist any accumulated funding deficiency, whether or not waived, with
respect to any such Plan; or (g) allow or suffer to exist any occurrence of a
reportable event or any other event or condition which presents a material risk
of termination by the Pension Benefit Guaranty Corporation of any such Plan that
is a single employer plan, which termination could result in any material
liability to the Pension Benefit Guaranty Corporation.
9.14 End of Fiscal Years; Fiscal Quarters
. Borrower and each Guarantor shall, for financial reporting purposes,
cause its, and each of its Subsidiaries' (a) fiscal years to end on December 31
of each year and (b) fiscal quarters to end on dates which are thirteen (13),
twenty-six (26), thirty-nine (39) and fifty-two (52) weeks following the prior
fiscal year end.
9.15 Change in Business
. Borrower and each Guarantor shall not, and shall not permit its
Subsidiaries to, engage in any business other than the business of Borrower,
such Guarantor or such Subsidiary on the date hereof and any business reasonably
related, ancillary or complimentary to the business in which Borrower, such
Guarantor or such Subsidiary is engaged on the date hereof.
9.16 Limitation of Restrictions Affecting Subsidiaries
. Borrower and each Guarantor shall not, directly, or indirectly, create
or otherwise cause or suffer to exist any encumbrance or restriction which
prohibits or limits the ability of its Subsidiaries of Borrower or such
Guarantor to (a) pay dividends or make other distributions or pay any
Indebtedness owed to Borrower or such Guarantor or its Subsidiaries of Borrower
or such Guarantor; (b) make loans or advances to Borrower or such Guarantor or
its Subsidiaries of Borrower or such Guarantor, (c) transfer any of its
properties or assets to Borrower or such Guarantor or its Subsidiaries of
Borrower or such Guarantor; or (d) create, incur, assume or suffer to exist any
lien upon any of its property, assets or revenues, whether now owned or
hereafter acquired, other than encumbrances and restrictions arising under (i)
applicable law, (ii) this Agreement, (iii) customary provisions restricting
subletting or assignment of any lease governing a leasehold interest of Borrower
or such Guarantor or its Subsidiaries of Borrower or such Guarantor, (iv)
customary restrictions on dispositions of real property interests found in
reciprocal easement agreements of Borrower or such Guarantor or its Subsidiaries
of Borrower or such Guarantor, (v) any agreement relating to permitted
Indebtedness incurred by a Subsidiary of Borrower or such Guarantor prior to the
date on which such Subsidiary was acquired by Borrower or such Guarantor and
outstanding on such acquisition date, (vi) any agreement relating to
Indebtedness permitted under Section 9.9(h) hereof so long as such encumbrances
and restrictions are imposed only on the Foreign Subsidiary incurring such
Indebtedness and (vii) the extension or continuation of contractual obligations
in existence on the date hereof; provided, that, any such encumbrances or
-------- ----
restrictions contained in such extension or continuation are no less favorable
to Agent and Lenders than those encumbrances and restrictions under or pursuant
to the contractual obligations so extended or continued.
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9.17 Secured Indebtedness to EBITDA Ratio
. At any time any amount of the Term Loan is outstanding, Borrower and its
Subsidiaries on a consolidated basis shall, at the end of each Fiscal Month,
have a ratio of Secured Funded Debt to EBITDA for the twelve Fiscal Month period
then ended of not more than 3:00 to 1:00.
9.18 License Agreements.
(a) Borrower and each Guarantor shall (i) promptly and faithfully
observe and perform all of the material terms, covenants, conditions and
provisions of the material License Agreements to which it is a party to be
observed and performed by it, at the times set forth therein, if any, (ii) not
do, permit, suffer or refrain from doing anything that could reasonably be
expected to result in a default under or breach of any of the terms of any
material License Agreement, (iii) not cancel, surrender, modify, amend, waive or
release any material License Agreement in any material respect or any term,
provision or right of the licensee thereunder in any material respect, or
consent to or permit to occur any of the foregoing; except, that, subject to
Section 9.19(b) below, Borrower or such Guarantor may cancel, surrender or
release any material License Agreement in the ordinary course of the business of
Borrower or such Guarantor; provided, that, Borrower or such Guarantor (as the
case may be) shall give Agent not less than thirty (30) days prior written
notice of its intention to so cancel, surrender and release any such material
License Agreement, (iv) give Agent prompt written notice of any material License
Agreement entered into by Borrower or such Guarantor after the date hereof,
together with a true, correct and complete copy thereof and such other
information with respect thereto as Agent may request, (v) give Agent prompt
written notice of any material breach of any obligation, or any default, by any
party under any material License Agreement, and deliver to Agent (promptly upon
the receipt thereof by Borrower or such Guarantor in the case of a notice to
Borrower or such Guarantor and concurrently with the sending thereof in the case
of a notice from Borrower or such Guarantor) a copy of each notice of default
and every other notice and other communication received or delivered by Borrower
or such Guarantor in connection with any material License Agreement which
relates to the right of Borrower or such Guarantor to continue to use the
property subject to such License Agreement, and (vi) furnish to Agent, promptly
upon the request of Agent, such information and evidence as Agent may reasonably
require from time to time concerning the observance, performance and compliance
by Borrower or such Guarantor or the other party or parties thereto with the
material terms, covenants or provisions of any material License Agreement.
(b) Borrower and each Guarantor will either exercise any option to renew or
extend the term of each material License Agreement to which it is a party in
such manner as will cause the term of such material License Agreement to be
effectively renewed or extended for the period provided by such option and give
prompt written notice thereof to Agent or give Agent prior written notice that
Borrower or such Guarantor does not intend to renew or extend the term of any
such material License Agreement or that the term thereof shall otherwise be
expiring, not less than sixty (60) days prior to the date of any such
non-renewal or expiration. In the event of the failure of Borrower or such
Guarantor to extend or renew any material License Agreement to which it is a
party, Agent shall have, and is hereby granted, the irrevocable right and
authority, at its option, to renew or extend the term of such material License
Agreement, whether in its own name and behalf, or in the name and behalf of a
designee or nominee of Agent or in the name and behalf of Borrower or such
Guarantor, as Agent shall determine at any time that an Event of Default shall
exist or have occurred and be continuing. Agent may, but shall not be required
to, perform any or all of such obligations of Borrower or such Guarantor under
any of the License Agreements, including, but not limited to, the payment of any
or all sums due from Borrower or such Guarantor thereunder. Any sums so paid by
Agent shall constitute part of the Obligations.
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9.19 After Acquired Real Property
. If Borrower or any Guarantor hereafter acquires any Real Property,
fixtures or any other property that is of the kind or nature described in the
Mortgages and such Real Property, fixtures or other property at any one location
has a fair market value in an amount equal to or greater than $250,000 (or if a
Default or Event of Default exists, then regardless of the fair market value of
such assets) (but excluding any such Real Property and fixtures subject to a
purchase money mortgage to secure Indebtedness incurred to purchase such Real
Property and fixtures under Section 9.9(b) unless the fair market value of such
Real Property and fixtures exceeds such purchase money Indebtedness by an amount
equal to or greater than $250,000 and the mortgage holder does not prohibit a
second lien in favor of Agent), without limiting any other rights of Agent or
any Lender, or duties or obligations of Borrower or any Guarantor, promptly upon
Agent's request, Borrower or such Guarantor shall execute and deliver to Agent a
mortgage, deed of trust or deed to secure debt, as Agent may determine, in form
and substance substantially similar to the Mortgages and as to any provisions
relating to specific state laws satisfactory to Agent and in form appropriate
for recording in the real estate records of the jurisdiction in which such Real
Property or other property is located granting to Agent a first and only lien
and mortgage on and security interest in such Real Property, fixtures or other
property (except as Borrower or such Guarantor would otherwise be permitted to
incur hereunder or under the Mortgages or as otherwise consented to in writing
by Agent) and such other agreements, documents and instruments as Agent may
require in connection therewith.
9.20 Costs and Expenses
. Borrower and Guarantors shall pay to Agent and Lenders on demand all
costs, expenses, filing fees and taxes paid or payable in connection with the
preparation, negotiation, execution, delivery, recording, administration,
collection, liquidation, enforcement and defense of the Obligations, Agent's
rights in the Collateral, this Agreement, the other Financing Agreements and all
other documents related hereto or thereto, including any amendments, supplements
or consents which may hereafter be contemplated (whether or not executed) or
entered into in respect hereof and thereof, including: (a) all costs and
expenses of filing or recording (including Uniform Commercial Code financing
statement filing taxes and fees, documentary taxes, intangibles taxes and
mortgage recording taxes and fees, if applicable); (b) costs and expenses and
fees for insurance premiums, appraisal fees and search fees, costs and expenses
of remitting loan proceeds, collecting checks and other items of payment, and
establishing and maintaining the Blocked Accounts, together with Agent's
customary charges and fees with respect thereto; (c) charges, fees or expenses
charged by any bank or issuer in connection with the Letter of Credit
Accommodations; (d) costs and expenses of preserving and protecting the
Collateral; (e) costs and expenses paid or incurred in connection with obtaining
payment of the Obligations, enforcing the security interests and liens of Agent,
selling or otherwise realizing upon the Collateral, and otherwise enforcing the
provisions of this Agreement and the other Financing Agreements or defending any
claims made or threatened against Agent or any Lender arising out of the
transactions contemplated hereby and thereby (including preparations for and
consultations concerning any such matters); (f) all out-of-pocket expenses and
costs heretofore and from time to time hereafter incurred by Agent and Lenders
during the course of periodic field examinations of the Collateral and
Borrower's or such Guarantor's operations, plus a per diem charge at the rate of
$800 per person per day for Agent's examiners in the field and office; and (g)
the fees and disbursements of counsel (including legal assistants) to Agent and
Lenders in connection with any of the foregoing.
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9.21 Further Assurances
. At the request of Agent at any time and from time to time, Borrower and
Guarantors shall, at their expense, duly execute and deliver, or cause to be
duly executed and delivered, such further agreements, documents and instruments,
and do or cause to be done such further acts as may be necessary or proper to
evidence, perfect, maintain and enforce the security interests and the priority
thereof in the Collateral and to otherwise effectuate the provisions or purposes
of this Agreement or any of the other Financing Agreements. Agent may at any
time and from time to time request a certificate from an officer of Borrower or
any Guarantor representing that all conditions precedent to the making of Loans
and providing Letter of Credit Accommodations contained herein are satisfied.
In the event of such request by Agent, Agent and Lenders may, at Agent's option,
cease to make any further Loans or provide any further Letter of Credit
Accommodations until Agent has received such certificate and, in addition, Agent
has determined that such conditions are satisfied.
9.22 Fixed Charge Coverage Ratio
. At any time when a Trigger Event exists, Borrower and its Subsidiaries
on a consolidated basis shall, at the end of each Fiscal Month (including as of
the end of the Fiscal Month immediately prior to the occurrence of such Trigger
Event), have a Fixed Charge Coverage Ratio for the twelve Fiscal Month period
then ended of not less than 1:00 to 1:00.
9.23 Permitted Bond Repurchases
. Borrower and Guarantors shall not and shall not permit their
Subsidiaries to prepay, repurchase or defease any Indebtedness existing under
the Indenture (a "Bond Repurchase") except that Borrower may make one or more
Bond Repurchases (each, a "Permitted Bond Repurchase") so long as (a) Borrower
provides Agent with prior written notice of its proposal to engage in a Bond
Repurchase specifying (i) the date of such Bond Repurchase, (ii) the face amount
of the Indebtedness subject to such Bond Repurchase and (iii) the amount of
Non-Exim Revolving Loans to be advanced to pay for such Bond Repurchase, (b) no
Default or Event of Default has occurred and is continuing immediately before,
and immediately after giving effect to, such Bond Repurchase, and (c) Borrower
has Excess Availability immediately before, and immediately after giving effect
to, such Bond Repurchase in an amount equal to at least (i) $5,000,000 at any
time when the aggregate amount of Bond Repurchases (including the proposed Bond
Repurchase) made by Borrower since the date hereof is less than or equal to
$12,500,000 or (ii) the greater of (A) $10,000,000 or (B) the amount equal to
one hundred twenty-five (125%) percent of the then outstanding principal amount
of the Term Loan at any time when the aggregate amount of Bond Repurchases
(including the proposed Bond Repurchases) made by Borrower since the date hereof
is greater than $12,500,000. Upon an advance of Non-Exim Revolving Loans to
effectuate a Bond Repurchase, the Bond Repurchase Reserve shall be automatically
reduced on a dollar for dollar basis.
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9.24 Sale Leasebacks
. Neither Borrower nor any of its Subsidiaries shall enter into any
arrangement, directly or indirectly, whereby Borrower or any of its Subsidiaries
shall sell or transfer any property owned by it to a Person (other than Borrower
or any of its Subsidiaries) in order then or thereafter to lease such property
or lease other property which Borrower or any of its Subsidiaries intends to use
for substantially the same purpose as the property being sold or transferred.
9.25 Excess Availability
. If Borrower's fiscal year certified audited financial statements
delivered pursuant to Section 9.6(a) report a loss of net income (before taxes
and excluding extraordinary gains but including extraordinary losses), Borrower
shall maintain Excess Availability (calculated without giving effect to any
limitation imposed by the Maximum Revolving Credit under clause (a)(ii) of the
definition of Excess Availability) at all times of no less than an amount equal
to six (6) months of aggregate amortization of the Equipment Sublimit and the
Real Property Sublimit.
9.26 Exim Covenants
. Borrower and each Guarantor shall comply with all the covenants, terms
and conditions set forth in the Exim Guarantee Documents, which covenants, terms
and conditions are incorporated into this Section 9.26(a) by reference.
9.27 Bank Accounts
. With respect to each of the deposit accounts set forth on the
Information Certificate as of the date hereof (other than those accounts for
which Agent has received a Deposit Account Control Agreement), Borrower shall
not, and shall not cause any Guarantor to, maintain in excess of $7,500 in any
such deposit account(except that Borrower may maintain up to $75,000 at Flora
Bank & Trust). At the request of Agent, Borrower shall deliver to Agent a
Deposit Account Control Agreement in respect of any such deposit account.
SECTION 10. EVENTS OF DEFAULT AND REMEDIES
----------------------------------
10.1 Events of Default
. The occurrence or existence of any one or more of the following events
are referred to herein individually as an "Event of Default", and collectively
as "Events of Default":
(a) (i) Borrower fails to pay any of the Obligations when due or (ii)
Borrower or any Obligor fails to perform any of the covenants contained in
Sections 9.3, 9.4, 9.13, 9.14, 9.15, 9.16 and 9.18 of this Agreement and such
failure shall continue for ten (10) days; provided, that, such ten (10) day
period shall not apply in the case of: (A) any failure to observe any such
covenant which is not capable of being cured at all or within such ten (10) day
period or which has been the subject of a prior failure within a six (6) month
period or (B) an intentional breach by Borrower or any Obligor of any such
covenant or (iii) Borrower or any Obligor fails to perform any of the terms,
covenants, conditions or provisions contained in this Agreement or any of the
other Financing Agreements other than those described in Sections 10.1(a)(i) and
10.1(a)(ii) above;
(b) any representation, warranty or statement of fact made by Borrower or
any Obligor to Agent in this Agreement, the other Financing Agreements or any
other written agreement, schedule, confirmatory assignment or otherwise shall
when made or deemed made be false or misleading in any material respect;
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(c) any Obligor revokes or terminates or purports to revoke or terminate or
fails to perform any of the terms, covenants, conditions or provisions of any
guarantee, endorsement or other agreement of such party in favor of Agent or any
Lender;
(d) any judgment for the payment of money is rendered against Borrower or
any Obligor in excess of $1,000,000 in any one case or in excess of $1,000,000
in the aggregate (to the extent not covered by insurance where the insurer has
assumed responsibility in writing for such judgment) and shall remain
undischarged or unvacated for a period in excess of thirty (30) days or
execution shall at any time not be effectively stayed, or any judgment other
than for the payment of money, or injunction, attachment, garnishment or
execution is rendered against Borrower or any Obligor or any of the Collateral
having a value in excess of $1,000,000;
(e) any Obligor (being a natural person or a general partner of an Obligor
which is a partnership) dies or Borrower or any Obligor, which is a partnership,
limited liability company, limited liability partnership or a corporation,
dissolves or suspends or discontinues doing business;
(f) Borrower or any Obligor makes an assignment for the benefit of
creditors, makes or sends notice of a bulk transfer or calls a meeting of its
creditors or principal creditors in connection with a moratorium or adjustment
of the Indebtedness due to them;
(g) a case or proceeding under the bankruptcy laws of the United States of
America now or hereafter in effect or under any insolvency, reorganization,
receivership, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction now or hereafter in effect (whether at law or in equity) is
filed against Borrower or any Obligor or all or any part of its properties and
such petition or application is not dismissed within thirty (30) days after the
date of its filing or Borrower or any Obligor shall file any answer admitting or
not contesting such petition or application or indicates its consent to,
acquiescence in or approval of, any such action or proceeding or the relief
requested is granted sooner;
(h) a case or proceeding under the bankruptcy laws of the United States of
America now or hereafter in effect or under any insolvency, reorganization,
receivership, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction now or hereafter in effect (whether at a law or equity) is
filed by Borrower or any Obligor or for all or any part of its property;
(i) any default in respect of any Indebtedness of Borrower or any Obligor
(other than Indebtedness owing to Agent and Lenders hereunder), in any case in
an amount in excess of $500,000, which default continues for more than the
applicable cure period, if any, with respect thereto or any default by Borrower
or any Obligor under any Material Contract, which default continues for more
than the applicable cure period, if any, with respect thereto and/or is not
waived in writing by the other parties thereto;
(j) any material provision hereof or of any of the other Financing
Agreements shall for any reason cease to be valid, binding and enforceable with
respect to any party hereto or thereto (other than Agent) in accordance with its
terms, or any such party shall challenge the enforceability hereof or thereof,
or shall assert in writing, or take any action or fail to take any action based
on the assertion that any provision hereof or of any of the other Financing
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Agreements has ceased to be or is otherwise not valid, binding or enforceable in
accordance with its terms, or any security interest provided for herein or in
any of the other Financing Agreements shall cease to be a valid and perfected
first priority security interest in any of the Collateral purported to be
subject thereto (except as otherwise permitted herein or therein);
(k) an ERISA Event shall occur which results in or could reasonably be
expected to result in liability of Borrower in an aggregate amount in excess of
$500,000;
(l) any Change of Control;
(m) the indictment by any Governmental Authority, or as Agent may reasonably
and in good faith determine, the threatened indictment by any Governmental
Authority of Borrower or any Obligor of which Borrower, Obligor or Agent
receives notice, in either case, as to which there is a reasonable possibility
of an adverse determination, in the good faith determination of Agent, under any
criminal statute, or commencement or threatened commencement of criminal or
civil proceedings against Borrower or any Obligor, pursuant to which statute or
proceedings the penalties or remedies sought or available include forfeiture of
(i) any of the Collateral having a value in excess of $250,000 or (ii) any other
property of Borrower or any Guarantor which is necessary or material to the
conduct of its business;
(n) there shall be a material adverse change in the business, assets or
prospects of Borrower or any Obligor after the date hereof;
(o) there shall be an event of default under any of the other Financing
Agreements or any of the Exim Guarantee Documents; or
(p) Exim revokes or terminates, or purports to revoke or terminate, or
otherwise contests or fails to honor its obligations to make payment under, the
Exim Guarantee; provided, that the foregoing shall not be an Event of Default to
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the extent no Exim Revolving Loans or Exim Letter of Credit Accommodations are
outstanding and the Exim Guarantee Documents have been terminated.
10.2 Remedies.
(a) At any time an Event of Default exists or has occurred and is
continuing, Agent and Lenders shall have all rights and remedies provided in
this Agreement, the other Financing Agreements, the UCC and other applicable
law, all of which rights and remedies may be exercised without notice to or
consent by Borrower or any Obligor, except as such notice or consent is
expressly provided for hereunder or required by applicable law. All rights,
remedies and powers granted to Agent and Lenders hereunder, under any of the
other Financing Agreements, the UCC or other applicable law, are cumulative, not
exclusive and enforceable, in Agent's discretion, alternatively, successively,
or concurrently on any one or more occasions, and shall include, without
limitation, the right to apply to a court of equity for an injunction to
restrain a breach or threatened breach by Borrower or any Obligor of this
Agreement or any of the other Financing Agreements. Subject to Section 12
hereof and Section 10.2(k) hereof, Agent may, and at the direction of the
Required Lenders shall, at any time or times, proceed directly against Borrower
or any Obligor to collect the Obligations without prior recourse to the
Collateral.
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(b) Without limiting the foregoing, at any time an Event of Default exists
or has occurred and is continuing, Agent may, in its discretion, and upon the
direction of the Required Lenders, shall, subject to Section 10.2(k) hereof, (i)
accelerate the payment of all or a portion of the Obligations and demand
immediate payment thereof to Agent for itself and the ratable benefit of
Lenders, (provided, that, upon the occurrence of any Event of Default described
in Sections 10.1(g) and 10.1(h), all Obligations shall automatically become
immediately due and payable), (ii) with or without judicial process or the aid
or assistance of others, enter upon any premises on or in which any of the
Collateral may be located and take possession of the Collateral or complete
processing, manufacturing and repair of all or any portion of the Collateral,
(iii) require Borrower or any Obligor, at Borrower's expense, to assemble and
make available to Agent any part or all of the Collateral at any place and time
designated by Agent, (iv) collect, foreclose, receive, appropriate, setoff and
realize upon any and all Collateral, (v) remove any or all of the Collateral
from any premises on or in which the same may be located for the purpose of
effecting the sale, foreclosure or other disposition thereof or for any other
purpose, (vi) sell, lease, transfer, assign, deliver or otherwise dispose of any
and all Collateral (including entering into contracts with respect thereto,
public or private sales at any exchange, broker's board, at any office of Agent
or elsewhere) at such prices or terms as Agent may deem reasonable, for cash,
upon credit or for future delivery, with Agent having the right to purchase the
whole or any part of the Collateral at any such public sale, all of the
foregoing being free from any right or equity of redemption of Borrower or any
Obligor, which right or equity of redemption is hereby expressly waived and
released by Borrower and Obligors and/or (vii) terminate this Agreement. If any
of the Collateral is sold or leased by Agent upon credit terms or for future
delivery, the Obligations shall not be reduced as a result thereof until payment
therefor is finally collected by Agent. If notice of disposition of Collateral
is required by law, ten (10) days prior notice by Agent to Borrower designating
the time and place of any public sale or the time after which any private sale
or other intended disposition of Collateral is to be made, shall be deemed to be
reasonable notice thereof and Borrower and Obligors waive any other notice. In
the event Agent institutes an action to recover any Collateral or seeks recovery
of any Collateral by way of prejudgment remedy, Borrower and each Obligor waives
the posting of any bond which might otherwise be required. At any time an Event
of Default exists or has occurred and is continuing, upon Agent's request,
Borrower will either, as Agent shall specify, furnish cash collateral to the
issuer to be used to secure and fund Agent's reimbursement obligations to the
issuer in connection with any Letter of Credit Accommodations or furnish cash
collateral to Agent for the Letter of Credit Accommodations. Such cash
collateral shall be in the amount equal to one hundred ten (110%) percent of the
amount of the Letter of Credit Accommodations plus the amount of any fees and
expenses payable in connection therewith through the end of the latest
expiration date of such Letter of Credit Accommodations.
(c) At any time or times that an Event of Default exists or has occurred and
is continuing, subject to Section 10.2(k) hereof, Agent may, in its discretion,
and upon the direction of the Required Lenders, Agent shall, enforce the rights
of Borrower or any Obligor against any account debtor, secondary obligor or
other obligor in respect of any of the Accounts or other Receivables. Without
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limiting the generality of the foregoing, subject to Section 10.2(k) hereof,
Agent may, in its discretion, and upon the direction of the Required Lenders,
Agent shall, at such time or times (i) notify any or all account debtors,
secondary obligors or other obligors in respect thereof that the Receivables
have been assigned to Agent and that Agent has a security interest therein and
Agent may direct any or all accounts debtors, secondary obligors and other
obligors to make payment of Receivables directly to Agent, (ii) extend the time
of payment of, compromise, settle or adjust for cash, credit, return of
merchandise or otherwise, and upon any terms or conditions, any and all
Receivables or other obligations included in the Collateral and thereby
discharge or release the account debtor or any secondary obligors or other
obligors in respect thereof without affecting any of the Obligations, (iii)
demand, collect or enforce payment of any Receivables or such other obligations,
but without any duty to do so, and Agent and Lenders shall not be liable for any
failure to collect or enforce the payment thereof nor for the negligence of its
agents or attorneys with respect thereto and (iv) take whatever other action
Agent may deem necessary or desirable for the protection of its interests and
the interests of Lenders. At any time that an Event of Default exists or has
occurred and is continuing, at Agent's request, all invoices and statements sent
to any account debtor shall state that the Accounts and such other obligations
have been assigned to Agent and are payable directly and only to Agent and
Borrower and Obligors shall deliver to Agent such originals of documents
evidencing the sale and delivery of goods or the performance of services giving
rise to any Accounts as Agent may require. In the event any account debtor
returns Inventory when an Event of Default exists or has occurred and is
continuing, Borrower shall, upon Agent's request, hold the returned Inventory in
trust for Agent, segregate all returned Inventory from all of its other
property, dispose of the returned Inventory solely according to Agent's
instructions, and not issue any credits, discounts or allowances with respect
thereto without Agent's prior written consent.
(d) Notwithstanding anything to the contrary contained herein, subject to
Section 10.2(k) hereof, Agent shall demand payment of the Obligations and
commence and pursue such other Enforcement Actions, in each case as Agent in
good ▇▇▇▇▇ ▇▇▇▇▇ appropriate upon the expiration of any Standstill Period;
provided, that, (i) the applicable Specified Default has not been waived or
cured, (ii) in the good faith determination of Agent, taking an Enforcement
Action is permitted under the terms of this Agreement and applicable law, (iii)
taking an Enforcement Action shall not result in any liability of Agent to
Borrower, any Obligor or any other Person and (iv) Agent shall be entitled to
all of the benefits of Section 12 hereof.
(e) If Agent determines at any time that any amount received by Agent must
be returned to Borrower or any Obligor or paid to any other person pursuant to
any insolvency law or otherwise, then, notwithstanding any other term or
condition of this Agreement or any other Financing 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, that
Agent is required to pay to Borrower or any Obligor or such other person
(without setoff, counterclaim or deduction of any kind).
(f) Anything in this Agreement or otherwise to the contrary notwithstanding,
each Lender hereby agrees with each other Lender that no Lender shall take any
action (other than actions against Agent for violating its obligations under
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this Agreement) to protect or enforce its rights arising out of this Agreement
or one or more Financing Agreements without first obtaining the prior written
consent of Agent, it being the intent of Lenders that any such action to protect
or enforce rights under this Agreement or one or more Financing Agreements shall
be taken in concert and at the direction or with the consent of Agent. Each
Lender agrees and acknowledges that Agent may exercise all rights and remedies
provided to Agent under, and in accordance with, the terms of the Financing
Agreements and applicable law (including, without limitation, with respect to
the liens granted to Agent).
(g) To the extent that applicable law imposes duties on Agent or any Lender
to exercise remedies in a commercially reasonable manner (which duties cannot be
waived under such law), Borrower and each Guarantor acknowledges and agrees that
it is not commercially unreasonable for Agent or any Lender (i) to fail to incur
expenses reasonably deemed significant by Agent or any Lender to prepare
Collateral for disposition or otherwise to complete raw material or work in
process into finished goods or other finished products for disposition, (ii) to
fail to obtain third party consents for access to Collateral to be disposed of,
or to obtain or, if not required by other law, to fail to obtain consents of any
Governmental Authority or other third party for the collection or disposition of
Collateral to be collected or disposed of, (iii) to fail to exercise collection
remedies against account debtors, secondary obligors or other persons obligated
on Collateral or to remove liens or encumbrances on or any adverse claims
against Collateral, (iv) to exercise collection remedies against account debtors
and other persons obligated on Collateral directly or through the use of
collection agencies and other collection specialists, (v) to advertise
dispositions of Collateral through publications or media of general circulation,
whether or not the Collateral is of a specialized nature, (vi) to contact other
persons, whether or not in the same business as Borrower or any Guarantor, for
expressions of interest in acquiring all or any portion of the Collateral, (vii)
to hire one or more professional auctioneers to assist in the disposition of
Collateral, whether or not the collateral is of a specialized nature, (viii) to
dispose of Collateral by utilizing Internet sites that provide for the auction
of assets of the types included in the Collateral or that have the reasonable
capability of doing so, or that match buyers and sellers of assets, (ix) to
dispose of assets in wholesale rather than retail markets, (x) to disclaim
disposition warranties, (xi) to purchase insurance or credit enhancements to
insure Agent or Lenders against risks of loss, collection or disposition of
Collateral or to provide to Agent or Lenders a guaranteed return from the
collection or disposition of Collateral, or (xii) to the extent deemed
appropriate by Agent, to obtain the services of other brokers, investment
bankers, consultants and other professionals to assist Agent in the collection
or disposition of any of the Collateral. Borrower and each Guarantor
acknowledges that the purpose of this Section is to provide non-exhaustive
indications of what actions or omissions by Agent or any Lender would not be
commercially unreasonable in the exercise by Agent or any Lender of remedies
against the Collateral and that other actions or omissions by Agent or any
Lender shall not be deemed commercially unreasonable solely on account of not
being indicated in this Section. Without limitation of the foregoing, nothing
contained in this Section shall be construed to grant any rights to Borrower or
any Guarantor or to impose any duties on Agent or Lenders that would not have
been granted or imposed by this Agreement or by applicable law in the absence of
this Section.
(h) For the purpose of enabling Agent to exercise the rights and remedies
hereunder, Borrower and each Guarantor hereby grants to Agent, to the extent
assignable, an irrevocable, non-exclusive license (exercisable at any time an
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Event of Default shall exist or have occurred and for so long as the same is
continuing) without payment of royalty or other compensation to Borrower or any
Guarantor, to use, assign, license or sublicense any of the trademarks,
service-marks, trade names, business names, trade styles, designs, logos and
other source of business identifiers and other Intellectual Property and general
intangibles now owned or hereafter acquired by Borrower or any Guarantor,
wherever the same maybe located, including in such license reasonable access to
all media in which any of the licensed items may be recorded or stored and to
all computer programs used for the compilation or printout thereof.
(i) Agent may apply the cash proceeds of Collateral actually received by
Agent from any sale, lease, foreclosure or other disposition of the Collateral
to payment of the Obligations, in whole or in part and in accordance with
Section 6.4 hereof. Borrower and Guarantors shall remain liable to Agent and
Lenders for the payment of any deficiency with interest at the highest rate
provided for herein and all costs and expenses of collection or enforcement,
including attorneys' fees and expenses.
(j) Without limiting the foregoing, subject to Section 10.2(k) hereof, upon
the occurrence of a Default or an Event of Default, (i) Agent and Lenders may,
at Agent's option, and upon the occurrence of an Event of Default at the
direction of the Required Lenders, Agent and Lenders shall, without notice, (A)
cease making Loans or arranging for Letter of Credit Accommodations or reduce
the lending formulas or amounts of Loans and Letter of Credit Accommodations
available to Borrower and/or (B) terminate any provision of this Agreement
providing for any future Loans or Letter of Credit Accommodations to be made by
Agent and Lenders to Borrower and (ii) Agent may, at its option, establish such
Reserves as Agent determines, without limitation or restriction, notwithstanding
anything to the contrary contained herein.
(k) To the extent the Required Lenders (or Required Term Lenders or Ableco
under Section 10.2(d) hereof) request that Agent accelerate any portion of the
Exim Facility (except for the automatic acceleration of the Exim Facility as a
result of Events of Default arising under Sections 10.1(g) and 10.1(h) hereof),
undertake any legal action with respect to the Exim Facility or exercise any
remedies under the Financing Agreements in connection with the Exim Facility or
the Exim Primary Collateral, the parties hereto agree that no such action shall
be taken unless and until Agent has received the prior written consent of Exim
pursuant to the Exim Guarantee Documents and at the request of Required Lenders
(or Required Term Lenders or Ableco under Section 10.2(d) hereof), Agent shall
promptly seek to obtain such written consent.
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW
---------------------------------------------------------------
11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial
Waiver.
(a) The validity, interpretation and enforcement of this Agreement and
the other Financing Agreements (other than the Mortgages to the extent provided
therein) and any dispute arising out of the relationship between the parties
hereto, whether in contract, tort, equity or otherwise, shall be governed by the
internal laws of the State of Illinois but excluding any principles of conflicts
of law or other rule of law that would cause the application of the law of any
jurisdiction other than the laws of the State of Illinois.
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(b) Borrower, Guarantors, Agent and Lenders irrevocably consent and submit
to the non-exclusive jurisdiction of the state courts located in ▇▇▇▇ County,
City of Chicago, Illinois and the United States District Court for the Northern
District of Illinois whichever Agent may elect, and waive any objection based on
venue or forum non conveniens with respect to any action instituted therein
arising under this Agreement or any of the other Financing Agreements or in any
way connected with or related or incidental to the dealings of the parties
hereto in respect of this Agreement or any of the other Financing Agreements or
the transactions related hereto or thereto, in each case whether now existing or
hereafter arising, and whether in contract, tort, equity or otherwise, and agree
that any dispute with respect to any such matters shall be heard only in the
courts described above (except that Agent and Lenders shall have the right to
bring any action or proceeding against Borrower or any Guarantor or its or their
property in the courts of any other jurisdiction which Agent deems necessary or
appropriate in order to realize on the Collateral or to otherwise enforce its
rights against Borrower or any Guarantor or its or their property).
(c) Borrower and each Guarantor hereby waives personal service of any and
all process upon it and consents that all such service of process may be made by
certified mail (return receipt requested) directed to its address set forth
herein and service so made shall be deemed to be completed five (5) days after
the same shall have been so deposited in the U.S. mails, or, at Agent's option,
by service upon Borrower or any Guarantor (or Borrower on behalf of Borrower or
such Guarantor) in any other manner provided under the rules of any such courts.
Within thirty (30) days after such service, Borrower or such Guarantor shall
appear in answer to such process, failing which Borrower or such Guarantor shall
be deemed in default and judgment may be entered by Agent against Borrower or
such Guarantor for the amount of the claim and other relief requested.
(d) BORROWER, GUARANTORS, AGENT AND LENDERS EACH HEREBY WAIVES ANY RIGHT TO
TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS
AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR IN ANY WAY CONNECTED WITH
OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF
THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE TRANSACTIONS
RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. BORROWER,
GUARANTORS, AGENT AND LENDERS EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY AND THAT BORROWER, ANY GUARANTOR, AGENT OR ANY LENDER MAY FILE AN
ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY.
(e) Agent and Lenders shall not have any liability to Borrower or any
Guarantor (whether in tort, contract, equity or otherwise) for losses suffered
by Borrower or such Guarantor in connection with, arising out of, or in any way
related to the transactions or relationships contemplated by this Agreement, or
any act, omission or event occurring in connection herewith, unless it is
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determined by a final and non-appealable judgment or court order binding on
Agent and such Lender, that the losses were the result of acts or omissions
constituting gross negligence or willful misconduct. In any such litigation,
Agent and Lenders shall be entitled to the benefit of the rebuttable presumption
that it acted in good faith and with the exercise of ordinary care in the
performance by it of the terms of this Agreement. Borrower and each Guarantor:
(i) certifies that neither Agent, any Lender nor any representative, agent or
attorney acting for or on behalf of Agent or any Lender has represented,
expressly or otherwise, that Agent and Lenders would not, in the event of
litigation, seek to enforce any of the waivers provided for in this Agreement or
any of the other Financing Agreements and (ii) acknowledges that in entering
into this Agreement and the other Financing Agreements, Agent and Lenders are
relying upon, among other things, the waivers and certifications set forth in
this Section 11.1 and elsewhere herein and therein.
11.2 Waiver of Notices
. Borrower and each Guarantor hereby expressly waives demand, presentment,
protest and notice of protest and notice of dishonor with respect to any and all
instruments and chattel paper, included in or evidencing any of the Obligations
or the Collateral, and any and all other demands and notices of any kind or
nature whatsoever with respect to the Obligations, the Collateral and this
Agreement, except such as are expressly provided for herein. No notice to or
demand on Borrower or any Guarantor which Agent or any Lender may elect to give
shall entitle Borrower or such Guarantor to any other or further notice or
demand in the same, similar or other circumstances.
11.3 Amendments and Waivers.
(a) Neither this Agreement nor any other Financing Agreement nor any
terms hereof or thereof may be amended, waived, discharged or terminated unless
such amendment, waiver, discharge or termination is in writing signed by Agent
and the Required Lenders or at Agent's option, by Agent with the authorization
of the Required Lenders, and as to amendments to any of the Financing Agreements
(other than with respect to any provision of Section 12 hereof), by Borrower;
except, that, no such amendment, waiver, discharge or termination shall:
(i) reduce the interest rate or any fees or extend the time of payment
of principal, interest or any fees or reduce the principal amount of any Loan or
Letter of Credit Accommodations, in each case without the consent of each Lender
directly affected thereby,
(ii) increase the Commitment of any Lender over the amount thereof then in
effect or provided hereunder, in each case without the consent of the Lender
directly affected thereby,
(iii) release any Collateral (except as expressly required hereunder or
under any of the other Financing Agreements or applicable law and except as
permitted under Section 12.11(b) hereof), without the consent of Agent and all
of Lenders,
(iv) reduce any percentage specified in the definition of Required Lenders,
without the consent of Agent and all of Lenders,
(v) consent to the assignment or transfer by Borrower or any Guarantor of
any of their rights and obligations under this Agreement, without the consent of
Agent and all of Lenders,
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(vi) amend, modify or waiver any terms of this Section 11.3 hereof, without
the consent of Agent and all of Lenders, or
(vii) increase the advance rates constituting part of the Borrowing Base,
without the consent of Agent and all of the Required Revolving Lenders.
Notwithstanding anything to the contrary contained herein, (x) any amendment or
waiver with respect to clause (D) of Section 6.4 shall only require the consent
of Agent and the Required Revolving Lenders, (y) any amendment, waiver,
discharge or termination in respect of any provision relating to the Exim
Facility or Collateral securing the Exim Facility shall require the prior
written approval of Exim and (z) any amendment, waiver, discharge or termination
with respect to the following shall, in addition to the requisite number of
Lenders required under this clause (a) above, require the consent of Agent and
the Required Term Lenders:
(A) the terms of Sections 9.17, 9.22, 9.23 and 9.25 hereof (or any
definition with respect to financial terms used in such covenants in a manner
which has the effect of reducing the amounts which Loan Parties are required to
maintain pursuant to such covenants);
(B) the definitions of (1) "Borrowing Base" (but only to the extent such
proposed change in the definition would increase the advance rates above those
in effect on the date hereof), (2) "Eligible Accounts", "Eligible Equipment",
Eligible FarmPro Accounts", "Eligible Real Property" and "Eligible Inventory"
(but only to the extent such proposed change in any of such definitions would
make any eligibility criteria less restrictive than the criteria in effect on
the date hereof), (3) "Ableco", "Approved Fund", "Bond Repurchase Reserve",
"Change of Control", "Eligible Transferee", "Enforcement Action", "Excess
Availability", "Exim Excess Availability", "Exim Guarantee", "Export-Related
Borrowing Base" (but only to the extent such proposed change in the definition
would increase the advance rates above those in effect on the date hereof), (4)
"Maximum Exim Revolving Credit", "Exim Revolving Loans", and "Exim Letter of
Credit Accommodations" (but only to the extent such proposed change would have
the effect of increasing the amount of Exim Revolving Loans or Exim Letter of
Credit Accommodations available to Borrower), and (5) "Interest Rate" (but only
to the extent such proposed change would change clause (a)(ii) and clause
(c)(ii) thereof), "Material Adverse Effect", "Maximum Credit" (but only to the
extent such proposed change would have the effect of increasing the amount of
Revolving Loans or Letter of Credit Accommodations available to Borrower),
"Maximum Revolving Credit" (but only to the extent such proposed change would
have the effect of increasing the amount of Revolving Loans or Letter of Credit
Accommodations available to Borrower), "Maximum Term Credit", "Net Amount",
"Prime Rate" (but only to the extent such proposed change would change the
Interest Rate of the Term Loan), "Priority Event", "Pro Rata Share" (but only to
the extent such proposed change would change clause (a), (c) and (d) thereof),
"Required Term Lenders", "Specified Default", "Standstill Period" and "Term Loan
Termination Date"; and
(C) any of the following Sections in any material respect: 2.1 (but only to
the extent such proposed change would have the effect of increasing the amount
of Revolving Loans available to Borrower), 2.2 (but only to the extent such
proposed change would have the effect of increasing the amount of Letter of
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Credit Accommodations available to Borrower), 2.3, 2.5, 3.2(b), 3.2(c) (as it
relates to payments under the Fee Letter), 6.4 (other than clause (D) of Section
6.4), 9.7, 9.8, 9.9, 9.10, 9.11, 9.12, 10.1(a) (but only to the extent such
proposed change would waive, or extend any applicable cure period with respect
to, an Event of Default arising from any Section set forth in clause A. or C. of
this Section 11.3(a)), 10.2(d), 11.3(a) (but only to the extent such proposed
change relates to this provision that requires the consent of Agent and the
Required Term Lenders), 12.8, 12.11(a), 12.11(b), 13.1 (but only to the extent
that such proposed change relates to the Term Loan) or 13.6(a) (but only to the
extent such proposed change would increase the $5,000,000 threshold).
(b) Agent and Lenders shall not, by any act, delay, omission or
otherwise be deemed to have expressly or impliedly waived any of its or their
rights, powers and/or remedies unless such waiver shall be in writing and signed
as provided herein. Any such waiver shall be enforceable only to the extent
specifically set forth therein. A waiver by Agent or any Lender of any right,
power and/or remedy on any one occasion shall not be construed as a bar to or
waiver of any such right, power and/or remedy which Agent or any Lender would
otherwise have on any future occasion, whether similar in kind or otherwise.
(c) Notwithstanding anything to the contrary contained in Section 11.3(a)
above, in the event that Borrower or any Guarantor requests that this Agreement
or any other Financing Agreements be amended or otherwise modified in a manner
which would require the unanimous consent of all of the Lenders or the Required
Term Lenders and such amendment or other modification is agreed to by the
Required Lenders, then, with the consent of Borrower and Agent, the Required
Lenders, Agent and Borrower may amend this Agreement without the consent of the
Lenders that did not agree to such amendment or other modification
(collectively, the "Minority Lenders") to provide for the termination of the
Commitment of each of the Minority Lenders, the addition to this Agreement of
one or more other Lenders, or an increase in the Commitment of one or more of
the Required Lenders, so that the Commitments, after giving effect to such
amendment, shall be in the same aggregate amount as the Commitments immediately
before giving effect to such amendment, if any Loans are outstanding at the
time of such amendment, the making of such additional Loans by such new Lenders
or Required Lenders, as the case may be, as may be necessary to repay in full
the outstanding Loans of the Minority Lenders immediately before giving effect
to such amendment and the payment of all interest, fees and other Obligations
payable or accrued in favor of the Minority Lenders and such other modifications
to this Agreement as Borrower and the Required Lenders may determine to be
appropriate.
(d) The consent of Agent shall be required for any amendment, waiver or
consent affecting the rights or duties of Agent hereunder or under any of the
other Financing Agreements, in addition to the consent of the Lenders otherwise
required by this Section and the exercise by Agent of any of its rights
hereunder with respect to Reserves or Eligible Accounts or Eligible Inventory
shall not be deemed an amendment to the advance rates provided for in this
Section 11.3.
11.4 Waiver of Counterclaims
. Borrower and each Guarantor waives all rights to interpose any claims,
deductions, setoffs or counterclaims of any nature (other then compulsory
counterclaims) in any action or proceeding with respect to this Agreement, the
Obligations, the Collateral or any matter arising therefrom or relating hereto
or thereto.
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11.5 Indemnification
. Borrower and each Guarantor shall, jointly and severally, indemnify and
hold Agent and each Lender, and its officers, directors, agents, employees,
advisors and counsel and their respective Affiliates (each such person being an
"Indemnitee"), harmless from and against any and all losses, claims, damages,
liabilities, costs or expenses (including attorneys' fees and expenses) imposed
on, incurred by or asserted against any of them in connection with any
litigation, investigation, claim or proceeding commenced or threatened related
to the negotiation, preparation, execution, delivery, enforcement, performance
or administration of this Agreement, any other Financing Agreements, or any
undertaking or proceeding related to any of the transactions contemplated hereby
or any act, omission, event or transaction related or attendant thereto,
including amounts paid in settlement, court costs, and the fees and expenses of
counsel except that Borrower and Guarantors shall not have any obligation under
this Section 11.5 to indemnify an Indemnitee with respect to a matter covered
hereby resulting from the gross negligence or willful misconduct of such
Indemnitee as determined pursuant to a final, non-appealable order of a court of
competent jurisdiction (but without limiting the obligations of Borrower or
Guarantors as to any other Indemnitee). To the extent that the undertaking to
indemnify, pay and hold harmless set forth in this Section may be unenforceable
because it violates any law or public policy, Borrower and Guarantors shall pay
the maximum portion which it is permitted to pay under applicable law to Agent
and Lenders in satisfaction of indemnified matters under this Section. To the
extent permitted by applicable law, neither Borrower nor any Guarantor shall
assert, and Borrower and each Guarantor hereby waives, any claim against any
Indemnitee, on any theory of liability, for special, indirect, consequential or
punitive damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result of, this Agreement, any of the other Financing
Agreements or any undertaking or transaction contemplated hereby. All amounts
due under this Section shall be payable upon demand. The foregoing indemnity
shall survive the payment of the Obligations and the termination or non-renewal
of this Agreement.
SECTION 12. THE AGENT
----------
12.1 Appointment, Powers and Immunities
. Each Lender irrevocably designates, appoints and authorizes Congress to
act as Agent hereunder and under the other Financing Agreements with such powers
as are specifically delegated to Agent by the terms of this Agreement and of the
other Financing Agreements, together with such other powers as are reasonably
incidental thereto. Agent (a) shall have no duties or responsibilities except
those expressly set forth in this Agreement and in the other Financing
Agreements, and shall not by reason of this Agreement or any other Financing
Agreement be a trustee or fiduciary for any Lender; (b) shall not be responsible
to Lenders for any recitals, statements, representations or warranties contained
in this Agreement or in any of the other Financing Agreements, or in any
certificate or other document referred to or provided for in, or received by any
of them under, this Agreement or any other Financing Agreement, or for the
value, validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement or any other Financing Agreement or any other document referred
to or provided for herein or therein or for any failure by Borrower or any
Obligor or any other Person to perform any of its obligations hereunder or
thereunder; and (c) shall not be responsible to Lenders for any action taken or
omitted to be taken by it hereunder or under any other Financing Agreement or
under any other document or instrument referred to or provided for herein or
therein or in connection herewith or therewith, except for its own gross
negligence or willful misconduct as determined by a final non-appealable
judgment of a court of competent jurisdiction. Agent may employ agents and
104
attorneys-in-fact and shall not be responsible for the negligence or misconduct
of any such agents or attorneys-in-fact selected by it in good faith. Agent may
deem and treat the payee of any note as the holder thereof for all purposes
hereof unless and until the assignment thereof pursuant to an agreement (if and
to the extent permitted herein) in form and substance satisfactory to Agent
shall have been delivered to and acknowledged by Agent.
12.2 Reliance by Agent
. Agent shall be entitled to rely upon any certification, notice or other
communication (including any thereof by telephone, telecopy, telex, telegram or
cable) believed by it to be genuine and correct and to have been signed or sent
by or on behalf of the proper Person or Persons, and upon advice and statements
of legal counsel, independent accountants and other experts selected by Agent.
As to any matters not expressly provided for by this Agreement or any other
Financing Agreement, Agent shall in all cases be fully protected in acting, or
in refraining from acting, hereunder or thereunder in accordance with
instructions given by the Required Lenders or all of Lenders as is required in
such circumstance, and such instructions of such Agents and any action taken or
failure to act pursuant thereto shall be binding on all Lenders.
12.3 Events of Default.
(a) Agent shall not be deemed to have knowledge or notice of the
occurrence of an Event of Default or other failure of a condition precedent to
the Loans and Letter of Credit Accommodations hereunder, unless and until Agent
has received written notice from a Lender, or Borrower specifying such Event of
Default or any unfulfilled condition precedent, and stating that such notice is
a "Notice of Default or Failure of Condition". In the event that Agent receives
such a Notice of Default or Failure of Condition, Agent shall give prompt notice
thereof to the Lenders. Agent shall (subject to Section 12.7) take such action
with respect to any such Event of Default or failure of condition precedent as
shall be directed by the Required Lenders; provided, that, unless and until
Agent shall have received such directions, Agent may (but shall not be obligated
to) take such action, or refrain from taking such action, with respect to or by
reason of such Event of Default or failure of condition precedent, as it shall
deem advisable in the best interest of Lenders. Without limiting the foregoing,
and notwithstanding the existence or occurrence and continuance of an Event of
Default or any other failure to satisfy any of the conditions precedent set
forth in Section 4 of this Agreement to the contrary, Agent may, but shall have
no obligation to, continue to make Loans and issue or cause to be issued Letter
of Credit Accommodations for the ratable account and risk of Lenders from time
to time if Agent believes making such Loans or issuing or causing to be issued
such Letter of Credit Accommodations is in the best interests of Lenders.
(b) Except with the prior written consent of Agent, no Lender may assert or
exercise any enforcement right or remedy in respect of the Loans, Letter of
Credit Accommodations or other Obligations, as against Borrower or any Obligor
or any of the Collateral or other property of Borrower or any Obligor.
12.4 Congress in its Individual Capacity
. With respect to its Commitment and the Loans made and Letter of Credit
Accommodations issued or caused to be issued by it (and any successor acting as
Agent), so long as Congress shall be a Lender hereunder, it shall have the same
rights and powers hereunder as any other Lender and may exercise the same as
105
though it were not acting as Agent, and the term "Lender" or "Lenders" shall,
unless the context otherwise indicates, include Congress in its individual
capacity as Lender hereunder. Congress (and any successor acting as Agent) and
its Affiliates may (without having to account therefor to any Lender) lend money
to, make investments in and generally engage in any kind of business with
Borrower (and any of its Subsidiaries or Affiliates) as if it were not acting as
Agent, and Congress and its Affiliates may accept fees and other consideration
from Borrower or any Guarantor and any of its Subsidiaries and Affiliates for
services in connection with this Agreement or otherwise without having to
account for the same to Lenders.
12.5 Indemnification
. Lenders agree to indemnify Agent (to the extent not reimbursed by
Borrower hereunder and without limiting any obligations of Borrower hereunder)
ratably, in accordance with their Pro Rata Shares, for any and all claims of any
kind and nature whatsoever that may be imposed on, incurred by or asserted
against Agent (including by any Lender) arising out of or by reason of any
investigation in or in any way relating to or arising out of this Agreement or
any other Financing Agreement or any other documents contemplated by or referred
to herein or therein or the transactions contemplated hereby or thereby
(including the costs and expenses that Agent is obligated to pay hereunder) or
the enforcement of any of the terms hereof or thereof or of any such other
documents, provided, that, no Lender shall be liable for any of the foregoing to
the extent it arises from the gross negligence or willful misconduct of the
party to be indemnified as determined by a final non-appealable judgment of a
court of competent jurisdiction. The foregoing indemnity shall survive the
payment of the Obligations and the termination or non-renewal of this Agreement.
12.6 Non-Reliance on Agent and Other Lenders
. Each Lender agrees that it has, independently and without reliance on
Agent or other Lender, and based on such documents and information as it has
deemed appropriate, made its own credit analysis of Borrower and Obligors and
has made its own decision to enter into this Agreement and that it will,
independently and without reliance upon Agent or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own analysis and decisions in taking or not taking action
under this Agreement or any of the other Financing Agreements. Agent shall not
be required to keep itself informed as to the performance or observance by
Borrower or any Obligor of any term or provision of this Agreement or any of the
other Financing Agreements or any other document referred to or provided for
herein or therein or to inspect the properties or books of Borrower or any
Obligor. Agent will use reasonable efforts to provide Lenders with any
information received by Agent from Borrower or any Obligor which is required to
be provided to Lenders hereunder and with a copy of any Notice of Default or
Failure of Condition received by Agent from Borrower or any Lender; provided,
that, Agent shall not be liable to any Lender for any failure to do so, except
to the extent that such failure is attributable to Agent's own gross negligence
or willful misconduct as determined by a final non-appealable judgment of a
court of competent jurisdiction. Except for notices, reports and other
documents expressly required to be furnished to Lenders by Agent hereunder,
Agent shall not have any duty or responsibility to provide any Lender with any
other credit or other information concerning the affairs, financial condition or
business of Borrower or any Obligor that may come into the possession of Agent.
106
12.7 Failure to Act
. Except for action expressly required of Agent hereunder and under the
other Financing- Agreements, Agent shall in all cases be fully justified in
failing or refusing to act hereunder and thereunder unless it shall receive
further assurances to its satisfaction from Lenders of their indemnification
obligations under Section 12.5 hereof against any and all liability and expense
that may be incurred by it by reason of taking or continuing to take any such
action.
12.8 Additional Loans
.. Agent shall not make any Revolving Loans or provide any Letter of Credit
Accommodations to Borrower on behalf of Lenders intentionally and with actual
knowledge that such Revolving Loans or Letter of Credit Accommodations would
cause the aggregate amount of the total outstanding Revolving Loans and Letter
of Credit Accommodations to Borrower to exceed the Borrowing Base or the
Export-Related Borrowing Base, without the prior consent of all Lenders, except,
that, Agent may make such additional Non-Exim Revolving Loans or provide such
additional Non-Exim Letter of Credit Accommodations on behalf of Lenders,
intentionally and with actual knowledge that such Non-Exim Revolving Loans or
Non-Exim Letter of Credit Accommodations will cause the total outstanding
Non-Exim Revolving Loans and Non-Exim Letter of Credit Accommodations to
Borrower to exceed the Borrowing Base, as Agent may deem necessary or advisable
in its discretion; provided, that: (a) the total principal amount of the
additional Non-Exim Revolving Loans or Non-Exim additional Letter of Credit
Accommodations to Borrower which Agent may make or provide after obtaining such
actual knowledge that the aggregate principal amount of the Non-Exim Revolving
Loans and Non-Exim Letter of Credit Accommodations equal or exceed the Borrowing
Base, plus the amount of Special Agent Advances made pursuant to Section
12.11(a)(i) and (a)(ii) hereof then outstanding, shall not exceed the lesser of
(x) an amount equal to ten percent (10%) of the Borrowing Base at any time or
(y) the Maximum Revolving Credit less the outstanding amount of all Exim
Revolving Loans and Exim Letter of Credit Accommodations and (b) no such
additional Non-Exim Revolving Loan or Non-Exim Letter of Credit Accommodation
shall be outstanding more than ninety (90) days after the date such additional
Non-Exim Revolving Loan or Non-Exim Letter of Credit Accommodation is made or
issued (as the case may be), except as the Required Lenders may otherwise agree.
Each Revolving Lender shall be obligated to pay Agent the amount of its Pro Rata
Share of any such additional Non-Exim Revolving Loans or Non-Exim Letter of
Credit Accommodations.
12.9 Concerning the Collateral and the Related Financing Agreements
. Each Lender authorizes and directs Agent to enter into this Agreement
and the other Financing Agreements. Each Lender agrees that any action taken by
Agent or Required Lenders in accordance with the terms of this Agreement or the
other Financing Agreements and the exercise by Agent or Required Lenders of
their respective powers set forth therein or herein, together with such other
powers that are reasonably incidental thereto, shall be binding upon all of the
Lenders.
12.10 Field Audit, Examination Reports and Other Information;
Disclaimer by Lenders
. By signing this Agreement, each Lender:
(a) is deemed to have requested that Agent furnish such Lender,
promptly after it becomes available, a copy of each field audit or examination
report and a weekly report with respect to the Borrowing Base prepared by Agent
(each field audit or examination report and monthly report with respect to the
Borrowing Base being referred to herein as a "Report" and collectively,
"Reports");
107
(b) expressly agrees and acknowledges that Agent (i) does not make any
representation or warranty as to the accuracy of any Report, or (ii) shall not
be liable for any information contained in any Report;
(c) expressly agrees and acknowledges that the Reports are not comprehensive
audits or examinations, that Agent or any other party performing any audit or
examination will inspect only specific information regarding Borrower and
Guarantors and will rely significantly upon Borrower's and Guarantors' books and
records, as well as on representations of Borrower's and Guarantors' personnel;
and
(d) agrees to keep all Reports confidential and strictly for its internal
use in accordance with the terms of Section 13.5 hereof, and not to distribute
or use any Report in any other manner.
12.11 Collateral Matters.
(a) Agent may, at its option, from time to time, at any time on or
after an Event of Default and for so long as the same is continuing or upon any
other failure of a condition precedent to the Loans and Letter of Credit
Accommodations hereunder, make such disbursements and advances ("Special Agent
Advances") which Agent, in its sole discretion, (i) deems necessary or desirable
either to preserve or protect the Collateral or any portion thereof or (ii) to
enhance the likelihood or maximize the amount of repayment by Borrower and
Guarantors of the Loans and other Obligations or (iii) to pay any other amount
chargeable to Borrower or any Guarantor pursuant to the terms of this Agreement
or any of the other Financing Agreements consisting of costs, fees and expenses
and payments to any issuer of Letter of Credit Accommodations; provided, that,
the aggregate principal amount of the Special Agent Advances pursuant to clauses
(i) and(ii) above, plus the then outstanding principal amount of the additional
Loans and Letter of Credit Accommodations which Agent may make or provide as set
forth in Section 12.8 hereof, shall not exceed an amount equal to ten percent
(10%) of the Borrowing Base at any time. Special Agent Advances shall be
repayable on demand and be secured by the Collateral. Special Agent Advances
shall not constitute Loans but shall otherwise constitute Obligations hereunder.
Agent shall notify each Lender and Borrower in writing of each such Special
Agent Advance, which notice shall include a description of the purpose of such
Special Agent Advance. Without limitation of its obligations pursuant to
Section 6.9, each Revolving Lender agrees that it shall make available to Agent,
upon Agent's demand, in immediately available funds, the amount equal to such
Revolving Lender's Pro Rata Share of each such Special Agent Advance. If such
funds are not made available to Agent by such Revolving Lender, Agent shall be
entitled to recover such funds, on demand from such Revolving Lender together
with interest thereon for each day from the date such payment was due until the
date such amount is paid to Agent at the Federal Funds Rate for each day during
such period (as published by the Federal Reserve Bank of New York or at Agent's
option based on the arithmetic mean determined by Agent of the rates for the
last transaction in overnight Federal funds arranged prior to 9:00 a.m. (New
York City time) on that day by each of the three leading brokers of Federal
funds transactions in New York City selected by Agent) and if such amounts are
not paid within three (3) days of Agent's demand, at the highest Interest Rate
provided for in Section 3.1 hereof applicable to Prime Rate Loans.
108
(b) Lenders hereby irrevocably authorize Agent, at its option and in its
discretion to release any security interest in, mortgage or lien upon, any of
the Collateral (i) upon termination of the Commitments and payment and
satisfaction of all of the Obligations and delivery of cash collateral to the
extent required under Section 13.1 below, or (ii) constituting property being
sold or disposed of if Borrower certifies to Agent that the sale or disposition
is made in compliance with Section 9.7 hereof (and Agent may rely conclusively
on any such certificate, without further inquiry), or (iii) constituting
property in which Borrower or any Guarantor did not own an interest at the time
the security interest, mortgage or lien was granted or at any time thereafter,
or (iv) having a value in the aggregate in any twelve (12) month period of less
than $250,000 and to the extent permitted to be released under the Exim
Guarantee Documents, or (v) upon the sale, lease, transfer, assignment or
disposition of any property of Borrower or any Guarantor in connection with an
Enforcement Action or (vi) if approved, authorized or ratified in writing by all
of Lenders. Except as provided above, Agent will not release any security
interest in, mortgage or lien upon, any of the Collateral without the prior
written authorization of all of Lenders. Upon request by Agent at any time,
Lenders will promptly confirm in writing Agent's authority to release particular
types or items of Collateral pursuant to this Section.
(c) Without any manner limiting Agent's authority to act without any
specific or further authorization or consent by the Required Lenders, each
Lender agrees to confirm in writing, upon request by Agent, the authority to
release Collateral conferred upon Agent under this Section. Agent shall (and is
hereby irrevocably authorized by Lenders to) execute such documents as may be
necessary to evidence the release of the security interest, mortgage or liens
granted to Agent upon any Collateral to the extent set forth above; provided,
that, (i) Agent shall not be required to execute any such document on terms
which, in Agent's opinion, would expose Agent to liability or create any
obligations or entail any consequence other than the release of such security
interest, mortgage or liens without recourse or warranty and (ii) such release
shall not in any manner discharge, affect or impair the Obligations or any
security interest, mortgage or lien upon (or obligations of Borrower or any
Guarantor in respect of) the Collateral retained by Borrower or such Guarantor.
(d) Agent shall have no obligation whatsoever to any Lender or any other
Person to investigate, confirm or assure that the Collateral exists or is owned
by Borrower or any Guarantor or is cared for, protected or insured or has been
encumbered, or that any particular items of Collateral meet the eligibility
criteria applicable in respect of the Loans or Letter of Credit Accommodations
hereunder, or whether any particular reserves are appropriate, or that the liens
and security interests granted to Agent pursuant hereto or any of the Financing
Agreements or otherwise 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 Agreement or in any
of the other Financing Agreements, it being understood and agreed that in
respect of the Collateral, 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 the Collateral as a Lender and that Agent shall have no duty or
liability whatsoever to any other Lender.
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12.12 Agency for Perfection
. Each Lender hereby appoints Agent and each other Lender as agent and
bailee for the purpose of perfecting the security interests in and liens upon
the Collateral of Agent in assets which, in accordance with Article 9 of the UCC
can be perfected only by possession (or where the security interest of a secured
party with possession has priority over the security interest of another secured
party) and Agent and each Lender hereby acknowledges that it holds possession of
any such Collateral for the benefit of Agent as secured party. Should any
Lender 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.
12.13 Successor Agent
. Agent may resign as Agent upon thirty (30) days' notice to Lenders and
Borrower. If Agent resigns under this Agreement, the Required Lenders shall
appoint from among the Lenders a successor agent for Lenders. If no successor
agent is appointed prior to the effective date of the resignation of Agent,
Agent may appoint, after consulting with Lenders and Borrower, a successor agent
from among Lenders. Upon the acceptance by the Lender so selected of its
appointment as successor agent hereunder, such successor agent shall succeed to
all of the rights, powers and duties of the retiring Agent and the term "Agent"
as used herein and in the other Financing Agreements shall mean such successor
agent and the retiring Agent's appointment, powers and duties as Agent shall be
terminated. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Section 12 shall inure to its benefit as to any actions taken
or omitted by it while it was Agent under this Agreement. If no successor agent
has accepted appointment as Agent by the date which is thirty (30) days after
the date of a retiring Agent 's notice of resignation, the retiring Agent's
resignation shall nonetheless thereupon become effective and Lenders shall
perform all of the duties of Agent hereunder until such time, if any, as the
Required Lenders appoint a successor agent as provided for above.
SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS
-----------------------------------
13.1 Term.
(a) This Agreement and the other Financing Agreements shall become
effective as of the date set forth on the first page hereof and shall continue
in full force and effect for a term ending on the date three (3) years from the
date hereof (the "Renewal Date"), and from year to year thereafter, unless
sooner terminated pursuant to the terms hereof; provided, however, that the Term
Loan shall be due and payable on the Term Loan Termination Date without regard
to whether the term of this Agreement is extended. Agent may, at its option (or
shall at the direction of any Lender in writing received by Agent at least
ninety (90) days prior to the Renewal Date or the anniversary of any Renewal
Date, as the case may be), terminate this Agreement and the other Financing
Agreements, or Borrower may terminate this Agreement and the other Financing
Agreements, in each case, effective on the Renewal Date or on the anniversary of
the Renewal Date in any year by giving to the other party at least sixty (60)
days prior written notice; provided, that, this Agreement and all other
110
Financing Agreements must be terminated simultaneously. In addition, Borrower
may terminate this Agreement at any time upon ten (10) days prior written notice
to Agent (which notice shall be irrevocable) and Agent may, at its option, and
shall at the direction of Required Lenders, terminate this Agreement at any time
on or after an Event of Default. Upon the Renewal Date or any other effective
date of termination of the Financing Agreements, Borrower shall pay to Agent all
outstanding and unpaid Obligations and shall furnish cash collateral to Agent
(or at Agent's option, a letter of credit issued for the account of Borrower and
at Borrower's expense, in form and substance satisfactory to Agent, by an issuer
acceptable to Agent and payable to Agent as beneficiary) in such amounts as
Agent determines are reasonably necessary to secure Agent and Lenders from loss,
cost, damage or expense, including attorneys' fees and expenses, in connection
with any contingent Obligations, including issued and outstanding Letter of
Credit Accommodations and checks or other payments provisionally credited to the
Obligations and/or as to which Agent or any Lender has not yet received final
and indefeasible payment. The amount of such cash collateral (or letter of
credit, as Agent may determine) as to any Letter of Credit Accommodations shall
be in the amount equal to one hundred ten (110%) percent of the amount of the
Letter of Credit Accommodations plus the amount of any fees and expenses payable
in connection therewith through the end of the latest expiration date of such
Letter of Credit Accommodations. Such payments in respect of the Obligations
and cash collateral shall be remitted by wire transfer in Federal funds to the
Agent Payment Account or such other bank account of Agent, as Agent may, in its
discretion, designate in writing to Borrower for such purpose. Interest shall
be due until and including the next Business Day, if the amounts so paid by
Borrower to the Agent Payment Account or other bank account designated by Agent
are received in such bank account later than 12:00 noon, Chicago time.
(b) No termination of this Agreement or the other Financing Agreements shall
relieve or discharge Borrower or any Guarantor of its respective duties,
obligations and covenants under this Agreement or the other Financing Agreements
until all Obligations have been fully and finally discharged and paid, and
Agent's continuing security interest in the Collateral and the rights and
remedies of Agent and Lenders hereunder, under the other Financing Agreements
and applicable law, shall remain in effect until all such Obligations have been
fully and finally discharged and paid. Accordingly, Borrower and each Guarantor
waives any rights it may have under the UCC to demand the filing of termination
statements with respect to the Collateral and Agent shall not be required to
send such termination statements to Borrower or Guarantors, or to file them with
any filing office, unless and until this Agreement shall have been terminated in
accordance with its terms and all Obligations paid and satisfied in full in
immediately available funds.
(c) If for any reason this Agreement is terminated prior to the Renewal
Date, in view of the impracticality and extreme difficulty of ascertaining
actual damages and by mutual agreement of the parties as to a reasonable
calculation of Agent's and each Revolving Lender's lost profits as a result
thereof, Borrower agrees to pay to Agent for itself and the ratable benefit of
Lenders, upon the effective date of such termination, an early termination fee
in the amount equal to
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Period
-----------------------------------------------
Amount
-----------------------------------------------
From the date hereof to and including the
(i) 2.00% of Maximum Revolving. . . . . . . . . first anniversary of the date hereof
Credit
From and after the first anniversary of the
date hereof to and including the second
(ii) 1.00% of Maximum Revolving . . . . . . . . anniversary of the date hereof
Credit
From and after the second anniversary of the
date hereof to but not including the third
anniversary of the date hereof or if the term
(iii) 0.50% of Maximum Revolving. . . . . . . . of this Agreement is extended, at any time
Credit. . . . . . . . . . . . . . . . . . . . . prior to the end of the then current term.
Such early termination fee shall be presumed to be the amount of damages
--------------------------------------------------------------------------------
sustained by Agent and Revolving Lenders as a result of such early termination
--------------------------------------------------------------------------------
and Borrower and Guarantors agree that it is reasonable under the circumstances
--------------------------------------------------------------------------------
currently existing. In addition, Agent and Revolving Lenders shall be entitled
--------------------------------------------------------------------------------
to such early termination fee upon the occurrence of any Event of Default
--------------------------------------------------------------------------------
described in Sections 10.1(g) and 10.1(h) hereof, even if Agent and Revolving
--------------------------------------------------------------------------------
Lenders do not exercise the right to terminate this Agreement, but elect, at
--------------------------------------------------------------------------------
their option, to provide financing to Borrower or permit the use of cash
--------------------------------------------------------------------------------
collateral under the United States Bankruptcy Code. The early termination fee
--------------------------------------------------------------------------------
provided for in this Section 13.1 shall be deemed included in the Obligations.
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Such early termination fee shall be waived in the event of a refinancing of the
--------------------------------------------------------------------------------
Credit Facility pursuant to which all of the Obligations are paid in full in
--------------------------------------------------------------------------------
cash and for which Wachovia Bank, National Association or an Affiliate thereof
--------------------------------------------------------------------------------
serves as "Agent".
--------------------
13.2 Interpretative Provisions.
(a) All terms used herein which are defined in Article 1, Article 8 or
Article 9 of the UCC shall have the meanings given therein unless otherwise
defined in this Agreement.
(b) All references to the plural herein shall also mean the singular and to
the singular shall also mean the plural unless the context otherwise requires.
(c) All references to Borrower, any Guarantor, any Obligor, Agent and
Lenders pursuant to the definitions set forth in the recitals hereto, or to any
other person herein, shall include their respective successors and assigns.
(d) The words "hereof", "herein", "hereunder", "this Agreement" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not any particular provision of this Agreement and as this Agreement
now exists or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
(e) The word "including" when used in this Agreement shall mean "including,
without limitation".
112
(f) An Event of Default shall exist or continue or be continuing until such
Event of Default is waived in accordance with Section 11.3 or is cured in a
manner satisfactory to Agent, if such Event of Default is capable of being cured
as determined by Agent.
(g) All references to the term "good faith" used herein when applicable to
Agent or any Lender shall mean, notwithstanding anything to the contrary
contained herein or in the UCC, honesty in fact in the conduct or transaction
concerned. Borrower and Guarantors shall have the burden of proving any lack of
good faith on the part of Agent or any Lender alleged by Borrower or any
Guarantor at any time.
(h) Any accounting term used in this Agreement shall have, unless otherwise
specifically provided herein, the meaning customarily given in accordance with
GAAP, and all financial computations hereunder shall be computed unless
otherwise specifically provided herein, in accordance with GAAP as consistently
applied and using the same method for inventory valuation as used in the
preparation of the financial statements of Borrower most recently received by
Agent prior to the date hereof.
(i) In the computation of periods of time from a specified date to a later
specified date, the word "from" means "from and including", the words "to" and
"until" each mean "to but excluding" and the word "through" means "to and
including".
(j) Unless otherwise expressly provided herein, (i) references herein to any
agreement, document or instrument shall be deemed to include all subsequent
amendments, modifications, supplements, extensions, renewals, restatements or
replacements with respect thereto, but only to the extent the same are not
prohibited by the terms hereof or of any other Financing Agreement, and (ii)
references to any statute or regulation are to be construed as including all
statutory and regulatory provisions consolidating, amending, replacing,
recodifying, supplementing or interpreting the statute or regulation.
(k) The captions and headings of this Agreement are for convenience of
reference only and shall not affect the interpretation of this Agreement.
(l) This Agreement and other Financing Agreements may use several different
limitations, tests or measurements to regulate the same or similar matters. All
such limitations, tests and measurements are cumulative and shall each be
performed in accordance with their terms.
(m) This Agreement and the other Financing Agreements are the result of
negotiations among and have been reviewed by counsel to Agent and the other
parties, and are the products of all parties. Accordingly, this Agreement and
the other Financing Agreements shall not be construed against Agent or Lenders
merely because of Agent's or any Lender's involvement in their preparation.
13.3 Notices
. All notices, requests and demands hereunder shall be in writing and
deemed to have been given or made: if delivered in person, immediately upon
delivery; if by telex, telegram or facsimile transmission, immediately upon
sending and upon confirmation of receipt; if by nationally recognized overnight
courier service with instructions to deliver the next Business Day, one (1)
Business Day after sending; and if by certified mail, return receipt requested,
113
five (5) days after mailing. All notices, requests and demands upon the parties
are to be given to the following addresses (or to such other address as any
party may designate by notice in accordance with this Section):
The GSI Group, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ - CFO
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Borrower or any Guarantor:
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ & Maw LLP
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. Given
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Congress Financial Corporation (Central)
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ - GSI Account Manager
Telephone No.: (312) 332-0420 ext. 231
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Agent:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:. . . . . . . . . . . . . . . . . . . Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
13.4 Partial Invalidity
. If any provision of this Agreement is held to be invalid or
unenforceable, such invalidity or unenforceability shall not invalidate this
Agreement as a whole, but this Agreement shall be construed as though it did not
contain the particular provision held to be invalid or unenforceable and the
rights and obligations of the parties shall be construed and enforced only to
such extent as shall be permitted by applicable law.
13.5 Successors
. This Agreement, the other Financing Agreements and any other document
referred to herein or therein shall be binding upon and inure to the benefit of
and be enforceable by Agent, Lenders, Borrower, Guarantors and their respective
successors and assigns, except that Borrower may not assign its rights under
this Agreement, the other Financing Agreements and any other document referred
to herein or therein without the prior written consent of Agent and Lenders.
Any such purported assignment without such express prior written consent shall
be void. No Lender may assign its rights and obligations under this Agreement
without the prior written consent of Agent, except as provided in Section 13.6
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below. The terms and provisions of this Agreement and the other Financing
Agreements are for the purpose of defining the relative rights and obligations
of Borrower, Guarantors, Agent and Lenders with respect to the transactions
contemplated hereby and there shall be no third party beneficiaries of any of
the terms and provisions of this Agreement or any of the other Financing
Agreements.
13.6 Assignments; Participations.
(a) Each Lender may assign all or, if less than all, a portion equal to
at least $5,000,000 in the aggregate for the assigning Lender, of such rights
and obligations under this Agreement to one or more Eligible Transferees or
Approved Funds (but not including for this purpose any assignments in the form
of a participation), each of which assignees shall become a party to this
Agreement as a Lender by execution of an Assignment and Acceptance; provided
that so long as no Event of Default has occurred and is continuing and Congress'
Commitment is less than or equal to $50,000,000, the consent of Borrower shall
be required in connection with any assignment to an Eligible Transferee
described in clauses (c) and (d) of the definition of Eligible Transferee (such
consent not to be unreasonably withheld); provided further that, (i) such
transfer or assignment will not be effective until recorded by Agent on the
Register and (ii) Agent shall have received for its sole account payment of a
processing fee from the assigning Lender or the assignee in the amount of
$5,000. Anything contained herein to the contrary notwithstanding, the consent
of Borrower or Agent shall not be required, the minimum assignment amount shall
not be applicable such transfer or assignment shall not be required to be
recorded by Agent on the Register in order to be effective, and payments of the
processing fee shall not be required if (x) such assignment is in connection
with any merger, consolidation, sale, transfer, or other disposition of all or
any substantial portion of the business or loan portfolio of a Lender or (y) in
the case of any Term Lender, the assignee is an Affiliate (other than
individual(s)) of such Term Lender or any Approved Fund; provided, however, that
-------- -------
Borrower and Agent may continue to deal solely and directly with the assigning
Lender in connection with the interest so assigned until such time as written
notice of such assignment shall have been delivered by the assigning Lender or
the assignee to Agent.
(b) Agent shall maintain a register of the names and addresses of Lenders,
their Commitments and the principal amount of their Loans (the "Register").
Agent shall also maintain a copy of each Assignment and Acceptance delivered to
and accepted by it and shall modify the Register to give effect to each
Assignment and Acceptance. The entries in the Register shall be conclusive and
binding for all purposes, absent manifest error, and Borrower, any Obligors,
Agent and Lenders may treat each Person whose name is recorded in the Register
as a Lender hereunder for all purposes of this Agreement. The Register shall be
available for inspection by Borrower and any Lender at any reasonable time and
from time to time upon reasonable prior notice.
(c) Upon such execution, delivery, acceptance and recording, from and after
the effective date specified in each Assignment and Acceptance, the assignee
thereunder shall be a party hereto and to the other Financing Agreements and, to
the extent that rights and obligations hereunder have been assigned to it
pursuant to such Assignment and Acceptance, have the rights and obligations
(including, without limitation, the obligation to participate in Letter of
115
Credit Accommodations) of a Lender hereunder and thereunder and the assigning
Lender shall, to the extent that rights and obligations hereunder have been
assigned by it pursuant to such Assignment and Acceptance, relinquish its rights
and be released from its obligations under this Agreement.
(d) By execution and delivery of an Assignment and Acceptance, the assignor
and assignee thereunder confirm to and agree with each other and the other
parties hereto as follows: (i) other than as provided in such Assignment and
Acceptance, the assigning Lender makes no representation or warranty and assumes
no responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement or any of the other Financing
Agreements or the execution, legality, enforceability, genuineness, sufficiency
or value of this Agreement or any of the other Financing Agreements furnished
pursuant hereto, (ii) the assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of
Borrower, any Obligor or any of their Subsidiaries or the performance or
observance by Borrower or any Obligor of any of the Obligations; (iii) such
assignee confirms that it has received a copy of this Agreement and the other
Financing Agreements, together with such other documents and information it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance, (iv) such assignee will, independently and
without reliance upon the assigning Lender, Agent and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Agreement and the
other Financing Agreements, (v) such assignee appoints and authorizes Agent to
take such action as agent on its behalf and to exercise such powers under this
Agreement and the other Financing Agreements as are delegated to Agent by the
terms hereof and thereof, together with such powers as are reasonably incidental
thereto, and (vi) such assignee agrees that it will perform in accordance with
their terms all of the obligations which by the terms of this Agreement and the
other Financing Agreements are required to be performed by it as a Lender.
Agent and Lenders may furnish any information concerning Borrower or any Obligor
in the possession of Agent or any Lender from time to time to assignees and
Participants.
(e) Each Lender may sell participations to one or more banks or other
entities in or to all or a portion of its rights and obligations under this
Agreement and the other Financing Agreements (including, without limitation, all
or a portion of its Commitments and the Loans owing to it and its participation
in the Letter of Credit Accommodations, without the consent of Agent or the
other Lenders); provided, that, (i) such Lender's obligations under this
Agreement (including, without limitation, its Commitment hereunder) and the
other Financing Agreements shall remain unchanged, (ii) such Lender shall remain
solely responsible to the other parties hereto for the performance of such
obligations, and Borrower, Guarantors, the other Lenders and Agent shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement and the other Financing
Agreements, and (iii) the Participant shall not have any rights under this
Agreement or any of the other Financing Agreements (the Participant's rights
against such Lender in respect of such participation to be those set forth in
the agreement executed by such Lender in favor of the Participant relating
thereto) and all amounts payable by Borrower or any Obligor hereunder shall be
determined as if such Lender had not sold such participation.
116
(f) Nothing in this Agreement shall prevent or prohibit any Lender from
pledging its Loans hereunder to a Federal Reserve Bank in support of borrowings
made by such Lenders from such Federal Reserve Bank.
(g) Borrower and Guarantors shall assist Agent or any Lender permitted to
sell assignments or participations under this Section 13.6 in whatever manner
reasonably necessary in order to enable or effect any such assignment or
participation, including (but not limited to) the execution and delivery of any
and all agreements, notes and other documents and instruments as shall be
requested and the delivery of informational materials, appraisals or other
documents for, and the participation of relevant management in meetings and
conference calls with, potential Lenders or Participants. Borrower shall
certify the correctness, completeness and accuracy, in all material respects, of
all descriptions of Borrower and Guarantors and their affairs provided, prepared
or reviewed by Borrower or any Guarantor that are contained in any selling
materials and all other information provided by it and included in such
materials.
(h) (i) A Registered Term Loan (and the Registered Term Note, if any,
evidencing the same) may be assigned or sold in whole or in part only by
registration of such assignment or sale on the Register (and each Registered
Term Note shall expressly so provide). Any assignment or sale of all or part of
such Registered Term Loan (and the Registered Term Note, if any, evidencing the
same) may be effected only by registration of such assignment or sale on the
Register, together with the surrender of the Registered Term Note, if any,
evidencing the same duly endorsed by (or accompanied by a written instrument of
assignment or sale duly executed by) the holder of such Registered Term Note,
whereupon, at the request of the designated assignee(s) or transferee(s), one or
more new Registered Term Notes in the same aggregate principal amount shall be
issued to the designated assignee(s) or transferee(s). Prior to the
registration of assignment or sale of any Registered Term Loan (and the
Registered Term Note, if any evidencing the same), Agent and the Borrowers shall
treat the Person in whose name such Loan (and the Registered Term Note, if any,
evidencing the same) is registered as the owner thereof for the purpose of
receiving all payments thereon and for all other purposes, notwithstanding
notice to the contrary. In the case of an assignment by a Lender to any of its
Approved Funds that is not reflected in Agent's Register, the assigning Lender
shall maintain a comparable register on behalf of Agent.
(ii) In the event that any Term Lender sells participations
in a Registered Term Loan, such Term Lender shall maintain a register on which
it enters the name of all participants in such Registered Term Loan (the
"Participant Register"). A Registered Term Loan (and the Registered Term Note,
if any, evidencing the same) may be participated in whole or in part only by
registration of such participation on the Participant Register (and each
Registered Term Note shall expressly so provide). Any participation of such
Registered Term Loan (and the Registered Term Note, if any, evidencing the same)
may be effected only by the registration of such participation on the
Participant Register.
(i) To the extent the ratio of (x) the outstanding principal balance of
the Obligations (other than Obligations arising under the Exim Facility) to (y)
the outstanding principal balance of the Obligations under the Exim Facility is
less than 1.0 to 1.0, each of the Revolving Lenders agrees to, if requested by
117
Exim, assign to Exim all of its right, title and interest in and to (A) the
portion of the Financing Agreements relating to the Exim Facility and (B) the
Exim Primary Collateral, in each case pursuant to an assignment agreement, and
such terms and conditions, that are acceptable to Exim, Agent and each Revolving
Lender.
13.7 Entire Agreement
. This Agreement, the other Financing Agreements, any supplements hereto
or thereto, and any instruments or documents delivered or to be delivered in
connection herewith or therewith represents the entire agreement and
understanding concerning the subject matter hereof and thereof between the
parties hereto, and supersede all other prior agreements, understandings,
negotiations and discussions, representations, warranties, commitments,
proposals, offers and contracts concerning the subject matter hereof, whether
oral or written. In the event of any inconsistency between the terms of this
Agreement and any schedule or exhibit hereto, the terms of this Agreement shall
govern.
13.8 Counterparts, Etc
. This Agreement or any of the other Financing Agreements may be executed
in any number of counterparts, each of which shall be an original, but all of
which taken together shall constitute one and the same agreement. Delivery of an
executed counterpart of this Agreement or any of the other Financing Agreements
by telefacsimile shall have the same force and effect as the delivery of an
original executed counterpart of this Agreement or any of such other Financing
Agreements. Any party delivering an executed counterpart of any such agreement
by telefacsimile shall also deliver an original executed counterpart, but the
failure to do so shall not affect the validity, enforceability or binding effect
of such agreement.
[signature page follows]
118
IN WITNESS WHEREOF, Agent, Lenders, Borrower and Guarantors have caused
these presents to be duly executed as of the day and year first above written.
AGENT:
------------------------------------------------------------------
BORROWER:
------------------------------------------------------------------
CONGRESS FINANCIAL CORPORATION
(CENTRAL). . . . . . . . . . . . . . . . . . . . . . . . . . . . . THE GSI GROUP, INC.
By:. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . By:
Title: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Title:
REVOLVING LENDERS:
------------------------------------------------------------------
CONGRESS FINANCIAL CORPORATION . . . . . . . . . . . . . . . . . . GUARANTORS:
--------------------------------
(CENTRAL)
▇▇▇▇▇ MANUFACTURING CO.
By:
Title: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . By:
Title: _
------------------------------------------------------------------
FLEET CAPITAL CORPORATION. . . . . . . . . . . . . . . . . . . . . ASSUMPTION LEASING COMPANY, INC.
By:
Title: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . By:
Title:
TERM LENDERS:
------------------------------------------------------------------
ABLECO FINANCE LLC, on behalf of itself and its affiliate assigns
By:
Title:
119
------
EXHIBIT A
---------
TO
--
LOAN AND SECURITY AGREEMENT
---------------------------
ASSIGNMENT AND ACCEPTANCE AGREEMENT
-----------------------------------
This ASSIGNMENT AND ACCEPTANCE AGREEMENT (this "Assignment and Acceptance")
dated as of _____________, 200_ is made between ________________________ (the
"Assignor") and ____________________ (the "Assignee").
W I T N E S S E T H:
WHEREAS, Congress Financial Corporation (Central), in its capacity as agent
pursuant to the Loan Agreement (as hereinafter defined) acting for and on behalf
of the lenders that are parties thereto (in such capacity, "Agent"), and the
lenders that are parties to the Loan Agreement (individually, each a "Lender"
and collectively, "Lenders") have entered or are about to enter into financing
arrangements pursuant to which Agent and Lenders may make loans and advances and
provide other financial accommodations to The GSI Group, Inc. ("Borrower") as
set forth in the Loan and Security Agreement, dated _________, 2003, by and
among Borrower, certain of its affiliates, Agent and Lenders (as the same now
exists or may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced, the "Loan Agreement"), and the other agreements, documents
and instruments referred to therein or at any time executed and/or delivered in
connection therewith or related thereto (all of the foregoing, together with the
Loan Agreement, as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced, being collectively
referred to herein as the "Financing Agreements");
WHEREAS, as provided under the Loan Agreement, Assignor committed to making
Loans (the "Committed Loans") to Borrower in an aggregate amount not to exceed
$___________ (the "Commitment");
WHEREAS, Assignor wishes to assign to Assignee [part of the] [all] rights and
obligations of Assignor under the Loan Agreement in respect of its Commitment in
an amount equal to $______________ (the "Assigned Commitment Amount") on the
terms and subject to the conditions set forth herein and Assignee wishes to
accept assignment of such rights and to assume such obligations from Assignor on
such terms and subject to such conditions;
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
contained herein, the parties hereto agree as follows:
1. Assignment and Acceptance.
---------------------------
(a) Subject to the terms and conditions of this Assignment and
Acceptance, Assignor hereby sells, transfers and assigns to Assignee, and
Assignee hereby purchases, assumes and undertakes from Assignor, without
recourse and without representation or warranty (except as provided in this
Assignment and Acceptance) an interest in (i) the Commitment and each of the
Committed Loans of Assignor and (ii) all related rights, benefits, obligations,
120
liabilities and indemnities of the Assignor under and in connection with the
Loan Agreement and the other Financing Agreements, so that after giving effect
thereto, the Commitment of Assignee and the Commitment of Assignor shall be as
set forth below and the Pro Rata Share of Assignee shall be _______ (__%)
percent and the Pro Rata Share of Assignor shall be ____ (__%) percent.
(b) With effect on and after the Effective Date (as defined in Section 5
hereof), Assignee shall be a party to the Loan Agreement and succeed to all of
the rights and be obligated to perform all of the obligations of a Lender under
the Loan Agreement, including the requirements concerning confidentiality and
the payment of indemnification, with a Commitment in an amount equal to the
Assigned Commitment Amount. Assignee agrees that it will perform in accordance
with their terms all of the obligations which by the terms of the Loan Agreement
are required to be performed by it as a Lender. It is the intent of the parties
hereto that the Commitment of Assignor shall, as of the Effective Date, be
reduced by an amount equal to the Assigned Commitment Amount and Assignor shall
relinquish its rights and be released from its obligations under the Loan
Agreement to the extent such obligations have been assumed by Assignee;
provided, that, Assignor shall not relinquish its rights under Sections 2.1,
6.4, 6.8 and 6.9 of the Loan Agreement to the extent such rights relate to the
time prior to the Effective Date.
(c) After giving effect to the assignment and assumption set forth herein,
on the Effective Date Assignee's Commitment will be $_____________.
(d) After giving effect to the assignment and assumption set forth herein,
on the Effective Date Assignor's Commitment will be $______________.
2. Payments. As consideration for the sale, assignment and transfer
--------
contemplated in Section 1 hereof, Assignee shall pay to Assignor on the
Effective Date in immediately available funds an amount equal to $____________,
representing Assignee's Pro Rata Share of the principal amount of all Committed
Loans.
3. Reallocation of Payments. Any interest, fees and other payments accrued
-------------------------
to the Effective Date with respect to the Commitment, Committed Loans and
outstanding Letter of Credit Accommodations shall be for the account of
Assignor. Any interest, fees and other payments accrued on and after the
Effective Date with respect to the Assigned Commitment Amount shall be for the
account of Assignee. Each of Assignor and Assignee agrees that it will hold in
trust for the other party any interest, fees and other amounts which it may
receive to which the other party is entitled pursuant to the preceding sentence
and pay to the other party any such amounts which it may receive promptly upon
receipt.
4. Independent Credit Decision. Assignee acknowledges that it has received
---------------------------
a copy of the Loan Agreement and the Schedules and Exhibits thereto, together
with copies of the most recent financial statements of Borrower and its
Subsidiaries, and such other documents and information as it has deemed
appropriate to make its own credit and legal analysis and decision to enter into
this Assignment and Acceptance and agrees that it will, independently and
without reliance upon Assignor, Agent or any Lender and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit and legal decisions in taking or not taking action under the Loan
Agreement.
121
5. Effective Date; Notices.
-------------------------
(a) As between Assignor and Assignee, the effective date for this
Assignment and Acceptance shall be _______________, 200_ (the "Effective Date");
provided, that, the following conditions precedent have been satisfied on or
before the Effective Date:
(i) this Assignment and Acceptance shall be executed and delivered by
Assignor and Assignee;
(ii) the consent of Agent as required for an effective assignment of the
Assigned Commitment Amount by Assignor to Assignee shall have been duly obtained
and shall be in full force and effect as of the Effective Date;
(iii) written notice of such assignment, together with payment instructions,
addresses and related information with respect to Assignee, shall have been
given to Borrower and Agent; and
(iv) Assignee shall pay to Assignor all amounts due to Assignor under this
Assignment and Acceptance.
(b) Promptly following the execution of this Assignment and Acceptance,
Assignor shall deliver to Borrower and Agent for acknowledgment by Agent, a
Notice of Assignment in the form attached hereto as Schedule 1.
[6. Agent. [INCLUDE ONLY IF ASSIGNOR IS AN AGENT]
-----
(a) Assignee hereby appoints and authorizes Assignor in its capacity as
Agent to take such action as agent on its behalf to exercise such powers under
the Loan Agreement as are delegated to Agent by Lenders pursuant to the terms of
the Loan Agreement.
(b) Assignee shall assume no duties or obligations held by Assignor in its
capacity as Agent under the Loan Agreement.]
7. Withholding Tax. Assignee (a) represents and warrants to Assignor,
----------------
Agent and Borrower that under applicable law and treaties no tax will be
required to be withheld by Assignee, Agent or Borrower with respect to any
payments to be made to Assignee hereunder or under any of the Financing
Agreements, (b) agrees to furnish (if it is organized under the laws of any
jurisdiction other than the United States or any State thereof) to Agent and
Borrower prior to the time that Agent or Borrower are required to make any
payment of principal, interest or fees hereunder, duplicate executed originals
of either U.S. Internal Revenue Service Form 4224 or U.S. Internal Revenue
Service Form 1001 (wherein Assignee claims entitlement to the benefits of a tax
treaty that provides for a complete exemption from U.S. federal income
withholding tax on all payments hereunder) and agrees to provide new Forms 4224
or 1001 upon the expiration of any previously delivered form or comparable
statements in accordance with applicable U.S. law and regulations and amendments
thereto, duly executed and completed by Assignee, and (c) agrees to comply with
all applicable U.S. laws and regulations with regard to such withholding tax
exemption.
122
8. Representations and Warranties.
--------------------------------
(a) Assignor represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any security interest, lien, encumbrance or other
adverse claim, it is duly organized and existing and it has the full power and
authority to take, and has taken, all action necessary to execute and deliver
this Assignment and Acceptance and any other documents required or permitted to
be executed or delivered by it in connection with this Assignment and Acceptance
and to fulfill its obligations hereunder, no notices to, or consents,
authorizations or approvals of, any Person are required (other than any already
given or obtained) for its due execution, delivery and performance of this
Assignment and Acceptance, and apart from any agreements or undertakings or
filings required by the Loan Agreement, no further action by, or notice to, or
filing with, any Person is required of it for such execution, delivery or
performance, and this Assignment and Acceptance has been duly executed and
delivered by it and constitutes the legal, valid and binding obligation of
Assignor, enforceable against Assignor in accordance with the terms hereof,
subject, as to enforcement, to bankruptcy, insolvency, moratorium,
reorganization and other laws of general application relating to or affecting
creditors' rights and to general equitable principles.
(b) Assignor makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Loan Agreement or any of the other Financing
Agreements or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Loan Agreement or any other instrument or document
furnished pursuant thereto. Assignor makes no representation or warranty in
connection with, and assumes no responsibility with respect to, the solvency,
financial condition or statements of Borrower, Guarantors or any of their
respective Affiliates, or the performance or observance by Borrower, Guarantors
or any other Person, of any of its respective obligations under the Loan
Agreement or any other instrument or document furnished in connection therewith.
(c) Assignee represents and warrants that (i) it is duly organized and
existing and it has full power and authority to take, and has taken, all action
necessary to execute and deliver this Assignment and Acceptance and any other
documents required or permitted to be executed or delivered by it in connection
with this Assignment and Acceptance, and to fulfill its obligations hereunder,
(ii) no notices to, or consents, authorizations or approvals of, any Person are
required (other than any already given or obtained) for its due execution,
delivery and performance of this Assignment and Acceptance, and apart from any
agreements or undertakings or filings required by the Loan Agreement, no further
action by, or notice to, or filing with, any Person is required of it for such
execution, delivery or performance; and (iii) this Assignment and Acceptance has
been duly executed and delivered by it and constitutes the legal, valid and
binding obligation of Assignee, enforceable against Assignee in accordance with
the terms hereof, subject, as to enforcement, to bankruptcy, insolvency,
moratorium, reorganization and other laws of general application relating to or
affecting creditors' rights to general equitable principles.
9. Further Assurances. Assignor and Assignee each hereby agree to
-------------------
execute and deliver such other instruments, and take such other action, as
either party may reasonably request in connection with the transactions
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contemplated by this Assignment and Acceptance, including the delivery of any
notices or other documents or instruments to Borrower or Agent, which may be
required in connection with the assignment and assumption contemplated hereby.
10. Miscellaneous.
-------------
(a) Any amendment or waiver of any provision of this Assignment and
Acceptance shall be in writing and signed by the parties hereto. No failure or
delay by either party hereto in exercising any right, power or privilege
hereunder shall operate as a waiver thereof and any waiver of any breach of the
provisions of this Assignment and Acceptance shall be without prejudice to any
rights with respect to any other for further breach thereof.
(b) All payments made hereunder shall be made without any set-off or
counterclaim.
(c) Assignor and Assignee shall each pay its own costs and expenses incurred
in connection with the negotiation, preparation, execution and performance of
this Assignment and Acceptance.
(d) This Assignment and Acceptance may be executed in any number of
counterparts and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
(e) THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE OF ILLINOIS Assignor and Assignee each
irrevocably submits to the non-exclusive jurisdiction of any State or Federal
court sitting in ▇▇▇▇ County, Illinois over any suit, action or proceeding
arising out of or relating to this Assignment and Acceptance and irrevocably
agrees that all claims in respect of such action or proceeding may be heard and
determined in such Illinois State or Federal court. Each party to this
Assignment and Acceptance hereby irrevocably waives, to the fullest extent it
may effectively do so, the defense of an inconvenient forum to the maintenance
of such action or proceeding.
(f) ASSIGNOR AND ASSIGNEE EACH HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH
THIS ASSIGNMENT AND ACCEPTANCE, THE LOAN AGREEMENT, ANY OF THE OTHER FINANCING
AGREEMENTS OR ANY RELATED DOCUMENTS AND AGREEMENTS OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, OR STATEMENTS (WHETHER ORAL OR WRITTEN).
124
IN WITNESS WHEREOF, Assignor and Assignee have caused this Assignment and
Acceptance to be executed and delivered by their duly authorized officers as of
the date first above written.
[ASSIGNOR]
By:
Title:
[ASSIGNEE]
By:
Title:
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SCHEDULE 1
NOTICE OF ASSIGNMENT AND ACCEPTANCE
-----------------------------------
______, 200__
Attn.:
Re:
Ladies and Gentlemen:
Congress Financial Corporation (Central), in its capacity as agent pursuant
to the Loan Agreement (as hereinafter defined) acting for and on behalf of the
lenders that are parties thereto (in such capacity, "Agent"), and the lenders
that are parties to the Loan Agreement (individually, each a "Lender" and
collectively, "Lenders") have entered or are about to enter into financing
arrangements pursuant to which Agent and Lenders may make loans and advances and
provide other financial accommodations to The GSI Group, Inc. as set forth in
the Loan and Security Agreement, dated _____________, 2003, by and among
Borrower, certain of their affiliates, Agent and Lenders (as the same now exists
or may hereafter be amended, modified, supplemented, extended, renewed, restated
or replaced, the "Loan Agreement"), and the other agreements, documents and
instruments referred to therein or at any time executed and/or delivered in
connection therewith or related thereto (all of the foregoing, together with the
Loan Agreement, as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced, being collectively
referred to herein as the "Financing Agreements"). Capitalized terms not
otherwise defined herein shall have the respective meanings ascribed thereto in
the Loan Agreement.
1. We hereby give you notice of, and request your consent to, the assignment
by __________________________ (the "Assignor") to ___________________________
(the "Assignee") such that after giving effect to the assignment Assignee shall
have an interest equal to ________ (__%) percent of the total Commitments
pursuant to the Assignment and Acceptance Agreement attached hereto (the
"Assignment and Acceptance"). We understand that the Assignor's Commitment
shall be reduced by $_____________.
2. Assignee agrees that, upon receiving the consent of Agent to such
assignment, Assignee will be bound by the terms of the Loan Agreement as fully
and to the same extent as if the Assignee were the Lender originally holding
such interest under the Loan Agreement.
1
3. The following administrative details apply to Assignee:
(A) Notice address:
Assignee name:
Address:
Attention:
Telephone:
Telecopier:
(B) Payment instructions:
Account No.:
At:
Reference:
Attention:
4. You are entitled to rely upon the representations, warranties and
covenants of each of Assignor and Assignee contained in the Assignment and
Acceptance.
IN WITNESS WHEREOF, Assignor and Assignee have caused this Notice of Assignment
and Acceptance to be executed by their respective duly authorized officials,
officers or agents as of the date first above mentioned.
Very truly yours,
[NAME OF ASSIGNOR]
By:
Title:
[NAME OF ASSIGNEE]
2
By:
Title:
ACKNOWLEDGED AND ASSIGNMENT
CONSENTED TO:
CONGRESS FINANCIAL CORPORATION
(____________), as Agent
By:
Title:
3
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EXHIBIT C
TO
LOAN AND SECURITY AGREEMENT
---------------------------
Compliance Certificate
----------------------
To: Congress Financial Corporation
(_________), as Agent
_________________________
_________________________
Ladies and Gentlemen:
I hereby certify to you pursuant to Section 9.6 of the Loan Agreement (as
defined below) as follows:
1. I am the duly elected Chief Financial Officer of The GSI Group, Inc., a
Delaware corporation ("Borrower"). Capitalized terms used herein without
definition shall have the meanings given to such terms in the Loan and Security
Agreement, dated ______, 2003, by and among Congress Financial Corporation
(Central) as agent for the lenders party thereto (in such capacity, "Agent") and
the lenders party thereto (collectively, "Lenders"), Borrower and certain of its
affiliates (as such Loan and Security Agreement is amended, modified or
supplemented, from time to time, the "Loan Agreement").
2. I have reviewed the terms of the Loan Agreement, and have made, or have
caused to be made under my supervision, a review in reasonable detail of the
transactions and the financial condition of Borrower and Guarantors, during the
immediately preceding Fiscal Month.
3. The review described in Section 2 above did not disclose the existence
during or at the end of such Fiscal Month, and I have no knowledge of the
existence and continuance on the date hereof, of any condition or event which
constitutes a Default or an Event of Default, except as set forth on Schedule I
attached hereto. Described on Schedule I attached hereto are the exceptions, if
any, to this Section 3 listing, in detail, the nature of the condition or event,
the period during which it has existed and the action which Borrower or any
Guarantor has taken, is taking, or proposes to take with respect to such
condition or event.
4. I further certify that, based on the review described in Section 2 above,
Borrower and Guarantors have not at any time during or at the end of such Fiscal
Month, except as specifically described on Schedule II attached hereto or as
permitted by the Loan Agreement, done any of the following:
(a) Changed its respective corporate name, or transacted business under any
trade name, style, or fictitious name, other than those previously described to
you and set forth in the Financing Agreements.
1
(b) Changed the location of its chief executive office, changed its
jurisdiction of incorporation, changed its type of organization or changed the
location of or disposed of any of its properties or assets (other than pursuant
to the sale of Inventory in the ordinary course of its business or as otherwise
permitted by Section 9.7 of the Loan Agreement), or established any new asset
locations.
(c) Materially changed the terms upon which it sells goods (including sales
on consignment) or provides services, nor has any vendor or trade supplier to
Borrower or any Guarantor during or at the end of such period materially
adversely changed the terms upon which it supplies goods to Borrower or such
Guarantor.
(d) Permitted or suffered to exist any security interest in or liens on any
of its properties, whether real or personal, other than as specifically
permitted in the Financing Agreements.
(e) Received any notice of, or obtained knowledge of any of the following
not previously disclosed to Agent: (i) the occurrence of any event involving
the release, spill or discharge of any Hazardous Material in violation of
applicable Environmental Law in a material respect or (ii) any investigation,
proceeding, complaint, order, directive, claims, citation or notice with respect
to: (A) any non-compliance with or violation of any applicable Environmental Law
by Borrower or any Guarantor in any material respect or (B) the release, spill
or discharge of any Hazardous Material in violation of applicable Environmental
Law in a material respect or (C) the generation, use, storage, treatment,
transportation, manufacture, handling, production or disposal of any Hazardous
Materials in violation of applicable Environmental Laws in a material respect or
(D) any other environmental, health or safety matter, which has a material
adverse effect on Borrower or any Guarantor or its business, operations or
assets or any properties at which Borrower or such Guarantor transported, stored
or disposed of any Hazardous Materials.
(f) Become aware of, obtained knowledge of, or received notification of, any
breach or violation of any material covenant contained in any instrument or
agreement in respect of Indebtedness for money borrowed by Borrower or any
Guarantor.
5. Attached hereto as Schedule III are the calculations used in
determining, as of the end of such Fiscal Month whether Borrower and Guarantors
are in compliance with the covenants set forth in Sections 9.17, 9.22, 9.23 and
9.25 of the Loan Agreement for such Fiscal Month and setting forth the DMC
Sublimit as of the end of such Fiscal Month.
The foregoing certifications are made and delivered this day of ___________,
20__.
Very truly yours,
By:
Title:
2