EXHIBIT 4(C)
CREDIT AGREEMENT
dated as of April 27, 2000
between
LINCOLN SNACKS COMPANY
and
THE BANK OF NEW YORK
ARTICLE 1 DEFINITIONS; ACCOUNTING TERMS. 1
Section 1.1 Definitions 1
Section 1.2 Accounting Terms 10
Section 1.3 Rounding 11
Section 1.4 Exhibits and Schedules 11
Section 1.5 References to "Borrower and its Subsidiaries" 11
Section 1.6 Miscellaneous Terms 11
ARTICLE 2 THE LOANS 11
Section 2.1 The Loans 11
Section 2.2 The Note 12
Section 2.3 Procedures for Borrowing under Loans 12
Section 2.4 Maturity of Loans and Commitment Reduction 13
Section 2.5 Optional Prepayments 13
Section 2.6 Mandatory Prepayment 14
Section 2.7 Interest on the Loans 14
Section 2.8 Fees 15
Section 2.9 Payments Generally 15
Section 2.10 Capital Adequacy 15
Section 2.11 Increased Costs 16
Section 2.12 Illegality 16
Section 2.13 Payments to be Free of Deductions 17
Section 2.14 Computations 18
Section 2.15 Obligations Absolute 18
ARTICLE 3 SECURITY 18
Section 3.1 Security Documents 18
Section 3.2 Further Assurances 19
ARTICLE 4 CONDITIONS PRECEDENT 19
Section 4.1 Documentary Conditions Precedent 19
Section 4.2 Additional Conditions Precedent to Each Loan 21
Section 4.3 Deemed Representations 22
ARTICLE 5 REPRESENTATIONS AND WARRANTIES 22
Section 5.1 Incorporation Good Standing and Due Qualification 22
Section 5.2 Corporate Power and Authority: No Conflicts 22
Section 5.3 Legally Enforceable Agreements 23
Section 5.4 Litigation 23
Section 5.5 Financial Statements 23
Section 5.6 Ownership and Liens 23
Section 5.7 Taxes 24
Section 5.8 ERISA 24
Section 5.9 Subsidiaries and Ownership of Stock 24
Section 5.10 Credit Arrangements 25
Section 5.11 Operation of Business 25
Section 5.12 No Default on Outstanding Judgments or Orders 26
Section 5.13 No Defaults on Other Agreements 26
Section 5.14 Consents and Approvals 26
Section 5.15 Partnerships 26
Section 5.16 Environmental Protection 26
Section 5.17 Copyrights Patents, Trademarks, Etc 27
Section 5.18 Compliance with Laws 27
Section 5.19 Events of Default 28
Section 5.20 Use of Proceeds 28
ARTICLE 6 AFFIRMATIVE COVENANTS 28
Section 6.1 Maintenance of Existence 28
Section 6.2 Conduct of Business 28
Section 6.3 Maintenance of Properties 28
Section 6.4 Maintenance of Records 29
Section 6.5 Maintenance of Insurance 29
Section 6.6 Compliance with Laws 29
Section 6.7 Right of Inspection 29
Section 6.8 Reporting Requirements 29
Section 6.9 Certificates 32
Section 6.10 Further Assurances 33
Section 6.11 Compliance with Agreements 33
Section 6.12 Use of Proceeds 33
Section 6.13 Security 33
ARTICLE 7 NEGATIVE COVENANTS 33
Section 7.1 Debt 33
Section 7.2 Guaranties, Etc 34
Section 7.3 Liens 34
Section 7.4 Investments and Advances 35
Section 7.5 Mergers and Consolidations and
Acquisitions of Assets 35
Section 7.6 Sale of Assets 35
Section 7.7 Repayment of Subordinated Debt 35
Section 7.8 Transactions with Affiliates 35
Section 7.9 Debt to EBITDA Ratio 36
Section 7.10 EBITDA to Interest Expense Ratio 36
Section 7.11 Dividends; Distributions 36
Section 7.12 Sale of Receivables 36
Section 7.13 Capital Expenditures 36
ARTICLE 8 EVENTS OF DEFAULT 36
Section 8.1 Events of Default 36
Section 8.2 Remedies 39
ARTICLE 9 MISCELLANEOUS 39
Section 9.1 Amendments and Waivers 39
Section 9.2 Usury 39
Section 9.3 Expenses; Indemnities 40
Section 9.4 Term; Survival 41
Section 9.5 Assignment; Participations 42
Section 9.6 Notices 42
Section 9.7 Setoff 42
Section 9.8 Jurisdiction; Immunities 43
Section 9.9 Table of Contents; Headings 43
Section 9.10 Severability 43
Section 9.11 Counterparts 43
Section 9.12 Integration 43
Section 9.13 Governing Law 44
Section 9.14 Authorization of Third Parties to Deliver
Opinions, Etc 44
Section 9.15 Waivers 44
Schedule 1.1 Lending Offices
Schedule 5.4 Litigation
Schedule 5.6 Liens
Schedule 5.9 Subsidiaries
Schedule 5.10(a) Credit Arrangements
Schedule 5.14 Consents and Approvals
Schedule 5.15 Partnerships
Exhibit A Promissory Note
Exhibit B Notice of Borrowing
Exhibit C Borrowing Base Certificate
Exhibit D Officer's Certificate
Exhibit E Description of Opinion of Counsel to Borrower and
Subsidiaries
Exhibit F Subsidiary Security Agreement
Exhibit G Guaranty Agreement
CREDIT AGREEMENT dated as of April 27, 2000 between LINCOLN SNACKS
COMPANY, a Delaware corporation (the "Borrower"), and THE BANK OF NEW YORK
(the "Bank").
The Borrower desires that the Bank extend credit as provided herein,
and the Bank is prepared to extend such credit. Accordingly, the Borrower
and the Bank agree as follows:
ARTICLE 1
DEFINITIONS; ACCOUNTING TERMS.
Section 1.1 Definitions. As used in this Agreement, the following
terms have the following meanings (terms defined in the singular to have a
correlative meaning when used in the plural and vice versa):
"Acceptable Acquisitions" has the meaning given to such term in
Section 7.5.
"Affiliate" means, as to any Person, any other Person which directly
or indirectly controls, or is under common control with, or is controlled
by, such Person. As used in this definition, "control" (including, with its
correlative meanings, "controlled by" and "under common control with") shall
mean possession, directly or indirectly, of power to direct or cause the
direction of management or policies (whether through ownership of securities
or partnership or other ownership interests, by contract or otherwise),
provided that, in any event: (i) any Person which owns directly or
indirectly 20% or more of the securities having ordinary voting power for
the election of directors or other governing body of a corporation or 20% or
more of the partnership or other ownership interests of any other Person
(other than as a limited partner of such other Person) will be deemed to
control such corporation or other Person; and (ii) each director and officer
of the Borrower shall be deemed to be an Affiliate of the Borrower.
"Agreement" means this Credit Agreement, as amended or supplemented
from time to time. References to Articles, Sections, Exhibits, Schedules
and the like refer to the Articles, Sections, Exhibits, Schedules and the
like of this Agreement unless otherwise indicated.
"Alternate Base Rate" means, for any day, a rate per annum equal to
the higher of (a) the Prime Rate for such day and (b) 0.5% plus the Federal
Funds Rate for such day.
"Alternate Base Rate Loan" means any Loan which bears interest at the
Alternate Base Rate.
"Applicable Interest Rate" means (a) for any Alternate Base Rate Loan,
the Alternate Base Rate and (b) for any Eurodollar Rate Loan, the Eurodollar
Rate plus the Applicable Margin.
"Applicable Margin" means the rate per annum for each rating level
period set forth in the schedule below:
Applicable Margin
Level I Period 1.25%
Level II Period 1.50%
Level III Period 1.75%
Level IV Period 2.00%
For purposes of determining whether a Level I Period, Level II Period,
Level III Period or Level IV Period exists, the Borrower shall determine the
ratio of funded Senior Debt of the Borrower and its Subsidiaries as of the
determination date to EBITDA of the Borrower and its Subsidiaries for the
immediately preceding twelve (12) months (ending on such date) on the date
of each new Borrowing and no less frequently than each month end thereafter
and shall certify to such ratio in a certificate delivered to the Bank;
provided that, if the Borrower fails to provide the Bank with such a
certificate, the Applicable Margin shall correspond to a Level IV Period.
"Borrowing" means each borrowing consisting of a Loan from the Bank
under this Agreement.
"Borrowing Base" means at any time, the sum of (i) 75% of all Eligible
Receivables plus (ii) the lesser of (x) $2,000,000, (y) the amount
determined pursuant to clause (i) in this definition, and (z) 50% of the
"value" of the Eligible Inventory. The "value" of Eligible Inventory shall
be computed at the lower of cost (computed on a "first in, first out" basis)
or market.
"Business Day" means any day (other than a Saturday, Sunday or legal
holiday) on which commercial banks are not authorized or required or
permitted by law to close in Connecticut, except that with respect to
notices, determinations and payments with respect to Eurodollar Rate Loans,
such day shall be a "Business Day" only if it is also a day on which
dealings (including dealings in Dollar deposits) are carried out in the
London interbank Eurodollar market.
"Capital Expenditures" means, for any period, the Dollar amount of
gross expenditures (including payments in respect of Capital Lease
Obligations) made for fixed assets, real property, plant and equipment, and
all renewals, improvements and replacements thereto (but not repairs
thereof) incurred during such period, all as determined in accordance with
GAAP.
"Capital Lease" means any lease which has been or should be
capitalized on the books of the lessee in accordance with GAAP.
"Capital Lease Obligation" means the obligation of the lessee under a
Capital Lease. The amount of a Capital Lease Obligation at any date is the
amount at which the lessee's liability under the related Capital Lease would
be required to be shown on its balance sheet at such date in accordance with
GAAP.
"Closing Date" means April 27, 2000. The closing of this transaction
shall occur in Stamford, Connecticut.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
"Collateral" means any property in which the Bank has been granted a
security interest by the Borrower and the Subsidiaries.
"Commitment" means the commitment of the Bank to make Loans hereunder
as set forth in Section 2.1.
"Commitment Period" means the period from and including the Closing
Date to but not including the Termination Date or such earlier date as the
Commitment shall terminate as provided herein.
"Debt" means, with respect to any Person: (a) indebtedness of such
Person for borrowed money; (b) indebtedness for the deferred purchase price
of Property or services (except trade payables in the ordinary course of
business); (c) Unfunded Vested Liabilities of such Person (if such Person is
not the Borrower, determined in a manner analogous to that of determining
Unfunded Vested Liabilities of the Borrower); (d) the face amount of any
outstanding letters of credit issued for the account of such Person; (e)
obligations arising under acceptance facilities; (f) guaranties,
endorsements (other than for collection in the ordinary course of business)
and other contingent obligations to purchase or to provide funds for payment
of the obligations of another Person, to supply funds to invest in any
Person to cause such Person to maintain a minimum working capital or net
worth or otherwise assure the creditors of such Person against loss; (g)
obligations secured by any Lien on Property of such Person; and (h) Capital
Lease Obligations.
"Default" means any event which with the giving of notice or lapse of
time, or both, would become an Event of Default.
"Default Rate" means for any Loan a rate per annum equal at all times
to the lesser of (a) 2% per annum above the Applicable Interest Rate in
effect from time to time with respect to such Loan or (b) the highest rate
permitted by law.
"Dollars" and the sign "$" mean lawful money of the United States of
America.
"EBITDA" means, for any period, the sum of (a) net income for such
period, plus (b) Interest Expense for such period, plus (c) income tax
expense deducted in determining net income for such period, plus (d) total
depreciation expense, plus (e) total amortization expense, in each case of
the Borrower and its Subsidiaries, all of which shall be determined in
accordance with GAAP.
"Eligible Inventory" means finished goods and raw materials held by
the Borrower for sale or contracts of sale and that the Bank, in the
exercise of its sole discretion, deems to be Eligible Inventory. No
Inventory shall be Eligible Inventory unless, in the Bank's opinion, it (i)
is in good, new and saleable condition, (ii) is not obsolete or
unmerchantable, (iii) meets all standards for use and sale imposed by any
governmental agency or authority, (iv) conforms in all material respects to
the warranties, representations and covenants set forth herein, and (v) is
at all times subject to the Bank's duly perfected security interest and no
other Lien except as permitted under Section 7.3.
"Eligible Receivable" means each Receivable which arises out of a bona
fide sale of goods (not services) of the kind ordinarily sold by the
Borrower in the ordinary course of the Borrower's business, and acceptable
to the Bank in its sole discretion in all respects. A Receivable shall,
however, in no event be deemed to be eligible unless (i) the Borrower is the
owner of the Receivable free and clear of any claim, Lien or security
interest; (ii) such Receivable continues to be in full conformity with all
warranties and covenants made by the Borrower with respect thereto contained
herein or in the Security Agreement; (iii) no more than ninety (90) days
shall have elapsed from the invoice date; (iv) such Receivable does not
represent a ▇▇▇▇ and hold sale, a consignment sale, a guaranty sale, a sale
to a Subsidiary of the Borrower or any other such similar sale; (v) such
Receivable is not subject to set off, counterclaim, allowance, adjustment or
dispute and there have been no allowances or adjustments other than as shown
on the invoice; (vi) the Receivable is not an obligation of an Affiliate of
the Borrower, due from a foreign obligor, due from the United States
Government or any agency thereof unless the Bank's lien is perfected on such
Receivable, or due from a debtor believed to be bankrupt, insolvent or
generally unable to pay its debts as they become due; (vii) such Receivable
arose in the ordinary course of business; (viii) such Receivable arose from
the absolute sale of goods by the Borrower in which goods the Borrower had
the sole and complete ownership and the goods have been shipped or delivered
to the account debtor and evidenced by shipping and delivery receipts which
are in the possession of the Borrower; (ix) such Receivable is not subject
to any prior or subsequent assignment, claim, Lien or security interest
other than that in favor of the Bank; and (x) such Receivable is not from an
account debtor of the Borrower which has twenty-five percent (25%) or more
of the value of its account more than ninety (90) days past the due date.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, including any rules and regulations promulgated
thereunder.
"ERISA Affiliate" means any corporation or trade or business which is
a member of the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as the Borrower or is under common control
(within the meaning of Section 414(c) of the Code) with the Borrower.
"Eurodollar Rate" means, for the Interest Period for each Eurodollar
Rate Loan comprising part of the same Borrowing, an interest rate per annum
equal to (x) the rate at which deposits in Dollars are offered by the Bank
to prime commercial banks in the London interbank Eurodollar market at
approximately 11:00 a.m. London time two Business Days before the first day
of such Interest Period for a period equal to such Interest Period and in an
amount equal to the Borrowing, divided by (y) one (1) minus the Reserve
Requirement for each such Eurodollar Rate Loan for such Interest Period.
"Eurodollar Rate Loan" means any Loan if the Borrower elects in
accordance with Section 2.3 for a Loan to bear interest at the Eurodollar
Rate plus the Applicable Margin.
"Event of Default" has the meaning given such term in Section 8.1.
"Federal Funds Rate" means, for any day, the weighted average of the
rate on overnight Federal funds transactions with the members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day
(or if such day is not a Business Day, for the immediately preceding
Business Day) by the Federal Reserve Bank of New York, or if such rate is
not so published for any day which is a Business Day, the average of
quotations for such day on such transactions received by the Bank from three
Federal funds brokers of recognized standing selected by the Bank.
"Financing Statements" means the UCC-1 financing statements including
any fixture filings, signed by the Borrower in connection with the security
interests granted to the Bank pursuant to the Security Agreement.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time, applied on a basis
consistent with those used in the preparation of the financial statements
referred to in Section 5.5 (except for changes concurred in by the
Borrower's independent public accountants).
"Guaranty Agreement" means a Guaranty Agreement in substantially the
form of Exhibit G made by a Subsidiary in favor of the Bank.
"Interest Expense" means, for any period, the consolidated interest
expense on Senior Debt and Subordinated Debt, including the interest portion
of rental payments under Capital Leases, of the Borrower and its
Subsidiaries, as determined on a consolidated basis in accordance with GAAP.
"Interest Period" means (a) for each Eurodollar Rate Loan comprising
part of the same Borrowing, the period commencing on the date such
Eurodollar Rate Loan is made or on the last day of the immediately preceding
Interest Period, as the case may be, and ending on the numerically
corresponding day in the first, second or third calendar month thereafter,
as the Borrower may select as provided in Section 2.3; and (b) for each
Alternate Base Rate Loan comprising part of the same Borrowing, the period
commencing on the date such Alternate Base Rate Loan is made or on the last
day of the preceding Interest Period, as the case may be, and ending on the
30th day after the date of such Alternate Base Rate Loan or the last day of
the preceding Interest Period, as the case may be; provided, however, that:
(i) whenever the last day of any Interest Period would otherwise
occur on a day other than a Business Day, the last day of such
Interest Period shall be extended to occur on the next
succeeding Business Day; provided that, with respect to
Eurodollar Rate Loans, if such extension would cause the last
day of such Interest Period to occur in the next following
calendar month, the last day of such Interest Period shall occur
on the immediately preceding Business Day;
(ii) no Interest Period for any Loan shall extend beyond the
Termination Date; and
(iii) if any Interest Period begins on the last Business Day of a
calendar month or on a day for which there is no numerically
corresponding day in the calendar month during which such
Interest Period is to end, such Interest Period shall end on the
last Business Day of such calendar month.
"Inventory" means, as of the date of determination thereof, all goods,
merchandise, raw materials, supplies, goods in process, finished goods and
other tangible personal property of the Borrower held for processing, sale
or lease or furnished or to be furnished by the Borrower under contracts of
service or to be used or consumed in the Borrower's business, including,
without limitation, work in progress subject to purchase orders of the
Borrower.
"Investment" means, with respect to any Person, any investment by or
of such Person, whether by means of purchase or other acquisition of capital
stock or other Securities of any other Person or by means of loan, advance,
capital contribution or other debt or equity participation or interest, in
any other Person, including any partnership, limited liability company and
joint venture interests of such Person in any other Person.
"Lending Office" means, for each type of Loan, the lending office of
the Bank (or of an Affiliate of the Bank) designated as such for such type
of Loan on Schedule 1.1 or such other office of the Bank (or of an Affiliate
of the Bank) as the Bank may from time to time specify to the Borrower as
the office through which Loans of such type are to be made and maintained.
"Level I Period" means any period during which the ratio of funded
Senior Debt of the Borrower and its Subsidiaries as of a determination date
to EBITDA of the Borrower and its Subsidiaries for the immediately preceding
twelve (12) months (ending on such date) is less than or equal to 1.00 to
1.00.
"Level II Period" means any period during which the ratio of funded
Senior Debt of the Borrower and its Subsidiaries as of a determination date
to EBITDA of the Borrower and its Subsidiaries for the immediately preceding
twelve (12) months (ending on such date) is greater than 1.00 to 1.00 and
less than 1.50 to 1.00.
"Level III Period" means any period during which the ratio of funded
Senior Debt of the Borrower and its Subsidiaries as of a determination date
to EBITDA of the Borrower and its Subsidiaries for the immediately preceding
twelve (12) months (ending on such date) is greater than or equal to 1.50 to
1.00 and less than or equal to 2.25 to 1.00.
"Level IV Period" means any period during which the ratio of funded
Senior Debt of the Borrower and its Subsidiaries as of a determination date
to EBITDA of the Borrower and its Subsidiaries for the immediately preceding
twelve (12) months (ending on such date) is greater than 2.25 to 1.00.
"Lien" means any lien (statutory or otherwise), security interest,
mortgage, deed of trust, priority, pledge, charge, conditional sale, title
retention agreement, financing lease or other encumbrance or similar right
of others, or any agreement to give any of the foregoing.
"Loans" means each loan made by the Bank pursuant to Section 2.1.
Each Loan shall be an Alternate Base Rate Loan or Eurodollar Rate Loan, as
the Borrower may from time to time elect pursuant to Section 2.3.
"Multiemployer Plan" means a Plan defined as such in Section 3(37) of
ERISA to which contributions have been made by the Borrower or any ERISA
Affiliate and which is covered by Title IV of ERISA.
"Negative Pledge Agreement" means the Negative Pledge Agreement with
respect to the real property owned by the Borrower in Lincoln, Nebraska,
dated the date hereof, duly executed by the Borrower, as the same may be
amended from time to time.
"Note" means a promissory note of the Borrower, in the form of Exhibit
A hereto, evidencing the Loans made by the Bank hereunder.
"Notice of Borrowing" means the certificate, in the form of Exhibit B
hereto, to be delivered by the Borrower to the Bank pursuant to Section 2.3
and shall include any accompanying certifications or documents.
"Obligations" means all indebtedness, obligations and liabilities of
the Borrower and its Subsidiaries, if any, to the Bank under this Agreement,
the Note or the Security Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Person" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust,
unincorporated association, joint venture, governmental authority or other
entity of whatever nature.
"Plan" means any employee benefit or other plan established or
maintained, or to which contributions have been made, by the Borrower or any
ERISA Affiliate and which is covered by Title IV of ERISA.
"Prime Rate" means the prime commercial lending rate of the Bank as
publicly announced to be in effect from time to time.
"Prohibited Transaction" means any transaction set forth in Section
406 of ERISA or Section 4975 of the Code for which there is no applicable
statutory or regulatory exemption (including a class exemption or an
individual exemption).
"Property" means any interest of any kind in property or assets,
whether real, personal or mixed, and whether tangible or intangible.
"Receivables" means, as of the date of determination thereof, the
Borrower's accounts, accounts receivable, contract rights, general
intangibles, chattel paper, instruments, notes, drafts and acceptances,
documents, tax refunds, insurance proceeds, insurance certificates and
policies, securities, deposit accounts, checking accounts, cash, letters of
credit and the Borrower's right to receive payment thereunder and all other
debts, liabilities and obligations in whatever form owing to the Borrower.
"Regulations D, X and U" means Regulations D, X and U of the Board of
Governors of the Federal Reserve System, as amended or supplemented from
time to time.
"Regulatory Change" means any change after the date of this Agreement
in United States federal, state or foreign laws or regulations (including
Regulation D and the laws or regulations which designate any assessment rate
relating to certificates of deposit or otherwise) or the adoption or making
after such date of any orders, rulings, interpretations, directives,
guidelines or requests applying to a class of banks including the Bank, of
or under any United States federal, state, or foreign laws or regulations
(whether or not having the force of law) by any court or governmental or
monetary authority charged with the interpretation or administration
thereof.
"Reportable Event" means any of the events set forth in Section
4043(b) of ERISA as to which events the PBGC has not waived the requirement
of Section 4043 (a) of ERISA that it be notified within 30 days of the
occurrence of such event, provided that a failure to meet the minimum
funding standard of Section 412 of the Code or Section 302 of ERISA shall be
a Reportable Event regardless of any waivers given under Section 412(d) of
the Code.
"Reserve Requirement" means for any Eurodollar Rate Loans for any
Interest Period as to which interest is payable hereunder, the average
maximum rate at which reserves (including any marginal, supplemental or
emergency reserves) are required to be maintained during such period under
Regulation D by member banks of the Federal Reserve System in New York, New
York with deposits exceeding one billion Dollars against "Eurocurrency
liabilities" (as such term is used in Regulation D). Without limiting the
effect of the foregoing, the Reserve Requirement shall reflect any other
reserves required to be maintained by such member banks by reason of any
Regulatory Change against: (i) any category of liabilities which includes
deposits by references to which the Eurodollar Rate for Eurodollar Rate
Loans is to be determined as provided in the definition of "Eurodollar Rate"
in this Article 1, or (ii) any category of extensions of credit or other
assets which include Eurodollar Rate Loans.
"Securities" means any capital stock, share, voting trust certificate,
bonds, debentures, notes or other evidences of indebtedness, limited
partnership interests, or any warrant, option or other right to purchase or
acquire any of the foregoing.
"Security Agreement" means the Security Agreement with respect to the
Obligations, dated the date hereof, duly executed by the Borrower, as the
same may be amended from time to time.
"Senior Debt" means at any particular date, with respect to the
Borrower and its Subsidiaries, Debt of the Borrower and its Subsidiaries
less the face amount of all Subordinated Debt.
"Senior Officer" means the (a) chief executive officer or (b) chief
financial officer of the Person designated.
"Subordinated Debt" means all Debt of the Borrower payable to Brynwood
Partners III which has been subordinated to the Loans pursuant to the
Subordination Agreement dated as of the date hereof, between the Bank and
Brynwood Partners III.
"Subordination Agreement" means the Subordination Agreement, dated as
of the date hereof, duly executed by the Bank and Brynwood Partners III.
"Subsidiary" means with respect to any Person, any corporation,
partnership or joint venture whether now existing or hereafter organized or
acquired: (i) in the case of a corporation, of which a majority of the
securities having ordinary voting power for the election of directors (other
than securities having such power only by reason of the happening of a
contingency) are at the time owned by such Person and/or one or more
Subsidiaries of such Person or (ii) in the case of a partnership or joint
venture, in which such Person is a general partner or joint venturer or of
which a majority of the partnership or other ownership interests are at the
time owned by such Person and/or one or more of its Subsidiaries. Unless
the context otherwise requires, references in this Agreement to "Subsidiary"
or "Subsidiaries" shall be deemed to be references to a Subsidiary or
Subsidiaries of the Borrower or of a Subsidiary of the Borrower.
"Subsidiary Financing Statements" means the UCC-l financing statements
signed by each Subsidiary in connection with the security interests granted
to the Bank pursuant to a Subsidiary Security Agreement.
"Subsidiary Security Agreement" means a Subsidiary Security Agreement
in substantially the form of Exhibit F between a Subsidiary of the Borrower
and the Bank in favor of the Bank.
"Termination Date" means the third anniversary of the Closing Date.
If such date is not a Business Day, the Termination Date shall be the next
preceding Business Day.
"Unfunded Vested Liabilities" means, with respect to any Plan, the
amount (if any) by which the present value of all vested benefits under the
Plan exceeds the fair market value of all Plan assets allocable to such
benefits, as determined on the most recent valuation date of the Plan and in
accordance with the provisions of ERISA for calculating the potential
liability of the Borrower or any ERISA Affiliate to the PBGC or the Plan
under Title IV of ERISA.
"Voting Stock" means securities of any class or classes, the holders
of which are ordinarily, in the absence of contingencies, entitled to elect
corporate directors (or Persons performing similar functions).
Section 1.2 Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP, applied on a
consistent basis, and all financial data required to be delivered hereunder
shall be prepared in accordance with GAAP, applied on a consistent basis;
except as otherwise specifically prescribed herein. In the event that GAAP
changes during the term of this Agreement such that the financial covenants
contained in Article 7 would then be calculated in a different manner or
with different components (a) the Borrower and the Bank agree to enter into
good faith negotiations to amend this Agreement in such respects as are
necessary to conform those covenants as criteria for evaluating the
Borrower's financial condition to substantially the same criteria as were
effective prior to such change in GAAP and (b) the Borrower shall be deemed
to be in compliance with the financial covenants contained in such Article
during the 60 days following any such change in GAAP if and to the extent
that the Borrower would have been in compliance therewith under GAAP as in
effect immediately prior to such change; provided, however, if an amendment
shall not be agreed upon within 60 days or such longer period as shall be
agreed to by the Bank, for purposes of determining compliance with such
covenants until such amendment shall be agreed upon, such terms shall be
construed in accordance with GAAP as in effect on the Closing Date applied
on a basis consistent with the application used in preparing the financial
statements for the fiscal year ended June 30, 1999.
Section 1.3 Rounding. Any financial ratios required to be maintained
by Borrower pursuant to this Agreement shall be calculated by dividing the
appropriate component by the other component, carrying the result to one
place more than the number of places by which such ratio is expressed in
this Agreement and rounding the result up or down to the nearest number
(with a round-up if there is no nearest number) to the number of places by
which such ratio is expressed in this Agreement.
Section 1.4 Exhibits and Schedules. All Exhibits and Schedules to
this Agreement, either as originally existing or as the same may from time
to time be supplemented, modified or amended, are incorporated herein by
this reference. A matter disclosed on any Schedule shall be deemed
disclosed on all Schedules.
Section 1.5 References to "Borrower and its Subsidiaries". Any
reference herein to "Borrower and its Subsidiaries" or the like shall refer
solely to Borrower during such times, if any, as Borrower shall have no
Subsidiaries.
Section 1.6 Miscellaneous Terms. The term "or" is disjunctive; the
term "and" is conjunctive. The term "shall" is mandatory, the term "may" is
permissive. Masculine terms also apply to females; feminine terms also
apply to males. The term "including" is by way of example and not
limitation.
ARTICLE 2
THE LOANS.
Section 2.1 The Loans.
(a) Subject to the terms and conditions of this Agreement, the Bank
agrees to make revolving loans to the Borrower (hereinafter collectively
referred to as the "Loan" or "Loans") from time to time from and including
the Closing Date to but not including the earlier of the Termination Date or
the termination of the Commitment of the Bank, in an aggregate principal
amount at any one time outstanding of up to, but not exceeding, the lesser
of (x) $4,000,000 and (y) the Borrowing Base. Each Borrowing under this
Section 2.1 of (i) an Alternate Base Rate Loan shall be in the principal
amount of not less than $100,000 or any greater amount which is an integral
multiple of $25,000 and (ii) a Eurodollar Rate Loan shall be in the
principal amount of not less than $100,000 or any greater amount which is an
integral multiple of $25,000. During the Commitment Period and within the
foregoing limits, the Borrower may borrow, repay and reborrow Loans, all in
accordance with the terms and conditions of this Agreement.
(b) On the Termination Date, the Commitment of the Bank shall
terminate and, subject to the terms and conditions hereof, the aggregate
unpaid principal amount of Loans then outstanding shall be immediately due
and payable.
(c) The Bank is authorized to record and, prior to any transfer of
the Note, endorse on a schedule forming a part thereof appropriate notations
evidencing the date and the amount of each Loan, the interest rate
applicable thereto and the date and amount of each payment of principal made
by the Borrower with respect thereto; provided that failure to make any such
endorsement or notation shall not affect the Obligations of the Borrower
hereunder or under the Note. The Bank is hereby irrevocably authorized by
the Borrower to so endorse the Note and to attach to and make a part of the
Note a continuation of any such schedule as and when required. The Bank
may, at its option, record and maintain such information in its internal
records rather than on such schedule.
Section 2.2 The Note. The Loans made by the Bank to the Borrower
hereunder shall be evidenced by the Note, payable to the order of the Bank.
The Note shall evidence the obligations of the Borrower to pay the lesser of
(i) the Commitment or,
(ii) the aggregate unpaid principal amount of all Loans made by the
Bank to the Borrower then outstanding.
Section 2.3 Procedures for Borrowing under Loans.
(a) The Borrower shall give the Bank a Notice of Borrowing, in the
form of Exhibit B hereto, prior to 11:00 a.m. (New York time), on the date
of a Borrowing of a Loan which is an Alternate Base Rate Loan, and at least
three (3) Business Days before a Borrowing of a Loan which is a Eurodollar
Rate Loan, specifying:
(i) the date of such Borrowing, which shall be a Business Day,
(ii) the principal amount of such Borrowing,
(iii) whether the Loan comprising such Borrowing is to be an
Alternate Base Rate Loan or a Eurodollar Rate Loan, and
(iv) if a Eurodollar Rate Loan, the Interest Period with
respect to such Borrowing.
(b) No Notice of Borrowing shall be revocable by the Borrower.
(c) There shall be no more than four Interest Periods relating to
Eurodollar Rate Loans outstanding at any time.
(d) If the Bank makes a new Loan hereunder on a day on which the
Borrower is to repay an outstanding Loan from the Bank, the Bank shall apply
the proceeds of its new Loan to make such repayment and only an amount equal
to the excess (if any) of the amount being borrowed over the amount being
repaid shall be made available by the Bank to the Borrower.
(e) If, with respect to any Eurodollar Rate Loan, the Bank
reasonably determines that, by reason of circumstances affecting the
Eurodollar market generally that are beyond the reasonable control of the
Bank, the Eurodollar Rate cannot be determined for the applicable Interest
Period, the rate at which deposits are offered to the Bank in the relevant
market will not accurately reflect the cost to the Bank of making or
maintaining any Eurodollar Rate Loan or deposits are not being offered to
the Bank in the Eurodollar market for the applicable Interest Period, then
the Bank shall give notice thereof to the Borrower, whereupon until the Bank
notifies the Borrower that the circumstances giving rise to such suspension
no longer exist, the obligation to make any future Eurodollar Rate Loan
shall be suspended. If at the time of such notice there is then pending a
Notice of Borrowing that specifies a Eurodollar Rate Loan, such Notice of
Borrowing shall be deemed to specify an Alternate Base Rate Loan.
Section 2.4 Maturity of Loans and Commitment Reduction. Each Loan
shall mature, and the principal amount thereof shall be due and payable, on
the last day of the Interest Period applicable to such Loan, or such earlier
date as provided herein. The Commitment shall terminate on the Termination
Date. Any Loans outstanding on the Termination Date (together with accrued
interest thereon) shall be due and payable on the Termination Date (or such
earlier date as provided herein). No termination of the Commitment
hereunder shall relieve the Borrower of any of its outstanding Obligations
to the Bank hereunder or otherwise. The Borrower shall have the right, upon
prior written notice of at least five (5) Business Days to the Bank, to
terminate or, from time to time, reduce the Commitment, provided that (i)
any such reduction of the Commitment shall be accompanied by the prepayment
of the Note, together with accrued interest thereon to the date of such
prepayment and any amount due pursuant to Section 2.5, to the extent, if
any, that the aggregate unpaid principal amount thereof then outstanding
exceeds the Commitment as then reduced and (ii) any such termination of the
Commitment shall be accompanied by prepayment in full of the unpaid
principal amount of the Note together with accrued interest thereon to the
date of such prepayment and any amount due pursuant to Section 2.5. Any
such partial reduction of the Commitment shall be in an aggregate principal
amount of $500,000 or any whole multiple of $100,000 and shall reduce
permanently the Commitment then in effect hereunder.
Section 2.5 Optional Prepayments.
(a) The Borrower may, upon notice to the Bank, prepay any Alternate
Base Rate Loan, without premium or penalty, in whole at any time or from
time to time in part in minimum amounts of at least $100,000 and in integral
multiples of $25,000 in excess thereof, by paying the principal amount being
prepaid together with accrued interest thereon to the date of prepayment and
any other payments required hereunder, including but not limited to any such
payments pursuant to Sections 2.10 and 2.11.
(b) The Borrower may, upon at least three (3) Business Days' notice
to the Bank, prepay any Eurodollar Rate Loan, in whole at any time or from
time to time in part in minimum amounts of at least $100,000 and in integral
multiples of $25,000 in excess thereof, by paying the principal amount being
prepaid together with (i) accrued interest thereon to the date of prepayment
and (ii) if such prepayment occurs on a date that is not the last day of the
Interest Period applicable to such Eurodollar Rate Loan, any amounts
required to compensate the Bank for any reasonable losses, costs or expenses
(excluding any losses of anticipated profit), as certified by the Bank (such
certification setting forth the basis for such compensation), which the Bank
may reasonably incur as a result of such prepayment, including without
limitation, any loss, cost or expense incurred by reason of funds
liquidation or reemployment of deposits or other funds acquired by the Bank
to fund or maintain such Eurodollar Rate Loan and any administrative costs,
expenses or charges of the Bank as a result thereof.
Section 2.6 Mandatory Prepayment. If at any time the aggregate
principal amount of the Loans exceeds the Borrowing Base, the Borrower shall
notify the Bank of that fact and, unless otherwise agreed to in writing by
the Bank, immediately pay to the Bank the amount equal to said excess,
accompanied by the payment of accrued interest on the amount of such payment
to the date thereof.
Section 2.7 Interest on the Loans.
(a) Each Alternate Base Rate Loan shall bear interest on the
outstanding principal amount thereof, for each day from the date such
Alternate Base Rate Loan is made to but excluding the date on which it
becomes due, at a rate per annum equal to the Alternate Base Rate for such
day. Interest shall be payable monthly in arrears from the date of the
Borrowing and on the Termination Date. Such interest shall accrue from and
including the date of such Borrowing to but excluding the date of any
repayment thereof and shall be computed for each payment date on the basis
of a fraction, the numerator of which is the actual number of days elapsed
from the date of Borrowing, or the last day to which interest thereon has
been paid, and the denominator of which is three hundred sixty (360).
Overdue principal of and, to the extent permitted by law, overdue interest
on the Alternate Base Rate Loans shall bear interest for each day until paid
at a rate per annum equal to the Default Rate.
(b) Each Eurodollar Rate Loan shall bear interest on the unpaid
principal amount thereof, for each day from the date such Eurodollar Rate
Loan is made to but excluding the date on which it becomes due, at a rate
per annum equal to the Eurodollar Rate for the relevant Interest Period,
plus the Applicable Margin. Interest shall be payable on the last day of
the Interest Period applicable thereto and on the Termination Date. Such
interest shall accrue from and including the date of such Borrowing to but
excluding the date of any repayment thereof and shall be computed for each
payment date on the basis of a fraction, the numerator of which is the
actual number of days elapsed from the date of Borrowing, or the last day to
which interest thereon has been paid, and the denominator of which is three
hundred sixty (360). Overdue principal of and, to the extent permitted by
law, overdue interest on the Eurodollar Rate Loans shall bear interest for
each day until paid at a rate per annum equal to the Default Rate.
Section 2.8 Fees.
(a) The Borrower shall pay to the Bank a facility fee of $20,000 on
the Closing Date.
(b) The Borrower shall pay to the Bank a stand-by commitment fee for
the Commitment Period, payable in arrears at a rate per annum of 0.25% on
the average daily unused portion of the Bank's Commitment to make Loans.
Accrued stand-by commitment fees shall be payable monthly in arrears on the
first Business Day of each month beginning May 1, 2000 and shall be computed
on the basis of a 360-day year for the actual number of days elapsed.
(c) The fees required by paragraphs (a) and (b) of this Section 2.8
shall not be refundable.
Section 2.9 Payments Generally. All payments under this Agreement
shall be made in Dollars in immediately available funds not later than 1:00
p.m. New York time) on the due date (each such payment made after such time
on such due date to be deemed to have been made on the next succeeding
Business Day) to the Bank at its address set forth on the signature pages
hereof or at such other address as it may hereafter designate by notice to
the Borrower for the account of the Lending Office of the Bank specified by
the Bank on Schedule 1.1 hereto. The Borrower shall, at the time of making
each payment under this Agreement, specify to the Bank the principal or
other amount payable by the Borrower under this Agreement to which such
payment is to be applied (and in the event that it fails to so specify, or
if a Default or Event of Default has occurred and is continuing, the Bank
may apply such payment as it may elect in its sole discretion). If the due
date of any payment under this Agreement would otherwise fall on a day which
is not a Business Day, such date shall be extended to the next succeeding
Business Day and such extension of time shall in such case be included in
the computation of such payment; provided that, if such extension would
cause the last day of an Interest Period to occur in the next following
calendar month, the last day of such Interest Period shall occur on the
immediately preceding Business Day.
Section 2.10 Capital Adequacy. If after the date hereof, either
(i) the introduction of, or any change in, or in the interpretation or
enforcement of, any law, regulation, order, ruling, interpretation,
directive, guideline or request or (ii) the compliance with any order,
ruling, interpretation, directive, guideline or request from any central
bank or other governmental authority (whether or not having the force of
law) issued, announced, published, promulgated or made after the date hereof
(including, in any event, any law, regulation, order, ruling,
interpretation, directive, guideline or request contemplated by the report
dated July, 1988 entitled "International Convergence of Capital Measurement
and Capital Standards" issued by the Basle Committee on Banking Regulation
and Supervisory Practices) affects or would affect the amount of capital
required or expected to be maintained by the Bank or any corporation
controlling the Bank and the Bank reasonably determines that the amount of
such required or expected capital is increased by or based upon the
existence of the Bank's Loans hereunder or the Bank's commitment to lend
hereunder, then, upon demand by the Bank, the Borrower shall be liable for,
and shall pay to the Bank, within thirty (30) days following demand from
time to time by the Bank, additional amounts sufficient to compensate the
Bank in the light of such circumstances for the effects of such law,
regulation, order, ruling, interpretation, directive, guideline or request,
to the extent that the Bank reasonably determines such increase in capital
to be allocable to the existence of the Bank's Loans hereunder or of the
Bank's commitment to lend hereunder. A certificate substantiating such
amounts and identifying the event giving rise thereto, submitted to the
Borrower by the Bank, shall be conclusive, absent manifest error. The Bank
shall promptly notify the Borrower of any event of which it has knowledge
occurring after the date of this Agreement which will entitle the Bank to
compensation pursuant to this Section, and the Bank shall take any
reasonable action available to it consistent with its internal policy and
legal and regulatory restrictions (including the designation of a different
Lending Office, if any) that will avoid the need for, or reduce the amount
of, such compensation and will not in the reasonable judgment of the Bank be
otherwise disadvantageous to the Bank.
Section 2.11 Increased Costs. If after the date hereof, due to
either (i) the introduction of, or any change in, or in the interpretation
or enforcement of, any law, regulation, order, ruling, directive, guideline
or request, or (ii) the compliance with any order, ruling, directive,
guideline or request from any central bank or other governmental authority
(whether or not having the force of law) issued, announced, published,
promulgated or made after the date hereof, there shall be any increase in
the cost to the Bank of agreeing to make or making, funding or maintaining
Eurodollar Rate Loans, then the Borrower shall be liable for, and shall from
time to time, within thirty (30) days following a demand by the Bank, pay to
the Bank for the account of the Bank additional amounts sufficient to
compensate the Bank for such increased cost; provided, however, that before
making any such demand, the Bank agrees to use reasonable efforts
(consistent with its internal policy and legal and regulatory restrictions)
to designate a different Lending Office if the making of such a designation
would allow the Bank or its Lending Office to continue to perform its
obligations to make Eurodollar Rate Loans or to continue to fund or maintain
Eurodollar Rate Loans and would not, in the reasonable judgment of the Bank,
be otherwise disadvantageous to the Bank. A certificate substantiating the
amount of such increased cost, submitted to the Borrower by the Bank, shall
be conclusive, absent manifest error.
Section 2.12 Illegality. Notwithstanding any other provision of
this Agreement, if after the date hereof the introduction of, or any change
in or in the interpretation or enforcement of, any law, regulation, order,
ruling, directive, guideline or request shall make it unlawful, or any
central bank or other governmental authority shall assert that it is
unlawful, for the Bank or its Lending Office to perform its obligations
hereunder to make Eurodollar Rate Loans or to continue to fund or maintain
Eurodollar Rate Loans hereunder, then, on notice thereof by the Bank to the
Borrower, (i) the obligation of the Bank to make Eurodollar Rate Loans shall
terminate (and the Bank shall make all of its Loans as Alternate Base Rate
Loans notwithstanding any election by the Borrower to have the Bank make
Eurodollar Rate Loans) and (ii) at the end of the current Interest Period
for such Eurodollar Rate Loans, otherwise five (5) Business Days after such
notice and demand, all Eurodollar Rate Loans of the Bank then outstanding
will automatically convert into Alternate Base Rate Loans; provided, however
that before making any such demand, the Bank agrees to use reasonable
efforts (consistent with its internal policy and legal and regulatory
restrictions) to designate a different Lending Office if the making of such
a designation would allow the Bank or its Lending Office to continue to
perform its obligations to make or maintain Eurodollar Rate Loans and would
not, in the judgment of the Bank, be otherwise disadvantageous to the Bank.
A certificate describing such introduction or change in or in the
interpretation or enforcement of such law, regulation, order, ruling,
directive, guideline or request, submitted to the Borrower by the Bank,
shall be conclusive evidence of such introduction, change, interpretation or
enforcement, absent manifest error.
Section 2.13 Payments to be Free of Deductions. All payments by
the Borrower under this Agreement shall be made without setoff or
counterclaim and free and clear of, and without deduction for, any taxes
(other than any taxes imposed on or measured by the gross income or profits
of the Bank), levies, imposts, duties, charges, fees, deductions,
withholdings, compulsory loans, restrictions or conditions of any nature now
or hereafter imposed or levied by any country or any political subdivision
thereof or taxing or other authority therein unless the Borrower is
compelled by law to make such deduction or withholding. If any such
obligation is imposed upon the Borrower with respect to any amount payable
by it hereunder, it will pay to the Bank, on the date on which such amount
becomes due and payable hereunder and in Dollars, such additional amount as
shall be necessary to enable the Bank to receive the same net amount which
it would have received on such due date had no such obligation been imposed
upon the Borrower. If the Bank is at any time, or any permitted assignee of
the Bank hereunder (an "Assignee"), is organized under the laws of any
jurisdiction other than the United States or any state or other political
subdivision thereof, the Bank or the Assignee shall deliver to the Borrower
on the date it becomes a party to this Agreement, and at such other times as
may be necessary in the determination of the Borrower in its reasonable
discretion, such certificates, documents or other evidence, properly
completed and duly executed by the Bank or the Assignee (including, without
limitation, Internal Revenue Service Form 1001 or Form 4224 or any other
certificate or statement of exemption required by Treasury Regulations
Section 1.1441-4(a) or Section 1.1441-6(c) or any successor thereto) to
establish that the Bank or the Assignee is not subject to deduction or
withholding of United States Federal Income Tax under Section 1441 or 1442
of the Internal Revenue Code or otherwise (or under any comparable
provisions of any successor statute) with respect to any payments to the
Bank or the Assignee of principal, interest, fees or other amounts payable
hereunder. Borrower shall not be required to pay any additional amount to
the Bank or any Assignee under this Section 2.13 if the Bank or such
Assignee shall have failed to satisfy the requirements of the immediately
preceding sentence; provided that if the Bank or any Assignee shall have
satisfied such requirements on the date it became a party to this Agreement,
nothing in this Section 2.13 shall relieve Borrower of its obligation to pay
any additional amounts pursuant to this Section 2.13 in the event that, as a
result of any change in applicable law, the Bank or such Assignee is no
longer properly entitled to deliver certificates, documents or other
evidence at a subsequent date establishing the fact that the Bank or the
Assignee is not subject to withholding as described in the immediately
preceding sentence.
Section 2.14 Computations. All computations of interest and like
payments hereunder on the Loans shall, in the absence of clearly
demonstrable error, be considered correct and binding on the Borrower and
the Bank, unless within forty-five (45) days after receipt of any notice by
the Bank of such outstanding amount, the Borrower notifies the Bank to the
contrary.
Section 2.15 Obligations Absolute. The Obligations of the
Borrower to make payments under this Agreement shall be unconditional and
irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances, and irrespective of, the following
circumstances:
(a) any lack of validity or enforceability of all or any portion of
this Agreement or any other agreement or any instrument relating hereto;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations of the Borrower;
(c) the existence of any claim, setoff, defense or other right that
the Borrower may have; or
(d) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing, including without limitation, any other
circumstance that might otherwise constitute a defense available to, or a
discharge of, the Borrower.
ARTICLE 3
SECURITY.
Section 3.1 Security Documents. In order to secure payment when due
of the principal and interest under the Loans and the other Obligations
under this Agreement, the Borrower agrees to deliver, or cause to be
delivered, to the Bank on the Closing Date the following:
(a) the Security Agreement and any additional security agreements;
(b) the Financing Statements;
(c) the Guaranty Agreement;
(d) the Subsidiary Security Agreement; and
(e) the Subsidiary Financing Statements.
Section 3.2 Further Assurances. At any time following the delivery of
the Security Agreement to the Bank, at the request of the Bank, the Borrower
will execute any certificate, instrument, statement or document and will
procure any such certificate, instrument, statement or document (and pay all
connected costs) which the Bank reasonably deems necessary to preserve or
perfect the security interests of the Bank contemplated hereby or thereby.
ARTICLE 4
CONDITIONS PRECEDENT.
Section 4.1 Documentary Conditions Precedent. The commitment of the
Bank to make the Loans under this Agreement is subject to the condition
precedent that the Borrower shall have delivered the following, in form and
substance satisfactory to the Bank:
(a) the Note, for the account of the Bank duly executed by the
Borrower;
(b) the Negative Pledge Agreement;
(c) a certificate of the Secretary or Assistant Secretary of the
Borrower, dated the Closing Date, attesting on behalf of the Borrower to all
corporate action taken by the Borrower, including resolutions of its Board
of Directors authorizing the execution, delivery and performance of this
Agreement, the Note, the Security Agreement, the Negative Pledge Agreement
and each other document to be delivered pursuant to this Agreement, and
attesting to the names and true signatures of the officers of the Borrower
authorized to sign this Agreement, the Note, the Security Agreement and the
other documents to be delivered by the Borrower under this Agreement;
(d) a certificate of the Secretary or Assistant Secretary of each
Subsidiary, dated the Closing Date, attesting on behalf of such Subsidiary
to all corporate action taken by such Subsidiary, including resolutions of
its Board of Directors authorizing the execution, delivery and performance
of the Guaranty Agreement, the Subsidiary Security Agreement, the Subsidiary
Financing Statements and each other document to be delivered pursuant to
this Agreement, and attesting to the names and true signatures of the
officers of such Subsidiary authorized to sign the Guaranty Agreement, the
Subsidiary Security Agreement, the Subsidiary Financing Statements and the
other documents to be delivered by the Borrower under this Agreement
(e) a certificate of a Senior Officer of the Borrower, dated the
Closing Date, certifying on behalf of the Borrower that (i) the
representations and warranties in Article 5 are true, complete and correct
in all material respects on such date as though made on and as of such date,
(ii) no event has occurred and is continuing which constitutes a Default or
Event of Default, (iii) the Borrower has performed and complied with all
agreements and conditions contained in this Agreement which are required to
be performed or complied with by the Borrower at or before the Closing Date,
and (iv) there has been no material adverse change in the financial
condition, operations, Properties, business, or as far as the Borrower can
reasonably foresee, prospects of the Borrower and its Subsidiaries, if any,
taken as a whole, since June 30, 1999;
(f) copies of (i) pro forma financial statements for the Borrower as
of the end of the most recently ended fiscal quarter of the Borrower or more
recently and (ii) Borrower's most recent accounts receivable aging report,
each in a form reasonably satisfactory to the Bank and providing sufficient
information to establish that the Borrower will be in compliance with the
covenants set forth in this Agreement, after giving effect to the
transactions contemplated herein;
(g) a certificate of good standing for the Borrower, and each
Subsidiary, as of a recent date by the Secretary of State of its
jurisdiction of incorporation and each other state, if any, where the
Borrower or such Subsidiary, by the nature of its business, is required to
qualify to do business, except where the failure to be so qualified would
not have a material adverse effect on the financial condition, operations,
Properties and business of the Borrower or such Subsidiary or, as far as
such Borrower can reasonably foresee, prospects of the Borrower and its
Subsidiaries, taken as a whole;
(h) a certificate or similar instrument from the appropriate tax
authority in the State of Connecticut and each other state, if any, where
the Borrower and each Subsidiary, by the nature of its business, is required
to qualify to do business, except where the failure to be so qualified would
not have a material adverse effect on the financial condition, operations,
Properties and business of the Borrower or such Subsidiary or, as far as the
Borrower can reasonably foresee, prospects of the Borrower and its
Subsidiaries, taken as a whole, as to the payment by the Borrower and such
Subsidiary of all taxes owed;
(i) a favorable opinion of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel to the
Borrower and each Subsidiary, dated the Closing Date, in substantially the
form set forth in Exhibit E hereto;
(j) evidence that each consent, license, approval and notice,
required in connection with the execution, delivery, performance, validity
and enforceability of this Agreement, the Security Agreement, the Negative
Pledge Agreement and each other document and instrument required to be
delivered in connection herewith, shall have been received or given and such
consents, licenses, approvals and notices shall be in full force and effect;
(k) evidence that all of the outstanding Debt of the Borrower, as
set forth in Schedule 5.10, has been fully paid and satisfied, or in the
case of indebtedness to Brynwood Partners III, such indebtedness shall be
subordinated to the Bank and extended to a period after the expiration of
the Commitment Period as more particularly set forth in the Subordination
Agreement;
(l) the Subordination Agreement;
(m) all corporate and legal proceedings and all instruments and
agreements in connection with the transactions contemplated by this
Agreement shall be satisfactory in form and substance to the Bank and the
Bank shall have received any and all other information and documents with
respect to the Borrower which it may reasonably request;
(n) payment to Day, ▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, special counsel to the Bank,
of its legal fees and disbursements;
(o) most currently available financial statements for each
Subsidiary;
(p) an audit of the Collateral (as such term is set forth in the
Security Agreement and the Subsidiary Security Agreement) in form and
substance satisfactory to the Bank and its special counsel; and
(q) a Landlord Waiver and Consent, in form and substance
satisfactory to the Bank, duly executed and delivered by the lessor of the
property located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and more
particularly described in that certain lease dated October 10, 1996 by and
between ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and the Borrower, as amended.
Section 4.2 Additional Conditions Precedent to Each Loan. The
obligation of the Bank to make the Loans pursuant to a Borrowing (including
the initial Borrowing), unless waived by the Bank, shall be subject to the
further conditions precedent that on the date of such Loan:
(a) the representations and warranties contained in Article 5 of
this Agreement are true and correct in all material respects on and as of
the date of such Loan as though made on and as of such date (or, if such
representation or warranty is expressly stated to have been made as of a
specific date, as of such specific date);
(b) the Borrower has performed and complied with and is in
compliance with all agreements and conditions contained in this Agreement
which are required to be performed or complied with by the Borrower;
(c) there does not exist any Default or Event of Default under this
Agreement;
(d) there has been no material adverse change in the financial
condition, operations, Properties, business or prospects of the Borrower and
its Subsidiaries, if any, taken as a whole, since the date of the last
Borrowing under this Agreement; and
(e) the Bank shall have received (i) a Notice of Borrowing in the
form of Exhibit B, detailing the computation of the ratio of funded Senior
Debt of the Borrower and its Subsidiaries as of such date to EBITDA of the
Borrower and its Subsidiaries for the immediately preceding twelve (12)
months and (ii) such approvals, opinions or documents as the Bank may
reasonably request.
Section 4.3 Deemed Representations. Each Notice of Borrowing
hereunder and acceptance by the Borrower of the proceeds of such Borrowing
shall constitute a representation and warranty that the statements contained
in Section 4.2(a) are true and correct both on the date of such Notice of
Borrowing and, unless the Borrower otherwise notifies the Bank prior to such
Borrowing, as of the date of such Borrowing.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES.
The Borrower hereby represents and warrants the following:
Section 5.1 Incorporation Good Standing and Due Qualification. The
Borrower is duly incorporated, validly existing and in good standing under
the laws of the State of Delaware, has the power and authority to own its
assets and to transact the business in which it is now engaged, and is duly
qualified as a foreign corporation and in good standing under the laws of
each other jurisdiction in which such qualification is required, except
where the failure to be so qualified would not have a material adverse
effect on the financial condition, operations, Properties, business or, as
far as the Borrower can reasonably foresee, prospects of the Borrower and
its Subsidiaries, taken as a whole. The Borrower has all requisite power
and authority to execute and deliver and to perform all of its obligations
under this Agreement, the Note, the Security Agreement and the other
writings contemplated hereby.
Section 5.2 Corporate Power and Authority: No Conflicts. The
execution, delivery and performance by the Borrower of this Agreement, the
Note and the Security Agreement have been duly authorized by all necessary
corporate action and do not and will not (a) require any consent or approval
of its shareholders; (b) violate any provisions of its articles of
incorporation or by-laws; (c) violate any provision of, or require any
filing, registration, consent or approval under, any law, rule, regulation
(including without limitation, Regulation U and X), order, writ, judgment,
injunction, decree, determination or award presently in effect having
applicability to and binding upon the Borrower or any Subsidiary; (d) result
in a breach of or constitute a default or require any consent under any
indenture, mortgage, or loan or credit agreement or any other material
agreement, lease or instrument to which the Borrower or any Subsidiary is a
party or by which it or its Properties may be bound; or (e) result in, or
require, the creation or imposition of any Lien upon or with respect to any
of the Properties now owned or hereafter acquired by the Borrower, except as
created by the Security Agreement.
Section 5.3 Legally Enforceable Agreements. This Agreement, the Note
and the Security Agreement constitute the legal, valid and binding
obligations of the Borrower enforceable against the Borrower in accordance
with their respective terms, except to the extent that such enforcement may
be limited by applicable bankruptcy, insolvency and other similar laws
affecting creditors' rights generally and by general principles of equity.
Section 5.4 Litigation. Except as disclosed on Schedule 5.4, there
are no actions, suits or proceedings or investigations pending or, as far as
the Borrower can reasonably foresee, threatened against or affecting the
Borrower or any Subsidiary, or any Property of any of them before any court,
governmental agency or arbitrator, which if determined adversely to the
Borrower or any Subsidiary would in any one case or in the aggregate,
materially adversely affect the financial condition, operations, Properties,
business or, as far as the Borrower can reasonably foresee, prospects of the
Borrower and its Subsidiaries, taken as a whole, or the ability of the
Borrower to perform its obligations under this Agreement, the Note or the
Security Agreement.
Section 5.5 Financial Statements. The balance sheets of the Borrower
and its Subsidiaries as of June 30, 1998 and June 30, 1999 and the related
consolidated statements of income, shareholders' equity, and cash flows of
the Borrower for the fiscal years then ended, and the accompanying
footnotes, together with the unaudited interim consolidated balance sheet of
the Borrower as of December 31, 1999, and the related consolidated
statements of income, stockholders' equity and cash flows for the six-month
period then ended, copies of which have been furnished to the Bank, fairly
present the financial condition of the Borrower and any Subsidiaries, taken
as a whole, as at such dates and the results of the operations of the
Borrower and any Subsidiaries, taken as a whole, for the periods covered by
such statements, all in accordance with GAAP consistently applied (subject
to year-end adjustments in the case of the interim financial statements).
There are no liabilities of the Borrower or any Subsidiary, fixed or
contingent, which are material but are not reflected in the financial
statements or in the notes thereto, other than liabilities arising in the
ordinary course of business since June 30, 1999 and other than this
Agreement and the Note. No written information, exhibit or report furnished
by the Borrower to the Bank in connection with the negotiation of this
Agreement contained any material misstatement of fact or omitted to state
any fact necessary to make the statements contained therein not materially
misleading as of their respective dates. Since June 30, 1999, no event or
circumstance has occurred that would materially adversely affect the
financial condition, operations, Properties, business or, as far as the
Borrower can reasonably foresee, prospects of the Borrower and its
Subsidiaries, taken as a whole, or the ability of the Borrower to perform
its obligations under this Agreement, the Note or the Security Agreement.
Section 5.6 Ownership and Liens. Each of the Borrower and its
Subsidiaries has good and valid title to, or valid leasehold interests in,
its material Properties and assets, real and personal, including the
material Properties and assets, and leasehold interests reflected in the
financial statements referred to in Section 5.5 (other than any Properties
or assets disposed of in the ordinary course of business), and none of the
material Properties and assets owned by the Borrower or its Subsidiaries,
and none of its leasehold interests is subject to any Lien, except as
disclosed in such financial statements or in Schedule 5.6, or as may be
permitted hereunder.
Section 5.7 Taxes. Each of the Borrower and its Subsidiaries has
filed all federal and state tax returns and all other material local tax
returns required to be filed, has paid all due and payable taxes,
assessments and governmental charges and levies, including interest and
penalties, imposed upon it or upon its Properties, and has made adequate
provision for the payment of such taxes, assessments and other charges
accruing but not yet due and payable, except with respect to taxes which are
being contested in good faith by the Borrower or its Subsidiaries and for
which the Borrower or its Subsidiaries has established and maintains
adequate reserves for payment. To the best knowledge of Borrower, there is
no tax assessment contemplated or proposed by any governmental agency
against Borrower or any of its Subsidiaries that would materially adversely
affect the financial condition, operations, Properties, business or, as far
as the Borrower can reasonably foresee, prospects of the Borrower and its
Subsidiaries, taken as a whole, or the ability of the Borrower to perform
its obligations under this Agreement, the Note, or the Security Agreement,
other than, as of each date subsequent to the Closing Date, such
contemplated or proposed tax assessments with respect to which (i) Borrower
has promptly notified Bank in writing of its knowledge and (ii) Borrower or
the appropriate Subsidiary of Borrower has in good faith commenced, and
thereafter diligently pursued, appropriate proceedings in opposition to such
assessment.
Section 5.8 ERISA. Each of the Borrower and its Subsidiaries is in
compliance in all material respects with all applicable provisions of ERISA
with respect to any Plan. Within the three-year period prior to the date
hereof, neither a Reportable Event nor a Prohibited Transaction has occurred
with respect to any Plan; no notice of intent to terminate a Plan has been
filed nor has any Plan been terminated; no circumstance exists which
constitutes grounds under Section 4042 of ERISA entitling the PBGC to
institute proceedings to terminate, or appoint a trustee to administer, a
Plan, nor has the PBGC instituted any such proceedings; neither the Borrower
nor any ERISA Affiliate has completely or partially withdrawn under Sections
4201 or 4204 of ERISA from a Multiemployer Plan; each of the Borrower and
its ERISA Affiliates has met its minimum funding requirements under ERISA
with respect to all of its Plans and there are no Unfunded Vested
Liabilities and neither the Borrower nor any ERISA Affiliate has incurred
any material liability to the PBGC under ERISA other than for premium
payments incurred in the normal course of operating the Plans.
Section 5.9 Subsidiaries and Ownership of Stock.
(a) Schedule 5.9 correctly sets forth the names of all Subsidiaries
of Borrower. All of the outstanding shares of capital stock, or all of the
units of equity interest, as the case may be, of each Subsidiary are owned
of record and beneficially by Borrower or a Subsidiary of the Borrower, as
disclosed on said Schedule; there are no outstanding options, warrants or
other rights to purchase capital stock of any such Subsidiary; and all such
shares or equity interests so owned are duly authorized, validly issued,
fully paid, non-assessable, and were issued in compliance with all
applicable state and federal securities and other laws, and are free and
clear of all Liens, except as may be permitted hereunder.
(b) Each Subsidiary of the Borrower is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation, has the power and authority to own its assets
and to transact the business in which it is now engaged, and is duly
qualified as a foreign corporation and in good standing under the laws of
each other jurisdiction in which such qualification is required, except
where the failure to be so qualified would not materially adversely affect
the financial condition, operations, Properties, business or, as far as the
Borrower can reasonably foresee, prospects of the Borrower and its
Subsidiaries, taken as a whole, or the ability of the Subsidiary to perform
its obligations under the Guaranty Agreement or the Subsidiary Security
Agreement.
(c) Each Subsidiary of Borrower is in compliance with all laws and
other requirements applicable to its business and has obtained all
authorizations, consents, approvals, orders, licenses, and permits from, and
each Subsidiary has accomplished all filings, registrations, and
qualifications with, or obtained exemptions from any of the foregoing from,
any governmental or public agency that are necessary for the transaction of
its business, except where the failure to be in such compliance, obtain such
authorizations, consents, approvals, orders, licenses, and permits,
accomplish such filings, registrations, and qualifications, or obtain such
exemptions, would not materially adversely affect the financial condition,
operations, Properties, business or, as far as the Borrower can reasonably
foresee, prospects of the Borrower and its Subsidiaries, taken as a whole,
or the ability of the Subsidiary to perform its obligations under the
Guaranty Agreement or the Subsidiary Security Agreement.
Section 5.10 Credit Arrangements. Schedule 5.10.(a) is a complete
and correct list of all credit agreements, indentures, guaranties, Capital
Leases, mortgages, and other instruments, agreements and arrangements
presently in effect providing for or relating to extensions of credit
(including agreements and arrangements for the issuance of letters of credit
or for acceptance financing) in respect of which the Borrower or any of its
Subsidiaries is in any manner directly or contingently obligated, other than
trade payables in the ordinary course of business; and the maximum principal
or face amounts of the credit in question, which are outstanding and which
can be outstanding, are therein set forth and are correctly stated as of the
date hereof, and all Liens given or agreed to be given as security therefor
are therein set forth and are correctly described or indicated in such
Schedule.
Section 5.11 Operation of Business. Each of the Borrower and its
Subsidiaries possesses all licenses, permits and franchises, or rights
thereto, necessary to conduct its business as now conducted and as presently
proposed to be conducted, the absence of which would have a material adverse
effect on the financial condition, operations, Properties or business of the
Borrower and its Subsidiaries, taken as a whole, and neither the Borrower
nor any of its Subsidiaries is in violation in any material respect of any
valid rights of others with respect to any of the foregoing.
Section 5.12 No Default on Outstanding Judgments or Orders. Each of
the Borrower and its Subsidiaries has satisfied all material judgments and
neither the Borrower nor any Subsidiary is in default with respect to any
judgment, writ, injunction, decree, rule or regulation of any court,
arbitrator or federal, state, municipal or other governmental authority,
commission, board, bureau, agency or instrumentality, domestic or foreign,
which would, in any one case or in the aggregate, materially adversely
affect the financial condition, operations, Properties, business or, as far
as the Borrower can reasonably foresee, prospects of the Borrower and its
Subsidiaries, taken as a whole, or the ability of the Borrower to perform
its obligations under this Agreement, the Note or the Security Agreement.
Section 5.13 No Defaults on Other Agreements. Neither the Borrower
nor any of its Subsidiaries is a party to any indenture, mortgage or loan or
credit agreement or any lease or other agreement or instrument or subject to
any charter or corporate restriction which would have a material adverse
effect on the business, Properties, assets, operations, financial condition
or, as far as the Borrower can reasonably foresee, prospects of the Borrower
and its Subsidiaries, taken as a whole, or the ability of the Borrower to
carry out its obligations under this Agreement, the Note or the Security
Agreement. Neither the Borrower nor any of its Subsidiaries is in default
in any material respect in the performance, observance or fulfillment of any
of the obligations, covenants or conditions contained in any agreement or
instrument material to its business to which it is a party.
Section 5.14 Consents and Approvals. No authorization, consent,
approval, order, license or permit from, or filing, registration or
qualification with, or exemption by, any governmental or public body or
authority, or any subdivision thereof, or any other Person, is required to
authorize, or is required in connection with the execution, delivery and
performance by the Borrower of, or the legality, validity, binding effect or
enforceability of, this Agreement, the Note or the Security Agreement,
except the consents, approvals or other similar actions listed on Schedule
5.14 attached hereto which have been duly and properly obtained and are in
full force and effect.
Section 5.15 Partnerships. Except as set forth in Schedule 5.15,
neither the Borrower nor any of its Subsidiaries is a partner in any
partnership.
Section 5.16 Environmental Protection. Each of Borrower and its
Subsidiaries has obtained all material permits, licenses and other
authorizations which are required under all environmental laws, including
laws relating to emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals or industrial, toxic or hazardous
substances or wastes into the environment (including without limitation,
ambient air, surface water, ground water, or land), or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of pollutants, contaminants, chemicals, or
industrial, toxic or hazardous substances or wastes, except to the extent
failure to have any such permit, license or authorization would not
reasonably be expected to have a material adverse effect on the business,
financial condition, operations, Properties or, as far as the Borrower can
reasonably foresee, prospects of the Borrower and its Subsidiaries, taken as
a whole. Each of the Borrower and its Subsidiaries is in compliance with
all terms and conditions of the required permits, licenses and
authorizations, and is also in compliance with all other limitations,
restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in the environmental laws or
contained in any regulation, code, plan, order, decree, judgment,
injunction, notice or demand letter issued, entered, promulgated or approved
thereunder, except to the extent failure to comply would not reasonably be
expected to have a material adverse effect on the business, financial
condition, operations, Properties or, as far as the Borrower can reasonably
foresee, prospects of the Borrower and its Subsidiaries, taken as a whole,
or the ability of the Borrower to carry out its obligations under this
Agreement, the Note or the Security Agreement. None of the Properties of
the Borrower or its Subsidiaries, either owned or leased, have been included
or, as far as the Borrower can reasonably foresee, proposed fo inclusion on
the National Priorities List adopted pursuant to the Comprehensive
Environmental Response Compensation and Liability Act, as amended, or on any
similar list or inventory of sites requiring response or cleanup actions
adopted by any other federal, state or local agency.
Section 5.17 Copyrights Patents, Trademarks, Etc. Each of the
Borrower and its Subsidiaries is duly licensed or otherwise entitled to use
all patents, trademarks, service marks, trade names, and copyrighted
materials which are used in the operation of its business as presently
conducted, except where the failure to be so licensed or entitled would not
have a materially adverse effect on the financial condition, operations,
Properties, business or, as far as the Borrower can reasonably foresee,
prospects of the Borrower and its Subsidiaries, taken as a whole. No claim
is pending or, as far as the Borrower can reasonably foresee, threatened
against the Borrower or any of its Subsidiaries contesting the use of any
such patents, trademarks, service marks, trade names or copyrighted
materials, nor does the Borrower know of any valid basis for any such
claims, other than claims which, if adversely determined, would not have a
material adverse effect on the financial condition, operations, Properties,
business or, as far as the Borrower can reasonably foresee, prospects of the
Borrower and its Subsidiaries, taken as a whole, or the ability of the
Borrower to carry out its obligations under this Agreement, the Note or the
Security Agreement.
Section 5.18 Compliance with Laws. Neither the Borrower nor any of
its Subsidiaries is in violation of any laws, ordinances, rules or
regulations, applicable to it, of any federal, state or municipal
governmental authorities, instrumentalities or agencies, including without
limitation, the United States Occupational Safety and Health Act of 1970, as
amended, except where such violation would not have a material adverse
effect on the financial condition, operations, Properties, business or, as
far as the Borrower can reasonably foresee, prospects of the Borrower and
its Subsidiaries, taken as a whole, or the ability of the Borrower to carry
out its obligations under this Agreement, the Note or the Security
Agreement.
Section 5.19 Events of Default. No Default or Event of Default has
occurred and is continuing.
Section 5.20 Use of Proceeds. The Borrower will use the proceeds of
the Loans for the working capital purposes of the Borrower and for other
general corporate purposes of the Borrower. No part of such proceeds shall
be used to purchase or carry, or to extend credit to others for the purpose
of purchasing or carrying, any "margin stock" (as such term is defined in
Regulation G of the Board of Governors of the Federal Reserve System) in
violation of Regulations U and X. Neither Borrower nor any of its
Subsidiaries is engaged principally, or as one of its important activities,
in the business of extending credit for the purpose of purchasing or
carrying any such "margin stock."
ARTICLE 6
AFFIRMATIVE COVENANTS.
During the term of this Agreement, and until performance, payment
and/or satisfaction in full of the Obligations, the Borrower covenants and
agrees that it shall, and shall cause each of its Subsidiaries to, unless
the Bank otherwise consents in writing:
Section 6.1 Maintenance of Existence. Preserve and maintain its
corporate existence and good standing in its jurisdiction of incorporation,
and qualify and remain qualified as a foreign corporation in each
jurisdiction in which such qualification is required from time to time,
except where failure to be so qualified would not have a material adverse
effect on the business, financial condition, operations, Properties or, as
far as the Borrower can reasonably foresee, prospects of the Borrower and
its Subsidiaries, taken as a whole.
Section 6.2 Conduct of Business. Continue to engage in a business
of the same general type as conducted by it on the date of this Agreement.
Section 6.3 Maintenance of Properties. Maintain, keep and preserve
all of its material Properties (tangible and intangible), necessary or
useful in the conduct of its business, in good working order and condition,
ordinary wear and tear excepted, except that the failure to maintain,
preserve and protect a particular item of depreciable Property that is not
of significant value, either intrinsically or to the operations of Borrower
and its Subsidiaries, taken as a whole, shall not constitute a violation of
this covenant.
Section 6.4 Maintenance of Records. Keep accurate and complete
records and books of account, in which complete entries will be made in
accordance with GAAP, reflecting all financial transactions of the Borrower
and its Subsidiaries.
Section 6.5 Maintenance of Insurance. Maintain insurance (subject
to customary deductibles and retentions) with financially sound and
reputable insurance companies, in such amounts and with such coverages
(including without limitation public liability insurance, fire, hazard and
extended coverage insurance on all of its assets, necessary workers'
compensation insurance and all other coverages as are consistent with
industry practice) as are maintained by companies of established reputation
engaged in similar businesses and similarly situated. Each policy of
insurance obtained by the Borrower in compliance with this Section 6.5 shall
name the Bank as a loss payee and as an additional named insured.
Section 6.6 Compliance with Laws. Comply in all respects with all
applicable laws, rules, regulations and orders, except where the failure to
so comply would not have a material adverse effect on the business,
financial condition, operations, Properties or, as far as the Borrower can
reasonably foresee, prospects of the Borrower and its Subsidiaries taken as
whole or the ability of the Borrower to carry out its obligations under this
Agreement, the Note or the Security Agreement. Such compliance shall
include, without limitation, paying all taxes, assessments and governmental
charges imposed upon it or upon its Property (and all penalties and other
costs, if any, related thereto), unless contested in good faith by
appropriate proceedings and for which adequate reserves have been set aside.
Section 6.7 Right of Inspection. From time to time upon prior
notice and in accordance with customary standards and practices within the
banking industry (including, without limitation, upon any Event of Default
or whenever the Bank may have reasonable cause to believe that an Event of
Default has occurred), the Borrower shall permit the Bank or any agent or
representative thereof, to examine and make copies and abstracts from the
records and books of account of, and visit the Properties of, the Borrower
and its Subsidiaries to discuss the affairs, finances and accounts of the
Borrower and any such Subsidiaries with any of their respective officers and
directors and the Borrower's independent accountants, and to make such
verification concerning the Borrower and its Subsidiaries as may be
reasonable under the circumstances, and upon request, furnish promptly to
Bank true copies of all financial information made available to Senior
Officers of Borrower and its Subsidiaries; provided, that the Bank shall use
reasonable efforts to not materially interfere with the business of the
Borrower and its Subsidiaries and to treat as confidential any and all
information obtained pursuant to this Section 6.7, except to the extent
disclosure is required by any law, regulation, order, ruling, directive,
guideline or request from any central bank or other government authority
(whether or not having the force of law).
Section 6.8 Reporting Requirements. The Borrower shall, and shall
cause each of its Subsidiaries, as applicable, to, furnish to the Bank:
(a) Annual Financial Statements. Within ninety (90) days following
Borrower's fiscal year end for 1999 and within ninety (90) days following
the end of Borrower's fiscal year for each fiscal year thereafter, copies
of:
(i) the consolidated balance sheets of the Borrower and its
Subsidiaries as at the close of such fiscal year, and
(ii) the consolidated statements of income and consolidated
statements of stockholders' equity and cash flows, in each
case of the Borrower and its Subsidiaries for such fiscal
year,
in each case setting forth in comparative form the figures for the preceding
fiscal year and prepared in accordance with GAAP, all in reasonable detail
and accompanied by an opinion of a firm of independent public accountants of
recognized national standing selected by the Borrower and reasonably
acceptable to the Bank, stating that such financial statements present
fairly in all material respects the financial position of the Borrower and
its consolidated Subsidiaries and the results of their operations and their
cash flows in conformity with GAAP and that the audit of such accountants in
connection with such consolidated financial statements has been made in
accordance with generally accepted accounting principles consistently
applied; provided, however, the Borrower shall provide unaudited
consolidating balance sheets and statements of income for each of clause (i)
and (ii) above upon request of the Bank.
(b) Quarterly Financial Statements. As soon as available, and in any
event within forty-five (45) days after the end of each quarterly fiscal
period of the Borrower (other than the fourth fiscal quarter of any fiscal
year), copies of:
(i) the consolidated balance sheets of Borrower and its
Subsidiaries as at the end of such fiscal quarter, and
(ii) the consolidated statements of income and consolidated
statements of stockholders' equity and cash flows, in each
case of Borrower and its Subsidiaries for such fiscal
quarter and the portion of such fiscal year ended with
such fiscal quarter,
in each case setting forth in comparative form the figures for the preceding
fiscal year and prepared in accordance with GAAP, all in reasonable detail
and certified as presenting fairly in accordance with GAAP the financial
condition of the Borrower and its Subsidiaries as of the end of such period
and the results of operations for such period by a Senior Officer of
Borrower, subject only to normal year-end accruals and audit adjustments and
the absence of footnotes and differences in presentation; provided, however,
the Borrower shall provide unaudited consolidating balance sheets and
statements of income for each of clause (i) and (ii) above upon request of
the Bank.
(c) Annual Financial Projections. Concurrently with the delivery of
the financial statements required pursuant to subsection (a) of this
Section, copies of the Borrower's financial projections for the following
fiscal year.
(d) Monthly Reports of Borrowing Base and Accounts Receivable.
Within fifteen (15) days after the end of each month, or at such shorter
intervals as the Bank shall request, a detailed computation of the Borrowing
Base in substantially the form of Exhibit C. If there are delays in
delivery schedules, if a customer rejects finished goods, or if similar
problems arise which may materially adversely affect the quantity or quality
of Eligible Inventory, the Borrower shall notify the Bank of such problems
immediately. Additionally, within fifteen (15) days after the end of each
month, a report with respect to accounts receivable (including aging) of the
Borrower, in form and substance satisfactory to the Bank, certified by the
Chief Financial Officer of the Borrower.
(e) Management Letters. Promptly upon receipt thereof, copies of
any reports or management letters relating to the internal financial
controls and procedures delivered to the Borrower or any of its Subsidiaries
by any independent certified public accountant in connection with
examination of the financial statements of the Borrower or any such
Subsidiary.
(f) SEC Filings. Promptly after the same are available, copies of
each annual report, proxy or financial statement or other report or
communication sent to the shareholders of the Borrower and copies of all
annual, regular, periodic and special reports and registration statements
which the Borrower may file or be required to file with the Securities and
Exchange Commission under Sections 13 and 15(d) of the Securities and
Exchange Act of 1934.
(g) Notice of Litigation. Promptly after the commencement thereof,
notice of any action, suit and proceeding before any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic
or foreign, against the Borrower or any of its Subsidiaries (A) which, if
determined adversely to the Borrower or such Subsidiary, would have a
material adverse effect on the financial condition, operations, Properties,
business or, as far as the Borrower can reasonably foresee, prospects of the
Borrower and its Subsidiaries, taken as a whole, or the ability of the
Borrower to carry out its obligations under this Agreement, the Note or the
Security Agreement, or (B) commenced by any creditor or lessor under any
written credit agreement with respect to borrowed money or any material
lease which asserts a default thereunder on the part of the Borrower or any
of its Subsidiaries.
(h) Notices of Default. As soon as any Default or Event of Default
becomes known to an officer of the Borrower, a written notice setting forth
the details of such Default or Event of Default and the action which is
proposed to be taken by the Borrower with respect thereto.
(i) Other Filings. At any time upon the reasonable request of the
Bank, permit the Bank the opportunity to review copies of all reports,
including annual reports, and notices which the Borrower or any Subsidiary
files with or receives from the PBGC or the U.S. Department of Labor under
ERISA; and as soon as practicable and in any event within fifteen (15) days
after the Borrower or any if its Subsidiaries knows or has reason to know
that any Reportable Event or Prohibited Transaction has occurred with
respect to any Plan or that the PBGC or the Borrower or any such Subsidiary
has instituted or will institute proceedings under Title IV of ERISA to
terminate any Plan, the Borrower will deliver to the Bank a certificate of a
Senior Officer of the Borrower setting forth details as to such Reportable
Event or Prohibited Transaction or Plan termination and the action the
Borrower proposes to take with respect thereto.
(j) Additional Information. Such additional information as the Bank
may reasonably request concerning the Borrower and its Subsidiaries and for
that purpose all pertinent books, documents and vouchers relating to its
business, affairs and Properties, including investments as shall from time
to time be designated by the Bank.
Section 6.9 Certificates.
(a) Officer's Certificate. Simultaneously with each delivery of
financial statements pursuant to Section 6.8(a) and 6.8(b), the Borrower
shall deliver to the Bank a certificate in substantially the form of Exhibit
D of its Chief Financial Officer which will
(i) certify on behalf of the Borrower that such officer has
reviewed (A) such financial statements, (B) the Agreement,
and (C) the condition and transactions of the Borrower and
its Subsidiaries for the period covered by such financial
statements, and state that to the best of his knowledge
(x) the Borrower has observed or performed all of its
covenants and other agreements, and satisfied every
condition, contained in this Agreement, the Note and the
Security Agreement, (y) no Default or Event of Default has
occurred and is continuing or, if a Default or Event of
Default has occurred and is continuing, a statement as to
the nature thereof and the action which is proposed to be
taken with respect thereto, and (z) that there is no
manifest error in such financial statements, and
(ii) include information (with detailed calculations) required
to establish whether the Borrower was in compliance with
the covenants set forth in this Agreement during the
period covered by the financial statements then being
delivered.
(b) Insurance Certificate. Simultaneously with each delivery of
financial statements pursuant to Section 6.8(a), the Borrower will deliver
to the Bank a certificate evidencing the insurance coverages required by
Section 6.5.
Section 6.10 Further Assurances. The Borrower shall take all such
further actions and execute and file or record, at its own cost and expense,
all such further documents and instruments as the Bank may at any time
reasonably determine may be necessary or advisable, and shall do, execute,
acknowledge, deliver, record, file, re-file, record, register and re-
register any and all such further acts, deeds, conveyances, estoppel
certificates, transfers, certificates, assurances and other instruments as
the Bank may reasonably require from time to time in order to carry out more
effectively the purposes of this Agreement, the Note and the Security
Agreement.
Section 6.11 Compliance with Agreements. Promptly and fully comply
with all contractual obligations under all agreements, mortgages,
indentures, leases and/or instruments to which any one or more of the
Borrower and its Subsidiaries is a party, whether such agreements,
mortgages, indentures, leases or instruments are with the Bank or another
Person, except where such failure to so comply would not have a material
adverse effect on the business, financial condition, operations, Properties
or, as far as the Borrower can reasonably foresee, prospects of the Borrower
and its Subsidiaries taken as whole or the ability of the Borrower to carry
out its obligations under this Agreement, the Note or the Security
Agreement.
Section 6.12 Use of Proceeds. Use the proceeds of the Loans only for
the purposes described in Section 5.20.
Section 6.13 Security. Cause any Subsidiary which becomes a
Subsidiary after the Closing Date, in accordance with and subject to
Sections 7.4 and 7.5, to duly execute and deliver to the Bank a Guaranty
Agreement, a Subsidiary Security Agreement, Subsidiary Financing Statements
along with any opinions, corporate documents, certificates and other
documents reasonably requested by the Bank and its special counsel in form
and substance satisfactory to the Bank and its special counsel within 15
days of each Subsidiary becoming a Subsidiary.
ARTICLE 7
NEGATIVE COVENANTS.
During the term of this Agreement, and until performance, payment
and/or satisfaction in full of the Obligations, the Borrower covenants and
agrees that Borrower shall not, and shall not permit its Subsidiaries to,
unless the Bank otherwise consents in writing:
Section 7.1 Debt. Create, incur, assume or suffer to exist any
Debt, except:
(a) Debt of the Borrower under this Agreement and the Note;
(b) Debt permitted under Section 7.2 hereof;
(c) the Subordinated Debt;
(d) Debt secured by the purchase money security interests permitted
pursuant to Subsection 7.3(h) not to exceed in the aggregate $250,000 at any
time.
Section 7.2 Guaranties, Etc. Assume, guarantee, endorse or
otherwise be or become directly or contingently responsible or liable
(including, but not limited to, an agreement to purchase any obligation, or
to supply or advance any funds, or an agreement to cause such Person to
maintain a minimum working capital or net worth or otherwise to assure the
creditors of any Person against loss) for the obligations of any Person,
except guaranties by endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business.
Section 7.3 Liens. Create, incur, assume or suffer to exist any
Lien, upon or with respect to any of its Properties, now owned or hereafter
acquired, except:
(a) Liens for taxes or assessments or other government charges or
levies if not yet due and payable or if due and payable, if they are being
contested in good faith by appropriate proceedings and for which appropriate
reserves are maintained;
(b) Liens imposed by law, such as mechanic's, materialmen's,
landlord's, warehousemen's and carrier's Liens, and other similar Liens,
securing obligations incurred in the ordinary course of business which are
not past due for more than forty-five 45 days, or which are being contested
in good faith by appropriate proceedings and for which appropriate reserves
have been established;
(c) Liens under workers' compensation, unemployment insurance,
social security or similar legislation (other than ERISA);
(d) judgment and other similar Liens arising in connection with
court proceedings; provided that the execution or other enforcement of such
Liens is effectively stayed and the claims secured thereby are being
actively contested in good faith and by appropriate proceedings;
(e) easements, rights-of-way, restrictions and other similar
encumbrances which, in the aggregate, do not materially interfere with the
occupation, use and enjoyment by the Borrower or any of its Subsidiaries of
the Property or assets encumbered thereby in the normal course of its
business or materially impair the value of the Property subject thereto;
(f) the Liens listed on Schedule 5.6;
(g) the Liens created by the Security Agreement and the Subsidiary
Security Agreements; and
(h) Liens constituting purchase money security interests that secure
Debt in an amount not to exceed in the aggregate $250,000 at any time;
provided that each such Lien covers only the particular equipment or
property purchased with such Debt.
Section 7.4 Investments and Advances. Except as permitted by
Section 7.5, make or acquire any Investments in any other Person other than
(i) certificates of deposit issued by any bank doing business in and
incorporated under the laws of the United States of America, or any state
thereof with combined capital, surplus and undivided profits in excess of
$100,000,000, (ii) readily marketable direct obligations of the United
States of America or its agencies or readily marketable obligations fully
guaranteed by the United States of America or its agencies, in each case due
within one (1) year from the date of making such investment, (iii) Cayman
time deposits held with the Bank, (iv) Acceptable Acquisitions, (v) any
money market account or money market mutual funds (vi) commercial paper
rated at least "A-1" or the equivalent thereof by Standard & Poor's
Corporation or at least "P-1" or the equivalent thereof by ▇▇▇▇▇'▇ Investors
Service, Inc. and in each case maturing within six (6) months after the date
of acquisition or (vii) investments by the Borrower in short-term cash
management investments permitted under subsections (ii) or (vi) above or
constituting other high quality, short-term investments offered by the Bank
as part of its normal cash management services.
Section 7.5 Mergers and Consolidations and Acquisitions of Assets.
Merge or consolidate with any Person (whether or not Borrower or any
Subsidiary is the surviving entity), or acquire all or substantially all of
the assets or any of the capital stock of any Person; provided that any
Subsidiary may merge into the Borrower or any other Subsidiary; provided
further that the Borrower or any Subsidiary may acquire all or substantially
all of the assets or any of the capital stock of any Person if, after giving
effect to such transaction no Default or Event of Default would exist, the
Borrower and its Subsidiaries shall be in compliance with all
representations and warranties and all covenants hereunder and an officer of
such Person provides a certificate showing pro forma compliance with all
representations and warranties and covenants hereunder ("Acceptable
Acquisitions").
Section 7.6 Sale of Assets. Sell, lease or otherwise dispose of any
of its assets, except in the ordinary course of business.
Section 7.7 Repayment of Subordinated Debt. Repay any part of the
Subordinated Debt, except as permitted by the terms of the applicable
subordination agreement.
Section 7.8 Transactions with Affiliates. Enter into any
transaction of any kind with any Affiliate of the Borrower, or any Person
that owns or holds 5% or more of the outstanding common stock of the
Borrower, other than (i) transactions between or among (x) the Borrower and
its wholly owned Subsidiaries or (y) the Borrower's wholly owned
Subsidiaries, (ii) transactions on terms at least as favorable to the
Borrower or its Subsidiaries as would be the case in an arm's-length
transaction between unrelated parties of equal bargaining power.
Section 7.9 Debt to EBITDA Ratio. As of the end of any fiscal
quarter permit the ratio of funded Senior Debt of the Borrower and its
Subsidiaries to the rolling four quarter EBITDA of the Borrower and its
Subsidiaries for such period to be greater than 3.50 to 1.00.
Section 7.10 EBITDA to Interest Expense Ratio. As of the end of any
fiscal quarter permit the ratio of the rolling four quarter EBITDA of the
Borrower and its Subsidiaries for such fiscal quarter to Interest Expense
for such period to be less than 1.50 to 1.00.
Section 7.11 Dividends; Distributions. Other than dividends from a
Subsidiary to a Borrower, declare or pay any dividends on its capital stock,
purchase or otherwise acquire for value any of its capital stock now or
hereafter outstanding, or make any distribution of assets to its
shareholders.
Section 7.12 Sale of Receivables. Sell, assign or discount any of
the Receivables or any promissory note held by it, with or without recourse,
other than the endorsement of negotiable instruments for deposit and similar
transactions in the ordinary course of business.
Section 7.13 Capital Expenditures. Make or permit to be made any
Capital Expenditure in any fiscal year of the Borrower, or commit to make
any Capital Expenditure in any fiscal year, which when added to the
aggregate Capital Expenditures of the Borrower and its Subsidiaries
theretofore made or committed to be made in that fiscal year, would exceed
$900,000.
ARTICLE 8
EVENTS OF DEFAULT.
Section 8.1 Events of Default. Any of the following events shall be
an "Event of Default":
(a) (i) the Borrower shall fail to pay any principal amount when
due, whether at stated maturity, by acceleration, by notice of prepayment or
otherwise, or (ii) Borrower shall fail to pay any premium or interest, or
any fees or other amounts payable hereunder, within five days after the date
due;
(b) any written statement, representation or warranty made by the
Borrower in this Agreement, or the Note or the Security Agreement, or which
is contained in any certificate, document, financial or other written
statement furnished at any time under or in connection with this Agreement,
the Note or the Security Agreement shall prove to have been incorrect in any
material respect on or as of the date made;
(c) the Borrower shall default in the observance or performance of
any covenant contained in Section 6.13;
(d) any written statement, representation or warranty made by any
Subsidiary in any Guaranty Agreement or any Subsidiary Security Agreement,
or which is contained in any certificate, document, financial or other
written statement furnished at any time under or in connection with a
Guaranty Agreement or a Subsidiary Security Agreement shall prove to have
been incorrect in any material respect on or as of the date made;
(e) the Borrower shall (i) fail to perform or observe any term,
covenant, or agreement contained in Section 5.20, Section 6.8(h) or Article
7; or (ii) fail to perform or observe any term, covenant, or agreement on
its part to be performed or observed (other than the obligations
specifically referred to elsewhere in this Section 8.1) in this Agreement
(including without limitation any such term, covenant or agreement contained
in Article 6 hereof), the Security Agreement or the Note and such failure
shall continue unremedied for 30 consecutive days;
(f) by reason of the incorporation by reference of Articles 5, 6 and
7 hereof into the Guaranty Agreements, any Subsidiary shall (i) fail to
perform or observe any term, covenant, or agreement contained in Section
5.20, Section 6.8(h) or Article 7; or (ii) fail to perform or observe any
term, covenant, or agreement on its part to be performed or observed (other
than the obligations specifically referred to elsewhere in this Section 8.1)
in this Agreement (including without limitation any such term, covenant or
agreement contained in Article 6 hereof), the Guaranty Agreement or the
Subsidiary Security Agreement and such failure shall continue unremedied for
30 consecutive days;
(g) the Borrower or any Subsidiary shall (i) fail to pay any
indebtedness, including but not limited to indebtedness for borrowed money
(other than the payment Obligations described in (a) above), of the Borrower
or such Subsidiary, as the case may be, or any interest or premium thereon,
when due (whether by scheduled maturity, required prepayment, acceleration,
demand or otherwise); or (ii) fail to perform or observe any term, covenant
or condition on its part to be performed or observed under any agreement or
instrument relating to any such indebtedness, when required to be performed
or observed and such failure continues after any applicable notice and grace
period, if the effect of such failure to perform or observe is to
accelerate, or to permit the acceleration of the maturity of such
indebtedness, or (iii) any such indebtedness shall be declared to be due and
payable, or required to be prepaid (other than by a regularly scheduled
required prepayment), prior to the stated maturity thereof; provided,
however, that it shall not be a Default or Event of Default under this
Section 8.1(g) unless the aggregate principal amount of all such
indebtedness as described in clauses (i) through (iii) above shall exceed
$50,000;
(h) the Borrower or any Subsidiary (i) shall generally not, or be
unable to, or shall admit in writing its inability to, pay its debts as such
debts become due; or (ii) shall make an assignment for the benefit of
creditors or petition or apply to any tribunal for the appointment of a
custodian, receiver or trustee for it or a substantial part of its assets;
or (iii) shall commence any proceeding under any bankruptcy, reorganization,
arrangement, readjustment of debt, dissolution or liquidation law or statute
of any jurisdiction, whether now or hereafter in effect; or (iv) shall have
had any such petition or application filed or any such proceeding shall have
been commenced against it in which an adjudication or appointment is made or
order for relief is entered, or which petition, application or proceeding
remains undismissed for a period of sixty (60) days or more; or (v) shall be
the subject of any proceeding under which its assets may be subject to
seizure, forfeiture or divestiture (other than a proceeding in respect of a
Lien permitted under Section 7.3(a)); or (vi) by any act or omission shall
indicate its consent to, approval of or acquiescence in any such petition,
application or proceeding or order for relief or the appointment of a
custodian, receiver or trustee for all or any substantial part of its
Property; or (vii) shall suffer any such custodianship, receivership or
trusteeship to continue undischarged for a period of sixty (60) days or
more;
(i) one or more judgments, decrees or orders for the payment of
money in excess of $100,000 in the aggregate shall have been rendered
against the Borrower or any of its Subsidiaries and such judgments, decrees
or orders shall continue unsatisfied and in effect for a period of sixty
(60) consecutive days without being vacated, discharged, satisfied or stayed
or bonded pending appeal;
(j) any of the following events shall occur or exist with respect to
the Borrower or any Subsidiary or any ERISA Affiliate: (i) any Prohibited
Transaction involving any Plan; (ii) any Reportable Event shall occur with
respect to any Plan; (iii) the filing under Section 4041 of ERISA of a
notice of intent to terminate any Plan or the termination of any Plan (other
than in a "standard termination" referred to in Section 4041 of ERISA); (iv)
any event or circumstance exists which would constitute grounds entitling
the PBGC to institute proceedings under Section 4042 of ERISA for the
termination of or for the appointment of a trustee to administer any Plan,
or the institution by the PBGC of any such proceedings; (v) complete or
partial withdrawal under Section 4201 or 4204 of ERISA from a Multiemployer
Plan or the reorganization, insolvency or termination of any Multi employer
Plan; and in each case above, such event or condition, together with all
other such events or conditions, if any, would in the reasonable opinion of
the Bank subject the Borrower or such Subsidiary to any tax, penalty or
other liability to a Plan, Multiemployer Plan, the PBGC or otherwise (or any
combination thereof) which in the aggregate exceed or may exceed $25,000;
(k) this Agreement, the Note or the Security Agreement shall at any
time after its execution and delivery and for any reason cease to be in full
force and effect or shall be declared null and void, or the validity or
enforceability thereof shall be contested by the Borrower or the Borrower
shall deny it has any further liability or obligation hereunder;
(l) any Guaranty Agreement or any Subsidiary Security Agreement
shall at any time after its execution and delivery and for any reason cease
to be in full force and effect or shall be declared null and void, or the
validity or enforceability thereof shall be contested by a Subsidiary or
such Subsidiary shall deny it has any further liability or obligation
hereunder;
(m) the Borrower shall be in default under the Security Agreement or
any default shall exist under a Guaranty Agreement or a Subsidiary Security
Agreement;
(n) less than fifty-one percent (51%) of the Voting Stock of the
Borrower shall be held by Brynwood Partners III.
Section 8.2 Remedies. Without limiting any other rights or remedies
of the Bank provided for elsewhere in this Agreement, the Note, the Security
Agreement, a Guaranty Agreement or a Subsidiary Security Agreement, or by
applicable law, or in equity, or otherwise, if any Event of Default shall
occur and be continuing, the Bank may by notice to the Borrower, (i) declare
the Commitment to be terminated, whereupon the same shall forthwith
terminate, (ii) declare all amounts owing under this Agreement and the Note
to be forthwith due and payable, whereupon all such amounts shall become and
be forthwith due and payable, without presentment, demand, protest or
further notice of any kind, all of which are hereby expressly waived by the
Borrower; provided that, in the case of an Event of Default referred to in
Section 8.1(e) above with respect to the Borrower, the Commitment shall be
immediately terminated, and all such amounts shall be immediately due and
payable without notice, presentment, demand, protest or other formalities of
any kind, all of which are hereby expressly waived by the Borrower.
ARTICLE 9
MISCELLANEOUS.
Section 9.1 Amendments and Waivers. No amendment or waiver of any
provision of this Agreement, the Note or the Security Agreement nor consent
to any departure by the Borrower therefrom, shall in any event be effective
unless the same shall be in writing and signed by the Bank and the Borrower,
and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given. No failure on the
part of the Bank to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof or preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
Section 9.2 Usury. Anything herein to the contrary notwithstanding,
the Obligations of the Borrower with respect to this Agreement and the Note
shall be subject to the limitation that payments of interest shall not be
required to the extent that receipt thereof would be contrary to provisions
of law applicable to the Bank limiting rates of interest which may be
charged or collected by the Bank.
Section 9.3 Expenses; Indemnities.
(a) Unless otherwise agreed in writing, the Borrower shall reimburse
the Bank on demand for all reasonable costs, expenses and charges (including
without limitation, reasonable fees and charges of Day, ▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
or any other external legal counsel for the Bank) incurred by the Bank in
connection with the preparation, filing, recording, modification and
amendment of this Agreement, the Note, the Security Agreement, the Guaranty
Agreements or the Subsidiary Security Agreements or any other document to be
delivered under this Agreement. The Borrower further agrees to pay on
demand all reasonable costs and expenses (including reasonable counsel fees
and expenses), if any, in connection with the enforcement of and protection
of the rights of the Bank under the provisions of (including without
limitation, the enforcement of judgments (whether through negotiations,
legal proceedings or otherwise)) this Agreement, the Note, the Security
Agreement, the Guaranty Agreements or the Subsidiary Security Agreements or
any other document to be delivered under this Agreement and all reasonable
costs and expenses incurred by the Bank in auditing the accounts receivable
of the Borrower or the Collateral (as defined in the Security Agreement) if
in the reasonable judgment of the Bank, such an audit is necessary. Until
paid, the amount of any cost, expense or charge shall constitute, together
with all accrued interest thereon, part of the Obligations.
(b) The Borrower hereby agrees to indemnify the Bank upon demand at
any time, against any and all losses, costs or expenses which the Bank may
at any time or from time to time sustain or incur as a consequence of (i)
any failure by the Borrower to pay, punctually on the due date thereof any
amount payable by the Borrower to the Bank or (ii) the acceleration, in
accordance with the terms of this Agreement, of the time of payment of any
of the Obligations of the Borrower. Such losses, costs or expenses may
include, without limitation, (i) any costs incurred by the Bank in carrying
funds to cover any overdue principal, overdue interest, or any other overdue
sums payable by the Borrower to the Bank or (ii) any losses incurred or
sustained by the Bank in liquidating or reemploying funds acquired by the
Bank from third parties, except to the extent caused by the Bank's gross
negligence or willful misconduct.
(c) The Borrower agrees to indemnify the Bank and its directors,
officers, employees, agents and Affiliates from, and hold each of them
harmless against, any and all losses, liabilities, claims, damages, costs or
expenses incurred by any of them arising out of or by reason of any
investigation or litigation or other proceedings (including any threatened
investigation or litigation or other proceedings) relating to any
transaction contemplated by this Agreement or the Security Agreement, any
actions or omissions of the Borrower or any Subsidiary or any of their
respective directors, officers, employees or agents in connection with this
Agreement, or any actual or proposed use by the Borrower or any Subsidiary
of the proceeds of the Loans including without limitation, the reasonable
fees and disbursements of counsel incurred in connection with any such
investigation or litigation or other proceedings (but excluding any such
losses, liabilities, claims, damages or expenses incurred by reason of the
gross negligence or willful misconduct of the Person to be indemnified or
any Affiliate of the Person to be indemnified).
(d) The Borrower agrees to indemnify the Bank and its directors,
officers, employees, agents and Affiliates from, and hold each of them
harmless against, any and all losses, liabilities, claims, damages, costs or
expenses (including without limitation, reasonable fees and disbursements of
counsel, engineers or similar professionals) which may be incurred by or
asserted against the Bank or any such party in connection with or arising
out of or relating to (i) the Bank's compliance with any environmental law
with respect to the Properties or operations of the Borrower or its
Subsidiaries, (ii) any natural resource damages, governmental fines or
penalties or other amounts mandated by any governmental authority, court
order, demand or decree in connection with the disposal by the Borrower or
its Subsidiaries either on-site or off- site (including leakage or seepage
from any such site including third party treatment facilities) of
pollutants, contaminants or hazardous wastes and (iii) any personal injury
or property damage to third parties resulting from such pollutants,
contaminants or hazardous wastes.
(e) The Borrower agrees to indemnify the Bank and to hold the Bank
harmless from and against all losses and expenses that the Bank may sustain
or incur (i) if the Borrower makes any payment or prepayment of the
principal of any Eurodollar Rate Loan on a day other than the last Business
Day of the Interest Period therefor (whether as a result of acceleration of
the maturity of such Loan or otherwise) or (ii) if the Borrower, for any
reason whatsoever, fails to complete a borrowing or continuation of or a
prepayment of any Eurodollar Rate Loan on the date specified therefore in a
request by the Borrower pursuant to Section 2.3 or 2.5 hereof (including,
without limitation, in each case, any interest payable by the Bank in order
to make or maintain such Eurodollar Rate Loan). Without limiting the
generality of the foregoing, the amounts due the Bank under this paragraph
(e) may include an amount equal to the excess, if any, of (i) the amount of
interest which would have accrued on the amount so paid or prepaid or the
amount of the Borrowing that is not completed or continued on the date
specified by the Borrower for the period from the date of such payment or
prepayment or the date such Borrowing was scheduled to be made to the last
day of the applicable Interest Period, in each case at the Eurodollar Rate,
over (ii) the amount of interest (as reasonably determined by the Bank)
which would have accrued to the Bank on such amount by placing such amount
on deposit for a comparable period with leading banks in the interbank
Eurodollar market.
Section 9.4 Term; Survival. This Agreement shall continue in full
force and effect as long as any Obligations are owing by the Borrower to the
Bank. No termination of this Agreement shall in any way affect or impair
the rights and obligations of the parties hereto relating to any
transactions or events prior to such termination date, and all warranties
and representations of the Borrower shall survive such termination. All
representations and warranties made hereunder and in any document,
certificate, or statement delivered pursuant hereto or in connection
herewith shall survive the execution and delivery of this Agreement, the
Note or the Security Agreement. The obligations of the Borrower under
Sections 2.10, 2.11 and 9.3 shall survive the repayment of the Loans and the
termination of the Commitment.
Section 9.5 Assignment; Participations. This Agreement shall be
binding upon, and shall inure to the benefit of the Borrower, the Bank and
their respective successors and assigns, except that the Borrower may not
assign or transfer its rights or obligations hereunder. The Bank may sell
participations in, or upon forty-five (45) days' notice may assign all or
any part of any Loan to another lender, in which event (a) in the case of an
assignment, the assignee shall have, to the extent of such assignment
(unless otherwise provided therein), the same rights, benefits and
obligations as it would have if it were the Bank hereunder; and (b) in the
case of a participation, the participant shall have no rights under this
Agreement, the Note or the Security Agreement. The agreement executed by
the Bank in favor of the participant shall not give the participant the
right to require the Bank to take or omit to take any action hereunder
except action directly relating to (i) the extension of a regularly
scheduled payment date with respect to any portion of the principal of or
interest on any amount outstanding hereunder allocated to such participant,
(ii) the reduction of the principal amount allocated to such participant or
(iii) the reduction of the rate of interest payable on such amount or any
amount of fees payable hereunder to a rate or amount, as the case may be,
below that which the participant is entitled to receive under its agreement
with the Bank. Without limiting the generality of the foregoing, the Bank
reserves the right to assign all or any part of any Loan or any of its
rights under this Agreement to any Federal Reserve Bank; provided, however,
that no such assignment shall release the Bank from its obligations
hereunder. The Bank may furnish any information concerning the Borrower in
the possession of the Bank from time to time to assignees and participants
(including prospective assignees and participants).
Section 9.6 Notices. All notices, requests, demands and other
communications provided for herein shall be in writing and shall be (i) hand
delivered; (ii) sent by certified, registered or express United States mail,
return receipt requested, or reputable next-day courier service; or (iii)
given by telex, telecopy, telegraph or similar means of electronic
communication. All such communications shall be effective upon the receipt
thereof. Notices shall be addressed to the Borrower and the Bank at their
respective addresses set forth on the signature pages of this Agreement, or
to such other address as the Borrower or the Bank shall theretofore have
transmitted to the other party in writing by any of the means specified in
this Section 9.6.
Section 9.7 Setoff. The Borrower agrees that, in addition to (and
without limitation of) any right of setoff banker's lien or counterclaim the
Bank may otherwise have, the Bank shall be entitled, at its option, to
offset balances (general or special, time or demand, provisional or final,
and regardless of whether such balances are then due to the Borrower) held
by it for the account of the Borrower at any of the Bank's offices, in
Dollars or in any other currency, against any amount payable by the Borrower
under this Agreement, the Note or the Security Agreement which is not paid
when due, taking into account any applicable grace period, in which case it
shall promptly notify the Borrower thereof provided that the Bank's failure
to give such notice shall not affect the validity thereof.
Section 9.8 Jurisdiction; Immunities.
(a) The Borrower hereby irrevocably submits to the jurisdiction of
any Connecticut State or United States Federal court sitting in Connecticut
over any action or proceeding arising out of or relating to this Agreement,
the Note or the Security Agreement, and the Borrower hereby irrevocably
agrees that all claims in respect of such action or proceeding may be heard
and determined in such Connecticut State or Federal court. The Borrower
irrevocably consents to the service of any and all process in any such
action or proceeding by the mailing of copies of such process to the
Borrower at its address specified in Section 9.6. The Borrower agrees that
a final judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any
other manner provided by law. The Borrower further waives any objection to
venue in such State and any objection to an action or proceeding in such
State on the basis of forum non conveniens. The Borrower further agrees
that any action or proceeding brought against the Bank shall be brought only
in Connecticut State or United States Federal courts sitting in Connecticut.
(b) Nothing in this Section shall affect the right of the Bank to
serve legal process in any other manner permitted by law or affect the right
of the Bank to bring any action or proceeding against the Borrower or its
Property in the courts of any other jurisdictions.
Section 9.9 Table of Contents; Headings. Any table of contents and
the headings and captions hereunder are for convenience only and shall not
affect the interpretation or construction of this Agreement.
Section 9.10 Severability. The provisions of this Agreement are
intended to be severable. If for any reason any provision of this Agreement
shall be held invalid or unenforceable in whole or in part in any
jurisdiction, such provision shall, as to such jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without in any manner
affecting the validity or enforceability thereof in any other jurisdiction
or the remaining provisions hereof in any jurisdiction.
Section 9.11 Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and
the same instrument, and any party hereto may execute this Agreement by
signing any such counterpart.
Section 9.12 Integration. This Agreement, the Note and the Security
Agreement set forth the entire agreement between the parties hereto relating
to the transactions contemplated hereby and thereby and supersede any prior
oral or written statements or agreements with respect to such transactions.
Section 9.13 Governing Law. This Agreement shall be governed by, and
interpreted and construed in accordance with, the laws of the State of
Connecticut except to the extent that the perfection of the security
interest under the Security Agreement, or the remedies thereunder in respect
of the Collateral thereunder are governed by the laws of the other states
where any of the Collateral is located.
Section 9.14 Authorization of Third Parties to Deliver Opinions, Etc.
The Borrower hereby authorizes and directs each Person whose preparation or
delivery to the Bank of any opinion, report or other information is a
condition or covenant under this Agreement (including under Articles 5, 6
and 7) to so prepare or deliver such opinion, report or other information
for the benefit of the Bank. The Borrower agrees to confirm such
authorizations and directions provided for in this Section 9.14 from time to
time as may be requested by the Bank.
Section 9.15 Waivers. EACH PARTY HERETO ACKNOWLEDGES THAT IT HAS
BEEN ADVISED BY COUNSEL OF ITS CHOICE WITH RESPECT TO THIS TRANSACTION AND
THIS AGREEMENT AND THAT IT MAKES THE FOLLOWING WAIVERS KNOWINGLY AND
VOLUNTARILY:
(a) EACH PARTY HERETO IRREVOCABLY WAIVES TRIAL BY JURY IN ANY COURT
AND IN ANY SUIT, ACTION OR PROCEEDING OR ANY MATTER ARISING IN CONNECTION
WITH OR IN ANY WAY RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT, THE NOTE, THE SECURITY AGREEMENT OR ANY OF THE DOCUMENTS RELATED
THERETO AND THE ENFORCEMENT OF ANY OF THE BANK'S RIGHTS AND REMEDIES.
(b) THE BORROWER EXPRESSLY ACKNOWLEDGES THAT THIS AGREEMENT IS
DELIVERED AS PART OF A COMMERCIAL TRANSACTION AS SUCH TERM IS USED AND
DEFINED IN CHAPTER 903a OF THE CONNECTICUT GENERAL STATUTES AND VOLUNTARILY
AND KNOWINGLY WAIVES ANY AND ALL RIGHTS WHICH ARE OR MAY BE CONFERRED UPON
IT UNDER CHAPTER 903a OF SAID STATUTES (OR ANY OTHER STATUTE OF ANY
JURISDICTION AFFECTING PREJUDGMENT REMEDIES) TO ANY NOTICE OR HEARING OR
PRIOR COURT ORDER OR THE POSTING OF ANY BOND PRIOR TO ANY PREJUDGMENT REMEDY
WHICH THE BANK MAY USE. THE BORROWER ACKNOWLEDGES THAT IT HAS BEEN ADVISED
BY COUNSEL OF ITS CHOICE WITH RESPECT TO THIS TRANSACTION AND THE LOANS.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
LINCOLN SNACKS COMPANY
By: /s/ ▇▇▇▇▇▇▇▇ ▇. Crabs
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Name: ▇▇▇▇▇▇▇▇ ▇. Crabs
Title: Vice President & Chief Financial Officer
Address for Notices:
Lincoln Snacks Company
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▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
THE BANK OF NEW YORK
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
Address for Notices:
The Bank of New York
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▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇