CREDIT AGREEMENT
DATED AS OF JANUARY 31, 1997
among
HA-LO INDUSTRIES, INC.,
AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO,
individually and as Agent
and
the Lenders
which are or become parties hereto
TABLE OF CONTENTS
PAGE
SECTION 1. THE CREDITS . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1. Revolving Credit . . . . . . . . . . . . . . . . . . . 1
Section 1.2. Revolving Loans. . . . . . . . . . . . . . . . . . . . 2
Section 1.3. Letters of Credit. . . . . . . . . . . . . . . . . . . 2
(a) General Terms. . . . . . . . . . . . . . . . . . . . . 2
(b) Applications . . . . . . . . . . . . . . . . . . . . . 2
(c) The Reimbursement Obligation . . . . . . . . . . . . . 3
(d) The Participating Interests. . . . . . . . . . . . . . 3
(e) Indemnification. . . . . . . . . . . . . . . . . . . . 4
Section 1.4. Term Credit. . . . . . . . . . . . . . . . . . . . . . 4
Section 1.5. Manner of Borrowing Loans. . . . . . . . . . . . . . . 5
(a) Generally. . . . . . . . . . . . . . . . . . . . . . . 5
(b) Reimbursement Obligation . . . . . . . . . . . . . . . 5
(c) Agent Reliance on Bank Funding . . . . . . . . . . . . 6
(d) Reliance . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2. INTEREST. . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.1. Options. . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.2. Base Rate Portion. . . . . . . . . . . . . . . . . . . 7
Section 2.3. LIBOR Portions . . . . . . . . . . . . . . . . . . . . 7
Section 2.4. Manner of Rate Selection . . . . . . . . . . . . . . . 8
Section 2.5. Change of Law. . . . . . . . . . . . . . . . . . . . . 8
Section 2.6. Unavailability of Deposits or Inability to Ascertain
the Adjusted LIBOR Rate. . . . . . . . . . . . . . . . 8
Section 2.7. Taxes and Increased Costs. . . . . . . . . . . . . . . 8
Section 2.8. Funding Indemnity. . . . . . . . . . . . . . . . . . . 9
Section 2.9. Lending Branch . . . . . . . . . . . . . . . . . . . .10
Section 2.10. Discretion of Lenders as to Manner of Funding. . . . .10
Section 2.11. Capital Adequacy . . . . . . . . . . . . . . . . . . .10
SECTION 3. FEES, PAYMENTS, REDUCTIONS, APPLICATIONS AND NOTATIONS. .11
Section 3.1. Commitment Fee . . . . . . . . . . . . . . . . . . . .11
Section 3.2. Letter of Credit Fees. . . . . . . . . . . . . . . . .11
Section 3.3. Computation of Interest and Fees . . . . . . . . . . .11
Section 3.4. Agents Fees. . . . . . . . . . . . . . . . . . . . . .11
Section 3.5. Voluntary Prepayments. . . . . . . . . . . . . . . . .11
Section 3.6. Commitment Terminations. . . . . . . . . . . . . . . .12
Section 3.7. Place and Application. . . . . . . . . . . . . . . . .12
Section 3.8. Notations and Requests . . . . . . . . . . . . . . . .13
SECTION 4. THE GUARANTIES. . . . . . . . . . . . . . . . . . . . . .14
Section 4.1. Guaranties . . . . . . . . . . . . . . . . . . . . . .14
Section 4.2. Further Assurances.. . . . . . . . . . . . . . . . . .14
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SECTION 5. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . .14
Section 5.1. Organization and Qualification . . . . . . . . . . . .14
Section 5.2. Subsidiaries . . . . . . . . . . . . . . . . . . . . .14
Section 5.3. Corporate Authority and Validity of Obligations. . . .15
Section 5.4. Use of Proceeds; Margin Stock. . . . . . . . . . . . .15
Section 5.5. Financial Reports. . . . . . . . . . . . . . . . . . .15
Section 5.6. No Material Adverse Change . . . . . . . . . . . . . .16
Section 5.7. Litigation and Other Controversies . . . . . . . . . .16
Section 5.8. Taxes. . . . . . . . . . . . . . . . . . . . . . . . .16
Section 5.9. Approvals. . . . . . . . . . . . . . . . . . . . . . .16
Section 5.10. Investment Company; Public Utility Holding Company . .16
Section 5.11. ERISA. . . . . . . . . . . . . . . . . . . . . . . . .16
Section 5.12. Compliance with Laws . . . . . . . . . . . . . . . . .17
Section 5.13. Other Agreements . . . . . . . . . . . . . . . . . . .17
Section 5.14. No Default . . . . . . . . . . . . . . . . . . . . . .17
SECTION 6. CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . .17
Section 6.1. All Advances . . . . . . . . . . . . . . . . . . . . .17
Section 6.2. Initial Advance. . . . . . . . . . . . . . . . . . . .18
SECTION 7. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . .19
Section 7.1. Maintenance of Business. . . . . . . . . . . . . . . .19
Section 7.2. Maintenance of Properties. . . . . . . . . . . . . . .19
Section 7.3. Taxes and Assessments. . . . . . . . . . . . . . . . .20
Section 7.4. Insurance. . . . . . . . . . . . . . . . . . . . . . .20
Section 7.5. Financial Reports. . . . . . . . . . . . . . . . . . .20
Section 7.6. Inspection . . . . . . . . . . . . . . . . . . . . . .21
Section 7.7. Current Ratio. . . . . . . . . . . . . . . . . . . . .22
Section 7.8. Tangible Net Worth . . . . . . . . . . . . . . . . . .22
Section 7.9. Leverage Ratio . . . . . . . . . . . . . . . . . . . .22
Section 7.10. Cash Flow Coverage Ratio . . . . . . . . . . . . . . .22
Section 7.11. Indebtedness for Borrowed Money. . . . . . . . . . . .22
Section 7.12. Liens. . . . . . . . . . . . . . . . . . . . . . . . .22
Section 7.13. Investments, Acquisitions, Loans, Advances and
Guaranties . . . . . . . . . . . . . . . . . . . . . .23
Section 7.14. Mergers, Consolidations and Sales. . . . . . . . . . .25
Section 7.15. Dividends and Certain Other Restricted Payments. . . .25
Section 7.16. ERISA. . . . . . . . . . . . . . . . . . . . . . . . .26
Section 7.17. Compliance with Laws . . . . . . . . . . . . . . . . .26
Section 7.18. Change in the Nature of Business . . . . . . . . . . .26
SECTION 8. EVENTS OF DEFAULT AND REMEDIES. . . . . . . . . . . . . .26
Section 8.1. Events of Default. . . . . . . . . . . . . . . . . . .26
Section 8.2. Non-Bankruptcy Remedies. . . . . . . . . . . . . . . .28
Section 8.3. Bankruptcy Remedies. . . . . . . . . . . . . . . . . .28
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Section 8.4. Collateral for Undrawn Letters of Credit . . . . . . .28
SECTION 9. DEFINITIONS; INTERPRETATIONS. . . . . . . . . . . . . . .29
Section 9.1. Definitions. . . . . . . . . . . . . . . . . . . . . .29
Section 9.2. Interpretation.. . . . . . . . . . . . . . . . . . . .37
SECTION 10. THE AGENT . . . . . . . . . . . . . . . . . . . . . . . .38
Section 10.1. Appointment and Authorization. . . . . . . . . . . . .38
Section 10.2. Rights as a Lender . . . . . . . . . . . . . . . . . .38
Section 10.3. Standard of Care . . . . . . . . . . . . . . . . . . .38
Section 10.4. Costs and Expenses . . . . . . . . . . . . . . . . . .39
Section 10.5. Indemnity. . . . . . . . . . . . . . . . . . . . . . .39
SECTION 11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . .39
Section 11.1. Withholding Taxes. . . . . . . . . . . . . . . . . . .39
Section 11.2. Non-Business Days. . . . . . . . . . . . . . . . . . .40
Section 11.3. No Waiver, Cumulative Remedies . . . . . . . . . . . .41
Section 11.4. Waivers, Modifications and Amendments. . . . . . . . .41
Section 11.5. Costs and Expenses . . . . . . . . . . . . . . . . . .41
Section 11.6. Documentary Taxes. . . . . . . . . . . . . . . . . . .41
Section 11.7. Survival of Representations. . . . . . . . . . . . . .42
Section 11.8. Notices. . . . . . . . . . . . . . . . . . . . . . . .42
Section 11.9. Participations . . . . . . . . . . . . . . . . . . . .42
Section 11.10. Assignment Agreements. . . . . . . . . . . . . . . . .42
Section 11.11. Extension of the Revolving Credit Commitments. . . . .43
Section 11.12. Lender's Obligations Several . . . . . . . . . . . . .44
Section 11.13. Headings . . . . . . . . . . . . . . . . . . . . . . .44
Section 11.14. Severability of Provisions . . . . . . . . . . . . . .44
Section 11.15. Counterparts . . . . . . . . . . . . . . . . . . . . .44
Section 11.16. Binding Nature and Governing Law . . . . . . . . . . .44
Section 11.17. Entire Understanding . . . . . . . . . . . . . . . . .44
Section 11.18. Submission to Jurisdiction; Waiver of Jury Trial . . .44
Signature Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46
EXHIBIT A -- Form of Revolving Credit Note
EXHIBIT B -- Notice of Payment Request
EXHIBIT C -- Form of Term Note
EXHIBIT D -- Compliance Certificate
EXHIBIT E -- Opinion of Counsel
EXHIBIT F -- Assignment and Acceptance
SCHEDULE 5.2 -- Subsidiaries
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CREDIT AGREEMENT
American National Bank
and Trust Company of Chicago
Chicago, Illinois
▇▇▇▇▇▇ Trust and Savings Bank
Chicago, Illinois
Comerica Bank
Detroit, Michigan
and the other Lenders from time to time party hereto
Ladies and Gentlemen:
The undersigned, HA-LO Industries, Inc., an Illinois corporation (the
"COMPANY"), applies to you for your several commitments, subject to the terms
and conditions hereof and on the basis of the representations and warranties
hereinafter set forth, to make credit available to the Company, all as more
fully hereinafter set forth.
SECTION 1. THE CREDITS.
SECTION 1.1. REVOLVING CREDIT. Subject to the terms and conditions
hereof, each Lender, by its acceptance hereof, severally agrees to extend a
revolving credit (the "REVOLVING CREDIT") to the Company in the aggregate amount
of such Lender's commitment to extend the Revolving Credit as set forth on the
applicable signature page hereof or pursuant to Section 11.10 hereof (its
"REVOLVING CREDIT COMMITMENT" and cumulatively for all the Lenders, the
"REVOLVING CREDIT COMMITMENTS") (subject to any reductions thereof pursuant to
the terms hereof) prior to the Termination Date. The Revolving Credit, subject
to all of the terms and conditions hereof, may be utilized by the Company in the
form of Revolving Loans and Letters of Credit, all as more fully hereinafter set
forth; PROVIDED, HOWEVER, that the aggregate principal amount of the Revolving
Loans and L/C Obligations outstanding at any one time shall not at any time
exceed the Revolving Credit Commitments then in effect. During the period from
and including the date hereof to but not including the Termination Date, the
Company may use the Revolving Credit Commitments by borrowing, repaying and
reborrowing Revolving Loans in whole or in part and/or by having the Agent issue
Letters of Credit, having such Letters of Credit expire or otherwise terminate
without having been drawn upon or, if drawn upon, reimbursing the Agent for each
such drawing, and having the Agent issue new Letters of Credit, all in
accordance with the terms and conditions of this Agreement. For all purposes of
this Agreement, where a determination of the unused or available amount of the
Revolving Credit Commitments is necessary, the Revolving Loans and L/C
Obligations shall all be deemed to utilize the Revolving Credit Commitments.
The obligations of the Lenders hereunder are several and not joint, and no
Lender shall under any circumstances be obligated to extend credit hereunder in
excess of its Revolving Credit Commitment.
SECTION 1.2. REVOLVING LOANS. Subject to the terms and conditions
hereof, the Revolving Credit may be availed of in the form of loans
(individually a "REVOLVING LOAN" and collectively the "REVOLVING LOANS"). Each
Borrowing of Revolving Loans shall be made ratably by the Lenders in accordance
with their Percentages. Each Borrowing of Revolving Loans shall be in an amount
of $100,000 or such greater amount which is an
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integral multiple of $50,000; PROVIDED, HOWEVER, that (i) a Borrowing made to
repay a Reimbursement Obligation may be made in the amount thereof and (ii) a
Borrowing of Revolving Loans, or any part thereof, which bears interest with
reference to the Adjusted LIBOR Rate shall be in such greater amount as is
required by Section 2 hereof. All Revolving Loans made by a Lender shall be
evidenced by a single Revolving Credit Note of the Company (individually a
"REVOLVING CREDIT NOTE" and collectively the "REVOLVING CREDIT NOTES", which
shall include the Revolving Credit Notes issued pursuant to Section 11.10
hereof) payable to the order of such Lender in the amount of its Revolving
Credit Commitment, each Revolving Credit Note to be in the form (with
appropriate insertions) attached hereto as Exhibit A. Each Revolving Credit
Note shall be dated the date of issuance thereof, be expressed to bear interest
as set forth in Section 2 hereof, and be expressed to mature on the Termination
Date. Without regard to the principal amount of each Revolving Credit Note
stated on its face, the actual principal amount at any time outstanding and
owing by the Company on account thereof shall be the sum of all Revolving Loans
then or theretofore made thereon less all payments of principal actually
received thereon.
SECTION 1.3. LETTERS OF CREDIT.
(a) GENERAL TERMS. Subject to the terms and conditions hereof, as part of
the Revolving Credit, the Agent shall issue standby and commercial letters of
credit (each a "LETTER OF CREDIT") for the account of the Company in U.S.
Dollars in an aggregate undrawn face amount up to the amount of the L/C
Commitment. Each Letter of Credit shall be issued by the Agent, but each Lender
shall be obligated to reimburse the Agent for such Lender's Percentage of the
amount of each draft drawn under a Letter of Credit and, accordingly, each
Letter of Credit shall be deemed to utilize the Revolving Credit Commitment of
each Lender pro rata in accordance with its Percentage thereof.
(b) APPLICATIONS. At any time before the Termination Date, the Agent
shall, at the request of the Company, issue one or more Letters of Credit to or
for the account of the Company in a form satisfactory to the Agent, with
expiration dates no later than the earlier of (i) 12 months from the date of
issuance (or be cancellable not later than 12 months from the date of issuance
and each renewal) and (ii) 3 months after the Termination Date then in effect,
in an aggregate face amount as set forth above, upon the receipt of an
application for the relevant Letter of Credit in the form then customarily
prescribed by the Agent duly executed by the Company (each an "APPLICATION").
On the Termination Date, the Company shall pay to the Agent an amount equal to
the aggregate amounts undrawn on all Letters of Credit which are outstanding on
that date to be held as cash collateral for the Obligations of the Company with
respect to such Letters of Credit and the Applications therefor.
Notwithstanding anything contained in any Application to the contrary, (i) the
obligation of the Company to pay fees in connection with each Letter of Credit
shall be as set forth in Section 3.2 hereof and (ii) except during the existence
of an Event of Default, the Agent will not call for the funding by the Company
of any amount under a Letter of Credit, or any other form of collateral security
for the obligations of the Company in connection with such Letter of Credit,
before being presented with a drawing thereunder. The Agent will promptly
notify the Lenders of each issuance by the Agent of a Letter of
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Credit. If the Agent issues any Letter of Credit with an expiration date that
is automatically extended unless the Agent gives notice that the expiration date
will not so extend beyond its then scheduled expiration date, the Agent will
give such notice of non-renewal before the time necessary to prevent such
automatic extension if before such required notice date (i) the expiration date
of such Letter of Credit if so extended would be after the Termination Date,
(ii) the Revolving Credit Commitments have been terminated or (iii) a Default or
an Event of Default exists and the Required Lenders have given the Agent
instructions not to so permit the extension of the expiration date of such
Letter of Credit. The Agent shall provide the Company with a copy of such
notice of non-renewal promptly after issuance thereof. The Agent agrees to
issue amendments to the Letter(s) of Credit increasing the amount, or extending
the expiration date, thereof at the request of the Company subject to the
conditions of Section 6 and the other terms of this Section 1.3. Without
limiting the generality of the foregoing, the Agent will not issue, amend or
extend the expiration date of any Letter of Credit if any Lender notifies the
Agent of any failure to satisfy or otherwise comply with the conditions and
terms of Section 6 or of this Section 1.3 and directs the Agent not to take such
action.
(c) THE REIMBURSEMENT OBLIGATION. Subject to Section 1.3(b) hereof, the
obligation of the Company to reimburse the Agent for all drawings under a Letter
of Credit (a "REIMBURSEMENT OBLIGATION") shall be governed by the Application
related to such Letter of Credit, except that (i) reimbursement of each drawing
shall be made in immediately available funds at the Agent's principal office in
Chicago, Illinois by no later than 2:00 p.m. Chicago time on the date when such
drawing is paid if the Company has been informed of such drawing by the Agent on
or before 11:30 a.m. Chicago time on the date when such drawing is paid or, if
notice of such drawing is given to the Company after 11:30 a.m. Chicago time on
the date when such drawn is paid, by 2:00 p.m. Chicago time on the next Business
Day and (ii) the Company's Reimbursement Obligation shall bear interest (which
the Company hereby promises to pay), whether before or after judgment, until
payment in full thereof at the rate per annum equal to the Base Rate as in
effect from time to time. If the Company does not make any such reimbursement
payment on the date due and the Participating Lenders fund their participations
therein in the manner set forth in Section 1.3(d) below, then all payments
thereafter received by the Agent in discharge of any of the relevant
Reimbursement Obligations shall be distributed in accordance with Section 1.3(d)
below.
(d) THE PARTICIPATING INTERESTS. Each Lender (other than the Lender then
acting as Agent in issuing Letters of Credit), by its acceptance hereof,
severally agrees to purchase from the Agent, and the Agent hereby agrees to sell
to each such Lender (a "PARTICIPATING LENDER"), an undivided percentage
participating interest (a "PARTICIPATING INTEREST"), to the extent of its
Percentage, in each Letter of Credit issued by, and each Reimbursement
Obligation owed to, the Agent. Upon any failure by the Company to pay any
Reimbursement Obligation in respect of a Letter of Credit at the time required
on the date the related drawing is paid, as set forth in Section 1.3(c) above,
or if the Agent is required at any time to return to the Company or to a
trustee, receiver, liquidation, custodian or other Person any portion of any
payment of any Reimbursement Obligation, each
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Participating Lender shall, not later than the Business Day it receives a
certificate in the form of Exhibit B hereto from the Agent to such effect, if
such certificate is received before 2:00 p.m. Chicago time, or not later than
the following Business Day, if such certificate is received after such time, pay
to the Agent an amount equal to such Lender's Percentage of such unpaid or
recaptured Reimbursement Obligation together with interest on such amount
accrued from the date the related payment was made by the Agent to the date of
such payment by such Participating Lender at a rate per annum equal to (i) from
the date the related payment was made by the Agent to the date 2 Business Days
after payment by such Participating Lender is due hereunder, the Federal Funds
Rate for each such day and (ii) from the date 2 Business Days after the date
such payment is due from such Participating Lender to the date such payment is
made by such Participating Lender, the Base Rate in effect for each such day.
Each such Participating Lender shall thereafter be entitled to receive its
Percentage of each payment received in respect of the relevant Reimbursement
Obligation and of interest paid thereon, with the Agent retaining its Percentage
as a Lender hereunder.
The several obligations of the Participating Lenders to the Agent under
this Section 1.3 shall be absolute, irrevocable and unconditional under any and
all circumstances whatsoever and shall not be subject to any set-off,
counterclaim or defense to payment which any Participating Lender may have or
have had against the Company, the Agent, any other Lender or any other Person
whatsoever. Without limiting the generality of the foregoing, such obligations
shall not be affected by any Default or Event of Default or by any reduction or
termination of any Revolving Credit Commitment of any Lender, and each payment
by a Participating Lender under this Section 1.3 shall be made without any
offset, abatement, withholding or reduction whatsoever. The Agent shall be
entitled to offset amounts received for the account of a Lender under this
Agreement against unpaid amounts due from such Lender to the Agent hereunder
(whether as fundings of participations, indemnities or otherwise), but shall not
be entitled to offset against amounts owed to the Agent by any Lender arising
outside this Agreement.
(e) INDEMNIFICATION. The Participating Lenders shall, to the extent of
their respective Percentages, indemnify the Agent (to the extent not reimbursed
by the Company) against any cost, expense (including reasonable counsel fees and
disbursements), claim, demand, action, loss or liability (except such as result
from the Agent's gross negligence or willful misconduct) that the Agent may
suffer or incur in connection with any Letter of Credit. The obligations of the
Participating Lenders under this Section 1.3(e) and all other parts of this
Section 1.3 shall survive termination of this Agreement, the Applications, and
all drafts and any other documents presented in connection with a drawing under
any Letter of Credit.
SECTION 1.4. TERM CREDIT. Subject to the terms and
conditions hereof, each Lender severally agrees to make one or more
loans (individually a "TERM LOAN" and collectively the "TERM LOANS")
to the Company in the aggregate amount of such Lender's commitment
to make Term Loans as set forth on the applicable signature page
hereof or pursuant to Section 11.10 hereof (its "TERM LOAN
COMMITMENT" and collectively for all Lenders the "TERM LOAN
COMMITMENTS") (subject to any reductions thereof pursuant to the
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terms hereof) prior to the Term Credit Termination Date. Each
Borrowing of Term Loans shall be made ratably by the Lenders in
accordance with their Percentages. Each Borrowing of Term Loans
shall be in an amount of $1,000,000 or such greater amount which is
an integral multiple of $100,000; PROVIDED, HOWEVER, that a
Borrowing of Term Loans, or any part thereof, which bears interest
with reference to the Adjusted LIBOR Rate shall be in such greater
amount as is required by Section 2 hereof. The principal amount of
each Term Loan shall permanently reduce the amount available to the
Company under each Lender's Term Loan Commitment, and no amount
repaid or prepaid on any Term Loan may be borrowed again. Each Term
Loan made by a Lender shall be evidenced by a Term Note of the
Company (individually a "TERM NOTE" and collectively the "TERM
NOTES", which shall include the Term Notes issued pursuant to
Section 11.10 hereof) payable to the order of such Lender in an
amount equal to such Lender's Percentage of the Borrowing of Term
Loans then being made, each Term Note to be in the form (with
appropriate insertions) attached hereto as Exhibit C. Each Term
Note shall be dated the date of issuance thereof, be expressed to
bear interest as set forth in Section 2 hereof, and be expressed to
mature in consecutive quarterly principal installments, with each
principal installment of a Term Note to be in an amount equal to
1/20th of the original principal amount of the Term Loan evidenced
thereby, commencing on the date which is three calendar months after
the date on which the relevant Term Loan is made and continuing on
the same date of each and every third calendar month thereafter (or
if no such date exists for any one or more of such installments,
then on the last day of such third calendar month), except that the
final payment of both principal and interest, if not sooner paid,
shall be due on the earlier of (i) the fifth anniversary date of the
date on which the relevant Term Loan was made or (ii) June 30, 2003.
The obligations of the Lenders hereunder are several and not joint,
and no Lender shall under any circumstances be obligated to extend
credit hereunder in excess of its Term Loan Commitment.
SECTION 1.5. MANNER OF BORROWING LOANS.
(a) GENERALLY. The Company shall give the Agent notice
(which may be written or oral, but if oral, promptly confirmed in
writing) by 10:00 a.m. Chicago time on any Business Day of each
request that any Borrowing of Loans, in each case specifying the
amount of each such Borrowing, the type of Loan being requested,
and the date such Borrowing is to be made (which shall be a
Business Day). The Agent shall notify each Lender of its receipt
of each such notice by 12:00 noon Chicago time on the Business Day
any Borrowing of Loans constituting the Base Rate Portion is to be
made and by 12:00 noon Chicago time on the Business Day it receives
such a request for any Borrowing of Loans constituting a LIBOR
Portion. Each Borrowing shall initially constitute part of the
relevant Base Rate Portion except to the extent the Company has
timely elected that such Borrowing, or any part thereof, constitute
part of a LIBOR Portion as provided in Section 2 hereof. Not later
than 2:00 p.m. Chicago time on the date specified for any Borrowing
of Loans to be made hereunder, each Lender shall make the proceeds
of its Loan comprising part of such Borrowing available in
immediately available funds to the Agent in Chicago, Illinois.
Subject to all of the terms and conditions hereof, the proceeds of
each Lender's Loan shall be made available to the Company in
accordance with the instruction of the
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Company at the office of the Agent in Chicago, Illinois and in
funds there current.
(b) REIMBURSEMENT OBLIGATION. In the event the Company fails
to give notice pursuant to Section 1.5(a) above of a Borrowing
equal to the amount of a Reimbursement Obligation and has not
notified the Agent by 11:30 a.m. Chicago time on the day such
Reimbursement Obligation becomes due that the Company intends to
repay such Reimbursement Obligation through funds not borrowed
under this Agreement, the Company shall be deemed to have requested
a Borrowing of Revolving Loans constituting part of the Base Rate
Portion on such day in the amount of the Reimbursement Obligation
then due, subject to Section 6 hereof, which Borrowing shall be
applied to pay the Reimbursement Obligation then due.
(c) AGENT RELIANCE ON BANK FUNDING. Unless the Agent shall
have been notified by a Lender before the date on which such Lender
is scheduled to make payment to the Agent of the proceeds of a Loan
(which notice shall be effective upon receipt) that such Lender
does not intend to make such payment, the Agent may assume that
such Lender has made such payment when due and the Agent may in
reliance upon such assumption (but shall not be required to) make
available to the Company the proceeds of the Loan to be made by
such Lender and, if any Lender has not in fact made such payment to
the Agent, such Lender shall, on demand, pay to the Agent the
amount made available to the Company attributable to such Lender
together with interest thereon in respect of each day during the
period commencing on the date such amount was made available to the
Company and ending on (but excluding) the date such Lender pays
such amount to the Agent at a rate per annum equal to (i) from the
date the related amount was made available to the Company by the
Agent to the date 2 Business Days after such amount is due from the
Lender hereunder, the Federal Funds Rate for each such day and (ii)
from the date 2 Business Days after such amount is due from the
Lender hereunder to the date such amount is paid to the Agent by
such Lender, the Base Rate in effect for each such day. If such
amount is not received from such Lender by the Agent immediately
upon demand, the Company will, on demand, repay to the Agent the
proceeds of the Loan attributable to such Lender with interest
thereon at a rate per annum equal to the interest rate applicable
to the relevant Loan, but without such payment being considered a
payment or prepayment of a Loan under Section 2.8 hereof, so that
the Company will have no liability under Section 2.8 with respect
to such payment.
(d) RELIANCE. All requests for Borrowings and selection of
interest rates to be applicable thereto may be written or oral,
including by telephone or telecopy. The Company agrees that the
Agent may rely on any such notice given by any person the Agent in
good faith believes is an Authorized Representative without the
necessity of independent investigation (the Company hereby
indemnifying the Agent and the Lenders from any liability or loss
ensuing from such reliance), and in the event any such telephonic
or other oral notice conflicts with any written confirmation, such
oral or telephonic notice shall govern if the Agent has acted in
reliance thereon.
SECTION 2. INTEREST.
SECTION 2.1. OPTIONS. Subject to all of the terms and
conditions of this Section 2, portions of the principal
indebtedness evidenced by the Notes (all of the indebtedness
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evidenced by Notes of the same type and, with respect to the Term
Notes, relating to the same Borrowing, and bearing interest at the
same rate for the same period of time being hereinafter referred to
as a "PORTION") may, at the option of the Company, bear interest
with reference to the Base Rate ("BASE RATE PORTIONS") or with
reference to the Adjusted LIBOR Rate ("LIBOR PORTIONS"), and
Portions may be converted from time to time from one basis to the
other. All of the indebtedness evidenced by the Notes of the same
type and, with respect to the Term Notes, relating to the same
Borrowing, which is not part of a LIBOR Portion shall constitute a
single Base Rate Portion. All of the indebtedness evidenced by the
Notes of the same type and, with respect to the Term Notes,
relating to the same Borrowing, which bears interest with reference
to a particular Adjusted LIBOR Rate for a particular Interest
Period shall constitute a single LIBOR Portion. Anything contained
herein to the contrary notwithstanding, there shall not be more
than five (5) LIBOR Portions applicable to Notes of the same type
and, with respect to the Term Notes, relating to the same
Borrowing, outstanding at any one time and each Lender shall have a
ratable interest in each Portion. The Company hereby promise to
pay interest on each Portion applicable to it at the rates and
times specified in this Section 2.
SECTION 2.2. BASE RATE PORTION. Each Base Rate Portion
shall bear interest (which the Company hereby promises to pay at
the times herein provided) at the rate per annum equal to the Base
Rate as in effect from time to time minus .25% per annum, provided
that if a Base Rate Portion is not paid when due (whether by lapse
of time, acceleration or otherwise), such Portion shall bear
interest (which the Company hereby promises to pay at the times
hereinafter provided), whether before or after judgment, and until
payment in full thereof, at the rate per annum determined by adding
2% to the Base Rate as in effect from time to time. Interest on
the Base Rate Portions shall be payable monthly in arrears on the
last day of each month in each year and at maturity of the
applicable Notes, and interest after maturity shall be due and
payable upon demand.
SECTION 2.3. LIBOR PORTIONS. Each LIBOR Portion shall bear
interest (which the Company hereby promises to pay at the times
herein provided) for each Interest Period selected therefor at a
rate per annum determined by adding the Applicable Margin to the
Adjusted LIBOR Rate for such Interest Period, provided that if any
LIBOR Portion is not paid when due (whether by lapse of time,
acceleration or otherwise), such Portion shall bear interest (which
the Company hereby promises to pay at the times hereinafter
provided), whether before or after judgment, and until payment in
full thereof, through the end of the Interest Period then
applicable thereto at the rate per annum determined by adding 2% to
the interest rate otherwise applicable thereto and effective at the
end of such Interest Period, such LIBOR Portion shall automatically
be converted into and added to the applicable Base Rate Portion and
shall thereafter bear interest at the rate per annum determined by
adding 2% to the Base Rate as in effect from time to time.
Interest on each LIBOR Portion shall be due and payable on the last
day of each Interest Period applicable thereto (provided that if
any Interest Period is longer than three months, then interest on
the LIBOR Portion having such Interest Period shall be due and
payable on the date occurring every three months after the date
such Interest Period began and on the last day of such Interest
Period), and interest after maturity shall be due and payable upon
demand. The Company
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shall notify the Agent on or before 10:00 a.m. Chicago time on the
third Business Day preceding the end of an Interest Period
applicable to a LIBOR Portion whether such LIBOR Portion is to
continue as a LIBOR Portion, in which event the Company shall
notify the Agent of the new Interest Period selected therefor, and
in the event the Company shall fail to so notify the Agent, such
LIBOR Portion shall automatically be converted into and added to
the applicable Base Rate Portion as of and on the last day of such
Interest Period. The Agent shall promptly notify each Lender of
each notice received from the Company pursuant to the foregoing
provisions. Each LIBOR Portion shall be in an amount equal to
$500,000 or such greater amount which is an integral multiple of
$100,000. Anything contained herein to the contrary
notwithstanding, the obligation of the Lenders to create, continue
or effect by conversion any LIBOR Portion shall be conditioned upon
the fact that at the time no Default or Event of Default shall have
occurred and be continuing.
SECTION 2.4. MANNER OF RATE SELECTION. The Company shall
notify the Agent by 10:00 a.m. Chicago time at least 3 Business
Days prior to the date upon which it requests that any LIBOR
Portion be created or that any part of the applicable Base Rate
Portion be converted into a LIBOR Portion (such notice to specify
in each instance the amount thereof and the Interest Period
selected therefor) and the Agent shall advise each Lender of each
such notice by 12:00 noon Chicago time on the same Business Day it
receives such notice. If any request is made to convert a LIBOR
Portion into the applicable Base Rate Portion, such conversion
shall only be made so as to become effective as of the last day of
the Interest Period applicable thereto. All requests for the
creation, continuance or conversion of Portions under this
Agreement shall, subject to Section 2.6 hereof, be irrevocable.
SECTION 2.5. CHANGE OF LAW. Notwithstanding any other
provisions of this Agreement or the Notes, if at any time a Lender
shall determine in good faith that any change in applicable laws,
treaties or regulations or in the interpretation thereof makes it
unlawful for such Lender to create or continue to maintain LIBOR
Portions, it shall promptly so notify the Agent (which shall in
turn promptly notify the Company and the other Lenders) and the
obligation of such Lender to create, continue or maintain any LIBOR
Portion under this Agreement shall be suspended until it is no
longer unlawful for such Lender to create, continue or maintain
LIBOR Portions. The Company shall, on demand, if the continued
maintenance of a LIBOR Portion is unlawful, thereupon prepay the
outstanding principal amount of the LIBOR Portion, together with
all interest accrued thereon and all other amounts payable to the
affected Lender with respect thereto under this Agreement;
PROVIDED, HOWEVER, that the Company may instead elect to convert
the principal amount of the affected LIBOR Portion into the
applicable Base Rate Portion, subject to the terms and conditions
of this Agreement.
SECTION 2.6. UNAVAILABILITY OF DEPOSITS OR INABILITY TO
ASCERTAIN THE ADJUSTED LIBOR RATE. Notwithstanding any other
provision of this Agreement or the Notes, if prior to the
commencement of any Interest Period, (a) any Lender shall inform
the Agent that such Lender has determined that United States dollar
deposits in the amount of any LIBOR Portion scheduled to be
outstanding during such Interest Period are not readily available
to such Lender in the offshore interbank market or (b) the Required
Lenders shall advise the Agent that LIBOR as determined by the
Agent will not adequately and fairly reflect the
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cost to such Lenders of funding such LIBOR Portion for such
Interest Period, the Agent shall promptly give notice thereof to
the Company and each other Lender and the obligations of the
Lenders to create, continue or effect by conversion any LIBOR
Portion in such amount and for such Interest Period shall be
suspended until the circumstances giving rise to such suspension no
longer exist.
SECTION 2.7. TAXES AND INCREASED COSTS. With respect to the
LIBOR Portions, if any Lender shall determine in good faith that
any change in any applicable law, treaty, regulation or guideline
(including, without limitation, Regulation D of the Board of
Governors of the Federal Reserve System) or any new law, treaty,
regulation or guideline, or any interpretation of any of the
foregoing by any governmental authority charged with the
administration thereof or any central bank or other fiscal,
monetary or other authority having jurisdiction over such Lender or
its lending branch or the Portions contemplated by this Agreement
(whether or not having the force of law) shall:
(i) impose, increase, or deem applicable any reserve,
special deposit or similar requirement against assets held by,
or deposits in or for the account of, or loans by, or any
other acquisition of funds or disbursements by, such Lender
which is not in any instance already accounted for in
computing the Adjusted LIBOR Rate;
(ii) subject such Lender, the LIBOR Portions or any Note
to the extent it evidences any LIBOR Portion, to any tax
(including, without limitation, any United States interest
equalization tax or similar tax however named applicable to
the acquisition or holding of debt obligations and any
interest or penalties with respect thereto), duty, charge,
stamp tax, fee, deduction or withholding in respect of this
Agreement, any LIBOR Portion or any Note to the extent it
evidences such a Portion, except such taxes as may be measured
by the overall net income or gross receipts of such Lender or
its lending branches and imposed by the jurisdiction, or any
political subdivision or taxing authority thereof, in which
such Lender's principal executive office or its lending branch
is located;
(iii) change the basis of taxation of payments of
principal and interest due from the Company to such Lender
hereunder or under any Note to the extent it evidences any
LIBOR Portion (other than by a change in taxation of the
overall net income or gross receipts of such Lender or its
lending branches); or
(iv) impose on such Lender any penalty with respect to
the foregoing or any other condition regarding this Agreement,
any LIBOR Portion, or any Note to the extent it evidences any
LIBOR Portion;
and such Lender shall determine that the result of any of the
foregoing is to increase the cost (whether by incurring a cost or
adding to a cost) to such Lender of creating or maintaining any
LIBOR Portion hereunder or to reduce the amount of principal or
interest received or receivable by such Lender, then the Company
shall pay on demand to the Agent for the account of such Lender
from time to time as specified by such Lender such additional
amounts as such Lender shall reasonably determine are sufficient to
compensate and indemnify it for such increased cost or reduced
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amount. If a Lender makes such a claim for compensation, it shall
provide to the Company (with a copy to the Agent) a certificate
setting forth in reasonable detail the computation of the increased
cost or reduced amount as a result of any event mentioned herein
and such certificate shall be conclusive if reasonably determined.
SECTION 2.8. FUNDING INDEMNITY. In the event any Lender
shall incur any loss, cost or expense (including, without
limitation, any loss, cost or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired or
contracted to be acquired by such Lender to fund or maintain its
part of any LIBOR Portion or the relending or reinvesting of such
deposits or other funds or amounts paid or prepaid to such Lender)
as a result of:
(i) any payment of a LIBOR Portion on a date other than
the last day of the then applicable Interest Period for any
reason, whether before or after the occurrence of a Default or
Event of Default, and whether or not such payment is required
by any provisions of this Agreement; or
(ii) any failure by any of the Company to create, borrow,
continue or effect by conversion a LIBOR Portion on the date
specified in a notice given pursuant to this Agreement;
then, upon the demand of such Lender, the Company shall pay on
demand to the Agent for the account of such Lender such amount as
will reimburse such Lender for such loss, cost or expense. If a
Lender requests such a reimbursement, it shall provide the Company
(with a copy to the Agent) with a certificate setting forth in
reasonable detail the computation of the loss, cost or expense
giving rise to the request for reimbursement and such certificate
shall be conclusive if reasonably determined.
SECTION 2.9. LENDING BRANCH. Each Lender may, at its
option, elect to make, fund or maintain its Loans hereunder at the
branches or offices specified on the signature pages hereof or on
any Assignment Agreement executed and delivered pursuant to Section
11.10 hereof or at such other of its branches or offices as such
Lender may from time to time elect.
SECTION 2.10. DISCRETION OF LENDERS AS TO MANNER OF FUNDING.
Notwithstanding any provision of this Agreement to the contrary,
each Lender shall be entitled to fund and maintain its funding of
all or any part of its share of its Notes in any manner it sees
fit, it being understood, however, that for the purposes of this
Agreement all determinations hereunder (including determinations
under Sections 2.6, 2.7 and 2.8 hereof) shall be made as if each
such Lender had actually funded and maintained each LIBOR Portion
during each Interest Period applicable thereto through the purchase
of deposits in the offshore interbank market in the amount of its
share of such LIBOR Portion, having a maturity corresponding to
such Interest Period and bearing an interest rate equal to LIBOR
for such Interest Period.
SECTION 2.11. CAPITAL ADEQUACY. If any Lender shall
determine that any applicable law, rule or regulation regarding
capital adequacy instituted after the date hereof, or any change in
the interpretation or administration of any applicable law, rule or
regulation regarding capital adequacy by any governmental
authority, central bank or
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comparable agency charged with the interpretation or administration
thereof or compliance by such Lender (or its lending office) with
any request or directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the
rate of return on such Lender's capital as a consequence of its
obligations hereunder or credit extended by it hereunder to a level
below that which such Lender could have achieved but for such law,
rule, regulation, change or compliance (taking into consideration
such Lender's policies with respect to capital adequacy) by an
amount deemed by such Lender to be material, then from time to
time, within 15 days after demand by such Lender, the Company shall
pay to the Agent for the account of such Lender such additional
amount or amounts as will compensate such Lender for such
reduction. Any Lender claiming compensation under this Section
shall accompany its demand for compensation with a certificate
(with a copy to the Agent) setting forth the additional amount or
amounts to be paid to it hereunder in reasonable detail, which
certificate shall be conclusive if reasonably determined. In
determining such amount, such Lender may use any reasonable
averaging and attribution methods.
SECTION 3. FEES, PAYMENTS, REDUCTIONS, APPLICATIONS AND
NOTATIONS.
SECTION 3.1. COMMITMENT FEE. For the period from the date
hereof to but not including the Termination Date, the Company shall
pay to the Agent for the account of the Lenders in accordance with
their Percentages a commitment fee at the rate per annum equal to
.20% per annum on the average daily unused amount of the Revolving
Credit Commitments hereunder. Such fee shall be payable in arrears
on the last day of each March, June, September, and December in
each year (commencing with the first of such dates after the date
hereof) and on the Termination Date.
SECTION 3.2. LETTER OF CREDIT FEES. With respect to each
standby Letter of Credit, commencing on the date which is three
calendar months after the date of issuing the relevant Letter of
Credit and continuing on the same date each and every third
calendar month thereafter, the Company shall pay to the Agent a
letter of credit fee at the rate of 1.5% per annum applied to the
daily average face amount of the relevant standby Letter of Credit
outstanding during such period (of which amount the Agent shall
retain for its own account, as the issuing bank and not on account
of its interest therein as a Lender, .25% per annum with the
remaining 1.25% per annum fee to be remitted to the Lenders pro
rata in accordance with their Percentages). With respect to each
commercial Letter of Credit, on the date when any drawing is made
thereunder (or, if sooner, the expiry date of the relevant Letter
of Credit), the Company shall pay to the Agent a letter of credit
fee at the rate of .25% (minimum of $70) per annum applied to the
face amount of the drawing of the relevant commercial Letter of
Credit (or, if being paid on the expiry date of such Letter of
Credit, on the undrawn face amount thereof) (of which amount the
Agent shall retain for its own account, as the issuing bank and not
on account of its interest therein as a Lender, .05% per annum,
with the remaining .20% per annum fee to be remitted to the
Lenders pro rata in accordance with their Percentages). In
addition, the Company shall pay to the Agent for its own use and
benefit the Agent's standard amendment and other administrative
fees for each Letter of Credit, as such standard fees may be
established by the Agent from time to time.
SECTION 3.3. COMPUTATION OF INTEREST AND FEES. All interest
on the Notes, and all fees, charges and commissions due hereunder,
shall be computed on the basis of a year of
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360 days for the actual number of days elapsed.
SECTION 3.4. AGENTS FEES. The Company shall pay to the
Agent for its own use and benefit fees with respect to the
administration of the credit facilities described in this Agreement
as are agreed to between the Company and the Agent in that certain
fee letter dated January 31, 1997, or as otherwise agreed to by
them.
SECTION 3.5. VOLUNTARY PREPAYMENTS. The Company shall have
the privilege of prepaying the Revolving Credit Notes in whole or
in part (but if in part, then in a minimum amount of $100,000 or
such greater amount which is an integral multiple of $50,000) and
the Term Notes in whole or in part (but if in part, then in a
minimum amount of $100,000 or such greater amount which is an
integral multiple of $50,000) at any time upon 1 Business Day prior
notice to the Agent (such notice if received subsequent to 2:00
p.m. Chicago time on a given day to be treated as though received
at the opening of business on the next Business Day), which shall
promptly so notify the Lenders, by paying to the Agent for the
account of the Lenders the principal amount to be prepaid and (i)
if such a prepayment prepays the Term Notes relating to the same
Borrowing in full, accrued interest thereon to the date of
prepayment, (ii) if such a prepayment prepays the Revolving Credit
Notes in full and is accompanied by the termination in whole of the
Revolving Credit Commitments, accrued interest thereon to the date
of prepayment plus any commitment fee which has accrued and is
unpaid, and (iii) any amounts due to the Lenders under Section 2.8
hereof.
SECTION 3.6. COMMITMENT TERMINATIONS. (a) VOLUNTARY
TERMINATIONS. The Company shall have the privilege upon 1 Business
Day prior notice to the Agent (which shall promptly notify the
Lenders) to ratably terminate the Revolving Credit Commitments
and/or the Term Loan Commitments in whole or in part (but if in
part then in the amount of $5,000,000 or such greater amount which
is an integral multiple of $1,000,000). No partial terminations of
the Revolving Credit Commitments may be made below the L/C
Commitment then in effect, unless the L/C Commitment is
concurrently reduced by a like amount. Not later than the
termination date stated in such notice, there shall be made such
payments to the Agent as may be necessary to reduce the sum of the
aggregate outstanding principal amount of the relevant Loans to the
amount to which the relevant Commitments have been reduced,
together with (x) any amount due the Lenders under Section 2.8
hereof and (y) in the case of a termination in whole, all interest,
fees and other amounts due on the Obligations. The foregoing to
the contrary notwithstanding, (i) no termination of the Revolving
Credit Commitment may be effected hereunder if as a result thereof
the outstanding aggregate amount of L/C Obligations would exceed
the L/C Commitment as reduced by such termination and (ii) the
relevant Commitments may not be terminated below $10,000,000 except
concurrently with their termination in whole. No termination of
the Commitments may be reinstated.
(b) CHANGE IN CONTROL. After the occurrence of a Change in
Control, the Required Lenders may at any time, but in no event
later than 30 days after the date the Company notifies the Lenders
of such Change in Control, terminate the Commitments effective on
the Business Day after the day the Company receives notice of such
termination. Any Loans outstanding on the date the Commitments are
so terminated,
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together with all other Obligations owing hereunder, shall be due
and payable on such date.
SECTION 3.7. PLACE AND APPLICATION. All payments of
principal, interest, fees and any other Obligations shall be made
to the Agent at its office at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ (or at such other place as the Agent may specify) in
immediately available and freely transferable funds at the place of
payment. All such payments shall be made without set-off or
counterclaim and without reduction for, and free from, any and all
present or future taxes, levies, imposts, duties, fees, charges,
deductions, withholdings, restrictions or conditions of any nature
imposed by any government or political subdivision or taxing
authority thereof. Payments received by the Agent after 2:00 p.m.
Chicago time shall be deemed received as of the opening of business
on the next Business Day. Except as herein provided, all payments
shall be received by the Agent for the ratable account of the
Lenders and shall be promptly distributed by the Agent to the
Lenders in accordance with their Percentages. Unless the Company
otherwise directs, payments on any Loans shall be deemed first
applied to the applicable Base Rate Portion until payment in full
thereof, with any balance applied to the LIBOR Portions in the
order in which their Interest Periods expire. Any amount prepaid
on the Revolving Credit Notes may, subject to all of the terms and
conditions hereof, be borrowed, repaid and borrowed again. No
amounts prepaid on the Term Notes may be reborrowed, and any
partial prepayments (whether voluntary or mandatory) shall be
applied to the several installments of such Notes in the inverse
order of maturity. All payments (whether voluntary or required)
shall be accompanied by any amount due the Lenders under Section
2.8 hereof, but no acceptance of such a payment without requiring
payment of amounts due under Section 2.8 shall preclude a later
demand by the Lenders for any amount due them under Section 2.8 in
respect of such payment.
Anything contained herein to the contrary notwithstanding, all
payments and collections received in respect of the Obligations and
all proceeds of collateral or payments on guarantees received, in
each instance, by the Agent or any of the Lenders after the
occurrence of an Event of Default shall be remitted to the Agent
and distributed as follows:
(a) first, to the payment of any outstanding actual
costs and expenses incurred by the Agent in protecting,
preserving or enforcing rights under the Loan Documents, and
in any event all costs and expenses of a character which the
Company has agreed to pay under Section 11.5 hereof (such
funds to be retained by the Agent for its own account unless
the Agent has previously been reimbursed for such costs and
expenses by the Lenders, in which event such amounts shall be
remitted to the Lenders to reimburse them for payments
theretofore made to the Agent);
(b) second, to the payment of any outstanding interest
or other fees or amounts due under the Notes and the other
Loan Documents, in each case other than for principal or in
reimbursement or collateralization of L/C Obligations, ratably
as among the Agent and the Lenders in accord with the amount
of such interest and other fees or amounts owing each;
(c) third, to the payment of the principal of the Notes
and any unpaid
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Reimbursement Obligations and to the Agent to be held as
collateral security for any other L/C Obligations (until the
Agent is holding an amount of cash equal to the then
outstanding amount of all such L/C Obligations), the aggregate
amount paid to or held as collateral security for the Lenders
to be allocated pro rata as among the Lenders in accordance
with the then respective aggregate unpaid principal balances
of their Loans and interests in the Letters of Credit; and
(d) fourth, to the Company or whoever else may be
lawfully entitled thereto.
SECTION 3.8. NOTATIONS AND REQUESTS. All Borrowings made
against the Notes, the status of all amounts evidenced by the Notes
as constituting part of the applicable Base Rate Portion or LIBOR
Portion and the rates of interest and Interest Periods applicable
to such Portions shall be recorded by the Lenders on their books
or, at their option in any instance, endorsed on the reverse side
of the Notes and the unpaid principal balances and status, rates
and Interest Periods so recorded or endorsed by the Lenders shall
be prima facie evidence in any court or other proceeding brought to
enforce the Notes of the principal amount remaining unpaid thereon,
the status of such Borrowings and the interest rates and Interest
Periods applicable thereto. Prior to any negotiation of any Note,
the Lender holding such Note shall endorse thereon the status of
all amounts evidenced thereby as constituting part of the Base Rate
Portion or LIBOR Portion and the rates of interest and the Interest
Periods applicable thereto.
SECTION 4. THE GUARANTIES.
SECTION 4.1. GUARANTIES. The payment and performance of the
Obligations shall at all times be guaranteed by each Subsidiary,
whether now existing or hereafter formed or acquired, pursuant to a
guaranty agreement executed by such Subsidiary in form and
substance satisfactory to the Agent (individually a "GUARANTY" and
collectively the "GUARANTIES"); PROVIDED, HOWEVER, that, unless an
Event of Default exists and thereafter until requested by the Agent
or the Required Lenders, no Subsidiary organized outside of the
United States of America needs to execute and deliver any such
Guaranty or otherwise become bound as a guarantor of the
Obligations hereunder.
SECTION 4.2. FURTHER ASSURANCES. In the event the Company
or any Subsidiary forms or acquires any Subsidiary after the date
hereof, the Company shall cause such newly formed or acquired
Subsidiary to execute a Guaranty in accordance with Section 4.1
above, and the Company shall also deliver, or cause such Subsidiary
to deliver, at the Company's cost and expense, such other
instruments, documents, certificates, and opinions reasonably
required by the Agent in connection therewith.
SECTION 5. REPRESENTATIONS AND WARRANTIES.
The Company represents and warrants to the Lenders as follows:
SECTION 5.1. ORGANIZATION AND QUALIFICATION. The Company is
duly organized, validly existing and in good standing as a
corporation under the laws of the State of Illinois, has full and
adequate corporate power to own its Property and conduct its
business as now conducted, and is duly licensed or qualified and in
good standing in each jurisdiction in which the nature of the
business conducted by it or the nature of the Property owned or
leased by it requires such licensing or qualifying, except where
the failure to do
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so would not have a Material Adverse Effect.
SECTION 5.2. SUBSIDIARIES. Each Subsidiary is duly
organized, validly existing and in good standing under the laws of
the jurisdiction in which it is incorporated or organized, as the
case may be, has full and adequate power to own its Property and
conduct its business as now conducted, and is duly licensed or
qualified and in good standing in each jurisdiction in which the
nature of the business conducted by it or the nature of the
Property owned or leased by it requires such licensing or
qualifying, except where the failure to do so would not have a
Material Adverse Effect. Schedule 5.2 hereto identifies each
Subsidiary, the jurisdiction of its incorporation or organization,
as the case may be, the percentage of issued and outstanding shares
of each class of its capital stock or other equity interests owned
by the Company and the Subsidiaries and, if such percentage is not
100% (excluding directors' qualifying shares as required by law), a
description of each class of its authorized capital stock and other
equity interests and the number of shares of each class issued and
outstanding. All of the outstanding shares of capital stock and
other equity interests of each Subsidiary are validly issued and
outstanding and fully paid and nonassessable and all such shares
and other equity interests indicated on Schedule 5.2 as owned by
the Company or a Subsidiary are owned, beneficially and of record,
by the Company or such Subsidiary free and clear of all Liens.
There are no outstanding commitments or other obligations of any
Subsidiary to issue, and no options, warrants or other rights of
any Person to acquire, any shares of any class of capital stock or
other equity interests of any Subsidiary.
SECTION 5.3. CORPORATE AUTHORITY AND VALIDITY OF
OBLIGATIONS. The Company has full right and authority to enter
into this Agreement and the other Loan Documents executed by it, to
make the borrowings herein provided for, to issue its Notes in
evidence thereof, and to perform all of its obligations hereunder
and under the other Loan Documents executed by it. Each Subsidiary
has full right and authority to enter into the Loan Documents
executed by it, to guarantee the Obligations, and to perform all of
its obligations under the Loan Documents executed by it. The Loan
Documents delivered by the Company and by each of its Subsidiaries
have been duly authorized, executed and delivered by such Person
and constitute valid and binding obligations of such Person
enforceable in accordance with their terms except as enforceability
may be limited by bankruptcy, insolvency, fraudulent conveyance or
similar laws affecting creditors' rights generally and general
principles of equity (regardless of whether the application of such
principles is considered in a proceeding in equity or at law); and
this Agreement and the other Loan Documents do not, nor does the
performance or observance by the Company or any Subsidiary of any
of the matters and things herein or therein provided for,
contravene or constitute a default under any provision of law or
any judgment, injunction, order or decree binding upon the Company
or any Subsidiary or any provision of the charter, articles of
incorporation or by-laws of the Company or any Subsidiary or any
covenant, indenture or agreement of or affecting the Company or any
Subsidiary or any of its Property, or result in the creation or
imposition of any Lien on any Property of the Company or any
Subsidiary.
SECTION 5.4. USE OF PROCEEDS; MARGIN STOCK. The Company
shall use the
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proceeds of the Loans and other extensions of credit made available
hereunder for its general working capital purposes and for such
other legal and proper purposes as are consistent with all
applicable laws. Neither the Company nor any Subsidiary is engaged
in the business of extending credit for the purpose of purchasing
or carrying margin stock (within the meaning of Regulation U of the
Board of Governors of the Federal Reserve System), and no part of
the proceeds of any Loan or any other extension of credit made
hereunder will be used to purchase or carry any such margin stock
or to extend credit to others for the purpose of purchasing or
carrying any such margin stock. Margin stock constitutes less than
25% of those assets of the Company and its Subsidiaries which are
the subject to any limitation on sale, pledge or other restriction
hereunder.
SECTION 5.5. FINANCIAL REPORTS. The consolidated balance
sheet of the Company and its Subsidiaries as at December 31, 1995,
and the related consolidated statements of income, shareholders
equity and cash flows of the Company and its Subsidiaries for the
fiscal year then ended, and accompanying notes thereto, which
financial statements are accompanied by the audit report of ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, L.L.P., independent public accountants, and the unaudited
interim consolidated balance sheet of the Company and its
Subsidiaries as at September 30, 1996, and the related consolidated
statements of income, shareholders equity and cash flows of the
Company and its Subsidiaries for the 9 months then ended,
heretofore furnished to the Lenders, fairly present the financial
condition of the Company and its Subsidiaries as at said dates and
the results of their operations and cash flows for the periods then
ended in conformity with GAAP applied on a consistent basis.
Neither the Company nor any Subsidiary has contingent liabilities
which are material to it other than as indicated on such financial
statements or, with respect to future periods, on the financial
statements furnished pursuant to Section 7.5 hereof.
SECTION 5.6. NO MATERIAL ADVERSE CHANGE. Since September
30, 1996, there has been no change in the condition (financial or
otherwise) or business prospects of the Company or any Subsidiary,
except those occurring in the ordinary course of business, none of
which individually or in the aggregate constitute a Material
Adverse Effect.
SECTION 5.7. LITIGATION AND OTHER CONTROVERSIES. There is
no litigation or governmental proceeding or labor controversy
pending, nor to the knowledge of the Company threatened, against
the Company or any Subsidiary which, if adversely determined, is
reasonably likely to result in a Material Adverse Effect except as
disclosed prior to the date hereof in filings by the Company with
the Securities and Exchange Commission.
SECTION 5.8. TAXES. All tax returns required to be filed by
the Company or any Subsidiary in any jurisdiction have, in fact,
been filed or appropriate extensions therefor have been obtained,
and all taxes, assessments, fees and other governmental charges
upon the Company or any Subsidiary or upon any of their respective
Properties, income or franchises, which are shown to be due and
payable in such returns, have been paid as and when due. The
Company does not know of any proposed additional tax assessment
against the Company or any of its Subsidiaries for which adequate
provisions in accordance with GAAP have not been made on their
accounts. Adequate provisions in accordance with GAAP for taxes on
the books of the Company and each Subsidiary have been made for all
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open years, and for its current fiscal period.
SECTION 5.9. APPROVALS. No authorization, consent, license,
or exemption from, or filing or registration with, any court or
governmental department, agency or instrumentality, nor any
approval or consent of the stockholders of the Company or any other
Person, is or will be necessary to the valid execution, delivery or
performance by the Company of this Agreement or by the Company or
any Subsidiary of any other Loan Document, except for such
approvals of the Board of Directors of the Company and its
Subsidiaries which have been obtained and remain in full force and
effect.
SECTION 5.10. INVESTMENT COMPANY; PUBLIC UTILITY HOLDING
COMPANY. Neither the Company nor any Subsidiary is an "investment
company" or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940, as
amended, or a "public utility holding company" within the meaning
of the Public Utility Holding Company Act of 1935, as amended.
SECTION 5.11. ERISA. The Company and each other member of
its Controlled Group has fulfilled its obligations under the
minimum funding standards of and is in compliance in all material
respects with ERISA and the Code to the extent applicable to it and
has not incurred any material liability to the PBGC or a Plan under
Title IV of ERISA other than a liability to the PBGC for premiums
under Section 4007 of ERISA. Neither the Company nor any
Subsidiary has any contingent liabilities with respect to any
post-retirement benefits under a Welfare Plan, other than liability
for continuation coverage described in article 6 of Title I of
ERISA.
SECTION 5.12. COMPLIANCE WITH LAWS. The Company and each of
its Subsidiaries are in compliance with the requirements of all
federal, state and local laws, rules and regulations applicable to
or pertaining to their Properties or business operations
(including, without limitation, the Occupational Safety and Health
Act of 1970, the Americans with Disabilities Act of 1990, laws and
regulations relating to the providing of health care services, and
laws and regulations establishing quality criteria and standards
for air, water, land and toxic or hazardous wastes and substances),
non-compliance with which is reasonably likely to result in a
Material Adverse Effect. Neither the Company nor any Subsidiary
has received notice to the effect that its operations are not in
compliance with any of the requirements of applicable federal,
state or local environmental, health and safety statutes and
regulations or are the subject of any governmental investigation
evaluating whether any remedial action is needed to respond to a
release of any toxic or hazardous waste or substance into the
environment, which non-compliance or remedial action is reasonably
likely to result in a Material Adverse Effect.
SECTION 5.13. OTHER AGREEMENTS. Neither the Company nor any
Subsidiary is in default under the terms of any covenant, indenture
or agreement of or affecting the Company or any Subsidiary, or any
of its Property, which default, if uncured, is reasonably likely to
result in a Material Adverse Effect.
SECTION 5.14. NO DEFAULT. No Default or Event of Default has
occurred and is continuing.
SECTION 6. CONDITIONS PRECEDENT.
SECTION 6.1. ALL ADVANCES. The obligation of the Lenders to
make any Loan or
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other financial accommodation to the Company hereunder (including
the first such accommodation) shall be subject to the conditions
precedent that as of the time of the making of each such
accommodation:
(a) each of the representations and warranties set forth
herein and in the other Loan Documents shall be and remain
true and correct as of said time, except to the extent the
same expressly relate to an earlier date;
(b) no Default or Event of Default shall have occurred
Sand be continuing;
(c) after giving effect to such extension of credit, the
aggregate principal amount of all Revolving Loans and L/C
Obligations outstanding under this Agreement shall not exceed
the Revolving Credit Commitments then in effect;
(d) in the case of any Borrowing of Term Loans, the
Agent shall have received for each of the Lenders a duly
executed and completed Term Note for such Lender in the amount
of its Term Loan;
(e) in the case of the issuance of any Letter of Credit,
the Agent shall have received a properly completed Application
therefor and, in the case of an extension or increase in the
amount of the Letter of Credit, the Agent shall have received
a written request therefor, in a form reasonably acceptable to
the Agent; and
(f) such extension of credit shall not violate any
order, judgment or decree of any court or other authority or
any provision of law or regulation applicable to the Agent or
any Lender (including, without limitation, Regulation U of the
Board of Governors of the Federal Reserve System) as then in
effect.
The Company's request for any Loan or Letter of Credit shall
constitute its warranty as to the facts specified in subsections
(a) through (e), both inclusive, above.
SECTION 6.2. INITIAL ADVANCE. At or prior to the time of
the initial Loans or other financial accommodation hereunder, the
following conditions precedent shall also have been satisfied:
(a) the Agent shall have received the following for the
account of the Lenders (each to be properly executed and
completed) and the same shall have been approved as to form
and substance by the Agent:
(i) the Revolving Credit Notes;
(ii) the Guaranties;
(iii) copies (executed or certified as may be
appropriate) of resolutions of the Board of Directors of
the Company and each Subsidiary authorizing the
execution, delivery and performance of the Loan Documents
to which it is a party and all other documents relating
thereto;
(iv) an incumbency certificate containing the name,
title and genuine signature of the Company's Authorized
Representatives and each authorized signatory of each
Subsidiary;
(v) a good standing certificate for the Company and
each Subsidiary, dated as of a date no earlier than 30
days prior to the date hereof, from the appropriate
governmental offices in the state of its incorporation
and in each state in which it is qualified to do business
as a foreign corporation;
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(vi) articles of incorporation and by-laws for the
Company and each Subsidiary certified by such Person's
corporate Secretary or other appropriate officer
acceptable to the Agent; and
(vii) a pay-off letter from each lender to the
Company and its Subsidiaries whose debt is being
satisfied out of the initial Borrowing hereunder, each
pay-off letter to be in form and substance reasonably
satisfactory to the Agent (without limiting the
foregoing, each such pay-off letter shall contain an
undertaking of the relevant lender to execute and deliver
to the Agent all necessary UCC termination statements and
other lien release documents necessary to release all
liens and security interests filed in favor of such
lender against the property of the Company and its
Subsidiaries).
(b) all legal matters incident to the transactions
contemplated hereby shall be acceptable to the Lenders and
their counsel, and the Agent shall have received for the
account of the Lenders the favorable written opinion of
counsel to the Company and its Subsidiaries, in the form of
Exhibit E hereto or in such other form as is reasonably
acceptable to the Agent and its counsel;
(c) the Agent shall have received for itself and for the
Lenders the initial fees, if any, called for hereby;
(d) the Company shall have delivered to each of the
Lenders a Compliance Certificate substantially in the form
attached hereto as Exhibit D showing compliance with the
financial covenants set forth in Sections 7.7, 7.8 and 7.9
hereto as of December 31, 1996, and a pro forma Compliance
Certificate substantially in the form attached hereto as
Exhibit D showing compliance with the financial covenants set
forth in Sections 7.7, 7.8 and 7.9 hereof after giving effect
to the Creative Concepts Acquisition; and
(e) the Agent shall have received for the account of the
Lenders such other agreements, instruments, documents,
certificates and opinions as the Agent may reasonably request.
SECTION 7. COVENANTS.
The Company agrees that, so long as any credit is available to
or in use by the Company hereunder, except to the extent compliance
in any case or cases is waived in writing by the Required Lenders:
SECTION 7.1. MAINTENANCE OF BUSINESS. The Company shall,
and shall cause each Subsidiary to, preserve and maintain its
existence, except as otherwise provided in Section 7.14(c) hereof.
The Company shall, and shall cause each Subsidiary to, preserve and
keep in force and effect all licenses, permits, franchises,
approvals, patents, trademarks, trade names, trade styles,
copyrights, and other proprietary rights reasonably necessary to
the proper conduct of its business.
SECTION 7.2. MAINTENANCE OF PROPERTIES. The Company shall,
and shall cause each Subsidiary to, maintain, preserve and keep its
property, plant and equipment in good repair, working order and
condition (ordinary wear and tear excepted).
SECTION 7.3. TAXES AND ASSESSMENTs. The Company shall duly
pay and
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discharge, and shall cause each Subsidiary to duly pay and
discharge, all taxes, rates, assessments, fees and governmental
charges upon or against it or its Properties, in each case before
the same become delinquent and before penalties accrue thereon,
unless and to the extent that the same are being contested in good
faith and by appropriate proceedings which prevent enforcement of
the matter under contest and adequate reserves are provided
therefor.
SECTION 7.4. INSURANCE. The Company shall insure and keep
insured, and shall cause each Subsidiary to insure and keep
insured, with good and responsible insurance companies, all
insurable Property owned by it which is of a character usually
insured by Persons similarly situated and operating like Properties
against loss or damage from such hazards and risks, and in such
amounts, as are insured by Persons similarly situated and operating
like Properties; and the Company shall insure, and shall cause each
Subsidiary to insure, such other hazards and risks (including
employers' and public liability risks) with good and responsible
insurance companies as and to the extent usually insured by Persons
similarly situated and conducting similar businesses. The Company
shall upon request furnish to the Agent and the Lenders a
certificate setting forth in summary form the nature and extent of
the insurance maintained pursuant to this Section.
SECTION 7.5. FINANCIAL REPORTS. The Company shall, and
shall cause each Subsidiary to, maintain a standard system of
accounting in accordance with GAAP and shall furnish to the Agent,
each Lender and each of their duly authorized representatives such
information respecting the business and financial condition of the
Company and its Subsidiaries as the Agent or such Lender may
reasonably request; and without any request, shall furnish to the
Agent and the Lenders:
(a) as soon as available, and in any event within 45
days after the close of each of the first three fiscal
quarters of each fiscal year of the Company, a copy of the
consolidated balance sheet of the Company and its Subsidiaries
as of the last day of such period and the consolidated
statements of income, shareholders equity and cash flows of
the Company and its Subsidiaries for the fiscal quarter and
for the fiscal year-to-date period then ended, each in
reasonable detail showing in comparative form the figures for
the corresponding date and period in the previous fiscal year,
prepared by the Company in accordance with GAAP (subject to
year-end audited adjustments) and certified to by the
Company's chief financial officer, or another officer of the
Company acceptable to the Agent;
(b) as soon as available, and in any event within 90
days after the close of each fiscal year of the Company, a
copy of the consolidated balance sheet of the Company and its
Subsidiaries as of the last day of the period then ended and
the consolidated statements of income, shareholders equity and
cash flows of the Company and its Subsidiaries for the period
then ended, and accompanying notes thereto, each in reasonable
detail showing in comparative form the figures for the
previous fiscal year, accompanied by an unqualified opinion
thereon of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, L.L.P. or another firm of
independent public accountants of recognized national standing
selected by the Company and reasonably satisfactory to the
Required Lenders, to the effect that the consolidated
financial statements have been
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prepared in accordance with GAAP and present fairly in
accordance with GAAP the consolidated financial condition of
the Company and its Subsidiaries as of the close of such
fiscal year and the results of their operations and cash flows
for the fiscal year then ended and that an examination of such
accounts in connection with such financial statements has been
made in accordance with generally accepted auditing standards
and, accordingly, such examination included such tests of the
accounting records and such other auditing procedures as were
considered necessary in the circumstances;
(c) promptly after the sending or filing thereof, copies
of each financial statement, report, notice or proxy statement
sent by the Company or any Subsidiary to its stockholders, and
copies of each regular, periodic or special report,
registration statement or prospectus filed by the Company or
any of its Subsidiaries with any securities exchange or the
Securities Exchange Commission or any successor agency;
(d) as soon as available, and in any event within 60
days after the end of each fiscal year of the Company, a copy
of the Company's consolidated annual budget for the then
current fiscal year, such budget to show the Company's
projected consolidated revenues and expenses on a
quarter-by-quarter basis, such budget to be in reasonable
detail prepared by the Company and in form reasonably
satisfactory to the Agent; and
(e) promptly after knowledge thereof shall have come to
the attention of any responsible officer of the Company,
written notice of any threatened or pending litigation or
governmental proceeding or labor controversy against the
Company or against any Subsidiary which, if adversely
determined, is reasonably likely to result in a Material
Adverse Effect or of the occurrence of any Default or Event of
Default hereunder.
Each of the financial statements furnished to the Lenders pursuant
to subsections (a) and (b) of this Section 7.5 shall be accompanied
by a written certificate in the form attached hereto as Exhibit D
signed by the chief financial officer of the Company, or another
officer of the Company acceptable to the Agent, to the effect that
to the best of such officer's knowledge and belief no Default or
Event of Default has occurred during the period covered by such
statements or, if any such Default or Event of Default has occurred
during such period, setting forth a description of such Default or
Event of Default and specifying the action, if any, taken by the
Company or any Subsidiary to remedy the same. Such certificate
shall also set forth the calculations supporting such statements in
respect of Sections 7.7, 7.8, 7.9 and 7.10 of this Agreement.
SECTION 7.6. INSPECTION. The Company shall, and shall cause
each of its Subsidiaries to, permit the Agent, each Lender and each
of their duly authorized representatives and agents to visit and
inspect any of its Properties, corporate books and financial
records, to examine and make copies of its books of accounts and
other financial records, and to discuss its affairs, finances and
accounts with, and to be advised as to the same by its officers at
such reasonable times and intervals as the Agent or any such Lender
may designate provided, however, that in each case the Company
receives not less than 24
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hours prior notice and that such inspections only occur during
normal business hours.
SECTION 7.7. CURRENT RATIO. The Company shall at all times
maintain a Current Ratio of not less than 1.5 to 1.0.
SECTION 7.8. TANGIBLE NET WORTH. The Company shall, at all
times, maintain Tangible Net Worth of not less than the sum of (a)
$30,000,000 plus (b) 50% of Net Income for each fiscal year of the
Company ending after the date hereof (commencing with the fiscal
year ending December 31, 1996) for which such Net Income is a
positive amount (I.E., there shall be no reduction to the amount of
Tangible Net Worth required to be maintained hereunder for any
fiscal year in which Net Income is less than zero).
SECTION 7.9. LEVERAGE RATIO. The Company shall, at all
times, maintain a ratio of Total Liabilities to Tangible Net Worth
of not more than 2.5 to 1.0.
SECTION 7.10. CASH FLOW COVERAGE RATIO. As of the last day
of each fiscal quarter of the Company, the Company shall maintain a
ratio of Adjusted EBITDA for the four fiscal quarters of the
Company then ended to Fixed Charges for the same four fiscal
quarters then ended of not less than 1.2 to 1.0.
SECTION 7.11. INDEBTEDNESS FOR BORROWED MONEY. The Company
shall not, nor shall it permit any Subsidiary to, issue, incur,
assume, create or have outstanding any Indebtedness for Borrowed
Money; PROVIDED, HOWEVER, that the foregoing shall not restrict nor
operate to prevent:
(a) the Obligations of the Company owing to the Agent
and the Lenders hereunder;
(b) purchase money indebtedness and Capitalized Lease
Obligations incurred in the ordinary course of business in an
aggregate amount not to exceed $2,000,000 at any one time
outstanding
(c) obligations of the Company arising out of interest
rate hedging agreements entered into with financial
institutions in the ordinary course of business;
(d) guaranties expressly permitted by Section 7.13
hereof;
(e) indebtedness from time to time owing by any
Subsidiary to the Borrower or to any other Subsidiary arising
in the ordinary course of business;
(f) indebtedness of up to $7,000,000 in the aggregate to
finance the purchase and/or construction of the Company's
intended Detroit-area Creative Concepts facility; and
(g) other unsecured indebtedness of the Company and its
Subsidiaries in an aggregate amount not to exceed $500,000 at
any one time outstanding.
SECTION 7.12. LIENS. The Company shall not, nor shall it
permit any Subsidiary to, create, incur or permit to exist any Lien
of any kind on any Property owned by the Company or any Subsidiary;
PROVIDED, HOWEVER, that the foregoing shall not apply to nor
operate to prevent:
(a) Liens arising by statute in connection with worker's
compensation, unemployment insurance, old age benefits, social
security obligations, taxes, assessments, statutory
obligations or other similar charges, good faith cash deposits
in connection with tenders, contracts or leases to which the
Company or any Subsidiary is a party or other cash deposits
required to be made in the ordinary
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course of business, provided in each case that the obligation
is not for borrowed money and that the obligation secured is
not overdue or, if overdue, is being contested in good faith
by appropriate proceedings which prevent enforcement of the
matter under contest and adequate reserves have been
established therefor;
(b) mechanics', workmen's, materialmen's, landlords',
carriers', or other similar Liens arising in the ordinary
course of business with respect to obligations which are not
due or which are being contested in good faith by appropriate
proceedings which prevent enforcement of the matter under
contest;
(c) the pledge of assets for the purpose of securing an
appeal, stay or discharge in the course of any legal
proceeding, provided that the aggregate amount of liabilities
of the Company and their Subsidiaries secured by a pledge of
assets permitted under this subsection, including interest and
penalties thereon, if any, shall not be in excess of
$1,000,000 at any one time outstanding;
(d) Liens on property of the Company or of any
Subsidiary created solely for the purpose of securing
indebtedness permitted by Section 7.11(b) hereof, representing
or incurred to finance, refinance or refund the purchase price
of Property, provided that no such Lien shall extend to or
cover other Property of the Company or such Subsidiary other
than the respective Property so acquired, and the principal
amount of indebtedness secured by any such Lien shall at no
time exceed the original purchase price of such Property; and
(e) Liens on the Detroit-area real property purchased
and/or developed by the Company securing indebtedness
permitted by Section 7.11(f) above.
SECTION 7.13. INVESTMENTS, ACQUISITIONS, LOANS, ADVANCES AND
GUARANTIES. The Company shall not, nor shall it permit any
Subsidiary to, directly or indirectly, make, retain or have
outstanding any investments (whether through purchase of stock or
obligations or otherwise) in, or loans or advances (other than for
travel advances and other similar cash advances made to employees
in the ordinary course of business) to, any other Person, or
acquire all or any substantial part of the assets or business of
any other Person or division thereof, or be or become liable as
endorser, guarantor, surety or otherwise for any debt, obligation
or undertaking of any other Person, or otherwise agree to provide
funds for payment of the obligations of another, or supply funds
thereto or invest therein or otherwise assure a creditor of another
against loss, or apply for or become liable to the issuer of a
letter of credit which supports an obligation of another, or
subordinate any claim or demand it may have to the claim or demand
of any other Person; PROVIDED, HOWEVER, that the foregoing shall
not apply to nor operate to prevent:
(a) investments in direct obligations of the United
States of America or of any agency or instrumentality thereof
whose obligations constitute full faith and credit obligations
of the United States of America, provided that any such
obligations shall mature within one year of the date of
issuance thereof;
(b) investments in commercial paper rated at least P-1
by ▇▇▇▇▇'▇ Investors Services, Inc. and at least A-1 by
Standard & Poor's Ratings Group, a division of The
McGraw-Hills Companies, Inc. maturing within 270 days of the
date of issuance thereof;
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(c) investments in certificates of deposit issued by any
United States commercial bank having capital and surplus of
not less than $100,000,000 which have a maturity of one year
or less;
(d) endorsement of items for deposit or collection of
commercial paper received in the ordinary course of business;
(e) the Company's investments from time to time in its
Subsidiaries;
(f) intercompany advances made from time to time between
the Company and one or more Subsidiaries or between
Subsidiaries in the ordinary course of business;
(g) one or more acquisitions by the Company of all or
any substantial part of the assets and business of, or all or
any substantial part of the equity interest in, a Person in
the business of providing marketing or promotional services
and/or merchandise including, but not limited to,
telemarketing, event planning, licensing, sports marketing and
advertising (a "PERMITTED LINE OF BUSINESS") if each of the
following are met (i) no Default or Event of Default has
occurred and is continuing or would occur as a result of such
transaction, (ii) the Board of Directors or other governing
body of such Person whose assets or Voting Stock is being so
acquired has approved the terms of such acquisition, (iii) the
Company has given the Agent prior written notice of the
proposed transaction, (iv) if the Company or any Subsidiary,
in the aggregate, incur Indebtedness for Borrowed Money of
more than $10,000,000 in connection with any such acquisition
or more than $30,000,000 during any 12-month period for all
acquisitions occurring during such period, the Company shall
have obtained the prior written consent of the Required
Lenders prior to consummating any such acquisition (the
Lenders hereby acknowledging their consent to the Creative
Concepts Acquisition closed on January 3, 1997, and provided
the other conditions of this Section 7.13(g) are satisfied),
and (v) if such transaction results in a new Subsidiary, the
Company shall cause such new Subsidiary to execute and deliver
to the Agent (with sufficient number of copies for each
Lender) a Guaranty, together with such other instruments,
documents, certificates and opinions reasonably requested by
the Agent, each of which to be in form and substance
satisfactory to the Agent, and Schedule 5.2 of this Agreement
shall from and after such date be deemed amended to include
reference to such Subsidiary;
(h) Guaranties executed by one or more Subsidiaries in
favor of the Agent and the Lenders; and
(i) other investments, loans and advances in addition to
these otherwise permitted by this Section in an aggregate
amount not to exceed $2,000,000 at any one time outstanding.
In determining the amount of investments, acquisitions, loans,
advances and guaranties permitted under this Section, investments
and acquisitions shall always be taken at the original cost thereof
(regardless of any subsequent appreciation or depreciation
therein), loans and advances shall be taken at the principal amount
thereof then remaining unpaid, and guaranties shall be taken at the
amount of the obligations guaranteed thereby.
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SECTION 7.14. MERGERS, CONSOLIDATIONS AND SALES. The Company
shall not, nor shall it permit any of its Subsidiaries to, be a
party to any merger or consolidation, or sell, transfer, lease or
otherwise dispose of all or any substantial part of its Property,
including any disposition of Property as part of a sale and
leaseback transaction, or in any event sell or discount (with or
without recourse) any of its notes or accounts receivable;
PROVIDED, HOWEVER, that this Section shall not apply to nor operate
to prevent:
(a) the sale or lease of inventory in the ordinary
course of business;
(b) the sale, transfer, lease, or other disposition of
Property of the Company or any Subsidiary to one another in
the ordinary course of its business; and
(c) a merger of any Subsidiary with and into the Company
or any Wholly-Owned Subsidiary; provided that the Company or
such Wholly-Owned Subsidiary survives such merger and, in the
case of any merger involving the Company, the Company is the
corporation surviving the merger.
The term "SUBSTANTIAL" as used herein shall mean the sale,
transfer, lease or other disposition of Property of the Company or
of any Subsidiary aggregating, for the Company and its Subsidiaries
during any fiscal year, 15% or more of the consolidated total
assets of the Company and its Subsidiaries. In the event of any
merger permitted by Section 7.14(c) above, the Company shall give
the Agent and the Lender's prior written notice of any such event
and, immediately after giving effect to any such merger, Schedule
5.2 of this Agreement shall be deemed amended excluding reference
to any such Subsidiary merged out of existence.
SECTION 7.15. DIVIDENDS AND CERTAIN OTHER RESTRICTED
PAYMENTS. The Company shall not during any fiscal year (i) declare
or pay any dividends on or make any other distributions in respect
of any class or series of its capital stock (other than dividends
payable solely in its capital stock) or (ii) directly or indirectly
purchase, redeem or otherwise acquire or retire any of its capital
stock, except that the Company may declare and pay dividends on,
and purchase, redeem, or otherwise acquire or retire, its capital
stock so long as no Default or Event of Default exists prior to or
would result after giving effect to any such action.
SECTION 7.16. ERISA. The Company shall, and shall cause each
Subsidiary to, promptly pay and discharge all obligations and
liabilities arising under ERISA of a character which if unpaid or
unperformed might result in the imposition of a Lien against any of
its Properties. The Company shall, and shall cause each Subsidiary
to, promptly notify the Agent of (i) the occurrence of any
reportable event (as defined in ERISA) with respect to a Plan, (ii)
receipt of any notice from the PBGC of its intention to seek
termination of any Plan or appointment of a trustee therefor, (iii)
its intention to terminate or withdraw from any Plan, and (iv) the
occurrence of any event with respect to any Plan which would result
in the incurrence by the Company or any Subsidiary of any material
liability, fine or penalty, or any material increase in the
contingent liability of the Company or any Subsidiary with respect
to any post-retirement Welfare Plan benefit.
SECTION 7.17. COMPLIANCE WITH LAWS. The Company shall, and
shall cause each Subsidiary to, comply in all respects with the
requirements of all federal, state and local
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laws, rules, regulations, ordinances and orders applicable to or
pertaining to its Properties or business operations, non-compliance
with which is reasonably likely to result in a Material Adverse
Effect.
SECTION 7.18. CHANGE IN THE NATURE OF BUSINESS. The Company
shall not, nor shall it permit any Subsidiary to, engage in any
business or activity if as a result the general nature of the
business of the Company or any Subsidiary would be changed in any
material respect from the general nature of the business engaged in
by it as of the date of this Agreement or as of the date such
Person becomes a Subsidiary hereunder.
SECTION 8. EVENTS OF DEFAULT AND REMEDIES.
SECTION 8.1. EVENTS OF DEFAULT. Any one or more of the
following shall constitute an "EVENT OF DEFAULT" hereunder:
(a) default for a period of 5 days in the payment when
due of all or any part of the principal of or interest on any
Note (whether at the stated maturity thereof or at any other
time provided for in this Agreement) or of any Reimbursement
Obligation or of any fee or other Obligation payable hereunder
or under any other Loan Document;
(b) default in the observance or performance of any
covenant set forth in Sections 7.5, 7.7, 7.8, 7.9, 7.10, 7.11,
7.12, 7.13, 7.14, or 7.15 hereof;
(c) default in the observance or performance of any
other provision hereof or of any other Loan Document which is
not remedied within 30 days after written notice thereof is
given to the Company by the Agent (provided that the Company
shall have an additional 30 days to cure any such default
before the same becomes an "EVENT OF DEFAULT" hereunder if
such default is reasonably susceptible to cure within the
additional 30-day period but only so long as the Company
diligently and in good faith works to cure such default during
such additional 30-day period);
(d) any material representation or warranty made herein
or in any other Loan Document or in any certificate furnished
to the Agent or the Lenders pursuant hereto or thereto or in
connection with any transaction contemplated hereby or thereby
proves untrue in any material respect as of the date of the
issuance or making thereof;
(e) any event occurs or condition exists (other than
those described in subsections (a) through (d) above) which is
specified as an event of default under any of the other Loan
Documents and any applicable notice and cure period has
expired, or any of the Loan Documents shall for any reason not
be or shall cease to be in full force and effect, or any of
the Loan Documents is declared to be null and void, or any
Subsidiary takes any action for the purpose of terminating,
repudiating or rescinding any Loan Document executed by it or
any of its obligations thereunder;
(f) default shall occur under any Indebtedness for
Borrowed Money issued, assumed or guaranteed by the Company or
any Subsidiary aggregating, for the Company and its
Subsidiaries, in excess of $1,000,000, or under any indenture,
agreement or other instrument under which the same may be
issued, and such default shall continue for a period of time
sufficient to permit the acceleration of the
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maturity of any such Indebtedness for Borrowed Money (whether
or not such maturity is in fact accelerated), or any such
Indebtedness for Borrowed Money shall not be paid when due
(whether by demand, lapse of time, acceleration or otherwise);
(g) any judgment or judgments, writ or writs or warrant
or warrants of attachment, or any similar process or processes
shall be entered or filed against the Company or any
Subsidiary, or against any of its Property, aggregating, for
the Company and its Subsidiaries, in excess of $1,000,000, and
which remains undischarged, unvacated, unbonded or unstayed
for a period of 60 days;
(h) the Company or any member of its Controlled Group
shall fail to pay when due an amount or amounts aggregating in
excess $1,000,000 which it shall have become liable to pay to
the PBGC or to a Plan under Title IV of ERISA; or notice of
intent to terminate a Plan or Plans having aggregate Unfunded
Vested Liabilities in excess of $1,000,000 (collectively, a
"MATERIAL PLAN") shall be filed under Title IV of ERISA by the
Company or any other member of its Controlled Group, any plan
administrator or any combination of the foregoing; or the PBGC
shall institute proceedings under Title IV of ERISA to
terminate or to cause a trustee to be appointed to administer
any Material Plan or a proceeding shall be instituted by a
fiduciary of any Material Plan against the Company or any
member of its Controlled Group to enforce Section 515 or
4219(c)(5) of ERISA and such proceeding shall not have been
dismissed within 60 days thereafter; or a condition shall
exist by reason of which the PBGC would be entitled to obtain
a decree adjudicating that any Material Plan must be
terminated;
(i) the Company or any Subsidiary shall (i) have entered
involuntarily against it an order for relief under the United
States Bankruptcy Code, as amended, (ii) not pay, or admit in
writing its inability to pay, its debts generally as they
become due, (iii) make an assignment for the benefit of
creditors, (iv) apply for, seek, consent to, or acquiesce in,
the appointment of a receiver, custodian, trustee, examiner,
liquidator or similar official for it or any substantial part
of its Property, (v) institute any proceeding seeking to have
entered against it an order for relief under the United States
Bankruptcy Code, as amended, to adjudicate it insolvent, or
seeking dissolution, winding up, liquidation, reorganization,
arrangement, adjustment or composition of it or its debts
under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors or fail to file an answer
or other pleading denying the material allegations of any such
proceeding filed against it, (vi) take any corporate action in
furtherance of any matter described in parts (i) through (v)
above, or (vii) fail to contest in good faith any appointment
or proceeding described in Section 8.1(j) hereof; or
(j) a custodian, receiver, trustee, examiner, liquidator
or similar official shall be appointed for the Company or any
Subsidiary or any substantial part of any of its Property, or
a proceeding described in Section 8.1(i)(v) shall be
instituted against the Company or any Subsidiary, and such
appointment continues undischarged or such proceeding
continues undismissed or unstayed for a period of 60 days.
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SECTION 8.2. NON-BANKRUPTCY REMEDIES. When any Event of
Default described in subsections 8.1(a) to 8.1(h), both inclusive,
has occurred and is continuing, the Agent shall, upon request of
the Required Lenders, by notice to the Company, take any or all of
the following actions:
(a) terminate the obligations of the Lenders to extend
any further credit hereunder on the date (which may be the
date thereof) stated in such notice;
(b) declare the principal of and the accrued interest on
the Notes to be forthwith due and payable and thereupon the
Notes, including both principal and interest, and all fees,
charges and other Obligations payable hereunder and under the
other Loan Documents, shall be and become immediately due and
payable without further demand, presentment, protest or notice
of any kind; and
(c) enforce any and all rights and remedies available to
it under the Loan Documents or applicable law.
SECTION 8.3. BANKRUPTCY REMEDIES. When any Event of Default
described in subsection 8.1(i) or 8.1(j) has occurred and is
continuing, then the Notes, including both principal and interest,
and all fees, charges and other Obligations payable hereunder and
under the other Loan Documents, shall immediately become due and
payable without presentment, demand, protest or notice of any kind,
and the obligations of the Lenders to extend further credit
pursuant to any of the terms hereof shall immediately terminate.
In addition, the Agent may exercise any and all remedies available
to it under the Loan Documents or applicable law.
SECTION 8.4. COLLATERAL FOR UNDRAWN LETTERS OF CREDIT. If
and when (x) any Event of Default, other than an Event of Default
described in subsections (i) or (j) of Section 8.1, has occurred
and is continuing, the Company shall, upon demand of the Agent, and
(y) any Event of Default described in subsections (i) or (j) of
Section 8.1 has occurred or any Letter of Credit is outstanding on
the Termination Date (whether or not any Event of Default has
occurred), the Company shall, without notice or demand from the
Agent, immediately pay to the Agent the full amount of each Letter
of Credit, the Company agreeing to immediately make each such
payment and acknowledging and agreeing that the Agent and the
Lenders would not have an adequate remedy at law for failure of the
Company to honor any such demand and that the Agent shall have the
right to require the Company to specifically perform such
undertaking whether or not any draws have been made under the
Letters of Credit.
SECTION 9. DEFINITIONS; INTERPRETATIONS.
SECTION 9.1. DEFINITIONS; The following terms when
used herein have the following meaning:
"ADJUSTED EBITDA" means, with reference to any period, the
difference of (a) Net Income for such period plus the sum of all
amounts deducted in arriving at such Net Income amount in respect
of (i) Interest Expense for such period, (ii) federal, state and
local income taxes for such period, and (iii) depreciation of fixed
assets and amortization of intangible assets for such period MINUS
(b) net capital expenditures for such period (i.e., capital
expenditures incurred during such period computed on a consolidated
basis for the Company and its Subsidiaries less (i) Indebtedness
for Borrowed Money incurred to acquire
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such assets and (ii) capital expenditures acquired with the
proceeds of insurance as a result of a casualty to its property,
plant or equipment and applied to replace or restore such assets).
"ADJUSTED LIBOR RATE" means a rate per annum determined by the
Agent pursuant to the following formula:
Adjusted LIBOR Rate = LIBOR
-------------------------
100%-Reserve Percentage
"RESERVE PERCENTAGE" means, for the purpose of computing the
Adjusted LIBOR Rate, the maximum rate of all reserve requirements
(including, without limitation, any marginal emergency,
supplemental or other special reserves) imposed by the Board of
Governors of the Federal Reserve System (or any successor) under
Regulation D on Eurocurrency liabilities (as such term is defined
in Regulation D) for the applicable Interest Period as of the first
day of such Interest Period, but subject to any amendments to such
reserve requirement by such Board or its successor, and taking into
account any transitional adjustments thereto becoming effective
during such Interest Period. For purposes of this definition,
LIBOR Portions shall be deemed to be Eurocurrency liabilities as
defined in Regulation D without benefit of or credit for
prorations, exemptions, or offsets under Regulation D. "LIBOR"
means, for each Interest Period, the rate of interest per annum
(rounded upwards, if necessary, to nearest 1/100 of 1%) at which
deposits in U.S. dollars in immediately available funds are being
offered to prime banks in the London interbank market at 11:00 a.m.
(London, England time) 2 Business Days before the beginning of such
Interest Period for a period equal to such Interest Period and in
an amount equal or comparable to the principal amount of the
applicable LIBOR Portion, as determined by the Agent by reference
to Bloomberg Financial Market's terminal screen entitled "OFFICIAL
BBA LIBOR FIXINGS" or such other information vendor selected by the
Agent for determining British Bankers' Association Interest
Settlement Rates for U.S. Dollar deposits. Each determination of
LIBOR made by the Agent shall be conclusive and binding on the
Company and the Lenders absent manifest error.
"AFFILIATE" means any Person directly or indirectly
controlling or controlled by, or under direct or indirect common
control with, another Person. A Person shall be deemed to control
another Person for the purposes of this definition if such Person
possesses, directly or indirectly, the power to direct, or cause
the direction of, the management and policies of the other Person,
whether through the ownership of voting securities, common
directors, trustees or officers, by contract or otherwise.
"AGENT" means American National Bank and Trust Company of
Chicago, and any successor thereto appointed pursuant to Section
10.1 hereof.
"AGREEMENT" means this Credit Agreement, as the same may be
amended, modified or restated from time to time in accordance with
the terms hereof.
"APPLICABLE MARGIN" means, with respect to LIBOR Portions,
.375% per annum until the first Pricing Date, and thereafter from
one Pricing Date to the next the Applicable Margin with respect to
LIBOR Portions shall mean a rate per annum determined in accordance
with the following schedule:
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FUNDED DEBT/EBITDA RATIO APPLICABLE MARGIN
FOR SUCH PRICING DATE SHALL BE
Greater than 2.5 to 1.0 1.00%
Equal to or less than 2.5 to 1.0, but .80%
greater than 2.0 to 1.0
Equal to or less than 2.0 to 1.0, but .60%
greater than 1.0 to 1.0
Equal to or less than 1.0 to 1.0 .375%
For purposes hereof, the term "PRICING DATE" means, for any fiscal
quarter of the Company ended after the date hereof, 15 days after
the date the Agent is in receipt of the Company's most recent
financial statements for the fiscal quarter then ended, pursuant to
Section 7.5(a) or (b) hereof. The Applicable Margin established
on a Pricing Date shall remain in effect until the next Pricing
Date. If the Company has not delivered its financial statements by
the date such financial statements (and, in the case of the
year-end financial statements, audit report) are required to be
delivered under Section 7.5(a) and (b) hereof, until such financial
statements and audit report are delivered, the Applicable Margin
for LIBOR Portions shall be 1.00%. If the Company subsequently
delivers such financial statements before the next Pricing Date,
the Applicable Margin established by such late delivered financial
statements shall take effect from the date of delivery until the
next Pricing Date. In all other circumstances, the Applicable
Margin established by such financial statements shall be in effect
from the Pricing Date that occurs immediately after the end of the
Company's fiscal quarter covered by such financial statements until
the next Pricing Date. Each determination of the Applicable Margin
made by the Agent in accordance with the foregoing shall be
conclusive and binding on the Company and the Lenders if reasonably
determined.
"APPLICATION" is defined in Section 1.3 hereof.
"AUTHORIZED REPRESENTATIVE" means those persons shown on the
list of individuals provided by the Company pursuant to Section 6.2
hereof or on any update of any such list provided by the Company to
the Agent, or any further or different individuals so named by an
Authorized Representative of the Company in a written notice to the
Agent.
"BASE RATE" means a fluctuating interest rate per annum equal
at all times to the greater of (i) the rate of interest announced
by the Agent from time to time as its commercial base rate (also
commonly referred to as its "prime rate") as in effect on such day
(it being acknowledged and agreed that such rate may not be the
Agent's best or lowest rate), with any change in such rate
resulting from a change in said commercial base rate to be
effective as of the date of the relevant change in said commercial
base rate; and (ii) the sum of (x) the rate determined by the Agent
to be the average (rounded upwards, if necessary, to the next
higher 1/100 of 1% of the rates per annum quoted to the Agent at
approximately 10:00 a.m. Chicago time (or as soon thereafter as is
practicable) on such day
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(or, if such day is not a Business Day, on the immediately preceding Business
Day) by two or more Federal funds brokers selected by the Agent for the sale
to the Agent at face value of Federal funds in the secondary market in an amount
equal or comparable to the principal amount owed to the Agent for which such
rate is being determined, plus (y) 1/2 of 1%.
"BASE RATE PORTIONS" is defined in Section 2.1(a) hereof.
"BORROWING" means the total of Loans of a single type made to
the Company by all the Lenders on a single date, and if such Loans
are to be part of a LIBOR Portion, for a single Interest Period.
Borrowings of Loans are made and maintained ratably from each of
the Lenders according to their Percentages of the relevant
Commitment.
"BUSINESS DAY" shall mean any day (other than a Saturday or
Sunday) on which banks are not authorized or required to close in
Chicago, Illinois and, when used with respect to LIBOR Portions, a
day on which banks are also dealing in United States Dollar
deposits in London, England.
"CAPITAL LEASE" means any lease of Property (whether real or
personal) which in accordance with GAAP is required to be
capitalized on the balance sheet of the lessee.
"CAPITALIZED LEASE OBLIGATION" means the amount of the
liability shown on the balance sheet of any Person in respect of a
Capital Lease determined in accordance with GAAP.
"CHANGE OF CONTROL" means any one of the following events:
(i) any Person or two or more Persons acting in concert shall have
acquired beneficial ownership (within the meaning of Rule 13d-3 of
the Securities and Exchange Commission under the Securities
Exchange Act of 1934), directly or indirectly, of securities of the
Company (or other securities convertible into such securities)
representing 49% or more of the combined voting power of all
securities of the Company entitled to vote in the election of
directors, other than securities having such power only be reason
of the happening of a contingency; or (ii) during any period of up
to 24 consecutive months, commencing before or after the date of
this Agreement, individuals who at the beginning of such 24-month
period were directors of the Company shall cease for any reason to
constitute a majority of the board of directors of the Company.
"CODE" means the Internal Revenue Code of 1986, as amended,
and any successor statute thereto.
"COMMITMENTS" means and includes the Revolving Credit
Commitments, the L/C Commitment, and the Term Loan Commitments.
"COMPANY" is defined in the introductory paragraph of this
Agreement.
"CONTROLLED GROUP" means all members of a controlled group of
corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the Company
or any Subsidiary, are treated as a single employer under Section
414 of the Code.
"CREATIVE CONCEPTS ACQUISITION" means the acquisition by the
Company of 100% of the capital stock of Creative Concepts in
Advertising, Inc. for a purchase price of approximately 2,750,000
shares of the capital stock of the Company.
"CURRENT RATIO" means, at any time the same is to be
determined, the ratio of consolidated current assets of the Company
and its Subsidiaries to consolidated current
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liabilities of the Company and its Subsidiaries, each as determined
in accordance with GAAP.
"DEFAULT" means any event or condition the occurrence of which
would, with the lapse of time or the giving of notice, or both,
constitute an Event of Default.
"EBITDA" means, with reference to any period, the difference
of (a) Net Income for such period plus the sum of all amounts
deducted in arriving at such Net Income amount in respect of (i)
Interest Expense for such period, (ii) federal, state and local
income taxes for such period, and (iii) depreciation of fixed
assets and amortization of intangible assets for such period.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute thereto.
"EVENT OF DEFAULT" means any event or condition specified as
such in Section 8.1 hereof.
"FEDERAL FUNDS RATE" means the fluctuating interest rate per
annum described in part (x) of clause (ii) of the definition of
Base Rate.
"FIXED CHARGES" means, with reference to any period, the sum
of (i) the aggregate amount of payments of principal due within 12
calendar months on and after the last day of such period in respect
of any and all Indebtedness for Borrowed Money of the Company and
its Subsidiaries, plus (ii) Interest Expense for the same period,
plus (iii) federal, state and local income taxes of the Company and
its Subsidiaries accrued during such period, plus (iv) payments
made in respect of dividends, distribution, purchases and/or
redemptions of the Company's capital stock during such period
"FUNDED DEBT/EBITDA RATIO" means, as of the last day of the
most recently completed fiscal quarter of the Company, the ratio of
Total Funded Debt as of the last day of such fiscal quarter to
EBITDA for the four fiscal quarters then ended.
"GAAP" means generally accepted accounting principles as in
effect from time to time, applied by the Company and its
Subsidiaries on a basis consistent with the preparation of the
Company's most recent financial statements furnished to the Lenders
pursuant to Section 5.5 hereof.
"INDEBTEDNESS FOR BORROWED MONEY" shall mean for the Company
and its Subsidiaries the sum (without duplication) of (i) all
indebtedness of the Company and each of its Subsidiaries for
borrowed money, whether current or funded, or secured or unsecured,
(ii) all indebtedness for the deferred purchase price of Property
or services, (iii) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to
Property acquired by the Company or any of its Subsidiaries (even
though the rights and remedies of the seller or lender under such
agreement in the event of a default are limited to repossession or
sale of such Property), (iv) all indebtedness secured by a purchase
money mortgage or other Lien to secure all or part of the purchase
price of Property subject to such mortgage or Lien, (v) all
obligations under leases which shall have been or must be, in
accordance with GAAP, recorded as Capital Leases in respect of
which the Company or any of its Subsidiaries is liable as lessee,
(vi) any liability in respect of banker's acceptances or letters of
credit, (vii) any indebtedness, whether or not assumed, secured by
Liens on Property acquired by the Company or any of its
Subsidiaries at the
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time of acquisition thereof and (viii) all indebtedness referred to in clause
(i), (ii), (iii), (iv), (v), (vi) or (vii) above which is directly or indirectly
guaranteed by the Company or any of its Subsidiaries or which any of the
foregoing have agreed (contingently or otherwise) to purchase or otherwise
acquire or in respect of which any of them have otherwise assured a creditor
against loss, it being understood that the term "Indebtedness for Borrowed
Money" shall not include trade payables arising in the ordinary course of
business.
"INTEREST EXPENSE" means, with reference to any period, the sum of all
interest charges (including imputed interest charges with respect to Capitalized
Lease Obligations and all amortization of debt discount and expense) of the
Company and its Subsidiaries for such period determined on a consolidated basis
in accordance with GAAP.
"INTEREST PERIOD" means, with respect to any LIBOR Portion, the period
commencing on, as the case may be, the creation, continuation or conversion date
with respect to such LIBOR Portion and ending 1, 2, 3 or 6 months thereafter as
selected by the Company in its notice as provided herein; PROVIDED that, all of
the foregoing provisions relating to Interest Periods are subject to the
following:
(i) if any Interest Period would otherwise end on a day which is not
a Business Day, that Interest Period shall be extended to the next
succeeding Business Day, unless the result of such extension would be to
carry such Interest Period into another calendar month in which event such
Interest Period shall end on the immediately preceding Business Day;
(ii) no Interest Period may extend beyond the final maturity date of
the relevant Notes;
(iii) the interest rate to be applicable to each Portion for each
Interest Period shall apply from and including the first day of such
Interest Period to but excluding the last day thereof; and
(iv) no Interest Period may be selected if after giving effect thereto
the Company will be unable to make a principal payment scheduled to be made
during such Interest Period without paying part of a LIBOR Portion on a
date other than the last day of the Interest Period applicable thereto.
For purposes of determining an Interest Period, a month means a period starting
on one day in a calendar month and ending on a numerically corresponding day in
the next calendar month, PROVIDED, HOWEVER, if an Interest Period begins on the
last day of a month or if there is no numerically corresponding day in the month
in which an Interest Period is to end, then such Interest Period shall end on
the last Business Day of such month.
"L/C COMMITMENT" means $7,500,000, as reduced pursuant to Section 3.6
hereof.
"L/C OBLIGATIONS" means the aggregate undrawn face amounts of all
outstanding Letters of Credit and all unpaid Reimbursement Obligations.
"LENDERS" means American National Bank and Trust Company of Chicago, ▇▇▇▇▇▇
Trust and Savings Bank, Comerica Bank and all other lenders becoming parties
hereto pursuant to Section 11.10 hereof.
"LETTER OF CREDIT" is defined in Section 1.3 hereof.
"LIBOR PORTIONS" is defined in Section 2.1(a) hereof.
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"LIEN" means any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind or nature in respect of any Property, including the
interest of a vendor or lessor under any conditional sale, Capital Lease or
other title retention arrangement.
"LOAN DOCUMENTS" means this Agreement, the Notes, the Applications, the
Guaranties, and each other instrument or document to be delivered hereunder or
thereunder or otherwise in connection therewith.
"LOANS" means and includes Revolving Loans and the Term Loans.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (i) the
business, Property, condition (financial or otherwise), results of operations or
prospects of the Company and its Subsidiaries taken as a whole, (ii) the ability
of the Company or any Subsidiary to perform its obligations under the Loan
Documents, or (iii) the validity or enforceability of any of the Loan Documents
or the rights or remedies of the Agent or the Lenders thereunder.
"NET INCOME" means, with reference to any period, the net income (or net
loss) of the Company and its Subsidiaries for such period computed on a
consolidated basis in accordance with GAAP.
"NOTES" means and includes the Revolving Credit Notes and the Term Notes.
"OBLIGATIONS" means all obligations of the Company to pay principal and
interest on the Loans, all Reimbursement Obligations owing under the
Applications, all fees and charges payable hereunder, and all other payment
obligations of the Company or any Subsidiary arising under or in relation to any
Loan Document, in each case whether now existing or hereafter arising, due or to
become due, direct or indirect, absolute or contingent, and howsoever evidenced,
held or acquired.
"PBGC" means the Pension Benefit Guaranty Corporation or any Person
succeeding to any or all of its functions under ERISA.
"PERCENTAGE" means, for each Lender, the percentage of the applicable
Commitments represented by such Lender's Commitment or, if the Commitments have
been terminated, the percentage held by such Lender (including through
participation interests in L/C Obligations) of the aggregate principal amount of
all outstanding Obligations.
"PERSON" means an individual, partnership, corporation, limited liability
company, association, trust, unincorporated organization or any other entity or
organization, including a government or agency or political subdivision thereof.
"PLAN" means any employee pension benefit plan covered by Title IV of ERISA
or subject to the minimum funding standards under Section 412 of the Code that
either (i) is maintained by a member of the Controlled Group for employees of a
member of the Controlled Group, or (ii) is maintained pursuant to a collective
bargaining agreement or any other arrangement under which more than one employer
makes contributions and to which a member of the Controlled Group is then making
or accruing an obligation to make contributions or has within the preceding five
plan years made contributions.
"PORTION" is defined in Section 2.1(a) hereof.
"PROPERTY" means, as to any Person, all types of real, personal, tangible,
intangible or mixed property owned by such Person whether or not included in the
most recent balance sheet of such Person and its subsidiaries under GAAP.
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"REIMBURSEMENT OBLIGATION" is defined in Section 1.3 hereof.
"REQUIRED LENDERS" means, at any time, Lenders whose Commitments aggregate
51% or more of the total Commitments or, if at the time no Commitments are
outstanding, Lenders holding 51% or more of the aggregate outstanding principal
balance of the Notes and the credit risk with respect to the Letters of Credit.
"REVOLVING CREDIT COMMITMENTS" is defined in Section 1.1 hereof.
"REVOLVING CREDIT NOTES" is defined in Section 1.2 hereof.
"REVOLVING LOANS" is defined in Section 1.2 hereof.
"SUBSIDIARY" means, as to any particular parent corporation or
organization, any other corporation or organization more than 50% of the
outstanding Voting Stock of which is at the time directly or indirectly owned by
such parent corporation or organization or by any one or more other entities
which are themselves subsidiaries of such parent corporation or organization.
The term "SUBSIDIARY" shall mean, when used with reference to the Company, a
subsidiary of, respectively, the Company or any of its direct or indirect
Subsidiaries.
"TANGIBLE NET WORTH" means, at any time the same is to be determined, total
shareholder's equity (including capital stock, additional paid-in capital and
retained earnings after deducting treasury stock, but excluding minority
interests in Subsidiaries) which would appear on a consolidated balance sheet of
the Company and its Subsidiaries prepared on a consolidated basis in accordance
with GAAP, minus the sum of (i) all assets which would be classified as
intangible assets under GAAP, including, without limitation, goodwill, patents,
trademarks, trade names, copyrights, franchises and deferred charges (including,
without limitation, unamortized debt discount and expense, organization costs
and deferred research and development expense) and similar assets, (ii) the
write-up of assets above cost, and (iii) the aggregate book value of all sample
inventory.
"TERM CREDIT TERMINATION DATE" means January 31, 1999, or such earlier date
on which the Term Loan Commitments are terminated in whole pursuant to
Sections 3.6, 8.2 or 8.3 hereof.
"TERM LOAN COMMITMENTS" is defined in Section 1.4 hereof.
"TERM LOANS" is defined in Section 1.4 hereof.
"TERM NOTES" is defined in Section 1.4 hereof.
"TERMINATION DATE" means January 31, 1999, or such earlier date on which
the Revolving Credit Commitments are terminated in whole pursuant to
Sections 3.6, 8.2 or 8.3 hereof, or such later date to which the Revolving
Credit Commitments are extended pursuant to Section 11.11 hereof.
"TOTAL FUNDED DEBT" means, at any time the same is to be determined, the
difference between (a) the aggregate of all Indebtedness for Borrowed Money of
the Company and its Subsidiaries at such time, including all Indebtedness for
Borrowed Money of any other Person which is directly or indirectly guaranteed by
the Company or any of its Subsidiaries or which the Company or any of its
Subsidiaries has agreed (contingently or otherwise) to purchase or otherwise
acquire or in respect of which the Company or any of its Subsidiaries has
otherwise assured a creditor against loss minus (b) investments of the type
referred to in Section 7.13 (a)-(c) hereof maintained by the Company or any
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Subsidiary with the Agent or any
Lender which are unrestricted and freely available (other than restrictions in
the form of early withdrawal penalties for time deposits and other similar
instruments) and which are free and clear of any Liens whatsoever (other than
unasserted rights of offset of the relevant financial institution).
"TOTAL LIABILITIES" means, at any time the same is to be determined, the
aggregate of all indebtedness, obligations, liabilities, reserves and any other
items which would be listed as a liability on a balance sheet of the Company and
its Subsidiaries determined on a consolidated basis in accordance with GAAP.
"UNFUNDED VESTED LIABILITIES" means, for any Plan at any time, the amount
(if any) by which the present value of all vested nonforfeitable accrued
benefits under such Plan exceeds the fair market value of all Plan assets
allocable to such benefits, all determined as of the then most recent valuation
date for such Plan, but only to the extent that such excess represents a
potential liability of a member of the Controlled Group to the PBGC or the Plan
under Title IV of ERISA.
"U.S. DOLLARS" AND "$" each means the lawful currency of the United States
of America.
"VOTING STOCK" of any Person means capital stock or other equity interests
of any class or classes (however designated) having ordinary power for the
election of directors or other similar governing body of such Person, other than
stock or other equity interests having such power only by reason of the
happening of a contingency.
"WELFARE PLAN" means a "welfare plan" as defined in Section 3(1) of ERISA.
"WHOLLY-OWNED SUBSIDIARY" means a Subsidiary of which all of the issued and
outstanding shares of capital stock (other than directors' qualifying shares as
required by law) or other equity interests are owned by the Company and/or one
or more wholly-owned subsidiaries of the Company within the meaning of this
definition.
SECTION 9.2. INTERPRETATION The foregoing definitions are equally
applicable to both the singular and plural forms of the terms defined. The
words "HEREOF", "HEREIN", and "HEREUNDER" and words of like import when used in
this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. All references to time of day herein
are references to Chicago, Illinois time unless otherwise specifically provided.
Where the character or amount of any asset or liability or item of income or
expense is required to be determined or any consolidation or other accounting
computation is required to be made for the purposes of this Agreement, it shall
be done in accordance with GAAP except where such principles are inconsistent
with the specific provisions of this Agreement.
SECTION 10. THE AGENT
SECTION 10.1. APPOINTMENT AND AUTHORIZATION. Each Lender hereby
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers hereunder and under the other Loan Documents as are
designated to the Agent by the terms hereof and thereof together with such
powers as are reasonably incidental thereto. The Lenders expressly agree that
the Agent is not acting as a fiduciary of the Lenders in respect of the Loan
Documents, the Company or otherwise, and nothing herein or in any of the other
Loan Documents shall result in any duties or obligations on the Agent or any of
the
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Lenders except as expressly set forth herein. The Agent may resign at any time
by sending 20 days prior written notice to the Company and the Lenders. In the
event of any such resignation, the Required Lenders may appoint a new agent
after consultation with the Company which shall succeed to all the rights,
powers and duties of the Agent hereunder and under the other Loan Documents.
Any resigning Agent shall be entitled to the benefit of all the protective
provisions hereof with respect to its acts as an agent hereunder, but no
successor Agent shall in any event be liable or responsible for any actions of
its predecessor. If the Agent resigns and no successor is appointed, the rights
and obligations of such Agent shall be automatically assumed by the Required
Lenders and the Company shall be directed to make all payments due each Lender
hereunder directly to such Lender.
SECTION 10.2. RIGHTS AS A LENDER. The Agent has and reserves all of the
rights, powers and duties hereunder and under the other Loan Documents as any
Lender may have and may exercise the same as though it was not the Agent. The
terms "LENDER" and "LENDERS" as used herein and in all other Loan Documents
shall, the context otherwise expressly indicates, include the Agent in its
individual capacity as Lender.
SECTION 10.3. STANDARD OF CARE. The Lenders acknowledge that they have
received and approved copies of the Loan Documents and such other information
and documents concerning the transactions contemplated and financed hereby as
they have requested to receive and/or review. The Agent makes no
representations or warranties of any kind or character to the Lenders with
respect to the validity, enforceability, genuineness, perfection, value, worth
or collectibility hereof or of the Notes or any of the other Obligations or of
the Loan Documents or of any other documents called for hereby or thereby.
Neither the Agent nor any director, officer, employee, agent or representative
thereof (including any security trustee therefor) shall in any event be liable
for any clerical errors or errors in judgment, inadvertence or oversight, or for
action taken or omitted to be taken by it or them hereunder or under the Loan
Documents or in connection herewith or therewith except for its or their own
gross negligence or willful misconduct. The Agent shall not incur any liability
to the Lenders under or in respect of this Agreement or any other Loan Documents
by acting upon any notice, certificate, warranty, instruction or statement (oral
or written) of anyone (including anyone in good faith believed by it to be
authorized to act on behalf of the Company), unless it has actual knowledge of
the untruthfulness of same. The Agent may execute any of its duties hereunder
by or through representatives, employees, agents, and attorneys-in-fact and
shall not be answerable to the Lenders for the default or misconduct of any such
representatives, employees, agents or attorneys-in-fact selected with reasonable
care. The Agent shall be entitled to advice of counsel concerning all matters
pertaining to the agency hereby created and its duties hereunder, and shall
incur no liability to the Lenders and be fully protected in acting upon the
advice of such counsel. The Agent shall be entitled to assume that no Default
or Event of Default exists unless notified to the contrary by a Lender. The
Agent shall in all events be fully protected in acting or failing to act in
accord with the instructions of the Required Lenders. The Agent shall in all
cases be fully justified in failing or refusing to act hereunder unless it shall
be indemnified to its satisfaction by the Lenders against any and all liability
and expense which may be incurred by the Agent by reason of taking or
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continuing to take any such action. The Agent may treat the owner of any Note
as the holder thereof until written notice of transfer shall have been filed
with the Agent signed by such owner in form satisfactory to the Agent. Each
Lender acknowledges that it has independently and without reliance on the Agent
or any other Lender and based upon such information, investigations and
inquiries as it deems appropriate made its own credit analysis and decision to
extend credit to the Company. It shall be the responsibility of each Lender to
keep itself informed as to the creditworthiness of the Company and the Agent
shall have no liability to any Lender with respect thereto.
SECTION 10.4. COSTS AND EXPENSES. Each Lender agrees to reimburse the
Agent for all costs and expenses (including, without limitation, reasonable
attorneys' fees) suffered or incurred by the Agent or any security trustee in
performing its duties hereunder and under the other Loan Documents, or in the
exercise of any right or power imposed or conferred upon the Agent hereby or
thereby, to the extent that the Agent is not promptly reimbursed for same by the
Company after making request of the Company for payment thereof, all such costs
and expenses to be borne by the Lenders ratably in accordance with their
Percentages. If any Lender fails to reimburse the Agent for its share of any
such costs and expenses, such costs and expenses shall be paid pro rata by the
remaining Lenders, but without in any manner releasing the defaulting Lender
from its liability hereunder.
SECTION 10.5. INDEMNITY. The Lenders shall ratably indemnify and hold the
Agent, and its directors, officers, employees, agents, representatives or
attorneys-in-fact (including as such any security trustee therefor), harmless
from and against any liabilities, losses, costs or expenses suffered or incurred
by it hereunder or under the other Loan Documents or in connection with the
transactions contemplated hereby or thereby, regardless of when asserted or
arising, except to the extent it is promptly reimbursed for the same by the
Company and except to the extent that any event giving rise to a claim was
caused by the gross negligence or willful misconduct of the party seeking to be
indemnified. If any Lender defaults in its obligations hereunder, its share of
the obligations shall be paid pro rata by the remaining Lenders, but without in
any manner releasing the defaulting Lender from its liability hereunder.
SECTION 11. MISCELLANEOUS.
SECTION 11.1. WITHHOLDING TAXES. (a) PAYMENTS FREE OF WITHHOLDING.
Except as otherwise required by law and subject to Section 11.1(b) hereof, each
payment by the Company under this Agreement or the other Loan Documents shall be
made without withholding for or on account of any present or future taxes (other
than overall net income taxes on the recipient) imposed by or within the
jurisdiction in which the Company is domiciled, any jurisdiction from which the
Company makes any payment, or (in each case) any political subdivision or taxing
authority thereof or therein. If any such withholding is so required, the
Company shall make the withholding, pay the amount withheld to the appropriate
governmental authority before penalties attach thereto or interest accrues
thereon and forthwith pay such additional amount as may be necessary to ensure
that the net amount actually received by each Lender and the Agent free and
clear of such taxes (including such taxes on such additional amount) is equal to
the amount which that Lender or the Agent (as the case may be) would have
received had such withholding not been
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made. If the Agent or any Lender pays any amount in respect of any such taxes,
penalties or interest, the Company shall reimburse the Agent or that Lender for
that payment on demand in the currency in which such payment was made. If the
Company pays any such taxes, penalties or interest, it shall deliver official
tax receipts evidencing that payment or certified copies thereof to the Lender
or Agent on whose account such withholding was made (with a copy to the Agent if
not the recipient of the original) on or before the thirtieth day after payment.
(b) U.S. WITHHOLDING TAX EXEMPTIONS. Each Lender that is not a United
States person (as such term is defined in Section 7701(a)(30) of the Code) shall
submit to the Company and the Agent on or before the earlier of the date the
initial Borrowing is made hereunder and 30 days after the date hereof, two duly
completed and signed copies of either Form 1001 (relating to such Lender and
entitling it to a complete exemption from withholding under the Code on all
amounts to be received by such Lender, including fees, pursuant to the Loan
Documents and the Obligations) or Form 4224 (relating to all amounts to be
received by such Lender, including fees, pursuant to the Loan Documents and the
Obligations) of the United States Internal Revenue Service. Thereafter and from
time to time, each Lender shall submit to the Company and the Agent such
additional duly completed and signed copies of one or the other of such Forms
(or such successor forms as shall be adopted from time to time by the relevant
United States taxing authorities) as may be (i) requested by the Company in a
written notice, directly or through the Agent, to such Lender and (ii) required
under then-current United States law or regulations to avoid or reduce United
States withholding taxes on payments in respect of all amounts to be received by
such Lender, including fees, pursuant to the Loan Documents or the Obligations.
(c) INABILITY OF LENDER TO SUBMIT FORMS. If any Lender determines, as a
result of any change in applicable law, regulation or treaty, or in any official
application or interpretation thereof, that it is unable to submit to the
Company or Agent any form or certificate that such Lender is obligated to submit
pursuant to subsection (b) of this Section 11.1 or that such Lender is required
to withdraw or cancel any such form or certificate previously submitted or any
such form or certificate otherwise becomes ineffective or inaccurate, such
Lender shall promptly notify the Company and the Agent of such fact and the
Lender shall to that extent not be obligated to provide any such form or
certificate and will be entitled to withdraw or cancel any affected form or
certificate, as applicable.
SECTION 11.2. NON-BUSINESS DAYS. If any payment hereunder becomes due and
payable on a day which is not a Business Day, the due date of such payment shall
be extended to the next succeeding Business Day on which date such payment shall
be due and payable. In the case of any payment of principal falling due on a
day which is not a Business Day, interest on such principal amount shall
continue to accrue during such extension at the rate per annum then in effect,
which accrued amount shall be due and payable on the next scheduled date for the
payment of interest.
SECTION 11.3. NO WAIVER, CUMULATIVE REMEDIES. No delay or failure on the
part of the Agent or any Lender in the exercise of any power or right shall
operate as a waiver thereof or as an acquiescence in any default, nor shall any
single or partial exercise of any
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right preclude any other or further exercise thereof or the exercise of any
other power or right. The rights and remedies hereunder of the Agent and the
Lenders are cumulative to, and not exclusive of, any rights or remedies which
any of them would otherwise have.
SECTION 11.4. WAIVERS, MODIFICATIONS AND AMENDMENTS. Any provision hereof
or of the other Loan Documents may be amended, modified, waived or released and
any Default or Event of Default and its consequences may be rescinded and
annulled upon the written consent of the Company and the Required Lenders;
PROVIDED, HOWEVER, that without the written consent of each Lender no such
amendment, modification or waiver shall increase the amount or extend the terms
of such Lender's Commitments or reduce the amount of any principal of or
interest rate applicable to, or extend the maturity of, any Obligation owed to
it or reduce the amount of fees or other amounts to which it is entitled
hereunder or release any guaranty of any Obligations or change this Section 11.4
or change the definition of "REQUIRED LENDERS" or change the number of Lenders
required to take any action hereunder or under the other Loan Documents. No
amendment, modification or waiver of the Agent's protective provisions shall be
effective without the prior written consent of the Agent.
SECTION 11.5. COSTS AND EXPENSES. The Company agrees to pay on demand all
actual and reasonable costs and expenses of the Agent in connection with the
negotiation, preparation, execution, delivery of the Loan Documents and in
connection with any consents hereunder or thereunder and any waivers or
amendments hereto or thereto, including the reasonable fees and expenses of
counsel for the Agent with respect to all of the foregoing, and all costs and
expenses (including reasonable attorneys' fees) incurred by the Agent, the
Lenders or any other holders of the Obligations in connection with a Default or
Event of Default or the enforcement of the Loan Documents, and all costs, fees
and taxes of the types enumerated above incurred in supplementing (and recording
or filing supplements to) the Loan Documents in connection with assignments
contemplated by Section 11.10 hereof if counsel to the Agent reasonably believes
such supplements to be appropriate or desirable. The Company agrees to
indemnify and save the Lenders, the Agent and any security trustee for the Agent
or the Lenders harmless from any and all liabilities, losses, costs and expenses
incurred by the Lenders or the Agent in connection with any action, suit or
proceeding brought against the Agent, any security trustee or any Lender by any
Person which arises out of the transactions contemplated or financed by any of
the Loan Documents or out of any action or inaction by the Agent, any security
trustee or any Lender thereunder, including without limitation those caused by
the negligence of any party but except for such thereof as is caused by the
gross negligence or willful misconduct of the party indemnified. The provisions
of this Section 11.5 and the protective provisions of Section 2 hereof shall
survive payment of the Obligations.
SECTION 11.6. DOCUMENTARY TAXES. The Company agrees that it will pay any
documentary, stamp or similar taxes payable in respect to any Loan Document,
including interest and penalties, in the event any such taxes are assessed,
irrespective of when such assessment is made and whether or not any credit to it
is then in use or available.
SECTION 11.7. SURVIVAL OF REPRESENTATIONS. All representations and
warranties made herein and in the other Loan Documents and in certificates given
pursuant hereto or
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thereto shall survive the execution and delivery of this Agreement and the other
Loan Documents, and shall continue in full force and effect with respect to the
date as of which they were made as long as any credit is in use or available
hereunder.
SECTION 11.8. NOTICES. Except as otherwise specified herein, all notices
hereunder shall be in writing (including, without limitation, notice by
telecopy) and shall be given to the relevant party at its address or telecopier
number set forth below, in the case of the Company, or on the appropriate
signature page hereof, in the case of the Lenders and the Agent, or such other
address or telecopier number as such party may hereafter specify by notice to
the Agent and the Company given by United States certified or registered mail,
by telecopy or by other telecommunication device capable of creating a written
record of such notice and its receipt. Notices hereunder to the Company shall
be addressed to:
HA-LO Industries, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention ▇▇. ▇▇▇▇ ▇▇▇▇▇▇
Telephone (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Each such notice, request or other communication shall be effective (i) if given
by telecopier, when such telecopy is transmitted to the telecopier number
specified in this Section and a confirmation of such telecopy has been received
by the sender, (ii) if given by mail, five (5) days after such communication is
deposited in the mail, certified or registered with return receipt requested,
addressed as aforesaid or (iii) if given by any other means, when delivered at
the addresses specified in this Section; PROVIDED that any notice given pursuant
to Section 1 or Section 2 hereof shall be effective only upon receipt.
SECTION 11.9. PARTICIPATIONS. Any Lender may grant participations in its
extensions of credit hereunder to any other bank or lending institution (a
"PARTICIPANT"), provided that (i) no Participant shall thereby acquire any
direct rights under this Agreement, (ii) no Lender shall agree with a
Participant not to exercise any of its rights hereunder without the consent of
such Participant except for rights which under the terms hereof may only be
exercised by all Lenders, and (iii) no sale of a participation in extensions of
credit shall in any manner relieve the selling Lender of its obligations
hereunder.
SECTION 11.10. ASSIGNMENT AGREEMENTS. Each Lender may, from time to time
upon at least 5 Business Days' notice to the Agent, assign to other banks or
lending institutions all or part of its rights and obligations under this
Agreement (including, without limitation, the indebtedness evidenced by the
Notes then owned by such assigning Lender, together with an equivalent
proportion of its obligation to make loans and advances and participate in
Letters of Credit hereunder) pursuant to an Assignment Agreement in the form
attached hereto as Exhibit F (the "ASSIGNMENT
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AGREEMENTS"); PROVIDED, HOWEVER, that (i) each such assignment shall be of a
constant, and not a varying, percentage of the assigning Lender's rights and
obligations under this Agreement and the assignment shall cover the same
percentage of such Lender's Commitments, Loans, Notes and interests in Letters
of Credit; (ii) unless the Agent otherwise consents, the aggregate amount of the
Commitments, Loans, Notes and interests in the Letters of Credit of the
assigning Lender being assigned pursuant to each such assignment (determined as
of the effective date of the relevant Assignment Agreement) shall in no event be
less than $5,000,000 and shall be an integral multiple of $1,000,000 and, unless
the assigning Lender shall have assigned all of its Commitments, Loans, Notes
and interests in Letters of Credit, the aggregate amount of Commitments, Loans,
Notes, and interests in Letters of Credit retained by the assigning Lender shall
in no event be less than $5,000,000; (iii) the Agent and, prior to the existence
of an Event of Default, the Company must each consent, which consent shall not
be unreasonably withheld and shall be evidenced by execution of a counterpart of
the relevant Assignment Agreement in the space provided thereon for such
acceptance, to each such assignment to a party which was not an original
signatory of this Agreement and (iv) the assigning Lender must pay to the Agent
a processing and recordation fee of $3,000 and any reasonable out-of-pocket
attorney's fees incurred by the Agent in connection with such Assignment
Agreement. Upon the execution of each Assignment Agreement by the assigning
Lender thereunder, the assignee lender thereunder, the Agent and, so long as no
Event of Default exists, the Company and payment to such assigning Lender by
such assignee lender of the purchase price for the portion of the indebtedness
of the Company being acquired by it, (i) such assignee lender shall thereupon
become a "LENDER" for all purposes of this Agreement with Commitments in the
amount set forth in such Assignment Agreement and with all the rights, powers
and obligations afforded a Lender hereunder, (ii) such assigning Lender shall
have no further liability for funding the portion of its Commitments assumed by
such other Lender and (iii) the address for notices to such assignee Lender
shall be as specified in the Assignment Agreement executed by it. Concurrently
with the execution and delivery of such Assignment Agreement, the Company shall
execute and deliver Notes to the assignee Lender in the respective amounts of
its Commitments and new Notes to the assigning Lender in the respective amounts
of its Commitments after giving effect to the reduction occasioned by such
assignment, all such Notes to constitute "NOTES" for all purposes of this
Agreement and the other Loan Documents. Upon the delivery of such new Notes,
the assigning Lender agrees to return to the Company such Lender's prior Notes
marked "CANCELLED" or words of like import.
SECTION 11.11. EXTENSION OF THE REVOLVING CREDIT COMMITMENTS. The Company
shall have the option to request extensions to
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the Termination Date pursuant to this Section 11.11. No less than 90 days prior
to, but no more than 150 days prior to, January 31, 1998 (and, if the
Termination Date has been extended pursuant to this Section 11.11, January 31st
of each year thereafter), the Company may advise the Agent in writing of the
Company's desire to extend the Termination Date for an additional 12 months and
the Agent shall promptly notify the Lenders of each such request. If the
Company makes any such request, each Lender agrees to notify the Company and the
Agent within 60 days of such request stating whether such Lender is declining or
consenting to any such request, or consenting to such request subject to
specified terms and conditions. In the event that a Lender fails to so notify
the Agent and the Company during such period, such Lender shall be deemed to
have refused the requested extension. In the event that each Lender is
agreeable to such extension (it being understood that the Lenders may accept or
decline such a request in their sole discretion and on such terms as they may
elect), the Company and the Lenders shall enter into such documents as the Agent
may reasonably deem necessary or appropriate to reflect such extension, and all
actual out-of-pocket costs and expenses incurred by the Agent in connection
therewith (including reasonable attorneys' fees) shall be paid by the Company.
SECTION 11.12. LENDER'S OBLIGATIONS SEVERAL. The obligations of the
Lenders hereunder are several and not joint. Nothing contained in this
Agreement and no action taken by the Lenders pursuant hereto shall be deemed to
constitute the Lenders a partnership, association, joint venture or other
entity.
SECTION 11.13. HEADINGS. Section headings used in this Agreement are for
convenience of reference only and are not a part of this Agreement for any other
purpose.
SECTION 11.14. SEVERABILITY OF PROVISIONS. Any provision of this Agreement
which is unenforceable or prohibited in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such unenforceability or
prohibition without invalidating the remaining provisions hereof or affecting
the validity or enforceability of such provision in any other jurisdiction. All
rights, remedies and powers provided in this Agreement and the other Loan
Documents may be exercised only to the extent that the exercise thereof does not
violate any applicable mandatory provisions of law, and all the provisions of
this Agreement and other Loan Documents are intended to be subject to all
applicable mandatory provisions of law which may be controlling and to be
limited to the extent necessary so that they will not render this Agreement or
the other Loan Documents invalid or unenforceable.
SECTION 11.15. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, and by different parties hereto on separate counterpart
signature pages, and all such counterparts taken together shall be deemed to
constitute one and the same instrument.
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SECTION 11.16. BINDING NATURE AND GOVERNING LAW. This Agreement shall be
binding upon the Company and its successors and assigns, and shall inure to the
benefit of the Agent and the Lenders and the benefit of their successors and
assigns, including any subsequent holder of an interest of the Obligations.
This Agreement and the rights and duties of the parties hereto shall be
construed and determined in accordance with, and shall be governed by, the
internal laws of the State of Illinois without regard to principles of conflicts
of law. The Company may not assign its rights hereunder without the written
consent of the Agent and the Lenders.
SECTION 11.17. ENTIRE UNDERSTANDING. This Agreement, together with the
other Loan Documents, constitute the entire understanding of the parties with
respect to the subject matter hereof and any prior agreements, whether written
or oral, with respect thereto are superseded hereby.
SECTION 11.18. SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL. The
Company hereby submits to the nonexclusive jurisdiction of the United States
District Court for the Northern District of Illinois and of any Illinois State
court sitting in the City of Chicago for purposes of all legal proceedings
arising out of or relating to this Agreement, the other Loan Documents or the
transactions contemplated hereby or thereby. The Company irrevocably waives, to
the fullest extent permitted by law, any objection which it may now or hereafter
have to the laying of the venue of any such proceeding brought in such a court
and any claim that any such proceeding brought in such a court has been brought
in an inconvenient forum. THE COMPANY, THE AGENT, AND EACH LENDER HEREBY
IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
THEREBY.
[SIGNATURE PAGES TO FOLLOW]
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Upon your acceptance hereof in the manner hereinafter set forth, this
Agreement shall be a contract between us for the purposes hereinabove set forth.
Dated as of this 31st day of January, 1997..c4 Signature Page;
HA-LO INDUSTRIES, INC.
By
Name
--------------------------------
Title
-------------------------------
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Accepted and Agreed to as of the day and year last above written.
Each of the Lenders hereby agrees with each other Lender that if it should
receive or obtain any payment (whether by voluntary payment, by the exercise of
rights of set-off or banker's lien, by counterclaim or cross action, or by the
enforcement of any rights under the Agreement or the other Loan Documents or
otherwise) in respect of the Obligations, in a greater amount than such Lender
would have received had such payment been made to the Agent and been distributed
among the Lenders as contemplated by Section 3.7 hereof, then in that event the
Lender receiving such disproportionate payment shall purchase for cash without
recourse from the other Lenders an interest in the Obligations owed to such
Lenders in such amount as shall result in a distribution of such payment as
contemplated by Section 3.7 hereof. In the event any payment made to a Lender
and shared with the other Lenders pursuant to the provisions hereof is ever
recovered from such Lender, the Lenders receiving a portion of such payment
hereunder shall restore the same to the payor Lender, but without interest. In
the event any amount paid to the Agent under the Applications shall ever be
recovered from the Agent, each Lender shall reimburse the Agent for its pro rata
share of the amount so recovered.
Amount and Percentage of Commitments:
Revolving Credit Term Loan AMERICAN NATIONAL BANK AND TRUST
Commitment Commitment COMPANY OF CHICAGO, individually and
$22,500,000 $10,000,000 as agent
By
Name
------------------------------
Title:
------------------------------
Address:
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15th Floor, Corporate Finance Division
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Revolving Credit Term Loan ▇▇▇▇▇▇ TRUST AND SAVINGS BANK
Commitment Commitment
$15,576,923 $6,923,077
By
Name
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Title:
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Address:
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Attention: ▇▇. ▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Revolving Credit Term Loan COMERICA BANK
Commitment Commitment
$6,923,077 $3,076,923
By
Name
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Title:
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Address:
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Attention:
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Telephone:
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Telecopy:
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EXHIBIT A
REVOLVING CREDIT NOTE
Chicago, Illinois
$___________________ _________________, 19__
On the Termination Date, for value received, the undersigned, HA-LO
INDUSTRIES, INC., an Illinois corporation (the "COMPANY") hereby promises to pay
to the order of ________________________________________________________ (the
"LENDER"), at the principal office of American National Bank and Trust Company
of Chicago in Chicago, Illinois, the principal sum of (i)
__________________________________________ Dollars ($_________), or (ii) such
lesser amount as may at the time of the maturity hereof, whether by acceleration
or otherwise, be the aggregate unpaid principal amount of all Revolving Loans
owing from the Company to the Lender under the Credit Agreement hereinafter
mentioned.
This Note evidences Revolving Loans constituting part of a "BASE RATE
PORTION" and "LIBOR PORTIONS" as such terms are defined in that certain Credit
Agreement dated as of January 31, 1997, among the Company, American National
Bank and Trust Company of Chicago, individually and as Agent, and the other
Lenders which are now or may from time to time hereafter become parties thereto
(said Credit Agreement, as the same may from time to time be modified, amended
or restated being referred to herein as the "CREDIT AGREEMENT") made and to be
made to the Company by the Lender under the Credit Agreement, and the Company
hereby promises to pay interest at the office specified above on each Revolving
Loan evidenced hereby at the rates and times specified therefor in the Credit
Agreement.
Each Revolving Loan made under the Credit Agreement by the Lender to the
Company against this Note, any repayment of principal hereon, the status of each
such loan from time to time as part of the Base Rate Portion or a LIBOR Portion,
in the case of any LIBOR Portion, and the interest rates and Interest Periods
applicable thereto shall be endorsed by the holder hereof on the reverse side of
this Note or recorded on the books and records of the holder hereof (provided
that such entries shall be endorsed on the reverse side hereof prior to any
negotiation hereof). The Company agrees that in any action or proceeding
instituted to collect or enforce collection of this Note, the entries so
endorsed on the reverse side hereof or recorded on the books and records of the
Lender shall be prima facie evidence of the unpaid balance of this Note, the
status of each loan from time to time as part of a Base Rate Portion or a LIBOR
Portion and, in the case of any LIBOR Portion, the interest rates and Interest
Periods applicable thereto.
This Note is issued by the Company under the terms and provisions of the
Credit Agreement, and this Note and the holder hereof are entitled to all of the
benefits and security provided for thereby or referred to therein, to which
reference is hereby made for a statement thereof. This Note may be declared to
be, or be and become, due prior to its expressed maturity, voluntary prepayments
may be made hereon, and certain prepayments are required to be made hereon, all
in the events, on the terms and with the effects provided in the Credit
Agreement. All capitalized terms used herein without definition shall have the
same meanings herein as such terms have in the Credit Agreement.
The Company hereby promises to pay all actual out-of-pocket costs and
expenses (including reasonable attorneys' fees) suffered or incurred by the
holder hereof in collecting this Note or enforcing any rights in any collateral
therefor. The Company hereby waives presentment for payment and demand. THIS
NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE INTERNAL LAWS
OF THE STATE OF ILLINOIS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
HA-LO INDUSTRIES, INC.
By
Name
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Title
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EXHIBIT B
NOTICE OF PAYMENT REQUEST
[Date]
[Name of Lender]
[Address]
Attention:
Reference is made to the Credit Agreement, dated as of January_31, 1997,
among HA-LO Industries, Inc., the Lenders named therein, and American National
Bank and Trust Company of Chicago, as Agent (the "CREDIT AGREEMENT").
Capitalized terms used herein and not defined herein have the meanings assigned
to them in the Credit Agreement. [THE COMPANY HAS FAILED TO PAY A REIMBURSEMENT
OBLIGATION IN THE AMOUNT OF $__________. YOUR PERCENTAGE OF THE UNPAID
REIMBURSEMENT OBLIGATION IS $___________] OR [AMERICAN NATIONAL BANK AND TRUST
COMPANY OF CHICAGO HAS BEEN REQUIRED TO RETURN A PAYMENT BY THE COMPANY OF A
REIMBURSEMENT OBLIGATION IN THE AMOUNT OF $__________. YOUR PERCENTAGE OF THE
RETURNED REIMBURSEMENT OBLIGATIONS IS $____________].
Very truly yours,
AMERICAN NATIONAL BANK AND TRUST
COMPANY OF CHICAGO, as Agent
By
Name
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Title
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EXHIBIT C
TERM NOTE
Chicago, Illinois
$___________________ _________________, 19__
For Value Received, the undersigned, HA-LO INDUSTRIES, INC., an Illinois
corporation (the "COMPANY") hereby promises to pay to the order of
__________________________________________ (the "LENDER"), at the principal
office of American National Bank and Trust Company of Chicago in Chicago,
Illinois, the principal sum of ______________________________________________
Dollars ($_________), in consecutive principal installments commencing on
____________, 199___ and continuing on the ____ day of each ____________,
___________, _____________ and ________ occurring thereafter to and including
____________, 200_, with the first _______ principal installments each to be in
an amount equal to 1/20th of the original principal amount of this Note, with
the final installment in the amount of all principal not sooner paid due on
_______________, 200_, of the final maturity hereof.
This Note evidence a Term Loan constituting part of a "BASE RATE PORTION"
and "LIBOR PORTIONS" as such terms are defined in that certain Credit Agreement
dated as of January 31, 1997, among the Company, American National Bank and
Trust Company of Chicago, individually and as Agent, and the other Lenders which
are now or may from time to time hereafter become parties thereto (said Credit
Agreement, as the same may from time to time be modified, amended or restated
being referred to herein as the "CREDIT AGREEMENT") made to the Company by the
Lender under the Credit Agreement, and the Company hereby promises to pay
interest at the office specified above on the Term Loan evidenced hereby at the
rates and times specified therefor in the Credit Agreement.
The Term Loan made under the Credit Agreement by the Lender to the Company
against this Note, any repayment of principal hereon, the status of such loan
from time to time as part of the Base Rate Portion or a LIBOR Portion, in the
case of any LIBOR Portion, and the interest rates and Interest Periods
applicable thereto shall be endorsed by the holder hereof on the reverse side of
this Note or recorded on the books and records of the holder hereof (provided
that such entries shall be endorsed on the reverse side hereof prior to any
negotiation hereof). The Company agrees that in any action or proceeding
instituted to collect or enforce collection of this Note, the entries so
endorsed on the reverse side hereof or recorded on the books and records of the
Lender shall be prima facie evidence of the unpaid balance of this Note, the
status of such loan from time to time as part of a Base Rate Portion or a LIBOR
Portion and, in the case of any LIBOR Portion, the interest rates and Interest
Periods applicable thereto.
This Note is issued by the Company under the terms and provisions of the
Credit Agreement, and this Note and the holder hereof are entitled to all of the
benefits and security provided for thereby or referred to therein, to which
reference is hereby made for a statement thereof. This Note may be declared to
be, or be and become, due prior to its expressed maturity, voluntary prepayments
may be made hereon, and certain prepayments are required to be made hereon, all
in the events, on the terms and with the effects provided in the Credit
Agreement. All capitalized terms used herein without definition shall have the
same meanings herein as such terms have in the Credit Agreement.
The Company hereby promises to pay all actual out-of-pocket costs and
expenses (including reasonable attorneys' fees) suffered or incurred by the
holder hereof in collecting this Note or enforcing any rights in any collateral
therefor. The Company hereby waives presentment for payment and demand. THIS
NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE INTERNAL LAWS
OF THE STATE OF ILLINOIS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
HA-LO INDUSTRIES, INC.
By
Name
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Title
-------------------------------
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EXHIBIT D
COMPLIANCE CERTIFICATE
To: American National Bank and Trust
Company of Chicago, as Agent under, and
the Lenders party to, the Credit Agreement
described below
This Compliance Certificate is furnished to the Agent and the Lenders
pursuant to that certain Credit Agreement dated as of January 31, 1997, by and
among HA-LO Industries, Inc. and you (the "CREDIT AGREEMENT"). Unless otherwise
defined herein, the terms used in this Compliance Certificate have the meanings
ascribed thereto in the Credit Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected _________________________________ of the
Company;
2. I have reviewed the terms of the Credit Agreement and I have made, or
have caused to be made under my supervision, a detailed review of the
transactions and conditions of the Company and its Subsidiaries during the
accounting period covered by the attached financial statements;
3. The examinations described in paragraph 2 did not disclose, and I have
no knowledge of, the existence of any condition or the occurrence of any event
which constitutes a Default or Event of Default during or at the end of the
accounting period covered by the attached financial statements or as of the date
of this Certificate, except as set forth below;
4. The financial statements required by Section 7.5 of the Credit
Agreement and being furnished to you concurrently with this Certificate are
true, correct and complete in all material respects as of the date and for the
periods
covered thereby; and
5. The Schedule I hereto sets forth financial data and computations
evidencing the Company's compliance with certain covenants of the Credit
Agreement, all of which data and computations are, to the best of my knowledge,
true, complete and correct and have been made in accordance with the relevant
Sections of the Credit Agreement.
Described below are the exceptions, if any, to paragraph 3 by listing, in
detail, the nature of the condition or event, the period during which it has
existed and the action which the Company has taken, is taking, or proposes to
take with respect to each such condition or event:
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The foregoing certifications, together with the computations set forth in
Schedule I hereto and the financial statements delivered with this Certificate
in support hereof, are made and delivered this _________ day of
__________________ 19___.
HA-LO INDUSTRIES, INC.
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(Print or Type Name) (Title)
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SCHEDULE I
COMPLIANCE CALCULATIONS
FOR JANUARY 31, 1997 CREDIT AGREEMENT
CALCULATIONS AS OF _____________, ____
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A. CURRENT RATIO (SECTION 7.7)
1. Consolidated current assets $___________
2. Consolidated current liabilities $___________
3. Ratio of line A1 to A2 _____: 1.0
4. Line A3 ratio must not be less than 1.5: 1.0
5. The Company is in compliance (circle yes or no) yes/no
B. TANGIBLE NET WORTH (SECTION 7.10)
1. Stockholders Equity $___________
2. Sum of:
(i) intangible assets $___________
(ii) write-up of assets $___________
(iii) sample inventory $___________
3. Line B1 minus B2 $___________
(Tangible Net Worth)
4. Line B3 must not be less than $___________
5. The Company is in compliance (circle yes or no) yes/no
C. LEVERAGE RATIO (SECTION 7.9)
1. Total Liabilities $___________
2. Tangible Net Worth (Line B3 above) $___________
3. Ratio of Line C1 to Line C2 ___: 1.0
4. Line C3 Ratio must not be more than 2.5: 1.0
5. The Company is in compliance (circle yes or no) yes/no
D. CASH FLOW COVERAGE RATIO (SECTION 7.10)
1. Net Income for past 4 quarters $________
2. Interest Expense for past 4 quarters $________
3. Depreciation and Amortization Expense for past 4
quarters $________
4. Federal, state and local income tax expense for past
4 quarters $________
5. Sum of Lines D1, D2, D3 and D4 $________
6. Net Capital Expenditures $________
7. Line D5 minus D6 ("ADJUSTED EBITDA") $________
8. Principal Payments due over next 4 quarters $________
9. Interest Expense for past 4 quarters $________
10. Federal, state and local income tax expense for past
4 quarters $________
11. Dividends, Redemptions, etc. made during past 4
quarters $________
12. Sum of Lines D8, D9, D10 and D11 ("FIXED CHANGES") $________
13. Ratio of Line D7 to Line D12 ______:1.0
14. Line D13 ratio must not to be less than 1.2:1.0
15. The Company is in compliance (circle yes or no) Yes/No
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EXHIBIT E
OPINION OF COUNSEL
EXHIBIT F
ASSIGNMENT AND ACCEPTANCE
Dated _____________,_19_____
Reference is made to the Credit Agreement dated as of January_31, 1997 (the
"CREDIT AGREEMENT") among HA-LO Industries, Inc., an Illinois corporation (the
"COMPANY"), the Lenders (as defined in the Credit Agreement) and American
National Bank and Trust Company of Chicago, as Agent for the Lenders (the
"AGENT"). Terms defined in the Credit Agreement are used herein with the same
meaning.
_____________________________________________________ (the "ASSIGNOR") and
_________________________ (the "ASSIGNEE") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, a _______% interest in
and to all of the Assignor's rights and obligations under the Credit Agreement
as of the Effective Date (as defined below), including, without limitation, such
percentage interest in the Assignor's Commitments as in effect on the Effective
Date and the Loans, if any, owing to the Assignor on the Effective Date and the
Assignor's Percentage of any outstanding L/C Obligations, if any.
2. The Assignor (i) represents and warrants that as of the date hereof
(A) its Revolving Credit Commitment is $____________, and its Term Loan
Commitment is $____________, (B) the aggregate outstanding principal amount of
Loans made by it under the Credit Agreement that have not been repaid is
$____________ ($____________ Revolving Loans and $___________ Term Loans) and a
description of the interest rates and interest periods for such Loans is
attached as Schedule 1 hereto, and (C) the aggregate principal amount of
Assignor's outstanding L/C Obligations is $___________; (ii) represents and
warrants that it is the legal and beneficial owner of the interest being
assigned by it hereunder and that such interest is free and clear of any adverse
claim, lien, or encumbrance of any kind; (iii) makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Credit Agreement
or the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Credit Agreement or any other instrument or document furnished
pursuant thereto; and (iv) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Company or any
Subsidiary or the performance or observance by the Company or any Subsidiary of
any of their respective obligations under the Credit Agreement or any other
instrument or document furnished pursuant thereto.
3. The Assignee (i) confirms that it has received a copy of the Credit
Agreement, together with copies of the most recent financial statements
delivered to the Lenders pursuant to in Section 7.5(a) and (b) thereof and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Assignment and
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Acceptance; (ii) agrees that it will, independently and without reliance upon
the Agent, the Assignor or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Credit Agreement;
(iii) appoints and authorizes the Agent to take such action as Agent on its
behalf and to exercise such powers under the Credit Agreement as are delegated
to the Agent by the terms thereof, together with such powers as are reasonably
incidental thereto; (iv) agrees that it will perform in accordance with their
terms all of the obligations which by the terms of the Credit Agreement are
required to be performed by it as a Lender; and (v) specifies as its lending
offices (and address for notices) the offices set forth beneath its name on the
signature pages hereof.
4. As consideration for the assignment and sale contemplated in Section 1
hereof, the Assignee shall pay to the Assignor on the date hereof in Federal
funds an amount equal to $_______________(1). It is understood that commitment
and/or Letter of Credit fees accrued to the
--------------------
(1) Amount should combine principal together with accrued interest and breakage
compensation, if any, to be paid by the Assignee, net of any portion of any
upfront fee to be paid by Assignor to the Assignee. It may be preferable
in an appropriate case to specify these amounts generically or by formula
rather than as a fixed sum.
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date hereof with respect to the interest assigned hereby are for the account of
the Assignor and such fees accruing from and including the date hereof are for
the account of the Assignee. Each of the Assignor and the Assignee hereby
agrees that if it receives any amount under the Credit Agreement which is for
the account of the other party hereto, it shall receive the same for the account
of such other party to the extent of such other party's interest therein and
shall promptly pay the same to such other party.
5. The effective date for this Assignment and Acceptance shall be
_____________, ____ (the "EFFECTIVE DATE"). Following the execution of this
Assignment and Acceptance, it will be delivered to the Company for its
acceptance on behalf of the Company and to the Agent for acceptance and
recording by the Agent.
6. Upon such acceptance and recording, as of the Effective Date, (i) the
Assignee shall be a party to the Credit Agreement and, to the extent provided in
this Assignment and Acceptance, have the rights and obligations of a Lender
thereunder and (ii) the Assignor shall, to the extent provided in this
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Credit Agreement.
7. Upon such acceptance and recording, from and after the Effective Date,
the Agent shall make all payments under the Credit Agreement in respect of the
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interest assigned hereby (including, without limitation, all payments of
principal, interest and commitment fees with respect thereto) to the Assignee.
The Assignor and Assignee shall make all appropriate adjustments in payments
under the Credit Agreement for periods prior to the Effective Date directly
between themselves.
8. In accordance with Section 11.10 of the Credit Agreement, the Assignor
and the Assignee request and direct that the Agent prepare and cause the Company
to execute and deliver to the Assignee Notes payable to the Assignee in the
amount of its Commitments and new Notes to the Assignor in the amount of its
Commitments after giving effect to the assignment hereunder.
9. This Assignment and Acceptance shall be governed by, and construed in
accordance with, the laws of the State of Illinois.
[ASSIGNOR LENDER]
By
Name
-----------------------------------
Title
----------------------------------
[ASSIGNEE LENDER]
By
Name
-----------------------------------
Title
----------------------------------
Lending Office (and
address for notices):
Accepted and consented this
____ day of ___________,19__
HA-LO INDUSTRIES, INC.
By
------------------------------------
Name
----------------------------------
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Title
---------------------------------
Accepted and consented to by the Agent this
_______ day of ___________, 19__
AMERICAN NATIONAL BANK AND TRUST
COMPANY OF CHICAGO, AS AGENT
By
------------------------------------
Name
----------------------------------
Title
---------------------------------
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SCHEDULE I
Type of Last day of
Principal Amount Loan Interest Rate Interest Period
---------------- ---- ------------- ---------------
SCHEDULE 5.2
SUBSIDIARIES
JURISDICTION OF PERCENTAGE
NAME INCORPORATION OWNERSHIP
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ & White,
Inc. Illinois 100%
HA-LO Sports, Inc. Illinois 100%
Market U.S.A., Inc. Illinois 100%
Creative Concepts in
Advertising, Inc. Michigan 100%