EXHIBIT 10.1
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LOAN AND SECURITY AGREEMENT
BY AND BETWEEN
VISKASE COMPANIES, INC.
AS BORROWER,
AND
▇▇▇▇▇ FARGO FOOTHILL, INC.
AS LENDER
DATED AS OF JUNE 29, 2004
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EXHIBIT 10.1
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "Agreement"), is entered into
as of June 29, 2004, by and between ▇▇▇▇▇ FARGO FOOTHILL, INC., a California
corporation ("Lender") and VISKASE COMPANIES, INC., a Delaware corporation
("Borrower").
The parties hereto hereby agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS. As used in this Agreement, the following terms shall have
the following definitions:
"Account" means an account (as that term is defined in the Code).
"Account Debtor" means any Person who is obligated on an Account,
chattel paper, or a General Intangible.
"ACH Transactions" means any cash management or related services
(including the Automated Clearing House processing of electronic fund transfers
through the direct Federal Reserve Fedline system) provided by a Bank Product
Provider for the account of Borrower or its Subsidiaries.
"Additional Documents" has the meaning set forth in Section 4.4(c).
"Advances" has the meaning set forth in Section 2.1(a).
"Affiliate" means, as applied to any Person, any other Person who,
directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person. For purposes of
this definition, "control" means the possession, directly or indirectly through
one or more intermediaries, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of Stock of
such Person having the right to vote for the election of members of the Board of
Directors or such Person, by contract, or otherwise; provided, however, that,
for purposes of the definition of Eligible Accounts and Section 7.13 hereof, any
Person who has Beneficial Ownership of 10% or more of the Stock of such Person
having the right to vote for the election of members of the Board of Directors
of such Person shall be deemed to be control.
"Agreement" has the meaning set forth in the preamble hereto.
"Applicable Prepayment Premium" means, as of any date of
determination, an amount equal to (a) during the period from and after the date
of the execution and delivery of this Agreement up to the date that is the first
anniversary of the Closing Date, 3.00% times
the Maximum Revolver Amount, (b) during the period from and including the date
that is the first anniversary of the Closing Date up to the date that is the
second anniversary of the Closing Date, 2.00% times the Maximum Revolver Amount,
and (c) during the period from and including the date that is the second
anniversary of the Closing Date up to the date that is the third anniversary of
the Closing Date, 1.00% times the Maximum Revolver Amount; provided, however,
the Applicable Prepayment Premium will be waived in full if the prepayment in
full and early termination of this Agreement in accordance with the terms hereof
is the result of a refinancing provided solely by ▇▇▇▇▇ Fargo; provided,
further, the Applicable Prepayment Premium will be reduced by fifty percent
(50%) if such prepayment in full and early termination of this Agreement is the
result of a private placement of Borrower's subordinated debt or equity, a
public offering of Borrower's equity, or the sale of substantially all of the
assets or stock of Borrower.
"Assignee" has the meaning set forth in Section 14.1(a).
"Authorized Person" means any officer or employee of Borrower.
"Availability" means, as of any date of determination, the amount
that Borrower is entitled to borrow as Advances hereunder (after giving effect
to all Revolver Usage, the Rent Reserve and all reserves then applicable
hereunder instituted in accordance with Section 2.1(b)).
"Bank Product" means any financial accommodation extended to
Borrower or its Subsidiaries by a Bank Product Provider (other than pursuant to
this Agreement) including: (a) credit cards, (b) credit card processing
services, (c) debit cards, (d) purchase cards, (e) ACH Transactions, (f) cash
management, including controlled disbursement, accounts or services, or (g)
transactions under Hedge Agreements.
"Bank Product Agreements" means those agreements entered into from
time to time by Borrower or its Subsidiaries with a Bank Product Provider in
connection with the obtaining of any of the Bank Products.
"Bank Product Obligations" means all obligations, liabilities,
contingent reimbursement obligations, fees, and expenses owing by Borrower or
its Subsidiaries to any Bank Product Provider pursuant to or evidenced by the
Bank Product Agreements and irrespective of whether for the payment of money,
whether direct or indirect, absolute or contingent, due or to become due, now
existing or hereafter arising, and including all such amounts that Borrower or
its Subsidiaries are obligated to reimburse to Lender as a result of Lender
purchasing participations from, or executing indemnities or reimbursement
obligations to, a Bank Product Provider with respect to the Bank Products
provided by such Bank Product Provider to Borrower or its Subsidiaries.
"Bank Product Provider" means ▇▇▇▇▇ Fargo or any of its Affiliates.
"Bank Product Reserve" means, as of any date of determination, the
amount of reserves that Lender has established (based upon the Bank Product
Providers' reasonable
determination of the credit exposure of Borrower and its Subsidiaries in respect
of Bank Products) in respect of Bank Products then provided or outstanding.
"Bankruptcy Code" means title 11 of the United States Code, as in
effect from time to time.
"Base LIBOR Rate" means the rate per annum, determined by Lender in
accordance with its customary procedures, and utilizing such electronic or other
quotation sources as it considers appropriate (rounded upwards, if necessary, to
the next 1/100%), to be the rate at which Dollar deposits (for delivery on the
first day of the requested Interest Period) are offered to major banks in the
London interbank market 2 Business Days prior to the commencement of the
requested Interest Period, for a term and in an amount comparable to the
Interest Period and the amount of the LIBOR Rate Loan requested (whether as an
initial LIBOR Rate Loan or as a continuation of a LIBOR Rate Loan or as a
conversion of a Base Rate Loan to a LIBOR Rate Loan) by Borrower in accordance
with this Agreement, which determination shall be conclusive in the absence of
manifest error.
"Base Rate" means, the rate of interest announced, from time to
time, within ▇▇▇▇▇ Fargo at its principal office in San Francisco as its "prime
rate", with the understanding that the "prime rate" is one of ▇▇▇▇▇ Fargo's base
rates (not necessarily the lowest of such rates) and serves as the basis upon
which effective rates of interest are calculated for those loans making
reference thereto and is evidenced by the recording thereof after its
announcement in such internal publications as ▇▇▇▇▇ Fargo may designate.
"Base Rate Loan" means the portion of the Advances that bears
interest at a rate determined by reference to the Base Rate.
"Beneficial Ownership" has the meaning assigned to such term in Rule
132-3 and Rule 13-d-5 under the Exchange Act, except that in calculating the
beneficial ownership of any particular "person" (as that term is used in Section
13(d)(3) of the Exchange Act), such "person" will be deemed to have beneficial
ownership of all securities that such "person" has the right to acquire by
conversion or exercise of other securities, whether such right is currently
exercisable or is exercisable only upon the occurrence of a subsequent
condition.
"Benefit Plan" means a "defined benefit plan" (as defined in Section
3(35) of ERISA) for which Borrower or any Subsidiary or ERISA Affiliate of
Borrower has been an "employer" (as defined in Section 3(5) of ERISA) within the
past six years.
"Board of Directors" means the board of directors (or comparable
managers) of Borrower or any committee thereof duly authorized to act on behalf
of the board of directors (or comparable managers).
"Books" means all of Borrower's and its Subsidiaries' now owned or
hereafter acquired books and records (including all of their Records indicating,
summarizing, or evidencing their assets (including the Collateral) or
liabilities, all of Borrower's and its
Subsidiaries' Records relating to their business operations or financial
condition, and all of their goods or General Intangibles related to such
information).
"Borrower" has the meaning set forth in the preamble to this
Agreement.
"Borrower Collateral" means all of Borrower's now owned or hereafter
acquired right, title, and interest in and to each of the following:
(a) all of its Accounts,
(b) all of its Books,
(c) all of its commercial tort claims described on Schedule 5.7(d),
(d) all of its Deposit Accounts,
(e) all of its Equipment,
(f) all of its General Intangibles,
(g) all of its Inventory,
(h) all of its Investment Property (including all of its securities
and Securities Accounts),
(i) all of its Negotiable Collateral,
(j) all of its Supporting Obligations,
(k) money or other assets of Borrower that now or hereafter come
into the possession, custody, or control of the Lender, and
(l) the proceeds and products, whether tangible or intangible, of
any of the foregoing, including proceeds of insurance covering any or all of the
foregoing, and any and all Accounts, Books, Deposit Accounts, Equipment, General
Intangibles, Inventory, Investment Property, Negotiable Collateral, Real
Property, Supporting Obligations, money, or other tangible or intangible
property resulting from the sale, exchange, collection, or other disposition of
any of the foregoing, or any portion thereof or interest therein, and the
proceeds thereof.
"Borrower Permitted Liens" shall mean Liens permitted under clauses
(a)-(c), (f), (g), (i) and (j) of the definition of Permitted Liens.
"Borrowing" means a borrowing hereunder consisting of Advances.
"Borrowing Base" means (1) so long as less than 30% of the Maximum
Revolver Amount is funded, the result of:
(a) 85% of the amount of Eligible Domestic Accounts, less the
amount, if any, of the Dilution Reserve, plus
(b) the lesser of
(i) 75% of the amount of Eligible Export Accounts, less the
amount, if any, of the Dilution Reserve, and
(ii) $3,750,000, plus
(c) the lowest of
(i) $12,500,000,
(ii) 65% of the value of Eligible Inventory, and
(iii) 85% times the Net Liquidation Percentage times the book
value of Borrower's Inventory, minus
(d) the sum of (i) the Bank Product Reserve, (ii) the aggregate
amount of reserves, if any, established by Lender under Section 2.1(b) and (iii)
the Rent Reserve.
and (2) so long as 30% or more of the Maximum Revolver Amount is
funded, the result of:
(a) the lesser of
(i) 85% of the amount of Eligible Domestic Accounts, less the
amount, if any, of the Dilution Reserve, and
(ii) an amount equal to Borrower's Collections with respect to
Accounts for the immediately preceding 90 day period, plus
(b) the lowest of
(i) 75% of the amount of Eligible Export Accounts, less the
amount, if any, of the Dilution Reserve,
(ii) an amount equal to Borrower's Collections with respect to
Accounts for the immediately preceding 90 day period, and
(iii) $3,750,000, plus
(c) the lowest of
(i) $12,500,000,
(ii) 65% of the value of Eligible Inventory, and
(iii) 85% times the Net Liquidation Percentage times the book
value of Borrower's Inventory, minus
(d) the sum of (i) the Bank Product Reserve, (ii) the aggregate
amount of reserves, if any, established by Lender under Section 2.1(b) and (iii)
the Rent Reserve.
"Business Day" means any day that is not a Saturday, Sunday, or
other day on which banks are authorized or required to close in the state of
Illinois, except that, if a determination of a Business Day shall relate to a
LIBOR Rate Loan, the term "Business Day" also shall exclude any day on which
banks are closed for dealings in Dollar deposits in the London interbank market.
"Canadian Dollars" means Canadian dollars.
"Capital Expenditures" means, with respect to any Person for any
period, the aggregate of all expenditures by such Person and its Subsidiaries
during such period that are capital expenditures as determined in accordance
with GAAP, whether such expenditures are paid in cash or financed, other than
reinvestment of asset sale proceeds permitted pursuant to Section 2.4(d) and
capital expenditures made solely with the proceeds of insurance or condemnation
awards, to the extent permitted under Section 6.8 and capital expenditures that
constitute Permitted Acquisitions.
"Capitalized Lease Obligation" means that portion of the obligations
under a Capital Lease that is required to be capitalized in accordance with
GAAP.
"Capital Lease" means a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.
"Cash Equivalents" means (a) marketable direct obligations issued
by, or unconditionally guaranteed by, the United States or issued by any agency
thereof and backed by the full faith and credit of the United States, in each
case maturing within 1 year from the date of acquisition thereof, (b) marketable
direct obligations issued by any state of the United States or any political
subdivision of any such state or any public instrumentality thereof maturing
within 1 year from the date of acquisition thereof and, at the time of
acquisition, having one of the two highest ratings obtainable from either
Standard & Poor's Rating Group ("S&P") or ▇▇▇▇▇'▇ Investor Service, Inc.
("Moody's"), (c) commercial paper maturing no more than one year from the date
of creation thereof and, at the time of acquisition, having a rating of at least
A-1 from S&P or at least P-1 from Moody's, (d) certificates of deposit or
bankers' acceptances maturing within 1 year from the date of acquisition thereof
issued by any bank organized under the laws of the United States or any state
thereof or the District of Columbia or any United States branch of a foreign
bank having at the date of acquisition thereof combined net capital and surplus
of not less than $250,000,000, (e) Deposit Accounts maintained with (i) any bank
that satisfies the criteria described in clause (d) above, or (ii) any other
bank organized under the laws of the United States or any state thereof so long
as the amount maintained with any such other bank is less than or equal to
$100,000 and is insured by the Federal Deposit Insurance Corporation, (f) money
market
funds offered by any bank that satisfies the criteria described in clause (d)
above, (g) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clause (a) above entered into
with any bank meeting the qualifications specified in clause (d) above, and (h)
Investments in money market funds substantially all of whose assets are invested
in the types of assets described in clauses (a) through (g) above.
"Cash Management Account" has the meaning set forth in Section
2.7(a).
"Cash Management Agreements" means those certain cash management
agreements, in form and substance reasonably satisfactory to Lender, each of
which is among Borrower or one of its Subsidiaries, Lender, and one of the Cash
Management Banks.
"Cash Management Bank" has the meaning set forth in Section 2.7(a).
"Change of Control" means the occurrence of one or more of the
following events:
(1) any direct or indirect sale, lease, transfer, conveyance or
other disposition (other than by way of merger or consolidation), in one
transaction or a series of related transactions, of all or substantially all of
the assets of the Company to any Person or group of related Persons for purposes
of Section 13(d) of the Exchange Act (a "Group"), other than a transaction in
which the transferee is controlled by one or more Permitted Holders;
(2) any Person or Group, other than Permitted Holders, is or becomes
the Beneficial Owner, directly or indirectly whether by merger or consolidation,
of a majority of the total outstanding Stock of the Company as measured by
voting power; provided that there shall be no Change of Control pursuant to this
clause (2) if the Permitted Holders continue to have the right or ability by
voting power; contract or otherwise to elect or designate for election a
majority of the Board of Directors of the Company,
(3) the adoption of a plan for the liquidation or dissolution of the
Company; or
(4) individuals who on the Closing Date constituted the Board of
Directors (together with any new directors whose election by such Board of
Directors or whose nomination for election by the stockholders of the Company
was approved pursuant to a vote of a majority of the directors then still in
office who were either directors on the Closing Date or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors then in office; provided that
there shall be no Change of Control pursuant to this clause (4) if since the
Closing Date the Permitted Holders continue to own, directly or indirectly, (a)
at least 90% of the Stock of the Company held by the Permitted Holders as of the
Closing Date, (b) more Stock than any other Person or Group (other than a Group
consisting solely of ▇▇▇▇▇▇▇ ▇▇▇▇▇ and Co., Inc., Northeast Investors Trust and
their respective Affiliates), (c) more Stock ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., Inc. and
its Affiliates and (d) more Stock than Northeast Investors Trust and its
Affiliates.
"Closing Date" means the date of the making of the initial Advance
(or other extension of credit) hereunder or the date on which Lender sends
Borrower a written notice that each of the conditions precedent set forth in
Section 3.1 either have been satisfied or have been waived.
"Closing Date Business Plan" means the set of Projections of
Borrower for the 3 calendar year period commencing with 2004 (on a year by year
basis, and for 2004, on a quarter by quarter basis.
"Code" means the Illinois Uniform Commercial Code, as in effect from
time to time; provided, however, that in the event that, by reason of mandatory
provisions of law, any or all of the attachment, perfection, priority, or
remedies with respect to Lender's Lien on any Collateral is governed by the
Uniform Commercial Code as enacted and in effect in a jurisdiction other than
the State of Illinois, the term "Code" shall mean the Uniform Commercial Code as
enacted and in effect in such other jurisdiction solely for purposes of the
provisions thereof relating to such attachment, perfection, priority, or
remedies.
"Collateral" means all assets and interests in assets and proceeds
thereof now owned or hereafter acquired by Borrower in or upon which a Lien is
granted under any of the Loan Documents. Notwithstanding the foregoing, the term
Collateral shall in no event include (a) more than sixty-five percent (65%) of
the issued and outstanding Stock of any first-tier Foreign Subsidiary of
Borrower, (b) any rights under any Account, contract, license or other agreement
or any General Intangible, in each case, to the extent that the grant of a
security interest under any Loan Document (i) would invalidate the underlying
rights of Borrower in such General Intangible, (ii) is prohibited by such
Account, contract, license, agreement, intellectual property or General
Intangible without the consent of any other party thereto, (iii) would give any
other party to such Account, contract, license, agreement or General Intangible
the right to terminate its obligations thereunder, or (iv) is not permitted
without consent, unless in each case, all necessary consents to such grant of a
security interest have been obtained from the other parties thereto; provided,
however, that nothing herein shall be intended to limit the affect of 9-406 of
the Code or otherwise limit or restrict the conveyance by the Borrower of any
rights under any such Account, contracts, licenses, agreements or General
Intangibles to the extent which would not be violative of the restrictive terms
thereof or (c) Equipment subject to a Lien permitted under Sections 7.1(b), (c)
and (d) of this Agreement, in each case, with respect to which Borrower is
prohibited from granting a security interest under the terms of the Indebtedness
incurred to finance the purchase of such Equipment.
"Collateral Agent" means LaSalle Bank National Association, in its
capacity as the collateral agent pursuant to the Collateral Agreements.
"Collateral Agreements" means each security agreement, mortgage,
leasehold mortgage, pledge agreement and any other document or agreement
providing for a Lien in favor of the Collateral Agent in connection with the
Notes and the Indenture, as any of the
same may be amended or modified in accordance with their respective terms, and
the Intercreditor Agreement and this Agreement.
"Collateral Access Agreement" means a landlord waiver, bailee
letter, or acknowledgement agreement of any lessor, warehouseman, processor,
consignee, or other Person in possession of, having a Lien upon, or having
rights or interests in Borrower's or its Subsidiaries' Books, Equipment, or
Inventory, in each case, in form and substance reasonably satisfactory to
Lender.
"Collections" means all cash, checks, notes, instruments, and other
items of payment (including insurance proceeds, proceeds of cash sales, rental
proceeds, and tax refunds).
"Commercial Tort Claim Assignment" has the meaning set forth in
Section 4.4(b).
"Compliance Certificate" means a certificate substantially in the
form of Exhibit C-1 delivered by the chief financial officer of Borrower to
Lender.
"Control Agreement" means a control agreement, in form and substance
reasonably satisfactory to Lender, executed and delivered by Borrower, Lender,
and the applicable securities intermediary (with respect to a Securities
Account) or bank (with respect to a Deposit Account).
"Daily Balance" means, as of any date of determination and with
respect to any Obligation, the amount of such Obligation owed at the end of such
day.
"Default" means an event, condition, or default that, with the
giving of notice, the passage of time, or both, would be an Event of Default.
"Deposit Account" means any deposit account (as that term is defined
in the Code).
"Designated Account" means the Deposit Account of Borrower
identified on Schedule D-1, as such schedule may be amended or modified from
time to time by Borrower and as consented to by Lender pursuant to the execution
of a Control Agreement by the Lender, the applicable securities intermediary or
bank and the Borrower.
"Designated Account Bank" has the meaning ascribed thereto on
Schedule D-1, as such schedule may be amended or modified from time to time by
Borrower and as consented to by Lender pursuant to the execution of a Control
Agreement by the Lender, the applicable securities intermediary or bank and the
Borrower.
"Dilution" means, as of any date of determination, a percentage,
based upon the experience of the immediately prior 360 consecutive days, that is
the result of dividing the Dollar amount of (a) bad debt write-downs, discounts,
advertising allowances, credits, or
other dilutive items with respect to Borrower's Accounts during such period, by
(b) Borrower's ▇▇▇▇▇▇▇▇ with respect to Accounts during such period.
"Dilution Reserve" means, as of any date of determination, an amount
sufficient to reduce the advance rate against Eligible Accounts by 1 percentage
point for each percentage point by which Dilution is in excess of 5%.
"Disbursement Letter" means an instructional letter executed and
delivered by Borrower to Lender regarding the extensions of credit to be made on
the Closing Date, the form and substance of which is reasonably satisfactory to
Lender.
"Dollars" or "$" means United States dollars.
"EBITDA" means, with respect to any fiscal period, Borrower's and
its Subsidiaries' consolidated net earnings (or loss), minus extraordinary gains
and interest income, plus interest expense, income taxes, and depreciation and
amortization and non-cash and non-recurring charges for such period, in each
case, as determined in accordance with GAAP.
"Eligible Accounts" means collectively, Eligible Domestic Accounts
and Eligible Export Accounts.
"Eligible Domestic Accounts" means those Accounts created by
Borrower in the ordinary course of its business, that arise out of Borrower's
sale of goods or rendition of services, that comply with each of the
representations and warranties respecting Eligible Accounts made in the Loan
Documents, and that are not excluded as ineligible by virtue of one or more of
the excluding criteria set forth below; provided, however, that such criteria
may be revised from time to time by Lender in Lender's Permitted Discretion to
address the results of any audit performed by Lender from time to time after the
Closing Date; provided, further, that prior to revising any such criteria, the
Lender shall notify the Borrower and promptly enter into good faith discussions
with the Borrower for such period of time as the Lender deems appropriate in its
Permitted Discretion. In determining the amount to be included, Eligible
Domestic Accounts shall be calculated net of customer deposits and unapplied
cash. Eligible Domestic Accounts shall not include the following:
(a) Accounts that the Account Debtor has failed to pay within 90
days of original invoice date or Accounts with selling terms of more than 60
days,
(b) Accounts owed by an Account Debtor (or its Affiliates) where 50%
or more of all Accounts owed by that Account Debtor (or its Affiliates) are
deemed ineligible under clause (a) above,
(c) Accounts with respect to which the Account Debtor is an
Affiliate of Borrower or an employee or agent of Borrower or any Affiliate of
Borrower,
(d) Accounts arising in a transaction wherein goods are placed on
consignment or are sold pursuant to a guaranteed sale, a sale or return, a sale
on approval, a ▇▇▇▇ and hold, or any other terms by reason of which the payment
by the Account Debtor may be conditional,
(e) Accounts that are not payable in Dollars or Canadian Dollars,
(f) Accounts with respect to which the Account Debtor either (i)
does not maintain its chief executive office in the United States or Canada, or
(ii) is not organized under the laws of the United States or Canada or any state
or province thereof, or (iii) is the government of any foreign country or
sovereign state, or of any state, province, municipality, or other political
subdivision thereof, or of any department, agency, public corporation, or other
instrumentality thereof, unless (y) the Account is supported by an irrevocable
letter of credit reasonably satisfactory to Lender (as to form, substance, and
issuer or domestic confirming bank) that has been delivered to Lender and is
directly drawable by Lender, or (z) the Account is covered by credit insurance
in form, substance, and amount, and by an insurer, reasonably satisfactory to
Lender,
(g) Accounts with respect to which the Account Debtor is either (i)
the United States or any department, agency, or instrumentality of the United
States (exclusive, however, of Accounts with respect to which Borrower has
complied, to the reasonable satisfaction of Lender, with the Assignment of
Claims Act, 31 USC Section 3727), or (ii) any state of the United States,
(h) Accounts with respect to which the Account Debtor is a creditor
of Borrower, has or has asserted a right of setoff, or has disputed its
obligation to pay all or any portion of the Account, to the extent of such
claim, right of setoff, or dispute; provided, that only such portion of such
Account subject to any such claim, right of setoff or dispute shall be deemed
ineligible pursuant to this clause (h),
(i) Accounts with respect to an Account Debtor whose total
obligations owing to Borrower exceed 10% (except in the case of Kraft Foods, 20%
and Smithfield Foods, 20%) (such percentage, as applied to a particular Account
Debtor, being subject to reduction by Lender in its Permitted Discretion if the
creditworthiness of such Account Debtor deteriorates) of all Eligible Accounts,
to the extent of the obligations owing by such Account Debtor in excess of such
percentage; provided, however, that, in each case, the amount of Eligible
Domestic Accounts that are excluded because they exceed the foregoing percentage
shall be determined by Lender based on all of the otherwise Eligible Accounts
prior to giving effect to any eliminations based upon the foregoing
concentration limit,
(j) Accounts with respect to which the Account Debtor is subject to
an Insolvency Proceeding, is not Solvent, has gone out of business, or as to
which Borrower has received notice of an imminent Insolvency Proceeding or a
material impairment of the financial condition of such Account Debtor,
(k) Accounts with respect to which the Account Debtor is located in
a state or jurisdiction (e.g., New Jersey, Minnesota, and West Virginia) that
requires, as a condition to access to the courts of such jurisdiction, that a
creditor qualify to transact business, file a business activities report or
other report or form, or take one or more other actions, unless Borrower has so
qualified, filed such reports or forms, or taken such actions (and, in each
case, paid any required fees or other charges), except to the extent that
Borrower may qualify subsequently as a foreign entity authorized to transact
business in such state or jurisdiction and gain access to such courts, without
incurring any cost or penalty viewed by Lender to be significant in amount, and
such later qualification cures any access to such courts to enforce payment of
such Account,
(l) Accounts, the collection of which, Lender, in its Permitted
Discretion, believes to be doubtful by reason of the Account Debtor's financial
condition,
(m) Accounts that are not subject to a valid and perfected first
priority Lender's Lien (other than Borrower Permitted Liens),
(n) Accounts with respect to which (i) the goods giving rise to such
Account have not been shipped and billed to the Account Debtor, or (ii) the
services giving rise to such Account have not been performed and billed to the
Account Debtor, or
(o) Accounts that represent the right to receive progress payments
or other advance ▇▇▇▇▇▇▇▇ that are due prior to the completion of performance by
Borrower of the subject contract for goods or services.
"Eligible Export Accounts" means those Accounts created by Borrower
in the ordinary course of its business, that arise out of Borrower's sale of
goods or rendition of services, that comply with each of the representations and
warranties respecting Eligible Accounts made in the Loan Documents, and that are
not excluded as ineligible by virtue of one or more of the excluding criteria
set forth below; provided, however, that such criteria may be revised from time
to time by Lender in Lender's Permitted Discretion to address the results of any
audit performed by Lender from time to time after the Closing Date; provided,
further, that prior to revising any such criteria, the Lender shall notify the
Borrower and promptly enter into good faith discussions with the Borrower for
such period of time as the Lender deems appropriate in its Permitted Discretion.
In determining the amount to be included, Eligible Export Accounts shall be
calculated net of customer deposits and unapplied cash. Eligible Export Accounts
shall not include the following:
(a) Accounts that the Account Debtor has failed to pay within 90
days of original invoice date,
(b) Accounts owed by an Account Debtor (or its Affiliates) where 50%
or more of all Accounts owed by that Account Debtor (or its Affiliates) are
deemed ineligible under clause (a) above,
(c) Accounts with respect to which the Account Debtor is an
Affiliate of Borrower or an employee or agent of Borrower or any Affiliate of
Borrower,
(d) Accounts arising in a transaction wherein goods are placed on
consignment or are sold pursuant to a guaranteed sale, a sale or return, a sale
on approval, a ▇▇▇▇ and hold, or any other terms by reason of which the payment
by the Account Debtor may be conditional,
(e) Accounts that are not payable in Dollars or Canadian Dollars,
(f) Accounts with respect to which the Account Debtor is the
government of any foreign country or sovereign state, or of any state, province,
municipality, or other political subdivision thereof, or of any department,
agency, public corporation, or other instrumentality thereof, unless (y) the
Account is supported by an irrevocable letter of credit reasonably satisfactory
to Lender (as to form, substance, and issuer or domestic confirming bank) that
has been delivered to Lender and is directly drawable by Lender, or (z) the
Account is covered by credit insurance in form, substance, and amount, and by an
insurer, reasonably satisfactory to Lender,
(g) Accounts with respect to which the Account Debtor is a creditor
of Borrower, has or has asserted a right of setoff, or has disputed its
obligation to pay all or any portion of the Account, to the extent of such
claim, right of setoff, or dispute; provided, that only such portion of such
Account subject to any such claim, right of setoff or dispute shall be deemed
ineligible pursuant to this clause (g),
(h) Accounts with respect to an Account Debtor whose total
obligations owing to Borrower exceed 5% (except in the case of Kyokuto Boeki
Kaisha, 10% and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, 10%) such percentage, as applied to a particular
Account Debtor, being subject to reduction by Lender in its Permitted Discretion
if the creditworthiness of such Account Debtor deteriorates) of all Eligible
Accounts, to the extent of the obligations owing by such Account Debtor in
excess of such percentage; provided, however, that, in each case, the amount of
Eligible Export Accounts that are excluded because they exceed the foregoing
percentage shall be determined by Lender based on all of the otherwise Eligible
Accounts prior to giving effect to any eliminations based upon the foregoing
concentration limit,
(i) Accounts with respect to which the Account Debtor is subject to
an Insolvency Proceeding, is not Solvent, has gone out of business, or as to
which Borrower has received notice of an imminent Insolvency Proceeding or a
material impairment of the financial condition of such Account Debtor,
(j) Accounts, the collection of which, Lender, in its Permitted
Discretion, believes to be doubtful by reason of the Account Debtor's financial
condition,
(k) Accounts that are not subject to a valid and perfected first
priority Lender's Lien (other than Borrower Permitted Liens),
(l) Accounts with respect to which (i) the goods giving rise to such
Account have not been shipped and billed to the Account Debtor, or (ii) the
services giving rise to such Account have not been performed and billed to the
Account Debtor, or
(m) Accounts that represent the right to receive progress payments
or other advance ▇▇▇▇▇▇▇▇ that are due prior to the completion of performance by
Borrower of the subject contract for goods or services.
"Eligible Inventory" means Inventory (a) consisting of first quality
finished goods held for sale in the ordinary course of Borrower's business, (b)
semi-finished goods or (c) raw materials, that complies with each of the
representations and warranties respecting Eligible Inventory made in the Loan
Documents, and that is not excluded as ineligible by virtue of one or more of
the excluding criteria set forth below; provided, however, that such criteria
may be revised from time to time by Lender in Lender's Permitted Discretion to
address the results of any audit or appraisal performed by Lender from time to
time after the Closing Date. In determining the amount to be so included,
Inventory shall be valued at the lower of cost or market on a basis consistent
with Borrower's historical accounting practices. An item of Inventory shall not
be included in Eligible Inventory if:
(a) Borrower does not have good, valid, and marketable title
thereto,
(b) it is not (i) located at one of the locations in the continental
United States or Canada set forth on Schedule E-1 (which Schedule may be amended
from time to time by Borrower as consented to by Lender pursuant to the
execution and delivery of a Collateral Access Agreement or the imposition of a
Rent Reserve with respect to such property) or (ii) in-transit from one such
location to another location permitted in clause (i) above; provided, however
that in no event shall, at any time, more than $750,000 of such in-transit
Inventory constitute any portion of Eligible Inventory for purposes of the
Borrowing Base,
(c) it is not subject to a valid and perfected first priority
Lender's Lien (other than Borrower Permitted Liens),
(d) it consists of goods returned or rejected by Borrower's
customers (unless such goods have been re-worked by Borrower as determined by
Lender in its Permitted Discretion), or
(e) it consists of goods that are obsolete or slow moving as
determined by Lender in its Permitted Discretion or goods that constitute spare
parts, packaging and shipping materials, supplies used or consumed in Borrower's
business, ▇▇▇▇ and hold goods, defective goods, "seconds," or Inventory acquired
on consignment.
"Eligible Transferee" means (a) a commercial bank organized under
the laws of the United States, or any state thereof, and having total assets in
excess of $250,000,000, (b) a commercial bank organized under the laws of any
other country which is a member of the Organization for Economic Cooperation and
Development or a political subdivision of
any such country and which has total assets in excess of $250,000,000, provided
that such bank is acting through a branch or agency located in the United
States, (c) a finance company, insurance company, or other financial institution
or fund that is engaged in making, purchasing, or otherwise investing in
commercial loans in the ordinary course of its business and having (together
with its Affiliates) total assets in excess of $250,000,000, (d) any Affiliate
(other than individuals) of Lender, (e) so long as no Event of Default has
occurred and is continuing, any other Person approved by Borrower (which
approval of Borrower shall not be unreasonably withheld, delayed, or
conditioned), and (f) during the continuation of an Event of Default, any other
Person approved by Lender.
"Environmental Actions" means any complaint, summons, citation,
notice, directive, order, claim, litigation, investigation, judicial or
administrative proceeding, judgment, letter, or other written communication from
any Governmental Authority, or any third party involving violations of
Environmental Laws or releases of Hazardous Materials from (a) any assets,
properties, or businesses of Borrower or its U.S. Subsidiaries, (b) from
adjoining properties or businesses, or (c) from or onto any facilities which
received Hazardous Materials generated by Borrower or its U.S. Subsidiaries.
"Environmental Law" means any applicable federal, state, provincial,
foreign or local statute, law, rule, regulation, ordinance, code, binding and
enforceable guideline, binding and enforceable written policy, or rule of common
law now or hereafter in effect and in each case as amended, or any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, in each case, to the extent binding on
Borrower or its U.S. Subsidiaries, relating to the environment, the effect of
the environment on employee health, or Hazardous Materials, including the
Comprehensive Environmental Response Compensation and Liability Act, 42 USC
Section 9601 et seq.; the Resource Conservation and Recovery Act, 42 USC Section
6901 et seq.; the Federal Water Pollution Control Act, 33 USC Section 1251 et
seq.; the Toxic Substances Control Act, 15 USC Section 2601 et seq.; the Clean
Air Act, 42 USC Section 7401 et seq.; the Safe Drinking Water Act, 42 USC
Section 3803 et seq.; the Oil Pollution Act of 1990, 33 USC Section 2701 et
seq.; the Emergency Planning and the Community Right-to-Know Act of 1986, 42 USC
Section 11001 et seq.; the Hazardous Material Transportation Act, 49 USC
Section 1801 et seq.; and the Occupational Safety and Health Act, 29 USC Section
651 et seq. (to the extent it regulates occupational exposure to Hazardous
Materials); any state and local or foreign counterparts or equivalents, in each
case as amended from time to time.
"Environmental Liabilities and Costs" means all liabilities,
monetary obligations, losses, damages, punitive damages, consequential damages,
treble damages, costs and expenses (including all reasonable fees, disbursements
and expenses of counsel, experts, or consultants, and costs of investigation and
feasibility studies), fines, penalties, sanctions, and interest incurred as a
result of any claim or demand, or Remedial Action required, by any Governmental
Authority or any third party, and which relate to any Environmental Action.
"Environmental Lien" means any Lien in favor of any Governmental
Authority for Environmental Liabilities and Costs.
"Equipment" means equipment (as that term is defined in the Code)
and includes machinery, machine tools, motors, furniture, furnishings, fixtures,
vehicles (including motor vehicles), computer hardware, tools, parts, and goods
(other than consumer goods, farm products, or Inventory), wherever located,
including all attachments, accessories, accessions, replacements, substitutions,
additions, and improvements to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and any successor statute thereto.
"ERISA Affiliate" means (a) any Person subject to ERISA whose
employees are treated as employed by the same employer as the employees of
Borrower or its Subsidiaries under IRC Section 414(b), (b) any trade or business
subject to ERISA whose employees are treated as employed by the same employer as
the employees of Borrower or its Subsidiaries under IRC Section 414(c), (c)
solely for purposes of Section 302 of ERISA and Section 412 of the IRC, any
organization subject to ERISA that is a member of an affiliated service group of
which Borrower or any of its Subsidiaries is a member under IRC Section 414(m),
or (d) solely for purposes of Section 302 of ERISA and Section 412 of the IRC,
any Person subject to ERISA that is a party to an arrangement with Borrower or
any of its Subsidiaries and whose employees are aggregated with the employees of
Borrower or its Subsidiaries under IRC Section 414(o).
"Event of Default" has the meaning set forth in Section 8.
"Excess Availability" means, as of any date of determination, the
amount equal to Availability minus the aggregate amount, if any, of all trade
payables of Borrower and its Subsidiaries aged in excess of historical levels
with respect thereto and all book overdrafts of Borrower and its Subsidiaries in
excess of historical practices with respect thereto, in each case as determined
by Lender in its Permitted Discretion.
"Exchange Act" means the Securities Exchange Act of 1934, as in
effect from time to time.
"Existing Lender" means Arnos Corp.
"Extraordinary Receipts" means any Collections received by the
Borrower or any of its U.S. Subsidiaries not in the ordinary course of business,
including, (a) proceeds of insurance and (b) condemnation awards (and payments
in lieu thereof), less, with respect to (a) and (b) above, the aggregate amount
actually paid by Borrower or its U.S. Subsidiaries, as applicable, in respect of
maintaining and preserving the properties subject to such insurance or casualty,
preceding the receipt of such Collections.
"Filing Authorization Letter" means a letter duly executed by
Borrower authorizing Lender to file appropriate financing statements in such
office or offices as may
be necessary or, in the opinion of Lender, desirable to perfect the security
interests to be created by the Loan Documents.
"Fixed Charges" means with respect to the Borrower and its
Subsidiaries for any period, the sum, without duplication, of (a) cash Interest
Expense, and (b) regularly scheduled principal payments required to be paid
during such period in respect of Indebtedness.
"Fixed Charge Coverage Ratio" means, with respect to Borrower and
its Subsidiaries for any period, the ratio of (i) EBITDA for such period minus
Capital Expenditures made (to the extent not already incurred in a prior period)
or incurred during such period solely with Advances minus all federal, state and
local income taxes paid during such period, to (ii) Fixed Charges for such
period.
"Foreign Subsidiaries" means any Subsidiary that is incorporated,
organized or formed under any laws other than the laws of the United States, any
state thereof or the District of Columbia and is a "controlled foreign company"
(as defined in the IRC), including Viskase Europe Limited, Viskase Brasil
Embalagens Ltda., and Viskase Canada Inc.
"Funding Date" means the date on which a Borrowing occurs.
"Funding Losses" has the meaning set forth in Section 2.13(b)(ii).
"GAAP" means generally accepted accounting principles as in effect
from time to time in the United States, consistently applied.
"General Intangibles" means general intangibles (as that term is
defined in the Code), including payment intangibles, contract rights, rights to
payment, rights arising under common law, statutes, or regulations, choses or
things in action, goodwill, patents, trade names, trade secrets, trademarks,
servicemarks, copyrights, blueprints, drawings, purchase orders, customer lists,
monies due or recoverable from pension funds, route lists, rights to payment and
other rights under any royalty or licensing agreements, infringement claims,
computer programs, information contained on computer disks or tapes, software,
literature, reports, catalogs, insurance premium rebates, tax refunds, and tax
refund claims, and any other personal property other than Accounts, Deposit
Accounts, goods, Investment Property, and Negotiable Collateral.
"Governing Documents" means, with respect to any Person, the
certificate or articles of incorporation, by-laws, or other organizational
documents of such Person.
"Governmental Authority" means any federal, state, local, or other
governmental or administrative body, instrumentality, board, department, or
agency or any court, tribunal, administrative hearing body, arbitration panel,
commission, or other similar dispute-resolving panel or body.
"Hazardous Materials" means (a) substances that are defined or
listed in, or otherwise classified pursuant to, any applicable laws or
regulations as "hazardous substances," "hazardous materials," "hazardous
wastes," "toxic substances," or any other formulation intended to define, list,
or classify substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP
toxicity", (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.
"Hedge Agreement" means any and all agreements or documents now
existing or hereafter entered into by Borrower or any of its Subsidiaries that
provide for an interest rate, credit, commodity or equity swap, cap, floor,
collar, forward foreign exchange transaction, currency swap, cross currency rate
swap, currency option, or any combination of, or option with respect to, these
or similar transactions, for the purpose of hedging Borrower's or any of its
Subsidiaries' exposure to fluctuations in interest or exchange rates, loan,
credit exchange, security, or currency valuations or commodity prices.
"Indebtedness" means, with respect to a Person, (a) all obligations
for borrowed money, (b) all obligations evidenced by bonds, debentures, notes,
or other similar instruments and all reimbursement or other obligations in
respect of letters of credit, bankers acceptances, interest rate swaps, or other
financial products, (c) all obligations as a lessee under Capital Leases (other
than obligations that are not and will not be included in such Person's audited
consolidated financial statements prepared in accordance with GAAP due to the
immateriality of such obligations as determined in good faith by such Person),
(d) all obligations or liabilities of others secured by a Lien on any asset of a
Person or its Subsidiaries, irrespective of whether such obligation or liability
is assumed, (e) all obligations to pay the deferred purchase price of assets
(other than trade payables incurred in the ordinary course of business and
repayable in accordance with customary trade practices), (f) all obligations
owing under Hedge Agreements, (g) all obligations of such Person issued or
assumed as the deferred purchase price of property, all conditional sale
obligations and all obligations under any title retention agreement (but
excluding trade accounts payable and other accrued liabilities arising in the
ordinary course of business that are not overdue by 90 days or more or are
subject to a Permitted Protest), (h) all obligations incurred in connection with
a Permitted Acquisition and (i) any obligation guaranteeing or intended to
guarantee (whether directly or indirectly guaranteed, endorsed, co-made,
discounted, or sold with recourse) any obligation of any other Person that
constitutes Indebtedness under any of clauses (a) through (h) above.
"Indemnified Liabilities" has the meaning set forth in Section 11.3.
"Indemnified Person" has the meaning set forth in Section 11.3.
"Indenture" means that certain Indenture governing the issuance of
the Notes by and among the Borrower, the Trustee and the Collateral Agent, and
any successor thereto, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with the Intercreditor Agreement.
"Initial Purchaser" means ▇▇▇▇▇▇▇▇▇ & Company, Inc.
"Insolvency Proceeding" means any proceeding commenced by or against
any Person under any provision of the Bankruptcy Code or under any other state
or federal bankruptcy or insolvency law, assignments for the benefit of
creditors, formal or informal moratoria, compositions, extensions generally with
creditors, or proceedings seeking reorganization, arrangement, or other similar
relief.
"Intangible Assets" means, with respect to any Person, that portion
of the book value of all of such Person's assets that would be treated as
intangibles under GAAP.
"Intellectual Property Security Agreement" means an intellectual
property security agreement executed and delivered by Borrower and Lender, the
form and substance of which is reasonably satisfactory to Lender.
"Intercompany Subordination Agreement" means a subordination
agreement executed and delivered by Borrower and each of its Subsidiaries and
Lender, the form and substance of which is reasonably satisfactory to Lender.
"Intercreditor Agreement" means an intercreditor agreement by and
among the Collateral Agent, Lender and the Borrower, in form and substance
reasonably satisfactory to Lender, as the same may be amended, supplemented or
modified from time to time in accordance with its terms.
"Interest Expense" means, for any period, the aggregate of the
interest expense of Borrower and its Subsidiaries for such period, determined on
a consolidated basis in accordance with GAAP.
"Interest Period" means, with respect to each LIBOR Rate Loan, a
period commencing on the date of the making of such LIBOR Rate Loan (or the
continuation of a LIBOR Rate Loan or the conversion of a Base Rate Loan to a
LIBOR Rate Loan) and ending 1, 2, or 3 or 6 months thereafter; provided,
however, that (a) if any Interest Period would end on a day that is not a
Business Day, such Interest Period shall be extended (subject to clauses (c)-(e)
below) to the next succeeding Business Day, (b) interest shall accrue at the
applicable rate based upon the LIBOR Rate from and including the first day of
each Interest Period to, but excluding, the day on which any Interest Period
expires, (c) any Interest Period that would end on a day that is not a Business
Day shall be extended to the next succeeding Business Day unless such Business
Day falls in another calendar month, in which case such Interest Period shall
end on the next preceding Business Day, (d) with respect to an Interest Period
that begins on the last Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar month at the end of
such Interest
Period), the Interest Period shall end on the last Business Day of the calendar
month that is 1, 2, or 3 or 6 months after the date on which the Interest Period
began, as applicable, and (e) Borrower may not elect an Interest Period which
will end after the Maturity Date.
"Inventory" means inventory (as that term is defined in the Code).
"Investment" means, with respect to any Person, any investment by
such Person in any other Person (including Affiliates) in the form of loans,
guarantees, advances, or capital contributions (excluding (a) commission,
travel, relocation and similar advances to officers and employees of such Person
made in the ordinary course of business, and (b) bona fide Accounts or advances
to suppliers, in each case, arising in the ordinary course of business
consistent with past practice), purchases or other acquisitions of Indebtedness,
Stock, or all or substantially all of the assets of such other Person (or of any
division or business line of such other Person), and any other items that are or
would be classified as investments on a balance sheet prepared in accordance
with GAAP.
"Investment Property" means investment property (as that term is
defined in the Code).
"IRC" means the Internal Revenue Code of 1986, as in effect from
time to time.
"L/C" has the meaning set forth in Section 2.12(a).
"L/C Disbursement" means a payment made by Lender pursuant to a
Letter of Credit.
"L/C Undertaking" has the meaning set forth in Section 2.12(a).
"Lender" has the meaning set forth in the preamble to this
Agreement.
"Lender Expenses" means all (a) reasonable costs or expenses
(including taxes, and insurance premiums) required to be paid by Borrower or its
Subsidiaries under any of the Loan Documents that are paid, advanced, or
incurred by Lender, (b) reasonable fees or charges paid or incurred by Lender in
connection with Lender's transactions with Borrower or its Subsidiaries,
including, fees or charges for photocopying, notarization, couriers and
messengers, telecommunication, public record searches (including tax lien,
litigation, and UCC searches and including searches with the patent and
trademark office or the copyright office), filing, recording, publication,
appraisal (including periodic collateral appraisals to the extent of the fees
and charges (and up to the amount of any limitation) contained in this
Agreement), real estate title policies and endorsements, (c) reasonable costs
and expenses incurred by Lender in the disbursement of funds to Borrower (by
wire transfer or otherwise), (d) charges paid or incurred by Lender resulting
from the dishonor of checks, (e) reasonable costs and expenses paid or incurred
by Lender to correct any default or enforce any provision of the Loan Documents,
or in gaining possession of, maintaining, handling, preserving, storing,
shipping, selling, preparing for sale, or advertising to sell the Collateral, or
any
portion thereof, irrespective of whether a sale is consummated, (f)
reasonable audit fees and expenses of Lender related to audit examinations of
the Books to the extent of the fees and charges (and up to the amount of any
limitation) contained in this Agreement, (g) reasonable costs and expenses of
third party claims or any other suit paid or incurred by Lender in enforcing or
defending the Loan Documents or in connection with the transactions contemplated
by the Loan Documents or Lender's relationship with Borrower or any of its
Subsidiaries, (h) Lender's reasonable costs and expenses (including attorneys
fees) incurred in advising, structuring, drafting, reviewing, administering,
syndicating, or amending the Loan Documents, and (i) Lender's reasonable costs
and expenses (including attorneys, accountants, consultants, and other advisors
fees and expenses) incurred in terminating, enforcing (including attorneys,
accountants, consultants, and other advisors fees and expenses incurred in
connection with a "workout," a "restructuring," or an Insolvency Proceeding
concerning Borrower or its Subsidiaries or in exercising rights or remedies
under the Loan Documents), or defending the Loan Documents, irrespective of
whether suit is brought, or in taking any Remedial Action concerning the
Collateral.
"Lender-Related Person" means Lender, together with its Affiliates,
officers, directors, employees, attorneys, and agents.
"Lender's Account" means the account identified in Schedule L-1.
"Lender's Liens" means the Liens granted by Borrower and its
Subsidiaries to Lender under this Agreement or the other Loan Documents.
"Letter of Credit" means an L/C or an L/C Undertaking, as the
context requires.
"Letter of Credit Usage" means, as of any date of determination, the
aggregate undrawn amount of all outstanding Letters of Credit.
"LIBOR Deadline" has the meaning set forth in Section 2.13(b)(i).
"LIBOR Notice" means a written notice in the form of Exhibit L-1.
"LIBOR Option" has the meaning set forth in Section 2.13(a).
"LIBOR Rate" means, for each Interest Period for each LIBOR Rate
Loan, the rate per annum determined by Lender (rounded upwards, if necessary, to
the next 1/100%) by dividing (a) the Base LIBOR Rate for such Interest Period,
by (b) 100% minus the Reserve Percentage. The LIBOR Rate shall be adjusted on
and as of the effective day of any change in the Reserve Percentage.
"LIBOR Rate Loan" means each portion of an Advance that bears
interest at a rate determined by reference to the LIBOR Rate.
"LIBOR Rate Margin" means the number of percentage points set forth
below:
LIBOR Rate
EBITDA Margin
------ ------
$21,000,000 or less 2.50%
$21,000,001 to $25,000,000 2.25%
$25,000,001 and above 2.00%
For purposes of the foregoing, (x) EBITDA shall be determined as of
the end of each fiscal year based upon the most recent audited consolidated
financial statements of Borrower for such fiscal year delivered pursuant to
Section 6.3(b) and (y) each change in the LIBOR Rate Margin resulting from a
change in EBITDA as determined in accordance with clause (x) above shall be
effective during the period commencing on and including the date of delivery to
Lender of such audited consolidated financial statements indicating such change
in EBITDA and ending on the date immediately preceding the effective date of the
next such change in EBITDA as determined in accordance with clause (x) above.
The preceding notwithstanding, if Section 7.19(a) hereof is breached at any
time, the Borrower acknowledges that the default rate of interest set forth in
Section 2.6(c) shall be applicable.
"Lien" means any interest in an asset securing an obligation owed
to, or a claim by, any Person other than the owner of the asset, irrespective of
whether (a) such interest is based on the common law, statute, or contract, (b)
such interest is recorded or perfected, and (c) such interest is contingent upon
the occurrence of some future event or events or the existence of some future
circumstance or circumstances. Without limiting the generality of the foregoing,
the term "Lien" includes the lien or security interest arising from a mortgage,
deed of trust, encumbrance, pledge, hypothecation, collateral assignment,
security deposit arrangement, security agreement, conditional sale or trust
receipt, or from a lease, consignment, or bailment for security purposes and
also includes reservations, exceptions, encroachments, easements, rights-of-way,
covenants, conditions, restrictions, leases, and other title exceptions and
encumbrances affecting Real Property.
"Loan Account" has the meaning set forth in Section 2.10.
"Loan Documents" means this Agreement, the Bank Product Agreements,
the Cash Management Agreements, the Control Agreements, the Disbursement Letter,
the Intellectual Property Security Agreement, the Intercompany Subordination
Agreement, the Letters of Credit, the Mortgages, the Stock Pledge Agreements,
any note or notes executed by Borrower in connection with this Agreement and
payable to Lender, and any other agreement entered into, now or in the future,
by Borrower and Lender in connection with this Agreement, as any of the
foregoing may be amended or modified from time to time in accordance with their
respective terms.
"Material Adverse Change" means (a) a material adverse change in the
business, operations, results of operations, assets, liabilities or condition
(financial or
otherwise) of Borrower and its Subsidiaries, taken as a whole, (b) a material
impairment of Borrower's and its Subsidiaries' ability to perform their
respective obligations under the Loan Documents to which they are parties or of
Lender's ability to enforce the Obligations or realize upon the Collateral, or
(c) a material impairment of the enforceability or priority of the Lender's
Liens with respect to the Collateral as a result of an action or failure to act
on the part of Borrower or its Subsidiaries.
"Maturity Date" has the meaning set forth in Section 3.4.
"Maximum Revolver Amount" means $20,000,000.00.
"Mortgage Policy" has the meaning set forth in Section 3.1(r).
"Mortgages" means, individually and collectively, one or more
mortgages, deeds of trust, or deeds to secure debt, executed and delivered by
Borrower in favor of Lender, in form and substance reasonably satisfactory to
Lender, that encumber the Real Property Collateral, as the same may be amended
or modified from time to time in accordance with its terms.
"Negotiable Collateral" means letters of credit, letter of credit
rights, instruments, promissory notes, drafts, documents, and chattel paper
(including electronic chattel paper and tangible chattel paper).
"Net Cash Proceeds" means, with respect to any sale or disposition
by any Person or any Subsidiary thereof of property or assets, the amount of
Collections received (directly or indirectly) from time to time (whether as
initial consideration or through the payment of deferred consideration) by or on
behalf of such Person or such Subsidiary, in connection therewith after
deducting therefrom only (i) the amount of any Indebtedness secured by any
Permitted Lien on any asset (other than (A) Indebtedness owing to Lender under
this Agreement or the other Loan Documents and (B) Indebtedness assumed by the
purchaser of such asset) which is required to be, and is, repaid in connection
with such disposition, (ii) reasonable expenses related thereto incurred by such
Person or such Subsidiary in connection therewith, (iii) taxes paid, payable or
estimated in good faith to be payable to any taxing authorities by such Person
or such Subsidiary in connection therewith and are properly attributable to such
transaction and (iv) any reserves required by GAAP to be made by such Person or
such Person's Subsidiary in connection with such sale or disposition.
"Net Liquidation Percentage" means the percentage of the book value
of Borrower's Inventory that is estimated to be recoverable in an orderly
liquidation of such Inventory net of all associated costs and expenses of such
liquidation, such percentage to be as determined from time to time by a
qualified appraisal company selected by Lender.
"Notes" means those certain 11-1/2% Senior Secured Notes due 2011 of
Borrower in the principal amount of $90,000,000.
"Obligations" means (a) all loans, Advances, debts, principal,
interest (including any interest that, but for the commencement of an Insolvency
Proceeding, would have accrued), contingent reimbursement obligations with
respect to outstanding Letters of Credit, premiums, liabilities (including all
amounts charged to Borrower's Loan Account pursuant hereto), obligations
(including indemnification obligations), fees (including the fees provided for
in the Fee Letter), charges, costs, Lender Expenses (including any fees or
expenses that, but for the commencement of an Insolvency Proceeding, would have
accrued), guaranties, covenants, and duties of any kind and description owing by
Borrower to Lender pursuant to or evidenced by the Loan Documents and
irrespective of whether for the payment of money, whether direct or indirect,
absolute or contingent, due or to become due, now existing or hereafter arising,
and including all interest not paid when due and all Lender Expenses that
Borrower is required to pay or reimburse by the Loan Documents, by law, or
otherwise, and (b) all Bank Product Obligations. Any reference in this Agreement
or in the Loan Documents to the Obligations shall include all extensions,
modifications, renewals or alterations thereof, both prior and subsequent to any
Insolvency Proceeding.
"Overadvance" has the meaning set forth in Section 2.5.
"Participant" has the meaning set forth in Section 14.1(d).
"Pay-Off Letter" means a letter, in form and substance reasonably
satisfactory to Lender, from Existing Lender to Lender respecting the amount
necessary to repay in full all of the obligations of Borrower and its
Subsidiaries owing to Existing Lender and obtain a release of all of the Liens
existing in favor of Existing Lender in and to the assets of Borrower and its
Subsidiaries.
"Permitted Acquisitions" means any acquisition (whether by merger,
consolidation, stock purchase, asset purchase or otherwise) by Borrower or any
of its Subsidiaries of all or part of the capital stock (or other equity),
assets, or business of a Person engaged in substantially the same general line
of business as that in which the Borrower is engaged; provided, that, (i)
immediately prior to and after giving effect to any such acquisition no Default
or Event of Default shall occur and be continuing; (ii) the Borrower provides
the Lender with prior written notice (which notice shall not be less than 15
days prior to the closing date of such acquisition) of such acquisition
containing the salient terms of such acquisition; (iii) for the 30 day period
prior to consummating such acquisition and after giving effect thereto Borrower
shall have at least $5,000,000 of Availability; (iv) the Borrower shall, and
shall cause its Subsidiaries, to comply with the requirements set forth in
Section 6.15 (to the extent applicable in such acquisition); (v) the Borrower
and its Subsidiaries shall comply with the Fixed Charge Coverage Ratio set forth
in Section 7.19(c) for the four fiscal quarters immediately following the
closing of such acquisition; and (vi) not more than two acquisitions in any
fiscal year shall be consummated and the aggregate amount of consideration for
all such acquisitions in any fiscal year shall not exceed $5,000,000.
"Permitted Discretion" means a determination made in the exercise of
commercially reasonable (from the perspective of a secured asset-based lender)
business judgment in good faith.
"Permitted Dispositions" means (a) sales or other dispositions of
assets that are substantially worn, surplus, damaged, or obsolete in the
ordinary course of business, (b) sales of Inventory to buyers in the ordinary
course of business, (c) the use or transfer of money or Cash Equivalents in a
manner that is not prohibited by the terms of this Agreement or the other Loan
Documents, (d) the licensing or abandonment of patents, patent applications,
trademarks, trademark applications, copyrights, copyright registrations, trade
secrets, computer programs and software and other intellectual property rights
in the ordinary course of business, (e) any sale of non-core assets acquired in
connection with a Permitted Acquisition or a Permitted Investment, (f) any sale
or disposition of assets permitted under Section 2.4(c), (g) sales or other
dispositions of assets having a fair market value not to exceed $1,500,000 in
the aggregate in any fiscal year of the Borrower, subject in such case to
Section 2.4(c) and (d), (h) any transfer of assets by any Foreign Subsidiary to
another Foreign Subsidiary, (i) any transfer of assets by any Subsidiary to
Borrower, (j) any transfer of assets by Borrower to any U.S. Subsidiary so long
as such U.S. Subsidiary becomes a party to this Agreement pursuant to Section
6.15 hereof and (k) any transfer of assets by Borrower or any U.S. Subsidiary to
any Foreign Subsidiary to the extent constituting (and subject to the
limitations and restrictions) a Permitted Investment under clause (i) thereof.
"Permitted Holders" means ▇▇▇▇ ▇. Icahn and his Affiliates.
"Permitted Investments" means (a) Investments in cash and Cash
Equivalents, (b) Investments in negotiable instruments for collection, (c)
advances made in connection with purchases of goods or services in the ordinary
course of business, (d) Investments received in settlement of amounts due to
Borrower or any of its Subsidiaries effected in the ordinary course of business
or owing to Borrower or any of its Subsidiaries as a result of Insolvency
Proceedings involving an Account Debtor or upon the foreclosure or enforcement
of any Lien in favor of Borrower or its Subsidiaries, (e) Investments by any
Foreign Subsidiary in any other Foreign Subsidiary, (f) Investments by any U.S.
Subsidiary in Borrower, (g) Investments by any Foreign Subsidiary in the
Borrower to the extent permitted under Section 7.1, (h) Investments by Borrower
in any U.S. Subsidiary so long as such U.S. Subsidiary becomes a party to this
Agreement pursuant to Section 6.15 hereof, (i) Investments by Borrower or any
U.S. Subsidiary in any Foreign Subsidiary so long as (1) such Investment is made
in substantially the same general line of business as that in which the Borrower
is engaged, (2) immediately prior to and after giving effect to any such
Investment no Default or Event of Default shall occur and be continuing, (3) the
Borrower provides the Lender with prior written notice (which notice shall not
be less than 15 days prior to the closing date of such Investment) of such
Investment containing the salient terms of such Investment, (4) for the 30 day
period prior to consummating such Investment and after giving effect thereto
Borrower shall have at least $5,000,000 of Availability, (5) the Borrower and
its Subsidiaries shall comply with the Fixed Charge Coverage Ratio set forth in
Section 7.19(c) for the four fiscal quarters immediately following the closing
of such
Investment and (6) the aggregate amount of consideration for all such
Investments in any 12 month period shall not exceed $5,000,000; provided,
however, that during one 12 month period during the term of this Agreement,
Borrower shall be permitted to make a one time aggregate Investment of
$11,000,000 (which amount shall include the $5,000,000 limitation set forth in
this clause (6)), (j) Investments by Borrower or any Subsidiary from
consideration received in connection with any Permitted Acquisition or Permitted
Disposition, subject to Section 2.4(c) and (d) and (k) Investments set forth on
Schedule I-1.
"Permitted Liens" means (a) Liens held by Lender, (b) Liens for
unpaid taxes that either (i) are not yet delinquent, or (ii) do not constitute
an Event of Default hereunder and are the subject of Permitted Protests, (c) the
first priority Liens in favor of the Collateral Agent in the Borrower's
Equipment, fixtures and the Real Property Collateral, and the second priority
Liens in favor of the Collateral Agent in the Borrower's Accounts and Inventory,
and the Liens in favor of the Collateral Agent on a pari passu basis with Lender
in all of the Borrower's other assets and property, including intellectual
property, General Intangibles, deposit accounts, chattel paper, documents,
instruments, and investment property (including interests in Borrower's
Subsidiaries), (d) the interests of lessors under operating leases or landlord
liens arising thereunder, (e) purchase money Liens or the interests of lessors
under Capital Leases to the extent that such Liens or interests secure Permitted
Purchase Money Indebtedness and so long as such Lien attaches only to the asset
purchased or acquired and the proceeds thereof and Liens arising from Purchase
Money Indebtedness acquired pursuant to a Permitted Acquisition but subject to
Section 7.1(i), (f) Liens arising by operation of law in favor of warehousemen,
landlords, carriers, mechanics, materialmen, laborers, or suppliers, incurred in
the ordinary course of business and not in connection with the borrowing of
money, and which Liens either (i) are for sums not yet delinquent, or (ii) are
the subject of Permitted Protests, (g) Liens on amounts deposited to secure
obligations arising from statutory, regulatory, contractual or warranty
requirements of Borrower or its Subsidiaries, including rights of offset and
set-off, (h) Liens securing obligations under Hedge Agreements, (i) Liens on
amounts deposited as security for performance or surety and appeal bonds in
connection with obtaining such bonds in the ordinary course of business, (j)
Liens resulting from any judgment or award that is not an Event of Default
hereunder, (k) with respect to any Real Property, easements, rights of way,
zoning restrictions and other charges or encumbrances that do not materially
interfere with or impair the use or operation thereof, (l) Liens securing
Indebtedness acquired by the Borrower or its Subsidiaries; provided, that such
Liens (i) were not granted in connection with, or in anticipation of, the
incurrence of such Indebtedness by Borrower or its Subsidiaries, (ii) do not
cover property or assets of Borrower and its Subsidiaries other than property or
assets which secured such Indebtedness prior to the time such Indebtedness
became acquired Indebtedness and (iii) are no more favorable than the Liens in
such property or assets in favor of Lender and Collateral Agent permitted by
this Agreement, (m) Liens securing Indebtedness of Foreign Subsidiaries to the
extent such Indebtedness is permitted under Section 7.1(j), (n) Liens securing
Indebtedness to be refinanced permitted to Section 7.1(c); provided that (i)
such Lien securing Indebtedness to be refinanced had been a Lien permitted
hereunder, (ii) is not less favorable to Lender than the Liens securing the
Indebtedness to be refinanced and (iii) does not cover any property or assets of
the Borrower or such Subsidiary not securing the
Indebtedness to be refinanced, (o) Liens upon specific items of Inventory or
other goods and proceeds of Borrower or its Subsidiaries securing such Person's
obligations in respect of bankers' acceptances issued or created for the account
of such Person to facilitate the purchase, shipment or storage of such Inventory
or other goods, (p) Liens securing reimbursement obligations of any Foreign
Subsidiary with respect to commercial letters of credit which encumber documents
and other property relating to such letters of credit and products and proceeds
thereof, and (q) Liens set forth on Schedule P-1.
"Permitted Protest" means the right of Borrower or any of its
Subsidiaries to protest any Lien (other than any Lien that secures the
Obligations), taxes (other than payroll taxes or taxes that are the subject of a
United States federal tax lien), or rental payment, provided that (a) a reserve
with respect to such obligation is established on the Books in such amount as is
required under GAAP, (b) any such protest is instituted promptly and prosecuted
diligently by Borrower or any of its Subsidiaries, as applicable, in good faith,
and (c) Lender is satisfied that, while any such protest is pending, there will
be no impairment of the enforceability, validity, or priority of any of the
Lender's Liens.
"Permitted Purchase Money Indebtedness" means, as of any date of
determination, Purchase Money Indebtedness incurred after the Closing Date in an
aggregate amount outstanding at any one time not in excess of $1,000,000.00
(excluding any such Purchase Money Indebtedness acquired pursuant to a Permitted
Acquisition but subject to Section 7.1(i)).
"Person" means natural persons, corporations, limited liability
companies, limited partnerships, general partnerships, limited liability
partnerships, joint ventures, trusts, land trusts, business trusts, or other
organizations, irrespective of whether they are legal entities, and governments
and agencies and political subdivisions thereof.
"Projections" means Borrower's forecasted (a) balance sheets, (b)
profit and loss statements, and (c) cash flow statements, all prepared on a
basis consistent with Borrower's historical financial statements, together with
appropriate supporting details and a statement of underlying assumptions.
"Purchase Money Indebtedness" means Indebtedness (other than the
Obligations, but including Capitalized Lease Obligations), incurred at the time
of, or within 20 days after, the acquisition of any fixed assets for the purpose
of financing all or any part of the acquisition cost thereof.
"Real Property" means any estates or interests in real property now
owned or hereafter acquired by Borrower or any of its Subsidiaries and the
improvements thereto.
"Real Property Collateral" means the Real Property identified on
Schedule R-1 and any Real Property hereafter acquired by Borrower or any of its
Subsidiaries.
"Record" means information that is inscribed on a tangible medium or
which is stored in an electronic or other medium and is retrievable in
perceivable form.
"Registration Rights Agreement" means that certain Registration
Rights Agreement between the Borrower and the Initial Purchaser in connection
with the Notes.
"Remedial Action" means all actions required under applicable
Environmental Laws to (a) clean up, remove, remediate, contain, treat, monitor,
assess, evaluate, or in any way address Hazardous Materials in the indoor or
outdoor environment, (b) prevent or minimize a release or threatened release of
Hazardous Materials so they do not migrate or endanger or threaten to endanger
public health or welfare or the indoor or outdoor environment, (c) restore or
reclaim natural resources or the environment, (d) perform any pre-remedial
studies, investigations, or post-remedial operation and maintenance activities,
or (e) conduct any other actions with respect to Hazardous Materials authorized
by Environmental Laws.
"Rent Reserve" means an amount not to exceed three months rent on
any applicable real property leased by the Borrower or its Subsidiaries from any
Person that is not subject to a Collateral Access Agreement, which amount shall
be reduced with respect to any property in which the Borrower shall have
delivered to the Lender a Collateral Access Agreement.
"Required Availability" means that Availability exceeds
$10,000,000.00.
"Reserve Percentage" means, on any day, for Lender, the maximum
percentage prescribed by the Board of Governors of the Federal Reserve System
(or any successor Governmental Authority) for determining the reserve
requirements (including any basic, supplemental, marginal, or emergency
reserves) that are in effect on such date with respect to eurocurrency funding
(currently referred to as "eurocurrency liabilities") of Lender, but so long as
Lender is not required or directed under applicable regulations to maintain such
reserves, the Reserve Percentage shall be zero.
"Revolver Usage" means, as of any date of determination, the sum of
(a) the amount of outstanding Advances, plus (b) the amount of the Letter of
Credit Usage.
"SEC" means the United States Securities and Exchange Commission and
any successor thereto.
"Securities Account" means a securities account (as that term is
defined in the Code).
"8% Senior Notes" means those certain 8% Senior Subordinated Secured
Notes due 2008 of Borrower.
"Solvent" means, with respect to any Person on a particular date,
that such Person is able to pay its debts as they become due.
"Stock" means all shares, options, warrants, interests,
participations, or other equivalents (regardless of how designated) of or in a
Person, whether voting or nonvoting,
including common stock, preferred stock, or any other "equity security" (as such
term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated
by the SEC under the Exchange Act).
"Stock Pledge Agreements" means those certain stock pledge
agreements, in form and substance reasonably satisfactory to Lender, executed
and delivered by Borrower to Lender, as the same may be amended or modified from
time to time in accordance with its terms.
"Subsidiary" of a Person means a corporation, partnership, limited
liability company, or other entity in which that Person directly or indirectly
owns or controls the shares of Stock having ordinary voting power to elect a
majority of the board of directors (or appoint other comparable managers) of
such corporation, partnership, limited liability company, or other entity.
"Supporting Obligation" means a letter-of-credit right or secondary
obligation that supports the payment or performance of an Account, chattel
paper, document, General Intangible, instrument, or Investment Property.
"Taxes" has the meaning set forth in Section 16.5.
"Triggering Event" means the occurrence of one or more of the
following events: (a) an Event of Default has occurred, (b) the aggregate
principal amount of all outstanding Advances exceeds $5,000,000 and (c) the
amount of Availability is less than $5,000,000.
"Trustee" means LaSalle Bank National Association in its capacity as
trustee under the Indenture on behalf of the holders of the Notes.
"Underlying Issuer" means a third Person which is the beneficiary of
an L/C Undertaking and which has issued a letter of credit at the request of
Lender for the benefit of Borrower.
"Underlying Letter of Credit" means a letter of credit that has been
issued by an Underlying Issuer.
"United States" means the United States of America.
"Unrestricted Subsidiary" means (a) any Subsidiary of the Borrower
that at the time of determination shall be or continue to be designated an
Unrestricted Subsidiary by the Board of Directors of the Borrower or any of its
Subsidiaries in the manner provided in Section 7.3 and (b) any Subsidiary of an
Unrestricted Subsidiary.
"U.S. Subsidiaries" means any Subsidiary other than a Foreign
Subsidiary including, Viskase Films, Inc. and WSC Corporation, each a Delaware
corporation, and wholly-owned by Borrower.
"Voidable Transfer" has the meaning set forth in Section 16.7.
"▇▇▇▇▇ Fargo" means ▇▇▇▇▇ Fargo Bank, National Association, a
national banking association.
1.2 ACCOUNTING TERMS. All accounting terms not specifically defined herein
shall be construed in accordance with GAAP. When used herein, the term
"financial statements" shall include the notes and schedules thereto. Whenever
the term "Borrower" is used in respect of a financial covenant or a related
definition, it shall be understood to mean Borrower and its Subsidiaries on a
consolidated basis unless the context clearly requires otherwise.
1.3 CODE. Any terms used in this Agreement that are defined in the Code
shall be construed and defined as set forth in the Code unless otherwise defined
herein; provided, however, that to the extent that the Code is used to define
any term herein and such term is defined differently in different Articles of
the Code, the definition of such term contained in Article 9 shall govern.
1.4 CONSTRUCTION. Unless the context of this Agreement or any other Loan
Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the terms "includes"
and "including" are not limiting, and the term "or" has, except where otherwise
indicated, the inclusive meaning represented by the phrase "and/or." The words
"hereof," "herein," "hereby," "hereunder," and similar terms in this Agreement
or any other Loan Document refer to this Agreement or such other Loan Document,
as the case may be, as a whole and not to any particular provision of this
Agreement or such other Loan Document, as the case may be. Section, subsection,
clause, schedule, and exhibit references herein are to this Agreement unless
otherwise specified. Any reference in this Agreement or in the other Loan
Documents to any agreement, instrument, or document shall include all
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements, thereto and thereof, as
applicable (subject to any restrictions on such alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements set forth herein). Any reference herein to the
satisfaction or repayment in full of the Obligations shall mean the repayment in
full in cash (or cash collateralization in accordance with the terms hereof) of
all Obligations other than contingent indemnification Obligations and other than
any Bank Product Obligations that, at such time, are allowed by the applicable
Bank Product Provider to remain outstanding and are not required to be repaid or
cash collateralized pursuant to the provisions of this Agreement. Any reference
herein to any Person shall be construed to include such Person's successors and
assigns. Any requirement of a writing contained herein or in the other Loan
Documents shall be satisfied by the transmission of a Record and any Record
transmitted shall constitute a representation and warranty as to the accuracy
and completeness of the information contained therein.
1.5 SCHEDULES AND EXHIBITS. All of the schedules and exhibits attached to
this Agreement shall be deemed incorporated herein by reference.
2. LOAN AND TERMS OF PAYMENT.
2.1 REVOLVER ADVANCES.
(a) Subject to the terms and conditions of this Agreement, and
during the term of this Agreement, Lender agrees to make advances ("Advances")
to Borrower in an amount at any one time outstanding not to exceed an amount
equal to the lesser of (i) the Maximum Revolver Amount less the Letter of Credit
Usage, or (ii) the Borrowing Base less the Letter of Credit Usage.
(b) Anything to the contrary in this Section 2.1 notwithstanding,
Lender shall have the right to establish reserves in such amounts, and with
respect to such matters, against the Borrowing Base, as Lender in its Permitted
Discretion shall deem necessary or appropriate, against the Borrowing Base,
including reserves with respect to (i) sums that Borrower is required to pay
(such as taxes, assessments, insurance premiums, or, in the case of leased
assets, rents or other amounts payable under such leases) and has failed to pay
in accordance with the applicable provision of this Agreement or any other Loan
Document (subject to all applicable grace periods, if any), and (ii) amounts
owing by Borrower or its Subsidiaries to any Person to the extent secured by a
Lien on, or trust over, any of the Collateral (other than any existing Permitted
Lien set forth on Schedule P-1 which is specifically identified thereon as
entitled to have priority over the Lender's Liens), which Lien or trust, in the
Permitted Discretion of Lender likely would have a priority superior to the
Lender's Liens (such as Liens or trusts in favor of landlords, warehousemen,
carriers, mechanics, materialmen, laborers, or suppliers, or Liens or trusts for
ad valorem, excise, sales, or other taxes where given priority under applicable
law) in and to such item of the Collateral. Prior to imposing any reserves
against the Borrowing Base or changing any eligibility criteria with respect to
the Borrowing Base, the Lender shall notify the Borrower and promptly enter into
good faith discussions with the Borrower for such period of time as the Lender
deems appropriate in its Permitted Discretion. In addition to the foregoing,
Lender shall have the right to have the Borrower's Inventory reappraised by a
qualified appraisal company selected by Lender from time to time after the
Closing Date for the purpose of re-determining the Net Liquidation Percentage of
Borrower's Inventory and, as a result, re-determining the Borrowing Base;
provided, that unless an Event of Default has occurred, Borrower shall reimburse
Lender for no more than one appraisal in any calendar year.
(c) Lender shall have no obligation to make additional Advances
hereunder to the extent such additional Advances would cause the Revolver Usage
to exceed the Maximum Revolver Amount.
(d) Amounts borrowed pursuant to this Section 2.1 may be repaid and,
subject to the terms and conditions of this Agreement, reborrowed at any time
during the term of this Agreement.
2.2 [INTENTIONALLY OMITTED.]
2.3 BORROWING PROCEDURES AND SETTLEMENTS.
(a) PROCEDURE FOR BORROWING. Each Borrowing shall be made by an
irrevocable written request by an Authorized Person delivered to Lender. Such
notice must be received by Lender no later than 10:00 a.m. (California time) on
a Business Day specifying (i) the amount of such Borrowing, and (ii) the
requested Funding Date, which shall be a Business Day. At Lender's election, in
lieu of delivering the above-described written request, any Authorized Person
may give Lender telephonic notice of such request by the required time. In such
circumstances, Borrower agrees that any such telephonic notice will be confirmed
in writing within 24 hours of the giving of such telephonic notice, but the
failure to provide such written confirmation shall not affect the validity of
the request.
(b) MAKING OF ADVANCES. If Lender has received a timely request for
a Borrowing in accordance with the provisions hereof, and subject to the
satisfaction or waiver in writing of the applicable terms and conditions set
forth herein, Lender shall make the proceeds of such Advance available to
Borrower on the applicable Funding Date by transferring immediately available
federal funds equal to such proceeds to Borrower's Designated Account.
2.4 PAYMENTS.
(a) PAYMENTS BY BORROWER.
(i) Except as otherwise expressly provided herein, all
payments by Borrower shall be made to Lender's Account for the
account of the Lender and shall be made in immediately available
funds, no later than 11:00 a.m. (California time) on the date
specified herein. Any payment received by Lender later than 11:00
a.m. (California time) shall be deemed to have been received on the
following Business Day and any applicable interest or fee shall
continue to accrue until such following Business Day.
(b) APPORTIONMENT AND APPLICATION.
(i) All payments shall be remitted to Lender and all
such payments, and all proceeds of Collateral received by Lender,
shall be applied as follows, subject only to the terms of the
Intercreditor Agreement:
first, to pay any Lender Expenses then due to Lender under the
Loan Documents, until paid in full,
second, to pay any fees then due to Lender under the Loan
Documents until paid in full,
third, to pay interest due in respect of Advances until paid
in full,
fourth, so long as no Event of Default has occurred and is
continuing, and at Lender's election (which election Lender
agrees will not be made if an Overadvance would be created
thereby), to pay amounts then due and owing by Borrower or its
Subsidiaries in respect of Bank Products, until paid in full,
fifth, so long as no Event of Default has occurred and is
continuing, to pay the principal of all Advances until paid in
full,
sixth, if an Event of Default has occurred and is continuing,
ratably (i) to pay the principal of all Advances until paid in
full, (ii) to Lender, to be held by Lender as cash collateral
in an amount up to 105% of the Letter of Credit Usage until
paid in full, and (iii) to Lender, to be held by Lender, for
the benefit of the Bank Product Providers, as cash collateral
in an amount up to the amount of the Bank Product Reserve
established prior to the occurrence of, and not in
contemplation of, the subject Event of Default until
Borrower's and its Subsidiaries' obligations in respect of
Bank Products have been paid in full or the cash collateral
amount has been exhausted,
seventh, to pay any other Obligations (including the provision
of amounts to Lender, to be held by Lender, for the benefit of
the Bank Product Providers, as cash collateral in an amount up
to the amount determined by Lender in its Permitted Discretion
as the amount necessary to secure Borrower's and its
Subsidiaries' obligations in respect of Bank Products), and
eighth, to Borrower (to be wired to the Designated Account) or
such other Person entitled thereto under applicable law.
(ii) In each instance, so long as no Event of Default
has occurred and is continuing, this Section 2.4(b) shall not apply to any
payment made by Borrower to Lender and specified by Borrower to be for the
payment of specific Obligations then due and payable (or prepayable) under
any provision of this Agreement.
(iii) For purposes of the foregoing, "paid in full"
means payment of all amounts owing under the Loan Documents according to
the terms thereof (other than contingent indemnification obligations),
including loan fees, service fees, professional fees, interest (and
specifically including interest accrued after the commencement of any
Insolvency Proceeding), default interest, interest on interest, and
expense reimbursements, whether or not any of the foregoing would be or is
allowed or disallowed in whole or in part in any Insolvency Proceeding.
(iv) In the event of a direct conflict between the
priority provisions of this Section 2.4 and other provisions
contained in any other Loan Document, it is the intention of the
parties hereto that such priority provisions in such documents shall
be read together and construed, to the fullest extent possible, to
be in concert with each other. In the event of any actual,
irreconcilable conflict that cannot be resolved as aforesaid, the
terms and provisions of this Section 2.4 shall control and govern.
(c) MANDATORY PREPAYMENTS.
(i) Immediately upon any sale or disposition by Borrower
or any of its U.S. Subsidiaries of property or assets (other than
Permitted Dispositions set forth in clauses (a) through and
including (e) and (h) through and including (k)), the Borrower shall
prepay the outstanding Advances in accordance with clause (d) below
in an amount equal to 100% of the Net Cash Proceeds received by such
Person in connection with such sales or dispositions. Nothing
contained in this subclause (i) shall permit Borrower or any of its
U.S. Subsidiaries to sell or otherwise dispose of any property or
assets other than in accordance with Section 7.4.
(ii) Upon the receipt by Borrower or any of its U.S.
Subsidiaries of any Extraordinary Receipts, the Borrower shall
prepay the outstanding Advances in accordance with clause (d) below
in an amount equal to 100% of such Extraordinary Receipts, net of
any reasonable expenses incurred in collecting such Extraordinary
Receipts. This Section 2.4(c) is subject in all cases to the
Intercreditor Agreement.
(d) APPLICATION OF PAYMENTS.
Each prepayment pursuant to subclause (c)(i) and, with respect to
insurance proceeds and condemnation awards related to a casualty or
loss of Collateral, (c)(ii) above shall be applied as follows:
(1) If the proceeds are from the sale or disposition of
Accounts or Inventory, such proceeds shall be applied to the
outstanding Advances.
(2) Subject to (3) below, if the proceeds are from the sale or
disposition of any other assets or condemnation awards related
to a casualty or loss of Collateral, such proceeds shall be
applied to the outstanding principal amount of the Advances;
provided, that, except during the continuance of an Event of
Default, such proceeds shall not be required to be so applied
to the extent that such proceeds are used to replace, repair
or restore the properties or assets (or to purchase other
assets used by the Borrower in its business) in respect of
which such proceeds were paid if (i) the amount of proceeds
received in respect of such sale, disposition or insurance
proceeds or condemnation award is
less than $5,000,000, and (ii) Borrower delivers a certificate
to Lender within 10 days after such sale or 30 days after the
date of such loss, destruction or taking, as the case may be,
stating that such proceeds shall be used to replace, repair or
restore such properties or assets (or to purchase other assets
used by the Borrower in its business) within a period
specified in such certificate not to exceed 180 days after the
receipt of such proceeds (which certificate shall set forth
estimates of the proceeds to be so expended). If a Triggering
Event has occurred and is continuing, then such proceeds
referenced in this clause (2) shall be immediately deposited
in a Deposit Account subject to a Control Agreement.
(3) If the proceeds are from a sale or disposition of all or
substantially all of the assets of any Person, which sale or
disposition includes both Accounts and Inventory and other
assets, such proceeds shall be applied as follows: (i) an
amount equal to the book value of such Accounts or Inventory,
or if greater, an amount equal to the Advances supported by
such assets determined using the effective advance rate under
the Borrowing Base against such Accounts and Inventory, as the
case may be, (determined at the time of such sale or
disposition), shall be applied to the outstanding amount of
the Advances and (ii) the remaining proceeds shall be applied
to the outstanding Advances. This Section 2.4(d) is subject in
all cases to the Intercreditor Agreement.
2.5 OVERADVANCES. If, at any time or for any reason, the amount of
Obligations (other than Bank Product Obligations) owed by Borrower to Lender
pursuant to Section 2.1 or Section 2.12 is greater than any of the limitations
set forth in Section 2.1 or Section 2.12, as applicable (an "Overadvance"),
Borrower immediately shall pay to Lender, in cash, the amount of such excess,
which amount shall be used by Lender to reduce the Obligations in accordance
with the priorities set forth in Section 2.4(b). In addition, Borrower hereby
promises to pay the Obligations (including principal, interest, fees, costs, and
expenses) in Dollars in full as and when due and payable under the terms of this
Agreement and the other Loan Documents.
2.6 INTEREST RATES AND LETTER OF CREDIT FEE: RATES, PAYMENTS, AND
CALCULATIONS.
(a) INTEREST RATES. Except as provided in clause (c) below, all
Obligations (except for undrawn Letters of Credit and except for Bank Product
Obligations) that have been charged to the Loan Account pursuant to the terms
hereof shall bear interest on the Daily Balance thereof as follows (i) if the
relevant Obligation is an Advance that is a LIBOR Rate Loan, at a per annum rate
equal to the LIBOR Rate plus the LIBOR Rate Margin, and (ii) otherwise, at a per
annum rate equal to the Base Rate.
The foregoing notwithstanding, at no time shall any portion of the
Obligations (other than Bank Product Obligations) bear interest on the Daily
Balance thereof at a per annum rate less than 3%. To the extent that interest
accrued hereunder at the rate set forth herein would be less than the foregoing
minimum daily rate, the interest rate chargeable hereunder for such day
automatically shall be deemed increased to the minimum rate.
(b) LETTER OF CREDIT FEE. Borrower shall pay Lender a Letter of
Credit fee (in addition to all applicable bank issuance charges and the charges,
commissions, fees, and costs set forth in Section 2.12(e)) which shall accrue at
a rate equal to the applicable LIBOR Rate Margin less 0.50 basis points per
annum times the Daily Balance of the undrawn amount of all outstanding Letters
of Credit and is payable monthly in arrears.
(c) DEFAULT RATE. Upon the occurrence and during the continuation of
an Event of Default (and at the election of Lender),
(i) all Obligations (except for undrawn Letters of Credit and
except for Bank Product Obligations) that have been charged to the
Loan Account pursuant to the terms hereof shall bear interest on the
Daily Balance thereof at a per annum rate equal to 2 percentage
points above the per annum rate otherwise applicable hereunder, and
(ii) the Letter of Credit fee provided for above shall be
increased to 2 percentage points above the per annum rate otherwise
applicable hereunder.
(d) PAYMENT. Except as provided to the contrary in Section 2.11 or
Section 2.13(a), interest, Letter of Credit fees, and all other fees payable
hereunder shall be due and payable, in arrears, on the first day of each month
at any time that Obligations are outstanding or at any time that Lender has an
obligation to extend credit hereunder. Borrower hereby authorizes Lender to
charge all interest and fees (when due and payable), all Lender Expenses (as and
when incurred), all charges, commissions, fees, and costs provided for in
Section 2.12(e) (as and when accrued or incurred), all fees and costs provided
for in Section 2.11 (as and when accrued or incurred), and all other payments as
and when due and payable under any Loan Document (including any amounts due and
payable to the Bank Product Providers in respect of Bank Products up to the
amount of the Bank Product Reserve) to Borrower's Loan Account, which amounts
thereafter shall constitute Advances hereunder and shall accrue interest at the
rate then applicable to Advances hereunder. Any interest not paid when due shall
be compounded by being charged to Borrower's Loan Account and shall thereafter
constitute Advances hereunder and shall accrue interest at the rate then
applicable to Advances that are Base Rate Loans hereunder. The Lender shall
provide the Borrower with invoices, to the extent such invoices exist, with
respect to such charges, fees and costs contemplated by this Section 2.6(d).
(e) COMPUTATION. All interest and fees chargeable under the Loan
Documents shall be computed on the basis of a 360 day year for the actual number
of days elapsed. In the event the Base Rate is changed from time to time
hereafter, the rates of
interest hereunder based upon the Base Rate automatically and immediately shall
be increased or decreased by an amount equal to such change in the Base Rate.
(f) INTENT TO LIMIT CHARGES TO MAXIMUM LAWFUL RATE. In no event
shall the interest rate or rates payable under this Agreement, plus any other
amounts paid in connection herewith, exceed the highest rate permissible under
any law that a court of competent jurisdiction shall, in a final determination,
deem applicable. Borrower and Lender, in executing and delivering this
Agreement, intend legally to agree upon the rate or rates of interest and manner
of payment stated within it; provided, however, that, anything contained herein
to the contrary notwithstanding, if said rate or rates of interest or manner of
payment exceeds the maximum allowable under applicable law, then, ipso facto, as
of the date of this Agreement, Borrower is and shall be liable only for the
payment of such maximum as allowed by law, and payment received from Borrower in
excess of such legal maximum, whenever received, shall be applied to reduce the
principal balance of the Advances to the extent of such excess.
2.7 CASH MANAGEMENT.
(a) Borrower shall (i) establish and maintain cash management
services of a type and on terms satisfactory to Lender at one or more of the
banks set forth on Schedule 2.7(a) (each, a "Cash Management Bank"), and shall
request in writing and otherwise take such reasonable steps to ensure that all
of its Account Debtors forward payment of the amounts owed by them directly to
such Cash Management Bank, and (ii) deposit or cause to be deposited promptly,
and in any event no later than the first Business Day after the date of receipt
thereof, all of its Collections (including those sent directly by its Account
Debtors to Borrower) into a bank account in Borrower's name (a "Cash Management
Account") at one of the Cash Management Banks.
(b) Each Cash Management Bank shall establish and maintain Cash
Management Agreements with Lender and Borrower, in form and substance reasonably
acceptable to Lender. Each such Cash Management Agreement shall provide, among
other things, that (i) the Cash Management Bank will, upon written notice by
Lender to such Cash Management Bank that a Triggering Event has occurred in
which event the remaining provisions set forth in this Section 2.7(b) shall
apply until that particular Triggering Event shall have been cured for three
consecutive months, comply with any instructions originated by Lender directing
the disposition of the funds in such Cash Management Account without further
consent by Borrower or its Subsidiaries, as applicable, (ii) the Cash Management
Bank has no rights of setoff or recoupment or any other claim against the
applicable Cash Management Account other than for payment of its service fees
and other charges directly related to the administration of such Cash Management
Account and for returned checks or other items of payment, and (iii) it will
forward, by daily sweep, all amounts in the applicable Cash Management Account
to the Lender's Account. Notwithstanding the foregoing, if at any time during
the three consecutive months following the date a Triggering Event is cured
there are no outstanding amounts due by Borrower to Lender hereunder, then
during such time any funds shall remain in the applicable Cash Management
Account.
(c) So long as no Default or Event of Default has occurred and is
continuing, Borrower may amend Schedule 2.7(a) to add or replace a Cash
Management Bank or Cash Management Account; provided, however, that (i) such
prospective Cash Management Bank shall be reasonably satisfactory to Lender, and
(ii) prior to the time of the opening of such Cash Management Account, Borrower
and such prospective Cash Management Bank shall have executed and delivered to
Lender a Cash Management Agreement. Borrower shall close any of its Cash
Management Accounts (and establish replacement cash management accounts in
accordance with the foregoing sentence) promptly and in any event within 30 days
of written notice from, and after good faith negotiations with, Lender that the
creditworthiness of any Cash Management Bank is no longer acceptable in Lender's
commercially reasonable judgment, or as promptly as practicable and in any event
within 60 days of written notice from, and after good faith negotiations with,
Lender that the operating performance, funds transfer, or availability
procedures or performance of the Cash Management Bank with respect to Cash
Management Accounts or Lender's liability under any Cash Management Agreement
with such Cash Management Bank is no longer acceptable in Lender's commercially
reasonable judgment.
(d) The Cash Management Accounts shall be cash collateral accounts
subject to Control Agreements, subject to the terms and provisions of this
Section 2.7.
2.8 CREDITING PAYMENTS. The receipt of any payment item by Lender (whether
from transfers to Lender by the Cash Management Banks pursuant to the Cash
Management Agreements or otherwise) shall not be considered a payment on account
unless such payment item is a wire transfer of immediately available federal
funds made to the Lender's Account or unless and until such payment item is
honored when presented for payment. Should any payment item not be honored when
presented for payment, then Borrower shall be deemed not to have made such
payment and interest shall be calculated accordingly. Anything to the contrary
contained herein notwithstanding, any payment item shall be deemed received by
Lender only if it is received into the Lender's Account on a Business Day on or
before 11:00 a.m. (California time). If any payment item is received into the
Lender's Account on a non-Business Day or after 11:00 a.m. (California time) on
a Business Day, it shall be deemed to have been received by Lender as of the
opening of business on the immediately following Business Day.
2.9 DESIGNATED ACCOUNT. Lender is authorized to make the Advances and to
issue the Letters of Credit under this Agreement based upon telephonic or other
instructions received from anyone purporting to be an Authorized Person or,
without instructions, if pursuant to Section 2.6(d). Borrower agrees to
establish and maintain the Designated Account with the Designated Account Bank
for the purpose of receiving the proceeds of the Advances requested by Borrower
and made by Lender hereunder. Unless otherwise agreed by Lender and Borrower,
any Advance requested by Borrower and made by Lender hereunder shall be made to
the Designated Account.
2.10 MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF OBLIGATIONS. Lender shall
maintain an account on its books in the name of Borrower (the "Loan Account") on
which
Borrower will be charged with all Advances made by Lender to Borrower or for
Borrower's account, the Letters of Credit issued by Lender for Borrower's
account, and with all other payment Obligations hereunder or under the other
Loan Documents (except for Bank Product Obligations), including, accrued
interest, fees and expenses, and Lender Expenses. In accordance with Section
2.8, the Loan Account will be credited with all payments received by Lender from
Borrower or for Borrower's account, including all amounts received in the
Lender's Account from any Cash Management Bank. Lender shall render statements
regarding the Loan Account to Borrower, including principal, interest, fees, and
including an itemization of all charges and expenses constituting Lender
Expenses owing, and such statements, absent manifest error, shall be
conclusively presumed to be correct and accurate and constitute an account
stated between Borrower and Lender unless, within 30 days after receipt thereof
by Borrower, Borrower shall deliver to Lender written objection thereto
describing the error or errors contained in any such statements.
2.11 FEES. Borrower shall pay to Lender the following fees and charges,
which fees and charges shall be fully-earned and non-refundable when paid
(irrespective of whether this Agreement is terminated thereafter):
(a) UNUSED LINE FEE. On the first day of each month during the term
of this Agreement, an unused line fee in an amount equal to 0.375% per annum
times the result of (i) the Maximum Revolver Amount, less (ii) the sum of (A)
the average Daily Balance of Advances that were outstanding during the
immediately preceding month, plus (B) the average Daily Balance of the Letter of
Credit Usage during the immediately preceding month,
(b) SERVICING FEE. On the first day of each month, commencing with
the first day of the month immediately following the Closing Date, through the
date on which all of the Obligations are paid in full in accordance with the
terms of this Agreement and this Agreement is terminated in accordance with its
terms, a servicing fee in an amount equal to $2,500,
(c) AUDIT, APPRAISAL, AND VALUATION CHARGES. Audit, appraisal, and
valuation fees and charges as follows (i) a fee of $850 per day, per auditor,
plus out-of-pocket expenses for each financial audit of Borrower performed by
personnel employed by Lender, (ii) if implemented, a fee of $850 per day, per
applicable individual, plus out of pocket expenses for the establishment of
electronic collateral reporting systems, (iii) the daily fee per appraiser
charged by such appraiser, plus out-of-pocket expenses, for each appraisal of
the Collateral, or any portion thereof, performed by a third party appraiser
hired by Lender and reasonably satisfactory to the Borrower, and (iv) the actual
charges paid or incurred by Lender if it elects to employ the services of one or
more third Persons to perform financial audits of Borrower or its Subsidiaries,
to establish electronic collateral reporting systems, or to appraise the
Collateral, or any portion thereof, subject in all cases to Section 6.4 hereof
and
(d) CLOSING FEE. A closing fee equal to one percent (1%) of the
Maximum Revolver Amount, which is Two Hundred Thousand Dollars ($200,000) and
payable on the Closing Date.
2.12 LETTERS OF CREDIT.
(a) Subject to the terms and conditions of this Agreement, Lender
agrees to issue letters of credit for the account of Borrower (each, an "L/C")
or to purchase participations or execute indemnities or reimbursement
obligations (each such undertaking, an "L/C Undertaking") with respect to
letters of credit issued by an Underlying Issuer (as of the Closing Date, the
prospective Underlying Issuer is to be ▇▇▇▇▇ Fargo) for the account of Borrower.
Each request for the issuance of a Letter of Credit, or the amendment, renewal,
or extension of any outstanding Letter of Credit, shall be made in writing by an
Authorized Person and delivered to Lender via hand delivery, telefacsimile, or
other electronic method of transmission reasonably in advance of the requested
date of issuance, amendment, renewal, or extension. Each such request shall be
in form and substance reasonably satisfactory to Lender in its Permitted
Discretion and shall specify (i) the amount of such Letter of Credit, (ii) the
date of issuance, amendment, renewal, or extension of such Letter of Credit,
(iii) the expiration of such Letter of Credit, (iv) the name and address of the
beneficiary thereof (or the beneficiary of the Underlying Letter of Credit, as
applicable), and (v) such other information (including, in the case of an
amendment, renewal, or extension, identification of the outstanding Letter of
Credit to be so amended, renewed, or extended) as shall be necessary to prepare,
amend, renew, or extend such Letter of Credit. If requested by Lender, Borrower
also shall be an applicant under the application with respect to any Underlying
Letter of Credit that is to be the subject of an L/C Undertaking. Lender shall
have no obligation to issue a Letter of Credit if any of the following would
result after giving effect to the issuance of such requested Letter of Credit:
(i) the Letter of Credit Usage would exceed the Borrowing Base
less the outstanding amount of Advances, or
(ii) the Letter of Credit Usage would exceed $10,000,000.00,
or
(iii) the Letter of Credit Usage would exceed the Maximum
Revolver Amount less the outstanding amount of Advances.
Borrower and Lender acknowledge and agree that certain Underlying
Letters of Credit may be issued to support letters of credit that already are
outstanding as of the Closing Date. Each Letter of Credit (and corresponding
Underlying Letter of Credit) shall be in form and substance acceptable to Lender
(in the exercise of its Permitted Discretion), including the requirement that
the amounts payable thereunder must be payable in Dollars. If Lender is
obligated to advance funds under a Letter of Credit, Borrower immediately shall
reimburse such L/C Disbursement to Lender by paying to Lender an amount equal to
such L/C Disbursement not later than 11:00 a.m., California time, on the date
that such L/C Disbursement is made, if Borrower shall have received written or
telephonic notice of such
L/C Disbursement prior to 10:00 a.m., California time, on such date, or, if such
notice has not been received by Borrower prior to such time on such date, then
not later than 11:00 a.m., California time, on the Business Day that Borrower
receives such notice, if such notice is received prior to 10:00 a.m., California
time, on the date of receipt, and, in the absence of such reimbursement, the L/C
Disbursement immediately and automatically shall be deemed to be an Advance
hereunder and, thereafter, shall bear interest at the rate then applicable to
Advances that are Base Rate Loans under Section 2.6. To the extent an L/C
Disbursement is deemed to be an Advance hereunder, Borrower's obligation to
reimburse such L/C Disbursement shall be discharged and replaced by the
resulting Advance.
(b) Borrower hereby agrees to indemnify, save, defend, and hold
Lender harmless from any loss, cost, expense, or liability, and reasonable
out-of-pocket fees of outside attorneys incurred by Lender arising out of or in
connection with any Letter of Credit; provided, however, that Borrower shall not
be obligated hereunder to indemnify for any loss, cost, expense, or liability to
the extent that it is caused by the gross negligence or willful misconduct of
Lender. Borrower agrees to be bound by the Underlying Issuer's regulations and
interpretations of any Underlying Letter of Credit or by Lender's
interpretations of any L/C issued by Lender to or for Borrower's account, even
though this interpretation may be different from Borrower's own, and Borrower
understands and agrees that Lender shall not be liable for any error,
negligence, or mistake, whether of omission or commission, in following
Borrower's instructions or those contained in the Letter of Credit or any
modifications, amendments, or supplements thereto, except to the extent cause by
the gross negligence or willful misconduct of the Lender. Borrower understands
that the L/C Undertakings may require Lender to indemnify the Underlying Issuer
for certain costs or liabilities arising out of claims by Borrower against such
Underlying Issuer. Borrower hereby agrees to indemnify, save, defend, and hold
Lender harmless with respect to any loss, cost, expense (including reasonable
out-of-pocket fees of outside attorneys), or liability incurred by Lender under
any L/C Undertaking as a result of Lender's indemnification of any Underlying
Issuer; provided, however, that Borrower shall not be obligated hereunder to
indemnify for any loss, cost, expense, or liability to the extent that it is
caused by the gross negligence or willful misconduct of Lender. Borrower hereby
acknowledges and agrees that Lender shall not be responsible for delays, errors,
or omissions resulting from the malfunction of equipment in connection with any
Letter of Credit.
(c) Borrower hereby authorizes and directs any Underlying Issuer to
deliver to Lender all instruments, documents, and other writings and property
received by such Underlying Issuer pursuant to such Underlying Letter of Credit
and to accept and rely upon Lender's instructions with respect to all matters
arising in connection with such Underlying Letter of Credit and the related
application.
(d) Any and all reasonable charges and commissions and reasonable
out-of-pocket fees,and costs incurred by Lender relating to Underlying Letters
of Credit shall be Lender Expenses for purposes of this Agreement and
immediately shall be reimbursable by Borrower to Lender for the account of
Lender; it being acknowledged and agreed by Borrower that, as of the Closing
Date, the issuance charge imposed by the prospective
Underlying Issuer is .825% per annum times the face amount of each Underlying
Letter of Credit, that such issuance charge may be changed from time to time,
and that the Underlying Issuer also imposes a schedule of charges for
amendments, extensions, drawings, and renewals. The Lender shall provide the
Borrower with invoices, to the extent such invoices exist, with respect to such
charges, fees and costs contemplated by this Section 2.12(d).
(e) If by reason of (i) any change after the Closing Date in any
applicable law, treaty, rule, or regulation or any change in the interpretation
or application thereof by any Governmental Authority, or (ii) compliance by the
Underlying Issuer or Lender with any direction, request, or requirement
(irrespective of whether having the force of law) of any Governmental Authority
or monetary authority including, Regulation D of the Federal Reserve Board as
from time to time in effect (and any successor thereto):
(i) any reserve, deposit, or similar requirement is or shall
be imposed or modified in respect of any Letter of Credit issued
hereunder, or
(ii) there shall be imposed on the Underlying Issuer or Lender
any other condition regarding any Underlying Letter of Credit or any
Letter of Credit issued pursuant hereto;
and the result of the foregoing is to increase, directly or indirectly, the cost
to Lender of issuing, making, guaranteeing, or maintaining any Letter of Credit
or to reduce the amount receivable in respect thereof by Lender, then, and in
any such case, Lender may, at any time within a reasonable period after the
additional cost is incurred or the amount received is reduced, notify Borrower,
and Borrower shall pay on demand such amounts as Lender may specify to be
necessary to compensate Lender for such additional cost or reduced receipt,
together with interest on such amount from the date of such demand until payment
in full thereof at the rate then applicable to Base Rate Loans hereunder. The
determination by Lender of any amount due pursuant to this Section, as set forth
in a certificate setting forth the calculation thereof in reasonable detail,
shall, in the absence of manifest or demonstrable error, be final and conclusive
and binding on all of the parties hereto.
2.13 LIBOR OPTION.
(a) INTEREST AND INTEREST PAYMENT DATES. In lieu of having interest
charged at the rate based upon the Base Rate, Borrower shall have the option
(the "LIBOR Option") to have interest on all or a portion of the Advances be
charged at a rate of interest based upon the LIBOR Rate. Interest on LIBOR Rate
Loans shall be payable on the earliest of (i) the last day of the Interest
Period applicable thereto (provided, however, that, subject to the following
clauses (ii) and (iii), in the case of any Interest Period greater than 3 months
in duration, interest shall be payable at 3 month intervals after the
commencement of the applicable Interest Period and on the last day of such
Interest Period), (ii) the occurrence of an Event of Default in consequence of
which Lender has elected to accelerate the maturity of all or any portion of the
Obligations, or (iii) termination of this Agreement pursuant to the terms
hereof. On the last day of each applicable Interest Period, unless Borrower
properly
has exercised the LIBOR Option with respect thereto, the interest rate
applicable to such LIBOR Rate Loan automatically shall convert to the rate of
interest then applicable to Base Rate Loans of the same type hereunder. At any
time that an Event of Default has occurred and is continuing, Borrower no longer
shall have the option to request that Advances bear interest at a rate based
upon the LIBOR Rate and Lender shall have the right to convert the interest rate
on all outstanding LIBOR Rate Loans to the rate then applicable to Base Rate
Loans hereunder.
(b) LIBOR Election.
(i) Borrower may, at any time and from time to time, so long
as no Event of Default has occurred and is continuing, elect to
exercise the LIBOR Option by notifying Lender prior to 11:00 a.m.
(California time) at least two (2) Business Days prior to the
commencement of the proposed Interest Period (the "LIBOR Deadline").
Notice of Borrower's election of the LIBOR Option for a permitted
portion of the Advances and an Interest Period pursuant to this
Section shall be made by delivery to Lender of a LIBOR Notice
received by Lender before the LIBOR Deadline, or by telephonic
notice received by Lender before the LIBOR Deadline (to be confirmed
by delivery to Lender of a LIBOR Notice received by Lender prior to
5:00 p.m. (California time) on the same day.
(ii) Each LIBOR Notice shall be irrevocable and binding on
Borrower. In connection with each LIBOR Rate Loan, Borrower shall
indemnify, defend, and hold Lender harmless against any loss, cost,
or expense incurred by Lender as a result of (a) the payment of any
principal of any LIBOR Rate Loan other than on the last day of an
Interest Period applicable thereto (including as a result of an
Event of Default), (b) the conversion of any LIBOR Rate Loan other
than on the last day of the Interest Period applicable thereto, or
(c) the failure to borrow, convert, continue or prepay any LIBOR
Rate Loan on the date specified in any LIBOR Notice delivered
pursuant hereto (such losses, costs, and expenses, collectively,
"Funding Losses"). Funding Losses shall be deemed to equal the
amount determined by Lender to be the excess, if any, of (i) the
amount of interest that would have accrued on the principal amount
of such LIBOR Rate Loan had such event not occurred, at the LIBOR
Rate that would have been applicable thereto, for the period from
the date of such event to the last day of the then current Interest
Period therefor (or, in the case of a failure to borrow, convert, or
continue, for the period that would have been the Interest Period
therefor), minus (ii) the amount of interest that would accrue on
such principal amount for such period at the interest rate which
Lender would be offered were it to be offered, at the commencement
of such period, Dollar deposits of a comparable amount and period in
the London interbank market. A certificate of Lender delivered to
Borrower setting forth the calculation in
reasonable detail of any amount or amounts that Lender is entitled
to receive pursuant to this Section 2.13 shall be conclusive absent
manifest error.
(iii) Borrower shall have not more than 5 LIBOR Rate Loans in
effect at any given time. Borrower only may exercise the LIBOR
Option for LIBOR Rate Loans of at least $1,000,000 and integral
multiples of $500,000 in excess thereof.
(c) PREPAYMENTS. Borrower may prepay LIBOR Rate Loans at any time;
provided, however, that in the event that LIBOR Rate Loans are prepaid on any
date that is not the last day of the Interest Period applicable thereto,
including as a result of any automatic prepayment through the required
application by Lender of proceeds of Borrower's Collections in accordance with
Section 2.4(b) or for any other reason, including early termination of the term
of this Agreement or acceleration of all or any portion of the Obligations
pursuant to the terms hereof, Borrower shall indemnify, defend, and hold Lender
and its Participants harmless against any and all Funding Losses in accordance
with clause (b)(ii) above.
(d) SPECIAL PROVISIONS APPLICABLE TO LIBOR RATE.
(i) The LIBOR Rate may be adjusted by Lender on a prospective
basis to take into account any additional or increased costs to
Lender of maintaining or obtaining any eurodollar deposits or
increased costs due to changes in applicable law occurring
subsequent to the commencement of the then applicable Interest
Period, including changes in tax laws (except changes of general
applicability in corporate income tax laws) and changes in the
reserve requirements imposed by the Board of Governors of the
Federal Reserve System (or any successor), excluding the Reserve
Percentage, which additional or increased costs would increase the
cost of funding loans bearing interest at the LIBOR Rate. In any
such event, Lender shall give Borrower written notice of such a
determination and adjustment and, upon its receipt of the notice
from Lender, Borrower may, by notice to Lender (y) require Lender to
furnish to Borrower a statement setting forth the basis for
adjusting such LIBOR Rate and the method for determining the amount
of such adjustment, or (z) repay the LIBOR Rate Loans with respect
to which such adjustment is made (together with any amounts due
under clause (b)(ii) above).
(ii) In the event that any change in market conditions or any
law, regulation, treaty, or directive, or any change therein or in
the interpretation of application thereof, shall at any time after
the date hereof, in the reasonable opinion of Lender, make it
unlawful or impractical for Lender to fund or maintain LIBOR
Advances or to continue such funding or maintaining, or to determine
or charge interest rates at the LIBOR Rate, Lender shall give notice
of such changed circumstances to Borrower and (y)
in the case of any LIBOR Rate Loans that are outstanding, the date
specified in Lender's notice shall be deemed to be the last day of
the Interest Period of such LIBOR Rate Loans, and interest upon the
LIBOR Rate Loans thereafter shall accrue interest at the rate then
applicable to Base Rate Loans, and (z) Borrower shall not be
entitled to elect the LIBOR Option until Lender determines that it
would no longer be unlawful or impractical to do so.
(e) NO REQUIREMENT OF MATCHED FUNDING. Anything to the contrary
contained herein notwithstanding, neither Lender, nor any of its Participants,
is required actually to acquire eurodollar deposits to fund or otherwise match
fund any Obligation as to which interest accrues at the LIBOR Rate. The
provisions of this Section shall apply as if Lender or its Participants had
match funded any Obligation as to which interest is accruing at the LIBOR Rate
by acquiring eurodollar deposits for each Interest Period in the amount of the
LIBOR Rate Loans.
2.14 CAPITAL REQUIREMENTS. If, after the date hereof, Lender determines
that (i) the adoption of or change in any law, rule, regulation or guideline
regarding capital requirements for banks or bank holding companies, or any
change in the interpretation or application thereof by any Governmental
Authority charged with the administration thereof, or (ii) compliance by Lender
or its parent bank holding company with any guideline, request, or directive of
any such entity regarding capital adequacy (whether or not having the force of
law), has the effect of reducing the return on Lender's or such holding
company's capital as a consequence of Lender's obligations hereunder to a level
below that which Lender or such holding company could have achieved but for such
adoption, change, or compliance (taking into consideration Lender's or such
holding company's then existing policies with respect to capital adequacy and
assuming the full utilization of such entity's capital) by any amount deemed by
Lender to be material, then Lender may notify Borrower thereof. Following
receipt of such notice, Borrower agrees to pay Lender on demand the amount of
such reduction of return of capital as and when such reduction is determined,
payable within 90 days after presentation by Lender of a statement in the amount
and setting forth in reasonable detail Lender's calculation thereof and the
assumptions upon which such calculation was based (which statement shall be
deemed true and correct absent manifest error). In determining such amount,
Lender may use any reasonable averaging and attribution methods.
3. CONDITIONS; TERM OF AGREEMENT.
3.1 CONDITIONS PRECEDENT TO THE INITIAL EXTENSION OF CREDIT. The
obligation of Lender to make the initial extension of credit provided for
hereunder, is subject to the fulfillment, to the satisfaction of Lender (the
making of such initial extension of credit by Lender being conclusively deemed
to be its satisfaction or waiver of the following), of each of the following
conditions precedent:
(a) the Closing Date shall occur on or before June 29, 2004;
(b) Lender shall have received a Filing Authorization Letter, duly
executed by Borrower, authorizing the filing of appropriate financing statements
in such office or offices as may be necessary or, in the opinion of Lender,
desirable to perfect the Lender's Liens in and to the Collateral;
(c) Lender shall have received each of the following documents, in
form and substance reasonably satisfactory to Lender, duly executed, and each
such document shall be in full force and effect:
(i) the Intellectual Property Security Agreement,
(ii) the Intercompany Subordination Agreement,
(iii) the Intercreditor Agreement,
(iv) the Mortgages,
(v) the Pay-Off Letter, together with termination statements
and other documentation evidencing the termination by Existing
Lender of its Liens in and to the properties and assets of Borrower
and its Subsidiaries, and termination statements and other
documentation evidencing the termination by the applicable trustee
on behalf of the holders of the 8% Senior Notes of the Liens in and
to the properties and assets of Borrower and its Subsidiaries, and
(vi) the Stock Pledge Agreements, together with (i) all
original certificates representing the shares of Stock pledged
thereunder regarding the U.S. Subsidiaries, as well as Stock powers
with respect thereto endorsed in blank shall be delivered to the
Collateral Agent, and (ii) the original certificates representing
the shares of Stock pledged thereunder regarding the first-tier
Foreign Subsidiaries of the Borrower (other than Viskase Brasil
Embalagens Ltda., which Stock is not certificated), as well as Stock
powers with respect thereto endorsed in blank, but with respect to
only 65% of the issued and outstanding Stock of each of such
first-tier Foreign Subsidiaries shall be delivered to the Collateral
Agent.
(d) Lender shall have received a certificate from the Secretary of
Borrower (i) attesting to the resolutions of Borrower's Board of Directors
authorizing its execution, delivery, and performance of this Agreement and the
other Loan Documents to which Borrower is a party, (ii) authorizing specific
officers of Borrower to execute the same, and (iii) attesting to the incumbency
and signatures of such specific officers of Borrower;
(e) Lender shall have received copies of Borrower's Governing
Documents, as amended, modified, or supplemented to the Closing Date, certified
by the Secretary of Borrower;
(f) Lender shall have received a certificate of status with respect
to Borrower, dated within 10 days of the Closing Date, such certificate to be
issued by the appropriate officer of the jurisdiction of organization of
Borrower, which certificate shall indicate that Borrower is in good standing in
such jurisdiction;
(g) Lender shall have received certificates of status with respect
to Borrower, each dated within 30 days of the Closing Date, such certificates to
be issued by the appropriate officer of the jurisdictions (other than the
jurisdiction of organization of Borrower) in which its failure to be duly
qualified or licensed could not reasonably be expected to constitute a Material
Adverse Change, which certificates shall indicate that Borrower is in good
standing in such jurisdictions;
(h) Lender shall have received a certificate of insurance, together
with the endorsements thereto, as are required by Section 6.8, the form and
substance of which shall be reasonably satisfactory to Lender;
(i) Lender shall have received Collateral Access Agreements with
respect to the following locations: (i) ▇▇▇▇ ▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇, (ii) ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ and (iii) ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, and in the event Lender shall
not have received any Collateral Access Agreement, then the Lender shall
forthwith establish the Rent Reserve with respect to such leased location in
accordance with this Agreement;
(j) Lender shall have received an opinion of Borrower's counsel in
form and substance reasonably satisfactory to Lender;
(k) Lender shall have received satisfactory evidence (including a
certificate of the chief financial officer of Borrower) that all federal and
state income and all other material tax returns required to be filed by Borrower
and its Subsidiaries have been timely filed and all federal and state income and
all other material taxes upon Borrower and its Subsidiaries or their properties,
assets, income, and franchises (including Real Property taxes, sales taxes, and
payroll taxes) have been paid prior to delinquency, except such taxes that are
the subject of a Permitted Protest;
(l) Borrower shall have the Required Availability after giving
effect to the initial extensions of credit hereunder and the payment of all fees
and expenses required to be paid by Borrower on the Closing Date under this
Agreement or the other Loan Documents;
(m) Lender shall have completed its business, legal, and collateral
due diligence, including (i) a collateral audit and review of Borrower's and its
Subsidiaries' books and records and verification of Borrower's representations
and warranties to Lender, the results of which shall be reasonably satisfactory
to Lender, and (ii) an inspection of each of the locations where Borrower's
Inventory is located, the results of which shall be reasonably satisfactory to
Lender;
(n) Lender shall have received completed reference checks with
respect to Borrower's senior management, the results of which are reasonably
satisfactory to Lender in its sole discretion;
(o) Lender shall have received an appraisal of the Net Liquidation
Percentage applicable to Borrower's Inventory, and if available, a copy of any
recent appraisal of the Equipment;
(p) Lender shall have received Borrower's Closing Date Business Plan
and April 30, 2004 internally prepared financial statements, the results of
which are reasonably satisfactory to Lender;
(q) Borrower shall have paid all Lender Expenses incurred in
connection with the transactions evidenced by this Agreement and the Lender
shall have delivered to the Borrower any invoices, to the extent any exist, with
respect to the Lender Expenses;
(r) Lender shall have received (i) if available, a copy of any
appraisal of the Real Property Collateral, (ii) mortgagee title insurance
policies (or marked commitments to issue the same) for the Real Property
Collateral issued by a title insurance company reasonably satisfactory to Lender
(each a "Mortgage Policy" and, collectively, the "Mortgage Policies") in amounts
reasonably satisfactory to Lender assuring Lender that the Mortgages on such
Real Property Collateral are valid and enforceable second priority mortgage
Liens (subject to the first priority mortgage Lien in favor of the Trustee) on
such Real Property Collateral free and clear of all defects and encumbrances
except Permitted Liens, and the Mortgage Policies otherwise shall be in form and
substance reasonably satisfactory to Lender, and (iii) if available, the most
recent survey with respect to each parcel composing the Real Property
Collateral;
(s) If available, Lender shall have received a copy of a phase-I
environmental report with respect to each parcel composing the Real Property
Collateral; the environmental consultants and surveyors retained for such
reports or surveys, the scope of the reports or surveys, and the results thereof
shall be reasonably acceptable to Lender;
(t) Lender shall have received copies of each of the material
agreements of the Borrower, together with a certificate of the Secretary of
Borrower certifying each such document as being a true, correct, and complete
copy thereof;
(u) Borrower and each of its Subsidiaries shall have received all
licenses, approvals or evidence of other actions required by any Governmental
Authority in connection with the execution and delivery by Borrower or its
Subsidiaries of the Loan Documents or with the consummation of the transactions
contemplated thereby, except any license, approval or action the failure of
which to receive could not reasonably be expected to constitute a Material
Adverse Change;
(z) Lender shall have received true, correct and complete copies of
the Notes and any and all material instruments, agreements and documents
executed or delivered
in connection therewith (including, without limitation, the final offering
circular, the Registration Rights Agreement, and all Collateral Agreements),
which shall be in form and substance reasonably acceptable to Lender;
(aa) the offering of the Notes and the other transactions
contemplated thereby shall have been consummated concurrently herewith and the
proceeds thereof shall have been used by Borrower to (i) purchase approximately
$55.8 million aggregate principal amount of the 8% Senior Notes, (ii) repay all
indebtedness due or owing to the Existing Lender, (iii) effect the early
termination of Borrower's capital lease with General Electric Capital
Corporation, and (iv) pay the transaction costs, expenses and fees incurred by
Borrower in connection therewith;
(bb) Lender shall have received UCC, tax lien, judgment, fixture,
and pending suit searches on the Borrower in all jurisdictions as reasonably
required by Lender, the results of which shall be reasonably satisfactory to
Lender and Borrower shall have implemented an electronic collateral reporting
system reasonably satisfactory to Lender;
(cc) Lender shall have received final credit approval for the
financing contemplated by this Agreement;
(dd) Lender shall have received any and all documents, certificates
and agreements regarding the pension and post retirement benefit plans of
Borrower and its Subsidiaries as Lender may reasonably request, and Lender shall
have obtained reasonable assurance that the unfunded pension obligations of
Borrower and its Subsidiaries will not create or provide a Lien in favor of any
other Person with priority over Lender's Liens in the Borrower's Accounts and
Inventory and the proceeds thereof; and
(ee) all other documents and legal matters in connection with the
transactions contemplated by this Agreement shall have been delivered, executed,
or recorded and shall be in form and substance reasonably satisfactory to
Lender.
3.2 CONDITIONS SUBSEQUENT TO THE INITIAL EXTENSION OF CREDIT. The
obligation of Lender to continue to make Advances (or otherwise extend credit
hereunder) is subject to the fulfillment or waiver in writing, on or before the
date applicable thereto, of each of the conditions subsequent set forth below
(the failure by Borrower to so perform or cause to be performed constituting an
Event of Default), within 30 days of the Closing Date, deliver to Lender
certified copies of the policies of insurance, together with the endorsements
thereto, as are required by Section 6.8, the form and substance of which shall
be reasonably satisfactory to Lender and its counsel.
3.3 CONDITIONS PRECEDENT TO ALL EXTENSIONS OF CREDIT. The obligation of
Lender to make any Advances hereunder at any time (or to extend any other credit
hereunder) shall be subject to the following conditions precedent:
(a) the representations and warranties contained in this Agreement
and the other Loan Documents shall be true and correct in all material respects
on and as of the date
of such extension of credit, as though made on and as of
such date (except to the extent that such representations and warranties relate
solely to an earlier date);
(b) no Default or Event of Default shall have occurred and be
continuing on the date of such extension of credit, nor shall either result from
the making thereof; and
(c) with respect solely to the initial Advance, Lender shall have
received (i) searches reflecting the filing of all financing statements filed by
the Lender against the Borrower, (ii) a pre-funding audit in form satisfactory
to the Lender in its Permitted Discretion, which audit shall constitute one of
the audits during fiscal year 2004 contemplated by Section 6.4, (iii) the
Disbursement Letter, (iv) the Cash Management Agreements (and in no event more
than 15 days following the Closing Date), and (v) the Control Agreements (and in
no event more than 15 days following the Closing Date),
3.4 TERM. This Agreement shall continue in full force and effect for a
term ending on June 29, 2009 (the "Maturity Date"). The foregoing
notwithstanding, Lender shall have the right to terminate its obligations under
this Agreement immediately and without notice upon the occurrence and during the
continuation of an Event of Default.
3.5 EFFECT OF TERMINATION. On the date of termination of this Agreement,
all Obligations (including contingent reimbursement obligations of Borrower with
respect to outstanding Letters of Credit and including all Bank Product
Obligations) immediately shall become due and payable without notice or demand
(including (a) either (i) providing cash collateral to be held by Lender in an
amount equal to 105% of the Letter of Credit Usage, or (ii) causing the original
Letters of Credit to be returned to Lender, and (b) providing cash collateral
(in an amount determined by Lender as sufficient to satisfy the reasonably
estimated credit exposure) to be held by Lender for the benefit of the Bank
Product Providers with respect to the Bank Product Obligations). No termination
of this Agreement, however, shall relieve or discharge Borrower or its
Subsidiaries of their duties, Obligations, or covenants hereunder or under any
other Loan Documents and the Lender's Liens in the Collateral shall remain in
effect until all Obligations have been paid in full and Lender's obligations to
provide additional credit hereunder have been terminated. When this Agreement
has been terminated and all of the Obligations have been paid in full and
Lender's obligations to provide additional credit under the Loan Documents have
been terminated irrevocably, Lender will, at Borrower's sole expense, execute
and deliver any termination statements, lien releases, mortgage releases,
re-assignments of trademarks, discharges of security interests, and other
similar discharge or release documents (and, if applicable, in recordable form)
as are reasonably necessary to release, as of record, the Lender's Liens and all
notices of security interests and liens previously filed by Lender with respect
to the Obligations.
3.6 EARLY TERMINATION BY BORROWER. Borrower has the option, at any time
upon 90 days prior written notice to Lender, to terminate this Agreement by
paying to Lender, in cash, the Obligations (including (a) either (i) providing
cash collateral to be held by Lender in an amount equal to 105% of the Letter of
Credit Usage, or (ii) causing the original Letters
of Credit to be returned to Lender, and (b) providing cash collateral (in an
amount determined by Lender as sufficient to satisfy the reasonably estimated
credit exposure) to be held by Lender for the benefit of the Bank Product
Providers with respect to the Bank Product Obligations), in full, together with
the Applicable Prepayment Premium. If Borrower has sent a notice of termination
pursuant to the provisions of this Section, then Lender's obligations to extend
credit hereunder shall terminate and Borrower shall be obligated to repay the
Obligations (including (a) either (i) providing cash collateral to be held by
Lender in an amount equal to 105% of the Letter of Credit Usage, or (ii) causing
the original Letters of Credit to be returned to Lender, and (b) providing cash
collateral (in an amount determined by Lender as sufficient to satisfy the
reasonably estimated credit exposure) to be held by Lender for the benefit of
the Bank Product Providers with respect to the Bank Product Obligations), in
full, together with the Applicable Prepayment Premium, on the date set forth as
the date of termination of this Agreement in such notice. In the event of the
termination of this Agreement and repayment of the Obligations at any time prior
to the Maturity Date, for any other reason, including (a) termination upon the
election of Lender to terminate after the occurrence and during the continuation
of an Event of Default, (b) foreclosure and sale of Collateral, (c) sale of the
Collateral in any Insolvency Proceeding, or (d) restructure, reorganization, or
compromise of the Obligations by the confirmation of a plan of reorganization or
any other plan of compromise, restructure, or arrangement in any Insolvency
Proceeding, then, in view of the impracticability and extreme difficulty of
ascertaining the actual amount of damages to Lender or profits lost by Lender as
a result of such early termination, and by mutual agreement of the parties as to
a reasonable estimation and calculation of the lost profits or damages of
Lender, Borrower shall pay the Applicable Prepayment Premium to Lender, measured
as of the date of such termination.
4. CREATION OF SECURITY INTEREST.
4.1 GRANT OF SECURITY INTEREST. Borrower hereby grants to Lender, for the
benefit of Lender and the Bank Product Providers, a continuing security interest
in all of its right, title, and interest in all currently existing and hereafter
acquired or arising Borrower Collateral in order to secure prompt repayment of
any and all of the Obligations in accordance with the terms and conditions of
the Loan Documents and in order to secure prompt performance by Borrower of each
of its covenants and duties under the Loan Documents. The Lender's Liens in and
to the Borrower Collateral shall attach to all Borrower Collateral without
further act on the part of Lender or Borrower. Anything contained in this
Agreement or any other Loan Document to the contrary notwithstanding, except for
Permitted Dispositions, Borrower and its Subsidiaries have no authority, express
or implied, to dispose of any item or portion of the Collateral.
4.2 NEGOTIABLE COLLATERAL. In the event that any Borrower Collateral,
including proceeds, is evidenced by or consists of Negotiable Collateral, and if
and to the extent that Lender determines that perfection or priority of Lender's
security interest is dependent on or enhanced by possession, Borrower, promptly
upon the request of Lender, shall endorse and deliver physical possession of
such Negotiable Collateral with an individual value in excess
of $50,000 to the Collateral Agent to be administered in accordance with the
terms of the Intercreditor Agreement.
4.3 COLLECTION OF ACCOUNTS, GENERAL INTANGIBLES, AND NEGOTIABLE
COLLATERAL. At any time after the occurrence and during the continuation of an
Event of Default, Lender or Lender's designee may (a) notify Account Debtors of
Borrower that Borrower's Accounts, chattel paper, or General Intangibles have
been assigned to Lender or that Lender has a security interest therein, or (b)
collect Borrower's Accounts, chattel paper, or General Intangibles directly and
charge the collection costs and expenses to the Loan Account. Borrower agrees
that it will hold in trust for Lender, as Lender's trustee, any of its
Collections that it receives and immediately will deliver such Collections to
Lender or a Cash Management Bank in their original form as received by Borrower.
4.4 FILING OF FINANCING STATEMENTS; COMMERCIAL TORT CLAIMS; DELIVERY OF
ADDITIONAL DOCUMENTATION REQUIRED.
(a) Borrower authorizes Lender to file any financing statement
necessary or desirable to effectuate the transactions contemplated by the Loan
Documents, and any continuation statement or amendment with respect thereto, in
any appropriate filing office without the signature of Borrower where permitted
by applicable law. Borrower hereby ratifies the filing of any financing
statement filed without the signature of Borrower prior to the date hereof.
(b) If Borrower acquires any commercial tort claims after the date
hereof, Borrower shall promptly (but in any event within 3 Business Days after
such acquisition) deliver to Lender a written description of such commercial
tort claim and shall deliver a written agreement, in form and substance
reasonably satisfactory to Lender, pursuant to which Borrower shall grant a
perfected security interest in all of its right, title and interest in and to
such commercial tort claim to Lender, as security for the Obligations (a
"Commercial Tort Claim Assignment").
(c) At any time upon the request of Lender, Borrower shall execute
and deliver to, or authorize, as applicable, Lender to file, any and all
financing statements, original financing statements in lieu of continuation
statements, amendments to financing statements, fixture filings, security
agreements, pledges, assignments, Commercial Tort Claim Assignments,
endorsements of certificates of title, and all other documents (collectively,
the "Additional Documents") that Lender may request in its Permitted Discretion,
in form and substance reasonably satisfactory to Lender, to create, perfect, and
continue perfected or to better perfect the Lender's Liens in the assets of
Borrower (whether now owned or hereafter arising or acquired, tangible or
intangible, real or personal), to create and perfect Liens in favor of Lender in
any owned Real Property acquired after the Closing Date, and in order to fully
consummate all of the transactions contemplated hereby and under the other Loan
Documents. To the maximum extent permitted by applicable law, Borrower
authorizes Lender to execute any such Additional Documents in Borrower's name
and authorizes Lender to file such executed Additional Documents in any
appropriate filing
office. In addition, on such periodic basis as Lender shall reasonably require,
Borrower shall (i) provide Lender with a report of all new material patents,
patent applications, trademarks, trademark applications, copyrights or copyright
applications acquired or generated by Borrower during the prior period and (ii)
cause to be prepared, executed, and delivered to Lender supplemental schedules
to the applicable Loan Documents to identify such patents, copyrights, and
trademarks as being subject to the security interests created thereunder;
provided, however, that neither Borrower nor any of its Subsidiaries shall
register with the U.S. Copyright Office any unregistered copyrights (whether in
existence on the Closing Date or thereafter acquired, arising, or developed)
unless (A) the Borrower provides Lender with written notice of its intent to
register such copyrights not less than 30 days prior to the date of the proposed
registration, and (B) prior to such registration, the applicable Person executes
and delivers to Lender a copyright security agreement in form and substance
reasonably satisfactory to Lender, supplemental schedules to any existing
copyright security agreement, or such other documentation as Lender reasonably
deems necessary in order to perfect and continue perfected Lender's Liens on
such copyrights following such registration.
4.5 POWER OF ATTORNEY. Borrower hereby irrevocably makes, constitutes, and
appoints Lender (and any of Lender's officers, employees, or agents designated
by Lender) as Borrower's true and lawful attorney, with power to (a) if Borrower
refuses to, or fails timely to execute and deliver any of the documents
described in Section 4.4, sign the name of Borrower on any of the documents
described in Section 4.4, (b) at any time that an Event of Default has occurred
and is continuing, sign Borrower's name on any invoice or ▇▇▇▇ of lading
relating to the Borrower Collateral, drafts against Account Debtors, or notices
to Account Debtors, (c) send requests for verification of Borrower's Accounts at
any time when an Event of Default has occurred and is continuing, (d) endorse
Borrower's name on any of its payment items (including all of its Collections)
that may come into Lender's possession, (e) at any time that an Event of Default
has occurred and is continuing, make, settle, and adjust all claims under
Borrower's policies of insurance and make all determinations and decisions with
respect to such policies of insurance, and (f) at any time that an Event of
Default has occurred and is continuing, settle and adjust disputes and claims
respecting Borrower's Accounts, chattel paper, or General Intangibles directly
with Account Debtors, for amounts and upon terms that Lender determines to be
reasonable, and Lender may cause to be executed and delivered any documents and
releases that Lender determines to be necessary. The appointment of Lender as
Borrower's attorney, and each and every one of its rights and powers, being
coupled with an interest, is irrevocable until all of the Obligations have been
paid and performed in full and Lender's obligations to extend credit hereunder
are terminated.
4.6 RIGHT TO INSPECT. To the extent permitted by Section 6.4, Lender
(through any of its officers, employees, or agents) shall have the right to
inspect the Books and make copies or abstracts thereof and to check, test, and
appraise the Collateral, or any portion thereof, in order to verify Borrower's
and its Subsidiaries' financial condition or the amount, quality, value,
condition of, or any other matter relating to, the Collateral at such reasonable
times and intervals as Lender may designate, and so long as no Default or Event
of Default has occurred and is continuing, with reasonable prior notice.
4.7 CONTROL AGREEMENTS. Borrower agrees that it will take all commercially
reasonable steps in order for Lender or the Collateral Agent as contemplated by
the Intercreditor Agreement to obtain control in accordance with Sections 8-106,
9-104, 9-105, 9-106, and 9-107 of the Code with respect to (subject to the
proviso contained in Section 7.12) all of its or their Securities Accounts,
Deposit Accounts, electronic chattel paper, Investment Property, and
letter-of-credit rights (other than ▇▇▇▇▇ cash, payroll and zero-balance
accounts so long as the aggregate amount in such accounts does not exceed
$20,000 at any time outstanding). Upon the occurrence and during the continuance
of an Event of Default, Lender may notify any bank or securities intermediary
subject to a Control Agreement to liquidate the applicable Deposit Account or
Securities Account or any related Investment Property maintained or held thereby
and remit the proceeds thereof to the Lender's Account.
5. REPRESENTATIONS AND WARRANTIES.
In order to induce Lender to enter into this Agreement, Borrower
makes the following representations and warranties to Lender which shall be
true, correct, and complete, in all material respects, as of the date hereof,
and shall be true, correct, and complete, in all material respects, as of the
Closing Date, and at and as of the date of the making of each Advance (or other
extension of credit) made thereafter, as though made on and as of the date of
such Advance (or other extension of credit) (except to the extent that such
representations and warranties relate solely to an earlier date) and such
representations and warranties shall survive the execution and delivery of this
Agreement:
5.1 NO ENCUMBRANCES. Borrower and its Subsidiaries have good and
marketable title to, or a valid leasehold interest in, their personal property
assets and good and marketable title to, or a valid leasehold interest in, their
Real Property and such personal property assets and Real Property of Borrower is
free and clear of Liens except for Permitted Liens.
5.2 ELIGIBLE ACCOUNTS. As to each Account that is identified by Borrower
as an Eligible Account in a borrowing base report submitted to Lender as of the
date of such borrowing base report, such Account is (a) a bona fide existing
payment obligation of the applicable Account Debtor created by the sale and
delivery of Inventory or the rendition of services to such Account Debtor in the
ordinary course of Borrower's business, (b) owed to Borrower without any known
defenses, disputes, offsets, counterclaims, or rights of return or cancellation
(subject to the limitation provided in clause (h) in the definition of Eligible
Accounts), and (c) not excluded as ineligible by virtue of one or more of the
excluding criteria set forth in the definition of Eligible Accounts.
5.3 ELIGIBLE INVENTORY. As to each item of Inventory that is identified by
Borrower as Eligible Inventory in a borrowing base report submitted to Lender,
such Inventory is (a) of good and merchantable quality, free from known defects,
and (b) as of the date of such borrowing base report, not excluded as ineligible
by virtue of one or more of the excluding criteria set forth in the definition
of Eligible Inventory.
5.4 EQUIPMENT. All of the Equipment of Borrower and its Subsidiaries is
used or held for use in their business and, except for Equipment that is
substantially worn, damaged or obsolete, is fit for such purposes.
5.5 LOCATION OF INVENTORY AND EQUIPMENT. The Inventory of Borrower is
located at the locations identified on Schedule 5.5 (as such Schedule may be
updated pursuant to Section 6.9).
5.6 INVENTORY RECORDS. Borrower keeps correct and accurate records
itemizing and describing the type, quality, and quantity of its Inventory and
the book value thereof.
5.7 STATE OF INCORPORATION; LOCATION OF CHIEF EXECUTIVE OFFICE;
ORGANIZATIONAL IDENTIFICATION NUMBER; COMMERCIAL TORT CLAIMS.
(a) The jurisdiction of organization of Borrower and each of its
Subsidiaries is set forth on Schedule 5.7(a).
(b) The chief executive office of Borrower and each of its
Subsidiaries is located at the address indicated on Schedule 5.7 (b) (as such
Schedule may be updated pursuant to Section 6.9).
(c) Borrower's and each of its Subsidiaries' organizational
identification numbers, if any, are identified on Schedule 5.7(c).
(d) As of the Closing Date, Borrower does not hold any commercial
tort claims, except as set forth on Schedule 5.7(d).
5.8 DUE ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) Borrower is duly organized and existing and in good standing
under the laws of the jurisdiction of its organization and qualified to do
business in any state where the failure to be so qualified reasonably could be
expected to result in a Material Adverse Change.
(b) Set forth on Schedule 5.8(b), is a complete and accurate
description of the authorized capital Stock of Borrower, by class, and, as of
March 31, 2004 and to the best knowledge of Borrower, a description of the
number of shares of each such class that are issued, outstanding and held by a
Person holding at least ten percent (10%) of all such issued and outstanding
capital Stock. Other than as described on Schedule 5.8(b), there are no
subscriptions, options, warrants, or calls relating to any shares of Borrower's
capital Stock, including any right of conversion or exchange under any
outstanding security or other instrument. Borrower is not subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of its capital Stock or any security convertible into or
exchangeable for any of its capital Stock.
(c) Set forth on Schedule 5.8(c), is a complete and accurate list of
Borrower's direct and indirect Subsidiaries, showing: (i) the jurisdiction of
their organization, (ii) the number of shares of each class of Stock authorized
for each of such Subsidiaries, and (iii) the number and the percentage of the
outstanding shares of each such class owned directly or indirectly by Borrower.
All of the outstanding capital Stock of each such corporate Subsidiary has been
validly issued and is fully paid and non-assessable.
(d) Except as set forth on Schedule 5.8(c), there are no
subscriptions, options, warrants, or calls relating to any shares of Borrower's
Subsidiaries' capital Stock, including any right of conversion or exchange under
any outstanding security or other instrument. Neither Borrower nor any of its
Subsidiaries is subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any shares of Borrower's Subsidiaries'
capital Stock or any security convertible into or exchangeable for any such
capital Stock.
5.9 DUE AUTHORIZATION; NO CONFLICT.
(a) The execution, delivery, and performance by Borrower of this
Agreement and the Loan Documents to which it is a party have been duly
authorized by all necessary action on the part of Borrower.
(b) The execution, delivery, and performance by Borrower of this
Agreement and the other Loan Documents to which it is a party do not and will
not (i) violate any provision of federal, state, or local law or regulation
applicable to Borrower, the Governing Documents of Borrower, or any order,
judgment, or decree of any court or other Governmental Authority binding on
Borrower, except where such violation could not reasonably be expected to have a
Material Adverse Change, (ii) conflict with, result in a breach of, or
constitute (with due notice or lapse of time or both) a default under any
contractual obligation of Borrower, except such conflict or breach which could
not reasonably be expected to have a Material Adverse Change, (iii) result in or
require the creation or imposition of any Lien of any nature whatsoever upon any
properties or assets of Borrower, other than Permitted Liens, or (iv) require
any approval of the holders of Borrower's Stock or any approval or consent of
any Person under any contractual obligation of Borrower, other than (x) consents
or approvals that have been obtained and that are still in force and effect and
(y) those consents and approvals the failure to obtain could not reasonably be
expected to have a Material Adverse Change.
(c) Other than the filing of financing statements and the
recordation of the Mortgages, the execution, delivery, and performance by
Borrower of this Agreement and the other Loan Documents to which Borrower is a
party do not and will not require any registration with, consent, or approval
of, or notice to, or other action with or by, any Governmental Authority, other
than (x) consents or approvals that have been obtained and that are still in
force and effect and (y) those consents and approvals the failure to obtain
could not reasonably be expected to have a Material Adverse Change.
(d) This Agreement and the other Loan Documents to which Borrower is
a party, and all other documents contemplated hereby and thereby, when executed
and delivered by Borrower will be the legally valid and binding obligations of
Borrower, enforceable against Borrower in accordance with their respective
terms, except as enforcement may be limited by equitable principles or by
bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to
or limiting creditors' rights generally.
(e) The Lender's Liens are validly created, perfected, and first
priority Liens, subject only to Permitted Liens (including the first priority
Lien on the Equipment, Real Estate Collateral and fixtures, and second priority
Lien on the Accounts and Inventory, of the Borrower in favor of the Collateral
Agent).
5.10 LITIGATION. Other than those matters disclosed on Schedule 5.10 and
other than matters arising after the Closing Date that reasonably could not be
expected to result in a Material Adverse Change, there are no actions, suits, or
proceedings pending or, to the best knowledge of Borrower, threatened against
Borrower or any of its Subsidiaries.
5.11 NO MATERIAL ADVERSE CHANGE. All financial statements relating to
Borrower and its Subsidiaries that have been delivered by Borrower to Lender
have been prepared in accordance with GAAP (except, in the case of unaudited
financial statements, for the lack of footnotes and being subject to year-end
audit adjustments) and present fairly in all material respects, Borrower's and
its Subsidiaries' financial condition as of the date thereof and results of
operations for the period then ended. There has not been a Material Adverse
Change with respect to Borrower and its Subsidiaries since the date of the
latest financial statements submitted to Lender on or before the Closing Date.
5.12 FRAUDULENT TRANSFER.
(a) Each of Borrower and each of its Subsidiaries is Solvent.
(b) No transfer of property is being made by Borrower or its
Subsidiaries and no obligation is being incurred by Borrower or its Subsidiaries
in connection with the transactions contemplated by this Agreement or the other
Loan Documents with the intent to hinder, delay, or defraud either present or
future creditors of Borrower or its Subsidiaries.
5.13 EMPLOYEE BENEFITS. Except as set forth on Schedule 5.13, neither
Borrower nor any of its Subsidiaries, or any of their ERISA Affiliates maintains
or contributes to any Benefit Plan.
5.14 ENVIRONMENTAL CONDITION. Except as set forth on Schedule 5.14, (a) to
Borrower's knowledge, neither Borrower's nor its U.S. Subsidiaries' properties
or assets has ever been used by Borrower or its U.S. Subsidiaries in the
disposal of, or to produce, store, handle, treat, release, or transport, any
Hazardous Materials, where such use, production, storage, handling, treatment,
release or transport was in violation, in any material respect, of any
applicable Environmental Law, (b) to Borrower's knowledge, none of Borrower's or
its U.S. Subsidiaries' properties or assets has ever been designated or
identified in any manner
pursuant to any environmental protection statute as a Hazardous Materials
disposal site, (c) neither Borrower nor any of its U.S. Subsidiaries has
received written notice that a Lien arising under any Environmental Law has
attached to any revenues or to any Real Property owned or operated by Borrower
or its U.S. Subsidiaries, and (d) neither Borrower nor its U.S. Subsidiaries has
received a written summons, citation, notice, or directive from the United
States Environmental Protection Agency or any other federal or state
governmental agency concerning any action or omission by Borrower or its U.S.
Subsidiaries resulting in the releasing or disposing of Hazardous Materials into
the environment in violation of any applicable Environmental Law.
5.15 BROKERAGE FEES. Neither Borrower nor any of its Subsidiaries has
utilized the services of any broker or finder in connection with Borrower's
obtaining financing from Lender under this Agreement and no brokerage commission
or finders fee is payable by Borrower or its Subsidiaries in connection
herewith.
5.16 INTELLECTUAL PROPERTY. To Borrower's knowledge, Borrower and its
Subsidiaries own, or hold licenses in, all trademarks, trade names, copyrights,
patents and licenses that are necessary to the conduct of its business as
currently conducted, and attached hereto as Schedule 5.16 (as updated from time
to time) is a true, correct, and complete listing of all material patents,
patent applications, trademarks, trademark applications, copyrights, and
copyright registrations as to which Borrower or one of its Subsidiaries is the
owner or is an exclusive licensee.
5.17 LEASES. Borrower and its Subsidiaries enjoy peaceful and undisturbed
possession under all leases material to their business and to which they are
parties or under which they are operating, and all of such leases are valid and
subsisting and no material default by Borrower or its Subsidiaries exists under
any of them.
5.18 DEPOSIT ACCOUNTS AND SECURITIES ACCOUNTS. Set forth on Schedule 5.18
(as such schedule may be amended from time to time by Borrower and, to the
extent required by Section 4.7 consented to by Lender as evidenced by the
execution and delivery by the Borrower, the applicable securities intermediary
or bank and the Lender of a Control Agreement) is a listing of all of Borrower's
and its Subsidiaries' Deposit Accounts and Securities Accounts, including, with
respect to each bank or securities intermediary (a) the name and address of such
Person, and (b) the account numbers of the Deposit Accounts or Securities
Accounts maintained with such Person.
5.19 COMPLETE DISCLOSURE. All factual information (taken as a whole)
furnished by or on behalf of Borrower or its Subsidiaries in writing to Lender
(including all information contained in the Schedules hereto or in the other
Loan Documents) for purposes of or in connection with this Agreement, the other
Loan Documents, or any transaction contemplated herein or therein is, and all
other such factual information (taken as a whole) hereafter furnished by or on
behalf of Borrower or its Subsidiaries in writing to Lender will be, true and
accurate, in all material respects, on the date as of which such information is
dated or certified and not incomplete by omitting to state any fact necessary to
make such information
(taken as a whole) not misleading in any material respect at such time in light
of the circumstances under which such information was provided. On the Closing
Date, the Closing Date Projections represent, and as of the date on which any
other Projections are delivered to Lender, such additional Projections represent
Borrower's good faith estimate of its and its Subsidiaries' future performance
for the periods covered thereby.
5.20 INDEBTEDNESS. Set forth on Schedule 5.20 is a true and complete list
of all Indebtedness of Borrower and its Subsidiaries outstanding immediately
prior to the Closing Date that is to remain outstanding after the Closing Date
and such Schedule accurately reflects the aggregate principal amount of such
Indebtedness and describes the principal terms thereof.
5.20 U.S. SUBSIDIARIES. Other than WSC Corp. and Viskase Films, Inc., the
Borrower does not have any United States Subsidiaries. The assets of WSC Corp.
and Viskase Films, Inc. in the aggregate do not exceed US$500,000. Neither WSC
Corp. nor Viskase Films, Inc. generates any Accounts nor holds or maintains any
Inventory for sale or lease. In the event the assets of any U.S. Subsidiary
(including, WSC Corp. or Viskase Films, Inc.) exceed US$500,000, then such U.S.
Subsidiary shall be a party to this Agreement as contemplated by Section 6.15
hereof.
5.21 INDENTURE DOCUMENTS. Borrower has furnished Lender with true, correct
and complete and, as applicable, fully-executed, copies of the Notes and the
Indenture and any and all material instruments, agreements and documents
executed or delivered in connection therewith (including, without limitation,
the final offering circular, the Registration Rights Agreement, and all
Collateral Agreements).
6. AFFIRMATIVE COVENANTS.
Borrower covenants and agrees that, so long as any credit hereunder
shall be available and until payment in full of the Obligations (other than
contingent indemnification obligations), Borrower shall and shall cause each of
its Subsidiaries to do all of the following:
6.1 ACCOUNTING SYSTEM. Maintain a system of accounting that enables
Borrower to produce financial statements in accordance with GAAP and maintain
records pertaining to the Collateral that contain information as from time to
time reasonably may be requested by Lender. Borrower also shall keep a reporting
system that shows all additions, sales, claims, returns, and allowances with
respect to its and its Subsidiaries' sales.
6.2 COLLATERAL REPORTING. Provide Lender with the following documents at
the following times in form satisfactory to Lender:
So long as a (a) sales journal, collection journal, and credit
Triggering Event register since the last such schedule, a report
shall occur and regarding credit memoranda that have been issued since
be continuing the last such report, and a calculation of the Borrowing
and for the 30 Base as of such date,
day period
following the (b) notice of all claims, offsets, or disputes asserted
cure of a by Account Debtors with respect to Borrower's Accounts
Triggering Event, and
weekly
(c) Inventory reports specifying the cost and the
wholesale market value of Borrower's Inventory, by
category, with additional detail showing additions to
and deletions therefrom.
Monthly (not (d) a detailed calculation of the Borrowing Base
later than the (including detail regarding those Accounts of Borrower
15th day of each that are not Eligible Accounts),
month with
respect to clauses (e) a detailed aging, by total, of the Accounts of
(d)-(f) and (h) Borrower, together with a reconciliation to the detailed
and not later than calculation of the Borrowing Base previously provided to
the 20th day of Lender,
each month with
respect to clause (f) a summary aging, by vendor, of Borrower's accounts
(g)) payable and any book overdraft,
(g) a detailed report regarding Borrower's cash and Cash
Equivalents, and
(h) a calculation of Dilution for the month most
recently ended.
Quarterly (i) a detailed list of Borrower's customers, and
(j) a report regarding Borrower's accrued, but unpaid,
ad valorem taxes,
Upon request by (k) copies of invoices in connection with Borrower's
Lender Accounts, credit memos, remittance advices, deposit
slips, shipping and delivery documents in connection
with Borrower's Accounts and, for Inventory and
Equipment acquired by Borrower, purchase orders and
invoices, and
(l) such other reports as to the Collateral or the
financial condition of Borrower, as Lender may request.
In addition, Borrower agrees to cooperate fully with Lender to
facilitate and implement a system of electronic collateral reporting in order to
provide electronic reporting of each of the items set forth above.
6.3 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES. Deliver to Lender:
(a) as soon as available, but in any event within 30 days (45 days
in the case of a month that is the end of one of Borrower's fiscal quarters)
after the end of each month during each of Borrower's fiscal years,
(i) solely with respect to the months of January and February,
an unaudited balance sheet and income statement of the Borrower
covering the Borrower's operations during such period (subject to
adjustments deemed applicable and appropriate), solely with respect
to the months of April, May, July, August, October and November, an
unaudited consolidated balance sheet and income statement covering
Borrower's and its Subsidiaries' operations during such period
(subject to adjustments deemed applicable and appropriate), and
solely with respect to the months of March, June, September and
December, an unaudited consolidated balance sheet, income statement
and statement of cash flow covering Borrower's and its Subsidiaries'
operations during such period (subject to applicable and appropriate
adjustments) and
(ii) a Compliance Certificate,
(b) as soon as available, but in any event within 90 days after the
end of each of Borrower's fiscal years,
(i) consolidated and consolidating financial statements of
Borrower and its Subsidiaries for each such fiscal year, audited by
independent certified public accountants reasonably acceptable to
Lender and certified, without any qualifications (including any (A)
"going concern" or like qualification or exception, (B)
qualification or exception as to the scope of such audit, or (C)
qualification which relates to the treatment or classification of
any item and which, as a condition to the removal of such
qualification, would require an adjustment to such item, the effect
of which would be to cause any noncompliance with the provisions of
Section 7.19), by such accountants to have been prepared in
accordance with GAAP (such audited financial statements to include a
balance sheet, income statement, and statement of cash flow and, if
prepared, such accountants' letter to management),
(ii) a certificate of such accountants addressed to Lender
stating that such accountants do not have knowledge of the existence
of any Event of Default under Section 7.19 (to the extent then in
effect) and
(iii) a Compliance Certificate,
(c) as soon as available, but in any event within 30 days after the
start of each of Borrower's fiscal years, copies of Borrower's Projections, in
form and substance (including as to scope and underlying assumptions)
satisfactory to Lender, in its Permitted Discretion, for the forthcoming 3
years, year by year, and for the forthcoming fiscal year,
month by month, certified by the chief financial officer of Borrower as being
such officer's good faith estimate of the financial performance of Borrower
during the period covered thereby; provided, however, that if during the 30 day
period prior to delivery of the Borrower's Projections 30% or less of the
Maximum Revolver Amount has been funded during such 30 day period, then such
Borrower's Projections to be delivered under this Section 6.3(c) may contain for
such forthcoming fiscal year, quarter by quarter estimates in lieu of month by
month estimates certified by the chief financial officer of Borrower as being
such officer's good faith estimate of the financial performance of Borrower
during the period covered thereby,
(d) if and when filed by Borrower,
(i) Form 10-Q quarterly reports, Form 10-K annual reports, and
Form 8-K current reports,
(ii) any other filings made by Borrower with the SEC,
(iii) copies of Borrower's federal income tax returns, and any
amendments thereto, filed with the Internal Revenue Service, and
(iv) any other information that is provided by Borrower to its
shareholders generally,
(e) promptly, but in any event within 5 days after Borrower has
knowledge of any event or condition that constitutes a Default or an Event of
Default, notice thereof and a statement of the curative action that Borrower
proposes to take with respect thereto,
(f) promptly after the commencement thereof, but in any event within
5 days after the service of process with respect thereto on Borrower or any of
its Subsidiaries, notice of all actions, suits, or proceedings brought by or
against Borrower or any of its Subsidiaries before any Governmental Authority
which reasonably could be expected to result in a Material Adverse Change, and
(g) upon the request of Lender, any other information reasonably
requested relating to the financial condition of Borrower or its Subsidiaries.
In addition, Borrower agrees that no Subsidiary of Borrower will
have a fiscal year different from that of Borrower. Borrower also agrees to
cooperate with Lender to allow Lender to consult with its independent certified
public accountants if Lender reasonably requests the right to do so and that, in
such connection, its independent certified public accountants are authorized to
communicate with Lender and to release to whatever financial information
concerning Borrower or its Subsidiaries that Lender reasonably may request
(provided that Borrower is copied on any written correspondence (A) sent by the
Lender to the Borrower's independent certified public accountants and (B)
received by the Lender from the Borrower's independent certified public
accountants and the Borrower is present at any meetings or conference calls).
6.4 APPRAISALS; AUDITS Without limiting anything contained in this
Agreement, Lender shall have the right (a) annually (or more often if any Event
of Default shall have occurred) to have the Borrower's Inventory appraised by a
qualified appraisal company selected by Lender, and (b) at least one (1) time
per calendar year if the average outstanding amount of the Advances is less than
$5,000,000 during each calendar quarter, and otherwise, at least four (4) times
per year (or more often if any Event of Default shall have occurred) to conduct
field audits and audits and examinations of the Books of the Borrower, performed
by personnel employed by Lender, with all of such costs, expenses and fees to be
paid by Borrower as set forth in this Agreement.
6.5 RETURNS. Cause returns and allowances, as between Borrower and its
Subsidiaries and their Account Debtors, to be on the same basis and in
accordance with the usual customary practices of Borrower and its Subsidiaries,
as they exist at the time of the execution and delivery of this Agreement;
provided, that Borrower may, in the exercise of its commercially reasonable
business judgment, adjust its usual customary practice to reflect customary
trade practices of Persons in its line of business, provided, further that if
such adjustments are material, then the Borrower will provide the Lender with
prior written notice describing such adjustments in reasonable detail.
6.6 MAINTENANCE OF PROPERTIES. Maintain and preserve all of its properties
which are necessary or useful in the proper conduct to its business in good
working order and condition, ordinary wear and tear excepted, and comply at all
times with the provisions of all material leases to which it is a party as
lessee, so as to prevent any loss or forfeiture thereof or thereunder.
6.7 TAXES. Cause all material assessments and all federal and state income
and other material taxes, whether real, personal, or otherwise, due or payable
by, or imposed, levied, or assessed against Borrower, its Subsidiaries, or any
of their respective assets to be paid in full, before delinquency or before the
expiration of any extension period, except to the extent that the validity of
such assessment or tax shall be the subject of a Permitted Protest. Borrower
will and will cause its Subsidiaries to make timely payment or deposit of all
tax payments and withholding taxes required of it and them by applicable laws,
including those laws concerning F.I.C.A., F.U.T.A., state disability, and local,
state, and federal income taxes, and will, upon request, furnish Lender with
proof satisfactory to Lender indicating that Borrower and its Subsidiaries have
made such payments or deposits.
6.8 INSURANCE.
(a) At Borrower's expense, maintain insurance respecting its and its
Subsidiaries' assets wherever located, covering loss or damage by fire, theft,
explosion, and all other hazards and risks as ordinarily are insured against by
other Persons engaged in the same or similar businesses. Borrower also shall
maintain business interruption, public liability, and product liability
insurance, as well as insurance against larceny, embezzlement, and criminal
misappropriation. All such policies of insurance shall be in such amounts and
with such insurance companies as ordinarily are insured by other Persons engaged
in the
same or similar businesses. Borrower shall deliver copies of all such policies
to Lender with an endorsement naming Lender as the sole loss payee (under a
satisfactory lender's loss payable endorsement) or additional insured, as
appropriate. The Borrower will use its commercially reasonable efforts to cause
each policy of insurance or endorsement to contain a clause requiring the
insurer to give not less than 30 days prior written notice to Lender in the
event of cancellation of the policy for any reason whatsoever.
(b) Borrower shall give Lender prompt notice of any loss covered by
such insurance. Lender shall have the exclusive right to adjust any losses
claimed under any such insurance policies in excess of $3,000,000 (or in any
amount after the occurrence and during the continuation of an Event of Default),
without any liability to Borrower whatsoever in respect of such adjustments. Any
monies received as payment for any loss under any insurance policy mentioned
above (other than liability insurance policies) or as payment of any award or
compensation for condemnation or taking by eminent domain, shall be paid over to
(i) Borrower's Deposit Account, or (ii) if required by Section 2.4(d), to Lender
or at Lender's option to be disbursed to Borrower under staged payment terms
reasonably satisfactory to Lender for application to the cost of repairs,
replacements, or restorations. Any such repairs, replacements, or restorations
shall be effected with reasonable promptness and shall be of a value at least
equal to the value of the items of property destroyed prior to such damage or
destruction.
(c) Borrower will not and will not suffer or permit its Subsidiaries
to take out separate insurance concurrent in form or contributing in the event
of loss with that required to be maintained under this Section 6.8, unless
Lender is included thereon as an additional insured or loss payee under a
lender's loss payable endorsement. Borrower promptly shall notify Lender
whenever such separate insurance is taken out, specifying the insurer thereunder
and full particulars as to the policies evidencing the same, and copies of such
policies promptly shall be provided to Lender.
6.9 LOCATION OF INVENTORY AND EQUIPMENT. Keep Borrower's Inventory and
Equipment only at the locations identified on Schedule 5.5 and its chief
executive offices only at the locations identified on Schedule 5.7(b); provided,
however, that Borrower may amend Schedule 5.5 and Schedule 5.7 so long as such
amendment occurs by prompt written notice to Lender, so long as such new
location is within the continental United States or Canada or is at such other
location within North America in connection with such one time aggregate
$11,000,000 Permitted Investment described in clause (i) in the definition of
Permitted Investment.
6.10 COMPLIANCE WITH LAWS. Comply with the requirements of all applicable
laws, rules, regulations, and orders of any Governmental Authority, other than
laws, rules, regulations, and orders the non-compliance with which, individually
or in the aggregate, could not reasonably be expected to result in a Material
Adverse Change.
6.11 LEASES. Pay when due all rents and other amounts payable under any
material leases to which Borrower or any of its Subsidiaries is a party or by
which Borrower's or any
such Subsidiaries' properties and assets are bound, unless such payments are the
subject of a Permitted Protest.
6.12 EXISTENCE. Except as otherwise expressly permitted under Section 7.3,
at all times preserve and keep in full force and effect Borrower's and its
Subsidiaries' valid existence and good standing and any rights and franchises
material to their businesses, except where the failure to be in good standing
could reasonably be expected to result in a Material Adverse Change.
6.13 ENVIRONMENTAL. Keep any property either owned or operated by Borrower
or its U.S. Subsidiaries free of any Environmental Liens other than
Environmental Liens for which bonds or other financial assurances sufficient to
satisfy the obligations or liability evidenced by such Environmental Liens have
been posted, (b) comply with Environmental Laws and provide to Lender
documentation of such compliance which Lender reasonably requests except where
the failure to comply which could not reasonably be expected to result in a
Material Adverse Change, (c) promptly notify Lender of any release of a
Hazardous Material in any quantity required to be reported to any Governmental
Authority under an applicable Environmental Law from or onto property owned or
operated by Borrower or its U.S. Subsidiaries which could reasonably be expected
to result in a Material Adverse Change, (d) take any Remedial Actions required
to ▇▇▇▇▇ any release of a Hazardous Material in any quantity required to be
reported to any Governmental Authority under an applicable Environmental Law
from or onto property or operating by Borrower or its U.S. Subsidiaries, to the
extent required by applicable Environmental Law, and (e) promptly, but in any
event within 5 days of its receipt thereof, provide Lender with written notice
of any of the following: (i) notice that an Environmental Lien has been filed
against any of the real or personal property of Borrower or its U.S.
Subsidiaries, (ii) commencement of any Environmental Action or written notice
that an Environmental Action will be filed against Borrower or its U.S.
Subsidiaries, and (iii) written notice of a violation, citation, or other
administrative order relating to a violation of Environmental Law, in the case
of clauses (ii) and (iii), which reasonably could be expected to result in a
Material Adverse Change.
6.14 DISCLOSURE UPDATES. Promptly and in no event later than 5 Business
Days after obtaining knowledge thereof, notify Lender if any written
information, exhibit, or report furnished to Lender contained, at the time it
was furnished, any untrue statement of a material fact or omitted to state any
material fact necessary to make the statements contained therein not materially
misleading in light of the circumstances in which made. The foregoing to the
contrary notwithstanding, any notification pursuant to the foregoing provision
will not cure or remedy the effect of the prior untrue statement of a material
fact or omission of any material fact nor shall any such notification have the
affect of amending or, modifying this Agreement or any of the Schedules hereto.
6.15 FORMATION OF SUBSIDIARIES. At the time that Borrower forms any direct
or indirect U.S. Subsidiary or acquires any direct or indirect U.S. Subsidiary
after the Closing Date, Borrower shall (a) cause such new U.S. Subsidiary to
provide to Lender a joinder to this Agreement, together with such other security
documents (including Mortgages with
respect to any Real Property of such new U.S. Subsidiary), as well as
appropriate financing statements (and with respect to all property subject to a
Mortgage, fixture filings), all in form and substance satisfactory to Lender
(including being sufficient to grant Lender a first priority Lien (subject to
Permitted Liens and the terms of the Intercreditor Agreement) in and to the
assets of such newly formed or acquired U.S. Subsidiary), (b) provide to Lender
a pledge agreement and appropriate certificates and powers or financing
statements, hypothecating all of the direct or beneficial ownership interest in
such new Subsidiary, in form and substance satisfactory to Lender (subject to
the terms of the Intercreditor Agreement), and (c) provide to Lender all other
documentation, including one or more opinions of counsel reasonably satisfactory
to Lender, which in its opinion is appropriate with respect to the execution and
delivery of the applicable documentation referred to above (including policies
of title insurance or other documentation with respect to all property subject
to a Mortgage). At the time that Borrower forms any first-tier Foreign
Subsidiary or acquires any first-tier Foreign Subsidiary after the Closing Date,
Borrower shall provide to Lender a pledge agreement and appropriate certificates
and powers or financing statements, pledging 65% of the Borrower's beneficial
ownership in such new first-tier Foreign Subsidiary, in form and substance
satisfactory to the Lender (subject to the terms of the Intercreditor
Agreement). Any document, agreement, or instrument executed or issued pursuant
to this Section 6.15 shall be a Loan Document
7. NEGATIVE COVENANTS.
Borrower covenants and agrees that, so long as any credit hereunder
shall be available and until the Obligations are paid and performed in full
(other than contingent indemnification obligations and except as otherwise
provided in Section 7.19 hereof), Borrower will not and will not permit any of
its Subsidiaries to do any of the following:
7.1 INDEBTEDNESS. Create, incur, assume, suffer to exist, guarantee, or
otherwise become or remain, directly or indirectly, liable with respect to any
Indebtedness, except:
(a) Indebtedness evidenced by this Agreement and the other Loan
Documents, together with Indebtedness owed to Underlying Issuers with respect to
Underlying Letters of Credit,
(b) Indebtedness evidenced by the Notes, and other Indebtedness set
forth on Schedule 5.20,
(c) Permitted Purchase Money Indebtedness,
(d) refinancings, renewals, or extensions of Indebtedness permitted
under clauses (b), (c), (i) and (j) of this Section 7.1 (and continuance or
renewal of any Permitted Liens associated therewith) so long as: (i) the terms
and conditions of such refinancings, renewals, or extensions are no less
favorable in all respects to such Indebtedness, (ii) such refinancings,
renewals, or extensions do not result in an increase in the principal amount of,
or interest rate with respect to, the Indebtedness so refinanced, renewed, or
extended, (iii) such refinancings, renewals, or extensions do not result in a
shortening of the average
weighted maturity of the Indebtedness so refinanced, renewed, or extended, nor
are they on terms or conditions that, taken as a whole, are materially more
burdensome or restrictive to Borrower, (iv) if the Indebtedness that is
refinanced, renewed, or extended was subordinated in right of payment to the
Obligations, then the terms and conditions of the refinancing, renewal, or
extension Indebtedness must include subordination terms and conditions that are
at least as favorable to Lender as those that were applicable to the refinanced,
renewed, or extended Indebtedness, and (v) the Indebtedness that is refinanced,
renewed, or extended is not recourse to any Person that is liable on account of
the Obligations other than those Persons which were obligated with respect to
the Indebtedness that was refinanced, renewed, or extended,
(e) endorsement of instruments or other payment items for deposit,
(f) Indebtedness composing Permitted Investments,
(g) Indebtedness of (1) Borrower or any of its U.S. Subsidiaries to
the Borrower or its U.S. Subsidiaries so long as such Indebtedness is subject to
the Intercompany Subordination Agreement and so long as all such U.S.
Subsidiaries are Borrowers hereunder, (2) any Foreign Subsidiary to any other
Foreign Subsidiary and (3) Borrower or any of its Foreign Subsidiaries to the
Borrower or its Foreign Subsidiaries in an amount not to exceed $5,000,000 in
the aggregate at any time outstanding so long as such Indebtedness is subject to
the Intercompany Subordination Agreement,
(h) Hedge Agreements not entered by Borrower or any of its
Subsidiaries for speculative purposes,
(i) Indebtedness incurred in connection with a Permitted Acquisition
so long the aggregate amount of such Indebtedness does not exceed $2,000,000 and
so long as (1) such Indebtedness is not secured by the Collateral, (2) such
Indebtedness is secured solely by the assets acquired in connection with such
Permitted Acquisition or (3) such Person subject to such Permitted Acquisition
becomes a Borrower hereunder,
(j) Indebtedness of Foreign Subsidiaries in an aggregate amount not
to exceed $2,000,000 outstanding so long as such Indebtedness is not secured by
the Collateral and is non-recourse to the Borrower,
(k) other unsecured Indebtedness from any Person in an aggregate
amount not to exceed $500,000 outstanding and
(l) Indebtedness incurred in connection with the financing of
insurance premiums in an aggregate amount not to exceed $2,000,000 outstanding.
7.2 LIENS. Create, incur, assume, or suffer to exist, directly or
indirectly, any Lien on or with respect to any of its assets, of any kind,
whether now owned or hereafter acquired, or any income or profits therefrom,
except for Permitted Liens (including Liens that are replacements of Permitted
Liens to the extent that the original Indebtedness is refinanced,
renewed, or extended under Section 7.1(d) and so long as the replacement Liens
only encumber those assets that secured the refinanced, renewed, or extended
Indebtedness).
7.3 RESTRICTIONS ON FUNDAMENTAL CHANGES.
(a) Except as otherwise contemplated by a Permitted Acquisition or
any merger or reorganization of the Borrower with and into a U.S. Subsidiary, a
U.S. Subsidiary with and into the Borrower or any Foreign Subsidiary with and
into the Borrower, subject in all cases to such surviving entity being a party
to this Agreement as contemplated by Section 6.15, any merger, consolidation,
reorganization, or recapitalization, or reclassify its Stock. Notwithstanding
the foregoing, a merger of a Foreign Subsidiary with and into another Foreign
Subsidiary shall neither be prohibited by this Agreement nor shall such merger
require that such Foreign Subsidiary that survives such merger be a party to
this Agreement.
(b) Liquidate, wind up, or dissolve itself (or suffer any
liquidation or dissolution).
(c) Except for Permitted Dispositions, convey, sell, lease, license,
assign, transfer, or otherwise dispose of, in one transaction or a series of
transactions, all or any substantial part of its assets.
(d) Form any Unrestricted Subsidiary without the prior written
consent of the Lender, in which case if the Lender shall permit the formation of
such Unrestricted Subsidiary, then such Unrestricted Subsidiary shall not be
subject to the provisions set forth in this Agreement and this Agreement shall
be amended to reflect the same.
7.4 DISPOSAL OF ASSETS. Other than Permitted Dispositions, convey, sell,
lease, license, assign, transfer, or otherwise dispose of any of Borrower's or
its Subsidiaries' assets.
7.5 CHANGE NAME. Change Borrower's or any of its Subsidiaries' names,
organizational identification number, state of organization or organizational
identity; provided, however, that Borrower or any of its Subsidiaries may change
their names upon at least 30 days prior written notice to Lender of such change
and so long as, at the time of such written notification, Borrower or its
Subsidiary provides any financing statements necessary to perfect and continue
perfected the Lender's Liens.
7.6 NATURE OF BUSINESS. Make any change in the principal nature of its or
their business, except the Borrower and its Subsidiaries may enter into
businesses which are reasonably related to or supportive of their respective
business or ancillary or similar thereto]
7.7 PREPAYMENTS AND AMENDMENTS. Except in connection with a refinancing
permitted by Section 7.1(d),
(a) prepay, redeem, defease, purchase, or otherwise acquire any
Indebtedness of Borrower or its Subsidiaries, other than (i) a Net Proceeds
Offer (as defined in the Indenture) in an amount equal to 100% of the principal
amount of the outstanding
Notes, (ii) a Change of Control Offer (as defined in the Indenture) in an amount
equal to 101% of the principal amount of the outstanding Notes, (iii) on and
after January 1, 2007, an Excess Cash Flow Offer (as defined in the Indenture)
or open market purchases, in each case in an amount not to exceed the estimated
Excess Cash Flow Offer Amount (as defined in the Indenture) so long as solely
with respect to clause (iii) (A) no Default or Event of Default shall have
occurred and be continuing immediately prior to and after giving effect to such
open market purchases or such Excess Cash Flow Offer, (B) if the Borrower uses
Advances to pay for such purchases or redemptions, the Borrower shall have not
less than $10,000,000 of Availability for the 30 day period immediately before
and for the 30 day period immediately after such redemption, (C) if the Borrower
uses funds other than Advances to pay for such redemption, the Borrower shall
have not less than $5,000,000 of Availability for the 30 day period immediately
before and for the 30 day period immediately after giving such redemption, and
(D) the Borrower shall have delivered to the Lender not less than three days
prior to making such open market purchase or consummating such Excess Cash Flow
Offer, unaudited financial statements of the Borrower and its Subsidiaries
setting forth the applicable calculation used to determine the estimated Excess
Cash Flow Offer Amount, (iv) the Obligations in accordance with this Agreement,
or (v) all or any portion of the 8% Senior Notes so long as no Default or Event
of Default shall have occurred and be continuing immediately prior to and after
giving effect to such purchase.
(b) except to the extent permitted by the Intercreditor Agreement,
directly or indirectly, amend, modify, alter, increase, or change any of the
terms or conditions of any agreement, instrument, document, indenture, or other
writing evidencing or concerning Indebtedness evidenced by the Notes.
7.8 CHANGE OF CONTROL. Cause, permit, or suffer, directly or indirectly,
any Change of Control.
7.9 CONSIGNMENTS. Consign any of its or their Inventory or sell any of its
or their Inventory on ▇▇▇▇ and hold, sale or return, sale on approval, or other
conditional terms of sale in an aggregate amount in excess of $3,000,000.
7.10 DISTRIBUTIONS. Make any distribution or declare or pay any dividends
(in cash or other property, other than common Stock) on, or purchase, acquire,
redeem, or retire any of Borrower's Stock, of any class, whether now or
hereafter outstanding, nor, without the prior written consent of Lender, make at
any time any distribution (whether in cash, assets or otherwise) to any of the
U.S. Subsidiaries.
7.11 ACCOUNTING METHODS. Modify or change its fiscal year or its method of
accounting (other than as may be required to conform to GAAP) or enter into,
modify, or terminate any agreement currently existing, or at any time hereafter
entered into with any third party accounting firm without said accounting firm
agreeing to provide Lender information regarding Borrower's and its
Subsidiaries' financial condition unless the Borrower replaces such third party
accounting firm with a nationally recognized accounting firm.
7.12 INVESTMENTS. Except for Permitted Investments, directly or
indirectly, make or acquire any Investment or incur any liabilities (including
contingent obligations) for or in connection with any Investment; provided,
however, that Borrower shall not have Permitted Investments (other than in the
Cash Management Accounts) in Deposit Accounts or Securities Accounts in an
aggregate amount in excess of $20,000.00 at any one time unless Borrower and the
applicable securities intermediary or bank have entered into Control Agreements
governing such Permitted Investments in order to perfect (and further establish)
the Lender's Liens in such Permitted Investments. Subject to the foregoing
proviso, Borrower shall not establish or maintain any Deposit Account (other
than payroll, ▇▇▇▇▇ cash and zero balance accounts with an aggregate amount not
to exceed $20,000 at any time outstanding) or Securities Account unless Lender
shall have received a Control Agreement in respect of such Deposit Account or
Securities Account.
7.13 TRANSACTIONS WITH AFFILIATES. Except as otherwise expressly permitted
herein, directly or indirectly enter into or permit to exist any transaction
with any Affiliate of Borrower except for transactions that (a) are in the
ordinary course of Borrower's business, (b) are upon fair and reasonable terms,
(c) are no less favorable to Borrower or its Subsidiaries, as applicable, than
would be obtained in an arm's length transaction with a non-Affiliate, and (d)
do not violate Section 7.10 hereof.
7.14 SUSPENSION. Except as otherwise expressly permitted under Section
7.3, suspend or go out of a substantial portion of its or their business.
7.15 INTENTIONALLY OMITTED.
7.16 USE OF PROCEEDS. Use the proceeds of the Advances for any purpose
other than (a) on the Closing Date, to (i) repay, in full, the outstanding
principal, accrued interest, and accrued fees and expenses owing to Existing
Lender, (ii) effect the early termination of Borrower's capital lease with
General Electric Capital Corporation, (iii) purchase approximately $55.8 million
aggregate principal amount of the 8% Senior Notes, and (iv) pay transactional
fees, costs, and expenses incurred in connection with this Agreement, the other
Loan Documents and the Notes, and the transactions contemplated hereby and
thereby, and (b) thereafter, consistent with the terms and conditions hereof,
for the lawful financing of its ongoing working capital and general corporate
needs.
7.17 INTENTIONALLY OMITTED.
7.18 INDENTURE DOCUMENTS. Amend, restate or modify the Indenture or the
Notes in order to increase the principal amount of the indebtedness owing
thereunder, without the prior written consent of Lender to the extent required
pursuant to the Intercreditor Agreement.
7.19 FINANCIAL COVENANTS. The requirements of Sections 7.19 (a) and (b)
shall be effective only during each period commencing on the first day that the
Maximum Revolver Amount is more than 30% funded by Lender hereunder and ending
90 days after 30% or less of the Maximum Revolver Amount is funded by Lender.
The requirements of Section 7.19
(c) shall be effective for the four fiscal quarters immediately following the
closing of a Permitted Acquisition and for the four fiscal quarters immediately
following the closing of a Permitted Investment referred to in clause (i) in the
definition of Permitted Investment.
(a) MINIMUM EBITDA. Fail to maintain or achieve EBITDA, measured on
a fiscal quarter-end basis, of at least the required amount set forth in the
following table for the applicable period set forth opposite thereto:
Applicable Amount Applicable Period
----------------- -----------------
$14,200,000 For the 3 fiscal quarter period
ending September 30, 2004
$19,400,000 For the 4 fiscal quarter period
ending December 31, 2004
$19,400,000 For the 4 fiscal quarter period
ending March 31, 2005
$19,400,000 For the 4 fiscal quarter period
ending June 30, 2005
$19,400,000 For the 4 fiscal quarter period
ending September 30, 2005
$19,400,000 For the 4 quarter period
ending December 31, 2005
$19,400,000 For the 4 fiscal quarter period
ending March 31, 2006
$19,400,000 For the 4 fiscal quarter period
ending June 30, 2006
$19,400,000 For the 4 fiscal quarter period
ending September 30, 2006
$21,000,000 For the 4 fiscal quarter period
ending each fiscal quarter thereafter
(b) CAPITAL EXPENDITURES. Make Capital Expenditures in any fiscal
year in excess of the amount set forth in the following table for the applicable
period ;provided that with respect to any portion of the Capital Expenditure
limitation for any fiscal year that is not fully utilized in such fiscal year,
such unused amount may be carried forward to the
immediately following Fiscal Year (but to no other succeeding fiscal year) and
such carried forward amount shall be deemed to be utilized first:
fiscal year 2006 and each
fiscal year 2004 fiscal year 2005 fiscal year thereafter
---------------- ---------------- ----------------------
$9,700,000 $5,500,000 $6,000,000
(c) FIXED CHARGE COVERAGE RATIO. Fail to maintain a Fixed Charge
Coverage Ratio of not less than 1.25 to 1.00, measured on a trailing 12 month
basis as of the last day of each fiscal quarter.
8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an event of
default (each, an "Event of Default") under this Agreement:
8.1 If Borrower fails to pay (i) when due and payable, or when declared
due and payable, all or any portion of the principal amount of the Advances or
(ii) within 3 days after due and payable or declared due and payable, all or any
portion of interest (including any interest which, but for the provisions of the
Bankruptcy Code, would have accrued on such amounts), fees and charges due
Lender, reimbursement of Lender Expenses, or other amounts constituting
Obligations, including, without limitation, Obligations arising under Section
2.4);
8.2 If Borrower or any of its Subsidiaries fails to perform, keep, or
observe any term, provision, condition, covenant, or agreement (i) contained in
Sections 2.7, 4.2, 4.4, 4.6, 6.3(e), 6.8, 6.12, 6.15 or 7 of this Agreement or
(ii) contained in any other provision of this Agreement or in any of the other
Loan Documents and, with respect solely to such provisions referred to in this
clause (ii), such default shall continue unremedied for a period of at least
fifteen (15) days from the date the failure of performance of non-compliance
occurred;
8.3 If any material portion of Borrower's or any of its Subsidiaries'
assets is attached, seized, subjected to a writ or distress warrant, levied
upon, or comes into the possession of any third Person;
8.4 If an Insolvency Proceeding is commenced by Borrower or any of its
Subsidiaries;
8.5 If an Insolvency Proceeding is commenced against Borrower, or any of
its Subsidiaries, and any of the following events occur: (a) Borrower or such
Subsidiary consents to the institution of such Insolvency Proceeding against it,
(b) the petition commencing the Insolvency Proceeding is not timely
controverted; provided, however, that,
during the pendency of such period, Lender shall be relieved of its obligations
to extend credit hereunder, (c) the petition commencing the Insolvency
Proceeding is not dismissed within 60 calendar days of the date of the filing
thereof; provided, however, that, during the pendency of such period, Lender
shall be relieved of its obligation to extend credit hereunder, (d) an interim
trustee is appointed to take possession of all or any substantial portion of the
properties or assets of, or to operate all or any substantial portion of the
business of, Borrower or any of its Subsidiaries, or (e) an order for relief
shall have been entered therein;
8.6 If Borrower or any of its Subsidiaries is enjoined, restrained, or in
any way prevented by court order from continuing to conduct all or any material
part of its business affairs;
8.7 If a notice of Lien, levy, or assessment is filed of record with
respect to any of Borrower's or any of its Subsidiaries' assets by the United
States, or any department, agency, or instrumentality thereof, or by any state,
county, municipal, or governmental agency, or, except as otherwise expressly
permitted by this Agreement, if at all, if any taxes or debts owing at any time
hereafter to any one or more of such entities becomes a Lien, whether ▇▇▇▇▇▇ or
otherwise, upon any of Borrower's or any of its Subsidiaries' assets and the
same is not paid before such payment is delinquent;
8.8 If a judgment or other claim becomes a Lien or encumbrance in an
amount in excess of $200,000 upon any material portion of Borrower's or any of
its Subsidiaries' assets, unless such judgment or claim is the subject of a
Permitted Protest;
8.9 If there is a default in any material agreement to which Borrower or
any of its Subsidiaries is a party and such default (a) occurs at the final
maturity of the obligations thereunder, or (b) results in a right by the other
party thereto, irrespective of whether exercised, to accelerate the maturity of
Borrower's or its Subsidiaries' obligations thereunder or to terminate such
agreement;
8.10 If Borrower or any of its Subsidiaries makes any payment on account
of Indebtedness that has been contractually subordinated in right of payment to
the payment of the Obligations, except to the extent such payment is permitted
by the terms of the subordination provisions applicable to such Indebtedness;
8.11 If any material misstatement or material misrepresentation exists as
of the date when made or deemed made, in any warranty, representation,
statement, or Record made to Lender by Borrower, its Subsidiaries, or any
officer, employee, agent, or director of Borrower or any of its Subsidiaries;
8.12 If this Agreement or any other Loan Document that purports to create
a Lien, shall, for any reason, fail or cease to create a valid and perfected
and, except to the extent permitted by the terms hereof or thereof, first
priority Lien on or security interest in the Collateral covered hereby or
thereby, except as a result of a disposition of the applicable Collateral in a
transaction permitted under this Agreement;
8.13 If there is a material breach or default of the Intercreditor
Agreement by any party thereto (other than the Lender) and, if such breach or
default is capable of being remedied (as determined by Lender in its Permitted
Discretion), such breach or default is not remedied within five (5) days of such
default;
8.14 Any provision of any Loan Document shall at any time for any reason
be declared to be null and void, which materially and adversely affects any of
Lender's rights under any such Loan Document as determined by Lender in its sole
and absolute determination, or the validity or enforceability thereof shall be
contested by Borrower or its Subsidiaries, or a proceeding shall be commenced by
Borrower or its Subsidiaries, or by any Governmental Authority having
jurisdiction over Borrower or its Subsidiaries seeking to establish the
invalidity or unenforceability thereof, or Borrower or its Subsidiaries, shall
deny that Borrower or its Subsidiaries has any liability or obligation purported
to be created under any Loan Document; or
8.16 If any breach or default shall occur under or pursuant to the
Indenture, the Notes or any of the Collateral Agreements, after expiration of
any cure period therein, if any.
9. LENDER'S RIGHTS AND REMEDIES.
9.1 RIGHTS AND REMEDIES. Upon the occurrence, and during the continuation,
of an Event of Default, Lender (at its election but without notice of its
election and without demand) may do any one or more of the following, all of
which are authorized by Borrower:
(a) Declare all or any portion of the Obligations, whether evidenced
by this Agreement, by any of the other Loan Documents, or otherwise, immediately
due and payable;
(b) Cease advancing money or extending credit to or for the benefit
of Borrower under this Agreement, under any of the Loan Documents, or under any
other agreement between Borrower and Lender;
(c) Terminate this Agreement and any of the other Loan Documents as
to any future liability or obligation of Lender, but without affecting any of
the Lender's Liens in the Collateral and without affecting the Obligations;
(d) Settle or adjust disputes and claims directly with Borrower's
Account Debtors for amounts and upon terms which Lender considers advisable, and
in such cases, Lender will credit Borrower's Loan Account with only the net
amounts received by Lender in payment of such disputed Accounts after deducting
all Lender Expenses incurred or expended in connection therewith;
(e) Cause Borrower to hold all of its returned Inventory in trust
for Lender and segregate all such Inventory from all other assets of Borrower or
in Borrower's possession;
(f) Without notice to or demand upon Borrower, make such payments
and do such acts as Lender considers necessary or reasonable to protect its
security interests in the Collateral. Borrower agrees to assemble the Collateral
if Lender so requires, and to make the Collateral available to Lender at a place
that Lender may designate which is reasonably convenient to both parties.
Borrower authorizes Lender to enter the premises where the Collateral is
located, to take and maintain possession of the Collateral, or any part of it,
and to pay, purchase, contest, or compromise any Lien that in Lender's
determination appears to conflict with the priority of Lender's Liens in and to
the Collateral and to pay all expenses incurred in connection therewith and to
charge Borrower's Loan Account therefor. With respect to any of Borrower's owned
or leased premises, Borrower hereby grants Lender a license to enter into
possession of such premises and to occupy the same, without charge, in order to
exercise any of Lender's rights or remedies provided herein, at law, in equity,
or otherwise;
(g) Without notice to Borrower (such notice being expressly waived),
and without constituting an acceptance of any collateral in full or partial
satisfaction of an obligation (within the meaning of the Code), set off and
apply to the Obligations any and all (i) balances and deposits of Borrower held
by Lender (including any amounts received in the Cash Management Accounts), or
(ii) Indebtedness at any time owing to or for the credit or the account of
Borrower held by Lender;
(h) Hold, as cash collateral, any and all balances and deposits of
Borrower held by Lender, and any amounts received in the Cash Management
Accounts, to secure the full and final repayment of all of the Obligations
(other than contingent indemnification obligations);
(i) Ship, reclaim, recover, store, finish, maintain, repair, prepare
for sale, advertise for sale, and sell (in the manner provided for herein) the
Borrower Collateral. Borrower hereby grants to Lender a license or other right
to use, without charge, Borrower's labels, patents, copyrights, trade secrets,
trade names, trademarks, service marks, and advertising matter, or any property
of a similar nature, as it pertains to the Borrower Collateral, in completing
production of, advertising for sale, and selling any Borrower Collateral and
Borrower's rights under all licenses and all franchise agreements shall inure to
Lender's benefit;
(j) Sell the Borrower Collateral at either a public or private sale,
or both, by way of one or more contracts or transactions, for cash or on terms,
in such manner and at such places (including Borrower's premises) as Lender
determines is commercially reasonable. It is not necessary that the Borrower
Collateral be present at any such sale;
(k) Except in those circumstances where no notice is required under
the Code, Lender shall give notice of the disposition of the Borrower Collateral
as follows:
(i) Lender shall give Borrower a notice in writing of the time
and place of public sale, or, if the sale is a private sale or some
other disposition other than a public sale is to be made of the
Borrower Collateral,
the time on or after which the private sale or other disposition is
to be made; and
(ii) The notice shall be personally delivered or mailed,
postage prepaid, to Borrower as provided in Section 12, at least 10
days before the earliest time of disposition set forth in the
notice; no notice needs to be given prior to the disposition of any
portion of the Borrower Collateral that is perishable or threatens
to decline speedily in value or that is of a type customarily sold
on a recognized market;
(l) Lender may credit bid and purchase at any public sale;
(m) Lender may seek the appointment of a receiver or keeper to take
possession of all or any portion of the Borrower Collateral or to operate same
and, to the maximum extent permitted by law, may seek the appointment of such a
receiver without the requirement of prior notice or a hearing; and
(n) Lender shall have all other rights and remedies available at law
or in equity or pursuant to any other Loan Document.
The foregoing to the contrary notwithstanding, upon the occurrence
of any Event of Default described in Section 8.4 or Section 8.5, in addition to
the remedies set forth above, without any notice to Borrower or any other Person
or any act by the Lender, Lender's obligation to extent credit hereunder shall
terminated and the Obligations then outstanding, together with all accrued and
unpaid interest thereon and all fees and all other amounts due under this
Agreement and the other Loan Documents, shall automatically and immediately
become due and payable, without presentment, demand, protest, or notice of any
kind, all of which are expressly waived by Borrower.
9.2 REMEDIES CUMULATIVE. The rights and remedies of Lender under this
Agreement, the other Loan Documents, and all other agreements shall be
cumulative. Lender shall have all other rights and remedies not inconsistent
herewith as provided under the Code, by law, or in equity. No exercise by Lender
of one right or remedy shall be deemed an election, and no waiver by Lender of
any Event of Default shall be deemed a continuing waiver. No delay by Lender
shall constitute a waiver, election, or acquiescence by it.
10. TAXES AND EXPENSES.
If Borrower fails to pay any monies (whether taxes, assessments,
insurance premiums, or, in the case of leased properties or assets, rents or
other amounts payable under such leases) due to third Persons, or fails to make
any deposits or furnish any required proof of payment or deposit, in each case,
to the extent required under the terms of this Agreement, then, Lender, in its
sole discretion and without prior notice to Borrower, may do any or all of the
following: (a) make payment of the same or any part thereof, (b) set up such
reserves against the Borrowing Base or the Maximum Revolver Amount as Lender
deems necessary
to protect Lender from the exposure created by such failure, or (c) in the case
of the failure to comply with Section 6.8 hereof, if an Event of Default shall
occur and be continuing, obtain and maintain insurance policies of the type
described in Section 6.8 and take any action with respect to such policies as
Lender deems prudent. Any such amounts paid by Lender shall constitute Lender
Expenses and any such payments shall not constitute an agreement by Lender to
make similar payments in the future or a waiver by Lender of any Event of
Default under this Agreement. Lender need not inquire as to, or contest the
validity of, any such expense, tax, or Lien and the receipt of the usual
official notice for the payment thereof shall be conclusive evidence that the
same was validly due and owing.
11. WAIVERS; INDEMNIFICATION.
11.1 DEMAND; PROTEST. Borrower waives demand, protest, notice of protest,
notice of default or dishonor, notice of payment and nonpayment, nonpayment at
maturity, release, compromise, settlement, extension, or renewal of documents,
instruments, chattel paper, and guarantees at any time held by Lender on which
Borrower may in any way be liable.
11.2 LENDER'S LIABILITY FOR BORROWER COLLATERAL. Borrower hereby agrees
that: (a) so long as Lender complies with its obligations, if any, under the
Code, Lender shall not in any way or manner be liable or responsible for: (i)
the safekeeping of the Borrower Collateral, (ii) any loss or damage thereto
occurring or arising in any manner or fashion from any cause, (iii) any
diminution in the value thereof, or (iv) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other Person, and (b) all risk of
loss, damage, or destruction of the Borrower Collateral shall be borne by
Borrower.
11.3 INDEMNIFICATION. Borrower shall pay, indemnify, defend, and hold the
Lender-Related Persons, and each Participant (each, an "Indemnified Person")
harmless (to the fullest extent permitted by law) from and against any and all
claims, demands, suits, actions, investigations, proceedings, and damages, and
all reasonable attorneys fees and disbursements and other costs and expenses
actually incurred in connection therewith or in connection with the enforcement
of this indemnification (as and when they are incurred and irrespective of
whether suit is brought), at any time asserted against, imposed upon, or
incurred by any of them (a) in connection with or as a result of or related to
the execution, delivery, enforcement, performance, or administration (including
any restructuring or workout with respect hereto) of this Agreement, any of the
other Loan Documents, or the transactions contemplated hereby or thereby, and
(b) with respect to any investigation, litigation, or proceeding related to this
Agreement, any other Loan Document, or the use of the proceeds of the credit
provided hereunder (irrespective of whether any Indemnified Person is a party
thereto), or any act, omission, event, or circumstance in any manner related
thereto (all the foregoing, collectively, the "Indemnified Liabilities"). The
foregoing to the contrary notwithstanding, Borrower shall have no obligation to
any Indemnified Person under this Section 11.3 with respect to any Indemnified
Liability that a court of competent jurisdiction finally determines to have
resulted from the gross negligence or willful misconduct of such Indemnified
Person. This provision shall survive the termination of this Agreement and the
repayment of the Obligations. If any Indemnified Person makes any
payment to any other Indemnified Person with respect to an Indemnified Liability
as to which Borrower was required to indemnify the Indemnified Person receiving
such payment, the Indemnified Person making such payment is entitled to be
indemnified and reimbursed by Borrower with respect thereto. WITHOUT LIMITATION,
THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO
INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF
ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY OTHER PERSON.
12. NOTICES.
Unless otherwise provided in this Agreement, all notices or demands
by Borrower or Lender to the other relating to this Agreement or any other Loan
Document shall be in writing and (except for financial statements and other
informational documents which may be sent by first-class mail, postage prepaid)
shall be personally delivered or sent by registered or certified mail (postage
prepaid, return receipt requested), overnight courier, electronic mail (at such
email addresses as Borrower or Lender, as applicable, may designate to each
other in accordance herewith), or telefacsimile to Borrower or Lender, as the
case may be, at its address set forth below:
If to Borrower: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
____________________________________
Attn: President and General Counsel
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
with copies to: Jenner & Block LLP
▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq. and ▇▇▇▇
▇▇▇▇▇▇▇▇▇, Esq.
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇ and (▇▇▇) ▇▇▇-▇▇▇▇
If to Lender: ▇▇▇▇▇ FARGO FOOTHILL, INC.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Business Finance Manager
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
with copies to: ▇▇▇▇▇ ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
Lender and Borrower may change the address at which they are to
receive notices hereunder, by notice in writing in the foregoing manner given to
the other party. All notices or demands sent in accordance with this Section 12,
other than notices by Lender in connection with enforcement rights against the
Borrower Collateral under the provisions of the Code, shall be deemed received
on the earlier of the date of actual receipt or 3 Business Days after the
deposit thereof in the mail. Borrower acknowledges and agrees that notices sent
by Lender in connection with the exercise of enforcement rights against Borrower
Collateral under the provisions of the Code shall be deemed sent when deposited
in the mail or personally delivered, or, where permitted by law, transmitted by
telefacsimile or any other method set forth above; provided, that with respect
to transmission via (i) telefacsimile, Lender shall have received confirmation
of delivery or (ii) electronic mail, Lender shall not have received notice that
such transmission was not delivered..
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
(UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT
OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT
HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH
RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR
THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF ILLINOIS.
(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND
LITIGATED ONLY IN THE STATE AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
FEDERAL COURTS LOCATED IN THE COUNTY OF ▇▇▇▇, STATE OF ILLINOIS, PROVIDED,
HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER
PROPERTY MAY BE BROUGHT, AT LENDER'S OPTION, IN THE COURTS OF ANY JURISDICTION
WHERE LENDER ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER
PROPERTY MAY BE FOUND. BORROWER AND LENDER WAIVE, TO THE EXTENT PERMITTED UNDER
APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON
CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN
ACCORDANCE WITH THIS SECTION 13(b).
(c) BORROWER AND LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF
THE LOAN DOCUMENTS
OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS.
BORROWER AND LENDER REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE
FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
14.1 ASSIGNMENTS AND PARTICIPATIONS.
(a) Lender may assign and delegate to one or more assignees (each an
"Assignee") that are Eligible Transferees all, or any ratable part of all, of
the Obligations and the other rights and obligations of Lender hereunder and
under the other Loan Documents, in a minimum amount of $5,000,000; provided,
however, that Borrower may continue to deal solely and directly with Lender in
connection with the interest so assigned to an Assignee until (i) written notice
of such assignment, together with payment instructions, addresses, and related
information with respect to the Assignee, have been given to Borrower by Lender
and the Assignee, and (ii) Lender and its Assignee have delivered to Borrower an
assignment and acceptance. Anything contained herein to the contrary
notwithstanding, the Assignee need not be an Eligible Transferee if such
assignment is in connection with any merger, consolidation, sale, transfer, or
other disposition of all or any substantial portion of the business or loan
portfolio of the assigning Lender.
(b) From and after the date that Lender provides Borrower with such
written notice and executed assignment and acceptance, (i) the Assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such assignment and
acceptance, shall have the rights and obligations of a Lender under the Loan
Documents, and (ii) the Lender shall, to the extent that rights and obligations
hereunder and under the other Loan Documents have been assigned by it pursuant
to such assignment and acceptance, relinquish its rights (except with respect to
Section 11.3 hereof) and be released from any future obligations under this
Agreement (and in the case of an assignment and acceptance covering all or the
remaining portion of an assigning Lender's rights and obligations under this
Agreement and the other Loan Documents, such Lender shall cease to be a party
hereto and thereto), and such assignment shall effect a novation between
Borrower and the Assignee; provided, however, that nothing contained herein
shall release any assigning Lender from obligations that survive the termination
of this Agreement, including such assigning Lender's obligations under Section
16.8 of this Agreement.
(c) Immediately upon Borrower's receipt of such fully executed
assignment and acceptance agreement, this Agreement shall be deemed to be
amended to the
extent, but only to the extent, necessary to reflect the addition of the
Assignee and the resulting adjustment of the rights and duties of Lender arising
therefrom.
(d) Lender may at any time sell to one or more commercial banks,
financial institutions, or other Persons not Affiliates of Lender (a
"Participant") participating interests in Obligations and the other rights and
interests of Lender hereunder and under the other Loan Documents; provided,
however, that (i) Lender shall remain the "Lender" for all purposes of this
Agreement and the other Loan Documents and the Participant receiving the
participating interest in the Obligations and the other rights and interests of
Lender hereunder shall not constitute a "Lender" hereunder or under the other
Loan Documents and Lender's obligations under this Agreement shall remain
unchanged, (ii) Lender shall remain solely responsible for the performance of
such obligations, (iii) Borrower and Lender shall continue to deal solely and
directly with each other in connection with Lender's rights and obligations
under this Agreement and the other Loan Documents, (iv) Lender shall not
transfer or grant any participating interest under which the Participant has the
right to approve any amendment to, or any consent or waiver with respect to,
this Agreement or any other Loan Document, except to the extent such amendment
to, or consent or waiver with respect to this Agreement or of any other Loan
Document would (A) extend the final maturity date of the Obligations hereunder
in which such Participant is participating, (B) reduce the interest rate
applicable to the Obligations hereunder in which such Participant is
participating, (C) release all or substantially all of the Collateral or
guaranties (except to the extent expressly provided herein or in any of the Loan
Documents) supporting the Obligations hereunder in which such Participant is
participating, (D) reduce the amount of, the interest or fees payable to such
Participant through Lender, or (E) change the amount or due dates of scheduled
principal repayments or prepayments or premiums, and (v) all amounts payable by
Borrower hereunder shall be determined as if Lender had not sold such
participation, except that, if amounts outstanding under this Agreement are due
and unpaid, or shall have been declared or shall have become due and payable
upon the occurrence of an Event of Default, each Participant shall be deemed to
have the right of set-off in respect of its participating interest in amounts
owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement. The rights of any Participant only shall be derivative through Lender
and no Participant shall have any rights under this Agreement or the other Loan
Documents or any direct rights as to Borrower, the Collections of Borrower or
its Subsidiaries, the Collateral, or otherwise in respect of the Obligations. No
Participant shall have the right to participate directly in the making of
decisions by Lender.
(e) In connection with any such assignment or participation or
proposed assignment or participation, Lender may, subject to the provisions of
Section 16.8, disclose all documents and information which it now or hereafter
may have relating to Borrower and its Subsidiaries and their respective
businesses.
(f) Any other provision in this Agreement notwithstanding, Lender
may at any time create a security interest in, or pledge, all or any portion of
its rights under and interest in this Agreement in favor of any Federal Reserve
Bank in accordance with
Regulation A of the Federal Reserve Bank or U.S. Treasury Regulation 31 CFR
Section 203.24, and such Federal Reserve Bank may enforce such pledge or
security interest in any manner permitted under applicable law.
14.2 SUCCESSORS. This Agreement shall bind and inure to the benefit of the
respective successors and assigns of each of the parties; provided, however,
that except as otherwise expressly permitted pursuant to Section 7.3, if at all
[to discuss], Borrower may not assign this Agreement or any rights or duties
hereunder without Lender's prior written consent and any prohibited assignment
shall be absolutely void ab initio. No consent to assignment by Lender shall
release Borrower from its Obligations. Lender may assign this Agreement and the
other Loan Documents and its rights and duties hereunder and thereunder pursuant
to Section 14.1 hereof and, except as expressly required pursuant to Section
14.1 hereof, no consent or approval by Borrower is required in connection with
any such assignment.
15. AMENDMENTS; WAIVERS.
15.1 AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of
this Agreement or any other Loan Document (other than Bank Product Agreements),
and no consent with respect to any departure by Borrower therefrom, shall be
effective unless the same shall be in writing and signed by Lender and Borrower
and then any such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
15.2 NO WAIVERS; CUMULATIVE REMEDIES. No failure by Lender to exercise any
right, remedy, or option under this Agreement or any other Loan Document, or
delay by Lender in exercising the same, will operate as a waiver thereof. No
waiver by Lender will be effective unless it is in writing, and then only to the
extent specifically stated. No waiver by Lender on any occasion shall affect or
diminish Lender's rights thereafter to require strict performance by Borrower of
any provision of this Agreement. Lender's rights under this Agreement and the
other Loan Documents will be cumulative and not exclusive of any other right or
remedy that Lender may have.
16. GENERAL PROVISIONS.
16.1 EFFECTIVENESS. This Agreement shall be binding and deemed effective
when executed by Borrower and Lender.
16.2 SECTION HEADINGS. Headings and numbers have been set forth herein for
convenience only. Unless the contrary is compelled by the context, everything
contained in each Section applies equally to this entire Agreement.
16.3 INTERPRETATION; GOVERNMENT REGULATION. Neither this Agreement nor any
uncertainty or ambiguity herein shall be construed against Lender or Borrower,
whether under any rule of construction or otherwise. On the contrary, this
Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary
meaning of the words used so as to accomplish fairly the purposes and intentions
of all parties hereto. Anything contained in this Agreement to the contrary
notwithstanding, Lender shall not be obligated to extend credit to the Borrower
in violation of any limitation or prohibition provided by any applicable
statute, regulation or law.
16.4 SEVERABILITY OF PROVISIONS. Each provision of this Agreement shall be
severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.
16.5 WITHHOLDING TAXES. All payments made by Borrower hereunder or under
any note or other Loan Document will be made without setoff, counterclaim, or
other defense. In addition, all such payments will be made free and clear of,
and without deduction or withholding for, any present or future Taxes, and in
the event any deduction or withholding of Taxes is required, Borrower shall
comply with the penultimate sentence of this Section 16.5, "Taxes" shall mean,
any taxes, levies, imposts, duties, fees, assessments or other charges of
whatever nature now or hereafter imposed by any jurisdiction or by any political
subdivision or taxing authority thereof or therein with respect to such payments
(but excluding, any tax imposed by any jurisdiction or by any political
subdivision or taxing authority thereof or therein measured by or based on the
net income or net profits of Lender) and all interest, penalties or similar
liabilities with respect thereto. If any Taxes are so levied or imposed,
Borrower agrees to pay the full amount of such Taxes, and such additional
amounts as may be necessary so that every payment of all amounts due under this
Agreement, any note, or Loan Document, including any amount paid pursuant to
this Section 16.5 after withholding or deduction for or on account of any Taxes,
will not be less than the amount provided for herein; provided, however, that
Borrower shall not be required to increase any such amounts if the increase in
such amount payable results from Lender's own willful misconduct or gross
negligence (as finally determined by a court of competent jurisdiction).
Borrower will furnish to Lender as promptly as possible after the date the
payment of any Tax is due pursuant to applicable law certified copies of tax
receipts evidencing such payment by Borrower.
16.6 COUNTERPARTS; ELECTRONIC EXECUTION. This Agreement may be executed in
any number of counterparts and by different parties on separate counterparts,
each of which, when executed and delivered, shall be deemed to be an original,
and all of which, when taken together, shall constitute but one and the same
Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile or other electronic method of transmission shall be equally as
effective as delivery of an original executed counterpart of this Agreement. Any
party delivering an executed counterpart of this Agreement by telefacsimile or
other electronic method of transmission also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document mutatis
mutandis.
16.7 REVIVAL AND REINSTATEMENT OF OBLIGATIONS. If the incurrence or
payment of the Obligations by Borrower or the transfer to Lender of any property
should for any reason
subsequently be declared to be void or voidable under any state or federal law
relating to creditors' rights, including provisions of the Bankruptcy Code
relating to fraudulent conveyances, preferences, or other voidable or
recoverable payments of money or transfers of property (collectively, a
"Voidable Transfer"), and if Lender is required to repay or restore, in whole or
in part, any such Voidable Transfer, or elects to do so upon the reasonable
advice of its counsel, then, as to any such Voidable Transfer, or the amount
thereof that Lender is required or elects to repay or restore, and as to all
reasonable costs, expenses, and attorneys fees of Lender related thereto, the
liability of Borrower automatically shall be revived, reinstated, and restored
and shall exist as though such Voidable Transfer had never been made.
16.8 CONFIDENTIALITY.
Lender agrees that material, non-public information regarding
Borrower and its Subsidiaries, their operations, assets, and existing and
contemplated business plans shall be treated by Lender in a confidential manner,
and shall not be disclosed by Lender to Persons who are not parties to this
Agreement, except: (a) to attorneys for and other advisors, accountants,
auditors, and consultants to Lender, provided that any such Subsidiary or
Affiliate shall have agreed to receive such information hereunder subject to the
terms of this Section 16.8, (b) to Subsidiaries and Affiliates of Lender
(including the Bank Product Providers), provided that any such Subsidiary or
Affiliate shall have agreed to receive such information hereunder subject to the
terms of this Section 16.8, (c) as may be required by statute, decision or
judicial or administrative order, rule, or regulation, provided that prior to
such disclosure as a result of a decision or judicial or administrative order
Borrower shall be given notice of such requirement and provided to time to file
and objection, (d) as may be agreed to in advance by Borrower or its
Subsidiaries or as requested or required by any Governmental Authority pursuant
to any subpoena or other legal process, provided that prior to such disclosure
Borrower shall be given notice or such subpoena or other legal process and
provided time to file an objection, (e) as to any such information that is or
becomes generally available to the public (other than as a result of disclosure
prohibited by this Section 16.8), (f) in connection with any assignment,
prospective assignment, sale, prospective sale, participation or prospective
participations, or pledge or prospective pledge of Lender's interest under this
Agreement, provided that any such assignee, prospective assignee, purchaser,
prospective purchaser, participant, prospective participant, pledgee, or
prospective pledgee shall have agreed in writing to receive such information
hereunder subject to the terms of this Section, and (g) in connection with any
litigation or other adversary proceeding involving parties hereto which such
litigation or adversary proceeding involves claims related to the rights or
duties of such parties under this Agreement or the other Loan Documents. The
provisions of this Section 16.8 shall survive for 2 years after the payment in
full of the Obligations.
16.9 INTEGRATION. This Agreement, together with the other Loan Documents,
reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.
16.10 INTERCREDITOR AGREEMENT.
(a) The Liens granted hereunder in favor of Lender for the benefit
of itself and the Bank Product Providers in respect of the Collateral and the
exercise of any right related thereto thereby shall be subject, in each case, to
the terms of the Intercreditor Agreement.
(b) In the event of any direct conflict between the express terms
and provisions of this Agreement and of the Intercreditor Agreement, the terms
and provisions of the Intercreditor Agreement shall control.
(c) Notwithstanding anything to the contrary herein, any provision
hereof that requires any Borrower to (i) deliver any Collateral to Lender or
(ii) provide that the Lender have control over such Collateral may be satisfied
by (A) the delivery of such Collateral by such Borrower to the Lender for the
benefit of the Lender and the Bank Product Providers and Collateral Agent for
the benefit of itself, the Trustee and the Holders (as defined in the Indenture)
pursuant to Section 3.03 of the Intercreditor Agreement and (B) providing that
the Lender be provided with control with respect to such Collateral of such
Borrower for the benefit of the Lender and the Bank Product Providers and
Collateral Agent for the benefit of itself, the Trustee and the Holders pursuant
to Section 3.03 of the Intercreditor Agreement.
[Signature pages to follow.]
IN WITNESS WHEREOF, the parties hereto have caused this Loan and
Security Agreement to be executed and delivered as of the date first above
written.
VISKASE COMPANIES, INC.
a Delaware corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
▇▇▇▇▇ FARGO FOOTHILL, INC.,
a California corporation, as Lender
By: _____/s/_________________
Title: Vice President