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LOAN AGREEMENT
By and Among
BOSS HOLDINGS, INC.,
as Borrower,
BOSS MANUFACTURING COMPANY,
as Borrower,
and
AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO,
as Bank
Dated as of June 16, 2000
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TABLE OF CONTENTS
1. DEFINITIONS AND INITIAL TERMS 1
1.1 Certain Definitions 1
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1.2 Certain UCC and Accounting Terms 10
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1.3 Certain Matters of Construction 10
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2. LOANS: BANK'S COMMITMENTS AND BORROWING PROCEDURES 11
2.1 Revolving Credit Commitment 11
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2.2 Borrowing Procedures for Revolving Loans 11
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2.3 Procedures for Letter of Credits 12
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2.4 Limitation on Borrowings Made and Letters of Credit Issued
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Under the Revolving Credit Commitment 12
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2.5 Rollovers 12
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2.6 Authorized Officers 12
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3. LOANS: NOTES EVIDENCING LOANS: JOINT AND SEVERAL OBLIGATIONS 13
3.1 Revolving Note 13
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3.2 Recordation 13
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3.3 Joint and Several Liability; Extent of Obligations 13
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4. LOANS: INTEREST; LETTER OF CREDIT FEES; AVAILABILITY FEES 13
4.1 Interest Rates 13
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4.2 Computation of Interest 14
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4.3 Interest Laws 14
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4.4 Letter of Credit Fee 14
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4.5 Availability Fee 14
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5. LOANS: GENERAL INITIAL TERMS 15
5.1 Payments to Bank 15
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5.2 Automatic Debit 16
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5.3 Conditions Precedent 17
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5.4 Offset 17
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5.5 Discretionary Disbursements 18
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5.6 Termination Date; Continuance of Obligations, Etc. 18
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6. LOANS: CONDITIONS TO LENDING 18
6.1 Initial Loan Conditions Precedent 18
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6.2 Further Loan Conditions Precedent 19
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7. REPRESENTATIONS AND WARRANTIES; COVENANTS 20
7.1 Representations and Warranties of Borrowers 20
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7.2 Affirmative Covenants 23
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7.3 Negative Covenants 26
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7.4 Financial Covenants 28
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7.5 Maintenance of Accounts 29
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7.6 Clean Down Requirement 29
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7.7 Bank Accounts 29
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8. DEFAULT 29
8.1 Events of Default 29
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8.2 Cumulative Remedies 31
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8.3 Suspension of Commitment; Acceleration and Early Termination
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of Loans 31
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8.4 Manner of Application: Waiver of Setoff Prohibition 31
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9. GENERAL 31
9.1 Payment Application Date 31
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9.2 Survival of Representations and Warranties 31
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9.3 Integration; Amendment; Assignment; Participation 31
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9.4 No Waiver 32
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9.5 Severability 32
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9.6 Successors and Assigns 32
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9.7 Conflict with Other Agreements 33
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9.8 No Impairment by Termination 33
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9.9 Waivers 33
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9.10 Indemnification 33
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9.11 Governing Law 34
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9.12 Notices 34
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9.13 FORUM; AGENT; VENUE; JURY TRIAL WAIVER 35
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9.14 Reimbursement of Expenses 35
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9.15 Revival 36
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9.16 Confidentiality of Information 36
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9.17 Acknowledgments 37
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9.18 Headings 37
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9.19 Counterparts; Facsimile 37
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9.20 Governing Agreement 37
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EXHIBITS
Exhibit 2.2 Borrower Request
Exhibit 3.1 Revolving Note
Exhibit 6.1(a)(ii) Security Agreement
Exhibit 6.1(a)(vi) Borrowing Base Certificate
Exhibit 6.1(b)(i) Guaranty
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Exhibit 7.2(d)(viii) Compliance Statement
SCHEDULES
Schedule 1.1 Entities Exempt from Change in Control
Schedule 7.1(e) Material Contingent Obligations
Schedule 7.1(f) Litigation
Schedule 7.1(l) Authorized Representatives
Schedule 7.1(n) Environmental Matters
Schedule 7.1(r) Subsidiaries
Schedule 7.1(s) Labor Matters
Schedule 7.1(v) Insurance Policies
Schedule 7.1(x) Capital Structure
Schedule 7.3(a)(v) Liens
Schedule 7.3(g) Debt
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LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Agreement") is made as of the 16th day of
June, 2000, by and among Boss Holdings, Inc., a Delaware corporation, and
Boss Manufacturing Company, a Delaware corporation (each individually, and a
"Borrower" and collectively the "Borrowers"), and AMERICAN NATIONAL BANK AND
TRUST COMPANY OF CHICAGO, a national banking association ("Bank").
WITNESSETH:
WHEREAS, Borrowers desire to borrow funds and to obtain other financial
accommodations, among other things, to refinance existing debt, to cause
certain letters of credit to be issued by Bank, to finance certain working
capital needs and to provide funds for general business purposes of the
Borrowers;
WHEREAS, on the terms and subject to the conditions contained in this
Agreement, Bank is willing to provide such financing and financial
accommodations; and
WHEREAS, Bank and Borrowers are desirous of fully setting forth their
rights and obligations with respect to the loans to, and borrowings by,
Borrowers.
NOW, THEREFORE, in consideration of the premises, the mutual covenants
and agreements set forth herein, Borrowers agree to borrow from Bank, and
Bank agrees to lend to Borrowers, subject to and upon the following terms and
conditions:
1. DEFINITIONS AND INITIAL TERMS
1.1 Certain Definitions. The following words, terms and/or phrases
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shall have the meanings set forth thereafter and such meanings shall be
applicable to the singular and plural form thereof, giving effect to the
numerical difference.
"Account Debtor" shall have the meaning assigned such term in the
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Security Agreement.
"Accounting Changes" shall have the meaning assigned to such term in
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paragraph 1.2 hereof.
"Adjusted LIBOR Rate" shall mean the LIBOR Rate plus 2.10% per annum.
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"Affiliate" means with respect to any Person, (i) each Person that,
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directly or indirectly, owns or controls, whether beneficially, or as a
trustee, guardian or other fiduciary, twenty percent (20%) or more of the
stock having ordinary voting power in the election of directors, (ii) each
Person that controls, is controlled by or is under common control with such
Person or any Affiliate of such Person, and (iii) each of such Person's
officers, directors, and partners. For the purposes of this definition,
"control" of a Person shall mean the possession, directly or indirectly, of
the power to direct or cause the direction of its management or policies,
whether through the ownership of voting securities, by contract or otherwise.
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"Authorized Officer" means any individual identified on Schedule 7.1(1)
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hereto who is authorized to act on behalf of the Borrower.
"Bankruptcy Code" means Title 11 of the United States Code, as amended.
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"Base Rate" means at any time and from time to time the rate of interest
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per annum which Bank most recently announces as its corporate base rate in
Chicago, Illinois, which rate shall not necessarily be the lowest rate of
interest which Bank charges its customers. The rate of interest shall change
automatically and immediately as and when the Base Rate shall change, without
notice to the Borrower, and any notice to which it may be entitled is hereby
waived, and any such change in Bank's Base Rate shall not affect any of the
terms and conditions of this Agreement, all of which remain in full force and
effect.
"Borrowed Debt" shall mean items (i) through (iv) in the definition of
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Debt provided with respect to item (iii), Borrowed Debt shall not include
trade payables incurred in the ordinary course of business.
"Borrower Request" has the meaning assigned to such term in Paragraph 2.2
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hereof.
"Borrowers' Liabilities" means all Revolving Loans and all other
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advances, letter of credit reimbursement obligations and/or debts,
liabilities, obligations, covenants and duties owing, arising, due or payable
from or by Borrowers to Bank of any kind or nature, present or future,
whether or not evidenced by any note, guaranty or other instrument, whether
arising under this Agreement or any of the Other Agreements or operation of
law or otherwise, whether direct or indirect (including those acquired by
assignment), absolute or contingent, primary or secondary, due or to become
due, now existing or hereafter arising and however evidenced, created
incurred or acquired. The term includes, without limitation, all interest
charges, late payment charges, expenses, fees, legal fees and any other sums
chargeable to Borrower under this Agreement or any of the Other Agreements.
"Borrowing Base" means, as of any time the same is to be determined 80%
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of Eligible Receivables and 40% of Eligible Inventory provided, however, that
(i) advances relying upon Eligible Inventory shall not exceed a maximum of
$2,000,000 during the time period October 1, through December 31, and January
1, through May 30th of each year and a maximum of $4,000,000 during the time
period of June 1st, through September 30th of each year; (ii) advances
relying upon Eligible Receivables and Eligible Inventory included in the
Borrowing Base from Boss Balloon Company shall not exceed $1,000,000 and
(iii) advances relying upon the Eligible Inventory and Eligible Receivables
included in the Borrowing Base from Boss Manufacturing Holdings, Inc. shall
not exceed $1,500,000.
"Business Day" means any day on which Bank is open for the transaction of
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commercial banking business in Chicago, Illinois other than a Saturday or
Sunday.
"Cash Collateral Account" means a cash collateral account maintained by
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the Borrowers at Bank to which all payments on items received in the Lockbox
shall be deposited.
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"Change of Control" means the occurrence of any of the following events
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(whether or not approved by the Board of Directors of the Borrower): (i) any
Person, including any group acting for the purpose of acquiring, holding or
disposing of securities, is or becomes the beneficial owner, directly or
indirectly, of more than 25% of the total voting power of the then
outstanding voting stock of the Borrower or (ii) the Borrower consolidates or
merges into another Person and is not the survivor in the merger.
Notwithstanding the foregoing, the entities appearing on Schedule 1.1 may
acquire any percentage as a group or individually without such acquisition
constituting a Change in Control.
"Closing Date" means June 16, 2000.
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"Code" means the Internal Revenue Code of 1986, as amended.
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"Commitment Letter" means the letter dated April 27, 2000 from Bank to
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Boss Holdings, Inc., regarding this Agreement.
"Current Ratio" means as of any date, the ratio equal to (i) current
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assets less prepaid expenses as determined in conformity with GAAP
consistently applied to (ii) current liabilities less the current portion of
deferred revenues as determined in conformity with GAAP consistently applied
plus, to the extent not included in current liabilities, all outstanding
Revolving Loans.
"Debt" means all of a Person's liabilities, obligations and indebtedness
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to any Person of any and every kind and nature, whether primary, secondary,
direct, indirect, absolute, contingent, fixed or otherwise, heretofore, now
and/or from time to time hereafter owing, due or payable, however evidenced,
created, incurred, acquired or owing and however arising, whether under
written or oral agreement, by operation of law or otherwise. Without in any
way limiting the generality of the foregoing, Debt specifically includes (i)
indebtedness for borrowed money, (ii) obligations evidenced by bonds,
debentures, notes or other similar instruments, (iii) obligations to pay the
deferred purchase price of property or services, (iv) obligations as lessee
under leases which shall have been or should be, in accordance with GAAP,
recorded as capital leases, (v) obligations under direct or indirect
guaranties in respect of, and obligations (contingent or otherwise) to
purchase or otherwise acquire, or otherwise to assure a creditor against loss
in respect of, indebtedness or obligations of others of the kinds referred to
in clauses (i) through (iv) above, and (vi) liabilities in respect of
unfunded vested benefits under Plans and Multiemployer Plans covered by Title
IV of ERISA.
"Debt to Tangible Net Worth Ratio" means as of any date, the ratio equal
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to (i) all obligations of Parent and its Subsidiaries which are (or, as of
such date, should be) accounted for as indebtedness on the consolidated
balance sheet of Parent in conformity with GAAP consistently applied whether
such obligations are classified as long term or short term under GAAP
consistently applied to (ii) Tangible Net Worth.
"Debt Service Coverage Ratio" means a ratio, calculated on a consolidated
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basis of the Parent equal to (i) the sum of Net Income on a consolidated
basis plus, interest expense, amortization and depreciation expenses less
unfinanced capital expenditures, and dividends to (ii)
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the sum of interest expense plus scheduled principal payments on long term
debt and capital leases, all in accordance with GAAP.
"Default" means any event or condition the occurrence of which would,
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with the lapse of time or the giving of notice, or both, become an Event of
Default.
"Default Rate" shall have the meaning assigned to such term in Paragraph
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4.1(c) hereof.
"Early Termination Date" means the date, pursuant to Paragraph 8.3, upon
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which, whether by notice or by right hereunder, Bank's obligation to extend
credit hereunder is terminated.
"Eligible Inventory" means Inventory of Borrowers, Boss Balloon Company
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and Boss Manufacturing Holdings, Inc. except that, the following Inventory is
not Eligible Inventory:
(a) Inventory which is work-in-process;
(b) Inventory which is obsolete or damaged, or not useful;
(c) Inventory in which Bank does not have a first perfected
security interest or in which any other Person claims a security interest
or lien;
(d) Inventory which is in transit or in locations other than
described in Borrowers Security Agreement;
(e) Inventory which is uninsured;
(f) Inventory which is held on consignment for or is subject to a
bailment arrangement with any other Person;
(g) Inventory which is used in packaging or shipping of Inventory
or in displays.
"Eligible Receivables" means any receivable of either Borrower or of Boss
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Balloon or Boss Manufacturing Holdings, Inc., so long as such companies are
Guarantors and provided that the Borrowers and such Guarantors have delivered
a Security Agreement as required herein, that:
(a) is denominated and payable in United States Dollars, and
owing by an account debtor who is a resident of the United States;
(b) is the valid, binding and legally enforceable obligation of
the account debtor obligated thereon and such account debtor is not (i) a
Subsidiary or an Affiliate of the Borrowers or any Subsidiary of the
Borrowers, (ii) a shareholder, director, officer or employee of the
Borrowers, any Guarantor or any of their Subsidiaries or Affiliates or
(iii) the United States of America or any department, agency or
instrumentality thereof unless the Borrowers or such Subsidiary has
complied with the Assignment of Claims Act to the satisfaction of the
Bank;
(c) is not evidenced by chattel paper or an instrument;
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(d) is an asset of the Borrower or such Subsidiary to which it
has good and marketable title, is assignable, and is subject to an
enforceable Lien pursuant to the Security Agreement in favor of the Bank
free and clear of any other liens;
(e) is not subject to any rebate, refund (except as may be
required upon prepayment of the underlying loan obligation), reduction,
credit or allowance of any kind except that receivables subject to a
rebate of 10% or less customarily granted may be included after deduction
for such portion subject to rebate;
(f) is not subject to any asserted right of rescission, offset,
counterclaim or other defense with respect thereto and that any amounts
represented as owing with respect to such receivable are true and
correctly stated;
(g) is not owed by an account debtor who is obligated on accounts
owed to the Borrower or such Subsidiary if 10% of all amounts owing is
unpaid more than 90 days after the contractual date (without regard to
any stated grace period) and, if less than 10% is overdue, such portion
which is overdue shall not be an Eligible Receivable;
(h) all representations of the Borrower or such Subsidiary
with respect to such receivable in the Security Agreement are true and
correct;
(i) was created in accordance with, and is subject to loan
and security documentation which complies in all respects with, all
applicable federal, state and local laws, rules and regulations; and
(j) is not a receivable which Bank in its reasonable business
judgment deems unacceptable.
"Environmental Claim" means any notice of violation, claim, demand,
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abatement order or other order or direction (conditional or otherwise) by any
governmental authority for any damage, including, without limitation,
personal injury (including sickness, disease or death), tangible or
intangible property damage, contribution, indemnity, indirect or
consequential damages, damage to the environment, nuisance, pollution,
release of any Hazardous Material into the environment, contamination or
other adverse effects on the environment, or for fines, penalties or
restrictions, resulting from or based upon (i) the occurrence of a Release
(whether sudden or non-sudden or accidental or non-accidental) of, or
exposure to, any Hazardous Material, in, into or onto the environment at, in,
by, from, onto or related to any Facility, (ii) the generation, use,
handling, transportation, storage, treatment or disposal of Hazardous
Materials in connection with the operation of any Facility, or (iii) the
violation, or alleged violation, of any Environmental Laws or any
Governmental Authorizations relating to environmental matters in connection
with the Facilities.
"Environmental Laws" means all statutes, ordinances, orders, rules,
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regulations, or decrees and the like relating to (i) environmental matters,
including, without limitation, those relating to fines, injunctions,
penalties, damages, contribution, cost recovery compensation, losses or
injuries
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resulting from the Release or threatened Release of Hazardous Materials, (ii)
the generation, use, handling, transportation, storage, treatment or disposal
of Hazardous Materials or (iii) occupational safety and health, industrial
hygiene, land use or the protection of human, plant or animal health or
welfare related to Hazardous Materials, in any manner applicable to Borrower
or any of its properties, including, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act (42 U.S.C. Sec.9601
et seq.), the Hazardous Materials Transportation Act (49 U.S.C. Sec.1801 et
seq.), the Resource Conservation and Recovery Act (42 U.S.C. Sec.6901 etc.),
the Federal Water Pollution Control Act (33 U.S.C. Sec.1251 et seq.), the
Clean Air Act (42 X.X.X Xxx.0000 et seq.), the Toxic Substances Control Act
(15 U.S.C. Sec.2601 et seq.), the Occupational Safety and Health Act (29
U.S.C. Sec.651 et seq.) and the Emergency Planning and Community
Right-To-Know Act (42 X.X.X. Xxx.00000 et seq.), each as amended or
supplemented, and any analogous present or future local, state and federal
statutes and regulations promulgated pursuant thereto, each as in effect as of
the date of determination.
"ERISA" means the Employee Retirement Income Security Act of 1974, as the
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same may be amended from time to time and, unless the context otherwise
requires, the regulations promulgated thereunder and any successor statute.
"ERISA affiliate" means each trade or business (whether or not
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incorporated) which together with Borrower would be deemed to be a "single
employer" within the meaning of Section 4001(b) of ERISA or, where
applicable, would be treated as a "single employer" under Section 412(c)(11)
of the Code.
"ERISA Termination Event" means (i) a "Reportable Event" described in
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Section 4043 of ERISA (other than a "Reportable Event" not subject to the
provision for 30-day notice to the PBGC under such regulations), (ii) the
withdrawal of any Borrower from a Plan during a plan year in which it was a
"substantial employer," as defined in Section 4001 (a) of ERISA, including a
cessation of operations that is treated as a withdrawal by a "substantial
employer" under Section 4062(e) of ERISA, (iii) the filing of a notice of
intent to terminate a Plan or the treatment of a Plan amendment as a
termination under Section 4041 of ERISA, (iv) the institution of proceedings
to terminate a Plan by the PBGC, (v) any other event or condition which in
the reasonable judgment of any Borrower is likely to constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee
to or any ERISA administrator for, any Plan, or (vi) the partial or complete
withdrawal of any Borrower or any ERISA affiliate from a Multiemployer Plan.
"Event of Default" shall have the meaning assigned to such term in
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Paragraph 8.1.
"Excess Interest" shall have the meaning assigned to such term in
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Paragraph 4.3.
"Facilities" means any and all real property (including, without
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limitation, all buildings, or other improvements located thereon) now,
hereafter or heretofore, owned, leased, operated or used by Borrowers or any
of their successors and assigns.
"GAAP" shall mean generally accepted accounting principles as in effect
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from time to time.
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"Governmental Authorization" means any permit, license, authorization,
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directive, consent order or consent decree of or from any federal, state or
local governmental authority, agency or court having jurisdiction over
Borrowers or any Facility.
"Guarantor" shall mean each Subsidiary of Parent who is party to a
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Guaranty.
"Guaranty" shall mean the Guaranty executed and delivered on the Closing
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Date by Boss Balloon Company and Boss Manufacturing Holdings, Inc. in the
form of Exhibit 6.1(b)(1) hereto, as the same may be amended, supplemented,
modified or restated from time to time or assumed by additional Subsidiaries
or as replaced by another guaranty.
"Hazardous Materials" means (i) any chemical, material or substance
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defined as or included in the definition of "hazardous substances, "hazardous
wastes," "hazardous materials," "extremely hazardous waste," "restricted
hazardous waste," "infectious waste," "toxic substances" or any other
formulations intended to define, list or classify substances by reason of
deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, toxicity, reproductive toxicity, "TCLP toxicity" or "EP
toxicity" or words of similar import under any applicable Environmental Laws
or publications promulgated pursuant thereto, (ii) any oil, petroleum or
petroleum derived substance, (iii) any drilling fluids, produced waters and
other wastes associated with the exploration, development or production of
crude oil, natural gas or geothermal resources, (iv) any flammable substances
or explosives, (v) any radioactive materials, (vi) asbestos in any form
(which is or could become friable), (vii) urea formaldehyde foam insulation,
(viii) electrical equipment which contains any oil or dielectric fluid
containing levels of polychlorinated biphenyls in excess of fifty parts per
million, (ix) pesticides or (x) any other chemical, material or substance,
exposure to which is prohibited, limited or regulated by any governmental
authority or which may or could pose a hazard to the health and safety of the
owners, occupants or any Persons in the vicinity of the Facilities.
"Large Cap Stocks" shall mean equity investments in companies traded on a
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national exchange or the NASDAQ having a market capitalization of $1 billion
or more provided such stocks are not held in a margin account.
"Letter of Credit" means and includes all outstanding letters of credit
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issued by Bank under the terms of any of the Letter of Credit Agreements at
the request of either of the Borrowers.
"Letter of Credit Agreement" means one or more Other Agreements under the
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terms of which Bank issues one or more Letters of Credit pursuant to the
Revolving Credit Commitment contained in Paragraph 2.1 hereof.
"LIBOR Tranche" means a Revolving Loan which bears interest with
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reference to the Adjusted LIBOR Rate.
"LIBOR Rate" means, for each LIBOR Tranche, the rate per annum for
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deposits in U.S. Dollars in the London Interbank Market for a period equal to
such LIBOR Tranche as announced by Bank at the time such LIBOR Tranche is
requested by Borrowers.
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"Lien" means any interest in Property securing an obligation owed to, or
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a claim by, a Person other than the owner of the Property, whether such
interest is based upon the common law, statute or contract, and including,
but not limited to, the security interest, security title or lien arising
from a security agreement, mortgage, deed of trust, deed to secure debt,
encumbrance, pledge, conditional sale or trust receipt or a lease,
consignment or bailment for security purposes. The term "Lien" shall include
reservations, exceptions, encroachments, easements, rights of way, covenants,
conditions, restrictions, leases and other title exceptions and encumbrances
affecting Property. For the purpose of this Agreement, Borrower shall be
deemed to be the owner of the Property which it has acquired or holds subject
to a conditional sale agreement or other arrangement pursuant to which title
to the Property has been retained by or vested in some other Person for
security purposes.
"Lockbox" means any lockbox maintained by Borrowers and Guarantors at
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Bank pursuant to such agreements as Borrowers and Guarantors shall enter into
with Bank.
"Material Adverse Effect" shall mean (a) a materially adverse effect on
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the business, assets, operations or financial condition of the Borrowers, (b)
material impairment of the ability of the Borrowers to perform any material
obligation under this Agreement or the Other Agreements to which it now is or
hereafter becomes a party or (c) material impairment of any of the material
rights or benefits available to Bank under this Agreement or the Other
Agreements.
"Maximum Rate" shall have the meaning assigned to such term in Paragraph
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4.3
"Multiemployer Plan" means a plan defined as such in Section 4001(a)(3)
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of ERISA to which contributions have been made by a Borrower or an ERISA
affiliate.
"Net Income" means as of any date, the amount equal to the aggregate net
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income, before consideration of any gains or charges resulting from
extraordinary items, of the Borrowers as determined in conformity with GAAP
consistently applied.
"Other Agreements" means all agreements, instruments and documents,
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including, without limitation, applications, documents and agreements
delivered in connection with any Letter of Credit Agreement, Lockbox
agreements, guaranties, mortgages, deeds of trust, pledges, powers of
attorney, consents, assignments, contracts, notices, security agreements,
leases, financing statements and all other written matter heretofore, now
and/or from time to time hereafter executed by and/or on behalf of the
Borrowers or the Guarantors and delivered to Bank including, without
limitation, the Revolving Note, the Security Agreement, the Guaranty and any
Letter of Credit Agreement.
"Parent" shall mean Boss Holdings, Inc.
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"PBGC" means the Pension Benefit Guaranty Corporation and any entity
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succeeding to any or all of its functions under ERISA.
"Permitted Liens" has the meaning assigned to such term in Section 7.3(a)
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hereof.
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"Person" means and includes any individual, partnership, joint venture,
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corporation, limited liability company, trust, unincorporated organization,
government or any department or agency thereof or any other entity or
organization.
"Plan" means, at any time, any single-employer plan, as defined in
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Section 4001(a) and subject to Title IV of ERISA, which is maintained, or at
any time during the five calendar years preceding the time in question was
maintained, for employees of Borrower.
"Property" shall mean any interest in any kind of property or asset,
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whether real, personal or mixed, or tangible or intangible.
"Release" means any release, spill, emission, leaking, pumping, pouring,
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injection, escape, deposit, disposal, discharge, dumping, leaching, or
migration of Hazardous Materials into the indoor or outdoor environment
(including, without limitation, the abandonment or disposal of any barrels,
containers or other closed receptacles containing any Hazardous Materials),
or into or out of any Facility.
"Revolving Credit Commitment" means the revolving credit facility in an
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amount not to exceed $10,000,000.
"Revolving Credit Termination Date" means May 30, 2002, as such date may
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be amended upon the written consent of all of the parties hereto.
"Revolving Loans" means and includes all advances made by Bank under the
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Revolving Credit Commitment, but excluding the stated amount of any then
outstanding Letters of Credit.
"Revolving Note" means that certain Revolving Note of even date herewith
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made payable by Borrowers in favor of Bank in the original maximum principal
amount of $10,000,000 as described in Paragraph 3.1 hereof.
"Security Agreement" means that certain Security Agreement dated as of
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even date herewith in the form of Exhibit 6.1(a)(ii) hereto and as such
agreement may be amended or modified hereafter.
"Stated Expiration Date" means with respect to each Letter of Credit the
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date upon which such Letter of Credit is stated to expire, subject to such
earlier termination as shall be set forth therein or in the applicable Letter
of Credit Agreement.
"Subsidiary" means with respect to Parent, a corporation of which Parent
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and its other Subsidiaries, directly or indirectly own more than 50% of the
ordinary voting power for the election of directors and with respect to any
other entity, which Parent and its other Subsidiaries, if any, directly or
indirectly, have the power to control.
"Tangible Net Worth" means at any date the amount on a consolidated
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basis, without duplication, equal to (i) the stockholders' equity of Parent
in accordance with GAAP consistently applied as of such date less (ii) the
amounts shown on Parent balance sheet as of such date for
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goodwill, intangible assets, and prepaid expenses (other than prepaid and
deferred income taxes), and advances and loans to Affiliates, all as
determined in accordance with GAAP.
"Total Revenues" shall mean gross sales less any applicable discounts,
--------------
returns or any allowances.
"Tranche Maturity Date" means, for any LIBOR Tranche, the last day of
---------------------
such LIBOR Tranche.
"Unused Commitments" shall mean the Revolving Credit Commitment less the
------------------
outstanding amount of all Revolving Loans and the stated amount of all
outstanding Letters of Credit.
"Working Capital" shall have the meaning customarily given to such term
---------------
in accordance with GAAP.
1.2 Certain UCC and Accounting Terms. Except as otherwise defined in
--------------------------------
this Agreement or the Other Agreements, all words, terms and/or phrases used
herein and therein shall be defined by the applicable definition therefor (if
any) in the Uniform Commercial Code as adopted by the State of Illinois.
Notwithstanding the foregoing, any accounting terms used in this Agreement
which are not specifically defined herein shall have the meaning customarily
given to them in accordance with GAAP. All financial computations hereunder
shall be computed, unless otherwise specifically provided herein, in
accordance with GAAP, consistently applied. No Accounting Changes (as defined
below) shall affect financial covenants, standards or terms in this Agreement
in the first year of each Accounting Change; provided, however, that
Borrowers shall prepare footnotes to the financial statements required to be
delivered hereunder that show the differences between the financial
statements delivered (which reflect such Accounting Changes) and the basis
for calculating financial covenant compliance (without reflecting such
Accounting Changes) for the first year in which an Accounting Change occurs.
"Accounting Changes" means changes in accounting principles required by GAAP
occurring after the Closing Date and implemented by a Borrower.
1.3 Certain Matters of Construction
-------------------------------
(a) The terms "herein", "hereof", and "hereunder" and other
words of similar import refer to this Agreement as a whole and not to any
particular section, paragraph or subdivision. The section titles, table of
contents and list of exhibits appear as a matter of convenience only and
shall not affect the interpretation of this Agreement. All references to
statutes and related regulations shall include any amendments of same and any
successor statutes and regulations. All references to any instruments or
agreements, including without limitation to any of the Other Agreements,
shall include any and all amendments, modifications or supplements thereto
and any and all extensions or renewals thereof. Wherever from the context it
appears appropriate, each term stated in either the singular or plural shall
include the singular and the plural, and pronouns stated in the masculine,
feminine or neuter gender shall include the masculine, the feminine and the
neuter.
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(b) In this Agreement and the Other Agreements, in the
computation of periods of time from a specified date to a later date (i) the
word "from" means "from and including", (ii) the words "to" and "until" each
means "to, but excluding" and (iii) the words "through", "end of" and
"expiration" each mean "through and including". All references in this
Agreement and the Other Agreements to "month" "quarter" or "year", unless
specified otherwise, shall be deemed to refer to a calendar month, quarter or
year.
(c) Except as otherwise specifically provided for herein,
whenever Bank's consent is required to be obtained hereunder or under any of
the Other Agreements as a condition to any action, inaction, condition or
event, Bank shall be authorized to give or withhold such consent in its sole
and absolute discretion and to condition its consent upon the giving of
additional collateral security, the payment of money or any other matter.
(d) Borrower and Borrower's counsel participated fully in the
negotiation and documentation of this Agreement and the Other Agreements.
Each party agrees that any rule of construction that provides that any
ambiguity in any document shall be interpreted against the drafter shall not
be employed in any dispute or litigation.
2. LOANS: BANK'S COMMITMENTS AND BORROWING PROCEDURES
2.1 Revolving Credit Commitment. On the terms and subject to the
---------------------------
conditions set forth in this Agreement, Bank agrees, for so long as no
Default or Event of Default shall have occurred and be continuing, to make
revolving credit available to the Borrowers from time to time prior to the
Revolving Credit Termination Date or an Early Termination Date, if any, in
such aggregate amounts not to exceed the limitation set forth in Section 2.4
and as an Authorized Officer may from time to time request. On the terms and
subject to the conditions set forth in this Agreement, the Revolving Credit
Commitment shall be available to the Borrowers by means of Revolving Loans
and the issuance of any Letters of Credit, it being understood that (a)
Revolving Loans may be repaid, subject to the limitation set forth in Section
5.1(b), and used again during the period from the date hereof to and
including the Revolving Credit Termination Date and (b) the Letters of Credit
may terminate or be reimbursed in accordance with the applicable Letter of
Credit Agreement and thereafter new Letters of Credit (having Stated
Expiration Dates not later than the Revolving Credit Termination Date) may be
issued again during the period from the date hereof to and including the
Revolving Credit Termination Date.
2.2 Borrowing Procedures for Revolving Loans
----------------------------------------
(a) Requests by Borrowers for disbursements of Revolving Loans shall be
made in writing in the form of Exhibit 2.2 hereof (the "Borrower Request")
and delivered in person or by telecopier or facsimile transmission, but at
Bank's sole discretion, Bank may disburse a Revolving Loan upon the oral
request of Borrower (to be confirmed in writing), provided, however, that if
Bank shall receive after 11:00 a.m. Chicago time on any Business Day, a
Borrower Request for disbursement, Bank shall not be obligated to make such
disbursement until the next Business Day.
(b) Each Borrower Request shall be irrevocable and shall be effective
upon receipt by Bank and shall specify the following: the date of such
Revolving Loan, the amount of such
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Revolving Loan, the type of interest rate applicable Revolving Loan (Adjusted
LIBOR Rate or Base Rate), and if to be a LIBOR Tranche, the duration of the
period for such LIBOR Tranche. Each LIBOR Tranche shall be for a minimum of
$100,000 (and in $50,000 increments thereof,) and shall be for a period of
either 30 days, 60 days, 90 days, 120 days or 180 days. No LIBOR Tranche
shall be selected which has a Tranche Maturity Date which is later than the
Revolving Credit Termination Date.
(c) Not later than 2:00 p.m., Chicago time, on the date specified for
each borrowing provided a request has been given by the required time, Bank
shall make available the amount of the Revolving Loan requested by depositing
such amount in immediately available funds, in an account or accounts of
Borrower maintained at the Bank.
2.3 Procedures for Letter of Credits. An Authorized Officer shall give
--------------------------------
Bank irrevocable telephonic notice, which notice shall be confirmed in
writing by delivery of a fully completed Letter of Credit Agreement in Bank's
then current form within two Business Days, that it requests issuance of a
Letter of Credit pursuant to the Revolving Credit Commitment, which Letter of
Credit shall be in an amount not exceeding the amount available as set forth
in Section 2.4 hereof and shall have a Stated Expiration Date no later than
one year from the date of issuance and in no event shall a Stated Expiration
Date be a date after the Revolving Credit Termination Date. Not later than
2:00 p.m. Chicago time, on the second Business Day after delivery of a fully
completed Letter of Credit Agreement, Bank shall issue and deliver such
Letter of Credit on behalf of the Borrower requesting such letter of credit.
2.4 Limitation on Borrowings Made and Letters of Credit Issued Under
----------------------------------------------------------------
the Revolving Credit Commitment. Notwithstanding anything in this Agreement
-------------------------------
or the Other Agreements to the contrary, Borrowers shall not request and the
Bank shall have no obligation to make any Revolving Loan, if the principal
portion of the aggregate Revolving Loans outstanding after making such
Revolving Loan plus the stated amount of the then outstanding Letters of
Credit shall exceed the lesser of (a) the Revolving Credit Commitment, and
(b) the Borrowing Base. Borrower shall not request issuance and Bank shall
have no obligation to issue any Letter of Credit if the stated amount of the
then outstanding Letters of Credit shall exceed the lesser of (a) the
Revolving Credit Commitment or (b) the Borrowing Base minus the sum of (i)
the principal portion of the aggregate Revolving Loans outstanding plus (ii)
the stated amount of the then outstanding Letters of Credit (after giving
effect to issuance of such newly requested Letter of Credit).
2.5 Rollovers. (a) An Authorized Officer shall give Bank irrevocable
---------
telephonic notice (which notice shall be promptly confirmed in writing) no
later than 11:00 a.m., Chicago time, on the second Business Day preceding the
Tranche Maturity Date of each LIBOR Tranche as to whether such LIBOR Tranche
is to be repaid on its Tranche Maturity Date or whether it is to be rolled
over into a new LIBOR Tranche, in which event the Borrowers shall notify the
Bank of the duration of the new LIBOR Tranche (subject to those restrictions
applicable to LIBOR Tranches). In the event the Borrowers shall fail to give
such notice, the maturing LIBOR Tranche shall be rolled over into a Revolving
Loan bearing interest at the Adjusted Base Rate.
2.6 Authorized Officers. For purposes of this Agreement and the other
-------------------
Agreements, Borrowers agree that Bank may rely on any request, notice,
consent or direction by any person that
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Bank reasonably believes to be an Authorized Officer without necessity of
independent investigation.
3. LOANS: NOTES EVIDENCING LOANS: JOINT AND SEVERAL
OBLIGATIONS
3.1 Revolving Note. The Revolving Loans made by Bank under the
--------------
Revolving Credit Commitment shall be evidenced by a promissory note (as the
same may be amended, modified or supplemented from time to time, and together
with any renewals thereof or exchanges or substitutions therefor, the
"Revolving Note") substantially in the form set forth in Exhibit 3.1, with
appropriate insertions, dated the date hereof (or such other date prior
thereto as shall be satisfactory to Bank), payable to the order of Bank. The
unpaid principal amount of the Revolving Loans shall bear interest and be due
and payable as provided in this Agreement and the Revolving Note. Payments to
be made by Borrowers under the Revolving Note shall be made at the times, in
the amounts and upon the terms set forth herein and therein.
3.2 Recordation. The type, date, interest rate and amount of each
-----------
Revolving Loan made by Bank and the interest rate, date and amount of each
repayment of principal received by Bank shall be recorded by Bank in its
records or, at its option, on the schedule attached to the Revolving Note.
The aggregate unpaid principal amount so recorded shall be prima facie
evidence of the principal amount owing and unpaid on the Revolving Note. The
failure to so record any such amount or any error in so recording any such
amount shall not limit or otherwise affect the obligations of Borrower
hereunder or under the Revolving Note to repay the principal amount thereof
together with all interest accrued thereon.
3.3 Joint and Several Liability; Extent of Obligations. The liability
--------------------------------------------------
of the Borrowers hereunder is joint and several. The Borrowers hereby: (1)
acknowledge and agree that the Bank shall have no obligation to proceed
against one Borrower before proceeding against the other Borrower or any
other Person, including any Guarantor, (2) waive any defense to their
obligations under this Agreement or any of the Other Agreements based on or
arising out of the disability or other defense or cessation of liability of
one Borrower versus the other or of any other Person and (3) waive any right
of subrogation or ability to proceed against any Person until the Borrowers'
Liabilities have been paid and performed in full.
4. LOANS: INTEREST; LETTER OF CREDIT FEES; AVAILABILITY FEES
4.1 Interest Rates.
--------------
(a) Borrowers' Liabilities arising under Article 2 hereof in respect of
each of the Revolving Loans attributable to any LIBOR Tranche shall bear
interest at the Adjusted LIBOR Rate for the period commencing on the date of
such Revolving Loans until such Loans are paid in full, except as otherwise
noted in Section 4.1(c) below. Borrowers' Liabilities arising under Article 2
hereof in respect of each of the Revolving Loans which are not attributable
to a LIBOR Tranche shall bear interest at the Base Rate from time to time in
effect for the period commencing on the date of such Loans until such Loans
are paid in full, except as otherwise noted in Section 4.1(c) below
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(b) Accrued interest on the outstanding principal amount of Revolving
Loans shall be payable monthly in arrears on the last Business Day of each
calendar month commencing with the last Business Day of June, 2000. After the
Revolving Credit Termination Date or any Early Termination Date, accrued
interest on draws under any Letter of Credit and accrued interest on
Revolving Loans shall be payable on demand.
(c) If any reimbursement for or repayment of any amount (i) honored or
paid in respect of any draft or draw on any Letter of Credit is not made on
the first to occur of (A) the Revolving Credit Termination Date, (B) any
Early Termination Date or (C) the date upon which reimbursement is due under
the applicable Letter of Credit Agreement or (ii) on any Revolving Loan is
not made on the Revolving Commitment Termination Date or on any Early
Termination Date, then each such draw or Loan, as the case may be, shall bear
interest from the date such payment was due until paid in full, payable on
demand, at a rate per annum equal to the Base Rate plus 2% (the "Default
Rate").
4.2 Computation of Interest. Interest on each Loan shall be computed
-----------------------
for the actual number of days elapsed on the basis of a 360-day year. In
computing interest on any Loan, (i) the date of funding of the Loan shall be
included and (ii) the date of payment of such Loan shall be excluded;
provided, however, that if a Loan or draw is repaid on the same day on which
it is made, one day's interest shall be paid on that Loan or draw. Interest
shall be payable on each unreimbursed draw on each Letter of Credit in
accordance with the terms of the applicable Letter of Credit Agreement.
4.3 Interest Laws. Notwithstanding any provision to the contrary
-------------
contained in this Agreement or the Other Agreements, Borrowers shall not be
required to pay, and Bank shall not be permitted to collect, any amount of
interest in excess of the maximum amount of interest permitted by law
("Excess Interest"). If any Excess Interest is provided for or determined by
a court of competent jurisdiction to have been provided for in this Agreement
or in any of the Other Agreements, then in such event: (a) the provisions of
this Paragraph shall govern and control; (b) Borrowers shall not be obligated
to pay any Excess Interest; (c) any Excess Interest that Bank may have
received hereunder shall be, at the mutual agreement of Bank and Borrowers,
(i) applied as a credit against the outstanding principal balance of
Borrowers' Liabilities or accrued and unpaid interest (not to exceed the
maximum amount permitted by law), (ii) refunded to the payor thereof, or
(iii) any combination of the foregoing; (d) the interest rate(s) provided for
herein shall be automatically reduced to the maximum lawful rate allowed from
time to time under applicable law (the "Maximum Rate"), and this Agreement
and the Other Agreements shall be deemed to have been and shall be reformed
and modified to reflect such reduction; and (e) Borrower shall not have any
action against Bank for any damages arising out of the payment or collection
of any Excess Interest.
4.4 Letter of Credit Fee. The fee payable on each Letter of Credit
--------------------
issued pursuant to the Revolving Credit Commitment shall be at the Bank's
publicly announced fee schedule for letters of credit transactions and be
payable as further provided in the applicable Letter of Credit Agreement.
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4.5 Availability Fee. Borrowers hereby agree to pay to the Bank an
----------------
availability fee at the rate of 1/8 of 1% per annum on the average daily
Unused Commitments. Such availability fee shall be payable quarterly in
arrears on the last Business Day of each March, June, September and December
in each year and on the Revolving Credit Termination Date unless an Early
Termination Date occurs, in which event the availability fee for the period
to the date of termination in whole shall be paid on the date of such
termination.
5. LOANS: GENERAL INITIAL TERMS
5.1 Payments to Bank.
----------------
(a) Automatic Sweep. Borrowers shall, and shall cause each Guarantor,
----------------
to direct all Account Debtors to mail all payments due a Borrower or
Guarantor to a Lockbox. Collections on items delivered to such Lockbox shall
be deposited into the Cash Collateral Account. If any Borrower or Guarantor
shall receive payment by wire transfer, Borrowers agree to direct such wires,
and to cause the Guarantors, to direct such wires to the Cash Collateral
Account. Borrowers shall have no right to withdraw any funds from the Cash
Collateral Account which shall be under the dominion and control of Bank. On
each day, so long as no Default or Event of Default has occurred, Bank shall
permit funds in the Cash Collateral Account to be swept into Borrowers'
operating account as necessary to clear checks presented for payment against
such operating account. All funds on deposit in the Cash Collateral Account
at the end of each day shall be deducted by Bank and applied toward the
payment of the Borrowers' Liabilities. For so long as no Default or Event of
Default has occurred, payments received by Bank from the Cash Collateral
Account shall be applied in the following order of priority:
(i) any expenses of Bank not yet paid;
(ii) any interest payment then due;
(iii) to make payment according to the terms of any Letter
of Credit Agreement;
(iv) Revolving Loans that are not LIBOR Tranches.
If, after application as provided above, funds still remain on deposit in
the Cash Collateral Account, such funds shall be applied to LIBOR Tranches
only if such LIBOR Tranches are due or shall be invested in Bank's standard
offered overnight investments as directed by Borrowers until amounts owing as
provided in (i)-(iv) arise or a LIBOR Tranche becomes due, in which case such
funds will be applied.
(b) Borrowers may prepay at any time any Revolving Loan subject to the
following.
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If Borrower elects to pay a LIBOR Tranche before its Maturity Date,
Borrower will indemnify Bank for any loss or cost incurred by Bank resulting
therefrom, including without limitation any loss or cost in liquidating or
employing deposits acquired to fund or maintain the LIBOR Loan, provided,
--------
however, that Bank shall to the extent practical, notify Borrower of any
------
expected loss or cost in advance. Bank shall deliver a written statement
setting forth in reasonable detail the calculations upon which Bank
determined such amount which statement shall be presumed to be correct.
Determination of such amounts shall be calculated as though Bank funded the
LIBOR Tranche through the purchase of a deposit of the type and maturity
corresponding to the deposit used as a reference in determining the LIBOR
Rate applicable to the LIBOR Tranche whether in fact that is the case or not.
The amount specified in the written statement shall be payable on demand.
(c) In addition, Borrowers shall make mandatory payments as follows:
(i) Borrowers shall cause the Borrowing Base to be not less at
any date than the aggregate principal amount of outstanding Revolving
Loans plus the face amount of all outstanding Letter of Credits.
Notwithstanding Section 5.1(a) hereof, Borrowers shall immediately prepay
the Revolving Loan to Bank on any day in an amount by which the principal
amount of outstanding Revolving Loans and the face amount of all
outstanding Letters of Credit exceeds the Borrowing Base; and
(ii) That portion of Borrowers' Liabilities consisting of:
(i) principal payable on Revolving Loans that are (A) LIBOR Tranches
shall be payable by Borrowers to Bank solely on the first to occur of the
(1) Tranche Maturity Date of the applicable LIBOR Tranche, (rollovers
pursuant to Section 2.6, for purposes hereof, are deemed payments of the
relevant LIBOR Tranche) (2) Revolving Credit Termination Date and (3)
Early Termination Date and (B) Revolving Loans bearing interest at Base
Rate shall be payable by Borrowers to Bank on the first to occur of the
Revolving Credit Termination Date or the Early Termination Date; (ii)
principal payable to reimburse Bank for draws under the Letter of Credit
shall be payable by Borrower to Bank solely as provided in the applicable
Letter of Credit Agreement, (iii) costs, fees and expenses payable
pursuant to this Agreement shall be payable by Borrowers to Bank, on
demand; (iv) interest payable pursuant to this Agreement shall be payable
by Borrowers to Bank as provided in Paragraph 4.1; and (v) the balance of
-------------
Borrowers' Liabilities, if any, shall be payable by Borrowers to Bank as
and when provided in this Agreement, the Letter of Credit Agreements or
the Other Agreements. Except as provided in Paragraph 5.2 below, all of
-------------
such payments to Bank shall be payable at the place of business of the
Bank specified at the beginning of this Agreement or at such other place
or places as Bank may designate in writing to an Authorized Officer.
5.2 Automatic Debit. In order to cause timely payment to be made to
---------------
Bank of all Borrowers' Liabilities as and when due, Borrowers hereby
authorize and direct Bank, at Bank's option following the occurrence of an
Event of Default, to debit the amount of Borrowers' Liabilities to any
ordinary deposit account of Borrowers (including, without limitation, by
increasing the principal balance due under the Revolving Loans). Borrowers
also hereby authorize and direct Bank to debit the amount of any principal or
interest payments due, reimbursement amounts owing under any Letters of
Credit Agreement and payable hereunder to any ordinary
16
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deposit account of Borrowers (including, without limitation, by increasing
the principal balance due under the Revolving Loans), at Bank's option on or
after 1:00 p.m. on the applicable due date therefor, regardless of the
occurrence of an Event of Default.
5.3 Conditions Precedent. Each Revolving Loan made or Letter of Credit
--------------------
issued by Bank at the request of an Authorized Officer pursuant to this
Agreement, the Letter of Credit Agreements or the Other Agreements shall in
any event be subject to the following conditions precedent:
(a) There shall not then exist an Event of Default or Default.
(b) The representations and warranties of Borrowers contained in this
Agreement shall be true and correct in all material respects as of the date
of such Revolving Loan or Letter of Credit with the same effect as though
made on such date, except for representations and warranties made as of a
specific date which shall be true and correct in all material respect only as
of such specified date.
(c) All of the covenants and agreements of Borrowers in this Agreement,
and all of the requirements of this Agreement with respect to such Revolving
Loan or Letter of Credit, shall have been complied with in all material
respects.
(d) Bank shall have received a duly executed Guaranty from Boss Balloon
Company and Boss Manufacturing Holdings, Inc. in the form of Exhibit
6.1(b)(i).
(e) Each Borrower and Guarantor shall have duly executed and delivered
the Security Agreement in the form of Exhibit 6.1(a)(ii) hereto.
(f) There shall not have occurred since the date of this Agreement any
Material Adverse Effect.
(g) Each Borrower and each Guarantor shall have established at Bank a
Lockbox to which all payments from all Account Debtors shall be mailed.
Agreements creating such Lockbox shall provide for all payments arising from
items mailed to such Lockbox to be credited to the Cash Collateral Account.
Each borrowing by Borrowers and issuance of each Letter of Credit
hereunder shall be deemed a representation and warranty by Borrowers that the
foregoing conditions have been fulfilled as of the date of such borrowing.
5.4 Offset. Borrowers agree that, in addition to (and without
------
limitation of) any right of set-off, bankers' lien or counterclaim Bank may
otherwise have, Bank shall be entitled, at its option on or after 1:00 p.m.
on the applicable due date therefor, to offset balances held by it for
account of either Borrower at any of its offices, in United States Dollars or
in any other currency, against any principal of or interest on any of Bank's
Loans, or any other amount payable to Bank hereunder, which is not paid when
due (regardless of whether such balances are then due to Borrower);
17
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provided, however, that Bank shall only have the right to offset amounts
other than principal and interest payments after the occurrence of an Event
of Default.
5.5 Discretionary Disbursements. After the occurrence of an Event of
---------------------------
Default, Bank, in its sole and absolute discretion, may, immediately upon
notice to an Authorized Officer, disburse any or all proceeds of Loans made
available to Borrowers pursuant to this Agreement and/or the Other Agreements
to pay any reasonable fees, costs, expenses or other amounts required to be
paid by Borrowers hereunder and not so paid. All monies so disbursed by Bank
shall be a part of Borrowers' Liabilities, payable by Borrowers on demand.
5.6 Termination Date; Continuance of Obligations, Etc. This Agreement,
--------------------------------------------------
Bank's obligations to loan monies to Borrowers, and Borrowers' ability to
borrow monies from Bank shall be in effect until the earlier to occur of the
Revolving Credit Termination Date or the Early Termination Date.
Notwithstanding the foregoing and until such date when Borrowers' Liabilities
under this Agreement shall be paid in full, (i) Borrowers' obligations
hereunder and under the Other Agreements shall continue, (ii) interest shall
continue to be paid in accordance with the foregoing, and (iii) Bank shall
retain all of its rights and remedies under this Agreement and provided
further that the Security Agreement shall remain in effect until all
Borrowers' Liabilities (whether or not arising from this Agreement) have been
repaid or discharged in full. Upon notice from any of the parties hereto,
the parties mutually agree to consult with each other at least forty-five
(45) days prior to the Revolving Credit Termination Date with respect to
extensions and/or renewals of the Revolving Credit Commitment.
6. LOANS: CONDITIONS TO LENDING
6.1 Initial Loan Conditions Precedent. In addition to those conditions
---------------------------------
set forth in Paragraph 5.4 above with respect to all Loans, Letters of Credit
and advances hereunder, prior to or contemporaneously with the making of the
initial advance of funds, Bank's obligation to make any Loan or issue any
Letter of Credit is subject to the Bank's receipt of the following documents,
in form and substance satisfactory to Bank, and all of the transactions
contemplated by each such document shall have been consummated or each
condition contemplated by each such document shall have been satisfied:
(a) Documents. The following documents duly executed by Borrowers:
---------
(i) this Agreement;
(ii) the Security Agreement in the form of Exhibit 6.1(a)(ii)
hereof;
(iii) such Lockbox agreements as Bank shall require;
(iv) the Revolving Note;
(v) such Other Agreements as reasonably required by Bank;
(vi) an initial Borrowing Base Certificate in the form of Exhibit
6.1(a)(vi); and
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(vii) a Purpose Statement of Credit complying with Regulation U.
(b) Guaranty Documents. The following documents duly executed by Boss
------------------
Balloon Company and Boss Manufacturing Holdings, Inc.:
(i) the Guaranty in the form of Exhibit 6.1(b)(i);
(ii) the Security Agreement; and
(iii) such Lockbox agreements as Bank shall require.
(c) Articles of Incorporation and By-laws. A copy of each Borrower's
-------------------------------------
and Guarantor's Articles of Incorporation, together with all amendments
through the date hereof, certified by the Secretary of State of its state of
incorporation and copies of the By-laws of each Borrower and Guarantors
certified by the corporate secretary of the respective Borrower and
Guarantor.
(d) Good Standing Certificates. A Good Standing Certificate (or
--------------------------
applicable equivalent certificate) for each Borrower and Guarantor from its
state of incorporation and each jurisdiction in which each Borrower and
Guarantor reasonably believes is required to be qualified to transact
business as a foreign corporation.
(e) Board Resolutions. Certified copies of resolutions of the Board of
-----------------
Directors of each Borrower and Guarantor authorizing the execution and
delivery of and the consummation of the transactions contemplated by this
Agreement and the Other Agreements and all other documents or instruments to
be executed and delivered in conjunction herewith and therewith by each
respective Borrower and Guarantor.
(f) Incumbency Certificates. A certificate of the Secretary (or an
-----------------------
Assistant Secretary) certifying the names of the officer or officers
authorized to sign this Agreement, the Other Agreements and the Other
Agreements together with a sample of the true signature of each such officer.
(g) Receipt of Financials. Audited financial statements of Parent for
---------------------
the fiscal year ending December 31, 1999.
(h) Other Documents. Such other documents as Bank may reasonably
---------------
request.
6.2 Further Loan Conditions Precedent. In addition to those conditions
---------------------------------
set forth in Paragraph 5.3 and 6.1, prior to or contemporaneously with the
making of the initial Revolving Loan and any Revolving Loan thereafter or
issuance of any Letter of Credit, Bank's obligation to make such Loan or
issuance is subject to the following conditions precedent:
(a) Borrowers shall have performed all of their covenants and
agreements under this Agreement and each of the Other Agreements.
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(b) All of the representations and warranties of Borrowers in this
Agreement and the Other Documents and in any certificate or affidavit
delivered by Borrowers are, in the sole judgment of Bank, true and correct in
all material respects as of the date of such initial Loan or issuance.
(c) No event or matter will have occurred which, in the sole discretion
of the Bank, will constitute a material adverse change in the operations of
Borrowers or the business of Borrowers as reflected on the financial
statement of Parent provided as set forth in Section 6.1(g).
7. REPRESENTATIONS AND WARRANTIES; COVENANTS
7.1 Representations and Warranties of Borrowers. Borrowers hereby
-------------------------------------------
represent and warrant to Bank as of the date hereof and on the date of
disbursement of each Revolving Loan or advance or issuance of any Letter of
Credit hereunder as follows:
(a) Corporate Existence and Authority. Each Borrower is a corporation
---------------------------------
duly organized, validly existing and in good standing under the laws of its
state of incorporation and is duly qualified to do business and is in good
standing under the laws of the jurisdiction in which its principal place of
business is located and each other jurisdiction in which the failure to be
qualified would have a Material Adverse Effect. Each Borrower has all
requisite corporate or other power and authority to conduct its activities as
presently conducted, to own its properties and to perform its obligations
under this Agreement and the Other Agreements.
(b) Authorization: No Conflict. The execution, delivery and
--------------------------
performance by each Borrower of this Agreement and the Other Agreements to
which it is a party are within such Borrower's corporate powers, have been
duly authorized by all necessary corporate action and do not contravene (i)
such Borrower's Articles of Incorporation, By-laws or resolutions or (ii) any
law or any material contractual restriction binding on or affecting such
Borrower or its properties, and do not result in or require the creation of
any Lien (except as may be created under this Agreement or the Other
Agreements) upon or with respect to any of its properties.
(c) No Approval. Except as otherwise provided herein, no authorization
-----------
or approval or other action by, and no notice to or filing with, any
governmental authority or regulatory body is required for the due execution,
delivery and performance by Borrowers and Guarantors of this Agreement or any
Other Agreement.
(d) Validity and Binding Nature. This Agreement is, and the Other
---------------------------
Agreements when delivered hereunder will be, legal, valid and binding
obligations of each Borrower and Guarantor, enforceable against each Borrower
in accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors and to general
principles of equity.
(e) Financial Condition. On the Closing Date, except as disclosed on
-------------------
Schedule 7.1(e) or in the financial statement for the fiscal year ending
December 31, 1999 delivered to Bank, Borrowers and their subsidiaries have no
material contingent obligations, long-term leases or material forward or
long-term commitments.
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(f) Litigation. On the Closing Date, except as disclosed on Schedule
----------
7.1(f), there is no pending or, to the best knowledge of Borrowers,
threatened action, suit, inquiry, investigation, or proceeding affecting,
directly or indirectly, Borrowers or any of Borrower's Property before any
court, governmental agency or arbitrator. There is no pending or, to the
best of Borrowers' knowledge, threatened action, suit, inquiry,
investigation, or proceeding affecting, directly or indirectly, either
Borrower's or any of Borrower's Property or any of their subsidiaries'
Property before any court, governmental agency or arbitrator which would have
a Material Adverse Effect. Borrowers and their subsidiaries are not in
default with respect to any order, writ, injunction or decree or rule of any
court, governmental authority or arbitration board or tribunal, the effect of
which default would have a Material Adverse Effect.
(g) Securities Transaction. No proceeds of any Loan or advance made by
----------------------
Bank to Borrowers hereunder will be used to acquire any security in any
transaction which is subject to Section 13 or 14 of the Securities Exchange
Act of 1934, as amended.
(h) Regulation U. Borrowers are not engaged in the business of
------------
extending credit for the purpose of purchasing or carrying margin stock
(within the meaning of Regulation U issued by the Board of Governors of the
Federal Reserve System), and no proceeds of any Loan or advance made by Bank
to Borrowers hereunder will be used to purchase or carry any margin stock or
to extend credit to others for the purpose of purchasing or carrying any
margin stock.
(i) ERISA Termination Event and Funding. No ERISA Termination Event has
-----------------------------------
occurred nor is expected to occur which would have a Material Adverse Effect
with respect to any Plan and all Plans, to the extent governed by ERISA, meet
the minimum funding standards of Section 302 of ERISA.
(j) Withdrawal Liability and Reportable Events. Neither of the
------------------------------------------
Borrowers nor any ERISA affiliate has incurred, or expects to incur, any
withdrawal liability under Section 4201 of ERISA to any Multiemployer Plan,
and No Reportable Event (as defined in ERISA) has occurred with respect to
any Plan any of which would have a Material Adverse Effect.
(k) Taxes. Borrowers have filed all Federal tax returns required to be
-----
filed and paid all taxes shown thereon to be due, including interest and
penalties, other than such taxes that such Borrower is contesting in good
faith by appropriate legal proceedings and proper reserves therefor have been
established on the books of Borrowers to the extent required by GAAP and
Borrowers have filed such state tax returns and paid all taxes shown thereon
to be due in foreign jurisdictions in which Borrowers reasonably believes
filings and payments are required and which the failure to make such filings
or payments would have a Material Adverse Effect.
(l) Authorized Representatives. Those persons listed on Schedule
--------------------------
7.1(1), as amended by Borrowers from time to time, are duly authorized to act
on behalf of Borrowers pursuant to this Agreement and the Other Agreements.
(m) Conflicts. Borrowers are not a party to any indenture, loan or
---------
credit agreement or any lease or other agreement or instrument (including
corporate charters or other organizational
21
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documents) which is likely to have a Material Adverse Effect on the ability
of Borrowers to perform its obligations under this Agreement or the Other
Agreements or which would restrict or otherwise limit the incurring of the
Debt represented by this Agreement and the Other Agreements.
(n) Environmental Matters. Except as set forth on Schedule 7.1(n),
---------------------
(i) the operations of Borrowers and each of their Subsidiaries
comply in all material respects with all Environmental Laws for which
noncompliance would have a Material Adverse Effect; and
(ii) no Hazardous Materials (other than those used in, or
disposed of as part of, the ordinary course as part of Borrowers' business as
currently conducted) are stored or otherwise located on any Facility owned,
leased or operated by such Borrowers and their Subsidiaries, and no part of
any such Facility, including the groundwater located thereon or thereunder is
contaminated by any Hazardous Materials where any of which would have a
Material Adverse Effect.
(o) Investment Company Act. Borrowers are not an "investment company"
----------------------
or a company "controlled by an investment company," within the meaning of the
Investment Company Act of 1940, as amended.
(p) Compliance with Laws. Borrowers and all of their Subsidiaries are
--------------------
in compliance with all laws, orders, regulations and ordinances of all
federal, foreign, state and local governmental authorities binding upon or
affecting the business, operation or assets of Borrowers and such
Subsidiaries and have all necessary permits, licenses, certifications,
accreditations and qualifications except to the extent the failure to comply
or have such would not have a Material Adverse Effect.
(q) Other Agreement Representations. Borrowers make each of the
-------------------------------
representations and warranties contained in the Other Agreements to which
Borrowers are a party operative and applicable for the benefit of Bank as if
the same were set forth at length herein.
(r) Subsidiaries. Borrowers have no subsidiaries except as set forth
------------
on schedule 7.1(r) hereof.
(s) Labor. On the Closing Date, except as disclosed on Schedule 7.1(s),
-----
none of the employees of Borrower is subject to any collective bargaining
agreement, and there are no strikes, work stoppages, election or
decertification petitions or proceedings, unfair labor charges, equal
employment opportunity proceedings, wage payment or material unemployment
compensation proceedings, material workmen's compensation proceedings or
other material labor or employee-related controversies pending or threatened
involving Borrower and any of its employees. Since the date of this
Agreement, Borrowers have not notified Bank of any execution of a collective
bargaining agreement. Since the date of this Agreement, there have not been
any strikes, work stoppages, unfair labor charges, wage payment or
unemployment compensation proceedings, xxxxxxx'x compensation proceedings,
and other material labor or employee related controversies which could have a
Material Adverse Effect.
22
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(t) Solvent Financial Condition. Borrowers are not now and, after
---------------------------
giving effect to all Revolving Loans to be made to it and any Letters of
Credit that may be obtained hereunder , at all times will not be, insolvent,
nor will the Borrowers' incurrence of obligations, direct or indirect, render
it "insolvent." For purposes of this Section 7.1(t), an entity is
"insolvent" if (a) the "present fair saleable value" (as defined below) of
its assets is less than the amount that will be required to repay its
probable liability on its existing Debts; (b) its property constitutes
unreasonably small capital for it to carry out its business as currently
conducted and as proposed to be conducted including its capital needs; (c) it
intends to, or believes that it will, incur Debts beyond its ability to pay
such Debts as they mature or the cash available to it after taking into
account all other anticipated uses of its cash is anticipated to be
insufficient to pay all such amounts on or in respect of its Debt when such
amounts are required to be paid; or (d) it believes that final judgments
against it in actions for money damages will be rendered at a time when, or
in an amount such that, it will be unable to satisfy any such judgments
promptly in accordance with their terms or the cash available to it after
taking into account all other anticipated uses of its cash is anticipated to
be insufficient to pay all such judgments promptly. For purposes of this
Section 7.1(t) the following terms have the following meanings: (i) the
"present fair saleable value" of a Borrower's assets means the amount which
may be realized, within a reasonable time, either through collection or sale
of such assets at their "regular market value" and (ii) the term "regular
market value" means the amount which a capable and diligent businessman or
broker could obtain for the property in question within a reasonable time
from an interested buyer who is willing to purchase under ordinary selling
conditions.
(u) Assets. Borrowers own, possess or otherwise have rights in all
------
assets necessary for the conduct of their businesses.
(v) Insurance. Schedule 7.1(v) sets forth a complete and accurate
---------
description of all policies of insurance that will be in effect as of the
Closing Date for Borrowers and their Subsidiaries. Each Borrower and its
Subsidiaries are adequately insured under all policies of insurance, no
notice of cancellation has been received with respect to such policies and
Borrower is in compliance with all material conditions contained in such
policies. Upon 30 days notice to Bank thereto and consent from Bank (which
consent shall not be unreasonably withheld), Borrowers may change insurers
provided Borrowers comply with all requirements of the Security Agreement
with respect to insurance coverage.
(w) Names. Borrowers have no assumed names and are not doing business
-----
under any name other than their own company name, except as otherwise
disclosed to Bank.
(x) Capital Structure. As of the Closing Date, Schedule 7.1(x)
-----------------
attached hereto states (i) the name of each holder of Parent's common stock
known to Parent as owning in excess of 5% of its common stock and (ii) the
ownership by Parent of its Subsidiaries.
(y) Financials. The financial statement of Parent for fiscal year
----------
ending December 31, 1999 delivered to Bank presents fairly in all material
respects the financial condition of Parent.
7.2 Affirmative Covenants. At all times prior to the earlier of the
---------------------
Revolving Credit Termination Date or the Early Termination Date and
thereafter for so long as any amounts are due
23
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or owing to Bank hereunder, each Borrower hereby covenants that it will,
unless Bank otherwise consents in writing:
(a) Existence. Do or cause to be done all things necessary to preserve
---------
and keep in full force and effect Borrower's existence as a corporation in
good standing and all material rights, privileges, and franchises in
connection therewith, and maintain its qualification and good standing in all
states in which the failure to be so qualified would have a material adverse
effect on the financial condition, business or Property of the Borrower.
(b) Compliance With Laws, Etc. Comply in all material respects with
--------------------------
all laws, ordinances, governmental rules and regulations to which it is
subject, and obtain and keep in force any and all licenses, permits,
franchises, or other governmental authorizations necessary to the ownership
of the Properties or the conduct of the business, which violations or failure
to obtain or keep in force would have a material adverse effect on the
condition (financial or otherwise), business, or Properties of the Borrower.
(c) Payment of Taxes and Other Claims. Pay or discharge or cause to be
---------------------------------
paid or discharged, before the same shall become delinquent, (i) all taxes
and other governmental charges levied or imposed upon Borrower or upon the
income, profits or property of Borrower, if any, and (ii) all lawful claims
for labor, materials and supplies which, if unpaid, might by law become a
Lien upon the property of Borrower; provided, however, that Borrower shall
not be required to pay or discharge or cause to be paid or discharged any
such taxes and other governmental charges or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings if reserves have been established on the books of Borrower to the
extent required by GAAP.
(d) Reporting Requirements. Keep true books of record and account in
----------------------
which full, true and correct entries in accordance with GAAP consistently
applied will be made of all dealings or transactions in relation to its
business and activities, and an Authorized Officer shall furnish to Bank:
(i) as soon as possible and in any event within ten (10) days
after an Authorized Officer of either Borrower has knowledge of the
occurrence of an Event of Default or any event which, with the giving of
notice, lapse of time, or both, would constitute an Event of Default, the
statement of an Authorized Officer setting forth the details of such Event of
Default or event and the action which Borrowers have taken or propose to take
to cure the same;
(ii) as soon as available and in any event within thirty (30)
days after the end of each month beginning with the month ending May 31,
2000, an internally-prepared consolidated financial statements of the Parent,
including a balance sheet and a income statement as of the end of such month
and for the portion of the fiscal year ended at the end of such month, all in
reasonable detail and certified (subject to normal year-end adjustments) as
to fairness of presentation, in accordance with GAAP, by an Authorized
Officer and a Borrowing Base Certificate;
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29
(iii) for the fiscal year ending December 30, 2000, and for all
fiscal years thereafter, as soon as available and in any event within one
hundred and twenty (120) days after the close of each fiscal year of the
Borrower, consolidated and consolidating financial statements of Parent,
including balance sheet, income statement, statements of operation,
statements of cash flows and statements of changes in equity as of the end of
such fiscal year, which present fairly and accurately in all material
respects, the financial condition of the Parent as at such date and the
results of operations of the Parent and its subsidiaries for such fiscal year
and setting forth in each case in comparative form the corresponding figures
for the corresponding period of the preceding fiscal year, all in reasonable
detail, prepared in conformity with GAAP consistently applied, and audited by
independent certified public accountant reasonably acceptable to Bank;
(iv) promptly upon filing with the Securities Exchange
Commission, copies of all reports on Form 8-K filed by Parent;
(v) as soon as available and in any event within ninety (90)
days after the close of Borrower's fiscal year end, financial projections
detailing annual financial results for the coming fiscal year;
(vi) immediately after notice to Borrower of the commencement
thereof, notice, in writing, of any action, suit, arbitration or other
proceeding instituted or commenced against Borrower in which the amount in
controversy is in excess of $250,000;
(vii) if requested by Bank, such Borrower's federal, state and
local tax returns, if applicable, as soon as said returns are completed in
the form said returns will be filed with the Internal Revenue Service and any
state or local department of revenue or taxing authority;
(viii) covenant compliance statements in the form of Exhibit
7.2(d)(viii) demonstrating compliance as of each fiscal quarter, such
certificates to be delivered within 30 days after the end of each fiscal
quarter respectively and to be certified by Borrower's Chief Financial
Officer; and
(ix) such other information respecting the condition or
operations, financial or otherwise, of such Borrower as Bank may from time to
time reasonably request, including, without limitation, periodic accounts
receivable agings, accounts payable agings, annual budget and cash flow.
(e) Inspection Rights. At any time or times during normal business
-----------------
hours, permit Bank or any agents or representatives thereof, to examine and
make copies of and abstracts from the records and books of account of and
visit the properties of Borrower, all as Bank shall reasonably request, and
to discuss the affairs, finances and accounts of Borrower with Authorized
Officers; provided that all such activities prior to a Default or an Event of
Default shall be at the expense of the Bank.
(f) Environmental Disclosure and Inspection.
---------------------------------------
25
30
(i) Exercise due diligence in order to comply with all
Environmental Laws when failure to comply would result in a Material Adverse
Effect.
(ii) Promptly advise Bank in writing and in reasonable detail of
each of the following events or actions which could have a Material Adverse
Effect on Borrower's business or operations: (A) any Release of any Hazardous
Materials required to be reported to any federal, state or local governmental
or regulatory agency under any applicable Environmental Laws; (B) any and all
written communications with respect to Environmental Claims or any Release of
Hazardous Material required to be reported to any federal, state or local
governmental or regulatory agency; (C) any remedial action taken by Borrower
or any other person in response to (1) any Hazardous Material on, under or
about any Facility, the existence of which is reasonably likely to give rise
to an Environmental Claim, or (2) any Environmental Claim; (D) Borrower's
discovery of any occurrence or condition on any real property adjoining or in
the vicinity of any Facility that could cause such Facility or any part
thereof to be subject to any restrictions on the ownership, occupancy,
transferability or use thereof under any Environmental Laws; and (E) any
request for information from any governmental agency indicating that such
agency has initiated an investigation as to whether Borrower may be
potentially responsible for a Release or threatened Release of Hazardous
Materials.
(iii) At its own expense, provide copies of such documents or
information as Bank may reasonably request in relation to any matters
disclosed pursuant to this Paragraph.
(iv) Promptly take any and all remedial action reasonably deemed
necessary by Borrower in connection with the presence, storage, use,
disposal, transportation, Release or threatened Release of any Hazardous
Materials on, under or about any Facility in order to comply with all
applicable Environmental Laws and Governmental Authorizations where the
failure to take such action could have a Material Adverse Effect. In the
event Borrower undertakes any remedial action with respect to any Hazardous
Material on, under or about any Facility, Borrower shall conduct and complete
such remedial action in compliance with all applicable Environmental Laws.
(g) Insurance. At its sole cost and expense, keep and maintain
---------
business interruption insurance and public liability and property damage
insurance with respect to its property, the operation thereof and its
business against such casualties, contingencies and risks (including, but not
limited to, public liability and employee dishonesty) and in amounts not less
than adequate to protect its property and operations and its ownership and
use of its assets. Upon the request of Bank, an Authorized Officer shall
promptly deliver to Bank a certificate of insurance and evidence of payment
of all premiums for each such policy.
7.3 Negative Covenants. Prior to the earlier of the Revolving Credit
------------------
Termination Date or the Early Termination Date and thereafter for so long as
any amount is due or owing to Bank hereunder, unless Bank shall otherwise
consent in writing, each Borrower shall not:
26
31
(a) Liens Etc. Create or suffer to exist any Lien, other charge or
----------
encumbrance, or any other type of preferential arrangement, upon or with
respect to any of the assets of any Borrower, whether now owned or hereafter
acquired, or assign any right to receive income, in each case to secure or
provide for the payment of any Debt of any Person, except for the following
Liens ("Permitted Liens"):
(i) Liens arising under this Agreement, the Security Agreement,
and any other lien granted or to be granted in any Other Agreements in favor
of Bank;
(ii) Liens for current taxes, assessments or other governmental
charges which are not delinquent or remain payable without any penalty, or
the validity of which are contested in good faith by appropriate proceedings
upon stay of execution of the enforcement thereof and reserves are set aside
therefor to the extent required by GAAP;
(iii) deposits or pledges to secure (A) statutory obligations; (B)
surety or appeal bonds; (C) bonds for release of attachment, stay of
execution or injunction; or (D) performance of bids, tenders, contracts
(other than for the repayment of Debt) or leases, or for purposes of like
general nature in the ordinary course of its business;
(iv) any Lien renewing, extending or refunding any Lien in
amounts not to exceed $500,000 in any 12 month period permitted by clauses
(i) through (iii) above, provided that the principal amount secured is not
increased, and the Lien is not extended to other property;
(v) Liens currently existing on Property of the Borrowers and
disclosed on Schedule 7.3(a)(v) hereto; and
(vi) any Lien (A) on assets acquired, constructed or improved by
the Borrower, provided that (1) the Lien and Debt secured thereby is incurred
prior to or within 90 days after such acquisition or completion of such
construction or improvement (2) the Debt secured thereby does not exceed 100%
of the cost of acquiring, constructing or improving such asset, (3) such
security interests shall not apply to any other property or assets of the
Borrower and (B) existing on any fixed or capital asset prior to the
acquisition thereof by the Borrower in an acquisition of the business or any
part of a business of any Person provided (1) such Lien is not created in
contemplation of such acquisition, (2) such Lien shall not apply to any other
property of the Borrower and (3) such Lien shall secure only those
obligations which it secures on the date of such acquisition, and provided
further that the aggregate outstanding principal amount of all such Debt
secured by Liens permitted in this Section 7.3(a)(vi) does not exceed
$500,000 in any 12 month period.
(b) Maintain Existence, Merger, Negative Pledge, Etc. (i) dissolve or
-------------------------------------------------
liquidate or (ii) except as specifically permitted by this Agreement, grant a
security interest in, convey, transfer, lease or otherwise dispose of
(whether in one transaction or in a series of transactions) any assets (other
than inventory held for sale in the ordinary course of business and obsolete
goods or equipment) of any Borrower (whether now owned or hereafter acquired)
to any Person; or (iii) convey, transfer, lease or otherwise dispose of
(whether in one transaction or in a series of transactions) all or
substantially all of the assets of any Borrower (whether now owned or
hereafter
27
32
acquired) to any Person (other than a Borrower hereunder); or (iv) except as
may otherwise be permitted hereunder, engage in any transaction out of the
ordinary course of business (and any acquisition of assets or the stock of
any Person, other than inventory in the ordinary course, shall be deemed to
out of the ordinary course of business), or (v) merge or consolidate with any
Person.
(c) Transactions with Affiliates. Enter into, or be a party to, any
----------------------------
transaction with any Affiliate (other than any Borrower or Guarantor), except
in the ordinary course of, and pursuant to the reasonable requirements of,
Borrower's business and upon fair and reasonable terms which are fully
disclosed to Bank and are no less favorable to Borrower than would obtain in
a comparable arm's length transaction with a Person not an Affiliate.
(d) Lines of Business. Make any change in or engage in any line of
-----------------
business other than the development, manufacture distribution or sale of the
types of products or services constituting Parent's and its subsidiaries
business on the Closing Date, provided Parent and its Subsidiaries shall be
permitted to grant licenses in their names and tradenames for their products
and services and provided further that Bank will not unreasonably withhold
any consent to other lines of business.
(e) Subsidiaries. Create or acquire any Subsidiaries without notifying
------------
the Bank, and if directed by the Bank to do so, without making such
Subsidiary a Guarantor and causing such Subsidiary to assume the Security
Agreement
(f) Loans, Investments and Guaranties. Make any loans or other
---------------------------------
advances of money to or make any investments in any Person, including without
limitation, any of Borrowers' Affiliates or Subsidiaries or guarantee,
assume, endorse or otherwise, in any way, become directly or contingently
liable with respect to the Debt of any Person, including Borrowers'
Subsidiaries and Affiliates, other than loans, advances, investments,
guaranties, as follows: (i) Loans to its Subsidiary, Boss Manufacturing
Holdings, Inc. not to exceed $1,500,000 at any one time; (ii) loans to its
Subsidiary Boss Balloon Company; (iii) in all other cases, investments or
advances after the Closing Date to wholly owned Subsidiaries not to exceed
$750,000; and (iv) guaranties or endorsements in favor of Bank; and (iv)
Large Cap Stocks not to exceed in value 10% of Parent's Consolidated Tangible
Net Worth provided such purchases are made only from cash on hand of the
Parent prior to the date of this Agreement and that under no circumstances
shall any loan proceeds from this Agreement be used to purchase or carry any
such investment.
(g) Borrowed Debt. Create, incur, assume or suffer to exist any
-------------
Borrowed Debt by itself or any of its Subsidiaries other than (i) Debt to
Bank; (ii) Debt secured by liens permitted by Section 7.2(a)(iv) hereof; and
(iii) Debt disclosed on Schedule 7.3(g) hereto.
7.4 Financial Covenants. At all times prior to the earlier of the
-------------------
Revolving Credit Termination Date and the Early Termination Date and
thereafter for so long as any amount is due and owing to this Bank hereunder,
Borrowers hereby covenant to meet the requirements of the following financial
covenants.
(a) The Debt Service Coverage Ratio of Parent on a consolidated basis
(measured quarterly commencing the end of December 30, 2000 and measured each
quarter thereafter on a rolling four quarter basis) shall be not less than
1.10:1.
28
33
(b) The Current Ratio (measured quarterly beginning June 30, 2000)
shall be not less than 1.15:1.
(c) Tangible Net Worth shall not be less than $16,500,000 plus 25% of
the Parent's Net Income on a consolidated basis cumulatively for the years
ended 2000 and 2001.
(d) Debt to Tangible Net Worth Ratio (measured as of June 30 and
December 31 of each year commencing June 30, 2000) shall not be greater than
1.50:1.
7.5 Maintenance of Accounts. Borrowers agree to maintain their primary
-----------------------
operational accounts with Bank in a non-interest bearing demand deposit
account with Bank (the "Operating Account"). Borrower acknowledges that Bank
will charge Borrower standard service charges in effect from time to time for
various services performed by Bank in connection with any aspect of the
relationship between Borrower and Bank, and Borrower hereby agrees that if
such service charges exceed the credit to Borrower arising from earnings
attributable to funds on deposit with Bank in the Operating Account, such
service charge deficiency shall be deducted by Bank from Borrower's Operating
Account, monthly, in arrears, within ten (10) days following the end of each
month. Bank may cause interest and other amounts payable on the obligations
of Borrower to Bank hereunder to be paid by making a direct charge to the
applicable Operating Account in accordance with the terms hereof.
7.6 Clean Down Requirement. Borrowers covenant and agree that in each
----------------------
of the Borrowers' fiscal years, all Revolving Loans outstanding throughout
one consecutive sixty day period (the "Clean Down Period") will not exceed
$5,000,000 for any Clean Down Period exclusive of Letters of Credit.
7.7 Bank Accounts. At all times prior to the earlier of the Revolving
-------------
Credit Termination Date and the Early Termination Date and thereafter for so
long as any amount is due and owing hereunder, Borrowers hereby covenant that
they will not permit deposits in any accounts of Borrowers and their
subsidiaries who are Guarantors other than those with Bank, to exceed in the
aggregate of $50,000.
8. DEFAULT
8.1 Events of Default. The occurrence of any one of the following
-----------------
events shall constitute a default ("Event of Default") by Borrowers under
this Agreement:
(a) Any Borrower or Guarantor fails or neglects to make any payment of
principal and interest hereunder or under any of the Other Agreements when
due;
(b) Borrowers fail to keep or observe any covenant contained in Section
7.3(b) or 7.4;
(c) Any Borrower or Guarantor fails to perform the covenants contained
in Sections 4.1 - 4.7 of the Security Agreement;
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34
(d) Any Borrower or Guarantor fails or neglects to perform, keep or
observe any covenant or agreement contained in this Agreement or in the Other
Agreements (other than those set forth in clause (a) and (b) above) which is
required to be performed, kept or observed by such Borrower or Guarantor and
such failure continues for thirty (30) days after notice thereof is received
by Borrowers from Bank;
(e) any representation or warranty made by Borrowers herein or by any
Borrower or Guarantors in any Other Agreement is breached in any material
respect or is false or misleading in any material respect, or any exhibit,
schedule, certificate, financial statement, report, notice or other writing
furnished by Borrowers or any of its officers, employees, or agents to Bank
is false or misleading in any material respect on the date as of which the
facts therein set forth are stated or certified;
(f) Any Borrower or Guarantor is in default upon any agreement for
Borrowed Debt for which such default may give rise to the acceleration of an
aggregate principal amount of Borrowed Debt of $100,000;
(g) a petition under any section or chapter of the Bankruptcy Code or
any similar law or regulation shall be filed by either Borrower or any
Guarantor or if either Borrower or any Guarantor shall make an assignment for
the benefit of its creditors or if any case or proceeding is filed by either
Borrower or any Guarantor for its dissolution or liquidation;
(h) either Borrower is enjoined, restrained or in any way prevented by
court order from conducting all or any material part of its business affairs
or if a petition under any section or chapter of the Bankruptcy Code or any
similar law or regulation is filed against either Borrower or if any case or
proceeding is filed against Borrower for its dissolution or liquidation and
such injunction, restraint or petition is not dismissed or stayed within
forty-five (45) days after the entry or filing thereof;
(i) an application is made by either Borrower or any Guarantor for the
appointment of a receiver, trustee or custodian for any of either of
Borrowers' or any Guarantor's assets;
(j) an application is made by any Person for the appointment of a
receiver, trustee or custodian for the assets of either Borrower or any
Guarantor and the same is not dismissed within forty-five (45) days after the
application therefor;
(k) either Borrower or any Guarantor becomes insolvent or is unable
generally to pay its Debts as they become due;
(l) the occurrence of a material breach, a default or an event of
default by a Borrower or any Guarantor under any of the Other Agreements or
the Guarantor documents after any cure period applicable to any such default
or event of default has expired;
(m) the entry of final judgment or judgments for the payment of money
in excess of $100,000 in the aggregate in any one calendar year and the same
shall not be (i) fully covered by insurance, or (ii) within 30 days after the
entry thereof, have been discharged or execution stayed
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pending appeal, or shall not have been discharged within five days after the
expiration of any such stay; and
(n) a Change of Control.
8.2 Cumulative Remedies. All of Bank's rights and remedies under this
-------------------
Agreement and the Other Agreements are cumulative and non-exclusive.
8.3 Suspension of Commitment; Acceleration and Early Termination of
---------------------------------------------------------------
Loans. Upon the occurrence of an Event of Default, (a) upon notice by Bank
-----
to an Authorized Officer, Borrowers' Liabilities shall be immediately due and
payable, unless there shall have occurred an Event of Default under
subparagraphs 8.1(g) through 8.1(k), in which case Borrowers' Liabilities
shall automatically become due and payable without notice or demand, and (b)
by, Bank or Borrower, Bank shall have no further obligation to and may then
forthwith cease advancing monies or extending credit to, or for the benefit
of, Borrower under this Agreement and the Other Agreements.
8.4 Manner of Application: Waiver of Setoff Prohibition. After the
---------------------------------------------------
occurrence of an Event of Default, Borrowers waive the right to direct the
application of any and all payments at any time or times hereafter received
by Bank on account of Borrowers' Liabilities and after the occurrence of an
Event of Default, Borrowers agree that Bank shall have the right, in its
absolute and sole discretion, to apply and re-apply any and all such payments
in such manner as Bank may deem advisable, notwithstanding any entry by Bank
upon any of its books and records. After the occurrence of an Event of
Default, Borrowers further waive any right under or benefit of any law that
would restrict or limit the right or ability of Bank to obtain payment of
Borrowers' Liabilities, including any law that would restrict or limit Bank
in the exercise of its right to appropriate any indebtedness owing from Bank
to Borrowers and any deposits or other property of Borrower in the possession
or control of Bank and apply the same toward or setoff the same against the
payment of Borrowers' Liabilities.
9. GENERAL
9.1 Payment Application Date. Any check, draft, or similar item of
------------------------
payment by or for the account of Borrowers delivered to Bank on account of
Borrowers' Liabilities shall be applied by Bank on account of Borrowers'
Liabilities on the date final settlement thereof is reflected by irrevocable
credit to Bank.
9.2 Survival of Representations and Warranties. Each Borrower
------------------------------------------
covenants, warrants and represents to Bank that all representations and
warranties of each Borrower contained in this Agreement and the Other
Agreements shall be true at the time of such Borrower's execution of this
Agreement and the Other Agreements and shall survive the execution, delivery
and acceptance thereof by the parties thereto and the closing of the
transactions described therein or related thereto.
9.3 Integration; Amendment; Assignment; Participation.
-------------------------------------------------
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(a) This Agreement and the Other Agreements constitute the entire
agreement and understanding between the parties relating to the subject
matter hereof and supersede all prior agreements, including without
limitation the Commitment Letter with respect to the commitment to provide a
line of credit. This Agreement and the Other Agreements may not be modified,
altered or amended except by an agreement in writing signed by an Authorized
Officer, on behalf of Borrowers, and Bank.
(b) Borrowers shall not assign any of their obligations and rights
under this Agreement. Bank shall have the right to assign to one or more
banks or other financial institutions all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of the Revolving Credit Commitment and the Other Agreements). Upon
any such assignment, (i) the assignee shall become a party hereto and, to the
extent of such assignment, have all rights and obligations of Bank hereunder
and under the Other Agreements, (ii) Bank shall, to the extent of such
assignment, relinquish its rights and be released from its obligations
hereunder and under the Other Agreements and (iii) Bank shall provide
Borrowers' notice thereof. Borrowers hereby agree to execute and deliver
such documents, and to take such other actions, as Bank may reasonably
request to accomplish the foregoing. Notwithstanding any other provision
herein to the contrary, Bank and Borrowers agree that Borrowers shall not be
required to pay any of the costs, fees or expenses of any assignment by Bank.
(c) In addition to the assignments permitted in subsection (b) of this
Paragraph, Bank and any assignee pursuant to subsection (b) above shall have
the right to grant participations to one or more banks or other financial
institutions in or to any Loan hereunder (and the Other Agreements) without
consent from Borrowers.
9.4 No Waiver. The acceptance by Bank of any partial payment after the
---------
time when any of Borrowers' Liabilities become due and payable will not
establish a custom, or waive any rights of Bank to enforce prompt payment
hereof. Bank's failure at any time or times hereafter to require strict
performance by Borrowers of any provision of this Agreement shall not waive,
affect or diminish any right of Bank thereafter to demand strict compliance
and performance therewith. Any suspension or waiver by Bank of an Event of
Default by Borrower under this Agreement or the Other Agreements shall not
suspend, waive or affect any other Event of Default by Borrowers under this
Agreement or the Other Agreements, whether the same is prior or subsequent
thereto and whether of the same or of a different type. None of the
undertakings, agreements, warranties, covenants or representations of
Borrowers contained in this Agreement or the Other Agreements and no Event of
Default by Borrowers under this Agreement or the Other Agreements shall be
deemed to have been suspended or waived by Bank unless such suspension or
waiver is by an instrument in writing by Bank specifying such suspension or
waiver and is given pursuant to the requirements of Paragraph 9.12 hereof.
9.5 Severability. If any provision of this Agreement or the Other
------------
Agreements or the application thereof to any Person or circumstance is held
invalid or unenforceable, only such portion as applicable law requires to be
held invalid shall be unenforceable as to such Person, the remainder of this
Agreement and the Other Agreements as to such Person and the application of
such provision to other Persons or circumstances will not be affected thereby
and the provisions of this Agreement and the Other Agreements shall be
severable in any such instance.
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9.6 Successors and Assigns. This Agreement and the Other Agreements
----------------------
shall be binding upon and inure to the benefit of the respective successors
and assigns of Borrowers and Bank. This provision, however, shall not be
deemed to modify Paragraph 9.3 hereof.
9.7 Conflict with Other Agreements. The provisions of the Other
------------------------------
Agreements are incorporated in this Agreement by this reference thereto.
Except as otherwise provided in the Other Agreements by specific reference to
the applicable provision of this Agreement, if any provision contained in
this Agreement is in conflict with, or inconsistent with, any provision in
the Other Agreements, the provision contained in this Agreement shall govern
and control.
9.8 No Impairment by Termination. Except to the extent provided to the
----------------------------
contrary in this Agreement and in the Other Agreements, no termination or
cancellation (regardless of cause or procedure) of this Agreement or the
Other Agreements shall in any way affect or impair the powers, obligations,
duties, rights and liabilities of any Borrower in any way or respect relating
to (a) any transaction or event occurring prior to such termination or
cancellation, and/or (b) any of the undertakings, agreements, covenants,
warranties and representations of any Borrower contained in this Agreement or
the Other Agreements. All such undertakings, agreements, covenants,
warranties and representations shall survive such termination or
cancellation.
9.9 Waivers. Except as otherwise specifically provided in this
-------
Agreement, Borrowers waive any and all notice or demand which Borrower might
be entitled to receive with respect to this Agreement or the Other Agreements
by virtue of any applicable statute or law and waives presentment, demand and
protest and notice of presentment, protest, default, dishonor, non-payment,
maturity, release, compromise, settlement, extension or renewal of any or all
commercial paper, accounts, contract rights, documents, instruments, chattel
paper and guaranties at any time held by Bank on which Borrowers may in any
way be liable and hereby ratifies and confirms whatever Bank may do in this
regard.
9.10 Indemnification. In consideration of the Bank's execution and
---------------
delivery of this Agreement and the Bank's agreement to extend the Revolving
Credit Commitment, the Borrowers hereby agree to indemnify, exonerate and
hold the Bank and each of its officers, directors, employees and agents
(herein collectively called the "Bank Parties" and individually called a
"Bank Party") free and harmless from and against any and all actions, causes
of action, suits, losses, costs (including, without limitation, all
documentary or other stamp taxes or duties), liabilities and damages, and
expenses in connection therewith (irrespective of whether such Bank Party is
a party to the action for which indemnification hereunder is sought) (the
"Indemnified Liabilities"), including without limitation, reasonable
attorneys' fees and disbursements, incurred by the Bank Parties or any of
them as a result of, or arising out of, or relating to:
(a) any transaction financed or to be financed in whole or in
part, directly or indirectly, with the proceeds of any Revolving Loan;
(b) the execution, delivery, performance, administration or
enforcement of this Agreement or the Other Agreements in accordance with
their respective terms by any of the Bank Parties;
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(c) The presence on or under any Property of the Hazardous
Material or underground storage tank, or any releases or discharges of any
Hazardous Material, on, under or from the Property (including residual
contamination thereon or thereunder), or affecting natural resources; or the
performance of any activity undertaken on or off the Property or relating to
the generation, use, handling, treatment, removal, storage, decontamination,
clean-up, transport or disposal of any Hazardous Material at any time located
on any Property, irrespective whether (i) Borrower or any of its employees,
agents, contractors or subcontractors, (ii) any predecessor in title, or any
employees, agents, contractors or subcontractors of the predecessor in title,
or (iii) any third Persons occupying or present on any Property who engaged
in such activity prior to, during or subsequent to the term of this Agreement
or whether such activities were or will be taken in accordance with
applicable laws, regulations, codes and ordinances, except for any such
Indemnified Liabilities arising solely on account of such Bank Party's gross
negligence or willful misconduct. If and to the extent that the foregoing
agreements described in this Section 9.10 may be unenforceable for any
reason, Borrowers hereby agree to make the maximum contribution to the
payment and satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law; or
(d) any misrepresentation or breach of any warranty or covenant
herein; provided, however, that nothing in this Section 9.10 shall require
indemnification of any claim finally determined to be caused solely by Bank's
gross negligence or willful misconduct.
Borrowers' obligations under this Section 9.10 shall survive repayment of
the Revolving Loans and Revolving Note and the termination of this Agreement
or any of the Other Agreements. Borrowers' obligations hereunder shall be
part of Borrowers' Liabilities and shall be subject to any lien or security
interest securing the repayment of Borrowers' Liabilities.
9.11 Governing Law. This Agreement and the Other Agreements are
-------------
submitted by Borrowers at Bank's place of business in Peoria, Illinois. This
Agreement and the Other Agreements shall be deemed to have been made at
Peoria, Illinois. This Agreement and the Other Agreements shall be governed
and controlled by the laws of the State of Illinois without regard to that
State's principles of conflict of laws.
9.12 Notices. All notices, consents, requests, demands and other
-------
communications hereunder shall be in writing and shall be deemed duly given
to any party or parties (a) upon delivery to the address of the party or
parties as specified below if delivered in person or by courier or if sent by
certified or registered mail (return receipt requested), or (b) upon dispatch
if transmitted by telecopy or other means of facsimile transmission, in each
case addressed as follows:
If to Borrowers:
Boss Holdings, Inc.
000 X. Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: President
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with a courtesy copy to:
Boss Holdings, Inc.
000 X. Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: General Counsel
If to Bank:
American National Bank and Trust Company of Chicago
000 X.X. Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
ATTN: Commercial Banking Department
with a copy to: The Law Department at the above address.
The parties hereto may designate such other address or telecopy number by
written notice in the aforesaid manner.
9.13 FORUM; AGENT; VENUE; JURY TRIAL WAIVER. TO INDUCE BANK TO ACCEPT
--------------------------------------
THIS AGREEMENT AND THE OTHER AGREEMENTS, BORROWERS AND BANK, IRREVOCABLY
AGREE THAT, ALL ACTIONS OR PROCEEDINGS IN ANY WAY, MANNER, OR RESPECT,
ARISING OUT OF OR FROM OR RELATED TO THIS AGREEMENT OR THE OTHER AGREEMENTS
SHALL BE LITIGATED ONLY IN COURTS HAVING SITUS WITHIN PEORIA, ILLINOIS.
BORROWERS AND BANK HEREBY CONSENT AND SUBMIT TO THE JURISDICTION OF ANY
LOCAL, STATE, OR FEDERAL COURT LOCATED WITHIN SAID CITY AND STATE. BORROWERS
AND BANK HEREBY WAIVE ANY RIGHT THEY MAY HAVE TO TRANSFER OR CHANGE THE VENUE
OF ANY LITIGATION BROUGHT AGAINST BORROWERS BY BANK IN ACCORDANCE WITH THIS
PARAGRAPH. BORROWERS HEREBY IRREVOCABLY WAIVE THE RIGHT TO TRIAL BY JURY WITH
RESPECT TO ANY ACTION IN WHICH SUCH BORROWER IS A PARTY WHICH IS IN ANY WAY
CONNECTED OR RELATED TO THIS AGREEMENT OR THE OTHER AGREEMENTS.
9.14 Reimbursement of Expenses. If, at any time or times prior or
-------------------------
subsequent to the date hereof, regardless of whether or not a Default or
Event of Default then exists or any of the transactions contemplated
hereunder are concluded, Bank employs counsel for advice or other
representation, or incurs legal expenses or other costs or out-of-pocket
expenses in connection with: (A) the negotiation and documentation of this
Agreement and the Other Agreements (not to exceed $10,000) and any amendment
of or modification hereto or thereto; (B) the administration of this
Agreement or any of the Other Agreements and the transactions contemplated
hereby and thereby; (C) any litigation, contest, dispute, suit, proceeding or
action (whether instituted by Bank, any Borrower or any other Person) in any
way relating to this Agreement or any of the Other Agreements or any
Borrower's affairs; (D) any attempt to enforce any rights of Bank against
Borrower or any other Person which may be obligated to Lender by virtue of
this Agreement or any of the Other Agreements; or (E) any attempt to protect,
preserve, restore, collect, sell, liquidate or
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otherwise dispose of or realize upon any Property given to Bank as security
for the Borrowers' Liabilities and, after a Default or Event of Default, any
attempt to inspect or verify any Property given as security for Borrowers'
Liabilities; then in any such event, the reasonable attorneys' fees arising
from such services and all reasonable expenses, costs, charges and other fees
of such counsel or of Bank or relating to any of the events or actions
described in this Section shall be payable, and upon demand by Borrowers to
Bank, and shall be additional Borrowers' Liabilities hereunder. Without
limiting the generality of the foregoing, such expenses, costs, charges and
fees may include reasonable accountants' fees, costs and expenses; court
costs and expenses; reasonable photocopying and duplicating expenses; court
reporter fees, costs and expenses; long distance telephone charges; air
express charges; telegram charges; reasonable secretarial over-time charges;
and reasonable expenses for travel, lodging and food paid or incurred in
connection with the performance of such legal services. Additionally, if any
taxes (excluding taxes imposed upon or measured by the net income of Bank)
shall be payable on account of the execution or delivery of this Agreement,
or the execution, delivery, issuance or recording of any of the Other
Agreements, or the creation of any of the Borrowers' Liabilities hereunder,
by reason of any existing or hereafter enacted federal or state statute,
Borrowers will pay all such taxes, including, but not limited to, any
interest and penalties thereon, and will indemnify and hold Bank harmless
from and against liability in connection therewith. Borrowers' obligations
pursuant to this Section 9.14 shall survive the termination of this
Agreement. Bank agrees to notify Borrowers of any amounts charged to
Borrowers pursuant to the terms hereof.
9.15 Revival. To the extent that Bank receives any payment on account
-------
of Borrowers' Liabilities and any such payment or any part thereof
subsequently is invalidated, declared to be fraudulent or preferential, set
aside, subordinated and/or required to be repaid to a trustee, receiver or
any other party under any bankruptcy act, state or federal law, common law or
equitable cause, then, to the extent of such payment received, Borrowers'
Liabilities or part thereof intended to be satisfied shall be revived and
continue in full force and effect, as if such payment had not been received
by Bank and applied on account of Borrowers' Liabilities.
9.16 Confidentiality of Information. Bank agrees to maintain any
------------------------------
Confidential Information that it may receive from any Borrower or any
Guarantor confidential and may not disclose such information to any person or
entity without either (a) the prior written consent of the Borrower or
Guarantor originally furnishing such Confidential Information or (b) the
written agreement of such person or entity receiving such Confidential
Information to be bound by the terms this Section 9.16. However, Bank or any
successor or assign of Bank with respect to the Borrowers' Liability (the
"Disclosing Party") may disclose such Confidential Information: (i) to legal
counsel of the Disclosing Party; (ii) to other professional advisors of the
Disclosing Party (but only if they have been informed of the confidential
nature of such Confidential Information and agree in writing to be bound by
the terms of this Section); (iii) to regulatory officials having jurisdiction
over the Disclosing Party; (iv) to any actual or potential successor or
assign of Bank (or participant with Bank) with respect to the Borrowers'
Liability (but only if they have been informed of the confidential nature of
such Confidential Information and agree in writing to be bound by the terms
of this Section); and (v) as required by law or legal process or in
connection with any legal proceeding to which the Disclosing Party is a
party or is otherwise subject. For purposes of this Section 9.16
"Confidential Information" means: (i) information not available to the
public concerning any Borrower's or any Guarantor's business and financial
affairs delivered by
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or on behalf of any Borrower or any Guarantor to the Bank and which Borrower
has designated as confidential; and (ii) analyses, compilations, forecasts,
studies and other documents prepared on the basis of such information by
Bank, its agents, representatives, attorneys, advisors, affiliates, employees
or consultants.
9.17 Acknowledgments. Borrowers acknowledge that (i) they have been
---------------
advised by counsel of its choice with respect to this Agreement and the
transactions contemplated hereby, (ii) each of the waivers set forth herein
was knowingly and voluntarily made; and (iii) the obligations of Bank
hereunder, including the obligation to advance and lend funds to Borrowers in
accordance herewith, shall be strictly construed and shall be expressly
subject to compliance by the Borrower in all respects with the terms and
conditions herein set forth.
9.18 Headings. Paragraph and Section headings used in this Agreement
--------
are for convenience only and shall not affect the construction or
interpretation of this Agreement.
9.19 Counterparts; Facsimile. This Agreement may be executed in two or
-----------------------
more counterparts, each of which shall be deemed an original and all of which
taken together shall constitute one and the same instrument. The parties
hereto may deliver by facsimile this executed Agreement, and such facsimile
may be treated as an original signature until the original is delivered by
the other party.
9.20 Governing Agreement. If this Agreement or any of its provisions
-------------------
are inconsistent with any of the provisions or any Letter of Credit
Agreement, this Agreement shall control.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, this Agreement has been duly executed as of the day
and year specified at the beginning hereof.
BOSS HOLDINGS, INC.,
a Delaware corporation
By: /s/ J. Xxxxx Xxxxxxxxx
-----------------------------
J. Xxxxx Xxxxxxxxx,
Executive Vice President
BOSS MANUFACTURING COMPANY,
a Delaware corporation
By: /s/ J. Xxxxx Xxxxxxxxx
-----------------------------
J. Xxxxx Xxxxxxxxx,
Executive Vice President
AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO,
a national banking association
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------
Xxxxx X. Xxxxxxx,
First Vice President
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