Exhibit 10.1
--------------------------------------------------------------------------------
REVOLVING CREDIT, TERM LOAN
AND
SECURITY AGREEMENT
--------------------------------------------------------------------------------
PNC BANK, NATIONAL ASSOCIATION
(AS LENDER AND AS AGENT)
--------------------------------------------------------------------------------
WITH
--------------------------------------------------------------------------------
WAXMAN INDUSTRIES, INC.
WAXMAN CONSUMER PRODUCTS GROUP INC.,
WAXMAN USA INC.
AND
WAMI SALES, INC.
(BORROWERS)
--------------------------------------------------------------------------------
February 13, 2002
TABLE OF CONTENTS
PAGE
----
I. DEFINITIONS............................................................................................1
1.1 ACCOUNTING TERMS................................................................................1
1.2 GENERAL TERMS...................................................................................1
1.3 UNIFORM COMMERCIAL CODE TERMS..................................................................16
1.4 CERTAIN MATTERS OF CONSTRUCTION................................................................16
II. ADVANCES, PAYMENTS....................................................................................16
2.1 (a) REVOLVING ADVANCES.........................................................................16
2.2 TERM LOAN......................................................................................17
2.3 PROCEDURE FOR REVOLVING ADVANCES...............................................................17
2.4 DISBURSEMENT OF ADVANCE PROCEEDS...............................................................18
2.5 MAXIMUM ADVANCES...............................................................................18
2.6 REPAYMENT OF ADVANCES..........................................................................18
2.7 REPAYMENT OF EXCESS ADVANCES...................................................................19
2.8 STATEMENT OF ACCOUNT...........................................................................19
2.9 LETTERS OF CREDIT..............................................................................19
2.10 ISSUANCE OF LETTERS OF CREDIT..................................................................19
2.11 REQUIREMENTS FOR ISSUANCE OF LETTERS OF CREDIT.................................................20
2.12 ADDITIONAL PAYMENTS............................................................................21
2.13 MANNER OF BORROWING AND PAYMENT................................................................21
2.14 MANDATORY PREPAYMENTS..........................................................................23
2.15 USE OF PROCEEDS................................................................................23
2.16 DEFAULTING LENDER..............................................................................23
III. INTEREST AND FEES.....................................................................................24
3.1 INTEREST.......................................................................................24
3.2 LETTER OF CREDIT FEES..........................................................................25
3.3 (a) CLOSING FEE................................................................................25
3.4 COLLATERAL MONITORING FEE......................................................................25
3.5 COMPUTATION OF INTEREST AND FEES...............................................................26
3.6 MAXIMUM CHARGES................................................................................26
3.7 INCREASED COSTS................................................................................26
3.8 CAPITAL ADEQUACY...............................................................................27
IV. COLLATERAL: GENERAL TERMS............................................................................27
4.1 SECURITY INTEREST IN THE COLLATERAL............................................................27
4.2 PERFECTION OF SECURITY INTEREST................................................................27
4.3 DISPOSITION OF COLLATERAL......................................................................28
4.4 PRESERVATION OF COLLATERAL.....................................................................28
4.5 OWNERSHIP OF COLLATERAL........................................................................29
4.6 DEFENSE OF AGENT'S AND LENDERS' INTERESTS......................................................29
4.7 BOOKS AND RECORDS..............................................................................30
4.8 FINANCIAL DISCLOSURE...........................................................................30
4.9 COMPLIANCE WITH LAWS...........................................................................30
4.10 INSPECTION OF PREMISES.........................................................................30
4.11 INSURANCE......................................................................................31
4.12 FAILURE TO PAY INSURANCE.......................................................................32
4.13 PAYMENT OF TAXES...............................................................................32
4.14 PAYMENT OF LEASEHOLD OBLIGATIONS...............................................................32
-i-
4.15 RECEIVABLES....................................................................................32
4.16 INVENTORY......................................................................................35
4.17 MAINTENANCE OF EQUIPMENT.......................................................................35
4.18 EXCULPATION OF LIABILITY.......................................................................35
4.19 ENVIRONMENTAL MATTERS..........................................................................36
4.20 FINANCING STATEMENTS...........................................................................38
V. REPRESENTATIONS AND WARRANTIES........................................................................38
5.1 AUTHORITY......................................................................................38
5.2 FORMATION AND QUALIFICATION....................................................................38
5.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.....................................................38
5.4 TAX RETURNS....................................................................................39
5.5 FINANCIAL STATEMENTS...........................................................................39
5.6 CORPORATE NAME.................................................................................40
5.7 O.S.H.A. AND ENVIRONMENTAL COMPLIANCE..........................................................40
5.8 SOLVENCY; NO LITIGATION, VIOLATION, INDEBTEDNESS OR DEFAULT....................................40
5.9 PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES...................................................41
5.10 LICENSES AND PERMITS...........................................................................42
5.11 DEFAULT OF INDEBTEDNESS........................................................................42
5.12 NO DEFAULT.....................................................................................42
5.13 NO BURDENSOME RESTRICTIONS.....................................................................42
5.14 NO LABOR DISPUTES..............................................................................42
5.15 MARGIN REGULATIONS.............................................................................42
5.16 INVESTMENT COMPANY ACT.........................................................................43
5.17 DISCLOSURE.....................................................................................43
5.18 SWAPS. ........................................................................................43
5.19 CONFLICTING AGREEMENTS.........................................................................43
5.20 APPLICATION OF CERTAIN LAWS AND REGULATIONS....................................................43
5.21 BUSINESS AND PROPERTY OF BORROWERS.............................................................43
VI. AFFIRMATIVE COVENANTS.................................................................................44
6.1 PAYMENT OF FEES................................................................................44
6.2 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE AND ASSETS....................................44
6.3 VIOLATIONS.....................................................................................44
6.4 GOVERNMENT RECEIVABLES.........................................................................44
6.5 TANGIBLE NET WORTH.............................................................................44
6.6 FIXED CHARGE COVERAGE RATIO....................................................................45
6.7 EXECUTION OF SUPPLEMENTAL INSTRUMENTS..........................................................45
6.8 PAYMENT OF INDEBTEDNESS........................................................................45
6.9 STANDARDS OF FINANCIAL STATEMENTS..............................................................45
6.10 LEASEHOLD AGREEMENTS...........................................................................45
VII. NEGATIVE COVENANTS....................................................................................45
7.1 MERGER, CONSOLIDATION, ACQUISITION AND SALE OF ASSETS..........................................45
7.2 CREATION OF LIENS..............................................................................46
7.3 GUARANTEES.....................................................................................46
7.4 INVESTMENTS....................................................................................46
7.5 LOANS; CAPITAL CONTRIBUTIONS...................................................................46
7.6 CAPITAL EXPENDITURES...........................................................................46
7.7 DIVIDENDS......................................................................................47
7.8 INDEBTEDNESS...................................................................................47
7.9 NATURE OF BUSINESS.............................................................................47
7.10 TRANSACTIONS WITH AFFILIATES...................................................................48
-ii-
7.11 LEASES. .......................................................................................48
7.12 SUBSIDIARIES...................................................................................48
7.13 FISCAL YEAR AND ACCOUNTING CHANGES.............................................................48
7.14 PLEDGE OF CREDIT...............................................................................48
7.15 AMENDMENT OF ARTICLES OF INCORPORATION, BY-LAWS................................................48
7.16 COMPLIANCE WITH ERISA..........................................................................48
7.17 PREPAYMENT OF INDEBTEDNESS.....................................................................49
7.18 CHANGE IN CONTROL OR OWNERSHIP.................................................................49
VIII. CONDITIONS PRECEDENT..................................................................................49
8.1 CONDITIONS TO INITIAL ADVANCES.................................................................49
8.2 CONDITIONS TO EACH ADVANCE.....................................................................53
IX. INFORMATION AS TO BORROWERS...........................................................................53
9.1 DISCLOSURE OF MATERIAL MATTERS.................................................................53
9.2 SCHEDULES......................................................................................53
9.3 ENVIRONMENTAL REPORTS..........................................................................54
9.4 LITIGATION.....................................................................................54
9.5 MATERIAL OCCURRENCES...........................................................................54
9.6 GOVERNMENT RECEIVABLES.........................................................................54
9.7 ANNUAL FINANCIAL STATEMENTS....................................................................54
9.8 QUARTERLY FINANCIAL STATEMENTS.................................................................55
9.9 MONTHLY FINANCIAL STATEMENTS...................................................................55
9.10 OTHER REPORTS..................................................................................56
9.11 ADDITIONAL INFORMATION.........................................................................56
9.12 PROJECTED OPERATING BUDGET.....................................................................56
9.13 VARIANCES FROM OPERATING BUDGET................................................................56
9.14 NOTICE OF SUITS, ADVERSE EVENTS................................................................56
9.15 ERISA NOTICES AND REQUESTS.....................................................................56
9.16 ADDITIONAL DOCUMENTS...........................................................................57
X. EVENTS OF DEFAULT.....................................................................................57
XI. LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT............................................................60
11.1 RIGHTS AND REMEDIES............................................................................60
11.2 AGENT'S DISCRETION.............................................................................61
11.3 SETOFF. .......................................................................................61
11.4 RIGHTS AND REMEDIES NOT EXCLUSIVE..............................................................61
11.5 ALLOCATION OF PAYMENTS AFTER EVENT OF DEFAULT..................................................61
XII. WAIVERS AND JUDICIAL PROCEEDINGS......................................................................62
12.1 WAIVER OF NOTICE...............................................................................62
12.2 DELAY. ........................................................................................62
XIII. EFFECTIVE DATE AND TERMINATION........................................................................62
13.1 TERM. .........................................................................................62
13.2 TERMINATION....................................................................................63
XIV. REGARDING AGENT.......................................................................................63
14.1 APPOINTMENT....................................................................................63
14.2 NATURE OF DUTIES...............................................................................64
14.3 LACK OF RELIANCE ON AGENT AND RESIGNATION......................................................64
14.4 CERTAIN RIGHTS OF AGENT........................................................................65
14.5 RELIANCE.......................................................................................65
14.6 NOTICE OF DEFAULT..............................................................................65
-iii-
14.7 INDEMNIFICATION................................................................................65
14.8 AGENT IN ITS INDIVIDUAL CAPACITY...............................................................65
14.9 DELIVERY OF DOCUMENTS..........................................................................66
14.10 BORROWERS' UNDERTAKING TO AGENT................................................................66
XV. BORROWING AGENCY......................................................................................66
15.1 BORROWING AGENCY PROVISIONS....................................................................66
15.2 WAIVER OF SUBROGATION..........................................................................67
XVI. MISCELLANEOUS.........................................................................................67
16.1 GOVERNING LAW..................................................................................67
16.2 ENTIRE UNDERSTANDING...........................................................................67
16.3 SUCCESSORS AND ASSIGNS; PARTICIPATIONS; NEW LENDERS............................................70
16.4 APPLICATION OF PAYMENTS........................................................................71
16.5 INDEMNITY......................................................................................71
16.6 NOTICE. .......................................................................................71
16.7 SURVIVAL.......................................................................................73
16.8 SEVERABILITY...................................................................................73
16.9 EXPENSES.......................................................................................73
16.10 INJUNCTIVE RELIEF..............................................................................73
16.11 CONSEQUENTIAL DAMAGES..........................................................................74
16.12 CAPTIONS.......................................................................................74
16.13 COUNTERPARTS; TELECOPIED SIGNATURES............................................................74
16.14 CONSTRUCTION...................................................................................74
16.15 CONFIDENTIALITY; SHARING INFORMATION...........................................................74
16.16 PUBLICITY......................................................................................75
List of Exhibits and Schedules...................................................................................78
Exhibits ........................................................................................................78
Schedules .......................................................................................................78
-iv-
REVOLVING CREDIT, TERM LOAN
AND
SECURITY AGREEMENT
------------------
Revolving Credit, Term Loan and Security Agreement, dated February 13,
2002, among Waxman Industries, Inc., a corporation organized under the laws of
the State of Delaware ("Waxman"), Waxman Consumer Products Group Inc., a
corporation organized under the laws of the State of Delaware ("Waxman
Consumer"), Waxman USA Inc., a corporation organized under the laws of the State
of Delaware ("Waxman USA"), and WAMI Sales, Inc., a corporation organized under
the laws of the State of Delaware ("WAMI Sales") (Waxman, Waxman Consumer,
Waxman USA, WAMI Sales, each a "Borrower" and collectively "Borrowers"), the
financial institutions which are now or which hereafter become a party hereto
(collectively, the "Lenders" and individually a "Lender") and PNC BANK, NATIONAL
ASSOCIATION ("PNC"), as agent for Lenders (PNC, in such capacity, the "Agent").
IN CONSIDERATION of the mutual covenants and undertakings herein
contained, Borrowers, Lenders and Agent hereby agree as follows:
I. DEFINITIONS.
------------
1.1 ACCOUNTING TERMS. As used in this Agreement, the Note, or any
certificate, report or other document made or delivered pursuant to this
Agreement, accounting terms not defined in Section 1.2 or elsewhere in this
Agreement and accounting terms partly defined in Section 1.2 to the extent not
defined, shall have the respective meanings given to them under GAAP; PROVIDED,
HOWEVER, whenever such accounting terms are used for the purposes of determining
compliance with financial covenants in this Agreement, such accounting terms
shall be defined in accordance with GAAP as applied in preparation of the
audited financial statements of Borrowers for the fiscal year ended June 30,
2001, except that such accounting terms shall reflect the Financial Accounting
Standards Board EITF Issue No. 00-25 regarding reporting of procurement costs.
1.1 GENERAL TERMS. For purposes of this Agreement the following terms
shall have the following meanings:
"120 DAY DATED RECEIVABLES" shall mean any Eligible
Receivables outstanding more than 90 days but less than 120 days from the
original invoice date.
"150 DAY DATED RECEIVABLES" shall mean any Eligible
Receivables outstanding more than 120 days but less than 150 days from the
original invoice date.
"ACCOUNTANTS" shall have the meaning set forth in Section 9.7
hereof.
-1-
"ADVANCES" shall mean and include the Revolving Advances,
Letters of Credit and the Term Loan.
"ADVANCE RATES" shall have the meaning set forth in Section
2.1(a) hereof.
"AFFILIATE" of any Person shall mean (a) any Person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with such Person, or (b) any Person who is a director or officer (i) of
such Person, (ii) of any Subsidiary of such Person or (iii) of any Person
described in clause (a) above. For purposes of this definition, control of a
Person shall mean the power, direct or indirect, (x) to vote five percent or
more of the securities having ordinary voting power for the election of
directors of such Person, or (y) to direct or cause the direction of the
management and policies of such Person whether by contract or otherwise.
"AGENT" shall have the meaning set forth in the preamble to
this Agreement and shall include its successors and assigns.
"ALTERNATE BASE RATE" shall mean, for any day, a rate per
annum equal to the higher of (i) the Base Rate in effect on such day and (ii)
the Federal Funds Rate in effect on such day plus one-half of one percent.
"AUTHORITY" shall have the meaning set forth in Section
4.19(d).
"BASE RATE" shall mean the base commercial lending rate of PNC
as publicly announced to be in effect from time to time, such rate to be
adjusted automatically, without notice, on the effective date of any change in
such rate. This rate of interest is determined from time to time by PNC as a
means of pricing some loans to its customers and is neither tied to any external
rate of interest or index nor does it necessarily reflect the lowest rate of
interest actually charged by PNC to any particular class or category of
customers of PNC.
"BLOCKED ACCOUNTS" shall have the meaning set forth in Section
4.15(h).
"BORROWER" or "BORROWERS" shall have the meaning set forth in
the preamble to this Agreement and shall extend to all permitted successors and
assigns of such Persons.
"BORROWING BASE CERTIFICATE" shall mean a certificate duly
executed by an officer of Borrowing Agent appropriately completed and in
substantially the form of EXHIBIT A hereto.
"BORROWERS ON A CONSOLIDATED BASIS" shall mean Waxman,
together with its Subsidiaries, on a consolidated basis as determined in
accordance with GAAP.
"BORROWERS' ACCOUNT" shall have the meaning set forth in
Section 2.8.
"BORROWING AGENT" shall mean Waxman.
"BUSINESS DAY" shall mean any day other than Saturday or
Sunday or a legal holiday on which commercial banks are authorized or required
by law to be closed for business in East Brunswick, New Jersey.
-2-
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. Section 9601
ET SEQ.
"CHANGE OF CONTROL" shall mean (a) the occurrence of any
event (whether in one or more transactions) which results in a transfer of
control of any Borrower to a Person who is not a Permitted Owner or (b) any
merger or consolidation of or with any Borrower or sale of all or substantially
all of the property or assets of any Borrower, other than with or to another
Borrower. For purposes of this definition, "control of Borrower" shall mean the
power, direct or indirect, (x) to vote 50% or more of the securities having
ordinary voting power for the election of directors of any Borrower or (y) to
direct or cause the direction of the management and policies of any Borrower by
contract or otherwise.
"CHANGE OF OWNERSHIP" shall mean (a) 50% or more of the common
stock of any Borrower is no longer owned or controlled by (including for the
purposes of the calculation of percentage ownership, any shares of common stock
into which any capital stock of any Borrower held by any of the Permitted Owners
is convertible or for which any such shares of the capital stock of any Borrower
or of any other Person may be exchanged and any shares of common stock issuable
to such Permitted Owners upon exercise of any warrants, options or similar
rights which may at the time of calculation be held by such Permitted Owners) a
Person who is a Permitted Owner or (b) any merger, consolidation or sale of
substantially all of the property or assets of any Borrower, other than with or
to another Borrower.
"CHARGES" shall mean all taxes, charges, fees, imposts, levies
or other assessments, including, without limitation, all net income, gross
income, gross receipts, sales, use, ad valorem, value added, transfer,
franchise, profits, inventory, capital stock, license, withholding, payroll,
employment, social security, unemployment, excise, severance, stamp, occupation
and property taxes, custom duties, fees, assessments, liens, claims and charges
of any kind whatsoever, together with any interest and any penalties, additions
to tax or additional amounts, imposed by any taxing or other authority, domestic
or foreign (including, without limitation, the Pension Benefit Guaranty
Corporation or any environmental agency or superfund), upon the Collateral, any
Borrower or any of its Affiliates.
"CLOSING DATE" shall mean February 13, 2002 or such other date
as may be agreed to by the parties hereto.
"CODE" shall mean the Internal Revenue Code of 1986, as
amended from time to time and the regulations promulgated thereunder.
"COLLATERAL" shall mean and include:
(a) all Receivables;
(b) all Equipment;
(c) all General Intangibles;
(d) all Inventory;
-3-
(e) all Investment Property;
(f) all Real Property;
(g) the Leasehold Interests;
(h) the Waxman Foreign Subsidiary Stock;
(i) all of each Borrower's right, title and interest in and to
(i) its respective goods and other property including, but not limited to, goods
in transit, fixtures, and all merchandise returned or rejected by Customers,
relating to or securing any of the Receivables; (ii) all of each Borrower's
rights as a consignor, a consignee, an unpaid vendor, mechanic, artisan, or
other lienor, including stoppage in transit, setoff, detinue, replevin,
reclamation and repurchase; (iii) all additional amounts due to any Borrower
from any Customer relating to the Receivables; (iv) other property, including
warranty claims, relating to any goods securing this Agreement; (v) all of each
Borrower's contract rights, rights of payment which have been earned under a
contract right, instruments (including promissory notes), negotiable and
non-negotiable bills of lading and other documents of title, documents, chattel
paper (including electronic chattel paper), warehouse receipts, deposit
accounts, letters of credit, and money; (vi) all commercial tort claims (whether
now existing or hereafter arising); (vii) if and when obtained by any Borrower,
all real and personal property of third parties in which such Borrower has been
granted a lien or security interest as security for the payment or enforcement
of Receivables; and (viii) any other goods, personal property or real property
now owned or hereafter acquired in which any Borrower has expressly granted a
security interest or may in the future grant a security interest to Agent
hereunder, or in any amendment or supplement hereto or thereto, or under any
other agreement between Agent and any Borrower;
(j) copies of all of each Borrower's ledger sheets, ledger
cards, files, correspondence, records, books of account, business papers,
computers, computer software (owned by any Borrower or in which it has an
interest), computer programs, tapes, disks and documents relating to (a), (b),
(c), (d), (e), (f), (g), (h) or (i) of this Paragraph; and
(k) all proceeds and products of (a), (b), (c), (d), (e), (f),
(g), (h),(i) or (j) in whatever form, including, but not limited to: cash,
deposit accounts (whether or not comprised solely of proceeds), certificates of
deposit, insurance proceeds (including hazard, flood and credit insurance),
negotiable instruments and other instruments for the payment of money, chattel
paper, security agreements, documents, eminent domain proceeds, condemnation
proceeds and tort claim proceeds.
"COMMITMENT PERCENTAGE" of any Lender shall mean the percentage set
forth below such Lender's name on the signature page hereof as same may be
adjusted upon any assignment by a Lender pursuant to Section 16.3(b) hereof.
"COMMITMENT TRANSFER SUPPLEMENT" shall mean a document in the form of
EXHIBIT 16.3 hereto, properly completed and otherwise in form and substance
satisfactory to Agent by which the Purchasing Lender purchases and assumes a
portion of the obligation of Lenders to make Advances under this Agreement.
-4-
"CONSENTS" shall mean all filings and all licenses, permits,
consents, approvals, authorizations, qualifications and orders of governmental
authorities and other third parties, domestic or foreign, necessary to carry on
any Borrower's business, including, without limitation, any Consents required
under all applicable federal, state or other applicable law.
"CONTESTED CHARGES" shall have the meaning set forth in
Section 4.13 hereof.
"CONTRACT RATE" shall mean, as applicable, the Revolving
Interest Rate or the Term Loan Rate.
"CONTROLLED GROUP" shall mean all members of a controlled
group of corporations and all trades or businesses (whether or not incorporated)
under common control which, together with any Borrower, are treated as a single
employer under Section 414 of the Code.
"CUSTOMER" shall mean and include the account debtor with
respect to any Receivable and/or the prospective purchaser of goods, services or
both with respect to any contract or contract right, and/or any party who has
entered into any contract or other arrangement with any Borrower, pursuant to
which such Borrower is to deliver any personal property or perform any services.
"DEFAULT" shall mean an event which, with the giving of notice
or passage of time or both, would constitute an Event of Default.
"DEFAULT RATE" shall have the meaning set forth in Section 3.1
hereof.
"DEFAULTING LENDER" shall have the meaning set forth in
Section 2.17 hereof. "DEPOSITORY ACCOUNTS" shall have the
meaning set forth in Section 4.15(h) hereof.
"DOCUMENTS" shall have the meaning set forth in Section 8.1(c)
hereof.
"DOLLAR" and the sign "$" shall mean lawful money of the
United States of America.
"DOMESTIC RATE LOAN" shall mean any Advance that bears
interest based upon the Alternate Base Rate.
"EARLY TERMINATION DATE" shall have the meaning set forth in
Section 13.1 hereof.
"EBITDA" shall mean for any period the sum of (i) Net Income
(or loss) of Borrowers on a consolidated basis for such period, PLUS (ii) all
interest expense of Borrowers on a consolidated basis for such period, PLUS
(iii) all charges against income of Borrowers on a consolidated basis for such
period for federal, state and local taxes expensed, PLUS (iv) depreciation
expenses of Borrowers on a consolidated basis for such period, PLUS (v)
amortization expenses of Borrowers on a consolidated basis for such period, PLUS
(vi) non-cash expenses and charges, PLUS (vii) extraordinary losses of Borrowers
on a consolidated basis for such period, MINUS (viii) extraordinary gains of
Borrowers on a consolidated basis for such period.
-5-
"ELIGIBLE INVENTORY" shall mean and include Inventory
excluding work in process, with respect to each Borrower valued at the lower of
cost or market value, determined on a first-in-first-out basis, which is not, in
Agent's good faith reasonable credit judgment, obsolete, slow moving or
unmerchantable and which Agent, in its good faith reasonable discretion, shall
not deem ineligible Inventory, based on such considerations as Agent may from
time to time deem appropriate including, without limitation, whether the
Inventory is subject to a perfected, first priority security interest in favor
of Agent and whether the Inventory conforms to all standards imposed by any
governmental agency, division or department thereof which has regulatory
authority over such goods or the use or sale thereof. Eligible Inventory shall
include all Inventory in transit for which title has passed to a Borrower, which
is insured to the full value thereof and for which Agent shall have in its
possession (a) all negotiable bills of lading properly endorsed and (b) all
non-negotiable bills of lading issued in Agent's name.
"ELIGIBLE RECEIVABLES" shall mean and include with respect to
each Borrower, each Receivable of such Borrower arising in the ordinary course
of such Borrower's business and which Agent, in its good faith reasonable credit
judgment, shall deem to be an Eligible Receivable, based on such considerations
as Agent may from time to time deem appropriate. A Receivable shall not be
deemed eligible unless such Receivable is subject to Agent's first priority
perfected security interest and no other Lien (other than Permitted
Encumbrances), and is evidenced by an invoice or other documentary evidence
satisfactory to Agent. In addition, no Receivable shall be an Eligible
Receivable if:
(a) it arises out of a sale made by any Borrower to an
Affiliate of any Borrower or to a Person controlled by an Affiliate of any
Borrower;
(b) it is due or unpaid more than 60 days after the due
date or more than 150 days after the original invoice date;
(c) 50% or more of the Receivables from any one Customer
are not deemed Eligible Receivables hereunder and are not covered by adequate
credit insurance. Such percentage may, in Agent's good faith reasonable
discretion, be increased or decreased from time to time;
(d) any covenant, representation or warranty contained in
this Agreement with respect to such Receivable has been breached;
(e) to the extent not covered by adequate credit insurance
(subject, in the case of credit insurance, to Agent's receipt of confirmation of
coverage within 30 days after Agent's request therefor), the Customer shall (i)
apply for, suffer, or consent to the appointment of, or the taking of possession
by, a receiver, custodian, trustee or liquidator of itself or of all or a
substantial part of its property or call a meeting of its creditors, (ii) admit
in writing its inability, or be generally unable, to pay its debts as they
become due or cease operations of its present business, (iii) make a general
assignment for the benefit of creditors, (iv) commence a voluntary case under
any state or federal bankruptcy laws (as now or hereafter in effect), (v) be
adjudicated a bankrupt or insolvent, (vi) file a petition seeking to take
advantage of any other law providing for the relief of debtors, (vii) acquiesce
to, or fail to have dismissed or stayed within 45 days, any
-6-
petition which is filed against it in any involuntary case under such bankruptcy
laws, or (viii) take any action for the purpose of effecting any of the
foregoing;
(f) the sale is to a Customer outside the continental United
States of America, unless the sale is on letter of credit, guaranty or
acceptance terms, in each case acceptable to Agent in its sole discretion;
(g) the sale to the Customer is on a xxxx-and-hold, guaranteed
sale, sale-and-return, sale on approval, consignment or any other repurchase or
return basis or is evidenced by chattel paper;
(h) Agent believes, in its good faith reasonable judgment,
that collection of such Receivable is insecure or that such Receivable may not
be paid by reason of the Customer's financial inability to pay and lack of
adequate credit insurance with respect to such Receivable (subject, in the case
of credit insurance, to Agent's receipt of confirmation of coverage within 30
days after Agent's request therefor);
(i) the Customer is the United States of America, any state or
any department, agency or instrumentality of any of them, unless the applicable
Borrower assigns its right to payment of such Receivable to Agent pursuant to
the Assignment of Claims Act of 1940, as amended (31 U.S.C. Sub-Section 3727 ET
SEQ. and 41 U.S.C. Sub-Section 15 ET SEQ.) or has otherwise complied with
other applicable statutes or ordinances;
(j) the goods giving rise to such Receivable have not been
shipped to or as designated by the Customer or the services giving rise to such
Receivable have not been performed by the applicable Borrower or the Receivable
otherwise does not represent a final sale;
(k) the Receivable is subject to any offset, deduction,
defense, dispute, or counterclaim, the Customer is also a creditor or supplier
of a Borrower or the Receivable is contingent in any respect or for any reason;
PROVIDED, THAT, the portion of such Receivable of such Customer in excess of the
amount at any time and from time to time owed, or claimed owed, by the
applicable Borrower to such Customer shall be deemed Eligible Receivables;
(l) the applicable Borrower has made any agreement with any
Customer for any deduction therefrom, except for discounts or allowances made in
the ordinary course of business for prompt payment or other prudent business
reasons, all of which discounts or allowances are validly utilized with respect
to the Receivable and are reflected in the calculation of the face value of each
respective invoice related thereto or on a credit memorandum or monthly
statement issued to such Customer;
(m) any return, rejection or repossession of the merchandise
has occurred or the rendition of services has been disputed;
(n) such Receivable is not payable to a Borrower; or
(o) such Receivable is not otherwise satisfactory to Agent as
determined in good faith by Agent in the exercise of its discretion in a
reasonable manner.
-7-
"ENVIRONMENTAL COMPLAINT" shall have the meaning set forth in
Section 4.19(d) hereof.
"ENVIRONMENTAL LAWS" shall mean all federal, state and local
environmental, land use, zoning, health, chemical use, safety and sanitation
laws, statutes, ordinances and codes relating to the protection of the
environment and/or governing the use, storage, treatment, generation,
transportation, processing, handling, production or disposal of Hazardous
Substances and the rules, regulations, decisions, orders and directives of
federal, state and local governmental agencies and authorities with respect
thereto.
"EQUIPMENT" shall mean and include as to each Borrower all of
such Borrower's goods (other than Inventory) whether now owned or hereafter
acquired and wherever located including, without limitation, all equipment,
machinery, apparatus, motor vehicles, fittings, furniture, furnishings,
fixtures, parts, accessories and all replacements and substitutions therefor or
accessions thereto.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended from time to time and the rules and regulations
promulgated thereunder.
"EVENT OF DEFAULT" shall mean the occurrence of any of the
events set forth in Article X hereof.
"FEDERAL FUNDS RATE" shall mean, for any day, the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published for such
day (or if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or if such rate is not so published for
any day which is a Business Day, the average of quotations for such day on such
transactions received by PNC from three Federal funds brokers of recognized
standing selected by PNC.
"FEE LETTER" shall mean the fee letter dated the date hereof
among Borrowers and PNC.
"FIXED CHARGE COVERAGE RATIO" shall mean and include, with
respect to any fiscal period of Borrowers on a consolidated basis, but solely as
to the United States' based operations of Borrowers on a consolidated basis, the
ratio of (a) EBITDA, MINUS unfinanced capitalized expenditures made,
distributions made (other than distributions made to a Borrower), and taxes
expensed during such period PLUS, (to the extent included in EBITDA) the amount
of corporate selling, general and administrative expenses attributed to external
foreign sales allocated to Waxman's consolidated sales, to (b) all principal
payments on Indebtedness (including principal payments under capitalized leases)
scheduled to be paid during such period and all cash interest expense with
respect to Indebtedness for borrowed money paid during such period.
"FOREIGN SUBSIDIARY" shall mean a Subsidiary incorporated,
formed or organized in a state outside of the jurisdiction of the United States.
"FORMULA AMOUNT" shall have the meaning set forth in Section
2.1(a).
-8-
"GAAP" shall mean generally accepted accounting principles in
the United States of America in effect from time to time.
"GENERAL INTANGIBLES" shall mean and include as to each
Borrower all of such Borrower's general intangibles, whether now owned or
hereafter acquired including, without limitation, all payment intangibles,
choses in action, causes of action, corporate or other business records,
inventions, designs, patents, patent applications, equipment formulations,
manufacturing procedures, quality control procedures, trademarks, service marks,
trade secrets, goodwill, copyrights, design rights, software, computer
information, source codes, codes, records and dates, registrations, licenses,
franchises, customer lists, tax refunds, tax refund claims, computer programs,
all claims under guaranties, security interests or other security held by or
granted to such Borrower to secure payment of any of the Receivables by a
Customer (other than to the extent covered by Receivables) all rights of
indemnification and all other intangible property of every kind and nature
(other than Receivables).
"GOVERNMENTAL BODY" shall mean any nation or government, any
state or other political subdivision thereof or any entity exercising the
legislative, judicial, regulatory or administrative functions of or pertaining
to a government.
"GUARANTOR" shall mean TWI, International, Inc. and any other
Person who may hereafter guarantee payment or performance of the whole or any
part of the Obligations and "Guarantors" means collectively all such Persons.
"GUARANTOR SECURITY AGREEMENT" shall mean any Security
Agreement executed by any Guarantor in favor of Agent securing the Guaranty of
such Guarantor.
"GUARANTY" shall mean any guaranty of the obligations of
Borrowers executed by a Guarantor in favor of Agent for its benefit and for the
ratable benefit of Lenders.
"HAZARDOUS DISCHARGE" shall have the meaning set forth in
Section 4.19(d) hereof.
"HAZARDOUS SUBSTANCE" shall mean, without limitation, any
flammable explosives, radon, radioactive materials, asbestos, urea formaldehyde
foam insulation, polychlorinated biphenyls, petroleum and petroleum products,
methane, hazardous materials, Hazardous Wastes, hazardous or Toxic Substances or
related materials as defined in CERCLA, the Hazardous Materials Transportation
Act, as amended (49 U.S.C. Sections 1801, ET SEQ.), RCRA, Articles 15 and 27 of
the New York State Environmental Conservation Law or any other applicable
Environmental Law and in the regulations adopted pursuant thereto.
"HAZARDOUS WASTES" shall mean all waste materials subject to
regulation under CERCLA, RCRA or applicable state law, and any other applicable
Federal and state laws now in force or hereafter enacted relating to hazardous
waste disposal.
"INDEBTEDNESS" of a Person at a particular date shall mean all
obligations of such Person which in accordance with GAAP would be classified
upon a balance sheet as liabilities (except capital stock and surplus earned or
otherwise) and in any event, without limitation by reason of enumeration, shall
include all indebtedness, debt and other similar monetary obligations of such
Person whether direct or guaranteed, and all premiums, if any, due at the
-9-
required prepayment dates of such indebtedness, and all indebtedness secured by
a Lien on assets owned by such Person, whether or not such indebtedness actually
shall have been created, assumed or incurred by such Person (the amount of such
indebtedness being deemed for purposes of this definition to be the lesser of
the fair value of such assets subject to the Lien or the actual amount of such
indebtedness). Any indebtedness of such Person resulting from the acquisition by
such Person of any assets subject to any Lien shall be deemed, for the purposes
hereof, to be the equivalent of the creation, assumption and incurring of the
indebtedness secured thereby, whether or not actually so created, assumed or
incurred.
"INVENTORY" shall mean and include as to each Borrower all of
such Borrower's now owned or hereafter acquired goods, merchandise and other
personal property, wherever located, to be furnished under any consignment
arrangement, contract of service or held for sale or lease, all raw materials,
work in process, finished goods and materials and supplies of any kind, nature
or description which are or might be used or consumed in such Borrower's
business or used in selling or furnishing such goods, merchandise and other
personal property, and all documents of title or other documents representing
them.
"INVENTORY ADVANCE RATE" shall have the meaning set forth in
Section 2.1(a)(y)(ii) hereof.
"INVESTMENT PROPERTY" shall mean and include as to each
Borrower, all of such Borrower's now owned or hereafter acquired securities
(whether certificated or uncertificated), securities entitlements, securities
accounts, commodities contracts and commodities accounts.
"ISSUER" shall mean any Person who issues a Letter of Credit
and/or accepts a draft pursuant to the terms hereof.
"LATE RECEIVABLES" shall mean 120 Day Dated Receivables and
150 Day Dated Receivables.
"LEASEHOLD INTERESTS" shall mean all of each Borrower's
right, title and interest in and to the premises listed on Schedule 1.2(a).
"LENDER" and "LENDERS" shall have the meaning ascribed to such
term in the preamble to this Agreement and shall include each Person which
becomes a transferee, successor or assign of any Lender.
"LETTER OF CREDIT FEES" shall have the meaning set forth in
Section 3.2.
"LETTERS OF CREDIT" shall have the meaning set forth in
Section 2.9.
"LIEN" shall mean any mortgage, deed of trust, pledge,
hypothecation, assignment, security interest, lien (whether statutory or
otherwise), Charge, claim or encumbrance, or preference, priority or other
security agreement or preferential arrangement held or asserted in respect of
any asset of any kind or nature whatsoever including, without limitation, any
conditional sale or other title retention agreement, any lease having
substantially the same economic effect as any of the foregoing, and the filing
of, or agreement to give, any financing statement under the Uniform Commercial
Code or comparable law of any jurisdiction.
-10-
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect
on (a) the condition, operations, assets, business or prospects of the
applicable Person or Persons, (b) any Borrower's ability to pay the Obligations
in accordance with the terms thereof, (c) the value of the Collateral, or
Agent's Liens on the Collateral or the priority of any such Lien or (d) the
practical realization of the benefits of Agent's and each Lender's rights and
remedies under this Agreement and the Other Documents.
"MAXIMUM LOAN AMOUNT" shall mean $16,155,000 less repayments
under the Term Loan.
"MAXIMUM TERM LOAN AMOUNT" shall mean $1,155,000 less
repayments under the Term Loan.
"MAXIMUM REVOLVING ADVANCE AMOUNT" shall mean $15,000,000.
"MONTHLY ADVANCES" shall have the meaning set forth in Section
3.1 hereof.
"MORTGAGE" shall mean the mortgage on the Real Property owned
by any Borrower together with all extensions, renewals, amendments, supplements,
modifications, substitutions and replacements thereto and thereof.
"MULTIEMPLOYER PLAN" shall mean a "multiemployer plan" as
defined in Sections 3(37) and 4001(a)(3) of ERISA to which any Borrower or
Controlled Group member is obligated to make any contribution.
"NET INCOME" shall mean the net income of Borrowers on a
consolidated basis, as determined in accordance with GAAP.
"NOTE" shall mean, collectively, the Term Note and the
Revolving Credit Note.
"OBLIGATIONS" " shall mean and include any and all loans,
advances, debts, liabilities, obligations, covenants and duties owing by
Borrowers to Lenders or Agent or to any other direct or indirect subsidiary or
affiliate of Agent or any Lender of any kind or nature, present or future
(including, without limitation, any interest accruing thereon after maturity, or
after the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding relating to any Borrower, whether
or not a claim for post-filing or post-petition interest is allowed in such
proceeding), whether or not evidenced by any note, guaranty or other instrument,
whether arising under any agreement, instrument or document, (including, without
limitation, this Agreement and the Other Documents) whether or not for the
payment of money, whether arising by reason of an extension of credit, opening
of a letter of credit, loan, equipment lease or guarantee, under any interest or
currency swap, future, option or other similar agreement, or in any other
manner, whether arising out of overdrafts or deposit or other accounts or
electronic funds transfers (whether through automated clearing houses or
otherwise) or out of the Agent's or any Lenders non-receipt of or inability to
collect funds or otherwise not being made whole in connection with depository
transfer check or other similar arrangements, whether direct or indirect
(including those acquired by assignment or participation), absolute or
contingent, joint or several, due or to become due, now existing or hereafter
arising, contractual or tortious, liquidated or unliquidated, regardless of how
such
-11-
indebtedness or liabilities arise or by what agreement or instrument they may be
evidenced or whether evidenced by any agreement or instrument, including, but
not limited to, any and all of any Borrower's Indebtedness and/or liabilities
under this Agreement, the Other Documents or under any other agreement between
Agent or Lenders and any Borrower and any amendments, extensions, renewals or
increases and all costs and expenses of Agent and any Lender incurred in the
documentation, negotiation, modification, enforcement, collection or otherwise
in connection with any of the foregoing, including but not limited to reasonable
attorneys' fees and expenses and all obligations of any Borrower to Agent or
Lenders to perform acts or refrain from taking any action.
"OTHER DOCUMENTS" shall mean the Mortgage, the Note, the
Questionnaire, any Guaranty, any Guarantor Security Agreement, any Pledge
Agreement and any and all other agreements, instruments and documents,
including, without limitation, guaranties, pledges, powers of attorney,
consents, and all other writings heretofore, now or hereafter executed by any
Borrower or any Guarantor and/or delivered to Agent or any Lender in respect of
the transactions contemplated by this Agreement.
"PARENT" of any Person shall mean a corporation or other
entity owning, directly or indirectly at least 50% of the shares of stock or
other ownership interests having ordinary voting power to elect a majority of
the directors of the Person, or other Persons performing similar functions for
any such Person.
"PARTICIPANT" shall mean each Person who shall be granted the
right by any Lender to participate in any of the Advances and who shall have
entered into a participation agreement in form and substance satisfactory to
such Lender.
"PAYMENT OFFICE" shall mean initially Xxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxx Xxxxxxxxx, Xxx Xxxxxx 00000; thereafter, such other office of
Agent, if any, which it may designate by notice to Borrowing Agent and to each
Lender to be the Payment Office.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"PERMITTED ENCUMBRANCES" shall mean (a) Liens in favor of
Agent for the benefit of Agent and Lenders; (b) Liens for taxes, assessments or
other governmental charges not delinquent or being contested in good faith and
by appropriate proceedings and with respect to which proper reserves have been
taken by Borrowers; PROVIDED, THAT, the Lien shall have no effect on the
priority of the Liens in favor of Agent or the value of the assets in which
Agent has such a Lien and a stay of enforcement of any such Lien shall be in
effect; (c) Liens disclosed in the financial statements referred to in Section
5.5, the existence of which Agent has consented to in writing; (d) deposits or
pledges to secure obligations under worker's compensation, social security or
similar laws, or under unemployment insurance; (e) deposits or pledges to secure
bids, tenders, contracts (other than contracts for the payment of money),
leases, statutory obligations, surety and appeal bonds and other obligations of
like nature arising in the ordinary course of any Borrower's business; (f)
judgment Liens that have been stayed or bonded and mechanics', workers',
materialmen's or other like Liens arising in the ordinary course of any
Borrower's business with respect to obligations which are not due or which are
being contested in good faith by the applicable Borrower or which are fully
insured (subject to applicable
-12-
deductions and co-insurance) or being defended at the sole cost and risk of the
insurer; (g) Liens placed upon fixed assets hereafter acquired to secure a
portion of the purchase price thereof, provided that (x) any such lien shall not
encumber any other property of the Borrowers and (y) the aggregate amount of
Indebtedness secured by such Liens incurred as a result of such purchases during
any fiscal year shall not exceed the amount provided for in Section 7.6; (h)
other Liens incidental to the conduct of Borrowers' business or the ownership of
its property and assets which were not incurred in connection with the borrowing
of money or the obtaining of advances or credit, and which do not in the
aggregate materially detract from Agent's or Lenders' rights in and to the
Collateral or the value of Borrowers' property or assets or which do not
materially impair the use thereof in the operation of Borrowers' business; (i)
easements, rights of way, zoning and similar covenants and restrictions and
other similar encumbrances or title defects which, in the aggregate, do not
materially detract from the value of property subject thereto or materially
interfere with the conduct of the business of the Borrowers; (j) liens in favor
of custom and revenue authorities to secure payment of custom duties arising in
the ordinary course of business of Borrowers; (k) liens arising from (i)
operating leases and the precautionary UCC financing statement filings in
respect thereof and (ii) equipment or other materials which are not owned by a
Borrower located on the premises of such Borrower (but not in connection with,
or as part of, the financing thereof) from time to time in the ordinary course
of business and consistent with current practices of Borrowers and the
precautionary UCC financing statement filings in respect thereof; and (l) Liens
disclosed on SCHEDULE 1.2(b).
"PERMITTED OWNERS" shall mean Xxxxxx Xxxxxx, Xxxxxx Xxxxxx,
Xxxxxxxx Xxxxxx, trusts for the benefit of any of Xxxxxx Xxxxxx, Xxxxxx Xxxxxx,
Xxxxxxxx Xxxxxx or members of their families, the heirs of or administrators or
executors for the respective estates of Xxxxxx Xxxxxx, Xxxxxx Xxxxxx, Xxxxxxxx
Xxxxxx or any person, entity or group of persons controlled by any of the
foregoing.
"PERSON" shall mean any individual, sole proprietorship,
partnership, corporation, business trust, joint stock company, trust,
unincorporated organization, association, limited liability company,
institution, public benefit corporation, joint venture, entity or government
(whether Federal, state, county, city, municipal or otherwise, including any
instrumentality, division, agency, body or department thereof).
"PLAN" shall mean any employee benefit plan within the meaning
of Section 3(3) of ERISA, other than a Plan described in Section 4(b) of ERISA,
maintained for employees of Borrowers or any member of the Controlled Group to
which any Borrower or any member of the Controlled Group is required to
contribute on behalf of any of its employees.
"PLEDGE AGREEMENT" shall mean each of the Pledge Agreements in
substantially the form of Exhibit B hereto pursuant to which 65% of the
outstanding equity interests of each of the Waxman Foreign Subsidiaries is
pledged to Agent and Lenders.
"PRO FORMA BALANCE SHEET" shall have the meaning set forth in
Section 5.5(a) hereof.
"PRO FORMA FINANCIAL STATEMENTS" shall have the meaning set
forth in Section 5.5(b) hereof.
-13-
"PROJECTIONS" shall have the meaning set forth in Section
5.5(b) hereof.
"PURCHASING LENDER" shall have the meaning set forth in
Section 16.3 hereof.
"QUESTIONNAIRE" shall mean the Documentation Information
Questionnaire and the responses thereto provided by Borrowers and delivered to
Agent.
"RCRA" shall mean the Resource Conservation and Recovery Act,
42 U.S.C.ss.ss.6901 ET SEQ., as same may be amended from time to time.
"REAL PROPERTY" shall mean all of each Borrower's right, title
and interest in and to the owned and leased premises identified on SCHEDULE 4.19
hereto.
"RECEIVABLES" shall mean and include, as to each Borrower, all
of such Borrower's accounts, contract rights, instruments (including those
evidencing indebtedness owed to Borrowers by their Affiliates), documents,
chattel paper (including electronic chattel paper), general intangibles relating
to accounts, drafts and acceptances, credit card receivables, and all other
forms of obligations owing to such Borrower arising out of or in connection with
the sale or lease of Inventory or the rendition of services, all supporting
obligations, guarantees and other security therefor, whether secured or
unsecured, now existing or hereafter created, and whether or not specifically
sold or assigned to Agent hereunder.
"RECEIVABLES ADVANCE RATE" shall have the meaning set forth in
Section 2.1(a)(y)(i) hereof.
"RELEASE" shall have the meaning set forth in Section
5.7(c)(i) hereof.
"REPORTABLE EVENT" shall mean a reportable event described in
Section 4043(c) of ERISA or the regulations promulgated thereunder.
"REQUIRED LENDERS" shall mean Lenders holding 50% of the
outstanding Advances or such other percentage as determined by Agent and Lenders
at the time of the addition of a Lender under this Agreement, and if no Advances
are outstanding, the Commitment Percentages.
"RESERVE PERCENTAGE" shall mean the maximum effective
percentage in effect on any day as prescribed by the Board of Governors of the
Federal Reserve System (or any successor) for determining the reserve
requirements (including, without limitation, supplemental, marginal and
emergency reserve requirements) with respect to eurocurrency funding.
"REVOLVING ADVANCES" shall mean Advances made other than
Letters of Credit and the Term Loan.
"REVOLVING CREDIT NOTE" shall mean the promissory note
referred to in Section 2.1(a) hereof.
"REVOLVING INTEREST RATE" shall mean an interest rate per
annum equal to the sum of the Alternate Base Rate plus one-half percent.
-14-
"SETTLEMENT DATE" shall mean the Closing Date and thereafter
Wednesday of each week unless such day is not a Business Day in which case it
shall be the next succeeding Business Day.
"SUBSIDIARY" shall mean a corporation or other entity of whose
shares of stock or other ownership interests having ordinary voting power (other
than stock or other ownership interests having such power only by reason of the
happening of a contingency) to elect a majority of the directors of such
corporation, or other Persons performing similar functions for such entity, are
owned, directly or indirectly, by such Person.
"TANGIBLE NET WORTH" at a particular date, shall mean all
amounts which would be included under shareholders' equity on a balance sheet of
the Borrowers on a consolidated basis, determined in accordance with GAAP as at
such date, excluding assets properly classified as intangible assets under GAAP.
"TERM" shall have the meaning set forth in Section 13.1
hereof.
"TERM LOAN" shall mean the Advances made pursuant to Section
2.2 hereof.
"TERM LOAN RATE" shall mean an interest rate per annum equal
to the sum of the Alternate Base Rate plus one percent.
"TERM NOTE" shall mean the promissory note described in
Section 2.2 hereof.
"TERMINATION EVENT" shall mean (i) a Reportable Event with
respect to any Plan which is subject to Title IV of ERISA; (ii) the withdrawal
of any Borrower or any member of the Controlled Group from a Plan which is
subject to Title IV of ERISA during a plan year in which such entity was a
"substantial employer" as defined in Section 4001(a)(2) of ERISA; (iii) the
providing of notice of intent to terminate a Plan in a distress termination
described in Section 4041(c) of ERISA; (iv) the institution by the PBGC of
proceedings to terminate a Plan or Multiemployer Plan; (v) any event or
condition (a) which might constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan or
Multiemployer Plan, or (b) that may result in termination of a Multiemployer
Plan pursuant to Section 4041A of ERISA; or (vi) the partial or complete
withdrawal within the meaning of Sections 4203 and 4205 of ERISA, of any
Borrower or any member of the Controlled Group from a Multiemployer Plan. It is
provided, however, that no event shall constitute a "Termination Event" unless
such event is reasonably likely to have a Material Adverse Effect on any
Borrower or Controlled Group member.
"TOXIC SUBSTANCE" shall mean and include any material present
on the Real Property or the Leasehold Interests which is subject to regulation
under the Toxic Substances Control Act (TSCA), 15 U.S.C. Section 2601 ET SEQ.,
applicable state law, or any other applicable Federal or state laws now in force
or hereafter enacted relating to toxic substances. "Toxic Substance" includes
but is not limited to asbestos, polychlorinated biphenyls (PCBs) and lead-based
paints.
"TRANSACTIONS" shall have the meaning set forth in Section 5.5
hereof.
-15-
"TRANSFEREE" shall have the meaning set forth in Section
16.3(b) hereof.
"UNDRAWN AVAILABILITY" at a particular date shall mean an
amount equal to (a) the lesser of (i) the Formula Amount or (ii) the Maximum
Revolving Advance Amount, MINUS (b) the sum of (i) the outstanding amount of
Advances (other than the Term Loan), PLUS (ii) all amounts due and owing to
Borrowers' trade creditors which are outstanding 60 days or more after the due
dates thereof, PLUS (iii) fees and expenses for which Borrowers are liable but
which have not been paid or charged to Borrowers' Account.
"WAXMAN FOREIGN SUBSIDIARIES" shall mean CWI International
China Ltd., TWI International Taiwan, Inc. and Waxman International Limited.
"WAXMAN FOREIGN SUBSIDIARY STOCK" shall mean 65% of all of the
outstanding equity interests of each of the Waxman Foreign Subsidiaries.
"WEEK" shall mean the time period commencing with the opening
of business on a Wednesday and ending on the end of business the following
Tuesday.
1.3 UNIFORM COMMERCIAL CODE TERMS. All terms used herein and defined in
the Uniform Commercial Code as adopted in the state governing the Uniform
Commercial Code transaction from time to time shall have the meaning given
therein unless otherwise defined herein. To the extent the definition of any
category or type of Collateral is expanded by any amendment, modification or
revision to the Uniform Commercial Code, such expanded definition will apply
automatically as of the date of such amendment, modification or revision.
1.4 CERTAIN MATTERS OF CONSTRUCTION. 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. Any pronoun used
shall be deemed to cover all genders. Wherever appropriate in the context, terms
used herein in the singular also include the plural and VICE VERSA. All
references to statutes and related regulations shall include any amendments of
same and any successor statutes and regulations. Unless otherwise provided, all
references to any instruments or agreements to which Agent is a party,
including, without limitation, references to any of the Other Documents, shall
include any and all modifications or amendments thereto and any and all
extensions or renewals thereof.
II. ADVANCES, PAYMENTS.
-------------------
2.1 (a) REVOLVING ADVANCES. Subject to the terms and conditions set
forth in this Agreement including, without limitation, Section 2.1(b), each
Lender, severally and not jointly, will make Revolving Advances to Borrowers in
aggregate amounts outstanding at any time equal to such Lender's Commitment
Percentage of the lesser of (x) the Maximum Revolving Advance Amount less the
aggregate amount of outstanding Letters of Credit or (y) an amount equal to the
sum of:
(i) the sum of (A) up to 85%, subject to the provisions of
Section 2.1(b) hereof ("Receivables Advance Rate"), of Eligible
Receivables, excluding
-16-
Late Receivables, PLUS (B) the lesser of (x) the Receivables Advance
Rate multiplied by the amount of 120 Day Dated Receivables, and (y)
$500,000, PLUS (C) the lesser of (x) 150 Day Dated Receivables, and (y)
$150,000;
(ii) up to the lesser of (A) 60%, subject to the provisions of
Section 2.1(b) hereof ("Inventory Advance Rate"), of the value of the
Eligible Inventory, and (B) $7,500,000 (the Receivables Advance Rate
and the Inventory Advance Rate shall be referred to collectively, as
the "Advance Rates"), MINUS
(iii) the aggregate amount of outstanding Letters of Credit,
MINUS
(iv) such reserves as Agent may reasonably deem proper and
necessary from time to time.
The amount derived from the sum of (x) Sections 2.1(a)(y)(i) and (ii)
MINUS (y) Section 2.1 (a)(y)(iii) and (iv) at any time and from time to time
shall be referred to as the "Formula Amount." The Revolving Advances shall be
evidenced by one or more secured promissory notes (collectively, the "Revolving
Credit Note") substantially in the form attached hereto as EXHIBIT 2.1(a).
(b) DISCRETIONARY RIGHTS. The Advance Rates may be increased
or decreased by Agent at any time and from time to time in the exercise of its
reasonable discretion. Each Borrower consents to any such increases or decreases
and acknowledges that decreasing the Advance Rates or increasing the reserves
may limit or restrict Advances requested by Borrowing Agent. Notwithstanding the
foregoing, any decrease of Advance Rates or creation of new reserves shall be
based on a field examination or appraisal commenced at the Agent's request but
conducted by an independent third party at Borrower's cost. The Agent shall
provide the Borrowing Agent forty-five (45) days prior notice of any such
decrease or new reserve. The Agent and Borrowers acknowledge that any party on
Agent's approved appraiser list, Xxxxxxx Consulting LLC or such other third
party mutually agreed by Agent and the Borrowing Agent shall be an acceptable
third party appraiser for this purpose.
2.2 TERM LOAN. Subject to the terms and conditions of this Agreement,
each Lender, severally and not jointly, will make a Term Loan to Borrowers in
the sum equal to the Lender's Commitment Percentage of $1,155,000. The Term Loan
shall be advanced on the Closing Date and shall be, with respect to principal,
payable, subject to acceleration upon the occurrence of an Event of Default
under this Agreement or termination of this Agreement, in equal monthly
installments of $13,750, commencing on March 1, 2002, with the balance, together
with all accrued and unpaid interest on the Term Loan, payable on the third
anniversary of the Closing Date. The Term Loan shall be evidenced by one or more
secured promissory notes (collectively, the "Term Note") in substantially the
form attached hereto as EXHIBIT 2.2.
2.3 PROCEDURE FOR REVOLVING ADVANCES. Borrowing Agent on behalf of any
Borrower may notify Agent prior to 12:00 p.m. on a Business Day of a Borrower's
request to incur, on that day, a Revolving Advance hereunder. Should any amount
required to be paid as interest hereunder, or as fees or other charges under
this Agreement or any other agreement with Agent
-17-
or Lenders, or with respect to any other Obligation, become due, same shall be
deemed a request for a Revolving Advance as of the date such payment is due, in
the amount required to pay in full such interest, fee, charge or Obligation
under this Agreement or any other agreement with Agent or Lenders, and such
request shall be irrevocable.
2.4 DISBURSEMENT OF ADVANCE PROCEEDS. All Advances shall be disbursed
from whichever office or other place Agent may designate from time to time and,
together with any and all other Obligations of Borrowers to Agent or Lenders,
shall be charged to Borrowers' Account on Agent's books. During the Term,
Borrowers may use the Revolving Advances by borrowing, prepaying and
reborrowing, all in accordance with the terms and conditions hereof. The
proceeds of each Revolving Advance requested by Borrowers or deemed to have been
requested by Borrowers under Section 2.3 hereof shall, with respect to requested
Revolving Advances to the extent Lenders make such Revolving Advances, be made
available to the applicable Borrower on the day so requested by way of credit to
such Borrower's operating account at PNC, or such other bank as Borrowing Agent
may designate following notification to Agent, in immediately available federal
funds or other immediately available funds or, with respect to Revolving
Advances deemed to have been requested by any Borrower, be disbursed to Agent to
be applied to the outstanding Obligations giving rise to such deemed request.
2.5 MAXIMUM ADVANCES. The aggregate balance of Advances outstanding at
any time shall not exceed the Maximum Loan Amount. The aggregate balance of
Revolving Advances outstanding at any time shall not exceed the lesser of (a)
the Maximum Revolving Advance Amount less the aggregate amount of outstanding
Letters of Credit, or (b) the Formula Amount. The aggregate balance of the Term
Loan outstanding at any time shall not exceed the Maximum Term Loan Amount.
2.6 REPAYMENT OF ADVANCES.
(a) The Revolving Advances shall be due and payable in full on the
last day of the Term subject to earlier prepayment as herein provided. The Term
Loan shall be due and payable as provided in Section 2.2 hereof and in the Term
Note, subject to mandatory prepayments as herein provided.
(b) Each Borrower recognizes that the amounts evidenced by checks,
notes, drafts or any other items of payment relating to and/or proceeds of
Collateral may not be collectible by Agent on the date received. In
consideration of Agent's agreement to conditionally credit Borrowers' Account as
of the Business Day on which Agent receives those items of payment, each
Borrower agrees that, in computing the charges under this Agreement, all items
of payment shall be deemed applied by Agent on account of the Obligations one
Business Day after the Business Day Agent receives such payments via wire
transfer or electronic depository check. Agent is not, however, required to
credit Borrowers' Account for the amount of any item of payment which is
unsatisfactory to Agent and Agent may charge Borrowers' Account for the amount
of any item of payment which is returned to Agent unpaid.
(c) All payments of principal, interest and other amounts payable
hereunder, or under any of the Other Documents shall be made to Agent at the
Payment Office not later than 1:00 P.M. (New York Time) on the due date therefor
in lawful money of the United States of
-18-
America in federal funds or other funds immediately available to Agent. Agent
shall have the right to effectuate payment on any and all Obligations due and
owing hereunder by charging Borrowers' Account or by making Advances as provided
in Section 2.3 hereof.
(d) Borrowers shall pay principal, interest, and all other amounts
payable hereunder, or under any related agreement, without any deduction
whatsoever, including, but not limited to, any deduction for any setoff or
counterclaim.
2.7 REPAYMENT OF EXCESS ADVANCES. The aggregate balance of Advances
outstanding at any time in excess of the maximum amount of Advances permitted
hereunder shall be immediately due and payable without the necessity of any
demand, at the Payment Office, whether or not a Default or Event of Default has
occurred. Agent shall endeavor to provide notice to the Borrowing Agent upon the
occurrence of such event, but the failure of the Agent to provide such notice
shall in no event constitute a violation or breach of this Agreement.
2.8 STATEMENT OF ACCOUNT. Agent shall maintain, in accordance with its
customary procedures, a loan account ("Borrowers' Account") in the name of
Borrowers in which shall be recorded the date and amount of each Advance made by
Agent and the date and amount of each payment in respect thereof; PROVIDED,
HOWEVER, the failure by Agent to record the date and amount of any Advance shall
not adversely affect Agent or any Lender. Each month, Agent shall send to
Borrowing Agent a statement showing the accounting for the Advances made,
payments made or credited in respect thereof, and other transactions between
Agent and Borrowers, during such month. The monthly statements shall be deemed
correct and binding upon Borrowers in the absence of manifest error and shall
constitute an account stated between Lenders and Borrowers unless Agent receives
a written statement of Borrowers' specific exceptions thereto within 30 days
after such statement is received by Borrowing Agent. The records of Agent with
respect to the loan account shall be conclusive evidence absent manifest error
of the amounts of Advances and other charges thereto and of payments applicable
thereto.
2.9 LETTERS OF CREDIT. Subject to the terms and conditions hereof,
Agent shall issue or cause the issuance of Letters of Credit ("Letters of
Credit") on behalf of any Borrower; PROVIDED, HOWEVER, that Agent will not be
required to issue or cause to be issued any Letters of Credit to the extent that
the face amount of such Letters of Credit would then cause the sum of (i) the
outstanding Revolving Advances PLUS (ii) outstanding Letters of Credit to exceed
the lesser of (x) the Maximum Revolving Advance Amount or (y) the Formula
Amount. The maximum amount of outstanding Letters of Credit shall not exceed
$1,000,000 in the aggregate at any time. All disbursements or payments related
to Letters of Credit shall be deemed to be Domestic Rate Loans consisting of
Revolving Advances and shall bear interest at the Revolving Interest Rate.
Letters of Credit that have not been drawn upon shall not bear interest.
2.10 ISSUANCE OF LETTERS OF CREDIT.
(a) Borrowing Agent, on behalf of Borrowers, may request Agent to
issue or cause the issuance of a Letter of Credit by delivering to Agent at the
Payment Office, Agent's form of Letter of Credit Application (the "Letter of
Credit Application") completed to the satisfaction of Agent, and, such other
certificates, documents and other papers and information as Agent may reasonably
request. Borrowing Agent, on behalf of Borrowers, also has the right to
-19-
give instructions and make agreements with respect to any application, any
applicable letter of credit and security agreement, any applicable letter of
credit reimbursement agreement and/or any other applicable agreement, any letter
of credit and the disposition of documents, disposition of any unutilized funds,
and to agree with Agent upon any amendment, extension or renewal of any Letter
of Credit.
(b) Each Letter of Credit shall, among other things, (i) provide
for the payment of sight drafts or acceptances of usance drafts when presented
for honor thereunder in accordance with the terms thereof and when accompanied
by the documents described therein and (ii) have an expiry date not later than
twelve (12) months after such Letter of Credit's date of issuance and in no
event later than the last day of the Term. Each Letter of Credit shall be
subject to the Uniform Customs and Practice for Documentary Credits (1993
Revision), International Chamber of Commerce Publication No. 500, and any
amendments or revision thereof adhered to by the Issuer and, to the extent not
inconsistent therewith, the laws of the State of Ohio.
(c) Agent shall use its reasonable efforts to notify Lenders of
the request by Borrowing Agent for a Letter of Credit hereunder.
2.11 REQUIREMENTS FOR ISSUANCE OF LETTERS OF CREDIT.
(a) In connection with the issuance of any Letter of Credit,
Borrowers shall indemnify, save and hold Agent, each Lender and each Issuer
harmless from any loss, cost, expense or liability, including, without
limitation, payments made by Agent, any Lender or any Issuer and expenses and
reasonable attorneys' fees incurred by Agent, any Lender or Issuer arising out
of, or in connection with, any Letter of Credit to be issued or created for any
Borrower. Borrowers shall be bound by Agent's or any Issuer's regulations and
good faith interpretations of any Letter of Credit issued or created for
Borrowers' Account, although this interpretation may be different from its
own; and, neither Agent, nor any Lender, nor any Issuer nor any of their
correspondents shall be liable for any error, negligence, or mistakes, whether
of omission or commission, in following Borrowing Agent's or any Borrower's
instructions or those contained in any Letter of Credit or of any modifications,
amendments or supplements thereto or in issuing or paying any Letter of Credit,
except for Agent's, any Lender's, any Issuer's or such correspondents' bad faith
or willful misconduct.
(b) Borrowing Agent shall authorize and direct any Issuer to name
the applicable Borrower as the "Applicant" or "Account Party" of each Letter of
Credit. If Agent is not the Issuer of any Letter of Credit, Borrowing Agent
shall authorize and direct the Issuer to deliver to Agent all instruments,
documents, and other writings and property received by the Issuer pursuant to
the Letter of Credit and to accept and rely upon Agent's instructions and
agreements with respect to all matters arising in connection with the Letter of
Credit or the application therefor.
(c) In connection with all Letters of Credit issued or caused to
be issued by Agent under this Agreement, each Borrower hereby appoints Agent, or
its designee, as its attorney, with full power and authority (i) to sign and/or
endorse such Borrower's name upon any warehouse or other receipts; (ii) to sign
such Borrower's name on bills of lading; (iii) to
-20-
clear Inventory through the United States of America Customs Department
("Customs") in the name of such Borrower or Agent or Agent's designee, and to
sign and deliver to Customs officials powers of attorney in the name of such
Borrower for such purpose; and (iv) to complete in such Borrower's name or
Agent's, or in the name of Agent's designee, any order, sale or transaction,
obtain the necessary documents in connection therewith, and collect the proceeds
thereof. Neither Agent nor its attorneys will be liable for any acts or
omissions nor for any error of judgment or mistakes of fact or law, except for
Agent's or its attorney's bad faith or willful misconduct. This power, being
coupled with an interest, is irrevocable as long as any Letters of Credit remain
outstanding.
(d) Each Lender shall to the extent of the percentage amount
equal to the product of such Lender's Commitment Percentage times the
aggregate amount of all unreimbursed reimbursement obligations arising from
disbursements made or obligations incurred with respect to the Letters of
Credit be deemed to have irrevocably purchased an undivided participation in
each such unreimbursed reimbursement obligation. In the event that at the time
a disbursement is made the unpaid balance of Revolving Advances plus the
aggregate amount of outstanding Letters of Credit exceeds or would exceed,
with the making of such disbursement, the lesser of the Maximum Revolving
Advance Amount or the Formula Amount, and such disbursement is not reimbursed
by Borrowers within two Business Days, Agent shall promptly notify each Lender
and upon Agent's demand each Lender shall pay to Agent such Lender's
proportionate share of such unreimbursed disbursement together with such
Lender's proportionate share of Agent's unreimbursed costs and expenses
relating to such unreimbursed disbursement. Upon receipt by Agent of a
repayment from any Borrower of any amount disbursed by Agent for which Agent
had already been reimbursed by Lenders, Agent shall deliver to each Lender
that Lender's pro rata share of such repayment. Each Lender's participation
commitment shall continue until the last to occur of any of the following
events: (A) Agent ceases to be obligated to issue or cause to be issued
Letters of Credit hereunder; (B) no Letter of Credit issued hereunder remains
outstanding and uncancelled or (C) all Persons (other than the applicable
Borrower) have been fully reimbursed for all payments made under or relating
to Letters of Credit.
2.12 ADDITIONAL PAYMENTS. Any sums expended by Agent or any Lender due
to any Borrower's failure to perform or comply with its obligations under this
Agreement or any Other Document including, without limitation, any Borrower's
obligations under Sections 4.2, 4.4, 4.12, 4.13, 4.14 and 6.1 hereof, may be
charged to Borrowers' Account as a Revolving Advance and added to the
Obligations.
2.13 MANNER OF BORROWING AND PAYMENT.
(a) Each borrowing of Revolving Advances shall be advanced
according to the applicable Commitment Percentages of Lenders. The Term Loan
shall be advanced according to the Commitment Percentages of Lenders.
(b) Each payment (including each prepayment) by Borrowers on
account of the principal of and interest on the Revolving Advances, shall be
applied to the Revolving Advances pro rata according to the applicable
Commitment Percentages of Lenders. Each payment (including each prepayment) by
Borrowers on account of the principal of and interest
-21-
on the Term Note, shall be made from or to, or applied to that portion of the
Term Loan evidenced by the Term Note pro rata according to the Commitment
Percentages of Lenders. Except as expressly provided herein, all payments
(including prepayments) to be made by any Borrower on account of principal,
interest and fees shall be made without set off or counterclaim and shall be
made to Agent on behalf of the Lenders to the Payment Office, in each case on or
prior to 1:00 P.M., New York time, in Dollars and in immediately available
funds.
(c) Notwithstanding anything to the contrary contained in Sections
2.13(a) and (b) hereof, commencing with the first Business Day following the
Closing Date, each borrowing of Revolving Advances shall be advanced by Agent
and each payment by any Borrower on account of Revolving Advances shall be
applied first to those Revolving Advances advanced by Agent. On or before 1:00
P.M., New York time, on each Settlement Date commencing with the first
Settlement Date following the Closing Date, Agent and Lenders shall make certain
payments as follows: (i) if the aggregate amount of new Revolving Advances made
by Agent during the preceding Week (if any) exceeds the aggregate amount of
repayments applied to outstanding Revolving Advances during such preceding Week,
then each Lender shall provide Agent with funds in an amount equal to its
applicable Commitment Percentage of the difference between (w) such Revolving
Advances and (x) such repayments and (ii) if the aggregate amount of repayments
applied to outstanding Revolving Advances during such Week exceeds the aggregate
amount of new Revolving Advances made during such Week, then Agent shall provide
each Lender with funds in an amount equal to its applicable Commitment
Percentage of the difference between (y) such repayments and (z) such Revolving
Advances.
(i) Each Lender shall be entitled to earn interest at the
applicable Contract Rate on outstanding Advances which it has funded.
(ii) Promptly following each Settlement Date, Agent shall
submit to each Lender a certificate with respect to payments received
and Advances made during the Week immediately preceding such Settlement
Date. Such certificate of Agent shall be conclusive in the absence of
manifest error.
(d) If any Lender or Participant (a "benefitted Lender") shall at any
time receive any payment of all or part of its Advances, or interest thereon, or
receive any Collateral in respect thereof (whether voluntarily or involuntarily
or by set-off) in a greater proportion than any such payment to and Collateral
received by any other Lender, if any, in respect of such other Lender's
Advances, or interest thereon, and such greater proportionate payment or receipt
of Collateral is not expressly permitted hereunder, such benefitted Lender shall
purchase for cash from the other Lenders a participation in such portion of each
such other Lender's Advances, or shall provide such other Lender with the
benefits of any such Collateral, or the proceeds thereof, as shall be necessary
to cause such benefitted Lender to share the excess payment or benefits of such
Collateral or proceeds ratably with each of the other Lenders; PROVIDED,
HOWEVER, that if all or any portion of such excess payment or benefits is
thereafter recovered from such benefitted Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest. Each Lender so purchasing a portion of another
Lender's Advances may exercise all rights of payment (including, without
limitation, rights of set-off) with respect to such portion as fully as if such
Lender were the direct holder of such portion.
-22-
(e) Unless Agent shall have been notified by telephone, confirmed
in writing, by any Lender that such Lender will not make the amount which would
constitute its applicable Commitment Percentage of the Advances available to
Agent, Agent may (but shall not be obligated to) assume that such Lender shall
make such amount available to Agent on the next Settlement Date and, in reliance
upon such assumption, make available to Borrowers a corresponding amount. Agent
will promptly notify Borrowers of its receipt of any such notice from a Lender.
If such amount is made available to Agent on a date after such next Settlement
Date, such Lender shall pay to Agent on demand an amount equal to the product of
(i) the daily average Federal Funds Rate (computed on the basis of a year of 360
days) during such period as quoted by Agent, times (ii) such amount, times (iii)
the number of days from and including such Settlement Date to the date on which
such amount becomes immediately available to Agent. A certificate of Agent
submitted to any Lender with respect to any amounts owing under this paragraph
(e) shall be conclusive, in the absence of manifest error. If such amount is not
in fact made available to Agent by such Lender within three Business Days after
such Settlement Date, Agent shall be entitled to recover such an amount, with
interest thereon at the rate per annum then applicable to such Revolving
Advances hereunder, on demand from Borrowers; PROVIDED, HOWEVER, that Agent's
right to such recovery shall not prejudice or otherwise adversely affect
Borrowers' rights (if any) against such Lender.
2.14 MANDATORY PREPAYMENTS. Subject to Section 4.3 hereof, when any
Borrower sells or otherwise disposes of any Collateral other than Inventory in
the ordinary course of business, Borrowers shall repay the Advances in an amount
equal to the net cash proceeds of such sale (i.e., gross proceeds less the
reasonable costs of such sales or other dispositions), such repayments to be
made promptly but in no event more than one Business Day following receipt of
such net proceeds, and until the date of payment, such proceeds shall be held in
trust for Agent. The foregoing shall not be deemed to be implied consent to any
such sale otherwise prohibited by the terms and conditions hereof. Such
repayments shall be applied (x) first, to the outstanding principal installments
of the Term Loan in the inverse order of the maturities thereof and (y) second,
to the remaining Advances in such order as Agent may determine, subject to
Borrower's ability to reborrow Revolving Advances in accordance with the terms
hereof.
2.15 USE OF PROCEEDS. Borrowers shall apply the proceeds of Advances to
(i) repay existing Indebtedness owed to Congress Financial Corporation, (ii) pay
fees and expenses relating to this transaction, and (iii) to provide for their
working capital needs.
2.16 DEFAULTING LENDER.
(a) Notwithstanding anything to the contrary contained herein, in
the event any Lender (x) has refused (which refusal constitutes a breach by such
Lender of its obligations under this Agreement) to make available its portion of
any Advance or (y) notifies either Agent or Borrowing Agent that it does not
intend to make available its portion of any Advance (if the actual refusal would
constitute a breach by such Lender of its obligations under this Agreement)
(each, a "Lender Default"), all rights and obligations hereunder of such Lender
(a "Defaulting Lender") as to which a Lender Default is in effect and of the
other parties hereto shall be modified to the extent of the express provisions
of this Section 2.16 while such Lender Default remains in effect.
-23-
(b) Advances shall be incurred pro rata from Lenders (the
"Non-Defaulting Lenders") which are not Defaulting Lenders based on their
respective Commitment Percentages, and no Commitment Percentage of any Lender or
any pro rata share of any Advances required to be advanced by any Lender shall
be increased as a result of such Lender Default. Amounts received in respect of
principal of any type of Advances shall be applied to reduce the applicable
Advances of each Lender pro rata based on the aggregate of the outstanding
Advances of that type of all Lenders at the time of such application; provided,
that, such amount shall not be applied to any Advances of a Defaulting Lender at
any time when, and to the extent that, the aggregate amount of Advances of any
Non-Defaulting Lender exceeds such Non-Defaulting Lender's Commitment Percentage
of all Advances then outstanding.
(c) A Defaulting Lender shall not be entitled to give instructions to
Agent or to approve, disapprove, consent to or vote on any matters relating to
this Agreement and the Other Documents. All amendments, waivers and other
modifications of this Agreement and the Other Documents may be made without
regard to a Defaulting Lender and, for purposes of the definition of "Required
Lenders", a Defaulting Lender shall be deemed not to be a Lender and not to have
Advances outstanding.
(d) Other than as expressly set forth in this Section 2.16, the rights
and obligations of a Defaulting Lender (including the obligation to indemnify
Agent) and the other parties hereto shall remain unchanged. Nothing in this
Section 2.16 shall be deemed to release any Defaulting Lender from its
obligations under this Agreement and the Other Documents, shall alter such
obligations, shall operate as a waiver of any default by such Defaulting Lender
hereunder, or shall prejudice any rights which any Borrower, Agent or any Lender
may have against any Defaulting Lender as a result of any default by such
Defaulting Lender hereunder.
(e) In the event a Defaulting Lender retroactively cures to the
satisfaction of Agent the breach which caused a Lender to become a Defaulting
Lender, such Defaulting Lender shall no longer be a Defaulting Lender and shall
be treated as a Lender under this Agreement.
III. INTEREST AND FEES.
-----------------
3.1 INTEREST. Interest on Advances shall be payable in arrears on the
first Business Day of each month. Interest charges shall be computed on the
actual principal amount of Advances outstanding during the month (the "Monthly
Advances") at a rate per annum equal to (i) with respect to Revolving Advances,
the applicable Revolving Interest Rate and (ii) with respect to the Term Loan,
the applicable Term Loan Rate (as applicable, the "Contract Rate"). Whenever,
subsequent to the date of this Agreement, the Alternate Base Rate is increased
or decreased, the Contract Rate shall be similarly changed without notice or
demand of any kind by an amount equal to the amount of such change in the
Alternate Base Rate during the time such change or changes remain in effect.
Upon and after the occurrence of an Event of Default, and during the
continuation thereof, the Obligations shall bear interest at the applicable
Contract Rate plus two percent per annum (the "Default Rate").
-24-
3.2 LETTER OF CREDIT FEES.
(a) Borrowers shall pay (x) to Agent, for the benefit of Lenders,
fees for each Letter of Credit for the period from and excluding the date of
issuance of same to and including the date of expiration or termination, equal
to the average daily face amount of each outstanding Letter of Credit multiplied
by three and one quarter percent per annum, such fees to be calculated on the
basis of a 360-day year for the actual number of days elapsed and to be payable
monthly in arrears on the first day of each month and on the last day of the
Term and (y) to the Issuer, any and all fees and expenses as agreed upon by the
Issuer and the Borrowing Agent in connection with any Letter of Credit,
including, without limitation, in connection with the opening, amendment or
renewal of any such Letter of Credit and any acceptances created thereunder and
shall reimburse Agent for any and all fees and expenses, if any, paid by Agent
to the Issuer (all of the foregoing fees, the "Letter of Credit Fees"). All such
charges shall be deemed earned in full on the date when the same are due and
payable hereunder and shall not be subject to rebate or proration upon the
termination of this Agreement for any reason nor impacted by any subsequent
change in the Issuer's prevailing charges for that type of transaction.
(b) Upon termination of this Agreement for any reason, Borrowers
will cause cash to be deposited and maintained in an account with Agent, as cash
collateral, in an amount equal to 105% of the outstanding Letters of Credit, and
each Borrower hereby irrevocably authorizes Agent, in its discretion, on such
Borrower's behalf and in such Borrower's name, to open such an account and to
make and maintain deposits therein, or in an account opened by such Borrower, in
the amounts required to be made by such Borrower, out of the proceeds of
Receivables or other Collateral or out of any other funds of such Borrower
coming into any Lender's possession at any time. Agent will invest such cash
collateral (less applicable reserves) in such short-term money-market items as
to which Agent and such Borrower mutually agree and the net return on such
investments shall be credited to such account and constitute additional cash
collateral. No Borrower may withdraw amounts credited to any such account except
upon payment and performance in full of all Obligations and termination of this
Agreement.
3.3 (a) CLOSING FEE. Upon the execution of this Agreement, Borrowers
shall pay to Agent for the ratable benefit of Lenders a closing fee of $121,163
less that portion of the commitment fee of $35,000 and the deposit fee of
$35,000 heretofore paid by Borrowers to Agent remaining after application of
such fees to out of pocket expenses incurred by Agent.
(b) FACILITY FEE. If, for any month during the Term, the
average daily unpaid balance of the Revolving Advances plus the aggregate amount
of the outstanding Letters of Credit for each day of such month does not equal
the Maximum Revolving Advance Amount, then Borrowers shall pay to Agent for the
ratable benefit of Lenders a fee at a rate equal to .375% per annum on the
amount by which the Maximum Revolving Advance Amount exceeds such average daily
unpaid balance. Such fee shall be payable to Agent in arrears on the last day of
each quarter.
3.4 COLLATERAL MONITORING FEE. Borrowers shall pay to Agent on the
first Business Day of each month a collateral monitoring fee in an amount equal
to $2,000 per month. Borrower shall pay to Agent, in addition to this monthly
fee, the amount of $750 per day for each
-25-
of Agent's employees engaged to conduct any field examination or collateral
audit for Borrowers, plus all costs and disbursements incurred by Agent in the
performance of such audit.
3.5 COMPUTATION OF INTEREST AND FEES. Interest and fees hereunder shall
be computed on the basis of a year of 360 days and for the actual number of days
elapsed. If any payment to be made hereunder becomes due and payable on a day
other than a Business Day, the due date thereof shall be extended to the next
succeeding Business Day and interest thereon shall be payable at the applicable
Contract Rate during such extension.
3.6 MAXIMUM CHARGES. In no event whatsoever shall interest and other
charges charged hereunder exceed the highest rate permissible under law. In the
event interest and other charges as computed hereunder would otherwise exceed
the highest rate permitted under law, such excess amount shall be first applied
to any unpaid principal balance owed by Borrowers, and if the then remaining
excess amount is greater than the previously unpaid principal balance, Lenders
shall promptly refund such excess amount to Borrowers and the provisions hereof
shall be deemed amended to provide for such permissible rate.
3.7 INCREASED COSTS. In the event that any applicable law, treaty or
governmental regulation, or any change therein or in the interpretation or
application thereof, or compliance by any Lender (for purposes of this Section
3.7, the term "Lender" shall include Agent or any Lender and any corporation or
bank controlling Agent or any Lender) with any request or directive (whether or
not having the force of law) from any central bank or other financial, monetary
or other authority, shall:
(a) subject Agent or any Lender to any tax of any kind whatsoever
with respect to this Agreement or any Other Document or change the basis of
taxation of payments to Agent or any Lender of principal, fees, interest or any
other amount payable hereunder or under any Other Documents (except for changes
in the rate of tax on the overall net income of Agent or any Lender by any
jurisdiction in which it is subject to taxation);
(b) impose, modify or hold applicable any reserve, special
deposit, assessment or similar requirement against assets held by, or deposits
in or for the account of, advances or loans by, or other credit extended by, any
office of Agent or any Lender, including (without limitation) pursuant to
Regulation D of the Board of Governors of the Federal Reserve System; or
(c) impose on Agent or any Lender any other condition with respect
to this Agreement or any Other Document;
(d) and the result of any of the foregoing is to increase the cost
to Agent or any Lender of making, renewing or maintaining its Advances hereunder
by an amount that Agent or such Lender deems to be material or to reduce the
amount of any payment (whether of principal, interest or otherwise) in respect
of any of the Advances by an amount that Agent or such Lender deems to be
material,
then, in any case Borrowers shall promptly pay Agent or such Lender, upon its
demand, such additional amount as will compensate Agent or such Lender for such
additional cost or such reduction, as the case may be. Agent or such Lender
shall certify the amount of such additional
-26-
cost or reduced amount to Borrowers (including the manner of calculating same),
and such certification shall be conclusive absent manifest error.
3.8 CAPITAL ADEQUACY.
(a) In the event that Agent or any Lender shall have determined
that any applicable law, rule, regulation or guideline regarding capital
adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by Agent or any Lender (for purposes of this Section 3.8, the term "Lender"
shall include Agent or any Lender and any corporation or bank controlling Agent
or any Lender) with any request or directive regarding capital adequacy (whether
or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on Agent or any Lender's capital as a consequence of its obligations hereunder
to a level below that which Agent or such Lender could have achieved but for
such adoption, change or compliance (taking into consideration Agent's and each
Lender's policies with respect to capital adequacy) by an amount deemed by Agent
or any Lender to be material, then, from time to time, Borrowers shall pay upon
demand to Agent or such Lender such additional amount or amounts as will
compensate Agent or such Lender for such reduction. In determining such amount
or amounts, Agent or such Lender may use any reasonable averaging or attribution
methods. The protection of this Section 3.8 shall be available to Agent and each
Lender regardless of any possible contention of invalidity or inapplicability
with respect to the applicable law, regulation or condition.
(b) A certificate of Agent or such Lender setting forth such
amount or amounts as shall be necessary to compensate Agent or such Lender with
respect to Section 3.8(a) hereof when delivered to Borrowers shall be conclusive
absent manifest error.
IV. COLLATERAL: GENERAL TERMS.
--------------------------
4.1 SECURITY INTEREST IN THE COLLATERAL. To secure the prompt payment
and performance to Agent and each Lender of the Obligations, each Borrower
hereby assigns, pledges and grants to Agent for its benefit and for the ratable
benefit of each Lender a continuing security interest in and to all of its
Collateral, whether now owned or existing or hereafter acquired or arising and
wheresoever located. Each Borrower shall xxxx its books and records as may be
necessary or appropriate to evidence, protect and perfect Agent's security
interest. Each Borrower shall promptly provide Agent with written notice of all
commercial tort claims made by any Borrower, such notice to contain the case
title together with the applicable court and a brief description of the
claim(s). Upon delivery of each such notice, such Borrower shall be deemed to
hereby grant to Agent a security interest and lien in and to such commercial
tort claims and all proceeds thereof.
4.2 PERFECTION OF SECURITY INTEREST. Each Borrower shall take all
action that may be necessary or desirable, or that Agent may request, so as at
all times to maintain the validity, perfection, enforceability and priority of
Agent's security interest in the Collateral or to enable Agent to protect,
exercise or enforce its rights hereunder and in the Collateral, including, but
not
-27-
limited to, (i) immediately discharging all Liens other than Permitted
Encumbrances, (ii) obtaining landlords' or mortgagees' lien waivers, (iii)
delivering to Agent, endorsed or accompanied by such instruments of assignment
as Agent may specify, and stamping or marking, in such manner as Agent may
specify, any and all chattel paper, instruments, letters of credits and advices
thereof and documents evidencing or forming a part of the Collateral, (iv)
entering into warehousing, lockbox and other custodial arrangements satisfactory
to Agent, and (v) executing and delivering financing statements, control
agreements, instruments of pledge, mortgages, notices and assignments, in each
case in form and substance satisfactory to Agent, relating to the creation,
validity, perfection, maintenance or continuation of Agent's security interest
under the Uniform Commercial Code or other applicable law. Agent is hereby
authorized to prepare and file financing statements in accordance with the
Uniform Commercial Code as adopted in the state governing the Uniform Commercial
Code transaction from time to time. By its signature hereto, each Borrower
hereby authorizes Agent to file against such Borrower, one or more financing,
continuation, or amendment statements pursuant to the Uniform Commercial Code in
form and substance satisfactory to Agent (which statements may have a
description of collateral which is broader than that set forth herein). All
charges, expenses and fees Agent may incur in doing any of the foregoing, and
any local taxes relating thereto (excluding any taxes in respect of Agent's or
any Lender's income), shall be charged to Borrowers' Account as a Revolving
Advance of a Domestic Rate Loan and added to the Obligations, or, at Agent's
option, shall be paid to Agent for the ratable benefit of Lenders immediately
upon demand.
4.3 DISPOSITION OF COLLATERAL. Each Borrower will safeguard and protect
all Collateral for Agent's general account and make no disposition thereof
whether by sale, lease or otherwise except (a) the sale of Inventory in the
ordinary course of business, (b) the disposition or transfer of obsolete and
worn-out Equipment in the ordinary course of business during any fiscal year
having an aggregate fair market value of not more than $200,000 and only to the
extent that (i) the proceeds of any such disposition are used to acquire
replacement Equipment which is subject to Agent's first priority security
interest or (ii) the proceeds of which are remitted to Agent to be applied
pursuant to Section 2.14, and (c) the sale or other disposition of Equipment so
long as (i) any proceeds from such sales are remitted to Agent to be applied
pursuant to Section 2.14, (ii) such sales do not involve Equipment having an
aggregate fair market value in excess of $100,000 for all such Equipment
disposed of in any fiscal year of Borrowers, and (iii) such sales do not have an
adverse effect on the operations or business of Borrowers taken as a whole. In
the event that any part of the Collateral is sold or otherwise disposed of in
connection with a sale or other disposition permitted by this Section 4.3,
Agent, at the request and expense of the applicable Borrower, shall, as soon as
reasonably practicable, duly release the security interest created pursuant to
this Agreement and assign, transfer and deliver to such Borrower (without
recourse and without any representation or warranty) such Collateral as is then
being (or has been) so sold or released and as may be in the possession of Agent
and has not theretofore been released pursuant to this Agreement.
4.4 PRESERVATION OF COLLATERAL. Following the occurrence of an Event of
Default, in addition to the rights and remedies set forth in Section 11.1
hereof, Agent: (a) may at any time take such steps as Agent deems necessary to
protect Agent's interest in and to preserve the Collateral, including the hiring
of such security guards or the placing of other security protection measures as
Agent may deem appropriate; (b) may employ and maintain at any of any
-28-
Borrower's premises a custodian who shall have full authority to do all acts
necessary to protect Agent's interests in the Collateral; (c) may lease
warehouse facilities to which Agent may move all or part of the Collateral; (d)
may use any Borrower's owned or leased lifts, hoists, trucks and other
facilities or equipment for handling or removing the Collateral; and (e) shall
have, and is hereby granted, a right of ingress and egress to the places where
the Collateral is located, and may proceed over and through any of Borrower's
owned or leased property. Each Borrower shall cooperate fully with all of
Agent's efforts to preserve the Collateral and will take such actions to
preserve the Collateral as Agent may direct. All of Agent's expenses of
preserving the Collateral, including any expenses relating to the bonding of a
custodian, shall be charged to Borrowers' Account as a Revolving Advance of a
Domestic Rate Loan and added to the Obligations.
4.5 OWNERSHIP OF COLLATERAL. With respect to the Collateral, at the
time the Collateral becomes subject to Agent's security interest: (a) each
Borrower shall be the sole owner of and fully authorized and able to sell,
transfer, pledge and/or grant a first priority security interest in each and
every item of the its respective Collateral to Agent; and, except for Permitted
Encumbrances the Collateral shall be free and clear of all Liens and
encumbrances whatsoever; (b) each document and agreement executed by each
Borrower or delivered to Agent or any Lender in connection with this Agreement
shall be true and correct in all material respects; (c) all signatures and
endorsements of each Borrower that appear on such documents and agreements shall
be genuine and each Borrower shall have full capacity to execute same; and (d)
each Borrower's Equipment and Inventory shall be located as set forth on
SCHEDULE 4.5 and shall not be removed from such location(s) without the prior
written consent of Agent except with respect to the sale of Inventory in the
ordinary course of business and Equipment to the extent permitted in Section 4.3
hereof.
4.6 DEFENSE OF AGENT'S AND LENDERS' INTERESTS. Until (a) payment and
performance in full of all of the Obligations and (b) termination of this
Agreement, Agent's interests in the Collateral shall continue in full force and
effect. During such period no Borrower shall, without Agent's prior written
consent, pledge, sell (except Inventory in the ordinary course of business and
Equipment to the extent permitted in Section 4.3 hereof), assign, transfer,
create or suffer to exist a Lien upon or encumber or allow or suffer to be
encumbered in any way except for Permitted Encumbrances, any part of the
Collateral. Each Borrower shall defend Agent's interests in the Collateral
against any and all Persons whatsoever. At any time following an Event of
Default, Agent shall have the right to take possession of the indicia of the
Collateral and the Collateral in whatever physical form contained, including
without limitation: labels, stationery, documents, instruments and advertising
materials. If Agent exercises this right to take possession of the Collateral,
Borrowers shall, upon demand, assemble it in the best manner possible and make
it available to Agent at a place reasonably convenient to Agent. In addition,
with respect to all Collateral, Agent and Lenders shall be entitled to all of
the rights and remedies set forth herein and further provided by the Uniform
Commercial Code or other applicable law. Subject to Section 4.15(d), each
Borrower shall, and Agent may, at its option, instruct all suppliers, carriers,
forwarders, warehousers or others receiving or holding cash, checks, Inventory,
documents or instruments in which Agent holds a security interest to deliver
same to Agent and/or subject to Agent's order and if they shall come into any
Borrower's possession, they, and each of them, shall be held by such Borrower in
trust as Agent's trustee, and such
-29-
Borrower will immediately deliver them to Agent in their original form together
with any necessary endorsement.
4.7 BOOKS AND RECORDS. Each Borrower shall (a) keep proper books of
record and account in which full, true and correct entries will be made of all
dealings or transactions of or in relation to its business and affairs; (b) set
up on its books accruals with respect to all taxes, assessments, charges, levies
and claims; and (c) on a reasonably current basis set up on its books, from its
earnings, allowances against doubtful Receivables, advances and investments and
all other proper accruals (including without limitation by reason of
enumeration, accruals for premiums, if any, due on required payments and
accruals for depreciation, obsolescence, or amortization of properties), which
should be set aside from such earnings in connection with its business. All
determinations pursuant to this subsection shall be made in accordance with, or
as required by, GAAP consistently applied in the opinion of such independent
public accountant as shall then be regularly engaged by Borrowers.
4.8 FINANCIAL DISCLOSURE. Each Borrower hereby irrevocably authorizes
and directs all accountants and auditors employed by such Borrower at any time
during the Term to exhibit and deliver to Agent and each Lender copies of any of
any Borrower's financial statements, trial balances or other accounting records
of any sort in the accountant's or auditor's possession, and to disclose to
Agent and each Lender any information such accountants may have concerning such
Borrower's financial status and business operations. Each Borrower hereby
authorizes all federal, state and municipal authorities to furnish to Agent and
each Lender copies of reports or examinations relating to such Borrower, whether
made by such Borrower or otherwise; however, Agent and each Lender will attempt
to obtain such information or materials directly from such Borrower prior to
obtaining such information or materials from such accountants or such
authorities. Each Borrower shall instruct any of the foregoing parties to
deliver to Borrowing Agent copies of any of the foregoing documents delivered to
Agent or the Lenders.
4.9 COMPLIANCE WITH LAWS. Each Borrower shall comply with all acts,
rules, regulations and orders of any legislative, administrative or judicial
body or official applicable to its respective Collateral or any part thereof or
to the operation of such Borrower's business the non-compliance with which could
reasonably be expected to have a Material Adverse Effect on such Borrower. Each
Borrower may, however, contest or dispute any acts, rules, regulations, orders
and directions of those bodies or officials in any reasonable manner, provided
that any related Lien is inchoate or stayed and sufficient reserves are
established to the reasonable satisfaction of Agent to protect Agent's Lien on
or security interest in the Collateral. The assets of Borrowers at all times
shall be maintained in accordance with the requirements of all insurance
carriers which provide insurance with respect to the assets of Borrowers so that
such insurance shall remain in full force and effect.
4.10 INSPECTION OF PREMISES. After at least two Business Days notice to
Borrowing Agent, or at any time and without notice to Borrowing Agent if an
Event of Default has occurred, Agent and each Lender shall have full access to
and the right to audit, check, inspect and make abstracts and copies from each
Borrower's books, records, audits, correspondence and all other papers relating
to the Collateral and the operation of each Borrower's business. After at least
two Business Days notice to Borrowing Agent, or at any time and without notice
to Borrowing Agent if an Event of Default has occurred, Agent, any Lender and
their agents may
-30-
enter upon any of each Borrower's premises at any time during business hours and
at any other reasonable time, and from time to time, for the purpose of
inspecting the Collateral and any and all records pertaining thereto and the
operation of such Borrower's business.
4.11 INSURANCE. Each Borrower shall bear the full risk of any loss of
any nature whatsoever with respect to the Collateral. At each Borrower's own
cost and expense in amounts and with carriers reasonably acceptable to Agent,
each Borrower shall (a) keep all its insurable properties and properties in
which each Borrower has an interest insured against the hazards of fire, flood,
sprinkler leakage, those hazards covered by extended coverage insurance and such
other hazards, and for such amounts, as is customary in the case of companies
engaged in businesses similar to such Borrower's including, without limitation,
business interruption insurance; (b) maintain a bond in such amounts as is
customary in the case of companies engaged in businesses similar to such
Borrower insuring against larceny, embezzlement or other criminal
misappropriation of insured's officers and employees who may either singly or
jointly with others at any time have access to the assets or funds of such
Borrower either directly or through authority to draw upon such funds or to
direct generally the disposition of such assets; (c) maintain public and product
liability insurance against claims for personal injury, death or property damage
suffered by others; (d) maintain all such worker's compensation or similar
insurance as may be required under the laws of any state or jurisdiction in
which such Borrower is engaged in business; (e) furnish Agent with (i) copies of
all policies and evidence of the maintenance of such policies by the renewal
thereof at least 10 days before any expiration date, and (ii) appropriate loss
payable endorsements in form and substance satisfactory to Agent, naming Agent
as a co-insured and loss payee as its interests may appear with respect to all
insurance coverage referred to in clauses (a) and (c) above, and providing (A)
that all proceeds thereunder shall be payable to Agent, (B) no such insurance
shall be affected by any act or neglect of the insured or owner of the property
described in such policy, and (C) that such policy and loss payable clauses may
not be cancelled, amended or terminated unless at least 10 days' prior written
notice is given to Agent. In the event of any loss thereunder, the carriers
named therein hereby are directed by Agent and the applicable Borrower to make
payment for such loss to Agent and not to such Borrower and Agent jointly. If
any insurance losses are paid by check, draft or other instrument payable to any
Borrower and Agent jointly, Agent may endorse such Borrower's name thereon and
do such other things as Agent may deem advisable to reduce the same to cash.
Agent is hereby authorized to adjust and compromise claims under insurance
coverage referred to in clauses (a) and (b) above. Anything hereinabove to the
contrary notwithstanding, and subject to the fulfillment of the conditions set
forth below, Agent shall remit to Borrowers insurance proceeds received by Agent
during any calendar year under insurance policies procured and maintained by
Borrowers which insure Borrowers' insurable properties to the extent such
insurance proceeds do not exceed $100,000 in the aggregate during such calendar
year or $100,000 per occurrence. In the event the amount of insurance proceeds
received by Agent for any occurrence exceeds $100,000, then Agent shall not be
obligated to remit the insurance proceeds to Borrowers unless Borrowers shall
provide Agent with evidence reasonably satisfactory to Agent that the insurance
proceeds will be used by Borrowers to repair, replace or restore the insured
property which was the subject of the insurable loss. In the event Borrowers
have previously received (or, after giving effect to any proposed remittance by
Agent to Borrowers would receive) insurance proceeds which equal or exceed
$100,000 in the aggregate during any calendar year, then Agent may, in its sole
discretion, either remit the insurance proceeds to Borrowers upon Borrowers
providing Agent with evidence reasonably
-31-
satisfactory to Agent that the insurance proceeds will be used by Borrowers to
repair, replace or restore the insured property which was the subject of the
insurable loss, or apply the proceeds, in the absence of an Event of Default, to
the Revolving Advances and, following an Event of Default, in such order as
Agent in its sole discretion shall determine. The agreement of Agent to remit
insurance proceeds in the manner above provided shall be subject in each
instance to satisfaction of each of the following conditions: (x) No Event of
Default or Default shall then have occurred, and (y) Borrowers shall use such
insurance proceeds to repair, replace or restore the insurable property which
was the subject of the insurable loss and for no other purpose.
4.12 FAILURE TO PAY INSURANCE. (a) If any Borrower fails to obtain
insurance as hereinabove provided, or to keep the same in force, Agent, if Agent
so elects, may obtain such insurance and pay the premium therefor on behalf of
such Borrower, and charge Borrowers' Account therefor as a Revolving Advance of
a Domestic Rate Loan and such expenses so paid shall be part of the Obligations.
Agent shall provide notice to the Borrowing Agent of any action taken by Agent
pursuant to this Section 4.12, but the failure of the Agent to provide such
notice shall in no event constitute a violation or breach of this Agreement.
4.13 PAYMENT OF TAXES. (a) Each Borrower will pay, when due, all taxes,
assessments and other Charges lawfully levied or assessed upon such Borrower or
any of the Collateral, except for Charges the validity of which are being
contested in good faith by appropriate proceedings diligently pursued and
available to such Borrower and with respect to which adequate reserves have been
set aside on its books ("Contested Charges"). If any tax by any governmental
authority is or may be imposed on or as a result of any transaction between any
Borrower and Agent or any Lender which Agent or any Lender may be required to
withhold or pay or if any taxes, assessments, or other Charges, other than
Contested Charges, remain unpaid after the date fixed for their payment, or if
any claim shall be made which, in Agent's or any Lender's opinion, may possibly
create a valid Lien on the Collateral, Agent may pay the taxes, assessments or
other Charges and each Borrower hereby indemnifies and holds Agent and each
Lender harmless in respect thereof. The amount of any payment by Agent under
this Section 4.13 shall be charged to Borrowers' Account as a Revolving Advance
of a Domestic Rate Loan and added to the Obligations and, until Borrowers shall
furnish Agent with an indemnity therefor (or supply Agent with evidence
satisfactory to Agent that due provision for the payment thereof has been made),
Agent may hold without interest any balance standing to Borrowers' credit and
Agent shall retain its security interest in any and all Collateral held by
Agent. Agent shall provide notice to the Borrowing Agent of any action taken by
Agent pursuant to this Section 4.13, but the failure of the Agent to provide
such notice shall in no event constitute a violation or breach of this
Agreement.
4.14 PAYMENT OF LEASEHOLD OBLIGATIONS. Each Borrower shall at all times
pay, when and as due, its rental obligations under all leases under which it is
a tenant, and shall otherwise comply, in all material respects, with all other
terms of such leases and keep them in full force and effect and, at Agent's
request will provide evidence of having done so.
4.15 RECEIVABLES.
(a) NATURE OF RECEIVABLES. Each of the Receivables shall be a
bona fide and valid account representing a bona fide indebtedness incurred by
the Customer therein named, for
-32-
a fixed sum as set forth in the invoice relating thereto (provided immaterial or
unintentional invoice errors shall not be deemed to be a breach hereof) with
respect to an absolute sale or lease and delivery of goods upon stated terms of
a Borrower, or work, labor or services theretofore rendered by a Borrower as of
the date each Receivable is created. Same shall be due and owing in accordance
with the applicable Borrower's standard terms of sale without dispute, setoff or
counterclaim except as may be stated on the accounts receivable schedules
delivered by Borrowers to Agent.
(b) SOLVENCY OF CUSTOMERS. Each Customer, to the best of each
Borrower's knowledge, as of the date each Receivable is created, is and will be
solvent and able to pay all Receivables on which the Customer is obligated in
full when due or with respect to such Customers of any Borrower who are not
solvent such Borrower has set up on its books and in its financial records bad
debt reserves adequate to cover such Receivables to the extent such Receivables
are not covered by credit insurance with respect to such Customer's Receivables.
(c) LOCATIONS OF BORROWER. Each Borrower's chief executive office is
located at the addresses set forth on SCHEDULE 4.15(c) hereto. Until written
notice is given to Agent by Borrowing Agent of any other office at which any
Borrower keeps its records pertaining to Receivables, all such records shall be
kept at such executive office.
(d) COLLECTION OF RECEIVABLES. Until any Borrower's authority to do so
is terminated by Agent (which notice Agent may give at any time following the
occurrence of an Event of Default or a Default or when Agent in its sole
discretion deems it to be in Lenders' best interest to do so), each Borrower
will, at such Borrower's sole cost and expense, but on Agent's behalf and for
Agent's account, collect as Agent's property and in trust for Agent all amounts
received on Receivables, and shall not commingle such collections with any
Borrower's funds or use the same except to pay Obligations. Each Borrower shall,
upon request, deliver to Agent, or deposit in the Blocked Account, in original
form and on the date of receipt thereof, all checks, drafts, notes, money
orders, acceptances, cash and other evidences of Indebtedness.
(e) NOTIFICATION OF ASSIGNMENT OF RECEIVABLES. At any time following
the occurrence of an Event of Default, Agent shall have the right to send notice
of the assignment of, and Agent's security interest in, the Receivables to any
and all Customers or any third party holding or otherwise concerned with any of
the Collateral. Thereafter, Agent shall have the sole right to collect the
Receivables, take possession of the Collateral, or both. Agent's actual
collection expenses, including, but not limited to, stationery and postage,
telephone and telegraph, secretarial and clerical expenses and the salaries of
any collection personnel used for collection, may be charged to Borrowers'
Account and added to the Obligations. Agent shall provide notice to the
Borrowing Agent of any action taken by Agent pursuant to this Section 4.15(e),
but the failure of the Agent to provide such notice shall in no event constitute
a violation or breach of this Agreement.
(f) POWER OF AGENT TO ACT ON BORROWERS' BEHALF. At any time following
the occurrence of an Event of Default, Agent shall have the right to receive,
endorse, assign and/or deliver in the name of Agent or any Borrower any and all
checks, drafts and other instruments for the payment of money relating to the
Receivables, and each Borrower hereby waives notice of presentment, protest and
non-payment of any instrument so endorsed. Each Borrower hereby
-33-
constitutes Agent or Agent's designee as such Borrower's attorney with power (i)
to endorse such Borrower's name upon any notes, acceptances, checks, drafts,
money orders or other evidences of payment or Collateral; (ii) so long as an
Event of Default shall have occurred, to sign such Borrower's name on any
invoice or xxxx of lading relating to any of the Receivables, drafts against
Customers, assignments and verifications of Receivables; (iii) to send
verifications of Receivables to any Customer; (iv) to sign such Borrower's name
on all financing statements or any other documents or instruments deemed
necessary or appropriate by Agent to preserve, protect, or perfect Agent's
interest in the Collateral and to file same; (v) so long as an Event of Default
shall have occurred, to demand payment of the Receivables; (vi) so long as an
Event of Default shall have occurred, to enforce payment of the Receivables by
legal proceedings or otherwise; (vii) so long as an Event of Default shall have
occurred, to exercise all of Borrowers' rights and remedies with respect to the
collection of the Receivables and any other Collateral; (viii) so long as an
Event of Default shall have occurred, to settle, adjust, compromise, extend or
renew the Receivables; (ix) to settle, adjust or compromise any legal
proceedings brought to collect Receivables; (x) so long as an Event of Default
shall have occurred, to prepare, file and sign such Borrower's name on a proof
of claim in bankruptcy or similar document against any Customer; (xi) to
prepare, file and sign such Borrower's name on any notice of Lien, assignment or
satisfaction of Lien or similar document in connection with the Receivables; and
(xii) so long as an Event of Default shall have occurred, to do all other acts
and things necessary to carry out this Agreement. All acts of said attorney or
designee are hereby ratified and approved, and said attorney or designee shall
not be liable for any acts of omission or commission nor for any error of
judgment or mistake of fact or of law, unless done maliciously, in bad faith or
with gross (not mere) negligence; this power being coupled with an interest is
irrevocable while any of the Obligations remain unpaid. Agent shall have the
right at any time, following the occurrence of an Event of Default or Default,
to change the address for delivery of mail addressed to any Borrower to such
address as Agent may designate and to receive, open and dispose of all mail
addressed to any Borrower. Agent shall provide notice to the Borrowing Agent of
any action taken by Agent pursuant to this Section 4.15(f), but the failure of
the Agent to provide such notice shall in no event constitute a violation or
breach of this Agreement.
(g) NO LIABILITY. Neither Agent nor any Lender shall, under any
circumstances or in any event whatsoever, have any liability for any error or
omission or delay of any kind occurring in the settlement, collection or payment
of any of the Receivables or any instrument received in payment thereof, or for
any damage resulting therefrom. Following the occurrence of an Event of Default,
Agent may, without notice or consent from any Borrower, xxx upon or otherwise
collect, extend the time of payment of, compromise or settle for cash, credit or
upon any terms any of the Receivables or any other securities, instruments or
insurance applicable thereto and/or release any obligor thereof. Agent is
authorized and empowered to accept, following the occurrence of an Event of
Default, the return of the goods represented by any of the Receivables, without
notice to or consent by any Borrower, all without discharging or in any way
affecting any Borrower's liability hereunder. Agent shall provide notice to the
Borrowing Agent of any action taken by Agent pursuant to this Section 4.15(g),
but the failure of the Agent to provide such notice shall in no event constitute
a violation or breach of this Agreement.
(h) ESTABLISHMENT OF A LOCKBOX ACCOUNT, DOMINION ACCOUNT. All proceeds
of Collateral shall, at the direction of Agent, be deposited by Borrowers into
the account set forth
-34-
on SCHEDULE 4.15(h) hereto or such other lockbox account, dominion account or
such other "blocked account" ("Blocked Accounts") as Agent may require pursuant
to an arrangement with such bank as may be selected by Borrowers and be
acceptable to Agent. Borrowers shall issue to any such bank, an irrevocable
letter of instruction directing said bank to transfer such funds so deposited to
Agent, either to any account maintained by Agent at said bank or by wire
transfer to appropriate account(s) of Agent. All funds deposited in such Blocked
Account shall immediately become the property of Agent, and Borrowers shall
obtain the agreement by such bank to waive any offset rights against the funds
so deposited. Neither Agent nor any Lender assumes any responsibility for such
blocked account arrangement, including without limitation, any claim of accord
and satisfaction or release with respect to deposits accepted by any bank
thereunder. Alternatively, Agent may establish depository accounts ("Depository
Accounts") in the name of Agent at a bank or banks for the deposit of such funds
and Borrowers shall deposit all proceeds of Collateral or cause same to be
deposited, in kind, in such Depository Accounts of Agent in lieu of depositing
same to the Blocked Accounts.
(i) ADJUSTMENTS. No Borrower will, without Agent's consent,
compromise or adjust any Receivables (or extend the time for payment thereof) or
accept any returns of merchandise or grant any additional discounts, allowances
or credits thereon except for those compromises, adjustments, returns,
discounts, credits and allowances (any of the foregoing, collectively an
"Adjustment") which such Borrower finds appropriate in accordance with its
reasonable business judgment or which have been heretofore customary in the
business of such Borrower; PROVIDED, HOWEVER, that any Adjustment made by a
Borrower shall be properly reflected in a current Borrowing Base Certificate and
after giving effect thereto will not result in a Default or an Event of Default.
4.16 INVENTORY. To the extent Inventory held for sale or lease has been
produced by any Borrower, it has been and will be produced by such Borrower in
accordance with the Federal Fair Labor Standards Act of 1938, as amended, and
all rules, regulations and orders thereunder.
4.17 MAINTENANCE OF EQUIPMENT. The Equipment shall be maintained in
good operating condition and repair (reasonable wear and tear excepted) and all
necessary replacements of and repairs thereto shall be made so that the value
and operating efficiency of the Equipment shall be maintained and preserved. No
Borrower shall use or operate the Equipment in violation of any law, statute,
ordinance, code, rule or regulation. Each Borrower shall have the right to sell
Equipment to the extent set forth in Section 4.3 hereof.
4.18 EXCULPATION OF LIABILITY. Nothing herein contained shall be
construed to constitute Agent or any Lender as any Borrower's agent for any
purpose whatsoever nor, except as required by law, shall Agent or any Lender be
responsible or liable for any shortage, discrepancy, damage, loss or destruction
of any part of the Collateral wherever the same may be located and regardless of
the cause thereof. Neither Agent nor any Lender, whether by anything herein or
in any assignment or otherwise, assume any of any Borrower's obligations under
any contract or agreement assigned to Agent or such Lender, and neither Agent
nor any Lender shall be responsible in any way for the performance by any
Borrower of any of the terms and conditions thereof.
-35-
4.19 ENVIRONMENTAL MATTERS.
(a) Borrowers shall ensure that the Real Property remains in compliance
with all applicable Environmental Laws and they shall not place or permit to be
placed any Hazardous Substances on any Real Property except as permitted by
applicable law or appropriate governmental authorities.
(b) Borrowers shall (i) employ in connection with the use of the Real
Property appropriate technology necessary to maintain compliance with any
applicable Environmental Laws and (ii) dispose of any and all Hazardous Waste
generated at the Real Property only at facilities and with carriers that
maintain valid permits under RCRA and any other applicable Environmental Laws.
Borrowers shall use their best efforts to obtain certificates of disposal, such
as hazardous waste manifest receipts, from all treatment, transport, storage or
disposal facilities or operators employed by Borrowers in connection with the
transport or disposal of any Hazardous Waste generated at the Real Property.
(c) In the event any Borrower obtains, gives or receives notice of any
Release of a reportable quantity of any Hazardous Substances at the Real
Property (any such event being hereinafter referred to as a "Hazardous
Discharge") or receives any notice of violation, request for information or
notification that it is potentially responsible for investigation or cleanup of
environmental conditions at the Real Property, demand letter or complaint,
order, citation, or other written notice with regard to any Hazardous Discharge
or violation of Environmental Laws affecting the Real Property or any Borrower's
interest therein (any of the foregoing is referred to herein as an
"Environmental Complaint") from any Person, including any state agency
responsible in whole or in part for environmental matters in the state in which
the Real Property is located or the United States Environmental Protection
Agency (any such person or entity hereinafter the "Authority"), then Borrowing
Agent shall, within five Business Days, give written notice of same to Agent
detailing non-privileged facts and circumstances of which any Borrower is aware
giving rise to the Hazardous Discharge or Environmental Complaint. Such
information is to be provided to allow Agent to protect its security interest in
the Real Property owned by any Borrower and the Collateral and is not intended
to create nor shall it create any obligation upon Agent or any Lender with
respect thereto.
(d) Borrowers shall promptly forward to Agent copies of any request for
information, notification of potential liability, demand letter relating to
potential responsibility with respect to the investigation or cleanup of
Hazardous Substances at any other site owned, operated or used by any Borrower
to dispose of Hazardous Substances and shall continue to forward copies of
correspondence between any Borrower and the Authority regarding such claims to
Agent until the claim is settled. Borrowers shall promptly forward to Agent
copies of all documents and reports concerning a Hazardous Discharge at the Real
Property that any Borrower is required to file under any Environmental Laws.
Such information is to be provided solely to allow Agent to protect Agent's
security interest in the Real Property owned by any Borrower and the Collateral.
(e) Borrowers shall respond promptly to any Hazardous Discharge or
Environmental Complaint in accordance with applicable law and take all
reasonably necessary action in order to safeguard the health of any Person and
to avoid subjecting the Collateral or
-36-
Real Property owned by any Borrower to any Lien. If any Borrower shall fail, in
a materially adverse manner, to respond promptly to any Hazardous Discharge or
Environmental Complaint or any Borrower shall fail to comply with any of the
requirements of any Environmental Laws, Agent shall notify Borrower of its
specific concerns and, within a reasonable period after Borrower's receipt of
such notice and failure to satisfy Agent's concerns, Agent, on behalf of
Lenders, may, but without the obligation to do so, for the sole purpose of
protecting Agent's interest in Collateral: (A) give such notices or (B) enter
onto the Real Property (or authorize environmentally qualified third parties to
enter onto the Real Property) and take such actions as Agent (or such third
parties as directed by Agent) deem reasonably necessary to comply with
applicable laws regarding any such Hazardous Discharge or Environmental
Complaint. All reasonable costs and expenses incurred by Agent and Lenders (or
such third parties) in the exercise of any such rights that are required to
comply with applicable Environmental Laws, including any sums paid in connection
with any judicial or administrative investigation or proceedings, fines and
penalties, together with interest thereon from the date expended at the Default
Rate for Domestic Rate Loans constituting Revolving Advances shall be paid upon
demand by Borrowers, and until paid shall be added to and become a part of the
Obligations secured by the Liens created by the terms of this Agreement or any
other agreement between Agent, any Lender and any Borrower.
(f) Promptly upon the written request of Agent, Borrowers shall provide
Agent, at Borrowers' expense, with an environmental site assessment report
prepared by an environmental engineering firm acceptable in the reasonable
opinion of Agent, to assess with a reasonable degree of certainty the existence
of a Hazardous Discharge and the potential costs in connection with abatement,
cleanup and removal of any Hazardous Substances found on, under, at or within
the Real Property. Any report or investigation of such Hazardous Discharge
proposed and acceptable to an appropriate Authority that is charged to oversee
the clean-up of such Hazardous Discharge shall be acceptable to Agent. If such
estimates, individually or in the aggregate, exceed $100,000, Agent shall have
the right to require Borrowers to post a bond, letter of credit or other
security reasonably satisfactory to Agent to secure payment of these costs and
expenses.
(g) Borrowers shall defend and indemnify Agent and Lenders and hold
Agent, Lenders and their respective employees, agents, directors and officers
harmless from and against all loss, liability, damage and expense, claims,
costs, fines and penalties, including reasonable attorney's fees, suffered or
incurred by Agent or Lenders under or on account of any violation by Borrower of
applicable Environmental Laws, including, without limitation, the assertion of
any Lien thereunder, with respect to any Hazardous Discharge, the presence of
any Hazardous Substances affecting the Real Property, whether or not the same
originates or emerges from the Real Property, including any loss of value of the
Real Property as a result of the foregoing except to the extent such loss,
liability, damage and expense is attributable to any Hazardous Discharge or
violation of applicable Environmental Law resulting from actions on the part of
Agent or any Lender. Borrowers' obligations under this Section 4.19(c), (d), (e)
and (f) shall arise upon the discovery of the presence of any Hazardous
Substances at the Real Property that triggers a requirement under any applicable
Environmental Law, whether or not any federal, state, or local environmental
agency has taken or threatened any action in connection with the presence of any
Hazardous Substances. Borrowers' obligation and the indemnifications hereunder
shall survive the termination of this Agreement.
-37-
4.20 FINANCING STATEMENTS. Except as respects the financing statements
filed by Agent and the financing statements described on SCHEDULE 1.2(B), no
financing statement covering any of the Collateral or any proceeds thereof is on
file in any public office.
V. REPRESENTATIONS AND WARRANTIES.
Each Borrower represents and warrants as follows:
5.1 AUTHORITY. Each Borrower has full power, authority and legal right
to enter into this Agreement and the Other Documents (in existence at the time
the representation or warranty is made or deemed made) and to perform all of its
respective Obligations hereunder and thereunder. This Agreement and the Other
Documents (in existence at the time the representation or warranty is made or
deemed made) constitute the legal, valid and binding obligation of such Borrower
enforceable in accordance with their terms. The execution, delivery and
performance of this Agreement and of the Other Documents (in existence at the
time the representation or warranty is made or deemed made) (a) are within such
Borrower's corporate powers, have been duly authorized, are not in contravention
of law or the terms of such Borrower's by-laws, certificate of incorporation or
other applicable documents relating to such Borrower's formation or to the
conduct of such Borrower's business or of any material agreement or undertaking
to which such Borrower is a party or by which such Borrower is bound, and (b)
will not conflict with nor result in any breach in any of the provisions of or
constitute a default under or result in the creation of any Lien except
Permitted Encumbrances upon any asset of such Borrower under the provisions of
any agreement, charter document, instrument, by-law or other instrument to which
such Borrower is a party or by which it or its property may be bound.
5.2 FORMATION AND QUALIFICATION.
(a) Each Borrower is duly incorporated and in good standing under
the laws of the state listed on SCHEDULE 5.2(a) and is qualified to do business
and is in good standing in the states listed on SCHEDULE 5.2(a) which constitute
all states in which qualification and good standing are necessary for such
Borrower to conduct its business and own its property and where the failure to
so qualify could reasonably be expected to have a Material Adverse Effect on
such Borrower. Each Borrower has delivered to Agent true and complete copies of
its certificate of incorporation and by-laws and will promptly notify Agent of
any amendment or changes thereto.
(b) The only Subsidiaries of each Borrower are listed on SCHEDULE
5.2(b).
(c) A description of the business of each Subsidiary of a Borrower
is listed on SCHEDULE 5.2(c).
5.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties of such Borrower contained in this Agreement and the Other Documents
shall be true at the time of such Borrower's execution of this Agreement and the
Other Documents, and shall survive the execution, delivery and acceptance
thereof by the parties thereto and the closing of the transactions described
therein or related thereto.
-38-
5.4 TAX RETURNS. Each Borrower's federal tax identification number is
set forth on SCHEDULE 5.4. Each Borrower has, to the best of its knowledge,
filed all material federal, state and local tax returns (including extensions)
and other reports each is required by law to file and has paid all taxes shown
thereon to be due and owing and material assessments, fees and other
governmental charges that are due and payable. Such federal, state and local
income tax returns of each Borrower have been filed for all periods through June
30, 2000. To the best of each Borrower's knowledge, the provision for taxes on
the books of each Borrower are adequate for all years not closed by applicable
statutes, and for its current fiscal year, and no Borrower has any knowledge of
any deficiency or additional assessment in connection therewith not provided for
on its books other than as set forth on SCHEDULE 5.4.
5.5 FINANCIAL STATEMENTS.
(a) The pro forma balance sheet of Borrowers on a consolidated
basis (the "Pro Forma Balance Sheet") furnished to Agent on the Closing Date
reflects the consummation of the transactions contemplated under this Agreement
(the "Transactions") and fairly reflects, in all material respects, the
financial condition of Borrowers on a consolidated basis as of the Closing Date
after giving effect to the Transactions. The Pro Forma Balance Sheet has been
certified as fairly reflecting, in all material respects, the financial
condition of Borrowers on a consolidated basis as of the Closing Date after
giving effect to the Transactions by the Vice-President and Chief Financial
Officer of Waxman. All historical financial information referenced in the
financial statements referred to in this subsection 5.5(a), including the
related schedules and notes thereto, have been prepared, in accordance with
GAAP, except as may be disclosed in such financial statements.
(b) The 12-month cash flow projections of the Borrowers on a
consolidated basis and their projected balance sheets as of the Closing Date,
copies of which are annexed hereto as EXHIBIT 5.5(b) (the "Projections") were
prepared by individuals under the direction of the Chief Financial Officer of
Waxman, are based on underlying assumptions which the Borrowers believe provide
a reasonable basis for the projections contained therein and reflect Borrowers'
judgment based on present circumstances of the most likely set of conditions and
course of action for the projected period. The cash flow Projections, together
with the Pro Forma Balance Sheet, are referred to as the "Pro Forma Financial
Statements."
(c) The consolidated and consolidating balance sheets of the
Borrowers, their Subsidiaries and such other Persons described therein
(including the accounts of all Subsidiaries for the respective periods during
which a subsidiary relationship existed) as of June 30, 2001, and the related
statements of income, changes in stockholder's equity, and changes in cash flow
for the period ended on such date (accompanied in the case of the consolidated
financial statements of Waxman by reports thereon containing opinions without
qualification by independent certified public accountants, copies of which have
been delivered to Agent) have been prepared in accordance with GAAP,
consistently applied (except for changes in application in which such
accountants concur) and present fairly, in all material respects, the financial
position of the Borrowers and their Subsidiaries at such date and the results of
their operations for such period. Since June 30, 2001, other than as reflected
on Borrowers' financial statements as of October 31, 2001, there has been no
change in the condition, financial or otherwise, of Borrowers or their
Subsidiaries as shown on the consolidated balance sheet as of such dates and
-39-
no change in the aggregate value of machinery, equipment and Real Property owned
by any Borrower and their respective Subsidiaries, except changes in the
ordinary course of business, none of which individually or in the aggregate has
been materially adverse.
5.6 CORPORATE NAME. No Borrower has been known by any other corporate
name in the past five years and does not sell Inventory under any other name
except as set forth on SCHEDULE 5.6, nor has any Borrower been the surviving
corporation of a merger or consolidation or acquired all or substantially all of
the assets of any Person during the preceding five years.
5.7 O.S.H.A. AND ENVIRONMENTAL COMPLIANCE.
(a) Each Borrower has duly complied with, and its facilities,
business, assets, property, leaseholds and Equipment are in compliance in all
material respects with, the provisions of the Federal Occupational Safety and
Health Act and all other applicable Environmental Laws. Except as set forth in
SCHEDULE 5.7(A), there have been no outstanding citations, notices or orders of
non-compliance issued to any Borrower or relating to its business, assets,
property, leaseholds or Equipment under any such laws, rules or regulations.
(b) Each Borrower has been issued all required federal, state and
local licenses, certificates or permits relating to all applicable Environmental
Laws, where the failure to do so could reasonably be expected to have a Material
Adverse Effect on such Borrower.
(c) To the best of each Borrower's knowledge, (i) there are no
visible signs of releases, spills, discharges, leaks or disposal (collectively
referred to as "Releases") of Hazardous Substances at, upon, under or within any
Real Property owned by any Borrower or any premises leased by any Borrower; (ii)
there are no underground storage tanks or polychlorinated biphenyls on any Real
Property owned by any Borrower or any premises leased by any Borrower; (iii)
neither the Real Property owned by any Borrower nor any premises leased by any
Borrower has ever been used as a treatment, storage or disposal facility of
Hazardous Waste; and (iv) no Hazardous Substances are present on the Real
Property owned by any Borrower or any premises leased by any Borrower, except in
such forms and quantities as are handled in accordance with all applicable
manufacturer's instructions and governmental regulations and in proper storage
containers and as are necessary for the operation of the commercial business of
any Borrower or of its tenants.
5.8 SOLVENCY; NO LITIGATION, VIOLATION, INDEBTEDNESS OR DEFAULT.
(a) After giving effect to the Transactions, Borrowers are
solvent, able to pay their debts as they mature, have capital sufficient to
carry on their business and all businesses in which they are about to engage,
and, as of the Closing Date, the fair present saleable value of their assets,
calculated on a going concern basis, is in excess of the amount of their
liabilities.
(b) Except as disclosed in SCHEDULE 5.8(b), no Borrower has (i)
any pending or threatened litigation, arbitration, actions or proceedings which
could reasonably be expected to have a Material Adverse Effect on such Borrower,
and (ii) any liabilities nor indebtedness for borrowed money other than the
Obligations.
-40-
(c) No Borrower is in violation of any applicable statute,
regulation or ordinance in any respect which could reasonably be expected to
have a Material Adverse Effect on such Borrower, nor is any Borrower in
violation of any order of any court, governmental authority or arbitration board
or tribunal which could reasonably be expected to have a Material Adverse Effect
on such Borrower.
(d) No Borrower nor any member of the Controlled Group maintains
or contributes to any Plan other than those listed on SCHEDULE 5.8(d) hereto.
Except as set forth in SCHEDULE 5.8(d), (i) no Plan has incurred any
"accumulated funding deficiency," as defined in Section 302(a)(2) of ERISA and
Section 412(a) of the Code, whether or not waived, and each Borrower and each
member of the Controlled Group has met all applicable minimum funding
requirements under Section 302 of ERISA in respect of each Plan, (ii) each Plan
which is intended to be a qualified plan under Section 401(a) of the Code as
currently in effect has been determined by the Internal Revenue Service to be
qualified under Section 401(a) of the Code and the trust related thereto is
exempt from federal income tax under Section 501(a) of the Code, (iii) no
Borrower nor any member of the Controlled Group has incurred any liability to
the PBGC other than for the payment of premiums, and there are no premium
payments which have become due which are unpaid, (iv) no Plan which is subject
to Title IV of ERISA has been terminated by the plan administrator thereof nor
by the PBGC, and there is no occurrence which would cause the PBGC to institute
proceedings under Title IV of ERISA to terminate any Plan, (v) at this time, the
current value of the assets of each Plan which is subject to Title IV of ERISA
exceeds the present value of the accrued benefits and other liabilities of such
Plan and no Borrower nor any member of the Controlled Group knows of any facts
or circumstances which would materially change the value of such assets and
accrued benefits and other liabilities, (vi) no Borrower nor any member of the
Controlled Group has breached, in any material respect, any of the
responsibilities, obligations or duties imposed on it by ERISA with respect to
any Plan, (vii) no Borrower nor any member of a Controlled Group has incurred
any liability, in a material amount, for any excise tax arising under Section
4972 or 4980B of the Code, and no fact exists which could give rise to any such
liability in a material amount, (viii) no Borrower nor any member of the
Controlled Group nor any fiduciary of, nor any trustee to, any Plan, has engaged
in a "prohibited transaction" described in Section 406 of the ERISA or Section
4975 of the Code nor taken any action which would constitute or result in a
Termination Event with respect to any such Plan which is subject to Title IV of
ERISA, (ix) each Borrower and each member of the Controlled Group has made all
contributions due and payable with respect to each Plan, (x) there exists no
event described in Section 4043(b) of ERISA with respect to any Plan subject to
Title IV of ERISA, for which the 30 day notice period contained in 29 CFR
Section 4043.20 has not been waived, (xi) no Borrower nor any member of the
Controlled Group has any fiduciary responsibility for investments with respect
to any plan existing for the benefit of persons other than employees or former
employees of any Borrower and any member of the Controlled Group, and (xii) no
Borrower nor any member of the Controlled Group has withdrawn, completely or
partially, from any Multiemployer Plan so as to incur liability under the
Multiemployer Pension Plan Amendments Act of 1980.
5.9 PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES. All patents, patent
applications, trademarks, trademark applications, service marks, service xxxx
applications, copyrights, copyright applications, design rights, tradenames,
assumed names, trade secrets and licenses owned or utilized by any Borrower are
set forth on SCHEDULE 5.9, are valid and have been duly
-41-
registered or filed with all appropriate governmental authorities and constitute
all of the intellectual property rights which are necessary for the operation of
its business; there is no objection to or pending challenge to the validity of
any such patent, trademark, copyright, design right, tradename, trade secret or
license and no Borrower is aware of any grounds for any challenge, except as set
forth in SCHEDULE 5.9 hereto. Each patent, patent application, patent license,
trademark, trademark application, trademark license, service xxxx, service xxxx
application, service xxxx license, design right, copyright, copyright
application and copyright license owned or held by any Borrower and all trade
secrets used by any Borrower consist of original material or property developed
by such Borrower or was lawfully acquired by such Borrower from the proper and
lawful owner thereof. Each of such items currently used in the business has been
maintained so as to preserve the value thereof from the date of creation or
acquisition thereof. With respect to all software (excluding generally available
"shrink-wrapped" software) used by any Borrower, such Borrower is in possession
of all source and object codes related to each piece of software or is the
beneficiary of a source code escrow agreement, each such source code escrow
agreement being listed on SCHEDULE 5.9 hereto.
5.10 LICENSES AND PERMITS. Except as set forth in SCHEDULE 5.10, each
Borrower (a) is in compliance with and (b) has procured and is now in possession
of, all material licenses or permits required by any applicable federal, state
or local law or regulation for the operation of its business in each
jurisdiction wherein it is now conducting or proposes to conduct business and
where the failure to procure such licenses or permits could have a Material
Adverse Effect on such Borrower.
5.11 DEFAULT OF INDEBTEDNESS. No Borrower is in default in the payment
of the principal of or interest on any Indebtedness or under any instrument or
agreement under or subject to which any Indebtedness has been issued and no
event has occurred under the provisions of any such instrument or agreement
which with or without the lapse of time or the giving of notice, or both,
constitutes or would constitute an event of default thereunder.
5.12 NO DEFAULT. No Borrower is in default, nor will any Borrower be in
default after giving effect to the Transactions, in the payment or performance
of, or under the terms of, any of its contractual obligations where such default
could reasonably be expected to have a Material Adverse Effect on such Borrower
and no Default has occurred.
5.13 NO BURDENSOME RESTRICTIONS. No Borrower is party to any contract
or agreement the performance of which could have a Material Adverse Effect on
such Borrower. No Borrower has agreed or consented to cause or permit in the
future (upon the happening of a contingency or otherwise) any of its property,
whether now owned or hereafter acquired, to be subject to a Lien which is not a
Permitted Encumbrance.
5.14 NO LABOR DISPUTES. No Borrower is involved in any labor dispute.
There are no strikes or walkouts or union organization of any Borrower's
employees threatened or in existence, and no labor contract is scheduled to
expire during the Term other than as set forth on SCHEDULE 5.14 hereto.
5.15 MARGIN REGULATIONS. No Borrower is engaged, nor will it engage,
principally or as one of its important activities, in the business of extending
credit for the purpose of
-42-
"purchasing" or "carrying" any "margin stock" within the respective meanings of
each of the quoted terms under Regulation U of the Board of Governors of the
Federal Reserve System as now and from time to time hereafter in effect. No part
of the proceeds of any Advance will be used for "purchasing" or "carrying"
"margin stock" as defined in Regulation U of such Board of Governors.
5.16 INVESTMENT COMPANY ACT. No Borrower is an "investment company"
registered or required to be registered under the Investment Company Act of
1940, as amended, nor is it controlled by such a company.
5.17 DISCLOSURE. No representation or warranty made by any Borrower in
this Agreement or in any financial statement, report, certificate or any other
document furnished in connection herewith contains any untrue statement of fact
or omits to state any fact necessary to make the statements herein or therein,
taken as a whole, not misleading in light of the circumstances under which they
were made. There is no fact known to Borrowers or which reasonably should be
known to Borrowers which Borrowers have not disclosed to Agent in writing with
respect to the transactions contemplated by this Agreement which could
reasonably be expected to have a Material Adverse Effect on any Borrower (other
than general market, financial and business conditions applicable to the economy
as a whole).
5.18 SWAPS. No Borrower is a party to, nor will it be a party to, any
swap agreement whereby such Borrower has agreed or will agree to swap interest
rates or currencies unless same provides that damages upon termination following
an event of default thereunder are payable on an unlimited "two-way basis"
without regard to fault on the part of either party.
5.19 CONFLICTING AGREEMENTS. No provision of any mortgage, indenture,
contract, agreement, judgment, decree or order binding on any Borrower or
affecting the Collateral conflicts with, or requires any Consent which has not
already been obtained to, or would in any way prevent the execution, delivery or
performance of, the terms of this Agreement or the Other Documents.
5.20 APPLICATION OF CERTAIN LAWS AND REGULATIONS. No Borrower nor any
Affiliate of any Borrower is subject to any statute, rule or regulation which
regulates the incurrence of any Indebtedness, including without limitation,
statutes or regulations relative to common or interstate carriers or to the sale
of electricity, gas, steam, water, telephone, telegraph or other public utility
services.
5.21 BUSINESS AND PROPERTY OF BORROWERS. Upon and after the Closing
Date, Borrowers do not propose to engage in any business other than that engaged
in on the Closing Date or substantially similar business activities. On the
Closing Date, each Borrower will own all the property and possess all of the
rights and Consents necessary for the conduct of the business of such Borrower.
-43-
VI. AFFIRMATIVE COVENANTS.
---------------------
Each Borrower shall, until payment in full of the Obligations and
termination of this Agreement:
6.1 PAYMENT OF FEES. Pay to Agent on demand all usual and customary
fees and expenses which Agent incurs in connection with (a) the forwarding of
Advance proceeds and (b) the establishment and maintenance of any Blocked
Accounts or Depository Accounts as provided for in Section 4.15(h). Agent may,
without making demand, charge Borrowers' Account for all such fees and expenses.
Agent shall endeavor to provide notice to the Borrowing Agent upon the
occurrence of such event, but the failure of the Agent to provide such notice
shall in no event constitute a violation or breach of this Agreement.
6.2 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE AND ASSETS. (a)
Conduct continuously and operate actively its business according to good
business practices and maintain all of its properties useful or necessary in its
business in good working order and condition (reasonable wear and tear excepted
and except as may be disposed of in accordance with the terms of this
Agreement), including, without limitation, all licenses, patents, copyrights,
design rights, tradenames, trade secrets and trademarks and take all actions
necessary to enforce and protect the validity of any intellectual property right
or other right included in the Collateral; (b) keep in full force and effect its
existence and comply in all material respects with the laws and regulations
governing the conduct of its business where the failure to do so could
reasonably be expected to have a Material Adverse Effect on such Borrower; and
(c) make all such reports and pay all such franchise and other taxes and license
fees and do all such other acts and things as may be lawfully required to
maintain its rights, licenses, leases, powers and franchises under the laws of
the United States or any political subdivision thereof where the failure to do
so could reasonably be expected to have a Material Adverse Effect on such
Borrower.
6.3 VIOLATIONS. Promptly notify Agent in writing of any violation of
any law, statute, regulation or ordinance of any Governmental Body, or of any
agency thereof, applicable to any Borrower which could reasonably be expected to
have a Material Adverse Effect on any Borrower.
6.4 GOVERNMENT RECEIVABLES. Take all steps necessary to protect Agent's
interest in the Collateral under the Federal Assignment of Claims Act or other
applicable state or local statutes or ordinances and deliver to Agent
appropriately endorsed, any instrument or chattel paper connected with any
Receivable arising out of contracts between any Borrower and the United States,
any state or any department, agency or instrumentality of any of them.
6.5 TANGIBLE NET WORTH. Maintain at all times a Tangible Net Worth in
an amount determined as follows: (a) as of the Closing Date, $16,830,000; (b)
commencing July 1, 2002, $16,830,000, plus 85% of positive Net Income for the
fiscal year ending June 30, 2002; and (c) commencing July 1, 2003, and for each
fiscal year thereafter, the required Tangible Net Worth for the fiscal year
ending on the immediately preceding June 30, plus 85% of positive Net Income for
the fiscal year ending on the immediately preceding June 30.
-44-
6.6 FIXED CHARGE COVERAGE RATIO. Maintain a Fixed Charge Coverage Ratio
for any four consecutive fiscal quarters of Waxman of not less than 1.05 to
1.00.
6.7 EXECUTION OF SUPPLEMENTAL INSTRUMENTS. Execute and deliver to Agent
from time to time, upon demand, such supplemental agreements, statements,
assignments and transfers, or instructions or documents relating to the
Collateral, and such other instruments as Agent may reasonably request, in order
that the full intent of this Agreement may be carried into effect.
6.8 PAYMENT OF INDEBTEDNESS. Pay, discharge or otherwise satisfy at or
before maturity (subject, where applicable, to specified grace periods and, in
the case of the trade payables, to normal payment practices) all its obligations
and liabilities of whatever nature, except when the failure to do so could not
reasonably be expected to have a Material Adverse Effect or when the amount or
validity thereof is being contested in good faith by appropriate proceedings and
each Borrower shall have provided for such reserves as Agent may reasonably deem
proper and necessary.
6.9 STANDARDS OF FINANCIAL STATEMENTS. Cause all financial statements
referred to in Sections 9.7, 9.8, 9.9, 9.10, 9.12 and 9.13 as to which GAAP is
applicable to present fairly in all material respects (subject, in the case of
interim financial statements, to normal year-end audit adjustments) the
financial position of the applicable Borrower and to be prepared in reasonable
detail and in accordance with GAAP applied consistently throughout the periods
reflected therein.
6.10 LEASEHOLD AGREEMENTS. Within sixty (60) days after the Closing
Date, deliver landlord, mortgagee or warehouseman agreements satisfactory to
Agent with respect to all premises at which Inventory is located, whether leased
or otherwise; PROVIDED, HOWEVER, that for each location as to which such
agreement is not delivered to the Agent within the thirty (30) day period,
Agent, in its sole discretion, may establish a reserve in an amount equal to
three months rental or other payment obligation of Borrower in connection with
such Inventory location (until such time as a satisfactory agreement is
delivered to Agent).
VII. NEGATIVE COVENANTS.
-------------------
No Borrower shall, until satisfaction in full of the Obligations and
termination of this Agreement:
7.1 MERGER, CONSOLIDATION, ACQUISITION AND SALE OF ASSETS.
(a) Enter into any merger, consolidation or other reorganization
with or into any other Person or acquire all or a substantial portion of the
assets or stock of any Person or permit any other Person to consolidate with or
merge with it; EXCEPT THAT any Borrower may merge with and into or consolidate
with any other Borrower, provided that each of the following conditions is
satisfied as determined by Agent in good faith: (i) Agent shall have received
not less than ten (10) days' prior written notice of the intention of such
Borrower to so merge or consolidate and such information with respect thereto as
Agent may reasonable request, (ii) as of the effective date of the merger or
consolidation and after giving effect thereto, no Default or
-45-
Event of Default shall exist or have occurred and be continuing, and (iii) Agent
shall have received true, correct and complete copies of all agreements,
documents and instruments relating to such merger, including, but not limited
to, the certificate or certificates of merger as filed with each appropriate
Secretary of State.
(b) Sell, lease, transfer or otherwise dispose of any of its
properties or assets, except in the ordinary course of its business and except
as provided in Section 4.3 or on SCHEDULE 7.1(b).
7.2 CREATION OF LIENS. Create or suffer to exist any Lien or transfer
upon or against any of its property or assets now owned or hereafter acquired,
except Permitted Encumbrances.
7.3 GUARANTEES. Become liable upon the obligations of any Person (other
than any other Borrower) by assumption, endorsement or guaranty thereof or
otherwise (other than to Lenders) except the endorsement of checks in the
ordinary course of business.
7.4 INVESTMENTS. Purchase or acquire obligations or stock of, or any
other interest in, any Person, except (a) obligations issued or guaranteed by
the United States of America or any agency thereof, (b) commercial paper with
maturities of not more than 180 days and a published rating of not less than A-1
or P-1 (or the equivalent rating), (c) certificates of time deposit and bankers'
acceptances having maturities of not more than 180 days and repurchase
agreements backed by United States government securities of a commercial bank if
(i) such bank has a combined capital and surplus of at least $500,000,000, or
(ii) its debt obligations, or those of a holding company of which it is a
Subsidiary, are rated not less than A (or the equivalent rating) by a nationally
recognized investment rating agency, (d) U.S. money market funds that invest
solely in obligations issued or guaranteed by the United States of America or an
agency thereof, and (e) loans permitted under Section 7.5 hereof.
7.5 LOANS; CAPITAL CONTRIBUTIONS. Make advances, loans or extensions of
credit to any Person, including without limitation, any Parent, Subsidiary or
Affiliate, except with respect to (a) the extension of commercial trade credit
in connection with the sale of Inventory in the ordinary course of its business,
in excess of the aggregate amount of $100,000 at any time, (b) loans to the
individuals and entities set forth on SCHEDULE 7.5, which shall not exceed the
aggregate amount of $500,000 at any time, and (c) split dollar insurance
premiums classified as loans and to be repaid upon death. Notwithstanding the
foregoing, no Borrower may lend any funds, transfer any assets or contribute any
capital of any kind to a Subsidiary unless (i) the Subsidiary is a Borrower or
(ii) at the time of any such loan, transfer or contribution and immediately
after giving effect to such transaction, no Event of Default exists and the
Borrowers have Undrawn Availability of at least $1,500,000.
7.6 CAPITAL EXPENDITURES. Contract for, purchase or make any
expenditure or commitments for fixed or capital assets (including capitalized
leases) in (i) the fiscal year ending June 30, 2002, in an aggregate amount for
all Borrowers in excess of $1,250,000 and, no more than $750,000 may be expended
with respect to Foreign Subsidiaries; (ii) the fiscal year ending June 30, 2003,
in an aggregate amount for all Borrowers in excess of $1,680,000 and, no more
than $425,000 may be expended with respect to Foreign Subsidiaries; (iii) the
fiscal year ending June 30, 2004, in an aggregate amount for all Borrowers in
excess of $1,120,000 and, no more
-46-
than $450,000 may be expended with respect to Foreign Subsidiaries; and (iv) the
fiscal year ending June 30, 2005, in an aggregate amount for all Borrowers in
excess of $1,260,000 and, no more than $450,000 may be expended with respect to
Foreign Subsidiaries. Any insurance proceeds used by Borrowers to repair,
replace or restore insured property shall be in addition to the amounts set
forth herein.
7.7 DIVIDENDS. Declare, pay or make any dividend or distribution on any
shares of the common stock or preferred stock of any Borrower (other than
dividends or distributions payable in its stock, or split-ups or
reclassifications of its stock) or apply any of its funds, property or assets to
the purchase, redemption or other retirement of any common or preferred stock,
or of any options to purchase or acquire any such shares of common or preferred
stock of any Borrower, EXCEPT (a) any Subsidiary of a Borrower may pay dividends
to such Borrower and (b) any Borrower may repurchase shares of common stock of
such Borrower for cash consideration, PROVIDED, THAT, as to any such repurchase,
each of the following conditions is satisfied: (i) as of the date of the payment
for such repurchase and after giving effect thereto, no Event of Default shall
exist or have occurred and be continuing; (ii) such repurchase shall be paid
with funds legally available therefor, (iii) such repurchase shall not violate
any law or regulation or the terms of any indenture, agreement or undertaking to
which any Borrower is a party or by which any Borrower or its property are bound
and (iv) the aggregate amount of all payments for such repurchases in any given
fiscal year of Waxman shall not exceed $25,000.
7.8 INDEBTEDNESS. Create, incur, assume or suffer to exist any
Indebtedness (exclusive of trade debt and accrued liabilities arising in the
ordinary course of business) except (a) Indebtedness to Agents and Lenders; (b)
Indebtedness incurred for capital expenditures permitted under Section 7.6
hereof; (c) the Indebtedness listed on SCHEDULE 7.8 hereto; provided, however,
that the maximum aggregate amount outstanding at any time of such Indebtedness
shall not exceed $50,000; (d) purchase money Indebtedness (including capital
leases) to the extent incurred or secured by liens (including capital leases)
permitted under Section 7.2 hereof; (e) Indebtedness of any Borrower or any of
their respective Subsidiaries arising pursuant to loans permitted under Section
7.5 hereof; (f) Indebtedness of any Borrower which is subordinated to the
Obligations pursuant to a subordination agreement in form and substance
satisfactory to Agent in its sole discretion; (g) Indebtedness of Borrowers or
any of their respective Subsidiaries under interest rate swap agreements,
interest rate cap agreements, interest rate collar agreements, interest rate
exchange agreements or similar contractual arrangements intended to protect a
Person against fluctuations in interest rates and currency swap agreements,
forward currency purchase agreements or similar contractual arrangements
intended to protect a Person against fluctuations in currency exchange rates;
PROVIDED, THAT, such arrangements are with banks or other financial institutions
that have combined capital and surplus and undivided profits of not less than
$100,000,000 and are not for speculative purposes and such Indebtedness shall be
unsecured; and (h) Indebtedness arising pursuant to guarantees permitted under
Section 7.3 hereof.
7.9 NATURE OF BUSINESS. Substantially change the nature of the business
in which it is presently engaged, nor except as specifically permitted hereby
purchase or invest, directly or indirectly, in any assets or property other than
in the ordinary course of business for assets or property which are useful in,
necessary for and are to be used in its business as presently conducted.
-47-
7.10 TRANSACTIONS WITH AFFILIATES. Directly or indirectly, purchase,
acquire or lease any property from, or sell, transfer or lease any property to,
or otherwise deal with, any Affiliate, except transactions in the ordinary
course of business, on an arm's-length basis, and on terms no less favorable
than terms which would have been obtainable from a Person other than an
Affiliate.
7.11 LEASES. Create, incur, assume or suffer to exist as lessee any
lease arrangement for real or personal property (unless capitalized and
permitted under Section 7.6 hereof) if, after giving effect thereto, aggregate
annual rental payments for all such leased property would exceed $1,200,000 in
any one fiscal year in the aggregate for all Borrowers.
7.12 SUBSIDIARIES.
(a) Form any Subsidiary unless (A) (i) such Subsidiary expressly
joins in this Agreement as a borrower and becomes jointly and severally liable
for the obligations of Borrowers hereunder, under the Note, and under any other
agreement between any Borrower and Lenders, and (ii) Agent shall have received
all documents, including legal opinions, it may reasonably require to establish
compliance with each of the foregoing conditions, or (B) such Subsidiary is a
Foreign Subsidiary and its formation does not cause a violation or breach of
Section 7.5 of this Agreement. In all events, the formation of a Subsidiary
shall require the written consent of the Agent, which consent shall not be
unreasonably withheld.
(b) Enter into any partnership, joint venture or similar
arrangement, unless the Borrowers have Undrawn Availability of at least
$1,500,000 after giving effect to such transaction, and no Event of Default
exists immediately prior, or after giving effect, to the transaction.
7.13 FISCAL YEAR AND ACCOUNTING CHANGES. Change its fiscal year from
June 30 or make any change (i) in accounting treatment and reporting practices
except as required or permitted by GAAP or (ii) in tax reporting treatment
except as required or permitted by law.
7.14 PLEDGE OF CREDIT. Now or hereafter pledge Agent's or any Lender's
credit on any purchases or for any purpose whatsoever or use any portion of any
Advance in or for any business other than such Borrower's business as conducted
on the date of this Agreement.
7.15 AMENDMENT OF ARTICLES OF INCORPORATION, BY-LAWS. Amend, modify or
waive any material term or provision of its Articles of Incorporation or By-Laws
in any way adverse to the interests of Agent and the Lenders, unless required by
law.
7.16 COMPLIANCE WITH ERISA. (i) (x) Maintain, or permit any member of
the Controlled Group to maintain, or (y) become obligated to contribute to, or
permit any member of the Controlled Group to become obligated to contribute to,
to any Plan, other than those Plans disclosed on SCHEDULE 5.8(d), (ii) engage,
or permit any member of the Controlled Group to engage, in any non-exempt
"prohibited transaction", as that term is defined in section 406 of ERISA and
Section 4975 of the Code, which could result in a Material Adverse Effect to any
Borrower or Controlled Group member, (iii) incur, or permit any member of the
Controlled Group to incur, any "accumulated funding deficiency", as that term is
defined in Section 302 of ERISA or Section 412 of the Code in a material amount,
(iv) terminate, or permit any member of
-48-
the Controlled Group to terminate, any Plan where such event could result in any
liability in a material amount of any Borrower or any member of the Controlled
Group or the imposition of a lien on the property of any Borrower or any member
of the Controlled Group pursuant to Section 4068 of ERISA, (v) assume, or permit
any member of the Controlled Group to assume, any obligation to contribute to
any Multiemployer Plan not disclosed on SCHEDULE 5.8(d), (vi) incur, or permit
any member of the Controlled Group to incur, any withdrawal liability in a
material amount to any Multiemployer Plan; (vii) fail promptly to notify Agent
of the occurrence of any Termination Event, (viii) fail to comply, or permit a
member of the Controlled Group to fail to comply, in any material respect, with
the requirements of ERISA or the Code or other applicable laws in respect of any
Plan, (ix) fail to meet, or permit any member of the Controlled Group to fail to
meet, all material minimum funding requirements under ERISA or the Code or
postpone or delay or allow any member of the Controlled Group to postpone or
delay any funding requirement with respect of any Plan. It is provided, however,
that a Borrower or any Controlled Group member may engage in any activity
described in clause (i), (iv), (v) or (vi) with the consent of the Lender, which
consent shall not be unreasonably withheld.
7.17 PREPAYMENT OF INDEBTEDNESS. At any time, directly or indirectly,
prepay any Indebtedness (other than to Lenders), or repurchase, redeem, retire
or otherwise acquire any Indebtedness of any Borrower.
7.18 CHANGE IN CONTROL OR OWNERSHIP. At any time, effect or permit a
Change of Control or Change of Ownership.
VIII. CONDITIONS PRECEDENT.
---------------------
8.1 CONDITIONS TO INITIAL ADVANCES. The agreement of Lenders to make
the initial Advances requested to be made on the Closing Date is subject to the
satisfaction, or waiver by Lenders, immediately prior to or concurrently with
the making of such Advances, of the following conditions precedent:
(a) NOTE. Agent shall have received the Note duly executed and
delivered by an authorized officer of each Borrower;
(b) FILINGS, REGISTRATIONS AND RECORDINGS. Each document
(including, without limitation, any Uniform Commercial Code financing statement)
required by this Agreement, any related agreement or under law or reasonably
requested by the Agent to be filed, registered or recorded in order to create,
in favor of Agent, a perfected security interest in or lien upon the Collateral
shall have been properly filed, registered or recorded in each jurisdiction in
which the filing, registration or recordation thereof is so required or
requested, and Agent shall have received an acknowledgment copy, or other
evidence satisfactory to it, of each such filing, registration or recordation
and satisfactory evidence of the payment of any necessary fee, tax or expense
relating thereto;
(c) CORPORATE PROCEEDINGS OF BORROWERS. Agent shall have received
a copy of the resolutions in form and substance reasonably satisfactory to
Agent, of the Board of Directors of each Borrower authorizing (i) the execution,
delivery and performance of this Agreement, the
-49-
Note, the Mortgage, and any related agreements, (collectively the "Documents")
and (ii) the granting by each Borrower of the security interests in and liens
upon the Collateral in each case certified by the Secretary or an Assistant
Secretary of each Borrower as of the Closing Date; and, such certificate shall
state that the resolutions thereby certified have not been amended, modified,
revoked or rescinded as of the date of such certificate;
(d) INCUMBENCY CERTIFICATES OF BORROWERS. Agent shall have received a
certificate of the Secretary or an Assistant Secretary of each Borrower, dated
the Closing Date, as to the incumbency and signature of the officers of each
Borrower executing this Agreement, any certificate or other documents to be
delivered by it pursuant hereto, together with evidence of the incumbency of
such Secretary or Assistant Secretary;
(e) CORPORATE PROCEEDINGS OF GUARANTOR. Agent shall have received a
copy of the resolutions in form and substance reasonably satisfactory to Agent,
of the Board of Directors of Guarantor authorizing the execution, delivery and
performance of the Guaranty certified by the Secretary or an Assistant Secretary
of Guarantor as of the Closing Date; and, such certificate shall state that the
resolutions thereby certified have not been amended, modified, revoked or
rescinded as of the date of such certificate;
(f) INCUMBENCY CERTIFICATES OF GUARANTOR. Agent shall have received a
certificate of the Secretary or an Assistant Secretary of Guarantor, dated the
Closing Date, as to the incumbency and signature of the officers of Guarantor
executing the Guaranty, any certificate or other documents to be delivered by it
pursuant hereto, together with evidence of the incumbency of such Secretary or
Assistant Secretary;
(g) CERTIFICATES. Agent shall have received a copy of the Articles or
Certificate of Incorporation or other formation documents, as applicable, of
each Borrower and the Guarantor, and all amendments thereto, certified by the
Secretary of State or other appropriate official of its jurisdiction of
incorporation together with copies of the By-Laws or other documents concerning
the corporate governance of each Borrower and the Guarantor and all agreements
of each Borrower's and the Guarantor's shareholders or members certified as
accurate and complete by the Secretary of each Borrower and the Guarantor;
(h) GOOD STANDING CERTIFICATES. Agent shall have received good standing
certificates for each Borrower dated not more than 15 days prior to the Closing
Date, issued by the Secretary of State or other appropriate official of each
Borrower's jurisdiction of incorporation and each jurisdiction where the conduct
of each Borrower's business activities or the ownership of its properties
necessitates qualification;
(i) LEGAL OPINION. Agent shall have received the executed legal
opinions of Xxxxxxx Berlin Shereff Xxxxxxxx, LLP and Xxxxxxxx Xxxx LLP in form
and substance satisfactory to Agent which shall cover such matters incident to
the transactions contemplated by this Agreement, the Note, and related
agreements as Agent may reasonably require and each Borrower hereby authorizes
and directs such counsel to deliver such opinion to Agent;
(j) NO LITIGATION. (i) No litigation, investigation or proceeding
before or by any arbitrator or Governmental Body shall be continuing or
threatened against any Borrower or
-50-
against the officers or directors of any Borrower in connection with the Other
Documents or any of the transactions contemplated thereby and which, in the
reasonable opinion of Agent, could have a Material Adverse Effect; and (ii) no
injunction, writ, restraining order or other order of any nature materially
adverse to any Borrower or the conduct of its business or inconsistent with the
due consummation of the Transactions shall have been issued by any Governmental
Body;
(k) FINANCIAL CONDITION CERTIFICATES. Agent shall have received an
executed Financial Condition Certificate in the form of EXHIBIT 8.1(k).
(l) COLLATERAL EXAMINATION. Agent shall have completed Collateral
examinations and received appraisals, the results of which shall be satisfactory
in form and substance to Lenders, of the Receivables, Inventory, General
Intangibles, Real Property, Leasehold Interest and Equipment of each Borrower
and all books and records in connection therewith;
(m) FEES. Agent shall have received all fees payable to Agent and
Lenders on or prior to the Closing Date pursuant to Article III hereof;
(n) PRO FORMA FINANCIAL STATEMENTS. Agent shall have received a copy of
the Pro Forma Financial Statements which shall be satisfactory in all respects
to Agent;
(o) INSURANCE. Agent shall have received in form and substance
satisfactory to Agent, certified copies of Borrowers' casualty certificates of
insurance, together with loss payable endorsements on Agent's standard form of
loss payee endorsement naming Agent as loss payee, and certified copies of
Borrowers' liability certificates of insurance, together with endorsements
naming Agent as a co-insured;
(p) TITLE INSURANCE. Agent shall have received fully paid mortgagee
title insurance policies (or binding commitments to issue title insurance
policies, marked to Agent's satisfaction to evidence the form of such policies
to be delivered with respect to the Mortgage), in standard ALTA form, issued by
a title insurance company satisfactory to Agent, each in an amount equal to not
less than the fair market value of the Real Property subject to the Mortgage,
insuring the Mortgage to create a valid Lien on the Real Property and no survey
or other exceptions, other than Permitted Encumbrances and those consented to by
Agent;
(q) ENVIRONMENTAL REPORTS. Agent shall have received in form and
substance satisfactory to Agent all environmental studies and reports prepared
by independent environmental engineering firms with respect to all Real Property
owned by Borrowers;
(r) INSTRUCTIONS. Agent shall have received written instructions from
Borrowers directing the application of proceeds of the initial Advances made
pursuant to this Agreement;
(s) BLOCKED ACCOUNTS. Agent shall have received duly executed
agreements establishing the Blocked Accounts or Depository Accounts with
financial institutions acceptable to Agent for the collection or servicing of
the Receivables and proceeds of the Collateral;
-51-
(t) CONSENTS. Agent shall have received any and all Consents necessary
to permit the effectuation of the transactions contemplated by this Agreement
and the Other Documents, and Agent shall have received such Consents and waivers
of such third parties as might assert claims with respect to the Collateral, as
Agent and its counsel shall deem necessary;
(u) NO ADVERSE MATERIAL CHANGE. Since October 31, 2001, there shall not
have occurred any event, condition or state of facts which could reasonably be
expected to have a Material Adverse Effect and no representations made or
information supplied to Agent shall have been proven to be inaccurate or
misleading in any material respect, except as set forth on SCHEDULE 8.1(u);
(v) MORTGAGE. Agent shall have received in form and substance
satisfactory to Lenders an executed Mortgage;
(w) TANGIBLE NET WORTH. Agent shall have received the Pro Forma Balance
Sheet reflecting a Tangible Net Worth after giving effect to the Transactions of
at least $16,830,000;
(x) CONTRACT REVIEW. Agent shall have reviewed all material contracts
of Borrowers including, without limitation, leases, union contracts, labor
contracts, purchase and sale contracts, vendor supply contracts, license
agreements and distributorship agreements and such contracts and agreements
shall be satisfactory in all respects to Agent;
(y) CLOSING CERTIFICATE. Agent shall have received a closing
certificate signed by the Chief Financial Officer of each Borrower dated as of
the date hereof, stating that (i) all representations and warranties set forth
in this Agreement and the Other Documents are true and correct in all material
respects on and as of such date, (ii) Borrowers are on such date in compliance
in all material respects with all the terms and provisions set forth in this
Agreement and the Other Documents and (iii) on such date no Default or Event of
Default has occurred or is continuing;
(z) BORROWING BASE CERTIFICATE. Agent shall have received a Borrowing
Base Certificate from Borrowers indicating that the aggregate amount of Eligible
Receivables and Eligible Inventory is sufficient in value and amount to support
Advances in the amount requested by Borrowers on the Closing Date;
(aa) UNDRAWN AVAILABILITY. After giving effect to the initial Advances
hereunder, Borrowers shall have Undrawn Availability of at least $1,500,000;
(bb) GUARANTY, SECURITY AGREEMENT AND OTHER DOCUMENTS. Agent shall have
received (i) the executed Guaranty, (ii) the executed Guarantor Security
Agreement, and (iii) the executed Other Documents, all in form and substance
satisfactory to Agent;
(cc) OTHER. All corporate and other proceedings, and all documents,
instruments and other legal matters in connection with the Transactions shall be
satisfactory in form and substance to Agent.
-52-
8.2 CONDITIONS TO EACH ADVANCE. The agreement of Lenders to make any
Advance requested to be made on any date (including, without limitation, the
initial Advance), is subject to the satisfaction of the following conditions
precedent as of the date such Advance is made:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations
and warranties made by any Borrower in or pursuant to this Agreement and any
related agreements to which it is a party, and each of the representations and
warranties contained in any certificate, document or financial or other
statement furnished at any time under or in connection with this Agreement or
any related agreement shall be true and correct in all material respects on and
as of such date as if made on and as of such date; except to the extent that
Agent has been notified by the Borrowers that any representation or warranty is
not correct and Agent has agreed in its discretion to waive such requirement (as
evidenced by the making of such Advance);
(b) NO DEFAULT. No Event of Default or Default shall have occurred
and be continuing on such date, or would exist after giving effect to the
Advances requested to be made, on such date; PROVIDED, HOWEVER that Agent, in
its sole discretion, may continue to make Advances notwithstanding the existence
of an Event of Default or Default and that any Advances so made shall not be
deemed a waiver of any such Event of Default or Default; and
(c) MAXIMUM ADVANCES. In the case of any Advances requested to be
made, after giving effect thereto, the aggregate Advances shall not exceed the
maximum amount of Advances permitted under Section 2.5 hereof.
Each request for an Advance by any Borrower hereunder shall constitute a
representation and warranty by each Borrower as of the date of such Advance that
the conditions contained in this Section 8.2 shall have been satisfied.
IX. INFORMATION AS TO BORROWERS.
---------------------------
Each Borrower shall, until satisfaction in full of the Obligations and
the termination of this Agreement:
9.1 DISCLOSURE OF MATERIAL MATTERS. Immediately upon learning thereof,
report to Agent all matters materially affecting the value, enforceability or
collectibility of any portion of the Collateral including, without limitation,
any Borrower's reclamation or repossession of, or the return to any Borrower of,
a material amount of goods or claims or disputes asserted by any Customer or
other obligor.
9.2 SCHEDULES. Deliver to Agent on or before the fifteenth (15th) day
of each month as and for the prior month (a) accounts receivable ageings, (b)
accounts payable schedules, (c) Inventory reports and (d) a Borrowing Base
Certificate (which shall be calculated as of the last day of the prior month and
which shall not be binding upon Agent or restrictive of Agent's rights under
this Agreement). In addition, each Borrower will deliver to Agent at such
intervals as Agent may reasonably require: (i) confirmatory assignment
schedules, (ii) copies of Customer's invoices, (iii) evidence of shipment or
delivery, and (iv) such further schedules, documents and/or information
regarding the Collateral as Agent may reasonably require including, without
-53-
limitation, trial balances and test verifications. Agent shall have the right to
confirm and verify all Receivables by any manner and through any medium it
considers advisable and, subject to the provisions of this Agreement, do
whatever it may deem reasonably necessary to protect its interests hereunder.
The items to be provided under this Section are to be in form satisfactory to
Agent and executed by each Borrower and delivered to Agent from time to time
solely for Agent's convenience in maintaining records of the Collateral, and any
Borrower's failure to deliver any of such items to Agent shall not affect,
terminate, modify or otherwise limit Agent's Lien with respect to the
Collateral.
9.3 ENVIRONMENTAL REPORTS. Furnish Agent, concurrently with the
delivery of the financial statements referred to in Sections 9.7 and 9.8, with a
certificate signed by the President of each Borrower stating, to the best of his
knowledge, that each Borrower is in compliance in all material respects with all
applicable Environmental Laws. To the extent any Borrower is not in compliance
with the foregoing laws, the certificate shall set forth with specificity
non-privileged information regarding all areas of non-compliance and the
proposed action such Borrower will implement in order to achieve full
compliance.
9.4 LITIGATION. Promptly notify Agent in writing of any litigation,
suit or administrative proceeding affecting any Borrower, whether or not the
claim is covered by insurance, and of any suit or administrative proceeding,
which in any such case could reasonably be expected to have a Material Adverse
Effect on any Borrower.
9.5 MATERIAL OCCURRENCES. Promptly notify Agent in writing upon the
occurrence of (a) any Event of Default or Default; (b) any event, development or
circumstance whereby any financial statements or other reports furnished to
Agent fail in any material respect to present fairly, in accordance with GAAP
consistently applied, the financial condition or operating results of any
Borrower as of the date of such statements; (c) any accumulated retirement plan
funding deficiency which, if such deficiency continued for two plan years and
was not corrected as provided in Section 4971 of the Code, could subject any
Borrower to a tax imposed by Section 4971 of the Code; (d) each and every
default by any Borrower which might result in the acceleration of the maturity
of any material Indebtedness, including the names and addresses of the holders
of such Indebtedness with respect to which there is a default existing or with
respect to which the maturity has been or could be accelerated, and the amount
of such Indebtedness; and (e) any other development in the business or affairs
of any Borrower which could reasonably be expected to have a Material Adverse
Effect; in each case describing the nature thereof and the action Borrowers
propose to take with respect thereto.
9.6 GOVERNMENT RECEIVABLES. Notify Agent immediately if any of its
Receivables arise out of contracts between any Borrower and the United States,
any state, or any department, agency or instrumentality of any of them.
9.7 ANNUAL FINANCIAL STATEMENTS. Furnish Agent within 90 days after the
end of each fiscal year of Borrowers, financial statements of Borrowers on a
consolidated basis (and, in the case of statements of income and stockholders'
equity, consolidating basis as well) including, but not limited to, statements
of income and stockholders' equity and cash flow from the beginning of the
current fiscal year to the end of such fiscal year and the balance sheet as at
the end of such fiscal year, all prepared in accordance with GAAP applied on a
basis consistent with prior
-54-
practices, and in reasonable detail and reported upon without qualification by
an independent certified public accounting firm selected by Borrowers and
satisfactory to Agent (the "Accountants"). The report of the Accountants shall
be accompanied by a statement of the Accountants certifying that (i) they have
caused this Agreement to be reviewed, (ii) in making the examination upon which
such report was based either no information came to their attention which to
their knowledge constituted an Event of Default or a Default under this
Agreement or any related agreement or, if such information came to their
attention, specifying any such Default or Event of Default, its nature, when it
occurred and whether it is continuing. In addition, the reports shall be
accompanied by a certificate of each Borrower's Chief Financial Officer which
shall state that, based on an examination sufficient to permit him to make an
informed statement, no Default or Event of Default exists, or, if such is not
the case, specifying such Default or Event of Default, its nature, when it
occurred, whether it is continuing and the steps being taken by such Borrower
with respect to such event, and such certificate shall have appended thereto
calculations which set forth Borrowers' compliance with the requirements or
restrictions imposed by Sections 6.5, 6.6, 7.6 and 7.11 hereof.
9.8 QUARTERLY FINANCIAL STATEMENTS. Furnish Agent within 45 days after
the end of each fiscal quarter, an unaudited balance sheet of Borrowers on a
consolidated and consolidating basis and unaudited statements of income and
stockholders' equity and cash flow of Borrowers on a consolidated basis (and, in
the case of statements of income and stockholders' equity, consolidating basis
as well) fairly reflecting in all material respects results of operations from
the beginning of the fiscal year to the end of such quarter and for such
quarter, prepared on a basis consistent with prior practices, subject to normal
and recurring year end adjustments that individually and in the aggregate are
not material to the business of Borrowers. The reports shall be accompanied by a
certificate signed by the Chief Financial Officer of each Borrower, which shall
state that, based on an examination sufficient to permit him to make an informed
statement, no Default or Event of Default exists, or, if such is not the case,
specifying such Default or Event of Default, its nature, when it occurred,
whether it is continuing and the steps being taken by Borrowers with respect to
such default and, such certificate shall have appended thereto calculations
which set forth Borrowers' compliance with the requirements or restrictions
imposed by Sections 6.5, 6.6, 7.6 and 7.11 hereof.
9.9 MONTHLY FINANCIAL STATEMENTS. Furnish Agent with (i) an unaudited
balance sheet on a consolidated basis and (ii) statements of income and
stockholders' equity of Borrowers on a consolidated and consolidating basis,
within 30 days after the end of each month, fairly reflecting in all material
respects results of operations from the beginning of the fiscal year to the end
of such month and for such month, prepared on a basis consistent with prior
practices, subject to normal and recurring year end adjustments that
individually and in the aggregate are not material to the business of Borrowers.
The reports shall be accompanied by a certificate of each Borrower's Chief
Financial Officer, which shall state that, based on an examination sufficient to
permit him to make an informed statement, no Default or Event of Default exists,
or, if such is not the case, specifying such Default or Event of Default, its
nature, when it occurred, whether it is continuing and the steps being taken by
Borrowers with respect to such event and, such certificate shall have appended
thereto calculations which set forth Borrowers' compliance with the requirements
or restrictions imposed by Sections 6.5, 6.6, 7.6 and 7.11 hereof.
-55-
9.10 OTHER REPORTS. Furnish Agent as soon as available, but in any
event within ten (10) days after the issuance thereof, with copies of such
financial statements, reports and returns as each Borrower shall send to its
stockholders.
9.11 ADDITIONAL INFORMATION. Furnish Agent with such additional
information as Agent shall reasonably request in order to enable Agent to
determine whether the terms, covenants, provisions and conditions of this
Agreement and the Note have been complied with by Borrowers including, without
limitation and without the necessity of any request by Agent, (a) copies of all
environmental audits and reviews, (b) at least 30 days prior thereto, notice of
any Borrower's opening of any new office or place of business or any Borrower's
closing of any existing office or place of business, and (c) promptly upon any
Borrower's learning thereof, notice of any labor dispute to which any Borrower
may become a party, any strikes or walkouts relating to any of its plants or
other facilities, and the expiration of any labor contract to which any Borrower
is a party or by which any Borrower is bound.
9.12 PROJECTED OPERATING BUDGET. Furnish Agent, no later than 15 days
prior to the beginning of each Borrower's fiscal years commencing with fiscal
year 2002, a month by month projected operating budget and cash flow of
Borrowers on a consolidated and, other than with respect to statements of cash
flow, consolidating basis for such fiscal year (including an income statement
for each month and a balance sheet as at the end of the last month in each
fiscal quarter), such projections to be accompanied by a certificate signed by
the President or Chief Financial Officer of each Borrower to the effect that
such projections have been prepared on the basis of sound financial planning
practice consistent with past budgets and financial statements and that such
officer has no reason to question the reasonableness of any material assumptions
on which such projections were prepared.
9.13 VARIANCES FROM OPERATING BUDGET. Furnish Agent (i) concurrently
with the delivery of the financial statements referred to in Sections 9.7 and
9.9, additional numerical data, either set forth on or accompanying such
financial statements, indicating all material variances from budgets submitted
by Borrowers pursuant to Section 9.12, and (ii) concurrently with the delivery
of the financial statements referred to in Section 9.8, a written report
summarizing all material variances from budgets submitted by Borrowers pursuant
to Section 9.12, and a discussion and analysis by management with respect to
such variances.
9.14 NOTICE OF SUITS, ADVERSE EVENTS. Furnish Agent with prompt notice
of (i) any lapse or other termination of any Consent issued to any Borrower by
any Governmental Body or any other Person that is material to the operation of
any Borrower's business, (ii) any refusal by any Governmental Body or any other
Person to renew or extend any such Consent; and (iii) copies of any periodic or
special reports filed by any Borrower with any Governmental Body or Person, if
such reports indicate any material change in the business, operations, affairs
or condition of any Borrower, or if copies thereof are requested by Lender, and
(iv) copies of any material notices and other communications from any
Governmental Body or Person which specifically relate to any Borrower.
9.15 ERISA NOTICES AND REQUESTS. Furnish Agent with immediate written
notice in the event that (i) any Borrower or any member of the Controlled Group
knows or has reason to know that a Termination Event has occurred, together with
a written statement describing such
-56-
Termination Event and the action, if any, which such Borrower or any member of
the Controlled Group has taken, is taking, or proposes to take with respect
thereto and, when known, any action taken or threatened by the Internal Revenue
Service, Department of Labor or PBGC with respect thereto, (ii) any Borrower or
any member of the Controlled Group knows or has reason to know that a prohibited
transaction (as defined in Sections 406 of ERISA and 4975 of the Code) has
occurred together with a written statement describing such transaction and the
action which such Borrower or any member of the Controlled Group has taken, is
taking or proposes to take with respect thereto, (iii) a funding waiver request
has been filed with respect to any Plan together with all communications
received by any Borrower or any member of the Controlled Group with respect to
such request, (iv) any material increase in the benefits of any existing Plan or
the establishment of any new Plan or the commencement of contributions to any
Plan to which any Borrower or any member of the Controlled Group was not
previously contributing shall occur, (v) any Borrower or any member of the
Controlled Group shall receive from the PBGC a notice of intention to terminate
a Plan or to have a trustee appointed to administer a Plan, together with copies
of each such notice, (vi) any Borrower or any member of the Controlled Group
shall receive any favorable or unfavorable determination letter from the
Internal Revenue Service regarding the qualification of a Plan under Section
401(a) of the Code, together with copies of each such letter; (vii) any Borrower
or any member of the Controlled Group shall receive a notice regarding the
imposition of withdrawal liability to a Multiemployer Plan, together with copies
of each such notice; (viii) any Borrower or any member of the Controlled Group
shall fail to make an installment or any other payment required under Section
412 of the Code on or before the due date for such installment or payment; (ix)
any Borrower or any member of the Controlled Group knows that (a) a
Multiemployer Plan has been terminated, (b) the administrator or plan sponsor of
a Multiemployer Plan intends to terminate a Multiemployer Plan, or (c) the PBGC
has instituted or will institute proceedings under Section 4042 of ERISA to
terminate a Multiemployer Plan.
9.16 ADDITIONAL DOCUMENTS. Execute and deliver to Agent, upon request,
such documents and agreements as Agent may, from time to time, reasonably
request to carry out the purposes, terms or conditions of this Agreement.
X. EVENTS OF DEFAULT.
------------------
The occurrence of any one or more of the following events shall
constitute an "Event of Default":
10.1 failure by any Borrower to pay any principal or interest on the
Obligations when due, whether at maturity or by reason of acceleration pursuant
to the terms of this Agreement or by notice of intention to prepay, or by
required prepayment or failure to pay any other liabilities or make any other
payment, fee or charge provided for herein when due or in any Other Document;
10.2 any representation or warranty made or deemed made by any Borrower
in this Agreement or any related agreement or in any certificate, document or
financial or other statement furnished at any time in connection herewith or
therewith shall prove to have been misleading in any material respect on the
date when made or deemed to have been made;
-57-
10.3 failure by any Borrower to (i) furnish financial information when
due or when requested pursuant to the terms of this Agreement which is
unremedied for a period of 15 days, or (ii) permit the inspection of its books
or records pursuant to the terms of this Agreement;
10.4 issuance of a notice of Lien, levy, assessment, injunction or
attachment against a material portion of any Borrower's property which is not
stayed or lifted within 30 days, except to the extent the validity of any of the
foregoing is being contested in good faith by appropriate proceedings diligently
pursued and available to such Borrower and with respect to which adequate
reserves have been set aside on its books;
10.5 except as otherwise provided for in Sections 10.1 and 10.3,
failure or neglect of any Borrower to perform, keep or observe any term,
provision, condition or covenant herein contained, or contained in any other
agreement or arrangement, now or hereafter entered into between any Borrower and
Agent or any Lender except for (a) a failure or neglect of any Borrower to
perform, keep or observe any term, provision, condition or covenant, contained
in Sections 4.6, 4.7, 4.9, 6.4 or 9.6 hereof which is cured within five days
from the occurrence of such failure or neglect, or (b) a failure or neglect of
any Borrower to perform, keep or observe any term, provision, condition or
covenant herein contained, or contained in any other agreement or arrangements
now or hereafter entered into between any Borrower and Agent or any Lender, the
effect of which (when taken together with all such failures or neglect) is not
material to Agent's or any Lender's rights hereunder, to the business,
operations or condition of any Borrower or the value of any Collateral;
10.6 any judgment or judgments are rendered or judgment liens filed
against any Borrower for an aggregate amount in excess of $250,000, unless
Borrower, in good faith, contests such judgment(s) or judgment liens and
establishes such reserves as are satisfactory to Agent;
10.7 any Borrower shall (i) apply for, consent to or suffer the
appointment of, or the taking of possession by, a receiver, custodian, trustee,
liquidator or similar fiduciary of itself or of all or a substantial part of its
property, (ii) make a general assignment for the benefit of creditors, (iii)
commence a voluntary case under any state or federal bankruptcy laws (as now or
hereafter in effect), (iv) be adjudicated as bankrupt or insolvent, (v) file a
petition seeking to take advantage of any other law providing for the relief of
debtors, (vi) acquiesce to, or fail to have dismissed or stayed, within 60 days,
any petition filed against it in any involuntary case under such bankruptcy
laws, or (vii) take any action for the purpose of effecting any of the
foregoing;
10.8 any Borrower shall admit in writing its inability, or be generally
unable, to pay its debts as they become due or cease operations of its present
business;
10.9 any Affiliate or any Subsidiary of any Borrower, or any Guarantor,
shall (i) apply for, consent to or suffer the appointment of, or the taking of
possession by, a receiver, custodian, trustee, liquidator or similar fiduciary
of itself or of all or a substantial part of its property, (ii) admit in writing
its inability, or be generally unable, to pay its debts as they become due or
cease operations of its present business, (iii) make a general assignment for
the benefit of creditors, (iv) commence a voluntary case under any state or
federal bankruptcy laws (as now or hereafter in effect), (v) be adjudicated as
bankrupt or insolvent, (vi) file a petition seeking to take advantage
-58-
of any other law providing for the relief of debtors, (vii) acquiesce to, or
fail to have dismissed or stayed, within 60 days, any petition filed against it
in any involuntary case under such bankruptcy laws, or (viii) take any action
for the purpose of effecting any of the foregoing;
10.10 any change in any Borrower's condition or affairs (financial or
otherwise) which in Agent's opinion has a Material Adverse Effect;
10.11 any Lien created hereunder or provided for hereby or under any
related agreement for any reason ceases to be or is not a valid and perfected
Lien having a first priority interest;
10.12 a default of the obligations of any Borrower under any other
agreement to which it is a party shall occur which adversely affects its
condition, affairs or prospects (financial or otherwise) which default is not
cured within any applicable grace period;
10.13 termination or breach of any Guaranty or Guaranty Security
Agreement or similar agreement executed and delivered to Agent in connection
with the Obligations of any Borrower, or if any Guarantor attempts to terminate,
challenges the validity of, or its liability under, any such Guaranty or
Guaranty Security Agreement or similar agreement;
10.14 any Change of Ownership or Change of Control shall occur;
10.15 any material provision of this Agreement shall, for any reason,
cease to be valid and binding on any Borrower, or any Borrower shall so claim in
writing to Agent;
10.16 (i) any Governmental Body shall (A) revoke, terminate, suspend or
adversely modify any license, permit, patent trademark or tradename of any
Borrower, the continuation of which is material to the continuation of any
Borrower's business, or (B) commence proceedings to suspend, revoke, terminate
or adversely modify any such license, permit, trademark, tradename or patent and
such proceedings shall not be dismissed or discharged within 60 days, or (c)
schedule or conduct a hearing on the renewal of any license, permit, trademark,
tradename or patent necessary for the continuation of any Borrower's business
and the staff of such Governmental Body issues a report recommending the
termination, revocation, suspension or material, adverse modification of such
license, permit, trademark, tradename or patent; (ii) any agreement which is
necessary or material to the operation of any Borrower's business shall be
revoked or terminated and not replaced by a substitute acceptable to Agent
within 30 days after the date of such revocation or termination, and such
revocation or termination and non-replacement would reasonably be expected to
have a Material Adverse Effect on any Borrower;
10.17 any material portion of the Collateral shall be seized or taken
by a Governmental Body, or any Borrower or the title and rights of any Borrower
or any Permitted Owner which is the owner of any material portion of the
Collateral shall have become the subject matter of litigation which might, in
the opinion of Agent, upon final determination, result in impairment or loss of
the security provided by this Agreement or the Other Documents;
10.18 the operations of any Borrower's manufacturing facility are
interrupted at any time for more than 48 hours during any period of 30
consecutive days, unless such Borrower shall (i) be entitled to receive for such
period of interruption, proceeds of business interruption insurance sufficient
to assure that its per diem cash needs during such period is at least equal to
-59-
its average per diem cash needs for the consecutive three month period
immediately preceding the initial date of interruption and (ii) receive such
proceeds in the amount described in clause (i) preceding not later than 30 days
following the initial date of any such interruption; provided, however, that
notwithstanding the provisions of clauses (i) and (ii) of this section, an Event
of Default shall be deemed to have occurred if such Borrower shall be receiving
the proceeds of business interruption insurance for a period of 30 consecutive
days; or
10.19 an event or condition specified in Sections 7.16 or 9.15 hereof
shall occur or exist with respect to any Plan and, as a result of such event or
condition, together with all other such events or conditions, any Borrower or
any member of the Controlled Group shall incur, or in the opinion of Agent be
reasonably likely to incur, a liability to a Plan or the PBGC (or both) which,
in the reasonable judgment of Agent, would have a Material Adverse Effect on any
Borrower.
XI. LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT.
------------------------------------------
11.1 RIGHTS AND REMEDIES. Upon the occurrence of (i) an Event of
Default pursuant to Section 10.7 all Obligations shall be immediately due and
payable and this Agreement and the obligation of Lenders to make Advances shall
be deemed terminated; and, (ii) any of the other Events of Default and at any
time thereafter (such default not having previously been cured), at the option
of Required Lenders all Obligations shall be immediately due and payable and
Lenders shall have the right to terminate this Agreement and to terminate the
obligation of Lenders to make Advances and (iii) a filing of a petition against
Borrower in any involuntary case under any state or federal bankruptcy laws, the
obligation of Lenders to make Advances hereunder shall be terminated other than
as may be required by an appropriate order of the bankruptcy court having
jurisdiction over any Borrower. Upon the occurrence of any Event of Default,
Agent shall have the right to exercise any and all other rights and remedies
provided for herein, under the Uniform Commercial Code and at law or equity
generally, including, without limitation, the right to foreclose the security
interests granted herein and to realize upon any Collateral by any available
judicial procedure and/or to take possession of and sell any or all of the
Collateral with or without judicial process. Agent may enter any of any
Borrower's premises or other premises without legal process and without
incurring liability to any Borrower therefor, and Agent may thereupon, or at any
time thereafter, in its discretion without notice or demand, take the Collateral
and remove the same to such place as Agent may deem advisable and Agent may
require Borrowers to make the Collateral available to Agent at a convenient
place. With or without having the Collateral at the time or place of sale, Agent
may sell the Collateral, or any part thereof, at public or private sale, at any
time or place, in one or more sales, at such price or prices, and upon such
terms, either for cash, credit or future delivery, as Agent may elect. Except as
to that part of the Collateral which is perishable or threatens to decline
speedily in value or is of a type customarily sold on a recognized market, Agent
shall give Borrowers reasonable notification of such sale or sales, it being
agreed that in all events written notice mailed to Borrowers at least ten (10)
Business Days days prior to such sale or sales is reasonable notification. At
any public sale Agent or any Lender may bid for and become the purchaser, and
Agent, any Lender or any other purchaser at any such sale thereafter shall hold
the Collateral sold absolutely free from any claim or right of whatsoever kind,
including any equity of redemption and such right and equity are hereby
expressly waived and released by each Borrower. In connection with the exercise
of the foregoing remedies, Agent is granted
-60-
permission to use all of each Borrower's trademarks, trade styles, trade names,
patents, patent applications, licenses, franchises and other proprietary rights
which are used in connection with (a) Inventory for the purpose of disposing of
such Inventory and (b) Equipment for the purpose of completing the manufacture
of unfinished goods. The proceeds realized from the sale of any Collateral shall
be applied as follows: first, to the reasonable costs, expenses and attorneys'
fees and expenses incurred by Agent for collection and for acquisition,
completion, protection, removal, storage, sale and delivery of the Collateral;
second, to interest due upon any of the Obligations and any fees payable under
this Agreement; and, third, to the principal of the Obligations. If any
deficiency shall arise, Borrowers shall remain liable to Agent and Lenders
therefor. Any excess shall be remitted by Agent to the Borrowers.
11.2 AGENT'S DISCRETION. Agent shall have the right in its sole
discretion to determine which rights, Liens, security interests or remedies
Agent may at any time pursue, relinquish, subordinate, or modify or to take any
other action with respect thereto, and such determination will not in any way
modify or affect any of Agent's or Lenders' rights hereunder.
11.3 SETOFF. In addition to any other rights which Agent or any Lender
may have under applicable law, upon the occurrence of an Event of Default
hereunder, Agent and such Lender shall have a right to apply any Borrower's
property held by Agent and such Lender to reduce the Obligations.
11.4 RIGHTS AND REMEDIES NOT EXCLUSIVE. The enumeration of the
foregoing rights and remedies is not intended to be exhaustive, and the exercise
of any right or remedy shall not preclude the exercise of any other right or
remedies provided for herein or otherwise provided by law, all of which shall be
cumulative and not alternative.
11.5 ALLOCATION OF PAYMENTS AFTER EVENT OF DEFAULT. Notwithstanding any
other provisions of this Agreement to the contrary, after the occurrence and
during the continuance of an Event of Default, all amounts collected or received
by the Agent on account of the Obligations or any other amounts outstanding
under any of the Other Documents or in respect of the Collateral may, at Agent's
discretion, be paid over or delivered as follows:
FIRST, to the payment of all reasonable out-of-pocket costs and
expenses (including without limitation, reasonable attorneys' fees) of the Agent
in connection with enforcing the rights of the Lenders under this Agreement and
the Other Documents and any protective advances made by the Agent with respect
to the Collateral under or pursuant to the terms of this Document;
SECOND, to payment of any fees owed to the Agent;
THIRD, to the payment of all reasonable out-of-pocket costs and
expenses (including without limitation, reasonable attorneys' fees) of each of
the Lenders in connection with enforcing its rights under this Agreement and the
Other Documents or otherwise with respect to the Obligations owing to such
Lender;
FOURTH, to the payment of all of the Obligations consisting of accrued
fees and interest;
-61-
FIFTH, to the payment of the outstanding principal amount of the
Obligations (including the payment or cash collateralization of the outstanding
Letters of Credit);
SIXTH, to all other Obligations and other obligations which shall have
become due and payable under the Other Documents or otherwise and not repaid
pursuant to clauses "FIRST" through "FIFTH" above;
SEVENTH, to the payment of the surplus, if any, to whoever may be
lawfully entitled to receive such surplus.
In carrying out the foregoing, (i) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; (ii) each of the Lenders shall receive (so long as it is
not a Defaulting Lender) an amount equal to its pro rata share (based on the
proportion that the then outstanding Advances held by such Lender bears to the
aggregate then outstanding Advances) of amounts available to be applied pursuant
to clauses "THIRD", "FOURTH", "FIFTH" and "SIXTH" above; and (iii) to the extent
that any amounts available for distribution pursuant to clause "FIFTH" above are
attributable to the issued but undrawn amount of outstanding Letters of Credit,
such amounts shall be held by the Agent in a cash collateral account and applied
(A) first, to reimburse the Issuer from time to time for any drawings under such
Letters of Credit and (B) then, following the expiration of all Letters of
Credit, to all other obligations of the types described in clauses "FIFTH" and
"SIXTH" above in the manner provided in this Section 11.5.
XII. WAIVERS AND JUDICIAL PROCEEDINGS.
--------------------------------
12.1 WAIVER OF NOTICE. Each Borrower hereby waives notice of
non-payment of any of the Receivables, demand, presentment, protest and notice
thereof with respect to any and all instruments, notice of acceptance hereof,
notice of loans or advances made, credit extended, Collateral received or
delivered, or any other action taken in reliance hereon, and all other demands
and notices of any description, except such as are expressly provided for
herein.
12.2 DELAY. No delay or omission on Agent's or any Lender's part in
exercising any right, remedy or option shall operate as a waiver of such or any
other right, remedy or option or of any default.
XIII. EFFECTIVE DATE AND TERMINATION.
------------------------------
13.1 TERM. This Agreement, which shall inure to the benefit of and
shall be binding upon the respective successors and permitted assigns of each
Borrower, Agent and each Lender, shall become effective on the date hereof and
shall continue in full force and effect until the third anniversary of the
Closing Date (the "Term") unless sooner terminated as herein provided. Borrowers
may terminate this Agreement at any time upon 90 days' prior written notice upon
payment in full of the Obligations. In the event the Obligations are prepaid in
full prior to the last day of the Term (the date of such prepayment hereinafter
referred to as the "Early Termination Date"), Borrowers shall pay to Agent for
the benefit of Lenders an early termination
-62-
fee in an amount equal to (x) two percent of the Maximum Loan Amount if the
Early Termination Date occurs on or after the Closing Date to and including the
date immediately preceding the first anniversary of the Closing Date, and (y)
one percent of the Maximum Loan Amount if the Early Termination Date occurs on
or after the first anniversary of the Closing Date to and including the date 60
days prior to the third anniversary of the Closing Date.
13.2 TERMINATION. The termination of the Agreement shall not affect any
Borrower's, Agent's or any Lender's rights, or any of the Obligations having
their inception prior to the effective date of such termination, and the
provisions hereof shall continue to be fully operative until all transactions
entered into, rights or interests created or Obligations have been fully
disposed of, concluded or liquidated. The security interests, Liens and rights
granted to Agent and Lenders hereunder and the financing statements filed
hereunder shall continue in full force and effect, notwithstanding the
termination of this Agreement or the fact that Borrowers' Account may from time
to time be temporarily in a zero or credit position, until all of the
Obligations of each Borrower have been paid or performed in full after the
termination of this Agreement or each Borrower has furnished Agent and Lenders
with an indemnification satisfactory to Agent and Lenders with respect thereto.
Accordingly, except as set forth in Section 4.3, each Borrower waives any rights
which it may have under the Uniform Commercial Code to demand the filing of
termination statements with respect to the Collateral, and Agent shall not be
required to send such termination statements to each Borrower, or to file them
with any filing office, unless and until this Agreement shall have been
terminated in accordance with its terms and all Obligations paid in full in
immediately available funds. All representations, warranties, covenants, waivers
and agreements contained herein shall survive termination hereof until all
Obligations are paid or performed in full.
XIV. REGARDING AGENT.
---------------
14.1 APPOINTMENT. Each Lender hereby designates PNC to act as Agent for
such Lender under this Agreement and the Other Documents. Each Lender hereby
irrevocably authorizes Agent to take such action on its behalf under the
provisions of this Agreement and the Other Documents and to exercise such powers
and to perform such duties hereunder and thereunder as are specifically
delegated to or required of Agent by the terms hereof and thereof and such other
powers as are reasonably incidental thereto and Agent shall hold all Collateral,
payments of principal and interest, fees (except the fees set forth in Sections
3.2 and 3.3, charges and collections (without giving effect to any collection
days) received pursuant to this Agreement, for the ratable benefit of Lenders.
Agent may perform any of its duties hereunder by or through its agents or
employees. As to any matters not expressly provided for by this Agreement
(including without limitation, collection of the Note) Agent shall not be
required to exercise any discretion or take any action, but shall be required to
act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Required Lenders, and such
instructions shall be binding; PROVIDED, HOWEVER, that Agent shall not be
required to take any action which exposes Agent to liability or which is
contrary to this Agreement or the Other Documents or applicable law unless Agent
is furnished with an indemnification reasonably satisfactory to Agent with
respect thereto.
-63-
14.2 NATURE OF DUTIES. Agent shall have no duties or responsibilities
except those expressly set forth in this Agreement and the Other Documents.
Neither Agent nor any of its officers, directors, employees or agents shall be
(i) liable for any action taken or omitted by them as such hereunder or in
connection herewith, unless caused by their gross (not mere) negligence or
willful misconduct, or (ii) responsible in any manner for any recitals,
statements, representations or warranties made by any Borrower or any officer
thereof contained in this Agreement, or in any of the Other Documents or in any
certificate, report, statement or other document referred to or provided for in,
or received by Agent under or in connection with, this Agreement or any of the
Other Documents or for the value, validity, effectiveness, genuineness, due
execution, enforceability or sufficiency of this Agreement, or any of the Other
Documents or for any failure of any Borrower to perform its obligations
hereunder. Agent shall not be under any obligation to any Lender to ascertain or
to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any of the Other Documents, or
to inspect the properties, books or records of any Borrower. The duties of Agent
as respects the Advances to Borrowers shall be mechanical and administrative in
nature; Agent shall not have by reason of this Agreement a fiduciary
relationship in respect of any Lender; and nothing in this Agreement, expressed
or implied, is intended to or shall be so construed as to impose upon Agent any
obligations in respect of this Agreement except as expressly set forth herein.
14.3 LACK OF RELIANCE ON AGENT AND RESIGNATION. Independently and
without reliance upon Agent or any other Lender, each Lender has made and shall
continue to make (i) its own independent investigation of the financial
condition and affairs of each Borrower in connection with the making and the
continuance of the Advances hereunder and the taking or not taking of any action
in connection herewith, and (ii) its own appraisal of the creditworthiness of
each Borrower. Agent shall have no duty or responsibility, either initially or
on a continuing basis, to provide any Lender with any credit or other
information with respect thereto, whether coming into its possession before
making of the Advances or at any time or times thereafter except as shall be
provided by any Borrower pursuant to the terms hereof. Agent shall not be
responsible to any Lender for any recitals, statements, information,
representations or warranties herein or in any agreement, document, certificate
or a statement delivered in connection with or for the execution, effectiveness,
genuineness, validity, enforceability, collectibility or sufficiency of this
Agreement or any Other Document, or of the financial condition of any Borrower,
or be required to make any inquiry concerning either the performance or
observance of any of the terms, provisions or conditions of this Agreement, the
Note, the Other Documents or the financial condition of any Borrower, or the
existence of any Event of Default or any Default.
Agent may resign on 60 days' written notice to each of Lenders and
Borrowing Agent and upon such resignation, the Required Lenders will promptly
designate a successor Agent reasonably satisfactory to Borrowers.
Any such successor Agent shall succeed to the rights, powers and duties
of Agent, and the term "Agent" shall mean such successor agent effective upon
its appointment, and the former Agent's rights, powers and duties as Agent shall
be terminated, without any other or further act or deed on the part of such
former Agent. After any Agent's resignation as Agent, the provisions of this
Article XIV shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement.
-64-
14.4 CERTAIN RIGHTS OF AGENT. If Agent shall request instructions from
Lenders with respect to any act or action (including failure to act) in
connection with this Agreement or any Other Document, Agent shall be entitled to
refrain from such act or taking such action unless and until Agent shall have
received instructions from the Required Lenders; and Agent shall not incur
liability to any Person by reason of so refraining. Without limiting the
foregoing, Lenders shall not have any right of action whatsoever against Agent
as a result of its acting or refraining from acting hereunder in accordance with
the instructions of the Required Lenders.
14.5 RELIANCE. Agent shall be entitled to rely, and shall be fully
protected in relying, upon any note, writing, resolution, notice, statement,
certificate, telex, teletype or telecopier message, cablegram, order or other
document or telephone message believed by it to be genuine and correct and to
have been signed, sent or made by the proper person or entity, and, with respect
to all legal matters pertaining to this Agreement and the Other Documents and
its duties hereunder, upon advice of counsel selected by it. Agent may employ
agents and attorneys-in-fact and shall not be liable for the default or
misconduct of any such agents or attorneys-in-fact selected by Agent with
reasonable care.
14.6 NOTICE OF DEFAULT. Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default hereunder or under
the Other Documents, unless Agent has received notice from a Lender or a
Borrower referring to this Agreement or the Other Documents, describing such
Default or Event of Default and stating that such notice is a "notice of
default". In the event that Agent receives such a notice, Agent shall give
notice thereof to Lenders. Agent shall take such action with respect to such
Default or Event of Default as shall be reasonably directed by the Required
Lenders; PROVIDED, THAT, unless and until Agent shall have received such
directions, Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of Lenders.
14.7 INDEMNIFICATION. To the extent Agent is not reimbursed and
indemnified by Borrowers, each Lender will reimburse and indemnify Agent in
proportion to its respective portion of the Advances (or, if no Advances are
outstanding, according to its Commitment Percentage), from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever which
may be imposed on, incurred by or asserted against Agent in performing its
duties hereunder, or in any way relating to or arising out of this Agreement or
any Other Document; PROVIDED THAT, Lenders shall not be liable for any portion
of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from Agent's gross
(not mere) negligence or willful misconduct.
14.8 AGENT IN ITS INDIVIDUAL CAPACITY. With respect to the obligation
of Agent to lend under this Agreement, the Advances made by it shall have the
same rights and powers hereunder as any other Lender and as if it were not
performing the duties as Agent specified herein; and the term "Lender" or any
similar term shall, unless the context clearly otherwise indicates, include
Agent in its individual capacity as a Lender. Agent may engage in business with
any Borrower as if it were not performing the duties specified herein, and may
accept fees and other consideration from any Borrower for services in connection
with this Agreement or otherwise without having to account for the same to
Lenders.
-65-
14.9 DELIVERY OF DOCUMENTS. To the extent Agent receives financial
statements required under Sections 9.7, 9.8, and 9.9 from any Borrower pursuant
to the terms of this Agreement, Agent will promptly furnish such documents and
information to Lenders.
14.10 BORROWERS' UNDERTAKING TO AGENT. Without prejudice to their
respective obligations to Lenders under the other provisions of this Agreement,
each Borrower hereby undertakes with Agent to pay to Agent from time to time on
demand all amounts from time to time due and payable by it for the account of
Agent or Lenders or any of them pursuant to this Agreement to the extent not
already paid. Any payment made pursuant to any such demand shall pro TANTO
satisfy the relevant Borrower's obligations to make payments for the account of
Lenders or the relevant one or more of them pursuant to this Agreement.
XV. BORROWING AGENCY.
----------------
15.1 BORROWING AGENCY PROVISIONS.
(a) Each Borrower hereby irrevocably designates Borrowing Agent to be
its attorney and agent and in such capacity to borrow, sign and endorse notes,
and execute and deliver all instruments, documents, writings and further
assurances now or hereafter required hereunder, on behalf of such Borrower or
Borrowers, and hereby authorizes Agent to pay over or credit all loan proceeds
hereunder in accordance with the request of Borrowing Agent.
(b) The handling of this credit facility as a co-borrowing facility
with a borrowing agent in the manner set forth in this Agreement is solely as an
accommodation to Borrowers and at their request. Neither Agent nor any Lender
shall incur liability to Borrowers as a result thereof. To induce Agent and
Lenders to do so and in consideration thereof, each Borrower hereby indemnifies
Agent and each Lender and holds Agent and each Lender harmless from and against
any and all liabilities, expenses, losses, damages and claims of damage or
injury asserted against Agent or any Lender by any Person arising from or
incurred by reason of the handling of the financing arrangements of Borrowers as
provided herein, reliance by Agent or any Lender on any request or instruction
from Borrowing Agent or any other action taken by Agent or any Lender with
respect to this Section 15.1 except due to willful misconduct or gross (not
mere) negligence by the indemnified party.
(c) All Obligations shall be joint and several, and each Borrower shall
make payment upon the maturity of the Obligations by acceleration or otherwise,
and such obligation and liability on the part of each Borrower shall in no way
be affected by any extensions, renewals and forbearance granted to Agent or any
Lender to any Borrower, failure of Agent or any Lender to give any Borrower
notice of borrowing or any other notice, any failure of Agent or any Lender to
pursue or preserve its rights against any Borrower, the release by Agent or any
Lender of any Collateral now or thereafter acquired from any Borrower, and such
agreement by each Borrower to pay upon any notice issued pursuant thereto is
unconditional and unaffected by prior recourse by Agent or any Lender to the
other Borrowers or any Collateral for such Borrower's Obligations or the lack
thereof. Each Borrower waives all suretyship defenses.
-66-
15.2 WAIVER OF SUBROGATION. Each Borrower expressly waives any and all
rights of subrogation, reimbursement, indemnity, exoneration, contribution of
any other claim which such Borrower may now or hereafter have against the other
Borrowers or other Person directly or contingently liable for the Obligations
hereunder, or against or with respect to the other Borrowers' property
(including, without limitation, any property which is Collateral for the
Obligations), arising from the existence or performance of this Agreement, until
termination of this Agreement and repayment in full of the Obligations.
XVI. MISCELLANEOUS.
-------------
16.1 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Ohio. Any judicial proceeding
brought by or against any Borrower with respect to any of the Obligations, this
Agreement or any related agreement may be brought in any court of competent
jurisdiction in the State of Ohio, United States of America, and, by execution
and delivery of this Agreement, each Borrower accepts for itself and in
connection with its properties, generally and unconditionally, the non-exclusive
jurisdiction of the aforesaid courts, and irrevocably agrees to be bound by any
judgment rendered thereby in connection with this Agreement. Each Borrower
hereby waives personal service of any and all process upon it and consents that
all such service of process may be made by registered mail (return receipt
requested) directed to Borrowing Agent at its address set forth in Section 16.6
and service so made shall be deemed completed five days after the same shall
have been so deposited in the mails of the United States of America, or, at the
Agent's and/or any Lender's option, by service upon Borrowing Agent which each
Borrower irrevocably appoints as such Borrower's Agent for the purpose of
accepting service within the State of Ohio. Nothing herein shall affect the
right to serve process in any manner permitted by law or shall limit the right
of Agent or any Lender to bring proceedings against any Borrower in the courts
of any other jurisdiction. Each Borrower waives any objection to jurisdiction
and venue of any action instituted hereunder and shall not assert any defense
based on lack of jurisdiction or venue or based upon FORUM NON CONVENIENS. Any
judicial proceeding by any Borrower against Agent or any Lender involving,
directly or indirectly, any matter or claim in any way arising out of, related
to or connected with this Agreement or any related agreement, shall be brought
only in a federal or state court located in the County of Cuyahoga, State of
Ohio.
16.2 ENTIRE UNDERSTANDING.
(a) This Agreement and the documents executed concurrently
herewith contain the entire understanding between each Borrower, Agent and each
Lender and supersedes all prior agreements and understandings, if any, relating
to the subject matter hereof. Any promises, representations, warranties or
guarantees not herein contained and hereinafter made shall have no force and
effect unless in writing, signed by each Borrower's, Agent's and each Lender's
respective officers. Neither this Agreement nor any portion or provisions hereof
may be changed, modified, amended, waived, supplemented, discharged, cancelled
or terminated orally or by any course of dealing, or in any manner other than by
an agreement in writing, signed by the party to be charged. Each Borrower
acknowledges that it has been advised by counsel in connection with the
execution of this Agreement and Other Documents and is not
-67-
relying upon oral representations or statements inconsistent with the terms and
provisions of this Agreement.
(b) The Required Lenders, Agent with the consent in writing of the
Required Lenders, and Borrowers may, subject to the provisions of this Section
16.2 (b), from time to time enter into written supplemental agreements to this
Agreement or the Other Documents executed by Borrowers, for the purpose of
adding or deleting any provisions or otherwise changing, varying or waiving in
any manner the rights of Lenders, Agent or Borrowers thereunder or the
conditions, provisions or terms thereof of waiving any Event of Default
thereunder, but only to the extent specified in such written agreements;
PROVIDED, HOWEVER, that no such supplemental agreement shall, without the
consent of all Lenders:
(i) increase the Commitment Percentage or maximum dollar
commitment of any Lender.
(ii) extend the maturity of any Note or the due date for any
amount payable hereunder, or decrease the rate of interest or reduce
any fee payable by Borrowers to Lenders pursuant to this Agreement.
(iii) alter the definition of the term Required Lenders or
alter, amend or modify this Section 16.2(b).
(iv) release any Collateral during any calendar year (other
than in accordance with the provisions of this Agreement) having an
aggregate value in excess of $250,000.
(v) change the rights and duties of Agent.
(vi) permit any Revolving Advance to be made if after giving
effect thereto the total of Revolving Advances outstanding hereunder
would exceed the Formula Amount for more than 30 consecutive Business
Days or exceed 105% of the Formula Amount.
(vii) increase the Advance Rates above the Advance Rates in
effect on the Closing Date.
Any such supplemental agreement shall apply equally to each Lender and shall be
binding upon Borrowers, Lenders and Agent and all future holders of the
Obligations. In the case of any waiver, Borrowers, Agent and Lenders shall be
restored to their former positions and rights, and any Event of Default waived
shall be deemed to be cured and not continuing, but no waiver of a specific
Event of Default shall extend to any subsequent Event of Default (whether or not
the subsequent Event of Default is the same as the Event of Default which was
waived), or impair any right consequent thereon.
In the event that Agent requests the consent of a Lender pursuant to
this Section 16.2 and such Lender shall not respond or reply to Agent in writing
within ten (10) days of delivery of such request, such Lender shall be deemed to
have consented to matter that was the subject of the request. In the event that
Agent requests the consent of a Lender pursuant to this Section 16.2
-68-
and such consent is denied, then PNC may, at its option, require such Lender to
assign its interest in the Advances to PNC or to another Lender or to any other
Person designated by the Agent (the "Designated Lender"), for a price equal to
the then outstanding principal amount thereof plus accrued and unpaid interest
and fees due such Lender, which interest and fees shall be paid when collected
from Borrowers. In the event PNC elects to require any Lender to assign its
interest to PNC or to the Designated Lender, PNC will so notify such Lender in
writing within 45 days following such Lender's denial, and such Lender will
assign its interest to PNC or the Designated Lender no later than five days
following receipt of such notice pursuant to a Commitment Transfer Supplement
executed by such Lender, PNC or the Designated Lender, as appropriate, and
Agent.
Notwithstanding (a) the existence of a Default or an Event of Default,
(b) that any of the other applicable conditions precedent set forth in Section
8.2 hereof have not been satisfied or (c) any other provision of this Loan
Agreement, Agent may at its discretion and without the consent of the Required
Lenders, voluntarily permit the outstanding Revolving Advances at any time to
exceed an amount equal to the sum of (i) the Formula Amount minus (ii) the
amount of minimum Undrawn Availability required by Section 8.1(bb) hereof at
such time (such sum, the "Overadvance Threshold Amount") by up to 105% of the
Overadvance Threshold Amount for up to 30 consecutive Business Days. For
purposes of the preceding sentence, the discretion granted to Agent hereunder
shall not preclude involuntary overadvances that may result from time to time
due to the fact that the Overadvance Threshold Amount was unintentionally
exceeded for any reason, including, but not limited to, Collateral previously
deemed to be either "Eligible Receivables" or "Eligible Inventory", as
applicable, becomes ineligible, collections of Receivables applied to reduce
outstanding Revolving Advances are thereafter returned for insufficient funds or
overadvances are made to protect or preserve the Collateral. In the event Agent
involuntarily permits the outstanding Revolving Advances to exceed the Formula
Amount or Overadvance Threshold Amount by more than 5%, Agent shall use its
efforts to have Borrowers decrease such excess in as expeditious a manner as is
practicable under the circumstances and not inconsistent with the reason for
such excess. Revolving Advances made after Agent has determined the existence of
involuntary overadvances shall be deemed to be involuntary overadvances and
shall be decreased in accordance with the preceding sentence.
In addition to (and not in substitution of) the discretionary Revolving
Advances permitted above in this Section 16.2, the Agent is hereby authorized by
the Borrowers and the Lenders, from time to time in the Agent's sole discretion,
(A) after the occurrence and during the continuation of a Default or an Event of
Default, or (b) at any time that any of the other applicable conditions
precedent set forth in Section 8.2 hereof have not been satisfied, to make
Revolving Advances to the Borrowers on behalf of the Lenders which the Agent, in
its reasonable business judgment, deems necessary or desirable (a) to preserve
or protect the Collateral, or any portion thereof, (b) to enhance the likelihood
of, or maximize the amount of, repayment of the Advances and other Obligations,
or (iii) to pay any other amount chargeable to the Borrowers pursuant to the
terms of this Agreement; PROVIDED, THAT at any time after giving effect to any
such Revolving Advances the outstanding Revolving Advances do not exceed 105% of
the Formula Amount.
-69-
16.3 SUCCESSORS AND ASSIGNS; PARTICIPATIONS; NEW LENDERS.
(a) This Agreement shall be binding upon and inure to the benefit of
Borrowers, Agent, each Lender, all future holders of the Obligations and their
respective successors and assigns, except that no Borrower may assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of Agent and each Lender.
(b) Each Borrower acknowledges that in the regular course of commercial
banking business one or more Lenders may at any time and from time to time sell
participating interests in the Advances to other financial institutions (each
such transferee or purchaser of a participating interest, a "Transferee"). Each
Transferee may exercise all rights of payment (including without limitation
rights of set-off) with respect to the portion of such Advances held by it or
other Obligations payable hereunder as fully as if such Transferee were the
direct holder thereof provided that Borrowers shall not be required to pay to
any Transferee more than the amount which it would have been required to pay to
Lender which granted an interest in its Advances or other Obligations payable
hereunder to such Transferee had such Lender retained such interest in the
Advances hereunder or other Obligations payable hereunder and in no event shall
Borrowers be required to pay any such amount arising from the same circumstances
and with respect to the same Advances or other Obligations payable hereunder to
both such Lender and such Transferee. Each Borrower hereby grants to any
Transferee a continuing security interest in any deposits, moneys or other
property actually or constructively held by such Transferee as security for the
Transferee's interest in the Advances.
(c) Any Lender may with the consent of Agent which shall not be
unreasonably withheld or delayed sell, assign or transfer all or any part of its
rights under this Agreement and the Other Documents to one or more additional
banks or financial institutions and one or more additional banks or financial
institutions may commit to make Advances hereunder (each a "Purchasing Lender"),
in minimum amounts of not less than $5,000,000, pursuant to a Commitment
Transfer Supplement, executed by a Purchasing Lender, the transferor Lender, and
Agent and delivered to Agent for recording. Upon such execution, delivery,
acceptance and recording, from and after the transfer effective date determined
pursuant to such Commitment Transfer Supplement, (i) Purchasing Lender
thereunder shall be a party hereto and, to the extent provided in such
Commitment Transfer Supplement, have the rights and obligations of a Lender
thereunder with a Commitment Percentage as set forth therein, and (ii) the
transferor Lender thereunder shall, to the extent provided in such Commitment
Transfer Supplement, be released from its obligations under this Agreement, the
Commitment Transfer Supplement creating a novation for that purpose. Such
Commitment Transfer Supplement shall be deemed to amend this Agreement to the
extent, and only to the extent, necessary to reflect the addition of such
Purchasing Lender and the resulting adjustment of the Commitment Percentages
arising from the purchase by such Purchasing Lender of all or a portion of the
rights and obligations of such transferor Lender under this Agreement and the
Other Documents. Borrowers hereby consent to the addition of such Purchasing
Lender and the resulting adjustment of the Commitment Percentages arising from
the purchase by such Purchasing Lender of all or a portion of the rights and
obligations of such transferor Lender under this Agreement and the Other
Documents. Borrowers shall execute and deliver such further documents and do
such further acts and things in order to effectuate the foregoing.
-70-
(d) Agent shall maintain at its address a copy of each Commitment
Transfer Supplement delivered to it and a register (the "Register") for the
recordation of the names and addresses of the Advances owing to each Lender from
time to time. The entries in the Register shall be conclusive, in the absence of
manifest error, and Borrowers, Agent and Lenders may treat each Person whose
name is recorded in the Register as the owner of the Advance recorded therein
for the purposes of this Agreement. The Register shall be available for
inspection by Borrowers or any Lender at any reasonable time and from time to
time upon reasonable prior notice. Agent shall receive a fee in the amount of
$3,500 payable by the applicable Purchasing Lender upon the effective date of
each transfer or assignment to such Purchasing Lender.
(e) Each Borrower authorizes each Lender to disclose to any
Transferee or Purchasing Lender and any prospective Transferee or Purchasing
Lender any and all financial information in such Lender's possession concerning
such Borrower which has been delivered to such Lender by or on behalf of such
Borrower pursuant to this Agreement or in connection with such Lender's credit
evaluation of such Borrower.
16.4 APPLICATION OF PAYMENTS. Agent shall have the continuing and
exclusive right to apply or reverse and re-apply any payment and any and all
proceeds of Collateral to any portion of the Obligations. To the extent that any
Borrower makes a payment or Agent or any Lender receives any payment or proceeds
of the Collateral for any Borrower's benefit, which are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to
be repaid to a trustee, debtor in possession, receiver, custodian or any other
party under any bankruptcy law, common law or equitable cause, then, to such
extent, the Obligations or part thereof intended to be satisfied shall be
revived and continue as if such payment or proceeds had not been received by
Agent or such Lender.
16.5 INDEMNITY. Each Borrower shall indemnify Agent, each Lender and
each of their respective officers, directors, Affiliates, employees and agents
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses and disbursements of any
kind or nature whatsoever (including, without limitation, fees and disbursements
of counsel) which may be imposed on, incurred by, or asserted against Agent or
any Lender in any litigation, proceeding or investigation instituted or
conducted by any governmental agency or instrumentality or any other Person with
respect to any aspect of, or any transaction contemplated by, or referred to in,
or any matter related to, this Agreement or the Other Documents, whether or not
Agent or any Lender is a party thereto, except to the extent that any of the
foregoing arises out of the bad faith or willful misconduct of the party being
indemnified.
16.6 NOTICE. Any notice or request hereunder may be given to Borrowing
Agent or any Borrower or to Agent or any Lender at their respective addresses
set forth below or at such other address as may hereafter be specified in a
notice designated as a notice of change of address under this Section. Any
notice, request, demand, direction or other communication (for purposes of this
Section 16.6 only, a "Notice") to be given to or made upon any party hereto
under any provision of this Loan Agreement shall be given or made by telephone
or in writing (which includes by means of electronic transmission (i.e.,
"e-mail") or facsimile transmission. Any such Notice must be delivered to the
applicable parties hereto at the addresses and numbers set forth under their
respective names on Section 16.6 hereof or in accordance with any
-71-
subsequent unrevoked Notice from any such party that is given in accordance with
this Section 16.6. Any Notice shall be effective:
(a) In the case of hand-delivery, when delivered;
(b) If given by mail, four days after such Notice is deposited with the
United States Postal Service, with first-class postage prepaid, return receipt
requested;
(c) In the case of a telephonic Notice, when a party is contacted by
telephone, if delivery of such telephonic Notice is confirmed no later than the
next Business Day by hand delivery, a facsimile or electronic transmission or an
overnight courier delivery of a confirmatory Notice (received at or before noon
on such next Business Day);
(d) In the case of a facsimile transmission, when sent to the
applicable party's facsimile machine's telephone number, if the party sending
such Notice receives confirmation of the delivery thereof from its own facsimile
machine;
(e) In the case of electronic transmission, when actually received; and
(f) If given by any other means (including by overnight courier), when
actually received.
Any Lender giving a Notice to Borrowing Agent or any Borrower shall
concurrently send a copy thereof to the Agent, and the Agent shall promptly
notify the other Lenders of its receipt of such Notice.
(A) If to Agent or PNC at: PNC Bank, National Association
One PNC Plaza, 6th Floor
000 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxx Xxxx
Telephone: (000) 000-0000
Telecopier:(000) 000-0000
with a copy to: PNC Bank, National Association
PNC Agency Services
Xxx XXX Xxxxx, 0xx Xxxxx
000 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxx Xxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
and a copy to: Xxxxx & Xxxxxxxxx LLP
3200 National City Center
0000 Xxxx 0xx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxxxxxx X. Xxxxxxxxx, Esq.
-72-
Telephone: (000) 000-0000
Telecopier:(000) 000-0000
(B) If to a Lender other than Agent, as specified on the signature
pages hereof.
(C) If to Borrowing Agent
or any Borrower, at: Waxman Industries, Inc.
00000 Xxxxxx Xxxx
Xxxxxxx Xxxxxxx, Xxxx 00000
Attention: Xx. Xxxx X. Xxxxxx
Telephone: (440) 439-1830 ext. 3552
Telecopier: (000) 000-0000
with a copy to: Xxxxxxx Berlin Shereff Xxxxxxxx, LLP
The Chrysler Building
000 Xxxxxxxxx Xxx., 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
16.7 SURVIVAL. The obligations of Borrowers under Sections 3.7, 3.8,
4.19(h), 14.7 and 16.5 shall survive termination of this Agreement and the Other
Documents and payment in full of the Obligations.
16.8 SEVERABILITY. If any part of this Agreement is contrary to,
prohibited by, or deemed invalid under applicable laws or regulations, such
provision shall be inapplicable and deemed omitted to the extent so contrary,
prohibited or invalid, but the remainder hereof shall not be invalidated thereby
and shall be given effect so far as possible.
16.9 EXPENSES. All costs and expenses including, without limitation,
reasonable attorneys' fees (including the allocated costs of in house counsel)
and disbursements incurred by Agent on its behalf or on behalf of Lenders (a) in
all efforts made to enforce payment of any Obligation or effect collection of
any Collateral, or (b) in connection with the entering into, modification,
amendment, administration and enforcement of this Agreement or any consents or
waivers hereunder and all related agreements, documents and instruments, or (c)
in instituting, maintaining, preserving, enforcing and foreclosing on Agent's
security interest in or Lien on any of the Collateral, whether through judicial
proceedings or otherwise, or (d) in defending or prosecuting any actions or
proceedings arising out of or relating to Agent's or any Lender's transactions
with any Borrower, or (e) in connection with any advice given to Agent or any
Lender with respect to its rights and obligations under this Agreement and all
related agreements, may be charged to Borrowers' Account and shall be part of
the Obligations.
16.10 INJUNCTIVE RELIEF. Each Borrower recognizes that, in the event
any Borrower fails to perform, observe or discharge any of its obligations or
liabilities under this Agreement, any remedy at law may prove to be inadequate
relief to Lenders; therefore, Agent, if Agent so
-73-
requests, shall be entitled to temporary and permanent injunctive relief in any
such case without the necessity of proving that actual damages are not an
adequate remedy.
16.11 CONSEQUENTIAL DAMAGES. Neither Agent nor any Lender, nor any
agent or attorney for any of them, shall be liable to any Borrower for
consequential damages arising from any breach of contract, tort or other wrong
relating to the establishment, administration or collection of the Obligations.
16.12 CAPTIONS. The captions at various places in this Agreement are
intended for convenience only and do not constitute and shall not be interpreted
as part of this Agreement.
16.13 COUNTERPARTS; TELECOPIED SIGNATURES. This Agreement may be
executed in any number of and by different parties hereto on separate
counterparts, all of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute one and the same agreement. Any signature
delivered by a party by facsimile transmission shall be deemed to be an original
signature hereto.
16.14 CONSTRUCTION. The parties acknowledge that each party and its
counsel have reviewed this Agreement and that the normal rule of construction to
the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Agreement or any amendments,
schedules or exhibits thereto.
16.15 CONFIDENTIALITY; SHARING INFORMATION.
(a) Agent, each Lender and each Transferee shall hold all
non-public information obtained by Agent, such Lender or such Transferee
pursuant to the requirements of this Agreement in accordance with Agent's, such
Lender's and such Transferee's customary procedures for handling confidential
information of this nature; provided, HOWEVER, Agent, each Lender and each
Transferee may disclose such confidential information (a) to its examiners,
affiliates, outside auditors, counsel and other professional advisors who need
access to such information, (b) to Agent, any Lender or to any prospective
Transferees and Purchasing Lenders, and (c) as required or requested by any
Governmental Body or representative thereof or pursuant to legal process;
PROVIDED, FURTHER that (i) unless specifically prohibited by applicable law or
court order, Agent, each Lender and each Transferee shall use its best efforts
prior to disclosure thereof, to notify the applicable Borrower of the applicable
request for disclosure of such non-public information (A) by a Governmental Body
or representative thereof (other than any such request in connection with an
examination of the financial condition of a Lender or a Transferee by such
Governmental Body) or (B) pursuant to legal process and (ii) in no event shall
Agent, any Lender or any Transferee be obligated to return any materials
furnished by any Borrower other than those documents and instruments in
possession of Agent or any Lender in order to perfect its Lien on the Collateral
once the Obligations have been paid in full and this Agreement has been
terminated.
(b) Each Borrower acknowledges that from time to time financial
advisory, investment banking and other services may be offered or provided to
such Borrower or one or more of its Affiliates (in connection with this
Agreement or otherwise) by any Lender or by one or more Subsidiaries or
Affiliates of such Lender and each Borrower hereby authorizes each
-74-
Lender to share any information delivered to such Lender by such Borrower and
its Subsidiaries pursuant to this Agreement, or in connection with the decision
of such Lender to enter into this Agreement, to any such Subsidiary or Affiliate
of such Lender, it being understood that any such Subsidiary or Affiliate of any
Lender receiving such information shall be bound by the provision of Section
16.15 as if it were a Lender hereunder. Such authorization shall survive the
repayment of the other Obligations and the termination of the Loan Agreement.
16.16 PUBLICITY. Each Borrower and each Lender hereby authorizes Agent
to make appropriate announcements of the financial arrangement entered into
among Borrowers, Agent and Lenders, including, without limitation, announcements
which are commonly known as tombstones, in such publications and to such
selected parties as Agent shall in its sole and absolute discretion deem
appropriate.
-75-
EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY
OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT
OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH, OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL
TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED
IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH
CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT
OR TORT OR OTHERWISE AND EACH PARTY HEREBY CONSENTS THAT ANY SUCH CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND
THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF
THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENTS OF THE PARTIES
HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
Each of the parties has signed this Agreement as of the day and year
first above written.
WAXMAN INDUSTRIES, INC.
By: /s/ Xxxx Xxxxxx
---------------------------------------------
Name: Xxxx Xxxxxx
Title: Vice President and Chief Financial Officer
Address: 00000 Xxxxxx Xxxx
Xxxxxxx Xxxxxxx, Xxxx 00000
WAXMAN CONSUMER PRODUCTS GROUP INC.
By: /s/ Xxxx Xxxxxx
----------------------------------------------
Name: Xxxx Xxxxxx
Title: Treasurer and Assistant Secretary
Address: 00000 Xxxxxx Xxxx
Xxxxxxx Xxxxxxx, Xxxx 00000
WAMI SALES, INC.
By: /s/ Xxxx Xxxxxx
------------------------------------
Name: Xxxx Xxxxxx
Title: Treasurer and Secretary
Address: 00000 Xxxxxx Xxxx
Xxxxxxx Xxxxxxx, Xxxx 00000
WAXMAN USA INC.
By: /s/ Xxxx Xxxxxx
------------------------------------
Name: Xxxx Xxxxxx
Title: Vice President - Finance and Assistant Secretary
Address: 00000 Xxxxxx Xxxx
Xxxxxxx Xxxxxxx, Xxxx 00000
PNC BANK, NATIONAL ASSOCIATION, as Lender and as Agent
By: /s/ Xxxxxxx X. Xxxx, Xx.
------------------------------------
Name: Xxxxxxx X. Xxxx, Xx.
Title: Vice President
Address: 2 PNC Plaza
000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Commitment Percentage: 100%
List of Exhibits and Schedules
------------------------------
Exhibits
--------
Exhibit 2.1(a) Revolving Credit Note
Exhibit 2.4(a) Term Note
Exhibit 5.5(b) Financial Projections
Exhibit 8.1(k) Financial Condition Certificate
Exhibit 16.3 Commitment Transfer Supplement
Exhibit A Borrowing Base Certificate
Exhibit B Pledge Agreement
Schedules
---------
Schedule 1.2(a) Leasehold Interests
Schedule 1.2(b) Permitted Encumbrances
Schedule 4.5 Equipment and Inventory Locations
Schedule 4.15(c) Location of Executive Offices
Schedule 4.15(h) Lockbox Account
Schedule 4.19 Real Property
Schedule 5.2(a) States of Qualification and Good Standing
Schedule 5.2(b) Subsidiaries
Schedule 5.2(c) Description of the Businesses
Schedule 5.4 Federal Tax Identification Number
Schedule 5.6 Prior Names
Schedule 5.7(a) Environmental Compliance
Schedule 5.8(b) Litigation
Schedule 5.8(d) Plans
Schedule 5.9 Intellectual Property, Source Code Escrow
Agreements
Schedule 5.10 Licenses and Permits
Schedule 5.14 Labor Disputes
Schedule 6.11 Non-operating Subsidiaries
Schedule 7.8 Indebtedness
Schedule 7.18(b) Sale of Assets
Schedule 8.1(u) Material Adverse Changes
-78-
