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EXHIBIT 4.3(b)
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
DATED AS OF MAY 12, 0000
XXXXX
XXXX XX XXXXXXX NATIONAL TRUST AND SAVINGS ASSOCIATION
AS THE BANK
AND
OUTLOOK GROUP CORP.,
OUTLOOK LABEL SYSTEMS, INC.,
AND
OUTLOOK PACKAGING, INC.
AS THE BORROWERS
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TABLE OF CONTENTS
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1. DEFINITIONS..............................................................................................1
1.1 Accounting Terms...............................................................................14
1.2 Other Terms....................................................................................14
2. LOANS AND LETTERS OF CREDIT.............................................................................14
2.1 The Facility...................................................................................14
2.2 Revolving Loans................................................................................15
2.3 Letters of Credit..............................................................................16
3. INTEREST AND OTHER CHARGES..............................................................................20
3.1 Interest.......................................................................................20
3.2 Conversion and Continuation Elections..........................................................23
3.3 Letter of Credit Fee...........................................................................24
4. PAYMENTS AND PREPAYMENTS................................................................................24
4.1 Revolving Loans................................................................................24
4.2 Place and Form of Payments; Extension of Time..................................................25
4.3 Application and Reversal of Payments...........................................................25
4.4 INDEMNITY FOR RETURNED PAYMENTS................................................................25
5. BANK'S BOOKS AND RECORDS; MONTHLY STATEMENTS............................................................25
6. TAXES, YIELD PROTECTION AND ILLEGALITY..................................................................26
6.1 Taxes..........................................................................................26
6.2 Illegality.....................................................................................27
6.3 Increased Costs and Reduction of Return........................................................27
6.4 Funding Losses.................................................................................28
6.5 Inability to Determine Rates...................................................................28
6.6 Survival.......................................................................................29
7. COLLATERAL..............................................................................................29
7.1 Grant of Security Interest.....................................................................29
7.2 Perfection and Protection of Security Interest.................................................29
7.3 Location of Collateral.........................................................................30
7.4 Title to, Liens on, and Sale and Use of Collateral.............................................30
7.5 Access and Examination.........................................................................31
7.6 Insurance......................................................................................31
7.7 Accounts.......................................................................................32
7.8 Inventory......................................................................................33
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7.9 Equipment......................................................................................33
7.10 Documents, Instruments, and Chattel Paper......................................................33
7.11 Power of Attorney..............................................................................33
7.12 Right to Cure..................................................................................34
8. BOOKS AND RECORDS, FINANCIAL INFORMATION, NOTICES.......................................................34
8.1 Books and Records..............................................................................34
8.2 Financial and Other Information................................................................35
8.3 Notices to Bank................................................................................37
9. GENERAL WARRANTIES AND REPRESENTATIONS..................................................................38
9.1 Authorization, Validity, and Enforceability of this Agreement and the Loan
Documents......................................................................................38
9.2 Validity and Priority of Security Interest.....................................................38
9.3 Organization and Qualification.................................................................39
9.4 Corporate Name; Prior Transactions.............................................................39
9.5 Subsidiaries and Affiliates....................................................................39
9.6 Financial Statements...........................................................................39
9.7 Capitalization.................................................................................39
9.8 Solvency.......................................................................................40
9.9 Debt...........................................................................................40
9.10 Distributions..................................................................................40
9.11 Title to Property..............................................................................40
9.12 Adequate Assets................................................................................40
9.13 Real Property; Leases..........................................................................40
9.14 Proprietary Rights.............................................................................40
9.15 Trade Names and Terms of Sale..................................................................41
9.16 Litigation.....................................................................................41
9.17 Restrictive Agreements.........................................................................41
9.18 Labor Disputes.................................................................................41
9.19 Environmental Laws.............................................................................41
9.20 No Violation of Law............................................................................43
9.21 No Default.....................................................................................43
9.22 ERISA Compliance...............................................................................43
9.23 Taxes..........................................................................................44
9.24 Use of Proceeds................................................................................44
9.25 No Material Adverse Change.....................................................................44
9.26 Disclosure.....................................................................................44
9.27 Year 2000 Compliance...........................................................................44
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10. AFFIRMATIVE AND NEGATIVE COVENANTS......................................................................44
10.1 Taxes and Other Obligations....................................................................44
10.2 Corporate Existence and Good Standing..........................................................45
10.3 Compliance with Law and Agreements.............................................................45
10.4 Maintenance of Property and Insurance..........................................................45
10.5 Environmental Laws.............................................................................45
10.6 ERISA..........................................................................................46
10.7 Mergers, Consolidations or Sales...............................................................46
10.8 Distributions; Capital Changes.................................................................46
10.9 Transactions Affecting Collateral or Obligations...............................................46
10.10 Guaranties.....................................................................................46
10.11 Debt...........................................................................................46
10.12 Prepayment.....................................................................................47
10.13 Transactions with Affiliates...................................................................47
10.14 Business Conducted.............................................................................47
10.15 Liens..........................................................................................47
10.16 Sale and Leaseback Transactions................................................................47
10.17 New Subsidiaries...............................................................................47
10.18 Restricted Investments.........................................................................48
10.19 Net Worth......................................................................................48
10.20 Fixed Charge Coverage Ratio....................................................................48
10.21 Capital Expenditures...........................................................................48
10.22 Liabilities to Net Worth Ratio.................................................................48
10.23 SWIB Debt: IRB Debt............................................................................48
10.24 Further Assurances.............................................................................49
11. CLOSING, CONDITIONS TO CLOSING..........................................................................49
11.1 Conditions Precedent to Making of Loans or issuance of Letters of Credit on the
Closing Date...................................................................................49
11.2 Conditions Precedent to Each Loan..............................................................50
12. DEFAULT.................................................................................................51
12.1 Events of Default..............................................................................51
13. REMEDIES................................................................................................53
14. MISCELLANEOUS...........................................................................................54
14.1 Cumulative Remedies: No Prior Recourse to Collateral..........................................54
14.2 No Implied Waivers.............................................................................54
14.3 Severability...................................................................................55
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14.4 Governing Law..................................................................................55
14.5 Consent to Jurisdiction and Venue: Service of Process..........................................55
14.6 WAIVER OF JURY TRIAL...........................................................................55
14.7 Survival of Representations and Warranties.....................................................55
14.8 Other Security and Guaranties..................................................................56
14.9 Fees and Expenses..............................................................................56
14.10 Notices........................................................................................56
14.11 Indemnification................................................................................57
14.12 Waiver of Notices..............................................................................58
14.13 Binding Effect: Assignment.....................................................................59
14.14 Modification...................................................................................59
14.15 Counterparts...................................................................................59
14.16 Captions.......................................................................................59
14.17 Right of SetOff................................................................................59
14.18 Participating Bank's Security Interests........................................................59
14.19 Joint and Several Liability....................................................................60
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AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this "Agreement"),
dated as of May 12, 1999, is entered into by and among (a) BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION, a national banking association, with an
office at 000 X. XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000 (the "Bank") and (b)
OUTLOOK GROUP CORP., a Wisconsin corporation (the "Parent"), with offices at
0000 Xxxxxxxx Xxxxx, Xxxxxx, Xxxxxxxxx 00000-0000; OUTLOOK LABEL SYSTEMS, INC.
("Outlook Label") and OUTLOOK PACKAGING, INC. ("Outlook Packaging"); (the
Parent, Outlook Label and Outlook Packaging are hereinafter sometimes referred
to individually as a "Borrower" and collectively as the "Borrowers").
W I T N E S S E T H
WHEREAS, BankAmerica Business Credit, Inc. ("BABC") and Borrowers are
party to that certain Loan and Security Agreement dated as of November 5, 1996
(as amended from time to time thereafter, the "Original Agreement"); and
WHEREAS, BABC has assigned to the Bank all of BABC's right, title and
interest in, to an under the Original Agreement and all other "Loan Documents"
(as such term is defined in the Original Agreement).
WHEREAS, the Borrowers and the Bank desire to amend and restate the
Original Agreement in its entirety to be in the form of this Agreement.
NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth in this Agreement, and for good and valuable consideration,
the receipt of which is hereby acknowledged, the Borrowers and the Bank hereby
agree as follows:
1. DEFINITIONS. As used herein:
"Account" means each Borrower's right to payment for a sale or lease
and delivery of goods or rendition of services.
"Affiliate" means: (a) a Person which, directly or indirectly,
controls, is controlled by or is under common control with, any Borrower; (b) a
Person which beneficially owns or holds, directly or indirectly, five percent or
more of any class of voting stock of any Borrower, or (c) a Person in which five
percent of any class of the voting stock is beneficially owned or held, directly
or indirectly, by any Borrower. The term control (including the terms
"controlled by" and "under common control with") means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of the Person in question.
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"Bank" means Bank of America National Trust and Savings Association,
together with its successors and assigns.
"Base Rate" means the higher of (a) the rate of interest publicly
announced from time to time by the Bank as its reference rate or (b) the Federal
Funds Rate plus one-half of one percent (0.5%) per annum. The reference rate of
the Bank is a rate set by the Bank based upon various factors including the
Bank's costs and desired return, general economic conditions, and other factors,
and is used as a reference point for pricing some loans. However, the Bank may
price loans at, above, or below such announced rate. Any changes in the Base
Rate shall take effect on the day specified in the public announcement of such
change.
"Base Rate Loans" means the Base Rate Revolving Loans.
"Base Rate Revolving Loans" means a Revolving Loan during any period in
which it bears interest based on the Base Rate.
"Borrower" is defined in the preamble to this Agreement.
"Borrowing" means a borrowing hereunder consisting of a Revolving Loan
made by the Bank to a Borrower.
"Business Day" means (a) any day that is not a Saturday, Sunday, or a
day on which banks in San Francisco, California, or Chicago, Illinois, are
required or permitted to be closed, and (b) with respect to all notices,
determinations, fundings and payments in connection with the IBOR Rate or IBOR
Rate Loans, any day that is a Business Day pursuant to clause (a) above and that
is also a day on which trading is carried on by and between banks in the London
interbank market.
"Capital Adequacy Regulation" means any guideline, request or directive
of any central bank or other Public Authority, or any other law, rule or
regulation, whether or not having the force of law, in each case, regarding
capital adequacy of any bank or of any corporation controlling a bank.
"Capital Expenditures" means all payments due (whether or not paid)
during a Fiscal Year in respect of the cost of any fixed asset or improvement,
or replacement, substitution, or addition thereto, which has a useful life of
more than one year, including, without limitation, those arising in connection
with the direct or indirect acquisition of such assets by way of increased
product or service charges or offset items or in connection with Capital Leases.
"Capital Lease" means any lease of Property by any Borrower that, in
accordance with GAAP, should be reflected as a liability on the consolidated
balance sheet of the Borrowers.
"Closing Date" means the date of this Agreement.
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"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" has the meaning given to such term in Section 7.1(a).
"Contaminant" means any waste, pollutant, hazardous substance, toxic
substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, asbestos in any form or condition, polychlorinated biphenyls
("PCBs"), or other substance or material, the handling, release, or possession
of which is regulated to protect health, safety, or environment, or any
constituent of any such substance or waste.
"Debt" means all liabilities, obligations and indebtedness of each
Borrower to any Person, of any kind or nature, now or hereafter owing, arising,
due or payable, howsoever evidenced, created, incurred, acquired or owing,
whether primary, secondary, direct, contingent, fixed or otherwise, and
including, without in any way limiting the generality of the foregoing: (a) each
Borrower's liabilities and obligations to trade creditors; (b) all Obligations;
(c) all obligations and liabilities of any Person secured by any Lien on any
Borrower's Property, even though such Borrower shall not have assumed or become
liable for the payment thereof; provided, however, that all such obligations and
liabilities which are limited in recourse to such Property shall be included in
Debt only to the extent of the book value of such Property as would be shown on
a balance sheet of such Borrower prepared in accordance with GAAP; (d) all
obligations or liabilities created or arising under any Capital Lease or
conditional sale or other title retention agreement with respect to Property
used or acquired by any Borrower, even if the rights and remedies of the lessor,
seller or lender thereunder are limited to repossession of such Property;
provided, however, that all such obligations and liabilities which are limited
in recourse to such Property shall be included in Debt only to the extent of the
book value of such Property as would be shown on a balance sheet of that
Borrower prepared in accordance with GAAP; (e) all accrued pension fund and
other employee benefit plan obligations and liabilities; (f) all obligations and
liabilities under Guaranties; and (g) deferred taxes.
"Default" means any event or condition which, with notice, the passage
of time, the happening of any other condition or event, or any combination
thereof, would constitute an Event of Default.
"Distribution" means in respect of any corporation: (a) the payment or
making of any dividend or other distribution of Property in respect of capital
stock or options or warrants in respect of such capital stock of such
corporation, other than distributions in capital stock of the same class; or (b)
the redemption or other acquisition of any capital stock of such corporation.
"DOL" means the United States Department of Labor or any successor
department or agency.
"Earnings from Operations" means, with respect to any fiscal period of
the Borrowers, the Borrowers' consolidated net income after provision for income
taxes for such fiscal period, as
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determined in accordance with GAAP and reported on the Financial Statements for
such period, less any and all of the following included in such net income: (a)
gain or loss arising from the sale of a capital asset; (b) gain or loss arising
from any write-up in the book value of any asset; (c) earnings of any
corporation, substantially all the assets of which have been acquired by any
Borrower in any manner, to the extent realized by such other corporation prior
to the date of acquisition; (d) earnings of any business entity in which any
Borrower has an ownership interest unless (and only to the extent) such earnings
shall actually have been received by such Borrower in the form of cash
distributions; (e) earnings of any Person to which assets of any Borrower shall
have been sold, transferred or disposed of, or into which any Borrower shall
have been merged, or which has been a party with any Borrower to any
consolidation or other form of reorganization, prior to the date of such
transaction; (f) gain or loss arising from the acquisition of debt or equity
securities of any Borrower or from cancellation or forgiveness of Debt; and (g)
gain or loss arising from extraordinary items, as determined in accordance with
GAAP, or from any other non-recurring transaction.
"EBITDA" means with respect to the Borrowers, on a consolidated basis
for any period, Earnings from Operations, plus the sum of (i) interest expenses,
(ii) income taxes, (iii) depreciation, (iv) amortization, and (v) other non-cash
expenses, each to the extent deducted in determining the Borrowers' Earnings
from Operations for that period, less non-cash income included in the
calculation of Earnings from Operations for that period.
"Environmental Laws" means all federal, state and local laws, rules,
regulations, ordinances, programs, permits, guidance, orders and consent decrees
relating to health, safety, hazardous substances, and environmental matters
applicable to the Borrowers' business and facilities (whether or not owned by a
Borrower). Such laws and regulations include but are not limited to the Resource
Conservation and Recovery Act, 42 U.S.C. ss. 6901 et seq., as amended; the
Comprehensive Environmental Response Compensation and Liability Act, 42 U.S.C.
ss. 9601 et seq., as amended; the Toxic Substances Control Act, 15 U.S.C. ss.
2601 et seq., as amended; the Clean Water Act, 33 U.S.C. ss. 466 et seq., as
amended; the Clean Air Act, 42 U.S.C. ss. 7401 et seq., as amended; state and
federal lien and environmental cleanup programs; and U.S.
Department of Transportation regulations.
"Environmental Lien" means a Lien in favor of any Public Authority for
(a) any liability under any Environmental Laws, or (b) damages arising from, or
costs incurred by such Public Authority in response to, a Release or threatened
Release of a Contaminant into the environment.
"Equipment" means all of each Borrower's now owned and hereafter
acquired machinery, equipment, furniture, furnishings, fixtures, and other
tangible personal property (except Inventory), including, without limitation,
data processing hardware and software, motor vehicles, aircraft, dies, tools,
jigs, and office equipment, as well as all of such types of property leased by
any Borrower and all of such Borrower's rights and interests with respect
thereto under such leases (including, without limitation, options to purchase);
together with all present and future additions and accessions thereto,
replacements therefor, component and auxiliary parts and
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supplies used or to be used in connection therewith, and all substitutes for any
of the foregoing, and all manuals, drawings, instructions, warranties and rights
with respect thereto; wherever any of the foregoing is located.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with any Borrower within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for
purposes of provisions relating to Section 412 of the Code).
"ERISA Event" means, with respect to the Borrowers, any ERISA Affiliate
or any Pension Plan, the occurrence of any of the following: (a) a Reportable
Event; (b) a withdrawal by a substantial employer (as defined in Section
4001(a)(12) of ERISA) subject to Section 4063 of ERISA; (c) a cessation of
operations which is treated as a withdrawal under Section 4062(e) of ERISA; (d)
a complete or partial withdrawal under Section 4203 or 4205 of ERISA from a
Multiemployer Plan; (e) a notification that a Multiemployer Plan is in
reorganization under Section 4242 of ERISA; (f) the filing of a notice of intent
to terminate a Pension Plan under 4041 of ERISA; (g) the treatment of an
amendment of a Pension Plan as a termination under 4041 of ERISA; (h) the
termination of a Multiemployer Plan under Section 4041A of ERISA; (i) the
commencement of proceedings by the PBGC to terminate a Pension Plan under 4042
of ERISA; (j) an event or condition which could reasonably be expected to
constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, a Pension Plan; or (k) the imposition of
any liability under Title IV of ERISA, other than PBGC premiums due but not
delinquent under Section 4007 of ERISA.
"Event of Default" has the meaning specified in Section 12.1.
"Existing Letter of Credit" means a letter of credit issued by the Bank
for the account of a Borrower pursuant to the Original Agreement and described
on Schedule 1.1 hereto. Subject to the satisfaction of the conditions contained
in Section 11.1, from and after the Closing Date, the Existing Letters of Credit
shall be deemed to be Letters of Credit issued pursuant to this Agreement.
"Federal Funds Rate" means, for any day, the rate set forth in the
weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York (including any
such successor, "H.15(519)") on the preceding Business Day opposite the caption
"Federal Funds (Effective)"; or, if for any relevant day such rate is not so
published on any such preceding Business Day, the rate for such day will be the
arithmetic mean as determined by the Bank of the rates for the last transaction
in overnight Federal funds arranged prior to 9:00 a.m. (New York City time) on
that day by each of three leading brokers of Federal funds transactions in New
York City selected by the Bank.
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"Financial Statements" means, according to the context in which it is
used, the financial statements of the Borrowers dated May 31, 1998 and November
30, 1998 heretofore delivered by the Borrowers to the Bank, any financial
statements required to be given to the Bank pursuant to Section 9.6, or any
combination thereof.
"Fiscal Year" means the Borrowers' fiscal year for financial accounting
purposes. The current Fiscal Year of the Borrowers will end on May 31, 1999.
"Fixed Charges" means as to the Borrowers on a consolidated basis, for
any fiscal period, the sum of (i) interest expenses paid or payable in cash,
(ii) scheduled installments of principal paid or payable with respect to Debt
for borrowed money and Capital Leases; (iii) that portion of Capital
Expenditures not financed by borrowings from third parties; and (iv) income
taxes paid or payable in cash.
"Fixed Charge Coverage Ratio" means as to the Borrowers on a
consolidated basis for any fiscal period, the ratio of EBITDA to Fixed Charges.
"Funding Date" means the date on which a Borrowing occurs.
"GAAP" means at any particular time generally accepted accounting
principles as in effect at such time.
"GECC" means General Electric Credit Corporation, its successors and assigns.
"GECC Lease" means that certain Master Lease Agreement dated as of
March 13, 1997 between GECC and the Parent, as amended, modified or supplemented
from time to time.
"General Intangibles" means general intangibles as such term is defined
in Article 9 of the UCC.
"Guaranty" by any Person means all obligations of such Person which in
any manner directly or indirectly guarantee or assure, or in effect guarantee or
assure, the payment or performance of any indebtedness, dividend or other
obligation of any other Person (the "guaranteed obligations"), or to assure or
in effect assure the holder of the guaranteed obligations against loss in
respect thereof, including, without limitation, any such obligations incurred
through an agreement contingent or otherwise: (a) to purchase the guaranteed
obligations or any Property constituting security therefor; (b) to advance or
supply funds for the purchase or payment of the guaranteed obligations or to
maintain a working capital or other balance sheet condition, (c) to lease
Property or to purchase any debt or equity securities or other Property or
services.
"Interest Period" means, as to any IBOR Rate Loan, the period
commencing on the Funding Date of such Loan or on the Conversion/Continuation
Date on which the Loan is
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converted into or continued as a IBOR Rate Loan, and ending on the date one,
two, three or six months thereafter as selected by the Parent in its Notice of
Borrowing or Notice of Conversion/Continuation; provided, however, that:
(a) if any Interest Period would otherwise end on a
day that is not a Business Day, that Interest Period shall be
extended to the following Business Day unless the result of
such extension would be to carry such Interest Period into
another calendar month, in which event such Interest Period
shall end on the preceding Business Day;
(b) any Interest Period that begins on the last
Business Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month at
the end of such Interest Period) shall end on the last
Business Day of the calendar month at the end of such Interest
Period; and
(c) no Interest Period shall extend beyond the Stated
Termination Date or any renewal term.
"Inventory" means all of each Borrower's now owned and hereafter
acquired inventory, goods, merchandise, and other personal property, wherever
located, to be furnished under any contract of service or held for sale or
lease, all raw materials, work-in-process, finished goods, returned 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 connection with the
manufacture, packing, shipping, advertising, selling or finishing of such goods,
merchandise and such other personal property, and all documents of title or
other documents representing them.
"IRB Letters of Credit" means Letters of Credit in the aggregate face
amount of $4,800,000 issued in support of outstanding industrial revenue bonds
(whether by direct support or indirect support in the form of back-up letters of
credit to existing letters of credit providing direct support) under which one
or more of the Borrowers is obligated.
"IRS" means the Internal Revenue Service or any successor agency.
"Letter of Credit" has the meaning specified in Section 2.3.
"Letter of Credit Fee" has the meaning specified in Section 3.3.
"Letter of Credit Obligations" means, at any time of determination, the
sum of (a) the aggregate undrawn face amount of all outstanding Letters of
Credit plus (b) the aggregate amount drawn under outstanding Letters of Credit
for which the Bank has not been reimbursed pursuant to this Agreement.
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"IBOR Interest Payment Date" means, with respect to a IBOR Rate Loan,
the last day of each Interest Period applicable to such Loan, and if the
Interest Period is longer than three months, on the date which is three months
from the first day of such Interest Period.
"IBOR Interest Rate Determination Date" means each date of calculating
the IBOR Rate for purposes of determining the interest rate with respect to an
Interest Period. The IBOR Interest Rate Determination Date for any IBOR Rate
Loan shall be the second Business Day prior to the first day of the related
Interest Period for such IBOR Rate Loan.
"IBOR Rate" means, for any Interest Period, with respect to IBOR Rate
Loans comprising part of the same Borrowing, the rate of interest per annum
(rounded upward to the next 1/1000th of 1%) determined as follows:
IBOR Rate = IBOR
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1.00 - Eurodollar Reserve Percentage
where, "Eurodollar Reserve Percentage" means for any day for
any Interest Period the maximum reserve percentage (expressed
as a decimal, rounded upward to the next 1/100th of 1.0%) in
effect on such day (whether or not applicable to the Bank)
under regulations issued from time to time by the Federal
Reserve Board for determining the maximum reserve requirement
(including any emergency, supplemental or other marginal
reserve requirement) with respect to Eurocurrency funding
(currently referred to as "Eurocurrency liabilities"); and
"IBOR" means the rate of interest per annum (rounded upward to
the next 1/16 of 1%) notified to the Bank by Bank as the rate
of interest at which United States Dollar deposits in the
approximate amount of the Loan to be made or continued as, or
converted into, a IBOR Rate Loan and having a maturity
comparable to such Interest Period would be offered by Bank's
applicable lending office to major banks in the London
interbank market at their request at approximately 11:00 a.m.
(London time) two Business Days prior to the commencement of
such Interest Period.
"IBOR Rate Loans" means the IBOR Revolving Loans.
"IBOR Revolving Loan" means a Revolving Loan during any period in which
it bears interest based on the IBOR Rate.
"Intellectual Property Assignments" means the Intellectual Property
Assignments executed and delivered in connection with the Original Agreement to
evidence and perfect the Bank's Security Interest in the Parent's and Outlook
Packaging's present and future patents, trademarks, and related licenses and
rights, together with all amendments, restatements, supplements or other
modifications thereto.
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"Lien" means: (a) any interest in Property securing an obligation owed
to, or a claim by, a Person other than the owner of the Property, whether such
interest is based on the common law, statute, or contract, and including without
limitation, a security interest, charge, claim, or lien arising from a mortgage,
deed of trust, encumbrance, pledge, hypothecation, assignment, deposit
arrangement, agreement, security agreement, conditional sale or trust receipt or
a lease, consignment or bailment for security purposes; and (b) to the extent
not included under clause (a), any reservation, exception, encroachment,
easement, right-of-way, covenant, condition, restriction, lease or other title
exception or encumbrance affecting Property.
"Loans" means, collectively, all loans and advances provided for in
Section 2.
"Loan Documents" means this Agreement, the Patent and Trademark
Assignments, and all other agreements, instruments, and documents heretofore,
now or hereafter evidencing, securing, guaranteeing or otherwise relating to the
Obligations, the Collateral, the Security Interest, or any other aspect of the
transactions contemplated by this Agreement.
"Multiemployer Plan" means a multiemployer as defined in Section
4001(a)(3) of ERISA to which any Borrower or any ERISA Affiliate makes, is
making, made, or was at any time during the current year or the immediately
preceding six (6) years obligated to make contributions.
"Nonuse Fee" is defined in Section 3.1(c).
"Notice of Borrowing" has the meaning specified in Section 2.2(b).
"Notice of Conversion/Continuation" has the meaning specified in
Section 3.2(b).
"Obligations" means all present and future loans, advances,
liabilities, obligations, covenants, duties, and Debt owing by any Borrower to
the Bank, whether or not arising under this Agreement, whether or not evidenced
by any note, or other instrument or document, whether arising from an extension
of credit, opening of a letter of credit, acceptance, loan, guaranty,
indemnification or otherwise, whether direct or indirect (including, without
limitation, those acquired by assignment from others, and any participation by
the Bank in any Borrower's debts owing to others), absolute or contingent, due
or to become due, primary or secondary, as principal or guarantor, and
including, without limitation, all interest, charges, expenses, fees, attorneys
fees, filing fees and any other sums chargeable to any Borrower hereunder, under
another Loan Document, or under any other agreement or instrument with the Bank.
"Obligations" includes, without limitation, all debts, liabilities, and
obligations (direct, contingent or otherwise) now or hereafter owing from any
Borrower to Bank under or in connection with the Letters of Credit.
"Other Taxes" means any present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies which arise from
any payment made hereunder
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or from the execution, delivery or registration of, or otherwise with respect
to, this Agreement or any other Loan Documents.
"Participating Bank" means any Person who shall have been granted the
right by the Bank to participate in the Loans and who shall have entered into a
participation agreement in form and substance satisfactory to the Bank.
"PBGC" means the Pension Benefit Guaranty Corporation or any Person
succeeding to the functions thereof.
"Parent" is defined in the preamble to this Agreement.
"Pension Plan" means a pension plan (as defined in Section 3(2) of
ERISA) subject to Title IV of ERISA which such Borrower or an ERISA Affiliate
sponsors, maintains, or to which it makes, is making, or is obligated to make
contributions or, in the case of a Multiemployer Plan, has made contributions at
any time during the current year or the immediately preceding six (6) plan
years.
"Permitted Liens" means: (a) Liens for taxes not yet delinquent or
Liens for taxes in an amount not to exceed $100,000 being contested in good
faith by appropriate proceedings diligently pursued, provided that a reserve or
other appropriate provision, if any, as shall be required by GAAP shall have
been made therefor on the applicable Financial Statements and that a stay of
enforcement of any such Lien is in effect; (b) Liens in favor of the Bank, (c)
Liens arising by operation of law in favor of warehouseman, landlords, carriers,
mechanics, materialmen, laborers, employees or suppliers, incurred in the
ordinary course of business of any Borrower and not in connection with the
borrowing of money, for sums not yet delinquent or which are being contested in
good faith and by proper proceedings diligently pursued, provided that a reserve
or other appropriate provision, if any, required by GAAP shall have been made
therefor on the applicable Financial Statements and a stay of enforcement of any
such Lien is in effect; (d) Liens in connection with worker's compensation or
other unemployment insurance incurred in the ordinary course of any Borrower's
business; (e) Liens created by deposits of cash to secure performance of bids,
tenders, leases (to the extent permitted under this Agreement), or trade
contracts, incurred in the ordinary course of business of any Borrower and not
in connection with the borrowing of money; (f) Liens arising by reason of cash
deposits for surety or appeal bonds in the ordinary course of business of any
Borrower; (g) Liens of or resulting from any judgment or award, the time for the
appeal or petition for rehearing of which has not yet expired, or in respect of
which the applicable Borrower is in good faith prosecuting an appeal or
proceeding for a review, and in respect of which a stay of execution pending
such appeal or proceeding for review has been secured; (h) Liens on the assets
described on Schedule 1.2 hereto in favor of SWIB securing Debt in an amount not
to exceed $2,260,994.13; (i) with respect to any Premises: Liens in favor of
SWIB pursuant to the SWIB Loan Documents, easements, rights of way, zoning and
similar covenants and restrictions and similar encumbrances which customarily
exist on properties of corporations engaged in similar activities and similarly
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situated and which in any event do not materially interfere with or impair the
use or operation of the Collateral by any Borrower or the value of the Bank's
Security Interest therein, or materially interfere with the ordinary conduct of
the business of such Borrower and (j) Liens in existence on the Closing Date and
listed on Schedule 1.2.
"Person" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization limited liability company
association corporation Public Authority, or any other entity.
"Plan" means an employee benefit plan (as defined in Section 3(3) of
ERISA) which any Borrower or an ERISA Affiliate sponsors or maintains or to
which any Borrower or an ERISA Affiliate makes, is making, or is obligated to
make contributions and includes any Pension Plan.
"Premises" means the land (including leased premises) identified by
addresses on Schedule 9.13 together with all buildings, improvements, and
fixtures thereon and all tenements, hereditament, and appurtenances belonging or
in any way appertaining thereto, and which constitutes all of the real property
in which any Borrower has any interest on the Closing Date.
"Proceeds" means all products and proceeds of any Collateral, and all
proceeds of such proceeds and products, including, without limitation, all cash
and credit balances, all payments under any indemnity, warranty, or guaranty
payable with respect to any Collateral, all awards for taking by eminent domain,
all proceeds of fire or other insurance, and all money and other Property
obtained as a result of any claims against third parties or any legal action or
proceeding with respect to Collateral.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
"Proprietary Rights" means all of each Borrower's now owned and
hereafter arising or acquired: licenses, franchises, permits, patents, patent
rights, copyrights, works which are the subject matter of copyrights,
trademarks, trade names, trade styles, patent and trademark applications and
licenses and rights thereunder, including without limitation those patents
trademarks and copyrights set forth on Schedule 9.14, and all other rights under
any of the foregoing, all extensions, renewals, reissues, divisions,
continuations, and continuations-in-part of any of the foregoing, and all rights
to xxx for past, present, and future infringement of any of the foregoing;
inventions, trade secrets, formulae, processes, compounds, drawings, designs,
blueprints, surveys, reports, manuals, and operating standards; goodwill;
customer and other lists in whatever form maintained; and trade secret rights,
copyright rights, rights in works of authorship, and contract rights relating to
computer software programs, in whatever form created or maintained.
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"Public Authority" means the government of any country or sovereign
state, or of any state, province, municipality, or other political subdivision
thereof, or any department, agency, public corporation or other instrumentality
of any of the foregoing.
"Receivables" means all of each Borrower's now owned and hereafter
arising or acquired: Accounts (whether or not earned by performance), including
Accounts owed to any Borrower by any of its Subsidiaries or Affiliates, together
with all interest, late charges, penalties, collection fees, and other sums
which shall be due and payable in connection with any Account proceeds of any
letters of credit naming any Borrower as beneficiary; contract rights, chattel
paper instruments, documents, investment property, general intangibles
(including without limitation chosen in action, causes of action, tax refunds,
tax refund claims, and Reversions and other amounts payable to any Borrower from
or with respect to any Plan) and all forms of obligations owing to any Borrower
(including, without limitation, in respect of loans, advances, and extensions of
credit by any Borrower to its Subsidiaries and Affiliates); guarantees and other
security for any of the foregoing; goods represented by or the sale, lease or
delivery of which gave rise to any of the foregoing; merchandise returned to or
repossessed by any Borrower and rights of stoppage in transit, replevin, and
reclamation; and other rights or remedies of an unpaid vendor, lienor, or
secured party.
"Release" means a release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration of a
Contaminant into the indoor or outdoor environment or into or out of any real
estate or other property, including the movement of Contaminants through or in
the air, soil surface water, groundwater or real estate or other property.
"Reportable Event" means, any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder, other than any such event for
which the 30-day notice requirement under ERISA has been waived in regulations
issued by the PBGC.
"Requirement of Law" means any law (statutory or common), treaty, rule
or regulation or determination of an arbitrator or of a Public Authority.
"Restricted Investment" means any acquisition of Property by any
Borrower or any of its Subsidiaries in exchange for cash or other Property,
whether in the form of an acquisition of stock debt security, or other
indebtedness or obligation or the purchase or acquisition of any other Property,
or a loan advance, capital contribution, or subscription except acquisitions of
the following: (a) fixed assets to be used in the business of such Borrower, so
long as the acquisition costs thereof constitute Capital Expenditures permitted
hereunder; (b) current assets arising from the sale or lease of goods or
rendition of services in the ordinary course of business of such Borrower; (c)
direct obligations of the United States of America, or any agency thereof, or
obligations guaranteed by the United States of America, provided that such
obligations mature within one year from the date of acquisition thereof; (d)
certificates of deposit maturing within one year from the date of acquisition,
bankers acceptances, Eurodollar bank deposits, or
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overnight bank deposits, in each case issued by, created by, or with a bank or
trust company organized under the laws of the United States or any state thereof
having capital and surplus aggregating at least $100,000,000; and (e) commercial
paper given the highest rating by a national credit rating agency and maturing
not more than 270 days from the date of creation thereof.
"Reversions" means any funds which may become due to any Borrower in
connection with the termination of any Plan or other employee benefit plan.
"Revolver IBOR Margin" has the meaning specified in Section 3.1(b).
"Revolving Loan Facility" has the meaning specified in Section 2.1.
"Revolving Loans" has the meaning specified in Section 2.2.
"Security Interest" means collectively the Liens granted to the Bank in
the Collateral pursuant to this Agreement, the other Loan Documents, or any
other agreement or instrument.
"Solvent" shall mean when used with respect to any Person that: (a) the
fair value of all its Property is in excess of the total amount of its debts
(including contingent liabilities); (b) it is able to pay its debts as they
mature; and (c) it does not have unreasonably small capital for the business in
which it is engaged or for any business or transaction in which it is about to
engage.
"Stated Termination Date" means the third anniversary of the Closing
Date.
"Subsidiary" of a Person means any corporation, association,
partnership, joint venture or other business entity of which more than 50% of
the voting stock or other equity interests (in the case of Persons other than
corporations), is owned or controlled directly or indirectly by the Person, or
one or more of the Subsidiaries of the Person, or a combination thereof. Unless
the context otherwise clearly requires, references herein to a "Subsidiary"
refer to a Subsidiary of the Borrowers.
"Supporting Letter of Credit" is defined in Section 2.3(g).
"SWIB" means the State of Wisconsin Investment Board.
"SWIB Debt" means loans and obligations owing by Borrowers to SWIB in
an aggregate principal amount not to exceed the amount outstanding on the
Closing Date.
"SWIB Loan Documents" means any and all documents, agreements or
instruments evidencing Debt owed by any Borrower to SWIB.
"Target" has the meaning specified in Section 10.17(b).
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"Taxes" means any and all present or future taxes, assessments, levies,
imposts, impositions, deductions, charges or withholdings, and all liabilities
with respect thereto, excluding, in the case of the Bank, such taxes (including
income taxes or franchise taxes) as are imposed on or measured by the Bank's net
income by the jurisdiction (or any political subdivision thereof) under the laws
of which the Bank is organized or maintains a lending office.
"Total Facility" has the meaning specified in Section 2.1.
"UCC" means the Uniform Commercial Code (or any successor statute) of
the State of Illinois or of any other state the laws of which are required by
Section 9-103 thereof to be applied in connection with the issue of perfection
of security interests.
1.1 Accounting Terms. Any accounting term used in this
Agreement shall have, unless otherwise specifically provided herein, the meaning
customarily given in accordance with GAAP, and all financial computations
hereunder shall be computed, unless otherwise specifically provided herein, in
accordance with GAAP as consistently applied and using the same method for
inventory valuation as used in the preparation of the Financial Statements.
1.2 Other Terms. All other undefined terms contained in this
Agreement shall, unless the context indicates otherwise, have the meanings
provided for by the UCC to the extent the same are used or defined therein.
Wherever appropriate in the context, terms used herein in the singular also
include the plural, and vice versa, and each masculine, feminine, or neuter
pronoun shall also include the other genders.
2. LOANS AND LETTERS OF CREDIT.
2.1 The Facility.
(a) Subject to all of the terms and conditions of this
Agreement, the Bank shall make available a total credit facility of
$15,000,000.00, subject to reduction in the amount of the Revolving Loan
Facility as set forth in Section 2.1(b) hereof (the "Total Facility") for
Borrowers' use from time to time during the term of this Agreement. The Total
Facility shall be comprised of a revolving line of credit for Revolving Loans
and Letters of Credit as described in Sections 2.2 and 2.3.
(b) Notwithstanding paragraph (a) of this Section, if the
ratio of (i) the outstanding principal amount of the Revolving Loans (expressly
excluding from the determination of such outstanding principal amount the amount
of the Letter of Credit Obligations) to (ii) the total dollar amount of the
Borrowers' Accounts (as reflected on the Borrowers' books and records in
accordance with GAAP) exceeds 70% as of the last day of any month, the Bank,
upon notice to the Borrowers may, in its sole and absolute discretion,
thereafter limit the aggregate outstanding amount of Revolving Loans to a
maximum dollar amount determined with reference to a "borrowing base" calculated
on the basis of the value (as
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determined by the Bank) of the Borrowers' "eligible collateral". All
determinations with respect to "eligible collateral" or such "borrowing base"
shall be made and applied by the Bank in such manner as the Bank shall from time
to time determine in its sole and absolute discretion. Any such limitation shall
remain in effect until the Stated Termination Date or such earlier date as
determined by the Bank in its sole and absolute discretion. Notwithstanding the
foregoing, any limitations (including, without limitation, the definition of
borrowing base and related terms) established pursuant to this Section 2.1(b)
shall be on substantially the same terms and Availability (as defined in the
Original Agreement) as are set forth in the Original Agreement, based upon the
Bank's determination at such time of the nature, valuation and concentration of
the Company's assets, the identity and creditworthiness of the Company's account
debtors, the Company's inventory composition and such other factors as the Bank,
in its reasonable discretion, deems to be relevant with respect to the extension
of credit on a "borrowing base" lending structure of similar substance and
procedure as set forth in the Original Agreement.
2.2 Revolving Loans.
(a) The Bank shall, upon the Parent's request from
time to time, make revolving loans (the "Revolving Loans") to the Borrowers;
provided, that the Bank shall not be obligated to permit the outstanding
principal amount of the Revolving Loans plus the aggregate Letter of Credit
Obligations to exceed the amount of the Total Facility (or if less, the amount
determined by the Bank pursuant to Section 2.1(b)). The Bank, in its sole
discretion, may elect to exceed the foregoing limits on one or more occasions,
but if it does so, the Bank shall not be deemed thereby to have changed such
limits or to be obligated to exceed such limits on any other occasion. The
Parent may request Revolving Loans either telephonically or in writing. Each
oral request for a Revolving Loan shall be conclusively presumed to be made by a
person authorized by each Borrower to do so and the crediting of a Revolving
Loan to a Borrower's deposit account, or transmittal to such Person as the
Parent shall direct, shall conclusively establish the obligation of the
applicable Borrower to repay such Revolving Loan as provided herein. The Bank
may charge all Revolving Loans and other Obligations to a loan account of each
Borrower maintained with the Bank. All fees, commissions, costs, expenses, and
other charges under or pursuant to the Loan Documents, and all payments made and
out-of-pocket expenses incurred by the Bank pursuant to the Loan Documents, may
be charged as Base Rate Revolving Loans to the applicable Borrower's loan
account as of the date due from such Borrower or the date paid or incurred by
the Bank, as the case may be.
(b) Procedure for Borrowing.
(i) Each Borrowing shall be made upon the
Parent's irrevocable written notice delivered to the Bank in the form of a
Notice of Borrowing (which notice must be received by the Bank prior to 11:00
a.m. (Chicago time) (1) two Business Days prior to the requested Funding Date,
in the case of IBOR Rate Loans and (2) on the requested Funding Date, in the
case of Base Rate Loans, specifying:
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(A) the amount of the requested Borrowing;
(B) the requested Funding Date, which shall be a
Business Day;
(C) whether the Revolving Loans requested are to
be Base Rate Revolving Loans or IBOR Revolving Loans;
(D) the duration of the Interest Period (one,
two, three or six months) if the requested Revolving Loans are
to be IBOR Revolving Loans. If the Notice of Borrowing fails
to specify the duration of the Interest Period for any
Borrowing comprised of IBOR Rate Loans, such Interest Period
shall be one month; and
(E) the aggregate principal amount of such
Borrowing attributable to each Borrower.
(ii) After giving effect to any Borrowing,
there may not be more than five (5) different Interest Periods in
effect.
(iii) With respect to any request for Base
Rate Revolving Loans, in lieu of delivering the above-described Notice
of Borrowing, the Parent may give the Bank telephonic notice of such
request by the required time, with such telephonic notice to be
confirmed in writing within 24 hours of the giving of such notice but
the Bank shall be entitled to rely on the telephonic notice in making
such Revolving Loans.
2.3 Letters of Credit.
(a) Subject to the terms and conditions of this
Agreement, the Bank shall upon the Parent's request from time to time, issue
commercial, standby or IRB Letters of Credit for the applicable Borrower's
account (collectively, the "Letters of Credit"). The Bank shall have no
obligation to issue any Letter of Credit (other than IRB Letters of Credit) if
either (i) the maximum stated amount of the requested Letter of Credit (other
than IRB Letters of Credit) plus the aggregate outstanding Letter of Credit
Obligations (other than any with respect to IRB Letters of Credit) would exceed
$3,000,000 or (ii) the outstanding principal amount of all Revolving Loans plus
the aggregate Letter of Credit Obligations would exceed the Total Facility. In
addition, the Bank shall have no obligation to issue any IRB Letter of Credit if
either (i) the maximum stated amount of the requested IRB Letter of Credit plus
the aggregate Letter of Credit Obligations with respect to all IRB Letters of
Credit would exceed $4,800,000 or (ii) the outstanding principal amount of all
Revolving Loans plus the aggregate Letter of Credit Obligations would exceed the
Total Facility. The Existing Letters of Credit shall constitute IRB Letters of
Credit and shall be deemed to be issued under and be utilization of the facility
for IRB Letters of Credit established hereunder. No Letter of Credit shall have
an expiry date later than the Stated Termination Date or longer than 12 months
from the date of issue, subject to annual renewals for IRB Letters of Credit
which shall be subject to the conditions of Section 11.2. All
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payments made by the Bank under or pursuant to, and all charges incurred by the
Bank pursuant to or in connection with, any Letter of Credit, shall be charged
to the applicable Borrower's loan account with the Bank as a Base Rate Revolving
Loan.
(b) Other Conditions. In addition to being
subject to the satisfaction of the applicable conditions precedent contained in
Section 11, the obligation of the Bank to issue or extend any Letter of Credit
is subject to the following conditions precedent having been satisfied in a
manner satisfactory to the Bank:
(1) The applicable Borrower shall have delivered
to the Bank, at such times and in such manner as the Bank may
prescribe, an application in form and substance satisfactory
to the Bank for the issuance of the Letter of Credit and such
other documents as may be required pursuant to the terms
thereof, and the form and terms of the proposed Letter of
Credit shall be satisfactory to the Bank; and
(2) As of the date of issuance, no order of any
court, arbitrator or Public Authority shall purport by its
terms to enjoin or restrain money center banks generally from
issuing letters of credit of the type and in the amount of the
proposed Letter of Credit, and no law, rule or regulation
applicable to money center banks generally and no request or
directive (whether or not having the force of law) from any
Public Authority with jurisdiction over money center banks
generally shall prohibit, or request that the proposed issuer
of such Letter of Credit refrain from, the issuance of letters
of credit generally or the issuance of such Letters of Credit.
(c) Issuance of Letters of Credit.
(1) Request for Issuance. The Parent shall give
the Bank three (3) Business Days' prior written notice of the
applicable Borrower's request for the issuance of a Letter of
Credit (other than an Existing Letter of Credit outstanding on
the Closing Date). Such notice shall be irrevocable and shall
specify the original face amount of the Letter of Credit
requested, the effective date (which date shall be a Business
Day) of issuance of such requested Letter of Credit, whether
such Letter of Credit may be drawn in a single or in partial
draws, the date on which such requested Letter of Credit is to
expire (which date shall be a Business Day), the purpose for
which such Letter of Credit is to be issued, and the
beneficiary of the requested Letter of Credit. The Parent
shall attach to such notice the proposed form of the Letter of
Credit that the Bank is requested to issue.
(2) No Extensions or Amendment. The Bank shall
not be obligated to extend or amend any Letter of Credit
unless the requirements of this Section 2.3 are met as though
a new Letter of Credit were being requested and issued.
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(d) Payments Pursuant to Letters of Credit.
(1) Payment of Letter of Credit Obligations.
Each Borrower that is the account party as to a Letter of
Credit agrees to reimburse the Bank for any draw under such
Letter of Credit immediately upon demand, and to pay the Bank
the amount of all other obligations and other amounts payable
to the Bank under or in connection with such Letter of Credit
immediately when due, irrespective of any claim, setoff,
defense or other right which such Borrower may have at any
time against the Bank or any other Person.
(2) Revolving Loans to Satisfy Reimbursement
Obligations. In the event that the Bank honors any draw under
any Letter of Credit and the applicable Borrower shall not
have repaid such amount to the Bank pursuant to Section
2.3(d)(1), such amount when paid shall constitute a Base Rate
Revolving Loan to such Borrower which shall be deemed to have
been requested by the Parent.
(e) Compensation for Letters of Credit.
(1) Letter of Credit Fee. Each Borrower agrees
to pay to the Bank with respect to each Letter of Credit, the
Letter of Credit Fee specified in, and in accordance with the
terms of, Section 3.3.
(2) Bank Fees and Charges. Each applicable
Borrower shall pay to the Bank, as issuer of each Letter of
Credit such fees and other charges as are charged by the Bank
for letters of credit issued by it, including, without
limitation, its standard fees for issuing, administering,
amending, renewing, paying and canceling letters of credit and
all other fees associated with issuing or servicing letters of
credit, as and when assessed.
(f) Indemnification; Exoneration: Power of
Attorney
(1) Indemnification. In addition to amounts
payable as elsewhere provided in this Section 2.3, the
Borrowers, jointly and severally, hereby agree to protect,
indemnify, pay and save the Bank harmless from and against any
and all claims, demands, liabilities, damages, losses, costs,
charges and expenses (including reasonable attorneys' fees)
which the Bank may incur or be subject to as a consequence,
direct or indirect, of the issuance of any Letter of Credit or
the provision of any credit support or enhancement in
connection therewith. The agreement in this Section 2.3(f)(1)
shall survive payments of all Obligations and the termination
of this Agreement.
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(2) Assumption of Risk by the Borrowers. As among the
Borrowers and the Bank, the Borrowers assume all risks of the
acts and omissions of, or misuse of any of the Letters of
Credit by, the respective beneficiaries of such Letters of
Credit. In furtherance and not in limitation of the foregoing,
the Bank shall not be responsible for: (A) the form, validity,
sufficiency, accuracy, genuineness or legal effect of any
document submitted by any Person in connection with the
application for and issuance of and presentation of drafts
with respect to any of the Letters of Credit, even if it
should prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (B) the
validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign any Letter of
Credit or the rights or benefits thereunder or proceeds
thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason; (C) the failure of the beneficiary
of any Letter of Credit to comply duly with conditions
required in order to draw upon such Letter of Credit; (D)
errors, omissions, interruptions, or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex or
otherwise, whether or not they be in cipher; (E) errors in
interpretation of technical terms; (F) any loss or delay in
the transmission or otherwise of any document required in
order make a drawing under any Letter of Credit or of the
proceeds thereof; (G) the misapplication by the beneficiary of
any Letter of Credit of the proceeds of any drawing under such
Letter of Credit; or (H) any consequences arising from causes
beyond the control of the Bank, including, without limitation,
any act or omission, whether rightful or wrongful, of any
present or future de jure or de facto Public Authority. None
of the foregoing shall affect, impair or prevent the vesting
of any rights or powers of the Bank under this Section 2.3.
(3) Exoneration. In furtherance and extension, and
not in limitation, of the specific provisions set forth above,
any action taken or omitted by the Bank under or in connection
with any of the Letters of Credit or any related certificates,
if taken or omitted in the absence of gross negligence or
willful misconduct, shall not put the Bank under any resulting
Liability to any Borrower or relieve any Borrower of any of
its obligations hereunder to the Bank.
(4) Rights and Powers Following an Event of Default;
Power of Attorney. In connection with all Inventory financed
by Letters of Credit, each Borrower hereby appoints the Bank,
or the Bank's designee, as its attorney, with full power and
authority exercisable only at such time that an Event of
Default exists: (a) to sign and/or endorse such Borrower's
name upon any warehouse or other receipts; (b) to sign such
Borrower's name on bills of lading and other negotiable and
non-negotiable documents; (c) to clear Inventory through
customs in the Bank's or such Borrower's name, and to sign and
deliver to customs officials powers of attorney in such
Borrower's name for such purpose; (d) to complete in such
Borrower's or the Bank's name, any order, sale, or
transaction, obtain the
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necessary documents in collection therewith, and collect the
proceeds thereof; and (e) to do such other acts and things as
are necessary in order to enable the Bank to obtain possession
of the Inventory and to obtain payment of the Obligations.
Neither the Bank nor its designee, as such Borrower's
attorney, will be liable for any acts or omissions, nor for
any error of judgement or mistakes of fact or law. This power,
being coupled with an interest, is irrevocable until all
Obligations have been paid and satisfied. In addition, at any
time that an Event of Default exists, each Borrower will, at
the Bank's request, and the Bank may, in its own name or in
the name of the applicable Borrower, instruct all suppliers,
carriers, forwarders, warehouses or others dealing with
Inventory financed by a Letter of Credit or receiving or
holding cash, checks, such Inventory, documents or instruments
in which the Bank holds a security interest, to deliver them
to the Bank and/or subject to the Bank's order, and if they
shall come into such Borrower's possession, to deliver them,
upon request, to the Bank in their original form. At any time
that an Event of Default exists each Borrower shall also, at
the Bank's request, designate the Bank as the consignee on all
bills of lading and other negotiable and non-negotiable
documents.
(g) Supporting Letter of Credit; Cash Collateral. If,
notwithstanding the provisions of this Section 2.3 any Letter of Credit is
outstanding on the Stated Termination Date or earlier termination of this
Agreement, the Borrowers shall deposit with the Bank, at its discretion, with
respect to each Letter of Credit then outstanding either (A) a standby letter of
credit (a "Supporting Letter of Credit") in form and substance satisfactory to
the Bank, issued by an issuer satisfactory to the Bank in an amount equal to the
greatest amount for which such Letter of Credit may be drawn, under which
Supporting Letter of Credit the Bank is entitled to draw amounts necessary to
reimburse the Bank for payments made by the Bank under such Letter of Credit or
under any credit support or enhancement provided through the Bank with respect
thereto, or (B) cash in amounts necessary to reimburse the Bank for payments
made by the Bank under such Letter of Credit or under any credit support or
enhancement provided through the Bank. Such Supporting Letter of Credit or
deposit of cash shall be held by the Bank, as security for, and to provide for
the payment of, the aggregate undrawn amount of such Letters of Credit remaining
outstanding.
3. INTEREST AND OTHER CHARGES.
3.1 Interest.
(a) All Obligations shall bear interest on the unpaid
principal amount thereof from the date made until paid in full in cash at a rate
determined by reference to the Base Rate or the IBOR Rate and Sections 3.1(a)
and (b), as applicable. Subject to the provisions of Section 3.2, any of the
Loans may be converted into, or continued as, Base Rate Loans or IBOR Rate Loans
in the manner provided in Section 3.2. If at any time Loans are outstanding with
respect to which notice has not been delivered to Bank in accordance with the
terms of this
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Agreement specifying the basis for determining the interest rate applicable
thereto, then those Loans shall be Base Rate Loans and shall bear interest at a
rate determined by reference to the Base Rate until notice to the contrary has
been given to the Bank and such notice has become effective. Except as otherwise
provided herein, the Obligations shall bear interest as follows:
(i) For all Revolving Loan Obligations other
than IBOR Rate Loans, at a fluctuating rate per annum rate equal to the
Base Rate; and
(ii) For all Revolving Loan Obligations that
are IBOR Rate Loans, at a per annum rate equal to the Revolver IBOR
Margin from time to time in effect plus the IBOR Rate determined for
the applicable Interest Period.
Each change in the Base Rate shall be reflected in the interest rate described
in clause (i) above as of the effective date of such change. All interest
charges shall be computed on the basis of a year of three hundred sixty (360)
days and actual days elapsed. All interest with respect to Base Rate Loans shall
be payable to Bank on the last day of each month hereafter. All interest with
respect to Libor Rate Loans shall be payable to Bank on each IBOR Interest
Payment Date.
(b) The "Revolver IBOR Margin" means a per annum
rate of interest charged in addition to the IBOR Rate with respect to IBOR
Revolving Loans. On the Closing Date, but subject to Subsection (d) below, the
Revolver IBOR Margin shall equal two percent (2.00%). Commencing upon the
six-month anniversary of the Closing Date and continuing thereafter, but subject
to Subsection (d) below, the Revolver IBOR Margin on any date of determination
shall be determined with reference to the grid set forth below on the basis of
the Borrowers' consolidated EBITDA for the period of four consecutive fiscal
quarters ending coincident with or immediately prior to such date of
determination, determined as one accounting period, as reflected in the
Borrowers' monthly financial statements delivered to the Bank pursuant to
Section 8.2 hereof. Subject to Subsection (d) below, any adjustment to the
Revolver IBOR Margin (up or down) based upon any change in the Borrowers'
consolidated EBITDA shall take effect two (2) Business Days following the Bank's
receipt of such monthly financial statements.
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===================================================================================================================
CONSOLIDATED REVOLVER
EBITDA IBOR MARGIN
(PER ANNUM)
-------------------------------------------------------------------------------------------------------------------
equal to or greater than $10,000,000 1.50%
-------------------------------------------------------------------------------------------------------------------
equal to or greater than $7,500,000 1.75%
but less than $10,000,000
-------------------------------------------------------------------------------------------------------------------
equal to or greater than $5,000,000 2.00%
but less than $7,500,000
-------------------------------------------------------------------------------------------------------------------
less than $5,000,000 2.25%
===================================================================================================================
(c) For every month or portion thereof during the
term of this Agreement, the Borrowers shall pay the Bank a fee (the "Nonuse
Fee") in an amount equal to the percentage per annum determined as set forth in
this Subsection (c) (for purposes of this Subsection (c), the "Nonuse Fee
Percentage") multiplied by the excess of the Total Facility Amount over the
daily average during such month of the sum of (i) the outstanding amount of
Revolving Loans plus (ii) outstanding Letter of Credit Obligations, with the
unpaid balance calculated for this purpose by applying payments immediately upon
receipt. Such Nonuse Fee, if any, shall be calculated on the basis of a year of
three hundred sixty (360) days and actual days elapsed, and shall be payable to
the Bank on the last day of each month. On the Closing Date, the Nonuse Fee
Percentage shall equal 0.250%. Commencing upon the six-month anniversary of the
Closing Date and continuing thereafter, but subject to Subsection (d) below, the
Nonuse Fee Percentage shall be determined with reference to the grid set forth
below on the basis of the Borrowers' consolidated EBITDA for the period of four
consecutive fiscal quarters ending coincident with or immediately prior to such
date of determination, determined as one accounting period, as reflected in the
Borrowers' monthly financial statements delivered to the Bank pursuant to
Section 8.2 hereof. Subject to Subsection (d) below, any adjustment to the
Nonuse Fee Percentage (up or down) based upon any change in the Borrowers'
consolidated EBITDA shall take effect two (2) Business Days following the Bank's
receipt of such monthly financial statements.
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============================================================================= ======================================
CONSOLIDATED NONUSE
EBITDA FEE (PER ANNUM)
-------------------------------------------------------------------------------------------------------------------
equal to or greater than $10,000,000 .25%
-------------------------------------------------------------------------------------------------------------------
equal to or greater than $7,500,000 .25%
but less than $10,000,000
-------------------------------------------------------------------------------------------------------------------
equal to or greater than $5,000,000 .25%
but less than $7,500,000
-------------------------------------------------------------------------------------------------------------------
less than $5,000,000 .50%
============================================================================= ======================================
(d) If any Default with regard to Section 8.2 occurs
or any Event of Default occurs, then, until such Default or Event of Default is
cured or waived and until it ceases to exist, or if not cured or waived until
all Obligations are paid and performed in full, the Borrowers will pay interest
on the unpaid principal balances of the Revolving Loans at a per annum rate 2.0%
greater than the rates of interest otherwise specified herein, and the Letter of
Credit Fee and the Nonuse Fee shall be increased to a rate two percent (2.0%)
per annum greater than the Letter of Credit Fee or Nonuse Fee otherwise
specified herein.
3.2 Conversion and Continuation Elections.
(a) The Parent may, upon irrevocable written notice
to the Bank in accordance with Subsection 3.2(b):
(i) elect, as of any Business Day, in the
case of Base Rate Loans to convert any such Loans (or any part
thereof in an amount not less than $500,000, or that is in an
integral multiple of $500,000 in excess thereof) into IBOR
Rate Loans; or
(ii) elect, as of the last day of the
applicable Interest Period, to continue any IBOR Rate Loans
having Interest Periods expiring on such day (or any part
thereof in an amount not less than $500,000, or that is in an
integral multiple of $500,000 in excess thereof);
provided, that separate Loans to separate Borrowers may be aggregated for
purposes of determining the minimum amounts of IBOR Loans; and provided further,
that if at any time the aggregate amount of IBOR Rate Loans in respect of any
Borrowing is reduced, by payment, prepayment, or conversion of part thereof to
be less than $500,000, such IBOR Rate Loans shall automatically convert into
Base Rate Loans, and on and after such date the right of the Parent to continue
such Loans as, and convert such Loans into, IBOR Rate Loans, as the case may be,
shall terminate.
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(b) The Parent shall deliver a notice ("Notice
of Conversion/Continuation") to be received by the Bank not later than 11:00
A.M. (Chicago time) at least two Business Days in advance of the date of
commission or continuing, if the Loans are to be converted into or continued as
IBOR Rate Loans and specifying:
(A) the proposed Conversion/Continuation Date;
(B) the aggregate amount of Loans to be
converted or continued;
(C) the type of Loans resulting from the
proposed conversion or
continuation; and
(D) the duration of the requested Interest
Period.
(c) If upon the expiration of any Interest
Period applicable to IBOR Loans, the Parent has failed to select timely a new
Interest Period to be applicable to IBOR Rate Loans or if any Default or Event
of Default then exists, the Borrowers shall be deemed to have elected to convert
such IBOR Rate Loans into Base Rate Loans effective as of the expiration date
of such Interest Period.
(d) During the existence of Default or Event of
Default, the Parent may not elect to have a Loan converted into or continued as
a IBOR Rate Loan.
(e) After giving effect to any conversion or
continuation of Loans, there may not be more than five (5) different Interest
Periods in effect.
3.3 Letter of Credit Fee. Each Borrower agrees to pay to
the Bank a fee (the "Letter of Credit Fee") equal to (a) one and three-quarters
percent (1.75%) per annum of the daily average undrawn face amount of each IRB
Letter of Credit (including the Existing Letters of Credit) and (b) the Revolver
IBOR Margin per annum of the daily average undrawn face amount of each Letter of
Credit other than IRB Letters of Credit, plus all out-of-pocket costs, fees and
expenses incurred by the Bank in connection with the application for, issuance
of, or amendment to any Letter of Credit. The Letter of Credit Fee shall be
payable monthly in arrears on the last day of each month following any month in
which a Letter of Credit (including an IRB Letter of Credit) was issued and/or
in which a Letter of Credit remains outstanding. The Letter of Credit Fee shall
be computed on the basis of a 360-day year for the actual number of days
elapsed.
4. PAYMENTS AND PREPAYMENTS.
4.1 Revolving Loans. Each Borrower shall repay the outstanding
principal balance of the Revolving Loans advanced to it, plus all accrued but
unpaid interest thereon, upon the termination of this Agreement for any reason.
In addition, and without limiting the generality of the foregoing, if the Bank
has exercised its rights under Section 2.1(b), each Borrower jointly
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and severally agrees to pay to the Bank, on demand, the amount by which the
unpaid principal balance of the Revolving Loans at any time exceeds the maximum
imposed by the Bank pursuant to Section 2.1(b).
4.2 Place and Form of Payments; Extension of Time. All
payments of principal, interest, premium, and other sums due to the Bank shall
be made at the Bank's address set forth in Section 14.10. All such payments
shall be made in immediately available funds. If any payment of principal,
interest, premium, or other sum to be made hereunder becomes due and payable on
a day other than a Business Day, the due date of such payment shall be extended
to the next succeeding Business Day and interest thereon shall be payable at the
applicable interest rate during such extension.
4.3 Application and Reversal of Payments. The Bank shall
determine in its sole discretion the order and manner in which Proceeds of
Collateral and other payments that the Bank receives are applied to the
Revolving Loans, interest thereon, and the other Obligations then due and
payable, and each Borrower hereby irrevocably waives the right to direct the
application of any payment or Proceeds. The Bank shall have the continuing and
exclusive right to apply and reverse and reapply any and all such Proceeds and
payments to any portion of the Obligations then due and payable.
4.4 INDEMNITY FOR RETURNED PAYMENTS. IF AFTER RECEIPT OF ANY
PAYMENT WHICH IS APPLIED TO THE PAYMENT OF ALL OR ANY PART OF THE OBLIGATIONS,
THE BANK IS FOR ANY REASON COMPELLED TO SURRENDER SUCH PAYMENT TO ANY PERSON
BECAUSE SUCH PAYMENT IS INVALIDATED, DECLARED FRAUDULENT, SET ASIDE, DETERMINED
TO BE VOID OR VOIDABLE AS A PREFERENCE, IMPERMISSIBLE SETOFF, OR A DIVERSION OF
TRUST FUNDS, OR FOR ANY OTHER REASON, THEN: THE OBLIGATIONS OR PART THEREOF
INTENDED TO BE SATISFIED SHALL BE REVIVED AND CONTINUE AND THIS AGREEMENT SHALL
CONTINUE IN FULL FORCE AS IF SUCH PAYMENT HAD NOT BEEN RECEIVED BY THE BANK AND
THE BORROWERS SHALL BE LIABLE TO PAY TO THE BANK AND HEREBY JOINTLY AND
SEVERALLY INDEMNIFY THE BANK AND HOLD THE BANK HARMLESS FOR THE AMOUNT OF SUCH
PAYMENT SURRENDERED. The provisions of this Section 4.4 shall be and remain
effective notwithstanding any contrary action which may have been taken by the
Bank in reliance upon such payment, and any such contrary action so taken shall
be without prejudice to the Bank's rights under this Agreement and shall be
deemed to have been conditioned upon such payment having become final and
irrevocable. The provisions of this Section 4.4 shall survive the termination of
this Agreement.
5. BANK'S BOOKS AND RECORDS; MONTHLY STATEMENTS. The
Borrowers agree that the Bank's books and records showing the Obligations and
the transactions pursuant to this Agreement and the other Loan Documents shall
be admissible in any action or proceeding arising therefrom, and shall
constitute prima facie proof thereof, irrespective of
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whether any Obligation is also evidenced by a promissory note or other
instrument. The Bank will provide to the Borrowers a monthly statement of Loans,
payments, and other transactions pursuant to this Agreement. Such statement
shall be deemed correct, accurate, and binding on the Borrowers and as an
account stated (except for reversals and reapplications of payments made as
provided in Section 4.4 and corrections of errors discovered by the Bank),
unless the Parent notifies the Bank in writing to the contrary within forty-five
(45) days after such statement is rendered. In the event a timely written notice
of objections is given by the Parent, only the items to which exception is
expressly made will be considered to be disputed by the Borrowers.
6. TAXES, YIELD PROTECTION AND ILLEGALITY.
6.1 Taxes.
(a) Any and all payments by any Borrower to the
Bank under this Agreement and any other Loan Document shall be made free and
clear of, and without deduction or withholding for any Taxes. In addition, the
Borrowers shall pay all Other Taxes.
(b) The Borrowers agree, jointly and severally,
to indemnity and hold harmless the Bank for the full amount of Taxes or Other
Taxes (including any Taxes or Other Taxes imposed by any jurisdiction on amounts
payable under this Section) paid by the Bank and any liability (including
penalties, interest, additions to tax and expenses) arising therefrom or with
respect thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted. Payment under this indemnification shall be made within 30
days after the date the Bank makes written demand therefor.
(c) If any Borrower shall be required by law to
deduct or withhold any Taxes or Other Taxes from or in respect of any sum
payable hereunder to Bank, then:
(i) the sum payable shall be increased as
necessary so that after making all required deductions and
withholdings (including deductions and withholdings applicable
to additional sums payable under this Section) the Bank
receives an amount equal to the sum it would have received had
no such deductions or withholdings been made,
(ii) the applicable Borrower shall make such
deductions and withholdings;
(iii) the applicable Borrower shall pay the
full amount deducted or withheld to the relevant taxing
authority or other authority in accordance with applicable
law; and
(iv) the applicable Borrower shall also pay
to the Bank at the time interest is paid, all additional
amounts which the Bank specifies as necessary
-26-
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to preserve the after-tax yield the Lander would have received
if such Taxes or Other Taxes had not been imposed.
(d) Within 30 days after the date of any payment
by any Borrower of Taxes or Other Taxes, such Borrower shall furnish the Bank
the original or a certified copy of a receipt evidencing payment thereof, or
other evidence of payment satisfactory to the Bank.
6.2 Illegality.
(a) If the Bank determines that the introduction of
any Requirement of Law, or any change in any Requirement of Law, or in the
interpretation or administration of any Requirement of Law, has made it
unlawful, or that any central bank or other Public Authority has asserted that
it is unlawful, for the Bank or its applicable lending office to make IBOR Rate
Loans, then, on notice thereof by the Bank to the Parent, any obligation of the
Bank to make IBOR Rate Loans shall be suspended until the Bank notifies the
Borrowers that the circumstances giving rise to such determination no longer
exist.
(b) If the Bank determines that it is unlawful to
maintain any IBOR Rate Loan, each Borrower shall, upon Parent's receipt of
notice of such fact and demand from the Bank, prepay in full such IBOR Rate
Loans then outstanding, together with interest accrued thereon and amounts
required under Section 6.4, either on the last day of the Interest Period
thereof, if the Bank may lawfully continue to maintain such IBOR Rate Loans to
such day, or immediately, if the Bank may not lawfully continue to maintain such
IBOR Rate Loan. If a Borrower is required to so prepay any IBOR Rate Loans then
concurrently with such prepayment, such Borrower shall borrow from the Bank, in
the amount of such repayment, a Base Rate Loan.
6.3 Increased Costs and Reduction of Return.
(a) If the Bank determines that, due to either (i)
the introduction of or any change in the interpretation of any law or regulation
or (ii) the compliance by the Lends with any guideline or request from any
central bank or other Public Authority (whether or not having the force of law),
there shall be any increase in the cost to the Bank of agreeing to make or
making, funding or maintaining any IBOR Rate Loans, then the Borrowers shall be
liable for, and shall from time to time, upon demand, pay to the Bank,
additional amounts as are sufficient to compensate the Bank for such increased
costs.
(b) If the Bank shall have determined that (i) the
introduction of any Capital Adequacy Regulation, (ii) any change in any Capital
Adequacy Regulation, (iii) any change in the interpretation or administration of
any Capital Adequacy Regulation by any central bank or other Public Authority
charged with the interpretation or administration thereof, or (iv) compliance by
the Bank or any corporation controlling the Bank with any Capital Adequacy
Regulation, affects or would affect the amount of capital, reserves, or special
deposits required or
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expected to be maintained by the Bank or any corporation controlling the Bank
and (taking into consideration such Bank's or such corporation's policies with
respect to capital adequacy and such Bank's desired return on capital)
determines that the amount of such capital, reserves, or special deposits is
increased as a consequence of its loans, credits or obligations under this
Agreement, then, upon demand of the Bank to the Parent, the Borrowers shall pay
to the Bank, from time to time as specified by the Bank, additional amounts
sufficient to compensate the Bank for such increase. Notwithstanding the
foregoing, all such amounts shall be subject to the provisions of Section 3.3.
Any request for additional amounts pursuant to this Section 6.3 shall be
accompanied by a statement setting forth in reasonable detail the calculations
forming the basis for such request.
6.4 Funding Losses. The Borrowers, jointly and severally,
shall reimburse the Bank and hold the Bank harmless from any loss or expense
which the Bank may sustain or incur as a consequence of:
(a) the failure of any Borrower to make on a timely
basis any payment of principal of any IBOR Rate Loan;
(b) the failure of any Borrower to borrow, continue
or convert a Loan after Parent has given (or is deemed to have given) a Notice
of Borrowing or a Notice of Conversion/Continuation;
(c) the prepayment or other payment (including after
acceleration thereof) of an IBOR Rate Loan on a day that is not the last day of
the relevant Interest Period;
including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its IBOR Rate Loans or from fees payable to
terminate the deposits from which such funds were obtained.
6.5 Inability to Determine Rates. If the Bank determines
that for any reason adequate and reasonable means do not exist for determining
the IBOR Rate for any requested Interest Period with respect to a proposed IBOR
Rate Loan, or that the IBOR Rate for any requested Interest Period with respect
to a proposed IBOR Rate Loan does not adequately and fairly reflect the cost to
the Bank of funding such Loan, the Bank will promptly so notify the Parent.
Thereafter, the obligation of the Bank to make or maintain IBOR Rate Loans
hereunder shall be suspended until the Bank revokes such notice in writing. Upon
receipt of such notice, the Parent may revoke any Notice of Borrowing or Notice
of Conversion/Continuation then submitted by it. If the Parent does not revoke
such Notice, the Bank shall make, convert or continue the Loans, as proposed by
the Parent, in the amount specified in the applicable notice submitted by the
Parent, but such Loans shall be made, converted or continued as Base Rate Loans
instead of IBOR Rate Loans.
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6.6 Survival. The agreements and obligations of the Borrowers
in this Section 6 shall survive the payment of all other Obligations.
7. COLLATERAL.
7.1 Grant of Security Interest.
(a) As security for the Obligations, each Borrower
hereby grants to the Bank a continuing security interest in, lien on, and
assignment of: (i) all of each Borrower's Receivables, Inventory, Equipment,
General Intangibles, Proprietary Rights, documents instruments, chattel paper,
and Proceeds, wherever located and whether now existing or hereafter arising or
acquired; (ii) all moneys, securities, financial assets, investment property and
other property and the Proceeds thereof, now or hereafter held or received by,
or in transit to, the Bank from or for the Borrowers, whether for safekeeping,
pledge, custody, transmission, collection or otherwise, including, without
limitation, all of the Borrowers' deposit accounts, credits and balances with
the Bank and all claims of the Borrowers against the Bank at any time existing;
(iii) all of each Borrower's deposit accounts with any financial institutions
with which Borrowers maintain deposits; and (iv) all books, records and other
Property relating to or referring to any of the foregoing, including, without
limitation all books, records, ledger cards, data processing records, computer
software and other property, relating to the Receivables, General Intangibles,
Inventory, Equipment, Proprietary Rights, Proceeds, and other property referred
to above (all of the foregoing, and all other property in which the Bank may at
any time be granted a Lien, being herein collectively referred to as the
"Collateral"). The Bank shall have all of the rights of a secured party with
respect to the Collateral under the UCC and other applicable laws.
(b) The Bank may, in its sole discretion, (i)
exchange, waive, or release any of the Collateral, (ii) apply Collateral and
direct the order or manner of sale thereof as the Bank may determine, and (iii)
settle, compromise, collect, or otherwise liquidate any Collateral in any
manner, all without affecting the Obligations or the Bank's right to take any
other action with respect to any other Collateral.
7.2 Perfection and Protection of Security Interest. Each
Borrower shall, at its expense, perform all steps requested by the Bank at any
time to perfect, maintain, protect, and enforce the Security Interest including,
without limitation: (a) executing and recording of the Patent and Trademark
Assignments and executing and filing financing or continuation statements, and
amendments thereof, in form and substance satisfactory to the Bank; (b)
delivering to the Bank, for notation of its Security Interest, the original
certificates of title for motor vehicles; (c) delivering to the Bank the
originals of all instruments, documents, and chattel paper, and all other
Collateral of which the Bank determines it should have physical possession in
order to perfect and protect the Security Interest therein, duly endorsed or
assigned to the Bank without restriction; (d) delivering to the Bank warehouse
receipts covering any portion of the Collateral located in warehouses and for
which warehouse receipts are issued; (e) at any time during which an Event of
Default shall have occurred and be continuing, transferring Inventory
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to warehouses designated by the Bank; (f) placing notations on each Borrower's
books of account to disclose the Security Interest; (g) executing and delivering
to the Bank a security agreement relating to the Reversions in form and
substance satisfactory to the Bank; (h) delivering to the Bank all letters of
credit on which the Borrowers are named beneficiary; and (i) taking such other
steps as are deemed necessary by the Bank to maintain the Security Interest. To
the extent permitted by applicable law, the Bank may file, without any
Borrower's signature, one or more financing statements disclosing the Security
Interest. The Borrowers agree that a carbon, photographic, photostatic, or other
reproduction of this Agreement or of a financing statement is sufficient as a
financing statement. If any Collateral is at any time in the possession or
control of any warehouseman, bailee or any agents or processors of any Borrower,
then such Borrower shall notify the Bank thereof and upon request of the Bank,
shall notify such Person of the Security Interest in such Collateral and, upon
the Bank's request, instruct such Person to hold all such Collateral for the
Bank's account subject to the Bank's instructions. If at any time any Collateral
is located on any Premises that are not owned by a Borrower, then upon request
of the Bank, the applicable Borrower shall obtain written waivers, in form and
substance satisfactory to the Bank, of all present and future Liens to which the
owner or lessor or any mortgagee of such Premises may be entitled to assert
against the Collateral. From time to time, each Borrower shall, upon Bank's
request, execute and deliver confirmatory written instruments pledging to the
Bank the Collateral, but such Borrower's failure to do so shall not affect or
Limit the Security Interest or the Bank's other rights in and to the Collateral.
So long as this Agreement is in effect and until all Obligations have been fully
satisfied, the Security Interest shall continue in full force and effect in all
Collateral (whether or not deemed eligible for the purpose of calculating the
Availability or as the basis for any advance, loan, extension of credit, or
other financial accommodation).
7.3 Location of Collateral. The Borrowers, jointly and
severally, represent and warrant to the Bank that: (a) Schedule 7.3 hereto is a
correct and complete list of each Borrower's chief executive office, the
location of its books and records, the locations of the Collateral, and the
locations of all of its other places of business and (b) Schedule 7.3 correctly
identifies any of such facilities and locations that are not owned by a Borrower
and sets forth the names of the owners and lessors or sublessors of such
facilities and locations. Each Borrower covenants and agrees that it will not
maintain any Collateral at any location other than those listed on Schedule 7.3,
and it will not otherwise change or add to any of such locations, unless it
gives the Bank at least 30 days prior written notice thereof and executes any
and all financing statements and other documents that the Bank requests in
connection therewith.
7.4 Title to, Liens on, and Sale and Use of Collateral. The
Borrowers, jointly and severally, represent and warrant to the Bank that: (a)
all Collateral is and will continue to be owned by the applicable Borrower free
and clear of all Liens whatsoever, except for the Security Interest and other
Permitted Liens; (b) the Security Interest will not be subject to any prior Lien
except for the Liens described in clauses (c), (e), (f), (h) and (j) of the
definition of Permitted Liens; (c) each Borrower will use, store, and maintain
the Collateral with all reasonable care and will use the Collateral for lawful
purposes only; and (d) no Borrower will, without the Bank's
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prior written approval, sell lease, or dispose of or permit the sale or
disposition of the Collateral or any portion thereof, except for sales of
Inventory in the ordinary course of business and as permitted by Section 7.9.
The inclusion of Proceeds in the Collateral shall not be deemed the Bank's
consent to any sale or other disposition of the Collateral except as expressly
permitted herein.
7.5 Access and Examination. The Bank may at all reasonable
times have access to, examine, audit, make extracts from and inspect each
Borrower's records, files, and books of account and the Collateral and may
discuss each Borrower's affairs with its officers and management. Each Borrower
will deliver to the Bank any instrument necessary for the Bank to obtain records
from any service bureau maintaining records for the Borrowers. The Bank may, at
any time when an Event of Default exists and at the Borrowers' expense, make
copies of all of the Borrowers' books and records, or require the Borrowers to
deliver such copies to the Bank. The Bank may, without expense to the Bank, use
such of the Borrowers' personnel, supplies, and Premises as may be reasonably
necessary for maintaining or enforcing the Security Interest. Bank shall have
the right, at any time when an Event of Default exists, in Bank's name or in the
name of a nominee of the Bank, to verify the validity, amount or any other
matter relating to the Accounts, by mail, telephone, or otherwise.
7.6 Insurance. The Borrowers shall insure the Collateral
against loss or damage by fire with extended coverage, theft, burglary,
pilferage, loss in transit, and such other hazards as the Bank shall specify, in
amounts, under policies and by insurers acceptable to the Bank. Each Borrower
shall cause the Bank to be named in each such policy as secured party and loss
payee with respect to the Collateral or additional insured, in a manner
acceptable to the Bank. Each policy of insurance shall contain a clause or
endorsement requiring the insurer to give not less than thirty (30) days prior
written notice to the Bank in the event of cancellation of the policy for any
reason whatsoever and a clause or endorsement stating that the interest of the
Bank shall not be impaired or invalidated by any act or neglect of the Borrowers
or the owner of any premises where Collateral is located nor by the occupation
of such premises for purposes more hazardous than are permitted by such policy.
The Borrowers shall also pay all premiums for such insurance when due, and shall
deliver to the Bank certificates of insurance and, if requested, photocopies of
the policies. If the Borrowers fail to pay such fees or to procure such
insurance or the premiums therefor when due, the Bank may (but shall not be
required to) do so and charge the costs thereof to the Borrowers' loan account
as a Revolving Loan. The Borrowers shall promptly notify the Bank of any loss,
damage, or destruction to the Collateral or arising from its use, whether or not
covered by insurance. At any time that an Event of Default exists the Bank shall
have the right to deal directly with the insurers, and to collect all insurance
proceeds directly and apply any amounts received to the Obligations; at all
other times, the Borrowers may use proceeds of insurance to repair, replace, or
restore any loss or damage to the Collateral, to repay the Obligations, or for
any other purpose not prohibited by this Agreement.
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7.7 Accounts.
(a) Each Borrower hereby represents and warrants to the
Bank and agrees with the Bank that: (i) each existing Account represents, and
each future Account will represent, a bona fide sale or lease and delivery of
goods by such Borrower, or rendition of services by such Borrower, in the
ordinary course of such Borrower's business; (ii) each existing Account is, and
each future Account will be, for a liquidated amount payable by the Account
Debtor thereon on the terms set forth in the invoice therefor or in the schedule
thereof delivered to the Bank, without offset, deduction, defense, or
counterclaim; (iii) no payment will be received with respect to any Account, and
no credit, discount, or extension, or agreement therefor will be granted on any
Account, except as reported to the Bank in accordance with this Agreement; (iv)
each copy of an invoice delivered to the Bank by the Borrowers will be a genuine
copy of the original invoice sent to the Account Debtor named therein; and (v)
all goods described in each invoice will have been delivered to the Account
Debtor and all services of the Borrowers described in each invoice will have
been performed.
(b) No Borrower shall accept any note or other
instrument (except a check or other instrument for the immediate payment of
money) with respect to any Account without the Bank's written consent. If the
Bank consents to the acceptance of any such note or other instrument, it shall
be considered as evidence of the Account and not payment thereof, and the
applicable Borrower will promptly deliver such note or instrument to the Bank
appropriately endorsed. Regardless of the form of presentment, demand, notice of
dishonor, protest, and notice of protest with respect thereto, the applicable
Borrower will remain liable thereon until such note or instrument is paid in
full.
(c) If required by the Bank at any time that an Event
of Default exists, each Borrower shall notify the Bank promptly of all disputes
and claims with account debtors and settle or adjust them at no expense to the
Bank, but no discount, credit or allowance shall be granted to any account
debtor without the Bank's consent. If required by the Bank at any time that an
Event of Default exists, each Borrower shall send the Bank copies of all credit
memoranda. The Bank may at all times when an Event of Default exists hereunder
settle or adjust disputes and claims directly with customers or account debtors
for amounts and upon terms which the Bank considers advisable and, in all cases,
the Bank will credit the applicable Borrower's loan account with only the net
amounts received by the Bank in payment of any Accounts.
(d) At any time that an Event of Default exists the Bank
or the Bank's designee may notify obligors that the Accounts have been assigned
to the Bank and of the Security Interest therein, and may collect them directly
and charge the collection costs and expenses to such Borrower's loan account as
a Base Rate Revolving Loan. At the Bank's request, each Borrower shall execute
and deliver to the Bank such documents as the Bank shall require to grant the
Bank access to any post office box in which collections of Accounts are
received.
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7.8 Inventory. Each Borrower represents and warrants to the
Bank that all of the Inventory is and will be held for sale or lease, or to be
furnished in connection with the rendition of services in the ordinary course of
the applicable Borrower's business and is and will be fit for such purposes.
Each Borrower will keep the Inventory in good and marketable condition, at its
own expense. No Borrower will, without prior written notice to the Bank, acquire
or accept any Inventory other than ink supplies on consignment or approval. Each
Borrower agrees that all Inventory will be produced in accordance with the
Federal Fair Labor Standards Act of 1938, as amended, and all rules,
regulations, and orders thereunder.
7.9 Equipment. Each Borrower represents and warrants to the
Bank that all of the Equipment is and will be used or held for use in the
applicable Borrower's business and is and will be fit for such purposes. Each
Borrower shall keep and maintain the Equipment in good operating condition and
repair (ordinary wear and tear excepted) and shall make all necessary
replacements thereof. Each Borrower shall promptly inform the Bank of any
material additions to or deletions from the Equipment. No Borrower shall permit
any Equipment to become a fixture to real property or an accession to other
personal property, unless the Bank has a valid, perfected, and first priority
Security Interest in such real or personal property. No Borrower will, without
the Bank's prior written consent, alter or remove any identifying symbol or
number on the Equipment. No Borrower shall, without the Bank's prior written
consent, sell, lease as a lessor, or otherwise dispose of any of the Equipment
other than obsolete or unusable Equipment disposed of in the ordinary course.
7.10 Documents, Instruments, and Chattel Paper. Each Borrower
represents and warrants to the Bank that: (a) all documents, instruments, and
chattel paper describing, evidencing, or constituting Collateral, and all
signatures and endorsements thereon, are and will be complete, valid, and
genuine; and (b) all goods evidenced by such documents, instruments, and chattel
paper are and will be owned by the applicable Borrower free and clear of all
Liens other than Permitted Liens.
7.11 Power of Attorney. Each Borrower hereby appoints the Bank
and the Bank's designees as such Borrower's attorney, with power: (a) to endorse
a Borrower's name on any checks, notes, acceptances, money orders, or other
forms of payment or security that come into the Bank's possession; (b) to sign a
Borrower's name on any invoice, xxxx of lading, or other document of title
relating to any Collateral, on drafts against customers, on assignments of
Accounts, on notices of assignment, financing statements and other public
records, on verifications of Accounts and on notices to Account Debtors; (c) to
notify the post office authorities, when an Event of Default exists, to change
the address for delivery of the applicable Borrowers' mail to an address
designated by the Bank and to receive and open all mail addressed to such
Borrower; (d) to send requests for verification of Accounts to Account Debtors;
and (e) to do all things necessary to carry out this Agreement. Neither the Bank
nor the attorney will be liable for any acts or omissions or for any error of
judgment or mistake of fact or law except to the extent resulting from the gross
negligence or wilful misconduct of the Bank, its officers,
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directors, employees or agents. This power, being coupled with an interest, is
irrevocable until this Agreement has been terminated and the Obligations have
been fully satisfied.
7.12 Right to Cure. The Bank may, in its sole discretion and
at any time, pay any amount or do any act required of any Borrower hereunder, to
preserve, protect, maintain or enforce the Obligations, the Collateral or the
Security Interest, and which such Borrower fails to pay or do, including,
without limitation, payment of any judgment against a Borrower, any insurance
premium, any warehouse charge, any finishing or processing charge, any
landlord's claim, and any other Lien upon or with respect to the Collateral. All
payments that the Bank makes under this Section 7.12 and all out-of-pocket costs
and expenses that the Bank pays or incurs in collection with any action taken by
it hereunder shall be charged to the applicable Borrower's loan account as a
Base Rate Revolving Loan. Any payment made or other action taken by the Bank
under this Section 7.12 shall be without prejudice to any right to assert an
Event of Default hereunder and to proceed thereafter as herein provided.
7.13 Bank's Rights, Duties, and Liabilities. Each Borrower
assumes all responsibility and liability arising from or relating to the use,
sale, or other disposition of the Collateral. Neither the Bank nor any of its
officers, directors, employees, and agents shall be liable or responsible in any
way for the safekeeping of any of the Collateral, or for any act or failure to
act with respect to the Collateral, or for any loss or damage thereto, or for
any diminution in the value thereof, or for any act of default or any
warehouseman, carrier, forwarding agency or other person whomsoever, except to
the extant resulting from the gross negligence or willful misconduct of the
Bank, its officers, directors, employees or agents, all of which shall be at
such Borrower's sole risk. The Obligations shall not be affected by any failure
of the Bank to take any steps to perfect the Security Interest or to collect or
realize upon the Collateral, nor shall loss of or damage to the Collateral
release any Borrower from any of the Obligations. The Bank may (but shall not be
required to), without notice to or consent from the applicable Borrower, xxx
upon or otherwise collect, extend the time for payment of, modify or amend the
terms of, compromise or settle for cash, credit, or otherwise upon any terms,
grant other indulgences, extensions, renewals, compositions, or releases, and
take or omit to take any other action with respect to the Collateral, any
security therefor, any agreement relating thereto, any insurance applicable
thereto, or any Person liable directly or indirectly in connection with any of
the foregoing, without discharging or otherwise affecting the liability of such
Borrower for the Obligations or under this Agreement or any other agreement now
or hereafter existing between the Bank and such Borrower.
8. BOOKS AND RECORDS, FINANCIAL INFORMATION, NOTICES.
8.1 Books and Records. Each Borrower shall maintain, at all
times, correct and complete books, records and accounts in which complete,
correct and timely entries are made of its transactions in accordance with GAAP
consistent with those applied in the preparation of the Financial Statements.
Each Borrower shall, by means of appropriate entries, reflect in such accounts
and in all Financial Statements proper liabilities and reserves for all taxes
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and proper provision for depreciation and amortization of Property and bad
debts, all in accordance with GAAP. At any time that Bank has limited the
maximum amount of Borrowings and Letters of Credit pursuant to Section 2.1(b),
each Borrower shall maintain such books and records pertaining to the Collateral
in such detail, form, and scope as the Bank shall reasonably require, including
without limitation records of: (a) all payments received and all credits and
extensions granted with respect to the Accounts; (b) the return, rejections
repossession, stoppage in transit, loss, damage, or destruction of any
Inventory; and (c) all other dealings affecting the Collateral.
8.2 Financial and Other Information. Each Borrower shall
promptly furnish to the Bank or its agents all such financial information as the
Bank shall reasonably request, and notify its auditors and accountants that the
Bank is authorized to obtain such information directly from them. Without
limiting the foregoing, each Borrower and its Subsidiaries will furnish to the
Bank, in such detail as the Bank shall request, the following:
(a) As soon as available, but in any event not
later than 90 days after the close of each Fiscal Year, consolidated
audited balance sheets, and statements of income and expanse, and cash
flow statements for the Borrowers and their consolidated Subsidiaries
for such Fiscal Year, and the accompanying notes thereto, setting forth
in each case in comparative form figures for the previous Fiscal Year,
all in reasonable detail, fairly presenting the financial position and
the results of operations of the Borrowers and their consolidated
Subsidiaries as at the date thereof and for the Fiscal Year then ended,
and prepared in accordance with GAAP. Such statements shall be examined
in accordance with generally accepted auditing standards and
accompanied by a report thereon unqualified as to scope by independent
certified public accountants selected by the Parent and reasonably
satisfactory to the Bank.
(b) As soon as available, but in any event not
later than 30 days after the end of each month, consolidated unaudited
balance sheets of the Borrowers and their consolidated Subsidiaries as
at the end of such month, and consolidated unaudited statements of
income and expenses and cash flow statements for the Borrowers and
their consolidated Subsidiaries for such month and for the period from
the beginning of the Fiscal Year to the end of such month, all in
reasonable detail, fairly presenting the financial position and results
of operations of the Borrowers and their consolidated Subsidiaries as
at the date thereof and for such periods, and prepaid in accordance
with GAAP consistent with the audited Financial Statements required
pursuant to Section 8.2(a). Such statements shall be certified to be
correct by the chief financial or accounting officer of the Parent,
subject to normal year-end adjustments.
(c) With each of the audited Financial Statements
delivered pursuant to Section 8.2(a), a certificate of the independent
certified public accountants that examined such statements to the
effect that they have reviewed and are familiar with the Loan Documents
and that, in examining such Financial Statements, they did not become
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aware of any fact or condition which then constituted a Default or
Event of Default, except for those, if any, described in reasonable
detail in such certificate.
(d) As soon as available, but in any event not
later than 45 days after the end of each fiscal quarter, a certificate
of the chief executive or chief financial officer of the Parent (i)
setting forth in reasonable detail the calculations required to
establish that the Borrowers were in compliance with its covenants set
forth in Sections 10.19 through 10.22 during the preceding fiscal
quarter, and (ii) stating that, except as explained in reasonable
detail in such certificate, (A) all of the representations and
warranties of the Borrowers contained in this Agreement and the other
Loan Documents are correct and complete as at the date of such
certificate as if made at such time, and (B) no Default or Event of
Default then exists or existed during the immediately preceding fiscal
quarter and as of the date of such certificate. If such certificate
discloses that a representation or warranty is not correct or complete,
or that a covenant has not been complied with, or that a Default or
Event of Default existed or exists, such certificate shall set forth
what action the Borrowers have taken or propose to take with respect
thereto.
(e) Promptly after their preparation, copies of
any and all proxy statements, financial statements, and reports which
any Borrower makes available to its stockholders.
(f) Promptly after filing with the PBGC, DOL, or
IRS, a copy of each annual report or other filing or notice filed with
respect to each Plan of any Borrower or any ERISA Affiliate.
(g) Promptly, and in any event within 30 days of
the receipt thereof, copies of any management letter received from the
independent certified accountants retained by each Borrower.
(h) At any time that the Bank has limited the
maximum amount of Borrowings pursuant to Section 2.1(b), each Borrower
will provide the Bank with "borrowing base" certificates and other
reports and information concerning such Borrower's Accounts and
Inventory, in such form and detail, and at such frequency, as the Bank
shall require, including without limitation schedules of credit memos
and reports, schedules of collections of Account, schedules of
remittance advices, agings of Accounts and accounts payable and reports
of Inventory balances. If any Borrower's records or reports of the
Collateral are prepared by an accounting service or other agent, such
Borrower hereby authorizes such service or agent to deliver such
records, reports, and related documents to the Bank.
(i) Such additional information as the Bank may
from time to time reasonably request regarding the financial and
business affairs of any Borrower or any
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Subsidiary, including, without limitation, projections of future
operations on both a consolidated and consolidating basis.
8.3 Notices to Bank. Each Borrower shall notify the Bank in
writing of the following matters at the following times:
(a) Immediately after becoming aware of the existence
of any Default or Event of Default.
(b) Immediately after becoming aware that the holder
of any capital stock of any Borrower or of any Debt has given notice or
taken any action with respect to a claimed default.
(c) Immediately after becoming aware of any material
adverse change in any Borrower's Property, business, operations, or
condition (financial or otherwise).
(d) Immediately after becoming aware of any pending
or threatened action, suit, proceeding, or counterclaim by any Person,
or any pending or threatened investigation by a Public Authority, which
may materially and adversely affect the Collateral, the repayment of
the Obligations, the Banks rights under the Loan Documents, or any
Borrower's Property, business, operations, or condition (financial or
otherwise).
(e) Immediately after becoming aware of any pending
or threatened strike, work stoppage, material unfair labor practice
claim, or other material labor dispute affecting any Borrower or any of
its Subsidiaries.
(f) Immediately after becoming aware of any violation
of any law, statute, regulation, or ordinance of a Public Authority
applicable to any Borrower, any Subsidiary, or their respective
Properties which may materially and adversely affect the Collateral,
the repayment of the Obligations, the Bank's rights under the Loan
Documents, or such Borrower's Property, business, operations, or
condition (financial or otherwise).
(g) Immediately after becoming aware of any violation
by any Borrower of Environmental Laws or immediately upon receipt of
and any notice that a Public Authority has asserted that such Borrower
is not in compliance with Environmental Laws or that its compliance is
being investigated.
(h) Thirty (30) days prior to any Borrower changing
its name or the address of its chief executive office.
(i) Immediately after becoming aware of any ERISA
Event, accompanied by any materials required to be filed with the PBGC
with respect thereto;
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immediately after any Borrower's receipt of any notice concerning the
imposition of any withdrawal liability under Section 4042 of ERISA with
respect to a Plan; immediately upon the establishment of any Pension
Plan not existing at the Closing Date or the commencement of
contributions by any Borrower to any Pension Plan to which such
Borrower was not contributing at the Closing Date; and immediately upon
becoming aware of any other event or condition regarding a Plan or any
Borrower's or an ERISA Affiliate's compliance with ERISA, which may
materially and adversely affect such Borrower's Property, business,
operation, or condition (financial or otherwise).
Each notice given under this Section 8.3 shall describe the subject matter
thereof in reasonable detail and shall set forth the action that the applicable
Borrower has taken or proposes to take with respect thereto.
9. GENERAL WARRANTIES AND REPRESENTATIONS.
The Borrowers, jointly and severally, continuously warrant and
represent to the Bank, at all times during the term of this Agreement and until
all Obligations have been satisfied, that, except as hereafter disclosed to and
accepted by the Bank in writing:
9.1 Authorization, Validity, and Enforceability of this
Agreement and the Loan Documents. Each Borrower has the corporate power and
authority to execute, deliver and perform this Agreement and the other Loan
Documents, to incur the Obligations, and to grant the Security Interest. Each
Borrower has taken all necessary corporate action (including, without
limitation, obtaining approval of its stockholders) to authorize its execution,
delivery, and performance of this Agreement and the other Loan Documents. No
consent, approval or authorization of, or declaration or filing with, any Public
Authority, and no consent of any other Person, is required in connection with
any Borrower's execution, delivery, and performance of this Agreement and the
other Loan Documents, except for those already duly obtained. This Agreement and
the other Loan Documents have been duly executed and delivered by each Borrower
and constitutes the legal, valid and binding obligation of each Borrower,
enforceable against it in accordance with its terms without defense, setoff, or
counterclaim. No Borrower's execution, delivery, and performance of this
Agreement and the other Loan Documents does or will conflict with, or constitute
a violation or breach of, or constitute a default under, or result in the
creation or imposition of any Lien upon the Property of such Borrower or any of
its Subsidiaries (except as contemplated by this Agreement and the other Loan
Documents) by reason of the terms of (a) any mortgage, lease, agreement, or
instrument to which such Borrower or any of its Subsidiaries is a party or which
is binding upon it, (b) any judgment, law, statute, rule or governmental
regulation applicable to such Borrower or any of its Subsidiaries, or (c) the
Certificate or Articles of Incorporation or By-Laws of such Borrower or any of
its Subsidiaries.
9.2 Validity and Priority of Security Interest. The
provisions of this Agreement, and the other Loan Documents create legal and
valid Liens on all the Collateral in the Bank's favor, and when all proper
filings, recordings, and other actions necessary to perfect
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such Liens have been made or taken, such Liens will constitute perfected and
continuing Liens on all the Collateral, having priority over all other Liens on
the Collateral except for the Permitted Liens identified in Section 7.4 and
enforceable against each Borrower and all third parties.
9.3 Organization and Qualification. Each Borrower: (a) is
duly incorporated and organized and validly existing in good standing under the
laws of the State of its incorporation; (b) is qualified to do business as a
foreign corporation and is in good standing in all jurisdictions in which the
failure to so qualify would not have a material adverse effect on its business
or financial condition or on its ability to enforce collection of Accounts; and
(c) has all requisite power and authority to conduct its business and to own its
Property.
9.4 Corporate Name; Prior Transactions. No Borrower has,
during the past five years, been known by or used any other corporate or
fictitious name, or been a party to any merger or consolidation, or acquired all
or substantially all of the assets of any Person, or acquired any of its
Property out of the ordinary course of business, except as set forth on Schedule
9.4.
9.5 Subsidiaries and Affiliates. Schedule 9.5 is a correct
and complete list of the name and relationship to each Borrower of each and all
of the applicable Borrower's Subsidiaries and other Affiliates (other than
Affiliates of Parent of the type described in clause (b) of the definition
"Affiliate"). Each Subsidiary is (a) duly incorporated and organized and validly
existing in good standing under the laws of its state of incorporation set forth
on Schedule 9.5, and (b) qualified to do business as a foreign corporation and
in good standing in all jurisdictions in which the failure to do so would have a
material adverse effect on its business or financial condition or on its ability
to enforce collection of Accounts.
9.6 Financial Statements. The Borrowers have delivered to
the Bank the audited balance sheet and related statements of income, retained
earnings, changes in financial position, and changes in stockholders equity for
the Borrowers as of May 31, 1998 and for the Fiscal Year then ended, accompanied
by the report thereon of the Borrowers' independent certified public
accountants. The Borrowers have also delivered to the Bank the unaudited balance
sheet and related statements of income and changes in financial position for
Borrowers, as at November 30, 1998. All such financial statements have been
prepared in accordance with GAAP and present accurately and fairly the
Borrowers' financial position as at the dates thereof and its results of
operations for the periods then ended.
9.7 Capitalization. (a) As of April 5, 1999, Parent's
authorized capital stock consists of (i) 15,000,000 shares of common stock par
value $.01 per share, of which 4,667,132 shares are validly issued and
outstanding and (ii) 1,000,000 shares of preferred stock par value of $.01 per
share, of which no shares are issued and outstanding.
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45
(b) Outlook Label's authorized capital stock consists
of 500,000 shares of common stock no par value, of which 2,828 shares
are validly issued and outstanding and are owned beneficially and of
record by Parent;
(c) Outlook Packaging's authorized capital stock
consists of 9,000 shares of common stock par value $1.00 per share, of
which 10 shares are validly issued and outstanding and are owned
beneficially and of record by Parent; and
(d) All such shares of capital stock referred to in
this Section 9.7 are fully paid and non-assessable, except insofar as
personal liability may be imposed upon a shareholder pursuant to
Section 180.0622(2)(b) of the Wisconsin Business Corporation Law, as
judicially interpreted, for debts owing to employees for services
performed.
9.8 Solvency. Parent, on a consolidated basis, is Solvent
prior to and after giving effect to the making of each Revolving Loan and the
issuance of each Letter of Credit.
9.9 Debt. No Borrower has any Debt, except (a) the
Obligations, (b) Debt set forth in the most recent Financial Statements
delivered to the Bank, or the notes thereto, (c) trade payables and other
contractual obligations arising in the ordinary course of business since the
date of such Financial Statements, and (d) Debt incurred since the date of such
Financial Statements to finance Capital Expenditures permitted hereby.
9.10 Distributions. Since May 31, 1998, no Distribution has
been declared, paid, or made upon or in respect of any capital stock or other
securities of Parent.
9.11 Title to Property. Except for Property which a Borrower
leases, each Borrower has good and marketable title in fee simple to, or a valid
leasehold interest in, its Premises and good, indefeasible, and merchantable
title to all of its other Property including, without limitation, the assets
reflected on the most recent Financial Statements delivered to the Bank, except
as disposed of since the date thereof in the ordinary course of business.
9.12 Adequate Assets. Each Borrower possesses adequate
assets for the conduct of its business.
9.13 Real Property; Leases. Schedule 9.13 is a correct and
complete list of all real property owned by each Borrower, all leases and
subleases of real or personal property by such Borrower as lessee or sublessee,
and all leases and subleases of real or personal property by such Borrower as
lessor or sublessor. Each of such leases and subleases is valid and enforceable
in accordance with its terms and is in full force and effect and no default by
any party to any such lease or sublease exists.
9.14 Proprietary Rights. Schedule 9.14 is a correct and
complete list of each Borrower's Proprietary Rights. None of the Proprietary
Rights are subject to any Licensing
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agreement or similar arrangement except as set forth on Schedule 9.14. None of
the Proprietary Rights infringe on or conflict with any other Person's Property
and no other Person's Property infringes on or conflicts with the Proprietary
Rights. The Proprietary Rights described on Schedule 9.14 constitute all of the
Property of such type necessary to the current and anticipated future conduct of
each Borrower's business.
9.15 Trade Names and Terms of Sale. All trade names or
styles under which each Borrower will sell Inventory or create Accounts, or to
which instruments in payment of Accounts may be made payable, are listed on
Schedule 9.15.
9.16 Litigation. Except as set forth on Schedule 9.16,
there is no pending or, to the best of any Borrower's knowledge, threatened,
action, suit, proceeding, or counterclaim by any Person, or investigation by any
Public Authority, or any basis for any of the foregoing, which may materially
and adversely affect the Collateral, the repayment of the Obligations, the
Bank's rights under the Loan Documents, or any Borrower's Property, business,
operations, or condition (financial or otherwise).
9.17 Restrictive Agreements. No Borrower is a party to any
contract or agreement, or subject to any charter or other corporate restriction,
which affects its ability to execute, deliver, and perform the Loan Documents,
and repay the Obligations or which materially and adversely affects such
Borrower's Property, business, operations, or condition (financial or
otherwise).
9.18 Labor Disputes. Except as set forth on Schedule 9.18:
(a) there is no collective bargaining agreement or other labor contract covering
employees of any Borrower or any of its Subsidiaries; (b) no such collective
bargaining agreement or other labor contract is scheduled to expire during the
term of this Agreement; (c) no union or other labor organization is seeking to
organize, or to be recognized as, a collective bargaining unit of employees of
any Borrower or any of its Subsidiaries or for any similar purpose; and (d)
there is no pending or, to the best of any Borrower's knowledge, threatened
strike, work stoppage, material unfair labor practice claims, or other material
labor dispute against or affecting any Borrower, or any of its Subsidiaries or
their respective employees.
9.19 Environmental Laws. Except as otherwise disclosed on
Schedule 9.19:
(a) Each Borrower and its Subsidiaries have complied
in all material respects with all Environmental Laws applicable to its
Premises and business, and no Borrower or any Subsidiary nor any of its
present Premises or operations, nor its past property or operations, is
subject to any enforcement order from or liability agreement with any
Public Authority or private Person respecting (i) compliance with any
Environmental Law or (ii) any potential liabilities and costs or
remedial action arising from the Release or threatened Release of a
Contaminant.
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(b) Each Borrower and its Subsidiaries have obtained
all permits necessary for their current operations under Environmental
Laws, and all such permits are in good standing and each Borrower and
its Subsidiaries are in compliance with all terms and conditions of
such permits.
(c) No Borrower or any of its Subsidiaries, nor, to
the best of any Borrower's knowledge, any of its predecessors in
interest, has stored, treated or disposed of any hazardous waste on any
Premises, as defined pursuant to 40 CFR Part 261 or any equivalent
Environmental Law.
(d) No Borrower or any of its Subsidiaries has
received any summons, complaint, order or similar written notice that
it is not currently in compliance with, or that any Public Authority is
investigating its compliance with, any Environmental Laws or that it is
or may be liable to any other Person as a result of a Release or
threatened Release of a Contaminant.
(e) None of the present or past operations of any
Borrower or its Subsidiaries is the subject of any investigation by any
Public Authority evaluating whether any remedial action is needed to
respond to a Release or threatened Release of a Contaminant.
(f) There is not now, nor to the best of any
Borrower's knowledge has there ever been on or in such Borrower's
Premises:
(i) any underground storage tanks or surface
impoundments,
(ii) any asbestos containing material, or
(iii) any polychlorinated biphenyls (PCB's)
used in hydraulic oils, electrical
transformers or other equipment.
(g) No Borrower or any of its Subsidiaries has filed
any notice under any requirement of Environmental Law reporting a spill
or accidental and unpermitted release or discharge of a Contaminant
into the environment.
(h) No Borrower or any of its Subsidiaries has
entered into any negotiations or settlement agreements with any Person
(including, without limitation, the prior owner of its property)
imposing material obligations or liabilities on such Borrower or any of
its Subsidiaries with respect to any remedial action in response to the
Release of a Contaminant or environmentally related claim.
(i) None of the products manufactured, distributed
or sold by any Borrower or any of its Subsidiaries contain asbestos material.
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(j) No Environmental Lien has attached to any
Premises of any Borrower or any of its Subsidiaries.
9.20 No Violation of Law. No Borrower is in violation of
any law, statute, regulation, ordinance, judgment, order, or decree applicable
to it which violation would in any respect materially and adversely affect the
Collateral, the repayment of the Obligations, the Bank's rights under the Loan
Documents, or such Borrower's Property, business, operations, or condition
(financial or otherwise).
9.21 No Default. No Borrower is in default with respect to
any note, indenture, loan agreement, mortgage, lease, deed, or other agreement
to which such Borrower is a party or bound, which default could reasonably be
expected to materially and adversely affect the Collateral, the repayment of the
Obligations, the Bank's rights under the Loan Documents, or such Borrower's
Property, business, operations, or condition (financial or otherwise).
9.22 ERISA Compliance. Except as specifically disclosed in
Schedule 9.22:
(a) Each Plan is in compliance in all material
respects with the applicable provisions of ERISA, the Code and other federal or
state law. Each Plan which is intended to qualify under Section 401(a) of the
Code has received a favorable determination letter from the IRS and to the best
knowledge of each Borrower, nothing has occurred which would cause the loss of
such qualification. Each Borrower and each ERISA Affiliate has made all required
contributions to any Plan subject to Section 412 of the Code, and no application
for a funding waiver or an extension of any amortization period pursuant to
Section 412 of the Code has been made with respect to any Plan.
(b) There are no pending or, to the best knowledge
of any Borrower, threatened claims, actions or lawsuits, or action by any Public
Authority, with respect to any Plan which has resulted or could reasonably be
expected to result in a material adverse effect on such Borrower's business or
operations. There has been no prohibited transaction or violation of the
fiduciary responsibility rules with respect to any Plan which has resulted or
could reasonably be expected to result in a material adverse effect on any
Borrower's business or operations.
(c) (i) No ERISA Event has occurred or is reasonably
expected to occur; (ii) no Pension Plan has any unfunded pension liability;
(iii) no Borrower or any ERISA Affiliate has incurred, or reasonably expects to
incur, any liability under Title IV of ERISA with respect to any Pension Plan
(other than premiums due and not delinquent under Section 4007 of ERISA); (iv)
no Borrower or any ERISA Affiliate has incurred, or reasonably expects to incur,
any liability (and no event has occurred which, with the giving of notice under
Section 4219 of ERISA, would result in such liability) under Section 4201 or
4243 of ERISA with respect to a Multiemployer Plan; and (v) neither any Borrower
nor any ERISA Affiliate has engaged in a transaction that could subject any
Person to Section 4069 or 4212(c) of ERISA.
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9.23 Taxes. Each Borrower and its Subsidiaries have filed
all tax returns and other reports required to be filed and have paid all Taxes,
assessments, fees and other governmental charges levied or imposed upon them or
their properties, income or assets that are otherwise due and payable.
9.24 Use of Proceeds. None of the transactions contemplated
in this Agreement (including, without limitation, the use of proceeds from the
Loans) will violate or result in the violation of Section 7 of the Securities
Exchange Act of 1934, as amended, or any regulations issued pursuant thereto,
including without limitation, Regulations G, T, U and X of the Board of
Governors of the Federal Reserve System ("Federal Reserve Board"), 12 CFR,
Chapter II. No Borrower owns or intends to carry or purchase any "margin stock"
within the meaning of said Regulation U or G. None of the proceeds of the Loans
will be used, directly or indirectly, to purchase or carry (or refinance any
borrowing, the proceeds of which were used to purchase or carry) any "security"
within the meaning of the Securities Exchange Act of 1934, as amended.
9.25 No Material Adverse Change. Except as disclosed on
Schedule 9.25, no material adverse change has occurred in any Borrower's
Property, business, operations, or condition (financial or otherwise) since May
31, 1998.
9.26 Disclosure. Neither this Agreement nor any document or
statement furnished to the Bank by or on behalf of any Borrower hereunder
contains any untrue statement of a material fact or omits to state any material
fact necessary in order to make the statements contained herein or therein not
misleading.
9.27 Year 2000 Compliance. On the basis of a comprehensive
review and assessment of each Borrower's systems and equipment, and inquiry made
of each Borrower's material suppliers, vendors and customers, each Borrower
reasonably believes that the "Year 2000 Problem" (that is, the inability of
computers, as well as embedded microchips in non-computing devices, to perform
properly date-sensitive functions with respect to certain dates prior to and
after December 31, 1999), including costs of remediation, will not have a
material adverse affect on any Borrower's business, financial condition,
properties or prospects, or its ability to perform its obligations under the
Loan Documents. Each Borrower has developed feasible contingency plans
adequately to ensure uninterrupted and unimpaired business operation in the
event of failure of its own or a third party's systems or equipment due to the
Year 2000 Problem, including those of vendors, customers, and suppliers, as well
as a general failure of or interruption in its communications and delivery
infrastructure.
10. AFFIRMATIVE AND NEGATIVE COVENANTS. The Borrowers, jointly
and severally, covenant that, so long as any of the Obligations remain
outstanding or this Agreement is in effect:
10.1 Taxes and Other Obligations. Each Borrower and each of
its Subsidiaries shall: (a) file when due, subject to any extensions granted by
the applicable taxing authority, all
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tax returns and other reports which it is required to file, pay, or provide for
the payment, when due, of all Taxes, fees, assessments and other governmental
charges against it or upon its Property, income, and franchises, make all
required withholding and other tax deposits, and establish adequate reserves for
the payment of all such items, and shall provide to the Bank, upon request,
satisfactory evidence of its timely compliance with the foregoing; and (b) pay
when due all Debt owed by it and perform and discharge in a timely manner all
other obligations undertaken by it; provided however that any such Borrower and
its Subsidiaries need not pay any tax, fee, assessment, governmental charge, or
Debt, or perform or discharge any other obligation, that it is contesting in
good faith by appropriate proceedings diligently pursued.
10.2 Corporate Existence and Good Standing. Each Borrower
and each of its Subsidiaries shall maintain its corporate existence and its
qualification and good standing in all states necessary to conduct its business
and own its Property, and shall obtain and maintain all licenses, permits,
franchises and governmental authorizations necessary to conduct its business and
own its Property.
10.3 Compliance with Law and Agreements. Each Borrower and
each of its Subsidiaries shall comply with the terms and provisions of each
judgment, law, statute, rule, and governmental regulation applicable to it and
each contract, mortgage, lien, lease, indenture, order, instrument, agreement,
or document to which it is a party or by which it is bound.
10.4 Maintenance of Property and Insurance. Each Borrower
and each of its Subsidiaries shall: (a) maintain all of its Property necessary
and useful in its business in good operating condition and repair, ordinary wear
and tear excepted; and (b) in addition to the insurance required by Section 7.6,
maintain with financially sound and reputable insurers such other insurance with
respect to its Property and business against casualties and contingencies of
such types (including, without limitation, business interruption, environmental
liability, public liability, product liability, and larceny, embezzlement or
other criminal misappropriation) and in such amounts as is customary for Persons
of established reputation engaged in the same or a similar business and
similarly situated, naming the Bank, at its request, as additional insured under
each such policy.
10.5 Environmental Laws. Each Borrower shall conduct its
business in full compliance with all Environmental Laws applicable to it,
including, without limitation, those relating to such Borrower's generation,
handling, use, storage, and disposal of hazardous and toxic wastes and
substances. Each Borrower shall take prompt and appropriate action to respond to
any noncompliance with Environmental Laws and shall regularly report to the Bank
on such response. Without limiting the generality of the foregoing, whenever any
Borrower gives notice to the Bank pursuant to Section 8.3(g) such Borrower shall
at the Bank's request and the applicable Borrowers' expense: (a) cause an
independent environmental engineer acceptable to the Bank to conduct such tests
of the site where such Borrower's noncompliance or alleged noncompliance with
Environmental Laws has occurred and prepare and deliver to the Bank a report
setting forth the results of such tests, a proposed plan for responding to any
environmental
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problems described therein, and an estimate of the costs thereof; and (b)
provide to the Bank a supplemental report of such engineer whenever the scope of
the environmental problems, or the Borrowers' response thereto or the estimated
costs thereof, shall change.
10.6 ERISA. Each Borrower shall cause each Plan, which has
been designated to be so, to be qualified within the meaning of Section 401(a)
of the Code and to be administered in all respects in compliance with Section
401(a) of the Code. Each Borrower shall cause each Plan to be administered in
all respect in compliance with ERISA.
10.7 Mergers, Consolidations or Sales. No Borrower or any of
its Subsidiaries shall enter into any transaction of merger, reorganization, or
consolidation, or transfer, sell, assign, lease, or otherwise dispose of all or
any part of its Property, or wind up, liquidate or dissolve, or agree to do any
of the foregoing, except sales of Inventory in the ordinary course of its
business and sales of Equipment permitted by Section 7.9 and transactions
permitted by Section 10.17.
10.8 Distributions; Capital Changes. No Borrower or any of
its Subsidiaries shall: (a) directly or indirectly declare or make, or incur any
liability to make, any Distribution, except Distributions to a Borrower by a
Subsidiary wholly owned by such Borrower subject to the limitations set forth in
Section 10.13; or (b) make any change in its capital structure which could
adversely affect the repayment of the Obligations.
10.9 Transactions Affecting Collateral or Obligations. No
Borrower or any of its Subsidiaries shall enter into any transaction which
materially and adversely affects the Collateral taken as a whole or such
Borrower's ability to repay the Obligations.
10.10 Guaranties. No Borrower or any of its Subsidiaries shall
make, issue, or become liable on any Guaranty, except (i) Guaranties in favor of
the Bank and endorsements of instruments for deposit and (ii) Guaranties of the
obligations of a Borrower under the SWIB Loan Documents.
10.11 Debt. No Borrower or any of its Subsidiaries shall
incur or maintain any Debt, other than: (a) the Obligations; (b) trade payables
and contractual obligations to suppliers and customers incurred in the ordinary
course of business; (c) other Debt existing on the Closing Date and reflected in
the Financial Statements or any refinancing thereof (provided that in the case
of industrial revenue bonds and SWIB Debt, once such Debt has been repaid it may
not be refinanced or reborrowed and provided further that any refinancing of the
SWIB Debt shall comply with the provisions of Section 10.23 applicable to
amendments of the SWIB Loan Documents); and (d) Debt consisting of Capital
Leases or purchase money Debt in each case incurred solely to acquire an item of
Equipment, incurred concurrently with the acquisition thereof and secured solely
by a Lien on the Equipment so acquired; provided that the amount of each such
Debt does not exceed the price of the Equipment so purchased and the aggregate
amount of all such Debt shall not exceed $2,000,000.
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10.12 Prepayment. No Borrower or any of its Subsidiaries
shall voluntarily prepay any Debt, except the Obligations; provided that
Borrowers may refinance the SWIB Debt on terms consistent with the amendment
thereof permitted under Section 10.23.
10.13 Transactions with Affiliates. Except as set forth below
and as disclosed on Schedule 9.5, no Borrower or any of its Subsidiaries shall:
sell, transfer, distribute, or pay any money or Property to any Affiliate, or
lend or advance money or Property to any Affiliate, or invest in (by capital
contribution or otherwise) or purchase or repurchase any stock or indebtedness
or any Property of any Affiliate, or become liable on any Guaranty of the
indebtedness, dividends, or other obligations of any Affiliate, except so long
as no Event of Default has occurred and is continuing or would be created
thereby (a) each Borrower and its Subsidiaries may engage in transactions with
Affiliates in the ordinary course of business in amounts and upon terms fully
disclosed to the Bank and no less favorable to such Borrower or such Subsidiary
than would obtain in a comparable arm's length transaction with a third party
who is not an Affiliate, (b) Borrowers may pay Distributions to the Parent and
(c) Parent may make intercompany loans to any other Borrower and each Borrower
(other than Parent) may make intercompany loans to any other Borrower.
10.14 Business Conducted. No Borrower or any of its
Subsidiaries shall engage, directly or indirectly, in any line of business other
than the businesses in which such Borrower and its Subsidiaries are engaged on
the Closing Date.
10.15 Liens. No Borrower or any of its Subsidiaries shall
create, incur, assume, or permit to exist any Lien on any Property now owned or
hereafter acquired by any of them, except Permitted Liens.
10.16 Sale and Leaseback Transactions. No Borrower or any of
its Subsidiaries shall, directly or indirectly, enter into any arrangement with
any Person providing for such Borrower or a Subsidiary to lease or rent Property
that such Borrower or a Subsidiary has or will sell or otherwise transfer to
such Person.
10.17 New Subsidiaries. No Borrower shall, directly or
indirectly, acquire or create any Subsidiary other than in a transaction or
series of transactions permitted by this Section 10.17. Any Borrower may from
time to time acquire or create any Subsidiary provided that the following
requirements of this Section 10.17 are satisfied:
(a) the Parent shall have notified the Bank in writing
not less than ten (10) Business Days prior to the consummation of such
acquisition or creation;
(b) in the case of an acquisition, the board of
directors or other appropriate governing body of the Person to be acquired (the
"Target") shall have approved in writing such acquisition;
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(c) the Target shall be engaged in a line of business
substantially the same as a line of business engaged in by a Borrower;
(d) in the case of an acquisition, if the total
consideration paid or payable in connection with all such acquisitions made in
any Fiscal Year equals or exceeds $1,000,000 the Parent shall have received the
Bank's prior written consent thereto;
(e) immediately before and after giving effect to
such acquisition or creation, no Default or Event or Default shall exist on
either an actual or a pro forma basis; and
(f) such Subsidiary shall promptly and in any event
within ten (10) Business Days following its acquisition or creation execute and
deliver to the Bank such guarantees, joinder agreements, security agreements and
other documents and agreements as the Bank shall require to cause such
Subsidiary to guaranty the Obligations and grant to the Bank first-priority
liens and security interests in its assets as collateral security for the
Obligations.
10.18 Restricted Investments. No Borrower or any of its
Subsidiaries shall make any Restricted Investment.
10.19 Net Worth. The Borrowers will not permit the Borrowers'
consolidated net worth, determined as of the last day of each fiscal quarter, to
be less that (a) $34,000,000 plus (b) 50% of the amount of the Borrowers'
Earnings from Operations for the period from December 1, 1998 to such date of
determination calculated as if such period were a single accounting period.
10.20 Fixed Charge Coverage Ratio. The Borrowers will
maintain a ratio of (a) EBITDA to (b) Fixed Charges of not less than 1.0 to 1.0,
determined as of the last day of each fiscal quarter for the period of four
consecutive fiscal quarters (in each case taken as one accounting period) ending
on such last day.
10.21 Capital Expenditures. The Borrowers will not, and will
not permit their Subsidiaries to, make or incur any Capital Expenditure, if
after giving effect thereto, the aggregate amount of all Capital Expenditures
made or incurred by the Borrowers on a consolidated basis, would exceed
$4,000,000 in any Fiscal Year.
10.22 Liabilities to Net Worth Ratio. The Borrowers will not
permit the ratio of (a) their consolidated total liabilities to (b) consolidated
net worth, determined on a consolidated basis as of the last day of each fiscal
quarter, to exceed 2.0 to 1.0.
10.23 SWIB Debt: IRB Debt. No Borrower shall amend or modify
any SWIB Loan Document, any industrial revenue bond agreement or any GECC Lease
if the effect of such amendment or modification is to (a) increase the rate of
interest, fees or rentals payable with respect thereto; (b) change the dates on
which any payments are due thereunder other than to
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extend such dates; (c) make more restrictive the covenants or defaults contained
therein; (d) accelerate the date for payment or redemption of any such Debt or
lease payments; or (e) grant any Lien to secure the payment thereof other than
Liens in effect on the date hereof or contemplated by the SWIB Loan Documents as
in effect on the date hereof.
10.24 Further Assurances. The Borrowers shall execute and
deliver, or cause to be executed and delivered, to the Bank such documents and
agreements, and shall take or cause to be taken such actions, as the Bank may,
from time to time, request to carry out the terms and conditions of this
Agreement and the other Loan Documents.
11. CLOSING, CONDITIONS TO CLOSING. The Bank will not be obligated to
make the initial Loans or to issue any Letter of Credit on the Closing Date,
unless the following conditions precedent have been satisfied in a manner
satisfactory to Bank:
11.1 Conditions Precedent to Making of Loans or issuance
of Letters of Credit on the Closing Date.
(a) Representations and Warranties: Covenants. The
Borrowers' representations and warranties contained in this Agreement
and the other Loan Documents shall be correct and complete; the
Borrowers shall have performed and complied with all covenants,
agreements, and conditions contained herein and in the other Loan
Documents which are required to have been performed or complied with.
(b) Delivery of Documents. The Borrowers shall have
delivered, or caused to be delivered, to the Bank such documents,
instruments and agreements as the Bank shall request in connection
herewith, duly executed by all parties thereto other than the Bank, and
in form and substance satisfactory to the Bank and its counsel.
(c) Termination or Assignment of Liens. The Bank
shall have received duly executed UCC-3 Termination or Assignments
Statements and other instruments, in form and substance satisfactory to
the Bank, as shall be necessary to terminate or assign and satisfy all
Liens on the Property of the Borrowers and their Subsidiaries except
Permitted Liens.
(d) Required Approvals. The Bank shall have received
certified copies of all consents or approvals of any Public Authority
or other Person which the Bank determines is required in connection
with the transactions contemplated by this Agreement.
(e) No Material Adverse Change. There shall have
occurred no material adverse change in the Borrowers' business,
operations, profits, prospects or financial condition or in the
Collateral and no changes in key management, loss of customers, decline
in sales or profits, disposition or purchase of material assets, and no
occurrence of
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material casualties to assets since May 31, 1998, and the Bank shall
have received a certificate of Parent's chief executive officer to such
effect.
(f) SWIB Consent and Intercreditor Agreement. SWIB
shall have executed and delivered to the Bank an acknowledgment and
consent to this Agreement and the Loans to be made hereunder as well as
an amendment to the Intercreditor Agreement dated as of November 5,
1996, all in form and substance satisfactory to the Bank.
(g) No Material Suits. No action, suit,
investigation, litigation or proceeding shall be pending or threatened
in any court or before any arbitrator or Public Authority that (i)
could have a material adverse effect on the business, condition
(financial or otherwise), operations, performance or properties of the
Borrowers or which could impair the Borrowers' ability to repay the
Obligations or (ii) in the Bank's judgment could materially affect the
transaction contemplated hereby.
(h) Opinions. The Bank shall have received
satisfactory opinions of counsel to the Borrowers with respect to the
transactions contemplated hereby.
(i) Insurance. The Bank shall have received copies of
the Borrowers' insurance policies and loss payee endorsements.
(j) Consents. Third party consents and approvals
necessary in connection with the transactions contemplated hereby shall
have been obtained.
(k) Proceedings. All proceedings to be taken in
connection with the transactions contemplated by this Agreement, and
all documents, contemplated in connection herewith, shall be
satisfactory in form and substance to the Bank and its counsel.
(l) SWIB Loan Documents and GECC Lease. The Bank
shall have received a copy of the SWIB Loan Documents and the GECC
Lease, certified by the Parent as true, correct and complete.
(m) Other. The Bank shall have received such
instruments, documents or agreements as it deems necessary or appropriate in
order to effect and confirm the transactions contemplated hereby.
11.2 Conditions Precedent to Each Loan. The obligation of
the Bank to make each Loan or to provide for the issuance or extension of any
Letter of Credit shall be subject to the conditions precedent that on the date
of any such extension of credit the following statements shall be true, and the
acceptance by any Borrower of any extension of credit shall be deemed to be a
statement to the effect set forth in clauses (a) and (b), with the same effect
as the delivery to
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the Bank of a certificate signed by the chief executive officer and chief
financial officer of Parent, dated the date of such extension of credit, stating
that:
(a) The representations and warranties contained in
this Agreement and the other Loan Documents are correct in all material
respects on and as of the date of such extension of credit as though
made on and as of such date, except to the extent that (i) the Bank has
been notified by the Parent that any representation or warranty is not
correct and the Bank has explicitly waived in writing compliance with
such representation or warranty or (ii) any inaccuracy in the
representations and warranties, and the schedules referenced therein,
results solely from an action or omission expressly permitted by this
Agreement.
(b) No Default or Event of Default has occurred and
is continuing, or would result from such extension of credit.
12. DEFAULT.
12.1 Events of Default. It shall constitute an event of
default ("Event of Default") if any one or more of the following shall occur for
any reason:
(a) failure to make payment of principal, interest,
fees or premium on any of the Obligations when due;
(b) any representation or warranty made or deemed
made by any Borrower in this Agreement, any of the other Loan
Documents, any Financial Statement, or any certificate furnished by any
Borrower or any Subsidiary at any time to the Bank shall prove to be
untrue in any material respect as of the date when made, deemed made,
or furnished;
(c) (i) any default shall occur in the observance or
performance of any of the covenants or agreements contained in Section
7, 8.2, 8.3, 10.4 through 10.24 (other than a default under Section
10.15 or 10.16 as a result of a Lien involuntarily incurred, which is
not otherwise an Event of Default hereunder) or (ii) any default shall
occur in the observance or performance of any of the other covenants
and agreements contained in this Agreement, any other Loan Documents,
or any other agreement entered into at any time to which any Borrower
or any Subsidiary thereof and the Bank are party in each case referred
to in this clause (ii), if the same shall not have been cured within
twenty (20) days following notice by the Bank to the Parent of the
breach thereof, or if any such agreement or document shall terminate
(other than in accordance with its terms or the terms hereof or with
the written consent of the Bank) or become void or unenforceable,
without the written consent of the Bank:
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(d) default shall occur in the payment of any
principal or interest on any indebtedness for borrowed money (other
than the Obligations) beyond any period of grace provided with respect
thereto or any Event of Default shall occur and be continuing under the
SWIB Loan Documents;
(e) any Borrower or any Subsidiary shall: (i) file a
voluntary petition in bankruptcy or file a voluntary petition or an
answer or otherwise commence any action or proceeding seeking
reorganization, arrangement or readjustment of its debts or for any
other relief under the Federal Bankruptcy Code, as amended, or under
any other bankruptcy or insolvency act or law, state or federal, now or
hereafter existing, or consent to, approve of, or acquiesce in, any
such petition, action or proceeding; (ii) apply for or acquiesce in the
appointment of a receiver, assignee, liquidator, sequestrator,
custodian, trustee or similar officer for it or for all or any part of
its Property; (iii) make an assignment for the benefit of creditors; or
(iv) be unable generally to pay its debts as they become due;
(f) an involuntary petition shall be filed or an
action or proceeding otherwise commenced seeking reorganization,
arrangement or readjustment of any Borrower's or any Subsidiary's debts
or for any other relief under the Federal Bankruptcy Code, as amended,
or under any other bankruptcy or insolvency act or law, state or
federal, now or hereafter existing, and such case or proceeding shall
remain undismissed or unstayed for sixty (60) days or more or any court
shall enter a decree or order granting the relief sought in such case
or proceeding;
(g) a receiver, assignee, liquidator, sequestrator,
custodian, trustee or similar officer for any Borrower or any
Subsidiary or for all or any part of their Property shall be appointed
involuntarily or a warrant of attachment, execution or similar process
shall be issued against any part of the Property of such Borrower or
any Subsidiary, and such appointment, warrant or similar process shall
not be stayed or discharged within sixty (60) days;
(h) any Borrower or any Subsidiary shall: (i) file a
certificate of dissolution under applicable state law or shall be
liquidated, dissolved or wound-up; (ii) commence any action or
proceeding for dissolution, winding-up or liquidation, or shall take
any corporate action in furtherance thereof; or (iii) have commenced
against it any action or proceeding for dissolution, or shall take any
corporate action in furtherance thereof and such case or proceeding
shall remain undismissed or unstayed for sixty (60) days or more or any
court shall enter a decree or order granting relief sought in such case
or proceeding;
(i) any guaranty of the Obligations shall be
terminated, revoked or declared void or invalid;
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(j) one or more final judgments for the payment of
money aggregating in excess of $100,000 (whether or not covered by
insurance) shall be rendered against any Borrower or any Subsidiary and
such Borrower or such Subsidiary shall fail to discharge the same
within thirty (30) days from the date of notice of entry thereof or to
appeal therefrom;
(k) any loss, theft damage or destruction of any item
or items of Collateral occurs which: (i) materially and adversely
affects the operation of any Borrower's business or (ii) is material in
amount and is not adequately covered by insurance:
(l) Parent ceases to own all of the issued and
outstanding capital stock of each other Borrower or any person or group
of persons (within the meaning of the Securities Exchange Act of 1934)
shall have acquired beneficial ownership (within the meaning of Rule
13d-3 promulgated by the SEC) of 30% or more of the outstanding capital
stock of Parent; or
(m) any event or condition shall occur or exist with
respect to a Plan that could, in the Bank's reasonable judgment,
subject any Borrower or any Subsidiary to any tax, penalty or liability
under ERISA, the Code or otherwise which in the aggregate is material
in relation to the business, operations, Property or financial or other
condition of such Borrower.
13. REMEDIES.
(a) If an Event of Default exists, the Bank may, do
one or more of the following (i) refuse or make Revolving Loans and refuse to
issue or extend Letters of Credit; (ii) terminate this Agreement; (iii) declare
any or all Obligations to be immediately due and payable provided, however, that
upon the occurrence of any Event of Default described in Subsections (e), (f),
(g) or (h), all Obligations shall automatically, without notice or demand,
become immediately due and payable; and (iv) pursue its other rights and
remedies under the Loan Documents and applicable law.
(b) If an Event of Default exists: (i) the Bank shall
have, in addition to all other rights, the rights and remedies of a secured
party under the UCC; (ii) the Bank may, at any time, take possession of the
Collateral and keep it on any Borrower's premises, at no cost to the Bank, or
remove any part of it to such other place or places as the Bank may desire, or
each Borrower shall, upon the Bank's demand, at such Borrower's cost, assemble
the Collateral and make it available to the Bank at a place reasonably
convenient to the Bank; and (iii) the Bank may sell and deliver any Collateral
at public or private sales, for cash, upon credit or otherwise, at such prices
and upon such terms as the Bank deems advisable, in its sole discretion, and
may, if the Bank deems it reasonable, postpone or adjourn any sale of the
Collateral by an announcement at the time and place of sale or of such postponed
or adjourned sale without giving a new notice of sale. Without in any way
requiring notice to be given in the following
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manner, each Borrower agrees that any notice by the Bank of sale, disposition or
other intended action hereunder or in connection herewith, whether required by
the UCC or otherwise, shall constitute reasonable notice to such Borrower if
such notice is mailed by registered or certified mail, return receipt requested,
postage prepaid, or is delivered personally against receipt, at least ten (10)
days prior to such action to Parent's address specified in or pursuant to
Section 14.10. If any Collateral is sold on terms other than payment in full at
the time of sale, no credit shall be given against the Obligations until the
Bank receives payment, and if the buyer defaults in payment, the Bank may resell
the Collateral without further notice to the applicable Borrower. In the event
the Bank seeks to take possession of all or any portion of the Collateral by
judicial process, each Borrower irrevocably waives: (a) the posting of any bond,
surety or security with respect thereto which might otherwise be required; (b)
any demand for possession prior to the commencement of any suit or action to
recover the Collateral; and (c) any requirement that the Bank retain possession
and not dispose of any Collateral until after trial or final judgment. Each
Borrower agrees that the Bank has no obligation to preserve rights to the
Collateral or marshal any Collateral for the benefit of any Person. The Bank is
hereby granted a license or other right to use, without charge, each Borrower's
labels, patents, copyrights, name, trade secrets, trade names, trademarks, and
advertising matter, or any similar property, in completing production of,
advertising or selling any Collateral, and each Borrower's rights under all
licenses and all franchise agreements shall inure to the Bank's benefit. The
proceeds of sale shall be applied first to all expenses of sale, including
attorney's fees, and second, in whatever order the Bank elects, to all
Obligations. The Bank will return any excess to the applicable Borrower or such
other Person as shall be legally entitled thereto and each Borrower shall remain
liable for any deficiency.
(c) If an Event of Default occurs, each Borrower
hereby waives (i) all rights to notice and hearing prior to the exercise by the
Bank of the Bank's rights to repossess the Collateral without judicial process
or to replevy, attach or levy upon the Collateral without notice or hearing, and
(ii) all rights of set-off and counterclaim against Bank.
14. MISCELLANEOUS.
14.1 Cumulative Remedies: No Prior Recourse to Collateral.
The enumeration herein of the Bank's rights and remedies is not intended to be
exclusive, and such rights and remedies are in addition to and not by way of
limitation of any other rights or remedies that the Bank may have under the UCC
or other applicable law. The Bank shall have the right, in its sole discretion,
to determine which rights and remedies are to be exercised and in which order.
The exercise of one right or remedy shall not preclude the exercise of any
others, all of which shall be cumulative. The Bank may, without limitation,
proceed directly against any or all of the Borrowers to collect the Obligations
without any prior recourse to the Collateral.
14.2 No Implied Waivers. No act, failure or delay by the
Bank shall constitute a waiver of any of its rights and remedies. No single or
partial waiver by the Bank of any provision of this Agreement or any other Loan
Document, or of breach or default hereunder or
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thereunder, or of any right or remedy which the Bank may have, shall operate as
a waiver of any other provision, breach, default, right or remedy or of the same
provision, breach, default, right or remedy on a future occasion. No waiver by
the Bank shall affect its rights to require strict performance of this
Agreement.
14.3 Severability. If any provision of this Agreement shall
be prohibited or invalid, under applicable law, it shall be is effective only to
such extent, without invalidating the remainder of this Agreement.
14.4 Governing Law. This Agreement shall be deemed to have
been made in the State of Illinois and shall be governed by and interpreted in
accordance with the laws of such state, except that no doctrine of choice of law
shall be used to apply the laws of any other state or jurisdiction.
14.5 Consent to Jurisdiction and Venue: Service of Process.
Each Borrower agrees that, in addition to any other courts that may have
jurisdiction under applicable laws, any action or proceeding to enforce or
arising out of this Agreement or any of the other Loan Documents may be
commenced in the Circuit Court of the State of Illinois for Xxxx County, or in
the United States District Court for the Northern District of Illinois, and each
Borrower consents and submits in advance to such jurisdiction and agrees that
venue will be proper in such courts on any such matter. Each Borrower hereby
waives personal service of process and agrees that a summons and complaint
commencing an action or proceeding in any such court shall be properly served
and shall confer personal jurisdiction if served by registered or certified mail
to such Borrower. The choice of forum set forth in this section shall not be
deemed to preclude the enforcement of any judgment obtained in such forum, or
the taking of any action under this Agreement to enforce the same, in any
appropriate jurisdiction.
14.6 WAIVER OF JURY TRIAL. EACH BORROWER HEREBY WAIVES TRIAL
BY JURY, RIGHTS OF SETOFF, AND THE RIGHT TO IMPOSE COUNTERCLAIMS IN ANY
LITIGATION IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF
THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, THE OBLIGATIONS OR THE COLLATERAL, OR
ANY INSTRUMENT OR DOCUMENT DELIVERED PURSUANT HERETO OR THERETO, OR ANY OTHER
CLAIM OR DISPUTE HOWSOEVER ARISING, BETWEEN ANY BORROWER AND THE BANK EACH
BORROWER CONFIRMS THAT THE FOREGOING WAIVERS ARE INFORMED AND FREELY MADE.
14.7 Survival of Representations and Warranties. All of each
Borrowers representations and warranties contained in this Agreement shall
survive the execution, delivery, and acceptance thereof by the parties,
notwithstanding any investigation by the Bank or its agents.
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14.8 Other Security and Guaranties. The Bank may, without
notice or demand and without affecting any Borrower's obligations hereunder,
from time to time: (a) take from any Person and hold collateral (other than the
Collateral) for the payment of all or any part of the Obligations and exchange,
enforce or release such collateral or any part thereof; and (b) accept and hold
any endorsement or guaranty of payment of all or any part of the Obligations and
release or substitute any such endorser or guarantor, or any Person who has
given any Lien in any other collateral as security for the payment of all or any
part of the Obligations, or any other Person in any way obligated to pay all or
any part of the Obligations.
14.9 Fees and Expenses. The Borrowers shall pay to the Bank
on demand all costs and expenses that the Bank pays or incurs in connection with
the negotiation, preparation, consummation, administration, enforcement, and
termination of this Agreement and the other Loan Documents, including, without
limitation: (a) attorneys' and paralegal's fees and disbursements of counsel to
the Bank for negotiation and closing of this Agreement; (b) costs and expenses
including attorneys' and paralegals' fees and disbursements (including, without
limitation, a reasonable estimate of the allocable cost of in-house counsel and
staff) for any amendment, supplement, waiver, consent, or subsequent closing in
connection with the Loan Documents and the transactions contemplated thereby,
(c) costs and expenses of lien searches; (d) Taxes, fees and other charges for
recording the mortgages, filing financing statements and continuations, and
other actions to perfect, protect, and continue the Security Interest; (e) sums
paid or incurred to pay any amount or take any action required of a Borrower
under the Loan Documents that such Borrower fails to pay or take; (f) costs of
appraisals, inspections, and verifications of the Collateral; (g) all amounts
that a Borrower is required to pay under any letter of credit agreement with an
issuing bank; (h) costs and expenses of preserving and protecting the
Collateral; and (i) costs and expenses including attorneys' and paralegals' fees
and disbursements (including, without limitation, a reasonable estimate of the
allocable cost of in-house counsel and staff) paid or incurred to obtain payment
of the Obligations, enforce the Security Interest, sell or otherwise realize
upon the Collateral, and otherwise enforce the provisions of the Loan Documents,
or to defend any claims made or threatened against the Bank arising out of the
transactions contemplated hereby (including without limitation, preparations for
and consultations concerning any such matters). The foregoing shall not be
construed to limit any other provisions of the Loan Documents regarding costs
and expenses to be paid by the Borrowers. All of the foregoing costs and
expenses shall be charged to the Borrowers' loan accounts as Revolving Loans.
14.10 Notices. Except as otherwise provided herein, all
notices, demands, and requests that either party is required or elects to give
to the other shall be in writing, shall be
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delivered personally against receipt, or sent by recognized overnight courier
services, or mailed by registered or certified mail, return receipt requested,
postage prepaid, and shall be addressed to the party to be notified as follows:
If to the Bank: Bank of America National
Trust and Savings Association
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx W. A. Xxxxx
Vice President
with a copy to: Xxxx, Gerber & Xxxxxxxxx
Xxx Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
If to any Borrower
c/o Parent at: Outlook Group Corp.
0000 Xxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxx 00000
Attention: Xxxx X. Xxxxxx
Chief Financial Officer
with a copy to: Xxxxxxx & Xxxxx
000 X. Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx;
or to such other address as each party may designate for itself by like notice.
Any such notice, demand, or request shall be deemed given when received if
personally delivered or sent by overnight courier, or when deposited in the
United States mails, postage paid, if sent by registered or certified mail.
14.11 Indemnification. THE BORROWERS, JOINTLY AND SEVERALLY,
HEREBY INDEMNIFY, DEFEND AND HOLD BANK, AND ITS DIRECTORS, OFFICERS, AGENTS,
EMPLOYEES AND COUNSEL, HARMLESS FROM AND AGAINST ANY AND ALL LOSSES, CLAIMS,
DAMAGES, LIABILITIES, DEFICIENCIES, JUDGMENTS, PENALTIES OR EXPENSES IMPOSED ON,
INCURRED BY OR ASSERTED AGAINST ANY OF THEM, WHETHER DIRECT,
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INDIRECT OR CONSEQUENTIAL ARISING OUT OF OR BY REASON OF ANY LITIGATION,
INVESTIGATIONS, CLAIMS, OR PROCEEDINGS (WHETHER BASED ON ANY FEDERAL, STATE OR
LOCAL LAWS OR OTHER STATUTES OR REGULATIONS, INCLUDING, WITHOUT LIMITATION,
SECURITIES, ENVIRONMENTAL, OR COMMERCIAL LAWS AND REGULATIONS, UNDER COMMON LAW
OR AT EQUITY, OR ON CONTRACT OR OTHERWISE) COMMENCED OR THREATENED, WHICH ARISE
OUT OF OR ARE IN ANY WAY BASED UPON THE NEGOTIATION, PREPARATION, EXECUTION,
DELIVERY, ENFORCEMENT, PERFORMANCE OR ADMINISTRATION OF THIS AGREEMENT, ANY
OTHER LOAN DOCUMENT, OR ANY UNDERTAKING OR PROCEEDING RELATED TO ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY OR ANY ACT, OMISSION TO ACT, EVENT OR
TRANSACTION RELATED OR ATTENDANT THERETO, INCLUDING, WITHOUT LIMITATION, AMOUNTS
PAID IN SETTLEMENT, COURT COSTS, AND THE FEES AND EXPENSES OF COUNSEL REASONABLY
INCURRED IN CONNECTION WITH ANY SUCH LITIGATION, INVESTIGATION, CLAIM OR
PROCEEDING AND FURTHER INCLUDING, WITHOUT LIMITATION, ALL LOSSES, DAMAGES
(INCLUDING CONSEQUENTIAL DAMAGES), EXPENSES OR LIABILITIES SUSTAINED BY THE BANK
IN CONNECTION WITH ANY ENVIRONMENTAL INSPECTION, MONITORING, SAMPLING, OR
CLEANUP OF THE ENCUMBERED REAL ESTATE REQUIRED OR MANDATED BY ANY ENVIRONMENTAL
LAW; PROVIDED, HOWEVER, THAT NO BORROWER SHALL INDEMNIFY BANK, ITS DIRECTORS,
OFFICERS, AGENTS, EMPLOYEES AND COUNSEL FROM SUCH DAMAGES RESULTING FROM THEIR
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
Without limiting the foregoing, if, by reason of any suit or proceeding of any
kind, nature, or description against any Borrower, or by any Borrower or any
other party against Bank, which in Bank's sole discretion makes it advisable for
Bank to seek counsel for protection and preservation of its liens and security
assets, or to defend its own interest, such expenses and counsel fees shall be
allowed to Bank. To the extent that the undertaking to indemnify, pay and hold
harmless set forth in this Section 14.11 may be unenforceable because it is
violative of any law or public policy, the Borrowers shall contribute the
maximum portion which they are permitted to pay and satisfy under applicable
law, to the payment and satisfaction of all indemnified matters incurred by
Bank. The foregoing indemnity shall survive the payment of the Obligations and
the termination of this Agreement. All of the foregoing costs and expenses shall
be part of the Obligations and secured by the Collateral.
14.12 Waiver of Notices. Unless otherwise expressly provided
herein, each Borrower waives presentment, protest and notice of demand or
dishonor and protest as to any instrument, as well as any and all other notices
to which it might otherwise be entitled. No notice to or demand on any Borrower
which the Bank may elect to give shall entitle such Borrower or any other
Borrower to any or further notice or demand in the same, similar or other
circumstances.
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14.13 Binding Effect: Assignment. The provisions of this
Agreement shall be binding upon and inure to the benefit of the respective
representatives, successors and assigns of the parties hereto; provided,
however, that no interest herein may be assigned by any Borrower without the
prior written consent of the Bank. The rights and benefits of the Bank hereunder
shall, if the Bank so agrees, inure to any party acquiring any interest in the
Obligations or any part thereof.
14.14 Modification. This Agreement is intended by the
Borrowers and the Bank to be the final, complete, and exclusive expression of
the agreement between them. This Agreement supersedes any and all prior oral or
written agreements relating to the subject matter hereof and may not be
contradicted by evidence of prior, contemporaneous or subsequent oral agreements
of the parties. There are no oral agreements between the parties. No
modification, rescission, waiver, release, or amendment of any provision of this
Agreement shall be made, except by a written agreement signed by each Borrower
and a duly authorized officer of the Bank.
14.15 Counterparts. This Agreement may be executed in any
number of counterparts, and by the Bank and each Borrower in separate
counterparts, each of which shall be an original, but all of which shall
together constitute one and the same agreement.
14.16 Captions. The captions contained in this Agreement are
for convenience only, are without substantive meaning and should not be
construed to modify, enlarge, or restrict any provision.
14.17 Right of Set-Off. Whenever an Event of Default exists,
the Bank is hereby authorized at any time and from time to time, to the fullest
extent permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by the Bank or any affiliate of the Bank to or
for the credit or the account of any Borrower against any and all of the
Obligations, whether or not then due and payable. Bank agrees promptly to notify
the applicable Borrower after any such set-off and application made by Bank,
provided that the failure to give such notice shall not affect the validity of
such set-off and application.
14.18 Participating Bank's Security Interests. The Bank may,
without notice to or consent by any Borrower, grant one or more participations
in the Loans to Participating Banks. If a Participating Bank shall at any time
with the Parent's knowledge participate with the Bank in the Loans, each
Borrower hereby grants to such Participating Bank, and the Bank and such
Participating Bank shall have and are hereby given, a continuing lien on and
security interest in any money, securities and other property of such Borrower
in the custody or possession of the Participating Bank, including the right of
setoff, to the extent of the Participating Bank's participation in the
Obligations, and such Participating Bank shall be deemed to have the same right
of setoff to the extent of Participating Bank's participation in the Obligations
under this Agreement as it would have it were a direct lender.
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14.19 Joint and Several Liability. Each Borrower
unconditionally guarantees the payment in full and performance of the other
Borrowers' Obligations hereunder. Each Borrower shall be liable for all amounts
due to the Bank under this Agreement, regardless of which Borrower actually
receives Loans or other extensions of credit hereunder or the amount of such
Loans received or the manner in which the Bank accounts for such Loans or other
extensions of credit on its books and records. Each Borrower's Obligations with
respect to Loans made to it, and each Borrower's Obligations arising as a result
of the joint and several liability of the Borrowers hereunder, with respect to
Loans made to the other Borrowers hereunder, shall be separate and distinct
obligations, but all such Obligations shall be primary obligations of that
Borrower.
Each Borrower's Obligations arising as a result of the joint
and several liability of such Borrower hereunder with respect to Loans or other
extensions of credit made to the other Borrowers hereunder shall, to the fullest
extent permitted by law, be unconditional irrespective of (i) the validity or
enforceability, avoidance or subordination of the Obligations of the other
Borrowers or of any promissory note or other document evidencing all or any part
of the Obligations of the other Borrowers, (ii) the absence of any attempt to
collect the Obligations from any other Borrower, any other guarantor, or any
other security therefor, or the absence of any other action to enforce the same,
(iii) the waiver, consent, extension, forbearance or granting of any indulgence
by the Bank with respect to any provision of any instrument evidencing the
Obligations of any other Borrower, or any part thereof, or any other agreement
now or hereafter executed by any other Borrower and delivered to the Bank, (iv)
the failure by the Bank to take any steps to perfect and maintain its security
interest in, or to preserve its rights to, any security or collateral for the
Obligations of any other Borrower, (v) the Bank's election, in any proceeding
instituted under the Bankruptcy Code, of the application of Section 1111(b)(2)
of the Bankruptcy Code, (vi) any borrowing or grant of a security interest by
any other Borrower, as debtor-in- possession under Section 364 of the Bankruptcy
Code, (vii) the disallowance of all or any portion of the Bank's claim(s) for
the repayment of the Obligations of any other Borrower under Section 502 of the
Bankruptcy Code, or (viii) any other circumstances which might constitute a
legal or equitable discharge or defense of a guarantor or of any other Borrower.
With respect to each Borrower's Obligations arising as a result of the joint and
several liability of that Borrower hereunder with respect to Loans or other
extensions of credit made to the other Borrowers hereunder, each Borrower
waives, until the Obligations shall have been paid in full and the Loan
Agreement shall have been terminated, any right to enforce any right of
subrogation and any remedy which the Bank now has or may hereafter have against
any other Borrower, any endorser or any guarantor of all or any part of the
Obligations, and any benefit of, and any right to participate in, any security
or collateral given to the Bank to secure payment of the Obligations or any
other liability of any other Borrower to the Bank.
Upon any Event of Default, the Bank may proceed directly and
at once, without notice, against any or all Borrowers to collect and recover the
full amount, or any portion of the Obligations, without first proceeding against
any other Borrower or any other Person, or against any security or collateral
for the Obligations. Each Borrower consents and agrees that the Bank
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shall be under no obligation to marshal any assets in favor of that Borrower or
against or in payment of any or all of the Obligations.
The Obligations of each Borrower under this Section 14.19 with
respect to Loans (and interest, fees, and expenses with respect thereto) which
were advanced to or incurred by the other Borrowers (and were not reloaned to
the Guarantor-Borrower) shall be limited to an amount equal to the maximum
amount of the claim which could be recovered from the Guarantor-Borrower under
this Section 14.19 without rendering such claim voidable or avoidable under
Section 548 of the Bankruptcy Code or under any similar state statute or common
law.
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IN WITNESS WHEREOF, the parties have entered into this Agreement on the
date first above written.
OUTLOOK GROUP CORP.
By:____________________________________
Title:_________________________________
OUTLOOK LABEL SYSTEMS, INC.
By:____________________________________
Title:_________________________________
OUTLOOK PACKAGING, INC.
By:____________________________________
Title:_________________________________
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By:____________________________________
Title:_________________________________
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Schedules
Schedule 1.1 Existing Letters of Credit
Schedule 1.2 Permitted Liens
Schedule 7.3 Locations of Collateral
Schedule 9.4 Names of Borrowers and Trade Styles
Schedule 9.5 Subsidiaries and Affiliates and states of incorporation and qualification
Schedule 9.13 Real Estate - Owned and Leased
Schedule 9.14 Proprietary Rights Collateral (patents, trademarks and copyrights)
Schedule 9.15 Trade Names
Schedule 9.16 Litigation
Schedule 9.18 Labor Disputes
Schedule 9.19 Environmental Laws
Schedule 9.22 ERISA Compliance
Schedule 9.25 Material Changes Since May 31, 1998
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