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LOAN AND SECURITY AGREEMENT
Dated as of June 28, 1996
Among
THE FINANCIAL INSTITUTIONS NAMED HEREIN
AS THE LENDERS
and
BANKAMERICA BUSINESS CREDIT, INC.
AS THE AGENT
and
WAXMAN CONSUMER PRODUCTS GROUP INC.
and
WOC INC.
AS THE BORROWERS
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TABLE OF CONTENTS
SECTION PAGE
ARTICLE 1INTERPRETATION OF THIS AGREEMENT
1.1 Definitions.............................................1
1.2 Accounting Terms.......................................26
1.3 Interpretive Provisions................................27
ARTICLE 2LOANS AND LETTERS OF CREDIT
2.1 Revolving Loans........................................28
2.2 Procedure for Borrowing................................29
2.3 Consumer as Agent for Borrowers........................35
2.4 Letters of Credit......................................35
2.5 Term Loans.............................................41
ARTICLE 3INTEREST AND FEES
3.1 Interest...............................................41
3.2 Conversion and Continuation Elections..................43
3.3 Maximum Interest Rate..................................44
3.4 Closing Fee............................................45
3.5 Unused Line Fee........................................45
3.6 Letter of Credit Fee...................................45
3.7 Audit Fees.............................................46
ARTICLE 4PAYMENTS AND PREPAYMENTS
4.1 Revolving Loans........................................46
4.2 Termination of Facility................................46
4.3 Payments by the Borrowers..............................47
4.4 Payments as Revolving Loans............................48
4.5 Apportionment, Application and Reversal
of Payments............................................48
4.6 Indemnity for Returned Payments........................49
4.7 Agent's and Lenders' Books and Records;
Monthly Statements.....................................49
4.8 Prepayments............................................50
ARTICLE 5TAXES, YIELD PROTECTION AND ILLEGALITY
5.1 Taxes..................................................50
5.2 Illegality.............................................51
5.3 Increased Costs and Reduction of Return................52
5.4 Funding Losses.........................................52
5.5 Inability to Determine Rates...........................53
5.6 Certificates of Lenders................................53
5.7 Survival...............................................53
ARTICLE 6COLLATERAL
6.1 Grant of Security Interest.............................54
6.2 Perfection and Protection of Security Interest.........55
6.3 Location of Collateral.................................56
6.4 Title to, Liens on, and Sale and Use of
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Collateral.............................................57
6.5 Appraisals.............................................57
6.6 Access and Examination; Confidentiality................57
6.7 Collateral Reporting...................................59
6.8 Accounts...............................................59
6.9 Collection of Accounts; Payments.......................61
6.10 Inventory; Perpetual Inventory.........................62
6.11 Intentionally Omitted..................................62
6.12 Intentionally Omitted..................................62
6.13 Documents, Instruments, and Chattel Paper..............62
6.14 Right to Cure..........................................63
6.15 Power of Attorney......................................63
6.16 The Agent's and Lenders' Rights, Duties
and Liabilities........................................64
ARTICLE 7BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES
7.1 Books and Records......................................64
7.2 Financial Information..................................65
7.3 Notices to the Lenders.................................68
ARTICLE 8GENERAL WARRANTIES AND REPRESENTATIONS
8.1 Authorization, Validity, and Enforceability of
this Agreement and the Loan Documents..................70
8.2 Validity and Priority of Security Interest.............71
8.3 Organization and Qualification.........................71
8.4 Corporate Name; Prior Transactions.....................71
8.5 Subsidiaries and Affiliates............................71
8.6 Financial Statements and Projections...................71
8.7 Capitalization.........................................72
8.8 Solvency...............................................72
8.9 Debt...................................................72
8.10 Distributions..........................................72
8.11 Title to Property......................................73
8.12 Real Estate; Leases....................................73
8.13 Proprietary Rights Collateral..........................73
8.14 Trade Names and Terms of Sale..........................73
8.15 Litigation.............................................73
8.16 Restrictive Agreements.................................73
8.17 Labor Disputes.........................................74
8.18 Environmental Laws.....................................74
8.19 No Violation of Law....................................75
8.20 No Default.............................................75
8.21 ERISA Compliance.......................................75
8.22 Taxes..................................................76
8.23 Regulated Entities.....................................76
8.24 Use of Proceeds; Margin Regulations....................77
8.25 Patents, Trademarks and Licenses, etc..................77
8.26 No Material Adverse Change.............................77
8.27 Full Disclosure........................................77
8.28 Material Agreements....................................77
8.29 Bank Accounts..........................................77
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8.30 Indentures.............................................77
ARTICLE 9AFFIRMATIVE AND NEGATIVE COVENANTS
9.1 Taxes and Other Obligations............................78
9.2 Corporate Existence and Good Standing..................78
9.3 Compliance with Law and Agreements;
Maintenance of Licenses................................78
9.4 Maintenance of Property................................79
9.5 Insurance..............................................79
9.6 Equipment..............................................80
9.7 Environmental Laws.....................................80
9.8 Compliance with ERISA..................................80
9.9 Mergers, Consolidations or Sales.......................81
9.10 Capital Change; Restricted Investments.................81
9.11 Transactions Affecting Collateral or
Obligations............................................81
9.12 Guaranties.............................................81
9.13 Debt...................................................81
9.14 Prepayment.............................................81
9.15 Distributions; Transactions with Affiliates............81
9.16 Investment Banking and Finder's Fees...................83
[9.17 Intentionally omitted..................................83
9.18 Business Conducted.....................................83
9.19 Liens..................................................84
9.20 Sale and Leaseback Transactions........................84
9.21 New Subsidiaries.......................................84
9.22 Fiscal Year............................................84
9.23 Capital Expenditures...................................84
9.24 Operating Lease Obligations............................84
9.25 EBITDA.................................................85
9.26 Use of Proceeds........................................85
9.27 Further Assurances.....................................85
ARTICLE 10CONDITIONS OF LENDING
10.1 Conditions Precedent to Making of Loans on the
Closing Date...........................................85
10.2 Conditions Precedent to Each Loan......................88
ARTICLE 11DEFAULT; REMEDIES
11.1 Events of Default......................................89
11.2 Remedies...............................................92
ARTICLE 12TERM AND TERMINATION
12.1 Term and Termination...................................93
ARTICLE 13AMENDMENTS; WAIVER; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS
13.1 No Waivers Cumulative Remedies.........................94
13.2 Amendments and Waivers.................................94
13.3 Assignments; Participations............................95
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ARTICLE 14THE AGENT
14.1 Appointment and Authorization...........................97
14.2 Delegation of Duties....................................98
14.3 Liability of Agent......................................98
14.4 Reliance by Agent.......................................99
14.5 Notice of Default.......................................99
14.6 Credit Decision.........................................99
14.7 Indemnification........................................100
14.8 Agent in Individual Capacity...........................101
14.9 Successor Agent........................................101
14.10 Withholding Tax........................................101
14.11 Collateral Matters.....................................103
14.12 Restrictions on Actions by Lenders;
Sharing of Payments....................................104
14.13 Agency for Perfection..................................105
14.14 Payments by Agent to Lenders...........................105
14.15 Concerning the Collateral and the Related Loan
Documents..............................................105
14.16 Field Audit and Examination Reports;
Disclaimer by Lenders..................................106
ARTICLE 15MISCELLANEOUS
15.1 Cumulative Remedies; No Prior Recourse
to Collateral..........................................106
15.2 Severability...........................................107
15.3 Governing Law; Choice of Forum; Service
of Process; Jury Trial Waiver..........................107
15.4 Waiver of Jury Trial...................................109
15.5 Survival of Representations and Warranties.............109
15.6 Other Security and Guaranties..........................109
15.7 Fees and Expenses......................................110
15.8 Notices................................................111
15.9 Waiver of Notices......................................111
15.10 Binding Effect.........................................112
15.11 Indemnity of the Agent and the Lenders by
the Borrowers..........................................112
15.12 Final Agreement........................................112
15.13 Counterparts...........................................113
15.14 Captions...............................................113
15.15 Right of Setoff........................................113
15.16 Joint and Several Liability............................113
INDEX OF EXHIBITS AND SCHEDULES
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Exhibit A - Form of Borrowing Base
Exhibit B - Financial Statements
Exhibit B-1 - Form of Term Notes
Exhibit C - Pro Forma Balance Sheet
Exhibit D - List of Closing Documents
Exhibit E - Notice of Borrowing
Exhibit F - Notice of Conversion/Continuation
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Exhibit G - [Form of] Reconciliation of Intercompany
Accounts
Exhibit H - [Form of] Assignment and Acceptance Agreement
SCHEDULE 1 - Notice of Assignment and Acceptance
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LOAN AND SECURITY AGREEMENT
Loan and Security Agreement, dated as of June 28, 1996, among the
financial institutions listed on the signature pages hereof (such financial
institutions, together with their respective successors and assigns, are
referred to hereinafter each individually as a "Lender" and collectively as the
"Lenders"), BankAmerica Business Credit, Inc., a Delaware corporation, as agent
for the Lenders (in its capacity as agent, the "Agent"), and WAXMAN CONSUMER
PRODUCTS GROUP INC., a Delaware corporation, ("Borrower") and WOC INC., a
Delaware corporation, ("Borrower") each with offices at 00000 Xxxxxx Xxxx,
Xxxxxxx Xxxxxxx, Xxxx 00000 (collectively, the "Borrowers").
W I T N E S S E T H
WHEREAS, the Borrowers have requested the Lenders to make available to
the Borrowers a revolving line of credit for loans and letters of credit in an
amount not to exceed $30,000,000, and a Term Loan of $5,000,000, which
extensions of credit the Borrowers will use to repay existing Debt and for their
working capital needs and general business purposes;
WHEREAS, the Lenders have agreed to make available to the Borrowers a
revolving credit facility and term loan upon the terms and conditions set forth
in 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 Lenders, the Agent, and the
Borrowers hereby agree as follows.
ARTICLE 1
INTERPRETATION OF THIS AGREEMENT
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1.1 DEFINITIONS. As used herein:
"ACCOUNTS" means all of each Borrower's now owned or hereafter
acquired or arising accounts, and any other rights to payment for the sale or
lease of goods or rendition of services, whether or not they have been earned by
performance.
"ACCOUNT DEBTOR" means each Person obligated in any way on or in
connection with an Account.
"ACCRETING RESERVES" means collectively, the Consumer Accreting
Reserve and the WOC Accreting Reserve.
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"ADJUSTED TANGIBLE ASSETS" means as to Consumer or WOC, as
applicable, all of such Borrower's assets except: (a) deferred assets, other
than prepaid insurance and prepaid taxes; (b) patents, copyrights, trademarks,
trade names, franchises, goodwill, and other similar intangibles; (c) Restricted
Investments; (d) unamortized debt discount and expense; (e) assets of such
Borrower constituting Intercompany Accounts; and (f) fixed assets to the extent
of any write-up in the book value thereof resulting from a revaluation effective
after the Closing Date.
"ADJUSTED TANGIBLE NET WORTH" means, at any date: (a) the book
value (after deducting related depreciation, obsolescence, amortization,
valuation, and other proper reserves as determined in accordance with GAAP) at
which the Adjusted Tangible Assets would be shown on a consolidated balance
sheet of Consumer or WOC, as applicable, at such date prepared in accordance
with GAAP; less (b) the amount at which such Borrower's consolidated liabilities
would be shown on such balance sheet, including as liabilities all reserves for
contingencies and other potential liabilities which would be shown on such
balance sheet or disclosed in the notes thereto, including Intercompany Accounts
owing by Borrowers to Parent, Ultimate Parent or any Affiliate.
"AFFILIATE" means, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such Person. A Person shall be deemed to control another Person if
the controlling Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of the other Person, whether
through the ownership of voting securities, by contract, or otherwise.
"AGENT" means BankAmerica Business Credit, Inc., solely in its
capacity as agent for the Lenders, and shall include any successor agent.
"AGENT ADVANCES" has the meaning specified in SECTION 2.2(H).
"AGENT'S LIENS" means the Liens granted to the Agent, for the
ratable benefit of the Lenders, BABC, and Agent pursuant to this Agreement and
the other Loan Documents.
"AGENTRELATED PERSONS" means the Agent and any successor agent,
together with their respective Affiliates, and the officers, directors,
employees, agents and attorneys-in-fact of such Persons and Affiliates.
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"AGREEMENT" means this Loan and Security Agreement.
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"ANNIVERSARY DATE" means each anniversary of the Closing Date.
"APPLICABLE REVOLVER MARGIN" means (on a per annum basis)
(i) with respect to Base Rate Loans, 1.0%; and
(ii) with respect to LIBOR Rate Loans, 2.75%; subject to
adjustment in accordance with Section 3.1.
"APPLICABLE TERM MARGIN" means (on a per annum basis)
(i) with respect to Base Rate Loans, 1.25%; and
(ii) with respect to LIBOR Rate Loans, 3.00%; subject to
adjustment in accordance with Section 3.1.
"ASSIGNEE" has the meaning specified in SECTION 13.3(A).
"ASSIGNMENT AND ACCEPTANCE" has the meaning specified in SECTION
13.3(A).
"ATTORNEY COSTS" means and includes all reasonable fees, expenses
and disbursements of any law firm or other external counsel engaged by the
Agent, the reasonable allocated cost of internal legal services of the Agent and
all reasonable, documented expenses and disbursements of internal counsel of the
Agent.
"AVAILABILITY" means, as the context may require, in reference to
each Borrower's Availability, Availability-WOC, as to WOC, and
Availability-Consumer, as to Consumer, or in reference to both Borrowers,
Availability-WOC combined with Availability-Consumer.
"AVAILABILITY-CONSUMER" means, at any time, (a) the lesser of (i)
$20,000,000, and (ii) the sum of (A) eight-five percent (85%) of the Net Amount
of Consumer's Eligible Accounts; PLUS (B) sixty percent (60%) of the value of
Consumer's Eligible Inventory; MINUS (b) the sum of (i) the unpaid balance of
Revolving Loans outstanding to Consumer at such time; (ii) the aggregate amount
of Pending Revolving Loans requested for the benefit of Consumer at such time;
(iii) the aggregate undrawn amount of all outstanding Letters of Credit issued
for the account of Consumer; (iv) the aggregate amount of unpaid reimbursement
obligations in respect of Letters of Credit issued for the benefit of Consumer,
(v) reserves for accrued interest on the Obligations owing by Consumer, (vi) the
Consumer Accreting Reserve; (vii) two-thirds (2/3) of the Pledged Share Reserve,
if
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any; and (viii) such other reserves which the Agent deems necessary in the
exercise of its reasonable credit judgment to maintain with respect to
Consumer's account, including, without limitation, reserves for any amounts
which the Agent or any Lender may be obligated to pay in the future for the
account of Consumer; PROVIDED that at no time shall the sum of the outstanding
Revolving Loans to Consumer based upon the value of Consumer's Eligible
Inventory exceed $11,000,000.
"AVAILABILITY-WOC" means, at any time, (a) the lesser of (i)
$10,000,000, and (ii) the sum of (A) eighty-five percent (85%) of the Net Amount
of WOC's Eligible Accounts; PLUS (B) sixty percent (60%) of the value of WOC's
Eligible Inventory; MINUS (b)the sum of (i) the unpaid balance of Revolving
Loans outstanding to WOC at such time, (ii) the aggregate amount of Pending
Revolving Loans requested for the benefit of WOC at such time, (iii) the
aggregate undrawn amount of all outstanding Letters of Credit issued for the
account of WOC, (iv) the aggregate amount of any unpaid reimbursement
obligations in respect of Letters of Credit issued for the account of WOC, (v)
reserves for accrued interest on the Obligations owing by WOC, (vi) the WOC
Accreting Reserve; (vii) one-third (1/3) of the Pledged Share Reserve, if any,
and (viii) such other reserves which the Agent deems necessary in the exercise
of its reasonable credit judgment to maintain with respect to WOC's account,
including, without limitation, reserves for any amounts which the Agent or any
Lender may be obligated to pay in the future for the account of WOC; PROVIDED,
that at no time shall the sum of outstanding Revolving Loans to WOC based upon
the value of its Eligible Inventory exceed $5,000,000.
"BABC" means BankAmerica Business Credit, Inc.
"BABC LOAN" and "BABC LOANS" have the meanings specified in
SECTION 2.2(G).
"BANK OF AMERICA" means Bank of America National Trust and Savings
Association, a national banking association, or any successor entity thereto.
"BANKRUPTCY CODE" means Title 11 of the United States Code (11
U.S.C. section 101 ET SEQ.).
"XXXXXXX" means Xxxxxxx Inc., a Delaware corporation.
"BASE RATE" means, for any day, the rate of interest in effect for
such day as publicly announced from time to time by Bank of America in San
Francisco, California, as its "reference rate" (the "reference rate" being a
rate set by Bank of America based upon various factors including Bank of
America's costs and desired return, general economic conditions and other
factors,
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and is used as a reference point for pricing some loans, which may be
priced at, above, or below such announced rate). Any change in the reference
rate announced by Bank of America shall take effect at the opening of business
on the day specified in the public announcement of such change. Each Interest
Rate based upon the Base Rate shall be adjusted simultaneously with any change
in the Base Rate.
"BASE RATE LOAN" means a Revolving Loan during any period in which
it bears interest at the Base Rate.
"BORROWING" means a borrowing hereunder consisting of Revolving
Loans made on the same day by the Lenders to either Borrower (or by BABC in the
case of a Borrowing funded by BABC Loans) or by the Agent in the case of a
Borrowing consisting of an Agent Advance.
"BORROWING BASE CERTIFICATE" means a Borrowing Base Certificate in
the form of Exhibit A hereto.
"BUSINESS DAY" means (a) any day that is not a Saturday, Sunday,
or a day on which banks in San Francisco, California, are required or permitted
to be closed, and (b) with respect to all notices, determinations, fundings and
payments in connection with the LIBOR Rate or LIBOR 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.
"BUY-BACK OBLIGATIONS" means obligations incurred by either
Borrower by which it agrees to purchase from Account Debtors, merchandise
supplied by competitors or Inventory supplied by Borrowers to that Account
Debtor.
"CAPITAL ADEQUACY REGULATION" means any guideline, request or
directive of any central bank or other Governmental 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 costs
arising in connection with the direct or indirect acquisition of such asset by
way of increased product or service charges or offset items or in connection
with a Capital Lease.
"CAPITAL LEASE" means any lease of property by either Borrower
which, in accordance with GAAP, is or should be capitalized on such Borrower's
balance sheet or for which the
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amount of the asset and liability thereunder, as if so capitalized, should
be disclosed in a footnote to such balance sheet.
"CHANGE OF CONTROL" means any transaction or occurrence as a
result of which (i) any Person or group of Persons, other than Xxxxxx Xxxxxx and
Xxxxxx Xxxxxx and members of their families or trusts for the benefit of any of
the foregoing, shall have acquired beneficial ownership (within the meaning of
Rule 13d-3 of the Securities and Exchange Act) of shares of Ultimate Parent
sufficient to entitle them elect a majority of the board of directors of
Ultimate Parent;(ii) Ultimate Parent owns less than all of the issued and
outstanding capital stock of Parent on a fully diluted basis, (iii) Parent owns
less than all of the issued and outstanding capital stock of both WOC and
Consumer on a fully diluted basis.
"CLOSING DATE" means the date of this Agreement.
"CLOSING FEE" has the meaning specified in SECTION 3.4.
"CODE" means the Internal Revenue Code of 1986, as amended from
time to time, and any successor statute, and regulations promulgated thereunder.
"COLLATERAL" has the meaning specified in SECTION 6.1.
"COMMITMENT" means, at any time with respect to a Lender, the
principal amount set forth beside such Lender's name under the heading
"COMMITMENT" on the signature pages of this Agreement or on the signature page
of the Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of SECTION 13.3, as such Commitment
may be adjusted from time to time in accordance with the provisions of SECTION
13.3, and "COMMITMENTS" means, collectively, the aggregate amount of the
commitments of all of the Lenders.
"CONSUMER" means Waxman Consumer Products Group Inc., a Delaware
corporation.
"CONSUMER ACCRETING RESERVE" means a reserve against Availability
- Consumer which reserve shall initially be $39,683 and shall be increased on
the first day of each month by the amount of $39,683, commencing on August 1,
1996.
"CONSUMER TERM LOAN" means the Term Loan to be provided to
Consumer in accordance with Section 2.5 hereof.
"CONTAMINANT" means any waste, pollutant, hazardous substance,
toxic substance, hazardous waste, special waste,
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petroleum or petroleum-derived substance or waste, asbestos in any form or
condition, polychlorinated biphenyls ("PCBs"), or any constituent of any such
substance or waste.
"CONVERSION OBLIGATIONS" means deductions from Accounts offered by
either Borrower under its conversion money programs or similar arrangements to
any Account Debtors, whether deductions are currently earned or chargeable by
such Account Debtor.
"CO-OP ADVERTISING" means as to each Borrower its accrued
liability for cooperative advertising as set forth on its financial statements
prepared in accordance with GAAP, consistently applied.
"CURRENT ASSETS" means at any date the amount at which the current
assets of each Borrower on a consolidated basis (other than assets constituting
Intercompany Accounts) would be shown on a balance sheet of such Borrower,
prepared in accordance with GAAP.
"CURRENT LIABILITIES" means at any date the amount at which the
current liabilities of each Borrower would be shown on a balance sheet of such
Borrower, prepared in accordance with GAAP, but in any event, excluding the
Revolving Loans.
"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, excluding
liabilities under operating leases, but including, without in any way limiting
the generality of the foregoing: (i) each Borrower's liabilities and obligations
to trade creditors; (ii) all Obligations; (iii) all obligations and liabilities
of any Person secured by any Lien on either 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
lesser of (x) the amount of such obligations and liabilities or (y) the book
value of such property as would be shown on a balance sheet of the applicable
Borrower prepared in accordance with GAAP; (iv) 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 either
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 lesser of (x) the
amount of such obligations and
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liabilities or (y) the book value of such property as would be shown on a
balance sheet of the applicable Borrower prepared in accordance with GAAP; (v)
all accrued pension fund and other employee benefit plan obligations and
liabilities; (vi) all obligations and liabilities of either Borrower under
Guaranties; and (vii) deferred taxes of either Borrower.
"DEFAULT" means any event or circumstance which, with the giving
of notice, the lapse of time, or both, would (if not cured or otherwise remedied
during such time) constitute an Event of Default.
"DEFAULTING LENDER" has the meaning specified in SECTION
2.2(F)(II).
"DEFAULT RATE" means a per annum interest rate at all times equal
to the sum of (a) the otherwise applicable Interest Rate PLUS (b) three percent
(3%) per annum. Each Default Rate shall be adjusted simultaneously with any
change in the applicable Interest Rate.
"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 any options or warrants for such stock) of such
corporation, other than distributions in capital stock (or any options or
warrants for such stock) of the same class; or (b) the redemption or other
acquisition of any capital stock (or any options or warrants for such stock) of
such corporation.
"DOL" means the United States Department of Labor or any successor
department or agency.
"DOLLAR" and "$" means dollars in the lawful currency of the
United States.
"EBITDA" means, for any period, without duplication, the total of
the following as to Consumer or WOC, as applicable, each calculated for such
period: (1) net income determined in accordance with GAAP (expressly including a
deduction for corporate charges paid to Parent); PLUS, to the extent included in
the calculation of net income, (2) the sum of (a) income and franchise taxes
paid or accrued; (b) interest expenses, net of interest income, paid or accrued;
(c) interest paid in kind; (d) amortization and depreciation and (e) other
non-cash charges (excluding accruals for cash expenses made in the ordinary
course of business); LESS, to the extent included in the calculation of net
income, (3) the sum of (a) the income of any Person (other than wholly-owned
Subsidiaries of the applicable Borrower) in which such Borrower or a wholly
owned Subsidiary of such Borrower has an ownership interest except to the extent
such income is
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received by such Borrower or such wholly-owned Subsidiary in a cash distribution
during such period; (b) gains or losses from sales or other dispositions of
assets (other than Inventory in the normal course of business); and (c)
extraordinary or non-recurring gains, but not net of extraordinary or
non-recurring losses.
"ELIGIBLE ACCOUNTS" means all Accounts of each Borrower which the
Agent in the exercise of its reasonable commercial discretion determines to be
Eligible Accounts. Without limiting the discretion of the Agent to establish
other criteria of ineligibility, Eligible Accounts shall not, unless the Agent
in its sole discretion elects, include any Account (without duplication):
(a) either with respect to which more than 90 days have elapsed
since the date of the original invoice therefor or which is more than 60 days
past due;
(b) with respect to which any of the representations, warranties,
covenants, and agreements contained in SECTION 6.8 are not or have ceased to be
complete and correct or have been breached;
(c) with respect to which, in whole or in part, a check,
promissory note, draft, trade acceptance or other instrument for the payment of
money has been received, presented for payment and returned uncollected for any
reason;
(d) which represents a progress billing (as hereinafter defined)
or as to which the applicable Borrower has extended the time for payment without
the consent of the Agent; for the purposes hereof, "progress billing" means any
invoice for goods sold or leased or services rendered under a contract or
agreement pursuant to which the Account Debtor's obligation to pay such invoice
is conditioned upon the applicable Borrower's completion of any further
performance under the contract or agreement;
(e) as to which any one or more of the following events has
occurred with respect to the Account Debtor on such Account: death or judicial
declaration of incompetency of an Account Debtor who is an individual; the
filing by or against the Account Debtor of a request or petition for
liquidation, reorganization, arrangement, adjustment of debts, adjudication as a
bankrupt, winding-up, or other relief under the bankruptcy, insolvency, or
similar laws of the United States, any state or territory thereof, or any
foreign jurisdiction, now or hereafter in effect; the making of any general
assignment by the Account Debtor for the benefit of creditors; the appointment
of a receiver or trustee for the Account Debtor or for any of the
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assets of the Account Debtor, including, without limitation, the appointment of
or taking possession by a "custodian," as defined in the Federal Bankruptcy
Code; the institution by or against the Account Debtor of any other type of
insolvency proceeding (under the bankruptcy laws of the United States or
otherwise) or of any formal or informal proceeding for the dissolution or
liquidation of, settlement of claims against, or winding up of affairs of, the
Account Debtor; the sale, assignment, or transfer of all or any material part of
the assets of the Account Debtor; the nonpayment generally by the Account Debtor
of its debts as they become due; or the cessation of the business of the Account
Debtor as a going concern;
(f) if fifty percent (50%) or more of the aggregate dollar amount
of outstanding Accounts owed at such time by the Account Debtor thereon is
classified as ineligible under the other criteria set forth herein or otherwise
established by the Agent;
(g) owed by an Account Debtor which: (i) does not maintain its
chief executive office in the United States or Canada and is not organized under
the laws of the United States, Canada or any state or province thereof
(collectively "Foreign Account Debtors"); or (ii) is the government of any
foreign country or sovereign state, or of any state, province, municipality, or
other political subdivision thereof, or of any department, agency, public
corporation, or other instrumentality thereof; PROVIDED that such an Account
shall be an Eligible Account to the extent that it is secured or payable by a
letter of credit satisfactory to the Agent in its sole discretion and meets the
other criteria for eligibility herein set forth;
(h) owed by an Account Debtor which is an Affiliate or employee of
either Borrower; provided that Accounts owing by Xxxxxxx to either Borrower
which meet the other criteria for eligibility herein set forth shall be Eligible
Accounts in an aggregate amount not to exceed $250,000;
(i) except as provided in (k) below, as to which either the
perfection, enforceability, or validity of the Agent's Lien in such Account, or
the Agent's right or ability to obtain direct payment to the Agent of the
proceeds of such Account, is governed by any federal, state, or local statutory
requirements other than those of the UCC;
(j) which is owed by an Account Debtor to which either Borrower is
indebted in any way, or which is subject to any right of setoff or recoupment by
the Account Debtor, unless the Account Debtor has entered into an agreement
acceptable to the Agent to waive setoff rights (excluding without duplication
those setoff items deducted in the determination of the Net
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Amount of Eligible Accounts); or if the Account Debtor thereon has disputed
liability or made any claim with respect to any other Account due from such
Account Debtor; but in each such case only to the extent of such indebtedness,
setoff, recoupment, dispute, or claim;
(k) which is owed by the government of the United States of
America, or any department, agency, public corporation, or other instrumentality
thereof, unless the Federal Assignment of Claims Act of 1940, as amended (31
U.S.C. section 3727 ET SEQ.), and any other steps necessary to perfect the
Agent's Lien therein, have been complied with to the Agent's satisfaction with
respect to such Account;
(l) which is owed by any state, municipality, or other political
subdivision of the United States of America, or any department, agency, public
corporation, or other instrumentality thereof and as to which the Agent
determines that its Lien therein is not or cannot be perfected;
(m) which represents a sale on a xxxx-and-hold, guaranteed sale,
sale and return, sale on approval, consignment, or other repurchase or return
basis;
(n) which is evidenced by a promissory note or other instrument or
by chattel paper;
(o) if Agent believes, in the exercise of its reasonable judgment,
that the prospect of collection of such Account is impaired or that the Account
may not be paid by reason of the Account Debtor's financial inability to pay;
(p) with respect to which the Account Debtor is located in any
state requiring the filing of a Notice of Business Activities Report or similar
report in order to permit the applicable Borrower to seek judicial enforcement
in such state of payment of such Account, unless such Borrower has qualified to
do business in such state or has filed a Notice of Business Activities Report or
equivalent report for the then current year;
(q) arises out of a sale not made in the ordinary course of the
applicable Borrower's business;
(r) the goods giving rise to such Account have not been shipped
and delivered to and accepted by the Account Debtor or the services giving rise
to such Account have not been performed by the applicable Borrower, and, if
applicable, accepted by the Account Debtor, or the Account Debtor revokes its
acceptance of such goods or services; or
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(s) which is not subject to a first priority and perfected
security interest in favor of the Agent for the benefit of the Lenders.
If any Account at any time ceases to be an Eligible Account by reason
of any of the foregoing exclusions or any failure to meet any other eligibility
criteria established by the Agent in the exercise of its reasonable discretion
then such Account shall promptly be excluded from the calculation of Eligible
Accounts.
"ELIGIBLE INVENTORY" means Inventory, valued at the lower of cost
or market, that constitutes raw materials or first quality finished goods and
that (without duplication): (a) is not, in the Agent's reasonable opinion,
slow-moving, obsolete or unmerchantable; (b) is not in transit and is located at
premises owned by a Borrower or on premises otherwise reasonably acceptable to
the Agent, PROVIDED, HOWEVER, that Inventory located on premises leased to a
Borrower shall not be Eligible Inventory unless the applicable Borrower shall
have delivered to the Agent on the Closing Date or within thirty (30) days
thereafter a written waiver, duly executed on behalf of the appropriate landlord
and in form and substance acceptable to the Agent, of all Liens which the
landlord for such premises may be entitled to assert against such Inventory and
provided further, that Inventory located at warehouses shall not be Eligible
Inventory unless the book value thereof exceeds $50,000 and the applicable
Borrower shall have delivered to the Agent a written bailee letter, duly
executed on behalf of the appropriate warehouseman and in form and substance
acceptable to the Agent, waiving all Liens which such warehouseman may be
entitled to assert against the Inventory and agreeing to hold such Inventory as
agent-for-perfection for the Agent; (c) upon which the Agent for the benefit of
the Lenders has a first priority perfected security interest; (d) is not spare
parts, packaging, shipping and display materials, supplies, xxxx-and-hold
Inventory, returned, obsolete or defective Inventory, or Inventory delivered to
the applicable Borrower on consignment; (e) is not Inventory acquired in
connection with Buy-Back Obligations; (f) does not constitute "freight-in"
charges; (g) that portion of the value of Inventory equal to the profit earned
by any Affiliate on sale thereof to either Borrower; (h) does not constitute
write-ups in value with respect to currency exchange rates; and (i) the Agent,
in the exercise of its reasonable commercial discretion, deems eligible as the
basis for Revolving Loans based on such collateral and credit criteria as the
Agent may from time to time establish. If any Inventory at any time ceases to be
Eligible Inventory, such Inventory shall promptly be excluded from the
calculation of Eligible Inventory. For purposes of determining Availability,
Eligible Inventory shall be valued at the lower of cost (on a first-in,
first-out "FIFO" basis) or market.
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"ENVIRONMENTAL COMPLIANCE RESERVE" means any reserves which the
Agent, after the Closing Date, establishes from time to time for amounts that
are reasonably likely to be expended by the applicable Borrower in order for
such Borrower and its operations and property (a) to comply with any notice from
a Governmental Authority asserting material non-compliance with Environmental
Laws, or (b) to correct any such material non-compliance identified in a report
delivered to the Agent and the Lenders pursuant to SECTION 9.7.
"ENVIRONMENTAL CLAIMS" means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for release or injury
to the environment.
"ENVIRONMENTAL LAWS" means all federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and codes, together
with all administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental Authority,
in each case relating to environmental, health, safety and land use matters.
"ENVIRONMENTAL LIEN" means a Lien in favor of any Governmental
Authority for (1) any liability under any Environmental Laws, or (2) damages
arising from, or costs incurred by such Governmental Authority in response to, a
Release or threatened Release of a Contaminant into the environment.
"ENVIRONMENTAL PROPERTY TRANSFER ACT" means any applicable
requirement of law that conditions, restricts, prohibits or requires any
notification or disclosure triggered by the closure of any property or the
transfer, sale or lease of any property or deed or title for any property for
environmental reasons, including, but not limited to, any socalled
"Environmental Cleanup Responsibility Acts" or "Responsible Property Transfer
Acts."
"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 motor vehicles with
respect to which a certificate of title has been issued, aircraft, dies, tools,
jigs, and office equipment, as well as all of such types of property leased by
each Borrower and all of each 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 supplies used or to be
used in connection therewith, and all substitutes for any of the foregoing, and
all manuals, drawings,
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instructions, warranties and rights with respect thereto; wherever any of the
foregoing is located.
"EQUITY PROCEEDS" means proceeds of exercises of warrants issued
by Ultimate Parent or issuances of capital stock by Ultimate Parent that are
loaned to either Borrower by the Ultimate Parent as Intercompany Accounts after
the Closing Date.
"ERISA" means the Employee Retirement Income Security Act of 1974,
and regulations promulgated thereunder.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) under common control with either 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 (a) a Reportable Event with respect to a
Pension Plan; (b) a withdrawal by either Borrower or any ERISA Affiliate from a
Pension Plan subject to Section 4063 of ERISA during a plan year in which it was
a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a
cessation of operations which is treated as such a withdrawal under Section
4062(e) of ERISA; (c) a complete or partial withdrawal by either Borrower or any
ERISA Affiliate from a Multi-employer Plan or notification that a Multi-employer
Plan is in reorganization; (d) the filing of a notice of intent to terminate,
the treatment of a Plan amendment as a termination under Section 4041 or 4041A
of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension
Plan or Multi-employer Plan; (e) an event or condition which might reasonably be
expected to constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Pension Plan or
Multi-employer Plan; or (f) the imposition of any liability under Title IV of
ERISA, other than PBGC premiums due but not delinquent under Section 4007 of
ERISA, upon either Borrower or any ERISA Affiliate.
"EVENT OF DEFAULT" has the meaning specified in SECTION 11.1.
"EXCESS CASH FLOW" means, for any period, the greater of (A) zero
(0); or (B) without duplication, the total of the following for Consumer or WOC,
as applicable, each calculated for such period: (1) EBITDA; PLUS (2) tax refunds
actually received; LESS (3) Capital Expenditures (to the extent actually made in
cash and/or due to be made in cash within such period, but in no event more than
the amount permitted hereunder); LESS (4) income and franchise taxes paid or
accrued excluding any provision for deferred taxes included in the determination
of net income; LESS (5) decreases in deferred income taxes resulting from
payments of
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deferred taxes accrued in prior periods; LESS (6) Interest Expenses paid; LESS
(7) scheduled amortization of Indebtedness actually paid in cash and/or due to
be paid in cash within such period; plus (8) reductions in Working Capital
during that period; or minus (9) increases in Working Capital during that period
LESS (10) distributions to, or payments of Intercompany Accounts owing to,
Parent, and permitted in accordance with clauses (ii) or (iii) of Section 9.15.
"EXCHANGE ACT" means the Securities and Exchange Act of 1934, and
regulations promulgated thereunder.
"EXCHANGE NOTES" means Parent's 11-_% Senior Notes due 2001.
"FDIC" means the Federal Deposit Insurance Corporation, and any
Governmental Authority succeeding to any of its principal functions.
"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 Agent 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 Agent.
"FEDERAL RESERVE BOARD" means the Board of Governors of the
Federal Reserve System or any successor thereto.
"FINANCIAL STATEMENTS" means, according to the context in which it
is used, the financial statements attached hereto, or any financial statements
required to be given to the Lenders pursuant to this Agreement.
"FISCAL YEAR" means the Borrowers' fiscal year for financial
accounting purposes. The current Fiscal Year of the Borrowers will end on June
30, 1996.
"FIXED ASSETS" means Equipment and Real Estate of the Borrowers.
"FIXTURES" means all fixtures as such term is defined in the UCC
including trade fixtures, building fixtures and leasehold improvements.
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"FUNDING DATE" means the date on which a Borrowing occurs.
"GAAP" means generally accepted accounting principles set forth
from time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board (or
agencies with similar functions of comparable stature and authority within the
U.S. accounting profession), which are applicable to the circumstances as of the
Closing Date.
"GENERAL INTANGIBLES" means all of each Borrower's now owned or
hereafter acquired general intangibles, choses in action and causes of action
and all other intangible personal property of each Borrower of every kind and
nature (other than Accounts), including, without limitation, all contract
rights, Proprietary Rights, corporate or other business records, inventions,
designs, blueprints, plans, specifications, patents, patent applications,
trademarks, service marks, trade names, trade secrets, goodwill, copyrights,
computer software, customer lists, registrations, licenses, franchises, tax
refund claims, any funds which may become due to such Borrower in connection
with the termination of any Plan or other employee benefit plan or any rights
thereto and any other amounts payable to each Borrower from any Plan or other
employee benefit plan, rights and claims against carriers and shippers, rights
to indemnification, business interruption insurance and proceeds thereof,
property, casualty or any similar type of insurance and any proceeds thereof,
proceeds of insurance covering the lives of key employees on which either
Borrower is beneficiary, and any letter of credit, guarantee, claim, security
interest or other security held by or granted to either Borrower to secure
payment by an Account Debtor of any of the Accounts.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state
or other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
and any corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
"GUARANTY" means, with respect to any Person, 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 obligations of any other Person (the "guaranteed
obligations"), or 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,
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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; or (c) to lease property or to
purchase any debt or equity securities or other property or services.
"INDENTURES" shall mean, collectively, (i) the indenture governing
the Parent's 11-_% Senior Notes Due 2001, (ii) the indenture governing the
Ultimate Parent's 12-3/4% Deferred Coupon Notes due June 1, 2004, and (iii) the
indenture governing the Ultimate Parent's 13-3/4% Senior Subordinated Notes due
1999, as the same may be amended, modified, restated, renewed or extended.
"INTERCOMPANY ACCOUNTS" means all assets and liabilities, however
arising, which are due to either Borrower from, which are due from either
Borrower to, or which otherwise arise from any transaction by either Borrower
with, any Affiliate; provided that either Borrower's obligations on Intercompany
Accounts owed to Parent or Ultimate Parent shall be subordinated in right of
payment to the Obligations.
"INTEREST PERIOD" means, as to any LIBOR Rate Loan, the period
commencing on the Funding Date of such Loan or on the Conversion/Continuation
Date on which the Loan is converted into or continued as a LIBOR Rate Loan, and
ending on the date one, two, three or six months thereafter as selected by
Consumer in its Notice of Borrowing or Notice of Conversion/Continuation;
provided that:
(i) 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;
(ii) any Interest Period pertaining to a LIBOR Rate
Loan 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
(iii) no Interest Period for any Revolving Loan shall
extend beyond the Termination Date.
"INTEREST RATE" means each or any of the interest rates, including
the Default Rate, set forth in SECTION 3.1.
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"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 returned goods, raw materials, other materials and supplies of any
kind, nature or description which are or might be consumed in such Borrower's
business or used in connection with the 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.
"INVESTMENT PROPERTY" means all investment property as such term
is defined in the UCC as now or hereafter in effect in those states that adopt
such definition.
"IRS" means the Internal Revenue Service and any Governmental
Authority succeeding to any of its principal functions under the Code.
"LATEST PROJECTIONS" means: (a) on the Closing Date and thereafter
until the Lenders receive new projections pursuant to SECTION 7.2(E), the
projections of each Borrower's financial condition, results of operations, and
cash flow, for the period commencing on July 1, 1996 and ending on June 30, 1999
and delivered to the Lenders prior to the Closing Date; and (b) thereafter, the
projections most recently received by the Lenders pursuant to SECTION 7.2(E).
"LENDER" and "LENDERS" have the meanings specified in the
introductory paragraph hereof.
"LETTER OF CREDIT" has the meaning specified in SECTION 2.4(A).
"LETTER OF CREDIT FEE" has the meaning specified in SECTION 3.6.
"LIBOR INTEREST PAYMENT DATE" means, with respect to a LIBOR Rate
Loan, first day of each calendar month during each Interest Period applicable to
such loan and the last day of each Interest Period applicable to such Loan.
"LIBOR INTEREST RATE DETERMINATION DATE" means each date of
calculating the LIBOR Rate for purposes of determining the interest rate with
respect to an Interest Period. The LIBOR Interest Rate Determination Date for
any LIBOR Rate Loan shall be the second Business Day prior to the first day of
the related Interest Period for such LIBOR Rate Loan.
"LIBOR RATE" means, for any Interest Period, with respect to LIBOR
Rate Loans comprising part of the same
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Borrowing, the rate of interest per annum (rounded upward to the next 1/1000th
of 1.0%) determined by the Agent as follows:
LIBOR Rate = LIBOR
------------------------------------
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 any Lender)
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
"LIBOR" means the rate of interest per annum (rounded
upward to the next 1/16 of 1%) notified to the Agent by Bank
of America as the rate of interest at which dollar deposits in
the approximate amount of the Loan to be made or continued as,
or converted into, a LIBOR Rate Loan and having a maturity
comparable to such Interest Period would be offered by Bank of
America's applicable lending office to major banks in the
London eurodollar market at approximately 11:00 a.m. (London
time) two Business Days prior to the commencement of such
Interest Period; but in any event not to exceed the offered
rate for deposits in United States Dollars quoted on Telerate
page 3750 for a comparable amount and Interest Period at
approximately the same time on the same date.
"LIBOR RATE LOAN" means a Revolving Loan during any period in
which it bears interest at the LIBOR Rate.
"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,
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restriction, lease or other title exception or encumbrance affecting property.
"LOAN ACCOUNT" means the loan account of each Borrower, which
account shall be maintained by the Agent.
"LOAN DOCUMENTS" means this Agreement, the Patent and
Trademark Agreements, the Parent Guaranties, the Pledge Agreement, and any other
agreements, instruments, and documents heretofore, now or hereafter evidencing,
securing, guaranteeing or otherwise relating to the Obligations, the Collateral,
or any other aspect of the transactions contemplated by this Agreement.
"Loans" means the Revolving Loans and Term Loans,
collectively.
"MAJORITY LENDERS" means, at anytime Lenders whose Pro Rata
shares aggregate more than 66-2/3% of the Commitments.
"MARGIN STOCK" means "margin stock" as such term is defined in
Regulation G, T, U or X of the Federal Reserve Board.
"MATERIAL ADVERSE EFFECT" means (a) a material adverse change
in, or a material adverse effect upon, the operations, business, properties,
condition (financial or otherwise) or prospects of either Borrower or the
Collateral; (b) a material impairment of the ability of either Borrower to
perform under any Loan Document and to avoid any Event of Default; or (c) a
material adverse effect upon the legality, validity, binding effect or
enforceability against either Borrower of any Loan Document to which it is a
party.
"MAXIMUM REVOLVER AMOUNT" means $30,000,000.
"MULTI-EMPLOYER PLAN" means a "multi-employer plan" as defined
in Section 4001(a)(3) of ERISA which is or was at any time during the current
year or the immediately preceding six (6) years contributed to by either
Borrower or any ERISA Affiliate.
"NET AMOUNT OF ELIGIBLE ACCOUNTS" means, at any time, the
gross amount of Eligible Accounts less sales, excise or similar taxes, and less
returns, discounts, claims, credits and allowances of any nature at any time
issued, owing, granted, outstanding, available or claimed, including without
limitation, Buy-Back Obligations, Conversion Obligations and Co-Op Advertising.
"NOTICE OF BORROWING" has the meaning specified in SECTION
2.2(A).
"NOTICE OF CONVERSION/CONTINUATION" has the meaning specified
in SECTION 3.2(B).
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"OBLIGATIONS" means, without duplication, all present and
future loans, advances, liabilities, obligations, covenants, duties, and debts
owing by either Borrower to the Agent and/or any Lender, arising under or
pursuant to this Agreement or any of the other Loan Documents, 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 Agent and/or any Lender in either 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 principal, interest,
charges, expenses, fees, reasonable attorneys' fees, filing fees and any other
sums chargeable to either Borrower hereunder or under any of the other Loan
Documents. "Obligations" includes, without limitation, all debts, liabilities,
and obligations now or hereafter owing from either Borrower to the Agent and/or
any Lender under or in connection with the Letters of Credit.
"OPERATING CASH FLOW" means as to Consumer and WOC on a
combined basis, for any fiscal period, of Consumer and WOC EBITDA, the
consolidated EBITDA, PLUS decreases in the consolidated Working Capital of
Consumer and WOC during such period or MINUS increases in the consolidated
Working Capital of Consumer and WOC during such period; MINUS the sum of the
following during such period: (i) cash interest expenses, (ii) scheduled
principal payments, (iii) Capital Expenditures; and (iv) income taxes.
"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 or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement or any other Loan
Documents.
"PARENT" means Waxman USA Inc., a Delaware corporation.
"PARENT GUARANTIES" means (i) the secured Guaranty of even
date herewith by Parent in favor of Agent for the benefit of Lenders guarantying
payment and performance of the Obligations pertaining to the Term Loan, in form
and substance satisfactory to the Agent and (ii) the unsecured Guaranty of even
date herewith by Parent in favor of the Agent for the benefit of Lenders
guarantying payment and performance of the Obligations pertaining to the
Revolving Loan Obligations, in form and substance satisfactory to the Agent.
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"PARTICIPATING LENDER" means any Person who shall have been
granted the right by any Lender to participate in the financing provided by such
Lender under this Agreement, and who shall have entered into a participation
agreement in form and substance satisfactory to such Lender.
"PATENT AND TRADEMARK AGREEMENTS" means the Patent Security
Agreement and the Trademark Security Agreement, each dated as of the date
hereof, executed and delivered by each Borrower to the Agent to evidence and
perfect the Agent's security interest in each Borrower's present and future
patents, trademarks, and related licenses and rights, for the benefit of the
Lenders.
"PAYMENT ACCOUNT" means each blocked bank account established
pursuant to SECTION 6.9, to which the funds of each Borrower (including, without
limitation, proceeds of Accounts and other Collateral) are deposited or
credited, and which is maintained in the name of the Agent or such Borrower, as
the Agent may determine, on terms acceptable to the Agent.
"PBGC" means the Pension Benefit Guaranty Corporation or any
Governmental Authority succeeding to the functions thereof.
"PENDING REVOLVING LOANS" means, at any time, the aggregate
principal amount of all Revolving Loans requested in any Notice(s) of Borrowing
received by the Agent which have not yet been advanced.
"PENSION PLAN" means a pension plan (as defined in Section
3(2) of ERISA) subject to Title IV of ERISA which each Borrower sponsors,
maintains, or to which it makes, is making, or is obligated to make
contributions, or in the case of a Multi-employer Plan has made contributions at
any time during the immediately preceding five (5) plan years.
"PERMITTED LIENS" means:
(a) Liens for taxes not delinquent or for statutory
liens for taxes in an amount not to exceed $100,000; provided that the payment
of such taxes which are due and payable is being contested in good faith by
appropriate proceedings diligently pursued and as to which adequate financial
reserves have been established on the applicable Borrower's books and records
and a stay of enforcement of any such Lien is in effect.
(b) the Agent's Liens;
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(c) deposits under worker's compensation,
unemployment insurance, social security and other similar laws, or to secure the
performance of bids, tenders or contracts (other than for the repayment of
borrowed money) or to secure indemnity, performance or other similar bonds for
the performance of bids, tenders or contracts (other than for the repayment of
borrowed money) or to secure statutory obligations (other than liens arising
under ERISA or Environmental Liens), Liens in favor of customs and revenue
authorities to secure customs duties, or surety or appeal bonds, or to secure
indemnity, performance or other similar bonds in the ordinary course of
business;
(d) Liens securing the claims or demands of
materialmen, mechanics, carriers, warehousemen, landlords and other like
Persons, PROVIDED that the payment thereof is not at the time required by
SECTION 9.1;
(e) Reservations, exceptions, encroachments,
easements, rights of way, covenants running with the land, and other similar
title exceptions or encumbrances affecting any Real Estate; PROVIDED that they
do not in the aggregate materially detract from the value of the Real Estate or
materially interfere with its use in the ordinary conduct of the applicable
Borrower's business; and
(f) Judgment and other similar Liens arising in
connection with court proceedings, PROVIDED that (A) the existence of such Liens
is being contested in good faith and by proper proceedings diligently pursued,
(B) reserves or other appropriate provision, if any, as are required by GAAP
have been made therefor, (C) a stay of enforcement of any such Liens is in
effect, (D) the priority of any such Liens is subordinate to that of the Agent's
Liens, and (E) the existence of any judgment or court proceedings upon which
such Liens are based does not otherwise constitute an Event of Default under
this Agreement.
"PERMITTED RENTALS" has the meaning specified in SECTION 9.24.
"PERSON" means any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, Governmental Authority, or any other entity.
"PLAN" means an employee benefit plan (as defined in Section
3(3) of ERISA) which either Borrower sponsors or maintains or to which either
Borrower makes, is making, or is obligated to make contributions and includes
any Pension Plan.
"PLEDGE AGREEMENT" means the Stock Pledge Agreement by
Parent with respect to the Pledged Shares.
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"PLEDGED SHARE RESERVE" shall have the meaning assigned to
that term in Section 2.1(b).
"PLEDGED SHARES" means 500,000 shares of the common stock of
Xxxxxxx.
"PREMISES" means the land identified by addresses on SCHEDULE
8.12, together with all buildings, improvements, and fixtures thereon and all
tenements, hereditaments, and appurtenances belonging or in any way appertaining
thereto, and which constitutes all of the real property in which either Borrower
has any interests on the Closing Date.
"PRO RATA SHARE" means, with respect to a Lender, a fraction
(expressed as a percentage), the numerator of which is the amount of such
Lender's Commitment and the denominator of which is the sum of the amounts of
all of the Lenders' Commitments.
"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, service marks, trade names, trade styles, patent, trademark and
service xxxx applications, and all licenses and rights related to any of the
foregoing, including, without limitation, those patents, trademarks, service
marks and copyrights set forth on SCHEDULE 8.13 hereto, 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.
"REAL ESTATE" means all of the present and future interests of
each Borrower, as owner, lessee, or otherwise, in the Premises, including,
without limitation, any interest arising from an option to purchase or lease the
Premises or any portion thereof.
"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.
"RENTALS" has the meaning specified in SECTION 9.24.
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"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.
"REQUIRED LENDERS" means, at any time Lenders whose Pro Rata
Shares aggregate more than 35% of the Commitments.
"REQUIREMENT OF LAW" means, as to any Person, any law
(statutory or common), treaty, rule or regulation or determination of an
arbitrator or of a Governmental Authority, in each case applicable to or binding
upon the Person or any of its property or to which the Person or any of its
property is subject.
"RESPONSIBLE OFFICER" means the chief executive officer or the
president of each Borrower, or any other officer having substantially the same
authority and responsibility; or, with respect to compliance with financial
covenants, the chief financial officer or the treasurer of each Borrower, or any
other officer having substantially the same authority and responsibility.
"RESTRICTED INVESTMENT" means any acquisition of property by
either Borrower in exchange for cash or other property, whether in the form of
an acquisition of stock, debt, 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)
Equipment to be used in the business of such Borrower so long as the acquisition
costs thereof constitute Capital Expenditures permitted hereunder; (b) goods
held for sale or lease or to be used by such Borrower in the ordinary course of
business; (c) current assets arising from the sale or lease of goods or the
rendition of services in the ordinary course of business of such Borrower; (d)
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; (e)
certificates of deposit maturing within one year from the date of acquisition,
bankers' acceptances, Eurodollar bank deposits, or 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 (f) commercial paper given a rating of
"A2" or better by Standard & Poor's Corporation or "P2" or better by Xxxxx'x
Investors Service, Inc. and maturing not more than 90 days from the date of
creation thereof;
"REVOLVING LOANS" has the meaning specified in SECTION 2.1.
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"SENIOR SUBORDINATED NOTES" means Ultimate Parent's 13-3/4%
Senior Subordinated Notes due 1999, as the same may be amended, modified,
restated, renewed or extended.
"SOLVENT" means when used with respect to any Person that (a)
the fair value of all its assets is in excess of the total amount of its debts
(including contingent liabilities); (b) it is able to pay its debts as they
mature; (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; and (d) it is not "insolvent" as such term is defined in Section 101(32)
of the Bankruptcy Code.
"STATED TERMINATION DATE" means May 31, 1999.
"SUBSIDIARY" means any corporation of which more than fifty
percent (50.0%) of the outstanding securities of any class or classes, the
holders of which are ordinarily, in the absence of contingencies, entitled to
elect a majority of the corporate directors (or Persons performing similar
functions), is at the time, directly or indirectly through one or more
intermediaries, owned by either Borrower and/or one or more of its Subsidiaries.
"TAXES" means any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, excluding, in the case of each Lender and the Agent, such taxes
(including income taxes or franchise taxes) as are imposed on or measured by
each Lender's net income by the jurisdiction (or any political subdivision
thereof) under the laws of which such Lender or the Agent, as the case may be,
is organized or maintains a Lending Office.
"TERMINATION DATE" means the earliest to occur of (i) the
Stated Termination Date, (ii) the date the Revolver Facility is terminated
either by the Borrowers pursuant to SECTION 4.2 or by the Majority Lenders
pursuant to SECTION 11.2, and (iii) the date this Agreement is otherwise
terminated for any reason whatsoever.
"TERM LOANS" means the Consumer Term Loan and WOC Term Loan in
the aggregate initial principal amount of $5,000,000.
"TERM NOTES" has the meaning ascribed thereto in Section 2.5.
"TRADEMARK LICENSE AGREEMENTS" means the Trademark License
Agreements by and among Ultimate Parent, Parent, and the Borrowers dated as of
May 20, 1994.
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"UCC" means the Uniform Commercial Code (or any successor
statute) of the State of New York 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.
"ULTIMATE PARENT" means Waxman Industries, Inc., a Delaware
corporation.
"UNUSED LETTER OF CREDIT SUBFACILITY" means, in reference to
each Borrower, the Unused Letter of Credit Subfacility-Consumer or the Unused
Letter of Credit Subfacility-WOC, as applicable.
"UNUSED LETTER OF CREDIT SUBFACILITY-CONSUMER" means an amount
equal to $750,000 MINUS the sum of (a) the aggregate undrawn amount of all
outstanding Letters of Credit for Consumer as account party PLUS (b) the
aggregate unpaid reimbursement obligations with respect to all Letters of Credit
for Consumer as account party.
"UNUSED LETTER OF CREDIT SUBFACILITY - WOC" means an amount
equal to $1,250,000 MINUS the sum of (a) the aggregate undrawn amount of all
outstanding Letters of Credit for WOC as account party PLUS b) the aggregate
unpaid reimbursement obligations with respect to all Letters of Credit for WOC
as account party.
"UNFUNDED PENSION LIABILITY" means the excess of a Plan's
benefit liabilities under Section 4001(a)(16) of ERISA, over the current value
of that Plan's assets, determined in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Code for the applicable
plan year.
"WOC" means WOC Inc., a Delaware corporation.
"WOC ACCRETING RESERVE" means a reserve against Availability -
WOC which reserve shall initially be $19,842 and shall be increased on the first
day of each month by the amount of $19,842, commencing on August 1, 1996.
"WOC TERM LOAN" means the Term Loan provided to WOC in
accordance with Section 2.5 hereof.
"WORKING CAPITAL" at any date means Current Assets MINUS
Current Liabilities.
1.2 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,
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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.
1.3 INTERPRETIVE PROVISIONS. (a) The meanings of defined terms are
equally applicable to the singular and plural forms of the defined terms.
(b) The words "hereof," "herein," "hereunder" and similar
words refer to this Agreement as a whole and not to any particular provision of
this Agreement; and Subsection, Section, Schedule and Exhibit references are to
this Agreement unless otherwise specified.
(c) (i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other writings,
however evidenced.
(ii) The term "including" is not limiting and means
"including without limitation."
(iii) In the computation of periods of time from a
specified date to a later specified date, the word "from" means "from and
including," the words "to" and "until" each mean "to but excluding" and the word
"through" means "to and including."
(d) Unless otherwise expressly provided herein, (i) references
to agreements (including this Agreement) and other contractual instruments shall
be deemed to include all subsequent amendments and other modifications thereto,
but only to the extent such amendments and other modifications are not
prohibited by the terms of any Loan Document, and (ii) references to any statute
or regulation are to be construed as including all statutory and regulatory
provisions consolidating, amending, replacing, supplementing or interpreting the
statute or regulation.
(e) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation of this
Agreement.
(f) This Agreement and other Loan Documents may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are cumulative and shall
each be performed in accordance with their terms.
(g) This Agreement and the other Loan Documents are the result
of negotiations among and have been reviewed by counsel to the Agent, the
Borrowers and the other parties, and
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are the products of all parties. Accordingly, they shall not be construed
against the Lenders or the Agent merely because of the Agent's or Lender's
involvement in their preparation.
ARTICLE 2
LOANS AND LETTERS OF CREDIT
---------------------------
2.1 REVOLVING LOANS. (a) Subject to the satisfaction of the conditions
precedent set forth in ARTICLE 10, each Lender severally agrees, upon Consumer's
request from time to time on any Business Day during the period from the Closing
Date to the Termination Date, to make revolving loans (the "Revolving Loans") to
the Borrowers, in amounts not to exceed (except with respect to BABC Loans) such
Lender's Pro Rata Share of each Borrower's Availability. The Lenders, however,
in their discretion, may elect to make Revolving Loans or participate (as
provided for in SECTION 2.4(F)) in the credit support or enhancement provided
through the Agent to the issuers of Letters of Credit in excess of each
Borrower's Availability on one or more occasions, but if they do so, neither the
Agent nor the Lenders shall be deemed thereby to have changed the limits of the
Maximum Revolver Amount or either Borrower's Availability or to be obligated to
exceed such limits on any other occasion. If the sum of outstanding Revolving
Loans, the aggregate amount of Pending Revolving Loans, the undrawn amount of
outstanding Letters of Credit and any unpaid reimbursement obligations in
respect of Letters of Credit for either Borrower exceeds that Borrower's
Availability, the Lenders may refuse to make or otherwise restrict the making of
Revolving Loans to that Borrower as the Lenders determine until such excess has
been eliminated.
(b) If, as of any date of determination, the aggregate market
value of the Pledged Shares falls to an amount less than the product of the
outstanding principal balances of the Term Loans multiplied by 1.5, a reserve
against Availability will be established in an amount equal to the amount of the
short-fall.
If the aggregate market value of the Pledged Shares falls to
an amount less than the outstanding principal balances of the Term Loans, Agent
may, at its election, (i) sell or cause Borrower to sell all of the Pledged
Shares and apply the proceeds to the outstanding balances of the Term Loans, or
(ii) establish a reserve against Availability determined by reference to the
following formula:
Reserve + aggregate market value of Pledged Shares = Term Loan
balances x 2.0; but such Reserve shall not exceed the Term
Loan balances.
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The reserve against Availability described above is herein referred to as the
"Pledged Share Reserve" and shall be reduced by an amount equal to the lesser of
(x) $714,300 or (y) the amount of the Accreting Reserves as of any date of
determination. If, after the establishment of a Pledged Share Reserve,
Availability falls to less than $5,000,000, Agent shall be entitled to sell the
Pledged Shares and reverse, in whole or in part, the Pledged Share Reserve to
the extent necessary to eliminate that short-fall.
2.2 PROCEDURE FOR BORROWING. (a) NOTICE OF BORROWING. (1) Each
Borrowing shall be made upon Consumer's irrevocable written notice delivered to
the Agent in the form of a Notice of Borrowing (which notice must be received by
the Agent prior to 11:00 a.m. (Chicago time) (i) three Business Days prior to
the requested Funding Date, in the case of LIBOR Rate Loans and (ii) no later
than 11:00 a.m. (Chicago time) on the requested Funding Date, in the case of
Base Rate Loans, specifying:
(A) which Borrower is to receive the
Borrowing;
(B) the amount of the Borrowing;
(C) the requested Funding Date, which shall
be a Business Day;
(D) whether the Revolving Loans requested
are to be Base Rate Loans or LIBOR Rate Loans; and
(E) the duration of the Interest Period if
the requested Revolving Loans are to be LIBOR Rate Loans. If the Notice of
Borrowing fails to specify the duration of the Interest Period for any Borrowing
comprised of LIBOR Rate Loans, such Interest Period shall be three months;
provided, however, that with respect to the Borrowings to be made on the Closing
Date, such Borrowings will consist of Base Rate Loans only.
(2) After giving effect to any Borrowing,
there may not be more than three (3) different Interest Periods in effect.
(3) With respect to any request for Base Rate
Loans, in lieu of delivering the above-described Notice of Borrowing Consumer
may give the Agent 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 Agent shall be entitled to rely on the telephonic notice in
making such Base Rate Loans.
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(b) RELIANCE UPON AUTHORITY. On or prior to the Closing Date
and thereafter prior to any change with respect to any of the information
contained in the following clauses (i) and (ii), Consumer shall deliver to the
Agent a writing setting forth (i) the account of the applicable Borrower to
which the Agent is authorized to transfer the proceeds of the Revolving Loans
requested pursuant to this SECTION 2.2, and (ii) the names of the officers of
Consumer authorized to request Revolving Loans on behalf of the Borrowers, and
shall provide the Agent with a specimen signature of each such officer. The
Agent shall be entitled to rely conclusively on such officer's authority to
request Revolving Loans on behalf of each Borrower, the proceeds of which are to
be transferred to any of the accounts specified by Consumer pursuant to the
immediately preceding sentence, until the Agent receives written notice to the
contrary. The Agent shall have no duty to verify the identity of any individual
representing himself or herself as one of the officers authorized by the
Borrowers to make such requests on their behalf.
(c) NO LIABILITY. The Agent shall not incur any liability to
either Borrower as a result of acting upon any notice referred to in SECTIONS
2.2(A) and (B), which notice the Agent believes in good faith to have been given
by an officer of Consumer duly authorized by each Borrower to request Revolving
Loans on its behalf or for otherwise acting in good faith under this SECTION
2.2, and the crediting of Revolving Loans to the applicable Borrower's deposit
account, or transmittal to such Person as an authorized officer shall direct,
shall conclusively establish the obligation of the Borrower to repay such
Revolving Loans as provided herein.
(d) NOTICE IRREVOCABLE. Any Notice of Borrowing (or telephonic
notice in lieu thereof) made pursuant to SECTION 2.2(A) shall be irrevocable and
the applicable Borrower shall be bound to borrow the funds requested therein in
accordance therewith.
(e) AGENT'S ELECTION. Promptly after receipt of a Notice of
Borrowing (or telephonic notice in lieu thereof) pursuant to SECTION 2.2(A), the
Agent shall elect, in its discretion, (i) to have the terms of SECTION 2.2(F)
apply to such requested Borrowing, or (ii) to request BABC to make a BABC Loan
pursuant to the terms of SECTION 2.2(G) in the amount of the requested
Borrowing; PROVIDED, HOWEVER, that if BABC declines in its sole discretion to
make a BABC Loan pursuant to SECTION 2.2(G), the Agent shall elect to have the
terms of SECTION 2.2(F) apply to such requested Borrowing.
(f) MAKING OF REVOLVING LOANS. (i) In the event that the Agent
shall elect to have the terms of this SECTION 2.2(F) apply to a requested
Borrowing as described in SECTION 2.2(E),
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then promptly after receipt of a Notice of Borrowing or telephonic notice
pursuant to SECTION 2.2(A), the Agent shall notify the Lenders by telecopy,
telephone or other similar form of transmission, of the requested Borrowing.
Each Lender shall make the amount of such Lender's Pro Rata Share of the
requested Borrowing available to the Agent in same day funds, to such account of
the Agent as the Agent may designate, not later than noon (Chicago time) on the
Funding Date applicable thereto. After the Agent's receipt of the proceeds of
such Revolving Loans, upon satisfaction of the applicable conditions precedent
set forth in ARTICLE 10, the Agent shall make the proceeds of such Revolving
Loans available to the designated Borrower on the applicable Funding Date by
transferring same day funds equal to the proceeds of such Revolving Loans
received by the Agent to the account of the applicable Borrower, as designated
in writing by Consumer; PROVIDED, HOWEVER, that the amount of Revolving Loans so
made on any date shall in no event exceed the separate Availability of the
applicable Borrower on such date.
(ii) Unless the Agent receives notice from a Lender on or
prior to the Closing Date or, with respect to any Borrowing after the Closing
Date, at least one Business Day prior to the date of such Borrowing, that such
Lender will not make available as and when required hereunder to the Agent for
the account of the applicable Borrower the amount of that Lender's Pro Rata
Share of the Borrowing, the Agent may assume that each Lender has made such
amount available to the Agent in immediately available funds on the Funding Date
and the Agent may (but shall not be so required), in reliance upon such
assumption, make available to the applicable Borrower on such date a
corresponding amount. If and to the extent any Lender shall not have made its
full amount available to the Agent in immediately available funds and the Agent
in such circumstances has made available to the applicable Borrower such amount,
that Lender shall on the Business Day following such Funding Date make such
amount available to the Agent, together with interest at the Federal Funds Rate
for each day during such period. A notice of the Agent submitted to any Lender
with respect to amounts owing under this subsection shall be conclusive, absent
manifest error. If such amount is so made available, such payment to the Agent
shall constitute such Lender's Loan on the date of Borrowing for all purposes of
this Agreement. If such amount is not made available to the Agent on the
Business Day following the Funding Date, the Agent will notify the applicable
Borrower of such failure to fund and, upon demand by the Agent, the applicable
Borrower shall pay such amount to the Agent for the Agent's account, together
with interest thereon for each day elapsed since the date of such Borrowing, at
a rate per annum equal to the interest rate applicable at the time to the Loans
comprising such Borrowing. The failure of any Lender ("Defaulting Lender") to
make any Loan on any Funding Date shall not relieve any other Lender of any
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obligation hereunder to make a Loan on such Funding Date, but no Lender shall be
responsible for the failure of any other Lender to make the Loan to be made by
such other Lender on any Funding Date.
(iii) The Agent shall not be obligated to transfer to a
Defaulting Lender any payments made by either Borrower to the Agent for the
Defaulting Lender's benefit; nor shall a Defaulting Lender be entitled to the
sharing of any payments hereunder. Amounts payable to a Defaulting Lender shall
instead be paid to or retained by the Agent. The Agent may hold and, in its
discretion, re-lend to Borrowers the amount of all such payments received or
retained by it for the account of such Defaulting Lender. For purposes of voting
or consenting to matters with respect to the Loan Documents and determining Pro
Rata Shares, such Defaulting Lender shall be deemed not to be a "Lender" and
such Lender's Commitment shall be deemed to be zero (-0-). This Section shall
remain effective with respect to such Lender until such time as the Defaulting
Lender shall no longer be in default of any of its obligations under this
Agreement. The operation of this Section shall not be construed to increase or
otherwise affect the Commitment of any Lender, or relieve or excuse the
performance by either Borrower of its duties and obligations hereunder.
(g) MAKING OF BABC LOANS. (i) In the event the Agent shall
elect, with the consent of BABC, to have the terms of this SECTION 2.2(G) apply
to a requested Borrowing as described in SECTION 2.2(E), BABC shall make a
Revolving Loan in the amount of such Borrowing (any such Revolving Loan made
solely by BABC pursuant to this SECTION 2.2(G) being referred to as a "BABC
Loan" and such Revolving Loans being referred to collectively as "BABC Loans")
available to the applicable Borrower on the Funding Date applicable thereto by
transferring same day funds to an account of that Borrower, designated in
writing by Consumer. Each BABC Loan shall be subject to all the terms and
conditions applicable to other Revolving Loans except that all payments thereon,
including all interest paid or accrued with respect thereto, shall be payable to
BABC solely for its own account (and for the account of the holder of any
participation interest with respect to such Revolving Loan). The Agent shall not
request BABC to make any BABC Loan if (i) the Agent shall have received written
notice from any Lender, or otherwise has actual knowledge, that one or more of
the applicable conditions precedent set forth in ARTICLE 10 will not be
satisfied on the requested Funding Date for the applicable Borrowing, or (ii)
the requested Borrowing would exceed the Availability of the applicable
Borrower on such Funding Date. BABC shall not otherwise be required to
determine whether the applicable conditions precedent set forth in ARTICLE 10
have been satisfied or the requested Borrowing would exceed the Availability of
the
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applicable Borrower on the Funding Date therefor, prior to making, in its
sole discretion, any BABC Loan. The aggregate outstanding principal balance of
the BABC Loans shall not exceed $2,000,000 at any time.
(ii) The BABC Loans shall be repayable on the same terms as
the other Revolving Loans, shall be secured by the Collateral, shall constitute
Revolving Loans and Obligations hereunder, and shall bear interest at the rate
applicable to the other Revolving Loans from time to time.
(h) AGENT ADVANCES. (1) Subject to the limitations set forth
in the provisos contained in this SECTION 2.2(H), the Agent is hereby authorized
by the Borrowers and the Lenders, from time to time in the Agent's sole
discretion, (1) after the occurrence of a Default or an Event of Default, or (2)
at any time that any of the other applicable conditions precedent set forth in
ARTICLE 10 have not been satisfied, to make Revolving Loans to the Borrowers on
behalf of the Lenders which the Agent, in its reasonable business judgment,
deems necessary or desirable (A) to preserve or protect the Collateral, or any
portion thereof, (B) to enhance the likelihood of, or maximize the amount of,
repayment of the Loans and other Obligations, or (C) to pay any other amount
chargeable to the Borrowers pursuant to the terms of this Agreement, including,
without limitation, costs, fees and expenses as described in SECTION 15.7 (any
of the advances described in this SECTION 2.2(I) being hereinafter referred to
as "Agent Advances"); PROVIDED, that the Agent shall not make any Agent Advance
to the Borrowers if the amount thereof would exceed the Availability of the
applicable Borrower on the Funding Date applicable thereto; and PROVIDED,
FURTHER, that the Required Lenders may at any time revoke the Agent's
authorization contained in this SECTION 2.2(H) to make Agent Advances, any such
revocation to be in writing and to become effective upon the Agent's receipt
thereof.
(2) The Agent Advances shall be repayable on demand and
secured by the Collateral, shall constitute Revolving Loans and Obligations
hereunder, and shall bear interest at the rate applicable to the Revolving Loans
from time to time. The Agent shall notify each Lender in writing of each such
Agent Advance.
(i) SETTLEMENT. It is agreed that each Lender's funded portion
of the Revolving Loans is intended by the Lenders to be equal at all times to
such Lender's Pro Rata Share of the outstanding Revolving Loans. Notwithstanding
such agreement, the Agent, BABC, and the other Lenders agree (which agreement
shall not be for the benefit of or enforceable by either Borrower) that in order
to facilitate the administration of this Agreement and the other Loan Documents,
settlement among them as to the Revolving Loans, the BABC Loans and the Agent
Advances shall take
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place on a periodic basis in accordance with the following provisions:
(1) The Agent shall request settlement ("Settlement") with the
Lenders on a weekly basis, or on a more frequent basis if so determined by the
Agent, (1) on behalf of BABC, with respect to each outstanding BABC Loan, (2)
for itself, with respect to each Agent Advance, and (3) with respect to
collections received by Agent by notifying the Lenders by telecopy, telephone or
other similar form of transmission, of such requested Settlement, no later than
noon (Chicago time)on the date of such requested Settlement (the "Settlement
Date"). Each Lender (other than BABC, in the case of BABC Loans) shall make the
amount of such Lender's Pro Rata Share of the outstanding principal amount of
the BABC Loans and Agent Advances with respect to which Settlement is requested
available to the Agent, for itself or for the account of BABC, in same day
funds, to such account of the Agent as the Agent may designate, not later than
noon (Chicago time), on the Settlement Date applicable thereto, regardless of
whether the applicable conditions precedent set forth in ARTICLE 10 have then
been satisfied. Such amounts made available to the Agent shall be applied
against the amounts of the applicable BABC Loan or Agent Advance and, together
with the portion of such BABC Loan or Agent Advance representing BABC's Pro Rata
Share thereof, shall constitute Revolving Loans of such Lenders. If any such
amount is not made available to the Agent by any Lender on the Settlement Date
applicable thereto, the Agent shall be entitled to recover such amount on demand
from such Lender together with interest thereon at the Federal Funds Rate for
the first three (3) days from and after the Settlement Date and thereafter at
the Interest Rate then applicable to the Revolving Loans.
(2) Notwithstanding the foregoing, not more than one (1)
Business Day after demand is made by the Agent (whether before or after the
occurrence of a Default or an Event of Default and regardless of whether the
Agent has requested a Settlement with respect to a BABC Loan or Agent Advance),
each other Lender shall irrevocably and unconditionally purchase and receive
from BABC or the Agent, as applicable, without recourse or warranty, an
undivided interest and participation in such BABC Loan or Agent Advance to the
extent of such Lender's Pro Rata Share thereof by paying to the Agent, in same
day funds, an amount equal to such Lender's Pro Rata Share of such BABC Loan or
Agent Advance. If such amount is not in fact made available to the Agent by any
Lender, the Agent shall be entitled to recover such amount on demand from such
Lender together with interest thereon at the Federal Funds Rate for the first
three (3) days from and after such demand and thereafter at the Interest Rate
then applicable to the Revolving Loans.
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(3) From and after the date, if any, on which any Lender
purchases an undivided interest and participation in any BABC Loan or Agent
Advance pursuant to subsection (2) above, the Agent shall promptly distribute to
such Lender at such address as such Lender may request in writing, such Lender's
Pro Rata Share of all payments of principal and interest and all proceeds of
Collateral received by the Agent in respect of such BABC Loan or Agent Advance.
(4) Between Settlement Dates, the Agent, to the extent no
Agent Advances or BABC Loans are outstanding, may pay over to BABC any payments
received by Agent, which in accordance with the terms of the Agreement would be
applied to the reduction of the Revolving Loans, for application to BABC's Pro
Rata Share of the Revolving Loans. If, as of any Settlement Date, collections
received since the then immediately preceding Settlement Date have been applied
to BABC's Pro Rata Share of the Revolving Loans other than to BABC Loans or
Agent Advances, as provided for in the previous sentence, BABC shall pay to the
Agent for the accounts of the Lenders, to be applied to the outstanding
Revolving Loans of such Lenders, an amount such that each Lender shall, upon
receipt of such amount, have, as of such Settlement Date, its Pro Rata Share of
the Revolving Loans. During the period between Settlement Dates, BABC with
respect to BABC Loans, the Agent with respect to Agent Advances, and each Lender
with respect to the Revolving Loans other than BABC Loans and Agent Advances,
shall be entitled to interest at the applicable rate or rates payable under the
Agreement on the actual average daily amount of funds employed by BABC, the
Agent and the other Lenders.
(j) NOTATION. The Agent shall record on its books the
principal amount of the Revolving Loans owing to each Lender, including the BABC
Loans owing to BABC, and the Agent Advances owing to the Agent, from time to
time. In addition, each Lender is authorized, at such Lender's option, to note
the date and amount of each payment or prepayment of principal of such Lender's
Revolving Loans in its books and records, including computer records, such books
and records constituting rebuttably presumptive evidence, absent manifest error,
of the accuracy of the information contained therein.
(k) LENDERS' FAILURE TO PERFORM. All Loans (other than BABC
Loans and Agent Advances) shall be made by the Lenders simultaneously and in
accordance with their Pro Rata Shares. It is understood that (a) no Lender shall
be responsible for any failure by any other Lender to perform its obligation to
make any Loans hereunder, nor shall any Commitment of any Lender be increased or
decreased as a result of any failure by any other Lender to perform its
obligation to make any Revolving Loans hereunder, and (b) no failure by any
Lender to perform its
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obligation to make any Revolving Loans hereunder shall excuse any other Lender
from its obligation to make any Revolving Loans hereunder.
2.3 CONSUMER AS AGENT FOR BORROWERS. WOC and Consumer agree that
Consumer shall serve as agent for both Borrowers with respect to the issuance of
Notices of Borrowing and Notices of Conversion/Continuation, selection of
interest rates, designation of which Borrower is to receive each Borrowing, the
account to which that Borrowing is to be transferred and all other matters
requiring action of the Borrowers under Articles 2, 3 and 4. WOC and Consumer
further agree that the Responsible Officers of Consumer are authorized to act on
behalf of both Borrowers in furtherance of the matters set forth in the
preceding sentence.
2.4 LETTERS OF CREDIT.
(a) AGREEMENT TO CAUSE ISSUANCE. Subject to the terms and
conditions of this Agreement, and in reliance upon the representations and
warranties of the Borrowers herein set forth, the Agent agrees to take
reasonable steps to cause to be issued for the account of each Borrower and to
provide credit support or other enhancement in connection with one or more
stand-by or documentary letters of credit (each such letter of credit, a "Letter
of Credit" and such letters of credit, collectively, the "Letters of Credit") in
accordance with this SECTION 2.4 from time to time during the term of this
Agreement.
(b) AMOUNTS; OUTSIDE EXPIRATION DATE. The Agent shall not have
any obligation to take steps to cause to be issued any Letter of Credit for a
Borrower at any time: (1) if the maximum undrawn amount of the requested Letter
of Credit is greater than the Unused Letter of Credit Subfacility applicable to
that Borrower at such time; (2) if the maximum undrawn amount of the requested
Letter of Credit and all commissions, fees, and charges due from that Borrower
in connection with the opening thereof exceed the Availability of that Borrower
at such time; or (3) which has an expiration date later than the Stated
Termination Date or more than twelve (12) months from the date of issuance.
(c) OTHER CONDITIONS. In addition to being subject to the
satisfaction of the applicable conditions precedent contained in ARTICLE 10, the
obligation of the Agent to take reasonable steps to cause to be issued any
Letter of Credit is subject to the following conditions precedent having been
satisfied in a manner satisfactory to the Agent:
(1) The Borrower for which a Letter of Credit is
requested shall have delivered to the proposed issuer of such Letter of Credit,
at such times and in such manner as such proposed issuer may prescribe, an
application in form and
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substance satisfactory to such proposed issuer 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 Agent and such proposed issuer; and
(2) As of the date of issuance, no order of any
court, arbitrator or Governmental 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 Governmental
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.
(d) ISSUANCE OF LETTERS OF CREDIT.
(1) REQUEST FOR ISSUANCE. Consumer shall
give the Agent [three (3)] Business Days' prior written notice, containing the
original signature of an authorized officer of the applicable Borrower
requesting the issuance of a Letter of Credit. 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. Consumer shall attach to such notice the proposed form of the Letter of
Credit that the Agent is requested to cause to be issued.
(2) RESPONSIBILITIES OF THE AGENT; ISSUANCE.
The Agent shall determine, as of the Business Day immediately preceding the
requested effective date of issuance of the Letter of Credit set forth in the
notice from Consumer pursuant to SECTION 2.4(D)(1), (i) the amount of the
applicable Unused Letter of Credit Subfacility and (ii) the Availability of the
applicable Borrower as of such date. If (i) the undrawn amount of the requested
Letter of Credit is not greater than the applicable Unused Letter of Credit
Subfacility and (ii) the issuance of such requested Letter of Credit and all
commissions, fees, and charges due from the applicable Borrower in connection
with the opening thereof would not exceed the Availability of the applicable
Borrower, the Agent shall take reasonable steps to cause such issuer to issue
the requested Letter of Credit on such requested effective date of issuance.
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(3) NOTICE OF ISSUANCE. Promptly after the
issuance of any Letter of Credit, the Agent shall give notice to each Lender of
the issuance of such Letter of Credit.
(4) NO EXTENSIONS OR AMENDMENT. The Agent
shall not be obligated to cause any Letter of Credit to be extended or amended
unless the requirements of this SECTION 2.4(D) are met as though a new Letter of
Credit were being requested and issued. With respect to any Letter of Credit
which contains any "evergreen" or automatic renewal provision, each Lender shall
be deemed to have consented to any such extension or renewal unless any such
Lender shall have provided to the Agent, not less than 30 days prior to the last
date on which the applicable issuer can in accordance with the terms of the
applicable Letter of Credit decline to extend or renew such Letter of Credit,
written notice that it declines to consent to any such extension or renewal,
provided, that if all of the requirements of this SECTION 3.4 are met and no
Event or Event of Default exists, no Lender shall decline to consent to any such
extension or renewal.
(e) PAYMENTS PURSUANT TO LETTERS OF CREDIT.
(1) PAYMENT OF LETTER OF CREDIT OBLIGATIONS.
Each Borrower agrees to reimburse the issuer for any draw under any Letter of
Credit issued for its benefit immediately upon demand, and to pay the issuer of
the Letter of Credit the amount of all other obligations and other amounts
payable to such issuer under or in connection with any Letter of Credit
immediately when due, irrespective of any claim, setoff, defense or other right
which either Borrower may have at any time against such issuer or any other
Person.
(2) REVOLVING LOANS TO SATISFY REIMBURSEMENT
OBLIGATIONS. In the event that the issuer of any Letter of Credit honors a draw
under such Letter of Credit and the applicable Borrower shall not have repaid
such amount to the issuer of such Letter of Credit pursuant to SECTION
2.4(E)(1), the Agent shall, upon receiving notice of such failure, notify each
Lender of such failure, and each Lender shall unconditionally pay to the Agent,
for the account of such issuer, as and when provided hereinbelow, an amount
equal to such Lender's Pro Rata Share of the amount of such payment in Dollars
and in same day funds. If the Agent so notifies the Lenders prior to 11:00 a.m.
(Chicago time) on any Business Day, each Lender shall make available to the
Agent the amount of such payment, as provided in the immediately preceding
sentence, on such Business Day. Such amounts paid by the Lenders to the Agent
shall constitute Revolving Loans which shall be deemed to have been requested by
Consumer on behalf of the applicable Borrower pursuant to SECTION 2.2 as set
forth in SECTION 4.7.
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(f) PARTICIPATIONS.
(1) PURCHASE OF PARTICIPATIONS. Immediately
upon issuance of any Letter of Credit in accordance with SECTION 2.4(D), each
Lender shall be deemed to have irrevocably and unconditionally purchased and
received without recourse or warranty, an undivided interest and participation
in the credit support or enhancement provided through the Agent to such issuer
in connection with the issuance of such Letter of Credit, equal to such Lender's
Pro Rata Share of the face amount of such Letter of Credit (including, without
limitation, all obligations of the applicable Borrower with respect thereto, and
any security therefor or guaranty pertaining thereto).
(2) SHARING OF REIMBURSEMENT OBLIGATION
PAYMENTS. Whenever the Agent receives a payment from the applicable Borrower on
account of reimbursement obligations in respect of a Letter of Credit as to
which the Agent has previously received for the account of the issuer thereof
payment from a Lender pursuant to SECTION 2.4(E)(2), the Agent shall promptly
pay to such Lender such Lender's Pro Rata Share of such payment from the
applicable Borrower in Dollars. Each such payment shall be made by the Agent on
the Business Day on which the Agent receives immediately available funds paid to
such Person pursuant to the immediately preceding sentence, if received prior to
1:00 p.m. (Chicago time) on such Business Day and otherwise on the next
succeeding Business Day.
(3) DOCUMENTATION. Upon the request of any
Lender, the Agent shall furnish to such Lender copies of any Letter of Credit,
reimbursement agreements executed in connection therewith, application for any
Letter of Credit and credit support or enhancement provided through the Agent in
connection with the issuance of any Letter of Credit, and such other
documentation as may reasonably by requested by such Lender.
(4) OBLIGATIONS IRREVOCABLE. The obligations
of each Lender to make payments to the Agent with respect to any Letter of
Credit or with respect to any credit support or enhancement provided through the
Agent with respect to a Letter of Credit, and the obligations of each Borrower
to make payments to the Agent, for the account of the Lenders, shall be
irrevocable, not subject to any qualification or exception whatsoever ,
including, without limitation, any of the following circumstances:
(i) any lack of validity or
enforceability of this Agreement or any of the other Loan Documents;
(ii) the existence of any claim,
setoff, defense or other right which either Borrower may have at any time
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against a beneficiary named in a Letter of Credit or any transferee of any
Letter of Credit (or any Person for whom any such transferee may be acting), any
Lender, the Agent, the issuer of such Letter of Credit, or any other Person,
whether in connection with this Agreement, any Letter of Credit, the
transactions contemplated herein or any unrelated transactions (including any
underlying transactions between either Borrower or any other Person and the
beneficiary named in any Letter of Credit);
(iii) any draft, certificate or any other
document presented under the Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) the surrender or impairment of
any security for the performance or observance of any of the terms of any of the
Loan Documents; or
(v) the occurrence of any Default or
Event of Default.
(g) RECOVERY OR AVOIDANCE OF PAYMENTS. In the event any
payment by or on behalf of either Borrower received by the Agent with respect to
any Letter of Credit (or any guaranty by either Borrower or reimbursement
obligation of either Borrower relating thereto) and distributed by the Agent to
the Lenders on account of their respective participations therein is thereafter
set aside, avoided or recovered from the Agent in connection with any
receivership, liquidation or bankruptcy proceeding, the Lenders shall, upon
demand by the Agent, pay to the Agent their respective Pro Rata Shares of such
amount set aside, avoided or recovered, together with interest at the rate
required to be paid by the Agent upon the amount required to be repaid by it.
(h) COMPENSATION FOR LETTERS OF CREDIT.
(1) LETTER OF CREDIT FEE. Each Borrower agrees to
pay to the Agent with respect to each Letter of Credit, for the account of the
Lenders, the Letter of Credit Fee specified in, and in accordance with the terms
of, SECTION 3.6.
(2) ISSUER FEES AND CHARGES. Each Borrower
shall pay to the issuer of any Letter of Credit, or to the Agent, for the
account of the issuer of any such Letter of Credit, solely for such issuer's
account, such fees and other charges as are charged by such issuer 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.
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(i) INDEMNIFICATION; EXONERATION.
(1) INDEMNIFICATION. In addition to amounts
payable as elsewhere provided in this SECTION 2.4, each Borrower hereby agrees
to protect, indemnify, pay and save the Lenders and the Agent harmless from and
against any and all claims, demands, liabilities, damages, losses, costs,
charges and expenses (including reasonable attorneys' fees) (collectively,
"Damages") which any Lender or the Agent 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; provided
that Borrowers shall not be obligated to indemnify Agent or any Lender for
Damages arising from the gross negligence or willful misconduct of Agent or such
Lender, as finally determined by a court of competent jurisdiction.
(2) ASSUMPTION OF RISK BY THE BORROWERS. As
among the Borrowers, the Lenders, and the Agent, 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, subject to the provisions of the applications for
the issuance of Letters of Credit, the Lenders and the Agent 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 Lenders or the Agent, including, without
limitation, any act or omission, whether rightful or wrongful, of any present or
future DE JURE or DE FACTO Governmental Authority. None of the foregoing shall
affect, impair or prevent the vesting of any
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rights or powers of the Agent or any Lender under this SECTION 2.4(I).
(3) EXONERATION. In furtherance and
extension, and not in limitation, of the specific provisions set forth above,
any action taken or omitted by the Agent or any Lender 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 Agent or any Lender under any resulting liability to either Borrower or
relieve each Borrower of any of its obligations hereunder to any such Person.
2.5 TERM LOANS. Each Lender shall, on the Closing Date, make its Pro
Rata Share of a term loan to Consumer in the initial principal amount of Three
Million Dollars ($3,000,0000 (the "Consumer Term Loan") and a term loan to WOC
in the initial principal amount of Two Million Dollars ($2,000,000) (the "WOC
Term Loan"). The Term Loans will be repayable in accordance with the terms of
the promissory notes (the "Term Notes") authorized, issued and delivered by each
Borrower to each Lender (in the amount of its ratable share of each Term Loan)
in the form attached as Exhibit B-1 hereto and made a part hereof. On the Stated
Termination Date, the unpaid balances of the Term Loans shall be immediately due
and payable.
ARTICLE 3
INTEREST AND FEES
-----------------
3.1 INTEREST.
(a) INTEREST RATES. All outstanding Obligations shall bear
interest on the unpaid principal amount thereof (including, to the extent
permitted by law, on interest thereon not paid when due) from the date made
until paid in full in cash at a rate determined by reference to the Base Rate or
the LIBOR Rate and SECTIONS 3.1(A)(I) or (II), as applicable, but not to exceed
the Maximum Rate described in SECTION 3.3. Subject to the provisions of SECTION
3.2, any of the Revolving Loans may be converted into, or continued as, Base
Rate Loans or LIBOR 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 the Agent in accordance with the terms of this Agreement specifying the basis
for determining the interest rate applicable thereto, then those Revolving 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
Agent and such notice has become effective. Except as otherwise provided
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herein, the outstanding Obligations shall bear interest as follows:
(i) For all Revolving Loans which are NOT LIBOR
Rate Loans, at a fluctuating per annum rate equal to the Base Rate plus the
Applicable Revolver Margin;
(ii) For all Revolving Loans which are LIBOR
Rate Loans, at a per annum rate equal to the LIBOR Rate PLUS the Applicable
Revolver Margin;
(iii) For all Term Loans which are not LIBOR Rate
Loans, at fluctuating per annum rate equal to the Base Rate plus the Applicable
Term Margin; and
(iv) For all Term Loans which are LIBOR Rate
Loans, at a per annum rate equal to the LIBOR Rate PLUS the Applicable Term
Margin.
The Applicable Revolver Margin and the Applicable Term Margin
shall be reduced (or following any reduction, increased) by one quarter of one
percent (.25%) per annum, prospectively, commencing with the first day of the
first calendar month that is more than five (5) days following delivery to the
Agent of Borrowers' annual audited or quarterly unaudited Financial Statements
for the Fiscal Year ending June 30, 1997 and each fiscal quarter or Fiscal Year
thereafter, based on Borrowers' having (or failure to have) combined EBITDA of
$7,500,000 or more for the four quarters or the Fiscal Year (as applicable) then
ended. The total reduction in the Applicable Revolver Margin and Applicable Term
Margin shall not exceed .25% per annum. Following any reduction in interest
rates as set forth above, such rates shall be restored to their initial levels
if Borrowers do not have combined EBITDA of $7,500,000 or more for the trailing
four quarters or Fiscal Year ending as of the last day of any subsequent fiscal
quarter or Fiscal Year. No such reduction in interest rates shall be implemented
if any Event of Default shall have occurred and be continued.
Each change in the Base Rate shall be reflected in the
interest rate described in (i) above as of the effective date of such change.
All interest charges shall be computed on the basis of a year of 360 days and
actual days elapsed (which results in more interest being paid than if computed
on the basis of a 365-day year). Each Borrower agrees to pay to the Agent for
the ratable benefit of the Lenders interest on the outstanding Revolving Loans
on the first day of each calendar month in the case of Base Rate Loans and on
each applicable LIBOR Interest Payment Date in the case of LIBOR Rate Loans.
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(b) DEFAULT RATE. If any Default or Event of Default occurs
and is continuing and the Majority Lenders in their discretion so elect, then,
while any such Default or Event of Default is outstanding, all of the
Obligations shall bear interest at the Default Rate applicable thereto.
3.2 CONVERSION AND CONTINUATION ELECTIONS. (a) Consumer may, upon
irrevocable written notice to the Agent 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 $2,500,000, or that is in an integral multiple of $500,000 in excess
thereof) into LIBOR Rate Loans; or
(ii) elect, subject to SECTION 3.2(B) below, as
of the last day of the applicable Interest Period, to continue any LIBOR Rate
Loans having Interest Periods expiring on such day (or any part thereof in an
amount not less than $2,500,000, or that is in an integral multiple of $500,000
in excess thereof);
PROVIDED, that if at any time the aggregate amount of LIBOR Rate Loans in
respect of any Borrowing is reduced, by payment, prepayment, or conversion of
part thereof to be less than $1,000,000, such LIBOR Rate Loans shall
automatically convert into Base Rate Loans, and on and after such date the right
of the Borrower to continue such Loans as, and convert such Loans into, LIBOR
Rate Loans, as the case may be, shall terminate.
(b) Consumer shall deliver a Notice of Conversion/
Continuation to be received by the Agent not later than 11:00 a.m. (Chicago
time) at least three (3) Business Days in advance of the Conversion/Continuation
Date, if the Loans are to be converted into or continued as LIBOR Rate Loans and
specifying:
(i) the proposed Conversion/Continuation
Date;
(ii) the aggregate amount of Loans to be
converted or renewed; and
(iii) the type of Loans resulting from the
proposed conversion or continuation.
(c) If upon the expiration of any Interest Period applicable
to LIBOR Rate Loans, Consumer has failed to select timely a new Interest Period
to be applicable to LIBOR Rate Loans or if any Default or Event of Default then
exists, the Borrowers shall be deemed to have elected to convert such LIBOR Rate
Loans into Base Rate Loans effective as of the expiration date of such Interest
Period.
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(d) The Agent will promptly notify each Lender of its receipt
of a Notice of Conversion/Continuation. All conversions and continuations shall
be made ratably according to the respective outstanding principal amounts of the
Loans with respect to which the notice was given held by each Lender.
(e) During the existence of a Default or Event of Default,
Consumer may not elect to have a Loan converted into or continued as a LIBOR
Rate Loan.
(f) After giving effect to any conversion or continuation of
Loans, there may not be more than three (3) different Interest Periods in
effect.
3.3 MAXIMUM INTEREST RATE. In no event shall any interest rate provided
for hereunder exceed the maximum rate permissible for corporate borrowers under
applicable law for loans of the type provided for hereunder (the "Maximum
Rate"). If, in any month, any interest rate, absent such limitation, would have
exceeded the Maximum Rate, then the interest rate for that month shall be the
Maximum Rate, and, if in future months, that interest rate would otherwise be
less than the Maximum Rate, then that interest rate shall remain at the Maximum
Rate until such time as the amount of interest paid hereunder equals the amount
of interest which would have been paid if the same had not been limited by the
Maximum Rate. In the event that, upon payment in full of the Obligations under
this Agreement, the total amount of interest paid or accrued under the terms of
this Agreement is less than the total amount of interest which would, but for
this SECTION 3.3, have been paid or accrued if the interest rates otherwise set
forth in this Agreement had at all times been in effect, then each Borrower
shall, to the extent permitted by applicable law, pay the Agent, for the account
of the Lenders, an amount equal to the difference between (a) the lesser of (i)
the amount of interest which would have been charged if the Maximum Rate had, at
all times, been in effect or (ii) the amount of interest which would have
accrued had the interest rates otherwise set forth in this Agreement, at all
times, been in effect and (b) the amount of interest actually paid or accrued
under this Agreement. In the event that a court determines that the Agent and/or
any Lender has received interest and other charges hereunder in excess of the
Maximum Rate, such excess shall be deemed received on account of, and shall
automatically be applied to reduce, the Obligations other than interest, in the
inverse order of maturity, and if there are no Obligations outstanding, the
Agent and/or such Lender shall refund to the applicable Borrower such excess.
3.4 CLOSING FEE. The Borrowers agree to pay the Agent, a closing fee
(the "Closing Fee") in the amount and at the time
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specified in that certain fee letter of even date herewith among the Borrowers
and the Agent (the "Fee Letter"). Unless the Agent shall otherwise agree, 1/3 of
the Closing Fee shall be paid by WOC and the balance thereof shall be paid by
Consumer.
3.5 UNUSED LINE FEE. The Borrowers agree to pay, on the first day of
each month and on the Termination Date, to the Agent, for the ratable account of
the Lenders, an unused line fee equal to one-half percent (.50%) per annum on
the average daily amount by which the Maximum Revolver Amount exceeded the sum
of the average daily outstanding amount of Revolving Loans and the undrawn
amount of all outstanding Letters of Credit, during the immediately preceding
month or shorter period if calculated on the Termination Date. The unused line
fee shall be computed on the basis of a 360-day year for the actual number of
days elapsed. All payments received by the Agent on account of Accounts or as
proceeds of other Collateral shall be deemed to be credited to the applicable
Borrower's Loan Account immediately upon receipt for purposes of calculating the
unused line fee pursuant to this SECTION 3.5. Unless the Agent shall otherwise
agree, Consumer shall pay that portion of the unused line fee equal to
$20,000,000 LESS the average daily balance of Revolving Loans outstanding to it
and undrawn amount of Letters of Credit for its account and WOC shall pay that
portion of the unused line fee equal to $10,000,000 LESS the average daily
balance of Revolving Loans outstanding to it and the undrawn amount of Letters
of Credit for its account, subject in each case to ratable reduction upon any
reduction of the Revolving Loan Commitment permitted under SECTION 4.2.
3.6 LETTER OF CREDIT FEE. Each Borrower agrees to pay to the Agent, for
the ratable account of the Lenders, for each Letter of Credit issued for the
account of that Borrower, a fee (the "Letter of Credit Fee") equal to two
percent (2.0%) per annum of the undrawn amount of each Letter of Credit issued
for that Borrower's account at Consumer's request, PLUS all out-of-pocket costs,
fees and expenses incurred by the Agent in connection with the application for,
issuance of, or amendment to any Letter of Credit, which costs, fees and
expenses could include a "fronting fee" required to be paid by the Agent to such
issuer for the assumption of the settlement risk in connection with the issuance
of such Letter of Credit. The Letter of Credit Fee shall be payable in advance
(a) upon the issuance of each Letter of Credit for the number of days remaining
in the month during which such Letter of Credit was issued and (b) thereafter,
monthly, on the first day of each month during which each such 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.
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3.7 AUDIT FEES. The Borrowers agree to pay to the Agent, solely for its
own account, all costs and fees reasonably incurred by the Agent's internal
auditors in connection with audits of the Borrower performed by such auditors
during the term of this Agreement; PROVIDED, that so long as no Event of Default
shall have occurred and be continuing, the Agent shall not be entitled to
reimbursement for any such costs and fees incurred in connection with audits in
excess of four (4) per year. So long as any Event of Default shall have occurred
and be continuing, each auditor of the Agent shall be billed at a rate of $600
per day PLUS reasonably incurred outofpocket expenses (including travel
expenses).
ARTICLE 4
PAYMENTS AND PREPAYMENTS
------------------------
4.1 REVOLVING LOANS. The Borrowers shall repay the outstanding
principal balance of the Revolving Loans, plus all accrued but unpaid interest
and fees thereon, on the Termination Date. The Borrowers may prepay Revolving
Loans at any time, and reborrow subject to the terms of this Agreement;
PROVIDED, HOWEVER, that with respect to any LIBOR Rate Loans prepaid by the
Borrowers prior to the expiration date of the Interest Period applicable
thereto, the Borrowers agree to pay to the Lenders the amounts described in
SECTION 5.4. In addition, and without limiting the generality of the foregoing,
upon demand each Borrower shall pay to the Agent, for the account of the
Lenders, the amount, without duplication, by which the sum of outstanding
Revolving Loans to that Borrower, the aggregate amount of Pending Revolving
Loans requested for that Borrower, the aggregate undrawn amounts of all
outstanding Letters of Credit for the account of that Borrower and the amount of
all unpaid reimbursement obligations with respect to the Letters of Credit for
the account of that Borrower exceeds that Borrower's Availability.
4.2 TERMINATION OF FACILITY. The Borrowers may terminate this Agreement
upon at least ten (10) Business Days' prior written notice to the Agent and the
Lenders, upon (a) the payment in full of all outstanding Revolving Loans,
together with accrued interest thereon, and the cancellation of all outstanding
Letters of Credit, (b) the payment of the early termination fee set forth in the
next sentence, (c) the payment in full in cash of the Term Loans and all other
Obligations together with accrued interest thereon, and (d) with respect to any
LIBOR Rate Loans prepaid in connection with such termination prior to the
expiration date of the Interest Period applicable thereto, the payment of the
amounts described in SECTION 5.4. If this Agreement is terminated at any time
prior to the first Anniversary Date,
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pursuant to SECTION 11.2, the Borrowers shall pay to the Agent, for the account
of the Lenders, an early termination fee equal to three (3%) of the sum of the
average outstanding principal balance of the Revolving Loans during the thirty
(30) days prior to such prepayment and the principal balance of Term Loans, if
prepaid prior to the first Anniversary Date; two (2%) of the foregoing sum, if
prepaid on or after the first Anniversary Date and prior to the second
Anniversary Date, and one percent (1%) of the foregoing sum, if prepaid on or
after the Second Anniversary Date and prior to January 1, 1999; provided that no
early termination fee shall be payable if the Revolving Credit Loans are
refinanced by Bank of America N.T. & S.A. or any of its Affiliates (other than
BABC). Other than in connection with the prepayment in full of all of the
Obligations, either Borrower may voluntarily prepay the Term Loan made to it, in
whole or in part, without premium or penalty from sources other than (i)
Revolving Loan advances or (ii) Operating Cash Flow. Furthermore, upon at least
ten days' prior written notice to Agent, Borrowers may reduce the Revolving Loan
Commitment by $5,000,000 (ratably between Availability-Consumer and
Availability-WOC) without premium or penalty at any time on or after the first
Anniversary Date. All mandatory prepayments made pursuant to Section 4.8 shall
be made without premium or penalty.
4.3 PAYMENTS BY THE BORROWERS. (a) All payments to be made by each
Borrower shall be made without setoff, recoupment or counterclaim. Except as
otherwise expressly provided herein, all payments by each Borrower shall be made
to the Agent for the account of the Lenders at the Agent's address set forth in
SECTION 15.8, and shall be made in Dollars and in immediately available funds,
no later than 1:00 p.m. (Chicago time) on the date specified herein.
(b) Subject to the provisions set forth in the definition of
"Interest Period" herein, whenever any payment is due on a day other than a
Business Day, such payment shall be made on the following Business Day, and such
extension of time shall in such case be included in the computation of interest
or fees, as the case may be.
(c) Unless the Agent receives notice from the Borrowers prior
to the date on which any payment is due to the Lenders that the Borrowers will
not make such payment in full as and when required, the Agent may assume that
the Borrowers have made such payment in full to the Agent on such date in
immediately available funds and the Agent may (but shall not be so required), in
reliance upon such assumption, distribute to each Lender an amount equal to the
amount then due such Lender. If and to the extent the Borrowers have not made
such payment in full to the Agent, each Lender shall repay to the Agent on
demand such amount distributed to the Lenders, together with interest
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thereon at the Federal Funds Rate for each day from the date such amount is
distributed to the Lenders until the date repaid.
4.4 PAYMENTS AS REVOLVING LOANS. All payments of principal, interest,
reimbursement obligations in connection with Letters of Credit, fees, premiums
and other sums payable hereunder, including all reimbursement for expenses
pursuant to SECTION 15.7, may, at the option of the Agent, in its sole
discretion, subject only to the terms of this SECTION 4.4, be paid from the
proceeds of Revolving Loans made hereunder, whether made following a request by
Consumer pursuant to SECTION 2.2 or a deemed request as provided in this SECTION
4.4. Each Borrower hereby irrevocably authorizes the Agent to charge such
Borrower's Loan Account for the purpose of paying interest, principal,
reimbursement obligations in connection with Letters of Credit, fees, premiums
and other sums payable hereunder, including reimbursing expenses pursuant to
SECTION 15.7, and agrees that all such amounts charged shall constitute
Revolving Loans (including BABC Loans and Agent Advances) and that all such
Revolving Loans so made shall be deemed to have been requested by Consumer on
behalf of Borrowers pursuant to SECTION 2.2. Agent shall endeavor to give
Consumer reasonable telephonic notice of charges against either Borrower's Loan
Account (other than fees, interest and Letter of Credit and other charges
incurred in the ordinary course as reflected on monthly statements provided to
Consumer) substantially contemporaneously with the recordation thereof, but the
failure to do so shall not invalidate any such charge.
4.5 APPORTIONMENT, APPLICATION AND REVERSAL OF PAYMENTS. Aggregate
principal and interest payments shall be apportioned ratably among the Lenders
(according to the unpaid principal balance of the Loans to which such payments
relate held by each Lender) and payments of the fees shall, as applicable, be
apportioned ratably among the Lenders. All payments shall be remitted to the
Agent and all such payments not relating to principal or interest of specific
Loans, or not constituting payment of specific fees, and all proceeds of
Accounts or other Collateral received by the Agent, shall be applied, ratably,
subject to the provisions of this Agreement, FIRST, to pay any fees, or expense
reimbursements then due to the Agent from either Borrower; SECOND, to pay any
fees or expense reimbursements then due to the Lenders from either Borrower;
THIRD, to pay interest due in respect of all Revolving Loans, including BABC
Loans and Agent Advances; FOURTH, to pay or prepay principal of the BABC Loans
and Agent Advances; FIFTH, to pay or prepay principal of the Revolving Loans
(other than BABC Loans and Agent Advances) and unpaid reimbursement obligations
in respect of Letters of Credit; and SIXTH, to the payment of any other
Obligation due to the Agent or any Lender by either Borrower. Notwithstanding
anything to the contrary contained in this Agreement, unless so
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directed by the Borrowers, or unless an Event of Default is outstanding nor any
Lender shall apply any payments which it receives to the principal balance of
any LIBOR Rate Loan, except (a) on the expiration date of the Interest Period
applicable to any such LIBOR Rate Loan, or (b) in the event, and only to the
extent, that there are no outstanding Base Rate Loans. The Agent shall promptly
distribute to each Lender, pursuant to the applicable wire transfer instructions
received from each Lender in writing, such funds as it may be entitled to
receive, subject to a Settlement delay as provided for in SECTION 2.2(I). The
Agent and the Lenders 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.
4.6 INDEMNITY FOR RETURNED PAYMENTS. If, after receipt of any payment
of, or proceeds applied to the payment of, all or any part of the Obligations,
the Agent or any Lender is for any reason compelled to surrender such payment or
proceeds to any Person, because such payment or application of proceeds 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 or proceeds had not been received by the Agent or such Lender,
and the Borrowers shall be liable to pay to the Agent, and hereby indemnify the
Agent and the Lenders and hold the Agent and the Lenders harmless for, the
amount of such payment or proceeds surrendered. The provisions of this SECTION
4.6 shall be and remain effective notwithstanding any contrary action which may
have been taken by the Agent or any Lender in reliance upon such payment or
application of proceeds, and any such contrary action so taken shall be without
prejudice to the Agent's and the Lenders' rights under this Agreement and shall
be deemed to have been conditioned upon such payment or application of proceeds
having become final and irrevocable. The provisions of this SECTION 4.6 shall
survive the termination of this Agreement.
4.7 AGENT'S AND LENDERS' BOOKS AND RECORDS; MONTHLY STATEMENTS. The
Borrowers agree that the Agent's and each Lender'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 rebuttably presumptive proof thereof, irrespective of whether
any Obligation is also evidenced by a promissory note or other instrument. The
Agent will provide to Consumer for the benefit of both Borrowers a monthly
statement of Loans, payments, and other transactions pursuant to this Agreement.
Absent manifest error, such statement shall be deemed correct, accurate, and
binding on the Borrowers and an account
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stated (except for reversals and reapplications of payments made as provided in
SECTION 4.5 and corrections of errors discovered by the Agent), unless the
Borrowers notify the Agent in writing to the contrary within thirty (30) days
after such statement is rendered. In the event a timely written notice of
objections is given by the Borrowers, only the items to which exception is
expressly made will be considered to be disputed by the Borrowers.
4.8 PREPAYMENTS. (a) Each of Consumer and WOC shall prepay the Loans
made to it in an amount equal to fifty percent (50%) of its respective Excess
Cash Flow for each Fiscal Year, commencing with Fiscal Year 1997. Each such
payment shall be due and payable on the earlier of the date that is five (5)
days after delivery or Borrowers' audited annual financial statements to Agent
on October 3rd of each year and shall be accompanied by a certificate of each
Borrower's Chief Financial Officer setting forth in reasonable detail the
calculation of Excess Cash Flow for each Borrower.
(b) Except as may be agreed by Agent in writing, each of
Consumer and WOC shall prepay the Loans made to it in an amount equal to the
proceeds of asset dispositions permitted in accordance with Section 9.9, net of
reasonable out-of-pocket costs of sale, the costs of discharging Liens on the
assets sold and capital gains, income, transfer and other taxes, if any, arising
from such asset disposition.
(c) All prepayments hereunder shall be applied by Agent in
such manner as it shall determine, but in the absence of a determination to the
contrary, in the following order of priority: (i) to accrued expenses
reimbursable hereunder, (ii) to accrued interest and fees payable hereunder;
(iii) to the creation of an Excess Cash Flow reserve against Availability and
(iv) to the principal balances of the Term Loans; provided that proceeds of the
Pledged Shares shall be applied only to principal, fees, interest, and expenses
with respect to the Term Loans.
ARTICLE 5
TAXES, YIELD PROTECTION AND ILLEGALITY
--------------------------------------
5.1 TAXES. (a) Any and all payments by each Borrower to each Lender or
the Agent 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,
Borrowers shall pay all Other Taxes.
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(b) The Borrowers agree, jointly and severally, to indemnify
and hold harmless each Lender and the Agent for the full amount of Taxes or
Other Taxes (other than taxes on or measured by net income) (including any Taxes
or Other Taxes imposed by any jurisdiction on amounts payable under this
Section) paid by the Lender or the Agent 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 Lender or the Agent makes written demand therefor.
(c) If either 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 any Lender or the Agent, 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) such Lender or the Agent, as the case may be, receives an
amount equal to the sum it would have received had no such deductions or
withholdings been made;
(ii) such Borrower shall make such deductions and
withholdings;
(iii) such Borrower shall pay the full amount
deducted or withheld to the relevant taxing authority or other authority in
accordance with applicable law; and
(iv) such Borrower shall also pay to each Lender
or the Agent for the account of such Lender, at the time interest is paid, all
additional amounts which the respective Lender specifies as necessary to
preserve the after-tax yield the Lender would have received if such Taxes or
Other Taxes had not been imposed.
(d) Within 30 days after the date of any payment by either
Borrower of Taxes or Other Taxes, such Borrower shall furnish the Agent the
original or a certified copy of a receipt evidencing payment thereof, or other
evidence of payment satisfactory to the Agent.
(e) If either Borrower is required to pay additional amounts
to any Lender or the Agent pursuant to subsection (c) of this Section, then such
Lender shall use reasonable efforts (consistent with legal and regulatory
restrictions) to change the jurisdiction of its Lending Office so as to
eliminate any such additional payment by such Borrower which may thereafter
accrue,
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if such change in the judgment of such Lender is not otherwise disadvantageous
to such Lender.
5.2 ILLEGALITY. (a) If any Lender 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 Governmental Authority has asserted
that it is unlawful, for any Lender or its applicable Lending Office to make
LIBOR Rate Loans, then, on notice thereof by the Lender to the Borrowers through
the Agent, any obligation of that Lender to make LIBOR Rate Loans shall be
suspended until the Lender notifies the Agent and the Borrowers that the
circumstances giving rise to such determination no longer exist.
(b) If a Lender determines that it is unlawful to maintain any
LIBOR Rate Loan, the Borrowers shall, upon their receipt of notice of such fact
and demand from such Lender (with a copy to the Agent), prepay in full such
LIBOR Rate Loans of that Lender then outstanding, together with interest accrued
thereon, but without amounts otherwise required under SECTION 5.4, either on the
last day of the Interest Period thereof, if the Lender may lawfully continue to
maintain such LIBOR Rate Loans to such day, or immediately, if the Lender may
not lawfully continue to maintain such LIBOR Rate Loan. If the Borrowers are
required to so prepay any LIBOR Rate Loan, then concurrently with such
prepayment, the Borrowers shall borrow from the affected Lender, in the amount
of such repayment, a Base Rate Loan.
5.3 INCREASED COSTS AND REDUCTION OF RETURN. (a) If any Lender
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 that Lender
with any guideline or request from any central bank or other Governmental
Authority (whether or not having the force of law), there shall be any increase
in the cost to such Lender of agreeing to make or making, funding or maintaining
any LIBOR Rate Loans, then the Borrowers shall be liable for, and shall from
time to time, upon demand (with a copy of such demand to be sent to the Agent),
pay to the Agent for the account of such Lender, additional amounts as are
sufficient to compensate such Lender for such increased costs.
(b) If any Lender 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 Governmental
Authority charged with the interpretation or administration thereof, or (iv)
compliance by the Lender or any corporation controlling the Lender with any
Capital Adequacy Regulation, affects or would affect the amount of capital
required or expected to be
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maintained by the Lender or any corporation controlling the Lender and (taking
into consideration such Lender's or such corporation's policies with respect to
capital adequacy and such Lender's desired return on capital) determines that
the amount of such capital is increased as a consequence of its Commitment,
loans, credits or obligations under this Agreement, then, upon demand of such
Lender to the Borrowers through the Agent, the Borrowers shall pay to the
Lender, from time to time as specified by the Lender, additional amounts
sufficient to compensate the Lender for such increase.
5.4 FUNDING LOSSES. The Borrowers, jointly and severally, shall
reimburse each Lender and hold each Lender harmless from any loss or expense
which the Lender may sustain or incur as a consequence of:
(a) the failure of the applicable Borrower to make
on a timely basis any payment of principal of any LIBOR Rate Loan;
(b) the failure of the applicable Borrower to borrow, continue
or convert a Loan after Consumer 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 LIBOR 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 LIBOR Rate Loans or from fees payable to
terminate the deposits from which such funds were obtained.
5.5 INABILITY TO DETERMINE RATES. If the Agent determines that for any
reason adequate and reasonable means do not exist for determining the LIBOR Rate
for any requested Interest Period with respect to a proposed LIBOR Rate Loan, or
that the LIBOR Rate for any requested Interest Period with respect to a proposed
LIBOR Rate Loan does not adequately and fairly reflect the cost to the Lenders
of funding such Loan, the Agent will promptly so notify the Borrowers and each
Lender. Thereafter, the obligation of the Lenders to make or maintain LIBOR Rate
Loans hereunder shall be suspended until the Agent revokes such notice in
writing. Upon receipt of such notice, Consumer may revoke any Notice of
Borrowing or Notice of Conversion/Continuation then submitted by it, without
obligation to pay any amounts otherwise required under Section 5.4. If Consumer
does not revoke such Notice, the Lenders shall make, convert or continue the
Loans, as proposed by Consumer, in the amount specified in the applicable notice
submitted by Consumer, but such Loans shall be made,
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converted or continued as Base Rate Loans instead of LIBOR Rate Loans.
5.6 CERTIFICATES OF LENDERS. Any Lender claiming reimbursement or
compensation under this Article 5 shall deliver to the Borrowers (with a copy to
the Agent) a certificate setting forth in reasonable detail the amount payable
to the Lender hereunder and the reasons therefor and such certificate shall be
conclusive and binding on the Borrowers in the absence of manifest error.
5.7 SURVIVAL. The agreements and obligations of the Borrowers in this
Article 5 shall survive the payment of all other Obligations.
ARTICLE 6
COLLATERAL
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6.1 GRANT OF SECURITY INTEREST. (a) As security for all present and
future Obligations, each Borrower hereby grants to the Agent, for the ratable
benefit of the Lenders, a continuing security interest in, lien on, and right of
setoff against, all of the following property of such Borrower, whether now
owned or existing or hereafter acquired or arising, regardless of where located:
(i) all Accounts;
(ii) all Inventory;
(iii) all contract rights, letters of
credit, Assigned Contracts, chattel paper, instruments, notes, documents, and
documents of title;
(iv) all General Intangibles;
(v) all money, securities and other
property of any kind of such Borrower in the possession or under the control of
the Agent or any Lender, any assignee of or participant in the Obligations, or a
bailee of any such party or such party's affiliates;
(vi) all Equipment;
(vii) all Fixtures;
(viii) all Investment Property;
(ix) all deposit accounts, credits and
balances with and other claims against the Agent or any Lender or any of
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their respective Affiliates or any other financial institution in which such
Borrower maintains deposits;
(x) all books, records and other property
related to or referring to any of the foregoing, including, without limitation,
books, records, account ledgers, data processing records, computer software and
other property and General Intangibles at any time evidencing or relating to any
of the foregoing; and
(xi) all accessions to, substitutions for and
replacements, products and proceeds of any of the foregoing, including, but not
limited to, proceeds of any insurance policies, claims against third parties,
and condemnation or requisition payments with respect to all or any of the
foregoing.
All of the foregoing and all other property of the Borrowers in which the Agent
or any Lender may at any time be granted a Lien, is herein collectively referred
to as the "Collateral."
(b) All of the Obligations shall be secured by all of the
Collateral, except that the Pledged Shares shall serve solely as Collateral for
the Term Loans and interest, fees and expenses with respect thereto. The Agent
may, subject to the provisions of ARTICLES 13 and 14, 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 Agent may determine, and (iii)
settle, compromise, collect, or otherwise liquidate any Collateral in any
manner, all without affecting the Obligations or the Agent's or any Lender's
right to take any other action with respect to any other Collateral.
6.2 PERFECTION AND PROTECTION OF SECURITY INTEREST. (a) Each Borrower
shall, at its expense, perform all steps requested by the Agent at any time to
perfect, maintain, protect, and enforce the Agent's Liens, including, without
limitation: (i) executing, delivering and/or filing and recording of the Patent
and Trademark Agreements and executing and filing financing or continuation
statements, and amendments thereof, in form and substance satisfactory to the
Agent; (ii) delivering to the Agent the originals of all instruments, documents,
and chattel paper, and all other Collateral of which the Agent determines it
should have physical possession in order to perfect and protect the Agent's
security interest therein, duly pledged, endorsed or assigned to the Agent
without restriction; (iii) delivering to the Agent warehouse receipts covering
any portion of the Collateral located in warehouses and for which warehouse
receipts are issued; (iv) when an Event of Default exists, transferring
Inventory to warehouses designated by the Agent; (v) placing notations on such
Borrower's books of account to disclose the Agent's security interest; (vii)
delivering to
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the Agent all letters of credit on which such Borrower is named beneficiary; and
(viii) taking such other steps as are deemed necessary or desirable by the Agent
to maintain and protect the Agent's Liens. To the extent permitted by applicable
law, the Agent may file, without either Borrower's signature, one or more
financing statements disclosing the Agent's Liens. Each Borrower agrees that a
carbon, photographic, photostatic, or other reproduction of this Agreement or of
a financing statement is sufficient as a financing statement.
(b) If any Collateral is at any time in the possession or
control of any warehouseman, bailee or agent, converter or processor of either
Borrower, then such Borrower shall notify the Agent thereof and shall use
reasonable efforts to obtain a bailee letter from that Person in form and
substance satisfactory to the Agent. If at any time any Collateral is located on
any operating facility of either Borrower which is not owned by that Borrower,
then such Borrower shall, at the request of the Agent, use reasonable efforts to
obtain written waivers, in form and substance satisfactory to the Agent, of all
present and future Liens to which the owner or lessor of such premises may be
entitled to assert against the Collateral.
(c) From time to time, each Borrower shall, upon the Agent's
request, execute and deliver confirmatory written instruments pledging to the
Agent, for the ratable benefit of the Lenders, the Collateral with respect to
that Borrower, but either Borrower's failure to do so shall not affect or limit
the Agent's security interest or the Agent's other rights in and to the
Collateral with respect to that Borrower. So long as this Agreement is in effect
and until all Obligations have been fully satisfied, the Agent's Liens 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).
6.3 LOCATION OF COLLATERAL. The Borrowers, jointly and severally,
represent and warrant to the Agent and the Lenders that: (a) SCHEDULE 6.3 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 owned by it,
and the locations of all of its other places of business; and (b) SCHEDULE 6.3
correctly identifies any of such facilities and locations that are not owned by
either 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 (i) maintain any Collateral at any location other than those locations
listed for that Borrower on SCHEDULE 6.3, (ii) otherwise change or add new
locations, or (iii) change the location of its chief executive office from the
location
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identified in SCHEDULE 6.3, unless it gives the Agent at least thirty (30) days'
prior written notice thereof and executes any and all financing statements and
other documents that the Agent requests in connection therewith. Without
limiting the foregoing, each Borrower represents that all of its Inventory is,
and covenants that all of its Inventory will be, located either (a) on premises
owned by that Borrower, (b) on premises leased by that Borrower, or (c) in a
public warehouse, each as disclosed in writing to Agent. As to each location,
Agent for the benefit of Lenders shall have filed state (and, to the extent
required, local) UCC-1 financing statements; as to all leased and bailment
locations, Borrowers shall use all reasonable efforts to obtain landlord and
bailee waivers; as to all bailment locations for which bailee waiver letters
have not been obtained, Agent shall have delivered to the bailee a notice of
lien under Article 9 of the UCC; and for all leased locations as to which waiver
letters have not been obtained within thirty (30) days after the Closing Date,
the Inventory at those leased locations shall cease to be Eligible Inventory.
6.4 TITLE TO, LIENS ON, AND SALE AND USE OF COLLATERAL. Each Borrower
represents and warrants to the Agent and the Lenders and agrees with the Agent
and the Lenders t hat: (a) all of the assets of that Borrower are and will
continue to be owned by such Borrower free and clear of all Liens whatsoever,
except for Permitted Liens; (b) the Agent's Liens in the Collateral with respect
to such Borrower will not be subject to any prior Lien; (c) such Borrower will
use, store, and maintain the Collateral with all reasonable care and will use
such Collateral for lawful purposes only; and (d) such Borrower will not,
without the Agent's prior written approval, sell, or dispose of or permit the
sale or disposition of any of the Collateral except for sales of Inventory in
the ordinary course of business. The inclusion of proceeds in the Collateral
shall not be deemed to constitute the Agent's or any Lender's consent to any
sale or other disposition of the Collateral except as expressly permitted
herein.
6.5 APPRAISALS. Whenever an Event of Default exists, each Borrower
shall, at its expense and upon the Agent's request, provide the Agent with
appraisals or updates thereof of any or all of its Collateral from an appraiser,
and prepared on a basis, satisfactory to the Agent, such appraisals and updates
to include, without limitation, information required by applicable law and
regulation and by the internal policies of the Lenders.
6.6 ACCESS AND EXAMINATION; CONFIDENTIALITY. (a) The Agent, accompanied
by any Lender which so elects, may at all reasonable times and upon reasonable
prior notice (and at any time when a Default or Event of Default exists) have
access to, examine, audit, make extracts from or copies of and inspect any or
all of each Borrower's records, files, and books of account and the Collateral,
and discuss such Borrower's affairs with such
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Borrower's officers, employees and management. Each Borrower will deliver to the
Agent any instrument necessary for the Agent to obtain records from any service
bureau maintaining records for either Borrower. The Agent may, and at the
direction of the Majority Lenders shall, at any time when a Default or Event of
Default exists, and at the applicable Borrower' expense, make copies of all of
that Borrower's books and records, or require such Borrower to deliver such
copies to the Agent. The Agent may, without expense to the Agent, use such of
each Borrower's respective personnel, supplies, and premises as may be
reasonably necessary for maintaining or enforcing the Agent's Liens. The Agent
shall have the right, at any time, in the Agent's name or in the name of a
nominee of the Agent, to verify the validity, amount or any other matter
relating to the Accounts, Inventory, or other Collateral, by mail, telephone, or
otherwise.
(b) Each Borrower agrees that, subject to the Borrowers' prior
consent for uses other than in a traditional tombstone, the Agent and each
Lender may use the Borrowers' names in advertising and promotional material and
in conjunction therewith disclose the general terms of this Agreement. The Agent
and each Lender agree to take normal and reasonable precautions and exercise due
care to maintain the confidentiality of all confidential information provided to
the Agent or such Lender by or on behalf of the applicable Borrower, under this
Agreement or any other Loan Document, and neither the Agent, nor such Lender nor
any of their respective Affiliates shall use any such information other than in
connection with or in enforcement of this Agreement and the other Loan
Documents, except to the extent that such information (i) was or becomes
generally available to the public other than as a result of disclosure by the
Agent or such Lender, or (ii) was or becomes available on a nonconfidential
basis from a source other than the Borrowers or any of their affiliates,
advisors or other representatives, provided that such source is not bound by a
confidentiality agreement with, or other obligation of secrecy to, the Borrowers
known to the Agent or such Lender or otherwise known by the Agent or such Lender
to be prohibited from tranmitting such information to the Agent or any Lender by
a contractual, legal or fiduciary obligation; PROVIDED, HOWEVER, that the Agent
and any Lender may disclose such information (1) at the request or pursuant to
any requirement of any Governmental Authority to which the Agent or such Lender
is subject or in connection with an examination of the Agent or such Lender by
any such Governmental Authority; (2) pursuant to subpoena or other court
process; (3) when required to do so in accordance with the provisions of any
applicable requirement of law; (4) to the extent reasonably required in
connection with any litigation or proceeding (including, but not limited to, any
bankruptcy proceeding) to which the Agent, any Lender or their respective
Affiliates may be party; (5) to the extent reasonably required in connection
with the exercise of any
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remedy hereunder or under any other Loan Document; (6) to the Agent's or such
Lender's independent auditors, accountants, attorneys and other professional
advisors; (7) to any Affiliate of the Agent or such Lender, or to any
Participating Lender or assignee under any Assignment and Acceptance, actual or
potential, provided that such affiliate, Participating Lender or assignee agrees
to keep such information confidential to the same extent required of the Agent
and the Lenders hereunder; and (8) as expressly permitted under the terms of any
other document or agreement regarding confidentiality to which either Borrower
is party with the Agent or such Lender. In the event that Agent or any of the
Lenders receives a request or demand to disclose any confidential information
pursuant to clauses (2), (3) or (4), Agent and each Lender agrees to (i)
promptly notify Borrowers of such request so that the Borrowers may seek a
protective order or other appropriate relief or remedy or waive compliance with
the terms of this provision, (ii) if disclosure of such information is required,
disclose such information and, subject to reimbursement by the Borrowers of the
Agents' and Lender's reasonable expenses, cooperate with the Borrowers in their
efforts to obtain an order or other reliable assurance that confidential
treatment will be accorded to such portion of the disclosed information which
Borrowers so designate.
6.7 COLLATERAL REPORTING. Each Borrower shall provide the Agent with
the following documents at the following times (or more frequently if requested
by Agent) in form satisfactory to the Agent: (a) on the third Business Day of
each week as of the last Business Day of the preceding week, a Borrowing Base
Certificate, including daily invoice registers, cash receipts and credit memo
journals for the preceding week; (b) on or prior to the tenth (10th) day of each
month as of the last day of preceding month, an aging of each Borrower's
Accounts, together with a reconciliation to the previous month's aging of each
Borrower's Accounts and to its general ledger; (c) on or prior to the fifteenth
(15th) day of each month as of the last day of preceding month, an aging of the
Borrower's accounts payable; (d) on or prior to the twentieth (20th) day of each
month, perpetual Inventory reports by location and type, with additional detail
showing additions to and deletions from the Inventory; (e) upon request, copies
of invoices in connection with each Borrower's Accounts, customer statements,
credit memos, remittance advices and reports, deposit slips, shipping and
delivery documents in connection with such Borrower's Accounts and for Inventory
acquired by such Borrower, purchase orders and invoices; (f) a statement of the
balance of each of the Intercompany Accounts as of the last day of the
immediately preceding calendar month; (g) when entered into, contracts giving
rise to Buy-Back Obligations or Conversion Obligations; (h) such other reports
as to the Collateral of the Borrower as the Agent shall reasonably request from
time to time; and (i) with the delivery of each of the
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foregoing, a certificate of an officer of the Borrower certifying as to the
accuracy and completeness of the foregoing. If any of either 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 Agent, for distribution to the
Lenders.
6.8 ACCOUNTS. (a) The Borrowers, jointly and severally, hereby
represent and warrant to the Agent and the Lenders, with respect to the
Borrowers' Accounts reflected as part of Eligible Accounts in any Borrowing Base
Certificate, that except as disclosed in that Borrowing Base Certificate: (i)
each such Account represents a BONA FIDE sale or lease and delivery of goods by
a Borrower, or rendition of services by a Borrower, in the ordinary course of
its business; (ii) each such Account is 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 Agent, without any offset, deduction, defense,
or counterclaim except those known to the applicable Borrower; (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 Agent and the Lenders in accordance with this Agreement; (iv)
each copy of an invoice delivered to the Agent by a Borrower 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 such Borrower described in each invoice will have
been performed in each case as described in the applicable invoice..
(b) Neither Borrower shall redate any invoice or sale or make
sales on extended dating beyond that customary in the Borrowers' business or
extend or modify any Account. If either Borrower becomes aware of any matter
affecting the collectability of any Account or Account Debtor wherein the
adverse effect equals or exceeds $20,000, including information regarding the
Account Debtor's creditworthiness, such Borrower will promptly so advise the
Agent.
(c) Neither 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, except for Accounts which have ceased to be Eligible
Accounts and following notice to the Agent. Any such instrument shall be
considered as evidence of the Account and not payment thereof and the applicable
Borrower will promptly deliver such instrument to the Agent, endorsed by that
Borrower to the Agent in a manner satisfactory in form and substance to the
Agent. Regardless of the endorsement and delivery of any such instrument to
Agent,
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Agent's acceptance thereof shall not constitute payment of the Obligations until
such instrument is paid in full.
(d) Each Borrower shall notify the Agent promptly of all
disputes and claims in excess of $50,000, individually, or $100,000 in the
aggregate with any Account Debtor, and agrees to settle, contest, or adjust such
dispute or claim at no expense to the Agent or any Lender. No discount, credit
or allowance shall be granted to any such Account Debtor without the Agent's
prior written consent, except for discounts, credits and allowances made or
given in the ordinary course of the Borrowers' business when no Event of Default
exists hereunder. Each Borrower shall send the Agent a copy of each credit
memorandum in excess of $25,000 as soon as issued. The Agent may, and at the
direction of the Majority Lenders shall, at all times when an Event of Default
exists hereunder, settle or adjust disputes and claims directly with Account
Debtors for amounts and upon terms which the Agent or the Majority Lenders, as
applicable, shall consider advisable and, in all cases, the Agent will credit
the applicable Borrower's Loan Account with only the net amounts received by the
Agent in payment of any Accounts.
(e) If an Account Debtor returns any Inventory to either
Borrower when no Event of Default exists, then the applicable Borrower shall
promptly determine the reason for such return and shall issue a credit
memorandum to the Account Debtor in the appropriate amount. Each Borrower shall
immediately report to the Agent any return involving an amount in excess of
$50,000. Each such report shall indicate the reasons for the returns and the
locations and condition of the returned Inventory. In the event any Account
Debtor returns Inventory to either Borrower when an Event of Default exists, the
applicable Borrower, upon request of the Agent, shall: (i) hold the returned
Inventory in trust for the Agent; (ii) segregate all returned Inventory from all
of its other property; (iii) dispose of the returned Inventory solely according
to the Agent's written instructions; and (iv) not issue any credits or
allowances with respect thereto without the Agent's prior written consent. All
returned Inventory shall be subject to the Agent's Liens thereon. Whenever any
Inventory is returned, the related Account shall be deemed ineligible to the
extent of the amount owing by the Account Debtor with respect to such returned
Inventory
6.9 COLLECTION OF ACCOUNTS; PAYMENTS. (a) Until the Agent notifies each
Borrower to the contrary, such Borrower shall make collection of all Accounts
and other Collateral for the Agent and shall receive all payments as the Agent's
trustee. Each Borrower shall establish a lock-box service for collections of its
Accounts at a bank acceptable to the Agent and pursuant to documentation
satisfactory to the Agent. Each Borrower shall instruct all of its Account
Debtors to make all payments directly to the address established for lock-box
services. If,
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notwithstanding such instructions, either Borrower receives any proceeds of
Accounts, it shall receive such payments as the Agent's trustee, and shall
immediately deliver such payments to the Agent in their original form duly
endorsed in blank or deposit them into a Payment Account subject to
documentation acceptable to Agent, as the Agent may direct. All collections
received in any such lock-box or Payment Account or directly by a Borrower or
the Agent, and all funds in any Payment Account or other account to which such
collections are deposited shall be subject to the Agent's sole control and shall
be swept daily by wire transfers to Agent's collection account. The Agent or the
Agent's designee may, at any time, notify Account Debtors that the Accounts have
been assigned to the Agent and of the Agent's security interest therein, and may
collect them directly and charge the collection costs and expenses to the
applicable Borrower's Loan Account as a Revolving Loan. Each Borrower, at the
Agent's request, shall execute and deliver to the Agent such documents as the
Agent shall require to grant the Agent access to any post office box in which
collections of Accounts are received.
(b) If sales of Inventory are made for cash, the applicable
Borrower shall immediately deliver to the Agent or deposit into a Payment
Account the identical checks, cash, or other forms of payment which such
Borrower receives.
(c) All payments, including immediately available funds
received by the Agent at a bank designated by it, received by the Agent on
account of Accounts or as proceeds of other Collateral will be the Agent's sole
property for the benefit of the Lenders and will be credited to the applicable
Borrower's Loan Account (conditional upon final collection). Solely for purposes
of calculating interest on the Loans, each payment received by the Agent on any
Business Day shall be deemed to have been received on the following Business
Day.
(d) In the event the Borrowers repay all of the Obligations
upon the termination of this Agreement or upon acceleration of the Obligations,
other than through the Agent's receipt of payments on account of the Accounts or
proceeds of the other Collateral, such payment will be credited (conditional
upon final collection) to the applicable Borrower's Loan Account.
6.10 INVENTORY; PERPETUAL INVENTORY. The Borrowers, jointly and
severally, represent and warrant to the Agent and the Lenders and agree with the
Agent and the Lenders that all of the Eligible Inventory reflected on any
Borrowing Base Certificate will be owned by Borrowers, held for sale in the
ordinary course of Borrowers' business, and, except as disclosed on that
Borrowing Base Certificate, fit for such purposes. Each Borrower will keep its
Eligible Inventory in good and marketable condition, at its
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own expense. Neither Borrower will, without the prior written consent of the
Agent, acquire or accept any Inventory on consignment or approval. Each Borrower
agrees that all Inventory produced by it in the United States will be produced
in accordance with the Federal Fair Labor Standards Act of 1938, as amended, and
all rules, regulations, and orders thereunder. Each Borrower will conduct a
physical count of the Inventory at least once per Fiscal Year, and after and
during the continuation of an Event of Default, at such other times as the Agent
requests. Each Borrower will maintain a perpetual inventory reporting system at
all times. Neither Borrower will, without the Agent's written consent, sell any
Eligible Inventory on a xxxx-and-hold, guaranteed sale, sale and return, sale on
approval, consignment, or other repurchase or return basis.
6.11 INTENTIONALLY OMITTED.
6.12 INTENTIONALLY OMITTED.
6.13 DOCUMENTS, INSTRUMENTS, AND CHATTEL PAPER. Each Borrower
represents and warrants to the Agent and the Lenders 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. Attached as Schedule
6.13 is a list of instruments and chattel paper held by Borrowers as of the
Closing Date.
6.14 RIGHT TO CURE. The Agent may, in its discretion, and shall, at the
direction of the Majority Lenders, pay any amount or do any act required of
either Borrower hereunder or under any other Loan Document in order to preserve,
protect, maintain or enforce the Obligations, the Collateral or the Agent's
Liens therein, and which such Borrower fails to pay or do, including, without
limitation, payment of any judgment against such 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 Agent makes under this SECTION 6.14 and all out-of-pocket
costs and expenses that the Agent pays or incurs in connection with any action
taken by it hereunder shall be charged to the applicable Borrower's Loan Account
as a Revolving Loan . Any payment made or other action taken by the Agent under
this SECTION 6.14 shall be without prejudice to any right to assert an Event of
Default hereunder and to proceed thereafter as herein provided.
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6.15 POWER OF ATTORNEY. Each Borrower hereby appoints the Agent and the
Agent's designee as such Borrower's attorney, with power: (a) at any time, to
endorse the Borrower's name on any checks, notes, acceptances, money orders, or
other forms of payment or security that come into the Agent's or any Lender's
possession; (b) so long as an Event of Default shall have occurred and be
continuing, to sign such Borrower's name on any invoice, xxxx of lading,
warehouse receipt or other document of title relating to any Collateral, (c) at
any time to endorse or sign Borrower's name on drafts against customers, on
assignments of Accounts, on notices of assignment, financing statements and on
evidences of Agent's Liens to be filed in public records; (d) so long as an
Event of Default shall have occurred and be continuing, to notify the post
office authorities, to change the address for delivery of such Borrower's mail
to an address designated by the Agent and to receive, open and dispose of all
mail addressed to such Borrower; (e) at any time, to send requests for
verification of Accounts to customers or Account Debtors; (f) at any time, to
clear Inventory, the purchase of which was financed with Letters of Credit,
through customs in such Borrower's name, the Agent's name or the name of the
Agent's designee, and to sign and deliver to customs officials powers of
attorney in such Borrower's name for such purpose; and (g) so long as an Event
of Default shall have occurred and be continuing, to do all things necessary to
carry out this Agreement. Each Borrower ratifies and approves all acts of such
attorney. None of the Lenders or the Agent nor their attorneys will be liable
for any acts or omissions or for any error of judgment or mistake of fact or
law, except acts or omissions constituting gross negligence or willful
misconduct, as finally determined by a court of competent jurisdiction. This
power, being coupled with an interest, is irrevocable until this Agreement has
been terminated and the Obligations have been fully satisfied.
6.16 THE AGENT'S AND LENDERS' RIGHTS, DUTIES AND LIABILITIES. As
between Agent and Lenders on one hand and Borrowers on the other hand, each
Borrower assumes all responsibility and liability arising from or relating to
the use, sale or other disposition of the Collateral. Neither the Agent, nor any
Lender, nor any of their respective officers, directors, employees or agents
shall be liable or responsible in any way for the safekeeping of any of the
Collateral, or for any loss or damage thereto, or for any diminution in the
value thereof, or for any act of default of any warehouseman, carrier,
forwarding agency or other person whomsoever, all of which shall be at the
Borrowers' sole risk; provided that Agent shall act in a commercially reasonable
manner as to Collateral in its possession. The Obligations shall not be affected
by any failure of the Agent or any Lender to take any steps to perfect the
Agent's Liens or to collect or realize upon the Collateral, nor
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shall loss of or damage to the Collateral release either Borrower from any of
the Obligations. The Agent may (but shall not be required to), and at the
direction of the Majority Lenders shall, without notice to or consent from
either 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 the applicable Borrower for its Obligations
or under this Agreement or any other agreement now or hereafter existing between
the Agent and/or any Lender and either Borrower.
ARTICLE 7
BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES
-------------------------------------------------
7.1 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 applied
consistently with the audited Financial Statements required to be delivered
pursuant to SECTION 7.2(A). Each Borrower shall, by means of appropriate
entries, reflect in such accounts and in all Financial Statements proper
liabilities and reserves for all taxes and proper provision for depreciation and
amortization of property and bad debts, all in accordance with GAAP. Each
Borrower shall maintain at all times books and records pertaining to the
Collateral in such detail, form and scope as the Agent or any Lender shall
reasonably require, including, but not limited to, 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.
7.2 FINANCIAL INFORMATION. Each Borrower shall promptly furnish to the
Agent, sufficient copies for distribution by the Agent to each Lender, all such
financial information as the Agent or any Lender shall reasonably request, and
notify its auditors and accountants that the Agent, on behalf of the Lenders, is
authorized to obtain such information directly from them. Without limiting the
foregoing, each Borrower will furnish to the Agent, in sufficient copies for
distribution by the Agent to each Lender, in such detail as the Agent or the
Lenders shall request, the following:
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(a) As soon as available, but in any event not later than
forty-five (45) days after the close of each Fiscal Year, preliminary unaudited
and statements of income and expense of each Borrower, for such Fiscal Year
(which Financial Statements are subject to audit adjustments) and as soon as
available, but in any event not later than ninety (90) days after the close of
each Fiscal Year, consolidated audited balance sheets, and statements of income
and expense, cash flow and of stockholders' equity of Ultimate Parent, with
unaudited consolidating balance sheets, and statements of income and expense,
cash flow and stockholders' equity of each Borrower attached, 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
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 by and, in the case of such statements
performed on a consolidated basis, accompanied by a report thereon unqualified
as to scope of independent certified public accountants selected by the
Borrowers and reasonably satisfactory to the Agent. The Borrowers,
simultaneously with retaining such independent public accountants to conduct
such annual audit, shall obtain a letter from such accountants, with a copy to
the Agent and the Lenders, acknowledging that Agent and Lender are entitled to
rely on such auditors' certification of the audited financial statements
described above.
(b) (i) As to the third month of each of the first three
fiscal quarters of each Fiscal Year, as soon as available, but in any event not
later than thirty (30) days after the end of each such month, preliminary
consolidated and consolidating unaudited balance sheets and statements of income
and expense for each Borrower for such month and for the period from the
beginning of the Fiscal Year to the end of such month (which financial
statements are subject to quarterly adjustments), all in reasonable detail,
fairly presenting the financial position and results of operation of the
Borrowers as of the date thereof and for such periods.
(ii) As soon as available, but in any event not later
than thirty (30) days after the end of the first two months of each fiscal
quarter of each Fiscal Year and not later than forty-five (45) days after the
end of the third month of the first three fiscal quarters of each Fiscal Year,
consolidated and consolidating unaudited balance sheets of Borrowers, as at the
end of such month, and consolidated and consolidating unaudited statements of
income and expense and cash flow for the Borrowers, for such month and for the
period from the beginning of the Fiscal Year to the end of such month, on a
consolidated and
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consolidating basis, all in reasonable detail, fairly presenting the financial
position and results of operations of the Borrowers as at the date thereof and
for such periods, and prepared in accordance with GAAP applied consistently with
the audited Financial Statements required to be delivered pursuant to SECTION
7.2(A), with adjusting items as to preliminary financial statements for the
third month of each fiscal quarter. Together with each delivery of monthly
Financial Statements, Borrowers shall deliver to Agent a reconciliation of
Intercompany Accounts for each Borrower in the form attached hereto as Exhibit
G. The Borrowers shall certify by a certificate signed by its the chief
financial officer that all such statements have been prepared in accordance with
GAAP and present fairly, subject to normal year-end adjustments, each Borrower's
financial position as at the dates thereof and its results of operations for the
periods then ended.
(c) With each of the audited Financial Statements delivered
pursuant to SECTION 7.2(A), a certificate of the independent certified public
accountants that examined such Financial Statements to the effect that they have
reviewed and are familiar with this Agreement and that, in examining such
Financial Statements, they did not become 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) With each of the annual audited Financial Statements
delivered pursuant to SECTION 7.2(A), and within forty-five (45) days after the
end of each fiscal quarter, a certificate of the chief financial officer of each
Borrower (i) setting forth in reasonable detail the calculations required to
establish that the Borrowers were in compliance with the covenants set forth in
SECTIONS 9.23 through 9.26 during the period covered in such Financial
Statements and as at the end thereof, 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 in all material respects as at the date of
such certificate as if made at such time, (B) each Borrower is, at the date of
such certificate, in compliance in all material respects with all of its
respective covenants and agreements in this Agreement and the other Loan
Documents, (C) no Default or Event of Default then exists or existed during the
period covered by such Financial Statements, (D) describing and analyzing in
reasonable detail all material trends, changes, and developments in each and all
Financial Statements; and (E) explaining the variances of the figures in the
corresponding budgets and prior Fiscal Year financial statements. If such
certificate discloses that a representation or warranty is not correct or
complete, or that a covenant has
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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) No sooner than 60 days and not less than 30 days prior to
the beginning of each Fiscal Year commencing with Fiscal Year 1998, annual
forecasts (to include forecasted consolidated and consolidating balance sheets,
statements of income and expenses and statements of cash flow) for the Borrowers
as at the end of and for each month of such Fiscal Year.
(f) Promptly after filing with the PBGC and the IRS, a copy of
each annual report or other filing filed with respect to each Plan of each
Borrower.
(g) Promptly upon the filing thereof, copies of all final
reports and proxy statements, if any, to, or other final documents filed by
Ultimate Parent, Xxxxxxx, either Borrower or any of their respective
Subsidiaries with, the Securities and Exchange Commission under the Exchange
Act, and all default notices received from the holders of any Debt for borrowed
money of Ultimate Parent, Parent or either Borrower or any of its Subsidiaries
registered under the Securities Act of 1933 or to or from the trustee under any
indenture under which the same is issued.
(h) As soon as available, but in any event not later than 15
days after either Borrower's receipt thereof, a copy of all management reports
and management letters prepared for either Borrower by Xxxxxx Xxxxxxxx LLP or
any other independent certified public accountants of such Borrower.
(i) Promptly after their preparation, copies of any and all
proxy statements, financial statements, and reports which Ultimate Parent,
Xxxxxxx or either Borrower makes available to its stockholders.
(j) Promptly after filing with the IRS, a copy of each tax
return filed by Ultimate Parent, either Borrower or by any of its Subsidiaries.
(k) Such additional information as the Agent and/or any Lender
may from time to time reasonably request regarding the financial and business
affairs of the Borrower or any Subsidiary.
7.3 NOTICES TO THE LENDERS. Each Borrower shall notify the
Agent, in writing of the following matters at the following times:
(a) Immediately after becoming aware of any Default or
Event of Default.
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(b) Immediately after becoming aware of the assertion by the
holder of any capital stock of either Borrower or Subsidiary thereof or the
holder of any Debt in an outstanding principal amount in excess of $250,000 that
a default exists with respect thereto or that the applicable Borrower is not in
compliance with the terms thereof, or the threat or commencement by such holder
of any enforcement action because of such asserted default or non-compliance.
(c) Immediately after becoming aware of any material adverse
change in either Borrower's or any Subsidiary'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 Governmental Authority, which action,
suit, proceeding, counterclaim or investigation seeks damages in excess of
$100,000 (which amount shall not be fully covered by insurance), or which may
otherwise have a Material Adverse Effect.
(e) Immediately after becoming aware of any pending or
threatened strike, work stoppage, unfair labor practice claim, or other labor
dispute affecting either Borrower in a manner which could reasonably be expected
to have a Material Adverse Effect.
(f) Immediately after becoming aware of any violation of any
law, statute, regulation, or ordinance of a Governmental Authority affecting
either Borrower which could reasonably be expected to have a Material Adverse
Effect.
(g) Immediately after receipt of any notice of any violation
by either Borrower or any of its Subsidiaries of any Environmental Law which
could reasonably be expected to have a Material Adverse Affect or that any
Governmental Authority has asserted that either Borrower or any Subsidiary
thereof is not in compliance with any Environmental Law or is investigating
either Borrower's or such Subsidiary's compliance therewith.
(h) Immediately after receipt of any written notice that
either Borrower or any of its Subsidiaries is or may be liable to any Person as
a result of the Release or threatened Release of any Contaminant or that either
Borrower or any Subsidiary is subject to investigation by any Governmental
Authority evaluating whether any remedial action is needed to respond to the
Release or threatened Release of any Contaminant which, in either case, is
reasonably likely to give rise to liability in excess of $100,000.
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(i) Immediately after receipt of any written notice of the
imposition of any Environmental Lien against any property of either Borrower or
any of its Subsidiaries.
(j) Any change in either Borrower's name, state of
incorporation, or form of organization, trade names or styles under which the
applicable Borrower will sell Inventory or create Accounts, or to which
instruments in payment of Accounts may be made payable, in each case at least
thirty (30) days prior thereto.
(k) Within ten (10) Business Days after either Borrower or any
ERISA Affiliate knows or has reason to know, that an ERISA Event or a prohibited
transaction (as defined in Sections 406 of ERISA and 4975 of the Code) has
occurred, and, when known, any action taken or threatened by the IRS, the DOL or
the PBGC with respect thereto.
(l) Upon request, or, in the event that such filing reflects a
significant change with respect to the matters covered thereby, within three (3)
Business Days after the filing thereof with the PBGC, the DOL or the IRS, as
applicable, copies of the following: (i) each annual report (form 5500 series),
including Schedule B thereto, filed with the PBGC, the DOL or the IRS with
respect to each Plan, (ii) a copy of each funding waiver request filed with the
PBGC, the DOL or the IRS with respect to any Plan and all communications
received by either Borrower or any ERISA Affiliate from the PBGC, the DOL or the
IRS with respect to such request, and (iii) a copy of each other filing or
notice filed with the PBGC, the DOL or the IRS, with respect to each Plan of
either Borrower or any ERISA Affiliate or the PBGC Debt Agreement.
(m) Upon request, copies of each actuarial report for any Plan
or Multi-employer Plan and annual report for any Multi-employer Plan; and within
three (3) Business Days after receipt thereof by either Borrower or any ERISA
Affiliate, copies of the following: (i) any notices of the PBGC's intention to
terminate a Plan or to have a trustee appointed to administer such Plan; (ii)
any favorable or unfavorable determination letter from the IRS regarding the
qualification of a Plan under Section 401(a) of the Code; or (iii) any notice
from a Multi-employer Plan regarding the imposition of withdrawal liability.
(n) Within three (3) Business Days upon the occurrence
thereof: (i) any changes in the benefits of any existing Plan which increase
either Borrower's annual costs with respect thereto by an amount in excess of
$100,000 (excluding the 401(k) matched funding program contributions reflected
in Borrower's Latest Projections), or the establishment of any new Plan or the
commencement of contributions to any Plan to which either
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Borrower or any ERISA Affiliate was not previously contributing; or (ii) any
failure by either Borrower or any ERISA Affiliate to make a required installment
or any other required payment under Section 412 of the Code on or before the due
date for such installment or payment.
(o) Within three (3) Business Days after either Borrower or
any ERISA Affiliate knows or has reason to know that any of the following events
has or will occur: (i) a Multi-employer Plan has been or will be terminated;
(ii) the administrator or plan sponsor of a Multi-employer Plan intends to
terminate a Multi-employer Plan; or (iii) the PBGC has instituted or will
institute proceedings under Section 4042 of ERISA to terminate a Multi-employer
Plan.
Each notice given under this Section shall describe the
subject matter thereof in reasonable detail, and shall set forth the action that
the applicable Borrower, its Subsidiary, or any ERISA Affiliate, as applicable,
has taken or proposes to take with respect thereto.
ARTICLE 8
GENERAL WARRANTIES AND REPRESENTATIONS
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Each Borrower warrants, jointly and severally, and represents to the
Agent and the Lenders that except as hereafter disclosed to the Agent in
writing:
8.1 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 to the Agent Liens upon and security
interests in the Collateral. Each Borrower has taken all necessary corporate
action (including without limitation, obtaining approval of its stockholders if
necessary) 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 Governmental Authority, and no consent of
any other Person, is required in connection with either Borrower's execution,
delivery and performance of this Agreement and the other Loan Documents to which
the Borrowers are a party, except for those already duly obtained. This
Agreement and the other Loan Documents to which the Borrowers are a party have
been duly executed and delivered by each Borrower, and constitute the legal,
valid and binding obligation of such Borrower, enforceable against it in
accordance with its terms. Each Borrower's execution, delivery, and performance
of this Agreement and the other Loan Documents to which it is a party do not and
will not conflict with, or
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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 by reason of the terms of (a) any contract, mortgage, Lien,
lease, agreement, indenture, or instrument to which such Borrower is a party or
which is binding upon it, (b) any Requirement of Law 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.
8.2 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 favor of the Agent, for the ratable benefit of the Lenders, and
such Liens constitute perfected and continuing Liens on all the Collateral,
having priority over all other Liens on the Collateral, securing all the
Obligations, and enforceable against each Borrower and all third parties.
8.3 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, including those set
forth on SCHEDULE 8.3, where the failure to so qualify would have a Material
Adverse Effect and (c) has all requisite power and authority to conduct its
business and to own its property.
8.4 CORPORATE NAME; PRIOR TRANSACTIONS. Since its incorporation,
neither Borrower has 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
outside of the ordinary course of business.
8.5 SUBSIDIARIES AND AFFILIATES. SCHEDULE 8.5 is a correct and complete
list of the name and relationship to each Borrower and Ultimate Parent of each
and all of Ultimate Parent's and each Borrower's Subsidiaries and other
Affiliates. 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 8.5, and (b) qualified to do business as a foreign corporation and
in good standing in each jurisdiction in which the failure to so qualify or be
in good standing could reasonably be expected to have a material adverse effect
on any such Subsidiary's business, operations, prospects, property, or condition
(financial or otherwise) and (c) has all requisite power and authority to
conduct its business and own its property.
8.6 FINANCIAL STATEMENTS AND PROJECTIONS. (a) The Borrowers have
delivered to the Agent and the Lenders the
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unaudited balance sheet and related statements of income, retained earnings,
changes in financial position, and changes in stockholders equity for the
Borrowers as of June 30, 1995, and for the Fiscal Year then ended, accompanied
by the report with respect to the consolidated financial statements of Ultimate
Parent by the independent certified public accountants, Xxxxxx Xxxxxxxx LLP.
Each Borrower has also delivered to the Agent and the Lenders the unaudited
balance sheet and related statements of income and changes in financial position
for such Borrower as of May 31, 1996. Such financial statements are attached
hereto as EXHIBIT B. All such financial statements have been prepared in
accordance with GAAP and present accurately and fairly the financial position of
the Borrowers as at the dates thereof and their results of operations for the
periods then ended.
(b) The Latest Projections when submitted to the Lenders as
required herein represent the Borrowers' best estimate of the future financial
performance of the Borrower for the periods set forth therein. The Latest
Projections have been prepared on the basis of the assumptions and
qualifications set forth therein, which the Borrowers believe are fair and
reasonable in light of current and reasonably foreseeable business conditions at
the time submitted to the Lender.
8.7 CAPITALIZATION. Consumer's authorized capital stock consists of
9,000 shares of common stock, par value $.01 per share, of which 100 shares are
validly issued and outstanding, fully paid and non-assessable and are owned
beneficially and of record by Parent.
WOC's authorized capital stock consists of 9,000
shares of common stock, par value $.01 per share, of which 100 shares are
validly issued and outstanding, fully paid and non-assessable and are owned
beneficially and of record by Parent.
8.8 SOLVENCY. Each Borrower is Solvent prior to and after giving effect
to the making of the Revolving Loans to be made on the Closing Date and the
issuance of the Letters of Credit to be issued on the Closing Date, and shall
remain Solvent during the term of this Agreement.
8.9 DEBT. After giving effect to the making of the Revolving Loans to
be made on the Closing Date, the Borrowers and their Subsidiaries have no Debt,
except (a) the Obligations, (b) the PBGC Debt, (c) Debt described on SCHEDULE
8.9, and (d) trade payables and other contractual obligations arising in the
ordinary course of business.
8.10 DISTRIBUTIONS. Except as set forth in the Financial Statements
delivered to Agent prior to the Closing Date, since June 30, 1995, no
Distribution has been declared, paid, or made
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upon or in respect of any capital stock or other securities of either Borrower
or any of its Subsidiaries.
8.11 TITLE TO PROPERTY. Each Borrower has good, indefeasible, and
merchantable title to all of its personal property (including, without
limitation, the assets reflected on the April 30, 1996 Financial Statements
delivered to the Agent and the Lenders, except as disposed of in the ordinary
course of business since the date thereof), free of all Liens except Permitted
Liens.
8.12 REAL ESTATE; LEASES. SCHEDULE 8.12 sets forth a correct and
complete list of all Real Estate owned by each Borrower, all leases and
subleases of real or personal property by each Borrower as lessee or sublessee
(other than leases of personal property as to which such Borrower is lessee or
sublessee for which the value of such personal property is less than $100,000
individually or $200,000 in the aggregate), and all leases and subleases of real
or personal property by either Borrower as lessor, lessee, sublessor or
sublessee. Each of such leases and subleases is valid and enforceable in
accordance with its terms and is in full force and effect, and to the Borrowers'
knowledge no default by any party to any such lease or sublease exists.
8.13 PROPRIETARY RIGHTS COLLATERAL. SCHEDULE 8.13 sets forth a correct
and complete list of all of the Proprietary Rights Collateral. None of the
Proprietary Rights Collateral is subject to any licensing agreement or similar
arrangement except as set forth on SCHEDULE 8.13. To the best of each Borrower's
knowledge, none of the Proprietary Rights Collateral infringes on or conflicts
with any other Person's property, and to the best of each Borrower's knowledge
no other Person's property infringes on or conflicts with the Proprietary Rights
Collateral. The Proprietary Rights Collateral described on SCHEDULE 8.13
constitute all of the property of such type necessary to the current and
anticipated future conduct of each Borrower's business.
8.14 TRADE NAMES AND TERMS OF SALE. All trade names or styles under
which each Borrower or any of its Subsidiaries will sell Inventory or create
Accounts, or to which instruments in payment of Accounts may be made payable,
are listed on SCHEDULE 8.14.
8.15 LITIGATION. Except as set forth on SCHEDULE 8.15, there is no
pending or (to the best of each Borrowers' knowledge) threatened, action, suit,
proceeding, or counterclaim by any Person, or investigation by any Governmental
Authority, or to the best of Borrowers' knowledge any basis for any of the
foregoing,
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which could reasonably be expected to cause a Material Adverse Effect.
8.16 RESTRICTIVE AGREEMENTS. Neither 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 to
which it is a party and repay the Obligations or which materially and adversely
affects or, insofar as either Borrower can reasonably foresee, could materially
and adversely affect, the property, business, operations, or condition
(financial or otherwise) of either Borrower, or would in any respect cause a
Material Adverse Effect.
8.17 LABOR DISPUTES. Except as set forth on SCHEDULE 8.17, (a) there is
no collective bargaining agreement or other labor contract covering employees of
either 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) to the best of Borrowers' knowledge no union or other labor
organization is seeking to organize, or to be recognized as, a collective
bargaining unit of employees of either Borrower or for any similar purpose, and
(d) there is no pending or (to the best of either Borrower's knowledge)
threatened, strike, work stoppage, material unfair labor practice claim, or
other material labor dispute against or affecting either Borrower or their
employees.
8.18 ENVIRONMENTAL LAWS. Except as otherwise disclosed on SCHEDULE
8.18:
(a) Each Borrower has complied in all material respects with
all Environmental Laws applicable to its Premises and business, and neither
Borrower nor any of its present Premises or operations, nor to the best of
Borrowers' knowledge its past property or operations, is subject to any
enforcement order from or liability agreement with any Governmental 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.
(b) Each Borrower has obtained all permits necessary for their
current operations under Environmental Laws, and all such permits are in good
standing and each Borrower is in compliance with all terms and conditions of
such permits.
(c) Neither Borrower nor, to the best of the Borrowers'
knowledge, any of their predecessors in interest, has stored, treated or
disposed of any hazardous waste on any
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Premises, as defined pursuant to 40 CFR Part 261 or any equivalent Environmental
Law.
(d) Neither Borrower has received any summons, complaint,
order or similar written notice that it is not currently in compliance with, or
that any Governmental 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 either Borrower
is the subject of any investigation by any Governmental 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 each Borrower's
knowledge has there ever been on or in the Premises:
(1) any underground storage tanks or surface
impoundments,
(2) any asbestos containing material, or
(3) any polychlorinated biphenyls (PCB's)
used in hydraulic oils, electrical transformers or other equipment.
(g) Neither Borrower 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) Neither Borrower 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 either
Borrower 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
either Borrower contain asbestos containing material.
(j) No Environmental Lien has attached to any Premises of
either Borrower.
8.19 NO VIOLATION OF LAW. Neither Borrower is in violation of any law,
statute, regulation, ordinance, judgment, order, or decree applicable to it
which violation could reasonably be expected to have a Material Adverse Effect.
8.20 NO DEFAULT. Neither Borrower is in default with respect to any
note, indenture, loan agreement, mortgage, lease,
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deed, or other agreement to which such Borrower is a party or by which it is
bound, which default could reasonably be expected to have a Material Adverse
Effect.
8.21 ERISA COMPLIANCE. Except as specifically disclosed in SCHEDULE
8.21:
(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 either
Borrower, threatened claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan which has resulted or could reasonably be
expected to result in a Material Adverse Effect. 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.
(c) (i) No ERISA Event has occurred or is reasonably expected
to occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither
Borrower and none of their respective ERISA Affiliates 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) neither Borrower and none of their respective ERISA
Affiliates 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 Multi-employer Plan; and (v) neither Borrower and none of their respective
ERISA Affiliates has engaged in a transaction that could be subject to Section
4069 or 4212(c) of ERISA.
(d) The PBGC Debt Agreement (i) is in full force and effect,
(ii) evidences the comprehensive settlement of all claims, issues or disputes
with respect to the Borrowers' Plans, and (iii) is not subject to any pending
or, to the knowledge of Borrowers, threatened default, claim or dispute.
8.22 TAXES. Each Borrower has filed all Federal and other tax returns
and reports required to be filed, and have paid all
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Federal and other taxes, assessments, fees and other governmental charges levied
or imposed upon them or their properties, income or assets otherwise due and
payable.
8.23 REGULATED ENTITIES. Neither Borrower, and no Person controlling
either Borrower, and none of their respective Subsidiaries, is an "Investment
Company" within the meaning of the Investment Company Act of 1940. The Borrower
is not subject to regulation under the Public Utility Holding Company Act of
1935, the Federal Power Act, the Interstate Commerce Act, any state public
utilities code, or any other Federal or state statute or regulation limiting its
ability to incur Indebtedness.
8.24 USE OF PROCEEDS; MARGIN REGULATIONS. The proceeds of the Loans are
to be used solely for working capital purposes. Neither Borrower is engaged in
the business of purchasing or selling Margin Stock or extending credit for the
purpose of purchasing or carrying Margin Stock.
8.25 PATENTS, TRADEMARKS AND LICENSES, ETC. Each Borrower owns or is
licensed or otherwise has the right to use all of the patents, trademarks,
service marks, trade names, contractual franchises, authorizations and other
rights that are reasonably necessary for the operation of its businesses, and to
the best of Borrowers' knowledge, without conflict with the rights of any other
Person. To the best knowledge of each Borrower, no slogan or other advertising
device, product, process, method, substance, part or other material now
employed, or now contemplated to be employed, by either Borrower infringes upon
any rights held by any other Person. No claim or litigation regarding any of the
foregoing is pending or to the best of Borrowers' knowledge, threatened, and no
patent, invention, device, application, principle or any statute, law, rule,
regulation, standard or code is pending or, to the best of Borrowers' knowledge,
proposed, which, in either case, could reasonably be expected to have a Material
Adverse Effect.
8.26 NO MATERIAL ADVERSE CHANGE. Except as disclosed to Agent in
writing or reflected in the Latest Projections, no Material Adverse Effect has
occurred since June 30, 1995.
8.27 FULL DISCLOSURE. None of the representations or warranties made by
Parent, either Borrower or any Subsidiary in the Loan Documents as of the date
such representations and warranties are made or deemed made, and none of the
statements contained in any exhibit, report, statement or certificate furnished
by or on behalf of either Borrower or any Subsidiary in connection with the Loan
Documents, contains any untrue statement of a material fact or omits any
material fact required to be stated therein or necessary to make the statements
made therein,
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in light of the circumstances under which they are made, not misleading as of
the time when made or delivered.
8.28 MATERIAL AGREEMENTS. Schedule 8.28 hereto sets forth all
material agreements and contracts to which each Borrower is a party or is bound
as of the date hereof.
8.29 BANK ACCOUNTS. SCHEDULE 8.29 contains a complete and accurate
list of all bank accounts maintained by each Borrower with any bank or other
financial institution.
8.30 INDENTURES. No default or event of default has occurred and is
continuing under any of the Indentures and none of Ultimate Parent, Parent or
any of its Subsidiaries has any obligation to redeem, prepay or defease any of
the Notes issued under any to the Indentures.
ARTICLE 9
AFFIRMATIVE AND NEGATIVE COVENANTS
----------------------------------
Each Borrower, jointly and severally, covenants to the Agent
and each Lender that, so long as any of the Obligations remain outstanding or
this Agreement is in effect:
9.1 TAXES AND OTHER OBLIGATIONS. Each Borrower shall, and shall cause
each of its Subsidiaries to, (a) file when due all tax returns and other reports
which it is required to file; (b) 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
provide to the Agent and the Lenders, upon request, satisfactory evidence of its
timely compliance with the foregoing; and (c) pay when due all Debt owed by it
and all claims of materialmen, processors, converters, mechanics, carriers,
warehousemen, landlords and other like Persons, and all other indebtedness owed
by it and perform and discharge in a timely manner all other obligations
undertaken by it; PROVIDED, HOWEVER, so long as Borrowers have notified Agent in
writing, neither of the Borrowers nor any of their respective Subsidiaries need
pay any tax, fee, assessment, or governmental charge, that (i) it is contesting
in good faith by appropriate proceedings diligently pursued, (ii) the applicable
Borrower or its Subsidiary, as the case may be, has established proper reserves
for as provided in GAAP, and (iii) no Lien (other than a Permitted Lien) results
from such non-payment.
9.2 CORPORATE EXISTENCE AND GOOD STANDING. Each Borrower shall, and
shall cause each of its Subsidiaries to, maintain its
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corporate existence and its qualification and good standing in all jurisdictions
in which the failure to maintain such qualification or good standing could
reasonably be expected to have a material adverse effect on such Borrower's or
such Subsidiary's property, business, operations, prospects, or condition
(financial or otherwise).
9.3 COMPLIANCE WITH LAW AND AGREEMENTS; MAINTENANCE OF LICENSES. Each
Borrower shall comply, and shall cause each of its Subsidiaries to comply, in
all material respects with all Requirements of Law of any Governmental Authority
having jurisdiction over it or its business (including the Federal Fair Labor
Standards Act). Each Borrower shall, and shall cause each of its Subsidiaries
to, obtain and maintain all licenses, permits, franchises, and governmental
authorizations material to the ownership and conduct of its business as
conducted on the Closing Date.
9.4 MAINTENANCE OF PROPERTY. Each Borrower shall, and shall cause each
of its Subsidiaries to, maintain all of its property necessary in the conduct of
its business, in good operating condition and repair, ordinary wear and tear
excepted.
9.5 INSURANCE. (a) Each Borrower shall maintain, and shall cause each
of its Subsidiaries to maintain, insurers having a rating of at least (A-) or
better by Best Rating Guide, insurance against loss or damage by fire with
extended coverage; theft, burglary, pilferage and loss in transit; public
liability and third party property damage; larceny, embezzlement or other
criminal liability; business interruption; and such other hazards or of such
other types as is customary for Persons engaged in the same or similar business
(or, if an Event of Default shall have occurred and be continuing, as the Agent,
in its discretion, or acting at the direction of the Majority Lenders, shall
specify) in amounts, and under policies acceptable to the Agent and the Majority
Lenders. Without limiting the foregoing, each Borrower shall also maintain, and
shall cause each of its Subsidiaries to maintain, flood insurance, in the event
of a designation of the area in which any Real Estate is located as "flood
prone" or a "flood risk area," as defined by the Flood Disaster Protection Act
of 1973, in an amount to be reasonably determined by the Agent, and shall comply
with the additional requirements of the National Flood Insurance Program as set
forth in said Act.
(b) Each Borrower shall cause the Agent, for the ratable
benefit of the Lenders, to be named in each such policy as secured party and
loss payee or additional insured, in a manner acceptable to the Agent with
respect to the Collateral. 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 Agent in the event of cancellation of
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the policy for any reason whatsoever and a clause or endorsement stating that
the interest of the Agent shall not be impaired or invalidated by any act or
neglect of the applicable Borrower or any of its Subsidiaries or the owner of
any premises for purposes more hazardous than are permitted by such policy. All
premiums for such insurance shall be paid by the Borrowers when due, and
certificates of insurance and, if requested by the Agent or any Lender,
photocopies of the policies, shall be delivered to the Agent, in each case in
sufficient quantity for distribution by the Agent to each of the Lenders. If
either Borrower fails to procure such insurance or to pay the premiums therefor
when due, the Agent may, and at the direction of the Majority Lenders shall, do
so from the proceeds of Revolving Loans.
(c) Each Borrower shall promptly notify the Agent and the
Lenders of any loss, damage, or destruction to the Collateral, whether or not
covered by insurance in excess of $100,000. The Agent is hereby authorized to
collect all insurance proceeds directly, and to apply or remit them as follows:
(i) With respect to insurance proceeds relating to
property other than Collateral, after deducting from such proceeds the
reasonable expenses, if any, incurred by the Agent in the collection or handling
thereof, the Agent shall promptly remit to the applicable Borrower such
proceeds.
(ii) With respect to insurance proceeds relating to
Collateral, after deducting from such proceeds the reasonable expenses, if any,
incurred by the Agent in the collection or handling thereof, the Agent shall
apply such proceeds, ratably, to the reduction of the Obligations in the order
provided for in SECTION 4.8.
9.6 EQUIPMENT. Each Borrower shall maintain its Fixed Assets in good
operating condition and repair, normal wear and tear excepted. Neither Borrower
shall sell, lease or otherwise dispose of its Fixed Assets, except for (i) sales
or other dispositions of obsolete or worn-out Equipment or Equipment not
necessary for the conduct of the Borrowers' businesses and (ii) sales of other
Equipment not to exceed $100,000 in the aggregate in any Fiscal Year.
9.7 ENVIRONMENTAL LAWS. (a) Each Borrower shall, and shall cause each
of its Subsidiaries to, conduct its business in compliance with all
Environmental Laws applicable to it, including, without limitation, those
relating to the generation, handling, use, storage, and disposal of any
Contaminant. Each Borrower shall, and shall cause each of its Subsidiaries to,
take prompt and appropriate action to respond to any non-compliance
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with Environmental Laws and shall regularly report to the Agent on such
response.
(b) Without limiting the generality of the foregoing, each
Borrower shall submit to the Agent and the Lenders annually, commencing on the
first Anniversary Date, and on each Anniversary Date thereafter, an update of
the status of each environmental compliance or liability issue. The Agent or any
Lender may request copies of technical reports prepared by each Borrower and its
communications with any Governmental Authority to determine whether such
Borrower or any of its Subsidiaries is proceeding reasonably to correct, cure or
contest in good faith any alleged non-compliance or environmental liability.
9.8 COMPLIANCE WITH ERISA. Each Borrower shall, and shall cause each of
its ERISA Affiliates to: (a) maintain each Plan in compliance in all material
respects with the applicable provisions of ERISA, the Code and other federal or
state law; (b) cause each Plan which is qualified under Section 401(a) of the
Code to maintain such qualification; (c) make all required contributions to any
Plan subject to Section 412 of the Code; (d) not engage in a prohibited
transaction or violation of the fiduciary responsibility rules with respect to
any Plan; (e) comply with each term and condition of the PBGC Debt Agreement and
(f) not engage in a transaction that could be subject to Section 4069 or 4212(c)
of ERISA.
9.9 MERGERS, CONSOLIDATIONS OR SALES. (a) None of the Borrowers or the
Borrowers' respective 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 for (i) sales of Inventory in the
ordinary course of its business; (ii) sales of Equipment in accordance with
SECTION 9.6; and (iii) such other asset dispositions as may be approved by Agent
in writing.
9.10 CAPITAL CHANGE; RESTRICTED INVESTMENTS. Neither Borrower and none
of their respective Subsidiaries shall make any change in its capital structure
which could have a Material Adverse Effect or make any Restricted Investment.
9.11 TRANSACTIONS AFFECTING COLLATERAL OR OBLIGATIONS. Neither Borrower
and none of their respective Subsidiaries shall enter into any transaction which
could have a Material Adverse Effect.
9.12 GUARANTIES. Neither Borrower and none of their respective
Subsidiaries shall make, issue, or become liable on any Guaranty, except
Guaranties in favor of the Agent.
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9.13 DEBT. Neither Borrower and none of their respective 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 Pro Forma Balance Sheet attached hereto as EXHIBIT C; (d)
accrued expenses incurred in the ordinary course of business; and (e)
refinancings of Capital Leases existing as of the Closing Date.
9.14 PREPAYMENT. Neither Borrower and none of their respective
Subsidiaries shall voluntarily prepay any Debt, except the Obligations in
accordance with the terms of this Agreement.
9.15 DISTRIBUTIONS; TRANSACTIONS WITH AFFILIATES. Neither Borrower and
none of their respective Subsidiaries shall, sell, transfer, distribute, or pay
any money or property, including, but not limited to, any fees or expenses of
any nature (including, but not limited to, any fees or expenses for management
services), 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 for the following transactions:
(i) each Borrower may make unsecured intercompany loans to
the other Borrower; provided that:
(a) no Event of Default shall have occurred and
be continuing or would result after giving effect thereto;
(b) after giving effect to any such intercompany
Loan by WOC, Availability - WOC shall equal or exceed $1,000,000, with all
accounts payable and accrued expenses of WOC being paid currently; and
(c) after giving effect to any such intercompany
loan by Consumer, Availability-Consumer shall equal or exceed $2,000,000, with
all accounts payable and accrued expenses of Consumer being paid currently.
(ii) Borrowers may pay Intercompany Accounts owing to Parent
(which Parent may use in part to pay dividends to Ultimate Parent) in an amount
not to exceed the following aggregate amount in each of the following respective
Fiscal Years and to be used solely for the following purposes: (A) $7,134,000 in
Fiscal Year 1997; $6,924,000 in Fiscal Year 1998; and $6,835,000 in Fiscal Year
1999 to pay interest on the Exchange Notes and Senior Subordinated Notes and
pension, IRB, lease and life insurance
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payments owing by Parent or Ultimate Parent; PLUS (B) to the extent deducted in
determining the EBITDA of each Borrower for any Fiscal Year, an amount equal to
the lesser of (1) actual officers' salaries and overhead expenses incurred by
Parent and Ultimate Parent or (2) 3% of Borrowers' combined gross sales for the
preceding Fiscal Year; PLUS (C) reimbursement of operating expenses incurred for
the direct benefit of Consumer and WOC, but paid or payable by Parent or
Ultimate Parent; provided that
(a) No Event of Default shall have occurred and
be continuing or would result after giving effect to payment of any such
Intercompany Account; and
(b) on a pro forma basis, giving effect to the
payment of any such Intercompany Account as if it had been paid on the 45th day
preceding the proposed payment date therefor, on each day during that 45-day
period, Availability - Consumer would have been at least $2,000,000 and
Availability - WOC would have been at least $1,000,000 and each Borrower would
be Solvent.
(iii) Borrowers may pay Intercompany Accounts owed to Parent,
(which Parent may use in whole or in part to pay dividends to Ultimate Parent)
which shall be used solely to redeem or repurchase Notes subject to the
Indentures, such payments of Intercompany Accounts not to exceed $10,000,000 in
the aggregate during the term hereof, provided that
(a) Such payments shall only be made from and
after March 15, 1997 and on or prior to April 7, 1997;
(b) no Event of Default shall have occurred and
be continuing or would result after giving effect thereto;
(c) For the period commencing on July 1, 1996,
and ending on January 31, 1997, the Borrowers shall have combined EBITDA of at
least $3,800,000 and Operating Cash Flow of at least $4,400,000 as evidenced by
Borrowers' Financial Statements for that seven month period, delivered to Agent
at least ten (10) days prior to March 15, 1997;
(d) on a pro forma basis giving effect to the
payment of any such Intercompany Account as if it had been paid on the 45th day
preceding the proposed payment date therefor, on each day during that 45-day
period, the Borrowers' combined Availability would have been at least
$10,000,000 and each Borrower would be Solvent; and
(e) As of the date of payment of any such
Intercompany Account, Consumer's supply agreement with KMart (existing as of the
Closing Date) shall have been renewed on terms which do not have a Material
Adverse Effect.
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(iv) Borrowers may pay Intercompany Accounts owed to Ultimate
Parent in an amount equal to Equity Proceeds not previously repaid to Ultimate
Parent; provided that
(a) such Intercompany Account is paid on or
prior to December 31, 1996; and
(b) on a pro forma basis after giving effect to such
payment the criteria set forth in clause (iii)(d) above would be met.
9.16 INVESTMENT BANKING AND FINDER'S FEES. Neither Borrower and none of
their respective Subsidiaries shall pay or agree to pay, or reimburse any other
party with respect to, any investment banking or similar or related fee,
underwriter's fee, finder's fee, or broker's fee to any Person in connection
with this Agreement. Each Borrower shall defend and indemnify the Agent and the
Lenders against and hold them harmless from all claims of any Person for any
such fees, and all costs and expenses (including without limitation, attorneys'
fees) incurred by the Agent and/or any Lender in connection therewith.
[9.17 INTENTIONALLY OMITTED.]
9.18 BUSINESS CONDUCTED. Neither Borrower and none of their respective
Subsidiaries shall engage, directly or indirectly, in any line of business other
than the businesses in which they are engaged on the Closing Date.
9.19 LIENS. Neither Borrower and none of their respective 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.
9.20 SALE AND LEASEBACK TRANSACTIONS. Neither Borrower and none of
their respective Subsidiaries shall, directly or indirectly, enter into any
arrangement with any Person providing for such Borrower or such Subsidiary to
lease or rent property that either Borrower or such Subsidiary has sold or will
sell or otherwise transfer to such Person.
9.21 NEW SUBSIDIARIES. Neither Borrower and none of their respective
Subsidiaries shall, directly or indirectly, organize, create, acquire or permit
to exist any Subsidiary other than those listed on SCHEDULE 8.5.
9.22 FISCAL YEAR. The Borrowers shall not change their Fiscal Year
without Agent's prior written consent which shall not be unreasonably withheld.
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9.23 CAPITAL EXPENDITURES. Neither Consumer nor WOC shall make or incur
any Capital Expenditure if, after giving effect thereto, the aggregate amount of
all Capital Expenditures by that Borrower would exceed the following respective
amounts during any corresponding Fiscal Year set forth below:
FISCAL YEAR ENDED CONSUMER WOC
----------------- -------- ---
June 30, 1997 $660,000 $315,000
June 30, 1998 $660,000 $330,000
June 30, 1999 $660,000 $330,000
each Fiscal Year Thereafter.
9.24 OPERATING LEASE OBLIGATIONS. Neither Borrower shall enter into, or
suffer to exist, any lease of real or personal property as lessee or sublessee
(other than a Capital Lease), if, after giving effect thereto, the aggregate
amount of Rentals (as hereinafter defined) payable by the Borrowers and their
Subsidiaries on a consolidated basis in any Fiscal Year in respect of such lease
and all other such leases would exceed $3,000,000 (such amount being referred to
herein as "Permitted Rentals"). The term "Rentals" means all payments due from
the lessee or sublessee under a lease, including, without limitation, basic
rent, percentage rent, property taxes, utility or maintenance costs, and
insurance premiums.
9.25 EBITDA. Consumer and WOC shall comply with the financial
covenants set forth on Schedule 9.25 hereto.
9.26 USE OF PROCEEDS. The Borrowers shall not, and shall not suffer or
permit any Subsidiary to, use any portion of the Loan proceeds, directly or
indirectly, (i) to purchase or carry Margin Stock, (ii) to repay or otherwise
refinance indebtedness of the Borrower or others incurred to purchase or carry
Margin Stock, (iii) to extend credit for the purpose of purchasing or carrying
any Margin Stock, or (iv) to acquire any security in any transaction that is
subject to Section 13 or 14 of the Exchange Act.
9.27 FURTHER ASSURANCES. Each Borrower shall execute and deliver, or
cause to be executed and delivered, to the Agent and/or the Lenders such
documents and agreements, and shall take or cause to be taken such actions, as
the Agent or any Lender may, from time to time, request to carry out the terms
and conditions of this Agreement and the other Loan Documents.
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ARTICLE 10
CONDITIONS OF LENDING
10.1 CONDITIONS PRECEDENT TO MAKING OF LOANS ON THE CLOSING DATE. The
obligation of the Lenders to make the initial Revolving Loans on the Closing
Date, and the obligation of the Agent to cause to be issued any Letter of Credit
on the Closing Date and the obligation of the Lenders to participate in Letters
of Credit issued on the Closing Date, are subject to the following conditions
precedent having been satisfied in a manner satisfactory to the Agent and each
Lender:
(a) This Agreement and the other Loan Documents have been
executed by each party thereto and the Borrowers shall have performed and
complied with all covenants, agreements and conditions contained herein and the
other Loan Documents which are required to be performed or complied with by each
Borrower before or on such Closing Date.
(b) After making the Revolving Loans on the Closing Date
(including such Revolving Loans made to finance the Closing Fee or otherwise
pursuant to SECTION 4.7 as reimbursement for fees, costs and expenses then
payable under this Agreement) and with all their Debts current, the Borrowers
shall have aggregate Availability in an amount no less than $15,120,000
(c) All representations and warranties made hereunder and in
the other Loan Documents shall be true and correct as of the Closing Date as if
made on such date.
(d) No Default or Event of Default shall exist on the Closing
Date, or would exist after giving effect to the Loans to be made on such date.
(e) The Agent and the Lenders shall have received such
opinions of counsel for the Borrowers as the Agent or any Lender shall request,
each such opinion to be in a form, scope, and substance satisfactory to the
Agent, the Lenders, and their respective counsel, including (i) an opinion of
New York counsel that Agent may sell the Pledged Shares under Rule 144, with all
holding periods under Rule 144 having expired and without application of volume
limitations thereunder; and after October 4, 1996, without violating the
"lock-up" provisions of the underwriting agreement among Ultimate Parent,
Parent, Xxxxxxx and Barnett's underwriters; that the Loans and Loan Documents
(other than the Parent Guaranties) do not contravene the Indentures and that
Parent may sell Xxxxxxx capital stock other than the Pledged Shares owned by it
in its sole discretion and apply the proceeds
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to payment of the Obligations without violating the Indentures or any other
Agreement to which it is a party or by which it is bound; (ii) an opinion of
Ohio counsel regarding perfection of security interests with respect to
Collateral located in that State; and (iii) an opinion of Texas counsel
regarding perfection of security interests in that State.
(f) The Agent and the Lenders shall have received monthly or
quarterly financial projections for Fiscal Year 1996 consistent with the annual
financial projections for Fiscal Year 1996.
(g) The Agent shall have received:
(i) acknowledgment copies of proper financing
statements, duly filed on or before the Closing Date under the UCC in all
jurisdictions that the Agent may deem necessary or desirable in order to perfect
the Agent's Lien; and
(ii) duly executed such UCC-3 Termination
Statements and other instruments, in form and substance satisfactory to the
Agent, as shall be necessary to terminate and satisfy all Liens on the Property
of the Borrowers except Permitted Liens.
(h) The Borrowers shall have paid all fees and expenses of the
Agent and the Attorney Costs incurred in connection with any of the Loan
Documents and the transactions contemplated thereby.
(i) The Agent shall have received evidence, in form, scope,
and substance, reasonably satisfactory to the Agent, of all insurance coverage
as required by the Agreement.
(j) The Agent and the Lenders shall have had an opportunity,
if they so choose, to examine the books of account and other records and files
of each Borrower and to make copies thereof, and to conduct a pre-closing audit
which shall include, without limitation, verification of Inventory, Accounts,
and Availability, and the results of such examination and audit shall have been
satisfactory to the Agent and the Lenders in all respects.
(k) All proceedings taken in connection with the execution of
this Agreement, all other Loan Documents and all documents and papers relating
thereto shall be satisfactory in form, scope, and substance to the Agent and the
Lenders.
(l) The Agent and the Lenders shall have received the
Borrowers' financial statements as of May 31, 1996 and for the eleven (11)
months then ended.
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(m) The Agent shall have received landlord and mortgagee
waivers from landlords and mortgagees and bailee letters from warehousemen,
sales representatives (as applicable) with respect to each location (not owned
by a Borrower) at which Collateral is located.
(n) The Agent shall have received the Parent Guaranties.
(o) The Agent shall have received the Pledge Agreement, share
certificates evidencing the Pledged Shares, and stock powers endorsed by Parent
in blank.
(p) The Agent shall have received a pay-off letter from
Citibank.
(q) The Agent shall have received a Subordination Agreement
from Ultimate Parent whereby Ultimate Parent agrees that Intercompany Accounts
owed to it by each Borrower are subordinate in right of payment to the
Obligations.
(r) No claim, action, suit or litigation shall be pending or
threatened (i) which is reasonably likely to be determined adversely to either
Borrower and which would have a Material Adverse Effect if so determined or (ii)
which seeks to enjoin the transactions contemplated hereby.
The acceptance by either Borrower of any Loans made on the Closing Date
shall be deemed to be a representation and warranty made by either Borrower to
the effect that all of the conditions precedent to the making of such Loans have
been satisfied, with the same effect as delivery to the Agent and the Lenders of
a certificate signed by the a Responsible Officer of each Borrower, dated the
Closing Date, to such effect.
Execution and delivery to the Agent by a Lender of a counterpart to
this Agreement shall be deemed confirmation by such Lender that (i) all
conditions precedent in this SECTION 10.1 have been fulfilled to the
satisfaction of such Lender and (ii) the decision of such Lender to execute and
deliver to the Agent an executed counterpart to this Agreement was made by such
Lender independently and without reliance on the Agent or any other Lender as to
the satisfaction of any condition precedent set forth in this SECTION 10.1.
10.2 CONDITIONS PRECEDENT TO EACH LOAN. The obligation of the Lenders
to make each Loan, including the initial Revolving Loans on the Closing Date,
and the obligation of the Agent to take reasonable steps to cause to be issued
any Letter of Credit and the obligation of the Lenders to participate in Letters
of
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Credit, shall be subject to the further conditions precedent that on and as
of the date of any such extension of credit:
(a) the following statements shall be true, and the acceptance
by either Borrower of any extension of credit shall be deemed to be a statement
to the effect set forth in clauses (i) and (ii), with the same effect as the
delivery to the Agent and the Lenders of a certificate signed by a Responsible
Officer, dated the date of such extension of credit, stating that:
(i) 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 the Agent and the Lenders have been
notified by the Borrowers that any representation or warranty is not correct and
the Majority Lenders have explicitly waived in writing compliance with such
representation or warranty; and
(ii) No event has occurred and is continuing, or
would result from such extension of credit, which constitutes a Default or an
Event of Default; and
(b) without limiting SECTION 10.1 (b), the amount of the
Availability as to each Borrower shall be sufficient to make such Revolving
Loans to that Borrower without exceeding that Borrower's Availability, PROVIDED,
HOWEVER, that the foregoing conditions precedent are not conditions to each
Lender participating in or reimbursing BABC or the Agent for such Lenders' Pro
Rata Share of any BABC Loan or Agent Advance as provided in SECTIONS 2.2(g), (h)
and (i).
ARTICLE 11
DEFAULT; REMEDIES
11.1 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) any failure to pay the principal of or interest or
premium on any of the Obligations when due, whether upon demand or otherwise;
(b) any representation or warranty made by either Borrower in
this Agreement or by Ultimate Parent, either Borrower or any of their respective
Subsidiaries in any of the other Loan Documents, any Financial Statement, or any
certificate furnished by either Borrower or any of its Subsidiaries at any time
to the
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Agent or any Lender shall prove to be untrue in any material respect as of the
date on which made or furnished;
(c) any default shall occur in the observance or performance
of any of the covenants and agreements contained in this Agreement, including
the Schedules hereto, the Secured Guaranty of Parent, the Pledge Agreement or
any Loan Document to which either Borrower is a party, or any other agreement
entered into at any time to which either Borrower or any Subsidiary thereof and
the Agent or any Lender are party, 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 Agent and the Majority Lenders) or become void or
unenforceable, without the written consent of the Agent and the Majority
Lenders;
(d) any default shall occur under any of the Indentures or
with respect to the Notes issued pursuant thereto or any Debt for borrowed money
(other than the Obligations) in an outstanding principal amount which exceeds,
in the aggregate for all such Debt with respect to which default shall have
occurred, $250,000, or under any agreement or instrument under or pursuant to
which any such Debt or indebtedness may have been issued, created, assumed, or
guaranteed by either Borrower or any of their respective Subsidiaries, and such
default shall continue for more than the period of grace, if any, therein
specified, if the effect thereof (with or without the giving of notice or
further lapse of time or both) is to accelerate, or to permit the holders of any
such Debt or indebtedness to accelerate, the maturity of any such Debt; or any
such Debt or indebtedness shall be declared due and payable or be required to be
prepaid (other than by a regularly scheduled required prepayment) prior to the
stated maturity thereof;
(e) Ultimate Parent, Parent, or either Borrower 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 the debts of Ultimate Parent,
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Parent or either Borrower 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 either (i) such petition, action or
proceeding shall not have been dismissed within a period of sixty (60) days
after its commencement or (ii) an order for relief against Ultimate Parent,
either Borrower or such Subsidiary shall have been entered in such proceeding;
(g) a receiver, assignee, liquidator, sequestrator, custodian,
trustee or similar officer for Ultimate Parent, Parent or either Borrower or for
all or any part of its property shall be appointed or a warrant of attachment,
execution or similar process shall be issued against any part of the property of
either Borrower and in the case of a warrant of attachment, execution or similar
process issued without prior notice to Borrowers or hearing and for an amount
not to exceed $250,000, sixty (60) days or more shall have elapsed without the
same being discharged, removed or stayed;
(h) Ultimate Parent, Parent or either Borrower shall file a
certificate of dissolution under applicable state law or shall be liquidated,
dissolved or wound-up or shall commence or have commenced against it any action
or proceeding for dissolution, winding-up or liquidation, or shall take any
corporate action in furtherance thereof;
(i) all or any material part of the property of Ultimate
Parent, Parent or either Borrower shall be nationalized, expropriated or
condemned, seized or otherwise appropriated, or custody or control of such
property or of Ultimate Parent, either Borrower shall be assumed by any
Governmental Authority or any court of competent jurisdiction at the instance of
any Governmental Authority, except where contested in good faith by proper
proceedings diligently pursued where a stay of enforcement is in effect;
(j) any Guaranty of the Obligations shall be disavowed or
revoked by the guarantor;
(k) one or more judgments or orders for the payment of money
aggregating in excess of $250,000, which amount shall not be fully covered by
insurance, shall be rendered against either Borrower;
(l) any loss, theft, damage or destruction of any item or
items of Collateral or other property of either Borrower occurs which (i)
materially and adversely affects the property, business, operation, prospects,
or condition of the Borrower or any of its Subsidiaries; or (ii) is material in
amount and is not adequately covered by insurance;
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(m) there occurs a Material Adverse Effect;
(n) there is filed against either Borrower or any of its
Subsidiaries any civil or criminal action, suit or proceeding under any federal
or state racketeering statute (including, without limitation, the Racketeer
Influenced and Corrupt Organization Act of 1970), which action, suit or
proceeding (1) is not dismissed within one hundred twenty (120) days, and (2)
could result in the confiscation or forfeiture of any material portion of the
Collateral;
(o) for any reason other than the failure of the Agent to take
any action available to it to maintain perfection of the Agent's Liens pursuant
to the Loan Documents, this Agreement, the Secured Guaranty of Parent, the
Pledge Agreement or any Loan Document to which either Borrower is a party ceases
to be in full force and effect, or any Lien with respect to any material portion
of the Collateral intended to be secured thereby ceases to be, or is not, valid,
perfected and prior to all other Liens (other than Permitted Liens) or is
terminated, revoked or declared void;
(p) (i) an ERISA Event shall occur with respect to a Pension
Plan or Multi-employer Plan which has resulted or could reasonably be expected
to result in liability of either Borrower under Title IV of ERISA to the Pension
Plan, Multi-employer Plan or the PBGC in an aggregate amount in excess of
$250,000; (ii) the aggregate amount of Unfunded Pension Liability among all
Pension Plans at any time exceeds $250,000; or (iii) either Borrower or any
ERISA Affiliate shall fail to pay when due, after the expiration of any
applicable grace period, any installment payment with respect to its withdrawal
liability under Section 4201 of ERISA under a Multi-employer Plan in an
aggregate amount in excess of $200,000.
(q) There occurs a Change of Control.
11.2 REMEDIES. (a) If a Default or an Event of Default exists, the
Agent may, in its discretion, and shall, at the direction of the Majority
Lenders, do one or more of the following at any time or times and in any order,
without notice to or demand on either Borrower: (i) reduce the Maximum Revolver
Amount, or the advance rates against Eligible Accounts and/or Eligible Inventory
used in computing the Availability, or reduce one or more of the other elements
used in computing one or both Borrowers' Availability; (ii) restrict the amount
of or refuse to make Revolving Loans; and (iii) restrict or refuse to arrange
for Letters of Credit. If an Event of Default exists, the Agent shall, at the
direction of the Majority Lenders, do one or more
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of the following, in addition to the actions described in the preceding
sentence, at any time or times and in any order, without notice to or demand on
either Borrower: (a) terminate the Commitments and this Agreement; (b) declare
any or all Obligations to be immediately due and payable; PROVIDED, HOWEVER,
that upon the occurrence of any Event of Default described in SECTIONS 11.1(e),
11.1(g), or 11.1(h), the Commitments shall automatically and immediately expire
and all Obligations shall automatically become immediately due and payable
without notice or demand of any kind; and (c) pursue its other rights and
remedies under the Loan Documents and applicable law.
(b) If an Event of Default exists: (i) the Agent shall have
for the benefit of the Lenders, in addition to all other rights of the Agent and
the Lenders, the rights and remedies of a secured party under the UCC; (ii) the
Agent may, at any time, take possession of the Collateral and keep it on either
Borrower's premises, at no cost to the Agent or any Lender, or remove any part
of it to such other place or places as the Agent may desire, or either Borrower
shall, upon the Agent's demand, at either Borrower's cost, assemble the
Collateral and make it available to the Agent at a place reasonably convenient
to the Agent; and (iii) the Agent 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 are commercially reasonable, and may, if the Agent 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 manner, each Borrower agrees that any notice by the Agent of sale,
disposition or other intended action hereunder or in connection herewith,
whether required by the UCC or otherwise, shall constitute reasonable notice to
a 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 such Borrower's address specified
in or pursuant to SECTION 15.8. If any Collateral is sold to third parties on
terms other than payment in full at the time of sale, no credit shall be given
against the Obligations until the Agent or the Lenders receive payment. In the
event the Agent 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 Agent retain possession
and not dispose of any Collateral until after trial or final judgment. Each
Borrower agrees that the Agent has no obligation to preserve rights to the
Collateral or marshal any Collateral for the benefit of any Person. The Agent is
hereby granted a license or
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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 Agent's benefit. The proceeds of sale shall be
applied first to all expenses of sale, including reasonable attorneys' fees, and
then to the Obligations in whatever order the Agent elects. The Agent will
return any excess to the applicable Borrower and each Borrower shall remain
liable for any deficiency. To the extent that the foregoing provisions are
deemed to apply to the Pledged Shares and conflict with any provisions of the
Pledge Agreement, the applicable provisions of the Pledge Agreement shall
govern.
(c) If an Event of Default occurs, each Borrower hereby waives
all rights to notice and hearing prior to the exercise by the Agent of the
Agent's rights to repossess the Collateral without judicial process or to
replevy, attach or levy upon the Collateral without notice or hearing.
ARTICLE 12
TERM AND TERMINATION
12.1 TERM AND TERMINATION. The term of this Agreement shall end and the
Term Loans shall be due and payable on the Stated Termination Date, unless
earlier terminated. The Agent upon direction from the Majority Lenders may
terminate this Agreement without notice upon the occurrence of an Event of
Default. Upon the effective date of termination of this Agreement for any reason
in accordance herewith, all Obligations (including, without limitation, all
unpaid principal of, accrued interest on and prepayment fees, if any, with
respect to the Revolving Loans and Term Loans) shall become immediately due and
payable and all Letter of Credit Obligations shall be terminated or discharged.
Notwithstanding the termination of this Agreement, until all Obligations are
indefeasibly paid and performed in full in cash, each Borrower shall remain
bound by the terms of this Agreement and shall not be relieved of any of its
Obligations hereunder, and the Agent and the Lenders shall retain all their
rights and remedies hereunder (including, without limitation, the Agent's Liens
in and all rights and remedies with respect to all Collateral).
ARTICLE 13
AMENDMENTS; WAIVER; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS
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13.1 NO WAIVERS CUMULATIVE REMEDIES. No failure by the Agent or any
Lender to exercise any right, remedy, or option under this Agreement or any
present or future supplement thereto, or in any other agreement between or among
either Borrower and the Agent and/or any Lender, or delay by the Agent or any
Lender in exercising the same, will operate as a waiver thereof. No waiver by
the Agent or any Lender will be effective unless it is in writing, and then only
to the extent specifically stated. No waiver by the Agent or the Lenders on any
occasion shall affect or diminish the Agent's and each Lender's rights
thereafter to require strict performance by the Borrowers of any provision of
this Agreement. The Agent's and each Lender's rights under this Agreement will
be cumulative and not exclusive of any other right or remedy which the Agent or
any Lender may have.
13.2 AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to any
departure by either Borrower therefrom, shall be effective unless the same shall
be in writing and signed by the Majority Lenders (or by the Agent at the written
request of the Majority Lenders) and the Borrowers and then any such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; PROVIDED, HOWEVER, that no such waiver, amendment, or
consent shall, unless in writing and signed by all the Lenders and the Borrowers
and acknowledged by the Agent, do any of the following:
(a) increase or extend the Commitment of any Lender;
(b) postpone or delay any date fixed by this Agreement or any
other Loan Document for any payment of principal, interest, fees or other
amounts due to the Lenders (or any of them) hereunder or under any other Loan
Document;
(c) reduce the principal of, or the rate of interest specified
herein on any Loan, or any fees or other amounts payable hereunder or under any
other Loan Document;
(d) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Loans which is required for the Lender
or any of them to take any action hereunder;
(e) increase the advance rates with respect to Revolving
Loans;
(f) amend this Section or any provision of the Agreement
providing for consent or other action by all Lenders;
(g) release Collateral other than as permitted by SECTION
14.12;
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(h) change the definitions of "Majority Lenders" or "Required
Lenders."
and, PROVIDED FURTHER, that no amendment, waiver or consent shall, unless in
writing and signed by the Agent, affect the rights or duties of the Agent under
this Agreement or any other Loan Document.
13.3 ASSIGNMENTS; PARTICIPATIONS.
(a) Any Lender may, with the written consent of the Agent and
with the consent of Consumer which shall not be unreasonably withheld or
delayed, assign and delegate to one or more assignees (provided that no written
consent of the Agent shall be required in connection with any assignment and
delegation by a Lender to an Affiliate of such Lender) (each an "ASSIGNEE") all,
or any ratable part of all, of the Loans, the Commitments and the other rights
and obligations of such Lender hereunder, in a minimum amount of $5,000,000;
PROVIDED HOWEVER, that BABC shall retain at least 35% of the total Commitments;
PROVIDED, FURTHER, that each Borrower and the Agent may continue to deal solely
and directly with such Lender in connection with the interest so assigned to an
Assignee until (i) written notice of such assignment, together with payment
instructions, addresses and related information with respect to the Assignee,
shall have been given to each Borrower and the Agent by such Lender and the
Assignee; (ii) such Lender and its Assignee shall have delivered to each
Borrower and the Agent an Assignment and Acceptance in the form of EXHIBIT H
("ASSIGNMENT AND ACCEPTANCE") and (iii) the assignor Lender or Assignee has paid
to the Agent a processing fee in the amount of $2,500. Notwithstanding the
foregoing, no consent of either Borrower shall be required to the assignment of
any Lender's Loans and Commitments and BABC need not retain 35% of the total
Commitments (i) in the case of an assignment that occurs while an Event of
Default is continuing or (ii) in the case of an assignment that is part of the
sale of all or a substantial part of the assigning Lender's asset-based loan
portfolio.
(b) From and after the date that the Agent notifies the
assignor Lender that it has received an executed Assignment and Acceptance and
payment of the above-referenced processing fee, (i) the Assignee thereunder
shall be a party hereto and, to the extent that rights and obligations,
including, but not limited to, the obligation to participate in credit support
or other enhancement for Letters of Credit hereunder have been assigned to it
pursuant to such Assignment and Acceptance, shall have the rights and
obligations of a Lender under the Loan Documents, and (ii) the assignor Lender
shall, to the extent that rights and obligations hereunder and under the other
Loan
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Documents have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights and be released from its obligations under this Agreement
(and in the case of an Assignment and Acceptance covering all or the remaining
portion of an assigning Lender's rights and obligations under this Agreement,
such Lender shall cease to be a party hereto).
(c) By executing and delivering an Assignment and Acceptance,
the assigning Lender thereunder and the Assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (1) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Loan Document furnished
pursuant hereto; (2) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of either
Borrower or the performance or observance by either Borrower of any of its
obligations under this Agreement or any other Loan Document furnished pursuant
hereto; (3) such Assignee confirms that it has received a copy of this
Agreement, together with such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (4) such Assignee will, independently and without
reliance upon the Agent, such assigning Lender or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement; (5) such Assignee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under this Agreement
as are delegated to the Agent by the terms hereof, together with such powers as
are reasonably incidental thereto; and (6) such Assignee agrees that it will
perform in accordance with their terms all of the obligations which by the terms
of this Agreement are required to be performed by it as a Lender.
(d) Immediately upon each Assignee's making its processing fee
payment under the Assignment and Acceptance, this Agreement shall be deemed to
be amended to the extent, but only to the extent, necessary to reflect the
addition of the Assignee and the resulting adjustment of the Commitments arising
therefrom. The Commitment allocated to each Assignee shall reduce such
Commitments of the assigning Lender PRO TANTO.
(e) Any Lender may at any time sell to one or more commercial
banks, financial institutions, or other Persons not Affiliates of either
Borrower (a "PARTICIPANT") participating interests in any Loans, the Commitment
of that Lender and the
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other interests of that Lender (the "originating Lender") hereunder and under
the other Loan Documents; PROVIDED, HOWEVER, that (i) the originating Lender's
obligations under this Agreement shall remain unchanged, (ii) the originating
Lender shall remain solely responsible for the performance of such obligations,
(iii) each Borrower and the Agent shall continue to deal solely and directly
with the originating Lender in connection with the originating Lender's rights
and obligations under this Agreement and the other Loan Documents, and (iv) no
Lender shall transfer or grant any participating interest under which the
Participant has rights to approve any amendment to, or any consent or waiver
with respect to, this Agreement or any other Loan Document, and all amounts
payable by the Borrowers hereunder shall be determined as if such Lender had not
sold such participation; except that, if amounts outstanding under this
Agreement are due and unpaid, or shall have been declared or shall have become
due and payable upon the occurrence of an Event of Default, each Participant
shall be deemed to have the right of setoff in respect of its participating
interest in amounts owing under this Agreement to the same extent as if the
amount of its participating interest were owing directly to it as a Lender under
this Agreement.
(f) Notwithstanding any other provision in this Agreement, any
Lender may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement in favor of any
Federal Reserve Bank in accordance with Regulation A of the FRB or U.S. Treasury
Regulation 31 CFR section 203.14, and such Federal Reserve Bank may enforce such
pledge or security interest in any manner permitted under applicable law.
ARTICLE 14
THE AGENT
The provisions of this Article 14, except for Section 14.9,
are intended solely to govern the relationship between the Agent and the Lenders
and shall not affect the rights or obligations of either Borrower hereunder.
14.1 APPOINTMENT AND AUTHORIZATION. Each Lender hereby designates and
appoints BankAmerica Business Credit, Inc. as its Agent under this Agreement and
the other Loan Documents and each Lender hereby irrevocably authorizes the Agent
to take such action on its behalf under the provisions of this Agreement and
each other Loan Document and to exercise such powers and perform such duties as
are expressly delegated to it by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto. The
Agent agrees to act as
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such on the express conditions contained in this ARTICLE 14. The provisions of
this ARTICLE 14 are solely for the benefit of the Agent and the Lenders and
neither Borrower shall have any rights as a third party beneficiary of any of
the provisions contained herein. Notwithstanding any provision to the contrary
contained elsewhere in this Agreement or in any other Loan Document, the Agent
shall not have any duties or responsibilities, except those expressly set forth
herein, nor shall the Agent have or be deemed to have any fiduciary relationship
with any Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against the Agent. Except as expressly otherwise
provided in this Agreement, the Agent shall have and may use its sole discretion
with respect to exercising or refraining from exercising any discretionary
rights or taking or refraining from taking any actions which the Agent is
expressly entitled to take or assert under this Agreement and the other Loan
Documents, including, without limitation, (a) the determination of the
applicability of ineligibility criteria with respect to the calculation of the
Availability, (b) the making of Agent Advances pursuant to SECTION 2.2(h), and
(c) the exercise of remedies pursuant to SECTION 11.2, and any action so taken
or not taken shall be deemed consented to by the Lenders.
14.2 DELEGATION OF DUTIES. The Agent may execute any of its duties
under this Agreement or any other Loan Document by or through agents, employees
or attorneysinfact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agent or attorneyinfact that it selects as long
as such selection was made without gross negligence or willful misconduct.
14.3 LIABILITY OF AGENT. None of the AgentRelated Persons shall (i) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be responsible in any manner to any of the Lenders for any recital,
statement, representation or warranty made by either Borrower or any Subsidiary
or Affiliate of either Borrower, or any officer thereof, contained in this
Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by the
Agent under or in connection with, this Agreement or any other Loan Document, or
the validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of either Borrower or
any other party to any Loan Document to perform its obligations hereunder or
thereunder. No AgentRelated Person shall be under any obligation to any Lender
to ascertain or to inquire as to the
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observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Loan Document, or to inspect the properties,
books or records of each Borrower or any of either Borrowers' Subsidiaries.
14.4 RELIANCE BY AGENT. (a) The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone
message, statement or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons, and upon advice and statements of legal counsel, independent
accountants and other experts selected by the Agent. The Agent shall be fully
justified in failing or refusing to take any action under this Agreement or any
other Loan Document unless it shall first receive such advice or concurrence of
the Majority Lenders as it deems appropriate and, if it so requests, it shall
first be indemnified to its satisfaction by the Lenders against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement or any
other Loan Document in accordance with a request or consent of the Majority
Lenders and such request and any action taken or failure to act pursuant thereto
shall be binding upon all of the Lenders.
(b) For purposes of determining compliance with the conditions
specified in SECTION 10.1, each Lender that has executed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter either sent by the Agent to such Lender for consent,
approval, acceptance or satisfaction, or required thereunder to be consented to
or approved by or acceptable or satisfactory to the Lender.
14.5 NOTICE OF DEFAULT. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default, except with
respect to defaults in the payment of principal, interest and fees required to
be paid to the Agent for the account of the Lenders, unless the Agent shall have
received written notice from a Lender or a Borrower referring to this Agreement,
describing such Default or Event of Default and stating that such notice is a
"notice of default." The Agent will notify the Lenders of its receipt of any
such notice. The Agent shall take such action with respect to such Default or
Event of Default as may be requested by the Majority Lenders in accordance with
SECTION 11; PROVIDED, HOWEVER, that unless and until the Agent has received any
such request, the Agent may (but shall not be obligated to) take such action, or
refrain from
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taking such action, with respect to such Default or Event of Default as it shall
deem advisable.
14.6 CREDIT DECISION. Each Lender acknowledges that none of the
AgentRelated Persons has made any representation or warranty to it, and that no
act by the Agent hereinafter taken, including any review of the affairs of
either Borrower or its respective Subsidiaries, shall be deemed to constitute
any representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to the Agent that it has, independently and without reliance
upon any Agent-Related Person and based on such documents and information as it
has deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Borrowers and their respective Subsidiaries, and all
applicable bank regulatory laws relating to the transactions contemplated
hereby, and made its own decision to enter into this Agreement and to extend
credit to the Borrowers. Each Lender also represents that it will, independently
and without reliance upon any Agent-Related Person and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to make such
investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of the Borrowers. Except for notices, reports and other
documents expressly herein required to be furnished to the Lenders by the Agent,
the Agent shall not have any duty or responsibility to provide any Lender with
any credit or other information concerning the business, prospects, operations,
property, financial and other condition or creditworthiness of the Borrowers
which may come into the possession of any of the AgentRelated Persons.
14.7 INDEMNIFICATION. Whether or not the transactions contemplated
hereby are consummated, the Lenders shall indemnify upon demand the AgentRelated
Persons (to the extent not reimbursed by or on behalf of the Borrowers and
without limiting the obligation of the Borrowers to do so), pro rata, from and
against any and all Indemnified Liabilities; PROVIDED, HOWEVER, that no Lender
shall be liable for the payment to the AgentRelated Persons of any portion of
such Indemnified Liabilities resulting solely from such Person's gross
negligence or willful misconduct. Without limitation of the foregoing, each
Lender shall reimburse the Agent upon demand for its ratable share of any costs
or outofpocket expenses (including Attorney Costs) incurred by the Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
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responsibilities under, this Agreement, any other Loan Document, or any document
contemplated by or referred to herein, to the extent that the Agent is not
reimbursed for such expenses by or on behalf of the Borrowers. The undertaking
in this Section shall survive the payment of all Obligations hereunder and the
resignation or replacement of the Agent.
14.8 AGENT IN INDIVIDUAL CAPACITY. BABC and its Affiliates may make
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in and generally engage in any kind of banking, trust,
financial advisory, underwriting or other business with either Borrower and its
Subsidiaries and Affiliates as though BABC were not the Agent hereunder and
without notice to or consent of the Lenders. The Lenders acknowledge that,
pursuant to such activities, BABC or its Affiliates may receive information
regarding the Borrowers or their Affiliates (including information that may be
subject to confidentiality obligations in favor of the Borrowers or such
Affiliates) and acknowledge that the Agent shall be under no obligation to
provide such information to them. With respect to its Loans, BABC shall have the
same rights and powers under this Agreement as any other Lender and may exercise
the same as though it were not the Agent, and the terms "Lender" and "Lenders"
include BABC in its individual capacity.
14.9 SUCCESSOR AGENT. The Agent may resign as Agent upon at least 30
days' notice to the Lenders. If the Agent resigns under this Agreement, the
Majority Lenders shall appoint from among the Lenders a successor agent for the
Lenders. If no successor agent is appointed prior to the effective date of the
resignation of the Agent, the Agent may appoint, after consulting with the
Lenders and the Borrowers, a successor agent from among the Lenders. Upon the
acceptance of its appointment as successor agent hereunder, such successor agent
shall succeed to all the rights, powers and duties of the retiring Agent and the
term "Agent" shall mean such successor agent and the retiring Agent's
appointment, powers and duties as Agent shall be terminated. After any retiring
Agent's resignation hereunder as Agent, the provisions of this SECTION 14 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement. If no successor agent has accepted
appointment as Agent by the date which is 30 days following a retiring Agent's
notice of resignation, the retiring Agent's resignation shall nevertheless
thereupon become effective and the Lenders shall perform all of the duties of
the Agent hereunder until such time, if any, as the Majority Lenders appoint a
successor agent as provided for above.
14.10 WITHHOLDING TAX. (a) If any Lender is a "foreign corporation,
partnership or trust" within the meaning of the Code and such Lender claims
exemption from, or a reduction of, U.S.
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withholding tax under Sections 1441 or 1442 of the Code, such Lender agrees with
and in favor of the Agent, to deliver to the Agent:
(i) if such Lender claims an exemption from, or a
reduction of, withholding tax under a United States tax treaty, properly
completed IRS Forms 1001 and W8 before the payment of any interest in the first
calendar year and before the payment of any interest in each third succeeding
calendar year during which interest may be paid under this Agreement;
(ii) if such Lender claims that interest paid under
this Agreement is exempt from United States withholding tax because it is
effectively connected with a United States trade or business of such Lender, two
properly completed and executed copies of IRS Form 4224 before the payment of
any interest is due in the first taxable year of such Lender and in each
succeeding taxable year of such Lender during which interest may be paid under
this Agreement, and IRS Form W9; and
(iii) such other form or forms as may be required
under the Code or other laws of the United States as a condition to exemption
from, or reduction of, United States withholding tax.
Such Lender agrees to promptly notify the Agent of any change in circumstances
which would modify or render invalid any claimed exemption or reduction.
(b) If any Lender claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form 1001 and
such Lender sells, assigns, grants a participation in, or otherwise transfers
all or part of the Obligations of either Borrower to such Lender, such Lender
agrees to notify the Agent of the percentage amount in which it is no longer the
beneficial owner of Obligations of either Borrower to such Lender. To the extent
of such percentage amount, the Agent will treat such Lender's IRS Form 1001 as
no longer valid.
(c) If any Lender claiming exemption from United States
withholding tax by filing IRS Form 4224 with the Agent sells, assigns, grants a
participation in, or otherwise transfers all or part of the Obligations of
either Borrower to such Lender, such Lender agrees to undertake sole
responsibility for complying with the withholding tax requirements imposed by
Sections 1441 and 1442 of the Code.
(d) If any Lender is entitled to a reduction in the applicable
withholding tax, the Agent may withhold from any interest payment to such Lender
an amount equivalent to the applicable withholding tax after taking into account
such
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reduction. If the forms or other documentation required by subsection (a) of
this Section are not delivered to the Agent, then the Agent may withhold from
any interest payment to such Lender not providing such forms or other
documentation an amount equivalent to the applicable withholding tax.
(e) If the IRS or any other Governmental Authority of the
United States or other jurisdiction asserts a claim that the Agent did not
properly withhold tax from amounts paid to or for the account of any Lender
(because the appropriate form was not delivered, was not properly executed, or
because such Lender failed to notify the Agent of a change in circumstances
which rendered the exemption from, or reduction of, withholding tax ineffective,
or for any other reason) such Lender shall indemnify the Agent fully for all
amounts paid, directly or indirectly, by the Agent as tax or otherwise,
including penalties and interest, and including any taxes imposed by any
jurisdiction on the amounts payable to the Agent under this Section, together
with all costs and expenses (including Attorney Costs). The obligation of the
Lenders under this subsection shall survive the payment of all Obligations and
the resignation or replacement of the Agent.
14.11 COLLATERAL MATTERS.
(a) The Lenders hereby irrevocably authorize the Agent, at its
option and in its sole discretion, to release any Agent's Lien upon any
Collateral (i) upon the termination of the Commitments and payment and
satisfaction in full by Borrower of all Loans and reimbursement obligations in
respect of Letters of Credit, and the termination of all outstanding Letters of
Credit (whether or not any of such obligations are due) and all other
Obligations; (ii) constituting property being sold or disposed of if a Borrower
certifies to the Agent that the sale or disposition is made in compliance with
SECTION 9.9 (and the Agent may rely conclusively on any such certificate,
without further inquiry); (iii) constituting property in which neither Borrower
owned an interest at the time the Lien was granted or at any time thereafter; or
(iv) constituting property leased to a Borrower under a lease which has expired
or been terminated in a transaction permitted under this Agreement. Except as
provided above, the Agent will not release any of the Agent's Liens without the
prior written authorization of the Majority Lenders; PROVIDED that the Agent may
not release the Agent's Liens on Collateral valued in the aggregate in excess of
$1,000,000 without the prior written authorization of all of the Lenders. Upon
request by the Agent or the Borrowers at any time, the Lenders will confirm in
writing the Agent's authority to release any Agent's Liens upon particular types
or items of Collateral pursuant to this SECTION 14.12.
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(b) Upon receipt by the Agent of any authorization required
pursuant to SECTION 14.12(a) from the Majority Lenders or Lenders, as
applicable, of the Agent's authority to release any Agent's Liens upon
particular types or items of Collateral, and upon at least five (5) Business
Days' prior written request by the applicable Borrower, the Agent shall (and is
hereby irrevocably authorized by the Lenders to) execute such documents as may
be necessary to evidence the release of the Agent's Liens upon such Collateral;
PROVIDED, HOWEVER, that (i) the Agent shall not be required to execute any such
document on terms which, in the Agent's opinion, would expose the Agent to
liability or create any obligation or entail any consequence other than the
release of such Liens without recourse or warranty, and (ii) such release shall
not in any manner discharge, affect or impair the Obligations or any Liens
(other than those expressly being released) upon (or obligations of each
Borrower in respect of) all interests retained by the Borrowers, including
(without limitation) the proceeds of any sale, all of which shall continue to
constitute part of the Collateral.
(c) The Agent shall have no obligation whatsoever to any of
the Lenders to assure that the Collateral exists or is owned by the Borrowers or
is cared for, protected or insured or has been encumbered, or that the Agent's
Liens have been properly or sufficiently or lawfully created, perfected,
protected or enforced or are entitled to any particular priority, or to exercise
at all or in any particular manner or under any duty of care, disclosure or
fidelity, or to continue exercising, any of the rights, authorities and powers
granted or available to the Agent pursuant to any of the Loan Documents, it
being understood and agreed that in respect of the Collateral, or any act,
omission or event related thereto, the Agent may act in any manner it may deem
appropriate, in its sole discretion given the Agent's own interest in the
Collateral in its capacity as one of the Lenders and that the Agent shall have
no other duty or liability whatsoever to any Lender as to any of the foregoing.
14.12 RESTRICTIONS ON ACTIONS BY LENDERS; SHARING OF PAYMENTS. (a) Each
of the Lenders agrees that it shall not, without the express consent of the
Agent, and that it shall, to the extent it is lawfully entitled to do so, upon
the request of the Agent, set off against the Obligations, any amounts owing by
such Lender to either Borrower or any accounts of either Borrower now or
hereafter maintained with such Lender. Each of the Lenders further agrees that
it shall not, unless specifically requested to do so by the Agent, take or cause
to be taken any action, including, without limitation, the commencement of any
legal or equitable proceedings, to foreclose any Lien on, or otherwise enforce
any security interest in, any of the Collateral, the purpose of which is, or
could be, to give such
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Lender any preference or priority against the other Lenders with respect to the
Collateral.
(b) Subject to SECTION 4.8, if, at any time or times any
Lender shall receive (i) by payment, foreclosure, setoff or otherwise, any
proceeds of Collateral or any payments with respect to the Obligations of either
Borrower to such Lender arising under, or relating to, this Agreement or the
other Loan Documents, except for any such proceeds or payments received by such
Lender from the Agent pursuant to the terms of this Agreement, or (ii) payments
from the Agent in excess of such Lender's ratable portion of all such
distributions by the Agent, such Lender shall promptly (1) turn the same over to
the Agent, in kind, and with such endorsements as may be required to negotiate
the same to the Agent, or in same day funds, as applicable, for the account of
all of the Lenders and for application to the Obligations in accordance with the
applicable provisions of this Agreement, or (2) purchase, without recourse or
warranty, an undivided interest and participation in the Obligations owed to the
other Lenders so that such excess payment received shall be applied ratably as
among the Lenders in accordance with their Pro Rata Shares; PROVIDED, HOWEVER,
that if all or part of such excess payment received by the purchasing party is
thereafter recovered from it, those purchases of participations shall be
rescinded in whole or in part, as applicable, and the applicable portion of the
purchase price paid therefor shall be returned to such purchasing party, but
without interest except to the extent that such purchasing party is required to
pay interest in connection with the recovery of the excess payment.
14.13 AGENCY FOR PERFECTION. Each Lender hereby appoints each other
Lender as agent for the purpose of perfecting the Lenders' security interest in
assets which, in accordance with Article 9 of the UCC can be perfected only by
possession. Should any Lender (other than the Agent) obtain possession of any
such Collateral, such Lender shall notify the Agent thereof, and, promptly upon
the Agent's request therefor shall deliver such Collateral to the Agent or in
accordance with the Agent's instructions.
14.14 PAYMENTS BY AGENT TO LENDERS. All payments to be made by the
Agent to the Lenders shall be made by bank wire transfer or internal transfer of
immediately available funds to:
if to BABC: Bank of America Illinois
Chicago, Illinois
ABA No. 000000000
Reference: BankAmerica Business
Credit Inc./Waxman
Account No. 0000000
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or pursuant to such other wire transfer instructions as each party may designate
for itself by written notice to the Agent. Concurrently with each such payment,
the Agent shall identify whether such payment (or any portion thereof)
represents principal, premium or interest on the Revolving Loans, or otherwise.
14.15 CONCERNING THE COLLATERAL AND THE RELATED LOAN DOCUMENTS. Each
Lender authorizes and directs the Agent to enter into this Agreement and the
other Loan Documents relating to the Collateral, for the ratable benefit of the
Lenders. Each Lender agrees that any action taken by the Agent or Majority
Lenders in accordance with the terms of this Agreement or the other Loan
Documents relating to the Collateral, and the exercise by the Agent or the
Majority Lenders of their respective powers set forth therein or herein,
together with such other powers that are reasonably incidental thereto, shall be
binding upon all of the Lenders.
14.16 FIELD AUDIT AND EXAMINATION REPORTS; DISCLAIMER BY LENDERS. By
signing this Agreement, each Lender:
(a) is deemed to have requested that the Agent furnish such
Lender, promptly after it becomes available, a copy of each field audit or
examination report (each a "Report" and collectively, "Reports") prepared by the
Agent;
(b) expressly agrees and acknowledges that neither BABC nor
the Agent (i) makes any representation or warranty as to the accuracy of any
Report, or (ii) shall be liable for any information contained in any Report;
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that the Agent or other party performing
any audit or examination will inspect only specific information regarding each
Borrower and will rely significantly upon each Borrower's books and records, as
well as on representations of each Borrower's personnel;
(d) agrees to keep all Reports confidential and strictly
for its internal use, and not to distribute or use any Report in any other
manner; and
(e) without limiting the generality of any other
indemnification provision contained in this Agreement, agrees: (i) to hold the
Agent and any such other Lender preparing a Report harmless from any action the
indemnifying Lender may take or conclusion the indemnifying Lender may reach or
draw from any Report in connection with any loans or other credit accommodations
that the indemnifying Lender has made or may make
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to either Borrower, or the indemnifying Lender's participation in, or the
indemnifying Lender's purchase of, a loan or loans of such Borrower; and (ii) to
pay and protect, and indemnify, defend and hold the Agent and any such other
Lender preparing a Report harmless from and against, the claims, actions,
proceedings, damages, costs, expenses and other amounts (including, without
limitation attorney costs) incurred by the Agent and any such other Lender
preparing a Report as the direct or indirect result of any third parties who
might obtain all or part of any Report through the indemnifying Lender.
ARTICLE 15
MISCELLANEOUS
15.1 CUMULATIVE REMEDIES; NO PRIOR RECOURSE TO COLLATERAL. The
enumeration herein of the Agent's and each Lender'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 Agent and the
Lenders may have under the UCC or other applicable law. The Agent and the
Lenders shall have the right, in their 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 Agent and the Lenders may, without limitation, proceed
directly against the Borrowers to collect the Obligations without any prior
recourse to the Collateral. No failure to exercise and no delay in exercising,
on the part of the Agent or any Lender, any right, remedy, power or privilege
hereunder, shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power or
privilege.
15.2 SEVERABILITY. The illegality or unenforceability of any provision
of this Agreement or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement required hereunder.
15.3 GOVERNING LAW; CHOICE OF FORUM; SERVICE OF PROCESS; JURY TRIAL
WAIVER. (a) THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND LIABILITIES
OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE INTERNAL LAWS (AS
OPPOSED TO THE CONFLICT OF LAWS PROVISIONS PROVIDED THAT PERFECTION ISSUES WITH
RESPECT TO ARTICLE 9 OF THE UCC MAY GIVE EFFECT TO APPLICABLE CHOICE OR CONFLICT
OF LAW RULES SET FORTH IN ARTICLE 9 OF THE UCC) OF THE STATE OF NEW YORK;
PROVIDED THAT THE AGENT AND THE LENDERS SHALL RETAIN ALL RIGHTS ARISING UNDER
FEDERAL LAW.
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(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE
OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND
BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH BORROWER, THE AGENT AND THE
LENDERS CONSENT, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF THOSE COURTS. EACH BORROWER, THE AGENT AND THE LENDERS
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT
OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. NOTWITHSTANDING THE FOREGOING:
(1) THE AGENT AND THE LENDERS SHALL HAVE THE RIGHT TO BRING ANY ACTION OR
PROCEEDING AGAINST EITHER BORROWER OR ITS PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTION THE AGENT OR THE LENDERS DEEM NECESSARY OR APPROPRIATE IN ORDER TO
REALIZE ON THE COLLATERAL OR OTHER SECURITY FOR THE OBLIGATIONS AND (2) EACH OF
THE PARTIES HERETO ACKNOWLEDGES THAT ANY APPEALS FROM THE COURTS DESCRIBED IN
THE IMMEDIATELY PRECEDING SENTENCE MAY HAVE TO BE HEARD BY A COURT LOCATED
OUTSIDE THOSE JURISDICTIONS.
(c) EACH BORROWER HEREBY WAIVES PERSONAL SERVICE OF ANY AND
ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY
REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO EACH BORROWER AT ITS
ADDRESS SET FORTH IN SECTION 15.8 AND SERVICE SO MADE SHALL BE DEEMED TO BE
COMPLETED FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED IN THE U.S.
MAILS. NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF AGENT OR THE LENDERS
TO SERVE LEGAL PROCESS BY ANY OTHER MANNER PERMITTED BY LAW.
(d) NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT TO
THE CONTRARY, ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES, INCLUDING
BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT AND ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT,
SHALL AT THE REQUEST OR EITHER PARTY HERETO BE DETERMINED BY ARBITRATION. The
arbitration shall be conducted in accordance with the United States Arbitration
Act (Title 9, U.S. Code), notwithstanding any choice of law provision in this
Agreement, and under the Commercial Rules of the American Arbitration
Association ("AAA"). The arbitrator(s) shall give effect to statutes of
limitation in determining any claim. Any controversy concerning whether an issue
is arbitrable shall be determined by the arbitrator(s). Judgment upon the
arbitration award may be entered in any court having jurisdiction. The
institution and maintenance of an action for judicial relief or pursuant to a
provisional or ancillary remedy shall not constitute a waiver of the right of
either party, including the plaintiff, to submit the controversy
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or claim to arbitration if any other party contests such action for judicial
relief.
(e) Notwithstanding the provisions of (d) above, no
controversy or claim shall be submitted to arbitration without the consent of
all parties if, at the time of the proposed submission, such controversy or
claim arises from or related to an obligation to the Lender which is secured by
real estate property collateral (exclusive of real estate space lease
assignments). If all the parties do not consent to submission of such a
controversy or claim to arbitration, the controversy or claim shall be
determined as provided in this SECTION 15.3(e).
(f) At the request of either party a controversy or claim
which is not submitted to arbitration as provided and limited in SECTION 15.3(d)
and (e) shall be determined by judicial reference. If such an election is made,
the parties shall designate to the court a referee or referees selected under
the auspices of the AAA in the same manner as arbitrators are selected in
AAA-sponsored proceedings. The presiding referee of the panel, or the referee if
there is a single referee, shall be an active attorney or retired judge.
Judgment upon the award rendered by such referee or referees shall be entered in
the court in which such proceeding was commenced.
(g) No provision of Sections (d) through (g) shall limit the
right of the Agent or the Lenders to exercise self-help remedies such as setoff,
foreclosure against or sale of any real or personal property collateral or
security, or obtaining provisional or ancillary remedies from a court of
competent jurisdiction before, after, or during the pendency of any arbitration
or other proceeding. The exercise of a remedy does not waive the right of either
party to resort to arbitration or reference.
15.4 WAIVER OF JURY TRIAL. (a) SUBJECT TO THE PROVISIONS OF SECTION
15.3(d), EACH BORROWER, THE LENDERS AND THE AGENT EACH WAIVE THEIR RESPECTIVE
RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER
LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR
ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO
CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. EACH BORROWER, THE LENDERS AND THE
AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A
COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER
AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF
THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN
WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS
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AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS
WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
(b) EACH BORROWER AGREES THAT IT WILL NOT ASSERT AGAINST AGENT
OR ANY LENDER ANY CLAIM FOR CONSEQUENTIAL, INCIDENTAL, SPECIAL OR PUNITIVE
DAMAGES IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
15.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the Borrowers'
representations and warranties contained in this Agreement shall survive the
execution, delivery, and acceptance thereof by the parties, notwithstanding any
investigation by the Agent or the Lenders or their respective agents.
15.6 OTHER SECURITY AND GUARANTIES. The Agent, may, without notice or
demand and without affecting the Borrowers' 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.
15.7 FEES AND EXPENSES. The Borrowers, jointly and severally, agree to
pay to the Agent, for its benefit, on demand, all costs and expenses that Agent
pays or incurs in connection with the negotiation, preparation, consummation,
administration, enforcement, and termination of this Agreement, including,
without limitation: (a) Attorney Costs; (b) costs and expenses (including
reasonable attorneys' and paralegals' fees and disbursements which shall include
the reasonable allocated costs of Agent's in-house counsel fees and
disbursements) 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 and title searches and title insurance;
(d) fees and other charges for filing financing statements and continuations,
and other actions to perfect, protect, and continue the Agent's Liens (including
costs and expenses paid or incurred by the Agent in connection with the
consummation of the transactions contemplated by this Agreement); (e) sums paid
or incurred to pay any amount or take any action required of either Borrower
under the Loan Documents that such Borrower fails to pay or take; (f) costs of
appraisals, inspections, and verifications of the Collateral, including,
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without limitation, travel, lodging, and meals for inspections of the Collateral
and each Borrower's operations by the Agent plus, so long as an Event of Default
shall have occurred and be continuing, the Agent's then customary charge for
field examinations and audits and the preparation of reports thereof (such
charge is currently $600 per day (or portion thereof) for each agent or employee
of the Agent with respect to each field examination or audit); (g) costs and
expenses of forwarding loan proceeds, collecting checks and other items of
payment, and establishing and maintaining Payment Accounts and lock boxes; (h)
costs and expenses of preserving and protecting the Collateral; and (i) costs
and expenses (including attorneys' and paralegals' fees and disbursements which
shall include the reasonable allocated cost of Agent's in-house counsel fees and
disbursements) paid or incurred to obtain payment of the Obligations, enforce
the Agent's Liens, 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 Agent or any Lender arising out of the transactions
contemplated hereby (including without limitation, preparations for and
consultations concerning any such matters), other than claims arising from the
Agent's or such Lender's gross negligence or willful misconduct, as finally
determined by a court of competent jurisdiction. The foregoing shall not be
construed to limit any other provisions of the Loan Documents regarding costs
and expenses to be paid by either Borrower. All of the foregoing costs and
expenses shall be charged to the applicable Borrower's Loan Account as Revolving
Loans as described in SECTION 4.7.
15.8 NOTICES. Except as otherwise provided herein, all notices, demands
and requests that any party is required or elects to give to any other shall be
in writing, or by a telecommunications device capable of creating a written
record, and any such notice shall become effective (a) upon personal delivery
thereof, including, but not limited to, delivery by overnight mail and courier
service, (b) four (4) days after it shall have been mailed by United States
mail, first class, certified or registered, with postage prepaid, or (c) in the
case of notice by such a telecommunications device, when properly transmitted,
in each case addressed to the party to be notified as follows:
If to the Agent or to BABC:
BankAmerica Business Credit, Inc.
00 Xxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Portfolio Administrator
Telecopy No. (000) 000-0000
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with copies to:
Bank of America NT & SA
00000 Xxx Xxxxx Xxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Legal Department
Telecopy No. (000) 000-0000
If to either Borrower: Waxman Consumer Products Group Inc.
c/o Waxman Industries Inc.
00000 Xxxxxx Xxxx
Xxxxxxx Xxxxxxx, Xxxx 00000
Attention: Chief Financial Officer
Telecopy No. (000) 000-0000
or to such other address as each party may designate for itself by like notice.
Failure or delay in delivering copies of any notice, demand, request, consent,
approval, declaration or other communication to the persons designated above to
receive copies shall not adversely affect the effectiveness of such notice,
demand, request, consent, approval, declaration or other communication.
15.9 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, notice of intent to accelerate the Obligations and
notice of acceleration of the Obligations, as well as any and all other notices
to which it might otherwise be entitled. No notice to or demand on the Borrowers
which the Agent or any Lender may elect to give shall entitle either Borrower to
any or further notice or demand in the same, similar or other circumstances.
15.10 BINDING EFFECT. 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 either Borrower without prior written consent of the Agent and each
Lender. The rights and benefits of the Agent and the Lenders hereunder shall, if
such Persons so agree, inure to any party acquiring any interest in the
Obligations or any part thereof.
15.11 INDEMNITY OF THE AGENT AND THE LENDERS BY THE BORROWERS. The
Borrowers agree, jointly and severally, to defend indemnify and hold the
Agent-Related Persons, and each Lender and each of its respective officers,
directors, employees, counsel, agents and attorneysinfact (each, an "INDEMNIFIED
PERSON") harmless from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, charges, expenses and
disbursements (including Attorney Costs) of
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any kind or nature whatsoever which may at any time (including at any time
following repayment of the Loans and the termination, resignation or replacement
of the Agent or replacement of any Lender) be imposed on, incurred by or
asserted against any such Person in any way relating to or arising out of this
Agreement or any document contemplated by or referred to herein, or the
transactions contemplated hereby, or any action taken or omitted by any such
Person under or in connection with any of the foregoing, including with respect
to any investigation, litigation or proceeding (including any Insolvency
Proceeding or appellate proceeding) related to or arising out of this Agreement
or the Loans or the use of the proceeds thereof, whether or not any Indemnified
Person is a party thereto (all the foregoing, collectively, the "INDEMNIFIED
LIABILITIES"); PROVIDED, that the Borrowers shall have no obligation hereunder
to any Indemnified Person with respect to Indemnified Liabilities resulting from
the willful misconduct of such Indemnified Person, as finally determined by a
court of competent jurisdiction. The agreements in this Section shall survive
payment of all other Obligations.
15.12 FINAL AGREEMENT. This Agreement and the other Loan Documents are
intended by the Borrowers, the Agent and the Lenders 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. No modification, rescission, waiver, release, or amendment of any
provision of this Agreement or any other Loan Document shall be made, except by
a written agreement signed by the Borrowers and a duly authorized officer of
each of the Agent and the requisite Lenders.
15.13 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and by the Agent, each Lender and the Borrowers in separate
counterparts, each of which shall be an original, but all of which shall
together constitute one and the same agreement.
15.14 CAPTIONS. The captions contained in this Agreement are for
convenience of reference only, are without substantive meaning and should not be
construed to modify, enlarge, or restrict any provision.
15.15 RIGHT OF SETOFF. In addition to any rights and remedies of the
Lenders provided by law, if an Event of Default exists or the Loans have been
accelerated, each Lender is authorized at any time and from time to time,
without prior notice to the Borrowers, any such notice being waived by the
Borrowers 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 by, and other indebtedness at any time owing by, such Lender to or for
the credit or the
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account of either Borrower against any and all Obligations owing to such Lender,
now or hereafter existing, irrespective of whether or not the Agent or such
Lender shall have made demand under this Agreement or any Loan Document and
although such Obligations may be contingent or unmatured. Each Lender agrees
promptly to notify the Borrowers and the Agent after any such setoff and
application made by such Lender; PROVIDED, HOWEVER, that the failure to give
such notice shall not affect the validity of such setoff and application.
15.16 JOINT AND SEVERAL LIABILITY. Each Borrower unconditionally
guarantees the payment in full and performance of the other Borrower's
Obligations hereunder. Each Borrower shall be liable for all amounts due to the
Agent and/or any Lender 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 Agent and/or such Lender 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 Borrower 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 Borrower 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
Borrower or of any promissory note or other document evidencing all or any part
of the Obligations of the other Borrower, (ii) the absence of any attempt to
collect the Obligations from the 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 Agent and/or any Lender with respect to any provision of any instrument
evidencing the Obligations of the other Borrower, or any part thereof, or any
other agreement now or hereafter executed by the other Borrower and delivered to
the Agent and/or any Lender, (iv) the failure by the Agent and/or any Lender 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 the other
Borrower, (v) the Agent's and/or any Lender'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
the other Borrower, as debtor-in-possession under Section 364 of the
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Bankruptcy Code, (vii) the disallowance of all or any portion of the Agent's
and/or any Lender's claim(s) for the repayment of the Obligations of the 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 the 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 Borrower 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 Agent and/or
any Lender now has or may hereafter have against the 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
Agent and/or any Lender to secure payment of the Obligations or any other
liability of the other Borrower to the Agent and/or any Lender.
Upon any Event of Default, the Agent may proceed directly and
at once, without notice, against either or both Borrowers to collect and recover
the full amount, or any portion of the Obligations, without first proceeding
against the other Borrower or any other Person, or against any security or
collateral for the Obligations. Each Borrower consents and agrees that the Agent
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 15.16 (the
Guarantor-Borrower) with respect to Loans and interest, fees, and expenses with
respect thereto which were advanced to or incurred by the other Borrower (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 15.16 without rendering such claim
voidable or avoidable under Section 548 of the Bankruptcy Code or under any
similar state statute or common law.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have entered into this
Agreement on the date first above written.
WAXMAN CONSUMER PRODUCTS GROUP INC.
By
--------------------------------
Title:
WOC INC.
By
--------------------------------
Title:
"AGENT"
BankAmerica Business Credit, Inc.,
as the Agent
By
---------------------------------
---------------- , Vice President
"LENDERS"
Revolving Loan
Commitment: $30,000,000 BankAmerica Business Credit, Inc.,
as a Lender
Term Loan
Commitment: $5,000,000
By
---------------------------------
---------------- ,Vice President
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STOCK PLEDGE AGREEMENT
----------------------
STOCK PLEDGE AGREEMENT, dated as of June 28, 1996, (as it may be amended,
modified or supplemented from time to time, this "AGREEMENT") between WAXMAN
USA, INC., a Delaware corporation ("PLEDGOR"), and BANKAMERICA BUSINESS
CREDIT, INC., a Delaware corporation, as agent, for its benefit and the
ratable benefit of Lenders (in such capacity, "AGENT").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Pledgor is the legal and beneficial owner of 500,000 shares of the
issued and outstanding common stock ($.01 par value per share) more fully
described in SCHEDULE I hereto (the "PLEDGED SHARES") issued by Xxxxxxx Inc.,
a Delaware corporation; and
WHEREAS, Agent and the Persons from time to time designated as
lenders therein ("Lenders") have entered into that certain Loan and Security
Agreement dated as of June 28, 1996 (as amended, supplemented, restated or
otherwise modified from time to time, the "LOAN AGREEMENT") with Waxman Consumer
Products Group Inc. and WOC Inc. ("Borrowers"); and
WHEREAS, Pledgor has executed the Secured Guaranty in favor of Agent, for its
benefit and the ratable benefit of Lenders, whereby Pledgor guarantees payment
of all Term Loan Obligations of Borrowers under the Loan Agreement (the
"SECURED GUARANTY"); and
WHEREAS, in connection with the making of the Term Loans under the Loan
Agreement and as security for the obligations of Pledgor under the Secured
Guaranty, Lenders and Agent are requiring that Pledgor shall have executed and
delivered this Agreement and granted the security interests contemplated
hereby.
NOW, THEREFORE, in consideration of the premises and the covenants hereinafter
contained and to induce Lenders to make the Term Loans under the Loan
Agreement, it is agreed as follows:
1. DEFINITIONS. Unless otherwise defined herein, terms defined in the Loan
Agreement are used herein as therein defined, and the following shall have
(unless otherwise provided elsewhere in this Agreement) the following
respective meanings (such meanings being equally applicable to both the singular
and plural form of the terms defined):
"Bankruptcy Code" shall mean Xxxxx 00, Xxxxxx Xxxxxx Code, as amended from
time to time, and any successor statute thereto.
"Event of Default" shall mean any of the events described under SECTION 7.
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"Pledged Collateral" shall have the meaning assigned to such term in SECTION 2
hereof.
"Section" means a numbered section of this Agreement, unless another document is
specifically referenced.
"Secured Obligations" means the principal amount of the Term Loans under the
Loan Agreement and Term Term Notes issued pursuant thereto and all interest,
fees, and expenses accrued or incurred with respect thereto, including a ratable
share of expenses incurred with respect to the Loans generally.
2. PLEDGE. To secure payment of the Secured Obligations, Pledgor hereby grants
to Agent, for its benefit and the ratable benefit of Lenders, a first Lien on
all of the right, title and interest of Pledgor in and to all of the following
(collectively, the "PLEDGED COLLATERAL"):
(i) the Pledged Shares and the certificates or other instruments or securities
representing the Pledged Shares, and all dividends, distributions, cash,
instruments and other right or property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange or substitution
for any or all of the Pledged Shares and any right to receive stock and any
right to receive earnings in respect of the Pledged Shares, in which Pledgor now
has or hereafter acquires any right, issued by an issuer of Pledged Shares; and
(ii) all additional shares of stock of the issuer of the Pledged Shares from
time to time acquired by Pledgor (which shares shall be deemed to be part of the
Pledged Shares), and the certificates representing such additional shares, from
time to time received or otherwise distributed in respect of or in exchange for
any or all of the Pledged Shares, whether by way of stock dividend, stock split
or otherwise (collectively, the "STOCK RIGHTS").
This Agreement shall constitute an obligation of the Pledgor independent of the
Secured Guaranty and shall remain in effect so long as the Secured Obligations
are outstanding and regardless of whether the Secured Guaranty remains in
effect.
3. DELIVERY OF PLEDGED COLLATERAL. All certificates representing or evidencing
the Pledged Shares shall be delivered to and held by or on behalf of Agent, for
its benefit and the ratable benefit of Lenders, pursuant hereto and shall be
accompanied by endorsements or instruments of transfer or assignment, as
applicable, duly executed in blank, all in form and substance satisfactory to
Agent. Agent shall have the right at anytime to exchange certificates or
instruments representing or evidencing Pledged Shares for certificates or
instruments of smaller or larger denominations.
4. REPRESENTATIONS AND WARRANTIES. Pledgor represents and warrants to Agent and
Lenders that:
(a) Pledgor is, and at the time of delivery of the Pledged Shares to Agent
pursuant to SECTION 3 will be, the sole holder of record and the sole beneficial
owner of the Pledged Shares.
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(b) All of the Pledged Shares have been duly authorized, validly issued and are
fully paid and non-assessable.
(c) Pledgor has the power and requisite authority and legal right to pledge,
assign, transfer, deliver, deposit and set over the Pledged Collateral pledged
by Pledgor to Agent, for its benefit and the ratable benefit of Lenders, as
provided herein.
(d) None of the Pledged Shares has been issued or transferred in violation of
the securities registration, securities disclosure or similar laws of any
jurisdiction to which such issuance or transfer may be subject.
(e) There are no existing options, warrants, calls or commitments of any
character whatsoever relating to the Pledged Shares.
(f) No consent, approval, authorization or other order of any Person and no
consent, authorization, approval, or other action by, and no notice to or filing
with, any Governmental Authority is required either (i) for the pledge by
Pledgor of the Pledged Collateral pursuant to this Agreement or for the
execution, delivery or performance of this Agreement by Pledgor or (ii) except
under the "lock-up" provisions of the underwriting agreement dated March 29,
1996, among Ultimate Parent, Pledgor, Xxxxxxx and Xxxx Xxxxx & Sons,
Incorporated and Xxxxxxx Xxxxx & Company, for the exercise by Agent, for its
benefit and the ratable benefit of Lenders, of the voting or other rights
provided for in this Agreement or the remedies in respect of the Pledged
Collateral pursuant to this Agreement, except as may be required under federal
and state securities laws, including the Securities Act of 1933, as amended (the
"Act").
(g) The pledge, assignment and delivery of the Pledged Shares pursuant to this
Agreement creates a valid first priority Lien which is enforceable against
Pledgor in the Pledged Collateral and the proceeds thereof, securing the payment
of the Secured Obligations, subject to no other Lien.
(h) This Agreement has been duly authorized, executed and delivered by Pledgor
by proper corporate proceedings and constitutes a legal, valid and binding
obligation of Pledgor enforceable in accordance with its terms.
(i) The Pledged Shares qualify for sale under Rule 144 of the Act and all
requisite holding periods under Rule 144 have elapsed.
(j) Neither the execution and delivery by Pledgor of this Agreement, the
creation and perfection of the security interest in the Pledged Collateral
granted hereunder, nor compliance with the terms and provisions hereof violate
or will violate any law, rule, regulation (including without limitation,
Regulations G, T, U or X of the Board of Governors of the Federal Reserve
System), order, writ, judgment, injunction, decree or award binding on Pledgor
or Pledgor's certificate of incorporation or by-laws or the provisions of any
indenture, mortgage, lease, instrument, undertaking or agreement to which
Pledgor is a party or is subject, or by which it, or its property, is bound, or
conflict with or constitute a default thereunder, or result in the creation or
imposition of any Lien
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pursuant to the terms of any such indenture, instrument or agreement except as
contemplated by this Agreement.
(k) No Event of Default or Default exists.
The representations and warranties set forth in this SECTION 4 shall survive the
execution and delivery of this Agreement.
5. COVENANTS. Pledgor covenants and agrees that until the Termination Date:
(a) Pledgor will not sell, assign, transfer or otherwise dispose of or grant any
option with respect thereto or pledge, or otherwise encumber any of its rights
in or to the Pledged Collateral pledged by Pledgor or any unpaid dividends or
other distributions or payments with respect thereto or xxxxx x Xxxx in any of
the foregoing.
(b) Pledgor will, at its expense, promptly execute, acknowledge and deliver all
such instruments and take all such action as Agent from time to time may
reasonably request in order to ensure to Agent and Lenders the benefits of the
Lien in the Pledged Collateral intended to be created by this Agreement,
including the filing of any necessary Code financing statements, which may be
filed by Agent with or without the signature of Pledgor, and will cooperate with
Agent, at Pledgor's expense, in obtaining all necessary approvals and making all
necessary filings under federal or state law in connection with such Lien or any
sale or transfer of the Pledged Collateral.
(c) Pledgor has and will defend the title to the Pledged Collateral and the Lien
of Agent, for its benefit and the ratable benefit of Lenders, thereon against
the claim of any Person and will maintain and preserve such Lien until the
Secured Obligations are paid in full.
(d) Pledgor will, upon obtaining any stock certificate, instrument or other
document evidencing or constituting Pledged Collateral accept as the agent for
Agent and hold in trust for Agent, for its benefit and the ratable benefit of
Lenders, any such certificate, instrument or document and immediately thereafter
deliver the same to Agent including, without limitation any additional Pledged
Shares in suitable form for transfer by delivery and accompanied by appropriate
stock powers duly executed in blank, all in form and substance satisfactory to
Agent.
(e) Pledgor will pay when due all taxes, assessments and governmental charges
and levies upon the Pledged Collateral, except those being contested in good
faith by the appropriate proceedings.
(f) Pledgor will give prompt notice in writing to Agent of the occurrence of any
Event of Default or Default.
6. PLEDGOR'S RIGHTS. As long as no Event of Default has occurred and is
continuing:
(a) Pledgor shall have the right, from time to time, to vote and give consents
with respect to the Pledged Collateral or any part thereof for all purposes not
inconsistent with the
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provisions of this Agreement, the Loan Agreement, and any other Loan Document;
PROVIDED, HOWEVER, Pledgor shall not, without the prior written consent of
Agent, cast any vote, give any consent or take any action, which would have the
effect of impairing the position or interest of Agent or Lenders in respect of
the Pledged Collateral or which would authorize or effect (except as and to the
extent expressly permitted by the Loan Agreement) (i) the dissolution or
liquidation, in whole or in part, of the issuer of Pledged Shares, (ii) the
consolidation or merger of the issuer of Pledged Shares with the other Person,
(iii) the sale, disposition or encumbrance of all or substantially all of the
assets of the issuer of Pledged Shares, (iv) any change in the authorized number
of shares, the stated capital or the authorized share capital of the issuer of
Pledged Shares or the issuance of any additional shares of the issuer, or (v)
the alteration of the voting rights with respect to the capital stock of the
issuer.
(b) (i) Pledgor shall be entitled, from time to time, to collect and receive for
its own use all cash dividends paid in respect of the Pledged Shares to the
extent not in violation of the Loan Agreement other than any and all (A)
dividends paid or payable other than in cash in respect of, and instruments and
other property received, receivable or otherwise distributed in respect of, or
in exchange for, any Pledged Collateral, (B) dividends and other distributions
paid or payable in cash in respect of any Pledged Collateral in connection with
a partial or total liquidation or dissolution, and (C) cash paid, payable or
otherwise distributed in redemption of, or in exchange for, any Pledged
Collateral; PROVIDED, HOWEVER, that until actually paid all rights to such
distributions shall remain subject to the Lien created by this Agreement; and
(ii) all dividends (other than such cash dividends as are permitted to be paid
to Pledgor in accordance with Section 6(b)(i)) and all other distributions in
respect of any of the Pledged Shares of Pledgor, whenever paid or made, shall be
delivered to Agent to hold as Pledged Collateral and shall, if received by
Pledgor, be received in trust for the benefit of Agent, for its benefit and the
ratable benefit of Lenders, be segregated from the other property or funds of
Pledgor, and be forthwith delivered to Agent as Pledged Collateral in the same
form as so received (with any necessary endorsement).
7. DEFAULTS AND REMEDIES. (a) The occurrence of any one or more of the following
events shall constitute an Event of Default:
(i) any representation or warranty made in writing by Pledgor to Lenders or
Agent under or in connection with this Agreement shall be false as of the date
on which made.
(ii) the material breach by Pledgor of any of the terms or provisions of
SECTIONS 5 OR 6.
(iii) the material breach by Pledgor (other than a breach which constitutes an
Event of Default under (i) or (ii) above) of any of the terms or provisions of
this Agreement, which is not remedied within 30 days after written notice from
Agent.
(iv) Agent shall not have a first perfected Lien on all or any portion of the
Pledged Collateral (except as a result of Agent's failure to maintain possession
of the share
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certificate evidencing the Pledged Shares), other than ordinary cash dividends
which Pledgor is entitled to retain pursuant to SECTION 6.
(v) the occurrence of any "Event of Default" under, and as defined in, the Loan
Agreement.
(b) Upon the occurrence and during continuance of an Event of Default, Agent
(personally or through an agent) is hereby authorized and empowered to transfer
and register in its name or in the name of its nominee the whole or any part of
the Pledged Collateral, to exchange certificates or instruments representing or
evidencing Pledged Shares for certificates or instruments of smaller or larger
denominations, to exercise the voting and all other rights as a stockholder with
respect thereto, to collect and receive all cash dividends and other
distributions made thereon. In addition, (i) upon the occurrence and during the
continuance of an Event of Default, or (ii) if the closing sale price per share
as reported by the NASDAQ National Market of the Pledged Shares multiplied by
the number of Pledged Shares held by Agent is less than the outstanding
principal balances of the Term Loans, or (iii) if Borrowers' combined
Availability is less than $5,000,000 at any time that a Pledged Share Reserve
has been established, and in the case of clause (ii) or clause (iii), Pledgor
shall fail to pay the applicable short-fall to Agent for application to the
Loans within one (1) Business Day after Agent's demand therefor (a "Pledge
Default"), Agent is authorized and empowered to sell in one or more sales after
at least ten (10) days' written notice to Pledgor of the time and place of any
public sale (including a sale or sales through registered broker-dealers) or of
the time after which a private sale is to take place (which notice Pledgor
agrees is commercially reasonable), but without any previous notice or
advertisement, the whole or any part of the Pledged Collateral. Pledgor
acknowledges and agrees that an Event of Default or a Pledge Default shall
constitute a default under Section 9-504 of the UCC. Agent acknowledges and
agrees that a Pledge Default shall not constitute an Event of Default. In
connection with any sale thereof as set forth above, Agent may act with respect
to the Pledged Collateral as though Agent was the outright owner thereof, and in
furtherance thereof, Pledgor hereby irrevocably constitutes and appoints Agent
as the proxy and attorney-in-fact of Pledgor, with full power of substitution to
do so, which power of attorney shall remain in effect until the Secured
Obligations are indefeasibly paid in full; PROVIDED, HOWEVER, Agent shall not
have any duty to exercise any such right or to preserve the same and shall not
be liable for any failure to do so or for any delay in doing so. Any sale shall
be made at a public or private sale at Agent's place of business, through a
registered broker-dealer, or at any other place to be named in the notice of
sale, either for cash or upon credit or for future delivery at commercially
reasonable prices, and in the case of a sale upon the occurrence of an Event of
Default, Agent may be the purchaser, for its benefit and the ratable benefit of
Lenders, of the whole or any part of the Pledged Collateral. Each sale shall be
made to the highest bidder, but Agent reserves the right to reject any and all
bids at such sale which, in its discretion, it shall deem inadequate. Demands of
performance, except as otherwise herein specifically provided for, notices of
sale, advertisements and the presence of property at sale are hereby waived and
any sale hereunder may affected through a registered broker-dealer to the public
under Rule 144 of the Act.
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(c) If, at the original time or times appointed for the sale of the whole or any
part of the Pledged Collateral, the highest bid, if there be but one sale, shall
be inadequate to discharge in full all the Secured Obligations, or if the
Pledged Collateral be offered for sale in lots, if at any of such sales, the
highest bid for the lot offered for sale would indicate to Agent, in its
discretion, the unlikelihood of the proceeds of the sales of the whole of the
Pledged Collateral being sufficient to discharge all the Secured Obligations,
Agent may, on one or more occasions and in its discretion, postpone any of said
sales at the time of sale or the time of previous postponement of sale, and no
other notice of such postponement or postponements of sale need be given, any
other notice being hereby waived; PROVIDED, HOWEVER, that any sale or sales made
after such postponement shall be after ten (10) days' written notice to Pledgor.
(d) In the event of any sales hereunder Agent shall, after deducting all costs
or expenses of every kind (including attorneys' fees and disbursements) for
care, safekeeping, collection, sale, delivery or otherwise, apply the residue of
the proceeds of the sales to the pay ment or reduction, either in whole or in
part, of the Secured Obligations in accordance with the agreements and
instruments governing and evidencing the Secured Obligations, returning the
surplus, if any, to Pledgor.
(e) If, at any time when Agent shall determine to exercise its right to sell the
whole or any part of the Pledged Collateral hereunder, such Pledged Collateral
or the part thereof to be sold shall not, for any reason whatsoever, be
effectively registered under the Act or salable pursuant to Rule 144 under the
Act or any successor thereto (taking into account liquidity in the public market
for Xxxxxxx common stock) Agent may, in its discretion (subject only to
applicable requirements of law), sell such Pledged Collateral or part thereof by
private sale in such manner and under such circumstances as are commercially
reasonable, but subject to the other requirements of this SECTION 7, and shall
not be required to effect such registration or to cause the same to be effected
or sell the Pledged Shares under Rule 144. Without limiting the generality of
the foregoing, in any such event Agent in its discretion (x) may, in accordance
with applicable securities laws, proceed to make such private sale
notwithstanding that a registration statement for the purpose of registering
such Pledged Collateral or part thereof could be or shall have been filed (but
shall not have been declared effective) under said Act (or similar statute), (y)
may approach and negotiate with a single possible purchaser to effect such sale,
and (z) may restrict such sale to a purchaser who will represent and agree that
such purchaser is purchasing for its own account, for investment and not with a
view to the distribution or sale of such Pledged Collateral or part thereof in
violation of the Act. In addition to a private sale as provided above in this
SECTION 7, if any of the Pledged Collateral shall not be freely distributable to
the public without registration under the Act (or similar statute) at the time
of any proposed sale pursuant to this SECTION 7, then Agent shall not be
required to effect such registration or cause the same to be effected but, in
its discretion (subject only to applicable requirements of law), may require
that any sale hereunder (including a sale at auction) be conducted subject to
restrictions (i) as to the financial sophistication and ability of any Person
permitted to bid or purchase at any such sale, (ii) as to the content of legends
to be placed upon any certificates representing the Pledged Collateral sold in
such sale, including restrictions on future transfer thereof, (iii) as to the
representations required to be made by each Person bidding or purchasing at such
sale relating to that Person's access to financial information about
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Pledgor and such Person's intentions as to the holding of the Pledged Collateral
so sold for investment, for its own account, and not with a view to the
distribution thereof in violation of the Act, and (iv) as to such other matters
as Agent may, in its discretion, deem necessary or appropriate in order that
such sale (notwithstanding any failure so to register) may be effected in
compliance with Title 11 of the United States Code and other laws affecting the
enforcement of creditors' rights and the Act and all applicable state securities
laws.
(f) Pledgor acknowledges that if the Pledged Shares cease to be eligible for
sale under Rule 144 of the Act or if there is insufficient liquidity in the
markets for shares of Xxxxxxx, Agent may sell the Pledged Shares in one or more
private sales. Pledgor further acknowledges that any private sale may result in
prices and other terms less favorable to the seller than if such sale were a
public sale. Agent shall be under no obligation to delay a sale of any of the
Pledged Collateral for the period of time necessary to permit the registrant to
register such securities for public sale under the Act, or under applicable
state securities laws, even if Pledgor would agree to do so.
(g) Pledgor agrees that following the occurrence and during the continuance of
an Event of Default it will not at any time plead, claim or take the benefit of
any appraisal, valuation, stay, extension, moratorium or redemption law now or
hereafter in force in order to prevent or delay the enforcement of this
Agreement, or the absolute sale of the whole or any part of the Pledged
Collateral or the possession thereof by any purchaser at any sale hereunder, and
Pledgor waives the benefit of all such laws to the extent it lawfully may do so.
Pledgor agrees that it will not interfere with any right, power and remedy of
Agent provided for in this Agreement or now or hereafter existing at law or in
equity or by statute or otherwise, or the exercise or beginning of the exercise
by Agent of any one or more of such rights, powers or remedies. No failure or
delay on the part of Agent to exercise any such right, power or remedy and no
notice or demand which may be given to or made upon Pledgor by Agent with
respect to any such remedies shall operate as a waiver thereof, or limit or
impair Agent's right to take any action or to exercise any power or remedy
hereunder, without notice or demand, or prejudice its rights as against Pledgor
in any respect.
(h) Pledgor further agrees that a breach of any of the covenants contained in
SECTIONS 5, 6 and in this SECTION 7 will cause irreparable injury to Agent and
Lenders, that Agent has no adequate remedy at law in respect of such breach and,
as a consequence, agrees that each and every covenant contained in SECTIONS 5, 6
and in this SECTION 7 shall be specifically enforceable against Pledgor, and
Pledgor hereby waives and agrees not to assert any defenses against an action
for specific performance of such covenants except for a defense that the
Secured Obligations are not then due and payable in accordance with the
agreements and instruments governing and evidencing such obligations.
8. APPLICATION OF PROCEEDS. Any cash held by Agent as Pledged Collateral and
all cash proceeds received by Agent in respect of any sale of, liquidation of,
or other realization upon all or any part of the Pledged Collateral shall be
applied by Agent solely to the Secured Obligations.
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9. WAIVER. Neither Agent nor any Lender shall by any act, delay, omission or
otherwise be deemed to have waived any of its rights or remedies hereunder, and
no waiver shall be valid unless in writing, signed by Agent and then only to the
extent therein set forth. A waiver by Agent, for itself and the ratable benefit
of Lenders, of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which Agent would otherwise have had
on any future occasion. Neither a failure to exercise nor any delay in
exercising on the part of Agent or any Lender, any right, power or privilege
hereunder or course of dealing between Pledgor and Agent or any Lender, shall
impair such right, power or privilege or be construed to operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or future exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies
hereunder provided are cumulative and may be exercised singly or concurrently,
and are not exclusive of any rights and remedies provided by law. None of the
terms or provisions of this Agreement may be waived, altered, modified or
amended except by an instrument in writing, duly executed by Agent and Pledgor.
10. ASSIGNMENT. This Agreement and all obligations of Pledgor hereunder shall be
binding upon the successors and assigns of Pledgor and shall, together with the
rights and remedies of Agent, for its benefit and the ratable benefit of
Lenders, hereunder, inure to the benefit of Agent and Lenders, all future
holders of any instrument evidencing any of the Secured Obligations and their
respective successors and assigns. No sales of participations, other sales,
assignments, transfers or other dispositions of any agreement governing or
instrument evidencing the Secured Obligations or any portion thereof or interest
therein shall in any manner affect the security interest granted to Agent, for
its benefit and the ratable benefit of Lenders, hereunder. Pledgor may not
assign, sell or otherwise transfer any interest in or obligation under this
Agreement.
11. TERMINATION. Subject to SECTION 15, immediately following the payment in
full of all outstanding Secured Obligations, Agent shall deliver to Pledgor the
Pledged Collateral pledged by Pledgor at the time subject to this Agreement and
all instruments of assignment executed in connection therewith, free and clear
of the Lien hereof and all other documents reasonably requested by Pledgor to
effectuate or evidence the release of the Pledged Collateral and, except as
otherwise provided herein, all of Pledgor's obligations hereunder shall at such
time terminate.
12. LIEN ABSOLUTE. All rights of Agent and Lenders hereunder, and all
obligations of Pledgor hereunder, shall be absolute and unconditional
irrespective of: (a) any lack of validity or enforceability of the Loan
Agreement, the Term Notes, any other Loan Document or any other agreement or
instrument governing or evidencing any Secured Obligations;
(b) any change in the time, manner or place of payment of, or in any other term
of, all or any part of the Secured Obligations, or any other amendment or waiver
of or any consent to any departure from the Loan Agreement, the Term Notes, any
other Loan Document or any other agreement or instrument governing or evidencing
any Secured Obligations;
137
(c) any exchange, release or non-perfection of any other collateral, or any
release or amendment or waiver of or consent to departure from any guaranty, for
all or any of the Secured Obligations; or
(d) any provision of law or equity, which may be waived by Pledgor and which
might otherwise constitute a defense available to, or a discharge of, Pledgor.
13. RELEASE. Pledgor consents and agrees that Agent and Lenders may at any time,
or from time to time, in their discretion (a) renew, extend or change the time
of payment, and/or the manner, place or terms of payment of all or any part of
the Secured Obligations and (b) exchange, release and/or surrender all or any of
the Pledged Collateral, or any part thereof, by whomsoever deposited, which is
now or may hereafter be held by Agent in connection with all or any of the
Secured Obligations; all in such manner and upon such terms as Agent and Lenders
may deem proper, and without notice to or further assent from Pledgor, it being
hereby agreed that Pledgor shall be and remain bound upon this Agreement,
irrespective of the existence, value or condition of any of the Pledged
Collateral, and notwithstanding any such change, exchange, settlement,
compromise, surrender, release, renewal or extension, and notwithstanding also
that the Secured Obligations may, at any time, exceed the aggregate principal
amount thereof set forth in the Loan Agreement, or any other agreement governing
any Secured Obligations. Pledgor hereby waives notice of acceptance of this
Agreement, and also presentment, demand, protest and notice of dishonor of any
and all of the Secured Obligations, and promptness in commencing suit against
any party hereto or liable hereon, and in giving any notice to or of making any
claim or demand hereunder upon Pledgor. No act or omission of any kind on
Agent's part shall in any event affect or impair this Agreement.
14. INDEMNIFICATION. Pledgor agrees to indemnify and hold Agent and each Lender
harmless from and against any taxes, liabilities, claims and damages, including
reasonable attorney's fees and disbursements, and other reasonable expenses
incurred or arising by reason of the taking or the failure to take action by
Agent, in good faith, in respect of any transaction effected under this
Agreement or in connection with the Lien provided for herein, including, without
limitation, any taxes payable in connection with the delivery or registration of
any of the Pledged Collateral as provided herein. Whether or not the
transactions contemplated by this Agreement shall be consummated, Pledgor agrees
to pay to, to the extent not paid by Borrowers under the Loan Agreement, Agent's
reasonable out-of-pocket costs and expenses incurred by Agent in connection with
this Agreement and reasonable fees, expenses and disbursements and the
reasonable fees of Agent's agents or representatives, incurred in connection
with the execution and delivery of this Agreement and the performance by Agent
of the provisions of this Agreement and of any transactions effected in
connection with this Agreement. The obligations of Pledgor under this SECTION 14
shall survive the termination of this Agreement.
15. REINSTATEMENT. This Agreement shall remain in full force and effect and
continue to be effective should any petition be filed by or against Pledgor for
liquidation or reorganization, should Pledgor become insolvent or make an
assignment for the benefit of any creditor or creditors or should a receiver or
trustee be appointed for all or any significant part of Pledgor's assets, and
shall continue to be effective or be reinstated, as the
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case may be, if at any time payment and performance of the Secured Obligations,
or any part thereof, is, pursuant to applicable law, rescinded or reduced in
amount, or must otherwise be restored or returned by any obligee of the Secured
Obligations, whether as a "voidable preference", "fraudulent conveyance", or
otherwise, all as though such payment or performance had not been made. In the
event that any payment, or any part thereof, is rescinded, reduced, restored or
returned, the Secured Obligations shall be reinstated and deemed reduced only by
such amount paid and not so rescinded, reduced, restored or returned.
16. MISCELLANEOUS. (a) Agent may execute any of its duties hereunder by or
through agents or employees and shall be entitled to advice of counsel
concerning all matters pertaining to its duties hereunder.
(b) Pledgor agrees to promptly reimburse Agent for reasonable out-of-pocket
expenses, including, without limitation, reasonable counsel fees, incurred by
Agent in connection with the administration and enforcement of this Agreement.
(c) Neither Agent nor any Lender nor any of their respective officers,
directors, partners, employees, agents or counsel shall be liable for any action
lawfully taken or omitted to be taken by it or them hereunder or in connection
herewith, except for its or their own gross negligence or willful misconduct.
(d) IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE
GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE, AND
ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
17. SEVERABILITY. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. This Agreement is to be read, construed and applied together
with the Loan Agreement and the other Loan Documents which, taken together, set
forth the complete understanding and agreement of Agent, Lenders and Pledgor
with respect to the matters referred to herein and therein.
18. NOTICES. Except as otherwise provided herein, whenever it is provided herein
that any notice, demand, request, consent, approval, declaration or other
communication shall or may be given to or served upon any of the parties by any
other party, or whenever any of the parties desires to give or serve upon any
other a communication with respect to this Agreement, each such notice, demand,
request, consent, approval, declaration or other communication shall be in
writing and shall be given in the manner, and deemed received, as provided for
in SECTION 11.10 of the Loan Agreement. For purposes of this SECTION 18,
Pledgor's address shall be the following:
139
WAXMAN USA INC.
00000 Xxxxxx Xxxx
Xxxxxxx Xxxxxxx, Xxxx 00000
Attn: Chief Financial Officer
Telecopier No.: (000) 000-0000
19. POSSESSION OF PLEDGED COLLATERAL. Beyond the exercise of reasonable care to
assure the safe custody of the Pledged Collateral in the physical possession of
Agent pursuant hereto, neither Agent nor any Lender, nor any nominee of either
Person shall have any duty or liability to collect any sums due in respect
thereof or to protect, preserve or exercise any rights pertaining thereto, and
shall be relieved of all responsibility for the Pledged Collateral upon
surrendering it to Pledgor.
20. AGENT APPOINTED ATTORNEY-IN-FACT. Pledgor hereby irrevocably appoints Agent
as Pledgor's attorney-in-fact, with full authority in the place and stead of
Pledgor and in the name of Pledgor or otherwise, from time to time in Agent's
discretion reasonably exercised in connection with the sale of the Pledged
Collateral, to take any action and to execute any instrument that Agent deems
reasonably necessary or advisable to accomplish the purposes of this Agreement,
including, without limitation, to receive, endorse and collect all instruments
made payable to Pledgor representing any dividend, interest payment or other
distribution in respect of the Pledged Shares or any part thereof and to give
full discharge for the same, when and to the extent permitted by this Agreement.
21. ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding among Pledgor and Agent and supersedes all prior oral and written
agreements and understandings among Pledgor and Agent relating to the subject
hereof.
22. SECTION TITLES. The Section titles contained in this Agreement are and shall
be without substantive meaning or content of any kind whatsoever and are not a
part of the agreement between the parties hereto.
23. COUNTERPARTS. This Agreement may be executed in any number of separate
counterparts, each of which shall collectively and separately constitute one
agreement. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first written above.
WAXMAN USA INC.
By:_________________________________
Name:_______________________________
Title:______________________________
140
Accepted and Acknowledged by:
BANKAMERICA BUSINESS CREDIT, INC.
as Agent
By:_________________________________
Name:_______________________________
Title:______________________________
141
SCHEDULE I
Attached to and forming a part of that certain Stock Pledge Agreement by Waxman
USA Inc., as Pledgor, to BankAmerica Business Credit, Inc., as Agent, for its
benefit and the ratable benefit of Lenders.
Stock Number
Class of Certificate of
Stock Issuer Stock Numbers Shares
------------ -------- ----------- ------
Xxxxxxx Inc. common class 6 500,000
($.01 par value)
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SECURED GUARANTY
----------------
SECURED GUARANTY (as it may be amended, supplemented or otherwise modified from
time to time, this "Guaranty") is dated as of June 28, 1996, by WAXMAN USA INC.,
a Delaware corporation ("Guarantor"), having its principal place of business and
chief executive office at 00000 Xxxxxx Xxxx, Xxxxxxx Xxxxxxx, Xxxx 00000, in
favor of BANKAMERICA BUSINESS CREDIT, INC., a Delaware corporation ("Agent"),
for its benefit and the ratable benefit of the Lenders (as hereinafter defined).
WHEREAS, Guarantor is the legal and beneficial owner of all of the issued and
outstanding capital stock of Waxman Consumer Products Group Inc., a Delaware
corporation and WOC Inc., a Delaware corporation ("Borrowers"); and
WHEREAS, Agent and the Persons from time to time designated as lenders
thereunder (the "Lenders") have entered into that certain Loan and Security
Agreement dated as of June 28, 1996, (as the same may be amended, restated,
supplemented or otherwise modified from time to time, the "Loan Agreement") with
Borrowers; and
WHEREAS, Guarantor will derive substantial direct benefit and advantage from the
financial accommodations to Borrowers set forth in the Loan Agreement,
including, without limitation, the loans and advances made to Borrowers
thereunder, and it will be to Guarantor's direct interest and economic benefit
to assist Borrowers in procuring such financial accommodations from the Lenders;
and
WHEREAS, a condition to Agent and the Lenders entering into the Loan Agreement
is that Guarantor execute and deliver this Guaranty;
NOW, THEREFORE, for and in consideration of the premises and in order to induce
Agent and the Lenders to enter into the Loan Agreement and the Lenders to make
loans thereunder, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Guarantor hereby agrees as
follows:
SECTION 1. DEFINITIONS.
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Unless otherwise defined herein, all capitalized terms used herein shall have
the respective meanings assigned to such terms in the Loan Agreement.
"GUARANTEED OBLIGATIONS" means the principal amount of the Term Loans under the
Loan Agreement and Term Notes issued pursuant thereto and all interest, fees,
and expenses accrued or incurred with respect thereto, including a ratable share
of expenses incurred with respect to the Loans generally.
"PLEDGED COLLATERAL" means the Pledged Collateral as such term is defined in
that Stock Pledge Agreement of even date herewith between Guarantor and Agent,
consisting primarily of 500,000 shares of the common stock of Xxxxxxx Inc.
SECTION 2. GUARANTY OF PAYMENT.
(a) Guarantor hereby absolutely and unconditionally guarantees the full and
prompt payment to Agent, for its benefit and the ratable benefit of the Lenders,
when due, upon demand, at maturity or by reason of acceleration or otherwise and
at all times thereafter, of any and all existing and future Guaranteed
Obligations.
(b) Guarantor acknowledges that valuable consideration supports this Guaranty,
including, without limitation, the consideration set forth in the recitals above
as well as any commitment to lend, extension of credit or other financial
accommodation, whether heretofore or hereafter made by the Lenders to Borrowers;
any extension, renewal or replacement of any of the Guaranteed Obligations; any
forbearance with respect to any of the Guaranteed Obligations or otherwise; any
purchase of Borrowers' assets by the Lenders; or any other valuable
consideration.
(c) Guarantor agrees that all payments under this Guaranty shall be made in
United States currency and in the same manner as provided for the Guaranteed
Obligations.
SECTION 3. COSTS AND EXPENSES.
Guarantor agrees to pay on demand, if not paid by Borrowers, all reasonable
costs and reasonable expenses of every kind incurred by Agent or the Lenders:
(a) in enforcing this Guaranty, (b) in collecting any of the Guaranteed
Obligations from Borrowers or Guarantor, (c) in realizing upon or protecting any
collateral for payment of any of the Guaranteed Obligations, and (d) in
defending any claims or litigation arising in connection with this Guaranty.
"Costs and expenses" as used in the preceding
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sentence shall include, without limitation, reasonable attorneys' fees incurred
by Agent or any Lender in retaining counsel for advice, suit, appeal, any
insolvency or other proceedings under the United States Bankruptcy Code or
otherwise, or for any purpose specified in the preceding sentence.
SECTION 4. NATURE OF GUARANTY: CONTINUING, ABSOLUTE AND UNCONDITIONAL.
(a) This Guaranty is and is intended to be a continuing guaranty of payment of
the Guaranteed Obligations, independent of and in addition to any other
guaranty, indorsement, collateral or other agreement held by Agent or the
Lenders therefor or with respect thereto, whether or not furnished by Guarantor.
The obligations of Guarantor to repay the Guaranteed Obligations hereunder shall
be limited to the lesser of the amount of the Guaranteed Obligations or the
value of the Pledged Collateral.
(b) Until the Guaranteed Obligations have been paid in full on the Termination
Date, Guarantor shall have no right, claim or remedy of subrogation,
reimbursement, contribution or any similar rights against Borrowers or any other
guarantor with respect to the Guaranteed Obligations and hereby waives any right
to enforce any remedy which Agent or any Lender now has or may hereafter have
against Borrowers, any endorser or any other guarantor of all or any part of the
Guaranteed Obligations, and Guarantor hereby waives any benefit of, and any
right to participate in, any security or collateral given to Agent, on behalf of
itself and the Lenders, to secure payment of the Guaranteed Obligations or any
part thereof or any other liability of Borrowers to Agent or the Lenders. If any
amount shall be paid to Guarantor on account of any payment made hereunder at
any time prior to payment in full of the Guaranteed Obligations, such amount
shall be held in trust for the benefit of Agent and the Lenders and shall
forthwith be paid to Agent to be credited and applied, whether the Guaranteed
Obligations are matured or unmatured, in accordance with the terms of the Loan
Agreement. Guarantor authorizes Agent, on behalf of itself and the Lenders, to
take any action or exercise any remedy with respect to any collateral which
Agent, on behalf of itself and the Lenders, in its sole discretion shall
determine subject to applicable law, without notice to Guarantor. Guarantor
further agrees that any and all claims of Guarantor against Borrowers, any
endorser or any other guarantor of all or any part of the Guaranteed
Obligations, or against any of their respective properties, whether arising by
reason of any payment by Guarantor to Agent, on behalf of itself and the
Lenders, pursuant to the provisions hereof, or otherwise, including, without
limitation, all Intercompany Accounts, shall
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be subordinate and subject in right of payment to the prior payment, in full, of
the Guaranteed Obligations. In the event Agent, on behalf of itself and the
Lenders, in its sole discretion elects to give notice of any action with respect
to the collateral securing the Guaranteed Obligations or any part thereof, ten
(10) days' written notice mailed to Guarantor by ordinary mail at the address
set forth in Section 13 hereof shall be deemed reasonable notice of any matters
contained in such notice. Guarantor consents and agrees that Agent, on behalf of
itself and the Lenders, shall be under no obligation to xxxxxxxx any assets in
favor of Guarantor or against or in payment of any or all of the Guaranteed
Obligations.
(c) For the further security of Agent and the Lenders and without in any way
diminishing the liability of Guarantor, all debts and liabilities, present or
future of Borrowers to Guarantor and all monies received from Borrowers or for
their account by Guarantor in respect thereof in violation of Section 9.15 of
the Loan Agreement, shall be received in trust for Agent and the Lenders and
forthwith upon receipt shall be paid over to Agent, for the benefit of itself
and the Lenders, until all of such Guaranteed Obligations have been paid in
full. This assignment and postponement is independent of and severable from this
Guaranty and shall remain in full force and effect whether or not Guarantor is
liable for any amount under this Guaranty.
(d) This Guaranty and Guarantor's obligations hereunder are absolute and
unconditional and shall not be changed or affected by any representation, oral
agreement, act or thing whatsoever, except as herein provided. This Guaranty is
intended by Guarantor to be the final, complete and exclusive expression of the
guaranty agreement between Guarantor and Agent, on behalf of itself and the
Lenders. No modification or amendment of any provision of this Guaranty shall be
effective unless in writing and signed by a duly authorized officer of Agent.
SECTION 5. CERTAIN RIGHTS AND OBLIGATIONS.
(a) Guarantor authorizes Agent and the Lenders, without notice, demand or any
reservation of rights against Guarantor and without impairing or affecting the
validity or enforceability of this Guaranty or Guarantor's obligations
hereunder, from time to time: (i) to renew, extend, increase, accelerate or
otherwise change the time for payment of, the terms of or the interest on the
Guaranteed Obligations or any part thereof or grant other indulgences to
Borrowers or other Persons; (ii) to accept from any Person and hold collateral
for the payment of the Guaranteed Obligations or any part thereof, and to
modify, exchange, enforce or refrain from enforcing, or release, compromise,
settle, waive,
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subordinate or surrender, with or without consideration, such collateral or any
part thereof; (iii) to accept and hold any endorsement or guaranty of payment of
the Guaranteed Obligations or any part thereof, and to discharge, release or
substitute any such obligation of any such endorser or guarantor, or any Person
who has given any security interest in any collateral as security for the
payment of the Guaranteed Obligations or any part thereof, or any other Person
in any way obligated to pay the Guaranteed Obligations or any part thereof, and
to enforce or refrain from enforcing, or compromise or modify, the terms of any
obligation of any such endorser, guarantor or Person; (iv) to dispose of any and
all collateral securing the Guaranteed Obligations, subject to standards imposed
by applicable law, and to direct the order of such disposition and the
enforcement of any and all endorsements and guaranties relating to the
Guaranteed Obligations or any part thereof as Agent or the Lenders, in their
reasonable discretion may determine; (v) except as otherwise provided in the
Loan Agreement, to determine the manner, amount and time of application of
payments and credits, if any, to be made on all or any part of any component or
components of the Guaranteed Obligations (whether principal, interest, fees,
costs and expenses, or otherwise) including, without limitation, the application
of payments received from any source to the payment of indebtedness other than
the Guaranteed Obligations even though Agent and the Lenders might lawfully have
elected to apply such payments to the Guaranteed Obligations or to amounts which
are not covered by this Guaranty; and (vi) to take advantage or refrain from
taking advantage of any security or accept or make or refrain from accepting or
making any compositions or arrangements when and in such manner as Agent or the
Lenders, in their reasonable discretion, may deem appropriate and generally do
or refrain from doing any act or thing which might otherwise, at law or in
equity, release the liability of Guarantor as a guarantor or surety in whole or
in part, and in no case shall Agent or the Lenders be responsible or shall
Guarantor be released either in whole or in part for any act or omission in
connection with Agent or the Lenders having sold any collateral at less than
fair market value, subject to standards imposed by applicable law.
(b) If any default shall be made in the payment of any of the Guaranteed
Obligations and any grace period has expired with respect thereto, Guarantor
hereby agrees to pay the same in full subject to the limitations set forth in
Section 4: (i) without deduction by reason of any setoff, defense (other than
payment) or counterclaim of Guarantor; (ii) without requiring presentment,
protest or notice of nonpayment or notice of default to Guarantor, to Borrowers
or to any other Person, except as
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required by the Loan Documents; (iii) without demand for payment or proof of
such demand or filing of claims with a court in the event of receivership,
bankruptcy or reorganization of Borrowers; (iv) without requiring Agent or the
Lenders to resort first to Borrowers (this being a guaranty of payment and not
of collection) or to any other guarantor or any other Person obligated with
respect to the Guaranteed Obligations or any collateral which Agent or the
Lenders may hold; (v) without requiring notice of acceptance hereof or assent
hereto by Agent or the Lenders; and (vi) without requiring notice that any of
the Guaranteed Obligations has been incurred, extended or continued or of the
reliance by Agent or the Lenders upon this Guaranty; all of which Guarantor
hereby waives.
(c) This Guaranty and Guarantor's obligation hereunder shall at all times be
valid and enforceable and shall not be impaired or affected by any other
agreements or circumstances of any nature whatsoever which otherwise constitute
a defense to this Guaranty, including, without limitation, any of the following,
all of which Guarantor hereby waives, to the extent permitted by law: (i) any
failure or omission to perfect or continue the perfection of any security
interest in or other lien on, or preserve rights to, any collateral securing
payment of any of the Guaranteed Obligations or Guarantor's obligation
hereunder; (ii) the invalidity, unenforceability, propriety of manner of
enforcement of, or loss or change in priority of any such security interest or
other lien or guaranty of the Guaranteed Obligations; (iii) any failure or
omission to protect, preserve or insure any such collateral; (iv) failure of
Guarantor to receive notice of any intended disposition of such collateral; (v)
any defense arising by reason of the cessation from any cause whatsoever of
liability of Borrowers including, without limitation, any failure, negligence or
omission by Agent or the Lenders in enforcing their claims against Borrowers;
(vi) any waiver of any right, remedy or power or of any default with respect to
the Guaranteed Obligations or any part thereof or any release, settlement or
compromise of any obligation of Borrowers; (vii) the invalidity or
unenforceability of any of the Guaranteed Obligations or the invalidity or
unenforceability of any agreement relating thereto or with respect to any
collateral securing the Guaranteed Obligations or any part thereof; (viii) any
change of ownership of Borrowers or the insolvency, bankruptcy or any other
change in the legal status of Borrowers; (ix) any change in, or the imposition
of, any law, decree, regulation or other governmental act which does or might
impair, delay or in any way affect the validity, enforceability or the payment
when due of the Guaranteed Obligations; (x) the existence of any claim, setoff
or other right which Guarantor may have at any time against Agent, any
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Lender, Borrowers or any other guarantor in connection herewith or any unrelated
transaction; (xi) the failure of Borrowers or Guarantor to maintain in full
force, validity or effect or to obtain or renew when required all governmental
and other approvals, licenses or consents required in connection with the
Guaranteed Obligations or this Guaranty, or to take any other action required in
connection with the performance of all obligations pursuant to the Guaranteed
Obligations or this Guaranty; (xii) Agent's election, on behalf of the Lenders,
in any case instituted under chapter 11 of the United States Bankruptcy Code, of
the application of section 1111(b)(2) of the United States Bankruptcy Code;
(xiii) any borrowing, use of cash collateral, or grant of a security interest by
Borrowers, as debtor in possession, under section 363 or 364 of the United
States Bankruptcy Code; (xiv) the disallowance of all or any portion of Agent's
or any of the Lenders' claims for repayment of the Guaranteed Obligations under
section 502 or 506 of the United States Bankruptcy Code; or (xv) any other fact
or circumstance which might otherwise constitute grounds at law or in equity for
the discharge or release of Guarantor from its obligations hereunder, all
whether or not Guarantor shall have had notice or knowledge of any act or
omission referred to in the foregoing clauses (i) through (xiv) of this
SUBSECTION 5(C). It is agreed that Guarantor's liability hereunder is
independent of any other guaranties or other obligations at any time in effect
with respect to the Guaranteed Obligations or any part thereof and that
Guarantor's liability hereunder may be enforced regardless of the existence,
validity, enforcement or non-enforcement of any such other guaranties or other
obligations or any provision of any applicable law or regulation purporting to
prohibit payment by Borrowers of the Guaranteed Obligations in the manner agreed
upon between Agent and the Lenders and Borrowers.
(d) Credit may be granted or continued from time to time by Agent and the
Lenders to Borrowers without notice to or authorization from Guarantor
regardless of Borrowers' financial or other condition at the time of any such
grant or continuation. Neither Agent nor any Lender shall have an obligation to
disclose or discuss with Guarantor its assessment of the financial condition of
Borrowers.
SECTION 6. REPRESENTATIONS AND WARRANTIES.
Guarantor represents and warrants that:
(a) EXISTENCE. Guarantor (i) is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation or
organization and has been duly qualified to conduct business and is in good
standing in each
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other jurisdiction where its ownership or lease of property or the conduct of
its business requires such qualification; (ii) has the requisite corporate power
and authority, as applicable, and the legal right to own, pledge, mortgage or
otherwise encumber and operate its properties, to lease the property it operates
under lease and to conduct its business as now, heretofore and proposed to be
conducted; (iii) has all licenses, permits, consents or approvals from or by,
and has made all filings with, and has given all notices to, all Governmental
Authorities having jurisdiction, to the extent required for such ownership,
operation and conduct; (iv) is in compliance with its certificate or articles of
incorporation and bylaws; and (v) is in compliance with all applicable
provisions of law.
(b) AUTHORITY. Guarantor has full power, authority and legal right to enter into
this Guaranty and the other Loan Documents to which Guarantor is a party. The
execution, delivery and performance by Guarantor of this Guaranty and such other
Loan Documents: (i) have been duly authorized by all necessary action on the
part of Guarantor; (ii) are not in contravention of the terms of Guarantor's
certificate of incorporation or bylaws or of any indenture, agreement or
undertaking to which Guarantor is a party or by which Guarantor or any of its
property is bound; (iii) do not and will not require any consent of,
registration with or approval of any Governmental Authority or the consent of
any other Person that has not been obtained or made, as applicable; (iv) do not
and will not contravene any contractual or governmental restriction to which
Guarantor or any of its property may be subject (excluding the Indentures, as to
which no representation is made); and (v) do not and will not, except as
contemplated herein, result in the imposition of any Lien upon any property of
Guarantor under any existing indenture, mortgage, deed of trust, loan or credit
agreement or other material agreement or instrument to which Guarantor is a
party or by which Guarantor or any of its property may be bound or affected.
Guarantor has the full corporate authority to own or lease and operate its
property and to conduct the business in which it is currently engaged and in
which it proposes to engage.
(c) BINDING EFFECT. This Guaranty and all of the other Loan Documents to which
Guarantor is a party have been duly executed and delivered by Guarantor, are
the legal, valid and binding obligations of Guarantor and are enforceable
against Guarantor in accordance with their terms.
(d) COMPLIANCE WITH LAWS AND REGULATIONS. The execution and delivery by
Guarantor of this Guaranty and all of the other Loan Documents to which it is
a party and the performance of
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Guarantor's obligations hereunder and thereunder are not in contravention of any
order applicable to Guarantor or, to Guarantor's best knowledge, any laws,
regulations or ordinances applicable to Guarantor. Guarantor and its
Subsidiaries are in compliance with all applicable laws, orders, regulations and
ordinances of all federal, foreign, state and local governmental authorities
relating to the business operations and the property of Guarantor or any of its
Subsidiaries.
(e) FULL DISCLOSURE. This Guaranty and the representations and warranties of
Guarantor in any other Loan Document delivered or to be delivered by Guarantor,
do not and will not contain any untrue statement of a material fact or omit a
material fact necessary to make the statements contained therein or herein, in
light of the circumstances under which they were made, not misleading.
(f) SUBSIDIARIES. The Schedules attached to the Loan Agreement contain an
accurate list of all of the existing Subsidiaries of Guarantor as of the date of
this Guaranty, setting forth their respective jurisdictions of incorporation or
organization and the percentage of their capital stock owned by Guarantor or
other of its Subsidiaries.
(g) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties contained in this Guaranty or any of the other Loan Documents to
which Guarantor is a party shall survive the execution and delivery of this
Guaranty and the termination hereof.
SECTION 7. COVENANTS
Guarantor covenants that until the Guaranteed Obligations are paid in full and
the Commitments are terminated:
(a) Guarantor shall, and shall cause Borrowers to: (i) do or cause to be done
all things necessary to preserve and keep in full force and effect its corporate
existence and its rights and franchises and (ii) continue to conduct its
business substantially as now conducted or as otherwise permitted hereunder or
under the Loan Agreement;
(b) Guarantor shall comply in all material respects with all federal, state,
local and foreign laws and regulations applicable to it.
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(c) Guarantor will not (i) engage in any type of business activity other than
its ownership of the capital stock of Borrowers, Xxxxxxx and its other
Subsidiaries, (ii) pledge or encumber any of its assets except as collateral for
Debt, the proceeds of which Debt are used to pay the Obligations or Notes
outstanding under the Indentures or invested in Borrowers and used to acquire
Inventory and/or Equipment, (iii) merge or consolidate with, acquire any assets,
capital stock of or partnership interests in, or otherwise combine with any
Person,(iv) amend its certificate of incorporation or bylaws in any manner which
would adversely affect its obligation or ability to pay the Guaranteed
Obligations, (v) sell, transfer, convey, assign or otherwise dispose of any of
its assets (other than to the Borrowers), except that Guarantor may sell the
capital stock of Xxxxxxx; provided that all proceeds of any such sale are
applied to payment of the Obligations or Notes outstanding under the Indentures,
(vi) execute any agreements or contracts other than agreements and contracts
permitted by the Loan Documents, (vii) change its Fiscal Year other than with
the consent of Agent, which consent shall not be unreasonably withheld, (viii)
amend, modify or agree to amend or modify any Indenture to which it is a party
without Agent's consent if the effect of such amendment or modification is to:
(a) increase the interest rate on the debt issued under such Indenture; (b)
change the dates upon which payments of principal or interest (other than the
dates of semi-annual payments of interest) are due on the debt issues under such
Indenture other than to extend such dates; (c) change any default or event of
default other than to delete or make less restrictive any default provision
therein, or add any covenant with respect to the debt issued under such
Indenture; (d) change the redemption or prepayment provisions of such Indenture
other than to extend the dates therefor or to reduce the premiums payable in
connection therewith; (e) grant any security or collateral to secure payment of
the debt issued under such Indenture; or (f) change or amend any other term if
such change or amendment would materially increase the obligations of the
obligor or confer additional material rights of the holder of the debt issued
under such Indenture in a manner adverse to the Guarantor, any Borrower, Agent
or any Lender, (ix) use payments of Intercompany Accounts or dividends received
by it from Borrowers for any purpose other than the purposes set forth in
Section 9.15 of the Loan Agreement, which Section is incorporated herein by
reference, and (x) accept or retain any loans, dividends or other payments of
any kind from either Borrower in violation of the terms of the Loan Agreement.
(d) Guarantor shall not, nor shall Guarantor permit any of its Subsidiaries to,
enter into any indenture, agreement,instrument
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or other arrangement which, (i) directly or indirectly, prohibits or restrains,
or has the effect of prohibiting or restraining, or imposes materially adverse
conditions upon, the incurrence of the obligations of Guarantor hereunder, or
(ii) contains any provisions which would be violated or breached by the
performance by Guarantor of its obligations hereunder.
(e) Guarantor agrees to perform, comply with and be bound by all of the terms
and conditions set forth in the Loan Agreement which relate to Guarantor
including, without limitation, delivery of financial statements, with such terms
and conditions being incorporated in this Guaranty by reference and shall cause
Borrowers to comply with all covenants set forth in the Loan Agreement.
SECTION 8. TERMINATION.
This Guaranty shall remain in full force and effect until all of the Guaranteed
Obligations shall be finally and irrevocably paid in full and the Commitments
under the Loan Agreement shall have been terminated. Payment of all of the
Guaranteed Obligations from time to time shall not operate as a discontinuance
of this Guaranty. Guarantor further agrees that, to the extent that Borrowers
make a payment or payments to Agent or any of the Lenders on the Guaranteed
Obligations, or Agent or the Lenders receive any proceeds of collateral securing
the Guaranteed Obligations, which payment or receipt of proceeds or any part
thereof is subsequently invalidated, declared to be fraudulent or preferential,
set aside or required to be returned or repaid to Borrowers, its estate,
trustee, receiver, debtor in possession or any other Person, including, without
limitation, any guarantor, under any insolvency or bankruptcy law, state,
federal or foreign law, common law or equitable cause, then, to the extent of
such payment, return or repayment, the Guaranteed Obligations or part thereof
which have been paid, reduced or satisfied by such amount shall be reinstated
and continued in full force and effect as of the date when such initial payment,
reduction or satisfaction occurred, and this Guaranty shall continue in full
force notwithstanding any contrary action which may have been taken by Agent or
the Lenders in reliance upon such payment, and any such contrary action so taken
shall be without prejudice to Agent's or the Lenders' rights under this Guaranty
and shall be deemed to have been conditioned upon such payment having become
final and irrevocable.
SECTION 9. GUARANTY OF PERFORMANCE.
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Guarantor also guarantees the full, prompt and unconditional performance of all
obligations and agreements of every kind owed or hereafter to be owed by
Guarantor or Borrowers to Agent or the Lenders under or in connection with the
Loan Agreement. Every provision for the benefit of Agent and the Lenders
contained in this Guaranty shall apply to the guaranty of performance given in
this SECTION 9.
SECTION 10. TAXES.
All payments hereunder shall be made free and clear of, and without reduction by
reason of, any taxes, levies, imposts, charges and withholdings, restrictions or
conditions of any nature ("Taxes"), which are now or may hereafter be imposed,
levied or assessed by any country, political subdivision or taxing authority,
all of which will be for the account of and paid by Guarantor. If for any
reason, any such reduction is made or any Taxes are paid by Agent or the
Lenders, Guarantor will pay to Agent, for its benefit and the benefit of the
Lenders, such additional amounts as may be necessary to ensure that Agent and
the Lenders receive the same net amount (after payment of all Taxes, if
applicable) which they would have received had no reduction been made or Taxes
paid.
SECTION 11. SECURITY.
The Guaranteed Obligations under this Guaranty are secured by the Pledged
Collateral pledged to Agent pursuant to the Pledge Agreement of even date
herewith between Guarantor and Agent.
SECTION 12. MISCELLANEOUS.
(a) In addition to and without limiting any other right, power or remedy of
Agent or any Lender, whenever Agent or the Lenders have the right to declare any
of the Guaranteed Obligations to be immediately due and payable (whether or not
it has been so declared), the Lenders at their sole election without notice to
Guarantor may appropriate and setoff against the Guaranteed Obligations: (i) any
and all indebtedness or other monies due or to become due to Guarantor by Agent
or the Lenders in any capacity; and (ii) any monies, credits or other property
belonging to Guarantor (including all account balances, whether provisional or
final and whether or not collected or available, but excluding Equity Proceeds)
at any time held by or coming into the possession of Agent or any of the
Lenders, or any affiliate of Agent or any of the Lenders, whether for deposit or
otherwise, whether or not the Guaranteed Obligations or the obligation to pay
such monies owed by Agent or the Lenders is then due, and Agent, on its behalf
and on behalf of the Lenders, is hereby
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granted a security interest in and Lien upon such monies, credits and other
property. Agent or the Lenders shall be deemed to have exercised such right of
setoff immediately at the time of such election even though any charge therefor
is made or entered on Agent's or the Lenders' records subsequent thereto.
(b) In the event that acceleration of the time for payment of any of the
Guaranteed Obligations is stayed, upon the insolvency, bankruptcy or
reorganization of Borrowers, or otherwise, all such amounts shall nonetheless be
payable by Guarantor forthwith upon demand by Agent, on its behalf and on behalf
of the Lenders.
(c) No delay on the part of Agent or any Lender in the exercise of any right,
power or remedy shall operate as a waiver thereof, and no single or partial
exercise by Agent or any Lender of any right, power or remedy shall preclude any
further exercise thereof; nor shall any amendment, supplement, modification or
waiver of any of the terms or provisions of this Guaranty be binding upon Agent
or the Lenders, except as expressly set forth in a writing duly signed and
delivered by Agent. The failure by Agent or any Lender at any time or times
hereafter to require strict performance by Borrowers or Guarantor of any of the
provisions, warranties, terms and conditions contained in any Loan Document or
other promissory note, security agreement, agreement, indenture, guaranty,
instrument or document now or at any time or times hereafter executed by
Borrowers or Guarantor and delivered to Agent or any Lender shall not waive,
affect or diminish any right of Agent or any Lender at any time or times
hereafter to demand strict performance thereof, and such right shall not be
deemed to have been waived by any act or knowledge of Agent or any Lender, its
agents, officers or employees, unless such waiver is contained in an instrument
in writing duly signed and delivered by Agent and/or Lenders, as the case may
be. No waiver by Agent or Lenders of any default shall operate as a waiver of
any other default hereunder or the same default on a future occasion, and no
action by Agent or Lenders permitted hereunder shall in any way affect or impair
Agent's or the Lenders' rights, powers or remedies or the obligations of
Guarantor under this Guaranty. Any determination by a court of competent
jurisdiction of the amount of any of the Guaranteed Obligations owing by
Borrowers to the Lenders shall be conclusive and binding on Guarantor. The
rights and remedies of Agent and the Lenders hereunder are cumulative and may be
exercised singly or concurrently, and are not exclusive of any rights or
remedies provided by law.
(d) This Guaranty shall bind Guarantor and the successors and assigns of
Guarantor and shall inure to the benefit of Agent
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and the Lenders and their successors and assigns. All references herein to
Borrowers shall be deemed to include its successors and assigns including,
without limitation, a receiver, trustee or debtor in possession of or for
Borrowers.
(e) Section headings in this Guaranty are included herein for convenience of
reference only and shall not constitute a part of this Guaranty for any other
purpose or be given any substantive effect.
(f) Whenever possible, each provision of this Guaranty shall be interpreted in
such manner as to be effective and valid under applicable law. Any provision of
this Guaranty which is prohibited or unenforceable in any jurisdiction shall, as
to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remainder of such provision or the
remaining provisions of this Guaranty, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
(g) It is understood that while the amount of the Guaranteed Obligations is not
limited, if, in any action or proceeding involving any state or federal
bankruptcy, insolvency or other law affecting the rights of creditors generally,
this Guaranty would be held or determined to be void, invalid or unenforceable
on account of the amount of the aggregate liability under this Guaranty, then,
notwithstanding any other provision of this Guaranty to the contrary, the
aggregate amount of such liability shall, without any further action of
Guarantor, the Lenders, Agent or any other Person, be automatically limited and
reduced to the highest amount which is valid and enforceable as determined in
such action or proceeding.
(h) This Guaranty sets forth the entire understanding and agreement of Guarantor
and Agent with respect to the subject matter hereof and supersedes all other
understandings, oral or written, with respect to the subject matter hereof.
(I) GUARANTOR AND AGENT HEREBY SUBMIT TO THE EXCLUSIVE JURISDICTION OF ANY STATE
OR FEDERAL COURT LOCATED WITHIN THE CITY OF NEW YORK, NEW YORK, AND IRREVOCABLY
AGREE THAT ALL ACTIONS OR PROCEEDINGS RELATING TO THIS GUARANTY OR THE OTHER
LOAN DOCUMENTS TO WHICH THE GUARANTOR IS A PARTY SHALL BE LITIGATED IN SUCH
COURTS, AND GUARANTOR AND AGENT EACH WAIVES ANY OBJECTION WHICH IT MAY HAVE
BASED ON IMPROPER VENUE OF FORUM NON CONVENIENS TO THE CONDUCT OF ANY PROCEEDING
IN ANY SUCH COURT AND EACH WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON
IT, AND
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CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY MAIL OR MESSENGER DIRECTED
TO IT AT THE ADDRESS SET FORTH IN SECTION 13 HEREOF AND AGREES THAT SUCH SERVICE
SHALL CONSTITUTE SUFFICIENT NOTICE. NOTHING CONTAINED IN THIS SECTION 12 SHALL
AFFECT THE RIGHT OF AGENT TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED
BY LAW OR AFFECT THE RIGHT OF AGENT TO BRING ANY ACTION OR PROCEEDING AGAINST
GUARANTOR IN THE COURTS OF ANY OTHER JURISDICTION TO THE EXTENT NECESSARY TO
ENFORCE ITS LIENS AGAINST ASSETS LOCATED IN SUCH JURISDICTION.
(J) THIS GUARANTY SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED UNDER AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO CONFLICT OF LAWS PROVISIONS.
SECTION 13. NOTICES.
Unless otherwise specifically provided herein, any notice or other communication
required or permitted to be given shall be in writing addressed to the
respective party as set forth below and may be personally served, telecopied or
sent by overnight courier service or United States mail certified or registered
and shall be deemed to have been given (a) if delivered in person, when
delivered; (b) if delivered by telecopy, on the date of transmission if
transmitted on a Business Day before 5:00 p.m. (Chicago time) or, if not, on the
next succeeding Business Day; (c) if delivered by overnight courier, two
Business Days after delivery to such courier properly addressed; or (d) if by
United States mail, four Business Days after depositing in the United States
mail, with postage prepaid and properly addressed.
Notices shall be addressed as follows:
(a) If to Guarantor:
Waxman USA Inc.
00000 Xxxxxx Xxxx
Xxxxxxx Xxxxxxx, Xxxx 00000
Attention: Chief Financial Officer
Telecopy: (000) 000-0000
with a copy to:
Xxxxx Xxxxxxxxx
Shereff, Friedman, Xxxxxxx & Xxxxxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
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(b) If to Agent:
BankAmerica Business Credit, Inc.
Xxxxx 0000
00 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Portfolio Administrator
Telecopy: (000) 000-0000
with a copy to:
Winston & Xxxxxx
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxx
Telecopy: (000) 000-0000
or in any case, to such other address as the party addressed shall have
previously designated by written notice to the serving party, given in
accordance with this SECTION 13. A notice not given as provided above shall, if
it is in writing, be deemed given if and when actually received by the party to
whom given.
SECTION 14. WAIVERS.
(A) GUARANTOR WAIVES THE BENEFIT OF ALL VALUATION, APPRAISAL AND EXEMPTION LAWS.
(B) IN THE EVENT OF A DEFAULT UNDER THE LOAN AGREEMENT, GUARANTOR HEREBY WAIVES
TO THE EXTENT PERMITTED BY LAW ALL RIGHTS TO NOTICE AND HEARING OF ANY KIND
PRIOR TO THE EXERCISE BY AGENT OR THE LENDERS OF THEIR RIGHTS TO REPOSSESS ANY
COLLATERAL WITHOUT JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY UPON ANY
COLLATERAL WITHOUT PRIOR NOTICE OR HEARING. GUARANTOR ACKNOWLEDGES THAT IT HAS
BEEN ADVISED BY COUNSEL OF ITS CHOICE WITH RESPECT TO THIS TRANSACTION AND THIS
GUARANTY.
(C) GUARANTOR AND AGENT ACKNOWLEDGE THAT THE TIME AND EXPENSE REQUIRED FOR TRIAL
BY JURY EXCEED THE TIME AND EXPENSE REQUIRED FOR A BENCH TRIAL AND HEREBY WAIVE,
TO THE EXTENT PERMITTED BY LAW, TRIAL BY JURY, ANY OBJECTION BASED ON FORUM NON
CONVENIENS, ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER, AND WAIVE
ANY BOND OR SURETY OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER,
BE REQUIRED OF AGENT OR THE LENDERS.
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IN WITNESS WHEREOF, this Guaranty has been executed as of the day first written
above.
WAXMAN USA INC.
By:
Name:_____________________________
Title:____________________________
Accepted and Agreed:
BANKAMERICA BUSINESS CREDIT, INC.
By:______________________________
Title:___________________________
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UNSECURED GUARANTY
------------------
UNSECURED GUARANTY (as it may be amended, supplemented or otherwise modified
from time to time, this "Guaranty") is dated as of June 28, 1996, by WAXMAN USA
INC., a Delaware corporation ("Guarantor"), having its principal place of
business and chief executive office at 00000 Xxxxxx Xxxx, Xxxxxxx Xxxxxxx, Xxxx
00000, in favor of BANKAMERICA BUSINESS CREDIT, INC., a Delaware corporation
("Agent"), for its benefit and the ratable benefit of the Lenders (as
hereinafter defined).
WHEREAS, Guarantor is the legal and beneficial owner of all of the issued and
outstanding capital stock of Waxman Consumer Products Group Inc., a Delaware
corporation, and WOC Inc., a Delaware corporation ("Borrowers"); and
WHEREAS, Agent and the Persons from time to time designated as lenders
thereunder (the "Lenders") have entered into that certain Loan and Security
Agreement dated as of June 28, 1996, (as the same may be amended, restated,
supplemented or otherwise modified from time to time, the "Loan Agreement") with
Borrowers; and
WHEREAS, Guarantor will derive substantial direct benefit and advantage from the
financial accommodations to Borrowers set forth in the Loan Agreement,
including, without limitation, the loans and advances made to Borrowers
thereunder, and it will be to Guarantor's direct interest and economic benefit
to assist Borrowers in procuring such financial accommodations from the Lenders;
and
WHEREAS, a condition to Agent and the Lenders entering into the Loan Agreement
is that Guarantor execute and deliver this Guaranty;
NOW, THEREFORE, for and in consideration of the premises and in order to induce
Agent and the Lenders to enter into the Loan Agreement and the Lenders to make
loans thereunder, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Guarantor hereby agrees as
follows:
SECTION 1. DEFINITIONS.
Unless otherwise defined herein, all capitalized terms used herein shall have
the respective meanings assigned to such terms in the Loan Agreement.
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"GUARANTEED OBLIGATIONS" means all of the Obligations of Borrowers under the
Loan Agreement excluding the principal interest, fees and expenses with respect
to the Term Loans to the extent secured by the Pledged Collateral.
"PLEDGED COLLATERAL" means the Pledged Collateral as such term is defined in
that Stock Pledge Agreement of even date herewith between Guarantor and Agent,
consisting primarily of 500,000 shares of the common stock of Xxxxxxx Inc.
SECTION 2. GUARANTY OF PAYMENT.
(a) Guarantor hereby absolutely and unconditionally guarantees the full and
prompt payment to Agent, for its benefit and the ratable benefit of the Lenders,
when due, upon demand, at maturity or by reason of acceleration or otherwise and
at all times thereafter, of any and all existing and future Guaranteed
Obligations.
(b) Guarantor acknowledges that valuable consideration supports this Guaranty,
including, without limitation, the consideration set forth in the recitals above
as well as any commitment to lend, extension of credit or other financial
accommodation, whether heretofore or hereafter made by the Lenders to Borrowers;
any extension, renewal or replacement of any of the Guaranteed Obligations; any
forbearance with respect to any of the Guaranteed Obligations or otherwise; any
purchase of Borrowers' assets by the Lenders; or any other valuable
consideration.
(c) Guarantor agrees that all payments under this Guaranty shall be made in
United States currency and in the same manner as provided for the Guaranteed
Obligations.
SECTION 3. COSTS AND EXPENSES.
Guarantor agrees to pay on demand, if not paid by Borrowers, all reasonable
costs and reasonable expenses of every kind incurred by Agent or the Lenders:
(a) in enforcing this Guaranty, (b) in collecting any of the Guaranteed
Obligations from Borrowers or Guarantor, (c) in realizing upon or protecting any
collateral for payment of any of the Guaranteed Obligations and (d) in defending
any claims or litigation arising in connection with this Guaranty. "Costs and
expenses" as used in the preceding sentence shall include, without limitation,
reasonable attorneys' fees incurred by Agent or any Lender in retaining counsel
for advice, suit, appeal, any insolvency or other proceedings under the
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Xxxxxx Xxxxxx Bankruptcy Code or otherwise, or for any purpose specified in the
preceding sentence.
SECTION 4. NATURE OF GUARANTY: CONTINUING, ABSOLUTE AND UNCONDITIONAL.
(a) This Guaranty is and is intended to be a continuing guaranty of payment of
the Guaranteed Obligations, independent of and in addition to any other
guaranty, endorsement, collateral or other agreement held by Agent or the
Lenders therefor or with respect thereto, whether or not furnished by Guarantor.
(b) Until the Guaranteed Obligations have been paid in full on the Termination
Date, Guarantor shall have no right, claim or remedy of subrogation,
reimbursement, contribution or any similar rights against Borrowers or any other
guarantor with respect to the Guaranteed Obligations and hereby waives any right
to enforce any remedy which Agent or any Lender now has or may hereafter have
against Borrowers, any endorser or any other guarantor of all or any part of the
Guaranteed Obligations, and Guarantor hereby waives any benefit of, and any
right to participate in, any security or collateral given to Agent, on behalf of
itself and the Lenders, to secure payment of the Guaranteed Obligations or any
part thereof or any other liability of Borrowers to Agent or the Lenders. If any
amount shall be paid to Guarantor on account of any payment made hereunder at
any time prior to payment in full of the Guaranteed Obligations, such amount
shall be held in trust for the benefit of Agent and the Lenders and shall
forthwith be paid to Agent to be credited and applied, whether the Guaranteed
Obligations are matured or unmatured, in accordance with the terms of the Loan
Agreement. Guarantor authorizes Agent, on behalf of itself and the Lenders, to
take any action or exercise any remedy with respect to any collateral which
Agent, on behalf of itself and the Lenders, in its sole discretion shall
determine, subject to applicable law, without notice to Guarantor. Guarantor
further agrees that any and all claims of Guarantor against Borrowers, any
endorser or any other guarantor of all or any part of the Guaranteed
Obligations, or against any of their respective properties, whether arising by
reason of any payment by Guarantor to Agent, on behalf of itself and the
Lenders, pursuant to the provisions hereof, or otherwise, including, without
limitation, all Intercompany Accounts, shall be subordinate and subject in right
of payment to the prior payment, in full, of the Guaranteed Obligations. In the
event Agent, on behalf of itself and the Lenders, in its sole discretion elects
to give notice of any action with respect to the collateral securing the
Guaranteed Obligations or any part thereof, ten (10) days' written notice mailed
to Guarantor by
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ordinary mail at the address set forth in Section 13 hereof shall be deemed
reasonable notice of any matters contained in such notice. Guarantor consents
and agrees that Agent, on behalf of itself and the Lenders, shall be under no
obligation to xxxxxxxx any assets in favor of Guarantor or against or in payment
of any or all of the Guaranteed Obligations.
(c) For the further security of Agent and the Lenders and without in any way
diminishing the liability of Guarantor, all debts and liabilities, present or
future of Borrowers to Guarantor and all monies received from Borrowers or for
their account by Guarantor in respect thereof in violation of Section 9.15 of
the Loan Agreement, shall be received in trust for Agent and the Lenders and
forthwith upon receipt shall be paid over to Agent, for the benefit of itself
and the Lenders, until all of such Guaranteed Obligations have been paid in
full. This assignment and postponement is independent of and severable from this
Guaranty and shall remain in full force and effect whether or not Guarantor is
liable for any amount under this Guaranty.
(d) This Guaranty and Guarantor's obligations hereunder are absolute and
unconditional and shall not be changed or affected by any representation, oral
agreement, act or thing whatsoever, except as herein provided. This Guaranty is
intended by Guarantor to be the final, complete and exclusive expression of the
guaranty agreement between Guarantor and Agent, on behalf of itself and the
Lenders. No modification or amendment of any provision of this Guaranty shall be
effective unless in writing and signed by a duly authorized officer of Agent.
SECTION 5. CERTAIN RIGHTS AND OBLIGATIONS.
(a) Guarantor authorizes Agent and the Lenders, without notice, demand or any
reservation of rights against Guarantor and without impairing or affecting the
validity or enforceability of this Guaranty or Guarantor's obligations
hereunder, from time to time: (i) to renew, extend, increase, accelerate or
otherwise change the time for payment of, the terms of or the interest on the
Guaranteed Obligations or any part thereof or grant other indulgences to
Borrowers or other Persons; (ii) to accept from any Person and hold collateral
for the payment of the Guaranteed Obligations or any part thereof, and to
modify, exchange, enforce or refrain from enforcing, or release, compromise,
settle, waive, subordinate or surrender, with or without consideration, such
collateral or any part thereof; (iii) to accept and hold any endorsement or
guaranty of payment of the Guaranteed Obligations or any part thereof, and to
discharge, release or substitute any such obligation of any such endorser or
guarantor, or any Person
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who has given any security interest in any collateral as security for the
payment of the Guaranteed Obligations or any part thereof, or any other Person
in any way obligated to pay the Guaranteed Obligations or any part thereof, and
to enforce or refrain from enforcing, or compromise or modify, the terms of any
obligation of any such endorser, guarantor or Person; (iv) to dispose of any and
all collateral securing the Guaranteed Obligations, subject to standards imposed
by applicable law, and to direct the order of such disposition and the
enforcement of any and all endorsements and guaranties relating to the
Guaranteed Obligations or any part thereof as Agent or the Lenders, in their
reasonable discretion may determine; (v) except as otherwise provided in the
Loan Agreement, to determine the manner, amount and time of application of
payments and credits, if any, to be made on all or any part of any component or
components of the Guaranteed Obligations (whether principal, interest, fees,
costs and expenses, or otherwise) including, without limitation, the application
of payments received from any source to the payment of indebtedness other than
the Guaranteed Obligations even though Agent and the Lenders might lawfully have
elected to apply such payments to the Guaranteed Obligations or to amounts which
are not covered by this Guaranty; and (vi) to take advantage or refrain from
taking advantage of any security or accept or make or refrain from accepting or
making any compositions or arrangements when and in such manner as Agent or the
Lenders, in their reasonable discretion, may deem appropriate and generally do
or refrain from doing any act or thing which might otherwise, at law or in
equity, release the liability of Guarantor as a guarantor or surety in whole or
in part, and in no case shall Agent or the Lenders be responsible or shall
Guarantor be released either in whole or in part for any act or omission in
connection with Agent or the Lenders having sold any collateral at less than
fair market value, subject to standards imposed by applicable law.
(b) If any default shall be made in the payment of any of the Guaranteed
Obligations and any grace period has expired with respect thereto, Guarantor
hereby agrees to pay the same in full: (i) without deduction by reason of any
setoff, defense (other than payment) or counterclaim of Guarantor; (ii) without
requiring presentment, protest or notice of nonpayment or notice of default to
Guarantor, to Borrowers or to any other Person, except as required by the Loan
Documents; (iii) without demand for payment or proof of such demand or filing of
claims with a court in the event of receivership, bankruptcy or reorganization
of Borrowers; (iv) without requiring Agent or the Lenders to resort first to
Borrowers (this being a guaranty of payment and not of collection) or to any
other guarantor or any other Person
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obligated with respect to the Guaranteed Obligations or any collateral which
Agent or the Lenders may hold; (v) without requiring notice of acceptance hereof
or assent hereto by Agent or the Lenders; and (vi) without requiring notice that
any of the Guaranteed Obligations has been incurred, extended or continued or of
the reliance by Agent or the Lenders upon this Guaranty; all of which Guarantor
hereby waives.
(c) This Guaranty and Guarantor's obligation hereunder shall at all times be
valid and enforceable and shall not be impaired or affected by any other
agreements or circumstances of any nature whatsoever which otherwise constitute
a defense to this Guaranty, including, without limitation, any of the following,
all of which Guarantor hereby waives, to the extent permitted by law: (i) any
failure or omission to perfect or continue the perfection of any security
interest in or other lien on, or preserve rights to, any collateral securing
payment of any of the Guaranteed Obligations or Guarantor's obligation
hereunder; (ii) the invalidity, unenforceability, propriety of manner of
enforcement of, or loss or change in priority of any such security interest or
other lien or guaranty of the Guaranteed Obligations; (iii) any failure or
omission to protect, preserve or insure any such collateral; (iv) failure of
Guarantor to receive notice of any intended disposition of such collateral; (v)
any defense arising by reason of the cessation from any cause whatsoever of
liability of Borrowers including, without limitation, any failure, negligence or
omission by Agent or the Lenders in enforcing their claims against Borrowers;
(vi) any waiver of any right, remedy or power or of any default with respect to
the Guaranteed Obligations or any part thereof or any release, settlement or
compromise of any obligation of Borrowers; (vii) the invalidity or
unenforceability of any of the Guaranteed Obligations or the invalidity or
unenforceability of any agreement relating thereto or with respect to any
collateral securing the Guaranteed Obligations or any part thereof; (viii) any
change of ownership of Borrowers or the insolvency, bankruptcy or any other
change in the legal status of Borrowers; (ix) any change in, or the imposition
of, any law, decree, regulation or other governmental act which does or might
impair, delay or in any way affect the validity, enforceability or the payment
when due of the Guaranteed Obligations; (x) the existence of any claim, setoff
or other right which Guarantor may have at any time against Agent, any Lender,
Borrowers or any other guarantor in connection herewith or any unrelated
transaction; (xi) the failure of Borrowers or Guarantor to maintain in full
force, validity or effect or to obtain or renew when required all governmental
and other approvals, licenses or consents required in connection with the
Guaranteed Obligations or this Guaranty, or to take any other
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action required in connection with the performance of all obligations pursuant
to the Guaranteed Obligations or this Guaranty; (xii) Agent's election, on
behalf of the Lenders, in any case instituted under chapter 11 of the United
States Bankruptcy Code, of the application of section 1111(b)(2) of the United
States Bankruptcy Code; (xiii) any borrowing, use of cash collateral, or grant
of a security interest by Borrowers, as debtor in possession, under section 363
or 364 of the United States Bankruptcy Code; (xiv) the disallowance of all or
any portion of Agent's or any of the Lenders' claims for repayment of the
Guaranteed Obligations under section 502 or 506 of the United States Bankruptcy
Code; or (xv) any other fact or circumstance which might otherwise constitute
grounds at law or in equity for the discharge or release of Guarantor from its
obligations hereunder, all whether or not Guarantor shall have had notice or
knowledge of any act or omission referred to in the foregoing clauses (i)
through (xiv) of this SUBSECTION 5(C). It is agreed that Guarantor's liability
hereunder is independent of any other guaranties or other obligations at any
time in effect with respect to the Guaranteed Obligations or any part thereof
and that Guarantor's liability hereunder may be enforced regardless of the
existence, validity, enforcement or non-enforcement of any such other guaranties
or other obligations or any provision of any applicable law or regulation
purporting to prohibit payment by Borrowers of the Guaranteed Obligations in the
manner agreed upon between Agent and the Lenders and Borrowers.
(d) Credit may be granted or continued from time to time by Agent and the
Lenders to Borrowers without notice to or authorization from Guarantor
regardless of Borrowers' financial or other condition at the time of any such
grant or continuation. Neither Agent nor any Lender shall have an obligation to
disclose or discuss with Guarantor its assessment of the financial condition of
Borrowers.
SECTION 6. REPRESENTATIONS AND WARRANTIES.
Guarantor represents and warrants that:
(a) EXISTENCE. Guarantor (i) is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation or
organization and has been duly qualified to conduct business and is in good
standing in each other jurisdiction where its ownership or lease of property or
the conduct of its business requires such qualification; (ii) has the requisite
corporate power and authority, as applicable, and the legal right to own,
pledge, mortgage or otherwise encumber and operate its properties, to lease the
property it operates
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under lease and to conduct its business as now, heretofore and proposed to be
conducted; (iii) has all licenses, permits, consents or approvals from or by,
and has made all filings with, and has given all notices to, all Governmental
Authorities having jurisdiction, to the extent required for such ownership,
operation and conduct; (iv) is in compliance with its certificate or articles of
incorporation and bylaws; and (v) is in compliance with all applicable
provisions of law.
(b) AUTHORITY. Guarantor has full power, authority and legal right to enter into
this Guaranty and the other Loan Documents to which Guarantor is a party. The
execution, delivery and performance by Guarantor of this Guaranty and such other
Loan Documents: (i) have been duly authorized by all necessary action on the
part of Guarantor; (ii) are not in contravention of the terms of Guarantor's
certificate of incorporation or bylaws; (iii) do not and will not require any
consent of, registration with or approval of any Governmental Authority or the
consent of any other Person that has not been obtained or made, as applicable;
(iv) do not and will not contravene any contractual or governmental restriction
to which Guarantor or any of its property may be subject (excluding the
Indentures, as to which no representation is made); and (v) do not and will not,
except as contemplated herein, result in the imposition of any Lien upon any
property of Guarantor under any existing indenture, mortgage, deed of trust,
loan or credit agreement or other material agreement or instrument to which
Guarantor is a party or by which Guarantor or any of its property may be bound
or affected. Guarantor has the full corporate authority to own or lease and
operate its property and to conduct the business in which it is currently
engaged and in which it proposes to engage.
(c) DUE AUTHORIZATION. This Guaranty has been duly authorized, executed and
delivered by Guarantor.
(d) COMPLIANCE WITH LAWS AND REGULATIONS. The execution and delivery by
Guarantor of this Guaranty and all of the other Loan Documents to which it is a
party and the performance of Guarantor's obligations hereunder and thereunder
are not in contravention of any order applicable to Guarantor or, to Guarantor's
best knowledge, any laws, regulations or ordinances applicable to Guarantor.
Guarantor and its Subsidiaries are in compliance with all applicable laws,
orders, regulations and ordinances of all federal, foreign, state and local
governmental authorities relating to the business operations and the property of
Guarantor or any of its Subsidiaries.
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(e) FULL DISCLOSURE. This Guaranty and the representations and warranties of
Guarantor in any other Loan Document delivered or to be delivered by Guarantor,
do not and will not contain any untrue statement of a material fact or omit a
material fact necessary to make the statements contained therein or herein, in
light of the circumstances under which they were made, not misleading.
(f) SUBSIDIARIES. The Schedules attached to the Loan Agreement contain an
accurate list of all of the existing Subsidiaries of Guarantor as of the date of
this Guaranty, setting forth their respective jurisdictions of incorporation or
organization and the percentage of their capital stock owned by Guarantor or
other of its Subsidiaries.
(g) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties contained in this Guaranty or any of the other Loan Documents to
which Guarantor is a party shall survive the execution and delivery of this
Guaranty and the termination hereof.
SECTION 7. COVENANTS
Guarantor covenants that until the Guaranteed Obligations are paid in full and
the Commitments are terminated:
(a) Guarantor shall, and shall cause Borrowers to: (i) do or cause to be done
all things necessary to preserve and keep in full force and effect its corporate
existence and its rights and franchises and (ii) continue to conduct its
business substantially as now conducted or as otherwise permitted hereunder or
under the Loan Agreement;
(b) Guarantor shall comply in all material respects with all federal, state,
local and foreign laws and regulations applicable to it.
(c) Guarantor will not (i) engage in any type of business activity other than
its ownership of the capital stock of Borrowers, Xxxxxxx, and its other
Subsidiaries, (ii) pledge or encumber any of its assets except as collateral for
Debt, the proceeds of which Debt are used to pay the Obligations or Notes
outstanding under the Indebtures, (iii) merge or consolidate with, acquire any
assets, capital stock of or partnership interests in, or otherwise combine with
any Person,(iv) amend its certificate of incorporation or bylaws in any manner
which would adversely affect its obligation or ability to pay the Guaranteed
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Obligations, (v) sell, transfer, convey, assign or otherwise dispose of any of
its assets, except that Guarantor may sell the capital stock of Xxxxxxx;
provided that all proceeds of any such sale are applied to payment of the
Obligations or Notes outstanding under the Indentures, (vi) execute any
agreements or contracts other than agreements and contracts permitted by the
Loan Documents, (vii) change its Fiscal Year other than with the consent of
Agent, which consent shall not be unreasonably withheld, (viii) amend, modify or
agree to amend or modify any Indenture to which it is a party without Agent's
consent if the effect of such amendment or modification is to: (a) increase the
interest rate on the debt issued under such Indenture; (b) change the dates upon
which payments of principal or interest (other than the dates of semi-annual
payments of interest) are due on the debt issues under such Indenture other than
to extend such dates; (c) change any default or event of default other than to
delete or make less restrictive any default provision therein, or add any
covenant with respect to the debt issued under such Indenture; (d) change the
redemption or prepayment provisions of such Indenture other than to extend the
dates therefor or to reduce the premiums payable in connection therewith; (e)
grant any security or collateral to secure payment of the debt issued under such
Indenture; or (f) change or amend any other term if such change or amendment
would materially increase the obligations of the obligor or confer additional
material rights of the holder of the debt issued under such Indenture in a
manner adverse to the Guarantor, any Borrower, Agent or any Lender, (ix) use
payments of Intercompany Accounts or dividends received by it from Borrowers for
any purpose other than the purposes set forth in Section 9.15 of the Loan
Agreement, which Section is incorporated herein by reference, and (x) accept or
retain any loans, dividends or other payments of any kind from either Borrower
in violation of the terms of the Loan Agreement.
(d) Guarantor shall not, nor shall Guarantor permit any of its Subsidiaries to,
enter into any indenture, agreement, instrument or other arrangement which, (i)
directly or indirectly, prohibits or restrains, or has the effect of prohibiting
or restraining, or imposes materially adverse conditions upon, the incurrence of
the obligations of Guarantor hereunder, or (ii) contains any provisions which
would be violated or breached by the performance by Guarantor of its obligations
hereunder.
(e) Guarantor agrees to perform, comply with and be bound by all of the terms
and conditions set forth in the Loan Agreement which relate to Guarantor
including, without limitation, delivery of financial statements, with such terms
and conditions being incorporated in this Guaranty by reference and shall cause
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Borrowers to comply with all covenants set forth in the Loan Agreement.
SECTION 8. TERMINATION.
This Guaranty shall remain in full force and effect until all of the Guaranteed
Obligations shall be finally and irrevocably paid in full and the Commitments
under the Loan Agreement shall have been terminated. Payment of all of the
Guaranteed Obligations from time to time shall not operate as a discontinuance
of this Guaranty. Guarantor further agrees that, to the extent that Borrowers
make a payment or payments to Agent or any of the Lenders on the Guaranteed
Obligations, or Agent or the Lenders receive any proceeds of collateral securing
the Guaranteed Obligations, which payment or receipt of proceeds or any part
thereof is subsequently invalidated, declared to be fraudulent or preferential,
set aside or required to be returned or repaid to Borrowers, its estate,
trustee, receiver, debtor in possession or any other Person, including, without
limitation, any guarantor, under any insolvency or bankruptcy law, state,
federal or foreign law, common law or equitable cause, then, to the extent of
such payment, return or repayment, the Guaranteed Obligations or part thereof
which have been paid, reduced or satisfied by such amount shall be reinstated
and continued in full force and effect as of the date when such initial payment,
reduction or satisfaction occurred, and this Guaranty shall continue in full
force notwithstanding any contrary action which may have been taken by Agent or
the Lenders in reliance upon such payment, and any such contrary action so taken
shall be without prejudice to Agent's or the Lenders' rights under this Guaranty
and shall be deemed to have been conditioned upon such payment having become
final and irrevocable.
SECTION 9. GUARANTY OF PERFORMANCE.
Guarantor also guarantees the full, prompt and unconditional performance of all
obligations and agreements of every kind owed or hereafter to be owed by
Guarantor or Borrowers to Agent or the Lenders under or in connection with the
Loan Agreement. Every provision for the benefit of Agent and the Lenders
contained in this Guaranty shall apply to the guaranty of performance given in
this SECTION 9.
SECTION 10. TAXES.
All payments hereunder shall be made free and clear of, and without reduction by
reason of, any taxes, levies, imposts, charges and withholdings, restrictions or
conditions of any
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nature ("Taxes"), which are now or may hereafter be imposed, levied or assessed
by any country, political subdivision or taxing authority, all of which will be
for the account of and paid by Guarantor. If for any reason, any such reduction
is made or any Taxes are paid by Agent or the Lenders, Guarantor will pay to
Agent, for its benefit and the benefit of the Lenders, such additional amounts
as may be necessary to ensure that Agent and the Lenders receive the same net
amount (after payment of all Taxes, if applicable) which they would have
received had no reduction been made or Taxes paid.
SECTION 11. SECURITY.
The Guaranteed Obligations under this Guaranty are unsecured.
SECTION 12. MISCELLANEOUS.
(a) In addition to and without limiting any other right, power or remedy of
Agent or any Lender, whenever Agent or the Lenders have the right to declare any
of the Guaranteed Obligations to be immediately due and payable (whether or not
it has been so declared), the Lenders at their sole election without notice to
Guarantor may appropriate and setoff against the Guaranteed Obligations: (i) any
and all indebtedness or other monies due or to become due to Guarantor by Agent
or the Lenders in any capacity; and (ii) any monies, credits or other property
belonging to Guarantor (including all account balances, whether provisional or
final and whether or not collected or available, but excluding Equity Proceeds)
at any time held by or coming into the possession of Agent or any of the
Lenders, or any affiliate of Agent or any of the Lenders, whether for deposit or
otherwise, whether or not the Guaranteed Obligations or the obligation to pay
such monies owed by Agent or the Lenders is then due, and Agent, on its behalf
and on behalf of the Lenders, is hereby granted a security interest in and Lien
upon such monies, credits and other property. Agent or the Lenders shall be
deemed to have exercised such right of setoff immediately at the time of such
election even though any charge therefor is made or entered on Agent's or the
Lenders' records subsequent thereto.
(b) In the event that acceleration of the time for payment of any of the
Guaranteed Obligations is stayed, upon the insolvency, bankruptcy or
reorganization of Borrowers, or otherwise, all such amounts shall nonetheless be
payable by Guarantor forthwith upon demand by Agent, on its behalf and on behalf
of the Lenders.
(c) No delay on the part of Agent or any Lender in the exercise of any right,
power or remedy shall operate as a waiver thereof, and no single or partial
exercise by Agent or any Lender of any
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right, power or remedy shall preclude any further exercise thereof; nor shall
any amendment, supplement, modification or waiver of any of the terms or
provisions of this Guaranty be binding upon Agent or the Lenders, except as
expressly set forth in a writing duly signed and delivered by Agent. The failure
by Agent or any Lender at any time or times hereafter to require strict
performance by Borrowers or Guarantor of any of the provisions, warranties,
terms and conditions contained in any Loan Document or other promissory note,
security agreement, agreement, indenture, guaranty, instrument or document now
or at any time or times hereafter executed by Borrowers or Guarantor and
delivered to Agent or any Lender shall not waive, affect or diminish any right
of Agent or any Lender at any time or times hereafter to demand strict
performance thereof, and such right shall not be deemed to have been waived by
any act or knowledge of Agent or any Lender, its agents, officers or employees,
unless such waiver is contained in an instrument in writing duly signed and
delivered by Agent and/or Lenders, as the case may be. No waiver by Agent or
Lenders of any default shall operate as a waiver of any other default hereunder
or the same default on a future occasion, and no action by Agent or Lenders
permitted hereunder shall in any way affect or impair Agent's or the Lenders'
rights, powers or remedies or the obligations of Guarantor under this Guaranty.
Any determination by a court of competent jurisdiction of the amount of any of
the Guaranteed Obligations owing by Borrowers to the Lenders shall be conclusive
and binding on Guarantor. The rights and remedies of Agent and the Lenders
hereunder are cumulative and may be exercised singly or concurrently, and are
not exclusive of any rights or remedies provided by law.
(d) This Guaranty shall bind Guarantor and the successors and assigns of
Guarantor and shall inure to the benefit of Agent and the Lenders and their
successors and assigns. All references herein to Borrowers shall be deemed to
include its successors and assigns including, without limitation, a receiver,
trustee or debtor in possession of or for Borrowers.
(e) Section headings in this Guaranty are included herein for convenience of
reference only and shall not constitute a part of this Guaranty for any other
purpose or be given any substantive effect.
(f) Whenever possible, each provision of this Guaranty shall be interpreted in
such manner as to be effective and valid under applicable law. Any provision of
this Guaranty which is prohibited or unenforceable in any jurisdiction shall, as
to such jurisdiction, be ineffective to the extent of such prohibition or
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unenforceability without invalidating the remainder of such provision or the
remaining provisions of this Guaranty, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
(g) It is understood that while the amount of the Guaranteed Obligations is not
limited, if, in any action or proceeding involving any state or federal
bankruptcy, insolvency or other law affecting the rights of creditors generally,
this Guaranty would be held or determined to be void, invalid or unenforceable
on account of the amount of the aggregate liability under this Guaranty, then,
notwithstanding any other provision of this Guaranty to the contrary, the
aggregate amount of such liability shall, without any further action of
Guarantor, the Lenders, Agent or any other Person, be automatically limited and
reduced to the highest amount which is valid and enforceable as determined in
such action or proceeding.
(h) This Guaranty sets forth the entire understanding and agreement of Guarantor
and Agent with respect to the subject matter hereof and supersedes all other
understandings, oral or written, with respect to the subject matter hereof.
(I) GUARANTOR AND AGENT HEREBY SUBMIT TO THE EXCLUSIVE JURISDICTION OF ANY STATE
OR FEDERAL COURT LOCATED WITHIN THE CITY OF NEW YORK, NEW YORK, AND IRREVOCABLY
AGREE THAT ALL ACTIONS OR PROCEEDINGS RELATING TO THIS GUARANTY OR THE OTHER
LOAN DOCUMENTS TO WHICH THE GUARANTOR IS A PARTY SHALL BE LITIGATED IN SUCH
COURTS, AND GUARANTOR AND AGENT EACH WAIVES ANY OBJECTION WHICH IT MAY HAVE
BASED ON IMPROPER VENUE OF FORUM NON CONVENIENS TO THE CONDUCT OF ANY PROCEEDING
IN ANY SUCH COURT AND EACH WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON
IT, AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY MAIL OR MESSENGER
DIRECTED TO IT AT THE ADDRESS SET FORTH IN SECTION 13 HEREOF AND AGREES THAT
SUCH SERVICE SHALL CONSTITUTE SUFFICIENT NOTICE. NOTHING CONTAINED IN THIS
SECTION 12 SHALL AFFECT THE RIGHT OF AGENT TO SERVE LEGAL PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF AGENT TO BRING ANY ACTION OR
PROCEEDING AGAINST GUARANTOR IN THE COURTS OF ANY OTHER JURISDICTION TO THE
EXTENT NECESSARY TO ENFORCE ITS LIENS AGAINST ASSETS LOCATED IN SUCH
JURISDICTION.
(J) THIS GUARANTY SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED UNDER AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO CONFLICT OF LAWS PROVISIONS.
SECTION 13. NOTICES.
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Unless otherwise specifically provided herein, any notice or other communication
required or permitted to be given shall be in writing addressed to the
respective party as set forth below and may be personally served, telecopied or
sent by overnight courier service or United States mail certified or registered
and shall be deemed to have been given (a) if delivered in person, when
delivered; (b) if delivered by telecopy, on the date of transmission if
transmitted on a Business Day before 5:00 p.m. (Chicago time) or, if not, on the
next succeeding Business Day; (c) if delivered by overnight courier, two
Business Days after delivery to such courier properly addressed; or (d) if by
United States mail, four Business Days after depositing in the United States
mail, with postage prepaid and properly addressed.
Notices shall be addressed as follows:
(a) If to Guarantor:
Waxman USA Inc.
00000 Xxxxxx Xxxx
Xxxxxxx Xxxxxxx, Xxxx 00000
Attention: Chief Financial Officer
Telecopy: (000) 000-0000
with a copy to:
Xxxxx Xxxxxxxxx
Shereff, Friedman, Xxxxxxx & Xxxxxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
(b) If to Agent:
BankAmerica Business Credit, Inc.
Xxxxx 0000
00 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Portfolio Administrator
Telecopy: (000) 000-0000
with a copy to:
Winston & Xxxxxx
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxx
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Telecopy: (000) 000-0000
or in any case, to such other address as the party addressed shall have
previously designated by written notice to the serving party, given in
accordance with this SECTION 13. A notice not given as provided above shall, if
it is in writing, be deemed given if and when actually received by the party to
whom given.
SECTION 14. WAIVERS.
(A) GUARANTOR WAIVES THE BENEFIT OF ALL VALUATION, APPRAISAL AND EXEMPTION LAWS.
(B) IN THE EVENT OF A DEFAULT UNDER THE LOAN AGREEMENT, GUARANTOR HEREBY WAIVES
TO THE EXTENT PERMITTED BY LAW ALL RIGHTS TO NOTICE AND HEARING OF ANY KIND
PRIOR TO THE EXERCISE BY AGENT OR THE LENDERS OF THEIR RIGHTS TO REPOSSESS ANY
COLLATERAL WITHOUT JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY UPON ANY
COLLATERAL WITHOUT PRIOR NOTICE OR HEARING. GUARANTOR ACKNOWLEDGES THAT IT HAS
BEEN ADVISED BY COUNSEL OF ITS CHOICE WITH RESPECT TO THIS TRANSACTION AND THIS
GUARANTY.
(C) GUARANTOR AND AGENT ACKNOWLEDGE THAT THE TIME AND EXPENSE REQUIRED FOR TRIAL
BY JURY EXCEED THE TIME AND EXPENSE REQUIRED FOR A BENCH TRIAL AND HEREBY WAIVE,
TO THE EXTENT PERMITTED BY LAW, TRIAL BY JURY, ANY OBJECTION BASED ON FORUM NON
CONVENIENS, ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER, AND WAIVE
ANY BOND OR SURETY OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER,
BE REQUIRED OF ADMINISTRATIVE AGENT OR THE LENDERS.
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IN WITNESS WHEREOF, this Guaranty has been executed as of the day first written
above.
WAXMAN USA INC.
By:
Name:_____________________________
Title:____________________________
Accepted and Agreed:
BANKAMERICA BUSINESS CREDIT, INC.
By:_____________________________
Title:__________________________
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